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64 THE EST{E LAUDER COMPANIES INC.
notes through one of our subsidiaries in Europe. The inter-
est 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, 2014, no borrow-
ings were outstanding under this agreement. Debt
issuance costs incurred related to this agreement were
de minimis.
Total debt as a percent of total capitalization (excluding
noncontrolling interests) decreased to 26% at June 30,
2014 from 29% at June 30, 2013.
Cash Flows
Net cash provided by operating activities was $1,535.2
million, $1,226.3 million and $1,126.7 million in fiscal
2014, 2013 and 2012, respectively. The increase in cash
flows provided by operating activities as compared with
fiscal 2013 was primarily driven by an increase in net earn-
ings, an increase in accrued income taxes as a result of
the level and timing of tax payments and an increase in
accounts payable, primarily due to the timing of pay-
ments. These changes were partially offset by an increase
in accounts receivable, which primarily reflected acceler-
ated orders in connection with our July 2014 SMI imple-
mentation. Cash flows provided by operating activities
increased in fiscal 2013 as compared with fiscal 2012
primarily driven by an increase in net earnings, a decrease
in pension and post-retirement benefit contributions and
a favorable change in accounts receivable due to the tim-
ing of shipments and collections. These improvements
were partially offset by an increase in the levels of inven-
tory, primarily to maintain acceptable service levels in line
with forecasted sales activity, as well as for the remaining
We have a $1.0 billion commercial paper program under
which we may issue commercial paper in the United
States. As of June 30, 2014, we had no commercial paper
outstanding.
In July 2014, we replaced our undrawn $1.0 billion
unsecured revolving credit facility that was set to expire
on July 14, 2015 (the “Prior Facility”), with a new $1.0 bil-
lion senior unsecured revolving credit facility that expires
on July 15, 2019, unless extended for up to two additional
years in accordance with the terms set forth in the agree-
ment (the “New Facility”). At June 30, 2014, no borrow-
ings were outstanding under the Prior Facility. The New
Facility may be used for general corporate purposes. Up
to the equivalent of $350 million of the New Facility is
available for multi-currency loans. The interest rate on bor-
rowings 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 ½% plus the
Federal funds rate. We incurred costs of approximately
$1.0 million to establish the New Facility, which costs will
be amortized over the term of the facility. The New Facil-
ity has an annual fee of $0.6 million, payable quarterly,
based on our current credit ratings. The New Facility also
contains a cross-default provision whereby a failure to pay
other material financial obligations in excess of $150.0
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.
We have a fixed rate promissory note agreement with
a financial institution pursuant to which we may borrow
up to $150.0 million in the form of loan participation
Debt
At June 30, 2014, our outstanding borrowings were as follows:
Long-term Debt Current Debt Total Debt
($ in millions)
3.70% Senior Notes, due August 15, 2042 (“2042 Senior Notes”)(1), (6) $ 249.0 $ — $ 249.0
6.00% Senior Notes, due May 15, 2037 (“2037 Senior Notes”)(2), (6) 296.6 — 296.6
5.75% Senior Notes, due October 15, 2033 (“2033 Senior Notes”)(3) 197.8 — 197.8
2.35% Senior Notes, due August 15, 2022 (“2022 Senior Notes”)(4), (6) 249.8 — 249.8
5.55% Senior Notes, due May 15, 2017 (“2017 Senior Notes”)(5), (6) 321.1 — 321.1
Other borrowings 10.4 18.4 28.8
$1,324.7 $18.4 $1,343.1
(1) Consists of $250.0 million principal and unamortized debt discount of $1.0 million.
(2) Consists of $300.0 million principal and unamortized debt discount of $3.4 million.
(3) Consists of $200.0 million principal and unamortized debt discount of $2.2 million.
(4) Consists of $250.0 million principal and unamortized debt discount of $0.2 million.
(5) Consists of $300.0 million principal, unamortized debt discount of $0.2 million and a $21.3 million adjustment to reflect the termination value of
interest rate swaps.
(6) The Senior Notes contain certain customary incurrence–based covenants, including limitations on indebtedness secured by liens.