The Estée Lauder Companies Reports Record Fiscal 2014 Fourth Quarter and Full Year Results

  The Estée Lauder Companies Reports Record Fiscal 2014 Fourth Quarter and
  Full Year Results

    - Strong Broad-Based Topline Growth Drives Double-Digit EPS Increase -

           - Underlying Sales and Earnings Outlook Remains Strong -

            - Company Increases Long-Term Operating Margin Goal -

Business Wire

NEW YORK -- August 15, 2014

The Estée Lauder Companies Inc. (NYSE:EL) today reported a strong financial
performance for its fourth quarter and fiscal year ended June 30, 2014. For
the year, the Company achieved record net sales of $10.97 billion, an 8%
increase compared with $10.18 billion in the prior year. Excluding the impact
of foreign currency translation, net sales also increased 8%. The Company
reported a 170 basis-point increase in operating margin, and net earnings for
the year rose 18% to $1.20 billion, compared with $1.02 billion last year.
Diluted net earnings per common share rose 19% to $3.06, compared with $2.58
reported in the prior year.

Fabrizio Freda, President and Chief Executive Officer, said, “Fiscal 2014 was
another outstanding year for our Company. We achieved record results across
many metrics, including sales, operating margin, earnings per share and
operating cash flow. Our topline growth was nearly double that of prestige
beauty and was broad-based across regions, product categories and channels,
despite slower industry growth in some key countries. Our emerging markets,
makeup and luxury brands, and our online, freestanding store and travel retail
channels led our growth. At the same time, we made careful investment choices
to support the fastest areas of growth, while continuing to eliminate
non-value-added costs. This excellent performance further demonstrates the
resilience and consistency of our strategic business model and strengthened
our leadership in global prestige beauty.”

During fiscal 2014, the Company remeasured its Venezuelan net monetary assets
to the recently enacted foreign currency exchange rate mechanism, SICAD II,
and recorded a remeasurement charge of $38.3 million, both before and after
tax, equal to approximately $.10 per diluted share. Fiscal 2014 and 2013
included returns, charges and adjustments associated with restructuring
activities and, in fiscal 2013, a charge for the extinguishment of debt.

Excluding these charges in fiscal 2014 and 2013, net earnings for the year
ended June 30, 2014 were $1.24 billion, and diluted net earnings per common
share were $3.16, versus $2.64 in the prior-year period.

Additionally, the fiscal 2014 fourth quarter and full year results included
the acceleration of sales orders by some retailers of approximately $178
million in advance of the Company’s July 2014 implementation of its Strategic
Modernization Initiative (SMI) in certain of its largest remaining locations.
These orders would normally have been expected to occur in the Company’s
fiscal 2015 first quarter. This amounted to approximately $127 million in
operating income, equal to approximately $.21 per diluted common share.

Excluding the impact of the accelerated orders and the Venezuela remeasurement
charge, net sales in constant currency for the three and twelve months ended
June 30, 2014 would have increased 5% and 7%, respectively, and diluted
earnings per share for the three and twelve months ended June 30, 2014 would
have increased 83% and 12%, respectively.

Reconciliation       Three Months Ended June 30,
between GAAP      2014                              Year Ended June 30, 2014
and
non-GAAP             Net Sales Growth      Diluted       Net Sales Growth      Diluted

                     Reported   Constant  Earnings      Reported   Constant  Earnings
(Unaudited)                                                      
                     Basis      Currency   Per Share     Basis      Currency   Per Share
Results
including the
Venezuela
charge
and fiscal           13 %^(1)   13   %     $.66 ^(1)     8  %^(1)   8    %     $3.06 ^(1)
2015
accelerated
retailer
orders
Non-GAAP
Venezuela            —          —          —             —          —          .10
charge
Results
excluding the        13 %       13   %     .66           8  %       8    %     3.16
Venezuela
charge
Impact of
fiscal 2015          (7 )%      (8   )%    (.21 )        (2 )%      (2   )%    (.21  )
accelerated
orders
Results
excluding the
Venezuela
charge               6  %       5    %     $.45          6  %       7    %     $2.95
and
accelerated
retailer
orders
_____________________________
^(1) Represents GAAP

Amounts may not sum due to rounding.
                                                                                          

Additional information about GAAP and non-GAAP financial measures, including
reconciliation information, is included in this release.

“Fiscal 2014 marks the fifth consecutive year that we achieved outstanding
results for our Company and stockholders and is a testament to our ability to
execute our winning strategy,” Mr. Freda said. “The cornerstone of our success
is powerful brands, a robust innovation pipeline and a sharp focus on
fast-growth areas prioritized in our strategy. We are a growth company well
positioned to identify, create and capture the best global opportunities in
the growing prestige beauty industry. Increased efficiency and effectiveness,
along with benefits from the recent substantial completion of our Strategic
Modernization Initiative, should allow us to reinvest for future growth,
increase our profitability and continue to generate value for our
stockholders.

“We believe our strong momentum will continue in fiscal 2015. Our full fiscal
year outlook in constant currency reflects net sales growth of 6% to 7% and
double-digit earnings per share growth, after adjusting for the accelerated
sales orders we reported in fiscal 2014. We remain confident in our growth
potential and are raising our long-term operating margin target to 17.5% in
fiscal 2017.”


Full Year Results by Product Category
               Year Ended June 30
(Unaudited;                                                         Operating                   Percent
Dollars in      Net Sales                  Percent Change                                  
millions)                                                           Income (Loss)               Change
                                            Reported   Constant                                 Reported
                2014        2013           Basis                  2014         2013          Basis
                                                       Currency
                                                                                                         
Skin Care       $ 4,769.8    $ 4,465.3      7    %     8    %       $   975.8     $   830.1     18    %
Makeup          4,210.2      3,876.9        9          9            715.9         580.4         23
Fragrance       1,425.0      1,310.8        9          9            104.1         120.3         (13   )
Hair Care       515.6        488.9          5          6            33.7          26.7          26
Other           48.1         41.3           16         17           (4.8      )   (13.7     )   65
Subtotal        10,968.7     10,183.2       8          8            1,824.7       1,543.8       18
Returns and
charges
associated      0.1          (1.5       )                           2.9           (17.8     )
with
restructuring
activities
Total           $ 10,968.8   $ 10,181.7     8    %     8    %       $ 1,827.6     $ 1,526.0     20    %

                                                                                                         

The change in net sales and operating income in the Company’s product
categories was favorably impacted by the shift in orders from certain
retailers due to the Company’s implementation of SMI. Operating income was
unfavorably impacted by the current year remeasurement of net monetary assets
in Venezuela, as previously mentioned. See tables on page 15 for additional
information on these impacts.

Skin Care

  *The skin care category is a strategic priority and the Company is
    well-positioned to capitalize on its strong pipeline of innovative
    products. The Company gained share during the year in this category in
    certain countries where its products are sold.
  *Sales gains reflect the recent launches of the Company’s new Advanced
    Night Repair Synchronized Recovery Complex II and Micro Essence Skin
    Activating Treatment Lotion from Estée Lauder, as well as higher sales
    from its Nutritious line of products.
  *Recent product launches from Clinique, such as Dramatically Different
    Moisturizing Lotion+ and Even Better Essence Lotion, along with the
    reformulated Repairwear Laser Focus and initial shipments of Clinique
    Smart Custom-Repair Serum, contributed to sales growth.
  *Higher sales from the Company’s luxury skin care brand, La Mer, also
    contributed strong growth.
  *Operating income increased, primarily reflecting recent product launches
    from certain of the Company’s heritage brands, as well as increased
    results from luxury skin care products.

Makeup

  *Higher makeup sales primarily reflected double-digit growth from the
    Company’s makeup artist brands and from recent launches, such as Pure
    Color Envy Sculpting Lipstick from Estée Lauder and All About Shadow from
    Clinique.
  *Sales from makeup artist brands benefited from new product offerings, as
    well as expanded distribution in line with the Company’s retail store
    strategy.
  *Double-digit sales increases from Smashbox and the Tom Ford line of
    cosmetics contributed to the category’s growth.
  *The increase in makeup operating income primarily reflected improved
    performance from the Company’s makeup artist brands due to the higher
    sales, and from certain heritage brands.

Fragrance

  *In fragrance, strong double-digit sales growth came from luxury brands Tom
    Ford and Jo Malone. Sales gains were also generated from the recent
    launches of Estée Lauder Modern Muse, the Michael Kors Collection and Tory
    Burch.
  *Fragrance operating income declined, primarily reflecting higher
    investment spending behind recent major launches, partially offset by
    higher results from the Company’s luxury brands.

Hair Care

  *Hair care net sales growth was primarily driven by Aveda, reflecting solid
    gains in the salon channel and the continued success of its Invati line of
    products and the Dry Remedy and Damage Remedy franchises.
  *Sales increased at Bumble and bumble, primarily due to higher sales to
    specialty-multi brand retailers. Ojon sales decreased, primarily
    reflecting its exit from the direct response television channel.
  *The category’s growth also benefited from expanded global distribution, in
    particular to salons and travel retail for Aveda and to specialty-multi
    brand retailers for Bumble and bumble.
  *Hair care operating income increased, primarily reflecting higher net
    sales driven by expanded global distribution and new product launches, as
    well as strategically lower investment spending.


Full Year Results by Geographic Region
                Year Ended June 30
(Unaudited;                                                           Operating                 Percent
Dollars in        Net Sales                  Percent Change                                
millions)                                                             Income (Loss)             Change
                                              Reported   Constant                               Reported
                  2014        2013                                  2014       2013
                                              Basis      Currency                               Basis
                                                                                                         
The Americas      $ 4,572.3    $ 4,302.9      6    %     7    %       $   537.3   $   423.2     27    %
Europe, the
Middle East &     4,163.7      3,758.7        11         9            938.3       813.4         15
Africa.
Asia/Pacific      2,232.7      2,121.6        5          9            349.1       307.2         14
Subtotal          10,968.7     10,183.2       8          8            1,824.7     1,543.8       18
Returns and
charges
associated        0.1          (1.5       )                           2.9         (17.8     )
with
restructuring
activities
Total             $ 10,968.8   $ 10,181.7     8    %     8    %       $ 1,827.6   $ 1,526.0     20    %

                                                                                                         

The change in net sales and operating income in the Company’s geographic
regions was favorably impacted by the shift in orders from certain retailers
due to the Company’s implementation of SMI. Operating income in The Americas
was unfavorably impacted by the current year remeasurement of net monetary
assets in Venezuela, as previously mentioned. See tables on page 15 for
additional information on these impacts.

The Americas

  *Net sales in the United States increased, due to growth from the Company’s
    makeup artist and luxury brands and certain heritage and designer
    fragrance brands, reflecting new product introductions.
  *The increased sales also reflect the continued expansion of Smashbox at
    specialty multi-brand retailers and department stores and expansion into
    new retail channels by certain of the Company’s hair care brands.
  *Sales of the Company’s online business grew double digits.
  *Sales also increased in Latin America and Canada.
  *Operating income in the Americas rose, reflecting the increased sales and
    lower spending. The results also reflect the $38.3 million charge in the
    current year to remeasure net monetary assets in Venezuela.

Europe, the Middle East & Africa

  *In constant currency, net sales increased in each product category and in
    most countries in the region. The Company estimates that it continued to
    outperform prestige beauty in many markets.
  *The net sales increase was led by double-digit growth in a number of
    areas, including the United Kingdom and several emerging markets,
    including Turkey and Central Europe, while solid sales gains were
    generated in Germany and France. Certain European countries continued to
    experience soft retail environments.
  *In travel retail, sales increased double digits, primarily reflecting
    higher sales from the Company’s new launch initiatives, an increase in
    global airline passenger traffic and expanded distribution, as well as the
    impact of the accelerated retailer orders, as previously discussed.
    Excluding the accelerated retailer orders, travel retail sales increased
    high-single digits.
  *Operating income increased, as higher results, primarily from travel
    retail and the United Kingdom, were partially offset by lower operating
    results in France and the Middle East.

Asia/Pacific

  *Constant currency net sales increased in every country in the region,
    except Korea. The strongest double-digit growth was generated in China,
    Japan, Hong Kong and Singapore, while Australia achieved high-single digit
    gains. The sales increase in Japan reflects the accelerated retailer
    orders, as previously discussed.
  *The Company estimates that it gained share in certain countries within its
    points of distribution during the quarter.
  *In Asia/Pacific, operating income increased, led by Korea, Japan and Hong
    Kong, reflecting, in part, lower investment spending. The higher results
    in Japan primarily reflect the impact from the accelerated retailer
    orders. Lower operating results were posted in China, primarily due to an
    increase in investment spending behind new product introductions and
    increased distribution. Thailand and Malaysia also reported lower
    operating income.

Full-Year Cash Flows

  *For the 12 months ended June 30, 2014, net cash flows provided by
    operating activities increased 25% to $1.54 billion, compared with $1.23
    billion in the prior year.
  *The increase primarily reflected the higher net earnings, and an increase
    in accounts payable.
  *Days of inventory at June 30, 2014 were 15 days higher compared to a year
    ago. This increase primarily reflects the building of inventory to support
    expected near-term sales growth, as well as for safety stock related to
    the Company’s implementation of SMI at certain locations in July 2014.

Fourth Quarter Results

  *For the three months ended June 30, 2014, the Company reported net sales
    of $2.73 billion, a 13% increase from $2.41 billion in the comparable
    prior-year period. Excluding the impact of foreign currency translation,
    net sales also increased 13%.
  *As mentioned previously in this press release, the fiscal 2014 fourth
    quarter includes the effect of the accelerated retailer orders.
  *The Company’s fourth quarter sales benefited from innovative new products
    and growth in emerging and developed markets.
  *On a reported basis, as well as in constant currency, net sales grew in
    each of the Company’s geographic regions and product categories. Sales
    also increased in each product category within each region.
  *The Company’s fourth quarter sales growth reflects double-digit gains in
    the U.S. and travel retail, as well as double-digit local currency
    increases in many European emerging markets. In Asia/Pacific, local
    currency growth was led by strong increases in Japan, China and Hong Kong.
    Sales gains in the U.S., travel retail and Japan include the effect of the
    accelerated retailer orders.
  *The Company reported net earnings of $257.7 million, compared with $94.0
    million last year. Diluted net earnings per common share were $.66,
    compared with $.24 reported in the same prior-year period.
  *The fiscal 2014 and 2013 fourth-quarter results included returns, charges
    and adjustments associated with restructuring activities.
  *Excluding the impact of the accelerated orders and restructuring
    activities, net sales in constant currency and diluted earnings per share
    for the three months ended June 30, 2014 would have increased 5% and 83%,
    respectively.

Outlook for Fiscal 2015 First Quarter and Full Year

In fiscal 2015, the Company estimates global prestige beauty will grow
approximately 3% to 4%. The Company expects to grow ahead of the industry by
bringing highly innovative products to market and focusing on the fastest
growing countries, product categories and channels. The Company also expects
to leverage its strong sales growth and continue to reduce non-value-added
costs to further improve its operating margin in fiscal 2015.

As previously mentioned, some retailers accelerated their sales orders in
connection with the Company’s rollout of its last major wave of SMI in July
2014 in certain of its locations. While these additional orders benefited
fiscal 2014 results, the Company expects there to be a corresponding adverse
effect on its first quarter and full year fiscal 2015 results. The Company’s
fiscal 2015 first quarter and full year outlook includes the impact of this
shift.

First Quarter Fiscal 2015

  *Net sales are forecasted to decrease between 1% and 2% in constant
    currency.
  *Foreign currency translation is expected to negatively impact sales by
    approximately 1% versus the prior-year period.
  *The impact of the accelerated retailer orders is expected to reduce the
    fiscal 2015 first quarter sales by approximately 7%.
  *Net sales  excluding the effect of the accelerated retailer orders are
    forecasted to grow between 5% and 6% in constant currency.
  *Diluted net earnings per share, including the effect of the accelerated
    retailer orders, are projected to be between $.51 and $.55.
  *Diluted net earnings per share, excluding the effect of the accelerated
    retailer orders, are projected to be between $.72 to $.76.

Full Year Fiscal 2015

  *Net sales are forecasted to grow between 3% and 4% in constant currency.
  *Foreign currency translation is expected to negatively impact sales by
    approximately 2% versus the prior-year period.
  *The impact of the accelerated retailer orders is expected to reduce the
    fiscal 2015 full year sales by approximately 3%.
  *Net sales excluding the effect of the accelerated retailer orders are
    forecasted to grow between 6% and 7% in constant currency.
  *Diluted net earnings per share, including the effect of the accelerated
    retailer orders, are projected to be between $2.89 to $2.99.
  *Diluted net earnings per share, excluding the effect of the accelerated
    retailer orders, are projected to be between $3.10 to $3.20.
  *The approximate 2% negative currency impact on the sales growth equates to
    about $.09 of earnings per share. On a constant currency basis and before
    the effect of the accelerated retailer orders, earnings per share is
    expected to grow between 8% to 12%.


Reconciliation     Three Months Ending
between GAAP                                          Year Ending June 30, 2015
and                September 30, 2014

non-GAAP           Net Sales Growth        Diluted        Net Sales Growth      Diluted

                   Reported     Constant  Earnings       Reported   Constant  Earnings
(Unaudited)                               Per                                 Per
                   Basis        Currency                  Basis      Currency
                                           Share                                Share
Forecast
including the
impact of the      (3)%                    $.51           1%                    $2.89
                   -    %^(1)   (2)% - %   -    ^(1)      -  %^(1)   3% -  %    -     ^(1)
fiscal 2015        (2)          (1)        $.55           2          4          $2.99
accelerated
retailer
orders
Non-GAAP
Impact of
fiscal 2015        ~7   %       ~7     %   .21            ~3 %       ~3    %    .21
accelerated
orders
Forecast
excluding the                              $.72           4%                    $3.10
impact of the      4% - %       5% - 6 %   -              -  %       6% -  %    -
accelerated        5                       $.76           5          7          $3.20
retailer
orders
_____________________________
^(1) Represents GAAP estimates.


Conference Call

The Estée Lauder Companies will host a conference call at 9:30 a.m. (ET)
today, August 15, 2014 to discuss its results. The dial-in number for the call
is 888-294-4716 in the U.S. or 706-902-0101 internationally (conference ID
number: 82074353). 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 2015 First Quarter and 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,
  (1)   makeup, 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
    (2)    on 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 the Company’s products, an increase in the ownership
    (3)    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
    (5)    and 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
    (8)    products or 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
    (9)    at 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 financial strength of the Company’s customers,
    (10)   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
    (11)   Company’s 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,
           other information technology initiatives 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
    (14)   timely basis and 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
    (16)   around 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, investments and
           divestitures; 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, 2013.
           
           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, Flirt!,
GoodSkin Labs, Tom Ford, Coach, Ojon, Smashbox, Ermenegildo Zegna, Aerin
Beauty, Osiao, Marni and Tory Burch.

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          Percent                                 Percent
                                                         Year Ended June 30
                   June 30                     Change                                  Change
                   2014         2013                    2014          2013
                                                                                               
Net Sales (A)      $ 2,725.3     $ 2,407.4     13   %    $ 10,968.8     $ 10,181.7     8    %
Cost of Sales       533.8        475.6                  2,158.2       2,025.9
Gross Profit        2,191.5      1,931.8     13   %     8,810.6       8,155.8      8    %
                                                                                               
Gross Margin         80.4    %     80.2    %               80.3     %     80.1     %
                                                                                               
Operating
expenses:
Selling,
general and          1,812.0       1,765.2                 6,985.9        6,597.0
administrative
(B)
Restructuring
and other            (0.7    )     3.1                     (2.9     )     15.1
charges (A)
Goodwill             —             9.6                     —              9.6
impairment (C)
Impairment of
other               —            8.1                    —             8.1
intangible
assets (D)
                    1,811.3      1,786.0     1    %     6,983.0       6,629.8      5    %
                                                                                               
Operating            66.4    %     74.2    %               63.6     %     65.1     %
Expense Margin
                                                                                               
Operating            380.2         145.8       100  +%     1,827.6        1,526.0      20   %
Income
                                                                                               
Operating            14.0    %     6.0     %               16.7     %     15.0     %
Income Margin
                                                                                               
Interest             12.6          13.0                    50.8           54.8
expense, net
Interest
expense on
debt                 —             —                       —              19.1
extinguishment
(E)
Other income        —            —                      —             23.1
(F)
Earnings
before Income        367.6         132.8       100  +%     1,776.8        1,475.2      20   %
Taxes
                                                                                               
Provision for       109.2        36.9                   567.7         451.4
income taxes
Net Earnings         258.4         95.9        100  +%     1,209.1        1,023.8      18   %
                                                                                               
Net earnings
attributable
to                  (0.7    )    (1.9    )              (5.0     )    (4.0     )
noncontrolling
interests
Net Earnings
Attributable
to The Estée
Lauder             $ 257.7       $ 94.0        100  +%   $ 1,204.1      $ 1,019.8      18   %
Companies
Inc.


                                                                                               
                                                                                               
Net earnings
attributable
to The Estée
Lauder
Companies
Inc. per
common share:
Basic              $ .67         $ .24         100  +%   $ 3.12         $ 2.63         19   %
Diluted              .66           .24         100  +%     3.06           2.58         19   %
                                                                                               
Weighted
average common
shares
outstanding:
Basic                383.0         388.2                   386.2          387.6
Diluted              389.8         395.5                   393.1          394.9

    
      During the second quarter of fiscal 2013, the Company closed its
      multi-faceted cost savings program implemented in February 2009 (the
(A)   “Program”) and has executed substantially all remaining initiatives as
      of June 30, 2014. The impact of returns, charges and adjustments related
      to the Program for each fiscal period are set forth in tables that
      follow these notes.
      
      During the third quarter of fiscal 2014, based on then changes to
      Venezuela’s foreign currency exchange rate regulations, the Company
(B)   changed the exchange rate used to remeasure its Venezuelan net monetary
      assets to a newly enacted SICAD II rate. Accordingly, the Company
      recorded a remeasurement charge of $38.3 million, both before and after
      tax, equal to approximately $.10 per diluted common share.
      
      During the fourth quarter of fiscal 2013, the Company recorded a
(C)   goodwill impairment charge related to the Darphin reporting unit of $9.6
      million.
      
      During the fourth quarter of fiscal 2013, the Company recognized an
(D)   impairment charge related to the Darphin reporting unit of $8.1 million
      for its trademark.
      


THE ESTÉE LAUDER COMPANIES INC.
    
      In the first quarter of fiscal 2013, the Company redeemed $230.1 million
(E)   principal amount of its 7.75% Senior Notes due November 1, 2013. As a
      result, the Company recorded a pre-tax charge of $19.1 million.

      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
(F)   future contingent consideration and other rights. As a result of the
      amended agreement, the Company recognized $23.1 million as other income
      in the consolidated statement of earnings during the year ended June 30,
      2013.



SUMMARY OF CONSOLIDATED RESULTS

(Unaudited; Dollars in millions)
               
                  Three Months Ended June 30
                                                                  Operating                Percent
                  Net Sales                Percent Change                              
                                                                  Income (Loss)            Change
                                            Reported   Constant                            Reported
                  2014       2013                               2014        2013
                                            Basis      Currency                            Basis
Results by
Geographic
Region
The Americas      $ 1,103.3   $ 992.5       11   %     13   %     $  117.6     $  50.8     100   +%
Europe, the
Middle East &     1,132.1     980.6         15         13         264.9        154.4       72
Africa.
Asia/Pacific      489.9       435.7         12         15         (3.1     )   (54.9   )   94
Subtotal          2,725.3     2,408.8       13         13         379.4        150.3       100   +
Returns and
charges
associated        —           (1.4      )                         0.8          (4.5    )
with
restructuring
activities
Total             $ 2,725.3   $ 2,407.4     13   %     13   %     $ 380.2      $ 145.8     100   +%
                                                                                                 
Results by
Product
Category
Skin Care         $ 1,205.4   $ 1,056.9     14   %     14   %     $  217.2     $  80.0     100   +%
Makeup            1,064.4     948.0         12         12         151.4        85.3        77
Fragrance         309.3       271.2         14         13         8.6          (10.2   )   100   +
Hair Care         134.9       126.9         6          7          4.4          0.8         100   +
Other             11.3        5.8           95         97         (2.2     )   (5.6    )   61
Subtotal          2,725.3     2,408.8       13         13         379.4        150.3       100   +
Returns and
charges
associated        —           (1.4      )                         0.8          (4.5    )
with
restructuring
activities
Total             $ 2,725.3   $ 2,407.4     13   %     13   %     $ 380.2      $ 145.8     100   +%



THE ESTÉE LAUDER COMPANIES INC.

This earnings release includes some non-GAAP financial measures relating to
charges (adjustments) associated with restructuring activities, the Venezuela
remeasurement, the extinguishment of debt and the accelerated orders
associated with the Company’s SMI rollout. The following are reconciliations
between the non-GAAP financial measures and the most directly comparable GAAP
measures for certain consolidated statements of earnings accounts before and
after these items. The Company uses these non-GAAP financial measures, among
other financial measures, 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 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.


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, 2014       Three Months Ended June 30, 2013
                                                                                              % Change
                                         Before                                 Before
                 As           Returns/                  As           Returns/                 versus Prior
                 Reported              Returns/       Reported              Returns/
                              Charges                                Charges                  Year Before
                                         Charges                                Charges
                                                                                              Returns/Charges
Net Sales        $2,725.3     $0.0       $2,725.3       $2,407.4     $ 1.4      $2,408.8      13       %
Cost of          533.8        0.1        533.9          475.6        —          475.6
sales
Gross Profit     2,191.5      (0.1  )    2,191.4        1,931.8      1.4        1,933.2       13       %
Gross Margin     80.4     %              80.4     %     80.2     %              80.3     %
                                                                                                       
Operating        1,811.3      0.7        1,812.0        1,786.0      (3.1   )   1,782.9       2        %
expenses
Operating
Expense          66.4     %              66.5     %     74.2     %              74.0     %
Margin
                                                                                                       
Operating        380.2        (0.8  )    379.4          145.8        4.5        150.3         100      +%
Income
Operating
Income           14.0     %              13.9     %     6.0      %              6.3      %
Margin
                                                                                                       
Provision
for income       109.2        (0.2  )    109.0          36.9         1.7        38.6
taxes
Net Earnings
Attributable
to
The Estée      257.7        (0.6  )    257.1          94.0         2.8        96.8          100      +%
Lauder
Companies
Inc.
                                                                                                       
Diluted net
earnings
attributable
to The         .66          .00        .66            .24          .01        .24           100      +%
Estée Lauder
Companies
Inc. per
common share



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)
                                                                                                
                      Year Ended June 30, 2014                 Year Ended June 30, 2013
                                                                                                      % Change
                                               Before                                   Before
                                    Returns/                                 Returns/                 versus Prior
                      As Reported            Returns/        As Reported            Returns/
                                    Charges                                  Charges                  Year Before
                                               Charges                                  Charges
                                                                                                      Returns/Charges
Net Sales             $10,968.8     $(0.1  )   $10,968.7       $10,181.7     $ 1.5      $10,183.2     8        %
Cost of sales         2,158.2       (0.1   )   2,158.1         2,025.9       (1.2   )   2,024.7
Gross Profit          8,810.6       0.0        8,810.6         8,155.8       2.7        8,158.5       8        %
Gross Margin          80.3      %              80.3      %     80.1      %              80.2      %
                                                                                                               
Operating             6,983.0       (35.4  )   6,947.6         6,629.8       (15.1  )   6,614.7       5        %
expenses
Operating Expense     63.6      %              63.3      %     65.1      %              65.0      %
Margin
                                                                                                               
Operating Income      1,827.6       35.4       1,863.0         1,526.0       17.8       1,543.8       21       %
Operating Income      16.7      %              17.0      %     15.0      %              15.2      %
Margin
                                                                                                               
Interest expense
on debt               —             —          —               19.1          (19.1  )   —
extinguishment
                                                                                                               
Provision for         567.7         (1.1   )   566.6           451.4         13.0       464.4
income taxes
Net Earnings
Attributable to
The Estée           1,204.1       36.5       1,240.6         1,019.8       23.9       1,043.7       19       %
Lauder Companies
Inc.
                                                                                                               
Diluted net
earnings
attributable
to The Estée        3.06          .09        3.16            2.58          .06        2.64          19       %
Lauder Companies
Inc. per common
share
_________________
                                                                                                               

As part of the Company’s Strategic Modernization Initiative (SMI), the Company
implemented the last major wave of SAP-based technologies in July 2014. As a
result, and consistent with prior waves, the Company experienced a shift in
its sales and operating results from accelerated orders from certain of its
retailers to provide adequate safety stock and to mitigate any potential
short-term business interruption associated with the July 2014 SMI rollout. In
particular, approximately $178 million of accelerated orders were recorded as
net sales in the fiscal 2014 fourth quarter that would normally have been
expected to occur in the fiscal 2015 first quarter.

This action created a favorable comparison between the fiscal 2014 and fiscal
2013 fourth quarters and full years of approximately $178 million in net sales
and approximately $127 million in operating income, equal to $.21 per diluted
common share and impacted the Company’s operating margin comparisons. The
Company believes the presentation of certain comparative information in the
discussions in this release that exclude the impact of the timing of these
orders is useful in analyzing the net sales performance and operating results
of its business.

                                                                                                                               
                                                                                                                               
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)
                                                                                                                
                  Three Months Ended June 30, 2014                   Three Months Ended June 30, 2013
                                                                                                                        % Change
                                           SAP         Before                                   SAP         Before
                   As           Returns/                              As           Returns/                             versus
                                         Adjust-    Charges                                Adjust-   Charges    Prior
                   Reported     Charges                               Reported     Charges
                                           ments       /SAP                                     ments       /SAP        Year Before

                                                                                                                        Charges/SAP
Net Sales          $2,725.3     $0.0       $(178.3 )   $2,547.0       $2,407.4     $ 1.4        $ —         $2,408.8    6      %
Cost of sales      533.8        0.1        (35.1   )   498.8          475.6        —            —           475.6
Gross Profit       2,191.5      (0.1  )    (143.2  )   2,048.2        1,931.8      1.4          —           1,933.2     6      %
Gross Margin       80.4     %                          80.4     %     80.2     %                            80.3     %
                                                                                                                                    
Operating          1,811.3      0.7        (16.0   )   1,796.0        1,786.0      (3.1     )   —           1,782.9     1      %
expenses
Operating          66.4     %                          70.5     %     74.2     %                            74.0     %
Expense Margin
                                                                                                                                    
Operating          380.2        (0.8  )    (127.2  )   252.2          145.8        4.5          —           150.3       68     %
Income
Operating          14.0     %                          9.9      %     6.0      %                            6.3      %
Income Margin
                                                                                                                                    
Provision for      109.2        (0.2  )    (45.3   )   63.7           36.9         1.7          —           38.6
income taxes
Net Earnings
Attributable
to
The Estée        257.7        (0.6  )    (81.9   )   175.2          94.0         2.8          —           96.8        81     %
Lauder
Companies
Inc.
                                                                                                                                    
Diluted net
earnings
attributable
to The Estée       .66          .00        (.21    )   .45            .24          .01          —           .24         83     %
Lauder
Companies Inc.
per
common share

 
    ______________________________________________________________________________________________________
                     Year Ended June 30, 2014                             Year Ended June 30, 2013                           
                                                                                                                                   % Change
                                                  SAP         Before                                     SAP         Before
                       As            Returns/                                 As            Returns/                               versus
                                              Adjust-   Charges                                 Adjust-   Charges       Prior
                       Reported      Charges                                  Reported      Charges
                                                  ments       /SAP                                       ments       /SAP          Year Before

                                                                                                                                   Charges/SAP
    Net Sales          $10,968.8     $(0.1  )     $(178.3 )   $10,790.4       $10,181.7     $ 1.5        $ —         $10,183.2     6      %
    Cost of sales      2,158.2       (0.1   )     (35.1   )   2,123.0         2,025.9       (1.2     )   —           2,024.7
    Gross Profit       8,810.6       0.0          (143.2  )   8,667.4         8,155.8       2.7          —           8,158.5       6      %
    Gross Margin       80.3      %                            80.3      %     80.1      %                            80.2      %
                                                                                                                                               
    Operating          6,983.0       (35.4  )     (16.0   )   6,931.6         6,629.8       (15.1    )   —           6,614.7       5      %
    expenses
    Operating          63.6      %                            64.2      %     65.1      %                            65.0      %
    Expense Margin
                                                                                                                                               
    Operating          1,827.6       35.4         (127.2  )   1,735.8         1,526.0       17.8         —           1,543.8       12     %
    Income
    Operating          16.7      %                            16.1      %     15.0      %                            15.2      %
    Income Margin
                                                                                                                                               
    Interest
    expense on         —             —            —           —               19.1          (19.1    )   —           —
    debt
    extinguishment
                                                                                                                                               
    Provision for      567.7         (1.1   )     (45.3   )   521.3           451.4         13.0         —           464.4
    income taxes
    Net Earnings
    Attributable
    to
    The Estée        1,204.1       36.5         (81.9   )   1,158.7         1,019.8       23.9         —           1,043.7       11     %
    Lauder
    Companies
    Inc.
                                                                                                                                               
    Diluted net
    earnings
    attributable
    to The Estée       3.06          .09          (.21    )   2.95            2.58          .06          —           2.64          12     %
    Lauder
    Companies Inc.
    per
    common share



THE ESTÉE LAUDER COMPANIES INC.

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

                                                    
                                                          Venezuela
                        Accelerated Sales Orders
                                                          Remeasurement
                                                         Charge
                        Three Months and Year Ended       Year Ended

                        June 30, 2014                     June 30, 2014
(Unaudited; In          Net Sales     Operating          Operating Results
millions)                              Results
Product Category:
Skin Care               $    91        $     72           $         12
Makeup                       65              41                     16
Fragrance                    21              14                     10
Hair Care                    1               —                      —
Other                       —              —                     —
Total                   $    178       $     127          $         38
                                                                             
Geographic Region:
The Americas            $    84        $     53           $         38
Europe, the Middle           68              53                     —
East & Africa
Asia/Pacific                26             21                    —
Total                   $    178       $     127          $         38


Excluding the impact of the current-year period shift in orders associated
with the Company’s implementation of SMI, the returns and charges
(adjustments) associated with restructuring activities and, for the full
fiscal year, the Venezuela remeasurement charge, net sales and operating
results for the three months and year ended June 30, 2014 would have
increased/(decreased) as follows:

                                                
                 Three Months Ended June 30,         Year Ended June 30, 2014
                 2014
                 Net Sales As          Operating     Net Sales As          Operating
                 Adjusted                            Adjusted
(Unaudited)                           Results                            Results
                 Reported   Constant   As            Reported   Constant   As
                                                             
                 Basis      Currency   Adjusted      Basis      Currency   Adjusted
Product
Category:
Skin Care        5    %     5    %     82    %       5    %     6    %     10    %
Makeup           5          5          29            7          7          19
Fragrance        6          5          49            7          7          (17   )
Hair Care        6          7          100   +       5          6          26
Other            93        97        61           16        17        66    
Total            6    %     5    %     68    %       6    %     7    %     12    %
                                                                                     
Geographic
Region:
The Americas     3    %     4    %     28    %       4    %     5    %     24    %
Europe, the
Middle East      9          6          37            9          7          9
& Africa
Asia/Pacific     6         7         56           4         7         7     
Total            6    %     5    %     68    %       6    %     7    %     12    %

                                                                             
                                                                             
THE ESTÉE LAUDER COMPANIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; In millions)
                                                           
                                                 June 30         June 30

                                                 2014            2013
ASSETS
Current Assets
Cash and cash equivalents                        $ 1,629.1       $ 1,495.7
Accounts receivable, net                           1,379.3         1,171.7
Inventory and promotional merchandise, net         1,294.0         1,113.9
Prepaid expenses and other current assets         522.8          515.9   
Total Current Assets                              4,825.2        4,297.2 
                                                                             
Property, Plant and Equipment, net                 1,502.6         1,350.7
Other Assets                                      1,541.0        1,497.3 
Total Assets                                     $ 7,868.8       $ 7,145.2 
                                                                             
LIABILITIES AND EQUITY
Current Liabilities
Current debt                                     $ 18.4          $ 18.3
Accounts payable                                   524.5           481.7
Other accrued liabilities                         1,513.8        1,434.6 
Total Current Liabilities                         2,056.7        1,934.6 
                                                                             
Noncurrent Liabilities
Long-term debt                                     1,324.7         1,326.0
Other noncurrent liabilities                      618.0          582.7   
Total Noncurrent Liabilities                       1,942.7         1,908.7
                                                                             
Total Equity                                      3,869.4        3,301.9 
Total Liabilities and Equity                     $ 7,868.8       $ 7,145.2 

SELECT CASH FLOW DATA

(Unaudited; In millions)
                                                                             
                                                 Year Ended June 30
                                                 2014            2013
Cash Flows from Operating Activities
Net earnings                                     $ 1,209.1       $ 1,023.8
Depreciation and amortization                      384.6           336.9
Deferred income taxes                              (56.4   )       (76.1   )
Loss on Venezuela remeasurement                    38.3            2.8
Goodwill and other intangible asset                —               17.7
impairments
Other items                                        154.9           129.5
Changes in operating assets and
liabilities:
Increase in accounts receivable, net               (196.2  )       (113.0  )
Increase in inventory and promotional              (156.8  )       (134.5  )
merchandise, net
Increase in other assets, net                      (45.2   )       (3.2    )
Increase in accounts payable and other            202.9          42.4    
liabilities
Net cash flows provided by operating             $ 1,535.2       $ 1,226.3 
activities
                                                                             
Capital expenditures                             $ 510.2         $ 461.0
Repayments and redemption of long-term             11.8            241.5
debt
Payments to acquire treasury stock                 667.2           387.7
Dividends paid                                     301.8           419.2
                                                                             

Contact:

The Estée Lauder Companies Inc.
Investor Relations:
Dennis D’Andrea
212-572-4384
or
Media Relations:
Alexandra Trower
212-572-4430
 
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