Estee Lauder 2010 Annual Report Download - page 125

124 THE EST{E LAUDER COMPANIES INC.
Prescriptives brand, which was completed during
the fiscal year. In connection with these activities, the
Company recorded a reserve for product returns, wrote
off inventory and incurred costs to reduce workforce
and other exit costs. Also during fiscal 2010, the
Company approved a restructuring initiative that
included the reformulation of Ojon brand products.
•฀ ฀฀Outsourcing — In order to balance the growing need for
information technology support with the Company’s
efforts to provide the most efficient and cost effective
solutions, the Company continued the outsourcing
of certain information technology processes. The
Company incurred costs to transition services to an
outsource provider.
•฀ ฀Resize and Reorganize the Organization—The Company
continued the realignment and optimization of its orga-
nization to better leverage scale, improve productivity
and reduce complexity in each region and across vari-
ous functions. This included reduction of the workforce
which occurred through the consolidation of certain
functions through a combination of normal attrition and
job eliminations.
•฀ Turnaround or Exit Unprofitable Operations—To improve
the profitability in certain of the Company’s brands and
regions, the Company has selectively exited certain
channels of distribution, categories and markets. During
the first quarter of fiscal 2010, the Company approved
the exit from the global wholesale distribution of the
The following table presents aggregate restructuring charges related to the Program:
Employee-Related Asset Contract
Costs Write-offs Terminations Other Exit Costs Total
(In millions)
Fiscal 2009 $60.9 $ 4.2 $3.4 $1.8 $ 70.3
Fiscal 2010 29.3 11.0 2.3 6.2 48.8
Charges recorded through
June 30, 2010 $90.2 $15.2 $5.7 $8.0 $119.1
The total amount of restructuring charges expected to be incurred (including those recorded as set forth in the table
above), plus other initiatives approved through June 30, 2010, include approximately $111 million to $112 million for
employee-related costs, approximately $18 million in asset write-offs, which includes $8.8 million related to the impair-
ment of other intangible assets, and approximately $23 million of contract terminations and other exit costs.
The following table presents accrued restructuring and the related activity under the Program:
Employee-Related Asset Contract
Costs Write-offs Terminations Other Exit Costs Total
(In millions)
Charges $ 60.9 $ 4.2 $ 3.4 $ 1.8 $ 70.3
Cash payments (7.5) — (0.5) (1.6) (9.6)
Non-cash write-offs — (4.2) — — (4.2)
Translation adjustments 0.6 — — — 0.6
Other adjustments (2.4) — — — (2.4)
Balance at June 30, 2009 51.6 — 2.9 0.2 54.7
Charges 29.3 11.0 2.3 6.2 48.8
Cash payments (49.5) — (5.1) (6.0) (60.6)
Non-cash write-offs — (11.0) — — (11.0)
Translation adjustments (0.8) — — — (0.8)
Balance at June 30, 2010 $ 30.6 $— $ 0.1 $ 0.4 $ 31.1
Accrued restructuring charges at June 30, 2010 are
expected to result in cash expenditures funded from cash
provided by operations of approximately $25 million and
$6 million in fiscal 2011 and 2012, respectively.
The Company recorded other special charges in con-
nection with the implementation of the Program for the
years ended June 30, 2010 and 2009 of $12.3 million and
$10.1 million, respectively, related to consulting, other
professional services, and accelerated depreciation. The
total amount of other special charges expected to be
incurred to implement these initiatives, including those
recorded through June 30, 2010 plus other initiatives
approved through June 30, 2010 is approximately $41
million. For the year ended June 30, 2010, and primarily
related to the exit from the global wholesale distribution
of Prescriptives products, the Company recorded $15.7