falsedesktopEL2020-09-30000100125020000107{"tbl_sim": "https://q10k.com/tbl-sim", "search": "https://q10k.com/search"}{"q10k_tbl_0": "Large accelerated filer\t☒\tAccelerated filer\t☐\nNon-accelerated filer\t☐\tSmaller reporting company\t☐\n\t\tEmerging growth company\t☐\n", "q10k_tbl_1": "\tPage\nPart I. Financial Information\t\nItem 1. Financial Statements (Unaudited)\t\nConsolidated Statements of Earnings - Three Months Ended September 30 2020 and 2019\t2\nConsolidated Statements of Comprehensive Income - Three Months Ended September 30 2020 and 2019\t3\nConsolidated Balance Sheets - September 30 2020 and June 30 2020 (Audited)\t4\nConsolidated Statements of Cash Flows - Three Months Ended September 30 2020 and 2019\t5\nNotes to Consolidated Financial Statements\t6\nItem 2. Management's Discussion and Analysis of Financial Condition and Results of Operations\t31\nItem 3. Quantitative and Qualitative Disclosures About Market Risk\t52\nItem 4. Controls and Procedures\t52\nPart II. Other Information\t\nItem 1. Legal Proceedings\t52\nItem 2. Unregistered Sales of Equity Securities and Use of Proceeds\t53\nItem 6. Exhibits\t53\nSignatures\t54\n", "q10k_tbl_2": "\tThree Months Ended September 30\t\n(In millions except per share data)\t\t2020\t\t\t\t2019\t\t\nNet sales\t\t3562\t\t\t\t3895\t\t\nCost of sales\t\t825\t\t\t\t908\t\t\nGross profit\t\t2737\t\t\t\t2987\t\t\nOperating expenses\t\t\t\t\t\t\t\t\nSelling general and administrative\t\t2026\t\t\t\t2185\t\t\nRestructuring and other charges\t\t6\t\t\t\t23\t\t\nTotal operating expenses\t\t2032\t\t\t\t2208\t\t\nOperating income\t\t705\t\t\t\t779\t\t\nInterest expense\t\t45\t\t\t\t32\t\t\nInterest income and investment income net\t\t14\t\t\t\t14\t\t\nOther components of net periodic benefit cost\t\t3\t\t\t\t1\t\t\nEarnings before income taxes\t\t671\t\t\t\t760\t\t\nProvision for income taxes\t\t146\t\t\t\t162\t\t\nNet earnings\t\t525\t\t\t\t598\t\t\nNet earnings attributable to noncontrolling interests\t\t(2)\t\t\t\t(3)\t\t\nNet earnings attributable to The Estée Lauder Companies Inc.\t\t523\t\t\t\t595\t\t\nNet earnings attributable to The Estée Lauder Companies Inc. per common share\t\t\t\t\t\t\t\t\nBasic\t\t1.44\t\t\t\t1.65\t\t\nDiluted\t\t1.42\t\t\t\t1.61\t\t\nWeighted-average common shares outstanding\t\t\t\t\t\t\t\t\nBasic\t\t362.1\t\t\t\t361.4\t\t\nDiluted\t\t367.2\t\t\t\t368.6\t\t\n", "q10k_tbl_3": "\tThree Months Ended September 30\t\n(In millions)\t2020\t2019\t\t\t\t\t\t\nNet earnings\t525\t598\t\t\t\t\t\t\nOther comprehensive income (loss):\t\t\t\t\t\t\t\t\nNet cash flow hedge loss\t(31)\t(2)\t\t\t\t\t\t\nAmounts included in net periodic benefit cost\t6\t5\t\t\t\t\t\t\nTranslation adjustments\t78\t(70)\t\t\t\t\t\t\nBenefit for deferred income taxes on components of other comprehensive income\t18\t3\t\t\t\t\t\t\nTotal other comprehensive gain (loss)\t71\t(64)\t\t\t\t\t\t\nComprehensive income\t596\t534\t\t\t\t\t\t\nComprehensive income attributable to noncontrolling interests:\t\t\t\t\t\t\t\t\nNet earnings\t(2)\t(3)\t\t\t\t\t\t\nComprehensive income attributable to The Estée Lauder Companies Inc.\t594\t531\t\t\t\t\t\t\n", "q10k_tbl_4": "(In millions except share data)\tSeptember 30 2020\tJune 30 2020\n\t(Unaudited)\t\nASSETS\t\t\nCurrent assets\t\t\nCash and cash equivalents\t4267\t5022\nAccounts receivable net\t1812\t1194\nInventory and promotional merchandise\t2204\t2062\nPrepaid expenses and other current assets\t512\t614\nTotal current assets\t8795\t8892\nProperty plant and equipment net\t2077\t2055\nOther assets\t\t\nOperating lease right-of-use assets\t2322\t2282\nGoodwill\t1421\t1401\nOther intangible assets net\t2358\t2338\nOther assets\t930\t813\nTotal other assets\t7031\t6834\nTotal assets\t17903\t17781\nLIABILITIES AND EQUITY\t\t\nCurrent liabilities\t\t\nCurrent debt\t473\t1222\nAccounts payable\t1178\t1177\nOperating lease liabilities\t399\t375\nOther accrued liabilities\t2694\t2405\nTotal current liabilities\t4744\t5179\nNoncurrent liabilities\t\t\nLong-term debt\t4913\t4914\nLong-term operating lease liabilities\t2309\t2278\nOther noncurrent liabilities\t1456\t1448\nTotal noncurrent liabilities\t8678\t8640\nContingencies\t\t\nEquity\t\t\nCommon stock $.01 par value; Class A shares authorized: 1300000000 at September 30 2020 and June 30 2020; shares issued: 453152184 at September 30 2020 and 451927441 at June 30 2020; Class B shares authorized: 304000000 at September 30 2020 and June 30 2020; shares issued and outstanding: 135067429 at September 30 2020 and 135235429 at June 30 2020\t6\t6\nPaid-in capital\t4913\t4790\nRetained earnings\t10480\t10134\nAccumulated other comprehensive loss\t(594)\t(665)\n\t14805\t14265\nLess: Treasury stock at cost; 226727480 Class A shares at September 30 2020 and 226637238 Class A shares at June 30 2020\t(10353)\t(10330)\nTotal stockholders' equity - The Estée Lauder Companies Inc.\t4452\t3935\nNoncontrolling interests\t29\t27\nTotal equity\t4481\t3962\nTotal liabilities and equity\t17903\t17781\n", "q10k_tbl_5": "\tThree Months Ended September 30\t\n(In millions)\t2020\t2019\nCash flows from operating activities\t\t\nNet earnings\t525\t598\nAdjustments to reconcile net earnings to net cash flows from operating activities:\t\t\nDepreciation and amortization\t156\t143\nDeferred income taxes\t(39)\t11\nNon-cash stock-based compensation\t64\t56\nNet loss on disposal of property plant and equipment\t2\t2\nPension and post-retirement benefit expense\t23\t21\nPension and post-retirement benefit contributions\t(7)\t(9)\nOther non-cash items\t(10)\t(2)\nChanges in operating assets and liabilities:\t\t\nIncrease in accounts receivable net\t(607)\t(487)\nIncrease in inventory and promotional merchandise\t(94)\t(83)\nDecrease (increase) in other assets net\t39\t(48)\nDecrease in accounts payable\t(21)\t(400)\nIncrease in other accrued and noncurrent liabilities\t316\t31\nIncrease (decrease) in operating lease assets and liabilities net\t11\t(3)\nNet cash flows provided by (used for) operating activities\t358\t(170)\nCash flows from investing activities\t\t\nCapital expenditures\t(116)\t(125)\nProceeds from purchase price refund\t32\t0\nPayment for acquired business\t(6)\t0\nPurchases of investments\t(40)\t(5)\nSettlement of net investment hedges\t(112)\t2\nNet cash flows used for investing activities\t(242)\t(128)\nCash flows from financing activities\t\t\nProceeds (repayments) of current debt net\t(747)\t5\nRepayments and redemptions of long-term debt\t(2)\t(5)\nNet proceeds from stock-based compensation transactions\t58\t55\nPayments to acquire treasury stock\t(25)\t(313)\nDividends paid to stockholders\t(174)\t(156)\nPayments to noncontrolling interest holders for dividends\t0\t(2)\nNet cash flows used for financing activities\t(890)\t(416)\nEffect of exchange rate changes on Cash and cash equivalents\t19\t(14)\nNet decrease in Cash and cash equivalents\t(755)\t(728)\nCash and cash equivalents at beginning of period\t5022\t2987\nCash and cash equivalents at end of period\t4267\t2259\n", "q10k_tbl_6": "(In millions)\tSeptember 30 2020\tJune 30 2020\nRaw materials\t553\t542\nWork in process\t266\t305\nFinished goods\t1126\t995\nPromotional merchandise\t259\t220\n\t2204\t2062\n", "q10k_tbl_7": "(In millions)\tSeptember 30 2020\tJune 30 2020\nAssets (Useful Life)\t\t\nLand\t34\t33\nBuildings and improvements (10 to 40 years)\t419\t400\nMachinery and equipment (3 to 10 years)\t913\t865\nComputer hardware and software (4 to 10 years)\t1374\t1335\nFurniture and fixtures (5 to 10 years)\t122\t120\nLeasehold improvements\t2426\t2381\n\t5288\t5134\nLess accumulated depreciation and amortization\t(3211)\t(3079)\n\t2077\t2055\n", "q10k_tbl_8": "(In millions)\tSeptember 30 2020\tJune 30 2020\nAdvertising merchandising and sampling\t316\t256\nEmployee compensation\t405\t424\nDeferred revenue\t353\t222\nPayroll and other taxes\t277\t250\nAccrued income taxes\t269\t208\nSales return accrual\t253\t212\nOther\t821\t833\n\t2694\t2405\n", "q10k_tbl_9": "(In millions)\tSkin Care\tMakeup\tFragrance\tHair Care\tTotal\nBalance as of June 30 2020\t\t\t\t\t\nGoodwill\t519\t1210\t254\t389\t2372\nAccumulated impairments\t(95)\t(817)\t(26)\t(33)\t(971)\n\t424\t393\t228\t356\t1401\nGoodwill acquired during the period\t0\t2\t0\t4\t6\nTranslation adjustments goodwill\t10\t0\t5\t1\t16\nTranslation adjustments accumulated impairments\t(1)\t0\t0\t(1)\t(2)\n\t9\t2\t5\t4\t20\nBalance as of September 30 2020\t\t\t\t\t\nGoodwill\t529\t1212\t259\t394\t2394\nAccumulated impairments\t(96)\t(817)\t(26)\t(34)\t(973)\n\t433\t395\t233\t360\t1421\n", "q10k_tbl_10": "\tSeptember 30 2020\t\t\tJune 30 2020\t\t\n(In millions)\tGross Carrying Value\tAccumulated Amortization\tTotal Net Book Value\tGross Carrying Value\tAccumulated Amortization\tTotal Net Book Value\nAmortizable intangible assets:\t\t\t\t\t\t\nCustomer lists and other\t1615\t500\t1115\t1590\t475\t1115\nLicense agreements\t43\t43\t0\t43\t43\t0\n\t1658\t543\t1115\t1633\t518\t1115\nNon-amortizable intangible assets:\t\t\t\t\t\t\nTrademarks and other\t\t\t1243\t\t\t1223\nTotal intangible assets\t\t\t2358\t\t\t2338\n", "q10k_tbl_11": "\tFiscal\t\t\t\t\n(In millions)\t2021\t2022\t2023\t2024\t2025\nEstimated aggregate amortization expense\t77\t102\t101\t100\t99\n", "q10k_tbl_12": "\tSales Returns (included in Net Sales)\tCost of Sales\tOperating Expenses\t\tTotal\n(In millions)\t\tRestructuring Charges\tOther Charges\nTotal Charges Approved\t\t\t\t\t\nCumulative through June 30 2020\t13\t85\t511\t358\t967\nThree months ended September 30 2020\t1\t0\t(8)\t7\t0\nCumulative through September 30 2020\t14\t85\t503\t365\t967\n", "q10k_tbl_13": "(In millions)\tEmployee- Related Costs\tAsset- Related Costs\tContract Terminations\tOther Exit Costs\tTotal\nRestructuring Charges Approved\t\t\t\t\t\nCumulative through June 30 2020\t460\t28\t7\t16\t511\nThree months ended September 30 2020\t(8)\t0\t0\t0\t(8)\nCumulative through September 30 2020\t452\t28\t7\t16\t503\n", "q10k_tbl_14": "(In millions)\tSales Returns (included in Net Sales)\t\tCost of Sales\t\tOperating Expenses\t\tTotal\n\t\tRestructuring Charges\t\tOther Charges\t\nTotal Charges\t\t\t\t\t\t\t\nCumulative through June 30 2020\t14\t\t65\t\t491\t304\t874\nThree months ended September 30 2020\t0\t\t3\t\t(8)\t2\t(3)\nCumulative through September 30 2020\t14\t\t68\t\t483\t306\t871\n", "q10k_tbl_15": "(In millions)\tEmployee- Related Costs\tAsset- Related Costs\tContract Terminations\tOther Exit Costs\tTotal\nRestructuring Charges (Adjustments)\t\t\t\t\t\nCumulative through June 30 2020\t451\t27\t6\t7\t491\nThree months ended September 30 2020\t(8)\t0\t0\t0\t(8)\nCumulative through September 30 2020\t443\t27\t6\t7\t483\n", "q10k_tbl_16": "(In millions)\tEmployee- Related Costs\tAsset- Related Costs\tContract Terminations\tOther Exit Costs\tTotal\nBalance at June 30 2020\t112\t0\t0\t0\t112\nCharges (adjustments)\t(8)\t0\t0\t0\t(8)\nCash payments\t(23)\t0\t0\t0\t(23)\nBalance at September 30 2020\t81\t0\t0\t0\t81\n", "q10k_tbl_17": "\tAsset Derivatives\t\t\tLiability Derivatives\t\t\n\t\tFair Value (1)\t\t\tFair Value (1)\t\n(In millions)\tBalance Sheet Location\tSeptember 30 2020\tJune 30 2020\tBalance Sheet Location\tSeptember 30 2020\tJune 30 2020\nDerivatives Designated as Hedging Instruments\t\t\t\t\t\t\nForeign currency cash flow hedges\tPrepaid expenses and other current assets\t6\t26\tOther accrued liabilities\t13\t3\nNet investment hedges\tPrepaid expenses and other current assets\t8\t21\tOther accrued liabilities\t0\t62\nInterest rate-related derivatives\tPrepaid expenses and other current assets\t13\t15\tOther accrued liabilities\t3\t3\nTotal Derivatives Designated as Hedging Instruments\t\t27\t62\t\t16\t68\nDerivatives Not Designated as Hedging Instruments\t\t\t\t\t\t\nForeign currency forward contracts\tPrepaid expenses and other current assets\t8\t40\tOther accrued liabilities\t13\t15\nTotal derivatives\t\t35\t102\t\t29\t83\n", "q10k_tbl_18": "\tAmount of Gain or (Loss) Recognized in OCI on Derivatives\t\tLocation of Gain or (Loss) Reclassified from AOCI into Earnings\t\tAmount of Gain or (Loss) Reclassified from AOCI into Earnings(1)\t\t\n\tThree Months Ended September 30\t\t\tThree Months Ended September 30\t\t\n(In millions)\t2020\t2019\t\t2020\t\t2019\nDerivatives in Cash Flow Hedging Relationships:\t\t\t\t\t\t\t\nForeign currency forward contracts\t(31)\t25\tNet sales\t\t1\t\t13\nInterest rate-related derivatives\t0\t(14)\tInterest expense\t\t(1)\t\t0\n\t(31)\t11\t\t\t0\t\t13\nDerivatives in Net Investment Hedging Relationships(2):\t\t\t\t\t\t\t\nForeign currency forward contracts(3)\t(63)\t3\t\t\t0\t\t0\nTotal derivatives\t(94)\t14\t\t\t0\t\t13\n", "q10k_tbl_19": "(In millions)\t\t\nLine Item in the Consolidated Balance Sheets in Which the Hedged Item is Included\tCarrying Amount of the Hedged Liabilities\tCumulative Amount of Fair Value Hedging Gain/(Loss) Included in the Carrying Amount of the Hedged Liability\n\tSeptember 30 2020\tSeptember 30 2020\nCurrent debt\t453\t4\nLong-term debt\t259\t9\nTotal debt\t712\t13\n", "q10k_tbl_20": "\tThree Months Ended September 30\t\t\t\n\t2020\t\t2019\t\n(In millions)\tNet Sales\tInterest Expense\tNet Sales\tInterest Expense\nTotal 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\t3562\t45\t3895\t32\nThe effects of fair value and cash flow hedging relationships:\t\t\t\t\nGain (loss) on fair value hedge relationships - interest rate contracts:\t\t\t\t\nHedged item\tNot applicable\t2\tNot applicable\t(2)\nDerivatives designated as hedging instruments\tNot applicable\t(2)\tNot applicable\t2\nGain (loss) on cash flow hedge relationships - interest rate contracts:\t\t\t\t\nAmount of loss reclassified from AOCI into earnings\tNot applicable\t(1)\tNot applicable\t0\nGain (loss) on cash flow hedge relationships - foreign currency forward contracts:\t\t\t\t\nAmount of gain reclassified from AOCI into earnings\t1\tNot applicable\t13\tNot applicable\n", "q10k_tbl_21": "(In millions)\tLevel 1\tLevel 2\tLevel 3\tTotal\nAssets:\t\t\t\t\nMoney market funds\t1971\t0\t0\t1971\nForeign currency forward contracts\t0\t22\t0\t22\nInterest rate-related derivatives\t0\t13\t0\t13\nTotal\t1971\t35\t0\t2006\nLiabilities:\t\t\t\t\nForeign currency forward contracts\t0\t26\t0\t26\nInterest rate-related derivatives\t0\t3\t0\t3\nContingent consideration\t0\t0\t4\t4\nTotal\t0\t29\t4\t33\n", "q10k_tbl_22": "(In millions)\tLevel 1\tLevel 2\tLevel 3\tTotal\nAssets:\t\t\t\t\nMoney market funds\t2810\t0\t0\t2810\nForeign currency forward contracts\t0\t87\t0\t87\nInterest rate-related derivatives\t0\t15\t0\t15\nTotal\t2810\t102\t0\t2912\nLiabilities:\t\t\t\t\nForeign currency forward contracts\t0\t80\t0\t80\nInterest rate-related derivatives\t0\t3\t0\t3\nContingent consideration\t0\t0\t4\t4\nTotal\t0\t83\t4\t87\n", "q10k_tbl_23": "\tSeptember 30 2020\t\tJune 30 2020\t\n(In millions)\tCarrying Amount\tFair Value\tCarrying Amount\tFair Value\nNonderivatives\t\t\t\t\nCash and cash equivalents\t4267\t4267\t5022\t5022\nCurrent and long-term debt\t5386\t6180\t6136\t6902\nContingent consideration\t4\t4\t4\t4\nDerivatives\t\t\t\t\nForeign currency forward contracts - asset (liability) net\t(4)\t(4)\t7\t7\nInterest rate-related derivatives - asset (liability) net\t10\t10\t12\t12\n", "q10k_tbl_24": "(In millions)\tSeptember 30 2020\nBalance at June 30 2020\t36\nASC 326 cumulative effect adjustment (pre-tax)\t4\nProvision for expected credit losses\t5\nWrite-offs net & other\t1\nBalance at September 30 2020\t46\n", "q10k_tbl_25": "(In millions)\tSeptember 30 2020\nBalance at June 30 2020\t279\nRevenue recognized that was included in the deferred revenue balance at the beginning of the period\t(90)\nRevenue deferred during the period\t216\nOther\t4\nBalance at September 30 2020\t409\n", "q10k_tbl_26": "\tPension Plans\t\t\t\tOther than Pension Plans\t\n\tU.S.\t\tInternational\t\tPost-retirement\t\n(In millions)\t2020\t2019\t2020\t2019\t2020\t2019\nService cost\t11\t10\t9\t9\t0\t1\nInterest cost\t8\t8\t2\t3\t1\t2\nExpected return on plan assets\t(13)\t(13)\t(3)\t(3)\t0\t(1)\nAmortization of:\t\t\t\t\t\t\nActuarial loss\t5\t4\t1\t1\t0\t0\nSpecial termination benefits\t0\t0\t2\t0\t0\t0\nNet periodic benefit cost\t11\t9\t11\t10\t1\t2\n", "q10k_tbl_27": "(In millions)\tSeptember 30 2020\tJune 30 2020\nOther assets\t130\t127\nOther accrued liabilities\t(27)\t(27)\nOther noncurrent liabilities\t(456)\t(440)\nFunded status\t(353)\t(340)\nAccumulated other comprehensive loss\t319\t324\nNet amount recognized\t(34)\t(16)\n", "q10k_tbl_28": "\tThree Months Ended September 30\t\n(In millions except per share data)\t\t2020\t\t\t\t2019\t\t\nNumerator:\t\t\t\t\t\t\t\t\nNet earnings attributable to The Estée Lauder Companies Inc.\t\t523\t\t\t\t595\t\t\nDenominator:\t\t\t\t\t\t\t\t\nWeighted-average common shares outstanding - Basic\t\t362.1\t\t\t\t361.4\t\t\nEffect of dilutive stock options\t\t3.8\t\t\t\t4.9\t\t\nEffect of PSUs\t\t0.2\t\t\t\t0.3\t\t\nEffect of RSUs\t\t1.1\t\t\t\t2.0\t\t\nWeighted-average common shares outstanding - Diluted\t\t367.2\t\t\t\t368.6\t\t\nNet earnings attributable to The Estée Lauder Companies Inc. per common share:\t\t\t\t\t\t\t\t\nBasic\t\t1.44\t\t\t\t1.65\t\t\nDiluted\t\t1.42\t\t\t\t1.61\t\t\n", "q10k_tbl_29": "\tThree Months Ended September 30\t\n(In millions)\t\t2020\t\t\t\t2019\t\t\nCommon stock beginning of the period\t\t6\t\t\t\t6\t\t\nStock-based compensation\t\t0\t\t\t\t0\t\t\nCommon stock end of the period\t\t6\t\t\t\t6\t\t\nPaid-in capital beginning of the period\t\t4790\t\t\t\t4403\t\t\nCommon stock dividends\t\t1\t\t\t\t1\t\t\nStock-based compensation\t\t122\t\t\t\t110\t\t\nPaid-in capital end of the period\t\t4913\t\t\t\t4514\t\t\nRetained earnings beginning of the period\t\t10134\t\t\t\t9984\t\t\nCommon stock dividends\t\t(174)\t\t\t\t(157)\t\t\nNet earnings attributable to The Estée Lauder Companies Inc.\t\t523\t\t\t\t595\t\t\nCumulative effect of adoption of new accounting standards\t\t(3)\t\t\t\t(29)\t\t\nRetained earnings end of the period\t\t10480\t\t\t\t10393\t\t\nAccumulated other comprehensive loss beginning of the period\t\t(665)\t\t\t\t(563)\t\t\nOther comprehensive income (loss)\t\t71\t\t\t\t(64)\t\t\nAccumulated other comprehensive loss end of the period\t\t(594)\t\t\t\t(627)\t\t\nTreasury stock beginning of the period\t\t(10330)\t\t\t\t(9444)\t\t\nAcquisition of treasury stock\t\t0\t\t\t\t(277)\t\t\nStock-based compensation\t\t(23)\t\t\t\t(35)\t\t\nTreasury stock end of the period\t\t(10353)\t\t\t\t(9756)\t\t\nTotal stockholders' equity - The Estée Lauder Companies Inc.\t\t4452\t\t\t\t4530\t\t\nNoncontrolling interests beginning of the period\t\t27\t\t\t\t25\t\t\nNet earnings attributable to noncontrolling interests\t\t2\t\t\t\t3\t\t\nNoncontrolling interests end of the period\t\t29\t\t\t\t28\t\t\nTotal equity\t\t4481\t\t\t\t4558\t\t\nCash dividends declared per common share\t\t.48\t\t\t\t.43\t\t\n", "q10k_tbl_30": "Date Declared\tRecord Date\tPayable Date\tAmount per Share\nAugust 19 2020\tAugust 31 2020\tSeptember 15 2020\t.48\n", "q10k_tbl_31": "(In millions)\tNet Cash Flow Hedge Gain (Loss)\tAmounts Included in Net Periodic Benefit Cost\t\tTranslation Adjustments\t\tTotal\nBalance at June 30 2020\t14\t(244)\t\t(435)\t\t(665)\nOCI before reclassifications\t(24)\t(1)\t(1)\t91\t(2)\t66\nAmounts reclassified to Net earnings\t0\t5\t\t0\t\t5\nNet current-period OCI\t(24)\t4\t\t91\t\t71\nBalance at September 30 2020\t(10)\t(240)\t\t(344)\t\t(594)\n", "q10k_tbl_32": "\tAmount Reclassified from AOCI\t\tAffected Line Item in Consolidated Statements of Earnings\n\tThree Months Ended September 30\t\n(In millions)\t2020\t2019\nGain (Loss) on Cash Flow Hedges\t\t\t\nForeign currency forward contracts\t1\t13\tNet sales\nInterest rate-related derivatives\t(1)\t0\tInterest expense\n\t0\t13\t\nProvision for deferred taxes\t0\t(3)\tProvision for income taxes\n\t0\t10\tNet earnings\nAmounts Included in Net Periodic Benefit Cost\t\t\t\nAmortization of actuarial loss\t(6)\t(5)\tEarnings before income taxes (1)\nBenefit for deferred taxes\t1\t1\tProvision for income taxes\n\t(5)\t(4)\tNet earnings\nCumulative Translation Adjustments\t\t\t\nLoss on liquidation of an investment in a foreign subsidiary\t0\t(6)\tRestructuring and other charges\nTotal reclassification adjustments net\t(5)\t0\tNet earnings\n", "q10k_tbl_33": "(In millions)\t2020\t2019\nCash:\t\t\nCash paid during the period for interest\t26\t32\nCash paid during the period for income taxes\t119\t115\nNon-cash investing and financing activities:\t\t\nCapitalized interest and asset retirement obligations incurred\t1\t0\nProperty plant and equipment accrued but unpaid\t42\t50\nFinance lease obligations\t1\t0\n", "q10k_tbl_34": "\tThree Months Ended September 30\t\n(In millions)\t\t2020\t\t\t\t2019\t\t\nPRODUCT CATEGORY DATA\t\t\t\t\t\t\t\t\nNet sales:\t\t\t\t\t\t\t\t\nSkin Care\t\t2035\t\t\t\t1842\t\t\nMakeup\t\t978\t\t\t\t1443\t\t\nFragrance\t\t406\t\t\t\t462\t\t\nHair Care\t\t136\t\t\t\t136\t\t\nOther\t\t7\t\t\t\t12\t\t\nNet sales\t\t3562\t\t\t\t3895\t\t\nOperating income (loss) before charges associated with restructuring and other activities:\t\t\t\t\t\t\t\t\nSkin Care\t\t721\t\t\t\t632\t\t\nMakeup\t\t(71)\t\t\t\t104\t\t\nFragrance\t\t60\t\t\t\t66\t\t\nHair Care\t\t3\t\t\t\t0\t\t\nOther\t\t1\t\t\t\t2\t\t\n\t\t714\t\t\t\t804\t\t\nReconciliation:\t\t\t\t\t\t\t\t\nCharges associated with restructuring and other activities\t\t(9)\t\t\t\t(25)\t\t\nInterest expense\t\t(45)\t\t\t\t(32)\t\t\nInterest income and investment income net\t\t14\t\t\t\t14\t\t\nOther components of net periodic benefit cost\t\t(3)\t\t\t\t(1)\t\t\nEarnings before income taxes\t\t671\t\t\t\t760\t\t\nGEOGRAPHIC DATA(1)\t\t\t\t\t\t\t\t\nNet sales:\t\t\t\t\t\t\t\t\nThe Americas\t\t873\t\t\t\t1160\t\t\nEurope the Middle East & Africa\t\t1540\t\t\t\t1677\t\t\nAsia/Pacific\t\t1149\t\t\t\t1058\t\t\nNet sales\t\t3562\t\t\t\t3895\t\t\nOperating income (loss):\t\t\t\t\t\t\t\t\nThe Americas\t\t65\t\t\t\t175\t\t\nEurope the Middle East & Africa\t\t411\t\t\t\t377\t\t\nAsia/Pacific\t\t238\t\t\t\t252\t\t\n\t\t714\t\t\t\t804\t\t\nCharges associated with restructuring and other activities\t\t(9)\t\t\t\t(25)\t\t\nOperating income\t\t705\t\t\t\t779\t\t\n", "q10k_tbl_35": "\tThree Months Ended September 30\t\n(In millions)\t2020\t2019\t\t\t\t\t\t\nNET SALES\t\t\t\t\t\t\t\t\nBy Product Category:\t\t\t\t\t\t\t\t\nSkin Care\t2035\t1842\t\t\t\t\t\t\nMakeup\t978\t1443\t\t\t\t\t\t\nFragrance\t406\t462\t\t\t\t\t\t\nHair Care\t136\t136\t\t\t\t\t\t\nOther\t7\t12\t\t\t\t\t\t\nNet sales\t3562\t3895\t\t\t\t\t\t\nBy Region(1):\t\t\t\t\t\t\t\t\nThe Americas\t873\t1160\t\t\t\t\t\t\nEurope the Middle East & Africa\t1540\t1677\t\t\t\t\t\t\nAsia/Pacific\t1149\t1058\t\t\t\t\t\t\nNet sales\t3562\t3895\t\t\t\t\t\t\nOPERATING INCOME (LOSS)\t\t\t\t\t\t\t\t\nBy Product Category:\t\t\t\t\t\t\t\t\nSkin Care\t721\t632\t\t\t\t\t\t\nMakeup\t(71)\t104\t\t\t\t\t\t\nFragrance\t60\t66\t\t\t\t\t\t\nHair Care\t3\t0\t\t\t\t\t\t\nOther\t1\t2\t\t\t\t\t\t\n\t714\t804\t\t\t\t\t\t\nCharges associated with restructuring and other activities\t(9)\t(25)\t\t\t\t\t\t\nOperating income\t705\t779\t\t\t\t\t\t\nBy Region(1):\t\t\t\t\t\t\t\t\nThe Americas\t65\t175\t\t\t\t\t\t\nEurope the Middle East & Africa\t411\t377\t\t\t\t\t\t\nAsia/Pacific\t238\t252\t\t\t\t\t\t\n\t714\t804\t\t\t\t\t\t\nCharges associated with restructuring and other activities\t(9)\t(25)\t\t\t\t\t\t\nOperating income\t705\t779\t\t\t\t\t\t\n", "q10k_tbl_36": "\tThree Months Ended September 30\t\n\t2020\t2019\t\t\t\t\t\t\nNet sales\t100.0%\t100.0%\t\t\t\t\t\t\nCost of sales\t23.2\t23.3\t\t\t\t\t\t\nGross profit\t76.8\t76.7\t\t\t\t\t\t\nOperating expenses:\t\t\t\t\t\t\t\t\nSelling general and administrative\t56.9\t56.1\t\t\t\t\t\t\nRestructuring and other charges\t0.2\t0.6\t\t\t\t\t\t\nTotal operating expenses\t57.0\t56.7\t\t\t\t\t\t\nOperating income\t19.8\t20.0\t\t\t\t\t\t\nInterest expense\t1.3\t0.8\t\t\t\t\t\t\nInterest income and investment income net\t0.4\t0.3\t\t\t\t\t\t\nOther components of net periodic benefit cost\t0.1\t0\t\t\t\t\t\t\nEarnings before income taxes\t18.8\t19.5\t\t\t\t\t\t\nProvision for income taxes\t(4.1)\t(4.1)\t\t\t\t\t\t\nNet earnings\t14.7\t15.4\t\t\t\t\t\t\nNet earnings attributable to noncontrolling interests\t(0.1)\t(0.1)\t\t\t\t\t\t\nNet earnings attributable to The Estée Lauder Companies Inc.\t14.7%\t15.3%\t\t\t\t\t\t\n", "q10k_tbl_37": "\tThree Months Ended September 30\t\n($ in millions)\t\t2020\t\t\t\t2019\t\t\nAs Reported:\t\t\t\t\t\t\t\t\nNet sales\t\t3562\t\t\t\t3895\t\t\n Change from prior-year period\t\t(333)\t\t\t\t\t\t\n% Change from prior-year period\t\t(9)%\t\t\t\t\t\t\nNon-GAAP Financial Measure(1):\t\t\t\t\t\t\t\t\n% Change from prior-year period in constant currency\t\t(9)%\t\t\t\t\t\t\n", "q10k_tbl_38": "\tThree Months Ended September 30\t\n($ in millions)\t\t2020\t\t\t\t2019\t\t\nAs Reported:\t\t\t\t\t\t\t\t\nNet sales\t\t2035\t\t\t\t1842\t\t\n Change from prior-year period\t\t193\t\t\t\t\t\t\n% Change from prior-year period\t\t10%\t\t\t\t\t\t\nNon-GAAP Financial Measure(1):\t\t\t\t\t\t\t\t\n% Change from prior-year period in constant currency\t\t10%\t\t\t\t\t\t\n", "q10k_tbl_39": "\tThree Months Ended September 30\t\n($ in millions)\t\t2020\t\t\t\t2019\t\t\nAs Reported:\t\t\t\t\t\t\t\t\nNet sales\t\t978\t\t\t\t1443\t\t\n Change from prior-year period\t\t(465)\t\t\t\t\t\t\n% Change from prior-year period\t\t(32)%\t\t\t\t\t\t\nNon-GAAP Financial Measure(1):\t\t\t\t\t\t\t\t\n% Change from prior-year period in constant currency\t\t(32)%\t\t\t\t\t\t\n", "q10k_tbl_40": "\tThree Months Ended September 30\t\n($ in millions)\t\t2020\t\t\t\t2019\t\t\nAs Reported:\t\t\t\t\t\t\t\t\nNet sales\t\t406\t\t\t\t462\t\t\n Change from prior-year period\t\t(56)\t\t\t\t\t\t\n% Change from prior-year period\t\t(12)%\t\t\t\t\t\t\nNon-GAAP Financial Measure(1):\t\t\t\t\t\t\t\t\n% Change from prior-year period in constant currency\t\t(13)%\t\t\t\t\t\t\n", "q10k_tbl_41": "\tThree Months Ended September 30\t\n($ in millions)\t\t2020\t\t\t\t2019\t\t\nAs Reported:\t\t\t\t\t\t\t\t\nNet sales\t\t873\t\t\t\t1160\t\t\n Change from prior-year period\t\t(287)\t\t\t\t\t\t\n% Change from prior-year period\t\t(25)%\t\t\t\t\t\t\nNon-GAAP Financial Measure(1):\t\t\t\t\t\t\t\t\n% Change from prior-year period in constant currency\t\t(24)%\t\t\t\t\t\t\n", "q10k_tbl_42": "\tThree Months Ended September 30\t\n($ in millions)\t\t2020\t\t\t\t2019\t\t\nAs Reported:\t\t\t\t\t\t\t\t\nNet sales\t\t1540\t\t\t\t1677\t\t\n Change from prior-year period\t\t(137)\t\t\t\t\t\t\n% Change from prior-year period\t\t(8)%\t\t\t\t\t\t\nNon-GAAP Financial Measure(1):\t\t\t\t\t\t\t\t\n% Change from prior-year period in constant currency\t\t(9)%\t\t\t\t\t\t\n", "q10k_tbl_43": "\tThree Months Ended September 30\t\n($ in millions)\t\t2020\t\t\t\t2019\t\t\nAs Reported:\t\t\t\t\t\t\t\t\nNet sales\t\t1149\t\t\t\t1058\t\t\n Change from prior-year period\t\t91\t\t\t\t\t\t\n% Change from prior-year period\t\t9%\t\t\t\t\t\t\nNon-GAAP Financial Measure(1):\t\t\t\t\t\t\t\t\n% Change from prior-year period in constant currency\t\t7%\t\t\t\t\t\t\n", "q10k_tbl_44": "Favorable (Unfavorable) Basis Points\t\nThree Months Ended September 30 2020\t\nMix of business\t100\nObsolescence charges\t10\nManufacturing costs and other\t(40)\nForeign exchange transactions\t(50)\nSubtotal\t20\nCharges associated with restructuring and other activities\t(10)\nTotal\t10\n", "q10k_tbl_45": "Favorable (Unfavorable) Basis Points\t\nThree Months Ended September 30 2020\t\n\tThree Months Ended\nGeneral and administrative expenses\t(280)\nAdvertising merchandising sampling and product development\t(20)\nSelling\t230\nStock-based compensation\t(30)\nStore operating costs\t10\nShipping\t(30)\nForeign exchange transactions\t40\nSubtotal\t(80)\nCharges associated with restructuring and other activities\t50\nTotal\t(30)\n", "q10k_tbl_46": "\tThree Months Ended September 30\t\n($ in millions)\t\t2020\t\t\t\t2019\t\t\nAs Reported:\t\t\t\t\t\t\t\t\nOperating income\t\t705\t\t\t\t779\t\t\n Change from prior-year period\t\t(74)\t\t\t\t\t\t\n% Change from prior-year period\t\t(9)%\t\t\t\t\t\t\nOperating margin\t\t19.8%\t\t\t\t20.0%\t\t\nNon-GAAP Financial Measure(1):\t\t\t\t\t\t\t\t\n% Change in operating income from the prior-year period adjusting for the impact of charges associated with restructuring and other activities\t\t(11)%\t\t\t\t\t\t\n", "q10k_tbl_47": "\tThree Months Ended September 30\t\n($ in millions)\t\t2020\t\t\t\t2019\t\t\nAs Reported:\t\t\t\t\t\t\t\t\nOperating income\t\t721\t\t\t\t632\t\t\n Change from prior-year period\t\t89\t\t\t\t\t\t\n% Change from prior-year period\t\t14%\t\t\t\t\t\t\n", "q10k_tbl_48": "\tThree Months Ended September 30\t\n($ in millions)\t\t2020\t\t\t\t2019\t\t\nAs Reported:\t\t\t\t\t\t\t\t\nOperating income (loss)\t\t(71)\t\t\t\t104\t\t\n Change from prior-year period\t\t(175)\t\t\t\t\t\t\n% Change from prior-year period\t\t(100+)%\t\t\t\t\t\t\n", "q10k_tbl_49": "\tThree Months Ended September 30\t\n($ in millions)\t\t2020\t\t\t\t2019\t\t\nAs Reported:\t\t\t\t\t\t\t\t\nOperating income\t\t65\t\t\t\t175\t\t\n Change from prior-year period\t\t(110)\t\t\t\t\t\t\n% Change from prior-year period\t\t(63)%\t\t\t\t\t\t\n", "q10k_tbl_50": "\tThree Months Ended September 30\t\n($ in millions except per share data)\t\t2020\t\t\t\t2019\t\t\nAs Reported:\t\t\t\t\t\t\t\t\nNet earnings attributable to The Estée Lauder Companies Inc.\t\t523\t\t\t\t595\t\t\n Change from prior-year period\t\t(72)\t\t\t\t\t\t\n% Change from prior-year period\t\t(12)%\t\t\t\t\t\t\nDiluted net earnings per common share\t\t1.42\t\t\t\t1.61\t\t\n% Change from prior-year period\t\t(12)%\t\t\t\t\t\t\nNon-GAAP Financial Measure(1):\t\t\t\t\t\t\t\t\n% Change in diluted net earnings per common share from the prior-year period adjusting for the impact of charges associated with restructuring and other activities\t\t(14)%\t\t\t\t\t\t\n", "q10k_tbl_51": "($ in millions except per share data)\t\tThree Months Ended September 30\t\t\tVariance\t% Change\t% Change in constant currency\n\t2020\t\t2019\t\t\nNet sales as reported\t\t3562\t\t3895\t(333)\t(9)%\t(9)%\nReturns associated with restructuring and other activities\t\t0\t\t0\t0\t\t\nNet sales as adjusted\t\t3562\t\t3895\t(333)\t(9)%\t(9)%\nOperating income as reported\t\t705\t\t779\t(74)\t(9)%\t(9)%\nCharges associated with restructuring and other activities\t\t9\t\t25\t(16)\t\t\nOperating income as adjusted\t\t714\t\t804\t(90)\t(11)%\t(11)%\nDiluted net earnings per common share as reported\t\t1.42\t\t1.61\t(.19)\t(12)%\t(12)%\nCharges associated with restructuring and other activities\t\t.02\t\t.06\t(.04)\t\t\nDiluted net earnings per common share as adjusted\t\t1.44\t\t1.67\t(.23)\t(14)%\t(14)%\n", "q10k_tbl_52": "\tAs Reported\t\t\tImpact of foreign currency translation\tVariance in constant currency\t% Change as reported\t% Change in constant currency\n($ in millions)\tThree Months Ended September 30 2020\tThree Months Ended September 30 2019\tVariance\t\t\nBy Product Category:\t\t\t\t\t\t\t\nSkin Care\t2035\t1842\t193\t(11)\t182\t10%\t10%\nMakeup\t978\t1443\t(465)\t(2)\t(467)\t(32)\t(32)\nFragrance\t406\t462\t(56)\t(2)\t(58)\t(12)\t(13)\nHair Care\t136\t136\t0\t(1)\t(1)\t0\t(1)\nOther\t7\t12\t(5)\t1\t(4)\t(42)\t(33)\n\t3562\t3895\t(333)\t(15)\t(348)\t(9)\t(9)\nReturns associated with restructuring and other activities\t0\t0\t0\t0\t0\t\t\nTotal\t3562\t3895\t(333)\t(15)\t(348)\t(9)%\t(9)%\nBy Region:\t\t\t\t\t\t\t\nThe Americas\t873\t1160\t(287)\t14\t(273)\t(25)%\t(24)%\nEurope the Middle East & Africa\t1540\t1677\t(137)\t(10)\t(147)\t(8)\t(9)\nAsia/Pacific\t1149\t1058\t91\t(19)\t72\t9\t7\n\t3562\t3895\t(333)\t(15)\t(348)\t(9)\t(9)\nReturns associated with restructuring and other activities\t0\t0\t0\t0\t0\t\t\nTotal\t3562\t3895\t(333)\t(15)\t(348)\t(9)%\t(9)%\n", "q10k_tbl_53": "($ in millions)\tLong-term Debt\tCurrent Debt\tTotal Debt\n3.125% Senior Notes due December 1 2049 (\"2049 Senior Notes\") (1) (13)\t635\t0\t635\n4.15% Senior Notes due March 15 2047 (\"2047 Senior Notes\") (2) (13)\t494\t0\t494\n4.375% Senior Notes due June 15 2045 (\"2045 Senior Notes\") (3) (13)\t456\t0\t456\n3.70% Senior Notes due August 15 2042 (\"2042 Senior Notes\") (4) (13)\t247\t0\t247\n6.00% Senior Notes due May 15 2037 (\"2037 Senior Notes\") (5) (13)\t294\t0\t294\n5.75% Senior Notes due October 15 2033 (\"2033 Senior Notes\") (6)\t197\t0\t197\n2.600% Senior Notes due April 15 2030 (\"2030 Senior Notes\") (7)\t694\t0\t694\n2.375% Senior Notes due December 1 2029 (\"2029 Senior Notes\") (8) (13)\t640\t0\t640\n3.15% Senior Notes due March 15 2027 (\"2027 Senior Notes\") (9) (13)\t498\t0\t498\n2.00% Senior Notes due December 1 2024 (\"2024 Senior Notes\") (10) (13)\t495\t0\t495\n2.35% Senior Notes due August 15 2022 (\"2022 Senior Notes\") (11) (13)\t259\t0\t259\n1.70% Senior Notes due May 10 2021 (\"2021 Senior Notes\") (12) (13)\t0\t453\t453\nOther long-term borrowings\t4\t0\t4\nOther current borrowings\t0\t20\t20\n\t4913\t473\t5386\n", "q10k_tbl_54": "\tThree Months Ended September 30\t\n(In millions)\t2020\t2019\nNet cash provided by (used for) operating activities\t358\t(170)\nNet cash used for investing activities\t(242)\t(128)\nNet cash used for financing activities\t(890)\t(416)\n", "q10k_tbl_55": "Period\tTotal Number of Shares Purchased(1)\tAverage Price Paid Per Share\tTotal Number of Shares Purchased as Part of Publicly Announced Program\tMaximum Number of Shares that May Yet Be Purchased Under the Program(2)\nJuly 2020\t369\t190.81\t0\t34741624\nAugust 2020\t0\t0\t0\t34741624\nSeptember 2020\t114053\t219.79\t0\t34741624\n\t114422\t219.70\t0\t\n", "q10k_tbl_56": "Exhibit Number\tDescription\n10.1\tForm of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (SEC File No. 1-14064). †\n31.1\tCertification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CEO).\n31.2\tCertification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CFO).\n32.1\tCertification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CEO). (furnished)\n32.2\tCertification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CFO). (furnished)\n101.1\tThe following materials from The Estée Lauder Companies Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended September 30 2020 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Statements of Earnings (ii) the Consolidated Statements of Comprehensive Income (iii) the Consolidated Balance Sheets (iv) the Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements\n104\tThe cover page from The Estée Lauder Companies Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended September 30 2020 is formatted in iXBRL\n"}{"bs": "q10k_tbl_4", "is": "q10k_tbl_2", "cf": "q10k_tbl_5"}None
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
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, 2020, 226,538,215 shares of the registrant’s Class A Common Stock, $.01 par value, and 135,067,429 shares of the registrant’s Class B Common Stock, $.01 par value, were outstanding.
Common stock, $.01 par value; Class A shares authorized: 1,300,000,000 at September 30, 2020 and June 30, 2020; shares issued: 453,152,184 at September 30, 2020 and 451,927,441 at June 30, 2020; Class B shares authorized: 304,000,000 at September 30, 2020 and June 30, 2020; shares issued and outstanding: 135,067,429 at September 30, 2020 and 135,235,429 at June 30, 2020
6
6
Paid-in capital
4,913
4,790
Retained earnings
10,480
10,134
Accumulated other comprehensive loss
(594)
(665)
14,805
14,265
Less: Treasury stock, at cost; 226,727,480 Class A shares at September 30, 2020 and 226,637,238 Class A shares at June 30, 2020
(10,353)
(10,330)
Total stockholders’ equity – The Estée Lauder Companies Inc.
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, 2020.
Certain amounts in the consolidated financial statements of prior years 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, 2020. 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 gains (losses), net of tax, reported as translation adjustments through other comprehensive income (loss) (“OCI”) attributable to The Estée Lauder Companies Inc. were $91 million and $(72) million, net of tax, during the three months ended September 30, 2020 and 2019, 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 losses on foreign currency transactions of $1 million and $3 million during the three months ended September 30, 2020 and 2019, respectively.
The Company is a worldwide manufacturer, marketer and distributor of skin care, makeup, fragrance and hair care products. The Company’s sales subject to credit risk are made primarily to department stores, perfumeries, specialty multi-brand retailers and retailers in its travel retail business. 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 $554 million, or 16%, and $169 million, or 4%, of the Company's consolidated net sales for the three months ended September 30, 2020 and 2019, respectively. This customer accounted for $289 million, or 15%, and $297 million, or 24%, of the Company's accounts receivable at September 30, 2020 and June 30, 2020, respectively.
Another major customer of the Company during the quarter sells products primarily within the United States and accounted for $215 million, or 11%, and $87 million, or 7%, of the Company’s accounts receivable at September 30, 2020 and June 30, 2020, respectively. This customer accounted for $181 million, or 5%, and $279 million, or 7%, of the Company’s consolidated net sales for the three months ended September 30, 2020 and 2019, respectively.
Inventory and Promotional Merchandise
Inventory and promotional merchandise consists of the following:
(In millions)
September 30 2020
June 30 2020
Raw materials
$
553
$
542
Work in process
266
305
Finished goods
1,126
995
Promotional merchandise
259
220
$
2,204
$
2,062
Property, Plant and Equipment
Property, plant and equipment consists of the following:
(In millions)
September 30 2020
June 30 2020
Assets (Useful Life)
Land
$
34
$
33
Buildings and improvements (10 to 40 years)
419
400
Machinery and equipment (3 to 10 years)
913
865
Computer hardware and software (4 to 10 years)
1,374
1,335
Furniture and fixtures (5 to 10 years)
122
120
Leasehold improvements
2,426
2,381
5,288
5,134
Less accumulated depreciation and amortization
(3,211)
(3,079)
$
2,077
$
2,055
The cost of assets related to projects in progress of $523 million and $501 million as of September 30, 2020 and June 30, 2020, respectively, is included in their respective asset categories above. Depreciation and amortization of property, plant and equipment was $125 million during the three months ended September 30, 2020 and 2019. 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.
The effective rate for income taxes was 21.8% and 21.3% for the three months ended September 30, 2020 and 2019, respectively. The increase in the effective tax rate of 50 basis points was primarily attributable to a higher effective tax rate on the Company's foreign operations.
The fiscal 2021 first quarter effective tax rate included a 130 basis point reduction to the current period effective tax rate due to the impact of the U.S. government issuance of final global intangible low-taxed income (“GILTI”) tax regulations in July 2020 under the Tax Cuts and Jobs Act that provide for a high-tax exception to the current year GILTI tax. These newly-issued regulations are retroactive to the original enactment of the GILTI tax provision, which includes the Company's 2019 and 2020 fiscal years. The Company is currently evaluating the impact and ability to apply the GILTI regulations relating to fiscal 2019 and fiscal 2020.
The fiscal 2021 first quarter effective tax rate also included a 120 basis point increase to the current period effective tax rate due to the pending December 31, 2020 expiration of a tax law in China that expanded the corporate income tax deduction allowance for advertising and promotion expenses (“expiring China tax law”). The favorable impact from a possible re-enactment of the expiring China tax law would be recognized in the provision for income taxes in the period that includes the date of such re-enactment.
As of September 30, 2020 and June 30, 2020, the gross amount of unrecognized tax benefits, exclusive of interest and penalties, totaled $73 million and $70 million, respectively. The total amount of unrecognized tax benefits at September 30, 2020 that, if recognized, would affect the effective tax rate was $58 million. The total gross interest and penalties accrued related to unrecognized tax benefits during the three months ended September 30, 2020 in the accompanying consolidated statements of earnings was $1 million. The total gross accrued interest and penalties in the accompanying consolidated balance sheets at September 30, 2020 and June 30, 2020, was $14 million and $13 million, respectively. On the basis of the information available as of September 30, 2020, it is reasonably possible that the total amount of unrecognized tax benefits could decrease in a range of $5 million to $10 million within the next twelve months as a result of projected resolutions of global tax examinations and controversies and a potential lapse of the applicable statutes of limitations.
Other Accrued Liabilities
Other accrued liabilities consist of the following:
(In millions)
September 30 2020
June 30 2020
Advertising, merchandising and sampling
$
316
$
256
Employee compensation
405
424
Deferred revenue
353
222
Payroll and other taxes
277
250
Accrued income taxes
269
208
Sales return accrual
253
212
Other
821
833
$
2,694
$
2,405
Debt
In August 2020, the Company repaid the remaining $750 million borrowed under its $1,500 million revolving credit facility that was outstanding as of June 30, 2020.
Measurement of Credit Losses on Financial Instruments (ASC Topic 326 – Financial Instruments – Credit Losses) (“ASC 326”)
In June 2016, the FASB issued authoritative guidance that requires companies to utilize an impairment model for most financial assets measured at amortized cost and certain other financial instruments, which include trade and other receivables, loans and held-to-maturity debt securities, to record an allowance for credit risk based on expected losses rather than incurred losses. In addition, this guidance changes the recognition method for credit losses on available-for-sale debt securities, which can occur as a result of market and credit risk, and requires additional disclosures. In general, modified retrospective adoption will be required for all outstanding instruments that fall under this guidance.
In November 2019, the FASB issued authoritative guidance (ASU 2019-11 – Codification Improvements to Topic 326, Financial Instruments – Credit Losses) that amends ASC Topic 326 to clarify, improve and amend certain aspects of this guidance, such as disclosures related to accrued interest receivables and the estimation of credit losses associated with financial assets secured by collateral.
In February 2020, the FASB issued authoritative guidance (ASU 2020-02 – Financial Instruments – Credit Losses (Topic 326) and Leases (Topic 842)) that amends and clarifies Topic 326 and Topic 842. For Topic 326, the codification was updated to include the Securities and Exchange Commission staff interpretations associated with registrants engaged in lending activities.
Effective for the Company – Fiscal 2021 first quarter.
Impact on consolidated financial statements – On July 1, 2020, the Company adopted ASC 326. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. See Note 6 – Revenue Recognition for further discussion.
Goodwill and Other – Internal-Use Software (ASU 2018-15 – Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract)
In August 2018, the FASB issued authoritative guidance that permits companies to capitalize the costs incurred for setting up business systems that operate on cloud technology. The new guidance aligns the requirement for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance does not affect the accounting for the service element of a hosting arrangement that is a service contract. Capitalized costs associated with a hosting arrangement that is a service contract must be amortized over the term of the hosting arrangement to the same line item in the income statement as the expense for fees for the hosting arrangement.
Effective for the Company– Fiscal 2021 first quarter, with early adoption permitted in any interim period. This guidance can be adopted either retrospectively, or prospectively to all implementation costs incurred after the date of adoption.
Impact on consolidated financial statements – On July 1, 2020, the Company adopted this guidance prospectively to all implementation costs incurred after the date of adoption. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.
Recently Issued Accounting Standards
Reference Rate Reform (ASC Topic 848) (Accounting Standards Update (“ASU”) 2020-04 - Facilitation of the Effects of Reference Rate Reform on Financial Reporting)
In March 2020, the FASB issued authoritative guidance to provide optional relief for companies preparing for the discontinuation of interest rates such as LIBOR, which is expected to be phased out at the end of calendar 2021, and applies to lease contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that have LIBOR as the benchmark rate.
Effective for the Company – This guidance can be applied for a limited time, as of the beginning of the interim period that includes March 12, 2020 or any date thereafter, through December 31, 2022.The guidance will no longer be available to apply after December 31, 2022.
Impact on consolidated financial statements – The Company is currently assessing the impact of applying this guidance on its existing derivative contracts, leases and other arrangements, as well as when to adopt this guidance.
Income Taxes (ASU 2019-12 – Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes)
In December 2019, the FASB issued authoritative guidance that simplifies the accounting for income taxes by removing certain exceptions and making simplifications in other areas.
Effective for the Company – Fiscal 2022 first quarter, with early adoption permitted in any interim period. If adopted early, the Company must adopt all the amendments in the same period. The amendments have differing adoption methods including retrospectively, prospectively and/or modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption, depending on the specific change.
Impact on consolidated financial statements – The Company is currently evaluating the impact of applying this guidance and believes that it has transactions that may fall under the scope.
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
The following table presents goodwill by product category and the related change in the carrying amount:
The aggregate amortization expense related to amortizable intangible assets was $25 million and $11 million for the three months ended September 30, 2020 and 2019, respectively. The estimated aggregate amortization expense for the remainder of fiscal 2021 and for each of the next four fiscal years is as follows:
Fiscal
(In millions)
2021
2022
2023
2024
2025
Estimated aggregate amortization expense
$
77
$
102
$
101
$
100
$
99
NOTE 3 – CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES
Charges associated with restructuring activities for the three months ended September 30, 2020 were as follows:
Sales Returns (included in Net Sales)
Cost of Sales
Operating Expenses
Total
(In millions)
Restructuring Charges
Other Charges
Leading Beauty Forward Program
$
—
$
3
$
(8)
$
2
$
(3)
Post-COVID Business Acceleration Program
—
—
12
—
12
Total
$
—
$
3
$
4
$
2
$
9
Charges associated with restructuring and other activities are not allocated to our 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.
Leading Beauty Forward Program
In May 2016, the Company announced a multi-year initiative (“Leading Beauty Forward Program” or “LBF Program”) to build on its strengths and better leverage its cost structure to free resources for investment to continue its growth momentum. The LBF Program is designed to enhance the Company’s go-to-market capabilities, reinforce its leadership in global prestige beauty and continue creating sustainable value. As of June 30, 2019, the Company concluded the approvals of all major initiatives under the LBF Program related to the optimization of select corporate functions, supply chain activities, and corporate and regional market support structures, as well as the exit of underperforming businesses, and expects to substantially complete those initiatives through fiscal 2021.
LBF Program Approvals
The LBF Program approved restructuring and other charges expected to be incurred were:
The Company records approved charges associated with restructuring and other activities once the relevant accounting criteria have been met.
LBF Program Restructuring and Other Charges
Total cumulative charges recorded associated with restructuring and other activities for the LBF Program were:
(In millions)
Sales Returns (included in Net Sales)
Cost of Sales
Operating Expenses
Total
Restructuring Charges
Other Charges
Total Charges
Cumulative through June 30, 2020
$
14
$
65
$
491
$
304
$
874
Three months ended September 30, 2020
—
3
(8)
2
(3)
Cumulative through September 30, 2020
$
14
$
68
$
483
$
306
$
871
(In millions)
Employee- Related Costs
Asset- Related Costs
Contract Terminations
Other Exit Costs
Total
Restructuring Charges (Adjustments)
Cumulative through June 30, 2020
$
451
$
27
$
6
$
7
$
491
Three months ended September 30, 2020
(8)
—
—
—
(8)
Cumulative through September 30, 2020
$
443
$
27
$
6
$
7
$
483
Employee-related costs reflect adjustments to the accrual estimate for certain employees who either resigned or transferred to other existing positions within the Company.
Changes in accrued restructuring charges for the three months ended September 30, 2020 relating to the LBF Program were:
(In millions)
Employee- Related Costs
Asset- Related Costs
Contract Terminations
Other Exit Costs
Total
Balance at June 30, 2020
$
112
$
—
$
—
$
—
$
112
Charges (adjustments)
(8)
—
—
—
(8)
Cash payments
(23)
—
—
—
(23)
Balance at September 30, 2020
$
81
$
—
$
—
$
—
$
81
Accrued restructuring charges at September 30, 2020 relating to the LBF Program are expected to result in cash expenditures funded from cash provided by operations of approximately $56 million, $20 million and $5 million for the remainder of fiscal 2021 and for fiscal 2022 and 2023, respectively. The expected cash expenditures for fiscal 2024 are de minimis.
Additional information about the LBF Program is included in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2020.
On August 20, 2020, the Company announced a two-year restructuring program, Post-COVID Business Acceleration Program (the “PCBA Program”), designed to resize the Company's business against 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.
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.
In connection with the PCBA Program, at this time the Company estimates a net reduction in the range of approximately 1,500 to 2,000 positions globally, which is about 3% of its current workforce 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 estimates the closure of approximately 10% to 15% of its freestanding stores globally, primarily in Europe, the Middle East & Africa and in North America.
The Company plans to approve specific initiatives under the PCBA Program through fiscal 2022 and expects to complete those initiatives through fiscal 2023. The Company expects that the PCBA Program will result in related restructuring and other charges totaling between $400 million and $500 million, before taxes.
PCBA Program Approvals
Total cumulative charges approved by the Company through September 30, 2020 were: