Note 9 – Debt

Short Term Borrowings

At September 30, 2014 and June 30, 2014, we had $2.9 million and $3.7 million of short-term borrowings outstanding, respectively. At September 30, 2014 and June 30, 2014, we maintained lines of credit of $66.4 million and $64.6 million, respectively, primarily in India, China, Hungary, Brazil and Denmark.

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.

Credit Agreement

On October 10, 2012, we and our wholly-owned subsidiary Harman Holding GmbH & Co. KG (“Harman KG”), entered into a Multi-Currency Credit Agreement (the “Credit Agreement”) with a group of banks. The Credit Agreement provides for (i) a five-year unsecured multi-currency revolving credit facility (the “Revolving Credit Facility”) in the amount of $750.0 million (the “Aggregate Revolving Commitment”) with availability in currencies other than the United States Dollar of up to $550.0 million and (ii) a five-year unsecured United States Dollar term loan facility (the “Term Facility” and, collectively with the Revolving Credit Facility, the “Facilities”) in the amount of $300.0 million (the “Aggregate Term Commitment” and, collectively with the Aggregate Revolving Commitment, the “Aggregate Commitment”). Up to $60.0 million of the Aggregate Revolving Commitment is available for letters of credit. Subject to certain conditions set forth in the Credit Agreement, the Aggregate Commitment may be increased by up to $250.0 million. We may select interest rates for the Facilities equal to (i) LIBOR plus an applicable margin or (ii) a base rate plus an applicable margin, which in each case is determined based on our credit rating. We pay a facility fee on the Aggregate Revolving Commitment, whether drawn or undrawn, which is determined based on our credit rating. Any proceeds from borrowings under the Facilities may be used for general corporate purposes.

At September 30, 2014, there was $200.0 million of outstanding borrowings and approximately $4.6 million of outstanding letters of credit under the Revolving Credit Facility and $247.5 million of outstanding borrowings under the Term Facility, of which $37.5 million is included in our Condensed Consolidated Balance Sheet as Current portion of long-term debt and $210.0 million is classified as Long-term debt. At September 30, 2014, unused available credit under the Revolving Credit Facility was $545.4 million.

At June 30, 2014, there was $300.0 million of outstanding borrowings and approximately $4.6 million of outstanding letters of credit under the Revolving Credit Facility and $255.0 million of outstanding borrowings under the Term Facility, of which $35.6 million is included in our Condensed Consolidated Balance Sheet as Current portion of long-term debt and $219.4 million is classified as Long-term debt. At June 30, 2014, unused available credit under the Revolving Credit Facility was $445.4 million.

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

At September 30, 2014 and June 30, 2014, long-term debt and current portion of long-term debt consisted of the following:


	Fair Value at September 30, 2014			Book Value at September 30, 2014			Fair Value at June 30, 2014			Book Value at June 30, 2014
Borrowings under revolving credit facility	$	200,000		$	200,000		$	300,000		$	300,000
Term facility		247,500			247,500			255,000			255,000
Other obligations		30			30			32			32

Total debt		447,530			447,530			555,032			555,032
Less: current portion of long-term debt		(37,500	)		(37,500	)		(35,625	)		(35,625	)

Total long-term debt	$	410,030		$	410,030		$	519,407		$	519,407

At September 30, 2014, long-term debt maturing in each of the next five fiscal years and thereafter is as follows:


2015	$	28,125
2016		43,155
2017		135,000
2018		241,250
2019		0
Thereafter		0

Total	$	447,530

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 Credit Agreement, we could be in default under the Credit Agreement. As a result, our debt under the Credit Agreement could become due, which would have a material adverse effect on our financial condition and results of operations. As of September 30, 2014, we were in compliance with all the financial covenants of the Credit Agreement.

Interest expense is reported net of interest income in our Condensed Consolidated Statements of Income. Interest expense, net was $2.7 million and $2.0 million for the three months ended September 30, 2014 and 2013, respectively. Gross interest expense was $3.1 million and $2.4 million for the three months ended September 30, 2014 and 2013, respectively. The non-cash portion of gross interest expense was $0.5 million for each of the three month periods ended September 30, 2014 and 2013, associated with the amortization of debt issuance costs on the Credit Agreement. The cash portion of gross interest expense was $2.6 million and $1.9 million in the three months ended September 30, 2014 and 2013, respectively, associated with interest on the Credit Agreement and our short-term borrowings. Interest income was $0.4 million for each of the three month periods ended September 30, 2014 and 2013, associated with interest earned on our cash and cash equivalents.