COVER PAGE
COVER PAGE - shares | 6 Months Ended | |
Dec. 31, 2020 | Jan. 29, 2021 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Dec. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-14064 | |
Entity Registrant Name | Estée Lauder Companies Inc | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 11-2408943 | |
Entity Address, Address Line One | 767 Fifth Avenue | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10153 | |
City Area Code | 212 | |
Local Phone Number | 572-4200 | |
Title of 12(b) Security | Class A Common Stock, $.01 par value | |
Trading Symbol | EL | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001001250 | |
Amendment Flag | false | |
Common Class A | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 229,736,467 | |
Common Class B | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 133,023,029 |
CONSOLIDATED STATEMENTS OF EARN
CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | ||||
Net sales | $ 4,853 | $ 4,624 | $ 8,415 | $ 8,519 |
Cost of sales | 1,084 | 1,041 | 1,909 | 1,949 |
Gross profit | 3,769 | 3,583 | 6,506 | 6,570 |
Operating expenses | ||||
Selling, general and administrative | 2,590 | 2,538 | 4,616 | 4,723 |
Restructuring and other charges | 35 | 7 | 41 | 30 |
Goodwill impairment | 54 | 511 | 54 | 511 |
Impairment of other intangible assets | 27 | 266 | 27 | 266 |
Total operating expenses | 2,706 | 3,322 | 4,738 | 5,530 |
Operating income | 1,063 | 261 | 1,768 | 1,040 |
Interest expense | 43 | 38 | 88 | 70 |
Interest income and investment income, net | 17 | 13 | 31 | 27 |
Other components of net periodic benefit cost | 7 | 1 | 10 | 2 |
Other income | 0 | 576 | 0 | 576 |
Earnings before income taxes | 1,030 | 811 | 1,701 | 1,571 |
Provision for income taxes | 153 | 250 | 299 | 412 |
Net earnings | 877 | 561 | 1,402 | 1,159 |
Net earnings attributable to noncontrolling interests | (4) | (4) | (6) | (7) |
Net earnings attributable to The Estée Lauder Companies Inc. | $ 873 | $ 557 | $ 1,396 | $ 1,152 |
Net earnings attributable to The Estée Lauder Companies Inc. per common share | ||||
Basic (in dollars per share) | $ 2.40 | $ 1.55 | $ 3.84 | $ 3.19 |
Diluted (in dollars per share) | $ 2.37 | $ 1.52 | $ 3.79 | $ 3.13 |
Weighted-average common shares outstanding | ||||
Basic (in shares) | 363 | 360.2 | 363.4 | 360.8 |
Diluted (in shares) | 368 | 366.7 | 368.5 | 367.7 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 877 | $ 561 | $ 1,402 | $ 1,159 |
Other comprehensive income (loss): | ||||
Net cash flow hedge loss | (26) | (22) | (57) | (24) |
Retirement plan and other retiree benefit adjustments | 6 | 5 | 12 | 10 |
Translation adjustments | 213 | 64 | 291 | (6) |
Benefit for deferred income taxes on components of other comprehensive income | 20 | 10 | 38 | 13 |
Total other comprehensive income (loss), net of tax | 213 | 57 | 284 | (7) |
Comprehensive income | 1,090 | 618 | 1,686 | 1,152 |
Comprehensive income attributable to noncontrolling interests: | ||||
Net earnings | (4) | (4) | (6) | (7) |
Translation adjustments | (2) | 1 | (2) | 1 |
Comprehensive income attributable to noncontrolling interests | (6) | (3) | (8) | (6) |
Comprehensive income attributable to The Estée Lauder Companies Inc. | $ 1,084 | $ 615 | $ 1,678 | $ 1,146 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2020 | Jun. 30, 2020 |
Current assets | ||
Cash and cash equivalents | $ 5,545 | $ 5,022 |
Accounts receivable, net | 1,972 | 1,194 |
Inventory and promotional merchandise | 2,116 | 2,062 |
Prepaid expenses and other current assets | 658 | 614 |
Total current assets | 10,291 | 8,892 |
Property, plant and equipment, net | 2,142 | 2,055 |
Other assets | ||
Operating lease right-of-use assets | 2,325 | 2,282 |
Goodwill | 1,401 | 1,401 |
Other intangible assets, net | 2,424 | 2,338 |
Other assets | 1,012 | 813 |
Total other assets | 7,162 | 6,834 |
Total assets | 19,595 | 17,781 |
Current liabilities | ||
Current debt | 470 | 1,222 |
Accounts payable | 1,299 | 1,177 |
Operating lease liabilities | 387 | 375 |
Other accrued liabilities | 3,264 | 2,405 |
Total current liabilities | 5,420 | 5,179 |
Noncurrent liabilities | ||
Long-term debt | 4,913 | 4,914 |
Long-term operating lease liabilities | 2,314 | 2,278 |
Other noncurrent liabilities | 1,492 | 1,448 |
Total noncurrent liabilities | 8,719 | 8,640 |
Contingencies | ||
Equity | ||
Common stock, $.01 par value; Class A shares authorized: 1,300,000,000 at December 31, 2020 and June 30, 2020; shares issued: 456,618,145 at December 31, 2020 and 451,927,441 at June 30, 2020; Class B shares authorized: 304,000,000 at December 31, 2020 and June 30, 2020; shares issued and outstanding: 133,023,029 at December 31, 2020 and 135,235,429 at June 30, 2020 | 6 | 6 |
Paid-in capital | 5,068 | 4,790 |
Retained earnings | 11,159 | 10,134 |
Accumulated other comprehensive loss | (383) | (665) |
Stockholders' equity before treasury stock | 15,850 | 14,265 |
Less: Treasury stock, at cost; 227,008,228 Class A shares at December 31, 2020 and 226,637,238 Class A shares at June 30, 2020 | (10,429) | (10,330) |
Total stockholders’ equity – The Estée Lauder Companies Inc. | 5,421 | 3,935 |
Noncontrolling interests | 35 | 27 |
Total equity | 5,456 | 3,962 |
Total liabilities and equity | $ 19,595 | $ 17,781 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2020 | Jun. 30, 2020 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Treasury stock, shares | 227,008,228 | 226,637,238 |
Common Class A | ||
Common stock, shares authorized | 1,300,000,000 | 1,300,000,000 |
Common stock, shares issued | 456,618,145 | 451,927,441 |
Common Class B | ||
Common stock, shares authorized | 304,000,000 | 304,000,000 |
Common stock, shares issued | 133,023,029 | 135,235,429 |
Common stock, shares outstanding | 133,023,029 | 135,235,429 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities | ||
Net earnings | $ 1,402 | $ 1,159 |
Adjustments to reconcile net earnings to net cash flows from operating activities: | ||
Depreciation and amortization | 316 | 287 |
Deferred income taxes | (49) | 7 |
Non-cash stock-based compensation | 169 | 139 |
Net loss on disposal of property, plant and equipment | 13 | 5 |
Non-cash restructuring and other charges | 1 | 0 |
Pension and post-retirement benefit expense | 52 | 41 |
Pension and post-retirement benefit contributions | (25) | (33) |
Goodwill and other intangible asset impairments | 81 | 777 |
Changes in fair value of contingent consideration | (2) | (7) |
Gain on previously held equity method investment | 0 | (553) |
Other non-cash items | (23) | (10) |
Changes in operating assets and liabilities: | ||
Increase in accounts receivable, net | (720) | (347) |
Decrease in inventory and promotional merchandise | 67 | 31 |
Increase in other assets, net | (110) | (120) |
Increase (decrease) in accounts payable | 63 | (375) |
Increase in other accrued and noncurrent liabilities | 750 | 252 |
Increase (decrease) in operating lease assets and liabilities, net | (7) | 2 |
Net cash flows provided by operating activities | 1,978 | 1,255 |
Cash flows from investing activities | ||
Capital expenditures | (250) | (291) |
Proceeds from purchase price refund | 32 | 0 |
Payments for acquired businesses, net of cash acquired | (6) | (1,040) |
Purchases of investments | (40) | (5) |
Settlement of net investment hedges | (133) | (14) |
Net cash flows used for investing activities | (397) | (1,350) |
Cash flows from financing activities | ||
Proceeds (repayments) of current debt, net | (747) | 8 |
Proceeds from issuance of long-term debt, net | 0 | 1,783 |
Debt issuance costs | 0 | (14) |
Repayments and redemptions of long-term debt | (4) | (8) |
Net proceeds from stock-based compensation transactions | 104 | 71 |
Payments to acquire treasury stock | (102) | (813) |
Payments of contingent consideration | 0 | (3) |
Dividends paid to stockholders | (368) | (330) |
Payments to noncontrolling interest holders for dividends | (2) | (7) |
Net cash flows provided by (used for) financing activities | (1,119) | 687 |
Effect of exchange rate changes on Cash and cash equivalents | 61 | 17 |
Net increase in Cash and cash equivalents | 523 | 609 |
Cash and cash equivalents at beginning of period | 5,022 | 2,987 |
Cash and cash equivalents at end of period | $ 5,545 | $ 3,596 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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 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, 2020. Certain amounts in the consolidated financial statements of prior years 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, 2020. 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, including those related to the impacts of the COVID-19 pandemic, 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, net of tax, reported as translation adjustments through other comprehensive income (loss) (“OCI”) attributable to The Estée Lauder Companies Inc. were $227 million and $75 million, net of tax, during the three months ended December 31, 2020 and 2019, respectively, and $318 million and $3 million, net of tax, during the six months ended December 31, 2020 and 2019, 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 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 (losses) on foreign currency transactions of $27 million during the three months ended December 31, 2019, and $(2) million and $24 million during the six months ended December 31, 2020 and 2019, respectively. The net exchange loss on foreign currency transactions during the three months ended December 31, 2020 was not material. Concentration of Credit Risk The Company is a worldwide manufacturer, marketer and distributor of skin care, makeup, fragrance and hair care products. The Company’s sales subject to credit risk are made primarily to department stores, perfumeries, specialty multi-brand retailers and retailers in its travel retail business. The Company grants credit to qualified customers. As a result of the COVID-19 pandemic, the Company has enhanced its assessment of its customers' abilities to pay with a greater focus on factors affecting their liquidity and less on historical payment performance. While the Company does not believe it is exposed significantly to any undue concentration of credit risk at this time, it continues to monitor the extent of the impact of the COVID-19 pandemic on its customers' abilities, individually and collectively, to make timely payments. The Company’s largest customer during the three and six months ended December 31, 2020 sells products primarily in China travel retail. This customer accounted for $654 million or 13%, and $296 million or 6% for the three months ended December 31, 2020 and 2019, respectively, and $1,208 million or 14% and $465 million or 5% for the six months ended December 31, 2020 and 2019, respectively, of the Company's consolidated net sales. This customer accounted for $404 million, or 20%, and $297 million, or 24%, of the Company's accounts receivable at December 31, 2020 and June 30, 2020, respectively. Inventory and Promotional Merchandise Inventory and promotional merchandise consists of the following: (In millions) December 31 June 30 Raw materials $ 550 $ 542 Work in process 258 305 Finished goods 1,072 995 Promotional merchandise 236 220 $ 2,116 $ 2,062 Property, Plant and Equipment Property, plant and equipment consists of the following: (In millions) December 31 June 30 Assets (Useful Life) Land $ 57 $ 33 Buildings and improvements (10 to 40 years) 457 400 Machinery and equipment (3 to 10 years) 969 865 Computer hardware and software (4 to 10 years) 1,417 1,335 Furniture and fixtures (5 to 10 years) 126 120 Leasehold improvements 2,471 2,381 5,497 5,134 Less accumulated depreciation and amortization (3,355) (3,079) $ 2,142 $ 2,055 The cost of assets related to projects in progress of $601 million and $501 million as of December 31, 2020 and June 30, 2020, respectively, is included in their respective asset categories above. Depreciation and amortization of property, plant and equipment was $126 million and $127 million during the three months ended December 31, 2020 and 2019, respectively, and $251 million and $252 million during the six months ended December 31, 2020 and 2019, 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. Income Taxes The effective rate for income taxes for the three and six months ended December 31, 2020 and 2019 are as follows: Three Months Ended Six Months Ended 2020 2019 2020 2019 Effective rate for income taxes 14.9 % 30.8 % 17.6 % 26.2 % Basis-point change from the prior-year period (1,590) (860) For the three and six months ended December 31, 2020, the decrease in the effective tax rate was primarily attributable to a lower effective tax rate on the Company's foreign operations and the impact of nondeductible goodwill charges recognized in the second quarter of fiscal 2020. The effective tax rate for the three and six months ended December 31, 2020 included the impact of the U.S. government issuance of final global intangible low-taxed income (“GILTI”) tax regulations in July 2020 under the Tax Cuts and Jobs Act that provide for a high-tax exception to the GILTI tax. These regulations are retroactive to the original enactment of the GILTI tax provision, which includes the Company's 2019 and 2020 fiscal years. The Company has elected to apply the GILTI high-tax exception to fiscal 2021, 2020 and 2019. The election for fiscal 2021 resulted in reductions of 160 basis points and 150 basis points to the effective tax rates for the three and six months ended December 31, 2020, respectively. The impact of the elections with respect to fiscal 2020 and 2019 was recognized as a discrete item in the provision for income taxes in the second quarter of fiscal 2021 and resulted in reductions of 470 basis points and 280 basis points to the effective tax rates for the three and six months ended December 31, 2020, respectively. As of December 31, 2020 and June 30, 2020, the gross amount of unrecognized tax benefits, exclusive of interest and penalties, totaled $70 million. The total amount of unrecognized tax benefits at December 31, 2020 that, if recognized, would affect the effective tax rate was $55 million. The total gross interest and penalties accrued related to unrecognized tax benefits during the three and six months ended December 31, 2020 in the accompanying consolidated statements of earnings were not material. The total gross accrued interest and penalties in the accompanying consolidated balance sheets at December 31, 2020 and June 30, 2020, was $14 million and $13 million, respectively. On the basis of the information available as of December 31, 2020, the Company does not expect significant changes to the total amount of unrecognized tax benefits within the next twelve months. Other Accrued Liabilities Other accrued liabilities consist of the following: (In millions) December 31 June 30 Advertising, merchandising and sampling $ 353 $ 256 Employee compensation 494 424 Deferred revenue 365 222 Payroll and other taxes 392 250 Accrued income taxes 319 208 Sales return accrual 285 212 Accrued general and administrative expenses 295 233 Other 761 600 $ 3,264 $ 2,405 Debt In August 2020, the Company repaid the remaining $750 million borrowed under its $1,500 million revolving credit facility that was outstanding as of June 30, 2020. Recently Adopted Accounting Standards Measurement of Credit Losses on Financial Instruments (ASC Topic 326 – Financial Instruments – Credit Losses) (“ASC 326”) In June 2016, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that requires companies to utilize an impairment model for most financial assets measured at amortized cost and certain other financial instruments, which include trade and other receivables, loans and held-to-maturity debt securities, to record an allowance for credit risk based on expected losses rather than incurred losses. In addition, this guidance changes the recognition method for credit losses on available-for-sale debt securities, which can occur as a result of market and credit risk, and requires additional disclosures. In general, modified retrospective adoption will be required for all outstanding instruments that fall under this guidance. In November 2019, the FASB issued authoritative guidance (ASU 2019-11 – Codification Improvements to Topic 326, Financial Instruments – Credit Losses) that amends ASC Topic 326 to clarify, improve and amend certain aspects of this guidance, such as disclosures related to accrued interest receivables and the estimation of credit losses associated with financial assets secured by collateral. In February 2020, the FASB issued authoritative guidance (ASU 2020-02 – Financial Instruments – Credit Losses (Topic 326) and Leases (Topic 842)) that amends and clarifies Topic 326 and Topic 842. For Topic 326, the codification was updated to include the Securities and Exchange Commission staff interpretations associated with registrants engaged in lending activities. Effective for the Company – Fiscal 2021 first quarter. Impact on consolidated financial statements – On July 1, 2020, the Company adopted ASC 326. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. See Note 7 – Revenue Recognition for further discussion. Goodwill and Other – Internal-Use Software (ASU 2018-15 – Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract) In August 2018, the FASB issued authoritative guidance that permits companies to capitalize the costs incurred for setting up business systems that operate on cloud technology. The new guidance aligns the requirement for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance does not affect the accounting for the service element of a hosting arrangement that is a service contract. Capitalized costs associated with a hosting arrangement that is a service contract must be amortized over the term of the hosting arrangement to the same line item in the income statement as the expense for fees for the hosting arrangement. Effective for the Company – Fiscal 2021 first quarter, with early adoption permitted in any interim period. This guidance can be adopted either retrospectively, or prospectively to all implementation costs incurred after the date of adoption. Impact on consolidated financial statements – On July 1, 2020, the Company adopted this guidance prospectively to all implementation costs incurred after the date of adoption. The adoption of this standard did not have a material impact on the Company's consolidated financial statements. Recently Issued Accounting Standards Reference Rate Reform (ASC Topic 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”), which is expected to be phased out at the end of calendar 2021, and applies to lease contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that have LIBOR as the benchmark rate. 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 all derivative instruments affected by the changes to interest rates used for discounting, margining or contract price alignment, regardless of whether they reference LIBOR or another rate expected to be discontinued as a result of reference rate reform, an entity may apply certain practical expedients in ASC Topic 848. Effective for the Company – This guidance can be applied for a limited time through December 31, 2022. The guidance will no longer be available to apply after December 31, 2022. Impact on consolidated financial statements – The Company is currently assessing the impact of applying this guidance on its existing derivative contracts, leases and other arrangements, as well as when to adopt this guidance. Income Taxes (ASU 2019-12 – Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes) In December 2019, the FASB issued authoritative guidance that simplifies the accounting for income taxes by removing certain exceptions and making simplifications in other areas. Effective for the Company – Fiscal 2022 first quarter, with early adoption permitted in any interim period. If adopted early, the Company must adopt all the amendments in the same period. The amendments have differing adoption methods including retrospectively, prospectively and/or modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption, depending on the specific change. Impact on consolidated financial statements – The Company is currently evaluating the impact of applying this guidance and believes that it has transactions that may fall under the scope. No other recently issued accounting pronouncements are expected to have a material impact on the Company’s consolidated financial statements. |
ACQUISITION OF BUSINESS
ACQUISITION OF BUSINESS | 6 Months Ended |
Dec. 31, 2020 | |
Business Combinations [Abstract] | |
ACQUISITION OF BUSINESS | ACQUISITION OF BUSINESS On December 18, 2019, the Company acquired the remaining 66.66% equity interest in Have&Be Co. Ltd. (“Have & Be”), the global skin care company behind Dr. Jart+ and men’s grooming brand Do The Right Thing, for $1,268 million in cash. Based on the final purchase price and working capital adjustments, the Company estimated a refund receivable of $32 million that was outstanding as of June 30, 2020 and was received in the first quarter of fiscal 2021. The Company originally acquired a minority interest in Have & Be in December 2015, and that investment structure included a formula-based call option for the remaining equity interest. The original minority interest was accounted for as an equity method investment, which had a carrying value of $133 million at the acquisition date. The acquisition of the remaining equity interest in Have & Be was considered a step acquisition, whereby the Company remeasured the previously held equity method investment to its fair value of $682 million, resulting in the recognition of a gain of $549 million. The acquisition of the remaining equity interest also resulted in the recognition of a previously unrealized foreign currency gain of $4 million, which was reclassified from accumulated OCI. The total gain on the Company’s previously held equity method investment of $553 million is included in Other income in the accompanying consolidated statements of earnings for the three and six months ended December 31, 2019. The fair value of the previously held equity method investment was determined based upon a valuation of the acquired business, as of the date of acquisition, using 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. The accounting for the Have & Be business combination was finalized as of June 30, 2020. The amount paid at closing was funded by cash on hand including the proceeds from the issuance of debt. In anticipation of the closing, the Company transferred cash to a foreign subsidiary for purposes of making the closing payment. As a result, the Company recognized a foreign currency gain of $23 million, which is also included in Other income in the accompanying consolidated statements of earnings for the three and six months ended December 31, 2019. Further information 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, 2020. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 6 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS 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, 2020 Goodwill $ 519 $ 1,210 $ 254 $ 389 $ 2,372 Accumulated impairments (95) (817) (26) (33) (971) 424 393 228 356 1,401 Goodwill acquired during the period — 6 — 4 10 Impairment charges (54) — — — (54) Translation adjustments, goodwill 36 — 9 3 48 Translation adjustments, accumulated impairments (2) — — (2) (4) (20) 6 9 5 — Balance as of December 31, 2020 Goodwill 555 1,216 263 396 2,430 Accumulated impairments (151) (817) (26) (35) (1,029) $ 404 $ 399 $ 237 $ 361 $ 1,401 Other intangible assets consist of the following: December 31, 2020 June 30, 2020 (In millions) Gross Accumulated Total Net Gross Accumulated Total Net Amortizable intangible assets: Customer lists and other $ 1,684 $ 537 $ 1,147 $ 1,590 $ 475 $ 1,115 License agreements 43 43 — 43 43 — $ 1,727 $ 580 1,147 $ 1,633 $ 518 1,115 Non-amortizable intangible assets: Trademarks and other 1,277 1,223 Total intangible assets $ 2,424 $ 2,338 The aggregate amortization expense related to amortizable intangible assets was $27 million and $11 million for the three months ended December 31, 2020 and 2019, respectively, and $52 million and $22 million for the six months ended December 31, 2020 and 2019, respectively. The estimated aggregate amortization expense for the remainder of fiscal 2021 and for each of the next four fiscal years is as follows: Fiscal (In millions) 2021 2022 2023 2024 2025 Estimated aggregate amortization expense $ 52 $ 105 $ 104 $ 104 $ 104 Impairment Testing During the Six Months Ended December 31, 2020 During November 2020, given the actual and the estimate of the potential future impacts relating to the uncertainty of the duration and severity of COVID-19 impacting the Company and lower than expected results from geographic expansion, the Company made further revisions to the internal forecasts relating to its GLAMGLOW reporting unit. The Company concluded that the changes in circumstances in this reporting unit triggered the need for an interim impairment review of its trademark and goodwill. These changes in circumstances were also an indicator that the carrying amounts of GLAMGLOW's long-lived assets, including customer lists, may not be recoverable. Accordingly, the Company performed an interim impairment test for the trademark and a recoverability test for the long-lived assets as of November 30, 2020. The Company concluded that the carrying value of the trademark for GLAMGLOW exceeded its estimated fair value, which was determined utilizing the relief-from-royalty method to determine discounted projected future cash flows, and recorded an impairment charge of $21 million. In addition, the Company concluded that the carrying value of the GLAMGLOW customer lists intangible asset was fully impaired and recorded an impairment charge of $6 million. The fair value of all other long-lived assets of GLAMGLOW exceeded their carrying values and were not impaired as of November 30, 2020. After adjusting the carrying values of the trademark and customer lists intangible assets, the Company completed an interim quantitative impairment test for goodwill and recorded a goodwill impairment charge of $54 million, reducing the carrying value of goodwill for the GLAMGLOW reporting unit to zero. The fair value of the GLAMGLOW reporting unit was based upon an equal weighting of the income and market approaches, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the reporting unit. The impairment charges for the three and six months ended December 31, 2020 were reflected in the skin care product category and in the Americas region. As of December 31, 2020, the remaining carrying value of the trademark related to the GLAMGLOW reporting unit was $36 million. Impairment Testing During the Six Months Ended December 31, 2019 During December 2019, given the continuing declines in prestige makeup, generally in North America, and the ongoing competitive activity, the Company’s Too Faced, BECCA and Smashbox reporting units made revisions to their internal forecasts concurrent with the Company's brand strategy review process. The Company concluded that the changes in circumstances in these reporting units triggered the need for an interim impairment review of their respective trademarks and goodwill. These changes in circumstances were also an indicator that the carrying amounts of their respective long-lived assets, including customer lists, may not be recoverable. Accordingly, the Company performed interim impairment tests for the trademarks and recoverability tests for the long-lived assets as of December 31, 2019. The Company concluded that the carrying amounts of the long-lived assets were recoverable. The Company also concluded that the carrying values of the trademarks exceeded their estimated fair values, which were determined utilizing the relief-from-royalty method to determine discounted projected future cash flows, and recorded impairment charges. After adjusting the carrying value of the trademarks, the Company completed interim quantitative impairment tests for goodwill and recorded goodwill impairment charges for each of these reporting units. The fair value of each reporting unit was based upon an equal weighting of the income and market approaches, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the reporting unit. A summary of the impairment charges for the three and six months ended December 31, 2019 and the remaining trademark and goodwill carrying values as of December 31, 2019, for each reporting unit, are as follows: (In millions) Impairment Charge Carrying Value Reporting Unit: Trademark Goodwill Trademark Goodwill Too Faced $ 211 $ 430 $ 314 $ 175 BECCA 33 35 65 63 Smashbox 22 46 33 26 Total $ 266 $ 511 $ 412 $ 264 The impairment charges were recorded in the makeup product category and in the Americas region. |
CHARGES ASSOCIATED WITH RESTRUC
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | 6 Months Ended |
Dec. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES Charges associated with restructuring activities for the three months ended December 31, 2020 were as follows: Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Leading Beauty Forward Program $ — $ 2 $ (2) $ 3 $ 3 Post-COVID Business Acceleration Program — — 34 — 34 Total $ — $ 2 $ 32 $ 3 $ 37 Charges associated with restructuring activities for the six months ended December 31, 2020 were as follows: Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Leading Beauty Forward Program $ — $ 5 $ (10) $ 5 $ — Post-COVID Business Acceleration Program — — 46 — 46 Total $ — $ 5 $ 36 $ 5 $ 46 Charges associated with restructuring and other activities are not allocated to our 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. Leading Beauty Forward Program In May 2016, the Company announced a multi-year initiative (“Leading Beauty Forward Program” or “LBF Program”) to build on its strengths and better leverage its cost structure to free resources for investment to continue its growth momentum. The LBF Program is designed to enhance the Company’s go-to-market capabilities, reinforce its leadership in global prestige beauty and continue creating sustainable value. As of June 30, 2019, the Company concluded the approvals of all major initiatives under the LBF Program related to the optimization of select corporate functions, supply chain activities, and corporate and regional market support structures, as well as the exit of underperforming businesses, and expects to substantially complete those initiatives through fiscal 2021. LBF Program Approvals The LBF Program approved restructuring and other charges expected to be incurred were: Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Total Charges (Adjustments) Approved Cumulative through June 30, 2020 $ 13 $ 85 $ 511 $ 358 $ 967 Six months ended December 31, 2020 1 — (7) 6 — Cumulative through December 31, 2020 $ 14 $ 85 $ 504 $ 364 $ 967 Included in the above table, cumulative LBF Program restructuring initiatives approved by the Company by major cost type were: (In millions) Employee- Asset- Contract Other Exit Total Restructuring Charges (Adjustments) Approved Cumulative through June 30, 2020 $ 460 $ 28 $ 7 $ 16 $ 511 Six months ended December 31, 2020 (8) — 1 — (7) Cumulative through December 31, 2020 $ 452 $ 28 $ 8 $ 16 $ 504 The Company records approved charges associated with restructuring and other activities once the relevant accounting criteria have been met. LBF Program Restructuring and Other Charges Total cumulative charges recorded associated with restructuring and other activities for the LBF Program were: (In millions) Sales Cost of Sales Operating Expenses Total Restructuring Other Total Charges (Adjustments) Cumulative through June 30, 2020 $ 14 $ 65 $ 491 $ 304 $ 874 Six months ended December 31, 2020 — 5 (10) 5 — Cumulative through December 31, 2020 $ 14 $ 70 $ 481 $ 309 $ 874 (In millions) Employee- Asset- Contract Other Exit Total Restructuring Charges (Adjustments) Cumulative through June 30, 2020 $ 451 $ 27 $ 6 $ 7 $ 491 Six months ended December 31, 2020 (12) 1 1 — (10) Cumulative through December 31, 2020 $ 439 $ 28 $ 7 $ 7 $ 481 Employee-related costs reflect adjustments to the accrual estimate for certain employees who either resigned or transferred to other existing positions within the Company. Changes in accrued restructuring charges for the six months ended December 31, 2020 relating to the LBF Program were: (In millions) Employee- Asset- Contract Other Exit Total Balance at June 30, 2020 $ 112 $ — $ — $ — $ 112 Charges (adjustments) (12) 1 1 — (10) Cash payments (36) — — — (36) Translation adjustments 2 — — — 2 Balance at December 31, 2020 $ 66 $ 1 $ 1 $ — $ 68 Accrued restructuring charges at December 31, 2020 relating to the LBF Program are expected to result in cash expenditures funded from cash provided by operations of approximately $46 million, $17 million and $5 million for the remainder of fiscal 2021 and for fiscal 2022 and 2023, respectively. Additional information about the LBF 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, 2020. Post-COVID Business Acceleration Program On August 20, 2020, the Company announced a two-year restructuring program, Post-COVID Business Acceleration Program (the “PCBA Program”), designed to resize the Company's business against the dramatic shifts to its distribution landscape and consumer behaviors in the wake of the COVID-19 pandemic. The PCBA Program is designed to help improve efficiency and effectiveness by rebalancing resources to growth areas of prestige beauty. It is expected to further strengthen the Company by building upon the foundational capabilities in which the Company has invested. The PCBA Program’s main areas of focus include accelerating the shift to online with the realignment of the Company’s distribution network reflecting freestanding store and certain department store closures, with a focus on North America and Europe, the Middle East & Africa; the reduction in brick-and-mortar point of sale employees and related support staff; and the redesign of the Company’s regional branded marketing organizations, plus select opportunities in global brands and functions. This program is expected to position the Company to better execute its long-term strategy while strengthening its financial flexibility. In connection with the PCBA Program, at this time the Company estimates a net reduction in the range of approximately 1,500 to 2,000 positions globally, which is approximately 3% of its current workforce including temporary and part-time employees. This reduction takes into account the elimination of some positions, retraining and redeployment of certain employees and investment in new positions in key areas. The Company also estimates the closure of approximately 10% to 15% of its freestanding stores globally, primarily in Europe, the Middle East & Africa and in North America. The Company plans to approve specific initiatives under the PCBA Program through fiscal 2022 and expects to complete those initiatives through fiscal 2023. The Company expects that the PCBA Program will result in related restructuring and other charges totaling between $400 million and $500 million, before taxes. PCBA Program Approvals The PCBA Program cumulative charges approved by the Company through December 31, 2020 were: Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Total Charges (Adjustments) Approved Six months ended December 31, 2020 $ 5 $ (1) $ 46 $ 16 $ 66 Included in the above table, cumulative PCBA Program restructuring initiatives approved by the Company through December 31, 2020 by major cost type were: (In millions) Employee- Asset- Contract Other Exit Total Restructuring Charges (Adjustments) Approved Six months ended December 31, 2020 $ 46 $ 4 $ (7) $ 3 $ 46 Specific actions taken since the PCBA Program inception include: • Optimize Distribution Network – To help restore profitability to pre-COVID-19 pandemic levels and, as part of a broader initiative to be completed in phases, the Company has approved initiatives to close a number of underperforming freestanding stores and counters, mainly in the United Kingdom and certain affiliates in Europe, the Middle East & Africa. These anticipated closures reflect changing consumer behavior including higher demand for online and omnichannel capabilities. These activities will result in product returns, inventory write-offs, reduction of workforce, and termination of contracts. • Optimize Digital Organization – The Company approved initiatives to enhance its go-to-market support structures and align more resources to support online and digital activities. These initiatives are primarily intended to shift certain areas of focus from traditional brick-and-mortar to social and digital strategies to provide enhanced consumer experience, as well as to support expanded omnichannel opportunities. These actions will result in a net reduction of the workforce, which includes position eliminations, the re-leveling of certain positions and an investment in new capabilities. • Optimize Select Global Functions – The Company has started to reduce its corporate office footprint and is moving toward the future of work in a post-COVID environment, by restructuring where and how its employees work and collaborate. These actions will result primarily in lease termination fees. PCBA Program Restructuring and Other Charges Restructuring charges are comprised of the following: 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 employee outplacement for separated employees. Other charges associated with restructuring activities are comprised of the following: 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 – The Company approved other charges related to the design and implementation of approved initiatives, which are charged to Operating Expenses as incurred and primarily include the following: • 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 PCBA Program, including internal costs for employees dedicated solely to project management activities, and other PMO-related expenses incremental to the Company’s ongoing operations (e.g., rent and utilities), and • 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. Total cumulative charges recorded associated with restructuring and other activities for the PCBA Program were: Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Total Charges Six months ended December 31, 2020 $ — $ — $ 46 $ — $ 46 (In millions) Employee- Asset- Contract Other Exit Total Restructuring Charges Six months ended December 31, 2020 $ 45 $ — $ 1 $ — $ 46 Changes in accrued restructuring charges for the six months ended December 31, 2020 relating to the PCBA Program were: (In millions) Employee- Asset- Contract Other Exit Total Charges $ 45 $ — $ 1 $ — $ 46 Cash payments (4) — (1) — (5) Balance at December 31, 2020 $ 41 $ — $ — $ — $ 41 Accrued restructuring charges at December 31, 2020 relating to the PCBA Program are expected to result in cash expenditures funded from cash provided by operations of approximately $35 million, $5 million, and $1 million for the remainder of fiscal 2021 and for fiscal 2022 and 2023, respectively. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 6 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTSThe 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. 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 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 December 31, 2020, the notional amount of derivatives not designated as hedging instruments was $4,118 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. 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 December 31 June 30 Balance Sheet December 31 June 30 Derivatives Designated as Hedging Instruments Foreign currency cash flow hedges Prepaid expenses and other current assets $ — $ 26 Other accrued liabilities $ 37 $ 3 Net investment hedges Prepaid expenses and other current assets 21 21 Other accrued liabilities 71 62 Interest rate-related derivatives Prepaid expenses and other current assets 11 15 Other accrued liabilities — 3 Total Derivatives Designated as Hedging Instruments 32 62 108 68 Derivatives Not Designated as Hedging Instruments Foreign currency forward contracts Prepaid expenses and other current assets 52 40 Other accrued liabilities 29 15 Total derivatives $ 84 $ 102 $ 137 $ 83 (1) See Note 6 – Fair Value Measurements for further information about how the fair value of derivative assets and liabilities are determined. 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 or (Loss) Location of Gain or Amount of Gain or (Loss) Reclassified from AOCI into Earnings (1) Three Months Ended Three Months Ended (In millions) 2020 2019 2020 2019 Derivatives in Cash Flow Hedging Relationships: Foreign currency forward contracts $ (34) $ (21) Net sales $ (5) $ 6 Interest rate-related derivatives 3 5 Interest expense — — (31) (16) (5) 6 Derivatives in Net Investment Hedging Relationships (2) : Foreign currency forward contracts (3) (79) (37) — — Total derivatives $ (110) $ (53) $ (5) $ 6 (1) The amount reclassified into earnings as a result of the discontinuance of cash flow hedges because probable forecasted transactions will no longer occur by the end of the original time period was not material. (2) During the three months ended December 31, 2020 and December 31, 2019, the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $5 million and $13 million, respectively. (3) Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets. Amount of Gain or (Loss) Location of Gain or Amount of Gain or (Loss) Reclassified from AOCI into Earnings (1) Six Months Ended Six Months Ended (In millions) 2020 2019 2020 2019 Derivatives in Cash Flow Hedging Relationships: Foreign currency forward contracts $ (65) $ 4 Net sales $ (4) $ 19 Interest rate-related derivatives 3 (9) Interest expense (1) — (62) (5) (5) 19 Derivatives in Net Investment Hedging Relationships (2) : Foreign currency forward contracts (3) (142) (34) — — Total derivatives $ (204) $ (39) $ (5) $ 19 (1) The amount reclassified into earnings as a result of the discontinuance of cash flow hedges because probable forecasted transactions will no longer occur by the end of the original time period was not material. (2) During the six months ended December 31, 2020 and December 31, 2019, the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $10 million and $25 million, respectively. (3) Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets. Amount of Gain or (Loss) Recognized in Earnings on Derivatives (1) Location of Gain or (Loss) Recognized in Earnings on Derivatives Three Months Ended Six Months Ended (In millions) 2020 2019 2020 2019 Derivatives in Fair Value Hedging Relationships: Interest rate swap contracts Interest expense $ (3) $ (1) $ (5) $ 1 (1) Changes in the fair value of the interest rate swap agreements are exactly offset by the change in the fair value of the underlying long-term debt. 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 Carrying Amount of the Cumulative Amount of Fair December 31, 2020 December 31, 2020 Current debt $ 452 $ 2 Long-term debt 258 8 Total debt $ 710 $ 10 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 2020 2019 (In millions) Net Sales Interest Net Sales Interest 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 $ 4,853 $ 43 $ 4,624 $ 38 The effects of fair value and cash flow hedging relationships: Gain (loss) on fair value hedge relationships – interest rate contracts: Hedged item Not applicable 3 Not applicable 1 Derivatives designated as hedging instruments Not applicable (3) Not applicable (1) Gain (loss) on cash flow hedge relationships – interest rate contracts: Amount of loss reclassified from AOCI into earnings Not applicable — Not applicable — Gain (loss) on cash flow hedge relationships – foreign currency forward contracts: Amount of gain reclassified from AOCI into earnings (5) Not applicable 6 Not applicable Six Months Ended December 31 2020 2019 (In millions) Net Sales Interest Net Sales Interest 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 $ 8,415 $ 88 $ 8,519 $ 70 The effects of fair value and cash flow hedging relationships: Gain (loss) on fair value hedge relationships – interest rate contracts: Hedged item Not applicable 5 Not applicable (1) Derivatives designated as hedging instruments Not applicable (5) Not applicable 1 Gain (loss) on cash flow hedge relationships – interest rate contracts: Amount of loss reclassified from AOCI into earnings Not applicable (1) Not applicable — Gain (loss) on cash flow hedge relationships – foreign currency forward contracts: Amount of gain reclassified from AOCI into earnings (4) Not applicable 19 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 or (Loss) Location of Gain or (Loss) Recognized in Earnings on Three Months Ended Six Months Ended (In millions) 2020 2019 2020 2019 Derivatives Not Designated as Hedging Instruments: Foreign currency forward contracts Selling, general and administrative $ 42 $ 30 $ 63 $ 3 Cash Flow Hedges The Company enters into foreign currency forward contracts, and may enter into foreign currency option 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 have been designated as cash flow hedges and have varying maturities through the end of September 2022. Hedge effectiveness of the foreign currency forward contracts is based on the forward method, which includes time value in the effectiveness assessment. At December 31, 2020, the Company had cash flow hedges outstanding with a notional amount totaling $1,195 million. 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. For hedge contracts that are no longer deemed highly effective, hedge accounting is discontinued, and gains and losses in AOCI are reclassified to sales when the underlying forecasted transaction occurs. If it is probable that the forecasted transaction will no longer occur, then any gains or losses in AOCI are reclassified to current-period sales. As of December 31, 2020, the Company’s foreign currency cash flow hedges were highly effective. The estimated net loss on the Company’s derivative instruments designated as cash flow hedges as of December 31, 2020 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $25 million. The accumulated net gain (loss) on derivative instruments in AOCI was $(37) million and $20 million as of December 31, 2020 and June 30, 2020, respectively. Fair Value Hedges The Company enters into interest rate derivative contracts to manage the exposure to interest rate fluctuations on its funded indebtedness. The Company has interest rate swap agreements, with notional amounts totaling $450 million and $250 million to effectively convert the fixed rate interest on its 2021 Senior Notes and 2022 Senior Notes, respectively, to variable interest rates based on three-month LIBOR 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. Net Investment Hedges The Company enters into foreign currency forward contracts, designated as net investment hedges, to hedge a portion of its net investment in certain foreign operations. The net gain or loss on these contracts is recorded within translation adjustments, as a component of AOCI on the Company’s consolidated balance sheets. 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 January 2021. Hedge effectiveness of the net investment hedge contracts is based on the spot method. At December 31, 2020, the Company had net investment hedges outstanding with a notional amount totaling $1,879 million. Credit Risk As a matter of policy, the Company enters into derivative contracts only with counterparties that have a long-term credit rating of at least A- or higher by at least two nationally recognized rating agencies. The counterparties to these contracts are major financial institutions. Exposure to credit risk in the event of nonperformance by any of the counterparties is limited to the gross fair value of contracts in asset positions, which totaled $84 million at December 31, 2020. 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. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | 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. 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, 2020: (In millions) Level 1 Level 2 Level 3 Total Assets: Money market funds $ 2,549 $ — $ — $ 2,549 Foreign currency forward contracts — 73 — 73 Interest rate-related derivatives — 11 — 11 Total $ 2,549 $ 84 $ — $ 2,633 Liabilities: Foreign currency forward contracts $ — $ 137 $ — $ 137 Contingent consideration — — 2 2 Total $ — $ 137 $ 2 $ 139 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, 2020: (In millions) Level 1 Level 2 Level 3 Total Assets: Money market funds $ 2,810 $ — $ — $ 2,810 Foreign currency forward contracts — 87 — 87 Interest rate-related derivatives — 15 — 15 Total $ 2,810 $ 102 $ — $ 2,912 Liabilities: Foreign currency forward contracts $ — $ 80 $ — $ 80 Interest rate-related derivatives — 3 — 3 Contingent consideration — — 4 4 Total $ — $ 83 $ 4 $ 87 The estimated fair values of the Company’s financial instruments are as follows: December 31 June 30 (In millions) Carrying Fair Carrying Fair Nonderivatives Cash and cash equivalents $ 5,545 $ 5,545 $ 5,022 $ 5,022 Current and long-term debt 5,383 6,315 6,136 6,902 Contingent consideration 2 2 4 4 Derivatives Foreign currency forward contracts – asset (liability), net (64) (64) 7 7 Interest rate-related derivatives – asset (liability), net 11 11 12 12 The following table presents the Company’s impairment charges for the three and six months ended December 31, 2020 for certain of its nonfinancial assets measured at fair value on a nonrecurring basis, classified as Level 3, due to a change in circumstances that triggered an interim impairment test: (In millions) Impairment charges Date of Fair Value Measurement Fair Value Goodwill $ 54 November 30, 2020 $ — Other intangible assets, net (trademark and customer lists) 27 November 30, 2020 36 Total $ 81 $ 36 (1) See Note 3 - Goodwill and Other Intangible Assets for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs. The following table presents the Company’s impairment charges for the three and six months ended December 31, 2019 for certain of its nonfinancial assets measured at fair value on a nonrecurring basis, classified as Level 3, due to a change in circumstances that triggered an interim impairment test: (In millions) Impairment charges Date of Fair Value Measurement Fair Value Goodwill $ 511 December 31, 2019 $ 264 Other intangible assets, net (trademark) 266 December 31, 2019 412 Total $ 777 $ 676 (1) See Note 3 - Goodwill and Other Intangible Assets for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs. 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 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 LIBOR for contracts with maturities up to 12 months, and swap yield curves for contracts with maturities greater than 12 months. 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 LIBOR forward rates, 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. Contingent consideration – Contingent consideration obligations consist of potential obligations related to the Company’s acquisitions in previous years. The amounts to be paid under these obligations are contingent upon the achievement of stipulated financial targets by the business subsequent to acquisition. At December 31, 2020, the fair values of the contingent consideration related to certain acquisition earn-outs were based on the Company’s estimate of the applicable financial targets as per the terms of the agreements. Significant changes in the projected future operating results would result in a significantly higher or lower fair value measurement. As these are unobservable inputs, the Company’s contingent consideration is classified within Level 3 of the valuation hierarchy. Changes in the fair value of the contingent consideration obligations for six months ended December 31, 2020 are included in Selling, general and administrative expenses in the accompanying consolidated statements of earnings and were as follows: (In millions) Fair Value Contingent consideration at June 30, 2020 $ 4 Changes in fair value (2) Contingent consideration at December 31, 2020 $ 2 |
REVENUE RECOGNITION
REVENUE RECOGNITION | 6 Months Ended |
Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION The Company’s revenue recognition accounting policies are described in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2020. Accounts Receivable Accounts receivable, net is stated net of the allowance for doubtful accounts and customer deductions totaling $66 million and $63 million as of December 31, 2020 and June 30, 2020, respectively. During the first quarter of fiscal 2021, the Company adopted ASC 326 using the modified retrospective transition approach and, accordingly, the prior comparative period was not restated. Under this new standard, the Company is required to measure credit losses based on the Company’s estimate of expected losses rather than incurred losses, which generally results in earlier recognition of allowances for credit losses. In accordance with ASC 326, the Company evaluated certain criteria, including aging and historical write-offs, current economic condition of specific customers and future economic conditions of countries utilizing a consumption index to determine the appropriate allowance for credit losses. The Company writes-off receivables once it is determined that the receivables are no longer collectible and as allowed by local laws. 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 Balance at June 30, 2020 $ 36 ASC 326 cumulative effect adjustment (pre-tax) 4 Provision for expected credit losses 7 Write-offs, net & other (8) Balance at December 31, 2020 $ 39 As a result of the adoption of ASC 326, the Company recorded a cumulative adjustment of approximately $3 million, net of tax, as a reduction to its fiscal 2021 opening balance of retained earnings relating to its trade receivables. The remaining balance of the allowance for doubtful accounts of $27 million, as of December 31, 2020, relates to non-credit losses, which are primarily due to customer deductions. Deferred Revenue Changes in deferred revenue during the period are as follows: Three Months Ended Six Months Ended (In millions) 2020 2019 2020 2019 Deferred revenue, beginning of period $ 409 $ 392 $ 279 $ 361 Revenue recognized that was included in the deferred revenue balance at the beginning of the period (83) (83) (173) (243) Revenue deferred during the period 92 112 308 307 Other 2 4 6 — Deferred revenue, end of period $ 420 $ 425 $ 420 $ 425 Transaction Price Allocated to the Remaining Performance Obligations At December 31, 2020, 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 and gift card liabilities that are unsatisfied (or partially unsatisfied) is $365 million, and the remaining balance will be recognized beyond the next twelve months. |
PENSION AND POST-RETIREMENT BEN
PENSION AND POST-RETIREMENT BENEFIT PLANS | 6 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
PENSION AND POST-RETIREMENT BENEFIT PLANS | PENSION AND POST-RETIREMENT BENEFIT PLANSThe 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, 2020. The components of net periodic benefit cost for the three months ended December 31, 2020 and 2019 consisted of the following: Pension Plans Other than U.S. International Post-retirement (In millions) 2020 2019 2020 2019 2020 2019 Service cost $ 11 $ 10 $ 9 $ 9 $ — $ 1 Interest cost 7 9 3 2 2 1 Expected return on plan assets (13) (13) (3) (4) — — Amortization of: Actuarial loss 5 3 1 2 — — Special termination benefits — — 7 — — — Net periodic benefit cost $ 10 $ 9 $ 17 $ 9 $ 2 $ 2 The components of net periodic benefit cost for the six months ended December 31, 2020 and 2019 consisted of the following: Pension Plans Other than U.S. International Post-retirement (In millions) 2020 2019 2020 2019 2020 2019 Service cost $ 22 $ 20 $ 18 $ 18 $ — $ 2 Interest cost 15 17 5 5 3 3 Expected return on plan assets (26) (26) (6) (7) — (1) Amortization of: Actuarial loss 10 7 2 3 — — Special termination benefits — — 9 — — — Net periodic benefit cost $ 21 $ 18 $ 28 $ 19 $ 3 $ 4 During the six months ended December 31, 2020, the Company made contributions to its international pension plans totaling $18 million. 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 June 30 Other assets $ 138 $ 127 Other accrued liabilities (27) (27) Other noncurrent liabilities (472) (440) Funded status (361) (340) Accumulated other comprehensive loss 314 324 Net amount recognized $ (47) $ (16) |
CONTINGENCIES
CONTINGENCIES | 6 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES Legal Proceedings The Company is involved, from time to time, in litigation and other legal proceedings incidental to its business, including employment, intellectual property, real estate, environmental, regulatory, advertising, trade relations, tax, privacy, and product liability matters (including asbestos-related claims). Management believes that the outcome of current litigation and legal proceedings will not have a material adverse effect upon the Company’s business, results of operations, financial condition or cash flows. However, management’s assessment of the Company’s current litigation and other legal proceedings 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. Reasonably possible losses in addition to the amounts accrued for such litigation and legal proceedings are not material to the Company’s consolidated financial statements. |
STOCK PROGRAMS
STOCK PROGRAMS | 6 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK PROGRAMS | STOCK PROGRAMS Total net stock-based compensation expense is attributable to the granting of, and the remaining requisite service periods of stock options, restricted stock units (“RSUs”), performance share units (“PSUs”), long-term PSUs, and share units. Compensation expense attributable to net stock-based compensation was $105 million and $83 million for the three months ended December 31, 2020 and 2019, respectively, and was $169 million and $139 million for the six months ended December 31, 2020 and 2019, respectively. Stock Options During the six months ended December 31, 2020, the Company granted stock options in respect of approximately 1.5 million shares of Class A Common Stock with an exercise price per share of $218.40 and a weighted-average grant date fair value per share of $54.61. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model. The aggregate intrinsic value of stock options exercised during the six months ended December 31, 2020 was $209 million. Restricted Stock Units The Company granted RSUs in respect of approximately 0.9 million shares of Class A Common Stock during the six months ended December 31, 2020 with a weighted-average grant date fair value per share of $218.10 that, at the time of grant, are scheduled to vest at 0.3 million shares per year, in fiscal 2022, 2023 and 2024. Vesting of RSUs is generally subject to the continued employment or the retirement of the grantees. The RSUs are accompanied by dividend equivalent rights, payable upon settlement of the RSUs either in cash or shares (based on the terms of the particular award) and, as such, were valued at the closing market price of the Company’s Class A Common Stock on the date of grant. Performance Share Units During the six months ended December 31, 2020, the Company granted PSUs with a target payout of approximately 0.1 million shares of Class A Common Stock with a grant date fair value per share of $218.11, which will be settled in stock subject to the achievement of the Company’s net sales and diluted net earnings per common share for the three fiscal years ending June 30, 2023, all subject to continued employment or the retirement of the grantees. For PSUs granted, no settlement will occur for results below the applicable minimum threshold. PSUs are accompanied by dividend equivalent rights that will be payable in cash upon settlement of the PSUs and, as such, were valued at the closing market value of the Company’s Class A Common Stock on the date of grant. In September 2020, approximately 0.2 million shares of the Company’s Class A Common Stock were issued, and related accrued dividends were paid, relative to the target goals set at the time of the issuance, in settlement of 0.5 million PSUs which vested as of June 30, 2020. |
NET EARNINGS ATTRIBUTABLE TO TH
NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE | 6 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE | NET EARNINGS ATTRIBUTABLE TO THE ESTÉE LAUDER COMPANIES INC. PER COMMON SHARE Net earnings attributable to The Estée Lauder Companies Inc. per common share (“basic EPS”) is computed by dividing net earnings attributable to The Estée Lauder Companies Inc. by the weighted-average number of common shares outstanding and shares underlying PSUs and RSUs where the vesting conditions have been met. Net earnings attributable to The Estée Lauder Companies Inc. per common share assuming dilution (“diluted EPS”) is computed by reflecting potential dilution from stock-based awards. A reconciliation between the numerator and denominator of the basic and diluted EPS computations is as follows: Three Months Ended Six Months Ended (In millions, except per share data) 2020 2019 2020 2019 Numerator: Net earnings attributable to The Estée Lauder Companies Inc. $ 873 $ 557 $ 1,396 $ 1,152 Denominator: Weighted-average common shares outstanding – Basic 363.0 360.2 363.4 360.8 Effect of dilutive stock options 3.8 4.7 3.8 4.8 Effect of PSUs 0.2 0.3 0.2 0.2 Effect of RSUs 1.0 1.5 1.1 1.9 Weighted-average common shares outstanding – Diluted 368.0 366.7 368.5 367.7 Net earnings attributable to The Estée Lauder Companies Inc. per common share: Basic $ 2.40 $ 1.55 $ 3.84 $ 3.19 Diluted $ 2.37 $ 1.52 $ 3.79 $ 3.13 As of December 31, 2020 and 2019, the number of shares of Class A Common Stock underlying options that were excluded in the computation of diluted EPS because their inclusion would be anti-dilutive was 1.5 million and 1.3 million shares, respectively. As of December 31, 2020 and 2019, 0.8 million and 1.1 million shares, respectively, of Class A Common Stock underlying PSUs have been excluded from the calculation of diluted EPS because the number of shares ultimately issued is contingent on the achievement of certain performance targets of the Company, as discussed in Note 10 – Stock Programs . |
EQUITY
EQUITY | 6 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
EQUITY | EQUITY Total Stockholders’ Equity – The Estée Lauder Companies Inc. Three Months Ended Six Months Ended (In millions) 2020 2019 2020 2019 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 4,913 4,514 4,790 4,403 Common stock dividends — 1 1 2 Stock-based compensation 155 100 277 210 Paid-in capital, end of the period 5,068 4,615 5,068 4,615 Retained earnings, beginning of the period 10,480 10,393 10,134 9,984 Common stock dividends (194) (175) (368) (332) Net earnings attributable to The Estée Lauder Companies Inc. 873 557 1,396 1,152 Cumulative effect of adoption of new accounting standards — — (3) (29) Retained earnings, end of the period 11,159 10,775 11,159 10,775 Accumulated other comprehensive loss, beginning of the period (594) (627) (665) (563) Other comprehensive income (loss) 211 58 282 (6) Accumulated other comprehensive loss, end of the period (383) (569) (383) (569) Treasury stock, beginning of the period (10,353) (9,756) (10,330) (9,444) Acquisition of treasury stock — (426) — (703) Stock-based compensation (76) (71) (99) (106) Treasury stock, end of the period (10,429) (10,253) (10,429) (10,253) Total stockholders’ equity – The Estée Lauder Companies Inc. 5,421 4,574 5,421 4,574 Noncontrolling interests, beginning of the period 29 28 27 25 Net earnings attributable to noncontrolling interests 4 4 6 7 Distribution to noncontrolling interest holders — (4) — (4) Other comprehensive (income) loss 2 (1) 2 (1) Noncontrolling interests, end of the period 35 27 35 27 Total equity $ 5,456 $ 4,601 $ 5,456 $ 4,601 Cash dividends declared per common share $ .53 $ .48 $ 1.01 $ .91 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, 2020: Date Declared Record Date Payable Date Amount per Share August 19, 2020 August 31, 2020 September 15, 2020 $ .48 October 30, 2020 November 30, 2020 December 15, 2020 $ .53 On February 4, 2021, a dividend was declared in the amount of $.53 per share on the Company’s Class A and Class B Common Stock. The dividend is payable in cash on March 15, 2021 to stockholders of record at the close of business on February 26, 2021. Common Stock Beginning in early February 2020, the Company temporarily suspended its repurchase of shares of the Company's Class A Common Stock. The Company may resume repurchases in the future. During the six months ended December 31, 2020, approximately 2.2 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 Income The following table represents changes in AOCI, net of tax, by component for the six months ended December 31, 2020: (In millions) Net Cash Retirement Plan and Other Retiree Benefit Adjustments Translation Total Balance at June 30, 2020 $ 14 $ (244) $ (435) $ (665) OCI before reclassifications (48) (2) (1) 318 (2) 268 Amounts reclassified to Net earnings 4 10 — 14 Net current-period OCI (44) 8 318 282 Balance at December 31, 2020 $ (30) $ (236) $ (117) $ (383) (1) Consists of foreign currency translation losses. (2) See Note 5 – Derivative Financial Instruments for gains (losses) relating to net investment hedges. The following table represents the effects of reclassification adjustments from AOCI into net earnings for the three and six months ended December 31, 2020 and 2019: Amount Reclassified from AOCI Affected Line Item in Three Months Ended Six Months Ended (In millions) 2020 2019 2020 2019 Gain (Loss) on Cash Flow Hedges Foreign currency forward contracts $ (5) $ 6 $ (4) $ 19 Net sales Interest rate-related derivatives — — (1) — Interest expense (5) 6 (5) 19 Benefit (provision) for deferred taxes 1 (2) 1 (5) Provision for income taxes $ (4) $ 4 (4) $ 14 Net earnings Retirement Plan and Other Retiree Benefit Adjustments Amortization of actuarial loss $ (6) $ (5) $ (12) $ (10) Earnings before income taxes (1) Benefit for deferred taxes 1 1 2 2 Provision for income taxes $ (5) $ (4) $ (10) $ (8) Net earnings Cumulative Translation Adjustments Gain on previously held equity method investment $ — $ 4 $ — $ 4 Other income Loss on liquidation of an investment in a foreign subsidiary — — — (6) Restructuring and other charges $ — $ 4 — $ (2) Net earnings Total reclassification adjustments, net $ (9) $ 4 $ (14) $ 4 Net earnings (1) See Note 8 – Pension and Post-Retirement Benefit Plans for additional information. |
STATEMENT OF CASH FLOWS
STATEMENT OF CASH FLOWS | 6 Months Ended |
Dec. 31, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
STATEMENT OF CASH FLOWS | STATEMENT OF CASH FLOWS Supplemental cash flow information for the six months ended December 31, 2020 and 2019 is as follows: (In millions) 2020 2019 Cash: Cash paid during the period for interest $ 84 $ 63 Cash paid during the period for income taxes $ 320 $ 314 Non-cash investing and financing activities: Capitalized interest and asset retirement obligations incurred $ 1 $ — Property, plant and equipment accrued but unpaid $ 63 $ 53 Right-of-use assets obtained in exchange for new finance lease liabilities $ 1 $ — Right-of-use assets obtained in exchange for new operating lease liabilities $ 148 $ 110 |
SEGMENT DATA AND RELATED INFORM
SEGMENT DATA AND RELATED INFORMATION | 6 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT DATA AND RELATED INFORMATION | SEGMENT DATA AND RELATED INFORMATION Reportable operating segments include components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (the “Chief Executive”) in deciding how to allocate resources and in assessing performance. Although the Company operates in one business segment, beauty products, management also evaluates performance on a product category basis. Product category performance is measured based upon net sales before returns associated with restructuring and other activities, and earnings before income taxes, other components of net periodic benefit cost, interest expense, interest income and investment income, net, other income, net, and charges associated with restructuring and other activities. Returns and charges associated with restructuring and other activities are not allocated to our 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. The accounting policies for the Company’s reportable segments are substantially the same as those for the consolidated financial statements, as described in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2020. 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 Executive or included herein. There has been no significant variance in the total or long-lived asset values associated with the Company’s segment data since June 30, 2020. Three Months Ended Six Months Ended (In millions) 2020 2019 2020 2019 PRODUCT CATEGORY DATA Net sales: Skin Care $ 2,819 $ 2,205 $ 4,854 $ 4,047 Makeup 1,247 1,660 2,225 3,103 Fragrance 618 581 1,024 1,043 Hair Care 154 162 290 298 Other 15 16 22 28 Net sales $ 4,853 $ 4,624 $ 8,415 $ 8,519 Operating income (loss) before charges associated with restructuring and other activities: Skin Care $ 928 $ 772 $ 1,649 $ 1,404 Makeup 28 (611) (43) (507) Fragrance 141 97 201 163 Hair Care 4 12 7 12 Other (1) 4 — 6 1,100 274 1,814 1,078 Reconciliation: Charges associated with restructuring and other activities (37) (13) (46) (38) Interest expense (43) (38) (88) (70) Interest income and investment income, net 17 13 31 27 Other components of net periodic benefit cost (7) (1) (10) (2) Other income — 576 — 576 Earnings before income taxes $ 1,030 $ 811 $ 1,701 $ 1,571 GEOGRAPHIC DATA (1) Net sales: The Americas $ 1,048 $ 1,226 $ 1,921 $ 2,386 Europe, the Middle East & Africa 2,030 2,079 3,570 3,756 Asia/Pacific 1,775 1,319 2,924 2,377 Net sales $ 4,853 $ 4,624 $ 8,415 $ 8,519 Operating income (loss): The Americas $ 36 $ (529) $ 101 $ (354) Europe, the Middle East & Africa 657 505 1,068 882 Asia/Pacific 407 298 645 550 1,100 274 1,814 1,078 Charges associated with restructuring and other activities (37) (13) (46) (38) Operating income $ 1,063 $ 261 $ 1,768 $ 1,040 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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 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, 2020. Certain amounts in the consolidated financial statements of prior years have been reclassified to conform to current year presentation. |
Management Estimates | 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, 2020. 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, including those related to the impacts of the COVID-19 pandemic, will be reflected in the consolidated financial statements in future periods. |
Currency Translation and Transactions | 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, net of tax, reported as translation adjustments through other comprehensive income (loss) (“OCI”) attributable to The Estée Lauder Companies Inc. were $227 million and $75 million, net of tax, during the three months ended December 31, 2020 and 2019, respectively, and $318 million and $3 million, net of tax, during the six months ended December 31, 2020 and 2019, 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 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 (losses) on foreign currency transactions of $27 million during the three months ended December 31, 2019, and $(2) million and $24 million during the six months ended December 31, 2020 and 2019, respectively. The net exchange loss on foreign currency transactions during the three months ended December 31, 2020 was not material. |
Concentration of Credit Risk | Concentration of Credit RiskThe Company is a worldwide manufacturer, marketer and distributor of skin care, makeup, fragrance and hair care products. The Company’s sales subject to credit risk are made primarily to department stores, perfumeries, specialty multi-brand retailers and retailers in its travel retail business. The Company grants credit to qualified customers. As a result of the COVID-19 pandemic, the Company has enhanced its assessment of its customers' abilities to pay with a greater focus on factors affecting their liquidity and less on historical payment performance. While the Company does not believe it is exposed significantly to any undue concentration of credit risk at this time, it continues to monitor the extent of the impact of the COVID-19 pandemic on its customers' abilities, individually and collectively, to make timely payments. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment consists of the following: (In millions) December 31 June 30 Assets (Useful Life) Land $ 57 $ 33 Buildings and improvements (10 to 40 years) 457 400 Machinery and equipment (3 to 10 years) 969 865 Computer hardware and software (4 to 10 years) 1,417 1,335 Furniture and fixtures (5 to 10 years) 126 120 Leasehold improvements 2,471 2,381 5,497 5,134 Less accumulated depreciation and amortization (3,355) (3,079) $ 2,142 $ 2,055 The cost of assets related to projects in progress of $601 million and $501 million as of December 31, 2020 and June 30, 2020, respectively, is included in their respective asset categories above. Depreciation and amortization of property, plant and equipment was $126 million and $127 million during the three months ended December 31, 2020 and 2019, respectively, and $251 million and $252 million during the six months ended December 31, 2020 and 2019, 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. |
Income Taxes | Income Taxes The effective rate for income taxes for the three and six months ended December 31, 2020 and 2019 are as follows: Three Months Ended Six Months Ended 2020 2019 2020 2019 Effective rate for income taxes 14.9 % 30.8 % 17.6 % 26.2 % Basis-point change from the prior-year period (1,590) (860) For the three and six months ended December 31, 2020, the decrease in the effective tax rate was primarily attributable to a lower effective tax rate on the Company's foreign operations and the impact of nondeductible goodwill charges recognized in the second quarter of fiscal 2020. The effective tax rate for the three and six months ended December 31, 2020 included the impact of the U.S. government issuance of final global intangible low-taxed income (“GILTI”) tax regulations in July 2020 under the Tax Cuts and Jobs Act that provide for a high-tax exception to the GILTI tax. These regulations are retroactive to the original enactment of the GILTI tax provision, which includes the Company's 2019 and 2020 fiscal years. The Company has elected to apply the GILTI high-tax exception to fiscal 2021, 2020 and 2019. The election for fiscal 2021 resulted in reductions of 160 basis points and 150 basis points to the effective tax rates for the three and six months ended December 31, 2020, respectively. The impact of the elections with respect to fiscal 2020 and 2019 was recognized as a discrete item in the provision for income taxes in the second quarter of fiscal 2021 and resulted in reductions of 470 basis points and 280 basis points to the effective tax rates for the three and six months ended December 31, 2020, respectively. As of December 31, 2020 and June 30, 2020, the gross amount of unrecognized tax benefits, exclusive of interest and penalties, totaled $70 million. The total amount of unrecognized tax benefits at December 31, 2020 that, if recognized, would affect the effective tax rate was $55 million. The total gross interest and penalties accrued related to unrecognized tax benefits during the three and six months ended December 31, 2020 in the accompanying consolidated statements of earnings were not material. The total gross accrued interest and penalties in the accompanying consolidated balance sheets at December 31, 2020 and June 30, 2020, was $14 million and $13 million, respectively. On the basis of the information available as of December 31, 2020, the Company does not expect significant changes to the total amount of unrecognized tax benefits within the next twelve months. |
Recently Adopted and Issued Accounting Standards | Recently Adopted Accounting Standards Measurement of Credit Losses on Financial Instruments (ASC Topic 326 – Financial Instruments – Credit Losses) (“ASC 326”) In June 2016, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that requires companies to utilize an impairment model for most financial assets measured at amortized cost and certain other financial instruments, which include trade and other receivables, loans and held-to-maturity debt securities, to record an allowance for credit risk based on expected losses rather than incurred losses. In addition, this guidance changes the recognition method for credit losses on available-for-sale debt securities, which can occur as a result of market and credit risk, and requires additional disclosures. In general, modified retrospective adoption will be required for all outstanding instruments that fall under this guidance. In November 2019, the FASB issued authoritative guidance (ASU 2019-11 – Codification Improvements to Topic 326, Financial Instruments – Credit Losses) that amends ASC Topic 326 to clarify, improve and amend certain aspects of this guidance, such as disclosures related to accrued interest receivables and the estimation of credit losses associated with financial assets secured by collateral. In February 2020, the FASB issued authoritative guidance (ASU 2020-02 – Financial Instruments – Credit Losses (Topic 326) and Leases (Topic 842)) that amends and clarifies Topic 326 and Topic 842. For Topic 326, the codification was updated to include the Securities and Exchange Commission staff interpretations associated with registrants engaged in lending activities. Effective for the Company – Fiscal 2021 first quarter. Impact on consolidated financial statements – On July 1, 2020, the Company adopted ASC 326. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. See Note 7 – Revenue Recognition for further discussion. Goodwill and Other – Internal-Use Software (ASU 2018-15 – Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract) In August 2018, the FASB issued authoritative guidance that permits companies to capitalize the costs incurred for setting up business systems that operate on cloud technology. The new guidance aligns the requirement for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance does not affect the accounting for the service element of a hosting arrangement that is a service contract. Capitalized costs associated with a hosting arrangement that is a service contract must be amortized over the term of the hosting arrangement to the same line item in the income statement as the expense for fees for the hosting arrangement. Effective for the Company – Fiscal 2021 first quarter, with early adoption permitted in any interim period. This guidance can be adopted either retrospectively, or prospectively to all implementation costs incurred after the date of adoption. Impact on consolidated financial statements – On July 1, 2020, the Company adopted this guidance prospectively to all implementation costs incurred after the date of adoption. The adoption of this standard did not have a material impact on the Company's consolidated financial statements. Recently Issued Accounting Standards Reference Rate Reform (ASC Topic 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”), which is expected to be phased out at the end of calendar 2021, and applies to lease contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that have LIBOR as the benchmark rate. 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 all derivative instruments affected by the changes to interest rates used for discounting, margining or contract price alignment, regardless of whether they reference LIBOR or another rate expected to be discontinued as a result of reference rate reform, an entity may apply certain practical expedients in ASC Topic 848. Effective for the Company – This guidance can be applied for a limited time through December 31, 2022. The guidance will no longer be available to apply after December 31, 2022. Impact on consolidated financial statements – The Company is currently assessing the impact of applying this guidance on its existing derivative contracts, leases and other arrangements, as well as when to adopt this guidance. Income Taxes (ASU 2019-12 – Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes) In December 2019, the FASB issued authoritative guidance that simplifies the accounting for income taxes by removing certain exceptions and making simplifications in other areas. Effective for the Company – Fiscal 2022 first quarter, with early adoption permitted in any interim period. If adopted early, the Company must adopt all the amendments in the same period. The amendments have differing adoption methods including retrospectively, prospectively and/or modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption, depending on the specific change. Impact on consolidated financial statements – The Company is currently evaluating the impact of applying this guidance and believes that it has transactions that may fall under the scope. No other recently issued accounting pronouncements are expected to have a material impact on the Company’s consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of inventory and promotional merchandise | Inventory and promotional merchandise consists of the following: (In millions) December 31 June 30 Raw materials $ 550 $ 542 Work in process 258 305 Finished goods 1,072 995 Promotional merchandise 236 220 $ 2,116 $ 2,062 |
Schedule of property, plant and equipment | Property, plant and equipment consists of the following: (In millions) December 31 June 30 Assets (Useful Life) Land $ 57 $ 33 Buildings and improvements (10 to 40 years) 457 400 Machinery and equipment (3 to 10 years) 969 865 Computer hardware and software (4 to 10 years) 1,417 1,335 Furniture and fixtures (5 to 10 years) 126 120 Leasehold improvements 2,471 2,381 5,497 5,134 Less accumulated depreciation and amortization (3,355) (3,079) $ 2,142 $ 2,055 |
Schedule of effective rate for income taxes | The effective rate for income taxes for the three and six months ended December 31, 2020 and 2019 are as follows: Three Months Ended Six Months Ended 2020 2019 2020 2019 Effective rate for income taxes 14.9 % 30.8 % 17.6 % 26.2 % Basis-point change from the prior-year period (1,590) (860) |
Schedule of other accrued liabilities | Other accrued liabilities consist of the following: (In millions) December 31 June 30 Advertising, merchandising and sampling $ 353 $ 256 Employee compensation 494 424 Deferred revenue 365 222 Payroll and other taxes 392 250 Accrued income taxes 319 208 Sales return accrual 285 212 Accrued general and administrative expenses 295 233 Other 761 600 $ 3,264 $ 2,405 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill by product category and related change in the carrying amount | 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, 2020 Goodwill $ 519 $ 1,210 $ 254 $ 389 $ 2,372 Accumulated impairments (95) (817) (26) (33) (971) 424 393 228 356 1,401 Goodwill acquired during the period — 6 — 4 10 Impairment charges (54) — — — (54) Translation adjustments, goodwill 36 — 9 3 48 Translation adjustments, accumulated impairments (2) — — (2) (4) (20) 6 9 5 — Balance as of December 31, 2020 Goodwill 555 1,216 263 396 2,430 Accumulated impairments (151) (817) (26) (35) (1,029) $ 404 $ 399 $ 237 $ 361 $ 1,401 |
Schedule of other intangible assets, by type | Other intangible assets consist of the following: December 31, 2020 June 30, 2020 (In millions) Gross Accumulated Total Net Gross Accumulated Total Net Amortizable intangible assets: Customer lists and other $ 1,684 $ 537 $ 1,147 $ 1,590 $ 475 $ 1,115 License agreements 43 43 — 43 43 — $ 1,727 $ 580 1,147 $ 1,633 $ 518 1,115 Non-amortizable intangible assets: Trademarks and other 1,277 1,223 Total intangible assets $ 2,424 $ 2,338 |
Estimated aggregate amortization expense for the remainder of the current fiscal year and the next four years | The estimated aggregate amortization expense for the remainder of fiscal 2021 and for each of the next four fiscal years is as follows: Fiscal (In millions) 2021 2022 2023 2024 2025 Estimated aggregate amortization expense $ 52 $ 105 $ 104 $ 104 $ 104 |
Summary of impairment charges and carrying value of intangible assets | A summary of the impairment charges for the three and six months ended December 31, 2019 and the remaining trademark and goodwill carrying values as of December 31, 2019, for each reporting unit, are as follows: (In millions) Impairment Charge Carrying Value Reporting Unit: Trademark Goodwill Trademark Goodwill Too Faced $ 211 $ 430 $ 314 $ 175 BECCA 33 35 65 63 Smashbox 22 46 33 26 Total $ 266 $ 511 $ 412 $ 264 |
CHARGES ASSOCIATED WITH RESTR_2
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Restructuring and Related Activities [Abstract] | |
Schedule of aggregate restructuring and other activities | Charges associated with restructuring activities for the three months ended December 31, 2020 were as follows: Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Leading Beauty Forward Program $ — $ 2 $ (2) $ 3 $ 3 Post-COVID Business Acceleration Program — — 34 — 34 Total $ — $ 2 $ 32 $ 3 $ 37 Charges associated with restructuring activities for the six months ended December 31, 2020 were as follows: Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Leading Beauty Forward Program $ — $ 5 $ (10) $ 5 $ — Post-COVID Business Acceleration Program — — 46 — 46 Total $ — $ 5 $ 36 $ 5 $ 46 |
Schedule of total cumulative charges expected to be incurred associated with restructuring and other activities | The LBF Program approved restructuring and other charges expected to be incurred were: Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Total Charges (Adjustments) Approved Cumulative through June 30, 2020 $ 13 $ 85 $ 511 $ 358 $ 967 Six months ended December 31, 2020 1 — (7) 6 — Cumulative through December 31, 2020 $ 14 $ 85 $ 504 $ 364 $ 967 Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Total Charges (Adjustments) Approved Six months ended December 31, 2020 $ 5 $ (1) $ 46 $ 16 $ 66 |
Schedule of total cumulative charges by type approved associated with restructuring initiatives | Included in the above table, cumulative LBF Program restructuring initiatives approved by the Company by major cost type were: (In millions) Employee- Asset- Contract Other Exit Total Restructuring Charges (Adjustments) Approved Cumulative through June 30, 2020 $ 460 $ 28 $ 7 $ 16 $ 511 Six months ended December 31, 2020 (8) — 1 — (7) Cumulative through December 31, 2020 $ 452 $ 28 $ 8 $ 16 $ 504 Included in the above table, cumulative PCBA Program restructuring initiatives approved by the Company through December 31, 2020 by major cost type were: (In millions) Employee- Asset- Contract Other Exit Total Restructuring Charges (Adjustments) Approved Six months ended December 31, 2020 $ 46 $ 4 $ (7) $ 3 $ 46 |
Schedule of total cumulative charges recorded associated with restructuring and other activities | Total cumulative charges recorded associated with restructuring and other activities for the LBF Program were: (In millions) Sales Cost of Sales Operating Expenses Total Restructuring Other Total Charges (Adjustments) Cumulative through June 30, 2020 $ 14 $ 65 $ 491 $ 304 $ 874 Six months ended December 31, 2020 — 5 (10) 5 — Cumulative through December 31, 2020 $ 14 $ 70 $ 481 $ 309 $ 874 Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Total Charges Six months ended December 31, 2020 $ — $ — $ 46 $ — $ 46 |
Schedule of total cumulative charges by type recorded associated with restructuring and other activities | (In millions) Employee- Asset- Contract Other Exit Total Restructuring Charges (Adjustments) Cumulative through June 30, 2020 $ 451 $ 27 $ 6 $ 7 $ 491 Six months ended December 31, 2020 (12) 1 1 — (10) Cumulative through December 31, 2020 $ 439 $ 28 $ 7 $ 7 $ 481 (In millions) Employee- Asset- Contract Other Exit Total Restructuring Charges Six months ended December 31, 2020 $ 45 $ — $ 1 $ — $ 46 |
Schedule of changes in accrued restructuring charges | Changes in accrued restructuring charges for the six months ended December 31, 2020 relating to the LBF Program were: (In millions) Employee- Asset- Contract Other Exit Total Balance at June 30, 2020 $ 112 $ — $ — $ — $ 112 Charges (adjustments) (12) 1 1 — (10) Cash payments (36) — — — (36) Translation adjustments 2 — — — 2 Balance at December 31, 2020 $ 66 $ 1 $ 1 $ — $ 68 Changes in accrued restructuring charges for the six months ended December 31, 2020 relating to the PCBA Program were: (In millions) Employee- Asset- Contract Other Exit Total Charges $ 45 $ — $ 1 $ — $ 46 Cash payments (4) — (1) — (5) Balance at December 31, 2020 $ 41 $ — $ — $ — $ 41 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair values of the derivative financial instruments included in the consolidated balance sheets | 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 December 31 June 30 Balance Sheet December 31 June 30 Derivatives Designated as Hedging Instruments Foreign currency cash flow hedges Prepaid expenses and other current assets $ — $ 26 Other accrued liabilities $ 37 $ 3 Net investment hedges Prepaid expenses and other current assets 21 21 Other accrued liabilities 71 62 Interest rate-related derivatives Prepaid expenses and other current assets 11 15 Other accrued liabilities — 3 Total Derivatives Designated as Hedging Instruments 32 62 108 68 Derivatives Not Designated as Hedging Instruments Foreign currency forward contracts Prepaid expenses and other current assets 52 40 Other accrued liabilities 29 15 Total derivatives $ 84 $ 102 $ 137 $ 83 (1) See Note 6 – Fair Value Measurements for further information about how the fair value of derivative assets and liabilities are determined. |
Schedule of gains and losses related to derivative financial instruments designated as hedging instruments that are included in the assessment of effectiveness | 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 or (Loss) Location of Gain or Amount of Gain or (Loss) Reclassified from AOCI into Earnings (1) Three Months Ended Three Months Ended (In millions) 2020 2019 2020 2019 Derivatives in Cash Flow Hedging Relationships: Foreign currency forward contracts $ (34) $ (21) Net sales $ (5) $ 6 Interest rate-related derivatives 3 5 Interest expense — — (31) (16) (5) 6 Derivatives in Net Investment Hedging Relationships (2) : Foreign currency forward contracts (3) (79) (37) — — Total derivatives $ (110) $ (53) $ (5) $ 6 (1) The amount reclassified into earnings as a result of the discontinuance of cash flow hedges because probable forecasted transactions will no longer occur by the end of the original time period was not material. (2) During the three months ended December 31, 2020 and December 31, 2019, the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $5 million and $13 million, respectively. (3) Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets. Amount of Gain or (Loss) Location of Gain or Amount of Gain or (Loss) Reclassified from AOCI into Earnings (1) Six Months Ended Six Months Ended (In millions) 2020 2019 2020 2019 Derivatives in Cash Flow Hedging Relationships: Foreign currency forward contracts $ (65) $ 4 Net sales $ (4) $ 19 Interest rate-related derivatives 3 (9) Interest expense (1) — (62) (5) (5) 19 Derivatives in Net Investment Hedging Relationships (2) : Foreign currency forward contracts (3) (142) (34) — — Total derivatives $ (204) $ (39) $ (5) $ 19 (1) The amount reclassified into earnings as a result of the discontinuance of cash flow hedges because probable forecasted transactions will no longer occur by the end of the original time period was not material. (2) During the six months ended December 31, 2020 and December 31, 2019, the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $10 million and $25 million, respectively. (3) Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets. Amount of Gain or (Loss) Recognized in Earnings on Derivatives (1) Location of Gain or (Loss) Recognized in Earnings on Derivatives Three Months Ended Six Months Ended (In millions) 2020 2019 2020 2019 Derivatives in Fair Value Hedging Relationships: Interest rate swap contracts Interest expense $ (3) $ (1) $ (5) $ 1 (1) Changes in the fair value of the interest rate swap agreements are exactly offset by the change in the fair value of the underlying long-term debt. |
Schedule of cumulative amount of fair value hedging adjustments for designated and qualifying hedged items | 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 Carrying Amount of the Cumulative Amount of Fair December 31, 2020 December 31, 2020 Current debt $ 452 $ 2 Long-term debt 258 8 Total debt $ 710 $ 10 |
Schedule of effects of fair value and cash flow hedging relationships for designated and qualified hedging instruments | 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 2020 2019 (In millions) Net Sales Interest Net Sales Interest 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 $ 4,853 $ 43 $ 4,624 $ 38 The effects of fair value and cash flow hedging relationships: Gain (loss) on fair value hedge relationships – interest rate contracts: Hedged item Not applicable 3 Not applicable 1 Derivatives designated as hedging instruments Not applicable (3) Not applicable (1) Gain (loss) on cash flow hedge relationships – interest rate contracts: Amount of loss reclassified from AOCI into earnings Not applicable — Not applicable — Gain (loss) on cash flow hedge relationships – foreign currency forward contracts: Amount of gain reclassified from AOCI into earnings (5) Not applicable 6 Not applicable Six Months Ended December 31 2020 2019 (In millions) Net Sales Interest Net Sales Interest 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 $ 8,415 $ 88 $ 8,519 $ 70 The effects of fair value and cash flow hedging relationships: Gain (loss) on fair value hedge relationships – interest rate contracts: Hedged item Not applicable 5 Not applicable (1) Derivatives designated as hedging instruments Not applicable (5) Not applicable 1 Gain (loss) on cash flow hedge relationships – interest rate contracts: Amount of loss reclassified from AOCI into earnings Not applicable (1) Not applicable — Gain (loss) on cash flow hedge relationships – foreign currency forward contracts: Amount of gain reclassified from AOCI into earnings (4) Not applicable 19 Not applicable |
Schedule of gains and losses related to derivative financial instruments not designated as hedging instruments | 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 or (Loss) Location of Gain or (Loss) Recognized in Earnings on Three Months Ended Six Months Ended (In millions) 2020 2019 2020 2019 Derivatives Not Designated as Hedging Instruments: Foreign currency forward contracts Selling, general and administrative $ 42 $ 30 $ 63 $ 3 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of financial assets and liabilities measured at fair value on a recurring basis | 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, 2020: (In millions) Level 1 Level 2 Level 3 Total Assets: Money market funds $ 2,549 $ — $ — $ 2,549 Foreign currency forward contracts — 73 — 73 Interest rate-related derivatives — 11 — 11 Total $ 2,549 $ 84 $ — $ 2,633 Liabilities: Foreign currency forward contracts $ — $ 137 $ — $ 137 Contingent consideration — — 2 2 Total $ — $ 137 $ 2 $ 139 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, 2020: (In millions) Level 1 Level 2 Level 3 Total Assets: Money market funds $ 2,810 $ — $ — $ 2,810 Foreign currency forward contracts — 87 — 87 Interest rate-related derivatives — 15 — 15 Total $ 2,810 $ 102 $ — $ 2,912 Liabilities: Foreign currency forward contracts $ — $ 80 $ — $ 80 Interest rate-related derivatives — 3 — 3 Contingent consideration — — 4 4 Total $ — $ 83 $ 4 $ 87 |
Schedule of estimated fair values of financial instruments | The estimated fair values of the Company’s financial instruments are as follows: December 31 June 30 (In millions) Carrying Fair Carrying Fair Nonderivatives Cash and cash equivalents $ 5,545 $ 5,545 $ 5,022 $ 5,022 Current and long-term debt 5,383 6,315 6,136 6,902 Contingent consideration 2 2 4 4 Derivatives Foreign currency forward contracts – asset (liability), net (64) (64) 7 7 Interest rate-related derivatives – asset (liability), net 11 11 12 12 |
Impairment charges measured at fair value on a nonrecurring basis, classified as Level 3 | The following table presents the Company’s impairment charges for the three and six months ended December 31, 2020 for certain of its nonfinancial assets measured at fair value on a nonrecurring basis, classified as Level 3, due to a change in circumstances that triggered an interim impairment test: (In millions) Impairment charges Date of Fair Value Measurement Fair Value Goodwill $ 54 November 30, 2020 $ — Other intangible assets, net (trademark and customer lists) 27 November 30, 2020 36 Total $ 81 $ 36 (1) See Note 3 - Goodwill and Other Intangible Assets for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs. The following table presents the Company’s impairment charges for the three and six months ended December 31, 2019 for certain of its nonfinancial assets measured at fair value on a nonrecurring basis, classified as Level 3, due to a change in circumstances that triggered an interim impairment test: (In millions) Impairment charges Date of Fair Value Measurement Fair Value Goodwill $ 511 December 31, 2019 $ 264 Other intangible assets, net (trademark) 266 December 31, 2019 412 Total $ 777 $ 676 (1) See Note 3 - Goodwill and Other Intangible Assets for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs. |
Changes in the fair value of the contingent consideration obligations | Changes in the fair value of the contingent consideration obligations for six months ended December 31, 2020 are included in Selling, general and administrative expenses in the accompanying consolidated statements of earnings and were as follows: (In millions) Fair Value Contingent consideration at June 30, 2020 $ 4 Changes in fair value (2) Contingent consideration at December 31, 2020 $ 2 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of changes in allowance for credit losses | Changes in the allowance for credit losses are as follows: (In millions) December 31 Balance at June 30, 2020 $ 36 ASC 326 cumulative effect adjustment (pre-tax) 4 Provision for expected credit losses 7 Write-offs, net & other (8) Balance at December 31, 2020 $ 39 |
Schedule of significant changes in deferred revenue | Changes in deferred revenue during the period are as follows: Three Months Ended Six Months Ended (In millions) 2020 2019 2020 2019 Deferred revenue, beginning of period $ 409 $ 392 $ 279 $ 361 Revenue recognized that was included in the deferred revenue balance at the beginning of the period (83) (83) (173) (243) Revenue deferred during the period 92 112 308 307 Other 2 4 6 — Deferred revenue, end of period $ 420 $ 425 $ 420 $ 425 |
PENSION AND POST-RETIREMENT B_2
PENSION AND POST-RETIREMENT BENEFIT PLANS (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
Schedule of components of net periodic benefit cost for pension and other post-retirement benefit plans | The components of net periodic benefit cost for the three months ended December 31, 2020 and 2019 consisted of the following: Pension Plans Other than U.S. International Post-retirement (In millions) 2020 2019 2020 2019 2020 2019 Service cost $ 11 $ 10 $ 9 $ 9 $ — $ 1 Interest cost 7 9 3 2 2 1 Expected return on plan assets (13) (13) (3) (4) — — Amortization of: Actuarial loss 5 3 1 2 — — Special termination benefits — — 7 — — — Net periodic benefit cost $ 10 $ 9 $ 17 $ 9 $ 2 $ 2 The components of net periodic benefit cost for the six months ended December 31, 2020 and 2019 consisted of the following: Pension Plans Other than U.S. International Post-retirement (In millions) 2020 2019 2020 2019 2020 2019 Service cost $ 22 $ 20 $ 18 $ 18 $ — $ 2 Interest cost 15 17 5 5 3 3 Expected return on plan assets (26) (26) (6) (7) — (1) Amortization of: Actuarial loss 10 7 2 3 — — Special termination benefits — — 9 — — — Net periodic benefit cost $ 21 $ 18 $ 28 $ 19 $ 3 $ 4 |
Schedule of amounts recognized in the consolidated balance sheets related to the Company's pension and post-retirement benefit plans | 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 June 30 Other assets $ 138 $ 127 Other accrued liabilities (27) (27) Other noncurrent liabilities (472) (440) Funded status (361) (340) Accumulated other comprehensive loss 314 324 Net amount recognized $ (47) $ (16) |
NET EARNINGS ATTRIBUTABLE TO _2
NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation between the numerator and denominator of the basic and diluted EPS computations | A reconciliation between the numerator and denominator of the basic and diluted EPS computations is as follows: Three Months Ended Six Months Ended (In millions, except per share data) 2020 2019 2020 2019 Numerator: Net earnings attributable to The Estée Lauder Companies Inc. $ 873 $ 557 $ 1,396 $ 1,152 Denominator: Weighted-average common shares outstanding – Basic 363.0 360.2 363.4 360.8 Effect of dilutive stock options 3.8 4.7 3.8 4.8 Effect of PSUs 0.2 0.3 0.2 0.2 Effect of RSUs 1.0 1.5 1.1 1.9 Weighted-average common shares outstanding – Diluted 368.0 366.7 368.5 367.7 Net earnings attributable to The Estée Lauder Companies Inc. per common share: Basic $ 2.40 $ 1.55 $ 3.84 $ 3.19 Diluted $ 2.37 $ 1.52 $ 3.79 $ 3.13 |
EQUITY (Tables)
EQUITY (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Schedule of equity | Total Stockholders’ Equity – The Estée Lauder Companies Inc. Three Months Ended Six Months Ended (In millions) 2020 2019 2020 2019 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 4,913 4,514 4,790 4,403 Common stock dividends — 1 1 2 Stock-based compensation 155 100 277 210 Paid-in capital, end of the period 5,068 4,615 5,068 4,615 Retained earnings, beginning of the period 10,480 10,393 10,134 9,984 Common stock dividends (194) (175) (368) (332) Net earnings attributable to The Estée Lauder Companies Inc. 873 557 1,396 1,152 Cumulative effect of adoption of new accounting standards — — (3) (29) Retained earnings, end of the period 11,159 10,775 11,159 10,775 Accumulated other comprehensive loss, beginning of the period (594) (627) (665) (563) Other comprehensive income (loss) 211 58 282 (6) Accumulated other comprehensive loss, end of the period (383) (569) (383) (569) Treasury stock, beginning of the period (10,353) (9,756) (10,330) (9,444) Acquisition of treasury stock — (426) — (703) Stock-based compensation (76) (71) (99) (106) Treasury stock, end of the period (10,429) (10,253) (10,429) (10,253) Total stockholders’ equity – The Estée Lauder Companies Inc. 5,421 4,574 5,421 4,574 Noncontrolling interests, beginning of the period 29 28 27 25 Net earnings attributable to noncontrolling interests 4 4 6 7 Distribution to noncontrolling interest holders — (4) — (4) Other comprehensive (income) loss 2 (1) 2 (1) Noncontrolling interests, end of the period 35 27 35 27 Total equity $ 5,456 $ 4,601 $ 5,456 $ 4,601 Cash dividends declared per common share $ .53 $ .48 $ 1.01 $ .91 |
Summary of cash dividends declared per share on the Company's Class A and Class B Common Stock | 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, 2020: Date Declared Record Date Payable Date Amount per Share August 19, 2020 August 31, 2020 September 15, 2020 $ .48 October 30, 2020 November 30, 2020 December 15, 2020 $ .53 |
Schedule of components of AOCI, net of tax | The following table represents changes in AOCI, net of tax, by component for the six months ended December 31, 2020: (In millions) Net Cash Retirement Plan and Other Retiree Benefit Adjustments Translation Total Balance at June 30, 2020 $ 14 $ (244) $ (435) $ (665) OCI before reclassifications (48) (2) (1) 318 (2) 268 Amounts reclassified to Net earnings 4 10 — 14 Net current-period OCI (44) 8 318 282 Balance at December 31, 2020 $ (30) $ (236) $ (117) $ (383) (1) Consists of foreign currency translation losses. (2) See Note 5 – Derivative Financial Instruments for gains (losses) relating to net investment hedges. |
Schedule of effects of reclassification adjustments from AOCI into net earnings | The following table represents the effects of reclassification adjustments from AOCI into net earnings for the three and six months ended December 31, 2020 and 2019: Amount Reclassified from AOCI Affected Line Item in Three Months Ended Six Months Ended (In millions) 2020 2019 2020 2019 Gain (Loss) on Cash Flow Hedges Foreign currency forward contracts $ (5) $ 6 $ (4) $ 19 Net sales Interest rate-related derivatives — — (1) — Interest expense (5) 6 (5) 19 Benefit (provision) for deferred taxes 1 (2) 1 (5) Provision for income taxes $ (4) $ 4 (4) $ 14 Net earnings Retirement Plan and Other Retiree Benefit Adjustments Amortization of actuarial loss $ (6) $ (5) $ (12) $ (10) Earnings before income taxes (1) Benefit for deferred taxes 1 1 2 2 Provision for income taxes $ (5) $ (4) $ (10) $ (8) Net earnings Cumulative Translation Adjustments Gain on previously held equity method investment $ — $ 4 $ — $ 4 Other income Loss on liquidation of an investment in a foreign subsidiary — — — (6) Restructuring and other charges $ — $ 4 — $ (2) Net earnings Total reclassification adjustments, net $ (9) $ 4 $ (14) $ 4 Net earnings (1) See Note 8 – Pension and Post-Retirement Benefit Plans for additional information. |
STATEMENT OF CASH FLOWS (Tables
STATEMENT OF CASH FLOWS (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental cash flow information | Supplemental cash flow information for the six months ended December 31, 2020 and 2019 is as follows: (In millions) 2020 2019 Cash: Cash paid during the period for interest $ 84 $ 63 Cash paid during the period for income taxes $ 320 $ 314 Non-cash investing and financing activities: Capitalized interest and asset retirement obligations incurred $ 1 $ — Property, plant and equipment accrued but unpaid $ 63 $ 53 Right-of-use assets obtained in exchange for new finance lease liabilities $ 1 $ — Right-of-use assets obtained in exchange for new operating lease liabilities $ 148 $ 110 |
SEGMENT DATA AND RELATED INFO_2
SEGMENT DATA AND RELATED INFORMATION (Tables) | 6 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of segment data and related information | Three Months Ended Six Months Ended (In millions) 2020 2019 2020 2019 PRODUCT CATEGORY DATA Net sales: Skin Care $ 2,819 $ 2,205 $ 4,854 $ 4,047 Makeup 1,247 1,660 2,225 3,103 Fragrance 618 581 1,024 1,043 Hair Care 154 162 290 298 Other 15 16 22 28 Net sales $ 4,853 $ 4,624 $ 8,415 $ 8,519 Operating income (loss) before charges associated with restructuring and other activities: Skin Care $ 928 $ 772 $ 1,649 $ 1,404 Makeup 28 (611) (43) (507) Fragrance 141 97 201 163 Hair Care 4 12 7 12 Other (1) 4 — 6 1,100 274 1,814 1,078 Reconciliation: Charges associated with restructuring and other activities (37) (13) (46) (38) Interest expense (43) (38) (88) (70) Interest income and investment income, net 17 13 31 27 Other components of net periodic benefit cost (7) (1) (10) (2) Other income — 576 — 576 Earnings before income taxes $ 1,030 $ 811 $ 1,701 $ 1,571 GEOGRAPHIC DATA (1) Net sales: The Americas $ 1,048 $ 1,226 $ 1,921 $ 2,386 Europe, the Middle East & Africa 2,030 2,079 3,570 3,756 Asia/Pacific 1,775 1,319 2,924 2,377 Net sales $ 4,853 $ 4,624 $ 8,415 $ 8,519 Operating income (loss): The Americas $ 36 $ (529) $ 101 $ (354) Europe, the Middle East & Africa 657 505 1,068 882 Asia/Pacific 407 298 645 550 1,100 274 1,814 1,078 Charges associated with restructuring and other activities (37) (13) (46) (38) Operating income $ 1,063 $ 261 $ 1,768 $ 1,040 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Currency Translation and Transactions (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Currency Translation and Transactions | ||||
Unrealized translation gains (losses), net of tax | $ 227 | $ 75 | $ 318 | $ 3 |
Net exchange gains (losses) on foreign currency transactions | $ 27 | $ (2) | $ 24 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentration of Credit Risk (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | |
Concentration Risk [Line Items] | |||||
Net sales | $ 4,853 | $ 4,624 | $ 8,415 | $ 8,519 | |
Accounts receivable, net | 1,972 | 1,972 | $ 1,194 | ||
Largest Customer | Revenue Benchmark | Customer Concentration Risk | |||||
Concentration Risk [Line Items] | |||||
Net sales | $ 654 | $ 296 | $ 1,208 | $ 465 | |
Concentration risk (as a percent) | 13.00% | 6.00% | 14.00% | 5.00% | |
Largest Customer | Accounts Receivable | Customer Concentration Risk | |||||
Concentration Risk [Line Items] | |||||
Accounts receivable, net | $ 404 | $ 404 | $ 297 | ||
Concentration risk (as a percent) | 20.00% | 24.00% |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventory and Promotional Merchandise (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jun. 30, 2020 |
Accounting Policies [Abstract] | ||
Raw materials | $ 550 | $ 542 |
Work in process | 258 | 305 |
Finished goods | 1,072 | 995 |
Promotional merchandise | 236 | 220 |
Inventory and promotional merchandise | $ 2,116 | $ 2,062 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | |
Property, Plant and Equipment | |||||
Property, plant and equipment, gross | $ 5,497 | $ 5,497 | $ 5,134 | ||
Less accumulated depreciation and amortization | (3,355) | (3,355) | (3,079) | ||
Property, plant and equipment, net | 2,142 | 2,142 | 2,055 | ||
Cost of assets related to projects in progress | 601 | 601 | 501 | ||
Depreciation and amortization of property, plant and equipment | 126 | $ 127 | 251 | $ 252 | |
Land | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, gross | 57 | 57 | 33 | ||
Buildings and improvements | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, gross | 457 | $ 457 | 400 | ||
Buildings and improvements | Minimum | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, useful life (in years) | 10 years | ||||
Buildings and improvements | Maximum | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, useful life (in years) | 40 years | ||||
Machinery and equipment | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, gross | 969 | $ 969 | 865 | ||
Machinery and equipment | Minimum | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, useful life (in years) | 3 years | ||||
Machinery and equipment | Maximum | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, useful life (in years) | 10 years | ||||
Computer hardware and software | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, gross | 1,417 | $ 1,417 | 1,335 | ||
Computer hardware and software | Minimum | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, useful life (in years) | 4 years | ||||
Computer hardware and software | Maximum | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, useful life (in years) | 10 years | ||||
Furniture and fixtures | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, gross | 126 | $ 126 | 120 | ||
Furniture and fixtures | Minimum | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, useful life (in years) | 5 years | ||||
Furniture and fixtures | Maximum | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, useful life (in years) | 10 years | ||||
Leasehold improvements | |||||
Property, Plant and Equipment | |||||
Property, plant and equipment, gross | $ 2,471 | $ 2,471 | $ 2,381 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | |
Income Tax Examination [Line Items] | |||||
Effective tax rate (as a percent) | 14.90% | 30.80% | 17.60% | 26.20% | |
Increase (decrease) in effective tax rate (as a percent) | (15.90%) | (8.60%) | |||
Gross unrecognized tax benefits | $ 70 | $ 70 | $ 70 | ||
Total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate | 55 | 55 | |||
Total gross accrued interest and penalties related to unrecognized tax benefits | $ 14 | $ 14 | $ 13 | ||
Internal Revenue Service (IRS) | Fiscal Year 2021 | |||||
Income Tax Examination [Line Items] | |||||
Tax cuts and jobs act, change in enacted rate after application of GILTI (as a percent) | (1.60%) | (1.50%) | |||
Internal Revenue Service (IRS) | Fiscal Year 2020 and 2019 | |||||
Income Tax Examination [Line Items] | |||||
Tax cuts and jobs act, change in enacted rate after application of GILTI (as a percent) | (4.70%) | (2.80%) |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Other Accrued Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jun. 30, 2020 |
Accounting Policies [Abstract] | ||
Advertising, merchandising and sampling | $ 353 | $ 256 |
Employee compensation | 494 | 424 |
Deferred revenue | 365 | 222 |
Payroll and other taxes | 392 | 250 |
Accrued income taxes | 319 | 208 |
Sales return accrual | 285 | 212 |
Accrued general and administrative expenses | 295 | 233 |
Other | 761 | 600 |
Other accrued liabilities | $ 3,264 | $ 2,405 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Debt (Details) - Revolving Credit Facility - USD ($) | 1 Months Ended | |
Aug. 31, 2020 | Jun. 30, 2020 | |
Debt | ||
Repayments of lines of credit | $ 750,000,000 | |
Line of credit facility, maximum borrowing capacity | $ 1,500,000,000 |
ACQUISITION OF BUSINESS (Detail
ACQUISITION OF BUSINESS (Details) - USD ($) $ in Millions | Dec. 18, 2019 | Dec. 31, 2019 | Dec. 31, 2019 | Jun. 30, 2020 |
Acquisition of Business | ||||
Purchase price refund receivable | $ 32 | |||
Have & Be | ||||
Acquisition of Business | ||||
Interest acquired (as a percent) | 66.66% | |||
Cash consideration | $ 1,268 | |||
Carrying value | 133 | |||
Fair value | 682 | |||
Gain on remeasurement of previously held equity method investments | 549 | |||
Recognition of previously unrealized foreign currency gain | $ 4 | |||
Have & Be | Other income | ||||
Acquisition of Business | ||||
Gain on remeasurement of equity method investment | $ 553 | $ 553 | ||
Foreign currency gain | $ 23 | $ 23 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Nov. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | |
Goodwill and Other Intangible Assets | ||||||
Aggregate amortization expense for amortizable intangible assets | $ 27 | $ 11 | $ 52 | $ 22 | ||
Goodwill impairment | 54 | $ 511 | 54 | $ 511 | ||
Trademarks and other | ||||||
Goodwill and Other Intangible Assets | ||||||
Carrying value | 1,277 | 1,277 | $ 1,223 | |||
GLAMGLOW | ||||||
Goodwill and Other Intangible Assets | ||||||
Goodwill impairment | $ 54 | |||||
GLAMGLOW | Trademarks and other | ||||||
Goodwill and Other Intangible Assets | ||||||
Impairment charges of indefinite-lived intangible assets | 21 | |||||
Carrying value | $ 36 | $ 36 | ||||
GLAMGLOW | Customer lists | ||||||
Goodwill and Other Intangible Assets | ||||||
Impairment charges of finite-lived intangible assets | $ 6 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | |
Changes in goodwill | |||||
Goodwill, gross, beginning balance | $ 2,372 | ||||
Accumulated impairments | $ (1,029) | (1,029) | $ (971) | ||
Goodwill, beginning balance | 1,401 | ||||
Goodwill acquired during the period | 10 | ||||
Goodwill impairment | (54) | $ (511) | (54) | $ (511) | |
Translation adjustments, goodwill | 48 | ||||
Translation adjustments, accumulated impairments | (4) | ||||
Goodwill, period increase (decrease) | 0 | ||||
Goodwill, gross, ending balance | 2,430 | 2,430 | |||
Goodwill, ending balance | 1,401 | 1,401 | |||
Skin Care | |||||
Changes in goodwill | |||||
Goodwill, gross, beginning balance | 519 | ||||
Accumulated impairments | (151) | (151) | (95) | ||
Goodwill, beginning balance | 424 | ||||
Goodwill acquired during the period | 0 | ||||
Goodwill impairment | (54) | ||||
Translation adjustments, goodwill | 36 | ||||
Translation adjustments, accumulated impairments | (2) | ||||
Goodwill, period increase (decrease) | (20) | ||||
Goodwill, gross, ending balance | 555 | 555 | |||
Goodwill, ending balance | 404 | 404 | |||
Makeup | |||||
Changes in goodwill | |||||
Goodwill, gross, beginning balance | 1,210 | ||||
Accumulated impairments | (817) | (817) | (817) | ||
Goodwill, beginning balance | 393 | ||||
Goodwill acquired during the period | 6 | ||||
Goodwill impairment | 0 | ||||
Translation adjustments, goodwill | 0 | ||||
Translation adjustments, accumulated impairments | 0 | ||||
Goodwill, period increase (decrease) | 6 | ||||
Goodwill, gross, ending balance | 1,216 | 1,216 | |||
Goodwill, ending balance | 399 | 399 | |||
Fragrance | |||||
Changes in goodwill | |||||
Goodwill, gross, beginning balance | 254 | ||||
Accumulated impairments | (26) | (26) | (26) | ||
Goodwill, beginning balance | 228 | ||||
Goodwill acquired during the period | 0 | ||||
Goodwill impairment | 0 | ||||
Translation adjustments, goodwill | 9 | ||||
Translation adjustments, accumulated impairments | 0 | ||||
Goodwill, period increase (decrease) | 9 | ||||
Goodwill, gross, ending balance | 263 | 263 | |||
Goodwill, ending balance | 237 | 237 | |||
Hair Care | |||||
Changes in goodwill | |||||
Goodwill, gross, beginning balance | 389 | ||||
Accumulated impairments | (35) | (35) | $ (33) | ||
Goodwill, beginning balance | 356 | ||||
Goodwill acquired during the period | 4 | ||||
Goodwill impairment | 0 | ||||
Translation adjustments, goodwill | 3 | ||||
Translation adjustments, accumulated impairments | (2) | ||||
Goodwill, period increase (decrease) | 5 | ||||
Goodwill, gross, ending balance | 396 | 396 | |||
Goodwill, ending balance | $ 361 | $ 361 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS - Other Intangible Assets (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jun. 30, 2020 |
Amortizable intangible assets: | ||
Gross Carrying Value | $ 1,727 | $ 1,633 |
Accumulated Amortization | 580 | 518 |
Total Net Book Value | 1,147 | 1,115 |
Non-amortizable intangible assets: | ||
Total intangible assets | 2,424 | 2,338 |
Estimated aggregate amortization expense | ||
Estimated aggregate amortization expense for remainder of fiscal year 2021 | 52 | |
Estimated aggregate amortization expense for fiscal year 2022 | 105 | |
Estimated aggregate amortization expense for fiscal year 2023 | 104 | |
Estimated aggregate amortization expense for fiscal year 2024 | 104 | |
Estimated aggregate amortization expense for fiscal year 2025 | 104 | |
Trademarks and other | ||
Non-amortizable intangible assets: | ||
Trademarks and other | 1,277 | 1,223 |
Customer lists and other | ||
Amortizable intangible assets: | ||
Gross Carrying Value | 1,684 | 1,590 |
Accumulated Amortization | 537 | 475 |
Total Net Book Value | 1,147 | 1,115 |
License Agreements | ||
Amortizable intangible assets: | ||
Gross Carrying Value | 43 | 43 |
Accumulated Amortization | 43 | 43 |
Total Net Book Value | $ 0 | $ 0 |
GOODWILL AND OTHER INTANGIBLE_6
GOODWILL AND OTHER INTANGIBLE ASSETS - Impairment (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | |
Intangible assets | |||||
Impairment Charge, Goodwill | $ 54 | $ 511 | $ 54 | $ 511 | |
Carrying Value, Goodwill | $ 1,401 | $ 1,401 | $ 1,401 | ||
Too Faced | |||||
Intangible assets | |||||
Impairment Charge, Trademark | 211 | 211 | |||
Impairment Charge, Goodwill | 430 | 430 | |||
Carrying Value, Trademark | 314 | 314 | |||
Carrying Value, Goodwill | 175 | 175 | |||
BECCA | |||||
Intangible assets | |||||
Impairment Charge, Trademark | 33 | 33 | |||
Impairment Charge, Goodwill | 35 | 35 | |||
Carrying Value, Trademark | 65 | 65 | |||
Carrying Value, Goodwill | 63 | 63 | |||
Smashbox | |||||
Intangible assets | |||||
Impairment Charge, Trademark | 22 | 22 | |||
Impairment Charge, Goodwill | 46 | 46 | |||
Carrying Value, Trademark | 33 | 33 | |||
Carrying Value, Goodwill | 26 | 26 | |||
Too Faced, BECCA, and Smashbox | |||||
Intangible assets | |||||
Impairment Charge, Trademark | 266 | 266 | |||
Impairment Charge, Goodwill | 511 | 511 | |||
Carrying Value, Trademark | 412 | 412 | |||
Carrying Value, Goodwill | $ 264 | $ 264 |
CHARGES ASSOCIATED WITH RESTR_3
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES - Charges Associated With Restructuring Activities (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Restructuring and Other Costs | ||||
Restructuring charges | $ 37 | $ 13 | $ 46 | $ 38 |
Leading Beauty Forward | ||||
Restructuring and Other Costs | ||||
Restructuring charges | 3 | 0 | ||
PCBA Program | ||||
Restructuring and Other Costs | ||||
Restructuring charges | 34 | 46 | ||
Sales Returns (included in Net Sales) | ||||
Restructuring and Other Costs | ||||
Restructuring charges | 0 | 0 | ||
Sales Returns (included in Net Sales) | Leading Beauty Forward | ||||
Restructuring and Other Costs | ||||
Restructuring charges | 0 | 0 | ||
Sales Returns (included in Net Sales) | PCBA Program | ||||
Restructuring and Other Costs | ||||
Restructuring charges | 0 | 0 | ||
Cost of Sales | ||||
Restructuring and Other Costs | ||||
Restructuring charges | 2 | 5 | ||
Cost of Sales | Leading Beauty Forward | ||||
Restructuring and Other Costs | ||||
Restructuring charges | 2 | 5 | ||
Cost of Sales | PCBA Program | ||||
Restructuring and Other Costs | ||||
Restructuring charges | 0 | 0 | ||
Restructuring Charges | ||||
Restructuring and Other Costs | ||||
Restructuring charges | 32 | 36 | ||
Restructuring Charges | Leading Beauty Forward | ||||
Restructuring and Other Costs | ||||
Restructuring charges | (2) | (10) | ||
Restructuring Charges | PCBA Program | ||||
Restructuring and Other Costs | ||||
Restructuring charges | 34 | 46 | ||
Other Charges | ||||
Restructuring and Other Costs | ||||
Restructuring charges | 3 | 5 | ||
Other Charges | Leading Beauty Forward | ||||
Restructuring and Other Costs | ||||
Restructuring charges | 3 | 5 | ||
Other Charges | PCBA Program | ||||
Restructuring and Other Costs | ||||
Restructuring charges | $ 0 | $ 0 |
CHARGES ASSOCIATED WITH RESTR_4
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES - Approved Restructuring Activities by Major Cost Type (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Restructuring and related costs | ||||
Restructuring and other charges | $ 35 | $ 7 | $ 41 | $ 30 |
Leading Beauty Forward | ||||
Restructuring and related costs | ||||
Cumulative through June 30, 2020 | 967 | |||
Restructuring and other charges | 0 | |||
Cumulative through December 31, 2020 | 967 | 967 | ||
Leading Beauty Forward | Sales Returns (included in Net Sales) | ||||
Restructuring and related costs | ||||
Cumulative through June 30, 2020 | 13 | |||
Restructuring and other charges | 1 | |||
Cumulative through December 31, 2020 | 14 | 14 | ||
Leading Beauty Forward | Cost of Sales | ||||
Restructuring and related costs | ||||
Cumulative through June 30, 2020 | 85 | |||
Restructuring and other charges | 0 | |||
Cumulative through December 31, 2020 | 85 | 85 | ||
Leading Beauty Forward | Restructuring Charges | ||||
Restructuring and related costs | ||||
Cumulative through June 30, 2020 | 511 | |||
Restructuring and other charges | (7) | |||
Cumulative through December 31, 2020 | 504 | 504 | ||
Leading Beauty Forward | Restructuring Charges | Employee- Related Costs | ||||
Restructuring and related costs | ||||
Cumulative through June 30, 2020 | 460 | |||
Restructuring and other charges | (8) | |||
Cumulative through December 31, 2020 | 452 | 452 | ||
Leading Beauty Forward | Restructuring Charges | Asset- Related Costs | ||||
Restructuring and related costs | ||||
Cumulative through June 30, 2020 | 28 | |||
Restructuring and other charges | 0 | |||
Cumulative through December 31, 2020 | 28 | 28 | ||
Leading Beauty Forward | Restructuring Charges | Contract Terminations | ||||
Restructuring and related costs | ||||
Cumulative through June 30, 2020 | 7 | |||
Restructuring and other charges | 1 | |||
Cumulative through December 31, 2020 | 8 | 8 | ||
Leading Beauty Forward | Restructuring Charges | Other Exit Costs | ||||
Restructuring and related costs | ||||
Cumulative through June 30, 2020 | 16 | |||
Restructuring and other charges | 0 | |||
Cumulative through December 31, 2020 | 16 | 16 | ||
Leading Beauty Forward | Other Charges | ||||
Restructuring and related costs | ||||
Cumulative through June 30, 2020 | 358 | |||
Restructuring and other charges | 6 | |||
Cumulative through December 31, 2020 | $ 364 | 364 | ||
PCBA Program | ||||
Restructuring and related costs | ||||
Restructuring and other charges | 66 | |||
PCBA Program | Sales Returns (included in Net Sales) | ||||
Restructuring and related costs | ||||
Restructuring and other charges | 5 | |||
PCBA Program | Cost of Sales | ||||
Restructuring and related costs | ||||
Restructuring and other charges | (1) | |||
PCBA Program | Restructuring Charges | ||||
Restructuring and related costs | ||||
Restructuring and other charges | 46 | |||
PCBA Program | Restructuring Charges | Employee- Related Costs | ||||
Restructuring and related costs | ||||
Restructuring and other charges | 46 | |||
PCBA Program | Restructuring Charges | Asset- Related Costs | ||||
Restructuring and related costs | ||||
Restructuring and other charges | 4 | |||
PCBA Program | Restructuring Charges | Contract Terminations | ||||
Restructuring and related costs | ||||
Restructuring and other charges | (7) | |||
PCBA Program | Restructuring Charges | Other Exit Costs | ||||
Restructuring and related costs | ||||
Restructuring and other charges | 3 | |||
PCBA Program | Other Charges | ||||
Restructuring and related costs | ||||
Restructuring and other charges | $ 16 |
CHARGES ASSOCIATED WITH RESTR_5
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES - Cumulative Restructuring Charges by Major Cost Type (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Restructuring and related costs | ||||
Charges (adjustments) | $ 37 | $ 13 | $ 46 | $ 38 |
Sales Returns (included in Net Sales) | ||||
Restructuring and related costs | ||||
Charges (adjustments) | 0 | 0 | ||
Cost of Sales | ||||
Restructuring and related costs | ||||
Charges (adjustments) | 2 | 5 | ||
Restructuring Charges | ||||
Restructuring and related costs | ||||
Charges (adjustments) | 32 | 36 | ||
Other Charges | ||||
Restructuring and related costs | ||||
Charges (adjustments) | 3 | 5 | ||
Leading Beauty Forward | ||||
Restructuring and related costs | ||||
Cumulative through June 30, 2020 | 874 | |||
Charges (adjustments) | 3 | 0 | ||
Cumulative through December 31, 2020 | 874 | 874 | ||
Leading Beauty Forward | Sales Returns (included in Net Sales) | ||||
Restructuring and related costs | ||||
Cumulative through June 30, 2020 | 14 | |||
Charges (adjustments) | 0 | 0 | ||
Cumulative through December 31, 2020 | 14 | 14 | ||
Leading Beauty Forward | Cost of Sales | ||||
Restructuring and related costs | ||||
Cumulative through June 30, 2020 | 65 | |||
Charges (adjustments) | 2 | 5 | ||
Cumulative through December 31, 2020 | 70 | 70 | ||
Leading Beauty Forward | Restructuring Charges | ||||
Restructuring and related costs | ||||
Cumulative through June 30, 2020 | 491 | |||
Charges (adjustments) | (2) | (10) | ||
Cumulative through December 31, 2020 | 481 | 481 | ||
Leading Beauty Forward | Restructuring Charges | Employee- Related Costs | ||||
Restructuring and related costs | ||||
Cumulative through June 30, 2020 | 451 | |||
Charges (adjustments) | (12) | |||
Cumulative through December 31, 2020 | 439 | 439 | ||
Leading Beauty Forward | Restructuring Charges | Asset- Related Costs | ||||
Restructuring and related costs | ||||
Cumulative through June 30, 2020 | 27 | |||
Charges (adjustments) | 1 | |||
Cumulative through December 31, 2020 | 28 | 28 | ||
Leading Beauty Forward | Restructuring Charges | Contract Terminations | ||||
Restructuring and related costs | ||||
Cumulative through June 30, 2020 | 6 | |||
Charges (adjustments) | 1 | |||
Cumulative through December 31, 2020 | 7 | 7 | ||
Leading Beauty Forward | Restructuring Charges | Other Exit Costs | ||||
Restructuring and related costs | ||||
Cumulative through June 30, 2020 | 7 | |||
Charges (adjustments) | 0 | |||
Cumulative through December 31, 2020 | 7 | 7 | ||
Leading Beauty Forward | Other Charges | ||||
Restructuring and related costs | ||||
Cumulative through June 30, 2020 | 304 | |||
Charges (adjustments) | 3 | 5 | ||
Cumulative through December 31, 2020 | 309 | 309 | ||
PCBA Program | ||||
Restructuring and related costs | ||||
Charges (adjustments) | 34 | 46 | ||
Cumulative through December 31, 2020 | 46 | 46 | ||
PCBA Program | Sales Returns (included in Net Sales) | ||||
Restructuring and related costs | ||||
Charges (adjustments) | 0 | 0 | ||
Cumulative through December 31, 2020 | 0 | 0 | ||
PCBA Program | Cost of Sales | ||||
Restructuring and related costs | ||||
Charges (adjustments) | 0 | 0 | ||
Cumulative through December 31, 2020 | 0 | 0 | ||
PCBA Program | Restructuring Charges | ||||
Restructuring and related costs | ||||
Charges (adjustments) | 34 | 46 | ||
Cumulative through December 31, 2020 | 46 | 46 | ||
PCBA Program | Restructuring Charges | Employee- Related Costs | ||||
Restructuring and related costs | ||||
Charges (adjustments) | 45 | |||
Cumulative through December 31, 2020 | 45 | 45 | ||
PCBA Program | Restructuring Charges | Asset- Related Costs | ||||
Restructuring and related costs | ||||
Charges (adjustments) | 0 | |||
Cumulative through December 31, 2020 | 0 | 0 | ||
PCBA Program | Restructuring Charges | Contract Terminations | ||||
Restructuring and related costs | ||||
Charges (adjustments) | 1 | |||
Cumulative through December 31, 2020 | 1 | 1 | ||
PCBA Program | Restructuring Charges | Other Exit Costs | ||||
Restructuring and related costs | ||||
Charges (adjustments) | 0 | |||
Cumulative through December 31, 2020 | 0 | 0 | ||
PCBA Program | Other Charges | ||||
Restructuring and related costs | ||||
Charges (adjustments) | 0 | 0 | ||
Cumulative through December 31, 2020 | $ 0 | $ 0 |
CHARGES ASSOCIATED WITH RESTR_6
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES - Accrued Restructuring Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Restructuring Reserve [Roll Forward] | |||||||
Charges (adjustments) | $ 37 | $ 13 | $ 46 | $ 38 | |||
Restructuring Charges | |||||||
Restructuring Reserve [Roll Forward] | |||||||
Charges (adjustments) | 32 | 36 | |||||
Leading Beauty Forward | |||||||
Restructuring Reserve [Roll Forward] | |||||||
Charges (adjustments) | 3 | 0 | |||||
Leading Beauty Forward | Restructuring Charges | |||||||
Restructuring Reserve [Roll Forward] | |||||||
Beginning balance | 112 | $ 112 | |||||
Charges (adjustments) | (2) | (10) | |||||
Cash payments | (36) | ||||||
Translation adjustments | 2 | ||||||
Ending balance | 68 | 68 | |||||
PCBA Program | |||||||
Restructuring Reserve [Roll Forward] | |||||||
Charges (adjustments) | 34 | 46 | |||||
PCBA Program | Restructuring Charges | |||||||
Restructuring Reserve [Roll Forward] | |||||||
Charges (adjustments) | 34 | 46 | |||||
Cash payments | (5) | ||||||
Ending balance | 41 | 41 | |||||
Employee- Related Costs | Leading Beauty Forward | Restructuring Charges | |||||||
Restructuring Reserve [Roll Forward] | |||||||
Beginning balance | 112 | 112 | |||||
Charges (adjustments) | (12) | ||||||
Cash payments | (36) | ||||||
Translation adjustments | 2 | ||||||
Ending balance | 66 | 66 | |||||
Employee- Related Costs | PCBA Program | Restructuring Charges | |||||||
Restructuring Reserve [Roll Forward] | |||||||
Charges (adjustments) | 45 | ||||||
Cash payments | (4) | ||||||
Ending balance | 41 | 41 | |||||
Asset- Related Costs | Leading Beauty Forward | Restructuring Charges | |||||||
Restructuring Reserve [Roll Forward] | |||||||
Beginning balance | 0 | 0 | |||||
Charges (adjustments) | 1 | ||||||
Cash payments | 0 | ||||||
Translation adjustments | 0 | ||||||
Ending balance | 1 | 1 | |||||
Asset- Related Costs | PCBA Program | Restructuring Charges | |||||||
Restructuring Reserve [Roll Forward] | |||||||
Charges (adjustments) | 0 | ||||||
Cash payments | 0 | ||||||
Ending balance | 0 | 0 | |||||
Contract Terminations | Leading Beauty Forward | Restructuring Charges | |||||||
Restructuring Reserve [Roll Forward] | |||||||
Beginning balance | 0 | 0 | |||||
Charges (adjustments) | 1 | ||||||
Cash payments | 0 | ||||||
Translation adjustments | 0 | ||||||
Ending balance | 1 | 1 | |||||
Contract Terminations | PCBA Program | Restructuring Charges | |||||||
Restructuring Reserve [Roll Forward] | |||||||
Charges (adjustments) | 1 | ||||||
Cash payments | (1) | ||||||
Ending balance | 0 | 0 | |||||
Other Exit Costs | Leading Beauty Forward | Restructuring Charges | |||||||
Restructuring Reserve [Roll Forward] | |||||||
Beginning balance | 0 | 0 | |||||
Charges (adjustments) | 0 | ||||||
Cash payments | 0 | ||||||
Translation adjustments | 0 | ||||||
Ending balance | 0 | 0 | |||||
Other Exit Costs | PCBA Program | Restructuring Charges | |||||||
Restructuring Reserve [Roll Forward] | |||||||
Charges (adjustments) | 0 | ||||||
Cash payments | 0 | ||||||
Ending balance | $ 0 | $ 0 | |||||
Forecast | Leading Beauty Forward | |||||||
Restructuring Reserve [Roll Forward] | |||||||
Accrued restructuring charges expected to result in cash expenditures funded from cash provided by operations | $ 5 | $ 17 | 46 | ||||
Forecast | PCBA Program | |||||||
Restructuring Reserve [Roll Forward] | |||||||
Accrued restructuring charges expected to result in cash expenditures funded from cash provided by operations | $ 1 | $ 5 | $ 35 |
CHARGES ASSOCIATED WITH RESTR_7
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES - Narrative (Details) - PCBA Program $ in Millions | Aug. 20, 2020USD ($)position |
Restructuring and Other Costs | |
Restructuring program, period | 2 years |
Net reduction of current workforce (as a percent) | 3.00% |
Minimum | |
Restructuring and Other Costs | |
Net reduction in global positions | position | 1,500 |
Closure of freestanding stores (as a percent) | 10.00% |
Restructuring and related costs, expected costs | $ | $ 400 |
Maximum | |
Restructuring and Other Costs | |
Net reduction in global positions | position | 2,000 |
Closure of freestanding stores (as a percent) | 15.00% |
Restructuring and related costs, expected costs | $ | $ 500 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS - Derivative Instruments Included in the Consolidated Balance Sheets (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jun. 30, 2020 |
Derivatives, Fair Value | ||
Derivative asset, total | $ 84 | $ 102 |
Derivative liability, total | 137 | 83 |
Derivatives Designated as Hedging Instruments | Prepaid expenses and other current assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 32 | 62 |
Derivatives Designated as Hedging Instruments | Other accrued liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 108 | 68 |
Derivatives Designated as Hedging Instruments | Foreign currency cash flow hedges | Prepaid expenses and other current assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 0 | 26 |
Derivatives Designated as Hedging Instruments | Foreign currency cash flow hedges | Other accrued liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 37 | 3 |
Derivatives Designated as Hedging Instruments | Net investment hedges | Prepaid expenses and other current assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 21 | 21 |
Derivatives Designated as Hedging Instruments | Net investment hedges | Other accrued liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 71 | 62 |
Derivatives Designated as Hedging Instruments | Interest rate-related derivatives | Prepaid expenses and other current assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 11 | 15 |
Derivatives Designated as Hedging Instruments | Interest rate-related derivatives | Other accrued liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | 0 | 3 |
Derivatives Not Designated as Hedging Instruments | Foreign currency forward contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value | ||
Derivative asset, fair value | 52 | 40 |
Derivatives Not Designated as Hedging Instruments | Foreign currency forward contracts | Other accrued liabilities | ||
Derivatives, Fair Value | ||
Derivative liability, fair value | $ 29 | $ 15 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Gain (Loss) on Derivative Financial Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Gain (loss) on derivative financial instruments | ||||
Amount of Gain or (Loss) Recognized in OCI on Derivatives, Cash Flow Hedging | $ (110) | $ (53) | $ (204) | $ (39) |
Amounts reclassified to earnings during the year | (5) | 6 | (5) | 19 |
Cash flow hedges | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of Gain or (Loss) Recognized in OCI on Derivatives, Cash Flow Hedging | (31) | (16) | (62) | (5) |
Amounts reclassified to earnings during the year | (5) | 6 | (5) | 19 |
Current debt | ||||
Gain (loss) on derivative financial instruments | ||||
Cumulative Amount of Fair Value Hedging Gain/(Loss) Included in the Carrying Amount of the Hedged Liability | 2 | |||
Current debt | Derivatives in fair value hedging relationships | ||||
Gain (loss) on derivative financial instruments | ||||
Carrying Amount of the Hedged Liabilities | 452 | 452 | ||
Long-term debt | ||||
Gain (loss) on derivative financial instruments | ||||
Cumulative Amount of Fair Value Hedging Gain/(Loss) Included in the Carrying Amount of the Hedged Liability | 8 | |||
Long-term debt | Derivatives in fair value hedging relationships | ||||
Gain (loss) on derivative financial instruments | ||||
Carrying Amount of the Hedged Liabilities | 258 | 258 | ||
Total debt | ||||
Gain (loss) on derivative financial instruments | ||||
Cumulative Amount of Fair Value Hedging Gain/(Loss) Included in the Carrying Amount of the Hedged Liability | 10 | |||
Total debt | Derivatives in fair value hedging relationships | ||||
Gain (loss) on derivative financial instruments | ||||
Carrying Amount of the Hedged Liabilities | 710 | 710 | ||
Net sales | ||||
Gain (loss) on derivative financial instruments | ||||
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 | 4,853 | 4,624 | 8,415 | 8,519 |
Interest expense | ||||
Gain (loss) on derivative financial instruments | ||||
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 | 43 | 38 | 88 | 70 |
Foreign currency forward contracts | Cash flow hedges | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of Gain or (Loss) Recognized in OCI on Derivatives, Cash Flow Hedging | (34) | (21) | (65) | 4 |
Foreign currency forward contracts | Net investment hedges | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of Gain or (Loss) Recognized in OCI on Derivatives, Cash Flow Hedging | (79) | (37) | (142) | (34) |
Amounts reclassified to earnings during the year | 0 | 0 | 0 | 0 |
Foreign currency forward contracts | Net sales | Cash flow hedges | ||||
Gain (loss) on derivative financial instruments | ||||
Amounts reclassified to earnings during the year | (5) | 6 | (4) | 19 |
Interest rate-related derivatives | Cash flow hedges | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of Gain or (Loss) Recognized in OCI on Derivatives, Cash Flow Hedging | 3 | 5 | 3 | (9) |
Interest rate-related derivatives | Interest expense | Cash flow hedges | ||||
Gain (loss) on derivative financial instruments | ||||
Amounts reclassified to earnings during the year | 0 | 0 | (1) | 0 |
Interest rate-related derivatives | Interest expense | Derivatives in fair value hedging relationships | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of gain (loss) reclassified from AOCI to earnings | 3 | 1 | 5 | (1) |
Net investment hedges | ||||
Gain (loss) on derivative financial instruments | ||||
Gain recognized in earnings related to the amount excluded from effectiveness testing | 5 | 13 | 10 | 25 |
Derivatives Designated as Hedging Instruments | Interest rate-related derivatives | Interest expense | Derivatives in fair value hedging relationships | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of gain (loss) reclassified from AOCI to earnings | (3) | (1) | (5) | 1 |
Amount of gain (loss) reclassified from AOCI to earnings | (3) | (1) | (5) | 1 |
Derivatives Not Designated as Hedging Instruments | Foreign currency forward contracts | Selling, general and administrative | ||||
Gain (loss) on derivative financial instruments | ||||
Amount of gain (loss) reclassified from AOCI to earnings | $ 42 | $ 30 | $ 63 | $ 3 |
DERIVATIVE FINANCIAL INSTRUME_5
DERIVATIVE FINANCIAL INSTRUMENTS - Cash Flow Hedges, Fair Value Hedges, Credit Risk (Details) | Dec. 31, 2020USD ($)item | Jun. 30, 2020USD ($) |
Derivatives Not Designated as Hedging Instruments | ||
Derivative instruments | ||
Notional amount | $ 4,118,000,000 | |
Foreign Currency Cash-Flow Hedges | ||
Notional amount | $ 4,118,000,000 | |
Derivative | ||
Credit Risk | ||
Minimum number of nationally recognized rating agencies | item | 2 | |
Maximum exposure to credit risk in the event of non performance by counterparties, gross fair value of contracts in asset positions | $ 84,000,000 | |
Cash flow hedges | ||
Foreign Currency Cash-Flow Hedges | ||
Amount expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months | 25,000,000 | |
Accumulated net gain on derivative instruments in AOCI, before tax | (37,000,000) | $ 20,000,000 |
Cash flow hedges | Foreign currency forward contracts | ||
Derivative instruments | ||
Notional amount | 1,195,000,000 | |
Foreign Currency Cash-Flow Hedges | ||
Notional amount | 1,195,000,000 | |
Derivatives in fair value hedging relationships | Interest rate swap contracts | 1.70% Senior Notes, due May 10, 2021 ("2021 Senior Notes") | ||
Fair Value Hedges | ||
Notional amount | 450,000,000 | |
Derivatives in fair value hedging relationships | Interest rate swap contracts | 2.35% Senior Notes due August 15, 2022 ("2022 Senior Notes") | ||
Fair Value Hedges | ||
Notional amount | 250,000,000 | |
Net investment hedges | Foreign currency forward contracts | ||
Fair Value Hedges | ||
Notional amount | $ 1,879,000,000 |
FAIR VALUE MEASUREMENTS - Hiera
FAIR VALUE MEASUREMENTS - Hierarchy For Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - Recurring basis - USD ($) $ in Millions | Dec. 31, 2020 | Jun. 30, 2020 |
Assets: | ||
Foreign currency forward contracts | $ 73 | $ 87 |
Interest rate-related derivatives | 11 | 15 |
Total | 2,633 | 2,912 |
Liabilities: | ||
Foreign currency forward contracts | 137 | 80 |
Interest rate-related derivatives | 3 | |
Contingent consideration | 2 | 4 |
Total | 139 | 87 |
Money market funds | ||
Assets: | ||
Money market funds | 2,549 | 2,810 |
Level 1 | ||
Assets: | ||
Foreign currency forward contracts | 0 | 0 |
Interest rate-related derivatives | 0 | 0 |
Total | 2,549 | 2,810 |
Liabilities: | ||
Foreign currency forward contracts | 0 | 0 |
Interest rate-related derivatives | 0 | |
Contingent consideration | 0 | 0 |
Total | 0 | 0 |
Level 1 | Money market funds | ||
Assets: | ||
Money market funds | 2,549 | 2,810 |
Level 2 | ||
Assets: | ||
Foreign currency forward contracts | 73 | 87 |
Interest rate-related derivatives | 11 | 15 |
Total | 84 | 102 |
Liabilities: | ||
Foreign currency forward contracts | 137 | 80 |
Interest rate-related derivatives | 3 | |
Contingent consideration | 0 | 0 |
Total | 137 | 83 |
Level 2 | Money market funds | ||
Assets: | ||
Money market funds | 0 | 0 |
Level 3 | ||
Assets: | ||
Foreign currency forward contracts | 0 | 0 |
Interest rate-related derivatives | 0 | 0 |
Total | 0 | 0 |
Liabilities: | ||
Foreign currency forward contracts | 0 | 0 |
Interest rate-related derivatives | 0 | |
Contingent consideration | 2 | 4 |
Total | 2 | 4 |
Level 3 | Money market funds | ||
Assets: | ||
Money market funds | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Estim
FAIR VALUE MEASUREMENTS - Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jun. 30, 2020 |
Derivatives | ||
Derivative asset | $ 84 | $ 102 |
Derivative liability | (137) | (83) |
Carrying Amount | ||
Nonderivatives | ||
Cash and cash equivalents | 5,545 | 5,022 |
Current and long-term debt | 5,383 | 6,136 |
Contingent consideration | 2 | 4 |
Carrying Amount | Foreign currency forward contracts | ||
Derivatives | ||
Derivative asset | 7 | |
Derivative liability | 64 | |
Carrying Amount | Interest rate-related derivatives | ||
Derivatives | ||
Derivative asset | 11 | 12 |
Fair Value | ||
Nonderivatives | ||
Cash and cash equivalents | 5,545 | 5,022 |
Current and long-term debt | 6,315 | 6,902 |
Contingent consideration | 2 | 4 |
Fair Value | Foreign currency forward contracts | ||
Derivatives | ||
Derivative asset | 7 | |
Derivative liability | 64 | |
Fair Value | Interest rate-related derivatives | ||
Derivatives | ||
Derivative asset | $ 11 | $ 12 |
FAIR VALUE MEASUREMENTS - Impai
FAIR VALUE MEASUREMENTS - Impairment Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Estimated fair values of financial instruments | ||||
Goodwill impairment | $ 54 | $ 511 | $ 54 | $ 511 |
Level 3 | Fair Value, Nonrecurring | ||||
Estimated fair values of financial instruments | ||||
Goodwill impairment | 54 | 511 | 54 | 511 |
Impairment charges | 81 | 777 | 81 | 777 |
Level 3 | Fair Value, Nonrecurring | Trademarks and other | ||||
Estimated fair values of financial instruments | ||||
Impairment Charge, Trademark | 27 | 266 | 27 | 266 |
Level 3 | Fair Value, Nonrecurring | Fair Value | ||||
Estimated fair values of financial instruments | ||||
Goodwill, fair value | 0 | 264 | 0 | 264 |
Fair Value | 36 | 676 | 36 | 676 |
Level 3 | Fair Value, Nonrecurring | Fair Value | Trademarks and other | ||||
Estimated fair values of financial instruments | ||||
Trademark, fair value | $ 36 | $ 412 | $ 36 | $ 412 |
FAIR VALUE MEASUREMENTS - Forei
FAIR VALUE MEASUREMENTS - Foreign Currency Forward Contracts Maturity and Additional Purchase Price Payable - Narrative (Details) - Foreign currency forward contracts | 6 Months Ended |
Dec. 31, 2020 | |
Maximum | LIBOR | |
Foreign currency forward contracts | |
Contract maturities | 12 months |
Minimum | Swap yield curve | |
Foreign currency forward contracts | |
Contract maturities | 12 months |
FAIR VALUE MEASUREMENTS - Conti
FAIR VALUE MEASUREMENTS - Contingent Consideration Roll forward (Details) - USD ($) $ in Millions | 6 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Business Combination, Contingent Consideration [Roll Forward] | ||
Changes in fair value of contingent consideration | $ (2) | $ (7) |
Selling, general and administrative expenses | ||
Business Combination, Contingent Consideration [Roll Forward] | ||
Contingent consideration at June 30, 2020 | 4 | |
Changes in fair value of contingent consideration | (2) | |
Contingent consideration at December 31, 2020 | $ 2 |
REVENUE RECOGNITION - Narrative
REVENUE RECOGNITION - Narrative (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 |
REVENUE RECOGNITION | ||||||
Allowance for doubtful accounts and customer deductions | $ 66 | $ 63 | ||||
Adjustment to retained earnings | 5,456 | 3,962 | $ 4,601 | |||
Allowance for non-credit losses | 27 | |||||
Retained Earnings | ||||||
REVENUE RECOGNITION | ||||||
Adjustment to retained earnings | $ 11,159 | $ 10,480 | 10,134 | $ 10,775 | $ 10,393 | $ 9,984 |
Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings | ||||||
REVENUE RECOGNITION | ||||||
Adjustment to retained earnings | $ 0 | (3) | $ 0 | $ (29) | ||
Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings | Accounting Standards Update 2016-13 | ||||||
REVENUE RECOGNITION | ||||||
Adjustment to retained earnings | $ (3) |
REVENUE RECOGNITION - Changes i
REVENUE RECOGNITION - Changes in Allowance for Credit Losses (Details) $ in Millions | 6 Months Ended |
Dec. 31, 2020USD ($) | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance at June 30, 2020 | $ 36 |
Provision for expected credit losses | 7 |
Write-offs, net & other | (8) |
Balance at December 31, 2020 | 39 |
Cumulative Effect, Period of Adoption, Adjustment | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance at June 30, 2020 | $ 4 |
REVENUE RECOGNITION - Changes_2
REVENUE RECOGNITION - Changes in Deferred Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Change in Contract with Customer, Liability [Abstract] | ||||
Balance at the beginning of the period | $ 409 | $ 392 | $ 279 | $ 361 |
Revenue recognized that was included in the deferred revenue balance at the beginning of the period | (83) | (83) | (173) | (243) |
Revenue deferred during the period | 92 | 112 | 308 | 307 |
Other | 2 | 4 | 6 | 0 |
Balance at the end of the period | $ 420 | $ 425 | $ 420 | $ 425 |
REVENUE RECOGNITION - Transacti
REVENUE RECOGNITION - Transaction Price Allocated to the Remaining Performance Obligations (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 $ in Millions | Dec. 31, 2020USD ($) |
REVENUE RECOGNITION | |
Expected timing of revenue recognition | 12 months |
Estimated recognition of deferred revenue | $ 365 |
PENSION AND POST-RETIREMENT B_3
PENSION AND POST-RETIREMENT BENEFIT PLANS - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Pension Plans | U.S. | ||||
Components of net periodic benefit cost: | ||||
Service cost | $ 11 | $ 10 | $ 22 | $ 20 |
Interest cost | 7 | 9 | 15 | 17 |
Expected return on plan assets | (13) | (13) | (26) | (26) |
Amortization of: | ||||
Actuarial loss | 5 | 3 | 10 | 7 |
Special termination benefits | 0 | 0 | 0 | 0 |
Net periodic benefit cost | 10 | 9 | 21 | 18 |
Pension Plans | International | ||||
Components of net periodic benefit cost: | ||||
Service cost | 9 | 9 | 18 | 18 |
Interest cost | 3 | 2 | 5 | 5 |
Expected return on plan assets | (3) | (4) | (6) | (7) |
Amortization of: | ||||
Actuarial loss | 1 | 2 | 2 | 3 |
Special termination benefits | 7 | 0 | 9 | 0 |
Net periodic benefit cost | 17 | 9 | 28 | 19 |
Employer contributions | 18 | |||
Other than Pension Plans Post-retirement | ||||
Components of net periodic benefit cost: | ||||
Service cost | 0 | 1 | 0 | 2 |
Interest cost | 2 | 1 | 3 | 3 |
Expected return on plan assets | 0 | 0 | 0 | (1) |
Amortization of: | ||||
Actuarial loss | 0 | 0 | 0 | 0 |
Special termination benefits | 0 | 0 | 0 | 0 |
Net periodic benefit cost | $ 2 | $ 2 | $ 3 | $ 4 |
PENSION AND POST-RETIREMENT B_4
PENSION AND POST-RETIREMENT BENEFIT PLANS - Amounts Recognized in the Consolidated Balance Sheets (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Jun. 30, 2020 |
Amounts recognized in the consolidated balance sheets consist of: | ||
Other assets | $ 138 | $ 127 |
Other accrued liabilities | (27) | (27) |
Other noncurrent liabilities | (472) | (440) |
Funded status | (361) | (340) |
Accumulated other comprehensive loss | 314 | 324 |
Net amount recognized | $ (47) | $ (16) |
STOCK PROGRAMS - Compensation E
STOCK PROGRAMS - Compensation Expense and Stock Options (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Non-cash stock-based compensation | $ 105 | $ 83 | $ 169 | $ 139 |
Stock Options | Common Class A | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Grant at fair value (in shares) | 1.5 | |||
Exercise price (in dollars per share) | $ 218.40 | |||
Weighted-average grant date fair value (in dollars per share) | $ 54.61 | |||
Additional General Disclosures | ||||
Intrinsic value of stock options exercised (in dollars) | $ 209 |
STOCK PROGRAMS - Restricted Sto
STOCK PROGRAMS - Restricted Stock Units (Details) - Restricted Stock Units - Employee - Common Class A shares in Millions | 6 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Granted (in shares) | 0.9 |
Weighted-average grant date fair value (in dollars per share) | $ / shares | $ 218.10 |
RSU grants scheduled to vest in fiscal 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
RSU grants scheduled to vest (in shares) | 0.3 |
RSU grants scheduled to vest in fiscal 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
RSU grants scheduled to vest (in shares) | 0.3 |
RSU grants scheduled to vest in fiscal 2024 | |
Share-based Compensation Arrangement by Share-based Payment Award | |
RSU grants scheduled to vest (in shares) | 0.3 |
STOCK PROGRAMS - Performance Sh
STOCK PROGRAMS - Performance Share Units (Details) - Performance Share Units - Employee - $ / shares shares in Millions | 1 Months Ended | 6 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2020 | Jun. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award | |||
Vested (in shares) | 0.5 | ||
Common Class A | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Granted (in shares) | 0.1 | ||
Weighted-average grant date fair value (in dollars per share) | $ 218.11 | ||
Common Stock issued (in shares) | 0.2 |
NET EARNINGS ATTRIBUTABLE TO _3
NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE - Reconciliation Between Numerator and Denominator of Basic and Diluted EPS Computations (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Numerator: | ||||
Net earnings attributable to The Estée Lauder Companies Inc. | $ 873 | $ 557 | $ 1,396 | $ 1,152 |
Denominator: | ||||
Weighted-average common shares outstanding - Basic (in shares) | 363 | 360.2 | 363.4 | 360.8 |
Weighted-average common shares outstanding - Diluted (in shares) | 368 | 366.7 | 368.5 | 367.7 |
Net earnings attributable to The Estée Lauder Companies Inc. per common share: | ||||
Basic (in dollars per share) | $ 2.40 | $ 1.55 | $ 3.84 | $ 3.19 |
Diluted (in dollars per share) | $ 2.37 | $ 1.52 | $ 3.79 | $ 3.13 |
Stock Options | ||||
Denominator: | ||||
Incremental common shares attributable to share-based payment arrangements (in shares) | 3.8 | 4.7 | 3.8 | 4.8 |
Performance Share Units | ||||
Denominator: | ||||
Incremental common shares attributable to share-based payment arrangements (in shares) | 0.2 | 0.3 | 0.2 | 0.2 |
Restricted Stock Units | ||||
Denominator: | ||||
Incremental common shares attributable to share-based payment arrangements (in shares) | 1 | 1.5 | 1.1 | 1.9 |
NET EARNINGS ATTRIBUTABLE TO _4
NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE - Antidilutive Securities Excluded from Computation of Earnings, Per Share (Details) - shares shares in Millions | 6 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings, Per Share | ||
Antidilutive shares excluded from the calculation of diluted earnings per share | 1.5 | 1.3 |
Contingently Issuable Shares | ||
Antidilutive Securities Excluded from Computation of Earnings, Per Share | ||
Antidilutive shares excluded from the calculation of diluted earnings per share | 0.8 | 1.1 |
EQUITY - Equity Roll forward (D
EQUITY - Equity Roll forward (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Increase (Decrease) in Stockholders' Equity | ||||
Beginning of the period | $ 3,962 | |||
Net earnings attributable to The Estée Lauder Companies Inc. | $ 873 | $ 557 | 1,396 | $ 1,152 |
Other comprehensive income (loss) | 213 | 57 | 284 | (7) |
Net earnings attributable to noncontrolling interests | (4) | (4) | (6) | (7) |
End of the period | $ 5,456 | $ 4,601 | $ 5,456 | $ 4,601 |
Cash dividends declared per common share | $ 0.53 | $ 0.48 | $ 1.01 | $ 0.91 |
Total Stockholders' equity - The Estee Lauder Companies Inc. | ||||
Increase (Decrease) in Stockholders' Equity | ||||
End of the period | $ 5,421 | $ 4,574 | $ 5,421 | $ 4,574 |
Common Stock | ||||
Increase (Decrease) in Stockholders' Equity | ||||
Beginning of the period | 6 | 6 | 6 | 6 |
Stock-based compensation | 0 | 0 | 0 | 0 |
End of the period | 6 | 6 | 6 | 6 |
Paid-in Capital | ||||
Increase (Decrease) in Stockholders' Equity | ||||
Beginning of the period | 4,913 | 4,514 | 4,790 | 4,403 |
Stock-based compensation | 155 | 100 | 277 | 210 |
Common stock dividends | 0 | 1 | 1 | 2 |
End of the period | 5,068 | 4,615 | 5,068 | 4,615 |
Retained Earnings | ||||
Increase (Decrease) in Stockholders' Equity | ||||
Beginning of the period | 10,480 | 10,393 | 10,134 | 9,984 |
Common stock dividends | (194) | (175) | (368) | (332) |
Net earnings attributable to The Estée Lauder Companies Inc. | 873 | 557 | 1,396 | 1,152 |
End of the period | 11,159 | 10,775 | 11,159 | 10,775 |
Retained Earnings | Cumulative Effect, Period of Adoption, Adjustment | ||||
Increase (Decrease) in Stockholders' Equity | ||||
Beginning of the period | 0 | 0 | (3) | (29) |
Accumulated Other Comprehensive Loss | ||||
Increase (Decrease) in Stockholders' Equity | ||||
Beginning of the period | (594) | (627) | (665) | (563) |
Other comprehensive income (loss) | 211 | 58 | 282 | (6) |
End of the period | (383) | (569) | (383) | (569) |
Treasury Stock | ||||
Increase (Decrease) in Stockholders' Equity | ||||
Beginning of the period | (10,353) | (9,756) | (10,330) | (9,444) |
Stock-based compensation | (76) | (71) | (99) | (106) |
Acquisition of treasury stock | 0 | (426) | 0 | (703) |
End of the period | (10,429) | (10,253) | (10,429) | (10,253) |
Non-controlling Interests | ||||
Increase (Decrease) in Stockholders' Equity | ||||
Beginning of the period | 29 | 28 | 27 | 25 |
Other comprehensive income (loss) | 2 | (1) | 2 | (1) |
Net earnings attributable to noncontrolling interests | 4 | 4 | 6 | 7 |
Distribution to noncontrolling interest holders | 0 | (4) | 0 | (4) |
End of the period | $ 35 | $ 27 | $ 35 | $ 27 |
EQUITY - Class of Stock and Div
EQUITY - Class of Stock and Dividend Information (Details) - $ / shares shares in Millions | Feb. 04, 2021 | Dec. 15, 2020 | Oct. 30, 2020 | Sep. 15, 2020 | Aug. 19, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
Class of Stock | |||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.53 | $ 0.48 | $ 1.01 | $ 0.91 | |||||
Conversion of Class B to Class A (in shares) | 2.2 | ||||||||
Common Class A | |||||||||
Class of Stock | |||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.53 | $ 0.48 | |||||||
Cash dividends paid per common share (in dollars per share) | $ 0.53 | $ 0.48 | |||||||
Common Class A | Subsequent Event | |||||||||
Class of Stock | |||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.53 | ||||||||
Common Class B | |||||||||
Class of Stock | |||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.53 | $ 0.48 | |||||||
Cash dividends paid per common share (in dollars per share) | $ 0.53 | $ 0.48 | |||||||
Common Class B | Subsequent Event | |||||||||
Class of Stock | |||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.53 |
EQUITY - Changes in Accumulated
EQUITY - Changes in Accumulated Other Comprehensive Income (Loss) (Details) $ in Millions | 6 Months Ended |
Dec. 31, 2020USD ($) | |
Changes in AOCI, net of tax, by component | |
Balance, beginning of the period | $ 3,935 |
Balance, end of the period | 5,421 |
Accumulated Other Comprehensive Loss | |
Changes in AOCI, net of tax, by component | |
Balance, beginning of the period | (665) |
OCI before reclassifications | 268 |
Amounts reclassified to Net earnings | 14 |
Net current-period OCI | 282 |
Balance, end of the period | (383) |
Net Cash Flow Hedge Gain (Loss) | |
Changes in AOCI, net of tax, by component | |
Balance, beginning of the period | 14 |
OCI before reclassifications | (48) |
Amounts reclassified to Net earnings | 4 |
Net current-period OCI | (44) |
Balance, end of the period | (30) |
Retirement Plan and Other Retiree Benefit Adjustments | |
Changes in AOCI, net of tax, by component | |
Balance, beginning of the period | (244) |
OCI before reclassifications | (2) |
Amounts reclassified to Net earnings | 10 |
Net current-period OCI | 8 |
Balance, end of the period | (236) |
Translation Adjustments | |
Changes in AOCI, net of tax, by component | |
Balance, beginning of the period | (435) |
OCI before reclassifications | 318 |
Amounts reclassified to Net earnings | 0 |
Net current-period OCI | 318 |
Balance, end of the period | $ (117) |
EQUITY - Reclassification Adjus
EQUITY - Reclassification Adjustments From Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Reclassification adjustments from accumulated other comprehensive income (loss) | ||||
Net sales | $ 4,853 | $ 4,624 | $ 8,415 | $ 8,519 |
Interest expense | 43 | 38 | 88 | 70 |
Earnings before income taxes | 1,030 | 811 | 1,701 | 1,571 |
Benefit (provision) for deferred taxes | (153) | (250) | (299) | (412) |
Net earnings | 877 | 561 | 1,402 | 1,159 |
Amount Reclassified from AOCI | ||||
Reclassification adjustments from accumulated other comprehensive income (loss) | ||||
Net earnings | (9) | 4 | (14) | 4 |
Gain (Loss) on Cash Flow Hedges | Amount Reclassified from AOCI | ||||
Reclassification adjustments from accumulated other comprehensive income (loss) | ||||
Earnings before income taxes | (5) | 6 | (5) | 19 |
Benefit (provision) for deferred taxes | 1 | (2) | 1 | (5) |
Net earnings | (4) | 4 | (4) | 14 |
Gain (Loss) on Cash Flow Hedges | Foreign currency forward contracts | Amount Reclassified from AOCI | ||||
Reclassification adjustments from accumulated other comprehensive income (loss) | ||||
Net sales | (5) | 6 | (4) | 19 |
Gain (Loss) on Cash Flow Hedges | Interest rate-related derivatives | Amount Reclassified from AOCI | ||||
Reclassification adjustments from accumulated other comprehensive income (loss) | ||||
Interest expense | 0 | 0 | (1) | 0 |
Retirement Plan and Other Retiree Benefit Adjustments | Amount Reclassified from AOCI | ||||
Reclassification adjustments from accumulated other comprehensive income (loss) | ||||
Amortization of actuarial loss | (6) | (5) | (12) | (10) |
Benefit (provision) for deferred taxes | 1 | 1 | 2 | 2 |
Net earnings | (5) | (4) | (10) | (8) |
Cumulative Translation Adjustments | Amount Reclassified from AOCI | ||||
Reclassification adjustments from accumulated other comprehensive income (loss) | ||||
Gain on previously held equity method investment | 0 | 4 | 0 | 4 |
Net earnings | 0 | 4 | 0 | (2) |
Cumulative Translation Adjustments | Amount Reclassified from AOCI | Restructuring and other charges | ||||
Reclassification adjustments from accumulated other comprehensive income (loss) | ||||
Loss on liquidation of an investment in a foreign subsidiary | $ 0 | $ 0 | $ 0 | $ (6) |
STATEMENT OF CASH FLOWS (Detail
STATEMENT OF CASH FLOWS (Details) - USD ($) $ in Millions | 6 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash: | ||
Cash paid during the period for interest | $ 84 | $ 63 |
Cash paid during the period for income taxes | 320 | 314 |
Non-cash investing and financing activities: | ||
Capitalized interest and asset retirement obligations incurred | 1 | 0 |
Property, plant and equipment accrued but unpaid | 63 | 53 |
Right-of-use assets obtained in exchange for new finance lease liabilities | 1 | 0 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 148 | $ 110 |
SEGMENT DATA AND RELATED INFO_3
SEGMENT DATA AND RELATED INFORMATION (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2020USD ($)segment | Dec. 31, 2019USD ($) | |
SEGMENT DATA AND RELATED INFORMATION | ||||
Number of operating segments | segment | 1 | |||
Net sales | $ 4,853 | $ 4,624 | $ 8,415 | $ 8,519 |
Operating income (loss) before charges associated with restructuring and other activities: | ||||
Operating income (loss) before charges associated with restructuring activities | 1,100 | 274 | 1,814 | 1,078 |
Operating income | 1,063 | 261 | 1,768 | 1,040 |
Reconciliation: | ||||
Charges associated with restructuring and other activities | (37) | (13) | (46) | (38) |
Interest expense | (43) | (38) | (88) | (70) |
Interest income and investment income, net | 17 | 13 | 31 | 27 |
Other components of net periodic benefit cost | (7) | (1) | (10) | (2) |
Other income | 0 | 576 | 0 | 576 |
Earnings before income taxes | 1,030 | 811 | 1,701 | 1,571 |
The Americas | ||||
SEGMENT DATA AND RELATED INFORMATION | ||||
Net sales | 1,048 | 1,226 | 1,921 | 2,386 |
Operating income (loss) before charges associated with restructuring and other activities: | ||||
Operating income (loss) before charges associated with restructuring activities | 36 | (529) | 101 | (354) |
Europe, the Middle East & Africa | ||||
SEGMENT DATA AND RELATED INFORMATION | ||||
Net sales | 2,030 | 2,079 | 3,570 | 3,756 |
Operating income (loss) before charges associated with restructuring and other activities: | ||||
Operating income (loss) before charges associated with restructuring activities | 657 | 505 | 1,068 | 882 |
Asia/Pacific | ||||
SEGMENT DATA AND RELATED INFORMATION | ||||
Net sales | 1,775 | 1,319 | 2,924 | 2,377 |
Operating income (loss) before charges associated with restructuring and other activities: | ||||
Operating income (loss) before charges associated with restructuring activities | 407 | 298 | 645 | 550 |
Skin Care | ||||
SEGMENT DATA AND RELATED INFORMATION | ||||
Net sales | 2,819 | 2,205 | 4,854 | 4,047 |
Operating income (loss) before charges associated with restructuring and other activities: | ||||
Operating income (loss) before charges associated with restructuring activities | 928 | 772 | 1,649 | 1,404 |
Makeup | ||||
SEGMENT DATA AND RELATED INFORMATION | ||||
Net sales | 1,247 | 1,660 | 2,225 | 3,103 |
Operating income (loss) before charges associated with restructuring and other activities: | ||||
Operating income (loss) before charges associated with restructuring activities | 28 | (611) | (43) | (507) |
Fragrance | ||||
SEGMENT DATA AND RELATED INFORMATION | ||||
Net sales | 618 | 581 | 1,024 | 1,043 |
Operating income (loss) before charges associated with restructuring and other activities: | ||||
Operating income (loss) before charges associated with restructuring activities | 141 | 97 | 201 | 163 |
Hair Care | ||||
SEGMENT DATA AND RELATED INFORMATION | ||||
Net sales | 154 | 162 | 290 | 298 |
Operating income (loss) before charges associated with restructuring and other activities: | ||||
Operating income (loss) before charges associated with restructuring activities | 4 | 12 | 7 | 12 |
Other | ||||
SEGMENT DATA AND RELATED INFORMATION | ||||
Net sales | 15 | 16 | 22 | 28 |
Operating income (loss) before charges associated with restructuring and other activities: | ||||
Operating income (loss) before charges associated with restructuring activities | $ (1) | $ 4 | $ 0 | $ 6 |