Estee Lauder 2012 Annual Report Download - page 135

THE EST{E LAUDER COMPANIES INC. 133
impact on the Company’s results of operations, financial
position or cash flows.
In January 2010, the FASB issued authoritative guid-
ance that requires entities to make new disclosures about
recurring or nonrecurring fair-value measurements of
assets and liabilities. The Company adopted the new guid-
ance in its fiscal 2010 third quarter, except for certain
detailed recurring Level 3 disclosures, which became
effective for the Company’s fiscal 2012 first quarter. The
Company currently does not have any recurring Level 3
assets or liabilities.
Recently Issued Accounting Standards
In July 2012, the FASB amended its authoritative guidance
related to testing indefinite-lived intangible assets for
impairment. Under the revised guidance, entities testing
their indefinite-lived intangible assets for impairment have
the option of performing a qualitative assessment before
performing further impairment testing. If entities deter-
mine, on the basis of qualitative factors, that it is more-
likely-than-not that the asset is impaired, a quantitative
test is required. The guidance becomes effective in the
beginning of the Company’s fiscal 2014, with early
adoption permitted. The Company is currently evaluating
the timing of adopting this guidance which is not
expected to have an impact on the Company’s consoli-
dated financial statements.
In December 2011, the FASB issued authoritative guid-
ance that creates new disclosure requirements about the
nature of an entity’s rights of offset and related arrange-
ments associated with its financial instruments and deriva-
tive instruments. This revised guidance helps reconcile
differences in the offsetting requirements under U.S.
GAAP and IFRS. These requirements mandate that enti-
ties disclose both gross and net information about instru-
ments and transactions eligible for offset in the statement
of financial position as well as instruments and trans-
actions subject to an agreement similar to a master net-
ting arrangement. This disclosure-only guidance becomes
effective for the Company’s fiscal 2013 third quarter, with
retrospective application required. The Company
currently does not hold any financial or derivative instru-
ments that are subject to an enforceable master netting
arrangement. However, the Company currently utilizes
the right of offset when netting certain negative cash bal-
ances in its consolidated balance sheets. This guidance is
not expected to have an impact on the Company’s results
of operations, financial position or cash flows, but may
require certain additional disclosures if such balances are
material or if the Company enters into additional arrange-
ments that fall under the provisions of this guidance.
In September 2011, the FASB amended its authoritative
guidance related to testing goodwill for impairment.
Under the revised guidance, entities testing goodwill for
impairment have the option of performing a qualitative
assessment before performing Step 1 of the goodwill
impairment test. If entities determine, on the basis of qual-
itative factors, that the fair value of the reporting unit
is more-likely-than-not less than the carrying amount,
the two-step impairment test would be required. This
guidance becomes effective in the beginning of the
Company’s fiscal 2013, with early adoption permitted.
The Company is not adopting this guidance early, and it
does not expect the guidance to have an impact on the
Company’s consolidated financial statements.
In June 2011, the FASB amended its authoritative guid-
ance related to the presentation of comprehensive
income, requiring entities to present items of net income
and other comprehensive income either in one continu-
ous statement or in two separate consecutive statements.
This guidance also required entities to present reclassifica-
tion adjustments for each component of accumulated
other comprehensive income in both net income and
other comprehensive income on the face of the financial
statements. In December 2011, the FASB issued an
update to this guidance deferring the requirement to
present reclassification adjustments on the face of the
financial statements. However, the Company is still
required to present reclassification adjustments on either
the face of the financial statement where comprehensive
income is reported or disclose the reclassification adjust-
ments in the notes to the financial statements. This guid-
ance, including the deferral, becomes effective for the
Company’s fiscal 2013 first quarter, with early adoption
permitted and full retrospective application required. This
guidance will result in changes in the presentation of the
Company’s consolidated financial statements and will not
have a material impact on the Company’s results of opera-
tions, financial position or cash flows.
NOTE 3 — INVENTORY AND
PROMOTIONAL MERCHANDISE
JUNE 30 2012 2011
(In millions)
Inventory and promotional
merchandise, net consists of:
Raw materials $220.7 $230.2
Work in process 98.0 93.6
Finished goods 473.9 475.4
Promotional merchandise 191.0 196.4
$983.6 $995.6