Estee Lauder 2003 Annual Report Download - page 75

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THEEST{E LAUDER COMPANIES INC. 74
Other than
Pension Plans Pension Plans
2003 2002 2001 2003 2002 2001 2003 2002 2001
Weighted-average assumptions
Pre-retirement discount rate 5.75% 7.00% 7.50% 2.75– 2.75– 3.00– 5.75% 7.00% 7.50%
7.00% 7.00% 7.25%
Postretirement discount rate 4.75% 5.75% 6.00% ——————
Expected return on assets 8.50% 9.00% 9.00% 4.50– 4.50– 5.00– N/A N/A N/A
8.25% 8.25% 8.50%
Rate of compensation increase 3.00– 4.50– 5.00– 1.75– 1.75– 2.00– N/A N/A N/A
9.50% 11.00% 11.50% 4.00% 4.00% 5.50%
Components of net periodic
benefit cost (In millions)
Service cost, net $15.1 $ 13.5 $ 12.3 $8.5 $ 8.0 $ 8.0 $2.2 $ 1.8 $ 1.9
Interest cost 21.2 20.6 19.7 8.1 7.2 6.7 3.2 2.9 3.0
Expected return on assets (18.3) (17.3) (16.2) (9.2) (8.3) (7.4) ———
Amortization of:
Transition (asset) obligation (1.5) (1.5) (1.4) 0.3 0.2 0.2 ———
Prior service cost 0.2 0.4 0.4 0.2 0.2 0.2 ———
Actuarial loss (gain) 5.1 2.6 1.1 1.5 1.0 0.9 (0.1) (0.4) (0.2)
Settlements and curtailments
———2.3 —————
Net periodic benefit cost $ 21.8 $ 18.3 $ 15.9 $11.7 $ 8.3 $ 8.6 $5.3 $ 4.3 $ 4.7
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-
percentage-point change in assumed health care cost trend rates for fiscal 2003 would have had the following effects:
One-Percentage-Point Increase One-Percentage-Point Decrease
(In millions)
Effect on total service and interest costs $0.7 $(0.6)
Effect on postretirement benefit obligations $6.8 $(6.1)
The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the Company’s pension
plans at June 30 are as follows:
Pension Plans
2003 2002 2003 2002 2003 2002
(In millions)
Projected Benefit Obligation $286.6 $244.7 $72.1 $65.6 $191.0 $154.7
Accumulated Benefit Obligation 238.7 191.5 56.4 47.3 160.7 127.9
Fair Value of Plan Assets 277.4 201.8 ——120.9 116.3
InternationalRestoration
Retirement
Growth Account
PostretirementInternationalU.S.