Estee Lauder 2011 Annual Report Download - page 112

110 THE EST{E LAUDER COMPANIES INC.
We have a $750.0 million commercial paper program
under which we may issue commercial paper in the
United States. At June 30, 2011, there was no commercial
paper outstanding. We also have $205.4 million in addi-
tional uncommitted credit facilities, of which $10.6 million
was used as of June 30, 2011. We do not anticipate diffi-
culties in securing this form of working capital financing.
In July 2011, we replaced our undrawn $750.0 million
senior unsecured revolving credit facility that was set to
expire on April 26, 2012 (the “Prior Facility”), with a new
$1.0 billion senior unsecured revolving credit facility that
expires on July 14, 2015 (the “New Facility”). The New
Facility may be used to provide credit support for our
commercial paper program and for general corporate
purposes. As with the Prior Facility, up to the equivalent of
$250 million of the New Facility is available for multi-
currency loans. The interest rate on borrowings under the
New Facility is based on LIBOR or on the higher of prime,
which is the rate of interest publicly announced by the
administrative agent, or % plus the Federal funds rate. We
incurred costs of approximately $1.2 million to establish
the New Facility which will be amortized over the term of
the facility. The New Facility has an annual fee of $0.7
million, payable quarterly, based on our current credit
ratings. The New Facility also contains a cross-default pro-
vision whereby a failure to pay other material financial
obligations in excess of $100.0 million (after grace periods
and absent a waiver from the lenders) would result in an
event of default and the acceleration of the maturity of
any outstanding debt under this facility.
As of June 30, 2011, we were in compliance with all
financial and other restrictive covenants relating to the
Prior Facility, including limitations on indebtedness and
liens, and expect continued compliance with similar
restrictive covenants in the New Facility. The financial
covenant in the Prior Facility required an interest
expense coverage ratio of greater than 3:1 as of the last
day of each fiscal quarter. There is no such covenant
under the New Facility. The interest expense coverage
ratio was defined in the Prior Facility as the ratio of
Consolidated EBITDA (which does not represent a
measure of our operating results as defined under U.S.
generally accepted accounting principles) to Consoli-
dated Interest Expense and was calculated as stipulated in
the Prior Facility as follows:
Debt
At June 30, 2011, our outstanding borrowings were as follows:
Long-term Debt Current Debt Total Debt
($ in millions)
6.00% Senior Notes, due May 15, 2037 (“2037 Senior Notes”)(1) (6) $ 296.4 $ — $ 296.4
5.75% Senior Notes, due October 15, 2033 (“2033 Senior Notes”)(2) 197.7 — 197.7
5.55% Senior Notes, due May 15, 2017 (“2017 Senior Notes”)(3) (6) 341.5 — 341.5
7.75% Senior Notes, due November 1, 2013 (“2013 Senior Notes”)(4) (6) 230.0 — 230.0
6.00% Senior Notes, due January 15, 2012 (“2012 Senior Notes”)(5) — 119.4 119.4
Other borrowings 14.5 18.6 33.1
$1,080.1 $138.0 $1,218.1
(1) Consists of $300.0 million principal and unamortized debt discount of $3.6 million.
(2) Consists of $200.0 million principal and unamortized debt discount of $2.3 million.
(3) Consists of $300.0 million principal, unamortized debt discount of $0.3 million and a $41.8 million adjustment to reflect the fair value of outstanding
interest rate swaps.
(4) Consists of $230.1 million principal and unamortized debt discount of $0.1 million.
(5) Consists of $120.0 million principal and a $0.6 million adjustment to reflect the remaining termination value of an interest rate swap that is being
amortized to interest expense over the life of the debt.
(6) As of June 30, 2011, we were in compliance with all restrictive covenants, including limitations on indebtedness and liens, and expect
continued compliance.