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The Estee Lauder Companies Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 2, 2012 03:07PM
The Estee Lauder Companies Inc. (EL) filed Quarterly Report for the period ended 2012-09-30.
Highlight of Business Operations:During the three months ended September 30, 2011, we recorded adjustments to reflect revised estimates of then-anticipated sales returns associated with prior initiatives. Other charges in connection with the implementation of the Program primarily relate to consulting and other professional services.
Operating income increased 12%, or $52.0 million, to $482.0 million. Operating margin improved to 18.9% of net sales as compared with 17.4% in the prior-year period, reflecting our higher gross margin and the decrease in our operating expense margin, as previously discussed. The following discussions of Operating Results by Product Categories and Geographic Regions exclude the impact of total returns and charges associated with restructuring activities of $0.4 million, or less than 1% of net sales, for the three months ended September 30, 2012 and $4.1 million, or less than 1% of net sales, for the three months ended September 30, 2011. We believe the following analysis of operating results better reflects the manner in which we conduct and view our business.
Net cash used for operating activities was $125.2 million during the three months ended September 30, 2012 as compared with $36.2 million in the prior-year period. The increase in cash flows used for operating activities primarily reflected unfavorable changes in levels of accounts payable due to the timing of payments. This change also reflected an increase in the levels of inventory in line with forecasted sales activity to ensure acceptable service levels, as well as the building of safety stock for our upcoming implementation of SAP as part of our strategic modernization initiative at certain affiliates. In addition, accounts receivable increased due to the timing of shipments and the timing of collections. These changes were partially offset by an increase in other liabilities primarily due to the timing of advertising, merchandising and sampling activities.