01—Abstract
Summary
Summary of the 10-K filed August 22, 2011. Cited figures are marked; the original filing is the authoritative source.
The Estée Lauder Companies Inc. reported fiscal 2011 (year ended June 30, 2011) net sales of $8,810.0 milliona, up from $7,795.8 million in fiscal 2010, with all geographic regions and product categories growing.
Operating income rose to $1,089.4 millionb (12.4% of net sales, versus 10.1% in the prior year), and net earnings attributable to the company increased to $700.8 million, or $3.48 per diluted share, from $2.38. The filing attributes the margin improvement largely to the cost savings Program launched in February 2009, with restructuring and related charges of $59.4 million in fiscal 2011 versus $84.7 million in fiscal 2010. Cash flow from operations was $1,027.0 million, and cash and cash equivalents ended the year at $1,253.0 million.
Total debt was $1,218.1 millionc, and total debt as a percent of total capitalization (excluding noncontrolling interest) fell to 32% from 39%. The company repurchased about 5.0 million Class A shares for $376.9 million during the year, and declared an annual dividend of $.75 per share versus $.55 a year earlier. Management said it does not expect the same levels of year-over-year improvement to continue in fiscal 2012, and expects gross margin gains to be offset by higher operating expense as a share of sales.
The Lauder family controls about 86.8%d of the voting power, so the company is a "controlled company" exempt from certain NYSE governance requirements. Macy's Inc. was the largest customer at 11% of fiscal 2011 net sales.
02—Key points
Key Highlights
- Net sales rose to $8,810.0 million in fiscal 2011 from $7,795.8 million, with increases in the Americas, Europe/Middle East/Africa and Asia/Pacific.
- Operating income increased to $1,089.4 million, with operating margin of 12.4% versus 10.1% in fiscal 2010.
- Net earnings attributable to The Estée Lauder Companies Inc. were $700.8 million, or $3.48 per diluted share, compared with $2.38 in fiscal 2010.
- Net cash flows from operating activities were $1,027.0 million; cash and cash equivalents were $1,253.0 million at June 30, 2011.
- Total debt was $1,218.1 million; total debt as a percent of total capitalization fell to 32% from 39%.
- The company repurchased about 5.0 million Class A shares for $376.9 million in fiscal 2011 and declared a $.75 annual dividend per share.
- The Lauder family holds approximately 86.8% of voting power, making the company a controlled company under NYSE rules; Macy's Inc. was the largest customer at 11% of net sales.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Estée Lauder Companies kept $0.08.
- Revenue$8.81B100.0%
- Cost of revenue−$1.94B22.0%
- Gross profit$6.87B78.0%
- Operating costs−$5.78B65.6%
- Operating income$1.09B12.4%
- Interest, other & tax−$388.6M4.4%
- Net income$700.8M8.0%
Where FY2011 revenue went
$8.81B- SG&A: $5.70B, 65% of revenue
- Cost of revenue: $1.94B, 22% of revenue
- Net income: $700.8M, 8.0% of revenue
- R&D: $85.7M, 1.0% of revenue
- Interest, other & tax: $388.6M, 4.4% of revenue
Kept 8.0% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed August 22, 2011Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $8.81B$7.80B | +13.0% |
| Cost of Revenue | $1.94B$1.83B | +5.9% |
| Gross Profit | $6.87B$5.97B | +15.2% |
| R&D Expenses | $85.70M$79.50M | +7.8% |
| SG&A Expenses | $5.70B$5.07B | +12.4% |
| Operating Expenses | $5.78B$5.18B | +11.7% |
| Operating Income | $1.09B$789.90M | +37.9% |
| Net Income | $700.80M$478.30M | +46.5% |
| EPS (Basic) | $1.78$1.21 | +47.1% |
| EPS (Diluted) | $1.74$1.19 | +46.2% |
| Shares Outstanding (Basic) | 394.00M395.40M | −0.4% |
| Shares Outstanding (Diluted) | 402.40M401.50M | +0.2% |
05—Questions
Frequently Asked Questions
How much did net sales and earnings grow in fiscal 2011?
Net sales increased 13%, or $1,014.2 million, to $8,810.0 million. Net earnings attributable to the company rose 47%, or $222.5 million, to $700.8 million, and diluted EPS increased from $2.38 to $3.48.
What is management's outlook for fiscal 2012?
Management said it does not expect the same levels of year-over-year improvement in net sales and operating results seen in fiscal 2011. It expects its strategies to help improve cost of sales margin but to increase the operating expense margin over the next fiscal year.
How is the company's balance sheet and cash position?
Cash and cash equivalents were $1,253.0 million at June 30, 2011, and total debt was $1,218.1 million. The company amended its revolving credit facility in July 2011, replacing a $750.0 million facility with a $1.0 billion facility expiring July 14, 2015.
What is the status of the cost savings Program?
The Program, announced in February 2009, is expected to produce restructuring and other special charges of $350 million to $450 million before taxes and savings of approximately $675 million to $725 million. Cumulative savings through fiscal 2011 were approximately $560 million, and about 2,000 positions were eliminated.
What control does the Lauder family have over the company?
Lauder family members beneficially own shares representing approximately 86.8% of the outstanding voting power as of August 15, 2011. This allows them to control matters requiring stockholder approval, and the company relies on NYSE controlled-company exemptions from certain governance requirements.
06—Continue