Estee Lauder 2011 Annual Report Download - page 140
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138 THE EST{E LAUDER COMPANIES INC.
is not highly effective, or that it has ceased to be a highly
effective hedge, the Company will be required to discon-
tinue hedge accounting with respect to that derivative
prospectively.
hedge’s inception and on an ongoing basis, whether the
derivatives that are used in hedging transactions are
highly effective in offsetting changes in fair values or cash
flows of hedged items. If it is determined that a derivative
The fair values of the Company’s derivative financial instruments included in the consolidated balance sheets are
presented as follows:
Asset Derivatives Liability Derivatives
Balance Sheet Location Fair Value(1) Balance Sheet Location Fair Value(1)
June 30 June 30
2011 2010 2011 2010
(In millions)
Derivatives Designated as
Hedging Instruments
:
Prepaid expenses and
Foreign currency forward contracts
other current assets $11.9 $17.1
Other accrued liabilities
$28.4 $10.5
Interest rate swap contracts Other assets — 38.7 Not applicable — —
Total Derivatives Designated as
Hedging Instruments 11.9 55.8 28.4 10.5
Derivatives Not Designated as
Hedging Instruments:
Prepaid expenses and
Foreign currency forward contracts
other current assets 3.1 2.0 Other accrued liabilities 2.5 2.0
Total Derivatives $15.0 $57.8 $30.9 $12.5
(1) See Note 12 —Fair Value Measurements for further information about how the fair value of derivative assets and liabilities are determined.
The amounts of the gains and losses related to the Company’s derivative financial instruments designated as hedging
instruments are presented as follows:
Amount of Gain or (Loss) Location of Gain or (Loss) Amount of Gain or (Loss)
Recognized in OCI Reclassified from Reclassified from
on Derivatives Accumulated OCI into Accumulated OCI into
(Effective Portion) Earnings (Effective Portion) Earnings (Effective Portion)(2)
June 30 June 30
2011 2010 2011 2010
(In millions)
Derivatives in Cash Flow
Hedging Relationships:
Foreign currency forward contracts
$(38.0) $(0.2) Cost of sales $ (4.3) $ (8.5)
Selling, general and administrative
(10.8) (11.8)
Total derivatives $(38.0) $(0.2) $(15.1) $(20.3)
.
(2) The amount of gain (loss) recognized in earnings related to the amount excluded from effectiveness testing was $0.3 million and $(2.5) million for fiscal 2011
and 2010, respectively. The loss recognized in earnings related to the ineffective portion of the hedging relationships was $0.5 million for fiscal 2011. There
was no gain (loss) recognized in earnings related to the ineffective portion of the hedging relationships for fiscal 2010.