Estee Lauder 2015 Annual Report Download - page 18

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15
efficiencies from our Strategic Modernization Initiative program. We expect to reinvest some of the
savings in capabilities and growth drivers, including digital, R&D, retail store expansion and
information technology, while maintaining our goal of double-digit EPS growth in constant currency.
Improvement in our inventory management is expected to drive growth in free cash flow at a faster
rate than earnings, giving us more flexibility for acquisitions and returning cash to stockholders
through dividends and share repurchases.
Our outstanding performance this year, and over time, is supported by the following foundational
assets of our company:
First, the Lauder family. We are a public company built upon the strong foundation of family heritage
and values. The Lauder family members’ dedication to preserving the legacy of our Company
underlines our deep commitment to ensuring long-term sustainability and growth, and I am proud
and privileged to partner with them to continue to build this great organization.
Second, our people. Our success is the direct result of the talented team we have assembled and
with whom I look forward to working every day. Our management team defines what it means to be
“world class” and is supported by our extremely capable and talented employees around the globe.
We are committed to the continuous development of all our employees at the Company, and
encourage leadership from every chair.
I also thank our Board of Directors for their wise counsel and stewardship of our Company, which
have been essential to setting and maintaining our strategic course.
And importantly, I am grateful to you, our valued stockholders, for your continued support and
confidence.
I believe in the sustainability of the
beautiful momentum
that The Estée Lauder Companies
demonstrated in fiscal 2015 and over the past several years. It is a true honor to lead this fantastic
company, and I look forward to working with all of the great people associated with it to continue
our progress.
*This letter contains references to the following non-GAAP nancial measures: constant currency, adjusted net sales, adjusted
net earnings and adjusted diluted EPS. As a result of the Company’s July 2014 implementation of its Strategic Modernization
Initiative, approximately $178 million of accelerated orders were recorded as net sales and $82 million in net earnings, equal to
approximately $.21 per diluted common share in scal 2014 that would have occurred in the scal 2015 rst quarter. While
these additional orders had an adverse impact on our scal 2015 net sales and operating results comparisons, we expect there to
be corresponding favorable comparisons on our rst quarter and full year scal 2016 net sales and operating results. Additionally,
during scal 2015 and 2014, the Company recorded remeasurement charges of $5 million and $38 million, respectively, related
to changes in Venezuelan foreign currency exchange rate mechanisms. Including the effect of these items, net sales were $10.8
billion, net earnings were $1.09 billion and diluted earnings per share were $2.82. Information about GAAP and non-GAAP
nancial measures, including reconciliation information, is included in the Financial Section of this Annual Report.
THE EST{E LAUDER COMPANIES INC.