Estee Lauder 2002 Annual Report Download - page 65

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THEEST{E LAUDER COMPANIES INC.
The restructuring charge was recorded in other accrued
liabilities or as a reduction of fixed assets. During fiscal
2001, $0.7 million was paid and through June 30, 2002
an additional $26.7 million was paid. As of June 30, 2002,
the remaining obligation was $7.1 million, the majority of
which the Company expects to settle through the end of
fiscal 2003 with remaining payments made ratably
through fiscal 2004.
NOTE 6 – INCOME TAXES
The provision for income taxes is comprised of the
following:
YEAR ENDED JUNE 30 2002 2001 2000
(In millions)
Current:
Federal $ 40.7 $ 74.0 $ 93.9
Foreign 89.8 87.6 82.4
State and local 6.5 7.7 13.8
137.0 169.3 190.1
Deferred:
Federal (13.2) 3.7 (0.2)
Foreign (8.9) 0.5 (4.1)
State and local (0.5) 0.5 (1.2)
(22.6) 4.7 (5.5)
$114.4 $174.0 $184.6
Areconciliation between the provision for income taxes
computed by applying the statutory Federal income tax
rate to earnings before income taxes and minority interest
and the actual provision for income taxes is as follows:
YEAR ENDED JUNE 30 2002 2001 2000
(In millions)
Provision for income taxes
at statutory rate $116.1 $169.2 $174.5
Increase (decrease) due to:
State and local income taxes,
net of Federal tax benefit 3.9 5.3 8.2
Effect of foreign operations (0.9) (2.9) (11.7)
Domestic royalty expense
not deductible for U.S.
tax purposes —1.6 4.0
Other nondeductible expenses
3.2 3.8 3.8
Tax credits (2.1) ——
Other, net (5.8) (3.0) 5.8
Provision for income taxes $114.4 $174.0 $184.6
Effective tax rate 34.5% 36.0% 37.0%
Significant components of the Company’s deferred
income tax assets and liabilities as of June 30, 2002 and
2001 were as follows:
2002 2001
(In millions)
Deferred tax assets:
Deferred compensation and other
payroll related expenses $53.3 $ 47.7
Inventory obsolescence and other
inventory related reserves 58.5 54.1
Pension plan reserves 26.2 22.5
Postretirement benefit obligations 25.9 21.7
Various accruals not currently deductible 72.0 57.6
Net operating loss carryforwards 1.5 3.8
Other differences between tax and
financial statement values 9.4 5.7
246.8 213.1
Valuation allowance for deferred tax assets
(1.5) (3.8)
Total deferred tax assets 245.3 209.3
Deferred tax liabilities:
Depreciation and amortization (60.2) (54.1)
Other differences between tax and
financial statement values —(2.0)
Total deferred tax liabilities (60.2) (56.1)
Total net deferred tax assets $185.1 $153.2
64
Following is a summary of the charges as recorded in the consolidated statement of earnings for fiscal 2001:
Other Non-Recurring
Net Sales Cost of Sales Operating Expenses Expenses Total
(In millions)
jane $ 5.7 $ 1.5 $ 4.8 $ 4.1 $16.1
“tommy’s shops” 2.3 (0.4) 4.4 — 6.3
Information systems and
other assets — — 4.6 11.6 16.2
Global brand reorganization
—— 23.8 0.6 24.4
Total charge $ 8.0 $ 1.1 $37.6 $16.3 63.0
Tax effect (22.7)
Net charge $40.3
Restructuring