Estee Lauder 2013 Annual Report Download - page 160

As of June 30, 2013, the Company had outstanding
$248.9 million of the 2042 Senior Notes consisting of
$250.0 million principal and unamortized discount of $1.1
million. The 2042 Senior Notes, when issued in August
2012, were priced at 99.567% with a yield of 3.724%.
Interest payments are required to be made semi-annually
on February 15 and August 15.
As of June 30, 2013, the Company had outstanding
$296.5 million of 2037 Senior Notes consisting of $300.0
million principal and unamortized debt discount of $3.5
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 agree-
ments 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 mil-
lion 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, 2013, the Company had outstanding
$197.8 million of 2033 Senior Notes consisting of $200.0
million principal and unamortized debt discount of $2.2
million. The 2033 Senior Notes, when issued in September
2003, were priced at 98.645% with a yield of 5.846%.
Interest payments are required to be made semi-annually
on April 15 and October 15. In May 2003, in anticipation
of the issuance of the 5.75% Senior Notes, the Company
entered into a series of treasury lock agreements on a
notional amount totaling $195.0 million at a weighted-
average all-in rate of 4.53%. The treasury lock agreements
were settled upon the issuance of the new debt and the
Company received a payment of $15.0 million that will be
amortized against interest expense over the life of the
2033 Senior Notes. As a result of the treasury lock agree-
ments, the debt discount and debt issuance costs, the
effective interest rate on the 2033 Senior Notes will be
5.395% over the life of the debt.
As of June 30, 2013, the Company had outstanding
$249.8 million of the 2022 Senior Notes consisting of
$250.0 million principal and unamortized discount of
$0.2 million. The 2022 Senior Notes, when issued in
August 2012, were priced at 99.911% with a yield of
2.360%. Interest payments are required to be made semi-
annually on February 15 and August 15.
As of June 30, 2013, the Company had outstanding
$328.0 million of 2017 Senior Notes consisting of $300.0
million principal, an unamortized debt discount of $0.2
million and a $28.2 million adjustment to reflect the
remaining termination value of an interest rate swap. The
2017 Senior Notes, when issued in May 2007, were priced
at 99.845% with a yield of 5.570%. Interest payments
are required to be made semi-annually on May 15 and
November 15. During fiscal 2011, the Company termi-
nated its interest rate swap agreements with a notional
amount totaling $250.0 million which had effectively con-
verted the fixed rate interest on its outstanding 2017
Senior Notes to variable interest rates. The instrument,
which was classified as an asset, had a fair value of $47.4
million at the date of cash settlement. This net settlement
is classified as a financing activity on the consolidated
statements of cash flows. Hedge accounting treatment
was discontinued prospectively and the fair value adjust-
ment to the carrying amount of the related debt is being
amortized against interest expense over the remaining life
of the debt.
In September 2012, the Company used the net pro-
ceeds of the 2022 Senior Notes and 2042 Senior Notes to
redeem the $230.1 million principal amount of its 2013
Senior Notes at a price of 108% of the principal amount
and recorded a pre-tax expense on the extinguishment
of debt of $19.1 million representing the call premium of
$18.6 million and the pro-rata write-off of $0.5 million
of issuance costs and debt discount.
The Company has a commercial paper program under
which it may issue commercial paper in the United States.
In the second quarter of fiscal 2013, the Company
increased the limit of this program from $750.0 million
to $1.0 billion. In the first quarter of fiscal 2013, the
Company had repaid, using cash on hand, $200.0 million
of commercial paper that was outstanding at June 30,
2012. At June 30, 2013, the Company had no commercial
paper outstanding.
As of June 30, 2013, the Company had overdraft
borrowing agreements with two financial institutions
pursuant to which its subsidiary in Turkey may borrow up
to 50.0 million Turkish lira ($26.0 million at the exchange
rate at June 30, 2013). The interest rate on borrowings
under these agreements was approximately 7%. There
were no debt issuance costs incurred related to these
agreements. The outstanding balance at June 30, 2013
was 14.1 million Turkish lira ($7.4 million at the exchange
rate at June 30, 2013) and is classified as current debt on
the Company’s consolidated balance sheet.
As of June 30, 2013, the Company had a fixed rate
promissory note agreement with a financial institution
158 THE EST{E LAUDER COMPANIES INC.