SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
June 28, 2001
The Estee Lauder Companies Inc.
(Exact name of registrant as specified in its charter)
Delaware 11-2408943
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
767 Fifth Avenue, New York, New York 10153
(Address of principal executive offices) (Zip Code)
212-572-4200
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS.
On June 28, 2001, The Estee Lauder Companies Inc. issued a press release
announcing its anticipated fiscal 2001 full year earnings per share range, a
restructuring charge related to certain operations and introduced its fiscal
2002 net sales and earnings target. A copy of the press release is attached
hereto as Exhibit 99.1 and is incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
THE ESTEE LAUDER COMPANIES INC.
Date: June 28, 2001 By: /s/Richard W. Kunes
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Richard W. Kunes
Senior Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
THE ESTEE LAUDER COMPANIES INC.
EXHIBIT INDEX
Exhibit No. Description
99.1 Press release dated June 28, 2001 of the
Estee Lauder Companies Inc.
Exhibit 99.1
THE ESTEE LAUDER COMPANIES INC. News
Contact:
Investor Relations:
Dennis D'Andrea
767 Fifth Avenue (212) 572-4384
New York, NY 10153
Media Relations:
Sally Susman
(212) 572-4430
FOR IMMEDIATE RELEASE:
ESTEE LAUDER COMPANIES ON TRACK FOR
FISCAL 2001 FULL YEAR, BEFORE ONE-TIME CHARGES;
RESTRUCTURES CERTAIN OPERATIONS;
SETS FISCAL 2002 NET SALES AND EARNINGS TARGET
New York, NY, June 28, 2001 - The Estee Lauder Companies Inc. (NYSE: EL) today
said its fiscal 2001 full year results are on track with the Company's
previously announced guidance, before the effect of restructuring and one-time
charges. During the fourth quarter of fiscal 2001, as part of ongoing efforts to
strengthen its businesses and position itself for continued future growth, the
Company completed a reevaluation of certain operations and, as a result, is
restructuring those operations. Separately, the Company is confident with its
outlook for the ensuing fiscal year based on its preliminary business plan for
fiscal 2002.
Fred H. Langhammer, President and Chief Executive Officer, said, "Our
reaffirmation of our financial performance for fiscal 2001 and expectations for
growth in 2002, as well as the new initiatives we announced today, are
indicative of two things: our ongoing ability to deliver solid results even in
challenging environments and our commitment to continually evaluate our business
and take actions that will enhance our long-term growth. The new initiatives we
announced today will translate into growth by enabling us to bring new ideas and
products to market faster, increasing our efficiency and competitive advantages
and strengthening our infrastructure."
Fiscal 2001 Full Year Results
Based on the Company's current business prospects, net sales for the fiscal year
ended June 30, 2001 are expected to grow approximately 9% on a constant currency
basis versus the prior fiscal year. It is anticipated that geographic region net
sales growth in constant currency will be led by mid-teen double-digit growth in
Europe, the Middle East & Africa and low double-digit growth in Asia/Pacific.
Sales growth in the Americas is expected to be in the mid-single digits,
reflecting the challenging retail environment in the United States. On a product
category basis, in constant currency, the Company expects double-digit growth in
hair care sales, off of a smaller base, followed by low double-digit growth in
makeup and skin care, while fragrance sales will increase modestly versus the
prior year. The adverse effect of exchange rates in Europe and Asia could temper
reported sales growth for the full fiscal year by approximately 3.5 percentage
points. The Company reconfirmed its expectation for full year diluted earnings
per share of between $1.33 and $1.35, before the cumulative effect of a change
in accounting principle recorded in the fiscal first quarter, and before
restructuring and other one-time charges to be recorded in the fourth quarter as
described below.
Restructuring and Other One-Time Charges
In the fiscal 2001 fourth quarter, the Company will take a one-time charge for
restructuring and repositioning certain businesses as part of its ongoing
efforts to drive long-term growth and increase profitability. The restructuring
will focus on four areas: product fixtures for the jane brand, in-store tommy's
shops, information systems and other assets, as well as global brand
reorganization. These actions will result in a fiscal 2001 fourth quarter
pre-tax charge of approximately $60 million. On an after-tax basis, the charge
will be approximately $38 million, equal to $.16 per diluted share. About half
of the charges are cash related.
Specifically, the charge will include the following:
To bring product innovation rapidly to the market and drive growth, jane is
switching from its traditional wall displays to a carded program. This move
will not only accelerate growth but also substantially improve jane's
economic model. The charge includes a $16-million writedown of existing
jane product fixtures and the return of uncarded product. Jane is
distributed in approximately 13,000 self-select outlets in the United
States.
The Company is restructuring its in-store tommy's shops to focus on its
most productive stores and has decided to close certain shops that have
under performed relative to expectations. As a result, the Company has
recorded a $6-million provision for the closing of 86 inefficient in-store
tommy's shops and for related product returns.
In response to changing technology and strategic direction, included in the
charge is a $19-million provision for costs associated with the
reevaluation of supply chain systems that will no longer be utilized by the
Company, the transition to standard financial systems and the elimination
of unproductive assets. These changes will enhance efficiency and
consistency throughout the Company's global operations.
Finally, the charge includes a $19-million provision for costs associated
with the Company's recently announced reconfiguration of its global brand
structure, which will streamline the decision making process and increase
speed to market for ideas and innovation.
Estimate of Fiscal 2002 Full Year Results
The Company also announced that, based on its business plans and current
economic conditions, management estimates that the following results can be
achieved for its fiscal 2002 full year: Net sales are expected to increase
between 7% and 9% in constant currency. Despite the expected difficult retail
environment, the Company is confident in its strategies to grow its business
through product innovation, distribution enhancements and focused program
execution. The Company expects to achieve diluted earnings per share for the
fiscal 2002 full year of between $1.50 and $1.53. The earnings per share
estimate excludes the potential positive effect of adopting a new accounting
rule that would eliminate amortization of goodwill.
Estee Lauder Companies to Webcast Conference Call at 10 A.M. Today
The Company will host a conference call today, June 28, 2001, at 10:00 a.m. EST
to discuss these corporate developments. The call will be webcast. The call may
be accessed by dialing (800) 289-0730, for international callers (913) 981-5509,
or by visiting the Investor Information section of www.elcompanies.com, the
Company's website.
Forward-looking Statements
The forward-looking statements in this press release, including those containing
words like "will," "expects," "anticipates," and "estimate" involve risks and
uncertainties. Factors that could cause actual results to differ materially from
those forward-looking statements include the following:
(i) increased competitive activity from companies in the skin care,
makeup, fragrance and hair care businesses, some of which have
greater resources than the Company does;
(ii) the Company's ability to develop, produce and market new
products on which future operating results may depend;
(iii) consolidations and restructurings in the retail industry
causing a decrease in the number of stores that sell the Company's
products, an increase in the ownership concentration within the
retail industry, ownership of retailers by the Company's competitors
and ownership of competitors by the Company's customers that are
retailers;
(iv) shifts in the preferences of consumers as to where and how
they shop for the types of products and services the Company sells;
(v) social, political and economic risks to the Company's foreign
manufacturing, distribution and retail operations, including changes
in foreign investment and trade policies and regulations of the host
countries and of the United States;
(vi) changes in the laws, regulations and policies, including changes
in accounting standards, and legal or regulatory proceedings, that
affect, or will affect, the Company in the United States and abroad;
(vii) foreign currency fluctuations affecting the Company's results
of operations and the value of its foreign assets, the relative
prices at which the Company sells its products and its foreign
competitors sell products in the same markets and the Company's
operating and manufacturing costs outside of the United States;
(viii) changes in global or local economic conditions that could
affect consumer purchasing and the cost and availability of capital
to the Company, which may be needed for new equipment, facilities or
acquisitions;
(ix) shipment delays, depletion of inventory and increased production
costs resulting from disruptions of operations at any of the
facilities which, due to consolidations in the Company's
manufacturing operations, now manufacture nearly all of the Company's
supply of a particular type of product (i.e., focus factories);
(x) real estate rates and availability, which may affect the
Company's ability to increase the number of retail locations at which
the Company's products are sold;
(xi) changes in product mix to products which are less profitable;
(xii) the Company's ability to develop e-commerce capabilities, and
other new information and distribution technologies, on a timely
basis and within the Company's cost estimates; and
(xiii) the Company's ability to integrate acquired businesses and
realize value therefrom.
The Estee 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 120 countries and territories under
well-recognized brand names, including Estee Lauder, Clinique, Aramis,
Prescriptives, Origins, M.A.C, Bobbi Brown, Tommy Hilfiger, La Mer, jane, Donna
Karan, Aveda, Stila, Jo Malone and Bumble and bumble.
An electronic version of this release can be found at the Company's Website,
www.elcompanies.com.
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