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Estée Lauder Companies Third Quarter Earnings Per Share Rise To $.38, Before Restructuring Activities

Stocks in this article: EL

The Company operates on a global basis, with the majority of its net sales generated outside the United States. Accordingly, fluctuations in foreign currency exchange rates can affect the Company’s results of operations. Therefore, the Company presents certain net sales information excluding the effect of foreign currency rate fluctuations to provide a framework for assessing the performance of its underlying business outside the United States. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. The Company calculates constant currency information by translating current-period results using prior-year period weighted average foreign currency exchange rates.

 

THE ESTÉE LAUDER COMPANIES INC.

Reconciliation of Certain Consolidated Statements of Earnings Accounts Before and After Returns and Charges

(Unaudited; In millions, except per share data and percentages)

 
      Three Months Ended

March 31, 2012

    Three Months Ended

March 31, 2011

 

As Reported

 

Returns/

Charges

 

Before

Returns/

Charges

As Reported

   

Returns/

Charges

   

Before

Returns/

Charges

% Change

versus Prior

Year Before

Returns/Charges

Net Sales   $ 2,248.2   $ 0.0 $ 2,248.2 $ 2,165.7 $ 0.7 $ 2,166.4 4 %
Cost of sales   469.3   (0.4 )   468.9   482.6   (1.0 )   481.6
 
Gross Profit 1,778.9 0.4 1,779.3 1,683.1 1.7 1,684.8 6 %
Gross Margin 79.1 % 79.1 % 77.7 % 77.7 %
 
Operating expenses   1,567.4   (28.4 )   1,539.0   1,474.0   (21.8 )   1,452.2 6 %
 
Operating Expense Margin 69.7 % 68.4 % 68.1 % 67.0 %
 
Operating Income 211.5 28.8 240.3 209.1 23.5 232.6 3 %
Operating Income Margin 9.4 % 10.7 % 9.6 % 10.7

 

 

 
Provision for income taxes 65.7 10.0 75.7 68.2 5.6 73.8

Net Earnings Attributable to

  The Estée Lauder Companies Inc.

130.4 18.8 149.2 124.7 17.9 142.6 5 %
 

Diluted net earnings attributable

  to The Estée Lauder Companies

  Inc. per common share

.33 .05 .38 .31 .04 .35 7 %
 
        Nine Months Ended

March 31, 2012

    Nine Months Ended

March 31, 2011

 

As Reported

 

Returns/

Charges

 

Before

Returns/

Charges

As Reported

   

Returns/

Charges

   

Before

Returns/

Charges

% Change

versus Prior

Year Before

Returns/Charges

Net Sales   $ 7,462.4   $ (0.6 ) $ 7,461.8 $ 6,749.4 $ 2.2 $ 6,751.6 11 %
Cost of sales   1,554.6   (0.4 )   1,554.2   1,511.8   (5.6 )   1,506.2
 
Gross Profit 5,907.8 (0.2 ) 5,907.6 5,237.6 7.8 5,245.4 13 %
Gross Margin 79.2 % 79.2 % 77.6 % 77.7 %
 
Operating expenses   4,669.3   (39.2 )   4,630.1   4,212.8   (39.6 )   4,173.2 11 %
 
Operating Expense Margin 62.6 % 62.1 % 62.4 % 61.8 %
 
Operating Income 1,238.5 39.0 1,277.5 1,024.8 47.4 1,072.2 19 %
Operating Income Margin 16.6 % 17.1 % 15.2 % 15.9 %
 
Provision for income taxes 393.6 12.9 406.5 316.2 14.3 330.5

Net Earnings Attributable to

  The Estée Lauder Companies Inc.

805.7 26.1 831.8 659.7 33.1 692.8 20 %
 

Diluted net earnings attributable

  to The Estée Lauder Companies

  Inc. per common share

2.03 .07 2.10 1.64 .08 1.72 22 %
 
 

THE ESTÉE LAUDER COMPANIES INC.

SUMMARY OF CONSOLIDATED RESULTS

(Unaudited; Dollars in millions)

 
          Three Months

Ended March 31

    Percent Change   Nine Months

Ended March 31

  Percent Change

2012

 

2011

Reported

Basis

 

Local

Currency

2012

   

2011

Reported

Basis

   

Local

Currency

NET SALES    
By Region:    
The Americas $ 974.3 $ 928.9 5 % 5 % $ 3,151.0 $ 2,914.1 8 % 8 %
Europe, the Middle East & Africa. 823.6 794.7 4 6 2,728.1 2,468.9 10 10
Asia/Pacific 450.3 442.8 2 1,582.7 1,368.6 16 11
Subtotal 2,248.2 2,166.4 4 4 7,461.8 6,751.6 11 9

Returns associated with

  restructuring activities

(0.7 ) 0.6 (2.2 )
Total $ 2,248.2 $ 2,165.7 4 % 5 % $ 7,462.4 $ 6,749.4 11 % 9 %
 
By Product Category:
Skin Care $ 1,019.0 $ 933.4 9 % 10 % $ 3,257.8 $ 2,820.3 16 % 14 %
Makeup 877.0 878.2 1 2,789.4 2,554.6 9 8
Fragrance 231.3 232.0 2 1,029.2 1,014.1 1 1
Hair Care 110.1 110.0 1 335.3 316.1 6 6
Other 10.8 12.8 (16 ) (14 ) 50.1 46.5 8 7
Subtotal 2,248.2 2,166.4 4 4 7,461.8 6,751.6 11 9

Returns associated with

  restructuring activities

(0.7 ) 0.6 (2.2 )
Total $ 2,248.2 $ 2,165.7 4 % 5 % $ 7,462.4 $ 6,749.4 11 % 9 %
 
 

OPERATING INCOME (LOSS)

By Region:
The Americas $ 86.2 $ 54.7 58 % $ 347.8 $ 256.7 35 %
Europe, the Middle East & Africa. 101.0 115.8 (13 ) 598.8 556.1 8
Asia/Pacific 53.1 62.1 (14 ) 330.9 259.4 28
Subtotal 240.3 232.6 3 1,277.5 1,072.2 19

Charges associated with

  restructuring activities

(28.8 ) (23.5 ) (39.0 ) (47.4 )
Total $ 211.5 $ 209.1 1 % $ 1,238.5 $ 1,024.8 21 %
 
By Product Category:
Skin Care $ 156.3 $ 137.1 14 % $ 692.2 $ 547.2 26 %
Makeup 90.2 128.3 (30 ) 458.3 423.4 8
Fragrance (8.5

)

 

(7.5 ) (13 ) 113.0 115.7 (2 )
Hair Care 7.4 (23.8 ) 100 + 25.0 (9.8 ) 100 +
Other (5.1

)

 

(1.5 ) (100 )+ (11.0 ) (4.3 ) (100 )+
Subtotal 240.3 232.6 3 1,277.5 1,072.2 19

Charges associated with

  restructuring activities

(28.8

)

 

(23.5 ) (39.0 ) (47.4 )
Total $ 211.5 $ 209.1 1 % $ 1,238.5 $ 1,024.8 21 %
 

THE ESTÉE LAUDER COMPANIES INC.

As part of the Company’s strategic modernization initiative, the Company anticipates the continued migration of its operations to SAP-based technologies, with the majority of its locations being enabled through 2014. As a result, the Company has experienced, and may continue to experience, fluctuations in its net sales and operating results resulting from accelerated orders from certain of its retailers to provide adequate safety stock to mitigate any potential short-term business interruption associated with the SAP rollout. In particular, approximately $30 million of accelerated orders were recorded as net sales in the fiscal 2012 second quarter that likely would have occurred in the fiscal 2012 third quarter. In addition, approximately $42 million of accelerated orders were recorded as net sales in the fiscal 2011 third quarter that would have occurred in the fiscal 2011 fourth quarter.

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