Estee Lauder 2009 Annual Report Download - page 114

THE EST{E LAUDER COMPANIES INC. 113
companies to provide disclosures about fair value of fi nan-
cial instruments in interim fi nancial information. The adop-
tion of this disclosure-only guidance will not have an
impact on our consolidated fi nancial results and is effec-
tive beginning with our fi scal 2010 interim period ending
September 30, 2009.
In April 2009, the FASB issued FSP No. FAS 141(R)-1,
“Accounting for Assets Acquired and Liabilities Assumed
in a Business Combination That Arise from Contingen-
cies,” to require that assets acquired and liabilities
assumed in a business combination that arise from contin-
gencies be recognized at fair value if fair value can be
reasonably determined. If the fair value of such assets or
liabilities cannot be reasonably determined, then they
would generally be recognized in accordance with SFAS
No. 5, “Accounting for Contingencies” and FASB Interpre-
tation No. 14, “Reasonable Estimation of the Amount of a
Loss—an interpretation of FASB Statement No. 5.” This FSP
also amends the subsequent accounting for assets and
liabilities arising from contingencies in a business combi-
nation and certain other disclosure requirements. This FSP
is effective for assets or liabilities arising from contingen-
cies in business combinations that are consummated
during our fi scal 2010.
In December 2008, the FASB issued FSP No. FAS
132(R)-1, “Employers’ Disclosures about Postretirement
Benefi t Plan Assets” (“FSP No. FAS 132(R)-1”) to require
employers to provide additional disclosures about plan
assets of a defi ned benefi t pension or other post-retire-
ment plan. These disclosures should principally include
information detailing investment policies and strategies,
the major categories of plan assets, the inputs and valua-
tion techniques used to measure the fair value of plan
assets and an understanding of signifi cant concentrations
of risk within plan assets. While earlier application of the
provisions of this FSP is permitted, the disclosures required
by this FSP shall be provided for fi scal years ending after
December 15, 2009 (or our fi scal 2010, the anticipated
period of adoption). Upon initial application, the provi-
sions of this FSP are not required for earlier periods that
are presented for comparative purposes.
In November 2008, the FASB ratifi ed the consensus
reached on Emerging Issues Task Force (“EITF”) Issue No.
08-7, “Accounting for Defensive Intangible Assets” (“EITF
No. 08-7”). Defensive intangible assets are assets acquired
in a business combination that the acquirer (a) does not
intend to use or (b) intends to use in a way other than the
assets’ highest and best use as determined by an evalua-
tion of market participant assumptions. While defensive
intangible assets are not being actively used, they are
likely contributing to an increase in the value of other
eligible fi nancial instruments at fair value. An entity shall
report unrealized gains and losses on items for which the
fair value option has been elected in earnings at each
subsequent reporting date, and recognize upfront costs
and fees related to those items in earnings as incurred
and not deferred. SFAS No. 159 became effective for
us as of July 1, 2008. As we did not elect the fair value
option for our fi nancial instruments, the adoption of this
standard did not have an impact on our consolidated
fi nancial statements.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 2009, the FASB issued SFAS No. 168, “The FASB
Accounting Standards Codifi cation™ and the Hierarchy
of Generally Accepted Accounting Principles” (“SFAS No.
168”). SFAS No. 168 establishes the FASB Accounting
Standards Codifi cation™ (the “Codifi cation”) as the single
source of authoritative U.S. generally accepted account-
ing principles (“U.S. GAAP”) recognized by the FASB to
be applied by nongovernmental entities. Rules and inter-
pretive releases of the United States Securities and
Exchange Commission (“SEC”) under authority of federal
securities laws are also sources of authoritative U.S. GAAP
for SEC registrants. SFAS No. 168 and the Codifi cation
become effective for our September 30, 2009 interim
consolidated fi nancial statements. We do not expect SFAS
No. 168 or the Codifi cation to have a material impact on
our consolidated fi nancial statements.
In June 2009, the FASB issued SFAS No. 167, “Amend-
ments to FASB Interpretation No. 46(R)” (“SFAS No. 167”).
SFAS No. 167 eliminates the exception to consolidate a
qualifying special-purpose entity, changes the approach
to determining the primary benefi ciary of a variable inter-
est entity and requires companies to more frequently re-
assess whether they must consolidate variable interest
entities. Under the new guidance, the primary benefi ciary
of a variable interest entity is identifi ed qualitatively as the
enterprise that has both (a) the power to direct the activi-
ties of a variable interest entity that most signifi cantly
impact the entity’s economic performance, and (b) the
obligation to absorb losses of the entity that could poten-
tially be signifi cant to the variable interest entity or the
right to receive benefi ts from the entity that could poten-
tially be signifi cant to the variable interest entity. SFAS No.
167 becomes effective for our fi scal 2011 year-end and
interim reporting periods thereafter. We do not expect
SFAS No. 167 to have a material impact on our consoli-
dated fi nancial statements.
In April 2009, the FASB issued FSP No. FAS 107-1 and
APB 28-1, “Interim Disclosures about Fair Value of Finan-
cial Instruments,” principally to require publicly traded