Estee Lauder 2004 Annual Report Download - page 44

Download and view the complete annual report

Please find page 44 of the 2004 Estee Lauder annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 86

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86

THE EST{E LAUDER COMPANIES INC. 42
The following table presents certain consolidated earnings data as a percentage of net sales:
YEAR ENDED JUNE 30 2004 2003 2002
Net sales 100.0% 100.0% 100.0%
Cost of sales 25.5 26.0 26.8
Gross profit 74.5 74.0 73.2
Operating expenses:
Selling, general and administrative 63.1 63.3 63.3
Restructuring —— 2.3
Special charges —0.4 —
Related party royalties 0.3 0.4 0.4
63.4 64.1 66.0
Operating income 11.1 9.9 7.2
Interest expense, net 0.4 0.2 0.2
Earnings before income taxes, minority interest and discontinued operations 10.7 9.7 7.0
Provision for income taxes 4.0 3.2 2.4
Minority interest, net of tax (0.2) (0.1) (0.1)
Net earnings from continuing operations 6.5 6.4 4.5
Discontinued operations, net of tax (0.6) (0.1) (0.4)
Net earnings 5.9% 6.3% 4.1%
RECONCILIATIONS OF FINANCIAL RESULTS
The following tables present reconciliations of our financial results for the fiscal years ended June 30, 2003 and 2002 as
reported in conformity with U.S. generally accepted accounting principles (“GAAP”) and those results adjusted to exclude
certain charges described above each table. We have presented these reconciliations because of the special nature of the
charges or the fact that they are not necessarily comparable from period to period. We believe that such measures
provide investors with a view of our ongoing business trends and results of continuing operations. This is consistent with
the approach used by management in its evaluation and monitoring of such trends and results and provides investors with
a base for evaluating future periods. There were no events or transactions in fiscal 2004 for which we believe such a
presentation would be relevant.
While we consider the non-GAAP financial measures useful in analyzing our results, it is not intended to replace, or act
as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with GAAP.
FISCAL 2003
The table below reconciles the fiscal 2003 results as reported and results prior to adjustment for a special pre-tax charge
of $22.0 million, or $13.5 million after tax, equal to $.06 per diluted common share, in connection with the proposed
settlement of a class action lawsuit brought against us and a number of other defendants. The amount of the charge in this
case is significantly larger than similar charges we have incurred individually or in the aggregate for legal proceedings
in any prior year and we do not expect to take a charge of a similar magnitude for a single matter like it in the near future.