What changed in this filing

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Item 1. Financial Statements

2025-02-04 compared with 2024-10-31 · 391 added, 216 removed, 766 unchanged (44% of the section changed)

3 unchanged sentences

Three Months Ended

December 31, Six Months Ended

(In millions, except per share data) 2024 2023 2024 2023

1 unchanged sentence

Cost of sales

957 1,154 1,885 2,224

3,047 3,125 5,480 5,573

Operating expenses

Selling, general and administrative

2,585 2,544 4,883 4,893

Restructuring and other charges

Impairment of goodwill and other intangible assets

Talcum litigation settlement agreements

Total operating expenses

3,627 2,551 6,181 4,901

Operating income (loss)

( 580 ) 574 ( 701 ) 672

Interest expense 90 98 182 193

2 unchanged sentences

Earnings (loss) before income taxes

( 650 ) 519 ( 830 ) 565

Provision (benefit) for income taxes

( 60 ) 195 ( 84 ) 205

Net earnings (loss)

( 590 ) 324 ( 746 ) 360

Net earnings attributable to redeemable noncontrolling interest — ( 11 ) — ( 16 )

6 unchanged sentences

Weighted average common shares outstanding

360.0 358.7 359.8 358.6

360.0 360.0 359.8 360.3

See notes to consolidated financial statements.

2 unchanged sentences

Three Months Ended

December 31, Six Months Ended

(In millions) 2024 2023 2024 2023

3 unchanged sentences

Net cash flow hedge gain (loss)

Cross-currency swap contract gain

55 ( 47 ) ( 2 ) ( 28 )

Cross-currency swap contract - fair value hedge gain (loss)

( 5 ) 14 7 14

Retirement plan and other retiree benefit adjustments 2 ( 1 ) 4 ( 2 )

1 unchanged sentence

Benefit (provision) for income taxes on components of other comprehensive income

( 27 ) 38 ( 9 ) —

Total other comprehensive income (loss), net of tax

Comprehensive loss

( 284 ) 220 ( 201 ) 80

Comprehensive loss (income) attributable to redeemable noncontrolling interest:

Comprehensive income (loss) ( 874 ) 544 ( 947 ) 440

Comprehensive income attributable to redeemable noncontrolling interest:

Net earnings — ( 11 ) — ( 16 )

Translation adjustments — ( 13 ) — ( 2 )

Total comprehensive loss attributable to redeemable noncontrolling interest — 6

Comprehensive loss attributable to The Estée Lauder Companies Inc.

Total comprehensive income attributable to redeemable noncontrolling interest — ( 24 ) — ( 18 )

Comprehensive income (loss) attributable to The Estée Lauder Companies Inc.

$ ( 874 ) $ 520 $ ( 947 ) $ 422

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data) September 30

(In millions, except share and per share data) December 31, 2024 June 30, 2024

Current assets

26 unchanged sentences

Class A shares authorized:

1,300,000,000 at September 30, 2024 and June 30, 2024;

1,300,000,000 at December 31, 2024 and June 30, 2024;

shares issued:

471,407,641 at September 30, 2024 and 471,018,569 at June 30, 2024;

472,456,912 at December 31, 2024 and 471,018,569 at June 30, 2024;

Class B shares authorized:

304,000,000 at September 30, 2024 and June 30, 2024;

304,000,000 at December 31, 2024 and June 30, 2024;

shares issued and outstanding:

125,542,029 at September 30, 2024 and June 30, 2024

125,542,029 at December 31, 2024 and June 30, 2024

Paid-in capital 6,889 6,685

3 unchanged sentences

Treasury stock, at cost;

237,972,181 Class A shares at September 30, 2024 and 237,871,995 Class A shares at June 30, 2024

238,306,192 Class A shares at December 31, 2024 and 237,871,995 Class A shares at June 30, 2024

( 13,698 ) ( 13,664 )

5 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(In millions) 2024 2023

10 unchanged sentences

Pension and post-retirement benefit contributions ( 50 ) ( 62 )

Impairment of goodwill and other intangible assets

Other non-cash items 7 14

Changes in operating assets and liabilities:

Increase in accounts receivable, net ( 219 ) ( 477 )

Decrease (increase) in inventory and promotional merchandise ( 10 ) 62

Increase in other assets, net

( 47 ) ( 17 )

Decrease (increase) in accounts receivable, net

Decrease in inventory and promotional merchandise

Decrease (increase) in other assets, net

Decrease in accounts payable ( 298 ) ( 251 )

Increase (decrease) in other accrued and noncurrent liabilities ( 100 ) 51

Increase in other accrued and noncurrent liabilities

Decrease in operating lease assets and liabilities, net ( 12 ) ( 16 )

Net cash flows used for operating activities

( 670 ) ( 408 )

Net cash flows provided by operating activities

Cash flows from investing activities

4 unchanged sentences

Cash flows from financing activities

Repayments of current debt, net

Repayments and redemptions of long-term debt ( 1 ) ( 3 )

Proceeds of current debt, net

Repayments of commercial paper (maturities after three months) — ( 785 )

Repayments of long-term debt

( 502 ) ( 5 )

Net proceeds from stock-based compensation transactions 15 19

31 unchanged sentences

As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions.

Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods.

Significant changes, if any, in those estimates and assumptions will be reflected in the consolidated financial statements in future periods.

Currency Translation and Transactions

1 unchanged sentence

Unrealized translation gains (losses), net of tax, reported as translation adjustments through other comprehensive income (loss) (“OCI”) attributable to The Estée Lauder Companies Inc.

were $ 115 million and $( 143 ) million, net of tax, during the three months ended September 30, 2024 and 2023, respectively.

were $( 323 ) million and $ 232 million, net of tax, during the three months ended December 31, 2024 and 2023, respectively, and $( 208 ) million and $ 89 million, net of tax, during the six months ended December 31, 2024 and 2023, respectively.

For the Company’s subsidiaries operating in highly inflationary economies, the U.S.

3 unchanged sentences

The Company also uses cross-currency swap contracts to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt.

Additionally, the Company 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.

Additionally, the Company enters into foreign currency forward contracts and cross-currency swap contracts to hedge a portion of its net investment in certain foreign operations, which are designated as net investment hedges.

See Note 4 – Derivative Financial Instruments for further discussion .

The Company categorizes these instruments as entered into for purposes other than trading.

The accompanying consolidated statements of earnings (loss) include net exchange gains on foreign currency transactions of $ 19 million and $ 16 million during the three months ended September 30, 2024 and 2023, respectively.

The accompanying consolidated statements of earnings (loss) include net exchange gains on foreign currency transactions of $ 25 million and $ 13 million during the three months ended December 31, 2024 and 2023, respectively, and $ 44 million and $ 29 million during the six months ended December 31, 2024 and 2023, respectively.

THE ESTÉE LAUDER COMPANIES INC.

5 unchanged sentences

While the Company does not believe it is exposed significantly to any undue concentration of credit risk at this time, it continues to monitor its customers' abilities, individually and collectively, to make timely payments.

The Company’s largest customer during the first quarter of fiscal 2025 sells products primarily within the United States and accounted for $ 200 million, or 10 %, and $ 78 million, or 4 %, of the Company's accounts receivable at September 30, 2024 and June 30, 2024, respectively.

The Company’s largest customer as of December 31, 2024 sells products primarily in China travel retail.

This customer accounted for $ 163 million, or 10 %, and $ 206 million, or 12 %, of the Company's accounts receivable at December 31, 2024 and June 30, 2024, respectively.

Inventory and Promotional Merchandise

Inventory and promotional merchandise consists of the following:

(In millions) September 30, 2024 June 30, 2024

(In millions) December 31, 2024 June 30, 2024

Raw materials

2 unchanged sentences

Promotional merchandise

Total inventory and promotional merchandise

$ 2,002 $ 2,175

1 unchanged sentence

Property, plant and equipment consists of the following:

(In millions) September 30, 2024 June 30, 2024

(In millions) December 31, 2024 June 30, 2024

Assets (Useful Life)

6 unchanged sentences

Construction in progress 401 500

Total property, plant and equipment, gross

Less accumulated depreciation and amortization

( 4,280 ) ( 4,030 )

Total property, plant and equipment, net

$ 3,049 $ 3,136

(1) Land improvements are depreciated over a 10 year useful life.

Depreciation and amortization of property, plant and equipment was $ 168 million and $ 162 million during the three months ended September 30, 2024 and 2023, respectively.

Depreciation and amortization of property, plant and equipment was $ 168 million and $ 163 million during the three months ended December 31, 2024 and 2023, respectively, and $ 336 million and $ 325 million during the six months ended December 31, 2024 and 2023, 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 (loss).

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The effective rate for income taxes was 13.3 % and 21.7 % for the three months ended September 30, 2024 and 2023, respectively.

The decrease in the effective tax rate of 840 basis points was primarily attributable to the impact of the discrete treatment of the charge associated with the talcum litigation settlement agreements (See Note 8 - Commitments and Contingencies for further discussion) and charges associated with restructuring and other activities recorded in the first quarter of fiscal 2025.

The loss before income taxes in the first quarter of fiscal 2025 increased the impact of these discrete items on the effective tax rate.

Three Months Ended

Six Months Ended

2024 2023 2024 2023

Effective rate for income taxes 9.2 % 37.6 % 10.1 % 36.3 %

Basis-point change from the prior-year period ( 2,840 ) ( 2,620 )

For the three months ended December 31, 2024, the decrease in the effective tax rate was primarily attributable to the impact of the discrete treatment of charges associated with restructuring and other activities, the impairment of goodwill and other intangible assets, as well as an unfavorable impact associated with previously issued stock-based compensation.

For the six months ended December 31, 2024, the decrease in the effective tax rate was primarily attributable to the impact of the discrete treatment of charges associated with restructuring and other activities, the impairment of goodwill and other intangible assets, the charge associated with the talcum litigation settlement agreements (See Note 8 - Commitments and Contingencies for further discussion) and an unfavorable impact associated with previously issued stock-based compensation.

On August 16, 2022, the U.S.

federal government enacted the Inflation Reduction Act, including a tax provision implementing a 15% corporate alternative minimum tax based on global adjusted financial statement income.

The corporate alternative minimum tax did not have an impact on the Company's consolidated financial statements for the three months ended September 30, 2024 and 2023.

The corporate alternative minimum tax did not have an impact on the Company's consolidated financial statements for the three and six months ended December 31, 2024 and 2023.

On August 26, 2024, the U.S.

5 unchanged sentences

Although the Company has accrued the $ 73 million estimated tax benefit in the provision for income taxes and reduced the Transition Tax payable in the fiscal 2025 first quarter by $ 73 million, at this time the Company believes it is more-likely-than-not that the intended Transition Tax payable reduction claim will not be sustained.

As such, in the fiscal 2025 first quarter the Company has correspondingly increased the provision for income taxes for the estimated $ 73 million tax benefit to establish an uncertain tax position reserve accrual for the estimated $ 73 million Transition Tax at issue.

As a result, there was no net impact from this development in the provision for income taxes and accompanying consolidated statement of earnings (loss) for the three months ended September 30, 2024.

In the accompanying consolidated balance sheet as of September 30, 2024, the $ 73 million Transition Tax payable reduction and offsetting $ 73 million uncertain tax position reserve accrual are included in Other noncurrent liabilities.

As such, in the fiscal 2025 first quarter the Company correspondingly increased the provision for income taxes for the estimated $ 73 million tax benefit to establish an uncertain tax position reserve accrual for the estimated $ 73 million Transition Tax at issue.

As a result, there was no net impact from this development in the provision for income taxes and accompanying consolidated statement of earnings (loss) for the three and six months ended December 31, 2024.

In the accompanying consolidated balance sheet as of December 31, 2024, the $ 73 million Transition Tax payable reduction and offsetting $ 73 million uncertain tax position reserve accrual are included in Other noncurrent liabilities.

In December 2021, the Organization for Economic Cooperation and Development issued "Pillar Two" Global Anti-Base Erosion model rules for countries to enact into domestic law that would establish a 15% global minimum tax applied on a country-by-country basis for multinational companies.

In certain countries that have enacted legislation incorporating the global minimum tax, it became effective for the Company at the beginning of fiscal 2025.

The estimated tax impact of such legislation has been included in the provision for income taxes for the three months ended September 30, 2024 and was not material.

The estimated tax impact of such legislation has been included in the provision for income taxes for the three and six months ended December 31, 2024 and was not material.

We are continuing to monitor and evaluate the potential impact of newly enacted legislation incorporating the global minimum tax in additional countries.

As of September 30, 2024 and June 30, 2024, the gross amount of unrecognized tax benefits, exclusive of interest and penalties, totaled $ 138 million and $ 65 million, respectively.

The total amount of unrecognized tax benefits at September 30, 2024 that, if recognized, would affect the effective tax rate was $ 128 million.

The significant increase in the gross amount of unrecognized tax benefits as of September 30, 2024 as compared to June 30, 2024 was attributable to having established an uncertain tax position reserve accrual for the Transition Tax payable reduction position determined in the fiscal 2025 first quarter based on the August 26, 2024 U.S.

As of December 31, 2024 and June 30, 2024, the gross amount of unrecognized tax benefits, exclusive of interest and penalties, totaled $ 139 million and $ 65 million, respectively.

The total amount of unrecognized tax benefits at December 31, 2024 that, if recognized, would affect the effective tax rate was $ 129 million.

The significant increase in the gross amount of unrecognized tax benefits as of December 31, 2024 as compared to June 30, 2024 was attributable to having established an uncertain tax position reserve accrual for the Transition Tax payable reduction position determined in the fiscal 2025 first quarter based on the August 26, 2024 U.S.

Tax Court decision in Varian Medical Systems v.

Commissioner, as discussed above.

The total gross interest and penalties accrued related to unrecognized tax benefits during the three months ended September 30, 2024 in the accompanying consolidated statements of earnings (loss) was $ 2 million.

The total gross accrued interest and penalties in the accompanying consolidated balance sheets at September 30, 2024 and June 30, 2024, was $ 19 million and $ 17 million, respectively.

On the basis of the information available as of September 30, 2024, the Company does not expect significant changes to the total amount of unrecognized tax benefits within the next twelve months.

At September 30, 2024 and June 30, 2024, total Other assets of $ 1,527 million and $ 1,460 million included $ 1,107 million and $ 1,018 million of deferred tax assets, respectively.

The total gross interest and penalties accrued related to unrecognized tax benefits during the three and six months ended December 31, 2024 in the accompanying consolidated statements of earnings (loss) was $ 1 million and $ 2 million, respectively.

The total gross accrued interest and penalties in the accompanying consolidated balance sheets at December 31, 2024 and June 30, 2024, was $ 20 million and $ 17 million, respectively.

On the basis of the information available as of December 31, 2024, the Company does not expect significant changes to the total amount of unrecognized tax benefits within the next twelve months.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the fiscal 2025 second quarter, the Company received notification of the formal conclusion of the compliance process with respect to its fiscal 2023 income tax return under the U.S.

Internal Revenue Service (“IRS”) Compliance Assurance Program (“CAP”), which had no impact on the Company’s consolidated financial statements for the three and six months ended December 31, 2024.

At December 31, 2024 and June 30, 2024, total Other assets of $ 1,693 million and $ 1,460 million included $ 1,250 million and $ 1,018 million of deferred tax assets, respectively.

Supplier Finance Programs

2 unchanged sentences

The supplier invoices that have been confirmed as valid under the programs require payment in full within 90 days of the invoice date.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Outstanding obligations confirmed as valid totaling $ 58 million as of September 30, 2024 and June 30, 2024, are included in Accounts payable in the accompanying consolidated balance sheets.

Outstanding obligations confirmed as valid totaling $ 70 million and $ 58 million as of December 31, 2024 and June 30, 2024, respectively, are included in Accounts payable in the accompanying consolidated balance sheets.

Other Accrued Liabilities

Other accrued liabilities consist of the following:

(In millions) September 30, 2024 June 30, 2024

(In millions) December 31, 2024 June 30, 2024

Advertising, merchandising and sampling $ 335 $ 276

4 unchanged sentences

Accrued income taxes 205 335

Sales return accrual 265 248

Other 1,205 883

Total other accrued liabilities

$ 3,497 $ 3,404

9 unchanged sentences

Such information is included in Supplier Finance Programs above within Note 1 – Summary of Significant Accounting Policies .

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recently Issued Accounting Standards

2024-03 and 2025-01 – Disaggregation of Income Statement Expenses (Subtopic 220-40)

In November 2024 and January 2025, the FASB issued authoritative guidance requiring disclosures, in a tabular format in the notes to the consolidated financial statements, on the disaggregation of relevant expense captions that are included on the face of the consolidated statement of earnings within continuing operations.

The relevant expense captions are required to be disaggregated into natural expense categories including purchases of inventory, employee compensation, depreciation and intangible asset amortization.

The guidance also requires certain expenses, gains or losses that require disclosure under existing U.S.

GAAP, and that are recorded in a relevant expense caption on the face of the consolidated statement of earnings, to be presented in the same tabular disclosure.

Qualitative disclosures about any remaining amounts in relevant expense line items are required as well.

In addition, companies are required to disclose the total amount of selling expenses and, on an annual basis, how it defines selling expenses.

Effective for the Company :

The guidance is effective for the Company’s fiscal year ending June 30, 2028 Form 10-K and then in interim periods beginning in the Company’s first quarter of fiscal 2029.

Early adoption is permitted.

The guidance should be applied on a prospective basis;

however, retrospective application is permitted.

Impact on the consolidated financial statements :

The Company is currently evaluating the impact that this guidance will have on its consolidated financial statement disclosures.

2023-07 – Segment Reporting (Topic 280):

11 unchanged sentences

The guidance should be applied retrospectively unless impracticable.

Impact on consolidated financial statement s – The Company is currently evaluating the impact that this guidance will have on its financial statement disclosures.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Impact on consolidated financial statement s – The Company is currently evaluating the impact that this guidance will have on its consolidated financial statement disclosures.

2023-09 – Income Taxes (Topic 740):

7 unchanged sentences

The guidance also codifies existing SEC rules that require companies to disclose income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign as well as income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign jurisdictions.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Effective for the Company – The guidance is effective for the Company’s fiscal year ending June 30, 2026 Form 10-K.

1 unchanged sentence

The guidance should be applied on a prospective basis with the option to apply the standard retrospectively.

Impact on consolidated financial statement s – The Company is currently evaluating the impact that this guidance will have on its financial statement disclosures.

Impact on consolidated financial statement s – The Company is currently evaluating the impact that this guidance will have on its consolidated financial statement disclosures.

SEC Final Rule Release No.

5 unchanged sentences

The Company is not required to provide comparative information in the year of adoption.

Impact on consolidated financial statement s – The Company is currently evaluating the impact that this guidance will have on its annual financial statement disclosures.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Impact on consolidated financial statement s – The Company is currently evaluating the impact that this guidance will have on its annual consolidated financial statement disclosures.

NOTE 2 – GOODWILL AND OTHER INTANGIBLE ASSETS

2 unchanged sentences

Balance as of June 30, 2024

Goodwill, gross carrying amount

$ 1,612 $ 1,116 $ 253 $ 353 $ 3,334

1 unchanged sentence

( 429 ) ( 732 ) ( 30 ) — ( 1,191 )

Total goodwill

1,183 384 223 353 2,143

Impairment charges

— ( 13 ) — — ( 13 )

Translation adjustments, goodwill

( 72 ) — ( 2 ) ( 1 ) ( 75 )

Translation adjustments, accumulated impairments

( 54 ) ( 13 ) ( 2 ) ( 1 ) ( 70 )

Balance as of September 30, 2024

Balance as of December 31, 2024

Goodwill, gross carrying amount

1,540 1,116 251 352 3,259

1 unchanged sentence

( 411 ) ( 745 ) ( 30 ) — ( 1,186 )

Total goodwill

$ 1,129 $ 371 $ 221 $ 352 $ 2,073

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Intangible Assets

Other intangible assets consist of the following:

September 30, 2024 June 30, 2024

December 31, 2024 June 30, 2024

(In millions) Gross

8 unchanged sentences

Trademarks 3,202 4,107

Total intangible assets

Total other intangible assets, net

$ 4,158 $ 5,183

The aggregate amortization expense related to amortizable intangible assets was $ 36 million for the three months ended September 30, 2024 and 2023.

The aggregate amortization expense related to amortizable intangible assets was $ 35 million and $ 37 million for the three months ended December 31, 2024 and 2023, respectively, and $ 71 million and $ 73 million for the six months ended December 31, 2024 and 2023, respectively.

The estimated aggregate amortization expense for the remainder of fiscal 2025 and for each of the next four fiscal years is as follows:

1 unchanged sentence

Estimated aggregate amortization expense $ 65 $ 136 $ 119 $ 94 $ 93

Impairment Analysis During the Six Months Ended December 31, 2024

During the fiscal 2025 second quarter, the TOM FORD brand experienced lower-than-expected growth within key geographic regions and channels, including in mainland China, Asia travel retail and Hong Kong SAR.

Also during the fiscal 2025 second quarter, the Too Faced reporting unit experienced lower-than-expected results in key geographic regions and channels.

As a result, the Company made revisions to the internal forecasts relating to its TOM FORD brand and Too Faced reporting unit.

Additionally, there were increases in the weighted average cost of capital for both the TOM FORD brand and Too Faced reporting unit as compared to the prior-year annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2024.

The Company concluded that the changes in circumstances in the TOM FORD brand and Too Faced reporting unit, along with increases in the weighted average cost of capital, triggered the need for interim impairment reviews of the TOM FORD trademark and the Too Faced trademark and goodwill.

These changes in circumstances were also an indicator that the carrying amounts of Too Faced’s long-lived assets, including customer lists, may not be recoverable.

Accordingly, the Company performed interim impairment tests for the TOM FORD and Too Faced trademarks and Too Faced goodwill as well as a recoverability test for the Too Faced long-lived assets as of December 31, 2024.

The Company concluded that the carrying value of the trademark intangible assets exceeded their estimated fair values, which were determined utilizing the relief-from-royalty method, and recorded an impairment charge of $ 773 million for TOM FORD and $ 75 million for Too Faced.

The Company concluded that the carrying amounts of the long-lived assets for Too Faced were recoverable.

Additionally, as a result of the interim impairment review, the remaining carrying value of Too Faced’s goodwill was not recoverable and the Company recorded an impairment charge of $ 13 million, reducing the carrying value to zero .

The significant assumptions used in the relief-from-royalty method include revenue growth rates and profit margins, terminal values, weighted average cost of capital used to discount future cash flows and royalty rates.

The most significant unobservable input used to estimate the fair value of the TOM FORD and Too Faced trademark intangible assets was the weighted average cost of capital, which was 11.5 % and 14 %, respectively.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of the impairment charges for the three and six months ended December 31, 2024 and the remaining trademark and goodwill carrying values as of December 31, 2024, for the TOM FORD brand and Too Faced reporting unit, are as follows:

Impairment Charges (1)

Carrying Value

(In millions) Three and Six Months Ended

December 31, 2024

As of December 31, 2024

Brand/Reporting Unit

Geographic Region

Trademark (2)

$ 773 $ — $ 1,805 $ —

$ 848 $ 13 $ 1,917 $ —

(1) The date of the fair value measurement for the TOM FORD and Too Faced trademark intangible assets and Too Faced reporting unit was December 31, 2024.

(2) The carrying values of the trademark intangible assets, subsequent to the impairment charges, are equal to their fair values.

The impairment charge related to the TOM FORD trademark intangible asset for the three and six months ended December 31, 2024 of $ 773 million was reflected in the fragrance, makeup and other product categories of $ 549 million, $ 170 million and $ 54 million, respectively.

The trademark and goodwill impairment charges related to Too Faced were reflected in the makeup product category.

NOTE 3 – CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES

4 unchanged sentences

Upon completion of this plan, the Company expects to have improved its gross margin and expense base to drive greater operating leverage for the future.

As a component of the PRGP, on February 5, 2024, the Company announced a two-year restructuring program ("Restructuring Program").

The Restructuring Program’s main focus includes the reorganization and rightsizing of certain areas of the Company as well as simplification and acceleration of processes.

As a component of the PRGP, on February 5, 2024, the Company announced a two-year restructuring program.

The restructuring program’s main focus included the reorganization and rightsizing of certain areas of the Company as well as simplification and acceleration of processes.

The Company committed to this course of action on February 1, 2024.

In connection with the Restructuring Program, as of September 30, 2024, the Company continues to estimate a net reduction in the range of approximately 1,800 to 3,000 positions globally, which is about 3 - 5 % of its positions including temporary and part-time employees as of June 30, 2023.

This reduction takes into account the elimination of some positions as well as retraining and redeployment of certain employees in select areas.

The Company plans to substantially complete specific initiatives under the Restructuring Program through fiscal 2026.

The Company expects that the Restructuring Program will result in restructuring and other charges totaling between $ 500 million and $ 700 million, before taxes, consisting of employee-related costs, contract terminations, asset write-offs and other costs associated with implementing these initiatives.

Restructuring Program Approvals

The Restructuring Program cumulative charges for initiatives approved by the Company during the three months ended September 30, 2024 and through October 25, 2024, were:

In connection with the restructuring program, the Company estimated a net reduction in the range of approximately 1,800 to 3,000 positions globally, which was about 3 - 5 % of its positions including temporary and part-time employees as of June 30, 2023.

This reduction took into account the elimination of some positions as well as retraining and redeployment of certain employees in select areas.

The Company planned to substantially complete specific initiatives under the restructuring program through fiscal 2026.

The Company expected that the restructuring program would result in restructuring and other charges totaling between $ 500 million and $ 700 million, before taxes, consisting of employee-related costs, contract terminations, asset write-offs and other costs associated with implementing these initiatives.

After reviewing additional potential initiatives and the progress of previously approved initiatives, on February 3, 2025, the Company committed to the expansion of the PRGP, including an expansion of the restructuring program.

The expansion of the overall PRGP is focused on three key areas.

First, the Company plans to adopt a more competitive approach to procurement, a key pillar of savings, by further consolidating spending and strategically re-evaluating key supplier relationships.

Second, the Company plans to further improve efficiencies within its supply chain network through a zero-waste approach, aiming to improve demand forecasting and innovation planning to minimize excess inventory and product destruction.

Third, the Company is outsourcing select services to proven global partners.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The expanded component of the restructuring program will begin during the Company’s fiscal 2025 third quarter with all initiatives to be approved by the end of fiscal 2026.

Specific initiatives under the expanded component of the restructuring program are expected to be substantially completed by the end of fiscal 2027.

The focus of the now expanded restructuring program (now, collectively the “Restructuring Program”) includes (i) reorganization and rightsizing of certain areas and (ii) simplification and acceleration of processes, along with the newly added focus on (i) outsourcing of select services and (ii) evolution of go-to-market footprint and selling models.

In connection with the Restructuring Program, the Company now estimates a net reduction in the range of approximately 5,800 to 7,000 positions globally, which is about 9 - 11 % of its positions including temporary and part-time employees as of June 30, 2023.

This net reduction takes into account the elimination of positions after retraining and redeployment of certain employees in select areas.

The Company now expects that the Restructuring Program will result in restructuring and other charges totaling between $ 1,200 million and $ 1,600 million, before taxes, consisting of employee-related costs, contract terminations, asset write-offs and other costs associated with implementing these initiatives, which other than the non-cash charges, are expected to result in future cash expenditures funded from cash provided by operations.

Restructuring Program Component of the Profit Recovery and Growth Plan Approvals

The Restructuring Program cumulative charges for initiatives approved by the Company as of December 31, 2024 and through January 29, 2025 were:

Net Sales) Cost of Sales Operating Expenses Total

3 unchanged sentences

Cumulative charges through June 30, 2024 $ — $ — $ 109 $ 78 $ 187

Three months ended September 30, 2024

Six months ended December 31, 2024 1 9 257 25 292

Cumulative charges through December 31, 2024

1 9 366 103 479

October 1, 2024 - October 25, 2024

Cumulative charges through October 25, 2024

January 1, 2025 - January 29, 2025

Cumulative charges through January 29, 2025

$ 5 $ 9 $ 413 $ 110 $ 537

Included in the above table, Restructuring Program cumulative restructuring charges for initiatives approved by the Company during the three months ended September 30, 2024 and through October 25, 2024, by major cost type were:

Included in the above table, Restructuring Program cumulative restructuring charges for initiatives approved by the Company as of December 31, 2024 and through January 29, 2025 were:

(In millions) Employee-

3 unchanged sentences

Cumulative charges through June 30, 2024 $ 93 $ 7 $ — $ 9 $ 109

Three months ended September 30, 2024

October 1, 2024 - October 25, 2024

Cumulative charges through October 25, 2024

Six months ended December 31, 2024 245 6 — 6 257

Cumulative charges through December 31, 2024

338 13 — 15 366

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

January 1, 2025 - January 29, 2025

Cumulative charges through January 29, 2025

$ 378 $ 13 $ 3 $ 19 $ 413

Specific actions taken since the Restructuring Program inception to reorganize and right-size certain areas of the Company to drive future sales growth and productivity to rebuild gross and operating margin profitability include:

1 unchanged sentence

These actions will primarily result in employee severance through a net reduction in workforce, as well as costs to decommission and relocate activities, and asset write-offs.

• Enabling Function Re-Invention - The Company approved initiatives to reorganize and right-size its go-to market structure, including across various corporate functions.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Enabling Function Re-Invention – The Company approved initiatives to reorganize and right-size various corporate functions.

These activities will primarily result in employee severance through a net reduction in workforce.

• Future of Brand-led Model – The Company approved initiatives to focus on spans and layers to begin to develop a leaner, faster, and more agile marketing and creative organization.

• Future of Brand-led Model – The Company approved initiatives to redesign spans and layers in its marketing and creative organization to make it leaner, faster, and more agile.

These activities will primarily result in employee severance through a net reduction in workforce.

• Go-to-Market Operating Model Acceleration – The Company approved initiatives to exit unprofitable brands from specific markets and distribution channels.

These activities will result in inventory write-offs, employee severance through a net reduction in workforce, as well as costs associated with sales returns.

• Go-to-Market Operating Model Acceleration – The Company approved initiatives to optimize and right-size the organizational structure within its geographic regions to drive greater efficiency and effectiveness, as well as exit unprofitable brands from specific markets and distribution channels.

These activities will result in employee severance through a net reduction in workforce, inventory write-offs, as well as costs associated with sales returns.

• Digital Organization Transformation – The Company approved initiatives to begin to reorganize and right-size its technology functions, which support its internal enterprise and commercial capabilities, to create a leaner, faster, more effective and more agile technology organization.

These activities will primarily result in employee severance through a net reduction in workforce.

Once the relevant accounting criteria have been met, the Company expects to record restructuring and other charges of approximately $ 537 million (before tax) in connection with these initiatives, which other than the non-cash charges, are expected to result in future cash expenditures funded from cash provided by operations.

Restructuring Program Restructuring and Other Charges

9 unchanged sentences

• Temporary labor backfill;

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Costs to establish and maintain a Project Management Office for the duration of the Restructuring Program, including internal costs for employees dedicated solely to project management activities, and consulting services to assist with business case development;

• Recruitment and training costs for new and reskilled employees to acquire and apply the capabilities needed to perform responsibilities as a direct result of an approved restructuring initiative.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company records approved charges associated with restructuring and other activities once the relevant accounting criteria have been met.

3 unchanged sentences

Charges Other

Total Charges

Total Cumulative Charges

Cumulative charges through June 30, 2024 $ — $ — $ 92 $ 23 $ 115

1 unchanged sentence

— 9 85 12 106

Cumulative charges through September 30, 2024 $ — $ 9 $ 177 $ 35 $ 221

Three months ended December 31, 2024

— — 171 11 182

Cumulative charges through December 31, 2024 $ — $ 9 $ 348 $ 46 $ 403

(In millions) Employee-

4 unchanged sentences

Three months ended September 30, 2024

Cumulative charges through September 30, 2024 $ 172 $ 4 $ — $ 1 $ 177

Changes in accrued restructuring charges from the Restructuring Program for the three months ended September 30, 2024 were:

Three months ended December 31, 2024

165 5 — 1 171

Cumulative charges through December 31, 2024 $ 337 $ 9 $ — $ 2 $ 348

Changes in accrued restructuring charges from the Restructuring Program for the six months ended December 31, 2024 were:

(In millions) Employee-

2 unchanged sentences

Balance at June 30, 2024

$ 88 $ — $ — $ — $ 88

Charges 247 7 — 2 256

4 unchanged sentences

( 8 ) — — — ( 8 )

Balance at September 30, 2024 161 — $ — $ — $ 161

Accrued restructuring charges at September 30, 2024 relating to the Restructuring Program are expected to result in cash expenditures funded from cash provided by operations of approximately $ 92 million, $ 53 million, $ 15 million and $ 1 million for the remainder of fiscal 2025 and for fiscal 2026, 2027 and 2028, respectively.

Balance at December 31, 2024 $ 301 $ — $ — $ — $ 301

Accrued restructuring charges at December 31, 2024 relating to the Restructuring Program are expected to result in cash expenditures funded from cash provided by operations of approximately $ 134 million, $ 156 million, and $ 11 million for the remainder of fiscal 2025 and for fiscal 2026 and 2027, respectively.

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.

8 unchanged sentences

Costs associated with entering into derivative financial instruments have not been material to the Company’s consolidated financial results.

At September 30, 2024, the notional amount of derivatives not designated as hedging instruments was $ 4,026 million.

At December 31, 2024, the notional amount of derivatives not designated as hedging instruments was $ 3,443 million.

Fair Value Hedges

The Company enters into interest rate derivative contracts to manage the exposure to interest rate fluctuations on its funded indebtedness.

At September 30, 2024, the Company has interest rate swap agreements, with notional amounts totaling $ 700 million and $ 300 million to effectively convert the fixed rate interest on its 2030 Senior Notes and 2031 Senior Notes, respectively, to variable interest rates based on the three-month fallback Secured Overnight Financing Rate ("SOFR") plus a margin.

At December 31, 2024, the Company has interest rate swap agreements, with notional amounts totaling $ 700 million and $ 300 million to effectively convert the fixed rate interest on its 2030 Senior Notes and 2031 Senior Notes, respectively, to variable interest rates based on the three-month fallback Secured Overnight Financing Rate ("SOFR") plus a margin.

These interest rate swap agreements are designated as fair value hedges of the related long-term debt, and the changes in the fair value of the interest rate swap agreements are exactly offset by the change in the fair value of the underlying long-term debt.

The Company enters into cross-currency swap contracts to manage the exposure of foreign exchange rate fluctuations on its intercompany foreign currency denominated debt.

At September 30, 2024, the Company has cross-currency swap contracts with notional amounts totaling $ 491 million, to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt.

At December 31, 2024, the Company has cross-currency swap contracts with notional amounts totaling $ 491 million, to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt.

The cross-currency swap contracts are designated as fair value hedges of the related intercompany debt, and the gains and losses representing hedge components included in the assessment of effectiveness are presented in the same income statement line item as the earnings effect of the hedged transaction.

2 unchanged sentences

Any difference between the changes in the fair value of the excluded components and amounts recognized in earnings will be recognized in Accumulated Other Comprehensive Loss ("AOCI").

The estimated net gain on the Company’s derivative instruments designated as fair value hedges as of September 30, 2024 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $ 14 million.

The accumulated net gain (loss) on derivative instruments designated as fair value hedges in AOCI was $ 5 million and $( 7 ) million as of September 30, 2024 and June 30, 2024, respectively.

The estimated net gain on the Company’s derivative instruments designated as fair value hedges as of December 31, 2024 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $ 14 million.

The accumulated net loss on derivative instruments designated as fair value hedges in AOCI was less than $ 1 million and $ 7 million as of December 31, 2024 and June 30, 2024, respectively.

Cash Flow Hedges

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The purpose of the hedging activities is to minimize the effect of foreign exchange rate movements on the cash flows that the Company receives from foreign subsidiaries.

The foreign currency forward contracts entered into to hedge anticipated transactions have been designated as cash flow hedges and have varying maturities through the end of June 2026.

Hedge effectiveness of the foreign currency forward contracts is based on the forward method, which includes time value in the effectiveness assessment.

At September 30, 2024, the Company had cash flow hedges outstanding with a notional amount totaling $ 1,927 million.

The foreign currency forward contracts entered into to hedge anticipated transactions have been designated as cash flow hedges and have varying maturities through the end of September 2026.

Hedge effectiveness of the foreign currency forward contracts is based on the forward method, which includes forward points in the effectiveness assessment.

At December 31, 2024, the Company had cash flow hedges outstanding with a notional amount totaling $ 1,895 million.

For foreign currency hedge contracts that are no longer deemed highly effective, hedge accounting is discontinued and gains and losses in AOCI are reclassified to Net sales when the underlying forecasted transaction occurs.

If it is probable that the forecasted transaction will no longer occur, then any gains or losses in AOCI are reclassified to current-period Net sales.

As of September 30, 2024, the Company’s foreign currency cash flow hedges were highly effective.

As of December 31, 2024, the Company’s foreign currency cash flow hedges were highly effective.

The Company may enter into interest rate forward contracts to hedge anticipated issuance of debt for periods consistent with the Company’s identified exposures.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The estimated net loss on the Company’s derivative instruments designated as cash flow hedges as of September 30, 2024 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $ 12 million.

The accumulated net gain on derivative instruments designated as cash flow hedges in AOCI was $ 19 million and $ 75 million as of September 30, 2024 and June 30, 2024, respectively.

The estimated net gain on the Company’s derivative instruments designated as cash flow hedges as of December 31, 2024 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $ 27 million.

The accumulated net gain on derivative instruments designated as cash flow hedges in AOCI was $ 74 million and $ 75 million as of December 31, 2024 and June 30, 2024, respectively.

Net Investment Hedges

The Company enters into foreign currency forward contracts, designated as net investment hedges, to hedge a portion of its net investment in certain foreign operations.

Time value is excluded from the effectiveness assessment and is recognized under a systematic and rational method over the life of the hedging instrument in Selling, general and administrative expenses.

The Company enters into foreign currency forward contracts and cross-currency swap contracts, designated as net investment hedges, to hedge a portion of its net investment in certain foreign operations.

Forward points and cross-currency basis spreads, respectively, are excluded from the effectiveness assessment and are recognized under a systematic and rational method over the life of the hedging instrument in Selling, general and administrative expenses.

The purpose of the hedging activities is to minimize the effect of foreign exchange rate movements on the Company’s net investment in these foreign operations.

The net investment hedge contracts have varying maturities through the end of September 2025.

The net investment hedge contracts have varying maturities through the end of November 2029.

Hedge effectiveness of the net investment hedge contracts is based on the spot method.

At September 30, 2024, the Company had net investment hedges outstanding with a notional amount totaling $ 1,351 million.

At December 31, 2024, the Company had net investment hedges outstanding with a notional amount totaling $ 1,401 million.

As a matter of policy, the Company enters into derivative contracts only with counterparties that have a long-term credit rating of at least A- or higher by at least two nationally recognized rating agencies.

The counterparties to these contracts are major financial institutions.

Exposure to credit risk in the event of nonperformance by any of the counterparties is limited to the gross fair value of contracts in asset positions, which totaled $ 64 million at September 30, 2024.

Exposure to credit risk in the event of nonperformance by any of the counterparties is limited to the gross fair value of contracts in asset positions, which totaled $ 206 million at December 31, 2024.

To manage this risk, the Company has strict counterparty credit guidelines that are continually monitored.

7 unchanged sentences

(In millions) Balance Sheet

Location September 30, 2024 June 30, 2024 Balance Sheet

Location September 30, 2024 June 30, 2024

Location December 31, 2024 June 30, 2024 Balance Sheet

Location December 31, 2024 June 30, 2024

Derivatives Designated as Hedging Instruments:

Foreign currency cash flow hedges (2)

Foreign currency forward contracts (2)

Prepaid expenses and other current assets;

3 unchanged sentences

Other assets 88 80 Other accrued liabilities 8 —

Net investment hedges

Interest rate contracts

Prepaid expenses and other current assets — — Other accrued liabilities 138 145

Interest rate-related derivatives Prepaid expenses and other current assets — — Other accrued liabilities 104 145

Total Derivatives Designated as Hedging Instruments 192 129 149 149

3 unchanged sentences

(1) See Note 5 – Fair Value Measurements for further information about how the fair value of derivative assets and liabilities are determined.

(2) Included in the asset derivatives for the foreign currency cash flow hedges at September 30, 2024 and June 30, 2024 is less than $ 1 million and $ 2 million, respectively, classified within Other assets in the accompanying consolidated balance sheets.

(3) Included in the asset derivatives for the cross-currency swap contracts at September 30, 2024 and June 30, 2024 is approximately $ 26 million and $ 70 million, respectively, classified within Other assets in the accompanying consolidated balance sheets.

(2) Included in the asset derivatives for the foreign currency forward contracts at December 31, 2024 and June 30, 2024 is $ 4 million and $ 2 million, respectively, classified within Other assets in the accompanying consolidated balance sheets.

(3) Included in the asset derivatives for the cross-currency swap contracts at December 31, 2024 and June 30, 2024 is approximately $ 67 million and $ 70 million, respectively, classified within Other assets in the accompanying consolidated balance sheets.

THE ESTÉE LAUDER COMPANIES INC.

5 unchanged sentences

from AOCI into

Earnings Amount of Gain

Reclassified from AOCI into Earnings (1)

Earnings (Loss)

Amount of Gain (Loss)

Reclassified from AOCI into Earnings (Loss) (1)

Three Months Ended

September 30 Three Months Ended

Three Months Ended

(In millions) 2024 2023 2024 2023

1 unchanged sentence

Foreign currency forward contracts $ 70 $ ( 36 ) Net sales

Interest rate-related derivatives — — Interest expense

Interest rate contracts

— — Interest expense

Total cash flow hedges

70 ( 36 ) 15 11

2 unchanged sentences

86 ( 47 ) — —

Cross-currency swap contracts

Total net investment hedges

88 ( 47 ) — —

Total derivatives $ 158 $ ( 83 ) $ 15 $ 11

(1) There is no amount reclassified into earnings as a result of the discontinuance of cash flow hedges because it is probable that forecasted transactions will not occur by the end of the original time period.

(2) During the three months ended September 30, 2024 and 2023, the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $ 7 million and $ 5 million, respectively.

(1) The amount reclassified into earnings (loss) as a result of the discontinuance of cash flow hedges because it is probable that forecasted transactions will not occur by the end of the original time period was not material.

(2) During the three months ended December 31, 2024 and 2023, the gain recognized in earnings (loss) from net investment hedges related to the amount excluded from effectiveness testing was $ 8 million and $ 5 million, respectively.

(3) Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets.

Amount of Gain (Loss)

Recognized in Earnings on

Location of Gain (Loss) Recognized in Earnings on Derivatives

Recognized in OCI on

Derivatives Location of Gain (Loss) Reclassified

from AOCI into

Earnings (Loss)

Amount of Gain (Loss)

Reclassified from AOCI into Earnings (Loss) (1)

Six Months Ended

(In millions) 2024 2023 2024 2023

Derivatives in Cash Flow Hedging Relationships:

Foreign currency forward contracts $ 23 $ ( 8 ) Net sales

Interest rate contracts

— — Interest expense

Total cash flow hedges

23 ( 8 ) 25 20

Derivatives in Net Investment Hedging Relationships (2)(3) :

Foreign currency forward contracts

22 ( 17 ) — —

Cross-currency swap contracts 2 — — —

Total net investment hedges

24 ( 17 ) — —

Total derivatives $ 47 $ ( 25 ) $ 25 $ 20

(2) During the six months ended December 31, 2024 and 2023, the gain recognized in earnings (loss) from net investment hedges related to the amount excluded from effectiveness testing was $ 15 million and $ 10 million, respectively.

(3) Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amount of Gain (Loss)

Recognized in Earnings (Loss) on

Location of Gain (Loss) Recognized in Earnings (Loss) on Derivatives

Three Months Ended

December 31, Six Months Ended

(In millions) 2024 2023 2024 2023

2 unchanged sentences

Selling, general and administrative $ 43 $ ( 24 ) $ ( 9 ) $ ( 11 )

Interest rate swap contracts (2)

Interest rate contracts (2)

Interest expense $ ( 34 ) $ 49 $ 7 $ 20

(1) Changes in the fair value representing hedge components included in the assessment of effectiveness of the cross-currency swap contracts are exactly offset by the change in the fair value of the underlying intercompany foreign currency denominated debt.

The gain recognized in earnings from cross-currency swap contracts related to the amount excluded from effectiveness testing during the three months ended September 30, 2024 and 2023 was $ 4 million and $ 5 million, respectively.

(2) Changes in the fair value of the interest rate swap agreements are exactly offset by the change in the fair value of the underlying long-term debt.

Additional information regarding the cumulative amount of fair value hedging gain (loss) recognized in earnings for items designated and qualifying as hedged items in fair value hedges is as follows:

The gain recognized in earnings (loss) from cross-currency swap contracts related to the amount excluded from effectiveness testing during the three months ended December 31, 2024 and 2023 was $ 5 million and $ 4 million, respectively, and during the six months ended December 31, 2024 and 2023 was $ 9 million.

(2) Changes in the fair value of the interest rate contracts are exactly offset by the change in the fair value of the underlying long-term debt.

Additional information regarding the cumulative amount of fair value hedging gain (loss) recognized in earnings (loss) for items designated and qualifying as hedged items in fair value hedges is as follows:

(In millions)

3 unchanged sentences

Included in the Carrying Amount of the Hedged Liability

September 30, 2024 September 30, 2024

December 31, 2024 December 31, 2024

Long-term debt $ 856 $ ( 138 )

3 unchanged sentences

Additional information regarding the effects of fair value and cash flow hedging relationships for derivatives designated and qualifying as hedging instruments is as follows:

Three Months Ended September 30

Three Months Ended December 31,

(In millions) Net Sales Selling, General and Administrative Interest

1 unchanged sentence

Total amounts of income and expense line items presented in the consolidated statements of earnings (loss) in which the effects of fair value and cash flow hedges are recorded $ 4,004 $ 2,585 $ 90 $ 4,279 $ 2,544 $ 98

$ 3,361 $ 2,298 $ 92 $ 3,518 $ 2,349 $ 95

The effects of fair value and cash flow hedging relationships:

5 unchanged sentences

Derivatives designated as hedging instruments N/A 43 N/A N/A ( 24 ) N/A

Loss on cash flow hedge relationships – interest rate contracts:

Amount of loss reclassified from AOCI into earnings N/A N/A — N/A N/A —

Gain (loss) on cash flow hedge relationships – interest rate contracts:

Amount of gain (loss) reclassified from AOCI into earnings

N/A N/A 1 N/A N/A ( 1 )

Gain on cash flow hedge relationships – foreign currency forward contracts:

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended December 31,

(In millions) Net Sales Selling, General and Administrative Interest

Expense Net Sales Selling, General and Administrative Interest

Total amounts of income and expense line items presented in the consolidated statements of earnings (loss) in which the effects of fair value and cash flow hedges are recorded $ 7,365 $ 4,883 $ 182 $ 7,797 $ 4,893 $ 193

The effects of fair value and cash flow hedging relationships:

Gain (loss) on fair value hedge relationships – interest rate contracts:

Hedged item N/A N/A ( 7 ) N/A N/A ( 20 )

Derivatives designated as hedging instruments N/A N/A 7 N/A N/A 20

Gain (loss) on fair value hedge relationships – cross-currency swap contracts:

Hedged item N/A 9 N/A N/A 11 N/A

Derivatives designated as hedging instruments N/A ( 9 ) N/A N/A ( 11 ) N/A

Gain (loss) on cash flow hedge relationships – interest rate contracts:

Amount of gain (loss) reclassified from AOCI into earnings N/A N/A 1 N/A N/A ( 1 )

Gain on cash flow hedge relationships – foreign currency forward contracts:

Amount of gain reclassified from AOCI into earnings 24 N/A N/A 21 N/A N/A

N/A (Not applicable)

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The amount of gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments are presented as follows:

Amount of Gain (Loss)

Recognized in Earnings on Derivatives

Location of Gain (Loss) Recognized in Earnings on

Recognized in Earnings (Loss) on Derivatives

Location of Gain (Loss) Recognized in Earnings (Loss) on

Three Months Ended

December 31, Six Months Ended

(In millions) 2024 2023 2024 2023

6 unchanged sentences

The following table provides information as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria in the event of default or termination as stipulated by the terms of netting arrangements with each of the counterparties:

As of September 30, 2024 As of June 30, 2024

As of December 31, 2024 As of June 30, 2024

(In millions) Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet Contracts Subject to Netting Net Amounts of Assets / (Liabilities) Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet Contracts Subject to Netting Net Amounts of Assets / (Liabilities)

2 unchanged sentences

Derivative liabilities ( 198 ) 86 ( 112 ) ( 166 ) 49 ( 117 )

Total $ ( 124 ) $ — $ ( 124 ) $ ( 18 ) $ — $ ( 18 )

Total derivatives

$ 8 $ — $ 8 $ ( 18 ) $ — $ ( 18 )

NOTE 5 – FAIR VALUE MEASUREMENTS

11 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2024:

The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2024:

(In millions) Level 1 Level 2 Level 3 Total

5 unchanged sentences

$ — $ 52 $ — $ 52

Interest rate-related derivatives

Interest rate contracts

Cross-currency swap contracts

$ — $ 198 $ — $ 198

7 unchanged sentences

$ — $ 21 $ — $ 21

Interest rate-related derivatives — 145 — 145

Interest rate contracts

$ — $ 166 $ — $ 166

The estimated fair values of the Company’s financial instruments are as follows:

September 30, 2024 June 30, 2024

December 31, 2024 June 30, 2024

(In millions) Carrying

7 unchanged sentences

341 342 341 340

Cross-currency swap contracts - asset

Foreign currency forward contracts – asset (liability), net 66 66 47 47

( 59 ) ( 59 ) 47 47

Interest rate-related derivatives – liability

Cross-currency swap contracts - asset (liability), net

Interest rate contracts – liability

( 138 ) ( 138 ) ( 145 ) ( 145 )

9 unchanged sentences

The significant observable inputs to the model, such as yield curves and currency spot and forward rates, were obtained from independent pricing services.

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.

Interest rate contracts – The fair values of the Company’s interest rate contracts were determined using an industry-standard valuation model, which is based on the income approach.

The significant observable inputs to the model, such as treasury yield curves, swap yield curves and SOFR forward curves, were obtained from independent pricing services.

5 unchanged sentences

The Company’s deferred consideration payable is classified within Level 2 of the valuation hierarchy.

Nonfinancial assets measured at fair value on a nonrecurring basis

In connection with its interim goodwill and other indefinite-lived intangible asset impairment testing, the Company has measured certain nonfinancial assets at fair value on a nonrecurring basis, classified as Level 3 of the fair value hierarchy.

Refer to Note 2 – 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.

NOTE 6 – REVENUE RECOGNITION

Accounts Receivable

Accounts receivable, net is stated net of the allowance for doubtful accounts, including credit losses, and customer deductions totaling $ 31 million and $ 26 million as of September 30, 2024 and June 30, 2024, respectively.

Accounts receivable, net is stated net of the allowance for doubtful accounts, including credit losses, and customer deductions totaling $ 30 million and $ 26 million as of December 31, 2024 and June 30, 2024, respectively.

Payment terms are short-term in nature and are generally less than one year.

Changes in the allowance for credit losses are as follows:

(In millions) September 30, 2024

(In millions) December 31, 2024

Balance at June 30, 2024 $ 14

1 unchanged sentence

Write-offs, net & other ( 1 )

Balance at September 30, 2024 $ 18

The remaining balance of the allowance for doubtful accounts and customer deductions of $ 13 million and $ 12 million as of September 30, 2024 and June 30, 2024, respectively, relates to non-credit losses, which are primarily due to customer deductions.

Balance at December 31, 2024 $ 18

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The remaining balance of the allowance for doubtful accounts and customer deductions of $ 12 million as of December 31, 2024 and June 30, 2024, relates to non-credit losses, which are primarily due to customer deductions.

Deferred Revenue

1 unchanged sentence

Three Months Ended

December 31, Six Months Ended

(In millions) 2024 2023 2024 2023

5 unchanged sentences

Transaction Price Allocated to the Remaining Performance Obligations

At September 30, 2024, the combined estimated revenue expected to be recognized in the next twelve months related to performance obligations for customer loyalty programs, gift with purchase promotions, purchase with purchase promotions, gift card liabilities and the Marcolin license arrangement related to TOM FORD that are unsatisfied (or partially unsatisfied) is $ 338 million.

The remaining balance of deferred revenue at September 30, 2024 will be recognized beyond the next twelve months, of which $ 220 million relates to the non-refundable upfront payment received as part of the Marcolin licensing arrangement that is being recognized on a straight-line basis over the estimated economic life of the license, which is 20 years.

At December 31, 2024, the combined estimated revenue expected to be recognized in the next twelve months related to performance obligations for customer loyalty programs, gift with purchase promotions, purchase with purchase promotions, gift card liabilities and the Marcolin license arrangement related to TOM FORD that are unsatisfied (or partially unsatisfied) is $ 338 million.

The remaining balance of deferred revenue at December 31, 2024 will be recognized beyond the next twelve months, of which $ 217 million relates to the non-refundable upfront payment received as part of the Marcolin licensing arrangement that is being recognized on a straight-line basis over the estimated economic life of the license, which is 20 years.

Royalty Revenue – License Arrangements

5 unchanged sentences

Descriptions of these plans are included in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

The components of net periodic benefit cost for the three months ended September 30, 2024 and 2023 consisted of the following:

The components of net periodic benefit cost for the three months ended December 31, 2024 and 2023 consisted of the following:

Pension Plans Other than

9 unchanged sentences

Prior service cost — — — — ( 1 ) —

Special termination benefits — — 1 — — —

Net periodic benefit cost $ 14 $ 8 $ 4 $ 3 $ 1 $ 3

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The components of net periodic benefit cost for the six months ended December 31, 2024 and 2023 consisted of the following:

Pension Plans Other than

Pension Plans

International Post-retirement

(In millions) 2024 2023 2024 2023 2024 2023

Service cost $ 18 $ 18 $ 14 $ 13 $ — $ 1

Interest cost 25 23 9 9 4 4

Expected return on plan assets ( 25 ) ( 27 ) ( 13 ) ( 12 ) — —

Amortization of:

Actuarial loss (gain)

10 2 ( 3 ) ( 4 ) — —

Prior service cost — — — — ( 3 ) —

Special termination benefits — — 1 — — —

Net periodic benefit cost $ 28 $ 16 $ 8 $ 6 $ 1 $ 5

The amounts recognized in the consolidated balance sheets related to the Company’s pension and post-retirement benefit plans consist of the following:

(In millions) September 30, 2024 June 30, 2024

(In millions) December 31, 2024 June 30, 2024

Other assets $ 124 $ 125

15 unchanged sentences

Reasonably possible losses in addition to the amounts accrued for such litigation and legal proceedings are not expected to be material to the Company’s consolidated financial statements (refer below for the Company’s Securities Class Action and Derivative Matters and Cosmetic Talcum Powder Matters and related assessment of these loss contingencies).

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Securities Class Action and Derivative Matters

7 unchanged sentences

In June 2024, the other former derivative plaintiff made a books and records demand on the Company related to any documents relevant to the same alleged course of conduct referenced above.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2024, it is not probable or reasonably possible that we will incur material losses as a result of the securities class action and derivative matters.

As of December 31, 2024, it is not probable or reasonably possible that we will incur material losses as a result of the securities class action and derivative matters.

Cosmetic Talcum Powder Matters

1 unchanged sentence

Most of these actions involve a number of co-defendants from a variety of different industries.

As of September 30, 2024, there were 151 individual cases (including cases that were settled in subsequent talcum litigation settlement agreements described below) pending against the Company in state and federal courts throughout the United States, as compared to 273 cases as of June 30, 2024.

During the three months ended September 30, 2024, 35 new cases were filed and 157 cases were resolved by settlement or voluntary dismissal (including pursuant to the cases that were settled in subsequent talcum litigation settlement agreements described below).

As of December 31, 2024, there were 84 individual cases pending against the Company in state and federal courts throughout the United States, as compared to 273 cases as of June 30, 2024.

During the six months ended December 31, 2024, 43 new cases were filed and 232 cases were resolved by settlement or voluntary dismissal (including pursuant to the cases that were settled in the talcum litigation settlement agreements described below).

Due to the rising number of cases against the Company, as well as the evolving litigation landscape, there is an expectation that claims may increase in the future.

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(i) the resolution of over 200 pending cosmetic talcum powder matters handled by those firms as well as (ii) a process for resolving potential future cosmetic talcum powder claims expected to be brought on behalf of plaintiffs by those firms from January 1, 2025 through December 31, 2029, with annual capped amounts per year for each participating law firm.

To account for the talcum litigation settlement agreements, the Company recorded a charge of $ 159 million for the three months ended September 30, 2024 for the amount agreed to settle these current and potential future claims (amounts recorded for potential future claims is based on the best estimate of the probable loss and a reasonably possible loss beyond the amounts recorded is not expected to be material).

As of September 30, 2024, $ 63 million is recorded in Other accrued liabilities and $ 101 million is recorded in Other noncurrent liabilities in the accompanying consolidated balance sheet related to the talcum litigation settlement agreements (inclusive of accruals recorded in prior periods for any cases settled under these agreements).

To account for the talcum litigation settlement agreements, the Company recorded a charge of $ 159 million during the fiscal 2025 first quarter for the amount agreed to settle the current and potential future claims (amounts recorded for potential future claims is based on the best estimate of the probable loss and a reasonably possible loss beyond the amounts recorded is not expected to be material).

As of December 31, 2024, $ 32 million is recorded in Other accrued liabilities and $ 89 million is recorded in Other noncurrent liabilities in the accompanying consolidated balance sheet related to the talcum litigation settlement agreements (inclusive of accruals recorded prior to the fiscal 2025 first quarter for any cases settled under these agreements).

There are and could be other plaintiff law firms outside of those included in the talcum litigation settlement agreements that bring claims against the Company.

The value of other settlements outside of the talcum litigation settlement agreements, either individually or in the aggregate, for the three months ended September 30, 2024 and 2023 was not material.

The value of other settlements outside of the talcum litigation settlement agreements, either individually or in the aggregate, for the three and six months ended December 31, 2024 and 2023 was not material.

Given the inherent uncertainties of litigation, it is not possible to predict the outcome of all individual cases pending against the Company or potential unasserted claims, and therefore a specific estimate and associated provision is made for a small number of individual cases that have advanced to the later stages of legal proceedings.

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While the Company and its legal counsel intend to continue to defend these cases vigorously, there can be no assurances regarding the ultimate resolution of these matters.

The amounts recorded during the three months ended September 30, 2024 for such litigation, outside of the talcum litigation settlement agreements, are not material to the Company's consolidated financial statements.

The amounts recorded during the three and six months ended December 31, 2024 for such litigation, outside of the talcum litigation settlement agreements, are not material to the Company's consolidated financial statements.

The range of reasonably possible losses in excess of accrued liabilities currently cannot be reasonably estimated.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company believes that a portion of its costs incurred in defending and resolving these claims may be covered by insurance policies issued by several insurance carriers, subject to deductibles, exclusions, retentions and policy limits.

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Total net stock-based compensation expense is attributable to the granting of, and the remaining requisite service periods of stock options, restricted stock units (“RSUs”), performance share units (“PSUs”), long-term PSUs, including long-term price-vested units and share units.

Compensation expense attributable to net stock-based compensation was $ 74 million and $ 80 million for the three months ended September 30, 2024 and 2023, respectively.

Compensation expense attributable to net stock-based compensation was $ 106 million and $ 109 million for the three months ended December 31, 2024 and 2023, respectively, and was $ 180 million and $ 189 million for the six months ended December 31, 2024 and 2023, respectively.

Stock Options

During the three months ended September 30, 2024, the Company granted stock options in respect of approximately 0.8 million shares of Class A Common Stock with a weighted average exercise price per share of $ 92.87 and a weighted average grant date fair value per share of $ 29.53 .

During the six months ended December 31, 2024, the Company granted stock options in respect of approximately 0.9 million shares of Class A Common Stock with a weighted average exercise price per share of $ 91.36 and a weighted average grant date fair value per share of $ 29.26 .

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock Units

During the three months ended September 30, 2024, the Company granted RSUs in respect of approximately 3.2 million shares of Class A Common Stock with a weighted average grant date fair value per share of $ 92.71 that, at the time of grant, are scheduled to vest at 1.2 million, 1.1 million, and 0.9 million shares per year, in fiscal 2026, fiscal 2027 and fiscal 2028, respectively.

During the six months ended December 31, 2024, the Company granted RSUs in respect of approximately 3.2 million shares of Class A Common Stock with a weighted average grant date fair value per share of $ 92.71 that, at the time of grant, are scheduled to vest at 1.2 million, 1.1 million, and 0.9 million shares per year, in fiscal 2026, fiscal 2027 and fiscal 2028, respectively.

Vesting of RSUs is generally subject to the continued employment or the retirement of the grantees.

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Performance Share Units

During the three months ended September 30, 2024, the Company granted PSUs with a target payout of approximately 0.3 million shares of Class A Common Stock with a grant date fair value per share of $ 92.87 , 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, 2027, all subject to continued employment or the retirement of the grantees.

During the six months ended December 31, 2024, the Company granted PSUs with a target payout of approximately 0.3 million shares of Class A Common Stock with a grant date fair value per share of $ 92.87 , 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, 2027, 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.

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Long-term Performance Share Units

On September 3, 2024, the Company issued 195,940 shares of the Company’s Class A Common Stock to its Chief Executive Officer in accordance with the terms of PSUs granted in February 2018.

The total fair value of PSUs issued during the three months ended September 30, 2024 was $ 18 million.

On September 3, 2024, the Company issued 195,940 shares of the Company’s Class A Common Stock to its then Chief Executive Officer in accordance with the terms of PSUs granted in February 2018.

The total fair value of PSUs issued during the fiscal 2025 first quarter was $ 18 million.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – NET EARNINGS (LOSS) ATTRIBUTABLE TO THE ESTÉE LAUDER COMPANIES INC.

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per common share assuming dilution (“diluted EPS”) is computed by reflecting potential dilution from stock-based awards using the treasury stock method.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation between the numerator and denominator of the basic and diluted EPS computations is as follows:

Three Months Ended

December 31, Six Months Ended

(In millions, except per share data) 2024 2023 2024 2023

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Weighted average common shares outstanding – Basic

360.0 358.7 359.8 358.6

Effect of dilutive stock options (1)

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Weighted average common shares outstanding – Diluted

360.0 360.0 359.8 360.3

Net earnings (loss) attributable to The Estée Lauder Companies Inc.

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$ ( 1.64 ) $ .87 $ ( 2.07 ) $ .95

(1) For the three months ended September 30, 2024, the effects of potentially dilutive stock options, PSUs and RSUs were excluded from the computation of diluted EPS as they were anti-dilutive due to the net loss incurred during the period.

(1) For the three and six months ended December 31, 2024, the effects of potentially dilutive stock options, PSUs and RSUs were excluded from the computation of diluted EPS as they were anti-dilutive due to the net loss incurred during the period.

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:

Three Months Ended

Six Months Ended

(In millions) 2024 2023 2024 2023

Stock options

8.5 6.6 8.1 5.7

RSUs and PSUs

As of September 30, 2024 and 2023, 0.6 million and 0.4 million shares, respectively, of Class A Common Stock underlying PSUs have been excluded from the computation of diluted EPS as the number of shares ultimately issued is contingent on the achievement of applicable performance targets of the Company, as discussed in Note 9 – Stock Programs .

2.9 1.3 2.1 0.7

As of December 31, 2024 and 2023, 0.6 million and 0.4 million shares, respectively, of Class A Common Stock underlying PSUs have been excluded from the computation of diluted EPS as the number of shares ultimately issued is contingent on the achievement of applicable performance targets of the Company, as discussed in Note 9 – Stock Programs .

THE ESTÉE LAUDER COMPANIES INC.

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Three Months Ended

December 31, Six Months Ended

(In millions, except per share data)

2024 2023 2024 2023

Common stock, beginning of the period $ 6 $ 6 $ 6 $ 6

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Net earnings (loss) attributable to The Estée Lauder Companies Inc.

( 590 ) 313 ( 746 ) 344

Retained earnings, end of the period 12,313 13,858 12,313 13,858

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Other comprehensive earnings (loss) attributable to The Estée Lauder Companies Inc.

( 284 ) 207 ( 201 ) 78

Accumulated other comprehensive loss, end of the period ( 1,341 ) ( 856 ) ( 1,341 ) ( 856 )

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of quarterly cash dividends declared per share on the Company’s Class A and Class B Common Stock during the three months ended September 30, 2024:

The following is a summary of quarterly cash dividends declared per share on the Company’s Class A and Class B Common Stock during the six months ended December 31, 2024:

Date Declared Record Date Payable Date Amount per Share

August 16, 2024 August 30, 2024 September 16, 2024 $ .66

On October 30, 2024, a dividend was declared in the amount of $ .35 per share on the Company’s Class A and Class B Common Stock.

The dividend is payable in cash on December 16, 2024 to stockholders of record at the close of business on November 29, 2024.

October 30, 2024 November 29, 2024 December 16, 2024 $ .35

On February 3, 2025, a dividend was declared in the amount of $ .35 per share on the Company’s Class A and Class B Common Stock.

The dividend is payable in cash on March 17, 2025 to stockholders of record at the close of business on February 28, 2025.

Beginning in December 2022, we suspended the repurchase of shares of our Class A Common Stock under our publicly announced program.

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Accumulated Other Comprehensive Loss

The following table represents changes in accumulated other comprehensive loss, net of tax, by component for the three months ended September 30, 2024:

The following table represents changes in accumulated other comprehensive loss, net of tax, by component for the six months ended December 31, 2024:

(In millions) Net Cash

Gain (Loss) Cross-Currency Swap Contracts (2)

Gain (Loss) Cross-Currency Swap Contracts - Fair Value Hedge (2)

Included in Net Periodic Benefit Cost Translation

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Amounts reclassified to Net loss ( 19 ) ( 7 ) 3 — ( 23 )

( 7 ) ( 3 ) 2 — ( 8 )

Net current-period OCI ( 1 ) 5 3 ( 208 ) ( 201 )

Balance at September 30, 2024 $ 14 $ 4 $ ( 181 ) $ ( 894 ) $ ( 1,057 )

Balance at December 31, 2024 $ 56 $ — $ ( 180 ) $ ( 1,217 ) $ ( 1,341 )

(1) See Note 4 – Derivative Financial Instruments for gains (losses) relating to net investment hedges.

(2) The gain recognized in AOCI, net of tax from cross-currency swap contracts represents the amount excluded from effectiveness testing.

(3) The tax provision (benefit) included in Net Cash Flow Hedge Gain (Loss), Cross-Currency Swap Contracts and Translation Adjustments are $( 11 ) million, $ 4 million, and $( 7 ) million, respectively.

(3) The tax provision included in Net Cash Flow Hedge Gain (Loss), Cross-Currency Swap Contracts - Fair Value Hedge and Translation Adjustments are $ 5 million, $ 4 million, and $ 7 million, respectively.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table represents the effects of reclassification adjustments from AOCI into net earnings for the three months ended September 30, 2024 and 2023:

The following table represents the effects of reclassification adjustments from AOCI into net earnings (loss) for the three and six months ended December 31, 2024 and 2023:

Amount Reclassified from AOCI Affected Line Item in

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Three Months Ended

December 31, Six Months Ended

(In millions) 2024 2023 2024 2023

Gain (Loss) on Cash Flow Hedges

Gain on Cash Flow Hedges

Foreign currency forward contracts $ 14 $ 12 $ 24 $ 21 Net sales

Interest rate contracts

1 ( 1 ) 1 ( 1 ) Interest expense

Total gain on cash flow hedges, before tax

Provision for income taxes ( 3 ) ( 2 ) ( 6 ) ( 4 ) Provision (benefit) for income taxes

Total gain on cash flow hedges, net of tax

12 9 19 16 Net earnings (loss)

Cross-Currency Swap Contracts

Gain on cross-currency swap contracts 4 5 Selling, general and administrative

Cross-Currency Swap Contracts - Fair Value Hedge

Gain on cross-currency swap contracts, before tax

5 4 9 9 Selling, general and administrative

Provision for income taxes

( 1 ) ( 1 ) ( 2 ) ( 2 ) Provision (benefit) for income taxes

Total gain on cross-currency swap contracts - fair value hedge, net of tax

4 3 7 7 Net earnings (loss)

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Amortization of prior service cost 1 — 3 — Other components of net periodic benefit cost

Amortization of actuarial gain

( 4 ) 1 Other components of net periodic benefit cost

Amortization of actuarial gain (loss)

( 3 ) 1 ( 7 ) 2 Other components of net periodic benefit cost

Provision for income taxes

Total retirement plan and other retiree benefit adjustments, before tax

( 2 ) 1 ( 4 ) 2

Benefit (provision) for income taxes

1 ( 1 ) 1 ( 1 ) Provision (benefit) for income taxes

Total retirement plan and other retiree benefit adjustments, net of tax

( 1 ) — ( 3 ) 1 Net earnings (loss)

Total reclassification adjustments, net $ 8 $ 12 Net earnings (loss)

Total reclassification adjustments, net of tax

$ 15 $ 12 $ 23 $ 24 Net earnings (loss)

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 – STATEMENT OF CASH FLOWS

Supplemental cash flow information for the three months ended September 30, 2024 and 2023 is as follows:

Supplemental cash flow information for the six months ended December 31, 2024 and 2023 is as follows:

(In millions) 2024 2023

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Right-of-use assets obtained in exchange for new/modified operating lease liabilities $ 311 $ 210

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 – SEGMENT DATA AND RELATED INFORMATION

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There has been no significant variance in the total or long-lived asset values associated with the Company’s segment data since June 30, 2024.

During the fiscal 2024 second quarter, the Company identified and corrected prior-period misclassifications of net sales and operating income between certain of the Company’s product categories in its segment footnote.

As a result, product category net sales and operating income have been adjusted from the amounts previously reported for the three months ended September 30, 2023, for comparability purposes.

The misclassifications had no impact on the prior-period consolidated statements of earnings, consolidated statements of comprehensive income, consolidated balance sheets, or the consolidated statements of cash flows, and the Company determined that the impact on the Company’s previously issued financial statements for the respective period was not material.

THE ESTÉE LAUDER COMPANIES INC.

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Three Months Ended

December 31, Six Months Ended

(In millions) 2024 2023 2024 2023

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Hair Care 159 173 298 321

Other 30 30 55 62

4,004 4,280 7,365 7,798

Returns associated with restructuring and other activities — ( 1 ) — ( 1 )

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Hair Care ( 3 ) ( 3 ) ( 21 ) ( 25 )

Other ( 45 ) 9 ( 34 ) 27

( 399 ) 582 ( 414 ) 682

Reconciliation:

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Earnings (loss) before income taxes $ ( 650 ) $ 519 $ ( 830 ) $ 565

$ ( 180 ) $ 46

GEOGRAPHIC DATA (1)

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Asia/Pacific 1,287 1,449 2,231 2,507

4,004 4,280 7,365 7,798

Returns associated with restructuring and other activities — ( 1 ) — ( 1 )

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Asia/Pacific 108 258 171 396

( 399 ) 582 ( 414 ) 682

Charges associated with restructuring and other activities ( 181 ) ( 8 ) ( 287 ) ( 10 )

Operating income (loss) $ ( 580 ) $ 574 $ ( 701 ) $ 672

$ ( 121 ) $ 98

(1) The net sales from the Company's travel retail business are included in the Europe, the Middle East & Africa region, and operating income attributable to these net sales are included in that region and in The Americas.

The exception is for net sales and operating income of Dr.Jart+ in the travel retail channel in Korea that are reflected in Korea in the Asia/Pacific region.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The table below presents the effect of the corrections for the three months ended September 30, 2023.

Three Months Ended

September 30, 2023

(In millions) As Previously Reported

PRODUCT CATEGORY DATA

Skin Care $ 1,638 $ 2 $ 1,640

Makeup 1,063 ( 1 ) 1,062

Fragrance 637 ( 1 ) 636

Hair Care 148 — 148

Other 32 — 32

3,518 — 3,518

Returns associated with restructuring and other activities — — —

Net sales $ 3,518 $ — $ 3,518

Operating income (loss):

Skin Care $ 35 $ 2 $ 37

Makeup ( 39 ) ( 1 ) ( 40 )

Fragrance 108 ( 1 ) 107

Hair Care ( 22 ) — ( 22 )

Other 18 — 18

Charges associated with restructuring and other activities ( 2 ) — ( 2 )

Operating income $ 98 $ — $ 98

During the fiscal 2025 second quarter, the Company exited Dr.Jart+ from the travel retail channel in Korea.

THE ESTÉE LAUDER COMPANIES INC.

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.

What changed 10-Q

Item 1. Financial Statements