Estee Lauder 2002 Annual Report Download - page 72

THEEST{E LAUDER COMPANIES INC.
of ERISA. The Company matches a portion of the par-
ticipant’s contributions after one year of service under
a predetermined formula based on the participant’s con-
tribution level and years of service. The Company’s
contributions were approximately $6.7 million for the
fiscal years ended June 30, 2002 and 2001, and $5.8
million in fiscal 2000. 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 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 $95.7 million and $87.3 million as of June 30,
2002 and 2001, respectively. The expense for fiscal
2002, 2001 and 2000 was $11.6 million, $11.6 million and
$12.3 million, respectively.
NOTE 11– POSTEMPLOYMENT BENEFITS OTHER
THAN TO RETIREES
The Company provides certain postemployment benefits
to eligible former or inactive employees and their
dependents during the period subsequent to employ-
ment but prior to retirement. These benefits include
health care coverage and severance benefits. Generally,
the cost of providing these benefits is accrued and any
incremental benefits were not material to the Company’s
consolidated financial results.
NOTE 12 – $6.50 CUMULATIVE REDEEMABLE
PREFERRED STOCK, AT REDEMPTION VALUE
As of June 30, 2002, the Company’s authorized capital
stock included 23.6 million shares of preferred stock,
par value $.01 per share, of which 3.6 million shares
are outstanding and designated as $6.50 Cumulative
Redeemable Preferred Stock. The outstanding preferred
stock was issued in June 1995 in exchange for nonvoting
common stock of the Company owned by The Estée
Lauder 1994 Trust.
Holders of the $6.50 Cumulative Redeemable Pre-
ferred Stock are entitled to receive cumulative cash divi-
dends at a rate of $6.50 per annum per share payable in
quarterly installments. Such dividends have preference
over all other dividends of stock issued by the Company.
Shares are subject to mandatory redemption on June 30,
2005 at a redemption price of $100 per share. Following
such date and so long as such mandatory redemption
obligations have not been discharged in full, no dividends
may be paid or declared upon the Class A or Class B
Common Stock, or on any other capital stock ranking
junior to or in parity with such $6.50 Cumulative
Redeemable Preferred Stock and no shares of Class A or
Class B Common Stock or such junior or parity stock may
be redeemed or acquired for any consideration by the
Company. Under certain circumstances, the Company
may redeem the stock, in whole or in part, prior to the
mandatory redemption date. Holders of such stock may
put such shares to the Company at a price of $100 per
share upon the occurrence of certain events.
The Company recorded the $6.50 Cumulative
Redeemable Preferred Stock at its redemption value of
$360.0 million and charged this amount, net of the par
value of the shares of nonvoting common stock
exchanged, to stockholders’ equity in fiscal 1995.
NOTE 13 – COMMON STOCK
As of June 30, 2002, the Company’s authorized common
stock consists of 650 million shares of Class A Common
Stock, par value $.01 per share, and 240 million shares of
Class B Common Stock, par value $.01 per share. Class B
Common Stock is convertible into Class A Common
Stock, in whole or in part, at any time and from time to
time at the option of the holder, on the basis of one share
of Class A Common Stock for each share of Class B
Common Stock converted. Holders of the Company’s
Class A Common Stock are entitled to one vote per share
and holders of the Company’s Class B Common Stock are
entitled to ten votes per share.
Information about the Company’s common stock
outstanding is as follows:
Class A Class B
(Shares in thousands)
Balance at June 30, 1999 123,481.2 113,679.3
Acquisition of treasury stock (589.5) —
Share grants 2.9 —
Share units converted 100.0 —
Stock option programs 1,187.1 —
Balance at June 30, 2000 124,181.7 113,679.3
Acquisition of treasury stock (0.9) —
Conversion of Class B to Class A 189.0 (189.0)
Stock option programs 806.2 —
Balance at June 30, 2001 125,176.0 113,490.3
Acquisition of treasury stock (1,500.0) —
Conversion of Class B to Class A 5,077.8 (5,077.8)
Stock option programs 436.3 —
Balance at June 30, 2002 129,190.1 108,412.5
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