Estee Lauder 2008 Annual Report Download - page 90

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88 THE EST{E LAUDER COMPANIES INC.
million, respectively, and $1.8 million and $7.5 million,
respectively, related to the cost savings initiative were
recorded in Other accrued liabilities and Other noncurrent
liabilities, respectively, in the accompanying consolidated
balance sheets.
The following table summarizes the cost savings initia-
tive, which impacted the Company’s operating expenses
and cost of sales:
For the years ended June 30, 2008, 2007 and 2006,
aggregate expenses of $0.4 million, $1.1 million and $92.1
million, respectively, were recorded as Special charges
related to cost savings initiative in the accompanying con-
solidated statements of earnings. The fi scal 2008 charges
were related to employee separation expenses while the
2007 charges were primarily related to facility closings.
At June 30, 2008 and 2007, $4.4 million and $15.4
Accrued at Fiscal 2007 Fiscal 2007 Accrued at Fiscal 2008 Fiscal 2008 Accrued at
June 30, 2006 expense payments June 30, 2007 expense payments June 30, 2008
(In millions)
Employee separation
expenses $55.2 $0.3 $34.2 $21.3 $ 0.5 $15.6 $6.2
Facility closures and product/
distribution rationalization
12.5 0.8 11.7 1.6 (0.1) 1.5 —
Advertising and
promotional effectiveness
1.2 — 1.2 — — — —
Total $68.9 $1.1 $47.1 $22.9 $ 0.4 $17.1 $6.2
NOTE 9
—
INCOME TAXES
The provision for income taxes is comprised of the following:
YEAR ENDED JUNE 30 2008 2007 2006
(In millions)
Current:
Federal $141.4 $ 66.6 $164.3
Foreign 214.1 166.7 158.2
State and local 20.0 12.0 11.5
375.5 245.3 334.0
Deferred:
Federal (110.9) 11.3 (73.7)
Foreign (4.1) (4.8) (0.3)
State and local (0.6) 3.4 (0.3)
(115.6) 9.9 (74.3)
$259.9 $255.2 $259.7
A reconciliation between the provision for income taxes computed by applying the statutory Federal income tax rate to
earnings before income taxes and minority interest and the actual provision for income taxes is as follows:
YEAR ENDED JUNE 30 2008 2007 2006
($ in millions)
Provision for income taxes at statutory rate $260.3 $248.9 $208.5
Increase (decrease) due to:
State and local income taxes, net of Federal tax benefi t (5.9) 11.2 9.7
Effect of foreign operations 4.3 (0.5) 7.0
IRS tax settlement (Fiscal Years 1998-2001) — — 46.0
AJCA incremental dividend — (5.7) (10.9)
Preferred stock dividends not deductible for U.S. tax purposes — — 0.2
Other nondeductible expenses 3.5 3.4 3.4
Tax credits (4.2) (3.0) (2.2)
Other, net 1.9 0.9 (2.0)
Provision for income taxes $259.9 $255.2 $259.7
Effective tax rate 34.9% 35.9% 43.6%
2
00
8
$
260.3
(
5.9
)
4
.
3
—
—
—
3
.
5
(
4.2
)
1
.9
$
259.9
3
4.9
%