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74 THE EST{E LAUDER COMPANIES INC.
tax strategies. In addition, changes in judgment from the
evaluation of new information resulting in the recognition,
derecognition or remeasurement of a tax position taken
in a prior annual period are recognized separately in the
period of change.
The effective rate for income taxes was 32.0% and
30.6% for fiscal 2014 and 2013, respectively. The increase
in the rate of 140 basis points was principally attributable
to a higher effective tax rate related to the Company’s
foreign operations, which included the impact of the
Venezuela remeasurement charge for which no tax
benefit has been provided, as well as slightly higher
favorable income tax reserve adjustments recorded in
fiscal 2013.
NET EARNINGS ATTRIBUTABLE TO
THE EST{E LAUDER COMPANIES INC.
Net earnings attributable to The Estée Lauder Companies
Inc. as compared with fiscal 2013 increased 18%, or
$184.3 million, to $1,204.1 million and diluted net earn-
ings per common share increased 19% from $2.58
to $3.06.
NON-GAAP FINANCIAL MEASURES
We use certain non-GAAP financial measures, among
other financial measures, to evaluate our operating
performance, which represent the manner in which we
conduct and view our business. Management believes
that excluding these items that are not comparable from
period to period helps investors and others compare
operating performance between two periods. While we
consider the non-GAAP measures useful in analyzing our
results, they are not intended to replace, or act as a substi-
tute for, any presentation included in the consolidated
financial statements prepared in conformity with U.S.
GAAP. The following tables present Net Sales, Operating
Income and Diluted net earnings per common share
adjusted to exclude the impact of accelerated orders
associated with the July 2014 SMI rollout, the Venezuela
fiscal 2014 remeasurement charge, returns and charges
(adjustments) associated with restructuring activities
and the fiscal 2013 interest expense on debt extinguish-
ment. The tables provide reconciliations between these
non-GAAP financial measures and the most directly
comparable U.S. GAAP measures.
Year Ended June 30 % Change
in Constant
2014 2013 Variance % Change Currency
($ in millions)
Net Sales, as reported $10,968.8 $10,181.7 $ 787.1 8% 8%
Accelerated orders associated with SMI rollout (178.3) — (178.3)
Returns (adjustments) associated with
restructuring activities (0.1) 1.5 (1.6)
Net Sales, as adjusted $10,790.4 $10,183.2 $ 607.2 6% 7%
Year Ended June 30
2014 2013 Variance % Change
($ in millions)
Operating Income, as reported $1,827.6 $1,526.0 $ 301.6 20%
Accelerated orders associated with SMI rollout (127.2) — (127.2)
Venezuela fiscal 2014 remeasurement charge 38.3 — 38.3
Total charges (adjustments) associated with
restructuring activities (2.9) 17.8 (20.7)
Operating Income, as adjusted $1,735.8 $1,543.8 $ 192.0 12%
Year Ended June 30
2014 2013 Variance % Change
Diluted net earnings per common share, as reported $3.06 $2.58 $ .48 19%
Accelerated orders associated with SMI rollout (.21) — (.21)
Venezuela fiscal 2014 remeasurement charge .10 — .10
Total charges (adjustments) associated with
restructuring activities (.00) .03 (.03)
Interest expense on debt extinguishment — .03 (.03)
Diluted net earnings per common share, as adjusted $2.95 $2.64 $ .31 12%