Estee Lauder 2007 Annual Report Download - page 78

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Other than
Pension Plans Pension Plans
U.S. International Post-retirement
2007 2006 2005 2007 2006 2005 2007 2006 2005
($ in millions)
Components of net periodic
benefi t cost
:
Service cost, net $ 18.4 $ 21.5 $ 19.3 $ 16.2 $ 16.2 $ 11.3 $ 4.1 $ 5.1 $3.5
Interest cost 25.0 21.2 21.2 12.8 10.8 9.8 5.9 5.6 4.2
Expected return on assets (28.7) (24.9) (24.1) (13.8) (12.1) (11.2) — — —
Amortization of:
Transition (asset) obligation — — — 0.1 0.1 — — — —
Prior service cost 0.6 0.8 0.5 0.3 0.2 1.2 — — —
Actuarial loss (gain) 1.7 6.1 4.6 7.8 8.3 4.0 0.2 1.3 0.2
Acquisitions, divestitures,
adjustments — — — (1.7) — — — — —
Special termination benefi ts
— — — 1.6 0.3 2.0 — — —
Settlements and curtailments
— — — 0.5 (0.7) — — — —
Net periodic benefi t cost $ 17.0 $ 24.7 $ 21.5 $ 23.8 $ 23.1 $ 17.1 $10.2 $12.0 $7.9
Weighted-average assumptions
used to determine benefi t
obligations at June 30:
Pre-retirement discount rate 6.25% 6.25% 5.25% 2.25– 2.25– 1.75– 5.50– 5.75– 5.25%
6.25% 6.25% 5.25% 6.25% 6.25%
Post-retirement discount rate 5.25% 5.25% 4.75% 2.25– 2.25– 1.75– 5.50– 5.75– 5.25%
5.75% 5.75% 5.25% 6.25% 6.25%
Rate of compensation increase 3.00– 3.00– 3.00– 1.75– 1.75– 1.75– N/A N/A N/A
9.50% 9.50% 9.50% 5.00% 5.00% 4.50%
Weighted-average assumptions
used to determine net
periodic benefi t cost for
the year ending June 30:
Pre-retirement discount rate 6.25% 5.25% 6.00% 2.25– 1.75– 2.25– 5.75– 5.25% 6.00%
6.25% 5.50% 6.00% 6.25%
Post-retirement discount rate 5.25% 4.75% 5.00% 2.25– 1.75– 2.25– 5.75– 5.25% 6.00%
5.75% 5.50% 6.00% 6.25%
Expected return on assets 7.75% 7.75% 7.75% 2.75– 2.75– 3.25– N/A N/A N/A
7.25% 7.50% 7.50%
Rate of compensation increase 3.00– 3.00– 3.00– 1.75– 1.75– 1.75– N/A N/A N/A
9.50% 9.50% 9.50% 5.00% 5.00% 4.00%
200
7
$
18.4
25
.
0
(
28.7
)
—
0
.
6
1
.7
—
—
—
$
17.0
6
.25
%
5
.25
%
3
.
00
–
9
.50
%
6
.25
%
5
.25
%
7
.75
%
3
.
00
–
9
.50
%
In
2
00
7
$
16.2
1
2.
8
(
13.8
)
0
.1
0
.
3
7
.
8
(
1.7
)
1
.6
0
.
5
$
23.8
2
.
2
5–
6
.25
%
2
.25
–
5
.75
%
1
.7
5
–
5
.00
%
2
.2
5
–
6
.25
%
2
.2
5
–
5
.75
%
2
.7
5
–
7
.25
%
1
.7
5
–
5
.00
%
Po
2
007
$4.
1
5.
9
—
—
—
0.
2
—
—
—
$
10.
2
5.5
0–
6.25
%
5.50
–
6.25
%
N
/A
5
.7
5–
6.25
%
5
.7
5–
6.25
%
N
/A
N
/A
In determining the long-term rate of return for a plan, the Company considers the historical rates of return, the nature of
the plan’s investments and an expectation for the plan’s investment strategies.
Assumed health care cost trend rates have a signifi cant effect on the amounts reported for the health care plans.
The assumed weighted-average health care cost trend rate for the coming year is 9.66% while the ultimate trend rate of
4.50% is expected to be reached in fi scal 2015. A one-percentage-point change in assumed health care cost trend rates
for fi scal 2007 would have had the following effects:
One-Percentage-Point Increase One-Percentage-Point Decrease
(In millions)
Effect on total service and interest costs $ 1.5 $ (1.3)
Effect on post-retirement benefi t obligations $12.1 $(10.8)
THE EST{E LAUDER COMPANIES INC. 77