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The Estée Lauder Companies Reports Solid Fiscal 2013 Second-Quarter Results

Combined, these actions created a difficult comparison between the fiscal 2013 second quarter and the fiscal 2012 second quarter of approximately $64 million in net sales and approximately $55 million in operating income and impacted the Company’s operating margin comparisons. The Company believes the presentation of certain comparative information in the discussions of the quarterly results in this release that exclude the impact of the timing of these orders is useful in analyzing the net sales and operating results of its business.

                                                       
 

Reconciliation of Certain Consolidated Statements of Earnings Accounts Before and After

Returns and Charges and Accelerated Orders Associated with the Company’s Implementation of SAP

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

 
Three Months Ended

December 31, 2012

 

Three Months Ended

December 31, 2011

 

As Reported

 

Returns/ Charges

 

SAP Adjust- ments

Before Charges /SAP

 

As Reported

 

Returns/ Charges

SAP Adjust- ments

Before Charges /SAP

 

% Change versus Prior Year Before Charges/SAP

Net Sales $2,933.0 $ 0.1 $ (94.3 ) $2,838.8 $2,737.5 $ 0.1 $ (29.6 ) $2,708.0 5%
Cost of sales 568.0 (1.2 ) (16.2 ) 550.6 551.0 0.1 (6.4 ) 544.7
 
Gross Profit 2,365.0 1.3 (78.1 ) 2,288.2 2,186.5 0.0 (23.2 ) 2,163.3 6%
Gross Margin 80.6 % 80.6 % 79.9 % 79.9 %
 
Operating expenses 1,711.9 (13.3 ) 1,698.6 1,589.5 (6.1 ) 1,583.4 7%
Operating Expense Margin 58.3 % 59.8 % 58.1 % 58.5 %
 
Operating Income 653.1 14.6 (78.1 ) 589.6 597.0 6.1 (23.2 ) 579.9 2%
Operating Income Margin 22.3 % 20.8 % 21.8 % 21.4 %
 
Provision for income taxes 211.6 5.1 (25.0 ) 191.7 192.5 1.7 (7.8 ) 186.4

Net Earnings Attributable to

The Estée Lauder Companies Inc.

447.5 9.5 (53.1 ) 403.9 396.7 4.4 (15.4 ) 385.7 5%
 

Diluted net earnings

attributable to The Estée

Lauder Companies Inc. per

common share

1.13 .02 (.13 ) 1.02 1.00 .01 (.04 ) .98 5%
 
 
                                                           
 

THE ESTÉE LAUDER COMPANIES INC.

Reconciliation of Certain Consolidated Statements of Earnings Accounts Before and After

Returns and Charges and Accelerated Orders Associated with the Company’s Implementation of SAP

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

 
Six Months Ended

December 31, 2012

Six Months Ended

December 31, 2011

As Reported

Returns/ Charges

 

SAP Adjust- ments

Before Charges /SAP

As Reported

 

Returns/ Charges

SAP Adjust- ments

Before Charges /SAP

 

% Change versus Prior Year Before Charges/SAP

Net Sales $5,482.5 $ 0.1 $ (94.3 ) $5,388.3 $5,214.2 $(0.6 ) $ (29.6 ) $5,184.0 4%
Cost of sales 1,107.2 (1.2 ) (16.2 ) 1,089.8 1,085.3 (6.4 ) 1,078.9
 
Gross Profit 4,375.3 1.3 (78.1 ) 4,298.5 4,128.9 (0.6 ) (23.2 ) 4,105.1 5%
Gross Margin 79.8 % 79.8 % 79.2 % 79.2 %
 
Operating expenses 3,240.2 (13.7 ) 3,226.5 3,101.9 (10.8 ) 3,091.1 4%
Operating Expense Margin 59.1 % 59.9 % 59.5 % 59.6 %
 
Operating Income 1,135.1 15.0 (78.1 ) 1,072.0 1,027.0 10.2 (23.2 ) 1,014.0 6%
Operating Income Margin 20.7 % 19.9 % 19.7 % 19.6 %
 

Interest expense on debt

extinguishment

19.1 (19.1 )
 
Provision for income taxes 360.9 12.0 (25.0 ) 347.9 327.9 2.9 (7.8 ) 323.0

Net Earnings Attributable to

The Estée Lauder

Companies Inc.

747.0 22.1 (53.1 ) 716.0 675.3 7.3 (15.4 ) 667.2 7%
 

Diluted net earnings

attributable to The Estée

Lauder Companies Inc. per

common share

1.89 .06 (.13 ) 1.81 1.70 .02 (.04 ) 1.68 8%
 
 

The impact of accelerated orders from certain retailers associated with the Company’s implementation of SAP on net sales and operating results by product category and geographic region is as follows:

               

(Unaudited; In millions)

Three Months Ended December 31, 2012 Three Months Ended December 31, 2011
      Net Sales        

Operating Results

Net Sales        

Operating Results

Product Category:
Skin Care $ 48 $ 40 $ 16 $ 13
Makeup 32 26 9 6
Fragrance 10 9 2 2
Hair Care 4 3 3 2
Other        
Total $ 94 $ 78 $ 30 $ 23
 
Region:
The Americas $ 29 $ 23 $ 2 $ 1
Europe, the Middle East & Africa 15 12 3 3
Asia/Pacific   50   43   25   19
Total $ 94 $ 78 $ 30 $ 23
 
 
                   
 

THE ESTÉE LAUDER COMPANIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; In millions)

 

 

December 31 2012

 

June 30 2012

 

December 31 2011

       
ASSETS
Current Assets
Cash and cash equivalents $ 1,323.6 $ 1,347.7 $ 999.1
Accounts receivable, net 1,531.7 1,060.3 1,383.7
Inventory and promotional merchandise, net 994.1 983.6 898.9
Prepaid expenses and other current assets 491.6 463.5 471.6
Total Current Assets 4,341.0 3,855.1 3,753.3
 
Property, Plant and Equipment, net 1,301.6 1,231.8 1,151.4
Other Assets 1,527.5 1,506.1 1,437.5
Total Assets $ 7,170.1 $ 6,593.0 $ 6,342.2
 
LIABILITIES AND EQUITY
Current Liabilities
Current debt $ 26.0 $ 219.0 $ 143.8
Accounts payable 345.7 493.8 384.8
Other current liabilities 1,680.5 1,413.0 1,493.5
Total Current Liabilities 2,052.2 2,125.8 2,022.1
 
Noncurrent Liabilities
Long-term debt 1,330.1 1,069.1 1,068.7
Other noncurrent liabilities 664.7 650.6 607.7
Total Noncurrent Liabilities 1,994.8 1,719.7 1,676.4
 
Total Equity 3,123.1 2,747.5 2,643.7
Total Liabilities and Equity $ 7,170.1 $ 6,593.0 $ 6,342.2
 
                                           
 

SELECT CASH FLOW DATA

(Unaudited; In millions)

         
 
Six Months Ended December 31

2012

 

2011

Cash Flows from Operating Activities      
Net earnings $ 749.0 $ 677.0
Depreciation and amortization 156.8 141.0
Deferred income taxes (22.3 ) (13.6 )
Impairment of other intangible assets 6.7
Other items 69.9 56.8
Changes in operating assets and liabilities:
Increase in accounts receivable, net (444.9 ) (494.4 )

Decrease in inventory and promotional merchandise

11.7 59.2
Increase in other assets, net (31.5 ) (12.3 )
Increase in accounts payable and other liabilities   166.4   189.8
Net cash flows provided by operating activities $ 655.1 $ 610.2
 
Capital expenditures 205.4 181.5
Payments to acquire treasury stock 326.5 522.4
Dividends paid 279.5 204.0




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