Estee Lauder 2013 Annual Report Download - page 172

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. Regular full-time employees are eligible to par-
ticipate in the Savings Plan thirty days following their date
of hire. The Savings Plan is subject to the applicable provi -
sions of ERISA. The Company matches a portion of the
participant’s contributions after one year of service under
a predetermined formula based on the participant’s con-
tribution level. The Company’s contributions were $25.1
million, $23.6 million and $22.4 million for fiscal 2013,
2012 and 2011, respectively. Shares of the Company’s
Legal Proceedings
The Company is involved, from time to time, in litigation
and other legal proceedings incidental to its business.
Management believes that the outcome of current litiga-
tion and legal proceedings will not have a material
adverse effect upon the Company’s results of operations,
financial condition or cash flows. However, management’s
assessment of the Company’s current litigation and other
Class A Common 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 $72.1 million and $66.6 million as of June 30,
2013 and 2012, respectively. The expense for fiscal 2013,
2012 and 2011 was $12.2 million, $8.4 million and $9.9
million, respectively.
legal proceedings could change in light of the discovery
of facts with respect to legal actions or other proceedings
pending against the Company, not presently known to the
Company or determinations by judges, juries or other
finders of fact which are not in accord with management’s
evaluation of the possible liability or outcome of such liti-
gation or proceedings. Except as disclosed below, reason-
ably possible losses in addition to the amounts accrued
170 THE EST{E LAUDER COMPANIES INC.
NOTE 13 — COMMITMENTS AND CONTINGENCIES
Contractual Obligations
The following table summarizes scheduled maturities of the Company’s contractual obligations for which cash flows are
fixed and determinable as of June 30, 2013:
Payments Due in Fiscal
Total 2014 2015 2016 2017 2018 Thereafter
(In millions)
Debt service(1) $2,386.3 $ 79.6 $ 65.5 $ 61.8 $361.3 $ 44.7 $1,773.4
Operating lease commitments(2) 1,534.7 280.2 241.0 210.9 176.5 146.1 480.0
Unconditional purchase obligations(3) 2,681.7 1,441.6 346.3 358.2 139.1 143.8 252.7
Gross unrecognized tax benefits
and interest — current(4) 0.9 0.9 — — — — —
Total contractual obligations $6,603.6 $1,802.3 $652.8 $630.9 $676.9 $334.6 $2,506.1
(1) Includes long-term and current debt and the related projected interest costs, and to a lesser extent, capital lease commitments. Interest costs on
long-term and current debt are projected to be $61.3 million in each of the years from fiscal 2014 through fiscal 2017, $44.6 million in fiscal 2018
and $773.3 million thereafter. Projected interest costs on variable rate instruments were calculated using market rates at June 30, 2013. Refer to
Note 9 — Debt.
(2) Minimum operating lease commitments only include base rent. Certain leases provide for contingent rents that are not measurable at inception
and primarily include rents based on a percentage of sales in excess of stipulated levels, as well as common area maintenance. These amounts are
excluded from minimum operating lease commitments and are included in the determination of total rent expense when it is probable that the
expense has been incurred and the amount is reasonably measurable. Such amounts have not been material to total rent expense. Total rental
expense included in the accompanying consolidated statements of earnings was $332.4 million, $304.9 million and $290.9 million in fiscal 2013,
2012 and 2011, respectively.
(3) Unconditional purchase obligations primarily include inventory commitments, estimated future earn-out payments, estimated royalty payments
pursuant to license agreements, advertising commitments, capital improvement commitments, planned funding of pension and other post-
retirement benefit obligations, commitments pursuant to executive compensation arrangements, obligations related to the Company’s cost savings
initiatives and acquisitions. Future earn-out payments and future royalty and advertising commitments were estimated based on planned future
sales for the term that was in effect at June 30, 2013, without consideration for potential renewal periods.
(4) Refer to Note 7 — Income Taxes for information regarding unrecognized tax benefits. As of June 30, 2013, the noncurrent portion of the Company’s
unrecognized tax benefits, including related accrued interest and penalties was $80.5 million. At this time, the settlement period for the noncurrent
portion of the unrecognized tax benefits, including related accrued interest and penalties, cannot be determined and therefore was not included.