Estee Lauder 2008 Annual Report Download - page 99

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NOTE 13
—
PENSION, DEFERRED COMPENSATION
AND POST-RETIREMENT BENEFIT PLANS
The Company maintains pension plans covering substan-
tially all of its full-time employees for its U.S. operations
and a majority of its international operations. Several plans
provide pension benefi ts based primarily on years of
service and employees’ earnings. In certain instances, the
Company adjusts benefi ts in connection with international
employee transfers.
Retirement Growth Account Plan (U.S.)
The Retirement Growth Account Plan is a trust-based,
noncontributory qualifi ed defi ned benefi t pension plan.
The Company’s funding policy consists of an annual
contribution at a rate that provides for future plan benefi ts
and maintains appropriate funded percentages. Such
contribution is not less than the minimum required by the
Employee Retirement Income Security Act of 1974, as
amended, (“ERISA”) and subsequent pension legislation
and is not more than the maximum amount deductible for
income tax purposes.
Restoration Plan (U.S.)
The Company also has an unfunded, non-qualifi ed domes-
tic noncontributory pension Restoration Plan to provide
benefi ts in excess of Internal Revenue Code limitations.
International Pension Plans
The Company maintains International Pension Plans, the
most signifi cant of which are defi ned benefi t pension
plans. The Company’s funding policies for these plans are
determined by local laws and regulations. The Company’s
most signifi cant defi ned benefi t pension obligations are
included in the plan summaries below. Fiscal 2008 plan
data refl ects a plan amendment designed to provide
certain employees of a particular affi liate an opportunity
to participate in a defi ned benefi t pension plan with
enhanced benefi ts as compared with their current defi ned
contribution plan. In addition, fiscal 2008 plan data
refl ects the growth and relative signifi cance of certain
other defi ned benefi t plans.
Post-retirement Benefi ts
The Company maintains a domestic post-retirement
benefi t plan which provides certain medical and dental
benefi ts to eligible employees. Employees hired after
January 1, 2002 are not eligible for retiree medical bene-
fi ts when they retire. Certain retired employees who are
receiving monthly pension benefi ts are eligible for par-
ticipation in the plan. Contributions required and benefi ts
received by retirees and eligible family members are
dependent on the age of the retiree. It is the Company’s
practice to fund these benefi ts as incurred.
Certain of the Company’s international subsidiaries
and affi liates have post-retirement plans, although most
participants are covered by government-sponsored or
administered programs.
Plan Summaries
In September 2006, the FASB issued SFAS No. 158,
“Employers’ Accounting for Defi ned Benefi t Pension and
Other Postretirement Plans—an amendment of FASB
Statements No. 87, 106, and 132(R)” (“SFAS No. 158”).
SFAS No. 158 requires employers to recognize a net liabil-
ity or asset and an offsetting adjustment to accumulated
other comprehensive income to report the funded status
of defi ned benefi t pension and other post-retirement
benefi t plans. Previous standards required employers to
disclose the complete funded status of its plans only in
the notes to the consolidated financial statements.
Changes in the funded status of these plans will be recog-
nized as they occur through other comprehensive income.
Additional minimum liability adjustments are no longer
recognized upon adoption of SFAS No. 158. As of June
30, 2007, the Company prospectively adopted the bal-
ance sheet recognition provisions of SFAS No. 158, which
resulted in a net adjustment of $57.3 million (after tax) to
reduce accumulated other comprehensive income.
THE EST{E LAUDER COMPANIES INC. 97