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the holders of such shares would have the right to put the shares to us, at $100 per share (for an aggregate cost of $360.0 million). If shares of $6.50 Cumulative Redeemable Preferred Stock are put to us, we would have up to 120 days after notice to purchase such shares. 

Certain of our business acquisition agreements include “earn-out” provisions. These provisions generally require that we pay to the seller or sellers of the business addi- tional amounts based on the performance of the acquired business. The payments typically are made after a certain period of time and our next “earn-out” payment is expected to be made after the end of fiscal 2005. Since 

## Contractual Obligations 

the size of each payment depends upon performance of the acquired business, we do not expect that such pay- ments will have a material adverse impact on our future results of operations or financial condition. 

Under agreements covering our purchase of trade- marks for a percentage of related sales, royalty payments totaling $20.3 million, $16.5 million and $16.0 million in fiscal 2003, 2002 and 2001, respectively, have been charged to expense. Such payments were made to Mrs. Estée Lauder. This obligation is not necessarily fixed and determinable, and therefore has been excluded from the following contractual obligation table. 

The following table summarizes scheduled maturities of our contractual obligations for which cash flows are fixed and determinable as of June 30, 2003. 

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(1) Refer to Note 8 of Notes to Consolidated Financial Statements. 

(2) Refer to Note 12 of Notes to Consolidated Financial Statements. 

(3) Includes operating lease commitments, and to a lesser extent, minimal capital lease commitments. Refer to Note 15 of Notes to Consolidated Financial Statements. 

(4) Unconditional purchase obligations primarily include inventory commitments, estimated future earn-out payments, estimated royaltypaymentspursuant to license agreements, advertising commitments and capital improvement commitments. 

In July 2003, we signed a new lease for our principal offices at the same location. Our rental obligations under the new lease will commence in fiscal 2005 and expire in fiscal 2020. Obligations pursuant to the lease in fiscal 2005, 2006, 2007, 2008 and thereafter are $5.9 million, $23.6 million, $23.6 million, $24.1 million and $324.2 million, respectively. 

## Business Acquisitions and License Agreements 

In April 2003, we acquired the Paris-based Darphin group of companies that develops, manufactures and markets the “Darphin” brand of skin care products. The initial pur- chase price, paid at closing, was funded by cash provided by operations, and did not have a material effect on our results of operations or financial condition. An additional payment is expected to be made in fiscal 2009, the amount of which will depend on future net sales and earn- ings of the Darphin business. 

In May 2003, we entered into a license agreement to manufacture and sell fragrances and beauty products under the “Michael Kors” trademarks with Michael Kors L.L.C. At the same time, we purchased certain related rights and inventory from American Designer Fragrances, a division of LVMH. 

## Derivative Financial Instruments and Hedging Activities 

We address certain financial exposures through a con- trolled program of risk management that includes the use of derivative financial instruments. We primarily enter into foreign currency forward exchange contracts and foreign currency options to reduce the effects of fluctuating for- eign currency exchange rates. We also enter into interest rate derivative contracts to manage the effects of fluctu- ating interest rates. We categorize these instruments as entered into for purposes other than trading. 

