Estee Lauder 2003 Annual Report Download - page 76

THEEST{E LAUDER COMPANIES INC.75
International pension plans with accumulated benefit
obligations in excess of the plans’ assets had aggregate
projected benefit obligations of $137.8 million and
$113.3 million, aggregate accumulated benefit obligations
of $119.1 million and $97.2 million and aggregate fair
value of plan assets of $68.9 million and $66.3 million at
June 30, 2003 and 2002, respectively.
401(k) Savings Plan (U.S.)
The Company’s 401(k) Savings Plan (“Savings Plan”) is a
contributory defined contribution plan covering substan-
tially all regular U.S. employees who have completed the
hours and service requirements, as defined by the plan
document.Effective January 1, 2002, regular full-time
employees are eligible to participate in the Plan on the
first day of the second month following their date of hire.
The Savings Plan is subject to the applicable provisions
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 $9.1 million in fiscal
2003 and $6.7 million for the fiscal years ended June 30,
2002 and 2001. Shares of the Company’s Class A Com-
mon 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 $109.2 million and $95.7 million as of June
30, 2003 and 2002, respectively. The expense for fiscal
2003 was $17.4 million and for fiscal 2002 and 2001 was
$11.6 million in each year.
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, 2003, 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.