CONSOLIDATED STATEMENTS OF EARNINGS See notes to consolidated financial statements. THEEST{E LAUDER COMPANIES INC. 38 YEAR ENDED JUNE 30 2003 2002 2001 (In millions, except per share data) Net Sales $5,117.6 $4,743.7 $4,667.7 Cost of sales 1,335.7 1,273.4 1,226.4 Gross Profit 3,781.9 3,470.3 3,441.3 Operating expenses: Selling, general and administrative 3,244.5 3,002.0 2,869.2 Restructuring — 110.4 37.6 Special charges 22.0 — 16.3 Related party royalties 20.3 16.5 22.6 3,286.8 3,128.9 2,945.7 Operating Income 495.1 341.4 495.6 Interest expense, net 8.1 9.8 12.3 Earnings before Income Taxes, Minority Interest and Accounting Change 487.0 331.6 483.3 Provision for income taxes 160.5 114.4 174.0 Minority interest, net of tax (6.7) (4.7) (1.9) Net Earnings before Accounting Change 319.8 212.5 307.4 Cumulative effect of a change in accounting principle, net of tax — (20.6) (2.2) Net Earnings 319.8 191.9 305.2 Preferred stock dividends 23.4 23.4 23.4 Net Earnings Attributable to Common Stock $ 296.4 $ 168.5 $ 281.8 Basic net earnings per common share: Net earnings attributable to common stock before accounting change $ 1.27 $ .79 $ 1.19 Cumulative effect of a change in accounting principle, net of tax — (.08) (.01) Net earnings attributable to common stock $ 1.27 $ .71 $ 1.18 Diluted net earnings per common share: Net earnings attributable to common stock before accounting change $ 1.26 $ .78 $ 1.17 Cumulative effect of a change in accounting principle, net of tax — (.08) (.01) Net earnings attributable to common stock $ 1.26 $ .70 $ 1.16 Weighted average common shares outstanding: Basic 232.6 238.2 238.4 Diluted 234.7 241.1 242.2