Estee Lauder 2009 Annual Report Download - page 143

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 ser-
vice and employees’ earnings. In certain instances, the
Company adjusts benefi ts in connection with international
employee transfers. As of June 30, 2007, the Company
prospectively adopted SFAS No. 158, “Employers’
Accounting for Defi ned Benefi t Pension and Other Post-
retirement Plans—an amendment of FASB Statements No.
87, 106, and 132(R),” which requires employers to recog-
nize a net liability or asset and an offsetting adjustment to
accumulated other comprehensive income (loss) to report
the funded status of its benefit plans. The adoption
resulted in a net adjustment of $57.3 million (after tax) to
reduce accumulated other comprehensive income.
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 con-
tribution at a rate that provides for future plan benefi ts
and maintains appropriate funded percentages. Such con-
tribution 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 cer-
tain employees of a particular affi liate an opportunity to
participate in a defined benefit 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.
142 THE EST{E LAUDER COMPANIES INC.
The estimated fair values of the Company’s fi nancial instruments are as follows:
JUNE 30, 2009 JUNE 30, 2008
Carrying Amount Fair Value Carrying Amount Fair Value
(In millions)
Nonderivatives
Cash and cash equivalents $ 864.5 $ 864.5 $ 401.7 $ 401.7
Available-for-sale securities 5.5 5.5 15.8 15.8
Short-term and long-term debt 1,421.4 1,425.0 1,196.9 1,159.9
Derivatives
Foreign currency forward contracts —
asset (liability) (9.5) (9.5) (2.0) (2.0)
Foreign currency option contracts —
asset (liability) — — 3.5 3.5
Interest rate swap contracts — asset (liability) 24.5 24.5 10.8 10.8