Estee Lauder 2008 Annual Report Download - page 107

Download and view the complete annual report

Please find page 107 of the 2008 Estee Lauder annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 120

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120

Common Stock on the date of grant. Other RSUs
granted in fi scal 2008 are not accompanied by dividend
equivalent rights and, as such, were valued at the closing
market value of the Company’s Class A Common Stock
on the date of grant less the discounted present value of
the dividends expected to be paid on the shares during
the vesting period.
The following is a summary of the status of the
Company’s RSUs as of June 30, 2008 and activity during
the fi scal year then ended:
Weighted-Average Grant
Shares Date Fair Value Per Share
(Shares in thousands)
Nonvested at June 30, 2007 659.4 $38.74
Granted 585.0 42.02
Vested (346.7) 38.90
Forfeited (83.7) 40.48
Nonvested at June 30, 2008 814.0 40.85
Share Units
The Company grants share units to certain non-employee
directors under the Non-Employee Director Share Incen-
tive Plan. The share units are convertible into shares of
Class A Common Stock as provided for in that plan. Share
units are accompanied by dividend equivalent rights that
are converted to additional share units when such divi-
dends are declared. The following is a summary of the
status of the Company’s share units as of June 30, 2008
and activity during the fi scal year then ended:
Weighted-Average Grant
Shares Date Fair Value Per Share
(Shares in thousands)
Outstanding at June 30, 2007 13.8 $37.65
Granted 4.1 44.25
Dividend equivalents 0.2 43.79
Converted — —
Outstanding at June 30, 2008 18.1 39.21
Cash Units
Certain non-employee directors defer cash compensation
in the form of cash payout share units, which are not
subject to the Plans. These share units are classifi ed as
liabilities and, as such, their fair value is adjusted to refl ect
the current market value of the Company’s Class A
Common Stock. The Company recorded $0.5 million,
$0.8 million and $0.5 million as compensation expense to
refl ect additional deferrals and the change in the market
value for fi scal 2008, 2007 and 2006, respectively.
THE EST{E LAUDER COMPANIES INC. 105
NOTE 18
—
NET EARNINGS PER COMMON SHARE
For the years ended June 30, 2008, 2007 and 2006, net earnings per common share (“basic EPS”) is computed by
dividing net earnings by the weighted average number of common shares outstanding and contingently issuable shares
(which satisfy certain conditions). Net earnings per common share assuming dilution (“diluted EPS”) is computed by
refl ecting potential dilution from stock-based awards and contingently issuable shares.
A reconciliation between the numerators and denominators of the basic and diluted EPS computations is as follows:
YEAR ENDED JUNE 30 2008 2007 2006
(In millions, except per share data)
Numerator:
Net earnings from continuing operations $473.8 $448.7 $324.5
Discontinued operations, net of tax — 0.5 (80.3)
Net earnings attributable to common stock $473.8 $449.2 $244.2
Denominator:
Weighted average common shares outstanding —Basic 193.9 204.3 215.0
Effect of dilutive stock options 2.6 3.2 2.4
Effect of restricted stock units and performance share units 0.6 0.2 0.0
Effect of contingently issuable shares pursuant to accelerated share
repurchase program — 0.1 —
Weighted average common shares outstanding —Diluted 197.1 207.8 217.4
Basic net earnings per common share:
Net earnings from continuing operations $ 2.44 $ 2.20 $ 1.51
Discontinued operations, net of tax — .00 (.37)
Net earnings $ 2.44 $ 2.20 $ 1.14
Diluted net earnings per common share:
Net earnings from continuing operations $ 2.40 $ 2.16 $ 1.49
Discontinued operations, net of tax — .00 (.37)
Net earnings $ 2.40 $ 2.16 $ 1.12