Estee Lauder 2011 Annual Report Download - page 114

112 THE EST{E LAUDER COMPANIES INC.
and businesses engaged in the wholesale distribution and
retail sale of Aveda products in fiscal 2009. The change
also reflected lower cash payments in fiscal 2010 related
to counters and leasehold improvements.
Net cash used for financing activities was $313.1 mil-
lion and $406.1 million in fiscal 2011 and 2010, respec-
tively, and net cash provided by financing activities was
$125.8 million in fiscal 2009. The decrease in net cash
flows used for financing activities reflected a favorable
comparison with fiscal 2010 which included the partial
redemption of the 2012 and 2013 Senior Notes. This
favorable comparison was offset by an increase in trea-
sury stock purchases and an increase in the common
stock dividends during fiscal 2011. Subsequent to June
30, 2011, we purchased approximately 2.8 million addi-
tional shares of Class A Common Stock for $280.1 million
pursuant to our share repurchase program. The change in
net cash flows used for financing activities in fiscal 2010
as compared with net cash flows provided by financing
activities in fiscal 2009 was primarily driven by the fiscal
2009 net proceeds from the issuance of the 2013 Senior
Notes and the fiscal 2010 partial redemption of the 2012
and 2013 Senior Notes. Also contributing to this change
was an increase in treasury stock purchases and repay-
ments related to Ojon promissory notes, partially offset by
higher cash inflows from stock option exercises and the
fiscal 2009 repayment of commercial paper borrowings.
Dividends
On November 9, 2010, the Board of Directors declared
an annual dividend of $.75 per share on our Class A and
Class B Common Stock, of which an aggregate of $148.0
million was paid on December 15, 2010 to stockholders
of record at the close of business on November 29, 2010.
The annual common stock dividend declared during fiscal
2010 was $.55 per share, of which an aggregate of $109.1
million was paid on December 16, 2009 to stockholders
of record at the close of business on November 30, 2009.
Pension and Post-retirement Plan Funding
Several factors influence the annual funding requirements
for our pension plans. For the U.S. Qualified Plan, our
funding policy consists of annual contributions at a rate
that provides for future plan benefits and maintains appro-
priate 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.
For each international plan, our funding policies are deter-
mined by local laws and regulations. In addition, amounts
necessary to fund future obligations under these plans
could vary depending on estimated assumptions as
detailed in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations — Critical
Accounting Policies and Estimates.” The effect of our pen-
sion plan funding on future operating results will depend
on economic conditions, employee demographics, mor-
tality rates, the number of participants electing to take
lump-sum distributions, investment performance and
funding decisions.
For the U.S. Qualified Plan, we maintain an investment
strategy of matching the duration of a substantial portion
of the plan assets with the duration of the underlying plan
liabilities. This strategy assisted in maintaining a funded
ratio of more than 100% as of June 30, 2011. For fiscal
2011 and 2010, we met or exceeded all minimum contri-
butions required by ERISA for the U.S. Qualified Plan.
Nevertheless, we made discretionary cash contributions
totaling $35.6 million and $39.0 million to the U.S. Quali-
fied Plan during fiscal 2011 and 2010, respectively.
We made discretionary cash contributions to our post-
retirement plan in the United States of $8.4 million and
$6.0 million during fiscal 2011 and 2010, respectively. At
this time, we do not expect to make cash contributions to
the U.S. Qualified Plan or our post-retirement plan in the
United States during fiscal 2012. However, as we continue
to monitor the performance of our plan assets, we may
decide to make discretionary contributions.
For fiscal 2011 and 2010, we made benefit payments
under our non-qualified domestic noncontributory
pension plan of $8.8 million and $7.7 million, respectively.
We expect to make benefit payments under this plan
during fiscal 2012 of approximately $10 million. For fiscal
2011 and 2010, we made cash contributions to our
international defined benefit pension plans of $34.1
million and $68.2 million, respectively. We expect to make
contributions under these plans during fiscal 2012 of
approximately $16 million.
Commitments and Contingencies
Certain of our business acquisition agreements include
“earn-out” provisions. These provisions generally require
that we pay to the seller or sellers of the business addi-
tional amounts based on the performance of the acquired
business. Since the size of each payment depends upon
performance of the acquired business, we do not expect
that such payments will have a material adverse impact on
our future results of operations or financial condition.
For additional contingencies refer to Legal Proceedings
in “Note 14 — Commitments and Contingencies” of Notes
to Consolidated Financial Statements.