Estee Lauder 2012 Annual Report Download - page 120

118 THE EST{E LAUDER COMPANIES INC.
rate applicable to each such credit shall be up to a maxi-
mum of 175 basis points per annum above the spot rate
charged by the lender or the lender’s floating call rate
agreed to by us at each borrowing. There were no debt
issuance costs incurred related to this agreement. The
outstanding balance at June 30, 2012 was 12.9 million
Turkish lira ($7.1 million at the exchange rate at June 30,
2012) and is classified as short-term debt in our consoli-
dated balance sheet.
Total debt as a percent of total capitalization (exclud-
ing noncontrolling interests) was 32% at June 30, 2012
and June 30, 2011.
Cash Flows
Net cash provided by operating activities was $1,126.7
million, $1,027.0 million and $956.7 million in fiscal 2012,
2011 and 2010, respectively. The increase in cash flows
from operating activities as compared with fiscal 2011
was primarily driven by an increase in net earnings, favor-
able levels of accounts payable, primarily due to the tim-
ing of payments, and a decrease in the levels of inventory.
These improvements were partially offset by the change
in other liabilities, primarily due to the timing of payments
and costs related to employee compensation, advertising,
merchandising and sampling, and payroll and other taxes,
as well as an increase in accounts receivable balances
primarily due to the timing of shipments. Cash flows from
operating activities increased in fiscal 2011 as compared
with fiscal 2010, primarily reflecting the increase in net
earnings and the timing and level of accrued income taxes.
This increase was partially offset by an increase in accounts
receivable balances due to timing of collections, as well as
lower levels of accounts payable due to the timing of pay-
ments and an increase in inventory in line with forecasted
sales activity and to ensure acceptable levels of service.
Net cash used for investing activities was $428.3 mil-
lion, $606.9 million and $281.4 million in fiscal 2012, 2011
and 2010, respectively. The decrease in cash flows used
for investing activities as compared with fiscal 2011 pri-
marily reflected a favorable comparison with the fiscal
2011 acquisition of Smashbox Cosmetics, partially offset
by an increase in capital expenditures for counters and
leasehold improvements. The increase in cash flows used
for investing activities during fiscal 2011 as compared
with fiscal 2010 primarily reflected the fiscal 2011 acquisi-
tion of Smashbox Cosmetics, as well as higher cash pay-
ments for counters and computer hardware and software.
Net cash used for financing activities was $585.1 mil-
lion, $313.1 million and $406.1 million in fiscal 2012, 2011
and 2010, respectively. The change in net cash used for
financing activities as compared with fiscal 2011 primarily
reflected an increase in treasury stock purchases, lower
net proceeds from employee stock transactions and an
increase in the payment of dividends during the current
year as a result of an increase in the annual dividend rate.
The repayment of the 2012 Senior Notes during the cur-
rent year was offset by proceeds from the issuance of
short-term commercial paper. Subsequent to June 30,
2012, we purchased approximately 2.0 million additional
shares of Class A Common Stock for $104.2 million pursu-
ant to our share repurchase program. The decrease in net
cash flows used for financing activities in fiscal 2011
reflected a favorable comparison with fiscal 2010 which
included the partial redemption of the 2012 and 2013
Senior Notes. This favorable comparison was offset by an
increase in treasury stock purchases and an increase in
the common stock dividends during fiscal 2011.
Dividends
On November 3, 2011, our Board of Directors declared a
two-for-one stock split on our Class A and Class B Com-
mon Stock to be effected in the form of a stock dividend.
As a result of this action, one additional share was issued
on January 20, 2012 for each share held by stockholders
of record at the close of business on January 4, 2012. The
stock split did not have an impact on our consolidated
financial position or results of operations. Share and per
share amounts have been restated for the stock split.
During the current year, we paid dividends on Class A
and Class B Common Stock of $.525 per share (or an
aggregate of $204.0 million) as compared with $.375 per
share (or an aggregate of $148.0 million) in the prior year.
Pension and Post-retirement Plan Funding
Several factors influence the annual funding requirements
for our pension plans. For the U.S. Qualified Plan, our
funding policy consists of annual contributions at a rate
that provides for future plan benefits and maintains appro-
priate funded percentages. Such contribution is not less
than the minimum required by the Employee Retirement
Income Security Act of 1974, as amended, (“ERISA”) and
subsequent pension legislation, and is not more than the
maximum amount deductible for income tax purposes.
For each international plan, our funding policies are deter-
mined by local laws and regulations. In addition, amounts
necessary to fund future obligations under these plans
could vary depending on estimated assumptions as
detailed in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations — Critical
Accounting Policies and Estimates.” The effect of our pen-
sion plan funding on future operating results will depend
on economic conditions, employee demographics,
mor tality rates, the number of participants electing to take
lump-sum distributions, investment performance and
funding decisions.