Estee Lauder 2012 Annual Report Download - page 146
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144 THE EST{E LAUDER COMPANIES INC.
The fair values of the Company’s derivative financial instruments included in the consolidated balance sheets are
presented as follows:
Asset Derivatives Liability Derivatives
Balance Sheet Location Fair Value(1) Balance Sheet Location Fair Value(1)
June 30 June 30
2012 2011 2012 2011
(In millions)
Derivatives Designated as
Hedging Instruments
:
Prepaid expenses and
Foreign currency forward contracts
other current assets $16.1 $11.9
Other accrued liabilities
$4.9 $28.4
Derivatives Not Designated as
Hedging Instruments:
Prepaid expenses and
Foreign currency forward contracts other current assets 1.6 3.1 Other accrued liabilities 1.3 2.5
Total Derivatives $17.7 $15.0 $6.2 $30.9
(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 financial instruments designated as hedging
instruments are presented as follows:
Amount of Gain or (Loss) Location of Gain or (Loss) Amount of Gain or (Loss)
Recognized in OCI Reclassified from Reclassified from
on Derivatives Accumulated OCI into Accumulated OCI into
(Effective Portion) Earnings (Effective Portion) Earnings (Effective Portion)(2)
June 30 June 30
2012 2011 2012 2011
(In millions)
Derivatives in Cash Flow
Hedging Relationships:
Foreign currency forward contracts
$40.2 $(38.0) Cost of sales $ 4.6 $ (4.3)
Selling, general and administrative
7.1 (10.8)
Total derivatives $40.2 $(38.0) $11.7 $(15.1)
.
(2) The amount of gain (loss) recognized in earnings related to the amount excluded from effectiveness testing was $(0.8) million and $0.3 million for fiscal
2012 and 2011, respectively. The gain recognized in earnings related to the ineffective portion of the hedging relationships was de minimis for fiscal 2012.
The loss recognized in earnings related to the ineffective portion of the hedging relationships was $0.5 million for fiscal 2011.
Location of Gain or (Loss) Amount of Gain or (Loss)
Recognized in Earnings on Derivatives Recognized in Earnings on Derivatives(1
)
June 30
2012 2011
(In millions)
Derivatives in Fair Value Hedging
Relationships:
Interest rate swap contracts Interest expense, net $— $8.7
(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.