1 unchanged sentence
Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure.
−Removed: The Chief Executive Officer and the Chief Financial Officer, with assistance from other members of management, have evaluated the effectiveness of our disclosure controls and procedures, including impacts of COVID-19, and, based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures were effective as of June 30, 2021.
+Added: The Chief Executive Officer and the Chief Financial Officer, with assistance from other members of management, have evaluated the effectiveness of our disclosure controls and procedures, and, based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures were effective as of June 30, 2022.
As part of our review of internal control over financial reporting, we make changes to systems and processes to improve such controls and increase efficiencies, while ensuring that we maintain an effective internal control environment.
2 unchanged sentences
Other Information.
+Added: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
+Added: Not applicable.
Directors, Executive Officers and Corporate Governance.
60 unchanged sentences
4.13 Officers’ Certificate, dated May 10, 2016, defining certain terms of the 4.375% Senior Notes due 2045 (filed as Exhibit 4.3 to our Current Report on Form 8-K filed on May 10, 2016) (SEC File No.
−Removed: 4.14 Global Note for the 1.700% Senior Notes due 2021 (filed as Exhibit A in Exhibit 4.1 to our Current Report on Form 8-K filed on May 10, 2016) (SEC File No.
−Removed: 4.15 Officers’ Certificate, dated May 10, 2016, defining certain terms of the 4.375% Senior Notes due 2045 (filed as Exhibit 4.3 to our Current Report on Form 8-K filed on May 10, 2016) (SEC File No.
4.14 Global Note for the 4.375% Senior Notes due 2045 (filed as Exhibit B in Exhibit 4.3 to our Current Report on Form 8-K filed on May 10, 2016) (SEC File No.
1 unchanged sentence
4.16 Form of Global Note for the 3.150% Senior Notes due 2027 (included as Exhibit A in Exhibit 4.3 to our Current Report on Form 8-K filed on February 9, 2017) (SEC File No.
−Removed: Number Description
4.17 Officers’ Certificate, dated February 9, 2017, defining certain terms of the 4.150% Senior Notes due 2047 (filed as Exhibit 4.5 to our Current Report on Form 8-K filed on February 9, 2017) (SEC File No.
4.18 Form of Global Note for the 4.150% Senior Notes due 2047 (included as Exhibit A in Exhibit 4.5 to our Current Report on Form 8-K filed on February 9, 2017) (SEC File No.
+Added: Number Description
4.19 Officers’ Certificate, dated November 21, 2019, defining certain terms of the 2.000% Senior Notes due 2024 (filed as Exhibit 4.1 to our Current Report on Form 8-K filed on November 21, 2019) (SEC File No.
26 unchanged sentences
10.2b Second Amendment to Registration Rights Agreement (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on April 29, 1997) (SEC File No.
−Removed: Number Description
10.2c Third Amendment to Registration Rights Agreement (filed as Exhibit 10.2c to our Annual Report on Form 10-K filed on September 17, 2001) (SEC File No.
10.2d Fourth Amendment to Registration Rights Agreement (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q filed on January 29, 2004) (SEC File No.
−Removed: 10.3 The Estee Lauder Companies Retirement Growth Account Plan, as amended and restated, effective as of January 1, 2017, further amended effective as of July 1, 2017 (filed as Exhibit 10.3 to our Annual Report on Form 10-K filed on August 25, 2017) (SEC File No.
+Added: Number Description
+Added: 10.3 The Estee Lauder Companies Retirement Growth Account Plan, as amended and restated, effective as of January 1, 2019, as further amended through January 1, 2022 (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q filed on February 3, 2022) (SEC File No.
+Added: 10.3a Amendment to amended and restated The Estee Lauder Companies Retirement Growth Account Plan, effective as of May 31, 2022 (filed as Exhibit 10.1 on our Quarterly Report on Form 10-Q filed on May 3, 2022) (SEC File No.
10.4 The Estee Lauder Inc.
30 unchanged sentences
10.12 Employment Agreement with Deirdre Stanley filed as Exhibit 10.12 to our Annual Report on Form 10-K filed on August 28, 2020) (SEC File No.
−Removed: Number Description
10.12a Amendment to Employment Agreement with Deirdre Stanley filed as Exhibit 10.12a to our Annual Report on Form 10-K filed on August 28, 2020) (SEC File No.
+Added: Number Description
+Added: 10.13 Employment Agreement with Jane Hertzmark Hudis (SEC File No.
10.14 Form of Deferred Compensation Agreement (interest-based) with Outside Directors (filed as Exhibit 10.14 to our Annual Report on Form 10-K filed on September 17, 2001) (SEC File No.
13 unchanged sentences
10.16e The Estée Lauder Companies Inc.
−Removed: Amended and Restated Non-Employee Director Share Incentive Plan (as of July 13, 2021) (SEC File No.
+Added: Amended and Restated Non-Employee Director Share Incentive Plan (as of July 13, 2021) (filed as Exhibit 10.15e to our Annual Report on Form 10-K filed on August 27, 2021) (SEC File No.
10.17 Summary of Compensation For Non-Employee Directors of the Company (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q filed on November 1, 2013) (SEC File No.
10.17a Summary of Compensation For Non-Employee Directors of the Company (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q filed on November 1, 2017) (SEC File No.
−Removed: 10.16b Summary of Compensation For Non-Employee Directors of the Company (SEC File No.
+Added: 10.17b Summary of Compensation For Non-Employee Directors of the Company (filed as Exhibit 10.16b to our Annual Report on Form 10-K filed on August 27, 2021) (SEC File No.
10.18 Form of Stock Option Agreement for Annual Stock Option Grants under Non-Employee Director Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 99.2 to our Registration Statement on Form S-8 filed on November 9, 2007) (SEC File No.
8 unchanged sentences
Amended and Restated Fiscal 2002 Share Incentive Plan (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on November 19, 2019) (SEC File No.
+Added: Number Description
10.19d Form of Stock Option Agreement under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on November 4, 2011) (SEC File No.
−Removed: Number Description
10.19e Form of Stock Option Agreement under The Estée Lauder Companies Inc.
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10.19f Form of Stock Option Agreement under The Estée Lauder Companies Inc.
−Removed: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on November 2, 2012) (SEC File No.
−Removed: 10.18g Form of Stock Option Agreement with Fabrizio Freda under The Estée Lauder Companies Inc.
−Removed: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.6 to our Quarterly Report on Form 10-Q filed on November 2, 2012) (SEC File No.
−Removed: 10.18h Form of Stock Option Agreement under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.16y to our Annual Report on Form 10-K filed on August 20, 2014) (SEC File No.
−Removed: 10.18i Form of Stock Option Agreement with Fabrizio Freda under The Estée Lauder Companies Inc.
+Added: 10.19g Form of Stock Option Agreement with Fabrizio Freda under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.16z to our Annual Report on Form 10-K filed on August 20, 2014) (SEC File No.
−Removed: 10.18j Form of Stock Option Agreement under The Estée Lauder Companies Inc.
+Added: 10.19h Form of Stock Option Agreement under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.16m to our Annual Report on Form 10-K filed on August 25, 2017) (SEC File No.
−Removed: 10.18k Form of Stock Option Agreement under The Estée Lauder Companies Inc.
+Added: 10.19i Form of Stock Option Agreement under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.17l to our Annual Report on Form 10-K filed on August 23, 2019) (SEC File No.
−Removed: 10.18l Performance Share Unit Award Agreement with Fabrizio Freda under The Estée Lauder Companies Inc.
+Added: 10.19j Performance Share Unit Award Agreement with Fabrizio Freda under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Notice of Grant) (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on September 11, 2015) (SEC File No.
−Removed: 10.18m Performance Share Unit Award Agreement with Fabrizio Freda (2018) under The Estée Lauder Companies Inc.
+Added: 10.19k Performance Share Unit Award Agreement with Fabrizio Freda (2018) under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Notice of Grant) (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on February 15, 2018) (SEC File No.
−Removed: 10.18n Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc.
+Added: 10.19l Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.17u to our Annual Report on Form 10-K filed on August 24, 2018) (SEC File No.
−Removed: 10.18o Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc.
+Added: 10.19m Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.17t to our Annual Report on Form 10-K filed on August 23, 2019) (SEC File No.
−Removed: 10.18p Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc.
+Added: 10.19n Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on November 2, 2020) (SEC File No.
−Removed: 10.18q Price-Vested Unit Award Agreement with Fabrizio Freda under The Estée Lauder Companies Inc.
+Added: 10.19o Price-Vested Unit Award Agreement with Fabrizio Freda under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Notice of Grant) (filed as Exhibit 10.1 to our current Report on Form 8-K filed on March 16, 2021) (SEC File No.
−Removed: 10.18r Performance Share Unit Award Agreement with Fabrizio Freda under The Estée Lauder Companies Inc.
+Added: 10.19p Performance Share Unit Award Agreement with Fabrizio Freda under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Notice of Grant) (filed as Exhibit 10.2 to our Current Report on Form 8-K filed on March 16, 2021) (SEC File No.
−Removed: 10.18s Form of Non-annual Performance Share Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc.
−Removed: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (SEC File No.
−Removed: 10.18t Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc.
−Removed: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (SEC File No.
+Added: 10.19q Form of Non-annual Performance Share Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc.
+Added: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.18s to our Annual Report on Form 10-K filed on August 27, 2021) (SEC File No.
+Added: 10.19r Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc.
+Added: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.18t to our Annual Report on Form 10-K filed on August 27, 2021) (SEC File No.
Number Description
−Removed: 10.18u Form of Restricted Stock Unit Award Agreement under The Estée Lauder Companies Inc.
−Removed: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.16aa to our Annual Report on Form 10-K filed on August 25, 2017) (SEC File No.
−Removed: 10.18v Form of Restricted Stock Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc.
−Removed: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.16bb to our Annual Report on Form 10-K filed on August 25, 2017) (SEC File No.
−Removed: 10.18w Form of Restricted Stock Unit Award Agreement for Employees other than Executive Officers under The Estée Lauder Companies Inc.
−Removed: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.16cc to our Annual Report on Form 10-K filed on August 25, 2017) (SEC File No.
−Removed: 10.18x Form of Restricted Stock Unit Award Agreement under The Estée Lauder Companies Inc.
+Added: 10.19s Form of Restricted Stock Unit Award Agreement under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.17y to our Annual Report on Form 10-K filed on August 23, 2019) (SEC File No.
−Removed: 10.18y Form of Restricted Stock Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc.
+Added: 10.19t Form of Restricted Stock Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.17z to our Annual Report on Form 10-K filed on August 23, 2019) (SEC File No.
−Removed: 10.18z Form of Restricted Stock Unit Award Agreement for Employees other than Executive Officers under The Estée Lauder Companies Inc.
+Added: 10.19u Form of Restricted Stock Unit Award Agreement for Employees other than Executive Officers under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.17aa to our Annual Report on Form 10-K filed on August 23, 2019) (SEC File No.
−Removed: 10.18aa Form of Restricted Stock Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc.
+Added: 10.19v Form of Restricted Stock Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.18bb to our Annual Report on Form 10-K filed on August 28, 2020) (SEC File No.
−Removed: 10.18bb Form of Restricted Stock Unit Award Agreement for Employees other than Executive Officers under The Estée Lauder Companies Inc.
+Added: 10.19w Form of Restricted Stock Unit Award Agreement for Employees other than Executive Officers under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.18cc to our Annual Report on Form 10-K filed on August 28, 2020) (SEC File No.
−Removed: 10.18cc Form of Non-annual Restricted Stock Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc.
+Added: 10.19x Form of Non-annual Restricted Stock Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.18dd to our Annual Report on Form 10-K filed on August 28, 2020) (SEC File No.
−Removed: 10.19 $1.5 Billion Credit Agreement, dated as of October 26, 2018, among The Estée Lauder Companies Inc., the Eligible Subsidiaries of the Company, as defined therein, the lenders listed therein, and JPMorgan Chase Bank, N.A., as administrative agent (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on October 29, 2018) (SEC File No.
+Added: 10.20 $2.5 Billion Credit Facility, dated as of October 22, 2021, among The Estée Lauder Companies Inc., the Eligible Subsidiaries of the Company, as defined therein, the lenders listed therein, and JPMorgan Chase Bank, N.A., as administrative agent (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on October 22, 2021) (SEC File No.
10.21 Services Agreement, dated January 1, 2003, among Estee Lauder Inc., Melville Management Corp., Leonard A.
1 unchanged sentence
Lauder (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q filed on January 28, 2010) (SEC File No.
+Added: 10.21a Agreement of Sublease, dated May 18, 2022, between Editions de Parfums LLC, Sublandlord and Melville Management Corporation, Subtenant (SEC File No.
10.22 Services Agreement, dated November 22, 1995, between Estee Lauder Inc.
11 unchanged sentences
(filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on February 4, 2011) (SEC File No.
−Removed: Number Description
10.23d Fourth Amendment to Sublease, dated March 4, 2020, between Aramis Inc.
5 unchanged sentences
and Aerin Lauder Zinterhofer (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on April 8, 2011) (SEC File No.
+Added: Number Description
10.25a First Amendment to Creative Consultant Agreement between Estee Lauder Inc.
3 unchanged sentences
10.25c Third Amendment to Creative Consultant Agreement between Estee Lauder Inc.
−Removed: and Aerin Lauder Zinterhofer effective July 1, 2021 (SEC File No.
+Added: and Aerin Lauder Zinterhofer effective July 1, 2021 (filed as Exhibit 10.24c to our Annual Report on Form 10-K filed on August 27, 2021) (SEC File No.
10.26 License Agreement, dated April 6, 2011, by and among Aerin LLC, Aerin Lauder Zinterhofer and Estee Lauder Inc.
42 unchanged sentences
Wei Sun Christianson
+Added: ANGELA WEI DONG* Director August 24, 2022
+Added: Angela Wei Dong
FRIBOURG* Director August 24, 2022
−Removed: HOCKADAY, JR.* Director August 27, 2021
−Removed: Hockaday, Jr.
JENNIFER HYMAN* Director August 24, 2022
2 unchanged sentences
LAUDER* Director August 24, 2022
+Added: ARTURO NUÑEZ* Director August 24, 2022
PARSONS* Director August 24, 2022
19 unchanged sentences
Management’s Report on Internal Control Over Financial Reporting
−Removed: Reports of Independent Registered Public Accounting Firms
+Added: Report of Independent Registered Public Accounting Firm ( PricewaterhouseCoopers LLP , New York, New York , Auditor Firm ID:
+Added: Report of Independent Registered Public Accounting Firm ( KPMG LLP , New York, New York , Auditor Firm ID:
Consolidated Statements of Earnings
17 unchanged sentences
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
−Removed: Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2021.
−Removed: SEC guidance permits companies to exclude certain acquisitions from the assessment of internal control over financial reporting during the first year following the acquisition.
−Removed: Accordingly, management excluded the internal controls relating to Deciem Beauty Group Inc.
−Removed: (“DECIEM”) from its fiscal 2021 annual assessment of the effectiveness of internal control over financial reporting.
−Removed: On May 18, 2021, the Company increased its ownership interest in DECIEM from approximately 29% to approximately 76%.
−Removed: For the fiscal year ended June 30, 2021, DECIEM's financial results constitute approximately 0.4% of total net sales and 2% of total assets of the consolidated financial statement amounts.
Under the supervision of and with the participation of the Chief Executive Officer and the Chief Financial Officer, the Company’s management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the framework and criteria established in Internal Control – Integrated Framework (2013) , issued by the Committee of Sponsoring Organizations of the Treadway Commission.
8 unchanged sentences
Opinions on the Financial Statements and Internal Control over Financial Reporting
−Removed: We have audited the accompanying consolidated balance sheet of The Estée Lauder Companies Inc.
−Removed: and its subsidiaries (the “Company”) as of June 30, 2021, and the related consolidated statements of earnings, of comprehensive income, of equity and redeemable noncontrolling interest, and of cash flows for the year then ended, including the related notes and schedule of valuation and qualifying accounts for the year ended June 30, 2021 appearing on page S-1 (collectively referred to as the “consolidated financial statements”).
+Added: We have audited the accompanying consolidated balance sheets of The Estée Lauder Companies Inc.
+Added: and its subsidiaries (the “Company”) as of June 30, 2022 and 2021, and the related consolidated statements of earnings, of comprehensive income, of equity and redeemable noncontrolling interest and of cash flows for each of the two years in the period ended June 30, 2022, including the related notes and schedule of valuation and qualifying accounts for each of the two years in the period ended June 30, 2022 appearing on page S-1 (collectively referred to as the “consolidated financial statements”).
We also have audited the Company's internal control over financial reporting as of June 30, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
−Removed: In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2021, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
+Added: In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2022 in conformity with accounting principles generally accepted in the United States of America.
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
1 unchanged sentence
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.
−Removed: Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audit.
+Added: Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
−Removed: Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: We conducted our audits in accordance with the standards of the PCAOB.
+Added: Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
+Added: Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
−Removed: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
+Added: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
−Removed: Our audit also included performing such other procedures as we considered necessary in the circumstances.
−Removed: We believe that our audit provides a reasonable basis for our opinions.
−Removed: As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Deciem Beauty Group Inc.
−Removed: (“DECIEM”) from its assessment of internal control over financial reporting as of June 30, 2021.
−Removed: The Company increased its ownership interest in DECIEM from approximately 29% to approximately 76% in May 2021, resulting in the entity becoming a consolidated subsidiary.
−Removed: We have also excluded DECIEM from our audit of internal control over financial reporting.
−Removed: DECIEM’s total assets and total net sales excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 2% and 0.4%, respectively, of the related consolidated financial statement amounts as of and for the year ended June 30, 2021.
+Added: Our audits also included performing such other procedures as we considered necessary in the circumstances.
+Added: We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
6 unchanged sentences
Critical Audit Matters
−Removed: The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
−Removed: Indefinite-Lived Impairment Assessment - Dr.
−Removed: Jart+ Trademark
−Removed: As described in Notes 2 and 6 to the consolidated financial statements, the Company’s consolidated net indefinite-lived intangible assets balance was $2,366 million as of June 30, 2021, of which a portion relates to the Dr.
−Removed: Jart+ trademark.
−Removed: Management assesses indefinite-lived intangible assets at least annually for impairment as of the beginning of the fiscal fourth quarter or more frequently if certain events or circumstances exist.
−Removed: The quantitative impairment test for indefinite-lived intangible assets encompasses calculating the fair value of an indefinite-lived intangible asset and comparing the fair value to its carrying value.
−Removed: If the carrying value exceeds the fair value, an impairment charge is recorded.
−Removed: To determine the estimated fair value of indefinite-lived intangible assets, management uses an income approach, specifically the relief-from-royalty method.
−Removed: The significant assumptions used in this approach include revenue growth rates, terminal value, weighted-average cost of capital used to discount future cash flows, and royalty rate.
−Removed: The principal considerations for our determination that performing procedures relating to the Dr.
−Removed: Jart+ trademark impairment assessment is a critical audit matter are (i) the significant judgment by management when determining the fair value estimate of the trademark;
−Removed: (ii) the high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates, terminal value, weighted-average cost of capital used to discount future cash flows, and royalty rate;
−Removed: and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
−Removed: Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
−Removed: These procedures included testing the effectiveness of controls relating to management’s indefinite-lived intangible assets impairment assessment, including controls over the valuation of the Dr.
−Removed: Jart+ trademark.
−Removed: These procedures also included, among others, (i) testing management’s process for determining the fair value estimate;
−Removed: (ii) evaluating the appropriateness of the relief-from-royalty method;
−Removed: (iii) testing the completeness and accuracy of the underlying data used in the fair value estimate;
−Removed: and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates, terminal value, weighted-average cost of capital used to discount future cash flows, and royalty rate .
−Removed: Evaluating management’s assumptions related to revenue growth rates involved evaluating whether the assumptions were reasonable considering (i) the current and past performance of the Dr.
−Removed: (ii) the consistency with external market and industry data;
−Removed: and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.
−Removed: Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the relief-from-royalty method and (ii) the reasonableness of the terminal value, weighted-average cost of capital used to discount future cash flows, and royalty rate assumptions .
−Removed: Acquisition of DECIEM - Valuation of Intangible Assets and net Put (Call) Option
−Removed: As described in Notes 2 and 5 to the consolidated financial statements, in 2021, the Company acquired additional shares in Deciem Beauty Group Inc.
−Removed: (“DECIEM”) for $1,092 million in cash, including proceeds from the issuance of debt, which resulted in recording $1,917 million of customer relationships and trademark intangible assets.
−Removed: 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, with a purchase price based on the future performance of DECIEM (the “net Put (Call) Option”).
−Removed: As a result of this redemption feature, management recorded redeemable noncontrolling interest, at its acquisition-date fair value, that is classified as mezzanine equity in the consolidated balance sheet.
−Removed: The acquisition-date fair value of the redeemable noncontrolling interest includes the acquisition-date fair value of the net Put (Call) Option of $234 million.
−Removed: To determine the acquisition-date estimated fair value of intangible assets acquired, management applied the income approach, specifically the multi-period excess earnings method for customer relationships and the relief-from-royalty method for trademarks.
−Removed: 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.
−Removed: The acquisition-date fair value of the net Put (Call) Option is based on the M onte Carlo method.
−Removed: The significan t assumptions used include starting equity value, revenue growth rates and EBITDA, risk free rate, term, operating leverage adjustment, net sales discount rate , EBITDA discount rate, EBITDA volatility, and net sales volatility.
−Removed: The principal considerations for our determination that performing procedures relating to the valuation of acquired intangible assets and the net Put (Call) Option relating to the acquisition of DECIEM is a critical audit matter are (i) the significant judgment by management when determining the fair value estimates of the acquired intangible assets and the net Put (Call) Option;
−Removed: (ii) the high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates and weighted-average cost of capital used to discount future cash flows for customer relationships, and revenue growth rates, terminal values, weighted-average cost of capital used to discount future cash flows, and royalty rates for trademarks, and starting equity value, revenue growth rates and EBITDA, risk free rate, term, operating leverage adjustment, net sales discount rate , EBITDA discount rate, EBITDA volatility, and net sales volatility for the net Put (Call) Option;
+Added: The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
+Added: The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
+Added: Interim and Annual Goodwill and Indefinite-Lived Intangible Assets Impairment Assessments - DECIEM Reporting Unit
+Added: As described in Notes 2 and 6 to the consolidated financial statements, the Company’s consolidated balance of goodwill and indefinite-lived intangible assets was $2,521 million and $1,992 million, respectively, as of June 30, 2022, of which a significant portion relates to the DECIEM reporting unit and indefinite-lived trademarks.
+Added: Management assesses goodwill and other indefinite-lived intangible assets at least annually for impairment as of the beginning of the fiscal fourth quarter or more frequently if certain events or circumstances exist.
+Added: Management concluded that the changes in circumstances in the reporting units triggered the need for interim impairment reviews of the Company’s trademarks and goodwill.
+Added: Accordingly, management performed interim impairment tests as of February 28, 2022.
+Added: To determine the estimated fair value of the reporting units, management uses an equal weighting of the income and market approach.
+Added: To determine the estimated fair value of other indefinite-lived intangible assets, management uses an income approach, specifically the relief-from-royalty method.
+Added: The significant assumptions used in these approaches include revenue growth rates and profit margins, and the weighted-average cost of capital used to discount future cash flows for goodwill, and revenue growth rates, the weighted-average cost of capital to discount future cash flows, and royalty rates for trademarks.
+Added: The principal considerations for our determination that performing procedures relating to the interim and annual goodwill and indefinite-lived intangible assets impairment assessments - DECIEM reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates of the reporting unit and indefinite-lived trademarks;
+Added: (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates and profit margins, and weighted-average cost of capital for goodwill, and revenue growth rates, weighted-average cost of capital, and royalty rates for trademarks;
and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
−Removed: These procedures included testing the effectiveness of controls relating to the accounting for business combinations, including controls over management’s valuation of the intangible assets and net Put (Call) Option.
−Removed: These procedures also included, among others, (i) reading the purchase agreement;
−Removed: (ii) testing management’s process for determining the fair value estimates of the intangible assets and net Put (Call) option;
−Removed: (iii) evaluating the appropriateness of the multi-period excess earnings method for customer relationships, the relief-from-royalty method for trademarks, and the Monte Carlo method for the net Put (Call) Option;
−Removed: (iv) testing the completeness and accuracy of the underlying data used in the fair value estimates;
−Removed: and (v) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates and weighted-average cost of capital used to discount future cash flows for customer relationships, and revenue growth rates, terminal values, weighted-average cost of capital used to discount future cash flows, and royalty rate s for trademarks .
−Removed: Evaluating management’s assumptions related to revenue growth rates for customer relationships, and revenue growth rates and terminal values for trademarks involved evaluating whether the assumptions were reasonable considering (i) the current and past performance of DECIEM;
+Added: These procedures included testing the effectiveness of controls relating to management’s goodwill and indefinite-lived intangible assets impairment assessments, including controls over the valuation of the DECIEM reporting unit and trademarks.
+Added: These procedures also included, among others, (i) testing management’s process for developing the fair value estimates;
+Added: (ii) evaluating the appropriateness of the income and relief-from-royalty approaches;
+Added: (iii) testing the completeness and accuracy of the underlying data used in the approaches;
+Added: and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates and profit margins, weighted-average cost of capital, and royalty rates.
+Added: Evaluating management’s assumptions related to revenue growth rates and profit margins involved evaluating whether the assumptions were reasonable considering (i) the current and past performance of the brand;
(ii) the consistency with external market and industry data;
and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.
−Removed: Evaluating the appropriateness of the Monte Carlo method and management’s assumptions related to the net Put (Call Option) involved professionals with specialized skill and knowledge to assist in developing an independent value for each option and comparing to management’s estimate to evaluate the reasonableness of management’s estimate.
−Removed: Developing an independent value for each option involved developing an independent Monte Carlo simulation model, testing the completeness and accuracy of the contractual information used by management to calculate the agreed-upon price to acquire the remaining equity interests in DECIEM, and evaluating the reasonableness of the assumptions used by management to estimate DECIEM’s equity value.
−Removed: Professionals with specialized skill and knowledge were also used to assist in (i) evaluating the appropriateness of the Company’s multi-period excess earnings method for customer relationships and relief-from-royalty method for trademarks;
−Removed: and (ii) evaluating the appropriateness of the weighted-average cost of capital used to discount future cash flows and royalty rates assumptions.
+Added: Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the income and relief-from-royalty approaches, and (ii) the reasonableness of the weighted-average cost of capital and royalty rates assumptions.
/s/ PricewaterhouseCoopers LLP
6 unchanged sentences
Opinion on the Consolidated Financial Statements
−Removed: We have audited the accompanying consolidated balance sheet of The Estée Lauder Companies Inc.
−Removed: and subsidiaries (the Company) as of June 30, 2020, the related consolidated statements of earnings, comprehensive income, equity, and cash flows for each of the years in the two‑year period ended June 30, 2020, and the related notes and financial statement schedule (collectively, the consolidated financial statements).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2020, and the results of its operations and its cash flows for each of the years in the two‑year period ended June 30, 2020, in conformity with U.S.
+Added: We have audited the accompanying consolidated statement of earnings, comprehensive income, equity, and cash flow for the year ended June 30, 2020, and the related notes and financial statement schedule (collectively, the consolidated financial statements).
+Added: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2020, and the results of its operations and its cash flows for the year ended June 30, 2020, in conformity with U.S.
generally accepted accounting principles.
−Removed: Change in Accounting Principle
−Removed: As discussed in Note 7 to the consolidated financial statements, the Company has changed its method of accounting for leases effective July 1, 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases.
Basis for Opinion
23 unchanged sentences
Goodwill impairment — 54 812
−Removed: Impairments of other intangible and long-lived assets 134 614 22
+Added: Impairment of other intangible and long-lived assets 241 134 614
Total operating expenses 10,262 9,763 10,136
8 unchanged sentences
Net earnings attributable to noncontrolling interests ( 7 ) ( 12 ) ( 12 )
−Removed: Net loss attributable to redeemable noncontrolling interest 7 — —
+Added: Net loss (earnings) attributable to redeemable noncontrolling interest ( 11 ) 7 —
Net earnings attributable to The Estée Lauder Companies Inc.
14 unchanged sentences
Other comprehensive income (loss):
−Removed: Net unrealized investment gain — — 14
−Removed: Net cash flow hedge loss ( 21 ) ( 9 ) ( 24 )
+Added: Net cash flow hedge gain (loss) 91 ( 21 ) ( 9 )
Retirement plan and other retiree benefit adjustments 87 82 12
7 unchanged sentences
Total comprehensive income attributable to noncontrolling interests ( 3 ) ( 13 ) ( 12 )
−Removed: Comprehensive loss attributable to redeemable noncontrolling interest:
−Removed: Net loss 7 — —
+Added: Comprehensive loss (income) attributable to redeemable noncontrolling interest:
+Added: Net loss (earnings) ( 11 ) 7 —
Translation adjustments 25 17 —
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Stock-based compensation 477 542 384
+Added: Purchase of shares from noncontrolling interests ( 19 ) — —
Paid-in capital, end of year 5,796 5,335 4,790
6 unchanged sentences
Accumulated other comprehensive loss, beginning of year ( 470 ) ( 665 ) ( 563 )
−Removed: Other comprehensive income (loss) 195 ( 102 ) ( 129 )
+Added: Other comprehensive income (loss) attributable to The Estée Lauder Companies Inc.
+Added: ( 292 ) 195 ( 102 )
Accumulated other comprehensive loss, end of year ( 762 ) ( 470 ) ( 665 )
7 unchanged sentences
Net earnings attributable to noncontrolling interests 7 12 12
−Removed: Distributions to noncontrolling interest holders ( 6 ) ( 10 ) ( 6 )
−Removed: Translation adjustments, net 1 — —
+Added: Distribution to noncontrolling interest holders — ( 6 ) ( 10 )
+Added: Purchase of shares from noncontrolling interests ( 34 ) — —
+Added: Translation adjustments and other, net ( 7 ) 1 —
Noncontrolling interests, end of year — 34 27
2 unchanged sentences
Acquired redeemable noncontrolling interest — 881 —
−Removed: Net loss attributable to redeemable noncontrolling interest ( 7 ) — —
+Added: Net earnings (loss) attributable to redeemable noncontrolling interest 11 ( 7 ) —
Translation adjustments ( 25 ) ( 17 ) —
+Added: Adjustment of redeemable noncontrolling interest to redemption value ( 1 ) — —
Redeemable noncontrolling interest, end of year $ 842 $ 857 $ —
17 unchanged sentences
Changes in fair value of contingent consideration — ( 2 ) ( 17 )
−Removed: Gain on liquidation of an investment in a foreign subsidiary, net — — ( 71 )
Gain on previously held equity method investment ( 1 ) ( 847 ) ( 534 )
12 unchanged sentences
Payments for acquired businesses, net of cash acquired ( 3 ) ( 1,065 ) ( 1,047 )
−Removed: Proceeds from the disposition of investments — — 1,229
Purchases of investments ( 10 ) ( 42 ) ( 5 )
−Removed: Proceeds from sale of property, plant and equipment — — 2
Settlement of net investment hedges 108 ( 152 ) ( 23 )
−Removed: Net cash flows provided by (used for) investing activities ( 1,864 ) ( 1,698 ) 473
+Added: Net cash flows used for investing activities ( 945 ) ( 1,864 ) ( 1,698 )
Cash flows from financing activities
4 unchanged sentences
Net proceeds from stock-based compensation transactions 151 215 180
+Added: Payment for acquisition of noncontrolling interest ( 15 ) — —
Payments to acquire treasury stock ( 2,309 ) ( 733 ) ( 893 )
13 unchanged sentences
manufactures, markets and sells skin care, makeup, fragrance and hair care products around the world.
−Removed: Products are marketed under brand names, including:
−Removed: Estée Lauder, Aramis, Clinique, Lab Series, Origins, M·A·C, Bobbi Brown , La Mer , Aveda, Jo Malone London, Bumble and bumble, Darphin, Smashbox, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, Kilian Paris, Too Faced, Dr.
−Removed: Jart+, DECIEM and The Ordinary.
+Added: Products are marketed under owned brand names, including:
+Added: Estée Lauder, Aramis, Clinique, Lab Series, Origins, M·A·C, Bobbi Brown , La Mer , Aveda, Jo Malone London, Bumble and bumble, Darphin, Smashbox, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, Kilian Paris, Too Faced, Dr.Jart+, DECIEM and The Ordinary.
Certain subsidiaries of The Estée Lauder Companies Inc.
−Removed: are also the global licensee of the Tommy Hilfiger, Donna Karan New York, DKNY, Michael Kors, Tom Ford, Ermenegildo Zegna and AERIN brand names for fragrances and/or cosmetics.
+Added: are also the global licensee of brand names for fragrances and/or cosmetics, including Tom Ford and AERIN.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 unchanged sentences
All significant intercompany balances and transactions have been eliminated.
−Removed: Certain amounts in the consolidated financial statements of prior years have been reclassified to conform to current year presentation.
+Added: Certain amounts in the notes to the consolidated financial statements of prior years have been reclassified to conform to current year presentation.
Management Estimates
15 unchanged sentences
These subsidiaries are not material to the Company’s consolidated financial statements or liquidity in fiscal 2022, 2021 and 2020.
−Removed: In fiscal 2019, the Company had an investment in a foreign subsidiary that owned the Company’s available-for-sale securities, and the Company sold its available-for-sale securities, which liquidated this investment in the foreign subsidiary.
−Removed: As a result, the Company recorded a realized foreign currency gain on liquidation of $ 77 million and a gross loss on the sale of available-for-sale securities of $ 6 million, both of which were reclassified from accumulated OCI (“AOCI”) to Other income, net in the accompanying consolidated statement of earnings.
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.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
See Note 12 – Derivative Financial Instruments for further discussion .
1 unchanged sentence
The accompanying consolidated statements of earnings include net exchange gains (losses) on foreign currency transactions of $( 11 ) million, $( 12 ) million and $ 51 million in fiscal 2022, 2021 and 2020, respectively.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cash and Cash Equivalents
3 unchanged sentences
The Company accounts for its equity securities without readily determinable fair values at cost, less impairment, plus/minus subsequent observable price changes, and performs an assessment each quarter to determine whether or not a triggering event has occurred that results in changes in fair value.
−Removed: These investments were not material to the Company’s consolidated financial statements as of June 30, 2021 and 2020 and are included in Long-term investments in the accompanying consolidated balance sheets.
+Added: These investments and its equity method investments were not material to the Company’s consolidated financial statements as of June 30, 2022 and 2021 and are included in Long-term investments in the accompanying consolidated balance sheets.
Accounts Receivable
1 unchanged sentence
Payment terms are short-term in nature and are generally less than one year.
−Removed: During fiscal 2021, the Company adopted Accounting Standards Codification (“ASC”) Topic 326 – Financial Instruments – Credit Losses (“ASC 326”) using the modified retrospective transition approach and, accordingly, the prior comparative period was not restated.
−Removed: Under this new standard, the Company is required to measure credit losses based on the Company’s estimate of expected losses rather than incurred losses, which generally results in earlier recognition of allowances for credit losses.
−Removed: In accordance with ASC 326, the Company evaluated certain criteria, including aging and historical write-offs, current economic condition of specific customers and future economic conditions of countries utilizing a consumption index to determine the appropriate allowance for credit losses.
+Added: During fiscal 2021, the Company adopted Accounting Standards Codification (“ASC”) Topic 326 – Financial Instruments – Credit Losses (“ASC 326”) and is required to measure credit losses based on the Company’s estimate of expected losses rather than incurred losses, which generally results in earlier recognition of allowances for credit losses.
+Added: In accordance with ASC 326, the Company evaluates certain criteria, including aging and historical write-offs, current economic condition of specific customers and future economic conditions of countries utilizing a consumption index to determine the appropriate allowance for credit losses.
The Company writes-off receivables once it is determined that the receivables are no longer collectible and as allowed by local laws.
25 unchanged sentences
Costs incurred for computer software developed or obtained for internal use are capitalized during the application development stage and expensed as incurred during the preliminary project and post-implementation stages.
+Added: Capital costs incurred while an asset is being built are classified as Construction in progress and are reclassified to its respective asset class when placed into service.
For financial statement purposes, depreciation is provided principally on the straight-line method over the estimated useful lives of the assets ranging from 3 to 40 years.
22 unchanged sentences
If the carrying value exceeds the fair value, an impairment charge is recorded.
−Removed: For fiscal 2021 and 2020, the Company elected to perform the qualitative assessment for the goodwill in certain of its reporting units and indefinite-lived intangible assets.
+Added: For fiscal 2022, the Company elected to perform the quantitative assessment for the goodwill in each of its reporting units and indefinite-lived intangible assets.
+Added: The Company engaged a third-party valuation specialist and used industry accepted valuation models and criteria that were reviewed and approved by various levels of management.
+Added: To determine the estimated fair value of the reporting units, the Company used an equal weighting of the income and market approaches.
+Added: Under the income approach, the Company determined fair value using a discounted cash flow method, projecting future cash flows of each reporting unit, as well as a terminal value, and discounting such cash flows at a rate of return that reflected the relative risk of the cash flows.
+Added: Under the market approach, the Company utilized market multiples from publicly traded companies with similar operating and investment characteristics as the reporting unit.
+Added: The significant assumptions used in these two approaches include revenue growth rates and profit margins, terminal value, the weighted-average cost of capital used to discount future cash flows and comparable market multiples.
+Added: To determine the estimated fair value of other indefinite-lived intangible assets, the Company used an income approach, specifically the relief-from-royalty method.
+Added: This method assumes that, in lieu of ownership, a third-party would be willing to pay a royalty in order to obtain the rights to use the comparable asset.
+Added: The significant assumptions used in this approach include revenue growth rates, terminal value, the weighted-average cost of capital used to discount future cash flows and royalty rate.
+Added: For fiscal 2021, the Company elected to perform the qualitative assessment for the goodwill in certain of its reporting units and indefinite-lived intangible assets.
This qualitative assessment included the review of certain macroeconomic factors and entity-specific qualitative factors to determine if it was more-likely-than-not that the fair values of its reporting units were below carrying value.
1 unchanged sentence
In addition to these macroeconomic factors, among other things, the Company considered the reporting units’ current results and forecasts, any changes in the nature of the business, any significant legal, regulatory, contractual, political or other business climate factors, changes in the industry/competitive environment, changes in the composition or carrying amount of net assets and its intention to sell or dispose of a reporting unit or cease the use of a trademark.
−Removed: For the Company’s other reporting units and other indefinite-lived intangible assets, a quantitative assessment was performed.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: For fiscal 2021, a quantitative assessment was performed for the Company’s other reporting units and other indefinite-lived intangible assets.
The Company engaged third-party valuation specialists and used industry accepted valuation models and criteria that were reviewed and approved by various levels of management.
To determine the estimated fair value of the reporting units, the Company used an equal weighting of the income and market approaches.
−Removed: Under the income approach, we determined fair value using a discounted cash flow method, projecting future cash flows of each reporting unit, as well as a terminal value, and discounting such cash flows at a rate of return that reflected the relative risk of the cash flows.
−Removed: Under the market approach, we utilized market multiples from publicly traded companies with similar operating and investment characteristics as the reporting unit.
+Added: Under the income approach, the Company determined fair value using a discounted cash flow method, projecting future cash flows of each reporting unit, as well as a terminal value, and discounting such cash flows at a rate of return that reflected the relative risk of the cash flows.
+Added: Under the market approach, the Company utilized market multiples from publicly traded companies with similar operating and investment characteristics as the reporting unit.
The significant assumptions used in these two approaches include revenue growth rates and profit margins, terminal value, the weighted-average cost of capital used to discount future cash flows and comparable market multiples.
−Removed: To determine the estimated fair value of other indefinite-lived intangible assets, we use an income approach, specifically the relief-from-royalty method.
+Added: To determine the estimated fair value of other indefinite-lived intangible assets, the Company used an income approach, specifically the relief-from-royalty method.
This method assumes that, in lieu of ownership, a third-party would be willing to pay a royalty in order to obtain the rights to use the comparable asset.
6 unchanged sentences
Specifically for right-of-use assets, estimated fair value is based on discounting market rent using a real estate discount rate.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: During fiscal 2020, the Company adopted the lease accounting standard, ASC Topic 842 – Leases (“ASC 842”) using the modified retrospective transition approach permitted under the new standard for leases that existed at July 1, 2019 and, accordingly, the prior comparative periods were not restated.
The Company recognizes a lease liability and a related right-of-use (“ROU”) asset at the commencement date for leases on its consolidated balance sheet, excluding short-term leases as noted below.
8 unchanged sentences
In addition, significant changes in events or circumstances within the Company’s control are assessed to determine whether a change in the accounting for leases is required.
+Added: For lease modifications that result in partial termination of the lease, the Company has elected the proportional method whereby the carrying amount of the ROU asset is decreased in proportion with the full or partial termination of the lease based on the adjustment to the carrying value of the lease liability.
+Added: The difference between those adjustments is recognized in Selling, general and administrative expense in the accompanying consolidated statements of earnings at the effective date of the termination.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Certain of the Company’s leases provide for variable lease payments for the right to use an underlying asset that vary due to changes in facts and circumstances occurring after the commencement date, other than the passage of time.
3 unchanged sentences
The Company’s variable lease payments primarily include rents based on a percentage of sales in excess of stipulated levels, common area maintenance based on the percentage of the total square footage leased by the Company, as well as costs relating to embedded leases, such as third-party manufacturing agreements.
−Removed: Upon the adoption of ASC 842, the Company made the following accounting policy elections:
Certain of the Company’s contracts contain lease components as well as non-lease components, such as an agreement to purchase services.
−Removed: Unless an accounting policy is elected to the contrary, the contract consideration must be allocated to the separate lease and non-lease components in accordance with ASC 842.
−Removed: For purposes of allocating contract consideration, the Company elected not to separate the lease components from non-lease components for all asset classes.
−Removed: This was applied to all existing leases as of July 1, 2019 and will be applied to new leases on an ongoing basis.
−Removed: • The Company elected not to apply the measurement and recognition requirements of ASC 842 to short-term leases (i.e.
−Removed: leases with a term of 12 months or less).
−Removed: Accordingly, short-term leases will not be recorded as ROU assets or lease liabilities on the Company’s consolidated balance sheets, and the related lease payments will be recognized in net earnings on a straight-line basis over the lease term.
−Removed: • For certain leases relating to automobiles, information technology equipment and office equipment, the Company elected to apply the guidance of ASC 842 utilizing a portfolio approach.
+Added: For purposes of allocating contract consideration, the Company does not separate the lease components from non-lease components for all asset classes.
+Added: Short-term leases (i.e.
+Added: leases with a term of 12 months or less) are not recorded as ROU assets or lease liabilities on the Company’s consolidated balance sheets, and the related lease payments are recognized in net earnings on a straight-line basis over the lease term.
+Added: For certain leases relating to automobiles, information technology equipment and office equipment, the Company applies the guidance of ASC Topic 842 – Leases ("ASC 842") utilizing a portfolio approach.
Under this approach, the Company combined and accounted for leases (as a portfolio) with similar characteristics (e.g., lease term, discount rates, etc.) as a single lease, provided its application is not materially different when compared to the application at the individual lease level.
−Removed: As a result of the adoption of ASC 842, the Company recorded a cumulative adjustment of $ 29 million, net of tax, as a reduction to its fiscal 2020 opening balance of retained earnings, primarily to reflect the fair value of operating lease ROU assets that were impaired at, or prior to, the adoption date.
−Removed: In addition, the Company recognized operating lease ROU assets and liabilities of $ 2,598 million and $ 2,764 million, respectively, as of July 1, 2019.
See Note 7 – Leases for further information.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Concentration of Credit Risk
The Company is a worldwide manufacturer, marketer and seller of skin care, makeup, fragrance and hair care products.
−Removed: 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.
+Added: The Company’s sales subject to credit risk are made primarily to retailers in its travel retail business, department stores, specialty multi-brand retailers and perfumeries.
The Company grants credit to qualified customers.
5 unchanged sentences
Revenue Recognition
−Removed: During fiscal 2019, the Company adopted the new revenue accounting standard, ASC 606, under the modified retrospective method to all contracts as of the date of adoption.
−Removed: Under this method, the consolidated financial statements for the fiscal period beginning July 1, 2018 are presented under the new revenue accounting standard.
−Removed: Changes in Accounting Policies
−Removed: As a result of the fiscal 2019 adoption of ASC 606, the Company changed its accounting policies for revenue recognition as follows:
−Removed: • For products sold that qualify for customer loyalty program awards, the Company defers a portion of revenue related to the product sales.
−Removed: Previously, the Company recognized revenue in full for product sales and accrued for the expected amounts of loyalty awards to be provided under the incremental cost approach.
−Removed: • A portion of revenue is deferred for shipments of saleable products with separate performance obligations to provide gift with purchase and purchase with purchase promotional products, and is recognized as control is transferred to a customer.
−Removed: Previously, the Company recognized revenue for saleable products and purchase with purchase products based upon invoice prices charged to customers and included the cost of gift with purchase products and/or purchase with purchase products in Cost of sales when risks and rewards of ownership transferred to the Company’s customer (i.e.
−Removed: a third-party retailer).
−Removed: • The cost of certain promotional products, including samples and testers, are classified within Cost of sales.
−Removed: Such costs were previously accounted for as a component of Selling, general and administrative expenses.
−Removed: • In conjunction with the adoption of ASC 606, the Company reassessed its contracts under the variable consideration guidance, including the payments to customer guidance, and as a result certain reclassifications were made related to the timing and classification of certain net demonstration payments to and from customers.
−Removed: • For product returns, the Company established a sales return accrual and a corresponding asset for the right to recover goods in Other accrued liabilities and Inventory and promotional merchandise, net, respectively, while previously the net liability for product returns was recorded as a reduction of Accounts receivable, net.
−Removed: In addition, the Company adopted the policy election to exclude from the transaction price all amounts collected from customers for sales and other taxes.
−Removed: As a result of the change in accounting policies noted above, the Company recorded a cumulative adjustment of $ 229 million, net of tax, as a reduction to its fiscal 2019 opening balance of retained earnings.
−Removed: See Note 14 – Revenue Recognition for further discussion .
−Removed: For revenue disaggregated by product category and geographic region, see Note 22 – Segment Data and Related Information .
+Added: Performance Obligations
+Added: The Company recognizes revenue at a point in time when it satisfies a performance obligation by transferring control over a product and other promised goods and services to a customer.
+Added: The Company sells wholesale to customers in distribution channels that include department stores, travel retail, specialty-multi retailers, perfumeries, salons/spas and through various online sites operated by authorized retailers.
+Added: The primary performance obligation related to these channels of distribution is product sales where revenue is recognized as control of the product transfers to the customer.
+Added: In the Americas region, revenue is generally recognized at the time the product is made available and provided to the customer’s carrier at the Company’s location, and in the Europe, the Middle East & Africa and Asia/Pacific regions, revenue is generally recognized based upon the customer’s receipt.
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: The Company also sells direct to consumers at Company-operated freestanding stores and online through Company-owned and operated e-commerce and m-commerce sites and through third-party online malls.
+Added: At Company-operated freestanding stores, revenue is recognized when control of the product is transferred at the point of sale.
+Added: Revenue from online sales is recognized when control of the product is transferred, generally based upon the consumer’s receipt.
+Added: In connection with the sale of product, the Company may provide other promised goods and services that are deemed to be performance obligations.
+Added: These are comprised of customer loyalty program obligations, gift with purchase and purchase with purchase promotions, gift cards and other promotional goods including samples and testers.
+Added: The Company offers a number of different loyalty programs to its customers across regions, brands and distribution channels including points-based programs, tier-based programs and other programs.
+Added: Revenue is allocated between the saleable product revenue and the material right loyalty obligations based on relative standalone selling prices when the consumer purchases the products that are earning them the right to the future benefits.
+Added: Deferred revenue related to the Company’s loyalty programs is estimated based on the standalone selling price and is adjusted for an estimated breakage factor.
+Added: Standalone selling price is determined primarily using the observable market price of the good or service benefit if it is sold by the Company or a cost plus margin approach for goods/services not directly sold by the Company.
+Added: Breakage rates consider historical patterns of redemption and/or expiration.
+Added: Revenue is recognized when the benefits are redeemed or expire.
+Added: The Company provides gift with purchase promotional products to certain customers generally without additional charge and also provides purchase with purchase promotional products to certain customers at a discount in relation to prices charged for saleable product.
+Added: Revenue is allocated between saleable product, gift with purchase product and purchase with purchase product based on the estimated relative standalone selling prices.
+Added: Revenue is deferred and ultimately recognized based on the timing differences, if any, between when control of promotional goods and control of the related saleable products transfer to the Company’s customer (e.g., a third-party retailer), which is calculated based on the weighted-average number of days between promotional periods.
+Added: The estimated standalone selling price allocated to promotional goods is based on a cost plus margin approach.
+Added: In situations where promotional products are provided by the Company to its customers at the same time as the related saleable product, such as shipments of samples and testers, the cost of these promotional products are recognized as a cost of sales at the same time as the related revenue is recognized and no deferral of revenue is required.
+Added: The Company also offers gift cards through Company-operated freestanding stores and Company-owned websites.
+Added: The related deferred revenue is estimated based on expected breakage that considers historical patterns of redemption taking into consideration escheatment laws as applicable.
+Added: Product Returns, Sales Incentives and Other Forms of Variable Consideration
+Added: In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration.
+Added: Such elements of variable consideration include product returns and sales incentives, such as volume rebates and discounts, markdowns, margin adjustments and early-payment discounts.
+Added: We also enter into arrangements containing other forms of variable consideration, including certain demonstration arrangements, for which the Company does not receive a distinct good or service or for which the Company cannot reasonably estimate the fair value of the good or service.
+Added: For these types of arrangements, the adjustments to revenue are recorded at the later of when (i) the Company recognizes revenue for the transfer of the related goods or services to the customer, or (ii) the Company pays, or promises to pay, the consideration.
+Added: For the sale of goods with a right of return, the Company only recognizes revenue for the consideration it expects to be entitled to (considering the products to be returned) and records a sales return accrual within Other accrued liabilities for the amount it expects to credit back its customers.
+Added: In addition, the Company recognizes an asset included in Inventory and promotional merchandise and a corresponding adjustment to Cost of sales for the right to recover goods from customers associated with the estimated returns.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: The sales return accrual and corresponding asset include estimates that directly impact reported net sales.
+Added: These estimates are calculated based on a history of actual returns, estimated future returns and information provided by retailers regarding their inventory levels.
+Added: Consideration of these factors results in an estimate for anticipated sales returns that reflects increases or decreases related to seasonal fluctuations.
+Added: In addition, as necessary, sales return accruals and the related assets may be established for significant future known or anticipated events.
+Added: The types of known or anticipated events that are considered, and will continue to be considered, include the financial condition of the Company’s customers, store closings by retailers, changes in the retail environment and the Company’s decision to continue to support new and existing products.
+Added: The Company estimates sales incentives and other variable consideration using the most likely amount method and records accruals within Other accrued liabilities when control of the related product is transferred to the customer.
+Added: Under this method, certain forms of variable consideration are based on expected sell-through results, which requires subjective estimates.
+Added: These estimates are supported by historical results as well as specific facts and circumstances related to the current period.
+Added: The Company also enters into transactions and makes payments to certain of its customers related to demonstration, advertising and counter construction, some of which involve cooperative relationships with customers.
+Added: These activities may be arranged either with unrelated third parties or in conjunction with the customer.
+Added: To the extent the Company receives a distinct good or service in exchange for consideration and the fair value of the benefit can be reasonably estimated, the Company’s share of the counter depreciation and the other costs of these transactions (regardless of to whom they were paid) are reflected in Selling, general and administrative expenses in the accompanying consolidated statements of earnings.
+Added: See Note 14 – Revenue Recognition for further discussion .
+Added: For revenue disaggregated by product category and geographic region, see Note 22 – Segment Data and Related Information .
Advertising and Promotion
7 unchanged sentences
The Company’s license agreements provide the Company with worldwide rights to manufacture, market and sell beauty and beauty-related products (or particular categories thereof) using the licensors’ trademarks.
−Removed: The current licenses have an initial term of approximately 5 years to 10 years, and are renewable subject to the Company’s compliance with the license agreement provisions.
−Removed: Most of our license agreements have renewal terms in 5 -year increments.
+Added: The current licenses had an initial term of approximately 5 years to 10 years, and are renewable subject to the Company’s compliance with the license agreement provisions.
As of June 30, 2022, the remaining terms considering available renewal periods range from 8 years to approximately 10 years.
1 unchanged sentence
Some of the Company’s licenses were entered into to create a new business, while other licenses were acquired, or entered into, where the licensor or another licensee was operating a pre-existing beauty products business, in which case, other intangible assets are capitalized and amortized over their useful lives.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Certain license agreements may require minimum royalty payments, incremental royalties based on net sales levels and minimum spending on advertising and promotional activities.
6 unchanged sentences
The provision for income taxes includes the amounts payable or refundable for the current year, the effect of deferred taxes and impacts from uncertain tax positions.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: The Company accounts for income taxes using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis, net operating losses, tax credit and other carryforwards.
+Added: The Company recognizes deferred tax assets and liabilities for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis, net operating losses, tax credits and other carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates when the assets and liabilities are expected to be realized or settled.
The Company regularly reviews deferred tax assets for realizability and establishes valuation allowances based on available evidence including historical operating losses, projected future taxable income, expected timing of the reversals of existing temporary differences, and appropriate tax planning strategies.
−Removed: If the Company’s assessment of the realizability of a deferred tax asset changes, an increase to a valuation allowance will result in a reduction of net earnings at that time, while the reduction of a valuation allowance will result in an increase of net earnings at that time.
+Added: If the Company’s assessment of the realizability of a deferred tax asset changes, an increase to a valuation allowance will result in a reduction to net earnings at that time, while the reduction to a valuation allowance will result in an increase to net earnings at that time.
The Company provides tax reserves for applicable U.S.
13 unchanged sentences
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”).
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 accompanying consolidated balance sheets at June 30, 2021.
1 unchanged sentence
Each reporting period, a measurement period adjustment, if any, is then recorded to adjust the noncontrolling interest to the higher of either the redemption value, assuming it was redeemable at the reporting date, or its carrying value.
−Removed: These adjustments are recorded in Paid-in capital and are not reflected in Net earnings or Net earnings attributable to The Estée Lauder Companies Inc.
−Removed: In addition, based on the Company's policy election, if the redemption value exceeds the fair value of the noncontrolling interest on a cumulative basis, a measurement period adjustment is recorded in Retained earnings and the Company will adjust Net earnings attributable to The Estée Lauder Companies Inc.
+Added: These adjustments are recorded in Paid-in capital and are not reflected in Net earnings (loss) or Net earnings (loss) attributable to The Estée Lauder Companies Inc.
+Added: In addition, based on the Company's policy election, if the redemption value exceeds the fair value of the noncontrolling interest on a cumulative basis, a measurement period adjustment is recorded in Retained earnings and the Company will adjust Net earnings (loss) attributable to The Estée Lauder Companies Inc.
as it uses the two-class method when calculating earnings per common share.
−Removed: The fair value of the noncontrolling interest is estimated using an equal weighting of the income and market approaches.
−Removed: Under the income approach, the Company determines fair value using a discounted cash flow method, projecting future cash flows of the reporting unit, as well as a terminal value, and discounting such cash flows at a rate of return that reflected the relative risk of the cash flows.
−Removed: Under the market approach, the Company utilizes market multiples from publicly traded companies with similar operating and investment characteristics as the reporting unit.
−Removed: The significant assumptions used in these two approaches include revenue growth rates and profit margins, terminal value, the weighted-average cost of capital used to discount future cash flows and comparable market multiples.
+Added: The fair value of the noncontrolling interest per share is calculated by incorporating significant assumptions including the starting equity value, revenue growth rates and earnings before interest, taxes, depreciation and amortization (“EBITDA”) and the following key assumptions into the Monte Carlo method:
+Added: risk-free rate, term to mid of last twelve-month period, operating leverage adjustment, net sales discount rate, EBITDA discount rate, EBITDA volatility and net sales volatility.
See Note 5 – Acquisition of Businesses for additional information regarding the redeemable noncontrolling interest.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Government Assistance
1 unchanged sentence
Beginning in the second half of fiscal 2020, many governments in locations where the Company operates announced programs to assist employers whose businesses were impacted by the COVID-19 pandemic, including programs that provide rebates to incentivize employers to maintain employees on payroll who were unable to work for their usual number of hours.
−Removed: During fiscal 2021 and 2020, the Company qualified for and recorded $ 84 million and $ 99 million, respectively, in government assistance, which reduced Selling, general and administrative expenses by $ 78 million and $ 87 million, respectively, and Cost of sales by $ 6 million and $ 10 million, respectively.
+Added: During fiscal 2022, 2021 and 2020, the Company qualified for and recorded $ 12 million, $ 84 million and $ 99 million, respectively, in government assistance, which reduced Selling, general and administrative expenses by $ 9 million, $ 78 million and $ 87 million, respectively, and Cost of sales by $ 3 million, $ 6 million and $ 10 million, respectively.
The remaining $ 2 million recorded in fiscal 2020 was deferred and recognized in fiscal 2021 as a reduction to Cost of sales.
Recently Adopted Accounting Standards
−Removed: Measurement of Credit Losses on Financial Instruments (ASC Topic 326 – Financial Instruments – Credit Losses) (“ASC 326”)
−Removed: In June 2016, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that requires companies to utilize an impairment model for most financial assets measured at amortized cost and certain other financial instruments, which include trade and other receivables, loans and held-to-maturity debt securities, to record an allowance for credit risk based on expected losses rather than incurred losses.
−Removed: In addition, this guidance changes the recognition method for credit losses on available-for-sale debt securities, which can occur as a result of market and credit risk, and requires additional disclosures.
−Removed: In general, modified retrospective adoption will be required for all outstanding instruments that fall under this guidance.
−Removed: In November 2019, the FASB issued authoritative guidance (ASU 2019-11 – Codification Improvements to Topic 326, Financial Instruments – Credit Losses) that amends ASC Topic 326 to clarify, improve and amend certain aspects of this guidance, such as disclosures related to accrued interest receivables and the estimation of credit losses associated with financial assets secured by collateral.
−Removed: In February 2020, the FASB issued authoritative guidance (ASU 2020-02 – Financial Instruments – Credit Losses (Topic 326) and Leases (Topic 842)) that amends and clarifies Topic 326 and Topic 842.
−Removed: For Topic 326, the codification was updated to include the Securities and Exchange Commission staff interpretations associated with registrants engaged in lending activities.
+Added: Income Taxes (ASU 2019-12 – Income Taxes (Topic 740):
+Added: Simplifying the Accounting for Income Taxes)
+Added: 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.
−Removed: Impact on consolidated financial statements – On July 1, 2020, the Company adopted ASC 326.
−Removed: The adoption of this standard did not have a material impact on the Company's consolidated financial statements.
−Removed: See Note 14 - Revenue Recognition for further discussion.
−Removed: Goodwill and Other – Internal-Use Software (ASU 2018-15 – Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40):
−Removed: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract)
−Removed: In August 2018, the FASB issued authoritative guidance that permits companies to capitalize the costs incurred for setting up business systems that operate on cloud technology.
−Removed: The new guidance aligns the requirement for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.
−Removed: The guidance does not affect the accounting for the service element of a hosting arrangement that is a service contract.
−Removed: Capitalized costs associated with a hosting arrangement that is a service contract must be amortized over the term of the hosting arrangement to the same line item in the income statement as the expense for fees for the hosting arrangement.
−Removed: Effective for the Company – Fiscal 2021 first quarter, with early adoption permitted in any interim period.
−Removed: This guidance can be adopted either retrospectively, or prospectively to all implementation costs incurred after the date of adoption.
−Removed: Impact on consolidated financial statements – On July 1, 2020, the Company adopted this guidance prospectively to all implementation costs incurred after the date of adoption.
−Removed: The adoption of this standard did not have a material impact on the Company's consolidated financial statements.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: 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
−Removed: Reference Rate Reform (ASC Topic 848)
−Removed: 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”), which is expected to be phased out at the end of calendar 2021, and applies to lease contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that have LIBOR as the benchmark rate.
+Added: Reference Rate Reform (ASC Topic 848 “ ASC 848 ” )
+Added: In March 2020, the FASB issued authoritative guidance to provide optional relief for companies preparing for the discontinuation of interest rates such as the London Interbank Offered Rate (“LIBOR”) and applies to lease and other contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that reference LIBOR or another rate that is expected to be discontinued as a result of reference rate reform.
In January 2021, the FASB issued authoritative guidance that makes amendments to the new rules on accounting for reference rate reform.
−Removed: 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.
+Added: The amendments clarify that for all derivative instruments affected by the changes to interest rates used for discounting, margining or contract price alignment, regardless of whether they reference LIBOR or another rate expected to be discontinued as a result of reference rate reform, an entity may apply certain practical expedients in ASC 848.
Effective for the Company – This guidance can be applied for a limited time through December 31, 2022.
The guidance will no longer be available to apply after December 31, 2022.
−Removed: 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.
−Removed: Income Taxes (ASU 2019-12 – Income Taxes (Topic 740):
−Removed: Simplifying the Accounting for Income Taxes)
−Removed: In December 2019, the FASB issued authoritative guidance that simplifies the accounting for income taxes by removing certain exceptions and making simplifications in other areas.
−Removed: Effective for the Company – Fiscal 2022 first quarter.
−Removed: The amendments have differing adoption methods including retrospectively, prospectively and/or modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption, depending on the specific change.
−Removed: Impact on consolidated financial statements – The Company is in the process of finalizing its evaluation and currently expects to record a cumulative adjustment of approximately $ 120 million as an increase to its fiscal 2022 opening retained earnings balance for deferred taxes related to a previously held equity method investment that became a foreign subsidiary.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: Impact on consolidated financial statements – The Company currently has an implementation team in place that is performing a comprehensive evaluation and assessing the impact of applying this guidance, which includes assessing the impact to business processes and internal controls over financial reporting and the related disclosure requirements.
+Added: For treasury related arrangements, the Company references LIBOR in its interest rate swap agreements and LIBOR is also used for purposes of discounting certain foreign currency and interest rate forward contracts.
+Added: The Company is currently evaluating the potential impact of modifying treasury related arrangements and applying the relevant ASC 848 optional practical expedients, as needed.
+Added: For existing lease, debt arrangements and other contracts, the Company does not expect any qualifying contract modifications related to reference rate reform and therefore does not expect that the optional guidance in ASC 848 will need to be applied through December 31, 2022.
+Added: The Company will continue to monitor new contracts that could potentially be eligible for contract modification relief through December 31, 2022.
No other recently issued accounting pronouncements are expected to have a material impact on the Company’s consolidated financial statements.
7 unchanged sentences
$ 2,920 $ 2,505
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 – PROPERTY, PLANT AND EQUIPMENT
8 unchanged sentences
Leasehold improvements 2,246 2,312
+Added: Construction in progress 759 647
Less accumulated depreciation and amortization ( 3,490 ) ( 3,338 )
$ 2,650 $ 2,280
−Removed: The cost of assets related to projects in progress of $ 647 million and $ 501 million as of June 30, 2021 and 2020, respectively, is included in their respective asset categories above.
Depreciation and amortization of property, plant and equipment was $ 543 million, $ 516 million and $ 514 million in fiscal 2022, 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.
−Removed: See Note 7 – Leases for discussion of property, plant and equipment impairments.
+Added: S ee Note 7 – Leases for discussion of property, plant and equipment impairments.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 – ACQUISITION OF BUSINESSES
11 unchanged sentences
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 accompanying consolidated balance sheets at June 30, 2021.
−Removed: As of June 30, 2021, the accounting for the DECIEM business combination is provisional pending the calculation of the final purchase price, finalization of the opening balance sheet, the final valuation report, and allocation of the total consideration transferred.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: A summary of the total consideration transferred is as follows:
−Removed: (In millions) May 18, 2021
+Added: The accounting for the DECIEM business combination was finalized during the fiscal 2022 third quarter.
+Added: A summary of the total consideration transferred, including immaterial measurement period adjustments was finalized during the fiscal 2022 third quarter and recorded as follows:
+Added: (In millions) March 31, 2022
Cash paid $ 1,095
11 unchanged sentences
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 $ 2,992 million by the related effective previously held equity interest of approximately 30.5 %.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
10 unchanged sentences
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: 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.
+Added: The Company recorded an 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.
2 unchanged sentences
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.
−Removed: The preliminary allocation of the total consideration transferred has been recorded as follows:
−Removed: (In millions) May 18, 2021
+Added: The allocation of the total consideration transferred, including immaterial measurement period adjustments was finalized during the fiscal 2022 third quarter and recorded as follows:
+Added: (In millions) March 31, 2022
Accounts receivable 64
5 unchanged sentences
Goodwill 1,296
+Added: Deferred income taxes 8
Total assets acquired 3,623
6 unchanged sentences
Total consideration transferred $ 2,992
−Removed: The results of operations for DECIEM for the six-week period ended June 30, 2021 were not material to the Company's consolidated statements of earnings for the twelve months ended June 30, 2021.
−Removed: Acquisition-related costs of $ 21 million, which primarily include financial advisory, accounting and legal fees, are included in Selling, general and administrative expenses in the accompanying consolidated statements of earnings for the year ended June 30, 2021.
+Added: The results of operations for DECIEM and acquisition-related costs were not material to the Company's consolidated statements of earnings for the year ended June 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.
2 unchanged sentences
On December 18, 2019, the Company acquired the remaining 66.66 % equity interest in Have&Be Co.
−Removed: (“Have & Be”), the global skin care company behind Dr.
−Removed: Jart+ and men’s grooming brand Do The Right Thing, for $ 1,268 million in cash.
+Added: (“Have & Be”), the global skin care company behind Dr.Jart+ and men’s grooming brand Do The Right Thing, for $ 1,268 million in cash.
Based on the final purchase price and working capital adjustments, the Company estimated a refund receivable of $ 32 million that was outstanding as of June 30, 2020 and was received in fiscal 2021.
13 unchanged sentences
As such, the goodwill has been allocated to the Company’s skin care product category.
−Removed: The goodwill recorded in connection with this acquisition will not be deductible for tax purposes.
−Removed: These amounts are provisional pending the final purchase price, finalization of the opening balance sheet, the final valuation report, and allocation of the total consideration transferred.
−Removed: During the year ended June 30, 2020, the Company acquired Have & Be, which included the addition of goodwill of $ 346 million, amortizable intangible assets (customer lists) of $ 937 million with amortization periods of 7.5 years to 17.5 years, and non-amortizable intangible assets (trademarks) of $ 722 million.
−Removed: During the year ended June 30, 2021 and 2020, the Company recognized $ 6 million and $ 11 million, respectively, of goodwill associated with the continuing earn-out obligations related to the acquisition of the Bobbi Brown brand.
−Removed: The earn-out obligations ceased in fiscal 2021.
−Removed: The intangible assets acquired in connection with the acquisitions of DECIEM and Have & Be are classified as level 3 in the fair value hierarchy.
+Added: The goodwill recorded in connection with this acquisition is not deductible for tax purposes.
+Added: The intangible assets acquired in connection with the acquisition of DECIEM is classified as level 3 in the fair value hierarchy.
The estimate of the fair values of the acquired amortizable intangible assets were determined using a multi-period excess earnings income approach by discounting the incremental after-tax cash flows over multiple periods.
13 unchanged sentences
Impairment charges (1)
+Added: ( 54 ) ( 13 ) ( 4 ) — ( 71 )
Translation adjustments, goodwill ( 16 ) ( 2 ) 8 ( 38 ) ( 48 )
5 unchanged sentences
1,645 384 232 355 2,616
−Removed: Goodwill acquired during the year 1,283 6 — 4 1,293
−Removed: Impairment charges (1)
−Removed: ( 54 ) ( 13 ) ( 4 ) — ( 71 )
−Removed: Translation adjustments and write-offs, goodwill ( 16 ) ( 2 ) 8 ( 38 ) ( 48 )
−Removed: Translation adjustments and write-offs, accumulated impairments 8 — — 33 41
+Added: Goodwill measurement period adjustment 13 — — — 13
+Added: Translation and other adjustments, goodwill ( 97 ) ( 98 ) ( 13 ) ( 2 ) ( 210 )
+Added: Translation and other adjustments, accumulated impairments 3 98 1 — 102
( 81 ) — ( 12 ) ( 2 ) ( 95 )
36 unchanged sentences
Fiscal 2022 Impairment Testing
−Removed: The Company assesses goodwill and other indefinite-lived intangible assets at least annually for impairment or more frequently if certain events or circumstances exist.
+Added: For further policy information on the Company's policy relating to its impairment assessment of goodwill and other indefinite-lived intangible assets, see Goodwill and Other Indefinite-lived Intangible Assets within Note 2 – Summary of Significant Accounting Policies.
+Added: During the fiscal 2022 third quarter, given the lower-than-expected results from international expansion to areas that continue to be impacted by COVID-19, the Company made revisions to the internal forecasts relating to its GLAMGLOW reporting unit.
+Added: The Company concluded that the changes in circumstances in the reporting unit triggered the need for an interim impairment review of its trademark intangible asset.
+Added: The remaining carrying value of the trademark intangible asset was not recoverable and the Company recorded an impairment charge of $ 11 million reducing the carrying value to zero .
+Added: During the fiscal 2022 third quarter, given the lower-than-expected growth within key geographic regions and channels for Dr.Jart+ that continue to be impacted by the spread of COVID-19 variants and resurgence in cases and the potential future impacts relating to the uncertainty of the duration and severity of COVID-19 impacting the financial performance of the brand, the lower than expected growth in key retail channels for DECIEM, and the lower than expected results from international expansion to areas that continue to be impacted by COVID-19 for Too Faced, the Company made revisions to the internal forecasts relating to its Dr.Jart+, DECIEM and Too Faced reporting units.
+Added: The Company concluded that the changes in circumstances in the reporting units triggered the need for interim impairment reviews of their trademarks and goodwill.
+Added: These changes in circumstances were also an indicator that the carrying amounts of Dr.Jart+’s, DECIEM’s and Too Faced’s long-lived assets, including customer lists, may not be recoverable.
+Added: Accordingly, the Company performed interim impairment tests for the trademarks and a recoverability test for the long-lived assets as of February 28, 2022.
+Added: The Company concluded that the carrying amounts of the long-lived assets were recoverable.
+Added: For the Dr.Jart+ reporting unit, the Company also concluded that the carrying value of the trademark intangible asset exceeded its estimated fair value, which was determined utilizing the relief-from-royalty method to determine discounted projected future cash flows, and recorded an impairment charge of $ 205 million.
+Added: For the Too Faced and DECIEM reporting units, as the carrying values of the trademarks did not exceed their estimated fair values, which were determined utilizing the relief-from-royalty method to determine discounted projected future cash flows, the Company did not record impairment charges.
+Added: The estimated fair values of Too Faced’s and DECIEM's trademarks exceeded their carrying values by 13 % and 3 %, respectively.
+Added: For the Too Faced and DECIEM trademark intangible assets, if all other assumptions are held constant, an increase of 100 basis points and 50 basis points, respectively, in the weighted average cost of capital would result in an impairment charge.
+Added: After adjusting the carrying values of the trademarks, the Company completed interim quantitative impairment tests for goodwill.
+Added: As the estimated fair value of the Dr.Jart+, DECIEM and Too Faced reporting units were in excess of their carrying values, the Company concluded that the carrying amounts of the goodwill were recoverable and did not record a goodwill impairment charge related to these reporting units.
+Added: The fair values of these reporting units were based upon an equal weighting of the income and market approaches, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the reporting units.
+Added: 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 royalty rates for trademarks.
+Added: The most significant unobservable input used to estimate the fair value of the Dr.Jart+ trademark intangible asset was the weighted-average cost of capital, which was 10.5 %.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: Based on the Company’s annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2022, the Company determined that the carrying value of the Dr.Jart+ trademark exceeded its fair value.
+Added: This determination was made based on updated internal forecasts.
+Added: Given the lower-than-expected growth within key geographic regions and channels that continued to be impacted by the spread of COVID-19 variants, the resurgence in cases, regional lockdowns and the potential future impacts relating to the uncertainty of the duration and severity of COVID-19 impacting the financial performance of the brand, the Company made revisions to the internal forecasts relating to the Dr.Jart+ reporting unit.
+Added: These changes in circumstances were also indicators that the carrying amounts of their respective long-lived assets may not be recoverable.
+Added: The Company concluded that the carrying value of the trademark intangible asset exceeded its estimated fair value, which was determined utilizing the relief-from-royalty method to determine discounted projected future cash flows, and recorded an impairment charge of $ 25 million.
+Added: The Company concluded that the carrying amount of the long-lived assets were recoverable.
+Added: After adjusting the carrying value of the trademark, the Company completed a quantitative impairment test for goodwill.
+Added: As the estimated fair value of the reporting unit was in excess of its carrying value, the Company concluded that the carrying amount of the goodwill was recoverable and did not record a goodwill impairment charge related to the reporting unit.
+Added: The fair value of the reporting unit was based upon an equal weighting of the income and market approaches, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the reporting units.
+Added: 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 royalty rates for trademarks.
+Added: The most significant unobservable input used to estimate the fair value of the trademark intangible asset was the weighted-average cost of capital, which was 10.5 %.
+Added: A summary of the trademark impairment charges for the three and twelve months ended June 30, 2022 and the remaining carrying values as of June 30, 2022, for each reporting unit, are as follows:
+Added: (In millions) Impairment Charge Carrying Value
+Added: Reporting Unit:
+Added: Geographic Region Three Months Ended June 30, 2022 Twelve Months Ended June 30, 2022 As of June 30, 2022
+Added: GLAMGLOW The Americas $ — $ 11 $ —
+Added: Dr.Jart+ Asia/Pacific 25 230 428
+Added: Total $ 25 $ 241 $ 428
+Added: The impairment charges for the three and twelve months ended June 30, 2022 were reflected in the skin care product category.
+Added: Fiscal 2021 Impairment Testing
During November 2020, given the actual and the estimate of the potential future impacts relating to the uncertainty of the duration and severity of COVID-19 impacting the Company and lower than expected results from geographic expansion, the Company made further revisions to the internal forecasts relating to its GLAMGLOW reporting unit.
7 unchanged sentences
The fair value of the GLAMGLOW reporting unit was based upon an equal weighting of the income and market approaches, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the reporting unit.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Based on the Company’s annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2021, the Company determined that the carrying value of the GLAMGLOW and Smashbox trademarks exceeded their fair values.
13 unchanged sentences
The impairment charges for the three and twelve months ended June 30, 2021 were reflected in the Americas region.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fiscal 2020 Impairment Testing
10 unchanged sentences
For March 31, 2020, the fair value of each reporting unit was based upon an equal weighting of the income and market approaches, utilizing estimated cash flows, based on probability weighted undiscounted cash flows, and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the reporting unit.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Based on the Company’s annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2020, the Company determined that the carrying value of the Editions de Parfums Frédéric Malle reporting unit exceeded its fair value.
5 unchanged sentences
The fair value of this reporting unit was based upon an equal weighting of the income and market approaches, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the reporting unit.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During June 2020, given the actual and the estimate of the potential future impacts relating to the uncertainty of the duration and severity of COVID-19 impacting the Company, the Company made further revisions to the internal forecasts relating to its BECCA and GLAMGLOW reporting units.
19 unchanged sentences
The impairment charges for the three and twelve months ended June 30, 2020 were reflected in the Americas region.
−Removed: Fiscal 2019 Impairment Testing
−Removed: During fiscal 2019, the Company’s Smashbox reporting unit made revisions to its internal forecasts reflecting the continued slowdown of its makeup business driven by ongoing competitive activity and lower than expected growth in key retail channels for the brand.
−Removed: The Company concluded that these changes in circumstances triggered the need for an interim impairment review of the Smashbox trademark and the Smashbox reporting unit goodwill.
−Removed: Accordingly, the Company performed interim impairment tests as of December 31, 2018 and March 31, 2019.
−Removed: The Company concluded that the carrying values of the Smashbox trademark exceeded their estimated fair values, which were determined utilizing a royalty rate to determine discounted projected future cash flows.
−Removed: As a result, the Company recognized impairment charges totaling $ 22 million for the trademark in fiscal 2019.
−Removed: After adjusting the carrying values of the trademark, the Company completed interim quantitative impairment tests for goodwill and recorded goodwill impairment charges related to the Smashbox reporting unit.
−Removed: The fair values of the reporting unit as of December 31, 2018 and March 31, 2019 were based upon an equal weighting of the income and market approaches, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the reporting unit.
−Removed: In fiscal 2019, the Company recorded goodwill impairment charges related to the Smashbox reporting unit totaling $ 68 million.
−Removed: These impairment charges were reflected in the makeup product category and in the Americas region.
THE ESTÉE LAUDER COMPANIES INC.
9 unchanged sentences
Amortization of right-of-use assets
+Added: $ 12 $ 9 $ 11
Interest on lease liabilities
2 unchanged sentences
Variable lease cost
+Added: $ 833 $ 799 $ 819
Other information
1 unchanged sentence
Operating cash flows from operating leases
+Added: $ 506 $ 451 $ 426
Financing cash flows from finance leases
+Added: $ 18 $ 12 $ 12
Right-of-use assets obtained in exchange for new operating lease liabilities $ 279 $ 267 $ 266
1 unchanged sentence
Weighted-average remaining lease term – finance leases
−Removed: 3 years 2 years
+Added: 3 years 3 years 2 years
Weighted-average remaining lease term – operating leases
−Removed: 10 years 11 years
+Added: 9 years 10 years 11 years
Weighted-average discount rate – finance leases
+Added: 1.0 % 1.1 % 2.7 %
Weighted-average discount rate – operating leases
+Added: 2.4 % 2.3 % 2.5 %
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The total future minimum lease payments, over the remaining lease term, relating to the Company’s operating and finance leases for each of the next five fiscal years and thereafter is as follows:
9 unchanged sentences
Total $ 2,233 $ 23
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Operating lease and finance lease liabilities included in the consolidated balance sheet are as follows:
6 unchanged sentences
The ROU assets and lease liabilities related to finance leases are included in Other assets and in Current debt and Long-term debt , respectively, in the accompanying consolidated balance sheets as of June 30, 2022 and 2021.
−Removed: As a result of the continued challenging retail environment due to the COVID-19 pandemic, certain of the Company’s freestanding stores experienced lower net sales and lower expectations of future cash flows.
+Added: During fiscal 2021 and fiscal 2020, as a result of the continued challenging retail environment due to the COVID-19 pandemic, certain of the Company’s freestanding stores experienced lower net sales and lower expectations of future cash flows.
These changes were an indicator that the carrying amounts may not be recoverable.
6 unchanged sentences
The fiscal 2020 impairments related to operating lease ROU assets of $ 131 million, as well as the related property, plant and equipment and other long-lived assets in certain freestanding stores of $ 84 million, combined.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A summary of impairment charges is as follows:
+Added: Year Ended June 30
(In millions) 2021 2020
9 unchanged sentences
Total $ 71 $ 215
−Removed: As of June 30, 2021, the Company has additional operating lease obligations, relating primarily to facilities to support the Company’s manufacturing operations, retail stores, and corporate offices, that have not yet commenced of $ 37 million.
−Removed: These leases will commence between fiscal 2022 and fiscal 2026 with lease terms of 1 year to 10 years.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 – CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES
−Removed: During fiscal 2021, the Company incurred charges associated with restructuring activities as follows:
+Added: During fiscal 2022, the Company incurred charges associated with the Post-COVID Business Acceleration Program restructuring activities as follows:
Net Sales) Cost of Sales Operating Expenses Total
1 unchanged sentence
Charges Other
−Removed: Leading Beauty Forward Program $ — $ 8 $ ( 15 ) $ 14 $ 7
Post-COVID Business Acceleration Program $ 4 $ 5 $ 109 $ 9 $ 127
−Removed: Total $ 14 $ 10 $ 186 $ 18 $ 228
−Removed: During fiscal 2020 and 2019, the Company incurred charges associated with restructuring and other activities in connection with its Leading Beauty Forward initiative as follows:
−Removed: Operating Expenses
−Removed: (In millions) Sales Returns
−Removed: (included in Net Sales) Cost of Sales Restructuring
−Removed: Charges Other
−Removed: Charges Total
−Removed: Fiscal 2020 $ — $ 10 $ 34 $ 39 $ 83
−Removed: Fiscal 2019 $ 3 $ 22 $ 133 $ 83 $ 241
The types of activities included in restructuring and other charges, and the related accounting criteria, are described below.
Charges associated with restructuring and other activities are not allocated to the Company's product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed Company-wide initiatives to redesign, resize and reorganize select areas of the business.
−Removed: Leading Beauty Forward Program
−Removed: In May 2016, the Company announced a multi-year initiative (“Leading Beauty Forward” or the “LBF Program”) to build on its strengths and better leverage its cost structure to free resources for investment to continue its growth momentum.
−Removed: The LBF Program was designed to enhance the Company’s go-to-market capabilities, reinforce its leadership in global prestige beauty and continue creating sustainable value.
−Removed: Restructuring actions taken over the duration of the LBF Program involve the redesigning, resizing and reorganization of select corporate functions and go-to-market structures to improve effectiveness and create cost efficiencies in support of increased investment in growth drivers.
−Removed: As the Company continues to grow, it is important to more efficiently support its diverse portfolio of brands, channels and geographies in the rapidly evolving prestige beauty environment.
−Removed: The Company also believes that decision-making in key areas of innovation, marketing and digital communications should be moved closer to the consumer to increase speed and local relevance.
−Removed: As of June 30, 2019, the Company concluded the approvals of all major initiatives under the LBF Program related to the optimization of select corporate functions, supply chain activities, and corporate and regional market support structures, as well as the exit of underperforming businesses, and has substantially completed those initiatives through fiscal 2021.
−Removed: The Company estimated a net reduction over the duration of the LBF Program in the range of approximately 1,300 to 1,600 positions globally, excluding point-of-sale positions.
−Removed: As of June 30, 2021 the net reduction over the duration of the LBF Program was approximately 1,300 positions globally, excluding point-of-sale positions.
−Removed: This reduction takes into account the elimination of certain positions, inclusive of positions that are unfilled, as well as retraining and redeployment of certain employees and investment in new positions in key areas.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: LBF Program Approvals
−Removed: For the year ended 2020, the Company recognized $ 18 million of asset-related costs, approved under the LBF Program, due to the impairment of operating lease ROU assets as a result of closed freestanding retail stores, whereby the ability to sublease the locations was negatively impacted by the COVID-19 pandemic.
−Removed: These charges were initially approved under the LBF Program prior to fiscal 2020 as contract terminations related to continuing lease payments to landlords after exiting the location.
−Removed: The LBF Program approved restructuring and other charges expected to be incurred were:
−Removed: Sales Returns Operating Expenses
−Removed: (In millions) (included in
−Removed: Net Sales) Cost of Sales Restructuring
−Removed: Charges Other
−Removed: Charges Total
−Removed: Total Charges (Adjustments) Approved
−Removed: Cumulative through June 30, 2020 $ 13 $ 85 $ 511 $ 358 $ 967
−Removed: Fiscal 2021 1 ( 12 ) ( 25 ) ( 19 ) ( 55 )
−Removed: Cumulative through June 30, 2021 $ 14 $ 73 $ 486 $ 339 $ 912
−Removed: Included in the above table, cumulative LBF Program restructuring initiatives approved by the Company by major cost type were:
−Removed: (In millions) Employee-
−Removed: Costs Asset-Related
−Removed: Costs Contract
−Removed: Terminations Other Exit
−Removed: Restructuring Charges (Adjustments) Approved
−Removed: Cumulative through June 30, 2020 $ 460 $ 28 $ 7 $ 16 $ 511
−Removed: Fiscal 2021 ( 27 ) 3 4 ( 5 ) ( 25 )
−Removed: Cumulative through June 30, 2021 $ 433 $ 31 $ 11 $ 11 $ 486
−Removed: Specific actions approved under the LBF Program include:
−Removed: • Optimize Select Corporate Functions – The Company approved initiatives to realign and optimize its organization to better leverage scale, improve productivity, reduce complexity and achieve cost savings across various functions, including finance, information technology, research and development, and human resources.
−Removed: Such approvals included consulting and other professional services for the design, project management, implementation and integration of new processes and technologies and, to a lesser extent, costs for temporary labor backfill, training and recruiting related to new capabilities, as well as similar expenses for certain other corporate functions.
−Removed: These actions resulted in a net reduction of the workforce, which included position eliminations, the re-leveling of certain positions and an investment in new capabilities.
−Removed: The Company also approved other charges to support the LBF Project Management Office (“PMO”), which primarily consisted of internal and external resources that further drove project integration, organizational design capabilities and change management throughout the organization.
−Removed: The design of certain corporate functions included the creation of a shared-services structure, either using Company resources or through external service providers.
−Removed: As part of the service delivery model, the Company approved the organizational design of the management and governance platform of a shared-services structure using Company resources, as well as the transition of select transactional activities to an external service provider, which resulted in other charges for implementation, project and consulting costs.
−Removed: • Optimize Supply Chain –The Company approved certain activities related to initiatives to centralize the Company’s supply chain management, redesign certain supply chain planning and transportation management activities, improve the organizational design of manufacturing and engineering processes related to certain product lines, and enable distribution capabilities and generate efficiencies through an external service provider.
−Removed: Collectively, these actions resulted in a net reduction of the workforce, which included position eliminations, the re-leveling of certain positions and an investment in new capabilities, as well as consulting fees, implementation costs and temporary labor backfill.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: • Optimize Corporate and Region Market Support Structures – The Company approved initiatives to enhance its go-to-market support structures and achieve synergies across certain geographic regions, brands and channels.
−Removed: These initiatives primarily shifted certain areas of focus from traditional to social and digital marketing strategies to provide enhanced consumer experience, as well as to support expanded omnichannel opportunities.
−Removed: These actions resulted in a net reduction of the workforce, which included position eliminations, the re-leveling of certain positions and an investment in new capabilities.
−Removed: The Company also approved consulting and other professional services related to the design of future structures, processes and technologies and, to a lesser extent, other costs for recruitment and training related to new capabilities.
−Removed: In addition, the Company approved initiatives to enhance consumer engagement strategies across certain channels in Europe, which resulted in product returns.
−Removed: • Exit Underperforming Businesses – To further improve profitability in certain areas of the Company’s brands and regions, the Company approved initiatives to exit certain businesses in select markets and channels of distribution.
−Removed: The Company also decided to close a number of underperforming freestanding retail stores and exit mid-tier department stores for certain brands in the United States to redirect resources to other retail locations and channels with potential for greater profitability.
−Removed: These activities resulted in product returns, inventory write-offs, reduction of workforce, accelerated depreciation and termination of contracts.
−Removed: As initiatives under the LBF Program progressed through implementation, the Company identified certain costs that were initially approved but will not be incurred, as well as other changes to the prior estimates.
−Removed: These adjustments are included in their respective period presented above, and were primarily related to estimated employee-related costs for certain employees who either resigned or transferred to other existing positions within the Company.
−Removed: LBF Program Restructuring and Other Charges
−Removed: Restructuring charges are comprised of the following:
−Removed: 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.
−Removed: Employee-related costs are expensed when specific employees have been identified and when payment is probable and estimable, which generally occurs upon approval of the related initiative by management with authority delegated from the Company’s Board of Directors.
−Removed: Asset-Related Costs – Asset-related costs primarily consist of asset write-offs or accelerated depreciation related to long-lived assets that will be taken out of service prior to their existing useful life as a direct result of a restructuring initiative.
−Removed: The accelerated portion of depreciation expense will be expensed on a straight-line basis and be classified as restructuring charges, while the portion relating to the previous existing useful life will continue to be reported in Selling, general and administrative expenses.
−Removed: 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.
−Removed: These may include continuing operating lease payments (less estimated sublease payments) to a landlord after exiting a location prior to the lease-end date as a direct result of an approved restructuring initiative.
−Removed: Contract terminations also include minimum payments or fees related to the early termination of license or other personal service contracts.
−Removed: Costs related to contract terminations are expensed upon the cease-use date of a leased property or upon the notification date to the third party in the event of a license or personal service contract termination.
−Removed: 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.
−Removed: Other exit costs are charged to expense as incurred.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Other charges associated with restructuring activities are comprised of the following:
−Removed: 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.
−Removed: Consulting, other professional services and temporary labor backfill, primarily related to the design and implementation of supply chain activities, are expensed in Cost of sales as incurred.
−Removed: 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:
−Removed: • Consulting and other professional services for organizational design of the future structures, processes and technologies, and implementation thereof,
−Removed: • Temporary labor backfill,
−Removed: • Costs to establish and maintain a PMO for the duration of Leading Beauty Forward, 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
−Removed: • 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.
−Removed: The Company records approved charges associated with restructuring and other activities once the relevant accounting criteria have been met.
−Removed: Total cumulative charges recorded associated with restructuring and other activities for the LBF Program were:
−Removed: Sales Returns Operating Expenses
−Removed: (In millions) (included in
−Removed: Net Sales) Cost of Sales Restructuring
−Removed: Charges Other
−Removed: Charges Total
−Removed: Total Charges (Adjustments)
−Removed: Cumulative through June 30, 2018 $ 11 $ 33 $ 324 $ 182 $ 550
−Removed: Fiscal 2019 3 22 133 83 241
−Removed: Fiscal 2020 — 10 34 39 83
−Removed: Fiscal 2021 — 8 ( 15 ) 14 7
−Removed: Cumulative through June 30, 2021 $ 14 $ 73 $ 476 $ 318 $ 881
−Removed: The major cost types related to the cumulative restructuring charges set forth above were:
−Removed: (In millions) Employee-
−Removed: Related Costs Contract
−Removed: Terminations Other Exit
−Removed: Restructuring Charges (Adjustments)
−Removed: Cumulative through June 30, 2018 $ 314 $ 4 $ 3 $ 3 $ 324
−Removed: Fiscal 2019 131 — — 2 133
−Removed: Fiscal 2020 6 23 3 2 34
−Removed: Fiscal 2021 ( 18 ) — 1 2 ( 15 )
−Removed: Cumulative through June 30, 2021 $ 433 $ 27 $ 7 $ 9 $ 476
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Accrued restructuring charges from the LBF Program inception through June 30, 2021 were:
−Removed: (In millions) Employee-
−Removed: Costs Contract
−Removed: Terminations Other Exit
−Removed: Charges $ 74 $ 1 $ — $ — $ 75
−Removed: Non-cash asset write-offs — ( 1 ) — — ( 1 )
−Removed: Translation adjustments ( 1 ) — — — ( 1 )
−Removed: Balance at June 30, 2016 73 — — — 73
−Removed: Charges 116 2 2 2 122
−Removed: Cash payments ( 39 ) — ( 2 ) ( 2 ) ( 43 )
−Removed: Non-cash asset write-offs — ( 2 ) — — ( 2 )
−Removed: Balance at June 30, 2017 150 — — — 150
−Removed: Charges 124 1 1 1 127
−Removed: Cash payments ( 92 ) — — ( 1 ) ( 93 )
−Removed: Non-cash asset write-offs — ( 1 ) — — ( 1 )
−Removed: Translation adjustments ( 2 ) — — — ( 2 )
−Removed: Balance at June 30, 2018 180 — 1 — 181
−Removed: Charges 131 — — 2 133
−Removed: Cash payments ( 107 ) — ( 1 ) ( 1 ) ( 109 )
−Removed: Translation and other adjustments ( 2 ) — — — ( 2 )
−Removed: Balance at June 30, 2019 202 — — 1 203
−Removed: Charges 6 23 3 2 34
−Removed: Cash payments ( 94 ) — ( 3 ) ( 3 ) ( 100 )
−Removed: Translation adjustment ( 2 ) — — — ( 2 )
−Removed: Non-cash write-offs — ( 23 ) — — ( 23 )
−Removed: Balance at June 30, 2020 112 — — — 112
−Removed: Charges (adjustments) ( 18 ) — 1 2 ( 15 )
−Removed: Cash payments ( 65 ) — ( 1 ) ( 2 ) ( 68 )
−Removed: Translation adjustment — — — 1 1
−Removed: Balance at June 30, 2021 $ 29 $ — $ — $ 1 $ 30
−Removed: Restructuring charges for employee-related costs are net of adjustments to the accrual estimate for certain employees who either resigned or transferred to other existing positions within the Company.
−Removed: These adjustments were not material for all periods presented.
−Removed: Accrued restructuring charges at June 30, 2021 relating to the LBF Program are expected to result in cash expenditures funded from cash provided by operations of approximately $ 23 million and $ 7 million in fiscal 2022 and 2023, respectively.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Post-COVID Business Acceleration Program
6 unchanged sentences
This program is expected to position the Company to better execute its long-term strategy while strengthening its financial flexibility.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company previously estimated a net reduction over the duration of the PCBA Program in the range of approximately 2,000 to 2,500 positions globally, including temporary and part-time employees.
The Company has revised these estimates based on the review of the PCBA Program.
−Removed: At this time, 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.
+Added: As of June 30, 2022, the Company estimated a net reduction over the duration of the PCBA Program in the range of 2,500 to 3,000 positions globally, including temporary and part-time employees.
This reduction takes into account the elimination of some positions, retraining and redeployment of certain employees and investment in new positions in key areas.
−Removed: 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.
−Removed: The Company plans to approve specific initiatives under the PCBA Program through fiscal 2022 and expects to complete those initiatives through fiscal 2023.
−Removed: The Company expects that the PCBA Program will result in related restructuring and other charges totaling between $ 400 million and $ 500 million, before taxes.
+Added: The Company also estimated the closure over the duration of the PCBA Program of approximately 10 % to 15 % of its freestanding stores globally, primarily in Europe, the Middle East & Africa and in North America.
+Added: The Company approved specific initiatives under the PCBA Program through fiscal 2022 and expects to substantially complete those initiatives through fiscal 2023.
+Added: The Company previously estimated that the PCBA Program would result in related restructuring and other charges totaling between $ 400 million and $ 500 million, before taxes.
+Added: After concluding the final approvals and reviewing the progress of previously approved initiatives under the PCBA Program that are being implemented, the Company has revised its estimates for cost approvals under the PCBA Program.
+Added: Inclusive of approvals from inception through June 28, 2022, the Company now estimates that the PCBA Program may result in related restructuring and other charges totaling between $ 500 million and $ 515 million, before taxes.
PCBA Program Approvals
5 unchanged sentences
Fiscal 2021 $ 42 $ ( 6 ) $ 257 $ 21 $ 314
+Added: Fiscal 2022 1 15 167 18 201
+Added: Cumulative through June 30, 2022 $ 43 $ 9 $ 424 $ 39 $ 515
Included in the above table, cumulative PCBA Program restructuring initiatives approved by the Company through June 30, 2022 by major cost type were:
4 unchanged sentences
Fiscal 2021 $ 132 $ 108 $ 13 $ 4 $ 257
+Added: Fiscal 2022 83 53 30 1 167
+Added: Cumulative through June 30, 2022 $ 215 $ 161 $ 43 $ 5 $ 424
THE ESTÉE LAUDER COMPANIES INC.
1 unchanged sentence
Specific actions taken since the PCBA Program inception include:
−Removed: • 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.
−Removed: These anticipated closures reflect changing consumer behaviors including higher demand for online and omnichannel capabilities.
−Removed: 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.
−Removed: • 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.
−Removed: These actions will result primarily in lease termination fees.
−Removed: • Exit of the Global Distribution of BECCA Products – In reviewing the Company's brand portfolio to improve efficiency and to ensure 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.
+Added: • Optimize Select Marketing, Brand and Global Functions – The Company has started to reduce its corporate and certain of its brand office footprints and is moving toward the future of work in a post-COVID environment, by restructuring where and how its employees work and collaborate.
+Added: In addition, the Company has approved initiatives to reduce organizational complexity and leverage scale across various Global functions.
+Added: These actions will result in asset write-offs, employee severance, lease termination fees, and consulting and other professional services for the design and implementation of the future structures and processes.
+Added: • 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.
+Added: These anticipated closures reflect changing consumer behaviors including higher demand for online and omnichannel capabilities.
+Added: These activities will result in a net reduction in workforce, inventory and other asset write-offs, termination of contracts, and product returns.
+Added: • 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.
−Removed: The Company expects to substantially complete these initiatives during fiscal 2022.
+Added: The Company completed these initiatives during fiscal 2022.
+Added: • Exit of Certain Designer Fragrance Licenses – In reviewing the Company’s brand portfolio of fragrances and to focus on investing its resources on alternative opportunities for long-term growth and value creation globally, the Company announced that it would not be renewing its existing license agreements for the Donna Karan New York, DKNY, Michael Kors, Tommy Hilfiger and Ermenegildo Zegna product lines when their respective terms expire in June 2023.
+Added: The Company has since negotiated early termination agreements with each of the licensors effective June 30, 2022 and continued to sell products under these licenses until such time.
+Added: These actions resulted in employee-related costs, asset write-offs, including charges for the impairment of goodwill, and consulting and legal fees.
+Added: • Brand Transformation – In reviewing the Company’s brand portfolio to accelerate growth within the makeup product category and to support long-term investments, the decision was made to strategically reposition Smashbox to capitalize on changing consumer preferences and to mitigate the impact caused by the COVID-19 pandemic on the brand.
+Added: These actions will result primarily in product returns and inventory write-offs.
PCBA Program Restructuring and Other Charges
3 unchanged sentences
These costs also include goodwill and other intangible asset impairment charges relating to the exit of the global distribution of BECCA products.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
2 unchanged sentences
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.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Other Charges – The Company approved other charges related to the design and implementation of approved initiatives, which are charged to Operating expenses as incurred and primarily include the following:
1 unchanged sentence
• Temporary labor backfill;
−Removed: • 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
+Added: • 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);
• 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.
6 unchanged sentences
Fiscal 2021 $ 14 $ 2 $ 201 $ 4 $ 221
+Added: Fiscal 2022 4 5 109 9 127
+Added: Cumulative through June 30, 2022 $ 18 $ 7 $ 310 $ 13 $ 348
(In millions) Employee-
2 unchanged sentences
Fiscal 2021 $ 119 $ 75 $ 6 $ 1 $ 201
−Removed: (1) Asset-related costs include goodwill and other intangible asset impairment charges of $ 13 million and $ 34 million, respectively, relating to the exit of the global distribution of BECCA products.
+Added: Fiscal 2022 84 11 13 1 109
+Added: Cumulative through June 30, 2022 $ 203 $ 86 $ 19 $ 2 $ 310
+Added: (1) Asset-related costs include fiscal 2021 goodwill and other intangible asset impairment charges of $ 13 million and $ 34 million, respectively, relating to the exit of the global distribution of BECCA products.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Changes in accrued restructuring charges for the fiscal year ended June 30, 2022 relating to the PCBA Program were:
6 unchanged sentences
Balance at June 30, 2021 101 — — — 101
+Added: Charges 84 11 13 1 109
+Added: Cash payments ( 52 ) — ( 13 ) 1 ( 64 )
+Added: Non-cash asset write-offs — ( 11 ) — — ( 11 )
+Added: Translation and other adjustments ( 8 ) — — $ ( 2 ) $ ( 10 )
+Added: Balance at June 30, 2022 $ 125 $ — $ — $ — $ 125
Accrued restructuring charges at June 30, 2022 relating to the PCBA Program are expected to result in cash expenditures funded from cash provided by operations of approximately $ 87 million, $ 31 million, and $ 7 million for each of fiscal 2023, 2024 and 2025, respectively.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 – INCOME TAXES
10 unchanged sentences
$ 628 $ 456 $ 350
−Removed: Earnings before income taxes include amounts contributed by the Company’s foreign operations of approximately $ 3,127 million, $ 2,277 million and $ 2,021 million for fiscal 2021, 2020 and 2019, respectively.
+Added: Earnings before income taxes include amounts contributed by the Company’s foreign operations of $ 2,248 million, $ 3,127 million and $ 2,277 million for fiscal 2022, 2021 and 2020, respectively.
A portion of these earnings is taxed in the United States.
1 unchanged sentence
government released final and proposed regulations under the global intangible low-taxed income (“GILTI”) provisions of the TCJA that provide for a high-tax exception to the GILTI tax.
−Removed: These regulations are retroactive to the original enactment of the GILTI tax provision, which includes the Company's 2020 and 2019 fiscal years.
−Removed: The Company has elected to apply the GILTI high-tax exception to fiscal 2021, 2020 and 2019.
+Added: These regulations are retroactive to the original enactment of the GILTI tax provision, commencing with the Company's 2019 fiscal year.
+Added: The Company has elected to apply the GILTI high-tax exception beginning with fiscal 2019 through 2021, and intends to make the election for fiscal 2022.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of the U.S.
5 unchanged sentences
State and local income taxes, net of federal tax benefit 0.7 0.5 ( 0.1 )
−Removed: TCJA net income tax impact — — 0.2
Stock-based compensation arrangements – excess tax benefits, net ( 2.7 ) ( 3.0 ) ( 7.5 )
9 unchanged sentences
(2) For fiscal 2021 and 2020, the reconciling items between the Company's U.S.
−Removed: federal statutory income tax rate and the Company's actual effective tax rate were materially impacted by the increase from fiscal 2020 to fiscal 2021 and the decrease from fiscal 2019 to fiscal 2020, respectively, in earnings before income taxes.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: federal statutory income tax rate and the Company's actual effective tax rate were materially impacted by the increase from fiscal 2020 to fiscal 2021 in earnings before income taxes.
Income tax reserve adjustments represent changes in the Company’s net liability for unrecognized tax benefits related to prior-year tax positions including the impact of tax settlements and lapses of the applicable statutes of limitations.
All excess tax benefits and tax deficiencies related to share-based compensation awards are recorded as income tax expense or benefit in the consolidated statements of earnings.
−Removed: The Company recognized $ 99 million, $ 78 million and $ 63 million of excess tax benefits, net as a reduction to the provision for income taxes in the accompanying consolidated statements of earnings for twelve months ended June 30, 2021, 2020 and 2019, respectively.
−Removed: The Company has approximately $ 6,953 million of undistributed earnings of foreign subsidiaries at June 30, 2021.
−Removed: Included in this amount is approximately $ 4,595 million of earnings considered permanently reinvested.
+Added: The Company recognized $ 82 million, $ 99 million and $ 78 million of excess tax benefits, net as a reduction to the provision for income taxes in the accompanying consolidated statements of earnings for the twelve months ended June 30, 2022, 2021 and 2020, respectively.
+Added: The Company has $ 8,089 million of undistributed earnings of foreign subsidiaries at June 30, 2022.
+Added: Included in this amount is $ 5,736 million of earnings considered permanently reinvested.
There may be foreign tax ramifications associated with the distribution of such permanently reinvested earnings, which the Company is currently evaluating.
1 unchanged sentence
Any state income taxes associated with the distribution of such earnings is not expected to be material.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Significant components of the Company’s deferred income tax assets and liabilities were as follows:
12 unchanged sentences
Deferred tax liabilities:
−Removed: Depreciation and amortization (2)
−Removed: ( 504 ) ( 563 )
+Added: Fixed assets and intangibles ( 204 ) ( 329 )
ROU assets ( 452 ) ( 517 )
1 unchanged sentence
Other differences between tax and financial statement values ( 33 ) ( 158 )
−Removed: ( 158 ) ( 194 )
Total deferred tax liabilities ( 1,120 ) ( 1,471 )
Total net deferred tax assets (liabilities) $ 3 $ ( 218 )
−Removed: (1) Includes accumulated deferred tax assets as of June 30, 2021 of $ 175 million associated with goodwill and other intangible asset impairment charges related to the Company's taxable acquisitions.
−Removed: (2) Includes deferred tax liabilities associated with book-to-tax basis differences related to the Company's taxable and non-taxable acquisitions.
−Removed: (3) Includes the deferred tax liability of $ 117 million associated with the fiscal 2020 gain on a previously held equity method investment.
−Removed: As of June 30, 2021 and 2020, the Company had net deferred tax liabilities of $ 218 million, substantially all of which are included in Other noncurrent liabilities in the accompanying consolidated balance sheets, and net deferred tax assets of $ 44 million, substantially all of which are included in Other assets in the accompanying consolidated balance sheets, respectively.
−Removed: As of June 30, 2021 and 2020, certain subsidiaries had net operating loss and other carryforwards for tax purposes of approximately $ 531 million and $ 352 million, respectively.
−Removed: With the exception of approximately $ 391 million of net operating loss and other carryforwards with an indefinite carryforward period as of June 30, 2021, these carryforwards expire at various dates through fiscal 2033.
−Removed: Deferred tax assets, net of valuation allowances, in the amount of $ 24 million and $ 14 million as of June 30, 2021 and 2020, respectively, have been recorded to reflect the tax benefits of the carryforwards not utilized to date.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: A full valuation allowance has been provided for those deferred tax assets for which, in the opinion of management, it is more-likely-than-not that the deferred tax assets will not be realized.
+Added: As of June 30, 2022, the Company had net deferred tax assets of $ 3 million, of which $ 695 million is included in Other assets and $ 692 million is included in Other noncurrent liabilities in the accompanying consolidated balance sheets.
+Added: As of June 30, 2021, the Company had net deferred tax liabilities of $ 218 million, of which $ 631 million is included in Other assets and $ 849 million is included in Other noncurrent liabilities in the accompanying consolidated balance sheets.
+Added: As of June 30, 2022 and 2021, certain subsidiaries had $ 523 million and $ 490 million of foreign net operating loss carryforwards, respectively, the tax effect of which was $ 136 million and $ 129 million, respectively, as well as U.S.
+Added: federal tax credit carryforwards of $ 56 million and $ 41 million, respectively.
+Added: With the exception of $ 459 million of net operating losses with an indefinite carryforward period as of June 30, 2022, these net operating loss carryforwards expire at various dates through fiscal 2042.
+Added: The tax credit carryforwards will begin to expire in fiscal 2030.
+Added: The Company has recorded a valuation allowance of $ 185 million and $ 168 million as of June 30, 2022 and 2021, respectively, principally against certain net operating loss carryforwards and tax credit carryforwards.
+Added: A valuation allowance has been provided for those deferred tax assets for which, in the opinion of management, it is more-likely-than-not that the deferred tax assets will not be realized.
As of June 30, 2022, 2021 and 2020, the Company had gross unrecognized tax benefits of $ 61 million, $ 62 million, and $ 70 million, respectively.
2 unchanged sentences
The total gross accrued interest and penalty expense recorded during fiscal 2022, 2021 and 2020 in the accompanying consolidated statements of earnings was $ 4 million, $ 2 million and $ 3 million, respectively.
−Removed: The total gross accrued interest and penalties in the accompanying consolidated balance sheets at June 30, 2021 and 2020 were $ 14 million and $ 13 million, respectively.
+Added: The total gross accrued interest and penalties in the accompanying consolidated balance sheets at June 30, 2022 and 2021 was $ 14 million and $ 14 million, respectively.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
35 unchanged sentences
Korea 2019 - 2022
−Removed: Russia 2020 – 2021
Spain 2018 – 2022
11 unchanged sentences
Employee compensation 693 670
−Removed: Payroll and other non-income taxes 359 250
Deferred revenue 312 322
+Added: Payroll and other non-income taxes 345 359
Sales return accrual 252 369
22 unchanged sentences
2.35 % Senior Notes, due August 15, 2022 (“2022 Senior Notes”)
−Removed: 1.70 % Senior Notes, due May 10, 2021 (“2021 Senior Notes”)
Commercial paper
59 unchanged sentences
As a result of the treasury lock agreements, the debt discount and debt issuance costs, the effective interest rate on the 2027 Senior Notes will be 3.18 % over the life of the debt.
−Removed: (7) The Company entered into interest rate swap agreements with a notional amount totaling $ 250 million and $ 700 million to effectively convert the fixed rate interest on its outstanding 2022 Senior Notes and 2030 Senior Notes to variable interest rates based on three months LIBOR plus a margin.
+Added: (7) The Company entered into interest rate swap agreements with a notional amount totaling $ 250 million, $ 700 million and $ 300 million to effectively convert the fixed rate interest on its outstanding 2022 Senior Notes, 2030 Senior Notes and 2031 Senior Notes to variable interest rates based on three months LIBOR plus a margin.
(8) In April and May 2019, in anticipation of the issuance of the 2029 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $ 500 million at a weighted-average all-in rate of 2.50 %.
4 unchanged sentences
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: In October 2018, the Company replaced its undrawn $ 1,500 million senior unsecured revolving credit facility that was set to expire in October 2021 with a new $ 1,500 million senior unsecured revolving credit facility (the “New Facility”).
+Added: In October 2021, the Company replaced its $ 1,500 million senior unsecured revolving credit facility that was set to expire in October 2023 with a new $ 2,500 million senior unsecured revolving credit facility (the “New Facility”).
The New Facility expires on October 22, 2026 unless extended for up to two additional years in accordance with the terms set forth in the agreement.
4 unchanged sentences
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.
+Added: The New Facility may be increased, at the election of the Company, by up to $ 500 million in accordance with the terms set forth in the agreement.
At June 30, 2022, no borrowings were outstanding under the New Facility.
−Removed: In November 2019, the Company completed a public offering of $ 500 million aggregate principal amount of its 2024 Senior Notes, $ 650 million aggregate principal amount of its 2029 Senior Notes and $ 650 million aggregate principal amount of its 2049 Senior Notes.
−Removed: The Company used proceeds from this offering for general corporate purposes, including to fund the acquisition of Have&Be and refinance its $ 500 million aggregate principal amount of 1.80 % Senior Notes that became due February 7, 2020.
−Removed: In April 2020, the Company completed a public offering of $ 700 million aggregate principal amount of its 2030 Senior Notes.
−Removed: The Company used the proceeds from this offering for general corporate purposes, which included operating expenses, working capital, capital expenditures and redemption and repayment of short-term or long-term borrowings, including outstanding commercial paper as it matured.
In March 2021, the Company completed a public offering of $ 600 million aggregate principal amount of its 2031 Senior Notes.
7 unchanged sentences
Refer to Note 16 – Commitments and Contingencies for the Company’s projected debt service payments, as of June 30, 2022, over the next five fiscal years.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: On August 15, 2022, the Company repaid the outstanding principal balance of its $ 250 million 2.35 % Senior Notes with cash from operations.
NOTE 12 – DERIVATIVE FINANCIAL INSTRUMENTS
11 unchanged sentences
Costs associated with entering into derivative financial instruments have not been material to the Company’s consolidated financial results.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
46 unchanged sentences
(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.
−Removed: 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:
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: Additional information regarding the cumulative amount of fair value hedging loss recognized in earnings for items designated and qualifying as hedged items in fair value hedges is as follows:
(In millions)
4 unchanged sentences
Included in the Carrying Amount of the Hedged
−Removed: June 30, 2021
+Added: June 30, 2022 June 30, 2022
Current debt $ 250 $ —
1 unchanged sentence
Total debt $ 1,128 $ ( 115 )
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Additional information regarding the effects of fair value and cash flow hedging relationships for derivatives designated and qualifying as hedging instruments is as follows:
1 unchanged sentence
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 $ 17,737 $ 167 $ 16,215 $ 173
−Removed: $ 16,215 $ 173 $ 14,294 $ 161
The effects of fair value and cash flow hedging relationships:
5 unchanged sentences
Gain (loss) on cash flow hedge relationships – foreign currency forward contracts:
−Removed: Amount of gain reclassified from AOCI into earnings ( 22 ) Not applicable 35 Not applicable
+Added: Amount of gain (loss) reclassified from AOCI into earnings 3 Not applicable ( 22 ) Not applicable
The amount of the gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments are presented as follows:
5 unchanged sentences
Foreign currency forward contracts Selling, general and administrative $ ( 35 ) $ ( 17 )
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cash Flow Hedges
6 unchanged sentences
The purpose of the hedging activities is to minimize the effect of interest rate movements on the cost of debt issuance.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
1 unchanged sentence
As of June 30, 2022, the Company’s foreign currency cash flow hedges were highly effective.
−Removed: The estimated net loss on the Company’s derivative instruments designated as cash flow hedges as of June 30, 2021 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $ 10 million.
+Added: The estimated net gain on the Company’s derivative instruments designated as cash flow hedges as of June 30, 2022 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $ 36 million.
The accumulated net gain (loss) on derivative instruments in AOCI was $ 90 million and $( 1 ) million as of June 30, 2022 and 2021, respectively.
7 unchanged sentences
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.
−Removed: The net investment hedge contracts have varying maturities through the end of September 2021.
+Added: The net investment hedge contracts have varying maturities through the end of July 2022.
Hedge effectiveness of the net investment hedge contracts is based on the spot method.
25 unchanged sentences
Foreign currency forward contracts $ — $ 105 $ — $ 105
+Added: Interest rate-related derivatives — 115 — 115
DECIEM stock options — — 74 74
9 unchanged sentences
Foreign currency forward contracts $ — $ 56 $ — $ 56
−Removed: Interest rate-related derivatives — 3 — 3
−Removed: Contingent consideration — — 4 4
+Added: DECIEM stock options — — 141 141
Total $ — $ 56 $ 141 $ 197
5 unchanged sentences
Current and long-term debt 5,412 5,139 5,569 6,262
−Removed: Contingent consideration — — 4 4
DECIEM stock options 74 74 141 141
Foreign currency forward contracts – asset (liability), net 86 86 ( 4 ) ( 4 )
−Removed: Interest rate-related derivatives – asset, net 15 15 12 12
+Added: Interest rate-related derivatives – asset (liability), net ( 91 ) ( 91 ) 15 15
THE ESTÉE LAUDER COMPANIES INC.
1 unchanged sentence
The following table presents the Company’s impairment charges for certain of its nonfinancial assets measured at fair value on a nonrecurring basis, classified as Level 3, during fiscal 2022, 2021 and 2020:
+Added: (In millions) Impairment charges Date of Fair Value Measurement Fair Value (1)
+Added: Other intangible assets, net (trademarks)
+Added: GLAMGLOW $ 11 March 31, 2022 $ —
+Added: Dr.Jart+ 230 February 28, 2022
+Added: April 1, 2022 428
+Added: Total $ 241 $ 428
+Added: (1) See Note 6 – Goodwill and Other Intangible Assets for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs.
(In millions) Impairment
11 unchanged sentences
June 30, 2021 66
−Removed: Total impairments $ 239 $ 98
+Added: Total $ 239 $ 98
(1) See Note 6 – Goodwill and Other Intangible Assets for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs.
20 unchanged sentences
Long-lived assets 215 June 30, 2020 200
−Removed: Total impairments $ 1,426 $ 699
−Removed: (1) See Note 6 – Goodwill and Other Intangible Assets and Note 7 – Leases for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs.
−Removed: (In millions) Impairment
−Removed: Charges Date of Fair Value
−Removed: Measurement Fair Value (1)
−Removed: Goodwill $ 68 March 31, 2019 $ 72
−Removed: Other intangible assets, net (trademarks) 22 March 31, 2019 55
Total $ 1,426 $ 699
−Removed: (1) See Note 6 – Goodwill and Other Intangible Assets for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs.
+Added: (1) See Note 6 – Goodwill and Other Intangible Assets and Note 7 – Leases for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs.
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:
1 unchanged sentence
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.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
1 unchanged sentence
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.
−Removed: 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.
+Added: Interest rate-related derivatives – 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.
2 unchanged sentences
The Company’s debt is classified within Level 2 of the valuation hierarchy.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
2 unchanged sentences
The acquisition date fair value was calculated using the Monte Carlo Method, which requires certain assumptions.
+Added: Significant changes in the projected future operating results would result in a higher or lower fair value measurement.
+Added: Changes to the discount rates or volatilities would have a lesser effect.
These inputs are categorized as Level 3 of the valuation hierarchy.
−Removed: 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.
+Added: The DECIEM stock options are remeasured to fair value at each reporting date through the period when the options are exercised or repurchased (i.e.
+Added: when they are settled), with an offsetting entry to compensation expense.
See Note 5 – Acquisition of Businesses and Note 18 – Stock Programs for discussion .
−Removed: Contingent consideration – Contingent consideration obligations consist of potential obligations related to the Company’s acquisitions in previous years.
−Removed: The amounts to be paid under these obligations are contingent upon the achievement of stipulated financial targets by the business subsequent to acquisition.
−Removed: At June 30, 2021, there was no contingent consideration outstanding.
−Removed: Changes in the fair value of the contingent consideration obligations for the year ended June 30, 2021 are included in Selling, general and administrative expenses in the accompanying consolidated statements of earnings and were as follows:
+Added: Changes in the DECIEM stock option liability for the year ended June 30, 2022 are included in Selling, general and administrative expenses in the accompanying consolidated statements of earnings and were as follows:
(In millions) Fair Value
−Removed: Contingent consideration at June 30, 2020 $ 4
−Removed: Payments ( 2 )
−Removed: Changes in fair value ( 2 )
−Removed: Contingent consideration at June 30, 2021 $ —
−Removed: NOTE 14 – REVENUE RECOGNITION
−Removed: For further information on the Company's policies relating to revenue recognition see Note 2 – Summary of Significant Accounting Policies.
−Removed: Performance Obligations
−Removed: The Company recognizes revenue at a point in time when it satisfies a performance obligation by transferring control over a product and other promised goods and services to a customer.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: The Company sells wholesale to customers in distribution channels that include department stores, travel retail, specialty-multi retailers, perfumeries, salons/spas and through various online sites operated by authorized retailers.
−Removed: The primary performance obligation related to these channels of distribution is product sales where revenue is recognized as control of the product transfers to the customer.
−Removed: In the Americas region, revenue is generally recognized at the time the product is made available and provided to the customer’s carrier at the Company’s location, and in the Europe, the Middle East & Africa and Asia/Pacific regions, revenue is generally recognized based upon the customer’s receipt.
−Removed: The Company also sells direct to consumers at Company-operated freestanding stores and online through Company-owned and operated e-commerce and m-commerce sites and through third-party online malls.
−Removed: At Company-operated freestanding stores, revenue is recognized when control of the product is transferred at the point of sale.
−Removed: Revenue from online sales is recognized when control of the product is transferred, generally based upon the consumer’s receipt.
−Removed: In connection with the sale of product, the Company may provide other promised goods and services that are deemed to be performance obligations.
−Removed: These are comprised of customer loyalty program obligations, gift with purchase and purchase with purchase promotions, gift cards and other promotional goods including samples and testers.
−Removed: The Company offers a number of different loyalty programs to its customers across regions, brands and distribution channels including points-based programs, tier-based programs and other programs.
−Removed: Revenue is allocated between the saleable product revenue and the material right loyalty obligations based on relative standalone selling prices when the consumer purchases the products that are earning them the right to the future benefits.
−Removed: Deferred revenue related to the Company’s loyalty programs is estimated based on the standalone selling price and is adjusted for an estimated breakage factor.
−Removed: Standalone selling price is determined primarily using the observable market price of the good or service benefit if it is sold by the Company or a cost plus margin approach for goods/services not directly sold by the Company.
−Removed: Breakage rates consider historical patterns of redemption and/or expiration.
−Removed: Revenue is recognized when the benefits are redeemed or expire.
−Removed: The Company provides gift with purchase promotional products to certain customers generally without additional charge and also provides purchase with purchase promotional products to certain customers at a discount in relation to prices charged for saleable product.
−Removed: Revenue is allocated between saleable product, gift with purchase product and purchase with purchase product based on the estimated relative standalone selling prices.
−Removed: Revenue is deferred and ultimately recognized based on the timing differences, if any, between when control of promotional goods and control of the related saleable products transfer to the Company’s customer (e.g., a third-party retailer), which is calculated based on the weighted-average number of days between promotional periods.
−Removed: The estimated standalone selling price allocated to promotional goods is based on a cost plus margin approach.
−Removed: In situations where promotional products are provided by the Company to its customers at the same time as the related saleable product, such as shipments of samples and testers, the cost of these promotional products are recognized as a cost of sales at the same time as the related revenue is recognized and no deferral of revenue is required.
−Removed: The Company also offers gift cards through Company-operated freestanding stores and Company-owned websites.
−Removed: The related deferred revenue is estimated based on expected breakage that considers historical patterns of redemption taking into consideration escheatment laws as applicable.
−Removed: Product Returns, Sales Incentives and Other Forms of Variable Consideration
−Removed: In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration.
−Removed: Such elements of variable consideration include product returns and sales incentives, such as volume rebates and discounts, markdowns, margin adjustments and early-payment discounts.
−Removed: We also enter into arrangements containing other forms of variable consideration, including certain demonstration arrangements, for which the Company does not receive a distinct good or service or for which the Company cannot reasonably estimate the fair value of the good or service.
−Removed: For these types of arrangements, the adjustments to revenue are recorded at the later of when (i) the Company recognizes revenue for the transfer of the related goods or services to the customer, or (ii) the Company pays, or promises to pay, the consideration.
+Added: DECIEM stock option liability as of June 30, 2021 $ 141
+Added: Changes in fair value, net of foreign currency remeasurements (1)
+Added: Translation adjustments and other, net ( 12 )
+Added: DECIEM stock option liability as of June 30, 2022 $ 74
+Added: (1) Amount inc ludes expense attributable to graded vesting of stock options which is not material for the year ended June 30, 2022.
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: For the sale of goods with a right of return, the Company only recognizes revenue for the consideration it expects to be entitled to (considering the products to be returned) and records a sales return accrual within Other accrued liabilities for the amount it expects to credit back its customers.
−Removed: In addition, the Company recognizes an asset included in Inventory and promotional merchandise and a corresponding adjustment to Cost of sales for the right to recover goods from customers associated with the estimated returns.
−Removed: The sales return accrual and corresponding asset include estimates that directly impact reported net sales.
−Removed: These estimates are calculated based on a history of actual returns, estimated future returns and information provided by retailers regarding their inventory levels.
−Removed: Consideration of these factors results in an estimate for anticipated sales returns that reflects increases or decreases related to seasonal fluctuations.
−Removed: In addition, as necessary, sales return accruals and the related assets may be established for significant future known or anticipated events.
−Removed: The types of known or anticipated events that are considered, and will continue to be considered, include the financial condition of the Company’s customers, store closings by retailers, changes in the retail environment and the Company’s decision to continue to support new and existing products.
−Removed: The Company estimates sales incentives and other variable consideration using the most likely amount method and records accruals within Other accrued liabilities when control of the related product is transferred to the customer.
−Removed: Under this method, certain forms of variable consideration are based on expected sell-through results, which requires subjective estimates.
−Removed: These estimates are supported by historical results as well as specific facts and circumstances related to the current period.
−Removed: The Company also enters into transactions and makes payments to certain of its customers related to demonstration, advertising and counter construction, some of which involve cooperative relationships with customers.
−Removed: These activities may be arranged either with unrelated third parties or in conjunction with the customer.
−Removed: To the extent the Company receives a distinct good or service in exchange for consideration and the fair value of the benefit can be reasonably estimated, the Company’s share of the counter depreciation and the other costs of these transactions (regardless of to whom they were paid) are reflected in Selling, general and administrative expenses in the accompanying consolidated statements of earnings.
+Added: NOTE 14 – REVENUE RECOGNITION
+Added: For further information on the Company's policies relating to revenue recognition and accounts receivable see Note 2 – Summary of Significant Accounting Policies.
Accounts Receivable
−Removed: For further information on the Company's policies relating to accounts receivable see Note 2 – Summary of Significant Accounting Policies.
Accounts receivable, net is stated net of the allowance for doubtful accounts and customer deductions totaling $ 27 million and $ 40 million as of June 30, 2022 and June 30, 2021, respectively.
2 unchanged sentences
(In millions) 2022 2021
−Removed: Balance at June 30, 2020 $ 36
+Added: Allowance for credit losses, beginning of period $ 20 $ 36
ASC 326 cumulative effect adjustment (pre-tax) — 4
1 unchanged sentence
Write-offs, net & other ( 7 ) ( 12 )
−Removed: Balance at June 30, 2021 $ 20
+Added: Allowance for credit losses, end of period $ 10 20
As a result of the adoption of ASC 326, the Company recorded a cumulative adjustment of approximately $ 3 million, net of tax, as a reduction to its fiscal 2021 opening balance of retained earnings relating to its trade receivables.
The remaining balance of the allowance for doubtful accounts of $ 17 million, as of June 30, 2022, relates to non-credit losses, which are primarily due to customer deductions.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred Revenue
1 unchanged sentence
(In millions) 2022 2021
−Removed: Balance at the beginning of the year $ 279 $ 361
+Added: Deferred revenue, beginning of period $ 371 $ 279
Revenue recognized that was included in the deferred revenue balance at the beginning of the period ( 285 ) ( 201 )
1 unchanged sentence
Other ( 8 ) ( 1 )
−Removed: Balance at the end of the year $ 371 $ 279
+Added: Deferred revenue, end of period $ 362 $ 371
Transaction Price Allocated to the Remaining Performance Obligations
1 unchanged sentence
The remaining balance of deferred revenue at June 30, 2022 will be recognized beyond the next twelve months .
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: The following tables summarize impacts of the adoption of ASC 606 on the Company's fiscal 2019 consolidated financial statements:
−Removed: Consolidated Statement of Earnings
−Removed: June 30, 2019
−Removed: (In millions, except per share data) As Reported Impact Prior to the adoption of ASC 606
−Removed: Net sales $ 14,863 $ 49 $ 14,912
−Removed: Cost of sales 3,387 ( 300 ) 3,087
−Removed: Gross profit 11,476 349 11,825
−Removed: Selling, general and administrative 8,857 370 9,227
−Removed: Operating income 2,313 ( 21 ) 2,292
−Removed: Provision for income taxes 513 ( 5 ) 508
−Removed: Net earnings attributable to The Estée Lauder Companies Inc.
−Removed: 1,785 ( 16 ) 1,769
−Removed: Net earnings attributable to The Estée Lauder Companies Inc.
−Removed: per common share
−Removed: Basic $ 4.91 $ ( .04 ) $ 4.87
−Removed: Diluted $ 4.82 $ ( .04 ) $ 4.78
−Removed: Consolidated Balance Sheet
−Removed: June 30, 2019
−Removed: (In millions) As Reported Impact Prior to the adoption of ASC 606
−Removed: Accounts receivable, net $ 1,831 $ ( 202 ) $ 1,629
−Removed: Inventory and promotional merchandise, net 2,006 ( 21 ) 1,985
−Removed: Other assets 805 ( 65 ) 740
−Removed: Total assets 13,156 ( 288 ) 12,868
−Removed: Other accrued liabilities 2,599 ( 452 ) 2,147
−Removed: Other noncurrent liabilities 1,244 ( 47 ) 1,197
−Removed: Total liabilities 8,745 ( 499 ) 8,246
−Removed: Retained earnings 9,984 213 10,197
−Removed: Accumulated other comprehensive loss ( 563 ) ( 2 ) ( 565 )
−Removed: Total stockholders' equity - The Estée Lauder Companies Inc.
−Removed: 4,386 211 4,597
−Removed: Consolidated Statement of Cash Flows
−Removed: June 30, 2019
−Removed: (In millions) As Reported Impact Prior to the adoption of ASC 606
−Removed: Net earnings $ 1,794 $ ( 16 ) $ 1,778
−Removed: Changes in operating assets and liabilities
−Removed: Increase in accounts receivable, net ( 169 ) 5 ( 164 )
−Removed: Increase in inventory and promotional merchandise, net ( 375 ) ( 6 ) ( 381 )
−Removed: Increase in other assets, net ( 62 ) ( 5 ) ( 67 )
−Removed: Increase in other accrued and noncurrent liabilities 285 22 307
−Removed: Net cash flows provided by operating activities 2,517 — 2,517
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 – PENSION, DEFERRED COMPENSATION AND POST-RETIREMENT BENEFIT PLANS
3 unchanged sentences
In certain instances, the Company adjusts benefits in connection with international employee transfers.
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Retirement Growth Account Plan (U.S.)
18 unchanged sentences
Plan Summaries
−Removed: The significant components of the above-mentioned plans as of and for the years ended June 30 are summarized as follows:
+Added: The components of the above-mentioned plans as of and for the years ended June 30 are summarized as follows:
Pension Plans Other than
31 unchanged sentences
Net amount recognized $ 88 $ 106 $ 1 $ ( 4 ) $ ( 164 ) $ ( 158 )
+Added: For the twelve months ended June 30, 2022, the $ 164 million actuarial gain relating to the U.S.
+Added: pension plans was primarily due to the increase in the weighted average discount rate relating to the Retirement Growth Account Plan and the Restoration Plan from 3.0 % to 4.5 % and 2.5 % to 4.3 %, respectively.
For the twelve months ended June 30, 2021, the actuarial gains and losses affecting the benefit obligations were not material.
−Removed: For the twelve months ended June 30, 2020, the $ 101 million actuarial loss relating to the U.S.
−Removed: pension plans was primarily due to declines in the discount rates relating to the Retirement Growth Account Plan and the Restoration Plan from 3.8 % to 3.0 % and 3.4 % to 2.5 %, respectively.
−Removed: The decline in the discount rates as of June 30, 2020 were a result of lower rates on highly rated long-term bonds.
THE ESTÉE LAUDER COMPANIES INC.
23 unchanged sentences
2.70 – 9.00 %
+Added: 2.70 – 9.00 %
Rate of compensation increase 2.50 – 8.00 %
20 unchanged sentences
1.00 – 5.50 %
−Removed: 1.00 – 5.50 %
(1) The weighted-average assumptions used to determine benefit obligations at June 30, 2022 were as follows:
1 unchanged sentence
Rate of compensation increase - 2.50 % - 8.00 %, graded (U.S.), 2.96 % (International) and N/A (Other than Pension Plans, Post-retirement)
+Added: The weighted-average assumptions used to determine benefit obligations at June 30, 2021 were as follows:
+Added: Discount rate - 2.94 % (U.S.), 1.59 % (International) and 2.92 % (Other than Pension Plans, Post-retirement)
+Added: Rate of compensation increase - 2.50 % - 8.00 %, graded (U.S.), 2.81 % (International) and N/A (Other than Pension Plans, Post-retirement)
(2) The weighted-average assumptions used to determine net periodic benefit cost for the year ended June 30, 2022 were as follows:
3 unchanged sentences
Rate of compensation increase - 2.50 % - 8.00 %, graded (U.S.), 2.81 % (International) and N/A (Other than Pension Plans, Post-retirement)
+Added: The weighted-average assumptions used to determine net periodic benefit cost for the year ended June 30, 2021 were as follows:
+Added: Discount rate - 2.93 % (U.S.), 1.44 % (International) and 2.90 % (Other than Pension Plans, Post-retirement)
+Added: Expected return on assets - 6.25 % (U.S.
+Added: and Other than Pension Plans, Post-retirement) and 2.06 % (International)
+Added: Rate of compensation increase - 2.50 % - 8.00 %, graded (U.S.), 2.72 % (International) and N/A (Other than Pension Plans, Post-retirement)
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The discount rate for each plan used for determining future net periodic benefit cost is based on a review of highly rated long-term bonds.
3 unchanged sentences
In determining the long-term rate of return for a plan, the Company considers the historical rates of return, the nature of the plan’s investments and an expectation for the plan’s investment strategies.
−Removed: The weighted-average interest crediting rate used to determine the benefit oblation and net periodic benefit cost relating to the Company’s U.S.
+Added: The weighted-average interest crediting rate used to determine the benefit obligation and net periodic benefit cost relating to the Company’s U.S.
Retirement Growth Account Plan was 4.02 % as of and for the years ended June 30, 2022 and 2021.
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans.
6 unchanged sentences
Net actuarial losses, beginning of year $ 198 $ 20 $ 27 $ 245
−Removed: Actuarial losses (gains) recognized ( 64 ) ( 6 ) 10 ( 60 )
+Added: Actuarial gains recognized ( 13 ) ( 31 ) ( 27 ) ( 71 )
Amortization and settlements included in net periodic benefit cost ( 15 ) ( 2 ) ( 1 ) ( 18 )
27 unchanged sentences
2025 53 34 11
+Added: 2026 53 33 11
+Added: 2027 54 32 12
Years 2028 – 2032 302 159 67
73 unchanged sentences
The amounts included in the accompanying consolidated balance sheets under these plans were $ 74 million and $ 108 million as of June 30, 2022 and 2021, respectively.
−Removed: The expense for fiscal 2021, 2020 and 2019 was $ 31 million, $ 5 million and $ 8 million, respectively.
+Added: The expense (benefit) for fiscal 2022, 2021 and 2020 was $( 33 ) million, $ 31 million and $ 5 million, respectively.
THE ESTÉE LAUDER COMPANIES INC.
20 unchanged sentences
(2) Unconditional purchase obligations primarily include:
−Removed: royalty payments pursuant to license agreements, inventory commitments, capital expenditure commitments, information technology contract commitments, third-party distribution commitments and advertising commitments.
+Added: royalty payments pursuant to license agreements, inventory commitments, information technology contract commitments, capital expenditure commitments, advertising commitments and third-party distribution commitments.
Future royalty and advertising commitments were estimated based on planned future sales for the term that was in effect at June 30, 2022, without consideration for potential renewal periods.
5 unchanged sentences
Legal Proceedings
−Removed: 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).
+Added: The Company is involved, from time to time, in litigation and other legal proceedings incidental to its business, including product liability matters (including asbestos-related claims), advertising, regulatory, employment, intellectual property, real estate, environmental, trade relations, tax and privacy.
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.
28 unchanged sentences
August 18, 2021 August 31, 2021 September 15, 2021 $ .53
−Removed: October 30, 2020 November 30, 2020 December 15, 2020 $ .53
+Added: November 1, 2021 November 30, 2021 December 15, 2021 $ .60
February 2, 2022 February 28, 2022 March 15, 2022 $ .60
−Removed: April 30, 2021 May 28, 2021 June 15, 2021 $ .53
+Added: May 2, 2022 May 31, 2022 June 15, 2022 $ .60
On August 17, 2022, a dividend was declared in the amount of $ .60 per share on the Company's Class A and Class B Common Stock.
64 unchanged sentences
Vesting of RSUs granted is generally subject to the continued employment or the retirement of the grantees.
−Removed: 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.
+Added: The RSUs are generally 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 generally valued at the closing market price of the Company’s Class A Common Stock on the date of grant.
The following is a summary of the status of the Company’s RSUs as of June 30, 2022 and activity during the fiscal year then ended:
12 unchanged sentences
Performance Share Units
−Removed: During fiscal 2021, the Company granted PSUs with a target payout of approximately 0.2 million shares of Class A Common Stock with a weighted-average grant date fair value per share of $ 217.88 , 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, 2023, all subject to continued employment or the retirement of the grantees.
+Added: During fiscal 2022, the Company granted PSUs with a target payout of approximately 0.1 million shares of Class A Common Stock with a weighted-average 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, diluted net earnings per common share and return on invested capital goals for the three fiscal years ending June 30, 2023, 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.
10 unchanged sentences
Nonvested at June 30, 2022 (1)
−Removed: (1) Approximately 0.2 million PSUs with a performance period ended June 30, 2021 to be issued in September 2021 are included in Nonvested at June 30, 2021.
+Added: (1) Included approximately 0.1 million PSUs with a performance period ended June 30, 2022 expected to be issued in September 2022 are included in Nonvested at June 30, 2022.
Long-term Performance Share Units
−Removed: During September 2015, the Company granted PSUs to an executive of the Company with an aggregate target payout of 387,848 shares (in three tranches of approximately 129,283 each) of the Company’s Class A Common Stock, generally subject to continued employment through the end of relative performance periods, which end June 30, 2018, 2019, and 2020.
+Added: During September 2015, the Company granted PSUs to the Company's Chief Executive Officer (“CEO”) with an aggregate target payout of 387,848 shares (in three tranches of approximately 129,283 each) of the Company’s Class A Common Stock, generally subject to continued employment through the end of relative performance periods, which end June 30, 2018, 2019, and 2020.
Since the Company achieved positive Net Earnings, as defined in the PSU award agreement, for the fiscal year ended June 30, 2016, performance and vesting of each tranche will be based on the Company achieving positive Cumulative Operating Income, as defined in the PSU award agreement, during the relative performance period.
2 unchanged sentences
The grant date fair value of these PSUs of $ 30 million was estimated using the closing stock price of the Company’s Class A Common Stock as of September 4, 2015, the date of grant.
−Removed: Through June 30, 2021, 129,283 shares of the Company’s Class A Common Stock were issued, and the related dividends to be paid, in accordance with the terms of the grant, related to the performance periods ended June 30, 2018.
−Removed: During January 2016, the Company granted PSUs to an executive of the Company with an aggregate target payout of 71,694 shares (in three tranches of 23,898 each) of the Company’s Class A Common Stock.
−Removed: Since the Company achieved positive Net Earnings, as defined in the PSU award agreement, for the fiscal year ended June 30, 2017, the vesting of each tranche will generally be subject to continued employment through the end of relative service periods that end on January 29, 2018, 2019 and 2020.
−Removed: Payment with respect to a tranche will be made within 30 business days of the date on which the PSUs vest.
−Removed: The PSUs are accompanied by dividend equivalent rights that will be payable in cash at the same time as the payment of shares of the Company’s Class A Common Stock.
−Removed: The grant date fair value of these PSUs of $ 6 million was estimated using the closing stock price of the Company’s Class A Common Stock as of January 28, 2016, the date of grant.
−Removed: In January 2020, 23,898 shares of the Company’s Class A Common Stock were issued, and the related dividends were paid, in accordance with the terms of the grant related to the performance period of the award that ended January 29, 2020.
−Removed: Through June 30, 2020, 71,694 shares of the Company’s Class A Common Stock were issued, and the related dividends were paid, in accordance with the terms of the grant, related to the performance periods ended January 29, 2018, 2019 and 2020.
+Added: Through June 30, 2022, 258,565 shares of the Company’s Class A Common Stock were issued, and the related dividends paid, in accordance with the terms of the grant, related to the performance periods ended June 30, 2018 and 2019.
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: In February 2018, the Company granted to an executive of the Company PSUs with an aggregate payout of 195,940 shares (in two tranches of 97,970 shares each) of the Company’s Class A Common Stock, generally subject to continued employment through the end of the respective performance periods ending June 30, 2021 and 2022.
+Added: In February 2018, the Company granted to the Company's CEO PSUs with an aggregate payout of 195,940 shares (in two tranches of 97,970 shares each) of the Company’s Class A Common Stock, generally subject to continued employment through the end of the respective performance periods ending June 30, 2021 and 2022.
No portion of the award will generally vest unless the Company has achieved positive Cumulative Operating Income, as defined in the performance share unit award agreement, during the relevant performance period.
2 unchanged sentences
The grant date fair value of these PSUs of $ 27 million was estimated using the closing stock price of the Company’s Class A Common Stock as of the date of grant.
−Removed: Since the Company achieved positive Cumulative Operating Income, as defined in the PSU award agreement, for the fiscal year ended June 30, 2021, the end of the first performance period under the grant, 97,970 shares of the Company’s Class A Common Stock are anticipated to be issued, and the related dividends to be paid, in accordance with the terms of the grant.
−Removed: In March 2021, the Company granted to the Company’s Chief Executive Officer (“CEO”) PSUs with an aggregate payout of 68,578 shares of the Company's Class A Common Stock, to incentivize him to continue serving through at least June 30, 2024.
+Added: Since the Company achieved positive Cumulative Operating Income, as defined in the PSU award agreement, and since the executive completed the requisite service, 195,940 shares of the Company’s Class A Common Stock are anticipated to be issued, and the related dividends to be paid, in accordance with the terms of the grant on September 3, 2024.
+Added: In March 2021, the Company granted to the Company’s CEO PSUs with an aggregate payout of 68,578 shares of the Company's Class A Common Stock, to incentivize him to continue serving through at least June 30, 2024.
Generally, no portion of this award will vest unless the Company has achieved positive Cumulative Operating Income, as defined in the performance share unit award agreement, during the relevant performance period, and delivery of shares of the Company’s Class A Common Stock, if any, will be made on September 2, 2025.
12 unchanged sentences
Total shares 85,927
+Added: The Stock Price Goals (per Share) were all achieved during Fiscal 2022 but delivery of the shares are still subject to achievement of the Cumulative Operating Income goal and other terms and conditions in accordance with the terms of the award agreement .
THE ESTÉE LAUDER COMPANIES INC.
17 unchanged sentences
Dividend equivalents 1.0 293.15
+Added: Converted ( 22.9 ) 55.65
Outstanding at June 30, 2022 121.9 78.01
1 unchanged sentence
These share units are classified as liabilities and, as such, their fair value is adjusted to reflect the current market value of the Company’s Class A Common Stock.
−Removed: The Company recorded $ 29 million, $ 2 million and $ 9 million as compensation expense to reflect additional deferrals and the change in the market value for fiscal 2021, 2020 and 2019, respectively.
+Added: The Company recorded $( 5 ) million, $ 29 million and $ 2 million as compensation expense (income) to reflect additional deferrals and the change in the market value for fiscal 2022, 2021 and 2020, respectively.
DECIEM Stock Options
2 unchanged sentences
The DECIEM stock options are subject to the terms and conditions of the DECIEM 2021 Stock Option Plan.
−Removed: At exchange or replacement date, post-combination vested options totaled 90,978 options and post-combination unvested options totaled 3,123 options of which 59 vested as of June 30, 2021.
−Removed: 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.
+Added: As of June 30, 2022, post-combination vested options totaled 92,028 options and post-combination unvested options totaled 2,073 options.
+Added: The DECIEM stock options are liability-classified awards as they are expected to be settled in cash and are 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.
−Removed: The total stock option expense from the date of acquisition to June 30, 2021 was $ 40 million, with no related income tax benefit.
−Removed: As of June 30, 2021, the total unrecognized compensation cost related to unvested stock awards of the DECIEM Stock Option Plan was $ 4 million and the related weighted-average period over which it is expected to be recognized is approximately two years .
+Added: Due to a reduction in the fair value of the DECIEM stock options, the total stock option expense for the year ended June 30, 2022 resulted in income of $ 55 million, net of foreign currency remeasurements.
+Added: There were no DECIEM stock options exercised during the year ended June 30, 2022.
THE ESTÉE LAUDER COMPANIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: As of June 30, 2022, the total unrecognized compensation cost related to unvested stock awards of the DECIEM Stock Option Plan was not material and the related weighted-average period over which it is expected to be recognized is approximately one year .
The following is a summary of the DECIEM stock option program as of June 30, 2022 and changes during the fiscal year then ended:
20 unchanged sentences
Intrinsic value of stock options exercised $ — $ — $ —
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 5 – Acquisition of Businesses, DECIEM stock options, with total fair value of $ 295 million, were reported as part of the total consideration transferred.
−Removed: The DECIEM stock options are reported as a stock option liability of $ 141 million in Other noncurrent liabilities in the accompanying consolidated balance sheets at June 30, 2021.
−Removed: The fair value of the stock options were calculated using the following key assumptions into the Monte Carlo Method:
−Removed: May 18, 2021 June 30, 2021
+Added: The DECIEM stock options are reported as a stock option liability of $ 74 million and $ 141 million in Other noncurrent liabilities in the accompanying consolidated balance sheets at June 30, 2022 and June 30, 2021, respectively.
+Added: The fair value of the stock options 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:
+Added: June 30, 2022 June 30, 2021 May 18, 2021
Risk-free rate 3.20 % 0.50 % 0.50 %
−Removed: Term to mid of last twelve-month period 2.54 years 2.42 years
+Added: Term to mid of last twelve-month period 1.42 years 2.42 years 2.54 years
Operating leverage adjustment 0.45 0.45 0.45
3 unchanged sentences
Net sales volatility 15.30 % 17.00 % 17.20 %
−Removed: THE ESTÉE LAUDER COMPANIES INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19 – NET EARNINGS ATTRIBUTABLE TO THE ESTÉE LAUDER COMPANIES INC.
19 unchanged sentences
Diluted $ 6.55 $ 7.79 $ 1.86
+Added: THE ESTÉE LAUDER COMPANIES INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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:
10 unchanged sentences
(In millions) 2022 2021 2020
−Removed: Net unrealized investment losses, beginning of year $ — $ — $ ( 14 )
−Removed: Unrealized investment gains — — 14
−Removed: Net unrealized investment losses, end of year — — —
Net derivative instruments, beginning of year $ ( 2 ) $ 14 $ 21
22 unchanged sentences
Translation adjustments ( 409 ) 145 ( 108 )
−Removed: Benefit for deferred income taxes 2 2 12
+Added: Benefit (provision) for deferred income taxes ( 18 ) 2 2
Cumulative translation adjustments, end of year ( 716 ) ( 289 ) ( 435 )
13 unchanged sentences
Non-cash investing and financing activities:
−Removed: Purchase price refund receivable $ — $ 32 $ —
−Removed: Capital lease 1 , capitalized interest and asset retirement obligations incurred
Property, plant and equipment accrued but unpaid $ 106 $ 97 $ 39
−Removed: DECIEM stock option purchase price payable $ 103 $ — $ —
−Removed: (1) Applicab1e for fiscal 2019 only.
+Added: Purchase price payable - shares purchased from noncontrolling interests $ 38 $ — $ —
+Added: Purchase price payable - DECIEM stock option $ — $ 103 $ —
+Added: Purchase price refund receivable $ — $ — $ 32
NOTE 22 – SEGMENT DATA AND RELATED INFORMATION
8 unchanged sentences
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.
−Removed: During fiscal 2020, changes were made to reflect certain Leading Beauty Forward enhancements made to the capabilities and cost structure of the Company’s travel retail business, which are primarily centralized in The Americas region, and resulted in a change to the royalty structure of the travel retail business to reflect the value created in The Americas region.
−Removed: Accordingly, the fiscal 2019 operating income of The Americas was increased, with a corresponding decrease in Europe, the Middle East & Africa, by $ 866 million to conform with the fiscal 2021 and 2020 methodology and presentation.
The accounting policies for the Company’s reportable segments are substantially the same as those described in the summary of significant accounting policies, except for depreciation and amortization charges, which are allocated, primarily, based upon net sales.
62 unchanged sentences
$ 4,599 $ 4,470 $ 4,337
−Removed: (1) The net sales from the Company's travel retail business are included in the Europe, the Middle East & Africa region, with the exception of the net sales of Dr.
−Removed: Jart+ in the travel retail channel that are reflected in Korea in the Asia/Pacific region.
+Added: (1) The net sales from the Company’s travel retail business are included in the Europe, the Middle East & Africa region, with the exception of net sales of Dr.Jart+ in the travel retail channel that are reflected in Korea in the Asia/Pacific region.
Operating income attributable to the travel retail sales included in Europe, the Middle East & Africa is included in that region and in The Americas.
−Removed: (2) Includes property, plant and equipment, net.
−Removed: Fiscal 2021 and 2020 also includes operating lease ROU assets, recognized as a result of the adoption of ASC 842.
−Removed: Refer to Note 2 – Summary of Significant Accounting Policies for information.
+Added: (2) Includes property, plant and equipment, net and operating lease ROU assets.
Net sales are predominantly attributed to a country within a geographic region based on the location of the customer.
1 unchanged sentence
Net sales in the United States, including net sales from travel retail locations, in fiscal 2022, 2021 and 2020 were $ 4,009 million, $ 3,356 million and $ 3,449 million, respectively.
−Removed: Net sales in mainland China, including net sales from travel retail locations, in fiscal 2021, 2020 and 2019 were approximately 36 %, 24 % and 17 % of consolidated net sales, respectively, and no other country represented greater than 10% of the Company’s consolidated net sales.
+Added: Net sales in mainland China, as well as net sales from travel retail locations, in fiscal 2022, 2021 and 2020 were approximately 34 %, 36 % and 24 % of consolidated net sales, respectively.
+Added: In fiscal 2022, net sales in Korea, including net sales from travel retail locations, were approximately 11 % and no other country represented greater than 10% of the Company’s consolidated net sales.
The Company’s long-lived assets in the United States at June 30, 2022, 2021 and 2020 were $ 2,153 million, $ 2,075 million and $ 2,192 million, respectively.
41 unchanged sentences
4.13 Officers’ Certificate, dated May 10, 2016, defining certain terms of the 4.375% Senior Notes due 2045 (filed as Exhibit 4.3 to our Current Report on Form 8-K filed on May 10, 2016) (SEC File No.
−Removed: 4.14 Global Note for the 1.700% Senior Notes due 2021 (filed as Exhibit A in Exhibit 4.1 to our Current Report on Form 8-K filed on May 10, 2016) (SEC File No.
−Removed: 4.15 Officers’ Certificate, dated May 10, 2016, defining certain terms of the 4.375% Senior Notes due 2045 (filed as Exhibit 4.3 to our Current Report on Form 8-K filed on May 10, 2016) (SEC File No.
4.14 Global Note for the 4.375% Senior Notes due 2045 (filed as Exhibit B in Exhibit 4.3 to our Current Report on Form 8-K filed on May 10, 2016) (SEC File No.
1 unchanged sentence
4.16 Form of Global Note for the 3.150% Senior Notes due 2027 (included as Exhibit A in Exhibit 4.3 to our Current Report on Form 8-K filed on February 9, 2017) (SEC File No.
−Removed: Number Description
4.17 Officers’ Certificate, dated February 9, 2017, defining certain terms of the 4.150% Senior Notes due 2047 (filed as Exhibit 4.5 to our Current Report on Form 8-K filed on February 9, 2017) (SEC File No.
4.18 Form of Global Note for the 4.150% Senior Notes due 2047 (included as Exhibit A in Exhibit 4.5 to our Current Report on Form 8-K filed on February 9, 2017) (SEC File No.
+Added: Number Description
4.19 Officers’ Certificate, dated November 21, 2019, defining certain terms of the 2.000% Senior Notes due 2024 (filed as Exhibit 4.1 to our Current Report on Form 8-K filed on November 21, 2019) (SEC File No.
26 unchanged sentences
10.2b Second Amendment to Registration Rights Agreement (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on April 29, 1997) (SEC File No.
−Removed: Number Description
10.2c Third Amendment to Registration Rights Agreement (filed as Exhibit 10.2c to our Annual Report on Form 10-K filed on September 17, 2001) (SEC File No.
10.2d Fourth Amendment to Registration Rights Agreement (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q filed on January 29, 2004) (SEC File No.
−Removed: 10.3 The Estee Lauder Companies Retirement Growth Account Plan, as amended and restated, effective as of January 1, 2017, further amended effective as of July 1, 2017 (filed as Exhibit 10.3 to our Annual Report on Form 10-K filed on August 25, 2017) (SEC File No.
+Added: Number Description
+Added: 10.3 The Estee Lauder Companies Retirement Growth Account Plan, as amended and restated, effective as of January 1, 201 9 , as further amended through January 1, 2022 (filed as Exhibit 10.
+Added: 2 to our Quarterly Report on Form 10- Q filed on February 3, 2022 ) (SEC File No.
+Added: 10.3a Amendment to amended and restated The Estee Lauder Companies Retirement Growth Account Plan, effective as of May 31, 2022 (filed as Exhibit 10.1 on our Quarterly Report on Form 10-Q filed on May 3, 2022) (SEC File No.
10.4 The Estee Lauder Inc.
30 unchanged sentences
10.12 Employment Agreement with Deirdre Stanley filed as Exhibit 10.12 to our Annual Report on Form 10-K filed on August 28, 2020) (SEC File No.
−Removed: Number Description
10.12a Amendment to Employment Agreement with Deirdre Stanley filed as Exhibit 10.12a to our Annual Report on Form 10-K filed on August 28, 2020) (SEC File No.
+Added: Number Description
+Added: 10.13 Employment Agreement with Jane Hertzmark Hudis (SEC File No.
10.14 Form of Deferred Compensation Agreement (interest-based) with Outside Directors (filed as Exhibit 10.14 to our Annual Report on Form 10-K filed on September 17, 2001) (SEC File No.
13 unchanged sentences
10.16e The Estée Lauder Companies Inc.
−Removed: Amended and Restated Non-Employee Director Share Incentive Plan (as of July 13, 2021) (SEC File No.
+Added: Amended and Restated Non-Employee Director Share Incentive Plan (as of July 13, 2021) (filed as E xhibit 10.15e to our Ann ual Report on Form 10-K filed on August 27, 2021) (SEC File No.
10.17 Summary of Compensation For Non-Employee Directors of the Company (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q filed on November 1, 2013) (SEC File No.
10.17a Summary of Compensation For Non-Employee Directors of the Company (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q filed on November 1, 2017) (SEC File No.
−Removed: 10.16b Summary of Compensation For Non-Employee Directors of the Company (SEC File No.
+Added: 10.17b Summary of Compensation For Non-Employee Directors of the Company (filed as Exhibit 10.16b to our Ann ual Report on Form 10-K filed on August 27, 202 1) (SEC File No.
10.18 Form of Stock Option Agreement for Annual Stock Option Grants under Non-Employee Director Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 99.2 to our Registration Statement on Form S-8 filed on November 9, 2007) (SEC File No.
8 unchanged sentences
Amended and Restated Fiscal 2002 Share Incentive Plan (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on November 19, 2019) (SEC File No.
+Added: Number Description
10.19d Form of Stock Option Agreement under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on November 4, 2011) (SEC File No.
−Removed: Number Description
10.19e Form of Stock Option Agreement under The Estée Lauder Companies Inc.
1 unchanged sentence
10.19f Form of Stock Option Agreement under The Estée Lauder Companies Inc.
−Removed: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on November 2, 2012) (SEC File No.
−Removed: 10.18g Form of Stock Option Agreement with Fabrizio Freda under The Estée Lauder Companies Inc.
−Removed: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.6 to our Quarterly Report on Form 10-Q filed on November 2, 2012) (SEC File No.
−Removed: 10.18h Form of Stock Option Agreement under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.16y to our Annual Report on Form 10-K filed on August 20, 2014) (SEC File No.
−Removed: 10.18i Form of Stock Option Agreement with Fabrizio Freda under The Estée Lauder Companies Inc.
+Added: 10.19g Form of Stock Option Agreement with Fabrizio Freda under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.16z to our Annual Report on Form 10-K filed on August 20, 2014) (SEC File No.
−Removed: 10.18j Form of Stock Option Agreement under The Estée Lauder Companies Inc.
+Added: 10.19h Form of Stock Option Agreement under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.16m to our Annual Report on Form 10-K filed on August 25, 2017) (SEC File No.
−Removed: 10.18k Form of Stock Option Agreement under The Estée Lauder Companies Inc.
+Added: 10.19i Form of Stock Option Agreement under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.17l to our Annual Report on Form 10-K filed on August 23, 2019) (SEC File No.
−Removed: 10.18l Performance Share Unit Award Agreement with Fabrizio Freda under The Estée Lauder Companies Inc.
+Added: 10.19j Performance Share Unit Award Agreement with Fabrizio Freda under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Notice of Grant) (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on September 11, 2015) (SEC File No.
−Removed: 10.18m Performance Share Unit Award Agreement with Fabrizio Freda (2018) under The Estée Lauder Companies Inc.
+Added: 10.19k Performance Share Unit Award Agreement with Fabrizio Freda (2018) under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Notice of Grant) (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on February 15, 2018) (SEC File No.
−Removed: 10.18n Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc.
+Added: 10.19l Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.17u to our Annual Report on Form 10-K filed on August 24, 2018) (SEC File No.
−Removed: 10.18o Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc.
+Added: 10.19m Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.17t to our Annual Report on Form 10-K filed on August 23, 2019) (SEC File No.
−Removed: 10.18p Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc.
+Added: 10.19n Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on November 2, 2020) (SEC File No.
−Removed: 10.18q Price-Vested Unit Award Agreement with Fabrizio Freda under The Estée Lauder Companies Inc.
−Removed: Amended and Restated Fiscal 2002 Share Incentive Plan (including Notice of Grant) (filed as Exhibit 10.1 to our current R eport on Form 8-K filed on March 16, 2021) (SEC File No.
−Removed: 10.18r Performance Share Unit Award Agreement with Fabrizio Freda under The Estée Lauder Companies Inc.
−Removed: A mended and Restated Fiscal 2002 Share Incentive Plan (including Notice of Grant) (filed as Exhibit 10.2 to our Current Report on Form 8-K filed on March 16, 2021) (SEC File No.
−Removed: 10.18s Form of Non-annual Performance Share Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc.
−Removed: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (SEC File No.
−Removed: 10.18t Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc.
−Removed: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (SEC File No.
+Added: 10.19o Price-Vested Unit Award Agreement with Fabrizio Freda under The Estée Lauder Companies Inc.
+Added: Amended and Restated Fiscal 2002 Share Incentive Plan (including Notice of Grant) (filed as Exhibit 10.1 to our current Report on Form 8-K filed on March 16, 2021) (SEC File No.
+Added: 10.19p Performance Share Unit Award Agreement with Fabrizio Freda under The Estée Lauder Companies Inc.
+Added: Amended and Restated Fiscal 2002 Share Incentive Plan (including Notice of Grant) (filed as Exhibit 10.2 to our Current Report on Form 8-K filed on March 16, 2021) (SEC File No.
+Added: 10.19q Form of Non-annual Performance Share Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc.
+Added: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhi bit 10.18s to our Annual Report on Form 10-K filed on August 27, 20 21 (SEC File No.
+Added: 10.19r Form of Performance Share Unit Award Agreement for Employees including Executive Officers under The Estée Lauder Companies Inc.
+Added: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.1 8t to our Annual Report on Form 10-K filed on August 27, 20 21) (SEC File No.
+Added: 10.19s Form of Restricted Stock Unit Award Agreement under The Estée Lauder Companies Inc.
+Added: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.17y to our Annual Report on Form 10-K filed on August 23, 2019) (SEC File No.
Number Description
−Removed: 10.18u Form of Restricted Stock Unit Award Agreement under The Estée Lauder Companies Inc.
+Added: 10.19t Form of Restricted Stock Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc.
+Added: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.17z to our Annual Report on Form 10-K filed on August 23, 2019) (SEC File No.
+Added: 10.19u Form of Restricted Stock Unit Award Agreement for Employees other than Executive Officers under The Estée Lauder Companies Inc.
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.17aa to our Annual Report on Form 10-K filed on August 23, 2019) (SEC File No.
3 unchanged sentences
Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.18cc to our Annual Report on Form 10-K filed on August 28, 2020) (SEC File No.
−Removed: 10.18x Form of Restricted Stock Unit Award Agreement under The Estée Lauder Companies Inc.
−Removed: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.17y to our Annual Report on Form 10-K filed on August 23, 2019) (SEC File No.
−Removed: 10.18y Form of Restricted Stock Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc.
−Removed: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.17z to our Annual Report on Form 10-K filed on August 23, 2019) (SEC File No.
−Removed: 10.18z Form of Restricted Stock Unit Award Agreement for Employees other than Executive Officers under The Estée Lauder Companies Inc.
−Removed: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (filed as Exhibit 10.17aa to our Annual Report on Form 10-K filed on August 23, 2019) (SEC File No.
−Removed: 10.18aa Form of Restricted Stock Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc.
−Removed: A mended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) ( filed as Exhibit 10.18bb to our Annual Report on Form 10-K filed on August 28, 2020) (SEC File No.
−Removed: 10.18bb Form of Restricted Stock Unit Award Agreement for Employees other than Executive Officers under The Estée L auder Companies Inc.
−Removed: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of G rant) (filed as Exhibit 10.18cc to our Annual Report on Form 10-K filed on August 28, 2020) (SEC File No.
−Removed: 10.18cc Form of Non-annual Restricted Stock Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc.
−Removed: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) f iled as Exhibit 10.18dd to our Annual Report on Form 10-K filed on August 28, 2020) (SEC File No.
−Removed: 10.19 $1.5 Billion Credit Agreement, dated as of October 26, 2018, among The Estée Lauder Companies Inc., the Eligible Subsidiaries of the Company, as defined therein, the lenders listed therein, and JPMorgan Chase Bank, N.A., as administrative agent (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on October 29, 2018) (SEC File No.
+Added: 10.19x Form of Non-annual Restricted Stock Unit Award Agreement for Executive Officers under The Estée Lauder Companies Inc.
+Added: Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) filed as Exhibit 10.18dd to our Annual Report on Form 10-K filed on August 28, 2020) (SEC File No.
+Added: 10.20 $2.5 Billion Credit Facility, dated as of October 22, 2021, among The Estée Lauder Companies Inc., the Eligible Subsidiaries of the Company, as defined therein, the lenders listed therein, and JPMorgan Chase Bank, N.A., as administrative agent (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on October 22, 2021) (SEC File No.
10.21 Services Agreement, dated January 1, 2003, among Estee Lauder Inc., Melville Management Corp., Leonard A.
1 unchanged sentence
Lauder (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q filed on January 28, 2010) (SEC File No.
+Added: 10.21a Agreement of Sublease, dated May 18, 2022, between Editions de Parfums LLC, Sublandlord and Melville Management Corporation, Subtenant (SEC File No.
10.22 Services Agreement, dated November 22, 1995, between Estee Lauder Inc.
11 unchanged sentences
(filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on February 4, 2011) (SEC File No.
−Removed: Number Description
10.23d Fourth Amendment to Sublease, dated March 4, 2020, between Aramis Inc.
7 unchanged sentences
and Aerin Lauder Zinterhofer dated October 28, 2014 (filed as Exhibit 10.23a to our Annual Report on Form 10-K filed on August 20, 2015) (SEC File No.
+Added: Number Description
10.25b Second Amendment to Creative Consultant Agreement between Estee Lauder Inc.
1 unchanged sentence
10.25c Third Amendment to Creative Consultant Agreement between Estee Lauder Inc.
−Removed: and Aerin Lauder Zinterhofer effective July 1, 2021 (SEC File No.
+Added: and Aerin Lauder Zinterhofer effective July 1, 2021 (filed as Exhibit 10.24c to our Annual Report on Form 10-K filed on August 27, 2021) (SEC File No.
10.26 License Agreement, dated April 6, 2011, by and among Aerin LLC, Aerin Lauder Zinterhofer and Estee Lauder Inc.
21 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.