Estée Lauder Cos. Inc. (EL)

Estée Lauder calculates and provides for income taxes in each tax jurisdiction in which it operates. As the application of various tax laws relevant to Estée Lauder’s global business is often uncertain, significant judgment is required in determining Estée Lauder’s annual tax expense and in evaluating Estée Lauder’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.

Estée Lauder accounts for income taxes using an asset and liability approach that requires the recognition of 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. Estée Lauder 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 Estée Lauder’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. With respect to the new global intangible low-taxed income (“GILTI”) provision, companies are permitted to make an accounting policy election to record taxes as period costs as incurred or to factor such amounts into the measurement of deferred taxes. Estée Lauder has elected to record these taxes as period costs as they are incurred.

Estée Lauder provides tax reserves for U.S. federal, state, local and foreign tax exposures relating to periods subject to audit. The development of reserves for these exposures requires judgments about tax issues, potential outcomes and timing, and is a subjective critical estimate. Estée Lauder assesses its tax positions and records tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances, and information available at the reporting dates. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, Estée Lauder has recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon settlement with a tax authority that has full knowledge of all relevant information. For those tax positions where it is more-likely-than-not that a tax benefit will not be sustained, no tax benefit has been recognized in the consolidated financial statements. Estée Lauder classifies applicable interest and penalties as a component of the provision for income taxes. Although the outcome relating to these exposures is uncertain, in management’s opinion adequate provisions for income taxes have been made for estimable potential liabilities emanating from these exposures. If actual outcomes differ materially from these estimates, they could have a material impact on Estée Lauder’s consolidated net earnings.

Source: 10-K (filing date: 2019-08-23).

Estée Lauder Cos. Inc., income tax expense (benefit), continuing operations

US$ in millions

	12 months ended	Jun 30, 2019		Jun 30, 2018		Jun 30, 2017		Jun 30, 2016		Jun 30, 2015		Jun 30, 2014
	Federal
	Foreign
	State and local
	Current
	Federal
	Foreign
	State and local
	Deferred
	Provision for income taxes

Based on: 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20), 10-K (filing date: 2014-08-20).

Estée Lauder Cos. Inc., effective income tax rate (EITR) reconciliation

		Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016	Jun 30, 2015	Jun 30, 2014
	Provision for income taxes at statutory rate
	State and local income taxes, net of federal tax benefit
	Stock-based compensation arrangements, excess tax benefits
	Taxation of foreign operations
	China deferred tax asset valuation allowance reversal
	Income tax reserve adjustments
	Other, net
	Effective tax rate, before TCJA net income tax impact
	TCJA net income tax impact
	Effective tax rate

Based on: 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20), 10-K (filing date: 2014-08-20).

Estée Lauder Cos. Inc., components of deferred tax assets and liabilities

US$ in millions

		Jun 30, 2019		Jun 30, 2018		Jun 30, 2017		Jun 30, 2016		Jun 30, 2015		Jun 30, 2014
	Compensation related expenses
	Inventory obsolescence and other inventory related reserves
	Retirement benefit obligations
	Various accruals not currently deductible
	Net operating loss, credit and other carryforwards
	Unrecognized state tax benefits and accrued interest
	Other differences between tax and financial statement values
	Deferred tax assets, gross
	Valuation allowance for deferred tax assets
	Deferred tax assets
	Depreciation and amortization
	Other differences between tax and financial statement values
	Deferred tax liabilities
	Net deferred tax assets (liabilities)

Based on: 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20), 10-K (filing date: 2014-08-20).

Estée Lauder Cos. Inc., deferred tax assets and liabilities, classification

US$ in millions

		Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016	Jun 30, 2015	Jun 30, 2014
	Current net deferred tax assets (included in Prepaid expenses and other current assets)
	Noncurrent net deferred tax assets (included in Other assets)

Based on: 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20), 10-K (filing date: 2014-08-20).

Estée Lauder Cos. Inc., adjustments to financial data

US$ in millions

		Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016	Jun 30, 2015	Jun 30, 2014
	Adjustment to Current Assets
	Current assets (as reported)
	Less: Current deferred tax assets, net
	Current assets (adjusted)
	Adjustment to Total Assets
	Total assets (as reported)
	Less: Current deferred tax assets, net
	Less: Noncurrent deferred tax assets, net
	Total assets (adjusted)
	Adjustment to Stockholders’ Equity, The Estée Lauder Companies Inc.
	Stockholders’ equity, The Estée Lauder Companies Inc. (as reported)
	Less: Net deferred tax assets (liabilities)
	Stockholders’ equity, The Estée Lauder Companies Inc. (adjusted)
	Adjustment to Net Earnings Attributable To The Estée Lauder Companies Inc.
	Net earnings attributable to The Estée Lauder Companies Inc. (as reported)
	Add: Deferred income tax expense (benefit)
	Net earnings attributable to The Estée Lauder Companies Inc. (adjusted)

Based on: 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20), 10-K (filing date: 2014-08-20).

Estée Lauder Cos. Inc., Financial Data: Reported vs. Adjusted

Estée Lauder Cos. Inc., adjusted ratios

		Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016	Jun 30, 2015	Jun 30, 2014
	Current Ratio
	Reported current ratio
	Adjusted current ratio
	Net Profit Margin
	Reported net profit margin
	Adjusted net profit margin
	Total Asset Turnover
	Reported total asset turnover
	Adjusted total asset turnover
	Financial Leverage
	Reported financial leverage
	Adjusted financial leverage
	Return on Equity (ROE)
	Reported ROE
	Adjusted ROE
	Return on Assets (ROA)
	Reported ROA
	Adjusted ROA

Based on: 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20), 10-K (filing date: 2014-08-20).

Estée Lauder Cos. Inc., Ratios: Reported vs. Adjusted

		Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016	Jun 30, 2015	Jun 30, 2014
	As Reported
	Selected Financial Data (US$ in millions)
	Current assets
	Current liabilities
	Ratio
	Current ratio1
	Adjusted for Deferred Taxes
	Selected Financial Data (US$ in millions)
	Adjusted current assets
	Current liabilities
	Ratio
	Adjusted current ratio2

Based on: 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20), 10-K (filing date: 2014-08-20).

2019 Calculations

		Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016	Jun 30, 2015	Jun 30, 2014
	As Reported
	Selected Financial Data (US$ in millions)
	Net earnings attributable to The Estée Lauder Companies Inc.
	Net sales
	Ratio
	Net profit margin1
	Adjusted for Deferred Taxes
	Selected Financial Data (US$ in millions)
	Adjusted net earnings attributable to The Estée Lauder Companies Inc.
	Net sales
	Ratio
	Adjusted net profit margin2

Based on: 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20), 10-K (filing date: 2014-08-20).

2019 Calculations

		Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016	Jun 30, 2015	Jun 30, 2014
	As Reported
	Selected Financial Data (US$ in millions)
	Net sales
	Total assets
	Ratio
	Total asset turnover1
	Adjusted for Deferred Taxes
	Selected Financial Data (US$ in millions)
	Net sales
	Adjusted total assets
	Ratio
	Adjusted total asset turnover2

Based on: 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20), 10-K (filing date: 2014-08-20).

2019 Calculations

		Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016	Jun 30, 2015	Jun 30, 2014
	As Reported
	Selected Financial Data (US$ in millions)
	Total assets
	Stockholders’ equity, The Estée Lauder Companies Inc.
	Ratio
	Financial leverage1
	Adjusted for Deferred Taxes
	Selected Financial Data (US$ in millions)
	Adjusted total assets
	Adjusted stockholders’ equity, The Estée Lauder Companies Inc.
	Ratio
	Adjusted financial leverage2

Based on: 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20), 10-K (filing date: 2014-08-20).

2019 Calculations

		Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016	Jun 30, 2015	Jun 30, 2014
	As Reported
	Selected Financial Data (US$ in millions)
	Net earnings attributable to The Estée Lauder Companies Inc.
	Stockholders’ equity, The Estée Lauder Companies Inc.
	Ratio
	ROE1
	Adjusted for Deferred Taxes
	Selected Financial Data (US$ in millions)
	Adjusted net earnings attributable to The Estée Lauder Companies Inc.
	Adjusted stockholders’ equity, The Estée Lauder Companies Inc.
	Ratio
	Adjusted ROE2

Based on: 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20), 10-K (filing date: 2014-08-20).

2019 Calculations

		Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016	Jun 30, 2015	Jun 30, 2014
	As Reported
	Selected Financial Data (US$ in millions)
	Net earnings attributable to The Estée Lauder Companies Inc.
	Total assets
	Ratio
	ROA1
	Adjusted for Deferred Taxes
	Selected Financial Data (US$ in millions)
	Adjusted net earnings attributable to The Estée Lauder Companies Inc.
	Adjusted total assets
	Ratio
	Adjusted ROA2

Based on: 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20), 10-K (filing date: 2014-08-20).

2019 Calculations