Estee Lauder 2014 Annual Report Download - page 70

68 THE EST{E LAUDER COMPANIES INC.
correlations calculated over the past 250-day period.
The high, low and average measured value-at-risk during
fiscal 2014 related to our foreign exchange contracts is
as follows:
YEAR ENDED JUNE 30, 2014
(In millions) High Low Average
Foreign exchange
contracts $27.4 $7.4 $18.9
The model estimates were made assuming normal market
conditions and a 95 percent confidence level. We used a
statistical simulation model that valued our derivative
financial instruments against one thousand randomly gen -
erated market price paths. Our calculated value-at-risk
exposure represents an estimate of reasonably possible
net losses that would be recognized on our portfolio of
derivative financial instruments assuming hypothetical
movements in future market rates and is not necessarily
indicative of actual results, which may or may not occur.
It does not represent the maximum possible loss or any
expected loss that may occur, since actual future gains
and losses will differ from those estimated, based upon
actual fluctuations in market rates, operating exposures,
and the timing thereof, and changes in our portfolio
of derivative financial instruments during the year.
We believe, however, that any such loss incurred would
be offset by the effects of market rate movements on the
respective underlying transactions for which the deriva-
tive financial instrument was intended.
OFF-BALANCE SHEET ARRANGEMENTS
We do not maintain any off-balance sheet arrangements,
transactions, obligations or other relationships with
unconsolidated entities, other than operating leases,
that would be expected to have a material current
or future effect upon our financial condition or results
of operations.
RECENTLY ISSUED ACCOUNTING STANDARDS
Refer to “Note 2 — Summary of Significant Accounting
Policies” of Notes to Consolidated Financial Statements
for discussion regarding the impact of accounting stan-
dards that were recently issued but not yet effective, on
our consolidated financial statements.
FORWARD-LOOKING INFORMATION
We and our representatives from time to time make
written or oral forward-looking statements, including
statements contained in this and other filings with the
Securities and Exchange Commission, in our press
releases and in our reports to stockholders. The words
and phrases “will likely result,” “expect,” “believe,”
“planned,” “may,” “should,” “could,” “anticipate,”
“estimate,” “project,” “intend,” “forecast” or similar
expressions are intended to identify “forward-looking
statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements include,
without limitation, our expectations regarding sales, earn-
ings or other future financial performance and liquidity,
product introductions, entry into new geographic regions,
information systems initiatives, new methods of sale, our
long-term strategy, restructuring and other charges and
resulting cost savings, and future operations or operating
results. Although we believe that our expectations are
based on reasonable assumptions within the bounds of
our knowledge of our business and operations, actual
results may differ materially from our expectations. Factors
that could cause actual results to differ from expectations
include, without limitation:
(1) increased competitive activity from companies in the
skin care, makeup, fragrance and hair care businesses,
some of which have greater resources than we do;
(2) our ability to develop, produce and market new prod-
ucts on which future operating results may depend and to
successfully address challenges in our business;
(3) consolidations, restructurings, bankruptcies and
reorganizations in the retail industry causing a decrease in
the number of stores that sell our products, an increase
in the ownership concentration within the retail industry,
ownership of retailers by our competitors or ownership of
competitors by our customers that are retailers and our
inability to collect receivables;
(4) destocking and tighter working capital management
by retailers;
(5) the success, or changes in timing or scope, of new
product launches and the success, or changes in the tim-
ing or the scope, of advertising, sampling and merchan-
dising programs;
(6) shifts in the preferences of consumers as to where
and how they shop for the types of products and services
we sell;
(7) social, political and economic risks to our foreign or
domestic manufacturing, distribution and retail opera-
tions, including changes in foreign investment and trade
policies and regulations of the host countries and of the
United States;