Estee Lauder 2007 Annual Report Download - page 71

the fi nal assessment made by the Chief Tax Inspector was
received, confi rming the reassessment made by the tax
auditors. During fi scal 2006, an appeal against this fi nal
assessment was fi led with the Madrid Regional Economic
Administrative Tribunal. While no assurance can be given
as to the outcome in respect of this assessment, either
during the administrative appeals process or in the
Spanish courts, management believes that the subsidiary
should ultimately be successful in its defense against the
assessment. Accordingly, no tax reserve has been estab-
lished for this potential exposure.
NOTE 7 — OTHER ACCRUED LIABILITIES
Other accrued liabilities consist of the following:
JUNE 30 2007 2006
(In millions)
Advertising, merchandising and sampling $324.7 $334.5
Employee compensation 281.0 260.5
Special charges related to cost
savings initiative 15.4 40.7
Other 342.8 312.8
$963.9 $948.5
2
007
$
324.
7
28
1
.
0
1
5.
4
342.
8
$
963.
9
70 THE EST{E LAUDER COMPANIES INC.
NOTE 8 — DEBT
The Company’s short-term and long-term debt and available fi nancing consist of the following:
Available fi nancing at June 30
Debt at June 30 Committed Uncommitted
2007 2006 2007 2006 2007 2006
($ in millions)
6.00% Senior Notes, due May 15, 2037
(“2037 Senior Notes”) $ 296.2 $— $— $— $ — $—
5.55% Senior Notes, due May 15, 2017
(“2017 Senior Notes”) 290.9 — — — — —
6.00% Senior Notes, due January 15, 2012
(“2012 Senior Notes”) 239.7 230.0 — — — —
5.75% Senior Notes, due October 15, 2033
(“2033 Senior Notes”) 197.4 197.4 — — — —
Commercial paper 26.5 — — — 723.5 750.0
Turkish lira overdraft borrowing facility 9.4 — — — — —
Loan participation notes — 38.0 — — 150.0 112.0
Japanese yen revolving credit facility — 26.2 24.3 — — —
Other long-term borrowings 3.9 4.4 — — — —
Other short-term borrowings 24.5 25.5 — — 150.0 129.3
Revolving credit facility — — 750.0 600.0 — —
1,088.5 521.5 $774.3 $600.0 $1,023.5 $991.3
2
00
7
$
—
—
—
—
—
—
—
24.
3
—
—
7
50
.
0
$
774.3
200
7
$
—
—
—
—
7
2
3
.
5
—
1
50.0
—
—
1
50.0
—
$
1
,
023.5
Less short-term debt including current maturities (60.4) (89.7)
$1,028.1 $431.8
2
007
$
296.
2
2
9
0.
9
23
9
.
7
1
97.
4
2
6
.
5
9
.
4
—
—
3.
9
2
4.
5
—
1
,
088.
5
(
60.4
)
$
1,028.
1
As of June 30, 2007, the Company had outstanding
$296.2 million of 2037 Senior Notes consisting of $300.0
million principal and unamortized debt discount of $3.8
million. The 2037 Senior Notes, when issued in May 2007,
were priced at 98.722% with a yield of 6.093%. Interest
payments are required to be made semi-annually on
May 15 and November 15. In April 2007, in anticipation of
the issuance of the 2037 Senior Notes, the Company
entered into a series of forward-starting interest rate swap
agreements on a notional amount totaling $210.0 million
at a weighted average all-in rate of 5.45%. The forward-
starting interest rate swap agreements were settled upon
the issuance of the new debt and the Company recog-
nized a loss in other comprehensive income of $0.9
million that will be amortized to interest expense over the
life of the 2037 Senior Notes. As a result of the forward-
starting interest rate swap agreements, the debt discount
and debt issuance costs, the effective interest rate on the
2037 Senior Notes will be 6.181% over the life of
the debt.
As of June 30, 2007, the Company had outstanding
$290.9 million of 2017 Senior Notes consisting of
$300.0 million principal, an unamortized debt discount of
$0.5 million, and an $8.6 million adjustment to refl ect
the fair value of an outstanding interest rate swap. The
2017 Senior Notes, when issued in May 2007, were
priced at 99.845% with a yield of 5.570%. Interest pay-
ments are required to be made semi-annually on May 15
and November 15. In April 2007, the Company entered
into an interest rate swap agreement with a notional
amount of $250.0 million to effectively convert the fi xed