Estee Lauder 2011 Annual Report Download - page 155

THE EST{E LAUDER COMPANIES INC. 153
Of the $0.7 million, net of tax, derivative instrument loss
recorded in AOCI at June 30, 2011, $8.5 million in losses,
net of tax, related to foreign currency forward contracts
which the Company will reclassify to earnings through
March 2013. Also included in the net derivative instru-
ment loss recorded in OCI was $0.6 million, net of tax,
related to a loss from the settlement of a series of
forward-starting interest rate swap agreements upon the
issuance of the Company’s 6.00% Senior Notes due
May 2037, which will be reclassified to earnings as an
addition to interest expense over the life of the debt.
These losses were partially offset by $8.4 million, net of
tax, related to the October 2003 gain from the settlement
of the treasury lock agreements upon the issuance of
the Company’s 5.75% Senior Notes due October 2033,
which is being reclassified to earnings as an offset to
interest expense over the life of the debt.
Refer to Note 13 — Pension, Deferred Compensation
and Post-retirement Benefit Plans for the discussion
regarding the net pension and post-retirement adjustments.
NOTE 19 — STATEMENT OF CASH FLOWS
Supplemental cash flow information is as follows:
YEAR ENDED JUNE 30 2011 2010 2009
(In millions)
Cash:
Cash paid during the year for interest $ 72.6 $106.0 $ 77.2
Cash paid during the year for income taxes $241.7 $265.2 $230.2
Non-cash investing and financing activities:
Incremental tax benefit from the exercise of stock options $ (20.0) $ (21.3) $ (7.8)
Change in liability associated with acquisition of business $— $ 7.0 $ 5.9
Capital lease obligations incurred $ 1.0 $ 22.5 $ 15.5
Accrued dividend equivalents $ 0.3 $ 0.2 $ 0.1
Interest rate swap derivative mark to market $ 8.7 $ 14.2 $ 13.6
NOTE 20 — SEGMENT DATA AND
RELATED INFORMATION
Reportable operating segments include components of
an enterprise about which separate financial information
is available that is evaluated regularly by the chief operat-
ing decision maker (the “Chief Executive”) in deciding
how to allocate resources and in assessing performance.
As a result of the similarities in the manufacturing, market-
ing and distribution processes for all of the Company’s
products, much of the information provided in the con-
solidated financial statements is similar to, or the same as,
that reviewed on a regular basis by the Chief Executive.
Although the Company operates in one business
segment, beauty products, management also evaluates
performance on a product category basis.
While the Company’s results of operations are also
reviewed on a consolidated basis, the Chief Executive
reviews data segmented on a basis that facilitates com-
parison to industry statistics. Accordingly, net sales, depre-
ciation and amortization, and operating income are
available with respect to the manufacture and distribution
of skin care, makeup, fragrance, hair care and other prod-
ucts. These product categories meet the definition of
operating segments and, accordingly, additional financial
data are provided below. The “other” segment includes
the sales and related results of ancillary products and ser-
vices that do not fit the definition of skin care, makeup,
fragrance and hair care.
Product category performance is measured based
upon net sales before returns associated with restructur-
ing activities, and earnings before income taxes, net inter-
est expense, interest expense on debt extinguishment and
total charges associated with restructuring activities.
Returns and charges associated with restructuring activi-
ties are not allocated to the product categories because
they result from activities that are deemed a company-
wide program to redesign the Company’s organizational
structure. The accounting policies for the Company’s
reportable segments are the same as those described in
the summary of significant accounting policies, except for
depreciation and amortization charges, which are
allocated, primarily, based upon net sales. The assets and
liabilities of the Company are managed centrally and are
reported internally in the same manner as the consoli-
dated financial statements; thus, no additional information
is produced for the Chief Executive or included herein.