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

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

                   - Earnings Per Share Rose 20% to $.45 -
                                Before Charges

                    Company Raises Full-Year EPS Estimates

Business Wire

NEW YORK -- May 02, 2013

The Estée Lauder Companies Inc. (NYSE: EL) today reported net sales for its
third quarter ended March 31, 2013 of $2.29 billion, a 2% increase compared
with $2.25 billion in the prior-year quarter. Excluding the impact of foreign
currency translation, net sales increased 3%. The Company reported a 130
basis-point increase in operating margin and net earnings for the quarter rose
37% to $178.8 million, compared with $130.4 million last year. Diluted net
earnings per common share rose 38% to $.45, compared with $.33 in the prior
year.

The fiscal 2013 third-quarter results included net adjustments associated with
restructuring activities of $1.7 million ($1.0 million after tax). The fiscal
2012 third quarter results included charges associated with restructuring
activities of $28.8 million ($18.8 million after tax), equal to $.05 per
diluted common share.

Excluding these charges in the third quarters of fiscal 2013 and 2012, net
earnings increased 19% to $177.8 million and diluted net earnings per common
share rose 20% to $.45, versus a comparable $.38 in the prior-year period. A
reconciliation between GAAP and non-GAAP financial measures is included in
this release.

Fabrizio Freda, President and Chief Executive Officer, said, “Organic sales
growth this quarter was in line with our expectations and earnings per share
were better than expected. Adjusting for the shift of sales orders related to
our Strategic Modernization Initiative (SMI) implementation, our local
currency sales increased more than five percent. Despite macroeconomic
headwinds, particularly in Southern Europe and Korea, and short term global
supply planning issues related to SMI, we delivered solid growth ahead of the
industry and a 20 percent earnings per share increase. The strength of our
strategy and our ability to execute on it continues to produce consistent and
reliable results.

“Looking at the remainder of fiscal 2013, we are on track to deliver another
record year of solid sales and a double-digit increase in earnings per share.
In our fiscal fourth quarter, we expect an acceleration of our top-line
growth. For the full fiscal year, we are expecting sales growth of
approximately 6% in local currency and are raising our earnings per share
guidance, before charges, to $2.56 to $2.61. Our performance this year
reflects a combination of our strong innovation pipeline and targeted
investment spending behind the greatest opportunities to foster global growth.
Our future is bright and I am confident we are on track to attain our
long-term financial goals. We intend to build upon our success by continuing
to support major initiatives in our biggest brands and markets in order to
further increase profitability and gain share.”

Globally, prestige beauty continues to experience mixed results and overall
growth has slowed from the prior year, as the Company expected. Nonetheless,
the Company’s performance was broad based, generating local currency sales
gains in each of its geographic regions and most product categories.

During the quarter, the Company made meaningful progress on its strategic
goals and realized a strong improvement in cost of sales as a percentage of
net sales. In connection with the long-term strategic plan and certain ongoing
initiatives, the Company realized savings of $29 million during the quarter.
As planned, the Company increased global advertising spending versus the
prior-year quarter to build momentum and gain share in its key markets and
product categories.

In the second quarters of fiscal 2013 and fiscal 2012, some retailers
accelerated their sales orders in advance of the Company’s January 2013 and
January 2012 implementation of SMI in certain of its locations and brands.
Those additional orders would have likely occurred in the Company’s fiscal
2013 and 2012 third quarters. The impact of these shifts is included in this
release. The net overall change in net sales and operating income for the
quarter in each product category and geographic region was unfavorably
impacted by these accelerated orders. Some temporary challenges emerged during
the quarter related to the Company’s global supply planning component of its
latest SMI implementation, which caused some customer service delays. The
issues have been addressed and the Company expects full resolution by the end
of its current fiscal year.


Results by Product Category

                   Three Months Ended March 31
(Unaudited;                                                                           Operating                     Percent
Dollars in              Net Sales                    Percent Change                                         Change
millions)                                                                             Income (Loss)
                                                        Reported       Local                                        Reported
                        2013         2012            Basis                      2013         2012           Basis
                                                                       Currency
                                                                                                                          
Skin Care               $ 1,015.0       $ 1,019.0       —     %        —     %        $  134.4       $  156.3       (14   )%
Makeup                  919.2           877.0           5              5              107.3          90.2           19
Fragrance               233.2           231.3           1              1              (0.2     )     (8.5     )     98
Hair Care               116.2           110.1           6              6              5.1            7.4            (31   )
Other                   8.2             10.8            (24   )        (22   )        (3.2     )     (5.1     )     37
Subtotal                2,291.8         2,248.2         2              3              243.4          240.3          1
Returns and
charges
associated
                        —               —                                             1.7            (28.8    )
with
restructuring
activities
Total                   $ 2,291.8       $ 2,248.2       2     %        3     %        $ 245.1        $ 211.5        16    %



Excluding the impact of the shifts of accelerated retailer orders due to the
Company’s implementation of SMI:

  *Reported net sales in skin care, makeup, fragrance and hair care would
    have increased 3%, 7%, 4% and 6%, respectively, and 5% in total.
  *Operating results in skin care, makeup, fragrance and hair care would have
    increased/(decreased) 3%, 38%, 100+% and (12)%, respectively, and 22% in
    total.

Skin Care

  *The skin care category is a strategic priority for the Company. The
    Company gained share in this category during the quarter in certain
    countries where its products are sold.
  *Recent launches of Advanced Time Zone, Advanced Night Repair Eye Serum
    Infusion and Perfectionist CP+R from Estée Lauder and The Moisturizing
    Soft Cream from La Mer contributed to sales growth, which was entirely
    offset by the shift in orders due to SMI.
  *Operating income declined on flat sales growth and an increase in
    investment spending.

Makeup

  *Higher makeup sales primarily reflected strong growth from M•A•C brand
    products.
  *New product introductions from Clinique, such as Even Better Compact
    Makeup and increased sales of the Tom Ford line of cosmetics, contributed
    to the category’s growth.
  *The overall increase in net sales and operating income reflected a
    favorable comparison to the prior-year period, which included a provision
    for then-anticipated returns of approximately $16 million, as a result of
    repositioning certain products due to changes in regulations related to
    sunscreen products in the United States. These regulations were
    subsequently deferred and, accordingly, the Company reversed this
    provision in the fiscal 2012 fourth quarter.
  *The increase in makeup operating income also reflected improved results
    from the M•A•C brand, partially offset by heritage brands and an increase
    in investment spending.

Fragrance

  *In fragrance, notable sales increases were generated from higher-end
    fragrance products from Jo Malone and Tom Ford, as well as incremental
    sales from the recent launch of Coach Love.
  *Fragrance operating loss decreased sharply, primarily reflecting the
    success of recent launches, partially offset by lower results from certain
    of the Company’s designer fragrances.

Hair Care

  *Hair care net sales growth was driven by Aveda, reflecting the continued
    success of its Invati line of products and the recent launches of Pure
    Abundance Style Prep and Be Curly Curl Controller.
  *The category also benefited from expanded global distribution, in
    particular to salons.
  *Sales declined at Ojon, due, in part, to a reduction of its business in
    the direct response television channel.
  *Hair care operating income decreased, due in part to increased product
    support spending and additional investments related to distribution
    expansion initiatives.


Results by Geographic Region

                   Three Months Ended March 31
(Unaudited;                                                                           Operating                   Percent
Dollars in              Net Sales                    Percent Change                                       Change
millions)                                                                             Income (Loss)
                        2013         2012            Reported    Local          2013       2012          Reported
                                                        Basis          Currency                                   Basis
                                                                                                                        
The Americas            $ 988.1         $ 974.3         1    %         2    %         $  68.0       $  86.2       (21   )%
Europe, the
Middle East &           847.9           823.6           3              3              137.5         101.0         36
Africa.
Asia/Pacific            455.8           450.3           1              3              37.9          53.1          (29   )
Subtotal                2,291.8         2,248.2         2              3              243.4         240.3         1
Returns and
charges
associated
                        —               —                                             1.7           (28.8   )
with
restructuring
activities
Total                   $ 2,291.8       $ 2,248.2       2    %         3    %         $ 245.1       $ 211.5       16    %



Excluding the impact of the shifts of accelerated retailer orders due to the
Company’s implementation of SMI:

  *Reported net sales in the Americas, Europe, the Middle East & Africa and
    Asia/Pacific would have increased 4%, 4% and 6%, respectively.
  *Operating income in the Americas, in Europe, the Middle East & Africa and
    in Asia/Pacific would have increased 4%, 45% and 11%, respectively.

The Americas

  *The net sales increase in the region reflects growth from the Company’s
    makeup artist brands and Aveda.
  *Double-digit sales growth in Latin America was offset by sales declines in
    the United States, reflecting the shifts of accelerated retailer orders,
    and Canada.
  *The sales improvement also reflected a favorable comparison to the
    prior-year period, which included a provision for then-anticipated returns
    of makeup products of approximately $16 million.
  *Operating income in the Americas decreased,  primarily reflecting a
    decline in certain of the Company’s heritage brands as a result of the
    accelerated retailer orders, partially offset by improved results from
    makeup artist brands. The decrease also reflected higher investment
    spending during the current-year period, as well as the favorable
    comparison to the prior-year period regarding the provision mentioned
    above.

Europe, the Middle East & Africa

  *In constant currency, net sales increased in a number of countries in the
    region. Economic uncertainties in Southern European countries impacted the
    beauty markets, but the Company continued to outperform the industry in
    many markets.
  *In constant currency, double-digit net sales growth was recorded in a
    number of areas, including travel retail, the Middle East and South
    Africa.
  *The Company’s net sales in travel retail grew double-digits. Sales at
    retail also grew double-digits, which was more than twice the increase in
    airline passenger traffic.
  *These increases were partially offset by lower net sales, primarily in
    Switzerland and France, which included the impact of accelerated retailer
    orders, as well as Spain and the Balkans.
  *The Company estimates that it gained share in certain countries within its
    distribution in this region during the quarter.
  *Operating income in the region increased, led by travel retail, the Middle
    East and Spain, which was partially offset by lower results in France and
    the Balkans.

Asia/Pacific

  *In the region, the Company’s strongest local currency sales growth was
    generated in Hong Kong, Thailand and Australia, primarily reflecting
    strong sales of skin care products.
  *Lower sales were experienced in China and Taiwan, both of which reflected
    the accelerated retailer orders, as previously discussed.
  *Results in China included sales to new consumers in expanded distribution
    in tier two and three cities. Excluding the shift in retailer orders,
    sales in China grew strong double-digits. Sales at retail also continued
    to grow strong double-digits.
  *Korea reflected difficult economic conditions and competitive pressures.
    The Company expects to see continued weakness in prestige beauty in Korea,
    which also impacted the travel retail channel.
  *The Company estimates that for the quarter it gained share in certain
    countries, including China, within its points of distribution.
  *In Asia/Pacific, operating income decreased, with higher results from
    Australia, Hong Kong, New Zealand and Thailand, being more than offset by
    lower operating results in China and Japan. The lower results in China
    reflect the impact from the timing of orders as mentioned above.

Nine-Month Results

  *For the nine months ended March 31, 2013, the Company reported net sales
    of $7.77 billion, a 4% increase from $7.46 billion in the comparable
    prior-year period. Excluding the impact of foreign currency translation,
    net sales increased 5%. Net sales grew in each of the Company’s geographic
    regions and major product categories.
  *The Company reported net earnings of $925.8 million for the nine months
    ended March 31, 2013, a 15% increase from the $805.7 million in the same
    period last year. Diluted net earnings per common share for the nine
    months ended March 31, 2013 increased 16% to $2.35, compared with $2.03
    reported in the prior-year period.
  *The fiscal 2013 nine-month results included returns and charges associated
    with restructuring activities of $13.3 million ($8.9 million after tax),
    equal to $.02 per diluted common share. Additionally, during the nine
    months ended March 31, 2013, the Company redeemed $230.1 million principal
    amount of its 7.75% Senior Notes due 2013. As a result, the Company
    recorded a pre-tax charge to earnings of $19.1 million ($12.2 million
    after tax), for the impact of the extinguishment of debt, equal to $.03
    per diluted common share.
  *The fiscal 2012 nine-month results included returns and charges associated
    with restructuring activities of $39.0 million ($26.1 million after tax),
    equal to $.07 per diluted common share.
  *Excluding these returns and charges, net earnings for the nine months
    ended March 31, 2013 rose 14% to $946.9 million and diluted net earnings
    per common share rose 15% to $2.40, versus a comparable $2.10 in the
    prior-year period.

Cash Flows

  *For the nine months ended March 31, 2013, net cash flows provided by
    operating activities increased 7% to $934.2 million, compared with $869.7
    million in the prior-year period.
  *The increase primarily reflected the higher net earnings and a favorable
    change in other assets, partially offset by a net decrease in cash from
    certain working capital components.
  *Days of inventory at March 31, 2013 were 15 days higher compared to March
    31, 2012. This increase primarily reflects the remaining safety stock
    related to the Company’s implementation of SMI at certain locations.

Outlook for Fiscal 2013 Full Year

The Company has benefited from the strength in prestige beauty in North
America and China. While overall the Company’s business is performing well,
Southern European countries and Korea continue to face weakness due to
economic uncertainties.

  *Net sales are forecasted to grow approximately 6% in constant currency.
  *Foreign currency translation is expected to negatively impact sales
    approximately 1.0% versus the prior year.
  *The Company is raising the range of its diluted net earnings per share
    estimate, including charges associated with restructuring activities and
    the impact of the early extinguishment of debt, to $2.49 to $2.54.
  *The Company expects to take charges associated with restructuring
    activities in fiscal 2013 of about $25 million, equal to approximately
    $.04 per diluted common share. The recording of charges will depend on
    when the relevant accounting criteria are met.
  *As mentioned in this press release, the impact of the extinguishment of
    debt is equal to $.03 per diluted common share.
  *Diluted net earnings per share before charges associated with
    restructuring activities and the impact of the early extinguishment of
    debt are now projected to be $2.56 to $2.61, up 13% to15%.
  *The Company’s broad-based growth is expected to continue ahead of the
    prestige beauty industry for the full fiscal year.

Conference Call

The Estée Lauder Companies will host a conference call at 9:30 a.m. (ET)
today, May 2, 2013 to discuss the quarterly results. The dial-in number for
the call is 888-294-4716 in the U.S. or 706-902-0101 internationally
(conference ID number: 52045999). The call will also be webcast live at
http://investors.elcompanies.com.

Forward-Looking Statements

The forward-looking statements in this press release, including those
containing words like “expect,” “plans,” “may,” “could,” “anticipate,”
“estimate,” “projected,” “forecasted,” those in Mr. Freda’s remarks and those
in the “Outlook for Fiscal 2013 Full Year” section involve risks and
uncertainties. Factors that could cause actual results to differ materially
from those forward-looking statements include the following:

       increased competitive activity from companies in the skin care, makeup,
(1)   fragrance and hair care businesses, some of which have greater
       resources than the Company does;
       the Company’s ability to develop, produce and market new products on
(2)    which future operating results may depend and to successfully address
       challenges in the Company’s business;
       consolidations, restructurings, bankruptcies and reorganizations in the
       retail industry causing a decrease in the number of stores that sell
(3)    the Company’s products, an increase in the ownership concentration
       within the retail industry, ownership of retailers by the Company’s
       competitors or ownership of competitors by the Company’s customers that
       are retailers and our inability to collect receivables;
(4)    destocking and tighter working capital management by retailers;
       the success, or changes in timing or scope, of new product launches and
(5)    the success, or changes in the timing or the scope, of advertising,
       sampling and merchandising programs;
(6)    shifts in the preferences of consumers as to where and how they shop
       for the types of products and services the Company sells;
       social, political and economic risks to the Company’s foreign or
(7)    domestic manufacturing, distribution and retail operations, including
       changes in foreign investment and trade policies and regulations of the
       host countries and of the United States;
       changes in the laws, regulations and policies (including the
       interpretations and enforcement thereof) that affect, or will affect,
       the Company’s business, including those relating to its products or
(8)    distribution networks, changes in accounting standards, tax laws and
       regulations, environmental or climate change laws, regulations or
       accords, trade rules and customs regulations, and the outcome and
       expense of legal or regulatory proceedings, and any action the Company
       may take as a result;
       foreign currency fluctuations affecting the Company’s results of
       operations and the value of its foreign assets, the relative prices at
(9)    which the Company and its foreign competitors sell products in the same
       markets and the Company’s operating and manufacturing costs outside of
       the United States;
       changes in global or local conditions, including those due to the
       volatility in the global credit and equity markets, natural or man-made
       disasters, real or perceived epidemics, or energy costs, that could
       affect consumer purchasing, the willingness or ability of consumers to
       travel and/or purchase the Company’s products while traveling, the
(10)   financial strength of the Company’s customers, suppliers or other
       contract counterparties, the Company’s operations, the cost and
       availability of capital which the Company may need for new equipment,
       facilities or acquisitions, the returns that the Company is able to
       generate on its pension assets and the resulting impact on its funding
       obligations, the cost and availability of raw materials and the
       assumptions underlying the Company’s critical accounting estimates;
       shipment delays, commodity pricing, depletion of inventory and
       increased production costs resulting from disruptions of operations at
       any of the facilities that manufacture nearly all of the Company’s
(11)   supply of a particular type of product (i.e., focus factories) or at
       the Company’s distribution or inventory centers, including disruptions
       that may be caused by the implementation of SAP as part of the
       Company’s Strategic Modernization Initiative or by restructurings;
       real estate rates and availability, which may affect the Company’s
(12)   ability to increase or maintain the number of retail locations at which
       the Company sells its products and the costs associated with the
       Company’s other facilities;
(13)   changes in product mix to products which are less profitable;
       the Company’s ability to acquire, develop or implement new information
       and distribution technologies and initiatives on a timely basis and
(14)   within the Company’s cost estimates and the Company’s ability to
       maintain continuous operations of such systems and the security of data
       and other information that may be stored in such systems or other
       systems or media;
       the Company’s ability to capitalize on opportunities for improved
(15)   efficiency, such as publicly-announced strategies and restructuring and
       cost-savings initiatives, and to integrate acquired businesses and
       realize value therefrom;
       consequences attributable to local or international conflicts around
(16)   the world, as well as from any terrorist action, retaliation and the
       threat of further action or retaliation;
(17)   the timing and impact of acquisitions and divestitures, which depend on
       willing sellers and buyers, respectively, and;
       additional factors as described in the Company’s filings with the
(18)   Securities and Exchange Commission, including its Annual Report on Form
       10-K for the fiscal year ended June 30, 2012.

The Company assumes no responsibility to update forward-looking statements
made herein or otherwise.

The Estée Lauder Companies Inc. is one of the world’s leading manufacturers
and marketers of quality skin care, makeup, fragrance and hair care products.
The Company’s products are sold in over 150 countries and territories under
the following brand names: Estée Lauder, Aramis, Clinique, Prescriptives, Lab
Series, Origins, M•A•C, Bobbi Brown, Tommy Hilfiger, Kiton, La Mer, Donna
Karan, Aveda, Jo Malone, Bumble and bumble, Darphin,  Michael Kors, American
Beauty, Flirt!, GoodSkin Labs, Grassroots Research Labs, Tom Ford, Coach,
Ojon, Smashbox, Ermenegildo Zegna, Aerin Beauty, Osiao and Marni.

An electronic version of this release can be found at the Company’s website,
www.elcompanies.com.


THE ESTÉE LAUDER COMPANIES INC.

CONSOLIDATED STATEMENTS OF EARNINGS

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

                         Three Months Ended                                  Nine Months Ended
                                                      Percent                                      Percent
                         March 31                              Change        March 31                              Change
                           2013           2012                              2013           2012
                                                                                                                        
Net Sales (A)            $ 2,291.8         $ 2,248.2           2    %        $ 7,774.3         $ 7,462.4           4    %
Cost of Sales             443.1            469.3                            1,550.3          1,554.6
(A)
Gross Profit              1,848.7          1,778.9           4    %         6,224.0          5,907.8           5    %
                                                                                                                        
Gross Margin               80.7    %         79.1    %                         80.1    %         79.2    %
                                                                                                                        
Operating
expenses:
Selling,
general and                1,605.3           1,539.0                           4,831.8           4,623.4
administrative
Restructuring
and other                  (1.7    )         28.4                              12.0              39.2
charges (A)
Impairment of
other                     —                —                                —                6.7
intangible
assets (B)
                          1,603.6          1,567.4           2    %         4,843.8          4,669.3           4    %
Operating                  70.0    %         69.7    %                         62.3    %         62.6    %
Expense Margin
                                                                                                                        
Operating                  245.1             211.5             16   %          1,380.2           1,238.5           11   %
Income
                                                                                                                        
Operating                  10.7    %         9.4     %                         17.8    %         16.6    %
Income Margin
                                                                                                                        
Interest                   12.6              14.5                              41.8              47.1
expense, net
Interest
expense on
debt                       —                 —                                 19.1              —
extinguishment
(C)
Other income              —                —                                23.1             10.5
(D)
Earnings
before Income              232.5             197.0             18   %          1,342.4           1,201.9           12   %
Taxes
                                                                                                                        
Provision for             53.6             65.7                             414.5            393.6
income taxes
Net Earnings               178.9             131.3             36   %          927.9             808.3             15   %
                                                                                                                        
Net earnings
attributable
to                        (0.1    )        (0.9    )                        (2.1    )        (2.6    )
noncontrolling
interests
Net Earnings
Attributable
to The Estée
Lauder                   $ 178.8           $ 130.4             37   %        $ 925.8           $ 805.7             15   %

Companies
Inc.
                                                                                                                        
                                                                                                                        
Net earnings
attributable
to The Estée
Lauder
Companies

Inc. per
common share:
Basic                    $ .46             $ .34               38   %        $ 2.39            $ 2.07              15   %
Diluted                    .45               .33               38   %          2.35              2.03              16   %
                                                                                                                        
Weighted
average common
shares
outstanding:
Basic                      387.2             388.2                             387.5             388.5
Diluted                    394.0             396.3                             394.7             397.0


(A) In February 2009, the Company announced the implementation of a
multi-faceted cost savings program (the “Program”) to position it to achieve
long-term profitable growth. As of December 31, 2012, the Company closed the
Program. As a result of the closure of the Program and evaluation of the
initiatives that have been implemented as of March 31, 2013, the Company
anticipates total cumulative restructuring charges and other costs to
implement those initiatives to total between $325 million and $350 million,
before taxes. Since the inception of the Program, the Company approved cost
savings initiatives to resize the organization, reorganize certain functions,
turnaround or exit unprofitable operations and outsource certain services. The
impact of returns, charges and adjustments related to the Program for each
fiscal period are set forth in tables that follow these notes.

(B) The Company performs annual impairment tests for each of its reporting
units. In addition, the Company may perform interim impairment tests as a
result of changes in circumstances and certain financial indicators. Such
tests may conclude that the carrying value of certain assets exceed their
estimated fair values, resulting in the recognition of impairment charges.

During the second quarter of fiscal 2012, the Company recognized an impairment
charge related to the Ojon reporting unit of $6.7 million for its trademark.

(C) In the first quarter of fiscal 2013, the Company redeemed $230.1 million
principal amount of its 7.75% Senior Notes due November 1, 2013. As a result,
the Company recorded a pre-tax charge to earnings of $19.1 million ($12.2
million after tax), for the impact of the extinguishment of debt, equal to
$.03 per diluted common share.

(D) In December 2012, the Company amended the agreement related to the August
2007 sale of Rodan + Fields to receive a fixed amount in lieu of future
contingent consideration and other rights. As a result of the original and
amended terms of this agreement, the Company recognized $23.1 million as other
income in the consolidated statement of earnings during the nine months ended
March 31, 2013.

In November 2011, the Company settled a commercial dispute with third parties
that was outside its normal operations. In connection therewith, the Company
received a $10.5 million cash payment, which has been classified as other
income in the consolidated statement of earnings for the nine months ended
March 31, 2012.

This earnings release includes some non-GAAP financial measures relating to
charges associated with restructuring activities, the extinguishment of debt
and accelerated orders associated with the Company’s implementation of SMI.
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, the extinguishment of debt and accelerated orders
associated with the Company’s implementation of SMI. The Company uses the
non-GAAP financial measure, among other things, to evaluate its operating
performance and the measure represents 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, it is 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                                  Three Months Ended
                                                                                                                      
                         March 31, 2013                                      March 31, 2012
                                                                                                                                % Change
                                                           Before                                              Before
                                           Returns/                                            Returns/                         versus Prior
                         As Reported                   Returns/          As Reported                 Returns/
                                           Charges                                             Charges                          Year Before
                                                           Charges                                             Charges
                                                                                                                                Returns/Charges
Net Sales                 $ 2,291.8        $ 0.0         $ 2,291.8         $ 2,248.2         $ 0.0           $ 2,248.2        2        %
Cost of sales               443.1            0.0          443.1            469.3            (0.4  )        468.9
                                                                                                                                         
Gross Profit                 1,848.7           0.0           1,848.7           1,778.9           0.4             1,779.3        4        %
Gross Margin                 80.7    %                       80.7    %         79.1    %                         79.1    %
                                                                                                                                         
Operating                   1,603.6          1.7          1,605.3          1,567.4          (28.4 )        1,539.0        4        %
expenses
Operating                    70.0    %                       70.1    %         69.7    %                         68.4    %
Expense Margin
                                                                                                                                         
Operating Income             245.1             (1.7  )       243.4             211.5             28.8            240.3          1        %
Operating Income             10.7    %                       10.6    %         9.4     %                         10.7    %
Margin
                                                                                                                                         
Provision for                53.6              (0.7  )       52.9              65.7              10.0            75.7
income taxes
Net Earnings
Attributable to
                             178.8             (1.0  )       177.8             130.4             18.8            149.2          19       %
The Estée
Lauder Companies
Inc.
                                                                                                                                         
Diluted net
earnings
attributable

to The Estée               .45               .00           .45               .33               .05             .38            20       %
Lauder Companies

Inc. per
common share
                                                                                                                                         
                         Nine Months Ended                                   Nine Months Ended

                         March 31, 2013                                      March 31, 2012
                                                                                                                                % Change
                                                           Before                                              Before
                                           Returns/                                            Returns/                         versus Prior
                         As Reported                       Returns/          As Reported                       Returns/
                                           Charges                                             Charges                          Year Before
                                                           Charges                                             Charges
                                                                                                                                Returns/Charges
Net Sales                  $ 7,774.3         $ 0.1         $ 7,774.4         $ 7,462.4         $ (0.6  )       $ 7,461.8        4        %
Cost of sales               1,550.3          (1.2  )      1,549.1          1,554.6          (0.4  )        1,554.2
                                                                                                                                         
Gross Profit                 6,224.0           1.3           6,225.3           5,907.8           (0.2  )         5,907.6        5        %
Gross Margin                 80.1    %                       80.1    %         79.2    %                         79.2    %
                                                                                                                                         
Operating                   4,843.8          (12.0 )      4,831.8          4,669.3          (39.2 )        4,630.1        4        %
expenses
Operating                    62.3    %                       62.2    %         62.6    %                         62.1    %
Expense Margin
                                                                                                                                         
Operating Income             1,380.2           13.3          1,393.5           1,238.5           39.0            1,277.5        9        %
Operating Income             17.8    %                       17.9    %         16.6    %                         17.1    %
Margin
                                                                                                                                         
Interest expense
on debt                      19.1              (19.1 )       —                 —                 —               —

extinguishment
                                                                                                                                         
Provision for                414.5             11.3          425.8             393.6             12.9            406.5
income taxes
Net Earnings
Attributable to
                             925.8             21.1          946.9             805.7             26.1            831.8          14       %
The Estée
Lauder Companies
Inc.
                                                                                                                                         
Diluted net
earnings
attributable

to The Estée               2.35              .05           2.40              2.03              .07             2.10           15       %
Lauder Companies

Inc. per
common share



THE ESTÉE LAUDER COMPANIES INC.

SUMMARY OF CONSOLIDATED RESULTS

(Unaudited; Dollars in millions)

                   Nine Months Ended March 31
                                                                                      Operating                       Percent
                        Net Sales                    Percent Change                                           Change
                                                                                      Income (Loss)
                        2013          2012            Reported    Local          2013          2012            Reported
                                                        Basis          Currency                                       Basis
Results by
Geographic
Region
The Americas            $ 3,310.4       $ 3,151.0       5     %        5     %        $   372.4       $   347.8       7     %
Europe, the
Middle East &           2,778.1         2,728.1         2              4              659.0           598.8           10
Africa.
Asia/Pacific            1,685.9         1,582.7         7              7              362.1           330.9           9
Subtotal                7,774.4         7,461.8         4              5              1,393.5         1,277.5         9
Returns and
charges
associated
                        (0.1      )     0.6                                           (13.3     )     (39.0     )
with
restructuring
activities
Total                   $ 7,774.3       $ 7,462.4       4     %        5     %        $ 1,380.2       $ 1,238.5       11    %
                                                                                                                            
Results by
Product
Category
                                                                                                                            
Skin Care               $ 3,408.4       $ 3,257.8       5     %        6     %        $   750.1       $   692.2       8     %
Makeup                  2,928.9         2,789.4         5              6              495.1           458.3           8
Fragrance               1,039.6         1,029.2         1              2              130.5           113.0           15
Hair Care               362.0           335.3           8              9              25.9            25.0            4
Other                   35.5            50.1            (29   )        (29   )        (8.1      )     (11.0     )     26
Subtotal                7,774.4         7,461.8         4              5              1,393.5         1,277.5         9
Returns and
charges
associated
                        (0.1      )     0.6                                           (13.3     )     (39.0     )
with
restructuring
activities
Total                   $ 7,774.3       $ 7,462.4       4     %        5     %        $ 1,380.2       $ 1,238.5       11    %


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
SMI rollout. In particular, approximately $94 million of accelerated orders
were recorded as net sales in the fiscal 2013 second quarter that likely would
have occurred in the fiscal 2013 third quarter. Similarly, 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.

Combined, these actions created a difficult comparison between the fiscal 2013
and fiscal 2012 third quarters of approximately $64 million in net sales and
approximately $55 million in operating income, equal to $.09 per diluted
common share 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.

Excluding the impact of the accelerated orders and charges associated with
restructuring activities, net sales and operating income for the three months
ended March 31, 2013 would have increased 5% and 22%, respectively.


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 SMI

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

                    Three Months Ended                                            Three Months Ended
                                                                                                                                       
                    March 31, 2013                                                March 31, 2012
                                                                                                                                           % Change
                                                  SMI             Before                                        SMI           Before
                    As               Returns/                                     As             Returns/                                  versus
                                            Adjust-       Charges                                 Adjust-    Charges      Prior
                    Reported         Charges                                      Reported       Charges
                                                  ments           /SMI                                          ments         /SMI         Year Before

                                                                                                                                           Charges/SMI
Net Sales            $2,291.8         $ 0.0        $         $2,386.1        $2,248.2         $ 0.0       $ 29.6        $2,277.8     5%
                                                        94.3
Cost of               443.1             0.0             16.2      459.3           469.3             (0.4  )     6.4           475.3        
sales
                                                                                                                                                 
Gross Profit          1,848.7           0.0             78.1      1,926.8         1,778.9           0.4         23.2          1,802.5      7%
Gross Margin          80.7     %                                  80.8     %      79.1     %                                  79.1     %   
                                                                                                                                                 
Operating             1,603.6           1.7             —         1,605.3         1,567.4           (28.4 )     —             1,539.0      4%
expenses
Operating
Expense               70.0     %                                  67.3     %      69.7     %                                  67.5     %   
Margin
                                                                                                                                                 
Operating             245.1             (1.7  )        78.1      321.5           211.5             28.8        23.2          263.5        22%
Income
Operating
Income                10.7     %                                  13.5     %      9.4      %                                  11.6     %   
Margin
                                                                                                                                                 
Provision
for income            53.6              (0.7  )        25.0      77.9            65.7              10.0        7.8           83.5
taxes
Net Earnings
Attributable
to

The Estée           178.8             (1.0  )        53.1      230.9           130.4             18.8        15.4          164.6        40%
Lauder

Companies
Inc.
                                                                                                                                                 
Diluted net
earnings
attributable
to The Estée
Lauder
Companies
Inc. per
common share          .45               .00             .13       .59             .33               .05         .04           .42          41%
                    

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


(Unaudited; In      Three Months Ended           Three Months Ended
millions)            March 31, 2013                  March 31, 2012
                                     Operating                       Operating
                    Net Sales                    Net Sales   
                                     Results                         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        15              12              3               3
East & Africa
Asia/Pacific             50             43             25             19
Total                $    94         $    78         $    30         $    23


                       THE ESTÉE LAUDER COMPANIES INC.

Excluding the impact of the shift in orders associated with the Company’s
implementation of SMI and returns and charges associated with restructuring
activities, net sales and operating results for the three months ended March
31, 2013 would have  increased/(decreased) as follows:


(Unaudited; In millions)          Net Sales As Adjusted    
                                                                    Operating
                                       Reported      Local
                                                                 Results As
                                       Basis         Currency
                                                                    Adjusted
Product Category:                                              
Skin Care                                 3    %        3    %      3      %
Makeup                                    7             8           38
Fragrance                                 4             4           100    +
Hair Care                                 6             7           (12    )
Other                                     (21  )        (19  )      43
Total                                     5    %        5    %      22     %
                                                                           
Region:
The Americas                              4    %        4    %      4      %
Europe, the Middle East &                 4             5           45
Africa
Asia/Pacific                              6             8           11
Total                                     5    %        5    %      22     %



THE ESTÉE LAUDER COMPANIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; In millions)

                               March 31          June 30           March 31
                                                        
                               2013              2012              2012
ASSETS                                                           
Current Assets
Cash and cash                    $ 1,438.6         $ 1,347.7         $ 1,192.8
equivalents
Accounts receivable,             1,361.9           1,060.3           1,304.8
net
Inventory and
promotional                      989.3             983.6             898.7
merchandise, net
Prepaid expenses and             496.4             463.5             503.6
other current assets
Total Current Assets             4,286.2           3,855.1           3,899.9
                                                                     
Property, Plant and              1,296.0           1,231.8           1,181.8
Equipment, net
Other Assets                     1,512.9           1,506.1           1,519.8
Total Assets                     $ 7,095.1         $ 6,593.0         $ 6,601.5
                                                                     
LIABILITIES AND EQUITY
Current Liabilities
Current debt                     $ 20.0            $ 219.0           $ 144.0
Accounts payable                 388.2             493.8             406.6
Other current                    1,507.7           1,413.0           1,507.6
liabilities
Total Current                    1,915.9           2,125.8           2,058.2
Liabilities
                                                                     
Noncurrent Liabilities
Long-term debt                   1,329.2           1,069.1           1,065.9
Other noncurrent                 643.2             650.6             621.9
liabilities
Total Noncurrent                 1,972.4           1,719.7           1,687.8
Liabilities
                                                                     
Total Equity                     3,206.8           2,747.5           2,855.5
Total Liabilities and            $ 7,095.1         $ 6,593.0         $ 6,601.5
Equity



SELECT CASH FLOW DATA

(Unaudited; In millions)

                                                 Nine Months Ended
                                                  March 31
                                                  2013             2012
Cash Flows from Operating Activities                       
Net earnings                                      $ 927.9           $ 808.3
Depreciation and amortization                       247.2             215.4
Deferred income taxes                               (43.3  )          (28.7  )
Impairment of other intangible assets               —                 6.7
Other items                                         99.6              56.6
Changes in operating assets and
liabilities:
Increase in accounts receivable, net                (297.0 )          (397.0 )
Decrease (increase) in inventory and                (4.2   )          66.0
promotional merchandise
Increase in other assets, net                       (24.0  )          (100.8 )
Increase in accounts payable and other             28.0             243.2
liabilities
Net cash flows provided by operating              $ 934.2           $ 869.7
activities
                                                                             
Capital expenditures                                305.5             271.9
Payments to acquire treasury stock                  363.2             550.0
Dividends paid                                      349.3             204.0


Contact:

The Estée Lauder Companies Inc.
Investor Relations:
Dennis D’Andrea, 212-572-4384
or
Media Relations:
Alexandra Trower, 212-572-4430
 
Press spacebar to pause and continue. Press esc to stop.