The Estée Lauder Companies Inc. continuously works to ensure compliance with all applicable international, national, and local environmental, transportation and occupational safety regulations. To enhance compliance, EHS inspections and audits are conducted by corporate EAS staff, local EHS personnel, insurance companies, and Underwriters Laboratories as part of the ISO 14001/EL occupational health and safety audits. In addition, The Company’s facilities are routinely subject to inspections by regulatory agencies which further ensure that our Operations remain as safe and environmentally conscience as possible.

Over the past few years, we have experienced some minor notices of violation that Estée Lauder Companies has quickly moved to resolve. The table below reviews these items for the six most recent fiscal years.

Fiscal Year	Inspections	Notices of Violations	Regulatory Fines
2006	37	1	$0.00
2005	63	0	$1,000 (1)
2004	140	12	$28,050 (2) (3)
2003	145	5	$0.00
2002	145	1	$0.00
2001	151	5	$3,000 (4)

(1)The Company received a $1,000 fine for a fire code violation at an Estée Lauder Spa. The Company implemented corrective action to prevent future violations.

The Company has received a total of $27,000 in fines due to 8 violations that were received for products not meeting the Korean Environmental packaging requirements. Four products did not meet the empty space requirements and four products did not meet the packaging layer requirements. The specifications for these requirements have been added to the Estée Lauder's Companies Environmental Packaging Guidelines and the local affiliate is now reviewing all potential products to ensure compliance to the local regulatory requirements and prevent future violations.

(3)The Company received a $1,050.00 fine resulting from an OSHA inspection of one of the Creative Department offices in New York City that found three other than serious citations including hazard communication and emergency egress. These items were immediately corrected and a root cause investigation was completed and corrective action was implemented to prevent future occurrences.

(4)The Company received a $3,000.00 fine due to a shipment of hairspray that was not properly packaged in transit. A root cause investigation was undertaken and plans were enacted to prevent future occurrences.

Potential Landfill Liabilities

In June 2004, New York State added the Company and other potentially responsible parties (PRPs) as defendants in its pending case against the Hickey Parties for potential landfill liabilities at the Blydenburgh Landfill (Islip, NY). In April 2006, the Company and other defendants added numerous other parties to the case as third-party defendants. The Company and certain other PRPs have engaged in settlement discussions which to date have been unsuccessful. Settlement negotiations with the new third-party defendants, the State, the Company and other defendants began in July 2006. The Company has accrued an amount which it believes would be necessary to resolve its share of this matter.

In order to minimize potential future liabilities, the Company audits and inspects all waste vendors and in Fiscal Year 2004 stopped landfilling any of its Operations waste choosing alternatives, including more environmentally sound disposal options such as recycling and waste to energy methods.