Estee Lauder 2015 Annual Report Download - page 111

108 THE EST{E LAUDER COMPANIES INC.
401(k) Savings Plan (U.S.)
The Company’s 401(k) Savings Plan (“Savings Plan”) is
a contributory defined contribution plan covering sub-
stantially 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 participate in the Savings Plan thirty days following
their date of hire. The Savings Plan is subject to the
applicable provisions of ERISA. The Company matches a
portion of the participant’s contributions after one year of
service under a predetermined formula based on the par-
ticipant’s contribution level. The Company’s contributions
were $35.1 million, $33.3 million and $25.1 million for fis-
cal 2015, 2014 and 2013, respectively. Shares of the
Company’s Class A Common Stock are not an investment
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 change in the value of cash
units pursuant to agreements with certain key executives
and outside directors. The amounts included in the
accompanying consolidated balance sheets under these
plans were $74.7 million and $69.0 million as of June 30,
2015 and 2014, respectively. The expense for fiscal 2015,
2014 and 2013 was $8.6 million, $10.6 million and $12.2
million, respectively.
Legal Proceedings
The Company is involved, from time to time, in litigation
and other legal proceedings incidental to its business.
Management believes that the outcome of current litiga-
tion and legal proceedings will not have a material
adverse effect upon the Company’s results of operations,
financial condition or cash flows. However, manage-
ment’s assessment of the Company’s current litigation
and other legal proceedings could change in light of the
discovery of facts with respect to legal actions or other
proceedings pending against the Company, not presently
known to the Company or determinations by judges,
juries or other finders of fact which are not in accord
with management’s evaluation of the possible liability or
outcome of such litigation or proceedings. Reasonably
possible losses in addition to the amounts accrued for
litigation and other legal proceedings are not material to
the Company’s consolidated financial statements.
NOTE 14 — COMMITMENTS AND CONTINGENCIES
Contractual Obligations
The following table summarizes scheduled maturities of the Company’s contractual obligations for which cash flows are
fixed and determinable as of June 30, 2015:
Payments Due in Fiscal
Total 2016 2017 2018 2019 2020 Thereafter
(In millions)
Debt service(1) $2,970.6 $ 104.4 $ 378.4 $ 59.4 $ 58.4 $ 57.8 $2,312.2
Operating lease commitments(2) 1,927.8 299.8 279.4 252.5 205.7 168.6 721.8
Unconditional purchase obligations(3) 2,871.9 1,338.9 358.4 401.5 288.5 389.5 95.1
Gross unrecognized tax benefits
and interest — current(4) 5.2 5.2 — — — — —
Total contractual obligations $7,775.5 $1,748.3 $1,016.2 $713.4 $552.6 $615.9 $3,129.1
(1) Includes long-term and current debt and the related projected interest costs, and to a lesser extent, capital lease commitments. Interest costs on
long-term and current debt are projected to be $74.4 million in fiscal 2016 and fiscal 2017, $57.8 million in each of the years from fiscal 2018 through
fiscal 2020 and $1,012.2 million thereafter. Projected interest costs on variable rate instruments were calculated using market rates at June 30, 2015.
Refer to Note 10 — Debt.
(2) Minimum operating lease commitments only include base rent. Certain leases provide for contingent rents that are not measurable at inception and
primarily include rents based on a percentage of sales in excess of stipulated levels, as well as common area maintenance. These amounts are excluded
from minimum operating lease commitments and are included in the determination of total rent expense when it is probable that the expense has been
incurred and the amount is reasonably measurable. Such amounts have not been material to total rent expense. Total rental expense included in the
accompanying consolidated statements of earnings was $402.2 million, $356.1 million and $332.4 million in fiscal 2015, 2014 and 2013, respectively.
(3) Unconditional purchase obligations primarily include: inventory commitments, additional purchase price payable and contingent consideration which
resulted from the fiscal 2015 acquisitions, earn-out payments related to the acquisition of Bobbi Brown, royalty payments pursuant to license agree-
ments, advertising commitments, capital improvement commitments, non-discretionary planned funding of pension and other post-retirement benefit
obligations and commitments pursuant to executive compensation arrangements. Future contingent consideration, earn-out payments and royalty and
advertising commitments were estimated based on planned future sales for the term that was in effect at June 30, 2015, without consideration for
potential renewal periods.
(4) Refer to Note 8 — Income Taxes for information regarding unrecognized tax benefits. As of June 30, 2015, the noncurrent portion of the Company’s
unrecognized tax benefits, including related accrued interest and penalties was $89.1 million. At this time, the settlement period for the noncurrent
portion of the unrecognized tax benefits, including related accrued interest and penalties, cannot be determined and therefore was not included.