Note 9 – Debt

Short Term Borrowings

At December 31, 2013 and June 30, 2013, we had $21.6 million and $4.9 million of short-term borrowings outstanding, respectively. At December 31, 2013, we maintained lines of credit of $63.3 million primarily in Germany, Hungary, China, Brazil, the U.S., India and Denmark. At June 30, 2013, we maintained lines of credit of $55.7 million primarily in Denmark, Hungary, the U.S., Austria, Brazil and India.

We classify our debt based on the contractual maturity dates of the underlying debt instruments. We defer costs associated with debt issuance over the applicable term of the debt. These costs are amortized to Interest expense, net in our Condensed Consolidated Statements of Income.

New Credit Agreement

On October 10, 2012, we and Harman Holding GmbH & Co. KG (“Harman KG”), entered into a Multi-Currency Credit Agreement (the “New Credit Agreement”) with a group of banks. At December 31, 2013 and June 30, 2013 there were no outstanding borrowings and approximately $6.0 million and $6.8 million of outstanding letters of credit, respectively, under the new revolving credit facility (“New Revolving Credit Facility”) and $270.0 million and $285.0 million of outstanding borrowings under the term facility (the “Term Facility”), respectively, of which $30.0 million is included in each period in our Condensed Consolidated Balance Sheet as Current portion of long-term debt and $240.0 million and $255.0 million, respectively, is classified as Long-term debt. At December 31, 2013 and June 30, 2013, unused available credit under the New Revolving Credit Facility was $744.0 million and $743.2 million, respectively. If we do not meet the forecast in our budgets, we could violate our debt covenants and, absent a waiver from our lenders or an amendment to the New Credit Agreement, we could be in default under the New Credit Agreement. As a result, our debt under the New Credit Agreement could become due, which would have a material adverse effect on our financial condition and results of operations. As of December 31, 2013, we were in compliance with all the covenants of the New Credit Agreement.

Long-Term Debt and Current Portion of Long-Term-Debt

At December 31, 2013 and June 30, 2013, long-term debt and current portion of long-term debt consisted of the following:


	Fair Value at December 31, 2013			Book Value at December 31, 2013			Fair Value at June 30, 2013			Book Value at June 30, 2013
Term facility	$	270,000		$	270,000		$	285,000		$	285,000
Other obligations		38			38			43			43

Total debt		270,038			270,038			285,043			285,043
Less: current portion of long-term debt		(30,000	)		(30,000	)		(30,000	)		(30,000	)

Total long-term debt	$	240,038		$	240,038		$	255,043		$	255,043

At December 31, 2013, long-term debt maturing in each of the next five fiscal years and thereafter is as follows:


2014	$	15,000
2015		35,625
2016		43,125
2017		135,000
2018		41,288
Thereafter		0

Total	$	270,038

Interest expense is reported net of interest income in our Condensed Consolidated Statements of Income. Interest expense, net was $1.9 million and $3.7 million for the three months ended December 31, 2013 and 2012, respectively. Gross interest expense was $2.6 million and $4.3 million for the three months ended December 31, 2013 and 2012, respectively. The non-cash portion of gross interest expense was $0.5 million and $2.5 million for the three months ended December 31, 2013 and 2012, respectively, associated with the amortization of debt issuance costs on the New Credit Agreement in the three months ended December 31, 2013 and the amortization of the debt discount on the Convertible Senior Notes and the amortization of debt issuance costs on the New Credit Agreement, the Convertible Senior Notes and the Multi-Currency Credit Agreement entered into on December 1, 2010 (the “Old Credit Agreement”) in the three months ended December 31, 2012. The cash portion of gross interest expense was $2.1 million and $1.8 million for the three months ended December 31, 2013 and 2012, respectively. Interest income was $0.7 million and $0.6 million for the three months ended December 31, 2013 and 2012, respectively.

Interest expense, net was $3.8 million and $9.7 million for the six months ended December 31, 2013 and 2012, respectively. Gross interest expense was $4.9 million and $11.0 million for the six months ended December 31, 2013 and 2012, respectively. The non-cash portion of gross interest expense was $1.1 million and $7.4 million for the six months ended December 31, 2013 and 2012, respectively, associated with the amortization of debt issuance costs on the New Credit Agreement in the six months ended December 31, 2013 and the amortization of the debt discount on the Convertible Senior Notes and the amortization of debt issuance costs on the New Credit Agreement, the Convertible Senior Notes and the Old Credit Agreement in the six months ended December 31, 2012. The cash portion of gross interest expense was $3.8 million and $3.6 million for the six months ended December 31, 2013 and 2012, respectively. Interest income was $1.1 million and $1.3 million for the six months ended December 31, 2013 and 2012, respectively.