Estee Lauder 2010 Annual Report Download - page 136

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THE EST{E LAUDER COMPANIES INC. 135
The following methods and assumptions were used to
estimate the fair value of the Company’s other classes of
financial instruments for which it is practicable to estimate
that value:
Cash and cash equivalents — The carrying amount approx-
imates fair value, primarily because of the short maturity
of cash equivalent instruments.
Available-for-sale securities — Available-for-sale securities
are generally comprised of mutual funds and are valued
using quoted market prices on an active exchange.
Available-for-sale securities are included in investments in
the accompanying consolidated balance sheets.
Foreign currency forward contracts — The fair values of the
Company’s foreign currency forward contracts were
determined using an industry-standard valuation model,
which is based on an income approach. The significant
observable inputs to the model, such as swap yield curves
and currency spot and forward rates, were obtained from
an independent pricing service. To determine the fair
value of contracts under the model, the difference
between the contract price and the current forward rate
was discounted using LIBOR for contracts with maturities
up to 12 months, and swap yield curves for contracts with
maturities greater than 12 months.
The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a
recurring basis as of June 30, 2010:
Level 1 Level 2 Level 3 Total
(In millions)
Assets:
Foreign currency forward contracts $— $19.1 $— $19.1
Interest rate swap contracts — 38.7 — 38.7
Available-for-sale securities 5.4 — — 5.4
Total $5.4 $57.8 $— $63.2
Liabilities:
Foreign currency forward contracts $— $12.5 $— $12.5
The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a
recurring basis as of June 30, 2009:
Level 1 Level 2 Level 3 Total
(In millions)
Assets:
Foreign currency forward contracts $— $16.7 $— $16.7
Interest rate swap contracts — 24.5 — 24.5
Available-for-sale securities 5.5 — — 5.5
Total $5.5 $41.2 $— $46.7
Liabilities:
Foreign currency forward contracts $— $26.2 $— $26.2
The following table presents the Company’s hierarchy as of June 30, 2010 for certain of its nonfinancial assets measured
at fair value on a nonrecurring basis due to changes in circumstances that triggered interim impairment reviews and
recoverability tests during fiscal 2010:
Impairment Carrying Value
charges June 30, 2010 Level 1 Level 2 Level 3(1)
(In millions)
Goodwill $16.6 $28.0 $— $— $28.0
Other intangible assets, net 37.9(2) 41.4 — — 41.4
Long-lived assets 2.7 — — — —
Total $57.2 $69.4 $— $— $69.4
(1) See Note 4—Property, Plant and Equipment and Note 5— Goodwill and Other Intangible Assets for discussion of the valuation techniques used
to measure fair value, the description of the inputs and information used to develop those inputs.
(2) Includes $8.8 million related to the reformulation of Ojon brand products, which is included in Restructuring and other special charges in the
accompanying consolidated statements of earnings.