What changed in this filing

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Item 1. Financial Statements

2026-02-05 compared with 2025-10-30 · 390 added, 194 removed, 817 unchanged (42% of the section changed)

3 unchanged sentences

Three Months Ended

September 30,

December 31, Six Months Ended

(In millions, except per share data) 2025 2024 2025 2024

1 unchanged sentence

Cost of sales

994 957 1,921 1,885

3,235 3,047 5,789 5,480

Operating expenses

Selling, general and administrative

2,627 2,585 4,923 4,883

Restructuring and other charges

207 181 296 278

Impairment of goodwill and other intangible assets — 861 — 861

Talcum litigation settlement agreements

Total operating expenses

2,834 3,627 5,219 6,181

Operating income (loss)

401 ( 580 ) 570 ( 701 )

Interest expense 85 90 171 182

2 unchanged sentences

Earnings (loss) before income taxes

333 ( 650 ) 442 ( 830 )

Provision (benefit) for income taxes

171 ( 60 ) 233 ( 84 )

Net earnings (loss)

4 unchanged sentences

Weighted average common shares outstanding

362.1 360.0 361.7 359.8

364.8 360.0 364.2 359.8

See notes to consolidated financial statements.

2 unchanged sentences

Three Months Ended

September 30,

December 31, Six Months Ended

(In millions) 2025 2024 2025 2024

1 unchanged sentence

$ 162 $ ( 590 ) $ 209 $ ( 746 )

Other comprehensive (loss) income:

Other comprehensive income (loss):

Net cash flow hedge gain (loss) 8 55 24 ( 2 )

Cross-currency swap contract - fair value hedge gain

Cross-currency swap contract - fair value hedge gain (loss) 2 ( 5 ) 5 7

Retirement plan and other retiree benefit adjustments 3 2 7 4

Translation adjustments 56 ( 309 ) 29 ( 201 )

(Provision) benefit for income taxes on components of other comprehensive (loss) income

Total other comprehensive (loss) income, net of tax

Provision for income taxes on components of other comprehensive income (loss) ( 8 ) ( 27 ) ( 18 ) ( 9 )

Total other comprehensive income (loss), net of tax

61 ( 284 ) 47 ( 201 )

Comprehensive income (loss)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data) September 30, 2025 June 30, 2025

(In millions, except share and per share data) December 31, 2025 June 30, 2025

Current assets

26 unchanged sentences

Class A shares authorized:

1,300,000,000 at September 30, 2025 and June 30, 2025;

1,300,000,000 at December 31, 2025 and June 30, 2025;

shares issued:

473,216,446 at September 30, 2025 and 472,541,563 at June 30, 2025;

486,114,024 at December 31, 2025 and 472,541,563 at June 30, 2025;

Class B shares authorized:

304,000,000 at September 30, 2025 and June 30, 2025;

304,000,000 at December 31, 2025 and June 30, 2025;

shares issued and outstanding:

125,542,029 at September 30, 2025 and June 30, 2025

114,507,344 at December 31, 2025 and 125,542,029 at June 30, 2025

Paid-in capital 7,245 7,012

3 unchanged sentences

Treasury stock, at cost;

238,401,382 Class A shares at September 30, 2025 and 238,316,738 Class A shares at June 30, 2025

238,960,893 Class A shares at December 31, 2025 and 238,316,738 Class A shares at June 30, 2025

( 13,764 ) ( 13,698 )

5 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

September 30,

Six Months Ended

(In millions) 2025 2024

10 unchanged sentences

Pension and post-retirement benefit contributions ( 39 ) ( 50 )

Impairment of goodwill and other intangible assets — 861

Other adjustments and non-cash items

Changes in operating assets and liabilities:

Increase in accounts receivable, net ( 358 ) ( 219 )

Decrease (increase) in inventory and promotional merchandise 6 ( 10 )

Increase in other assets, net

( 11 ) ( 47 )

(Increase) decrease in accounts receivable, net ( 126 ) 79

Decrease in inventory and promotional merchandise 179 132

Decrease (increase) in other assets, net 25 ( 47 )

Decrease in accounts payable ( 239 ) ( 298 )

Decrease in other accrued and noncurrent liabilities

( 79 ) ( 100 )

Increase in other accrued and noncurrent liabilities 133 102

Increase (decrease) in operating lease assets and liabilities, net

Net cash flows used for operating activities

( 340 ) ( 670 )

Net cash flows provided by operating activities 785 387

Cash flows from investing activities

Purchases of investments — ( 1 )

Capital expenditures ( 204 ) ( 273 )

Proceeds from property, plant and equipment insurance recoveries 10 —

Purchases of investments — ( 1 )

Proceeds from the disposition of investments 3 —

3 unchanged sentences

Repayments of long-term debt

( 2 ) ( 502 )

Payment of deferred consideration

Settlement of cross-currency swaps

2 unchanged sentences

Payments to acquire treasury stock ( 67 ) ( 35 )

Payment of deferred consideration

Net cash flows used for financing activities

1 unchanged sentence

Effect of exchange rate changes on Cash and cash equivalents 3 ( 24 )

Net decrease in Cash and cash equivalents ( 702 ) ( 1,045 )

Net increase (decrease) in Cash and cash equivalents 161 ( 809 )

Cash and cash equivalents at beginning of period 2,921 3,395

26 unchanged sentences

All assets and liabilities of foreign subsidiaries and affiliates are translated at period-end rates of exchange, while revenue and expenses are translated at monthly average rates of exchange for the period.

Unrealized translation (losses) gains, net of tax, reported as translation adjustments through other comprehensive income (loss) (“OCI”) were $( 32 ) million and $ 115 million, net of tax, during the three months ended September 30, 2025 and 2024, respectively.

Unrealized translation gains (losses), net of tax, reported as translation adjustments through other comprehensive income (loss) (“OCI”) were $ 52 million and $( 323 ) million, net of tax, for the three months ended December 31, 2025 and 2024, respectively, and $ 20 million and $( 208 ) million, net of tax, for the six months ended December 31, 2025 and 2024, respectively.

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

dollar is the functional currency, and these subsidiaries are not material to the Company's consolidated financial statements or liquidity as of and for the three months ended September 30, 2025 and 2024.

dollar is the functional currency, and these subsidiaries are not material to the Company's consolidated financial statements or liquidity as of and for the three and six months ended December 31, 2025 and 2024.

Remeasurement adjustments in financial statements in a highly inflationary economy and other transactional gains and losses are reflected in earnings.

1 unchanged sentence

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 (losses) gains on foreign currency transactions of $( 6 ) million and $ 19 million during the three months ended September 30, 2025 and 2024, respectively.

The accompanying consolidated statements of earnings (loss) include net exchange (losses) gains on foreign currency transactions of less than $( 1 ) million and $ 25 million for the three months ended December 31, 2025 and 2024, respectively, and $( 6 ) million and $ 44 million for the six months ended December 31, 2025 and 2024, respectively.

THE ESTÉE LAUDER COMPANIES INC.

7 unchanged sentences

Inventory and promotional merchandise consists of the following:

(In millions) September 30, 2025 June 30, 2025

(In millions) December 31, 2025 June 30, 2025

Raw materials

7 unchanged sentences

($ in millions)

September 30, 2025 June 30, 2025

December 31, 2025 June 30, 2025

Assets (Useful Life)

12 unchanged sentences

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

Depreciation and amortization of property, plant and equipment was $ 170 million and $ 168 million during the three months ended September 30, 2025 and 2024, respectively.

Depreciation and amortization of property, plant and equipment was $ 168 million for the three months ended December 31, 2025 and 2024, and $ 338 million and $ 336 million for the six months ended December 31, 2025 and 2024, 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).

The effective rate for income taxes was 56.9 % and 13.3 % for the three months ended September 30, 2025 and 2024, respectively.

The increase in the effective tax rate of 4,360 basis points was attributable in part to the loss before income taxes in the fiscal 2025 first quarter as well as the estimated unfavorable impact of the newly enacted U.S.

tax legislation, a higher effective tax rate on the Company's foreign operations due to the Company's full year geographical mix of earnings in the current and prior-year periods and an unfavorable impact associated with the establishment of a valuation allowance against current period foreign tax credit and research and development tax credit U.S.

deferred tax assets.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On July 4, 2025, new U.S tax legislation was enacted known as the One Big Beautiful Bill Act.

Three Months Ended December 31, Six Months Ended December 31,

2025 2024 2025 2024

Effective rate for income taxes 51.40 % 9.20 % 52.70 % 10.10 %

Basis-point change from the prior-year period 4,220 4,260

For the three months ended December 31, 2025, the increase in effective tax rate was primarily attributable to the loss before income taxes and the impact of the discrete treatment of the impairment of goodwill and other intangible assets, both during the fiscal 2025 second quarter.

Further contributing to the increase in the effective tax rate was the estimated unfavorable impact of the recently enacted U.S.

tax legislation known as the "One Big Beautiful Bill Act", and a higher effective tax rate on the Company's foreign operations due to an unfavorable impact associated with the establishment of valuation allowances against certain net deferred tax assets, partially offset by the year-over-year favorable impact associated with previously issued stock-based compensation.

For the six months ended December 31, 2025, the increase in effective tax rate was primarily attributable to the loss before income taxes, the impact of the discrete treatment of charges associated with restructuring and other activities, the impairment of goodwill and other intangible assets, and the charge associated with the talcum litigation settlement agreements, each during the six months ended December 31, 2024.

Further contributing to the increase in the effective tax rate was the estimated unfavorable impact of the recently enacted One Big Beautiful Bill Act, a higher effective tax rate on the Company’s foreign operations due to an unfavorable impact associated with the establishment of valuation allowances against certain net deferred tax assets, partially offset by the year-over-year favorable impact associated with previously issued stock-based compensation.

On July 4, 2025, the One Big Beautiful Bill Act was enacted.

This legislation includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of certain business tax provisions.

3 unchanged sentences

taxable income and increased the excess foreign tax credits generated which require a valuation allowance.

The estimated unfavorable fiscal 2026 impact of the One Big Beautiful Bill Act has been included in the provision for income taxes, and the impact for the three months ended September 30, 2025 was $ 8 million.

The estimated unfavorable fiscal 2026 impact of the One Big Beautiful Bill Act has been included in the provision for income taxes, and the impact for the three and six months ended December 31, 2025 was $ 20 million and $ 28 million, respectively.

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, 2025 and was not material.

As of September 30, 2025 and June 30, 2025, the gross amount of unrecognized tax benefits, exclusive of interest and penalties, totaled $ 141 million and $ 140 million, respectively.

The total amount of unrecognized tax benefits at September 30, 2025 that, if recognized, would affect the effective tax rate was $ 134 million.

The total gross interest and penalties accrued related to unrecognized tax benefits during the three months ended September 30, 2025 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, 2025 and June 30, 2025, was $ 21 million and $ 19 million, respectively.

On the basis of the information available as of September 30, 2025, the Company does not expect significant changes to the total amount of unrecognized tax benefits within the next twelve months.

At September 30, 2025 and June 30, 2025, total Other assets of $ 1,836 million and $ 1,805 million included $ 1,366 million and $ 1,339 million of deferred tax assets, respectively.

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, 2025 and was not material.

During the fiscal 2026 second quarter, the Company received notification of the formal conclusion of the compliance process with respect to its fiscal 2024 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, 2025.

As of December 31, 2025 and June 30, 2025, the gross amount of unrecognized tax benefits, exclusive of interest and penalties, totaled $ 144 million and $ 140 million, respectively.

The total amount of unrecognized tax benefits at December 31, 2025 that, if recognized, would affect the effective tax rate was $ 137 million.

The total gross interest and penalties accrued related to unrecognized tax benefits for the three and six months ended December 31, 2025 in the accompanying consolidated statements of earnings (loss) was $ 1 million and $ 3 million, respectively.

The total gross accrued interest and penalties in the accompanying consolidated balance sheets at December 31, 2025 and June 30, 2025, was $ 22 million and $ 19 million, respectively.

On the basis of the information available as of December 31, 2025, the Company does not expect significant changes to the total amount of unrecognized tax benefits within the next twelve months.

At December 31, 2025 and June 30, 2025, total Other assets of $ 1,817 million and $ 1,805 million included $ 1,318 million and $ 1,339 million of deferred tax assets, respectively.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

Outstanding obligations confirmed as valid totaling $ 65 million and $ 82 million as of September 30, 2025 and June 30, 2025, respectively, are included in Accounts payable in the accompanying consolidated balance sheets.

Outstanding obligations confirmed as valid totaling $ 77 million and $ 82 million as of December 31, 2025 and June 30, 2025, 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, 2025 June 30, 2025

(In millions) December 31, 2025 June 30, 2025

Accrued employee compensation

9 unchanged sentences

$ 3,595 $ 3,529

Recently Issued Accounting Standards

2025-10 – Accounting for Government Grants Received by Business Entities (Topic 832)

In December 2025, the FASB issued authoritative guidance on the recognition, measurement, and presentation of government grants received by business entities.

A government grant is defined as a transfer of a monetary asset or a tangible nonmonetary asset, other than in an exchange transaction, from a government to an entity.

Government grants are recognized in earnings in the same periods that the costs for which the grant was intended to compensate are recognized.

A government grant can be recognized once it is probable that both of the following conditions are met:

(1) the company will comply with the conditions attached to the grant and (2) the grant will be received.

The guidance differentiates between a grant related to an asset and a grant related to income, which is based on the purpose and conditions of the grant.

A grant related to an asset is a government grant that is conditioned on the purchase, construction, or acquisition of an asset and is recognized on the balance sheet once the probable threshold is met and the related costs are incurred.

The guidance allows companies to make an accounting policy election to use either a deferred income approach or a cost accumulation approach for recognition of a grant of an asset.

A grant related to income is a government grant that does not meet the definition of a grant related to an asset and is recognized in earnings on a systematic and rational basis over the periods the related costs are recognized as expenses.

The guidance allows alternative accounting policies for the financial statement presentation of a government grant, depending on the type of grant as well as new disclosure requirements for grants related to an asset and grants of tangible nonmonetary assets.

Effective for the Company :

The guidance becomes effective for the Company’s first quarter of fiscal 2030.

The guidance can be applied on a modified prospective basis, modified retrospective basis or a full retrospective basis.

Early adoption is permitted.

Impact on consolidated financial statements :

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

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recently Issued Accounting Standards

2025-06 – Targeted Improvements to the Accounting for Internal-Use Software (Subtopic 350-40)

36 unchanged sentences

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

2023-09 – Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

2023-09 – Improvements to Income Tax Disclosures (Topic 740)

In December 2023, the FASB issued authoritative guidance to amend and enhance existing annual in come tax disclosures primarily focusing on two reporting areas:

22 unchanged sentences

Translation adjustments, goodwill ( 14 ) — — — ( 14 )

( 24 ) — — — ( 24 )

Translation adjustments, accumulated impairments 16 — — — 16

( 16 ) — — — ( 16 )

Balance as of September 30, 2025

Balance as of December 31, 2025

1,602 1,116 260 353 3,331

7 unchanged sentences

Other intangible assets consist of the following:

September 30, 2025 June 30, 2025

December 31, 2025 June 30, 2025

(In millions) Gross

10 unchanged sentences

$ 3,696 $ 3,759

The aggregate amortization expense related to amortizable intangible assets was $ 26 million and $ 36 million for the three months ended September 30, 2025 and 2024, respectively.

The aggregate amortization expense related to amortizable intangible assets was $ 27 million and $ 35 million for the three months ended December 31, 2025 and 2024, respectively, and $ 53 million and $ 71 million for the six months ended December 31, 2025 and 2024, respectively.

The estimated aggregate amortization expense for the remainder of fiscal 2026 and for each of the next four fiscal years is as follows:

1 unchanged sentence

Estimated aggregate amortization expense $ 51 $ 87 $ 70 $ 69 $ 67

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

7 unchanged sentences

Cumulative initiatives under the Restructuring Program are expected to be approved by the end of fiscal 2026 and substantially completed by the end of fiscal 2027.

In connection with the Restructuring Program, as of September 30, 2025, the Company 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.

In connection with the Restructuring Program, as of December 31, 2025, the Company 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 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, asset-related costs, contract terminations 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.

Additional information relating to the Company's Profit Recovery and Growth Plan and related Restructuring Program is included in Notes to Consolidated Financial Statements, Note 8 – Charges Associated with Restructuring and Other Activities in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Additional information relating to the Company's Profit Recovery and Growth Plan and related Restructuring Program is included in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

Restructuring Program Approvals

Cumulative charges for initiatives approved by the Company in connection with the Restructuring Program as of September 30, 2025 and through October 26, 2025, were:

Cumulative charges for initiatives approved by the Company in connection with the Restructuring Program as of December 31, 2025 and through January 30, 2026, were:

Net Sales) Cost of Sales Operating Expenses Total

1 unchanged sentence

Charges Other

Total Charges Approved

Total Charges (Adjustments) Approved

Cumulative charges approved through June 30, 2025

$ 4 $ 10 $ 552 $ 114 $ 680

Three months ended September 30, 2025

1 — 107 39 147

Cumulative charges approved through September 30, 2025

5 10 659 153 827

October 1, 2025 - October 26, 2025

Six months ended December 31, 2025

( 1 ) — 291 258 548

Cumulative charges approved through October 26, 2025

Cumulative charges approved through December 31, 2025

3 10 843 372 1,228

Included in the above table, cumulative restructuring charges for initiatives approved by the Company in connection with the Restructuring Program as of September 30, 2025 and through October 26, 2025, by major cost type were:

January 1, 2026 - January 30, 2026 2 ( 1 ) 22 ( 2 ) 21

Cumulative charges approved through January 30, 2026 $ 5 $ 9 $ 865 $ 370 $ 1,249

Included in the above table, cumulative restructuring charges for initiatives approved by the Company in connection with the Restructuring Program as of December 31, 2025 and through January 30, 2026, by major cost type were:

(In millions) Employee-

1 unchanged sentence

Terminations Other Exit

Restructuring Charges Approved

Restructuring Charges (Adjustments) Approved

Cumulative charges approved through June 30, 2025

$ 512 $ 14 $ 3 $ 23 $ 552

Three months ended September 30, 2025

64 39 1 3 107

Cumulative charges approved through September 30, 2025

Six months ended December 31, 2025

187 74 23 7 291

October 1, 2025 - October 26, 2025

Cumulative charges approved through October 26, 2025

Cumulative charges approved through December 31, 2025

699 88 26 30 843

January 1, 2026 - January 30, 2026 22 1 — ( 1 ) 22

Cumulative charges approved through January 30, 2026 $ 721 $ 89 $ 26 $ 29 $ 865

Specific actions taken since the Restructuring Program inception to drive future sales growth and productivity to rebuild gross and operating margin profitability include:

• Enterprise Business Services – The Company approved an initiative in connection with the transformation of its global operating model to (i) consolidate certain service providers, (ii) expand outsourced services, and (iii) redesign and standardize the related end-to-end business processes, leveraging advanced technology to improve productivity.

These actions will primarily result in other charges, including professional services related to the design, implementation and execution of the initiative.

These charges include transition and transformation support, process design, and costs to support the global project management office for this initiative.

These actions will also result in employee severance through a net reduction in workforce and contract termination charges.

• Value Chain Optimization – The Company approved initiatives to reduce spans and layers and right-size organizational capability within its supply chain and research and development functions.

1 unchanged sentence

• 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.

Additionally, as a result of the reorganization and right-sizing of various areas of the organization as previously approved under the Restructuring Program, the Company approved an initiative to exit an office lease.

These activities will primarily result in employee severance through a net reduction in workforce and asset-related costs.

• Future of Brand-led Model – The Company approved initiatives to redesign spans and layers in its marketing, creative and other functions within the brand and product category structures to make them 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 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 primarily result in employee severance through a net reduction in workforce, inventory write-offs, as well as costs associated with sales returns.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• 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.

• 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 optimize the selling model and exit unprofitable brands from specific markets and distribution channels.

These activities will primarily 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 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, as well as asset-related costs.

9 unchanged sentences

Other Charges – Other charges related to the design and implementation of approved initiatives, which are charged to Operating expenses as incurred and primarily include the following:

• Consulting and other professional services for organizational design of the future structures and processes as well as the implementation thereof;

• Consulting and other professional services for transition support, transformational organization design of the future structures and processes, as well as the implementation and execution thereof;

• Temporary labor backfill;

12 unchanged sentences

Three months ended September 30, 2025 — ( 2 ) 72 17 87

Three months ended December 31, 2025

— — 152 55 207

Cumulative charges through September 30, 2025

Cumulative charges through December 31, 2025

$ — $ 7 $ 748 $ 149 $ 904

Included in the above table, cumulative restructuring charges recorded by the Company in connection with the Restructuring Program as of September 30, 2025, by major cost type were:

Included in the above table, cumulative restructuring charges recorded by the Company in connection with the Restructuring Program as of December 31, 2025, by major cost type were:

(In millions) Employee-

5 unchanged sentences

Three months ended September 30, 2025 66 5 — 1 72

Cumulative charges through September 30, 2025

Three months ended December 31, 2025

114 15 21 2 152

Changes in accrued restructuring charges from the Restructuring Program for the three months ended September 30, 2025 were:

Cumulative charges through December 31, 2025

$ 683 $ 33 $ 24 $ 8 $ 748

Changes in accrued restructuring charges from the Restructuring Program for the six months ended December 31, 2025 were:

(In millions) Employee-

9 unchanged sentences

( 3 ) — 1 $ — ( 2 )

Balance at September 30, 2025

Balance at December 31, 2025

$ 413 $ — $ 23 $ — $ 436

Accrued restructuring charges at September 30, 2025 relating to the Restructuring Program are expected to result in cash expenditures funded from cash provided by operations of approximately $ 248 million, $ 104 million and $ 17 million for the remainder of fiscal 2026 and for fiscal 2027 and 2028, respectively.

Accrued restructuring charges at December 31, 2025 relating to the Restructuring Program are expected to result in cash expenditures funded from cash provided by operations of approximately $ 214 million, $ 197 million and $ 25 million for the remainder of fiscal 2026 and for fiscal 2027 and 2028, 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.

2 unchanged sentences

The Company does not utilize derivative financial instruments for trading or speculative purposes.

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

At September 30, 2025, the notional amount of derivatives not designated as hedging instruments was $ 3,314 million.

At December 31, 2025, the notional amount of derivatives not designated as hedging instruments was $ 3,010 million.

THE ESTÉE LAUDER COMPANIES INC.

1 unchanged sentence

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, 2025, the Company has interest rate swap agreements, with notional amounts totaling $ 700 million, $ 300 million and $ 300 million, to effectively convert the fixed rate interest on its 2030 Senior Notes, 2031 Senior Notes and 2034 Senior Notes, respectively, to variable interest rates based on the Secured Overnight Financing Rate ("SOFR") plus a margin.

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

At December 31, 2025, the Company has interest rate swap contracts, with notional amounts totaling $ 700 million, $ 300 million and $ 600 million, to effectively convert the fixed rate interest on its 2030 Senior Notes, 2031 Senior Notes and 2034 Senior Notes, respectively, to variable interest rates based on the 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, 2025, 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, 2025, 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 in the consolidated statements of earnings (loss).

1 unchanged sentence

The earnings recognition of excluded components is presented in the same income statement line item as the earnings effect of the hedged transaction in the consolidated statements of earnings (loss).

Any difference between the changes in the fair value of the excluded components and amounts recognized in earnings (loss) 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, 2025 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 on derivative instruments designated as fair value hedges in AOCI was $ 10 million and $ 7 million as of September 30, 2025 and June 30, 2025, respectively.

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

The estimated net gain on the Company’s derivative instruments designated as fair value hedges as of December 31, 2025 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 on derivative instruments designated as fair value hedges in AOCI was $ 12 million and $ 7 million as of December 31, 2025 and June 30, 2025, respectively.

Cash Flow Hedges

1 unchanged sentence

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 and receivables and payables denominated in foreign currencies have been designated as cash flow hedges and have varying maturities through the end of March 2027.

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

At September 30, 2025, the Company had cash flow hedges outstanding with a notional amount totaling $ 1,270 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.

At December 31, 2025, the Company had cash flow hedges outstanding with a notional amount totaling $ 1,025 million.

For foreign currency forward 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, 2025, the Company’s foreign currency cash flow hedges were highly effective.

As of December 31, 2025, the Company’s foreign currency forward contracts 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.

The purpose of the hedging activities is to minimize the effect of interest rate movements on the cost of debt issuance.

The estimated net loss on the Company’s derivative instruments designated as cash flow hedges as of September 30, 2025 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $ 24 million.

The accumulated net gain (loss) on derivative instruments designated as cash flow hedges in AOCI was $ 3 million and $( 13 ) million as of September 30, 2025 and June 30, 2025, respectively.

The estimated net loss on the Company’s derivative instruments designated as cash flow hedges as of December 31, 2025 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $ 18 million.

The accumulated net gain (loss) on derivative instruments designated as cash flow hedges in AOCI was $ 11 million and $( 13 ) million as of December 31, 2025 and June 30, 2025, respectively.

THE ESTÉE LAUDER COMPANIES INC.

6 unchanged sentences

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

At September 30, 2025, the Company had net investment hedges outstanding with notional amounts totaling $ 1,077 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.

At December 31, 2025, the Company had net investment hedges outstanding with notional amounts totaling $ 1,077 million.

As a matter of policy, the Company only enters into derivative contracts 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 $ 74 million at September 30, 2025.

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 $ 118 million at December 31, 2025.

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

5 unchanged sentences

(In millions) Balance Sheet

Location September 30, 2025 June 30, 2025 Balance Sheet

Location September 30, 2025 June 30, 2025

Location December 31, 2025 June 30, 2025 Balance Sheet

Location December 31, 2025 June 30, 2025

Derivatives Designated as Hedging Instruments:

12 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 forward contracts at September 30, 2025 is $ 1 million, 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, 2025 is $ 1 million, classified within Other assets in the accompanying consolidated balance sheets.

There were no amounts classified in Other assets at June 30, 2025.

(3) Included in the asset derivatives for the cross-currency swap contracts at September 30, 2025 and June 30, 2025 is approximately $ 50 million and $ 40 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, 2025 and June 30, 2025 is approximately $ 87 million and $ 40 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 (Loss)

Earnings (Loss) Amount of Gain (Loss)

Reclassified from AOCI into Earnings (Loss) (1)

Three Months Ended

September 30,

Three Months Ended

September 30,

(In millions) 2025 2024 2025 2024

1 unchanged sentence

Foreign currency forward contracts $ — $ 70 Net sales

Interest rate contracts

— — Interest expense 1 1

Total cash flow hedges

4 unchanged sentences

Total net investment hedges

Total derivatives $ 18 $ 158 $ ( 8 ) $ 15

(1) There was no amount reclassified into the accompanying consolidated statements of 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.

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

(3) For the three months ended December 31, 2025 and 2024, the gain recognized in the accompanying consolidated statements of earnings (loss) from foreign currency forward contracts related to the amount excluded from effectiveness testing was $ 3 million and $ 7 million, respectively.

(4) For the three months ended December 31, 2025 and 2024, the gain recognized in the accompanying consolidated statements of earnings (loss) from cross-currency swap contracts related to the amount excluded from effectiveness testing was $ 3 million and $ 1 million, respectively.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Amount of Gain (Loss)

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 December 31, Six Months Ended December 31,

(In millions) 2025 2024 2025 2024

Derivatives in Cash Flow Hedging Relationships:

Foreign currency forward contracts $ 16 $ 23 Net sales

Interest rate contracts — — Interest expense

Total cash flow hedges

16 23 ( 8 ) 25

Derivatives in Net Investment Hedging Relationships (2) :

Foreign currency forward contracts (3)

Cross-currency swap contracts (4)

Total net investment hedges

Total derivatives $ 49 $ 47 $ ( 8 ) $ 25

1 unchanged sentence

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

(3) During the three months ended September 30, 2025 and 2024, the gain recognized in the accompanying consolidated statements of earnings (loss) from foreign currency forward contracts related to the amount excluded from effectiveness testing was $ 3 million and $ 7 million, respectively.

(4) During the three months ended September 30, 2025, the gain recognized in the accompanying consolidated statements of earnings (loss) from cross-currency swap contracts related to the amount excluded from effectiveness testing was $ 3 million.

(3) For the six months ended December 31, 2025 and 2024, the gain recognized in the accompanying consolidated statements of earnings (loss) from foreign currency forward contracts related to the amount excluded from effectiveness testing was $ 6 million and $ 14 million, respectively.

(4) For the six months ended December 31, 2025 and 2024, the gain recognized in the accompanying consolidated statements of earnings (loss) from cross-currency swap contracts related to the amount excluded from effectiveness testing was $ 6 million and $ 1 million , respectively.

Amount of Gain (Loss)

2 unchanged sentences

Three Months Ended

September 30,

December 31, Six Months Ended

(In millions) 2025 2024 2025 2024

5 unchanged sentences

(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 the accompanying consolidated statements of earnings (loss) from cross-currency swap contracts related to the amount excluded from effectiveness testing during the three months ended September 30, 2025 and 2024 was $ 5 million and $ 4 million, respectively.

The gain recognized in the accompanying consolidated statements of earnings (loss) from cross-currency swap contracts related to the amount excluded from effectiveness testing for the three months ended December 31, 2025 and 2024 was $ 4 million and $ 5 million, respectively, and for each of the six months ended December 31, 2025 and 2024 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.

7 unchanged sentences

Included in the Carrying Amount of the Hedged Liability

September 30, 2025 September 30, 2025

December 31, 2025 December 31, 2025

Long-term debt $ 1,488 $ ( 102 )

1 unchanged sentence

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

9 unchanged sentences

Derivatives designated as hedging instruments N/A 22 N/A N/A 43 N/A

Gain on cash flow hedge relationships – interest rate contracts:

Amount of gain reclassified from AOCI N/A N/A 1 N/A N/A 1

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

Amount of gain (loss) reclassified from AOCI

— N/A N/A 10 N/A N/A

Amount of (loss) gain reclassified from AOCI ( 9 ) N/A N/A 14 N/A N/A

N/A (Not applicable)

1 unchanged sentence

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 accompanying consolidated statements of earnings (loss) in which the effects of fair value and cash flow hedges are recorded

$ 7,710 $ 4,923 $ 171 $ 7,365 $ 4,883 $ 182

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 ( 1 ) N/A N/A ( 7 )

Derivatives designated as hedging instruments N/A N/A 1 N/A N/A 7

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

Hedged item N/A ( 34 ) N/A N/A 9 N/A

Derivatives designated as hedging instruments N/A 34 N/A N/A ( 9 ) N/A

Gain on cash flow hedge relationships – interest rate contracts:

Amount of gain reclassified from AOCI N/A N/A 1 N/A N/A 1

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

Amount of (loss) gain reclassified from AOCI ( 9 ) N/A N/A 24 N/A N/A

N/A (Not applicable)

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

3 unchanged sentences

Three Months Ended

September 30,

December 31, Six Months Ended

(In millions) 2025 2024 2025 2024

1 unchanged sentence

Foreign currency forward contracts Selling, general and administrative $ 5 $ 31 $ 21 $ ( 19 )

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company's derivative instruments are subject to enforceable master netting agreements.

2 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, 2025

As of December 31, 2025

As of June 30, 2025

18 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, 2025:

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, 2025:

(In millions) Level 1 Level 2 Level 3 Total

6 unchanged sentences

Interest rate contracts

Cross-currency swap contracts

$ — $ 145 $ — $ 145

11 unchanged sentences

The estimated fair values of the Company’s financial instruments not measured at fair value on a recurring basis are as follows:

September 30, 2025 June 30, 2025

December 31, 2025 June 30, 2025

(In millions) Carrying

8 unchanged sentences

Cash and cash equivalents – Cash and all highly-liquid securities with original maturities of three months or less are classified as cash and cash equivalents, primarily consisting of cash deposits in interest bearing accounts, time deposits and money market funds (classified within Level 1 of the valuation hierarchy).

Cash deposits in interest bearing accounts and time deposits are carried at cost, which approximates fair value, due to the short maturity of cash equivalent instruments.

Cash deposits in interest bearing accounts and time deposits are carried at cost, which approximates fair value, due to the short maturity of these cash equivalent instruments.

Foreign currency forward contracts – The fair values of the Company’s foreign currency forward contracts were determined using an industry-standard valuation model, which is based on an income approach.

14 unchanged sentences

Three Months Ended

September 30,

December 31, Six Months Ended December 31,

(In millions) 2025 2024 2025 2024

1 unchanged sentence

Europe, United Kingdom and Ireland and Emerging Markets ("EUKEM")

1,183 1,085 2,084 1,953

Asia/Pacific (2)

900 888 1,773 1,694

Mainland China

928 822 1,460 1,312

4,229 4,004 7,709 7,365

Returns associated with restructuring and other activities — — 1 —

Net sales $ 4,229 $ 4,004 $ 7,710 $ 7,365

(1) The Company has reorganized its geographic regions, effective July 1, 2025 and has presented the information for the three months ended September 30, 2025 and 2024 under this new basis.

(1) The Company has reorganized its geographic regions, effective July 1, 2025 and has presented the information for the three and six months ended December 31, 2025 and 2024 under this new basis.

(2) The net sales from the Company’s travel retail business are included in the Asia/Pacific region.

2 unchanged sentences

Accounts Receivable

Accounts receivable, net is stated net of the allowance for doubtful accounts, including credit losses, and customer deductions totaling $ 39 million and $ 38 million as of September 30, 2025 and June 30, 2025, respectively.

Accounts receivable, net is stated net of the allowance for doubtful accounts, including credit losses, and customer deductions totaling $ 53 million and $ 38 million as of December 31, 2025 and June 30, 2025, 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, 2025

(In millions) December 31, 2025

Balance at June 30, 2025 $ 26

1 unchanged sentence

Write-offs, net & other —

Balance at September 30, 2025 $ 27

The remaining balance of the allowance for doubtful accounts and customer deductions of $ 12 million as of September 30, 2025 and June 30, 2025, relates to non-credit losses, which are primarily due to customer deductions.

Balance at December 31, 2025 $ 40

The remaining balance of the allowance for doubtful accounts and customer deductions of $ 13 million and $ 12 million as of December 31, 2025 and June 30, 2025, respectively, relates to non-credit losses, which are primarily due to customer deductions.

Deferred Revenue

1 unchanged sentence

Three Months Ended

September 30,

December 31, Six Months Ended

(In millions) 2025 2024 2025 2024

2 unchanged sentences

Revenue deferred during the period

93 104 234 258

Other 1 ( 2 ) 2 ( 1 )

Deferred revenue, end of period $ 539 $ 562 $ 539 $ 562

Transaction Price Allocated to the Remaining Performance Obligations

At September 30, 2025, 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 $ 332 million.

The remaining balance of deferred revenue at September 30, 2025 will be recognized beyond the next twelve months, of which $ 207 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 ending in fiscal 2043.

At December 31, 2025, 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 $ 327 million.

The remaining balance of deferred revenue at December 31, 2025 will be recognized beyond the next twelve months, of which $ 204 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 ending in fiscal 2043.

Royalty Revenue – License Arrangements

7 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The components of net periodic benefit cost for the three months ended September 30, 2025 and 2024 consisted of the following:

The components of net periodic benefit cost for the three months ended December 31, 2025 and 2024 consisted of the following:

Pension Plans Other than

11 unchanged sentences

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

The components of net periodic benefit cost for the six months ended December 31, 2025 and 2024 consisted of the following:

Pension Plans Other than

Pension Plans

International Post-retirement

(In millions) 2025 2024 2025 2024 2025 2024

Service cost $ 18 $ 18 $ 14 $ 14 $ — $ —

Interest cost 27 25 9 9 4 4

Expected return on plan assets ( 26 ) ( 25 ) ( 13 ) ( 13 ) — —

Amortization of:

Actuarial loss (gain)

10 10 — ( 3 ) — —

Prior service cost — — ( 1 ) — ( 2 ) ( 3 )

Special termination benefits — — — 1 — —

Net periodic benefit cost $ 29 $ 28 $ 9 $ 8 $ 2 $ 1

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, 2025 June 30, 2025

(In millions) December 31, 2025 June 30, 2025

Other assets $ 128 $ 128

4 unchanged sentences

Net amount recognized $ ( 3 ) $ 3

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Contractual Obligations

During the fiscal 2026 second quarter, the Company entered into a contract in connection with the transformation of its operating model, as part of its PRGP Enterprise Business Services initiative, as further described in Note 3 – Charges Associated with Restructuring and Other Activities .

This contract is intended to drive productivity and savings.

As of December 31, 2025, this contract is expected to increase our unconditional purchase obligations through fiscal 2033 by approximately $ 1,600 million.

The amounts expected to be paid under the contract may vary from this amount based on future variability in the pricing model and performance by the vendor under the contract.

Legal Proceedings

6 unchanged sentences

Refer below for the assessment of loss contingencies associated with the Company's Securities Class Action and Derivative Matters and Cosmetic Talcum Powder Matters.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Management believes that the outcome of all remaining current litigation and other legal proceedings will not have a material adverse effect upon the Company’s business, results of operations, financial condition or cash flows.

11 unchanged sentences

A committee of the Board has been formed to review the stockholder demands and make recommendations, as appropriate in its discretion, to the Board.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In fiscal 2025, on May 8, 2025, two additional stockholder derivative action complaints were filed in the United States District Court for the Southern District of New York against certain of the Company’s current and former officers and directors alleging breach of fiduciary duty and unjust enrichment from the sale of stock by certain individual defendants during the time period surrounding the allegations of false and misleading statements in the purported securities class action described above.

1 unchanged sentence

In fiscal 2026, on September 15, 2025 and September 26, 2025, two additional stockholder derivative action complaints were filed in Delaware Chancery Court against certain of the Company’s current and former officers and directors, also alleging breach of fiduciary duty and unjust enrichment as well as claims of waste, gross mismanagement and insider trading.

The Company believes that it is not possible at this time to reasonably assess the outcome of these matters or to estimate the loss or range of losses, if any, as the matters are in their early stages.

One of those complaints was voluntarily dismissed and refiled on November 11, 2025, by the proper shareholder.

On November 11, 2025 and November 12, 2025, two additional stockholder derivative action complaints were filed in Delaware Chancery Court against certain of the Company's current and former officers and directors, also alleging breach of fiduciary duty and unjust enrichment as well as claims of waste, gross mismanagement and insider trading.

The Company believes that it is not possible at this time to reasonably assess the outcome of these matters or to estimate the loss or range of losses, if any.

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, 2025, there were 91 individual cases pending against the Company in state and federal courts throughout the United States, as compared to 84 cases as of June 30, 2025.

During the three months ended September 30, 2025, 15 new cases were filed and 8 cases were resolved by settlement or voluntary dismissal.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2025, there were 105 individual cases pending against the Company in state and federal courts throughout the United States, as compared to 84 cases as of June 30, 2025.

During the six months ended December 31, 2025, 41 new cases were filed and 20 cases were resolved by settlement or voluntary dismissal.

In view of the number of cases pending against the Company at June 30, 2024, as well as the evolution of the litigation landscape and expectations regarding future claims at that time, the Company took action from the end of August 2024 through October 2024 to mitigate its future exposure.

2 unchanged sentences

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 were based on the best estimate of the probable loss at that time, and actual additional charges and any further reasonably possible losses beyond the amounts recorded during the three months ended September 30, 2024 has not been and is not expected to be material).

As of September 30, 2025, $ 28 million is recorded in Other accrued liabilities and $ 85 million is recorded in Other noncurrent liabilities in the accompanying consolidated balance sheet related to the talcum litigation settlement agreements.

As of December 31, 2025, $ 24 million is recorded in Other accrued liabilities and $ 73 million is recorded in Other noncurrent liabilities in the accompanying consolidated balance sheet related to the talcum litigation settlement 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, 2025 and 2024 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, 2025 and 2024 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, as needed, for a small number of individual cases that have advanced to the later stages of legal proceedings.

2 unchanged sentences

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, 2025 and 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, 2025 and 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 for cosmetic talcum matters, outside of the talcum litigation settlement agreements.

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.

2 unchanged sentences

Additional information relating to the Company's stock programs 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, 2025.

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 $ 88 million and $ 74 million for the three months ended September 30, 2025 and 2024, respectively.

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”) and performance share units (“PSUs”).

Compensation expense attributable to net stock-based compensation was $ 94 million and $ 106 million for the three months ended December 31, 2025 and 2024, respectively, and was $ 182 million and $ 180 million for the six months ended December 31, 2025 and 2024, respectively.

Stock Options

During the three months ended September 30, 2025, the Company granted stock options in respect of approximately 1.1 million shares of Class A Common Stock with a weighted average exercise price per share of $ 91.77 and a weighted average grant date fair value per share of $ 34.80 .

During the six months ended December 31, 2025, the Company granted stock options in respect of approximately 1.2 million shares of Class A Common Stock with a weighted average exercise price per share of $ 91.71 and a weighted average grant date fair value per share of $ 34.84 .

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

Restricted Stock Units

During the three months ended September 30, 2025, the Company granted RSUs in respect of approximately 3.5 million shares of Class A Common Stock with a weighted average grant date fair value per share of $ 91.66 that, at the time of grant, are scheduled to vest at 1.2 million, 1.5 million, and 0.8 million shares per year, in fiscal 2027, fiscal 2028 and fiscal 2029, respectively.

During the six months ended December 31, 2025, the Company granted RSUs in respect of approximately 3.5 million shares of Class A Common Stock with a weighted average grant date fair value per share of $ 91.66 that, at the time of grant, are scheduled to vest at 1.2 million, 1.5 million and 0.8 million shares per year, in fiscal 2027, fiscal 2028 and fiscal 2029, respectively.

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

The RSUs are generally accompanied by dividend equivalent rights, payable upon settlement of the RSUs either in cash or shares (based on the terms of the particular award) and, as such, were generally valued at the closing market price of the Company’s Class A Common Stock on the date of grant.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Included in the above are one-time grants in respect of approximately 0.5 million shares of Class A Common Stock scheduled to cliff vest in fiscal 2028 with a weighted average grant-date fair value per share of $ 91.77 made under the Profit Recovery and Growth Plan Incentive Program which was implemented in an effort to incentivize and retain leaders who are critical to the success of the PRGP.

Included in the above are one-time awards granted in the first quarter of fiscal 2026, in respect of approximately 0.5 million shares of Class A Common Stock scheduled to cliff vest in fiscal 2028 with a weighted average grant-date fair value per share of $ 91.77 made under the PRGP Incentive Program which was implemented in an effort to incentivize and retain leaders who are critical to the success of the PRGP.

Performance Share Units

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The total fair value of PVUs at the time of issuance was $ 7.7 million.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – NET EARNINGS (LOSS) PER COMMON SHARE

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

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.

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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

Three Months Ended

September 30,

December 31, Six Months Ended

(In millions, except per share data) 2025 2024 2025 2024

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Weighted average common shares outstanding – Basic

362.1 360.0 361.7 359.8

Effect of dilutive stock options

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Weighted average common shares outstanding – Diluted

364.8 360.0 364.2 359.8

Net earnings (loss) per common share:

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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

September 30,

Three Months Ended December 31, Six Months Ended December 31,

(In millions) 2025 2024 2025 2024

Stock options

7.9 8.5 8.2 8.1

RSUs and PSUs

As of September 30, 2025 and 2024, 0.5 million and 0.6 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 19 – Stock Programs in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

— 2.9 0.4 2.1

As of December 31, 2025 and 2024, 0.5 million and 0.6 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 19 – Stock Programs in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

THE ESTÉE LAUDER COMPANIES INC.

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Three Months Ended

September 30,

December 31, Six Months Ended

(In millions, except per share data)

2025 2024 2025 2024

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

8 unchanged sentences

Net earnings (loss)

162 ( 590 ) 209 ( 746 )

Retained earnings, end of the period 11,624 12,313 11,624 12,313

Accumulated other comprehensive loss, beginning of the period ( 1,141 ) ( 1,057 ) ( 1,127 ) ( 1,140 )

Other comprehensive (loss) earnings

Other comprehensive earnings (loss)

61 ( 284 ) 47 ( 201 )

Accumulated other comprehensive loss, end of the period ( 1,080 ) ( 1,341 ) ( 1,080 ) ( 1,341 )

6 unchanged sentences

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, 2025:

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, 2025:

Date Declared Record Date Payable Date Amount per Share

August 19, 2025 September 2, 2025 September 16, 2025 $ .35

On October 29, 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 December 15, 2025 to stockholders of record at the close of business on November 28, 2025.

October 29, 2025 November 28, 2025 December 15, 2025 $ .35

On February 4, 2026, 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 16, 2026 to stockholders of record at the close of business on February 27, 2026.

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

The Company may resume repurchases in the future.

During the six months ended December 31, 2025, 11.0 million shares of the Company’s Class B Common Stock were converted into the same amount of shares of the Company’s Class A Common Stock.

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, 2025:

The following table represents changes in accumulated other comprehensive loss, net of tax, by component for the three and six months ended December 31, 2025:

(In millions) Net Cash

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Amounts reclassified to Net earnings — ( 4 ) 3 — ( 1 )

— ( 4 ) 3 — ( 1 )

Net current-period OCI 13 2 3 ( 32 ) ( 14 )

Balance at September 30, 2025 2 8 ( 201 ) ( 950 ) ( 1,141 )

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

OCI before reclassifications (2)

( 1 ) 5 1 50 (3)

Amounts reclassified to Net earnings 6 ( 3 ) 3 — 6

Net current-period OCI 5 2 4 50 61

Balance at December 31, 2025 $ 7 $ 10 $ ( 197 ) $ ( 900 ) $ ( 1,080 )

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

(3) The tax provision included in Net Cash Flow Hedge Gain (Loss), Cross-Currency Swap Contracts - Fair Value Hedge Gain and Translation Adjustments are $ 3 million, $ 2 million, and $ 5 million, respectively.

(2) The tax provision included in Net Cash Flow Hedge Gain (Loss), Cross-Currency Swap Contracts - Fair Value Hedge Gain and Translation Adjustments for the three months ended September 30, 2025 was $ 3 million, $ 2 million and $ 5 million, respectively.

For the three months ended December 31, 2025, the tax provision included in Net Cash Flow Hedge Gain (Loss), Cross-Currency Swap Contracts - Fair Value Hedge Gain, Amounts Included in Net Periodic Benefit Cost and Translation Adjustments was $ 1 million, $ 1 million, $ 1 million and $ 4 million, respectively.

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

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table represents the effects of reclassification adjustments from AOCI into net earnings (loss) for the three months ended September 30, 2025 and 2024:

The following table represents the effects of reclassification adjustments from AOCI into net earnings (loss) for the three and six months ended December 31, 2025 and 2024:

Amount Reclassified from AOCI Affected Line Item in

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Three Months Ended

September 30,

December 31, Six Months Ended

(In millions) 2025 2024 2025 2024

Gain (Loss) on Cash Flow Hedges

(Loss) Gain on Cash Flow Hedges

Foreign currency forward contracts $ ( 9 ) $ 14 $ ( 9 ) $ 24 Net sales

Provision for income taxes

— ( 3 ) Provision (benefit) for income taxes

Total gain on cash flow hedges, net of tax

— 7 Net earnings (loss)

Interest rate contracts 1 1 1 1 Interest expense

Total (loss) gain on cash flow hedges, before tax ( 8 ) 15 ( 8 ) 25

Benefit (provision) for income taxes 2 ( 3 ) 2 ( 6 ) Provision (benefit) for income taxes

Total (loss) gain on cash flow hedges, net of tax ( 6 ) 12 ( 6 ) 19 Net earnings (loss)

Gain on Cross-Currency Swap Contracts - Fair Value Hedge

1 unchanged sentence

4 5 9 9 Selling, general and administrative

Provision for income taxes

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

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

4 3 Net earnings (loss)

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 3 4 7 7 Net earnings (loss)

Retirement Plan and Other Retiree Benefit Adjustments

Amortization of prior service cost 2 1 3 3 Other components of net periodic benefit cost

Amortization of actuarial loss

( 5 ) ( 4 ) Other components of net periodic benefit cost

Total retirement plan and other retiree benefit adjustments, before tax

( 4 ) ( 2 ) Other components of net periodic benefit cost

Benefit for income taxes

1 — Provision (benefit) for income taxes

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

( 3 ) ( 2 ) Net earnings (loss)

Amortization of actuarial loss ( 5 ) ( 3 ) ( 10 ) ( 7 ) Other components of net periodic benefit cost

Total retirement plan and other retiree benefit adjustments, before tax ( 3 ) ( 2 ) ( 7 ) ( 4 ) Other components of net periodic benefit cost

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

Total retirement plan and other retiree benefit adjustments, net of tax ( 3 ) ( 1 ) ( 6 ) ( 3 ) Net earnings (loss)

Total reclassification adjustments, net $ ( 6 ) $ 15 $ ( 5 ) $ 23 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, 2025 and 2024 is as follows:

Supplemental cash flow information for the six months ended December 31, 2025 and 2024 is as follows:

(In millions) 2025 2024

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Right-of-use assets obtained in exchange for new/modified operating lease liabilities $ 226 $ 311

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 – SEGMENT DATA AND RELATED INFORMATION

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Royalty revenue associated with the license of the TOM FORD trademark as well as sales and related results of ancillary products and services that do not fit within the Company's definitions of skin care, makeup, fragrance and hair care are included in the other category.

Segment net sales and operating income is before the impacts of restructuring and other activities and the impacts from the other category described above.

Segment net sales and operating income (loss) is before the impacts of restructuring and other activities and the impacts from the other category described above.

Returns and charges associated with restructuring and other activities are not allocated to the Company's segments because they are centrally directed and controlled, are not included in internal measures of segment performance and result from activities that are deemed Company-wide initiatives to redesign, resize and reorganize select areas of the business.

1 unchanged sentence

thus, no additional information is produced for the chief operating decision maker or included herein.

Information about the Company's four operating segments is as follows:

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Information about the Company's four operating segments for the three and six months ended December 31, 2025 and 2024 is as follows:

(In millions)

Three Months Ended

September 30, 2025

Three Months Ended December 31, 2025

Skin Care Makeup Fragrance Hair Care Total

5 unchanged sentences

Selling, general and administrative expenses 1,129 850 534 111 2,624

Segment operating income

$ 454 $ 18 $ 105 $ 18 $ 595

Other category operating income 13

Charges associated with restructuring and other activities

Operating income 401

Reconciliation to earnings before income taxes:

Interest expense ( 85 )

Interest income and investment income, net 21

Other components of net periodic benefit cost ( 4 )

Earnings before income taxes $ 333

Segment depreciation and amortization

$ 96 $ 54 $ 38 $ 8 $ 196

Other category

Depreciation and amortization $ 197

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions)

Three Months Ended December 31, 2024

Skin Care Makeup Fragrance Hair Care Total

Other category net sales

Returns associated with restructuring and other activities

Segment net sales

$ 1,921 $ 1,150 $ 744 $ 159 $ 3,974

Cost of sales 462 280 159 41 942

Selling, general and administrative expenses 1,153 823 482 121 2,579

Impairment of goodwill and other intangible assets — 258 549 — 807

Segment operating income (loss)

$ 306 $ ( 211 ) $ ( 446 ) $ ( 3 ) $ ( 354 )

Other category operating loss ( 45 )

Charges associated with restructuring and other activities

Operating loss ( 580 )

Reconciliation to loss before income taxes:

Interest expense ( 90 )

Interest income and investment income, net 23

Other components of net periodic benefit cost ( 3 )

Loss before income taxes $ ( 650 )

Segment depreciation and amortization

$ 99 $ 59 $ 39 $ 8 $ 205

Other category

Depreciation and amortization $ 207

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions)

Six Months Ended December 31, 2025

Skin Care Makeup Fragrance Hair Care Total

Other category net sales

Returns associated with restructuring and other activities

Segment net sales

$ 3,629 $ 2,194 $ 1,533 $ 297 $ 7,653

Cost of sales 890 576 353 75 1,894

Selling, general and administrative expenses 2,098 1,615 989 216 4,918

Segment operating income $ 641 $ 3 $ 191 $ 6 $ 841

Other category operating income 22

13 unchanged sentences

(In millions)

Three Months Ended

September 30, 2024

Six Months Ended December 31, 2024

Skin Care Makeup Fragrance Hair Care Total

5 unchanged sentences

Selling, general and administrative expenses 2,141 1,592 903 238 4,874

Impairment of goodwill and other intangible assets — 258 549 — 807

Other segment items (1)

2 unchanged sentences

$ 423 $ ( 396 ) $ ( 386 ) $ ( 21 ) $ ( 380 )

Other category operating income

Other category operating loss ( 34 )

Charges associated with restructuring and other activities

12 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements