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TheStreet Open House

The Estée Lauder Companies Reports Record Fiscal 2013 Fourth Quarter And Full Year Results

This earnings release includes some non-GAAP financial measures relating to charges associated with restructuring activities and the extinguishment of debt. The following is a reconciliation between the non-GAAP financial measures and the most directly comparable GAAP measure for certain consolidated statements of earnings accounts before and after the returns and charges associated with restructuring activities and the extinguishment of debt. The Company uses the non-GAAP financial measures, among other things, to evaluate its operating performance, and the measures represent the manner in which the Company conducts and views its business. Management believes that excluding these items that are special in nature or that are not comparable from period to period helps investors and others compare operating performance between two periods. While the Company considers the non-GAAP measures useful in analyzing its results, they are not intended to replace, or act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with GAAP.

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

June 30, 2013

    Three Months Ended

June 30, 2012

   
As Reported     Returns/

Charges

    Before

Returns/

Charges

As Reported     Returns/

Charges

   

Before

Returns/

Charges

% Change

versus Prior

Year Before

Returns/Charges

Net Sales $2,407.4 $ 1.4 $2,408.8 $2,251.2 $2.7 $2,253.9 7 %
Cost of sales 475.6 475.6 441.2 (1.1 ) 440.1
 
Gross Profit 1,931.8 1.4 1,933.2 1,810.0 3.8 1,813.8 7 %
Gross Margin 80.2 % 80.3 % 80.4 % 80.5 %
 
Operating expenses 1,786.0 (3.1 ) 1,782.9 1,736.8 (20.4 ) 1,716.4 4 %
Operating Expense Margin 74.2 % 74.0 % 77.2 % 76.2 %
 
Operating Income 145.8 4.5 150.3 73.2 24.2 97.4 54 %
Operating Income Margin 6.0 % 6.3 % 3.2 % 4.3 %
 
Provision for income taxes 36.9 1.7 38.6 7.0 6.2 13.2

Net Earnings Attributable to

  The Estée Lauder Companies Inc.

94.0 2.8 96.8 51.2 18.0 69.2 40 %
 

Diluted net earnings attributable

  to The Estée Lauder Companies

  Inc. per common share

.24 .01 .24 .13 .04 .17 41 %
 
 
 
        Year Ended

June 30, 2013

    Year Ended

June 30, 2012

   
As Reported     Returns/

Charges

    Before

Returns/

Charges

As Reported     Returns/

Charges

   

Before

Returns/

Charges

% Change

versus Prior

Year Before

Returns/Charges

Net Sales $10,181.7 $ 1.5 $10,183.2 $9,713.6 $ 2.1 $9,715.7 5 %
Cost of sales 2,025.9 (1.2 ) 2,024.7 1,995.8 (1.5 ) 1,994.3
 
Gross Profit 8,155.8 2.7 8,158.5 7,717.8 3.6 7,721.4 6 %
Gross Margin 80.1 % 80.2 % 79.5 % 79.5 %
 
Operating expenses 6,629.8 (15.1 ) 6,614.7 6,406.1 (59.6 ) 6,346.5 4 %
Operating Expense Margin 65.1 % 65.0 % 66.0 % 65.3 %
 
Operating Income 1,526.0 17.8 1,543.8 1,311.7 63.2 1,374.9 12 %
Operating Income Margin 15.0 % 15.2 % 13.5 % 14.2 %
 

Interest expense on debt

  extinguishment

19.1 (19.1 )
 
Provision for income taxes 451.4 13.0 464.4 400.6 19.1 419.7

Net Earnings Attributable to

  The Estée Lauder Companies Inc.

1,019.8 23.9 1,043.7 856.9 44.1 901.0 16 %
 

Diluted net earnings attributable

  to The Estée Lauder Companies

  Inc. per common share

2.58 .06 2.64 2.16 .11 2.27 16 %
 
 

THE ESTÉE LAUDER COMPANIES INC.

SUMMARY OF CONSOLIDATED RESULTS

(Unaudited; Dollars in millions)

 
          Three Months Ended June 30
Net Sales     Percent Change       Operating

Income (Loss)

   

Percent Change

2013     2012

Reported Basis

     

Local Currency

2013     2012

Reported Basis

Results by Geographic Region

The Americas $ 992.5 $ 950.1 4 % 5 % $ 50.8 $ (59.4 ) 100 +%
Europe, the Middle East & Africa. 980.6 875.1 12 13 154.4 147.5 5
Asia/Pacific 435.7 428.7 2 5 (54.9 ) 9.3 (100 )+
Subtotal 2,408.8 2,253.9 7 8 150.3 97.4 54

Returns and charges associated

  with restructuring activities

(1.4 ) (2.7 ) (4.5 ) (24.2 )
Total $ 2,407.4 $ 2,251.2 7 % 8 % $ 145.8 $ 73.2 99 %
 

Results by Product Category

Skin Care $ 1,056.9 $ 967.4 9 % 11 % $ 80.0 $ 54.5 47 %
Makeup 948.0 907.4 4 5 85.3 79.7 7
Fragrance 271.2 241.8 12 13 (10.2 ) (12.9 ) 21
Hair Care 126.9 127.1 0.8 (12.8 ) 100 +
Other 5.8 10.2 (43 ) (44 ) (5.6 ) (11.1 ) 49
Subtotal 2,408.8 2,253.9 7 8 150.3 97.4 54

Returns and charges associated

  with restructuring activities

(1.4 ) (2.7 ) (4.5 ) (24.2 )
Total $ 2,407.4 $ 2,251.2 7 % 8 % $ 145.8 $ 73.2 99 %
 
 

THE ESTÉE LAUDER COMPANIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; In millions)

 
       

June 30

2013

   

June 30

2012

ASSETS    
Current Assets
Cash and cash equivalents $ 1,495.7 $ 1,347.7
Accounts receivable, net 1,171.7 1,060.3
Inventory and promotional merchandise, net 1,113.9 983.6

Prepaid expenses and other current assets

515.9 463.5
Total Current Assets 4,297.2 3,855.1
 

Property, Plant and Equipment, net

1,350.7 1,231.8
Other Assets 1,497.3 1,506.1
Total Assets $ 7,145.2 $ 6,593.0
 
LIABILITIES AND EQUITY
Current Liabilities
Current debt $ 18.3 $ 219.0
Accounts payable 481.7 493.8
Other current liabilities 1,434.6 1,413.0
Total Current Liabilities 1,934.6 2,125.8
 
Noncurrent Liabilities
Long-term debt 1,326.0 1,069.1
Other noncurrent liabilities 582.7 650.6
Total Noncurrent Liabilities 1,908.7 1,719.7
 
Total Equity 3,301.9 2,747.5
Total Liabilities and Equity $ 7,145.2 $ 6,593.0
 
 
 

SELECT CASH FLOW DATA

(Unaudited; In millions)

 
          Year Ended June 30
2013       2012
Cash Flows from Operating Activities      
Net earnings $ 1,023.8 $ 860.5
Depreciation and amortization 336.9 295.8
Deferred income taxes (76.1 ) (22.1 )
Goodwill and other intangible asset impairments 17.7 21.7
Other items 132.3 28.4
Changes in operating assets and liabilities:
Increase in accounts receivable, net (113.0 ) (178.4 )
Increase in inventory and promotional merchandise, net (134.5 ) (41.2 )
Increase in other assets, net (3.2 ) (63.1 )
Increase in accounts payable and other liabilities   42.4   225.1
Net cash flows provided by operating activities $ 1,226.3 $ 1,126.7
 
Capital expenditures $ 461.0 $ 420.7
Repayments and redemption of long-term debt 241.5 128.8
Payments to acquire treasury stock 387.7 592.7
Dividends paid 419.2 204.0
 




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