Estee Lauder 2011 Annual Report Download - page 134

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132 THE EST{E LAUDER COMPANIES INC.
Income tax reserve adjustments represent changes in the
Company’s net liability for unrecognized tax benefits
related to prior-year tax positions including tax settle-
ments and lapses of the applicable statutes of limitations.
Federal income and foreign withholding taxes have not
been provided on approximately $1,208 million of undis-
tributed earnings of foreign subsidiaries at June 30, 2011.
The Company intends to reinvest these earnings in its for-
eign operations indefinitely, except where it is able to
repatriate these earnings to the United States without
material incremental tax provision. As of June 30, 2010
and 2009, the Company had not provided federal income
and foreign withholding taxes on approximately $1,068
million and $975 million, respectively, of undistributed
earnings of foreign subsidiaries. The determination and
estimation of the future income tax consequences in all
relevant taxing jurisdictions involves the application of
highly complex tax laws in the countries involved, particu-
larly in the United States, and is based on the tax profile of
the Company in the year of earnings repatriation. Accord-
ingly, it is not practicable to determine the amount of tax
associated with such undistributed earnings.
NOTE 8
—
INCOME TAXES
The provision for income taxes is comprised of the following:
YEAR ENDED JUNE 30 2011 2010 2009
(In millions)
Current:
Federal $127.2 $ 16.0 $ 42.6
Foreign 220.0 205.6 174.5
State and local (1.0) 9.0 7.0
346.2 230.6 224.1
Deferred:
Federal (27.8) (16.4) (84.0)
Foreign 2.6 (7.5) (23.6)
State and local 0.7 (0.8) (0.6)
(24.5) (24.7) (108.2)
$321.7 $205.9 $115.9
A reconciliation of the U.S. federal statutory income tax rate to our actual effective tax rate on earnings before income
taxes is as follows:
YEAR ENDED JUNE 30 2011 2010 2009
(In millions)
Provision for income taxes at statutory rate 35.0% 35.0% 35.0%
Increase (decrease) due to:
State and local income taxes, net of federal tax benefit 0.8 1.5 2.0
Taxation of foreign operations (2.7) (0.9) (4.4)
Income tax reserve adjustments (1.8) (5.6) 0.1
Other, net 0.1 (0.1) 1.1
Effective tax rate 31.4% 29.9% 33.8%