Estee Lauder 2010 Annual Report Download - page 142

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THE EST{E LAUDER COMPANIES INC. 141
Interests in limited partnerships and hedge fund
investments —One limited partnership investment and
one hedge fund was valued using the NAV provided by
the administrator of the partnership/fund. The NAV is
based on the value of the underlying assets owned by the
partnership/fund, minus its liabilities, and then divided by
the number of shares outstanding. These investments are
classified within Level 2 of the valuation hierarchy. All
other limited partnership investments and hedge fund
investments are private equity funds and the fair values
are determined by the fund managers based on the esti-
mated value of the various holdings of the fund portfolio.
These investments are classified within Level 3 of the
valuation hierarchy.
The following table presents the fair values of the Company’s pension and post-retirement plan assets by asset category
as of June 30, 2010: Quoted Prices in
Active Markets for Significant Other Significant
Identical Asset Observable Inputs Unobservable Inputs
(Level 1) (Level 2) (Level 3) Total
(In millions)
Short-term investment funds $52.6 $ 46.4 $— $ 99.0
Government agency securities — 32.4 — 32.4
Debt instruments — 86.2 — 86.2
Equity securities 12.4 — — 12.4
Commingled funds — 428.7 68.7 497.4
Insurance contracts — — 32.0 32.0
Limited partnerships and
hedge fund investments — — 78.0 78.0
Total $65.0 $593.7 $178.7 $837.4
The following table presents the changes in Level 3 plan assets for the year ended June 30, 2010:
Limited Partnerships
Commingled Insurance and Hedge Fund
Funds Contracts Investments Total
(In millions)
Balance as of June 30, 2009 $19.1 $34.3 $65.0 $118.4
Actual return on plan assets:
Relating to assets still held at the reporting date 4.9 — 10.9 15.8
Relating to assets sold during the year (3.7) 2.1 — (1.6)
Purchases, sales, issuances and settlements, net 53.1 0.5 2.1 55.7
Foreign exchange impact (4.7) (4.9) — (9.6)
Balance as of June 30, 2010 $68.7 $32.0 $78.0 $178.7
401(k) Savings Plan (U.S.)
The Company’s 401(k) Savings Plan (“Savings Plan”) is a
contributory defined contribution plan covering substan-
tially all regular U.S. employees who have completed the
hours and service requirements, as defined by the plan
document. Regular full-time employees are eligible to par-
ticipate in the Savings Plan thirty days following their date
of hire. The Savings Plan is subject to the applicable provi-
sions of ERISA. The Company matches a portion of the
participant’s contributions after one year of service under
a predetermined formula based on the participant’s con-
tribution level. The Company’s contributions were $20.8
million, $20.5 million and $18.7 million for the fiscal years
ended June 30, 2010, 2009 and 2008, respectively. Shares
of the Company’s Class A Common Stock are not an invest-
ment option in the Savings Plan and the Company does not
use such shares to match participants’ contributions.
Deferred Compensation
The Company accrues for deferred compensation and
interest thereon, and for the increase in the value of share
units pursuant to agreements with certain key executives
and outside directors. The amounts included in the
accompanying consolidated balance sheets under these
plans were $61.2 million and $66.4 million as of June 30,
2010 and 2009, respectively. The expense for fiscal 2010,
2009 and 2008 was $1.7 million, $5.4 million and $9.2
million, respectively.