01—Abstract
Summary
Summary of the 10-K filed September 18, 2000. Cited figures are marked; the original filing is the authoritative source.
The Estee Lauder Companies Inc. reported net sales of $4,366.8 milliona for the fiscal year ended June 30, 2000, up from $3,961.5 million in fiscal 1999.
Operating income rose to $515.8 millionb from $456.9 million, and net earnings were $314.1 million versus $272.9 million a year earlier. Diluted earnings per share were $1.20, compared with $1.03 in fiscal 1999. Growth was broad-based across skin care ($1,552.4 million), makeup ($1,579.5 million), fragrance ($1,092.3 million) and hair care ($113.9 million), and across all three geographic regions.
Cash flow from operations rose to $442.5 millionc, and capital expenditures were $180.9 million. The company's balance sheet strengthened over the year. Total assets grew to $3,043.3 million and stockholders' equity to $1,160.3 million, while total debt was $425.4 million.
Total debt as a percent of total capitalization was 22%d, down from 25% a year earlier. The company completed several acquisitions in fiscal 2000, including Stila, Jo Malone, gloss.com and a majority interest in Bumble and bumble, and it repurchased Class A shares under an authorized program. The Lauder family controls approximately 92.1% of the voting power.
Key risks disclosed include competition from larger rivals, dependence on retailers (Federated and May Department Stores accounted for 11% and 10% of net sales, respectively), foreign currency exposure, and a California antitrust class action and a Revlon patent infringement suit. Management believes neither lawsuit will have a material adverse effect on the company's financial position.
02—Key points
Key Highlights
- Net sales rose to $4,366.8 million in fiscal 2000 from $3,961.5 million, with growth in every product category and geographic region.
- Operating income increased to $515.8 million from $456.9 million, and operating margin reached 11.8% of net sales versus 11.5%.
- Net earnings were $314.1 million, or $1.20 per diluted share, compared with $272.9 million, or $1.03 per diluted share, in fiscal 1999.
- Net cash flows from operating activities were $442.5 million, up from $352.3 million, while capital expenditures were $180.9 million.
- Total debt as a percent of total capitalization fell to 22% from 25%, and stockholders' equity rose to $1,160.3 million from $924.5 million.
- Fiscal 2000 acquisitions included Stila, Jo Malone, gloss.com and a majority interest in Bumble and bumble, for an aggregate purchase price of about $186.6 million.
- The Lauder family holds approximately 92.1% of the voting power, and two customer groups, Federated and May Department Stores, accounted for 11% and 10% of net sales.
03—Questions
Frequently Asked Questions
How did The Estee Lauder Companies perform financially in fiscal 2000?
Net sales grew to $4,366.8 million from $3,961.5 million, operating income rose to $515.8 million from $456.9 million, and net earnings increased to $314.1 million from $272.9 million. Diluted earnings per share were $1.20 versus $1.03 a year earlier.
Which product categories and regions drove growth?
Makeup sales rose 12% to $1,579.5 million and skin care rose 11% to $1,552.4 million. Hair care increased 38% to $113.9 million, and fragrance rose 4% to $1,092.3 million. The Americas grew 11% to $2,658.8 million, Asia/Pacific rose 20% to $577.0 million, and Europe, the Middle East & Africa rose 4% to $1,131.0 million.
How strong is the company's balance sheet and cash generation?
Total assets were $3,043.3 million and total debt was $425.4 million at June 30, 2000. Cash and cash equivalents were $320.3 million, and operating cash flow was $442.5 million. Total debt as a percent of total capitalization was 22%, compared with 25% a year earlier.
What legal proceedings could affect investors?
The company faces a California class action alleging retail price-fixing with department stores, which seeks treble damages, and a patent infringement suit filed by a Revlon affiliate in August 2000. Management believes neither case will have a material adverse effect on the company's financial position.
What control and dividend arrangements apply to shareholders?
The Lauder family holds about 92.1% of the voting power through Class A and Class B shares, with Class B carrying ten votes per share. Quarterly dividends were $.05 per share in fiscal 2000, totaling $.20 for the year, and the company said it expects to continue paying cash dividends.
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