Cover
Cover - USD ($) $ in Billions | 12 Months Ended | ||
Jun. 30, 2023 | Aug. 11, 2023 | Dec. 30, 2022 | |
Entity Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Jun. 30, 2023 | ||
Document Transition Report | false | ||
Entity File Number | 1-14064 | ||
Entity Registrant Name | Estée Lauder Companies Inc | ||
Entity Tax Identification Number | 11-2408943 | ||
Entity Address, Address Line One | 767 Fifth Avenue | ||
Entity Address, City or Town | New York | ||
Entity Address, State or Province | NY | ||
Entity Address, Postal Zip Code | 10153 | ||
City Area Code | 212 | ||
Local Phone Number | 572-4200 | ||
Title of 12(b) Security | Class A Common Stock, $.01 par value | ||
Trading Symbol | EL | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 57 | ||
Documents Incorporated by Reference | Documents Incorporated by Reference Document Where Incorporated Proxy Statement for Annual Meeting of Stockholders to be held November 17, 2023 Part III | ||
Entity Central Index Key | 0001001250 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --06-30 | ||
Entity Incorporation, State or Country Code | DE | ||
Common Class A | |||
Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 232,148,786 | ||
Common Class B | |||
Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 125,542,029 |
Audit Information
Audit Information | 12 Months Ended |
Jun. 30, 2023 | |
Audit Information [Abstract] | |
Auditor Name | PricewaterhouseCoopers LLP |
Auditor Location | New York, New York |
Auditor Firm ID | 238 |
CONSOLIDATED STATEMENTS OF EARN
CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Statement [Abstract] | |||
Net sales | $ 15,910 | $ 17,737 | $ 16,215 |
Cost of sales | 4,564 | 4,305 | 3,834 |
Gross profit | 11,346 | 13,432 | 12,381 |
Operating expenses | |||
Selling, general and administrative | 9,575 | 9,888 | 9,371 |
Restructuring and other charges | 55 | 133 | 204 |
Goodwill impairment | 0 | 0 | 54 |
Impairment of other intangible and long-lived assets | 207 | 241 | 134 |
Total operating expenses | 9,837 | 10,262 | 9,763 |
Operating income | 1,509 | 3,170 | 2,618 |
Interest expense | 255 | 167 | 173 |
Interest income and investment income, net | 131 | 30 | 51 |
Other components of net periodic benefit cost | (12) | (2) | 12 |
Other income, net | 0 | 1 | 847 |
Earnings before income taxes | 1,397 | 3,036 | 3,331 |
Provision for income taxes | 387 | 628 | 456 |
Net earnings | 1,010 | 2,408 | 2,875 |
Net earnings attributable to noncontrolling interests | 0 | (7) | (12) |
Net loss (earnings) attributable to redeemable noncontrolling interest | (4) | (11) | 7 |
Net earnings attributable to The Estée Lauder Companies Inc. | $ 1,006 | $ 2,390 | $ 2,870 |
Net earnings attributable to The Estée Lauder Companies Inc. per common share | |||
Basic (in dollars per share) | $ 2.81 | $ 6.64 | $ 7.91 |
Diluted (in dollars per share) | $ 2.79 | $ 6.55 | $ 7.79 |
Weighted-average common shares outstanding | |||
Basic (in shares) | 357.9 | 360 | 362.9 |
Diluted (in shares) | 360.9 | 364.9 | 368.2 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | |||
Net earnings | $ 1,010 | $ 2,408 | $ 2,875 |
Other comprehensive income (loss): | |||
Net cash flow hedge gain (loss) | (11) | 91 | (21) |
Cross-currency swap contract loss | (20) | 0 | 0 |
Retirement plan and other retiree benefit adjustments | (79) | 87 | 82 |
Translation adjustments | (127) | (438) | 128 |
Benefit (provision) for income taxes on components of other comprehensive income | 51 | (61) | (10) |
Total other comprehensive income (loss), net of tax | (186) | (321) | 179 |
Comprehensive income | 824 | 2,087 | 3,054 |
Comprehensive income attributable to noncontrolling interests: | |||
Net earnings | 0 | (7) | (12) |
Translation adjustments | 0 | 4 | (1) |
Total comprehensive income attributable to noncontrolling interests | 0 | (3) | (13) |
Comprehensive loss (income) attributable to redeemable noncontrolling interest: | |||
Net loss (earnings) | (4) | (11) | 7 |
Translation adjustments | 14 | 25 | 17 |
Total comprehensive loss attributable to redeemable noncontrolling interest | 10 | 14 | 24 |
Comprehensive income attributable to The Estée Lauder Companies Inc. | $ 834 | $ 2,098 | $ 3,065 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2023 | Jun. 30, 2022 |
Current assets | ||
Cash and cash equivalents | $ 4,029 | $ 3,957 |
Accounts receivable, net | 1,452 | 1,629 |
Inventory and promotional merchandise | 2,979 | 2,920 |
Prepaid expenses and other current assets | 679 | 792 |
Total current assets | 9,139 | 9,298 |
Property, plant and equipment, net | 3,179 | 2,650 |
Other assets | ||
Operating lease right-of-use assets | 1,797 | 1,949 |
Goodwill | 2,486 | 2,521 |
Other intangible assets, net | 5,602 | 3,428 |
Other assets | 1,212 | 1,064 |
Total other assets | 11,097 | 8,962 |
Total assets | 23,415 | 20,910 |
Current liabilities | ||
Current debt | 997 | 268 |
Accounts payable | 1,670 | 1,822 |
Operating lease liabilities | 357 | 365 |
Other accrued liabilities | 3,216 | 3,360 |
Total current liabilities | 6,240 | 5,815 |
Noncurrent liabilities | ||
Long-term debt | 7,117 | 5,144 |
Long-term operating lease liabilities | 1,698 | 1,868 |
Other noncurrent liabilities | 1,943 | 1,651 |
Total noncurrent liabilities | 10,758 | 8,663 |
Commitments and contingencies | ||
Redeemable Noncontrolling Interest | 832 | 842 |
Equity | ||
Common stock, $.01 par value; Class A shares authorized: 1,300,000,000 at June 30, 2023 and June 30, 2022; shares issued: 469,668,085 at June 30, 2023 and 467,949,351 at June 30, 2022; Class B shares authorized: 304,000,000 at June 30, 2023 and June 30, 2022; shares issued and outstanding: 125,542,029 at June 30, 2023 and 125,542,029 at June 30, 2022 | 6 | 6 |
Paid-in capital | 6,153 | 5,796 |
Retained earnings | 13,991 | 13,912 |
Accumulated other comprehensive loss | (934) | (762) |
Stockholders' equity before treasury stock | 19,216 | 18,952 |
Less: Treasury stock, at cost; 237,590,199 Class A shares at June 30, 2023 and 236,435,830 Class A shares at June 30, 2022 | (13,631) | (13,362) |
Total equity | 5,585 | 5,590 |
Total liabilities, redeemable noncontrolling interest and equity | $ 23,415 | $ 20,910 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2023 | Jun. 30, 2022 |
Equity | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Class A | ||
Equity | ||
Common stock, par value (in dollars per share) | $ 0.01 | |
Common stock, shares authorized | 1,300,000,000 | 1,300,000,000 |
Common stock, shares issued | 469,668,085 | 467,949,351 |
Common stock, shares outstanding | 232,077,900 | 231,513,500 |
Treasury stock, shares | 237,590,199 | 236,435,830 |
Common Class B | ||
Equity | ||
Common stock, par value (in dollars per share) | $ 0.01 | |
Common stock, shares authorized | 304,000,000 | 304,000,000 |
Common stock, shares issued | 125,542,029 | 125,542,029 |
Common stock, shares outstanding | 125,542,029 | 125,542,029 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY AND REDEEMABLE NONCONTROLLING INTEREST - USD ($) $ in Millions | Total | Total stockholders’ equity – The Estée Lauder Companies Inc. | Common stock | Paid-in capital | Retained earnings | Retained earnings Cumulative effect of adoption of new accounting standards | Accumulated other comprehensive loss | Treasury Stock | Non-controlling interests | Redeemable noncontrolling interest |
Beginning of the period at Jun. 30, 2020 | $ 6 | $ 4,790 | $ 10,134 | $ (3) | $ (665) | $ (10,330) | $ 27 | |||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Stock-based compensation | 0 | 542 | (126) | |||||||
Common stock dividends | 3 | (757) | ||||||||
Purchase of shares from noncontrolling interests | 0 | 0 | ||||||||
Net earnings attributable to The Estée Lauder Companies Inc. | 2,870 | |||||||||
Other comprehensive income (loss) attributable to The Estée Lauder Companies Inc. | $ 179 | 195 | ||||||||
Acquisition of treasury stock | (602) | |||||||||
Net earnings attributable to noncontrolling interests | (12) | 12 | ||||||||
Distribution to noncontrolling interest holders | (6) | |||||||||
Translation adjustments and other, net | 1 | |||||||||
End of the period at Jun. 30, 2021 | 6,091 | $ 6,057 | 6 | 5,335 | 12,244 | 121 | (470) | (11,058) | 34 | |
Beginning of the period at Jun. 30, 2020 | $ 0 | |||||||||
Redeemable noncontrolling interest | ||||||||||
Acquired redeemable noncontrolling interest | 881 | |||||||||
Net earnings (loss) attributable to redeemable noncontrolling interest | (7) | (7) | ||||||||
Translation adjustments | $ 17 | (17) | ||||||||
Adjustment of redeemable noncontrolling interest to redemption value | 0 | |||||||||
End of the period at Jun. 30, 2021 | 857 | |||||||||
Redeemable noncontrolling interest | ||||||||||
Cash dividends declared per common share (in dollars per share) | $ 2.07 | |||||||||
Stock-based compensation | 0 | 477 | (174) | |||||||
Common stock dividends | 3 | (843) | ||||||||
Purchase of shares from noncontrolling interests | (19) | (34) | ||||||||
Net earnings attributable to The Estée Lauder Companies Inc. | 2,390 | |||||||||
Other comprehensive income (loss) attributable to The Estée Lauder Companies Inc. | $ (321) | (292) | ||||||||
Acquisition of treasury stock | (2,130) | |||||||||
Net earnings attributable to noncontrolling interests | (7) | 7 | ||||||||
Distribution to noncontrolling interest holders | 0 | |||||||||
Translation adjustments and other, net | (7) | |||||||||
End of the period at Jun. 30, 2022 | 5,590 | 5,590 | 6 | 5,796 | 13,912 | $ 0 | (762) | (13,362) | 0 | |
Redeemable noncontrolling interest | ||||||||||
Acquired redeemable noncontrolling interest | 0 | |||||||||
Net earnings (loss) attributable to redeemable noncontrolling interest | 11 | 11 | ||||||||
Translation adjustments | 25 | (25) | ||||||||
Adjustment of redeemable noncontrolling interest to redemption value | (1) | |||||||||
End of the period at Jun. 30, 2022 | $ 842 | 842 | ||||||||
Redeemable noncontrolling interest | ||||||||||
Cash dividends declared per common share (in dollars per share) | $ 2.33 | |||||||||
Stock-based compensation | 0 | 353 | (85) | |||||||
Common stock dividends | 4 | (927) | ||||||||
Purchase of shares from noncontrolling interests | 0 | 0 | ||||||||
Net earnings attributable to The Estée Lauder Companies Inc. | 1,006 | |||||||||
Other comprehensive income (loss) attributable to The Estée Lauder Companies Inc. | $ (186) | (172) | ||||||||
Acquisition of treasury stock | (184) | |||||||||
Net earnings attributable to noncontrolling interests | 0 | 0 | ||||||||
Distribution to noncontrolling interest holders | 0 | |||||||||
Translation adjustments and other, net | 0 | |||||||||
End of the period at Jun. 30, 2023 | 5,585 | $ 5,585 | $ 6 | $ 6,153 | $ 13,991 | $ (934) | $ (13,631) | $ 0 | ||
Redeemable noncontrolling interest | ||||||||||
Acquired redeemable noncontrolling interest | 0 | |||||||||
Net earnings (loss) attributable to redeemable noncontrolling interest | 4 | 4 | ||||||||
Translation adjustments | 14 | (14) | ||||||||
Adjustment of redeemable noncontrolling interest to redemption value | 0 | |||||||||
End of the period at Jun. 30, 2023 | $ 832 | $ 832 | ||||||||
Redeemable noncontrolling interest | ||||||||||
Cash dividends declared per common share (in dollars per share) | $ 2.58 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Cash flows from operating activities | |||
Net earnings | $ 1,010 | $ 2,408 | $ 2,875 |
Adjustments to reconcile net earnings to net cash flows from operating activities: | |||
Depreciation and amortization | 744 | 727 | 651 |
Deferred income taxes | (186) | (149) | (230) |
Non-cash stock-based compensation | 267 | 331 | 327 |
Net loss on disposal of property, plant and equipment | 13 | 8 | 23 |
Non-cash restructuring and other charges | 36 | 14 | 76 |
Pension and post-retirement benefit expense | 53 | 78 | 95 |
Pension and post-retirement benefit contributions | (49) | (56) | (59) |
Goodwill, other intangible and long-lived asset impairments | 207 | 241 | 188 |
Changes in fair value of contingent consideration | 0 | 0 | (2) |
Gain on previously held equity method investment | 0 | (1) | (847) |
Other non-cash items | (8) | (7) | (20) |
Changes in operating assets and liabilities: | |||
Decrease (increase) in accounts receivable, net | 185 | (10) | (398) |
Increase in inventory and promotional merchandise | (64) | (602) | (140) |
Decrease (increase) in other assets, net | 26 | (101) | 13 |
Increase (decrease) in accounts payable | (333) | 210 | 440 |
Increase (decrease) in other accrued and noncurrent liabilities | (129) | 1 | 695 |
Decrease in operating lease assets and liabilities, net | (41) | (52) | (56) |
Net cash flows provided by operating activities | 1,731 | 3,040 | 3,631 |
Cash flows from investing activities | |||
Capital expenditures | (1,003) | (1,040) | (637) |
Proceeds from purchase price refund | 0 | 0 | 32 |
Payments for acquired businesses, net of cash acquired | 0 | (3) | (1,065) |
Purchases of other intangible assets | (2,286) | 0 | 0 |
Purchases of investments | (8) | (10) | (42) |
Settlement of net investment hedges | 80 | 108 | (152) |
Net cash flows used for investing activities | (3,217) | (945) | (1,864) |
Cash flows from financing activities | |||
Proceeds (repayments) of current debt, net (Note 11) | 983 | (4) | (744) |
Proceeds from issuance of long-term debt, net | 1,995 | 0 | 596 |
Debt issuance costs | (15) | (1) | (4) |
Repayments and redemptions of long-term debt | (265) | (18) | (459) |
Net proceeds from stock-based compensation transactions | 88 | 151 | 215 |
Payment for acquisition of noncontrolling interest | 0 | (15) | 0 |
Payments to acquire treasury stock | (271) | (2,309) | (733) |
Dividends paid to stockholders | (925) | (840) | (753) |
Payments to noncontrolling interest holders for dividends | 0 | 0 | (8) |
Payments of contingent consideration | 0 | 0 | (2) |
Net cash flows provided by (used for) financing activities | 1,590 | (3,036) | (1,892) |
Effect of exchange rate changes on Cash and cash equivalents | (32) | (60) | 61 |
Net increase (decrease) in Cash and cash equivalents | 72 | (1,001) | (64) |
Cash and cash equivalents at beginning of year | 3,957 | 4,958 | 5,022 |
Cash and cash equivalents at end of year | $ 4,029 | $ 3,957 | $ 4,958 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | DESCRIPTION OF BUSINESS The Estée Lauder Companies Inc. manufactures, markets and sells skin care, makeup, fragrance and hair care products around the world. Products are marketed under owned brand names, including: Estée Lauder, Aramis, Clinique, Lab Series, Origins, M·A·C, La Mer, Bobbi Brown Cosmetics , Aveda, Jo Malone London, Bumble and bumble, Darphin Paris, TOM FORD, Smashbox, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, Kilian Paris, Too Faced, Dr.Jart+, and The Ordinary. The Estée Lauder Companies Inc. is also the global licensee of the AERIN and BALMAIN brand names for fragrances and cosmetics. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying consolidated financial statements include the accounts of The Estée Lauder Companies Inc. and its subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated. Certain amounts in the notes to the consolidated financial statements of prior years have been reclassified to conform to current year presentation. Management Estimates The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses reported in those financial statements. Certain significant accounting policies that contain subjective management estimates and assumptions include those related to revenue recognition, inventory, pension and other post-retirement benefit costs, business combinations and asset acquisitions, goodwill, other intangible assets and long-lived assets, income taxes, redeemable noncontrolling interest and Deciem Beauty Group Inc. (“DECIEM”) stock options. Management evaluates the related estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods. Currency Translation and Transactions All assets and liabilities of foreign subsidiaries and affiliates are translated at year-end rates of exchange, while revenue and expenses are translated at monthly average rates of exchange for the period. Unrealized translation gains (losses), net of tax, reported as translation adjustments through other comprehensive income (loss) (“OCI”) attributable to The Estée Lauder Companies Inc. were $(85) million, $(427) million and $147 million, net of tax, in fiscal 2023, 2022 and 2021, respectively. For the Company’s subsidiaries operating in highly inflationary economies, the U.S. dollar is the functional currency. Remeasurement adjustments in financial statements in a highly inflationary economy and other transactional gains and losses are reflected in earnings. These subsidiaries are not material to the Company’s consolidated financial statements or liquidity in fiscal 2023, 2022 and 2021. The Company enters into foreign currency forward contracts and may enter into option contracts to hedge foreign currency transactions for periods consistent with its identified exposures. The Company also uses cross-currency swap contracts to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt. Additionally, the Company enters into foreign currency forward contracts to hedge a portion of its net investment in certain foreign operations, which are designated as net investment hedges. See Note 12 – Derivative Financial Instruments for further discussion . The Company categorizes these instruments as entered into for purposes other than trading. The accompanying consolidated statements of earnings include net exchange gains (losses) on foreign currency transactions of $57 million, $(11) million and $(12) million in fiscal 2023, 2022 and 2021, respectively. Cash and Cash Equivalents Cash and cash equivalents include $66 million and $1,883 million of short-term time deposits at June 30, 2023 and 2022, respectively. The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Investments Investments in the common stock of privately-held companies in which the Company has the ability to exercise significant influence, but less than a controlling financial interest, are accounted for under the equity method of accounting. For those equity securities without readily determinable fair values where the Company does not have the ability to exercise significant influence, the Company records them at cost, less impairment, plus/minus subsequent observable price changes, and performs an assessment each quarter to determine whether or not a triggering event has occurred that results in changes in fair value. Collectively, these investments were not material to the Company’s consolidated financial statements as of June 30, 2023 and 2022 and are included in Other assets in the accompanying consolidated balance sheets. Accounts Receivable Accounts receivable, net is stated net of the allowance for doubtful accounts and customer deductions. Payment terms are short-term in nature and are generally less than one year. The Company is required to measure credit losses based on the Company’s estimate of expected losses rather than incurred losses, which generally results in earlier recognition of allowances for credit losses. The Company evaluates certain criteria, including aging and historical write-offs, the current economic condition of specific customers and future economic conditions of countries utilizing a consumption index to determine the appropriate allowance for credit losses. The Company writes-off receivables once it is determined that the receivables are no longer collectible and as allowed by local laws. See Note 14 – Revenue Recognition for additional information. Inventory and Promotional Merchandise Inventory and promotional merchandise only includes inventory considered saleable or usable in future periods, and is stated at the lower of cost or net realizable value, with cost being based on standard cost and production variances, which approximate actual cost on the first-in, first-out method. Cost components include raw materials, componentry, direct labor and overhead (e.g., indirect labor, utilities, depreciation, purchasing, receiving, inspection and warehousing) as well as inbound freight. Manufacturing overhead is allocated to the cost of inventory based on the normal production capacity. Unallocated overhead during periods of abnormally low production levels are recognized as cost of sales in the period in which they are incurred. Promotional merchandise is charged to expense at the time the merchandise is shipped to the Company’s customers. Included in inventory and promotional merchandise is an inventory obsolescence reserve, which represents the difference between the cost of the inventory and its estimated realizable value. This reserve is calculated using an estimated obsolescence percentage applied to the inventory based on age and historical results. In addition, and as necessary, specific reserves for future known or anticipated events may be established. Derivative Financial Instruments The Company’s derivative financial instruments are recorded as either assets or liabilities on the balance sheet and measured at fair value. All derivatives are (i) designated as a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value” hedge), (ii) designated as a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow” hedge), or (iii) not designated as a hedging instrument. Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge are recorded in current-period earnings, along with the loss or gain on the hedged asset or liability that is attributable to the hedged risk (including losses or gains on unrecognized firm commitments). Changes in the fair value of a derivative that is designated and qualifies as a cash flow hedge of a forecasted transaction are recorded in OCI. Gains and losses deferred in OCI are then recognized in current-period earnings when earnings are affected by the variability of cash flows of the hedged forecasted transaction (e.g., when periodic settlements on a variable-rate asset or liability are recorded in earnings). Changes in the fair value of derivative instruments not designated as hedging instruments are reported in current-period earnings. All derivative gains and losses relating to cash flow hedges and fair value hedges are recognized in the same income statement line as the hedged items. The Company also enters into foreign currency forward contracts to hedge a portion of its net investment in certain foreign operations, which are designated as net investment hedges. See Note 12 – Derivative Financial Instruments for further discussion. Property, Plant and Equipment Property, plant and equipment, including leasehold and other improvements that extend an asset’s useful life or productive capabilities, are carried at cost less accumulated depreciation and amortization. Costs incurred for computer software developed or obtained for internal use are capitalized during the application development stage and expensed as incurred during the preliminary project and post-implementation stages. Capital costs incurred while an asset is being built are classified as Construction in progress and are reclassified to its respective asset class when placed into service. For financial statement purposes, depreciation is provided principally on the straight-line method over the estimated useful lives of the assets ranging from 3 to 40 years. Leasehold improvements are amortized on a straight-line basis over the shorter of the lives of the respective leases or the expected useful lives of those improvements. Business Combinations and Asset Acquisitions The Company evaluates whether a transaction meets the definition of a business. The Company first applies a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen test is met, the transaction is accounted for as an asset acquisition. If the screen test is not met, the Company further considers whether the set of assets or acquired entities have at a minimum, inputs and processes that have the ability to create outputs in the form of revenue. If the assets or acquired entities meet this criteria, the transaction is accounted for as a business combination. The Company uses the acquisition method of accounting for acquired businesses. Under the acquisition method, the Company's consolidated financial statements reflect the operations of an acquired business starting from the closing date of the acquisition. The Company allocates the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date. Any residual purchase price is recorded as goodwill. The Company recognizes assets acquired in an asset acquisition based on the cost to the Company on a relative fair value basis, which includes transaction costs in addition to consideration transferred and liabilities assumed or issued as part of the transaction. Neither goodwill nor bargain purchase gains are recognized in an asset acquisition; any excess of consideration transferred over the fair value of the net assets acquired, or the opposite, is allocated to qualifying assets based on their relative fair values. The determination of fair value, as well as the expected useful lives of certain assets acquired, requires management to make judgments and may involve the use of significant estimates, including assumptions with respect to estimated future cash flows, discount rates and valuation multiples from comparable publicly traded companies, among other things. See Note 5 – Business and Asset Acquisitions for further information. Goodwill and Other Indefinite-lived Intangible Assets Goodwill is calculated as the excess of the cost of purchased businesses over the fair value of their underlying net assets. Other indefinite-lived intangible assets principally consist of trademarks. Goodwill and other indefinite-lived intangible assets are not amortized. The Company assesses goodwill and other 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. The Company tests goodwill for impairment at the reporting unit level, which is one level below the Company’s operating segments. The Company identifies its reporting units by assessing whether the components of its operating segments constitute businesses for which discrete financial information is available and management of each operating segment regularly reviews the operating results of those components. The Company makes certain judgments and assumptions in allocating assets and liabilities to determine carrying values for its reporting units. When testing goodwill for impairment, the Company has the option of first performing a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. The Company uses a single quantitative step when determining the subsequent measurement of goodwill by comparing the fair value of a reporting unit with its carrying amount and recording an impairment charge for the amount that the carrying amount exceeds the fair value, up to the total amount of goodwill allocated to that reporting unit. When testing other indefinite-lived intangible assets for impairment, the Company also has the option of first performing a qualitative assessment to determine whether it is more-likely-than-not that the indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform a quantitative test. The quantitative impairment test for indefinite-lived intangible assets encompasses calculating the fair value of an indefinite-lived intangible asset and comparing the fair value to its carrying value. If the carrying value exceeds the fair value, an impairment charge is recorded. See Note 6 – Goodwill and Other Intangible Assets for further information. Long-Lived Assets The Company reviews long-lived assets, primarily intangible assets subject to amortization, right-of-use assets and property, plant and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. When such events or changes in circumstances occur, a recoverability test is performed comparing projected undiscounted cash flows from the use and eventual disposition of an asset or asset group to its carrying value. If the projected undiscounted cash flows are less than the carrying value, then an impairment charge would be measured and recorded for the excess of the carrying value over the fair value. Specifically for right-of-use assets, estimated fair value is based on discounting market rent using a real estate discount rate. Leases The Company recognizes a lease liability and a related right-of-use (“ROU”) asset at the commencement date for leases on its consolidated balance sheet, excluding short-term leases as noted below. The lease liability is equal to the present value of unpaid lease payments over the remaining lease term. The Company’s lease term at the commencement date may reflect options to extend or terminate the lease when it is reasonably certain that such options will be exercised. To determine the present value of the lease liability, the Company uses an incremental borrowing rate, which is defined as the rate of interest that the Company would have to pay to borrow (on a collateralized basis over a similar term) an amount equal to the lease payments in similar economic environments. The ROU asset is based on the corresponding lease liability adjusted for certain costs such as initial direct costs, prepaid lease payments and lease incentives received. Both operating and finance lease ROU assets are reviewed for impairment, consistent with other long-lived assets, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. After an ROU asset is impaired, any remaining balance of the ROU asset is amortized on a straight-line basis over the shorter of the remaining lease term or the estimated useful life. After the lease commencement date, the Company evaluates lease modifications, if any, that could result in a change in the accounting for leases. For a lease modification, an evaluation is performed to determine if it should be treated as either a separate lease or a change in the accounting of an existing lease. In addition, significant changes in events or circumstances within the Company’s control are assessed to determine whether a change in the accounting for leases is required. For lease modifications that result in partial termination of the lease, the Company has elected the proportional method whereby the carrying amount of the ROU asset is decreased in proportion with the full or partial termination of the lease based on the adjustment to the carrying value of the lease liability. The difference between those adjustments is recognized in Selling, general and administrative expense in the accompanying consolidated statements of earnings at the effective date of the termination. Certain of the Company’s leases provide for variable lease payments for the right to use an underlying asset that vary due to changes in facts and circumstances occurring after the commencement date, other than the passage of time. Variable lease payments that are dependent on an index or rate (e.g., Consumer Price Index) are included in the initial measurement of the lease liability, the initial measurement of the ROU asset, and the lease classification test based on the index or rate as of the commencement date. Any changes from the commencement date estimation of the index- and rate-based variable payments are expensed as incurred in the period of the change. Variable lease payments that are not known at the commencement date and are determinable based on the performance or use of the underlying asset , are not included in the initial measurement of the lease liability or the ROU asset, but instead are expensed as incurred. The Company’s variable lease payments primarily include rents based on a percentage of sales in excess of stipulated levels, common area maintenance based on the percentage of the total square footage leased by the Company, as well as costs relating to embedded leases, such as third-party manufacturing agreements. Certain of the Company’s contracts contain lease components as well as non-lease components, such as an agreement to purchase services. For purposes of allocating contract consideration, the Company does not separate the lease components from non-lease components for all asset classes. Short-term leases (i.e. leases with a term of 12 months or less) are not recorded as ROU assets or lease liabilities on the Company’s consolidated balance sheets, and the related lease payments are recognized in net earnings on a straight-line basis over the lease term. For certain leases relating to automobiles, information technology equipment and office equipment, the Company utilizes the portfolio approach. Under this approach, the Company combines and accounts for leases (as a portfolio) with similar characteristics (e.g., lease term, discount rates, etc.) as a single lease, provided its application is not materially different when compared to the application at the individual lease level. See Note 7 – Leases for further information. Concentration of Credit Risk The Company is a worldwide manufacturer, marketer and seller of skin care, makeup, fragrance and hair care products. The Company’s sales subject to credit risk are made primarily to retailers in its travel retail business, department stores, specialty multi-brand retailers and perfumeries. The Company grants credit to qualified customers. While the Company does not believe it is exposed significantly to any undue concentration of credit risk at this time, it continues to monitor its customers' abilities, individually and collectively, to make timely payments. Revenue Recognition Performance Obligations The Company recognizes revenue at a point in time when it satisfies a performance obligation by transferring control over a product and other promised goods and services to a customer. The Company sells wholesale to customers in distribution channels that include department stores, travel retail, specialty-multi retailers, perfumeries, salons/spas and through various online sites operated by authorized retailers, including pure-play sites. The primary performance obligation related to these channels of distribution is product sales where revenue is recognized as control of the product transfers to the customer. In the Americas region, revenue is generally recognized at the time the product is made available and provided to the customer’s carrier at the Company’s location, and in the Europe, the Middle East & Africa and Asia/Pacific regions, revenue is generally recognized based upon the customer’s receipt. The Company also sells direct to consumers at Company-operated freestanding stores and online through Company-owned and operated e-commerce and m-commerce sites and through third-party online malls. At Company-operated freestanding stores, revenue is recognized when control of the product is transferred at the point of sale. Revenue from online sales is recognized when control of the product is transferred, generally based upon the consumer’s receipt. In connection with the sale of product, the Company may provide other promised goods and services that are deemed to be performance obligations. These are comprised of gift with purchase and purchase with purchase promotions, customer loyalty program obligations, gift cards and other promotional goods including samples and testers. The Company offers a number of different loyalty programs to its customers across regions, brands and distribution channels including points-based programs, tier-based programs and other programs. Revenue is allocated between the saleable product revenue and the material right loyalty obligations based on relative standalone selling prices when the consumer purchases the products that are earning them the right to the future benefits. Deferred revenue related to the Company’s loyalty programs is estimated based on the standalone selling price and is adjusted for an estimated breakage factor. Standalone selling price is determined primarily using the observable market price of the good or service benefit if it is sold by the Company or a cost plus margin approach for goods/services not directly sold by the Company. Breakage rates consider historical patterns of redemption and/or expiration. Revenue is recognized when the benefits are redeemed or expire. The Company provides gift with purchase promotional products to certain customers generally without additional charge and also provides purchase with purchase promotional products to certain customers at a discount in relation to prices charged for saleable product. Revenue is allocated between saleable product, gift with purchase product and purchase with purchase product based on the estimated relative standalone selling prices. Revenue is deferred and ultimately recognized based on the timing differences, if any, between when control of promotional goods and control of the related saleable products transfer to the Company’s customer (e.g., a third-party retailer), which is calculated based on the weighted-average number of days between promotional periods. The estimated standalone selling price allocated to promotional goods is based on a cost plus margin approach. In situations where promotional products are provided by the Company to its customers at the same time as the related saleable product, such as shipments of samples and testers, the cost of these promotional products are recognized as a cost of sales at the same time as the related revenue is recognized and no deferral of revenue is required. The Company also offers gift cards through Company-operated freestanding stores and Company-owned websites. The related deferred revenue is estimated based on expected breakage that considers historical patterns of redemption taking into consideration escheatment laws as applicable. Product Returns, Sales Incentives and Other Forms of Variable Consideration In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration. Such elements of variable consideration include product returns and sales incentives, such as volume rebates and discounts, markdowns, margin adjustments and early-payment discounts. We also enter into arrangements containing other forms of variable consideration, including certain demonstration arrangements, for which the Company does not receive a distinct good or service or for which the Company cannot reasonably estimate the fair value of the good or service. For these types of arrangements, the adjustments to revenue are recorded at the later of when (i) the Company recognizes revenue for the transfer of the related goods or services to the customer, or (ii) the Company pays, or promises to pay, the consideration. For the sale of goods with a right of return, the Company only recognizes revenue for the consideration it expects to be entitled to (considering the products to be returned) and records a sales return accrual within Other accrued liabilities for the amount it expects to credit back its customers. In addition, the Company recognizes an asset included in Inventory and promotional merchandise and a corresponding adjustment to Cost of sales for the right to recover goods from customers associated with the estimated returns. The sales return accrual and corresponding asset include estimates that directly impact reported net sales. These estimates are calculated based on a history of actual returns, estimated future returns and information provided by retailers regarding their inventory levels. Consideration of these factors results in an estimate for anticipated sales returns that reflects increases or decreases related to seasonal fluctuations. In addition, as necessary, sales return accruals and the related assets may be established for significant future known or anticipated events. The types of known or anticipated events that are considered, and will continue to be considered, include the financial condition of the Company’s customers, store closings by retailers, changes in the retail environment and the Company’s decision to continue to support new and existing products. The Company estimates sales incentives and other variable consideration using the most likely amount method and records accruals within Other accrued liabilities when control of the related product is transferred to the customer. Under this method, certain forms of variable consideration are based on expected sell-through results, which requires subjective estimates. These estimates are supported by historical results as well as specific facts and circumstances related to the current period. The Company also enters into transactions and makes payments to certain of its customers related to demonstration, advertising and counter construction, some of which involve cooperative relationships with customers. These activities may be arranged either with unrelated third parties or in conjunction with the customer. To the extent the Company receives a distinct good or service in exchange for consideration and the fair value of the benefit can be reasonably estimated, the Company’s share of the counter depreciation and the other costs of these transactions (regardless of to whom they were paid) are reflected in Selling, general and administrative expenses in the accompanying consolidated statements of earnings. See Note 14 – Revenue Recognition for further discussion . For revenue disaggregated by product category and geographic region, see Note 22 – Segment Data and Related Information . Royalty Revenue - License Arrangements As a result of the acquisition of the TOM FORD brand, the Company entered into license arrangements with the Marcolin Group (“Marcolin”) and Ermenegildo Zegna N.V. (“Zegna”). As part of these arrangements, the Company licensed the TOM FORD trademark for eyewear (“Eyewear”) to Marcolin and for fashionwear (“Fashion”) to Zegna. Licensing the TOM FORD trademark to customers represents a new revenue-generating activity in the ordinary course of business for the Company. The Company’s performance obligation is to license the TOM FORD trademark to Marcolin and to Zegna, which grants them the right to access the symbolic intellectual property. The licensing arrangements stipulate that licensees must pay a sales-based royalty, with a guaranteed minimum, to the Company. The Company satisfies its performance obligation over the license period, as the Company fulfills its promise to grant the licensees rights to use and benefit from the intellectual property as well as maintain the intellectual property. As such, revenue for both the Marcolin and Zegna arrangements is recognized over time. Royalty payments are collected on a quarterly basis. The Company expects the guaranteed minimum royalty amounts to be exceeded and, as a result, sales-based royalties will be recognized in the period in which the sales occur. The upfront payment received from Marcolin is recognized on a straight-line basis over the estimated economic life of the license. See Note 5 – Business and Asset Acquisitions and Note 14 - Revenue Recognition for further information regarding the acquisition of the TOM FORD brand. Advertising and Promotion Global net advertising, merchandising, sampling, promotion and product development expenses of $3,711 million, $3,877 million and $3,710 million in fiscal 2023, 2022 and 2021, respectively, are recorded in Selling, general and administrative expenses in the accompanying consolidated statements of earnings and are expensed as incurred. The cost of certain promotional products, including samples and testers, are classified within Cost of sales. Research and Development Research and development costs of $344 million, $307 million and $243 million in fiscal 2023, 2022 and 2021, respectively, are recorded in Selling, general and administrative expenses in the accompanying consolidated statements of earnings and are expensed as incurred. Shipping and Handling Shipping and handling expenses of $838 million, $860 million and $680 million in fiscal 2023, 2022 and 2021, respectively, are recorded in Selling, general and administrative expenses in the accompanying consolidated statements of earnings and include distribution center costs, promotional shipping costs, third-party logistics costs and outbound freight. Royalty Fees - License Arrangements The Company’s license agreements provide the Company with worldwide rights to manufacture, market and sell beauty and beauty-related products (or particular categories thereof) using the licensors’ trademarks. The current license arrangements have an initial term of approximately 5 years to 10 years, and are renewable subject to the Company’s compliance with the license agreement provisions. As of June 30, 2023, the remaining terms considering available renewal periods range from 7 years to approximately 27 years. Under each license, the Company is required to pay royalties to the licensor, at least annually, based on net sales to third parties. Certain license agreements may require minimum royalty payments, incremental royalties based on net sales levels and minimum spending on advertising and promotional activities. Royalty expenses are accrued in the period in which net sales are recognized while advertising and promotional expenses are accrued at the time these costs are incurred. Stock-Based Compensation The Company records stock-based compensation, measured at the fair value of the awards that are ultimately expected to vest, as an expense in the consolidated financial statements, net of estimated forfeitures. All excess tax benefits and tax de |
INVENTORY AND PROMOTIONAL MERCH
INVENTORY AND PROMOTIONAL MERCHANDISE | 12 Months Ended |
Jun. 30, 2023 | |
Inventory Disclosure [Abstract] | |
INVENTORY AND PROMOTIONAL MERCHANDISE | INVENTORY AND PROMOTIONAL MERCHANDISE Inventory and promotional merchandise consists of the following: June 30 (In millions) 2023 2022 Raw materials $ 876 $ 791 Work in process 362 366 Finished goods 1,404 1,449 Promotional merchandise 337 314 $ 2,979 $ 2,920 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended |
Jun. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consists of the following: June 30 (In millions) 2023 2022 Assets (Useful Life) Land $ 70 $ 53 Buildings and improvements (10 to 40 years) 843 491 Machinery and equipment (3 to 10 years) 1,071 994 Computer hardware and software (4 to 10 years) 1,651 1,468 Furniture and fixtures (5 to 10 years) 136 129 Leasehold improvements 2,310 2,246 Construction in progress 827 759 6,908 6,140 Less accumulated depreciation and amortization (3,729) (3,490) $ 3,179 $ 2,650 Depreciation and amortization of property, plant and equipment was $577 million, $543 million and $516 million in fiscal 2023, 2022 and 2021, respectively. Depreciation and amortization related to the Company’s manufacturing process is included in Cost of sales and all other depreciation and amortization is included in Selling, general and administrative expenses in the accompanying consolidated statements of earnings. See Note 7 – Leases for d iscussion of property, plant and equipment impairments. |
BUSINESS AND ASSET ACQUISITIONS
BUSINESS AND ASSET ACQUISITIONS | 12 Months Ended |
Jun. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
BUSINESS AND ASSET ACQUISITIONS | BUSINESS AND ASSET ACQUISITIONS Asset Acquisition Fiscal 2023 On April 28, 2023, the Company acquired 100% of the equity interests in 001 Del LLC (“001”) in exchange for $2,550 million in consideration (the “TOM FORD Acquisition”). 001 is the sole owner of the TOM FORD brand and its related intellectual property. The TOM FORD brand is a luxury brand created in 2005, and this acquisition is expected to further strengthen the Company’s TOM FORD BEAUTY brand, which the Company has historically licensed, while simultaneously enabling the Company to create new licensing revenue streams. At the same time as the Company's transaction, affiliates of the Ermenegildo Zegna Group (“Zegna”) separately purchased the interests in the TOM FORD fashion business that Zegna did not own (including the purchase of interests from the sellers of 001). The TOM FORD Acquisition has been accounted for as an asset acquisition as the fair value of the gross assets acquired is concentrated in the value of the TOM FORD trademark intangible asset. The acquisition of 001 included existing license relationships for certain uses of the brand name, which were modified, terminated or otherwise renegotiated in connection with the transaction, and are discussed separately in Note 14 – Revenue Recognition . The total cost of the asset acquisition is $2,578 million, inclusive of approximately $28 million of transaction related costs and $300 million of deferred consideration payable to the sellers included in Other noncurrent liabilities in the accompanying consolidated balance sheets as of June 30, 2023. Of the $300 million of deferred consideration payable to the sellers, $150 million is due in July 2025 and the remaining $150 million is due in July 2026. The total cost of the asset acquisition was allocated to the TOM FORD trademark intangible asset. The Company determined that the TOM FORD trademark intangible asset has an indefinite life, and will not be amortized, but will be subject to impairment assessment at least annually, or more frequently if certain events or circumstances exist. Business Combination Fiscal 2021 On May 18, 2021, the Company acquired additional shares in DECIEM, a Toronto-based skin care company, for $1,092 million in cash, including proceeds from the issuance of debt. DECIEM is a multi-brand beauty company with a brand portfolio that includes The Ordinary and NIOD. This acquisition is expected to further strengthen the Company’s leadership position in prestige skin care, expand its global consumer reach and complement its business in the online and specialty-multi channels. The Company originally acquired a minority interest in DECIEM in June 2017. The minority interest was accounted for as an equity method investment, which had a carrying value of $65 million at the acquisition date. The acquisition of additional shares increased the Company's fully diluted equity interest from approximately 29% to approximately 76% and was considered a step acquisition. On a fully diluted basis, the DECIEM stock options, discussed below, approximated 4% of the total capital structure. Accordingly, for purposes of determining the consideration transferred, the Company excluded the DECIEM stock options, which resulted in an increase in the Company’s post-acquisition undiluted equity interest from approximately 30% to approximately 78% and the post-acquisition undiluted equity interest of the remaining noncontrolling interest holders of approximately 22%. The Company remeasured the previously held equity method investment to its fair value of $913 million, resulting in the recognition of a gain of $848 million. The gain on the Company’s previously held equity method investment is included in Other income, net in the accompanying consolidated statements of earnings for the year ended June 30, 2021. As part of the increase in the Company's investment, 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 after a three-year period, with a purchase price based on the future performance of DECIEM (the “net Put (Call) Option”). As a result of this redemption feature, the Company recorded redeemable noncontrolling interest, at its acquisition‑date fair value, that is classified as mezzanine equity in the accompanying consolidated balance sheets at June 30, 2021. The accounting for the DECIEM business combination was finalized during the fiscal 2022 third quarter. A summary of the total consideration transferred, including immaterial measurement period adjustments was finalized during the fiscal 2022 third quarter and recorded as follows: (In millions) March 31, 2022 Cash paid $ 1,095 Fair value of DECIEM stock options liability 104 Fair value of net Put (Call) Option 233 Total consideration for the acquired ownership interest (approximately 47.9%) 1,432 Fair value of previously held equity method investment (approximately 30.5%) 913 Fair value of redeemable noncontrolling interest (approximately 21.6%) 647 Total consideration transferred (100%) $ 2,992 As part of the acquisition of additional shares, DECIEM stock options were issued in replacement of and exchange for certain vested and unvested stock options previously issued by DECIEM. The total fair value of the DECIEM stock options of $295 million was recorded as part of the total consideration transferred, comprising of $191 million of Cash paid for vested options settled as of the acquisition date and $104 million reported as a stock options liability on the Company's consolidated balance sheet as it is not an assumed liability of DECIEM and is expected to be settled in cash upon completion of the exercise of the Put (Call). The acquisition-date fair value of the DECIEM stock options liability was calculated by multiplying the acquisition-date fair value by the number of DECIEM stock options replaced the day after the acquisition date. The stock options replaced consist of vested and partially vested stock options. See Note 18 – Stock Programs for information relating to the DECIEM stock options. The acquisition-date fair value of the previously held equity method investment was calculated by multiplying the gross-up of the total consideration for the acquired ownership interest of $2,992 million by the related effective previously held equity interest of approximately 30.5%. The acquisition-date fair value of the redeemable noncontrolling interest includes the acquisition-date fair value of the net Put (Call) Option of $233 million. The remaining acquisition-date fair value of the redeemable noncontrolling interest of $647 million was calculated by multiplying the gross-up of the total consideration for the acquired ownership interest of $2,992 million by the related noncontrolling interest of approximately 21.6%. The acquisition-date fair values of the DECIEM stock options and the net Put (Call) Option were calculated by incorporating significant assumptions including the starting equity value, revenue growth rates and EBITDA and the following key assumptions into the Monte Carlo Method: May 18, 2021 Risk-free rate 0.50% Term to mid of last twelve-month period 2.54 years Operating leverage adjustment 0.45 Net sales discount rate 3.30% EBITDA discount rate 6.80% EBITDA volatility 38.30% Net sales volatility 17.20% The Company recorded an allocation of the total consideration transferred to the tangible and identifiable intangible assets acquired and liabilities assumed based on their fair value at the acquisition date. The total consideration transferred includes the cash paid at closing, the fair value of its previously held equity method investment, the fair value of the redeemable noncontrolling interest, including the fair value of the net Put (Call) Option, and the fair value of the DECIEM stock options liability. The excess of the total consideration transferred over the fair value of the net tangible and intangible assets acquired was recorded as goodwill. To determine the acquisition date estimated fair value of intangible assets acquired, the Company 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 allocation of the total consideration transferred, including immaterial measurement period adjustments was finalized during the fiscal 2022 third quarter and recorded as follows: (In millions) March 31, 2022 Cash $ 35 Accounts receivable 64 Inventory 190 Other current assets 33 Property, plant and equipment 40 Operating lease right-of-use assets 40 Intangible assets 1,917 Goodwill 1,296 Deferred income taxes 8 Total assets acquired 3,623 Accounts payable 21 Operating lease liabilities 8 Other accrued liabilities 78 Deferred income taxes 479 Long-term operating lease liabilities 45 Total liabilities assumed 631 Total consideration transferred $ 2,992 The results of operations for DECIEM and acquisition-related costs were not material to the Company's consolidated statements of earnings for the year ended June 30, 2021. Pro forma results of operations reflecting the acquisition of DECIEM are not presented, as the impact on the Company’s consolidated financial results would not have been material. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS As previously discussed in Note 5 - Business and Asset Acquisitions , in April 2023, the Company completed the TOM FORD Acquisition and recorded a non-amortizable intangible asset (trademark) of $2,578 million. The trademark acquired in connection with the TOM FORD Acquisition is classified as level 3 in the fair value hierarchy. The fair value of the trademark was determined using an income approach, specifically the relief-from-royalty method. This method assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to obtain the rights to use the comparable asset. The significant assumptions used to estimate the fair value were revenue growth rates, terminal value, beauty royalty savings, the weighted average cost of capital used to discount future cash flows and royalty rates. The most significant unobservable input was the weighted average cost of capital used to discount future cash flows. Also as discussed in Note 5 - Business and Asset Acquisitions, in May 2021 the Company increased its investment in DECIEM, which resulted in the inclusion of additional goodwill of $1,296 million, amortizable intangible assets (customer lists) of $701 million with amortization periods of 7 years to 14 years, and non-amortizable intangible assets (trademarks) of $1,216 million. Goodwill associated with the acquisition is primarily attributable to the future revenue growth opportunities associated with sales growth in the skin care category, as well as the value associated with DECIEM's assembled workforce. As such, the goodwill has been allocated to the Company’s skin care product category. The goodwill recorded in connection with this acquisition is not deductible for tax purposes. The intangible assets acquired in connection with the acquisition of DECIEM are classified as level 3 in the fair value hierarchy. The estimate of the fair values of the acquired amortizable intangible assets were determined using a multi-period excess earnings income approach by discounting the incremental after-tax cash flows over multiple periods. Fair value was determined under this approach by estimating future cash flows over multiple periods, as well as a terminal value, and discounting such cash flows at a rate of return that reflects the relative risk of the cash flows. The estimate of the fair values of the acquired intangible assets not subject to amortization were determined using an income approach, specifically the relief-from-royalty method. This method assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to obtain the rights to use the comparable asset. Goodwill The Company assigns goodwill of a reporting unit to the product categories in which that reporting unit operates at the time of acquisition. The following table presents goodwill by product category and the related change in the carrying amount: (In millions) Skin Care Makeup Fragrance Hair Care Total Balance as of June 30, 2021 Goodwill $ 1,786 $ 1,214 $ 262 $ 355 $ 3,617 Accumulated impairments (141) (830) (30) — (1,001) 1,645 384 232 355 2,616 Goodwill measurement period adjustment 13 — — — 13 Translation and other adjustments, goodwill (97) (98) (13) (2) (210) Translation and other adjustments, accumulated impairments 3 98 1 — 102 (81) — (12) (2) (95) Balance as of June 30, 2022 Goodwill 1,702 1,116 249 353 3,420 Accumulated impairments (138) (732) (29) — (899) 1,564 384 220 353 2,521 Translation and other adjustments, goodwill (38) — 5 — (33) Translation and other adjustments, accumulated impairments (1) — (1) — (2) (39) — 4 — (35) Balance as of June 30, 2023 Goodwill 1,664 1,116 254 353 3,387 Accumulated impairments (139) (732) (30) — (901) $ 1,525 $ 384 $ 224 $ 353 $ 2,486 Other Intangible Assets Other intangible assets primarily include trademarks and customer lists, as well as patents, and license arrangements resulting from or related to businesses and assets purchased by the Company. Indefinite-lived intangible assets (e.g., trademarks) are not subject to amortization and are assessed at least annually for impairment during the fiscal fourth quarter or more frequently if certain events or circumstances exist. Other intangible assets (e.g., customer lists) are amortized on a straight-line basis over their expected period of benefit, approximately 7 years to 18 years. Intangible assets related to license agreements were amortized on a straight-line basis over their useful lives based on the terms of the respective agreements. The costs incurred and expensed by the Company to extend or renew the term of acquired intangible assets during fiscal 2023 and 2022 were not material to the Company’s results of operations. Other intangible assets consist of the following: June 30, 2023 June 30, 2022 (In millions) Gross Accumulated Total Net Gross Accumulated Total Net Amortizable intangible assets: Customer lists, license agreements and other $ 2,030 $ 766 $ 1,264 $ 2,064 $ 628 $ 1,436 Non-amortizable intangible assets: Trademarks 4,338 1,992 Total intangible assets $ 5,602 $ 3,428 The aggregate amortization expense related to amortizable intangible assets for fiscal 2023, 2022 and 2021 was $145 million, $160 million and $110 million, respectively. The estimated aggregate amortization expense for each of the next five fiscal years is as follows: Fiscal (In millions) 2024 2025 2026 2027 2028 Estimated aggregate amortization expense $ 146 $ 146 $ 146 $ 129 $ 104 Fiscal 2023 Impairment Analysis For further policy information on the Company's policy relating to its impairment assessment of goodwill and other indefinite-lived intangible assets, see Goodwill and Other Indefinite-lived Intangible Assets within Note 2 – Summary of Significant Accounting Policies. During the fiscal 2023 second quarter, given the lower-than-expected results in the overall business, the Company revised the internal forecasts relating to its Smashbox reporting unit. The Company concluded that the changes in circumstances in the reporting unit triggered the need for an interim impairment review of its trademark intangible asset. The remaining carrying value of the trademark intangible asset was not recoverable and the Company recorded an impairment charge of $21 million reducing the carrying value to zero. During the fiscal 2023 second quarter, the Dr.Jart+ reporting unit experienced lower-than-expected growth within key geographic regions and channels that continue to be impacted by the spread of COVID-19 variants, resurgence in cases, and the potential future impacts relating to the uncertainty of the duration and severity of COVID-19 impacting the financial performance of the reporting unit. In addition, due to macro-economic factors, Dr.Jart+ has experienced lower-than-expected growth within key geographic regions. The Too Faced reporting unit experienced lower-than-expected results in key geographic regions and channels coupled with delays in future international expansion to areas that continue to be impacted by COVID-19. As a result, the Company revised the internal forecasts relating to its Dr.Jart+ and Too Faced reporting units. Additionally, there were increases in the weighted average cost of capital for both reporting units as compared to the prior year annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2022. The Company concluded that the changes in circumstances in the reporting units, along with increases in the weighted average cost of capital, triggered the need for interim impairment reviews of their trademarks and goodwill. These changes in circumstances were also an indicator that the carrying amounts of Dr.Jart+’s and Too Faced’s long-lived assets, including customer lists, may not be recoverable. Accordingly, the Company performed interim impairment tests for the trademarks and a recoverability test for the long-lived assets as of November 30, 2022. The Company concluded that the carrying value of the trademark intangible assets exceeded their estimated fair values, which were determined utilizing the relief-from-royalty method to determine discounted projected future cash flows and recorded an impairment charge of $100 million for Dr.Jart+ and $86 million for Too Faced. The Company concluded that the carrying amounts of the long-lived assets were recoverable. After adjusting the carrying values of the trademarks, the Company completed interim quantitative impairment tests for goodwill. As the estimated fair value of the Dr.Jart+ and Too Faced reporting units were in excess of their carrying values, the Company concluded that the carrying amounts of the goodwill were recoverable and did not record a goodwill impairment charge related to these reporting units. The fair values of these reporting units were based upon an equal weighting of the income and market approaches, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the reporting units. The significant assumptions used in these approaches include revenue growth rates and profit margins, terminal values, weighted average cost of capital used to discount future cash flows, comparable market multiples and royalty rates for trademarks. The most significant unobservable input used to estimate the fair values of the Dr.Jart+ and Too Faced trademark intangible assets was the weighted average cost of capital, which was 11% and 13%, respectively. A summary of the impairment charges for the twelve months ended June 30, 2023 and the remaining trademark and goodwill carrying values as of June 30, 2023, for each reporting unit, are as follows: Impairment Charges Carrying Value (In millions) Twelve Months Ended As of June 30, 2023 Reporting Unit Geographic Region Trademarks Goodwill Trademarks Goodwill Smashbox The Americas $ 21 $ — $ — $ — Dr.Jart+ Asia/Pacific 100 — 325 304 Too Faced The Americas 86 — 186 13 Total $ 207 $ — $ 511 $ 317 The impairment charges for the twelve months ended June 30, 2023 were reflected in the skin care product category for Dr.Jart+ and the makeup product category for Smashbox and Too Faced. Fiscal 2022 Impairment Analysis During the fiscal 2022 third quarter, given the lower-than-expected results from international expansion to areas that continue to be impacted by COVID-19, the Company made revisions to the internal forecasts relating to its GLAMGLOW reporting unit. The Company concluded that the changes in circumstances in the reporting unit triggered the need for an interim impairment review of its trademark intangible asset. The remaining carrying value of the trademark intangible asset was not recoverable and the Company recorded an impairment charge of $11 million reducing the carrying value to zero. During the fiscal 2022 third quarter, given the lower-than-expected growth within key geographic regions and channels for Dr.Jart+ that continue to be impacted by the spread of COVID-19 variants and resurgence in cases and the potential future impacts relating to the uncertainty of the duration and severity of COVID-19 impacting the financial performance of the brand, the lower than expected growth in key retail channels for DECIEM, and the lower than expected results from international expansion to areas that continue to be impacted by COVID-19 for Too Faced, the Company made revisions to the internal forecasts relating to its Dr.Jart+, DECIEM and Too Faced reporting units. The Company concluded that the changes in circumstances in the reporting units triggered the need for interim impairment reviews of their trademarks and goodwill. These changes in circumstances were also an indicator that the carrying amounts of Dr.Jart+’s, DECIEM’s and Too Faced’s long-lived assets, including customer lists, may not be recoverable. Accordingly, the Company performed interim impairment tests for the trademarks and a recoverability test for the long-lived assets as of February 28, 2022. The Company concluded that the carrying amounts of the long-lived assets were recoverable. For the Dr.Jart+ reporting unit, the Company also concluded that the carrying value of the trademark intangible asset exceeded its estimated fair value, which was determined utilizing the relief-from-royalty method to determine discounted projected future cash flows, and recorded an impairment charge Based on the Company’s annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2022, the Company determined that the carrying value of the Dr.Jart+ trademark exceeded its fair value. This determination was made based on updated internal forecasts. Given the lower-than-expected growth within key geographic regions and channels that continued to be impacted by the spread of COVID-19 variants, the resurgence in cases, regional lockdowns and the potential future impacts relating to the uncertainty of the duration and severity of COVID-19 impacting the financial performance of the brand, the Company made revisions to the internal forecasts relating to the Dr.Jart+ reporting unit. These changes in circumstances were also indicators that the carrying amounts of their respective long-lived assets may not be recoverable. The Company concluded that the carrying value of the trademark intangible asset exceeded its estimated fair value, which was determined utilizing the relief-from-royalty method to determine discounted projected future cash flows, and recorded an impairment charge of $25 million. The Company concluded that the carrying amount of the long-lived assets were recoverable. After adjusting the carrying value of the trademark, the Company completed a quantitative impairment test for goodwill. As the estimated fair value of the reporting unit was in excess of its carrying value, the Company concluded that the carrying amount of the goodwill was recoverable and did not record a goodwill impairment charge related to the reporting unit. The fair value of the reporting unit was based upon an equal weighting of the income and market approaches, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the reporting units. The significant assumptions used in these approaches include revenue growth rates and profit margins, terminal values, weighted average cost of capital used to discount future cash flows and royalty rates for trademarks. The most significant unobservable input used to estimate the fair value of the trademark intangible asset was the weighted average cost of capital, which was 10.5%. A summary of the trademark impairment charges for the three and twelve months ended June 30, 2022 and the remaining carrying values as of June 30, 2022, for each reporting unit, are as follows: (In millions) Impairment Charges Carrying Value Reporting Unit: Geographic Region Three Months Ended June 30, 2022 Twelve Months Ended June 30, 2022 As of June 30, 2022 GLAMGLOW The Americas $ — $ 11 $ — Dr.Jart+ Asia/Pacific 25 230 428 Total $ 25 $ 241 $ 428 The impairment charges for the three and twelve months ended June 30, 2022 were reflected in the skin care product category. Fiscal 2021 Impairment Analysis During November 2020, given the actual and the estimate of the potential future impacts relating to the uncertainty of the duration and severity of COVID-19 impacting the Company and lower than expected results from geographic expansion, the Company made further revisions to the internal forecasts relating to its GLAMGLOW reporting unit. The Company concluded that the changes in circumstances in this reporting unit triggered the need for an interim impairment review of its trademark and goodwill. These changes in circumstances were also an indicator that the carrying amounts of GLAMGLOW's long-lived assets, including customer lists, may not be recoverable. Accordingly, the Company performed an interim impairment test for the trademark and a recoverability test for the long-lived assets as of November 30, 2020. The Company concluded that the carrying value of the trademark for GLAMGLOW exceeded its estimated fair value, which was determined utilizing the relief-from-royalty method to determine discounted projected future cash flows, and recorded an impairment charge of $21 million. In addition, the Company concluded that the carrying value of the GLAMGLOW customer lists intangible asset was fully impaired and recorded an impairment charge of $6 million. The fair value of all other long-lived assets of GLAMGLOW exceeded their carrying values and were not impaired as of November 30, 2020. After adjusting the carrying values of the trademark and customer lists intangible assets, the Company completed an interim quantitative impairment test for goodwill and recorded a goodwill impairment charge of $54 million, reducing the carrying value of goodwill for the GLAMGLOW reporting unit to zero. The fair value of the GLAMGLOW reporting unit was based upon an equal weighting of the income and market approaches, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the reporting unit. Based on the Company’s annual goodwill and other indefinite-lived intangible asset impairment testing as of April 1, 2021, the Company determined that the carrying value of the GLAMGLOW and Smashbox trademarks exceeded their fair values. This determination was made based on updated internal forecasts, finalized and approved in June 2021, that reflected lower net sales growth projections due to a softer than expected retail environment for these brands, as well as the continued impacts relating to the uncertainty of the duration and severity of the COVID-19 pandemic. These changes in circumstances were also indicators that the carrying amounts of their respective long-lived assets may not be recoverable. The Company concluded that the carrying values of the trademarks exceeded their estimated fair values, which were determined utilizing the relief-from-royalty method to determine discounted projected future cash flows, and recorded impairment charges. The Company concluded that the carrying amounts of the long-lived assets were recoverable. 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. Impairment Charges (In millions) Three Months Ended June 30, 2021 Twelve Months Ended June 30, 2021 Carrying Value as of June 30, 2021 Reporting Unit: Product Category Trademark Customer Lists Goodwill Trademark Customer Lists Goodwill Trademark Customer Lists Goodwill GLAMGLOW Skin care $ 25 $ — $ — $ 46 $ 6 $ 54 $ 11 $ — $ — Smashbox Makeup 11 — — 11 — — 21 — — Total $ 36 $ — $ — $ 57 $ 6 $ 54 $ 32 $ — $ — |
LEASES
LEASES | 12 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Leases | LEASES For further information on the Company's policies relating to leases see Note 2 – Summary of Significant Accounting Policies. The Company has operating and finance leases primarily for real estate properties, including corporate offices, facilities to support the Company’s manufacturing, assembly, research and development and distribution operations and retail stores, as well as information technology equipment, automobiles and office equipment, with remaining terms of approximately 1 year to 57 years. Some of the Company’s lease contracts include options to extend the leases for up to 30 years, while others include options to terminate the leases within 25 years. A summary of total lease costs and other information for the periods relating to the Company’s finance and operating leases is as follows: June 30 (In millions) 2023 2022 2021 Total lease cost Finance lease cost: Amortization of right-of-use assets $ 11 $ 12 $ 9 Interest on lease liabilities — — — Operating lease cost 444 465 470 Short-term lease cost 41 24 19 Variable lease cost 213 332 301 Total $ 709 $ 833 $ 799 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 463 $ 506 $ 451 Financing cash flows from finance leases $ 15 $ 18 $ 12 Right-of-use assets obtained in exchange for new operating lease liabilities $ 273 $ 279 $ 267 Right-of-use assets obtained in exchange for new finance lease liabilities $ 34 $ 10 $ 44 Weighted-average remaining lease term – finance leases 14 years 3 years 3 years Weighted-average remaining lease term – operating leases 9 years 9 years 10 years Weighted-average discount rate – finance leases 0.4 % 1.0 % 1.1 % Weighted-average discount rate – operating leases 2.5 % 2.4 % 2.3 % The total future minimum lease payments, over the remaining lease term, relating to the Company’s operating and finance leases for each of the next five fiscal years and thereafter is as follows: (In millions) Operating Leases Finance Leases Fiscal 2024 $ 399 $ 9 Fiscal 2025 362 5 Fiscal 2026 299 3 Fiscal 2027 236 2 Fiscal 2028 185 2 Thereafter 827 21 Total future minimum lease payments 2,308 42 Less imputed interest (253) — Total $ 2,055 $ 42 Operating lease and finance lease liabilities included in the consolidated balance sheet are as follows: June 30 2023 2022 (In millions) Operating Leases Finance Leases Operating Leases Finance Leases Total current liabilities $ 357 9 $ 365 $ 13 Total noncurrent liabilities 1,698 33 1,868 10 Total $ 2,055 $ 42 $ 2,233 $ 23 The ROU assets and lease liabilities related to finance leases are included in Other assets Current debt Long-term debt During fiscal 2021, as a result of the continued challenging retail environment due to the COVID-19 pandemic, certain of the Company’s freestanding stores experienced lower net sales and lower expectations of future cash flows. These changes were an indicator that the carrying amounts may not be recoverable. Accordingly, the Company performed a recoverability test by comparing projected undiscounted cash flows from the use and eventual disposition of an asset or asset group to its carrying value. For those freestanding stores that failed step one of this test, the Company then compared the assets carrying values to their estimated fair values. Specifically, for the related ROU assets, the fair value was based on discounting market rent using a real estate discount rate. As a result, the Company recognized $71 million of long-lived asset impairments, included in Impairments of other intangible and long-lived assets A summary of impairment charges is as follows: (In millions) Year Ended June 30, 2021 Product Category Impairment Charge Skin care $ 1 Makeup 52 Fragrance 14 Hair care 4 Other — Total $ 71 Region The Americas $ 23 Europe, the Middle East & Africa 48 Asia/Pacific — Total $ 71 |
Leases | LEASES For further information on the Company's policies relating to leases see Note 2 – Summary of Significant Accounting Policies. The Company has operating and finance leases primarily for real estate properties, including corporate offices, facilities to support the Company’s manufacturing, assembly, research and development and distribution operations and retail stores, as well as information technology equipment, automobiles and office equipment, with remaining terms of approximately 1 year to 57 years. Some of the Company’s lease contracts include options to extend the leases for up to 30 years, while others include options to terminate the leases within 25 years. A summary of total lease costs and other information for the periods relating to the Company’s finance and operating leases is as follows: June 30 (In millions) 2023 2022 2021 Total lease cost Finance lease cost: Amortization of right-of-use assets $ 11 $ 12 $ 9 Interest on lease liabilities — — — Operating lease cost 444 465 470 Short-term lease cost 41 24 19 Variable lease cost 213 332 301 Total $ 709 $ 833 $ 799 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 463 $ 506 $ 451 Financing cash flows from finance leases $ 15 $ 18 $ 12 Right-of-use assets obtained in exchange for new operating lease liabilities $ 273 $ 279 $ 267 Right-of-use assets obtained in exchange for new finance lease liabilities $ 34 $ 10 $ 44 Weighted-average remaining lease term – finance leases 14 years 3 years 3 years Weighted-average remaining lease term – operating leases 9 years 9 years 10 years Weighted-average discount rate – finance leases 0.4 % 1.0 % 1.1 % Weighted-average discount rate – operating leases 2.5 % 2.4 % 2.3 % The total future minimum lease payments, over the remaining lease term, relating to the Company’s operating and finance leases for each of the next five fiscal years and thereafter is as follows: (In millions) Operating Leases Finance Leases Fiscal 2024 $ 399 $ 9 Fiscal 2025 362 5 Fiscal 2026 299 3 Fiscal 2027 236 2 Fiscal 2028 185 2 Thereafter 827 21 Total future minimum lease payments 2,308 42 Less imputed interest (253) — Total $ 2,055 $ 42 Operating lease and finance lease liabilities included in the consolidated balance sheet are as follows: June 30 2023 2022 (In millions) Operating Leases Finance Leases Operating Leases Finance Leases Total current liabilities $ 357 9 $ 365 $ 13 Total noncurrent liabilities 1,698 33 1,868 10 Total $ 2,055 $ 42 $ 2,233 $ 23 The ROU assets and lease liabilities related to finance leases are included in Other assets Current debt Long-term debt During fiscal 2021, as a result of the continued challenging retail environment due to the COVID-19 pandemic, certain of the Company’s freestanding stores experienced lower net sales and lower expectations of future cash flows. These changes were an indicator that the carrying amounts may not be recoverable. Accordingly, the Company performed a recoverability test by comparing projected undiscounted cash flows from the use and eventual disposition of an asset or asset group to its carrying value. For those freestanding stores that failed step one of this test, the Company then compared the assets carrying values to their estimated fair values. Specifically, for the related ROU assets, the fair value was based on discounting market rent using a real estate discount rate. As a result, the Company recognized $71 million of long-lived asset impairments, included in Impairments of other intangible and long-lived assets A summary of impairment charges is as follows: (In millions) Year Ended June 30, 2021 Product Category Impairment Charge Skin care $ 1 Makeup 52 Fragrance 14 Hair care 4 Other — Total $ 71 Region The Americas $ 23 Europe, the Middle East & Africa 48 Asia/Pacific — Total $ 71 |
CHARGES ASSOCIATED WITH RESTRUC
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | 12 Months Ended |
Jun. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES During fiscal 2023, the Company incurred charges associated with the Post-COVID Business Acceleration Program restructuring activities as follows: Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Post-COVID Business Acceleration Program $ 27 $ 3 $ 35 $ 12 $ 77 The types of activities included in restructuring and other charges, and the related accounting criteria, are described below. Charges associated with restructuring and other activities are not allocated to the Company's product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed Company-wide initiatives to redesign, resize and reorganize select areas of the business. Post-COVID Business Acceleration Program On August 20, 2020, the Company announced a two-year restructuring program, Post-COVID Business Acceleration Program (the “PCBA Program”), designed to realign the Company's business to address the dramatic shifts to its distribution landscape and consumer behaviors in the wake of the COVID-19 pandemic. The PCBA Program is designed to help improve efficiency and effectiveness by rebalancing resources to growth areas of prestige beauty. It is expected to further strengthen the Company by building upon the foundational capabilities in which the Company has invested. The PCBA Program’s main areas of focus include accelerating the shift to online with the realignment of the Company’s distribution network reflecting freestanding store and certain department store closures, with a focus on North America and Europe, the Middle East & Africa; the reduction in brick-and-mortar point of sale employees and related support staff; and the redesign of the Company’s regional branded marketing organizations, plus select opportunities in global brands and functions. This program is expected to position the Company to better execute its long-term strategy while strengthening its financial flexibility. As of June 30, 2023, the Company estimated a net reduction over the duration of the PCBA Program in the range of 2,800 to 3,200 positions globally, including temporary and part-time employees. This reduction takes into account the elimination of some positions, retraining and redeployment of certain employees and investment in new positions in key areas. The Company also estimated the closure over the duration of the PCBA Program of approximately 14% to 17% of its freestanding stores globally, primarily in North America and Europe, the Middle East & Africa. The Company approved specific initiatives under the PCBA Program through fiscal 2022 and has substantially completed those initiatives through fiscal 2023. Inclusive of approvals from inception through June 30, 2022, the Company estimates, as of June 30, 2023, that the PCBA Program will result in related restructuring and other charges totaling between $450 million and $480 million, before taxes. Specific actions taken since the PCBA Program inception include: • Optimize Digital Organization and Other Go-To-Market Organizations – The Company approved initiatives to enhance its go-to-market capabilities and shift more resources to support online growth. These actions are substantially complete and have resulted in a net reduction of the workforce, which includes position eliminations, the re-leveling of certain positions and an investment in new capabilities. • Optimize Select Marketing, Brand and Global Functions – The Company has started to reduce its corporate and certain of its brand office footprints and is moving toward the future of work in a post-COVID-19 environment, by restructuring where and how its employees work and collaborate. In addition, the Company has approved initiatives to reduce organizational complexity and leverage scale across various Global functions. These actions are substantially complete and resulted in asset write-offs, employee severance, lease termination fees, and consulting and other professional services for the design and implementation of the future structures and processes. • Optimize Distribution Network – To help restore profitability to pre-COVID-19 pandemic levels in certain areas of its distribution network and, as part of a broader initiative to be completed in phases, the Company has approved initiatives to close a number of underperforming freestanding stores, counters and other retail locations, mainly in certain affiliates across all geographic regions, including the Company's travel retail network. These closures reflect changing consumer behaviors including higher demand for online and omnichannel capabilities. These activities are substantially complete and resulted in product returns, termination of contracts, a net reduction in workforce, and inventory and other asset write-offs. • Exit of the Global Distribution of BECCA Products – In reviewing the Company's brand portfolio to improve efficiency and the sustainability of long-term investments, the decision was made to exit the global distribution of BECCA products due to its limited distribution, the ongoing decline in product demand and the challenging environment caused by the COVID-19 pandemic. These activities resulted in charges for the impairment of goodwill and other intangible assets, product returns, termination of contracts, and employee severance. The Company completed these initiatives during fiscal 2022. • Exit of Certain Designer Fragrance Licenses – In reviewing the Company’s brand portfolio of fragrances and to focus on investing its resources on alternative opportunities for long-term growth and value creation globally, the Company announced that it would not be renewing its existing license agreements for the Donna Karan New York, DKNY, Michael Kors, Tommy Hilfiger and Ermenegildo Zegna product lines when their respective terms expire in June 2023. The Company negotiated early termination agreements with each of the licensors effective June 30, 2022 and continued to sell products under these licenses until such time. These actions resulted in asset write-offs, including charges for the impairment of goodwill, employee-related costs, and consulting and legal fees. • Brand Transformation – In reviewing the Company’s brand portfolio to accelerate growth within the makeup product category and to support long-term investments, the decision was made to strategically reposition Smashbox to capitalize on changing consumer preferences and to mitigate the impact caused by the COVID-19 pandemic on the brand. These actions are substantially complete and have primarily resulted in product returns and inventory write-offs. PCBA Program Restructuring and Other Charges Restructuring charges are comprised of the following: Employee-Related Costs – Employee-related costs are primarily comprised of severance and other post-employment benefit costs, calculated based on salary levels, prior service and other statutory minimum benefits, if applicable. Asset-Related Costs – Asset-related costs primarily consist of asset write-offs or accelerated depreciation related to long-lived assets in certain freestanding stores (including rights associated with commercial operating leases and operating lease right-of-use assets) that will be taken out of service prior to their existing useful life as a direct result of a restructuring initiative. These costs also include goodwill and other intangible asset impairment charges relating to the exit of the global distribution of BECCA products. Contract Terminations – Costs related to contract terminations include continuing payments to a third party after the Company has ceased benefiting from the rights conveyed in the contract, or a payment made to terminate a contract prior to its expiration. Other Exit Costs – Other exit costs related to restructuring activities generally include costs to relocate facilities or employees, recruiting to fill positions as a result of relocation of operations, and employee outplacement for separated employees. Other charges associated with restructuring activities are comprised of the following: Sales Returns and Cost of Sales – Product returns (offset by the related cost of sales) and inventory write-offs or write-downs as a direct result of an approved restructuring initiative to exit certain businesses or locations will be recorded as a component of Net sales and/or Cost of sales when estimable and reasonably assured. Other Charges – The Company approved other charges related to the design and implementation of approved initiatives, which are charged to Operating expenses as incurred and primarily include the following: • Consulting and other professional services for organizational design of the future structures and processes as well as the implementation thereof; • Temporary labor backfill; • Costs to establish and maintain a PMO for the duration of the PCBA Program, including internal costs for employees dedicated solely to project management activities, and other PMO-related expenses incremental to the Company’s ongoing operations (e.g., rent and utilities); and • Recruitment and training costs for new and reskilled employees to acquire and apply the capabilities needed to perform responsibilities as a direct result of an approved restructuring initiative. The Company records approved charges associated with restructuring and other activities once the relevant accounting criteria have been met. Total cumulative charges recorded associated with restructuring and other activities for the PCBA Program were: Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Total Charges Fiscal 2021 $ 14 $ 2 $ 201 $ 4 $ 221 Fiscal 2022 4 5 109 9 127 Fiscal 2023 27 3 35 12 77 Cumulative through June 30, 2023 $ 45 $ 10 $ 345 $ 25 $ 425 (In millions) Employee- Asset- Related Costs (1) Contract Other Exit Total Restructuring Charges (Adjustments) Fiscal 2021 $ 119 $ 75 $ 6 $ 1 $ 201 Fiscal 2022 84 11 13 1 109 Fiscal 2023 3 31 (2) 3 35 Cumulative through June 30, 2023 $ 206 $ 117 $ 17 $ 5 $ 345 (1) Asset-related costs include fiscal 2021 goodwill and other intangible asset impairment charges of $13 million and $34 million, respectively, relating to the exit of the global distribution of BECCA products. Changes in accrued restructuring charges for the fiscal year ended June 30, 2023 relating to the PCBA Program were: (In millions) Employee- Asset- Contract Other Exit Total Charges $ 119 $ 75 $ 6 $ 1 $ 201 Cash payments (18) — (6) (1) (25) Non-cash asset write-offs — (75) — — (75) Balance at June 30, 2021 101 — — — 101 Charges 84 11 13 1 109 Cash payments (52) — (13) 1 (64) Non-cash asset write-offs — (11) — — (11) Translation and other adjustments (8) — — $ (2) $ (10) Balance at June 30, 2022 125 — — — 125 Charges 3 31 (2) 3 $ 35 Cash payments (40) — (1) (3) $ (44) Non-cash asset write-offs — (31) — — $ (31) Translation and other adjustments (7) — 4 — $ (3) Balance at June 30, 2023 $ 81 $ — $ 1 $ — $ 82 Accrued restructuring charges at June 30, 2023 relating to the PCBA Program are expected to result in cash expenditures funded from cash provided by operations of approximately $61 million, $19 million, and $2 million for each of fiscal 2024, 2025 and 2026, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The provision for income taxes is comprised of the following: Year Ended June 30 (In millions) 2023 2022 2021 Current: Federal $ 141 $ 219 $ 197 Foreign 424 533 479 State and local 8 25 10 573 777 686 Deferred: Federal (105) (12) (129) Foreign (77) (136) (100) State and local (4) (1) (1) (186) (149) (230) $ 387 $ 628 $ 456 Earnings before income taxes include amounts contributed by the Company’s foreign operations of $1,818 million, $2,248 million and $3,127 million for fiscal 2023, 2022 and 2021, respectively. A portion of these earnings is taxed in the United States. On August 16, 2022, the U.S. federal government enacted the Inflation Reduction Act, with tax provisions primarily focused on implementing a 1% excise tax on share repurchases and a 15% corporate alternative minimum tax based on global adjusted financial statement income. The excise tax was effective beginning with the Company’s third quarter of fiscal 2023 and did not have an impact on the Company’s results of operations or financial position. The corporate alternative minimum tax will be effective beginning with the Company's first quarter of fiscal 2024. The Company continues to monitor developments and evaluate projected impacts, if any, of this provision to its consolidated financial statements. On July 20, 2020, the U.S. government released final and proposed regulations under the global intangible low-taxed income (“GILTI”) provisions of the TCJA that provide for a high-tax exception to the GILTI tax. These regulations are retroactive to the original enactment of the GILTI tax provision, commencing with the Company's 2019 fiscal year. The Company has elected to apply the GILTI high-tax exception beginning with fiscal 2019 through 2022, and intends to make the election for fiscal 2023. A reconciliation of the U.S. federal statutory income tax rate to the Company’s actual effective tax rate on earnings before income taxes is as follows: Year Ended June 30 2023 2022 2021 Provision for income taxes at statutory rate 21.0 % 21.0 % 21.0 % Increase (decrease) due to: State and local income taxes, net of federal tax benefit 0.3 0.7 0.5 Stock-based compensation arrangements – excess tax benefits, net (0.8) (2.7) (3.0) Previously held equity method investment gain - DECIEM (1) — — (5.3) GILTI - High-Tax Exception election (adjustment for prior years) — — (1.4) Taxation of foreign operations 8.6 1.4 1.8 Income tax reserve adjustments (0.1) 0.3 (0.2) Nondeductible goodwill impairment charges — — 0.1 Other, net (1.3) — 0.2 Effective tax rate (2) 27.7 % 20.7 % 13.7 % (1) Included in Other income, net in the accompanying consolidated statements of earnings for the fiscal year ended June 30, 2021. (2) For fiscal 2023, the reconciling items between the Company's U.S. federal statutory income tax rate and the Company's actual effective tax rate were materially impacted by the decrease in earnings before income taxes from fiscal 2022 to fiscal 2023. Income tax reserve adjustments represent changes in the Company’s net liability for unrecognized tax benefits related to prior-year tax positions including the impact of tax settlements and lapses of the applicable statutes of limitations. All excess tax benefits and tax deficiencies related to share-based compensation awards are recorded as income tax expense or benefit in the consolidated statements of earnings. The Company recognized $11 million, $82 million and $99 million of excess tax benefits, net as a reduction to the provision for income taxes in the accompanying consolidated statements of earnings for the fiscal year ended June 30, 2023, 2022 and 2021, respectively. The Company has $8,876 million of undistributed earnings of foreign subsidiaries as of June 30, 2023. Included in this amount is $897 million of earnings considered permanently reinvested and for which no deferred income taxes have been provided. If these reinvested earnings were repatriated into the United States as dividends, the Company would be subject to approximately $55 million in taxes, primarily related to foreign withholding taxes as well as additional state and local income taxes. The Company historically had not provided for deferred income taxes on the undistributed earnings of certain foreign subsidiaries as they were considered indefinitely reinvested outside the United States. During the fourth quarter of fiscal 2023, in connection with a planned change in the Company's legal entity structure that exempts foreign withholding tax on certain undistributed earnings, the Company changed its assertion regarding its ability and intent to indefinitely reinvest undistributed earnings of certain foreign subsidiaries and determined that $5,548 million of undistributed earnings of such foreign subsidiaries are no longer considered indefinitely reinvested. The federal, state, local and foreign deferred income tax impact of this change is not material. Significant components of the Company’s deferred income tax assets and liabilities were as follows: June 30 (In millions) 2023 2022 Deferred tax assets: Compensation-related expenses $ 189 $ 203 Inventory obsolescence and other inventory related reserves 75 59 Retirement benefit obligations 60 42 Various accruals not currently deductible 225 269 Net operating loss, credit and other carryforwards 225 192 Unrecognized state tax benefits and accrued interest 12 13 Lease liabilities 479 504 Research-related expenses 200 121 Other differences between tax and financial statement values 107 26 1,572 1,429 Valuation allowance for deferred tax assets (200) (185) Total deferred tax assets 1,372 1,244 Deferred tax liabilities: Fixed assets and intangibles (264) (325) ROU assets (432) (452) Partnership interest in DECIEM (404) (431) Other differences between tax and financial statement values (32) (33) Total deferred tax liabilities (1,132) (1,241) Total net deferred tax assets $ 240 $ 3 As of June 30, 2023, the Company had net deferred tax assets of $240 million, of which $860 million is included in Other assets and $620 million is included in Other noncurrent liabilities in the accompanying consolidated balance sheets. As of June 30, 2022, the Company had net deferred tax assets of $3 million, of which $695 million is included in Other assets and $692 million is included in Other noncurrent liabilities in the accompanying consolidated balance sheets. As of June 30, 2023 and 2022, certain subsidiaries had $528 million and $523 million of foreign net operating loss carryforwards, respectively, the tax effect of which was $143 million and $136 million, respectively, as well as U.S. federal tax credit carryforwards of $79 million and $56 million, respectively. With the exception of $464 million of net operating losses with an indefinite carryforward period as of June 30, 2023, these net operating loss carryforwards expire at various dates through fiscal 2043. The tax credit carryforwards will begin to expire in fiscal 2031. The Company has recorded a valuation allowance of $200 million and $185 million as of June 30, 2023 and 2022, respectively, principally against certain net operating loss carryforwards and tax credit carryforwards. A valuation allowance has been provided for those deferred tax assets for which, in the opinion of management, it is more-likely-than-not that the deferred tax assets will not be realized. As of June 30, 2023, 2022 and 2021, the Company had gross unrecognized tax benefits of $63 million, $61 million, and $62 million, respectively. At June 30, 2023, the total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $53 million. The Company classifies applicable interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. The total gross accrued interest and penalty expense recorded during fiscal 2023, 2022 and 2021 in the accompanying consolidated statements of earnings was $2 million, $4 million and $2 million, respectively. The total gross accrued interest and penalties in the accompanying consolidated balance sheets at June 30, 2023 and 2022 was $15 million and $14 million, respectively. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows: June 30 (In millions) 2023 2022 2021 Beginning of the year balance of gross unrecognized tax benefits $ 61 $ 62 $ 70 Gross amounts of increases as a result of tax positions taken during a prior period 9 12 9 Gross amounts of decreases as a result of tax positions taken during a prior period (5) (6) (10) Gross amounts of increases as a result of tax positions taken during the current period 4 7 8 Amounts of decreases in unrecognized tax benefits relating to settlements with taxing authorities (4) (12) (13) Reductions to unrecognized tax benefits as a result of a lapse of the applicable statutes of limitations (2) (2) (2) End of year balance of gross unrecognized tax benefits $ 63 $ 61 $ 62 Earnings from the Company’s global operations are subject to tax in various jurisdictions both within and outside the United States. The Company participates in the U.S. Internal Revenue Service (the “IRS”) Compliance Assurance Program (“CAP”). The objective of CAP is to reduce taxpayer burden and uncertainty while assuring the IRS of the accuracy of income tax returns prior to filing, thereby reducing or eliminating the need for post-filing examinations. During the fourth quarter of fiscal 2023, the IRS completed its examination procedures with respect to fiscal 2022 under the IRS CAP. There was no impact to the Company’s consolidated financial statements. The Company expects to receive formal notification of the conclusion of the IRS CAP process for fiscal 2022 during fiscal 2024. As of June 30, 2023, the compliance process was ongoing with respect to fiscal 2023. The Company is currently undergoing income tax examinations and controversies in several state, local and foreign jurisdictions. These matters are in various stages of completion and involve complex multi-jurisdictional issues common among multinational enterprises, including transfer pricing, which may require an extended period of time for resolution. During fiscal 2023, the Company concluded various state, local and foreign income tax audits and examinations while several other matters, including those noted above, were initiated or remained pending. On the basis of the information available in this regard as of June 30, 2023, the Company does not expect significant changes to the total amount of unrecognized tax benefits within the next twelve months. The tax years subject to examination vary depending on the tax jurisdiction. As of June 30, 2023, the following tax years remain subject to examination by the major tax jurisdictions indicated: Major Jurisdiction Open Fiscal Years Belgium 2019 – 2023 Canada 2019 – 2023 China 2020 – 2023 France 2019 – 2023 Germany 2017 – 2023 Hong Kong 2017 – 2023 Italy 2019 – 2023 Japan 2020 – 2023 Korea 2021 - 2023 Spain 2018 – 2023 Switzerland 2020 – 2023 United Kingdom 2022 – 2023 United States 2022 – 2023 State of California 2018 – 2023 State and City of New York 2018 – 2023 The Company is also subject to income tax examinations in numerous other state, local and foreign jurisdictions. The Company believes that its tax reserves are adequate for all years subject to examination. |
OTHER ACCRUED AND NONCURRENT LI
OTHER ACCRUED AND NONCURRENT LIABILITIES | 12 Months Ended |
Jun. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
OTHER ACCRUED AND NONCURRENT LIABILITIES | OTHER ACCRUED AND NONCURRENT LIABILITIES Other accrued liabilities consist of the following: June 30 (In millions) 2023 2022 Employee compensation $ 546 $ 693 Accrued sales incentives 321 278 Deferred revenue 323 312 Other 2,026 2,077 $ 3,216 $ 3,360 At June 30, 2023 and 2022, total Other noncurrent liabilities of $1,943 million and $1,651 million included $620 million and $692 million of deferred tax liabilities, respectively. |
DEBT
DEBT | 12 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT The Company’s current and long-term debt and available financing consist of the following: Debt at June 30 Available financing at June 30, 2023 (In millions) 2023 2022 Committed Uncommitted 5.150% Senior Notes, due May 15, 2053 ("2053 Senior Notes") $ 590 $ — $ — $ — 3.125% Senior Notes, due December 1, 2049 (“2049 Senior Notes”) 636 636 — — 4.150% Senior Notes, due March 15, 2047 (“2047 Senior Notes”) 494 494 — — 4.375% Senior Notes, due June 15, 2045 (“2045 Senior Notes”) 454 454 — — 3.700% Senior Notes, due August 15, 2042 (“2042 Senior Notes”) 247 247 — — 6.000% Senior Notes, due May 15, 2037 (“2037 Senior Notes”) 295 294 — — 5.75% Senior Notes, due October 15, 2033 (“October 2033 Senior Notes”) 198 197 — — 4.650% Senior Notes, due May 15, 2033 ("May 2033 Senior Notes") 695 — — — 1.950% Senior Notes, due March 15, 2031 (“2031 Senior Notes”) 550 561 — — 2.600% Senior Notes, due April 15, 2030 ("2030 Senior Notes") 589 613 — — 2.375% Senior Notes, due December 1, 2029 (“2029 Senior Notes”) 643 642 — — 4.375% Senior Notes, due May 15, 2028 ("2028 Senior Notes") 696 — — — 3.150% Senior Notes, due March 15, 2027 (“2027 Senior Notes”) 499 498 — — 2.000% Senior Notes, due December 1, 2024 (“2024 Senior Notes”) 498 498 — — 2.350% Senior Notes, due August 15, 2022 (“2022 Senior Notes”) — 250 — — Commercial paper (1) 988 — — 1,500 Other long-term borrowings 33 10 — — Other current borrowings 9 18 — 161 Revolving credit facility — — 2,500 — 8,114 5,412 $ 2,500 $ 1,661 Less current debt including current maturities (997) (268) $ 7,117 $ 5,144 (1) Consists of $1,000 million principal and unamortized debt discount of $12 million. As of June 30, 2023, the Company’s long-term debt consisted of the following: Notes (10) Issue Date Price Yield Principal Unamortized Interest rate Debt Semi-annual interest ($ in millions) 2053 Senior Notes May 2023 99.455 % 5.186 % $ 600 $ (3) $ — $ (7) May 15/November 15 2049 Senior Notes November 2019 98.769 3.189 650 (8) — (6) June 1/December 1 2047 Senior Notes (1) February 2017 99.739 4.165 500 (1) — (5) March 15/September 15 2045 Senior Notes (2) June 2015 97.999 4.497 300 (5) — (3) June 15/December 15 2045 Senior Notes (2) May 2016 110.847 3.753 150 14 — (2) June 15/December 15 2042 Senior Notes August 2012 99.567 3.724 250 (1) — (2) February 15/August 15 2037 Senior Notes (3) May 2007 98.722 6.093 300 (2) — (3) May 15/November 15 October 2033 Senior Notes (4) September 2003 98.645 5.846 200 (1) — (1) April 15/October 15 May 2033 Senior Notes (9) May 2023 99.897 4.663 700 (1) — (4) May 15/November 15 2031 Senior Notes (5),(7) March 2021 99.340 2.023 600 (4) (43) (3) March 15/September 15 2030 Senior Notes (7) April 2020 99.816 2.621 700 (1) (107) (3) April 15/October 15 2029 Senior Notes (8) November 2019 99.046 2.483 650 (4) — (3) June 1/December 1 2028 Senior Notes May 2023 99.897 4.398 700 (1) — (3) May 15/November 15 2027 Senior Notes (6) February 2017 99.963 3.154 500 — — (1) March 15/September 15 2024 Senior Notes November 2019 99.421 2.122 500 (1) — (1) June 1/December 1 (1) In November 2016, in anticipation of the issuance of the 2047 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $350 million at a weighted-average all-in rate of 3.01%. The treasury lock agreements were settled upon the issuance of the new debt, and the Company recognized a gain in OCI of $3 million that is being amortized against interest expense over the life of the 2047 Senior Notes. As a result of the treasury lock agreements, the debt discount and debt issuance costs, the effective interest rate on the 2047 Senior Notes will be 4.17% over the life of the debt. (2) In April and May 2015, in anticipation of the issuance of the 2045 Senior Notes in June 2015, the Company entered into a series of forward-starting interest rate swap agreements on a notional amount totaling $300 million at a weighted-average all-in rate of 2.38%. The forward-starting interest rate swap agreements were settled upon the issuance of the new debt and the Company recognized a gain in OCI of $18 million that will be amortized against interest expense over the life of the 2045 Senior Notes. As a result of the forward-starting interest rate swap agreements, the debt discount and debt issuance costs, the effective interest rate on the 2045 Senior Notes will be 4.216% over the life of the debt. In May 2016, the Company reopened this offering with the same terms and issued an additional $150 million for an aggregate amount outstanding of $450 million of 2045 Senior Notes. (3) In April 2007, in anticipation of the issuance of the 2037 Senior Notes, the Company entered into a series of forward-starting interest rate swap agreements on a notional amount totaling $210 million at a weighted-average all-in rate of 5.45%. The forward-starting interest rate swap agreements were settled upon the issuance of the new debt and the Company recognized a loss in OCI of $1 million that is being amortized to interest expense over the life of the 2037 Senior Notes. As a result of the forward-starting interest rate swap agreements, the debt discount and debt issuance costs, the effective interest rate on the 2037 Senior Notes will be 6.181% over the life of the debt. (4) In May 2003, in anticipation of the issuance of the 2033 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $195 million at a weighted-average all-in rate of 4.53%. The treasury lock agreements were settled upon the issuance of the new debt and the Company received a payment of $15 million that is being amortized against interest expense over the life of the 2033 Senior Notes. As a result of the treasury lock agreements, the debt discount and debt issuance costs, the effective interest rate on the 2033 Senior Notes will be 5.395% over the life of the debt. (5) In March 2020, in anticipation of the issuance of the 2031 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $200 million at a weighted-average all-in rate of 0.84%. The treasury lock agreements were settled upon the issuance of the new debt, and the Company recognized a gain in OCI of $11 million that is being amortized to interest expense over the life of the 2031 Senior Notes. As a result of the treasury lock agreements, as well as the debt discount and debt issuance costs, the effective interest rate on the 2031 Senior Notes will be 1.89% over the life of the debt. (6) In November 2016, in anticipation of the issuance of the 2027 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $450 million at a weighted-average all-in rate of 2.37%. The treasury lock agreements were settled upon the issuance of the new debt, and the Company recognized a gain in OCI of $2 million that is being amortized against interest expense over the life of the 2027 Senior Notes. As a result of the treasury lock agreements, the debt discount and debt issuance costs, the effective interest rate on the 2027 Senior Notes will be 3.18% over the life of the debt. (7) The Company entered into interest rate swap agreements with a notional amount totaling $700 million and $300 million to effectively convert the fixed rate interest on its outstanding 2030 Senior Notes and 2031 Senior Notes to variable interest rates based on three months LIBOR plus a margin. (8) In April and May 2019, in anticipation of the issuance of the 2029 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $500 million at a weighted-average all-in rate of 2.50%. The treasury lock agreements were settled upon the issuance of the new debt, and the Company recognized a loss in OCI of $33 million that is being amortized to interest expense over the life of the 2029 Senior Notes. As a result of the treasury lock agreements, as well as the debt discount and debt issuance costs, the effective interest rate on the 2029 Senior Notes will be 3.15% over the life of the debt. (9) In December 2022 and March 2023, in anticipation of the issuance of the May 2033 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $575 million at a weighted-average all-in rate of 3.57%. The treasury lock agreements were settled upon the issuance of the new debt, and the Company recognized a loss in OCI of $5 million that is being amortized to interest expense over the life of the May 2033 Senior Notes. As a result of the treasury lock agreements, as well as the debt discount and debt issuance costs, the effective interest rate on the May 2033 Senior Notes will be 4.83% over the life of the debt. (10) The Senior Notes contain certain customary covenants, including limitations on indebtedness secured by liens. In January 2023, the Company entered into a $2,000 million senior unsecured revolving credit facility (the “364-Day Facility”) to support the Company's commercial paper program and for general corporate purposes, including to finance the Company's fiscal 2023 fourth quarter TOM FORD Acquisition. In January 2023, in connection with the 364-Day Facility, the Company increased its commercial paper program under which it may issue commercial paper in the United States from $2,500 million to $4,500 million. In May 2023, the Company completed a public offering of $2,000 million, consisting of $700 million aggregate principal amount of its 2028 Senior Notes, $700 million aggregate principal amount of its May 2033 Senior Notes and $600 million aggregate principal amount of its 2053 Senior Notes. The Company used proceeds from this offering for general corporate purposes, including to repay outstanding commercial paper as it matured. In June 2023, the Company decreased the size of its commercial paper program to $2,500 million and terminated the undrawn $2,000 million 364-Day Facility. As of June 30, 2023 and August 11, 2023, the Company had $1,000 million and $785 million, respectively, outstanding under its commercial paper program, which may be refinanced on a periodic basis as it matures at the then-prevailing market interest rates. Proceeds from issuance of commercial paper with maturities greater than 90 days were $765 million during fiscal 2023. On August 14, 2023, the Company issued an additional $215 million of commercial paper under its commercial paper program. On August 15, 2022, the Company repaid the outstanding principal balance of its $250 million 2.35% Senior Notes with cash from operations. In October 2021, the Company replaced its $1,500 million senior unsecured revolving credit facility that was set to expire in October 2023 with a new $2,500 million senior unsecured revolving credit facility (the “New Facility”). The New Facility expires on October 22, 2026 unless extended for up to two The Company maintains uncommitted credit facilities in various regions throughout the world. Interest rate terms for these facilities vary by region and reflect prevailing market rates for companies with strong credit ratings. During fiscal 2023 and 2022, the average amount outstanding was approximately $1 million and $8 million, respectively, and the annualized weighted-average interest rate incurred was approximately 5.4% and 10.2%, respectively. Refer to Note 16 – Commitments and Contingencies for the Company’s projected debt service payments, as of June 30, 2023, over the next five fiscal years. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended |
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS The Company addresses certain financial exposures through a controlled program of risk management that includes the use of derivative financial instruments. The Company enters into foreign currency forward contracts, and may enter into option contracts, to reduce the effects of fluctuating foreign currency exchange rates. The Company also uses cross-currency swap contracts to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt. In addition, the Company enters into interest rate derivatives to manage the effects of interest rate movements on the Company’s aggregate liability portfolio, including potential future debt issuances. The Company also enters into foreign currency forward contracts to hedge a portion of its net investment in certain foreign operations, which are designated as net investment hedges. The Company enters into the net investment hedges to offset the risk of changes in the U.S. dollar value of the Company’s investment in these foreign operations due to fluctuating foreign exchange rates. Time value is excluded from the effectiveness assessment and is recognized under a systematic and rational method over the life of the hedging instrument in Selling, general and administrative expenses. The net gain or loss on net investment hedges is recorded within translation adjustments, as a component of AOCI on the Company’s consolidated balance sheets, until the sale or substantially complete liquidation of the underlying assets of the Company’s investment. The Company also enters into foreign currency forward contracts, and may use option contracts, not designated as hedging instruments, to mitigate the change in fair value of specific assets and liabilities on the consolidated balance sheets. At June 30, 2023, the notional amount of derivatives not designated as hedging instruments was $3,667 million. The Company does not utilize derivative financial instruments for trading or speculative purposes. Costs associated with entering into derivative financial instruments have not been material to the Company’s consolidated financial results. For each derivative contract entered into, where the Company looks to obtain hedge accounting treatment, the Company formally and contemporaneously documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking the hedge transaction, the nature of the risk being hedged, and how the hedging instruments’ effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively. This process includes linking all derivatives to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. At inception, the Company evaluates the effectiveness of hedge relationships quantitatively, and has elected to perform, after initial evaluation, qualitative effectiveness assessments of certain hedge relationships to support an ongoing expectation of high effectiveness, if effectiveness testing is required. If based on the qualitative assessment, it is determined that a derivative has ceased to be a highly effective hedge, the Company will perform a quantitative assessment to determine whether to discontinue hedge accounting with respect to that derivative prospectively. The fair values of the Company’s derivative financial instruments included in the consolidated balance sheets are presented as follows: Asset Derivatives Liability Derivatives Fair Value (1) Fair Value (1) June 30 June 30 (In millions) Balance Sheet 2023 2022 Balance Sheet 2023 2022 Derivatives Designated as Hedging Instruments: Foreign currency cash flow hedges Prepaid expenses and other current assets $ 56 $ 57 Other accrued liabilities $ 16 $ 1 Cross-currency swap contracts Prepaid expenses and other current assets 22 — Other accrued liabilities — — Net investment hedges Prepaid expenses and other current assets — 107 Other accrued liabilities 13 — Interest rate-related derivatives Prepaid expenses and other current assets — 24 Other accrued liabilities 150 115 Total Derivatives Designated as Hedging Instruments 78 188 179 116 Derivatives Not Designated as Hedging Instruments: Foreign currency forward contracts Prepaid expenses and other current assets 20 27 Other accrued liabilities 20 104 Total derivatives $ 98 $ 215 $ 199 $ 220 (1) See Note 13 – Fair Value Measurements for further information about how the fair value of derivative assets and liabilities are determined. The amounts of the gains and losses related to the Company’s derivative financial instruments designated as hedging instruments that are included in the assessment of effectiveness are as follows: Amount of Gain (Loss) Location of Gain Amount of Gain (Loss) Reclassified from AOCI into Earnings (1) June 30 from AOCI into June 30 (In millions) 2023 2022 Earnings 2023 2022 Derivatives in Cash Flow Hedging Relationships: Foreign currency forward contracts $ 57 $ 69 Net sales $ 71 $ 3 Interest rate-related derivatives 2 24 Interest expense (1) (1) 59 93 70 2 Derivatives in Net Investment Hedging Relationships (2) : Foreign currency forward contracts (3) (35) 175 — — Total derivatives $ 24 $ 268 $ 70 $ 2 (1) The amount reclassified into earnings as a result of the discontinuance of cash flow hedges because probable forecasted transactions will no longer occur by the end of the original time period was not material. (2) During fiscal 2023 and 2022 the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $26 million and $11 million, respectively. (3) Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets. Amount of Gain (Loss) Recognized in Earnings on Derivatives Location of Gain (Loss) June 30 (In millions) Recognized in Earnings on Derivatives 2023 2022 Derivatives in Fair Value Hedging Cross-currency swap contracts (1) Selling, general and administrative $ 42 $ — Interest rate swap contracts (2) Interest expense $ (36) $ (130) (1) Changes in the fair value representing hedge components included in the assessment of effectiveness of the cross-currency swap contracts are exactly offset by the change in the fair value of the underlying intercompany foreign currency denominated debt. The gain recognized in earnings from cross-currency swap contracts related to the amount excluded from effectiveness testing was $9 million. (2) Changes in the fair value of the interest rate swap agreements are exactly offset by the change in the fair value of the underlying long-term debt. Additional information regarding the cumulative amount of fair value hedging gain (loss) recognized in earnings for items designated and qualifying as hedged items in fair value hedges is as follows: (In millions) Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included Carrying Amount of the Cumulative Amount of Fair June 30, 2023 June 30, 2023 Long-term debt $ 843 $ (150) Intercompany debt $ — $ 42 Additional information regarding the effects of fair value and cash flow hedging relationships for derivatives designated and qualifying as hedging instruments is as follows: June 30 2023 2022 (In millions) Net Sales Selling, General and Administrative Interest Expense Net Sales Selling, General and Administrative Interest Expense Total amounts of income and expense line items presented in the consolidated statements of earnings in which the effects of fair value and cash flow hedges are recorded $ 15,910 $ 9,575 $ 255 $ 17,737 $ 9,888 $ 167 The effects of fair value and cash flow hedging relationships: Gain (loss) on fair value hedge relationships – interest rate contracts: Hedged item N/A N/A 36 N/A N/A 130 Derivatives designated as hedging instruments N/A N/A (36) N/A N/A (130) Gain (loss) on fair value hedge relationships – cross-currency swap contracts: Hedged item N/A (42) N/A N/A — N/A Derivatives designated as hedging instruments N/A 42 N/A N/A — N/A Loss on cash flow hedge relationships – interest rate contracts: Amount of loss reclassified from AOCI into earnings N/A N/A (1) N/A N/A (1) Gain on cash flow hedge relationships – foreign currency forward contracts: Amount of gain reclassified from AOCI into earnings 71 N/A N/A 3 N/A N/A N/A (Not applicable) The amount of the gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments are presented as follows: Amount of Gain (Loss) Location of Gain (Loss) June 30 (In millions) Recognized in Earnings on Derivatives 2023 2022 Derivatives Not Designated as Hedging Instruments: Foreign currency forward contracts Selling, general and administrative $ (10) $ (35) The Company's derivative instruments are subject to enforceable master netting agreements. These agreements permit the net settlement of these contracts on a per-institution basis; however, the Company records the fair value on a gross basis in its consolidated balance sheets based on maturity dates, including those subject to master netting arrangements. The following table provides information as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria in the event of default or termination as stipulated by the terms of netting arrangements with each of the counterparties: As of June 30, 2023 As of June 30, 2022 (In millions) Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet Contracts Subject to Netting Net Amounts of Assets / (Liabilities) Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet Contracts Subject to Netting Net Amounts of Assets / (Liabilities) Derivative Financial Contracts Derivative assets $ 98 $ (53) $ 45 $ 215 $ (104) $ 111 Derivative liabilities (199) 53 (146) (220) 104 (116) Total $ (101) $ — $ (101) $ (5) $ — $ (5) Cash Flow Hedges The Company enters into foreign currency forward contracts, and may enter into foreign currency option contracts, to hedge anticipated transactions and receivables and payables denominated in foreign currencies, for periods consistent with the Company’s identified exposures. The purpose of the hedging activities is to minimize the effect of foreign exchange rate movements on the cash flows that the Company receives from foreign subsidiaries. The foreign currency forward contracts entered into to hedge anticipated transactions have been designated as cash flow hedges and have varying maturities through the end of March 2025. Hedge effectiveness of the foreign currency forward contracts is based on the forward method, which includes time value in the effectiveness assessment. At June 30, 2023, the Company had cash flow hedges outstanding with a notional amount totaling $1,981 million. The Company may enter into interest rate forward contracts to hedge anticipated issuance of debt for periods consistent with the Company’s identified exposures. The purpose of the hedging activities is to minimize the effect of interest rate movements on the cost of debt issuance. For foreign currency hedge contracts that are no longer deemed highly effective, hedge accounting is discontinued and gains and losses in AOCI are reclassified to Net sales when the underlying forecasted transaction occurs. If it is probable that the forecasted transaction will no longer occur, then any gains or losses in AOCI are reclassified to current-period Net sales. As of June 30, 2023, the Company’s foreign currency cash flow hedges were highly effective. The estimated net gain on the Company’s derivative instruments designated as cash flow hedges as of June 30, 2023 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $25 million. The accumulated net gain on derivative instruments designated as cash flow hedges in AOCI was $79 million and $90 million as of June 30, 2023 and 2022, respectively. Fair Value Hedges The Company enters into interest rate derivative contracts to manage the exposure to interest rate fluctuations on its funded indebtedness. At June 30, 2023, the Company has interest rate swap agreements, with notional amounts totaling $700 million and $300 million to effectively convert the fixed rate interest on its 2030 Senior Notes and 2031 Senior Notes, respectively, to variable interest rates based on three-month LIBOR plus a margin. These interest rate swap agreements are designated as fair value hedges of the related long-term debt, and the changes in the fair value of the interest rate swap agreements are exactly offset by the change in the fair value of the underlying long-term debt. The Company enters into cross-currency swap contracts to manage the exposure of foreign exchange rate fluctuations on its intercompany foreign currency denominated debt. At June 30, 2023, the Company has cross-currency swap contracts with notional amounts totaling $491 million, to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt. The cross-currency swap contracts are designated as fair value hedges of the related intercompany debt, and the gains and losses representing hedge components included in the assessment of effectiveness are presented in the same income statement line item as the earnings effect of the hedged transaction. Gains and losses on the derivative representing hedge components excluded from the assessment of effectiveness are recognized over the life of the hedge on a systematic and rational basis. The earnings recognition of excluded components is presented in the same income statement line item as the earnings effect of the hedged transaction. Any difference between the changes in the fair value of the excluded components and amounts recognized in earnings will be recognized in AOCI. The estimated net gain on the Company’s derivative instruments designated as fair value hedges as of June 30, 2023 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $14 million. The accumulated net loss on derivative instruments designated as fair value hedges in AOCI was $20 million as of June 30, 2023. Net Investment Hedges The Company enters into foreign currency forward contracts, designated as net investment hedges, to hedge a portion of its net investment in certain foreign operations. The net gain or loss on these contracts is recorded within translation adjustments, as a component of AOCI on the Company’s consolidated balance sheets. The purpose of the hedging activities is to minimize the effect of foreign exchange rate movements on the Company’s net investment in these foreign operations. The net investment hedge contracts have varying maturities through the end of November 2023. Hedge effectiveness of the net investment hedge contracts is based on the spot method. At June 30, 2023, the Company had net investment hedges outstanding with a notional amount totaling $1,082 million. Credit Risk As a matter of policy, the Company enters into derivative contracts only with counterparties that have a long-term credit rating of at least A- or higher by at least two nationally recognized rating agencies. The counterparties to these contracts are major financial institutions. Exposure to credit risk in the event of nonperformance by any of the counterparties is limited to the gross fair value of contracts in asset positions, which totaled $98 million at June 30, 2023. To manage this risk, the Company has strict counterparty credit guidelines that are continually monitored. Accordingly, management believes risk of loss under these hedging contracts is remote. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The Company records certain of its financial assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability, in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. The accounting for fair value measurements must be applied to nonfinancial assets and nonfinancial liabilities that require initial measurement or remeasurement at fair value, which principally consist of assets and liabilities acquired through business combinations and goodwill, indefinite-lived intangible assets and long-lived assets for the purposes of calculating potential impairment. The Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are as follows: Level 1: Inputs based on quoted market prices for identical assets or liabilities in active markets at the measurement date. Level 2: Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation. The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2023: (In millions) Level 1 Level 2 Level 3 Total Assets: Money market funds $ 3,241 $ — $ — $ 3,241 Foreign currency forward contracts — 76 — 76 Cross-currency swap contracts — 22 — 22 Total $ 3,241 $ 98 $ — $ 3,339 Liabilities: Foreign currency forward contracts $ — $ 49 $ — $ 49 Interest rate-related derivatives — 150 — 150 DECIEM stock options — — 99 99 Total $ — $ 199 $ 99 $ 298 The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2022: (In millions) Level 1 Level 2 Level 3 Total Assets: Money market funds $ 961 $ — $ — $ 961 Foreign currency forward contracts — 191 — 191 Interest rate-related derivatives — 24 — 24 Total $ 961 $ 215 $ — $ 1,176 Liabilities: Foreign currency forward contracts $ — $ 105 $ — $ 105 Interest rate-related derivatives — 115 — 115 DECIEM stock options — — 74 74 Total $ — $ 220 $ 74 $ 294 The estimated fair values of the Company’s financial instruments are as follows: June 30 2023 2022 (In millions) Carrying Fair Carrying Fair Nonderivatives Cash and cash equivalents $ 4,029 $ 4,029 $ 3,957 $ 3,957 Current and long-term debt 8,114 7,665 5,412 5,139 DECIEM stock options 99 99 74 74 Deferred consideration payable 341 338 38 38 Derivatives Cross-currency swap contracts - asset, net 22 22 — — Foreign currency forward contracts – asset, net 27 27 86 86 Interest rate-related derivatives – liability, net (150) (150) (91) (91) The following table presents the Company’s impairment charges for certain of its nonfinancial assets measured at fair value on a nonrecurring basis, classified as Level 3, during fiscal 2023, 2022 and 2021: Fiscal 2023 (In millions) Impairment charges Date of Fair Value Measurement Fair Value (1) Other intangible assets, net (trademarks) Dr.Jart+ $ 100 November 30, 2022 $ 325 Too Faced 86 November 30, 2022 186 Smashbox 21 December 31, 2022 — Total $ 207 $ 511 (1) See Note 6 – Goodwill and Other Intangible Assets for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs. Fiscal 2022 (In millions) Impairment charges Date of Fair Value Measurement Fair Value (1) Other intangible assets, net (trademarks) GLAMGLOW $ 11 March 31, 2022 $ — Dr.Jart+ 230 February 28, 2022 428 Total $ 241 $ 428 (1) See Note 6 – Goodwill and Other Intangible Assets for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs. Fiscal 2021 (In millions) Impairment Date of Fair Value Fair Value (1) Goodwill GLAMGLOW $ 54 November 30, 2020 $ — BECCA (2) 13 February 28, 2021 — Other 4 June 30, 2021 — Total 71 — Other intangible assets, net (trademark and customer lists) GLAMGLOW 52 November 30, 2020 11 BECCA (2) 34 February 28, 2021 — Smashbox 11 April 1, 2021 21 Total 97 32 Long-lived assets 71 March 31, 2021 66 Total $ 239 $ 98 (1) See Note 6 – Goodwill and Other Intangible Assets for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs. (2) See Note 8 – Charges Associated with Restructuring and Other Activities for further information relating to goodwill and other intangible asset impairment charges recorded in connection with the exit of the global distribution of BECCA products. The following methods and assumptions were used to estimate the fair value of the Company’s financial instruments for which it is practicable to estimate that value: Cash and cash equivalents – Cash and all highly-liquid securities with original maturities of three months or less are classified as cash and cash equivalents, primarily consisting of cash deposits in interest bearing accounts, time deposits and money market funds (classified within Level 1 of the valuation hierarchy). Cash deposits in interest bearing accounts and time deposits are carried at cost, which approximates fair value, due to the short maturity of cash equivalent instruments. Foreign currency forward contracts – The fair values of the Company’s foreign currency forward contracts were determined using an industry-standard valuation model, which is based on an income approach. The significant observable inputs to the model, such as swap yield curves and currency spot and forward rates, were obtained from an independent pricing service. To determine the fair value of contracts under the model, the difference between the contract price and the current forward rate was discounted using LIBOR for contracts with maturities up to 12 months, and swap yield curves for contracts with maturities greater than 12 months. Cross-currency swap contracts - The fair value of the Company’s cross-currency swap contracts were determined using an industry-standard valuation model, which is based on the income approach. The significant observable inputs to the model, such as yield curves and currency spot and forward rates, were obtained from independent pricing services. Interest rate-related derivatives – The fair values of the Company’s interest rate contracts were determined using an industry-standard valuation model, which is based on the income approach. The significant observable inputs to the model, such as treasury yield curves, swap yield curves and LIBOR forward rates, were obtained from independent pricing services. Current and long-term debt – The fair value of the Company’s debt was estimated based on the current rates offered to the Company for debt with the same remaining maturities. To a lesser extent, debt also includes finance lease obligations for which the carrying amount approximates the fair value. The Company’s debt is classified within Level 2 of the valuation hierarchy. Deferred consideration payable – The deferred consideration payable as of June 30, 2023 consists primarily of deferred payments associated with the TOM FORD Acquisition. The fair value of the payments treated as deferred consideration payable are calculated based on the net present value of cash payments using an estimated borrowing rate based on quoted prices for a similar liability. The Company’s deferred consideration payable is classified within Level 2 of the valuation hierarchy. Refer to Note 5 – Business and Asset Acquisitions for additional information associated with the TOM FORD Acquisition. DECIEM stock options – The stock option liability represents the employee stock options issued by DECIEM in replacement and exchange for certain vested and unvested DECIEM employee stock options previously issued by DECIEM, in connection with the Company's acquisition of DECIEM. The DECIEM stock options are subject to the terms and conditions of DECIEM's 2021 Stock Option Plan. The DECIEM stock option liability is measured using the Monte Carlo Method, which requires certain assumptions. Significant changes in the projected future operating results would result in a higher or lower fair value measurement. Changes to the discount rates or volatilities would have a lesser effect. These inputs are categorized as Level 3 of the valuation hierarchy. The DECIEM stock options are remeasured to fair value at each reporting date through the period when the options are exercised or repurchased (i.e., when they are settled), with an offsetting entry to compensation expense. See Note 5 – Business and Asset Acquisitions and Note 18 – Stock Programs for discussion . Changes in the DECIEM stock option liability for the year ended June 30, 2023 are included in Selling, general and administrative expenses in the accompanying consolidated statements of earnings and were as follows: (In millions) Fair Value DECIEM stock option liability as of June 30, 2022 $ 74 Changes in fair value, net of foreign currency remeasurements (1) 22 Translation adjustments and other, net 3 DECIEM stock option liability as of June 30, 2023 $ 99 (1) Amount inc ludes expense attributable to graded vesting of stock opt ions which is not material for the year ended June 30, 2023. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 12 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION For further information on the Company's policies relating to revenue recognition and accounts receivable see Note 2 – Summary of Significant Accounting Policies. Accounts Receivable Accounts receivable, net is stated net of the allowance for doubtful accounts and customer deductions totaling $30 million and $27 million as of June 30, 2023 and June 30, 2022, respectively. Payment terms are short-term in nature and are generally less than one year. Changes in the allowance for credit losses are as follows: June 30 (In millions) 2023 2022 Allowance for credit losses, beginning of period $ 10 $ 20 Provision (adjustment) for expected credit losses 6 (3) Write-offs, net & other — (7) Allowance for credit losses, end of period $ 16 10 The remaining balance of the allowance for doubtful accounts and customer deductions of $14 million and $17 million, as of June 30, 2023 and June 30, 2022, respectively, relates to non-credit losses, which are primarily due to customer deductions. Deferred Revenue Changes in deferred revenue are as follows: June 30 (In millions) 2023 2022 Deferred revenue, beginning of period $ 362 $ 371 Revenue recognized that was included in the deferred revenue balance at the beginning of the period (343) (285) Revenue deferred during the period 538 284 Other 15 (8) Deferred revenue, end of period $ 572 $ 362 The increase in Revenue deferred during the period from fiscal 2022 to fiscal 2023 is driven by the Marcolin licensing arrangement, which consists of a $250 million non-refundable upfront payment which is classified as deferred revenue within Other accrued liabilities and Other noncurrent liabilities in the accompanying consolidated balance sheets. The upfront payment will be recognized on a straight-line basis over the estimated economic life of the license, which is 20 years. The Company’s deferred revenue balance related to the Marcolin licensing arrangement was $235 million at June 30, 2023. Transaction Price Allocated to the Remaining Performance Obligations At June 30, 2023, the combined estimated revenue expected to be recognized in the next twelve months related to performance obligations for customer loyalty programs, gift with purchase promotions, purchase with purchase promotions, gift card liabilities, and the Marcolin license arrangement that are unsatisfied (or partially unsatisfied) is $323 million. The remaining balance of deferred revenue at June 30, 2023 will be recognized beyond the next twelve months. Royalty Revenue - License Arrangements As of June 30, 2023, the remaining contractually guaranteed minimum royalty amounts due to the Company during future periods are as follows: (In millions) Minimum Remaining Royalties Fiscal 2024 $ 27 Fiscal 2025 $ 28 Fiscal 2026 $ 29 Fiscal 2027 $ 30 Fiscal 2028 $ 32 Thereafter $ 194 The royalty revenue associated with the TOM FORD Acquisition will be included within the The Americas region and within the other product category. |
PENSION, DEFERRED COMPENSATION
PENSION, DEFERRED COMPENSATION AND POST-RETIREMENT BENEFIT PLANS | 12 Months Ended |
Jun. 30, 2023 | |
Retirement Benefits [Abstract] | |
PENSION, DEFERRED COMPENSATION AND POST-RETIREMENT BENEFIT PLANS | PENSION, DEFERRED COMPENSATION AND POST-RETIREMENT BENEFIT PLANS The Company maintains pension plans covering substantially all of its full-time employees for its U.S. operations and a majority of its international operations. Several plans provide pension benefits based primarily on years of service and employees’ earnings. In certain instances, the Company adjusts benefits in connection with international employee transfers. Retirement Growth Account Plan (U.S.) The Retirement Growth Account Plan is a trust-based, noncontributory qualified defined benefit pension plan. The Company seeks to maintain appropriate funded percentages. For contributions, the Company would seek to contribute an amount or amounts that would not be less than the minimum required by the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, and subsequent pension legislation, and would not be more than the maximum amount deductible for income tax purposes. Restoration Plan (U.S.) The Company also has an unfunded, non-qualified domestic noncontributory pension Restoration Plan to provide benefits in excess of Internal Revenue Code limitations. International Pension Plans The Company maintains international pension plans, the most significant of which are defined benefit pension plans. The Company’s funding policies for these plans are determined by local laws and regulations. The Company’s most significant defined benefit pension obligations are included in the plan summaries below. Post-retirement Benefit Plans The Company maintains a domestic post-retirement benefit plan which provides certain medical and dental benefits to eligible employees. Employees hired after January 1, 2002 are not eligible for retiree medical benefits when they retire. Certain retired employees who are receiving monthly pension benefits are eligible for participation in the plan. Contributions required and benefits received by retirees and eligible family members are dependent on the age of the retiree. It is the Company’s practice to fund a portion of these benefits as incurred and may provide discretionary funding for future liabilities up to the maximum amount deductible for income tax purposes. Certain of the Company’s international subsidiaries and affiliates have post-retirement plans, although most participants are covered by government-sponsored or administered programs. Plan Summaries The components of the above-mentioned plans as of and for the years ended June 30 are summarized as follows: Pension Plans Other than U.S. International Post-retirement (In millions) 2023 2022 2023 2022 2023 2022 Change in benefit obligation: Benefit obligation at beginning of year $ 922 $ 1,075 $ 562 $ 700 $ 177 $ 209 Service cost 37 46 27 31 1 2 Interest cost 40 31 15 10 8 6 Plan participant contributions — — 8 7 1 1 Actuarial loss (gain) (30) (164) (51) (82) 4 (29) Foreign currency exchange rate impact — — (3) (64) (3) (2) Benefits, expenses, taxes and premiums paid (57) (66) (32) (39) (12) (10) Plan amendments — — — 1 — — Settlements — — (4) (6) — — Special termination benefits — — — 4 — — Benefit obligation at end of year $ 912 $ 922 $ 522 $ 562 $ 176 $ 177 Change in plan assets: Fair value of plan assets at beginning of year $ 838 $ 981 $ 579 $ 681 $ 14 $ 24 Actual return on plan assets (42) (95) (38) (37) (1) (1) Foreign currency exchange rate impact — — (7) (64) — — Employer contributions 14 18 35 38 — — Plan participant contributions — — 8 7 1 1 Settlements — — (4) (7) — — Benefits, expenses, taxes and premiums paid from plan assets (57) (66) (32) (39) (12) (10) Fair value of plan assets at end of year $ 753 $ 838 $ 541 $ 579 $ 2 $ 14 Funded status $ (159) $ (84) $ 19 $ 17 $ (174) $ (163) Amounts recognized in the Balance Sheet consist of: Other assets $ — $ 26 $ 115 $ 125 $ — $ — Other accrued liabilities (21) (20) (4) (3) (9) (1) Other noncurrent liabilities (138) (90) (92) (105) (165) (162) Funded status (159) (84) 19 17 (174) (163) Accumulated other comprehensive loss (income) 237 172 (9) (16) 7 (1) Net amount recognized $ 78 $ 88 $ 10 $ 1 $ (167) $ (164) For fiscal 2023, the $30 million actuarial gain relating to the U.S. pension plans was primarily due to the increase in the weighted average discount rate relating to the Retirement Growth Account Plan and the Restoration Plan from 4.5% to 5.3% and 4.3% to 5.2%, respectively. For fiscal 2023, the $51 million actuarial gain relating to the International pension plans was primarily due to the increase in the weighted average discount rate from 2.8% to 3.7%. For fiscal 2022, the $164 million actuarial gain relating to the U.S. pension plans was primarily due to the increase in the weighted average discount rate relating to the Retirement Growth Account Plan and the Restoration Plan from 3.0% to 4.5% and 2.5% to 4.3%, respectively. For fiscal 2022, the $82 million actuarial gain relating to the International pension plans was primarily due to the increase in the weighted average discount rate from 1.6% to 2.8%. Pension Plans Other than U.S. International Post-retirement ($ in millions) 2023 2022 2021 2023 2022 2021 2023 2022 2021 Components of net periodic benefit cost: Service cost $ 37 $ 46 $ 45 $ 27 $ 31 $ 36 $ 1 $ 2 $ 2 Interest cost 40 31 31 15 10 10 8 6 6 Expected return on assets (57) (55) (53) (17) (13) (14) (1) (1) (1) Amortization of: Actuarial loss 3 15 20 (3) 2 4 — 1 — Prior service cost — — — (1) (1) (1) — — — Settlements — — — 1 — — — — — Special termination benefits — — — — 4 10 — — — Net periodic benefit cost $ 23 $ 37 $ 43 $ 22 $ 33 $ 45 $ 8 $ 8 $ 7 Assumptions used to determine benefit obligations at June 30 (1) : Discount rate 5.20 – 5.30% 4.30 – 4.50% 2.50 – 3.00% 1.00 – 9.00% 0.75 – 9.00% 0.50 – 7.25% 5.00 – 10.75% 4.50 – 9.75% 2.70 – 9.00% Rate of compensation increase 2.50 – 8.00% 2.50 – 8.00% 2.50 – 8.00% 1.75 – 5.00% 1.50 – 5.00% 1.00– 5.00% N/A N/A N/A Assumptions used to determine net periodic benefit cost for the year ended June 30 (2) : Discount rate 4.30 – 4.50% 2.50 – 3.00% 2.50 – 3.00% .75 – 9.00% .50– 7.25% .50 – 7.00% 4.50 – 9.75% 2.70 – 9.00% 2.70 – 9.00% Expected return on assets 6.25 % 6.25 % 6.25 % 1.25 – 9.00% 1.25 – 7.25% 1.25 – 7.00% 6.25 % 6.25 % 6.25 % Rate of compensation increase 2.50 – 8.00% 2.50 – 8.00% 2.50– 8.00% — – 5.00% — – 5.00% 1.00 – 5.50% N/A N/A N/A (1) The weighted-average assumptions used to determine benefit obligations at June 30, 2023 were as follows: a. Discount rate - 5.29% (U.S.), 3.69% (International) and 5.19% (Other than Pension Plans, Post-retirement) b. Rate of compensation increase - 2.50% - 8.00%, graded (U.S.), 3.08% (International) and N/A (Other than Pension Plans, Post-retirement) The weighted-average assumptions used to determine benefit obligations at June 30, 2022 were as follows: a. Discount rate - 4.48% (U.S.), 2.77% (International) and 4.68% (Other than Pension Plans, Post-retirement) b. Rate of compensation increase - 2.50% - 8.00%, graded (U.S.), 2.96% (International) and N/A (Other than Pension Plans, Post-retirement) (2) The weighted-average assumptions used to determine net periodic benefit cost for the year ended June 30, 2023 were as follows: a. Discount rate - 4.48% (U.S.), 2.77% (International) and 4.68% (Other than Pension Plans, Post-retirement) b. Expected return on assets - 6.25% (U.S.), 2.95% (International) and N/A (Other than Pension Plans, Post-retirement) c. Rate of compensation increase - 2.50% - 8.00%, graded (U.S.), 2.96% (International) and N/A (Other than Pension Plans, Post-retirement) The weighted-average assumptions used to determine net periodic benefit cost for the year ended June 30, 2022 were as follows: a. Discount rate - 2.94% (U.S.), 1.59% (International) and 2.92% (Other than Pension Plans, Post-retirement) b. Expected return on assets - 6.25% (U.S. and Other than Pension Plans, Post-retirement) and 2.19% (International) c. Rate of compensation increase - 2.50% - 8.00%, graded (U.S.), 2.81% (International) and N/A (Other than Pension Plans, Post-retirement) The discount rate for each plan used for determining future net periodic benefit cost is based on a review of highly rated long-term bonds. The discount rate for the Company’s Domestic Plans is based on a bond portfolio that includes only long-term bonds with an Aa rating, or equivalent, from a major rating agency. The Company used an above-mean yield curve which represents an estimate of the effective settlement rate of the obligation, and the timing and amount of cash flows related to the bonds included in this portfolio are expected to match the estimated defined benefit payment streams of the Company’s Domestic Plans. For the Company’s international plans, the discount rate in a particular country was principally determined based on a yield curve constructed from high quality corporate bonds in each country, with the resulting portfolio having a duration matching that particular plan. In determining the long-term rate of return for a plan, the Company considers the historical rates of return, the nature of the plan’s investments and an expectation for the plan’s investment strategies. The weighted-average interest crediting rate used to determine the benefit obligation and net periodic benefit cost relating to the Company’s U.S. Retirement Growth Account Plan was 4.00% and 4.02% as of and for the years ended June 30, 2023 and 2022, respectively. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. The assumed weighted-average health care cost trend rate for the coming year is 5.54% while the weighted-average ultimate trend rate of 4.02% is expected to be reached in approximately 17 years to 23 years. Amounts recognized in AOCI (before tax) as of June 30, 2023 are as follows: Pension Plans Other than (In millions) U.S. International Post-retirement Total Net actuarial losses (gains), beginning of year $ 170 $ (13) $ (1) $ 156 Actuarial losses recognized 68 4 7 79 Amortization and settlements included in net periodic benefit cost (3) 2 — (1) Translation adjustments — — 1 1 Net actuarial losses (gains), end of year 235 (7) 7 235 Net prior service cost, beginning of year 2 (3) — (1) Amortization included in net periodic benefit cost — 1 — 1 Net prior service cost, end of year 2 (2) — — Total amounts recognized in AOCI $ 237 $ (9) $ 7 $ 235 The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the Company’s pension plans at June 30 are as follows: Pension Plans Other than Pension Plans Retirement Growth Restoration International Post-retirement (In millions) 2023 2022 2023 2022 2023 2022 2023 2022 Projected benefit obligation $ 807 $ 811 $ 105 $ 111 $ 522 $ 562 $ 176 $ 177 Accumulated benefit obligation $ 774 $ 777 $ 95 $ 100 $ 467 $ 507 $ — $ — Fair value of plan assets $ 753 $ 838 $ — $ — $ 541 $ 579 $ 2 $ 14 International pension plans with projected benefit obligations in excess of the plans’ assets had aggregate projected benefit obligations of $275 million and $265 million and aggregate fair value of plan assets of $179 million and $156 million at June 30, 2023 and 2022, respectively. International pension plans with accumulated benefit obligations in excess of the plans’ assets had aggregate accumulated benefit obligations of $84 million and $95 million and aggregate fair value of plan assets of $3 million and $6 million at June 30, 2023 and 2022, respectively. The expected cash flows for the Company’s pension and post-retirement plans are as follows: Pension Plans Other than (In millions) U.S. International Post-retirement Expected employer contributions for year ending June 30, 2024 $ 72 $ 28 $ 9 Expected benefit payments for year ending June 30, 2024 75 39 11 2025 52 35 12 2026 53 34 12 2027 53 33 13 2028 55 34 14 Years 2029 – 2033 314 163 73 Plan Assets The Company’s investment strategy for its pension and post-retirement plan assets is to maintain a diversified portfolio of asset classes with the primary goal of meeting long-term cash requirements as they become due. Assets are primarily invested in diversified funds that hold equity or debt securities to maintain the security of the funds while maximizing the returns within each plan’s investment policy. The investment policy for each plan specifies the type of investment vehicles appropriate for the plan, asset allocation guidelines, criteria for selection of investment managers and procedures to monitor overall investment performance, as well as investment manager performance. The Company’s target asset allocation at June 30, 2023 is as follows: Pension Plans Other than U.S. International Post-retirement Equity 39 % 19 % 39 % Debt securities 50 % 59 % 50 % Other 11 % 22 % 11 % 100 % 100 % 100 % The following is a description of the valuation methodologies used for plan assets measured at fair value: Cash and Cash Equivalents – Cash and all highly-liquid securities with original maturities of three months or less are classified as cash and cash equivalents, primarily consisting of cash deposits in interest bearing accounts, time deposits and money market funds. These assets are classified within Level 1 of the valuation hierarchy. Short-term investment funds – The fair values are determined using the Net Asset Value (“NAV”) provided by the administrator of the fund when the Company has the ability to redeem the assets at the measurement date. These assets are classified within Level 2 of the valuation hierarchy. For some assets the Company is utilizing the NAV as a practical expedient and those investments are not included in the valuation hierarchy. Government and agency securities – The fair values are determined using third-party pricing services using market prices or prices derived from observable market inputs such as benchmark curves, broker/dealer quotes, and other industry and economic factors. These investments are classified within Level 2 of the valuation hierarchy. Commingled funds – The fair values of publicly traded funds are based upon market quotes and are classified within Level 1 of the valuation hierarchy. The fair values for non-publicly traded funds are determined using the NAV provided by the administrator of the fund when the Company has the ability to redeem the assets at the measurement date. These assets are classified within Level 2 of the valuation hierarchy. When the Company is utilizing the NAV as a practical expedient those investments are not included in the valuation hierarchy. These investments have monthly redemption frequencies with redemption notice periods ranging from 10 to 30 days. There are no unfunded commitments related to these investments. Insurance contracts – The fair values are based on negotiated value and the underlying investments held in separate account portfolios, as well as the consideration of the creditworthiness of the issuer. The underlying investments are primarily government, asset-backed and fixed income securities. Insurance contracts are generally classified as Level 3 as there are no quoted prices or other observable inputs for pricing. Interests in limited partnerships and hedge fund investments – The fair values are determined using the NAV provided by the administrator as a practical expedient, and therefore these investments are not included in the valuation hierarchy. These investments have monthly and quarterly redemption frequencies with redemption notice periods ranging from 30 to 90 days. Unfunded commitments related to these investments are de minimis. The following table presents the fair values of the Company’s pension and post-retirement plan assets by asset category as of June 30, 2023: (In millions) Level 1 Level 2 Level 3 Assets Total Cash and cash equivalents $ 2 $ — $ — $ — $ 2 Short-term investment funds — 12 — 3 15 Government and agency securities — 139 — — 139 Commingled funds 332 547 — 143 1,022 Insurance contracts — — 8 — 8 Interests in limited partnerships and hedge fund investments — — — 110 110 Total $ 334 $ 698 $ 8 $ 256 $ 1,296 The following table presents the fair values of the Company’s pension and post-retirement plan assets by asset category as of June 30, 2022: (In millions) Level 1 Level 2 Level 3 Assets Total Cash and cash equivalents $ 6 $ — $ — $ — $ 6 Short-term investment funds — 59 — 6 65 Government and agency securities — 103 — — 103 Commingled funds 378 574 — 144 1,096 Insurance contracts — — 46 — 46 Interests in limited partnerships and hedge fund investments — — — 115 115 Total $ 384 $ 736 $ 46 $ 265 $ 1,431 The following table presents the changes in Level 3 plan assets: June 30 (In millions) 2023 2022 Insurance Contracts Balance at beginning of year $ 46 $ 54 Actual return on plan assets: Relating to assets still held at the reporting date (2) (3) Purchases, sales, issuances and settlements, net (35) 1 Foreign exchange impact (1) (6) Balance at end of year $ 8 $ 46 401(k) Savings Plan (U.S.) The Company’s 401(k) Savings Plan (“Savings Plan”) is a contributory defined contribution plan covering substantially all regular U.S. employees who have completed the hours and service requirements, as defined by the plan document. Regular full-time employees are eligible to participate in the Savings Plan thirty days following their date of hire. The Savings Plan is subject to the applicable provisions of ERISA. The Company matches a portion of the participant’s contributions after one year of service under a predetermined formula based on the participant’s contribution level. The Company’s contributions were $50 million, $47 million and $49 million for fiscal 2023, 2022 and 2021, respectively. Shares of the Company’s Class A Common Stock are not an investment option in the Savings Plan and the Company does not use such shares to match participants’ contributions. Deferred Compensation The Company has agreements with certain employees and outside directors who defer compensation. The Company accrues for such compensation, and either interest thereon or for the change in the value of cash units. The amounts included in the accompanying consolidated balance sheets under these plans were $58 million and $74 million as of June 30, 2023 and 2022, respectively. The expense (benefit) for fiscal 2023, 2022 and 2021 was $(7) million, $(33) million and $31 million, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Contractual Obligations The following table summarizes scheduled maturities of the Company’s contractual obligations for which cash flows are fixed and determinable as of June 30, 2023: Payments Due in Fiscal (In millions) Total 2024 2025 2026 2027 2028 Thereafter Debt service (1) $ 12,133 $ 1,267 $ 761 $ 256 $ 755 $ 939 $ 8,155 Unconditional purchase obligations (2) 2,738 1,829 202 254 231 96 126 Gross unrecognized tax benefits and interest – current (3) 3 3 — — — — — Transition Tax payable (4) 188 42 65 81 — — — Total contractual obligations (5) $ 15,062 $ 3,141 $ 1,028 $ 591 $ 986 $ 1,035 $ 8,281 (1) Includes long-term and current debt and the related projected interest costs. Refer to Note 7 – Leases for information regarding future minimum lease payments relating to the Company’s finance leases. Interest costs on long-term and current debt in fiscal 2024, 2025, 2026, 2027, 2028 and thereafter are projected to be $267 million, $261 million, $256 million, $255 million, $239 million and $2,555 million, respectively. Projected interest costs on variable rate instruments were calculated using market rates at June 30, 2023. (2) Unconditional purchase obligations primarily include: inventory commitments, deferred consideration, capital expenditure commitments, information technology contract commitments, royalty payments pursuant to license agreements and advertising commitments. Future royalty and advertising commitments were estimated based on planned future sales for the term that was in effect at June 30, 2023, without consideration for potential renewal periods. (3) Refer to Note 9 – Income Taxes for information regarding unrecognized tax benefits. As of June 30, 2023, the noncurrent portion of the Company’s unrecognized tax benefits, including related accrued interest and penalties, was $75 million. At this time, the settlement period for the noncurrent portion of the unrecognized tax benefits, including related accrued interest and penalties, cannot be determined and therefore was not included. (4) The Transition Tax may be paid over an eight-year period and this amount represents the remaining liability as of June 30, 2023. (5) Refer to Note 7 – Leases for information regarding future minimum lease payments relating to the Company’s operating leases. Legal Proceedings The Company is involved, from time to time, in litigation and other legal proceedings incidental to its business, including product liability matters (including asbestos-related claims), advertising, regulatory, employment, intellectual property, real estate, environmental, trade relations, tax, and privacy. Management believes that the outcome of current litigation and legal proceedings will not have a material adverse effect upon the Company’s business, results of operations, financial condition or cash flows. However, management’s assessment of the Company’s current litigation and other legal proceedings could change in light of the discovery of facts with respect to legal actions or other proceedings pending against the Company not presently known to the Company or determinations by judges, juries or other finders of fact which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or proceedings. Reasonably possible losses in addition to the amounts accrued for such litigation and legal proceedings are not material to the Company’s consolidated financial statements. |
COMMON STOCK
COMMON STOCK | 12 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
COMMON STOCK | COMMON STOCK As of June 30, 2023, the Company’s authorized common stock consists of 1,300 million shares of Class A Common Stock, par value $.01 per share, and 304 million shares of Class B Common Stock, par value $.01 per share. Class B Common Stock is convertible into Class A Common Stock, in whole or in part, at any time and from time to time at the option of the holder, on the basis of one share of Class A Common Stock for each share of Class B Common Stock converted. Holders of the Company’s Class A Common Stock are entitled to one vote per share and holders of the Company’s Class B Common Stock are entitled to ten votes per share. Information about the Company’s common stock outstanding is as follows: (Shares in thousands) Class A Class B Balance at June 30, 2020 225,290.2 135,235.4 Acquisition of treasury stock (2,580.5) — Conversion of Class B to Class A 6,993.4 (6,993.4) Stock-based compensation 3,814.3 — Balance at June 30, 2021 233,517.4 128,242.0 Acquisition of treasury stock (7,393.6) — Conversion of Class B to Class A 2,700.0 (2,700.0) Stock-based compensation 2,689.7 — Balance at June 30, 2022 231,513.5 125,542.0 Acquisition of treasury stock (1,220.7) — Conversion of Class B to Class A — — Stock-based compensation 1,785.1 — Balance at June 30, 2023 232,077.9 125,542.0 The Company is authorized by the Board of Directors to repurchase Class A Common Stock in the open market or in privately negotiated transactions, depending on market conditions and other factors. As of June 30, 2023, the remaining authorized share repurchase balance was 25.1 million shares. The following is a summary of cash dividends declared per share on the Company’s Class A and Class B Common Stock during the year ended June 30, 2023: Date Declared Record Date Payable Date Amount per Share August 17, 2022 August 31, 2022 September 15, 2022 $ .60 November 1, 2022 November 30, 2022 December 15, 2022 $ .66 February 1, 2023 February 28, 2023 March 15, 2023 $ .66 May 2, 2023 May 31, 2023 June 15, 2023 $ .66 On August 17, 2023, a dividend was declared in the amount of $.66 per share on the Company's Class A and Class B Common Stock. The dividend is payable in cash on September 15, 2023 to stockholders of record at the close of business on August 31, 2023. |
STOCK PROGRAMS
STOCK PROGRAMS | 12 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK PROGRAMS | STOCK PROGRAMS As of June 30, 2023, the Company has two active equity compensation plans which include the Amended and Restated Fiscal 2002 Share Incentive Plan (the “Fiscal 2002 Plan”) and the Amended and Restated Non-Employee Director Share Incentive Plan (collectively, the “Plans”). These Plans currently provide for the issuance of approximately 88.8 million shares of Class A Common Stock, which consist of shares originally provided for and shares transferred to the Fiscal 2002 Plan from other inactive plans and employment agreements, to be granted in the form of stock-based awards to key employees and non-employee directors of the Company. As of June 30, 2023, approximately 10.1 million shares of Class A Common Stock were reserved and available to be granted pursuant to these Plans. The Company may satisfy the obligation of its stock-based compensation awards with either new or treasury shares. The Company’s equity compensation awards include stock options, restricted stock units (“RSUs”), performance share units (“PSUs”), long-term PSUs, including long-term price-vested units (“PVUs”), and share units. Total net stock-based compensation expense is attributable to the granting of and the remaining requisite service periods of stock options, RSUs, PSUs, long-term PSUs and share units. Compensation expense attributable to net stock-based compensation is as follows: Year Ended June 30 (In millions) 2023 2022 2021 Compensation expense (1) $ 267 $ 331 $ 327 Income tax benefit $ 52 $ 51 $ 50 (1) Excludes compensation expense relating to liability-classified awards, including DECIEM stock options discussed below. As of June 30, 2023, the total unrecognized compensation cost related to unvested stock-based awards was $241 million and the related weighted-average period over which it is expected to be recognized is approximately one year. Stock Options The following is a summary of the status of the Company’s stock options as of June 30, 2023 and activity during the fiscal year then ended: (Shares in thousands) Shares Weighted- Aggregate Intrinsic Value (1) (in millions) Weighted-Average Outstanding at June 30, 2022 7,171.8 $ 169.20 Granted at fair value 1,234.8 246.01 Exercised (739.0) 119.56 Expired (41.4) 283.87 Forfeited (129.1) 268.04 Outstanding at June 30, 2023 7,497.1 184.41 $ 318 6.0 Vested and expected to vest at June 30, 2023 7,440.5 183.78 $ 318 6.0 Exercisable at June 30, 2023 5,398.4 151.96 $ 318 5.0 (1) The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. The exercise period for all stock options generally may not exceed ten years from the date of grant. Stock option grants to individuals generally become exercisable in three substantively equal tranches over a service period of up to four years. The Company attributes the value of option awards on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards. The following is a summary of the per-share weighted-average grant date fair value of stock options granted and total intrinsic value of stock options exercised: Year Ended June 30 (In millions, except per share data) 2023 2022 2021 Per-share weighted-average grant date fair value of stock options granted $ 79.09 $ 85.56 $ 54.83 Intrinsic value of stock options exercised $ 93 $ 276 $ 407 The fair value of each of the Company's option grants were estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: Year Ended June 30 2023 2022 2021 Weighted-average expected stock-price volatility 30.8% 27.3% 26.1% Weighted-average expected option life 6 years 6 years 8 years Average risk-free interest rate 3.4% 0.9% 0.5% Average dividend yield 0.8% 0.7% 1.0% The Company uses a weighted-average expected stock-price volatility assumption that is a combination of both current and historical implied volatilities of the underlying stock. The implied volatilities were obtained from publicly available data sources. For the weighted-average expected option life assumption, the Company considers the exercise behavior for past grants and models the pattern of aggregate exercises. The average risk-free interest rate is based on the U.S. Treasury strip rate for the expected term of the options and the average dividend yield is based on historical experience. Restricted Stock Units The Company granted RSUs in respect of approximately 1.1 million shares of Class A Common Stock during fiscal 2023 with a weighted-average grant date fair value per share of $246.20 that, at the time of grant, are scheduled to vest as follows: 0.4 million in fiscal 2024, 0.3 million in fiscal 2025 and 0.4 million in fiscal 2026. Vesting of RSUs granted is generally subject to the continued employment or the retirement of the grantees. The RSUs are generally accompanied by dividend equivalent rights, payable upon settlement of the RSUs either in cash or shares (based on the terms of the particular award) and, as such, were generally valued at the closing market price of the Company’s Class A Common Stock on the date of grant. The following is a summary of the status of the Company’s RSUs as of June 30, 2023 and activity during the fiscal year then ended: (Shares in thousands) Shares Weighted-Average Nonvested at June 30, 2022 1,517.9 $ 272.26 Granted 1,129.2 246.20 Dividend equivalents 17.5 266.01 Vested (744.9) 250.41 Forfeited (129.8) 269.67 Nonvested at June 30, 2023 1,789.9 265.04 Performance Share Units During fiscal 2023, the Company granted PSUs with a target payout of approximately 0.1 million shares of Class A Common Stock with a weighted-average grant date fair value per share of $246.15, which will be settled in stock subject to the achievement of the Company’s net sales, diluted net earnings per common share and return on invested capital goals for the three In September 2022, approximately 0.2 million shares of the Company’s Class A Common Stock were issued, and related accrued dividends were paid, relative to the target goals set at the time of the issuance, in settlement of 0.1 million PSUs with a performance period ended June 30, 2022. The following is a summary of the status of the Company’s PSUs as of June 30, 2023 and activity during the fiscal year then ended: (Shares in thousands) Shares Weighted-Average Nonvested at June 30, 2022 728.9 $ 188.49 Granted 142.5 237.79 Vested and issued (155.9) 199.17 Forfeited (350.3) 128.30 Nonvested at June 30, 2023 (1) 365.2 260.90 (1) Includes approximately 0.1 million PSUs with a performance period ended June 30, 2023 expected to be issued in August 2023. Long-term Performance Share Units During September 2015, the Company granted PSUs to the Company's Chief Executive Officer (“CEO”) with an aggregate target payout of 387,848 shares (in three tranches of approximately 129,283 each) of the Company’s Class A Common Stock, generally subject to continued employment through the end of relative performance periods, which ended June 30, 2018, 2019, and 2020. Since the Company achieved positive Net Earnings, as defined in the PSU award agreement, for the fiscal year ended June 30, 2016, performance and vesting of each tranche was based on the Company achieving positive Cumulative Operating Income, as defined in the PSU award agreement, during the relative performance period. Payment with respect to a tranche was made on the third anniversary of the last day of the respective performance period. The PSUs are accompanied by dividend equivalent rights that was payable in cash at the same time as the payment of shares of Class A Common Stock. The grant date fair value of these PSUs of $30 million was estimated using the closing stock price of the Company’s Class A Common Stock as of September 4, 2015, the date of grant. As of June 30, 2023, all 387,848 shares of the Company’s Class A Common Stock were issued, and the related dividends paid, in accordance with the terms of the grant, related to the performance periods ended June 30, 2018, 2019, and 2020. In February 2018, the Company granted to the Company's CEO PSUs with an aggregate payout of 195,940 shares (in two tranches of 97,970 shares each) of the Company’s Class A Common Stock, generally subject to continued employment through the end of the respective performance periods ending June 30, 2021 and 2022. No portion of the award will generally vest unless the Company has achieved positive Cumulative Operating Income, as defined in the performance share unit award agreement, during the relevant performance period. Settlement, if any, with respect to both tranches will be made on September 3, 2024. The PSUs are accompanied by dividend equivalent rights that will be payable in cash at the same time as any payment of shares of Class A Common Stock. The grant date fair value of these PSUs of $27 million was estimated using the closing stock price of the Company’s Class A Common Stock as of the date of grant. Since the Company achieved positive Cumulative Operating Income, as defined in the PSU award agreement, and since the executive completed the requisite service, 195,940 shares of the Company’s Class A Common Stock are anticipated to be issued, and the related dividends to be paid, in accordance with the terms of the grant on September 3, 2024. In March 2021, the Company granted to the Company’s CEO PSUs with an aggregate payout of 68,578 shares of the Company's Class A Common Stock, to incentivize him to continue serving through at least June 30, 2024. Generally, no portion of this award will vest unless the Company has achieved positive Cumulative Operating Income, as defined in the performance share unit award agreement, during the relevant performance period, and delivery of shares of the Company’s Class A Common Stock, if any, will be made on September 2, 2025. The PSUs are accompanied by dividend equivalent rights that will be payable in cash at the same time as any delivery of shares of the Company's Class A Common Stock. The aggregate grant date fair value of the PSUs of approximately $20 million was estimated using the closing stock price of the Company's Class A Common Stock on the date of grant. Long-term Price-Vested Units In March 2021, the Company granted to the Company’s CEO PVUs with an aggregate payout of 85,927 shares, divided into three tranches, of the Company's Class A Common Stock, to incentivize him to continue serving through at least June 30, 2024. Generally, no portion of this award will vest unless the Company has achieved positive Cumulative Operating Income, as defined in the price-vested unit award agreement, during the relevant performance period. In addition, the vesting of each tranche is contingent upon the Company’s achievement of the respective stock price goal, which means that the average closing price per share of the Company’s Class A Common Stock traded on the New York Stock Exchange be at or above the applicable stock price goal (noted in the table below) for 20 consecutive trading days during the applicable performance period. The number of shares subject to each tranche of the price-vested unit award, as well as the stock price goals, service periods, performance periods and share delivery dates for each tranche are as follows: Number Stock Price Goal Service Period Performance Period for Stock Price Goal Performance Period for Cumulative Operating Income Goal Share Delivery Date First tranche 27,457 $ 323.03 March 11, 2021 - June 30, 2024 March 11, 2021 - June 30, 2024 July 1, 2021 - June 30, 2025 September 2, 2025 Second tranche 28,598 $ 333.21 March 11, 2021 - June 30, 2024 March 11, 2021 - June 30, 2024 July 1, 2021 - June 30, 2025 September 2, 2025 Third tranche 29,872 $ 343.61 March 11, 2021 - June 30, 2024 March 11, 2021 - June 30, 2024 July 1, 2021 - June 30, 2025 September 2, 2025 Total shares 85,927 The Stock Price Goals (per Share) were all achieved during fiscal 2022 but delivery of the shares are still subject to achievement of the Cumulative Operating Income goal and other terms and conditions in accordance with the terms of the award agreement . Generally, delivery of shares of the Company’s Class A Common Stock, if any, will be made on September 2, 2025. The PVUs are accompanied by dividend equivalent rights that will be payable in cash at the same time as any delivery of shares of the Company's Class A Common Stock. The aggregate grant date fair value of the PVUs of approximately $20 million was estimated using the Monte Carlo Method, which requires certain assumptions. The significant assumptions used for this award were as follows: Expected volatility 31.8 % Dividend yield 0.8 % Risk-free interest rate 0.4 % Expected term 3.3 years Share Units The Company grants share units to certain non-employee directors under the Amended and Restated Non-Employee Director Share Incentive Plan. The share units are convertible into shares of the Company’s Class A Common Stock as provided for in that plan. Share units are accompanied by dividend equivalent rights that are converted to additional share units when such dividends are declared. The following is a summary of the status of the Company’s share units as of June 30, 2023 and activity during the fiscal year then ended: (Shares in thousands) Shares Weighted-Average Outstanding at June 30, 2022 121.9 $ 78.01 Granted 5.4 233.46 Dividend equivalents 1.3 229.16 Converted (15.9) 73.57 Outstanding at June 30, 2023 112.7 87.84 Cash Units Certain non-employee directors defer cash compensation in the form of cash payout share units, which are not subject to the Plans. These share units are classified as liabilities and, as such, their fair value is adjusted to reflect the current market value of the Company’s Class A Common Stock. The Company recorded $(8) million, $(5) million and $29 million as compensation expense (income) to reflect additional deferrals and the change in the market value for fiscal 2023, 2022 and 2021, respectively. DECIEM Stock Options As a result of the fiscal 2021 acquisition of additional shares of DECIEM, the Company has a stock option plan relating to its majority-owned subsidiary DECIEM (“DECIEM Stock Option Plan”). The DECIEM stock options were issued in replacement of and exchange for certain vested and unvested DECIEM employee stock options previously issued by DECIEM. The DECIEM stock options are subject to the terms and conditions of the DECIEM 2021 Stock Option Plan. As of June 30, 2023, all 94,101 post-combination options were vested. The DECIEM stock options are liability-classified awards as they are expected to be settled in cash and are remeasured to fair value at each reporting date through date of settlement. Total stock-based compensation expense is attributable to the exchange or replacement of and the remaining requisite service period of stock options. The total stock option expense (income) The following is a summary of the DECIEM stock option program as of June 30, 2023 and changes during the fiscal year then ended: (Shares in thousands) Shares Weighted- Aggregate Intrinsic Value (1) (in millions) Weighted-Average Outstanding at June 30, 2022 94.1 $ 60.11 Granted at fair value — — Exercised — Expired — Forfeited — Outstanding at June 30, 2023 94.1 58.48 $ 104 0.92 Vested at June 30, 2023 94.1 58.48 $ 104 0.92 Exercisable at June 30, 2023 — — $ — — (1) The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. Stock options granted to individuals under the DECIEM Stock Option Plan vested between two to seven tranches over a service period of up to two years and as of June 30, 2023, all post-combination options were vested. The Company attributed the value of option awards under the DECIEM Stock Option Plan on a graded vesting basis where awards vested at specified rates over a specified period. The following is a summary of the per-share weighted-average grant date fair value of stock options granted and total intrinsic value of stock options exercised: Year Ended June 30 2023 2022 2021 Per-share weighted-average grant date fair value of stock options granted $ — $ — $ 1,557 Intrinsic value of stock options exercised $ — $ — $ — The initial fair value of the DECIEM stock option liability was calculated using the acquisition date fair value multiplied by the number of options replaced (consisting of vested and partially vested stock options) on the day following the acquisition date. As discussed in Note 5 – Business and Asset Acquisitions, DECIEM stock options, with total fair value of $295 million, were reported as part of the total consideration transferred. The DECIEM stock options are reported as a stock option liability of $99 million in Other accrued liabilities and $74 million in Other noncurrent liabilities in the accompanying consolidated balance sheets at June 30, 2023 and June 30, 2022, respectively. The fair value of the stock options were calculated by incorporating significant assumptions including the starting equity value, revenue growth rates and EBITDA and the following key assumptions into the Monte Carlo Method: June 30, 2023 June 30, 2022 June 30, 2021 Risk-free rate 4.90% 3.20% 0.50% Term to mid of last twelve-month period 0.46 years 1.42 years 2.42 years Operating leverage adjustment 0.45 0.45 0.45 Net sales discount rate 7.80% 6.00% 3.40% EBITDA discount rate 11.30% 9.40% 6.90% EBITDA volatility 32.00% 33.90% 37.70% Net sales volatility 14.40% 15.30% 17.00% |
NET EARNINGS ATTRIBUTABLE TO TH
NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE | 12 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE | NET EARNINGS ATTRIBUTABLE TO THE ESTÉE LAUDER COMPANIES INC. PER COMMON SHARE Net earnings attributable to The Estée Lauder Companies Inc. per common share (“basic EPS”) is computed by dividing net earnings attributable to The Estée Lauder Companies Inc. by the weighted-average number of common shares outstanding and shares underlying PSUs and RSUs where the vesting conditions have been met. Net earnings attributable to The Estée Lauder Companies Inc. per common share assuming dilution (“diluted EPS”) is computed by reflecting potential dilution from stock-based awards. A reconciliation between the numerator and denominator of the basic and diluted EPS computations is as follows: Year Ended June 30 (In millions, except per share data) 2023 2022 2021 Numerator: Net earnings attributable to The Estée Lauder Companies Inc. $ 1,006 $ 2,390 $ 2,870 Denominator: Weighted-average common shares outstanding – Basic 357.9 360.0 362.9 Effect of dilutive stock options 2.3 3.7 4.0 Effect of PSUs 0.1 0.2 0.2 Effect of RSUs 0.6 1.0 1.1 Weighted-average common shares outstanding – Diluted 360.9 364.9 368.2 Net earnings attributable to The Estée Lauder Companies Inc. per common share: Basic $ 2.81 $ 6.64 $ 7.91 Diluted $ 2.79 $ 6.55 $ 7.79 The shares of Class A Common Stock underlying stock options, RSUs and PSUs that were excluded in the computation of diluted EPS because their inclusion would be anti-dilutive were as follows: Year Ended June 30 (In millions) 2023 2022 2021 Stock options 2.4 0.9 0.7 RSUs and PSUs 0.1 0.1 0.1 As of June 30, 2023, 2022 and 2021, 0.4 million shares, 0.7 million shares and 0.9 million shares at target, respectively, of Class A Common Stock underlying PSUs have been excluded from the calculation of diluted EPS because the number of shares ultimately issued is contingent on the achievement of certain performance targets of the Company, as discussed in Note 18 – Stock Programs . |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 12 Months Ended |
Jun. 30, 2023 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS The components of AOCI included in the accompanying consolidated balance sheets consist of the following: Year Ended June 30 (In millions) 2023 2022 2021 Net derivative instruments, beginning of year $ 68 $ (2) $ 14 Gain (loss) on derivative instruments (1) 48 93 (45) Benefit (provision) for deferred income taxes (11) (21) 10 Reclassification to earnings during the year: Foreign currency forward contracts (2) (71) (3) 22 Interest rate-related derivatives (3) 1 1 2 Cross-currency swap contracts (1)(4) (9) — — Benefit (provision) for deferred income taxes on reclassification (5) 18 — (5) Net derivative instruments, end of year 44 68 (2) Net pension and post-retirement adjustments, beginning of year (114) (179) (244) Changes in plan assets and benefit obligations: Net actuarial gains (losses) recognized (79) 71 60 Prior service credit recognized — (1) (1) Translation adjustments (1) — — Benefit (provision) for deferred income taxes 17 (18) (12) Amortization and settlements included in net periodic benefit cost (6) : Net actuarial losses — 18 24 Net prior service cost (1) (1) (1) Settlements 1 — — Provision for deferred income taxes on reclassification (5) — (4) (5) Net pension and post-retirement adjustments, end of year (177) (114) (179) Cumulative translation adjustments, beginning of year (716) (289) (435) Reclassification to earnings during the year — — (1) Translation adjustments (7) (112) (409) 145 Benefit (provision) for deferred income taxes 27 (18) 2 Cumulative translation adjustments, end of year (801) (716) (289) Accumulated other comprehensive loss $ (934) $ (762) $ (470) (1) Includes the gain recognized in AOCI from cross-currency swap contracts which represents the amount excluded from effectiveness testing. (2) Amounts recorded in Net Sales in the accompanying consolidated statements of earnings. (3) Amounts recorded in Interest expense in the accompanying consolidated statements of earnings. (4) Amounts recorded in Selling, general and administrative in the accompanying consolidated statements of earnings. (5) Amounts recorded in Provision for income taxes in the accompanying consolidated statements of earnings. (6) See Note 15 – Pension, Deferred Compensation and Post-Retirement Benefit Plans for additional information . (7) See Note 12 – Derivative Financial Instruments for gains (losses) relating to net investment hedges. |
STATEMENT OF CASH FLOWS
STATEMENT OF CASH FLOWS | 12 Months Ended |
Jun. 30, 2023 | |
Supplemental Cash Flow Elements [Abstract] | |
STATEMENT OF CASH FLOWS | STATEMENT OF CASH FLOWS Supplemental cash flow information is as follows: Year Ended June 30 (In millions) 2023 2022 2021 Cash: Cash paid during the year for interest $ 235 $ 163 $ 166 Cash paid during the year for income taxes $ 665 $ 760 $ 664 Non-cash investing and financing activities: Capitalized interest and asset retirement obligations incurred $ 13 $ 6 $ 3 Deferred consideration payable $ 300 $ 38 $ — Property, plant and equipment accrued but unpaid $ 246 $ 106 $ 97 |
SEGMENT DATA AND RELATED INFORM
SEGMENT DATA AND RELATED INFORMATION | 12 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
SEGMENT DATA AND RELATED INFORMATION | SEGMENT DATA AND RELATED INFORMATION Reportable operating segments include components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (the “Chief Executive”) in deciding how to allocate resources and in assessing performance. As a result of the similarities in the manufacturing, marketing and distribution processes for all of the Company’s products, much of the information provided in the consolidated financial statements is similar to, or the same as, that reviewed on a regular basis by the Chief Executive. Although the Company operates in one business segment, beauty products, management also evaluates performance on a product category basis. While the Company’s results of operations are also reviewed on a consolidated basis, the Chief Executive reviews data segmented on a basis that facilitates comparison to industry statistics. Accordingly, net sales, depreciation and amortization, and operating income are available with respect to the manufacture and distribution of skin care, makeup, fragrance, hair care and other products. These product categories meet the definition of operating segments and, accordingly, additional financial data are provided below. The other segment includes the sales and related results of ancillary products and services that do not fit the definition of skin care, makeup, fragrance and hair care, including royalty revenue associated with the license of the TOM FORD trademark as discussed in Note 14 - Revenue Recognition . Product category performance is measured based upon net sales before returns associated with restructuring and other activities, and earnings before income taxes, other components of net periodic benefit cost, interest expense, interest income and investment income, net, other income, net and charges associated with restructuring and other activities. Returns and charges associated with restructuring and other activities are not allocated to the Company's product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed Company-wide initiatives to redesign, resize and reorganize select areas of the business. The accounting policies for the Company’s reportable segments are substantially the same as those described in the summary of significant accounting policies, except for depreciation and amortization charges, which are allocated, primarily, based upon net sales. The assets and liabilities of the Company are managed centrally and are reported internally in the same manner as the consolidated financial statements; thus, no additional information is produced for the Chief Executive or included herein. Year Ended June 30 (In millions) 2023 2022 2021 PRODUCT CATEGORY DATA Net sales: Skin Care $ 8,202 $ 9,886 $ 9,484 Makeup 4,516 4,667 4,203 Fragrance 2,512 2,508 1,926 Hair Care 653 631 571 Other 54 49 45 15,937 17,741 16,229 Returns associated with restructuring and other activities (27) (4) (14) Net sales $ 15,910 $ 17,737 $ 16,215 Depreciation and amortization: Skin Care $ 383 $ 404 $ 330 Makeup 211 213 210 Fragrance 117 89 78 Hair Care 31 20 31 Other 2 1 2 $ 744 $ 727 $ 651 Operating income (loss) before charges associated with restructuring and other activities: Skin Care $ 1,204 $ 2,753 $ 3,036 Makeup (22) 133 (384) Fragrance 440 456 215 Hair Care (34) (28) (19) Other 6 — (2) 1,594 3,314 2,846 Reconciliation: Charges associated with restructuring and other activities (85) (144) (228) Interest expense (255) (167) (173) Interest income and investment income, net 131 30 51 Other components of net periodic benefit cost 12 2 (12) Other income, net — 1 847 Earnings before income taxes $ 1,397 $ 3,036 $ 3,331 Year Ended June 30 (In millions) 2023 2022 2021 GEOGRAPHIC DATA (1) Net sales: The Americas $ 4,518 $ 4,623 $ 3,797 Europe, the Middle East & Africa 6,225 7,681 6,946 Asia/Pacific 5,194 5,437 5,486 15,937 17,741 16,229 Returns associated with restructuring and other activities (27) (4) (14) Net sales $ 15,910 $ 17,737 $ 16,215 Operating income (loss): The Americas $ (73) $ 1,159 $ 518 Europe, the Middle East & Africa 843 1,360 1,335 Asia/Pacific 824 795 993 1,594 3,314 2,846 Charges associated with restructuring and other activities (85) (144) (228) Operating income $ 1,509 $ 3,170 $ 2,618 Total assets: The Americas $ 13,292 $ 10,989 $ 11,387 Europe, the Middle East & Africa 5,985 5,781 5,907 Asia/Pacific 4,138 4,140 4,677 $ 23,415 $ 20,910 $ 21,971 Long-lived assets (2) : The Americas $ 2,593 $ 2,609 $ 2,521 Europe, the Middle East & Africa 1,202 1,133 1,314 Asia/Pacific 1,181 857 635 $ 4,976 $ 4,599 $ 4,470 (1) The net sales from the Company’s travel retail business are included in the Europe, the Middle East & Africa region, with the exception of net sales of Dr.Jart+ in the travel retail channel that are reflected in Korea in the Asia/Pacific region. Operating income attributable to the travel retail sales included in Europe, the Middle East & Africa is included in that region and in The Americas. (2) Includes property, plant and equipment, net and operating lease ROU assets. Net sales are predominantly attributed to a country within a geographic region based on the location of the customer. The Company is domiciled in the United States. Net sales in the United States, including net sales from travel retail locations, in fiscal 2023, 2022 and 2021 were $3,848 million, $4,009 million and $3,356 million, respectively. Net sales in mainland China, as well as net sales from travel retail locations, in fiscal 2023, 2022 and 2021 were approximately 28%, 34% and 36% of consolidated net sales, respectively. In fiscal 2023 and 2022, net sales in Korea, including net sales from travel retail locations, were approximately 10% and 11%, respectively, and no other country represented greater than 10% of the Company’s consolidated net sales. The Company’s long-lived assets in the United States at June 30, 2023, 2022 and 2021 were $2,136 million, $2,153 million and $2,075 million, respectively. |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Jun. 30, 2023 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | THE ESTÉE LAUDER COMPANIES INC. SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS Three Years Ended June 30, 2023 (In millions) Additions Description Balance (1) (2) Deductions Balance Reserves deducted in the balance sheet from the assets to which they apply: Allowance for doubtful accounts and customer deductions: Year ended June 30, 2023 $ 27 $ 21 $ — $ 18 (b) $ 30 Year ended June 30, 2022 $ 40 $ 5 $ — $ 18 (b) $ 27 Year ended June 30, 2021 $ 63 $ (5) $ 4 $ 22 (b) $ 40 Deferred tax valuation allowance: Year ended June 30, 2023 $ 185 $ 36 $ — $ 21 $ 200 Year ended June 30, 2022 $ 168 $ 41 $ — $ 24 $ 185 Year ended June 30, 2021 $ 107 $ 61 $ 1 $ 1 $ 168 (a) For the year ended June 30, 2021, “Charged to Other Accounts” includes the impact of the fiscal 2021 adoption of ASC 326 of $4 million, pre-tax. (b) Includes amounts written-off, net of recoveries. |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of The Estée Lauder Companies Inc. and its subsidiaries (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated. Certain amounts in the notes to the consolidated financial statements of prior years have been reclassified to conform to current year presentation. |
Management Estimates | Management Estimates The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses reported in those financial statements. Certain significant accounting policies that contain subjective management estimates and assumptions include those related to revenue recognition, inventory, pension and other post-retirement benefit costs, business combinations and asset acquisitions, goodwill, other intangible assets and long-lived assets, income taxes, redeemable noncontrolling interest and Deciem Beauty Group Inc. (“DECIEM”) stock options. Management evaluates the related estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods. |
Currency Translation and Transactions | Currency Translation and Transactions All assets and liabilities of foreign subsidiaries and affiliates are translated at year-end rates of exchange, while revenue and expenses are translated at monthly average rates of exchange for the period. Unrealized translation gains (losses), net of tax, reported as translation adjustments through other comprehensive income (loss) (“OCI”) attributable to The Estée Lauder Companies Inc. were $(85) million, $(427) million and $147 million, net of tax, in fiscal 2023, 2022 and 2021, respectively. For the Company’s subsidiaries operating in highly inflationary economies, the U.S. dollar is the functional currency. Remeasurement adjustments in financial statements in a highly inflationary economy and other transactional gains and losses are reflected in earnings. These subsidiaries are not material to the Company’s consolidated financial statements or liquidity in fiscal 2023, 2022 and 2021. The Company enters into foreign currency forward contracts and may enter into option contracts to hedge foreign currency transactions for periods consistent with its identified exposures. The Company also uses cross-currency swap contracts to hedge the impact of foreign currency changes on certain intercompany foreign currency denominated debt. Additionally, the Company enters into foreign currency forward contracts to hedge a portion of its net investment in certain foreign operations, which are designated as net investment hedges. See Note 12 – Derivative Financial Instruments for further discussion . The Company categorizes these instruments as entered into for purposes other than trading. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include $66 million and $1,883 million of short-term time deposits at June 30, 2023 and 2022, respectively. The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. |
Investments | Investments Investments in the common stock of privately-held companies in which the Company has the ability to exercise significant influence, but less than a controlling financial interest, are accounted for under the equity method of accounting. For those equity securities without readily determinable fair values where the Company does not have the ability to exercise significant influence, the Company records them at cost, less impairment, plus/minus subsequent observable price changes, and performs an assessment each quarter to determine whether or not a triggering event has occurred that results in changes in fair value. Collectively, these investments were not material to the Company’s consolidated financial statements as of June 30, 2023 and 2022 and are included in Other assets in the accompanying consolidated balance sheets. |
Accounts Receivable | Accounts Receivable Accounts receivable, net is stated net of the allowance for doubtful accounts and customer deductions. Payment terms are short-term in nature and are generally less than one year. The Company is required to measure credit losses based on the Company’s estimate of expected losses rather than incurred losses, which generally results in earlier recognition of allowances for credit losses. The Company evaluates certain criteria, including aging and historical write-offs, the current economic condition of specific customers and future economic conditions of countries utilizing a consumption index to determine the appropriate allowance for credit losses. The Company writes-off receivables once it is determined that the receivables are no longer collectible and as allowed by local laws. See Note 14 – Revenue Recognition for additional information. |
Inventory and Promotional Merchandise | Inventory and Promotional Merchandise Inventory and promotional merchandise only includes inventory considered saleable or usable in future periods, and is stated at the lower of cost or net realizable value, with cost being based on standard cost and production variances, which approximate actual cost on the first-in, first-out method. Cost components include raw materials, componentry, direct labor and overhead (e.g., indirect labor, utilities, depreciation, purchasing, receiving, inspection and warehousing) as well as inbound freight. Manufacturing overhead is allocated to the cost of inventory based on the normal production capacity. Unallocated overhead during periods of abnormally low production levels are recognized as cost of sales in the period in which they are incurred. Promotional merchandise is charged to expense at the time the merchandise is shipped to the Company’s customers. Included in inventory and promotional merchandise is an inventory obsolescence reserve, which represents the difference between the cost of the inventory and its estimated realizable value. This reserve is calculated using an estimated obsolescence percentage applied to the inventory based on age and historical results. In addition, and as necessary, specific reserves for future known or anticipated events may be established. |
Derivative Financial Instruments | Derivative Financial Instruments The Company’s derivative financial instruments are recorded as either assets or liabilities on the balance sheet and measured at fair value. All derivatives are (i) designated as a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value” hedge), (ii) designated as a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow” hedge), or (iii) not designated as a hedging instrument. Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge are recorded in current-period earnings, along with the loss or gain on the hedged asset or liability that is attributable to the hedged risk (including losses or gains on unrecognized firm commitments). Changes in the fair value of a derivative that is designated and qualifies as a cash flow hedge of a forecasted transaction are recorded in OCI. Gains and losses deferred in OCI are then recognized in current-period earnings when earnings are affected by the variability of cash flows of the hedged forecasted transaction (e.g., when periodic settlements on a variable-rate asset or liability are recorded in earnings). Changes in the fair value of derivative instruments not designated as hedging instruments are reported in current-period earnings. All derivative gains and losses relating to cash flow hedges and fair value hedges are recognized in the same income statement line as the hedged items. The Company also enters into foreign currency forward contracts to hedge a portion of its net investment in certain foreign operations, which are designated as net investment hedges. See Note 12 – Derivative Financial Instruments for further discussion. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment, including leasehold and other improvements that extend an asset’s useful life or productive capabilities, are carried at cost less accumulated depreciation and amortization. Costs incurred for computer software developed or obtained for internal use are capitalized during the application development stage and expensed as incurred during the preliminary project and post-implementation stages. Capital costs incurred while an asset is being built are classified as Construction in progress and are reclassified to its respective asset class when placed into service. For financial statement purposes, depreciation is provided principally on the straight-line method over the estimated useful lives of the assets ranging from 3 to 40 years. Leasehold improvements are amortized on a straight-line basis over the shorter of the lives of the respective leases or the expected useful lives of those improvements. |
Business Combinations and Asset Acquisitions | Business Combinations and Asset Acquisitions The Company evaluates whether a transaction meets the definition of a business. The Company first applies a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen test is met, the transaction is accounted for as an asset acquisition. If the screen test is not met, the Company further considers whether the set of assets or acquired entities have at a minimum, inputs and processes that have the ability to create outputs in the form of revenue. If the assets or acquired entities meet this criteria, the transaction is accounted for as a business combination. The Company uses the acquisition method of accounting for acquired businesses. Under the acquisition method, the Company's consolidated financial statements reflect the operations of an acquired business starting from the closing date of the acquisition. The Company allocates the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date. Any residual purchase price is recorded as goodwill. The Company recognizes assets acquired in an asset acquisition based on the cost to the Company on a relative fair value basis, which includes transaction costs in addition to consideration transferred and liabilities assumed or issued as part of the transaction. Neither goodwill nor bargain purchase gains are recognized in an asset acquisition; any excess of consideration transferred over the fair value of the net assets acquired, or the opposite, is allocated to qualifying assets based on their relative fair values. The determination of fair value, as well as the expected useful lives of certain assets acquired, requires management to make judgments and may involve the use of significant estimates, including assumptions with respect to estimated future cash flows, discount rates and valuation multiples from comparable publicly traded companies, among other things. See Note 5 – Business and Asset Acquisitions for further information. |
Goodwill and Other Indefinite-lived Intangible Assets | Goodwill and Other Indefinite-lived Intangible Assets Goodwill is calculated as the excess of the cost of purchased businesses over the fair value of their underlying net assets. Other indefinite-lived intangible assets principally consist of trademarks. Goodwill and other indefinite-lived intangible assets are not amortized. The Company assesses goodwill and other 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. The Company tests goodwill for impairment at the reporting unit level, which is one level below the Company’s operating segments. The Company identifies its reporting units by assessing whether the components of its operating segments constitute businesses for which discrete financial information is available and management of each operating segment regularly reviews the operating results of those components. The Company makes certain judgments and assumptions in allocating assets and liabilities to determine carrying values for its reporting units. When testing goodwill for impairment, the Company has the option of first performing a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. The Company uses a single quantitative step when determining the subsequent measurement of goodwill by comparing the fair value of a reporting unit with its carrying amount and recording an impairment charge for the amount that the carrying amount exceeds the fair value, up to the total amount of goodwill allocated to that reporting unit. When testing other indefinite-lived intangible assets for impairment, the Company also has the option of first performing a qualitative assessment to determine whether it is more-likely-than-not that the indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform a quantitative test. The quantitative impairment test for indefinite-lived intangible assets encompasses calculating the fair value of an indefinite-lived intangible asset and comparing the fair value to its carrying value. If the carrying value exceeds the fair value, an impairment charge is recorded. |
Long-Lived Assets | Long-Lived Assets The Company reviews long-lived assets, primarily intangible assets subject to amortization, right-of-use assets and property, plant and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. When such events or changes in circumstances occur, a recoverability test is performed comparing projected undiscounted cash flows from the use and eventual disposition of an asset or asset group to its carrying value. If the projected undiscounted cash flows are less than the carrying value, then an impairment charge would be measured and recorded for the excess of the carrying value over the fair value. Specifically for right-of-use assets, estimated fair value is based on discounting market rent using a real estate discount rate. |
Leases | Leases The Company recognizes a lease liability and a related right-of-use (“ROU”) asset at the commencement date for leases on its consolidated balance sheet, excluding short-term leases as noted below. The lease liability is equal to the present value of unpaid lease payments over the remaining lease term. The Company’s lease term at the commencement date may reflect options to extend or terminate the lease when it is reasonably certain that such options will be exercised. To determine the present value of the lease liability, the Company uses an incremental borrowing rate, which is defined as the rate of interest that the Company would have to pay to borrow (on a collateralized basis over a similar term) an amount equal to the lease payments in similar economic environments. The ROU asset is based on the corresponding lease liability adjusted for certain costs such as initial direct costs, prepaid lease payments and lease incentives received. Both operating and finance lease ROU assets are reviewed for impairment, consistent with other long-lived assets, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. After an ROU asset is impaired, any remaining balance of the ROU asset is amortized on a straight-line basis over the shorter of the remaining lease term or the estimated useful life. After the lease commencement date, the Company evaluates lease modifications, if any, that could result in a change in the accounting for leases. For a lease modification, an evaluation is performed to determine if it should be treated as either a separate lease or a change in the accounting of an existing lease. In addition, significant changes in events or circumstances within the Company’s control are assessed to determine whether a change in the accounting for leases is required. For lease modifications that result in partial termination of the lease, the Company has elected the proportional method whereby the carrying amount of the ROU asset is decreased in proportion with the full or partial termination of the lease based on the adjustment to the carrying value of the lease liability. The difference between those adjustments is recognized in Selling, general and administrative expense in the accompanying consolidated statements of earnings at the effective date of the termination. Certain of the Company’s leases provide for variable lease payments for the right to use an underlying asset that vary due to changes in facts and circumstances occurring after the commencement date, other than the passage of time. Variable lease payments that are dependent on an index or rate (e.g., Consumer Price Index) are included in the initial measurement of the lease liability, the initial measurement of the ROU asset, and the lease classification test based on the index or rate as of the commencement date. Any changes from the commencement date estimation of the index- and rate-based variable payments are expensed as incurred in the period of the change. Variable lease payments that are not known at the commencement date and are determinable based on the performance or use of the underlying asset , are not included in the initial measurement of the lease liability or the ROU asset, but instead are expensed as incurred. The Company’s variable lease payments primarily include rents based on a percentage of sales in excess of stipulated levels, common area maintenance based on the percentage of the total square footage leased by the Company, as well as costs relating to embedded leases, such as third-party manufacturing agreements. Certain of the Company’s contracts contain lease components as well as non-lease components, such as an agreement to purchase services. For purposes of allocating contract consideration, the Company does not separate the lease components from non-lease components for all asset classes. Short-term leases (i.e. leases with a term of 12 months or less) are not recorded as ROU assets or lease liabilities on the Company’s consolidated balance sheets, and the related lease payments are recognized in net earnings on a straight-line basis over the lease term. For certain leases relating to automobiles, information technology equipment and office equipment, the Company utilizes the portfolio approach. Under this approach, the Company combines and accounts for leases (as a portfolio) with similar characteristics (e.g., lease term, discount rates, etc.) as a single lease, provided its application is not materially different when compared to the application at the individual lease level. |
Concentration of Credit Risk | Concentration of Credit Risk The Company is a worldwide manufacturer, marketer and seller of skin care, makeup, fragrance and hair care products. The Company’s sales subject to credit risk are made primarily to retailers in its travel retail business, department stores, specialty multi-brand retailers and perfumeries. The Company grants credit to qualified customers. While the Company does not believe it is exposed significantly to any undue concentration of credit risk at this time, it continues to monitor its customers' abilities, individually and collectively, to make timely payments. |
Revenue Recognition and Royalty Revenue | Revenue Recognition Performance Obligations The Company recognizes revenue at a point in time when it satisfies a performance obligation by transferring control over a product and other promised goods and services to a customer. The Company sells wholesale to customers in distribution channels that include department stores, travel retail, specialty-multi retailers, perfumeries, salons/spas and through various online sites operated by authorized retailers, including pure-play sites. The primary performance obligation related to these channels of distribution is product sales where revenue is recognized as control of the product transfers to the customer. In the Americas region, revenue is generally recognized at the time the product is made available and provided to the customer’s carrier at the Company’s location, and in the Europe, the Middle East & Africa and Asia/Pacific regions, revenue is generally recognized based upon the customer’s receipt. The Company also sells direct to consumers at Company-operated freestanding stores and online through Company-owned and operated e-commerce and m-commerce sites and through third-party online malls. At Company-operated freestanding stores, revenue is recognized when control of the product is transferred at the point of sale. Revenue from online sales is recognized when control of the product is transferred, generally based upon the consumer’s receipt. In connection with the sale of product, the Company may provide other promised goods and services that are deemed to be performance obligations. These are comprised of gift with purchase and purchase with purchase promotions, customer loyalty program obligations, gift cards and other promotional goods including samples and testers. The Company offers a number of different loyalty programs to its customers across regions, brands and distribution channels including points-based programs, tier-based programs and other programs. Revenue is allocated between the saleable product revenue and the material right loyalty obligations based on relative standalone selling prices when the consumer purchases the products that are earning them the right to the future benefits. Deferred revenue related to the Company’s loyalty programs is estimated based on the standalone selling price and is adjusted for an estimated breakage factor. Standalone selling price is determined primarily using the observable market price of the good or service benefit if it is sold by the Company or a cost plus margin approach for goods/services not directly sold by the Company. Breakage rates consider historical patterns of redemption and/or expiration. Revenue is recognized when the benefits are redeemed or expire. The Company provides gift with purchase promotional products to certain customers generally without additional charge and also provides purchase with purchase promotional products to certain customers at a discount in relation to prices charged for saleable product. Revenue is allocated between saleable product, gift with purchase product and purchase with purchase product based on the estimated relative standalone selling prices. Revenue is deferred and ultimately recognized based on the timing differences, if any, between when control of promotional goods and control of the related saleable products transfer to the Company’s customer (e.g., a third-party retailer), which is calculated based on the weighted-average number of days between promotional periods. The estimated standalone selling price allocated to promotional goods is based on a cost plus margin approach. In situations where promotional products are provided by the Company to its customers at the same time as the related saleable product, such as shipments of samples and testers, the cost of these promotional products are recognized as a cost of sales at the same time as the related revenue is recognized and no deferral of revenue is required. The Company also offers gift cards through Company-operated freestanding stores and Company-owned websites. The related deferred revenue is estimated based on expected breakage that considers historical patterns of redemption taking into consideration escheatment laws as applicable. Product Returns, Sales Incentives and Other Forms of Variable Consideration In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration. Such elements of variable consideration include product returns and sales incentives, such as volume rebates and discounts, markdowns, margin adjustments and early-payment discounts. We also enter into arrangements containing other forms of variable consideration, including certain demonstration arrangements, for which the Company does not receive a distinct good or service or for which the Company cannot reasonably estimate the fair value of the good or service. For these types of arrangements, the adjustments to revenue are recorded at the later of when (i) the Company recognizes revenue for the transfer of the related goods or services to the customer, or (ii) the Company pays, or promises to pay, the consideration. For the sale of goods with a right of return, the Company only recognizes revenue for the consideration it expects to be entitled to (considering the products to be returned) and records a sales return accrual within Other accrued liabilities for the amount it expects to credit back its customers. In addition, the Company recognizes an asset included in Inventory and promotional merchandise and a corresponding adjustment to Cost of sales for the right to recover goods from customers associated with the estimated returns. The sales return accrual and corresponding asset include estimates that directly impact reported net sales. These estimates are calculated based on a history of actual returns, estimated future returns and information provided by retailers regarding their inventory levels. Consideration of these factors results in an estimate for anticipated sales returns that reflects increases or decreases related to seasonal fluctuations. In addition, as necessary, sales return accruals and the related assets may be established for significant future known or anticipated events. The types of known or anticipated events that are considered, and will continue to be considered, include the financial condition of the Company’s customers, store closings by retailers, changes in the retail environment and the Company’s decision to continue to support new and existing products. The Company estimates sales incentives and other variable consideration using the most likely amount method and records accruals within Other accrued liabilities when control of the related product is transferred to the customer. Under this method, certain forms of variable consideration are based on expected sell-through results, which requires subjective estimates. These estimates are supported by historical results as well as specific facts and circumstances related to the current period. The Company also enters into transactions and makes payments to certain of its customers related to demonstration, advertising and counter construction, some of which involve cooperative relationships with customers. These activities may be arranged either with unrelated third parties or in conjunction with the customer. To the extent the Company receives a distinct good or service in exchange for consideration and the fair value of the benefit can be reasonably estimated, the Company’s share of the counter depreciation and the other costs of these transactions (regardless of to whom they were paid) are reflected in Selling, general and administrative expenses in the accompanying consolidated statements of earnings. See Note 14 – Revenue Recognition for further discussion . For revenue disaggregated by product category and geographic region, see Note 22 – Segment Data and Related Information . Royalty Revenue - License Arrangements As a result of the acquisition of the TOM FORD brand, the Company entered into license arrangements with the Marcolin Group (“Marcolin”) and Ermenegildo Zegna N.V. (“Zegna”). As part of these arrangements, the Company licensed the TOM FORD trademark for eyewear (“Eyewear”) to Marcolin and for fashionwear (“Fashion”) to Zegna. Licensing the TOM FORD trademark to customers represents a new revenue-generating activity in the ordinary course of business for the Company. The Company’s performance obligation is to license the TOM FORD trademark to Marcolin and to Zegna, which grants them the right to access the symbolic intellectual property. The licensing arrangements stipulate that licensees must pay a sales-based royalty, with a guaranteed minimum, to the Company. The Company satisfies its performance obligation over the license period, as the Company fulfills its promise to grant the licensees rights to use and benefit from the intellectual property as well as maintain the intellectual property. As such, revenue for both the Marcolin and Zegna arrangements is recognized over time. Royalty payments are collected on a quarterly basis. The Company expects the guaranteed minimum royalty amounts to be exceeded and, as a result, sales-based royalties will be recognized in the period in which the sales occur. The upfront payment received from Marcolin is recognized on a straight-line basis over the estimated economic life of the license. See Note 5 – Business and Asset Acquisitions and Note 14 - Revenue Recognition for further information regarding the acquisition of the TOM FORD brand. |
Advertising and Promotion | Advertising and PromotionGlobal net advertising, merchandising, sampling, promotion and product development expenses of $3,711 million, $3,877 million and $3,710 million in fiscal 2023, 2022 and 2021, respectively, are recorded in Selling, general and administrative expenses in the accompanying consolidated statements of earnings and are expensed as incurred. The cost of certain promotional products, including samples and testers, are classified within Cost of sales. |
Research and Development | Research and Development Research and development costs of $344 million, $307 million and $243 million in fiscal 2023, 2022 and 2021, respectively, are recorded in Selling, general and administrative expenses in the accompanying consolidated statements of earnings and are expensed as incurred. |
Shipping and Handling | Shipping and Handling Shipping and handling expenses of $838 million, $860 million and $680 million in fiscal 2023, 2022 and 2021, respectively, are recorded in Selling, general and administrative expenses in the accompanying consolidated statements of earnings and include distribution center costs, promotional shipping costs, third-party logistics costs and outbound freight. |
Royalty Fees - License Arrangements | Royalty Fees - License Arrangements The Company’s license agreements provide the Company with worldwide rights to manufacture, market and sell beauty and beauty-related products (or particular categories thereof) using the licensors’ trademarks. The current license arrangements have an initial term of approximately 5 years to 10 years, and are renewable subject to the Company’s compliance with the license agreement provisions. As of June 30, 2023, the remaining terms considering available renewal periods range from 7 years to approximately 27 years. Under each license, the Company is required to pay royalties to the licensor, at least annually, based on net sales to third parties. Certain license agreements may require minimum royalty payments, incremental royalties based on net sales levels and minimum spending on advertising and promotional activities. Royalty expenses are accrued in the period in which net sales are recognized while advertising and promotional expenses are accrued at the time these costs are incurred. |
Stock-Based Compensation | Stock-Based Compensation The Company records stock-based compensation, measured at the fair value of the awards that are ultimately expected to vest, as an expense in the consolidated financial statements, net of estimated forfeitures. All excess tax benefits and tax deficiencies related to share-based compensation awards are recorded as income tax expense or benefit in the accompanying consolidated statements of earnings. |
Income Taxes | Income Taxes The Company calculates and provides for income taxes in each tax jurisdiction in which it operates. As the application of various tax laws relevant to the Company’s global business is often uncertain, significant judgment is required in determining the Company’s annual tax expense and in evaluating the Company’s tax positions. The provision for income taxes includes the amounts payable or refundable for the current year, the effect of deferred taxes and impacts from uncertain tax positions. The Company recognizes deferred tax assets and liabilities for future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis, net operating losses, tax credit and other carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates when the assets and liabilities are expected to be realized or settled. The Company regularly reviews deferred tax assets for realizability and establishes valuation allowances based on available evidence including historical operating losses, projected future taxable income, expected timing of the reversals of existing temporary differences, and appropriate tax planning strategies. If the Company’s assessment of the realizability of a deferred tax asset changes, an increase to a valuation allowance will result in a reduction of net earnings at that time, while the reduction of a valuation allowance will result in an increase of net earnings at that time. |
Redeemable Noncontrolling Interest | Redeemable Noncontrolling Interest On May 18, 2021, the Company acquired additional shares in Deciem Beauty Group Inc. ( “DECIEM” ), a Toronto-based skin care company. The Company originally acquired a minority interest in DECIEM in June 2017. The acquisition of additional shares increased the Company's equity interest and was considered a step acquisition. As part of the increase in the Company's investment, 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 after a three-yea As a result of this redemption feature, the Company recorded redeemable noncontrolling interest, at its acquisition‑date fair value, that is classified as mezzanine equity in the accompanying consolidated balance sheets. The noncontrolling interest is adjusted each reporting period for income (loss) attributable to the noncontrolling interest. Each reporting period, a measurement period adjustment, if any, is then recorded to adjust the noncontrolling interest to the higher of either the redemption value, assuming it was redeemable at the reporting date, or its carrying value. If and when applicable, these adjustments are recorded in Paid-in capital and are not reflected in the accompanying consolidated statements of earnings. In addition, based on the Company's policy election, if the redemption value exceeds the fair value of the noncontrolling interest on a cumulative basis, a measurement period adjustment is recorded in Retained earnings and the Company will adjust Net earnings (loss) attributable to The Estée Lauder Companies Inc. as it uses the two-class method when calculating earnings per common share. The fair value of the noncontrolling interest per share is calculated by incorporating significant assumptions including the starting equity value, revenue growth rates and earnings before interest, taxes, depreciation and amortization (“EBITDA”) and the following key assumptions into the Monte Carlo method: risk-free rate, term to mid of last twelve-month period, operating leverage adjustment, net sales discount rate, EBITDA discount rate, EBITDA volatility and net sales volatility. See Note 5 – Business and Asset Acquisitions for additional information regarding the redeemable noncontrolling interest. |
Government Assistance | Government AssistanceThe Company recognizes amounts received from government assistance programs as a reduction to cost of sales or operating expenses in the consolidated statements of earnings when there is reasonable assurance the Company will receive the amount and has met the conditions, if any, required by the government assistance program. Beginning in the second half of fiscal 2020, many governments in locations where the Company operates announced programs to assist employers whose businesses were impacted by the COVID-19 pandemic, including programs that provide rebates to incentivize employers to maintain employees on payroll who were unable to work for their usual number of hours. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards FASB ASU No. 2022-04 – Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations In September 2022, the FASB issued authoritative guidance which is intended to enhance the transparency surrounding the use of supplier finance programs. The guidance requires companies that use supplier finance programs to make annual disclosures about the program’s key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period and associated rollforward information. Only the amount outstanding at the end of the period must be disclosed in interim periods. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. Effective for the Company – The guidance becomes effective for the Company’s first quarter fiscal 2024 and is applied on a retrospective basis, except for the requirement to disclose rollforward information annually which is effective prospectively for the Company beginning in fiscal 2025. Early adoption is permitted. Annual disclosures, excluding the rollforward information, need to be provided in interim periods within the initial year of adoption. Impact on consolidated financial statements – The Company has supplier financing arrangements and will apply the disclosure requirements as required by the amendments. Reference Rate Reform (ASC Topic 848 “ ASC 848 ” ) In March 2020, t he FAS B issued authoritative guidance to provide optional relief for companies preparing for the discontinuation of interest rates such as the London Interbank Offered Rate (“LIBOR”) and applies to lease and other contracts, hedging instruments, held-to-maturity debt securities and debt arrangements that reference LIBOR or another rate that is expected to be discontinued as a result of reference rate reform. In Janua ry 2021, the FASB issued authoritative guidance that makes amendments to the new rules on accounting for reference rate reform. The amendments clar ify that for all derivative instruments affected by the changes to interest rates used for discounting, margining or contract price alignment, regardless of whether they reference LIBOR or another rate expected to be discontinued as a result of reference rate reform, an entity may apply certain practical expedients in ASC 848. In December 2022, the FASB issued authoritative guidance to defer the sunset date of ASC 848 from December 31, 2022 to December 31, 2024. Effective for the Company – This guidance can only be applied for a limited time through December 31, 2024. Impact on consolidated financial statements – The Company completed its comprehensive evaluation of applying this guidance, and will adopt certain practical expedients for its interest rate swap agreements in the fiscal 2024 first quarter which is not expected to have a significant impact on its consolidated financial statements, including business processes and internal controls over financial reporting. The practical expedients that will be adopted permit its hedging relationships to continue without de-designation upon changes due to reference rate reform. Foreign currency forward contracts do not reference LIBOR and no practical expedients will be elected, but will be discounted using the Secured Overnight Financing Rate (SOFR). For existing lease, debt arrangements and other contracts, the Company will not adopt any ASC 848 practical expedients as it relates to these arrangements. No other recently issued accounting pronouncements are expected to have a material impact on the Company’s consolidated financial statements. |
INVENTORY AND PROMOTIONAL MER_2
INVENTORY AND PROMOTIONAL MERCHANDISE (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory and promotional merchandise | Inventory and promotional merchandise consists of the following: June 30 (In millions) 2023 2022 Raw materials $ 876 $ 791 Work in process 362 366 Finished goods 1,404 1,449 Promotional merchandise 337 314 $ 2,979 $ 2,920 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment | Property, plant and equipment consists of the following: June 30 (In millions) 2023 2022 Assets (Useful Life) Land $ 70 $ 53 Buildings and improvements (10 to 40 years) 843 491 Machinery and equipment (3 to 10 years) 1,071 994 Computer hardware and software (4 to 10 years) 1,651 1,468 Furniture and fixtures (5 to 10 years) 136 129 Leasehold improvements 2,310 2,246 Construction in progress 827 759 6,908 6,140 Less accumulated depreciation and amortization (3,729) (3,490) $ 3,179 $ 2,650 |
BUSINESS AND ASSET ACQUISITION
BUSINESS AND ASSET ACQUISITION (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Summary of total consideration transferred | A summary of the total consideration transferred, including immaterial measurement period adjustments was finalized during the fiscal 2022 third quarter and recorded as follows: (In millions) March 31, 2022 Cash paid $ 1,095 Fair value of DECIEM stock options liability 104 Fair value of net Put (Call) Option 233 Total consideration for the acquired ownership interest (approximately 47.9%) 1,432 Fair value of previously held equity method investment (approximately 30.5%) 913 Fair value of redeemable noncontrolling interest (approximately 21.6%) 647 Total consideration transferred (100%) $ 2,992 |
Schedule of key assumptions used for acquisition date fair value | The acquisition-date fair values of the DECIEM stock options and the net Put (Call) Option were calculated by incorporating significant assumptions including the starting equity value, revenue growth rates and EBITDA and the following key assumptions into the Monte Carlo Method: May 18, 2021 Risk-free rate 0.50% Term to mid of last twelve-month period 2.54 years Operating leverage adjustment 0.45 Net sales discount rate 3.30% EBITDA discount rate 6.80% EBITDA volatility 38.30% Net sales volatility 17.20% The fair value of each of the Company's option grants were estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: Year Ended June 30 2023 2022 2021 Weighted-average expected stock-price volatility 30.8% 27.3% 26.1% Weighted-average expected option life 6 years 6 years 8 years Average risk-free interest rate 3.4% 0.9% 0.5% Average dividend yield 0.8% 0.7% 1.0% June 30, 2023 June 30, 2022 June 30, 2021 Risk-free rate 4.90% 3.20% 0.50% Term to mid of last twelve-month period 0.46 years 1.42 years 2.42 years Operating leverage adjustment 0.45 0.45 0.45 Net sales discount rate 7.80% 6.00% 3.40% EBITDA discount rate 11.30% 9.40% 6.90% EBITDA volatility 32.00% 33.90% 37.70% Net sales volatility 14.40% 15.30% 17.00% |
Rollforward of final allocation of total consideration | The allocation of the total consideration transferred, including immaterial measurement period adjustments was finalized during the fiscal 2022 third quarter and recorded as follows: (In millions) March 31, 2022 Cash $ 35 Accounts receivable 64 Inventory 190 Other current assets 33 Property, plant and equipment 40 Operating lease right-of-use assets 40 Intangible assets 1,917 Goodwill 1,296 Deferred income taxes 8 Total assets acquired 3,623 Accounts payable 21 Operating lease liabilities 8 Other accrued liabilities 78 Deferred income taxes 479 Long-term operating lease liabilities 45 Total liabilities assumed 631 Total consideration transferred $ 2,992 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill by product category and related change in the carrying amount | The following table presents goodwill by product category and the related change in the carrying amount: (In millions) Skin Care Makeup Fragrance Hair Care Total Balance as of June 30, 2021 Goodwill $ 1,786 $ 1,214 $ 262 $ 355 $ 3,617 Accumulated impairments (141) (830) (30) — (1,001) 1,645 384 232 355 2,616 Goodwill measurement period adjustment 13 — — — 13 Translation and other adjustments, goodwill (97) (98) (13) (2) (210) Translation and other adjustments, accumulated impairments 3 98 1 — 102 (81) — (12) (2) (95) Balance as of June 30, 2022 Goodwill 1,702 1,116 249 353 3,420 Accumulated impairments (138) (732) (29) — (899) 1,564 384 220 353 2,521 Translation and other adjustments, goodwill (38) — 5 — (33) Translation and other adjustments, accumulated impairments (1) — (1) — (2) (39) — 4 — (35) Balance as of June 30, 2023 Goodwill 1,664 1,116 254 353 3,387 Accumulated impairments (139) (732) (30) — (901) $ 1,525 $ 384 $ 224 $ 353 $ 2,486 |
Schedule of other intangible assets | Other intangible assets consist of the following: June 30, 2023 June 30, 2022 (In millions) Gross Accumulated Total Net Gross Accumulated Total Net Amortizable intangible assets: Customer lists, license agreements and other $ 2,030 $ 766 $ 1,264 $ 2,064 $ 628 $ 1,436 Non-amortizable intangible assets: Trademarks 4,338 1,992 Total intangible assets $ 5,602 $ 3,428 |
Estimated aggregate amortization expense for the next five years | The estimated aggregate amortization expense for each of the next five fiscal years is as follows: Fiscal (In millions) 2024 2025 2026 2027 2028 Estimated aggregate amortization expense $ 146 $ 146 $ 146 $ 129 $ 104 |
Summary of impairment charges and carrying value of intangible assets | A summary of the impairment charges for the twelve months ended June 30, 2023 and the remaining trademark and goodwill carrying values as of June 30, 2023, for each reporting unit, are as follows: Impairment Charges Carrying Value (In millions) Twelve Months Ended As of June 30, 2023 Reporting Unit Geographic Region Trademarks Goodwill Trademarks Goodwill Smashbox The Americas $ 21 $ — $ — $ — Dr.Jart+ Asia/Pacific 100 — 325 304 Too Faced The Americas 86 — 186 13 Total $ 207 $ — $ 511 $ 317 A summary of the trademark impairment charges for the three and twelve months ended June 30, 2022 and the remaining carrying values as of June 30, 2022, for each reporting unit, are as follows: (In millions) Impairment Charges Carrying Value Reporting Unit: Geographic Region Three Months Ended June 30, 2022 Twelve Months Ended June 30, 2022 As of June 30, 2022 GLAMGLOW The Americas $ — $ 11 $ — Dr.Jart+ Asia/Pacific 25 230 428 Total $ 25 $ 241 $ 428 Impairment Charges (In millions) Three Months Ended June 30, 2021 Twelve Months Ended June 30, 2021 Carrying Value as of June 30, 2021 Reporting Unit: Product Category Trademark Customer Lists Goodwill Trademark Customer Lists Goodwill Trademark Customer Lists Goodwill GLAMGLOW Skin care $ 25 $ — $ — $ 46 $ 6 $ 54 $ 11 $ — $ — Smashbox Makeup 11 — — 11 — — 21 — — Total $ 36 $ — $ — $ 57 $ 6 $ 54 $ 32 $ — $ — |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Lease, cost | A summary of total lease costs and other information for the periods relating to the Company’s finance and operating leases is as follows: June 30 (In millions) 2023 2022 2021 Total lease cost Finance lease cost: Amortization of right-of-use assets $ 11 $ 12 $ 9 Interest on lease liabilities — — — Operating lease cost 444 465 470 Short-term lease cost 41 24 19 Variable lease cost 213 332 301 Total $ 709 $ 833 $ 799 Other information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 463 $ 506 $ 451 Financing cash flows from finance leases $ 15 $ 18 $ 12 Right-of-use assets obtained in exchange for new operating lease liabilities $ 273 $ 279 $ 267 Right-of-use assets obtained in exchange for new finance lease liabilities $ 34 $ 10 $ 44 Weighted-average remaining lease term – finance leases 14 years 3 years 3 years Weighted-average remaining lease term – operating leases 9 years 9 years 10 years Weighted-average discount rate – finance leases 0.4 % 1.0 % 1.1 % Weighted-average discount rate – operating leases 2.5 % 2.4 % 2.3 % |
Operating lease liability, maturity schedule | The total future minimum lease payments, over the remaining lease term, relating to the Company’s operating and finance leases for each of the next five fiscal years and thereafter is as follows: (In millions) Operating Leases Finance Leases Fiscal 2024 $ 399 $ 9 Fiscal 2025 362 5 Fiscal 2026 299 3 Fiscal 2027 236 2 Fiscal 2028 185 2 Thereafter 827 21 Total future minimum lease payments 2,308 42 Less imputed interest (253) — Total $ 2,055 $ 42 |
Finance lease liability, maturity schedule | The total future minimum lease payments, over the remaining lease term, relating to the Company’s operating and finance leases for each of the next five fiscal years and thereafter is as follows: (In millions) Operating Leases Finance Leases Fiscal 2024 $ 399 $ 9 Fiscal 2025 362 5 Fiscal 2026 299 3 Fiscal 2027 236 2 Fiscal 2028 185 2 Thereafter 827 21 Total future minimum lease payments 2,308 42 Less imputed interest (253) — Total $ 2,055 $ 42 |
Schedule of operating lease and finance lease liabilities included in the consolidated balance sheet | Operating lease and finance lease liabilities included in the consolidated balance sheet are as follows: June 30 2023 2022 (In millions) Operating Leases Finance Leases Operating Leases Finance Leases Total current liabilities $ 357 9 $ 365 $ 13 Total noncurrent liabilities 1,698 33 1,868 10 Total $ 2,055 $ 42 $ 2,233 $ 23 |
Details of impairment of lease assets by type and by region | A summary of impairment charges is as follows: (In millions) Year Ended June 30, 2021 Product Category Impairment Charge Skin care $ 1 Makeup 52 Fragrance 14 Hair care 4 Other — Total $ 71 Region The Americas $ 23 Europe, the Middle East & Africa 48 Asia/Pacific — Total $ 71 |
CHARGES ASSOCIATED WITH RESTR_2
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
Schedule of aggregate restructuring and other activities | During fiscal 2023, the Company incurred charges associated with the Post-COVID Business Acceleration Program restructuring activities as follows: Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Post-COVID Business Acceleration Program $ 27 $ 3 $ 35 $ 12 $ 77 |
Schedule of total cumulative charges recorded associated with restructuring and other activities | Total cumulative charges recorded associated with restructuring and other activities for the PCBA Program were: Sales Cost of Sales Operating Expenses Total (In millions) Restructuring Other Total Charges Fiscal 2021 $ 14 $ 2 $ 201 $ 4 $ 221 Fiscal 2022 4 5 109 9 127 Fiscal 2023 27 3 35 12 77 Cumulative through June 30, 2023 $ 45 $ 10 $ 345 $ 25 $ 425 |
Schedule of total cumulative charges by type recorded associated with restructuring and other activities | (In millions) Employee- Asset- Related Costs (1) Contract Other Exit Total Restructuring Charges (Adjustments) Fiscal 2021 $ 119 $ 75 $ 6 $ 1 $ 201 Fiscal 2022 84 11 13 1 109 Fiscal 2023 3 31 (2) 3 35 Cumulative through June 30, 2023 $ 206 $ 117 $ 17 $ 5 $ 345 (1) Asset-related costs include fiscal 2021 goodwill and other intangible asset impairment charges of $13 million and $34 million, respectively, relating to the exit of the global distribution of BECCA products. |
Schedule of changes in accrued restructuring charges | Changes in accrued restructuring charges for the fiscal year ended June 30, 2023 relating to the PCBA Program were: (In millions) Employee- Asset- Contract Other Exit Total Charges $ 119 $ 75 $ 6 $ 1 $ 201 Cash payments (18) — (6) (1) (25) Non-cash asset write-offs — (75) — — (75) Balance at June 30, 2021 101 — — — 101 Charges 84 11 13 1 109 Cash payments (52) — (13) 1 (64) Non-cash asset write-offs — (11) — — (11) Translation and other adjustments (8) — — $ (2) $ (10) Balance at June 30, 2022 125 — — — 125 Charges 3 31 (2) 3 $ 35 Cash payments (40) — (1) (3) $ (44) Non-cash asset write-offs — (31) — — $ (31) Translation and other adjustments (7) — 4 — $ (3) Balance at June 30, 2023 $ 81 $ — $ 1 $ — $ 82 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Provision for income taxes | The provision for income taxes is comprised of the following: Year Ended June 30 (In millions) 2023 2022 2021 Current: Federal $ 141 $ 219 $ 197 Foreign 424 533 479 State and local 8 25 10 573 777 686 Deferred: Federal (105) (12) (129) Foreign (77) (136) (100) State and local (4) (1) (1) (186) (149) (230) $ 387 $ 628 $ 456 |
Reconciliation of the U.S. federal statutory income tax rate and actual effective tax rate on earnings before income taxes | A reconciliation of the U.S. federal statutory income tax rate to the Company’s actual effective tax rate on earnings before income taxes is as follows: Year Ended June 30 2023 2022 2021 Provision for income taxes at statutory rate 21.0 % 21.0 % 21.0 % Increase (decrease) due to: State and local income taxes, net of federal tax benefit 0.3 0.7 0.5 Stock-based compensation arrangements – excess tax benefits, net (0.8) (2.7) (3.0) Previously held equity method investment gain - DECIEM (1) — — (5.3) GILTI - High-Tax Exception election (adjustment for prior years) — — (1.4) Taxation of foreign operations 8.6 1.4 1.8 Income tax reserve adjustments (0.1) 0.3 (0.2) Nondeductible goodwill impairment charges — — 0.1 Other, net (1.3) — 0.2 Effective tax rate (2) 27.7 % 20.7 % 13.7 % (1) Included in Other income, net in the accompanying consolidated statements of earnings for the fiscal year ended June 30, 2021. |
Significant components of deferred income tax assets and liabilities | Significant components of the Company’s deferred income tax assets and liabilities were as follows: June 30 (In millions) 2023 2022 Deferred tax assets: Compensation-related expenses $ 189 $ 203 Inventory obsolescence and other inventory related reserves 75 59 Retirement benefit obligations 60 42 Various accruals not currently deductible 225 269 Net operating loss, credit and other carryforwards 225 192 Unrecognized state tax benefits and accrued interest 12 13 Lease liabilities 479 504 Research-related expenses 200 121 Other differences between tax and financial statement values 107 26 1,572 1,429 Valuation allowance for deferred tax assets (200) (185) Total deferred tax assets 1,372 1,244 Deferred tax liabilities: Fixed assets and intangibles (264) (325) ROU assets (432) (452) Partnership interest in DECIEM (404) (431) Other differences between tax and financial statement values (32) (33) Total deferred tax liabilities (1,132) (1,241) Total net deferred tax assets $ 240 $ 3 |
Reconciliation of the beginning and ending amount of gross unrecognized tax benefits | A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows: June 30 (In millions) 2023 2022 2021 Beginning of the year balance of gross unrecognized tax benefits $ 61 $ 62 $ 70 Gross amounts of increases as a result of tax positions taken during a prior period 9 12 9 Gross amounts of decreases as a result of tax positions taken during a prior period (5) (6) (10) Gross amounts of increases as a result of tax positions taken during the current period 4 7 8 Amounts of decreases in unrecognized tax benefits relating to settlements with taxing authorities (4) (12) (13) Reductions to unrecognized tax benefits as a result of a lapse of the applicable statutes of limitations (2) (2) (2) End of year balance of gross unrecognized tax benefits $ 63 $ 61 $ 62 |
Tax years that remain subject to examination vary by the major tax jurisdictions | The tax years subject to examination vary depending on the tax jurisdiction. As of June 30, 2023, the following tax years remain subject to examination by the major tax jurisdictions indicated: Major Jurisdiction Open Fiscal Years Belgium 2019 – 2023 Canada 2019 – 2023 China 2020 – 2023 France 2019 – 2023 Germany 2017 – 2023 Hong Kong 2017 – 2023 Italy 2019 – 2023 Japan 2020 – 2023 Korea 2021 - 2023 Spain 2018 – 2023 Switzerland 2020 – 2023 United Kingdom 2022 – 2023 United States 2022 – 2023 State of California 2018 – 2023 State and City of New York 2018 – 2023 |
OTHER ACCRUED AND NONCURRENT _2
OTHER ACCRUED AND NONCURRENT LIABILITIES (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of other accrued liabilities | Other accrued liabilities consist of the following: June 30 (In millions) 2023 2022 Employee compensation $ 546 $ 693 Accrued sales incentives 321 278 Deferred revenue 323 312 Other 2,026 2,077 $ 3,216 $ 3,360 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of current and long-term debt and available financing | The Company’s current and long-term debt and available financing consist of the following: Debt at June 30 Available financing at June 30, 2023 (In millions) 2023 2022 Committed Uncommitted 5.150% Senior Notes, due May 15, 2053 ("2053 Senior Notes") $ 590 $ — $ — $ — 3.125% Senior Notes, due December 1, 2049 (“2049 Senior Notes”) 636 636 — — 4.150% Senior Notes, due March 15, 2047 (“2047 Senior Notes”) 494 494 — — 4.375% Senior Notes, due June 15, 2045 (“2045 Senior Notes”) 454 454 — — 3.700% Senior Notes, due August 15, 2042 (“2042 Senior Notes”) 247 247 — — 6.000% Senior Notes, due May 15, 2037 (“2037 Senior Notes”) 295 294 — — 5.75% Senior Notes, due October 15, 2033 (“October 2033 Senior Notes”) 198 197 — — 4.650% Senior Notes, due May 15, 2033 ("May 2033 Senior Notes") 695 — — — 1.950% Senior Notes, due March 15, 2031 (“2031 Senior Notes”) 550 561 — — 2.600% Senior Notes, due April 15, 2030 ("2030 Senior Notes") 589 613 — — 2.375% Senior Notes, due December 1, 2029 (“2029 Senior Notes”) 643 642 — — 4.375% Senior Notes, due May 15, 2028 ("2028 Senior Notes") 696 — — — 3.150% Senior Notes, due March 15, 2027 (“2027 Senior Notes”) 499 498 — — 2.000% Senior Notes, due December 1, 2024 (“2024 Senior Notes”) 498 498 — — 2.350% Senior Notes, due August 15, 2022 (“2022 Senior Notes”) — 250 — — Commercial paper (1) 988 — — 1,500 Other long-term borrowings 33 10 — — Other current borrowings 9 18 — 161 Revolving credit facility — — 2,500 — 8,114 5,412 $ 2,500 $ 1,661 Less current debt including current maturities (997) (268) $ 7,117 $ 5,144 (1) Consists of $1,000 million principal and unamortized debt discount of $12 million. |
Schedule of long-term debt | As of June 30, 2023, the Company’s long-term debt consisted of the following: Notes (10) Issue Date Price Yield Principal Unamortized Interest rate Debt Semi-annual interest ($ in millions) 2053 Senior Notes May 2023 99.455 % 5.186 % $ 600 $ (3) $ — $ (7) May 15/November 15 2049 Senior Notes November 2019 98.769 3.189 650 (8) — (6) June 1/December 1 2047 Senior Notes (1) February 2017 99.739 4.165 500 (1) — (5) March 15/September 15 2045 Senior Notes (2) June 2015 97.999 4.497 300 (5) — (3) June 15/December 15 2045 Senior Notes (2) May 2016 110.847 3.753 150 14 — (2) June 15/December 15 2042 Senior Notes August 2012 99.567 3.724 250 (1) — (2) February 15/August 15 2037 Senior Notes (3) May 2007 98.722 6.093 300 (2) — (3) May 15/November 15 October 2033 Senior Notes (4) September 2003 98.645 5.846 200 (1) — (1) April 15/October 15 May 2033 Senior Notes (9) May 2023 99.897 4.663 700 (1) — (4) May 15/November 15 2031 Senior Notes (5),(7) March 2021 99.340 2.023 600 (4) (43) (3) March 15/September 15 2030 Senior Notes (7) April 2020 99.816 2.621 700 (1) (107) (3) April 15/October 15 2029 Senior Notes (8) November 2019 99.046 2.483 650 (4) — (3) June 1/December 1 2028 Senior Notes May 2023 99.897 4.398 700 (1) — (3) May 15/November 15 2027 Senior Notes (6) February 2017 99.963 3.154 500 — — (1) March 15/September 15 2024 Senior Notes November 2019 99.421 2.122 500 (1) — (1) June 1/December 1 (1) In November 2016, in anticipation of the issuance of the 2047 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $350 million at a weighted-average all-in rate of 3.01%. The treasury lock agreements were settled upon the issuance of the new debt, and the Company recognized a gain in OCI of $3 million that is being amortized against interest expense over the life of the 2047 Senior Notes. As a result of the treasury lock agreements, the debt discount and debt issuance costs, the effective interest rate on the 2047 Senior Notes will be 4.17% over the life of the debt. (2) In April and May 2015, in anticipation of the issuance of the 2045 Senior Notes in June 2015, the Company entered into a series of forward-starting interest rate swap agreements on a notional amount totaling $300 million at a weighted-average all-in rate of 2.38%. The forward-starting interest rate swap agreements were settled upon the issuance of the new debt and the Company recognized a gain in OCI of $18 million that will be amortized against interest expense over the life of the 2045 Senior Notes. As a result of the forward-starting interest rate swap agreements, the debt discount and debt issuance costs, the effective interest rate on the 2045 Senior Notes will be 4.216% over the life of the debt. In May 2016, the Company reopened this offering with the same terms and issued an additional $150 million for an aggregate amount outstanding of $450 million of 2045 Senior Notes. (3) In April 2007, in anticipation of the issuance of the 2037 Senior Notes, the Company entered into a series of forward-starting interest rate swap agreements on a notional amount totaling $210 million at a weighted-average all-in rate of 5.45%. The forward-starting interest rate swap agreements were settled upon the issuance of the new debt and the Company recognized a loss in OCI of $1 million that is being amortized to interest expense over the life of the 2037 Senior Notes. As a result of the forward-starting interest rate swap agreements, the debt discount and debt issuance costs, the effective interest rate on the 2037 Senior Notes will be 6.181% over the life of the debt. (4) In May 2003, in anticipation of the issuance of the 2033 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $195 million at a weighted-average all-in rate of 4.53%. The treasury lock agreements were settled upon the issuance of the new debt and the Company received a payment of $15 million that is being amortized against interest expense over the life of the 2033 Senior Notes. As a result of the treasury lock agreements, the debt discount and debt issuance costs, the effective interest rate on the 2033 Senior Notes will be 5.395% over the life of the debt. (5) In March 2020, in anticipation of the issuance of the 2031 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $200 million at a weighted-average all-in rate of 0.84%. The treasury lock agreements were settled upon the issuance of the new debt, and the Company recognized a gain in OCI of $11 million that is being amortized to interest expense over the life of the 2031 Senior Notes. As a result of the treasury lock agreements, as well as the debt discount and debt issuance costs, the effective interest rate on the 2031 Senior Notes will be 1.89% over the life of the debt. (6) In November 2016, in anticipation of the issuance of the 2027 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $450 million at a weighted-average all-in rate of 2.37%. The treasury lock agreements were settled upon the issuance of the new debt, and the Company recognized a gain in OCI of $2 million that is being amortized against interest expense over the life of the 2027 Senior Notes. As a result of the treasury lock agreements, the debt discount and debt issuance costs, the effective interest rate on the 2027 Senior Notes will be 3.18% over the life of the debt. (7) The Company entered into interest rate swap agreements with a notional amount totaling $700 million and $300 million to effectively convert the fixed rate interest on its outstanding 2030 Senior Notes and 2031 Senior Notes to variable interest rates based on three months LIBOR plus a margin. (8) In April and May 2019, in anticipation of the issuance of the 2029 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $500 million at a weighted-average all-in rate of 2.50%. The treasury lock agreements were settled upon the issuance of the new debt, and the Company recognized a loss in OCI of $33 million that is being amortized to interest expense over the life of the 2029 Senior Notes. As a result of the treasury lock agreements, as well as the debt discount and debt issuance costs, the effective interest rate on the 2029 Senior Notes will be 3.15% over the life of the debt. (9) In December 2022 and March 2023, in anticipation of the issuance of the May 2033 Senior Notes, the Company entered into a series of treasury lock agreements on a notional amount totaling $575 million at a weighted-average all-in rate of 3.57%. The treasury lock agreements were settled upon the issuance of the new debt, and the Company recognized a loss in OCI of $5 million that is being amortized to interest expense over the life of the May 2033 Senior Notes. As a result of the treasury lock agreements, as well as the debt discount and debt issuance costs, the effective interest rate on the May 2033 Senior Notes will be 4.83% over the life of the debt. (10) The Senior Notes contain certain customary covenants, including limitations on indebtedness secured by liens. |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair values of the derivative financial instruments included in the consolidated balance sheets | The fair values of the Company’s derivative financial instruments included in the consolidated balance sheets are presented as follows: Asset Derivatives Liability Derivatives Fair Value (1) Fair Value (1) June 30 June 30 (In millions) Balance Sheet 2023 2022 Balance Sheet 2023 2022 Derivatives Designated as Hedging Instruments: Foreign currency cash flow hedges Prepaid expenses and other current assets $ 56 $ 57 Other accrued liabilities $ 16 $ 1 Cross-currency swap contracts Prepaid expenses and other current assets 22 — Other accrued liabilities — — Net investment hedges Prepaid expenses and other current assets — 107 Other accrued liabilities 13 — Interest rate-related derivatives Prepaid expenses and other current assets — 24 Other accrued liabilities 150 115 Total Derivatives Designated as Hedging Instruments 78 188 179 116 Derivatives Not Designated as Hedging Instruments: Foreign currency forward contracts Prepaid expenses and other current assets 20 27 Other accrued liabilities 20 104 Total derivatives $ 98 $ 215 $ 199 $ 220 (1) See Note 13 – Fair Value Measurements for further information about how the fair value of derivative assets and liabilities are determined. |
Schedule of gains and losses related to derivative financial instruments designated as hedging instruments that are included in the assessment of effectiveness | The amounts of the gains and losses related to the Company’s derivative financial instruments designated as hedging instruments that are included in the assessment of effectiveness are as follows: Amount of Gain (Loss) Location of Gain Amount of Gain (Loss) Reclassified from AOCI into Earnings (1) June 30 from AOCI into June 30 (In millions) 2023 2022 Earnings 2023 2022 Derivatives in Cash Flow Hedging Relationships: Foreign currency forward contracts $ 57 $ 69 Net sales $ 71 $ 3 Interest rate-related derivatives 2 24 Interest expense (1) (1) 59 93 70 2 Derivatives in Net Investment Hedging Relationships (2) : Foreign currency forward contracts (3) (35) 175 — — Total derivatives $ 24 $ 268 $ 70 $ 2 (1) The amount reclassified into earnings as a result of the discontinuance of cash flow hedges because probable forecasted transactions will no longer occur by the end of the original time period was not material. (2) During fiscal 2023 and 2022 the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $26 million and $11 million, respectively. (3) Included within translation adjustments as a component of AOCI on the Company’s consolidated balance sheets. Amount of Gain (Loss) Recognized in Earnings on Derivatives Location of Gain (Loss) June 30 (In millions) Recognized in Earnings on Derivatives 2023 2022 Derivatives in Fair Value Hedging Cross-currency swap contracts (1) Selling, general and administrative $ 42 $ — Interest rate swap contracts (2) Interest expense $ (36) $ (130) (1) Changes in the fair value representing hedge components included in the assessment of effectiveness of the cross-currency swap contracts are exactly offset by the change in the fair value of the underlying intercompany foreign currency denominated debt. The gain recognized in earnings from cross-currency swap contracts related to the amount excluded from effectiveness testing was $9 million. (2) Changes in the fair value of the interest rate swap agreements are exactly offset by the change in the fair value of the underlying long-term debt. |
Schedule of cumulative amount of fair value hedging adjustments for designated and qualifying hedged items | Additional information regarding the cumulative amount of fair value hedging gain (loss) recognized in earnings for items designated and qualifying as hedged items in fair value hedges is as follows: (In millions) Line Item in the Consolidated Balance Sheets in Which the Hedged Item is Included Carrying Amount of the Cumulative Amount of Fair June 30, 2023 June 30, 2023 Long-term debt $ 843 $ (150) Intercompany debt $ — $ 42 |
Schedule of effects of fair value and cash flow hedging relationships for designated and qualified hedging instruments | Additional information regarding the effects of fair value and cash flow hedging relationships for derivatives designated and qualifying as hedging instruments is as follows: June 30 2023 2022 (In millions) Net Sales Selling, General and Administrative Interest Expense Net Sales Selling, General and Administrative Interest Expense Total amounts of income and expense line items presented in the consolidated statements of earnings in which the effects of fair value and cash flow hedges are recorded $ 15,910 $ 9,575 $ 255 $ 17,737 $ 9,888 $ 167 The effects of fair value and cash flow hedging relationships: Gain (loss) on fair value hedge relationships – interest rate contracts: Hedged item N/A N/A 36 N/A N/A 130 Derivatives designated as hedging instruments N/A N/A (36) N/A N/A (130) Gain (loss) on fair value hedge relationships – cross-currency swap contracts: Hedged item N/A (42) N/A N/A — N/A Derivatives designated as hedging instruments N/A 42 N/A N/A — N/A Loss on cash flow hedge relationships – interest rate contracts: Amount of loss reclassified from AOCI into earnings N/A N/A (1) N/A N/A (1) Gain on cash flow hedge relationships – foreign currency forward contracts: Amount of gain reclassified from AOCI into earnings 71 N/A N/A 3 N/A N/A N/A (Not applicable) |
Schedule of gains and losses related to derivative financial instruments not designated as hedging instruments | The amount of the gains and losses related to the Company’s derivative financial instruments not designated as hedging instruments are presented as follows: Amount of Gain (Loss) Location of Gain (Loss) June 30 (In millions) Recognized in Earnings on Derivatives 2023 2022 Derivatives Not Designated as Hedging Instruments: Foreign currency forward contracts Selling, general and administrative $ (10) $ (35) |
Schedule of Offsetting Liabilities | The following table provides information as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria in the event of default or termination as stipulated by the terms of netting arrangements with each of the counterparties: As of June 30, 2023 As of June 30, 2022 (In millions) Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet Contracts Subject to Netting Net Amounts of Assets / (Liabilities) Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet Contracts Subject to Netting Net Amounts of Assets / (Liabilities) Derivative Financial Contracts Derivative assets $ 98 $ (53) $ 45 $ 215 $ (104) $ 111 Derivative liabilities (199) 53 (146) (220) 104 (116) Total $ (101) $ — $ (101) $ (5) $ — $ (5) |
Schedule of Offsetting Assets | The following table provides information as if the Company had elected to offset the asset and liability balances of derivative instruments, netted in accordance with various criteria in the event of default or termination as stipulated by the terms of netting arrangements with each of the counterparties: As of June 30, 2023 As of June 30, 2022 (In millions) Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet Contracts Subject to Netting Net Amounts of Assets / (Liabilities) Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet Contracts Subject to Netting Net Amounts of Assets / (Liabilities) Derivative Financial Contracts Derivative assets $ 98 $ (53) $ 45 $ 215 $ (104) $ 111 Derivative liabilities (199) 53 (146) (220) 104 (116) Total $ (101) $ — $ (101) $ (5) $ — $ (5) |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of financial assets and liabilities measured at fair value on a recurring basis | The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2023: (In millions) Level 1 Level 2 Level 3 Total Assets: Money market funds $ 3,241 $ — $ — $ 3,241 Foreign currency forward contracts — 76 — 76 Cross-currency swap contracts — 22 — 22 Total $ 3,241 $ 98 $ — $ 3,339 Liabilities: Foreign currency forward contracts $ — $ 49 $ — $ 49 Interest rate-related derivatives — 150 — 150 DECIEM stock options — — 99 99 Total $ — $ 199 $ 99 $ 298 The following table presents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2022: (In millions) Level 1 Level 2 Level 3 Total Assets: Money market funds $ 961 $ — $ — $ 961 Foreign currency forward contracts — 191 — 191 Interest rate-related derivatives — 24 — 24 Total $ 961 $ 215 $ — $ 1,176 Liabilities: Foreign currency forward contracts $ — $ 105 $ — $ 105 Interest rate-related derivatives — 115 — 115 DECIEM stock options — — 74 74 Total $ — $ 220 $ 74 $ 294 |
Schedule of estimated fair values of financial instruments | The estimated fair values of the Company’s financial instruments are as follows: June 30 2023 2022 (In millions) Carrying Fair Carrying Fair Nonderivatives Cash and cash equivalents $ 4,029 $ 4,029 $ 3,957 $ 3,957 Current and long-term debt 8,114 7,665 5,412 5,139 DECIEM stock options 99 99 74 74 Deferred consideration payable 341 338 38 38 Derivatives Cross-currency swap contracts - asset, net 22 22 — — Foreign currency forward contracts – asset, net 27 27 86 86 Interest rate-related derivatives – liability, net (150) (150) (91) (91) |
Impairment charges measured at fair value on a nonrecurring basis, classified as Level 3 | The following table presents the Company’s impairment charges for certain of its nonfinancial assets measured at fair value on a nonrecurring basis, classified as Level 3, during fiscal 2023, 2022 and 2021: Fiscal 2023 (In millions) Impairment charges Date of Fair Value Measurement Fair Value (1) Other intangible assets, net (trademarks) Dr.Jart+ $ 100 November 30, 2022 $ 325 Too Faced 86 November 30, 2022 186 Smashbox 21 December 31, 2022 — Total $ 207 $ 511 (1) See Note 6 – Goodwill and Other Intangible Assets for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs. Fiscal 2022 (In millions) Impairment charges Date of Fair Value Measurement Fair Value (1) Other intangible assets, net (trademarks) GLAMGLOW $ 11 March 31, 2022 $ — Dr.Jart+ 230 February 28, 2022 428 Total $ 241 $ 428 (1) See Note 6 – Goodwill and Other Intangible Assets for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs. Fiscal 2021 (In millions) Impairment Date of Fair Value Fair Value (1) Goodwill GLAMGLOW $ 54 November 30, 2020 $ — BECCA (2) 13 February 28, 2021 — Other 4 June 30, 2021 — Total 71 — Other intangible assets, net (trademark and customer lists) GLAMGLOW 52 November 30, 2020 11 BECCA (2) 34 February 28, 2021 — Smashbox 11 April 1, 2021 21 Total 97 32 Long-lived assets 71 March 31, 2021 66 Total $ 239 $ 98 (1) See Note 6 – Goodwill and Other Intangible Assets for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs. (2) See Note 8 – Charges Associated with Restructuring and Other Activities for further information relating to goodwill and other intangible asset impairment charges recorded in connection with the exit of the global distribution of BECCA products. |
Changes in DECEIM stock option liability | Changes in the DECIEM stock option liability for the year ended June 30, 2023 are included in Selling, general and administrative expenses in the accompanying consolidated statements of earnings and were as follows: (In millions) Fair Value DECIEM stock option liability as of June 30, 2022 $ 74 Changes in fair value, net of foreign currency remeasurements (1) 22 Translation adjustments and other, net 3 DECIEM stock option liability as of June 30, 2023 $ 99 (1) Amount inc ludes expense attributable to graded vesting of stock opt ions which is not material for the year ended June 30, 2023. |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of changes in allowance for credit losses | Changes in the allowance for credit losses are as follows: June 30 (In millions) 2023 2022 Allowance for credit losses, beginning of period $ 10 $ 20 Provision (adjustment) for expected credit losses 6 (3) Write-offs, net & other — (7) Allowance for credit losses, end of period $ 16 10 |
Schedule of significant changes in deferred revenue | Changes in deferred revenue are as follows: June 30 (In millions) 2023 2022 Deferred revenue, beginning of period $ 362 $ 371 Revenue recognized that was included in the deferred revenue balance at the beginning of the period (343) (285) Revenue deferred during the period 538 284 Other 15 (8) Deferred revenue, end of period $ 572 $ 362 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | As of June 30, 2023, the remaining contractually guaranteed minimum royalty amounts due to the Company during future periods are as follows: (In millions) Minimum Remaining Royalties Fiscal 2024 $ 27 Fiscal 2025 $ 28 Fiscal 2026 $ 29 Fiscal 2027 $ 30 Fiscal 2028 $ 32 Thereafter $ 194 |
PENSION, DEFERRED COMPENSATIO_2
PENSION, DEFERRED COMPENSATION AND POST-RETIREMENT BENEFIT PLANS (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Retirement Benefits [Abstract] | |
Schedule of components of net periodic benefit cost for pension and other post-retirement benefit plans | The components of the above-mentioned plans as of and for the years ended June 30 are summarized as follows: Pension Plans Other than U.S. International Post-retirement (In millions) 2023 2022 2023 2022 2023 2022 Change in benefit obligation: Benefit obligation at beginning of year $ 922 $ 1,075 $ 562 $ 700 $ 177 $ 209 Service cost 37 46 27 31 1 2 Interest cost 40 31 15 10 8 6 Plan participant contributions — — 8 7 1 1 Actuarial loss (gain) (30) (164) (51) (82) 4 (29) Foreign currency exchange rate impact — — (3) (64) (3) (2) Benefits, expenses, taxes and premiums paid (57) (66) (32) (39) (12) (10) Plan amendments — — — 1 — — Settlements — — (4) (6) — — Special termination benefits — — — 4 — — Benefit obligation at end of year $ 912 $ 922 $ 522 $ 562 $ 176 $ 177 Change in plan assets: Fair value of plan assets at beginning of year $ 838 $ 981 $ 579 $ 681 $ 14 $ 24 Actual return on plan assets (42) (95) (38) (37) (1) (1) Foreign currency exchange rate impact — — (7) (64) — — Employer contributions 14 18 35 38 — — Plan participant contributions — — 8 7 1 1 Settlements — — (4) (7) — — Benefits, expenses, taxes and premiums paid from plan assets (57) (66) (32) (39) (12) (10) Fair value of plan assets at end of year $ 753 $ 838 $ 541 $ 579 $ 2 $ 14 Funded status $ (159) $ (84) $ 19 $ 17 $ (174) $ (163) Amounts recognized in the Balance Sheet consist of: Other assets $ — $ 26 $ 115 $ 125 $ — $ — Other accrued liabilities (21) (20) (4) (3) (9) (1) Other noncurrent liabilities (138) (90) (92) (105) (165) (162) Funded status (159) (84) 19 17 (174) (163) Accumulated other comprehensive loss (income) 237 172 (9) (16) 7 (1) Net amount recognized $ 78 $ 88 $ 10 $ 1 $ (167) $ (164) |
Net periodic benefit costs and weighted-average assumptions | Pension Plans Other than U.S. International Post-retirement ($ in millions) 2023 2022 2021 2023 2022 2021 2023 2022 2021 Components of net periodic benefit cost: Service cost $ 37 $ 46 $ 45 $ 27 $ 31 $ 36 $ 1 $ 2 $ 2 Interest cost 40 31 31 15 10 10 8 6 6 Expected return on assets (57) (55) (53) (17) (13) (14) (1) (1) (1) Amortization of: Actuarial loss 3 15 20 (3) 2 4 — 1 — Prior service cost — — — (1) (1) (1) — — — Settlements — — — 1 — — — — — Special termination benefits — — — — 4 10 — — — Net periodic benefit cost $ 23 $ 37 $ 43 $ 22 $ 33 $ 45 $ 8 $ 8 $ 7 Assumptions used to determine benefit obligations at June 30 (1) : Discount rate 5.20 – 5.30% 4.30 – 4.50% 2.50 – 3.00% 1.00 – 9.00% 0.75 – 9.00% 0.50 – 7.25% 5.00 – 10.75% 4.50 – 9.75% 2.70 – 9.00% Rate of compensation increase 2.50 – 8.00% 2.50 – 8.00% 2.50 – 8.00% 1.75 – 5.00% 1.50 – 5.00% 1.00– 5.00% N/A N/A N/A Assumptions used to determine net periodic benefit cost for the year ended June 30 (2) : Discount rate 4.30 – 4.50% 2.50 – 3.00% 2.50 – 3.00% .75 – 9.00% .50– 7.25% .50 – 7.00% 4.50 – 9.75% 2.70 – 9.00% 2.70 – 9.00% Expected return on assets 6.25 % 6.25 % 6.25 % 1.25 – 9.00% 1.25 – 7.25% 1.25 – 7.00% 6.25 % 6.25 % 6.25 % Rate of compensation increase 2.50 – 8.00% 2.50 – 8.00% 2.50– 8.00% — – 5.00% — – 5.00% 1.00 – 5.50% N/A N/A N/A (1) The weighted-average assumptions used to determine benefit obligations at June 30, 2023 were as follows: a. Discount rate - 5.29% (U.S.), 3.69% (International) and 5.19% (Other than Pension Plans, Post-retirement) b. Rate of compensation increase - 2.50% - 8.00%, graded (U.S.), 3.08% (International) and N/A (Other than Pension Plans, Post-retirement) The weighted-average assumptions used to determine benefit obligations at June 30, 2022 were as follows: a. Discount rate - 4.48% (U.S.), 2.77% (International) and 4.68% (Other than Pension Plans, Post-retirement) b. Rate of compensation increase - 2.50% - 8.00%, graded (U.S.), 2.96% (International) and N/A (Other than Pension Plans, Post-retirement) (2) The weighted-average assumptions used to determine net periodic benefit cost for the year ended June 30, 2023 were as follows: a. Discount rate - 4.48% (U.S.), 2.77% (International) and 4.68% (Other than Pension Plans, Post-retirement) b. Expected return on assets - 6.25% (U.S.), 2.95% (International) and N/A (Other than Pension Plans, Post-retirement) c. Rate of compensation increase - 2.50% - 8.00%, graded (U.S.), 2.96% (International) and N/A (Other than Pension Plans, Post-retirement) The weighted-average assumptions used to determine net periodic benefit cost for the year ended June 30, 2022 were as follows: a. Discount rate - 2.94% (U.S.), 1.59% (International) and 2.92% (Other than Pension Plans, Post-retirement) b. Expected return on assets - 6.25% (U.S. and Other than Pension Plans, Post-retirement) and 2.19% (International) c. Rate of compensation increase - 2.50% - 8.00%, graded (U.S.), 2.81% (International) and N/A (Other than Pension Plans, Post-retirement) |
Amounts recognized in AOCI (before tax) | Amounts recognized in AOCI (before tax) as of June 30, 2023 are as follows: Pension Plans Other than (In millions) U.S. International Post-retirement Total Net actuarial losses (gains), beginning of year $ 170 $ (13) $ (1) $ 156 Actuarial losses recognized 68 4 7 79 Amortization and settlements included in net periodic benefit cost (3) 2 — (1) Translation adjustments — — 1 1 Net actuarial losses (gains), end of year 235 (7) 7 235 Net prior service cost, beginning of year 2 (3) — (1) Amortization included in net periodic benefit cost — 1 — 1 Net prior service cost, end of year 2 (2) — — Total amounts recognized in AOCI $ 237 $ (9) $ 7 $ 235 |
Projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the company's pension plans | The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the Company’s pension plans at June 30 are as follows: Pension Plans Other than Pension Plans Retirement Growth Restoration International Post-retirement (In millions) 2023 2022 2023 2022 2023 2022 2023 2022 Projected benefit obligation $ 807 $ 811 $ 105 $ 111 $ 522 $ 562 $ 176 $ 177 Accumulated benefit obligation $ 774 $ 777 $ 95 $ 100 $ 467 $ 507 $ — $ — Fair value of plan assets $ 753 $ 838 $ — $ — $ 541 $ 579 $ 2 $ 14 |
Expected cash flows | The expected cash flows for the Company’s pension and post-retirement plans are as follows: Pension Plans Other than (In millions) U.S. International Post-retirement Expected employer contributions for year ending June 30, 2024 $ 72 $ 28 $ 9 Expected benefit payments for year ending June 30, 2024 75 39 11 2025 52 35 12 2026 53 34 12 2027 53 33 13 2028 55 34 14 Years 2029 – 2033 314 163 73 |
Target asset allocation | The Company’s target asset allocation at June 30, 2023 is as follows: Pension Plans Other than U.S. International Post-retirement Equity 39 % 19 % 39 % Debt securities 50 % 59 % 50 % Other 11 % 22 % 11 % 100 % 100 % 100 % |
Fair values of the company's pension and post-retirement plan assets by asset category | The following table presents the fair values of the Company’s pension and post-retirement plan assets by asset category as of June 30, 2023: (In millions) Level 1 Level 2 Level 3 Assets Total Cash and cash equivalents $ 2 $ — $ — $ — $ 2 Short-term investment funds — 12 — 3 15 Government and agency securities — 139 — — 139 Commingled funds 332 547 — 143 1,022 Insurance contracts — — 8 — 8 Interests in limited partnerships and hedge fund investments — — — 110 110 Total $ 334 $ 698 $ 8 $ 256 $ 1,296 The following table presents the fair values of the Company’s pension and post-retirement plan assets by asset category as of June 30, 2022: (In millions) Level 1 Level 2 Level 3 Assets Total Cash and cash equivalents $ 6 $ — $ — $ — $ 6 Short-term investment funds — 59 — 6 65 Government and agency securities — 103 — — 103 Commingled funds 378 574 — 144 1,096 Insurance contracts — — 46 — 46 Interests in limited partnerships and hedge fund investments — — — 115 115 Total $ 384 $ 736 $ 46 $ 265 $ 1,431 |
Changes in Level 3 plan assets | The following table presents the changes in Level 3 plan assets: June 30 (In millions) 2023 2022 Insurance Contracts Balance at beginning of year $ 46 $ 54 Actual return on plan assets: Relating to assets still held at the reporting date (2) (3) Purchases, sales, issuances and settlements, net (35) 1 Foreign exchange impact (1) (6) Balance at end of year $ 8 $ 46 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of scheduled maturities of contractual obligations for which cash flows are fixed and determinable | The following table summarizes scheduled maturities of the Company’s contractual obligations for which cash flows are fixed and determinable as of June 30, 2023: Payments Due in Fiscal (In millions) Total 2024 2025 2026 2027 2028 Thereafter Debt service (1) $ 12,133 $ 1,267 $ 761 $ 256 $ 755 $ 939 $ 8,155 Unconditional purchase obligations (2) 2,738 1,829 202 254 231 96 126 Gross unrecognized tax benefits and interest – current (3) 3 3 — — — — — Transition Tax payable (4) 188 42 65 81 — — — Total contractual obligations (5) $ 15,062 $ 3,141 $ 1,028 $ 591 $ 986 $ 1,035 $ 8,281 (1) Includes long-term and current debt and the related projected interest costs. Refer to Note 7 – Leases for information regarding future minimum lease payments relating to the Company’s finance leases. Interest costs on long-term and current debt in fiscal 2024, 2025, 2026, 2027, 2028 and thereafter are projected to be $267 million, $261 million, $256 million, $255 million, $239 million and $2,555 million, respectively. Projected interest costs on variable rate instruments were calculated using market rates at June 30, 2023. (2) Unconditional purchase obligations primarily include: inventory commitments, deferred consideration, capital expenditure commitments, information technology contract commitments, royalty payments pursuant to license agreements and advertising commitments. Future royalty and advertising commitments were estimated based on planned future sales for the term that was in effect at June 30, 2023, without consideration for potential renewal periods. (3) Refer to Note 9 – Income Taxes for information regarding unrecognized tax benefits. As of June 30, 2023, the noncurrent portion of the Company’s unrecognized tax benefits, including related accrued interest and penalties, was $75 million. At this time, the settlement period for the noncurrent portion of the unrecognized tax benefits, including related accrued interest and penalties, cannot be determined and therefore was not included. (4) The Transition Tax may be paid over an eight-year period and this amount represents the remaining liability as of June 30, 2023. (5) Refer to Note 7 – Leases for information regarding future minimum lease payments relating to the Company’s operating leases. |
COMMON STOCK (Tables)
COMMON STOCK (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Common stock outstanding | Information about the Company’s common stock outstanding is as follows: (Shares in thousands) Class A Class B Balance at June 30, 2020 225,290.2 135,235.4 Acquisition of treasury stock (2,580.5) — Conversion of Class B to Class A 6,993.4 (6,993.4) Stock-based compensation 3,814.3 — Balance at June 30, 2021 233,517.4 128,242.0 Acquisition of treasury stock (7,393.6) — Conversion of Class B to Class A 2,700.0 (2,700.0) Stock-based compensation 2,689.7 — Balance at June 30, 2022 231,513.5 125,542.0 Acquisition of treasury stock (1,220.7) — Conversion of Class B to Class A — — Stock-based compensation 1,785.1 — Balance at June 30, 2023 232,077.9 125,542.0 |
Summary of cash dividends per share | The following is a summary of cash dividends declared per share on the Company’s Class A and Class B Common Stock during the year ended June 30, 2023: Date Declared Record Date Payable Date Amount per Share August 17, 2022 August 31, 2022 September 15, 2022 $ .60 November 1, 2022 November 30, 2022 December 15, 2022 $ .66 February 1, 2023 February 28, 2023 March 15, 2023 $ .66 May 2, 2023 May 31, 2023 June 15, 2023 $ .66 |
STOCK PROGRAMS (Tables)
STOCK PROGRAMS (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of stock-based compensation expense | Total net stock-based compensation expense is attributable to the granting of and the remaining requisite service periods of stock options, RSUs, PSUs, long-term PSUs and share units. Compensation expense attributable to net stock-based compensation is as follows: Year Ended June 30 (In millions) 2023 2022 2021 Compensation expense (1) $ 267 $ 331 $ 327 Income tax benefit $ 52 $ 51 $ 50 (1) Excludes compensation expense relating to liability-classified awards, including DECIEM stock options discussed below. |
Summary of stock option programs | The following is a summary of the status of the Company’s stock options as of June 30, 2023 and activity during the fiscal year then ended: (Shares in thousands) Shares Weighted- Aggregate Intrinsic Value (1) (in millions) Weighted-Average Outstanding at June 30, 2022 7,171.8 $ 169.20 Granted at fair value 1,234.8 246.01 Exercised (739.0) 119.56 Expired (41.4) 283.87 Forfeited (129.1) 268.04 Outstanding at June 30, 2023 7,497.1 184.41 $ 318 6.0 Vested and expected to vest at June 30, 2023 7,440.5 183.78 $ 318 6.0 Exercisable at June 30, 2023 5,398.4 151.96 $ 318 5.0 (1) The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. The following is a summary of the DECIEM stock option program as of June 30, 2023 and changes during the fiscal year then ended: (Shares in thousands) Shares Weighted- Aggregate Intrinsic Value (1) (in millions) Weighted-Average Outstanding at June 30, 2022 94.1 $ 60.11 Granted at fair value — — Exercised — Expired — Forfeited — Outstanding at June 30, 2023 94.1 58.48 $ 104 0.92 Vested at June 30, 2023 94.1 58.48 $ 104 0.92 Exercisable at June 30, 2023 — — $ — — (1) The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. |
Summary of weighted-average grant date fair value and intrinsic value of stock options exercised | The following is a summary of the per-share weighted-average grant date fair value of stock options granted and total intrinsic value of stock options exercised: Year Ended June 30 (In millions, except per share data) 2023 2022 2021 Per-share weighted-average grant date fair value of stock options granted $ 79.09 $ 85.56 $ 54.83 Intrinsic value of stock options exercised $ 93 $ 276 $ 407 The following is a summary of the per-share weighted-average grant date fair value of stock options granted and total intrinsic value of stock options exercised: Year Ended June 30 2023 2022 2021 Per-share weighted-average grant date fair value of stock options granted $ — $ — $ 1,557 Intrinsic value of stock options exercised $ — $ — $ — |
Schedule of fair value option-pricing assumptions | The acquisition-date fair values of the DECIEM stock options and the net Put (Call) Option were calculated by incorporating significant assumptions including the starting equity value, revenue growth rates and EBITDA and the following key assumptions into the Monte Carlo Method: May 18, 2021 Risk-free rate 0.50% Term to mid of last twelve-month period 2.54 years Operating leverage adjustment 0.45 Net sales discount rate 3.30% EBITDA discount rate 6.80% EBITDA volatility 38.30% Net sales volatility 17.20% The fair value of each of the Company's option grants were estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: Year Ended June 30 2023 2022 2021 Weighted-average expected stock-price volatility 30.8% 27.3% 26.1% Weighted-average expected option life 6 years 6 years 8 years Average risk-free interest rate 3.4% 0.9% 0.5% Average dividend yield 0.8% 0.7% 1.0% June 30, 2023 June 30, 2022 June 30, 2021 Risk-free rate 4.90% 3.20% 0.50% Term to mid of last twelve-month period 0.46 years 1.42 years 2.42 years Operating leverage adjustment 0.45 0.45 0.45 Net sales discount rate 7.80% 6.00% 3.40% EBITDA discount rate 11.30% 9.40% 6.90% EBITDA volatility 32.00% 33.90% 37.70% Net sales volatility 14.40% 15.30% 17.00% |
Summary of restricted stock units (RSUs) | The following is a summary of the status of the Company’s RSUs as of June 30, 2023 and activity during the fiscal year then ended: (Shares in thousands) Shares Weighted-Average Nonvested at June 30, 2022 1,517.9 $ 272.26 Granted 1,129.2 246.20 Dividend equivalents 17.5 266.01 Vested (744.9) 250.41 Forfeited (129.8) 269.67 Nonvested at June 30, 2023 1,789.9 265.04 |
Summary of performance share units (PSUs) | The following is a summary of the status of the Company’s PSUs as of June 30, 2023 and activity during the fiscal year then ended: (Shares in thousands) Shares Weighted-Average Nonvested at June 30, 2022 728.9 $ 188.49 Granted 142.5 237.79 Vested and issued (155.9) 199.17 Forfeited (350.3) 128.30 Nonvested at June 30, 2023 (1) 365.2 260.90 |
Schedule of long-term price vested units | The number of shares subject to each tranche of the price-vested unit award, as well as the stock price goals, service periods, performance periods and share delivery dates for each tranche are as follows: Number Stock Price Goal Service Period Performance Period for Stock Price Goal Performance Period for Cumulative Operating Income Goal Share Delivery Date First tranche 27,457 $ 323.03 March 11, 2021 - June 30, 2024 March 11, 2021 - June 30, 2024 July 1, 2021 - June 30, 2025 September 2, 2025 Second tranche 28,598 $ 333.21 March 11, 2021 - June 30, 2024 March 11, 2021 - June 30, 2024 July 1, 2021 - June 30, 2025 September 2, 2025 Third tranche 29,872 $ 343.61 March 11, 2021 - June 30, 2024 March 11, 2021 - June 30, 2024 July 1, 2021 - June 30, 2025 September 2, 2025 Total shares 85,927 |
Schedule of assumptions used for award | The significant assumptions used for this award were as follows: Expected volatility 31.8 % Dividend yield 0.8 % Risk-free interest rate 0.4 % Expected term 3.3 years |
Summary of status of share units | The following is a summary of the status of the Company’s share units as of June 30, 2023 and activity during the fiscal year then ended: (Shares in thousands) Shares Weighted-Average Outstanding at June 30, 2022 121.9 $ 78.01 Granted 5.4 233.46 Dividend equivalents 1.3 229.16 Converted (15.9) 73.57 Outstanding at June 30, 2023 112.7 87.84 |
NET EARNINGS ATTRIBUTABLE TO _2
NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation between the numerator and denominator of the basic and diluted EPS computations | A reconciliation between the numerator and denominator of the basic and diluted EPS computations is as follows: Year Ended June 30 (In millions, except per share data) 2023 2022 2021 Numerator: Net earnings attributable to The Estée Lauder Companies Inc. $ 1,006 $ 2,390 $ 2,870 Denominator: Weighted-average common shares outstanding – Basic 357.9 360.0 362.9 Effect of dilutive stock options 2.3 3.7 4.0 Effect of PSUs 0.1 0.2 0.2 Effect of RSUs 0.6 1.0 1.1 Weighted-average common shares outstanding – Diluted 360.9 364.9 368.2 Net earnings attributable to The Estée Lauder Companies Inc. per common share: Basic $ 2.81 $ 6.64 $ 7.91 Diluted $ 2.79 $ 6.55 $ 7.79 |
Schedule of antidilutive securities excluded from computation of earnings per share | The shares of Class A Common Stock underlying stock options, RSUs and PSUs that were excluded in the computation of diluted EPS because their inclusion would be anti-dilutive were as follows: Year Ended June 30 (In millions) 2023 2022 2021 Stock options 2.4 0.9 0.7 RSUs and PSUs 0.1 0.1 0.1 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Schedule of components of AOCI, net of tax | The components of AOCI included in the accompanying consolidated balance sheets consist of the following: Year Ended June 30 (In millions) 2023 2022 2021 Net derivative instruments, beginning of year $ 68 $ (2) $ 14 Gain (loss) on derivative instruments (1) 48 93 (45) Benefit (provision) for deferred income taxes (11) (21) 10 Reclassification to earnings during the year: Foreign currency forward contracts (2) (71) (3) 22 Interest rate-related derivatives (3) 1 1 2 Cross-currency swap contracts (1)(4) (9) — — Benefit (provision) for deferred income taxes on reclassification (5) 18 — (5) Net derivative instruments, end of year 44 68 (2) Net pension and post-retirement adjustments, beginning of year (114) (179) (244) Changes in plan assets and benefit obligations: Net actuarial gains (losses) recognized (79) 71 60 Prior service credit recognized — (1) (1) Translation adjustments (1) — — Benefit (provision) for deferred income taxes 17 (18) (12) Amortization and settlements included in net periodic benefit cost (6) : Net actuarial losses — 18 24 Net prior service cost (1) (1) (1) Settlements 1 — — Provision for deferred income taxes on reclassification (5) — (4) (5) Net pension and post-retirement adjustments, end of year (177) (114) (179) Cumulative translation adjustments, beginning of year (716) (289) (435) Reclassification to earnings during the year — — (1) Translation adjustments (7) (112) (409) 145 Benefit (provision) for deferred income taxes 27 (18) 2 Cumulative translation adjustments, end of year (801) (716) (289) Accumulated other comprehensive loss $ (934) $ (762) $ (470) (1) Includes the gain recognized in AOCI from cross-currency swap contracts which represents the amount excluded from effectiveness testing. (2) Amounts recorded in Net Sales in the accompanying consolidated statements of earnings. (3) Amounts recorded in Interest expense in the accompanying consolidated statements of earnings. (4) Amounts recorded in Selling, general and administrative in the accompanying consolidated statements of earnings. (5) Amounts recorded in Provision for income taxes in the accompanying consolidated statements of earnings. (6) See Note 15 – Pension, Deferred Compensation and Post-Retirement Benefit Plans for additional information . (7) See Note 12 – Derivative Financial Instruments for gains (losses) relating to net investment hedges. |
STATEMENT OF CASH FLOWS (Tables
STATEMENT OF CASH FLOWS (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental cash flow information | Supplemental cash flow information is as follows: Year Ended June 30 (In millions) 2023 2022 2021 Cash: Cash paid during the year for interest $ 235 $ 163 $ 166 Cash paid during the year for income taxes $ 665 $ 760 $ 664 Non-cash investing and financing activities: Capitalized interest and asset retirement obligations incurred $ 13 $ 6 $ 3 Deferred consideration payable $ 300 $ 38 $ — Property, plant and equipment accrued but unpaid $ 246 $ 106 $ 97 |
SEGMENT DATA AND RELATED INFO_2
SEGMENT DATA AND RELATED INFORMATION (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of segment data and related information | Year Ended June 30 (In millions) 2023 2022 2021 PRODUCT CATEGORY DATA Net sales: Skin Care $ 8,202 $ 9,886 $ 9,484 Makeup 4,516 4,667 4,203 Fragrance 2,512 2,508 1,926 Hair Care 653 631 571 Other 54 49 45 15,937 17,741 16,229 Returns associated with restructuring and other activities (27) (4) (14) Net sales $ 15,910 $ 17,737 $ 16,215 Depreciation and amortization: Skin Care $ 383 $ 404 $ 330 Makeup 211 213 210 Fragrance 117 89 78 Hair Care 31 20 31 Other 2 1 2 $ 744 $ 727 $ 651 Operating income (loss) before charges associated with restructuring and other activities: Skin Care $ 1,204 $ 2,753 $ 3,036 Makeup (22) 133 (384) Fragrance 440 456 215 Hair Care (34) (28) (19) Other 6 — (2) 1,594 3,314 2,846 Reconciliation: Charges associated with restructuring and other activities (85) (144) (228) Interest expense (255) (167) (173) Interest income and investment income, net 131 30 51 Other components of net periodic benefit cost 12 2 (12) Other income, net — 1 847 Earnings before income taxes $ 1,397 $ 3,036 $ 3,331 Year Ended June 30 (In millions) 2023 2022 2021 GEOGRAPHIC DATA (1) Net sales: The Americas $ 4,518 $ 4,623 $ 3,797 Europe, the Middle East & Africa 6,225 7,681 6,946 Asia/Pacific 5,194 5,437 5,486 15,937 17,741 16,229 Returns associated with restructuring and other activities (27) (4) (14) Net sales $ 15,910 $ 17,737 $ 16,215 Operating income (loss): The Americas $ (73) $ 1,159 $ 518 Europe, the Middle East & Africa 843 1,360 1,335 Asia/Pacific 824 795 993 1,594 3,314 2,846 Charges associated with restructuring and other activities (85) (144) (228) Operating income $ 1,509 $ 3,170 $ 2,618 Total assets: The Americas $ 13,292 $ 10,989 $ 11,387 Europe, the Middle East & Africa 5,985 5,781 5,907 Asia/Pacific 4,138 4,140 4,677 $ 23,415 $ 20,910 $ 21,971 Long-lived assets (2) : The Americas $ 2,593 $ 2,609 $ 2,521 Europe, the Middle East & Africa 1,202 1,133 1,314 Asia/Pacific 1,181 857 635 $ 4,976 $ 4,599 $ 4,470 (1) The net sales from the Company’s travel retail business are included in the Europe, the Middle East & Africa region, with the exception of net sales of Dr.Jart+ in the travel retail channel that are reflected in Korea in the Asia/Pacific region. Operating income attributable to the travel retail sales included in Europe, the Middle East & Africa is included in that region and in The Americas. (2) Includes property, plant and equipment, net and operating lease ROU assets. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Currency Translation and Transactions (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Currency Translation and Transactions | |||
Unrealized translation gains (losses), net of tax | $ (85) | $ (427) | $ 147 |
Net exchange gains (losses) on foreign currency transactions | $ 57 | $ (11) | $ (12) |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash and Cash Equivalents (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Jun. 30, 2022 |
Cash and Cash Equivalents | ||
Short-term time deposits | $ 66 | $ 1,883 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment (Details) | Jun. 30, 2023 |
Minimum | |
Property, Plant and Equipment | |
Property, plant and equipment, useful life | 3 years |
Maximum | |
Property, Plant and Equipment | |
Property, plant and equipment, useful life | 40 years |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising and Promotion (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Product Information [Line Items] | |||
Selling, general and administrative | $ 9,575 | $ 9,888 | $ 9,371 |
Advertising and Promotion | |||
Product Information [Line Items] | |||
Selling, general and administrative | $ 3,711 | $ 3,877 | $ 3,710 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Research and Development (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Product Information [Line Items] | |||
Selling, general and administrative | $ 9,575 | $ 9,888 | $ 9,371 |
Research and Development | |||
Product Information [Line Items] | |||
Selling, general and administrative | $ 344 | $ 307 | $ 243 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Shipping and Handling (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Product Information [Line Items] | |||
Selling, general and administrative | $ 9,575 | $ 9,888 | $ 9,371 |
Shipping and Handling | |||
Product Information [Line Items] | |||
Selling, general and administrative | $ 838 | $ 860 | $ 680 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Licensing Arrangements (Details) | Jun. 30, 2023 |
Minimum | |
License Arrangements [Line Items] | |
License arrangements, useful life | 5 years |
License arrangements, useful life, available renewal term | 7 years |
Maximum | |
License Arrangements [Line Items] | |
License arrangements, useful life | 10 years |
License arrangements, useful life, available renewal term | 27 years |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Redeemable Noncontrolling Interest (Details) - DECIEM - DECIEM | May 18, 2021 |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |
Right to sell, period | 3 years |
Right to purchase, period | 3 years |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Government Assistance (Details) - COVID-19 Pandemic - USD ($) $ in Millions | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Unusual or Infrequent Item, or Both [Line Items] | ||
Government assistance | $ 12 | $ 84 |
Selling, general and administrative | ||
Unusual or Infrequent Item, or Both [Line Items] | ||
Government assistance | 9 | 78 |
Cost of Sales | ||
Unusual or Infrequent Item, or Both [Line Items] | ||
Government assistance | $ 3 | $ 6 |
INVENTORY AND PROMOTIONAL MER_3
INVENTORY AND PROMOTIONAL MERCHANDISE (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Jun. 30, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 876 | $ 791 |
Work in process | 362 | 366 |
Finished goods | 1,404 | 1,449 |
Promotional merchandise | 337 | 314 |
Inventory and promotional merchandise, net | $ 2,979 | $ 2,920 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ 6,908 | $ 6,140 | |
Less accumulated depreciation and amortization | (3,729) | (3,490) | |
Property, plant and equipment, net | 3,179 | 2,650 | |
Depreciation and amortization of property, plant and equipment | $ 577 | 543 | $ 516 |
Minimum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life | 3 years | ||
Maximum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life | 40 years | ||
Land | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ 70 | 53 | |
Buildings and improvements | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ 843 | 491 | |
Buildings and improvements | Minimum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life | 10 years | ||
Buildings and improvements | Maximum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life | 40 years | ||
Machinery and equipment | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ 1,071 | 994 | |
Machinery and equipment | Minimum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life | 3 years | ||
Machinery and equipment | Maximum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life | 10 years | ||
Computer hardware and software | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ 1,651 | 1,468 | |
Computer hardware and software | Minimum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life | 4 years | ||
Computer hardware and software | Maximum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life | 10 years | ||
Furniture and fixtures | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ 136 | 129 | |
Furniture and fixtures | Minimum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life | 5 years | ||
Furniture and fixtures | Maximum | |||
Property, Plant and Equipment | |||
Property, plant and equipment, useful life | 10 years | ||
Leasehold improvements | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ 2,310 | 2,246 | |
Construction in progress | |||
Property, Plant and Equipment | |||
Property, plant and equipment, gross | $ 827 | $ 759 |
BUSINESS AND ASSET ACQUISITIO_2
BUSINESS AND ASSET ACQUISITIONS - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||||||
Apr. 28, 2023 | Mar. 31, 2022 | May 18, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | May 17, 2021 | |
Business Acquisition [Line Items] | |||||||
Deferred consideration | $ 300 | $ 38 | $ 0 | ||||
Tom Ford | |||||||
Business Acquisition [Line Items] | |||||||
Equity interests acquired | 100% | ||||||
Payments for asset acquisition | $ 2,550 | ||||||
Total costs of the asset acquisition | 2,578 | ||||||
Transaction costs | 28 | ||||||
Deferred consideration | 300 | ||||||
Tom Ford | Deferred Consideration, Due July 2025 | |||||||
Business Acquisition [Line Items] | |||||||
Deferred consideration | 150 | ||||||
Tom Ford | Deferred Consideration, Due July 2026 | |||||||
Business Acquisition [Line Items] | |||||||
Deferred consideration | $ 150 | ||||||
Stock Options | DECIEM 2021 Stock Option Plan | |||||||
Business Acquisition [Line Items] | |||||||
Stock option liability | $ 104 | $ 99 | $ 74 | ||||
DECIEM | |||||||
Business Acquisition [Line Items] | |||||||
Equity method investments | $ 65 | ||||||
DECIEM | |||||||
Business Acquisition [Line Items] | |||||||
Cash consideration | $ 1,095 | $ 1,092 | |||||
Fully diluted equity interest before acquisition (as a percent) | 29% | ||||||
Fully diluted equity interest following acquisition (as a percent) | 76% | ||||||
Undiluted equity interest before acquisition (as a percent) | 30.50% | 30% | |||||
Undiluted equity interest after acquisition (as a percent) | 78% | ||||||
Fair value of previously held equity method investment | $ 913 | $ 913 | |||||
Gain on remeasurement of previously held equity method investment | $ 848 | ||||||
Consideration transferred | 2,992 | ||||||
Fair value of net put (call) option | 233 | ||||||
Fair value of redeemable noncontrolling interest | 647 | ||||||
DECIEM | Stock Options | DECIEM 2021 Stock Option Plan | |||||||
Business Acquisition [Line Items] | |||||||
Stock options, percent of total capital structure | 4% | ||||||
Fair value of stock options | 295 | ||||||
Payments for vested share-based payment award | $ 191 | ||||||
DECIEM | DECIEM | |||||||
Business Acquisition [Line Items] | |||||||
Noncontrolling interest ownership (as a percent) | 21.60% | 22% | |||||
Right to sell, period | 3 years | ||||||
Right to purchase, period | 3 years | ||||||
DECIEM | DECIEM | |||||||
Business Acquisition [Line Items] | |||||||
Equity interest | 30.50% |
BUSINESS AND ASSET ACQUISITIO_3
BUSINESS AND ASSET ACQUISITIONS - Summary of Total Consideration Transferred (Details) - DECIEM - USD ($) $ in Millions | Mar. 31, 2022 | May 18, 2021 | May 17, 2021 |
Business Combination, Consideration Transferred [Abstract] | |||
Cash paid | $ 1,095 | $ 1,092 | |
Fair value of DECIEM stock options liability | 104 | ||
Fair value of net Put (Call) Option | 233 | ||
Total consideration for the acquired ownership interest (approximately 47.9%) | 1,432 | ||
Fair value of previously held equity method investment (approximately 30.5%) | 913 | $ 913 | |
Fair value of redeemable noncontrolling interest (approximately 21.6%) | 647 | ||
Total consideration transferred (100%) | $ 2,992 | ||
Business Combination, Consideration Transferred, Percent [Abstract] | |||
Total consideration for the acquired ownership interest (as a percent) | 47.90% | ||
Fair value of previously held equity method investment (as a percent) | 30.50% | 30% | |
Total consideration transferred (as a percent) | 100% | ||
DECIEM | |||
Business Combination, Consideration Transferred, Percent [Abstract] | |||
Fair value of redeemable noncontrolling interest (as a percent) | 21.60% | 22% |
BUSINESS AND ASSET ACQUISITIO_4
BUSINESS AND ASSET ACQUISITIONS - Schedule of Fair Value Option-Pricing Assumptions (Details) - Stock Options | 12 Months Ended | |||
May 18, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Business Acquisition [Line Items] | ||||
Risk-free rate (as a percent) | 3.40% | 0.90% | 0.50% | |
Term to mid of last twelve-month period | 6 years | 6 years | 8 years | |
DECIEM | DECIEM 2021 Stock Option Plan | ||||
Business Acquisition [Line Items] | ||||
Risk-free rate (as a percent) | 0.50% | 4.90% | 3.20% | 0.50% |
Term to mid of last twelve-month period | 2 years 6 months 14 days | 5 months 15 days | 1 year 5 months 1 day | 2 years 5 months 1 day |
Operating leverage adjustment | 0.45 | 0.45 | 0.45 | 0.45 |
Net sales discount rate (as a percent) | 3.30% | 7.80% | 6% | 3.40% |
EBITDA discount rate (as a percent) | 6.80% | 11.30% | 9.40% | 6.90% |
EBITDA volatility (as a percent) | 38.30% | 32% | 33.90% | 37.70% |
Net sales volatility (as a percent) | 17.20% | 14.40% | 15.30% | 17% |
BUSINESS AND ASSET ACQUISITIO_5
BUSINESS AND ASSET ACQUISITIONS - Allocation of Total Consideration Transferred (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 2,486 | $ 2,521 | $ 2,616 | |
DECIEM | ||||
Business Acquisition [Line Items] | ||||
Cash | $ 35 | |||
Accounts receivable | 64 | |||
Inventory | 190 | |||
Other current assets | 33 | |||
Property, plant and equipment | 40 | |||
Operating lease right-of-use assets | 40 | |||
Intangible assets | 1,917 | |||
Goodwill | 1,296 | |||
Deferred income taxes | 8 | |||
Total assets acquired | 3,623 | |||
Accounts payable | 21 | |||
Operating lease liabilities | 8 | |||
Other accrued liabilities | 78 | |||
Deferred income taxes | 479 | |||
Long-term operating lease liabilities | 45 | |||
Total liabilities assumed | 631 | |||
Total consideration transferred | $ 2,992 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||
Apr. 28, 2023 | May 31, 2021 | Nov. 30, 2020 | Jun. 30, 2023 | Dec. 31, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Dec. 31, 2020 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2020 | |
Goodwill and Other Intangible Assets | |||||||||||||
Goodwill measurement period adjustment | $ 13 | ||||||||||||
Amortization of intangible assets | $ 145 | $ 160 | $ 110 | ||||||||||
Impairment, Intangible Asset, Finite-Lived, Statement of Income or Comprehensive Income [Extensible Enumeration] | Impairment of other intangible and long-lived assets | ||||||||||||
Goodwill impairment | 0 | $ 0 | 54 | ||||||||||
Goodwill | $ 2,486 | $ 2,521 | $ 2,616 | 2,486 | 2,521 | 2,616 | |||||||
Skin care | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Goodwill measurement period adjustment | 13 | ||||||||||||
Goodwill | 1,525 | 1,564 | 1,645 | 1,525 | 1,564 | 1,645 | |||||||
Makeup | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Goodwill measurement period adjustment | 0 | ||||||||||||
Goodwill | 384 | 384 | 384 | 384 | 384 | 384 | |||||||
Smashbox | Makeup | The Americas | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Impairment charges of indefinite-lived intangible assets | 11 | 21 | 11 | ||||||||||
Customer lists, impairment | 0 | 0 | |||||||||||
Goodwill impairment | 0 | 0 | 0 | ||||||||||
Carrying value of intangibles | $ 0 | 0 | 0 | $ 0 | |||||||||
Goodwill | 0 | 0 | 0 | 0 | 0 | 0 | |||||||
GLAMGLOW | Skin care | The Americas | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Impairment charges of indefinite-lived intangible assets | 0 | 25 | 11 | 46 | |||||||||
Customer lists, impairment | 0 | 6 | |||||||||||
Goodwill impairment | 54 | 0 | 54 | ||||||||||
Goodwill, fair value | 0 | ||||||||||||
Carrying value of intangibles | 0 | 0 | 0 | 0 | |||||||||
Goodwill | 0 | $ 0 | 0 | $ 0 | |||||||||
Too Faced | Makeup | The Americas | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Impairment charges of indefinite-lived intangible assets | 86 | ||||||||||||
Goodwill impairment | 0 | ||||||||||||
Goodwill | 13 | 13 | |||||||||||
Dr.Jart+ | Skin care | Asia/Pacific | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Impairment charges of indefinite-lived intangible assets | 25 | 100 | 230 | ||||||||||
Goodwill impairment | 0 | ||||||||||||
Goodwill | 304 | 304 | |||||||||||
Trademarks | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Trademarks | $ 4,338 | 1,992 | 4,338 | 1,992 | |||||||||
Trademarks | Tom Ford | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Indefinite-lived intangible assets acquired | $ 2,578 | ||||||||||||
Trademarks | Smashbox | Makeup | The Americas | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Impairment charges of indefinite-lived intangible assets | $ 21 | 21 | |||||||||||
Trademarks | 0 | ||||||||||||
Trademarks | GLAMGLOW | Skin care | The Americas | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Impairment charges of indefinite-lived intangible assets | 21 | $ 11 | $ 21 | 11 | 21 | ||||||||
Trademarks | $ 0 | $ 0 | $ 0 | ||||||||||
Trademarks | Too Faced | Makeup | The Americas | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Impairment charges of indefinite-lived intangible assets | 86 | $ 86 | |||||||||||
Fair value in excess of carrying value | 13% | ||||||||||||
Increase in weighted average cost of capital resulting in impairment charge (as a percent) | 1% | ||||||||||||
Trademarks | Too Faced | Makeup | The Americas | Measurement Input, Weighted Average Cost Of Capital | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Intangible asset, measurement input | 13% | 13% | |||||||||||
Trademarks | DECIEM | Skin care | The Americas | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Fair value in excess of carrying value | 3% | ||||||||||||
Increase in weighted average cost of capital resulting in impairment charge (as a percent) | 0.50% | ||||||||||||
Trademarks | Dr.Jart+ | Skin care | Asia/Pacific | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Impairment charges of indefinite-lived intangible assets | $ 100 | $ 100 | |||||||||||
Weighted-average cost of capital used to estimate fair value (as a percent) | 10.50% | 10.50% | |||||||||||
Trademarks | Dr.Jart+ | Skin care | Asia/Pacific | Measurement Input, Weighted Average Cost Of Capital | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Intangible asset, measurement input | 11% | 11% | |||||||||||
Customer Lists | GLAMGLOW | Skin care | The Americas | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Customer lists, impairment | $ 6 | $ 6 | |||||||||||
Other | Minimum | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Useful life (in years) | 7 years | 7 years | |||||||||||
Other | Maximum | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Useful life (in years) | 18 years | 18 years | |||||||||||
Trademarks | Dr.Jart+ | Skin care | Asia/Pacific | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Customer lists, impairment | $ 25 | $ 205 | |||||||||||
DECIEM | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Goodwill measurement period adjustment | $ 1,296 | ||||||||||||
Goodwill | $ 1,296 | ||||||||||||
DECIEM | Trademarks | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Indefinite-lived intangible assets acquired | 1,216 | ||||||||||||
DECIEM | Customer Lists | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Finite-lived intangible assets acquired | $ 701 | ||||||||||||
DECIEM | Customer Lists | Minimum | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Useful life (in years) | 7 years | ||||||||||||
DECIEM | Customer Lists | Maximum | |||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||
Useful life (in years) | 14 years |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Changes in goodwill | ||
Goodwill, gross, beginning balance | $ 3,420 | $ 3,617 |
Accumulated impairments, beginning balance | (899) | (1,001) |
Goodwill, beginning balance | 2,521 | 2,616 |
Goodwill measurement period adjustment | 13 | |
Translation and other adjustments, goodwill | (33) | (210) |
Translation and other adjustments, accumulated impairments | (2) | 102 |
Goodwill, period increase (decrease) | (35) | (95) |
Goodwill, gross, ending balance | 3,387 | 3,420 |
Accumulated impairments, ending balance | (901) | (899) |
Goodwill, ending balance | 2,486 | 2,521 |
Skin care | ||
Changes in goodwill | ||
Goodwill, gross, beginning balance | 1,702 | 1,786 |
Accumulated impairments, beginning balance | (138) | (141) |
Goodwill, beginning balance | 1,564 | 1,645 |
Goodwill measurement period adjustment | 13 | |
Translation and other adjustments, goodwill | (38) | (97) |
Translation and other adjustments, accumulated impairments | (1) | 3 |
Goodwill, period increase (decrease) | (39) | (81) |
Goodwill, gross, ending balance | 1,664 | 1,702 |
Accumulated impairments, ending balance | (139) | (138) |
Goodwill, ending balance | 1,525 | 1,564 |
Makeup | ||
Changes in goodwill | ||
Goodwill, gross, beginning balance | 1,116 | 1,214 |
Accumulated impairments, beginning balance | (732) | (830) |
Goodwill, beginning balance | 384 | 384 |
Goodwill measurement period adjustment | 0 | |
Translation and other adjustments, goodwill | 0 | (98) |
Translation and other adjustments, accumulated impairments | 0 | 98 |
Goodwill, period increase (decrease) | 0 | 0 |
Goodwill, gross, ending balance | 1,116 | 1,116 |
Accumulated impairments, ending balance | (732) | (732) |
Goodwill, ending balance | 384 | 384 |
Fragrance | ||
Changes in goodwill | ||
Goodwill, gross, beginning balance | 249 | 262 |
Accumulated impairments, beginning balance | (29) | (30) |
Goodwill, beginning balance | 220 | 232 |
Goodwill measurement period adjustment | 0 | |
Translation and other adjustments, goodwill | 5 | (13) |
Translation and other adjustments, accumulated impairments | (1) | 1 |
Goodwill, period increase (decrease) | 4 | (12) |
Goodwill, gross, ending balance | 254 | 249 |
Accumulated impairments, ending balance | (30) | (29) |
Goodwill, ending balance | 224 | 220 |
Hair care | ||
Changes in goodwill | ||
Goodwill, gross, beginning balance | 353 | 355 |
Accumulated impairments, beginning balance | 0 | 0 |
Goodwill, beginning balance | 353 | 355 |
Goodwill measurement period adjustment | 0 | |
Translation and other adjustments, goodwill | 0 | (2) |
Translation and other adjustments, accumulated impairments | 0 | 0 |
Goodwill, period increase (decrease) | 0 | (2) |
Goodwill, gross, ending balance | 353 | 353 |
Accumulated impairments, ending balance | 0 | 0 |
Goodwill, ending balance | $ 353 | $ 353 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS - Other Intangible Assets (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Jun. 30, 2022 |
Intangible assets | ||
Total intangible assets | $ 5,602 | $ 3,428 |
Estimated aggregate amortization expense | ||
2024 | 146 | |
2025 | 146 | |
2026 | 146 | |
2027 | 129 | |
2028 | 104 | |
Trademarks | ||
Intangible assets | ||
Trademarks | 4,338 | 1,992 |
Customer lists, license agreements and other | ||
Amortizable intangible assets: | ||
Gross Carrying Value | 2,030 | 2,064 |
Accumulated Amortization | 766 | 628 |
Total Net Book Value | $ 1,264 | $ 1,436 |
GOODWILL AND OTHER INTANGIBLE_6
GOODWILL AND OTHER INTANGIBLE ASSETS - Impairment (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Nov. 30, 2020 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2020 | |
Intangible assets | |||||||
Impairment, goodwill | $ 0 | $ 0 | $ 54 | ||||
Carrying Value, Goodwill | $ 2,521 | $ 2,616 | $ 2,486 | 2,521 | 2,616 | ||
Impairment, Intangible Asset, Indefinite-Lived (Excluding Goodwill), Statement of Income or Comprehensive Income [Extensible Enumeration] | Impairment of other intangible and long-lived assets | ||||||
Makeup | |||||||
Intangible assets | |||||||
Carrying Value, Goodwill | 384 | 384 | $ 384 | 384 | 384 | ||
Skin care | |||||||
Intangible assets | |||||||
Carrying Value, Goodwill | 1,564 | 1,645 | 1,525 | 1,564 | 1,645 | ||
GLAMGLOW | Skin care | The Americas | |||||||
Intangible assets | |||||||
Impairment, Trademark | 0 | 25 | 11 | 46 | |||
Customer lists, impairment | 0 | 6 | |||||
Impairment, goodwill | $ 54 | 0 | 54 | ||||
Carrying Value, Trademark | 0 | 11 | 0 | 11 | |||
Carrying Value, Customer Lists | 0 | 0 | 0 | $ 0 | |||
Carrying Value, Goodwill | 0 | 0 | 0 | 0 | |||
Dr.Jart+ | Skin care | Asia/Pacific | |||||||
Intangible assets | |||||||
Impairment, Trademark | 25 | 100 | 230 | ||||
Impairment, goodwill | 0 | ||||||
Carrying Value, Trademark | 428 | 325 | 428 | ||||
Carrying Value, Goodwill | 304 | ||||||
Too Faced | Makeup | The Americas | |||||||
Intangible assets | |||||||
Impairment, Trademark | 86 | ||||||
Impairment, goodwill | 0 | ||||||
Carrying Value, Trademark | 186 | ||||||
Carrying Value, Goodwill | 13 | ||||||
Smashbox, Dr. Jart+ and Too Faced | |||||||
Intangible assets | |||||||
Impairment, Trademark | 207 | ||||||
Impairment, goodwill | 0 | ||||||
Carrying Value, Trademark | 511 | ||||||
Carrying Value, Goodwill | 317 | ||||||
GLAMGLOW and Dr. Jart+ | Skin care | |||||||
Intangible assets | |||||||
Impairment, Trademark | 25 | 241 | |||||
Carrying Value, Trademark | $ 428 | $ 428 | |||||
Smashbox | Makeup | The Americas | |||||||
Intangible assets | |||||||
Impairment, Trademark | 11 | 21 | 11 | ||||
Customer lists, impairment | 0 | 0 | |||||
Impairment, goodwill | 0 | 0 | 0 | ||||
Carrying Value, Trademark | 21 | 0 | 21 | ||||
Carrying Value, Customer Lists | 0 | 0 | 0 | 0 | |||
Carrying Value, Goodwill | $ 0 | 0 | $ 0 | 0 | $ 0 | ||
GLAMGLOW and Smashbox | The Americas | |||||||
Intangible assets | |||||||
Impairment, Trademark | 36 | 57 | |||||
Customer lists, impairment | 0 | 6 | |||||
Impairment, goodwill | 0 | 54 | |||||
Carrying Value, Trademark | 32 | 32 | |||||
Carrying Value, Customer Lists | 0 | 0 | |||||
Carrying Value, Goodwill | $ 0 | $ 0 |
LEASES - General (Details)
LEASES - General (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2021 | |
Lessee, Lease, Description [Line Items] | ||
Lease renewal term | 30 years | |
Lease termination period | 25 years | |
Impairment of long-lived assets | $ 71 | |
Operating lease, impairment loss | $ 25 | |
Impairment, Long-Lived Asset, Held-for-Use, Statement of Income or Comprehensive Income [Extensible Enumeration] | Impairment of other intangible and long-lived assets | |
Rights Associated With Commercial Operating Leases | ||
Lessee, Lease, Description [Line Items] | ||
Impairment of long-lived assets | $ 27 | |
Property, Plant and Equipment in Freestanding Stores | ||
Lessee, Lease, Description [Line Items] | ||
Impairment of long-lived assets | $ 19 | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Remaining lease term | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Remaining lease term | 57 years |
LEASES - Total Lease Costs and
LEASES - Total Lease Costs and Other Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Finance lease cost: | |||
Amortization of right-of-use assets | $ 11 | $ 12 | $ 9 |
Interest on lease liabilities | 0 | 0 | 0 |
Operating lease cost | 444 | 465 | 470 |
Short-term lease cost | 41 | 24 | 19 |
Variable lease cost | 213 | 332 | 301 |
Total | 709 | 833 | 799 |
Cash paid for amounts included in the measurement of lease liabilities | |||
Operating cash flows from operating leases | 463 | 506 | 451 |
Financing cash flows from finance leases | 15 | 18 | 12 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 273 | 279 | 267 |
Right-of-use assets obtained in exchange for new finance lease liabilities | $ 34 | $ 10 | $ 44 |
Weighted-average remaining lease term – finance leases | 14 years | 3 years | 3 years |
Weighted-average remaining lease term – operating leases | 9 years | 9 years | 10 years |
Weighted-average discount rate – finance leases | 0.40% | 1% | 1.10% |
Weighted-average discount rate – operating leases | 2.50% | 2.40% | 2.30% |
LEASES - Future Minimum Lease P
LEASES - Future Minimum Lease Payments (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Jun. 30, 2022 |
Operating Leases | ||
Fiscal 2024 | $ 399 | |
Fiscal 2025 | 362 | |
Fiscal 2026 | 299 | |
Fiscal 2027 | 236 | |
Fiscal 2028 | 185 | |
Thereafter | 827 | |
Total future minimum lease payments | 2,308 | |
Less imputed interest | (253) | |
Total | 2,055 | $ 2,233 |
Finance Leases | ||
Fiscal 2024 | 9 | |
Fiscal 2025 | 5 | |
Fiscal 2026 | 3 | |
Fiscal 2027 | 2 | |
Fiscal 2028 | 2 | |
Thereafter | 21 | |
Total future minimum lease payments | 42 | |
Less imputed interest | 0 | |
Total | $ 42 | $ 23 |
LEASES - Operating Lease and Fi
LEASES - Operating Lease and Finance Lease Liabilities included in the Consolidated Balance Sheet (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Jun. 30, 2022 |
Operating Leases | ||
Total current liabilities | $ 357 | $ 365 |
Total noncurrent liabilities | 1,698 | 1,868 |
Total | 2,055 | 2,233 |
Finance Leases | ||
Total current liabilities | 9 | 13 |
Total noncurrent liabilities | 33 | 10 |
Total | $ 42 | $ 23 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other assets | Other assets |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | Current debt | Current debt |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Long-term debt | Long-term debt |
LEASES - Summary of Impairment
LEASES - Summary of Impairment Charges (Details) $ in Millions | 12 Months Ended |
Jun. 30, 2021 USD ($) | |
Lessee, Lease, Description [Line Items] | |
Impairment of long-lived assets | $ 71 |
The Americas | |
Lessee, Lease, Description [Line Items] | |
Impairment of long-lived assets | 23 |
Europe, the Middle East & Africa | |
Lessee, Lease, Description [Line Items] | |
Impairment of long-lived assets | 48 |
Asia/Pacific | |
Lessee, Lease, Description [Line Items] | |
Impairment of long-lived assets | 0 |
Skin care | |
Lessee, Lease, Description [Line Items] | |
Impairment of long-lived assets | 1 |
Makeup | |
Lessee, Lease, Description [Line Items] | |
Impairment of long-lived assets | 52 |
Fragrance | |
Lessee, Lease, Description [Line Items] | |
Impairment of long-lived assets | 14 |
Hair care | |
Lessee, Lease, Description [Line Items] | |
Impairment of long-lived assets | 4 |
Other | |
Lessee, Lease, Description [Line Items] | |
Impairment of long-lived assets | $ 0 |
CHARGES ASSOCIATED WITH RESTR_3
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES - Charges Associated With Restructuring Activities (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Restructuring and Other Costs | |||
Restructuring charges | $ 85 | $ 144 | $ 228 |
PCBA Program | |||
Restructuring and Other Costs | |||
Restructuring charges | 77 | 127 | 221 |
Sales Returns (included in Net Sales) | |||
Restructuring and Other Costs | |||
Restructuring charges | 27 | 4 | 14 |
Sales Returns (included in Net Sales) | PCBA Program | |||
Restructuring and Other Costs | |||
Restructuring charges | 27 | 4 | 14 |
Cost of Sales | PCBA Program | |||
Restructuring and Other Costs | |||
Restructuring charges | 3 | 5 | 2 |
Restructuring Charges | PCBA Program | |||
Restructuring and Other Costs | |||
Restructuring charges | 35 | 109 | 201 |
Other Charges | PCBA Program | |||
Restructuring and Other Costs | |||
Restructuring charges | $ 12 | $ 9 | $ 4 |
CHARGES ASSOCIATED WITH RESTR_4
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES - Narrative (Details) - PCBA Program $ in Millions | 12 Months Ended | ||||
Aug. 20, 2020 | Jun. 30, 2026 USD ($) | Jun. 30, 2025 USD ($) | Jun. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) position | |
Restructuring and Other Costs | |||||
Restructuring program, period | 2 years | ||||
Forecast | |||||
Restructuring and Other Costs | |||||
Accrued restructuring charges expected to result in cash expenditures funded from cash provided by operations | $ 2 | $ 19 | $ 61 | ||
Minimum | |||||
Restructuring and Other Costs | |||||
Net reduction in global positions | position | 2,800 | ||||
Closure of freestanding stores (as a percent) | 14% | ||||
Restructuring and related costs, expected costs | $ 450 | ||||
Maximum | |||||
Restructuring and Other Costs | |||||
Net reduction in global positions | position | 3,200 | ||||
Closure of freestanding stores (as a percent) | 17% | ||||
Restructuring and related costs, expected costs | $ 480 |
CHARGES ASSOCIATED WITH RESTR_5
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES - Cumulative Restructuring Charges by Major Cost Type (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Restructuring and Other Costs | |||
Restructuring charges | $ 85 | $ 144 | $ 228 |
Sales Returns (included in Net Sales) | |||
Restructuring and Other Costs | |||
Restructuring charges | 27 | 4 | 14 |
PCBA Program | |||
Restructuring and Other Costs | |||
Restructuring charges | 77 | 127 | 221 |
Cumulative through June 30, 2023 | 425 | ||
PCBA Program | Sales Returns (included in Net Sales) | |||
Restructuring and Other Costs | |||
Restructuring charges | 27 | 4 | 14 |
Cumulative through June 30, 2023 | 45 | ||
PCBA Program | Cost of Sales | |||
Restructuring and Other Costs | |||
Restructuring charges | 3 | 5 | 2 |
Cumulative through June 30, 2023 | 10 | ||
PCBA Program | Restructuring Charges | |||
Restructuring and Other Costs | |||
Restructuring charges | 35 | 109 | 201 |
Cumulative through June 30, 2023 | 345 | ||
PCBA Program | Restructuring Charges | Employee- Related Costs | |||
Restructuring and Other Costs | |||
Restructuring charges | 3 | 84 | 119 |
Cumulative through June 30, 2023 | 206 | ||
PCBA Program | Restructuring Charges | Asset- Related Costs | |||
Restructuring and Other Costs | |||
Restructuring charges | 31 | 11 | 75 |
Cumulative through June 30, 2023 | 117 | ||
PCBA Program | Restructuring Charges | Impairment Of Goodwill | Becca | |||
Restructuring and Other Costs | |||
Restructuring charges | 13 | ||
PCBA Program | Restructuring Charges | Impairment Of Other Intangible Assets | Becca | |||
Restructuring and Other Costs | |||
Restructuring charges | 34 | ||
PCBA Program | Restructuring Charges | Contract Terminations | |||
Restructuring and Other Costs | |||
Restructuring charges | (2) | 13 | 6 |
Cumulative through June 30, 2023 | 17 | ||
PCBA Program | Restructuring Charges | Other Exit Costs | |||
Restructuring and Other Costs | |||
Restructuring charges | 3 | 1 | 1 |
Cumulative through June 30, 2023 | 5 | ||
PCBA Program | Other Charges | |||
Restructuring and Other Costs | |||
Restructuring charges | 12 | $ 9 | $ 4 |
Cumulative through June 30, 2023 | $ 25 |
CHARGES ASSOCIATED WITH RESTR_6
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES - Accrued Restructuring Charges (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Restructuring Cost and Other Costs [Roll Forward] | |||
Charges | $ 85 | $ 144 | $ 228 |
PCBA Program | |||
Restructuring Cost and Other Costs [Roll Forward] | |||
Charges | 77 | 127 | 221 |
PCBA Program | Restructuring And Other Charges | |||
Restructuring Cost and Other Costs [Roll Forward] | |||
Beginning balance | 125 | 101 | |
Charges | 35 | 109 | 201 |
Cash payments | (44) | (64) | (25) |
Non-cash asset write-offs | (31) | (11) | (75) |
Translation and other adjustments | (3) | (10) | |
Ending balance | 82 | 125 | 101 |
Employee- Related Costs | PCBA Program | Restructuring And Other Charges | |||
Restructuring Cost and Other Costs [Roll Forward] | |||
Beginning balance | 125 | 101 | |
Charges | 3 | 84 | 119 |
Cash payments | (40) | (52) | (18) |
Non-cash asset write-offs | 0 | 0 | 0 |
Translation and other adjustments | (7) | (8) | |
Ending balance | 81 | 125 | 101 |
Asset- Related Costs | PCBA Program | Restructuring And Other Charges | |||
Restructuring Cost and Other Costs [Roll Forward] | |||
Beginning balance | 0 | 0 | |
Charges | 31 | 11 | 75 |
Cash payments | 0 | 0 | 0 |
Non-cash asset write-offs | (31) | (11) | (75) |
Translation and other adjustments | 0 | 0 | |
Ending balance | 0 | 0 | 0 |
Contract Terminations | PCBA Program | Restructuring And Other Charges | |||
Restructuring Cost and Other Costs [Roll Forward] | |||
Beginning balance | 0 | 0 | |
Charges | (2) | 13 | 6 |
Cash payments | (1) | (13) | (6) |
Non-cash asset write-offs | 0 | 0 | 0 |
Translation and other adjustments | 4 | 0 | |
Ending balance | 1 | 0 | 0 |
Other Exit Costs | PCBA Program | Restructuring And Other Charges | |||
Restructuring Cost and Other Costs [Roll Forward] | |||
Beginning balance | 0 | 0 | |
Charges | 3 | 1 | 1 |
Cash payments | (3) | 1 | (1) |
Non-cash asset write-offs | 0 | 0 | 0 |
Translation and other adjustments | 0 | (2) | |
Ending balance | $ 0 | $ 0 | $ 0 |
INCOME TAXES - Provision for In
INCOME TAXES - Provision for Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Current: | |||
Federal | $ 141 | $ 219 | $ 197 |
Foreign | 424 | 533 | 479 |
State and local | 8 | 25 | 10 |
Total | 573 | 777 | 686 |
Deferred: | |||
Federal | (105) | (12) | (129) |
Foreign | (77) | (136) | (100) |
State and local | (4) | (1) | (1) |
Total | (186) | (149) | (230) |
Provision for income taxes | $ 387 | $ 628 | $ 456 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Tax Contingency [Line Items] | ||||
Amounts contributed by foreign operations | $ 1,818 | $ 2,248 | $ 3,127 | |
Benefit for income taxes | 11 | 82 | 99 | |
Undistributed earnings of foreign subsidiaries | 8,876 | |||
Undistributed earnings of foreign subsidiaries considered permanently reinvested | 897 | |||
Undistributed earnings of foreign subsidiaries, withholding tax | 55 | |||
Undistributed earnings of foreign aubsidiaries, no longer expected to be permanently reinvested | 5,548 | |||
Net deferred tax assets | 240 | 3 | ||
Foreign net operating loss carryforwards | 528 | 523 | ||
Foreign net operating loss carryforwards, tax effect | 143 | 136 | ||
U.S. Federal tax credit carryforwards | 79 | 56 | ||
Portion of net operating loss carryforwards with indefinite carryforward period | 464 | |||
Valuation allowance for deferred tax assets | 200 | 185 | ||
Gross unrecognized tax benefits | 63 | 61 | 62 | $ 70 |
Total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate | 53 | |||
Gross interest and penalty accrued | 2 | 4 | $ 2 | |
Total gross accrued interest and penalties related to unrecognized tax benefits | 15 | 14 | ||
Other Noncurrent Assets | ||||
Income Tax Contingency [Line Items] | ||||
Net deferred tax assets | 860 | 695 | ||
Other Noncurrent Liabilities | ||||
Income Tax Contingency [Line Items] | ||||
Net deferred tax assets | $ 620 | $ 692 |
INCOME TAXES - Effective Income
INCOME TAXES - Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |||
Provision for income taxes at statutory rate | 21% | 21% | 21% |
Increase (decrease) due to: | |||
State and local income taxes, net of federal tax benefit | 0.30% | 0.70% | 0.50% |
Stock-based compensation arrangements – excess tax benefits, net | (0.80%) | (2.70%) | (3.00%) |
Previously held equity method investment gain - DECEIM | 0% | 0% | (5.30%) |
GILTI - High-Tax Exception election (adjustment for prior years) | 0% | 0% | (1.40%) |
Taxation of foreign operations | 8.60% | 1.40% | 1.80% |
Income tax reserve adjustments | (0.10%) | 0.30% | (0.20%) |
Nondeductible goodwill impairment charges | 0% | 0% | 0.10% |
Other, net | (1.30%) | 0% | 0.20% |
Effective tax rate | 27.70% | 20.70% | 13.70% |
INCOME TAXES - Significant Comp
INCOME TAXES - Significant Components of Deferred Income Tax Assets and Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Jun. 30, 2022 |
Deferred tax assets: | ||
Compensation-related expenses | $ 189 | $ 203 |
Inventory obsolescence and other inventory related reserves | 75 | 59 |
Retirement benefit obligations | 60 | 42 |
Various accruals not currently deductible | 225 | 269 |
Net operating loss, credit and other carryforwards | 225 | 192 |
Unrecognized state tax benefits and accrued interest | 12 | 13 |
Lease liabilities | 479 | 504 |
Research-related expenses | 200 | 121 |
Other differences between tax and financial statement values | 107 | 26 |
Deferred tax assets, gross | 1,572 | 1,429 |
Valuation allowance for deferred tax assets | (200) | (185) |
Total deferred tax assets | 1,372 | 1,244 |
Deferred tax liabilities: | ||
Fixed assets and intangibles | (264) | (325) |
ROU assets | (432) | (452) |
Partnership interest in DECIEM | (404) | (431) |
Other differences between tax and financial statement values | (32) | (33) |
Total deferred tax liabilities | (1,132) | (1,241) |
Total net deferred tax assets | $ 240 | $ 3 |
INCOME TAXES - Unrecognized Tax
INCOME TAXES - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Reconciliation of the beginning and ending amount of gross unrecognized tax benefits [Roll Forward] | |||
Beginning of the year balance of gross unrecognized tax benefits | $ 61 | $ 62 | $ 70 |
Gross amounts of increases as a result of tax positions taken during a prior period | 9 | 12 | 9 |
Gross amounts of decreases as a result of tax positions taken during a prior period | (5) | (6) | (10) |
Gross amounts of increases as a result of tax positions taken during the current period | 4 | 7 | 8 |
Amounts of decreases in unrecognized tax benefits relating to settlements with taxing authorities | (4) | (12) | (13) |
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statutes of limitations | (2) | (2) | (2) |
End of year balance of gross unrecognized tax benefits | $ 63 | $ 61 | $ 62 |
OTHER ACCRUED AND NONCURRENT _3
OTHER ACCRUED AND NONCURRENT LIABILITIES - Schedule of Other Accrued Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Jun. 30, 2022 |
Other Liabilities Disclosure [Abstract] | ||
Employee compensation | $ 546 | $ 693 |
Accrued sales incentives | 321 | 278 |
Deferred revenue | 323 | 312 |
Other | 2,026 | 2,077 |
Total Other Accrued Liabilities | $ 3,216 | $ 3,360 |
OTHER ACCRUED AND NONCURRENT _4
OTHER ACCRUED AND NONCURRENT LIABILITIES - Narrative (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Jun. 30, 2022 |
Income Tax Contingency [Line Items] | ||
Other noncurrent liabilities | $ 1,943 | $ 1,651 |
Other Noncurrent Liabilities | ||
Income Tax Contingency [Line Items] | ||
Deferred tax liabilities | $ 620 | $ 692 |
DEBT (Details)
DEBT (Details) - USD ($) | 1 Months Ended | 2 Months Ended | 4 Months Ended | 12 Months Ended | |||||||||||||
Aug. 14, 2023 | Aug. 15, 2022 | Oct. 31, 2021 | Mar. 31, 2020 | Nov. 30, 2016 | Apr. 30, 2007 | May 31, 2003 | May 31, 2019 | May 31, 2015 | Mar. 31, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Aug. 11, 2023 | May 31, 2023 | Jan. 31, 2023 | Dec. 31, 2022 | May 31, 2016 | |
Current and long-term debt and available financing | |||||||||||||||||
Current and long-term debt | $ 8,114,000,000 | $ 5,412,000,000 | |||||||||||||||
Less current debt including current maturities | (997,000,000) | (268,000,000) | |||||||||||||||
Long-term debt, excluding current maturities | 7,117,000,000 | 5,144,000,000 | |||||||||||||||
Available financing, committed | 2,500,000,000 | ||||||||||||||||
Available financing, uncommitted | 1,661,000,000 | ||||||||||||||||
Proceeds from issuance of commercial paper | 765,000,000 | ||||||||||||||||
Gain (loss) on derivative instruments recognized in other comprehensive income | 24,000,000 | 268,000,000 | |||||||||||||||
Commercial paper program | $ 4,500,000,000 | $ 2,500,000,000 | |||||||||||||||
Commercial paper, outstanding | 1,000,000,000 | ||||||||||||||||
Subsequent Event | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Proceeds from issuance of commercial paper | $ 215,000,000 | ||||||||||||||||
Commercial paper, outstanding | $ 785,000,000 | ||||||||||||||||
Commercial paper | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Commercial paper | 2,500,000,000 | ||||||||||||||||
Unamortized discount | 12,000,000 | ||||||||||||||||
Revolving credit facility | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Current and long-term debt | $ 0 | 0 | |||||||||||||||
5.150% Senior Notes, due May 15, 2053 ("2053 Senior Notes") | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Interest rate, stated percentage | 0.0515% | ||||||||||||||||
Current and long-term debt | $ 590,000,000 | 0 | |||||||||||||||
Price (as a percent) | 99.455% | ||||||||||||||||
Yield (as a percent) | 5.186% | ||||||||||||||||
Principal | $ 600,000,000 | $ 600,000,000 | |||||||||||||||
Unamortized Debt (Discount) Premium | (3,000,000) | ||||||||||||||||
Debt Issuance Costs | $ (7,000,000) | ||||||||||||||||
3.125% Senior Notes, due December 1, 2049 (“2049 Senior Notes”) | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Interest rate, stated percentage | 3.125% | ||||||||||||||||
Current and long-term debt | $ 636,000,000 | 636,000,000 | |||||||||||||||
Price (as a percent) | 98.769% | ||||||||||||||||
Yield (as a percent) | 3.189% | ||||||||||||||||
Principal | $ 650,000,000 | ||||||||||||||||
Unamortized Debt (Discount) Premium | (8,000,000) | ||||||||||||||||
Debt Issuance Costs | $ (6,000,000) | ||||||||||||||||
4.150% Senior Notes, due March 15, 2047 (“2047 Senior Notes”) | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Interest rate, stated percentage | 4.15% | ||||||||||||||||
Current and long-term debt | $ 494,000,000 | 494,000,000 | |||||||||||||||
Price (as a percent) | 99.739% | ||||||||||||||||
Yield (as a percent) | 4.165% | ||||||||||||||||
Principal | $ 500,000,000 | ||||||||||||||||
Unamortized Debt (Discount) Premium | (1,000,000) | ||||||||||||||||
Debt Issuance Costs | $ (5,000,000) | ||||||||||||||||
4.150% Senior Notes, due March 15, 2047 (“2047 Senior Notes”) | Treasury lock agreements | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Yield (as a percent) | 4.17% | ||||||||||||||||
Notional amount | $ 350,000,000 | ||||||||||||||||
Weighted-average all-in rate (as a percent) | 3.01% | ||||||||||||||||
Gain (loss) on derivative instruments recognized in other comprehensive income | $ 3,000,000 | ||||||||||||||||
4.375% Senior Notes, due June 15, 2045 (“2045 Senior Notes”) | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Interest rate, stated percentage | 4.375% | ||||||||||||||||
Current and long-term debt | $ 454,000,000 | 454,000,000 | |||||||||||||||
Price (as a percent) | 97.999% | ||||||||||||||||
Yield (as a percent) | 4.497% | ||||||||||||||||
Principal | $ 300,000,000 | $ 150,000,000 | |||||||||||||||
Unamortized Debt (Discount) Premium | (5,000,000) | ||||||||||||||||
Debt Issuance Costs | $ (3,000,000) | ||||||||||||||||
Aggregate amount outstanding of senior notes | $ 450,000,000 | ||||||||||||||||
4.375% Senior Notes, due June 15, 2045 (“2045 Senior Notes”) | Interest rate swap contracts | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Yield (as a percent) | 4.216% | ||||||||||||||||
Notional amount | $ 300,000,000 | ||||||||||||||||
Weighted-average all-in rate (as a percent) | 2.38% | ||||||||||||||||
Gain (loss) on derivative instruments recognized in other comprehensive income | $ 18,000,000 | ||||||||||||||||
3.700% Senior Notes, due August 15, 2042 (“2042 Senior Notes”) | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Interest rate, stated percentage | 3.70% | ||||||||||||||||
Current and long-term debt | $ 247,000,000 | 247,000,000 | |||||||||||||||
Price (as a percent) | 99.567% | ||||||||||||||||
Yield (as a percent) | 3.724% | ||||||||||||||||
Principal | $ 250,000,000 | ||||||||||||||||
Unamortized Debt (Discount) Premium | (1,000,000) | ||||||||||||||||
Debt Issuance Costs | $ (2,000,000) | ||||||||||||||||
6.000% Senior Notes, due May 15, 2037 (“2037 Senior Notes”) | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Interest rate, stated percentage | 6% | ||||||||||||||||
Current and long-term debt | $ 295,000,000 | 294,000,000 | |||||||||||||||
Price (as a percent) | 98.722% | ||||||||||||||||
Yield (as a percent) | 6.093% | ||||||||||||||||
Principal | $ 300,000,000 | ||||||||||||||||
Unamortized Debt (Discount) Premium | (2,000,000) | ||||||||||||||||
Debt Issuance Costs | $ (3,000,000) | ||||||||||||||||
6.000% Senior Notes, due May 15, 2037 (“2037 Senior Notes”) | Interest rate swap contracts | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Yield (as a percent) | 6.181% | ||||||||||||||||
Notional amount | $ 210,000,000 | ||||||||||||||||
Weighted-average all-in rate (as a percent) | 5.45% | ||||||||||||||||
Gain (loss) on derivative instruments recognized in other comprehensive income | $ (1,000,000) | ||||||||||||||||
5.75% Senior Notes, due October 15, 2033 (“October 2033 Senior Notes”) | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Interest rate, stated percentage | 5.75% | ||||||||||||||||
Current and long-term debt | $ 198,000,000 | 197,000,000 | |||||||||||||||
Price (as a percent) | 98.645% | ||||||||||||||||
Yield (as a percent) | 5.846% | ||||||||||||||||
Principal | $ 200,000,000 | ||||||||||||||||
Unamortized Debt (Discount) Premium | (1,000,000) | ||||||||||||||||
Debt Issuance Costs | $ (1,000,000) | ||||||||||||||||
5.75% Senior Notes, due October 15, 2033 (“October 2033 Senior Notes”) | Treasury lock agreements | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Yield (as a percent) | 5.395% | ||||||||||||||||
Notional amount | $ 195,000,000 | ||||||||||||||||
Weighted-average all-in rate (as a percent) | 4.53% | ||||||||||||||||
Cash payment received on settlement of derivative | $ 15,000,000 | ||||||||||||||||
4.650% Senior Notes, due May 15, 2033 ("May 2033 Senior Notes") | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Interest rate, stated percentage | 4.65% | ||||||||||||||||
Current and long-term debt | $ 695,000,000 | 0 | |||||||||||||||
Price (as a percent) | 99.897% | ||||||||||||||||
Yield (as a percent) | 4.663% | ||||||||||||||||
Principal | $ 700,000,000 | 700,000,000 | |||||||||||||||
Unamortized Debt (Discount) Premium | (1,000,000) | ||||||||||||||||
Debt Issuance Costs | $ (4,000,000) | ||||||||||||||||
4.650% Senior Notes, due May 15, 2033 ("May 2033 Senior Notes") | Treasury lock agreements | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Yield (as a percent) | 4.83% | ||||||||||||||||
Notional amount | $ 575,000,000 | ||||||||||||||||
Weighted-average all-in rate (as a percent) | 3.57% | ||||||||||||||||
Gain (loss) on derivative instruments recognized in other comprehensive income | $ (5,000,000) | ||||||||||||||||
1.950% Senior Notes, due March 15, 2031 (“2031 Senior Notes”) | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Interest rate, stated percentage | 1.95% | ||||||||||||||||
Current and long-term debt | $ 550,000,000 | 561,000,000 | |||||||||||||||
Price (as a percent) | 99.34% | ||||||||||||||||
Yield (as a percent) | 2.023% | ||||||||||||||||
Principal | $ 600,000,000 | ||||||||||||||||
Unamortized Debt (Discount) Premium | (4,000,000) | ||||||||||||||||
Interest rate swap adjustments | (43,000,000) | ||||||||||||||||
Debt Issuance Costs | $ (3,000,000) | ||||||||||||||||
1.950% Senior Notes, due March 15, 2031 (“2031 Senior Notes”) | LIBOR | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Number of months for LIBOR calculation | 3 months | ||||||||||||||||
1.950% Senior Notes, due March 15, 2031 (“2031 Senior Notes”) | Treasury lock agreements | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Yield (as a percent) | 1.89% | ||||||||||||||||
Notional amount | $ 200,000,000 | ||||||||||||||||
Weighted-average all-in rate (as a percent) | 0.84% | ||||||||||||||||
Gain (loss) on derivative instruments recognized in other comprehensive income | $ 11,000,000 | ||||||||||||||||
1.950% Senior Notes, due March 15, 2031 (“2031 Senior Notes”) | Interest rate swap contracts | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Notional amount | $ 300,000,000 | ||||||||||||||||
2.600% Senior Notes, due April 15, 2030 ("2030 Senior Notes") | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Interest rate, stated percentage | 2.60% | ||||||||||||||||
Current and long-term debt | $ 589,000,000 | 613,000,000 | |||||||||||||||
Price (as a percent) | 99.816% | ||||||||||||||||
Yield (as a percent) | 2.621% | ||||||||||||||||
Principal | $ 700,000,000 | ||||||||||||||||
Unamortized Debt (Discount) Premium | (1,000,000) | ||||||||||||||||
Interest rate swap adjustments | (107,000,000) | ||||||||||||||||
Debt Issuance Costs | $ (3,000,000) | ||||||||||||||||
2.600% Senior Notes, due April 15, 2030 ("2030 Senior Notes") | LIBOR | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Number of months for LIBOR calculation | 3 months | ||||||||||||||||
2.600% Senior Notes, due April 15, 2030 ("2030 Senior Notes") | Interest rate swap contracts | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Notional amount | $ 700,000,000 | ||||||||||||||||
2.375% Senior Notes, due December 1, 2029 (“2029 Senior Notes”) | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Interest rate, stated percentage | 2.375% | ||||||||||||||||
Current and long-term debt | $ 643,000,000 | 642,000,000 | |||||||||||||||
Price (as a percent) | 99.046% | ||||||||||||||||
Yield (as a percent) | 2.483% | ||||||||||||||||
Principal | $ 650,000,000 | ||||||||||||||||
Unamortized Debt (Discount) Premium | (4,000,000) | ||||||||||||||||
Debt Issuance Costs | $ (3,000,000) | ||||||||||||||||
2.375% Senior Notes, due December 1, 2029 (“2029 Senior Notes”) | Treasury lock agreements | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Yield (as a percent) | 3.15% | ||||||||||||||||
Notional amount | $ 500,000,000 | ||||||||||||||||
Weighted-average all-in rate (as a percent) | 2.50% | ||||||||||||||||
Gain (loss) on derivative instruments recognized in other comprehensive income | $ (33,000,000) | ||||||||||||||||
4.375% Senior Notes, due May 15, 2028 ("2028 Senior Notes") | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Interest rate, stated percentage | 4.375% | ||||||||||||||||
Current and long-term debt | $ 696,000,000 | 0 | |||||||||||||||
Price (as a percent) | 99.897% | ||||||||||||||||
Yield (as a percent) | 4.398% | ||||||||||||||||
Principal | $ 700,000,000 | 700,000,000 | |||||||||||||||
Unamortized Debt (Discount) Premium | (1,000,000) | ||||||||||||||||
Debt Issuance Costs | $ (3,000,000) | ||||||||||||||||
3.150% Senior Notes, due March 15, 2027 (“2027 Senior Notes”) | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Interest rate, stated percentage | 3.15% | ||||||||||||||||
Current and long-term debt | $ 499,000,000 | 498,000,000 | |||||||||||||||
Price (as a percent) | 99.963% | ||||||||||||||||
Yield (as a percent) | 3.154% | ||||||||||||||||
Principal | $ 500,000,000 | ||||||||||||||||
Unamortized Debt (Discount) Premium | 0 | ||||||||||||||||
Debt Issuance Costs | $ (1,000,000) | ||||||||||||||||
3.150% Senior Notes, due March 15, 2027 (“2027 Senior Notes”) | Treasury lock agreements | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Yield (as a percent) | 3.18% | ||||||||||||||||
Notional amount | $ 450,000,000 | ||||||||||||||||
Weighted-average all-in rate (as a percent) | 2.37% | ||||||||||||||||
Gain (loss) on derivative instruments recognized in other comprehensive income | $ 2,000,000 | ||||||||||||||||
2.000% Senior Notes, due December 1, 2024 (“2024 Senior Notes”) | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Interest rate, stated percentage | 2% | ||||||||||||||||
Current and long-term debt | $ 498,000,000 | 498,000,000 | |||||||||||||||
Price (as a percent) | 99.421% | ||||||||||||||||
Yield (as a percent) | 2.122% | ||||||||||||||||
Principal | $ 500,000,000 | ||||||||||||||||
Unamortized Debt (Discount) Premium | (1,000,000) | ||||||||||||||||
Debt Issuance Costs | $ (1,000,000) | ||||||||||||||||
2.350% Senior Notes, due August 15, 2022 (“2022 Senior Notes”) | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Interest rate, stated percentage | 2.35% | 2.35% | |||||||||||||||
Current and long-term debt | $ 0 | 250,000,000 | |||||||||||||||
Repayments of senior debt | $ 250,000,000 | ||||||||||||||||
Commercial paper | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Current and long-term debt | 988,000,000 | 0 | |||||||||||||||
Available financing, uncommitted | 1,500,000,000 | ||||||||||||||||
Other long-term borrowings | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Current and long-term debt | 33,000,000 | 10,000,000 | |||||||||||||||
Other current borrowings | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Current and long-term debt | 9,000,000 | 18,000,000 | |||||||||||||||
Available financing, uncommitted | 161,000,000 | ||||||||||||||||
Monthly average amount outstanding | $ 1,000,000 | $ 8,000,000 | |||||||||||||||
Weighted-average interest rate (as a percent) | 5.40% | 10.20% | |||||||||||||||
Revolving credit facility | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Available financing, committed | $ 2,500,000,000 | ||||||||||||||||
4.375% Senior Notes, due June 15, 2045 ("2045 Senior Notes") | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Price (as a percent) | 110.847% | ||||||||||||||||
Yield (as a percent) | 3.753% | ||||||||||||||||
Principal | $ 150,000,000 | ||||||||||||||||
Unamortized Debt (Discount) Premium | 14,000,000 | ||||||||||||||||
Debt Issuance Costs | (2,000,000) | ||||||||||||||||
364-Day Facility | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Maximum borrowing capacity | $ 2,000,000,000 | ||||||||||||||||
Line of credit, terminated | $ 2,000,000,000 | ||||||||||||||||
Senior Notes Due 2028 through 2053 | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Principal | $ 2,000,000,000 | ||||||||||||||||
Revolving Credit Facility Expiring October 2023 | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Maximum borrowing capacity | $ 1,500,000,000 | ||||||||||||||||
Revolving Credit Facility Expiring October 2026 | |||||||||||||||||
Current and long-term debt and available financing | |||||||||||||||||
Maximum borrowing capacity | $ 2,500,000,000 | ||||||||||||||||
Possible additional extended term (in years) | 2 years | ||||||||||||||||
Maximum borrowing capacity for multi-currency loans | $ 750,000,000 | ||||||||||||||||
Annual fee | 1,000,000 | ||||||||||||||||
Amount of cross-default provision | 175,000,000 | ||||||||||||||||
Potential increase in borrowing capacity | $ 500,000,000 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS - Narrative (Details) | 12 Months Ended | |
Jun. 30, 2023 USD ($) agency | Jun. 30, 2022 USD ($) | |
Derivative | ||
Derivative instruments | ||
Minimum number of nationally recognized rating agencies | agency | 2 | |
Maximum exposure to credit risk in the event of non performance by counterparties, gross fair value of contracts in asset positions | $ 98,000,000 | |
Cross-currency swap contracts | ||
Derivative instruments | ||
Accumulated net gain (loss) on derivative instruments in AOCI, before tax | (20,000,000) | |
Fair value hedge gain to be reclassified within 12 Months | $ 14,000,000 | |
2.600% Senior Notes, due April 15, 2030 ("2030 Senior Notes") | LIBOR | ||
Derivative instruments | ||
Number of months for LIBOR calculation | 3 months | |
2.600% Senior Notes, due April 15, 2030 ("2030 Senior Notes") | Interest rate swap contracts | ||
Derivative instruments | ||
Notional amount | $ 700,000,000 | |
1.950% Senior Notes, due March 15, 2031 (“2031 Senior Notes”) | LIBOR | ||
Derivative instruments | ||
Number of months for LIBOR calculation | 3 months | |
1.950% Senior Notes, due March 15, 2031 (“2031 Senior Notes”) | Interest rate swap contracts | ||
Derivative instruments | ||
Notional amount | $ 300,000,000 | |
Derivatives in Cash Flow Hedging Relationships | ||
Derivative instruments | ||
Amount expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months | 25,000,000 | |
Accumulated net gain (loss) on derivative instruments in AOCI, before tax | 79,000,000 | $ 90,000,000 |
Derivatives in Cash Flow Hedging Relationships | Foreign currency forward contracts | ||
Derivative instruments | ||
Notional amount | 1,981,000,000 | |
Derivatives in Fair Value Hedging Relationships | Cross-currency swap contracts | ||
Derivative instruments | ||
Notional amount | 491,000,000 | |
Derivatives in Fair Value Hedging Relationships | 2.600% Senior Notes, due April 15, 2030 ("2030 Senior Notes") | Interest rate swap contracts | ||
Derivative instruments | ||
Notional amount | $ 700,000,000 | |
Derivatives in Fair Value Hedging Relationships | 2.600% Senior Notes, due April 15, 2030 ("2030 Senior Notes") | Interest rate swap contracts | LIBOR | ||
Derivative instruments | ||
Number of months for LIBOR calculation | 3 months | |
Derivatives in Fair Value Hedging Relationships | 1.950% Senior Notes, due March 15, 2031 (“2031 Senior Notes”) | Interest rate swap contracts | ||
Derivative instruments | ||
Notional amount | $ 300,000,000 | |
Derivatives in Fair Value Hedging Relationships | 1.950% Senior Notes, due March 15, 2031 (“2031 Senior Notes”) | Interest rate swap contracts | LIBOR | ||
Derivative instruments | ||
Number of months for LIBOR calculation | 3 months | |
Net investment hedges | Foreign currency forward contracts | ||
Derivative instruments | ||
Notional amount | $ 1,082,000,000 | |
Derivatives Not Designated as Hedging Instruments | ||
Derivative instruments | ||
Notional amount | $ 3,667,000,000 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Derivative Instruments Included in the Consolidated Balance Sheets (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Jun. 30, 2022 |
Derivatives, Fair Value | ||
Asset Derivatives | $ 98 | $ 215 |
Liability Derivatives | 199 | 220 |
Derivative Asset, Total | 98 | 215 |
Derivative Liability, Total | $ 199 | $ 220 |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Prepaid expenses and other current assets | Prepaid expenses and other current assets |
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Other accrued liabilities | Other accrued liabilities |
Derivatives Designated as Hedging Instruments | ||
Derivatives, Fair Value | ||
Asset Derivatives | $ 78 | $ 188 |
Liability Derivatives | 179 | 116 |
Derivatives Designated as Hedging Instruments | Prepaid expenses and other current assets | Net investment hedges | ||
Derivatives, Fair Value | ||
Asset Derivatives | 0 | 107 |
Derivatives Designated as Hedging Instruments | Other accrued liabilities | Net investment hedges | ||
Derivatives, Fair Value | ||
Liability Derivatives | 13 | 0 |
Derivatives Designated as Hedging Instruments | Foreign currency forward contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value | ||
Asset Derivatives | 56 | 57 |
Derivatives Designated as Hedging Instruments | Foreign currency forward contracts | Other accrued liabilities | ||
Derivatives, Fair Value | ||
Liability Derivatives | 16 | 1 |
Derivatives Designated as Hedging Instruments | Cross-currency swap contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value | ||
Asset Derivatives | 22 | 0 |
Derivatives Designated as Hedging Instruments | Cross-currency swap contracts | Other accrued liabilities | ||
Derivatives, Fair Value | ||
Liability Derivatives | 0 | 0 |
Derivatives Designated as Hedging Instruments | Interest rate-related derivatives | Prepaid expenses and other current assets | ||
Derivatives, Fair Value | ||
Asset Derivatives | 0 | 24 |
Derivatives Designated as Hedging Instruments | Interest rate-related derivatives | Other accrued liabilities | ||
Derivatives, Fair Value | ||
Liability Derivatives | 150 | 115 |
Derivatives Not Designated as Hedging Instruments | Foreign currency forward contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value | ||
Asset Derivatives | 20 | 27 |
Derivatives Not Designated as Hedging Instruments | Foreign currency forward contracts | Other accrued liabilities | ||
Derivatives, Fair Value | ||
Liability Derivatives | $ 20 | $ 104 |
DERIVATIVE FINANCIAL INSTRUME_5
DERIVATIVE FINANCIAL INSTRUMENTS - Gain (Loss) on Derivative Financial Instruments (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Gain (loss) on derivative financial instruments | ||
Amount of Gain (Loss) Recognized in OCI on Derivatives | $ 24 | $ 268 |
Amount of Gain (Loss) Reclassified from AOCI into Earnings | 70 | 2 |
Derivatives in Cash Flow Hedging Relationships | ||
Gain (loss) on derivative financial instruments | ||
Amount of Gain (Loss) Recognized in OCI on Derivatives | 59 | 93 |
Amount of Gain (Loss) Reclassified from AOCI into Earnings | 70 | 2 |
Derivatives in Cash Flow Hedging Relationships | Foreign currency forward contracts | ||
Gain (loss) on derivative financial instruments | ||
Amount of Gain (Loss) Recognized in OCI on Derivatives | 57 | 69 |
Derivatives in Cash Flow Hedging Relationships | Foreign currency forward contracts | Net sales | ||
Gain (loss) on derivative financial instruments | ||
Amount of Gain (Loss) Reclassified from AOCI into Earnings | 71 | 3 |
Derivatives in Cash Flow Hedging Relationships | Interest rate-related derivatives | ||
Gain (loss) on derivative financial instruments | ||
Amount of Gain (Loss) Recognized in OCI on Derivatives | 2 | 24 |
Derivatives in Cash Flow Hedging Relationships | Interest rate-related derivatives | Interest expense | ||
Gain (loss) on derivative financial instruments | ||
Amount of Gain (Loss) Reclassified from AOCI into Earnings | (1) | (1) |
Derivatives in Net Investment Hedging Relationships | ||
Gain (loss) on derivative financial instruments | ||
Gain from net investment hedges from amount excluded from effectiveness testing | 26 | 11 |
Derivatives in Net Investment Hedging Relationships | Foreign currency forward contracts | ||
Gain (loss) on derivative financial instruments | ||
Amount of Gain (Loss) Recognized in OCI on Derivatives | (35) | 175 |
Amount of Gain (Loss) Reclassified from AOCI into Earnings | 0 | 0 |
Derivatives in Fair Value Hedging Relationships | Interest rate-related derivatives | Interest expense | ||
Gain (loss) on derivative financial instruments | ||
Amount of Gain (Loss) Recognized in Earnings on Derivatives | 36 | 130 |
Derivatives in Fair Value Hedging Relationships | Interest rate-related derivatives | Interest expense | Derivatives Designated as Hedging Instruments | ||
Gain (loss) on derivative financial instruments | ||
Amount of Gain (Loss) Recognized in Earnings on Derivatives | (36) | (130) |
Derivatives in Fair Value Hedging Relationships | Cross-currency swap contracts | Derivatives Designated as Hedging Instruments | ||
Gain (loss) on derivative financial instruments | ||
Gain from net investment hedges from amount excluded from effectiveness testing | 9 | |
Derivatives in Fair Value Hedging Relationships | Cross-currency swap contracts | Selling, general and administrative | ||
Gain (loss) on derivative financial instruments | ||
Amount of Gain (Loss) Recognized in Earnings on Derivatives | (42) | 0 |
Derivatives in Fair Value Hedging Relationships | Cross-currency swap contracts | Selling, general and administrative | Derivatives Designated as Hedging Instruments | ||
Gain (loss) on derivative financial instruments | ||
Amount of Gain (Loss) Recognized in Earnings on Derivatives | 42 | 0 |
Amount of Gain (Loss) Recognized in Earnings on Derivatives | 42 | 0 |
Derivatives in Fair Value Hedging Relationships | Interest rate swap contracts | Interest expense | Derivatives Designated as Hedging Instruments | ||
Gain (loss) on derivative financial instruments | ||
Amount of Gain (Loss) Recognized in Earnings on Derivatives | $ (36) | $ (130) |
DERIVATIVE FINANCIAL INSTRUME_6
DERIVATIVE FINANCIAL INSTRUMENTS - Cumulative Amount of Fair Value Hedging Gain (Loss) (Details) - Derivatives in Fair Value Hedging Relationships $ in Millions | 12 Months Ended |
Jun. 30, 2023 USD ($) | |
Long-term debt | |
Derivative instruments | |
Carrying Amount of the Hedged Liabilities | $ 843 |
Cumulative Amount of Fair Value Hedging Gain (Loss) Included in the Carrying Amount of the Hedged Liability | (150) |
Intercompany debt | |
Derivative instruments | |
Carrying Amount of the Hedged Liabilities | 0 |
Cumulative Amount of Fair Value Hedging Gain (Loss) Included in the Carrying Amount of the Hedged Liability | $ 42 |
DERIVATIVE FINANCIAL INSTRUME_7
DERIVATIVE FINANCIAL INSTRUMENTS - Effects of Fair Value and Cash Flow Hedging Relationships (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
The effects of fair value and cash flow hedging relationships: | ||
Gain (loss) on cash flow hedge relationships | $ 70 | $ 2 |
Derivatives in Cash Flow Hedging Relationships | ||
The effects of fair value and cash flow hedging relationships: | ||
Gain (loss) on cash flow hedge relationships | 70 | 2 |
Net sales | ||
Derivative instruments | ||
Total amounts of income and expense line items presented in the consolidated statements of earnings in which the effects of fair value and cash flow hedges are recorded | $ 15,910 | $ 17,737 |
The effects of fair value and cash flow hedging relationships: | ||
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Net sales | Net sales |
Net sales | Foreign currency forward contracts | Derivatives in Cash Flow Hedging Relationships | ||
The effects of fair value and cash flow hedging relationships: | ||
Gain (loss) on cash flow hedge relationships | $ 71 | $ 3 |
Selling, general and administrative | ||
Derivative instruments | ||
Total amounts of income and expense line items presented in the consolidated statements of earnings in which the effects of fair value and cash flow hedges are recorded | $ 9,575 | $ 9,888 |
The effects of fair value and cash flow hedging relationships: | ||
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Selling, general and administrative | Selling, general and administrative |
Selling, general and administrative | Cross-currency swap contracts | Derivatives in Fair Value Hedging Relationships | ||
The effects of fair value and cash flow hedging relationships: | ||
Gain (loss) on fair value hedge relationships | $ (42) | $ 0 |
Selling, general and administrative | Cross-currency swap contracts | Derivatives in Fair Value Hedging Relationships | Derivatives Designated as Hedging Instruments | ||
The effects of fair value and cash flow hedging relationships: | ||
Gain (loss) on fair value hedge relationships | 42 | 0 |
Interest expense | ||
Derivative instruments | ||
Total amounts of income and expense line items presented in the consolidated statements of earnings in which the effects of fair value and cash flow hedges are recorded | $ 255 | $ 167 |
The effects of fair value and cash flow hedging relationships: | ||
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Interest expense | Interest expense |
Interest expense | Interest rate-related derivatives | Derivatives in Fair Value Hedging Relationships | ||
The effects of fair value and cash flow hedging relationships: | ||
Gain (loss) on fair value hedge relationships | $ 36 | $ 130 |
Interest expense | Interest rate-related derivatives | Derivatives in Fair Value Hedging Relationships | Derivatives Designated as Hedging Instruments | ||
The effects of fair value and cash flow hedging relationships: | ||
Gain (loss) on fair value hedge relationships | (36) | (130) |
Interest expense | Interest rate-related derivatives | Derivatives in Cash Flow Hedging Relationships | ||
The effects of fair value and cash flow hedging relationships: | ||
Gain (loss) on cash flow hedge relationships | $ (1) | $ (1) |
DERIVATIVE FINANCIAL INSTRUME_8
DERIVATIVE FINANCIAL INSTRUMENTS - Gains and Losses Related to Instruments Not Designated as Hedging Instruments (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Foreign currency forward contracts | Derivatives Not Designated as Hedging Instruments | Selling, general and administrative | ||
Derivative instruments | ||
Amount of Gain (Loss) Recognized in Earnings on Derivatives | $ (10) | $ (35) |
DERIVATIVE FINANCIAL INSTRUME_9
DERIVATIVE FINANCIAL INSTRUMENTS - Schedule of Derivative Asset and Liabilities, Offset (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Jun. 30, 2022 |
Derivative assets | ||
Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet | $ 98 | $ 215 |
Contracts Subject to Netting | (53) | (104) |
Net Amounts of Assets / (Liabilities) | 45 | 111 |
Derivative liabilities | ||
Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet | (199) | (220) |
Contracts Subject to Netting | 53 | 104 |
Net Amounts of Assets / (Liabilities) | (146) | (116) |
Gross Amounts of Assets / (Liabilities) Presented in Balance Sheet | (101) | (5) |
Contracts Subject to Netting | 0 | 0 |
Net Amounts of Assets / (Liabilities) | $ (101) | $ (5) |
FAIR VALUE MEASUREMENTS - Hiera
FAIR VALUE MEASUREMENTS - Hierarchy For Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - Recurring basis - USD ($) $ in Millions | Jun. 30, 2023 | Jun. 30, 2022 |
Assets: | ||
Money market funds | $ 3,241 | $ 961 |
Foreign currency forward contracts | 76 | 191 |
Cross-currency swap contracts | 22 | |
Interest rate-related derivatives | 24 | |
Total | 3,339 | 1,176 |
Liabilities: | ||
Foreign currency forward contracts | 49 | 105 |
Interest rate-related derivatives | 150 | 115 |
DECIEM stock options | 99 | 74 |
Total | 298 | 294 |
Level 1 | ||
Assets: | ||
Money market funds | 3,241 | 961 |
Foreign currency forward contracts | 0 | 0 |
Cross-currency swap contracts | 0 | |
Interest rate-related derivatives | 0 | |
Total | 3,241 | 961 |
Liabilities: | ||
Foreign currency forward contracts | 0 | 0 |
Interest rate-related derivatives | 0 | 0 |
DECIEM stock options | 0 | 0 |
Total | 0 | 0 |
Level 2 | ||
Assets: | ||
Money market funds | 0 | 0 |
Foreign currency forward contracts | 76 | 191 |
Cross-currency swap contracts | 22 | |
Interest rate-related derivatives | 24 | |
Total | 98 | 215 |
Liabilities: | ||
Foreign currency forward contracts | 49 | 105 |
Interest rate-related derivatives | 150 | 115 |
DECIEM stock options | 0 | 0 |
Total | 199 | 220 |
Level 3 | ||
Assets: | ||
Money market funds | 0 | 0 |
Foreign currency forward contracts | 0 | 0 |
Cross-currency swap contracts | 0 | |
Interest rate-related derivatives | 0 | |
Total | 0 | 0 |
Liabilities: | ||
Foreign currency forward contracts | 0 | 0 |
Interest rate-related derivatives | 0 | 0 |
DECIEM stock options | 99 | 74 |
Total | $ 99 | $ 74 |
FAIR VALUE MEASUREMENTS - Estim
FAIR VALUE MEASUREMENTS - Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Jun. 30, 2022 |
Carrying Amount | ||
Non derivatives | ||
Cash and cash equivalents | $ 4,029 | $ 3,957 |
Current and long-term debt | 8,114 | 5,412 |
DECIEM stock options | 99 | 74 |
Deferred consideration payable | 341 | 38 |
Carrying Amount | Cross-currency swap contracts | ||
Derivatives | ||
Derivative assets (liabilities) | 22 | 0 |
Carrying Amount | Foreign currency forward contracts | ||
Derivatives | ||
Derivative assets (liabilities) | 27 | 86 |
Carrying Amount | Interest rate-related derivatives | ||
Derivatives | ||
Derivative assets (liabilities) | (150) | (91) |
Fair Value | ||
Non derivatives | ||
Cash and cash equivalents | 4,029 | 3,957 |
Current and long-term debt | 7,665 | 5,139 |
DECIEM stock options | 99 | 74 |
Deferred consideration payable | 338 | 38 |
Fair Value | Cross-currency swap contracts | ||
Derivatives | ||
Derivative assets (liabilities) | 22 | 0 |
Fair Value | Foreign currency forward contracts | ||
Derivatives | ||
Derivative assets (liabilities) | 27 | 86 |
Fair Value | Interest rate-related derivatives | ||
Derivatives | ||
Derivative assets (liabilities) | $ (150) | $ (91) |
FAIR VALUE MEASUREMENTS - Impai
FAIR VALUE MEASUREMENTS - Impairment Charges (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Estimated fair values of financial instruments | |||
Goodwill, impairment | $ 0 | $ 0 | $ 54 |
Long-lived assets, impairment | 71 | ||
Level 3 | Non recurring basis | |||
Estimated fair values of financial instruments | |||
Goodwill, impairment | 71 | ||
Long-lived assets, impairment | 71 | ||
Asset Impairment Charges, Total | 239 | ||
Level 3 | Non recurring basis | GLAMGLOW | |||
Estimated fair values of financial instruments | |||
Goodwill, impairment | 54 | ||
Level 3 | Non recurring basis | BECCA | |||
Estimated fair values of financial instruments | |||
Goodwill, impairment | 13 | ||
Level 3 | Non recurring basis | Other | |||
Estimated fair values of financial instruments | |||
Goodwill, impairment | 4 | ||
Level 3 | Non recurring basis | Trademarks | |||
Estimated fair values of financial instruments | |||
Impairment charges of indefinite-lived intangible assets | 207 | 241 | |
Level 3 | Non recurring basis | Trademarks | Dr.Jart+ | |||
Estimated fair values of financial instruments | |||
Impairment charges of indefinite-lived intangible assets | 100 | 230 | |
Level 3 | Non recurring basis | Trademarks | Too Faced | |||
Estimated fair values of financial instruments | |||
Impairment charges of indefinite-lived intangible assets | 86 | ||
Level 3 | Non recurring basis | Trademarks | Smashbox | |||
Estimated fair values of financial instruments | |||
Impairment charges of indefinite-lived intangible assets | 21 | ||
Level 3 | Non recurring basis | Trademarks | GLAMGLOW | |||
Estimated fair values of financial instruments | |||
Impairment charges of indefinite-lived intangible assets | 11 | ||
Level 3 | Non recurring basis | Trademarks and Customer Lists | |||
Estimated fair values of financial instruments | |||
Other intangible asset charges | 97 | ||
Level 3 | Non recurring basis | Trademarks and Customer Lists | Smashbox | |||
Estimated fair values of financial instruments | |||
Other intangible asset charges | 11 | ||
Level 3 | Non recurring basis | Trademarks and Customer Lists | GLAMGLOW | |||
Estimated fair values of financial instruments | |||
Other intangible asset charges | 52 | ||
Level 3 | Non recurring basis | Trademarks and Customer Lists | BECCA | |||
Estimated fair values of financial instruments | |||
Other intangible asset charges | 34 | ||
Level 3 | Non recurring basis | Fair Value | |||
Estimated fair values of financial instruments | |||
Goodwill, fair value | 0 | ||
Long-lived assets, fair value | 66 | ||
Fair value | 98 | ||
Level 3 | Non recurring basis | Fair Value | GLAMGLOW | |||
Estimated fair values of financial instruments | |||
Goodwill, fair value | 0 | ||
Level 3 | Non recurring basis | Fair Value | BECCA | |||
Estimated fair values of financial instruments | |||
Goodwill, fair value | 0 | ||
Level 3 | Non recurring basis | Fair Value | Other | |||
Estimated fair values of financial instruments | |||
Goodwill, fair value | 0 | ||
Level 3 | Non recurring basis | Fair Value | Trademarks | |||
Estimated fair values of financial instruments | |||
Trademark, fair value | 511 | 428 | |
Level 3 | Non recurring basis | Fair Value | Trademarks | Dr.Jart+ | |||
Estimated fair values of financial instruments | |||
Trademark, fair value | 325 | 428 | |
Level 3 | Non recurring basis | Fair Value | Trademarks | Too Faced | |||
Estimated fair values of financial instruments | |||
Trademark, fair value | 186 | ||
Level 3 | Non recurring basis | Fair Value | Trademarks | Smashbox | |||
Estimated fair values of financial instruments | |||
Trademark, fair value | $ 0 | ||
Level 3 | Non recurring basis | Fair Value | Trademarks | GLAMGLOW | |||
Estimated fair values of financial instruments | |||
Trademark, fair value | $ 0 | ||
Level 3 | Non recurring basis | Fair Value | Trademarks and Customer Lists | |||
Estimated fair values of financial instruments | |||
Other intangible assets, fair value | 32 | ||
Level 3 | Non recurring basis | Fair Value | Trademarks and Customer Lists | Smashbox | |||
Estimated fair values of financial instruments | |||
Other intangible assets, fair value | 21 | ||
Level 3 | Non recurring basis | Fair Value | Trademarks and Customer Lists | GLAMGLOW | |||
Estimated fair values of financial instruments | |||
Other intangible assets, fair value | 11 | ||
Level 3 | Non recurring basis | Fair Value | Trademarks and Customer Lists | BECCA | |||
Estimated fair values of financial instruments | |||
Other intangible assets, fair value | $ 0 |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) - Foreign currency forward contracts | Jun. 30, 2023 |
LIBOR | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Contract maturities | 12 months |
Swap yield curve | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Contract maturities | 12 months |
FAIR VALUE MEASUREMENTS - Chang
FAIR VALUE MEASUREMENTS - Changes in DECEIM Stock Option Liability (Details) - Level 3 - Recurring basis - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Fair Value Measurement Inputs and Valuation Techniques [Roll Forward] | |||
Changes in fair value, net of foreign currency remeasurements | $ (22) | $ 55 | $ (40) |
DECIEM Stock Option | |||
Fair Value Measurement Inputs and Valuation Techniques [Roll Forward] | |||
DECIEM stock option liability as of June 30, 2022 | 74 | ||
Changes in fair value, net of foreign currency remeasurements | 22 | ||
Translation adjustments and other, net | 3 | ||
DECIEM stock option liability as of June 30, 2023 | $ 99 | $ 74 |
REVENUE RECOGNITION - Narrative
REVENUE RECOGNITION - Narrative (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 |
Disaggregation of Revenue [Line Items] | |||
Allowance for doubtful accounts and customer deductions | $ 30 | $ 27 | |
Allowance for non-credit losses | 14 | 17 | |
Deferred revenue | $ 572 | $ 362 | $ 371 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | |||
Disaggregation of Revenue [Line Items] | |||
Expected timing of revenue recognition | 12 months | ||
Estimated recognition of deferred revenue | $ 323 | ||
License | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | |||
Disaggregation of Revenue [Line Items] | |||
Expected timing of revenue recognition | 1 year | ||
Estimated recognition of deferred revenue | $ 27 | ||
License | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01 | |||
Disaggregation of Revenue [Line Items] | |||
Expected timing of revenue recognition | 1 year | ||
Estimated recognition of deferred revenue | $ 28 | ||
License | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-07-01 | |||
Disaggregation of Revenue [Line Items] | |||
Expected timing of revenue recognition | 1 year | ||
Estimated recognition of deferred revenue | $ 29 | ||
License | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-07-01 | |||
Disaggregation of Revenue [Line Items] | |||
Expected timing of revenue recognition | 1 year | ||
Estimated recognition of deferred revenue | $ 30 | ||
License | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-07-01 | |||
Disaggregation of Revenue [Line Items] | |||
Expected timing of revenue recognition | 1 year | ||
Estimated recognition of deferred revenue | $ 32 | ||
License | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-07-01 | |||
Disaggregation of Revenue [Line Items] | |||
Expected timing of revenue recognition | |||
Estimated recognition of deferred revenue | $ 194 | ||
Marcolin Group | License | |||
Disaggregation of Revenue [Line Items] | |||
Deferred revenue | 250 | ||
Estimated recognition of deferred revenue | $ 235 | ||
Marcolin Group | License | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | |||
Disaggregation of Revenue [Line Items] | |||
Expected timing of revenue recognition | 20 years |
REVENUE RECOGNITION - Changes i
REVENUE RECOGNITION - Changes in Allowance for Credit Losses (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Allowance for credit losses, beginning of period | $ 10 | $ 20 |
Provision (adjustment) for expected credit losses | 6 | (3) |
Write-offs, net & other | 0 | (7) |
Allowance for credit losses, end of period | $ 16 | $ 10 |
REVENUE RECOGNITION - Changes_2
REVENUE RECOGNITION - Changes in Deferred Revenue (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Change in Contract with Customer, Liability [Roll Forward] | ||
Deferred revenue, beginning of period | $ 362 | $ 371 |
Revenue recognized that was included in the deferred revenue balance at the beginning of the period | (343) | (285) |
Revenue deferred during the period | 538 | 284 |
Other | 15 | (8) |
Deferred revenue, end of period | $ 572 | $ 362 |
REVENUE RECOGNITION - Transacti
REVENUE RECOGNITION - Transaction Price Allocated to the Remaining Performance Obligations (Details) $ in Millions | Jun. 30, 2023 USD ($) |
Marcolin Group | License | |
REVENUE RECOGNITION | |
Estimated recognition of deferred revenue | $ 235 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | |
REVENUE RECOGNITION | |
Expected timing of revenue recognition | 12 months |
Estimated recognition of deferred revenue | $ 323 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | License | |
REVENUE RECOGNITION | |
Expected timing of revenue recognition | 1 year |
Estimated recognition of deferred revenue | $ 27 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | Marcolin Group | License | |
REVENUE RECOGNITION | |
Expected timing of revenue recognition | 20 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01 | License | |
REVENUE RECOGNITION | |
Expected timing of revenue recognition | 1 year |
Estimated recognition of deferred revenue | $ 28 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-07-01 | License | |
REVENUE RECOGNITION | |
Expected timing of revenue recognition | 1 year |
Estimated recognition of deferred revenue | $ 29 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-07-01 | License | |
REVENUE RECOGNITION | |
Expected timing of revenue recognition | 1 year |
Estimated recognition of deferred revenue | $ 30 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-07-01 | License | |
REVENUE RECOGNITION | |
Expected timing of revenue recognition | 1 year |
Estimated recognition of deferred revenue | $ 32 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-07-01 | License | |
REVENUE RECOGNITION | |
Expected timing of revenue recognition | |
Estimated recognition of deferred revenue | $ 194 |
REVENUE RECOGNITION - Schedule
REVENUE RECOGNITION - Schedule of Guaranteed Minimum Royalty Amounts (Details) $ in Millions | Jun. 30, 2023 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | |
REVENUE RECOGNITION | |
Estimated recognition of deferred revenue | $ 323 |
Expected timing of revenue recognition | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | License | |
REVENUE RECOGNITION | |
Estimated recognition of deferred revenue | $ 27 |
Expected timing of revenue recognition | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-01 | License | |
REVENUE RECOGNITION | |
Estimated recognition of deferred revenue | $ 28 |
Expected timing of revenue recognition | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-07-01 | License | |
REVENUE RECOGNITION | |
Estimated recognition of deferred revenue | $ 29 |
Expected timing of revenue recognition | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-07-01 | License | |
REVENUE RECOGNITION | |
Estimated recognition of deferred revenue | $ 30 |
Expected timing of revenue recognition | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-07-01 | License | |
REVENUE RECOGNITION | |
Estimated recognition of deferred revenue | $ 32 |
Expected timing of revenue recognition | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-07-01 | License | |
REVENUE RECOGNITION | |
Estimated recognition of deferred revenue | $ 194 |
Expected timing of revenue recognition |
PENSION, DEFERRED COMPENSATIO_3
PENSION, DEFERRED COMPENSATION AND POST-RETIREMENT BENEFIT PLANS - Benefit Obligation, Plan Assets and Amounts Recognized in Balance Sheet (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Change in plan assets: | |||
Fair value of plan assets at beginning of year | $ 1,431 | ||
Fair value of plan assets at end of year | 1,296 | $ 1,431 | |
Amounts recognized in the Balance Sheet consist of: | |||
Accumulated other comprehensive loss (income) | 235 | ||
Pension Plans | Retirement Growth Account | |||
Change in benefit obligation: | |||
Benefit obligation at beginning of year | 811 | ||
Benefit obligation at end of year | 807 | 811 | |
Change in plan assets: | |||
Fair value of plan assets at beginning of year | 838 | ||
Fair value of plan assets at end of year | $ 753 | $ 838 | |
Amounts recognized in the Balance Sheet consist of: | |||
Discount rate (as a percent) | 5.30% | 4.50% | 3% |
Pension Plans | Pension Plans Restoration | |||
Change in benefit obligation: | |||
Benefit obligation at beginning of year | $ 111 | ||
Benefit obligation at end of year | 105 | $ 111 | |
Change in plan assets: | |||
Fair value of plan assets at beginning of year | 0 | ||
Fair value of plan assets at end of year | $ 0 | $ 0 | |
Amounts recognized in the Balance Sheet consist of: | |||
Discount rate (as a percent) | 5.20% | 4.30% | 2.50% |
Pension Plans | U.S. | |||
Change in benefit obligation: | |||
Benefit obligation at beginning of year | $ 922 | $ 1,075 | |
Service cost | 37 | 46 | $ 45 |
Interest cost | 40 | 31 | 31 |
Plan participant contributions | 0 | 0 | |
Actuarial loss (gain) | (30) | (164) | |
Foreign currency exchange rate impact | 0 | 0 | |
Benefits, expenses, taxes and premiums paid | (57) | (66) | |
Plan amendments | 0 | 0 | |
Settlements | 0 | 0 | |
Special termination benefits | 0 | 0 | 0 |
Benefit obligation at end of year | 912 | 922 | 1,075 |
Change in plan assets: | |||
Fair value of plan assets at beginning of year | 838 | 981 | |
Actual return on plan assets | (42) | (95) | |
Foreign exchange impact | 0 | 0 | |
Employer contributions | 14 | 18 | |
Plan participant contributions | 0 | 0 | |
Settlements | 0 | 0 | |
Benefits, expenses, taxes and premiums paid from plan assets | (57) | (66) | |
Fair value of plan assets at end of year | 753 | 838 | 981 |
Funded status | (159) | (84) | |
Amounts recognized in the Balance Sheet consist of: | |||
Other assets | 0 | 26 | |
Other accrued liabilities | (21) | (20) | |
Other noncurrent liabilities | (138) | (90) | |
Funded status | (159) | (84) | |
Accumulated other comprehensive loss (income) | 237 | 172 | |
Net amount recognized | 78 | 88 | |
Pension Plans | International | |||
Change in benefit obligation: | |||
Benefit obligation at beginning of year | 562 | 700 | |
Service cost | 27 | 31 | 36 |
Interest cost | 15 | 10 | 10 |
Plan participant contributions | 8 | 7 | |
Actuarial loss (gain) | (51) | (82) | |
Foreign currency exchange rate impact | (3) | (64) | |
Benefits, expenses, taxes and premiums paid | (32) | (39) | |
Plan amendments | 0 | 1 | |
Settlements | (4) | (6) | |
Special termination benefits | 0 | 4 | 10 |
Benefit obligation at end of year | 522 | 562 | 700 |
Change in plan assets: | |||
Fair value of plan assets at beginning of year | 579 | 681 | |
Actual return on plan assets | (38) | (37) | |
Foreign exchange impact | (7) | (64) | |
Employer contributions | 35 | 38 | |
Plan participant contributions | 8 | 7 | |
Settlements | (4) | (7) | |
Benefits, expenses, taxes and premiums paid from plan assets | (32) | (39) | |
Fair value of plan assets at end of year | 541 | 579 | $ 681 |
Funded status | 19 | 17 | |
Amounts recognized in the Balance Sheet consist of: | |||
Other assets | 115 | 125 | |
Other accrued liabilities | (4) | (3) | |
Other noncurrent liabilities | (92) | (105) | |
Funded status | 19 | 17 | |
Accumulated other comprehensive loss (income) | (9) | (16) | |
Net amount recognized | $ 10 | $ 1 | |
Discount rate (as a percent) | 3.70% | 2.80% | 1.60% |
Other than Pension Plans | |||
Change in benefit obligation: | |||
Benefit obligation at beginning of year | $ 177 | $ 209 | |
Service cost | 1 | 2 | $ 2 |
Interest cost | 8 | 6 | 6 |
Plan participant contributions | 1 | 1 | |
Actuarial loss (gain) | 4 | (29) | |
Foreign currency exchange rate impact | (3) | (2) | |
Benefits, expenses, taxes and premiums paid | (12) | (10) | |
Plan amendments | 0 | 0 | |
Settlements | 0 | 0 | |
Special termination benefits | 0 | 0 | 0 |
Benefit obligation at end of year | 176 | 177 | 209 |
Change in plan assets: | |||
Fair value of plan assets at beginning of year | 14 | 24 | |
Actual return on plan assets | (1) | (1) | |
Foreign exchange impact | 0 | 0 | |
Employer contributions | 0 | 0 | |
Plan participant contributions | 1 | 1 | |
Settlements | 0 | 0 | |
Benefits, expenses, taxes and premiums paid from plan assets | (12) | (10) | |
Fair value of plan assets at end of year | 2 | 14 | $ 24 |
Funded status | (174) | (163) | |
Amounts recognized in the Balance Sheet consist of: | |||
Other assets | 0 | 0 | |
Other accrued liabilities | (9) | (1) | |
Other noncurrent liabilities | (165) | (162) | |
Funded status | (174) | (163) | |
Accumulated other comprehensive loss (income) | 7 | (1) | |
Net amount recognized | $ (167) | $ (164) |
PENSION, DEFERRED COMPENSATIO_4
PENSION, DEFERRED COMPENSATION AND POST-RETIREMENT BENEFIT PLANS - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Pension Plans | U.S. | |||
Components of net periodic benefit cost: | |||
Service cost | $ 37 | $ 46 | $ 45 |
Interest cost | 40 | 31 | 31 |
Expected return on assets | (57) | (55) | (53) |
Amortization of: | |||
Actuarial loss | 3 | 15 | 20 |
Prior service cost | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 |
Special termination benefits | 0 | 0 | 0 |
Net periodic benefit cost | $ 23 | $ 37 | $ 43 |
Assumptions used to determine net periodic benefit cost for the year ended June 30 | |||
Expected return on assets (as a percent) | 6.25% | 6.25% | 6.25% |
Pension Plans | U.S. | Minimum | |||
Assumptions used to determine benefit obligations at June 30 | |||
Discount rate (as a percent) | 5.20% | 4.30% | 2.50% |
Rate of compensation increase (as a percent) | 2.50% | 2.50% | 2.50% |
Assumptions used to determine net periodic benefit cost for the year ended June 30 | |||
Discount rate (as a percent) | 4.30% | 2.50% | 2.50% |
Rate of compensation increase (as a percent) | 2.50% | 2.50% | 2.50% |
Pension Plans | U.S. | Maximum | |||
Assumptions used to determine benefit obligations at June 30 | |||
Discount rate (as a percent) | 5.30% | 4.50% | 3% |
Rate of compensation increase (as a percent) | 8% | 8% | 8% |
Assumptions used to determine net periodic benefit cost for the year ended June 30 | |||
Discount rate (as a percent) | 4.50% | 3% | 3% |
Rate of compensation increase (as a percent) | 8% | 8% | 8% |
Pension Plans | U.S. | Weighted Average | |||
Assumptions used to determine benefit obligations at June 30 | |||
Discount rate (as a percent) | 5.29% | 4.48% | |
Assumptions used to determine net periodic benefit cost for the year ended June 30 | |||
Discount rate (as a percent) | 4.48% | 2.94% | |
Expected return on assets (as a percent) | 6.25% | 6.25% | |
Pension Plans | International | |||
Components of net periodic benefit cost: | |||
Service cost | $ 27 | $ 31 | $ 36 |
Interest cost | 15 | 10 | 10 |
Expected return on assets | (17) | (13) | (14) |
Amortization of: | |||
Actuarial loss | (3) | 2 | 4 |
Prior service cost | (1) | (1) | (1) |
Settlements | 1 | 0 | 0 |
Special termination benefits | 0 | 4 | 10 |
Net periodic benefit cost | $ 22 | $ 33 | $ 45 |
Assumptions used to determine benefit obligations at June 30 | |||
Discount rate (as a percent) | 3.70% | 2.80% | 1.60% |
Pension Plans | International | Minimum | |||
Assumptions used to determine benefit obligations at June 30 | |||
Discount rate (as a percent) | 1% | 0.75% | 0.50% |
Rate of compensation increase (as a percent) | 1.75% | 1.50% | 1% |
Assumptions used to determine net periodic benefit cost for the year ended June 30 | |||
Discount rate (as a percent) | 0.75% | 0.50% | 0.50% |
Expected return on assets (as a percent) | 1.25% | 1.25% | 1.25% |
Rate of compensation increase (as a percent) | 0% | 0% | 1% |
Pension Plans | International | Maximum | |||
Assumptions used to determine benefit obligations at June 30 | |||
Discount rate (as a percent) | 9% | 9% | 7.25% |
Rate of compensation increase (as a percent) | 5% | 5% | 5% |
Assumptions used to determine net periodic benefit cost for the year ended June 30 | |||
Discount rate (as a percent) | 9% | 7.25% | 7% |
Expected return on assets (as a percent) | 9% | 7.25% | 7% |
Rate of compensation increase (as a percent) | 5% | 5% | 5.50% |
Pension Plans | International | Weighted Average | |||
Assumptions used to determine benefit obligations at June 30 | |||
Discount rate (as a percent) | 3.69% | 2.77% | |
Rate of compensation increase (as a percent) | 3.08% | 2.96% | |
Assumptions used to determine net periodic benefit cost for the year ended June 30 | |||
Discount rate (as a percent) | 2.77% | 1.59% | |
Expected return on assets (as a percent) | 2.95% | 2.19% | |
Rate of compensation increase (as a percent) | 2.96% | 2.81% | |
Other than Pension Plans | |||
Components of net periodic benefit cost: | |||
Service cost | $ 1 | $ 2 | $ 2 |
Interest cost | 8 | 6 | 6 |
Expected return on assets | (1) | (1) | (1) |
Amortization of: | |||
Actuarial loss | 0 | 1 | 0 |
Prior service cost | 0 | 0 | 0 |
Settlements | 0 | 0 | 0 |
Special termination benefits | 0 | 0 | 0 |
Net periodic benefit cost | $ 8 | $ 8 | $ 7 |
Assumptions used to determine net periodic benefit cost for the year ended June 30 | |||
Expected return on assets (as a percent) | 6.25% | 6.25% | 6.25% |
Other than Pension Plans | Minimum | |||
Assumptions used to determine benefit obligations at June 30 | |||
Discount rate (as a percent) | 5% | 4.50% | 2.70% |
Assumptions used to determine net periodic benefit cost for the year ended June 30 | |||
Discount rate (as a percent) | 4.50% | 2.70% | 2.70% |
Other than Pension Plans | Maximum | |||
Assumptions used to determine benefit obligations at June 30 | |||
Discount rate (as a percent) | 10.75% | 9.75% | 9% |
Assumptions used to determine net periodic benefit cost for the year ended June 30 | |||
Discount rate (as a percent) | 9.75% | 9% | 9% |
Other than Pension Plans | Weighted Average | |||
Assumptions used to determine benefit obligations at June 30 | |||
Discount rate (as a percent) | 5.19% | 4.68% | |
Assumptions used to determine net periodic benefit cost for the year ended June 30 | |||
Discount rate (as a percent) | 4.68% | 2.92% | |
Expected return on assets (as a percent) | 6.25% | 6.25% |
PENSION, DEFERRED COMPENSATIO_5
PENSION, DEFERRED COMPENSATION AND POST-RETIREMENT BENEFIT PLANS - Assumed Health Care Cost Trend Rates (Details) - Other than Pension Plans | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Assumed health care cost trend rates | ||
Weighted-average interest crediting rates (as a percent) | 4% | 4.02% |
Assumed weighted-average health care cost trend rate for the coming year (as a percent) | 5.54% | |
Weighted-average ultimate trend rate (as a percent) | 4.02% | |
Minimum | ||
Assumed health care cost trend rates | ||
Period after which ultimate trend rate is expected to be reached | 17 years | |
Maximum | ||
Assumed health care cost trend rates | ||
Period after which ultimate trend rate is expected to be reached | 23 years |
PENSION, DEFERRED COMPENSATIO_6
PENSION, DEFERRED COMPENSATION AND POST-RETIREMENT BENEFIT PLANS - Amounts Recognized in AOCI (Before Tax) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
AOCI (before tax) | |||
Translation adjustments | $ 127 | $ 438 | $ (128) |
Total amounts recognized in AOCI | 235 | ||
Net actuarial (gains) losses recognized | |||
AOCI (before tax) | |||
Balance, beginning of year | 156 | ||
Actuarial losses recognized | 79 | ||
Amortization and settlements included in net periodic benefit cost | (1) | ||
Translation adjustments | 1 | ||
Balance, end of year | 235 | 156 | |
Net prior service cost (credit) recognized | |||
AOCI (before tax) | |||
Balance, beginning of year | (1) | ||
Amortization and settlements included in net periodic benefit cost | 1 | ||
Balance, end of year | 0 | (1) | |
Pension Plans | U.S. | |||
AOCI (before tax) | |||
Total amounts recognized in AOCI | 237 | 172 | |
Pension Plans | U.S. | Net actuarial (gains) losses recognized | |||
AOCI (before tax) | |||
Balance, beginning of year | 170 | ||
Actuarial losses recognized | 68 | ||
Amortization and settlements included in net periodic benefit cost | (3) | ||
Translation adjustments | 0 | ||
Balance, end of year | 235 | 170 | |
Pension Plans | U.S. | Net prior service cost (credit) recognized | |||
AOCI (before tax) | |||
Balance, beginning of year | 2 | ||
Amortization and settlements included in net periodic benefit cost | 0 | ||
Balance, end of year | 2 | 2 | |
Pension Plans | International | |||
AOCI (before tax) | |||
Total amounts recognized in AOCI | (9) | (16) | |
Pension Plans | International | Net actuarial (gains) losses recognized | |||
AOCI (before tax) | |||
Balance, beginning of year | (13) | ||
Actuarial losses recognized | 4 | ||
Amortization and settlements included in net periodic benefit cost | 2 | ||
Translation adjustments | 0 | ||
Balance, end of year | (7) | (13) | |
Pension Plans | International | Net prior service cost (credit) recognized | |||
AOCI (before tax) | |||
Balance, beginning of year | (3) | ||
Amortization and settlements included in net periodic benefit cost | 1 | ||
Balance, end of year | (2) | (3) | |
Other than Pension Plans | |||
AOCI (before tax) | |||
Total amounts recognized in AOCI | 7 | (1) | |
Other than Pension Plans | Net actuarial (gains) losses recognized | |||
AOCI (before tax) | |||
Balance, beginning of year | (1) | ||
Actuarial losses recognized | 7 | ||
Amortization and settlements included in net periodic benefit cost | 0 | ||
Translation adjustments | 1 | ||
Balance, end of year | 7 | (1) | |
Other than Pension Plans | Net prior service cost (credit) recognized | |||
AOCI (before tax) | |||
Balance, beginning of year | 0 | ||
Amortization and settlements included in net periodic benefit cost | 0 | ||
Balance, end of year | $ 0 | $ 0 |
PENSION, DEFERRED COMPENSATIO_7
PENSION, DEFERRED COMPENSATION AND POST-RETIREMENT BENEFIT PLANS - Projected and Accumulated Benefit Obligation and Fair Value of Plan Assets (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 |
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | $ 1,296 | $ 1,431 | |
Pension Plans | Retirement Growth Account | |||
Defined Benefit Plan Disclosure | |||
Projected benefit obligation | 807 | 811 | |
Accumulated benefit obligation | 774 | 777 | |
Fair value of plan assets | 753 | 838 | |
Pension Plans | Pension Plans Restoration | |||
Defined Benefit Plan Disclosure | |||
Projected benefit obligation | 105 | 111 | |
Accumulated benefit obligation | 95 | 100 | |
Fair value of plan assets | 0 | 0 | |
Pension Plans | International | |||
Defined Benefit Plan Disclosure | |||
Projected benefit obligation | 522 | 562 | $ 700 |
Accumulated benefit obligation | 467 | 507 | |
Fair value of plan assets | 541 | 579 | 681 |
Defined benefit plans with obligations in excess of plan assets: | |||
Pension plans with projected benefit obligations in excess of the plans' assets, aggregate projected benefit obligations | 275 | 265 | |
Pension plans with projected benefit obligations in excess of the plans' assets, aggregate fair value of plan assets | 179 | 156 | |
Defined benefit plans with accumulated benefit obligations in excess of plan assets: | |||
Pension plans with accumulated benefit obligations in excess of the plans' assets, aggregate accumulated benefit obligations | 84 | 95 | |
Pension plans with accumulated benefit obligations in excess of the plans' assets, aggregate fair value of plan assets | 3 | 6 | |
Other than Pension Plans | |||
Defined Benefit Plan Disclosure | |||
Projected benefit obligation | 176 | 177 | 209 |
Accumulated benefit obligation | 0 | 0 | |
Fair value of plan assets | $ 2 | $ 14 | $ 24 |
PENSION, DEFERRED COMPENSATIO_8
PENSION, DEFERRED COMPENSATION AND POST-RETIREMENT BENEFIT PLANS - Expected Cash Flows for the Company's Pension and Post-Retirement Plans (Details) $ in Millions | Jun. 30, 2023 USD ($) |
Pension Plans | U.S. | |
Expected cash flows for the Company's pension and post-retirement plans | |
Expected employer contributions for year ending June 30, 2024 | $ 72 |
Expected benefit payments for year ending June 30, 2024 | 75 |
Expected benefit payments for year ending June 30, 2025 | 52 |
Expected benefit payments for year ending June 30, 2026 | 53 |
Expected benefit payments for year ending June 30, 2027 | 53 |
Expected benefit payments for year ending June 30, 2028 | 55 |
Expected benefit payments for year ending June 30, Years 2029-2032 | 314 |
Pension Plans | International | |
Expected cash flows for the Company's pension and post-retirement plans | |
Expected employer contributions for year ending June 30, 2024 | 28 |
Expected benefit payments for year ending June 30, 2024 | 39 |
Expected benefit payments for year ending June 30, 2025 | 35 |
Expected benefit payments for year ending June 30, 2026 | 34 |
Expected benefit payments for year ending June 30, 2027 | 33 |
Expected benefit payments for year ending June 30, 2028 | 34 |
Expected benefit payments for year ending June 30, Years 2029-2032 | 163 |
Other than Pension Plans | |
Expected cash flows for the Company's pension and post-retirement plans | |
Expected employer contributions for year ending June 30, 2024 | 9 |
Expected benefit payments for year ending June 30, 2024 | 11 |
Expected benefit payments for year ending June 30, 2025 | 12 |
Expected benefit payments for year ending June 30, 2026 | 12 |
Expected benefit payments for year ending June 30, 2027 | 13 |
Expected benefit payments for year ending June 30, 2028 | 14 |
Expected benefit payments for year ending June 30, Years 2029-2032 | $ 73 |
PENSION, DEFERRED COMPENSATIO_9
PENSION, DEFERRED COMPENSATION AND POST-RETIREMENT BENEFIT PLANS - Company's Target Asset Allocation (Details) | Jun. 30, 2023 |
Pension Plans | U.S. | |
Company's target asset allocation | |
Target asset allocation (as a percent) | 100% |
Pension Plans | U.S. | Equity | |
Company's target asset allocation | |
Target asset allocation (as a percent) | 39% |
Pension Plans | U.S. | Debt securities | |
Company's target asset allocation | |
Target asset allocation (as a percent) | 50% |
Pension Plans | U.S. | Other | |
Company's target asset allocation | |
Target asset allocation (as a percent) | 11% |
Pension Plans | International | |
Company's target asset allocation | |
Target asset allocation (as a percent) | 100% |
Pension Plans | International | Equity | |
Company's target asset allocation | |
Target asset allocation (as a percent) | 19% |
Pension Plans | International | Debt securities | |
Company's target asset allocation | |
Target asset allocation (as a percent) | 59% |
Pension Plans | International | Other | |
Company's target asset allocation | |
Target asset allocation (as a percent) | 22% |
Other than Pension Plans | |
Company's target asset allocation | |
Target asset allocation (as a percent) | 100% |
Other than Pension Plans | Equity | |
Company's target asset allocation | |
Target asset allocation (as a percent) | 39% |
Other than Pension Plans | Debt securities | |
Company's target asset allocation | |
Target asset allocation (as a percent) | 50% |
Other than Pension Plans | Other | |
Company's target asset allocation | |
Target asset allocation (as a percent) | 11% |
PENSION, DEFERRED COMPENSATI_10
PENSION, DEFERRED COMPENSATION AND POST-RETIREMENT BENEFIT PLANS - Fair Values of the Company's Pension and Post-Retirement Plan Assets by Asset Category (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | $ 1,296 | $ 1,431 | |
Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 334 | 384 | |
Level 2 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 698 | 736 | |
Level 3 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 8 | 46 | |
Assets Measured at NAV | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 256 | 265 | |
Cash and cash equivalents | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 2 | 6 | |
Cash and cash equivalents | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 2 | 6 | |
Cash and cash equivalents | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Cash and cash equivalents | Level 3 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Cash and cash equivalents | Assets Measured at NAV | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Short-term investment funds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 15 | 65 | |
Short-term investment funds | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Short-term investment funds | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 12 | 59 | |
Short-term investment funds | Level 3 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Short-term investment funds | Assets Measured at NAV | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 3 | 6 | |
Government and agency securities | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 139 | 103 | |
Government and agency securities | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Government and agency securities | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 139 | 103 | |
Government and agency securities | Level 3 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Government and agency securities | Assets Measured at NAV | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Commingled funds | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | $ 1,022 | 1,096 | |
Commingled funds | Minimum | |||
Defined Benefit Plan Disclosure | |||
Monthly and quarterly redemption notice period | 10 days | ||
Commingled funds | Maximum | |||
Defined Benefit Plan Disclosure | |||
Monthly and quarterly redemption notice period | 30 days | ||
Commingled funds | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | $ 332 | 378 | |
Commingled funds | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 547 | 574 | |
Commingled funds | Level 3 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Commingled funds | Assets Measured at NAV | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 143 | 144 | |
Insurance contracts | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 8 | 46 | |
Insurance contracts | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Insurance contracts | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Insurance contracts | Level 3 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 8 | 46 | $ 54 |
Insurance contracts | Assets Measured at NAV | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Interests in limited partnerships and hedge fund investments | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | $ 110 | 115 | |
Interests in limited partnerships and hedge fund investments | Minimum | |||
Defined Benefit Plan Disclosure | |||
Monthly and quarterly redemption notice period | 30 days | ||
Interests in limited partnerships and hedge fund investments | Maximum | |||
Defined Benefit Plan Disclosure | |||
Monthly and quarterly redemption notice period | 90 days | ||
Interests in limited partnerships and hedge fund investments | Level 1 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | $ 0 | 0 | |
Interests in limited partnerships and hedge fund investments | Level 2 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Interests in limited partnerships and hedge fund investments | Level 3 | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | 0 | 0 | |
Interests in limited partnerships and hedge fund investments | Assets Measured at NAV | |||
Defined Benefit Plan Disclosure | |||
Fair value of plan assets | $ 110 | $ 115 |
PENSION, DEFERRED COMPENSATI_11
PENSION, DEFERRED COMPENSATION AND POST-RETIREMENT BENEFIT PLANS - Changes in Level 3 Plan Assets (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Changes in Level 3 plan assets | ||
Fair value of plan assets at beginning of year | $ 1,431 | |
Actual return on plan assets: | ||
Fair value of plan assets at end of year | 1,296 | $ 1,431 |
Level 3 | ||
Changes in Level 3 plan assets | ||
Fair value of plan assets at beginning of year | 46 | |
Actual return on plan assets: | ||
Fair value of plan assets at end of year | 8 | 46 |
Insurance contracts | ||
Changes in Level 3 plan assets | ||
Fair value of plan assets at beginning of year | 46 | |
Actual return on plan assets: | ||
Fair value of plan assets at end of year | 8 | 46 |
Insurance contracts | Level 3 | ||
Changes in Level 3 plan assets | ||
Fair value of plan assets at beginning of year | 46 | 54 |
Actual return on plan assets: | ||
Relating to assets still held at the reporting date | (2) | (3) |
Purchases, sales, issuances and settlements, net | (35) | 1 |
Foreign exchange impact | (1) | (6) |
Fair value of plan assets at end of year | $ 8 | $ 46 |
PENSION, DEFERRED COMPENSATI_12
PENSION, DEFERRED COMPENSATION AND POST-RETIREMENT BENEFIT PLANS - 401(k) Savings Plan (U.S.) and Deferred Compensation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
401(k) Savings Plan (U.S.) | |||
Minimum period following date of hire after which full-time employees become eligible to participate in the savings plan | 30 days | ||
Minimum service period after which the Company matches a portion of the participant's contributions | 1 year | ||
Company's contribution to contributory defined contribution plan | $ 50 | $ 47 | $ 49 |
Deferred Compensation | |||
Accrued amount of deferred compensation and interest thereon | 58 | 74 | |
Deferred compensation expense (income) to reflect additional deferrals and change in market value (in dollars) | $ (7) | $ (33) | $ 31 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | 12 Months Ended |
Jun. 30, 2023 USD ($) | |
Debt service, Payments Due in Fiscal | |
Debt service | $ 12,133 |
Debt service, Payments Due in Fiscal 2024 | 1,267 |
Debt service, Payments Due in Fiscal 2025 | 761 |
Debt service, Payments Due in Fiscal 2026 | 256 |
Debt service, Payments Due in Fiscal 2027 | 755 |
Debt service, Payments Due in Fiscal 2028 | 939 |
Debt service, Payments Due in Fiscal Thereafter | 8,155 |
Unconditional purchase obligations, Payments Due in Fiscal | |
Unconditional purchase obligations | 2,738 |
Unconditional purchase obligations, Payments Due in Fiscal 2024 | 1,829 |
Unconditional purchase obligations, Payments Due in Fiscal 2025 | 202 |
Unconditional purchase obligations, Payments Due in Fiscal 2026 | 254 |
Unconditional purchase obligations, Payments Due in Fiscal 2027 | 231 |
Unconditional purchase obligations, Payments Due in Fiscal 2028 | 96 |
Unconditional purchase obligations, Payments Due in Fiscal Thereafter | 126 |
Gross unrecognized tax benefits and interest - current, Payments Due in Fiscal | |
Gross unrecognized tax benefits and interest - current | 3 |
Gross unrecognized tax benefits and interest - current, Payments Due in Fiscal 2024 | 3 |
Gross unrecognized tax benefits and interest current due within two years | 0 |
Gross unrecognized tax benefits and interest current due within three years | 0 |
Gross unrecognized tax benefits and interest current due within four years | 0 |
Gross unrecognized tax benefits and interest current due within five years | 0 |
Gross unrecognized tax benefits and interest current due after five years | 0 |
Transition Tax payable, Payments Due in Fiscal | |
Transition Tax payable | 188 |
Transition Tax payable, Payments Due in Fiscal 2024 | 42 |
Transition Tax payable, Payments Due in Fiscal 2025 | 65 |
Transition Tax payable, Payments Due in Fiscal 2026 | 81 |
Transition Tax payable, Payments Due in Fiscal 2027 | 0 |
Transition Tax payable, Payments Due in Fiscal 2028 | 0 |
Transition Tax payable, Payments Due in Fiscal Thereafter | 0 |
Total contractual obligations, Payments Due in Fiscal | |
Total contractual obligations | 15,062 |
Total contractual obligations, Payments Due in Fiscal 2024 | 3,141 |
Total contractual obligations, Payments Due in Fiscal 2025 | 1,028 |
Total contractual obligations, Payments Due in Fiscal 2026 | 591 |
Total contractual obligations, Payments Due in Fiscal 2027 | 986 |
Total contractual obligations, Payments Due in Fiscal 2028 | 1,035 |
Total contractual obligations, Payments Due in Fiscal Thereafter | 8,281 |
Projected interest costs on long-term and current debt, payments Due in fiscal | |
Projected interest costs on long-term and current debt Due in fiscal 2024 | 267 |
Projected interest costs on long-term and current debt Due in fiscal 2025 | 261 |
Projected interest costs on long-term and current debt Due in fiscal 2026 | 256 |
Projected interest costs on long-term and current debt Due in fiscal 2027 | 255 |
Projected interest costs on long-term and current debt Due in fiscal 2028 | 239 |
Projected interest costs on long-term and current debt Due in fiscal Thereafter | 2,555 |
Noncurrent unrecognized tax benefits, accrued interest and penalties | $ 75 |
Transition tax repayment period (in years) | 8 years |
COMMON STOCK - Narrative (Detai
COMMON STOCK - Narrative (Details) | 12 Months Ended | |||||||
Aug. 17, 2023 $ / shares | Feb. 01, 2023 $ / shares | Nov. 01, 2022 $ / shares | Aug. 17, 2022 $ / shares | May 02, 2022 $ / shares | Jun. 30, 2023 vote $ / shares shares | Jun. 30, 2022 $ / shares shares | Jun. 30, 2021 $ / shares | |
Class of Stock | ||||||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||||||
Cash dividends declared per common share (in dollars per share) | $ 2.58 | $ 2.33 | $ 2.07 | |||||
Common Class A | ||||||||
Class of Stock | ||||||||
Common stock, shares authorized | shares | 1,300,000,000 | 1,300,000,000 | ||||||
Common stock, par value (in dollars per share) | $ 0.01 | |||||||
Common stock, votes per share | vote | 1 | |||||||
Remaining authorized share repurchase balance (in shares) | shares | 25,100,000 | |||||||
Cash dividends declared per common share (in dollars per share) | $ 0.66 | $ 0.66 | $ 0.60 | $ 0.66 | ||||
Common Class A | Subsequent Event | ||||||||
Class of Stock | ||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.66 | |||||||
Common Class B | ||||||||
Class of Stock | ||||||||
Common stock, shares authorized | shares | 304,000,000 | 304,000,000 | ||||||
Common stock, par value (in dollars per share) | $ 0.01 | |||||||
Common stock, votes per share | vote | 10 | |||||||
Cash dividends declared per common share (in dollars per share) | $ 0.66 | $ 0.66 | $ 0.60 | $ 0.66 | ||||
Common Class B | Subsequent Event | ||||||||
Class of Stock | ||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.66 |
COMMON STOCK - Common Stock Out
COMMON STOCK - Common Stock Outstanding (Details) - shares | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Common Class A | |||
Increase (Decrease) in Stockholders' Equity | |||
Balance at the beginning of the period (in shares) | 231,513,500 | 233,517,400 | 225,290,200 |
Acquisition of treasury stock (in shares) | (1,220,700) | (7,393,600) | (2,580,500) |
Conversion of Class B to Class A (in shares) | 0 | 2,700,000 | 6,993,400 |
Stock-based compensation (in shares) | 1,785,100 | 2,689,700 | 3,814,300 |
Balance at the end of the period (in shares) | 232,077,900 | 231,513,500 | 233,517,400 |
Common Class B | |||
Increase (Decrease) in Stockholders' Equity | |||
Balance at the beginning of the period (in shares) | 125,542,029 | 128,242,000 | 135,235,400 |
Acquisition of treasury stock (in shares) | 0 | 0 | 0 |
Conversion of Class B to Class A (in shares) | 0 | (2,700,000) | (6,993,400) |
Stock-based compensation (in shares) | 0 | 0 | 0 |
Balance at the end of the period (in shares) | 125,542,029 | 125,542,029 | 128,242,000 |
COMMON STOCK - Summary of Cash
COMMON STOCK - Summary of Cash Dividends Per Share (Details) - $ / shares | 12 Months Ended | ||||||||||
Jun. 15, 2023 | Mar. 15, 2023 | Feb. 01, 2023 | Dec. 15, 2022 | Nov. 01, 2022 | Sep. 15, 2022 | Aug. 17, 2022 | May 02, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Class of Stock | |||||||||||
Cash dividends declared per common share (in dollars per share) | $ 2.58 | $ 2.33 | $ 2.07 | ||||||||
Common Class A | |||||||||||
Class of Stock | |||||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.66 | $ 0.66 | $ 0.60 | $ 0.66 | |||||||
Cash dividends paid per common share (in dollars per share) | $ 0.66 | $ 0.66 | $ 0.66 | $ 0.60 | |||||||
Common Class B | |||||||||||
Class of Stock | |||||||||||
Cash dividends declared per common share (in dollars per share) | $ 0.66 | $ 0.66 | $ 0.60 | $ 0.66 | |||||||
Cash dividends paid per common share (in dollars per share) | $ 0.66 | $ 0.66 | $ 0.66 | $ 0.60 |
STOCK PROGRAMS - Narrative (Det
STOCK PROGRAMS - Narrative (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | ||||||||
May 18, 2021 shares | Sep. 30, 2022 shares | Mar. 31, 2021 USD ($) shares | Feb. 28, 2018 USD ($) tranche shares | Sep. 30, 2015 tranche shares | Jun. 30, 2023 USD ($) tranche plan $ / shares shares | Jun. 30, 2022 USD ($) shares | Jun. 30, 2021 USD ($) shares | Mar. 31, 2022 USD ($) | Sep. 04, 2015 USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Number of active equity compensation plans | plan | 2 | |||||||||
Total unrecognized compensation cost related to unvested stock-based awards | $ | $ 241 | |||||||||
Weighted-average period over which compensation cost related to unvested stock-based awards is expected to be recognized | 1 year | |||||||||
Deferred compensation expense (income) to reflect additional deferrals and change in market value (in dollars) | $ | $ (7) | $ (33) | $ 31 | |||||||
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Selling, general and administrative | Selling, general and administrative | Selling, general and administrative | |||||||
Income tax expense (benefit) | $ | $ 52 | $ 51 | $ 50 | |||||||
Recurring basis | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Stock option liability | $ | 99 | 74 | ||||||||
Level 3 | Recurring basis | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Changes in fair value, net of foreign currency remeasurements | $ | 22 | (55) | 40 | |||||||
Stock option liability | $ | $ 99 | 74 | ||||||||
Company Stock Option Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Number of substantively equal tranches in which stock options grants become exercisable | tranche | 3 | |||||||||
DECIEM 2021 Stock Option Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Vested options (in shares) | 94,101 | |||||||||
Exercised in period (in shares) | 0 | |||||||||
Stock Options | Company Stock Option Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Maximum exercise period for all stock options from the date of grant | 10 years | |||||||||
Service period over which stock option grants generally become exercisable in substantively equal tranches | 4 years | |||||||||
Stock Options | DECIEM 2021 Stock Option Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Service period over which stock option grants generally become exercisable in substantively equal tranches | 2 years | |||||||||
Stock option liability | $ | $ 99 | 74 | $ 104 | |||||||
Stock Options | DECIEM 2021 Stock Option Plan | Minimum | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Number of substantively equal tranches in which stock options grants become exercisable | tranche | 2 | |||||||||
Stock Options | DECIEM 2021 Stock Option Plan | Maximum | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Number of substantively equal tranches in which stock options grants become exercisable | tranche | 7 | |||||||||
Stock Options | DECIEM 2021 Stock Option Plan | DECIEM | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Fair value of stock options | $ | $ 295 | |||||||||
Restricted Stock Units (RSUs) | Employee | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Granted (in shares) | 1,129,200 | |||||||||
Weighted-average grant date fair value (in dollars per share) | $ / shares | $ 246.20 | |||||||||
Vested (in shares) | 744,900 | |||||||||
Restricted Stock Units (RSUs) | Employee | RSU grants scheduled to vest in fiscal 2024 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Vested (in shares) | 400,000 | |||||||||
Restricted Stock Units (RSUs) | Employee | RSU grants scheduled to vest in fiscal 2025 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Vested (in shares) | 300,000 | |||||||||
Restricted Stock Units (RSUs) | Employee | RSU grants scheduled to vest in fiscal 2026 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Vested (in shares) | 400,000 | |||||||||
Performance Share Units | Employee | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Granted (in shares) | 142,500 | |||||||||
Weighted-average grant date fair value (in dollars per share) | $ / shares | $ 237.79 | |||||||||
Vesting period | 3 years | |||||||||
Vested (in shares) | 100,000 | 155,900 | ||||||||
Long-term Performance Share Units | Performance period ending June 30, 2018 and 2019 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Common stock anticipated to be issued (in shares) | 387,848 | |||||||||
Cash Units | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Deferred compensation expense (income) to reflect additional deferrals and change in market value (in dollars) | $ | $ (8) | $ (5) | $ 29 | |||||||
Common Class A | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Number of Class A Common Stock shares authorized under active equity compensation plans (in shares) | 88,800,000 | |||||||||
Number of Class A Common Stock shares reserved and available to be granted pursuant to equity compensation plans (in shares) | 10,100,000 | |||||||||
Common stock anticipated to be issued (in shares) | 1,785,100 | 2,689,700 | 3,814,300 | |||||||
Common Class A | Restricted Stock Units (RSUs) | Employee | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Weighted-average grant date fair value (in dollars per share) | $ / shares | $ 246.20 | |||||||||
Common Class A | Performance Share Units | Employee | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Granted (in shares) | 100,000 | |||||||||
Weighted-average grant date fair value (in dollars per share) | $ / shares | $ 246.15 | |||||||||
Common stock anticipated to be issued (in shares) | 200,000 | |||||||||
Common Class A | Long-term Performance Share Units | Employee | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Common stock anticipated to be issued (in shares) | 195,940 | |||||||||
Common Class A | Long-term Performance Share Units | Employee | Executive | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Granted (in shares) | 68,578 | |||||||||
Payout for performance share units in Class A Common Stock (in shares) | 195,940 | 387,848 | ||||||||
Number of tranches | tranche | 2 | 3 | ||||||||
Grant date fair value (in USD) | $ | $ 20 | $ 27 | $ 30 | |||||||
Common Class A | Long-term Performance Share Units | Employee | Performance periods ending June 30, 2018, 2019 and 2020 | Executive | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Payout for performance share units in Class A Common Stock (in shares) | 129,283 | |||||||||
Common Class A | Long-term Performance Share Units | Employee | Share Based Compensation Award Performance Period 2021 and 2022 | Executive | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Payout for performance share units in Class A Common Stock (in shares) | 97,970 | |||||||||
Common Class A | Long-Term Price-Vested Units | Employee | Executive | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||||||||
Granted (in shares) | 85,927 | |||||||||
Grant date fair value (in USD) | $ | $ 20 | |||||||||
Consecutive trading days | 20 days |
STOCK PROGRAMS - Schedule of St
STOCK PROGRAMS - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award | |||
Compensation expense | $ 267 | $ 331 | $ 327 |
Income tax benefit | $ 52 | $ 51 | $ 50 |
STOCK PROGRAMS - Summary of Sto
STOCK PROGRAMS - Summary of Stock Option Programs (Details) $ / shares in Units, $ in Millions | 12 Months Ended |
Jun. 30, 2023 USD ($) $ / shares shares | |
Company Stock Option Plan | |
Shares | |
Outstanding at the beginning of the year (in shares) | shares | 7,171,800 |
Grant at fair value (in shares) | shares | 1,234,800 |
Exercised (in shares) | shares | (739,000) |
Expired (in shares) | shares | (41,400) |
Forfeited (in shares) | shares | (129,100) |
Outstanding at the end of the period (in shares) | shares | 7,497,100 |
Vested and expected to vest (in shares) | shares | 7,440,500 |
Exercisable (in shares) | shares | 5,398,400 |
Weighted-Average Exercise Price Per Share | |
Outstanding at the beginning of the year (in dollars per share) | $ / shares | $ 169.20 |
Weighted-average grant date fair value (in dollars per share) | $ / shares | 246.01 |
Exercise price (in dollars per share) | $ / shares | 119.56 |
Expired (in dollars per share) | $ / shares | 283.87 |
Forfeited (in dollars per share) | $ / shares | 268.04 |
Outstanding at the end of the period (in dollars per share) | $ / shares | 184.41 |
Vested and expected to vest Weighted-Average Exercise Price (in dollars per share) | $ / shares | 183.78 |
Exercisable Weighted-Average Exercise Price (in dollars per share) | $ / shares | $ 151.96 |
Additional General Disclosures | |
Outstanding Aggregate Intrinsic Value (in dollars) | $ | $ 318 |
Outstanding, Weighted-Average Contractual Life Remaining | 6 years |
Vested and expected to vest, Aggregate Intrinsic Value (in dollars) | $ | $ 318 |
Vested and expected to vest, Weighted-Average Contractual Life Remaining | 6 years |
Exercisable, Aggregate Intrinsic Value (in dollars) | $ | $ 318 |
Exercisable, Weighted-Average Contractual Life Remaining | 5 years |
DECIEM 2021 Stock Option Plan | |
Shares | |
Outstanding at the beginning of the year (in shares) | shares | 94,100,000 |
Grant at fair value (in shares) | shares | 0 |
Exercised (in shares) | shares | 0 |
Expired (in shares) | shares | 0 |
Forfeited (in shares) | shares | 0 |
Outstanding at the end of the period (in shares) | shares | 94,100,000 |
Vested and expected to vest (in shares) | shares | 94,100,000 |
Exercisable (in shares) | shares | 0 |
Weighted-Average Exercise Price Per Share | |
Outstanding at the beginning of the year (in dollars per share) | $ / shares | $ 60.11 |
Weighted-average grant date fair value (in dollars per share) | $ / shares | 0 |
Exercise price (in dollars per share) | $ / shares | |
Expired (in dollars per share) | $ / shares | |
Forfeited (in dollars per share) | $ / shares | |
Outstanding at the end of the period (in dollars per share) | $ / shares | 58.48 |
Vested and expected to vest Weighted-Average Exercise Price (in dollars per share) | $ / shares | 58.48 |
Exercisable Weighted-Average Exercise Price (in dollars per share) | $ / shares | $ 0 |
Additional General Disclosures | |
Outstanding Aggregate Intrinsic Value (in dollars) | $ | $ 104 |
Outstanding, Weighted-Average Contractual Life Remaining | 11 months 1 day |
Vested and expected to vest, Aggregate Intrinsic Value (in dollars) | $ | $ 104 |
Vested and expected to vest, Weighted-Average Contractual Life Remaining | 11 months 1 day |
Exercisable, Aggregate Intrinsic Value (in dollars) | $ | $ 0 |
Exercisable, Weighted-Average Contractual Life Remaining | 0 years |
STOCK PROGRAMS - Summary of Wei
STOCK PROGRAMS - Summary of Weighted-Average Grant Date Fair Value and Intrinsic Value of Stock Options Exercised (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Company Stock Option Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Per-share weighted-average grant date fair value of stock options granted (in dollars per share) | $ 79.09 | $ 85.56 | $ 54.83 |
Intrinsic value of stock options exercised | $ 93 | $ 276 | $ 407 |
DECIEM 2021 Stock Option Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Per-share weighted-average grant date fair value of stock options granted (in dollars per share) | $ 0 | $ 0 | $ 1,557 |
Intrinsic value of stock options exercised | $ 0 | $ 0 | $ 0 |
STOCK PROGRAMS - Summary of Res
STOCK PROGRAMS - Summary of Restricted Stock Units (RSUs) (Details) - Restricted Stock Units (RSUs) - Employee | 12 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Shares | |
Nonvested at the beginning of the period (in shares) | shares | 1,517,900 |
Granted (in shares) | shares | 1,129,200 |
Dividend equivalents (in shares) | shares | 17,500 |
Vested (in shares) | shares | (744,900) |
Forfeited (in shares) | shares | (129,800) |
Nonvested at the end of the period (in shares) | shares | 1,789,900 |
Weighted-Average Grant Date Fair Value | |
Nonvested at the beginning of the period (in dollars per share) | $ / shares | $ 272.26 |
Granted (in dollars per share) | $ / shares | 246.20 |
Dividend equivalents (in dollars per share) | $ / shares | 266.01 |
Vested (in dollars per share) | $ / shares | 250.41 |
Forfeited (in dollars per share) | $ / shares | 269.67 |
Nonvested at the end of the period (in dollars per share) | $ / shares | $ 265.04 |
STOCK PROGRAMS - Summary of Per
STOCK PROGRAMS - Summary of Performance Share Units (PSUs) (Details) - Performance Share Units - Employee - $ / shares | 1 Months Ended | 12 Months Ended | |
Aug. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2023 | |
Other Equity Compensation Plans | |||
Nonvested at the beginning of the period (in shares) | 728,900 | ||
Granted (in shares) | 142,500 | ||
Vested and issued (in shares) | (100,000) | (155,900) | |
Forfeited (in shares) | (350,300) | ||
Nonvested at the end of the period (in shares) | 365,200 | ||
Weighted-Average Grant Date Fair Value | |||
Nonvested at the beginning of the period (in dollars per share) | $ 188.49 | ||
Granted (in dollars per share) | 237.79 | ||
Vested and issued (in dollars per share) | 199.17 | ||
Forfeited (in dollars per share) | 128.30 | ||
Nonvested at the end of the period (in dollars per share) | $ 260.90 | ||
Forecast | |||
Other Equity Compensation Plans | |||
Vested and issued (in shares) | (100,000) |
STOCK PROGRAMS - Schedule of Lo
STOCK PROGRAMS - Schedule of Long-Term Price Vested Units (Details) - Long-Term Price-Vested Units - Executive - Employee - Common Class A | 1 Months Ended |
Mar. 31, 2021 $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Number of Shares per Tranche | 85,927 |
First tranche | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Number of Shares per Tranche | 27,457 |
Stock Price Goal (per Share) | $ / shares | $ 323.03 |
Second tranche | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Number of Shares per Tranche | 28,598 |
Stock Price Goal (per Share) | $ / shares | $ 333.21 |
Third tranche | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Number of Shares per Tranche | 29,872 |
Stock Price Goal (per Share) | $ / shares | $ 343.61 |
STOCK PROGRAMS - Schedule of As
STOCK PROGRAMS - Schedule of Assumptions Used For Award (Details) | 1 Months Ended | 12 Months Ended | |||
May 18, 2021 | Mar. 31, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Long-Term Price-Vested Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Expected volatility (as a percent) | 31.80% | ||||
Dividend yield (as a percent) | 0.80% | ||||
Risk-free rate (as a percent) | 0.40% | ||||
Expected term | 3 years 3 months 18 days | ||||
Stock Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Expected volatility (as a percent) | 30.80% | 27.30% | 26.10% | ||
Dividend yield (as a percent) | 0.80% | 0.70% | 1% | ||
Risk-free rate (as a percent) | 3.40% | 0.90% | 0.50% | ||
Expected term | 6 years | 6 years | 8 years | ||
Stock Options | DECIEM | DECIEM 2021 Stock Option Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Risk-free rate (as a percent) | 0.50% | 4.90% | 3.20% | 0.50% | |
Expected term | 2 years 6 months 14 days | 5 months 15 days | 1 year 5 months 1 day | 2 years 5 months 1 day | |
Operating leverage adjustment | 0.45 | 0.45 | 0.45 | 0.45 | |
Net sales discount rate (as a percent) | 3.30% | 7.80% | 6% | 3.40% | |
EBITDA discount rate (as a percent) | 6.80% | 11.30% | 9.40% | 6.90% | |
EBITDA volatility (as a percent) | 38.30% | 32% | 33.90% | 37.70% | |
Net sales volatility (as a percent) | 17.20% | 14.40% | 15.30% | 17% |
STOCK PROGRAMS - Summary of Sta
STOCK PROGRAMS - Summary of Status of Share Units (Details) - Share Units - Non-employee | 12 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Shares | |
Outstanding at the beginning of the period (in shares) | shares | 121,900 |
Granted (in shares) | shares | 5,400 |
Dividend equivalents (in shares) | shares | 1,300 |
Converted (in shares) | shares | (15,900) |
Outstanding at the end of the period (in shares) | shares | 112,700 |
Weighted-Average Grant Date Fair Value Per Share | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 78.01 |
Weighted-average grant date fair value (in dollars per share) | $ / shares | 233.46 |
Dividend equivalents (in dollars per share) | $ / shares | 229.16 |
Converted (in dollars per share) | $ / shares | 73.57 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 87.84 |
NET EARNINGS ATTRIBUTABLE TO _3
NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE - Reconciliation Between Numerator and Denominator of Basic and Diluted EPS Computations (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Numerator: | |||
Net earnings attributable to The Estée Lauder Companies Inc. | $ 1,006 | $ 2,390 | $ 2,870 |
Denominator: | |||
Weighted-average common shares outstanding- Basic (in shares) | 357.9 | 360 | 362.9 |
Weighted-average common shares outstanding - Diluted (in shares) | 360.9 | 364.9 | 368.2 |
Net earnings attributable to The Estee Lauder Companies Inc. per common share: | |||
Basic (in dollars per share) | $ 2.81 | $ 6.64 | $ 7.91 |
Diluted (in dollars per share) | $ 2.79 | $ 6.55 | $ 7.79 |
Stock Options | |||
Denominator: | |||
Effect (in shares) | 2.3 | 3.7 | 4 |
Performance Share Units | |||
Denominator: | |||
Effect (in shares) | 0.1 | 0.2 | 0.2 |
Restricted Stock Units | |||
Denominator: | |||
Effect (in shares) | 0.6 | 1 | 1.1 |
NET EARNINGS ATTRIBUTABLE TO _4
NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares shares in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Stock Options | |||
Antidilutive Securities Excluded from Computation of Earnings, Per Share | |||
Antidilutive shares excluded from the calculation of diluted earnings per share (in shares) | 2.4 | 0.9 | 0.7 |
Restricted Stock Units and Performance Shares | |||
Antidilutive Securities Excluded from Computation of Earnings, Per Share | |||
Antidilutive shares excluded from the calculation of diluted earnings per share (in shares) | 0.1 | 0.1 | 0.1 |
NET EARNINGS ATTRIBUTABLE TO _5
NET EARNINGS ATTRIBUTABLE TO THE ESTEE LAUDER COMPANIES INC. PER COMMON SHARE - Narrative (Details) - shares shares in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Contingently Issuable Shares | |||
Antidilutive Securities Excluded from Computation of Earnings, Per Share | |||
Antidilutive shares excluded from the calculation of diluted earnings per share (in shares) | 0.4 | 0.7 | 0.9 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE LOSS - Changes in AOCI by Component (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Changes in AOCI, net of tax by component | |||
Beginning of the period | $ 5,590 | $ 6,091 | |
Amount of (Gain) Loss Reclassified from AOCI into Earnings | (70) | (2) | |
Benefit (provision) for deferred income taxes | 51 | (61) | $ (10) |
End of the period | 5,585 | 5,590 | 6,091 |
Accumulated other comprehensive loss | (934) | (762) | |
AOCI | |||
Changes in AOCI, net of tax by component | |||
Beginning of the period | (762) | (470) | (665) |
End of the period | (934) | (762) | (470) |
Accumulated other comprehensive loss | (934) | (762) | (470) |
Net derivative instruments | |||
Changes in AOCI, net of tax by component | |||
Beginning of the period | 68 | (2) | 14 |
Other comprehensive income (loss), before reclassifications, before tax | 48 | 93 | (45) |
Benefit (provision) for deferred income taxes | (11) | (21) | 10 |
Benefit (provision) for deferred income taxes on reclassification | 18 | 0 | (5) |
End of the period | 44 | 68 | (2) |
Net derivative instruments | Foreign currency forward contracts | |||
Changes in AOCI, net of tax by component | |||
Amount of (Gain) Loss Reclassified from AOCI into Earnings | (71) | (3) | 22 |
Net derivative instruments | Interest rate-related derivatives | |||
Changes in AOCI, net of tax by component | |||
Amount of (Gain) Loss Reclassified from AOCI into Earnings | 1 | 1 | 2 |
Net derivative instruments | Cross-currency swap contracts | |||
Changes in AOCI, net of tax by component | |||
Amount of (Gain) Loss Reclassified from AOCI into Earnings | (9) | 0 | 0 |
Amounts Included in Net Periodic Benefit Cost | |||
Changes in AOCI, net of tax by component | |||
Beginning of the period | (114) | (179) | (244) |
Benefit (provision) for deferred income taxes | 17 | (18) | (12) |
End of the period | (177) | (114) | (179) |
Net actuarial (gains) losses recognized | |||
Changes in AOCI, net of tax by component | |||
Other comprehensive income (loss), before reclassifications, before tax | (79) | 71 | 60 |
Amount of (Gain) Loss Reclassified from AOCI into Earnings | 0 | 18 | 24 |
Net prior service cost (credit) recognized | |||
Changes in AOCI, net of tax by component | |||
Other comprehensive income (loss), before reclassifications, before tax | 0 | (1) | (1) |
Amount of (Gain) Loss Reclassified from AOCI into Earnings | (1) | (1) | (1) |
Translation adjustments | |||
Changes in AOCI, net of tax by component | |||
Other comprehensive income (loss), before reclassifications, before tax | (1) | 0 | 0 |
Settlements | |||
Changes in AOCI, net of tax by component | |||
Amount of (Gain) Loss Reclassified from AOCI into Earnings | 1 | 0 | 0 |
Provision for deferred income taxes on reclassification | |||
Changes in AOCI, net of tax by component | |||
Benefit (provision) for deferred income taxes on reclassification | 0 | (4) | (5) |
Translation adjustments | |||
Changes in AOCI, net of tax by component | |||
Beginning of the period | (716) | (289) | (435) |
Other comprehensive income (loss), before reclassifications, before tax | (112) | (409) | 145 |
Amount of (Gain) Loss Reclassified from AOCI into Earnings | 0 | 0 | (1) |
Benefit (provision) for deferred income taxes | 27 | (18) | 2 |
End of the period | $ (801) | $ (716) | $ (289) |
STATEMENT OF CASH FLOWS (Detail
STATEMENT OF CASH FLOWS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Cash: | |||
Cash paid during the year for interest | $ 235 | $ 163 | $ 166 |
Cash paid during the year for income taxes | 665 | 760 | 664 |
Non-cash investing and financing activities: | |||
Capitalized interest and asset retirement obligations incurred | 13 | 6 | 3 |
Deferred consideration payable | 300 | 38 | 0 |
Property, plant and equipment accrued but unpaid | $ 246 | $ 106 | $ 97 |
SEGMENT DATA AND RELATED INFO_3
SEGMENT DATA AND RELATED INFORMATION - Narrative (Details) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 USD ($) segment | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | |
SEGMENT DATA AND RELATED INFORMATION | |||
Number of operating segments | segment | 1 | ||
Net sales | $ 15,910 | $ 17,737 | $ 16,215 |
Long-lived assets | 4,976 | 4,599 | 4,470 |
The Americas | |||
SEGMENT DATA AND RELATED INFORMATION | |||
Long-lived assets | 2,593 | 2,609 | 2,521 |
Europe, the Middle East & Africa | |||
SEGMENT DATA AND RELATED INFORMATION | |||
Long-lived assets | 1,202 | 1,133 | 1,314 |
U.S. | |||
SEGMENT DATA AND RELATED INFORMATION | |||
Net sales | 3,848 | 4,009 | 3,356 |
Long-lived assets | $ 2,136 | $ 2,153 | $ 2,075 |
Mainland China | Geographic Concentration Risk | Revenue from Contract with Customer Benchmark | |||
SEGMENT DATA AND RELATED INFORMATION | |||
Percentage of net sales (as a percent) | 28% | 34% | 36% |
Korea | Geographic Concentration Risk | Revenue from Contract with Customer Benchmark | |||
SEGMENT DATA AND RELATED INFORMATION | |||
Percentage of net sales (as a percent) | 10% | 11% |
SEGMENT DATA AND RELATED INFO_4
SEGMENT DATA AND RELATED INFORMATION - Schedule of Segment Data and Related Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Net sales: | |||
Net sales before returns associated with restructuring and other activities | $ 15,937 | $ 17,741 | $ 16,229 |
Charges associated with restructuring and other activities | (85) | (144) | (228) |
Net sales | 15,910 | 17,737 | 16,215 |
Depreciation and amortization: | |||
Depreciation and amortization | 744 | 727 | 651 |
Operating income (loss) before charges associated with restructuring and other activities: | |||
Operating income (loss) before charges associated with restructuring activities | 1,594 | 3,314 | 2,846 |
Operating income | 1,509 | 3,170 | 2,618 |
Reconciliation: | |||
Interest expense | (255) | (167) | (173) |
Interest income and investment income, net | 131 | 30 | 51 |
Other components of net periodic benefit cost | 12 | 2 | (12) |
Other income, net | 0 | 1 | 847 |
Earnings before income taxes | 1,397 | 3,036 | 3,331 |
ASSETS | |||
Total assets | 23,415 | 20,910 | 21,971 |
Long-lived assets | |||
Long-lived assets | 4,976 | 4,599 | 4,470 |
Sales Returns (included in Net Sales) | |||
Net sales: | |||
Charges associated with restructuring and other activities | (27) | (4) | (14) |
The Americas | |||
Net sales: | |||
Net sales before returns associated with restructuring and other activities | 4,518 | 4,623 | 3,797 |
Operating income (loss) before charges associated with restructuring and other activities: | |||
Operating income (loss) before charges associated with restructuring activities | (73) | 1,159 | 518 |
ASSETS | |||
Total assets | 13,292 | 10,989 | 11,387 |
Long-lived assets | |||
Long-lived assets | 2,593 | 2,609 | 2,521 |
Europe, the Middle East & Africa | |||
Net sales: | |||
Net sales before returns associated with restructuring and other activities | 6,225 | 7,681 | 6,946 |
Operating income (loss) before charges associated with restructuring and other activities: | |||
Operating income (loss) before charges associated with restructuring activities | 843 | 1,360 | 1,335 |
ASSETS | |||
Total assets | 5,985 | 5,781 | 5,907 |
Long-lived assets | |||
Long-lived assets | 1,202 | 1,133 | 1,314 |
Asia/Pacific | |||
Net sales: | |||
Net sales before returns associated with restructuring and other activities | 5,194 | 5,437 | 5,486 |
Operating income (loss) before charges associated with restructuring and other activities: | |||
Operating income (loss) before charges associated with restructuring activities | 824 | 795 | 993 |
ASSETS | |||
Total assets | 4,138 | 4,140 | 4,677 |
Long-lived assets | |||
Long-lived assets | 1,181 | 857 | 635 |
Skin care | |||
Net sales: | |||
Net sales before returns associated with restructuring and other activities | 8,202 | 9,886 | 9,484 |
Depreciation and amortization: | |||
Depreciation and amortization | 383 | 404 | 330 |
Operating income (loss) before charges associated with restructuring and other activities: | |||
Operating income (loss) before charges associated with restructuring activities | 1,204 | 2,753 | 3,036 |
Makeup | |||
Net sales: | |||
Net sales before returns associated with restructuring and other activities | 4,516 | 4,667 | 4,203 |
Depreciation and amortization: | |||
Depreciation and amortization | 211 | 213 | 210 |
Operating income (loss) before charges associated with restructuring and other activities: | |||
Operating income (loss) before charges associated with restructuring activities | (22) | 133 | (384) |
Fragrance | |||
Net sales: | |||
Net sales before returns associated with restructuring and other activities | 2,512 | 2,508 | 1,926 |
Depreciation and amortization: | |||
Depreciation and amortization | 117 | 89 | 78 |
Operating income (loss) before charges associated with restructuring and other activities: | |||
Operating income (loss) before charges associated with restructuring activities | 440 | 456 | 215 |
Hair care | |||
Net sales: | |||
Net sales before returns associated with restructuring and other activities | 653 | 631 | 571 |
Depreciation and amortization: | |||
Depreciation and amortization | 31 | 20 | 31 |
Operating income (loss) before charges associated with restructuring and other activities: | |||
Operating income (loss) before charges associated with restructuring activities | (34) | (28) | (19) |
Other | |||
Net sales: | |||
Net sales before returns associated with restructuring and other activities | 54 | 49 | 45 |
Depreciation and amortization: | |||
Depreciation and amortization | 2 | 1 | 2 |
Operating income (loss) before charges associated with restructuring and other activities: | |||
Operating income (loss) before charges associated with restructuring activities | $ 6 | $ 0 | $ (2) |
SCHEDULE II - VALUATION AND Q_2
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Reserves deducted in the balance sheet from the assets to which they apply: | |||
Change in opening balance | $ (5,585) | $ (5,590) | $ (6,091) |
Cumulative effect of adoption of new accounting standards | Accounting Standards Update 2016-13 | |||
Reserves deducted in the balance sheet from the assets to which they apply: | |||
Change in opening balance | 4 | ||
Allowance for doubtful accounts and customer deductions: | |||
Reserves deducted in the balance sheet from the assets to which they apply: | |||
Balance at Beginning of Period | 27 | 40 | 63 |
Additions Charged to Costs and Expenses | 21 | 5 | (5) |
Additions Charged to Other Accounts | 0 | 0 | 4 |
Deductions | 18 | 18 | 22 |
Balance at End of Period | 30 | 27 | 40 |
Deferred tax valuation allowance: | |||
Reserves deducted in the balance sheet from the assets to which they apply: | |||
Balance at Beginning of Period | 185 | 168 | 107 |
Additions Charged to Costs and Expenses | 36 | 41 | 61 |
Additions Charged to Other Accounts | 0 | 0 | 1 |
Deductions | 21 | 24 | 1 |
Balance at End of Period | $ 200 | $ 185 | $ 168 |