Estee Lauder (EL)

NEW YORK--(BUSINESS WIRE)--
The Estée Lauder Companies Inc. (NYSE: EL) today reported financial
results for the fiscal second quarter ended December 31, 2009 that were
sharply higher than the prior-year period and the Companyâ??s original
expectations.

For the second quarter, the Company had net sales of $2.26 billion, an
11% increase compared with $2.04 billion reported in the prior-year
period. Excluding the impact of foreign currency translation, net sales
increased 6% from the year-ago period. The Company reported net earnings
for the quarter of $256.2 million, compared with $158.0 million last
year. Diluted net earnings per common share rose 60% to $1.28, compared
with $.80 reported in the prior year. All mention of net earnings in the
body of this press release refers to net earnings attributable to The
Estée Lauder Companies Inc., which reflects the adjustment for
noncontrolling interests.

The fiscal 2010 second quarter results included an adjustment to reduce
anticipated returns, as well as charges associated with restructuring
activities. Excluding these items, net sales and diluted net earnings
per share for the quarter were not materially different than reported
results. A reconciliation between GAAP and non-GAAP financial measures
is included in this press release. In connection with its long-term
strategic plan, as well as certain ongoing initiatives, the Company
realized savings of approximately $83 million during the quarter.

The Companyâ??s business in each of its product categories and geographic
regions continued to be affected by challenging and volatile economic
conditions. Despite these conditions, the Company was able to outperform
its original expectations because of better-than-anticipated sales at
lower advertising, merchandising and sampling spending levels in each of
the Companyâ??s product categories and geographic regions. The
better-than-anticipated sales stemmed, in part, from strong growth in
Asia, solid increases from higher-margin product launches, higher gains
in the Companyâ??s travel retail business and the holiday season in the
United States and the United Kingdom, and improved foreign currency
translation. The lower spending reflected the decision to eliminate
less-efficient advertising, merchandising and sampling in some of the
Companyâ??s businesses, given the extent of the global economic downturn
and the potential risks in the near term that did not materialize during
the quarter. For the remainder of the fiscal year, to enhance
competitiveness and accelerate momentum, the Company plans to increase
investment spending well above first-half levels behind more effective
advertising, merchandising and sampling.

During the quarter, the Company continued to make progress on its
strategic goals with significant improvements in cost of sales,
reflecting the positive impact of SKU reductions and lower obsolescence.
The Company realized substantial savings in connection with its
restructuring and resizing efforts, as well as from initiatives in
indirect procurement. Further, the Companyâ??s turnaround brands are
experiencing success in their refocus and repositioning initiatives,
collectively generating significantly improved results for the first six
months of fiscal 2010, compared with the prior-year period.
Additionally, the wholesale business of the Prescriptives brand will
close on January 31, 2010. The Company has successfully directed
consumers to similar products at other Estée Lauder Companiesâ?? brands
and plans to leverage the assets, formulas and trademarks of
Prescriptives within the Company.

Fabrizio Freda, President and Chief Executive Officer, said, â??The strong
results we posted this quarter reflect the vitality of our brands,
increased locally relevant innovation and the value consumers find in
our product offerings. Our strong top-line growth indicates consumers
have responded positively. I am very pleased with our performance in our
travel retail business, the Asia region and a good holiday season,
particularly in the United States and the United Kingdom, where we had
the right mix of gift sets and basic products, supported by the integral
personal service from beauty advisors. Many aspects of our business this
quarter came together, as strong global sales growth, cost of sales
reductions, restructuring savings and efficient cost management
translated into significant operating margin improvement.

â??While certain businesses have shown signs of improvement, and the
economic challenges and some external uncertainties have abated, we
remain mindful that they have not completely disappeared. We continue to
examine our business to more closely align our cost structure with
expected sales growth and plan to make targeted incremental investments
throughout the balance of the fiscal year to support and grow our
brands. Our strategic direction and long-term goals are supported by our
entire organization, and step-by-step we have begun executing on each
element of the strategy. The solid results for the first half and our
confidence in our business for the balance of the fiscal year give us
the ability to again raise our full-year sales and earnings per share
estimates.�

In the second quarter, the Company recorded charges for the impairment
of goodwill and other intangible assets that negatively impacted the
operating results of the skin care and hair care product categories, as
well as the Americas and Europe, the Middle East & Africa regions.

All product categories and geographic regions benefited from the
Company-wide efforts to eliminate non-value adding costs, as well as
significant improvement in cost of sales from favorable product mix and
enhanced inventory management, resulting in substantial improvements in
their operating income.

Skin Care

• 
  The skin care category is a strategic priority for the Company. In
  local currency, and on a reported basis, skin care net sales in
  Asia/Pacific and Europe, the Middle East & Africa grew double-digits,
  while the Americas had a solid high-single-digit gain.
  


• 
  The Company gained share in this category during the quarter in
  certain countries in stores where its products are sold.
  


• 
  Across each region, the Estée Lauder brand had continued strong sales
  from the recent launch of Advanced Night Repair Synchronized Recovery
  Complex, as well as the Re-Nutriv line of products. Higher sales were
  also generated from Cliniqueâ??s new Youth Surge line of moisturizing
  products, Even Better Skin Tone Correcting Moisturizer SPF 20, as well
  as from existing products in its 3-Step Skin Care System. Various
  successful products from La Mer also contributed incremental sales.
  These sales gains were partially offset by lower sales from other
  existing products.
  


• 
  Operating income was substantially higher, primarily reflecting
  improved results from certain of the Companyâ??s heritage brands, driven
  by increased sales from new higher-margin product launches. The skin
  care category benefited from targeted increases in advertising,
  merchandising and sampling to further build sales momentum. Partially
  offsetting these positives were goodwill and other intangible asset
  impairments.
  

Makeup

• 
  In local currency and on a reported basis, makeup net sales increased
  strong double-digits in Europe, the Middle East & Africa. The
  Companyâ??s other regions also recorded sales gains.
  


• 
  The majority of the sales increase came from the makeup artist brands,
  which collectively generated solid double-digit global growth during
  the quarter, driven primarily by their international businesses. On a
  reported basis, net sales also increased in certain of the Companyâ??s
  heritage brands, with solid domestic and international performance.
  


• 
  The higher makeup sales also reflected increases across a broad range
  of products, such as, the recent launches of Even Better Makeup SPF 15
  and Superbalanced Powder Makeup SPF 15 from Clinique, as well as
  Double Wear Foundation and Nutritious Vita-Mineral Makeup by Estée
  Lauder.
  


• 
  Operating income increased sharply, primarily due to improvements at
  certain of the Companyâ??s heritage brands and its makeup artist brands.
  

Fragrance

• 
  The Companyâ??s priority in this category was profitability improvement.
  During the quarter, the Company continued to face challenges in this
  product category, due in part to the continued economic downturn,
  coupled with competitive dynamics. As a result, fragrance sales
  declined, primarily in the Americas region.
  


• 
  The decrease was largely due to lower sales of designer fragrances,
  attributable to DKNY Delicious Night, Hilfiger Men from Tommy Hilfiger
  and certain Sean John fragrances. Also contributing to the decrease
  were lower sales of certain Estée Lauder fragrances, some of which
  were up against their launches in the prior year.
  


• 
  Higher sales from DKNY Be Delicious Fresh Blossom and Aromatics Elixir
  by Clinique partially offset the declines.
  


• 
  Fragrance operating income increased over 100%, primarily reflecting a
  favorable comparison to the prior-year periodâ??s support spending
  behind launches.
  

Hair Care

• 
  In local currency, sales decreased slightly, with gains in
  international regions being more than offset by declines in the
  Americas. Increased sales of certain styling and hair color products
  at Aveda and sales generated from direct-response television programs
  at Ojon, were more than offset by a soft salon retail environment in
  the United States.
  


• 
  On a reported basis, sales increased, reflecting the positive impact
  of foreign currency translation.
  


• 
  Hair care operating results decreased over 100%, primarily reflecting
  goodwill and other intangible asset impairments related to the Ojon
  brand, partially offset by net sales growth outside the United States,
  the closing of certain underperforming retail stores and savings
  generated from cost containment initiatives.
  

The Americas

• 
  Despite the challenging economic conditions in this region,
  particularly in the department store channel, sales increased modestly
  for the quarter, as gains in the skin care and makeup product
  categories were partially offset by declines in fragrance and hair
  care.
  


• 
  Strong sales growth was generated in Latin America and gains were
  reported in Canada, which were positively impacted by the weaker U.S.
  dollar. In Canada, sales decreased in constant currency.
  


• 
  In the United States, sales were flat, where among the Companyâ??s
  heritage brands, results were mixed, and collectively, makeup artist
  sales increased. During the quarter, the Company experienced
  restocking to more appropriate levels by certain retailers.
  


• 
  Sales of the Companyâ??s products online increased, while results in
  other alternative channels were mixed.
  


• 
  During the quarter, the Companyâ??s share increased slightly in the U.S.
  prestige department store channel.
  


• 
  Ongoing challenges faced by certain of the Companyâ??s department store
  customers in the U.S. may continue to affect net sales for the short
  and medium term.
  


• 
  Operating income in the Americas decreased, due to goodwill and other
  intangible asset impairments. This decrease was partially offset by
  improved results from our heritage brands and our makeup artist brands
  in the United States.
  

Europe, the Middle East & Africa

• 
  In constant currency, double-digit sales growth was recorded in a
  number of countries, with the largest gains coming in Russia, the
  United Kingdom and Benelux. These gains were partially offset by sales
  declines in the Middle East.
  


• 
  Much of the region continued to be affected by weak economic
  conditions and further, yet more limited, retailer destocking.
  


• 
  The Companyâ??s travel retail business experienced strong double-digit
  sales and profit growth during the quarter, resulting from successful
  product launches, select trade re-stocking, increased distribution and
  cost containment. This business reflects an improvement in global
  airline passenger traffic compared with the prior-year period.
  


• 
  The Company estimates that it gained share in certain countries in its
  distribution in this region during the quarter.
  


• 
  Operating income increased significantly, reflecting improvements in
  travel retail and virtually all countries in the region. The strongest
  growth was generated in travel retail, the United Kingdom, Spain,
  Russia and the Balkans. Partially offsetting these improvements was an
  impairment of other intangible assets.
  

Asia/Pacific

• 
  This region generated solid local currency sales growth, with most
  countries posting increases. The strongest gains were generated in
  China, Hong Kong, Korea and Taiwan. Sales growth in China was
  predominantly due to strong like-door growth, expanded distribution
  and successful product launches. Sales declined in Japan, reflecting
  the continued recessionary environment there.
  


• 
  The Company estimates that for the quarter it gained share in the Asia
  region within its points of distribution.
  


• 
  Operating income in the region rose substantially, with all countries
  posting gains, led by China, Hong Kong, Japan, Taiwan and Australia.
  

Six-Month Results

• 
  For the six months ended December 31, 2009, the Company reported net
  sales of $4.10 billion, a 4% increase from $3.94 billion in the
  comparable prior-year period. Excluding the impact of foreign currency
  translation, net sales increased 3%. On a reported basis, as well as
  in constant currency, net sales growth in Asia/Pacific and Europe, the
  Middle East & Africa, more than offset lower sales in the Americas.
  Net sales grew in the Companyâ??s skin care and makeup categories, which
  more than offset declines in fragrance. Hair care sales were flat for
  the six months.
  


• 
  The Company reported net earnings, including charges associated with
  restructuring activities, of $396.9 million for the six months,
  compared with $209.1 million in the same period last year. Diluted net
  earnings per common share for the six months ended December 31, 2009
  increased 89% to $1.99, compared with $1.06 reported in the same
  prior-year period.
  


• 
  The fiscal 2010 six month results included returns and charges
  associated with restructuring activities of $42.6 million ($27.7
  million after-tax), equal to $.14 per diluted common share. Excluding
  these returns and charges, net sales for the six months ended December
  31, 2009 were $4.11 billion, net earnings increased to $424.6 million
  and diluted net earnings per share rose to $2.13.
  

Cash Flows

• 
  For the six months ended December 31, 2009, net cash flows provided by
  operating activities increased significantly to $616.9 million,
  compared with $216.7 million in the prior-year period.
  


• 
  The improvement primarily reflected higher net earnings and the timing
  and level of tax payments. The increase also reflected favorable net
  changes in certain working capital components, as well as lower
  inventory levels, partially offset by higher accounts receivable
  balances.
  


• 
  Operating cash flow was utilized primarily for dividends, capital
  investments and the repurchase of shares of the Companyâ??s Class A
  Common Stock.
  


• 
  The Companyâ??s focus on inventory management resulted in 16 fewer days
  of inventory at December 31, 2009, compared to the prior year. This
  occurred in spite of destocking by certain retailers worldwide. In the
  third quarter, the Company expects to build inventory in advance of
  the rollout of SAP to its North America manufacturing facilities.
  


• 
  The Company believes that cash on hand, cash generated from
  operations, available credit lines and access to credit markets will
  be adequate to support its currently planned business operations on
  both a near-term and long-term basis.
  

Outlook for Fiscal 2010 Third Quarter
and Full Year

The high degree of global economic uncertainty has had a negative effect
on consumer confidence, demand and spending. The Company cannot predict
with certainty the extent or duration of these conditions. The Companyâ??s
business strategies are designed to strengthen the Company over the
long-term. The uncertainty about future market conditions, consumer
spending patterns and the financial strength of some of the Companyâ??s
key retail customers, coupled with select retailer destocking, will
continue to negatively affect the Companyâ??s results for fiscal 2010. A
continuation of these conditions makes definitive forecasting difficult.

During the balance of the fiscal year, the Company expects to increase
investment spending well above first-half levels to enhance
competitiveness, build momentum and drive growth. The Company also plans
incremental spending to build capabilities in the areas of digital
applications, regional research and development and consumer insights.

Third Quarter

• 
  Net sales are expected to increase between 4% and 7% in constant
  currency.
  


• 
  Foreign currency translation is expected to benefit sales by
  approximately 5% versus the prior-year period.
  


• 
  Diluted net earnings per share including charges associated with
  restructuring activities are projected to be between $.17 and $.27.
  


• 
  The Company expects to take returns and charges associated with
  restructuring activities in its fiscal 2010 third quarter of about $10
  million, equal to approximately $.03 per diluted common share. The
  recording of charges will depend on when decisions are made and the
  relevant accounting criteria are met.
  


• 
  Diluted net earnings per share before charges associated with
  restructuring activities are projected to be between $.20 and $.30.
  


• 
  In connection with its long-term strategic plan, as well as certain
  on-going initiatives, the Company expects to realize savings of
  approximately $65 million in the third quarter of fiscal 2010.
  

Full Year

• 
  Net sales are forecasted to grow between 3% and 5% in constant
  currency.
  


• 
  Foreign currency translation is expected to benefit sales by
  approximately 2% to 3% versus the prior year.
  


• 
  The Company projects diluted net earnings per share, including charges
  associated with restructuring activities, to be between $2.26 and
  $2.53.
  


• 
  The Company expects to take returns and charges associated with
  restructuring activities in fiscal 2010 of between $60 million and $90
  million, equal to $.20 to $.29 per diluted common share. The recording
  of charges will depend on when decisions are made and the relevant
  accounting criteria are met.
  


• 
  Diluted net earnings per share before charges associated with
  restructuring activities are projected to be between $2.55 and $2.73.
  


• 
  On a product category basis, in constant currency, sales in skin care
  and makeup are expected to lead growth, followed by hair care and
  fragrance.
  


• 
  Geographic region net sales growth in constant currency is expected to
  be led by Asia/Pacific, followed by Europe, the Middle East & Africa.
  Sales in the Americas are expected to decline slightly.
  


• 
  In connection with its long-term strategic plan, as well as certain
  on-going initiatives, the Company now expects to realize savings of
  between $275 million and $300 million during fiscal 2010.
  

_______________

• 
  The timing and predictability of when charges may be recorded will
  likely vary by quarter. As restructuring and other special charges
  decisions are reached, the Company may communicate such decisions
  through 8-K amendments filed with the SEC.
  

Forward-Looking Statements

The forward-looking statements in this press release, including those
containing words like â??expect,â? â??plans,â? â??may,â? â??could,â? â??anticipate,â?
â??estimate,â? â??projected,â? â??forecasted,â? those in Mr. Fredaâ??s remarks and
those in the â??Outlook for Fiscal 2010 Third Quarter and Full Yearâ?
section involve risks and uncertainties. Factors that could cause actual
results to differ materially from those forward-looking statements
include the following:

(1) increased competitive activity from companies in the skin care,
makeup, fragrance and hair care businesses, some of which have greater
resources than the Company does;

(2) the Companyâ??s ability to develop, produce and market new products on
which future operating results may depend and to successfully address
challenges in the Companyâ??s business;

(3) consolidations, restructurings, bankruptcies and reorganizations in
the retail industry causing a decrease in the number of stores that sell
the Companyâ??s products, an increase in the ownership concentration
within the retail industry, ownership of retailers by the Companyâ??s
competitors and ownership of competitors by the Companyâ??s customers that
are retailers and our inability to collect receivables;

(4) destocking and tighter working capital management by retailers;

(5) the success, or changes in timing or scope, of new product launches
and the success, or changes in the timing or scope, of advertising,
sampling and merchandising programs;

(6) shifts in the preferences of consumers as to where and how they shop
for the types of products and services the Company sells;

(7) social, political and economic risks to the Companyâ??s foreign or
domestic manufacturing, distribution and retail operations, including
changes in foreign investment and trade policies and regulations of the
host countries and of the United States;

(8) changes in the laws, regulations and policies (including the
interpretation and enforcement thereof) that affect, or will affect, the
Companyâ??s business, including those relating to its products, changes in
accounting standards, tax laws and regulations, trade rules and customs
regulations, and the outcome and expense of legal or regulatory
proceedings, and any action the Company may take as a result;

(9) foreign currency fluctuations affecting the Companyâ??s results of
operations and the value of its foreign assets, the relative prices at
which the Company and its foreign competitors sell products in the same
markets and the Companyâ??s operating and manufacturing costs outside of
the United States;

(10) changes in global or local conditions, including those due to the
volatility in the global credit and equity markets, natural or man-made
disasters, real or perceived epidemics, or energy costs, that could
affect consumer purchasing, the willingness or ability of consumers to
travel and/or purchase the Companyâ??s products while traveling, the
financial strength of the Companyâ??s customers, suppliers or other
contract counterparties, the Companyâ??s operations, the cost and
availability of capital which the Company may need for new equipment,
facilities or acquisitions, the returns that the Company is able to
generate on its pension assets and the resulting impact on its funding
obligations, the cost and availability of raw materials and the
assumptions underlying the Companyâ??s critical accounting estimates;

(11) shipment delays, depletion of inventory and increased production
costs resulting from disruptions of operations at any of the facilities
that manufacture nearly all of the Companyâ??s supply of a particular type
of product (i.e., focus factories) or at the Companyâ??s distribution or
inventory centers, including disruptions that may be caused by the
implementation of SAP as part of the Companyâ??s Strategic Modernization
Initiative or by restructurings;

(12) real estate rates and availability, which may affect the Companyâ??s
ability to increase or maintain the number of retail locations at which
the Company sells its products and the costs associated with the
Companyâ??s other facilities;

(13) changes in product mix to products which are less profitable;

(14) the Companyâ??s ability to acquire, develop or implement new
information and distribution technologies and initiatives on a timely
basis and within the Companyâ??s cost estimates;

(15) the Companyâ??s ability to capitalize on opportunities for improved
efficiency, such as publicly announced restructuring and cost-savings
initiatives, and to integrate acquired businesses and realize value
therefrom;

(16) consequences attributable to the events that are currently taking
place in the Middle East, including terrorist attacks, retaliation and
the threat of further attacks or retaliation;

(17) the timing and impact of acquisitions and divestitures, which
depend on willing sellers and buyers, respectively, and;

(18) additional factors as described in the Companyâ??s filings with the
Securities and Exchange Commission, including its Annual Report on Form
10-K for the fiscal year ended June 30, 2009.

The Company assumes no responsibility to update forward-looking
statements made herein or otherwise.

The Estée Lauder Companies Inc. is one of the worldâ??s leading
manufacturers and marketers of quality skin care, makeup, fragrance and
hair care products. The Companyâ??s products are sold in over 140
countries and territories under the following brand names: Estée Lauder,
Aramis, Clinique, Prescriptives, Lab Series, Origins, Mâ?¢Aâ?¢C, Bobbi
Brown, Tommy Hilfiger, Kiton, La Mer, Donna Karan, Aveda, Jo Malone,
Bumble and bumble, Darphin,
Michael Kors, American Beauty,
Flirt!, Good Skinâ?¢, Grassroots Research Labs, Sean John, Missoni, Daisy
Fuentes, Tom Ford, Coach and Ojon.

An electronic version of this release can be found at the Companyâ??s
website, www.elcompanies.com.

â?? Tables Follow â??

(A) In February 2009, the Company announced the implementation of a
multi-faceted cost savings program (the â??Programâ?) to position it to
achieve long-term profitable growth. The Company anticipates the Program
will result in related restructuring and other special charges over the
next few fiscal years totaling between $350 million and $450 million
before taxes. The Program includes organizational resizing and regional
realignments which principally reflects the reduction of the workforce
by approximately 2,000 employees.

During the six months ended December 31, 2009, the Company approved cost
savings initiatives to resize the organization, reorganize certain
functions, exit unprofitable operations and outsource certain services.
For the three and six months ended December 31, 2009, aggregate
restructuring charges of $5.9 million and $20.6 million, respectively,
were recorded in the Companyâ??s summary of consolidated results related
to the Program. These charges primarily reflected employee-related
costs, asset write-offs, contract terminations and other exit costs.

The Company incurred other special charges in connection with the
implementation of the Program for the three and six months ended
December 31, 2009 of $3.4 million and $6.9 million, respectively,
related to consulting, other professional services, and accelerated
depreciation. During the three months ended December 31, 2009, the
Company recorded adjustments to reflect revised estimates of anticipated
sales returns and the write-off of inventory related to the exit from
the global wholesale distribution of the Prescriptives brand. For the
three months ended December 31, 2009, the Company recorded an adjustment
of $7.4 million to reduce anticipated sales returns and a related cost
of sales of $1.6 million, in addition to a benefit of $3.2 million to
reduce the anticipated write-off of inventory associated with exiting
unprofitable operations. For the six months ended December 31, 2009, the
Company recorded $11.1 million, reflecting anticipated sales returns
(less a related cost of sales of $2.3 million) and a write-off of
inventory associated with exiting unprofitable operations of $6.3
million.

Total charges associated with restructuring activities included in
operating income for the three and six months ended December 31, 2009,
were $0.3 million and $42.6 million, respectively.

(B) During the second quarter of fiscal 2010, the Ojon reporting unit
altered and delayed certain components of its future expansion plans,
resulting in revisions to its internal forecasts. The Company concluded
that these changes in circumstances in the Ojon reporting unit triggered
the need for an interim impairment review of its goodwill and trademark.
Additionally, these changes in circumstances were also an indicator that
the carrying amount of the customer list may not be recoverable. The
Company performed an interim impairment test for the trademark and a
recoverability test for the customer list as of December 31, 2009 on
this reporting unit. The Company concluded that the carrying value of
the Ojon trademark and customer list exceeded their estimated fair
values and, as a result, the Company recognized impairment charges of
$6.0 million for the trademark and $17.2 million for the customer list,
at the exchange rate in effect at that time. The Company also completed
an interim impairment test for goodwill and recorded a goodwill
impairment charge related to the Ojon reporting unit of $16.6 million at
the exchange rate in effect at that time. These impairment charges were
reflected in the hair care and skin care product categories and in the
Americas region.

During the second quarter of fiscal 2010, the Darphin reporting unit
identified issues related to the planned streamlining of its
distribution process, resulting in revisions to its internal forecasts.
The Company concluded that these changes in circumstances in the Darphin
reporting unit triggered the need for an interim impairment test of its
trademark and goodwill. The Company determined that the trademark was
impaired and therefore, recorded an impairment charge of $5.8 million in
the skin care product category and in the Europe, the Middle East &
Africa region.

_______________

This earnings release includes some non-GAAP financial measures relating
to charges associated with restructuring activities. The following is a
reconciliation between the non-GAAP financial measures and the most
directly comparable GAAP measure for certain summary of consolidated
results accounts before and after the charges associated with
restructuring activities. The Company uses the non-GAAP financial
measure, among other things, to evaluate its operating performance and
the measure represents the manner in which the Company conducts and
views its business. Management believes that excluding these items that
are special in nature or that are not comparable from period to period
helps investors and others compare operating performance between two
periods. While the Company considers the non-GAAP measures useful in
analyzing its 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.

The Company operates on a global basis, with the majority of its net
sales generated outside the United States. Accordingly, fluctuations in
foreign currency exchange rates can affect the Companyâ??s results of
operations. Therefore, the Company presents certain net sales
information excluding the effect of foreign currency rate fluctuations
to provide a framework for assessing the performance of its underlying
business outside the United States. Constant currency information
compares results between periods as if exchange rates had remained
constant period-over-period. The Company calculates constant currency
information by translating current-period results using prior-year
period weighted average foreign currency exchange rates.