Estee Lauder 2015 Annual Report Download - page 94

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THE EST{E LAUDER COMPANIES INC. 91
NOTE 4
—
INVENTORY AND PROMOTIONAL
MERCHANDISE
JUNE 30 2015 2014
(In millions)
Inventory and promotional
merchandise, net consists of:
Raw materials $ 306.9 $ 317.5
Work in process 168.7 192.4
Finished goods 581.3 599.5
Promotional merchandise 158.9 184.6
$1,215.8 $1,294.0
NOTE 5
—
PROPERTY, PLANT AND EQUIPMENT
JUNE 30 2015 2014
(In millions)
Asset (Useful Life)
Land $ 15.4 $ 15.4
Buildings and improvements
(10 to 40 years) 184.9 205.0
Machinery and equipment
(3 to 10 years) 671.3 673.9
Computer hardware and software
(4 to 10 years) 1,012.4 994.8
Furniture and fixtures
(5 to 10 years) 73.7 75.1
Leasehold improvements 1,621.9 1,565.7
3,579.6 3,529.9
Less accumulated depreciation
and amortization 2,089.4 2,027.3
$1,490.2 $1,502.6
The cost of assets related to projects in progress of
$192.0 million and $229.9 million as of June 30, 2015 and
2014, respectively, is included in their respective asset
categories above. Depreciation and amortization of
property, plant and equipment was $400.0 million, $ 378.1
million and $329.8 million in fiscal 2015, 2014 and
2013, respectively. Depreciation and amortization related
to the Company’s manufacturing process is included
in Cost of Sales and all other depreciation and amortiza-
tion is included in Selling, general and administrative
expenses in the accompanying consolidated statements
of earnings.
NOTE 6
—
ACQUISITION OF BUSINESSES
The Company acquired RODIN olio lusso, a skin care
brand, in October 2014, Le Labo, a fragrance brand, in
November 2014, and in January 2015, Editions de Parfums
Frédéric Malle, a fragrance brand, and GLAMGLOW, a
skin care brand. The results of operations of these busi-
nesses are included in the accompanying consolidated
financial statements commencing with the date they were
acquired. The purchase price related to each of these
acquisitions includes cash paid at closing plus additional
amounts to be paid in the future, a portion of which is
contingent on the achievement of certain future operat-
ing results. The amounts paid at closing were funded by
cash on hand and through the issuance of commercial
paper. The additional amounts are expected to be paid
from fiscal 2018 through fiscal 2020 with the exception of
The following table presents the Company’s available-for-sale securities by contractual maturity as of June 30, 2015:
Cost Fair Value
(In millions)
Due within one year $503.7 $503.7
Due after one through five years 414.3 414.1
$918.0 $917.8
The following table presents the fair market value of the Company’s investments with gross unrealized losses that are not
deemed to be other-than temporarily impaired as of June 30, 2015:
In a Loss Position for Less Than 12 Months
In a Loss Position for More Than 12 Months
Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses
(In millions)
Available-for-sale securities $263.2 $(0.5) $ — $ —
Gross gains and losses realized on sales of investments included in the consolidated statements of earnings were as follows:
YEAR ENDED JUNE 30 2015 2014
(In millions)
Gross realized gains $2.5 $—
Gross realized losses (0.1) —
Total $2.4 $—
The Company utilizes the first-in, first-out method to determine the cost of the security sold.