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Elizabeth Arden, Inc. Announces First Quarter Fiscal 2013 Results

(d) On a reported basis, for the three months ended September 30, 2012 and 2011, our effective tax rate, which is calculated as a percentage of income before income taxes, was 18.1% and 23.1%, respectively. On an adjusted basis, for the three months ended September 30, 2012 and 2011, our effective tax rate was 24.2% and 23.1%, respectively.

     

SEGMENT NET SALES

The table below is a comparative summary of our net sales by reportable segment for the three months ended September 30, 2012 and 2011:
 
 
(In thousands) Three Months Ended % Increase (Decrease)
September 30, 2012     September 30, 2011  

GAAP
    Constant Rates (e)
 
Segment Net Sales:
North America $ 231,557 $ 192,966 20.0 % 20.2%
International   112,984   110,568 2.2 % 8.8%
Total $ 344,541 $ 303,534 13.5 % 16.1%
 
       

PRODUCT CATEGORY NET SALES

The table below is a comparative summary of our net sales by product category for the three months ended September 30, 2012 and 2011:
 
(In thousands) Three Months Ended

% Increase (Decrease)
September 30, 2012     September 30, 2011

GAAP
    Constant Rates (e)
 
Product Category Net Sales:
Elizabeth Arden Brand $ 108,480 $ 114,298 (5.1 %) (0.9 %)
Celebrity, Lifestyle, Designer and Other Fragrances   236,061   189,236 24.7 % 26.3 %
Total $ 344,541 $ 303,534 13.5 % 16.1 %
 

(e) Constant currency information compares results between periods assuming exchange rates had remained constant period-over-period and excludes gains and losses from foreign currency contracts in all periods. We calculate constant currency information by translating current-period results using prior-year GAAP foreign currency exchange rates. The gains and/or losses from foreign currency contracts were not material for all periods presented.
           

ELIZABETH ARDEN, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET DATA(Unaudited)
 
(Amounts In thousands) September 30, 2012 June 30, 2012

September 30, 2011
 
Cash $ 35,917 $ 59,080 $ 34,450
Accounts Receivable, Net 310,098 188,141 237,090
Inventories 396,059 291,987 327,945
Property and Equipment, Net 89,261 89,438 80,128
Exclusive Brand Licenses, Trademarks and Intangibles, Net 309,806 314,502 226,465
Goodwill 21,054 21,054 21,054
Total Assets 1,265,621 1,066,754 1,031,495
Short-Term Debt 214,000 89,200 137,200
Current Liabilities 483,005 278,679 334,755
Long-Term Liabilities 292,972 306,348 270,741
Long-Term Debt 250,000 250,000 250,000
Shareholders' Equity 489,644 481,727 426,000
Working Capital 340,158 345,818 351,936
 
 
SUPPLEMENTARY CASH FLOW INFORMATION
(Unaudited)
(In thousands)
Three Months Ended
September 30,       September 30,
2012 2011
Net cash used in operating activities $ (141,261) $ (115,584)
Net cash used in investing activities (14,334) (47,834)
Net cash provided by financing activities 132,323 140,704
Net decrease in cash and cash equivalents (23,163) (24,400)
 

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Elizabeth Arden, Inc. is hereby providing cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in forward-looking statements (as defined in such act). Any statements that are not historical facts and that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, indicated through the use of words or phrases such as "will likely result," "are expected to," "will continue," "is anticipated," "should," "estimated," "intends," "plans," "believes" and "projects") may be forward-looking and may involve estimates and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements. These statements include, but are not limited to, our guidance and expectations regarding net sales, earnings, gross margins, operating cash flow and returns on invested capital. In addition, any such statements are qualified in their entirety by reference to, and are accompanied by, the following key factors that have a direct bearing on our results of operations:
  *   factors affecting our relationships with our customers or our customers' businesses, including the absence of contracts with customers, our customers' financial condition, and changes in the retail, fragrance and cosmetic industries, such as the consolidation of retailers and the associated closing of retail doors as well as retailer inventory control practices, including, but not limited to, levels of inventory carried at point of sale and practices used to control inventory shrinkage;
* risks of international operations, including foreign currency fluctuations, hedging activities, economic and political consequences of terrorist attacks, disruptions in travel, unfavorable changes in U.S. or international laws or regulations, diseases and pandemics, and political instability in certain regions of the world;
* our reliance on license agreements with third parties for the rights to sell many of our prestige fragrance brands;
* our reliance on third-party manufacturers for substantially all of our owned and licensed products and our absence of contracts with suppliers of distributed brands and components for manufacturing of owned and licensed brands;
* delays in shipments, inventory shortages and higher supply chain costs due to the loss of or disruption in our distribution facilities or at key third party manufacturing or fulfillment facilities that manufacture or provide logistic services for our products;
* our ability to respond in a timely manner to changing consumer preferences and purchasing patterns and other international and domestic conditions and events that impact retailer and/or consumer confidence and demand, such as domestic or global recessions or economic uncertainty;
* our ability to protect our intellectual property rights;
* the success, or changes in the timing or scope, of our new product launches, advertising and merchandising programs;
* the quality, safety and efficacy of our products;
* the impact of competitive products and pricing;
* our ability to (i) implement our growth strategy and acquire or license additional brands or secure additional distribution arrangements, (ii) successfully and cost-effectively integrate acquired businesses or new brands, and (iii) finance our growth strategy and our working capital requirements;
* our level of indebtedness, our ability to realize sufficient cash flows from operations to meet our debt service obligations and working capital requirements, and restrictive covenants in our revolving credit facility, term loan and the indenture for our 7 3/8% senior notes;
* changes in product mix to less profitable products;
* the retention and availability of key personnel;
* changes in the legal, regulatory and political environment that impact, or will impact, our business, including changes to customs or trade regulations, laws or regulations relating to ingredients or other chemicals or raw materials contained in products or packaging, or accounting standards or critical accounting estimates;
*

*
the success of our global Elizabeth Arden brand repositioning efforts;

the impact of tax audits, including the ultimate outcome of the pending Internal Revenue Service examination of our U.S. federal tax returns for the fiscal years ended June 30, 2008 and June 30, 2009, changes in tax laws or tax rates, and our ability to utilize our deferred tax assets;
* our ability to effectively implement, manage and maintain our global information systems and maintain the security of our confidential data and our employees' and customers' personal information;
* our reliance on third parties for certain outsourced business services, including information technology operations and employee benefit plan administration;
* the potential for significant impairment charges relating to our trademarks, goodwill or other intangible assets that could result from a number of factors, including downward pressure on our stock price; and
* other unanticipated risks and uncertainties.
 

We caution that the factors described herein could cause actual results to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. This press release is qualified in its entirety by the cautionary statements and risk factor disclosure contained in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the year ended June 30, 2012.

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