Estee Lauder 2013 Annual Report Download - page 170

The following is a description of the valuation method-
ologies 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. When
quoted in an active market, these investments are classi-
fied within Level 1 of the valuation hierarchy.
Government and agency securities — When quoted prices
are available in an active market, the investments are clas-
sified as Level 1. When quoted market prices are not avail-
able in an active market, these investments are classified
as Level 2.
Equity securities — The fair values reflect the closing
price reported on a major market where the individual
securities are traded. These investments are classified
within Level 1 of the valuation hierarchy.
Debt instruments — The fair values are based on a
compilation of primarily observable market information
or a broker quote in a non-active market. These invest-
ments are primarily 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.
168 THE EST{E LAUDER COMPANIES INC.
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, 2014 $ — $ 29.2 $ —
Expected benefit payments for year ending June 30,
2014 53.3 20.2 6.2
2015 53.9 17.0 6.8
2016 51.6 19.8 7.4
2017 48.3 22.3 8.2
2018 50.6 22.4 8.9
Years 2019 –2023 277.4 123.9 56.7
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, 2013 is as follows:
Other than
Pension Plans Pension Plans
U.S. International Post-retirement
Equity 30% 19% 30%
Debt securities 41% 54% 41%
Other 29% 27% 29%
100% 100% 100%