Estee Lauder 2008 Annual Report Download - page 109

Of the $7.9 million, net of tax, derivative instrument gain
recorded in OCI at June 30, 2008, $9.0 million, net of tax,
related to the October 2003 gain from the settlement of
the treasury lock agreements upon the issuance of the
Company’s 5.75% Senior Notes due October 2033, which
is being reclassifi ed to earnings as an offset to interest
expense over the life of the debt. Partially offsetting this
gain was $0.6 million, net of tax, related to a loss from the
settlement of a series of forward-starting interest rate
swap agreements upon the issuance of the Company’s
6.00% Senior Notes due May 2037, which will be reclassi-
fi ed to earnings as an addition to interest expense over
the life of the debt. Also partially offsetting the net deriva-
tive instrument gain recorded in OCI was $0.5 million in
losses, net of tax, related to foreign currency forward and
option contracts which the Company will reclassify to
earnings during the next twelve months.
Refer to Note 13 for the discussion regarding the net
pension and post-retirement adjustments.
NOTE 20 — STATEMENT OF CASH FLOWS
Supplemental cash fl ow information related to certain
non-cash investing and fi nancing transactions for fi scal
2008, 2007 and 2006 is as follows:
2008 2007 2006
(In millions)
Long-term debt issued upon
acquisition of business $23.9 $— $ —
Incremental tax benefi t from the
exercise of stock options $10.9 $16.0 $ 6.4
Change in liability associated
with acquisition of business $ 8.3 $ 2.1 $(36.1)
Capital lease obligations incurred $ 9.7 $ 5.1 $ 1.5
Accrued dividend equivalents $ 0.2 $ 0.2 $ 0.1
Interest rate swap derivative
mark to market $19.5 $ 0.6 $(16.5)
NOTE 21 — SEGMENT DATA AND
RELATED INFORMATION
Reportable operating segments, as defi ned by SFAS No.
131, “Disclosures about Segments of an Enterprise and
Related Information,” include components of an enter-
prise about which separate fi nancial information is avail-
able that is evaluated regularly by the chief operating
decision maker (the “Chief Executive”) in deciding how to
allocate resources and in assessing performance. As a
result of the similarities in the manufacturing, marketing
and distribution processes for all of the Company’s prod-
ucts, much of the information provided in the consoli-
dated fi nancial statements is similar to, or the same as,
that reviewed on a regular basis by the Chief Executive.
Although the Company operates in one business
segment, beauty products, management also evaluates
performance on a product category basis.
While the Company’s results of operations are also
reviewed on a consolidated basis, the Chief Executive
reviews data segmented on a basis that facilitates com-
parison to industry statistics. Accordingly, net sales, depre-
ciation and amortization, and operating income are
available with respect to the manufacture and distribution
of skin care, makeup, fragrance, hair care and other prod-
ucts. These product categories meet the FASB’s defi nition
of operating segments and, accordingly, additional fi nan-
cial data are provided below. The “other” segment
includes the sales and related results of ancillary products
and services that do not fi t the defi nition of skin care,
makeup, fragrance and hair care.
The Company evaluates segment performance based
upon operating income, which represents earnings before
income taxes, minority interest, net interest expense and
discontinued operations. The accounting policies for each
of the reportable segments are the same as those
described in the summary of signifi cant accounting poli-
cies, except for depreciation and amortization charges,
which are allocated, primarily, based upon net sales. The
assets and liabilities of the Company are managed cen-
trally and are reported internally in the same manner as
the consolidated fi nancial statements; thus, no additional
information is produced for the Chief Executive or
included herein.
THE EST{E LAUDER COMPANIES INC. 107