Estee Lauder 2014 Annual Report Download - page 52

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50 THE EST{E LAUDER COMPANIES INC.
RESULTS OF OPERATIONS
We manufacture, market and sell beauty products includ-
ing those in the skin care, makeup, fragrance and hair
care categories which are distributed in over 150 coun-
tries and territories. The following table is a comparative
summary of operating results for fiscal 2014, 2013 and
2012 and reflects the basis of presentation described in
“Note 2 — Summary of Significant Accounting Policies and
Note 19 — Segment Data and Related Information” of
Notes to Consolidated Financial Statements for all periods
presented. Products and services that do not meet our
definition of skin care, makeup, fragrance and hair care
have been included in the “other” category.
than 50% likelihood of being realized upon settlement
with a tax authority that has full knowledge of all relevant
information. For those tax positions where it is not more-
likely-than-not that a tax benefit will be sustained, no tax
benefit has been recognized in the consolidated financial
statements. We classify applicable interest and penalties
as a component of the provision for income taxes.
Although the outcome relating to these exposures is
uncertain, in management’s opinion adequate provisions
for income taxes have been made for estimable potential
liabilities emanating from these exposures. If actual
outcomes differ materially from these estimates, they
could have a material impact on our consolidated results
of operations.
QUANTITATIVE ANALYSIS
During the three-year period ended June 30, 2014, there
have not been material changes in the assumptions under-
lying these critical accounting policies, nor to the related
significant estimates. The results of our business underly-
ing these assumptions have not differed significantly from
our expectations.
While we believe that the estimates that we have made
are proper and the related results of operations for the
period are presented fairly in all material respects, other
assumptions could reasonably be justified that would
change the amount of reported net sales, cost of sales,
operating expenses or our provision for income taxes as
they relate to the provisions for anticipated sales returns,
allowance for doubtful accounts, inventory obsolescence
reserve and income taxes. For fiscal 2014, had these esti-
mates been changed simultaneously by 2.5% in either
direction, our reported gross profit would have increased
or decreased by approximately $5.8 million, operating
expenses would have changed by approximately $0.6 mil-
lion and the provision for income taxes would have
increased or decreased by approximately $0.7 million.
The collective impact of these changes on operating
income, net earnings attributable to The Estée Lauder
Companies Inc., and net earnings attributable to The
Estée Lauder Companies Inc. per diluted common share
would be an increase or decrease of approximately $6.4
million, $5.7 million and $.01, respectively.