Estee Lauder 2014 Annual Report Download - page 57

THE EST{E LAUDER COMPANIES INC. 55
interruption associated with the rollout, certain of our
retailers accelerated their orders during the fiscal 2014
fourth quarter. We believe those additional orders, which
totaled approximately $178 million, would normally occur
in our fiscal 2015 first quarter and created a favorable
comparison to fiscal 2013. While these additional orders
benefited our fiscal 2014 net sales comparison, we expect
there to be a corresponding adverse effect on our first
quarter and full year fiscal 2015 net sales. Adjusting for
the impact of the accelerated orders, reported net sales
would have increased 6%, with growth in all of our prod-
uct categories and geographic regions.
Product Categories
The change in net sales in each product category bene-
fited from the accelerated orders during the current year,
as discussed above, as follows: skin care, approximately
$91 million; makeup, approximately $65 million; fra-
grance, approximately $21 million; and hair care, approx-
imately $1 million.
Skin Care Net sales of skin care products increased 7%,
or $304.5 million, to $4,769.8 million. The recent launches
of Advanced Night Repair Synchronized Recovery Com-
plex II and Micro Essence Skin Activating Treatment
Lotion from Estée Lauder, and Dramatically Different
Moisturizing Lotion + and reformulated Repairwear Laser
Focus from Clinique contributed approximately $615 mil-
lion of incremental sales, combined. Also contributing to
the increase were higher sales of La Mer products and the
Nutritious line of products from Estée Lauder of approxi-
mately $144 million, combined. Partially offsetting these
increases were lower sales of certain existing Advanced
Night Repair Synchronized Recovery products from
Estée Lauder and Dramatically Different Moisturizing
Lotion and Repairwear Laser Focus from Clinique of
Accrued restructuring charges at June 30, 2014 are
expected to result in cash expenditures funded from cash
provided by operations of approximately $7 million and
$1 million in fiscal 2015 and 2016, respectively.
Total Returns and Other Charges (Adjustments)
Associated with Restructuring Activities
The following table presents total returns and charges
(adjustments) associated with restructuring and other
activities related to the Program:
YEAR ENDED JUNE 30 2014 2013 2012
(In millions)
Sales returns (included in
Net Sales) $(0.1) $ 1.5 $ 2.1
Cost of sales 0.1 1.2 1.5
Restructuring charges
(adjustments) (2.9) 14.6 53.6
Other charges — 0.5 6.0
Total charges (adjustments)
associated with
restructuring activities $(2.9) $17.8 $63.2
20142014
$(0.1)$(0.1)
0.10.1
(2.9)(2.9)
——
$(2.9)$(2.9)
Other charges in connection with the implementation of
the Program were primarily related to consulting and
other professional services.
FISCAL 2014 AS COMPARED WITH FISCAL 2013
NET SALES
Net sales increased 8%, or $787.1 million, to $10,968.8
million, primarily reflecting growth in all of our product
categories and geographic regions. The impact of foreign
currency translation on the change in net sales was
de minimis.
In advance of our July 2014 implementation of SMI at
certain of our locations and to provide adequate safety
stock to mitigate any potential short-term business
The following table presents accrued restructuring charges (adjustments) and the related activities under the Program to date:
Employee-Related Asset Contract
Costs Write-offs Terminations Other Exit Costs Total
(In millions)
Balance at June 30, 2012 $ 47.9 $ — $ 0.8 $ 0.5 $ 49.2
Charges 7.7 2.1 1.5 3.3 14.6
Cash payments (26.0) — (2.1) (3.1) (31.2)
Non-cash write-offs — (2.1) — — (2.1)
Translation adjustments 0.2 — — — 0.2
Other adjustments (2.3) — — — (2.3)
Balance at June 30, 2013 27.5 — 0.2 0.7 28.4
Charges (adjustments) (4.1) — 1.2 — (2.9)
Cash payments (16.6) — (0.8) (0.5) (17.9)
Translation adjustments 0.3 — 0.1 (0.1) 0.3
Balance at June 30, 2014 $ 7.1 $ — $ 0.7 $ 0.1 $ 7.9