Estee Lauder 2007 Annual Report Download - page 48

THE EST{E LAUDER COMPANIES INC. 47
5.570% and the 2037 Senior Notes were priced at
98.722% with a yield of 6.093%. Interest payments on
both notes are required to be made semi-annually on May
15 and November 15, commencing November 15, 2007.
We used the net proceeds of this offering to repay long-
term commercial paper, which was used to fund our
accelerated stock repurchase program, and to pay
transaction fees and expenses related to this offering.
We have a fi xed rate promissory note agreement with
a fi nancial institution pursuant to which we may borrow
up to $150.0 million in the form of loan participation notes
through one of our subsidiaries in Europe. The interest
rate on borrowings under this agreement is at an all-in
fi xed rate determined by the lender and agreed to by us
at the date of each borrowing. At June 30, 2007, no
borrowings were outstanding under this agreement.
Debt issuance costs incurred related to this agreement
were de minimis.
We have an overdraft borrowing agreement with a
fi nancial institution pursuant to which our subsidiary in
Turkey may be credited to satisfy outstanding negative
daily balances arising from its business operations. The
total balance outstanding at any time shall not exceed
20.0 million Turkish lira. The interest rate applicable to
each such credit shall be 40 basis points per annum above
the spot rate charged by the lender or the lender’s fl oat-
ing call rate agreed to by us at each borrowing. There
were no debt issuance costs incurred related to this agree-
ment. The outstanding balance at June 30, 2007 ($9.4
million at the exchange rate at June 30, 2007) is classifi ed
as short-term debt in our consolidated balance sheet.
We have a 3.0 billion yen revolving credit facility that
expires on March 24, 2009. The interest rate on borrow-
ings under the credit facility is based on TIBOR (Tokyo
Interbank Offered Rate) and a 10 basis point facility fee is
We have a $750.0 million commercial paper program
under which we may issue commercial paper in the
United States. Our commercial paper is currently rated
A-1 by Standard & Poor’s and P-1 by Moody’s. Our long-
term credit ratings are A with a stable outlook by Standard
& Poor’s and A2 with a stable outlook by Moody’s. At
June 30, 2007, we had $26.5 million of commercial
paper outstanding, which we may refi nance on a periodic
basis as it matures at then-prevailing market interest rates.
We also have $178.9 million in additional uncommitted
credit facilities, of which $28.9 million was used as of
June 30, 2007.
Effective April 2007, we entered into a $750.0 million
senior unsecured revolving credit facility, expiring on April
26, 2012, primarily to provide credit support for our
commercial paper program, to repurchase shares of
our common stock and for general corporate purposes.
The new facility replaced our prior, undrawn $600.0 mil-
lion senior unsecured revolving credit facility, which had
been effective since May 27, 2005. Up to the equivalent
of $250 million of the current facility is available for multi-
currency loans. The interest rate on borrowings under the
credit facility is based on LIBOR or on the higher of prime,
which is the rate of interest publicly announced by the
administrative agent, or 1 /2% plus the Federal funds rate.
We incurred costs of approximately $0.3 million to estab-
lish the facility which will be amortized over the term of
the facility. The credit facility has an annual fee of $0.4
million, payable quarterly, based on our current credit
ratings. As of June 30, 2007, we were in compliance
with all related fi nancial and other restrictive covenants,
including limitations on indebtedness and liens.
In May 2007, we issued and sold the 2017 Senior Notes
and the 2037 Senior Notes in a public offering. The 2017
Senior Notes were priced at 99.845% with a yield of
Long-term Debt Short-term Debt Total Debt
($ in millions)
6.00% Senior Notes, due May 15, 2037 (“2037 Senior Notes”)(1) $ 296.2 $ — $ 296.2
5.55% Senior Notes, due May 15, 2017 (“2017 Senior Notes”)(2) 290.9 — 290.9
6.00% Senior Notes, due January 15, 2012 (“2012 Senior Notes”)(3) 239.7 — 239.7
5.75% Senior Notes, due October 15, 2033 (“2033 Senior Notes”)(4) 197.4 — 197.4
Commercial paper maturing through July 2007 (5.40% average interest rate) — 26.5 26.5
12.3 million Turkish lira overdraft borrowing facility — 9.4 9.4
Other borrowings 3.9 24.5 28.4
$1,028.1 $60.4 $1,088.5
(1) Consists of $300.0 million principal and unamortized debt discount of $3.8 million.
(2) Consists of $300.0 million principal, unamortized debt discount of $0.5 million and an $8.6 million adjustment to refl ect the fair value of outstanding
interest rate swaps.
(3) Consists of $250.0 million principal, unamortized debt discount of $0.5 million and a $9.8 million adjustment to refl ect the remaining termination
value of an interest rate swap that is being amortized to interest expense over the life of the debt.
(4) Consists of $200.0 million principal and unamortized debt discount of $2.6 million.