Estée Lauder (EL) 10-K risk factor changes: FY2021 vs FY2020

Some competitors have greater resources than we do, [removed: some] others are newer companies (some backed by private-equity investors), and some are competing in distribution channels where we are less represented.

In some cases, [removed: our competitors] [added: we] may [added: not] be able to respond to changing business and economic conditions [removed: more] [added: as] quickly [removed: than us.][added: as our competitors.]

Our continued success depends on our ability to anticipate, gauge and react in a timely and cost-effective manner to changes in consumer [removed: tastes] [added: preferences] for skin care, makeup, fragrance and hair care products, attitudes toward our industry and brands, as well as to where and how consumers shop.

[removed: The issue is compounded] [added: We recognize that consumer preferences cannot be predicted with certainty and can change rapidly, driven] by the [removed: increasing] use of digital and social media by consumers and the speed by which information and opinions are shared.

We continue to see the shift in consumer preference to the online channel, which accelerated in response to [removed: COVID-19.][added: the COVID-19 pandemic.]

Acquisitions [added: and divestitures] may expose us to additional risks.

There can be no assurance that we will be able to identify [removed: suitable candidates or consummate] these [added: strategic actions and consummate such] transactions on favorable terms.

Our failure to [removed: successfully complete the integration of any acquired business or to] achieve the long-term plan for [removed: such business,] [added: acquired businesses,] as well as any other adverse consequences associated with our [removed: acquisition] [added: acquisition, divestiture] and investment activities, could have a material adverse effect on our business.

Our business could be negatively impacted by [removed: corporate citizenship] [added: social impact] and sustainability matters.

There is an increased focus from certain investors, customers, consumers, employees, and other stakeholders concerning [removed: corporate citizenship] [added: social impact] and sustainability matters.

From time to time, we announce certain initiatives, including [removed: goals,] [added: goals and commitments,] regarding our focus areas, which include environmental matters, packaging, responsible sourcing, social investments and inclusion and diversity.

We could fail, or be perceived to fail, in our achievement of such [removed: initiatives or goals,] [added: initiatives,] or [removed: we could fail] in accurately reporting our progress on such [removed: initiatives and goals.][added: initiatives.]

Moreover, the standards by which citizenship and sustainability efforts and related matters are measured are developing and evolving, and certain areas are subject to [removed: assumptions.][added: assumptions that could change over time.]

In addition, we could be criticized for the scope of [removed: such] [added: our] initiatives or goals or perceived as not acting responsibly in connection with these matters.

Any such matters, or related [removed: corporate citizenship] [added: social impact] and sustainability matters, could have a material adverse effect on our business.

[removed: If] [added: In the event of] a retailer [removed: was to liquidate,] [added: liquidation,] we may incur additional costs if we choose to purchase the retailer’s inventory of our products to protect brand equity.

Additionally, we continue to monitor the effects of the global macroeconomic environment; [removed: social and] [added: social,] political [added: and human rights] issues; regulatory matters, including the imposition of tariffs; geopolitical tensions; and global security issues.

The outbreak and global spread of [added: the] COVID-19 [added: pandemic] has [added: continued to] significantly [removed: disrupted] [added: disrupt] our operating environment, including retail stores, travel retail, [removed: manufacturing, distribution,] and the ability of [removed: many] [added: some] of our customers to operate.

[removed: There is considerable] [added: Considerable] uncertainty [added: remains] regarding this pandemic, including [added: responsive] measures being taken by various authorities and [removed: others to try to contain the pandemic, as well as the timing of the identification and distribution of any vaccine or cure.][added: others.]

The degree to which COVID-19 [removed: impacts] [added: continues to impact] our business will depend on future developments that are highly uncertain and cannot be predicted, many of which are outside our control, including the [removed: identification and distribution of any vaccine or cure and to what] extent [added: to which] there are sustainable improvements in the retail environment and general economic conditions.

In general, claims made by us or against us in litigation, disputes or other proceedings can be expensive and time consuming [removed: to bring or defend against] and could result in settlements, injunctions or damages that could significantly affect our business.

It is not possible to predict the final resolution of the litigation, disputes or proceedings to which we currently are or may in the future become party to, and the impact of certain of these matters [added: could have a material adverse effect] on our [removed: business could be material*.*][added: business*.*]

If our products are found to be defective or unsafe, our product claims are found to be deceptive, or our products otherwise fail to meet our consumers’ expectations, our relationships with customers or consumers could suffer, the appeal of [removed: one or more of] our brands could be diminished, and we could lose sales and become subject to liability or claims, any of which could result in a material adverse effect on our business.

[removed: These] [added: In addition,] counterfeit [added: versions of some of our] products may [added: be sold by third parties, which may] pose safety risks, may fail to meet consumers’ expectations, and may have a negative impact on our business.

Our success also depends, in part, on our continuing ability to identify, hire, train and retain [removed: other highly qualified personnel.][added: personnel across all levels of our business.]

Competition for [removed: these] employees can be intense.

We may not be able to attract, assimilate or retain [removed: qualified] [added: necessary] personnel in the future, and our failure to do so could have a material adverse effect on our business.

This risk may be exacerbated by the stresses associated with the implementation of our strategic plan and other [removed: initiatives.][added: initiatives, as well as by market conditions.]

We operate on a global basis, with a majority of our fiscal [removed: 2020] [added: 2021] net sales and operating income generated outside the United States.

We rely on information technology [removed: (outsourced and in-house)] that [removed: support] [added: supports] our business processes, including product development, marketing, sales, order processing, production, distribution, finance and intracompany communications throughout the world.

[removed: Despite the implementation of network security measures, our] [added: Our] systems [added: and data] may be vulnerable to constantly evolving cybersecurity threats such as malware, break-ins and similar disruptions from unauthorized tampering.

The occurrence of these or other events could disrupt or damage our information [removed: technology] [added: technology, including operational technology,] and adversely affect our business.

We [removed: may] share some of this information with [added: certain] vendors who assist us with [removed: certain aspects of our business.][added: business matters.]

Furthermore, third [removed: parties] [added: parties,] including our suppliers and [removed: customers may] [added: customers,] also rely on information technology and [added: may] be subject to [removed: such] cybersecurity [removed: breaches.][added: breaches that could impact their businesses and could in turn disrupt our supply chain and/or our business.]

Our implementation, maintenance and utilization of global information [removed: technology (outsourced, in-house and remote),] [added: technology,] including operational technology, supply chain and finance systems, human resource management systems, creative asset management and retail operating systems, as well as associated hardware and use of cloud-based models, involve risks and uncertainties.

These include certain information technology, [added: supply chain,] finance and human resource functions.

[removed: While we believe we conduct appropriate due diligence before entering into agreements with the outsourcing entity, the] [added: The] failure of one or more [removed: entities] [added: such providers] to [removed: provide] [added: deliver] the expected services, provide them on a timely basis or to provide them at the prices we expect may have a material adverse effect on our business.

In addition, [removed: if] [added: when] we transition [removed: systems to one or more new, or among existing,] external service providers, we may experience challenges that could have a material adverse effect on our business.

We assume no responsibility to provide [removed: guidance,] or [removed: to] update [removed: any guidance we provide,] [added: guidance,] and any longer-term guidance we may provide is based on goals that we believe, at the time guidance is given, are reasonably attainable for growth and performance over a number of years.

If [removed: and when we announce] [added: our] actual results [removed: that] differ from those that outside analysts or others have been predicting, the market price of our securities could be affected.

Risks related to our Business and our Industry

In addition, we periodically review our brand portfolio, and our strategy includes potential divestitures of certain brands as we rationalize product offerings.

Acquisitions including strategic investments or alliances entail numerous risks, which may include: (i) difficulties in integrating acquired operations or products, including the loss of key employees from, or customers, consumers or suppliers of, acquired businesses; (ii) diversion of management’s attention from our existing businesses; (iii) adverse effects on existing business relationships with suppliers, customers and consumers of ours or the companies in which we invest; (iv) adverse impacts of margin and product cost structures different from those of our current mix of business; (v) reputational risks associated with the activities of the businesses that we acquire or in which we invest; and (vi) risks of entering distribution channels, categories or markets in which we have limited or no prior experience.

Our global operations are subject to many risks and uncertainties, including: (i) fluctuations in foreign currency exchange rates and the relative costs of operating in different places, which can affect our results of operations, the value of our foreign assets, the relative prices at which we and competitors sell products in the same markets, the cost of certain inventory and non-inventory items required in our operations, and the relative prices at which we sell our products in different markets; (ii) foreign or U.S. laws, regulations and policies, including restrictions on trade, immigration and travel, operations, and investments; currency exchange controls; restrictions on imports and exports, including license requirements; tariffs; and taxes; (iii) lack of well-established or reliable legal and administrative systems in certain countries in which we operate; (iv) adverse weather conditions and natural disasters; and (v) social, economic and geopolitical conditions, such as a pandemic, terrorist attack, war or other military action.

Risks related to Legal and Regulatory Matters

Risks related to Technology and Cybersecurity Matters

Risks related to our Securities and our Ownership Structure

While we devote considerable effort and resources to shape, analyze and respond to consumer preferences, we recognize that consumer tastes cannot be predicted with certainty and can change rapidly.

Acquisitions including strategic investments or alliances entail numerous risks, which may include:

- difficulties in integrating acquired operations or products, including the loss of key employees from, or customers of, acquired businesses;

- diversion of management’s attention from our existing businesses;

- adverse effects on existing business relationships with suppliers and customers;

- adverse impacts of margin and product cost structures different from those of our current mix of business; and

- risks of entering distribution channels, categories or markets in which we have limited or no prior experience.

If the testing performed indicates that impairment has occurred, we are required to record a non-cash impairment charge for the difference between the carrying value of the goodwill or other intangible assets with indefinite lives and the fair value of the goodwill or the fair value of other intangible assets with indefinite lives in the period the determination is made.

The standards or assumptions could change over time.

We are modifying our business practices, including in response to legislation, executive orders and guidance from government entities and healthcare authorities.

Some of these changes to our business practices create operational challenges and may adversely impact our business.

The pandemic has significantly increased economic uncertainty, raising concerns about an economic slowdown and the possibility of a global recession.

History has not provided any comparable recent events that provide guidance concerning the impacts of a global pandemic like COVID-19.

In addition, third parties may sell counterfeit versions of some of our products.

Our global operations are subject to many risks and uncertainties, including:

- fluctuations in foreign currency exchange rates and the relative costs of operating in different places, which can affect our results of operations, the value of our foreign assets, the relative prices at which we and competitors sell products in the same markets, the cost of certain inventory and non-inventory items required in our operations, and the relative prices at which we sell our products in different markets;

- foreign or U.S. laws, regulations and policies, including restrictions on trade, immigration and travel, operations, and investments; currency exchange controls; restrictions on imports and exports, including license requirements; tariffs; and taxes;

- lack of well-established or reliable legal and administrative systems in certain countries in which we operate;

- adverse weather conditions and natural disasters; and

- social, economic and geopolitical conditions, such as a pandemic, terrorist attack, war or other military action.

These breaches may negatively impact their businesses, which could in turn disrupt our supply chain and/or our business.

The following table is a comparative summary of operating results for fiscal [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] and reflects the basis of presentation described in *Item 8.

| | | | | | | Year Ended June 30 | | | | | | | | | [removed: | | | | | | | | | | | | | | | | | |]

| (In millions) | | | | | | [removed: 2020 | | | | | | 2019 | | | | | | 2018] [added: 2021] | | | | | | [added: 2020] | | | | | | [added: 2019] | | |

| NET [removed: SALES(1) | | | | | | | | | | | |] [added: SALES] | | | | | | | | | | | | | | | | | | | | |

| By Product Category: | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | | | | | |]

| Skin Care | | | | | | $ | [removed: 7,382] [added: 9,484] | | | | | $ | [removed: 6,551] [added: 7,382] | | | | | $ | [removed: 5,595 | | | | | | | | | | | |] [added: 6,551] | |

| Makeup | | | | | | [removed: 4,794 | | | | | | 5,860 | | | | | | 5,633] [added: 4,203] | | | | | | [added: 4,794] | | | | | | [added: 5,860] | | |

| Fragrance | | | | | | [removed: 1,563 | | | | | | 1,802 | | | | | | 1,826] [added: 1,926] | | | | | | [added: 1,563] | | | | | | [added: 1,802] | | |

| Hair Care | | | | | | [removed: 515 | | | | | | 584 | | | | | | 570] [added: 571] | | | | | | [added: 515] | | | | | | [added: 584] | | |

| Other | | | | | | [removed: 40 | | | | | | 69 | | | | | | 67] [added: 45] | | | | | | [added: 40] | | | | | | [added: 69] | | |

| | | | | | | [removed: 14,294 | | | | | | 14,866 | | | | | | 13,691] [added: 16,229] | | | | | | [added: 14,294] | | | | | | [added: 14,866] | | |

| Returns associated with restructuring and other activities | | | | | | [removed: — | | | | | | (3) | | | | | | (8)] [added: (14)] | | | | | | [added: —] | | | | | | [added: (3)] | | |

| Net sales | | | | | | $ | [removed: 14,294] [added: 16,215] | | | | | $ | [removed: 14,863] [added: 14,294] | | | | | $ | [removed: 13,683 | | | | | | | | | | | |] [added: 14,863] | |

| By [removed: Region: | | | | | | | | | | | |] [added: Region(1):] | | | | | | | | | | | | | | | | | | | | |

| The Americas | | | | | | $ | [removed: 3,794] [added: 3,797] | | | | | $ | [removed: 4,741] [added: 3,794] | | | | | $ | [removed: 5,015 | | | | | | | | | | | |] [added: 4,741] | |

| Europe, the Middle East & Africa | | | | | | [removed: 6,262 | | | | | | 6,452 | | | | | | 5,634] [added: 6,946] | | | | | | [added: 6,262] | | | | | | [added: 6,452] | | |

| Asia/Pacific | | | | | | [removed: 4,238 | | | | | | 3,673 | | | | | | 3,042] [added: 5,486] | | | | | | [added: 4,238] | | | | | | [added: 3,673] | | |

| | | | | | | [removed: 14,294 | | | | | | 14,866 | | | | | | 13,691] [added: 16,229] | | | | | | [added: 14,294] | | | | | | [added: 14,866] | | |

| Returns associated with restructuring and other activities | | | | | | [removed: — | | | | | | (3) | | | | | | (8)] [added: (14)] | | | | | | [added: —] | | | | | | [added: (3)] | | |

| Net sales | | | | | | $ | [removed: 14,294] [added: 16,215] | | | | | $ | [removed: 14,863] [added: 14,294] | | | | | $ | [removed: 13,683 | | | | | | | | | | | |] [added: 14,863] | |

| OPERATING INCOME [removed: (LOSS)(1) | | | | | | | | | | | |] [added: (LOSS)] | | | | | | | | | | | | | | | | | | | | |

| By Product Category: | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | | | | | |]

| Skin Care | | | | | | $ | [removed: 2,125] [added: 3,036] | | | | | $ | [removed: 1,925] [added: 2,125] | | | | | $ | [removed: 1,514 | | | | | | | | | | | |] [added: 1,925] | |

| Makeup | | | | | | [removed: (1,438) | | | | | | 438 | | | | | | 549] [added: (384)] | | | | | | [added: (1,438)] | | | | | | [added: 438] | | |

| Fragrance | | | | | | [removed: 17 | | | | | | 140 | | | | | | 176] [added: 215] | | | | | | [added: 17] | | | | | | [added: 140] | | |

| Hair Care | | | | | | (19) | | | | | | [removed: 39 | | | | | | 64 | | | | | |] [added: (19)] | | | | | | [added: 39] | | |

| Other | | | | | | [removed: 4 | | | | | | 12 | | | | | | 9] [added: (2)] | | | | | | [added: 4] | | | | | | [added: 12] | | |

| | | | | | | [removed: 689 | | | | | | 2,554 | | | | | | 2,312] [added: 2,846] | | | | | | [added: 689] | | | | | | [added: 2,554] | | |

| Charges associated with restructuring and other activities | | | | | | [removed: (83) | | | | | | (241) | | | | | | (257)] [added: (228)] | | | | | | [added: (83)] | | | | | | [added: (241)] | | |

| Operating income | | | | | | $ | [removed: 606] [added: 2,618] | | | | | $ | [removed: 2,313] [added: 606] | | | | | $ | [removed: 2,055 | | | | | | | | | | | |] [added: 2,313] | |

| By [removed: Region: | | | | | | | | | | | |] [added: Region(1):] | | | | | | | | | | | | | | | | | | | | |

| The Americas | | | | | | $ | [removed: (1,044)] [added: 518] | | | | | $ | [removed: 672] [added: (1,044)] | | | | | $ | [removed: 872 | | | | | | | | | | | |] [added: 672] | |

| Europe, the Middle East & Africa | | | | | | [removed: 997 | | | | | | 1,153 | | | | | | 865] [added: 1,335] | | | | | | [added: 997] | | | | | | [added: 1,153] | | |

| Asia/Pacific | | | | | | [removed: 736 | | | | | | 729 | | | | | | 575] [added: 993] | | | | | | [added: 736] | | | | | | [added: 729] | | |

| | | | | | | [removed: 689 | | | | | | 2,554 | | | | | | 2,312] [added: 2,846] | | | | | | [added: 689] | | | | | | [added: 2,554] | | |

| Charges associated with restructuring and other activities | | | | | | [removed: (83) | | | | | | (241) | | | | | | (257)] [added: (228)] | | | | | | [added: (83)] | | | | | | [added: (241)] | | |

| Operating income | | | | | | $ | [removed: 606] [added: 2,618] | | | | | $ | [removed: 2,313] [added: 606] | | | | | $ | [removed: 2,055 | | | | | | | | | | | |] [added: 2,313] | |

(1)The net sales [removed: and operating income] from our travel retail business are included in the Europe, the Middle East & Africa region, with the exception of the net sales of Dr. Jart+ [removed: products] in the travel retail channel that are reflected in Korea in the Asia/Pacific region.

Accordingly, the fiscal 2019 [removed: and 2018] operating income of The Americas was increased, with a corresponding decrease in Europe, the Middle East & Africa, by $866 [removed: million and $661] million, [removed: respectively,] to conform with the [removed: current year] [added: fiscal 2021 and 2020] methodology and presentation.

| | | | | | | Year Ended June 30 | | | | | | | | | [removed: | | | | | | | | | | | | | | | | | |]

Operating income attributable to the travel retail sales included in Europe, the Middle East & Africa is included in that region and in The Americas.

| Net loss attributable to redeemable noncontrolling interest | | | | | | — | | | | | | — | | | | | | — | | |

The COVID-19 pandemic continues to disrupt our operating environment, including impacts on retail traffic and changes in certain consumer preferences.

During fiscal 2021, the spread of COVID-19, as well as the resurgences in COVID-19 cases and the rapid spread of variants, including the Delta variant, particularly in the United Kingdom, Continental Europe, Latin America, and Asia outside of China, led to government restrictions to prevent further spread of the virus.

Restrictions in many parts of the world at various times during fiscal 2021 have included temporary business closures, curtailment of travel, mask wearing, social distancing and quarantines.

Most brick-and-mortar retail stores that sell our products, whether operated by us or our customers, were open during the fiscal 2021 second quarter in China and the United States.

There were intermittent closures throughout the rest of the world, particularly in the second half of fiscal 2021.

In most of the Asia/Pacific region (with the exception of China), the United Kingdom, Continental Europe, Canada, and much of Latin America, many retail stores were temporarily closed for some period during the fiscal 2021 fourth quarter due to the resurgence of COVID-19 cases.

In much of the United Kingdom and Continental Europe, retail locations gradually reopened during the fourth quarter but with capacity and other safety restrictions in place.

Globally, in areas where stores were open, consumer traffic has not recovered to the pre-COVID-19 pandemic levels.

International travel has remained largely curtailed globally due to both government restrictions and consumer health concerns that continue to adversely impact consumer traffic in most travel retail locations.

Conversely, domestic travel in China, especially in Hainan, and some other travel corridors in Asia/Pacific and The Americas were open.

Consumer Preferences

The COVID-19 pandemic-related closures of offices, retail stores and other businesses and the significant decline in social gatherings have influenced consumer preferences and practices.

Specifically, the demand for makeup continues to be weak given fewer makeup usage occasions and ongoing mask wearing, while other categories have been more resilient.

Cost Controls

In response to the ongoing impacts from the COVID-19 pandemic, we continue to implement cost control actions in certain areas of the business to effectively manage the changing business environment.

This diversity allows us to leverage consumer analytics and insights with agility by deploying our brands to fast growing and profitable opportunities.

These analytics and insights, combined with our creativity, inform our innovation to provide a broad, locally-relevant and inclusive range of prestige products allowing us to compete effectively for a greater share of a consumer's beauty routine.

The launches of Advanced Night Repair Synchronized Multi-Recovery Complex, Revitalizing Supreme+ Bright, and the relaunch of Perfectionist Pro from Estée Lauder, Genaissance de la Mer The Concentrated Night Balm from La Mer, and Moisture Surge 100H Auto-Replenishing Hydrator from Clinique were particularly successful in Asia/Pacific.

Net sales of skin care products in fiscal 2021 rose in every geographic region, led by Estée Lauder.

La Mer and Dr. Jart+, which we acquired in December 2019.

- Our fragrance net sales growth accelerated during fiscal 2021, driven by continued resilience in luxury fragrance.

The growth was led by strength in colognes, bath, body and home subcategories at Jo Malone London, the successful launches of Bitter Peach and Rose Prick Private Blend fragrances from Tom Ford Beauty and targeted expanded consumer reach of Le Labo.

- Our hair care net sales grew as salons and retail stores reopened throughout the year and strong online growth continued.

Hero products led growth at Aveda, supported by the brand’s “100% vegan” campaign.

Net sales in fiscal 2021 from our specialty-multi and online channels led growth.

- Online net sales have continued to grow strongly on a global basis, rising strong double digits for fiscal 2021.

Areas of differentiation include climate & energy, green chemistry, social investments, employee engagement and safety and inclusion, diversity & equity.

The COVID-19 pandemic continues to disrupt business for us, retailers and other companies with which we do business.

We are mindful that these trends, the resurgence of COVID-19 cases globally and the related government restrictions may continue to impact the pace of recovery.

We previously estimated a net reduction over the duration of the PCBA Program in the range of approximately 1,500 to 2,000 positions globally, including temporary and part-time employees.

We have revised these estimates based on the review of the PCBA Program.

For additional information about restructuring and other charges, see *Item 8.

Financial Statements and Supplementary Data – Note 8 – Charges Associated with Restructuring and Other Activities*.

In addition, we 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.

The carrying values of the customer lists and goodwill relating to the GLAMGLOW and Smashbox reporting units were zero as of November 30, 2020 and June 30, 2020, respectively.

The carrying values of the DECIEM reporting unit and other intangible assets as of June 30, 2021 approximated their fair values.

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

We continue to monitor the impact of the COVID-19 pandemic, which negatively impacted the second half of fiscal 2020, on all aspects of our business.

We have taken significant actions to help protect the health and safety of our employees, beauty advisors and consumers, as well as to effectively manage our business through the rapidly evolving disruptions in our operating environment.

We believe we are well-positioned to participate in the markets' recovery.

Beginning in calendar 2020, governments in various countries implemented restrictions to prevent further spread of the virus.

As a result, we modified a number of our business practices, in part due to legislation, executive orders and guidance from government entities and healthcare authorities (collectively, “COVID-19 Directives”).

Brick-and-mortar retail stores that sell our products across most countries have experienced temporary or ongoing store closures and, as they re-open, significantly reduced consumer traffic.

This impacted the brick-and-mortar retail operations of our customers, as well as our freestanding stores.

- In Asia/Pacific, nearly all retail stores have re-opened after many stores closed for most of February 2020 through April 2020.

- In Europe, the Middle East & Africa, retail stores began closing in early March 2020 and gradually reopened through June 2020.

At the end of June 2020, approximately 15% of the stores remained closed, and by mid-August most had re-opened.

- In The Americas, retail stores began closing in mid-March 2020.

By the end of June 2020, approximately 20% of the stores remained closed, and by mid-August, most stores had re-opened.

- Since mid-March 2020, air travel has been largely curtailed globally, adversely impacting the annual growth trend of our travel retail business.

As the pandemic continues, we are continuing to assess local conditions and when counters and our stores should re-open.

Supply Chain impact

During the second half of fiscal 2020, a majority of our facilities continued to manufacture and distribute products globally, albeit in a much-reduced capacity in light of safety measures designed to protect our employees in response to the COVID-19 pandemic.

By the end of our fiscal year, all manufacturing and distribution facilities were operating with rapidly improving capacity.

We have, to date, been able to obtain raw materials and components.

At this time, we expect to be able to produce and distribute our products when the demand increases.

Our cost of sales was adversely impacted by the timing of expense recognition and other costs, primarily caused by the COVID-19 pandemic, including the shutdown of certain of our manufacturing facilities and the implementation of social distancing measures.

These adjustments resulted in an increase in Cost of sales for the fiscal 2020 fourth quarter and fiscal 2020 of $80 million and $83 million, respectively.

Additionally, we recorded an increase in excess and obsolete inventory, which resulted in an increase in Cost of sales for the fiscal 2020 fourth quarter and fiscal 2020 of $121 million and $166 million, respectively.

Cash Conservation

As the impacts from COVID-19 evolved, we faced various uncertainties and implemented strict cost control measures and took actions to conserve cash.

Such actions included:

- Expense reductions, including advertising and promotion activities, travel, meetings, consulting, and certain employee costs, including implementing a hiring freeze, furloughs and similar unpaid temporary leaves of absence for many point of sale employees; temporary salary reductions for senior executives and other management employees; and a temporary elimination of cash retainers for the Board of Directors.

Combined, these resulted in approximately $800 million of savings in the last five months of fiscal 2020.

- Reduced capital investments (e.g., facilities and consumer-facing counters) by approximately $275 million for fiscal 2020.

- Temporary suspension of discretionary repurchases of our Class A Common Stock.

- Not declaring a quarterly cash dividend that would have been paid in June 2020.

- Raising an additional $2,200 million of cash by issuing $700 million of Senior Unsecured Notes and borrowed the full amount under our $1,500 million revolving credit facility.

In June 2020, we repaid $750 million borrowed under our revolving credit facility, and, in August 2020, repaid the remaining $750 million.

The Estée Lauder Companies Inc., founded in 1946 by Estée and Joseph Lauder, is one of the world’s leading [removed: manufacturers and] [added: manufacturers,] marketers [added: and sellers] of quality skin care, makeup, fragrance and hair care products.

Our products are sold in approximately 150 countries and territories under a number of well-known brand names including: Estée Lauder, Clinique, Origins, M·A·C, Bobbi Brown, La Mer, Aveda, Jo Malone London, Too [removed: Faced and] [added: Faced,] Dr. [removed: Jart+.][added: Jart+, and The Ordinary.]

We believe we are a leader in the beauty industry due to the global recognition of our brand names, our [removed: leadership] [added: excellence] in product innovation, our strong position in key geographic markets and the consistently high quality of our products and “High-Touch” services.

We sell our prestige products through distribution channels that complement the luxury image and prestige status of our [removed: brands.][added: brands, and we provide “High-Touch” consumer experiences across our distribution channels.]

We believe that our strategy of pursuing selective distribution [removed: strengthens our relationships with retailers and consumers, enables our brands to be among the best-selling product lines at the stores and online, and] heightens the aspirational quality of our brands.

Members of the Lauder family, some of whom are directors, executive officers and/or employees, beneficially own, directly or indirectly, as of August 20, [removed: 2020,] [added: 2021,] shares of [added: our Company's] Class A Common Stock and Class B Common Stock having approximately [removed: 86%] [added: 85%] of the outstanding voting power of the Common Stock.

[removed: ][added: ]

[removed: ][added: ]

| [removed: ] [added: ] | | | | | | Estée Lauder brand products, which have been sold since 1946, have a reputation for innovation, sophistication and superior quality. Estée Lauder is one of the world’s most renowned beauty brands, producing iconic skin care, makeup and fragrances. | | |

| [removed: ] [added: ] | | | | | | We pioneered the marketing of prestige men’s fragrance, grooming and skin care products with the introduction of Aramis products in 1964. | | |

| [removed: ] [added: ] | | | | | | Introduced in 1968, Clinique skin care and makeup products are all allergy tested and 100% fragrance free and have been designed to address individual skin types and needs. Clinique also offers select fragrances. The skin care and makeup products are based on the research and related expertise of leading dermatologists. | | |

| [removed: ] [added: ] | | | | | | Lab Series, introduced in 1987, is a series of high performance, specialized skin care solutions uniquely created to improve the look and feel of men’s skin. | | |

| [removed: ] [added: ] | | | | | | Introduced in 1990, Origins is known for high-performance natural skin care that is “powered by nature and proven by science.” The brand also sells makeup, fragrance and hair care products and is distributed primarily through online, specialty-multi and free-standing Origins stores. Origins has a license agreement to develop and sell beauty products using the name of Dr. Andrew Weil. | | |

| [removed: ] [added: ] | | | | | | M·A·C, the leading brand of professional cosmetics, was created in Toronto, Canada. We completed our acquisition of M·A·C in 1998. The brand’s popularity has grown through a tradition of word-of-mouth endorsement from professional makeup artists, models, photographers and journalists around the world. | | |

| [removed: ] [added: ] | | | | | | Acquired in 1995, Bobbi Brown is a global prestige beauty brand known for its high quality and undertone-correct makeup and skin care products that celebrate individual beauty and confidence. Reflecting its artistry roots, the brand is focused on creating a teaching and learning community of women around the world. | | |

| [removed: ] [added: ] | | | | | | Acquired in 1995, La Mer is a leading global luxury skin care brand that is available in limited distribution worldwide. The brand is known for its iconic Crème de la Mer moisturizer, serums and lotions, as well as other skin care and foundation products that are created around the original “Miracle Broth.” | | |

| [removed: ] [added: ] | | | | | | Acquired in 1997, Aveda sells high-performance, naturally-derived hair care products, as well as skin care, makeup and fragrance. The brand is known for its innovative plant-based products and its commitment to environmental sustainability and corporate responsibility. It is distributed primarily through top-tier hair salons and direct-to-consumer, via online and Aveda stores. | | |

| [removed: ] [added: ] | | | | | | Acquired in 1999, Jo Malone London is a scented British lifestyle brand with understated elegance, offering enchanted story-telling and [removed: high-touch] [added: “High-Touch”] boutique services. The brand’s famous colognes are perfect alone or artfully layered with Fragrance Combining. Jo Malone London embodies the spirit of gifting generosity and inspires emotional elevation. | | |

| [removed: ] [added: ] | | | | | | Acquired in 2006, Bumble and bumble is a New York-based hair care brand that creates high-quality hair care and styling products. The brand is distributed primarily through top-tier salons, including Bumble and bumble’s own flagship salons, specialty-multi retailers and online. | | |

| [removed: ] [added: ] | | | | | | Acquired in 2003, Darphin is a Paris-based, prestige skin care brand known for its high-performance botanical skin care. The brand is distributed primarily through high-end independent pharmacies and online brand and retailer channels. | | |

| [removed: ] [added: ] | | | | | | In 2005, we entered into a license agreement to develop and distribute luxury fragrances and beauty products under the Tom Ford brand name, all shaped with Tom Ford’s vision to be the first true luxury brand of the 21st century encompassing fashion, fragrance and accessories. In the same vein as the fashion brand, Tom Ford Beauty exudes seductive modern-day glamour and includes luxury fragrance, color cosmetics, men’s grooming products and skin care products for discerning consumers globally. | | |

| [removed: ] [added: ] | | | | | | Acquired in 2010, Smashbox Cosmetics is a Los Angeles-based, photo studio-inspired makeup brand with high performance products created for our consumer’s everyday life in the spotlight. | | |

| [removed: ] [added: ] | | | | | | Launched in 2012, AERIN is a luxury lifestyle beauty and fragrance brand inspired by the signature style of its founder, Aerin Lauder. | | | [removed: | | | | | |]

| [removed: ] [added: ] | | | | | | Acquired in 2014, Le Labo is a sensory and experiential lifestyle brand, deeply rooted in the craft of slow perfumery. Born in Grasse, France and raised in downtown NYC, it offers hand-crafted and personalized fragrances, as well as ‘alternative’ and genuine experiences celebrating craftsmanship. | | | [removed: | | | | | |]

| [removed: ] [added: ] | | | | | | Acquired in 2015, Les Editions de Parfums Frédéric Malle is a collection of exclusive, sophisticated, ultraluxury fragrances crafted by some of the world’s most talented perfumers and published by the brand. | | | [removed: | | | | | |]

| [removed: ] [added: ] | | | | | | Acquired in 2015, GLAMGLOW started as a behind-the-scenes Hollywood secret to instant glow. The brand is known for bold, sensorial products that deliver instant results, and its unconventional philosophy that high performance skin care should also be fun and sexy. | | | [removed: | | | | | |]

| [removed: ] [added: ] | | | | | | Acquired in 2016, [removed: By] Kilian [added: Paris] is a prestige fragrance brand that embodies timeless sophistication and modern luxury. | | | [removed: | | | | | |]

| [removed: ] [added: ] | | | | | | Acquired in 2016, Too Faced is a serious makeup brand that knows how to have fun. The brand is unabashedly pink, pretty and feminine with a playful wink that is beloved for its high-quality formulas, cheeky product names and distinctive packaging. | | | [removed: | | | | | |]

| [removed: ] [added: ] | | | | | | Acquired in 2019, Dr. Jart+ is a Seoul-based, global skin care brand known for its innovative formulations and unique combination of dermatological science and art. Its high-quality masks, moisturizers and serums are distributed primarily through travel retail, specialty-multi and online channels. | | | [removed: | | | | | |]

| [removed:  | | | | | |] [added: ] | | | | | | | | |

| | | | | | | Under exclusive global license arrangements with Tommy Hilfiger, Donna Karan New York, DKNY, Michael Kors and Ermenegildo Zegna, we manage a diversified designer fragrance portfolio. | | | [removed: | | | | | |]

In addition to the brands described above, we manufacture and sell products under the [removed: Prescriptives, RODIN olio lusso and] Do The Right Thing [removed: brands.][added: brand.]

[removed: We also have] [added: Our current] minority investments [removed: in (i) a company based in Canada that manufactures, markets and sells skin care and other products under a number of brand names, including The Ordinary, primarily in North America, the United Kingdom and Europe, and (ii)] [added: include] a company based in India that manufactures, markets and sells Ayurvedic skin care and other products under the Forest Essentials brand name, primarily in India.

Our “luxury brands” are La Mer, Jo Malone London, Tom [removed: Ford,] [added: Ford Beauty,] AERIN, [removed: RODIN olio lusso,] Le Labo, Editions de Parfums Frédéric Malle and [removed: By Kilian.][added: Kilian Paris.]

Our “designer fragrances” are sold under the Tommy Hilfiger, Donna Karan New York, DKNY, Michael Kors, [removed: Kiton] and Ermenegildo Zegna brand names, which we license from their respective owners.

We sell our prestige products through distribution channels that complement the luxury image and prestige status of our [removed: brands.][added: brands, and we provide “High-Touch” consumer experiences across our distribution channels.]

As of June 30, [removed: 2020,] [added: 2021,] we operated approximately 1,600 freestanding stores.

Most [added: freestanding stores] are operated [added: by us] under a single brand name, such as M·A·C, Jo Malone London, Aveda, [removed: Origins or] [added: Origins,] Le [removed: Labo.][added: Labo or DECIEM.]

There are also [removed: more than 800] [added: approximately 700] Company-branded freestanding stores around the world operated by authorized third parties, primarily in Europe, the Middle East & [removed: Africa.][added: Africa and Asia/Pacific.]

[removed: Products] [added: Online, we sell products] from most of our brands [removed: are sold online through Company-owned and operated e-commerce and m-commerce sites,] [added: direct-to-consumer] through [removed: various] [added: our brand.com] sites [removed: operated by authorized retailers] and [removed: through] third-party online malls.

For a discussion of recent developments, including the impacts to consumer preferences and market trends due to the COVID-19 pandemic, see *Item 7.

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

|  | | | | | |  | | |

| | | | In 2021, we increased our investment in Deciem Beauty Group Inc. (“DECIEM”) to approximately 76%. Known as “The Abnormal Beauty Company,” DECIEM is a Toronto-based, vertically integrated multi-brand beauty company rooted in a consumer-focused and functional approach. Its portfolio includes The Ordinary, an ingredient-focused brand, and NIOD, a science-driven skin care brand. | | | | | |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | |

| | | | | | | | | |

In fiscal 2021, we made the decision to exit the global distribution of BECCA products, a makeup brand we acquired in 2016.

We expect to substantially complete this exit during fiscal 2022.

During fiscal 2021, we ceased global distribution of Prescriptives and Rodin olio lusso products and did not renew the license with Kiton.

From time to time, we also make strategic minority investments in other companies, mainly in the beauty industry.

In some cases, we have acquired the remaining interest or a majority interest (e.g., Have & Be Co. Ltd. (i.e. Dr. Jart+) and Deciem Beauty Group Inc., respectively).

Social Impact and Sustainability

In fiscal 2021, we continued to further integrate social impact and sustainability into our strategy and business operations.

Our social impact and sustainability initiatives help drive innovation, growth and efficiency across the business and within our brand portfolio.

Areas of focus include climate and energy; packaging; responsible sourcing; ingredient transparency; inclusion, diversity and equity; employee health and safety; and social investments.

We have set goals or made commitments for these focus areas.

For example, our goals related to climate and energy support efficiency and conservation within our facilities and internal supply chain, and some of these goals are also intended to help us reduce cost and waste.

Our Nominating and ESG Committee, one of our Board committees, has oversight responsibility for our Company’s environmental, social and governance (“ESG”) activities and practices, including citizenship and sustainability matters.

Our social impact and sustainability efforts are led by our Executive Chairman and our President and Chief Executive Officer.

Other members of senior management, along with employees across the organization, help to drive our strategic initiatives concerning social impact and sustainability.

Additional information related to our social impact and sustainability matters can be found at www.elcompanies.com.

In fiscal 2021, we were impacted by the dramatic shifts in our distribution landscape and consumer behaviors attributable to the COVID-19 pandemic.

While we and certain retailers and distributors closed or decreased our presence in a number of existing points of distribution, we also continued to strategically open new points of distribution globally and saw an expansion of online sales globally.

We also sell our products wholesale to authorized retailers that resell online through retailer.com and pure-play sites.

For a discussion of recent developments, see *Item 7.

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

|  | | | | | | Acquired in 2016, BECCA is the makeup brand known for its complexion products and iconic glow. The brand is committed to inclusivity and has shades for the lightest to darkest skin tones. Its formulas harness innovative light technology to provide a range of glow from start to finish. | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

We also develop and sell products under a license from Kiton.

In fiscal 2020, we continued to strategically open new points of distribution globally, and exited certain locations when appropriate.

Hero products are at the core of the brand marketing strategies and have become the key drivers of repeat sales and loyalty.

During fiscal 2020, we improved our remote working infrastructure and resilience plans, deployed capabilities to enhance data analytics, launched new marketing capabilities to drive deeper consumer engagement and elevated the in-store experience through innovative technologies.

To capitalize on innovation and other supply chain benefits, we continue to utilize a network of third-party manufacturers on a global basis.

To further ensure the adequacy of supply, we utilize sophisticated planning tools and deploy various tactics such as strategic inventory buffer and multi-sourcing solutions.

Employees

There are no material capital expenditures for environmental control facilities either planned in the current year or expected in the near future.

*as of August 20, 2020

Ms. Stanley joined the Company in 2019.

*as of August 20, 2020

| ☒ | | | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | | | [removed: | | |]

| | | | For the fiscal year ended June 30, [removed: 2020 | | |] [added: 2021] | | |

| ☐ | | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | | | [removed: | | |]

| | | | For the transition period from to | | | [removed: | | |]

The aggregate market value of the registrant’s voting common equity held by non-affiliates of the registrant was approximately [removed: $45] [added: $61] billion at December 31, [removed: 2019] [added: 2020] (the last business day of the registrant’s most recently completed second quarter).*

At August 20, [removed: 2020, 225,569,212] [added: 2021, 233,045,213] shares of the registrant’s Class A Common Stock, $.01 par value, and [removed: 135,235,429] [added: 128,242,029] shares of the registrant’s Class B Common Stock, $.01 par value, were outstanding.

| Proxy Statement for Annual Meeting of Stockholders to be held November [removed: 10, 2020] [added: 12, 2021] | | | | | | Part III | | |

| [Item [removed: 1.](#ie6b7bdd742494f74a721fab7d38e5c42_13)] [added: 1.](#i3abf634c5cff49dda5f3a4237e4cefbb_13)] | | | [removed: [Business](#ie6b7bdd742494f74a721fab7d38e5c42_13)] [added: [Business](#i3abf634c5cff49dda5f3a4237e4cefbb_13)] | | | [removed: [2](#ie6b7bdd742494f74a721fab7d38e5c42_13)] [added: [2](#i3abf634c5cff49dda5f3a4237e4cefbb_13)] | | |

| [Item [removed: 1A.](#ie6b7bdd742494f74a721fab7d38e5c42_16)] [added: 1A.](#i3abf634c5cff49dda5f3a4237e4cefbb_16)] | | | [Risk [removed: Factors](#ie6b7bdd742494f74a721fab7d38e5c42_16)] [added: Factors](#i3abf634c5cff49dda5f3a4237e4cefbb_16)] | | | [removed: [14](#ie6b7bdd742494f74a721fab7d38e5c42_16)] [added: [18](#i3abf634c5cff49dda5f3a4237e4cefbb_16)] | | |

| [Item [removed: 1B.](#ie6b7bdd742494f74a721fab7d38e5c42_19)] [added: 1B.](#i3abf634c5cff49dda5f3a4237e4cefbb_19)] | | | [Unresolved Staff [removed: Comments](#ie6b7bdd742494f74a721fab7d38e5c42_19)] [added: Comments](#i3abf634c5cff49dda5f3a4237e4cefbb_19)] | | | [removed: [20](#ie6b7bdd742494f74a721fab7d38e5c42_19)] [added: [24](#i3abf634c5cff49dda5f3a4237e4cefbb_19)] | | |

| [Item [removed: 2.](#ie6b7bdd742494f74a721fab7d38e5c42_22)] [added: 2.](#i3abf634c5cff49dda5f3a4237e4cefbb_22)] | | | [removed: [Properties](#ie6b7bdd742494f74a721fab7d38e5c42_22)] [added: [Properties](#i3abf634c5cff49dda5f3a4237e4cefbb_22)] | | | [removed: [21](#ie6b7bdd742494f74a721fab7d38e5c42_22)] [added: [24](#i3abf634c5cff49dda5f3a4237e4cefbb_22)] | | |

| [Item [removed: 3.](#ie6b7bdd742494f74a721fab7d38e5c42_25)] [added: 3.](#i3abf634c5cff49dda5f3a4237e4cefbb_25)] | | | [Legal [removed: Proceedings](#ie6b7bdd742494f74a721fab7d38e5c42_25)] [added: Proceedings](#i3abf634c5cff49dda5f3a4237e4cefbb_25)] | | | [removed: [21](#ie6b7bdd742494f74a721fab7d38e5c42_25)] [added: [25](#i3abf634c5cff49dda5f3a4237e4cefbb_25)] | | |

| [Item [removed: 4.](#ie6b7bdd742494f74a721fab7d38e5c42_28)] [added: 4.](#i3abf634c5cff49dda5f3a4237e4cefbb_28)] | | | [Mine Safety [removed: Disclosures](#ie6b7bdd742494f74a721fab7d38e5c42_28)] [added: Disclosures](#i3abf634c5cff49dda5f3a4237e4cefbb_28)] | | | [removed: [21](#ie6b7bdd742494f74a721fab7d38e5c42_28)] [added: [25](#i3abf634c5cff49dda5f3a4237e4cefbb_28)] | | |

| [Item [removed: 5.](#ie6b7bdd742494f74a721fab7d38e5c42_34)] [added: 5.](#i3abf634c5cff49dda5f3a4237e4cefbb_34)] | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#ie6b7bdd742494f74a721fab7d38e5c42_34)] [added: Securities](#i3abf634c5cff49dda5f3a4237e4cefbb_34)] | | | [removed: [22](#ie6b7bdd742494f74a721fab7d38e5c42_34)] [added: [26](#i3abf634c5cff49dda5f3a4237e4cefbb_34)] | | |

| [Item [removed: 6.](#ie6b7bdd742494f74a721fab7d38e5c42_37)] [added: 6.](#i3abf634c5cff49dda5f3a4237e4cefbb_37)] | | | [Selected Financial [removed: Data](#ie6b7bdd742494f74a721fab7d38e5c42_37)] [added: Data](#i3abf634c5cff49dda5f3a4237e4cefbb_37)] | | | [removed: [24](#ie6b7bdd742494f74a721fab7d38e5c42_37)] [added: [27](#i3abf634c5cff49dda5f3a4237e4cefbb_37)] | | |

| [Item [removed: 7.](#ie6b7bdd742494f74a721fab7d38e5c42_40)] [added: 7.](#i3abf634c5cff49dda5f3a4237e4cefbb_40)] | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#ie6b7bdd742494f74a721fab7d38e5c42_40)] [added: Operations](#i3abf634c5cff49dda5f3a4237e4cefbb_40)] | | | [removed: [25](#ie6b7bdd742494f74a721fab7d38e5c42_40)] [added: [28](#i3abf634c5cff49dda5f3a4237e4cefbb_40)] | | |

| [Item [removed: 7A.](#ie6b7bdd742494f74a721fab7d38e5c42_43)] [added: 7A.](#i3abf634c5cff49dda5f3a4237e4cefbb_43)] | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#ie6b7bdd742494f74a721fab7d38e5c42_43)] [added: Risk](#i3abf634c5cff49dda5f3a4237e4cefbb_43)] | | | [removed: [54](#ie6b7bdd742494f74a721fab7d38e5c42_43)] [added: [56](#i3abf634c5cff49dda5f3a4237e4cefbb_43)] | | |

| [Item [removed: 8.](#ie6b7bdd742494f74a721fab7d38e5c42_46)] [added: 8.](#i3abf634c5cff49dda5f3a4237e4cefbb_46)] | | | [Financial Statements and Supplementary [removed: Data](#ie6b7bdd742494f74a721fab7d38e5c42_46)] [added: Data](#i3abf634c5cff49dda5f3a4237e4cefbb_46)] | | | [removed: [54](#ie6b7bdd742494f74a721fab7d38e5c42_46)] [added: [57](#i3abf634c5cff49dda5f3a4237e4cefbb_46)] | | |

| [Item [removed: 9.](#ie6b7bdd742494f74a721fab7d38e5c42_49)] [added: 9.](#i3abf634c5cff49dda5f3a4237e4cefbb_49)] | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#ie6b7bdd742494f74a721fab7d38e5c42_49)] [added: Disclosure](#i3abf634c5cff49dda5f3a4237e4cefbb_49)] | | | [removed: [54](#ie6b7bdd742494f74a721fab7d38e5c42_49)] [added: [57](#i3abf634c5cff49dda5f3a4237e4cefbb_49)] | | |

| [Item [removed: 9A.](#ie6b7bdd742494f74a721fab7d38e5c42_52)] [added: 9A.](#i3abf634c5cff49dda5f3a4237e4cefbb_52)] | | | [Controls and [removed: Procedures](#ie6b7bdd742494f74a721fab7d38e5c42_52)] [added: Procedures](#i3abf634c5cff49dda5f3a4237e4cefbb_52)] | | | [removed: [54](#ie6b7bdd742494f74a721fab7d38e5c42_52)] [added: [57](#i3abf634c5cff49dda5f3a4237e4cefbb_52)] | | |

| [Item [removed: 9B.](#ie6b7bdd742494f74a721fab7d38e5c42_55)] [added: 9B.](#i3abf634c5cff49dda5f3a4237e4cefbb_55)] | | | [Other [removed: Information](#ie6b7bdd742494f74a721fab7d38e5c42_55)] [added: Information](#i3abf634c5cff49dda5f3a4237e4cefbb_55)] | | | [removed: [54](#ie6b7bdd742494f74a721fab7d38e5c42_55)] [added: [57](#i3abf634c5cff49dda5f3a4237e4cefbb_55)] | | |

| [Part [removed: III:](#ie6b7bdd742494f74a721fab7d38e5c42_58)] [added: III:](#i3abf634c5cff49dda5f3a4237e4cefbb_58)] | | | | | | | | |

| [Item [removed: 10.](#ie6b7bdd742494f74a721fab7d38e5c42_61)] [added: 10.](#i3abf634c5cff49dda5f3a4237e4cefbb_61)] | | | [Directors, Executive Officers and Corporate [removed: Governance](#ie6b7bdd742494f74a721fab7d38e5c42_61)] [added: Governance](#i3abf634c5cff49dda5f3a4237e4cefbb_61)] | | | [removed: [55](#ie6b7bdd742494f74a721fab7d38e5c42_61)] [added: [58](#i3abf634c5cff49dda5f3a4237e4cefbb_61)] | | |

| [Item [removed: 11.](#ie6b7bdd742494f74a721fab7d38e5c42_64)] [added: 11.](#i3abf634c5cff49dda5f3a4237e4cefbb_64)] | | | [Executive [removed: Compensation](#ie6b7bdd742494f74a721fab7d38e5c42_64)] [added: Compensation](#i3abf634c5cff49dda5f3a4237e4cefbb_64)] | | | [removed: [55](#ie6b7bdd742494f74a721fab7d38e5c42_64)] [added: [58](#i3abf634c5cff49dda5f3a4237e4cefbb_64)] | | |

| [Item [removed: 12.](#ie6b7bdd742494f74a721fab7d38e5c42_67)] [added: 12.](#i3abf634c5cff49dda5f3a4237e4cefbb_67)] | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#ie6b7bdd742494f74a721fab7d38e5c42_67)] [added: Matters](#i3abf634c5cff49dda5f3a4237e4cefbb_67)] | | | [removed: [55](#ie6b7bdd742494f74a721fab7d38e5c42_67)] [added: [58](#i3abf634c5cff49dda5f3a4237e4cefbb_67)] | | |

| [Item [removed: 13.](#ie6b7bdd742494f74a721fab7d38e5c42_70)] [added: 13.](#i3abf634c5cff49dda5f3a4237e4cefbb_70)] | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#ie6b7bdd742494f74a721fab7d38e5c42_70)] [added: Independence](#i3abf634c5cff49dda5f3a4237e4cefbb_70)] | | | [removed: [55](#ie6b7bdd742494f74a721fab7d38e5c42_70)] [added: [58](#i3abf634c5cff49dda5f3a4237e4cefbb_70)] | | |

| [Item [removed: 14.](#ie6b7bdd742494f74a721fab7d38e5c42_73)] [added: 14.](#i3abf634c5cff49dda5f3a4237e4cefbb_73)] | | | [Principal Accounting Fees and [removed: Services](#ie6b7bdd742494f74a721fab7d38e5c42_73)] [added: Services](#i3abf634c5cff49dda5f3a4237e4cefbb_73)] | | | [removed: [55](#ie6b7bdd742494f74a721fab7d38e5c42_73)] [added: [58](#i3abf634c5cff49dda5f3a4237e4cefbb_73)] | | |

| [Item [removed: 15.](#ie6b7bdd742494f74a721fab7d38e5c42_79)] [added: 15.](#i3abf634c5cff49dda5f3a4237e4cefbb_79)] | | | [Exhibits, Financial Statement [removed: Schedules](#ie6b7bdd742494f74a721fab7d38e5c42_79)] [added: Schedules](#i3abf634c5cff49dda5f3a4237e4cefbb_79)] | | | [removed: [56](#ie6b7bdd742494f74a721fab7d38e5c42_79)] [added: [59](#i3abf634c5cff49dda5f3a4237e4cefbb_79)] | | |

| [Item [removed: 16.](#ie6b7bdd742494f74a721fab7d38e5c42_82)] [added: 16.](#i3abf634c5cff49dda5f3a4237e4cefbb_82)] | | | [Form 10-K [removed: Summary](#ie6b7bdd742494f74a721fab7d38e5c42_82)] [added: Summary](#i3abf634c5cff49dda5f3a4237e4cefbb_82)] | | | [removed: [62](#ie6b7bdd742494f74a721fab7d38e5c42_82)] [added: [65](#i3abf634c5cff49dda5f3a4237e4cefbb_82)] | | |

Such statements include our expectations regarding sales, earnings or other future operations, financial performance or liquidity, our long-term strategy, restructuring and [removed: other] [added: similar] initiatives, product introductions, geographic regions or channels, information technology [removed: initiatives] [added: initiatives, social impact] and [added: sustainability initiatives, and] new methods of sale.

| OR | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | |

| [Part I:](#i3abf634c5cff49dda5f3a4237e4cefbb_10) | | | | | | | | |

| [Part II:](#i3abf634c5cff49dda5f3a4237e4cefbb_31) | | | | | | | | |

| [Part IV:](#i3abf634c5cff49dda5f3a4237e4cefbb_76) | | | | | | | | |

| [Signatures](#i3abf634c5cff49dda5f3a4237e4cefbb_85) | | | | | | [66](#i3abf634c5cff49dda5f3a4237e4cefbb_85) | | |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| OR | | | | | | | | |

| [Part I:](#ie6b7bdd742494f74a721fab7d38e5c42_10) | | | | | | | | |

| [Part II:](#ie6b7bdd742494f74a721fab7d38e5c42_31) | | | | | | | | |

| [Part IV:](#ie6b7bdd742494f74a721fab7d38e5c42_76) | | | | | | | | |

| [Signatures](#ie6b7bdd742494f74a721fab7d38e5c42_85) | | | | | | [63](#ie6b7bdd742494f74a721fab7d38e5c42_85) | | |

None.

Not applicable

The following table sets forth our principal owned and leased manufacturing, assembly, research and development (“R&D”) and distribution facilities, some of which include contiguous office space, as well as our principal executive offices, as of August 20, [removed: 2020.][added: 2021.]

The leases expire at various times through [removed: 2040] [added: 2078] subject to certain renewal options.

| | | | The Americas | | | | | | | | | | | | [removed: | | | | | |] Europe, the Middle East & Africa | | | | | | | | | | | | [removed: | | | | | |] Asia/Pacific | | | | | | | | | [removed: | | | | | |]

| | | | Owned | | | | | | Leased | | | | | | Owned | | | | | | Leased | | | | | | Owned | | | | | | Leased | | | [removed: | | | | | | | | | | | | | | | | | |]

| Manufacturing | | | 2 | | | | | | 2 | | | | | | 3 | | | | | | — | | | | | | — | | | | | | — | | | [removed: | | | | | | | | | | | | | | | | | |]

| Distribution | | | — | | | | | | 6 | | | | | | 1 | | | | | | [removed: 6] [added: 9] | | | | | | — | | | | | | 2 | | | [removed: | | | | | | | | | | | | | | | | | |]

| Manufacturing and R&D | | | 1 | | | | | | — | | | | | | — | | | | | | 1 | | | | | | — | | | | | | — | | | [removed: | | | | | | | | | | | | | | | | | |]

| Manufacturing and Assembly | | | — | | | | | | [removed: 2] [added: 3] | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | [removed: | | | | | | | | | | | | | | | | | |]

| Distribution and Manufacturing | | | — | | | | | | — | | | | | | 1 | | | | | | — | | | | | | — | | | | | | — | | | [removed: | | | | | | | | | | | | | | | | | |]

| Principal Executive Offices | | | — | | | | | | 1 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | [removed: | | | | | | | | | | | | | | | | | |]

| Total | | | 4 | | | | | | [removed: 12] [added: 14] | | | | | | 5 | | | | | | [removed: 7] [added: 10] | | | | | | — | | | | | | [removed: 3 | | | | | | | | | | | | | | | | | |] [added: 4] | | |

Certain of our manufacturing facilities are utilized primarily for the production of products relating to particular product categories: eight for makeup; [removed: three] [added: two] for skin [added: care; two for skin] care and fragrance; and one for skin care and hair care.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| R&D | | | 1 | | | | | | 2 | | | | | | — | | | | | | — | | | | | | — | | | | | | 2 | | |

In fiscal 2021, five of our primarily makeup facilities also produced a significant volume of skin care products.

In fiscal 2021, we began construction of a new manufacturing facility near Tokyo that we will own.

In fiscal 2021, we began construction at a newly leased site that will become our innovation center in Shanghai.

Construction is in progress and the facility is expected to be operational in late fiscal 2022.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| R&D | | | 1 | | | | | | 1 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1 | | | | | | | | | | | | | | | | | | | | |

Not applicable.

Not applicable

On August [removed: 19, 2020,] [added: 18, 2021,] a dividend was declared in the amount of [removed: $.48] [added: $.53] per share on our Class A and Class B Common Stock.

The dividend is payable in cash on September 15, [removed: 2020] [added: 2021] to stockholders of record at the close of business on August 31, [removed: 2020.][added: 2021.]

As of August 20, [removed: 2020,] [added: 2021,] there were [removed: 2,380] [added: 2,279] record holders of Class A Common Stock and 13 record holders of Class B Common Stock.

| Period | | | | | | Total Number [removed: of Shares Purchased(1)] [added: of Shares Purchased(1)] | | | | | | Average Price Paid Per Share | | | | | | Total Number of Shares Purchased as Part of Publicly Announced Program | | | | | | Maximum [removed: Number of] [added: Number of] Shares that [removed: May Yet] [added: May Yet] Be Purchased Under [removed: the Program(2)] [added: the Program(2)] | | |

[removed: (1)Relates to] [added: (1)Includes] shares that were repurchased by the Company to satisfy tax withholding obligations upon the payout of certain stock-based compensation arrangements.

Beginning in early February 2020, we temporarily suspended our repurchase of shares of [removed: the Company's] [added: our] Class A Common [removed: Stock.][added: Stock, and in March 2021, we resumed such repurchases under our share repurchase program.]

The returns are calculated by assuming an investment of $100 in the Class A Common Stock and in each index on June 30, [removed: 2015.][added: 2016.]

[removed: ][added: ]

| April 2021 | | | | | | 238,306 | | | | | | $ | 301.17 | | | | | 238,306 | | | | | | 33,765,535 | | |

| May 2021 | | | | | | 529,929 | | | | | | 298.19 | | | | | | 529,363 | | | | | | 33,236,172 | | |

| June 2021 | | | | | | 616,328 | | | | | | 303.55 | | | | | | 532,633 | | | | | | 32,703,539 | | |

| | | | | | | 1,384,563 | | | | | | 301.09 | | | | | | 1,300,302 | | | | | | | | |

Subsequent to June 30, 2021 and as of August 20, 2021, we purchased approximately 0.8 million additional shares of our Class A Common Stock for $244 million pursuant to our share repurchase program.

As part of the cost saving actions and cash conservation measures taken in response to the COVID-19 pandemic, we did not declare quarterly cash dividends that would have been paid in June 2020.

| April 2020 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | 34,741,624 | | |

| May 2020 | | | | | | 94 | | | | | | 175.58 | | | | | | — | | | | | | 34,741,624 | | |

| June 2020 | | | | | | 56,308 | | | | | | 187.16 | | | | | | — | | | | | | 34,741,624 | | |

| | | | | | | 56,402 | | | | | | 187.14 | | | | | | — | | | | | | | | |

We may resume repurchases in the future.

Not required.

The table below summarizes selected financial information.

For further information, refer to the audited consolidated financial statements and the notes thereto beginning on page F-1 of this report.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | Year Ended or at June 30 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| (In millions, except per share data) | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Statement of Earnings Data: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Net sales(1) | | | | | | $ | 14,294 | | | | | $ | 14,863 | | | | | $ | 13,683 | | | | | $ | 11,824 | | | | | $ | 11,262 | | | | | | | | | | | | | | | | | | | | | | | | | |

| Net earnings attributable to The Estée Lauder Companies Inc.(1) - (7) | | | | | | 684 | | | | | | 1,785 | | | | | | 1,108 | | | | | | 1,249 | | | | | | 1,115 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Per Share Data: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Net earnings attributable to The Estée Lauder Companies Inc. per common share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Basic(1) - (7) | | | | | | $ | 1.90 | | | | | $ | 4.91 | | | | | $ | 3.01 | | | | | $ | 3.40 | | | | | $ | 3.01 | | | | | | | | | | | | | | | | | | | | | | | | | |

| Diluted(1) - (7) | | | | | | 1.86 | | | | | | 4.82 | | | | | | 2.95 | | | | | | 3.35 | | | | | | 2.96 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Cash dividends declared per common share(8) | | | | | | 1.39 | | | | | | 1.67 | | | | | | 1.48 | | | | | | 1.32 | | | | | | 1.14 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Balance Sheet Data: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Total assets(3) (7) | | | | | | $ | 17,781 | | | | | $ | 13,156 | | | | | $ | 12,567 | | | | | $ | 11,568 | | | | | $ | 9,223 | | | | | | | | | | | | | | | | | | | | | | | | | |

| Total debt (2) | | | | | | 6,136 | | | | | | 3,412 | | | | | | 3,544 | | | | | | 3,572 | | | | | | 2,242 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

(1)Results included charges associated with restructuring and other activities of $68 million, $190 million, $193 million, $143 million and $90 million, after tax, or $.19, $.51, $.51, $.38, and $.24 per diluted common share in fiscal 2020, 2019, 2018, 2017 and 2016, respectively.

(2)In November 2019, we issued $500 million of 2.00% Senior Notes, $650 million of 2.375% Senior Notes and $650 million of 3.125% Senior Notes in a public offering.

These Senior Notes are due in December 2024, 2029 and 2049, respectively.

In April 2020, we issued $700 million of 2.60% Senior Notes, due in April 2030 in a public offering.

In February 2017, we issued 1.80%, 3.15% and 4.15% Senior Notes in a public offering, each with an aggregate principal amount of $500 million.

The 1.80% Senior Notes were repaid in February 2020.

The 3.15% and 4.15% Senior Notes become due in March 2027 and March 2047, respectively.

In May 2016, we issued $450 million of 1.70% Senior Notes due May 10, 2021 and an additional $150 million of our 4.375% Senior Notes due June 15, 2045 in a public offering.

(3)Fiscal 2020 results included $1,215 million, after tax, or $3.31 per diluted common share related to goodwill, other intangible and long-lived asset impairments.

Fiscal 2019 and 2017 results included $85 million and $23 million, after tax, or $.23 and $.06 per diluted common share related to goodwill and other intangible asset impairments, respectively.

(4)Results included gains (losses) associated with changes in fair value of contingent consideration related to certain of our acquisitions of $16 million, $31 million, $33 million, $44 million, $(8) million and $(6) million, after tax, or $.04, $.08, $.09, $.12, $(.02) and $(.02) per diluted common share in fiscal 2019, 2018, 2017, 2016 and 2015, respectively.

(5)On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “TCJA”), which, among other things, lowered the U.S. corporate statutory income tax rate and established a modified territorial system requiring a mandatory deemed repatriation tax on undistributed earnings of foreign subsidiaries (the “Transition Tax”).

See *Item 8.

Financial Statements and Supplementary Data – Note 9 – Income Taxes* for further discussion relating to the TCJA.

Fiscal 2019 results reflected credits (charges) to adjust the TCJA provisional amounts recorded in fiscal 2018 relating to the Transition Tax, the remeasurement of U.S. net deferred tax assets and the foreign withholding taxes recorded in connection with the reversal of its indefinite reinvestment assertion related to certain foreign earnings of $12 million, or $.03 per diluted common share, $(8) million, or $(.02) per diluted common share and $(9) million, or $(.02) per diluted common share, respectively.

Fiscal 2018 results reflected impacts and charges resulting from the TCJA, including the Transition Tax, the remeasurement of U.S. net deferred tax assets and the establishment of a net deferred tax liability related to foreign withholding taxes on certain foreign earnings of $(351) million, or $(.94) per diluted common share, $(53) million, or $(.14) per diluted common share and $(46) million, or $(.12) per diluted common share, respectively.

(6)Fiscal 2020 results included $441 million, after tax, or $1.20 per diluted common share, of Other income, net primarily related to a gain on a previously held equity method investment.

(7)Fiscal 2019 results included $57 million, after tax, or $.15 per diluted common share, related to a gain on liquidation of an investment in a foreign subsidiary, net.

(8)As part of the cost saving actions and cash conservation measures taken in response to the COVID-19 pandemic, we did not declare quarterly cash dividends that would have been paid in June 2020.

The Chief Executive Officer and the Chief Financial Officer, with assistance from other members of management, have [removed: reviewed] [added: evaluated] the effectiveness of our disclosure controls and procedures, including impacts of COVID-19, [removed: as of June 30, 2020] and, based on their evaluation, [added: our Chief Executive Officer and Chief Financial Officer] have concluded that the disclosure controls and procedures were effective as of [removed: such date.][added: June 30, 2021.]

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the fourth quarter of fiscal [removed: 2020] [added: 2021] that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Business – Information about our Executive Officers,* will be included in our Proxy Statement for the [removed: 2020] [added: 2021] Annual Meeting of Stockholders (the [removed: “2020] [added: “2021] Proxy Statement”).

The [removed: 2020] [added: 2021] Proxy Statement will be filed within 120 days after the close of the fiscal year ended June 30, [removed: 2020] [added: 2021] and such information is incorporated herein by reference.

The information required by this Item will be included in the [removed: 2020] [added: 2021] Proxy Statement.

The [removed: 2020] [added: 2021] Proxy Statement will be filed within 120 days after the close of the fiscal year ended June 30, [removed: 2020] [added: 2021] and such information is incorporated herein by reference.

The information required by this Item, not already provided under *Equity Compensation Plan Information* as set forth below, will be included in the [removed: 2020] [added: 2021] Proxy Statement.

The [removed: 2020] [added: 2021] Proxy Statement will be filed within 120 days after the close of the fiscal year ended June 30, [removed: 2020] [added: 2021] and such information is incorporated herein by reference.

The following table summarizes the equity compensation plans under which our securities may be issued as of June 30, [removed: 2020] [added: 2021] and does not include grants made or cancelled and options exercised after such date.

Equity Compensation Plan Information as of June 30, [removed: 2020][added: 2021]

| Plan category | | | | | | Number of securities to be issued upon exercise of outstanding options, warrants and [removed: rights(2)] [added: rights(2)] | | | | | | Weighted-average exercise price of outstanding options, warrants and [removed: rights(3) | | |] [added: rights(3)] | | | | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first [removed: column)(4)] [added: column)(4)] | | |

(2)Consists of [removed: 8,644,974] [added: 7,615,191] shares issuable upon exercise of outstanding options, [removed: 1,948,329] [added: 1,857,165] shares issuable upon conversion of outstanding Restricted Stock Units, [removed: 2,449,778] [added: 1,536,083] shares issuable upon conversion of outstanding Performance Share Units (“PSUs”) (assuming maximum payout for unvested PSUs and PSUs vested as of June 30, [removed: 2020] [added: 2021] pending approval by the Stock Plan Subcommittee of our Board of Directors), [removed: 136,836] [added: 141,555] shares issuable upon conversion of Share Units and [removed: 583,788] [added: 609,011] shares issuable upon conversion of Long-term [removed: PSUs.][added: PSUs, including Price-vested units (“PVUs”).]

(3)Calculated based upon outstanding options in respect of [removed: 8,644,974] [added: 7,615,191] shares of our Class A Common Stock.

As of June 30, [removed: 2020,] [added: 2021,] there were [removed: 14,505,951] [added: 12,717,742] shares of Class A Common Stock available for issuance under the 2002 Plan (subject to the approval by the Stock Plan Subcommittee of expected payouts for PSUs vested as of June 30, [removed: 2020).][added: 2021).]

As of June 30, [removed: 2020,] [added: 2021,] there were [removed: 485,723] [added: 464,327] shares available for issuance under the Director Plan.

If all of the outstanding options, warrants, rights, stock units and share units, as well as the securities available for future issuance, included in the first and third columns in the table above were converted to shares of Class A Common Stock as of June 30, [removed: 2020,] [added: 2021,] the total shares of Common Stock outstanding (i.e. Class A plus Class B) would increase [removed: 8%] [added: 7%] to [removed: 389,281,011.][added: 386,700,472.]

[removed: Of the] [added: All] outstanding options to purchase [removed: 8,644,974] shares of Class A Common Stock, [removed: options to purchase 7,355,467 shares] have an exercise price less than [removed: $188.68,] [added: $318.08,] the closing price on June 30, [removed: 2020.][added: 2021.]

Assuming the exercise of only in-the-money options, the total shares outstanding would increase by 2% to [removed: 367,881,099.][added: 369,374,589.]

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Equity compensation plans approved by security holders(1) | | | | | | 11,759,005 | | | | | | $136.24 | | | | | | 13,182,069 | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Equity compensation plans approved by security holders(1) | | | | | | 13,763,705 | | | | | | $108.30 | | | | | | 14,991,674 | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | |

The information required by this Item will be included in the [removed: 2020] [added: 2021] Proxy Statement.

The [removed: 2020] [added: 2021] Proxy Statement will be filed within 120 days after the close of the fiscal year ended June 30, [removed: 2020] [added: 2021] and such information is incorporated herein by reference.

The information required by this Item will be included in the [removed: 2020] [added: 2021] Proxy Statement.

The [removed: 2020] [added: 2021] Proxy Statement will be filed within 120 days after the close of the fiscal year ended June 30, [removed: 2020] [added: 2021] and such information is incorporated herein by reference.

| 4.17 | | | | | | Officers’ Certificate, dated February 9, 2017, defining certain terms of the [removed: 1.800%] [added: 3.150%] Senior Notes due [removed: 2020] [added: 2027] (filed as Exhibit [removed: 4.1] [added: 4.3] to our Current Report on Form 8-K filed on February 9, 2017) (SEC File No. 1-14064).* | | |

| 4.18 | | | | | | Form of Global Note for the [removed: 1.800%] [added: 3.150%] Senior Notes due [removed: 2020] [added: 2027] (included as Exhibit A in Exhibit [removed: 4.1] [added: 4.3] to our Current Report on Form 8-K filed on February 9, 2017) (SEC File No. 1-14064).* | | |

| 4.19 | | | | | | Officers’ Certificate, dated February 9, 2017, defining certain terms of the [removed: 3.150%] [added: 4.150%] Senior Notes due [removed: 2027] [added: 2047] (filed as Exhibit [removed: 4.3] [added: 4.5] to our Current Report on Form 8-K filed on February 9, 2017) (SEC File No. 1-14064).* | | |

| 4.20 | | | | | | Form of Global Note for the [removed: 3.150%] [added: 4.150%] Senior Notes due [removed: 2027] [added: 2047] (included as Exhibit A in Exhibit [removed: 4.3] [added: 4.5] to our Current Report on Form 8-K filed on February 9, 2017) (SEC File No. 1-14064).* | | |

| 4.21 | | | | | | Officers’ Certificate, dated [removed: February 9, 2017,] [added: November 21, 2019,] defining certain terms of the [removed: 4.150%] [added: 2.000%] Senior Notes due [removed: 2047] [added: 2024] (filed as Exhibit [removed: 4.5] [added: 4.1] to our Current Report on Form 8-K filed on [removed: February 9, 2017)] [added: November 21, 2019)] (SEC File No. 1-14064).* | | |

| 4.22 | | | | | | Form of Global Note for the [removed: 4.150%] [added: 2.000%] Senior Notes due [removed: 2047] [added: 2024] (included as Exhibit A in Exhibit [removed: 4.5] [added: 4.1] to our Current Report on Form 8-K filed on [removed: February 9, 2017)] [added: November 21, 2019)] (SEC File No. 1-14064).* | | |

| 4.23 | | | | | | Officers’ Certificate, dated November 21, 2019, defining certain terms of the [removed: 2.000%] [added: 2.375%] Senior Notes due [removed: 2024] [added: 2029] (filed as Exhibit [removed: 4.1] [added: 4.3] to our Current Report on Form 8-K filed on November 21, 2019) (SEC File No. 1-14064).* | | |

| 4.24 | | | | | | Form of Global Note for the [removed: 2.000%] [added: 2.375%] Senior Notes due [removed: 2024] [added: 2029] (included as Exhibit A in Exhibit [removed: 4.1] [added: 4.3] to our Current Report on Form 8-K filed on November 21, 2019) (SEC File No. 1-14064).* | | |

| 4.25 | | | | | | Officers’ Certificate, dated November 21, 2019, defining certain terms of the [removed: 2.375%] [added: 3.125%] Senior Notes due [removed: 2029] [added: 2049] (filed as Exhibit [removed: 4.3] [added: 4.5] to our Current Report on Form 8-K filed on November 21, 2019) (SEC File No. 1-14064).* | | |

| 4.26 | | | | | | Form of Global Note for the [removed: 2.375%] [added: 3.125%] Senior Notes due [removed: 2029] [added: 2049] (included as Exhibit A in Exhibit [removed: 4.3] [added: 4.5] to our Current Report on Form 8-K filed on November 21, 2019) (SEC File No. 1-14064).* | | |

| 4.27 | | | | | | Officers’ Certificate, dated [removed: November 21, 2019,] [added: April 13, 2020,] defining certain terms of the [removed: 3.125%] [added: 2.600%] Senior Notes due [removed: 2049] [added: 2030] (filed as Exhibit [removed: 4.5] [added: 4.1] to our Current Report on Form 8-K filed on [removed: November 21, 2019)] [added: April 13, 2020)] (SEC File No. 1-14064).* | | |

| 4.28 | | | | | | Form of Global Note for the [removed: 3.125%] [added: 2.600%] Senior Notes due [removed: 2049] [added: 2030] (included as Exhibit A in Exhibit [removed: 4.5] [added: 4.1] to our Current Report on Form 8-K filed on [removed: November 21, 2019)] [added: April 13, 2020)] (SEC File No. 1-14064).* | | |

| 4.29 | | | | | | Officers’ Certificate, dated [removed: April 13, 2020,] [added: March 4, 2021,] defining certain terms of the [removed: 2.600%] [added: 1.950%] Senior Notes due [removed: 2030] [added: 2031] (filed as Exhibit 4.1 to our Current Report on Form 8-K filed on [removed: April 13, 2020)] [added: March 4, 2021)] (SEC File No. 1-14064).* | | |

| 4.30 | | | | | | Form of Global Note for the [removed: 2.600%] [added: 1.950%] Senior Notes due [removed: 2030] [added: 2031] (included as Exhibit A in Exhibit 4.1 to our Current Report on Form 8-K filed on [removed: April 13, 2020)] [added: March 4, 2021)] (SEC File No. 1-14064).* | | |

| 10.3 | | | | | | The Estee Lauder Companies Retirement Growth Account Plan, as amended and restated, effective as of January 1, 2017, further amended effective as of July 1, 2017 (filed as Exhibit 10.3 to our Annual Report on Form 10-K filed on August 25, 2017) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.4 | | | | | | The Estee Lauder Inc. Retirement Benefits Restoration Plan (filed as Exhibit 10.5 to our Annual Report on Form 10-K filed on August 20, 2010) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.5 | | | | | | Executive Annual Incentive Plan (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on November 14, 2013) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.6 | | | | | | Employment Agreement with Tracey T. Travis (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on July 20, 2012) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.7 | | | | | | Employment Agreement with Leonard A. Lauder (filed as Exhibit 10.8 to our Annual Report on Form 10-K filed on September 17, 2001) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.7a | | | | | | Amendment to Employment Agreement with Leonard A. Lauder (filed as Exhibit 10.8a to our Annual Report on Form 10-K filed on September 17, 2002) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.7b | | | | | | Amendment to Employment Agreement with Leonard A. Lauder (filed as Exhibit 10.2 to our Current Report on Form 8-K filed on November 17, 2005) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.7c | | | | | | Amendment to Employment Agreement with Leonard A. Lauder (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on February 5, 2009) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.7d | | | | | | Amendment to Employment Agreement with Leonard A. Lauder (filed as Exhibit 10.8 to our Quarterly Report on Form 10-Q filed on October 30, 2009) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.7e | | | | | | Amendment to Employment Agreement with Leonard A. Lauder (filed as Exhibit 10.6 to our Quarterly Report on Form 10-Q filed on November 1, 2010) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.7f | | | | | | Amendment to Employment Agreement with Leonard A. Lauder (filed as Exhibit 10.7f to our Annual Report on Form 10-K filed on August 20, 2015) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.7g | | | | | | Amendment to Employment Agreement with Leonard A. Lauder (filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q filed on May 1, 2020) (SEC File No. [removed: 1-14064). * †] [added: 1-14064).*†] | | |

| 10.8 | | | | | | Employment Agreement with William P. Lauder (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on September 17, 2010) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.8a | | | | | | Amendment to Employment Agreement with William P. Lauder (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on February 27, 2013) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.9 | | | | | | Employment Agreement with Fabrizio Freda (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on February 11, 2011) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.9a | | | | | | Amendment to Employment Agreement with Fabrizio Freda and Stock Option Agreements (filed as Exhibit 10.2 to our Current Report on Form 8-K filed on February 27, 2013) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.10 | | | | | | Employment Agreement with John Demsey (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on September 24, 2010) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.10a | | | | | | Amendment to Employment Agreement with John Demsey (filed as Exhibit 10.3 to our Current Report on Form 8-K filed on February 27, 2013) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.11 | | | | | | Employment Agreement with Cedric Prouvé (filed as Exhibit 10.1 to our Current Report on Form 8-K filed on September 20, 2011) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.11a | | | | | | Amendment to Employment Agreement with Cedric Prouvé (filed as Exhibit 10.4 to our Current Report on Form 8-K filed on February 27, 2013) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.12 | | | | | | Employment Agreement with Deirdre Stanley [added: filed as Exhibit 10.12 to our Annual Report on Form 10-K filed on August 28, 2020)] (SEC File No. [removed: 1-14064).†] [added: 1-14064).*†] | | |

| 10.12a | | | | | | Amendment to Employment Agreement with Deirdre Stanley [added: filed as Exhibit 10.12a to our Annual Report on Form 10-K filed on August 28, 2020)] (SEC File No. [removed: 1-14064).†] [added: 1-14064).*†] | | |

| 10.13 | | | | | | Form of Deferred Compensation Agreement (interest-based) with Outside Directors (filed as Exhibit 10.14 to our Annual Report on Form 10-K filed on September 17, 2001) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.13a | | | | | | Form of Deferred Compensation Agreement (interest-based) with Outside Directors (including Election Form) (filed as Exhibit 10.12a to our Annual Report on Form 10-K filed on August 24, 2018) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.14 | | | | | | Form of Deferred Compensation Agreement (stock-based) with Outside Directors (filed as Exhibit 10.15 to our Annual Report on Form 10-K filed on September 17, 2001) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.14a | | | | | | Form of Deferred Compensation Agreement (stock-based) with Outside Directors (including Election Form) (filed as Exhibit 10.13a to our Annual Report on Form 10-K filed on August 24, 2018) (SEC File No. [removed: 1-14064).* †] [added: 1-14064).*†] | | |

| 10.16b | | | | | | Summary of Compensation For Non-Employee Directors of the Company (SEC File No. 1-14064).† | | |

| 10.24c | | | | | | Third Amendment to Creative Consultant Agreement between Estee Lauder Inc. and Aerin Lauder Zinterhofer effective July 1, 2021 (SEC File No. 1-14064).† | | |

| 23.2 | | | | | | Consent of KPMG LLP. | | |

| | | | | | | | | |

| | | | | | | | | |

| 10.18cc | | | | | | Form of Restricted Stock Unit Award Agreement for Employees other than Executive Officers under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Form of Notice of Grant) (SEC File No. 1-14064).† | | |

| | | | THE ESTÉE LAUDER COMPANIES INC. | | | | | | [removed: | | |]

| | | | By | | | /s/ TRACEY T. TRAVIS | | | [removed: | | |]

| | | | | | | Tracey T. Travis Executive Vice President and Chief Financial Officer | | | [removed: | | |]

| [removed: Date:] August 28, 2020 | | | | | | [removed: | | | | | |]

| FABRIZIO FREDA* | | | | | | President, Chief Executive Officer and a Director (Principal Executive Officer) | | | | | | August [removed: 28, 2020] [added: 27, 2021] | | |

| WILLIAM P. LAUDER* | | | | | | Executive Chairman and a Director | | | | | | August [removed: 28, 2020] [added: 27, 2021] | | |

| LEONARD A. LAUDER* | | | | | | Director | | | | | | August [removed: 28, 2020] [added: 27, 2021] | | |

| CHARLENE BARSHEFSKY* | | | | | | Director | | | | | | August [removed: 28, 2020] [added: 27, 2021] | | |

| ROSE MARIE BRAVO* | | | | | | Director | | | | | | August [removed: 28, 2020] [added: 27, 2021] | | |

| WEI SUN CHRISTIANSON* | | | | | | Director | | | | | | August [removed: 28, 2020] [added: 27, 2021] | | |

| PAUL J. FRIBOURG* | | | | | | Director | | | | | | August [removed: 28, 2020] [added: 27, 2021] | | |

| IRVINE O. HOCKADAY, JR.* | | | | | | Director | | | | | | August [removed: 28, 2020] [added: 27, 2021] | | |

| JENNIFER HYMAN* | | | | | | Director | | | | | | August [removed: 28, 2020] [added: 27, 2021] | | |

| JANE LAUDER* | | | | | | Director | | | | | | August [removed: 28, 2020] [added: 27, 2021] | | |

| RONALD S. LAUDER* | | | | | | Director | | | | | | August [removed: 28, 2020] [added: 27, 2021] | | |

| RICHARD D. PARSONS* | | | | | | Director | | | | | | August [removed: 28, 2020] [added: 27, 2021] | | |

| LYNN FORESTER DE ROTHSCHILD* | | | | | | Director | | | | | | August [removed: 28, 2020] [added: 27, 2021] | | |

| BARRY S. STERNLICHT* | | | | | | Director | | | | | | August [removed: 28, 2020] [added: 27, 2021] | | |

| JENNIFER TEJADA* | | | | | | Director | | | | | | August [removed: 28, 2020] [added: 27, 2021] | | |

| RICHARD F. ZANNINO* | | | | | | Director | | | | | | August [removed: 28, 2020] [added: 27, 2021] | | |

| /s/ TRACEY T. TRAVIS | | | | | | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | | | | | | August [removed: 28, 2020] [added: 27, 2021] | | |

| | | | Page | | | | | | [removed: | | |]

| Financial Statements: | | | | | | | | | [removed: | | |]

| [Management’s Report on Internal Control Over Financial [removed: Reporting](#ie6b7bdd742494f74a721fab7d38e5c42_91) | | | [F-](#ie6b7bdd742494f74a721fab7d38e5c42_91)] [added: Reporting](#i3abf634c5cff49dda5f3a4237e4cefbb_91)] | | | [removed: [2](#ie6b7bdd742494f74a721fab7d38e5c42_91)] [added: [F-](#i3abf634c5cff49dda5f3a4237e4cefbb_91)] | | | [added: [2](#i3abf634c5cff49dda5f3a4237e4cefbb_91)] | | |

| [Consolidated Statements of [removed: Earnings](#ie6b7bdd742494f74a721fab7d38e5c42_100) | | | [F-](#ie6b7bdd742494f74a721fab7d38e5c42_100)] [added: Earnings](#i3abf634c5cff49dda5f3a4237e4cefbb_100)] | | | [removed: [8](#ie6b7bdd742494f74a721fab7d38e5c42_100)] [added: [F-](#i3abf634c5cff49dda5f3a4237e4cefbb_100)] | | | [added: [8](#i3abf634c5cff49dda5f3a4237e4cefbb_100)] | | |

| [Consolidated Statements of Comprehensive [removed: Income](#ie6b7bdd742494f74a721fab7d38e5c42_103) | | | [F-](#ie6b7bdd742494f74a721fab7d38e5c42_103)] [added: Income](#i3abf634c5cff49dda5f3a4237e4cefbb_103)] | | | [removed: [9](#ie6b7bdd742494f74a721fab7d38e5c42_103)] [added: [F-](#i3abf634c5cff49dda5f3a4237e4cefbb_103)] | | | [added: [9](#i3abf634c5cff49dda5f3a4237e4cefbb_103)] | | |

| [Consolidated Balance [removed: Sheets](#ie6b7bdd742494f74a721fab7d38e5c42_106) | | | [F-](#ie6b7bdd742494f74a721fab7d38e5c42_106)] [added: Sheets](#i3abf634c5cff49dda5f3a4237e4cefbb_106)] | | | [removed: [10](#ie6b7bdd742494f74a721fab7d38e5c42_106)] [added: [F-](#i3abf634c5cff49dda5f3a4237e4cefbb_106)] | | | [added: [10](#i3abf634c5cff49dda5f3a4237e4cefbb_106)] | | |

| [Consolidated Statements of Cash [removed: Flows](#ie6b7bdd742494f74a721fab7d38e5c42_118) | | | [F-](#ie6b7bdd742494f74a721fab7d38e5c42_118)] [added: Flows](#i3abf634c5cff49dda5f3a4237e4cefbb_112)] | | | [removed: [12](#ie6b7bdd742494f74a721fab7d38e5c42_118)] [added: [F-](#i3abf634c5cff49dda5f3a4237e4cefbb_112)] | | | [added: [12](#i3abf634c5cff49dda5f3a4237e4cefbb_112)] | | |

[removed: | [Notes to Consolidated Financial Statements](#ie6b7bdd742494f74a721fab7d38e5c42_121) | | | [F-](#ie6b7bdd742494f74a721fab7d38e5c42_121) | | | [13](#ie6b7bdd742494f74a721fab7d38e5c42_121) | | | | | |][added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS]

| Financial Statement Schedule: | | | | | | | | | [removed: | | |]

| [Schedule II - Valuation and Qualifying [removed: Accounts](#ie6b7bdd742494f74a721fab7d38e5c42_226) | | | [S-](#ie6b7bdd742494f74a721fab7d38e5c42_226)] [added: Accounts](#i3abf634c5cff49dda5f3a4237e4cefbb_199)] | | | [removed: [1](#ie6b7bdd742494f74a721fab7d38e5c42_226)] [added: [S-](#i3abf634c5cff49dda5f3a4237e4cefbb_199)] | | | [added: [1](#i3abf634c5cff49dda5f3a4237e4cefbb_199)] | | |

Management of The Estée Lauder Companies Inc. (including its subsidiaries) (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in [removed: Rules] [added: Rule] 13a-15(f) of the Securities Exchange Act of 1934, as amended).

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with [removed: U.S.] generally accepted accounting principles.

[removed: As of and for] [added: For] the [added: fiscal] year ended June 30, [removed: 2020, Have & Be represented] [added: 2021, DECIEM's financial results constitute] approximately [removed: 12%] [added: 0.4% of total net sales] and [removed: 1%] [added: 2%] of [removed: the Company's consolidated] total assets [removed: and net sales, respectively.][added: of the consolidated financial statement amounts.]

[removed: The Company elected to exclude] [added: Accordingly, management excluded] the internal controls relating to [removed: Have & Be] [added: Deciem Beauty Group Inc. (“DECIEM”)] from its fiscal [removed: 2020] [added: 2021] annual [removed: evaluation] [added: assessment] of the effectiveness of internal control over financial reporting.

Based on this assessment, the Company’s management has concluded that, as of June 30, [removed: 2020,] [added: 2021,] the Company’s internal control over financial reporting was effective.

The effectiveness of the Company’s internal control over financial reporting as of June 30, [removed: 2020] [added: 2021] has been audited by [removed: KPMG] [added: PricewaterhouseCoopers] LLP, an independent registered public accounting firm, as stated in their report which appears under the heading “Report of Independent Registered Public Accounting Firm.”

| /s/ Fabrizio Freda | | | | | | | | | /s/ Tracey T. Travis | | | | | | [removed: | | | | | |]

| Fabrizio Freda | | | | | | | | | Tracey T. Travis | | | | | | [removed: | | | | | |]

| President and Chief Executive Officer | | | | | | | | | [removed: | | |] Executive Vice President and Chief Financial Officer | | | | | | [removed: | | |]

| Date: August 27, 2021 | | | | | | | | |

| [Reports of Independent Registered Public Accounting Firms](#i3abf634c5cff49dda5f3a4237e4cefbb_1099511629489) | | | [F-](#i3abf634c5cff49dda5f3a4237e4cefbb_1099511629489) | | | [3](#i3abf634c5cff49dda5f3a4237e4cefbb_1099511629489) | | |

| [Consolidated Statements of Equity and Redeemable Noncontrolling Interest](#i3abf634c5cff49dda5f3a4237e4cefbb_109) | | | [F-](#i3abf634c5cff49dda5f3a4237e4cefbb_109) | | | [11](#i3abf634c5cff49dda5f3a4237e4cefbb_109) | | |

| [Notes to Consolidated Financial Statements](#i3abf634c5cff49dda5f3a4237e4cefbb_115) | | | [F-](#i3abf634c5cff49dda5f3a4237e4cefbb_115) | | | [13](#i3abf634c5cff49dda5f3a4237e4cefbb_115) | | |

Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2021.

SEC guidance permits companies to exclude certain acquisitions from the assessment of internal control over financial reporting during the first year following the acquisition.

On May 18, 2021, the Company increased its ownership interest in DECIEM from approximately 29% to approximately 76%.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2021, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Deciem Beauty Group Inc. (“DECIEM”) from its assessment of internal control over financial reporting as of June 30, 2021.

The Company increased its ownership interest in DECIEM from approximately 29% to approximately 76% in May 2021, resulting in the entity becoming a consolidated subsidiary.

DECIEM’s total assets and total net sales excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 2% and 0.4%, respectively, of the related consolidated financial statement amounts as of and for the year ended June 30, 2021.

*Indefinite-Lived Impairment Assessment - Dr. Jart+ Trademark*

As described in Notes 2 and 6 to the consolidated financial statements, the Company’s consolidated net indefinite-lived intangible assets balance was $2,366 million as of June 30, 2021, of which a portion relates to the Dr. Jart+ trademark.

Management assesses indefinite-lived intangible assets at least annually for impairment as of the beginning of the fiscal fourth quarter or more frequently if certain events or circumstances exist.

To determine the estimated fair value of indefinite-lived intangible assets, management uses an income approach, specifically the relief-from-royalty method.

The significant assumptions used in this approach include revenue growth rates, terminal value, weighted-average cost of capital used to discount future cash flows, and royalty rate.

The principal considerations for our determination that performing procedures relating to the Dr. Jart+ trademark impairment assessment is a critical audit matter are (i) the significant judgment by management when determining the fair value estimate of the trademark; (ii) the high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates, terminal value, weighted-average cost of capital used to discount future cash flows, and royalty rate; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s indefinite-lived intangible assets impairment assessment, including controls over the valuation of the Dr. Jart+ trademark.

These procedures also included, among others, (i) testing management’s process for determining the fair value estimate; (ii) evaluating the appropriateness of the relief-from-royalty method; (iii) testing the completeness and accuracy of the underlying data used in the fair value estimate; and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates, terminal value, weighted-average cost of capital used to discount future cash flows, and royalty rate.

Evaluating management’s assumptions related to revenue growth rates involved evaluating whether the assumptions were reasonable considering (i) the current and past performance of the Dr. Jart+ brand; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the relief-from-royalty method and (ii) the reasonableness of the terminal value, weighted-average cost of capital used to discount future cash flows, and royalty rate assumptions.

*Acquisition of DECIEM - Valuation of Intangible Assets and net Put (Call) Option*

As described in Notes 2 and 5 to the consolidated financial statements, in 2021, the Company acquired additional shares in Deciem Beauty Group Inc. (“DECIEM”) for $1,092 million in cash, including proceeds from the issuance of debt, which resulted in recording $1,917 million of customer relationships and trademark intangible assets.

The Company was granted the right to purchase (“Call Option”), and granted the remaining investors a right to sell to the Company (“Put Option”), the remaining interests, with a purchase price based on the future performance of DECIEM (the “net Put (Call) Option”).

As a result of this redemption feature, management recorded redeemable noncontrolling interest, at its acquisition-date fair value, that is classified as mezzanine equity in the consolidated balance sheet.

The acquisition-date fair value of the redeemable noncontrolling interest includes the acquisition-date fair value of the net Put (Call) Option of $234 million.

To determine the acquisition-date estimated fair value of intangible assets acquired, management applied the income approach, specifically the multi-period excess earnings method for customer relationships and the relief-from-royalty method for trademarks.

The significant assumptions used in these approaches include revenue growth rates and profit margins, terminal values, weighted-average cost of capital used to discount future cash flows, and a customer attrition rate for customer relationships, and royalty rates for trademarks.

The acquisition-date fair value of the net Put (Call) Option is based on the Monte Carlo method.

The significant assumptions used include starting equity value, revenue growth rates and EBITDA, risk free rate, term, operating leverage adjustment, net sales discount rate, EBITDA discount rate, EBITDA volatility, and net sales volatility.

The principal considerations for our determination that performing procedures relating to the valuation of acquired intangible assets and the net Put (Call) Option relating to the acquisition of DECIEM is a critical audit matter are (i) the significant judgment by management when determining the fair value estimates of the acquired intangible assets and the net Put (Call) Option; (ii) the high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates and weighted-average cost of capital used to discount future cash flows for customer relationships, and revenue growth rates, terminal values, weighted-average cost of capital used to discount future cash flows, and royalty rates for trademarks, and starting equity value, revenue growth rates and EBITDA, risk free rate, term, operating leverage adjustment, net sales discount rate, EBITDA discount rate, EBITDA volatility, and net sales volatility for the net Put (Call) Option; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the accounting for business combinations, including controls over management’s valuation of the intangible assets and net Put (Call) Option.

These procedures also included, among others, (i) reading the purchase agreement; (ii) testing management’s process for determining the fair value estimates of the intangible assets and net Put (Call) option; (iii) evaluating the appropriateness of the multi-period excess earnings method for customer relationships, the relief-from-royalty method for trademarks, and the Monte Carlo method for the net Put (Call) Option; (iv) testing the completeness and accuracy of the underlying data used in the fair value estimates; and (v) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates and weighted-average cost of capital used to discount future cash flows for customer relationships, and revenue growth rates, terminal values, weighted-average cost of capital used to discount future cash flows, and royalty rates for trademarks.

Evaluating management’s assumptions related to revenue growth rates for customer relationships, and revenue growth rates and terminal values for trademarks involved evaluating whether the assumptions were reasonable considering (i) the current and past performance of DECIEM; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Evaluating the appropriateness of the Monte Carlo method and management’s assumptions related to the net Put (Call Option) involved professionals with specialized skill and knowledge to assist in developing an independent value for each option and comparing to management’s estimate to evaluate the reasonableness of management’s estimate.

Developing an independent value for each option involved developing an independent Monte Carlo simulation model, testing the completeness and accuracy of the contractual information used by management to calculate the agreed-upon price to acquire the remaining equity interests in DECIEM, and evaluating the reasonableness of the assumptions used by management to estimate DECIEM’s equity value.

Professionals with specialized skill and knowledge were also used to assist in (i) evaluating the appropriateness of the Company’s multi-period excess earnings method for customer relationships and relief-from-royalty method for trademarks; and (ii) evaluating the appropriateness of the weighted-average cost of capital used to discount future cash flows and royalty rates assumptions.

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | |

| | | | | | | | | | | | |

| | | | | | | | | | | | |

| | | | | | | | | | | | |

| [Report of Independent Registered Public Accounting Firm](#ie6b7bdd742494f74a721fab7d38e5c42_94) | | | [F-](#ie6b7bdd742494f74a721fab7d38e5c42_94) | | | [3](#ie6b7bdd742494f74a721fab7d38e5c42_94) | | | | | |

| [Report of Independent Registered Public Accounting Firm](#ie6b7bdd742494f74a721fab7d38e5c42_97) | | | [F-](#ie6b7bdd742494f74a721fab7d38e5c42_97) | | | [4](#ie6b7bdd742494f74a721fab7d38e5c42_97) | | | | | |

| [Consolidated Statements of Equity](#ie6b7bdd742494f74a721fab7d38e5c42_112) | | | [F-](#ie6b7bdd742494f74a721fab7d38e5c42_112) | | | [11](#ie6b7bdd742494f74a721fab7d38e5c42_112) | | | | | |

On December 18, 2019, the Company acquired Have&Be Co. Ltd. (“Have & Be”).

The Company acquired Have&Be Co. Ltd. on December 18, 2019, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2020, Have&Be Co. Ltd.’s internal control over financial reporting associated with 12% of total assets and 1% of total revenues included in the consolidated financial statements of the Company as of and for the year ended June 30, 2020.

| August 28, 2020 | | | | | | | | |

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of June 30, 2020, based on criteria established in *Internal Control – Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated August 28, 2020 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

As discussed in Note 14 to the consolidated financial statements, the Company has changed its method of accounting for revenue and related costs effective July 1, 2018 due to the adoption of Accounting Standards Codification Topic 606, *Revenue from Contracts with Customers*.

*Recoverability of the carrying value of goodwill and indefinite‑lived intangible assets*

As discussed in Note 6 to the consolidated financial statements, goodwill and indefinite‑lived intangible assets as of June 30, 2020 were $1,401 million and $2,338 million, respectively.

Annually, or whenever events or changes in circumstances indicate a potential impairment has occurred, the Company evaluates the recoverability of the carrying value of goodwill and indefinite‑lived intangible assets.

As a result of recoverability tests performed during the year ended June 30, 2020, the Company recognized goodwill and indefinite‑lived intangible asset impairment charges of $812 million and $614 million, respectively.

We identified the evaluation of the recoverability of the carrying values of goodwill and trademark indefinite‑lived intangible assets related to the Too Faced, BECCA, and GLAMGLOW reporting units to be a critical audit matter.

A high degree of judgment was required of management to estimate the fair value of these reporting units and trademarks.

Subjective and challenging auditor judgment was required to evaluate the comparable publicly traded companies used to derive the market multiples and the projected cash flows, including the revenue growth rate, royalty rate, and discount rate assumptions.

Additional uncertainty existed in the projected cash flows due to the COVID‑19 pandemic impact on the economic environment.

Specialized skills and knowledge were also required to assess the royalty rate and discount rate assumptions.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s goodwill and indefinite‑lived intangible assets impairment process.

This included controls over the determination of the assumptions listed above used to estimate the fair value of the reporting units and trademark indefinite‑lived intangible assets.

To assess the Company’s ability to project cash flows, including revenue growth rates, we compared the Company’s historical cash flow projections for Too Faced, BECCA, and GLAMGLOW to actual results.

We evaluated the Company’s revenue growth rate assumptions by comparing the projections to the underlying business strategies and growth plans.

To assess the impact of changes to the assumptions, we performed a sensitivity analysis related to select inputs to the projected cash flows, including revenue growth rates.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:

- Developing an estimate of market valuation of the reporting units using an evaluation of comparable publicly traded companies and market multiples based on publicly available information, and comparing the result to the Company’s fair value estimate,

- Developing an estimate of fair value of the reporting units using the Company’s projected cash flows, including revenue growth rates, and a discount rate based on publicly available information, and comparing the result to the Company’s fair value estimate, and

- Evaluating the assumed royalty rate for the trademark intangible asset valuation by comparing it to royalty rates for similar companies.

As discussed in Note 2 to the consolidated financial statements, the Company is subject to income tax in each tax jurisdiction in which it operates.

The Company maintains offices in over 50 countries and has key operational facilities located inside and outside the United States that manufacture, warehouse, or distribute goods for sale in approximately 150 countries and territories.

We identified the evaluation of the accounting for income taxes as a critical audit matter.

The Company’s global structure required complex auditor judgment to evaluate the Company’s interpretation and application of tax laws in relevant jurisdictions and the income tax impact of the legal entity ownership structure.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s income tax process.

This included controls over the identification of changes to tax laws in the various jurisdictions in which it operates.