10-Q 1 el-20220930.htm 10-Q el-20220930
--06-302023Q10001001250falsehttp://fasb.org/us-gaap/2022#RevenueFromContractWithCustomerExcludingAssessedTaxhttp://fasb.org/us-gaap/2022#CostOfGoodsAndServicesSoldhttp://fasb.org/us-gaap/2022#RestructuringAndRelatedCostIncurredCosthttp://fasb.org/us-gaap/2022#RestructuringAndRelatedCostIncurredCost00010012502022-07-012022-09-300001001250us-gaap:CommonClassAMember2022-10-26xbrli:shares0001001250us-gaap:CommonClassBMember2022-10-26iso4217:USD00010012502021-07-012021-09-30iso4217:USDxbrli:shares00010012502022-09-3000010012502022-06-300001001250us-gaap:CommonClassAMember2022-06-300001001250us-gaap:CommonClassAMember2022-09-300001001250us-gaap:CommonClassBMember2022-06-300001001250us-gaap:CommonClassBMember2022-09-3000010012502021-06-3000010012502021-09-300001001250el:LargestCustomerMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2022-07-012022-09-30xbrli:pure0001001250el:LargestCustomerMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2021-07-012021-09-300001001250el:LargestCustomerMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2022-09-300001001250el:LargestCustomerMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2022-07-012022-09-300001001250el:LargestCustomerMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2022-06-300001001250el:LargestCustomerMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2021-07-012022-06-300001001250us-gaap:LandMember2022-09-300001001250us-gaap:LandMember2022-06-300001001250us-gaap:BuildingAndBuildingImprovementsMembersrt:MinimumMember2022-07-012022-09-300001001250srt:MaximumMemberus-gaap:BuildingAndBuildingImprovementsMember2022-07-012022-09-300001001250us-gaap:BuildingAndBuildingImprovementsMember2022-09-300001001250us-gaap:BuildingAndBuildingImprovementsMember2022-06-300001001250us-gaap:MachineryAndEquipmentMembersrt:MinimumMember2022-07-012022-09-300001001250srt:MaximumMemberus-gaap:MachineryAndEquipmentMember2022-07-012022-09-300001001250us-gaap:MachineryAndEquipmentMember2022-09-300001001250us-gaap:MachineryAndEquipmentMember2022-06-300001001250el:ComputerHardwareAndSoftwareMembersrt:MinimumMember2022-07-012022-09-300001001250srt:MaximumMemberel:ComputerHardwareAndSoftwareMember2022-07-012022-09-300001001250el:ComputerHardwareAndSoftwareMember2022-09-300001001250el:ComputerHardwareAndSoftwareMember2022-06-300001001250us-gaap:FurnitureAndFixturesMembersrt:MinimumMember2022-07-012022-09-300001001250srt:MaximumMemberus-gaap:FurnitureAndFixturesMember2022-07-012022-09-300001001250us-gaap:FurnitureAndFixturesMember2022-09-300001001250us-gaap:FurnitureAndFixturesMember2022-06-300001001250us-gaap:LeaseholdImprovementsMember2022-09-300001001250us-gaap:LeaseholdImprovementsMember2022-06-300001001250us-gaap:ConstructionInProgressMember2022-09-300001001250us-gaap:ConstructionInProgressMember2022-06-300001001250us-gaap:OtherNoncurrentLiabilitiesMember2022-09-300001001250us-gaap:OtherNoncurrentLiabilitiesMember2022-06-300001001250el:SkinCareMember2022-06-300001001250el:MakeupMember2022-06-300001001250el:FragranceMember2022-06-300001001250el:HairCareMember2022-06-300001001250el:SkinCareMember2022-07-012022-09-300001001250el:MakeupMember2022-07-012022-09-300001001250el:FragranceMember2022-07-012022-09-300001001250el:HairCareMember2022-07-012022-09-300001001250el:SkinCareMember2022-09-300001001250el:MakeupMember2022-09-300001001250el:FragranceMember2022-09-300001001250el:HairCareMember2022-09-300001001250el:CustomerListsAndOtherMember2022-09-300001001250el:CustomerListsAndOtherMember2022-06-300001001250us-gaap:LicensingAgreementsMember2022-09-300001001250us-gaap:LicensingAgreementsMember2022-06-300001001250us-gaap:TrademarksMember2022-09-300001001250us-gaap:TrademarksMember2022-06-300001001250el:PCBAProgramMemberus-gaap:SalesReturnsAndAllowancesMember2022-07-012022-09-300001001250el:PCBAProgramMemberus-gaap:CostOfSalesMember2022-07-012022-09-300001001250us-gaap:RestructuringChargesMemberel:PCBAProgramMember2022-07-012022-09-300001001250el:PCBAProgramMemberus-gaap:OtherOperatingIncomeExpenseMember2022-07-012022-09-300001001250el:PCBAProgramMember2022-07-012022-09-300001001250el:PCBAProgramMember2020-08-202020-08-200001001250el:PCBAProgramMembersrt:MinimumMember2022-07-012022-09-30el:position0001001250srt:MaximumMemberel:PCBAProgramMember2022-07-012022-09-300001001250el:PCBAProgramMembersrt:MinimumMember2020-08-202020-08-200001001250srt:MaximumMemberel:PCBAProgramMember2020-08-202020-08-200001001250el:PCBAProgramMembersrt:MinimumMember2022-06-300001001250srt:MaximumMemberel:PCBAProgramMember2022-06-300001001250us-gaap:SalesReturnsAndAllowancesMember2022-07-012022-09-300001001250us-gaap:CostOfSalesMember2022-07-012022-09-300001001250us-gaap:RestructuringChargesMember2022-07-012022-09-300001001250us-gaap:OtherOperatingIncomeExpenseMember2022-07-012022-09-300001001250el:PCBAProgramMemberus-gaap:SalesReturnsAndAllowancesMember2022-06-300001001250el:PCBAProgramMemberus-gaap:CostOfSalesMember2022-06-300001001250us-gaap:RestructuringChargesMemberel:PCBAProgramMember2022-06-300001001250el:PCBAProgramMemberus-gaap:OtherOperatingIncomeExpenseMember2022-06-300001001250el:PCBAProgramMember2022-06-300001001250el:PCBAProgramMemberus-gaap:SalesReturnsAndAllowancesMember2022-09-300001001250el:PCBAProgramMemberus-gaap:CostOfSalesMember2022-09-300001001250us-gaap:RestructuringChargesMemberel:PCBAProgramMember2022-09-300001001250el:PCBAProgramMemberus-gaap:OtherOperatingIncomeExpenseMember2022-09-300001001250el:PCBAProgramMember2022-09-300001001250us-gaap:EmployeeSeveranceMemberel:PCBAProgramMember2022-06-300001001250el:PCBAProgramMemberel:ImpairmentInValueOfAssetsMember2022-06-300001001250us-gaap:ContractTerminationMemberel:PCBAProgramMember2022-06-300001001250us-gaap:OtherRestructuringMemberel:PCBAProgramMember2022-06-300001001250us-gaap:EmployeeSeveranceMemberel:PCBAProgramMember2022-07-012022-09-300001001250el:PCBAProgramMemberel:ImpairmentInValueOfAssetsMember2022-07-012022-09-300001001250us-gaap:ContractTerminationMemberel:PCBAProgramMember2022-07-012022-09-300001001250us-gaap:OtherRestructuringMemberel:PCBAProgramMember2022-07-012022-09-300001001250us-gaap:EmployeeSeveranceMemberel:PCBAProgramMember2022-09-300001001250el:PCBAProgramMemberel:ImpairmentInValueOfAssetsMember2022-09-300001001250us-gaap:ContractTerminationMemberel:PCBAProgramMember2022-09-300001001250us-gaap:OtherRestructuringMemberel:PCBAProgramMember2022-09-300001001250us-gaap:EmployeeSeveranceMemberus-gaap:RestructuringChargesMemberel:PCBAProgramMember2022-06-300001001250us-gaap:RestructuringChargesMemberel:PCBAProgramMemberel:ImpairmentInValueOfAssetsMember2022-06-300001001250us-gaap:RestructuringChargesMemberus-gaap:ContractTerminationMemberel:PCBAProgramMember2022-06-300001001250us-gaap:RestructuringChargesMemberus-gaap:OtherRestructuringMemberel:PCBAProgramMember2022-06-300001001250us-gaap:EmployeeSeveranceMemberus-gaap:RestructuringChargesMemberel:PCBAProgramMember2022-07-012022-09-300001001250us-gaap:RestructuringChargesMemberel:PCBAProgramMemberel:ImpairmentInValueOfAssetsMember2022-07-012022-09-300001001250us-gaap:RestructuringChargesMemberus-gaap:ContractTerminationMemberel:PCBAProgramMember2022-07-012022-09-300001001250us-gaap:RestructuringChargesMemberus-gaap:OtherRestructuringMemberel:PCBAProgramMember2022-07-012022-09-300001001250us-gaap:EmployeeSeveranceMemberus-gaap:RestructuringChargesMemberel:PCBAProgramMember2022-09-300001001250us-gaap:RestructuringChargesMemberel:PCBAProgramMemberel:ImpairmentInValueOfAssetsMember2022-09-300001001250us-gaap:RestructuringChargesMemberus-gaap:ContractTerminationMemberel:PCBAProgramMember2022-09-300001001250us-gaap:RestructuringChargesMemberus-gaap:OtherRestructuringMemberel:PCBAProgramMember2022-09-300001001250us-gaap:EmployeeSeveranceMemberel:PCBAProgramMemberel:RestructuringAndOtherChargesMember2022-06-300001001250el:PCBAProgramMemberel:ImpairmentInValueOfAssetsMemberel:RestructuringAndOtherChargesMember2022-06-300001001250us-gaap:ContractTerminationMemberel:PCBAProgramMemberel:RestructuringAndOtherChargesMember2022-06-300001001250us-gaap:OtherRestructuringMemberel:PCBAProgramMemberel:RestructuringAndOtherChargesMember2022-06-300001001250el:PCBAProgramMemberel:RestructuringAndOtherChargesMember2022-06-300001001250us-gaap:EmployeeSeveranceMemberel:PCBAProgramMemberel:RestructuringAndOtherChargesMember2022-07-012022-09-300001001250el:PCBAProgramMemberel:ImpairmentInValueOfAssetsMemberel:RestructuringAndOtherChargesMember2022-07-012022-09-300001001250us-gaap:ContractTerminationMemberel:PCBAProgramMemberel:RestructuringAndOtherChargesMember2022-07-012022-09-300001001250us-gaap:OtherRestructuringMemberel:PCBAProgramMemberel:RestructuringAndOtherChargesMember2022-07-012022-09-300001001250el:PCBAProgramMemberel:RestructuringAndOtherChargesMember2022-07-012022-09-300001001250us-gaap:EmployeeSeveranceMemberel:PCBAProgramMemberel:RestructuringAndOtherChargesMember2022-09-300001001250el:PCBAProgramMemberel:ImpairmentInValueOfAssetsMemberel:RestructuringAndOtherChargesMember2022-09-300001001250us-gaap:ContractTerminationMemberel:PCBAProgramMemberel:RestructuringAndOtherChargesMember2022-09-300001001250us-gaap:OtherRestructuringMemberel:PCBAProgramMemberel:RestructuringAndOtherChargesMember2022-09-300001001250el:PCBAProgramMemberel:RestructuringAndOtherChargesMember2022-09-300001001250el:PCBAProgramMembersrt:ScenarioForecastMember2022-10-012023-06-300001001250el:PCBAProgramMembersrt:ScenarioForecastMember2023-07-012024-06-300001001250el:PCBAProgramMembersrt:ScenarioForecastMember2024-07-012025-06-300001001250us-gaap:NondesignatedMember2022-09-300001001250el:ForeignCurrencyCashFlowHedgesMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-09-300001001250el:ForeignCurrencyCashFlowHedgesMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-06-300001001250el:ForeignCurrencyCashFlowHedgesMemberus-gaap:AccruedLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-09-300001001250el:ForeignCurrencyCashFlowHedgesMemberus-gaap:AccruedLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-06-300001001250us-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMember2022-09-300001001250us-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMember2022-06-300001001250us-gaap:AccruedLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMember2022-09-300001001250us-gaap:AccruedLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:NetInvestmentHedgingMember2022-06-300001001250us-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-09-300001001250us-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-06-300001001250us-gaap:AccruedLiabilitiesMemberus-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-09-300001001250us-gaap:AccruedLiabilitiesMemberus-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-06-300001001250us-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-09-300001001250us-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-06-300001001250us-gaap:AccruedLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-09-300001001250us-gaap:AccruedLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-06-300001001250us-gaap:NondesignatedMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:ForeignExchangeForwardMember2022-09-300001001250us-gaap:NondesignatedMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:ForeignExchangeForwardMember2022-06-300001001250us-gaap:NondesignatedMemberus-gaap:AccruedLiabilitiesMemberus-gaap:ForeignExchangeForwardMember2022-09-300001001250us-gaap:NondesignatedMemberus-gaap:AccruedLiabilitiesMemberus-gaap:ForeignExchangeForwardMember2022-06-300001001250us-gaap:ForeignExchangeForwardMemberus-gaap:CashFlowHedgingMember2022-07-012022-09-300001001250us-gaap:ForeignExchangeForwardMemberus-gaap:CashFlowHedgingMember2021-07-012021-09-300001001250us-gaap:ForeignExchangeForwardMemberus-gaap:SalesMemberus-gaap:CashFlowHedgingMember2022-07-012022-09-300001001250us-gaap:ForeignExchangeForwardMemberus-gaap:SalesMemberus-gaap:CashFlowHedgingMember2021-07-012021-09-300001001250us-gaap:InterestRateContractMemberus-gaap:CashFlowHedgingMember2022-07-012022-09-300001001250us-gaap:InterestRateContractMemberus-gaap:CashFlowHedgingMember2021-07-012021-09-300001001250us-gaap:InterestExpenseMemberus-gaap:InterestRateContractMemberus-gaap:CashFlowHedgingMember2022-07-012022-09-300001001250us-gaap:InterestExpenseMemberus-gaap:InterestRateContractMemberus-gaap:CashFlowHedgingMember2021-07-012021-09-300001001250us-gaap:CashFlowHedgingMember2022-07-012022-09-300001001250us-gaap:CashFlowHedgingMember2021-07-012021-09-300001001250us-gaap:ForeignExchangeForwardMemberus-gaap:NetInvestmentHedgingMember2022-07-012022-09-300001001250us-gaap:ForeignExchangeForwardMemberus-gaap:NetInvestmentHedgingMember2021-07-012021-09-300001001250us-gaap:NetInvestmentHedgingMember2022-07-012022-09-300001001250us-gaap:NetInvestmentHedgingMember2021-07-012021-09-300001001250us-gaap:InterestExpenseMemberus-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:FairValueHedgingMember2022-07-012022-09-300001001250us-gaap:InterestExpenseMemberus-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:FairValueHedgingMember2021-07-012021-09-300001001250us-gaap:ShortTermDebtMemberus-gaap:FairValueHedgingMember2022-07-012022-09-300001001250us-gaap:ShortTermDebtMember2022-07-012022-09-300001001250us-gaap:LongTermDebtMemberus-gaap:FairValueHedgingMember2022-07-012022-09-300001001250us-gaap:LongTermDebtMember2022-07-012022-09-300001001250us-gaap:FairValueHedgingMember2022-07-012022-09-300001001250us-gaap:SalesMember2022-07-012022-09-300001001250us-gaap:InterestExpenseMember2022-07-012022-09-300001001250us-gaap:SalesMember2021-07-012021-09-300001001250us-gaap:InterestExpenseMember2021-07-012021-09-300001001250us-gaap:InterestExpenseMemberus-gaap:InterestRateContractMemberus-gaap:FairValueHedgingMember2022-07-012022-09-300001001250us-gaap:InterestExpenseMemberus-gaap:InterestRateContractMemberus-gaap:FairValueHedgingMember2021-07-012021-09-300001001250us-gaap:NondesignatedMemberus-gaap:ForeignExchangeForwardMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2022-07-012022-09-300001001250us-gaap:NondesignatedMemberus-gaap:ForeignExchangeForwardMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2021-07-012021-09-300001001250us-gaap:ForeignExchangeForwardMemberus-gaap:CashFlowHedgingMember2022-09-300001001250us-gaap:CashFlowHedgingMember2022-09-300001001250us-gaap:CashFlowHedgingMember2022-06-300001001250el:SeniorNotesDueApril2030Memberus-gaap:InterestRateSwapMemberus-gaap:FairValueHedgingMember2022-09-300001001250el:SeniorNotesOneNinetyFivePercentDue2031Memberus-gaap:InterestRateSwapMemberus-gaap:FairValueHedgingMember2022-09-300001001250us-gaap:LondonInterbankOfferedRateLIBORMemberel:SeniorNotesDueApril2030Memberus-gaap:InterestRateSwapMemberus-gaap:FairValueHedgingMember2022-07-012022-09-300001001250el:SeniorNotesOneNinetyFivePercentDue2031Memberus-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueHedgingMember2022-07-012022-09-300001001250us-gaap:ForeignExchangeForwardMemberus-gaap:NetInvestmentHedgingMember2022-09-300001001250us-gaap:DerivativeMember2022-09-30el:agency0001001250us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-09-300001001250us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-09-300001001250us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-09-300001001250us-gaap:FairValueMeasurementsRecurringMember2022-09-300001001250us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-06-300001001250us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001001250us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-06-300001001250us-gaap:FairValueMeasurementsRecurringMember2022-06-300001001250us-gaap:CarryingReportedAmountFairValueDisclosureMember2022-09-300001001250us-gaap:EstimateOfFairValueFairValueDisclosureMember2022-09-300001001250us-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300001001250us-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001001250us-gaap:ForeignExchangeForwardMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-09-300001001250us-gaap:ForeignExchangeForwardMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-09-300001001250us-gaap:ForeignExchangeForwardMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300001001250us-gaap:ForeignExchangeForwardMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001001250us-gaap:InterestRateContractMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-09-300001001250us-gaap:InterestRateContractMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-09-300001001250us-gaap:InterestRateContractMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300001001250us-gaap:InterestRateContractMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001001250us-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:ForeignExchangeForwardMember2022-07-012022-09-300001001250us-gaap:ForeignExchangeForwardMemberel:SwapYieldCurveMember2022-07-012022-09-300001001250el:DeferredCompensationShareBasedArrangementsLiabilityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-06-300001001250el:DeferredCompensationShareBasedArrangementsLiabilityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-07-012022-09-300001001250el:DeferredCompensationShareBasedArrangementsLiabilityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-09-3000010012502022-10-012022-09-300001001250country:USus-gaap:PensionPlansDefinedBenefitMember2022-07-012022-09-300001001250country:USus-gaap:PensionPlansDefinedBenefitMember2021-07-012021-09-300001001250us-gaap:ForeignPlanMemberus-gaap:PensionPlansDefinedBenefitMember2022-07-012022-09-300001001250us-gaap:ForeignPlanMemberus-gaap:PensionPlansDefinedBenefitMember2021-07-012021-09-300001001250us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2022-07-012022-09-300001001250us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2021-07-012021-09-300001001250us-gaap:CommonClassAMember2022-07-012022-09-300001001250us-gaap:CommonClassAMemberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedPaymentArrangementEmployeeMember2022-07-012022-09-300001001250el:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVesting2023Memberus-gaap:CommonClassAMemberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedPaymentArrangementEmployeeMember2022-07-012022-09-300001001250us-gaap:CommonClassAMemberel:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVesting2024Memberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedPaymentArrangementEmployeeMember2022-07-012022-09-300001001250el:ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsVesting2025Memberus-gaap:CommonClassAMemberus-gaap:RestrictedStockUnitsRSUMemberus-gaap:ShareBasedPaymentArrangementEmployeeMember2022-07-012022-09-300001001250us-gaap:CommonClassAMemberus-gaap:PerformanceSharesMemberus-gaap:ShareBasedPaymentArrangementEmployeeMember2022-07-012022-09-300001001250us-gaap:CommonClassAMemberus-gaap:PerformanceSharesMemberus-gaap:ShareBasedPaymentArrangementEmployeeMember2022-09-012022-09-300001001250us-gaap:PerformanceSharesMemberus-gaap:ShareBasedPaymentArrangementEmployeeMember2022-09-012022-09-300001001250el:DECIEM2021StockOptionPlanMember2022-07-012022-09-300001001250us-gaap:EmployeeStockOptionMemberel:DECIEM2021StockOptionPlanMember2022-09-300001001250us-gaap:EmployeeStockOptionMemberel:DECIEM2021StockOptionPlanMember2022-06-300001001250el:DECIEMMemberus-gaap:EmployeeStockOptionMemberel:DECIEM2021StockOptionPlanMember2022-07-012022-09-300001001250el:DECIEMMemberus-gaap:EmployeeStockOptionMemberel:DECIEM2021StockOptionPlanMember2021-07-012022-06-300001001250us-gaap:EmployeeStockOptionMember2022-07-012022-09-300001001250us-gaap:EmployeeStockOptionMember2021-07-012021-09-300001001250us-gaap:PerformanceSharesMember2022-07-012022-09-300001001250us-gaap:PerformanceSharesMember2021-07-012021-09-300001001250us-gaap:RestrictedStockUnitsRSUMember2022-07-012022-09-300001001250us-gaap:RestrictedStockUnitsRSUMember2021-07-012021-09-300001001250us-gaap:EmployeeStockOptionMember2022-07-012022-09-300001001250us-gaap:EmployeeStockOptionMember2021-07-012021-09-300001001250el:RestrictedStockUnitsAndPerformanceSharesMember2022-07-012022-09-300001001250el:RestrictedStockUnitsAndPerformanceSharesMember2021-07-012021-09-300001001250el:ContingentlyIssuableShareMember2022-07-012022-09-300001001250el:ContingentlyIssuableShareMember2021-07-012021-09-300001001250us-gaap:CommonStockMember2022-06-300001001250us-gaap:CommonStockMember2021-06-300001001250us-gaap:CommonStockMember2022-07-012022-09-300001001250us-gaap:CommonStockMember2021-07-012021-09-300001001250us-gaap:CommonStockMember2022-09-300001001250us-gaap:CommonStockMember2021-09-300001001250us-gaap:AdditionalPaidInCapitalMember2022-06-300001001250us-gaap:AdditionalPaidInCapitalMember2021-06-300001001250us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001001250us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001001250us-gaap:AdditionalPaidInCapitalMember2022-09-300001001250us-gaap:AdditionalPaidInCapitalMember2021-09-300001001250us-gaap:RetainedEarningsMember2022-06-300001001250us-gaap:RetainedEarningsMember2021-06-300001001250us-gaap:RetainedEarningsMember2022-07-012022-09-300001001250us-gaap:RetainedEarningsMember2021-07-012021-09-300001001250us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2022-06-300001001250us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2021-06-300001001250us-gaap:RetainedEarningsMember2022-09-300001001250us-gaap:RetainedEarningsMember2021-09-300001001250us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001001250us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001001250us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001001250us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300001001250us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300001001250us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300001001250us-gaap:TreasuryStockMember2022-06-300001001250us-gaap:TreasuryStockMember2021-06-300001001250us-gaap:TreasuryStockMember2022-07-012022-09-300001001250us-gaap:TreasuryStockMember2021-07-012021-09-300001001250us-gaap:TreasuryStockMember2022-09-300001001250us-gaap:TreasuryStockMember2021-09-300001001250us-gaap:ParentMember2022-09-300001001250us-gaap:ParentMember2021-09-300001001250us-gaap:NoncontrollingInterestMember2022-06-300001001250us-gaap:NoncontrollingInterestMember2021-06-300001001250us-gaap:NoncontrollingInterestMember2022-07-012022-09-300001001250us-gaap:NoncontrollingInterestMember2021-07-012021-09-300001001250us-gaap:NoncontrollingInterestMember2022-09-300001001250us-gaap:NoncontrollingInterestMember2021-09-300001001250el:RedeemableNoncontrollingInterestMember2022-06-300001001250el:RedeemableNoncontrollingInterestMember2021-06-300001001250el:RedeemableNoncontrollingInterestMember2022-07-012022-09-300001001250el:RedeemableNoncontrollingInterestMember2021-07-012021-09-300001001250el:RedeemableNoncontrollingInterestMember2022-09-300001001250el:RedeemableNoncontrollingInterestMember2021-09-300001001250us-gaap:CommonClassAMember2022-09-152022-09-150001001250us-gaap:CommonClassBMember2022-09-152022-09-150001001250us-gaap:CommonClassAMember2022-08-172022-08-170001001250us-gaap:CommonClassBMember2022-08-172022-08-170001001250us-gaap:SubsequentEventMemberus-gaap:CommonClassBMember2022-11-012022-11-010001001250us-gaap:SubsequentEventMemberus-gaap:CommonClassAMember2022-11-012022-11-010001001250us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-06-300001001250us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-06-300001001250us-gaap:AccumulatedTranslationAdjustmentMember2022-06-300001001250us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-07-012022-09-300001001250us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-07-012022-09-300001001250us-gaap:AccumulatedTranslationAdjustmentMember2022-07-012022-09-300001001250us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-09-300001001250us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-09-300001001250us-gaap:AccumulatedTranslationAdjustmentMember2022-09-300001001250us-gaap:ForeignExchangeForwardMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-07-012022-09-300001001250us-gaap:ForeignExchangeForwardMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-07-012021-09-300001001250us-gaap:InterestRateContractMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-07-012022-09-300001001250us-gaap:InterestRateContractMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-07-012021-09-300001001250us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-07-012022-09-300001001250us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-07-012021-09-300001001250us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001001250us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300001001250us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-07-012022-09-300001001250us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-07-012021-09-300001001250us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001001250us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-30el:segment0001001250el:SkinCareMember2021-07-012021-09-300001001250el:MakeupMember2021-07-012021-09-300001001250el:FragranceMember2021-07-012021-09-300001001250el:HairCareMember2021-07-012021-09-300001001250us-gaap:ProductAndServiceOtherMember2022-07-012022-09-300001001250us-gaap:ProductAndServiceOtherMember2021-07-012021-09-300001001250us-gaap:SalesReturnsAndAllowancesMember2021-07-012021-09-300001001250srt:AmericasMember2022-07-012022-09-300001001250srt:AmericasMember2021-07-012021-09-300001001250us-gaap:EMEAMember2022-07-012022-09-300001001250us-gaap:EMEAMember2021-07-012021-09-300001001250srt:AsiaPacificMember2022-07-012022-09-300001001250srt:AsiaPacificMember2021-07-012021-09-30
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________________
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to
Commission file number 1-14064
The Estée Lauder Companies Inc.
(Exact name of registrant as specified in its charter)
Delaware
11-2408943
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
767 Fifth Avenue, New York, New York
10153
(Address of principal executive offices)
(Zip Code)
212-572-4200
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A Common Stock, $.01 par value
EL
New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐ No ☒
At October 26, 2022, 231,270,298 shares of the registrant’s Class A Common Stock, $.01 par value, and 125,542,029 shares of the registrant’s Class B Common Stock, $.01 par value, were outstanding.


THE ESTÉE LAUDER COMPANIES INC.
INDEX
Page
Consolidated Statements of Earnings — Three Months Ended September 30, 2022 and 2021
Consolidated Statements of Comprehensive Income — Three Months Ended September 30, 2022 and 2021
Consolidated Balance Sheets — September 30, 2022 and June 30, 2022 (Audited)
Consolidated Statements of Cash Flows — Three Months Ended September 30, 2022 and 2021


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
THE ESTÉE LAUDER COMPANIES INC.

CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three Months Ended
September 30
(In millions, except per share data)20222021
Net sales
$3,930 $4,392 
Cost of sales
1,023 1,057 
Gross profit
2,907 3,335 
Operating expenses
Selling, general and administrative
2,244 2,394 
Restructuring and other charges
2 6 
Total operating expenses
2,246 2,400 
Operating income661 935 
Interest expense46 42 
Interest income and investment income, net15 4 
Other components of net periodic benefit cost(3)1 
Other income— 1 
Earnings before income taxes633 897 
Provision for income taxes143 202 
Net earnings490 695 
Net earnings attributable to noncontrolling interests— (1)
Net earnings attributable to redeemable noncontrolling interest(1)(2)
Net earnings attributable to The Estée Lauder Companies Inc.$489 $692 
Net earnings attributable to The Estée Lauder Companies Inc. per common share
Basic
$1.37 $1.91 
Diluted
$1.35 $1.88 
Weighted-average common shares outstanding
Basic
357.9 362.2 
Diluted
361.4 367.9 
See notes to consolidated financial statements.
2
THE ESTÉE LAUDER COMPANIES INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended
September 30
(In millions)20222021
Net earnings$490 $695 
Other comprehensive income (loss):
Net cash flow hedge gain49 21 
Retirement plan and other retiree benefit adjustments— 4 
Translation adjustments(381)(186)
Benefit (provision) for income taxes on components of other comprehensive income(19)(12)
Total other comprehensive income (loss), net of tax(351)(173)
Comprehensive income139 522 
Comprehensive income attributable to noncontrolling interests:
Net earnings— (1)
Translation adjustments— 1 
Total comprehensive income attributable to noncontrolling interests— — 
Comprehensive income attributable to redeemable noncontrolling interest:
Net earnings(1)(2)
Translation adjustments35 17 
Total comprehensive income attributable to redeemable noncontrolling interest34 15 
Comprehensive income attributable to The Estée Lauder Companies Inc.$173 $537 
See notes to consolidated financial statements.
3
THE ESTÉE LAUDER COMPANIES INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)September 30
2022		June 30
2022
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents
$2,938 $3,957 
Accounts receivable, net
2,156 1,629 
Inventory and promotional merchandise
3,018 2,920 
Prepaid expenses and other current assets
754 792 
Total current assets
8,866 9,298 
Property, plant and equipment, net
2,654 2,650 
Other assets
Operating lease right-of-use assets
1,858 1,949 
Goodwill
2,415 2,521 
Other intangible assets, net
3,190 3,428 
Other assets
1,006 1,064 
Total other assets
8,469 8,962 
Total assets
$19,989 $20,910 
LIABILITIES AND EQUITY
Current liabilities
Current debt
$266 $268 
Accounts payable
1,392 1,822 
Operating lease liabilities
340 365 
Other accrued liabilities
3,273 3,360 
Total current liabilities
5,271 5,815 
Noncurrent liabilities
Long-term debt
5,107 5,144 
Long-term operating lease liabilities
1,781 1,868 
Other noncurrent liabilities
1,505 1,651 
Total noncurrent liabilities
8,393 8,663 
Contingencies


Redeemable Noncontrolling Interest808 842 
Equity
Common stock, $.01 par value; Class A shares authorized: 1,300,000,000 at September 30, 2022 and June 30, 2022; shares issued: 468,356,871 at September 30, 2022 and 467,949,351 at June 30, 2022; Class B shares authorized: 304,000,000 at September 30, 2022 and June 30, 2022; shares issued and outstanding: 125,542,029 at September 30, 2022 and 125,542,029 at June 30, 2022
6 6 
Paid-in capital
5,875 5,796 
Retained earnings
14,185 13,912 
Accumulated other comprehensive loss(1,078)(762)
18,988 18,952 
Less: Treasury stock, at cost; 236,867,993 Class A shares at September 30, 2022 and 236,435,830 Class A shares at June 30, 2022
(13,471)(13,362)
Total equity
5,517 5,590 
Total liabilities, redeemable noncontrolling interest and equity$19,989 $20,910 
See notes to consolidated financial statements.
4
THE ESTÉE LAUDER COMPANIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
September 30
(In millions)20222021
Cash flows from operating activities
Net earnings$490 $695 
Adjustments to reconcile net earnings to net cash flows from operating activities:
Depreciation and amortization178 183 
Deferred income taxes(53)(57)
Non-cash stock-based compensation53 79 
Net loss on disposal of property, plant and equipment2 1 
Non-cash restructuring and other charges9 2 
Pension and post-retirement benefit expense13 21 
Pension and post-retirement benefit contributions(5)(11)
Gain on previously held equity method investment— (1)
Other non-cash items(3)3 
Changes in operating assets and liabilities:
Increase in accounts receivable, net(579)(583)
Increase in inventory and promotional merchandise(229)(178)
Decrease (increase) in other assets, net3 (19)
Decrease in accounts payable(375)(191)
Decrease in other accrued and noncurrent liabilities(135)(15)
Decrease in operating lease assets and liabilities, net(19)(10)
Net cash flows used for operating activities(650)(81)
Cash flows from investing activities
Capital expenditures(152)(205)
Purchases of investments— (6)
Settlement of net investment hedges138 58 
Net cash flows used for investing activities(14)(153)
Cash flows from financing activities
Proceeds from current debt, net249 3 
Repayments and redemptions of long-term debt(254)(4)
Net proceeds from stock-based compensation transactions26 36 
Payments to acquire treasury stock(110)(557)
Dividends paid to stockholders(215)(192)
Net cash flows used for financing activities(304)(714)
Effect of exchange rate changes on Cash and cash equivalents(51)(15)
Net decrease in Cash and cash equivalents(1,019)(963)
Cash and cash equivalents at beginning of period3,957 4,958 
Cash and cash equivalents at end of period$2,938 $3,995 
See notes to consolidated financial statements.
5
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements include the accounts of The Estée Lauder Companies Inc. and its subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated.

The unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim consolidated financial statements furnished reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

Certain prior year amounts in the notes to the consolidated financial statements have been reclassified to conform to current year presentation.

Management Estimates

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses reported in those financial statements. Descriptions of the Company’s significant accounting policies are discussed in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2022. Management evaluates the related estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment, including those related to the impacts of the COVID-19 pandemic, will be reflected in the consolidated financial statements in future periods.

Currency Translation and Transactions

All assets and liabilities of foreign subsidiaries and affiliates are translated at period-end rates of exchange, while revenue and expenses are translated at monthly average rates of exchange for the period. Unrealized translation losses, net of tax, reported as translation adjustments through other comprehensive income (loss) (“OCI”) attributable to The Estée Lauder Companies Inc. were $352 million and $175 million, net of tax, during the three months ended September 30, 2022 and 2021, respectively. For the Company’s subsidiaries operating in highly inflationary economies, the U.S. dollar is the functional currency. Remeasurement adjustments in financial statements in a highly inflationary economy and other transactional gains and losses are reflected in earnings. These subsidiaries are not material to the Company’s consolidated financial statements or liquidity.

The Company enters into foreign currency forward contracts and may enter into option contracts to hedge foreign currency transactions for periods consistent with its identified exposures. The Company also enters into foreign currency forward contracts to hedge a portion of its net investment in certain foreign operations, which are designated as net investment hedges. See Note 4 – Derivative Financial Instruments for further discussion. The Company categorizes these instruments as entered into for purposes other than trading.

The accompanying consolidated statements of earnings include net exchange gains (losses) on foreign currency transactions of $14 million and $(12) million during the three months ended September 30, 2022 and 2021, respectively.

6
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Concentration of Credit Risk

The Company is a worldwide manufacturer, marketer and seller of skin care, makeup, fragrance and hair care products. The Company’s sales subject to credit risk are made primarily to retailers in its travel retail business, department stores, specialty multi-brand retailers and perfumeries. The Company grants credit to qualified customers. As a result of the COVID-19 pandemic, the Company has enhanced its assessment of its customers' abilities to pay with a greater focus on factors affecting their liquidity and less on historical payment performance. While the Company does not believe it is exposed significantly to any undue concentration of credit risk at this time, it continues to monitor the extent of the impact of the COVID-19 pandemic on its customers' abilities, individually and collectively, to make timely payments.

The Company’s largest customer during the quarter sells products primarily in China travel retail and accounted for $413 million or 11%, and $456 million, or 10%, of the Company's consolidated net sales for the three months ended September 30, 2022 and 2021, respectively. This customer accounted for $355 million, or 16%, and $399 million, or 24%, of the Company's accounts receivable at September 30, 2022 and June 30, 2022, respectively.

Inventory and Promotional Merchandise

Inventory and promotional merchandise consists of the following:
(In millions)September 30, 2022June 30, 2022
Raw materials
$853 $791 
Work in process
343 366 
Finished goods
1,499 1,449 
Promotional merchandise
323 314 
$3,018 $2,920 

Property, Plant and Equipment

Property, plant and equipment consists of the following:
(In millions)September 30, 2022June 30, 2022
Assets (Useful Life)
Land
$51 $53 
Buildings and improvements (10 to 40 years)
478 491 
Machinery and equipment (3 to 10 years)
975 994 
Computer hardware and software (4 to 10 years)
1,545 1,468 
Furniture and fixtures (5 to 10 years)
127 129 
Leasehold improvements
2,174 2,246 
Construction in progress806 759 
6,156 6,140 
Less accumulated depreciation and amortization
(3,502)(3,490)
$2,654 $2,650 

Depreciation and amortization of property, plant and equipment was $136 million and $130 million during the three months ended September 30, 2022 and 2021, respectively. Depreciation and amortization related to the Company’s manufacturing process is included in Cost of sales, and all other depreciation and amortization is included in Selling, general and administrative expenses in the accompanying consolidated statements of earnings.





7
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Income Taxes

The effective rate for income taxes was 22.6% and 22.5% for the three months ended September 30, 2022 and 2021, respectively. The increase in the effective tax rate of 10 basis points was primarily attributable to a higher effective tax rate on the Company's foreign operations and a decrease in excess tax benefits associated with stock-based compensation arrangements, partially offset by a reduction in income tax reserve adjustments.

On August 16, 2022, the U.S. federal government enacted the Inflation Reduction Act, with tax provisions primarily focused on implementing a 1% excise tax on share repurchases and a 15% corporate alternative minimum tax based on global adjusted financial statement income. The excise tax is effective beginning with the Company’s third quarter of fiscal 2023, while the corporate alternative minimum tax will be effective beginning with the Company’s first quarter of fiscal 2024. The Company is currently evaluating the effect of the new law on its consolidated financial statements.

As of September 30, 2022 and June 30, 2022, the gross amount of unrecognized tax benefits, exclusive of interest and penalties, totaled $59 million and $61 million, respectively. The total amount of unrecognized tax benefits at September 30, 2022 that, if recognized, would affect the effective tax rate was $49 million. The total gross interest and penalties accrued related to unrecognized tax benefits during the three months ended September 30, 2022 in the accompanying consolidated statements of earnings was $1 million. The total gross accrued interest and penalties in the accompanying consolidated balance sheets at each of September 30, 2022 and June 30, 2022, was $14 million. On the basis of the information available as of September 30, 2022, the Company does not expect significant changes to the total amount of unrecognized tax benefits within the next twelve months.

During the fiscal 2023 first quarter, the Company formally concluded the compliance process with respect to its fiscal 2021 income tax return under the U.S. Internal Revenue Service (“IRS”) Compliance Assurance Program (“CAP”), which had no impact on the Company’s consolidated financial statements for the three months ended September 30, 2022.

Other Accrued and Noncurrent Liabilities

Other accrued liabilities consist of the following:
(In millions)September 30, 2022June 30, 2022
Employee compensation$430 $693 
Deferred revenue313 312 
Payroll and other non-income taxes325 345 
Accrued income taxes332 267 
Sales return accrual307 252 
Other1,566 1,491 
$3,273 $3,360 

At September 30, 2022 and June 30, 2022, total Other noncurrent liabilities of $1,505 million and $1,651 million included $633 million and $692 million of deferred tax liabilities, respectively.

Recently Issued Accounting Standards

FASB ASU No. 2022-04 – Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations
In September 2022, the FASB issued authoritative guidance which is intended to enhance the transparency surrounding the use of supplier finance programs. The guidance requires companies that use supplier finance programs to make annual disclosures about the program’s key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period and associated rollforward information. Only the amount outstanding at the end of the period must be disclosed in interim periods. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations.

Effective for the Company – The guidance becomes effective for the Company’s first quarter fiscal 2024 and is applied on a retrospective basis, except for the requirement to disclose rollforward information which is effective prospectively for the Company’s first quarter fiscal 2025. Early adoption is permitted. Annual disclosures need to be provided in interim periods within the initial year of adoption.
8
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Impact on consolidated financial statements – The Company has a supplier financing arrangement and is currently evaluating the impact that this guidance will have on its financial statement disclosures.

Reference Rate Reform (ASC Topic 848 “ASC 848”)
In March 2020, the FASB issued authoritative guidance to provide optional relief for companies preparing for the discontinuation of interest rates such as the London Interbank Offered Rate (“LIBOR”) and applies to lease and other contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that reference LIBOR or another rate that is expected to be discontinued as a result of reference rate reform.

In January 2021, the FASB issued authoritative guidance that makes amendments to the new rules on accounting for reference rate reform. The amendments clarify that for all derivative instruments affected by the changes to interest rates used for discounting, margining or contract price alignment, regardless of whether they reference LIBOR or another rate expected to be discontinued as a result of reference rate reform, an entity may apply certain practical expedients in ASC 848.

Effective for the Company – This guidance can be applied for a limited time through December 31, 2022. The guidance will no longer be available to apply after December 31, 2022.

Impact on consolidated financial statements – The Company currently has an implementation team in place that is performing a comprehensive evaluation and assessing the impact of applying this guidance, which includes assessing the impact to business processes and internal controls over financial reporting and the related disclosure requirements. For treasury related arrangements, the Company references LIBOR in its interest rate swap agreements and LIBOR is also used for purposes of discounting certain foreign currency and interest rate forward contracts. The Company is currently evaluating the potential impact of modifying treasury related arrangements and applying the relevant ASC 848 optional practical expedients, as needed. For existing lease, debt arrangements and other contracts, the Company will not adopt any ASC 848 optional practical expedients as it relates to these arrangements. The Company will continue to monitor new contracts that could potentially be eligible for contract modification relief through December 31, 2022.

No other recently issued accounting pronouncements are expected to have a material impact on the Company’s consolidated financial statements.

NOTE 2 – GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The following table presents goodwill by product category and the related change in the carrying amount:

(In millions)Skin CareMakeupFragranceHair CareTotal
Balance as of June 30, 2022
Goodwill
$1,702 $1,116 $249 $353 $3,420 
Accumulated impairments
(138)(732)(29)— (899)
1,564 384 220 353 2,521 
Translation and other adjustments, goodwill(101)— (5)(1)(107)
Translation and other adjustments, accumulated impairments1 — — — 1 
(100)— (5)(1)(106)
Balance as of September 30, 2022
Goodwill
1,601 1,116 244 352 3,313 
Accumulated impairments
(137)(732)(29)— (898)
$1,464 $384 $215 $352 $2,415 

9
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Other Intangible Assets

Other intangible assets consist of the following:

September 30, 2022June 30, 2022
(In millions)Gross
Carrying
Value		Accumulated
Amortization		Total Net
Book
Value		Gross
Carrying
Value		Accumulated
Amortization		Total Net
Book
Value
Amortizable intangible assets:
Customer lists and other
$1,945 $640 $1,305 $2,061 $625 $1,436 
License agreements3 3 — 3 3 — 
$1,948 $643 1,305 $2,064 $628 1,436 
Non-amortizable intangible assets:
Trademarks and other1,885 1,992 
Total intangible assets
$3,190 $3,428 

The aggregate amortization expense related to amortizable intangible assets was $36 million and $45 million for the three months ended September 30, 2022 and 2021, respectively. The estimated aggregate amortization expense for the remainder of fiscal 2023 and for each of the next four fiscal years is as follows:

Fiscal
(In millions)20232024202520262027
Estimated aggregate amortization expense$105 $140 $140 $140 $123 

NOTE 3 – CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES

Charges associated with the Post-COVID Business Acceleration Program for the three months ended September 30, 2022 were as follows:
Sales
Returns
(included in
Net Sales)		Cost of SalesOperating ExpensesTotal
(In millions)Restructuring
Charges		Other
Charges
Total$5 $(1)$2 $— $6 

The types of activities included in restructuring and other charges, and the related accounting criteria, are described below.

Charges associated with restructuring and other activities are not allocated to the Company's product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed Company-wide initiatives to redesign, resize and reorganize select areas of the business.

Post-COVID Business Acceleration Program

On August 20, 2020, the Company announced a two-year restructuring program, Post-COVID Business Acceleration Program (the “PCBA Program”), designed to realign the Company's business to address the dramatic shifts to its distribution landscape and consumer behaviors in the wake of the COVID-19 pandemic. The PCBA Program is designed to help improve efficiency and effectiveness by rebalancing resources to growth areas of prestige beauty. It is expected to further strengthen the Company by building upon the foundational capabilities in which the Company has invested.



10
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The PCBA Program’s main areas of focus include accelerating the shift to online with the realignment of the Company’s distribution network reflecting freestanding store and certain department store closures, with a focus on North America and Europe, the Middle East & Africa; the reduction in brick-and-mortar point of sale employees and related support staff; and the redesign of the Company’s regional branded marketing organizations, plus select opportunities in global brands and functions. This program is expected to position the Company to better execute its long-term strategy while strengthening its financial flexibility.

As of September 30, 2022, the Company estimated a net reduction over the duration of the PCBA Program in the range of 2,500 to 3,000 positions globally, including temporary and part-time employees. This reduction takes into account the elimination of some positions, retraining and redeployment of certain employees and investment in new positions in key areas. The Company also estimated the closure over the duration of the PCBA Program of approximately 10% to 15% of its freestanding stores globally, primarily in Europe, the Middle East & Africa and in North America.

As of June 30, 2022, the Company approved specific initiatives under the PCBA Program and expects to substantially complete those initiatives through fiscal 2023. Inclusive of approvals from inception through June 30, 2022, the Company estimates that the PCBA Program may result in related restructuring and other charges totaling between $500 million and $515 million, before taxes.

PCBA Program Approvals

Total PCBA Program cumulative charges (adjustments) approved by the Company through September 30, 2022 were:

Sales
Returns
(included in
Net Sales)		Cost of SalesOperating ExpensesTotal
(In millions)Restructuring
Charges		Other
Charges
Total Charges (Adjustments) Approved
Cumulative through June 30, 2022$43 $9 $424 $39 $515 
Three months ended September 30, 2022— — — — — 
Cumulative through September 30, 2022$43 $9 $424 $39 $515 

Included in the above table, cumulative PCBA Program restructuring initiatives approved by the Company through September 30, 2022 by major cost type were:

(In millions)Employee-
Related
Costs		Asset-
Related
Costs		Contract
Terminations		Other Exit
Costs		Total
Restructuring Charges (Adjustments) Approved
Cumulative through June 30, 2022$215 $161 $43 $5 $424 
Three months ended September 30, 2022— — — — — 
Cumulative through September 30, 2022$215 $161 $43 $5 $424 

Specific actions taken since the PCBA Program inception include:

•Optimize Digital Organization and Other Go-To-Market Organizations – The Company approved initiatives to enhance its go-to-market capabilities and shift more resources to support online growth. These actions will result in a net reduction of the workforce, which includes position eliminations, the re-leveling of certain positions and an investment in new capabilities.

•Optimize Select Marketing, Brand and Global Functions – The Company has started to reduce its corporate and certain of its brand office footprints and is moving toward the future of work in a post-COVID environment, by restructuring where and how its employees work and collaborate. In addition, the Company has approved initiatives to reduce organizational complexity and leverage scale across various Global functions. These actions will result in asset write-offs, employee severance, lease termination fees, and consulting and other professional services for the design and implementation of the future structures and processes.
11
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
•Optimize Distribution Network – To help restore profitability to pre-COVID-19 pandemic levels in certain areas of its distribution network and, as part of a broader initiative to be completed in phases, the Company has approved initiatives to close a number of underperforming freestanding stores, counters and other retail locations, mainly in certain affiliates across all geographic regions, including the Company's travel retail network. These anticipated closures reflect changing consumer behaviors including higher demand for online and omnichannel capabilities. These activities will result in termination of contracts, a net reduction in workforce, product returns, and inventory and other asset write-offs.

•Exit of the Global Distribution of BECCA Products – In reviewing the Company's brand portfolio to improve efficiency and the sustainability of long-term investments, the decision was made to exit the global distribution of BECCA products due to its limited distribution, the ongoing decline in product demand and the challenging environment caused by the COVID-19 pandemic. These activities resulted in charges for the impairment of goodwill and other intangible assets, product returns, termination of contracts, and employee severance. The Company completed these initiatives during fiscal 2022.

•Exit of Certain Designer Fragrance Licenses – In reviewing the Company’s brand portfolio of fragrances and to focus on investing its resources on alternative opportunities for long-term growth and value creation globally, the Company announced that it would not be renewing its existing license agreements for the Donna Karan New York, DKNY, Michael Kors, Tommy Hilfiger and Ermenegildo Zegna product lines when their respective terms expire in June 2023. The Company has since negotiated early termination agreements with each of the licensors effective June 30, 2022 and continued to sell products under these licenses until such time. These actions resulted in asset write-offs, including charges for the impairment of goodwill, employee-related costs, and consulting and legal fees.

•Brand Transformation – In reviewing the Company’s brand portfolio to accelerate growth within the makeup product category and to support long-term investments, the decision was made to strategically reposition Smashbox to capitalize on changing consumer preferences and to mitigate the impact caused by the COVID-19 pandemic on the brand. These actions will result primarily in product returns and inventory write-offs.

PCBA Program Restructuring and Other Charges

Restructuring charges are comprised of the following:

Employee-Related Costs – Employee-related costs are primarily comprised of severance and other post-employment benefit costs, calculated based on salary levels, prior service and other statutory minimum benefits, if applicable.

Asset-Related Costs – Asset-related costs primarily consist of asset write-offs or accelerated depreciation related to long-lived assets in certain freestanding stores (including rights associated with commercial operating leases and operating lease right-of-use assets) that will be taken out of service prior to their existing useful life as a direct result of a restructuring initiative. These costs also include goodwill and other intangible asset impairment charges relating to the exit of the global distribution of BECCA products.

Contract Terminations – Costs related to contract terminations include continuing payments to a third party after the Company has ceased benefiting from the rights conveyed in the contract, or a payment made to terminate a contract prior to its expiration.

Other Exit Costs – Other exit costs related to restructuring activities generally include costs to relocate facilities or employees, recruiting to fill positions as a result of relocation of operations, and employee outplacement for separated employees.

Other charges associated with restructuring activities are comprised of the following:

Sales Returns and Cost of Sales – Product returns (offset by the related cost of sales) and inventory write-offs or write-downs as a direct result of an approved restructuring initiative to exit certain businesses or locations will be recorded as a component of Net sales and/or Cost of sales when estimable and reasonably assured.



12
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Other Charges – The Company approved other charges related to the design and implementation of approved initiatives, which are charged to Operating expenses as incurred and primarily include the following:

•Consulting and other professional services for organizational design of the future structures and processes as well as the implementation thereof;
•Temporary labor backfill;
•Costs to establish and maintain a PMO for the duration of the PCBA Program, including internal costs for employees dedicated solely to project management activities, and other PMO-related expenses incremental to the Company’s ongoing operations (e.g., rent and utilities); and
•Recruitment and training costs for new and reskilled employees to acquire and apply the capabilities needed to perform responsibilities as a direct result of an approved restructuring initiative.

The Company records approved charges associated with restructuring and other activities once the relevant accounting criteria have been met. Total cumulative charges recorded associated with restructuring and other activities for the PCBA Program were:

Sales
Returns
(included in
Net Sales)		Cost of SalesOperating ExpensesTotal
(In millions)Restructuring
Charges		Other
Charges
Total Charges (Adjustments)
Cumulative through June 30, 2022$18 $7 $310 $13 $348 
Three months ended September 30, 20225 (1)2 — 6 
Cumulative through September 30, 2022$23 $6 $312 $13 $354 

(In millions)Employee-
Related
Costs		Asset-
Related
Costs		Contract
Terminations		Other Exit
Costs		Total
Restructuring Charges (Adjustments)
Cumulative through June 30, 2022$203 $86 $19 $2 $310 
Three months ended September 30, 2022(1)9 (6)— 2 
Cumulative through September 30, 2022$202 $95 $13 $2 $312 

Changes in accrued restructuring charges for the three months ended September 30, 2022 relating to the PCBA Program were:

(In millions)Employee-
Related
Costs		Asset-
Related
Costs		Contract
Terminations		Other Exit
Costs		Total
Balance at June 30, 2022$125 $— $— $— $125 
Charges(1)9 (6)— 2
Cash payments(10)— — — (10)
Non-cash asset write-offs— (9)— — (9)
Translation and other adjustments(8)— 7 — (1)
Balance at September 30, 2022
$106 $— $1 $— $107 

Accrued restructuring charges at September 30, 2022 relating to the PCBA Program are expected to result in cash expenditures funded from cash provided by operations of approximately $64 million, $34 million and $9 million for the remainder of fiscal 2023 and for fiscal 2024 and 2025, respectively.





13
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 – DERIVATIVE FINANCIAL INSTRUMENTS

The Company addresses certain financial exposures through a controlled program of risk management that includes the use of derivative financial instruments. The Company enters into foreign currency forward contracts, and may enter into option contracts, to reduce the effects of fluctuating foreign currency exchange rates. In addition, the Company enters into interest rate derivatives to manage the effects of interest rate movements on the Company’s aggregate liability portfolio, including potential future debt issuances. The Company also enters into foreign currency forward contracts to hedge a portion of its net investment in certain foreign operations, which are designated as net investment hedges. The Company enters into the net investment hedges to offset the risk of changes in the U.S. dollar value of the Company’s investment in these foreign operations due to fluctuating foreign exchange rates. Time value is excluded from the effectiveness assessment and is recognized under a systematic and rational method over the life of the hedging instrument in Selling, general and administrative expenses. The net gain or loss on net investment hedges is recorded within translation adjustments, as a component of accumulated OCI (“AOCI”) on the Company’s consolidated balance sheets, until the sale or substantially complete liquidation of the underlying assets of the Company’s investment. The Company also enters into foreign currency forward contracts, and may use option contracts, not designated as hedging instruments, to mitigate the change in fair value of specific assets and liabilities on the consolidated balance sheets. At September 30, 2022, the notional amount of derivatives not designated as hedging instruments was $3,389 million. The Company does not utilize derivative financial instruments for trading or speculative purposes. Costs associated with entering into derivative financial instruments have not been material to the Company’s consolidated financial results.

For each derivative contract entered into, where the Company looks to obtain hedge accounting treatment, the Company formally and contemporaneously documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking the hedge transaction, the nature of the risk being hedged, and how the hedging instruments’ effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively. This process includes linking all derivatives to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. At inception, the Company evaluates the effectiveness of hedge relationships quantitatively, and has elected to perform, after initial evaluation, qualitative effectiveness assessments of certain hedge relationships to support an ongoing expectation of high effectiveness, if effectiveness testing is required. If based on the qualitative assessment, it is determined that a derivative has ceased to be a highly effective hedge, the Company will perform a quantitative assessment to determine whether to discontinue hedge accounting with respect to that derivative prospectively.

14
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The fair values of the Company’s derivative financial instruments included in the consolidated balance sheets are presented as follows:

Asset DerivativesLiability Derivatives
Fair Value (1)
Fair Value (1)
(In millions)Balance Sheet
Location		September 30, 2022June 30, 2022Balance Sheet
Location		September 30, 2022June 30, 2022
Derivatives Designated as Hedging Instruments:
Foreign currency cash flow hedgesPrepaid expenses and other current assets$97 $57 Other accrued liabilities$— $1 
Net investment hedgesPrepaid expenses and other current assets39 107 Other accrued liabilities— — 
Interest rate-related derivativesPrepaid expenses and other current assets— 24 Other accrued liabilities154 115 
Total Derivatives Designated as Hedging Instruments136 188 154 116 
Derivatives Not Designated as Hedging Instruments:
Foreign currency forward contractsPrepaid expenses and other current assets31 27 Other accrued liabilities54 104 
Total derivatives$167 $215 $208 $220 
(1)See Note 5 – Fair Value Measurements for further information about how the fair value of derivative assets and liabilities are determined.
15
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The amounts of the gains and losses related to the Company’s derivative financial instruments designated as hedging instruments that are included in the assessment of effectiveness are as follows:
Amount of Gain (Loss)
Recognized in OCI on
Derivatives		Location of Gain (Loss) Reclassified
from AOCI into
Earnings
Amount of Gain (Loss)
Reclassified from AOCI into Earnings(1)
Three Months Ended
September 30		Three Months Ended
September 30
(In millions)2022202120222021
Derivatives in Cash Flow Hedging Relationships:
Foreign currency forward contracts$57 $15 
Net sales
$15 $(6)
Interest rate-related derivatives7 — 
Interest expense
— — 
64 15 15 (6)
Derivatives in Net Investment Hedging Relationships(2):
Foreign currency forward contracts(3)
71 36 — — 
Total derivatives$135 $51 $15 $(6)
(1)There was no amount reclassified into earnings as a result of the discontinuance of cash flow hedges because probable forecasted transactions will no longer occur by the end of the original time period.
(2)During the three months ended September 30, 2022 and 2021, the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $6 million and $2 million, respectively.
(3)Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets.

Amount of Gain (Loss)
Recognized in Earnings on
Derivatives (1)
Location of Gain (Loss) Recognized in Earnings on Derivatives
Three Months Ended
September 30
(In millions)20222021
Derivatives in Fair Value Hedging Relationships:
Interest rate swap contracts
Interest expense
$(39)$(10)
(1)Changes in the fair value of the interest rate swap agreements are exactly offset by the change in the fair value of the underlying long-term debt.
16
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Additional information regarding the cumulative amount of fair value hedging gain (loss) recognized in earnings for items designated and qualifying as hedged items in fair value hedges is as follows:

(In millions)
Line Item in the Consolidated Balance Sheets in Which the Hedged Item is IncludedCarrying Amount of the
Hedged Liabilities		Cumulative Amount of Fair
Value Hedging Gain (Loss)
Included in the Carrying Amount of the Hedged Liability
September 30, 2022September 30, 2022
Current debt$— $— 
Long-term debt838 (154)
Total debt$838 $(154)
Additional information regarding the effects of fair value and cash flow hedging relationships for derivatives designated and qualifying as hedging instruments is as follows:
Three Months Ended September 30
20222021
(In millions)Net SalesInterest
Expense		Net SalesInterest
Expense
Total amounts of income and expense line items presented in the consolidated statements of earnings in which the effects of fair value and cash flow hedges are recorded$3,930 $