William P. Lauder – CEO, Director Daniel J. Brestle – COO Richard W. Kunes – CFO, EVP Dennis D'Andrea – VP of IR Fabrizio Freda – President, COO

Bill Schmitz – Deutsche Bank Nick Modi – UBS Ali Dibadj – Sanford C. Bernstein & Co Wendy C. Nicholson – Citi Group Alice Longley - Buckingham Research Chris Ferrara - Bank of America – Merrill Lynch Linda Bolton Weiser - Caris & Company Andrew Sawyer - Goldman Sachs Lauren Lieberman - Barclays Capital Connie Maneaty - BMO Capital Markets

Good day everyone and welcome to the Estee Lauder Company’s fiscal 2009 2nd 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: Good morning, everyone. We have on today’s call: William Lauder, Chief Executive Officer; Fabrizio Freda, President and Chief Operating Officer; and Rick Kunes, Executive Vice President and Chief Financial Officer. Dan Brestle, our Vice Chairman and President of ELC North America is also on the call and he will be available for questions. Today’s call will have a slightly different format. Rick will discuss our second quarter results and full fiscal 2009 outlook, William will give a view of the market conditions and how we are addressing them and Fabrizio will provide an update on our strategic plan, including actions already taken. We will then open up the call for questions. We have allotted and extra thirty minutes to allow plenty of time. 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 will find factors that could cause actual results to differ materially from these forward-looking statements. Now I will turn the call over to Rick. Richard W. Kunes: Thank you Dennis and good morning everyone. I will provide an abbreviated version of our second quarter financial results so that we can devote more time to our long term strategy. Let me refer you to this morning’s press release for details of our product categories and geographic regions, as well as other components of our P&L. I also want to refer you to the second quarter and full-year update we announced on January 16th. In local currency, sales this quarter decreased 6% over last year. Market conditions in the US, travel retail and some important European countries came in far below our previous assumptions. In addition, the strengthening of the dollar caused foreign exchange translation to negatively impact sales by 6 percentage points, resulting in reported sales declining 12% to $2.04 billion. Net earnings for the quarter were $158 million, compared with 224.4 million in the prior year quarter. Diluted EPS was $0.80 compared to $1.14 in the prior year quarter. As you are well aware, economic pressures, unemployment, and consumer sentiment continue to severely worsen around the globe, affecting holiday retail sales. However, we believe, based on both internal estimates and third party sources, that we gained market share in our distribution on a global basis. This bright spot underscores our strategy to continue to make prudent investments in our brands. In the US, where consumption patterns are most apparent, consumers across all income levels drastically curtailed their spending. In the past few months, a major shift in consumer psychology regarding shopping and buying has affected manufacturers and retailers alike. The luxury sector, which had remained robust through mid-September, was especially hard hit, declining 24-28% during the November – December period. Overall, during the holiday season, people still bought gifts, but they spent less and bought fewer items. As a result, the 2008 holiday quarter ended up being one of the worst in decades. Average chain store sales reported by US Prestige department stores declined 12%. Beauty sales in that channel decreased 7%. Retailers slashed prices across fashion and luxury categories, but they largely held Prestige cosmetic prices firm, which helped us maintain our strong brand equity going forward. In the Americas region, our sales for the quarter fell 12%, largely because of the difficult US department store business. Most of our products are positioned between basic staples that consumers need and more exclusive, luxury goods that they desire, and our results reflect that. We didn’t perform as well as some household product companies, nor as poorly as some luxury good players, many of which have beauty products in their mix. Consumers who purchased in the quarter were largely enticed by value, innovation, and newness, which helped some of our brands. For example, the Estee Lauder and Clinique brands enjoyed strong sales of value-driven gift sets, particularly skin care offerings. Retail sales for products in the US department stores declined 6.7%, according to MPD, because it was difficult to compete with huge markdowns in other categories in the stores. We also suffered from de-stocking. Our shipments fell approximately 19%, but on a bright note, MPD reported that we gained some share in that channel. In particular, Clinique sales outpaced the beauty industry and its share rose 80 basis points. Results in other US channels were mixed. Sales in our freestanding stores and salons suffered the effects of the downturn, but we generated gains through our e-commerce business. Many consumers were enticed with free shipping offers. In fact, December 15 was the biggest online sales day in our history. Our results in Europe, The Middle East, and Africa were also weaker than expected. Sales declined in most established countries. Some retailers in Europe are also managing inventory tightly. We experienced trade de-stocking throughout most major countries and we believe this will continue for at least the next quarter. Data from major Western European markets indicate we grew faster than Prestige Beauty. In addition, certain emerging markets, notably The Middle East, did well. Sales in our highly profitable travel retail channel fell sharply, due to a fall-off in passenger traffic and retailer de-stocking, as well as the impact of weaker currencies in certain countries, particularly the Korean Won. Although sales decreased in the Americas and Europe, they grew 8% in Asia Pacific. In local currencies, sales rose 13%, with many countries up double digit. The economies in this region so far, have held up better than in other parts of the world. That said, Japan officially entered a recession during the quarter, tempering the momentum we have seen. Nevertheless, our sales in Japan grew in the low single digits over the same period last year. Our data for the first six months of fiscal 2009 indicates overall share gains of 70 basis points in Asia, within our distribution. Despite the overall sales increase this quarter in the region, growth has been tempered by a softening retail environment, which we believe will continue and may worsen further. Looking at our business by category, we had the best performance in hair care, showing gains across Europe and Asia. Skin care grew double digits in the Asia Pacific region. Skin care is our most profitable segment, and will be a major focus of our strategy. Moving on to working capital and cash flow, our cash balance at the end of December was $729 million. Our days' sales outstanding were 46 days this quarter, compared with 43 days last year. So far, we have seen no material issues with either our retailers or our suppliers. We moved a few of our smaller customers to a “cash on delivery” basis. For others, orders continue to flow and we are being paid regularly. We will continue to keep an eye on the financial health of the parties with which we do business. Despite lower sales in the quarter, our inventory days improved to 166, compared with 174 days last year. Reflecting positive working capital trends, our net trade cycle improved to 117 days from 149 days a year ago. For this six months, net cash flows from operating activities were $217 million, compared with $362 million in the prior year period. And, we spend $158 million for capital expenditures in the first half of fiscal 2009, reflecting tighter control on uses of cash versus our plan. As our results indicate, we are not immune to the negative global economic conditions confronting many companies. However, we remain relevant in the market place with strong fundamentals and solid long-term growth potential. We are profitable, our cash flow is relatively strong, and we have enviable assets and the ability to grow our market share. However, given the climate, we are being prudent and taking aggressive steps to protect our business. Here are some of the actions we have taken. In our first quarter, we implemented belt-tightening plans in every affiliate brand and function to protect profits as much as possible during the global recession. For the first half of this fiscal year, we reduced planned operating expenses by approximately $120 million from existing cost-containment efforts and belt-tightening. This equates to about $250 million in expected spending reductions for the full fiscal year. We have ample liquidity and access to credit. In early November, we closed a $300 million offering of five-year notes as a defensive measure and to provide flexibility for our business opportunities. To preserve cash, we suspended our share repurchase program in September. On last quarter’s call, we said we were actively reducing discretionary capital spending by 10% this fiscal year. We are now looking for a 25% reduction and expect a portion of that savings will come from postponing upgrades to counters, manufacturing projects, and other discretionary items. We have reviewed our pension plans and they are adequately funded at this time, thus, not requiring any significant immediate cash infusion. However, we are staying on the offensive and investing smartly in areas where we believe we can capture market share and drive growth. Let me now discuss our thoughts on the remainder of the fiscal year. In these volatile times and unpredictable times, we are significantly more cautious than we were just three months ago. We believe that the current global economic conditions will contribute to soft retail sales for the balance of our fiscal year and beyond. Additionally, the economic environment creates other business risks for us, including the possibility of store foreclosures, retailer bankruptcies, slowing growth in the markets dependant on oil, and the possibility of short-term deflation followed by inflation. We have run a variety of scenarios weighing these risks, and all of them show us generating profit and positive cash flow. Like many companies, our ability to forecast has become more difficult, but we want to give you some guidance for the remainder of the year. For the year, on a constant currency basis, our international business is expected to be our leading performer. As of now, we are assuming that sales growth in Asia will continue in the low teens, although the environment could worsen. Europe should post a modest decline. Sales in the Americas are forecasted to decline at mid-single digit rate, reflecting the continued challenge in the economy. We expect 2009 local currency sales to be flat, to down 3%, compared to last year. Foreign currency translation is likely to lower our reported sales by approximately five to seven percentage points. For the remainder of the fiscal year, our assumption for the Euro is $1.30, for the Yen, $0.89 and for the Pound, $1.38. If the Dollar strengthens or weakens against these major currencies, it will further impact our financial results. We are maintaining our revised full-year EPS forecast of between $1.30 and $1.60. This includes approximately $0.25 - $0.27 related to the negative impact of foreign currency translation. Also included in our estimated EPS is $.05 due to higher debt levels. For fiscal ’09, we expect to generate around $475 million of cash flow from operations, and to use about $275 million for capital expenditures. We are anticipating that the high-level volatility and uncertainty in the market place will have a dramatic impact on our results for our fiscal third quarter. Sales for the third quarter are forecasted to decline 2-4% in local currency, reflecting a weak retail outlook. The negative impact of foreign exchange translation is expected to lower sales by about seven to eight percentage points. We expect EPS for the three months ended March 31, 2009 to be between $0.00 and $0.08. Summing up, while other companies have stopped giving guidance altogether, we want to continue to provide our expectations despite the limited visibility. Our assumptions remain dependant on how consumption and trade inventories evolve during the next five months. Economists vary in their predictions of the timing of an economic turnaround. Our outlook assumes that the downturn will last for at least another twelve to eighteen months. We will manage our business through these serious economic times by reducing costs and conserving cash, but we will not cut vital investments. We will continue to invest behind branding, innovation and the development of our people and capabilities to gain global share so that we emerge stronger and more competitive when the economy eventually rebounds. And now I will turn the call over to William. William P. Lauder: Thank you, Rick. Good morning and thank you for joining today’s conference call. Although we are obviously disappointed with our short-term results, we remain fully focused on building our business for the long term. We are bracing for a prolonged global market downturn and we are taking actions to protect and strengthen our business. We are positioning each of our businesses to reflect our commitment to the consumer. This involves cutting costs to reflect our lower sales base, reorganizing to work smarter, emphasizing strategic execution and rebalancing our portfolio. Importantly, with our solid cash flow, we continue to invest wisely. We are confident we will emerge from the downturn a stronger and healthier company than before, with greater market share and a more competitive position. We have shown our ability to weather difficulties numerous times in the past. In the years following recessions, slow-downs and retail disruptions, the Estee Lauder Companies grew global sales, emerged more successful and gained ground on competitors. We know this recession is likely to be longer, deeper and tougher than any, in recent memory. We anticipate being able to withstand the pressures. In my remarks, I will provide you with an overview of the actions we are taking and the strong fundamentals that anchor our business. We pride ourselves on our ability to build brands and drive sales around the globe. We realize we must also excel at cost containment to remain competitive with companies that are more productive and efficient. The current economic climate makes it even more critical to resize our cost structure. Additionally, we must accelerate some cost savings and dig even deeper to re-establish the base for our strategic plan. People costs account for nearly half of our selling, general, and administrative expenses. So we cannot ignore this area. Preliminary plans call for a reduction of approximately 2,000 people equal to 6% of the workforce. We are evaluating where cutbacks might occur, but they are likely to take place globally throughout the organization. The reductions will occur through normal attrition, reorganizations, and job eliminations. Additionally, we will reduce our temporary workforce. This is a very difficult step and we will carry it out with a respect for employees that reflects our company’s values. This decision comes after months of careful thought. We feel we have no other choice in these challenging times, in order to achieve a competitive and sustainable cost structure. The majority of these cutbacks will take place over the next twenty-four months. The cost associated with the headcount reductions will be one element of the restructuring charges that the company expects to take. Fabrizio will cover this later. In addition, we are implementing an immediate company-wide freeze in merit increases, which will have minimal benefits this year, but more substantial savings in fiscal 2010. The hiring freeze we imposed in the first quarter continues. The only exceptions are to fill important capabilities that are missing from the organization and positions needed in fast growing emerging markets. Employees are sharply reducing travel and entertainment expenses. Some of the company’s travel will be permanently eliminated, thanks to global investments we have made in videoconferencing and collaboration tools. Other actions we are taking to protect our company include, expanding our already healthy cash position, adapting our innovation and marketing programs to the current economic reality and consumer values, building capabilities to compete more effectively including enhancing our consumer insight, using our strong balance sheet to build share and core markets and brands. These are just some of the actions we are taking, and Fabrizio will elaborate in a few minutes. Now let me turn to the fundamentals of our business that gives us confidence in our future. Companies that will win through these times and emerge stronger are those with diversified businesses, strong balance sheets, and healthy cash flow. We have all three. As a pioneer in beauty, we have grown to amass a powerful and unrivaled brand portfolio with extraordinary global reach and recognition, diverse in geographies, customers, brands and beauty categories. Today the company is recognized for its constant flow of first to market innovative products and decades of well-honed brand building and commercial expertise, which is second to none. Equally important, the company continues to have solid financial underpinnings. We have a healthy balance sheet with relatively low debt. Our historic conservative stance on leverage has never looked wiser. Our cash flow remains strong, so we are able to weather these tough times while still making investments for future growth. We enjoy other fundamental strengths. Our business is well diversified and rests on a solid foundation, anchored by three pillars. We are multi-brand, multi-national and multi-channeled. Our diverse brands range from entry level Prestige to super-premium Luxury. They are leaders in four major Prestige beauty categories. Our brands are number one in US Prestige department store beauty sales, led by powerhouse brands – Estee Lauder, Clinique and Mac. Our skin care and make-up categories each had $3 billion in sales last year. In recent years, our brands have made great strides, penetrating international markets and appealing to millions of new consumers. This vibrant international business, which accounts for the majority of sales – 59% in fiscal 2008 –, is expected to continue driving our growth. The carefully selected distribution channels we use to sell our products depend on the region’s retailers and shopping habits of local consumers. Although consumers increasingly shop across multiple channels, North American department stores remain a core distribution channel for us. We are committed to working with them to jump start sales growth, re-energize the beauty floor, and make them more relevant to future consumers, which will help our business as well as theirs. In fact, Macy’s announcement this week of a major reorganization can be integrated with our own North American realignment. It gives us the opportunity to work together to develop a new model to better serve consumers and improve performance. Traditional department stores and perfumeries remain our two largest channels, but we have established healthy businesses in many other types of retail locations. A distinguishing trait that underlines our varied distribution is exceptional personal service and across all channels, that commitment to the consumer will be honored. The beauty business is rapidly changing; consumers are increasingly demanding, the competition more intense, and the playing field much bigger. Other shifts include: blurring of mass and prestige channels and products, changes in distribution, and the consumer’s definition and expectations of value. To maintain our position as the preeminent leader in prestige beauty, we must operate with a more competitive cost structure and a nimble organization We must operate with a more competitive cost structure, and a nimble organization, able to attract new consumers and find promising opportunities. Wealth is growing in Asia, the Middle East, and other emerging markets. The global marketplace is expanding, while at the same time, the world seems to be getting smaller. It is important to remember that even in the face of a global recession, growth in emerging markets where we enjoy leadership positions remain solid. That is good news for us, but consumers in different markets have different wants and needs. Therefore, it is more important than ever, that the consumer be the focus of everything we do. These demographic shifts, along with our increasingly complex business, require that we change the way we operate, both within the company, and the marketplace. We need to be more global in our thinking, by increasing our international innovation efforts, international presence, and international sales. Within the company, we have begun to establish a more multi-functional and integrated organization. Our company has been built on fiercely individual, independent brands, which is how consumers will continue to see them. However, brand leaders and other top executives are sharing ideas and resources, and meeting regularly in leadership groups. We realize we need to work differently, more efficiently, and cooperatively to leverage our resources and scale, and to eliminate duplicate efforts. The current economic situation has accelerated our need to focus, adapt, and execute against our priorities. With a difficult business climate, it is even more important to work harder and more creatively to confront the challenges. With lower sales, we must first realize our cost base and improve our productivity to preserve and grow margins, while still investing in the priorities that will drive our future growth. We have the drive and the passion to emerge in the challenging times even stronger than before. In closing, I want to reiterate that there are many reasons why this is the right time to embark on a new strategy and a clear vision for the future. We are a company with a long, successful history, deep core values, and enviable assets. Our goal is to grow to the next level. Fabrizio and I forged a terrific partnership and along with our senior management, believe that the Estee Lauder company can become an even stronger model for a modern day growth company, one that delivers sustainable, profitable growth for the long term. Now, I will turn the floor over to Fabrizio will talk to you about our strategic direction. Fabrizio…

Thank you, William, and good morning everyone. Today, I will provide you with highlights of our long-term strategy. We are taking an evolutionary approach toward achieving our goals, and not trying to do everything at once. We want to make sure we do it right, and at the appropriate pace. As both William and Rick mentioned, we are currently dealing with the acceleration of the global economic slowdown, which was recorded in such a short period of time. In this unprecedented environment, we cannot predict much, including consumer sentiment in current situations. In fact, the world has changed considerably since we first began developing our strategy, almost a year ago. As a result, the economic crisis has made us address our approach and lower our base from which we are launching our efforts. At the same time, it has pushed us to accelerate our focus on change and execute against our new priorities. In my remarks, today, I will focus on the elements of our business that we can control and how we will become more resilient in the face of what we do not control. Across the company, we are working in new ways that will help drive our future results. We have taken several initial steps as we embark on the new plan, namely, we established a leadership team comprised of high level executives from different brands, functions, and regions to address our challenges. We intend to operate more globally, across boundaries and brands. Working together as a multi-functional group, our new team will be faster in making critical investment and resource-allocation decisions, and will be responsible for achieving our goals, implementing our strategic priorities, and resolving critical global business issues. We created a program management team, mostly comprised of multi-functional executives, to lead the execution of restructuring and cost-saving projects that represent the biggest opportunities. They work under the leadership of Rick, our CFO. We have begun to deploy the new corporate strategy to our brands, function, and regions, making the company more cohesive and integrated. We have high quality teams of people in place to deliver results we are seeking. The best leader for each job and task are diligently working to succeed in their efforts. The company, now, has one clear vision; to strengthen our position as the global leader in prestige beauty and be a well-diversified brand-building powerhouse of unrivaled creativity and innovation. In a world of brands stretched beyond their origin, and companies that have become conglomerates, we remain a specialist devoted to prestige beauty. A big growing market filled with untapped consumer aspirations. These factors are the foundation needed to achieve our new strategic plan. Our company has been very successful in driving sales growth and developing brands, but now, we need to do even better. Our new goal is to deliver higher levels of sustainable, profitable growth for the years to come.

Hello, are we still on?

Yes sir, we are. It is Mr. Brestle's line disconnected.

Okay, can you get him back, please?

Yes sir.

These factors are the foundation needed to achieve our new strategic plan. Our company has been very successful in driving sales growth and developing brands, but now, we need to do even better. Our new goal is to deliver higher levels of sustainable, profitable growth for the years to come. Importantly, the company has many attributes that will not change, most notably, our intrinsic values of uncompromising ethics and integrity. As a family-controlled company, we remain committed to providing consumers with the highest quality products, treating employees with respect, building fair partnerships, and being responsible corporate citizens. Now, let me explain how these actions are expected to translate into results. During the next four years, from fiscal year 2010 throughout fiscal year 2015, these are the goals we want to achieve. Keep in mind, we are starting from a depressed base in fiscal year 2009. First, we target to gain share in global prestige beauty, with sales growing at least 1% ahead of market, every year. Second, derive more than 60% of sales from outside of the United States, making us even more balanced and diversified. Third, strive for an annual step change in profit improvement, with an initial goal of growing our operating margin between 12% and 30% by fiscal year 2013. Fourth, create a substantial increase from current levels in return on investor capital. Fifth, reducing the interest days 15% to 20%, which will liberate more cash to generate growth. These improvements will also substantially reduce [obsoletance] which is currently about $150 million per year. Achieving these goals will enhance our leadership position and create more value for stockholders. So, how will we accomplish these objectives, while also creating a sustainable business model and protecting our key [stance] and core values; by focusing resources on our biggest opportunities, including core brands, geographies, and consumer segments. by addressing underperforming brands, by driving our superior innovation capability and creativity, by continuing geographic and channel diversification, by sizably reducing costs and duplicative efforts, by creating a more efficient and integrated organizational structure, to better leverage scale and the power of our people, and by building greater capabilities in consumer knowledge, strategic focus, financial discipline, and global R&D. Let me go into these elements in more detail. We have started by making clear strategic choices, by brand, category, geography, and channel, and then determining how to succeed and what capability we needed. The first element is to focus and prioritize investments for profitable growth behind the biggest and most lucrative opportunities. This means focusing on high gross-margin segments with the best growth potential. This should allow us to exploit our distinctive business model, which is based on aspirational brands, superior product performance, selective distribution, and the power of personal service, all of which generate a unique consumer experience. The priority areas we have identified are by category and brands, be the undisputed global leader in skin care. Our most profitable category, where we have very strong guarantee capabilities, and where the personal service model is very effective. Focus will be in certain high-growth skin care segments, such as the wellness area and the anti-aging needs of a fast-growing, aging population. This focus will drive our biggest brands, Estee Lauder, and Clinique. Garner greater share in the cup on a worldwide basis, on the strength of our fast-growing makeup… brand model, which appeals to a broad range of demographic ethnicities. These represent a huge opportunity for accelerated profitable international expansion. Our strong Mack and Bobbi Brown brands will strive for growth in these areas of focus. Continue growing share in super luxury beauty segment. A $1 billion category for us, with brands such as La Mer, Joe Malone, Bobbi Brown, Estee Lauder and Nutri… we have only just begun to tap the full global potential of these exclusive brands. Although these areas have been hard in the U.S. and Europe, in the current environment, and require some reframing, we are optimistic about the long-term opportunities, particularly in Asia. We plan to play more profitably in premium hair care, by staying focused on the upscale salon business model… expanding international markets. The Aveda brand will be built up in this effort. By geography, focus resources on a fast-paced energy market, notably China, Russia, Eastern Europe, and the Middle East, that provide an [appropriate] return on investor capital, as well as Asia, with its rapidly-growing middle class consumer base. Specifically, we see great opportunity in skin care as beautiful skin is culturally important in that region. We aim to grow share in image building core markets, such as the U.S., U.K., France, Italy, and Japan. By channel, we will continue to drive our core department store and perfumeries across the globe. It is essential to turn around sales [brand] in North American department stores. This channel remains an important destination for many consumers. We are determinate to work with our retailers to create excitement, improve the business model, make our proposition more relevant and attractive to consumers, and improve productivity points of sales. As an example, the recently announced Macy's organization provided an opportunity to do this. We will aim to grow share in profitable, fast-growing channels, where consumers are sensitive to our unique business model, such as the Internet, travel retail, freestanding stores, European pharmacies, and direct-response TV. Separately, we will invest to cultivate tomorrow's winning brands and products. We have narrowed our focus for acquisition to targets we believe will profitably fill our strategic aims. Our entrepreneurial beauty bank division is becoming more global in its brand creation effort. We will explore furthering that… opportunity in incubator brands as we did with Forest Essentials, in India. Prioritizing also means deciding where to effectively manage resources for profit margin turnaround. In some areas, we will de-emphasize sales growth until investment rate returns are achieved. Following are the areas we look to improve: Underperforming brands – in the aggregate they represent about $1 billion in sales, but contribute disproportionately lower profits. The issues that confront each brand are different. Each underperforming brand has developed a plan to improve profitability and has ten to twenty-four months to achieve its goal. In this environment, we are working to speed up that timetable. Some brands will need to exit categories, geographies, or channels, to resize into a profitable model. The [FRIGAN] category - Our [FRIGAN] task force has developed and recommended a plan for the next three years, to improve profits. We are adjusting pricing strategies, reducing costs, announcing the portfolio, and rebalancing investments between new products and classics. We will invest in key business drivers, reduce non-added-value costs, and look to grow in profitable markets and channels, particularly in Europe and … Let me now change gears and talk about how we are going to succeed in those identified areas of focus, and what capabilities we need to strengthen. First, we believe the consumer must be in the forefront of our thinking. Better consumer segmentation will enable us to focus our efforts on the highest import opportunities, and maximize the effectiveness of our marketing. Enhanced consumer insights will allow us to continue to delight the consumer by focusing creativity and imagination in the right areas. More extensive consumer testing should also help us better predict demand, which should include inventory and destruction levels. Another key area of focus will be the innovation process. Innovation is our lifeblood and it will permeate every element of our business, including products, personal services, and marketing. First, we want to focus more on breakthrough technologies and ideas, totally new and unexpected products. We have also developed plans to increase the success rate of our sustaining and commercial innovation and lower the cost of the innovation process. Finally, we plan to leverage … partnerships, in key areas to accelerate the development of new ideas. Importantly, to succeed globally, we must customize our offering to meet regional and local needs. We have redesigning capability to do these at lower costs. We have made a good start with our Asian skin care and makeup offering in the Clinique and Estee Lauder brand. We can… capability further, how to localize development and consumer understanding. All those focus areas I've discussed are expected to sustain growth … of new priority initiatives underway to reduce costs. In the current environment, we have established two types of programs, temporary belt-tightening or resizing savings and systemic structural changes to sustain more profitable long-term growth. The resizing efforts are intended to carry us through this difficult economic period, and preserve as much profitability and cash as possible, in fiscal year 2009 and 2010. As William said, we have already instituted a hiring freeze, except for select positions where we need unique capabilities. We have reduced travel and entertainment, and cut non-essential marketing and professional fees. On top of that, the systemic structural changes are expected to generate permanent savings, specifically; we have identified roughly $450 to $550 million in potential savings. They include aggressively costs of goods. This will achieved through higher gross margin product mix working with suppliers to find efficiencies, reducing destructions, and optimizing the supply chain. SNI is a critical of our on-going effort to be more financially disciplined and operate more effectively. Our U.K. manufacturing, North American dairy procurement and North American financial reporting process went The broader mission for the [En.. propylene] group is to negotiate better prices, reduce usage, and leverage scale in an effort to control costs and eliminate duplication. We are in the process of designating experts in specific procurement categories to oversee the bulk of spending. At the end of fiscal year 2010, we expect that the vast majority of our purchasing will be done by professionals… achieving savings from outsourcing select support functions if there is a cost advantage. Another area for savings is optimizing the structure of our three major regions, the Americas; Europe, the Middle East and Africa, and Asia Pacific, and aligning the global brand and functional organizations. We believe we have significant opportunities to better leverage our scale, improve productivity, reduce complexity, and use the corporate view to optimize China's strategies. Specifically, with the opportunity to optimize and normalize our European and Asian organization, we will strive to accelerate sales growth and market share gains through our integrated business approach. We plan to increase efficiency in the regions to our brand synergies, shared services, and leveraging back office functions. Define and implement a North American affiliate organization. Our North American team, lead by Dan Brestle, has mapped a large portion of the necessary functions. They are working with the brands to establish the organizational structure … and the possibilities between brands and the new affiliate. Implement trans-coordinational improvements to shared services and achieve productivity improvements in corporate support departments. Shared-service opportunities include centralized support in IT, HR, Customer Service, and Accounting. Build on the need to resize our business, and the reorganization project, as William mentioned it, we will need to reduce about 6% of our work force, roughly 2000 employees, over the next twenty-four months. This is a very difficult decision, but with people cost at nearly half of the total cost base, it is needed. As we proceed through the second half of our fiscal year, we will continue to evolve our strategy and finalize further plans. We will likely take a restructuring and other one-time charge of between $350 million and $450 million, over the next few years. The charge will most likely cover the account reduction, some facility closings, improvements on underperforming brands, and other non-recurring costs related to the achievement of our plan. As William mentioned, we also are implementing an immediate company-wide freeze in [medic] increases. Moving to our organizational strategy, we are leveraging the amazing power and talent of our people, developing a highly interdependent organization, focused on superior creativity, operational excellence, and continued learning. We are strengthening our training programs, at all levels, with the focus on change leadership, consumer marketing, and strategic management skills. We have also developed a new rewards and accountability system to help ensure that our strategic and organizational objectives will be accomplished. The new compensation plan will affect about 6,000 bonus-eligible employees, at the manager level and above, beginning in fiscal year 2010. Although we had performance-based compensations in the past, the new structure will be tied closely to the strategic plan and provide financial incentives for the achievement of specific metrics, with more focus on profitability, return on investment, and collaboration. I mentioned earlier, that we will need to reinvest a portion of the savings to realize, to fund future growth, specifically; we expect to reinvest about $50 million of savings behind the following initiatives. First, we intend to build our competence in consumer knowledge. Second, we intend to accelerate and better leverage our presence online and in other non-traditional channels. Third, we expect to intensify our R&D, brand creation, and conceptualizing capabilities, particularly in Europe and Asia. Fourth, we are allocating resources to fund our equity-based new rewards program. This means we have identified $400 to $500 million in projected net savings. These actions should produce a sustainable 12% to 13% operating margin over the four-year period. This margin improvement represents our initial plan timeframe, and we see the opportunity to work toward an even greater efficiency after 2013. Historically, we have generated healthy cash flow. We are striving to improve working capital with major improvements in inventories, to announce our overall cash position of the company. Return on investor capital will take on greater importance and will be applied throughout the company as a decision-making tool. The strategy I have outlined this morning is the result of months of effort on the part of hundreds of people throughout the organization. It has been endorsed by the Board of Directors and William and I explained it to employees at all levels. Now, more than ever, the creativity, ingenuity, and dedication of our employees around the world, is essential to drive our business throughout this difficult period. William and I are very proud of the work, energy, and commitment they have already shown. In the coming months and years, employees will enjoy more career-development opportunities, be rewarded for their talents and efforts, and should continue to take pride in working for a company that appreciates their ideas and work ethics. We know we have a top-flight group of resourceful employees, many of whom have spent a good part of their careers here. We expect they will find a company with family values and … of excellence to be an even more exciting and rewarding place to work, as our strategic vision is realized and fulfilled. As we embark on our new strategy, we are asking everyone to embrace our vision and to be guided by our company's new mantra "Imagine, Integrate, and Innovate". The only limits to our future success will be our collective imagination and creativity. I'm excited to imagine what our best, brightest, and most creative people can change and achieve. We will share ideas and mix together our markets, products and resources, realizing that one united and one integrated company is stronger than twenty-nine individual brands. One global enterprise is greater than one hundred forty separate countries and territories. The most dysfunctional world is more productive than independent efforts. The vast Estee Lauder companies will be integrated into a more cohesive whole. Lastly, we will innovate, surprise, and delight the consumers throughout the products and related personal services we create. By working together in unexplored ways, by imagining, integrating, and innovating we are becoming truly global. We will take the best ideas, no matter where they originate, and send them out across markets. Future global brands will be born in India. Ideas can come from China or Brazil. Boundaries do not matter; creativity does. We are confident this will continue to be a company where people are excited to come to work, can aspire to great levels of personal development, and achievement, and everyone will play a pivotal role in taking the company to greater heights for the benefit of all stockholders, and all employees. That concludes my comments. We would be happy to take your questions, now.

(Operator Instructions) Our first question, today, comes from the line of Bill Schmitz, with Deutsche Bank Bill Schmitz – Deutsche Bank: Can you just talk about what some of the underlying volume assumptions are to get to that 12% to 13% operating margin? As we all know, there is still a pretty big fixed-cost element. I think the margins are pretty contingent on some sort of volume growth. Just a question, not related to that, but can you talk about what's going on with the ownership structure and some of the registered B shares that are becoming A shares, now?

I'll answer the second question, first. When there are B shareholders who wish to sell shares, they automatically convert to A. Bill Schmitz – Deutsche Bank: Okay, but they're definitely 12.5% of the float, is that right? That's been registered?

We can give you the exact number. I am really not certain what the total float is of the B shares, versus the total outstanding shares. The only B shareholders are original issuers in the Lauder family. Those are only B if they remain with the shareholders, of the shareholders agreement. If they are sold out, they are in A shares. Bill Schmitz – Deutsche Bank: Okay, that's great. Thank you.

They're not converted. The B shares, when sold, all automatically become A, except if they're sold in trust to the signers of the shareholders' agreement. Bill Schmitz – Deutsche Bank: Okay, great thank you. That's a good clarification.

This is Fabrizio. To answer your second question, now. Predicting the markets in this field is very difficult. Clearly, we didn't feel we could predict the market in the current volatility, especially in 2010; it's a too high-risk prediction. That is why I can share what our assumptions are in the numbers, which is not necessarily a prediction. We assume that 2010, the global market will be about flat. Then, we assume that the global market, as of 2011, will start growing again, between 2% and 5% per year. Those are our assumptions, today. Bill Schmitz – Deutsche Bank: Great, thank you very much.

Your next question comes from the line of Nick Modi, of UBS, Nick Modi – UBS: Hi, everyone. The only question I have is in terms of Clinique and Estee Lauder, in the U.S., could you talk about if you have any plans or programs in place to really start to jump-start those brands at the same time, getting them both growing in unison?

Ladies and gentlemen, this is the Operator. We are experiencing some technical difficulties. Please do not disconnect the lines. Your lines will be on silent hold until we are in progress, again. Thank you.

Hello, are we all on?

Yes, sir, you are on. Can we continue with the questions, please?

Please do, sir. Your next question is from the line of Ali Dibadj, of Sanford C. Bernstein & Co. Ali Dibadj – Sanford C. Bernstein & Co: Hey guys. I have a couple of questions about the specificity in the cost-savings plan. Maybe the first one is in terms of execution, perhaps timely given the execution of this phone call. What do you have in terms of your project management office? I'm resisting saying it's hopefully not the same people who are running this phone call, but how are you managing that? Do you have a PMO in place? How does that work?

First, we apologize for the technical difficulties. They are obviously outside of our control, but we're glad we are back speaking with you. Ali, for retail outlined in… we have organized a project management team. That office is led by myself, and other senior executives. For every single savings initiative, a senior member of our management team is responsible for that project. He has, beneath him, a team of his employees, who are working at delivering those savings. We have identified the key decision makers to make those savings happen. We are working with outside consultants to verify, through various benchmarking techniques, and others, the validity of the savings target that we have set. As we mentioned, most of those savings were quite comfortable, that they are there and available for us. We are right at the stage of beginning implementation. We have a very formal process. We meet every two weeks to review those projects so we are very well organized. Ali Dibadj – Sanford C. Bernstein & Co: In terms of where the cuts are coming from, could you give us a sense of the split between COGs and SGNA? The reason I say that is because as far as our analysis would be concerned, your employee base is growing much faster than your local currency sales. Cutting at 6%, or 2000 sounds like a big number; it actually isn't a big number. There are others who are cutting more deeply, more quickly, who are not in as dire straits as you guys, or in as much difficulty as you guys. Split between COG's and SGNA, and then I have a short follow-up.

Sure, and as the details of these savings plans become apparent to us, and the timing, we obviously intend to communicate that going forward. The split, roughly Ali – and this is roughly – is about 30% cost of good, 70% SGNA costs. You did mention the words dire straits. I am not so sure I would agree with dire straits, as a company we have a very strong balance sheet. We have a very strong cash flow. We have leading market share around the word. Quite honestly, we are well positioned and have an opportunity to improve our profitability. There is no question about that. As far as what lies in front of us, I think we're actually quite well-positioned, compared to many other companies. Ali Dibadj – Sanford C. Bernstein & Co: I have a question around – you did mention you announced this to employees. I would love to hear, perhaps from Fabrizio or you guys. We may have lost Fabrizio, but to get a sense of what the reaction was from people, how are they thinking about the company going forward? It is a very different method than what they're typically used to hearing from management.

Hi, actually, the reaction is excellent. I think we have really a great group of talented employees who are basically buying into the strategy and starting implementing it with excellence. At this moment, we have the team in place and we are learning how to work together in different ways, and how to bring this forward, with excellence. I would say the ability of the organization, so far, to change and evolve into a more balanced approach to growth management and cost management has been impressive, in my opinion. I am very optimistic for the future in this area. Ali Dibadj – Sanford C. Bernstein & Co: One last thing, if you could indulge me. You mentioned Macy's and other department stores reconfiguring how they operate, reconfiguring their back offices. It doesn't seem particularly rigged to your split of cost savings, and it didn't seem from the report or the release, that you are actually going after much of your front line, much of your sales force, much of your beauty advisors. I guess I don't get that. Why isn't that a pretty big opportunity? According to our numbers, that would suggest that it is. I would love to hear the logic there, and understand how we should think of that, going forward.

You should think about this going forward; the productivity in-store is something we honestly measure regularly with our retailers and continue to evolve daily. This is something that is not new, would not be a new part of the program for the future. We have been doing this for many years, regularly. On the contrary, our internal organization angled to market is actually what we are looking at for the future of the organization. We are going to leverage better scale, better focus; we are going to leverage the ability to be more local and tailored in our offer but be exploding scale, more at the center, which is a similar direction that Macy's announced. There is a good fit between the direction we want to take and what our big retail customers seem to also be going.

Ali, if I could add, I just want to remind you that the primary point of difference between ourselves and many of our competitors, is the extraordinary focus we put on the point of sale and the effectiveness of our people, offer that high value from the service to the consumer. Our focus is in scaring out expenses that are not touching the consumer, so we continue to focus our efforts – our expenditures aimed primarily at the consumer who ultimately is the most important part of our entire efforts.

Our next question comes from the line of Wendy Nicholson. Wendy C. Nicholson – Citi Group: Hi, my question is a little bit of a follow-up to that. It has to do with the 12% to 13% operating margin target. Obviously, we are in an unusual time now, when margins are very depressed. In terms of the targeting of the 12% to 13%, given there is a lack of specificity right now, in terms of the charges you are taking, in terms of the timing of the savings, can you give us some sense of the slope of the line, if you will, of the margin expansion? If you assumed, for example, that fiscal 2009 was supposed to be at 10% and started there, are we talking about 50 to 75 basis points of margin in expansion, every year, or is this stuff really a 2012, 2013 event?

Wendy, the short answer is that we intend to improve our operating margin, every year. We will provide you the details of that, as they become apparent to us, of the timing of some of these things. We did tell you that the cost associated with achieving these are a restructuring charge of between $350 and $450 million, but the savings we have identified are $450 to $550 million dollars of savings. It's really just an issue of what is the triggering event that allows us and requires us to take that restructuring charge, and as those events happen, we will certainly inform you and we will be making those choices, appropriately. We intend to continue to improve our operating margin, year-over-year. You just have to remember that from where we're starting is a relatively low base because of the economic conditions that we are in, but we look for linear and steady improvement over the period of our strategic plan. Wendy C. Nicholson – Citi Group: If I can follow-up; Fabrizio, relative to when you started focusing on these things and identifying the opportunities, would you say the timing of some of these programs or initiatives have been pushed out because of the macro environment is so tough? I know you pushed up the communication of the goals from December to February, but in terms of the actual activity, have you delayed any of these projects, given how tough things are?

No, to be honest in terms of cost savings activities, we are actually anticipating them, rather than delaying, just because the need of increased productivity caused by the softer sales has anticipated the need. That is the regional plan we are working on anticipation of. However, that is the regional plan. Our sales are softer and so we are working with two aspects. One is in the short time; try to resize the organization in order to re-establish at least the productivity we started from. Then, continue applying, in a linear way, all those savings that we have intensified to go from resizing into restructuring, and add to the slim margin by 2013. In a nutshell, it is anticipating the saving … and resizing the needs in the short term, and unfortunately having a lower base in 2009, as a starting point.

Your next question comes from the line of Alice Longley, of Buckingham Research Alice Longley - Buckingham Research: Hi, I have a question about your outlook. You said you are assuming that the downturn will last another 12 to 18 months and then you also said you are expecting your markets, globally, to be flat in fiscal 2010. In that kind of environment, can your earnings grow faster than your norm, for the next four years, or so? Do you get exceptional earnings rebound in that environment?

As I think we just outlined, we anticipate our operating margin to improve every year. With a very slow sales growth anticipated over the next 12 to 18 months, which means very aggressive cost cutting to make that happen. I am not so sure, that mathematically we would grow at an enormous pace, over the short term, but it will show operating margin improvement and what that implies for EPS, on a linear basis, over the course of our program. Alice Longley - Buckingham Research: Thank you, and my other question is; you said there are brands amounting to about a billion dollars in sales, that are underperforming brands. Which are these?

As you know, Alice, we do not really like to talk specifics about brands. I think that many of you have ideas of which those brands are. I think it is critical to understand that we have very specific plans in place on a brand-by-brand basis. They are not the same plans. Each brand is being treated differently and being addressed differently, based on its particular needs. As Fabrizio said, there are certain actions by brands, such as exiting certain channels or geographies that we will pursue on a brand-by-brand basis to improve the profitability of those brands. They have a fixed timeframe in which to make those improvements.

Your next question is from the line of Chris Ferrara, with Bank of America – Merrill Lynch. Chris Ferrara - Bank of America – Merrill Lynch: Fabrizio, I guess you talked about two buckets of costs savings, one being the belt tightening and the other being more strategic in nature. I guess I am trying to get some context around that. It sounds like just from belt tightening, you are talking about getting $250 million in savings, this year alone, yet the entire duration of the strategic restructuring program, you are doing $450 to $550 million. I guess, is that $250 of belt tightening stuff that comes back when you do not need to be as tight with the belt, and implying that the $450 to $550 million is actually a bigger number than that because it needs to offset that too? If not, why would there only be $450 to $550 million, if you could just tighten your belt to get $250?

I hoped that was clear in my speech. The belt tightening, part of it is linked to productivity, is there to stay. We will work then, to make it a building block of the future strategic changes. Part of it is just adjusting and reacting in the short term, to changes which have been amazingly sudden and fast. We had to react in the short term. This is bound to come back and to continue our investment of our core priorities. You cannot assume the belt tightening as it is, to be the first building block of the structural changes. Chris Ferrara - Bank of America – Merrill Lynch: Just so I understand, the portion of the $250 million of belt tightening, this year, that would be something that sticks. That is also part of the $450 to $550, is that correct?

That is correct, Chris, but the majority, a pretty large portion of that belt tightening is expenses that will come back. The reason that we're aggressively pursuing this resizing exercise is to reset that base and come up with more permanent savings to replace those temporary savings that are part of the belt tightening exercise. That's one piece of the savings, and then on top of that, we have the other more systemic and strategic and reorganization type savings that will bring us all the way to the $450 to $550 million of savings. Chris Ferrara - Bank of America – Merrill Lynch: Thanks, that is helpful. I guess, one I missed something. One of the areas it seems you have opportunity for improvement is advertising, promotion, and the expenditures there. Can you talk a bit about how the game plan might be different, relative to what we have seen the last couple of years?

There are two assets with the game plan with a difference. First, try to invest money on the best drivers. Using the most sophisticated … in return on investor capital (ROI), in order to evaluate the key drivers and the key brands and the key markets. This will allow us to spend the money where the money has better returns than to save the money somewhere else. Second, in the current environment you are seeing reduced cost of … and other elements that we are going to exploit via our … procurement new systems. Third, the approached business, where we have different brands duplicating a lot of efforts in their activity, for example, in production material for advertising or promotions of the organization; that created a lot of disbursement of energy. The ability to reorganize these and centralize some of these functions will also save a lot of money that the consumers do not see, meaning, save the money for preparation and process of these advertising promotion activities, where we have a big opportunity. The combination of those three things will reduce our costs, but will not reduce the impact on the consumers.

Your next question is from the line of Linda Bolton Weiser, with Caris & Company. Linda Bolton Weiser - Caris & Company: Can you elaborate on the part of the strategic plan that has to do with adjusting fragrance pricing strategy?

There are some of our brands, which have the opportunity of pricing; some others where we are too expensive in price, and others we are too low in price. Over the next year, we will adjust the price of our brands, reflecting the real understanding of the consumer segment in which they play. Those most important thing in redesigning our future, first of all, with the brands we may not need, the new brands we want to bring in; we will try to play into the entire pricing spectrum and portfolio opportunities of the category. Today, we are playing in one pricing area, mainly, with our fragrances. With the exception of Joe Malone or Tom Ford, we are playing in higher pricing segments. We are pricing very much in the middle/middle-low of the … we need to adjust the overall portfolio to grow share in every single, relevant pricing segment in the market. That is what this means. Linda Bolton Weiser - Caris & Company: I think this was asked, already, but can you just clarify once more. Did you say how much the headcount reductions would be in FY09?

Linda, we did that. We said it was 2000 in total, and as the details and timing of those plans were clearer for us, we would announce that to you. That would be a triggering event, obviously, for some sort of restructuring charge and that has not happened, as of yet.

Your next question comes from the line of Andrew Sawyer, of Goldman Sachs. Andrew Sawyer - Goldman Sachs: Hello, I was wondering if you could talk a bit more in detail about the portion of your labor force you're talking about cutting a labor force that is not in touch with employees. I was wondering if you could talk in more detail about of your 32,000 employees, give or take today, what are the big buckets of those employees? Where would you see cuts? What portion of that employee base would you consider customer-facing?

Andrew, first of all, 32,000 is a number much higher than when we calculate. We have approximately a lot of people, but the single largest portion of the force that is on our payroll is in manufacturing and distribution, in headcount. The second largest portion of the headcount would be white-collar workers throughout the system, and in affiliates and back office operations. Those are the two biggest buckets of opportunity. Obviously, as we get more efficient – first of all, as our demands and our manufacturing and distribution plans change and we can gain more efficiencies and will be reducing headcounts there, as well as we gain more efficiencies both in back office and brand operations, we will again find ways to reduce the headcount where we have activities that are going away on a permanent basis. Andrew Sawyer - Goldman Sachs: As far as getting more productivity out of the counter reps, is there anything new to the program that is different from what you guys have been trying to do before? How are you going to manage that aspect of it?

That side of what we have done has always had its own natural balancing factors, if you will. We have had very good productivity for FTE in-store, for a number of years. Given selective markets like North America, where the turnover rates have been high, that naturally balances itself on productivity on a very regular basis. We …[technical difficulties]

Ladies and gentlemen, we are experiencing technical difficulties. Please do not disconnect. The lines will be on silent hold until we resume. Again, ladies and gentlemen, we are experiencing technical difficulties. Please do not disconnect. The call will resume as soon as we are able to connect the speakers, thank you.

Hello? Andrew, if you can cue back up, come back on, we can finish the answer to your question.

Your next question is from the line of Lauren Lieberman, with Barclays Capital

Lauren, if you could hold off your question for one moment, and allow me to finish answering Andrew's question before we were technologically interrupted. A couple of clarifications, just to help you understand. Of the 32,000 people we have on our payroll, a significant portion, about a third of that number is related to in-store people who are on our payroll. There is also a large number of people who represent our brands in stores around the world, predominantly, but not exclusively, in North America, who are not on our payroll but represent our brand. The 2000 number we are talking about, at a 6% reduction of work force, is related to people who are non-retail sales related. Those are related to activities that are brand, manufacturing, distribution, and back office operations. The activities related to stores, as we said earlier, somewhat takes care of itself through natural attrition and productivity standards, which the brands have, as well as other factors. Lauren Lieberman - Barclays Capital: Great, first question was just on the assumptions for revenue growth and Fabrizio, your comment that it was a 2% to 5% growth rate for global prestige beauty, beginning in 2011. That seems lower to me than what you might have been incorporated into the company's thought processes historically. If that is always the rate you kind of saw global beauty growing at, then prior sales goals assume kind of 3 percentage points of share gains every year?

No, again, as I said, we are not in the condition to make predictions on the market at this moment. First of all, we don't know where the market will start from, when it will start growing again. The question was not which market growth global beauty care will come back, when the recession will be over. The question is what are the assumptions that were in our 12-margin calculation? The assumptions that are in our 12 margin calculations today are an assumption of a flattish market in 2010, and 2% to 5% growth on the average of 11 and 13. Obviously, if the markets will do better than that, our assumption will resolve conservative. If the market will do worse than that, our assumption will be too aggressive. That was the answer. If you want my personal belief on the beauty markets, I believe the beauty market, after the recession, will start growing again, very well. I believe there is an immense opportunity of growth in this market, particularly in Asia and other emerging markets where many consumers and a large number of middle class is entering the category and believe they are an opportunity to reframe the North American market in a way that will grow back to normal levels. That is not what is in our assumption, today. This is really an unpredictable area, during this recession phase.

Your next question comes from the line of Connie Maneaty, with BMO Capital Markets. Connie Maneaty - BMO Capital Markets: Good morning. I am interested in some of the comments you made. It seems as though at least part of the strategy is to move sales towards toward the super luxury-end of the business, where I think you said maybe a billion dollars of your sales are there. You also mentioned, with your comments on fragrance, that only Tom Ford and Joe Malone play in that area. Are you trying to move the fragrance business that way, and if so, you also said that fragrance should play in all relevant price points. Will some fragrance sales move out of department stores and into the mass market? I have a follow-up question.

First question, we did not say we are going to move the percentage of the business, higher in the large super luxury area. We just said that we have a big business in super luxury and that the market we believe has long-term potential. We plan to grow share in this very big potential market for the long term. Second point, on fragrances, yes today we have Joe Malone, and Tom Ford playing in higher priced luxury segment. The bulk of our business plays in the middle. The real focus of our pricing strategies and choices of portfolio will be profitability. We are going to focus our portfolio in the high, higher return segments and we have done a very … to identify them. For the moment, it would be premature to make announcement like going down or up in the -- [CALL ENDS ABRUPTLY]