Estee Lauder 2009 Annual Report Download - page 99

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98 THE EST{E LAUDER COMPANIES INC.
Total charges associated with restructuring activities
included in operating income for the year ended June 30,
2009 were $91.7 million.
While our business strategies are designed to
strengthen the Company over the long-term, we believe
the uncertainty about future market conditions, consumer
spending patterns and the fi nancial strength of some of
our retail customers, coupled with retailer destocking and
tighter working capital management, will continue to neg-
atively affect our net sales and operating results. In line
with our strategic plan, we will continue to seek ways to
contain costs and reduce our inventory levels.
We manufacture, market and sell beauty products
including those in the skin care, makeup, fragrance
and hair care categories which are distributed in over 140
countries and territories. The following table is a com-
parative summary of operating results from continuing
operations for fi scal 2009, 2008 and 2007 and refl ects the
basis of presentation described in Note 2 and Note 20 to
the Notes to Consolidated Financial Statements for all
periods presented. Products and services that do not
meet our defi nition of skin care, makeup, fragrance and
hair care have been included in the “other” category.
Accrued restructuring charges at June 30, 2009 are
expected to result in cash expenditures funded from
cash provided by operations of approximately $48 million,
$6 million and $1 million in fi scal 2010, 2011 and 2012,
respectively.
The total amount of restructuring charges incurred plus
other initiatives approved through June 30, 2009, include
approximately $75 million for employee-related costs,
approximately $6 million in asset write-offs and approxi-
mately $8 million of contract terminations and other
exit costs.
We incurred other special charges in connection with
the implementation of the Program for the year ended
June 30, 2009 of $10.1 million related to consulting, other
professional services, and accelerated depreciation. The
total amount of other special charges expected to be
incurred to implement these initiatives, including those
incurred through June 30, 2009, is approximately $36 mil-
lion. In addition to the other special charges, we recorded
$8.1 million refl ecting sales returns (less a related cost of
sales of $1.2 million) and a write-off of inventory associ-
ated with exiting unprofi table operations of $8.0 million.
During the year ended June 30, 2009, we recorded a
gain of $3.6 million related to excess accruals that were
recorded as other special charges in prior years.
For the year ended June 30, 2009, aggregate restruc turing charges of $70.3 million were recorded in our consoli
dated
statements of earnings related to the Program. These
charges primarily refl ected employee-related costs, asset write-offs,
contract terminations and other exit costs.
The following table presents the restructuring activity as of and for the year ended June 30, 2009 under the Program:
Employee-Related Asset Contract
Costs Write-offs Terminations Other Exit Costs Total
(In millions)
Charges $60.9 $ 4.2 $ 3.4 $ 1.8 $70.3
Cash payments (7.5) — (0.5) (1.6) (9.6)
Non-cash write-offs — (4.2) — — (4.2)
Translation adjustments 0.6 — — — 0.6
Other adjustments (2.4) — — — (2.4)
Balance at June 30, 2009 $51.6 $ — $ 2.9 $ 0.2 $54.7