QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
☒ | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company |
Page | |||||
Three Months Ended September 30 | ||||||||||||||
(In millions, except per share data) | 2021 | 2020 | ||||||||||||
Net sales | $ | $ | ||||||||||||
Cost of sales | ||||||||||||||
Gross profit | ||||||||||||||
Operating expenses | ||||||||||||||
Selling, general and administrative | ||||||||||||||
Restructuring and other charges | ||||||||||||||
Total operating expenses | ||||||||||||||
Operating income | ||||||||||||||
Interest expense | ||||||||||||||
Interest income and investment income, net | ||||||||||||||
Other components of net periodic benefit cost | ||||||||||||||
Other income | ||||||||||||||
Earnings before income taxes | ||||||||||||||
Provision for income taxes | ||||||||||||||
Net earnings | ||||||||||||||
Net earnings attributable to noncontrolling interests | ( | ( | ||||||||||||
Net earnings attributable to redeemable noncontrolling interest | ( | |||||||||||||
Net earnings attributable to The Estée Lauder Companies Inc. | $ | $ | ||||||||||||
Net earnings attributable to The Estée Lauder Companies Inc. per common share | ||||||||||||||
Basic | $ | $ | ||||||||||||
Diluted | $ | $ | ||||||||||||
Weighted-average common shares outstanding | ||||||||||||||
Basic | ||||||||||||||
Diluted |
Three Months Ended September 30 | ||||||||||||||
(In millions) | 2021 | 2020 | ||||||||||||
Net earnings | $ | $ | ||||||||||||
Other comprehensive income (loss): | ||||||||||||||
Net cash flow hedge gain (loss) | ( | |||||||||||||
Retirement plan and other retiree benefit adjustments | ||||||||||||||
Translation adjustments | ( | |||||||||||||
Benefit (provision) for income taxes on components of other comprehensive income | ( | |||||||||||||
Total other comprehensive income (loss), net of tax | ( | |||||||||||||
Comprehensive income | ||||||||||||||
Comprehensive income attributable to noncontrolling interests: | ||||||||||||||
Net earnings | ( | ( | ||||||||||||
Translation adjustments | ||||||||||||||
Total comprehensive income attributable to noncontrolling interests | ( | |||||||||||||
Comprehensive income attributable to redeemable noncontrolling interest: | ||||||||||||||
Net earnings | ( | |||||||||||||
Translation adjustments | ||||||||||||||
Total comprehensive income attributable to redeemable noncontrolling interest | ||||||||||||||
Comprehensive income attributable to The Estée Lauder Companies Inc. | $ | $ |
(In millions, except share data) | September 30 2021 | June 30 2021 | ||||||||||||
(Unaudited) | ||||||||||||||
ASSETS | ||||||||||||||
Current assets | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Accounts receivable, net | ||||||||||||||
Inventory and promotional merchandise | ||||||||||||||
Prepaid expenses and other current assets | ||||||||||||||
Total current assets | ||||||||||||||
Property, plant and equipment, net | ||||||||||||||
Other assets | ||||||||||||||
Operating lease right-of-use assets | ||||||||||||||
Goodwill | ||||||||||||||
Other intangible assets, net | ||||||||||||||
Other assets | ||||||||||||||
Total other assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||
Current liabilities | ||||||||||||||
Current debt | $ | $ | ||||||||||||
Accounts payable | ||||||||||||||
Operating lease liabilities | ||||||||||||||
Other accrued liabilities | ||||||||||||||
Total current liabilities | ||||||||||||||
Noncurrent liabilities | ||||||||||||||
Long-term debt | ||||||||||||||
Long-term operating lease liabilities | ||||||||||||||
Other noncurrent liabilities | ||||||||||||||
Total noncurrent liabilities | ||||||||||||||
Contingencies | ||||||||||||||
Redeemable Noncontrolling Interest | ||||||||||||||
Equity | ||||||||||||||
Common stock, $ | ||||||||||||||
Paid-in capital | ||||||||||||||
Retained earnings | ||||||||||||||
Accumulated other comprehensive loss | ( | ( | ||||||||||||
Less: Treasury stock, at cost; | ( | ( | ||||||||||||
Total stockholders’ equity – The Estée Lauder Companies Inc. | ||||||||||||||
Noncontrolling interests | ||||||||||||||
Total equity | ||||||||||||||
Total liabilities, redeemable noncontrolling interest and equity | $ | $ |
Three Months Ended September 30 | ||||||||||||||
(In millions) | 2021 | 2020 | ||||||||||||
Cash flows from operating activities | ||||||||||||||
Net earnings | $ | $ | ||||||||||||
Adjustments to reconcile net earnings to net cash flows from operating activities: | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Deferred income taxes | ( | ( | ||||||||||||
Non-cash stock-based compensation | ||||||||||||||
Net loss on disposal of property, plant and equipment | ||||||||||||||
Non-cash restructuring and other charges | ||||||||||||||
Pension and post-retirement benefit expense | ||||||||||||||
Pension and post-retirement benefit contributions | ( | ( | ||||||||||||
Gain on previously held equity method investment | ( | |||||||||||||
Other non-cash items | ( | |||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Increase in accounts receivable, net | ( | ( | ||||||||||||
Increase in inventory and promotional merchandise | ( | ( | ||||||||||||
Decrease (increase) in other assets, net | ( | |||||||||||||
Decrease in accounts payable | ( | ( | ||||||||||||
Increase (decrease) in other accrued and noncurrent liabilities | ( | |||||||||||||
Increase (decrease) in operating lease assets and liabilities, net | ( | |||||||||||||
Net cash flows provided by (used for) operating activities | ( | |||||||||||||
Cash flows from investing activities | ||||||||||||||
Capital expenditures | ( | ( | ||||||||||||
Proceeds from purchase price refund | ||||||||||||||
Payment for acquired business | ( | |||||||||||||
Purchases of investments | ( | ( | ||||||||||||
Settlement of net investment hedges | ( | |||||||||||||
Net cash flows used for investing activities | ( | ( | ||||||||||||
Cash flows from financing activities | ||||||||||||||
Proceeds (repayments) of current debt, net | ( | |||||||||||||
Repayments and redemptions of long-term debt | ( | ( | ||||||||||||
Net proceeds from stock-based compensation transactions | ||||||||||||||
Payments to acquire treasury stock | ( | ( | ||||||||||||
Dividends paid to stockholders | ( | ( | ||||||||||||
Net cash flows used for financing activities | ( | ( | ||||||||||||
Effect of exchange rate changes on Cash and cash equivalents | ( | |||||||||||||
Net decrease in Cash and cash equivalents | ( | ( | ||||||||||||
Cash and cash equivalents at beginning of period | ||||||||||||||
Cash and cash equivalents at end of period | $ | $ |
(In millions) | September 30 2021 | June 30 2021 | ||||||||||||
Raw materials | $ | $ | ||||||||||||
Work in process | ||||||||||||||
Finished goods | ||||||||||||||
Promotional merchandise | ||||||||||||||
$ | $ |
(In millions) | September 30 2021 | June 30 2021 | ||||||||||||
Assets (Useful Life) | ||||||||||||||
Land | $ | $ | ||||||||||||
Buildings and improvements ( | ||||||||||||||
Machinery and equipment ( | ||||||||||||||
Computer hardware and software ( | ||||||||||||||
Furniture and fixtures ( | ||||||||||||||
Leasehold improvements | ||||||||||||||
Construction in progress | ||||||||||||||
Less accumulated depreciation and amortization | ( | ( | ||||||||||||
$ | $ |
(In millions) | September 30 2021 | June 30 2021 | ||||||||||||
Advertising, merchandising and sampling | $ | $ | ||||||||||||
Employee compensation | ||||||||||||||
Deferred revenue | ||||||||||||||
Payroll and other non-income taxes | ||||||||||||||
Accrued income taxes | ||||||||||||||
Sales return accrual | ||||||||||||||
Other | ||||||||||||||
$ | $ |
(In millions) | September 30, 2021 | |||||||
Cash paid/payable | $ | |||||||
Fair value of DECIEM stock options liability | ||||||||
Fair value of net Put (Call) Option | ||||||||
Total consideration for the acquired ownership interest (approximately | ||||||||
Fair value of previously held equity method investment (approximately | ||||||||
Fair value of redeemable noncontrolling interest (approximately | ||||||||
Total consideration transferred ( | $ |
May 18, 2021 | ||||||||
Risk-free rate | ||||||||
Term to mid of last twelve-month period | ||||||||
Operating leverage adjustment | ||||||||
Net sales discount rate | ||||||||
EBITDA discount rate | ||||||||
EBITDA volatility | ||||||||
Net sales volatility |
(In millions) | September 30, 2021 | |||||||
Cash | $ | |||||||
Accounts receivable | ||||||||
Inventory | ||||||||
Other current assets | ||||||||
Property, plant and equipment | ||||||||
Operating lease right-of-use assets | ||||||||
Intangible assets | ||||||||
Goodwill | ||||||||
Total assets acquired | ||||||||
Accounts payable | ||||||||
Operating lease liabilities | ||||||||
Other accrued liabilities | ||||||||
Deferred income taxes | ||||||||
Long-term operating lease liabilities | ||||||||
Total liabilities assumed | ||||||||
Total consideration transferred | $ |
(In millions) | Skin Care | Makeup | Fragrance | Hair Care | Total | |||||||||||||||||||||||||||
Balance as of June 30, 2021 | ||||||||||||||||||||||||||||||||
Goodwill | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Accumulated impairments | ( | ( | ( | ( | ||||||||||||||||||||||||||||
Goodwill measurement period adjustment | ||||||||||||||||||||||||||||||||
Translation adjustments and write-offs, goodwill | ( | ( | ( | |||||||||||||||||||||||||||||
Translation adjustments and write-offs, accumulated impairments | ||||||||||||||||||||||||||||||||
( | ( | ( | ||||||||||||||||||||||||||||||
Balance as of September 30, 2021 | ||||||||||||||||||||||||||||||||
Goodwill | ||||||||||||||||||||||||||||||||
Accumulated impairments | ( | ( | ( | ( | ||||||||||||||||||||||||||||
$ | $ | $ | $ | $ |
September 30, 2021 | June 30, 2021 | |||||||||||||||||||||||||||||||||||||
(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 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
License agreements | ||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Non-amortizable intangible assets: | ||||||||||||||||||||||||||||||||||||||
Trademarks and other | ||||||||||||||||||||||||||||||||||||||
Total intangible assets | $ | $ |
Fiscal | ||||||||||||||||||||||||||||||||
(In millions) | 2022 | 2023 | 2024 | 2025 | 2026 | |||||||||||||||||||||||||||
Estimated aggregate amortization expense | $ | $ | $ | $ | $ |
Sales Returns (included in Net Sales) | Cost of Sales | Operating Expenses | Total | |||||||||||||||||||||||||||||
(In millions) | Restructuring Charges | Other Charges | ||||||||||||||||||||||||||||||
Total | $ | $ | ( | $ | $ | $ |
Sales Returns (included in Net Sales) | Cost of Sales | Operating Expenses | Total | |||||||||||||||||||||||||||||
(In millions) | Restructuring Charges | Other Charges | ||||||||||||||||||||||||||||||
Total Charges (Adjustments) Approved | ||||||||||||||||||||||||||||||||
Cumulative through June 30, 2021 | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||
Three months ended September 30, 2021 | ( | ( | ( | |||||||||||||||||||||||||||||
Cumulative through September 30, 2021 | $ | $ | $ | $ | $ |
(In millions) | Employee- Related Costs | Asset- Related Costs | Contract Terminations | Other Exit Costs | Total | |||||||||||||||||||||||||||
Restructuring Charges Approved | ||||||||||||||||||||||||||||||||
Cumulative through June 30, 2021 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Three months ended September 30, 2021 | ( | ( | ( | |||||||||||||||||||||||||||||
Cumulative through September 30, 2021 | $ | $ | $ | $ | $ |
Sales Returns (included in Net Sales) | Cost of Sales | Operating Expenses | Total | |||||||||||||||||||||||||||||
(In millions) | Restructuring Charges | Other Charges | ||||||||||||||||||||||||||||||
Total Charges (Adjustments) | ||||||||||||||||||||||||||||||||
Cumulative through June 30, 2021 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Three months ended September 30, 2021 | ( | |||||||||||||||||||||||||||||||
Cumulative through September 30, 2021 | $ | $ | $ | $ | $ |
(In millions) | Employee- Related Costs | Asset- Related Costs | Contract Terminations | Other Exit Costs | Total | |||||||||||||||||||||||||||
Restructuring Charges (Adjustments) | ||||||||||||||||||||||||||||||||
Cumulative through June 30, 2021 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Three months ended September 30, 2021 | ( | |||||||||||||||||||||||||||||||
Cumulative through September 30, 2021 | $ | $ | $ | $ | $ |
(In millions) | Employee- Related Costs | Asset- Related Costs | Contract Terminations | Other Exit Costs | Total | |||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Charges | ( | |||||||||||||||||||||||||||||||
Cash payments | ( | ( | ( | |||||||||||||||||||||||||||||
Noncash asset write-offs | ( | ( | ||||||||||||||||||||||||||||||
Translation adjustment | ||||||||||||||||||||||||||||||||
Balance at September 30, 2021 | $ | $ | $ | $ | $ |
Asset Derivatives | Liability Derivatives | |||||||||||||||||||||||||||||||||||||
Fair Value (1) | Fair Value (1) | |||||||||||||||||||||||||||||||||||||
(In millions) | Balance Sheet Location | September 30 2021 | June 30 2021 | Balance Sheet Location | September 30 2021 | June 30 2021 | ||||||||||||||||||||||||||||||||
Derivatives Designated as Hedging Instruments: | ||||||||||||||||||||||||||||||||||||||
Foreign currency cash flow hedges | Prepaid expenses and other current assets | $ | $ | Other accrued liabilities | $ | $ | ||||||||||||||||||||||||||||||||
Net investment hedges | Prepaid expenses and other current assets | Other accrued liabilities | ||||||||||||||||||||||||||||||||||||
Interest rate-related derivatives | Prepaid expenses and other current assets | Other accrued liabilities | ||||||||||||||||||||||||||||||||||||
Total Derivatives Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||
Derivatives Not Designated as Hedging Instruments: | ||||||||||||||||||||||||||||||||||||||
Foreign currency forward contracts | Prepaid expenses and other current assets | Other accrued liabilities | ||||||||||||||||||||||||||||||||||||
Total derivatives | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
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) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||
Derivatives in Cash Flow Hedging Relationships: | ||||||||||||||||||||||||||||||||
Foreign currency forward contracts | $ | $ | ( | Net sales | $ | ( | $ | |||||||||||||||||||||||||
Interest rate-related derivatives | Interest expense | ( | ||||||||||||||||||||||||||||||
( | ( | |||||||||||||||||||||||||||||||
Derivatives in Net Investment Hedging Relationships(2): | ||||||||||||||||||||||||||||||||
Foreign currency forward contracts(3) | ( | |||||||||||||||||||||||||||||||
Total derivatives | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||
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) | 2021 | 2020 | ||||||||||||||||||
Derivatives in Fair Value Hedging Relationships: | ||||||||||||||||||||
Interest rate swap contracts | Interest expense | $ | ( | $ | ( | |||||||||||||||
(In millions) | ||||||||||||||
Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included | Carrying Amount of the Hedged Liabilities | Cumulative Amount of Fair Value Hedging Gain (Loss) Included in the Carrying Amount of the Hedged Liability | ||||||||||||
September 30, 2021 | September 30, 2021 | |||||||||||||
Current debt | $ | $ | ||||||||||||
Long-term debt | ||||||||||||||
Total debt | $ | $ |
Three Months Ended September 30 | ||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||
(In millions) | Net Sales | Interest Expense | Net Sales | Interest 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 | $ | $ | $ | $ | ||||||||||||||||||||||
The effects of fair value and cash flow hedging relationships: | ||||||||||||||||||||||||||
Gain (loss) on fair value hedge relationships – interest rate contracts: | ||||||||||||||||||||||||||
Hedged item | Not applicable | Not applicable | ||||||||||||||||||||||||
Derivatives designated as hedging instruments | Not applicable | ( | Not applicable | ( | ||||||||||||||||||||||
Gain (loss) on cash flow hedge relationships – interest rate contracts: | ||||||||||||||||||||||||||
Amount of loss reclassified from AOCI into earnings | Not applicable | Not applicable | ( | |||||||||||||||||||||||
Gain (loss) on cash flow hedge relationships – foreign currency forward contracts: | ||||||||||||||||||||||||||
Amount of gain reclassified from AOCI into earnings | ( | Not applicable | Not applicable |
Amount of Gain (Loss) Recognized in Earnings on Derivatives | ||||||||||||||||||||
Location of Gain (Loss) Recognized in Earnings on Derivatives | Three Months Ended September 30 | |||||||||||||||||||
(In millions) | 2021 | 2020 | ||||||||||||||||||
Derivatives Not Designated as Hedging Instruments: | ||||||||||||||||||||
Foreign currency forward contracts | Selling, general and administrative | $ | ( | $ |
(In millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
Foreign currency forward contracts | ||||||||||||||||||||||||||
Interest rate-related derivatives | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Foreign currency forward contracts | $ | $ | $ | $ | ||||||||||||||||||||||
Interest rate-related derivatives | ||||||||||||||||||||||||||
DECIEM stock options | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
(In millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
Foreign currency forward contracts | ||||||||||||||||||||||||||
Interest rate-related derivatives | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Foreign currency forward contracts | $ | $ | $ | $ | ||||||||||||||||||||||
DECIEM stock options | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
September 30 2021 | June 30 2021 | |||||||||||||||||||||||||
(In millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||||
Nonderivatives | ||||||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||||||||||||
Current and long-term debt | ||||||||||||||||||||||||||
DECIEM stock options | ||||||||||||||||||||||||||
Derivatives | ||||||||||||||||||||||||||
Foreign currency forward contracts – asset (liability), net | ( | ( | ||||||||||||||||||||||||
Interest rate-related derivatives – asset (liability), net |
(In millions) | September 30 2021 | |||||||
Balance at June 30, 2021 | $ | |||||||
Provision for expected credit losses | ||||||||
Balance at September 30, 2021 | $ |
Three Months Ended September 30 | ||||||||||||||
(In millions) | 2021 | 2020 | ||||||||||||
Deferred revenue, beginning of period | $ | $ | ||||||||||||
Revenue recognized that was included in the deferred revenue balance at the beginning of the period | ( | ( | ||||||||||||
Revenue deferred during the period | ||||||||||||||
Other | ||||||||||||||
Deferred revenue, end of period | $ | $ |
Pension Plans | Other than Pension Plans | |||||||||||||||||||||||||||||||||||||
U.S. | International | Post-retirement | ||||||||||||||||||||||||||||||||||||
(In millions) | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||||
Service cost | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Interest cost | ||||||||||||||||||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
Amortization of: | ||||||||||||||||||||||||||||||||||||||
Actuarial loss | ||||||||||||||||||||||||||||||||||||||
Special termination benefits | ||||||||||||||||||||||||||||||||||||||
Net periodic benefit cost | $ | $ | $ | $ | $ | $ |
(In millions) | September 30 2021 | June 30 2021 | ||||||||||||
Other assets | $ | $ | ||||||||||||
Other accrued liabilities | ( | ( | ||||||||||||
Other noncurrent liabilities | ( | ( | ||||||||||||
Funded status | ( | ( | ||||||||||||
Accumulated other comprehensive loss | ||||||||||||||
Net amount recognized | $ | ( | $ | ( |
September 30, 2021 | June 30, 2021 | May 18, 2021 | ||||||||||||||||||
Risk-free rate | ||||||||||||||||||||
Term to mid of last twelve-month period | ||||||||||||||||||||
Operating leverage adjustment | ||||||||||||||||||||
Net sales discount rate | ||||||||||||||||||||
EBITDA discount rate | ||||||||||||||||||||
EBITDA volatility | ||||||||||||||||||||
Net sales volatility |
Three Months Ended September 30 | ||||||||||||||
(In millions, except per share data) | 2021 | 2020 | ||||||||||||
Numerator: | ||||||||||||||
Net earnings attributable to The Estée Lauder Companies Inc. | $ | $ | ||||||||||||
Denominator: | ||||||||||||||
Weighted-average common shares outstanding – Basic | ||||||||||||||
Effect of dilutive stock options | ||||||||||||||
Effect of PSUs | ||||||||||||||
Effect of RSUs | ||||||||||||||
Weighted-average common shares outstanding – Diluted | ||||||||||||||
Net earnings attributable to The Estée Lauder Companies Inc. per common share: | ||||||||||||||
Basic | $ | $ | ||||||||||||
Diluted | $ | $ |
Three Months Ended September 30 | |||||||||||
(In millions) | 2021 | 2020 | |||||||||
Stock options | |||||||||||
RSUs and PSUs | |||||||||||
Three Months Ended September 30 | ||||||||||||||
(In millions) | 2021 | 2020 | ||||||||||||
Common stock, beginning of the period | $ | $ | ||||||||||||
Stock-based compensation | ||||||||||||||
Common stock, end of the period | ||||||||||||||
Paid-in capital, beginning of the period | ||||||||||||||
Common stock dividends | ||||||||||||||
Stock-based compensation | ||||||||||||||
Paid-in capital, end of the period | ||||||||||||||
Retained earnings, beginning of the period | ||||||||||||||
Common stock dividends | ( | ( | ||||||||||||
Net earnings attributable to The Estée Lauder Companies Inc. | ||||||||||||||
Cumulative effect of adoption of new accounting standards | ( | |||||||||||||
Retained earnings, end of the period | ||||||||||||||
Accumulated other comprehensive loss, beginning of the period | ( | ( | ||||||||||||
Other comprehensive income (loss) | ( | |||||||||||||
Accumulated other comprehensive loss, end of the period | ( | ( | ||||||||||||
Treasury stock, beginning of the period | ( | ( | ||||||||||||
Acquisition of treasury stock | ( | |||||||||||||
Stock-based compensation | ( | ( | ||||||||||||
Treasury stock, end of the period | ( | ( | ||||||||||||
Total stockholders’ equity – The Estée Lauder Companies Inc. | ||||||||||||||
Noncontrolling interests, beginning of the period | ||||||||||||||
Net earnings attributable to noncontrolling interests | ||||||||||||||
Translation adjustments, net | ( | |||||||||||||
Noncontrolling interests, end of the period | ||||||||||||||
Total equity | $ | $ | ||||||||||||
Redeemable noncontrolling interest, beginning of the period | $ | $ | ||||||||||||
Net earnings attributable to redeemable noncontrolling interest | ||||||||||||||
Translation adjustments | ( | |||||||||||||
Redeemable noncontrolling interest, end of the period | $ | $ | ||||||||||||
Cash dividends declared per common share | $ | $ |
Date Declared | Record Date | Payable Date | Amount per Share | |||||||||||||||||
August 18, 2021 | August 31, 2021 | September 15, 2021 | $ |
(In millions) | Net Cash Flow Hedge Gain (Loss) | Amounts Included in Net Periodic Benefit Cost | Translation Adjustments | Total | ||||||||||||||||||||||
Balance at June 30, 2021 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
OCI before reclassifications | (1) | ( | (2) | ( | ||||||||||||||||||||||
Amounts reclassified to Net earnings | ||||||||||||||||||||||||||
Net current-period OCI | ( | ( | ||||||||||||||||||||||||
Balance at September 30, 2021 | $ | $ | ( | $ | ( | $ | ( | |||||||||||||||||||
Amount Reclassified from AOCI | Affected Line Item in Consolidated Statements of Earnings | |||||||||||||||||||
Three Months Ended September 30 | ||||||||||||||||||||
(In millions) | 2021 | 2020 | ||||||||||||||||||
Gain (Loss) on Cash Flow Hedges | ||||||||||||||||||||
Foreign currency forward contracts | $ | ( | $ | Net sales | ||||||||||||||||
Interest rate-related derivatives | ( | Interest expense | ||||||||||||||||||
( | ||||||||||||||||||||
Benefit for deferred taxes | Provision for income taxes | |||||||||||||||||||
( | Net earnings | |||||||||||||||||||
Amounts Included in Net Periodic Benefit Cost | ||||||||||||||||||||
Amortization of actuarial loss | ( | ( | Earnings before income taxes (1) | |||||||||||||||||
Benefit for deferred taxes | Provision for income taxes | |||||||||||||||||||
( | ( | Net earnings | ||||||||||||||||||
Total reclassification adjustments, net | $ | ( | $ | ( | Net earnings | |||||||||||||||
(In millions) | 2021 | 2020 | ||||||||||||
Cash: | ||||||||||||||
Cash paid during the period for interest | $ | $ | ||||||||||||
Cash paid during the period for income taxes | $ | $ | ||||||||||||
Non-cash investing and financing activities: | ||||||||||||||
Property, plant and equipment accrued but unpaid | $ | $ | ||||||||||||
Financing lease modifications | $ | ( | $ | |||||||||||
Right-of-use assets obtained in exchange for new/modified operating lease liabilities | $ | $ |
Three Months Ended September 30 | ||||||||||||||
(In millions) | 2021 | 2020 | ||||||||||||
PRODUCT CATEGORY DATA | ||||||||||||||
Net sales: | ||||||||||||||
Skin Care | $ | $ | ||||||||||||
Makeup | ||||||||||||||
Fragrance | ||||||||||||||
Hair Care | ||||||||||||||
Other | ||||||||||||||
Returns associated with restructuring and other activities | ( | |||||||||||||
Net sales | $ | $ | ||||||||||||
Operating income (loss) before charges associated with restructuring and other activities: | ||||||||||||||
Skin Care | $ | $ | ||||||||||||
Makeup | ( | |||||||||||||
Fragrance | ||||||||||||||
Hair Care | ||||||||||||||
Other | ||||||||||||||
Reconciliation: | ||||||||||||||
Charges associated with restructuring and other activities | ( | ( | ||||||||||||
Interest expense | ( | ( | ||||||||||||
Interest income and investment income, net | ||||||||||||||
Other components of net periodic benefit cost | ( | ( | ||||||||||||
Other income | ||||||||||||||
Earnings before income taxes | $ | $ | ||||||||||||
GEOGRAPHIC DATA(1) | ||||||||||||||
Net sales: | ||||||||||||||
The Americas | $ | $ | ||||||||||||
Europe, the Middle East & Africa | ||||||||||||||
Asia/Pacific | ||||||||||||||
Returns associated with restructuring and other activities | ( | |||||||||||||
Net sales | $ | $ | ||||||||||||
Operating income: | ||||||||||||||
The Americas | $ | $ | ||||||||||||
Europe, the Middle East & Africa | ||||||||||||||
Asia/Pacific | ||||||||||||||
Charges associated with restructuring and other activities | ( | ( | ||||||||||||
Operating income | $ | $ | ||||||||||||
Three Months Ended September 30 | ||||||||||||||
(In millions) | 2021 | 2020 | ||||||||||||
NET SALES | ||||||||||||||
By Product Category: | ||||||||||||||
Skin Care | $ | 2,449 | $ | 2,035 | ||||||||||
Makeup | 1,174 | 978 | ||||||||||||
Fragrance | 609 | 406 | ||||||||||||
Hair Care | 148 | 136 | ||||||||||||
Other | 13 | 7 | ||||||||||||
4,393 | 3,562 | |||||||||||||
Returns associated with restructuring and other activities | (1) | — | ||||||||||||
Net sales | $ | 4,392 | $ | 3,562 | ||||||||||
By Region(1): | ||||||||||||||
The Americas | $ | 1,194 | $ | 873 | ||||||||||
Europe, the Middle East & Africa | 1,873 | 1,540 | ||||||||||||
Asia/Pacific | 1,326 | 1,149 | ||||||||||||
4,393 | 3,562 | |||||||||||||
Returns associated with restructuring and other activities | (1) | — | ||||||||||||
Net sales | $ | 4,392 | $ | 3,562 | ||||||||||
OPERATING INCOME (LOSS) | ||||||||||||||
By Product Category: | ||||||||||||||
Skin Care | $ | 717 | $ | 721 | ||||||||||
Makeup | 91 | (71) | ||||||||||||
Fragrance | 131 | 60 | ||||||||||||
Hair Care | 2 | 3 | ||||||||||||
Other | — | 1 | ||||||||||||
941 | 714 | |||||||||||||
Charges associated with restructuring and other activities | (6) | (9) | ||||||||||||
Operating income | $ | 935 | $ | 705 | ||||||||||
By Region(1): | ||||||||||||||
The Americas | $ | 254 | $ | 65 | ||||||||||
Europe, the Middle East & Africa | 465 | 411 | ||||||||||||
Asia/Pacific | 222 | 238 | ||||||||||||
941 | 714 | |||||||||||||
Charges associated with restructuring and other activities | (6) | (9) | ||||||||||||
Operating income | $ | 935 | $ | 705 | ||||||||||
Three Months Ended September 30 | ||||||||||||||
2021 | 2020 | |||||||||||||
Net sales | 100.0 | % | 100.0 | % | ||||||||||
Cost of sales | 24.1 | 23.2 | ||||||||||||
Gross profit | 75.9 | 76.8 | ||||||||||||
Operating expenses: | ||||||||||||||
Selling, general and administrative | 54.5 | 56.9 | ||||||||||||
Restructuring and other charges | 0.1 | 0.2 | ||||||||||||
Total operating expenses | 54.6 | 57.0 | ||||||||||||
Operating income | 21.3 | 19.8 | ||||||||||||
Interest expense | 1.0 | 1.3 | ||||||||||||
Interest income and investment income, net | 0.1 | 0.4 | ||||||||||||
Other components of net periodic benefit cost | — | 0.1 | ||||||||||||
Other income | — | — | ||||||||||||
Earnings before income taxes | 20.4 | 18.8 | ||||||||||||
Provision for income taxes | (4.6) | (4.1) | ||||||||||||
Net earnings | 15.8 | 14.7 | ||||||||||||
Net earnings attributable to noncontrolling interests | — | (0.1) | ||||||||||||
Net earnings attributable to redeemable noncontrolling interest | — | — | ||||||||||||
Net earnings attributable to The Estée Lauder Companies Inc. | 15.8 | % | 14.7 | % | ||||||||||
Three Months Ended September 30 | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
As Reported: | ||||||||||||||
Net sales | $ | 4,392 | $ | 3,562 | ||||||||||
$ Change from prior-year period | 830 | |||||||||||||
% Change from prior-year period | 23 | % | ||||||||||||
Non-GAAP Financial Measure(1): | ||||||||||||||
% Change from prior-year period in constant currency | 21 | % | ||||||||||||
Three Months Ended September 30 | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
As Reported: | ||||||||||||||
Net sales | $ | 2,449 | $ | 2,035 | ||||||||||
$ Change from prior-year period | 414 | |||||||||||||
% Change from prior-year period | 20 | % | ||||||||||||
Non-GAAP Financial Measure(1): | ||||||||||||||
% Change from prior-year period in constant currency | 18 | % | ||||||||||||
Three Months Ended September 30 | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
As Reported: | ||||||||||||||
Net sales | $ | 1,174 | $ | 978 | ||||||||||
$ Change from prior-year period | 196 | |||||||||||||
% Change from prior-year period | 20 | % | ||||||||||||
Non-GAAP Financial Measure(1): | ||||||||||||||
% Change from prior-year period in constant currency | 18 | % | ||||||||||||
Three Months Ended September 30 | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
As Reported: | ||||||||||||||
Net sales | $ | 609 | $ | 406 | ||||||||||
$ Change from prior-year period | 203 | |||||||||||||
% Change from prior-year period | 50 | % | ||||||||||||
Non-GAAP Financial Measure(1): | ||||||||||||||
% Change from prior-year period in constant currency | 48 | % | ||||||||||||
Three Months Ended September 30 | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
As Reported: | ||||||||||||||
Net sales | $ | 148 | $ | 136 | ||||||||||
$ Change from prior-year period | 12 | |||||||||||||
% Change from prior-year period | 9 | % | ||||||||||||
Non-GAAP Financial Measure(1): | ||||||||||||||
% Change from prior-year period in constant currency | 8 | % | ||||||||||||
Three Months Ended September 30 | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
As Reported: | ||||||||||||||
Net sales | $ | 1,194 | $ | 873 | ||||||||||
$ Change from prior-year period | 321 | |||||||||||||
% Change from prior-year period | 37 | % | ||||||||||||
Non-GAAP Financial Measure(1): | ||||||||||||||
% Change from prior-year period in constant currency | 36 | % | ||||||||||||
Three Months Ended September 30 | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
As Reported: | ||||||||||||||
Net sales | $ | 1,873 | $ | 1,540 | ||||||||||
$ Change from prior-year period | 333 | |||||||||||||
% Change from prior-year period | 22 | % | ||||||||||||
Non-GAAP Financial Measure(1): | ||||||||||||||
% Change from prior-year period in constant currency | 21 | % | ||||||||||||
Three Months Ended September 30 | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
As Reported: | ||||||||||||||
Net sales | $ | 1,326 | $ | 1,149 | ||||||||||
$ Change from prior-year period | 177 | |||||||||||||
% Change from prior-year period | 15 | % | ||||||||||||
Non-GAAP Financial Measure(1): | ||||||||||||||
% Change from prior-year period in constant currency | 11 | % | ||||||||||||
Favorable (Unfavorable) Basis Points | |||||
Three Months Ended September 30, 2021 | |||||
Mix of business | (50) | ||||
Obsolescence charges | (85) | ||||
Manufacturing costs and other | (10) | ||||
Foreign exchange transactions | 45 | ||||
Subtotal | (100) | ||||
Charges associated with restructuring and other activities | 10 | ||||
Total | (90) |
Favorable (Unfavorable) Basis Points | ||||||||
Three Months Ended September 30, 2021 | ||||||||
General and administrative expenses | 80 | |||||||
Advertising, merchandising, sampling and product development | 100 | |||||||
Selling | 70 | |||||||
Store operating costs | 30 | |||||||
Shipping | (30) | |||||||
Foreign exchange transactions | (10) | |||||||
Subtotal | 240 | |||||||
Charges associated with restructuring and other activities | — | |||||||
Total | 240 |
Three Months Ended September 30 | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
As Reported: | ||||||||||||||
Operating income | $ | 935 | $ | 705 | ||||||||||
$ Change from prior-year period | 230 | |||||||||||||
% Change from prior-year period | 33 | % | ||||||||||||
Operating margin | 21.3 | % | 19.8 | % | ||||||||||
Non-GAAP Financial Measure(1): | ||||||||||||||
% Change in operating income from the prior-year period adjusting for the impact of charges associated with restructuring and other activities | 32 | % | ||||||||||||
Three Months Ended September 30 | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
As Reported: | ||||||||||||||
Operating income | $ | 717 | $ | 721 | ||||||||||
$ Change from prior-year period | (4) | |||||||||||||
% Change from prior-year period | (1) | % | ||||||||||||
Three Months Ended September 30 | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
As Reported: | ||||||||||||||
Operating income (loss) | $ | 91 | $ | (71) | ||||||||||
$ Change from prior-year period | 162 | |||||||||||||
% Change from prior-year period | 100+% | |||||||||||||
Three Months Ended September 30 | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
As Reported: | ||||||||||||||
Operating income | $ | 131 | $ | 60 | ||||||||||
$ Change from prior-year period | 71 | |||||||||||||
% Change from prior-year period | 100+% |
Three Months Ended September 30 | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
As Reported: | ||||||||||||||
Operating income | $ | 2 | $ | 3 | ||||||||||
$ Change from prior-year period | (1) | |||||||||||||
% Change from prior-year period | (33) | % |
Three Months Ended September 30 | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
As Reported: | ||||||||||||||
Operating income | $ | 254 | $ | 65 | ||||||||||
$ Change from prior-year period | 189 | |||||||||||||
% Change from prior-year period | 100+% | |||||||||||||
Three Months Ended September 30 | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
As Reported: | ||||||||||||||
Operating income | $ | 465 | $ | 411 | ||||||||||
$ Change from prior-year period | 54 | |||||||||||||
% Change from prior-year period | 13 | % |
Three Months Ended September 30 | ||||||||||||||
($ in millions) | 2021 | 2020 | ||||||||||||
As Reported: | ||||||||||||||
Operating income | $ | 222 | $ | 238 | ||||||||||
$ Change from prior-year period | (16) | |||||||||||||
% Change from prior-year period | (7) | % |
Three Months Ended September 30 | ||||||||||||||
(In millions) | 2021 | 2020 | ||||||||||||
Interest expense | $ | 42 | $ | 45 | ||||||||||
Interest income and investment income, net | $ | 4 | $ | 14 |
Three Months Ended September 30 | ||||||||||||||
2021 | 2020 | |||||||||||||
Effective rate for income taxes | 22.5 | % | 21.8 | % | ||||||||||
Basis-point change from the prior-year period | 70 |
Three Months Ended September 30 | ||||||||||||||
($ in millions, except per share data) | 2021 | 2020 | ||||||||||||
As Reported: | ||||||||||||||
Net earnings attributable to The Estée Lauder Companies Inc. | $ | 692 | $ | 523 | ||||||||||
$ Change from prior-year period | 169 | |||||||||||||
% Change from prior-year period | 32 | % | ||||||||||||
Diluted net earnings per common share | $ | 1.88 | $ | 1.42 | ||||||||||
% Change from prior-year period | 32 | % | ||||||||||||
Non-GAAP Financial Measure(1): | ||||||||||||||
% 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 | 31 | % | ||||||||||||
($ in millions, except per share data) | Three Months Ended September 30 | Variance | % Change | % Change in constant currency | ||||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||||||||
Net sales, as reported | $ | 4,392 | $ | 3,562 | $ | 830 | 23 | % | 21 | % | ||||||||||||||||||||||
Returns associated with restructuring and other activities | 1 | — | 1 | |||||||||||||||||||||||||||||
Net sales, as adjusted | $ | 4,393 | $ | 3,562 | $ | 831 | 23 | % | 21 | % | ||||||||||||||||||||||
Operating income, as reported | $ | 935 | $ | 705 | $ | 230 | 33 | % | 30 | % | ||||||||||||||||||||||
Charges associated with restructuring and other activities | 6 | 9 | (3) | |||||||||||||||||||||||||||||
Operating income, as adjusted | $ | 941 | $ | 714 | $ | 227 | 32 | % | 29 | % | ||||||||||||||||||||||
Diluted net earnings per common share, as reported | $ | 1.88 | $ | 1.42 | $ | .46 | 32 | % | 30 | % | ||||||||||||||||||||||
Charges associated with restructuring and other activities | .01 | .02 | (.01) | |||||||||||||||||||||||||||||
Diluted net earnings per common share, as adjusted | $ | 1.89 | $ | 1.44 | $ | .45 | 31 | % | 29 | % |
As Reported | Impact of foreign currency translation | Variance, in constant currency | % Change, as reported | % Change, in constant currency | ||||||||||||||||||||||||||||||||||||||||
Three Months Ended September 30 | ||||||||||||||||||||||||||||||||||||||||||||
($ in millions) | 2021 | 2020 | Variance | |||||||||||||||||||||||||||||||||||||||||
By Product Category: | ||||||||||||||||||||||||||||||||||||||||||||
Skin Care | $ | 2,449 | $ | 2,035 | $ | 414 | $ | (48) | $ | 366 | 20 | % | 18 | % | ||||||||||||||||||||||||||||||
Makeup | 1,174 | 978 | 196 | (17) | 179 | 20 | 18 | |||||||||||||||||||||||||||||||||||||
Fragrance | 609 | 406 | 203 | (10) | 193 | 50 | 48 | |||||||||||||||||||||||||||||||||||||
Hair Care | 148 | 136 | 12 | (1) | 11 | 9 | 8 | |||||||||||||||||||||||||||||||||||||
Other | 13 | 7 | 6 | (1) | 5 | 86 | 71 | |||||||||||||||||||||||||||||||||||||
4,393 | 3,562 | 831 | (77) | 754 | 23 | 21 | ||||||||||||||||||||||||||||||||||||||
Returns associated with restructuring and other activities | (1) | — | (1) | — | (1) | |||||||||||||||||||||||||||||||||||||||
Total | $ | 4,392 | $ | 3,562 | $ | 830 | $ | (77) | $ | 753 | 23 | % | 21 | % | ||||||||||||||||||||||||||||||
By Region: | ||||||||||||||||||||||||||||||||||||||||||||
The Americas | $ | 1,194 | $ | 873 | $ | 321 | $ | (6) | $ | 315 | 37 | % | 36 | % | ||||||||||||||||||||||||||||||
Europe, the Middle East & Africa | 1,873 | 1,540 | 333 | (15) | 318 | 22 | 21 | |||||||||||||||||||||||||||||||||||||
Asia/Pacific | 1,326 | 1,149 | 177 | (56) | 121 | 15 | 11 | |||||||||||||||||||||||||||||||||||||
4,393 | 3,562 | 831 | (77) | 754 | 23 | 21 | ||||||||||||||||||||||||||||||||||||||
Returns associated with restructuring and other activities | (1) | — | (1) | — | (1) | |||||||||||||||||||||||||||||||||||||||
Total | $ | 4,392 | $ | 3,562 | $ | 830 | $ | (77) | $ | 753 | 23 | % | 21 | % |
($ in millions) | Long-term Debt | Current Debt | Total Debt | |||||||||||||||||
3.125% Senior Notes, due December 1, 2049 (“2049 Senior Notes”) (1), (13) | $ | 636 | $ | — | $ | 636 | ||||||||||||||
4.15% Senior Notes, due March 15, 2047 (“2047 Senior Notes”) (2), (13) | 494 | — | 494 | |||||||||||||||||
4.375% Senior Notes, due June 15, 2045 (“2045 Senior Notes”) (3), (13) | 455 | — | 455 | |||||||||||||||||
3.70% Senior Notes, due August 15, 2042 (“2042 Senior Notes”) (4), (13) | 247 | — | 247 | |||||||||||||||||
6.00% Senior Notes, due May 15, 2037 (“2037 Senior Notes”) (5), (13) | 294 | — | 294 | |||||||||||||||||
5.75% Senior Notes, due October 15, 2033 (“2033 Senior Notes”) (6) | 197 | — | 197 | |||||||||||||||||
1.950% Senior Notes, due March 15, 2031 ("2031 Senior Notes") (7), (13) | 597 | — | 597 | |||||||||||||||||
2.600% Senior Notes, due April 15, 2030 ("2030 Senior Notes") (8), (13) | 691 | — | 691 | |||||||||||||||||
2.375% Senior Notes, due December 1, 2029 (“2029 Senior Notes”) (9), (13) | 642 | — | 642 | |||||||||||||||||
3.15% Senior Notes, due March 15, 2027 (“2027 Senior Notes”) (10), (13) | 498 | — | 498 | |||||||||||||||||
2.00% Senior Notes, due December 1, 2024 (“2024 Senior Notes”) (11), (13) | 496 | — | 496 | |||||||||||||||||
2.35% Senior Notes, due August 15, 2022 (“2022 Senior Notes”) (12), (13) | — | 254 | 254 | |||||||||||||||||
Other long-term borrowings | 20 | — | 20 | |||||||||||||||||
Other current borrowings | — | 27 | 27 | |||||||||||||||||
$ | 5,267 | $ | 281 | $ | 5,548 | |||||||||||||||
Three Months Ended September 30 | ||||||||||||||
(In millions) | 2021 | 2020 | ||||||||||||
Net cash provided by (used for) operating activities | $ | (81) | $ | 358 | ||||||||||
Net cash used for investing activities | $ | (153) | $ | (242) | ||||||||||
Net cash used for financing activities | $ | (714) | $ | (890) |
Period | Total Number of Shares Purchased(1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Maximum Number of Shares that May Yet Be Purchased Under the Program(2) | ||||||||||||||||||||||
July 2021 | 436,600 | $ | 321.27 | 436,600 | 32,266,939 | |||||||||||||||||||||
August 2021 | 353,202 | 328.44 | 353,202 | 31,913,737 | ||||||||||||||||||||||
September 2021 | 910,205 | 330.71 | 800,000 | 31,113,737 | ||||||||||||||||||||||
1,700,007 | 327.81 | 1,589,802 | ||||||||||||||||||||||||
Exhibit Number | Description | |||||||
31.1 | ||||||||
31.2 | ||||||||
32.1 | ||||||||
32.2 | ||||||||
101.1 | The following materials from The Estée Lauder Companies Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021 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 | |||||||
104 | The cover page from The Estée Lauder Companies Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021 is formatted in iXBRL | |||||||
THE ESTÉE LAUDER COMPANIES INC. | ||||||||
By: | /s/TRACEY T. TRAVIS | |||||||
Date: November 2, 2021 | Tracey T. Travis | |||||||
Executive Vice President and Chief Financial Officer | ||||||||
(Principal Financial and Accounting Officer) |
Date: November 2, 2021 | |||||
/s/ Fabrizio Freda | |||||
Fabrizio Freda President and Chief Executive Officer |
Date: November 2, 2021 | |||||
/s/ Tracey T. Travis | |||||
Tracey T. Travis Executive Vice President and Chief Financial Officer |
Date: November 2, 2021 | |||||
/s/ Fabrizio Freda | |||||
Fabrizio Freda President and Chief Executive Officer |
Date: November 2, 2021 | |||||
/s/ Tracey T. Travis | |||||
Tracey T. Travis Executive Vice President and Chief Financial Officer |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Sep. 30, 2021 |
Jun. 30, 2021 |
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Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Treasury stock, shares | 230,791,699 | 229,115,665 |
Common Class A | ||
Common stock, shares authorized | 1,300,000,000 | 1,300,000,000 |
Common stock, shares issued | 463,201,084 | 462,633,034 |
Common Class B | ||
Common stock, shares authorized | 304,000,000 | 304,000,000 |
Common stock, shares issued | 128,242,029 | 128,242,029 |
Common stock, shares outstanding | 128,242,029 | 128,242,029 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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, 2021. 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, 2021. 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 $(175) million and $91 million, net of tax, during the three months ended September 30, 2021 and 2020, 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 5 – 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 $12 million and $1 million during the three months ended September 30, 2021 and 2020, respectively. 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 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 $456 million, or 10%, and $554 million, or 16%, of the Company's consolidated net sales for the three months ended September 30, 2021 and 2020, respectively. This customer accounted for $301 million, or 13%, and $179 million, or 10%, of the Company's accounts receivable at September 30, 2021 and June 30, 2021, respectively. Another major customer of the Company during the quarter sells products primarily within the United States and accounted for $239 million, or 10%, and $133 million, or 8%, of the Company’s accounts receivable at September 30, 2021 and June 30, 2021, respectively. This customer accounted for $253 million, or 6%, and $181 million, or 5%, of the Company’s consolidated net sales for the three months ended September 30, 2021 and 2020, respectively. Inventory and Promotional Merchandise Inventory and promotional merchandise consists of the following:
Property, Plant and Equipment Property, plant and equipment consists of the following:
Depreciation and amortization of property, plant and equipment was $130 million and $125 million during the three months ended September 30, 2021 and 2020, 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. Income Taxes The effective rate for income taxes was 22.5% and 21.8% for the three months ended September 30, 2021 and 2020, respectively. The increase in the effective tax rate of 70 basis points was primarily attributable to a decrease in excess tax benefits associated with stock-based compensation arrangements and an increase in income tax reserve adjustments, partially offset by a lower effective tax rate on the Company's foreign operations. As of September 30, 2021 and June 30, 2021, the gross amount of unrecognized tax benefits, exclusive of interest and penalties, totaled $71 million and $62 million, respectively. The total amount of unrecognized tax benefits at September 30, 2021 that, if recognized, would affect the effective tax rate was $62 million. The total gross interest and penalties accrued related to unrecognized tax benefits during the three months ended September 30, 2021 in the accompanying consolidated statements of earnings was $3 million. The total gross accrued interest and penalties in the accompanying consolidated balance sheets at September 30, 2021 and June 30, 2021, was $16 million and $14 million, respectively. On the basis of the information available as of September 30, 2021, 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. During the fiscal 2022 first quarter, the Company formally concluded the compliance process with respect to its fiscal 2020 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, 2021. Other Accrued and Noncurrent Liabilities Other accrued liabilities consist of the following:
At September 30, 2021 and June 30, 2021, total Other noncurrent liabilities of $1,964 million and $2,037 million included $805 million and $849 million of deferred tax liabilities, respectively. Recently Adopted Accounting Standards Income Taxes (ASU 2019-12 – Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes) In December 2019, the Financial Accounting Standards Board (“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. Impact on consolidated financial statements – On July 1, 2021, the Company adopted this standard and recorded a cumulative adjustment of $121 million as an increase to its fiscal 2022 opening retained earnings balance to derecognize a deferred tax liability related to a previously held equity method investment that became a foreign subsidiary. Recently Issued Accounting Standards Reference Rate Reform (ASC Topic 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 contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that have LIBOR as the benchmark rate. 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 Topic 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 on its existing derivative contracts, leases and other arrangements, as well as when to adopt this guidance. No other recently issued accounting pronouncements are expected to have a material impact on the Company’s consolidated financial statements.
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ACQUISITION OF BUSINESSES |
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Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITION OF BUSINESSES | ACQUISITION OF BUSINESS On May 18, 2021, the Company acquired additional shares in Deciem Beauty Group Inc. (“DECIEM”), a Toronto-based skin care company, for $1,092 million in cash, including proceeds from the issuance of debt. DECIEM is a multi-brand beauty company with a brand portfolio that includes The Ordinary and NIOD. This acquisition is expected to further strengthen the Company’s leadership position in prestige skin care, expand its global consumer reach and complement its business in the online and specialty-multi channels. The Company originally acquired a minority interest in DECIEM in June 2017. The minority interest was accounted for as an equity method investment, which had a carrying value of $65 million at the acquisition date. The acquisition of additional shares increased the Company's fully diluted equity interest from approximately 29% to approximately 76% and was considered a step acquisition. On a fully diluted basis, the DECIEM stock options, discussed below, approximated 4% of the total capital structure. Accordingly, for purposes of determining the consideration transferred, the Company excluded the DECIEM stock options, which resulted in an increase in the Company’s post-acquisition undiluted equity interest from approximately 30% to approximately 78% and the post-acquisition undiluted equity interest of the remaining noncontrolling interest holders of approximately 22%. The Company remeasured the previously held equity method investment to its fair value of $913 million, resulting in the recognition of a gain of $848 million. As part of the increase in the Company's investment, the Company was granted the right to purchase (“Call Option”), and granted the remaining investors a right to sell to the Company (“Put Option”), the remaining interests after a three-year period, with a purchase price based on the future performance of DECIEM (the “net Put (Call) Option”). As a result of this redemption feature, the Company recorded redeemable noncontrolling interest, at its acquisition‑date fair value, that is classified as mezzanine equity in the consolidated balance sheets at June 30, 2021. As of September 30, 2021, the accounting for the DECIEM business combination is provisional pending the finalization of the opening balance sheet, the final valuation report, and allocation of the total consideration transferred. A summary of the total consideration transferred, including immaterial measurement period adjustments as of September 30, 2021, is as follows:
As part of the acquisition of additional shares, DECIEM stock options were issued in replacement of and exchange for certain vested and unvested stock options previously issued by DECIEM. The total fair value of the DECIEM stock options of $295 million was recorded as part of the total consideration transferred, comprising of $191 million of Cash paid for vested options settled as of the acquisition date and $104 million reported as a stock options liability on the Company's consolidated balance sheet as it is not an assumed liability of DECIEM and is expected to be settled in cash upon completion of the exercise of the Put (Call). The acquisition-date fair value of the DECIEM stock options liability was calculated by multiplying the acquisition-date fair value by the number of DECIEM stock options replaced the day after the acquisition date. The stock options replaced consist of vested and partially vested stock options. See Note 10 – Stock Programs for information relating to the DECIEM stock options. The acquisition-date fair value of the previously held equity method investment was calculated by multiplying the gross-up of the total consideration for the acquired ownership interest of $2,993 million by the related effective previously held equity interest of approximately 30.5%. The acquisition-date fair value of the redeemable noncontrolling interest includes the acquisition-date fair value of the net Put (Call) Option of $233 million. The remaining acquisition-date fair value of the redeemable noncontrolling interest of $648 million was calculated by multiplying the gross-up of the total consideration for the acquired ownership interest of $2,993 million by the related noncontrolling interest of approximately 21.6%. The acquisition-date fair values of the DECIEM stock options and the net Put (Call) Option were calculated by incorporating significant assumptions including the starting equity value, revenue growth rates and EBITDA and the following key assumptions into the Monte Carlo Method:
The Company recorded a preliminary allocation of the total consideration transferred to the tangible and identifiable intangible assets acquired and liabilities assumed based on their fair value at the acquisition date. The total consideration transferred includes the cash paid at closing, the fair value of its previously held equity method investment, the fair value of the redeemable noncontrolling interest, including the fair value of the net Put (Call) Option, and the fair value of the DECIEM stock options liability. The excess of the total consideration transferred over the fair value of the net tangible and intangible assets acquired was recorded as goodwill. To determine the acquisition date estimated fair value of intangible assets acquired, the Company applied the income approach, specifically the multi-period excess earnings method for customer relationships and the relief-from-royalty method for trademarks. The significant assumptions used in these approaches include revenue growth rates and profit margins, terminal values, weighted-average cost of capital used to discount future cash flows, and a customer attrition rate for customer relationships and royalty rates for trademarks. The preliminary allocation of the total consideration transferred, including immaterial measurement period adjustments as of September 30, 2021, has been recorded as follows:
The results of operations for DECIEM and acquisition-related costs were not material to the Company's consolidated statements of earnings for the three months ended September 30, 2021. Pro forma results of operations reflecting the acquisition of DECIEM are not presented, as the impact on the Company’s consolidated financial results would not have been material.
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GOODWILL AND OTHER INTANGIBLE ASSETS |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS As previously discussed in Note 2 – Acquisition of Business, in May 2021 the Company increased its investment in DECIEM, which resulted in the inclusion of additional goodwill of $1,297 million, amortizable intangible assets (customer lists) of $701 million with amortization periods of 7 years to 14 years, and non-amortizable intangible assets (trademarks) of $1,216 million. Goodwill associated with the acquisition is primarily attributable to the future revenue growth opportunities associated with sales growth in the skin care category, as well as the value associated with DECIEM's assembled workforce. As such, the goodwill has been allocated to the Company’s skin care product category. The goodwill recorded in connection with this acquisition will not be deductible for tax purposes. These amounts are provisional pending finalization of the opening balance sheet, the final valuation report, and allocation of the total consideration transferred. Goodwill The following table presents goodwill by product category and the related change in the carrying amount:
Other Intangible Assets Other intangible assets consist of the following:
The aggregate amortization expense related to amortizable intangible assets was $45 million and $25 million for the three months ended September 30, 2021 and 2020, respectively. The estimated aggregate amortization expense for the remainder of fiscal 2022 and for each of the next four fiscal years is as follows:
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CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES Charges associated with the Post-COVID Business Acceleration Program for the three months ended September 30, 2021 were as follows:
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. 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, 2021, the Company estimates a net reduction over the duration of the PCBA Program in the range of 2,000 to 2,500 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 estimates 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. 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 PCBA Program cumulative charges (adjustments) approved by the Company through September 30, 2021 were:
Included in the above table, cumulative PCBA Program restructuring initiatives approved by the Company through September 30, 2021 by major cost type were:
Specific actions taken since the PCBA Program inception include: •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 a net reduction in workforce, inventory and other asset write-offs, product returns, and termination of contracts. •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 office footprint and is moving toward the future of work in a post-COVID environment, by restructuring where and how its employees work and collaborate. These actions will result primarily in lease termination fees. •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 expects to substantially complete 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 is not renewing its existing license agreements for Donna Karan New York, DKNY, Michael Kors, Tommy Hilfiger and Ermenegildo Zegna when they expire in June 2023. The Company expects to continue to sell products under these licenses through June 30, 2022. These actions resulted in, or are expected to result in, employee-related costs, asset write-offs, including charges for the impairment of goodwill, and consulting and legal fees. 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. 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:
Changes in accrued restructuring charges for the three months ended September 30, 2021 relating to the PCBA Program were:
Accrued restructuring charges at September 30, 2021 relating to the PCBA Program are expected to result in cash expenditures funded from cash provided by operations of approximately $46 million, $20 million and $3 million for the remainder of fiscal 2022 and for fiscal 2023 and 2024, respectively. Leading Beauty Forward Program The Company substantially completed initiatives approved under the Leading Beauty Program (the “LBF Program”) through fiscal 2021. 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, 2021.
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DERIVATIVE FINANCIAL INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTSThe 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, 2021, the notional amount of derivatives not designated as hedging instruments was $3,946 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. The fair values of the Company’s derivative financial instruments included in the consolidated balance sheets are presented as follows:
(1)See Note 6 – Fair Value Measurements for further information about how the fair value of derivative assets and liabilities are determined. 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:
(1)The 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 was not material. (2)During the three months ended September 30, 2021 and 2020, the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $2 million and $5 million, respectively. (3)Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets.
(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. 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:
Additional information regarding the effects of fair value and cash flow hedging relationships for derivatives designated and qualifying as hedging instruments is as follows:
The amount of gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments are presented as follows:
Cash Flow Hedges The Company enters into foreign currency forward contracts, and may enter into foreign currency option contracts, to hedge anticipated transactions and receivables and payables denominated in foreign currencies, for periods consistent with the Company’s identified exposures. The purpose of the hedging activities is to minimize the effect of foreign exchange rate movements on the cash flows that the Company receives from foreign subsidiaries. The foreign currency forward contracts entered into to hedge anticipated transactions have been designated as cash flow hedges and have varying maturities through the end of June 2023. Hedge effectiveness of the foreign currency forward contracts is based on the forward method, which includes time value in the effectiveness assessment. At September 30, 2021, the Company had cash flow hedges outstanding with a notional amount totaling $1,066 million. The Company may enter into interest rate forward contracts to hedge anticipated issuance of debt for periods consistent with the Company’s identified exposures. The purpose of the hedging activities is to minimize the effect of interest rate movements on the cost of debt issuance. For hedge contracts that are no longer deemed highly effective, hedge accounting is discontinued and gains and losses in AOCI are reclassified to sales when the underlying forecasted transaction occurs. If it is probable that the forecasted transaction will no longer occur, then any gains or losses in AOCI are reclassified to current-period sales. As of September 30, 2021, the Company’s foreign currency cash flow hedges were highly effective. The estimated net gain on the Company’s derivative instruments designated as cash flow hedges as of September 30, 2021 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $5 million. The accumulated net gain (loss) on derivative instruments in AOCI was $20 million and $(1) million as of September 30, 2021 and June 30, 2021, respectively. Fair Value Hedges The Company enters into interest rate derivative contracts to manage the exposure to interest rate fluctuations on its funded indebtedness. The Company has interest rate swap agreements, with notional amounts totaling $250 million, $700 million and $300 million to effectively convert the fixed rate interest on its 2022 Senior Notes, 2030 Senior Notes and 2031 Senior Notes, respectively, to variable interest rates based on three-month LIBOR plus a margin. These interest rate swap agreements are designated as fair value hedges of the related long-term debt, and the 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. Net Investment Hedges The Company enters into foreign currency forward contracts, designated as net investment hedges, to hedge a portion of its net investment in certain foreign operations. The net gain or loss on these contracts is recorded within translation adjustments, as a component of AOCI on the Company’s consolidated balance sheets. The purpose of the hedging activities is to minimize the effect of foreign exchange rate movements on the Company’s net investment in these foreign operations. The net investment hedge contracts have varying maturities through the end of January 2022. Hedge effectiveness of the net investment hedge contracts is based on the spot method. At September 30, 2021, the Company had net investment hedges outstanding with a notional amount totaling $1,419 million. Credit Risk As a matter of policy, the Company enters into derivative contracts only with counterparties that have a long-term credit rating of at least A- or higher by at least two nationally recognized rating agencies. The counterparties to these contracts are major financial institutions. Exposure to credit risk in the event of nonperformance by any of the counterparties is limited to the gross fair value of contracts in asset positions, which totaled $70 million at September 30, 2021. To manage this risk, the Company has strict counterparty credit guidelines that are continually monitored. Accordingly, management believes risk of loss under these hedging contracts is remote.
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FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The Company records certain of its financial assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. The accounting for fair value measurements must be applied to nonfinancial assets and nonfinancial liabilities that require initial measurement or remeasurement at fair value, which principally consist of assets and liabilities acquired through business combinations and goodwill, indefinite-lived intangible assets and long-lived assets for the purposes of calculating potential impairment. The Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are as follows: Level 1: Inputs based on quoted market prices for identical assets or liabilities in active markets at the measurement date. Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation. The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2021:
The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2021:
The estimated fair values of the Company’s financial instruments are as follows:
The following methods and assumptions were used to estimate the fair value of the Company’s financial instruments for which it is practicable to estimate that value: Cash and cash equivalents – Cash and all highly-liquid securities with original maturities of three months or less are classified as cash and cash equivalents, primarily consisting of cash deposits in interest bearing accounts, time deposits and money market funds (classified within Level 1 of the valuation hierarchy). Cash deposits in interest bearing accounts and time deposits are carried at cost, which approximates fair value due to the short maturity of cash equivalent instruments. Foreign currency forward contracts – The fair values of the Company’s foreign currency forward contracts were determined using an industry-standard valuation model, which is based on an income approach. The significant observable inputs to the model, such as swap yield curves and currency spot and forward rates, were obtained from an independent pricing service. To determine the fair value of contracts under the model, the difference between the contract price and the current forward rate was discounted using LIBOR for contracts with maturities up to 12 months, and swap yield curves for contracts with maturities greater than 12 months. Interest rate contracts – The fair values of the Company’s interest rate contracts were determined using an industry-standard valuation model, which is based on the income approach. The significant observable inputs to the model, such as treasury yield curves, swap yield curves and LIBOR forward rates, were obtained from independent pricing services. Current and long-term debt – The fair value of the Company’s debt was estimated based on the current rates offered to the Company for debt with the same remaining maturities. To a lesser extent, debt also includes finance lease obligations for which the carrying amount approximates the fair value. The Company’s debt is classified within Level 2 of the valuation hierarchy. DECIEM stock options – The stock option liability represents the employee stock options issued by DECIEM in replacement and exchange for certain vested and unvested DECIEM employee stock options previously issued by DECIEM, in connection with the Company's acquisition of DECIEM. The DECIEM stock options are subject to the terms and conditions of DECIEM's 2021 Stock Option Plan. The initial fair value of the DECIEM stock option liability was calculated using the acquisition date fair value multiplied by the number of options replaced (consisting of vested and partially vested stock options) on the day following the acquisition date. The acquisition date fair value was calculated using the Monte Carlo Method, which requires certain assumptions. These inputs are categorized as Level 3 of the valuation hierarchy. The DECIEM stock options will be remeasured to fair value at each reporting date through settlement, with the offsetting entry to compensation expense, through the period when the options are exercised or repurchased. See Note 2 – Acquisition of Business and Note 10 – Stock Programs for discussion.
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REVENUE RECOGNITION |
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REVENUE RECOGNITION | REVENUE RECOGNITION The Company’s revenue recognition accounting policies are described in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021. Accounts Receivable Accounts receivable, net is stated net of the allowance for doubtful accounts and customer deductions totaling $40 million as of September 30, 2021 and June 30, 2021. Payment terms are short-term in nature and are generally less than one year. Changes in the allowance for credit losses are as follows:
The remaining balance of the allowance for doubtful accounts of $19 million, as of September 30, 2021, relates to non-credit losses, which are primarily due to customer deductions. Deferred Revenue Changes in deferred revenue during the period are as follows:
Transaction Price Allocated to the Remaining Performance Obligations At September 30, 2021, the combined estimated revenue expected to be recognized in the next twelve months related to performance obligations for customer loyalty programs, gift with purchase promotions, purchase with purchase promotions and gift card liabilities that are unsatisfied (or partially unsatisfied) is $379 million. The remaining balance of deferred revenue at September 30, 2021 will be recognized beyond the next twelve months.
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PENSION AND POST-RETIREMENT BENEFIT PLANS |
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PENSION AND POST-RETIREMENT BENEFIT PLANS | PENSION AND POST-RETIREMENT BENEFIT PLANS The Company maintains pension plans covering substantially all of its full-time employees for its U.S. operations and a majority of its international operations. The Company also maintains post-retirement benefit plans that provide certain medical and dental benefits to eligible employees. Descriptions of these plans are 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, 2021. The components of net periodic benefit cost for the three months ended September 30, 2021 and 2020 consisted of the following:
During the three months ended September 30, 2021, the Company made contributions to its international pension plans totaling $6 million. The amounts recognized in the consolidated balance sheets related to the Company’s pension and post-retirement benefit plans consist of the following:
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CONTINGENCIES |
3 Months Ended |
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Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES Legal Proceedings The Company is involved, from time to time, in litigation and other legal proceedings incidental to its business, including employment, intellectual property, real estate, environmental, regulatory, advertising, trade relations, tax, privacy, and product liability matters (including asbestos-related claims). Management believes that the outcome of current litigation and legal proceedings will not have a material adverse effect upon the Company’s business, results of operations, financial condition or cash flows. However, management’s assessment of the Company’s current litigation and other legal proceedings could change in light of the discovery of facts with respect to legal actions or other proceedings pending against the Company not presently known to the Company or determinations by judges, juries or other finders of fact which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or proceedings. Reasonably possible losses in addition to the amounts accrued for such litigation and legal proceedings are not material to the Company’s consolidated financial statements.
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STOCK PROGRAMS |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK PROGRAMS | STOCK PROGRAMS Additional information relating to the Company's stock programs and the DECIEM stock options are 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, 2021. The Company's Stock Programs Total net stock-based compensation expense is attributable to the granting of, and the remaining requisite service periods of stock options, restricted stock units (“RSUs”), performance share units (“PSUs”), long-term PSUs, including long-term price-vested units and share units. Compensation expense attributable to net stock-based compensation was $79 million and $64 million for the three months ended September 30, 2021 and 2020, respectively. Stock Options During the three months ended September 30, 2021, the Company granted stock options in respect of approximately 1.1 million shares of Class A Common Stock with an exercise price per share of $344.06 and a weighted-average grant date fair value per share of $85.49. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model. The aggregate intrinsic value of stock options exercised during the three months ended September 30, 2021 was $89 million. Restricted Stock Units The Company granted RSUs in respect of approximately 0.7 million shares of Class A Common Stock during the three months ended September 30, 2021 with a weighted-average grant date fair value per share of $343.90 that, at the time of grant, are scheduled to vest at 0.3 million, 0.2 million, and 0.2 million shares per year, in fiscal 2023, fiscal 2024 and fiscal 2025, respectively. Vesting of RSUs is generally subject to the continued employment or the retirement of the grantees. The RSUs are accompanied by dividend equivalent rights, payable upon settlement of the RSUs either in cash or shares (based on the terms of the particular award) and, as such, were valued at the closing market price of the Company’s Class A Common Stock on the date of grant. Performance Share Units During the three months ended September 30, 2021, the Company granted PSUs with a target payout of approximately 0.1 million shares of Class A Common Stock with a grant date fair value per share of $344.06, which will be settled in stock subject to the achievement of the Company’s net sales and diluted net earnings per common share for the three fiscal years ending June 30, 2024, all subject to continued employment or the retirement of the grantees. For PSUs granted, no settlement will occur for results below the applicable minimum threshold. PSUs are accompanied by dividend equivalent rights that will be payable in cash upon settlement of the PSUs and, as such, were valued at the closing market value of the Company’s Class A Common Stock on the date of grant. In September 2021, approximately 0.2 million shares of the Company’s Class A Common Stock were issued, and related accrued dividends were paid, relative to the target goals set at the time of the issuance, in settlement of 0.2 million PSUs with a performance period ended June 30, 2021. DECIEM Stock Options The DECIEM stock options are liability-classified awards as they are expected to be settled in cash and will be remeasured to fair value at each reporting date through date of settlement. Total stock-based compensation expense is attributable to the exchange or replacement of and the remaining requisite service period of stock options. The total stock option expense for the three months ended September 30, 2021 was not material. There were no stock options exercised during the three months ended September 30, 2021. The initial fair value of the DECIEM stock option liability was calculated using the acquisition date fair value multiplied by the number of options replaced (consisting of vested and partially vested stock options) on the day following the acquisition date. As discussed in Note 2 – Acquisition of Business, DECIEM stock options, with total fair value of $295 million, were reported as part of the total consideration transferred. The DECIEM stock options are reported as a stock option liability of $137 million and $141 million in Other noncurrent liabilities in the accompanying consolidated balance sheets at September 30, 2021 and June 30, 2021, respectively. The fair value of the stock options were calculated using the following key assumptions into the Monte Carlo Method:
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NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE | NET EARNINGS ATTRIBUTABLE TO THE ESTÉE LAUDER COMPANIES INC. PER COMMON SHARE Net earnings attributable to The Estée Lauder Companies Inc. per common share (“basic EPS”) is computed by dividing Net earnings attributable to The Estée Lauder Companies Inc. by the weighted-average number of common shares outstanding and shares underlying PSUs and RSUs where the vesting conditions have been met. Net earnings attributable to The Estée Lauder Companies Inc. per common share assuming dilution (“diluted EPS”) is computed by reflecting potential dilution from stock-based awards. A reconciliation between the numerator and denominator of the basic and diluted EPS computations is as follows:
The shares of Class A Common Stock underlying stock options, RSUs and PSUs that were excluded in the computation of diluted EPS because their inclusion would be anti-dilutive were as follows:
As of September 30, 2021 and 2020, 0.7 million and 0.8 million shares, respectively, of Class A Common Stock underlying PSUs have been excluded from the calculation of diluted EPS because the number of shares ultimately issued is contingent on the achievement of certain performance targets of the Company, as discussed in Note 10 – Stock Programs.
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EQUITY AND REDEEMABLE NONCONTROLLING INTEREST |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY AND REDEEMABLE NONCONTROLLING INTEREST | EQUITY AND REDEEMABLE NONCONTROLLING INTERESTTotal Stockholders’ Equity – The Estée Lauder Companies Inc.
The following is a summary of quarterly cash dividends declared per share on the Company’s Class A and Class B Common Stock during the three months ended September 30, 2021:
On November 1, 2021, a dividend was declared in the amount of $.60 per share on the Company’s Class A and Class B Common Stock. The dividend is payable in cash on December 15, 2021 to stockholders of record at the close of business on November 30, 2021. Common Stock During the three months ended September 30, 2021, the Company purchased approximately 1.7 million shares of its Class A Common Stock for $557 million. Accumulated Other Comprehensive Income The following table represents changes in AOCI, net of tax, by component for the three months ended September 30, 2021:
(1)Consists of foreign currency translation losses. (2)See Note 5 – Derivative Financial Instruments for gains (losses) relating to net investment hedges. The following table represents the effects of reclassification adjustments from AOCI into net earnings for the three months ended September 30, 2021 and 2020:
(1)See Note 8 – Pension and Post-Retirement Benefit Plans for additional information.
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STATEMENT OF CASH FLOWS |
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STATEMENT OF CASH FLOWS | STATEMENT OF CASH FLOWS Supplemental cash flow information for the three months ended September 30, 2021 and 2020 is as follows:
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SEGMENT DATA AND RELATED INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT DATA AND RELATED INFORMATION | SEGMENT DATA AND RELATED INFORMATION Reportable operating segments include components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (the “Chief Executive”) in deciding how to allocate resources and in assessing performance. Although the Company operates in one business segment, beauty products, management also evaluates performance on a product category basis. Product category performance is measured based upon net sales before returns associated with restructuring and other activities, and earnings before income taxes, other components of net periodic benefit cost, interest expense, interest income and investment income, net, other income, and charges associated with restructuring and other activities. Returns and 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. The accounting policies for the Company’s reportable segments are substantially the same as those for the consolidated financial statements, as described in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021. The assets and liabilities of the Company are managed centrally and are reported internally in the same manner as the consolidated financial statements; thus, no additional information is produced for the Chief Executive or included herein. There has been no significant variance in the total or long-lived asset values associated with the Company’s segment data since June 30, 2021.
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SUBSEQUENT EVENT |
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Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENTOn October 22, 2021, the Company replaced its $1.5 billion senior unsecured revolving credit facility that was set to expire on October 26, 2023 (the “Prior Facility”) with a new $2.5 billion senior unsecured revolving credit facility that expires on October 22, 2026 (the “New Facility”) unless extended for up to | additional years in accordance with the terms set forth in the agreement. Up to the equivalent of $750 million of the New Facility is available for multi-currency loans. At September 30, 2021 and through October 22, 2021, no borrowings were outstanding under the Prior Facility. The New Facility may be used for general corporate purposes. Interest rates on borrowings under the New Facility will be based on prevailing market interest rates in accordance with the agreement. The costs incurred to establish the New Facility were not material. The New Facility has an annual fee of approximately $1 million, payable quarterly, based on the Company’s current credit ratings. The New Facility contains a cross-default provision whereby a failure to pay other material financial obligations in excess of $175 million (after grace periods and absent a waiver from the lenders) would result in an event of default and the acceleration of the maturity of any outstanding debt under this facility.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | 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, 2021. Certain prior year amounts in the notes to the consolidated financial statements have been reclassified to conform to current year presentation.
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Management Estimates | 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, 2021. 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.
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Currency Translation and Transactions | 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 $(175) million and $91 million, net of tax, during the three months ended September 30, 2021 and 2020, 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 5 – 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 $12 million and $1 million during the three months ended September 30, 2021 and 2020, respectively.
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Concentration of Credit Risk | Concentration of Credit RiskThe 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 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment consists of the following:
Depreciation and amortization of property, plant and equipment was $130 million and $125 million during the three months ended September 30, 2021 and 2020, 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.
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Income Taxes | Income Taxes The effective rate for income taxes was 22.5% and 21.8% for the three months ended September 30, 2021 and 2020, respectively. The increase in the effective tax rate of 70 basis points was primarily attributable to a decrease in excess tax benefits associated with stock-based compensation arrangements and an increase in income tax reserve adjustments, partially offset by a lower effective tax rate on the Company's foreign operations. As of September 30, 2021 and June 30, 2021, the gross amount of unrecognized tax benefits, exclusive of interest and penalties, totaled $71 million and $62 million, respectively. The total amount of unrecognized tax benefits at September 30, 2021 that, if recognized, would affect the effective tax rate was $62 million. The total gross interest and penalties accrued related to unrecognized tax benefits during the three months ended September 30, 2021 in the accompanying consolidated statements of earnings was $3 million. The total gross accrued interest and penalties in the accompanying consolidated balance sheets at September 30, 2021 and June 30, 2021, was $16 million and $14 million, respectively. On the basis of the information available as of September 30, 2021, 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. During the fiscal 2022 first quarter, the Company formally concluded the compliance process with respect to its fiscal 2020 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, 2021.
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Recently Adopted and Issued Accounting Standards | Recently Adopted Accounting Standards Income Taxes (ASU 2019-12 – Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes) In December 2019, the Financial Accounting Standards Board (“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. Impact on consolidated financial statements – On July 1, 2021, the Company adopted this standard and recorded a cumulative adjustment of $121 million as an increase to its fiscal 2022 opening retained earnings balance to derecognize a deferred tax liability related to a previously held equity method investment that became a foreign subsidiary. Recently Issued Accounting Standards Reference Rate Reform (ASC Topic 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 contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that have LIBOR as the benchmark rate. 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 Topic 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 on its existing derivative contracts, leases and other arrangements, as well as when to adopt this guidance. No other recently issued accounting pronouncements are expected to have a material impact on the Company’s consolidated financial statements.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventory and promotional merchandise | Inventory and promotional merchandise consists of the following:
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Schedule of property, plant and equipment | Property, plant and equipment consists of the following:
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Schedule of other accrued liabilities | Other accrued liabilities consist of the following:
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ACQUISITION OF BUSINESSES (Tables) |
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of total consideration transferred | A summary of the total consideration transferred, including immaterial measurement period adjustments as of September 30, 2021, is as follows:
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Schedule of key assumptions used for acquisition date fair value | The acquisition-date fair values of the DECIEM stock options and the net Put (Call) Option were calculated by incorporating significant assumptions including the starting equity value, revenue growth rates and EBITDA and the following key assumptions into the Monte Carlo Method:
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Rollforward of final allocation of total consideration | The preliminary allocation of the total consideration transferred, including immaterial measurement period adjustments as of September 30, 2021, has been recorded as follows:
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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill by product category and related change in the carrying amount | The following table presents goodwill by product category and the related change in the carrying amount:
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Schedule of other intangible assets, by type | Other intangible assets consist of the following:
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Estimated aggregate amortization expense for the remainder of the current fiscal year and the next four years | The estimated aggregate amortization expense for the remainder of fiscal 2022 and for each of the next four fiscal years is as follows:
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CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of aggregate restructuring and other activities | Charges associated with the Post-COVID Business Acceleration Program for the three months ended September 30, 2021 were as follows:
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Schedule of total cumulative charges expected to be incurred associated with restructuring and other activities | Total PCBA Program cumulative charges (adjustments) approved by the Company through September 30, 2021 were:
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Schedule of total cumulative charges by type approved associated with restructuring initiatives | Included in the above table, cumulative PCBA Program restructuring initiatives approved by the Company through September 30, 2021 by major cost type were:
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Schedule of total cumulative charges recorded associated with restructuring and other activities | Total cumulative charges recorded associated with restructuring and other activities for the PCBA Program were:
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Schedule of total cumulative charges by type recorded associated with restructuring and other activities |
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Schedule of changes in accrued restructuring charges | Changes in accrued restructuring charges for the three months ended September 30, 2021 relating to the PCBA Program were:
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DERIVATIVE FINANCIAL INSTRUMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair values of the derivative financial instruments included in the consolidated balance sheets | The fair values of the Company’s derivative financial instruments included in the consolidated balance sheets are presented as follows:
(1)See Note 6 – Fair Value Measurements for further information about how the fair value of derivative assets and liabilities are determined.
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Schedule of gains and losses related to derivative financial instruments designated as hedging instruments that are included in the assessment of effectiveness | 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:
(1)The 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 was not material. (2)During the three months ended September 30, 2021 and 2020, the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $2 million and $5 million, respectively. (3)Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets.
(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.
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Schedule of cumulative amount of fair value hedging adjustments for designated and qualifying hedged items | 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:
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Schedule of effects of fair value and cash flow hedging relationships for designated and qualified hedging instruments | Additional information regarding the effects of fair value and cash flow hedging relationships for derivatives designated and qualifying as hedging instruments is as follows:
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Schedule of gains and losses related to derivative financial instruments not designated as hedging instruments | The amount of gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments are presented as follows:
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FAIR VALUE MEASUREMENTS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial assets and liabilities measured at fair value on a recurring basis | The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2021:
The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2021:
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Schedule of estimated fair values of financial instruments | The estimated fair values of the Company’s financial instruments are as follows:
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REVENUE RECOGNITION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in allowance for credit losses | Changes in the allowance for credit losses are as follows:
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Schedule of significant changes in deferred revenue | Changes in deferred revenue during the period are as follows:
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PENSION AND POST-RETIREMENT BENEFIT PLANS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of net periodic benefit cost for pension and other post-retirement benefit plans | The components of net periodic benefit cost for the three months ended September 30, 2021 and 2020 consisted of the following:
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Schedule of amounts recognized in the consolidated balance sheets related to the Company's pension and post-retirement benefit plans | The amounts recognized in the consolidated balance sheets related to the Company’s pension and post-retirement benefit plans consist of the following:
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STOCK PROGRAMS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of key assumptions used for acquisition date fair value | The acquisition-date fair values of the DECIEM stock options and the net Put (Call) Option were calculated by incorporating significant assumptions including the starting equity value, revenue growth rates and EBITDA and the following key assumptions into the Monte Carlo Method:
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NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reconciliation between the numerator and denominator of the basic and diluted EPS computations | A reconciliation between the numerator and denominator of the basic and diluted EPS computations is as follows:
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Schedule of antidilutive securities excluded from computation of earnings per share | The shares of Class A Common Stock underlying stock options, RSUs and PSUs that were excluded in the computation of diluted EPS because their inclusion would be anti-dilutive were as follows:
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EQUITY AND REDEEMABLE NONCONTROLLING INTEREST (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of equity | Total Stockholders’ Equity – The Estée Lauder Companies Inc.
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Summary of cash dividends declared per share on the Company's Class A and Class B Common Stock | The following is a summary of quarterly cash dividends declared per share on the Company’s Class A and Class B Common Stock during the three months ended September 30, 2021:
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Schedule of components of AOCI, net of tax | The following table represents changes in AOCI, net of tax, by component for the three months ended September 30, 2021:
(1)Consists of foreign currency translation losses. (2)See Note 5 – Derivative Financial Instruments for gains (losses) relating to net investment hedges.
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Schedule of effects of reclassification adjustments from AOCI into net earnings | The following table represents the effects of reclassification adjustments from AOCI into net earnings for the three months ended September 30, 2021 and 2020:
(1)See Note 8 – Pension and Post-Retirement Benefit Plans for additional information.
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STATEMENT OF CASH FLOWS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental cash flow information | Supplemental cash flow information for the three months ended September 30, 2021 and 2020 is as follows:
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SEGMENT DATA AND RELATED INFORMATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment data and related information |
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Currency Translation and Transactions (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Currency Translation and Transactions | ||
Unrealized translation gains (losses), net of tax | $ (175) | $ 91 |
Net exchange losses on foreign currency transactions | $ 12 | $ 1 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventory and Promotional Merchandise (Details) - USD ($) $ in Millions |
Sep. 30, 2021 |
Jun. 30, 2021 |
---|---|---|
Accounting Policies [Abstract] | ||
Raw materials | $ 697 | $ 674 |
Work in process | 290 | 330 |
Finished goods | 1,354 | 1,213 |
Promotional merchandise | 292 | 288 |
Inventory and promotional merchandise | $ 2,633 | $ 2,505 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Jun. 30, 2021 |
|
Income Tax Contingency [Line Items] | |||
Effective tax rate (as a percent) | 22.50% | 21.80% | |
Increase (decrease) in effective tax rate (as a percent) | 0.70% | ||
Gross unrecognized tax benefits | $ 71 | $ 62 | |
Total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate | 62 | ||
Gross interest and penalty accrued | 3 | ||
Total gross accrued interest and penalties related to unrecognized tax benefits | 16 | $ 14 | |
Minimum | |||
Income Tax Contingency [Line Items] | |||
Decrease in unrecognized tax benefits is reasonably possible | 5 | ||
Maximum | |||
Income Tax Contingency [Line Items] | |||
Decrease in unrecognized tax benefits is reasonably possible | $ 10 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Other Accrued Liabilities (Details) - USD ($) $ in Millions |
Sep. 30, 2021 |
Jun. 30, 2021 |
---|---|---|
Accounting Policies [Abstract] | ||
Advertising, merchandising and sampling | $ 348 | $ 294 |
Employee compensation | 456 | 670 |
Deferred revenue | 379 | 322 |
Payroll and other non-income taxes | 311 | 359 |
Accrued income taxes | 336 | 237 |
Sales return accrual | 378 | 369 |
Other | 974 | 944 |
Other accrued liabilities | $ 3,182 | $ 3,195 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Other Accrued Liabilities Narrative (Details) - USD ($) $ in Millions |
Sep. 30, 2021 |
Jun. 30, 2021 |
---|---|---|
Income Tax Contingency [Line Items] | ||
Other noncurrent liabilities | $ 1,964 | $ 2,037 |
Other Noncurrent Liabilities | ||
Income Tax Contingency [Line Items] | ||
Deferred tax liabilities | $ 805 | $ 849 |
ACQUISITION OF BUSINESSES - Schedule of Fair Value Option-Pricing Assumptions (Details) - DECIEM - DECIEM 2021 Stock Option Plan - Stock Options |
Sep. 30, 2021 |
Jun. 30, 2021 |
May 18, 2021 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Risk-free rate (as a percent) | 0.40% | 0.50% | 0.50% |
Term to mid of last twelve-month period | 2 years 2 months 1 day | 2 years 5 months 1 day | 2 years 6 months 14 days |
Operating leverage adjustment | 0.45 | 0.45 | 0.45 |
Net sales discount rate (as a percent) | 3.30% | 3.40% | 3.30% |
EBITDA discount rate (as a percent) | 6.90% | 6.90% | 6.80% |
EBITDA volatility (as a percent) | 39.10% | 37.70% | 38.30% |
Net sales volatility (as a percent) | 17.60% | 17.00% | 17.20% |
ACQUISITION OF BUSINESSES - Preliminary Allocation of Total Consideration Transferred (Details) - USD ($) $ in Millions |
Sep. 30, 2021 |
Jun. 30, 2021 |
---|---|---|
Business Acquisition [Line Items] | ||
Goodwill | $ 2,575 | $ 2,616 |
DECIEM | ||
Business Acquisition [Line Items] | ||
Cash | 35 | |
Accounts receivable | 64 | |
Inventory | 192 | |
Other current assets | 33 | |
Property, plant and equipment | 40 | |
Operating lease right-of-use assets | 40 | |
Intangible assets | 1,917 | |
Goodwill | 1,297 | |
Total assets acquired | 3,618 | |
Accounts payable | 21 | |
Operating lease liabilities | 8 | |
Other accrued liabilities | 67 | |
Deferred income taxes | 485 | |
Long-term operating lease liabilities | 44 | |
Total liabilities assumed | 625 | |
Total consideration transferred | $ 2,993 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) - DECIEM $ in Millions |
1 Months Ended |
---|---|
May 31, 2021
USD ($)
| |
Intangible assets | |
Goodwill measurement period adjustment | $ 1,297 |
Trademarks and other | |
Intangible assets | |
Indefinite-lived intangible assets acquired | 1,216 |
Customer lists | |
Intangible assets | |
Finite-lived intangible assets acquired | $ 701 |
Customer lists | Minimum | |
Intangible assets | |
Useful life (in years) | 7 years |
Customer lists | Maximum | |
Intangible assets | |
Useful life (in years) | 14 years |
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES - Charges Associated With Restructuring Activities (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Restructuring and Other Costs | ||
Restructuring charges | $ 6 | $ 9 |
PCBA Program | ||
Restructuring and Other Costs | ||
Restructuring charges | 2 | |
Sales Returns (included in Net Sales) | ||
Restructuring and Other Costs | ||
Restructuring charges | 1 | $ 0 |
Sales Returns (included in Net Sales) | PCBA Program | ||
Restructuring and Other Costs | ||
Restructuring charges | 1 | |
Cost of Sales | PCBA Program | ||
Restructuring and Other Costs | ||
Restructuring charges | (1) | |
Restructuring Charges | PCBA Program | ||
Restructuring and Other Costs | ||
Restructuring charges | 0 | |
Other Charges | PCBA Program | ||
Restructuring and Other Costs | ||
Restructuring charges | $ 2 |
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES - Narrative (Details) - PCBA Program $ in Millions |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Aug. 20, 2020
USD ($)
|
Sep. 30, 2021
position
|
Jun. 30, 2024
USD ($)
|
Jun. 30, 2023
USD ($)
|
Jun. 30, 2022
USD ($)
|
|
Restructuring and Other Costs | |||||
Restructuring program, period | 2 years | ||||
Forecast | |||||
Restructuring and Other Costs | |||||
Accrued restructuring charges expected to result in cash expenditures funded from cash provided by operations | $ 3 | $ 20 | $ 46 | ||
Minimum | |||||
Restructuring and Other Costs | |||||
Net reduction in global positions | position | 2,000 | ||||
Closure of freestanding stores (as a percent) | 10.00% | ||||
Restructuring and related costs, expected costs | $ 400 | ||||
Maximum | |||||
Restructuring and Other Costs | |||||
Net reduction in global positions | position | 2,500 | ||||
Closure of freestanding stores (as a percent) | 15.00% | ||||
Restructuring and related costs, expected costs | $ 500 |
FAIR VALUE MEASUREMENTS - Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Millions |
Sep. 30, 2021 |
Jun. 30, 2021 |
---|---|---|
Derivatives | ||
Derivative asset | $ 70 | $ 67 |
Derivative liability | (34) | (56) |
Carrying Amount | ||
Nonderivatives | ||
Cash and cash equivalents | 3,995 | 4,958 |
Current and long-term debt | 5,548 | 5,569 |
DECIEM stock options | 137 | 141 |
Carrying Amount | Foreign currency forward contracts | ||
Derivatives | ||
Derivative asset | 31 | |
Derivative liability | (4) | |
Carrying Amount | Interest rate-related derivatives | ||
Derivatives | ||
Derivative asset | 5 | 15 |
Fair Value | ||
Nonderivatives | ||
Cash and cash equivalents | 3,995 | 4,958 |
Current and long-term debt | 6,206 | 6,262 |
DECIEM stock options | 137 | 141 |
Fair Value | Foreign currency forward contracts | ||
Derivatives | ||
Derivative asset | 31 | |
Derivative liability | (4) | |
Fair Value | Interest rate-related derivatives | ||
Derivatives | ||
Derivative asset | $ 5 | $ 15 |
FAIR VALUE MEASUREMENTS - Foreign Currency Forward Contracts Maturity and Additional Purchase Price Payable - Narrative (Details) - Foreign currency forward contracts |
3 Months Ended |
---|---|
Sep. 30, 2021 | |
Maximum | LIBOR | |
Foreign currency forward contracts | |
Contract maturities | 12 months |
Minimum | Swap yield curve | |
Foreign currency forward contracts | |
Contract maturities | 12 months |
REVENUE RECOGNITION - Narrative (Details) - USD ($) $ in Millions |
Sep. 30, 2021 |
Jun. 30, 2021 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Allowance for doubtful accounts and customer deductions | $ 40 | $ 40 |
Allowance for non-credit losses | $ 19 |
REVENUE RECOGNITION - Changes in Allowance for Credit Losses (Details) $ in Millions |
3 Months Ended |
---|---|
Sep. 30, 2021
USD ($)
| |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance at June 30, 2021 | $ 20 |
Provision for expected credit losses | 1 |
Balance at September 30, 2021 | $ 21 |
REVENUE RECOGNITION - Changes in Deferred Revenue (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Change in Contract with Customer, Liability [Abstract] | ||
Balance at the beginning of the period | $ 371 | $ 279 |
Revenue recognized that was included in the deferred revenue balance at the beginning of the period | (170) | (90) |
Revenue deferred during the period | 223 | 216 |
Other | 2 | 4 |
Balance at the end of the period | $ 426 | $ 409 |
REVENUE RECOGNITION - Transaction Price Allocated to the Remaining Performance Obligations (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-10-01 $ in Millions |
Sep. 30, 2021
USD ($)
|
---|---|
REVENUE RECOGNITION | |
Expected timing of revenue recognition | 12 months |
Estimated recognition of deferred revenue | $ 379 |
PENSION AND POST-RETIREMENT BENEFIT PLANS - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Pension Plans | U.S. | ||
Components of net periodic benefit cost: | ||
Service cost | $ 12 | $ 11 |
Interest cost | 8 | 8 |
Expected return on plan assets | (14) | (13) |
Amortization of: | ||
Actuarial loss | 4 | 5 |
Special termination benefits | 0 | 0 |
Net periodic benefit cost | 10 | 11 |
Pension Plans | International | ||
Components of net periodic benefit cost: | ||
Service cost | 8 | 9 |
Interest cost | 3 | 2 |
Expected return on plan assets | (4) | (3) |
Amortization of: | ||
Actuarial loss | 0 | 1 |
Special termination benefits | 2 | 2 |
Net periodic benefit cost | 9 | 11 |
Employer contributions | 6 | |
Other than Pension Plans Post-retirement | ||
Components of net periodic benefit cost: | ||
Service cost | 1 | 0 |
Interest cost | 1 | 1 |
Expected return on plan assets | 0 | 0 |
Amortization of: | ||
Actuarial loss | 0 | 0 |
Special termination benefits | 0 | 0 |
Net periodic benefit cost | $ 2 | $ 1 |
PENSION AND POST-RETIREMENT BENEFIT PLANS - Amounts Recognized in the Consolidated Balance Sheets (Details) - USD ($) $ in Millions |
Sep. 30, 2021 |
Jun. 30, 2021 |
---|---|---|
Amounts recognized in the consolidated balance sheets consist of: | ||
Other assets | $ 152 | $ 162 |
Other accrued liabilities | (28) | (28) |
Other noncurrent liabilities | (424) | (432) |
Funded status | (300) | (298) |
Accumulated other comprehensive loss | 237 | 242 |
Net amount recognized | $ (63) | $ (56) |
STOCK PROGRAMS - Compensation Expense and Stock Options (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Share-based Compensation Arrangement by Share-based Payment Award | ||
Non-cash stock-based compensation | $ 79 | $ 64 |
Common Class A | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Grant at fair value (in shares) | 1.1 | |
Exercise price (in dollars per share) | $ 344.06 | |
Weighted-average grant date fair value (in dollars per share) | $ 85.49 | |
Additional General Disclosures | ||
Intrinsic value of stock options exercised (in dollars) | $ 89 |
STOCK PROGRAMS - Restricted Stock Units (Details) - Restricted Stock Units - Employee - Common Class A shares in Millions |
3 Months Ended |
---|---|
Sep. 30, 2021
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award | |
Granted (in shares) | 0.7 |
Weighted-average grant date fair value (in dollars per share) | $ / shares | $ 343.90 |
RSU grants scheduled to vest in fiscal 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
RSU grants scheduled to vest (in shares) | 0.3 |
RSU grants scheduled to vest in fiscal 2024 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
RSU grants scheduled to vest (in shares) | 0.2 |
RSU grants scheduled to vest in fiscal 2025 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
RSU grants scheduled to vest (in shares) | 0.2 |
STOCK PROGRAMS - Performance Share Units (Details) - Performance Share Units - Employee - $ / shares shares in Millions |
1 Months Ended | 3 Months Ended | 12 Months Ended |
---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2021 |
Jun. 30, 2021 |
|
Share-based Compensation Arrangement by Share-based Payment Award | |||
Vested (in shares) | 0.2 | ||
Common Class A | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Granted (in shares) | 0.1 | ||
Weighted-average grant date fair value (in dollars per share) | $ 344.06 | ||
Common Stock issued (in shares) | 0.2 |
STOCK PROGRAMS - DECIEM Stock Options (Details) - DECIEM 2021 Stock Option Plan - Stock Options - USD ($) $ in Millions |
Sep. 30, 2021 |
Jun. 30, 2021 |
---|---|---|
Share-based Compensation Arrangement by Share-based Payment Award | ||
Stock option liability | $ 137 | $ 141 |
DECIEM | ||
Share-based Compensation Arrangement by Share-based Payment Award | ||
Fair value of stock options | 295 | |
Stock option liability | $ 104 |
STOCK PROGRAMS - Schedule of Key Assumptions Used For Award (Details) - Stock Options - DECIEM - DECIEM 2021 Stock Option Plan |
Sep. 30, 2021 |
Jun. 30, 2021 |
May 18, 2021 |
---|---|---|---|
Share-based Compensation Arrangement by Share-based Payment Award | |||
Risk-free rate (as a percent) | 0.40% | 0.50% | 0.50% |
Expected term | 2 years 2 months 1 day | 2 years 5 months 1 day | 2 years 6 months 14 days |
Operating leverage adjustment | 0.45 | 0.45 | 0.45 |
Net sales discount rate (as a percent) | 3.30% | 3.40% | 3.30% |
EBITDA discount rate (as a percent) | 6.90% | 6.90% | 6.80% |
EBITDA volatility (as a percent) | 39.10% | 37.70% | 38.30% |
Net sales volatility (as a percent) | 17.60% | 17.00% | 17.20% |
NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE - Antidilutive Securities Excluded from Computation of Earnings, Per Share (Details) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings, Per Share | ||
Antidilutive shares excluded from the calculation of diluted earnings per share | 0.3 | 1.3 |
Restricted Stock Units and Performance Shares | ||
Antidilutive Securities Excluded from Computation of Earnings, Per Share | ||
Antidilutive shares excluded from the calculation of diluted earnings per share | 0.2 | 0.2 |
Contingently Issuable Shares | ||
Antidilutive Securities Excluded from Computation of Earnings, Per Share | ||
Antidilutive shares excluded from the calculation of diluted earnings per share | 0.7 | 0.8 |
STATEMENT OF CASH FLOWS (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Cash: | ||
Cash paid during the period for interest | $ 30 | $ 26 |
Cash paid during the period for income taxes | 125 | 119 |
Non-cash investing and financing activities: | ||
Property, plant and equipment accrued but unpaid | 126 | 42 |
Finance lease obligations | (17) | 0 |
Right-of-use assets obtained in exchange for new/modified operating lease liabilities | $ 44 | $ 101 |
SEGMENT DATA AND RELATED INFORMATION - Narrative (Details) |
3 Months Ended |
---|---|
Sep. 30, 2021
segment
| |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
SUBSEQUENT EVENT (Details) - Revolving Credit Facility - USD ($) |
Oct. 22, 2021 |
Oct. 31, 2018 |
---|---|---|
Revolving Credit Facility Expiring October 2023 | ||
Subsequent Event [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 1,500,000,000 | |
Revolving Credit Facility Expiring October 2023 | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Line of credit | $ 0 | |
Revolving Credit Facility Expiring October 2026 | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 2,500,000,000 | |
Extension term, period | 2 years | |
Maximum borrowing capacity for multi-currency loans | $ 750,000,000 | |
Annual fee | 1,000,000 | |
Amount of cross-default provision | $ 175,000,000 |
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