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The Estée Lauder Companies Reports Solid Fiscal 2013 First-Quarter Results - Earnings Per Share Rose 12% to $.79 - Before

  The Estée Lauder Companies Reports Solid Fiscal 2013 First-Quarter Results -
  Earnings Per Share Rose 12% to $.79 - Before Charges

Business Wire

NEW YORK -- November 01, 2012

The Estée Lauder Companies Inc. (NYSE: EL) today reported a solid financial
performance for its first quarter ended September 30, 2012. For the quarter,
the Company had net sales of $2.55 billion, a 3% increase compared with $2.48
billion reported in the prior-year quarter. Excluding the impact of foreign
currency translation, net sales increased 6% from a year ago. These results
were delivered against a 14% local currency sales increase in the prior-year
quarter and softer than expected markets, particularly in Western Europe. The
Company reported a 150 basis point increase in operating margin and net
earnings for the quarter rose 8% to $299.5 million, compared with $278.6
million last year. Diluted net earnings per common share rose 9% to $.76,
compared with $.70 reported in the prior year. All mention of net earnings in
the body of this release refers to net earnings attributable to The Estée
Lauder Companies Inc., which reflects the adjustment for noncontrolling
interests.

The fiscal 2013 first-quarter results included charges associated with
restructuring activities of $0.4 million. Additionally, in the quarter the
Company redeemed $230.1 million principal amount of its 7.75% Senior Notes due
2013. As a result, the Company recorded a pre-tax charge to earnings of $19.1
million ($12.2 million after tax), for the impact of the extinguishment of
debt, equal to $.03 per diluted common share. The fiscal 2012 first quarter
results included charges associated with restructuring activities of $4.1
million.

Excluding these charges in the first quarters of fiscal 2013 and 2012, net
earnings rose 11% to $312.1 million. Diluted net earnings per common share
rose 12% to $.79 versus a comparable $.70 in the prior-year period. A
reconciliation between GAAP and non-GAAP financial measures is included in
this release.

Fabrizio Freda, President and Chief Executive Officer, said, “In this new
fiscal year, we continue to be guided by our winning strategy and commitment
to profitable growth. Our first quarter results demonstrate the solid
fundamentals underlying our business and I am pleased and encouraged with our
performance even in softer markets. Organic sales growth for the quarter was
in line with our expectations, while earnings per share were better than
planned. In particular, strong growth in North America and China drove our
sales gains and, when coupled with cost of sales improvements and effective
expense management, we generated a significant operating margin increase.

“Looking ahead, we continue to focus our resources on the most attractive
areas of growth and on drawing new consumers into our business via successful
product and service innovation and effective investment spending. We are very
mindful of the uncertain market dynamics in several countries and of the solid
growth in others, but we are judicious in our resource allocation to maximize
our results in this dynamic market situation. We are confident that we have
developed the necessary agility to manage our business effectively. We expect
that we will grow our sales 6 to 7% in local currency this fiscal year, or
double the rate of global prestige beauty, while raising the lower end of our
earnings per share range.”

The Company’s performance was due to solid overall business, particularly from
its largest brands. The Company generated local currency sales gains in each
of its product categories and geographic regions. Sales growth was
particularly strong in the United States and overall in emerging markets,
along with solid gains in certain developed countries.

During the quarter, the Company made substantial progress on its previously
stated strategic goals, with a strong improvement in cost of sales and
operating expenses as a percentage of net sales. All product categories and
geographic regions benefited from Company-wide efforts to reduce or eliminate
non-value-added costs. In connection with the long-term strategic plan and
certain ongoing initiatives, the Company realized savings of $17 million
during the quarter. As a percentage of net sales, all significant operating
expense categories were lower. Gross margin expanded 50 basis points,
operating expense margin improved 90 basis points and operating margin rose
140 basis points, before charges.

              
Results by Product Category
               Three Months Ended September 30
                                                            Operating                Percent
(Unaudited;
Dollars in      Net Sales               Percent Change        Income (Loss)             Change
millions)
                                       Reported  Local                               Reported
                2012        2011        Basis      Currency   2012         2011         Basis
                                                                                              
Skin Care       $ 1,113.5   $ 1,072.9   4    %     7     %    $  259.0     $  223.7     16    %
Makeup          960.4       928.8       3          6          161.3        159.6        1
Fragrance       347.6       356.8       (3   )     0          53.4         48.3         11    
Hair Care       113.9       103.8       10         12         10.7         5.1          100   +
Other           14.1        13.7        3          4          (2.0     )   (2.6     )   23
Subtotal        2,549.5     2,476.0     3          6          482.4        434.1        11
Returns and
charges
associated      —           0.7                               (0.4     )   (4.1     )
with
restructuring
activities
Total           $ 2,549.5   $ 2,476.7   3    %     6     %    $ 482.0      $ 430.0      12    %
                                                                       

Skin Care

  *The skin care category is a strategic priority for the Company. The
    Company gained share in this category during the quarter in certain
    countries where its products are sold. Skin care sales growth was strong,
    particularly in view of the 25% growth reported in the prior-year quarter.
  *The Estée Lauder brand benefited from the recent launches of Perfectionist
    CP+R and the Optimizer line of products, as well as higher sales of
    Advanced Night Repair Synchronized Recovery Complex.
  *The recent launches of The Moisturizing Soft Cream from La Mer and Even
    Better Eyes Dark Circle Corrector from Clinique contributed strong
    incremental sales.
  *These sales gains were partially offset by lower sales from certain
    existing products.
  *Operating income increased double-digits, primarily reflecting improved
    results from higher-margin product launches in certain of the Company’s
    heritage brands, as well as from higher-end prestige skin care products.

Makeup

  *Makeup net sales increased, which built upon the 17% growth in the
    prior-year quarter.
  *Higher makeup sales reflected the recent launches of Pure Color Vivid
    Shine Lipstick and Pure Color Gelee Powder Eyeshadow from Estée Lauder,
    along with Pore Refining Solutions Makeup, High Impact Extreme Volume
    Mascara and Stay-Matte Oil-Free Makeup by Clinique.
  *Higher sales from Smashbox and certain products from the Company’s makeup
    artist brands, along with the success of the Tom Ford Beauty line of
    cosmetics, contributed to the category’s growth.
  *Lower sales from certain existing products partially offset these sales
    gains.
  *Makeup operating income increased, primarily reflecting the higher sales.

Fragrance

  *In fragrance, notable sales increases were generated from the recent
    launches of DKNY Be Delicious So Intense, Coach Poppy Blossom, Estée
    Lauder pleasures Eau Fraiche and Jo Malone Blackberry and Bay.
  *These increases were more than offset by lower sales of DKNY Golden
    Delicious, Estée Lauder Sensuous Nude and Coach Poppy Flower, all of which
    were new launches in the prior-year period.
  *Fragrance operating income increased, primarily reflecting a more
    strategically focused approach to spending as part of the Company’s
    strategy to improve profitability. Operating income also reflects a
    favorable comparison to the prior-year period, which included higher
    spending in support of new launches of designer fragrances.

Hair Care

  *Hair care double-digit net sales growth was primarily driven by Aveda,
    reflecting the recent successful launches of its Invati line of products
    and Pure Abundance Style Prep.
  *The category also benefited from sales generated from expanded global
    distribution, in particular to salons and multi-brand specialty retailers.
  *Lower net sales at Ojon were due, in part, to softness of its business in
    the direct response television channel.
  *Hair care operating results increased significantly, primarily reflecting
    the higher sales, driven by new product launches and expanded global
    distribution.

              
Results by Geographic Region
               Three Months Ended September 30
                                                            Operating                Percent
(Unaudited;
Dollars in      Net Sales               Percent Change        Income (Loss)             Change
millions)
                                       Reported  Local                               Reported
                2012        2011        Basis      Currency   2012         2011         Basis
                                                                                              
The Americas    $ 1,182.1   $ 1,105.4   7    %     8    %     $  172.3     $  149.2     15    %
Europe, the
Middle East &   824.9       858.2       (4   )     2          196.9        187.7        5
Africa.
Asia/Pacific    542.5       512.4       6          7          113.2        97.2         16
Subtotal        2,549.5     2,476.0     3          6          482.4        434.1        11
Returns and
charges
associated      —           0.7                               (0.4     )   (4.1     )
with
restructuring
activities
Total           $ 2,549.5   $ 2,476.7   3    %     6    %     $ 482.0      $ 430.0      12    %
                                                                       

The Americas

  *The region’s sales growth improved a strong 8% upon the prior year, when
    sales grew 10% in constant currency.
  *The net sales increase in the region was primarily attributable to strong
    growth in the United States, which benefited from successful new product
    offerings. The improvement reflects growth from the Company’s heritage and
    makeup artist brands, as well as increased sales in each of the Company’s
    product categories.
  *The higher sales also reflect strong local currency gains in Canada and
    Latin America. Sales in Brazil continued at a strong double-digit pace.
  *Sales to North American department stores grew mid-single digits and sales
    of the Company’s products online grew double digits.
  *Operating income in the Americas increased sharply, primarily reflecting
    the strong sales gains.

Europe, the Middle East & Africa

  *In constant currency, net sales increased in most countries in the region
    and in each product category, except fragrance. Economic uncertainties in
    some Western European countries impacted the beauty markets more than
    anticipated, but the Company continued to generate growth in most of the
    markets.
  *The region’s sales growth of 2% improved upon the prior-year quarter, when
    sales grew 19% in constant currency.
  *In constant currency, double-digit net sales growth was recorded in a
    number of areas, including the Middle East, South Africa, Turkey and the
    Nordic countries, while solid sales gains were generated in the United
    Kingdom and Germany.
  *In travel retail, the Company experienced double-digit retail sales growth
    in the quarter, which was more than twice the increase in airline
    passenger traffic. Weakness in Korea and select retailer destocking
    impacted net sales growth.
  *These increases were partially offset by lower net sales, primarily in
    Russia, Switzerland, France, the Balkans and Spain.
  *The Company estimates that it gained share in certain countries within its
    points of distribution in this region during the quarter.
  *Operating income in the region increased, led by travel retail, Russia and
    South Africa, which were partially offset by lower results in Germany,
    Spain and Italy.

Asia/Pacific

  *Local currency sales growth was generated in several countries in the
    region, with the strongest gains coming from China, Hong Kong and
    Thailand, primarily reflecting strong sales of skin care products. In
    China, the increase was primarily due to sales to new consumers in
    expanded distribution in tier two and three cities.
  *The region’s sales growth of 7% improved upon the prior-year quarter, when
    sales grew 15% in constant currency.
  *The increases in certain Asian countries were partially offset by lower
    net sales, predominantly in Korea, reflecting difficult economic
    conditions and competitive pressures. The Company expects to see continued
    weakness in prestige beauty in Korea, which also impacted the travel
    retail business there.
  *The Company estimates that for the quarter it gained share in certain
    countries, including China, within its points of distribution.
  *In Asia/Pacific, operating income increased, with most countries posting
    higher profits. China, Taiwan, Thailand and Japan reported the largest
    increases, while lower results were recorded primarily in Korea.

Cash Flows

  *For the three months ended September 30, 2012, net cash flows used for
    operating activities were $125.2 million, compared with $36.2 million in
    the prior-year period.
  *The increase primarily reflected changes in accounts payable and accounts
    receivable levels, due to the timing of payments and collections,
    respectively, as well as higher inventory levels in advance of the
    Company’s implementation of SAP at certain affiliates. These changes were
    partially offset by an increase in other liabilities and net earnings.
  *Days of inventory at September 30, 2012 were 14 days higher compared to
    September 30, 2011. This increase reflects the building of inventory to
    support expected near-term sales growth and maintain service levels, as
    well as in advance of the Company’s implementation of SAP at certain
    affiliates.
  *During the quarter, the Company used operating cash flows primarily for
    the repurchase of shares of the Company’s Class A Common Stock and capital
    expenditures, including increased expenses related to the Company’s
    Strategic Modernization Initiative (“SMI”).

Outlook for Fiscal 2013 Second Quarter and Full Year

The Company has benefited from the strength in prestige beauty in North
America and China. While overall the Company’s business is performing well,
certain Western European countries and Korea are seeing worse than expected
weakness due to economic uncertainties.

Specifically, in the context of its strategy, during fiscal 2013, the Company
expects to continue to increase gross margins and reduce operating expenses,
which allows it to increase global advertising spending and finance SMI, while
increasing profitability. Investment in advertising behind strong innovation
should continue to create growth well beyond the industry average.

Second Quarter

  *Net sales are forecasted to increase between 6% and 7% in constant
    currency.
  *Foreign currency translation is expected to negatively impact sales by
    approximately 1.5% versus the prior-year period.
  *The Company’s forecasted results will face a difficult comparison to the
    prior-year period when its sales grew 10%.
  *In advance of the Company’s expected January 2013 implementation of SAP at
    certain of its affiliates and to provide adequate safety stock to maintain
    service levels, some international retailers, primarily in Asia/Pacific,
    may increase their sales orders towards the end of the quarter. Those
    additional orders are estimated to amount to between $70 million and $90
    million of sales that would normally occur in the Company’s fiscal third
    quarter. Similarly, in comparison, during fiscal 2012, retailers
    accelerated orders into the second quarter from the third quarter in
    advance of the Company’s January 2012 implementation of SAP at certain of
    its affiliates. Those orders amounted to $30 million of sales.
  *To support product launch calendarization and maintain sales momentum, the
    Company expects to spend approximately $70 million to $80 million more in
    advertising, merchandising and sampling as compared to the prior period.
  *Diluted net earnings per common share, including charges associated with
    restructuring activities, are projected to be $.97 to $1.03.
  *The Company expects to take charges associated with restructuring
    activities in its fiscal 2013 second quarter of about $2 million. The
    recording of charges will depend on when the relevant accounting criteria
    are met.
  *Diluted net earnings per common share before charges associated with
    restructuring activities are projected to be in the range of $.97 to
    $1.03.
  *In connection with its long-term strategic plan, as well as certain
    ongoing initiatives, the Company expects to realize savings of between $15
    million and $20 million in the second quarter of fiscal 2013.

Full Year

  *Net sales are forecasted to grow between 6% and 7% in constant currency.
  *Foreign currency translation is expected to negatively impact sales by
    approximately 2% versus the prior year.
  *The Company is raising the low end of its diluted net earnings per share
    estimate, including charges associated with restructuring activities and
    the impact of the early extinguishment of debt, to be $2.43 to $2.52.
  *The Company expects to take charges associated with restructuring
    activities in fiscal 2013 of about $5 million, equal to approximately $.01
    per diluted common share. The recording of charges will depend on when the
    relevant accounting criteria are met.
  *As mentioned in this press release, the impact of the extinguishment of
    debt is equal to $.03 per diluted common share.
  *Diluted net earnings per share before charges associated with
    restructuring activities and the impact of the early extinguishment of
    debt are now projected to be $2.47 to $2.56, up 9% to 13%.
  *The Company’s broad-based growth is expected to continue ahead of the
    prestige beauty industry for the full fiscal year.
  *On a product category basis, in constant currency, hair care and skin care
    are expected to be the leading sales growth categories, followed by makeup
    and fragrance.
  *Geographic region net sales growth in constant currency is expected to be
    led by Asia/Pacific, followed by the Americas and Europe, the Middle East
    & Africa.
  *In connection with its long-term strategic plan, as well as certain
    ongoing initiatives, the Company expects to realize savings of between $50
    million and $75 million during fiscal 2013.

Forward-Looking Statements

The forward-looking statements in this press release, including those
containing words like “expect,” “plans,” “may,” “could,” “anticipate,”
“estimate,” “projected,” “forecasted,” those in Mr. Freda’s remarks and those
in the “Outlook for Fiscal 2013 Second Quarter and Full Year” section involve
risks and uncertainties. Factors that could cause actual results to differ
materially from those forward-looking statements include the following:

         increased competitive activity from companies in the skin care,
 (1)   makeup, fragrance and hair care businesses, some of which have
         greater resources than the Company does;
         the Company’s ability to develop, produce and market new products on
  (2)    which future operating results may depend and to successfully address
         challenges in the Company’s business;
         consolidations, restructurings, bankruptcies and reorganizations in
         the retail industry causing a decrease in the number of stores that
         sell the Company’s products, an increase in the ownership
  (3)    concentration within the retail industry, ownership of retailers by
         the Company’s competitors or ownership of competitors by the
         Company’s customers that are retailers and our inability to collect
         receivables;
  (4)    destocking and tighter working capital management by retailers;
         the success, or changes in timing or scope, of new product launches
  (5)    and the success, or changes in the timing or the scope, of
         advertising, sampling and merchandising programs;
  (6)    shifts in the preferences of consumers as to where and how they shop
         for the types of products and services the Company sells;
         social, political and economic risks to the Company’s foreign or
  (7)    domestic manufacturing, distribution and retail operations, including
         changes in foreign investment and trade policies and regulations of
         the host countries and of the United States;
         changes in the laws, regulations and policies (including the
         interpretations and enforcement thereof) that affect, or will affect,
         the Company’s business, including those relating to its products or
  (8)    distribution net works, changes in accounting standards, tax laws and
         regulations, environmental or climate change laws, regulations or
         accords, trade rules and customs regulations, and the outcome and
         expense of legal or regulatory proceedings, and any action the
         Company may take as a result;
         foreign currency fluctuations affecting the Company’s results of
         operations and the value of its foreign assets, the relative prices
  (9)    at which the Company and its foreign competitors sell products in the
         same markets and the Company’s operating and manufacturing costs
         outside of the United States;
         changes in global or local conditions, including those due to the
         volatility in the global credit and equity markets, natural or
         man-made disasters, real or perceived epidemics, or energy costs,
         that could affect consumer purchasing, the willingness or ability of
         consumers to travel and/or purchase the Company’s products while
         traveling, the financial strength of the Company’s customers,
  (10)   suppliers or other contract counterparties, the Company’s operations,
         the cost and availability of capital which the Company may need for
         new equipment, facilities or acquisitions, the returns that the
         Company is able to generate on its pension assets and the resulting
         impact on its funding obligations, the cost and availability of raw
         materials and the assumptions underlying the Company’s critical
         accounting estimates;
         shipment delays, commodity pricing, depletion of inventory and
         increased production costs resulting from disruptions of operations
         at any of the facilities that manufacture nearly all of the Company’s
  (11)   supply of a particular type of product (i.e., focus factories) or at
         the Company’s distribution or inventory centers, including
         disruptions that may be caused by the implementation of SAP as part
         of the Company’s Strategic Modernization Initiative or by
         restructurings;
         real estate rates and availability, which may affect the Company’s
  (12)   ability to increase or maintain the number of retail locations at
         which the Company sells its products and the costs associated with
         the Company’s other facilities;
  (13)   changes in product mix to products which are less profitable;
         the Company’s ability to acquire, develop or implement new
         information and distribution technologies and initiatives on a timely
  (14)   basis and within the Company’s cost estimates and the Company’s
         ability to maintain continuous operations of such systems and the
         security of data and other information that may be stored in such
         systems or other systems or media;
         the Company’s ability to capitalize on opportunities for improved
  (15)   efficiency, such as publicly-announced strategies and restructuring
         and cost-savings initiatives, and to integrate acquired businesses
         and realize value therefrom;
         consequences attributable to local or international conflicts around
  (16)   the world, as well as from any terrorist action, retaliation and the
         threat of further action or retaliation;
  (17)   the timing and impact of acquisitions and divestitures, which depend
         on willing sellers and buyers, respectively, and;
         additional factors as described in the Company’s filings with the
  (18)   Securities and Exchange Commission, including its Annual Report on
         Form 10-K for the fiscal year ended June 30, 2012.
         
  The Company assumes no responsibility to update forward-looking statements
  made herein or otherwise.

The Estée Lauder Companies Inc. is one of the world’s leading manufacturers
and marketers of quality skin care, makeup, fragrance and hair care products.
The Company’s products are sold in over 150 countries and territories under
the following brand names: Estée Lauder, Aramis, Clinique, Prescriptives, Lab
Series, Origins, M•A•C, Bobbi Brown, Tommy Hilfiger, Kiton, La Mer, Donna
Karan, Aveda, Jo Malone, Bumble and bumble, Darphin,  Michael Kors, American
Beauty, Flirt!, GoodSkin Labs, Grassroots Research Labs, Tom Ford, Coach,
Ojon, Smashbox, Ermenegildo Zegna, AERIN Beauty and Osiao.

An electronic version of this release can be found at the Company’s website,
www.elcompanies.com.

                              – Tables Follow –

                                                                   
THE ESTÉE LAUDER COMPANIES INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited; In millions, except per share data and percentages)
                                                                       
                                         Three Months Ended            Percent
                                         September 30                  Change
                                           2012         2011
                                                                            
Net Sales (A)                            $ 2,549.5     $ 2,476.7       3    %
Cost of sales (A)                         539.2        534.3
Gross Profit                              2,010.3      1,942.4       3    %
                                                                            
Gross Margin                               78.9    %     78.4    %
                                                                            
Operating expenses:
Selling, general and administrative        1,527.9       1,507.7
Restructuring and other charges (A)       0.4          4.7
                                          1,528.3      1,512.4       1    %
Operating Expense Margin                   60.0    %     61.0    %
                                                                            
Operating Income                           482.0         430.0         12   %
                                                                            
Operating Income Margin                    18.9    %     17.4    %
                                                                            
Interest expense, net                      15.8          16.0
Interest expense on debt                   19.1          —
extinguishment (B)
Other income                              1.8          —
Earnings before Income Taxes               448.9         414.0         8    %
                                                                            
Provision for income taxes                149.3        135.4
Net Earnings                               299.6         278.6         8    %
                                                                            
Net earnings attributable to              (0.1    )    —
noncontrolling interests
Net Earnings Attributable to The Estée   $ 299.5       $ 278.6         8    %
Lauder Companies Inc.
                                                                            
                                                                            
Net earnings attributable to The Estée
Lauder Companies Inc. per common
share:
Basic                                    $ .77         $ .71           8    %
Diluted                                    .76           .70           9    %
                                                                            
Weighted average common shares
outstanding:
Basic                                      387.8         390.5
Diluted                                    395.5         399.3

(A) In February 2009, the Company announced the implementation of a
multi-faceted cost savings program (the “Program”) to position it to achieve
long-term profitable growth. The Company anticipates the Program will result
in related restructuring and other charges, inclusive of cumulative charges
recorded to date and through the remainder of the Program, totaling between
$350 million and $450 million, before taxes. Since the inception of the
Program, the Company approved cost savings initiatives to resize the
organization, reorganize certain functions, turnaround or exit unprofitable
operations and outsource certain services.

For the three months ended September 30, 2012 and 2011, aggregate
restructuring charges of $0.3 million and $3.0 million, respectively, were
recorded in the Company’s consolidated statements of earnings related to the
Program. These charges primarily reflected employee-related costs, asset
write-offs, contract terminations and other exit costs.

The Company recorded other charges in connection with the implementation of
the Program for the three months ended September 30, 2012 and 2011 of $0.1
million and $1.7 million, respectively, primarily related to consulting and
other professional services. For the three months ended September 30, 2011,
the Company recorded an adjustment to reduce the reserve for then-anticipated
sales returns associated with restructuring activities of $0.7 million and a
charge to cost of sales of $0.1 million.

Total charges associated with restructuring activities included in operating
income for the three months ended September 30, 2012 and 2011, were $0.4
million and $4.1 million, respectively.

(B) In the first quarter of fiscal 2013, the Company redeemed $230.1 million
principal amount of its 7.75% Senior Notes due November 1, 2013. As a result,
the Company recorded a pre-tax charge to earnings of $19.1 million.

______________________

This earnings release includes some non-GAAP financial measures relating to
charges associated with restructuring activities and the extinguishment of
debt. The following is a reconciliation between the non-GAAP financial
measures and the most directly comparable GAAP measure for certain
consolidated statements of earnings accounts before and after the returns and
charges associated with restructuring activities and the extinguishment of
debt. The Company uses the non-GAAP financial measure, among other things, to
evaluate its operating performance and the measure represents the manner in
which the Company conducts and views its business. Management believes that
excluding these items that are special in nature or that are not comparable
from period to period helps investors and others compare operating performance
between two periods. While the Company considers the non-GAAP measures useful
in analyzing its results, it is not intended to replace, or act as a
substitute for, any presentation included in the consolidated financial
statements prepared in conformity with GAAP.

The Company operates on a global basis, with the majority of its net sales
generated outside the United States. Accordingly, fluctuations in foreign
currency exchange rates can affect the Company’s results of operations.
Therefore, the Company presents certain net sales information excluding the
effect of foreign currency rate fluctuations to provide a framework for
assessing the performance of its underlying business outside the United
States. Constant currency information compares results between periods as if
exchange rates had remained constant period-over-period. The Company
calculates constant currency information by translating current-period results
using prior-year period weighted average foreign currency exchange rates.

                                                          
THE ESTÉE LAUDER COMPANIES INC.
Reconciliation of Certain Consolidated Statements of Earnings Accounts Before and After Returns and Charges
(Unaudited; In millions, except per share data and percentages)
                                                                                                            
                 Three Months Ended                          Three Months Ended
                 September 30, 2012                          September 30, 2011
                                               Before                                 Before       % Change
                 As Reported    Returns/     Returns/      As Reported  Returns/  Returns/     versus Prior
                                 Charges       Charges                     Charges    Charges      Year Before
                                                                                                   Returns/Charges
Net Sales         $ 2,549.5      $ 0.0       $ 2,549.5     $ 2,476.7     $ (0.7 )   $ 2,476.0    3        %
Cost of sales       539.2          (0.0  )    539.2        534.3        (0.1 )    534.2
                                                                                                            
Gross Profit         2,010.3         0.0         2,010.3       1,942.4       (0.6 )     1,941.8    4        %
Gross Margin         78.9    %                   78.9    %     78.4    %                78.4    %
                                                                                                            
Operating           1,528.3        (0.4  )    1,527.9      1,512.4      (4.7 )    1,507.7    1        %
expenses
                                                                                                            
Operating            60.0    %                   60.0    %     61.0    %                60.9    %
Expense Margin
                                                                                                            
Operating            482.0           0.4         482.4         430.0         4.1        434.1      11       %
Income
Operating            18.9    %                   18.9    %     17.4    %                17.5    %
Income Margin
                                                                                                            
Interest
expense on           19.1            (19.1 )     —             —             —          —          —
debt
extinguishment
                                                                                                            
Provision for        149.3           6.9         156.2         135.4         1.2        136.6
income taxes
Net Earnings
Attributable
to The Estée
Lauder               299.5           12.6        312.1         278.6         2.9        281.5      11       %
Companies Inc.


                                                                                                            
Diluted net
earnings
attributable
to The Estée         .76             .03         .79           .70           .00        .70        12       %
Lauder
Companies Inc.
per common
share

                                                              
THE ESTÉE LAUDER COMPANIES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; In millions)
                                                                  
                                     September 30   June 30       September 30
                                     2012           2012          2011
ASSETS                                                          
Current Assets
Cash and cash equivalents               $ 1,053.7     $ 1,347.7      $ 719.5
Accounts receivable, net                1,604.7       1,060.3        1,378.5
Inventory and promotional               1,067.9       983.6          982.2
merchandise, net
Prepaid expenses and other current      486.8         463.5          481.9
assets
Total Current Assets                    4,213.1       3,855.1        3,562.1
                                                                     
Property, Plant and Equipment, net      1,268.9       1,231.8        1,125.1
Other Assets                            1,525.6       1,506.1        1,448.2
Total Assets                            $ 7,007.6     $ 6,593.0      $ 6,135.4
                                                                     
LIABILITIES AND EQUITY
Current Liabilities
Current debt                            $ 24.0        $ 219.0        $ 141.8
Accounts payable                        421.7         493.8          424.2
Other current liabilities               1,526.7       1,413.0        1,403.6
Total Current Liabilities               1,972.4       2,125.8        1,969.6
                                                                     
Noncurrent Liabilities
Long-term debt                          1,330.7       1,069.1        1,072.8
Other noncurrent liabilities            664.0         650.6          601.0
Total Noncurrent Liabilities            1,994.7       1,719.7        1,673.8
                                                                     
Total Equity                            3,040.5       2,747.5        2,492.0
Total Liabilities and Equity            $ 7,007.6     $ 6,593.0      $ 6,135.4
                                                           

                                                     
SELECT CASH FLOW DATA
(Unaudited; In millions)
                                                                             
                                                       Three Months Ended
                                                       September 30
                                                       2012        2011
Cash Flows from Operating Activities
Net earnings                                           $ 299.6      $ 278.6
Depreciation and amortization                            77.5         69.6
Deferred income taxes                                    (18.8  )     (9.6   )
Other items                                              58.3         47.3
Changes in operating assets and liabilities:
Increase in accounts receivable, net                     (518.1 )     (482.1 )
Increase in inventory and promotional merchandise,       (59.2  )     (21.4  )
net
Increase in other assets, net                            (26.9  )     (9.1   )
Increase in accounts payable and other liabilities      62.4        90.5
Net cash flows used for operating activities           $ (125.2 )   $ (36.2  )
                                                                             
Capital expenditures                                   $ 95.5       $ 80.8
Payments to acquire treasury stock                       165.4        402.9
Acquisition of businesses and other intangible           8.7          7.7
assets

Contact:

The Estée Lauder Companies Inc.
Investor Relations:
Dennis D’Andrea, (212) 572-4384
or
Media Relations:
Alexandra Trower, (212) 572-4430
 
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