Estee Lauder 2012 Annual Report Download - page 119

THE EST{E LAUDER COMPANIES INC. 117
In August 2012, we issued $250.0 million of 2.35% Senior
Notes due August 15, 2022 (“2022 Senior Notes”) and
$250.0 million of 3.70% Senior Notes due August 15,
2042 (“2042 Senior Notes”) in a public offering. The
2022 Senior Notes were priced at 99.911% with a yield of
2.360%. The 2042 Senior Notes were priced at 99.567%
with a yield of 3.724%. Interest payments on both notes
are required to be made semi-annually on February 15
and August 15, commencing February 15, 2013. On
August 2, 2012, we called for redemption all of the
outstanding 2013 Senior Notes on September 4, 2012.
We intend to use approximately $250 million of the net
proceeds of the offering for the redemption, of which
approximately $18 million to $20 million represents debt
extinguishment costs, and to use the remaining amounts
for general corporate purposes.
We have a $750.0 million commercial paper program
under which we may issue commercial paper in the
United States. At June 30, 2012, we had $200.0 million of
commercial paper outstanding, which we may refinance
on a periodic basis as it matures at then-prevailing market
interest rates. At August 13, 2012, we had $200.0 million
of commercial paper outstanding. We also have $164.9
million in additional uncommitted credit facilities, of
which $7.1 million was used as of June 30, 2012. We do
not anticipate difficulties in securing this form of working
capital financing.
We have a $1.0 billion senior unsecured revolving
credit facility that expires on July 14, 2015 (the “Facility”).
The Facility may be used to provide credit support for our
commercial paper program and for general corporate
purposes. Up to the equivalent of $250 million of the
Facility is available for multi-currency loans. The interest
rate on borrowings under the Facility is based on LIBOR
or on the higher of prime, which is the rate of interest
publicly announced by the administrative agent, or ½%
plus the Federal funds rate. We incurred costs of approxi-
mately $1 million to establish the Facility which are being
amortized over the term of the Facility. The Facility has an
annual fee of $0.7 million, payable quarterly, based on our
current credit ratings. The Facility also contains a cross-
default provision 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. At
June 30, 2012, no borrowings were outstanding under
this agreement.
We have a fixed rate promissory note agreement with a
financial 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 fixed
rate determined by the lender and agreed to by us at the
date of each borrowing. At June 30, 2012, 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
financial institution pursuant to which our subsidiary in
Turkey may be credited to satisfy outstanding negative
daily balances arising from its business operations. In June
2012, we reduced the maximum total available balance
outstanding of the overdraft borrowing agreement from
40.0 million Turkish lira ($22.0 million at the exchange
rate at June 30, 2012) to 25.0 million Turkish lira ($13.8
million at the exchange rate at June 30, 2012). The interest
Debt
At June 30, 2012, our outstanding borrowings were as follows:
Long-term Debt Current Debt Total Debt
($ in millions)
6.00% Senior Notes, due May 15, 2037 (“2037 Senior Notes”)(1) (4) $ 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) (4) 334.9 — 334.9
7.75% Senior Notes, due November 1, 2013 (“2013 Senior Notes”)(4) 230.1 — 230.1
Commercial paper maturing through July 2012 (0.18% average interest rate) — 200.0 200.0
Other borrowings 10.0 19.0 29.0
$1,069.1 $219.0 $1,288.1
(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 $0.2 million and a $35.1 million adjustment to reflect the fair value of terminated
interest rate swaps.
(4) As of June 30, 2012, we were in compliance with all restrictive covenants, including limitations on indebtedness and liens, and expect continued
compliance.