Obbligazione Estée Lauder Cos. Inc. 2% ( US29736RAN08 ) in USD

Estée Lauder Cos. Inc.

100 USD ▲

Stati Uniti

US29736RAN08 ( in USD )

2% per anno ( pagato 2 volte l'anno)

01/12/2024 - Obbligazione è scaduto

Prospetto opuscolo dell'obbligazione Estée Lauder Co Inc US29736RAN08 in USD 2%, scaduta

2 000 USD

500 000 000 USD

29736RAN0

A+ ( Upper medium grade - Investment-grade )

A1 ( Upper medium grade - Investment-grade )

Estée Lauder Companies Inc. è una multinazionale americana leader nel settore dei beni di lusso, specializzata nella produzione e distribuzione di profumi, cosmetici e prodotti per la cura della pelle.

Il presente articolo finanziario analizza l'obbligazione con codice ISIN US29736RAN08 e CUSIP 29736RAN0, emessa negli Stati Uniti da Estée Lauder Companies Inc., un'azienda leader globale nel settore della bellezza di prestigio che produce, commercializza e vende prodotti per la cura della pelle, il trucco, le fragranze e la cura dei capelli, possedendo un portafoglio diversificato di marchi di fama mondiale distribuiti in circa 150 paesi e territori, e la cui forte posizione di mercato e le linee di prodotti diversificate contribuiscono alla sua solida salute finanziaria; quest'obbligazione, denominata in USD, con un tasso d'interesse del 2% e pagamenti semestrali, faceva parte di un'emissione totale di 500.000.000 USD, con una dimensione minima di acquisto di 2.000 USD, ed era quotata al 100% del suo valore nominale sul mercato, essendo giunta a scadenza e rimborsata il 1° dicembre 2024, data che ne ha sancito la conclusione del ciclo di vita finanziario, ed era stata oggetto di un'attenta valutazione da parte delle agenzie di rating, ottenendo un rating A+ da Standard & Poor's e un rating A1 da Moody's, indicatori della sua elevata qualità creditizia.

424B2 1 a2240133z424b2.htm 424B2
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TABLE OF CONTENTS Prospectus Supplement
Table of Contents
CALCULATION OF REGISTRATION FEE

Proposed Maximum
Title of Each Class of Securities
Amount to be
Proposed Maximum
Aggregate Offering
Amount of
to be Registered

Registered

Offering Price

Price(1)

Registration Fee

2.000% Senior Notes due
2024

$500,000,000

99.421%

$497,105,000

$64,524.23

2.375% Senior Notes due
2029

$650,000,000

99.046%

$643,799,000

$83,565.11

3.125% Senior Notes due
2049

$650,000,000

98.769%

$641,998,500

$83,331.41

Total

$231,420.75

(1)
Calculated pursuant to Rule 457(a) based on the Amount to be Registered multiplied by Maximum Offering Price.
Table of Contents
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-225076
PROSPECTUS SUPPLEMENT
(To prospectus dated May 21, 2018)
$1,800,000,000
The Estée Lauder Companies Inc.
$500,000,000 2.000% Senior Notes due 2024
$650,000,000 2.375% Senior Notes due 2029
$650,000,000 3.125% Senior Notes due 2049
We are offering $500,000,000 aggregate principal amount of our 2.000% senior notes due 2024 (the "2024 notes"), $650,000,000 aggregate
principal amount of our 2.375% senior notes due 2029 (the "2029 notes") and $650,000,000 aggregate principal amount of our 3.125% senior notes due
2049 (the "2049 notes" and, together with the 2024 notes and the 2029 notes, the "notes").
The 2024 notes will bear interest at the rate of 2.000% per year, the 2029 notes will bear interest at the rate of 2.375% per year and the 2049 notes
will bear interest at the rate of 3.125% per year. Interest on the notes will be payable on June 1 and December 1 of each year, beginning on June 1, 2020.
The 2024 notes will mature on December 1, 2024, the 2029 notes will mature on December 1, 2029 and the 2049 notes will mature on December 1,
2049.
We may redeem the notes of each series in whole or in part at any time or from time to time at the applicable redemption prices discussed under
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the caption "Description of the Senior Notes--Optional Redemption."
The notes will be senior unsecured obligations of our company and will rank equally in right of payment with all of our other unsecured and
unsubordinated obligations from time to time outstanding.
Investing in the notes involves risks. See "Risk Factors" beginning on page S-10.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

Per 2024
Per 2029
Per 2049

Note

Total

Note

Total

Note

Total

Public Offering Price(1)

99.421%

$497,105,000
99.046%

$643,799,000
98.769%

$641,998,500

Underwriting Discount

0.350%

$1,750,000

0.450%

$2,925,000

0.875%

$5,687,500

Proceeds to The Estée
Lauder Companies Inc.
(before expenses)

99.071%

$495,355,000
98.596%

$640,874,000
97.894%

$636,311,000

(1)
Plus accrued interest, if any, from November 21, 2019 to the date of delivery, if settlement occurs after that date.
The notes will be ready for delivery in book-entry form only through The Depository Trust Company and its participants, including Clearstream
Banking société anonyme and Euroclear Bank S.A./N.V., on or about November 21, 2019.
Joint Book-Running Managers
BofA Securities

Citigroup

J.P. Morgan
BNP PARIBAS

MUFG
Co-Managers
Goldman Sachs & Co. LLC
HSBC

ICBC Standard Bank
RBC Capital Markets

SOCIETE GENERALE
US Bancorp
BBVA

Loop Capital Markets
Siebert Williams Shank

November 19, 2019
Table of Contents
You should rely only on the information contained in or incorporated by reference in this prospectus supplement, the accompanying
prospectus and any free writing prospectus we may file relating to this offering. We have not, and the underwriters have not, authorized
anyone to provide you with different information. We are not, and the underwriters are not, making an offer of these securities in any
jurisdiction where the offer is not permitted. You should not assume that the information contained or incorporated by reference in this
prospectus supplement, the accompanying prospectus or any free writing prospectus relating to this offering is accurate as of any date other
than the date on the front of those documents.
TABLE OF CONTENTS
Prospectus Supplement

Page

Information About This Prospectus Supplement
S-1
Where You Can Find More Information
S-1
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Cautionary Note Regarding Forward-Looking Information
S-2
Summary
S-4
Risk Factors
S-10
Use of Proceeds
S-12
Capitalization
S-13
Description of the Senior Notes
S-14
Book-Entry Issuance
S-22
Material U.S. Federal Income Tax Considerations for Non-U.S. Holders
S-26
Underwriting
S-29
Legal Matters
S-35
Experts
S-35

Prospectus

About This Prospectus

1
Where You Can Find More Information

1
Incorporation By Reference

2
Cautionary Note Regarding Forward-Looking Information

3
The Company

5
Risk Factors

5
Use of Proceeds

5
Ratio of Earnings to Fixed Charges

6
Description of Securities

7
Legal Matters

13
Experts

13
S-i
Table of Contents
INFORMATION ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement is part of an automatic shelf registration statement on Form S-3 that we filed with the Securities and Exchange
Commission, or the SEC, as a "well-known seasoned issuer" as defined in Rule 405 under the Securities Act of 1933, as amended, or the Securities Act.
By using a shelf registration statement, we may sell, at any time and from time to time, in one or more offerings, the securities described in this
prospectus supplement and the accompanying prospectus. As allowed by the SEC rules, this prospectus supplement does not contain all of the
information included in the registration statement. For further information, we refer you to the registration statement, including its exhibits. Statements
contained in this prospectus supplement and the accompanying prospectus about the provisions or contents of any agreement or other document are not
necessarily complete. If the SEC's rules and regulations require that an agreement or document be filed as an exhibit to the registration statement, please
see that agreement or document for a complete description of these matters.
You should read this prospectus supplement, the accompanying prospectus and any free writing prospectus relating to this offering, together with
any additional information you may need to make your investment decision. You should also read and carefully consider the information in the
documents we have referred you to in "Where You Can Find More Information" below. Information incorporated by reference after the date of this
prospectus supplement is considered a part of this prospectus supplement and may add, update or change information contained in this prospectus
supplement. Any information in such subsequent filings that is inconsistent with this prospectus supplement will supersede the information in the
accompanying prospectus or any earlier prospectus supplement. You should rely only on the information incorporated by reference or provided in this
prospectus supplement, the accompanying prospectus and any free writing prospectus relating to this offering. You should not assume the information
in this prospectus supplement, the accompanying prospectus, any free writing prospectus or any document incorporated by reference herein or therein is
accurate as of any date other than the date on the front of those documents. We have not authorized anyone else to provide you with other information.
Unless otherwise indicated, references to "we," "us," "our," "the company" and "our company" are to The Estée Lauder Companies Inc. and its
subsidiaries.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over
the internet at the SEC's website at http://www.sec.gov. We have filed a registration statement and related exhibits with the SEC under the Securities
Act. The registration statement, of which this prospectus supplement is a part, contains additional information about us and the securities we may issue.
You may review a copy of the registration statement, the documents incorporated by reference therein and herein through the SEC's website listed
above.
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The SEC allows us to "incorporate by reference" information into this prospectus supplement, which means that we can disclose important
information to you by referring to those documents. We hereby "incorporate by reference" the documents listed below, which means that we are
disclosing important information to you by referring you to those documents. The information that we file later with the SEC will automatically update
and in some cases supersede this information. Specifically, we incorporate by reference the following documents or information filed with the SEC
(other than, in each case, documents or information deemed to have been furnished and not filed in accordance with
S-1
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SEC rules, including current reports on Form 8-K furnished under Item 2.02 and Item 7.01 (including any financial statements or exhibits relating
thereto furnished pursuant to Item 9.01)):
·
Our Annual Report on Form 10-K for the fiscal year ended June 30, 2019 (including the information in Part III incorporated by
reference from our Definitive Proxy Statement on Schedule 14A, filed on September 27, 2019);
·
Our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2019;
·
Our Current Reports on Form 8-K filed on August 19, 2019 (only Item 8.01), October 31, 2019 (only Item 8.01), November 18, 2019
and November 19, 2019; and
·
Future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), after the date of this prospectus supplement and before the termination of this offering.
Upon your oral or written request, we will provide you with a copy of any of these filings at no cost. Requests should be directed to Investor
Relations Department, The Estée Lauder Companies Inc., 767 Fifth Avenue, New York, New York 10153, Telephone No. 1-800-308-2334.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
We and our representatives from time to time make written or oral forward-looking statements, including statements contained in this prospectus
supplement and the documents we incorporate by reference in this prospectus supplement and other filings with the SEC, in our press releases and in
our reports to stockholders, which may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of
1995. Such statements may address our expectations regarding sales, earnings or other future financial performance and liquidity, other performance
measures, product introductions, entry into new geographic regions, information technology initiatives, new methods of sale, our long-term strategy,
restructuring and other charges and resulting cost savings, and future operations or operating results. These statements may contain words like "expect,"
"will," "will likely result," "would," "believe," "estimate," "planned," "plans," "intends," "may," "should," "could," "anticipate," "estimate," "project,"
"projected," "forecast," and "forecasted" or similar expressions. Although we believe that our expectations are based on reasonable assumptions within
the bounds of our knowledge of our business and operations, actual results may differ materially from our expectations. Factors that could cause actual
results to differ from expectations include, without limitation:
(1) increased competitive activity from companies in the skin care, makeup, fragrance and hair care businesses;
(2) our ability to develop, produce and market new products on which future operating results may depend and to successfully address
challenges in our business;
(3) consolidations, restructurings, bankruptcies and reorganizations in the retail industry causing a decrease in the number of stores that
sell our products, an increase in the ownership concentration within the retail industry, ownership of retailers by our competitors or ownership of
competitors by our customers that are retailers and our inability to collect receivables;
(4) destocking and tighter working capital management by retailers;
(5) the success, or changes in timing or scope, of new product launches and the success, or changes in timing or scope, of advertising,
sampling and merchandising programs;
(6) shifts in the preferences of consumers as to where and how they shop;
S-2
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(7) social, political and economic risks to our foreign or domestic manufacturing, distribution and retail operations, including changes in
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foreign investment and trade policies and regulations of the host countries and of the United States;
(8) changes in the laws, regulations and policies (including the interpretations and enforcement thereof) that affect, or will affect, our
business, including those relating to our products or distribution networks, changes in accounting standards, tax laws and regulations,
environmental or climate change laws, regulations or accords, trade rules and customs regulations, and the outcome and expense of legal or
regulatory proceedings, and any action we may take as a result;
(9) foreign currency fluctuations affecting our results of operations and the value of our foreign assets, the relative prices at which we and
our foreign competitors sell products in the same markets and our operating and manufacturing costs outside of the United States;
(10) changes in global or local conditions, including those due to the volatility in the global credit and equity markets, natural or man-made
disasters, real or perceived epidemics, or energy costs, that could affect consumer purchasing, the willingness or ability of consumers to travel
and/or purchase our products while traveling, the financial strength of our customers, suppliers or other contract counterparties, our operations,
the cost and availability of capital which we may need for new equipment, facilities or acquisitions, the returns that we are able to generate on
our pension assets and the resulting impact on funding obligations, the cost and availability of raw materials and the assumptions underlying our
critical accounting estimates;
(11) shipment delays, commodity pricing, depletion of inventory and increased production costs resulting from disruptions of operations at
any of the facilities that manufacture our products or at our distribution or inventory centers, including disruptions that may be caused by the
implementation of information technology initiatives, or by restructurings;
(12) real estate rates and availability, which may affect our ability to increase or maintain the number of retail locations at which we sell our
products and the costs associated with our other facilities;
(13) changes in product mix to products which are less profitable;
(14) our ability to acquire, develop or implement new information and distribution technologies and initiatives on a timely basis and within
our cost estimates and our ability to maintain continuous operations of such systems and the security of data and other information that may be
stored in such systems or other systems or media;
(15) our ability to capitalize on opportunities for improved efficiency, such as publicly-announced strategies and restructuring and cost-
savings initiatives, and to integrate acquired businesses and realize value therefrom;
(16) consequences attributable to local or international conflicts around the world, as well as from any terrorist action, retaliation and the
threat of further action or retaliation;
(17) the timing and impact of acquisitions, investments and divestitures; and
(18) additional factors as described in our filings with the SEC, including our Annual Report on Form 10-K for the fiscal year ended
June 30, 2019.
Forward-looking statements involve risks, uncertainties and assumptions. We therefore caution you against relying on any forward-looking
statements. We assume no responsibility to update forward-looking statements made herein or otherwise.
S-3
Table of Contents
SUMMARY
This summary highlights certain information concerning our business and this offering. It does not contain all of the information that may be
important to you and to your investment decision. The following summary is qualified in its entirety by the more detailed information and financial
statements and notes thereto in this prospectus supplement and the accompanying prospectus and the documents incorporated by reference herein and
therein. You should carefully read this entire prospectus supplement and should consider, among other things, the matters set forth and incorporated by
reference in "Risk Factors" before deciding to invest in the notes.
The Company
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The Estée Lauder Companies Inc., founded in 1946 by Estée and Joseph Lauder, is one of the world's leading manufacturers and marketers of
quality skin care, makeup, fragrance and hair care products. Our products are sold in approximately 150 countries and territories under a number of
well-known brand names including: Estée Lauder, Clinique, Origins, M·A·C, Bobbi Brown, La Mer, Jo Malone London, Aveda and Too Faced. We are
also the global licensee for fragrances, cosmetics and/or related products sold under various designer brand names. Each brand is distinctly positioned
within the market for cosmetics and other beauty products.
We believe we are a leader in the beauty industry due to the global recognition of our brand names, our leadership in product innovation, our strong
position in key geographic markets and the consistently high quality of our products and "High-Touch" services. We sell our prestige products
principally through limited distribution channels to complement the images associated with our brands. These channels consist primarily of department
stores, specialty-multi retailers, upscale perfumeries and pharmacies and prestige salons and spas. In addition, our products are sold in our own and
authorized freestanding stores, our own and authorized retailer websites, third-party online malls, stores in airports and on cruise ships, in-flight, and
duty-free shops. We believe that our strategy of pursuing selective distribution strengthens our relationships with retailers and consumers, enables our
brands to be among the best selling product lines at the stores and online, and heightens the aspirational quality of our brands.
We have been controlled by the Lauder family since the founding of our company. Members of the Lauder family, some of whom are directors,
executive officers and/or employees, beneficially own, directly or indirectly, as of October 24, 2019, shares of Class A Common Stock and Class B
Common Stock having approximately 86% of the outstanding voting power of the Common Stock.
S-4
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The Offering
The summary below describes the principal terms of the notes. Certain of the terms and conditions described below are subject to important
limitations and exceptions. The sections entitled "Description of the Senior Notes" of this prospectus supplement and "Description of Securities" in the
accompanying prospectus contain more detailed descriptions of the terms and conditions of the notes and the indenture governing the notes. In this
subsection, "we," "us" and "our" refer only to The Estée Lauder Companies Inc. and not to any of our subsidiaries.
Issuer
The Estée Lauder Companies Inc.

Notes Offered
$1,800,000,000 aggregate principal amount of notes consisting of:

· $500,000,000 aggregate principal amount of 2.000% Senior Notes due 2024;

· $650,000,000 aggregate principal amount of 2.375% Senior Notes due 2029; and

· $650,000,000 aggregate principal amount of 3.125% Senior Notes due 2049.

Maturity Dates
December 1, 2024 for the 2024 notes;

December 1, 2029 for the 2029 notes; and

December 1, 2049 for the 2049 notes.

Interest Rates
We will pay interest on the 2024 notes at an annual rate of 2.000%.

We will pay interest on the 2029 notes at an annual rate of 2.375%.

We will pay interest on the 2049 notes at an annual rate of 3.125%.

Interest Payment Dates
We will make interest payments on the notes semi-annually in cash, in arrears, on June 1 and December 1
of each year, commencing June 1, 2020 and ending on the maturity date for each series of notes. Interest will
accrue from the issue date of the notes.

Ranking
The notes will be our senior unsecured obligations and will rank equally in right of payment with all of our
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other unsecured and unsubordinated obligations from time to time outstanding. The notes will be senior in
right of payment to any subordinated indebtedness which states in its terms that it is subordinate to our
senior debt securities.
S-5
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Optional
We may redeem the notes of each series, in whole or in part, at our option at any time prior to (i) November 1, 2024 (one month prior
Redemption to the maturity date of the 2024 notes) with respect to the 2024 notes; (ii) September 1, 2029 (three months prior to the maturity date
of the 2029 notes) with respect to the 2029 notes; and (iii) June 1, 2049 (six months prior to the maturity date of the 2049 notes) with
respect to the 2049 notes, in each case, at a redemption price equal to the applicable Make-Whole Price as described in "Description of
the Senior Notes--Optional Redemption."

In addition, we may redeem the notes of each series, in whole or in part, at our option at any time on or after (i) November 1, 2024
(one month prior to the maturity date of the 2024 notes) with respect to the 2024 notes; (ii) September 1, 2029 (three months prior to
the maturity date of the 2029 notes) with respect to the 2029 notes; and (iii) June 1, 2049 (six months prior to the maturity date of the
2049 notes) with respect to the 2049 notes, in each case, at a redemption price equal to 100% of the principal amount of the notes of
such series to be redeemed, plus accrued and unpaid interest thereon to, but excluding, the redemption date.

Sinking Fund
None.

Certain
The indenture governing the notes contains certain covenants that, among other things, limit our and our subsidiaries' ability, subject
Covenants
to certain exceptions, to:

· incur debt secured by liens;

· engage in sale/leaseback transactions;

· merge or consolidate with another entity; or

· sell or convey substantially all of our assets to another person.

See "Description of the Senior Notes--Certain Covenants" herein and "Description of Securities--Merger, Consolidation and Sale of
Assets" in the accompanying prospectus.

Purchase of
Notes Upon
a Change of If we experience a Change of Control (defined herein) and the notes of the applicable series are rated below Investment Grade (defined
Control
herein) by S&P Global Ratings, a division of S&P Global Inc. and Moody's Investors Service, Inc., we will offer to repurchase all of
Repurchase the notes of such series at a price equal to 101% of the principal amount plus accrued and unpaid interest to the repurchase date. See
Event
"Description of the Senior Notes--Certain Covenants--Purchase of Notes Upon a Change of Control Repurchase Event."
S-6
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Form of Notes
The notes will be issued in book-entry form and will be represented by global notes, deposited with a
custodian for and registered in the name of a nominee of The Depository Trust Company. The notes will be
issued only in denominations of $2,000 and in integral multiples of $1,000 in excess thereof.

Further Issues
We may issue from time to time, without giving notice to or seeking the consent of the holders of any series
of notes, additional notes having the same ranking and the same interest rate, maturity and other terms as any
such series of the notes offered hereby, except for the public offering price, the issue date and, potentially,
the initial interest payment date. Any additional notes having such similar terms, together with the
applicable series of notes being offered hereby, will constitute a single series of debt securities for all
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purposes under the indenture; provided that if such additional notes are not fungible with the applicable
series of notes offered hereby for U.S. federal income tax purposes, such additional notes will have a
separate CUSIP number.

Use of Proceeds
We intend to use the net proceeds of this offering for general corporate purposes, which may include
funding our recently announced acquisition of Have & Be Co. Ltd. and refinancing our $500 million
aggregate principal amount of 1.800% Senior Notes due February 7, 2020. Pending any specific application,
we may initially invest funds in short-term marketable securities. See "Use of Proceeds."

No Public Market
We have not applied and do not intend to apply for listing of the notes on any securities exchange or any
automated quotation system.

Governing Law
State of New York.

Risk Factors
See "Risk Factors" and the other information in this prospectus supplement and in our Annual Report on
Form 10-K for the fiscal year ended June 30, 2019.
For more information about the notes, see "Description of the Senior Notes."
S-7
Table of Contents
Summary Historical Consolidated Financial Data
The following information has been derived from our consolidated financial statements as of and for the three-month periods ended September 30,
2019 and 2018 and as of and for each of the years in the three-year period ended June 30, 2019. You should read this information along with our
consolidated financial statements and the related notes incorporated in this prospectus supplement and the accompanying prospectus by reference and
"Management's Discussion and Analysis of Financial Condition and Results of Operations" incorporated in this prospectus supplement by reference. See
"Where You Can Find More Information." The results of interim periods are not necessarily indicative of results that may be expected for the full year.
Three Months Ended

September 30,

Year Ended June 30,

2019

2018

2019

2018

2017

(Unaudited)

(Unaudited)

(In millions)

Consolidated Statement of Earnings Data:

Net sales(1)
$
3,895 $
3,524 $ 14,863 $ 13,683 $ 11,824
Net earnings attributable to The Estée Lauder
Companies Inc.(1)(2)(3)(4)(5)(6)

595
500
1,785
1,108
1,249
Balance Sheet Data(7):

Total assets(3)(6)
$
15,431 $
12,543 $ 13,156 $ 12,567 $ 11,568
Total debt(2)

3,415
3,544
3,412
3,544
3,572
(1)
Results include charges associated with restructuring and other activities of $21 million and $37 million, after tax, in the three-
month periods ended September 30, 2019 and 2018, respectively, and $190 million, $193 million and $143 million, after tax, in
fiscal 2019, 2018 and 2017, respectively.
(2)
In February 2017, we issued 1.800% Senior Notes due February 7, 2020, 3.150% Senior Notes due March 15, 2027 and 4.150%
Senior Notes due March 15, 2047 in a public offering, each with an aggregate principal amount of $500 million. We used the net
proceeds of the February 2017 offering for general corporate purposes, including to repay outstanding commercial paper as it
matured and to refinance our $300 million aggregate principal amount of 5.550% Senior Notes due May 15, 2017.
(3)
Fiscal 2019 and 2017 results included $85 million and $23 million, after tax, related to goodwill and other intangible asset
impairments, respectively.
(4)
Results include gain associated with changes in fair value of contingent consideration related to certain of our acquisitions of
$9 million, after tax, in the three-month period ended September 30, 2018, and $31 million, $33 million and $44 million, after
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tax, in fiscal 2019, 2018 and 2017, respectively.
(5)
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and
Jobs Act (the "TCJA"), which, among other things, lowered the U.S. corporate statutory income tax rate and established a
modified territorial system requiring a mandatory deemed repatriation tax on undistributed earnings of foreign subsidiaries (the
"Transition Tax"). See Item 8. Financial Statements and Supplementary Data--Note 8--Income Taxes in our Annual Report on
Form 10-K for the fiscal year ended June 30, 2019 for further discussion relating to the TCJA. Fiscal 2019 results reflect credits
(charges) to adjust the TCJA provisional amounts recorded in fiscal 2018 relating to the Transition Tax, the remeasurement of
U.S. net deferred tax assets and the foreign withholding taxes recorded in connection with the reversal of its indefinite
reinvestment assertion related to certain foreign earnings of $12 million,
S-8
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$(8) million and $(9) million, respectively. Fiscal 2018 results reflect impacts and charges resulting from the TCJA, including the
Transition Tax, the remeasurement of U.S. net deferred tax assets and the establishment of a net deferred tax liability related to
foreign withholding taxes on certain foreign earnings of $(351) million, $(53) million and $(46) million, respectively. Fiscal 2017
results include $75 million related to the reversal of a deferred tax asset valuation allowance. The deferred tax asset and
associated valuation allowance related to the accumulated carryforward of excess advertising and promotional expenses. In the
fourth quarter of fiscal 2017, a favorable change to the tax law in China was enacted that expanded the corporate income tax
deduction allowance for advertising and promotional expenses, resulting in this change in realizability of the asset.
(6)
Fiscal 2019 results include $57 million, after tax, related to a gain on liquidation of an investment in a foreign subsidiary, net.
(7)
During the first quarter of fiscal 2020, we adopted FASB Accounting Standards Codification ("ASC") Topic 842--Leases ("ASC
842") using the modified retrospective transition approach permitted under the new standard for leases that existed at July 1,
2019 and, accordingly, the prior comparative periods were not restated. The adoption of this standard impacted our consolidated
balance sheet due to the recognition of right-of-use assets and associated lease liabilities related to operating leases as compared
to the previous accounting. The accounting for finance leases under ASC 842 is consistent with the prior accounting for capital
leases. The impact of the adoption of this standard on our consolidated statement of earnings and consolidated statement of cash
flows was not material.
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RISK FACTORS
Before you decide to invest in the notes, you should consider the factors set forth below as well as the risk factors discussed in our Annual Report
on Form 10-K for the fiscal year ended June 30, 2019. See "Where You Can Find More Information."
A public trading market for the notes may not develop.
We have not applied and do not intend to apply for listing of the notes on any securities exchange or any automated quotation system. As a result, a
market for the notes may not develop or, if one does develop, it may not be sustained. If an active market for the notes fails to develop or cannot be
sustained, the trading price and liquidity of the notes could be adversely affected.
The market price of the notes may be volatile.
The market price of the notes will depend on many factors that may vary over time and some of which are beyond our control, including:
·
our financial condition, operating performance and future prospects;
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·
the amount of indebtedness we and our subsidiaries have outstanding;
·
our credit ratings with major credit rating agencies, including with respect to each series of the notes;
·
market interest rates;
·
economic, financial, geopolitical, regulatory and judicial events that affect us, the industries and markets in which we are doing business
and the financial markets generally;
·
the market for similar securities;
·
competition; and
·
general economic conditions.
As a result of these factors, you may only be able to sell your notes at a price below what you believe to be appropriate, including a price below the
price you paid for them.
An increase in interest rates could result in a decrease in the relative value of the notes.
In general, as market interest rates rise, notes bearing interest at a fixed rate generally decline in value because the premium, if any, over market
interest rates will decline. Consequently, if you purchase these notes and market interest rates increase, the market value of your notes may decline. We
cannot predict the future level of market interest rates.
Ratings of each series of the notes may not reflect all of the risks of an investment in the notes.
We expect that each series of the notes will be rated by two nationally recognized statistical rating organizations. The ratings of the notes will
primarily reflect our financial strength and will change in accordance with the rating of our financial strength. Any rating is not a recommendation to
purchase, sell, or hold the notes. These ratings do not correspond to market price or suitability for a particular investor. In addition, ratings at any time
may be lowered or withdrawn in their entirety.
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The notes do not restrict our ability to incur additional debt or prohibit us from taking other actions that could negatively impact holders of the
notes.
We are not restricted under the terms of the indenture governing the notes or the terms of the notes from incurring additional indebtedness or from
having our subsidiaries incur any debt.
In addition, the notes do not require us to achieve or maintain any minimum financial results relating to our financial position or results of
operations. Our ability to recapitalize, incur additional debt, secure existing or future debt, or take a number of other actions that are not limited by the
terms of the indenture and the notes, including repaying indebtedness or repurchasing common stock or paying dividends, could have the effect of
diminishing our ability to make payments on the notes when due.
Our financial performance and other factors could adversely impact our ability to make payments on the notes.
Our ability to make scheduled payments with respect to our indebtedness, including the notes, will depend on our financial and operating
performance, which, in turn, are subject to prevailing economic conditions and to financial, business, and other factors beyond our control.
The notes will be unsecured and subordinated to our secured debt to the extent of our assets securing such debt, which makes the claims of holders
of secured debt senior to the claims of holders of the notes.
The notes will be unsecured. As of September 30, 2019, we did not have any significant secured debt outstanding. The holders of any secured debt
that we may have may foreclose on our assets securing our debt, reducing the cash flow from the foreclosed property available for payment of
unsecured debt. The holders of any secured debt that we may have also would have priority over unsecured creditors in the event of our liquidation to
the extent of our assets securing such debt. In the event of our bankruptcy, liquidation, or similar proceeding, the holders of secured debt that we may
have would be entitled to proceed against their collateral, and that collateral will not be available for payment of unsecured debt, including the notes. As
a result, the notes will be effectively subordinated to any secured debt that we may have.
The notes are effectively subordinated to the liabilities of our subsidiaries, which may reduce our ability to use the assets of our subsidiaries to
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