NOTE 5 – RESTRUCTURING AND SPECIAL CHARGES During the fourth quarter of fiscal 2003, the Company recorded a special pre-tax charge of $22.0 million, or $13.5 million after-tax, equal to $.06 per diluted common share, in connection with the proposed settlement of a legal proceeding brought against a number of defendants including the Company (see Note 15). The amount of the charge in this case is significantly larger than similar charges the Company has incurred individually or in the aggregate for legal proceedings in any prior year. During the fourth quarter of fiscal 2002, the Company recorded a restructuring charge related to repositioning certain businesses as part of its ongoing efforts to drive long-term growth and increase profitability. The restruc- turing focused on cost reduction opportunities related to the Internet, supply chain, globalization of the organiza- tion and distribution channel refinements. The Company committed to a defined plan of action, which resulted in an aggregate pre-tax charge of $117.4 million, of which $59.4 million is cash related. On an after-tax basis, the aggregate charge was $76.9 million, equal to $.32 per diluted share. Specifically, the charge includes the following: • Internet. In an effort to achieve strategic objectives, reduce costs and improve profitability, the Company outsourced Gloss.com platform development and main- tenance efforts to a third-party provider. Additionally, Gloss.com closed its San Francisco facility and consoli- dated its operations in New York. As a result, included in the charge is a $23.9 million provision for restructuring the Gloss.com operations, including benefits and sever- ance packages for 36 employees as well as asset write- offs. The Company also took a $20.1 million charge to write off the related Gloss.com acquisition goodwill. • Supply Chain. Building on previously announced sup- plychain initiatives, the Company restructured certain manufacturing, distribution, research and development, information systems and quality assurance operations in the United States,Canada and Europe, which included benefits and severance packages for 110 employees. Acharge of $23.7 million was recorded related to  this effort. • Globalization of Organization. The Company con- tinued to implement its transition, announced in fiscal 2001, to a global brand structure designed to stream- line the decision making process and increase inno- vation and speed-to-market. The next phase of this transition entailed eliminating duplicate functions and responsibilities, which resulted in charges for benefits and severance for 122 employees. The Company recorded a charge of $27.1 million associated with these efforts. • Distribution. The Company evaluated areas of distribu- tion relative to its financial targets and decided to focus its resources on the most productive sales channels and markets. As a result, the Company closed its operations in Argentina and the remaining customers are being serviced by the Company’s Chilean affiliate. The Com- pany began closing all remaining in-store “tommy’s shops” and other select points of distribution. The Company recorded a $22.6 million provision related to these actions, which included benefits and severance for 85 employees. Following is a summary of the charges as recorded in the consolidated statement of earnings for fiscal 2002: Net Sales Cost of Sales Operating Expenses Total (In millions) Internet $ — $ — $ 44.0 $ 44.0 Supply Chain — — 23.7 23.7 Globalization of Organization — — 27.1 27.1 Distribution 6.2 0.8 15.6 22.6 Total charge $6.2 $0.8 $110.4 117.4 Tax effect (40.5) Net charge $ 76.9 Restructuring 66 THEEST{E LAUDER COMPANIES INC.