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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations . RESULTS OF OPERATIONS We manufacture, market and sell beauty products including those in the skin care, makeup, fragrance and hair care categories which are distributed in over 150 countries and territories. The following table is a comparative summary of operating results for fiscal 2017, 2016 and 2015 and reflects the basis of presentation described in Item 8. Financial Statements and Supplementary Data Note 2 Summary of Significant Accounting Policies and Note 21 Segment Data and Related Information for all periods presented. Products and services that do not meet our definition of skin care, makeup, fragrance and hair care have been included in the other category. Year Ended June 30 2017 2016 2015 (In millions) NET SALES By Product Category: Skin Care $ 4,527 $ 4,446 $ 4,479 Makeup 5,054 4,702 4,304 Fragrance 1,637 1,487 1,416 Hair Care 539 554 531 Other 69 74 50 11,826 11,263 10,780 Returns associated with restructuring and other activities (2) (1) Net Sales $ 11,824 $ 11,262 $ 10,780 By Region: The Americas $ 4,819 $ 4,710 $ 4,514 Europe, the Middle East & Africa 4,650 4,381 4,086 Asia/Pacific 2,357 2,172 2,180 11,826 11,263 10,780 Returns associated with restructuring and other activities (2) (1) Net Sales $ 11,824 $ 11,262 $ 10,780 OPERATING INCOME (LOSS) By Product Category: Skin Care $ 1,014 $ 842 $ 832 Makeup 713 758 659 Fragrance 115 87 83 Hair Care 51 52 38 Other 11 5 (6) 1,904 1,744 1,606 Charges associated with restructuring and other activities (212) (134) Net Sales $ 1,692 $ 1,610 $ 1,606 By Region: The Americas $ 284 $ 346 $ 302 Europe, the Middle East & Africa 1,203 1,027 943 Asia/Pacific 417 371 361 1,904 1,744 1,606 Charges associated with restructuring and other activities (212) (134) Operating Income $ 1,692 $ 1,610 $ 1,606 23 Table of Contents The following table presents certain consolidated earnings data as a percentage of net sales: Year Ended June 30 2017 2016 2015 Net sales 100.0% 100.0% 100.0% Cost of sales 20.6 19.4 19.5 Gross profit 79.4 80.6 80.5 Operating expenses: Selling, general and administrative 63.3 65.1 65.6 Goodwill impairment 0.2 Impairment of other intangible assets Restructuring and other charges 1.6 1.2 Total operating expenses 65.1 66.3 65.6 Operating income 14.3 14.3 14.9 Interest expense 0.8 0.6 0.6 Interest income and investment income, net 0.2 0.1 0.2 Earnings before income taxes 13.7 13.8 14.5 Provision for income taxes 3.1 3.9 4.4 Net earnings 10.6 9.9 10.1 Net earnings attributable to noncontrolling interests Net earnings attributable to The Este Lauder Companies Inc. 10.6% 9.9% 10.1% In order to meet the demands of consumers, we continually introduce new products, support new and established products through advertising, merchandising and sampling and phase out existing products that no longer meet the needs of our consumers or our objectives. The economics of developing, producing, launching, supporting and discontinuing products impact our sales and operating performance each period. The introduction of new products may have some cannibalizing effect on sales of existing products, which we take into account in our business planning.