Estee Lauder 2011 Annual Report Download - page 148

Download and view the complete annual report

Please find page 148 of the 2011 Estee Lauder annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 168

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168

146 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
administrator 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, these 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. When quoted in
an active market, these investments are classified within
Level 1 of the valuation hierarchy. When the market is not
active, these investments are generally classified within
Level 2. When the market is not active and some inputs
are unobservable, these investments are generally classi-
fied within Level 3.
Insurance contracts — These instruments are issued by
insurance companies. The fair value is based on negoti-
ated value and the underlying investment held in separate
account portfolios as well as considering the credit worth-
iness
of the issuer. The underlying investments are govern-
ment, 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.
The expected cash flows for the Company’s pension and post-retirement plans are as follows:
Other than
Pension Plans Pension Plans
U.S. International Post-retirement
(In millions)
Expected employer contributions for year
ending June 30, 2012 $ — $ 15.5 $ —
Expected benefit payments for year ending June 30,
2012 45.2 16.6 5.5
2013 44.3 16.5 6.1
2014 42.1 16.1 6.7
2015 37.2 17.9 7.4
2016 36.3 18.4 8.1
Years 2017 - 2021 184.6 121.4 54.9
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.
The Company’s target asset allocation at June 30, 2011 is as follows:
Other than
Pension Plans Pension Plans
U.S. International Post-retirement
Equity 42% 20% 42%
Debt securities 34% 57% 34%
Other 24% 23% 24%
100% 100% 100%