UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________________________

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to

Commission file number 1-14064

The Estée Lauder Companies Inc.

(Exact name of registrant as specified in its charter)

Delaware	11-2408943
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
767 Fifth Avenue, New York, New York	10153
(Address of principal executive offices)	(Zip Code)

212-572-4200

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $.01 par value	EL	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐ No ☒

At April 24, 2024, 233,021,911 shares of the registrant’s Class A Common Stock, $.01 par value, and 125,542,029 shares of the registrant’s Class B Common Stock, $.01 par value, were outstanding.

THE ESTÉE LAUDER COMPANIES INC.

INDEX

	Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Earnings — Three and Nine Months Ended March 31, 2024 and 2023	2
Consolidated Statements of Comprehensive Income — Three and Nine Months Ended March 31, 2024 and 2023	3
Consolidated Balance Sheets — March 31, 2024 and June 30, 2023 (Audited)	4
Consolidated Statements of Cash Flows — Nine Months Ended March 31, 2024 and 2023	5
Notes to Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
Item 3. Quantitative and Qualitative Disclosures About Market Risk	73
Item 4. Controls and Procedures	73
Part II. Other Information
Item 1. Legal Proceedings	73
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	74
Item 5. Other Information	74
Item 6. Exhibits	74
Signatures	75

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

THE ESTÉE LAUDER COMPANIES INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

	Three Months Ended March 31				Nine Months Ended March 31
(In millions, except per share data)	2024		2023		2024		2023
Net sales	$	3,940	$	3,751	$	11,737	$	12,301
Cost of sales	1,107		1,159		3,331		3,401
Gross profit	2,833		2,592		8,406		8,900
Operating expenses
Selling, general and administrative	2,284		2,281		7,177		7,155
Restructuring and other charges	18		14		26		24
Impairment of other intangible assets	—		—		—		207
Total operating expenses	2,302		2,295		7,203		7,386
Operating income	531		297		1,203		1,514
Interest expense	94		58		287		156
Interest income and investment income, net	45		37		126		78
Other components of net periodic benefit cost	(4)		(4)		(9)		(9)
Earnings before income taxes	486		280		1,051		1,445
Provision for income taxes	151		125		356		403
Net earnings	335		155		695		1,042
Net loss (earnings) attributable to redeemable noncontrolling interest	(5)		1		(21)		(3)
Net earnings attributable to The Estée Lauder Companies Inc.	$	330	$	156	$	674	$	1,039
Net earnings attributable to The Estée Lauder Companies Inc. per common share
Basic	$	.92	$	.44	$	1.88	$	2.90
Diluted	$	.91	$	.43	$	1.87	$	2.88
Weighted average common shares outstanding
Basic	359.1		357.9		358.8		357.8
Diluted	360.8		361.2		360.4		360.9

See notes to consolidated financial statements.

2

THE ESTÉE LAUDER COMPANIES INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended March 31				Nine Months Ended March 31
(In millions)	2024		2023		2024		2023
Net earnings	$	335	$	155	$	695	$	1,042
Other comprehensive income (loss):
Net cash flow hedge gain (loss)	21		(43)		(7)		(50)
Cross-currency swap contract gain (loss)	(4)		(11)		10		(11)
Retirement plan and other retiree benefit adjustments	24		—		22		—
Translation adjustments	(185)		(7)		(89)		(101)
Benefit (provision) for income taxes on components of other comprehensive income	(29)		16		(29)		23
Total other comprehensive loss, net of tax	(173)		(45)		(93)		(139)
Comprehensive income	162		110		602		903
Comprehensive loss (income) attributable to redeemable noncontrolling interest:
Net loss (earnings)	(5)		1		(21)		(3)
Translation adjustments	15		(1)		13		26
Total comprehensive loss (income) attributable to redeemable noncontrolling interest	10		—		(8)		23
Comprehensive income attributable to The Estée Lauder Companies Inc.	$	172	$	110	$	594	$	926

See notes to consolidated financial statements.

3

THE ESTÉE LAUDER COMPANIES INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data)	March 31 2024		June 30 2023
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	3,701	$	4,029
Accounts receivable, net	1,854		1,452
Inventory and promotional merchandise	2,307		2,979
Prepaid expenses and other current assets	672		679
Total current assets	8,534		9,139
Property, plant and equipment, net	3,133		3,179
Other assets
Operating lease right-of-use assets	1,836		1,797
Goodwill	2,453		2,486
Other intangible assets, net	5,438		5,602
Other assets	1,306		1,212
Total other assets	11,033		11,097
Total assets	$	22,700	$	23,415
LIABILITIES AND EQUITY
Current liabilities
Current debt	$	505	$	997
Accounts payable	1,197		1,670
Operating lease liabilities	363		357
Other accrued liabilities	3,351		3,216
Total current liabilities	5,416		6,240
Noncurrent liabilities
Long-term debt	7,265		7,117
Long-term operating lease liabilities	1,707		1,698
Other noncurrent liabilities	1,728		1,943
Total noncurrent liabilities	10,700		10,758
Commitments and contingencies
Redeemable noncontrolling interest	840		832
Equity
Common stock, $.01 par value; Class A shares authorized: 1,300,000,000 at March 31, 2024 and June 30, 2023; shares issued: 470,884,456 at March 31, 2024 and 469,668,085 at June 30, 2023; Class B shares authorized: 304,000,000 at March 31, 2024 and June 30, 2023; shares issued and outstanding: 125,542,029 at March 31, 2024 and 125,542,029 at June 30, 2023	6		6
Paid-in capital	6,465		6,153
Retained earnings	13,950		13,991
Accumulated other comprehensive loss	(1,014)		(934)
	19,407		19,216
Less: Treasury stock, at cost; 237,870,661 Class A shares at March 31, 2024 and 237,590,199 Class A shares at June 30, 2023	(13,663)		(13,631)
Total equity	5,744		5,585
Total liabilities, redeemable noncontrolling interest and equity	$	22,700	$	23,415

See notes to consolidated financial statements.

4

THE ESTÉE LAUDER COMPANIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended March 31
(In millions)	2024		2023
Cash flows from operating activities
Net earnings	$	695	$	1,042
Adjustments to reconcile net earnings to net cash flows from operating activities:
Depreciation and amortization	614		548
Deferred income taxes	(165)		(70)
Non-cash stock-based compensation	276		234
Net loss on disposal of property, plant and equipment	7		8
Non-cash restructuring and other charges	6		20
Pension and post-retirement benefit expense	38		40
Pension and post-retirement benefit contributions	(75)		(20)
Impairment of other intangible assets	—		207
Other non-cash items	13		(9)
Changes in operating assets and liabilities:
Increase in accounts receivable, net	(404)		(254)
Decrease (increase) in inventory and promotional merchandise	653		(154)
Decrease (increase) in other assets, net	19		(69)
Decrease in accounts payable	(289)		(313)
Increase (decrease) in other accrued and noncurrent liabilities	106		(151)
Decrease in operating lease assets and liabilities, net	(23)		(42)
Net cash flows provided by operating activities	1,471		1,017
Cash flows from investing activities
Capital expenditures	(702)		(652)
Purchases of other intangible assets	—		(8)
Purchases of investments	(8)		(5)
Settlement of net investment hedges	(25)		138
Net cash flows used for investing activities	(735)		(527)
Cash flows from financing activities
Proceeds (repayments) of current debt, net	(215)		2,228
Proceeds from issuance of long-term debt, net	649		—
Debt issuance costs	(4)		—
Repayments of commercial paper (maturities after three months)	(785)		—
Repayments and redemptions of long-term debt	(7)		(261)
Net proceeds from stock-based compensation transactions	29		68
Payments to acquire treasury stock	(34)		(258)
Settlement of cross-currency swap	18		—
Dividends paid to stockholders	(710)		(687)
Net cash flows provided by (used for) financing activities	(1,059)		1,090
Effect of exchange rate changes on Cash and cash equivalents	(5)		(6)
Net decrease in Cash and cash equivalents	(328)		1,574
Cash and cash equivalents at beginning of period	4,029		3,957
Cash and cash equivalents at end of period	$	3,701	$	5,531

See notes to consolidated financial statements.

5

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 for complete financial statements. The unaudited interim consolidated financial statements furnished 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, 2023.

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, 2023. Management evaluates the related estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment 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 losses, net of tax, reported as translation adjustments through other comprehensive income (loss) (“OCI”) attributable to The Estée Lauder Companies Inc. were $192 million and $5 million, net of tax, during the three months ended March 31, 2024 and 2023, respectively, and $103 million and $66 million, net of tax, during the nine months ended March 31, 2024 and 2023, respectively. For the Company’s subsidiaries operating in highly inflationary economies, the U.S. dollar is the functional currency. Remeasurement adjustments in financial statements in a highly inflationary economy and other transactional gains and losses are reflected in earnings. These subsidiaries are not material to the Company’s consolidated financial statements or liquidity.

The Company enters into foreign currency forward contracts and may enter into option contracts to hedge foreign currency transactions for periods consistent with its identified exposures. The Company also uses cross-currency swap contracts to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt. Additionally, the Company enters into foreign currency forward contracts to hedge a portion of its net investment in certain foreign operations, which are designated as net investment hedges. See Note 5 – Derivative Financial Instruments for further discussion. The Company categorizes these instruments as entered into for purposes other than trading.

The accompanying consolidated statements of earnings include net exchange gains on foreign currency transactions of $23 million and $25 million during the three months ended March 31, 2024 and 2023, respectively, and $52 million and $59 million during the nine months ended March 31, 2024 and 2023, respectively.

6

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 retailers in its travel retail business, department stores, specialty multi-brand retailers and perfumeries. 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.

The Company’s largest customer during the three and nine months ended March 31, 2024 sells products primarily in China travel retail. This customer accounted for $395 million or 10%, and $165 million, or 4%, of the Company's consolidated net sales for the three months ended March 31, 2024 and 2023, respectively, and $750 million, or 6%, and $887 million, or 7%, for the nine months ended March 31, 2024 and 2023, respectively. This customer accounted for $189 million, or 10%, and $49 million, or 3%, of the Company's accounts receivable at March 31, 2024 and June 30, 2023, respectively.

Inventory and Promotional Merchandise

Inventory and promotional merchandise consists of the following:

(In millions)	March 31, 2024		June 30, 2023
Raw materials	$	776	$	876
Work in process	312		362
Finished goods	960		1,404
Promotional merchandise	259		337
	$	2,307	$	2,979

Property, Plant and Equipment

Property, plant and equipment consists of the following:

(In millions)	March 31, 2024		June 30, 2023
Assets (Useful Life)
Land and improvements(1)	$	70	$	70
Buildings and improvements (10 to 40 years)	884		843
Machinery and equipment (3 to 10 years)	1,187		1,071
Computer hardware and software (4 to 10 years)	1,727		1,651
Furniture and fixtures (5 to 10 years)	136		136
Leasehold improvements	2,408		2,310
Construction in progress	677		827
	7,089		6,908
Less accumulated depreciation and amortization	(3,956)		(3,729)
	$	3,133	$	3,179

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

Depreciation and amortization of property, plant and equipment was $166 million and $147 million during the three months ended March 31, 2024 and 2023, respectively, and $491 million and $421 million during the nine months ended March 31, 2024 and 2023, respectively. Depreciation and amortization related to the Company’s manufacturing process is included in Cost of sales, and all other depreciation and amortization is included in Selling, general and administrative expenses in the accompanying consolidated statements of earnings.

7

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income Taxes

The effective rate for income taxes for the three and nine months ended March 31, 2024 and 2023 are as follows:

	Three Months Ended March 31				Nine Months Ended March 31
	2024		2023		2024		2023
Effective rate for income taxes	31.1	%	44.6	%	33.9	%	27.9	%
Basis-point change from the prior-year period	(1,350)				600

For the three months ended March 31, 2024, the decrease in the effective tax rate was primarily attributable to a lower effective tax rate on the Company's foreign operations due to the timing of the estimated change in the Company's full year geographical mix of earnings in the current and prior-year periods, partially offset by the unfavorable impact associated with previously issued stock-based compensation.

For the nine months ended March 31, 2024, the increase in the effective tax rate was primarily attributable to a higher effective tax rate on the Company's foreign operations, due to the Company's geographical mix of earnings for fiscal 2024, and the unfavorable impact associated with previously issued stock-based compensation.

On August 16, 2022, the U.S. federal government enacted the Inflation Reduction Act, including a tax provision implementing a 15% corporate alternative minimum tax based on global adjusted financial statement income. The corporate alternative minimum tax became effective beginning with the Company's first quarter of fiscal 2024 and did not have an impact on the Company's consolidated financial statements for the three and nine months ended March 31, 2024.

As of March 31, 2024 and June 30, 2023, the gross amount of unrecognized tax benefits, exclusive of interest and penalties, totaled $64 million and $63 million, respectively. The total amount of unrecognized tax benefits at March 31, 2024 that, if recognized, would affect the effective tax rate was $54 million. The total gross interest and penalties accrued related to unrecognized tax benefits during the three and nine months ended March 31, 2024 in the accompanying consolidated statements of earnings was $1 million and $3 million, respectively. The total gross accrued interest and penalties in the accompanying consolidated balance sheets at each of March 31, 2024 and June 30, 2023, was $18 million and $15 million, respectively. On the basis of the information available as of March 31, 2024, the Company does not expect significant changes to the total amount of unrecognized tax benefits within the next twelve months.

During the fiscal 2024 second quarter, the Company formally concluded the compliance process with respect to its fiscal 2022 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 nine months ended March 31, 2024.

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 $54 million and $52 million as of March 31, 2024 and June 30, 2023, respectively, are included in accounts payable in the accompanying consolidated balance sheets.

8

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Accrued and Noncurrent Liabilities

Other accrued liabilities consist of the following:

(In millions)	March 31, 2024		June 30, 2023
Advertising, merchandising and sampling	$	283	$	235
Employee compensation	507		546
Accrued sales incentives	400		321
Deferred revenue	306		323
Payroll and other non-income taxes	307		297
Accrued income taxes	315		222
Sales return accrual	289		289
Other	944		983
	$	3,351	$	3,216

At March 31, 2024 and June 30, 2023, total Other noncurrent liabilities of $1,728 million and $1,943 million included $581 million and $620 million of deferred tax liabilities, respectively.

Recently Adopted Accounting Standards

FASB ASU No. 2022-04 – Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations

In September 2022, the FASB issued authoritative guidance which is intended to enhance the transparency surrounding the use of supplier finance programs. The guidance requires companies that use supplier finance programs to make annual disclosures about the program’s key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period and associated rollforward information. Only the amount outstanding at the end of the period must be disclosed in interim periods. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations.

Effective for the Company – The guidance became effective for the Company’s first quarter fiscal 2024 and has been applied on a retrospective basis, except for the requirement to disclose rollforward information annually which is effective prospectively for the Company beginning in fiscal 2025.

Impact on consolidated financial statements – The Company has supplier financing arrangements and applied the disclosure requirements as required by the amendments. Such information is included in Supplier Finance Programs above within Note 1 – Summary of Significant Accounting Policies.

Reference Rate Reform (ASC Topic 848 “ASC 848”)

In March 2020, the FASB issued authoritative guidance to provide optional relief for companies preparing for the discontinuation of interest rates such as the London Interbank Offered Rate (“LIBOR”) and applies to lease and other contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that reference LIBOR or another rate that is expected to be discontinued as a result of reference rate reform.

In January 2021, the FASB issued authoritative guidance that makes amendments to the new rules on accounting for reference rate reform. The amendments clarify that for all derivative instruments affected by the changes to interest rates used for discounting, margining or contract price alignment, regardless of whether they reference LIBOR or another rate expected to be discontinued as a result of reference rate reform, an entity may apply certain practical expedients in ASC 848.

In December 2022, the FASB issued authoritative guidance to defer the sunset date of ASC 848 from December 31, 2022 to December 31, 2024.

9

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Effective for the Company – This guidance can only be applied for a limited time through December 31, 2024.

Impact on consolidated financial statements – The Company completed its comprehensive evaluation of applying this guidance and adopted certain practical expedients for its interest rate swap agreements in the fiscal 2024 first quarter which did not have a significant impact on its consolidated financial statements. The practical expedients that were adopted permit its hedging relationships to continue without de-designation upon changes due to reference rate reform. Foreign currency forward contracts do not reference LIBOR and no practical expedients were elected but are now discounted using the Secured Overnight Financing Rate ("SOFR"). For existing lease, debt arrangements and other contracts, the Company did not adopt any ASC 848 practical expedients as it relates to these arrangements.

Recently Issued Accounting Standards

FASB ASU No. 2023-07 – Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued authoritative guidance to improve reportable segment disclosure requirements. Companies are required to disclose significant segment expenses by reportable segment if they are regularly provided to the chief operating decision maker (CODM). Companies are also required to disclose other segment items by reportable segment. The guidance clarifies that companies may disclose more than one measure of segment profit or loss used by the CODM, provided that at least one of the reported measures includes the segment profit or loss measure that is most consistent with U.S. GAAP measurement principles. All existing annual disclosures about segment profit or loss, as well as the new requirements, must now be provided on an interim basis. Additionally, on an annual basis, the CODM’s title and position is required, as well as an explanation of how the CODM uses the reported measure(s) and other disclosures. The guidance does not change how companies identify their operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.

Effective for the Company – The guidance is effective for the Company’s fiscal year ending June 30, 2025 Form 10-K and then in interim periods beginning in the Company’s first quarter of fiscal 2026. Early adoption is permitted. The guidance should be applied retrospectively unless impracticable.

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

FASB ASU No. 2023-09 – Income Taxes (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued authoritative guidance to amend and enhance existing annual income 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 by the companies, disaggregated by applicable jurisdiction.

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.

•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 requires 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 statements – The Company is currently evaluating the impact that this guidance will have on its financial statement disclosures.

10

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEC Final Rule Release No. 33-11275 – The Enhancement and Standardization of Climate-Related Disclosures for Investors

In March 2024, the SEC adopted rules intended to enhance and standardize climate-related disclosures in registration statements and annual reports. The rules require significant effects of severe weather events and other natural conditions, amounts related to carbon offsets and renewable energy credits or certificates, as well as material impacts on financial estimates and assumptions that are due to severe weather events and other natural conditions or disclosed climate-related targets or transition plans to be disclosed in the annual financial statements in certain circumstances.

Effective for the Company – On April 4, 2024, the SEC issued an order staying the final rule on climate-related disclosures pending certain legal challenges. Under the rule as currently issued, the disclosure requirements related to the annual financial statements are expected to be effective for the Company's fiscal year ending June 30, 2026 Form 10-K. The Company is not required to provide comparative information in the year of adoption.

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

NOTE 2 – GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

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, 2023
Goodwill	$	1,664	$	1,116	$	254	$	353	$	3,387
Accumulated impairments	(139)		(732)		(30)		—		(901)
	1,525		384		224		353		2,486
Translation adjustments, goodwill	(32)		—		(1)		—		(33)
	(32)		—		(1)		—		(33)
Balance as of March 31, 2024
Goodwill	1,632		1,116		253		353		3,354
Accumulated impairments	(139)		(732)		(30)		—		(901)
	$	1,493	$	384	$	223	$	353	$	2,453

Other Intangible Assets

Other intangible assets consist of the following:

	March 31, 2024						June 30, 2023
(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	$	2,000	$	868	$	1,132	$	2,030	$	766	$	1,264
Non-amortizable intangible assets:
Trademarks					4,306						4,338
Total intangible assets					$	5,438					$	5,602

The aggregate amortization expense related to amortizable intangible assets was $36 million for the three months ended March 31, 2024 and 2023, and $109 million for the nine months ended March 31, 2024 and 2023.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The estimated aggregate amortization expense for the remainder of fiscal 2024 and for each of the next four fiscal years is as follows:

	Fiscal
(In millions)	2024		2025		2026		2027		2028
Estimated aggregate amortization expense	$	35	$	143	$	143	$	126	$	101

Impairment Analysis During the Nine Months Ended March 31, 2023

During the fiscal 2023 second quarter, given the lower-than-expected results in the overall business, the Company made revisions to the internal forecasts relating to its Smashbox reporting unit. The Company concluded that the changes in circumstances in the reporting unit triggered the need for an interim impairment review of its trademark intangible asset. The remaining carrying value of the trademark intangible asset was not recoverable and the Company recorded an impairment charge of $21 million reducing the carrying value to zero.

During the fiscal 2023 second quarter, the Dr.Jart+ reporting unit experienced lower-than-expected growth within key geographic regions and channels that continue to be impacted by the spread of COVID-19 variants, resurgence in cases, and the potential future impacts relating to the uncertainty of the duration and severity of COVID-19 impacting the financial performance of the reporting unit. In addition, due to macro-economic factors, Dr.Jart+ has experienced lower-than-expected growth within key geographic regions. The Too Faced reporting unit experienced lower-than-expected results in key geographic regions and channels coupled with delays in future international expansion to areas that continue to be impacted by COVID-19. As a result, the Company made revisions to the internal forecasts relating to its Dr.Jart+ and Too Faced reporting units. Additionally, there were increases in the weighted average cost of capital for both reporting units as compared to the prior year annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2022.

The Company concluded that the changes in circumstances in the reporting units, along with increases in the weighted average cost of capital, triggered the need for interim impairment reviews of their trademarks and goodwill. These changes in circumstances were also an indicator that the carrying amounts of Dr.Jart+’s and Too Faced’s long-lived assets, including customer lists, may not be recoverable. Accordingly, the Company performed interim impairment tests for the trademarks and a recoverability test for the long-lived assets as of November 30, 2022. 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 to determine discounted projected future cash flows and recorded an impairment charge of $100 million for Dr.Jart+ and $86 million for Too Faced. The Company concluded that the carrying amounts of the long-lived assets were recoverable. After adjusting the carrying values of the trademarks, the Company completed interim quantitative impairment tests for goodwill. As the estimated fair value of the Dr.Jart+ and Too Faced reporting units were in excess of their carrying values, the Company concluded that the carrying amounts of the goodwill were recoverable and did not record a goodwill impairment charge related to these reporting units. The fair values of these reporting units were based upon an equal weighting of the income and market approaches, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the reporting units. The significant assumptions used in these approaches include revenue growth rates and profit margins, terminal values, weighted average cost of capital used to discount future cash flows and royalty rates for trademarks. The most significant unobservable input used to estimate the fair values of the Dr.Jart+ and Too Faced trademark intangible assets was the weighted average cost of capital, which was 11% and 13%, respectively.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of the impairment charges for the three and nine months ended March 31, 2023 and the remaining trademark and goodwill carrying values as of March 31, 2023, for each reporting unit, are as follows:

		Impairment Charges								Carrying Value
(In millions)		Three Months Ended March 31, 2023				Nine Months Ended March 31, 2023				As of March 31, 2023
Reporting Unit	Geographic Region	Trademarks		Goodwill		Trademarks		Goodwill		Trademarks		Goodwill
Smashbox	The Americas	$	—	$	—	$	21	$	—	$	—	$	—
Dr.Jart+	Asia/Pacific	—		—		100		—		330		310
Too Faced	The Americas	—		—		86		—		186		13
Total		$	—	$	—	$	207	$	—	$	516	$	323

The impairment charges for the nine months ended March 31, 2023 were reflected in the skin care product category for Dr.Jart+ and the makeup product category for Smashbox and Too Faced.

NOTE 3 – CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES

Restructuring Program Component of the Profit Recovery Plan ("Restructuring Program")

As previously communicated on November 1, 2023, the Company has launched a Profit Recovery Plan to help progressively rebuild its profit margins in fiscal years 2025 and 2026.

The Profit Recovery Plan is focused on rebuilding stronger, more sustainable profitability, supporting sales growth acceleration and increasing speed and agility. The plan is designed to improve gross margin, lower the cost base and reduce overhead expenses, while increasing investments in key consumer-facing activities. Upon completion of this plan, the Company expects to have improved its gross margin and expense base to drive greater operating leverage for the future.

As a component of the Profit Recovery Plan, on February 5, 2024, the Company announced a two-year restructuring program. The restructuring program’s main focus includes the reorganization and rightsizing of certain areas of the Company as well as simplification and acceleration of processes. The Company committed to this course of action on February 1, 2024.

In connection with the restructuring program, as of March 31, 2024, the Company estimates a net reduction in the range of approximately 1,800 to 3,000 positions globally, which is about 3-5% of its positions including temporary and part-time employees as of June 30, 2023. This reduction takes into account the elimination of some positions as well as retraining and redeployment of certain employees in select areas.

The Company plans to substantially complete specific initiatives under the restructuring program through fiscal 2026. The Company expects that the restructuring program will result in restructuring and other charges totaling between $500 million and $700 million, before taxes, consisting of employee-related costs, contract terminations, asset write-offs and other costs associated with implementing these initiatives.

Restructuring Program Approvals

The Restructuring Program cumulative charges approved by the Company through March 31, 2024 were:

	Sales Returns (included in Net Sales)		Cost of Sales		Operating Expenses				Total
(In millions)					Restructuring Charges		Other Charges
Total Charges Approved
Cumulative charges through March 31, 2024	$	—	$	—	$	13	$	21	$	34

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Included in the above table, cumulative Restructuring Program restructuring initiatives approved by the Company through March 31, 2024 by major cost type were:

(In millions)	Employee- Related Costs		Asset- Related Costs		Contract Terminations		Other Exit Costs		Total
Restructuring Charges Approved
Cumulative charges through March 31, 2024	$	6	$	4	$	—	$	3	$	13

Specific actions taken since the Restructuring Program inception include:

•Value Chain Optimization – To help rebuild gross margin profitability, as part of a broader initiative associated with reorganizing and redesigning the Company’s supply chain to be completed in phases, the Company has approved an initiative to right-size a manufacturing location to improve efficiencies and optimize asset utilization. These actions will primarily result in a net reduction in workforce, which includes employee severance, asset write-offs, and costs to decommission and relocate activities.

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 rights associated with commercial operating leases and operating lease right-of-use assets) that will be taken out of service prior to their existing useful life as a direct result of a restructuring initiative.

Contract Terminations – Costs related to contract terminations include continuing payments to a third party after the Company has ceased benefiting from the rights conveyed in the contract, or a payment made to terminate a contract prior to its expiration.

Other Exit Costs – Other exit costs related to restructuring activities generally include costs to relocate facilities or employees, recruiting to fill positions as a result of relocation of operations, and employee outplacement for separated employees.

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 organizational design of the future structures and processes as well as the implementation thereof;

•Temporary labor backfill;

•Costs to establish and maintain a Project Management Office (“PMO”) 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

•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.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company records approved charges associated with restructuring and other activities once the relevant accounting criteria have been met. 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 March 31, 2024	$	—	$	—	$	6	$	11	$	17

(In millions)	Employee- Related Costs		Asset- Related Costs		Contract Terminations		Other Exit Costs		Total
Restructuring Charges
Cumulative charges through March 31, 2024	$	6	$	—	$	—	$	—	$	6

Accrued restructuring charges of $7 million at March 31, 2024 relating to the Restructuring Component of the Profit Recovery Plan are expected to result in cash expenditures funded from cash provided by operations of approximately $2 million, $2 million, $2 million and $1 million for the remainder of fiscal 2024 and for fiscal 2025, 2026, and 2027, respectively.

Charges associated with restructuring and other activities are not allocated to the Company's product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed Company-wide initiatives to redesign, resize and reorganize select areas of the business.

Restructuring Program April 2024 Approvals

Subsequent to March 31, 2024, between April 1, 2024 and April 24, 2024, the Company approved certain initiatives under the Restructuring Program within the areas of PMO, Enabling Function Re-Invention, which represents a broader initiative to reorganize and right-size the Company’s go-to-market structure, and Value Chain Optimization.

Once the relevant accounting criteria has been met, the Company expects to record restructuring and other charges of approximately $62 million.

The following presents the restructuring initiative charges approved from April 1, 2024 to April 24, 2024:

	Sales Returns (included in Net Sales)		Cost of Sales		Operating Expenses				Total
(In millions)					Restructuring Charges		Other Charges
Approval Period
April 1, 2024 - April 24, 2024	$	—	$	—	$	11	$	51	$	62

15

THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Included in the above table, cumulative Restructuring Program restructuring initiative charges approved by the Company from April 1, 2024 to April 24, 2024 by major cost type were:

(In millions)	Employee- Related Costs		Asset- Related Costs		Contract Terminations		Other Exit Costs		Total
Restructuring Charges Approved
April 1, 2024 - April 24, 2024	$	9	$	1	$	—	$	1	$	11

Post-COVID Business Acceleration Program

The Company approved specific initiatives under the Post-COVID Business Acceleration Program (the “PCBA Program”) through fiscal 2022 and has substantially completed those initiatives through fiscal 2023. Additional information about the PCBA Program is included in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023.

NOTE 4 – DEBT

In February 2024, the Company completed a public offering of $650 million aggregate principal amount of its 5.000% Senior Notes due February 14, 2034 (the "2034 Senior Notes"). The Company intends to use the proceeds from this offering for general corporate purposes, which may include funding a portion of the price to purchase the remaining interest in DECIEM, operating expenses, working capital, capital expenditures and redemptions and repayment of short-term or long-term borrowings, including outstanding commercial paper as it matures.

These recently issued notes are summarized as follows:

($ in millions)	Issue Date	Price		Yield		Unamortized Debt Discount		Debt Issuance Costs		Semi-annual interest payments
2034 Senior Notes (1)	February 2024	99.689	%	5.04	%	$	(2)	$	(5)	February 14/August 14

(1)In March 2022, in anticipation of the issuance of the 2034 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $300 million at a weighted average all-in rate of 2.02%. The treasury lock agreements were terminated in September 2022, and the Company recognized a gain in OCI of $31 million that is being amortized to interest expense over the life of the 2034 Senior Notes. As a result of the treasury lock agreements, as well as the debt discount and debt issuance costs, the effective interest rate on the 2034 Senior Notes will be 4.53% over the life of the debt.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 – 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 enters into foreign currency forward contracts, and may enter into option contracts, to reduce the effects of fluctuating foreign currency exchange rates. The Company also uses cross-currency swap contracts to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt. In addition, the Company enters into interest rate derivatives to manage the effects of interest rate movements on the Company’s aggregate liability portfolio, including potential future debt issuances. The Company also enters into foreign currency forward contracts to hedge a portion of its net investment in certain foreign operations, which are designated as net investment hedges. The Company enters into the net investment hedges to offset the risk of changes in the U.S. dollar value of the Company’s investment in these foreign operations due to fluctuating foreign exchange rates. Time value is excluded from the effectiveness assessment and is recognized under a systematic and rational method over the life of the hedging instrument in Selling, general and administrative expenses. The net gain or loss on net investment hedges is recorded within translation adjustments, as a component of accumulated OCI (“AOCI”) on the Company’s consolidated balance sheets, until the sale or substantially complete liquidation of the underlying assets of the Company’s investment. The Company also enters into foreign currency forward contracts, and may use option contracts, not designated as hedging instruments, to mitigate the change in fair value of specific assets and liabilities on the consolidated balance sheets. At March 31, 2024, the notional amount of derivatives not designated as hedging instruments was $3,449 million. The Company does not utilize derivative financial instruments for trading or speculative purposes. Costs associated with entering into derivative financial instruments have not been material to the Company’s consolidated financial results.

For each derivative contract entered into, where the Company looks to obtain hedge accounting treatment, the Company formally and contemporaneously documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking the hedge transaction, the nature of the risk being hedged, and how the hedging instruments’ effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively. This process includes linking all derivatives to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. At inception, the Company evaluates the effectiveness of hedge relationships quantitatively, and has elected to perform, after initial evaluation, qualitative effectiveness assessments of certain hedge relationships to support an ongoing expectation of high effectiveness, if effectiveness testing is required. If based on the qualitative assessment, it is determined that a derivative has ceased to be a highly effective hedge, the Company will perform a quantitative assessment to determine whether to discontinue hedge accounting with respect to that derivative prospectively.

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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	March 31, 2024		June 30, 2023		Balance Sheet Location	March 31, 2024		June 30, 2023
Derivatives Designated as Hedging Instruments:
Foreign currency cash flow hedges	Prepaid expenses and other current assets	$	36	$	56	Other accrued liabilities	$	8	$	16
Cross-currency swap contracts	Prepaid expenses and other current assets	52		22		Other accrued liabilities	—		—
Net investment hedges	Prepaid expenses and other current assets	7		—		Other accrued liabilities	—		13
Interest rate-related derivatives	Prepaid expenses and other current assets	—		—		Other accrued liabilities	148		150
Total Derivatives Designated as Hedging Instruments		95		78			156		179
Derivatives Not Designated as Hedging Instruments:
Foreign currency forward contracts	Prepaid expenses and other current assets	7		20		Other accrued liabilities	7		20
Total derivatives		$	102	$	98		$	163	$	199

(1)See Note 6 – Fair Value Measurements for further information about how the fair value of derivative assets and liabilities are determined.

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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	Amount of Gain (Loss) Reclassified from AOCI into Earnings(1)
	Three Months Ended March 31					Three Months Ended March 31
(In millions)	2024		2023			2024		2023
Derivatives in Cash Flow Hedging Relationships:
Foreign currency forward contracts	$	36	$	(11)	Net sales	$	15	$	22
Interest rate-related derivatives	—		(11)		Interest expense	—		(1)
	36		(22)			15		21
Derivatives in Net Investment Hedging Relationships(2):
Foreign currency forward contracts(3)	11		(23)			—		—
Total derivatives	$	47	$	(45)		$	15	$	21

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

(2)During the three months ended March 31, 2024 and 2023, the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $3 million and $6 million, respectively.

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

	Amount of Gain (Loss) Recognized in OCI on Derivatives				Location of Gain (Loss) Reclassified from AOCI into Earnings	Amount of Gain (Loss) Reclassified from AOCI into Earnings(1)
	Nine Months Ended March 31					Nine Months Ended March 31
(In millions)	2024		2023			2024		2023
Derivatives in Cash Flow Hedging Relationships:
Foreign currency forward contracts	$	28	$	7	Net sales	$	36	$	59
Interest rate-related derivatives	—		1		Interest expense	(1)		(1)
	28		8			35		58
Derivatives in Net Investment Hedging Relationships(2):
Foreign currency forward contracts(3)	(6)		(38)			—		—
Total derivatives	$	22	$	(30)		$	35	$	58

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

(2)During the nine months ended March 31, 2024 and 2023, the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $13 million and $19 million, respectively.

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

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

		Amount of Gain (Loss) Recognized in Earnings on Derivatives
	Location of Gain (Loss) Recognized in Earnings on Derivatives
		Three Months Ended March 31				Nine Months Ended March 31
(In millions)		2024		2023		2024		2023
Derivatives in Fair Value Hedging Relationships:
Cross-currency swap contracts (1)	Selling, general and administrative	$	30	$	1	$	19	$	1
Interest rate swap contracts (2)	Interest expense	$	(17)	$	18	$	3	$	(17)

(1)Changes in the fair value representing hedge components included in the assessment of effectiveness of the cross-currency swap contracts are exactly offset by the change in the fair value of the underlying intercompany foreign currency denominated debt. The gain recognized in earnings from cross-currency swap contracts related to the amount excluded from effectiveness testing during the three months ended March 31, 2024 and 2023 was $5 million and $4 million, respectively, and for the nine months ended March 31, 2024 and 2023 was $14 million and $4 million, respectively.

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

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

(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
	March 31, 2024		March 31, 2024
Long-term debt	$	845	$	(148)
Intercompany debt	$	—	$	62

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Three Months Ended March 31

2024

2023

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

$

3,940

$

2,284

$

94

$

3,751

$

2,281

$

58

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

17

N/A

N/A

(18)

Derivatives designated as hedging instruments

N/A

N/A

(17)

N/A

N/A

18

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

Hedged item

N/A

(30)

N/A

N/A

(1)

N/A

Derivatives designated as hedging instruments

N/A

30

N/A

N/A

1

N/A

Loss on cash flow hedge relationships – interest rate contracts:

Amount of loss reclassified from AOCI into earnings

N/A

N/A

—

N/A

N/A

(1)

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

Amount of gain reclassified from AOCI into earnings

15

N/A

N/A

22

N/A

N/A

N/A (Not applicable)

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THE ESTÉE LAUDER COMPANIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Nine Months Ended March 31
	2024		2023
(In millions)	Net Sales	Selling, General and Administrative