Estee Lauder 2007 Annual Report Download - page 76

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Post-retirement Benefi ts
The Company maintains a domestic post-retirement
benefi t plan which provides certain medical and dental
benefi ts to eligible employees. Employees hired after
January 1, 2002 are not eligible for retiree medical bene-
fi ts when they retire. Certain retired employees who are
receiving monthly pension benefi ts are eligible for par-
ticipation in the plan. Contributions required and benefi ts
received by retirees and eligible family members are
dependent on the age of the retiree. It is the Company’s
practice to fund these benefi ts as incurred.
Certain of the Company’s international subsidiaries
and affi liates have post-retirement plans, although most
participants are covered by government-sponsored or
administered programs.
Plan Summaries
In September 2006, the FASB issued SFAS No. 158,
“Employers’ Accounting for Defi ned Benefi t Pension and
Other Postretirement Plans, an amendment of FASB
Statements No. 87, 106, and 132(R)” (“SFAS No. 158”).
SFAS No. 158 requires employers to recognize a net
liability or asset and an offsetting adjustment to accumu-
lated other comprehensive income to report the funded
status of defi ned benefi t pension and other post-retire-
ment benefi t plans. Previous standards required employ-
ers to disclose the complete funded status of its plans only
in the notes to the consolidated fi nancial statements.
Changes in the funded status of these plans will be
recognized as they occur through other comprehensive
income. Additional minimum liability adjustments are no
longer recognized upon adoption of SFAS No. 158. As of
June 30, 2007, the Company prospectively adopted the
balance sheet recognition provisions of SFAS No. 158.
The incremental effect of applying SFAS No. 158 on indi-
vidual line items in the Company’s consolidated balance
sheet is summarized below:
THE EST{E LAUDER COMPANIES INC. 75
Before Application Minimum Liability SFAS No. 158 After Application
of SFAS No. 158 Adjustment Adjustments of SFAS No. 158
(In millions)
Other assets, net $274.7 $ — $(56.1) $218.6
Other accrued liabilities 944.9 — 19.0 963.9
Other noncurrent liabilities 369.0 (16.0) 23.6 376.6
Accumulated other comprehensive income 137.4 16.0 (98.7) 54.7
Additionally, SFAS No. 158 requires employers to measure plan assets and obligations at their year-end balance sheet
date. The Company’s principal pension and post-retirement benefi t plans are measured as of June 30; therefore, the
measurement provisions of SFAS No. 158 did not affect the Company’s existing valuation practices. The adoption of
SFAS No. 158 did not impact the consolidated statements of earnings or the Company’s fi nancial debt covenant.
Amounts recognized in accumulated other comprehensive income as of June 30, 2007 are as follows:
Other than
Pension Plans Pension Plans
U.S. International Post-retirement Total
(In millions)
Prior service cost (credit) $ 5.2 $ 1.7 $ (0.1) $ 6.8
Net actuarial loss 48.2 33.6 10.1 91.9
Total amounts recognized in accumulated
other comprehensive income $53.4 $35.3 $10.0 $98.7
Amounts in accumulated other comprehensive income expected to be amortized as components of net periodic benefi t
cost during fi scal 2008 are as follows:
Other than
Pension Plans Pension Plans
U.S. International Post-retirement
(In millions)
Prior service cost $0.6 $0.3 $ —
Net actuarial loss 1.7 7.5 0.1