Estee Lauder 2009 Annual Report Download - page 140

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THE EST{E LAUDER COMPANIES INC. 139
is not highly effective, or that it has ceased to be a highly
effective hedge, the Company will be required to
discontinue hedge accounting with respect to that deriva-
tive prospectively.
the hedge’s inception and on an ongoing basis, whether
the derivatives that are used in hedging transactions are
highly effective in offsetting changes in fair values or cash
fl ows of hedged items. If it is determined that a derivative
The fair values of the Company’s derivative fi nancial instruments included in the consolidated balance sheet as of June 30,
2009 are presented as follows:
Asset Derivatives Liability Derivatives
Balance Sheet Location Fair Value(1) Balance Sheet Location Fair Value(1)
(In millions)
Derivatives Designated as Hedging Instruments
:
Prepaid expenses and
Foreign currency forward contracts other current assets $13.9 Other accrued liabilities $(24.9)
Interest rate swap contracts Other assets 24.5 Not applicable —
Total Derivatives Designated as
Hedging Instruments 38.4 (24.9)
Derivatives Not Designated as
Hedging Instruments:
Prepaid expenses and
Foreign currency forward contracts other current assets 2.8 Other accrued liabilities (1.3)
Total Derivatives $41.2 $(26.2)
(1) See Note 12 —Fair Value Measurements for further information about how the fair value of derivative assets and liabilities are determined.
The amounts of the gains and losses related to the Company’s derivative fi nancial instruments designated as hedging
instruments for the year ended June 30, 2009 are presented as follows:
Amount of Gain or (Loss) Location of Gain or (Loss) Amount of Gain or (Loss)
Recognized in OCI Reclassifi ed from Reclassifi ed from
on Derivatives Accumulated OCI into Accumulated OCI into
(Effective Portion)(1) Earnings (Effective Portion) Earnings (Effective Portion)(1)(2)
(In millions)
Derivatives in Cash Flow
Hedging Relationships:
Foreign currency forward contracts
$16.5 Cost of sales $ 6.8
Selling, general and administrative
19.3
Total derivatives $16.5 $26.1
(1) See Note 18— Accumulated Other Comprehensive Income (Loss) for additional information on changes to other accumulated comprehensive income (loss).
(2) The amount of gain (loss) recognized in earnings related to the amount excluded from effectiveness testing was $1.4 million for the fi scal year ended June 30,
2009. There was no gain (loss) recognized in earnings related to the ineffective portion of the hedging relationships for the fi scal year ended June 30, 2009.
Location of Gain or (Loss) Amount of Gain or (Loss)
Recognized in Earnings on Derivatives Recognized in Earnings on Derivatives (1
)
(In millions)
Derivatives in Fair Value Hedging Relationships:
Interest rate swap contracts Interest expense, net $13.6
(1) Changes in the fair values of the interest rate swap agreements are exactly offset by changes in the fair value of the underlying long-term debt.
The amounts of the gains and losses related to the Company’s derivative fi nancial instruments not designated as hedging
instruments for the year ended June 30, 2009 are presented as follows:
Location of Gain or (Loss) Amount of Gain or (Loss)
Recognized in Earnings on Derivatives Recognized in Earnings on Derivatives
(In millions)
Derivatives Not Designated as
Hedging Instruments:
Foreign currency forward contracts Selling, general and administrative $(0.7)