This summary is based on the third quarter fiscal 2007 earnings call conducted by Estee Lauder Cos., (EL: chart) on May 3, 2007.

President and Chief Executive Officer: William P. Lauder
Chief Operating Officer: Daniel Brestle
Executive Vice President and Chief Financial Officer: Richard W. Kunes

Key Investors Issues

- Earnings per share rose 62.8% to 45 cents, versus the year ago period.
- Quarterly net sales rose 7.1% to $1.69 billion, versus the prior year period.
- Fiscal 2007 earnings per share from continuing operations are projected between $2.15 and $2.20.

Third Quarter Fiscal 2007 Financial Highlights

Quarterly net earnings rose 57.8% to $93.9 million, versus $59.5 billion in the year ago period. Earnings per share rose 62.8% to 45 cents, from 28 cents in the year ago period.

Quarterly net sales rose 7.1% to $1.69 billion, versus $1.578 billion in the prior year period.

- Excluding the impact of foreign currency translation, quarterly net sales rose 5% over the year ago period.
- More than half of quarterly sales and operating income was generated outside the United States from a mix of established and emerging markets.

- Gross profit rose 8.4% to $1.264 billion, from $1.166 billion in the prior year period.
- Quarterly gross margin was 74.8%, versus 73.9% in the prior year period.
- Operating income rose 34.7% to $156.7 million, from $116.3 million in the prior year period.
- Operating income margin rose to 9.3%, from 7.4% in the prior year period.
- Earnings before income taxes, minority interest and discontinued operations were $147.9 million, up 34.8% versus 109.7 million in the prior year period.

- Net earnings from continuing operations rose 48.4% to $93.8 million, from $63.2 million in the year ago period.
- Earnings per share from continuing operations rose 53.4% to 45 cents, from 29 cents in the year ago period.
- Income from discontinued operations, net of tax was $100,000 versus loss of $3.7 million in the year ago period. Earnings per share from discontinued operation, net of tax were 1 cent in the year ago period. On April 10, 2006, the company completed the sale of certain assets and operations of the Stila brand products unit.

Total operating expenses rose 5.5% to $1.107 billion, versus $1.05 billion in the prior year period.

- Selling, general and administrative expenses were $1.107 billion, versus $998.8 million in the prior year period.
- Special benefit related to cost savings initiative was $100,000, versus charge of $51.6 million or 15 cents a share in the prior year period.
- Operating expense margin was 65.5%, versus 66.5% in the prior year period.

- Cost of sales was $426 million, versus $411.5 million in the prior year period.
- Net interest expense was $8.8 million, versus $6.6 million in the prior year period.
- Provision for income taxes were $52.4 million, versus $43.4 million in the prior year period.
- Minority interest, net of tax was $1.7 million, versus $3.1 million in the prior year period.
- The effective tax rate for the quarter was 35.4%

Performance Analysis by Geography

The Americas

Operating income fell 27.4% to $72 million, versus $99.2 million in the year ago period.

Net sales fell 1.5% to $856.9 million, versus $870.1 million in the year ago period.

Net sales for the quarter decreased, over the year ago period, primarily reflecting lower sales in core brands in the U.S., which continue to be challenged by competitive pressures and retailer consolidation. The company also experienced weakness in its business at those Federated stores that converted to Macy''s in the United States.

Contributing to the decline in quarterly sales, versus the prior year period, was the timing and level of fragrance shipments, in particular, certain Tommy Hilfiger products, as well as somewhat lower replenishment shipments to retailers following an increase of such shipments during the latter portion of the company''s fiscal 2007 second quarter.

Positive quarterly sales growth from the company''s hair care business, internet distribution and makeup artist brands, and good overall gains in Canada, Latin America, and Mexico, partially offset the decrease in quarterly sales, versus the year ago period.