Mr. Lauder: This company was founded in 1946 by my grandparents, Estée and Joseph Lauder. It was started with just a few products, and a vision and passion on their part; vision certainly on my grandmother's part, passion and support on my grandfather's part. My father was the first employee in 1946, when he was just a teenager. It was started with a couple of products, one brand, Estée Lauder brand. Then in 1964, the Aramis brand was added as a men's fragrance or cologne. And then in 1968, Clinique; 1979, Prescriptives; 1990, Origins. Those five brands we call our core brands, they're brands we created ourselves while we were a private company, if you will, out of our own imagination. In 1993 we started licensing. Tommy Hilfiger was our first licensed fragrance product, first licensee, first brand outside of our own. In 1994 we made our first acquisition of M.A.C., and in the year after, we bought Bobbi Brown and La Mer. And then in 1997 we bought Aveda, and we did a series of acquisitions between 1994 and approximately the year 2000-2001. And we've done a couple since then, but we're not nearly as active in the acquisition world now as we were then, primarily because between 1994 and 1998-1999, we had the acquisition world in our space pretty much to ourselves. The competitors looked to us and said, "What are you doing? You're crazy." Then competitors started looking at the space. But just as importantly, the private equity folks started getting into the business, and they have a very different set of financial dynamics than we do, looking at acquisitions. And as they started looking in the same place we do for smaller companies with growth opportunities, their investment criteria was different than ours. They were looking for a very low-equity exposure, very high-debt exposure with different return hurdles and shorter-term horizons. They were more concerned with the financial dynamics than the strategic acquisition. They were paying money that we, knowing how the business is actually operated, were not willing to pay. So we stepped out of that business. We are the world's leading maker of prestige beauty products. Prestige being aspirational brands sold in leading department stores and perfumeries around the world, as well as in travel retail locations, as well as in a few hundred of our own retail stores. We are a family of 29 different brands. Only one brand has the name Estée Lauder on it, that's the Estée Lauder brand. That's a very deliberate strategy on our part. Because we sell in the aspirational space in leading department stores around the world, we have multiple brands available for the consumer, all differentiated by unique positioning, performance, price and psychographic attributes. So therefore, it's not in our interest to tie a corporate family of brands together for the consumer. Instead, it's our interest to let the consumer choose the brand that she likes, and certainly we have a brand that is appealing. That's the primary underlying principle. The trajectory of our company is interesting: In 1958 the company was doing approximately 800,000 in sales. We reported this year over 7.3 billion in sales. So we think that's a very healthy growth over an extended period of time. Nearly two-thirds of all sales come from brands we created ourselves, the rest come from brands we've acquired. However, with the vast majority from the brands we've acquired, the growth has come while those brands have been a part of our portfolio. We didn't really acquire much in terms of revenue in acquisitions. We acquired brands. We were able to take those great brands and ideas, and grow them very meaningfully. Very, very meaningfully.
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