Estee Lauder 2015 Annual Report Download - page 109

106 THE EST{E LAUDER COMPANIES INC.
The following is a description of the valuation methodolo-
gies used for plan assets measured at fair value:
Cash and Cash Equivalents — Cash and all highly-liquid
securities with original maturities of three months or less
are classified as cash and cash equivalents, primarily con-
sisting of cash and time deposits. The carrying amount
approximates fair value, primarily because of the short
maturity of cash equivalent instruments.
Short-term investment funds — The fair values are deter-
mined using the Net Asset Value (“NAV”) provided by the
administrator of the fund. These assets are classified
within Level 2 of the valuation hierarchy and the Com-
pany has the ability to redeem at the measurement date
or within the near term without redemption restrictions.
Government and agency securities — The fair values are
determined using third-party pricing services using market
prices or prices derived from observable market inputs
such as benchmark curves, broker/dealer quotes, and
other industry and economic factors. These investments
are classified within Level 2 of the valuation hierarchy.
Debt instruments — The fair values are determined using
third-party pricing services using market prices or prices
derived from observable market inputs such as credit
spreads, broker/dealer quotes, benchmark curves and
other industry and economic factors. These investments
are classified within Level 2 of the valuation hierarchy.
Equity securities — The fair values are determined using
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.
Commingled funds — The fair values of publicly traded
funds are based upon market quotes and are classified
within Level 1 of the valuation hierarchy. The fair values
for non-publicly traded funds are determined using the
NAV provided by the administrator of the fund. Those
investments where the Company has the ability to redeem
at the measurement date or within the near term are
classified within Level 2 of the valuation hierarchy. When
the Company is unable to redeem in the near term, these
investments are classified within Level 3.
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, 2016 $ — $ 23.3 $ —
Expected benefit payments for year ending June 30,
2016 64.5 18.9 6.2
2017 62.4 20.3 7.0
2018 61.0 20.4 7.6
2019 56.9 19.9 8.3
2020 59.2 20.0 9.2
Years 2021–2025 306.1 133.3 57.2
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, 2015 is as follows:
Other than
Pension Plans Pension Plans
U.S. International Post-retirement
Equity 30% 20% 30%
Debt securities 39% 48% 39%
Other 31% 32% 31%
100% 100% 100%