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

Stephen R. Powers - UBS Securities LLC Dana L. Telsey - Telsey Advisory Group LLC Wendy C. Nicholson - Citigroup Global Markets, Inc. (Broker) Mark S. Astrachan - Stifel, Nicolaus & Co., Inc. Lauren Rae Lieberman - Barclays Capital, Inc. Joseph Nicholas Altobello - Raymond James & Associates, Inc. Kevin Grundy - Jefferies LLC Ali Dibadj - Sanford C. Bernstein & Co. LLC Caroline S. Levy - CLSA Americas LLC

Good day, everyone, and welcome to The Estée Lauder Companies' Fiscal 2016 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 - Vice President-Investor Relations: Good morning, everybody. On today's call, we have Fabrizio Freda, President and Chief Executive Officer, and Tracey Travis, Executive Vice President and Chief Financial Officer. Since many of our remarks today contain forward-looking statements, let me refer you to our press release and our reports filed with the SEC where you'll find factors that could cause actual results to differ materially from these forward-looking statements. To facilitate the discussion of our underlying business, our six-month and full year comparisons have been adjusted for the impact of the prior-year implementation of our Strategic Modernization Initiative, and the discussion of our financial results and our expectations are before restructuring and other charges. You can find reconciliations between GAAP and non-GAAP figures in our press release and on the Investor Relations section of our website. During the Q&A section, we ask that you please limit yourself to one question so we can respond to all of you within the time scheduled for this call. And I'll turn it over to Fabrizio now. Fabrizio Freda - President, Chief Executive Officer & Director: Thank you, Dennis, and good morning, everyone. We delivered strong results in our fiscal 2016, with sales growing 8% and earnings per share climbing 18% in constant currency before charges. This performance contributed to stellar first half results as constant currency sales also rose 8% and EPS was 17% higher before charges. Our company is helping to drive the momentum in global prestige beauty, which is resilient and growing despite significant economic volatility. We are strengthening our leadership by growing approximately twice as fast as the industry. Our success in this volatile environment has been driven by our broadly diversified business, powered by our multiple engines of growth, coupled with investment agility and strong execution. This was achieved thanks to our talented and experienced leaders and global workforce. We are not over-reliant of any one category, channel or country, which helped cushion us somewhat from regional slowdowns or political strife. We reacted quickly to unexpected events and volatility during the quarter and reallocated our investment spending, capitalizing on the best opportunities, as condition changed. To cite some examples, we reduced the investment in Hong Kong which continued to decline and increased support in Canada, the U.K. and other fast growth markets. As the makeup category surged globally, we invested more in M•A•C's terrific momentum and in popular launches for our Estée Lauder and Clinique brands to leverage their accelerating makeup growth. In travel retail, we accelerated our brand expansion into Europe, which enjoyed stronger traffic tourists. Seeing a growing demand in our direct-to-consumer business, we accelerated development of e-commerce sites and freestanding stores in several markets. Our strategy is to invest dynamically in our strengths, which added fuel to our momentum and helped us driving terrific results. Thanks to the strategic resource allocation, we had constant currency gains across the board of our regions and categories. By intentionally accelerating investment in selected winning areas, we generated a stronger results in our makeup and luxury brands, direct-to-consumer channels and the Europe, Middle East and Africa region, where we gained significant share. Even with formidable competition, we believe we are expanding our leading position in skincare and makeup combined in Western Europe and in emerging markets in that region. Our strong overall results were especially encouraging in light of some difficult macro issues, including a depressed retail climate in Hong Kong and softer market growth in China, as well as worsening currency headwinds, especially in certain emerging markets. Although we expect economic and geopolitical volatility to continue throughout the balance of the fiscal year, we believe we can successfully navigate the instabilities because of our strong positions in the categories, channels and regions with the strongest sustainable growth. We anticipated many of the major trends driving global prestige beauty today. We are able to leverage the increasing growth the industry is experiencing in direct-to-consumer channels, such as online and retail stores, as well as travel retail and specialty stores category into a growing numbers of beauty consumers. We were a pioneer in online beauty, recognizing early on that the channel would be increasingly important for marketing, communication and shopping convenience. Today, we are among the largest and most established player in online prestige beauty and have enjoyed extraordinary growth. This fiscal year, we expect our online sales from our brand sites and retailer sites to top $1 billion for the first time, representing a doubling of the business in just three years. Our digital success comes from having a diverse entrepreneurial team, more than half of whom are millennials. And they quickly adapt to business, to changing landscapes. Our websites offer a desirable luxury experience and have become major contributors to brand growth. The holiday quarter was a valuable time for e-commerce as more consumers opted for the convenience of shopping online. Online sales accelerated for various product categories, and beauty was no exception. Our E&M commerce business captured the increased volume and generated nearly 30% growth in the quarter. On Cyber Monday, sales of our North America brand sites were more than 50% higher than last year. On Singles' Day in China, sales of our five flagship sites on Tmall more than doubled, led by Estée Lauder and Clinique. Many global metrics of our brand sites improved, including the number of orders, which rose 27%. And mobile became an even larger portion of our sales, accounting for 36% of all online transactions. During the quarter, we added 69 brand retailers and third-party sites worldwide. Linking our brand sites to our freestanding store is key to enabling an omni-channel experience, which is an important evolving trend in retailing. We have launched numerous pilot programs and are building omni-channel capability to begin to seamlessly connect consumers across our brand sites and our freestanding stores globally. We are exploring many different approaches and learning what's successful. For example, we launched online booking for makeup services in the U.K. and the U.S. and are finding that over half of the appointments at M•A•C new makeup studio in Manhattan have been made online. In the U.K., several of our brands offer cross channel gift cards that can be redeemed online and in our freestanding stores. And in October, Bobbi Brown aired an interactive beauty class that generated more than 1.1 million social media impressions. Today, we have approximately 1,500 freestanding stores worldwide that are managed directly by our company or our partners. As we expand our number of highly productivity stores, we are testing new concepts. Origins discover retail design, which illustrates the journey from plan to product, is being rolled out globally. M•A•C's first makeup studio is a service-based store that we believe will provide an additional revenue stream. M•A•C freestanding stores are a key growth engine and account for approximately one-third of its global sales today. Leveraging a growing demand for prestige beauty in Brazil, two of our luxury brands are entering the country with standalone stores. La Mer recently opened in a luxury shopping mall in São Paulo, where it offers spa treatment. And Jo Malone will soon follow, one of the 30 stores it plans to add globally this fiscal year. Our M•A•C and Clinique brands have been a standing and freestanding store in Brazil now for several years. We also anticipated that specialty multi would be a fast growing beauty channel. In the quarter, our strongest sales growth in North America was in this channel, which saw robust retail sales through all our brands. Many of our brands are increasing their penetration with the appropriate retailers. As I mentioned on our last call, one of our exciting initiatives comes from the Estée Lauder brand which will launch its Estée Edit group of products in 320 North America Sephora stores and on Sephora.com in mid-March. Inspired by today's young consumers, the Estée Edit line delivers instant visible benefits centered on the theme beauty is an attitude aimed directly at millennials and promoted on social media. The Estée Edit is part of a strategic effort to modernize the Estée Lauder brand for long-term growth and seed the next generation of consumer while continuing to appeal to its core consumers. Additionally, in Sephora, Bobbi Brown plans to add more doors in the U.S. this spring. And GLAMGLOW reinforced its popularity with the launch of lip treatment products, which become best sellers there. In international markets, La Mer launched in the makeup specialty chain in Australia, and in Europe Bumble and bumble and Smashbox had good growth in Boots. Douglas accounts for one-third of our business in Germany, and our retail sales there grew double digits in the quarter. Our brands continue to perform well also in higher-end department stores globally. However, in mid-tier North America department store, some of our brands are experiencing softness, although they showed solid increase online. Travel retail is another long-term growth engine of our business that improved in the channel as well. Importantly, in the quarter, our net sales, retail sales and traffic growth all grew mid-single digit. With changing travel patterns shifting where and what consumers buy, we redeployed some of our investment activities to the corridors with the most touristic traffic. Korea returned to growth after concerns about MERS eased and Europe was robust as the weak euro attracted tourists. Hong Kong remained soft, also in travel retail in China has did markets in the corridor – also in the corridors frequented by Russians and Brazilians. Overall, in travel retail, we had double-digit retail growth in half of our top 30 markets. Mirroring our broader company strategy, we continued to diversify our travel retail business by expanding our brands in more locations and opening more doors. The preorder business where travelers order products online and pick them up in the airports had a strong increase. Healthy passenger traffic growth is projected across all regions this fiscal year. Touching concern for the key geographies, the Korean market continued to rebound and our business is posting solid growth and gaining share, driven largely by our makeup brands which are set to be leveraging important Korean trends and demonstrating our ability to successfully compete with local brands. In China, nearly all our brands grew double digits. While prestige beauty growth slowed, our business there grew a solid 9%, exceeding growth in prestige. Our results reflect our strategy to diversify our business by expanding our portfolio channels, cities and products. Our makeup and fragrance business has been growing rapidly in what has traditionally been a skincare oriented market, demonstrating our strategy to align our multiple engines of growth with local market dynamics. The economic environment and beauty market growth in emerging markets overall has slowed. While we are not immune to soft local economic conditions, our business in emerging markets other than China continued to be very robust, rising 27% in the quarter, approximately three times the growth of prestige beauty in those countries. We are committed to these markets and plan to invest more in this time of softness to leverage our momentum, increase our market share, resulting in a much stronger position when these economies will improve again. Around the world, makeup proved again to be a strong growth engine, a trend that we had anticipated and prepared for, which is evident in our results. For the quarter, our makeup business grew 13% in constant currency. Our three makeup brands are clearly benefiting, M•A•C and Smashbox especially, up strong double digits. But so are our multi-category brands. Estée Lauder and Clinique makeup sales grew in every region. Foundation has been very strong across our brands, and we had four of the top five foundations in the U.S. in 2015. Among Estée Lauder's best products was Double Wear Stay-in-Place Liquid Foundation, a strong seller decades after its launch. This core product was the best-selling foundation in the U.S. according to NPD for the quarter and also the 2015 calendar year, with sales up more than 20%. Clinique launched Beyond Perfecting Foundation + Concealer in Asia, which established a new makeup pillar for the brand and drove strong foundation growth in the region. This success in foundation is one of the key factors driving improvement in Estée Lauder and Clinique. We have chosen to reemphasize makeup in these brands to help ignite their businesses. Estée Lauder progress in both modernizing the brand and emphasizing local relevant product drove its higher sales, particularly in certain Asian and European markets. While skincare is its largest business, especially in Asia, the brand's substantial makeup portfolio is attracting younger consumers. It is creating a vibrant digital strategy with newsworthy updates and enhanced storytelling to communicate with consumers 24/7. Clinique's greater emphasis on makeup, especially some color products, is creating a stronger emotional connection with millennials, which is helping to stabilize its performance and drive growth. It is announcing consultant training, distorting key products and testing in new store formats that's colorful, high energy, modular and engages consumers. The first pilot of the new freestanding store model opened in Hong Kong two months ago, and sales are up sharply in what has recently been a relatively depressed market. Our strategy of having multiple engines of growth extends to our innovation program, which develops desirable technologies and concepts across our product category and brands. Our innovation isn't just about creating big blockbusters and our success isn't based solely on the newness product for each brand. Instead, an important impact of our launches is to pull consumers into stores, build traffic and drive sales. Some shoppers do come to buy the latest lip shade, but many others gravitate on our staples, which accounts for the vast majority of our sales. Let me give you example of some recent and upcoming products by category. In skincare, Estée Lauder's new Advanced Night Repair PowerFoil Mask is a global launch with a focus on Asia where masks are extremely popular. This offers key ANR technology and extends this important franchise. Estée Lauder's New Dimension serum was successful in many markets in Europe and Asia, offsetting lower than expected results in North America. La Mer introduced their Renewal Oil, a luxury entry in the popular facial oil subcategory and it has exceeded expectations in many markets. Clinique built a franchise around its Smart serum by extending it with moisturizer and treatment oils. In the makeup category, Skin Foundation have been strong sellers. Several of our brands, including Estée Lauder and Bobbi Brown, are introducing cushion compacts, which is a growing segment and has been popular with consumers. The strong growth in our high-end fragrances brands is another important element of our strategy that is working very well. The combination of Tom Ford, Jo Malone and recent acquisitions are generating sustainable profitable growth and we continue to expand distribution and roll out exciting new scents. We have had a variety of fragrance launches across prestige points, and many of them, as well as attractive sets, were popular gifts for the holidays. With an eye towards spring, Jo Malone Herb Garden collection will offer five different colognes. Looking at the balance of our fiscal year, we are confident in our sound strategy and are choosing to increase investment in the strongest areas of our business. These investments will include more advertising, building freestanding stores and e-commerce sites, R&D and travel retail expansion. We are further fueling our growth momentum by investing in our winners and continues to build global market share. There are, of course, many macro factors beyond our control and slower markets to overcome. We believe, however, that our diversification, multiple engines of growth, strong innovation, financial agility and superb execution will generate excellent growth. We also continue working to find ways to better leverage this growth in the longer term. With this confidence, we are raising the lower end of our sales guidance and now expect to deliver 7% to 8% growth in constant currency, as well as continuing to forecast double-digit EPS growth for fiscal 2016, delivering another year of strong results while continuing to build sustainable, profitable growth engines. Now, I will turn the call over to Tracey. Tracey Thomas Travis - Chief Financial Officer & Executive Vice President: Thank you, Fabrizio, and good morning, everyone. I will first review our fiscal 2016 second quarter results, and then I will cover our expectations for the third quarter and the full year. My commentary does exclude the impact of restructuring and other charges. Net sales for the second quarter were $3.12 billion, up 8% in constant currency compared to the prior year. Acquisitions contributed approximately 70 basis points of this sales growth. Once again, the strongest geographic performance this quarter came from the Europe, Middle East and Africa region. Net sales in EMEA rose 13% in constant currency, with double-digit growth in virtually every market. A continuation of strong local demand for our products increased tourist traffic in certain cities, and our selective brand distribution expansion contributed to double-digit increases in all major Western markets. Sales growth in France was slower than last quarter, as the attacks in mid-November understandably curtailed both shopping and tourism in Paris. All emerging markets in the region saw double-digit gains led by Russia, Turkey and the Middle East. Our net sales in the global travel retail channel rose 5%, as double-digit gains in many countries and a strong return to growth in Korea were partially offset by continued declines in both Hong Kong and Brazil. Overall, passenger traffic growth is strong, and our growth at retail and net reflected the strength in the quarter. Sales in the Asia-Pacific region grew 6% in constant currency. China rose 9% with e-commerce sales growing nearly 80%, thanks in part to the success of Singles' Day on November 11 when our sales more than doubled versus prior year. Our online sales for the quarter rose to nearly 13% of our total China business. We delivered solid growth in our core markets of Korea and Japan, while some of the smaller emerging markets in the region rose double digits. Australia also delivered another quarter of strong double-digit sales growth. These strong results were partially offset by continued weakness in Hong Kong, where sales decreased by high single digits on top of a meaningful decline last year. A sharp continuation of a decline in tourist flows from China that began last year, combined with both the Chinese yuan devaluing this fiscal year and Chinese tourists continuing to travel more to other destinations in Europe and Asia is creating further weakness in local sales in Hong Kong. Excluding Hong Kong, the region sales would have grown more than 8%. Net sales in the Americas increased 4% in constant currency. Strong double-digit growth continued across Latin America, led by Brazil and Mexico. North American sales grew low single digits, which reflected double-digit growth in Canada and low single-digit growth in the U.S. Sales were strongest in the U.S. in specialty multi, online and high-end department store channels, while tourist driven doors in all channels have been adversely affected by the strong dollar. Our sales in mid-tier department stores continue to be soft in brick and mortar while the related retailer online business was up sharply. Our holiday sales were broadly in line with our expectations, although the environment this year was more promotional than the prior year. In constant currency, net sales in every product category grew this quarter, with double-digit growth in makeup, fragrance and hair care. Makeup sales rose 13% in constant currency. M•A•C, Tom Ford and Smashbox all rose strong double digits due to the success of key recent product launches, further distribution expansion and solid like-door growth. Tom Ford Lips & Boys collection, which originally launched last holiday season, continued to be particularly strong this year. Bobbi Brown, Clinique and Estée Lauder rose mid to high single digits in makeup, primarily due to strengthening their product offerings and their support behind the fast growing lip and foundation categories. Fragrance category sales rose 12% in constant currency during the important holiday gifting season. Double-digit gains from Jo Malone and Tom Ford and incremental sales from our newer brands, Le Labo and Frédéric Malle, drove the majority of the growth. Within other designer fragrances, Michael Kors Gold Collection and Tory Burch also contributed to growth and Estée Lauder's Modern Muse Le Rouge, launched this fall, grew the overall Modern Muse franchise. Hair care sales increased 14% in constant currency with growth from both Aveda and Bumble and bumble. Aveda launched Thickening Tonic and Shampure dry shampoo, which also benefited from continued growth in existing products such as Be Curly. The brand expanded its presence in travel retail and delivered strong salon growth in Western Europe, and Bumble and bumble experienced solid growth in the specialty multi-channel. Skincare sales rose 2% in constant currency. Skincare continues to be the dominant beauty category in China and Hong Kong where there has been more challenging macro trends that have contributed to the category's slower global growth. La Mer rose double digits. Origins and Darphin generated solid growth and GLAMGLOW represented incremental sales growth in skincare. Estée Lauder achieved modest growth due to recent launches and Clinique declined slightly in the quarter. Our gross margin for the quarter was comparable to the prior year at 81.2% of sales. Favorabilities in our supply chain were offset by the combination of category mix, with a slower growth in skincare, and some higher promotional expenses over the holidays. Operating expenses as a percent of sales were in line with the prior year quarter at 60.4%. Increases were primarily due to higher store operating costs, which reflected over 130 new freestanding retail store openings over the past year, offset by improvements in selling, shipping and other expenses. As a result, operating income of $647.9 million was 2% above the prior year and operating margin was unchanged at 20.8%. Our constant currency operating margin improved 60 basis points primarily due to expense leverage. Net earnings were $458.6 million or 5% above the prior year quarter, reflecting a 230 basis point improvement in our effective tax rate, which was partially driven by a discrete tax credit in the quarter. Diluted EPS of $1.22 was 8% above the prior year, including the benefit of a lower share count. Our stronger than expected EPS was largely driven by a combination of better sales performance across most of our brands and continued strong expense management as we navigated the volatile macro environment. Earnings per share for the quarter included $0.01 of dilution from acquisitions and $0.11 of unfavorable currency translation. On a constant currency basis, EPS increased 18%. We recorded $18.5 million in charges before tax, or $0.03 per share, for the transition of our global technology infrastructure to a new platform that we announced to you last quarter. As we mentioned previously, for the full fiscal year we expect to record charges for this transition of between $40 million and $50 million before tax, or approximately $0.07 to $0.09 per share. Continued progress in our working capital initiatives, along with favorable currency translation, contributed to a seven-day improvement in inventory days to sell through the end of December. These improvements were partially offset by the inventory build necessary to meet our future sales growth objectives and the additional inventory from our new brands. For the six months ended December 31, we generated $962 million in cash flows from operating activities, 3% less than the comparable period last year. The prior year cash flow benefited from the SMI sales shift. Excluding the impact of the shift from last year, operating cash flow this year rose 17%. We invested $223 million in capital expenditures, primarily to support new retail stores, counters, systems and office space. We utilized $628 million in cash to repurchase approximately 7.6 million shares of our stock, 1.2 million more than the same period last year. We also distributed $201 million in dividends to stockholders. So that concludes our results for the second quarter and the half year. Let me now turn to our outlook for the full fiscal year and the third quarter. For the full year, the sales shift related to last year's SMI rollout will impact comparisons to the prior year. I will now discuss our expectations adjusting for the impact of the shift. Our forecasted growth rates, both before and after the shift impact, are available in today's earnings release for your reference. Also excluded, again, for the full year is the impact of restructuring and other charges. So, reflecting our strong first half performance, we have raised the low end of our guidance range and now expect full year sales growth of between 7% and 8% in constant currency, including 50 basis points from acquisitions. Currency has become an even greater headwind, and we now estimate that translation could negatively impact our full year sales growth by approximately five percentage points. Our estimate assumes spot exchange rates as of the end of January of 1.08 for the euro, 1.43 for the pound, and 1.18 for the yen for the remainder of the fiscal year. Diluted EPS is expected to range between $3.07 and $3.12, including $0.04 of dilution from acquisitions. The increased currency headwinds are now projected to affect EPS by about $0.29, which is $0.05 more than we projected when we last gave guidance. Our strong first half performance gave us comfort to increase our investments in the second half of the fiscal year to support new innovation, additional freestanding store acceleration, omni-channel pilots, travel retail and the Estée Edit, which should allow us to continue to fuel profitable growth. And while we remain on track to deliver $200 million of cost savings this year, we will also continue to look for ways to further improve our leverage in the future. We continue to expect EPS growth of 10% to 12% in constant currency. In the third quarter, our sales are expected to rise 6% to 7% in constant currency, including 70 basis points from acquisitions as we anniversary our strongest sales growth quarter from last year. The impact of foreign currency is anticipated to reduce growth by approximately four percentage points. Our third quarter diluted EPS is expected to be between $0.53 and $0.58, including approximately $0.03 per share of adverse currency translation and approximately $0.02 dilution from acquisitions. This estimate reflects our highest quarter of planned advertising and promotional spending as a percent of sales in the third quarter and is deployed behind key activities such as the global launch of Estée Lauder's new Advanced Night Repair PowerFoil Mask, the U.S. introduction of the Estée Edit collection in Sephora as well as a variety of activities in the makeup category across multiple brands. We delivered strong sales and earnings growth and showed solid progress on our strategic initiatives in the first half of the fiscal year while managing through a volatile global macro environment. We are encouraged by our results thus far and the scope of activities we have planned throughout the remainder of the fiscal year, which should support our continued growth momentum for this fiscal year and beyond. And that concludes our prepared remarks. We'll be happy to take your questions at this time.

The floor is now open for questions. Our first question today comes from Steve Powers with UBS. Stephen R. Powers - UBS Securities LLC: Great. Good morning. I wanted to pick up on the theme of agility, which was the center of the discussion we had a couple of months ago, and you began by calling it out again today. So really two questions, if I could, related it to. First, Fabrizio, can you maybe talk about some of the structural steps you've taken to enable that flexibility? Because I think there is some debate out there as to how much of what we are seeing is innate skill and a function of institutionalized discipline versus simply you benefiting from a spate of good luck that might eventually run out. That will be my first question. And then second, Tracey, can you talk about how the theme of agility relates to your ability to protect margins and profit? Because I am struck by the fact that here we are, you just beat the top end of your Q2 guidance by $0.14 and none of that is being passed through to your full year guidance to insulate the P&L from incremental FX pressure. And maybe that is prudent on your part. I am inclined to think that it is, but at the same time I just thought that with the top line strength, all the pricing levers you have, some of your productivity efforts that there would be more ability to be nimble and agile on that front as well and avoid the guide down. So I would just love your thoughts there too. Thanks. Fabrizio Freda - President, Chief Executive Officer & Director: Okay. Now, on agility, as we discussed, so, first of all, we monitor the changes around the world. So the first institutional model is a continuous monitoring all the changes. Example, traveling corridor of tourist full, market growth in different levels. We have now new level of analytics and follow-up on how the business evolves. So understanding. The second institution is then we tailor launches – product launches, assortment and things based on what we learn regularly. Third is when markets over-deliver their financial trends, they get more opportunity to spend. And when they market then to under-deliver, they tend to cover at least part of what they cover for the profit pressure that they are under. So these automatic mechanisms are anyway generating flows or resources automatically to the winning part of our business. Third, the way people collaborate is completely different today. We collaborate, we make decision together and so the ability to flow in an agile way, both resources and money, and make fast decision on locations is taken at the top of the company in a collaborative way. Those are institutional way, which are here to stay. And actually they are a – the way we work across every quarter. So assume that we – once we decide a plan, we constantly work to improve it, quarter-by-quarter, months-by-months. And the company does this in a structural way. Second point before Tracey answer the second part of your question, I would like to say that in reality, what we are doing is focusing even more on growth, even in the second semester. We have so many winning opportunity and our location methodologies are working. And our ability to build the top line in a sustainable way for the long-term is definitely the most important priority for sustainable double digit EPS growth in the long-term. So our point of view is that moving the lower end of our top line sales trend from the 6% to 8% – we have 6% to 8%. So moving from closer to the 6% to closer to the 8% in a sustainable way has much more value for our shareholders in the long-term than just covering currencies in the short term. So our approach is to focus on long-term top line growth acceleration. And in a moment where the environment out there is volatile, and we have proven that in volatile environment, we have a competitive advantage in being able to operate, we want to leverage that momentum and get this competitive advantage through. That's what we're doing. That's why we have decided not to cover currency. We trim the investment in the short term that we didn't feel was the long-term priority. Tracey Thomas Travis - Chief Financial Officer & Executive Vice President: And so I think Fabrizio answered it well, Steve, but I will just add on that while Estée Lauder and Clinique are ahead some good signs in terms of the first quarter, they have some great programs lined up for the second quarter that we think are worthwhile investing in. If we didn't have good opportunities to invest in, in the second half, we would certainly drop the upside to the bottom line. But as Fabrizio said, we have tremendous momentum in many of our brands. We have good programs in Estée Lauder and Clinique that we think will deliver good results in the second half of the year, and beyond. So it's important for us to invest not only for this fiscal year but obviously to continue the growth momentum beyond this fiscal year.

Your next question is from Dana Telsey with Telsey Advisory Group. Tracey Thomas Travis - Chief Financial Officer & Executive Vice President: Hello, Dana? Dana L. Telsey - Telsey Advisory Group LLC: Hello. Tracey Thomas Travis - Chief Financial Officer & Executive Vice President: Hi. Dana L. Telsey - Telsey Advisory Group LLC: Hello. Hi. Congratulations and wanted to get a better understanding of channel penetration, given that specialty multi is growing so fast. What does it mean for distribution of the business? What percentage could it account for over time? And how does that impact margins go forward? Thank you. Fabrizio Freda - President, Chief Executive Officer & Director: Okay. So, specialty multi is growing well globally. And what it means for our distribution that we are increasing distribution globally with our brand portfolio in specialty multi where appropriate. So you can expect a global increase of distribution gradually in this channel. However, we also learning how to win in this channel. So it's not only a distribution game, it's also a marketing game. This channel requires different marketing and selling techniques than the traditional department store core business that we have around the world. And so over time, I believe our organization is becoming better and better in partnering with specialty retailers around the world and learning how to grow our business in this channel better and better. The first thing is so you can expect that the percentage of our business in which channel will grow, but this is very different by country around the world depending on the penetration of this channel. So, I will not give frankly detail on percentages, also because they will be very much the results of mix by geographies rather than on specific advancement in a given brand or in a given country. Tracey, I don't know if you want to talk. Tracey Thomas Travis - Chief Financial Officer & Executive Vice President: No. I think you answered it well.

Your next question is from Wendy Nicholson with Citi Investment Research. Wendy C. Nicholson - Citigroup Global Markets, Inc. (Broker): Hi. Could you give us a little bit more color on the Estée Edit? So it is going into 320 doors. How many SKUs is that? Can you give us some sense for how large a contribution to the revenue growth in the third quarter that will be? Is it 50 bps or whatever? Is it skincare and color or just color? And are there plans to expand it either to more Sephora doors or Ulta doors or any of the department doors as we go forward? And then, just following up on that, second of all, can you remind us or tell us; I don't think I heard it, Clinique and Estée Lauder, are you still expecting them as big brands to be up for fiscal 2016? Thanks. Fabrizio Freda - President, Chief Executive Officer & Director: Yes. A lot of questions. So on Estée Edit – so, first of all, Estée Edit is exclusive to Sephora and will be launching Sephora brick and mortar and Sephora.com. And it's been developed also in strict collaboration with the Sephora teams. The Estée Edit is focused on makeup, but includes also some – how we call it, instant skincare benefit products. To us some core SKUs of Estée Lauder business. This brand will be supported by a very strong social media and very strong digital activities, really focused on the millennials and incorporation also in magazines that support the magazine and social media activity. So it will be a strong launch. In terms of the impact for the long term, obviously, it will depend from the success. We have a very strong belief that this will be a strong success. And in case of success, we assume it will be expanded to more Sephora doors over time, obviously. But we will need first to test and see the success level that we get. Now, in terms of the quarter, remember, this is launched in March 15 at mid-March, so the impact on third quarter is relatively limited. But we hope that the impact on fiscal year 2017 and 2018 will be – obviously be much stronger when success will happen. The other important aspect of Estée Edit is that it is not only going to be hopefully a success in sales, but is also very important way to attract millennials to the Estée Lauder brand and is one of the steps to modernize the Estée Lauder brand as a whole in our opinion. On Lauder and Clinique, the Lauder and Clinique combined grew about 1% in the quarter two, so – which is a turnaround. This was in quarter two specifically, it was driven by Estée Lauder growth as Tracey explained in her remarks. But the important point is that both Lauder and Clinique are growing again on their makeup business, which is in the case of the Clinique a very big percentage; in the case of Lauder is more the percentage of total business because of the big Asia penetration of skincare, but still in many countries is the bigger part of the business of these two brands. So that's the important reality. We said that we would have started turning around to grow these two brands starting from makeup and then fall into skincare. On skincare, it's frankly difficult to imagine that skincare will also start growing again within this fiscal year with Hong Kong in the situation in which it is and with the China market growth in skincare being so soft. As I said before, China market growth is mainly driven by makeup in this moment, and the skincare is not growing very aggressively. So – but as soon as the Asia skincare dynamic will find back a normalized growth, we will complete the turnaround also on the skincare front of these two brands. That's our assumption for the fiscal year.

Your next question is from Mark Astrachan with Stifel Nicolaus. Mark S. Astrachan - Stifel, Nicolaus & Co., Inc.: Thanks and good morning, everybody. I wanted to ask about gross margins, so flat sequentially for the second straight quarter. Just curious, you talked about promotional activity in China and the press release talked about just general levels of promotional activity around the holiday period. How much did that impact gross margins in the quarter? Were there other drivers as well? As you sort of think longer term, is modest expansion still reasonable? And then, sort of related to all that, I guess just back to the previous question, so there is clearly going to be some mix effect, I would assume, from skincare. So, how does that factor in as well? Thank you. Tracey Thomas Travis - Chief Financial Officer & Executive Vice President: No. Great questions. So, promotion affected the margins slightly in the quarter. The bigger impact in terms of it being flat year-over-year was the category mix as you indicated. So tremendously strong growth in makeup and much softer growth in skincare and fragrance as well, so strong growth in fragrance. Those two factors do affect our category, or our gross profit margin mix. In terms of the future, yes, we do expect to see some modest improvement in gross profit margin over the next few years, not to the extent that we saw four years or five years ago, but certainly a continuation of modest improvement over the next few years.

Your next question is from Lauren Lieberman with Barclays Capital. Lauren Rae Lieberman - Barclays Capital, Inc.: Great. Thanks. I was curious about the travel retail stepping up investments there because I feel like from an external perspective and some of your competitors, if anything, there is more concern about travel retail being a soft spot and I think even questions around whether we will see a resurgence when and if some of those wealthier emerging-market travelers start shopping again. And yet, you talked about increasing your investment in travel retail distribution. So, can you talk a little bit about that decision? Is it new airports? Is it new brands in some of your existing corridors? Just any color there would be great. Thank you. Fabrizio Freda - President, Chief Executive Officer & Director: Absolutely. So, first of all, we are applying to travel retail the same multiple engines of growth, diversification and investment agility philosophy that we are applying to the entire company. So as you said, travel retail has been having some outstanding momentum for years based on the Asian travelers' acceleration. And in this moment, the Asian dynamic, particularly the Hong Kong-Macau one, which is the worrying one and it's been soft, very soft in quarter two, we predicted the softness to stay in that part. But in reality, it's not the traffic which is declining. It is where consumers are going and how much they're shopping. So we are reacting to that. We are increasing brand distribution, yes. We are increasing penetration of airports where the traffic is going now, meaning more Europe and more other areas of Asia, for example. We are adjusting assortments to the new corridor, to the new traveling corridor. So give you an example. At the moment, Brazilians don't travel any more as much as they used to. And when they travel, they shop less. We adjust assortments. And in these places like Miami, now there are more different kind of travelers to which we adjust. And maybe there are other brands that today are not there that are better suited with different group of travelers there. So the previous brands that we had before that were maybe more suited to Brazilians, as an example. This is happening all over the world. So it's adjustment in assortment, is increase our number of brands, is penetration of more airports, and most importantly, is a dynamic adjustment to the corridor travelers. So that's the first theme, which is about traffic management. The second theme is about commercial. And what is changing is that all these currency changes in travel retail, the currency changes are changing the dynamic of the duty-free aspect, the discounts the consumer found around the world versus their home market. And that's why, for example, makeup is growing much better in travel retail. Makeup is much more purchased because of the commercial marketing from travelers to buyers rather than for big discounts. Also they get discounts for these in absolute terms, much smaller. So we are learning to increase some categories in travel retail where we were not as penetrated as we were in skincare, like some makeup. We are learning that our high-end fragrances like Jo Malone are extremely successful in travel retail. So we are expanding the high-end, the sophisticated artisanal fragrances, including our new acquisition would be part of that. That is a very big opportunity. Also because as you know, fragrance is a very big market in travel retail and we are learning more marketing techniques to convert traveler into purchaser based – for example of M•A•C is adding makeup artists. Jo Malone is adding gifts methodologies in travel retail. So making sure there are more reasons to buy in travel retail than just lower prices than in the home markets. So that's the entire strategy. It's a pretty sophisticated strategy. And as everything we are doing is about the long-term sustained growth of this very important and profitable channel.

Your next question is from Joe Altobello with Raymond James. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Hi. Thanks. Good morning. Since we are talking about travel retail, I guess I will start there. Obviously, a big turnaround this quarter for your sales, although retail sales have been pretty good for the last few quarters. Is this an indication that the inventory adjustments we have seen in the past are now behind us or was this sort of a one-time blip in the quarter? And then secondly, on skincare, up 2% constant currency. Obviously, the market conditions of Hong Kong and China are not helping you, but how does that 2% compare to category growth overall? Thanks. Fabrizio Freda - President, Chief Executive Officer & Director: So, I'll answer the first part of the question, which is basically, yes. We believe in this moment, as we said, the net-in and sellout retail seems to be aligned. Remember that the – part of this alignment that was caused by the MERS event in Korea, so we cannot eliminate the risk that more events like this will happen, or flus or things in other parts that will disrupt the relationship between net and retail in the future. But for the moment, I believe we are in a situation where they are realigned. And in absence of new disrupting event, hopefully, they will stay aligned. Tracey, you want to address... sorry. Tracey Thomas Travis - Chief Financial Officer & Executive Vice President: The skincare – I think the second question was skincare versus – the skincare growth in travel retail versus the category. Fabrizio Freda - President, Chief Executive Officer & Director: Oh, right. Tracey Thomas Travis - Chief Financial Officer & Executive Vice President: And as you might well know that our skincare travel retail business is heavily driven by Asia and Asian markets and Asian traveling consumers, so we did see softness in the Hong Kong and China part of our travel retail business that was largely related to skincare. We also saw some softness in Brazil that was more related to makeup. But for skincare, definitely, the Hong Kong/China softness impacted the category in travel retail. Yeah. Fabrizio Freda - President, Chief Executive Officer & Director: But I wanted again to stress what I said before that makeup is growing. The M•A•C brand travel retail trend is outstanding and the Joe Malone, for example, or the Tom Ford, so our high-end fragrances are really, really doing well.

Your next question is from Kevin Grundy with Jefferies. Kevin Grundy - Jefferies LLC: Thanks. Good morning. Tracey Thomas Travis - Chief Financial Officer & Executive Vice President: Good morning. Kevin Grundy - Jefferies LLC: So my question is on emerging markets, specifically, where you guys have delivered outstanding growth. What is your outlook for the year, broadly? And I am curious how that may have changed or may not have changed over the past three months to six months, given the difficult macro? And specifically, do you still think you can deliver this mid to high 20% growth that we have been accustomed to, just the fact the comparisons become more difficult in the third quarter? So any commentary there would be helpful. Thank you. Fabrizio Freda - President, Chief Executive Officer & Director: So the – sorry the question was the other markets, the other emerging markets? Tracey Thomas Travis - Chief Financial Officer & Executive Vice President: Other emerging markets. Fabrizio Freda - President, Chief Executive Officer & Director: So, the other emerging markets, the China, that grew 30% in the first quarter grew 27% for us in the second quarter, and anyway this is three times the growth of these markets. So, we are growing market share by design in the emerging markets around the world from Mexico to Brazil, to Turkey, to South Africa, to India, to the Middle East. And in all these markets, we are growing double-digit. As we said, China is not in this group but when we say China, which is growing 9% and the rest of the emerging markets 27%. And I think we will continue. Actually as I said in my remarks, we plan to continue to invest for growth and beat market share in this market even if in some of them the currency issues is creating some economical issues in these markets. We will take the opportunity to further increase our market share in this moment, because also it can be done in a very efficient way and hopefully get the benefits of this when this market will go back to more normal economic growth. So it's a good momentum, our brands are loved, and the opportunities in front of us are enormous. And so if the question was, can this kind of growth be sustained? I believe, yes. This kind of growth can be sustained for the long time.

Your next question is from Ali Dibadj with Bernstein Research. Ali Dibadj - Sanford C. Bernstein & Co. LLC: Hey, guys. I'm sorry. I have three questions, but they are relatively straightforward. One is, just going back to the agility, I want to better understand how you are organizationally structured to do that. So who is actually responsible for the dynamic resource allocation? Is it centralized? Is it decentralized? So some more color there would be interesting because it seems to really be helpful to you guys. Number two is – and it may relate to the first question or it may not, is your SG&A ex-advertising spend still seems relatively high here. So I'm trying to get a sense of how much opportunity you think there is there, especially perhaps as you become more nimble. Typically, that is fewer layers, fewer heads, et cetera, so some ideas there. And then, the third piece is something completely different, just about the fragrances. I guess two of the 12 fragrances that remain with P&G, Dolce & Gabbana and, I guess to a lesser extent, Christina Aguilera, and your interest in those, given what you are seeing trend wise in fragrances recently. Thanks. Sorry for the three. Fabrizio Freda - President, Chief Executive Officer & Director: So, I'll answer the first and the third, and let Tracey answer the second. So, how our methodology works. First of all, it is about how we are structured. So – but the short answer is centralized. This decision is pretty centralized. We have monthly meetings where the finance team with Tracey at the head and the group presidents, which are – we have two group presidents take care of the region, or they go to market, and two group presidents take care of the combination of the brands. These four people plus Tracey and me centrally have basically complete control of the business and the resource allocation. And we review the opportunity and make decisions centrally in the same room on a very agile way. And that's I think the key topic. Then how technically that this work, frankly, it will – be more time than eight minutes on a call. But that's the key idea. It's centralized by six people. Second question, actually, your third question on fragrances. Again, I want to insist, we have declared that in this moment our priorities are high end fragrances on brand assets that we own like Jo Malone and that's why the acquisition of Le Labo. That is our priority; that stays our priority. This part of high end brand own seasonal fragrances model are very profitable, are growing at a smaller but fast growing part of the business which is very well suited to the Estée Lauder company portfolio. Tracey Thomas Travis - Chief Financial Officer & Executive Vice President: And, Ali, regarding your second question on costs outside of advertising, yes, we do believe we have further opportunity in those areas. Most of our cost saving programs this year, some of them were targeted at A&P effectiveness, many were targeted outside of that with selling productivity and other cost saving initiatives. And we think there is further opportunity, as I mentioned in my prepared remarks, to leverage expenses going forward with some of the process improvement initiatives that we have put in place this year that should yield some benefits in the future.

We have time for one more question, please, Caroline Levy with CLSA. Caroline S. Levy - CLSA Americas LLC: Thank you so much. Good morning. I was interested in just digging a little deeper into China, if I might. It used to be that prices were – I mean, I think at least 50% above, say, the United States. And I just wondered with some of the price changes that had gone into place, how much the price premium is in China today, on an average? And if you could just maybe walk around differentiating between Tier 1 cities, other cities, and obviously your online is doing very well, but where are the real pockets of weakness in China and what are the opportunities to change that even in the face of a soft consumer? Fabrizio Freda - President, Chief Executive Officer & Director: So, first of all, on pricing, in China, we have decreased the pricing, as you probably know, some time ago. And after the price decrease, the currency in China continues to devaluate. So in reality, the price differentials are much diminished on our brands. And I cannot tell you an average because it doesn't – but they are 10%, 15% in some cases, or 30%, 35% in other cases by SKU depending on many different dynamics. But they're much more reduced than they used to be in the past. So, the second part is where are the strengths, the weakness of China? Our strategy in China, like the one I explained for travel retail, is about diversification. So China is softer in this moment in the biggest skincare segment, is softer in the biggest cities; Shanghai, Beijing. Is – while China growth is very strong in Tier 2, Tier 3 cities, it's very strong online. It's very strong in smaller brands which are entering in areas in makeup and fragrances, which are fast-growing categories for this population. So again, it's about diversification. If you have multiple engines of growth, you can operate in new cities. You can operate online. You can operate in new growing segments like some makeup and some fragrance, high-end fragrance segments. There is an enormous amount of growth opportunity in China. And that is the diversification, multiple engine of growth work that we are doing also there and which are driving our results. Just to give you a number, our online business grew 80% in total in China during quarter two. 80%; 80. So it is a very strong acceleration, and that's what is the focus of our activity of creating the right engines of growth also in China for the long-term.

That concludes today's question-and-answer session. If you were unable to join for the entire call, a playback will be available at 1:00 p.m. Eastern Time today through February 19. To hear a recording of the call, please dial 855-859-2056; pass code 35830757. That concludes today's Estée Lauder Conference Call. I would like to thank you all for your participation and wish you all a good day.