Estee Lauder 2009 Annual Report Download - page 130

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THE EST{E LAUDER COMPANIES INC. 129
Company’s manufacturing process is included in Cost of
sales and all other depreciation and amortization is
included in Selling, general and administrative expenses in
the accompanying consolidated statements of earnings.
During the fourth quarter of fi scal 2009, the Company
recorded non-cash impairment charges of $8.5 million to
reduce the net carrying value of certain retail store and
counter assets to their estimated fair value, which was
determined based on discounted expected future cash
fl ows. Lower than expected operating cash fl ow perfor-
mance relative to the affected assets, restructuring activi-
ties, revisions in internal forecasts and the impact of the
current economic environment on their projected future
results of operations indicated that the carrying value of
the related long-lived assets were not recoverable. These
asset impairment charges primarily related to the
Company’s skin care and makeup businesses in the
Americas region and are included in Impairment of intan-
gible and other long-lived assets in the accompanying
consolidated statements of earnings.
NOTE 5
—
GOODWILL AND OTHER
INTANGIBLE ASSETS
During fiscal 2009, the Company acquired Applied
Genetics Incorporated Dermatics (“AGI”), a manufacturer
of cosmetics ingredients. In addition, the Company
acquired businesses engaged in the wholesale distribu-
tion and retail sale of Aveda products. These activities
were predominantly related to the Company’s skin care
and hair care businesses and resulted in increases to
goodwill of $42.5 million and other intangible assets of
$19.9 million as of June 30, 2009.
During fiscal 2008, the Company acquired Ojon
Corporation, which markets and sells Ojon hair care and
skin care products primarily through direct response
television and specialty stores. In conjunction with this
acquisition, the Company purchased, from an unrelated
party, the exclusive rights to sell and distribute Ojon prod-
ucts worldwide. In addition, the Company acquired a
business engaged in the wholesale distribution and retail
sale of Aveda products and recorded goodwill for earn-
out payments related to the acquisition of the Bobbi
Brown brand. These activities resulted in an increase to
goodwill of $51.9 million and other intangible assets of
$85.5 million.
“Reporting Revenue Gross as a Principal versus Net as
an Agent,” and other applicable accounting literature.
Payments to or from collaborators should be presented in
the income statement based on the nature of the arrange-
ment, the nature of the company’s business and whether
the payments are within the scope of other accounting
literature. Other detailed information related to the col-
laborative arrangement is also required to be disclosed.
The requirements under this Issue must be applied to col-
laborative arrangements in existence at the beginning of
the Company’s fi scal 2010 using a modifi ed version of
retrospective application. The Company is currently not a
party to signifi cant collaborative arrangement activities, as
defi ned by EITF No. 07-1.
NOTE 3
—
INVENTORY AND
PROMOTIONAL MERCHANDISE
JUNE 30 2009 2008
(In millions)
Inventory and promotional
merchandise, net consists of:
Raw materials $188.5 $205.4
Work in process 43.8 56.8
Finished goods 375.6 494.7
Promotional merchandise 187.1 230.3
$795.0 $987.2
NOTE 4
—
PROPERTY, PLANT AND EQUIPMENT
JUNE 30 2009 2008
(In millions)
Asset (Useful Life)
Land $ 14.5 $ 14.9
Buildings and improvements
(10 to 40 years) 183.2 183.5
Machinery and equipment
(3 to 10 years) 1,080.2 1,008.9
Furniture and fi xtures
(5 to 10 years) 86.1 95.6
Leasehold improvements 1,112.8 1,090.7
2,476.8 2,393.6
Less accumulated depreciation
and amortization 1,450.1 1,350.5
$1,026.7 $1,043.1
The cost of assets related to projects in progress of $144.9
million and $129.0 million as of June 30, 2009 and 2008,
respectively, is included in their respective asset catego-
ries above. Depreciation and amortization of property,
plant and equipment was $240.2 million, $233.9 million
and $198.1 million in fi scal 2009, 2008 and 2007, respec-
tively. Depreciation and amortization related to the