Estee Lauder 2010 Annual Report Download - page 141

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140 THE EST{E LAUDER COMPANIES INC.
The following is a description of the valuation methodolo-
gies used for plan assets measured at fair value:
Short-term investment funds — The fair value is determined
using the Net Asset Value (“NAV”) provided by the admin-
istrator of the fund. The NAV is based on the value of the
underlying assets owned by the fund, minus its liabilities,
and then divided by the number of shares outstanding.
The NAV is a quoted price in a market that is not active
and is primarily classified as Level 2.
Government and agency securities — When quoted prices
are available in an active market, the investments are
classified as Level 1. When quoted market prices are not
available in an active market, the investments are classi-
fied as Level 2.
Equity securities — The fair values reflect the closing price
reported on a major market where the individual securi-
ties are traded. These investments are classified within
Level 1 of the valuation hierarchy.
Debt instruments —The fair values are based on a compila-
tion of primarily observable market information or a broker
quote in a non-active market. These investments are pri-
marily classified within Level 2 of the valuation hierarchy.
Commingled funds — The fair values are determined using
NAV provided by the administrator of the fund. The NAV
is based on the value of the underlying assets owned by
the trust/entity, minus its liabilities, and then divided by the
number of shares outstanding. These investments are gen-
erally classified within Level 2 of the valuation hierarchy.
Insurance contracts —The instruments are issued by insur-
ance companies. The fair value is based on negotiated
value and the underlying investment held in separate
account portfolios as well as considering the credit
worthiness of the issuer. The underlying investments are
government, asset-backed and fixed income securities.
Insurance contracts are generally classified as Level 3 as
there are no quoted prices nor other observable inputs
for pricing.
Other than
Pension Plans Pension Plans
U.S. International Post-retirement
(In millions)
Expected Cash Flows:
Expected employer contributions for year
ending June 30, 2011 $— $ 21.4 $—
Expected benefit payments for year ending June 30,
2011 41.8 17.5 5.7
2012 42.1 18.5 6.3
2013 40.0 17.7 7.0
2014 33.8 17.0 7.6
2015 34.2 17.5 8.3
Years 2016-2020 172.6 102.6 56.3
Plan Assets
The Company’s investment strategy for its pension and post-retirement plan assets is to maintain a diversified portfolio of
asset classes with the primary goal of meeting long-term cash requirements as they become due. Assets are primarily
invested in diversified funds that hold equity or debt securities to maintain the security of the funds while maximizing the
returns within each plan’s investment policy. The investment policy for each plan specifies the type of investment vehicles
appropriate for the plan, asset allocation guidelines, criteria for selection of investment managers, procedures to monitor
overall investment performance, as well as investment manager performance.
Other than
Pension Plans Pension Plans
U.S. International Post-retirement
Target Asset Allocation at June 30, 2010:
Equity 42% 20% 42%
Debt securities 34% 52% 34%
Other 24% 28% 24%
100% 100% 100%