Dennis D'Andrea - Vice President of Investor Relations Fabrizio Freda - Chief Executive Officer, President and Director Daniel Rachmanis Tracey Thomas Travis - Chief Financial Officer and Executive Vice President

Olivia Tong - BofA Merrill Lynch, Research Division Jason English - Goldman Sachs Group Inc., Research Division Dara W. Mohsenian - Morgan Stanley, Research Division Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division Mark S. Astrachan - Stifel, Nicolaus & Co., Inc., Research Division Alice Beebe Longley - The Buckingham Research Group Incorporated William Schmitz - Deutsche Bank AG, Research Division Caroline S. Levy - CLSA Limited, Research Division Neely J.N. Tamminga - Piper Jaffray Companies, Research Division Constance Marie Maneaty - BMO Capital Markets U.S. David Wu - Telsey Advisory Group LLC Lauren R. Lieberman - Barclays Capital, Research Division Joe Lachky - Wells Fargo Securities, LLC, Research Division Wendy Nicholson - Citigroup Inc, Research Division Joseph Altobello - Oppenheimer & Co. Inc., Research Division Alec Patterson Javier Escalante - Consumer Edge Research, LLC

Good day, everyone, and welcome to The Estée Lauder Companies Fiscal 2013 Fourth Quarter and Year-End Conference Call. Today's call is being recorded and webcast. For opening remarks and introductions, I would like to turn the call over to the Vice President of Investor Relations, Mr. Dennis D'Andrea. Please go ahead, sir. Dennis D'Andrea: Good morning, everyone. On today's call are Fabrizio Freda, President and Chief Executive Officer; Tracey Travis, Executive Vice President and Chief Financial Officer; and Daniel Rachmanis, President, Latin America. Daniel will give a strategic overview of this region. Since many of our remarks today contain forward-looking statements, let me refer you to our press release and our reports filed with the SEC, where you'll find factors that could cause actual results to differ materially from these forward-looking statements. Our discussion of our financial results and our expectations are before restructuring and other charges. You can find a reconciliation between GAAP and non-GAAP figures in our press release and on the Investor Relations section of our website. I'll turn the call over to Fabrizio now.

Thank you, Dennis, and good morning, everyone. I'm pleased to say that for the fourth consecutive year, our winning strategy steered our company to new heights of success. We delivered strong results in fiscal 2013 with solid sales gains and double-digit EPS growth, and our improvement was broad-based. Every product category grew in every region. This performance enabled us to gain share in global prestige beauty and strengthened our industry leadership. We delivered these results despite challenges in several important international markets and some lower growth in the U.S. Yet overall, our brands thrived, thanks to well-received product innovations, personalized High-Touch service and compelling advertising. Our sales rose 6% in local currency, 2 percentage points more than prestige beauty did worldwide, and EPS increased 16% to a record $2.64. Most of our brands contributed, fueled by targeted investment behind products in fast-growing channels and countries. We improved our leverage of consumer insights and our digital reach, which helped us connect with consumers of widely differing backgrounds in more than 150 markets, including many who were new to our brands. And we appealed to global consumers through local lens, with products and communications tailored to their desires and customs. By focusing our resources on our biggest and fastest-growing opportunities across consumer segments, categories, channels and countries, we achieved record financial results and hit some major milestones. In fiscal 2013, our sales topped $10 billion for the first time in our history. Globally, we gained 30 basis points of share, with gains in skin care and makeup and in Asia/Pacific, Western Europe and Latin America. By maintaining our financial discipline, we leveraged the higher sales and grew operating margin to an all-time high of 15.2%. Net earning passed the $1 billion mark for the first time. Our total stockholder return was 23.7%, which was better than the S&P 500. From a brand perspective, the standouts during the year were our luxury brands, La Mer, Jo Malone, Tom Ford, which together, grew about 20%. La Mer new Moisturizing Soft Cream helped drive the brand's total sales and attracted new consumers. We believe that more than 50% of people who bought the soft cream were new to the brand, and the product lifted sales of the brand's moisturizer category 30%. Combined, our 3 largest brands grew 5%. Esteé Lauder and Clinique gained share globally in both skin care and makeup, while M-A-C enhanced its position in makeup. The Estée Lauder brand generated double-digit growth in travel retail and Asia. Clinique's fastest growth was in North America, and M-A-C business grew sharply in every single region. In Latin America, M-A-C's makeup collections have been gaining in popularity, and across the region, it is our #1 brand. All of our categories advanced. Our skin care was the fastest growing and most profitable. Our overall growth continues to be supported by innovation. 16% of the company's sales came from innovations in new products. We believe our newest products have great potential and expect more of sales this year to come from fiscal year '14 launches. Prestige beauty gained over mass in several countries, including the United States and China. Several of our brands gained share in North America, and our brands had the top 9 SKUs in skin care and the top 5 in makeup, according to NPD. We gained share in China, where our 14 brands collectively grew 23%, as well as in Asia overall. Esteé Lauder, the prestige beauty leader in China, gained share. And Clinique made terrific progress, also increasing share in its distribution. We had an encouraging year in Japan, where our business continued to recover and we gained share in our distribution. As we have discussed throughout the year, Korea was challenging, and our domestic sales there fell sharply. Our region covering Europe, the Middle East & Africa grew overall, with emerging markets such as the Middle East expanding double digits. We, again, demonstrated our ability to achieve growth in strong markets as well as soft ones. In the U.K., prestige beauty outpaced mass, and we experienced healthy sales growth and share gains. And in Italy, where prestige beauty declined, we had robust sales due to strong innovation and new door openings. Through a wide range of prestige distribution channels worldwide, our brands are able to reach consumers in the most engaging and appropriate ways by region and country. One of our big wins was e-commerce, where we, again, had significant growth and crossed a milestone. Sales surpassed $0.5 billion. Sales rose in both our own brand sites and retailer sites. Travel retail started out more slowly than we had anticipated, but sales growth accelerated throughout the fiscal year. Our retail sales outpaced total beauty sales in the channel, and we have tripled the pace of passengers' traffic. Having now completed 4 successful years of our long-term strategy, let me give you a sense of our progress. Sales has climbed 40%, and our operating margin more than doubled. We completed a 4-year restructuring program, saving $781 million, which was more than 50% greater than the original forecast. Some of that savings, along with better managing the growth in expenses, freed up substantial resources to invest in advertising and marketing. Since 2009, we have increased advertising, merchandising and sampling by almost $900 million, which went to developing creative print, TV, digital advertising and exciting in-store displays. This model has created greater awareness for our brands and helped lift sales significantly. We are confident that the next phase of our strategy will allow us to continue growing sales and profits, enabling us to set a new long-range operating margin target of 16.5% in fiscal 2016. As we start this new fiscal year, we will stay the course. We are guided by our strategy, which remains solid, and we are making some refinements based on changing market conditions and new insights. We foresee stable global prestige beauty growth, increasing approximately 3% to 4%. We believe Southern European markets will remain soft and Korea will continue to decline, but not to the same extent of last year. Starting in our recent fourth quarter, we have seen some lower prestige beauty growth in the U.S. Despite this challenging condition, we still expect to grow at double the rate of global prestige beauty. We are positioned to maximize the potential of the power of our brands and estimate constant currency sales gains of 6% to 8% this year. To fuel the growth, we will exploit our best opportunity for our brands. They are: to win in large markets and in core department store channel, further penetrate smaller cities in emerging markets, create exciting innovations, be locally relevant, re-energize the fragrance business, advance our retailing concept and gain in high-growth channels. To expand our leadership in our heritage markets, we plan to look for granular opportunities to target multiethnic consumers more effectively because they are expected to drive the majority of prestige beauty growth through 2020. In the U.S. and the U.K., we will continue to work with our important department store customers to refine our assortment to reflect regional differences in trend, consumer ethnicities and distribution. China is expected to remain one of our fastest-growing markets as we continue to expand distribution to smaller cities. We have made progress with our skin care business in China, and we raised awareness and educated consumer about our makeup and fragrance offering. Skin care will remain our biggest opportunity, since it is used by 94% of Chinese women. Long term, we see good potential to build up makeup, which is only used by 16% of Chinese women regularly today, and also fragrance, which 47% of Chinese women use only occasionally. As part of that effort, we recently brought Zegna into China, and Jo Malone will launch this fiscal year. We also plan to broaden our presence in smaller cities in other emerging markets, including the Middle East and Russia, as we diversify our distribution and introduce more locally relevant products. This promises to be a major year for attention-getting innovations, and our 2 biggest brands already have launched blockbuster products. Clinique Dramatically Different Moisturizing Lotion, commonly known as DDML, is the best-selling prestige moisturizer in America. Now Clinique has created the first reformulation since the original product was introduced 45 years ago. The new product, called DDML+, features new technology and much enhanced moisturizing benefits but has the same look and texture. Esteé Lauder major global launch is the new version of its iconic Advanced Night Repair that combines the latest technologies to create its most advanced serum. The new ANR will continue building this important franchise. In conjunction with the launch, the Estée Lauder brand commissioned a clinical sleep study that showed poor sleep quality negatively affects skin function and appearance and can weaken the skin's natural repair capabilities. ANR helps maximizing skin natural night repair processes and helps women wake up to younger-looking skin. Both of these new products are being heavily supported with major advertising investment, including TV, in many markets, which should help with sales momentum in coming quarters. These blockbusters illustrate our intent to create fewer but bigger launches mapped to the largest market and consumer opportunities. We have many other innovations that will debut these coming months, some based on new technologies, other on local insights, and they span regions, categories and brands. Some of these new products will be fragrances, which we are giving increased attention and intend to grow more rapidly this year. Fragrance represents about 1/3 of the worldwide prestige beauty sales and is expected to be the strongest area of industry growth after skin care. We believe it can be a larger and more profitable opportunity for our brands as well, particularly in emerging markets such as Latin America and the Middle East. In the past few years, we focused on improving fragrance profitability. Today, we are well positioned to resume faster growth, leveraging the new cost structure we have implemented. We have many activities underway to expand our share in the fastest-growing and profitable ultra-prestige segment. Tom Ford is expanding distribution, particularly in the European region, and we'll introduce a collection of Ford Private Blend scents designed for the brand's entry into Asia. Also in the luxury area, we expect Jo Malone global popularity to continue sending its sales up sharply. The AERIN brand will launch its first scent in November in a 5-piece upscale collection to be sold in select specialty stores in the U.S., Canada and the U.K. Marni and Zegna, recent additions to our portfolio, will expand their geographic presence, and another newcomer to our fragrance portfolio, Tory Burch, will launch next month. We expect our Aramis and Designer Fragrances Division to grow double digits and to strengthen its designer brands, including Donna Karan, Coach, Tommy Hilfiger. With Michael Kors' success in apparel and accessories, along with our new launch activities, we believe our sales of the brand fragrances will also strongly accelerate. We will build scale and profitability in ADF by optimizing its portfolio by region and business model. In our third fragrance pillars, those that are part of our beauty brands, Estée Lauder will begin rolling out Modern Muse in September to the U.S., U.K. and certain other markets. This mark its first major fragrance launch in a decade, timed to take advantage of the important holiday season. Estée Lauder will generate buzz with an extensive TV, print and digital marketing campaign. On the retail front, we intend to leverage M-A-C's expertise with freestanding stores, develop new concept and strengthen our High-Touch services as we open more stores globally for many of our brands. Freestanding stores selectively complement our wholesales business, and in some regions of the world, we are building equity for our brands that traditional retailers can then build upon. We are trying to create a more cohesive experience for consumer with engaging merchandising across retail and wholesales locations. Our brands are approaching freestanding stores in various ways. M-A-C, for instance, has created several different store formats that vary by size, location and target consumers that allow it to maximize its penetration. For example, Aveda will expand its presence in Japan and Korea with its own stores. We are the leader in prestige beauty and e- and mobile commerce, with sites across 20 countries. In fiscal '13, we had triple-digit growth in mobile sales and site visits. This year, we will launch e- and m-commerce operation in new markets, including Poland, Israel, Malaysia and Taiwan, and several brands will expand their digital sales to much more countries. Travel retail business is expected to increase double digits as we capitalize on the growth in skin care and Asia, focused on opportunities in makeup and accelerate our widening fragrance portfolio with key franchises in travel corridors. We are well situated. Prestige skin care and Asia consumers are the fastest-growing segment in the travel retail channel, and they are our areas of strength. We continue to improve our social media skills and find exciting ways to engage consumers. A dramatic example of this was in May, when M-A-C created an online-only event to sell a coveted Rihanna lipstick. The brand sold out the collection online in North America in less than 3 hours, and the only way a consumer heard about the sale was through e-mail, social media and M-A-C e- and m-commerce sites. Not a penny was spent on traditional advertising. We are looking forward to 2 more M-A-C Rihanna collections that will launch this fall. They will have an online component and be available in stores. We have always been a growth company. But over the past 4 years, our mission was to make that growth more profitable and sustainable, and we clearly accomplished that goal. Having established a firm foundation, we are in an even better position today to focus on our top line growth, with the added advantage of having greater advertising firepower to ignite our brands and promote their latest innovations. With our creativity and innovation, a wide geographic reach and the ability to react swiftly to the best opportunities worldwide, we believe we can continue growing faster than prestige beauty. At the same time, we will continue to improve our operational capabilities so that we can further enhance our service to our retail customers, as well as our consumers. I'm extremely proud that our company has achieved such important historical milestones, and we couldn't have done it without the constant hard work and dedicated efforts of all our employees. I want to thank them for believing in our vision, executing our strategy so well and making The Estée Lauder Companies what it is today. Now I will turn the call over to Daniel.

Thank you, Fabrizio, and good morning, everyone. I joined the company in 2007, after 20 years in the industry. I was chosen to lead our newly established Latin American region in 2009 in order to build on our company's 50 years' history there and capitalize on the promising opportunities we see now and in the future. Our first priorities were to strengthen the teams in our 5 affiliates and develop best-in-class regional capabilities in finance, supply chain, human resources, consumer insights, digital and store design. We have made good progress in all these areas. Today, the Latin America region includes 17 countries, from Mexico down to Argentina. Since this regional structure was created, we have doubled our net sales to approximately $260 million, totaling approximately 3% of the company sales, and we have enjoyed a compound annual growth rate of 22%. In fiscal year '13, our sales growth was 11%, twice the rate of prestige beauty in the region, driven primarily by Brazil and Peru. We view Latin American's role in the geographic portfolio of the company as a profitable engine of growth. We have grown sales, and we'll continue growing twice as fast at the average of the company while, at the same time, being accretive to the company's profitability. Also, the investments we make in Latin America drive awareness for our brands among the millions of regional consumers who then buy our products in profitable channels such as travel retail and in destination cities across the United States and Europe. We estimate that for every $1 we sell in Brazil, for example, we sell another $1.50 in travel retail and North America. With the strong results we have generated, we now have a solid platform for additional growth in the coming years. To give you a sense of the possibilities that lie ahead, today, we sell only 10 of our brands in the region, and not all are sold in every country. In fact, in Brazil, one of the fastest-growing beauty markets in the world, we sell only Clinique, M-A-C, Tommy Hilfiger, Donna Karan and Michael Kors, and we see terrific opportunity for additional brand expansion. Latin America is a $24 billion beauty market and the fastest growing among all global regions, with a 10% CAGR in the past 4 years. However, 89% of the market is mass. That said, the prestige category has been growing faster than mass as millions of people have joined the middle class. In fact, Latin America's middle class has increased by 50% in the last 5 years to 165 million people. We believe we can convert many people in the new middle class to our aspirational prestige beauty products. Within prestige beauty, fragrance and makeup are growing the fastest in the region since they represent an entry into the luxury market for the aspirational mass consumer. The growth of prestige beauty is also being driven by new distribution channels such as specialty-multi and e-commerce. From a category standpoint, fragrance accounts for nearly half of this beauty mix, followed by makeup and skin care. Over the past couple of years, we have become the #1 player in the still small prestige makeup and skin care segment with a combined share of 54.2% for the 12 months ended March, up 230 basis points from the year earlier. This strong performance provides us a solid base to continue recruiting emerging prestige consumers from mass. On the contrary, we are still very under-penetrated in the larger prestige fragrance category, so we see a strong opportunity for growth in that area as we roll out new franchises and increase our advertising. In coming months, we will launch Uomo by Zegna in Colombia and Brazil, the new Michael Kors collection in Brazil and Tory Burch in Mexico. Brazil is the #1 fragrance market in the world, yet we also see promising opportunities in other categories. For example, Brazil is the second-largest global market for hair care products, and we believe 1 or more of our hair care brands could do well there, so we are exploring our options. Naturally-based products are also extremely relevant to Latin consumers. We just opened our first Origins counter with our partner, Liverpool department stores, in Mexico City. Given the excellent initial results, we plan to expand to 50 doors in the country over the next 5 years. In terms of distribution, across Latin America, the largest channel is door-to-door at 50%, followed by supermarkets, perfumeries, department stores and pharmacies, but the channel mix is different from country to country. Department stores are the strongest players in prestige distribution in the region, and they represent 53% of our business. Perfumeries represent 10%. Freestanding stores are a fast-growing channel for us, and M-A-C's retail stores account for 20% of our total distribution mix, mostly in Brazil. With our leadership structure firmly in place and a clear view of our growth potentials, we have developed a robust strategy with several strategic pillars to accelerate our business. Since we already lead in the prestige segment, our largest growth opportunity will continue to come from sourcing new consumers from mass. We will accelerate several proven and successful initiatives to increase trial and loyalty among emerging prestige consumers, including greater accessibility of our products, better pricing awareness, flexible payment options, smaller sizes and value reframing. Similar to many other countries, we know that many aspirational consumers live in high-growth secondary cities, particularly in Mexico and Brazil. We intend to increase our reinvestment in those areas through more profitable and cost-efficient formats, including freestanding stores. In Brazil, M-A-C's 30 freestanding stores provide a profitable base for growth. That's why we plan to expand M-A-C's geographic presence in Brazil to 50 stores in 30 cities by fiscal 2016. We are also opening the brand in 3 new countries this year: Ecuador, Uruguay and Paraguay. The second pillar of our growth strategy is developing the right distribution channels by country. While we expect to continue winning with our traditional department store partners, we also plan to lead in fast-growing emerging channels, namely e-commerce and specialty-multi. We launched our first brand e-commerce site 2 years ago for Clinique in Brazil, and sales have steadily grown. Later this year, we plan to unveil our second e-commerce site in the country, this time for M-A-C. Looking further out, we expect to launch e-commerce in Mexico and Chile in fiscal '15. We also have 10 marketing sites for our brands throughout the region, and we have a local presence on Facebook, Instagram and Twitter in many markets. The specialty-multi channel is changing the retail environment and creating new distribution opportunities for our brands. For example, Sephora is rolling out in more stores in Mexico and Brazil, and Smashbox, Clinique, Bobbi Brown, Estée Lauder and our fragrance brands are leveraging this new distribution. Another critical component to our continued success will be the further development of the freestanding store channel. Our regional stores allow us to build brand awareness, fully express brand equity and provide High-Touch services to our consumers. They also serve to recruit and educate the new consumers we want to capture in advance of the arrival of traditional retailers. We currently operate 37 of our own stores, and another 43 are run by our partners. In the next 3 years, we expect to double the total number, including stores for new brands such as Aveda and Jo Malone. The third pillar of our growth strategy is our portfolio management by country. We are tailoring our go-to-market model according to the potential we see in each specific country. In Mexico, a well-established core market, we are the #1 player in prestige beauty. The key to our success has been our ability to develop relevant concepts and products, such as specific foundations shaped for Latino consumers and special skin care products for oily skin. M-A-C's waterproof mascara and color collections have resonated strongly in Mexico. We are also exploring opportunities to optimize the travel corridor linking Mexico to the Southwestern United States, where 13 million Mexican tourists visit every year. During the next 3 years, we plan to grow our retail store presence in Mexico, invest in secondary cities and launch e-commerce. We believe we can continue our current double-digit sales growth in the country. The countries that we consider our strong growth engines are Brazil, Peru and Colombia. With an average 35% growth per year over the past 4 years, Brazil is one of the company's fastest-growing major emerging markets, and our share has increased dramatically over the past 2 years. Brazil is the third largest beauty market in the world after the United States and Japan, but is growing much faster. However, we are still playing in a tiny segment, since mass represents 98% of the total $12 billion Brazilian beauty market. The country is dominated by very strong local players that offer masstige products and have strong business models. Despite these well-regarded competitions, we were encouraged that M-A-C was recently voted the most loved cosmetic company in Brazil and the second most admired brand in all categories by a respected Brazilian trade and retail magazine. And we are seeing an important trend of consumers trading up to more aspirational foreign brands. Although we've had strong growth, distribution in Brazil remains challenging. Department stores are nonexistent, perfumeries are fragmented and losing share, and the new prestige distribution is still emerging. Going forward, our distribution strategy in Brazil will focus on freestanding stores, specialty-multi and our e-commerce business. In Peru, we are growing 40% a year as our chain of retailers expand in the country by opening malls and department stores. In Colombia, Clinique is the market leader in prestige beauty and M-A-C is expanding into prosperous secondary cities like Cali and Medellin. Lastly, over the past 4 years, we have successfully reduced the relative weight of the more economically volatile countries on our portfolio, including Venezuela and Argentina. They are expected to represent only 11% of the regional sales this fiscal year. We will continue to manage these countries cautiously and direct our efforts and investments toward more stable countries. As you see, we are still at the beginning of our journey, with a vast majority of the Latin American beauty market left to pursue. In that context, I believe The Estée Lauder Companies' brands are uniquely positioned to consolidate and accelerate their leadership in Latin America. I would like to close by recognizing and thanking our 2,400 employees across the region for their passion and dedication to our brands. Thank you. And now I will turn the call over to Tracey.

Thank you, Daniel, and good morning, everyone. I'll briefly review the highlights of our fiscal 2013 fourth quarter and full year financial performance and then frame for your expectations for the year ahead. As usual, my commentary on the financial results excludes the impact of restructuring and other charges. For the fourth quarter, net sales rose 7% to $2.41 billion. Excluding the impact of currency translations, sales grew 8%. Net earnings increased 40% to $96.8 million compared with $69.2 million in the prior year quarter, and diluted EPS was $0.24, above the top end of our expectations. The challenges that emerged in our third quarter with the latest wave of SMI have been resolved, and we have begun work on the last major wave of SMI implementation, which is scheduled to launch in July of 2014. Regarding sales, every region contributed to sales growth in the quarter. Sales in our Americas region increased 5% in local currency, with mid-single-digit growth in North America and high single-digit growth in Latin America. From a channel perspective, our North American sales at retail were mixed, with the strongest growth realized through multi-brand specialty stores, luxury department stores, online and our own freestanding stores. Mid-tier prestige department stores and salons were softer this quarter. The prior year included a reversal of a provision for sunscreen returns, which lowered growth in the Americas by approximately 2 percentage points in the quarter. In the Europe, Middle East & Africa region, sales increased 13% in local currency. We achieved double-digit sales gains in the developing markets of Turkey, the Middle East and South Africa, but also in many established markets in Western Europe, including Italy, Germany and the U.K. Our sales in the travel retail channel rose 15%, slightly ahead of sell-through. The region's growth was partially offset by declines in Switzerland and in Russia. Sales in the Asia/Pacific region rose 5% in local currency. Double-digit gains were achieved in Australia, New Zealand, Hong Kong, Thailand and Vietnam. China grew sales 7% as retailers sold through the inventory build from the SMI rollout earlier in the year. Growth at retail remained strong at nearly 20%. Japan increased sales by 5%. Korea continues to be weak. However, declines are more modest now that we have anniversaried the initial downturn in the market. Our gross margin decreased 20 basis points to 80.3%, primarily related to obsolescence. Operating expenses as a percent of sales improved 220 basis points to 74%. Selling cost decreased 80 basis points, and advertising, merchandising and sampling fell 120 basis points, reflecting the planned cadence of marketing increases to earlier in the year, as we have discussed with you previously. Operating income rose 54% to $150.3 million, and operating margin increased 200 basis points to 6.3%. Our effective tax rate for the quarter was 28.1% compared with 15.8% in the prior year. For the full fiscal year, net sales rose 5% to $10.2 billion. Excluding the effects of currency translation, sales grew 6%. Net earnings gained 16% to $1.04 billion, and diluted EPS increased 16% to $2.64. Every region and major product category contributed to our sales growth again this year. Gross margin increased 70 basis points to 80.2%. The increase came primarily from 40 basis points related to positive pricing and mix and 20 points from favorable cost of goods. Operating expenses as a percent of sales improved 30 basis points to 65%. We increased advertising, merchandising and sampling 10 basis points, reflecting our continued commitment to support our brands' new launches. Collectively, all other costs fell 40 basis points as the benefit of cost savings and productivity improvements more than offset other investments. Since fiscal 2009, our operating expenses have improved 250 basis points, while at the same time, we invested an incremental 230 basis points in advertising, merchandising and sampling. This means that all other expenses have declined by 480 basis points, a significant achievement. Operating income rose 12% to $1.54 billion, and operating margin increased 100 basis points to 15.2%, another record achievement. Our savings initiative contributed $73 million in fiscal 2013 and totaled $780 million over the 4-year span of the program. Net interest expense declined 10% to $54.8 million, primarily due to lower rates, and our effective tax rate for the year was 30.7%. We recorded $17.8 million in returns and charges associated with restructuring activities in fiscal 2013 and believe that charges related to this program are substantially complete. Net cash flows generated by operating activities increased 9% to $1.23 billion compared to $1.13 billion last year, primarily reflecting higher earnings. We invested $461 million in capital projects, mainly for counters, retail stores and systems. We returned 100% of our free cash flow to stockholders in fiscal 2013, which went to repurchase approximately 6.7 million shares of our stock for $388 million and pay out $419 million in dividends, which reflected a 37% increase in the dividend rate, as well as the incremental outlay from a transition to quarterly payments. Days sales outstanding increased by 2 to 44 days. Inventory days to sell rose to 183 compared with 164 days last year, primarily to support both the SMI transition and planned future growth. Fiscal 2013 marks the end of a 4-year period where the company focused on restructuring, resizing and realigning the business model. Going forward, we expect to build on our success and leverage the investments we've made in R&D, consumer insights, geographic expansion, SMI and productivity to continue our growth trajectory. We expect global prestige beauty to grow at 3% to 4% in fiscal '14 and 4% to 5% annually thereafter, and we continue to believe we can exceed this growth by at least 1 percentage point. More of our growth is expected to come from innovation, reflecting the emphasis on bigger, more impactful launches, as well as locally relevant developments. Our small and medium-sized brands are continuing their momentum and are likely to make a greater contribution to growth as they expand into more countries and more doors. Developing markets should provide a greater share of incremental sales as they grow in size and their populations continue to achieve greater wealth, and we have continued to see accelerated growth in many of these markets in fiscal '13. Skin care and makeup will remain our largest categories, but fragrance should continue to grow and contribute more as we renew our commitment to the category and launch new brands and products. These drivers of strong top line growth, combined with increasing productivity and prudent reinvestment, should allow us to deliver operating margin expansion to 16.5% in fiscal 2016 and double-digit annual EPS growth for the next 3 years. Let me now talk about our outlook for fiscal 2014. Sales are expected to grow 6% to 8% in constant currency. Currency translation is expected to negatively impact our full year sales growth by approximately 2%. Our estimate assumes weighted average exchange rates for the full year of $1.24 for the euro, $1.50 for the pound and $0.01 for the yen. Our estimate also includes approximately 2 percentage points of growth from pricing. The combined benefits of pricing and operating leverage are expected to drive operating margin expansion by 40 to 50 basis points for the full year. Continued cost discipline allows us to invest for sustained growth and efficiency. This year, we plan to further strengthen our capabilities in consumer and shopper insights, our research and development, retail stores, supply chain, human resources and information systems. We expect advertising, merchandising and sampling to remain fairly consistent as a percent of sales annually, with a different cadence of investment by quarter this year, and we do have the flexibility to invest incrementally behind activities that demonstrate good momentum during the year. Our fiscal 2014 tax rate is planned at 30% to 32%. We are forecasting full year EPS in the range of $2.74 to $2.87. Depending on the magnitude of exchange rate movements, the approximately 2% negative currency impact on our top line equates to about $0.10 of EPS. Excluding this foreign exchange impact, our EPS is expected to rise by 8% to 13%. As a reminder, in fiscal 2013, we had some onetime benefits that will negatively affect the comparison to fiscal '14, including $23 million of other income related to the 2007 sale of Rodan + Fields, which was equal to about $0.04 of EPS. In fiscal 2014, we plan to generate approximately $1.4 billion of cash flow from operations. Our capital plan of $525 million will largely support consumer-facing investments in counters, retail stores and e-commerce, as well as back-office support for systems and supply chain. In our first quarter, we expect sales to grow 5% to 7% in local currency. Translation could hinder growth by approximately 1%. Major product launches, including the new Advanced Night Repair, Modern Muse and DDML+ should help drive growth. We also expect our marketing investments to be substantial, given the innovation activity in the quarter that we are supporting, which should aid to our sales -- should aid our sales momentum throughout the year. Therefore, we anticipate that EPS will come in between $0.67 and $0.71 in the quarter. As we said earlier, wave 4 of our SMI rollout is scheduled for July of 2014, which is the first quarter of our next fiscal year. This group includes our North America order-to-cash business, our travel retail division, Japan and the Middle East and represents approximately 18% of our sales. As we've seen previously, we expect retailers to increase their orders in advance of the go-live to mitigate any potential disruptions from the transition. The impact of this potential shift in orders will be to increase sales in our fiscal 2014 fourth quarter and full year. As we have done in the past, we will provide an estimate of the shift when we get closer to the date and have a better indication from the retailers of what this shift will be. The guidance, however, that we have given today does not include these incremental sales and profits. That concludes our prepared remarks. We'll be happy to take your questions now.

[Operator Instructions] Our first question today comes from Olivia Tong with Bank of America. Olivia Tong - BofA Merrill Lynch, Research Division: Just want to talk about the growth rate that you're expecting for this year. So relative to the 3% to 4%, you're saying 2x, plus 6% to 8%. You mentioned a big incremental increase in advertising in Q1, but can you provide some color on the cadence for the remainder of the year? And then also, can you provide some perspective on where you expect your share gains to come from? Is it stronger in one region versus another, or product category? And do you expect to source most of your share gains from bigger players or from smaller brands?

Well, for the full year, our advertising, marketing and promotion as a percent of sales will remain flat. So we do see a shift, as I had mentioned before, in the quarterly spend. And again, as we have mentioned before, supporting our launch activity, which is substantial, obviously, in the first quarter. Fabrizio mentioned DDML and Advanced Night Repair, which launched in July. We also have Modern Muse, which is the first relaunch in some time of a fragrance by the Estée Lauder brand in September. So the combination of those 3, as well as some of the other licensed brand fragrance activity that we have, is increasing the spend in the first quarter. It should normalize over the balance of the year to create a flat percent of sales for advertising promotion and marketing.

In terms of share gains, we assume to continue growing share in Western Europe, Asia, Latin America, and we believe we will stabilize our share situation also in the U.S. thanks to the innovation programs of the next 12 months.

Your next question comes from Jason English with Goldman Sachs. Jason English - Goldman Sachs Group Inc., Research Division: I wanted to zoom in a little bit more on the U.S. Fabrizio and team, can you guys give us your perspective on what's caused the deceleration of the prestige category? And then within that, maybe touch on channel mix. I know last year, I think you said that your U.S. business, around 9% of those sales were coming from online. Where do we stand with that today?

Yes. So the -- first of all, the deceleration of the U.S. business that we have seen started in May. The U.S. business has been growing in prestige as per NPD at about 6.9% in the first part of last fiscal year, and then in quarter 4, it's 2.5%, and then June was minus 1%. So it's been clearly a softening in that period. Now we believe this just been a reduced traffic for several macroeconomic reasons, and we already see some improvements, and we believe that back-to-school and then later, the holiday season, should bring the U.S. market back to solid growth, although we believe will be a growth below what we've seen in fiscal year '12 and the beginning of fiscal year '13. In terms of channel mix, we are continuing expanding very strongly in e-commerce, and e-commerce is growing 20%-plus, and we believe this will continue. We are also growing in our freestanding stores at double digit, and we are continuing expanding in specialty-multi successfully. And -- however, independently from the soft last couple of months of the fiscal year, the -- we grew about 6% in the U.S. in fiscal year '13. So a pretty solid growth, and we believe that probably, this growth will be reduced but will remain solid over the fiscal year '14.

So just to add on to what Fabrizio said, as we have communicated all year, our online business has grown 2.5x to 3x what our regular business has grown. So in the U.S., it's approximately 10% now versus the 9% last year.

Your next question comes from Dara Mohsenian with Morgan Stanley. Dara W. Mohsenian - Morgan Stanley, Research Division: So from a margin standpoint, your fiscal 2014 EPS guidance implies only about 40 basis points of margin expansion, even at the high end. Given your favorable pricing; channel mix; operating leverage; the drag from SMI, I would assume, is improving; why can't you do better than that? And what are the negative offsets to those positives I mentioned from a margin standpoint?

So you may recall that we made the decision a quarter or so ago to extend SMI. So we do have an extra quarter of SMI this year that we did not expect to have previously. So that is creating some incremental expense. Largely, we have offset that incremental expense. We also have planned advertising increase, obviously, for the year, and as I mentioned right now, planned flat for the balance of the year. But we have other investments that we're making as well. We're making an investment in our HR systems. We're making investment in some of our marketing areas, as well, to support the growth in fiscal 2014 and beyond. Making some investment in our innovation areas as well. So that's the reason why the margin expansion is 40 basis points, 40 to 50 basis points. And we expect that, that will continue over the next 3 years. Once we have fully implemented SMI and start to really leverage it, and we expect to do some of that this year -- so one of the benefits that the delay has given us is the opportunity to focus on the first 3 waves of the rollout and really optimize some of the tools and the deployment of SMI and SAP, and that is expected to yield a benefit as well this year and certainly beyond.

Your next question comes from Ali Dibadj with Bernstein. Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division: Guys, wanted to ask a little bit more about your thought process on just the incremental spend in 2014, because you are clearly increasing spend, but the top line isn't growing much faster than you have been without the spend. So I'm trying to get a better sense, I guess, of -- is it because it's just more difficult out there, so competition is greater and consumers are tougher? Or indeed, you're spending more for the future, whether it be innovation or distribution gains? So I'm trying to get an understanding of the mix between those 2. And I ask that particularly in the context -- you had it in your prepared remarks for the past 4 years, being very strong from restructuring and spend-back perspective. But now, as we look forward, we are, I think, having to expect a little bit more of a leverage on your current expenses. So I'm trying to tie those 2 together in terms of your spending more this year, growing the same this year and then going forward, we're expecting more leverage, I guess, on your current expenses. So I'm hoping to get some help tying those together.

Yes, let me explain what is the idea behind that. We definitely are preparing for an acceleration of top line growth. And this year was 6%, and we plan 6% to 8% next year. Now the acceleration should also be read in the context of the overall market, meaning we are very confident that the sum of our activities will provide the acceleration, I will give you some details in a second, but the market behind it is still some signs of softness. And Southern Europe, we believe, will continue to be soft. Korea will continue to be soft. And frankly, for the moment, we suspend our judgment on the U.S. temporary softness that we have seen in May and July, and we assume that this will not recover all the way to the levels of the U.S. that was last year. So with these assumptions -- that's why we say the market. If this assumption holds, the market will grow 3%, 4%, and we are saying 6% to 8%. So we are saying we will grow double than the market one more year in -- and to grow double than the market, frankly, we need the innovation and all the other -- and the investment in the advertising that we have created. Without that, it would be very difficult to beat the market in that way. Now obviously, if the market will grow better, it will be stronger over time, then we can see even better leverage from our investment in advertising and innovation in our top line. And we will see -- and we'll do, obviously, the best we can. The details I wanted to give is that, obviously, Korea, the current U.S. trend, Southern Europe are somehow concerning. But on the other side, we expect strong growth in developing areas like China, Middle East, Turkey, Latin America, as you heard. We expect double-digit growth in travel retail again in the year and a continuation of 20-plus percent growth in online. We are looking to our luxury group of brands like La Mer, Tom Ford, to continue to grow 20% more. And our innovation, as I explained, should be a strong driver. So we are, in my opinion, again, not only improving our productivity and ability to leverage our -- with growth our cost, but also, we're in a position to exploit our growth portfolio. Because even in a moment when we had a quarter of soft in the U.S., we have strong growth in China offsetting it. And Korea is down, Japan is back up. So the strengths of our portfolio that cover different regions, different categories, different channels is really one of the things that make us comfortable with a strong growth over the years, but obviously, reflecting the reality of the market in every given moment.

The only thing I would add to that is, Ali, and you mentioned this, we are seeding distribution for those mid-tier brands to continue to achieve the kind of growth that we've experienced this year both from a comp standpoint, they're doing terrific, but also from a distribution opportunity standpoint now that Jo Malone and La Mer continues to have momentum -- and Tom Ford and some of the other brands that we have at that -- next year, Aveda, for instance, that Daniel mentioned in terms of perhaps an opportunity for Latin America. So we are investing more in distribution, both for our newer brands as well as in emerging markets.

Your next question comes from Mark Astrachan with Stifel. Mark S. Astrachan - Stifel, Nicolaus & Co., Inc., Research Division: Wanted to ask quickly just on gross margins in the quarter in terms of sort of puts and takes there, why it was not up as strongly as it's been or why it was actually down a little bit. And then just back on ad spend, is it going to be in different regions and channels in fiscal '14? And how do you measure returns and efficiencies on the spend, considering the decision to maintain or to increase as you go forward?

Okay. So on the gross profit margin, there were a couple of different impacts. The mix favorability wasn't as great this quarter as it has been in previous quarters, but there was a favorability. So in addition to that, as we have called out, our inventory is at higher levels than certainly we had anticipated this year with some of the delay in the SMI conversion. So we ended the year with higher inventory. So we did make sure that we were properly provided, from an obsolescence standpoint, for that. And the last area is we did have a slight unfavorability in manufacturing variances for the quarter. But again, for the year, as you saw, we showed tremendous margin -- gross profit margin expansion. So it's more of a quarterly phenomenon than, certainly, an annual.

In terms of our advertising and promotional spending, we are very deliberate and strategic about the resource or location. We have a very thorough internal process to measure the return of these investments, and they vary a lot depending on, for example, which area of the world we are launching. If we do a big launch in China, this is normally more advertising intense than the Middle East, as an example. Or which brands. If we have a launch in M-A-C, it's obviously less advertising intense than Estée Lauder. Or the importance of innovation. If we launch a big -- like Advanced Night Repair relaunch, that's much more advertised than the next variant of BB cream. So it's very, very deliberate, and it depends from market, from kind of category and from the kind of innovation that we are getting better and better in measuring the return on investment of what we do.

Your next question comes from Alice Longley with Buckingham Research. Alice Beebe Longley - The Buckingham Research Group Incorporated: My major question is about the first half overall for fiscal '14. Can you tell us if the -- if we put the second quarter together with the first quarter, if the earnings for the first half of the year will grow roughly in line with your guidance for the year? And I'm just -- I'm assuming that there is a shift in timing of marketing away from the second quarter back to the first quarter, and maybe if we look at the 2 together, they'll be in line with the year? And then also, China, you under-shipped in the first quarter relative to sell-through at retail. Would you be back in the second quarter to shipping in line with sell-through at retail in China, so we'll get an acceleration in sales there?

So Alice, I'll start off and then let Fabrizio chime in. We are currently not giving second quarter guidance. I would, though, remind you that we had an SMI shift last year, where we actually pre-shipped product in the second quarter for the third quarter go-live of SMI release 3. So we -- just keep that in mind when you're looking at your model and modeling out the quarters. Certainly, from a mix standpoint, the first quarter, from an advertising, marketing and promotions standpoint, will be the highest as a percent of mix relative to the other 3 quarters. But that -- but we'll certainly be prepared to update second quarter when we have our next call.

In term of China, I mean, it is difficult, frankly, to provide reconciliations by quarter of every single country in this way, but we are pretty happy of our trends in China and pretty satisfied for the fiscal year that we are closing, meaning fiscal year '13. We grew 20-plus percent in China, again, at retail, and our same-door grew 5% at retail. So China is doing pretty well. And our strategy there is about reaching new consumers, the new growing middle class, via the ability to penetrate new cities and continuing increase distribution and also reaching the many traveling Chinese consumers that want to travel outside of China, which we often speak about, which has been 40 million in the closing year, but also the ones who travel within China, which we should not forget, at 350 million every year. And before, they were used to all buy in Beijing, but now they find the product in their own e-commerce site or in their own city. And obviously, this -- so they buy less in Beijing and more in their hometown, and we are favoring this process. That's why we should look at China as a whole and over time, and not divide it quarter by quarter, piece by piece, because a lot is depending on this incredible phenomenon of distribution expansion in the cities. Just to give you a data on this one, we have expanded, in 2013 fiscal year, 11 new cities in China. And we plan in fiscal year '14 to expand another 14 new cities in China.

Your next question comes from Bill Schmitz with Deutsche Bank. William Schmitz - Deutsche Bank AG, Research Division: Can you talk about the trends on the Asian margin front? Because, obviously, I think this quarter was an anomaly. But can you just sort of explain what happened in the quarter and kind of how you're going to look at the margin profitability in Asia going forward? And then just a housekeeping item, is there any share repurchase included in your guidance for '14?

So certainly, on a reported basis, obviously, we have the impact of exchange on the margin in Asia in the quarter. In addition to that, obviously, we spoke about the fact that the shipments in China were a bit less in the quarter because of the amount of inventory that the trade was still working through. So the retails continue to be strong, but our shipments were less, given the shipments that were made in Q2 to support the rollout of Q3 in China. So the foreign exchange, Korea, obviously, being down significantly, as we've talked about, all impacted the margins in Asia/Pacific. It is a tremendous high-growth region for us, as you know, and it's a profitable region for us. So we certainly expect that to continue into fiscal 2014.

Your next question comes from Caroline Levy with CLSA. Caroline S. Levy - CLSA Limited, Research Division: Couple of things. On the big push behind fragrance over the next year-plus, what impact do you expect that to have on your margins? My understanding historically is that there's a lot of A&M that goes with it. But if you restructured in that business, is it possible for that to meet or beat your current average margins? And then the second question is on Europe. Excluding travel retail, you must have seen enormous share gains. And I was wondering what particular product might have driven that and if some of what you're seeing in Europe is Middle East shoppers and things like that. So just a little understanding of what happened in Europe that was so strong.

Yes, sure. Let me first answer the fragrance question. Is -- our fragrance portfolio is better in margin overall, but the different components have different margins levels. So the high end, like Jo Malone or certain brands like Clinique, they have definitely the opportunity to be accretive in terms of margin as they grow. Other brands, more the designer fragrance portfolio, as you know, as an example, are in a position where they're not accretive, but they are in a much better margin position. So the impact, also, of the accelerated of fragrances will be to enable our acceleration of growth because this is an important category, which embrace 30% of the global market, and we need to be able to grow in this. This growth will allow us to leverage our cost base in a better way across the company. So it's not necessarily being accretive as a category, but it definitely is going to be important in certain parts of it and also in terms, as I said, will be also accretive, but is going to be important to accelerated growth and leverage our cost base over time. In terms of what's happening in Europe, we are doing very well, as I said. I gave in my prepared remarks the example of Italy, but we are doing very well in many developed markets, even the ones which are very soft. And so what's happened is that we're winning there. We're winning there with our innovation because we are investing in this difficult moment. And so in this way, we are building market share. This, for us, is a big strategic decision because never, never miss to exploit a crisis is our way of thinking, in a sense, that we -- our market share in Europe is not very high in all of these markets. So that's the moment where we have the opportunity to establish us as bigger player in Western Europe, and then benefit of it for the many years to come when we are starting from a higher market share when those markets will recover, as we believe will happen at a certain moment in time. The other thing which is happening in this area is huge success in emerging markets. The Middle East is doing very, very well. For us, it's 20-plus growth. Turkey is doing very, very well. South Africa is doing very, very well. So -- and the Russia situation has stabilized. So in this situation, we see EMEA, as we call this region, doing pretty well, despite the softness in Southern Europe.

Your next question comes from Neely Tamminga with Piper Jaffray. Neely J.N. Tamminga - Piper Jaffray Companies, Research Division: Fabrizio, you guys have been so innovative on the product side, and I just want to talk a little bit more on the marketing side as well. Could you give us a sense of how you are thinking about your digital ad spend overall, how that's trended from last year to this year and maybe, ultimately, where you think your total ad spend can go and maybe some of the innovation behind that to drive these excellent e-commerce sales?

So -- you mean the advertising in the digital part. So our digital budget in advertising is increasing significantly. It's tripled in the last year. So we are spending much more in digital, and we will continue to increase our digital spending. Obviously, there are some of our brands, which use digital online communication, digital advertising and all the e-commerce activities as their main communication activity. Example, this is very important area for M-A-C, while there are other brands, which are using more TV or more print. So this is, again, not -- I cannot speak about -- the company average, in other words, doesn't give you a real sense of the reality. It's by brand, our decision making, and our return on investment is calculated by brand. So -- but on average, we are definitely increasing our investment in digital in a very significant way.

Your next question comes from Connie Maneaty with BMO Capital Markets. Constance Marie Maneaty - BMO Capital Markets U.S.: Could you talk a little bit about the 2% in sales from pricing? Does this mean you're raising the price with the innovation that's coming on DDML and Advanced Night Repair? And are these actual price increases, or with the introduction of new fragrance, is there also a positive mix shift because the fragrances are more expensive? And then just a follow-on, could you give us an update on Osiao?

Yes. On pricing, the 2% is more or less in line with the cost inflation. So overall, how the 2% is driven is a mix of some regular price increases in certain countries, where the inflation and the reality of the market allow us to do that, and some of the innovation comes through higher prices. And then finally, there are also some price decreases, meaning 2% is the average. But to be very clear, we are decreasing price, including of some of this new innovation in certain markets, particularly in Asia, where it was appropriate to decrease the prices. We are increasing the prices in other markets, where it was the right decision. And then the innovation mix is positive. Some innovation is higher priced, some is lower priced. So price is a pretty sophisticated exercise. The result of it is an average of 2% to cover our cost inflation, and that's, obviously, our minimum objective to go forward. That is not an average number that we use. We use a very specific number by brand and by activity.

Your next question comes from David Wu with Telsey Advisory. David Wu - Telsey Advisory Group LLC: Can you perhaps talk about your R&D spending goals in FY '14 and any new hires or changes that you plan to make in the department and which sort of product attributes you plan to focus the innovation on? And just secondly, can you update us on your new distribution, especially in the specialty beauty retailers, and how the testing of Estée Lauder at Sephora North America is progressing and also your plans to increase distribution there? And also, similarly, with La Mer in Sephora China and France?

Are you answering the first question?

In terms -- can you repeat your first -- the first part of your question?

[Operator Instructions]

It was on the R&D and our R&D spend. So we are slightly increasing, as a percent of mix, our R&D spend this year. And again, our R&D spend is certainly disclosed in our financial statement so that you know what we're investing. And a good portion of that, as Fabrizio said, as we looked at our strategy over next 3 years, new products and innovation have always been a critical element of the company. And we have a tremendous amount of leverage and momentum to increase that now. And it's been a stated focus of the organization for the last few years, and we've achieved good results in that area. So we are seeing a slight increase in the percent of spend of R&D this year versus last year. Certainly, a portion of that, as you mentioned, will be incremental headcount, and we are -- and the R&D team is certainly executing against that. In terms of Estée Lauder in Sephora in North America.

Yes. In terms of our distribution, so the test on Sephora Estée Lauder is continuing and was planned for 18 months, and so we probably make a final decision in the next 6 months. And in terms of our distribution plan overall, we are increasing distribution next year, and we have done it in fiscal year '13 and we'll continue to do next year in a very significant way in some emerging markets, as I said, in secondary cities, in smaller cities around the world. And in the new growth channel, expanding e-commerce, expanding travel retail, expanding specialty-multi, including our partner, Sephora, in many parts of the world, all this is up. And just to give you maybe the sense of our 6% to 8% growth, 2% come from pricing, as we just discussed, and 1.5% to 2% will come from distribution expansion. The rest will be organic growth. And so distribution is increased -- is a very important piece in our model. And I want to take the opportunity because I forgot to answer Osiao before, and so for fairness, I want to say that we continue our test of Osiao. We are encouraged by the results, but we are still in a testing mode on this brand.

Your next question comes from Lauren Lieberman with Barclays. Lauren R. Lieberman - Barclays Capital, Research Division: I just want to follow up on your comment that there was going to be -- Tracey said there's growth coming from some of the small and midsize brands, and I didn't know if that specifically referred to fiscal '14 that, that starts to accelerate, or was it a longer-term comment? Because it's particularly interesting in the context of this enormous launch activity in both Estée and Clinique just even in the first quarter.

So it is a longer-term comment, Lauren. And the kind of growth, as we had shared with you, that those brands had in fiscal 2013, we certainly expect that they will have continued momentum, both based on their innovation programs for fiscal '14 and beyond, as well as the distribution opportunities for those brands. They're obviously not as widely distributed. And Jo Malone in the U.K. is doing tremendously well. Tom Ford has had some terrific success. Aveda has been a call-out for us all year with some of the new products that they've launched, and there's still a tremendous amount of international opportunity for the Aveda brand. So we're very excited about not only our heritage brands and all of the wonderful innovation that we have this year planned for them, and certainly that should make for an exciting year for Estée Lauder, Clinique and M-A-C, but also for that next year. So we have -- we are continuing to diversify our portfolio. Over the next 3 years, we actually expect the mix of those brands to be a higher-percent penetration.

Yes. And I just want to add on this point that this is a deliberate strategy. We have 3 very big and successful brands: Estée Lauder, Clinique and M-A-C. And we need to continue building the rest of the portfolio to critical mass and critical size, and we are very successful. The moment we do that, brands like Bobbi Brown, La Mer, Jo Malone, the moment they reach this critical mass level, they contribute enormously more in absolute terms, obviously, to the growth of the company. And this is happening, and this is making us, again, stronger in terms of ability to grow and ability to penetrate different categories, spanning from skin care to makeup to hair care to fragrances, in the correct way.

Your next question comes from Joe Lachky with Wells Fargo Securities. Joe Lachky - Wells Fargo Securities, LLC, Research Division: I wanted to take advantage of Daniel and ask about Brazil. Historically, it's a direct selling and mass market, but how do you see the market evolving over time? And specifically, do you see door-to-door share of the market deteriorating over time? And then also, can you gain material share with your own stores, or will you require additional department store build-out before it really becomes a material part of the company's business overall?

Yes, you're absolutely right. Door-to-door is the main distribution channel for beauty in Brazil. And if you look at the results of some of the door-to-door players this last year, indeed, we have seen some slowdown in their sales growth. On the other side, the prestige market is growing much, much faster than mass in Brazil, almost 4 points faster, and that's the area where we are focusing on. We see emerging distribution, such as specialty-multi and e-commerce, developing in Brazil. We see the middle class demanding better products, better services, and I believe our brands are perfectly positioned to offer those better products and better brands going forward, as prestige distribution in the country increases. So very clearly, we are in Brazil for the long term. It's one of the key markets. It's one of the largest consumer markets in the world. So I think we're just touching the surface of our opportunities as we launch new brands and develop distribution in the country.

I just would like to add one concept that was in the prepared remark of Daniel that Latin America, for us, is small but provides great opportunity for growth in the future. And our strategy, like in many emerging market, is to grow profitably from day 1. So we are maybe taking less advantage of the speed of addressing the market because we are growing more gradually, but we are growing profitably so that the growth of this market will be accretive to the company average. And we have chosen this strategy for the several reason that Daniel has explained in the prepared remark.

Your next question comes from Wendy Nicholson with Citi Research. Wendy Nicholson - Citigroup Inc, Research Division: Two things. First, on travel retail. Tracey, I think you said that the 15% was ahead of sell-through. And is that just intentional because of the timing of SMI or -- maybe you can explain that gap? And then second thing, someone asked about share buybacks, and I don't think you answered the question whether the earning -- the EPS guidance for 2014 includes buybacks or not.

So in terms of travel retail, there are different -- slight differences in timing between sell-in and sell-through. They're never quite exactly matched from quarter-to-quarter. So no, it had nothing to do with SMI as it relates to fiscal -- the end of fiscal '13 and fiscal '14, since the next wave is, obviously, beginning in July of 2015, Wendy. But we certainly expect continued strong double-digit growth from travel retail in fiscal '14 and believe that it's an exciting channel for us. In terms of our share repurchase and the guidance that we've given, yes, some of it -- there is a slight amount of share repurchase, primarily to offset dilution in -- from our equity program.

Your next question comes from Joe Altobello with Oppenheimer. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: Just wanted to stay on the inventory question in terms of sell-in versus sell-through. I think in the past, you've talked about sell-in trailing sell-through by about 2 points. That was most acute, I think, in travel retail. That's been, I guess, solved this quarter, and I think also in Europe. So could you give us a sense of what sell-through looks like in Europe at this point versus sell-in?

At this point, our sell-in and sell-through are aligned. Even in travel retail, what you mentioned is the beginning of last fiscal year, when there was destocking, then the stock normalized over the year. Travel retail finished in a balanced way. And the same thing we see in Europe. In this moment, I think, our stock situation is pretty balanced versus what it's been in the past few years.

Your next question comes from Alec Patterson with AGI RCM.

I was just curious about your strategy in Korea. It seems like a market which has got maybe more structural issues in terms of the prestige category. And so how are you thinking about handling that? And to what degree does that impact the travel retail segment of Korea?

Yes, that's a great question. I completely agree. Korea is -- there is a structural thing. The structural thing is that during this recession, or at least this very difficult economic situation that the country went through, consumers started to trade down. And so the -- and some local brands did a good job to attract particularly young consumers. So we are working on a rethinking on the way to manage our brands in the future, go back to advertise them in the correct way, analyze the right distribution opportunities and, particularly, manage innovation in a much more locally relevant way, able to attract all the young, emerging consumer segments and their way of thinking. And so that's why we are guiding Korea as continuing to be soft next year because we absolutely need time to fix this market for the long term. However, we will fix this market. This is a very important market for us and for the long term and will have influence on total Asia over time. So we are working very diligently to adapt to the new reality and continue growth in Korea in the future. Onto the travel retail side, on the contrary, there are good news. Our Korea travel retail, as we explained last time, is 13% of the global travel retail and is growing again, because the travel retail is recovering faster, with the -- also the currency situation is improving there. So on the travel retail side, we are doing better and we are growing again, so it's an area of recovery.

Your last question comes from Javier Escalante with Consumer Edge Research. Javier Escalante - Consumer Edge Research, LLC: I have a still -- a question with regards to -- and it had been alluded several times during the call, which is the difference between shipments and like-for-like sales, if you will. And I still fully don't understand essentially -- if you can help us understand, division-by-division, the following, and I'm going to give you a list because I've been kind of like not fully tracking what the crumbles of information that you had given: What was your shipment to department stores in the U.S., given that retail sales were flat? What was your shipment to Western Europe, given that the industry is flat? And what is your shipment in travel retail, given that it's growing only at 10%? And in the case of Asia, why is it that -- I understand that you mentioned about the destocking in China because you overshipped at the beginning of the year. But you mentioned that your retail sales in Asia were up 20%, and that is an acceleration from what you just -- what you saw in the first 2 quarters that you said that same-store sales were growing 2% to 6%. So I'm confused with regards to what is same-store sales, what is shipments. So if you can clarify this in a more systematic way, as I said, department stores in the U.S., if you please, Western Europe, travel retail and China, that will be very, very helpful.

Well, Javier, I'm not sure we can clarify all of those individual areas. I mean, there are certainly differences in timing. As you know, shipments precede sell-through, and shipments are for comp doors as well as new doors. So to the extent that we, along with our retail partners, project sales to occur, and therefore, we ship them product, if the environment changes suddenly, there is a difference between retail sell-through and our shipments that ends up curing itself when we ship less product in a subsequent quarter. So certainly, there are different dynamics that have occurred over the last year, 1.5 years, if you will, between the different channels and the different environments in North America, in travel retail and in other parts of the world. But it all normalizes out over the course of a year or so. So I think that, as you look at our patterns of shipments year-over-year, other than the major call-outs as it relates to destocking that occurred last year and created some challenges for us earlier in the year, very specific to travel retail, by and large, our shipments year-over-year and the retail sales pattern year-over-year is the same with the exception of when we have promotions and launches, and that will obviously affect some of the year-over-year piece. So again, I would remind you that shipments also include new distribution, not just same-store sales. It may be a bit confusing. And perhaps, we will certainly look at clarifying, when we're talking about retail sales, we're talking about our -- the sell-through, if you will, versus the shipments. And so -- but certainly, we can spend some more time with you later on in the day and walk you through that in more detail. If we can provide greater clarity, we'd be happy to do that.

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