ESTEE LAUDER COMPANIES INC 10-Q

Item 1. Financial Statements. THE ESTÉE LAUDER COMPANIES INC. CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) (Unaudited) Three Months Ended December 31, Six Months Ended December 31, (In millions, except per share data) 2025 2024 2025 2024 Net sales $ 4,229 $ 4,004 $ 7,710 $ 7,365 Cost of sales 994 957 1,921 1,885 Gross profit 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 — — — 159 Total operating expenses 2,834 3,627 5,219 6,181 Operating income (loss) 401 ( 580 ) 570 ( 701 ) Interest expense 85 90 171 182 Interest income and investment income, net 21 23 51 58 Other components of net periodic benefit cost 4 3 8 5 Earnings (loss) before income taxes 333 ( 650 ) 442 ( 830 ) Provision (benefit) for income taxes 171 ( 60 ) 233 ( 84 ) Net earnings (loss) $ 162 $ ( 590 ) $ 209 $ ( 746 ) Net earnings (loss) per common share Basic $ .45 $ ( 1.64 ) $ .58 $ ( 2.07 ) Diluted $ .44 $ ( 1.64 ) $ .57 $ ( 2.07 ) Weighted average common shares outstanding Basic 362.1 360.0 361.7 359.8 Diluted 364.8 360.0 364.2 359.8 See notes to consolidated financial statements. 2 Table of Contents THE ESTÉE LAUDER COMPANIES INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) Three Months Ended December 31, Six Months Ended December 31, (In millions) 2025 2024 2025 2024 Net earnings (loss) $ 162 $ ( 590 ) $ 209 $ ( 746 ) Other comprehensive income (loss): Net cash flow hedge gain (loss) 8 55 24 ( 2 ) 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 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) $ 223 $ ( 874 ) $ 256 $ ( 947 ) See notes to consolidated financial statements. 3 Table of Contents THE ESTÉE LAUDER COMPANIES INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (In millions, except share and per share data) December 31, 2025 June 30, 2025 ASSETS Current assets Cash and cash equivalents $ 3,082 $ 2,921 Accounts receivable, net 1,657 1,530 Inventory and promotional merchandise 1,895 2,074 Prepaid expenses and other current assets 524 544 Total current assets 7,158 7,069 Property, plant and equipment, net 2,966 3,172 Other assets Operating lease right-of-use assets 1,860 1,952 Goodwill 2,137 2,135 Other intangible assets, net 3,696 3,759 Other assets 1,817 1,805 Total other assets 9,510 9,651 Total assets $ 19,634 $ 19,892 LIABILITIES AND EQUITY Current liabilities Current debt $ 3 $ 3 Accounts payable 1,260 1,497 Operating lease liabilities 413 406 Other accrued liabilities 3,595 3,529 Total current liabilities 5,271 5,435 Noncurrent liabilities Long-term debt 7,319 7,314 Long-term operating lease liabilities 1,655 1,744 Other noncurrent liabilities 1,358 1,534 Total noncurrent liabilities 10,332 10,592 Commitments and contingencies Equity Common stock, $ .01 par value; Class A shares authorized: 1,300,000,000 at December 31, 2025 and June 30, 2025; shares issued: 486,114,024 at December 31, 2025 and 472,541,563 at June 30, 2025; Class B shares authorized: 304,000,000 at December 31, 2025 and June 30, 2025; shares issued and outstanding: 114,507,344 at December 31, 2025 and 125,542,029 at June 30, 2025 6 6 Paid-in capital 7,245 7,012 Retained earnings 11,624 11,672 Accumulated other comprehensive loss ( 1,080 ) ( 1,127 ) 17,795 17,563 Less: Treasury stock, at cost; 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 ) Total equity 4,031 3,865 Total liabilities and equity $ 19,634 $ 19,892 See notes to consolidated financial statements. 4 Table of Contents THE ESTÉE LAUDER COMPANIES INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended December 31, (In millions) 2025 2024 Cash flows from operating activities Net earnings (loss) $ 209 $ ( 746 ) Adjustments to reconcile net earnings (loss) to net cash flows from operating activities: Depreciation and amortization 397 415 Deferred income taxes 11 ( 292 ) Non-cash stock-based compensation 182 180 Net loss on disposal of property, plant and equipment 3 2 Non-cash restructuring and other charges 18 17 Pension and post-retirement benefit expense 40 37 Pension and post-retirement benefit contributions ( 39 ) ( 50 ) Impairment of goodwill and other intangible assets — 861 Other adjustments and non-cash items ( 12 ) 7 Changes in operating assets and liabilities: (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 ) Increase in other accrued and noncurrent liabilities 133 102 Increase (decrease) in operating lease assets and liabilities, net 4 ( 12 ) Net cash flows provided by operating activities 785 387 Cash flows from investing activities Capital expenditures ( 204 ) ( 273 ) Proceeds from property, plant and equipment insurance recoveries 10 — Purchases of investments — ( 1 ) Proceeds from the disposition of investments 3 — Settlement of net investment hedges ( 17 ) ( 20 ) Net cash flows used for investing activities ( 208 ) ( 294 ) Cash flows from financing activities Repayments of long-term debt ( 2 ) ( 502 ) Payment of deferred consideration ( 150 ) — Settlement of cross-currency swaps 9 10 Net proceeds from stock-based compensation transactions 46 15 Dividends paid to stockholders ( 255 ) ( 366 ) Payments to acquire treasury stock ( 67 ) ( 35 ) Net cash flows used for financing activities ( 419 ) ( 878 ) Effect of exchange rate changes on Cash and cash equivalents 3 ( 24 ) Net increase (decrease) in Cash and cash equivalents 161 ( 809 ) Cash and cash equivalents at beginning of period 2,921 3,395 Cash and cash equivalents at end of period $ 3,082 $ 2,586 See notes to consolidated financial statements. 5 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements include the accounts of The Estée Lauder Companies Inc. and its subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated. The unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP in annual financial statements. The unaudited interim consolidated financial statements reflect all normal and recurring adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025. Certain prior-year amounts in the notes to the consolidated financial statements have been reclassified to conform to current-year presentation. Management Estimates The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses reported in those financial statements. Descriptions of the Company’s significant accounting policies are discussed in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025. Management evaluates the related estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, as relevant, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates and assumptions will be reflected in the consolidated financial statements in future periods. Currency Translation and Transactions All assets and liabilities of foreign subsidiaries and affiliates are translated at period-end rates of exchange, while revenue and expenses are translated at monthly average rates of exchange for the period. Unrealized translation gains (losses), net of tax, reported as translation adjustments through other comprehensive income (loss) (“OCI”) 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 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. The Company enters into foreign currency forward contracts to hedge foreign currency transactions for periods consistent with its identified exposures. 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 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 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. 6 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Concentration of Credit Risk The Company is a worldwide manufacturer, marketer and seller of skin care, makeup, fragrance and hair care products. The Company’s sales subject to credit risk are made primarily to department stores, duty-free retailers, specialty multi retailers, online pure players, perfumeries and pharmacies, and salons and spas. The Company grants credit to qualified customers. 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. Inventory and Promotional Merchandise Inventory and promotional merchandise consists of the following: (In millions) December 31, 2025 June 30, 2025 Raw materials $ 534 $ 631 Work in process 217 283 Finished goods 1,015 996 Promotional merchandise 129 164 Total inventory and promotional merchandise $ 1,895 $ 2,074 Property, Plant and Equipment Property, plant and equipment consists of the following: ($ in millions) December 31, 2025 June 30, 2025 Assets (Useful Life) Land and improvements (1) $ 72 $ 75 Buildings and improvements ( 10 to 40 years) 1,030 1,057 Machinery and equipment ( 3 to 20 years) 1,446 1,429 Computer hardware and software ( 4 to 10 years) 2,084 1,926 Furniture and fixtures ( 5 to 10 years) 145 145 Leasehold improvements 2,675 2,631 Construction in progress 316 462 Total property, plant and equipment, gross 7,768 7,725 Less accumulated depreciation and amortization ( 4,802 ) ( 4,553 ) Total property, plant and equipment, net $ 2,966 $ 3,172 (1) Land improvements are depreciated over a 10 year useful life. 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). 7 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Income Taxes 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. The legislation has multiple effective dates, with certain provisions becoming effective in fiscal 2026. The most impactful provision effective beginning in fiscal 2026 relates to the expansion of the business interest expense deduction limitation. The resulting increase in tax deductible interest expense reduced U.S. 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 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 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. 8 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Supplier Finance Programs Under its supplier finance programs, the Company agrees to pay the banks the stated amount of confirmed invoices from its designated suppliers on the due dates of the invoices. The Company may terminate the agreements upon written notice (with notice periods ranging from 30 to 60 days) or immediately upon a breach. 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 $ 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) December 31, 2025 June 30, 2025 Accrued employee compensation $ 481 $ 551 Accrued income taxes 185 282 Accrued payroll and other non-income taxes 372 307 Accrued restructuring 362 279 Accrued sales incentives 343 321 Accrued selling, advertising, marketing, promotion and product development 333 287 Deferred revenue 327 314 Sales return accrual 283 255 Other 909 933 Total other accrued liabilities $ 3,595 $ 3,529 Recently Issued Accounting Standards FASB ASU No. 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. 9 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FASB ASU No. 2025-06 – Targeted Improvements to the Accounting for Internal-Use Software (Subtopic 350-40) In September 2025, the FASB issued authoritative guidance to modernize the accounting for the costs to develop software for internal use to align better with current software development methods, such as agile programming. Capitalization of eligible costs will begin when (1) management has authorized and committed to funding the software project, and (2) it is probable that the project will be completed and the software will be used to perform the function intended. In evaluating whether it is probable the project will be completed, entities are required to consider whether there is significant uncertainty associated with the development activities of the software. The new standard does not change the types of costs that are capitalizable once the threshold for capitalization is met. Capitalization ceases when the software project is substantially complete and ready for its intended use, which typically occurs after all substantial testing is completed. Furthermore, the guidance supersedes website development costs guidance and incorporates the recognition requirements for website-specific development costs into Subtopic 350-40. The guidance clarifies that existing disclosure requirements under ASC 360 for property, plant and equipment apply to capitalized costs under the new standard, regardless of how the internal-use software is classified on the balance sheet or how it was acquired. Effective for the Company : The guidance becomes effective for the Company’s first quarter of fiscal 2029. The guidance can be applied prospectively, retrospectively or through a modified transition approach. 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. FASB ASU No. 2025-05 – Measurement of Credit Losses for Accounts Receivable and Contract Assets (Topic 326) In July 2025, the FASB issued authoritative guidance related to the estimation of expected credit losses for current accounts receivable and current contract assets. The guidance allows entities to elect a practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset in the development of a reasonable and supportable forecast as part of estimating expected credit losses. Entities electing the practical expedient are still required to adjust historical loss information to reflect current conditions to the extent that historical loss information does not reflect current conditions. An entity that elects to use the practical expedient is required to disclose that fact. Effective for the Company : The guidance becomes effective for the Company’s first quarter of fiscal 2027 and is applied prospectively. Early adoption is permitted. Impact on consolidated financial statements : The Company is currently evaluating the impact that this guidance will have on its accounts receivable balance and consolidated financial statement disclosures. FASB ASU No. 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 (loss) 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 (loss), 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 consolidated financial statements : The Company is currently evaluating the impact that this guidance will have on its consolidated financial statement disclosures. FASB ASU No. 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: (1) greater disaggregation of information in the effective tax rate reconciliations and (2) disclosure of income taxes paid, disaggregated by applicable jurisdiction. 10 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Companies are required to use specific categories to prepare and disclose a tabular rate reconciliation (using both percentages and reporting currency amounts) of: • the reported income tax expense (or benefit) from continuing operations and the product of the income (or loss) from continuing operations before income taxes and the applicable statutory federal income tax rate of the jurisdiction of domicile; and • reconciling items within certain categories that are equal to or greater than a specified quantitative threshold, including the nature, effect, and underlying causes of the reconciling items and the judgment used in categorizing the reconciling items. The guidance also requires companies to disclose the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign jurisdictions including individual jurisdictions with amounts paid equal to or greater than a specified quantitative threshold. 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. Effective for the Company – The guidance is effective for the Company’s fiscal year ending June 30, 2026 Form 10-K. Early adoption is permitted. 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 consolidated financial statement disclosures. NOTE 2 – GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill The Company assigns goodwill at the time of acquisition to a reporting unit, which is one level below the Company's operating segments. The skin care, makeup, fragrance and hair care product categories are the Company's operating segments. The following table presents goodwill by product category and the related change in the carrying amount: (In millions) Skin Care Makeup Fragrance Hair Care Total Balance as of June 30, 2025 Goodwill $ 1,616 $ 1,116 $ 260 $ 353 $ 3,345 Accumulated impairments ( 435 ) ( 745 ) ( 30 ) — ( 1,210 ) 1,181 371 230 353 2,135 Translation adjustments, goodwill ( 14 ) — — — ( 14 ) Translation adjustments, accumulated impairments 16 — — — 16 2 — — — 2 Balance as of December 31, 2025 Goodwill 1,602 1,116 260 353 3,331 Accumulated impairments ( 419 ) ( 745 ) ( 30 ) — ( 1,194 ) Total goodwill $ 1,183 $ 371 $ 230 $ 353 $ 2,137 11 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Other Intangible Assets Other intangible assets consist of the following: December 31, 2025 June 30, 2025 (In millions) Gross Carrying Value Accumulated Amortization Total Net Book Value Gross Carrying Value Accumulated Amortization Total Net Book Value Amortizable intangible assets: Customer lists and other $ 1,942 $ 1,369 $ 573 $ 1,984 $ 1,348 $ 636 Non-amortizable intangible assets: Trademarks 3,123 3,123 Total other intangible assets, net $ 3,696 $ 3,759 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: Fiscal (In millions) 2026 2027 2028 2029 2030 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. 12 Table of Contents 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 Goodwill Trademark (2) Goodwill TOM FORD The Americas $ 773 $ — $ 1,805 $ — Too Faced The Americas 75 13 112 — Total $ 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 Restructuring Program Component of the Profit Recovery and Growth Plan As announced on November 1, 2023, the Company launched the Profit Recovery and Growth Plan ("PRGP") to help progressively rebuild its profit margins in fiscal years 2025 and 2026. As a component of the PRGP, on February 5, 2024, the Company announced a two-year restructuring program. The Company committed to this course of action on February 1, 2024. 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 expanded component of the restructuring program began during the Company’s fiscal 2025 third quarter. The focus of the overall expanded restructuring program (collectively the “Restructuring Program”) includes (i) reorganization and rightsizing of certain areas, (ii) simplification and acceleration of processes, (iii) outsourcing of select services and (iv) evolution of go-to-market footprint and selling models. 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 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. 13 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Restructuring Program Approvals 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: Sales Returns (included in Net Sales) Cost of Sales Operating Expenses Total (In millions) Restructuring Charges Other Charges Total Charges (Adjustments) Approved Cumulative charges approved through June 30, 2025 $ 4 $ 10 $ 552 $ 114 $ 680 Six months ended December 31, 2025 ( 1 ) — 291 258 548 Cumulative charges approved through December 31, 2025 3 10 843 372 1,228 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- Related Costs Asset- Related Costs Contract Terminations Other Exit Costs Total Restructuring Charges (Adjustments) Approved Cumulative charges approved through June 30, 2025 $ 512 $ 14 $ 3 $ 23 $ 552 Six months ended December 31, 2025 187 74 23 7 291 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. These actions will primarily result in employee severance through a net reduction in workforce, as well as asset-related costs and costs to decommission and relocate activities. • Enabling Function Re-Invention – The Company approved initiatives to reorganize and right-size various corporate functions. 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. 14 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS • 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. Once the relevant accounting criteria have been met, the Company expects to record cumulative restructuring and other charges of approximately $ 1,249 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 The Company classifies restructuring charges as follows: Employee-Related Costs – Employee-related costs are primarily comprised of severance and other post-employment benefit costs, calculated based on salary levels, prior service and other statutory minimum benefits, if applicable. Asset-Related Costs – Asset-related costs primarily consist of asset write-offs or accelerated depreciation related to long-lived assets (including operating lease right-of-use assets) that will be taken out of service prior to their existing useful life as a direct result of a restructuring initiative. Contract Terminations – Costs related to contract terminations include continuing payments to a third party after the Company has ceased benefiting from the rights conveyed in the contract, or a payment made to terminate a contract prior to its expiration. Other Exit Costs – Other exit costs related to restructuring activities generally include costs to relocate facilities or employees, recruiting to fill positions as a result of relocation of operations, and outplacement for separated employees. The Company classifies other charges associated with restructuring activities as follows: Sales Returns and Cost of Sales – Product returns (offset by the related cost of sales) and inventory write-offs or write-downs as a direct result of an approved restructuring initiative to exit certain businesses or locations will be recorded as a component of Net sales and/or Cost of sales when estimable and reasonably assured. Other Charges – 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 transition support, transformational organization design of the future structures and processes, as well as the implementation and execution thereof; • Temporary labor backfill; • 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 and execution; and • Recruitment and training costs for new and reskilled employees to acquire and apply the capabilities needed to perform responsibilities as a direct result of an approved restructuring initiative. The Company records approved charges associated with restructuring and other activities once the relevant accounting criteria have been met. 15 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Total cumulative charges recorded associated with restructuring and other activities for the Restructuring Program were: Sales Returns (included in Net Sales) Cost of Sales Operating Expenses Total (In millions) Restructuring Charges Other Charges Total Charges Cumulative charges through June 30, 2025 $ — $ 9 $ 524 $ 77 $ 610 Three months ended September 30, 2025 — ( 2 ) 72 17 87 Three months ended December 31, 2025 — — 152 55 207 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 December 31, 2025, by major cost type were: (In millions) Employee- Related Costs Asset- Related Costs Contract Terminations Other Exit Costs Total Restructuring Charges Cumulative charges through June 30, 2025 $ 503 $ 13 $ 3 $ 5 $ 524 Three months ended September 30, 2025 66 5 — 1 72 Three months ended December 31, 2025 114 15 21 2 152 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- Related Costs Asset- Related Costs Contract Terminations Other Exit Costs Total Balance at June 30, 2025 $ 369 $ — $ 2 $ — $ 371 Charges 180 20 21 3 224 Cash payments ( 133 ) — ( 1 ) ( 3 ) ( 137 ) Non-cash asset-related costs — ( 20 ) — — ( 20 ) Translation and other adjustments ( 3 ) — 1 $ — ( 2 ) Balance at December 31, 2025 $ 413 $ — $ 23 $ — $ 436 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. NOTE 4 – DERIVATIVE FINANCIAL INSTRUMENTS The Company addresses certain financial exposures through a controlled program of risk management that includes the use of derivative financial instruments. The Company does not utilize derivative financial instruments for trading or speculative purposes. At December 31, 2025, the notional amount of derivatives not designated as hedging instruments was $ 3,010 million. 16 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Fair Value Hedges 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 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). Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis. 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") 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 The Company enters into foreign currency forward contracts to hedge anticipated transactions and receivables and payables denominated in foreign currencies, for periods consistent with the Company’s identified exposures. The purpose of the hedging activities is to minimize the effect of foreign exchange rate movements on the cash flows that the Company receives from foreign subsidiaries. The foreign currency forward contracts entered into to hedge anticipated transactions and receivables and payables denominated in foreign currencies have been designated as cash flow hedges and have varying maturities through the end of June 2027. 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, 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 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 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. 17 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Net Investment Hedges 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 November 2029. Hedge effectiveness of the net investment hedge contracts is based on the spot method. At December 31, 2025, the Company had net investment hedges outstanding with notional amounts totaling $ 1,077 million. Credit Risk 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 $ 118 million at December 31, 2025. To manage this risk, the Company has strict counterparty credit guidelines that are continually monitored. Accordingly, management believes risk of loss under these hedging contracts is remote. The fair values of the Company’s derivative financial instruments included in the consolidated balance sheets are presented as follows: Asset Derivatives Liability Derivatives Fair Value (1) Fair Value (1) (In millions) Balance Sheet Location December 31, 2025 June 30, 2025 Balance Sheet Location December 31, 2025 June 30, 2025 Derivatives Designated as Hedging Instruments: Foreign currency forward contracts (2) Prepaid expenses and other current assets; Other assets $ 7 $ 7 Other accrued liabilities $ 30 $ 82 Cross-currency swap contracts (3) Prepaid expenses and other current assets; Other assets 107 50 Other accrued liabilities — 15 Interest rate contracts Prepaid expenses and other current assets — — Other accrued liabilities 102 104 Total Derivatives Designated as Hedging Instruments 114 57 132 201 Derivatives Not Designated as Hedging Instruments: Foreign currency forward contracts Prepaid expenses and other current assets 4 25 Other accrued liabilities 13 15 Total derivatives $ 118 $ 82 $ 145 $ 216 (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 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 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. 18 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The amounts of the gains and losses related to the Company’s derivative financial instruments designated as hedging instruments that are included in the assessment of effectiveness are as follows: 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) Three Months Ended December 31, Three Months Ended December 31, (In millions) 2025 2024 2025 2024 Derivatives in Cash Flow Hedging Relationships: Foreign currency forward contracts $ — $ 70 Net sales $ ( 9 ) $ 14 Interest rate contracts — — Interest expense 1 1 Total cash flow hedges — 70 ( 8 ) 15 Derivatives in Net Investment Hedging Relationships (2) : Foreign currency forward contracts (3) ( 2 ) 86 — — Cross-currency swap contracts (4) 20 2 — — Total net investment hedges 18 88 — — 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. 19 Table of Contents 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 $ ( 9 ) $ 24 Interest rate contracts — — Interest expense 1 1 Total cash flow hedges 16 23 ( 8 ) 25 Derivatives in Net Investment Hedging Relationships (2) : Foreign currency forward contracts (3) ( 2 ) 22 — — Cross-currency swap contracts (4) 35 2 — — Total net investment hedges 33 24 — — Total derivatives $ 49 $ 47 $ ( 8 ) $ 25 (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 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) Recognized in Earnings (Loss) on Derivatives Location of Gain (Loss) Recognized in Earnings (Loss) on Derivatives Three Months Ended December 31, Six Months Ended December 31, (In millions) 2025 2024 2025 2024 Derivatives in Fair Value Hedging Relationships: Cross-currency swap contracts (1) Selling, general and administrative $ 22 $ 43 $ 34 $ ( 9 ) Interest rate contracts (2) Interest expense $ ( 3 ) $ ( 34 ) $ 1 $ 7 (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 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. 20 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Additional information regarding the cumulative amount of fair value hedging gain (loss) recognized in the accompanying consolidated statements of earnings (loss) for items designated and qualifying as hedged items in fair value hedges is as follows: (In millions) Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included Carrying Amount of the Hedged Liabilities Cumulative Amount of Fair Value Hedging Gain (Loss) Included in the Carrying Amount of the Hedged Liability December 31, 2025 December 31, 2025 Long-term debt $ 1,488 $ ( 102 ) Intercompany debt $ — $ 76 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 December 31, 2025 2024 (In millions) Net Sales Selling, General and Administrative Interest Expense Net Sales Selling, General and Administrative Interest Expense 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 $ 4,229 $ 2,627 $ 85 $ 4,004 $ 2,585 $ 90 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 3 N/A N/A 34 Derivatives designated as hedging instruments N/A N/A ( 3 ) N/A N/A ( 34 ) Gain (loss) on fair value hedge relationships – cross-currency swap contracts: Hedged item N/A ( 22 ) N/A N/A ( 43 ) N/A 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 (loss) gain reclassified from AOCI ( 9 ) N/A N/A 14 N/A N/A N/A (Not applicable) 21 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Six Months Ended December 31, 2025 2024 (In millions) Net Sales Selling, General and Administrative Interest Expense Net Sales Selling, General and Administrative Interest Expense 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: Amount of Gain (Loss) Recognized in Earnings (Loss) on Derivatives Location of Gain (Loss) Recognized in Earnings (Loss) on Derivatives Three Months Ended December 31, Six Months Ended December 31, (In millions) 2025 2024 2025 2024 Derivatives Not Designated as Hedging Instruments: Foreign currency forward contracts Selling, general and administrative $ 5 $ 31 $ 21 $ ( 19 ) 22 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company's derivative instruments are subject to enforceable master netting agreements. These agreements permit the net settlement of these contracts on a per-institution basis; however, the Company records the fair value on a gross basis on its consolidated balance sheets based on maturity dates, including those subject to master netting arrangements. 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 December 31, 2025 As of June 30, 2025 (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) Derivative Financial Instruments Derivative assets $ 118 $ ( 34 ) $ 84 $ 82 $ ( 60 ) $ 22 Derivative liabilities ( 145 ) 34 ( 111 ) ( 216 ) 60 ( 156 ) Total derivatives $ ( 27 ) $ — $ ( 27 ) $ ( 134 ) $ — $ ( 134 ) NOTE 5 – FAIR VALUE MEASUREMENTS The Company records certain of its financial assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. The accounting for fair value measurements must be applied to nonfinancial assets and nonfinancial liabilities that require initial measurement or remeasurement at fair value, which principally consist of assets and liabilities acquired through business combinations and goodwill, indefinite-lived intangible assets and long-lived assets for the purposes of calculating potential impairment. The Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are as follows: Level 1: Inputs based on quoted market prices for identical assets or liabilities in active markets at the measurement date. Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation. 23 Table of Contents THE ESTÉE LAUDER COMPANIES INC. 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 December 31, 2025: (In millions) Level 1 Level 2 Level 3 Total Assets: Money market funds $ 647 $ — $ — $ 647 Foreign currency forward contracts — 11 — 11 Cross-currency swap contracts — 107 — 107 Total $ 647 $ 118 $ — $ 765 Liabilities: Foreign currency forward contracts $ — $ 43 $ — $ 43 Interest rate contracts — 102 — 102 Total $ — $ 145 $ — $ 145 The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2025: (In millions) Level 1 Level 2 Level 3 Total Assets: Money market funds $ 727 $ — $ — $ 727 Foreign currency forward contracts — 32 — 32 Cross-currency swap contracts — 50 — 50 Total $ 727 $ 82 $ — $ 809 Liabilities: Foreign currency forward contracts $ — $ 97 $ — $ 97 Interest rate contracts — 104 — 104 Cross-currency swap contracts — 15 — 15 Total $ — $ 216 $ — $ 216 The estimated fair values of the Company’s financial instruments not measured at fair value on a recurring basis are as follows: December 31, 2025 June 30, 2025 (In millions) Carrying Amount Fair Value Carrying Amount Fair Value Current and long-term debt $ 7,322 $ 6,902 $ 7,317 $ 6,794 Deferred consideration payable $ 172 $ 174 $ 322 $ 323 24 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following methods and assumptions were used to estimate the fair value of the Company’s financial instruments for which it is practicable to estimate that value: Cash and cash equivalents – Cash and all highly-liquid securities with original maturities of three months or less are classified as cash and cash equivalents, primarily consisting of cash deposits in interest bearing accounts, time deposits and money market funds (classified within Level 1 of the valuation hierarchy). Cash deposits in interest bearing accounts and time deposits are carried at cost, which approximates fair value, due to the short maturity of 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. The significant observable inputs to the model, such as swap yield curves and currency spot and forward rates, were obtained from an independent pricing service. To determine the fair value of contracts under the model, the difference between the contract price and the current forward rate was discounted using SOFR forward curves. Cross-currency swap contracts – The fair values of the Company’s cross-currency swap 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 swap yield curves and currency spot and forward rates, were obtained from independent pricing services. 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. Current and long-term debt – The fair value of the Company’s debt was estimated based on the current rates offered to the Company for debt with the same remaining maturities. To a lesser extent, debt also includes finance lease obligations for which the carrying amount approximates the fair value. The Company’s debt is classified within Level 2 of the valuation hierarchy. Deferred consideration payable – The deferred consideration payable consists primarily of deferred payments associated with the fiscal 2023 fourth quarter acquisition of TOM FORD. The fair value of the payments treated as deferred consideration payable are calculated based on the net present value of cash payments using an estimated borrowing rate based on quoted prices for a similar liability. The Company’s deferred consideration payable is classified within Level 2 of the valuation hierarchy. NOTE 6 – REVENUE RECOGNITION Disaggregation of net sales by the Company's geographic regions (1) are as follows: Three Months Ended December 31, Six Months Ended December 31, (In millions) 2025 2024 2025 2024 The Americas $ 1,218 $ 1,209 $ 2,392 $ 2,406 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 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. 25 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Accounts Receivable 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) December 31, 2025 Balance at June 30, 2025 $ 26 Provision for expected credit losses 14 Write-offs, net & other — 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 Changes in deferred revenue are as follows: Three Months Ended December 31, Six Months Ended December 31, (In millions) 2025 2024 2025 2024 Deferred revenue, beginning of period $ 548 $ 567 $ 533 $ 560 Revenue recognized that was included in the deferred revenue balance at the beginning of the period ( 103 ) ( 107 ) ( 230 ) ( 255 ) 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 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 The Company’s contractually guaranteed minimum royalty amounts due during future periods under its existing license arrangements is disclosed 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. NOTE 7 – PENSION AND POST-RETIREMENT BENEFIT PLANS The Company maintains pension plans covering substantially all of its full-time employees for its U.S. operations and a majority of its international operations. The Company also maintains post-retirement benefit plans that provide certain medical and dental benefits to eligible employees. Descriptions of these plans are included in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025. 26 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 Pension Plans U.S. International Post-retirement (In millions) 2025 2024 2025 2024 2025 2024 Service cost $ 9 $ 9 $ 7 $ 7 $ — $ — Interest cost 13 12 5 4 2 2 Expected return on plan assets ( 13 ) ( 12 ) ( 6 ) ( 6 ) — — Amortization of: Actuarial loss (gain) 5 5 — ( 2 ) — — Prior service cost — — ( 1 ) — ( 1 ) ( 1 ) Special termination benefits — — ( 1 ) 1 — — 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 U.S. 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) December 31, 2025 June 30, 2025 Other assets $ 128 $ 128 Other accrued liabilities ( 44 ) ( 44 ) Other noncurrent liabilities ( 346 ) ( 349 ) Funded status ( 262 ) ( 265 ) Accumulated other comprehensive loss 259 268 Net amount recognized $ ( 3 ) $ 3 27 Table of Contents 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 The Company is involved, from time to time, in litigation and other legal proceedings incidental to its business, including product liability matters (including asbestos-related claims), advertising, regulatory, employment, intellectual property, real estate, environmental, trade relations, securities, tax, and privacy. The Company establishes accruals for loss contingencies when it has determined that a loss is probable and that the amount of loss, or range of loss, can be reasonably estimated. Amounts accrued for legal contingencies often result from a complex series of judgments about future events and uncertainties that rely on estimates and assumptions including timing of related payments. Any such accruals are adjusted thereafter as appropriate to reflect changes in circumstances. The Company also determines estimates of reasonably possible losses or ranges of reasonably possible losses in excess of related accrued liabilities, if any, when it has determined that a loss is reasonably possible, and it is able to determine such estimates. Legal defense costs are recognized as incurred when the legal services are provided. Refer below for the assessment of loss contingencies associated with the Company's Securities Class Action and Derivative Matters and Cosmetic Talcum Powder Matters. 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. Reasonably possible losses in addition to the amounts accrued for the Company's remaining litigation and legal proceedings are not expected to be material to the Company’s consolidated financial statements. However, management's assessment of the Company's current litigation and other legal proceedings, including the Securities Class Action and Derivative Matters and Cosmetic Talcum Powder Matters, could change in light of the discovery of facts with respect to legal actions or other proceedings pending against the Company not presently known to the Company or determinations by judges, juries or other finders of fact which are not in accord with management's evaluation of the possible liability or outcome of such litigation or proceedings. Securities Class Action and Derivative Matters On December 7, 2023 and January 22, 2024, the Company and its then Chief Executive Officer and Chief Financial Officer were named as defendants in separate purported securities class action complaints filed in the United States District Court for the Southern District of New York. On February 20, 2024, those two purported securities class actions were consolidated into one action. On March 22, 2024, plaintiffs filed their consolidated amended class action complaint, which alleges that defendants made materially false and misleading statements during the period February 3, 2022 to October 31, 2023 in press releases, the Company’s public filings and during conference calls with analysts that artificially inflated the price of the Company’s stock in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. On March 31, 2025, the Court denied defendants' motion to dismiss. Defendants intend to defend the action vigorously. On February 1, 2024 and March 15, 2024, stockholder derivative action complaints were filed against certain of the Company’s officers as of those dates, all the Company’s directors as of those dates and certain of the Company’s former directors as of those dates in the United States District Court for the Southern District of New York. In April 2024, both complaints were voluntarily dismissed without prejudice. Subsequently, the Company's Board of Directors ("the Board") received stockholder litigation demands, requesting, among other things, that the Board investigate potential claims on behalf of the Company based on the same alleged course of conduct identified in the securities case complaint (which were also the subject of the voluntarily dismissed stockholder derivative actions complaints) described above. A committee of the Board has been formed to review the stockholder demands and make recommendations, as appropriate in its discretion, to the Board. 28 Table of Contents 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. Then, on June 23, 2025, another stockholder derivative action complaint was filed in the Supreme Court of the State of New York in Kings County 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. 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. 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 The Company has been named as a defendant in civil actions alleging that certain cosmetic talcum powder products sold by the Company were contaminated with asbestos. Most of these actions involve a number of co-defendants from a variety of different industries. 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. During that period, the Company reached agreements with certain plaintiff law firms (collectively, the “talcum litigation settlement agreements”) for: (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 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 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 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. For the remaining filed cases, the Company records an estimate of exposure loss on an aggregated and ongoing basis, which takes into account the historical outcomes of cases the Company has resolved to date. Any adverse outcomes, either in an individual case or in the aggregate, could be material. 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 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. 29 Table of Contents 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. Amounts received to date have not been material. NOTE 9 – STOCK PROGRAMS 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”) 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 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 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. 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 For the PSUs granted in fiscal 2023 with a performance period ended June 30, 2025, the target goals set at the time of issuance were not achieved, resulting in no shares of the Company’s Class A Common Stock issued related to these awards. Long-term Performance Share Units On September 2, 2025, the Company issued 68,578 shares of the Company’s Class A Common Stock to its former Chief Executive Officer in accordance with the terms of PSUs granted in March 2021. The total fair value of PSUs at the time of issuance was $ 6.2 million. On September 3, 2024, the Company issued 195,940 shares of the Company’s Class A Common Stock to its former Chief Executive Officer in accordance with the terms of PSUs granted in February 2018. The total fair value of PSUs at the time of issuance was $ 18 million. Long-term Price-Vested Units On September 2, 2025, the Company issued 85,927 shares of the Company’s Class A Common Stock to its former Chief Executive Officer in accordance with the terms of price-vested unit awards ("PVUs") granted in March 2021. The total fair value of PVUs at the time of issuance was $ 7.7 million. 30 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10 – NET EARNINGS (LOSS) PER COMMON SHARE Net earnings (loss) per common share (“basic EPS”) is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding and shares underlying PSUs and RSUs where the vesting conditions have been met. 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 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 December 31, Six Months Ended December 31, (In millions, except per share data) 2025 2024 2025 2024 Numerator: Net earnings (loss) $ 162 $ ( 590 ) $ 209 $ ( 746 ) Denominator: Weighted average common shares outstanding – Basic 362.1 360.0 361.7 359.8 Effect of dilutive stock options 0.1 — 0.1 — Effect of PSUs — — — — Effect of RSUs 2.6 — 2.4 — Weighted average common shares outstanding – Diluted 364.8 360.0 364.2 359.8 Net earnings (loss) per common share: Basic $ .45 $ ( 1.64 ) $ .58 $ ( 2.07 ) Diluted $ .44 $ ( 1.64 ) $ .57 $ ( 2.07 ) 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 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 — 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. 31 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 11 – EQUITY Total Stockholders’ Equity Three Months Ended December 31, Six Months Ended December 31, (In millions, except per share data) 2025 2024 2025 2024 Common stock, beginning of the period $ 6 $ 6 $ 6 $ 6 Stock-based compensation — — — — Common stock, end of the period 6 6 6 6 Paid-in capital, beginning of the period 7,141 6,778 7,012 6,685 Common stock dividends 1 1 4 4 Stock-based compensation 103 110 229 200 Paid-in capital, end of the period 7,245 6,889 7,245 6,889 Retained earnings, beginning of the period 11,591 13,031 11,672 13,427 Common stock dividends ( 129 ) ( 128 ) ( 257 ) ( 368 ) 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 earnings (loss) 61 ( 284 ) 47 ( 201 ) Accumulated other comprehensive loss, end of the period ( 1,080 ) ( 1,341 ) ( 1,080 ) ( 1,341 ) Treasury stock, beginning of the period ( 13,707 ) ( 13,674 ) ( 13,698 ) ( 13,664 ) Stock-based compensation ( 57 ) ( 24 ) ( 66 ) ( 34 ) Treasury stock, end of the period ( 13,764 ) ( 13,698 ) ( 13,764 ) ( 13,698 ) Total equity $ 4,031 $ 4,169 $ 4,031 $ 4,169 Cash dividends declared per common share $ .35 $ .35 $ .70 $ 1.01 32 Table of Contents THE ESTÉE LAUDER COMPANIES INC. 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 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 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. Common Stock 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 and six months ended December 31, 2025: (In millions) Net Cash Flow Hedge Gain (Loss) Cross-Currency Swap Contracts - Fair Value Hedge Gain (1) Amounts Included in Net Periodic Benefit Cost Translation Adjustments Total Balance at June 30, 2025 $ ( 11 ) $ 6 $ ( 204 ) $ ( 918 ) $ ( 1,127 ) OCI before reclassifications (2) 13 6 — ( 32 ) ( 13 ) Amounts reclassified to Net earnings — ( 4 ) 3 — ( 1 ) Net current-period OCI 13 2 3 ( 32 ) ( 14 ) Balance at September 30, 2025 2 8 ( 201 ) ( 950 ) ( 1,141 ) OCI before reclassifications (2) ( 1 ) 5 1 50 (3) 55 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. (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. 33 Table of Contents 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 and six months ended December 31, 2025 and 2024: Amount Reclassified from AOCI Affected Line Item in Consolidated Statements of Earnings (Loss) Three Months Ended December 31, Six Months Ended December 31, (In millions) 2025 2024 2025 2024 (Loss) Gain on Cash Flow Hedges Foreign currency forward contracts $ ( 9 ) $ 14 $ ( 9 ) $ 24 Net sales 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 Cross-currency swap contracts 4 5 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 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 ) ( 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) 34 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 12 – STATEMENT OF CASH FLOWS Supplemental cash flow information for the six months ended December 31, 2025 and 2024 is as follows: (In millions) 2025 2024 Cash: Cash paid during the period for interest $ 168 $ 179 Cash paid during the period for income taxes $ 295 $ 327 Non-cash investing and financing activities: Property, plant and equipment accrued but unpaid $ 25 $ 24 Right-of-use assets obtained in exchange for new/modified operating lease liabilities $ 226 $ 311 NOTE 13 – SEGMENT DATA AND RELATED INFORMATION Operating segments include components of an enterprise for which separate financial information is available that are regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Although the Company operates in one business segment, beauty products, the chief operating decision maker evaluates performance based on its four major product categories: skin care, makeup, fragrance and hair care. These product categories meet the definition of operating and reportable segments and, accordingly, additional financial data is provided below. 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 (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. The assets and liabilities of the Company are managed centrally and are reported internally in the same manner as the consolidated financial statements; thus, no additional information is produced for the chief operating decision maker or included herein. 35 Table of Contents 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 December 31, 2025 Skin Care Makeup Fragrance Hair Care Total Net sales $ 4,229 Less: Other category net sales 31 Less: Returns associated with restructuring and other activities — Segment net sales $ 2,054 $ 1,164 $ 812 $ 168 $ 4,198 Cost of sales 471 296 173 39 979 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 ( 207 ) 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 1 Depreciation and amortization $ 197 36 Table of Contents 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 Net sales $ 4,004 Less: Other category net sales 30 Less: 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 ( 181 ) 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 2 Depreciation and amortization $ 207 37 Table of Contents 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 Net sales $ 7,710 Less: Other category net sales 56 Less: Returns associated with restructuring and other activities 1 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 Charges associated with restructuring and other activities ( 293 ) Operating income 570 Reconciliation to earnings before income taxes: Interest expense ( 171 ) Interest income and investment income, net 51 Other components of net periodic benefit cost ( 8 ) Earnings before income taxes $ 442 Segment depreciation and amortization $ 187 $ 113 $ 79 $ 15 $ 394 Other category 3 Depreciation and amortization $ 397 38 Table of Contents THE ESTÉE LAUDER COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In millions) Six Months Ended December 31, 2024 Skin Care Makeup Fragrance Hair Care Total Net sales $ 7,365 Less: Other category net sales 55 Less: Returns associated with restructuring and other activities — Segment net sales $ 3,450 $ 2,188 $ 1,374 $ 298 $ 7,310 Cost of sales 886 575 308 81 1,850 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) — 159 — — 159 Segment operating income (loss) $ 423 $ ( 396 ) $ ( 386 ) $ ( 21 ) $ ( 380 ) Other category operating loss ( 34 ) Charges associated with restructuring and other activities ( 287 ) Operating loss ( 701 ) Reconciliation to loss before income taxes: Interest expense ( 182 ) Interest income and investment income, net 58 Other components of net periodic benefit cost ( 5 ) Loss before income taxes $ ( 830 ) Segment depreciation and amortization $ 195 $ 123 $ 77 $ 17 $ 412 Other category 3 Depreciation and amortization $ 415 (1) Other segment items include Talcum litigation settlement agreements 39 Table of Contents THE ESTÉE LAUDER COMPANIES INC.