SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
----------------------
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 31, 1999
OR
Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 1-14064
The Estee Lauder Companies Inc.
(Exact name of registrant as specified in its charter)
Delaware 11-2408943
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
767 Fifth Avenue, New York, New York 10153
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 212-572-4200
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
At January 24, 2000, 123,910,935 shares of the registrant's Class A Common
Stock, $.01 par value, and 113,679,334 shares of the registrant's Class B Common
Stock, $.01 par value, were outstanding.
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
INDEX
<TABLE>
<CAPTION>
Page
Part I. Financial Information
<S> <C>
Consolidated Statements of Earnings --
Three Months and Six Months Ended December 31, 1999 and 1998............................. 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations............................................ 3
Consolidated Balance Sheets --
December 31, 1999 and June 30, 1999...................................................... 14
Consolidated Statements of Cash Flows --
Six Months Ended December 31, 1999 and 1998.............................................. 15
Notes to Consolidated Financial Statements.................................................... 16
Part II. Other Information............................................................................. 20
</TABLE>
-1-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
PART I. FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31 December 31
------------------- ----------------------
1999 1998 1999 1998
---- ---- ---- ----
(In millions, except per share data)
<S> <C> <C> <C> <C>
Net Sales........................................................ $1,235.1 $1,091.0 $2,328.8 $2,088.0
Cost of sales.................................................... 283.1 249.8 534.9 479.4
--------- --------- --------- --------
Gross Profit..................................................... 952.0 841.2 1,793.9 1,608.6
--------- --------- --------- --------
Operating expenses:
Selling, general and administrative........................... 756.7 670.3 1,454.1 1,308.5
Related party royalties....................................... 9.2 9.1 17.2 16.7
--------- --------- --------- --------
765.9 679.4 1,471.3 1,325.2
--------- --------- --------- --------
Operating Income................................................. 186.1 161.8 322.6 283.4
Interest expense, net............................................ 5.2 4.8 10.6 10.9
--------- --------- --------- --------
Earnings before Income Taxes..................................... 180.9 157.0 312.0 272.5
Provision for income taxes....................................... 67.0 59.7 115.5 103.6
--------- --------- --------- --------
Net Earnings..................................................... 113.9 97.3 196.5 168.9
Preferred stock dividends........................................ 5.8 5.8 11.7 11.7
--------- --------- --------- --------
Net Earnings Attributable to Common Stock........................ $ 108.1 $ 91.5 $ 184.8 $ 157.2
========= ========= ========= ========
Net earnings per common share:
Basic........................................................ $ .46 $ .39 $ .78 $ .66
Diluted...................................................... $ .45 $ .38 $ .76 $ .65
Weighted average common shares outstanding:
Basic........................................................ 237.5 236.5 237.5 236.7
Diluted...................................................... 242.2 240.3 242.4 240.2
Cash dividends declared per common share......................... $ .05 $ .0425 $ .10 $ .085
</TABLE>
See notes to consolidated financial statements.
-2-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
We manufacture skin care, makeup, fragrance and hair care products which are
distributed in over 110 countries and territories. The following is a
comparative summary of operating results for the three and six month periods
ended December 31, 1999 and 1998. Sales of products and services that do not
meet our definition of skin care, makeup, fragrance and hair care have been
included in the "Other" category. Prior-year information has been restated to
reflect the results of operations related to those products and services.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31 December 31
-------------------- ---------------------
1999 1998 1999 1998
---- ---- ---- ----
(In millions)
<S> <C> <C> <C> <C>
NET SALES By Region:
The Americas............................................... $ 716.5 $ 623.0 $1,432.3 $1,279.3
Europe, the Middle East & Africa........................... 350.3 328.1 607.4 573.0
Asia/Pacific............................................... 168.3 139.9 289.1 235.7
-------- --------- -------- --------
$1,235.1 $1,091.0 $2,328.8 $2,088.0
======== ======== ======== ========
By Product Category:
Skin Care.................................................. $ 389.8 $ 342.8 $ 743.2 $ 645.9
Makeup..................................................... 373.2 352.2 777.1 722.4
Fragrance.................................................. 434.0 369.8 741.1 665.3
Hair Care.................................................. 29.8 20.8 52.9 42.9
Other...................................................... 8.3 5.4 14.5 11.5
-------- -------- -------- --------
$1,235.1 $1,091.0 $2,328.8 $2,088.0
======== ======== ======== ========
OPERATING INCOME By Region:
The Americas............................................... $ 99.5 $ 90.2 $ 199.9 $ 183.1
Europe, the Middle East & Africa........................... 60.2 50.3 87.4 75.5
Asia/Pacific............................................... 26.4 21.3 35.3 24.8
-------- -------- -------- --------
$ 186.1 $ 161.8 $ 322.6 $ 283.4
======== ======== ======== ========
By Product Category:
Skin Care.................................................. $ 73.8 $ 62.3 $ 127.9 $ 107.3
Makeup..................................................... 46.7 43.2 95.2 87.4
Fragrance.................................................. 61.7 53.6 93.0 83.1
Hair Care.................................................. 4.3 2.4 6.8 5.5
Other...................................................... (0.4) 0.3 (0.3) 0.1
-------- -------- -------- --------
$ 186.1 $ 161.8 $ 322.6 $ 283.4
======== ======== ======== ========
</TABLE>
-3-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table sets forth certain consolidated earnings data as a
percentage of net sales:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31 December 31
--------------------- -------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales........................................................ 100.0% 100.0% 100.0% 100.0%
Cost of sales.................................................... 22.9 22.9 23.0 23.0
----- ----- ----- -----
Gross profit..................................................... 77.1 77.1 77.0 77.0
----- ----- ----- -----
Operating expenses before depreciation and amortization:
Selling, general and administrative........................... 58.4 58.8 59.4 59.8
Related party royalties....................................... 0.7 0.8 0.7 0.8
----- ----- ----- -----
59.1 59.6 60.1 60.6
----- ----- ----- -----
Earnings before interest, taxes, depreciation and amortization
("EBITDA")..................................................... 18.0 17.5 16.9 16.4
Depreciation and amortization.................................... 2.9 2.7 3.0 2.8
----- ----- ----- -----
Operating income................................................. 15.1 14.8 13.9 13.6
Interest expense, net............................................ 0.5 0.4 0.5 0.5
----- ----- ----- -----
Earnings before income taxes..................................... 14.6 14.4 13.4 13.1
Provision for income taxes....................................... 5.4 5.5 5.0 5.0
----- ----- ----- -----
Net earnings ................................................... 9.2% 8.9% 8.4% 8.1%
===== ===== ===== =====
</TABLE>
-4-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Second Quarter Fiscal 2000 compared with Second Quarter Fiscal 1999
NET SALES
Net sales increased 13% or $144.1 million to $1,235.1 million due to increases
in all regions and in all product categories. These results reflect the success
of our growth strategies for each product category, including the success of
recently introduced products. A strong domestic economy helped to fuel growth in
the Americas, while our investments in the Asia/Pacific region are returning
increased sales in all markets in a healthier economic environment. The U.S.
dollar strengthened against certain European currencies but weakened against the
Japanese yen and other Asian currencies. The combined effect of these changes
was a negative impact on net sales. On a constant exchange rate basis, net sales
increased 15% over the prior-year quarter. Additionally, as part of our Year
2000 contingency plans, we shipped approximately $30 million of merchandise in
December that would normally have been shipped in January.
Product Categories
Skin Care
Net sales of skin care products increased 14% or $47.0 million to $389.8 million
as compared with the same prior-year quarter. The increase in sales partially
related to the continued international rollout of Resilience Lift and Stop Signs
as well as the domestic introduction of Spotlight Skin Tone Perfector. In
addition to successful new products, our planned reemphasis on the skin care
line of business has generated sales improvements for our core product offerings
such as the Clinique 3-Step Skin Care System. Skin care sales were favorably
impacted by the improved results in Asian markets, given the concentration of
skin care sales in the Asia/Pacific region.
Makeup
Net sales of makeup products increased 6% or $21.0 million to $373.2 million as
compared with the same prior-year quarter. New and existing products supported
growth among all of our brands. New products included the recent launch of
*magic by Prescriptives and the Tommy Hilfiger line of color cosmetics. Existing
product growth was supported by increased sales of Superfit Makeup and Liquid
Lipstick. Current sales increases also reflect the inclusion of Stila, acquired
in August 1999.
Fragrance
We successfully rolled out Freedom for him, Freedom for her and Clinique Happy
for Men on a worldwide basis before the holiday selling season. These product
launches, together with the continuing success of Clinique Happy and Donna Karan
Cashmere Mist, were primarily responsible for the 17%, $64.2 million increase in
fragrance sales to $434.0 million, as compared to the same prior-year quarter.
Sales improvements in this category were partially offset by lower sales of
previously launched Tommy Hilfiger products.
Hair Care
Sales of hair care products increased $9.0 million to $29.8 million, an increase
of 43%. This increase was due to sales of new Aveda products and an increase in
the number of Company-owned retail stores, partially offset by a greater degree
of selectivity with regard to salons.
-5-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Geographic Regions
Net sales in the Americas increased 15% or $93.5 million to $716.5 million as
compared with the same prior-year quarter. Sales increases related primarily to
the introduction of several new fragrances, the success of newer brands and the
inclusion of newly acquired Stila. In Europe, the Middle East & Africa, net
sales increased 7% or $22.2 million to $350.3 million. Excluding the impact of
foreign currency translation, net sales increased 15%, reflecting increases in
Italy, France, Spain and the distributor and travel retail businesses. Net sales
in Asia/Pacific increased 20% or $28.4 million to $168.3 million as compared
with the same prior-year quarter. Sales increases in virtually all Asia/Pacific
markets were led by Japan, Australia, Taiwan and Korea. Excluding the impact of
foreign currency translation, Asia/Pacific net sales increased 12%, as compared
to the same prior-year quarter.
We strategically stagger our new product launches by geographic markets, which
may account for differences in regional sales growth.
COST OF SALES
Cost of sales for the three months ended December 31, 1999 and 1998 was 22.9% of
net sales. The consistency of cost of sales relative to net sales on a quarter
over quarter basis reflects increases related to the growth of acquired brands,
which have higher product cost structures, fully offset by production
efficiencies.
OPERATING EXPENSES
Operating expenses as a percent of net sales for the three months ended December
31, 1999 were 62.0% of net sales compared with 62.3% of net sales in the same
prior-year period. Relative to the core brands, our newer brands spend less as a
percent of sales on operating expenses. The current quarter change in operating
expenses as a percent of net sales reflects this mix of brand cost structures as
well as operating expense efficiencies achieved. Planned operating expenses
related to our Year 2000 contingency plan sales of $30 million are also
reflected in the second quarter results. The timing and type of new product
introductions also affect our level of selling, advertising and promotional
spending.
OPERATING INCOME
Operating income increased 15% or $24.3 million to $186.1 million as compared to
the same prior-year quarter, which resulted in an operating margin of 15.1% in
the current quarter versus 14.8% in the prior-year quarter. The increase in
operating income and margin is due to our ability to sustain gross margins
through production efficiencies, while capitalizing on operating expense
efficiencies achieved.
Product Categories
Operating income from skin care products increased 18% or $11.5 million to $73.8
million due to strong sales of core and recently introduced products. Makeup
operating income grew 8%, an increase of $3.5 million to $46.7 million
reflecting sales increases and the inclusion of Stila. Operating income for
fragrance products was $61.7 million, an increase of $8.1 million or 15%. This
increase is primarily attributable to sales of new products and the continued
success of certain existing products. After investing in the Aveda distribution
channel during the latter part of fiscal 1999 and the first quarter of 2000,
operating income in the hair care segment increased 79% or $1.9 million in the
current quarter.
-6-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Geographic Regions
Operating income in the Americas increased 10% or $9.3 million to $99.5 million
primarily due to higher net sales in all product categories. In Europe, the
Middle East & Africa, operating income increased 20% or $9.9 million to $60.2
million. Improved operating results in France and the distributor and travel
retail businesses were partially offset by lower results in Germany. In
Asia/Pacific, operating income increased 24% or $5.1 million to $26.4 million
due to increased sales in Japan, Australia, Taiwan and Singapore, as well as
improved general economic conditions.
Quarterly operating results are subject to seasonal net sales fluctuations in
addition to the level, scope and timing of expenditures related to product
promotions and/or introductions.
EBITDA
Earnings before interest, taxes, depreciation and amortization is an additional
measure of operating performance used by management. While the components of
EBITDA may vary from company to company, we exclude all depreciation charges
related to property, plant and equipment and all amortization charges including:
amortization of goodwill; purchased royalty rights; leasehold improvements; and
other intangible assets. We consider EBITDA useful in analyzing our results;
however, it is not intended to replace, or substitute for, any presentation
included in the consolidated financial statements prepared in conformity with
generally accepted accounting principles.
EBITDA increased 17% to $222.4 million or 18.0% of net sales as compared to
$190.8 million or 17.5% of net sales in the same prior-year quarter. The
improvement in EBITDA is primarily attributable to sales growth and operating
expense efficiencies.
INTEREST EXPENSE, NET
Net interest expense was $5.2 million for the three months ended December 31,
1999, as compared with $4.8 million in the same prior-year quarter, primarily
due to lower interest rates on commercial paper outstanding compared to the
rates on term loan debt outstanding in the prior-year quarter. This improvement
is offset by a decrease in interest income due to lower average cash balances
attributable to acquisition activity.
PROVISION FOR INCOME TAXES
The provision for income taxes represents federal, foreign, state and local
income taxes. The effective rate for income taxes for the three months ended
December 31, 1999 was 37.0% compared with 38.0% in the same prior-year quarter.
These rates reflect the effect of state and local taxes, tax rates in certain
foreign jurisdictions and certain nondeductible expenses. The decrease in the
effective income tax rate as compared to the same prior-year quarter was
principally attributable to implementing tax planning initiatives.
-7-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Six Months Fiscal 2000 compared with Six Months Fiscal 1999
NET SALES
Net sales increased 12% or $240.8 million to $2,328.8 million for the six months
ended December 31, 1999 as compared with the same prior-year period. Such
increase was due to increased sales in all product categories, a strong domestic
economy and the continued recovery of the Asia/Pacific region. Foreign currency
translation has not had a material effect on net sales as the favorable
translation of Asian currencies has been more than offset by weakness in certain
European currencies.
Product Categories
Skin Care
Net sales of skin care products increased 15% or $97.3 million to $743.2 million
reflecting double-digit increases in all regions. Resilience Lift and Stop Signs
have been rolled out internationally and are being well received. They have
contributed to growth in the category along with the recently launched Clinique
Acne Solutions line and traditional products such as Dramatically Different
Moisturizing Lotion and Clarifying Lotion, which are part of the Clinique 3-Step
Skin Care System. Due to the relatively high concentration of skin care products
sold in the Far East, the recent recovery of the Asia/Pacific marketplace has
had a favorable effect on sales in this segment.
Makeup
Makeup product sales increased 8% or $54.7 million to $777.1 million supported
by new products, the addition of Stila and increased sales by MAC. Toward the
end of last fiscal year, we introduced Superfit Makeup, and in the first quarter
of this year, we launched City Stick and Longstemmed Lashes. These products, as
well as the recently launched line of Tommy Hilfiger color cosmetics, have
contributed to sales growth. We have also added a number of new counters,
stores-within-stores and freestanding retail stores to our portfolio. Partially
offsetting the growth from new products are difficult comparisons to successful
products from the same prior-year period such as Smudgesicles and Indelible
Lipstick.
Fragrance
The worldwide launch of Freedom for him, Freedom for her and Clinique Happy for
Men, together with the continuing success of Clinique Happy and Donna Karan
Cashmere Mist, were primarily responsible for the 11%, $75.8 million
increase in fragrance sales. Improvements in this category were partially
offset by lower sales of previously launched Tommy Hilfiger products.
Hair Care
Sales of hair care products increased 23% or $10.0 million to $52.9 million due
to growth of the Aveda hair care product line and to refinements in the
distribution channel. Improvements to the distribution channel include a greater
degree of selectivity with regard to salons that carry Aveda products and an
increase in the number of Company-owned retail stores.
-8-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Geographic Regions
Sales in the Americas increased 12% or $153.0 million to $1,432.3 million for
the six months ended December 31, 1999 as compared with the same prior-year
period. This increase was driven by sales increases in all categories, the
success of new and existing products, and the growth of our newer brands. In
Europe, the Middle East & Africa, net sales increased 6% or $34.4 million to
$607.4 million compared with the same prior-year period. The increase was
primarily the result of higher net sales in Italy, Spain, France and the
distributor and travel retail businesses. Excluding the impact of foreign
currency translation, sales in Europe, the Middle East & Africa increased 12%.
Net sales in Asia/Pacific increased 23% or $53.4 million to $289.1 million
primarily due to higher net sales in Japan, Australia, Korea and Taiwan.
Excluding the impact of foreign currency translation, Asia/Pacific sales grew
10% over the prior-year period.
COST OF SALES
Cost of sales for the six months ended December 31, 1999 and 1998 were 23.0% of
net sales. Although the cost of goods sold has not changed as a percent of net
sales, the components reflect lower costs resulting from continued production
efficiencies offset by growth of our newer brands, which generally have a higher
product cost structure than our core brands.
OPERATING EXPENSES
Although operating expenses increased 11% or $146.1 million over the comparable
prior-year period they decreased as a percent of net sales from 63.4% in fiscal
1999 to 63.1% in fiscal 2000. This change reflects the fact that our newer
brands spend proportionally less on operating expenses than our core brands as
well as operating expense efficiencies achieved. The timing and type of new
product introductions also affect our level of selling, advertising and
promotional spending.
OPERATING INCOME
Operating income increased 14% or $39.2 million to $322.6 million for the six
months ended December 31, 1999 as compared with the same prior-year period.
Operating margin increased to 13.9% in the current period as compared to 13.6%
in the same period last year. The increase in operating income and margin is due
to higher net sales coupled with production and operating expense efficiencies
achieved.
Product Categories
Operating income in the skin care, makeup, fragrance and hair care categories
increased 19%, 9%, 12% and 24%, respectively, primarily due to sales growth
across all segments.
Geographic Regions
Operating income in the Americas increased 9% or $16.8 million to $199.9 million
for the six months ended December 31, 1999 as compared with the same prior-year
period, primarily due to net sales increases related to new and existing
products and the growth of newer brands. In Europe, the Middle East & Africa,
operating income increased 16% or $11.9 million to $87.4 million primarily due
to improved operating results in France, Germany, South Africa and the
distributor and travel retail businesses, partially offset by lower operating
income in the United Kingdom. In Asia/Pacific, operating income increased 42% or
$10.5 million to $35.3 million due to higher results in Japan, Australia, Korea
and Taiwan.
-9-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EBITDA
EBITDA increased 15% to $392.9 million or 16.9% of net sales as compared to
$342.1 million or 16.4% of net sales in the same prior-year period. The
improvement in EBITDA is primarily attributable to sales growth and operating
expense efficiencies achieved.
INTEREST EXPENSE, NET
Net interest expense was $10.6 million for the six months ended December 31,
1999 as compared to $10.9 million in the same prior-year period. The decrease in
net interest expense for the six months ended December 31, 1999 is primarily
attributable to lower borrowing levels at some of our foreign affiliates as well
as lower interest rates on commercial paper borrowings as compared to higher
rates on a similar level of term loan debt in the prior year.
PROVISION FOR INCOME TAXES
The provision for income taxes represents federal, foreign, state and local
income taxes. The effective rate for income taxes for the six months ended
December 31, 1999 was 37.0% compared with 38.0% in the same prior-year period.
These rates reflect the effect of state and local taxes, tax rates in certain
foreign jurisdictions and certain nondeductible expenses. The decrease in the
effective income tax rate is principally attributable to implementing tax
planning initiatives.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of funds are cash flow from operations, issuance of
commercial paper, long-term borrowings and borrowings under committed credit
lines provided by banks in the United States and abroad. We believe that these
sources of funds will be adequate to support currently planned business
operations, acquisitions and capital expenditures on both a near-term and
long-term basis. At December 31, 1999, the Company had cash and cash equivalents
of $347.7 million as compared to $347.5 million at June 30, 1999.
The classification of commercial paper as long-term debt in our balance sheet is
based upon our intent and ability to refinance maturing commercial paper on a
long-term basis. That ability is supported by committed credit facilities in the
amount of $750.0 million, of which none were used. We also have uncommitted
credit facilities in the amount of $97.4 million, of which none were used. Total
debt as a percentage of total capitalization (including short-term debt) was 23%
at December 31, 1999 and 25% at June 30, 1999.
In November 1999, our shelf registration statement covering the potential
issuance of up to $400.0 million in debt securities was declared effective by
the SEC.
Net cash provided by operating activities was $244.9 million in the six months
ended December 31, 1999 as compared to $219.1 million in the same prior-year
period. This favorable change in net cash provided by operating activities
primarily reflects increased profitability.
Net cash used for investing activities of $199.8 million during the six months
ended December 31, 1999 reflects capital expenditures, the acquisitions of Stila
and Jo Malone Limited, and the ongoing acquisition of certain Aveda distributors
in the United States and the United Kingdom as well as certain Aveda retail
stores.
-10-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net cash used for financing activities of $45.3 million principally reflects
dividends and payments to acquire treasury stock.
Derivative Financial Instruments
We conduct business in many foreign currencies. As a result, we are subject to
foreign currency exchange rate risk due to the effects that foreign exchange
rate movements of these currencies have on our costs and cash flows which we
receive from our foreign subsidiaries. We address our risks through a controlled
program of risk management, the principal objective of which is to minimize the
risks and/or costs associated with financial and global operating activities. We
use derivative financial instruments for the purpose of managing our exposure to
adverse fluctuations in foreign currency exchange rates and interest rates. The
Company does not utilize derivative financial instruments for trading or other
speculative purposes.
Foreign Exchange Risk Management
We enter into forward exchange contracts to hedge purchases, receivables and
payables denominated in foreign currencies for periods consistent with our
identified exposures. Gains and losses related to qualifying hedges of these
exposures are deferred and recognized in operating income when the underlying
hedged transaction occurs. We also enter into purchased foreign currency options
to hedge anticipated transactions where there is a high probability that
anticipated exposures will materialize. Any gains realized on such options that
qualify as hedges are deferred and recognized in operating income when the
underlying hedged transaction occurs. Premiums on foreign currency options are
amortized over the period being hedged. Foreign currency transactions which do
not qualify as hedges are marked to market on a current basis with gains and
losses recognized through income and reflected in operating expenses. In
addition, any previously deferred gains and losses on hedges which are
terminated prior to the transaction date are recognized in current income when
the hedge is terminated. The contracts have varying maturities with none
exceeding 24 months.
As a matter of policy, we only enter into contracts with counterparties that
have at least an "A" (or equivalent) credit rating. The counterparties to these
contracts are major financial institutions. We do not have significant exposure
to any one counterparty. Our exposure to credit loss in the event of
nonperformance by any of the counterparties is limited to only the recognized,
but not realized, gains attributable to the contracts. Management believes risk
of loss is remote and in any event would not be material. Costs associated with
entering into such contracts have not been material to our financial results. At
December 31, 1999, we had contracts to exchange foreign currencies in the form
of purchased currency options and forward exchange contracts in the amount of
$20.8 million and $136.6 million, respectively. Foreign currencies exchanged
under these contracts are principally the Euro, Japanese yen, Swiss franc and
British pound.
Interest Rate Risk Management
We have entered into interest rate swaps to exchange floating rate for fixed
rate interest payments periodically over the life of the agreements. Amounts
currently due to or from interest rate swap counterparties are recorded in
interest expense in the period in which they accrue. As of December 31, 1999, we
had interest rate swap agreements outstanding with a notional principal amount
of $200.0 million.
Market Risk
There have been no significant changes in market risk since June 30, 1999 that
would have a material effect on our calculated value-at-risk exposure, as
disclosed in the annual report on Form 10-K for the year ended June 30, 1999.
-11-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YEAR 2000
Our comprehensive program to address Year 2000 issues was successful in that our
business activities continued without disruption through the days before and
after January 1, 2000. In terms of supply chain readiness, on the basis of the
information available to us, we do not expect disruptions caused by the failures
of third parties to remediate their Year 2000 issues.
Costs related to the Year 2000 program were not significant.
INTERNET
Our strategic goals for the Internet are to enhance our brand equities, to reach
new consumers, to forge deeper relationships with existing consumers and to
strengthen our business through our traditional retailers. Currently, we have
six websites that educate and inform consumers about specific brands, and
additional sites are under development. Three of the existing sites -
clinique.com, origins.com and bobbibrowncosmetics.com - have e-commerce
capabilities, either directly or through one of our retail customers. We expect
to launch additional sites with e-commerce capabilities in the near-term. Our
Internet sales are currently limited to consumers in the United States and,
during the three and six months ending December 31, 1999, such sales have not
been significant. Currently, we do not intend to supply our products to
merchants that sell only over the Internet.
Forward-Looking Information
We and our representatives from time to time make written or oral
forward-looking statements, including statements contained in this and other
filings with the Securities and Exchange Commission and in our reports to
stockholders. The words and phrases "will likely result," "expects," "believes,"
"will continue," "is anticipated," "estimates," "projects" or similar
expressions are intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
include, without limitation, our expectations regarding sales, earnings or other
future financial performance and liquidity, product introductions, entry into
new geographic regions, new methods of sale and future operations or operating
results. Although we believe that our expectations are based on reasonable
assumptions within the bounds of our knowledge of our business and operations,
we cannot assure that actual results will not differ materially from our
expectations. Factors that could cause actual results to differ from
expectations include, without limitation:
(i) increased competitive activity from companies in the skin care,
makeup, fragrance and hair care businesses, some of which have
greater resources than we do;
(ii) our ability to develop, produce and market new products on which
future operating results may depend;
(iii) consolidations and restructurings in the retail industry
causing a decrease in the number of stores that sell our products, an
increase in the ownership concentration within the retail industry or
ownership of retailers by our competitors or ownership of competitors
by our customers that are retailers;
-12-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(iv) shifts in the preferences of consumers as to where and how they
shop for beauty and related products;
(v) social, political and economic risks to our foreign
manufacturing, distribution and retail operations, including changes
in foreign investment and trade policies and regulations of the host
countries and of the United States;
(vi) changes in the laws, regulations and policies, including changes
in accounting standards, that affect, or will affect, us in the
United States and abroad;
(vii) foreign currency fluctuations affecting our results of
operations and the value of our foreign assets, the relative prices
at which we sell our products and our foreign competitors sell their
products in the same market and our operating and manufacturing costs
outside of the United States;
(viii) changes in global economic conditions that could affect the
cost and availability of capital to the Company, which may be needed
for new equipment, facilities or acquisitions;
(ix) shipment delays, depletion of inventory and increased production
costs resulting from disruptions of operations at any of the
facilities which, due to consolidations in our manufacturing
operations, now manufacture nearly all of our supply of a particular
type of product (i.e., focus factories);
(x) real estate rates and availability, which may affect our ability
to increase the number of retail locations at which we sell our
products;
(xi) changes in product mix to products which are less profitable;
(xii) our ability and the ability of third parties, including
customers, suppliers and governmental entities, to adequately address
Year 2000 issues; and
(xiii) our ability to integrate acquired businesses and realize value
therefrom.
We assume no responsibility to update forward-looking statements made herein or
otherwise.
-13-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31 June 30
1999 1999
---- ----
(Unaudited)
(In millions)
ASSETS
<S> <C> <C>
Current Assets
Cash and cash equivalents............................................................... $ 347.7 $ 347.5
Accounts receivable, net................................................................ 686.9 533.7
Inventory and promotional merchandise, net.............................................. 463.5 513.0
Prepaid expenses and other current assets............................................... 197.0 176.0
-------- --------
Total current assets............................................................... 1,695.1 1,570.2
-------- --------
Property, Plant and Equipment, net...................................................... 419.4 383.6
-------- --------
Other Assets
Investments, at cost or market value.................................................... 47.4 35.5
Deferred taxes.......................................................................... 63.4 63.6
Goodwill, net .......................................................................... 664.5 557.9
Other intangible assets, net............................................................ 41.2 50.6
Other assets, net....................................................................... 89.6 85.3
-------- --------
Total other assets................................................................. 906.1 792.9
-------- --------
Total assets.................................................................. $3,020.6 $2,746.7
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term debt......................................................................... $ 6.8 $ 6.6
Accounts payable........................................................................ 228.1 223.1
Accrued income taxes.................................................................... 98.6 87.6
Other accrued liabilities............................................................... 618.2 544.9
-------- --------
Total current liabilities.......................................................... 951.7 862.2
-------- --------
Noncurrent Liabilities
Long-term debt.......................................................................... 422.1 422.5
Other noncurrent liabilities............................................................ 196.5 177.5
-------- --------
Total noncurrent liabilities....................................................... 618.6 600.0
-------- --------
$6.50 Cumulative Redeemable Preferred Stock, at redemption value........................ 360.0 360.0
-------- --------
Stockholders' Equity
Common stock, $.01 par value; 650,000,000 shares Class A authorized, shares
issued 124,261,319 at December 31, 1999 and 123,936,464 at June 30, 1999;
240,000,000 shares Class B authorized, shares issued and outstanding 113,679,334..... 2.4 2.4
Paid-in capital......................................................................... 220.9 211.6
Retained earnings....................................................................... 927.3 766.2
Accumulated other comprehensive income.................................................. (39.1) (44.3)
-------- --------
1,111.5 935.9
Less: Treasury stock, at cost; 693,806 Class A shares at December 31, 1999 and
455,306 at June 30, 1999............................................................. (21.2) (11.4)
-------- --------
Total stockholders' equity......................................................... 1,090.3 924.5
-------- --------
Total liabilities and stockholders' equity...................................... $3,020.6 $2,746.7
======== ========
</TABLE>
See notes to consolidated financial statements.
-14-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31
-------------------
1999 1998
---- ----
(In millions)
<S> <C> <C>
Cash Flows from Operating Activities
Net earnings............................................................................... $ 196.5 $ 168.9
Adjustments to reconcile net earnings to net cash
flows provided by operating activities:
Depreciation and amortization.......................................................... 61.4 49.8
Amortization of purchased royalty rights............................................... 8.9 8.9
Deferred income taxes.................................................................. (8.0) (8.0)
Non-cash stock compensation............................................................ 1.1 -
Changes in operating assets and liabilities:
Increase in accounts receivable, net................................................... (153.1) (124.8)
Decrease in inventory and promotional merchandise...................................... 54.8 73.1
Increase in other assets............................................................... (28.8) (14.5)
Increase (decrease) in accounts payable................................................ 2.2 (32.7)
Increase in accrued income taxes....................................................... 14.7 33.8
Increase in other accrued liabilities.................................................. 76.7 51.4
Increase in other noncurrent liabilities............................................... 18.5 13.2
--------- --------
Net cash flows provided by operating activities...................................... 244.9 219.1
--------- --------
Cash Flows from Investing Activities
Acquisition of businesses, net of cash acquired............................................ (121.8) -
Capital expenditures....................................................................... (76.5) (47.6)
Purchase of long-term investments.......................................................... (4.5) (0.7)
Proceeds from the disposition of long-term investments..................................... 3.0 -
--------- --------
Net cash flows used for investing activities......................................... (199.8) (48.3)
--------- --------
Cash Flows from Financing Activities
Decrease in short-term debt, net........................................................... (0.8) (6.5)
Repayments of long-term debt............................................................... (3.5) (3.0)
Proceeds from exercise of stock options.................................................... 4.2 0.5
Payments to acquire treasury stock......................................................... (9.8) (12.7)
Dividends paid............................................................................. (35.4) (31.8)
--------- --------
Net cash flows used for financing activities......................................... (45.3) (53.5)
--------- --------
Effect of Exchange Rate Changes on Cash and Cash Equivalents.................................. 0.4 7.9
--------- --------
Net Increase in Cash and Cash Equivalents.................................................. 0.2 125.2
Cash and Cash Equivalents at Beginning of Period........................................... 347.5 277.5
--------- --------
Cash and Cash Equivalents at End of Period................................................. $ 347.7 $ 402.7
========= ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest .............................................................................. $ 14.8 $ 14.9
========= ========
Income taxes........................................................................... $ 97.2 $ 75.3
========= ========
Non cash items:
Tax benefit from exercise of stock options............................................. $ 4.0 $ -
========= ========
</TABLE>
See notes to consolidated financial statements.
-15-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements include the accounts of The
Estee Lauder Companies Inc. and its subsidiaries (collectively, the "Company").
All significant intercompany balances and transactions have been eliminated in
consolidation.
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. The
results of operations of any interim period are not necessarily indicative of
the results of operations to be expected for the fiscal year. For further
information, refer to the consolidated financial statements and accompanying
footnotes included in the Company's annual report on Form 10-K for the year
ended June 30, 1999.
Net Earnings Per Common Share
For the three and six month periods ended December 31, 1999 net earnings per
common share amounts ("basic EPS") were computed by dividing net earnings, after
deducting preferred stock dividends on the Company's $6.50 Cumulative Redeemable
Preferred Stock, by the weighted average number of common shares outstanding and
contingently issuable shares (which satisfy certain conditions) and excluded any
potential dilution. Net earnings per common share amounts assuming dilution
("diluted EPS") were computed by reflecting potential dilution from the exercise
of stock options.
A reconciliation between the numerators and denominators of the basic and
diluted EPS computations is as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31 December 31
---------------------- --------------------
1999 1998 1999 1998
---- ---- ---- ----
(Unaudited)
(In millions, except per share data)
<S> <C> <C> <C> <C>
Numerator:
Net earnings.................................................. $ 113.9 $ 97.3 $ 196.5 $ 168.9
Preferred stock dividends..................................... 5.8 5.8 11.7 11.7
------- ------- ------- -------
Net earnings attributable to common stock..................... $ 108.1 $ 91.5 $ 184.8 $ 157.2
======= ======= ======= =======
Denominator:
Weighted average common shares outstanding - Basic............ 237.5 236.5 237.5 236.7
Effect of dilutive securities: Stock options.................. 4.7 3.8 4.9 3.5
------- ------- ------- -------
Weighted average common shares outstanding - Diluted.......... 242.2 240.3 242.4 240.2
======= ======= ======= =======
Net earnings per common share:
Basic EPS..................................................... $ .46 $ .39 $ .78 $ .66
======= ======= ======= =======
Diluted EPS................................................... $ .45 $ .38 $ .76 $ .65
======= ======= ======= =======
</TABLE>
Options to purchase 6.1 million and 1.9 million shares of common stock at
December 31, 1999 and 1998, respectively, were not included in the computation
of diluted EPS because the exercise price of those options was greater than the
average market price of common shares. The options were still outstanding at the
end of the respective period.
-16-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Accounts Receivable
Accounts receivable is stated net of the allowance for doubtful accounts and
retail customer deductions of $34.3 million and $36.0 million as of December 31
and June 30, 1999, respectively.
Inventory and Promotional Merchandise
Inventory and promotional merchandise only include inventory considered saleable
or usable in future periods, and are stated at the lower of cost or market, with
cost being determined on the first-in, first-out method. Promotional merchandise
is charged to expense at the time the merchandise is shipped to the Company's
customers.
<TABLE>
<CAPTION>
December 31 June 30
1999 1999
---- ----
(Unaudited)
(In millions)
<S> <C> <C>
Inventory and promotional merchandise consists of:
Raw materials......................................... $ 123.8 $ 128.3
Work in process....................................... 24.1 22.6
Finished goods........................................ 234.9 238.7
Promotional merchandise............................... 80.7 123.4
------- -------
$ 463.5 $ 513.0
======= =======
</TABLE>
Property, Plant and Equipment
Property, plant and equipment are carried at cost less accumulated depreciation.
For financial statement purposes, depreciation is provided principally on the
straight-line method over the estimated useful lives of the assets ranging from
3 to 40 years. Leasehold improvements are amortized on a straight-line basis
over the shorter of the lives of the respective leases or the expected useful
lives of the improvements.
<TABLE>
<CAPTION>
December 31 June 30
1999 1999
---- ----
(Unaudited)
(In millions)
<S> <C> <C>
Land ................................................. $ 13.0 $ 13.0
Buildings and improvements.............................. 130.5 129.9
Machinery and equipment................................. 455.0 432.0
Furniture and fixtures.................................. 83.7 71.7
Leasehold improvements.................................. 193.4 153.2
------- -------
875.6 799.8
Less accumulated depreciation and amortization.......... (456.2) (416.2)
------- -------
$ 419.4 $ 383.6
======= =======
</TABLE>
-17-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Management Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses
reported in those financial statements. Actual results could differ from those
estimates and assumptions.
NOTE 2 - COMPREHENSIVE INCOME
The components of accumulated other comprehensive income included in the
accompanying consolidated balance sheets consist of net unrealized investment
gains and cumulative translation adjustments as of the end of each period.
Comprehensive income and its components, net of tax, are as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31 December 31
------------------------ ---------------------
1999 1998 1999 1998
---- ---- ---- ----
(Unaudited)
(In millions)
<S> <C> <C> <C> <C>
Net earnings.............................................. $113.9 $ 97.3 $196.5 $168.9
------ ------ ------ ------
Other comprehensive income:
Net unrealized investment gains (losses)............. 6.6 2.7 6.3 (0.3)
Translation adjustments.............................. (12.4) 7.3 (1.1) 26.1
------ ------ ------ ------
Other comprehensive income........................... (5.8) 10.0 5.2 25.8
------ ------ ------ ------
Comprehensive income...................................... $108.1 $107.3 $201.7 $194.7
====== ====== ====== ======
</TABLE>
NOTE 3 - ACQUISITION OF BUSINESSES
In October 1999, the Company acquired Jo Malone Limited, a London-based marketer
of prestige skin care and fragrance products, for cash.
At various times during the first half of fiscal 2000 the Company acquired
businesses engaged in the distribution and retail sale of Aveda products in the
United States and the United Kingdom.
In August 1999, the Company acquired the business of Stila Cosmetics, Inc., a
manufacturer and marketer of prestige makeup products, for cash.
The aggregate purchase price for these transactions, which includes acquisition
costs, was approximately $122.2 million and each transaction has been accounted
for using the purchase method of accounting. Accordingly, the results of
operations of these acquired businesses are included in the accompanying
consolidated financial statements since their respective dates of acquisition.
Pro forma results of operations as if these acquisitions had been completed as
of July 1, 1999 have not been presented as the impact on the Company's results
of operations would not have been material.
-18-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - SEGMENT DATA AND RELATED INFORMATION
Reportable operating segments include components of an enterprise about which
separate financial information is available that is evaluated regularly by the
chief operating decision maker in deciding how to allocate resources and in
assessing performance. The Company evaluates segment performance based upon
operating income, which represents earnings before income taxes and net interest
expense. The accounting policies for each of the reportable segments are
substantially the same as those for the consolidated financial statements, as
described in the summary of significant accounting policies. There has been no
significant variance in the total or long-lived asset values associated with
each segment since June 30, 1999.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31 December 31
------------------ ----------------
1999 1998 1999 1998
---- ---- ---- ----
(Unaudited)
(In millions)
<S> <C> <C> <C> <C>
SEGMENT DATA Net Sales:
Skin Care........................................................ $ 389.8 $ 342.8 $ 743.2 $ 645.9
Makeup........................................................... 373.2 352.2 777.1 722.4
Fragrance........................................................ 434.0 369.8 741.1 665.3
Hair Care........................................................ 29.8 20.8 52.9 42.9
Other............................................................ 8.3 5.4 14.5 11.5
--------- --------- --------- --------
$ 1,235.1 $ 1,091.0 $ 2,328.8 $2,088.0
========= ========= ========= ========
Operating Income:
Skin Care........................................................ $ 73.8 $ 62.3 $ 127.9 $ 107.3
Makeup........................................................... 46.7 43.2 95.2 87.4
Fragrance........................................................ 61.7 53.6 93.0 83.1
Hair Care........................................................ 4.3 2.4 6.8 5.5
Other............................................................ (0.4) 0.3 (0.3) 0.1
--------- --------- --------- --------
186.1 161.8 322.6 283.4
Reconciliation:
Interest expense, net......................................... 5.2 4.8 10.6 10.9
--------- --------- --------- --------
Earnings before income taxes..................................... $ 180.9 $ 157.0 $ 312.0 $ 272.5
========= ========= ========= ========
REGIONAL DATA Net Sales:
The Americas..................................................... $ 716.5 $ 623.0 $ 1,432.3 $1,279.3
Europe, the Middle East & Africa................................. 350.3 328.1 607.4 573.0
Asia/Pacific..................................................... 168.3 139.9 289.1 235.7
--------- --------- --------- --------
$ 1,235.1 $ 1,091.0 $ 2,328.8 $2,088.0
========= ========= ========= ========
Operating Income:
The Americas..................................................... $ 99.5 $ 90.2 $ 199.9 $ 183.1
Europe, the Middle East & Africa................................. 60.2 50.3 87.4 75.5
Asia/Pacific..................................................... 26.4 21.3 35.3 24.8
--------- --------- --------- --------
$ 186.1 $ 161.8 $ 322.6 $ 283.4
========= ========= ========= ========
</TABLE>
-19-
<PAGE>
THE ESTEE LAUDER COMPANIES INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are involved in various routine legal proceedings incident to the ordinary
course of business. In management's opinion the outcome of pending legal
proceedings, separately or in the aggregate, will not have a material adverse
effect on our business or financial condition.
Item 4. Submission of matters to a vote of security holders
(a) The Annual Meeting of Stockholders of the Company was held on November 10,
1999.
(b) The following directors were elected at the Annual Meeting of the
Stockholders: Leonard A. Lauder, Ronald S. Lauder and Marshall Rose, as
Class III Directors for a term expiring at the 2002 Annual Meeting. The
Class I Directors, whose terms expire at the 2000 Annual Meeting, are
Fred H. Langhammer and Faye Wattleton. The Class II Directors, whose
terms expire at the 2001 Annual Meeting, are William P. Lauder, Richard
D. Parsons and P. Roy Vagelos, M.D.
(c) (i) Each person elected as a director at the Annual Meeting received
the number of votes (shares of Class B Common Stock are entitled to
ten votes per share) indicated beside his name:
<TABLE>
<CAPTION>
Name Votes For Votes Withheld
<S> <C> <C>
Leonard A. Lauder 1,246,602,075 657,774
Ronald S. Lauder 1,246,561,892 697,957
Marshall Rose 1,246,717,200 542,649
<CAPTION>
(ii) The Amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares was approved as indicated
below.
Votes For Votes Against Abstentions
<S> <C> <C> <C>
Total 1,235,591,746 11,600,645 67,458
Class A 98,798,406 11,600,645 67,458
Class B 1,136,793,340 0 0
</TABLE>
There were no broker nonvotes.
(iii)1,247,134,759 votes were cast for and 56,726 votes were cast
against the ratification of the appointment of Arthur Andersen LLP
as independent auditors of the Company for the 2000 fiscal year.
There were 68,364 abstentions and no broker nonvotes.
(d) Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits--
3.1 Certificate of Amendment of Restated Certificate of
Incorporation
3.2 Amended and Restated By-Laws
27.1 Financial Data Schedule
- ---------------------------------------
(b) Reports on Form 8-K -- There were no reports on Form 8-K for the
three months ended December 31, 1999.
-20-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE ESTEE LAUDER COMPANIES INC.
Date: January 27, 2000 by:/s/Robert J. Bigler
---------------------------
Robert J. Bigler
Senior Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
-21-
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
THE ESTEE LAUDER COMPANIES INC.
--------------------
The Estee Lauder Companies Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: The first sentence of Section 4.1 of Article IV of the Restated
Certificate of Incorporation of said corporation is hereby deleted in its
entirety and replaced with the following: "The total number of shares of stock
that the Corporation shall have authority to issue is nine hundred thirteen
million six hundred thousand (913,600,000) shares, consisting of (a) six hundred
fifty million (650,000,000) shares of Class A Common Stock, par value $.01 per
share (the "Class A Common Stock"); (b) two hundred forty million (240,000,000)
shares of Class B Common Stock, par value $.01 per share (the "Class B Common
Stock"); (c) twenty million (20,000,000) shares of preferred stock, par value
$.01 per share (the "Preferred Stock"), issuable in one or more series as
hereinafter provided; and (d) three million six hundred thousand (3,600,000)
shares of $6.50 Cumulative Redeemable Preferred Stock, par value $.01 per share
(the "$6.50 Cumulative Redeemable Preferred Stock")."
SECOND: The aforesaid amendment was duly adopted in accordance with
the applicable provisions of Section 242 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, said The Estee Lauder Companies Inc. has caused
this certificate to be signed by Paul E. Konney, its Senior Vice President,
General Counsel and Secretary, this 10th day of November, 1999.
THE ESTEE LAUDER COMPANIES INC.
By: ______________________________
Name: Paul E. Konney
Title: Senior Vice President, General
Counsel and Secretary
AMENDED AND RESTATED BYLAWS
OF
THE ESTEE LAUDER COMPANIES INC.
(a Delaware corporation)
(As adopted by the Board of Directors
of the Corporation, and effective on January 1, 2000)
ARTICLE I.
OFFICES
SECTION 1. Registered Office. The registered office of The
Estee Lauder Companies Inc. (the "Corporation") in the State of Delaware shall
be at 1013 Centre Road, in the City of Wilmington, County of New Castle and its
registered agent at such address shall be Corporation Services Company or such
other office or agent as the Board of Directors of the Corporation (the "Board")
shall from time to time select.
SECTION 2. Other Offices. The Corporation may also have an
office or offices, and keep the books and records of the Corporation, except as
may otherwise be required by law, at such other place or places, either within
or without the State of Delaware, as the Board may from time to time determine
or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Place of Meeting. All meetings of the stockholders
of the Corporation shall be held at the office of the Corporation or at such
other places, within or without the State of Delaware, as may from time to time
be fixed by the Board.
SECTION 2. Annual Meetings. The annual meeting of the
stockholders for the election of directors and for the transaction of such other
business as may properly come before the meeting shall be held each year at such
date and time, within or without the State of Delaware, as the Board shall
determine.
SECTION 3. Special Meetings. Except as otherwise required by
law or the Restated Certificate of Incorporation of the Corporation (the
"Certificate"), special meetings of the stockholders for any purpose or purposes
may be called by the Chairman of the Board or a majority of the entire Board.
Only such business as is specified in the notice of any special meeting of the
stockholders shall come before such meeting.
-1-
<PAGE>
SECTION 4. Notice of Meetings. Except as otherwise provided by
law, written notice of each meeting of the stockholders, whether annual or
special, shall be given, either by personal delivery or by mail, not less than
10 nor more than 60 days before the date of the meeting to each stockholder of
record entitled to notice of the meeting. If mailed, such notice shall be deemed
given when deposited in the United States mail, postage prepaid, directed to the
stockholder at such stockholder's address as it appears on the records of the
Corporation. Each such notice shall state the place, date and hour of the
meeting, and the purpose or purposes for which the meeting is called. Notice of
any meeting of stockholders shall not be required to be given to any stockholder
who shall attend such meeting in person or by proxy without protesting, prior to
or at the commencement of the meeting, the lack of proper notice to such
stockholder, or who shall sign a written waiver of notice thereof, whether
before or after such meeting. Notice of adjournment of a meeting of stockholders
need not be given if the time and place to which it is adjourned are announced
at such meeting, unless the adjournment is for more than 30 days or, after
adjournment, a new record date is fixed for the adjourned meeting.
SECTION 5. Quorum. Except as otherwise provided by law or by
the Certificate, the holders of a majority of the votes entitled to be cast by
the stockholders entitled to vote generally, present in person or by proxy,
shall constitute a quorum for the transaction of business at any meeting of the
stockholders; provided, however, that in the case of any vote to be taken by
classes, the holders of a majority of the votes entitled to be cast by the
stockholders of a particular class shall constitute a quorum for the transaction
of business by such class. When a quorum is once present it is not broken by the
subsequent withdrawal of any stockholder.
SECTION 6. Adjournments. The chairman of the meeting or the
holders of a majority of the votes entitled to be cast by the stockholders who
are present in person or by proxy may adjourn the meeting from time to time
whether or not a quorum is present. In the event that a quorum does not exist
with respect to any vote to be taken by a particular class, the chairman of the
meeting or the holders of a majority of the votes entitled to be cast by the
stockholders of such class who are present in person or by proxy may adjourn the
meeting with respect to the vote(s) to be taken by such class. At such adjourned
meeting at which a quorum may be present, any business may be transacted which
might have been transacted at the meeting as originally called.
SECTION 7. Order of Business. (a) At each meeting of the
stockholders, the Chairman of the Board or, in the absence of the Chairman of
the Board, such person as shall be selected by the Board shall act as chairman
of the meeting. The order of business at each such meeting shall be as
determined by the chairman of the meeting. The chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts and things as are necessary or desirable for the proper
conduct of the meeting, including, without limitation, the establishment of
procedures for the maintenance of order and safety, limitations on the time
allotted to questions or comments on the affairs of the Corporation,
restrictions on entry to such meeting after the time prescribed for the
commencement thereof, and the opening and closing of the voting polls.
-2-
<PAGE>
(b) At any annual meeting of stockholders, only such business
shall be conducted as shall have been brought before the annual meeting (i) by
or at the direction of the chairman of the meeting, (ii) pursuant to the notice
provided for in Section 4 of this Article II or (iii) by any stockholder who is
a holder of record at the time of the giving of such notice provided for in this
Section 7, who is entitled to vote at the meeting and who complies with the
procedures set forth in this Section 7.
(c) For business properly to be brought before an annual
meeting by a stockholder, the stockholder must have given timely notice thereof
in proper written form to the Secretary of the Corporation (the "Secretary") and
such business must be a proper matter for stockholder action under the Delaware
General Corporation Law ("DGCL"). To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than 60 days nor more than 90 days prior to the first
anniversary of the date on which the Corporation first mailed its proxy
materials for the preceding year's annual meeting of stockholders; provided,
however, that if the date of the annual meeting is advanced more than 30 days
prior to or delayed by more than 60 days after the first anniversary of the
preceding year's annual meeting of stockholders, notice by the stockholder to be
timely must be so delivered not earlier than the 120th day prior to such annual
meeting and not later than the close of business on the later of the 90th day
prior to such annual meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made. To be in proper written
form, a stockholder's notice to the Secretary shall set forth in writing as to
each matter the stockholder proposes to bring before the annual meeting: (i) a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting; (ii)
the name and address of the stockholder proposing such business and all persons
or entities acting in concert with the stockholder; (iii) the class and number
of shares of the Corporation which are beneficially owned by the stockholder and
all persons or entities acting in concert with such stockholder; and (iv) any
material interest of the stockholder in such business. The foregoing notice
requirements shall be deemed satisfied by a stockholder if the stockholder has
notified the Corporation of his or her intention to present a proposal at an
annual meeting and such stockholder's proposal has been included in a proxy
statement that has been prepared by management of the Corporation to solicit
proxies for such annual meeting; provided, however, that if such stockholder
does not appear or send a qualified representative to present such proposal at
such annual meeting, the Corporation need not present such proposal for a vote
at such meeting, notwithstanding that proxies in respect of such vote may have
been received by the Corporation. Notwithstanding anything in the Bylaws to the
contrary, no business shall be conducted at any annual meeting except in
accordance with the procedures set forth in this Section 7. The chairman of an
annual meeting shall, if the facts warrant, determine that business was not
properly brought before the annual meeting in accordance with the provisions of
this Section 7 and, if the chairman should so determine, the chairman shall so
declare to the annual meeting and any such business not properly brought before
the annual meeting shall not be transacted.
SECTION 8. List of Stockholders. It shall be the duty of the
Secretary or other officer who has charge of the stock ledger to prepare and
make, at least 10 days before each meeting of the stockholders, a complete list
of the stockholders entitled to vote thereat, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in such stockholder's name. Such list shall be produced and kept available at
the times and places required by law.
-3-
<PAGE>
SECTION 9. Voting. (a) Except as otherwise provided by law or
by the Certificate, each stockholder of record of any class or series of capital
stock of the Corporation shall be entitled at each meeting of stockholders to
such number of votes for each share of such stock as may be fixed in the
Certificate or in the resolution or resolutions adopted by the Board providing
for the issuance of such stock, registered in such stockholder's name on the
books of the Corporation:
(i) on the date fixed pursuant to Section 6 of
Article VII of these Bylaws as the record date
for the determination of stockholders entitled to
notice of and to vote at such meeting; or
(ii) if no such record date shall have been so fixed,
then at the close of business on the day next
preceding the day on which notice of such
meeting is given, or, if notice is waived, at
the close of business on the day next preceding
the day on which the meeting is held.
(b) Each stockholder entitled to vote at any meeting of
stockholders may authorize not in excess of three persons to act for such
stockholder by proxy. Any such proxy shall be delivered to the secretary of such
meeting at or prior to the time designated for holding such meeting. No such
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period.
(c) At each meeting of the stockholders, all corporate actions
to be taken by vote of the stockholders (except as otherwise required by law and
except as otherwise provided in the Certificate or these Bylaws) shall be
authorized by a majority of the votes cast affirmatively or negatively by the
stockholders, and where a separate vote by class is required, a majority of the
votes cast affirmatively or negatively by the stockholders of such class shall
be the act of such class.
(d) Unless required by law or determined by the chairman of
the meeting to be advisable, the vote on any matter, including the election of
directors, need not be by written ballot. In the case of a vote by written
ballot, each ballot shall be signed by the stockholder voting, or by such
stockholder's proxy.
(e) Any action required or permitted to be taken at any
meeting of stockholders may, except as otherwise required by law or the
Certificate, be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of record of the issued and outstanding capital stock of
the Corporation having a majority of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted, and the writing or writings are filed with the permanent
records of the Corporation. Prompt notice of the taking of corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
-4-
<PAGE>
SECTION 10. Inspectors. The chairman of the meeting may
appoint one or more inspectors to act at any meeting of stockholders. If
appointed, such inspectors shall perform such duties as shall be required by law
and as shall be specified by the chairman of the meeting. Inspectors need not be
stockholders. No director or nominee for the office of director shall be
appointed such inspector.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the
Corporation shall be managed by or under the direction of the Board, which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by law or by the Certificate directed or required to be
exercised or done by the stockholders.
SECTION 2. Number, Qualification and Election. (a) Except as
otherwise fixed by or pursuant to the provisions of Article IV of the
Certificate relating to the rights of the holders of any class or series of
stock having preference over the common stock of the Corporation as to dividends
or upon liquidation, the number of directors of the Corporation shall be
determined from time to time by the Board by the affirmative vote of directors
constituting at least a majority of the entire Board. The use of the phrase
"entire board" herein refers to the total number of directors which the
Corporation would have if there were no vacancies.
(b) At the first annual meeting of stockholders of the
Corporation held after the consummation of the initial offering and sale by the
Corporation of shares of common stock pursuant to an effective registration
statement under the Securities Act of 1933, as amended, the directors, other
than those who may be elected by the holders of shares of any class or series of
stock having a preference over the common stock of the Corporation as to
dividends or upon liquidation pursuant to the terms of Article IV of the
Certificate or any resolution or resolutions providing for the issuance of such
stock adopted by the Board, shall be divided into three classes, designated
Class I, Class II and Class III. Initially, Class I directors shall be elected
for a one-year term, Class II directors for a two-year term, and Class III
directors for a three-year term. At each succeeding annual meeting of the
stockholders beginning at the annual meeting after such first meeting,
successors to the class of directors whose term expires at that meeting shall be
elected for a three-year term. Any additional director of any class elected to
fill a vacancy resulting from an increase in such class shall hold office for a
term that shall coincide with the remaining term of that class, but in no case
will a decrease in the number of directors shorten the term of any incumbent
director. A director shall hold office until the annual meeting for the year in
which his or her term expires and until his or her successor shall be elected,
subject, however, to his or her prior death, resignation, retirement or removal
from office.
-5-
<PAGE>
(c) Each director shall be at least 18 years of age.
Directors need not be stockholders of the Corporation.
(d) In any election of directors held at a meeting of
stockholders, the persons receiving a plurality of the votes cast by the
stockholders entitled to vote thereon at such meeting who are present or
represented by proxy, up to the number of directors to be elected in such
election, shall be deemed elected.
SECTION 3. Notification of Nomination. Subject to the rights
of the holders of any class or series of stock having a preference over the
common stock as to dividends or upon liquidation, nominations for the election
of directors may be made by the Board or by any stockholder who is a stockholder
of record at the time of giving of the notice of nomination provided for in this
Section 3 of this Article III and who is entitled to vote for the election of
directors. Any stockholder of record entitled to vote for the election of
directors at a meeting may nominate persons for election as directors only if
timely written notice of such stockholder's intent to make such nomination is
given, either by personal delivery or by United States mail, postage prepaid, to
the Secretary. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation (i)
with respect to an election to be held at an annual meeting of stockholders, not
less than 60 days nor more than 90 days prior to the first anniversary of the
date on which the Corporation first mailed its proxy materials for the preceding
year's annual meeting of stockholders; provided, however, that if the date of
the annual meeting is advanced more than 30 days prior to or delayed by more
than 60 days after the first anniversary of the preceding year's annual meeting
of stockholders, notice by the stockholder to be timely must be so delivered not
earlier than the 120th day prior to such annual meeting and not later than the
close of business on the later of the 90th day prior to such annual meeting or
the 10th day following the day on which public announcement of the date of such
meeting is first made and (ii) with respect to an election to be held at a
special meeting of stockholders for the election of directors, not earlier than
the 120th day prior to such special meeting and not later than the close of
business on the later of the 90th day prior to such special meeting or the 10th
day following the day on which public announcement is first made of the date of
the special meeting and of the nominees proposed by the Board to be selected at
such meeting. Each such notice shall set forth: (i) the name and address of the
stockholder who intends to make the nomination, of all persons or entities
acting in concert with the stockholder, and of the person or persons to be
nominated; (ii) a representation that the stockholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons specified
in the notice; (iii)a description of all arrangements or understandings between
the stockholder and each nominee and any other person or entities acting in
concert with the stockholder (naming such person or entities) pursuant to which
the nomination or nominations are to be made by the stockholder; (iv) such other
information regarding each nominee proposed by the stockholder as would have
been required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission had each nominee been nominated,
or intended to be nominated, by the Board; (v) the class and number of shares of
the Corporation that are beneficially owned by the stockholder and all persons
or entities acting in concert with the stockholder; and (vi) the consent of each
-6-
<PAGE>
nominee to being named in a proxy statement as nominee and to serve as a
director of the Corporation if so elected. Only persons nominated in accordance
with this Section shall be qualified to serve as directors. The chairman of the
meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedure. Only such persons who are nominated in
accordance with the procedures set forth in this Section 3 of this Article III
shall be eligible to serve as directors of the Corporation.
Notwithstanding anything in the third sentence of this Section
3 of Article III to the contrary, in the event that the number of directors to
be elected to the Board is increased and there is no public announcement naming
all of the nominees for director or specifying the size of the increased Board
made by the Corporation at least 70 days prior to the first anniversary of date
on which the Corporation first mailed its proxy materials for the preceding
year's annual meeting of stockholders, a stockholder's notice required by these
Bylaws shall also be considered timely, but only with respect to nominees for
any new positions created by such increase, if it shall be delivered to the
Secretary at the principal executive offices of the Corporation not later than
the close of business on the 10th day following the day on which such public
announcement is first made by the Corporation.
For purposes of the Bylaws, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or a comparable national news service or in a document publicly filed by
the company with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Securities Exchange Act of 1934, as amended.
SECTION 4. Quorum and Manner of Acting. Except as otherwise
provided by law, the Certificate or these Bylaws, a majority of the entire Board
shall constitute a quorum for the transaction of business at any meeting of the
Board, and, except as so provided, the vote of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board. The chairman of the meeting or a majority of the directors present may
adjourn the meeting to another time and place whether or not a quorum is
present. At any adjourned meeting at which a quorum is present, any business may
be transacted which might have been transacted at the meeting as originally
called.
SECTION 5. Place of Meeting. The Board may hold its meetings
at such place or places within or without the State of Delaware as the Board may
from time to time determine or as shall be specified or fixed in the respective
notice or waivers of notice thereof.
SECTION 6. Regular Meetings. Regular meetings of the Board
shall be held at such times and places as the Chairman of the Board or the Board
shall from time to time by resolution determine. If any day fixed for a regular
meeting shall be a legal holiday under the laws of the place where the meeting
is to be held, the meeting which would otherwise be held on that day shall be
held at the same hour on the next succeeding business day.
-7-
<PAGE>
SECTION 7. Special Meetings. Special meetings of the Board
shall be held whenever called by the Chairman of the Board or by a majority of
the directors then in office.
SECTION 8. Notice of Meetings. Notice of regular meetings of
the Board or of any adjourned meeting thereof need not be given. Notice of each
special meeting of the Board shall be given by overnight delivery service or
mailed to each director, in either case addressed to such director at such
director's residence or usual place of business, at least two days before the
day on which the meeting is to be held or shall be sent to such director at such
place by telegraph or telecopy or be given personally or by telephone, not later
than the day before the meeting is to be held, but notice need not be given to
any director who shall, either before or after the meeting, submit a signed
waiver of such notice or who shall attend such meeting other than for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting was not lawfully called or
convened. Every such notice shall state the time and place but need not state
the purpose of the meeting.
SECTION 9. Organization. At all meetings of the Board, the
Chairman, if any, or if none or in the Chairman's absence or inability to act
the Chief Executive Officer, if any, or if none or in the Chief Executive
Officer's absence or inability to act, the President, or in the President's
absence or inability to act any Vice-President who is a member of the Board of
Directors, or in such Vice-President's absence or inability to act a chairman
chosen by the directors, shall preside. The Secretary of the Corporation shall
act as secretary at all meetings of the Board when present, and, in the
Secretary's absence, the presiding officer may appoint any person to act as
secretary.
SECTION 10. Rules and Regulations. The Board may adopt such
rules and regulations not inconsistent with the provisions of law, the
Certificate or these Bylaws for the conduct of its meetings and management of
the affairs of the Corporation as the Board may deem proper.
SECTION 11. Participation in Meeting by Means of Communication
Equipment. Any one or more members of the Board or any committee thereof may
participate in any meeting of the Board or of any such committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
in a meeting shall constitute presence in person at such meeting.
SECTION 12. Action without Meeting. Any action required or
permitted to be taken at any meeting of the Board or any committee thereof may
be taken without a meeting if all of the members of the Board or of any such
committee consent thereto in writing and the writing or writings are filed with
the minutes or proceedings of the Board or of such committee.
SECTION 13. Resignations. Any director of the Corporation may
at any time resign by giving written notice to the Board, the Chairman of the
Board, the Chief Executive Officer, the President or the Secretary. Such
resignation shall take effect at the time specified therein or, if the time be
not specified therein, upon receipt thereof; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
-8-
<PAGE>
SECTION 14. Removal of Directors. Any director (including all
members of the Board) may be removed from office at any time, but only by the
affirmative vote of the holders of at least 75% of the voting power of all of
the shares of capital stock of the Corporation then entitled to vote generally
in the election of directors, voting together as a single class; provided,
however, that after the election of directors in accordance with the provisions
of Section 2(b) of this Article III, such removal shall be only for cause. For
the purposes of this Section 14, "cause" shall mean the wilful failure of a
director to substantially perform such director's duties to the Corporation
(other than any such failure resulting from incapacity due to physical or mental
illness) or the wilful engaging by a director in gross misconduct injurious to
the Corporation.
SECTION 15. Vacancies. Except as otherwise required by law and
subject to the rights of the holders of any class or series of stock having a
preference over the common stock of the Corporation as to dividends or upon
liquidation, any vacancy in the Board for any reason and any newly created
directorship resulting by reason of any increase in the number of directors may
be filled only by the Board (and not by the stockholders), by resolution adopted
by the affirmative vote of a majority of the remaining directors then in office,
even though less than a quorum (or by a sole remaining director); provided,
however, that if not so filled, any such vacancy shall be filled by the
stockholders at the next annual meeting or at a special meeting called for that
purpose. Any director so appointed shall hold office until the next meeting of
stockholders at which directors of the class for which such director has been
chosen are to be elected and until his or her successor is elected and
qualified.
SECTION 16. Compensation. Each director, in consideration of
such person serving as a director, shall be entitled to receive from the
Corporation such amount per annum and such fees for attendance at meetings of
the Board or of committees of the Board, or both, as the Board shall from time
to time determine. In addition, each director shall be entitled to receive from
the Corporation reimbursement for the reasonable expenses incurred by such
person in connection with the performance of such person's duties as a director.
Nothing contained in this Section 16 of this Article III shall preclude any
director from serving the Corporation or any of its subsidiaries in any other
capacity and receiving proper compensation therefor.
SECTION 17. Director Emeritus. The Board may at any meeting
duly convened elect as Director Emeritus any person who has, in the opinion of
the Board, given long and meritorious service as a member of the Board. A
Director Emeritus shall be entitled to attend and participate in any meeting of
the Board; provided, however, that a Director Emeritus shall not be entitled to
vote at any such meeting and shall not be included in the calculation of a
quorum at any such meeting; and provided, further, that notice of any meeting of
the Board shall not be required be given to a Director Emeritus.
-9-
<PAGE>
ARTICLE IV
COMMITTEES OF THE BOARD OF DIRECTORS
SECTION 1. Establishment of Committees of the Board of
Directors; Election of Members of Committees of the Board of Directors;
Functions of Committees of the Board of Directors. The Board may, in accordance
with and subject to the DGCL, from time to time establish committees of the
Board to exercise such powers and authorities of the Board, and to perform such
other functions, as the Board may from time to time determine.
SECTION 2. Procedure; Meetings; Quorum. Regular meetings of
committees of the Board, of which no notice shall be necessary, may be held at
such times and places as shall be fixed by resolution adopted by a majority of
the members thereof. Special meetings of any committee of the Board shall be
called at the request of a majority of the members thereof. Notice of each
special meeting of any committee of the Board shall be given by overnight
delivery service or mailed to each member, in either case addressed to such
member at such member's residence or normal place of business, at least two days
before the day on which the meeting is to be held or shall be sent to such
members at such place by telegraph or telecopy or be given personally or by
telephone, not later than the day before the meeting is to be held, but notice
need not be given to any member who shall, either before or after the meeting,
submit a signed waiver of such notice or who shall attend such meeting other
than for the express purpose of objecting, at the beginning of the meeting, to
the transaction of any business because the meeting was not lawfully called or
convened. Any special meeting of any committee of the Board shall be a legal
meeting without any notice thereof having been given, if all the members thereof
shall be present thereat. Notice of any adjourned meeting of any committee of
the Board need not be given. Any committee of the Board may adopt such rules and
regulations not inconsistent with the provisions of law, the Certificate or
these Bylaws for the conduct of its meetings as such committee of the Board may
deem proper. A majority of the members of any committee of the Board shall
constitute a quorum for the transaction of business at any meeting, and the vote
of a majority of the members thereof present at any meeting at which a quorum is
present shall be the act of such committee. Each committee of the Board shall
keep written minutes of its proceedings and shall report on such proceedings to
the Board.
SECTION 3. Action by Written Consent. Any action required or
permitted to be taken at any meeting of any committee of the Board may be taken
without a meeting if all the members of the committee consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the committee.
SECTION 4. Term; Termination. In the event any person shall
cease to be a director of the Corporation, such person shall simultaneously
therewith cease to be a member of any committee appointed by the Board.
-10-
<PAGE>
ARTICLE V
OFFICERS
SECTION 1. Number; Term of Office. The Board shall elect the
officers of the Corporation, which shall include a President and a Secretary,
and may include, by election or appointment, one of more Vice-Presidents (any
one or more of whom may be given an additional designation of rank, such as
"Executive Vice-President" or "Senior Vice-President," or function), a Treasurer
and such Assistant Secretaries, such Assistant Treasurers and such other
officers as the Board may from time to time deem proper. Each officer shall have
such powers and duties as may be prescribed by these Bylaws and as may be
assigned by the Board, the Chief Executive Officer or the President. Any two or
more offices may be held by the same person except the offices of President and
Secretary; provided, however, that no officer shall execute, acknowledge or
verify any instrument in more than one capacity if such instrument is required
by law, the Certificate or these Bylaws to be executed, acknowledged or verified
by two or more officers. The Board may from time to time authorize any officer
to appoint and remove any such other officers and agents and to prescribe their
powers and duties. The Board may require any officer or agent to give security
for the faithful performance of such person's duties.
SECTION 2. Term of Office; Removal; Remuneration. Each officer
shall hold office for such term as may be prescribed by the Board and until such
person's successor shall have been chosen and shall qualify, or until such
person's death or resignation, or until such person's removal in the manner
hereinafter provided. Any officer may be removed, either with or without cause,
by the Board.
SECTION 3. Resignation. Any officer may resign at any time by
giving notice to the Board, the Chief Executive Officer, the President or the
Secretary. Any such resignation shall take effect at the date of receipt of such
notice or at any later date specified therein; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
SECTION 4. Vacancies. A vacancy in any office because of
death, resignation, removal or any other cause may be filled for the unexpired
portion of the term by the Board.
SECTION 5. Chairman of the Board; Powers and Duties. The
Chairman of the Board shall preside at all meetings of the stockholders and the
Board.
SECTION 6. Chief Executive Officer; President; Executive Vice
Presidents, Senior Vice Presidents and Vice Presidents; Powers and Duties.
Subject to the control of the Board, the Chief Executive Officer shall supervise
and direct generally all the business and affairs of the Corporation. The
President and each Executive Vice President, each Senior Vice President, and
each Vice President shall have such powers and perform such duties as may be
assigned by the Board, the Chief Executive Officer or the President. In case of
the absence or disability of the Chief Executive Officer or a vacancy in the
office, the President, an Executive Vice President, a Senior Vice President, or
a Vice President designated by the Chairman of the Board, the Chief Executive
Officer or the Board shall exercise all the powers and perform all the duties of
the Chief Executive Officer. The Board may elect one or more persons to be the
President and/or Chief Executive Officer of a division or business unit of the
Corporation.
-11-
<PAGE>
SECTION 7. Secretary and Assistant Secretary; Powers and
Duties. The Secretary shall attend all meetings of the stockholders and the
Board and shall keep the minutes for such meetings in one or more books provided
for that purpose. The Secretary shall be custodian of the corporate records,
except those required to be in the custody of the Treasurer or the Controller,
shall keep the seal of the Corporation, and shall execute and affix the seal of
the Corporation to all documents duly authorized for execution under seal on
behalf of the Corporation, and shall perform all of the duties incident to the
office of Secretary, as well as such other duties as may be assigned by the
Board, the Chairman of the Board or the Chief Executive Officer.
An Assistant Secretary shall perform such of the Secretary's
duties as the Secretary shall from time to time direct. In case of the absence
or disability of the Secretary or a vacancy in the office, an Assistant
Secretary designated by the Chairman of the Board, the Chief Executive Officer
or the Secretary, if the office is not vacant, shall perform the duties of the
Secretary.
SECTION 8. Chief Financial Officer; Powers and Duties. The
Chief Financial Officer shall be responsible for maintaining the financial
integrity of the Corporation, shall prepare the financial plans for the
Corporation, and shall monitor the financial performance of the Corporation and
its subsidiaries, as well as performing such other duties as may be assigned by
the Board or the Chief Executive Officer.
SECTION 9. Treasurer and Assistant Treasurer; Powers and
Duties. The Treasurer shall have care and custody of the funds and securities of
the Corporation, shall deposit such funds in the name and to the credit of the
Corporation with such depositories as the Treasurer shall approve, shall
disburse the funds of the Corporation for proper expenses and dividends, and as
may be ordered by the Board, taking proper vouchers for such disbursements. The
Treasurer shall perform all of the duties incident to the office of Treasurer,
as well as such other duties as may be assigned by the Board or the Chief
Executive Officer.
An Assistant Treasurer shall perform such of the Treasurer's
duties as the Treasurer shall from time to time direct. In case of the absence
or disability of the Treasurer or a vacancy in the office, an Assistant
Treasurer designated by the Chief Executive Officer or by the Treasurer, if the
office is not vacant, shall perform the duties of the Treasurer.
SECTION 10. General Counsel; Powers and Duties. The General
Counsel shall be a licensed attorney at law and shall be the chief legal officer
of the Corporation. The General Counsel shall have such power and exercise such
authority and provide such counsel to the Corporation as deemed necessary or
desirable to enforce the rights and protect the property and integrity of the
Corporation, shall also have the power, authority, and responsibility for
securing for the Corporation all legal advice, service, and counselling, and
shall perform all of the duties incident to the office of General Counsel, as
well as such other duties as may be assigned by the Board or the Chief Executive
Officer.
-12-
<PAGE>
SECTION 11. Controller and Assistant Controller; Powers and
Duties. The Controller shall be the chief accounting officer of the Corporation
and shall keep and maintain in good and lawful order all accounts required by
law and shall have sole control over, and ultimate responsibility for, the
accounts and accounting methods of the Corporation and the compliance of the
Corporation with all systems of accounts and accounting regulations prescribed
by law. The Controller shall audit, to such extent and at such times as may be
required by law or as the Controller may think necessary, all accounts and
records of corporate funds or property, by whomsoever kept, and for such
purposes shall have access to all such accounts and records. The Controller
shall make and sign all necessary and proper accounting statements and financial
reports of the Corporation, and shall perform all of the duties incident to the
office of Controller, as well as such other duties as may be assigned by the
Board or the Chief Executive Officer.
An Assistant Controller shall perform such of the Controller's
duties as the Controller shall from time to time direct. In case of the absence
or disability of the Controller or a vacancy in the office, an Assistant
Controller designated by the Chief Executive Officer or the Controller, if the
office is not vacant, shall perform the duties of the Controller.
SECTION 12. Salaries. The salaries of all officers of the
Corporation shall be fixed by the Board, or an authorized committee thereof, or
in such manner as the Board, or any authorized committee thereof, shall provide.
No officer shall be disqualified from receiving a salary by reason of also being
a director of the Corporation.
ARTICLE VI
INDEMNIFICATION
SECTION 1. Scope of Indemnification. (a) Each person who was
or is made a party or is threatened to be made a party to or is otherwise
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of the
fact that he or she is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director, officer,
employee or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the DGCL, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
permitted prior thereto), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) reasonably incurred or suffered by such indemnitee in
connection therewith and such indemnification shall continue as to an indemnitee
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the indemnitee's heirs, executors and administrators; provided,
however, that, except as provided in Section 3 of this Article VI with respect
to proceedings to enforce rights to indemnification, the Corporation shall
indemnify any such indemnitee in connection with a proceeding (or part thereof)
initiated by such indemnitee only if such proceeding (or part thereof) was
authorized by the Board.
-13-
<PAGE>
(b) If an indemnitee is not entitled to indemnification with
respect to a portion of any liabilities to which such person may be subject, the
Corporation shall nonetheless indemnify such indemnitee to the maximum extent
for the remaining portion of the liabilities.
(c) The termination of a proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that the indemnitee is not entitled
to indemnification.
(d) To the extent permitted by law, the payment of
indemnification provided for by this Article, including the advancement of
expenses pursuant to Section 2 of this Article VI, with respect to proceedings
other than those brought by or in the right of the Corporation, shall be subject
to the conditions that the indemnitee shall give the Corporation prompt notice
of any proceeding, that the Corporation shall have complete charge of the
defense of such proceeding and the right to select counsel for the indemnitee,
and that the indemnitee shall assist and cooperate fully in all matters
respecting the proceeding and its defense or settlement. The Corporation may
waive any or all of the conditions set forth in the preceding sentence. Any such
waiver shall be applicable only to the specific payment for which the waiver is
made and shall not in any way obligate the Corporation to grant such waiver at
any future time. In the event of a conflict of interest between the indemnitee a
the indemnitee under the rules of professional conduct applicable to attorneys,
it shall be the policy of the Corporation to waive any or all of the foregoing
conditions subject to such limitations or conditions as the Corporation shall
deem to be reasonable in the circumstances.
SECTION 2. Advancing Expenses. The right to indemnification
conferred in Section 1 of this Article VI shall include the right to be paid by
the Corporation the expenses incurred in defending any proceeding for which such
right to indemnification is applicable in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, an
advancement of expenses incurred by an indemnitee shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Section or otherwise. No advance shall be made by the Corporation if a
determination is reasonably and promptly made by a majority vote of
disinterested directors, even if the disinterested directors constitute less
than a quorum, or (if such a quorum is not obtainable or, even if obtainable, a
quorum of disinterested directors so directs) by independent legal counsel in a
written opinion, that, based upon the facts known to the Board or counsel at the
time such determination is made, the indemnitee has acted in such a manner as to
permit or require the denial of indemnification pursuant to the provisions of
Section 1 of this Article VI.
-14-
<PAGE>
SECTION 3. Right of Indemnitee to Bring Suit. The rights to
indemnification and to the advancement of expenses conferred in Sections 1 and 2
of this Article VI shall be contract rights. If a claim under Sections 1 and 2
of this Article VI is not paid in full by the Corporation within sixty days
after a written claim has been received by the Corporation, except in the case
of a claim for an advancement of expenses, in which case the applicable period
shall be twenty days, the indemnitee may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim. If successful
in whole or in part in any such suit, or in a suit brought by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking, the
indemnitee shall be entitled to be paid also the expense of prosecuting or
defending such suit. In any suit brought by (a) the indemnitee to enforce a
right to indemnification hereunder (but not in a suit brought by the indemnitee
to enforce a right to an advancement of expenses) it shall be a defense that the
indemnitee has not met the applicable standard of conduct and (b) the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the Corporation shall be entitled to recover such expenses upon a
final adjudication that the indemnitee has not met any applicable standard for
indemnification set forth in the DGCL. Neither the failure of the Corporation
(including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the DGCL, nor an actual determination by the Corporation (including its board of
directors, independent legal counsel, or its stockholders) that the indemnitee
has not met such applicable standard of conduct, shall create a presumption that
the indemnitee has not met the applicable standard of conduct or, in the case of
such a suit brought by the indemnitee, be a defense to such suit. In any suit
brought by the indemnitee to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Section or otherwise shall be on the
Corporation.
SECTION 4. Non-Exclusivity of Rights. The rights to
indemnification and to the advancement of expenses conferred in this Article VI
shall not be exclusive of any other right which any person may have or hereafter
acquire under any statute, the Certificate, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
SECTION 5. Insurance, Contracts and Funding. The Corporation
may purchase and maintain insurance to protect itself and any indemnitee against
any expenses, judgments, fines and amounts payable as specified in this Article
VI, to the fullest extent permitted by applicable law as then in effect. The
Corporation may enter into contracts with any indemnitee in furtherance of the
provisions of this Article VI and may create a trust fund, grant a security
interest or use other means (including, without limitation, a letter of credit)
to ensure the payment of such amounts as may be necessary to effect
indemnification as provided in this Article VI.
-15-
<PAGE>
SECTION 6. Effects of Amendments. Neither the amendment or
repeal of, nor the adoption of a provision inconsistent with, any provision of
this Article VI (including, without limitation, this Section 6) shall adversely
affect the rights of any indemnitee under this Article VI with respect to any
proceeding commenced or threatened prior to such amendment, repeal or adoption
of an inconsistent provision.
SECTION 7. Severability. If any provision or provisions of
this Article VI shall be held to be invalid, illegal or unenforceable for any
reason whatsoever: (a) the validity, legality and enforceability of the
remaining provisions of this Article VI (including, without limitation, all
portions of any paragraph of this Article VI containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall not in any way be affected or impaired thereby;
and (b) to the fullest extent possible, the provisions of this Article VI
(including, without limitation, all portions of any paragraph of this Article VI
containing any such provision held to be invalid, illegal or unenforceable, that
are not themselves invalid, illegal or unenforceable) shall be construed so as
to give effect to the intent manifested by the provision held invalid, illegal
or unenforceable.
ARTICLE VII
CAPITAL STOCK
SECTION 1. Share Ownership. (a) Holders of shares of stock of
each class of the Corporation shall be recorded on the books of the Corporation
and ownership of such stock shall be evidenced by a certificate or other form as
shall be approved by the Board. Certificates representing shares of stock of
each class shall be signed by, or in the name of, the Corporation by the
Chairman or Vice-Chairman of the Board, or the President or any Vice President
and by the Secretary or any Assistant Secretary or the Treasurer or any
Assistant Treasurer of the Corporation, and sealed with the seal of the
Corporation, which may be a facsimile thereof. Any or all such signatures and
the signatures of any transfer agent or registrar may be facsimiles. Although
any officer, transfer agent or registrar whose manual or facsimile signature is
affixed to such a certificate ceases to be such officer, transfer agent or
registrar before such certificate has been issued, the certificate may
nevertheless be issued by the Corporation with the same effect as if such
officer, transfer agent or registrar were still such at the date of its issue.
(b) The stock ledger and blank share certificates shall be
kept by the Secretary or by a transfer agent or by a registrar or by any officer
or agent designated by the Board.
SECTION 2. Transfer of Shares. Transfers of shares of stock of
each class of the Corporation shall be made only on the books of the Corporation
by the holder thereof, or by such holder's attorney thereunto authorized by a
power of attorney duly executed and filed with the Secretary or a transfer agent
for such stock, if any, and on surrender of the certificate or certificates, if
-16-
<PAGE>
any, for such shares properly endorsed or accompanied by a duly executed stock
transfer power (or by proper evidence of succession, assignment or authority to
transfer) and the payment of any taxes thereon; provided, however, that the
Corporation shall be entitled to recognize and enforce any lawful restriction on
transfer. The person in whose name shares are registered on the books of the
Corporation shall be deemed the owner thereof for all purposes as regards the
Corporation; provided, however, that whenever any transfer of shares shall be
made for collateral security and not absolutely, and written notice thereof
shall be given to the Secretary or to such transfer agent, such fact shall be
stated in the entry of the transfer. No transfer of shares shall be valid as
against the Corporation, its stockholders and creditors for any purpose, until
it shall have been entered in the stock records of the Corporation by an entry
showing from and to whom transferred.
SECTION 3. Registered Stockholders and Addresses of
Stockholders. (a) The Corporation shall be entitled to recognize the exclusive
right of a person registered on its records as the owner of shares of stock to
receive dividends and to vote as such owner, and shall not be bound to recognize
any equitable or other claim to, or interest in, such share or shares of stock
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by applicable law.
(b) Each stockholder shall designate to the Secretary or
transfer agent of the Corporation an address at which notices of meetings and
all other corporate notices may be delivered or mailed to such person, and, if
any stockholder shall fail to designate such address, corporate notices may be
delivered to such person by mail directed to such person at such person's post
office address, if any, as the same appears on the stock record books of the
Corporation or at such person's last known post office address.
SECTION 4. Lost, Stolen, Destroyed and Mutilated Certificates.
The Corporation may issue to any holder of shares of stock the certificate for
which has been lost, stolen, destroyed or mutilated a new certificate or
certificates for shares, upon the surrender of the mutilated certificate or, in
the case of loss, theft or destruction of the certificate, upon satisfactory
proof of such loss, theft or destruction. The Board, or a committee designated
thereby, or the transfer agents and registrars for the stock, may, in their
discretion, require the owner of the lost, stolen or destroyed certificate, or
such person's legal representative, to give the Corporation a bond in such sum
and with such surety or sureties as they may direct to indemnify the Corporation
and said transfer agents and registrars against any claim that may be made on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate.
SECTION 5. Regulations. The Board may make such additional
rules and regulations as it may deem expedient concerning the issue and transfer
of certificates representing shares of stock of each class of the Corporation
and may make such rules and take such action as it may deem expedient concerning
the issue of certificates in lieu of certificates claimed to have been lost,
destroyed, stolen or mutilated.
SECTION 6. Fixing Date for Determination of Stockholders of
Record. (a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment or any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board may fix, in advance, a record date, which shall
not be more than 60 nor less than 10 days before the date of such meeting, nor
more than 60 days prior to any other action. A determination of stockholders
entitled to notice of or to vote at a meeting of the stockholders shall apply to
any adjournment of the meeting; provided, however, that the Board may fix a new
record date for the adjourned meeting.
-17-
<PAGE>
(b) In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board may fix a record date, which record date shall not precede
the date upon which the resolution fixing the record date is adopted by the
Board, and which date shall not be more than 10 days after the date upon which
the resolution fixing the record date is adopted by the Board. Any stockholder
of record seeking to have the stockholders authorize or take corporate action by
written consent shall, by written notice to the Secretary, request the Board to
fix a record date. The Board shall promptly, but in all events within 10 days
after the date on which such a request is received, adopt a resolution fixing
the record date. If no record date has been fixed by the Board within 10 days of
the date on which such a request is received, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board is required by applicable law, shall
be the first date on which a signed written consent setting forth the action
taken or proposed to be taken is delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business, or
any officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. If no record date has been fixed by the Board
and prior action by the Board is required by applicable law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the date on which the
board adopts the resolution taking such prior action.
SECTION 7. Transfer Agents and Registrars. The Board may
appoint, or authorize any officer or officers to appoint, one or more transfer
agents and one or more registrars.
ARTICLE VIII
DIVIDENDS
Subject always to the provisions of law and the Certificate,
the Board shall have full power to determine whether any, and, if any, what part
of any, funds legally available for the payment of dividends shall be declared
as dividends and paid to stockholders; the division of the whole or any part of
such funds of the Corporation shall rest wholly within the lawful discretion of
the Board, and it shall not be required at any time, against such discretion, to
divide or pay any part of such funds among or to the stockholders as dividends
or otherwise; and before payment of any dividend, there may be set aside out of
any funds of the Corporation available for dividends such sum or sums as the
Board from time to time, in its absolute discretion, thinks proper as a reserve
or reserves to meet contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the Corporation, or for such other purpose as the
Board shall think conducive to the interest of the Corporation, and the Board
may modify or abolish any such reserve in the manner in which it was created.
-18-
<PAGE>
ARTICLE IX
CORPORATE SEAL
The Board shall provide a corporate seal which shall have
inscribed thereon the name of the Corporation and the year of its incorporation,
and shall be in such form and contain such other words and/or figures as the
Board shall determine. The corporate seal may be used by printing, engraving,
lithographing, stamping or otherwise making, placing or affixing, or causing to
be printed, engraved, lithographed, stamped or otherwise made, placed or
affixed, upon any paper or document, by any process whatsoever, an impression,
facsimile or other reproduction of
ARTICLE X
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and shall
be subject to change, by the Board. Unless otherwise fixed by the Board, the
fiscal year of the Corporation shall be the twelve-month period beginning July 1
and ending June 30.
ARTICLE XI
WAIVER OF NOTICE
Whenever notice is required to be given by these Bylaws or by
the Certificate of Incorporation or by law, a written waiver thereof, signed by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice.
ARTICLE XII
BANK ACCOUNTS, DRAFTS, CONTRACTS, ETC.
SECTION 1. Bank Accounts and Drafts. In addition to such bank
accounts as may be authorized by the Board, the primary financial officer or any
person designated by said primary financial officer, whether or not an employee
of the Corporation, may authorize such bank accounts to be opened or maintained
in the name and on behalf of the Corporation as he may deem necessary or
appropriate, payments from such bank accounts to be made upon and according to
the check of the Corporation in accordance with the written instructions of said
primary financial officer, or other person so designated by the Treasurer.
-19-
<PAGE>
SECTION 2. Contracts. The Board may authorize any person or
persons, in the name and on behalf of the Corporation, to enter into or execute
and deliver any and all deeds, bonds, mortgages, contracts and other obligations
or instruments, and such authority may be general or confined to specific
instances.
SECTION 3. Proxies; Powers of Attorney; Other Instruments. The
Chairman, the Chief Executive Officer, the President or any other person
designated by either of them shall have the power and authority to execute and
deliver proxies, powers of attorney and other instruments on behalf of the
Corporation in connection with the rights and powers incident to the ownership
of stock by the Corporation. The Chairman, the Chief Executive Officer, the
President or any other person authorized by proxy or power of attorney executed
and delivered by either of them on behalf of the Corporation may attend and vote
at any meeting of stockholders of any company in which the Corporation may hold
stock, and may exercise on behalf of the Corporation any and all of the rights
and powers incident to the ownership of such stock at any such meeting, or
otherwise as specified in the proxy or power of attorney so authorizing any such
person. The Board, from time to time, may confer like powers upon any other
person.
SECTION 4. Financial Reports. The Board may appoint the
primary financial officer or other fiscal officer and/or the Secretary or any
other officer to cause to be prepared and furnished to stockholders entitled
thereto any special financial notice and/or financial statement, as the case may
be, which may be required by any provision of law.
ARTICLE XIII
AMENDMENTS
The Board shall have the power to adopt, amend or repeal these
Bylaws by the affirmative vote of at least a majority of the members then in
office. The affirmative vote of the holders of not less than seventy-five (75%)
of the voting power of all shares of capital stock of the Corporation then
entitled to vote generally in the election of directors, voting as a single
class shall be required to adopt, amend or repeal these Bylaws (notwithstanding
the fact that approval by a lesser percentage may be permitted by the DGCL).
-20-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Estee
Lauder Companies Inc. Form 10-Q and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> Jun-30-2000
<PERIOD-END> Dec-31-1999
<CASH> 347,700
<SECURITIES> 0
<RECEIVABLES> 721,200
<ALLOWANCES> 34,300
<INVENTORY> 463,500
<CURRENT-ASSETS> 1,695,100
<PP&E> 875,600
<DEPRECIATION> 456,200
<TOTAL-ASSETS> 3,020,600
<CURRENT-LIABILITIES> 951,700
<BONDS> 422,100
360,000
0
<COMMON> 2,400
<OTHER-SE> 1,087,900
<TOTAL-LIABILITY-AND-EQUITY> 3,020,600
<SALES> 2,328,800
<TOTAL-REVENUES> 2,328,800
<CGS> 534,900
<TOTAL-COSTS> 534,900
<OTHER-EXPENSES> 1,471,300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 312,000
<INCOME-TAX> 115,500
<INCOME-CONTINUING> 196,500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 196,500
<EPS-BASIC> .78
<EPS-DILUTED> .76
</TABLE>
