Estee Lauder 2010 Annual Report Download - page 129

128 THE EST{E LAUDER COMPANIES INC.
The tax years subject to examination vary depending
on the tax jurisdiction. As of June 30, 2010, the following
tax years remain subject to examination by the major tax
jurisdictions indicated:
Major Jurisdiction Open Fiscal Years
Belgium 2006–2010
Canada 2001–2010
France 2006–2010
Germany 1999–2002, 2004–2010
Japan 2006–2010
Korea 2009–2010
Spain 1999–2002, 2005–2010
Switzerland 2006–2010
United Kingdom 2009–2010
United States 2006–2010
State of California 2002–2010
State of Minnesota 2001–2010
State of New York 2007–2010
The Company is also subject to income tax examinations
in numerous other state, local and foreign jurisdictions.
The Company believes that its tax reserves are adequate
for all years subject to examination.
NOTE 9 — OTHER ACCRUED LIABILITIES
Other accrued liabilities consist of the following:
JUNE 30 2010 2009
(In millions)
Advertising, merchandising
and sampling $ 373.5 $ 321.1
Employee compensation 366.3 280.8
Payroll and other taxes 103.6 94.8
Restructuring 25.4 48.2
Other 249.2 317.5
$1,118.0 $1,062.4
2010
$ 373.5
366.3
103.6
25.4
249.2
$1,118.0
On July 18, 2005, the final assessment made by the
Chief Tax Inspector was received, confirming the reassess-
ment made by the tax auditors. During fiscal 2006,
an appeal against this final assessment was filed with
the Madrid Regional Economic Administrative Tribunal
(“TEAR”). In view of the TEAR’s silence, during fiscal 2007
the claim was presumed to be dismissed and an appeal was
filed against it with the Central Economic-Administrative
Tribunal (“TEAC”). During the fiscal 2008 fourth quarter,
the TEAC dismissed the claim and, on June 10, 2008, the
Company filed an appeal for judicial review with the
National Appellate Court. During fiscal 2009, the Com-
pany completed the appeal proceedings with the National
Appellate Court and, as of June 30, 2010, awaits the
court’s decision. While no assurance can be given as to
the outcome in respect of this assessment and pending
appeal in the Spanish courts, management believes
it is more-likely-than-not that the subsidiary will be
successful in its defense against the assessment and con-
tinues to measure the full amount of the tax benefit.
Accordingly, no tax reserve has been established for this
potential exposure.
Notwithstanding the pending appeal in the Spanish
courts, during the fourth quarter of fiscal 2010, the
Company reached a favorable tentative agreement with
the Spanish tax authority regarding an examination of the
fiscal 2005 through calendar year 2007 tax period.
During fiscal 2010, the Company concluded various
state, local and foreign income tax audits and exami-
nations while several other matters, including those
noted above, were initiated or remained pending. On the
basis of the information available in this regard as of
June 30, 2010, it is reasonably possible that the total
amount of unrecognized tax benefits could decrease in
a range of $45 million to $60 million within 12 months as a
result of projected resolutions of global tax examinations
and controversies and a potential lapse of the applicable
statutes of limitations.