Dennis D'Andrea, VP, IR William Lauder, President, Chief Executive Officer Richard Kunes, EVP, Chief Financial Officer Cedric Prouve, Group President

Bill Pecoriello, Morgan Stanley Wendy Nicholson, Citigroup Investment Research Amy Chasen, Goldman Sachs Bill Schmitz, Deutsche Bank Linda Bolton Weiser, Oppenheimer John Faucher, J.P. Morgan Alice Longley, Buckingham Research Sandy Beebee, HSBC Chris Ferrara, Merrill Lynch Amy Chasen, Goldman Sachs Javier Escalante, Morgan Stanley Kathleen Reed, Stanford Financial

Good day everyone and welcome to the Estee Lauder Companies Fiscal 2006 Second Quarter 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, VP, IR: Good morning everyone. On today's call is William Lauder, President and Chief Executive Officer, and Rick Kunes, Executive Vice President and Chief Financial Officer. Also with us today is Patrick Bousquet, Group President responsible for sales and profits in all markets outside of North America. Dan Brestle, our Chief Operating Officer is also here and he will be available for the Q&A session. Since many of our remarks today contains forward-looking statements, let me refer you to our press release where you will find factors that could cause actual results to differ materially from these forward-looking statements. I’ll turn the call over to William. William Lauder, President, Chief Executive Officer: Thank you, Dennis. Good morning everyone and thank you for joining us. I am happy to report that overall the quarter sales came in within our expected range while the bottom line was better than anticipated. We told you we will quickly act at our strategic imperatives and some of the cost containment efforts we started are paying off. I’ll talk in more detail about these actions shortly but first let me recap the holiday season. On the international front where we now derive almost half of our sales and more than half of our profits, the holiday period was strong. Stronger retail sales during the quarter grew double-digits. The U.K had a terrific Christmas. Japan and Korea are starting to rebound and the emerging markets of China and Russia have seller growth. Some of the Western European countries remain challenging due to a relatively weak retail environment and de-stocking by several retailers. But overall the international business was solid. Those of you who follow the U.S. retail sector know that much of the department store traffic materialized just before the holidays. Our sales followed a similar pattern showing strong double-digit gains at retail during the week prior to Christmas. Once again the largest retail sales growth was in specialty department stores like Neiman Marcus in Nordstrom with more temperate increases elsewhere. Estee Lauder’s Annual Blockbuster Promotion grew 11% at retail despite a small price increase. The brands in other holiday sets also proved popular. Nearly 1/3rd of annual segment sales in U.S. department stores take place in the month of December. Estee Lauder Pleasures grew 29% at retail during the quarter. DKNY Be Delicious held flat against its strong prior year launch and Donna Karan Cashmere Mist grew 4% at retail. These positives were offset by declines in Estee Lauder Beyond Paradise and to a lesser extent Clinique Happy. During the quarter we continue to forge ahead on our strategic imperatives. We are in negotiations with potential buyers for Stila and expect to complete the sale by the end of this fiscal year. We are encouraged with the strides we are making with the Estee Lauder brand. The Tom Ford, Amber Nude collection created huge excitement for Estee Lauder both at the counter and in the press. The publicity value was immeasurable with virtually every major franchise fashion and beauty magazine covering our launch. The results were felt immediately. In November and December U.S. sales of the Estee Lauder brand grew an additional 5% points in the limited locations where Amber Nudes were sold compared with locations that didn’t carry the line. Internationally the results were even more startling, for instance in the U.K. only five stores launched the Tom Ford collections, but they saw Estee Lauder sales increased significantly faster than other doors in the country. We are also excited about the consumer response to actress Gwyneth Paltrow as a new face as one of our best selling fragrances, Estee Lauder Pleasures. We saw a measurable impact on U.S. sales when we began running the ads in November and similar starts were seen in the U.K. and Asia. Our Clinique, Lynne Greene is veteran with our company was appointed President of the brand responsible for its worldwide business. Lynne has 25 years of experience in the industry and previously led four of our other brands. Clinique sales continue to grow in the important Japanese market this quarter, even faster than they did in the first quarter. In fact over the past six months we have seen sustained monthly growth giving us confidence that Clinique has turned the corner in Japan. We expect to continue the momentum with the March launch of Vermulite (phonetics) inline of 12 facial products. As we mentioned in earlier calls the brands core product line, the 3-Step Skin Care System represents a significant portion of global sales. Re-launch of 3-Step in Asia and Europe in the second quarter has been very encouraging and we look forward to the U.S. restaging in the fiscal third quarter. During the last three months we also strengthened our product categories. We opened a State-of-the-Art Innovation Institute in Shanghai to help develop advances in skin care. Scientists there will study how genetic affects the skins response to the environment. The company has also established a panel of Chinese dermatologists to advice on research and innovation continuing our long creation of partnering with leading educational medical and research organizations. We expect that studies conducted at the institute will provide us with a better understanding of Asian skin so we can combine ingredients to best meet the needs of consumers in that region. The skin care category was boosted by a number of new products; the Estee Lauder brand is experiencing growth at the high end of the skin care category with its luxury Re-Nutriv Line. The brand added Ultimate Lifting Serum with a suggestive retail price of $200 and Re-Creation Day & Night Creme with a suggested retail price of $900 per set, demand for both were strong. On Origins the new adaptive wire line helps drive skin care growth. The brand was also honored with an industry award for the Best Executed Launch Strategy. In makeup sales of MAC and Bobbi Brown each achieved solid double-digit growth globally this quarter. MAC won five Reader’s Choice award from the Allure Magazine, reflecting its success with consumers. Expansion of our developing brands in new and established countries provides a consistent avenue for growth. I previously shared with you the excitement of that our prospects in China as well as other international opportunities. Patrick Bousquet is here today and he will discuss our foreign business in more detail in a moment. There has been a lot of activity in our distribution channel; we operate in a dynamic market which is evident from the number of consolidations in ownership changes among retailers worldwide. The most significant of these for us is the Federated, May merger and the related store closings. I want to impress upon you the longer-term positive impact we see for our business in this combination as Federated focuses on building two strong national brands Macy's and Bloomingdale. Among other things we will be able to run national television, radio and print advertising which will expand our choice of media outlets and enable us to reach new consumers. As we have said previously a sharp focus on fewer stores should also translate to higher productivity per store. We are also committed to driving growth in our other channels of distribution, our strategic company owned retail stores saw accelerating sales during the quarter up 11% overall led by a strong performance from MAC and improvements in Origins and Aveda. This increase is primarily like to your growth, we haven’t added many new stores this year. Our online business jumped more than 40% in the second quarter driven by both brand specific and retail partner sites. This significantly outpaces the 25% growth reported for total ecommerce sales in the U.S. during the quarter. Now that most of our brands are sold online in the U.S., we are beginning to expand into other top markets. Our Salon business remains healthy, sales were up sharply in the quarter and Aveda continues to migrate it’s business to highly productive concepts salons and has been focusing on stylist training, improved service and consumer retention. It also is accelerating its business overseas, Aveda added 60 salons in Europe and Asia this quarter. In October we marked the first anniversary of Beauty Bank in Kohl’s, our four brands had a successful holiday season. Growth in our American Beauty brand was driven by the introduction of its new fragrance Wonderful represented by its spokeswomen Ashley Judd. All brands had an appealing collection of gift set, those with American Beauty and Grass Roots sold particularly well. Same store sales in the quarter were healthy and we believe the business continue to develop in a steady manner. The travel retail business remains on a growth path with sales rising in the mid-teens for the quarter. I will let Patrick discuss this area in more detail. On the operational front we planned to open more efficient distribution centers. During the next 9 to 12 months we will open locations in Pennsylvania, Japan, China and Spain. Last quarter four new supplier hubs came on line allowing them to ship components to our plant on a just-in-time basis and enabling us to keep lower inventory. We have been increasing production of promotional items in China in line with our five-year plan. We also established an operations team in Shanghai to facilitate in-country purchasing, body assurance and packaging development. Our strategic modernization initiative is moving along. The blueprint phase is complete and we plan to implement SMI at Aveda our private location later this year. We pledged 40 to 45 million in cost saving this year and we expect to achieve the high end of that goal. During the quarter our brands in corporate departments heeded the call for austerity and reduced non-critical spending. As part of this we offered a voluntary separation program for employees in November which enabled us to reduce cost. We expect to realize financial benefits from this program and other budget cuts this year and beyond. We continue to look for savings and indirect procurement in other areas of SG&A. Rick will take you through some of these specifics in a moment. Now, let’s talk about our expectations for the remainder of fiscal 2006. The second half of our fiscal year will continue to be challenged by the transformation of Federated and disruptions at other retailers. However, I believe we have sufficient momentum in other areas of the business to meet our current top line objective. The cost savings we are pursuing should help us to achieve our goals for the bottom-line. Let me give you some details on activities we have planned. The Estee Lauder brand is rolling out the Youth Dew Amber Nude fragrance developed by Tom Ford to broader distribution this month. This will be followed by the Tom Ford Estee Lauder Spring Collection which will feature a more extensive color cosmetic line and will have broader distribution in the initial offerings in the second quarter. Clinique is re-launching its 3-Step System in the U.S. and for the first time is using television advertising. Based on the positive response we’ve seen with 3-Step at foreign market we expected to atleast miss Clinique in the United States. This month Clinique is bringing out extensions to its popular turnaround line with two products designed to improve the skin clarity and smoothness. Two fragrance brands from fashion designers will be introduced in the third quarter. Sean John Unforgivable for men and Missoni for women. Sean John created by music and entertainment icon Sean Combs aims to attract the useful consumer. The Missoni sale for the Italian Fashion House will be launched in Italy, the U.K. and the U.S. Importantly it will give us a stronger strategic presence in Europe. We continue to expect our international business to lead growth, the momentum in China is anticipated to continue, fueled by growth in Prestige Beauty and expansion of our brands. We’re cautiously optimistic about Japan given that Clinique has been able to maintain several months of growth and Aveda is trending of our plans. Korea is showing signs of a turnaround in consumer sentiment and retail excitement. Many other Asian countries are expected to produce sales growth in the mid-to-high single-digits. We believe sales in the European region will rise on travel retail growth and strong retail environments in the Middle East, Russia and Turkey. Western Europe is expected to improve somewhat as destocking abates and we hope the holiday period in the U.K. carries over into spring. The America’s region will likely be driven by growth in our non-traditional channels and the high-end specialty retailers, which we believe will continue their superior performance. We are confident that our strategic direction is sound and the actions we’re taking should drive strong top and bottom-line growth. Earlier this month, we were added to the S&P 500 Index, which affirms our role as an industry leader. Now, I would like to hand it over to Rick Kunes, our Chief Financial Officer to take you through the finical details. Rick? Richard Kunes, Chief Financial Officer: Thank you, William, and good morning, everyone. My discussions today will focus on our results from continuing operations. The Company achieved second-quarter sales of 1.78 billion, a 3% increase over the 1.74 billion in the last year’s second quarter. In local currency sales rose 5%. In today’s earnings release, we added a table of our net sales and operating income by product category and geographic region. As a result, I will not specifically mention those numbers but rather refer you to the press release for details. I’ll just touch on a few keys items. Let me begin by looking at sales by category. In the quarter, Skin Care sales were led by Europe, Middle East and Africa business and continue to benefit from the ongoing success of our La Mer brand. Makeup sales benefited from the continued strong performance from MAC and Bobbi Brown as we’ve mentioned and new and exciting products from other brands also lifted the category. The fragrance business is still challenging with sales declining versus the prior year’s quarter. Fragrance sales were lower in each region, although less sale in Europe where our travel retail business is reported. On a positive note DKNY Be Delicious continues its terrific global success. Christmas sets sold well in the U.S. and several new products were launched in this quarter. Geographically, our overseas business led this quarter’s growth. As you know international continues to be our largest opportunity. Patrick will cover these results but we are particularly pleased with our performance in China. Sales in the Americas came in slightly lower than expected reflecting the mixed retail environment over the holiday season. Once again specialty stores generated solid increases compared with more modest growth in certain key retailers where greater portion of our business is done. We experienced softness in our core brands, our revenue reflecting continued challenges in the fragments category. In the quarter, we made incremental provisions for anticipated sales returns, reflecting dollar estimated impact of announced store closes by certain retailers groups. We also expand; we also continue to be affected by store closes in the Southern U.S. resulting from the hurricanes. Switching to operating income, for the current quarter, we reported a net 8% increase to 250.7 million compared with 232.7 million last year. This reflects an increase in our operating margin of 70 basis points to 14.1%. Our gross margin of 74.3% for the quarter, decreased 10 basis points over the last year. This reflects an increase in obsolescence charges of approximately 40 basis points, proportionate to the change in inventory and unfavorable changes in exchange rate as well as higher travel retail sales which carry a higher cost of sales of approximately 20 basis points. Partially offsetting these increases was the net change in their mix of our business within our geographic regions and product categories. Any effect of a shift in the timing of shipments of promotional groups of approximately 40 basis points. Operating expenses, as a percentage of sales for the quarter decreased 80 basis points to 60.2% from 61% last year. The decrease reflects the Company’s efforts to reduce cost inline with software sales. Aggressive and discipline spending controls relative to marketing and general and administrate activities, as well as a shift of certain spending into the second half of this fiscal year. The improvement was also due to sales growth in businesses with lower operating expenses, combining these improvements represented 220 basis points. Partially offsetting these improvements was a recognition of stock-based compensation, the incremental provision for anticipated retailer returns and the charge related to cost savings initiatives. These items combined amounted to approximately 140 basis points. Looking at operating profits by category, skin care and makeup increased due to higher sales, while fragrance declined reflecting lower sales and to a lesser extent product support spending for the development of new products and brands. In hair care expenses related to a distributor acquisition, customer retention programs and further cost for additional points of distribution resulted in a lower operating income. By region, operating profits in the Americas declined primarily due to cost related to stock-based compensation and the incremental sales return provision I mentioned earlier. In Europe, the Middle East and Africa our travel retail business posted the highest operating income growth with a strong double-digit increase, and certain key markets like France and Germany also posted improvement. Asia Pacific operating income increased primarily due to improved results in some of our larger markets including Korea, China and Japan. I think, I will remind you that our results for both the fiscal second quarter and first half include the negative effect of external factors and business uncertainties which affected our first half sales and operating income by approximately 29 million and 49 million respectively. These factors will continue to affect us throughout the rest of the fiscal year and I will talk about that in a little later on in my outlook. According to our interest cost, we reported net interest expense of 6.9 million this quarter versus 3.3 million last year. The increase is primarily due to outstanding commercial paper during the current quarter. The effective income tax rate for the quarter was 37% versus 37.6% in the prior year. This decrease is primarily because of the tax effect of the Company's foreign operations, a decrease in state and local income tax expense, and an increase in tax credits. At this time we expect our effective tax rate to be 36.7% throughout fiscal 2006. Switching to our financial position, the Company’s cash balance was 370 million at the end of December 2005 versus 578 million last year. For the six months, net cash flows from operating activities improved 28% to 389 million versus 305 million in the prior year period, for the full fiscal year, we expect net cash from operating activities of approximately 550 million. During the first six months, we spent 306 million to repurchase approximately 8.8 million shares of our stock under our share repurchase program. We plan to continue to buy back shares opportunistically, returning excess cash to shareholders. Also, during the quarter, we redeemed remaining 68.4 million of the 2015 deferred stock that was outstanding in that last fiscal year end. We anticipate capital expenditures of approximately 275 million in fiscal ‘06 higher than last year due to our company-wide systems initiative. Regarding our working capital as of December 31, 2005 the inventory was 727 million, an increase of 28 million versus last December. Inventory days were 165 at the end of the quarter, versus 164 last year. A significant improvement compared to the relationship at the end of the first quarter. Our day sales outstanding was 42 days at December 31, 2005 compared to a 43 days a year ago. Let me now update you on a few assumptions for fiscal 2006. We’ve talked about the external factors affecting our business this fiscal year and here is what we have build into our full year forecast and what we have not. Included in our estimates is the following, first as announced by Federated on January 16th, 62 of the 82 doors they planned to close will take place in February. Based on this information, the full-year impact on our sales is expected to be approximately 62 million comprised of both lost sales in the closed doors and in general weakness from the overall business due to uncertainty. This is 12 million higher than our previous estimate. Second, about a 11 million of lost sales due to the hurricanes in the first half of the fiscal year. And third, there will be approximately a 35 million impact to our full-year operating income because of expensing stock-based compensation. But not built into our forecast at this time is 1) the remaining 20 Federated store closures and 2) the divestiture of Federated 55 more retailer stores, where we do approximately $49 million in sales. At this time, we believe these will occur in fiscal 2007. When further announcements regarding these events unknown we may have to adjust our expectations. As we said before we believe the retail consolidation in our sector in the long-term results from better productivity and improved profitability. Our forecast also includes a positive factor that is in our control, our cost savings initiative. We had finalized plans to realize about 45 million incremental cost savings this fiscal year which translates to approximately 75 million annually in the future years, they will come from these major areas. Organizational restructuring which is supported by our voluntary separation program affecting approximately 500 positions will result in current year savings of 24 million and a future annual benefit of approximately 47 million. Annual reductions in the area overhead will total approximately 12 million. This initiative is expected to generate about 20 million in annual savings and advertising and promotion efficiencies of about 9 million. In connection with these savings initiatives we expect to report a one-time charge of approximately 88.5 million in the second half of this fiscal year. And majority of this charge will likely occur in the third quarter. We will continue to be very aggressive in pursuing cost saving and a further reductions are identified that provide a reasonable pay back we will not hesitate to ask. For the full fiscal year, we now anticipate sales growth of approximately 3% in constant currency, and we expect foreign currency translation to negatively impact reported sales by approximately 1.5%. We expect gross margin to decrease slightly with supply change savings offset by the impact of the unfavorable gift program in the first quarter, pressures on our cost resulting from higher energy prices and negative foreign exchange. We now anticipate a significant increase in operating expenses. The one-time charge will affect our operating expenses by approximately 140 basis points. Operating expense margins will also include the effect of lower sales growth and approximately 50 basis points negative impact from stock-based compensation expense. This will be partially offset by the positive effect of our set up cost savings. As a result, a full-year reported operating margin is expected to decline substantially. Our results this year would be stronger if it were not for the one-time charge which would provide benefit from the future periods, any unusual external factors. A reported diluted EPS from continuing operations is now expected to be between $1.61 and $1.68, this range includes approximately $0.12 per share impact from expensing stock-based compensation, $0.13 attributable to the impact of Federated/May. $0.03 related to the hurricanes and $0.26 related to the one-time cost associated with our savings initiatives. These are partially offset by our positive $0.13 from our additional cost savings. Regarding the fiscal ‘06 second half, we expect sales to grow approximately 4% in constant currency, anticipate 2.5% negatively impact of foreign exchange. We expect gross margin to decrease slightly and operating expenses to increase significantly, which will also include the one-time charge, with previously mentioned external factors in our cost savings. As a result, our second half operating margin is expected to decline. Diluted earnings per share from continuing operations for the second half are expected to be between $0.64 and $0.71. This will include approximately $0.40 for the combined impact on the Federated/May merger, hurricanes, stock-based compensation and one-time charge. While we do not give exclusive quarterly guidance, our fiscal third quarter profit in particular is expected to be impacted by the one-time charges, the shift of some of our advertising and promotional spending from the second quarter into the third, store closing and our business disruptions related to retailer consolidation as well as our originally planned marketing spend. As a result, our fiscal third quarter net earnings from continuing operations are expected to be significantly below last year’s third quarter. Therefore, we believe our fourth quarter will increase significantly. Let me emphasize that all of our second half profitability growth is expected to occur in our fiscal fourth quarter. Please remember that we run our business on an annual basis and we experience volatility in our quarterly results. That concludes my comments for today and I will turn the call over to Cedric Prouve. Cedric Prouve, Group President: Thank you Rick and good morning everyone. Let me start by saying our goals for international division are in sync with the global strategy imperatives established by William for the company. Our focus has been and remains centered on the following five goals. Our first goal is to gain market share of our core brands in the most important countries. We look at key markets in terms of their size and strategic importance, critical market for our industry outside the U.S. are the U.K, France, Japan and now China. They are key innovation centers, trend-setting areas and of course possibilities for global competition. We have been successful in our market share acquisition strategies in all of these countries. Japan has been more challenging for a number of years but recent results have shown renewed sales and share gains for our portfolio brand in purchase distribution. Our second goal is to accelerate the roll out of newer brand. Estee Lauder, Clinique and Aramis operate in roughly 30 markets around the world. Followed by MAC which is in 64 markets, La Mer in 41 and Bobbi Brown in 34. While this appears to be a straight forward profit, we usually decide whether to enter a country based on specific criteria including the assurance that we have a clear business model, the ability of the local organization to take on a new brand and the long-term liability of the distribution channel. Generally most of our newer brands open 2 to 3 new markets a year. Our third goal is to act aggressively in key developing markets, the believed countries are at the center of these objectives, where we have focused the most attention and efforts during the past three years. Central Europe, Turkey and Vietnam are the next area that interest in our emerging market strategy. In addition, we are much more focused on Latin America which has produced significant returns in the past several years. Our fourth goal is to accelerate our business initiatives in areas that exhibit great growth potential and have shown strong financial performance. Those are mainly the travel retailing channel and medium. For these two entities acceleration means increased investments that can be regrouped rapidly, it also translates into putting our newer brands into more locations around the world faster. Our fifth goal is to explore and develop new channel such as e-commerce, home shopping, European pharmacies and presenting stores. This also includes increased investment in our customer relationship management initiatives, allowing us to understand our consumer better and to communicate with them more directly. We are particularly successful with our new e-commerce enabled site in the U.K., Korea and Japan. Let me elaborate on our international results. We operate in a complex environment and we cover a wide array of regions, markets and channels of distribution. Our growth rates range from quite low right low in major consent of European market, which is spectacularly high in China, with many stages in between. From the brand perspective, our core brand Estee Lauder and Clinique are growing in the low single-digit. Our Aramis and designer fragrances division is performing extremely well right now led by the enormous success of DKNY Be Delicious in virtually every market. This performance is especially pleasing given the difficulties the overall fragrance category is experiencing. Our Makeup costume brands are also doing so well across the board and exceed our goals for the year-to-date. MAC continues to reach new consumer or customers. It launched in Cyprus during the second quarter and Cyprus is the fourth new country it entered this fiscal year. MAC added 19 new points of distribution internationally in the second quarter bringing the total number of doors outside North America to more than 350. We are embarking on an international rollout of Jo Malone and it is running of our expectation. Most recently we introduced our Bobbi Brown brand in Australia, France, Germany, Greece and Thailand. Let me give you a few more details on our performance by region highlighting the main challenges and opportunities. Much of the performance of our key categories, we have seen a better performance in retail sales and in wholesale in many major market including the U.K., France and Japan. This is due to general destocking and an effort by some of our key retailers to place more emphasis on inventory control. Still Here we are focusing our efforts on retail sales growth since this is a better parameter of business success and market share improvement. In Europe, we’re growing at a slower pace than originally expected. Yet, two starkly different pictures emerged. Beside regional market U.K., Spain, Germany, France and Italy have been challenging with a particularly difficult business this year in France, although Germany showing encouraging sign. Part of the show point trends resulted from the logistical issues addressed last quarter. On the positive side, the rest of Europe Middle East and Africa are well ahead of our budgets and growing at double-digit rate with the best earnings coming from Eastern Europe and the Middle Eastern countries. Our Asia Pacific region is showing healthy growth. China is having an increasingly significant impact. Hong Kong continues to benefit from the strong interest of Mainland tourism and aggressive development in Macau. China remains a key market for growth and sales continue to increase dramatically. Our business is evolving advance to our new cities and expand traditional retailers. The Estee Lauder and Clinique brands currently are in 66 stores compared to 41 a year ago. Overall this fiscal year these brands have seen high double-digit like total growth. Estee Lauder and Clinique remained the two fastest growing prestige brands among the top five in the Chinese market today. Estee Lauder had nearly a 100% sell through on its Christmas offering were Clinique continues to build on its core future franchise in the region. We currently sell 8 brands in China, with new entries La Mer, MAC, Bobbie Brown, Aramis, Tommy Hilfiger and Donna Karan gaining tremendous spread and word of mouth. As you know we have been in an investment mood in China to build our business, we expect to start making a modest profit there next fiscal year, well ahead of our earlier forecast. Korea is finally showing signs of the turn around, as exhibited by positive consumer sentiment and important move by our retail partners. I am referring more specifically to the recently announced public offering of Lotte Department Store which could mean increased capital investments in the Korean (indiscernible) sector. It also appears that the consumer credit issue experienced for the past two to three years are behind them. Consumer spending appears to be on an upward claim in Southeast Asia as well. Australia has been a more challenging market, our business there is erratic at the moment because of a very difficult fragrance category overall and the announced sale of our largest customer Myers. Nonetheless we still enjoy terrific market shares in that region. The news from Japan is relatively bullish and we are cautiously optimistic. We expect low-single digit growth for the full-year led by a solid performance from Clinique, the standardization (phonetics) of our Estee Lauder business and solid gains from most of our all other brands. Department store sales projections are also improving and Beauty remains one of their best performing categories. Although Latin America is a fairly small percentage of our international business we continue to experience great results in top and bottom line growth and particularly in prestige market share. The reason is of increasing importance because of the growing clouds and larger number of Latin customers in North America. Sales overseas are also taking place online, we have established ecommerce site in the U.K. for Estee Lauder, Clinique and Jo Malone. Our products are sold on Google (phonetics) and (indiscernible) website as well. And after that we are assigning selling on local site in Korea and (indiscernible) in Europe. MAC and Origins we launched e-commerce sites in the U.K. in March. Finally our travel retailing division which operates in a traditionally volatile environment continues to perform extremely well and is projected to exceed our expectations again this year. Total retail incomes to follow the trends that we see geographically and by category. As a result key European market under fragrance category except again for the overwhelming success of DKNY Be Delicious are more challenging areas. The outlook for growth remains positive for the channel, thanks to increasing passenger traffic and ever-expanding airport capacity worldwide. To conclude, we believe that international business will contribute a larger share of the Estee Lauder company sales this year and as mentioned by William we’ll get as closer to the 60% mark which we aim to surpass very soon. Thank you for your time and that concludes our comments, we will be happy to take your question.

Q - Bill Pecoriello: Good luck, well good morning everybody.

Good morning.

Good morning. Q - Bill Pecoriello: Question on the, if you could help us out in the quarter, the advertising promotion, how much was it down, how much had -- you shifted into the back half and how much will it be down on the full year? That was the first part of it, and also how much on the overhead cost, how much of the 45 million on the full-year is already been realized in this quarter if any? A - William Lauder: Our year-to-date basis Bill, our A&P spending as a percentage of sales is below last year, so that gives you an indication for the full-year obviously be in line. So, it gives you an indication of the amount of spending that shifted into the third quarter. Regarding our 45 million, there’s very little of it in the second quarter, just a few million dollars that had been achieved, and looking at the second half of the year the bulk of that savings are actually going to come into the fourth quarter which is another reason why our fourth quarter profitability is so high. If you would have split the remaining savings for the rest of the year it’s about 1/3rd in the third quarter and 2/3rds of that savings in the fourth quarter. Q - Bill Pecoriello: And then just on the advertising promotion, I know there is efficiencies you’re looking at but, as you’re trying to turnaround the core brands and improve your marketing campaigns, what gives you the confident you can do that and improve the top line while you are, starting or holding back on the advertising promotion? And then another part is just on the Federated/May I wanted to follow-up, you know move that up to $0.13 impact of few stores closing in this fiscal year only 62 of the 82, so how much were the provisions in the second quarter. And why did you pump that up to $0.13? A - William Lauder: Well, we pumped it up because they announced, I think it was the second week of January that rather then close the 43 doors that we had previously been announced that in February that they were going to change that number to be 62. So, we can only provide based on the information that we have. And when they change their guidance we obviously had to change, change the provision that we made, so that was the reason for the change. Regarding the A&P spending, you have to remember that some of our fastest growing brands used a different marketing vehicle to drive their business. So, we are spending buying the core brands, we are increasing spending buying those core brands but just the percentage relationship changes as some of those newer faster growing brands are a bigger percentage of our business. Q - Bill Pecoriello: Okay. Maybe you could just clarify for me how much of the $0.13 wound-up in the provision in the second quarter on the Federated/May store closing? A - Cedric Prouve: Year-to-date through the first half, if you just give me a second I will let you know. About $0.06 of the total year’s impact we anticipate has happened through the first half of the year. Q - Bill Pecoriello: Thank you. A - Cedric Prouve: Okay.

We’ll go next to Wendy Nicholson with Citigroup Investment Research. Q – Wendy Nicholson: Hi, my first question has to do with your discussion of, a couple of new distribution centers to be opened over the next year. I think, that’s kind of makes the itch because I remember in the first quarter one of the big things that went wrong was some execution issues in opening up the DC in Belgium, so are there -- things are going to do differently this time to make sure there isn’t sort of the same level of business disruption? A – Daniel Brestle: Wendy, I am -- this is Dan Brestle, I am sorry you are itching. We’re not, the mistakes and problems we had in the regional distribution center in Belgium with just one, one issue, -- one particular group of issues. We’ve successively opened up a PADC with most of our brands in Pennsylvania. We just opened up a new distribution center in U.K., we have one, we had just opened up in the same timeframe one in Canada for MAC. So we know how to open distribution centers, we had in one half issue that we think we’re in the process of straightening up. Q – Wendy Nicholson: So nothing funny that we need to anticipate on the balance sheet in terms of higher inventory levels or anything like that? A – Dan Brestle: We do not think so, no. Q – Wendy Nicholson: Okay. And then just a quick follow-up, can you give us a sense of how big China is expected to be this year in dollar terms? A - Cedric Prouve: Well, right now we think it’s going to be close to 75 million. Q – Wendy Nicholson: Terrific, thanks very much.

And we’ll go next to Amy Chasen, with Goldman Sachs. Q - Amy Chasen: Can you, I guess just following up on this A&P. Rick, can you just give us the exact number that of A&P that was shifted from the second quarter into the third quarter? A - Richard Kunes: Amy, our plans always call for spending more A&P in the third quarter; I mean we have three things going on in the third quarter that we’ve known about for the whole year. We have the launch of Missioni, we have the launch of Sean John and we have the television advertising which is the first time that Clinique has ever done that supporting 3-Step. So those activities were always planned. But we do have control in essence of short-term marketing activities and we clamped down very hard on those in the second quarter until we establish our savings program, because we want to make sure that we achieved the $45 million that we committed to. Now that we that, we are releasing some of those controls if you will, and so some of that spending is moved into the third quarter. But, we are not really going to get into this quarterly, what happen what didn’t happen, I mean we run our business as you know on an annual basis and, we really try to avoid just this type of discussion which is explaining one quarter to another quarter. Q - Amy Chasen: Okay and just on the Europe and the U.K., I’m a little bit confused about the U.K. because I spot that William said it was strong but then Patrick indicated that it was weaker. Can you just give us an overall comment about the U.K. in the second quarter? And then I believe you said in the press release that Europe would be the strongest growing of all your regions in the second half, but again that didn’t sound to be consistent with them with Cedric’s comments. A - Cedric Prouve: Yes, I am going to -- Patrick again, I didn’t want to confuse you actually, I was talking about the five largest markets in Europe. And U.K. clearly is the best performing of all of them, what I meant is, I meant to say that the U.K. has slowed down compared to the historical growth we’d experience. We’re still growing mid-single digit right now at MAC and wholesale and the retail is actually outperforming that number. A – Dan Brestle: Amy? William was referring to the Christmas holiday season when he referred to U.K. specifically. Q - Amy Chasen: Okay so do you, do you still expect that Europe is going to be the slowest growing region and why given the strong second quarter performance? A - Cedric Prouve: When you say Europe we have to, we have to define because we are, the slowest growth is going to be in the, lets say the larger continental market. A - Richard Kunes: And I think let’s not, let’s make sure we understand, embedded in our European number that you see regionally is also travel retail, is also the more effect the faster growing, emerging parts of Europe, Central and Eastern Europe and Russia as well as the Middle East. The big issue which is what Patrick talked about is the five largest most established markets in Western Europe do not have the same retail strength that these other markets decidedly. Q - Amy Chasen: Okay and last but not least, just can you tell me whether third quarter earnings excluding the charges will be down? A - Richard Kunes: Yes. Q - Amy Chasen: Thank you

We’ll go next to Bill Schmitz with Deutsche Bank. Q - Bill Schmitz: Hi good morning. A – Richard Kunes: Good morning Bill Q - Bill Schmitz: I think you are going down Europe thing, but can you just breakdown the sales in Europe by travel retail which just saw western European sort of developed countries and then emerging Europe and Middle East? A - William Lauder: You know we’re not going to, Bill, break it down by the three elements but we did mention that TRD was up mid double-digits in the second quarter, for the year we are anticipating TRD to be up high single-digit. So the second half growth rate of TRD business a little bit slower than it was so far year-to-date. And Cedric did mentioned that the bigger markets within Western Europe are slower growing than Eastern Europe and the Middle East. So, hopefully that gives you a picture of what they, what it is going to look like. Q - Bill Schmitz: Yeah, I mean just because I think you are meaning my models wrong, but I think those countries you decided are about 65% of European sales. So to understand how in the quarter Europe could have been up a 11% when you had effectively flat sales in the five largest countries. So something in its travel retail grew double-digit, there must have been absolutely amazing growth in Central and Eastern Europe and the Middle East is that a good assumption? A - Cedric Prouve: Well we don’t have flat sales in all five big market, we have positive sales growth in Spain and U.K. and yes we have a very strong growth in Russia and Central Europe and in Italy. A - Richard Kunes: Last year in the second quarter Europe growth was relatively flat so we are up against a very easy comp in the second quarter in Europe. Q - Bill Schmitz: Okay great that’s fair. All right, okay just on the Stila discontinued operations charge setting up 69 million. What kind of, while into that math, I know there is an impairment there, but I want to know the impression that Stila sales were, quite less than $100 million? A - William Lauder: Well, I mean going into the math and you read it in the Q, actually doubled that sales, anticipating loss on sale, I mean there was, we had a purchase price that were in there, we also had ongoing investments in this Stila business were we grounded and then we’re comparing that investment in its totality eventual -- we anticipate to going from the sale of the business. Q - Bill Schmitz: Okay, great. I am sorry, I apologize if almost done but just one last one if I could, as a percentage of sales going forward, I know the old model was that, do you going to increase that and kind of funded with lower other G&A cost. Is that still a safe assumption? A - William Lauder: And fund, what specifically Bill, I am sorry. Q - Bill Schmitz: Higher A&P spending? A - William Lauder: You know, we said that our A&P spending as a percentage of sales would start to flatten out because of the growth of the brands that grow much faster and don’t spend as much in A&P spending. So we actually said that our A&P percentage will begin to flatten out but that we will continue to invest in A&P behind our core brands more or less equal with the sales growth that we anticipate. A - Richard Kunes: In other words, the absolute value of investment in A&P and the key brands that use the A&P particularly as a vehicle will continue to grow. Because of the mix of our business and the growth of brands which use a lower portion of A&P in total you will see a percentage change. Q - Bill Schmitz: Okay got it, that makes good sense, thank you very much.

And we’ll go next to Linda Bolton Weiser with Oppenheimer. Q - Linda Bolton Weiser: Thank you, could you give a little bit more color on Japan because I think you said Clinique was up, you had all of Japan was down in the quarter. So what was down? A – Cedric Prouve: The Estee Lauder brand was still down but we, we still minus one to zero growth in December, so we are very encouraged by the stabilization of the Lauder brand. As William said Clinique has been growing for six consecutive months now so that is a very good performance for us. And our other brands, the makeup brand like MAC, Bobbi Brown are growing very high double-digit and Origins is a bit down right down. Q - Linda Bolton Weiser: Okay, and then you have said, yeah that MAC and Bobbi Brown were up double-digit globally, can you give some indication how they were in the Americas? A - Richard Kunes: Both brands were extremely strong in the Americas. Q - Linda Bolton Weiser: Up double-digit or just single digit? A - Richard Kunes: Yeah, high double. High double-digit. Q - Linda Bolton Weiser: Okay. A - Richard Kunes: On a nice -- on a very healthy basis. Q - Linda Bolton Weiser: Okay so then, I mean I would assume that the core Estee Lauder and Clinique brands were down in the Americas in the quarter, was one of them kind of down more than the other? A - Richard Kunes: I think you can refer to the MPD data for something that maybe pretty specific. It is suffice to say that the brand, both of those brands did not perform up to our expectation and in fact we are very concerned about whether or not they can continue to gain share at the rate we are expecting them to perform. But we see both brands having tremendous potential to write their direction, and we’ve seen some recent trends which yielded results. Q - Linda Bolton Weiser: Okay, and then so can you just explain a little more than why the Americas will go to being the highest growth region in the second half versus the lowest in the second quarter? A - Richard Kunes: I don’t think we said the highest and I think it’s actually probably going to be the second fastest growth out of the three and really not by a great deal more than we are anticipating the growth in Europe. Q - Linda Bolton Weiser: Okay, and were the Kohl’s sales up in the quarter versus prior year when you had sales in the prior year? A - Richard Kunes: Comp store sales were up very nicely at retail in Kohl’s where we are anniversarying. Q - Linda Bolton Weiser: Okay and then finally, in terms of your store openings, do you have a target for that globally for FY’06 versus FY’05? A - Richard Kunes: If you are talking about our own retail store openings, no we don’t, we are opportunistic and strategic and looking for location, but we do not take into our plans any expected number of stores. A - William Lauder: We have about 400 stores right now in total. Q - Linda Bolton Weiser: That’s globally? A - William Lauder: That’s globally, yeah. Q - Linda Bolton Weiser: Okay, I thought, could you say you opened something like a couple of hundred or something that’s or did I misunderstand? A - Richard Kunes: When we talk about our own retail stores, these are our own retail branded stores. Q - Linda Bolton Weiser: Oh okay. A - Richard Kunes: Then we make reference to doors which may be either our own doors and or with partnered locations with department stores at Perfumery. Q - Linda Bolton Weiser: Okay thank you, I got your views on that, thanks very much.

And we go next to John Faucher with J.P. Morgan. Q - John Faucher: Yes good morning everyone. A couple of accounting questions actually; first of just for my own notification. Travel retail from a segment standpoint, is my understanding was that was flowing through the fragrance segment or is that simply fragrance and travel retail flows through there, can you clarify that? A - William Lauder: Sure, it flows through whatever segments, whatever categories the sales are in and I think where the confusion you might have trying to set, we always say that 60% to 65% of the overall travel retail business is fragrance related, it’s less of our percentage from our business but the overall travel reach out is a high waiting towards fragrances. Q - John Faucher: Okay so then to follow-up on that is, are your fragrance trend, I am assuming your fragrance trend in travel retail are dramatically better than your overall fragrance trend is that a fair assumption to make? A - William Lauder: Yes. Q - John Faucher: Okay and then one other accounting question which is, obviously with the shift in spending we are seeing pretty decent amount of volatility surrounding your advertising and promotional spending and including for lot of earnings volatility. And I am wondering have you considered, using more of a sales curve type of accounting system where your marketing spending gets allocated across your, based on revenues as oppose to on a cash basis, lot of consumer companies do this and it tends to limit some of the quarter-to-quarter volatility is this something you thought about? A - William Lauder: I think John that my, I think I understand what you’re asking and let me just sort of give you response to what I believe you’re asking. The problem you have is, is to match it up against our sales, you realize that our sales, our net sales in shipments in any given period lead the actual sales through to the consumer while the advertising and promotional spend comes for closer to the time period associated with the consumer sale. So to match those up will be very difficult in actually driving the business through to the consumer. This is an example, if you restart building inventories in the late spring and early summer where the holiday shipments would come in the later part of the first quarter and the early part of the second quarter for advertising that comes in the later half of the second quarter. That’s just an example of the flows and usage of the cash and then distributions and the retail sell through. So while we, while report you the health of our retail business sell through from the retailers in the fourth quarter that is actually reflective of the sell through of inventories shifting to them in net sales booked in the latter half to the first quarter and the second quarter. Yes, the spend associated with that comes later in the quarter. Q - John Faucher: Okay A - William Lauder: Did that answer your question? Q - John Faucher: Not sure, I think, I’ll try to follow-up with that offline, but and I guess the question is you guys are expensing your advertising promotions on a cash basis, right went it goes out the door as oppose to trying to match up spending with revenue, if you did 24% of your revenue in the second quarter you book 24% of the A&P that’s not how you do it right? A - William Lauder: We do John, we do match it up, but we don’t match it up as a percentage of our shipments, we do match up our spending, but I think the real basic issue is the fact that, the market and the business environment that we are in now is, it changes daily, weekly, monthly and we have to change our business plan based on what we see competition doing and what we see as opportunities, what we see that we have to cut back spending. So, when we say is there more volatility, I think the answer is yes, but I think that the, the world in sense is more volatile because the world reacts more quickly to changes that we are going on. Q - John Faucher: Okay. Thank you very much.

We’ll go next to Alice Longley with Buckingham Research. Q - Alice Longley: Hi, my question is try to travel retail as well, are your margins on travel retailing, they are much higher than the corporate level, are they even higher than the average for the year in the December quarter for seasonal reasons? A - William Lauder: No, the one, they are fairly consistent on a period-over-period basis but they -- you are correct, they are much higher which is one of the reasons that our profitability was pretty strong in the second quarter. Q - Alice Longley: Okay and this is adding to questions that were asked earlier, which category through driving growth in travel retail, most in which brands, in other words was Makeup, it grows into travel retail faster than fragrance growth? A – Cedric Prouve: Makeup followed by skin care and the fragrance was difficult, as far as better than the company but… Q - Alice Longley: So, when Makeup was driving growth to most was that -- which brands? A – Cedric Prouve: It was the Makeup of these brands that I mentioned MAC, Bobbi Brown and also Clinique Makeup perfume, doing well. Q - Alice Longley: Okay, excellent. Thank you.

And we’ll go next to Sandy Beebee with HSBC. Q - Sandy Beebee: Hi, I had one question just on the shift in A&P spend. I guess where your margins came here much strongly both, in the International market and that I would have thought that the most of the shift in A&P spend would have been in the U.S. between quarters, so can you confirm that over there in International? A - William Lauder: No, your assumption is wrong about the U.S. versus International. I mean when we made a decision to control expenses, we just didn’t control them here in the U.S. but we tightened up on a worldwide basis. So, there is a certain amount of flexibility that we have with our spending, and there was a certain amount of that spending that we held off on a worldwide basis in the second quarter which shifted in to the third. Q - Sandy Beebee: Okay, and then I had one another question just in terms of, the corporate downsizing that you are undertaking, and I guess as you gone through the process of finalizing the details, have you found that maybe the opportunities extends beyond just 2000 and fiscal 2006 and that maybe their further opportunities to streamline the organizational structure, not just from the supply chain perspective but from a fixed comp perspective as well? A - Richard Kunes: Sandy, we believe that this is a virtual cycle of net, this is never stopped. Q - Sandy Beebee: Okay, so it’s not just a question of when you are being really top in sales you look for the opportunity that reduce that cost, this is something maybe that could happen beyond fiscal 2006. A - Richard Kunes: We expect it to be an ongoing constant effort well into the future. Q - Sandy Beebee: Okay, thank you.

And we’ll go next to Chris Ferrara with Merrill Lynch. Q - Chris Ferrara: Hi, how fast does the Estee Lauder and Clinique brands together have to grow in the Americas in a longer-term, do you guys to be at a total company top line rate that you’re comfortable with? A - Richard Kunes: Well, no growth is too high it’s the best way to put in and obviously with these two big core brands representing a significant portion of our total business. These brands need to grow at the mid to low single-digit on a reasonable basis in order to provide a solid base for the faster growing brands to pull the total along at a healthy cliff. Q - Chris Ferrara: So, you need 3% to 5% essentially that. A - Richard Kunes: That’s about right. A - Richard Kunes: You know on a worldwide basis. A - Richard Kunes: On a global basis, yeah. Q - Chris Ferrara: On a global, so I mean would it be fair to expect obviously U.S. to correct that I mean, so you might only need 1 to 3 into that? A - Richard Kunes: Given the environment, given the retail environment in North America as well as the penetrations of these brands to the total, our expectations are that we will continue to see lot faster growth for these brands internationally that we’ll see in North America. Q - Chris Ferrara: Yeah, yeah also then one other, actually one other kind of silly question when you can say mid double-digit, so that mean mid way between double-digits and triple-digits? A - Richard Kunes: No, no, we’re not an internet company, I’m sorry we don’t report that (indiscernible). A - Richard Kunes: Mid teen, We are a consumer company. Q - Chris Ferrara: Got it, thank you. A - Richard Kunes: Well.

And we’ll go next to Amy Chasen with Goldman Sachs. Q - Amy Chasen: I just wanted to follow-up William on the comment you made about Estee Lauder and Clinique and being quote very concerned whether they can gain share at the rate that you currently expect. Number one, was that a global comment or worldwide comment or just the U.S. comment? And number two, what do you expect to do about it, I mean what are you guys thinking about this in your strategic plan, what, how you’re moving forward on that? A - William Lauder: Amy, I’ll refer you the last answer to my question which is the high penetration of both the Clinique and Estee Lauder brands and share in the North American market, you’ll realize that in many of the, at the part -- the largest departmental store markets for us in the world, with Clinique as the number one brand and Estee Lauder as the number two brand. MAC is rapidly approaching in each of its points of distribution of being the number one, two or three brand. So we have very significant share as of the market in all of these locations. The real key question is can these brand continue to grow, we must make sure these brands continue to grow at or above the department average trend, so that atleast maintain if not continue to expand their share. We’re not particularly comfortable nor happy in allowing brands other than our own brands to grow at a faster cliff than the department. So our goal is to make sure that these brands continue to grow at a reasonable amount of fair cliff, number one, to support our plans and expectations you refer the other comment on the 3% to 5% growth that we’re looking for. And number two, to make sure as they continue to expand and expand their share, those are the key core concerns and obviously anyone given moment when the price for foreign exchange they’re well are very pleased when the brands so performance well. We get concerned and we say okay guys what you’re going to do to make sure you can continue to expand your share. We are seeing very healthy share expansion for Clinique brand particular as well as the Estee Lauder brand in many of our international markets and we’re very pleased with their share in the key core categories such as Makeup and treatment in Europe as well as the U.K. as well as the continued growth for Clinique we mentioned there were historic growth for Clinique in Japan and a continued growth for the Estee Lauder and Clinique brands in Asia. All of these factors go into the success of the total brand. And as we talked about before our long-term goal is that our share of the total business especially for Clinique and Lauder the more mature developed brands in North America will grow to faster cliff internationally and we hope as the U.S grows at a nice cliff, international grows at a healthier cliff, and that we expect in the long-term the 60% plus of our sales for these brands will come from outside of North America. Q - Amy Chasen: Right and so the question is William you’re concerned because kind of on an overall basis these brands to stop, what do you plan to do to get them going? A – William Lauder: With the number of different efforts I think we talked about a number of them in the call not only the initial efforts both for the repositioning of the Estee Lauder brand using Tom Ford as an example as well recreation and reach a neutral going after the higher end business which as you see are growing at a far faster cliff, and we’re doing, we’re taking these efforts around the world in a more aggressive manner. We talked about the 3-Step efforts with Clinique we are first in Europe and Asia we were looking at restaging of 3-Step as well as the use of TV and other vehicles to drive this key core segment of the total Clinique business and now bringing into North America. There are number of other different efforts, that both brands are making in key category, and one of the key efforts just to continue to make sure that locally, regionally as well as globally these brands both on a category basis in overall continue to be relevant and in demand by the consumer in a strong basis. Q - Amy Chasen: Okay.

We’ll go next to Javier Escalante with Morgan Stanley. Q - Javier Escalante: Good morning everyone, I have a quick question with regards to something that we notice recently, we had seen some of your products in Cosco basically Estee Lauder product, Origins products. I would imagine that this is not that you guys are piloting channel diversification this way, is this diverted product do you sell, well actually that these kind of the control given the reasons with brand equity. A - Richard Kunes: Yes your assumption is correct these are diverted goods we are making every effort to find the source of these goods and we will close them down. Q - Javier Escalante: Thank you.

And our final question of the day will come from Kathleen Reed with Stanford Financial. Q - Kathleen Reed: Good morning. Just quicker questions on your over all global fragrance business with sales down and profits down 35% can you just remind us if had a major fragrance launch in your prior year quarter and if not was it mainly just declining department store traffic and I guess coupled with weaker, into overall international sales just in fragrance, wouldn’t there another problem? A – William Lauder: It actually all of the above, some others factors, there is a number of factors that go into the overall global fragrance performance trend right now. Specifically we are looking at a shipping of the spend from one brand to another in the Estee Lauder brand in particular, or the Estee Lauder brand had a significant spend last year against it’s Beyond Paradise fragrance and they shifted this spend from a predominate spend of Beyond Paradise into the Pleasures brand which we share with you as experience some great results, and as the result go, the Beyond Paradise segment has been falling off. So in addition we cannot ignore the fact that one of our other key fragrance brands, our Tommy Hilfiger brand continues to show extraordinary weakness in North America and it is dropping at a rapid rate and unfortunately we are doing all we can is to support the brand but the overall health of the brand is the concern to us. In additional of course let me reiterate these strategic importance especially they are not channel, just the channel for distribution of the overall fragrance sector and the efforts we are making into it sort of up the performance in the total sector. We believe that the fragrance sector is very important in our key strategic markets, and we will continue to be, but I will remind you that the best analogy I can draw about the fragrance business is the movie business. There is lots of launches going on all the time ahead with the successful in it, and its not added its on to the net direct quickly, the consumers attention is that way, the retailers is attention is that way, and we will continue to find ways to make sure we can make this sector and make a contribution to the total efforts of the company. I want to, just leave you with a few final thoughts about our company, we have a uniquely powerful global franchisee that provides us with abundant avenues for growth, these avenues include the launch of innovated products and new brands, expansion in new and existing markets and particularly emerging markets and the development of other channels of distribution, distribution are underway in each of these areas and are positioning us to continue our 59 year record of uninterrupted annual sales growth. By maintaining our rigorous expansion discipline I assure you that this is going to help us grow and give our benefits to the bottom-line. I am very excited about our company, and with the future goals. And I want to thank you very much for joining us this morning and for your very challenging question, thank you very much.

That does conclude today’s question and answer session. If you were unable to join the entire call, a playback will be available between 12:30 Eastern Time today through February 2nd. To hear a recording of the call, please dial toll free 888-203-1112, and the passcode for that replay is 3278543. That conclude today’s Estee Lauder conference call, I would like to thank you all for your participation, and wish you all good day.