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The Estée Lauder Companies Reports Fiscal 2014 Second Quarter Results

Stocks in this article: EL

The Estée Lauder Companies Inc. (NYSE:EL) today reported net sales for its second quarter ended December 31, 2013 of $3.02 billion, a 3% increase compared with $2.93 billion in the prior-year quarter. Excluding the impact of foreign currency translation, net sales increased 4%. Net earnings for the quarter were $432.5 million, compared with $447.5 million last year, and diluted net earnings per common share were $1.09, compared with $1.13 reported in the prior year.

The fiscal 2014 second-quarter results included net adjustments associated with restructuring activities of $(3.5) million ($(2.3) million after tax), equal to $(.01) per diluted common share. The fiscal 2013 second-quarter results included returns and charges associated with restructuring activities of $14.6 million ($9.5 million after tax), equal to $.02 per diluted common share.

Excluding these restructuring activities in the second quarters of fiscal 2014 and 2013, net earnings for the three months ended December 31, 2013 were $430.2 million, and diluted net earnings per common share were $1.09, versus a comparable $1.16 in the prior-year period. A reconciliation between GAAP and non-GAAP financial measures is included in this release.

Comparisons between the current fiscal year and the prior year second quarters were affected by the accelerated sales orders shifted into the Company’s fiscal 2013 second quarter from its third quarter in advance of the Company’s January 2013 implementation of SAP as part of its Strategic Modernization Initiative (SMI). This amounted to approximately $94 million in sales and $78 million in operating income, equal to approximately $.13 per diluted common share.

Excluding the impact of the shift and restructuring activities, net sales in local currency and operating income for the three months ended December 31, 2013 would have increased 7% and 11%, respectively.

Additionally, in the prior-year second quarter, the Company amended the agreement related to the August 2007 sale of Rodan + Fields to receive a fixed amount in lieu of future consideration and other rights and, as a result, recognized $21.3 million as other income, equal to approximately $.04 per diluted common share.

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