# EDGAR Filing Document

**Accession Number:** 0001001250
**File Stem:** 0001001250-23-000010
**Filing Date:** 2023-2
**Character Count:** 545555
**Document Hash:** d82f2baf5f248584e4c6ca52d3f73709
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001001250-23-000010.hdr.sgml**: 20230202

**ACCESSION NUMBER**: 0001001250-23-000010

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 228

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230202

**DATE AS OF CHANGE**: 20230202

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** ESTEE LAUDER COMPANIES INC
- **CENTRAL INDEX KEY:** 0001001250
- **STANDARD INDUSTRIAL CLASSIFICATION:** PERFUMES, COSMETICS & OTHER TOILET PREPARATIONS [2844]
- **IRS NUMBER:** 112408943
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0630

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-14064
- **FILM NUMBER:** 23579583

**BUSINESS ADDRESS:**
- **STREET 1:** 767 FIFTH AVE
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10153
- **BUSINESS PHONE:** 2125724200

**MAIL ADDRESS:**
- **STREET 1:** 767 FIFTH AVE
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10153

?xml version="1.0" ? el-20221231

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**______________________________________________________________________**

**FORM 10-Q** 

**(Mark One)**

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

**For the quarterly period ended December 31, 2022**

**or**

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

**For the transition period from&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; to**

**Commission file number 1-14064** 

**The Estée Lauder Companies Inc.**

(Exact name of registrant as specified in its charter)

---

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

---

**212-572-4200** 

(Registrant's telephone number, including area code)

**Not Applicable**

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

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

---

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

---

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

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

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

---

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

---

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

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

At January 26, 2023, 231,678,169 shares of the registrant's Class A Common Stock, $.01 par value, and 125,542,029 shares of the registrant's Class B Common Stock, $.01 par value, were outstanding.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**INDEX**

---

| | |
|:---|:---|
| | Page |
| [Part I. Financial Information](#id29ccd98496a40a38c32a6814c421b8c_10) |  |
| [Item 1. Financial Statements (Unaudited)](#id29ccd98496a40a38c32a6814c421b8c_13) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Consolidated Statements of Earnings](#id29ccd98496a40a38c32a6814c421b8c_16)[—](#id29ccd98496a40a38c32a6814c421b8c_16)Three and Six Months Ended December 31, 2022[and](#id29ccd98496a40a38c32a6814c421b8c_16)2021 | [2](#id29ccd98496a40a38c32a6814c421b8c_16) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Consolidated Statements of Comprehensive Incom](#id29ccd98496a40a38c32a6814c421b8c_19)[e](#id29ccd98496a40a38c32a6814c421b8c_19)[—](#id29ccd98496a40a38c32a6814c421b8c_19)Three and Six Months Ended December 31, 2022[and](#id29ccd98496a40a38c32a6814c421b8c_19)2021 | [3](#id29ccd98496a40a38c32a6814c421b8c_19) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Consolidated Balance Sheets —](#id29ccd98496a40a38c32a6814c421b8c_22)December 31, 2022[and](#id29ccd98496a40a38c32a6814c421b8c_22)June 30, 2022[(Audited)](#id29ccd98496a40a38c32a6814c421b8c_22) | [4](#id29ccd98496a40a38c32a6814c421b8c_22) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Consolidated Statements of Cash Flows —](#id29ccd98496a40a38c32a6814c421b8c_25)Six Months Ended December 31, 2022[and](#id29ccd98496a40a38c32a6814c421b8c_25)2021 | [5](#id29ccd98496a40a38c32a6814c421b8c_25) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Notes to Consolidated Financial Statements](#id29ccd98496a40a38c32a6814c421b8c_28) | [6](#id29ccd98496a40a38c32a6814c421b8c_28) |
| [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](#id29ccd98496a40a38c32a6814c421b8c_76) | [35](#id29ccd98496a40a38c32a6814c421b8c_76) |
| [Item 3. Quantitative and Qualitative Disclosures About Market Risk](#id29ccd98496a40a38c32a6814c421b8c_127) | [64](#id29ccd98496a40a38c32a6814c421b8c_127) |
| [Item 4. Controls and Procedures](#id29ccd98496a40a38c32a6814c421b8c_130) | [64](#id29ccd98496a40a38c32a6814c421b8c_130) |
| [Part II. Other Information](#id29ccd98496a40a38c32a6814c421b8c_133) |  |
| [Item 1. Legal Proceedings](#id29ccd98496a40a38c32a6814c421b8c_136) | [64](#id29ccd98496a40a38c32a6814c421b8c_136) |
| [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](#id29ccd98496a40a38c32a6814c421b8c_139) | [65](#id29ccd98496a40a38c32a6814c421b8c_139) |
| [Item 6. Exhibits](#id29ccd98496a40a38c32a6814c421b8c_142) | [65](#id29ccd98496a40a38c32a6814c421b8c_142) |
| [Signatures](#id29ccd98496a40a38c32a6814c421b8c_145) | [66](#id29ccd98496a40a38c32a6814c421b8c_145) |

---

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**PART I. FINANCIAL INFORMATION**

**Item 1. *Financial Statements.***

**THE ESTÉE LAUDER COMPANIES INC.**

**CONSOLIDATED STATEMENTS OF EARNINGS**

**(Unaudited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>(In millions, except per share data) | **2022** | **2021** | **2022** | **2021** |
| **Net sales** | $4620 | $5539 | $8550 | $9931 |
| Cost of sales | 1219 | 1223 | 2242 | 2280 |
| **Gross profit** | 3401 | 4316 | 6308 | 7651 |
| **Operating expenses** |  |  |  |  |
| &nbsp;&nbsp;Selling, general and administrative | 2630 | 2885 | 4874 | 5279 |
| &nbsp;&nbsp;Restructuring and other charges | 8 | 13 | 10 | 19 |
| &nbsp;&nbsp;&nbsp;Impairment of other intangible assets | 207 |  | 207 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total operating expenses** | 2845 | 2898 | 5091 | 5298 |
| **Operating income** | 556 | 1418 | 1217 | 2353 |
| Interest expense | 52 | 42 | 98 | 84 |
| Interest income and investment income, net | 26 | 10 | 41 | 14 |
| Other components of net periodic benefit cost | (2) | (2) | (5) | (1) |
| Other income |  |  |  | 1 |
| **Earnings before income taxes** | 532 | 1388 | 1165 | 2285 |
| Provision for income taxes | 135 | 298 | 278 | 500 |
| **Net earnings** | 397 | 1090 | 887 | 1785 |
| Net earnings attributable to noncontrolling interests |  | (4) |  | (5) |
| Net loss (earnings) attributable to redeemable noncontrolling interest | (3) | 2 | (4) |  |
| **Net earnings attributable to The Estée Lauder Companies Inc.** | $394 | $1088 | $883 | $1780 |
| **Net earnings attributable to The Estée Lauder Companies Inc. per common share** |  |  |  |  |
| &nbsp;&nbsp;Basic | $1.10 | $3.02 | $2.47 | $4.93 |
| &nbsp;&nbsp;Diluted | $1.09 | $2.97 | $2.45 | $4.85 |
| **Weighted-average common shares outstanding** |  |  |  |  |
| &nbsp;&nbsp;Basic | 357.7 | 360.6 | 357.8 | 361.4 |
| &nbsp;&nbsp;Diluted | 360.4 | 366.0 | 360.9 | 367.0 |

---

See notes to consolidated financial statements.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**

**(Unaudited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>(In millions) | **2022** | **2021** | **2022** | **2021** |
| **Net earnings** | $397 | $1090 | $887 | $1785 |
| **Other comprehensive income (loss):** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net cash flow hedge gain (loss) | (56) | (5) | (7) | 16 |
| &nbsp;&nbsp;&nbsp;Retirement plan and other retiree benefit adjustments |  | 4 |  | 8 |
| &nbsp;&nbsp;&nbsp;Translation adjustments | 287 | (15) | (94) | (201) |
| &nbsp;&nbsp;&nbsp;Benefit (provision) for income taxes on components of other comprehensive income | 26 | (6) | 7 | (18) |
| **Total other comprehensive income (loss), net of tax** | 257 | (22) | (94) | (195) |
| **Comprehensive income** | 654 | 1068 | 793 | 1590 |
| **Comprehensive income attributable to noncontrolling interests:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net earnings |  | (4) |  | (5) |
| &nbsp;&nbsp;&nbsp;Translation adjustments |  | 1 |  | 2 |
| **Total comprehensive income attributable to noncontrolling interests** |  | (3) |  | (3) |
| **Comprehensive loss (income) attributable to redeemable noncontrolling interest:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net loss (earnings) | (3) | 2 | (4) |  |
| &nbsp;&nbsp;&nbsp;Translation adjustments | (8) |  | 27 | 17 |
| **Total comprehensive loss (income) attributable to redeemable noncontrolling interest** | (11) | 2 | 23 | 17 |
| **Comprehensive income attributable to The Estée Lauder Companies Inc.** | $643 | $1067 | $816 | $1604 |

---

See notes to consolidated financial statements.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
| (In millions, except share data) | **December 31<br>2022** | **June 30<br>2022** |
|  | **(Unaudited)** |  |
| **ASSETS** |  |  |
| **Current assets** |  |  |
| Cash and cash equivalents | $3725 | $3957 |
| Accounts receivable, net | 1932 | 1629 |
| Inventory and promotional merchandise | 3069 | 2920 |
| Prepaid expenses and other current assets | 641 | 792 |
| &nbsp;&nbsp;**Total current assets** | 9367 | 9298 |
| **Property, plant and equipment, net** | 2908 | 2650 |
| **Other assets** |  |  |
| Operating lease right-of-use assets | 1847 | 1949 |
| Goodwill | 2473 | 2521 |
| Other intangible assets, net | 3097 | 3428 |
| Other assets | 1039 | 1064 |
| &nbsp;&nbsp;**Total other assets** | 8456 | 8962 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total assets** | $20731 | $20910 |
| **LIABILITIES AND EQUITY** |  |  |
| **Current liabilities** |  |  |
| Current debt | $260 | $268 |
| Accounts payable | 1507 | 1822 |
| Operating lease liabilities | 349 | 365 |
| Other accrued liabilities | 3539 | 3360 |
| &nbsp;&nbsp;**Total current liabilities** | 5655 | 5815 |
| **Noncurrent liabilities** |  |  |
| Long-term debt | 5111 | 5144 |
| Long-term operating lease liabilities | 1757 | 1868 |
| Other noncurrent liabilities | 1487 | 1651 |
| &nbsp;&nbsp;**Total noncurrent liabilities** | 8355 | 8663 |
| **Commitments and Contingencies** |  |  |
| **Redeemable Noncontrolling Interest** | 819 | 842 |
| **Equity** |  |  |
| Common stock, $.01 par value; Class A shares authorized: 1,300,000,000 at December 31, 2022 and June 30, 2022; shares issued: 469,124,426 at December 31, 2022 and 467,949,351 at June 30, 2022; Class B shares authorized: 304,000,000 at December 31, 2022 and June 30, 2022; shares issued and outstanding: 125,542,029 at December 31, 2022 and 125,542,029 at June 30, 2022 | 6 | 6 |
| Paid-in capital | 6000 | 5796 |
| Retained earnings | 14342 | 13912 |
| Accumulated other comprehensive loss | (829) | (762) |
|  | 19519 | 18952 |
| Less: Treasury stock, at cost; 237,534,951 Class A shares at December 31, 2022 and 236,435,830 Class A shares at June 30, 2022 | (13617) | (13362) |
| &nbsp;&nbsp;**Total equity** | 5902 | 5590 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities, redeemable noncontrolling interest and equity** | $20731 | $20910 |

---

See notes to consolidated financial statements.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
| | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>(In millions) | **2022** | **2021** |
| **Cash flows from operating activities** |  |  |
| &nbsp;&nbsp;&nbsp;Net earnings | $887 | $1785 |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net earnings to net cash flows from operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 359 | 364 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | (31) | (43) |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-cash stock-based compensation | 165 | 192 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss on disposal of property, plant and equipment | 4 | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-cash restructuring and other charges | 14 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Pension and post-retirement benefit expense | 26 | 39 |
| &nbsp;&nbsp;&nbsp;&nbsp;Pension and post-retirement benefit contributions | (12) | (18) |
| &nbsp;&nbsp;&nbsp;&nbsp;Impairment of other intangible assets | 207 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain on previously held equity method investment |  | (1) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other non-cash items | (5) | (4) |
| &nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Increase in accounts receivable, net | (295) | (407) |
| &nbsp;&nbsp;&nbsp;&nbsp;Increase in inventory and promotional merchandise | (156) | (164) |
| &nbsp;&nbsp;&nbsp;&nbsp;Decrease (increase) in other assets, net | 33 | (57) |
| &nbsp;&nbsp;&nbsp;&nbsp;Decrease in accounts payable | (310) | (40) |
| &nbsp;&nbsp;&nbsp;&nbsp;Increase (decrease) in other accrued and noncurrent liabilities | (106) | 213 |
| &nbsp;&nbsp;&nbsp;&nbsp;Decrease in operating lease assets and liabilities, net | (29) | (17) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash flows provided by operating activities** | 751 | 1846 |
| **Cash flows from investing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Capital expenditures | (419) | (459) |
| &nbsp;&nbsp;&nbsp;Payment for acquired business |  | (3) |
| &nbsp;&nbsp;&nbsp;Purchases of investments | (4) | (10) |
| &nbsp;&nbsp;&nbsp;Settlement of net investment hedges | 138 | 58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash flows used for investing activities** | (285) | (414) |
| **Cash flows from financing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds (repayments) of current debt, net | 244 | (4) |
| &nbsp;&nbsp;&nbsp;Debt issuance costs |  | (1) |
| &nbsp;&nbsp;&nbsp;Repayments and redemptions of long-term debt | (258) | (10) |
| &nbsp;&nbsp;&nbsp;Net proceeds from stock-based compensation transactions | 37 | 77 |
| &nbsp;&nbsp;&nbsp;Payments to acquire treasury stock | (257) | (1428) |
| &nbsp;&nbsp;&nbsp;Dividends paid to stockholders | (451) | (409) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash flows used for financing activities** | (685) | (1775) |
| Effect of exchange rate changes on Cash and cash equivalents | (13) | (12) |
| &nbsp;&nbsp;&nbsp;**Net decrease in Cash and cash equivalents** | (232) | (355) |
| &nbsp;&nbsp;&nbsp;**Cash and cash equivalents at beginning of period** | 3957 | 4958 |
| &nbsp;&nbsp;&nbsp;**Cash and cash equivalents at end of period** | $3725 | $4603 |

---

See notes to consolidated financial statements.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***Basis of Presentation***

The accompanying consolidated financial statements include the accounts of The Estée Lauder Companies Inc. and its subsidiaries (collectively, the "Company"). All significant intercompany balances and transactions have been eliminated.

The unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim consolidated financial statements furnished reflect all normal and recurring adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

Certain prior year amounts in the notes to the consolidated financial statements have been reclassified to conform to current year presentation.

***Management Estimates***

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses reported in those financial statements. Descriptions of the Company's significant accounting policies are discussed in the notes to consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2022. Management evaluates the related estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions. Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment, including those related to the impacts of the COVID-19 pandemic, will be reflected in the consolidated financial statements in future periods.

***Currency Translation and Transactions***

All assets and liabilities of foreign subsidiaries and affiliates are translated at period-end rates of exchange, while revenue and expenses are translated at monthly average rates of exchange for the period. Unrealized translation gains (losses), net of tax, reported as translation adjustments through other comprehensive income (loss) ("OCI") attributable to The Estée Lauder Companies Inc. were $291 million and $(20) million, net of tax, during the three months ended December 31, 2022 and 2021, respectively, and $(61) million and $(195) million, net of tax, during the six months ended December 31, 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.

The Company enters into foreign currency forward contracts and may enter into option contracts to hedge foreign currency transactions for periods consistent with its identified exposures. The Company also enters into foreign currency forward contracts to hedge a portion of its net investment in certain foreign operations, which are designated as net investment hedges. See *Note 4 – 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 $20 million and $(6) million during the three months ended December 31, 2022 and 2021, respectively, and $34 million and $(18) million during the six months ended December 31, 2022 and 2021, respectively.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***Concentration of Credit Risk***

The Company is a worldwide manufacturer, marketer and seller of skin care, makeup, fragrance and hair care products. The Company's sales subject to credit risk are made primarily to retailers in its travel retail business, department stores, specialty multi-brand retailers and perfumeries. The Company grants credit to qualified customers. While the Company does not believe it is exposed significantly to any undue concentration of credit risk at this time, it continues to monitor its customers' abilities, individually and collectively, to make timely payments.

The Company's largest customer during the three and six months ended December 31, 2022 sells products primarily in China travel retail. This customer accounted for $242 million, or 12%, and $399 million, or 24%, of the Company's accounts receivable at December 31, 2022 and June 30, 2022, respectively.

***Inventory and Promotional Merchandise***

Inventory and promotional merchandise consists of the following:

---

| | | |
|:---|:---|:---|
| (In millions) | **December 31, 2022** | **June 30, 2022** |
| Raw materials | $918 | $791 |
| Work in process | 318 | 366 |
| Finished goods | 1519 | 1449 |
| Promotional merchandise | 314 | 314 |
|  | $3069 | $2920 |

---

***Property, Plant and Equipment***

Property, plant and equipment consists of the following:

---

| | | |
|:---|:---|:---|
| (In millions) | **December 31, 2022** | **June 30, 2022** |
| **Assets (Useful Life)** |  |  |
| &nbsp;&nbsp;Land | $54 | $53 |
| &nbsp;&nbsp;Buildings and improvements (10 to 40 years) | 504 | 491 |
| &nbsp;&nbsp;Machinery and equipment (3 to 10 years) | 1027 | 994 |
| &nbsp;&nbsp;Computer hardware and software (4 to 10 years) | 1587 | 1468 |
| &nbsp;&nbsp;Furniture and fixtures (5 to 10 years) | 134 | 129 |
| &nbsp;&nbsp;Leasehold improvements | 2266 | 2246 |
| &nbsp;&nbsp;&nbsp;Construction in progress | 1008 | 759 |
|  | 6580 | 6140 |
| &nbsp;&nbsp;Less accumulated depreciation and amortization | (3672) | (3490) |
|  | $2908 | $2650 |

---

Depreciation and amortization of property, plant and equipment was $138 million and $136 million during the three months ended December 31, 2022 and 2021, respectively, and $274 million and $266 million during the six months ended December 31, 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.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***Income Taxes***

The effective rate for income taxes for the three and six months ended December 31, 2022 and 2021 are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
| | **2022** | **2021** | **2022** | **2021** |
| Effective rate for income taxes | 25.4% | 21.5% | 23.9% | 21.9% |
| Basis-point change from the prior-year period | 390 |  | 200 |  |

---

For the three and six months ended December 31, 2022, the increase in the effective tax rate was primarily attributable to a decrease in excess tax benefits associated with stock-based compensation arrangements and a higher effective tax rate on the Company's foreign operations, partially offset by a reduction in income tax reserve adjustments.

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 is effective beginning with the Company's third quarter of fiscal 2023 and is not expected to have a material 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.

As of December 31, 2022 and June 30, 2022, the gross amount of unrecognized tax benefits, exclusive of interest and penalties, totaled $58 million and $61 million, respectively. The total amount of unrecognized tax benefits at December 31, 2022 that, if recognized, would affect the effective tax rate was $49 million. The total gross interest and penalties accrued related to unrecognized tax benefits during the three and six months ended December 31, 2022 in the accompanying consolidated statements of earnings was $1 million and $2 million, respectively. The total gross accrued interest and penalties in the accompanying consolidated balance sheets at each of December 31, 2022 and June 30, 2022, was $15 million and $14 million, respectively. On the basis of the information available as of December 31, 2022, the Company does not expect significant changes to the total amount of unrecognized tax benefits within the next twelve months.

During the fiscal 2023 first quarter, the Company formally concluded the compliance process with respect to its fiscal 2021 income tax return under the U.S. Internal Revenue Service ("IRS") Compliance Assurance Program ("CAP"), which had no impact on the Company's consolidated financial statements for the three and six months ended December 31, 2022.

***Other Accrued and Noncurrent Liabilities***

Other accrued liabilities consist of the following:

---

| | | |
|:---|:---|:---|
| (In millions) | **December 31, 2022** | **June 30, 2022** |
| Advertising, merchandising and sampling | $284 | $250 |
| Employee compensation | 473 | 693 |
| Deferred revenue | 344 | 312 |
| Payroll and other non-income taxes | 308 | 345 |
| Accrued income taxes | 343 | 267 |
| Sales return accrual | 293 | 252 |
| Other | 1494 | 1241 |
|  | $3539 | $3360 |

---

At December 31, 2022 and June 30, 2022, total Other noncurrent liabilities of $1,487 million and $1,651 million included $636 million and $692 million of deferred tax liabilities, respectively.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***Recently Issued Accounting Standards***

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

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 which is effective prospectively for the Company's first quarter fiscal 2025. Early adoption is permitted. Annual disclosures need to be provided in interim periods within the initial year of adoption.

*Impact on consolidated financial statements –* The Company has a supplier financing arrangement and will apply the disclosure requirements as required by the amendments.

**<u>Reference Rate Reform (ASC Topic 848</u> "<u>ASC 848</u>"<u>)</u>**

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

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

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

*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 currently has an implementation team in place that has performed a comprehensive evaluation and is assessing the impact of applying this guidance, which includes assessing the impact to business processes and internal controls over financial reporting and the related disclosure requirements. For treasury related arrangements, the Company references LIBOR in its interest rate swap agreements and LIBOR is also used for purposes of discounting certain foreign currency and interest rate forward contracts. The Company is currently evaluating the potential impact of modifying treasury related arrangements and applying the relevant ASC 848 optional practical expedients, as needed. For existing lease, debt arrangements and other contracts, the Company will not adopt any ASC 848 optional practical expedients as it relates to these arrangements. The Company will continue to monitor new contracts that could potentially be eligible for contract modification relief through December 31, 2024.

No other recently issued accounting pronouncements are expected to have a material impact on the Company's consolidated financial statements.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 2 – GOODWILL AND OTHER INTANGIBLE ASSETS**

**Goodwill**

The following table presents goodwill by product category and the related change in the carrying amount:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| (In millions) | **Skin Care** | **Makeup** | **Fragrance** | **Hair Care** | **Total** |
| **<u>Balance as of June 30, 2022</u>** |  |  |  |  |  |
| Goodwill | $1702 | $1116 | $249 | $353 | $3420 |
| Accumulated impairments | (138) | (732) | (29) |  | (899) |
|  | 1564 | 384 | 220 | 353 | 2521 |
| &nbsp;&nbsp;&nbsp;Translation and other adjustments, goodwill | (50) |  | 3 |  | (47) |
| &nbsp;&nbsp;&nbsp;Translation and other adjustments, accumulated impairments |  |  | (1) |  | (1) |
|  | (50) |  | 2 |  | (48) |
| **<u>Balance as of December 31, 2022</u>** |  |  |  |  |  |
| Goodwill | 1652 | 1116 | 252 | 353 | 3373 |
| Accumulated impairments | (138) | (732) | (30) |  | (900) |
|  | $1514 | $384 | $222 | $353 | $2473 |

---

**Other Intangible Assets**

Other intangible assets consist of the following:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **June 30, 2022** | **June 30, 2022** | **June 30, 2022** |
|<br>(In millions) | **Gross<br>Carrying<br>Value** | **Accumulated<br>Amortization** | **Total Net<br>Book<br>Value** | **Gross<br>Carrying<br>Value** | **Accumulated<br>Amortization** | **Total Net<br>Book<br>Value** |
| <u>Amortizable intangible assets:</u> |  |  |  |  |  |  |
| Customer lists, license agreements and other | $2057 | $702 | $1355 | $2064 | $628 | $1436 |
| <u>Non-amortizable intangible assets:</u> |  |  |  |  |  |  |
| Trademarks and other |  |  | 1742 |  |  | 1992 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total intangible assets |  |  | $3097 |  |  | $3428 |

---

The aggregate amortization expense related to amortizable intangible assets was $37 million and $39 million for the three months ended December 31, 2022 and 2021, respectively, and $73 million and $84 million for the six months ended December 31, 2022 and 2021, respectively.

The estimated aggregate amortization expense for the remainder of fiscal 2023 and for each of the next four fiscal years is as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Fiscal** | **Fiscal** | **Fiscal** | **Fiscal** | **Fiscal** |
|<br>(In millions) | **2023** | **2024** | **2025** | **2026** | **2027** |
| Estimated aggregate amortization expense | $75 | $147 | $147 | $147 | $130 |

---

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Impairment Testing During the Six Months Ended December 31, 2022**

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

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

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

A summary of the impairment charges for the three and six months ended December 31, 2022 and the remaining trademark and goodwill carrying values as of December 31, 2022, for each reporting unit, are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **Impairment Charge** | **Impairment Charge** | **Carrying Value** | **Carrying Value** |
| (In millions) |  | **Three and Six Months Ended December 31, 2022** | **Three and Six Months Ended December 31, 2022** | **As of December 31, 2022** | **As of December 31, 2022** |
| **Reporting Unit:** | **Geographic Region** | **Trademarks** | **Goodwill** | **Trademarks** | **Goodwill** |
| &nbsp;&nbsp;Smashbox | The Americas | $21 | $— | $— | $— |
| &nbsp;&nbsp;Dr. Jart+ | Asia/Pacific | 100 |  | 339 | 318 |
| &nbsp;&nbsp;Too Faced | The Americas | 86 |  | 186 | 13 |
| Total |  | $207 | $— | $525 | $331 |

---

The impairment charges for the three and six months ended December 31, 2022 were reflected in the skin care product category for Dr.Jart+ and the makeup product category for Smashbox and Too Faced.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 3 – CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES**

Charges associated with the Post-COVID Business Acceleration Program for the three and six months ended December 31, 2022 were as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Sales<br>Returns<br>(included in<br>Net Sales)** | **Cost of Sales** | **Operating Expenses** | **Operating Expenses** | **Total** |
|<br>(In millions) | **Sales<br>Returns<br>(included in<br>Net Sales)** | **Cost of Sales** | **Restructuring<br>Charges** | **Other<br>Charges** | **Total** |
| Three months ended December 31, 2022 | $1 | $— | $4 | $3 | $8 |
| Six months ended December 31, 2022 | $6 | $(1) | $6 | $3 | $14 |

---

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 December 31, 2022, the Company estimated a net reduction over the duration of the PCBA Program in the range of 2,500 to 3,000 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 10% to 15% of its freestanding stores globally, primarily in Europe, the Middle East & Africa and in North America.

As of June 30, 2022, the Company approved specific initiatives under the PCBA Program and expects to substantially complete those initiatives through fiscal 2023. Inclusive of approvals from inception through June 30, 2022, the Company estimates that the PCBA Program may result in related restructuring and other charges totaling between $500 million and $515 million, before taxes. Additional information about the PCBA Program approvals is included in the notes to consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

Specific actions taken since the PCBA Program inception include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Optimize Digital Organization and Other Go-To-Market Organizations</u> – The Company approved initiatives to enhance its go-to-market capabilities and shift more resources to support online growth. These actions will result in a net reduction of the workforce, which includes position eliminations, the re-leveling of certain positions and an investment in new capabilities.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Optimize Select Marketing, Brand and Global Functions</u> – 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 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 will result 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Optimize Distribution Network</u> – 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 anticipated closures reflect changing consumer behaviors including higher demand for online and omnichannel capabilities. These activities will result in termination of contracts, a net reduction in workforce, product returns, and inventory and other asset write-offs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Exit of the Global Distribution of BECCA Products</u> – 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Exit of Certain Designer Fragrance Licenses</u> – 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 has since 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Brand Transformation</u> – 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 will result primarily 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.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Consulting and other professional services for organizational design of the future structures and processes as well as the implementation thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Temporary labor backfill;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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<br>Returns<br>(included in<br>Net Sales)** | **Cost of Sales** | **Operating Expenses** | **Operating Expenses** | **Total** |
|<br>(In millions) | **Sales<br>Returns<br>(included in<br>Net Sales)** | **Cost of Sales** | **Restructuring<br>Charges** | **Other<br>Charges** | **Total** |
| **Total Charges (Adjustments)** |  |  |  |  |  |
| Cumulative through June 30, 2022 | $18 | $7 | $310 | $13 | $348 |
| Six months ended December 31, 2022 | 6 | (1) | 6 | 3 | 14 |
| Cumulative through December 31, 2022 | $24 | $6 | $316 | $16 | $362 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| (In millions) | **Employee-<br>Related<br>Costs** | **Asset-<br>Related<br>Costs** | **Contract<br>Terminations** | **Other Exit<br>Costs** | **Total** |
| **Restructuring Charges (Adjustments)** |  |  |  |  |  |
| Cumulative through June 30, 2022 | $203 | $86 | $19 | $2 | $310 |
| Six months ended December 31, 2022 | (3) | 14 | (6) | 1 | 6 |
| Cumulative through December 31, 2022 | $200 | $100 | $13 | $3 | $316 |

---

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

Changes in accrued restructuring charges for the six months ended December 31, 2022 relating to the PCBA Program were:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| (In millions) | **Employee-<br>Related<br>Costs** | **Asset-<br>Related<br>Costs** | **Contract<br>Terminations** | **Other Exit<br>Costs** | **Total** |
| Balance at June 30, 2022 | $125 | $— | $— | $— | $125 |
| Charges | (3) | 14 | (6) | 1 | 6 |
| Cash payments | (17) |  | (1) | (1) | (19) |
| Non-cash asset write-offs |  | (14) |  |  | (14) |
| Translation and other adjustments | (6) |  | 7 |  | 1 |
| Balance at December 31, 2022 | $99 | $— | $— | $— | $99 |

---

Accrued restructuring charges at December 31, 2022 relating to the PCBA Program are expected to result in cash expenditures funded from cash provided by operations of approximately $51 million, $36 million and $12 million for the remainder of fiscal 2023 and for fiscal 2024 and 2025, respectively.

**NOTE 4 – 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. In addition, the Company enters into interest rate derivatives to manage the effects of interest rate movements on the Company's aggregate liability portfolio, including potential future debt issuances. The Company also enters into foreign currency forward contracts to hedge a portion of its net investment in certain foreign operations, which are designated as net investment hedges. The Company enters into the net investment hedges to offset the risk of changes in the U.S. dollar value of the Company's investment in these foreign operations due to fluctuating foreign exchange rates. Time value is excluded from the effectiveness assessment and is recognized under a systematic and rational method over the life of the hedging instrument in Selling, general and administrative expenses. The net gain or loss on net investment hedges is recorded within translation adjustments, as a component of accumulated OCI ("AOCI") on the Company's consolidated balance sheets, until the sale or substantially complete liquidation of the underlying assets of the Company's investment. The Company also enters into foreign currency forward contracts, and may use option contracts, not designated as hedging instruments, to mitigate the change in fair value of specific assets and liabilities on the consolidated balance sheets. At December 31, 2022, the notional amount of derivatives not designated as hedging instruments was $4,005 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.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

The fair values of the Company's derivative financial instruments included in the consolidated balance sheets are presented as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Asset Derivatives** | **Asset Derivatives** | **Asset Derivatives** | **Liability Derivatives** | **Liability Derivatives** | **Liability Derivatives** |
| | | **Fair Value** <sup>(1)</sup> | **Fair Value** <sup>(1)</sup> | | **Fair Value** <sup>(1)</sup> | **Fair Value** <sup>(1)</sup> |
|<br>(In millions) |<br>**Balance Sheet<br>Location** | **December 31, 2022** | **June 30, 2022** |<br>**Balance Sheet<br>Location** | **December 31, 2022** | **June 30, 2022** |
| **Derivatives Designated as Hedging Instruments:** |  |  |  |  |  |  |
| Foreign currency cash flow hedges | Prepaid expenses and other current assets | $35 | $57 | Other accrued liabilities | $13 | $1 |
| Net investment hedges | Prepaid expenses and other current assets |  | 107 | Other accrued liabilities | 40 |  |
| Interest rate-related derivatives | Prepaid expenses and other current assets | 5 | 24 | Other accrued liabilities | 150 | 115 |
| &nbsp;&nbsp;&nbsp;Total Derivatives Designated as Hedging Instruments |  | 40 | 188 |  | 203 | 116 |
| **Derivatives Not Designated as Hedging Instruments:** |  |  |  |  |  |  |
| Foreign currency forward contracts | Prepaid expenses and other current assets | 44 | 27 | Other accrued liabilities | 10 | 104 |
| &nbsp;&nbsp;&nbsp;Total derivatives |  | $84 | $215 |  | $213 | $220 |

---

<sup>(1)</sup> See *Note 5 – Fair Value Measurements* for further information about how the fair value of derivative assets and liabilities are determined.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

The amounts of the gains and losses related to the Company's derivative financial instruments designated as hedging instruments that are included in the assessment of effectiveness are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Amount of Gain (Loss)<br>Recognized in OCI on<br>Derivatives** | **Amount of Gain (Loss)<br>Recognized in OCI on<br>Derivatives** | **Location of Gain (Loss) Reclassified<br>from AOCI into<br>Earnings** | **Amount of Gain (Loss)**<br>**Reclassified from AOCI into Earnings**<sup>(1)</sup> | **Amount of Gain (Loss)**<br>**Reclassified from AOCI into Earnings**<sup>(1)</sup> |
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Location of Gain (Loss) Reclassified<br>from AOCI into<br>Earnings** | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** |
|<br>(In millions) | **2022** | **2021** | **Location of Gain (Loss) Reclassified<br>from AOCI into<br>Earnings** | **2022** | **2021** |
| **Derivatives in Cash Flow Hedging Relationships:** |  |  |  |  |  |
| Foreign currency forward contracts | $(39) | $(8) | Net sales | $22 | $(2) |
| Interest rate-related derivatives | 5 |  | Interest expense |  | (1) |
|  | (34) | (8) |  | 22 | (3) |
| **Derivatives in Net Investment Hedging Relationships**<sup>(2)</sup>**:** |  |  |  |  |  |
| Foreign currency forward contracts<sup>(3)</sup> | (86) | 34 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total derivatives | $(120) | $26 |  | $22 | $(3) |

---

<sup>(1)</sup> 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.

<sup>(2)</sup> During the three months ended December 31, 2022 and 2021, the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $7 million and $3 million, respectively.

<sup>(3)</sup> Included within translation adjustments as a component of AOCI on the Company's consolidated balance sheets.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Amount of Gain (Loss)<br>Recognized in OCI on<br>Derivatives** | **Amount of Gain (Loss)<br>Recognized in OCI on<br>Derivatives** | **Location of Gain (Loss) Reclassified<br>from AOCI into<br>Earnings** | **Amount of Gain (Loss)**<br>**Reclassified from AOCI into Earnings**<sup>(1)</sup> | **Amount of Gain (Loss)**<br>**Reclassified from AOCI into Earnings**<sup>(1)</sup> |
| | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Location of Gain (Loss) Reclassified<br>from AOCI into<br>Earnings** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>(In millions) | **2022** | **2021** | **Location of Gain (Loss) Reclassified<br>from AOCI into<br>Earnings** | **2022** | **2021** |
| **Derivatives in Cash Flow Hedging Relationships:** |  |  |  |  |  |
| Foreign currency forward contracts | $18 | $7 | Net sales | $37 | $(8) |
| Interest rate-related derivatives | 12 |  | Interest expense |  | (1) |
|  | 30 | 7 |  | 37 | (9) |
| **Derivatives in Net Investment Hedging Relationships**<sup>(2)</sup>**:** |  |  |  |  |  |
| Foreign currency forward contracts<sup>(3)</sup> | (15) | 70 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total derivatives | $15 | $77 |  | $37 | $(9) |

---

<sup>(1)</sup> 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.

<sup>(2)</sup> During the six months ended December 31, 2022 and 2021, the gain recognized in earnings from net investment hedges related to the amount excluded from effectiveness testing was $13 million and $5 million, respectively.

<sup>(3)</sup> Included within translation adjustments as a component of AOCI on the Company's consolidated balance sheets.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **Amount of Gain (Loss)** <br>**Recognized in Earnings on**<br>**Derivatives** <sup>(1)</sup> | **Amount of Gain (Loss)** <br>**Recognized in Earnings on**<br>**Derivatives** <sup>(1)</sup> | **Amount of Gain (Loss)** <br>**Recognized in Earnings on**<br>**Derivatives** <sup>(1)</sup> | **Amount of Gain (Loss)** <br>**Recognized in Earnings on**<br>**Derivatives** <sup>(1)</sup> |
| | **Location of Gain (Loss) Recognized in Earnings on Derivatives** | | | | |
| | **Location of Gain (Loss) Recognized in Earnings on Derivatives** | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br><br>(In millions) | **Location of Gain (Loss) Recognized in Earnings on Derivatives** | **2022** | **2021** | **2022** | **2021** |
| **Derivatives in Fair Value Hedging Relationships:** |  |  |  |  |  |
| Interest rate swap contracts | Interest expense | $4 | $(6) | $(35) | $(16) |

---

<sup>(1)</sup> 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<br>Hedged Liabilities** | **Cumulative Amount of Fair<br>Value Hedging Gain (Loss)<br>Included in the Carrying Amount of the Hedged Liability** |
|  | **December 31, 2022** | **December 31, 2022** |
| Long-term debt | $842 | $(150) |

---

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

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

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31** | **Three Months Ended December 31** | **Three Months Ended December 31** | **Three Months Ended December 31** |
| | **2022** | **2022** | **2021** | **2021** |
|<br>(In millions) | **Net Sales** | **Interest<br>Expense** | **Net Sales** | **Interest<br>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 | $4620 | $52 | $5539 | $42 |
| **The effects of fair value and cash flow hedging relationships:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Gain (loss) on fair value hedge relationships – interest rate contracts: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Hedged item | Not applicable | (4) | Not applicable | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;Derivatives designated as hedging instruments | Not applicable | 4 | Not applicable | (6) |
| &nbsp;&nbsp;&nbsp;Gain (loss) on cash flow hedge relationships – interest rate contracts: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amount of loss reclassified from AOCI into earnings | Not applicable |  | Not applicable | (1) |
| &nbsp;&nbsp;&nbsp;Gain (loss) on cash flow hedge relationships – foreign currency forward contracts: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amount of gain (loss) reclassified from AOCI into earnings | 22 | Not applicable | (2) | Not applicable |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Six Months Ended December 31** | **Six Months Ended December 31** | **Six Months Ended December 31** | **Six Months Ended December 31** |
| | **2022** | **2022** | **2021** | **2021** |
|<br>(In millions) | **Net Sales** | **Interest<br>Expense** | **Net Sales** | **Interest<br>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 | $8550 | $98 | $9931 | $84 |
| **The effects of fair value and cash flow hedging relationships:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Gain (loss) on fair value hedge relationships – interest rate contracts: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Hedged item | Not applicable | 35 | Not applicable | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;Derivatives designated as hedging instruments | Not applicable | (35) | Not applicable | (16) |
| &nbsp;&nbsp;&nbsp;Gain (loss) on cash flow hedge relationships – interest rate contracts: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amount of loss reclassified from AOCI into earnings | Not applicable |  | Not applicable | (1) |
| &nbsp;&nbsp;&nbsp;Gain (loss) on cash flow hedge relationships – foreign currency forward contracts: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amount of gain (loss) reclassified from AOCI into earnings | 37 | Not applicable | (8) | Not applicable |

---

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

The amount of gains and losses related to the Company's derivative financial instruments not designated as hedging instruments are presented as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **Amount of Gain (Loss)<br>Recognized in Earnings on Derivatives** | **Amount of Gain (Loss)<br>Recognized in Earnings on Derivatives** | **Amount of Gain (Loss)<br>Recognized in Earnings on Derivatives** | **Amount of Gain (Loss)<br>Recognized in Earnings on Derivatives** |
| | **Location of Gain (Loss) Recognized in Earnings on<br>Derivatives** | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>(In millions) | **Location of Gain (Loss) Recognized in Earnings on<br>Derivatives** | **2022** | **2021** | **2022** | **2021** |
| **Derivatives Not Designated as Hedging Instruments:** |  |  |  |  |  |
| Foreign currency forward contracts | Selling, general and administrative | $6 | $(38) | $17 | $(49) |

---

***Cash Flow Hedges***

The Company enters into foreign currency forward contracts, and may enter into foreign currency option contracts, to hedge anticipated transactions and receivables and payables denominated in foreign currencies, for periods consistent with the Company's identified exposures. The purpose of the hedging activities is to minimize the effect of foreign exchange rate movements on the cash flows that the Company receives from foreign subsidiaries. The foreign currency forward contracts entered into to hedge anticipated transactions have been designated as cash flow hedges and have varying maturities through the end of September 2024. Hedge effectiveness of the foreign currency forward contracts is based on the forward method, which includes time value in the effectiveness assessment. At December 31, 2022, the Company had cash flow hedges outstanding with a notional amount totaling $1,774 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 December 31, 2022, 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 December 31, 2022 that is expected to be reclassified from AOCI into earnings, net of tax, within the next twelve months is $28 million. The accumulated net gain on derivative instruments in AOCI was $83 million and $90 million as of December 31, 2022 and June 30, 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. 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.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***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 May 2023. Hedge effectiveness of the net investment hedge contracts is based on the spot method. At December 31, 2022, the Company had net investment hedges outstanding with a notional amount totaling $1,037 million.

***Credit Risk***

As a matter of policy, the Company enters into derivative contracts only with counterparties that have a long-term credit rating of at least A- or higher by at least two nationally recognized rating agencies. The counterparties to these contracts are major financial institutions. Exposure to credit risk in the event of nonperformance by any of the counterparties is limited to the gross fair value of contracts in asset positions, which totaled $84 million at December 31, 2022. 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.

**NOTE 5 – 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:&nbsp;&nbsp;&nbsp;&nbsp;Inputs based on quoted market prices for identical assets or liabilities in active markets at the measurement date.

Level 2:&nbsp;&nbsp;&nbsp;&nbsp;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:&nbsp;&nbsp;&nbsp;&nbsp;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.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

The following table presents the Company's hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2022:

---

| | | | | |
|:---|:---|:---|:---|:---|
| (In millions) | **Level 1** | **Level 2** | **Level 3** | **Total** |
| **Assets:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Money market funds | $989 | $— | $— | $989 |
| &nbsp;&nbsp;Foreign currency forward contracts |  | 79 |  | 79 |
| &nbsp;&nbsp;Interest rate-related derivatives |  | 5 |  | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $989 | $84 | $— | $1073 |
| **Liabilities:** |  |  |  |  |
| &nbsp;&nbsp;Foreign currency forward contracts | $— | $63 | $— | $63 |
| &nbsp;&nbsp;Interest rate-related derivatives |  | 150 |  | 150 |
| &nbsp;&nbsp;&nbsp;DECIEM stock options |  |  | 71 | 71 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $— | $213 | $71 | $284 |

---

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:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Money market funds | $961 | $— | $— | $961 |
| &nbsp;&nbsp;Foreign currency forward contracts |  | 191 |  | 191 |
| &nbsp;&nbsp;Interest rate-related derivatives |  | 24 |  | 24 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $961 | $215 | $— | $1176 |
| **Liabilities:** |  |  |  |  |
| &nbsp;&nbsp;Foreign currency forward contracts | $— | $105 | $— | $105 |
| &nbsp;&nbsp;&nbsp;Interest rate-related derivatives |  | 115 |  | 115 |
| &nbsp;&nbsp;&nbsp;DECIEM stock options |  |  | 74 | 74 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $— | $220 | $74 | $294 |

---

The estimated fair values of the Company's financial instruments are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2022** | **December 31, 2022** | **June 30, 2022** | **June 30, 2022** |
|<br>(In millions) | **Carrying<br>Amount** | **Fair<br>Value** | **Carrying<br>Amount** | **Fair<br>Value** |
| **Nonderivatives** |  |  |  |  |
| Cash and cash equivalents | $3725 | $3725 | $3957 | $3957 |
| Current and long-term debt | 5371 | 4884 | 5412 | 5139 |
| DECIEM stock options | 71 | 71 | 74 | 74 |
| **Derivatives** |  |  |  |  |
| Foreign currency forward contracts – asset, net | 16 | 16 | 86 | 86 |
| Interest rate-related derivatives – liability, net | (145) | (145) | (91) | (91) |

---

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

The following table presents the Company's impairment charges for the three and six months ended December 31, 2022 for certain of its nonfinancial assets measured at fair value on a nonrecurring basis, classified as Level 3, due to a change in circumstances that triggered an interim impairment test:

---

| | | | |
|:---|:---|:---|:---|
| (In millions) | **Impairment charges** | **Date of Fair Value Measurement** | **Fair Value**<sup>(1)</sup> |
| **Other intangible assets, net (trademarks)** |  |  |  |
| Dr.Jart+ | $100 | November 30, 2022 | $339 |
| Too Faced | 86 | November 30, 2022 | 186 |
| Smashbox | 21 | December 31, 2022 |  |
| &nbsp;&nbsp;Total | $207 |  | $525 |

---

*(1)*See *Note 2 - Goodwill and Other Intangible Assets* for discussion of the valuation techniques used to measure fair value, the description of the inputs and information used to develop those inputs.

The following methods and assumptions were used to estimate the fair value of the Company's financial instruments for which it is practicable to estimate that value:

*Cash and cash equivalents –* Cash and all highly-liquid securities with original maturities of three months or less are classified as cash and cash equivalents, primarily consisting of cash deposits in interest bearing accounts, time deposits and money market funds (classified within Level 1 of the valuation hierarchy). Cash deposits in interest bearing accounts and time deposits are carried at cost, which approximates fair value, due to the short maturity of cash equivalent instruments.

*Foreign currency forward contracts –* The fair values of the Company's foreign currency forward contracts were determined using an industry-standard valuation model, which is based on an income approach. The significant observable inputs to the model, such as swap yield curves and currency spot and forward rates, were obtained from an independent pricing service. To determine the fair value of contracts under the model, the difference between the contract price and the current forward rate was discounted using LIBOR for contracts with maturities up to 12 months, and swap yield curves for contracts with maturities greater than 12 months.

*Interest rate - 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.

*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 9 – Stock Programs* for discussion*.*

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

Changes in the DECIEM stock option liability for the six months ended December 31, 2022 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<sup>(1)</sup> | (3) |
| Translation adjustments and other, net |  |
| DECIEM stock option liability as of December 31, 2022 | $71 |

---

<sup>(1)</sup> Amount includes expense attributable to graded vesting of stock options which is not material for the six months ended December 31, 2022.

**NOTE 6 – REVENUE RECOGNITION**

The Company's revenue recognition accounting policies are described in the notes to consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

**Accounts Receivable**

Accounts receivable, net is stated net of the allowance for doubtful accounts and customer deductions totaling $26 million and $27 million as of December 31, 2022 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:

---

| | |
|:---|:---|
| (In millions) | **December 31, 2022** |
| Balance at June 30, 2022 | $10 |
| Provision for expected credit losses | 2 |
| Balance at December 31, 2022 | $12 |

---

The remaining balance of the allowance for doubtful accounts of $14 million and $17 million as of December 31, 2022 and June 30, 2022, respectively, relates to non-credit losses, which are primarily due to customer deductions.

**Deferred Revenue**

Changes in deferred revenue during the period are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>(In millions) | **2022** | **2021** | **2022** | **2021** |
| Deferred revenue, beginning of period | $362 | $426 | $362 | $371 |
| Revenue recognized that was included in the deferred revenue balance at the beginning of the period | (131) | (78) | (280) | (248) |
| Revenue deferred during the period | 119 | 75 | 276 | 298 |
| Other | 3 | (2) | (5) |  |
| Deferred revenue, end of period | $353 | $421 | $353 | $421 |

---

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Transaction Price Allocated to the Remaining Performance Obligations**

At December 31, 2022, the combined estimated revenue expected to be recognized in the next twelve months related to performance obligations for customer loyalty programs, gift with purchase promotions, purchase with purchase promotions and gift card liabilities that are unsatisfied (or partially unsatisfied) is $344 million. The remaining balance of deferred revenue at December 31, 2022 will be recognized beyond the next twelve months.

**NOTE 7 – PENSION 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. The Company also maintains post-retirement benefit plans that provide certain medical and dental benefits to eligible employees. Descriptions of these plans are included in the notes to consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

The components of net periodic benefit cost for the three months ended December 31, 2022 and 2021 consisted of the following:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Pension Plans** | **Pension Plans** | **Pension Plans** | **Pension Plans** | **Other than<br>Pension Plans** | **Other than<br>Pension Plans** |
| | **U.S.** | **U.S.** | **International** | **International** | **Post-retirement** | **Post-retirement** |
|<br>(In millions) | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** |
| Service cost | $9 | $11 | $6 | $8 | $— | $— |
| Interest cost | 10 | 7 | 4 | 2 | 2 | 2 |
| Expected return on plan assets | (14) | (13) | (4) | (3) |  | (1) |
| Amortization of: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Actuarial loss | 1 | 3 | (1) | 1 |  | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prior service cost |  |  |  | (1) |  |  |
| Special termination benefits |  |  |  | 1 |  |  |
| Net periodic benefit cost | $6 | $8 | $5 | $8 | $2 | $2 |

---

The components of net periodic benefit cost for the six months ended December 31, 2022 and 2021 consisted of the following:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Pension Plans** | **Pension Plans** | **Pension Plans** | **Pension Plans** | **Other than<br>Pension Plans** | **Other than<br>Pension Plans** |
| | **U.S.** | **U.S.** | **International** | **International** | **Post-retirement** | **Post-retirement** |
|<br>(In millions) | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** |
| Service cost | $18 | $23 | $13 | $16 | $— | $1 |
| Interest cost | 20 | 15 | 7 | 5 | 4 | 3 |
| Expected return on plan assets | (28) | (27) | (8) | (7) |  | (1) |
| Amortization of: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Actuarial loss | 2 | 7 | (2) | 1 |  | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Prior service cost |  |  |  | (1) |  |  |
| Special termination benefits |  |  |  | 3 |  |  |
| Net periodic benefit cost | $12 | $18 | $10 | $17 | $4 | $4 |

---

During the six months ended December 31, 2022, the Company made contributions to its international pension plans totaling $7 million.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

The amounts recognized in the consolidated balance sheets related to the Company's pension and post-retirement benefit plans consist of the following:

---

| | | |
|:---|:---|:---|
| (In millions) | **December 31, 2022** | **June 30, 2022** |
| Other assets | $137 | $151 |
| Other accrued liabilities | (24) | (24) |
| Other noncurrent liabilities | (359) | (357) |
| Funded status | (246) | (230) |
| Accumulated other comprehensive loss | 157 | 155 |
| &nbsp;&nbsp;&nbsp;Net amount recognized | $(89) | $(75) |

---

**NOTE 8 – COMMITMENTS AND CONTINGENCIES**

***Commitments***

In November 2022, the Company signed an agreement to acquire the TOM FORD brand. The amount to be paid by the Company for the acquisition is approximately $2,300 million, net of a $250 million payment to the Company at closing from Marcolin S.p.A. and expects to close in the second half of fiscal 2023. The Company expects to fund this transaction through a combination of cash, debt and $300 million in deferred payments to the sellers that become due beginning in July 2025. In addition, the acquisition will result in the elimination of the existing license royalty payments on the Company's beauty business upon closing.

In January 2023, the Company entered into a $2,000 million senior unsecured revolving credit facility that expires on January 2, 2024 (the "New Facility") for liquidity support for the Company's commercial paper program and general corporate purposes, of which the entire amount is currently undrawn and available. Interest rates on borrowings under the New Facility will be based on prevailing market interest rates in accordance with the agreement.

In January 2023, 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.

***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.

**NOTE 9 – STOCK PROGRAMS**

Additional information relating to the Company's stock programs and the DECIEM stock options are included in the notes to consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**The Company's Stock Programs**

Total net stock-based compensation expense is attributable to the granting of, and the remaining requisite service periods of stock options, restricted stock units ("RSUs"), performance share units ("PSUs"), long-term PSUs, including long-term price-vested units and share units. Compensation expense attributable to net stock-based compensation was $112 million and $113 million for the three months ended December 31, 2022 and 2021, respectively, and was $165 million and $192 million for the six months ended December 31, 2022 and 2021, respectively.

***Stock Options***

During the six months ended December 31, 2022, the Company granted stock options in respect of approximately 1.2 million shares of Class A Common Stock with an exercise price per share of $246.01 and a weighted-average grant date fair value per share of $79.09. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model. The aggregate intrinsic value of stock options exercised during the six months ended December 31, 2022 was $52 million.

***Restricted Stock Units***

During the six months ended December 31, 2022, the Company granted RSUs in respect of approximately 1.1 million shares of Class A Common Stock with a weighted-average grant date fair value per share of $246.16 that, at the time of grant, are scheduled to vest at 0.4 million, 0.4 million, and 0.3 million shares per year, in fiscal 2024, fiscal 2025 and fiscal 2026, respectively. Vesting of RSUs 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.

***Performance Share Units***

During the six months ended December 31, 2022, the Company granted PSUs with a target payout of approximately 0.1 million shares of Class A Common Stock with a grant date fair value per share of $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 fiscal years ending June 30, 2025, all subject to continued employment or the retirement of the grantees. For PSUs granted, no settlement will occur for results below the applicable minimum threshold. PSUs are accompanied by dividend equivalent rights that will be payable in cash upon settlement of the PSUs and, as such, were valued at the closing market value of the Company's Class A Common Stock on the date of grant.

In September 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.

**DECIEM Stock Options**

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 for the three and six months ended December 31, 2022 and 2021 was not material. There were no DECIEM stock options exercised during the six months ended December 31, 2022.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

The DECIEM stock options are reported as a stock option liability of $71 million and $74 million in Other noncurrent liabilities in the accompanying consolidated balance sheets at December 31, 2022 and June 30, 2022, respectively. The fair value of the stock options were calculated using the following key assumptions in the Monte Carlo Method:

---

| | | |
|:---|:---|:---|
| | **December 31, 2022** | **June 30, 2022** |
| Risk-free rate | 4.40% | 3.20% |
| Term to mid of last twelve-month period | 0.92 years | 1.42 years |
| Operating leverage adjustment | 0.45 | 0.45 |
| Net sales discount rate | 7.10% | 6.00% |
| EBITDA discount rate | 10.50% | 9.40% |
| EBITDA volatility | 34.90% | 33.90% |
| Net sales volatility | 15.70% | 15.30% |

---

**NOTE 10 – NET EARNINGS ATTRIBUTABLE TO THE ESTÉE LAUDER COMPANIES INC. PER COMMON SHARE**

Net earnings attributable to The Estée Lauder Companies Inc. per common share ("basic EPS") is computed by dividing net earnings attributable to The Estée Lauder Companies Inc. by the weighted-average number of common shares outstanding and shares underlying PSUs and RSUs where the vesting conditions have been met. Net earnings attributable to The Estée Lauder Companies Inc. per common share assuming dilution ("diluted EPS") is computed by reflecting potential dilution from stock-based awards.

A reconciliation between the numerator and denominator of the basic and diluted EPS computations is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>(In millions, except per share data) | **2022** | **2021** | **2022** | **2021** |
| **Numerator:** |  |  |  |  |
| Net earnings attributable to The Estée Lauder Companies Inc. | $394 | $1088 | $883 | $1780 |
| **Denominator:** |  |  |  |  |
| Weighted-average common shares outstanding – Basic | 357.7 | 360.6 | 357.8 | 361.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Effect of dilutive stock options | 2.1 | 4.1 | 2.4 | 4.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Effect of PSUs | 0.1 | 0.2 | 0.1 | 0.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Effect of RSUs | 0.5 | 1.1 | 0.6 | 1.2 |
| Weighted-average common shares outstanding – Diluted | 360.4 | 366.0 | 360.9 | 367.0 |
| **Net earnings attributable to The Estée Lauder Companies Inc. per common share:** |  |  |  |  |
| Basic | $1.10 | $3.02 | $2.47 | $4.93 |
| Diluted | $1.09 | $2.97 | $2.45 | $4.85 |

---

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

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:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>(In millions) | **2022** | **2021** | **2022** | **2021** |
| Stock options | 2.9 | 1.1 | 2.1 | 0.7 |
| RSUs and PSUs | 0.1 |  | 0.1 | 0.1 |

---

As of December 31, 2022 and 2021, 0.4 million and 0.7 million shares, respectively, of Class A Common Stock underlying PSUs have been excluded from the calculation of diluted EPS because the number of shares ultimately issued is contingent on the achievement of certain performance targets of the Company, as discussed in *Note 9 – Stock Programs*.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 11 – EQUITY AND REDEEMABLE NONCONTROLLING INTEREST**

***Total Stockholders' Equity – The Estée Lauder Companies Inc.***

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>(In millions) | **2022** | **2021** | **2022** | **2021** |
| **Common stock, beginning of the period** | $6 | $6 | $6 | $6 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation |  |  |  |  |
| **Common stock, end of the period** | 6 | 6 | 6 | 6 |
| **Paid-in capital, beginning of the period** | 5875 | 5450 | 5796 | 5335 |
| &nbsp;&nbsp;&nbsp;Common stock dividends | 1 |  | 2 | 1 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation | 124 | 155 | 202 | 269 |
| **Paid-in capital, end of the period** | 6000 | 5605 | 6000 | 5605 |
| **Retained earnings, beginning of the period** | 14185 | 12864 | 13912 | 12244 |
| &nbsp;&nbsp;&nbsp;Common stock dividends | (237) | (217) | (453) | (410) |
| &nbsp;&nbsp;&nbsp;Net earnings attributable to The Estée Lauder Companies Inc. | 394 | 1088 | 883 | 1780 |
| &nbsp;&nbsp;&nbsp;Cumulative effect of adoption of new accounting standards |  |  |  | 121 |
| **Retained earnings, end of the period** | 14342 | 13735 | 14342 | 13735 |
| **Accumulated other comprehensive loss, beginning of the period** | (1078) | (625) | (762) | (470) |
| &nbsp;&nbsp;&nbsp;Other comprehensive income (loss) attributable to The Estée Lauder Companies Inc. | 249 | (21) | (67) | (176) |
| **Accumulated other comprehensive loss, end of the period** | (829) | (646) | (829) | (646) |
| **Treasury stock, beginning of the period** | (13471) | (11614) | (13362) | (11058) |
| &nbsp;&nbsp;&nbsp;Acquisition of treasury stock | (92) | (763) | (184) | (1282) |
| &nbsp;&nbsp;&nbsp;Stock-based compensation | (54) | (105) | (71) | (142) |
| **Treasury stock, end of the period** | (13617) | (12482) | (13617) | (12482) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total stockholders' equity – The Estée Lauder Companies Inc.** | 5902 | 6218 | 5902 | 6218 |
| **Noncontrolling interests, beginning of the period** |  | 34 |  | 34 |
| &nbsp;&nbsp;&nbsp;Net earnings attributable to noncontrolling interests |  | 4 |  | 5 |
| &nbsp;&nbsp;&nbsp;Translation adjustments and other, net |  | (4) |  | (5) |
| **Noncontrolling interests, end of the period** |  | 34 |  | 34 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total equity** | $5902 | $6252 | $5902 | $6252 |
| **Redeemable noncontrolling interest, beginning of the period** | $808 | $842 | $842 | $857 |
| &nbsp;&nbsp;&nbsp;Net earnings (loss) attributable to redeemable noncontrolling interest | 3 | (2) | 4 |  |
| &nbsp;&nbsp;&nbsp;Translation adjustments | 8 |  | (27) | (17) |
| **Redeemable noncontrolling interest, end of the period** | $819 | $840 | $819 | $840 |
| **Cash dividends declared per common share** | $.66 | $.60 | $1.26 | $1.13 |

---

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

The following is a summary of quarterly cash dividends declared per share on the Company's Class A and Class B Common Stock during the six months ended December 31, 2022:

---

| | | | |
|:---|:---|:---|:---|
| **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 |

---

On February 1, 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 March 15, 2023 to stockholders of record at the close of business on February 28, 2023.

***Common Stock***

During the six months ended December 31, 2022, the Company purchased approximately 1.1 million shares of its Class A Common Stock for $257 million.

***Accumulated Other Comprehensive Income***

The following table represents changes in AOCI, net of tax, by component for the six months ended December 31, 2022:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| (In millions) | **Net Cash<br>Flow Hedge<br>Gain (Loss)** | **Amounts<br>Included in Net Periodic Benefit Cost** | **Translation<br>Adjustments** |  | **Total** |
| Balance at June 30, 2022 | $68 | $(114) | $(716) |  | $(762) |
| &nbsp;&nbsp;&nbsp;&nbsp;OCI before reclassifications | 23 | (1) | (61) | <sup>(2)</sup> | (39) |
| &nbsp;&nbsp;&nbsp;&nbsp;Amounts reclassified to Net earnings | (28) |  |  |  | (28) |
| Net current-period OCI | (5) | (1) | (61) |  | (67) |
| Balance at December 31, 2022 | $63 | $(115) | $(777) |  | $(829) |

---

<sup>(1)</sup> Consists of foreign currency translation losses.

<sup>(2)</sup> See *Note 4 – Derivative Financial Instruments* for gains (losses) relating to net investment hedges.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

The following table represents the effects of reclassification adjustments from AOCI into net earnings for the three and six months ended December 31, 2022 and 2021:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Amount Reclassified from AOCI** | **Amount Reclassified from AOCI** | **Amount Reclassified from AOCI** | **Amount Reclassified from AOCI** | **Affected Line Item in<br>Consolidated<br>Statements of Earnings** |
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Affected Line Item in<br>Consolidated<br>Statements of Earnings** |
|<br>(In millions) | **2022** | **2021** | **2022** | **2021** | **Affected Line Item in<br>Consolidated<br>Statements of Earnings** |
| **Gain (Loss) on Cash Flow Hedges** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign currency forward contracts | $22 | $(2) | $37 | $(8) | Net sales |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest rate-related derivatives |  | (1) |  | (1) | Interest expense |
|  | 22 | (3) | 37 | (9) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Benefit (provision) for deferred taxes | (5) |  | (9) | 2 | Provision for income taxes |
|  | 17 | (3) | 28 | (7) | Net earnings |
| **Retirement Plan and Other Retiree Benefit Adjustments** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of prior service cost |  | 1 |  | 1 | Other components of net periodic benefit cost <sup>(1)</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of actuarial loss |  | (5) |  | (9) | Other components of net periodic benefit cost <sup>(1)</sup> |
|  |  | (4) |  | (8) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Benefit for deferred taxes |  | 1 |  | 2 | Provision for income taxes |
|  |  | (3) |  | (6) | Net earnings |
| **Total reclassification adjustments, net** | $17 | $(6) | $28 | $(13) | Net earnings |

---

<sup>(1)</sup> See *Note 7 – Pension and Post-Retirement Benefit Plans* for additional information.

**NOTE 12 – STATEMENT OF CASH FLOWS**

Supplemental cash flow information for the six months ended December 31, 2022 and 2021 is as follows:

---

| | | |
|:---|:---|:---|
| (In millions) | **2022** | **2021** |
| Cash: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash paid during the period for interest | $94 | $80 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash paid during the period for income taxes | $249 | $317 |
| Non-cash investing and financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Property, plant and equipment accrued but unpaid | $216 | $108 |
| &nbsp;&nbsp;&nbsp;&nbsp;Financing lease modifications | $— | $(14) |
| &nbsp;&nbsp;&nbsp;&nbsp;Right-of-use assets obtained in exchange for new/modified operating lease liabilities | $107 | $139 |

---

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 13 – SEGMENT DATA AND RELATED INFORMATION**

Reportable operating segments include components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (the "Chief Executive") in deciding how to allocate resources and in assessing performance. Although the Company operates in one business segment, beauty products, management also evaluates performance on a product category basis. Product category performance is measured based upon net sales before returns associated with restructuring and other activities, and operating income (loss) before 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 for the consolidated financial statements, as described in the notes to consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2022. The assets and liabilities of the Company are managed centrally and are reported internally in the same manner as the consolidated financial statements; thus, no additional information is produced for the Chief Executive or included herein. There has been no significant variance in the total or long-lived asset values associated with the Company's segment data since June 30, 2022.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>(In millions) | **2022** | **2021** | **2022** | **2021** |
| **PRODUCT CATEGORY DATA** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;**Net sales:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Skin Care | $2382 | $3159 | $4486 | $5608 |
| &nbsp;&nbsp;&nbsp;&nbsp;Makeup | 1268 | 1386 | 2320 | 2560 |
| &nbsp;&nbsp;&nbsp;&nbsp;Fragrance | 775 | 799 | 1382 | 1408 |
| &nbsp;&nbsp;&nbsp;&nbsp;Hair Care | 182 | 180 | 340 | 328 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 14 | 16 | 28 | 29 |
|  | 4621 | 5540 | 8556 | 9933 |
| &nbsp;&nbsp;&nbsp;Returns associated with restructuring and other activities | (1) | (1) | (6) | (2) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales | $4620 | $5539 | $8550 | $9931 |
| &nbsp;&nbsp;&nbsp;**Operating income (loss) before charges associated with restructuring and other activities:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Skin Care | $421 | $1082 | $951 | $1799 |
| &nbsp;&nbsp;&nbsp;&nbsp;Makeup | (37) | 130 | (21) | 221 |
| &nbsp;&nbsp;&nbsp;&nbsp;Fragrance | 177 | 210 | 310 | 341 |
| &nbsp;&nbsp;&nbsp;&nbsp;Hair Care | 5 | 8 | (7) | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | (1) | 3 | (1) | 3 |
|  | 565 | 1433 | 1232 | 2374 |
| &nbsp;&nbsp;&nbsp;**Reconciliation:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Charges associated with restructuring and other activities | (9) | (15) | (15) | (21) |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense | (52) | (42) | (98) | (84) |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest income and investment income, net | 26 | 10 | 41 | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other components of net periodic benefit cost | 2 | 2 | 5 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other income |  |  |  | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Earnings before income taxes | $532 | $1388 | $1165 | $2285 |
| **GEOGRAPHIC DATA**<sup>(1)</sup> |  |  |  |  |
| &nbsp;&nbsp;&nbsp;**Net sales:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;The Americas | $1235 | $1300 | $2358 | $2494 |
| &nbsp;&nbsp;&nbsp;&nbsp;Europe, the Middle East & Africa | 1816 | 2338 | 3498 | 4211 |
| &nbsp;&nbsp;&nbsp;&nbsp;Asia/Pacific | 1570 | 1902 | 2700 | 3228 |
|  | 4621 | 5540 | 8556 | 9933 |
| &nbsp;&nbsp;&nbsp;&nbsp;Returns associated with restructuring and other activities | (1) | (1) | (6) | (2) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales | $4620 | $5539 | $8550 | $9931 |
| &nbsp;&nbsp;&nbsp;**Operating income (loss):** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;The Americas | $(85) | $382 | $40 | $636 |
| &nbsp;&nbsp;&nbsp;&nbsp;Europe, the Middle East & Africa | 409 | 620 | 743 | 1085 |
| &nbsp;&nbsp;&nbsp;&nbsp;Asia/Pacific | 241 | 431 | 449 | 653 |
|  | 565 | 1433 | 1232 | 2374 |
| &nbsp;&nbsp;&nbsp;&nbsp;Charges associated with restructuring and other activities | (9) | (15) | (15) | (21) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating income | $556 | $1418 | $1217 | $2353 |

---

<sup>(1)</sup> 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.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**Item 2. *Management's Discussion and Analysis of Financial Condition and Results of Operations.***

**<u>RESULTS OF OPERATIONS</u>**

We manufacture, market and sell beauty products including those in the skin care, makeup, fragrance and hair care categories, which are distributed in approximately 150 countries and territories. The following table is a comparative summary of operating results for the three and six months ended December 31, 2022 and 2021, and reflects the basis of presentation described in *Notes to Consolidated Financial Statements, Note 1 – Summary of Significant Accounting Policies* for all periods presented. Products and services that do not meet our definition of skin care, makeup, fragrance and hair care have been included in the "other" category.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>(In millions) | **2022** | **2021** | **2022** | **2021** |
| **NET SALES** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;**By Product Category:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Skin Care | $2382 | $3159 | $4486 | $5608 |
| &nbsp;&nbsp;&nbsp;&nbsp;Makeup | 1268 | 1386 | 2320 | 2560 |
| &nbsp;&nbsp;&nbsp;&nbsp;Fragrance | 775 | 799 | 1382 | 1408 |
| &nbsp;&nbsp;&nbsp;&nbsp;Hair Care | 182 | 180 | 340 | 328 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 14 | 16 | 28 | 29 |
|  | 4621 | 5540 | 8556 | 9933 |
| &nbsp;&nbsp;&nbsp;&nbsp;Returns associated with restructuring and other activities | (1) | (1) | (6) | (2) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales | $4620 | $5539 | $8550 | $9931 |
| &nbsp;&nbsp;**By Region**<sup>(1)</sup>**:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;The Americas | $1235 | $1300 | $2358 | $2494 |
| &nbsp;&nbsp;&nbsp;&nbsp;Europe, the Middle East & Africa | 1816 | 2338 | 3498 | 4211 |
| &nbsp;&nbsp;&nbsp;&nbsp;Asia/Pacific | 1570 | 1902 | 2700 | 3228 |
|  | 4621 | 5540 | 8556 | 9933 |
| &nbsp;&nbsp;&nbsp;&nbsp;Returns associated with restructuring and other activities | (1) | (1) | (6) | (2) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales | $4620 | $5539 | $8550 | $9931 |
| **OPERATING INCOME (LOSS)** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;**By Product Category:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Skin Care | $421 | $1082 | $951 | $1799 |
| &nbsp;&nbsp;&nbsp;&nbsp;Makeup | (37) | 130 | (21) | 221 |
| &nbsp;&nbsp;&nbsp;&nbsp;Fragrance | 177 | 210 | 310 | 341 |
| &nbsp;&nbsp;&nbsp;&nbsp;Hair Care | 5 | 8 | (7) | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | (1) | 3 | (1) | 3 |
|  | 565 | 1433 | 1232 | 2374 |
| &nbsp;&nbsp;&nbsp;&nbsp;Charges associated with restructuring and other activities | (9) | (15) | (15) | (21) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating income | $556 | $1418 | $1217 | $2353 |
| &nbsp;&nbsp;**By Region**<sup>(1)</sup>**:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;The Americas | $(85) | $382 | $40 | $636 |
| &nbsp;&nbsp;&nbsp;&nbsp;Europe, the Middle East & Africa | 409 | 620 | 743 | 1085 |
| &nbsp;&nbsp;&nbsp;&nbsp;Asia/Pacific | 241 | 431 | 449 | 653 |
|  | 565 | 1433 | 1232 | 2374 |
| &nbsp;&nbsp;&nbsp;&nbsp;Charges associated with restructuring and other activities | (9) | (15) | (15) | (21) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating income | $556 | $1418 | $1217 | $2353 |

---

<sup>(1)</sup> 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.

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<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

The following table presents certain consolidated earnings data as a percentage of net sales:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
| | **2022** | **2021** | **2022** | **2021** |
| Net sales | 100.0% | 100.0% | 100.0% | 100.0% |
| Cost of sales | 26.4 | 22.1 | 26.2 | 23.0 |
| Gross profit | 73.6 | 77.9 | 73.8 | 77.0 |
| Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative | 56.9 | 52.0 | 57.0 | 53.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restructuring and other charges | 0.2 | 0.3 | 0.1 | 0.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Impairment of other intangible assets | 4.5 |  | 2.4 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 61.6 | 52.3 | 59.5 | 53.3 |
| Operating income | 12.0 | 25.6 | 14.2 | 23.7 |
| Interest expense | 1.1 | 0.8 | 1.1 | 0.8 |
| Interest income and investment income, net | 0.6 | 0.2 | 0.5 | 0.1 |
| Other components of net periodic benefit cost |  |  | (0.1) |  |
| Other income |  |  |  |  |
| Earnings before income taxes | 11.5 | 25.1 | 13.6 | 23.0 |
| Provision for income taxes | (2.9) | (5.4) | (3.3) | (5.0) |
| Net earnings | 8.6 | 19.7 | 10.4 | 18.0 |
| Net earnings attributable to noncontrolling interests |  | (0.1) |  | (0.1) |
| Net loss (earnings) attributable to redeemable noncontrolling interest | (0.1) |  |  |  |
| Net earnings attributable to The Estée Lauder Companies Inc. | 8.5% | 19.6% | 10.3% | 17.9% |

---

Not adjusted for differences caused by rounding

Period-over-period changes in our net sales are generally attributable to the impacts from (i) pricing on our base portfolio, including changes in mix and those due to strategic pricing actions, (ii) volume, including changes driven by the impact of new product innovation, (iii) acquisitions and/or divestitures, and/or (iv) foreign currency translation.

The net sales impact from pricing consists of changes in list prices, due to strategic pricing actions, and mix shifts within and among product categories, geographic regions and distribution channels. The prices at which we sell our products vary by brand, distribution channel (e.g., wholesale or direct-to-consumer) and may also vary by country. Our brands and products cover a broad array of pricing tiers. Prices of skin care and fragrance products are typically higher than makeup and hair care products.

New product innovation includes the introduction of new products, as well as changes related to existing products or where they are sold, including reformulations, regional expansion, repackaging and sets. A product is considered "new innovation" for the twelve-month period following the initial shipment date. Our innovation is launched at different price points than existing products and value derived from innovation may vary from year to year. We continually introduce new products, support new and established products through advertising, merchandising and sampling and phase out existing products that no longer meet the needs of our consumers or our objectives. The economics of developing, producing, launching, supporting and discontinuing products impact our sales and operating performance each period. The introduction of new products often has some cannibalizing effect on sales of existing products, which we take into account in our business planning. The impact of new product introductions, including timing compared to introductions in prior periods, also affects our results.

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<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

***Non-GAAP Financial Measures***

We use certain non-GAAP financial measures, among other financial measures, to evaluate our operating performance, which represent the manner in which we conduct and view our business. Management believes that excluding certain items that are not comparable from period to period helps investors and others compare operating performance between periods. While we consider the non-GAAP measures useful in analyzing our results, they are not intended to replace, or act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with U.S. GAAP. See *Reconciliations of Non-GAAP Financial Measures* beginning on page 54 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

We operate on a global basis, with the majority of our net sales generated outside the United States. Accordingly, fluctuations in foreign currency exchange rates can affect our results of operations. Therefore, we present certain net sales, operating results and diluted net earnings per common share information excluding the effect of foreign currency rate fluctuations to provide a framework for assessing the performance of our underlying business outside the United States. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. We calculate constant currency information by translating current-period results using monthly average foreign currency exchange rates and adjusting for the period-over-period impact of foreign currency cash flow hedging activities.

***Overview***

**<u>Business Update</u>**

We are a leader in prestige beauty, which combines the repeat purchase and relative affordability of consumer goods with high quality products and services. Within prestige beauty, we are well diversified by product category, geography, brand, product sub-category, channel, consumer segment and price point. This diversification allows us to leverage consumer analytics and insights with agility by deploying our brands to fast growing and profitable opportunities. These analytics and insights, combined with our creativity, inform our innovation to provide a broad, locally-relevant and inclusive range of prestige products allowing us to compete effectively for a greater share of a consumer's beauty routine. Elements of our strategy are described in the *Overview* on pages 30-32 of our Annual Report on Form 10-K for the year ended June 30, 2022, as well as below.

The COVID-19 pandemic continued to disrupt our operating environment through the first half of fiscal 2023, including the evolution of the COVID-19 environment, including restrictions in mainland China and the rising number of COVID cases (collectively "COVID-related impacts") affecting Asia travel retail, particularly Hainan, and retail traffic in mainland China. In Asia travel retail, these challenges led to prolonged store closures as well as the curtailment of travel and caused the tightening of inventory by certain of our retailers who had previously placed orders in anticipation of the return of travel that was since delayed. During the first half of fiscal 2023, our business was also negatively impacted by the strong U.S. dollar, along with inflationary pressures and recession concerns that caused certain of our retailers in the United States to tighten inventory. While our monthly retail trends improved sequentially during the fiscal 2023 second quarter in the United States, the pace was slower than anticipated resulting in lower replenishment orders compared to the prior-year period.

During the second quarter of fiscal 2023, net sales decreased 17%, reflecting the impacts of the challenges noted above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our skin care net sales declined 25%, including the unfavorable impact of foreign currency translation of 5%. The category continues to be pressured by the COVID-related impacts affecting Asia travel retail, including the tightening of inventory by certain of our retailers, retail traffic in mainland China and the Dr.Jart+ travel retail business in Korea. Lower replenishment orders in the United States also negatively impacted the category's growth. Despite these pressures, net sales benefited from higher net sales from The Ordinary and Bobbi Brown.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our makeup net sales declined 9%, including the unfavorable impact of foreign currency translation of 6%. The decline in makeup net sales reflects the COVID-related impacts affecting Asia travel retail and retail traffic in mainland China, partially offset by the continued progression towards recovery in parts of Asia/Pacific and Europe, Middle East & Africa.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our fragrance net sales decreased 3%, primarily due to the impact of the license terminations related to certain of our designer fragrances of 9% and the unfavorable impact of foreign currency translation of 6%. Overall the category benefited from increases in Estée Lauder and Clinique due to strong holiday performance, as well as the shift in consumer demand toward our luxury and artisanal offerings, including Le Labo and Tom Ford Beauty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our hair care net sales remained virtually flat, benefiting from the fiscal 2022 third quarter launch of The Ordinary's hair care products, offset by lower net sales from Aveda, driven by the unfavorable impact of foreign currency translation.

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<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

Our global distribution capability and operations allow us to focus on targeted expanded consumer reach wherever consumer demographics and trends are the most attractive. Our regional organizations, and the expertise of our people there, enable our brands to be more locally and culturally relevant in both product assortment and communications. We are evolving the way we connect with our consumers in stores, online and where they travel, including by expanding our digital and social media presence and the engagement of global and local influencers to amplify brand or product stories. We tailor implementation of our strategy by market to drive consumer engagement and embrace cultural diversity. We continuously strengthen our presence in large, image-building core markets, while broadening our presence in emerging markets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Net sales in The Americas decreased 5%, primarily reflecting the license terminations related to certain of our designer fragrances, and the unfavorable impacts of lower replenishment orders in the United States. Offsetting the net sales decrease in The Americas was continued growth in Latin America, primarily led by our makeup category and successful performance during holiday and key shopping moments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**•** Net sales in Europe, the Middle East & Africa decreased 22%, including the unfavorable impact of foreign currency translation of 4%, primarily due to continued COVID-related impacts affecting Asia travel retail. Partially offsetting this decrease was an increase in net sales in Turkey, driven by growth in our makeup category, and India, driven by growth in our skin care category. Net sales in Russia declined period-over-period, and, during the fiscal 2023 second quarter, we sold a limited selection of products to a reduced number of authorized retailers and completed the closure of all of our freestanding stores. Net sales in the United Kingdom declined period-over-period, driven by the unfavorable impact of foreign currency translation, partially offset by the continued recovery in the makeup product category.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The continued COVID-related impacts affected our business in Greater China and the Dr.Jart+ travel retail business in Korea drove the net sales decline in Asia/Pacific of 17%, including the unfavorable impact of foreign currency translation of 9%. Net sales in Asia/Pacific benefited from growth in southeast Asia, led by the Philippines, Malaysia, and Vietnam, driven by our makeup and fragrance product categories.

**Outlook**

The COVID-19 pandemic continues to disrupt business for us, retailers and other companies with which we do business. There have been, and are likely to continue to be, intermittent store closures and supply chain challenges. We are mindful that these trends may continue to impact the pace of recovery. We are seeing a continued and prolonged curtailment in international travel which is also affecting our travel retail business, particularly in Asia, which historically has been one of our fastest growth areas. The rising number of COVID cases that started in December continues to negatively impact the pace of recovery. In addition to impacting net sales and profitability, these and other challenges may adversely impact the goodwill and other intangible assets associated with our brands, as well as long-lived assets (i.e. potentially resulting in impairments).

We believe that the best way to increase long-term stockholder value is to continue providing superior products and services in the most efficient and effective manner while recognizing shifts in consumers' behaviors and shopping practices. Accordingly, our long-term strategy has numerous initiatives across geographic regions, product categories, brands, channels of distribution and functions designed to grow our sales, provide cost efficiencies, leverage our strengths and make us more productive and profitable. We plan to build upon and leverage our history of outstanding creativity and innovation, high quality products and services, and engaging communications while investing for long-term sustainable growth.

We continue to monitor the effects of the global macro environment, including the risk of recession; currency volatility; increasing inflationary pressures; supply chain challenges; social and political issues; regulatory matters, including the imposition of tariffs and sanctions; geopolitical tensions; and global security issues. For example, the strengthening of the U.S. dollar could negatively impact results within Europe, the Middle East & Africa due to pricing pressures on our retail customers and consumers in key international travel retail locations. Additionally, we continue to monitor the geopolitical tensions between the United States and China, which could have a material adverse effect on our business. We are also mindful of inflationary pressures on our cost base and are monitoring the impact on consumer preferences.

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<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

As the invasion of Ukraine continues and international sanctions evolve, our business and ability to operate in Russia and Ukraine continue to be negatively impacted. As we responsibly scale-down our operations, we expect to sell a limited selection of products to authorized retailers in Russia. We will continue to monitor the risks and evolving situation that may further affect our business and will adjust our plans accordingly. In fiscal 2022, our operations in Ukraine and Russia accounted for approximately 1% of consolidated net sales. There are uncertainties related to the future impacts on our business, including possible new sanctions that are difficult to predict due to the high level of geopolitical volatility. On a broader perspective, there could be additional negative impacts to our net sales, earnings, assets and cash flows from such uncertainties. We also note that worsening conditions could exacerbate economic challenges in other countries such as inflationary pressures, energy shortages, recessions or other consequences. Please refer to *Risk Factors* in Part I, Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2022, for a more complete discussion of the risks we encounter in our business and industry.

The uncertainty around the timing, speed and duration of the recovery from the adverse impacts of the COVID-19 pandemic, including the impacts on our business in China and the other macro challenges we are facing, will continue to affect our ability to grow sales profitably. We believe we can, to some extent, offset the impact of more ordinary challenges by continually developing and pursuing a diversified strategy with multiple engines of growth and by accelerating initiatives focused on areas of strength, discipline and agility, including continuing to execute upon and benefit from efficiencies attributable to previously approved initiatives under the Post-COVID Business Acceleration Program. As the current situation continues to progress, if economic and social conditions or the degree of uncertainty or volatility worsen, or the adverse conditions previously described are further prolonged, there could be a further negative effect on consumer confidence, demand, spending and willingness or ability to travel and, as a result, on our business. We are continuing to monitor these and other risks that may affect our business.

**Post-COVID Business Acceleration Program**

Information about our restructuring initiative, the Post-COVID Business Acceleration Program, is described in *Notes to Consolidated Financial Statements, Note 3 – Charges Associated with Restructuring and Other Activities* herein, as well as, in *Notes to Consolidated Financial Statements, Note 8 – Charges Associated with Restructuring and Other Activities* and in the *Overview* on page 33 of our Annual Report on Form 10-K for the year ended June 30, 2022.

**Other Intangible Asset Impairments**

During the fiscal 2023 second quarter, given the lower-than-expected results in the overall business, we made revisions to the internal forecasts relating to our Smashbox reporting unit. We 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 we 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, we made revisions to the internal forecasts relating to our 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.

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<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

We 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, we performed interim impairment tests for the trademarks and a recoverability test for the long-lived assets as of November 30, 2022. We 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. We concluded that the carrying amounts of the long-lived assets were recoverable. After adjusting the carrying values of the trademarks, we 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, we concluded that the carrying amounts of the goodwill were recoverable and did not record a goodwill impairment charge related to these reporting units. The fair values of these reporting units were based upon an equal weighting of the income and market approaches, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the reporting units. The significant assumptions used in these approaches include revenue growth rates and profit margins, terminal values, weighted average cost of capital used to discount future cash flows and royalty rates for trademarks. The most significant unobservable input used to estimate the fair values of the Dr.Jart+ and Too Faced trademark intangible assets was the weighted-average cost of capital, which was 11% and 13%, respectively.

A summary of the impairment charges for the three and six months ended December 31, 2022 and the remaining trademark and goodwill carrying values as of December 31, 2022, for each reporting unit, are as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **Impairment Charge** | **Impairment Charge** | **Carrying Value** | **Carrying Value** |
| (In millions) |  | **Three and Six Months Ended December 31, 2022** | **Three and Six Months Ended December 31, 2022** | **As of December 31, 2022** | **As of December 31, 2022** |
| **Reporting Unit:** | **Geographic Region** | **Trademarks** | **Goodwill** | **Trademarks** | **Goodwill** |
| &nbsp;&nbsp;Smashbox | The Americas | $21 | $— | $— | $— |
| &nbsp;&nbsp;Dr. Jart+ | Asia/Pacific | 100 |  | 339 | 318 |
| &nbsp;&nbsp;Too Faced | The Americas | 86 |  | 186 | 13 |
| Total |  | $207 | $— | $525 | $331 |

---

The impairment charges for the three and six months ended December 31, 2022 were reflected in the skin care product category for Dr.Jart+ and the makeup product category for Smashbox and Too Faced.

The fair value of the Dr.Jart+ and Too Faced trademarks were equal to their carrying values subsequent to the impairment charges taken as of December 31, 2022. Additionally, the estimated fair value of the Dr.Jart+ and Too Faced reporting units exceeded their carrying value by 7% and 10%, respectively. For the Dr.Jart+ and Too faced reporting units, if all other assumptions are held constant, a decrease of 10% in the estimated future cash flows, inclusive of the terminal value, or an increase of 100 basis points in the weighted average cost of capital, would have caused the carrying value of these reporting units to approximate their fair value. The key assumptions used to determine the estimated fair value of the reporting units and their respective trademarks are primarily predicated on the estimated future impacts of COVID-19, the success of future new product launches, the achievement of distribution expansion plans, and the realization of cost reduction and other efficiency efforts. If such plans do not materialize, or if there are further challenges in the business environments in which the reporting unit operates, resulting changes in the key assumptions could have negative impacts on the estimated fair value of the reporting units, and their respective trademarks, and it is possible we could recognize additional impairment charges in the future.

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<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**NET SALES**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>($ in millions) | **2022** | **2021** | **2022** | **2021** |
| **As Reported:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net sales | $4620 | $5539 | $8550 | $9931 |
| &nbsp;&nbsp;&nbsp;&nbsp;$ Change from prior-year period | (919) |  | (1381) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period | (17)% |  | (14)% |  |
| **Non-GAAP Financial Measure**<sup>(1)</sup>**:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period in constant currency adjusting for returns associated with restructuring and other activities | (11)% |  | (9)% |  |

---

<sup>(1)</sup> See "*Reconciliations of Non-GAAP Financial Measures"* beginning on page 54 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

Reported net sales decreased for the three and six months ended December 31, 2022, driven by lower net sales from the skin care, makeup and fragrance product categories and from all geographic regions. In both periods, the net sales decrease is primarily due to the COVID-related impacts, affecting Asia travel retail, mainland China, and the Dr.Jart+ travel retail business in Korea, as well as the impact of the license terminations related to certain of our designer fragrances effective June 30, 2022.

Skin care net sales declined for the three and six months ended December 31, 2022, primarily driven by Estée Lauder, La Mer, Dr.Jart+ and Clinique, partially offset by higher net sales from The Ordinary and Bobbi Brown. Makeup net sales decreased in both periods due to lower net sales from Estée Lauder and Tom Ford Beauty, partially offset by an increase in net sales from M·A·C driven by the recognition of previously deferred revenue due to changes to the BACK 2 M·A·C take back program during the fiscal 2023 second quarter. Fragrance net sales declined in both periods primarily due to the impact of the license terminations related to the Donna Karan New York, DKNY, Michael Kors, Tommy Hilfiger and Ermenegildo Zegna product lines ("certain of our designer fragrances") effective June 30, 2022 and lower net sales from Jo Malone London, partially offset by higher net sales from Estée Lauder, Le Labo, Tom Ford Beauty and Clinique.

Net sales in Europe, the Middle East & Africa declined for the three and six months ended December 31, 2022, primarily driven by the COVID-related impacts affecting Asia travel retail, as well as lower net sales from Russia, and the United Kingdom, driven by the unfavorable impact of foreign currency translation. Net sales decreased in Asia/Pacific in both periods, primarily due to the COVID-related impacts affecting Greater China and the Dr.Jart+ travel retail business in Korea, partially offset by higher net sales from southeast Asia, led by the Philippines, Malaysia, and Vietnam. Net sales in The Americas decreased in both periods, driven by the impact of the license terminations related to certain of our designer fragrances effective June 30, 2022, and the impact in the United States from the tightening of inventory from certain of our retailers and lower replenishment orders in the fiscal 2023 second quarter. Partially offsetting the decrease in net sales in The Americas for the three and six months ended December 31, 2022 was an increase in net sales in Latin America.

The total net sales decrease was impacted by approximately $282 million and $458 million of unfavorable foreign currency translation for the three and six months ended December 31, 2022, respectively.

Returns associated with restructuring and other activities are not allocated to our product categories or geographic regions because they result from activities that are deemed a Company-wide initiative to redesign, resize and reorganize select corporate functions and go-to-market structures. Accordingly, the following discussions of Net sales by *Product Categories* and *Geographic Regions* exclude the impact of returns associated with restructuring and other activities for the three and six months ended December 31, 2022 of $1 million and $6 million, respectively, and for the three and six months ended December 31, 2021 of $1 million and $2 million, respectively.

Reported net sales decreased 17% for the three months ended December 31, 2022, driven by the decrease from volume of 11%, the unfavorable impact from foreign currency translation of 5%, and the impact from the license terminations of certain of our designer fragrances of 1%. The impact from pricing was virtually flat period-over-period, due to the favorable impact from strategic pricing actions offset by changes in mix.

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<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

Reported net sales decreased 14% for the six months ended December 31, 2022, driven by the decrease from volume of 10%, the unfavorable impact from foreign currency translation of 5%, and the impact from the license terminations of certain of our designer fragrances of 1%. Partially offsetting these decreases was the increase from pricing of 2%, due to the favorable impact from strategic pricing actions, partially offset by changes in mix.

***Product Categories***

**Skin Care**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>($ in millions) | **2022** | **2021** | **2022** | **2021** |
| **As Reported:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net sales | $2382 | $3159 | $4486 | $5608 |
| &nbsp;&nbsp;&nbsp;&nbsp;$ Change from prior-year period | (777) |  | (1122) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period | (25)% |  | (20)% |  |
| **Non-GAAP Financial Measure**<sup>(1)</sup>**:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period in constant currency | (20)% |  | (16)% |  |

---

<sup>(1)</sup> See "*Reconciliations of Non-GAAP Financial Measures"* beginning on page 54 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

Reported skin care net sales decreased for the three and six months ended December 31, 2022, reflecting lower net sales from Estée Lauder, La Mer, Clinique and Dr.Jart+, combined, of approximately $762 million and $1,068 million, respectively, primarily driven by the COVID-related impacts affecting Asia travel retail, including the tightening of inventory by certain of our retailers, retail traffic in mainland China and the Dr.Jart+ travel retail business in Korea. Also contributing to the decrease in net sales from Estée Lauder for the three and six months ended December 31, 2022 in the United States was the tightening of inventory from certain of our retailers and lower replenishment orders in the fiscal 2023 second quarter.

Partially offsetting these decreases in skin care net sales for the three and six months ended December 31, 2022 were higher net sales from The Ordinary and Bobbi Brown, combined, of approximately $34 million and $38 million, respectively. The increase in net sales from The Ordinary in both periods was driven by success of hero products, new product launches and expanded distribution. In both periods, the increase in net sales from Bobbi Brown reflected the continued success of hero products.

The skin care net sales decrease was impacted by approximately $152 million and $237 million of unfavorable foreign currency translation for the three and six months ended December 31, 2022, respectively.

Reported skin care net sales decreased 25% for the three months ended December 31, 2022, driven by the decrease from volume of 18%, the unfavorable impact from foreign currency translation of 5%, and a decrease from pricing of 2%, due to the unfavorable impact from changes in mix, partially offset from strategic pricing actions.

Reported skin care net sales decreased 20% for the six months ended December 31, 2022, driven by the decrease from volume of 16% and the unfavorable impact from foreign currency translation of 4%. The impact from pricing was virtually flat period-over-period, due to the favorable impact from strategic pricing actions offset by changes in mix.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**Makeup**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>($ in millions) | **2022** | **2021** | **2022** | **2021** |
| **As Reported:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net sales | $1268 | $1386 | $2320 | $2560 |
| &nbsp;&nbsp;&nbsp;&nbsp;$ Change from prior-year period | (118) |  | (240) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period | (9)% |  | (9)% |  |
| **Non-GAAP Financial Measure**<sup>(1)</sup>**:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period in constant currency | (3)% |  | (5)% |  |

---

<sup>(1)</sup> See "*Reconciliations of Non-GAAP Financial Measures"* beginning on page 54 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

Reported makeup net sales decreased for the three and six months ended December 31, 2022, reflecting lower net sales from Estée Lauder and Tom Ford Beauty, combined, of approximately $119 million and $233 million, respectively, primarily driven by COVID-related impacts, affecting Asia travel retail and retail traffic in mainland China.

Partially offsetting these decreases in net sales for the three and six months ended December 31, 2022 was an increase in net sales from M·A·C in both periods, driven by the recognition of previously deferred revenue due to changes to the BACK 2 M·A·C take back program during the fiscal 2023 second quarter.

The makeup net sales decrease was impacted by approximately $73 million and $123 million of unfavorable foreign currency translation for the three and six months ended December 31, 2022, respectively.

Reported makeup net sales decreased 9% for the three months ended December 31, 2022, driven by the decrease from volume of 9% and the unfavorable impact from foreign currency translation of 5%. Partially offsetting these decreases was the increase from pricing of 5% due to the favorable impact from strategic pricing actions.

Reported makeup net sales decreased 9% for the six months ended December 31, 2022, driven by the decrease from volume of 6% and the unfavorable impact from foreign currency translation of 5%. Partially offsetting these decrease was an increase from pricing of 2% due to the favorable impact from strategic pricing actions, partially offset by changes in mix.

**Fragrance**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>($ in millions) | **2022** | **2021** | **2022** | **2021** |
| **As Reported:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net sales | $775 | $799 | $1382 | $1408 |
| &nbsp;&nbsp;&nbsp;&nbsp;$ Change from prior-year period | (24) |  | (26) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period | (3)% |  | (2)% |  |
| **Non-GAAP Financial Measure**<sup>(1)</sup>**:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period in constant currency | 3% |  | 4% |  |

---

<sup>(1)</sup> See "*Reconciliations of Non-GAAP Financial Measures"* beginning on page 54 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

Reported fragrance net sales decreased for the three and six months ended December 31, 2022, primarily reflecting the impact of the license terminations related to certain of our designer fragrances effective June 30, 2022 and lower net sales from Jo Malone London, combined, of approximately $102 million and $163 million, respectively. The decrease in net sales from Jo Malone London for the three and six months ended December 31, 2022 primarily reflected COVID-related impacts affecting Asia travel retail and retail traffic in mainland China. Also contributing to the net sales decline for the three months ended December 31, 2022 for Jo Malone London was an unfavorable impact relating to the timing of holiday shipments compared to the prior-year period.

Partially offsetting the decrease in fragrance net sales for the three and six months ended December 31, 2022 were higher net sales from Estée Lauder, Le Labo, Tom Ford Beauty, and Clinique, combined, of approximately $74 million and $135 million, respectively. Net sales from Estée Lauder increased in both periods, primarily reflecting successful performance during holiday and key shopping moments driven by continued success from the Beautiful franchise line of products. Also contributing to the increase in net sales from Estée Lauder for the three months ended December 31, 2022 was a favorable impact due to timing of holiday shipments compared to the prior-year period. Net sales from Le Labo increased in both periods, reflecting the continued success of hero product franchises, successful performance during holiday and targeted expanded consumer reach. The increase in net sales from Tom Ford Beauty in both periods reflected the continued success of Private Blend and Signature fragrances, new product launches and successful performance during holiday and key shopping moments. Net sales from Clinique increased in both periods, primarily reflecting growth in the Clinique Happy franchise line of products.

The fragrance net sales decrease was impacted by approximately $49 million and $84 million of unfavorable foreign currency translation for the three and six months ended December 31, 2022, respectively.

Reported fragrance net sales decreased 3% for the three months ended December 31, 2022, driven by the impact from the license terminations of certain of our designer fragrances of 9% and the unfavorable impact from foreign currency translation of 6%. Partially offsetting these decreases was the increase from volume of 9% and the increase from pricing of 3%, due to the favorable impact from strategic pricing actions, partially offset by changes in mix.

Reported fragrance net sales decreased 2% for the six months ended December 31, 2022, driven by the impact from the license terminations of certain of our designer fragrances of 10% and the unfavorable impact from foreign currency translation of 6%. Partially offsetting these decreases was the increase from volume of 10% and the increase from pricing of 4%, due to the favorable impact from strategic pricing actions, partially offset by changes in mix.

**Hair Care**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>($ in millions) | **2022** | **2021** | **2022** | **2021** |
| **As Reported:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net sales | $182 | $180 | $340 | $328 |
| &nbsp;&nbsp;&nbsp;&nbsp;$ Change from prior-year period | 2 |  | 12 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period | 1% |  | 4% |  |
| **Non-GAAP Financial Measure**<sup>(1)</sup>**:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period in constant currency | 4% |  | 7% |  |

---

<sup>(1)</sup> See "*Reconciliations of Non-GAAP Financial Measures"* beginning on page 54 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

Reported hair care net sales increased for the three and six months ended December 31, 2022, led by The Ordinary, benefiting from the fiscal 2022 third quarter launch of hair care products, partially offset by a decrease in net sales from Aveda. The decrease in net sales from Aveda in both periods reflects an unfavorable impact of foreign currency translation, partially offset by the fiscal 2023 first quarter distribution expansion into mainland China and successful performance during holiday and key shopping moments.

The hair care net sales increase was impacted by approximately $6 million and $12 million of unfavorable foreign currency translation for the three and six months ended December 31, 2022, respectively.

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<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

Reported hair care net sales increased 1% for the three months ended December 31, 2022, driven by the increase from pricing of 7%, due to the favorable impact from strategic pricing actions. Partially offsetting this increase was the decrease from volume of 3%, partially offset by new product innovation, and the unfavorable impact from foreign currency translation of 3%.

Reported hair care net sales increased 4% for the six months ended December 31, 2022, driven by the increase from pricing of 10%, due to the favorable impact from strategic pricing actions and changes in mix. Partially offsetting this increase was the decrease from volume of 2%, partially offset by new product innovation, and the unfavorable impact from foreign currency translation of 4%.

***Geographic Regions***

We strategically time our new product launches by geographic market, which may account for differences in regional sales growth.

**The Americas**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>($ in millions) | **2022** | **2021** | **2022** | **2021** |
| **As Reported:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net sales | $1235 | $1300 | $2358 | $2494 |
| &nbsp;&nbsp;&nbsp;&nbsp;$ Change from prior-year period | (65) |  | (136) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period | (5)% |  | (5)% |  |
| **Non-GAAP Financial Measure**<sup>(1)</sup>**:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period in constant currency | (6)% |  | (6)% |  |

---

<sup>(1)</sup> See "*Reconciliations of Non-GAAP Financial Measures"* beginning on page 54 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

Reported net sales in The Americas decreased for the three and six months ended December 31, 2022, reflecting the impact of the license terminations related to certain of our designer fragrances effective June 30, 2022 of 2% and 3%, respectively. In the United States, net sales decreased $66 million and $138 million for the three and six months ended December 31, 2022, respectively, driven by the tightening of inventory from certain of our retailers, lower shipments of replenishment orders in the fiscal 2023 second quarter and the aforementioned impact of the license terminations related to certain of our designer fragrances.

Partially offsetting the decrease in The Americas for the three and six months ended December 31, 2022 was an increase in net sales in Latin America of approximately $7 million and $20 million, respectively, reflecting continued recovery in makeup.

Net sales in The Americas were impacted by approximately $7 million and $14 million of favorable foreign currency translation for the three and six months ended December 31, 2022, respectively.

Reported net sales in The Americas decreased 5% for the three months ended December 31, 2022, driven by the decrease from volume of 8% and the impact from the license terminations related to certain of our designer fragrances of 2%. Partially offsetting this decrease was the increase from pricing of 4%, due to the favorable impact from strategic pricing actions, partially offset by changes in mix, and the favorable impact from foreign currency translation of 1%.

Reported net sales in The Americas decreased 5% for the six months ended December 31, 2022, driven by the decrease from volume of 8% and the impact from the license terminations related to certain of our designer fragrances of 3%. Partially offsetting this decrease was the increase from pricing of 5%, due to the favorable impact from strategic pricing actions, and the favorable impact from foreign currency translation of 1%.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**Europe, the Middle East & Africa**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>($ in millions) | **2022** | **2021** | **2022** | **2021** |
| **As Reported:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net sales | $1816 | $2338 | $3498 | $4211 |
| &nbsp;&nbsp;&nbsp;&nbsp;$ Change from prior-year period | (522) |  | (713) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period | (22)% |  | (17)% |  |
| **Non-GAAP Financial Measure**<sup>(1)</sup>**:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period in constant currency | (18)% |  | (13)% |  |

---

<sup>(1)</sup> See "*Reconciliations of Non-GAAP Financial Measures"* beginning on page 54 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

Reported net sales decreased in Europe, the Middle East & Africa for the three and six months ended December 31, 2022, primarily driven by lower net sales from our travel retail business, Russia and the United Kingdom, combined, of approximately $529 million and $703 million, respectively. The decrease in net sales from our travel retail business for the three and six months ended December 31, 2022 reflects the COVID-related impacts affecting Asia travel retail, including the tightening of inventory from certain of our retailers. Net sales from Russia decreased for the three and six months ended December 31, 2022, as we sold a limited selection of products to a reduced number of authorized retailers and completed the closure of all of our freestanding stores. The decrease in net sales from the United Kingdom for the three and six months ended December 31, 2022 is driven by the unfavorable impact of foreign currency translation, partially offset by the continued recovery in the makeup product category.

Partially offsetting the decreases in net sales in Europe, the Middle East & Africa for the three and six months ended December 31, 2022 were increases in net sales from Turkey and India, combined, of approximately $17 million and $31 million. The net sales increase in Turkey in both periods was driven by growth in makeup. Net sales in India increased for the three and six months ended December 31, 2022 led by growth in skin care and makeup, respectively.

Net sales in Europe, the Middle East & Africa were impacted by approximately $102 million and $185 million of unfavorable foreign currency translation for the three and six months ended December 31, 2022, respectively.

Reported net sales in Europe, the Middle East & Africa decreased 22% for the three months ended December 31, 2022, driven by the decrease from volume of 16%, the unfavorable impact from foreign currency translation of 4%, and the impact from the license terminations related to certain of our designer fragrances of 1%, and a decrease from pricing of 1%, due to the unfavorable impact from changes in mix, partially offset by strategic pricing actions.

Reported net sales in Europe, the Middle East & Africa decreased 17% for the six months ended December 31, 2022, driven by the decrease from volume of 12%, the unfavorable impact from foreign currency translation of 4%, and the impact from the license terminations related to certain of our designer fragrances of 1%. The impact from pricing was virtually flat period-over-period, due to the favorable impact from strategic pricing actions offset by changes in mix.

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<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**Asia/Pacific**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>($ in millions) | **2022** | **2021** | **2022** | **2021** |
| **As Reported:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net sales | $1570 | $1902 | $2700 | $3228 |
| &nbsp;&nbsp;&nbsp;&nbsp;$ Change from prior-year period | (332) |  | (528) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period | (17)% |  | (16)% |  |
| **Non-GAAP Financial Measure**<sup>(1)</sup>**:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period in constant currency | (8)% |  | (7)% |  |

---

<sup>(1)</sup> See "*Reconciliations of Non-GAAP Financial Measures"* beginning on page 54 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

Reported net sales decreased in Asia/Pacific for the three and six months ended December 31, 2022, primarily driven by a decrease in net sales in Greater China and Korea, led by the Dr.Jart+ travel retail business in Korea, combined, of approximately $321 million and $538 million, respectively, due to the COVID-related impacts.

Partially offsetting the net sales decrease for the three and six months ended December 31, 2022 were increases across southeast Asia, led by increases in net sales from the Philippines, Malaysia and Vietnam, combined, of approximately $5 million and $30 million, respectively, driven by growth in our makeup and fragrance product categories.

Net sales in Asia/Pacific were impacted by approximately $187 million and $287 million of unfavorable foreign currency translation for the three and six months ended December 31, 2022, respectively.

Reported net sales in Asia/Pacific decreased 17% for the three months ended December 31, 2022, driven by the decrease from the unfavorable impact from foreign currency translation of 10% and the decrease from volume of 8%. Partially offsetting these decreases was the increase from pricing of 1%, due to the favorable impact from strategic pricing actions, partially offset by changes in mix.

Reported net sales in Asia/Pacific decreased 16% for the six months ended December 31, 2022, driven by the unfavorable impact from foreign currency translation of 9% and the decrease from volume of 8%. Partially offsetting these decreases was the increase from pricing of 1%, due to the favorable impact from strategic pricing actions, partially offset by changes in mix.

**GROSS MARGIN**

Gross margin decreased to 73.6% and 73.8% for the three and six months ended December 31, 2022, respectively, as compared with 77.9% and 77.0% in the prior-year periods.

---

| | | |
|:---|:---|:---|
| | **Favorable (Unfavorable) Basis Points** | **Favorable (Unfavorable) Basis Points** |
| | **December 31, 2022** | **December 31, 2022** |
| | **Three Months Ended** | **Six Months Ended** |
| Mix of business | (300) | (220) |
| Obsolescence charges | (55) | (25) |
| Manufacturing costs and other | (85) | (80) |
| Foreign exchange transactions | 10 | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | (430) | (320) |

---

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<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

The decrease in gross margin for the three and six months ended December 31, 2022 reflected unfavorable impacts from our mix of business and higher manufacturing costs due to continued inflationary pressures. The unfavorable impact from our mix of business in both periods is primarily due to the change in geographic region and category mix, driven by the decrease in skin care net sales and higher costs associated with promotional items.

**OPERATING EXPENSES**

Operating expenses as a percentage of net sales was 61.6% and 59.5% for the three and six months ended December 31, 2022, respectively, as compared with 52.3% and 53.3% in the prior-year periods.

---

| | | |
|:---|:---|:---|
| | **Favorable (Unfavorable) Basis Points** | **Favorable (Unfavorable) Basis Points** |
| | **December 31, 2022** | **December 31, 2022** |
| | **Three Months Ended** | **Six Months Ended** |
| General and administrative expenses | (50) | (20) |
| Advertising, merchandising, sampling and product development | (150) | (150) |
| Selling | (110) | (70) |
| Stock-based compensation | (40) |  |
| Store operating costs | (90) | (80) |
| Shipping | (60) | (70) |
| &nbsp;&nbsp;&nbsp;&nbsp;Subtotal | (500) | (390) |
| Charges associated with restructuring and other activities | 10 | 10 |
| Other intangible asset impairments | (450) | (240) |
| Changes in fair value of acquisition-related stock options | 10 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | (930) | (620) |

---

The unfavorable change in operating expense margin for the three and six months ended December 31, 2022, was primarily due to the decrease in net sales and the fiscal 2023 second quarter impact of other intangible asset impairments of $207 million. The unfavorable impact of store operating costs in both periods was due to the brick-and-mortar recovery, including more stores being open compared to the prior-year period. Partially mitigating the unfavorable impact in both periods was disciplined expense management.

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<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**OPERATING RESULTS**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>($ in millions) | **2022** | **2021** | **2022** | **2021** |
| **As Reported:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating income | $556 | $1418 | $1217 | $2353 |
| &nbsp;&nbsp;&nbsp;&nbsp;$ Change from prior-year period | (862) |  | (1136) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period | (61)% |  | (48)% |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating margin | 12.0% | 25.6% | 14.2% | 23.7% |
| **Non-GAAP Financial Measure**<sup>(1)</sup>**:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change in operating income from the prior-year period adjusting for the impact of charges associated with restructuring and other activities, other intangible asset impairments and the change in fair value of acquisition-related stock options | (46)% |  | (40)% |  |

---

<sup>(1)</sup> See "*Reconciliations of Non-GAAP Financial Measures"* beginning on page 54 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

The decrease in reported operating margin for the three and six months ended December 31, 2022 was primarily driven by a decrease in net sales, decrease in gross margin and the decrease in operating expense margin, discussed above.

Charges associated with restructuring and other activities are not allocated to our product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed Company-wide initiatives to redesign, resize and reorganize select areas of the business. Accordingly, the following discussions of Operating income by *Product Categories* and *Geographic Regions* exclude the impact of charges associated with restructuring and other activities.

***Product Categories***

**Skin Care**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>($ in millions) | **2022** | **2021** | **2022** | **2021** |
| **As Reported:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating income | $421 | $1082 | $951 | $1799 |
| &nbsp;&nbsp;&nbsp;&nbsp;$ Change from prior-year period | (661) |  | (848) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period | (61)% |  | (47)% |  |
| **Non-GAAP Financial Measure**<sup>(1)</sup>**:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change in operating income from the prior-year period adjusting for the impact of other intangible asset impairments and the change in fair value of acquisition-related stock options | (52)% |  | (42)% |  |

---

<sup>(1)</sup> See "*Reconciliations of Non-GAAP Financial Measures"* beginning on page 54 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

Reported skin care operating income decreased for the three and six months ended December 31, 2022, reflecting lower operating results from Estée Lauder and La Mer, combined, of approximately $476 million and $641 million, respectively, primarily driven by decreases in net sales, as well as the fiscal 2023 second quarter other intangible asset impairment related to Dr.Jart+ of $100 million.

Partially offsetting the decrease in skin care operating income for the three and six months ended December 31, 2022 was higher operating results from The Ordinary, primarily driven by an increase in net sales. Also benefiting skin care operating income in both periods was disciplined expense management.

**Makeup**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>($ in millions) | **2022** | **2022** | **2021** | **2022** | **2022** | **2021** |
| **As Reported:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating income (loss) | $| (37) | $130 | $| (21) | $221 |
| &nbsp;&nbsp;&nbsp;&nbsp;$ Change from prior-year period | (167) | (167) |  | (242) | (242) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period | (100+)% | (100+)% |  | (100+)% | (100+)% |  |
| **Non-GAAP Financial Measure**<sup>(1)</sup>**:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change in operating income from the prior-year period adjusting for the impact of other intangible asset impairments | (46) | (46)% |  | (61) | (61)% |  |

---

<sup>(1)</sup> See "*Reconciliations of Non-GAAP Financial Measures"* beginning on page 54 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

Reported makeup operating income decreased for the three and six months ended December 31, 2022, reflecting the fiscal 2023 second quarter other intangible asset impairments related to Too Faced and Smashbox of $107 million, combined, and lower results from Estée Lauder and Tom Ford Beauty, combined, of approximately $103 million and $231 million, respectively. In both periods, the decrease in operating income from Estée Lauder and Tom Ford Beauty is driven by decreases in net sales. Also contributing to the decrease in operating results from Estée Lauder in both periods were higher cost of sales due to impacts associated with inflationary pressures, partially offset by a decrease in advertising and promotional activities.

Partially offsetting the decrease in makeup operating income for the three and six months ended December 31, 2022 were higher results from M·A·C, primarily driven by the recognition of previously deferred revenue due to changes to the BACK 2 M·A·C take back program during the fiscal 2023 second quarter and disciplined advertising and promotional expense management. Also benefiting makeup operating income in both periods was lower general and administrative expenses.

**Fragrance**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>($ in millions) | **2022** | **2021** | **2022** | **2021** |
| **As Reported:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating income | $177 | $210 | $310 | $341 |
| &nbsp;&nbsp;&nbsp;&nbsp;$ Change from prior-year period | (33) |  | (31) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period | (16)% |  | (9)% |  |

---

Reported fragrance operating income decreased for the three and six months ended December 31, 2022, reflecting lower results from Jo Malone London and the impact of license terminations related to certain of our designer fragrances effective June 30, 2022, combined, of approximately $61 million and $93 million, respectively. Operating income from Jo Malone London decreased in both periods, primarily driven by a decrease in net sales, higher advertising and promotional activities to support holiday and key shopping moments, and higher selling expenses due to increased staffing costs compared to the prior-year period.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

Partially offsetting the decrease in fragrance operating income for the three and six months ended December 31, 2022, were higher results from Estée Lauder, driven by an increase in net sales. Also benefiting fragrance operating income for the six months ended December 31, 2022, were higher results from Tom Ford Beauty, reflecting an increase in net sales, partially offset by higher selling expenses due to increased staffing costs compared to the prior-year period, and higher advertising and promotional activities to support hero franchises and holiday and key shopping moments. Also benefiting fragrance operating income in both periods was lower general and administrative expenses.

**Hair Care**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>($ in millions) | **2022** | **2021** | **2022** | **2022** | **2021** |
| **As Reported:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating income (loss) | $5 | $8 | $| (7) | $10 |
| &nbsp;&nbsp;&nbsp;&nbsp;$ Change from prior-year period | (3) |  | (17) | (17) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period | (38)% |  | (100+)% | (100+)% |  |

---

Reported hair care operating results decreased for the three and six months ended December 31, 2022, primarily driven by lower results from Aveda and Bumble and bumble, combined, of approximately $9 million and $34 million, respectively. In both periods, the lower results from Aveda were primarily driven by a decrease in net sales, higher advertising and promotional activities to support the brand's expansion into mainland China during fiscal 2023 and holiday and key shopping moments and higher cost of sales. Operating results from Bumble and bumble decreased for the three and six months ended December 31, 2022, primarily driven by higher cost of sales.

Partially offsetting the decrease in hair care operating income for the three and six months ended December 31, 2022 was lower general and administrative expenses.

***Geographic Regions***

**The Americas**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>($ in millions) | **2022** | **2022** | **2021** | **2022** | **2021** |
| **As Reported:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating income (loss) | $| (85) | $382 | $40 | $636 |
| &nbsp;&nbsp;&nbsp;&nbsp;$ Change from prior-year period | (467) | (467) |  | (596) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period | (100+)% | (100+)% |  | (94)% |  |
| **Non-GAAP Financial Measure**<sup>(1)</sup>**:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change in operating income from the prior-year period adjusting for the impact of other intangible asset impairments and change in fair value of acquisition-related stock options | (95) | (95)% |  | (77)% |  |

---

<sup>(1)</sup> See "*Reconciliations of Non-GAAP Financial Measures"* beginning on page 54 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

Reported operating results decreased in The Americas for the three and six months ended December 31, 2022, primarily reflecting lower operating results from North America of approximately $468 million and $602 million, respectively. The decrease in operating results in North America is driven by the United States, primarily due to lower intercompany royalty income driven by a decrease in net sales in our travel retail business, fiscal 2023 second quarter other intangible asset impairments relating to Too Faced and Smashbox of $107 million and a decrease in net sales. Also contributing to the decrease in operating results in the United States for the six months ended December 31, 2022 was an increase in selling expenses due to higher staffing costs compared to the prior-year period.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**Europe, the Middle East & Africa**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>($ in millions) | **2022** | **2021** | **2022** | **2021** |
| **As Reported:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating income | $409 | $620 | $743 | $1085 |
| &nbsp;&nbsp;&nbsp;&nbsp;$ Change from prior-year period | (211) |  | (342) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period | (34)% |  | (32)% |  |

---

Reported operating income decreased in Europe, the Middle East & Africa for the three and six months ended December 31, 2022, primarily driven by lower results from our travel retail business of approximately $236 million and $384 million, respectively. In both periods, operating income decreased in our travel retail business reflecting the decrease in net sales and higher advertising and promotional activity primarily to support investments in key markets and increased digital media campaigns. Also contributing to the decrease in operating income in our travel retail business was an increase in cost of sales reflecting higher costs due to inflationary pressures. Partially offsetting the decrease in operating income in our travel retail business in both periods was a decrease in intercompany royalty expense to The Americas due to the net sales decrease.

**Asia/Pacific**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>($ in millions) | **2022** | **2021** | **2022** | **2021** |
| **As Reported:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating income | $241 | $431 | $449 | $653 |
| &nbsp;&nbsp;&nbsp;&nbsp;$ Change from prior-year period | (190) |  | (204) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period | (44)% |  | (31)% |  |
| **Non-GAAP Financial Measure**<sup>(1)</sup>**:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change in operating income from the prior-year period adjusting for the impact of other intangible asset impairments | (21)% |  | (16)% |  |

---

<sup>(1)</sup> See "*Reconciliations of Non-GAAP Financial Measures"* beginning on page 54 for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

Reported operating income decreased in Asia/Pacific for the three and six months ended December 31, 2022, primarily reflecting the fiscal 2023 second quarter other intangible asset impairment relating to Dr. Jart+ of $100 million and a decrease in operating results in Greater China of approximately $76 million and $106 million, respectively. The decrease in operating results in Greater China in both periods was driven by a decrease in net sales, partially offset by disciplined advertising and promotional expense management.

Partially offsetting the decrease in operating income in Asia/Pacific for the three and six months ended December 31, 2022 were higher results from southeast Asia, led by Singapore, Malaysia, and the Philippines, combined, of approximately $2 million and $23 million, respectively, primarily driven by an increase in net sales.

**INTEREST AND INVESTMENT INCOME**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>(In millions) | **2022** | **2021** | **2022** | **2021** |
| Interest expense | $52 | $42 | $98 | $84 |
| Interest income and investment income, net | $26 | $10 | $41 | $14 |

---

Interest expense and interest income and investment income, net, increased primarily reflecting higher interest rates compared to the prior-year period.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**PROVISION FOR INCOME TAXES**

The provision for income taxes represents U.S. federal, foreign, state and local income taxes. The effective rate differs from the federal statutory rate primarily due to the effect of state and local income taxes, the tax impact of share-based compensation, the taxation of foreign income and income tax reserve adjustments, which represent changes in our net liability for unrecognized tax benefits including tax settlements and lapses of the applicable statutes of limitations. Our effective tax rate will change from quarter-to-quarter based on recurring and non-recurring factors including the geographical mix of earnings, enacted tax legislation, state and local income taxes, tax reserve adjustments, the tax impact of share-based compensation, the interaction of various global tax strategies and the impact from certain acquisitions. In addition, changes in judgment from the evaluation of new information resulting in the recognition, derecognition or remeasurement of a tax position taken in a prior annual period are recognized separately in the quarter of change.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
| | **2022** | **2021** | **2022** | **2021** |
| Effective rate for income taxes | 25.4% | 21.5% | 23.9% | 21.9% |
| Basis-point change from the prior-year period | 390 |  | 200 |  |

---

For the three and six months ended December 31, 2022, the increase in the effective tax rate was primarily attributable to a decrease in excess tax benefits associated with stock-based compensation arrangements and a higher effective tax rate on the our foreign operations, partially offset by a reduction in income tax reserve adjustments.

**NET EARNINGS ATTRIBUTABLE TO THE ESTÉE LAUDER COMPANIES INC.**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>($ in millions, except per share data) | **2022** | **2021** | **2022** | **2021** |
| **As Reported:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net earnings attributable to The Estée Lauder Companies Inc. | $394 | $1088 | $883 | $1780 |
| &nbsp;&nbsp;&nbsp;$ Change from prior-year period | (694) |  | (897) |  |
| &nbsp;&nbsp;&nbsp;% Change from prior-year period | (64)% |  | (50)% |  |
| &nbsp;&nbsp;&nbsp;Diluted net earnings per common share | $1.09 | $2.97 | $2.45 | $4.85 |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change from prior-year period | (63)% |  | (50)% |  |
| **Non-GAAP Financial Measure**<sup>(1)</sup>**:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;% Change in diluted net earnings per common share from the prior-year period adjusting for the impact of charges associated with restructuring and other activities, other intangible asset impairments and the change in fair value of acquisition-related stock options | (49)% |  | (41)% |  |

---

<sup>(1)</sup> See "*Reconciliations of Non-GAAP Financial Measures"* below for reconciliations between non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES**

We use certain non-GAAP financial measures, among other financial measures, to evaluate our operating performance, which represent the manner in which we conduct and view our business. Management believes that excluding certain items that are not comparable from period to period, or do not reflect the Company's underlying ongoing business, provides transparency for such items and helps investors and others compare and analyze our operating performance from period to period. In the future, we expect to incur charges or adjustments similar in nature to those presented below; however, the impact to the Company's results in a given period may be highly variable and difficult to predict. Our non-GAAP financial measures may not be comparable to similarly titled measures used by, or determined in a manner consistent with, other companies. While we consider the non-GAAP measures useful in analyzing our results, they are not intended to replace, or act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with U.S. GAAP. The following tables present Net sales, Operating income and Diluted net earnings per common share adjusted to exclude the impact of charges associated with restructuring and other activities; the change in fair value of acquisition-related stock options; other intangible asset impairments; and the effects of foreign currency translation.

The following tables provide reconciliations between these non-GAAP financial measures and the most directly comparable U.S. GAAP measures.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| ($ in millions, except per share data) | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | **Variance** | **% Change** | **% Change**<br>**in** <br>**constant currency** |
| ($ in millions, except per share data) | **2022** | **2021** | **Variance** | **% Change** | **% Change**<br>**in** <br>**constant currency** |
| Net sales, as reported | $4620 | $5539 | $(919) | (17)% | (12)% |
| &nbsp;&nbsp;&nbsp;Returns associated with restructuring and other activities | 1 | 1 |  |  |  |
| Net sales, as adjusted | $4621 | $5540 | $(919) | (17)% | (11)% |
| Operating income, as reported | $556 | $1418 | $(862) | (61)% | (57)% |
| &nbsp;&nbsp;&nbsp;Charges associated with restructuring and other activities | 9 | 15 | (6) |  |  |
| &nbsp;&nbsp;&nbsp;Other intangible asset impairments | 207 |  | 207 |  |  |
| &nbsp;&nbsp;&nbsp;Change in fair value of acquisition-related stock options | (4) | 2 | (6) |  |  |
| Operating income, as adjusted | $768 | $1435 | $(667) | (46)% | (42)% |
| Diluted net earnings per common share, as reported | $1.09 | $2.97 | $(1.88) | (63)% | (59)% |
| &nbsp;&nbsp;&nbsp;Charges associated with restructuring and other activities | .02 | .03 | (.01) |  |  |
| &nbsp;&nbsp;&nbsp;Other intangible asset impairments | .44 |  | .44 |  |  |
| &nbsp;&nbsp;&nbsp;Change in fair value of acquisition-related stock options (less portion attributable to redeemable noncontrolling interest) | (.01) | .01 | (.02) |  |  |
| Diluted net earnings per common share, as adjusted | $1.54 | $3.01 | $(1.47) | (49)% | (44)% |

---

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| ($ in millions, except per share data) | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** | **Variance** | **% Change** | **% Change**<br>**in** <br>**constant currency** |
| ($ in millions, except per share data) | **2022** | **2021** | **Variance** | **% Change** | **% Change**<br>**in** <br>**constant currency** |
| Net sales, as reported | $8550 | $9931 | $(1381) | (14)% | (9)% |
| &nbsp;&nbsp;&nbsp;Returns associated with restructuring and other activities | 6 | 2 | 4 |  |  |
| Net sales, as adjusted | $8556 | $9933 | $(1377) | (14)% | (9)% |
| Operating income, as reported | $1217 | $2353 | $(1136) | (48)% | (44)% |
| &nbsp;&nbsp;&nbsp;Charges associated with restructuring and other activities | 15 | 21 | (6) |  |  |
| &nbsp;&nbsp;&nbsp;Other intangible asset impairments | 207 |  | 207 |  |  |
| &nbsp;&nbsp;&nbsp;Change in fair value of acquisition-related stock options | (3) | 2 | (5) |  |  |
| Operating income, as adjusted | $1436 | $2376 | $(940) | (40)% | (35)% |
| Diluted net earnings per common share, as reported | $2.45 | $4.85 | $(2.40) | (50)% | (46)% |
| &nbsp;&nbsp;&nbsp;Charges associated with restructuring and other activities | .03 | .05 | (.02) |  |  |
| &nbsp;&nbsp;&nbsp;Other intangible asset impairments | .44 |  | .44 |  |  |
| &nbsp;&nbsp;&nbsp;Change in fair value of acquisition-related stock options (less portion attributable to redeemable noncontrolling interest) | (.01) |  | (.01) |  |  |
| Diluted net earnings per common share, as adjusted | $2.91 | $4.90 | $(1.99) | (41)% | (36)% |

---

As diluted net earnings per common share, as adjusted, is used as a measure of the Company's performance, we consider the impact of current and deferred income taxes when calculating the per-share impact of each of the reconciling items.

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

The following tables reconcile the change in net sales by product category and geographic region, as reported, to the change in net sales excluding the effects of foreign currency translation:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **As Reported** | **As Reported** | **As Reported** | **Impact of foreign<br>currency translation** | **Variance,<br>in constant currency** | **% Change,<br>as reported** | **% Change,<br>in constant currency** |
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | | **Impact of foreign<br>currency translation** | **Variance,<br>in constant currency** | **% Change,<br>as reported** | **% Change,<br>in constant currency** |
|<br>($ in millions) | **2022** | **2021** |<br>**Variance** | **Impact of foreign<br>currency translation** | **Variance,<br>in constant currency** | **% Change,<br>as reported** | **% Change,<br>in constant currency** |
| **By Product Category:** |  |  |  |  |  |  |  |
| Skin Care | $2382 | $3159 | $(777) | $152 | $(625) | (25)% | (20)% |
| Makeup | 1268 | 1386 | (118) | 73 | (45) | (9) | (3) |
| Fragrance | 775 | 799 | (24) | 49 | 25 | (3) | 3 |
| Hair Care | 182 | 180 | 2 | 6 | 8 | 1 | 4 |
| Other | 14 | 16 | (2) | 2 |  | (13) |  |
|  | 4621 | 5540 | (919) | 282 | (637) | (17) | (11) |
| &nbsp;&nbsp;&nbsp;Returns associated with restructuring and other activities | (1) | (1) |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $4620 | $5539 | $(919) | $282 | $(637) | (17)% | (12)% |
| **By Region:** |  |  |  |  |  |  |  |
| The Americas | $1235 | $1300 | $(65) | $(7) | $(72) | (5)% | (6)% |
| Europe, the Middle East & Africa | 1816 | 2338 | (522) | 102 | (420) | (22) | (18) |
| Asia/Pacific | 1570 | 1902 | (332) | 187 | (145) | (17) | (8) |
|  | 4621 | 5540 | (919) | 282 | (637) | (17) | (11) |
| &nbsp;&nbsp;&nbsp;Returns associated with restructuring and other activities | (1) | (1) |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $4620 | $5539 | $(919) | $282 | $(637) | (17)% | (12)% |

---

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **As Reported** | **As Reported** | **As Reported** | **Impact of foreign<br>currency translation** | **Variance,<br>in constant currency** | **% Change,<br>as reported** | **% Change,<br>in constant currency** |
| | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** | | **Impact of foreign<br>currency translation** | **Variance,<br>in constant currency** | **% Change,<br>as reported** | **% Change,<br>in constant currency** |
|<br>($ in millions) | **2022** | **2021** |<br>**Variance** | **Impact of foreign<br>currency translation** | **Variance,<br>in constant currency** | **% Change,<br>as reported** | **% Change,<br>in constant currency** |
| **By Product Category:** |  |  |  |  |  |  |  |
| Skin Care | $4486 | $5608 | $(1122) | $237 | $(885) | (20)% | (16)% |
| Makeup | 2320 | 2560 | (240) | 123 | (117) | (9) | (5) |
| Fragrance | 1382 | 1408 | (26) | 84 | 58 | (2) | 4 |
| Hair Care | 340 | 328 | 12 | 12 | 24 | 4 | 7 |
| Other | 28 | 29 | (1) | 2 | 1 | (3) | 3 |
|  | 8556 | 9933 | (1377) | 458 | (919) | (14) | (9) |
| &nbsp;&nbsp;&nbsp;Returns associated with restructuring and other activities | (6) | (2) | (4) |  | (4) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $8550 | $9931 | $(1381) | $458 | $(923) | (14)% | (9)% |
| **By Region:** |  |  |  |  |  |  |  |
| The Americas | $2358 | $2494 | $(136) | $(14) | $(150) | (5)% | (6)% |
| Europe, the Middle East & Africa | 3498 | 4211 | (713) | 185 | (528) | (17) | (13) |
| Asia/Pacific | 2700 | 3228 | (528) | 287 | (241) | (16) | (7) |
|  | 8556 | 9933 | (1377) | 458 | (919) | (14) | (9) |
| &nbsp;&nbsp;&nbsp;Returns associated with restructuring and other activities | (6) | (2) | (4) |  | (4) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $8550 | $9931 | $(1381) | $458 | $(923) | (14)% | (9)% |

---

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

The following tables reconcile the change in operating results by product category and geographic region, as reported, to the change in operating income excluding the impact of other intangible asset impairments and the change in fair value of acquisition-related stock options:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **As Reported** | **As Reported** | **As Reported** | **Add:<br>Changes in<br>Other intangible asset impairments** | **Add:<br>Change in fair value of acquisition-related stock options** | **Variance, as adjusted** | **% Change, as reported** | **% Change, as adjusted** |
| | **Three Months Ended<br>December 31** | **Three Months Ended<br>December 31** | | **Add:<br>Changes in<br>Other intangible asset impairments** | **Add:<br>Change in fair value of acquisition-related stock options** | **Variance, as adjusted** | **% Change, as reported** | **% Change, as adjusted** |
|<br>($ in millions) | **2022** | **2021** |<br>**Variance** | **Add:<br>Changes in<br>Other intangible asset impairments** | **Add:<br>Change in fair value of acquisition-related stock options** | **Variance, as adjusted** | **% Change, as reported** | **% Change, as adjusted** |
| **By Product Category:** |  |  |  |  |  |  |  |  |
| Skin Care | $421 | $1082 | $(661) | $100 | $(6) | $(567) | (61)% | (52)% |
| Makeup | (37) | 130 | (167) | 107 |  | (60) | (100+) | (46) |
| Fragrance | 177 | 210 | (33) |  |  | (33) | (16) | (16) |
| Hair Care | 5 | 8 | (3) |  |  | (3) | (38) | (38) |
| Other | (1) | 3 | (4) |  |  | (4) | (100+) | (100+) |
|  | 565 | 1433 | (868) | $207 | $(6) | $(667) | (61)% | (46)% |
| Charges associated with restructuring and other activities | (9) | (15) | 6 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $556 | $1418 | $(862) |  |  |  |  |  |
| **By Region:** |  |  |  |  |  |  |  |  |
| The Americas | $(85) | $382 | $(467) | $107 | $(6) | $(366) | (100+)% | (95)% |
| Europe, the Middle East & Africa | 409 | 620 | (211) |  |  | (211) | (34) | (34) |
| Asia/Pacific | 241 | 431 | (190) | 100 |  | (90) | (44) | (21) |
|  | 565 | 1433 | (868) | $207 | $(6) | $(667) | (61)% | (46)% |
| Charges associated with restructuring and other activities | (9) | (15) | 6 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $556 | $1418 | $(862) |  |  |  |  |  |

---

------

<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **As Reported** | **As Reported** | **As Reported** | **Add:<br>Changes in<br>Other intangible asset impairments** | **Add:<br>Change in fair value of acquisition-related stock options** | **Variance, as adjusted** | **% Change, as reported** | **% Change, as adjusted** |
| | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** | | **Add:<br>Changes in<br>Other intangible asset impairments** | **Add:<br>Change in fair value of acquisition-related stock options** | **Variance, as adjusted** | **% Change, as reported** | **% Change, as adjusted** |
|<br>($ in millions) | **2022** | **2021** |<br>**Variance** | **Add:<br>Changes in<br>Other intangible asset impairments** | **Add:<br>Change in fair value of acquisition-related stock options** | **Variance, as adjusted** | **% Change, as reported** | **% Change, as adjusted** |
| **By Product Category:** |  |  |  |  |  |  |  |  |
| Skin Care | $951 | $1799 | $(848) | $100 | $(5) | $(753) | (47)% | (42)% |
| Makeup | (21) | 221 | (242) | 107 |  | (135) | (100+) | (61) |
| Fragrance | 310 | 341 | (31) |  |  | (31) | (9) | (9) |
| Hair Care | (7) | 10 | (17) |  |  | (17) | (100+) | (100+) |
| Other | (1) | 3 | (4) |  |  | (4) | (100+) | (100+) |
|  | 1232 | 2374 | (1142) | $207 | $(5) | $(940) | (48)% | (40)% |
| Charges associated with restructuring and other activities | (15) | (21) | 6 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $1217 | $2353 | $(1136) |  |  |  |  |  |
| **By Region:** |  |  |  |  |  |  |  |  |
| The Americas | $40 | $636 | $(596) | $107 | $(5) | $(494) | (94)% | (77)% |
| Europe, the Middle East & Africa | 743 | 1085 | (342) |  |  | (342) | (32) | (32) |
| Asia/Pacific | 449 | 653 | (204) | 100 |  | (104) | (31) | (16) |
|  | 1232 | 2374 | (1142) | $207 | $(5) | $(940) | (48)% | (40)% |
| Charges associated with restructuring and other activities | (15) | (21) | 6 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $1217 | $2353 | $(1136) |  |  |  |  |  |

---

**<u>FINANCIAL CONDITION</u>**

**LIQUIDITY AND CAPITAL RESOURCES**

***Overview***

Our principal sources of funds historically have been cash flows from operations, borrowings pursuant to our commercial paper program, borrowings from the issuance of long-term debt and committed and uncommitted credit lines provided by banks and other lenders in the United States and abroad. At December 31, 2022, we had cash and cash equivalents of $3,725 million compared with $3,957 million at June 30, 2022. Our cash and cash equivalents are maintained at a number of financial institutions. To mitigate the risk of uninsured balances, we select financial institutions based on their credit ratings and financial strength, and we perform ongoing evaluations of these institutions to limit our concentration risk exposure.

Based on past performance and current expectations, we believe that cash on hand, cash generated from operations, available credit lines and access to credit markets will be adequate to support seasonal working capital needs, currently planned business operations, information technology enhancements, capital expenditures, acquisitions, dividends, stock repurchases, restructuring initiatives, commitments and other contractual obligations on both a near-term and long-term basis.

The Tax Cuts and Jobs Act ("TCJA*"*) resulted in the Transition Tax on unrepatriated earnings of our foreign subsidiaries and changed the tax law in ways that present opportunities to repatriate cash without additional U.S. federal income tax. As a result, we changed our indefinite reinvestment assertion related to certain foreign earnings, and we continue to analyze the indefinite reinvestment assertion on our remaining applicable foreign earnings. We do not believe that continuing to reinvest our foreign earnings impairs our ability to meet our domestic debt or working capital obligations. If these reinvested earnings were repatriated into the United States as dividends, we would be subject to state income taxes and applicable foreign taxes in certain jurisdictions.

The effects of inflation have not been significant to our overall operating results in recent years, however we are mindful of increasing inflationary pressures. Generally, we have been able to introduce new products at higher prices, increase prices and implement other operating efficiencies to sufficiently offset cost increases.

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<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

In November 2022, we signed an agreement to acquire the TOM FORD brand. The amount to be paid for the acquisition is approximately $2,300 million, net of a $250 million payment to be received at closing from Marcolin S.p.A. and expects to close in the second half of fiscal 2023. We expect to fund this transaction through a combination of cash, debt and $300 million in deferred payments to the sellers that become due beginning in July 2025. In addition, the acquisition will result in the elimination of the existing license royalty payments on our beauty business upon closing.

***Credit Ratings***

Changes in our credit ratings will likely result in changes in our borrowing costs. Our credit ratings also impact the cost of our revolving credit facility. Downgrades in our credit ratings may reduce our ability to issue commercial paper and/or long-term debt and would likely increase the relative costs of borrowing. A credit rating is not a recommendation to buy, sell, or hold securities, is subject to revision or withdrawal at any time by the assigning rating organization, and should be evaluated independently of any other rating. As of January 26, 2023, our long-term debt is rated A+ with a stable outlook by Standard & Poor's and A1 with a stable outlook by Moody's.

***Debt***

At December 31, 2022, our outstanding borrowings were as follows:

---

| | | | |
|:---|:---|:---|:---|
| ($ in millions) | **Long-term<br>Debt** | **Current<br>Debt** | **Total Debt** |
| 3.125% Senior Notes, due December 1, 2049 ("2049 Senior Notes") <sup>(1), (12)</sup> | $636 | $— | $636 |
| 4.15% Senior Notes, due March 15, 2047 ("2047 Senior Notes") <sup>(2), (12)</sup> | 494 |  | 494 |
| 4.375% Senior Notes, due June 15, 2045 ("2045 Senior Notes") <sup>(3), (12)</sup> | 455 |  | 455 |
| 3.70% Senior Notes, due August 15, 2042 ("2042 Senior Notes") <sup>(4), (12)</sup> | 247 |  | 247 |
| 6.00% Senior Notes, due May 15, 2037 ("2037 Senior Notes") <sup>(5), (12)</sup> | 295 |  | 295 |
| 5.75% Senior Notes, due October 15, 2033 ("2033 Senior Notes") <sup>(6)</sup> | 197 |  | 197 |
| 1.950% Senior Notes, due March 15, 2031 ("2031 Senior Notes") <sup>(7), (12)</sup> | 549 |  | 549 |
| 2.600% Senior Notes, due April 15, 2030 ("2030 Senior Notes") <sup>(8), (12)</sup> | 589 |  | 589 |
| 2.375% Senior Notes, due December 1, 2029 ("2029 Senior Notes") <sup>(9), (12)</sup> | 643 |  | 643 |
| 3.15% Senior Notes, due March 15, 2027 ("2027 Senior Notes") <sup>(10), (12)</sup> | 499 |  | 499 |
| 2.00% Senior Notes, due December 1, 2024 ("2024 Senior Notes") <sup>(11), (12)</sup> | 498 |  | 498 |
| Commercial paper |  | 249 | 249 |
| Other long-term borrowings | 9 |  | 9 |
| Other current borrowings |  | 11 | 11 |
|  | $5111 | $260 | $5371 |

---

<sup>(1)</sup> Consists of $650 million principal, unamortized debt discount of $8 million and debt issuance costs of $6 million.

<sup>(2)</sup> Consists of $500 million principal, unamortized debt discount of $1 million and debt issuance costs of $5 million.

<sup>(3)</sup> Consists of $450 million principal, net unamortized debt premium of $9 million and debt issuance costs of $4 million.

<sup>(4)</sup> Consists of $250 million principal, unamortized debt discount of $1 million and debt issuance costs of $2 million.

<sup>(5)</sup> Consists of $300 million principal, unamortized debt discount of $3 million and debt issuance costs of $2 million.

<sup>(6)</sup> Consists of $200 million principal, unamortized debt discount of $2 million and debt issuance costs of $1 million.

<sup>(7)</sup> Consists of $600 million, principal, unamortized debt discount of $3 million, debt issuance costs of $4 million and a $44 million loss to reflect the fair value of interest rate swaps.

<sup>(8)</sup> Consists of $700 million principal, unamortized debt discount of $1 million, debt issuance costs of $4 million and a $106 million loss to reflect the fair value of interest rate swaps.

<sup>(9)</sup> Consists of $650 million principal, unamortized debt discount of $4 million and debt issuance costs of $3 million.

<sup>(10)</sup> Consists of $500 million principal and debt issuance costs of $1 million.

<sup>(11)</sup> Consists of $500 million principal, unamortized debt discount of $1 million and debt issuance costs of $1 million.

<sup>(12)</sup> The Senior Notes contain certain customary incurrence–based covenants, including limitations on indebtedness secured by liens.

Total debt as a percent of total capitalization was 48% and 49% at December 31, 2022 and June 30, 2022, respectively.

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<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

In January 2023, we entered into a $2,000 million senior unsecured revolving credit facility that expires on January 2, 2024 (the "New Facility") for liquidity support for our commercial paper program and general corporate purposes, of which the entire amount is currently undrawn and available. Interest rates on borrowings under the New Facility will be based on prevailing market interest rates in accordance with the agreement.

In January 2023, we increased our commercial paper program under which we may issue commercial paper in the United States from $2,500 million to $4,500 million.

***Cash Flows***

---

| | | |
|:---|:---|:---|
| | **Six Months Ended<br>December 31** | **Six Months Ended<br>December 31** |
|<br>(In millions) | **2022** | **2021** |
| Net cash flows provided by operating activities | $751 | $1846 |
| Net cash flows used for investing activities | $(285) | $(414) |
| Net cash flows used for financing activities | $(685) | $(1775) |

---

The change in net cash flows provided by operating activities primarily reflected lower earnings before tax, excluding non-cash items, and the unfavorable change in working capital, reflecting lower other accrued liabilities, which includes the settlement of net investment hedges, lower accounts payable due to timing of payments, partially offset by a favorable change in accounts receivable.

The change in net cash flows used for investing activities primarily reflected a favorable impact from the settlement of net investment hedges, which is offset by the unfavorable change in other accrued liabilities as discussed above, and a decrease in capital expenditures compared to the prior-year period.

The change in net cash flows used for financing activities primarily reflected a decrease relating to lower treasury stock repurchases compared to the prior-year period.

***Dividends***

For a summary of quarterly cash dividends declared per share on our Class A and Class B Common Stock during the six months ended December 31, 2022, see *Notes to Consolidated Financial Statements, Note 11 – Equity and Redeemable Noncontrolling Interest*.

***Pension and Post-retirement Plan Funding***

There have been no significant changes to our pension and post-retirement funding as discussed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

***Commitments, Contractual Obligations and Contingencies***

There have been no other significant changes to our commitments and contractual obligations as discussed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022, except as disclosed in *Notes to Consolidated Financial Statements, Note 8 – Commitments and Contingencies.* For a discussion of contingencies, see *Notes to Consolidated Financial Statements, Note 8 – Commitments and Contingencies*.

***Derivative Financial Instruments and Hedging Activities***

For a discussion of our derivative financial instruments and hedging activities, see *Notes to Consolidated Financial Statements, Note 4 – Derivative Financial Instruments*.

***Foreign Exchange Risk Management***

For a discussion of foreign exchange risk management, see *Notes to Consolidated Financial Statements, Note 4 – Derivative Financial Instruments (Cash Flow Hedges, Net Investment Hedges)*.

***Credit Risk***

For a discussion of credit risk, see *Notes to Consolidated Financial Statements, Note 4 – Derivative Financial Instruments (Credit Risk)*.

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<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

***Market Risk***

We address certain financial exposures through a controlled program of market risk management that includes the use of foreign currency forward contracts to reduce the effects of fluctuating foreign currency exchange rates and to mitigate the change in fair value of specific assets and liabilities on the balance sheet. To perform a sensitivity analysis of our foreign currency forward contracts, we assess the change in fair values from the impact of hypothetical changes in foreign currency exchange rates. A hypothetical 10% weakening of the U.S. dollar against the foreign exchange rates for the currencies in our portfolio would have resulted in a net decrease in the fair value of our portfolio of approximately $267 million and $259 million as of December 31, 2022 and June 30, 2022, respectively. This potential change does not consider our underlying foreign currency exposures.

In addition, we enter into interest rate derivatives to manage the effects of interest rate movements on our aggregate liability portfolio, including future debt issuances. Based on a hypothetical 100 basis point increase in interest rates, the estimated fair value of our interest rate derivatives would decrease by approximately $33 million and $41 million as of December 31, 2022 and June 30, 2022, respectively.

Our sensitivity analysis represents an estimate of reasonably possible net losses that would be recognized on our portfolio of derivative financial instruments assuming hypothetical movements in future market rates and is not necessarily indicative of actual results, which may or may not occur. It does not represent the maximum possible loss or any expected loss that may occur, since actual future gains and losses will differ from those estimated, based upon actual fluctuations in market rates, operating exposures, and the timing thereof, and changes in our portfolio of derivative financial instruments during the year. We believe, however, that any such loss incurred would be offset by the effects of market rate movements on the respective underlying transactions for which the derivative financial instrument was intended.

**OFF-BALANCE SHEET ARRANGEMENTS**

We do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships with unconsolidated entities that would be expected to have a material current or future effect upon our financial condition or results of operations.

**<u>CRITICAL ACCOUNTING POLICIES</u>**

As disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022, the discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in conformity with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in those financial statements. These estimates and assumptions can be subjective and complex, and consequently, actual results could differ from those estimates. Our most critical accounting policies relate to goodwill, other intangible assets and long-lived assets - impairment assessment and income taxes. Since June 30, 2022, there have been no significant changes to the assumptions and estimates related to our critical accounting policies, except as disclosed in *Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations* on pages 39-40.

**<u>RECENTLY ISSUED ACCOUNTING STANDARDS</u>**

For a discussion regarding the impact of accounting standards that were recently issued but not yet effective, on the Company's consolidated financial statements, see *Notes to Consolidated Financial Statements, Note 1 – Summary of Significant Accounting Policies*.

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<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**<u>CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION</u>**

We and our representatives from time to time make written or oral forward-looking statements, including in this and other filings with the Securities and Exchange Commission, in our press releases and in our reports to stockholders, which may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may address our expectations regarding sales, earnings or other future financial performance and liquidity, other performance measures, product introductions, entry into new geographic regions, information technology initiatives, new methods of sale, our long-term strategy, restructuring and other charges and resulting cost savings, and future operations or operating results. These statements may contain words like "expect," "will," "will likely result," "would," "believe," "estimate," "planned," "plans," "intends," "may," "should," "could," "anticipate," "estimate," "project," "projected," "forecast," and "forecasted" or similar expressions. Although we believe that our expectations are based on reasonable assumptions within the bounds of our knowledge of our business and operations, actual results may differ materially from our expectations. Factors that could cause actual results to differ from expectations include, without limitation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)increased competitive activity from companies in the skin care, makeup, fragrance and hair care businesses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)our ability to develop, produce and market new products on which future operating results may depend and to successfully address challenges in our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)consolidations, restructurings, bankruptcies and reorganizations in the retail industry causing a decrease in the number of stores that sell our products, an increase in the ownership concentration within the retail industry, ownership of retailers by our competitors or ownership of competitors by our customers that are retailers and our inability to collect receivables;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)destocking and tighter working capital management by retailers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5)the success, or changes in timing or scope, of new product launches and the success, or changes in timing or scope, of advertising, sampling and merchandising programs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6)shifts in the preferences of consumers as to where and how they shop;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7)social, political and economic risks to our foreign or domestic manufacturing, distribution and retail operations, including changes in foreign investment and trade policies and regulations of the host countries and of the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8)changes in the laws, regulations and policies (including the interpretations and enforcement thereof) that affect, or will affect, our business, including those relating to our products or distribution networks, changes in accounting standards, tax laws and regulations, environmental or climate change laws, regulations or accords, trade rules and customs regulations, and the outcome and expense of legal or regulatory proceedings, and any action we may take as a result;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9)foreign currency fluctuations affecting our results of operations and the value of our foreign assets, the relative prices at which we and our foreign competitors sell products in the same markets and our operating and manufacturing costs outside of the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10)changes in global or local conditions, including those due to volatility in the global credit and equity markets, natural or man-made disasters, real or perceived epidemics, supply chain challenges, inflation, or increased energy costs, that could affect consumer purchasing, the willingness or ability of consumers to travel and/or purchase our products while traveling, the financial strength of our customers, suppliers or other contract counterparties, our operations, the cost and availability of capital which we may need for new equipment, facilities or acquisitions, the returns that we are able to generate on our pension assets and the resulting impact on funding obligations, the cost and availability of raw materials and the assumptions underlying our critical accounting estimates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11)impacts attributable to the COVID-19 pandemic, including disruptions to our global business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12)shipment delays, commodity pricing, depletion of inventory and increased production costs resulting from disruptions of operations at any of the facilities that manufacture our products or at our distribution or inventory centers, including disruptions that may be caused by the implementation of information technology initiatives, or by restructurings;

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**THE ESTÉE LAUDER COMPANIES INC.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13)real estate rates and availability, which may affect our ability to increase or maintain the number of retail locations at which we sell our products and the costs associated with our other facilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14)changes in product mix to products which are less profitable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(15)our ability to acquire, develop or implement new information and distribution technologies and initiatives on a timely basis and within our cost estimates and our ability to maintain continuous operations of such systems and the security of data and other information that may be stored in such systems or other systems or media;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(16)our ability to capitalize on opportunities for improved efficiency, such as publicly-announced strategies and restructuring and cost-savings initiatives, and to integrate acquired businesses and realize value therefrom;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(17)consequences attributable to local or international conflicts around the world, as well as from any terrorist action, retaliation and the threat of further action or retaliation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(18)the timing and impact of acquisitions, investments and divestitures; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(19)additional factors as described in our filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the fiscal year ended June 30, 2022.

We assume no responsibility to update forward-looking statements made herein or otherwise.

**Item 3. *Quantitative and Qualitative Disclosures About Market Risk.***

The information required by this item is set forth in Item 2 of this Quarterly Report on Form 10-Q under the caption *Liquidity and Capital Resources* - *Market Risk* and is incorporated herein by reference.

**Item 4. *Controls and Procedures.***

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure. The Chief Executive Officer and the Chief Financial Officer, with assistance from other members of management, have reviewed the effectiveness of our disclosure controls and procedures as of December 31, 2022 and, based on their evaluation, have concluded that the disclosure controls and procedures were effective as of such date.

As part of our review of internal control over financial reporting, we make changes to systems and processes to improve such controls and increase efficiencies, while ensuring that we maintain an effective internal control environment. There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the second quarter of fiscal 2023 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

**PART II. OTHER INFORMATION**

**Item 1. *Legal Proceedings.***

For a discussion of legal proceedings, see *Notes to Consolidated Financial Statements, Note 8 – Commitments and Contingencies*.

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<u>[**Table of Contents**](#id29ccd98496a40a38c32a6814c421b8c_7)</u>

**THE ESTÉE LAUDER COMPANIES INC.**

**Item 2. *Unregistered Sales of Equity Securities and Use of Proceeds.***

**Share Repurchase Program**

We are authorized by the Board of Directors to repurchase shares of our Class A Common Stock in the open market or in privately negotiated transactions, depending on market conditions and other factors. The following table provides information relating to our repurchase of Class A Common Stock during the referenced periods:

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| | | | | |
|:---|:---|:---|:---|:---|
| **Period** | **Total Number**<br>**of Shares**<br>**Purchased**<sup>(1)</sup> | **Average Price<br>Paid Per<br>Share** | **Total Number of<br>Shares Purchased as<br>Part of Publicly<br>Announced<br>Program** | **Maximum**<br>**Number of Shares**<br>**that May Yet Be**<br>**Purchased Under**<br>**the Program**<sup>(2)</sup> |
| October 2022 | 287111 | $211.33 | 286250 | 25227742 |
| November 2022 | 420683 | 205.04 | 154500 | 25073242 |
| December 2022 |  |  |  | 25073242 |
|  | 707794 | 207.59 | 440750 |  |

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<sup>(1)</sup> Includes shares that were repurchased by the Company to satisfy tax withholding obligations upon the payout of certain stock-based compensation arrangements.

<sup>(2)</sup> The Board of Directors has authorized the current repurchase program for up to 80.0 million shares. The total amount was last increased by the Board on October 31, 2018. Our repurchase program does not have an expiration date.

Beginning in December 2022, we temporarily suspended the repurchase of shares of our Class A Common Stock. We may resume repurchases in the future.

**Item 6. *Exhibits.***

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| | |
|:---|:---|
| **Exhibit <br>Number** | **Description** |
| 10.1 | <u>[The Estee Lauder Companies Retirement Growth Account Plan, as amended and restated, effective as of January 1, 2023 (SEC File No. 1-14064).†](exhibit101-esteelauderxr.htm)</u> |
| 31.1 | <u>[Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CEO).](el-q2fy2023xex311.htm)</u> |
| 31.2 | <u>[Certification pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CFO).](el-q2fy2023xex312.htm)</u> |
| 32.1 | <u>[Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CEO). (furnished)](el-q2fy2023xex321.htm)</u> |
| 32.2 | <u>[Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CFO). (furnished)](el-q2fy2023xex322.htm)</u> |
| 101.1 | The following materials from The Estée Lauder Companies Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2022 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Statements of Earnings, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements |
| 104 | The cover page from The Estée Lauder Companies Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2022 is formatted in iXBRL |

---

† Exhibit is a management contract or compensatory plan or arrangement.

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**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | | |
|:---|:---|:---|
| | **THE ESTÉE LAUDER COMPANIES INC.** | **THE ESTÉE LAUDER COMPANIES INC.** |
| | By: | /s/ TRACEY T. TRAVIS |
| Date: February 2, 2023 |  | Tracey T. Travis |
|  |  | Executive Vice President and Chief Financial Officer |
|  |  | (Principal Financial and Accounting Officer) |

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## Exhibit 10.1

![](exhibit101-esteelauderxr001.jpg)

THE ESTEE LAUDER COMPANIES RETIREMENT GROWTH ACCOUNT PLAN As Amended and Restated Effective as of January 1, 2023 Exhibit 10.1

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![](exhibit101-esteelauderxr002.jpg)

i THE ESTEE LAUDER COMPANIES RETIREMENT GROWTH ACCOUNT PLAN **TABLE OF CONTENTS** SECTION 1 NAME AND CONSTRUCTION .............................................................................. 1 SECTION 2 DEFINITIONS ........................................................................................................... 2 SECTION 3 PARTICIPATION ................................................................................................... 12 SECTION 4 RETIREMENT DATES .......................................................................................... 14 SECTION 5 PARTICIPANTS' RETIREMENT ACCOUNTS ................................................... 15 SECTION 6 CONTRIBUTIONS ................................................................................................. 23 SECTION 7 DEATH BENEFIT ................................................................................................... 24 SECTION 8 TERMINATION OF EMPLOYMENT ................................................................... 26 SECTION 9 OPTIONAL FORMS OF BENEFIT........................................................................ 29 SECTION 10 PAYMENT OF RETIREMENT INCOME ........................................................... 34 SECTION 11 ADMINISTRATION OF THE PLAN ................................................................... 36 SECTION 12 INVESTMENT OF PLAN ASSETS; DUTIES OF FIDUCIARY COMMITTEE ............................................................................................................. 39 SECTION 13 OBLIGATIONS OF THE EMPLOYER ............................................................... 41 SECTION 14 MISCELLANEOUS PROVISIONS ...................................................................... 42 SECTION 15 ADOPTION OF PLAN BY MEMBERS OF THE GROUP ................................. 44 SECTION 16 AMENDMENT AND TERMINATION ............................................................... 46 SECTION 17 LIMITATION ACCORDING TO TREASURY DEPARTMENT REQUIREMENTS ...................................................................................................... 48 SECTION 18 TOP-HEAVY PLAN PROVISIONS ..................................................................... 49 SECTION 19 FUNDING-BASED LIMITATIONS .................................................................... 52 SECTION 20 EXECUTION ......................................................................................................... 59 APPENDIX A ............................................................................................................................. A-1 APPENDIX B ............................................................................................................................. B-1 APPENDIX C ADDITIONAL EARLY RETIREMENT BENEFITS ....................................... C-1 APPENDIX D ADDITIONAL EARLY RETIREMENT BENEFITS ....................................... D-1 APPENDIX E SPECIAL PROVISIONS GOVERNING EMPLOYEES OF WHITMAN PACKAGING CORPORATION WHO DID NOT OTHERWISE BECOME ELIGIBLE EMPLOYEES PRIOR TO JANUARY 1, 1992 ..................................... E-1 APPENDIX F SPECIAL PROVISIONS GOVERNING EMPLOYEES OF WHITMAN PACKAGING CORPORATION WHO OTHERWISE BECOME ELIGIBLE EMPLOYEES PRIOR TO JANUARY 1, 1992 ........................................................ F-1

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![](exhibit101-esteelauderxr003.jpg)

ii APPENDIX G SPECIAL PROVISIONS GOVERNING EMPLOYEES OF NORTHTEC INC. WHO DID NOT OTHERWISE BECOME ELIGIBLE EMPLOYEES PRIOR TO JANUARY 1, 1992 ................................................................................ G-1 APPENDIX H SPECIAL PROVISIONS GOVERNING EMPLOYEES OF NORTHTEC INC. WHO OTHERWISE BECOME ELIGIBLE EMPLOYEES PRIOR TO JANUARY 1, 1992 ................................................................................................... H-1 APPENDIX I ADDITIONAL RETIREMENT BENEFITS......................................................... I-1 APPENDIX J ADDITIONAL EARLY RETIREMENT BENEFITS - II ................................... J-1 APPENDIX K SPECIAL PROVISIONS GOVERNING EMPLOYEES OF BOBBI BROWN PROFESSIONAL COSMETICS, INC. WHO DID NOT OTHERWISE BECOME ELIGIBLE EMPLOYEES .............................................. K-1 APPENDIX L SPECIAL PROVISIONS GOVERNING ESTEE LAUDER EMPLOYEES WHO WERE PREVIOUSLY EMPLOYED BY THE DONNA KARAN COMPANY WHO DID NOT OTHERWISE BECOME ELIGIBLE EMPLOYEES ............................................................................................................ L-1 APPENDIX M SPECIAL PROVISIONS GOVERNING CERTAIN TRANSFERRED EMPLOYEES .......................................................................................................... M-1 APPENDIX N PROVISIONS GOVERNING CERTAIN EMPLOYEES OF MAKE-UP ART COSMETICS INC. AND ITS AFFILIATES AND PREDECESSORS ......... N-1 APPENDIX O ADDITIONAL EARLY RETIREMENT BENEFIT - III .................................. O-1 APPENDIX P PROVISIONS GOVERNING CERTAIN EMPLOYEES OF STILA COSMETICS, INC. AND ITS AFFILIATES AND PREDECESSORS .................. P-1 APPENDIX Q PROVISIONS GOVERNING CERTAIN EMPLOYEES OF AVEDA CORPORATION AND ITS AFFILIATES AND PREDECESSORS .................... Q-1 APPENDIX R PROVISIONS GOVERNING CERTAIN EMPLOYEES OF SASSABY COSMETICS INC. AND ITS AFFILIATES AND PREDECESSORS .................. R-1 APPENDIX S SPECIAL PROVISIONS GOVERNING TRANSFERRED EMPLOYEES OF RODAN & FIELDS LLC .................................................................................... S-1 APPENDIX T PROVISIONS GOVERNING CERTAIN EMPLOYEES OF DARPHIN LLC AND ITS AFFILIATES AND PREDECESSORS ........................................... T-1 APPENDIX U PROVISIONS GOVERNING CERTAIN EMPLOYEES OF APPLIED GENETICS INC. DERMATICS AND ITS AFFILIATES AND PREDECESSORS..................................................................................................... U-1 APPENDIX V RETIREE MEDICAL ACCOUNT .................................................................... V-1 APPENDIX W PROVISIONS GOVERNING CERTAIN EMPLOYEES OF BUMBLE AND BUMBLE, LLC, BUMBLE AND BUMBLE PRODUCTS, LLC AND THEIR PREDECESSORS ....................................................................................... W-1 APPENDIX X PROVISIONS GOVERNING CERTAIN EMPLOYEES OF DJF ENTERPRISES, INC. AND ITS PREDECESSORS ............................................... X-1

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iii APPENDIX Y SPECIAL SUPPLEMENT ................................................................................. Y-1 APPENDIX Z PROVISIONS GOVERNING CERTAIN EMPLOYEES OF GLAMGLOW LLC ................................................................................................... Z-1 APPENDIX AA PROVISIONS GOVERNING CERTAIN EMPLOYEES OF BY KILIAN INC AND EDITIONS DE PARFUMS LCC .......................................... AA-1 APPENDIX BB PROVISIONS GOVERNING CERTAIN EMPLOYEES OF LE LABO HOLDING LLC ...................................................................................................... BB-1 APPENDIX CC PROVISIONS GOVERNING CERTAIN EMPLOYEES OF ALZHEIMER'S DRUG DISCOVERY FOUNDATION ...................................... CC-1 APPENDIX DD PROVISIONS GOVERNING CERTAIN EMPLOYEES OF TOO FACED COSMETICS HOLDINGS, LLC ............................................................ DD-1 APPENDIX EE PROVISIONS GOVERNING CERTAIN EMPLOYEES OF HAVE & BE USA, INC.......................................................................................................... EE-1

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![](exhibit101-esteelauderxr005.jpg)

1 AMENDMENT AND RESTATEMENT OF THE ESTEE LAUDER COMPANIES RETIREMENT GROWTH ACCOUNT PLAN SECTION 1 NAME AND CONSTRUCTION 1.1 Name of Plan. This Plan shall be known as the "The Estee Lauder Companies Retirement Growth Account Plan." 1.2 Construction. It is the intention of Estee Lauder that the amended and restated Plan, and its attendant trust fund, will continue to meet the requirements of ERISA and be qualified and exempt from taxes under Sections 401 and 501 of the Code. Effective January 1, 1996, the Plan also is intended to be a "multiple employer plan" within the meaning of Section 413(c) of the Code. The Plan is intended to be a defined benefit plan for purposes of ERISA and the Code. 1.3 Effective Date. (a) This Amendment and Restatement of the Plan shall generally be effective as of January 1, 2023; provided, however, that earlier or later effective dates may apply to specific provisions of the Plan, as noted in such provisions. (b) The rights of any person who terminated employment or retired on or before the effective date of any of the relevant provisions of this amendment and restatement of the Plan, including his or her eligibility for benefits, shall be determined solely under the terms of the Plan as in effect on the date of his termination or retirement, unless such person is thereafter reemployed (and, to the extent relevant, again becomes an Active Participant) on or after the effective date of any such provision of amendment and restatement, in which case such provision shall apply to such person.

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2 SECTION 2 DEFINITIONS 2.1 "Accrued Benefit" means a monthly amount of retirement income determined for a Participant as of a specified date, commencing on a Participant's Normal Retirement Date, and payable as a single life annuity. The Accrued Benefit as of a specified date equals the Participant's Retirement Account projected to Normal Retirement Date with interest using the Periodic Adjustment Percentage and then divided by the applicable factor from Appendix A. If the Accrued Benefit is determined after the Participant's Normal Retirement Date, the Accrued Benefit equals the Participant's Retirement Account divided by the applicable factor from Appendix A. For those who were participants in the Prior Plans as of December 31, 1990 and satisfy the applicable requirements set forth in Appendix B, the Accrued Benefit is the greater of the accrued benefit described above or the accrued benefit determined under the Prior Plans, as described in Section 5.5 hereof. 2.2 "Actuarial Equivalent" means, with respect to a Participant's Accrued Benefit, another annuity or benefit that commences at a different date and/or is payable in a different form than the Accrued Benefit, but which has the same present value as the Accrued Benefit, when measured on the basis of the interest rate, mortality table and other factors specified in Appendix A as of the date of commencement of payment of such annuity or benefit, as calculated by or under the supervision of an actuary appointed by Estee Lauder or the Fiduciary Committee, which actuary has been enrolled under Subtitle C of Title III of ERISA. 2.3 "Approved Absence" means (a) any period of absence from work (other than any such absence on account of a period of Disability), with the approval or direction of the Employer, for up to 12 months and, provided said Employee returns to work for the Employer at such time as the Employer may reasonably require, the Approved Absence may exceed such 12- month period but will not be in excess of 24 months, (b) any period of absence during which the Employee was in military service with the armed forces (including Coast Guard and Merchant Marine Service) if the Employee has reemployment rights under applicable laws and complies with the requirements of the law as to reemployment and is reemployed, and (c) any period of Disability, but (except as provided in the last paragraph of Section 5.5) not to exceed 12 months. An Approved Absence will be disregarded for the purpose of the Plan, and the Employee will be regarded as in the service of the Employer during any period of an Approved Absence. The Hours of Service credited during an Approved Absence shall be those which would normally have been credited but for such absence, or in any case in which the Employer is unable to determine such hours normally credited, eight (8) Hours of Service per day. 2.4 "Average Final Compensation" means the highest average annual "compensation" which is produced by averaging an Employee's compensation for any five (5) consecutive calendar years within the Employee's Years of Credited Service. For purposes of this Section only, "compensation" means the straight time basic salary or wages paid to an Employee by the Employer for his services during each calendar year, inclusive of salary reduction contributions made by an Employer on behalf of the Employee under a "cash or deferred arrangement" described in Section 401(k) of the Code and pre-tax contributions made

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3 by the Employee under a "cafeteria plan" described in Section 125 of the Code and (effective January 1, 2001) under an arrangement described in Section 132(f)(4) of the Code, in each case maintained by an Employer, but excluding bonuses, payments for overtime, other Employer contributions for pension, insurance or other welfare benefits, or any other special payments. Notwithstanding the foregoing provisions of this Section 2.4, except to the extent otherwise provided in Section 5.5, "compensation" for each calendar year shall not exceed the dollar limitation under Section 401(a)(17) of the Code, subject to any adjustment to reflect increases in the cost of living determined by the Secretary of the Treasury pursuant to Section 401(a)(17) of the Code. In determining Average Final Compensation for Participants whose retirement or termination of employment is on or after January 1, 2002, the Participant's "compensation" for 2001 and prior years shall be subject to the annual compensation limit in effect under Section 401(a)(17) of the Code on January 1, 2002 ($200,000). Effective as of January 1, 2009, "compensation" for purposes of this Section 2.4 shall also include any "differential pay" (as defined in Section 2.10). 2.5 "Beneficiary" means any individual, trust, estate or other recipient entitled pursuant to Section 7.3 of this Plan to receive benefits, on either a primary or contingent basis, because of the death of a Participant. 2.6 "Board of Directors" or "Board" means the Board of Directors of Estee Lauder. 2.7 "Break in Service" means, with respect to any person, a Plan Year during which such person does not perform more than 500 Hours of Service; provided, however, that for purposes of Years of Eligibility Service, such term shall mean the 12-month period commencing on a person's Employment Commencement Date or a Plan Year, as the case may be (a "computation period"), during which such person does not perform more than 500 Hours of Service. A person who is absent from work for maternity or paternity reasons shall be credited with the lesser of the number of Hours of Service necessary to prevent a Break in Service or the number of hours which otherwise would normally have been credited to such person but for such absence (i) in the computation period in which the absence begins, if necessary to prevent a Break in Service, and (ii) in all other cases, in the following computation period. For purposes of this Section, an absence from work for maternity or paternity reasons means an absence (i) by reason of the pregnancy of the person, (ii) by reason of the birth of a child of the person, (iii) by reason of the placement of a child with the person in connection with the adoption of such child by such person or (iv) for purposes of caring for such child for a period beginning immediately following such birth or placement. No person shall incur a Break in Service solely on account of an absence which qualifies under the Family Medical Leave Act of 1993, to the extent required under the provisions of such Act. 2.8 "Code" means the Internal Revenue Code of 1986, as amended. 2.9 "Committee" means The Estee Lauder Inc. Employee Benefits Committee appointed pursuant to Section 11 hereof. 2.10 "Compensation" means, for a particular Plan Year, the straight time basic salary or wages paid to an Employee by the Employer on and after the Entry Date on which the

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![](exhibit101-esteelauderxr008.jpg)

4 Employee first becomes eligible to participate in the Plan pursuant to Section 3, inclusive of salary reduction contributions made by an Employer on behalf of the Employee under a "cash or deferred arrangement" described in Section 401(k) of the Code and pre-tax contributions made by the Employee under a "cafeteria plan" described in Section 125 of the Code or (effective January 1, 2001) under an arrangement described in Section 132(f)(4) of the Code, in each case maintained by the Employer, and including bonuses, commissions paid on or after January 1, 2022, shift differential, back-up pay, overtime pay, paid time off, training and travel time pay, but excluding (i) commissions paid prior to January 1, 2022, (ii) payments in lieu of unused vacation time, sick time, holidays, seniority days or other unused paid time off, (iii) referral fees, (iv) gratuities, (v) relocation payments, (vi) special allowance payments, (vii) sign-on payments, (viii) on-call compensation, (ix) any other amounts which are not currently included in the Employee's income for Federal income tax purposes, and (x) amounts paid under Estee Lauder's Short-Term Disability Plan or Long-Term Disability Plan. In addition to other applicable limitations that may be set forth in the Plan and notwithstanding any other contrary provision of the Plan, Compensation taken into account under the Plan for the purpose of calculating a Plan Participant's Accrued Benefit shall not exceed the dollar limitation under Section 401(a)(17) of the Code, subject to any adjustment to reflect increases in the cost of living determined by the Secretary of the Treasury pursuant to Section 401(a)(17) of the Code. Notwithstanding the foregoing, for Participants who terminate employment on or after December 1, 2002, the annual amounts credited to their Retirement Account pursuant to Section 5 for Plan Years prior to 2002 shall be retroactively adjusted as though the $200,000 dollar limitation in effect under Section 401(a)(17) of the Code for 2002 had been in effect for such prior Plan Years (subject to the Plan's compliance with Sections 401(a)(4) and 415 of the Code and the Treasury Regulations thereunder). Effective as of January 1, 2009, Compensation shall also include any "differential pay." For this purpose, "differential pay" shall mean any payment which (i) is made by an Employer to an individual with respect to any period during which he or she is performing service in the uniformed services (as defined in Chapter 43, Title 38, United States Code) while on active duty for a period of more than 30 days, and (ii) represents all or a portion of the amount the individual would have received from the Employer if he or she were performing services for such Employer. Notwithstanding the exclusion of commissions paid prior to January 1, 2022 from "Compensation" pursuant to the first paragraph of this Section 2.10, commissions paid on or after April 1, 2010 to Employees of Aveda Corporation, Aveda Experience Centers Inc., Aveda Institute Inc. or Aveda Services Inc. shall be counted as "Compensation" for all purposes under the Plan. 2.11 "Disability" means, with respect to any Employee, a condition which constitutes a disability under the terms of the Employer's Long-Term Disability Plan or under Title II of the Federal Social Security Act, regardless of whether such Employee is otherwise in fact entitled to receive benefits under the Employer's Long-Term Disability Plan and/or Title II of the Federal Social Security Act. 2.12 "Domestic Partner" means any person who is not the Participant's spouse and who, together with the Participant, has properly certified in the form and manner designated

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5 by the Committee that they qualify as a domestic partnership. Once an individual has been recognized as a Domestic Partner under the Plan, the individual shall continue to be treated as a Domestic Partner until the earlier of the individual's death, the individual's marriage to the Participant, or the date the individual or the Participant furnishes, in the form and manner designated by the Committee, a written statement certifying the termination of the domestic partnership. 2.13 "Early Retirement Date" means the first day of the month which next follows a Participant's termination of employment on or after attainment of at least age 55 and completion of at least ten (10) Years of Service, but prior to the Participant's Normal Retirement Date. 2.14 "Effective Date," with respect to the Plan as amended and restated and set forth herein, means January 1, 2023. 2.15 "Employee" means any person who is classified as an employee on the payroll records of an Employer, in accordance with the Employer's standard personnel practices. Individuals not classified as employees on the payroll records of the Employer for a particular period shall not be considered "Employees" for such period even if a court or administrative agency subsequently determines that such individuals were common law employees of the Employer during such period. Anything herein to the contrary notwithstanding, the term "Employee" shall not include: (a) a person who is represented by or included in a collective bargaining unit recognized by the Employer unless the Employer and the collective bargaining agent have agreed that the Plan shall apply to such unit; (b) with respect to periods prior to July 1, 1998, an In-Store Employee; (c) a person who would be an In-Store Employee, but for the fact that such person is classified as an international military sales person; (d) a person who is a nonresident alien who receives no compensation from an Employer which constitutes income from sources within the United States (other than a person employed by Clinique Laboratories, Inc. (Puerto Rico Branch)); (e) any person who is performing services for the Employer pursuant to an agreement between the Employer and a third party leasing organization, staffing firm, professional employer organization or other similar third party organization; or (f) a person who is classified as an "on-call employee" in accordance with the Employer's standard personnel practices. Notwithstanding the foregoing, and solely for purposes of determining a person's non-forfeitable benefit and eligibility to become a Participant, if a person who had been a Leased Employee becomes an Employee, such person shall be treated as an Employee from the first date that such person would have first been treated as a Leased Employee, determined without regard to the one (1)-year requirement of Section 414(n)(2)(B) of the Code; provided, however, that

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6 such person shall not become a Participant prior to the first Entry Date coincident with or next following becoming an Employee. 2.16 "Employer" means Estee Lauder, and any other company included within the Group that includes Estee Lauder (or any other corporation or unincorporated trade or business not included within the Group that includes Estee Lauder) that adopts the Plan with the approval of Estee Lauder, as provided in Section 15 hereof, and any successor to any such company that participated in this Plan. 2.17 "Employment Commencement Date" means, with respect to any person, the date coincident with or next following the date on which such person first performs an Hour of Service; provided, however, that with respect to a person who incurs a Break in Service and is thereafter reemployed, such term shall mean the date subsequent to such Break in Service on which he first performs an Hour of Service. 2.18 "Entry Date" means each January 1 and July 1; provided, however, that prior to January 1, 1993, with respect to any person who was a regular and non-contingent Employee of the Employer, "Entry Date" means the first date coincident with or next following such person's Employment Commencement Date. 2.19 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. 2.20 "Estee Lauder" means Estee Lauder Inc., a corporation duly organized under the laws of the State of Delaware, and any successor thereto. 2.21 "Fiduciary Committee" means the Estee Lauder Inc. Fiduciary Investment Committee, the members of which shall be appointed by the Board. 2.22 "Group" means Estee Lauder and any other unit or organization that is related to Estee Lauder as a member of a "controlled group of corporations," a group under "common control" or an "affiliated service group," all as determined pursuant to Sections 414(b), (c), and (m) of the Code. With respect to a participating Employer which is not in the same Group as Estee Lauder, "Group" means such Employer and any other unit or organization that is related to such employer as a member of a "controlled group of corporations," a group under "common control" or an "affiliated service group," all as determined pursuant to Sections 414(b), (c) and (m) of the Code. For purposes of determining whether or not a person is an Employee and the period of employment of such person, each such unit or organization shall be included in the Group only for such period or periods during which it is a "member" of the Group. 2.23 "Hour of Service" means: (a) Each hour for which an Employee is directly or indirectly compensated, or entitled to be compensated, by the Employer for the performance of duties. (b) Each hour for which an Employee is credited by the Employer during an Approved Absence.

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![](exhibit101-esteelauderxr011.jpg)

7 (c) Except as provided in (b) above, each hour, to a maximum of 501 hours for any single continuous period, for which an Employee is directly or indirectly compensated, or entitled to be compensated, by the Employer for reasons other than the performance of duties (irrespective of whether the employment relationship has terminated) due to vacation, holidays, incapacity, layoff, jury duty or military duty. Hours shall not be credited for payment to an Employee from a plan required by workers' compensation, unemployment compensation or disability insurance laws, nor shall hours be credited for reimbursement of such an Employee for his medical or medically-related expenses. (d) Each hour for which back pay, irrespective of mitigation of damages, has been awarded or agreed to by the Employer provided that if such award or agreement of back pay is for reasons other than the performance of duties, such hours shall be subject to the restrictions of paragraph (c). The same Hours of Service shall not be credited under more than one of the paragraphs above. All Hours of Service shall be computed and credited to computation periods in accordance with Sections 2530.200b-2(b) and (c) of the Department of Labor regulations; provided, however, that Hours of Service under paragraph (a) above, with respect to any payroll period, shall be credited for the Plan Year in which such payroll period ends. In determining an Employee's Hours of Service, he shall receive credit for all Hours of Service performed for any corporation or other entity which is a member of the Group; provided that (a) he shall not be credited with any Hours of Service performed for any such corporation or other entity prior to the time that such entity becomes a member of the Group and (b) the number of Hours of Service so credited with respect to his employment with such entity shall cease at the time such entity is no longer a member of the Group. Notwithstanding any of the foregoing requirements of this definition, an individual employed by the Employer (or by any other member of the Group which includes the Employer) as a common law employee, but who is not then classified as an Employee (including, but not limited to, an individual who was an Employee and thereafter becomes an Inactive Participant on account of a transfer of employment to a non-Employer member of the Group) shall, except for purposes of determining Years of Credited Service, nevertheless be credited with Hours of Service for all periods with respect to which such person is in fact so employed as a common law employee, to the same extent as if he had been an Employee. When an Employee's total actual Hours of Service are not specifically tracked during a payroll period, the following equivalencies shall be used in accordance with Section 2530.200b-3(e) of the Department of Labor regulations: Employees shall be credited with the following Hours of Service for each payroll period for which they are required to be credited with at least one (1) Hour of Service: Payroll Period Applicable to Employee Hours of Service Monthly 190

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![](exhibit101-esteelauderxr012.jpg)

8 Semi-monthly 95 Biweekly 90 Weekly 45 Per diem 10 2.24 "In-Store Employee" means any person who: (a) is classified as an employee on the payroll records of the Employer, in accordance with the Employer's standard personnel practices; and (b) performs services primarily in department stores, or in free-standing stores owned or leased by Estee Lauder or by another member of the Group that make sales to the general public (including stores providing sales of discounted merchandise to the general public). 2.25 "Initial Effective Date" means January 1, 1991. 2.26 "Leased Employee" means an individual who performs services for the Employer, other than as a common law employee, if (a) such services are provided pursuant to a written or oral agreement between the Employer and any other person; (b) the individual has performed during any consecutive 12-month period (i) at least 1,500 Hours of Service for the Employer or (ii) a number of Hours of Service which is at least 501 and which is at least equal to 75% of the median Hours of Service that are customarily performed by an employee of the Employer in the particular position; and (c) such services are performed under the primary direction or control of the Employer. 2.27 "Normal Retirement Date" means the first day of the month which next follows a Participant's attainment of at least age 65 and completion of at least five (5) Years of Service. 2.28 "Normal Retirement Income" means a Participant's Accrued Benefit payable hereunder at his Normal Retirement Date in the form provided in Section 9.1 hereof. The Normal Retirement Income of each Participant shall not be less than the largest periodic benefit that would have been payable to the Participant upon separation from service at or prior to his Normal Retirement Date under the Plan exclusive of social security supplements, premiums on disability or term insurance, and the value of disability benefits not in excess of the Normal Retirement Income. For purposes of comparing periodic benefits in the same form, commencing prior to and at the Participant's Normal Retirement Date, the greater benefit is determined by converting the benefit payable prior to the Normal Retirement Date into the same form of annuity benefit payable at the Normal Retirement Date and comparing the amount of such annuity payments. 2.29 "Participant" means any person who has become eligible to participate in the Plan in accordance with Section 3, and who has neither been paid in full any benefit to which

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![](exhibit101-esteelauderxr013.jpg)

9 he may be entitled under the Plan nor completely forfeited such benefit. An "Active Participant" means a Participant who is an Employee. An "Inactive Participant" means a Participant who is not an Active Participant. 2.30 "Periodic Adjustment Percentage" means: (a) For Plan Years beginning prior to January 1, 2017, the greater of (i) the arithmetic daily average of one (1)-year Treasury Constant Maturities for each calendar year immediately preceding the applicable Plan Year for which it is applied, as published in the Federal Reserve Statistical Release H.15 (519) of the Board of Governors of the Federal Reserve System, or (ii) 4%, and (b) For Plan Years beginning on or after January 1, 2017, the greater of (i) the arithmetic average of the monthly averages of one (1)-year Treasury Constant Maturity rates determined for each of the last five (5) months of the calendar year immediately preceding the applicable Plan Year for which it is applied, as published in the Federal Reserve Statistical Release H.15 (519) of the Board of Governors of the Federal Reserve System, or (ii) 4%. 2.31 "Plan" means The Estee Lauder Companies Retirement Growth Account Plan as effective January 1, 1991, and as it hereafter may be further amended from time to time. 2.32 "Plan Year" means the calendar year. 2.33 "Prior Plan" means the Estee Lauder Inc. Employee Retirement Plan, As Amended Effective July 1, 1975 (incorporating all amendments adopted through December 31, 1990), or the Estee Lauder Hemisphere Corporation Pension Plan, As Amended and Restated Effective January 1, 1986 (incorporating all amendments adopted through December 31, 1990), as such plans were in effect immediately prior to January 1, 1991, whichever plan (if any) is applicable to a Participant. The terms and provisions of the applicable Prior Plan fix and determine the rights and obligations under the Plan with respect to any Employee whose employment terminated prior to January 1, 1991. 2.34 "Retirement Account" means the bookkeeping account maintained with respect to a Participant as described in Section 5.1 hereof. 2.35 "Retirement Income Commencement Date" means the first day of the first period for which a benefit under the Plan is paid as an annuity or any other form. 2.36 "Social Security Covered Compensation" means the 35 year average of the maximum annual wages covered by the Federal Social Security Act as in effect, ending in the year Social Security retirement age (as defined in Section 415(b)(8) of the Code) is attained. 2.37 "Surviving Spouse" means a wife or husband of a Participant who has been married to such Participant by legal contract as of the earlier of the death of the Participant or the Participant's Retirement Income Commencement Date. 2.38 "Trustee" means the trustee or trustees which may at any time be acting as trustee of the Trust Fund, as provided in Section 12 hereof.

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10 2.39 "Trust Fund" or "Fund" means all funds at any time held by the Trustee and/or insurance company for the purposes of the Plan, as provided in Section 12 hereof. 2.40 "Year of Credited Service" means, with respect to any Participant, a Plan Year during which the Participant completes at least 1,000 Hours of Service as an Employee, commencing on such Participant's Entry Date, or, if later, January 1, 1993. In the case of a Participant who participated in the Plan prior to January 1, 1993, Years of Credited Service shall also include all Years of Credited Service accrued under the Plan as of December 31, 1992; fractional Years of Credited Service accrued under the Plan as of December 31, 1992 shall be converted to Hours of Service by crediting such Participant, for the Plan Year commencing on January 1, 1993, with 190 Hours of Service for each calendar month during which the Participant performed an Hour of Service. In the case of a Participant who was a participant in a Prior Plan, Years of Credited Service shall, in addition, include all Credited Service (as defined in the Prior Plan) recognized under such Prior Plan for benefit accrual purposes as of December 31, 1990. 2.41 "Year of Eligibility Service" means, with respect to any person, a consecutive 12-month period beginning on such person's Employment Commencement Date during which he completes at least 1,000 Hours of Service. If such person fails to complete at least 1,000 Hours of Service during such 12-month period, then a "Year of Eligibility Service" shall be determined based on the completion of at least 1,000 Hours of Service in the Plan Year beginning with or within the 12-month period beginning on such person's Employment Commencement Date, and then each Plan Year thereafter. In the case of a Participant who terminates employment and does not have any nonforfeitable right to his Accrued Benefit, Years of Eligibility Service before a period of consecutive one (1)-year Breaks in Service shall not be taken into account if the number of consecutive one (1)-year Breaks in Service in such period equals or exceeds five (5). A Participant whose Years of Eligibility Service are disregarded pursuant to the preceding sentence shall, upon his reemployment, be treated as newly employed for eligibility purposes. If a Participant's Years of Service may not thus be disregarded, such Participant shall again become an Active Participant immediately upon the date he first performs an Hour of Service as an Employee. 2.42 "Year of Service" means, with respect to any person, a Plan Year during which the person completes at least 1,000 Hours of Service (except as set forth in Section 8.4 hereof (relating to the "rule of parity")) commencing on the later of January 1, 1993, or (i) for purposes of Section 5.2 hereof, in the case of any In- Store Employee who becomes a Participant on July 1, 1998 or in the case of employment by a non-Employer member of the Group, the Employment Commencement Date, (ii) for purposes of Section 5.2, in the case of any Participant not described in the foregoing clause (i), the first day of the Plan Year in which such person's Entry Date occurs, and (iii) for purposes of Section 8 hereof, the Employment Commencement Date.

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11 In the case of a person who was in the employ of an Employer or other member of the Group prior to January 1, 1993, Years of Service shall also include all Years of Service accrued under the Plan as of December 31, 1992; fractional Years of Service accrued under the Plan as of December 31, 1992 shall be converted to Hours of Service by crediting such person, for the Plan Year commencing on January 1, 1993, with 95 Hours of Service for each semi- monthly period during which the person performed an Hour of Service. In the case of a person who was a participant in a Prior Plan, Years of Service shall, in addition, include (i) for purposes of Section 8 hereof, all Service (as defined in the Prior Plan) recognized for purposes of vesting under such Prior Plan as of December 31, 1990 and (ii) for purposes of Section 5.2, all Credited Service (as defined in the Prior Plan) recognized under such Prior Plan for benefit accrual purposes as of December 31, 1990. The masculine pronoun wherever used herein shall include the feminine pronoun, and the singular shall include the plural.

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12 SECTION 3 PARTICIPATION 3.1 Each Employee who was a participant in a Prior Plan immediately prior to the Initial Effective Date shall become a Participant herein as of the Initial Effective Date. 3.2 Each person who becomes an Employee on or after the Initial Effective Date, or who became an Employee prior to that date but was not a participant in a Prior Plan immediately prior to the Initial Effective Date, shall become a Participant on the first Entry Date on which such person is an Employee coincident with or next following his completion of a Year of Eligibility Service; provided, however, that any person who was an In-Store Employee on June 30, 1998 and completed at least a Year of Eligibility Service at any time on or prior to such date shall become a Participant on July 1, 1998 if such person remains an Employee on such date; and further, provided, that, in the case of any Employee whose Entry Date, determined without regard to any Year of Eligibility Service requirement, would otherwise have occurred prior to January 1, 1993, such Employee shall become a Participant as of such Entry Date, without the need to also complete a Year of Eligibility Service. 3.3 If a person who has been in the employ of an Employer or another member of the Group as a non-Employee subsequently becomes an Employee, such Employee shall become a Participant in accordance with Section 3.2 hereof. 3.4 A Participant who has become an Inactive Participant on account of his ceasing to be an Employee, while remaining employed by a member of the Group, shall once again become an Active Participant upon the date on which he first performs an Hour of Service as an Employee following the date he becomes an Inactive Participant. 3.5 Except as otherwise provided in this Section, benefits commencing after Normal Retirement Date shall not be less than the Actuarial Equivalent of the benefits to which the Participant would have been entitled if such benefits had commenced at Normal Retirement Date. Upon written notification to a Participant who elects to remain in service pursuant to Section 4.3 hereof, or to a former retired Participant who returns to the service of an Employer as a Participant herein, the retirement income payments to which the Participant is entitled on and after Normal Retirement Date but before he retires (or, in the case of a former retired Participant, again retires) shall be permanently forfeited so long as such Participant remains in "section 203(a)(3)(B) service," as described in Department of Labor Regulation Section 2530.203-3(c). For this purpose, a Participant's service shall be deemed "section 203(a)(3)(B) service" for any month in which he is credited with at least 40 Hours of Service or such other standard as may be applicable under Section 203(a)(3)(B) of ERISA. In the case of a Participant whose retirement income commenced to be paid before his Normal Retirement Date, upon his subsequent retirement, his retirement income shall be recomputed, based on the amount credited to his Retirement Account pursuant to Section 5 hereof and reduced on an actuarial basis to take account of retirement income payments previously received by him.

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13 3.6 Notwithstanding the foregoing, the following eligibility rules shall apply to In-Store Employees on and after January 1, 2007: (a) In-Store Employees who have not become Participants under the preceding provisions of this Section 3 by December 31, 2006, shall not be eligible to become Participants after such date. (b) Individuals who have terminated employment (as In-Store Employees or otherwise) with an Employer and are rehired on or after January 1, 2007 as In- Store Employees shall not be eligible to become Participants after their rehire. If any such individual was a Participant immediately prior to his rehire, he shall continue to be a Participant after his rehire to the extent otherwise permitted under the Plan, but his Accrued Benefit shall be frozen in accordance with Section 5.9. (c) Employees who change status on or after January 1, 2007 to that of an In-Store Employee from another category of Employee shall not be eligible to become Participants after their status change. If any such Employee was a Participant immediately prior to his status change, (i) If he was a vested Participant as of December 31, 2006, he shall continue to be a Participant after his status change for all purposes under the Plan; and (ii) If he was not a vested Participant as of December 31, 2006, he shall continue to be a Participant after his status change to the extent otherwise permitted under the Plan, but his Accrued Benefit shall be frozen in accordance with Section 5.9. (d) An individual whose status changes from that of an In-Store Employee to another category of Employee on or after January 1, 2007 shall be permitted to participate in the Plan after such status change if and when he otherwise satisfies the Plan's eligibility requirements. (e) Notwithstanding any other provision of this Section 3.6, with respect to any individuals who are classified as "on-call employees" in accordance with the Employer's standard personnel practices but continue to be Participants by virtue of the provisions of the Plan in effect prior to the Effective Date, the Accrued Benefits of such individuals shall continue to be frozen in accordance with the terms of the Plan as in effect prior to the Effective Date.

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14 SECTION 4 RETIREMENT DATES 4.1 Except as otherwise provided in this Section 4, each Participant may retire on his Normal Retirement Date and shall receive the Normal Retirement Income. 4.2 A Participant may retire on or after his Early Retirement Date and shall be entitled to receive his Accrued Benefit on or after his termination of employment in accordance with the provisions of Sections 9 and 10 hereof. 4.3 Any Participant whose employment is continued by the Employer after the Participant has reached his Normal Retirement Date shall receive retirement income payments commencing on the first day of the month following the date of his actual retirement, based on the amount credited to his Retirement Account at such date.

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15 SECTION 5 PARTICIPANTS' RETIREMENT ACCOUNTS 5.1 A Retirement Account shall be established and maintained for each Participant pursuant to this Section 5 (and for certain individuals who were participants in a Prior Plan) to which credits shall be made in accordance with the provisions of this Section 5. Except as otherwise provided in Section 5 hereof, an Inactive Participant who was a participant in a Prior Plan before January 1, 1991 but is not an Active Participant at any time on or after January 1, 1991 shall be credited with an amount equal to his "Accrued Benefit under the Prior Plan," determined in accordance with Appendix A, but a Retirement Account shall not be established for such Inactive Participant. Except as otherwise provided in Section 5.5 and 5.6 hereof, a Participant's Accrued Benefit under this Plan shall be based on the amount credited to his Retirement Account. The Retirement Account established and maintained pursuant to this Section 5 is intended to be a bookkeeping account. Neither the establishment of such Retirement Account nor the making of credits to such Retirement Account shall be construed as an allocation of assets of the Plan to, or a segregation of such assets in, such account, or otherwise as creating a right of the Participant to receive specific assets of the Plan. Benefits provided under the Plan shall be paid from the general assets of the Plan in the amounts, in the forms and at the times provided in Sections 4, 8, 9 and 10 hereof. 5.2 The annual amount credited to a Participant's Retirement Account pursuant to this Section shall be based upon the Participant's Years of Service and the Participant's Compensation for the applicable Plan Year or portion thereof. Credits pursuant to this Section shall be made to a Participant's Retirement Account as of the last day of each Plan Year in which the Participant performs a Year of Service beginning with 1991 and ending with the last day of the month in which occurs the Participant's termination of employment. (a) For each Participant who has fewer than five (5) Years of Service as of the last day of the Plan Year, credits shall be made to the Participant's Retirement Account in an amount equal to 3% of the Participant's Compensation earned while an Active Participant for such Plan Year. (b) For each Participant who has five (5) Years of Service as of the last day of the Plan Year, credits shall be made to the Participant's Retirement Account in an amount equal to the sum of (i) 3% of the Participant's Compensation earned while an Active Participant for such Plan Year multiplied by a fraction, the numerator of which is the number of whole calendar months in such Plan Year while an Active Participant preceding the anniversary of his Entry Date ("Anniversary Date") and the denominator of which is the number of whole months in such Plan Year while an Active Participant, and (ii) 4% of the Participant's Compensation earned while an Active Participant for such Plan Year multiplied by a fraction, the numerator of which is the number of whole calendar months in such Plan Year while an Active Participant following the Anniversary Date (including the calendar month in which the Anniversary Date occurs) and the denominator of which is the number of whole months in such Plan Year while an Active Participant.

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16 (c) For each Participant who has more than five (5) but fewer than ten (10) Years of Service as of the last day of the Plan Year, credits shall be made to the Participant's Retirement Account in an amount equal to 4% of the Participant's Compensation earned while an Active Participant for such Plan Year. (d) For each Participant who has ten (10) Years of Service as of the last day of the Plan Year, credits shall be made to the Participant's Retirement Account in an amount equal to the sum of (i) 4% of the Participant's Compensation earned while an Active Participant for such Plan Year multiplied by a fraction, the numerator of which is the number of whole calendar months in such Plan Year while an Active Participant preceding the Anniversary Date and the denominator of which is the number of whole months in such Plan Year while an Active Participant, and (ii) 5% of the Participant's Compensation earned while an Active Participant for such Plan Year multiplied by a fraction, the numerator of which is the number of whole calendar months in such Plan Year while an Active Participant following the Anniversary Date (including the calendar month in which the Anniversary Date occurs) and the denominator of which is the number of whole months in such Plan Year while an Active Participant. (e) For each Participant who has more than ten (10) Years of Service as of the last day of the Plan Year, credits shall be made to the Participant's Retirement Account in an amount equal to 5% of the Participant's Compensation earned while an Active Participant for such Plan Year. No credits shall be made pursuant to this Section with respect to any period during which a Participant is an Inactive Participant. In the event that a Participant becomes an Inactive Participant by reason of his transfer of employment to a non-Employer member of the Group, no credits shall be made to his Retirement Account pursuant to this Section after the end of the month in which the transfer occurs, and for purposes of this Section his Compensation shall be considered to be $0 after the end of the Plan Year in which the transfer occurs until such time that he again performs an Hour of Service as an Employee (i.e., again becomes an Active Participant); provided, however, that such Participant's Retirement Account balance shall continue to be increased in accordance with Section 5.4 hereof following such transfer. Notwithstanding any other provision of Section 5, in no event shall a Participant's Retirement Account balance, determined as of his Retirement Income Commencement Date, be less than the sum of all of the credits made to such Retirement Account pursuant to this Section 5.2. 5.3 In the case of an Active Participant in the Plan who as of the Initial Effective Date had an accrued benefit under a Prior Plan as of December 31, 1990, there shall be credited to the Retirement Account of such Participant as of January 1, 1991, an amount that is the single sum value of his "Accrued Benefit under the Prior Plan," determined in accordance with Appendix A. 5.4 For Plan Years beginning on or after the Initial Effective Date, each Participant's Retirement Account balance on the first day of the Plan Year shall be automatically increased as of the last day of the Plan Year by an amount equal to the Retirement Account balance on the first day of the Plan Year multiplied by the Periodic Adjustment Percentage;

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17 provided, however, in the case of a Participant who terminates employment, for any reason, such increase shall continue to be made until the last date as of which a Retirement Account balance is maintained for such Participant; further provided, however, if such increase is for less than a full Plan Year, the Periodic Adjustment Percentage shall be proportionately reduced. 5.5 In the case of any Participant on or after the Initial Effective Date who was a Participant under a Prior Plan on December 31, 1990 and satisfies the applicable requirements set forth in Appendix B, such Participant's Accrued Benefit shall be the greater of (i) the amount credited to his Retirement Account or (ii) the accrued benefit which would have been determined for him under the terms and provisions of the Prior Plan as in effect immediately prior to the Initial Effective Date, had such Prior Plan continued in effect until the date of his termination of employment. For this purpose, in the case of the Prior Plan which is the Estee Lauder Inc. Employee Retirement Plan, the annual amount of the Participant's Normal Retirement Income is equal to the greater of (a), (b) or (c) below: (a) 1% of that portion of his Average Final Compensation which is not in excess of his Social Security Covered Compensation plus 1½% of that portion of such Average Final Compensation which is in excess of such Social Security Covered Compensation, multiplied by the number of his Years of Credited Service. (b) $2,500 with 25 or more Years of Credited Service and reduced proportionately for Years of Credited Service less than 25. (c) The sum of (i) the amount that would otherwise have been determined under (a) above had such Participant terminated employment on December 31, 1993 (or, if earlier, his actual date of termination of employment) and had such Participant's "compensation" (as used in Section 2.4) for each Plan Year during the period ending on such applicable date been limited to $200,000 (or such greater amount as may have been permitted after taking into account increases for cost of living for such Plan Year, as determined by the Secretary of the Treasury) and with such dollar limit further applied by taking into account the family aggregation rules of Section 414(q)(6) of the Code pursuant to Section 401(a)(17) of the Code (as in effect on such applicable date), and (ii) the benefit that would otherwise have been determined under (a) above counting only Years of Credited Service performed after December 31, 1993. In the case of the Estee Lauder Hemisphere Corporation Pension Plan, the annual amount of the Participant's Normal Retirement Income would be equal to the greater of (a), (b) or (c) below: (a) 1% of that portion of his Average Final Compensation which is not in excess of his Social Security Covered Compensation plus 1½% of that portion of such Average Final Compensation which is in excess of such Social Security Covered Compensation, multiplied by the number of his Years of Credited Service. (b) $1,620 with 25 or more Years of Credited Service and reduced proportionately for Years of Credited Service less than 25.

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18 (c) The sum of (i) the amount that would otherwise have been determined under (a) above had such Participant terminated employment on December 31, 1993 (or, if earlier, his actual date of termination of employment) and had such Participant's "compensation" (as used in Section 2.4) for each Plan Year during the period ending on such applicable date been limited to $200,000 (or such greater amount as may have been permitted after taking into account increases for cost of living for such Plan Year, as determined by the Secretary of the Treasury) and with such dollar limit further applied by taking into account the family aggregation rules of Section 414(q)(6) of the Code pursuant to Section 401(a)(17) of the Code (as in effect on such applicable date), and (ii) the benefit that would otherwise have been determined under (a) above counting only Years of Credited Service after December 31, 1993. In the case of a Participant whose Accrued Benefit is determined under the terms of a Prior Plan under this Section, a Participant may, subject to consent as provided in Sections 9.4 and 9.5 hereof, elect a reduced retirement income to commence on the first day of any month which is between the date of his Early Retirement Date and his Normal Retirement Date. In the case of the Estee Lauder Inc. Employee Retirement Plan, the amount of the percentage of such reduction shall be equal to the sum of (a) the product derived by multiplying seven-twelfths (7/12) of 1% times the number of whole calendar months by which the pension commencement date precedes the Participant's attainment of age 57 and (b) the product derived by multiplying five-twelfths (5/12) of 1% by the excess of (i) the number of whole calendar months by which the pension commencement date precedes the Participant's attainment of age 62 over (ii) the number of whole calendar months specified in (a). No reduction shall be applied to such early retirement income amount if the pension commencement date occurs on or after the Participant's attainment of age 62. In the case of the Estee Lauder Inc. Hemisphere Corporation Pension Plan, the amount of the percentage of such reduction shall be equal to the sum of (a) the product derived by multiplying one-fourth (1/4) of 1% times the number of whole calendar months (up to and including the first 60 thereof) by which the pension commencement date precedes the Normal Retirement Date and (b) the product derived by multiplying one-half (1/2) of 1% by the number of calendar months, if any, by which the pension commencement date precedes by more than 60 calendar months the Normal Retirement Date. Notwithstanding any other provision of the Plan to the contrary: (i) in the case of any Participant who is eligible for a benefit set forth in this Section 5.5 and incurs a Disability prior to January 1, 1998, such Participant (i) shall continue to be credited with Hours of Service during the period of such Disability, to the same extent as if such person had not become so disabled, for purposes of determining such person's Years of Credited Service used in calculating such person's benefit pursuant to this Section 5.5, and (ii) shall, during the portion of such Participant's period of such Disability beginning on January 1st of the year following the year in which such period of Disability first commenced, be considered to continue to receive "compensation" for purposes of determining such person's Average Final Compensation, based upon such person's level of "base pay" as in effect immediately prior to the incurring of such Disability, and

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19 (ii) in the case of any Participant who is eligible for a benefit set forth in this Section 5.5 and incurs a Disability on or after January 1, 1998, such Participant (i) shall continue to be credited with Hours of Service during a period not exceeding the first 12 months of such Disability, to the same extent as if such person had not become so disabled, for purposes of determining such person's Years of Credited Service used in calculating such person's benefit pursuant to this Section 5.5, and (ii) shall, during that portion (if any) of such Participant's period of such Disability beginning on January 1st of the year following the year in which such period of Disability first commenced during which such Participant continues to be so credited with Hours of Service pursuant to the immediately preceding clause (i), be considered to continue to receive "compensation" for purposes of determining such person's Average Final Compensation, based upon such person's level of "base pay" as in effect immediately prior to the incurring of such Disability; provided, however, that in no event shall such person continue to be so credited with Hours of Service or be imputed with "compensation" for periods after such person's Normal Retirement Date. 5.6 Notwithstanding anything to the contrary provided herein or elsewhere in the Plan, any Participant who retires on or after his Normal Retirement Date with at least five (5) Years of Credited Service but less than ten (10) Years of Credited Service shall be entitled to a Normal Retirement Income of not less than $100 per month for life, and any Participant who retires on or after his Normal Retirement Date with at least ten (10) Years of Credited Service shall be entitled to a Normal Retirement Income of not less than $200 per month for life. 5.7 The benefits otherwise payable to a Participant or a Beneficiary under this Plan and, where relevant, the Accrued Benefit of a Participant, shall be limited to the extent required, and only to the extent required, by the provisions of Section 415 of the Code and rulings, notices and regulations issued thereunder. To the extent applicable, Section 415 of the Code and rulings, notices and regulations issued thereunder are hereby incorporated by reference into this Plan. In calculating these limits, the following rules shall apply: (a) Except where otherwise specifically set forth in rulings, notices and regulations incorporated into this Plan by reference, the limitations applicable to alternative forms of benefits (other than a "qualified joint and survivor annuity," as defined in Section 417(b) of the Code) shall be determined using the factors set forth in Appendix A, subject to the limitations on actuarial assumptions imposed by Section 415(b)(2)(E) of the Code. (b) If the applicable limits of Section 415 of the Code are increased after a benefit is in pay status by virtue of an adjustment to those limits reflecting a change in the cost of living index or an amendment to the Code, benefit payments to a Participant or his Beneficiary shall be increased automatically to the maximum extent permitted under the revised limits. This increase shall occur only to the extent it would not cause the benefit to exceed the benefit to which the Participant or Beneficiary would have been entitled in the absence of the limits under Section 415 of the Code.

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20 (c) If, upon the death of a Participant whose benefits were limited under this Section, the Surviving Spouse shall be entitled to a benefit payment smaller than that which was payable while the Participant was alive, the benefit payments to the Surviving Spouse shall equal the lesser of: (i) the benefit payment which would be payable to the Surviving Spouse if benefits under this Plan had not been limited by this Section, and (ii) the benefit payment which would be payable to the Surviving Spouse if the benefit provided under this Plan had been a "qualified joint and survivor annuity," as defined in Section 417(b) of the Code, with survivor benefits equal to 100% of the amount payable while the Participant was alive, in an amount equal to the maximum limitations provided under this Section. (d) If the Participant is entitled to a benefit under any defined benefit plan which is, or ever has been, maintained by the Employer or another member of the Group, the limits under this Section shall be applied to the combined benefits payable and the benefit payable hereunder shall be reduced to the extent necessary to make the combined benefits meet the limits under this Section. (e) To calculate average compensation for a Participant's high three (3)-years of service, compensation shall be the Employee's Compensation, and the three (3)-year average shall be calculated using consecutive limitation years. In making such average compensation calculations in limitation years beginning on or after April 5, 2007, the compensation limit of Section 401(a)(17) of the Code shall apply for each year taken into account in calculating such average. Notwithstanding the immediately preceding sentence, the benefits accrued or payable with respect to a Participant as of the end of the limitation year that immediately precedes the first limitation year beginning on or after April 5, 2007, pursuant to Plan provisions that were both adopted and in effect before April 5, 2007, shall be deemed to satisfy the limitations of Section 415(b) of the Code in accordance with Treasury Regulation Section 1.415(a)-1(g)(4). (f) Except as provided below, the Compensation of each Participant that may be taken into account in any limitation year for purposes of this Section 5.7 must be actually paid or made available to the Participant (or, if earlier, includable in the gross income of the Participant) within the limitation year, and must be paid or treated as paid prior to the Participant's severance from employment with the Employer, including payments made in the following limitation year solely because of the timing of pay periods and pay dates (as described in Treasury Regulation Section 1.415(c)-2(e)(2)). Notwithstanding the preceding sentence, the following amounts are also included in Compensation for a limitation year: any payment of regular compensation for services during the Employee's regular working hours, compensation for services outside the Employee's regular working hours (such as overtime or shift differential), commissions, bonuses or other similar payments made after severance from employment with the Employer that are paid by the later of 2½ months after severance from employment or the end of the limitation year that includes the date of severance from employment. (g) A limitation year shall be a Plan Year for purposes of this Section.

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21 5.8 Notwithstanding any other provision of the Plan to the contrary, the Accrued Benefit of an Inactive Participant who (i) was a participant in a Prior Plan and (ii) had a condition of Disability as of December 30, 1990, shall continue to be determined under the benefit formula of such Prior Plan, unless such Inactive Participant is eligible for the benefit set forth in Section 5.5 hereof. A Participant who first has a condition of Disability on or after January 1, 1991 shall be covered under the benefit formula of this Plan as of the Initial Effective Date unless such Participant is eligible for the benefit set forth in Section 5.5 hereof. For purposes of determining the opening Retirement Account balance under this Plan, Average Final Compensation shall be used, except that with respect to any year in which there were no earnings or earnings were reduced because of Disability, such Participant's last year of actual base pay shall be used on an annualized basis. 5.9 Notwithstanding the foregoing, the following rules shall apply to In-Store Employees, effective as of December 31, 2006: (a) The Accrued Benefit of any Participant who is an In-Store Employee and is not vested in such Accrued Benefit as of December 31, 2006 shall be frozen as of such date. (b) The Accrued Benefit of any Participant who terminates employment (as an In-Store Employee or otherwise) with an Employer and is rehired on or after January 1, 2007 as an In-Store Employee shall be frozen as of the date immediately preceding the date of such rehire (or such earlier date as may have applied under other provisions of the Plan). (c) The Accrued Benefit of any Participant who changes status on or after January 1, 2007 to that of an In-Store Employee from another category of Employee shall be frozen as of the date immediately preceding the date of such status change (or such earlier date as may have applied under other provisions of the Plan). The preceding sentence shall not apply, however, to any Participant who was vested in his Accrued Benefit as of December 31, 2006. (d) Following the applicable date of the Accrued Benefit freeze described in subsections (a), (b) or (c) above, the Retirement Account of the affected Participant shall no longer be eligible for Compensation-based credits pursuant to Section 5.2, but shall continue to be eligible for increases based on the Periodic Adjustment Percentage pursuant to Section 5.4. (e) If a Participant whose Accrued Benefit is frozen under this Section 5.9 changes status on or after January 1, 2007 from that of an In-Store Employee to another category of Employee that is eligible to accrue benefits under the Plan, he shall be permitted to accrue additional benefits after such status change in accordance with the terms of the Plan. (f) Notwithstanding any other provision of this Section 5.9, with respect to any individuals who are classified as "on-call employees" in accordance with the Employer's standard personnel practices but continue to be Participants by virtue of the provisions of the Plan in effect prior to the Effective Date, the Accrued Benefits of such

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22 individuals shall continue to be frozen in accordance with the terms of the Plan as in effect prior to the Effective Date. 5.10 The provisions of this Section 5.10 shall apply to each Participant (i) whose Entry Date was on or before January 1, 1998, (ii) whose Accrued Benefit is not determined under the terms of a Prior Plan, and (iii) who is actively employed by an Employer in a manufacturing job category as of October 1, 2013 and will have attained at least 50 years of age as of December 31, 2013 (a "Manufacturing Participant"). The determination of whether a job category is "manufacturing" for this purpose shall be made by the Committee or its delegate in its sole discretion. Any Manufacturing Participant who elects a Retirement Income Commencement Date which is on or after his Early Retirement Date and prior to his Normal Retirement Date shall have his Plan benefit calculated as an annuity (the "Manufacturing Early Retirement Annuity") in the following manner: (a) The Manufacturing Participant's Retirement Account shall be projected to his Normal Retirement Date with interest using the Periodic Adjustment Percentage in effect for the Plan Year in which the Retirement Income Commencement Date occurs (for the avoidance doubt, such projection shall be made using the same interest crediting methodology as prescribed by Section 5.4, such that the Retirement Account balance on the first day of the Plan Year shall be automatically increased as of the last day of the Plan Year by an amount equal to the Retirement Account balance on the first day of the Plan Year multiplied by such Periodic Adjustment Percentage, provided, however, that if such increase is for less than a full Plan Year, the Periodic Adjustment Percentage shall be proportionately reduced); (b) Such projected Retirement Account balance shall then be divided by the applicable factor from Appendix A to produce an Actuarial Equivalent, annual amount of single life annuity that would be payable commencing at the Normal Retirement Date; and (c) Such single life annuity amount shall then be reduced by a percentage equal to the sum of (i) the product derived by multiplying seven-twelfths (7/12) of 1% times the number of whole calendar months by which the Retirement Income Commencement Date precedes the Participant's attainment of age 57 and (ii) the product derived by multiplying five-twelfths (5/12) of 1% by the excess of (A) the number of whole calendar months by which the Retirement Income Commencement Date precedes the Participant's attainment of age 62 over (B) the number of whole calendar months specified in (i). No reduction shall be applied to such single life annuity amount if the Retirement Income Commencement Date occurs on or after the Participant's attainment of age 62. The Manufacturing Early Retirement Annuity determined in accordance with this Section 5.10 shall in no event be less than the Actuarial Equivalent of the Manufacturing Participant's Accrued Benefit otherwise determined under the Plan. The Manufacturing Early Retirement Annuity shall be payable in either the normal form of benefit or in any of the optional forms of benefit, including a lump sum, otherwise available to the Manufacturing Participant in accordance with Section 9.

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23 SECTION 6 CONTRIBUTIONS 6.1 No contributions are to be made by Participants under this Plan. 6.2 Subject to the provisions of Section 13 hereof, the Employer intends to contribute over a period of time such amounts as may be determined by actuarial calculations to be required of the Employer to provide benefits in accordance with the Plan. Any forfeitures arising under the Plan shall not be applied to increase the benefits any Participant would otherwise receive under the Plan but shall be applied to reduce the Employer contributions under the Plan. 6.3 Subject to the provisions of Section 13 hereof, the administrative expenses of the Plan, except to the extent paid by the Employer, shall be paid out of the funds of the Plan. 6.4 Except as provided in paragraphs (a) and (b) below, and except as provided in Section 16 hereof, Employer contributions made under the Plan will be held for the exclusive benefit of Participants, and their joint annuitants or Beneficiaries and may not revert to the Employer. (a) A contribution made by the Employer under a mistake of fact may be returned to the Employer within one (1) year after it is contributed to the Plan. (b) A contribution conditioned upon its deductibility under Section 404 of the Code may be returned, to the extent the deduction is disallowed, to the Employer within one (1) year after the disallowance. All contributions to the Plan are hereby conditioned upon their deductibility. The maximum contribution that may be returned to the Employer will not exceed the amount actually contributed to the Plan, or the value of such contribution on the date it is returned to the Employer, if less. 6.5 In recognition of the fact that the Plan is, effective January 1, 1996, subject to the requirements of Section 413(c) of the Code, the provisions of Section 413(c)(4) of the Code shall, with respect to periods on and after that date, be applied consistent with such rules and procedures as shall be adopted by the actuary appointed under the Plan.

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24 SECTION 7 DEATH BENEFIT 7.1 Death Before Retirement Date. (a) If a Participant with a nonforfeitable right to the amount credited to his Retirement Account pursuant to Section 8 hereof dies prior to commencement of benefits, then his Surviving Spouse, or if (i) the Participant elects a Beneficiary other than his Surviving Spouse and such Surviving Spouse consents to such designation pursuant to Section 7.3 of the Plan or (ii) the Participant is unmarried, the Participant's Domestic Partner or other designated Beneficiary, as applicable, shall receive the amount credited to the Retirement Account, payable in a single life annuity. The Surviving Spouse (or Domestic Partner or other designated Beneficiary, if applicable) may elect to receive such benefit in a cash lump sum payment; provided, however, that if the Actuarial Equivalent value of such amount does not exceed $1,000, such value shall automatically be paid in a cash lump sum in accordance with the last sentence of Section 10.1 hereof. (b) Notwithstanding the foregoing subsection (a), if (i) a Participant described in such subsection (a) was subject to the provisions of Section 5.5 and (ii) at the time of his death there is a Surviving Spouse and the Participant has not designated a Beneficiary other than his Surviving Spouse with such Surviving Spouse's consent pursuant to Section 7.3, the single life annuity otherwise payable to such Surviving Spouse pursuant to this Section 7.1 shall not be less than the single life annuity otherwise payable to such person determined in accordance with the provisions of Section 6.1 or 6.2, as the case may be, of the appropriate Prior Plan and based solely on such Participant's Normal Retirement Income determined in accordance with Section 5.5; provided, however, that if the Actuarial Equivalent value of the single life annuity otherwise so determined pursuant to this subsection (b) does not exceed $1,000, such value shall automatically be paid in a cash lump sum in accordance with the last sentence of Section 10.1 hereof. 7.2 Death After Date of Commencement of Benefits. In the event of a Participant's death after commencement of benefits, and if an optional form of benefit under Section 9.3 hereof is applicable, then the death benefit payable hereunder, if any, shall be determined in accordance with such optional election. Otherwise, no death benefit shall be payable. 7.3 Beneficiary Designation. If a Participant has a Surviving Spouse, his Surviving Spouse shall be his Beneficiary, unless the Participant designates someone other than his Surviving Spouse as his Beneficiary (other than as a contingent Beneficiary) and the Surviving Spouse consents to such designation. If the Participant does not have a Surviving Spouse or if his Surviving Spouse consents, the Participant shall have the right to designate any person as a Beneficiary, to receive the amount, if any, payable pursuant to this Plan upon his death and may from time to time change any such designation in accordance with procedures established by the Committee. Each such designation shall be submitted to the Committee or its designee in such form and manner as may be required by the Committee or its designee. In the event that a Participant designates someone other than his Surviving Spouse as his Beneficiary

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25 (other than as a contingent Beneficiary), such Beneficiary designation shall not be effective unless (i) the Surviving Spouse consents to such Beneficiary designation in writing, in a form acceptable to the Committee or its designee, and such consent is witnessed by a Plan representative or a notary public or (ii) the Participant provides the Committee or its designee with sufficient evidence to show that the Participant does not have a Surviving Spouse or that his Surviving Spouse cannot be located. The Committee shall decide which Beneficiary, if any, shall have been validly designated. If a Participant does not have a Surviving Spouse and no Beneficiary has been designated, or if a Participant does not have a Surviving Spouse and the Committee determines that a designation made by the Participant is not effective for any reason, the Committee shall designate the Participant's Domestic Partner, if any, or, if there is no such Domestic Partner, the Participant's estate as the Beneficiary.

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26 SECTION 8 TERMINATION OF EMPLOYMENT 8.1 A Participant shall be 100% vested in the amount credited to his Retirement Account after having completed at least five (5) Years of Service. Effective for Plan Years beginning on or after January 1, 2008, a Participant shall be 100% vested in the amount credited to his Retirement Account after having completed at least three (3) Years of Service. If a Participant terminates employment other than by early or normal retirement or death after having completed at least five (5) Years of Service (or at least three (3) Years of Service effective for Plan Years beginning on or after January 1, 2008), he shall be entitled to elect, with spousal consent under the terms of Section 9.4 hereof, if applicable, payment of the amount credited to his Retirement Account (or if greater, for distributions made prior to January 1, 2007, an amount equal to the Actuarial Equivalent of his Accrued Benefit) as of such date of termination in a cash lump sum or, (i) if the Participant has a Surviving Spouse at the time of such termination of employment, as an annuity that pays an Actuarial Equivalent retirement income to the retired Participant for the rest of his life and, after his death, either 50% or 75% (in accordance with the Participant's election) of such Actuarial Equivalent retirement income to his Surviving Spouse for the rest of the Surviving Spouse's life, or (ii) if the Participant has no Surviving Spouse at the time of such termination of employment, as an annuity that pays an Actuarial Equivalent retirement income to the retired Participant for the rest of his life. Such payment shall be made (or in the case of an annuity, shall commence) in accordance with the last sentence of Section 10.1 hereof, and such election shall be subject to consent as provided in Sections 9.4 and 9.5 hereof; provided, however, that if the Actuarial Equivalent value of such amount does not exceed $1,000, such value shall automatically be paid in a cash lump sum in accordance with the last sentence of Section 10.1 hereof. If such Participant does not elect such lump sum to be paid or such annuity to commence upon his termination of employment, he shall be entitled to receive his Accrued Benefit commencing on the first day of any month after his termination of employment (but not later than his Normal Retirement Date), payable in a lump sum or as an annuity in accordance with this Section 8.1, to the extent applicable. For purposes of this Section 8, a Participant who is terminated for Disability after a one (1)-year absence because of Disability shall be deemed to have completed at least five (5) Years of Service. 8.2 In no event shall the retirement income of a terminated Employee who was a participant under a Prior Plan immediately prior to the Initial Effective Date be less than the Actuarial Equivalent of the benefit that would have been payable under the Prior Plan had the Participant's employment terminated immediately prior to the Initial Effective Date. 8.3 Notwithstanding any other provision of this Plan, each Participant shall be 100% vested in his Retirement Account on his Normal Retirement Date. 8.4 (a) If a Participant's service terminates prior to having completed five (5) Years of Service (or three (3) Years of Service for any Participant who performs at least one (1) Hour of Service on or after January 1, 2008), and at a time when he is 0% vested in the amount credited to his Retirement Account, he shall, notwithstanding any other provision of the

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27 Plan to the contrary, be deemed to automatically receive, as of such person's date of termination of employment, a single lump sum distribution which is the Actuarial Equivalent of his entire vested Accrued Benefit under the Plan, and he shall thereupon forfeit his Retirement Account as of such same date. Any forfeiture resulting from the operation of this Section, or any other provisions of the Plan, shall be used to reduce future Employer contributions. (b) If a Participant's Retirement Account is forfeited pursuant to the preceding paragraph (a) above and such Participant is subsequently reemployed as an Employee of an Employer (i) after the number of consecutive one (1)-year Breaks in Service equals or exceeds five (5), the Years of Service completed prior to the Breaks in Service shall not be aggregated with Years of Service completed after the reemployment date, or (ii) prior to incurring five (5) or more consecutive one (1)-year Breaks in Service, the amounts previously credited to his Retirement Account will be restored, the Years of Service completed prior to the Breaks in Service will be aggregated with the Years of Service after his reemployment date and the Participant shall become a Participant of the Plan upon his reemployment. (c) If a Participant's vested percentage is 100% at the time of his termination of employment, and such Participant is subsequently reemployed as an Employee of an Employer, Years of Service completed prior to any number of one (1)-year Breaks in Service shall be aggregated with Years of Service after the reemployment. If such Participant received a complete distribution of his benefits under the Plan prior to his reemployment, then the amounts credited to his Retirement Account as of his date of termination shall be restored on his reemployment date, but any subsequent distribution paid to the Participant after his reemployment shall be offset by the present value of any distributions previously paid to him at any time in accordance with the requirements of Section 411(a)(7) of the Code and the regulations promulgated thereunder. (d) For purposes of determining the amount credited to the Retirement Account of a reemployed Participant described in Section 8.4(c) above, (i) if such Participant received a complete distribution of his benefits under the Plan prior to his reemployment, the amount credited to his Retirement Account upon reemployment shall be $0, and (ii) if such Participant received distributions of only a portion of his benefits under the Plan prior to his reemployment, the amount credited to his Retirement Account upon reemployment shall be the amount credited to his Retirement Account at the time of his prior termination of employment less the amount of such distributions, and his Retirement Account shall be increased in accordance with Section 5.4 by applying the Periodic Adjustment Percentage to the undistributed amounts credited to his Retirement Account during the period between his termination of employment and his reemployment. Notwithstanding the foregoing, if the reemployed Participant repays in full his prior distributions plus interest in accordance with Section 411(a)(7) of the Code, the Participant's Retirement Account shall be credited with the full amount credited to such Retirement Account at the time of his prior termination of employment, increased in accordance with Section 5.4 by applying the Periodic Adjustment Percentage to such amount for the period between his termination of employment and his reemployment. 8.5 Notwithstanding the foregoing provisions of this Section 8 and solely in the case of a Participant subject to the provisions of Section 5.5:

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28 (a) if such Participant's Accrued Benefit is in fact determined pursuant to Section 5.5, rather than with reference to the amount credited to his Retirement Account, then the provisions of Section 8.1 shall instead be applied with reference to such Accrued Benefit so determined pursuant to Section 5.5, and in connection therewith, the amount of any cash lump sum shall be the Actuarial Equivalent of such Accrued Benefit; and (b) regardless of whether such Participant's Accrued Benefit is in fact so determined pursuant to Section 5.5, the provisions of Section 8.4 shall be applied with reference to both such person's Retirement Account and the amount otherwise calculated pursuant to Section 5.5.

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29 SECTION 9 OPTIONAL FORMS OF BENEFIT 9.1 Normal Form of Benefit. (a) The normal form of benefit shall be an income payable monthly for life, commencing on the Normal Retirement Date and terminating with the payment preceding death; provided, however, that a Participant may, with spousal consent under the terms of Section 9.4 hereof, if applicable, elect to receive the amount credited to his Retirement Account (or if greater, for distributions made prior to January 1, 2007, an amount equal to the Actuarial Equivalent of his Accrued Benefit) in a single cash lump sum; further provided, however, that if the Actuarial Equivalent value of such amount does not exceed $1,000, such amount shall automatically be paid to the Participant in a cash lump sum in accordance with the last sentence of Section 10.1 hereof. (b) Notwithstanding the foregoing subsection (a) and in the case of a Participant subject to the provisions of Section 5.5 or Section 5.6, if such Participant's Accrued Benefit is in fact determined pursuant to Section 5.5 or Section 5.6, rather than with reference to the amount credited to his Retirement Account, then the provisions of the foregoing subsection (a) shall instead be applied with reference to such Accrued Benefit so determined pursuant to Section 5.5 or Section 5.6, and in connection therewith, the amount of any cash lump sum shall be the Actuarial Equivalent of such Accrued Benefit. (c) In the case of an eligible Participant who is subject to Section 5.10, the provisions of the foregoing subsection (a) shall not be applied with reference to the amount credited to his Retirement Account and instead shall be applied with reference to the Manufacturing Early Retirement Annuity determined under Section 5.10, and in connection therewith, the amount of any cash lump sum shall be the Actuarial Equivalent of such Manufacturing Early Retirement Annuity (and in no event shall such lump sum be less than the amount credited to the Participant's Retirement Account). 9.2 Automatic Post-Retirement Surviving Spouse Option. Subject to the conditions hereinafter set forth in this Section, if a Participant has a Surviving Spouse at his Retirement Income Commencement Date, the amount of retirement income payment to which he would otherwise be entitled under the normal form of benefit described in Section 9.1 shall be reduced on an Actuarial Equivalent basis to reflect the fact that, if such spouse shall survive him, a retirement income shall be payable under the Plan to his Surviving Spouse during such spouse's remaining lifetime after his death in an amount equal to 50% of the reduced amount of retirement income payments. A married Participant may elect (and may revoke such election and thereafter reelect) that his retirement income not be paid in the 50% joint and survivor form described in the preceding sentence, subject to the provisions of Section 9.4 hereof. 9.3 Notwithstanding the foregoing provisions of this Section 9, a Participant who retires on or after his Early Retirement Date may, subject to consent as provided in Sections 9.4 and 9.5 hereof, elect to receive the value of (i) his entire Accrued Benefit in accordance with Option 1 or 2; or (ii) his Accrued Benefit as of his Retirement Income Commencement Date less

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30 the value of his Accrued Benefit as of December 31, 1990 separately in accordance with Option 1 or 2, and his Accrued Benefit as of December 31, 1990 under a Prior Plan separately in accordance with Option 3 or 4 or, for Retirement Income Commencement Dates prior to November 1, 2008, Option 5. Without limiting the foregoing, an eligible Participant who is subject to Section 5.10 may, subject to consent as provided in Sections 9.4 and 9.5 hereof, elect to receive the value of the Manufacturing Early Retirement Annuity determined under Section 5.10 in accordance with Option 1 or 2. Option 1. An Actuarial Equivalent retirement income to be paid to the retired Participant for the rest of his life, and after his death either 50%, 100% or, effective for Plan Years beginning on or after January 1, 2008, 75% (in accordance with his election) of such Actuarial Equivalent retirement income to be paid to his contingent annuitant for the rest of the contingent annuitant's life. Option 2. An Actuarial Equivalent retirement income to be paid to the retired Participant payable for the greater of his lifetime or a period of ten (10) years. If the retired Participant dies before the expiration of ten (10) years, the remaining installments of his Actuarial Equivalent retirement income shall be paid to his Beneficiary. Option 3. An Actuarial Equivalent retirement income to be paid to the retired Participant for the rest of his life, and after his death either 25%, 66.67%, 75% or 100% (in accordance with his election) of such Actuarial Equivalent retirement income to be paid to his contingent annuitant for the rest of the contingent annuitant's life. Notwithstanding the foregoing, the 66.67% contingent annuity shall not be available for Retirement Income Commencement Dates on or after November 1, 2008. Option 4. An Actuarial Equivalent retirement income to be paid to the retired Participant for the rest of his life, and if he dies before receiving 120 monthly payments, such Actuarial Equivalent retirement income to be paid to his Beneficiary for the remainder of the 120 months. Option 5. A Participant who retires early in accordance with Section 4.2 hereof and whose Retirement Income Commencement Date is prior to November 1, 2008 may elect to receive an Actuarial Equivalent retirement income providing larger monthly payments, in lieu of the retirement income otherwise payable upon early retirement, until the earliest date on which his Social Security benefit could commence; thereafter his monthly retirement income payments shall be reduced by the estimated monthly amount of his Social Security benefit computed to commence on such date. This optional form provides, insofar as practical, a level total retirement income (from this Plan and Social Security) for the Participant. In the event of the election of this Social Security adjustment option, the monthly payment of the adjusted retirement income shall commence at the date of retirement and shall cease with the earlier of the last payment prior to the death of the Participant or the last payment payable as calculated under this option. 9.4 The following rules and requirements must be met in order for any optional form of retirement income to be applicable.

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31 (a) The election must be made pursuant to a qualified election (as described in paragraphs (b) and (g) of this Section) and filed with the Committee or its designee within the 90-day period (180-day period for Plan Years beginning on or after January 1, 2007) ending on the Retirement Income Commencement Date. (b) The consent of a contingent annuitant or Beneficiary shall not be required for a qualified election of an option; except that, if a married Participant elects to receive a form of benefit other than the Automatic Post-Retirement Survivor Spouse Option described in Section 9.2 hereof or the 75% or 100% joint and survivor annuity described in Option 1 or Option 3 under Section 9.3 with the Surviving Spouse as the contingent annuitant, a qualified election requires that the Surviving Spouse waive such spouse's right to the Automatic Post-Retirement Surviving Spouse Option. Such waiver shall not be effective unless (i) the consent is in writing; (ii) the election designates a specific alternate Beneficiary, including any class of Beneficiaries or any contingent Beneficiaries, which may not be changed without spousal consent (or the Surviving Spouse expressly permits designations by the Participant without any further spousal consent); (ii) the Surviving Spouse's consent acknowledges the effect of the election; (iv) the Surviving Spouse's consent is witnessed by a Plan representative or notary public; and (v) the election designates a form of benefit payment that may not be changed without spousal consent (or the Surviving Spouse expressly permits designations by the Participant without any further spousal consent). In the absence of a waiver by such spouse, other than for the reason that such spouse cannot be located, the election of a form of payment other than as provided in Section 9.2 hereof shall be null and void. Any consent by a Surviving Spouse obtained under this provision (or establishment that the consent of a Surviving Spouse may not be obtained) shall be effective only with respect to such Surviving Spouse. A consent that permits designations by the Participant without any requirement of further consent by the Surviving Spouse must acknowledge that such spouse has the right to limit consent to a specific Beneficiary, and a specific form of benefit where applicable, and that such spouse voluntarily elects to relinquish either or both of such rights. A revocation of a prior waiver may be made by a Participant without the consent of the Surviving Spouse at any time prior to the commencement of benefits. The number of revocations shall not be limited. No consent obtained under this provision shall be valid unless the Participant has received notice as provided in paragraph (g) of this Section. (c) An election may not be made nor will it be accepted by the Committee or its designee, or if accepted it shall become null and void, if the Actuarial Equivalent value of the Participant's entire Accrued Benefit as of his Retirement Income Commencement Date would be $1,000 or less, and such value shall automatically be paid to the Participant in a cash lump sum. (d) If the stated effective date of the option is prior to the Participant's Normal Retirement Date and the Participant continues in service after such stated effective date, the election shall become null and void but, subject to the rules and requirements contained in this Section, the Participant may thereafter make another election. If the stated effective date is the Participant's Normal Retirement Date or any later date and he continues in service after such stated effective date, the option shall take effect upon his subsequent death or retirement.

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32 (e) If a Participant who has elected Option 4 under Section 9.3 hereof dies while the option is in effect, and his Beneficiary is a natural person who survives the Participant but dies before the 120 monthly payments have been paid to the Participant and the Beneficiary, the lump sum discounted value of the unpaid balance of such 120 monthly payments shall be paid to the Beneficiary's estate. (f) If the contingent annuitant is other than the Surviving Spouse, and if the actuarial present value of the payments to be made to the Participant under an option will be less than 51% of the Actuarial Equivalent value of the normal form of retirement benefit provided in Section 9.1 hereof, the optional benefit shall be adjusted so that the value of the Participant's benefit will be equal to 51% of the Actuarial Equivalent value of the Participant's normal form of retirement benefit. Notwithstanding the foregoing sentence, for annuity starting dates occurring on or after January 1, 2006, the level of benefits payable to a contingent annuitant who is not the Surviving Spouse shall be determined in accordance with Q&A-2(c) of Treasury Regulations Section 1.401(a)(9)-6, as applicable. (g) No election shall be a qualified election unless, at least 30 days (or such a shorter period permitted by the Code and the regulations promulgated thereunder) and no more than 90 days (180 days for Plan Years beginning on or after January 1, 2007) prior to the Participant's Retirement Income Commencement Date, the Committee shall furnish him (by mail or personal delivery) a statement generally describing the 50% joint and survivor form and other optional forms of benefit and explaining the relative financial effects of making an election under Section 9.2 hereof, or an election of an optional form of payment under Section 9.3 hereof. The statement shall also describe the right of the Participant and his Surviving Spouse to waive the 50% joint and survivor form, the effect of such a waiver, and the right to revoke such waiver. 9.5 If the Actuarial Equivalent value of a Participant's vested Accrued Benefit exceeds $1,000 and the Accrued Benefit is "immediately distributable" (as defined below), the Participant and any Surviving Spouse (or where either the Participant or the spouse has died, the survivor) must consent to any distribution of such Accrued Benefit. An Accrued Benefit is "immediately distributable" if any part of the Accrued Benefit could be distributed to the Participant (or Surviving Spouse) before the Participant attains (or would have attained if not deceased) Normal Retirement Date. The consent of the Participant and any Surviving Spouse shall be obtained in writing within the 90-day period (180-day period for Plan Years beginning on or after January 1, 2007) ending on the Retirement Income Commencement Date. The Participant and any Surviving Spouse shall be notified of the right to defer any distribution until the Participant's Accrued Benefit is no longer immediately distributable and, for Plan Years beginning on or after January 1, 2008, of the consequences of failing to defer receipt of such distribution). Such notification shall include a general description of the material features, and an explanation of the relative values of, the optional forms of benefit available under the Plan in a manner that would satisfy the notice requirements of Section 417(a)(3) of the Code, and shall be provided no less than 30 days (or such shorter period permitted by the Code and the regulations promulgated thereunder) and no more than 90 days (180 days for Plan Years beginning on or after January 1, 2007) prior to the Retirement Income Commencement Date. Notwithstanding the foregoing, only the Participant need consent to the commencement of a distribution in the form of a 50%, 75% or 100% joint and survivor annuity described in Option 1 or Option 3 under Section 9.3 while the Accrued Benefit is immediately distributable, provided

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33 that the Surviving Spouse is the contingent annuitant. Neither the consent of the Participant nor the Surviving Spouse shall be required to the extent that a distribution is required to satisfy Section 401(a)(9) or 415 of the Code. 9.6 Any Distributee (as defined below) who is entitled to receive a Plan distribution that would be an "Eligible Rollover Distribution" (as defined below), may elect to have such distribution paid in the form of a direct trustee-to-trustee transfer to an "Eligible Retirement Plan" (as defined below) specified by such individual. The Committee shall prescribe uniform rules for making such direct transfer election. For purposes of this Section 9.6: (a) "Distributee" means a (i) Participant, (ii) the Surviving Spouse of a Participant, (iii) an alternate payee (within the meaning of Section 414(p) of the Code) who is a Spouse or former Spouse of the Participant, or (iv), effective for distributions on or after January 1, 2007, a non-Spouse Beneficiary. (b) "Eligible Rollover Distribution" means any distribution of all or any portion of the balance to the credit of the individual, except that an Eligible Rollover Distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the individual or the joint lives (or joint life expectancies) of the individual and the individual's designated Beneficiary, or for a specified period of ten (10) years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; and any distribution that is made upon hardship of the individual. (c) "Eligible Retirement Plan" means any of the following plans or arrangements that accepts the individual's Eligible Rollover Distribution: (i) an individual retirement account described in Section 408(a) of the Code, (ii) an individual retirement annuity described in Section 408(b) of the Code, (iii) a Roth IRA described in Section 408A of the Code, (iv) a qualified plan trust, (v) an annuity plan described in Section 403(a) of the Code, (vi) an annuity contract described in Section 403(b) of the Code, or (vii) an eligible deferred compensation plan described in Section 457(b) of the Code that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state. In the case of a non-Spouse Beneficiary, an "Eligible Retirement Plan" shall include only (i) an individual retirement account described in Section 408(a) of the Code, (ii) an individual retirement annuity described in Section 408(b) of the Code (other than an endowment contract) or (iii) a Roth IRA described in Section 408A of the Code, established for the purpose of receiving the Eligible Rollover Distribution on behalf of such non-Spouse Beneficiary.

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34 SECTION 10 PAYMENT OF RETIREMENT INCOME 10.1 Subject to the provisions of Sections 9 and 11 hereof, retirement income payable in other than a lump sum shall be payable in monthly installments, as of the first day of each month with the first payment to be made as of the appropriate retirement date or earlier date of termination of employment, but in no event later than the 60th day after the later of the close of the Plan Year in which the Participant attains age 65 or terminates employment or in which occurs his tenth (10th) Year of Credited Service, and with final payment to be made as of the first day of the month in which death occurs, or, if earlier, the first day of the month payments cease under the option elected. Subject to the foregoing sentence, retirement income payable in a single cash lump sum shall be paid on or as soon as administratively possible following the date he becomes entitled thereto. 10.2 Anything elsewhere in the Plan to the contrary notwithstanding, the entire nonforfeitable interest of each Participant shall be either: (a) distributed to the Participant not later than the Participant's "Required Beginning Date" (as defined in Section 10.2(b)), or (b) distributed to, or for the benefit of, the Participant and the Participant's contingent annuitant in installments beginning not later than the Participant's Required Beginning Date and continuing, in accordance with such regulations as the Secretary of the Treasury may prescribe, (i) over the life of the Participant or over the lives of the Participant and the Participant's contingent annuitant or (ii) over a period certain not extending beyond the life expectancy of the Participant and the Participant's Beneficiary. For purposes of this Section, the "Required Beginning Date" shall mean the later of April 1 of the calendar year which follows the calendar year in which the Participant attains age 72 (age 70½ for Participants who attain age 70½ prior to January 1, 2020), or the calendar year in which the Participant retires; provided, however, that a distribution to a Participant who is a "five percent owner" (as defined in Section 416 of the Code) shall begin no later than April 1 of the calendar year which follows the calendar year in which such Participant attains age 72 (age 70½ for Participants who attain age 70½ prior to January 1, 2020). Notwithstanding anything to the contrary in this Plan, all distributions will be made in accordance with Section 401(a)(9) of the Code, including the incidental death benefit requirement of Section 401(a)(9)(G) of the Code, and with Treasury Regulation Sections 1.401(a)(9)-1 through 1.401(a)(9)-9. The provisions of Section 401(a)(9) of the Code and such Treasury Regulations, as reflected in this Section 10.2, shall override any distribution options in the Plan inconsistent with Section 401(a)(9) of the Code and such Treasury Regulations. If distribution of a Participant's nonforfeitable interest has begun in accordance with Section 10.2(b) hereof and the Participant dies before his entire nonforfeitable interest has been distributed to him, the remaining portion of such interest shall be distributed at least as rapidly as under the method of distribution being used under Section 10.2(b) hereof as of the date of the Participant's death.

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35 If a Participant dies before distribution of the Participant's nonforfeitable interest has begun in accordance with Section 10.2(b) hereof, the entire nonforfeitable interest shall be distributed within five years after the death of the Participant, except such portion thereof as shall be payable in installments to, or for the benefit of, the Participant's contingent annuitant, beginning not later than one (1) year after the date of the Participant's death and continuing, in accordance with such regulations as the Secretary of the Treasury may prescribe, over the life of the contingent annuitant (or over a period certain not extending beyond the life expectancy of the contingent annuitant); provided, however, that if the Surviving Spouse is the Participant's contingent annuitant, the date on which the distributions are required to begin shall not be later than the Participant's Required Beginning Date and, if the Surviving Spouse dies before the distributions to the Surviving Spouse begin, this paragraph shall be applied as if the Surviving Spouse was the Participant.

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36 SECTION 11 ADMINISTRATION OF THE PLAN 11.1 Except with respect to those responsibilities delegated to the Fiduciary Committee hereunder, the Plan shall be administered by the Committee, which shall be responsible for carrying out the provisions of the Plan. The Committee shall be a "named fiduciary" under Section 402(a)(2) of ERISA. The Committee shall consist of at least three (3) members who shall be appointed in the manner authorized by the Board. Vacancies therein shall be filled in the same manner as appointments. Any member of the Committee may be removed by action of the Board or may resign of his own accord by delivering his written resignation to the Board and to the secretary of the Committee. 11.2 The members of the Committee shall elect from their number a chairman. The chairman shall appoint a secretary, who need not be a member of the Committee. The members of the Committee may appoint from their number subcommittees with such powers as they shall determine, may authorize one or more of their number or any agent to execute or deliver any instrument or make any payment in their behalf, and may employ clerks and may employ such counsel, accountants, and actuaries as may be required in carrying out the provisions of the Plan. 11.3 The Committee shall hold meetings upon such notice, at such time, and at such place as they may determine. 11.4 A majority of the members of the Committee at the time in office shall constitute a quorum for the transaction of business. All resolutions or other actions taken by the Committee shall be by the affirmative vote of a majority of those present at the meeting, or the written consent of a majority of members at the time in office, if they act without a meeting. 11.5 No member of the Committee who is also an Employee shall receive any compensation for his services as such, but the Employer may reimburse any member for any necessary expenses incurred. 11.6 The Committee shall from time to time establish rules for the administration of the Plan and the transaction of its business. Except as herein otherwise expressly provided, the Committee shall have the exclusive right to interpret the Plan and to decide any matters arising thereunder in connection with the administration of the Plan, the eligibility of any person to benefits thereunder and the amounts of such benefits. It shall endeavor to act by general rules so as not to discriminate in favor of any person. Its decisions and the records of the Committee shall be conclusive and binding upon the Employer, the Participants, and all other persons having any interest under the Plan. The Committee shall have the power to amend the Plan, provided that such amendment does not increase the total cost of providing benefits under the Plan by an amount in excess of $1,000,000 in any Plan Year computed in accordance with generally accepted accounting or actuarial principles; and provided, further, that such amendment does not affect the duties delegated hereunder to the Fiduciary Committee.

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37 The Committee may appoint a Plan administrator for the Plan and shall delegate to the Plan administrator the duty to maintain all records and accounts necessary for the effective administration of the Plan, and to take any actions necessary to comply with the reporting and disclosure requirements imposed by the Code, ERISA and any other applicable federal or state statute or regulation, including any law or regulation promulgated by any foreign governing body which applies to the Plan. The Committee may delegate to any Plan administrator such other duties as it may deem necessary and appropriate. The Committee shall receive reports from each such Plan administrator as the Committee may request. 11.7 The Committee shall cause to be maintained accounts showing the fiscal transactions of the Plan, and in connection therewith shall require the Trustee to submit any necessary reports, and shall keep in convenient form such data as may be necessary for actuarial valuations of the assets and liabilities of the Plan. The Committee may retain counsel, accountants, actuaries and/or other persons to assist in the discharge of its duties. 11.8 The members of the Committee, the Fiduciary Committee, the Board, and the officers and directors of the Employer shall be entitled to rely upon all tables, valuations, certificates, and reports furnished by any duly appointed actuary, upon all certificates and reports made by any duly appointed accountant, and upon all opinions given by any duly appointed legal counsel. The members of the Committee, the Fiduciary Committee, the Board, and the officers and directors of the Employer shall not be held liable for any action taken in good faith in reliance upon any such tables, valuations, certificates, reports, or opinions. All actions so taken shall be conclusive upon each of them and upon all persons having any interest under the Plan. No member of the Committee shall be personally liable by virtue of any instrument executed by him or on his behalf as a member of the Committee, or for any mistake of judgment made by himself or any other member or by anyone employed by the Employer, or for any loss unless resulting from his own actions, including gross negligence or willful misconduct. Each member of the Committee shall be indemnified by the Employer against losses reasonably incurred by him in connection with any claim, proceeding or action to which he may be a party by reason of his membership in the Committee (including amounts paid in a settlement approved by the Employer and reasonable attorney's fees and expenses incurred in connection with such claim, proceeding or action); provided, however, that such indemnification shall not apply to matters as to which he shall be finally adjudged, by a court of competent jurisdiction in a decision from which no appeal may be taken or with respect to which the time to appeal has expired without an appeal having been made, to have engaged in gross negligence or willful misconduct. The foregoing right of indemnification shall be in addition to any other rights to which any such member may be entitled as a matter of law or pursuant to the bylaws of Estee Lauder or any other Employer. 11.9 In the event that any Participant, contingent annuitant or Beneficiary claims to be entitled to a benefit under the Plan, and the Committee determines that such claim should be denied in whole or in part, the Committee shall, in writing, notify such claimant within 90 days of receipt of such claim that his claim has been denied, setting forth the specific reasons for such denial. Such notification shall be written in a manner reasonably expected to be understood by such Participant or other payee and shall set forth the pertinent sections of the Plan relied on and, where appropriate, an explanation of how the claimant can obtain review of such denial. Within 60 days after the mailing or delivery by the Committee of such notice, such

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38 claimant may request, by mailing or delivery of written notice to the Committee, a review by the Committee of the decision denying the claim. If the claimant fails to request such a hearing within such 60-day period, it shall be conclusively determined for all purposes of this Plan that the denial of such claim by the Committee is correct. If such claimant requests a review within such 60-day period, he shall have the opportunity to review pertinent documents and to submit a written statement to the Committee. After such review, the Committee shall determine whether such denial of the claim was correct and shall notify such claimant in writing of its determination within 60 days from receipt of his request and no further review shall thereafter be required by the Committee.

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39 SECTION 12 INVESTMENT OF PLAN ASSETS; DUTIES OF FIDUCIARY COMMITTEE 12.1 All assets for providing the benefits of the Plan shall be held in trust for the exclusive benefit of Participants, contingent annuitants and Beneficiaries under the Plan, and no part of the corpus or income shall be used for, or diverted to, purposes other than for the exclusive benefit of Participants, contingent annuitants, and Beneficiaries under the Plan except as provided in Sections 6.3 and 16.4 hereof. No Participant, contingent annuitant, or Beneficiary under the Plan, nor any other person, shall have any interest in or right to any part of the earnings of the Trust Fund, or any rights in, to, or under the Trust Fund or any part of its assets, except to the extent expressly provided in the Plan. 12.2 All contributions to the Plan by the Employer shall be committed in trust to the Trustee and/or to an insurance company as provided for in Section 404 of ERISA. The Trustee shall be appointed from time to time by the Fiduciary Committee by the appropriate instrument, with such powers in the Trustee as to investment, reinvestment, control, and disbursement of the funds as the Fiduciary Committee shall approve and as shall be in accordance with the Plan. The Fiduciary Committee may remove, replace, or add a Trustee at any time. Upon the removal, replacement, or resignation of any Trustee, the Fiduciary Committee may designate a successor Trustee. 12.3 In the discretion of the Fiduciary Committee all contributions to the Plan by the Employer committed to the Trustee and/or insurance company may be commingled from time to time in whole or in part with any other fund or funds held by the Trustee and/or insurance company for use in connection with the payment of pensions of any Employee of the Employer or with any other fund or funds held by the Trustee and/or insurance company pursuant to any other retirement plan which is a qualified pension plan under Section 401(a) of the Code. For purposes of this Plan, the word "fund" or "funds" as used in this Section 12 and hereafter in this Plan shall mean the allocable portion of the fund or funds held by the Trustee and/or insurance company in respect of the contributions made pursuant to this Plan. 12.4 The Fiduciary Committee shall determine the manner in which the funds of the Plan shall be disbursed in accordance with the Plan and the provisions of the trust instrument, including the form of voucher or warrant to be used in making disbursements and the qualifications of persons authorized to approve and sign the same and any other matters incident to the disbursement of such funds. 12.5 The Fiduciary Committee shall adopt from time to time actuarial tables to be used as the basis for all actuarial calculations and shall recommend the rates of contribution payable by the Employer to the Plan as provided in Section 6 hereof. The Fiduciary Committee shall determine from time to time the per centum rate of interest to be used as the basis for all calculations. As an aid to the Fiduciary Committee in adopting tables and in recommending the rates of contribution payable by the Employer to the Plan, the actuary appointed by the Fiduciary Committee shall make annual actuarial valuations of the assets and liabilities of the Plan and

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40 shall certify to the Fiduciary Committee the tables and rates of contribution which he would recommend for use by the Fiduciary Committee.

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41 SECTION 13 OBLIGATIONS OF THE EMPLOYER 13.1 All contributions by the Employer for benefits under the Plan shall be voluntary, and the Employer shall be under no legal obligation to make and/or continue to make them. The Employer shall have no liability in respect to payments or benefits or otherwise under the Plan, and the Employer shall have no liability in respect to the administration of the Trust Fund or of the funds, securities, or other assets paid over to the Trustee, and each Participant, each contingent annuitant, and each Beneficiary shall look solely to such Trust Fund for any payments or benefits under the Plan.

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42 SECTION 14 MISCELLANEOUS PROVISIONS 14.1 Except as otherwise provided by law (which shall include a "qualified domestic relations order" pursuant to Section 414(p) of the Code and any other circumstance described in Section 401(a)(13) of the Code and the Treasury regulations promulgated thereunder), no benefit payable under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge; nor shall any such benefit be in any manner liable for or subject to the debts, contracts, liabilities, engagements, or torts of the person entitled to such benefit. 14.2 If any Participant, contingent annuitant, or Beneficiary under the Plan shall become bankrupt or attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any benefit in a manner not allowed pursuant to Section 14.1, then such benefit shall, in the discretion of the Committee, cease and terminate. In that event the Committee shall hold or apply the benefit or any part thereof to or for such Participant, contingent annuitant or Beneficiary, his spouse, children, or other dependents, or any of them, in such manner and in such proportions as the Committee shall in its sole discretion determine. 14.3 The establishment and/or maintenance of the Plan shall not be construed as conferring any rights upon any Employee or any person for a continuation of employment, and shall not be construed as limiting in any way the right of the Employer to discharge any Employee or to treat him without regard to the effect which such treatment might have upon him as a Participant of the Plan. 14.4 If any person entitled to receive any benefits from the Trust Fund is a minor or, in the judgment of the Committee, legally, physically or mentally incapable of personally receiving any distributions, the Committee may instruct the Trustee to make distribution to such other person, persons, or institutions that, in the judgment of the Committee, are then maintaining or have custody of such distributee. 14.5 The determination of the Committee as to the identity of the proper payee of any benefit under the Plan and the amount of such benefit properly payable shall be conclusive, and payment in accordance with such determination shall constitute a complete discharge of all obligations on account of such benefit. 14.6 In the event any amount shall become payable from the Trust Fund to a Beneficiary or the estate of any deceased person and if, after written notice from the Trustee mailed to the last known address of such Beneficiary, or of the executor or administrator of such estate (as certified to the Trustee by the Committee), such person or such executor or administrator shall not have presented himself to the Trustee within two (2) years after the mailing of such notice, the Trustee shall notify the Committee, and the Committee shall instruct the Trustee to distribute such amount due to such Beneficiary or such estate among one or more of the spouse and blood relatives of such deceased person, as designated by the Committee.

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43 14.7 This Plan may be adopted, by action of the Board of Directors, with respect to Employees who are United States citizens employed by a foreign subsidiary (as defined in Section 3121(1)(8) of the Code) of the Employer, with such Employees being treated as Employees of an Employer for the purpose described in Section 406 of the Code if the following conditions are met: (a) the Employer has entered into an agreement under Section 3121(1) of the Code which applies to the foreign subsidiary by which such Employees are employed; and (b) no contributions under another funded plan of deferred compensation (whether or not a plan described in Section 401(a), 403(a), or 405(a) of the Code) are provided by any other Employer with respect to the remuneration paid to such Employees by such subsidiary. 14.8 In the case of any merger or consolidation with, or transfer of assets or liabilities to, any other plan each Participant in the Plan will (if the Plan then terminated) receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit he would have been entitled to receive immediately before the merger, consolidation or transfer (if the Plan had then terminated). Such merger, consolidation or transfer shall comply with Section 414(l) of the Code and the regulations promulgated thereunder. 14.9 The rights of any person who terminated employment or retired on or before the effective date of any of the relevant provisions of this restatement, including his eligibility for benefits, shall be determined solely under the terms of the Plan as in effect on the date of his termination of employment or retirement, unless such person is thereafter reemployed and again becomes a Participant. 14.10 Notwithstanding any provision of the Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Section 414(u) of the Code. 14.11 In the case of a Participant who, on or after January 1, 2007, dies while performing "qualified military service" (within the meaning of Section 414(u)(5) of the Code), the survivors of the Participant shall be entitled to any additional benefits (including vesting) provided under the Plan had the Participant resumed and then terminated employment on account of death.

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44 SECTION 15 ADOPTION OF PLAN BY MEMBERS OF THE GROUP 15.1 Any member of the Group, other than Estee Lauder, or any other corporation or unincorporated trade or business which is not a member of the Group may, with the consent of the Board of Directors, adopt this Plan, thereby bringing such Group member or other corporation or unincorporated trade or business within the definition of Employer. With respect to such member of the Group or other corporation or unincorporated trade or business, the term "Original Effective Date" of the Plan shall refer to the date as to which such member adopts the Plan or the date as of which the Plan is extended to such member as the case may be. 15.2 The Board of Directors shall, subject to the requirements of ERISA and the Code, determine the extent to which, if at all, the period of employment prior to the extension of the Plan to a member of the Group or other corporation or unincorporated trade or business shall be recognized for purposes of the Plan. 15.3 In the event that a retirement plan or pension plan maintained by a member of the Group, or other corporation or unincorporated trade or business, for any other division, plant, or location is added to this Plan, the rights and benefits of Employees who were covered under such other plan shall, from and after the Original Effective Date of the Plan with respect to said Employer, be determined under such terms and conditions with respect to such Employees as shall be specified by the Board of Directors in the resolution approving the adoption or extension of the Plan as to the said Employees. The assets under such other plans maintained by a member of the group applicable to Employees to be covered by this Plan shall, to the extent practicable and subject to the provisions of Section 14.8 hereof, be transferred to the Fund under this Plan, and such transferred assets shall be merged with the Fund held under this Plan. 15.4 If any Employer which has come within the definition of Employer pursuant to this Section 15 subsequently withdraws or is withdrawn from the Plan, or discontinues the Plan with respect to all or part of its Employees, the Committee shall determine the share of the Fund which shall be allocated to the Employees of such Employer who are thereby affected. If a separate defined benefit pension plan is being continued for such Employees, such Employer shall, subject to the provisions of Section 14.8 hereof, designate a successor Trustee under a separate instrument to whom such allocable funds shall be transferred with respect to all or the specified classifications of its Employees, as the case may be, unless the Board of Directors shall determine that such Employer and its affected Employees may upon proper action of such Employer continue to participate in the Trust Fund maintained in connection with this Plan. If the Plan is discontinued with respect to all or part of such Employer's Employees, such allocable funds shall be allocated with respect to each Employee affected, and shall be applied pursuant to Section 16.4 hereof. 15.5 If any Employer which is not a member of the Group which includes Estee Lauder adopts the Plan in accordance with Section 15.1, the Plan shall be treated as a "multiple

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45 employer plan" within the meaning of Section 413(c) of the Code, and it shall comply with all the requirements of the Code and ERISA applicable to such plans.

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46 SECTION 16 AMENDMENT AND TERMINATION 16.1 Estee Lauder reserves the right at any time, and from time to time, by action of the Committee to amend, in whole or in part, retroactively or prospectively or both, any or all of the provisions of the Plan; provided, however, that no part of the assets of the Plan shall, by reason of any amendment, be used for or diverted to purposes other than for the exclusive benefit of Participants, contingent annuitants, and Beneficiaries; and further provided that any amendment adopted by the Committee which would cause the Plan and the trust established under the Plan to cease to meet the requirements of Section 401(a) or 501(a) of the Code respectively, shall be null and void; and any actions taken under the Plan pursuant to such amendment, any benefit increases (or decreases) accruing under the Plan as a result of such amendment, and any increases (or decreases) in benefit payments under the Plan made as a result of such amendment, during the period from the date of adoption of such amendment to the date it is determined that such amendment should so cause the Plan and the trust under the Plan to cease to meet such requirements, shall be, respectively, rectified, nullified, and restored as soon as possible to the extent necessary to permit the Plan and the trust under the Plan to continue to meet the requirements of Section 401(a) and 501(a) of the Code, respectively. Notwithstanding the previous paragraph herein, no amendment to the Plan shall: (a) reduce the Participant's accrued normal retirement income as of the date on which the amendment is adopted, (b) eliminate or reduce any early retirement benefit or retirement-type subsidy (to be determined by regulation), or an optional form of retirement income under the Plan, with respect to the accrued normal retirement income, or (c) reduce a retired Participant's retirement income as of the beginning of the Plan Year in which the amendment is effective. The Board of Directors' approval shall be required for any amendment to the Plan which is anticipated by the Committee to increase the cost to Estee Lauder of maintaining the Plan by an amount in excess of $1,000,000 in any Plan Year, computed in accordance with generally accepted accounting or actuarial principles. 16.2 The Board of Directors may terminate the Plan at any time as to all or any particular group or groups of Participants and such other persons, if any, who have or may become entitled to benefits under the Plan on account of such Participants as to whom the Plan shall have been terminated, which Participants and other persons shall be referred to collectively as the terminated group in this Section 16. After the Plan termination date which is applicable to the terminated group, benefits shall be provided to the terminated group in accordance with Section 16.4 hereof. In the event of such termination, each member of the terminated group will be fully (100%) vested in his accrued benefit. 16.3 The terminated group's portion of the Fund shall equal the sum of that part of the fair market value on the Plan termination date of the entire Fund that would have been

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47 allocated to each person in the terminated group in accordance with Section 16.4 hereof if the Plan had been terminated on such date as to all Participants in the Plan and no expenses were incurred in connection with such termination of the Plan. 16.4 A terminated group's share of the Fund shall be allocated as follows: (a) first, to provide benefits to each person in the terminated group in accordance with Section 4044(a) of ERISA, and the regulations issued pursuant thereto; (b) then, to the extent that after the making of the allocation described in (a) above, there remain in the Fund any assets which are applicable to the terminated group, the said assets shall be applied to pay for any unpaid administrative expenses for the administration of the Plan as to the terminated group; and (c) lastly, to the extent that after making the allocations described in (a) and (b) above, there remain in the Fund any assets which are applicable to the terminated group, then such remaining assets shall be paid to the Employer for its own use and benefit provided that such payment to the Employer does not contravene any provision of law. 16.5 Upon termination of the Plan, (i) the rate of interest used to determine accrued benefits under the Plan shall be equal to the average of the rates of interest used under the Plan during the five (5)-year period ending on the termination date, and (ii) the interest rate and mortality table used to determine the amount of any benefit under the Plan payable in the form of an annuity payable at Normal Retirement Date shall be the rate and table specified in Appendix A, except that if such rate is a variable rate, the interest rate shall be determined under the rules of clause (i). This section shall be interpreted and applied in a manner consistent with Section 411(b)(5)(B)(vi) of the Code and the guidance issued thereunder. 16.6 In the event of a "partial termination" of the Plan within the meaning of Section 411(d)(3) of the Code and Treasury Regulation Section 1.411(d)-2, the rights of each affected Participant to his Accrued Benefit as of the date of such partial termination, to the extent funded, shall be fully (100%) vested and nonforfeitable.

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48 SECTION 17 LIMITATION ACCORDING TO TREASURY DEPARTMENT REQUIREMENTS The purpose of this Section is to conform the Plan to the requirements of Section 1.401(a)(4)-5(b) of the Income Tax Regulations. 17.1 If a benefit becomes or is payable for a Plan Year to a Participant who is among the 25 highest paid "highly compensated employees" or "highly compensated former employees" (each as defined in Section 414(q) of the Code and regulations and rulings issued thereunder) for a Plan Year, such benefit cannot exceed an amount equal to the payments that would be made during the Plan Year on behalf of the Participant under a single life annuity that is the Actuarial Equivalent of the sum of the Participant's Accrued Benefit and any other benefits under the Plan; provided, however, that this Section shall not apply if (i) benefits that would be payable to such a Participant are less than 1% of the total value of current liabilities under the Plan, or (ii) the assets of the Trust Fund exceed, immediately after payment of a benefit to such a Participant, 110% of the value of current liabilities under the Plan. (For purposes of this Section, the value of current liabilities shall be as defined in Section 412(l)(7) of the Code.) 17.2 In the event of a termination of the Plan, the benefit of any highly compensated employee or highly compensated former employee shall be limited to a benefit that is nondiscriminatory under Section 401(a)(4) of the Code. 17.3 In the event Congress should provide by statute, or the Internal Revenue Service or Department of the Treasury should provide by regulation or ruling, that such limitations are no longer necessary for the Plan to meet the requirements of Section 401(a) or other applicable provisions of the Code then in effect, such limitations shall become void and shall no longer apply, without the necessity of further amendment to the Plan.

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49 SECTION 18 TOP-HEAVY PLAN PROVISIONS 18.1 Anything elsewhere in this Plan to the contrary notwithstanding, the provisions of this Section 18 shall apply to the Plan for any Plan Year if, on the last day of the preceding Plan Year (the "Determination Year"), either (i) the present equivalent actuarial value of the cumulative accrued normal retirement income of Key Employees exceeds 60% of the present equivalent actuarial value of the cumulative accrued normal retirement income of all Participants, or (ii) the sum of (A) the present equivalent actuarial value of the cumulative accrued normal retirement income of Key Employees under the Plan, (B) the present equivalent actuarial value of the accumulated accrued benefits of Key Employees under all other qualified defined benefit plans included in the Aggregation Group, and (C) the cumulative account balances of Key Employees under all qualified defined contribution plans included in the Aggregation Group exceeds 60% of the sum of (D) the present equivalent actuarial value of the cumulative accrued normal retirement income of all Participants under the Plan, (E) the present equivalent actuarial value of the accumulated accrued benefits of all Participants under all other qualified defined benefit plans included in the Aggregation Group, and (F) the cumulative account balances of all Participants under all qualified defined contribution plans included in the Aggregation Group. For the purpose of the foregoing sentence, the value of plan assets shall be determined as of the first day of the Determination Year, and the "equivalent actuarial value" of the cumulative accrued normal retirement income of each Participant under the Plan shall be calculated utilizing a 5% interest rate assumption and the mortality table prescribed for such Determination Year for minimum funding purposes under Section 430(h)(3) of the Code and shall be increased by the amount of the aggregate distributions, if any, made with respect to the Participant under the Plan during the five (5)-year period ending on the last day of the Determination Year (except that for Plan Years beginning on or after January 1, 2002, distributions on account of severance from employment, death or disability shall be taken into account only if made during the one (1)-year period ending on the last day of the Determination Year); and the present equivalent actuarial value of the accumulated accrued benefit of each Participant under all other qualified defined benefit plans and the cumulative account balances of each Participant under any qualified defined contribution plan shall be increased by the amount of the aggregate distributions, if any, made with respect to the Participant under such other plan during that five (5)-year period (or one (1)-year period, as applicable). The term "Aggregation Group" shall mean all plans to which the Employer contributes in which a Key Employee is a Participant and all other plans to which the Employer contributes that enable any such plan to meet the requirements of Section 401(a)(4) or Section 410 of the Code. If a Participant is not a Key Employee for any Plan Year, but was a Key Employee in a prior Plan Year, the accrued normal retirement income for such Participant shall not be taken into account. The accrued normal retirement income of any Participant or former Participant who has not during the five (5)-year period ending on the last day of the preceding Plan Year received from the Employer any compensation other than benefits under the Plan (or for determinations on or after January 1, 2002, who has not during the one (1)-year period ending on the last day of the preceding Plan Year performed any services for the Employer) shall not be taken into account. In any Plan Year for which the provisions of this Section 18 apply and thereafter, each Employee who is a Participant during that Plan Year and has completed at least three (3) Years of Service shall have a nonforfeitable right, in the event he ceases to be an Employee prior to his Normal Retirement

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50 Date, otherwise than by death or early retirement, to receive for the remainder of his life (beginning at his Normal Retirement Date if he is still living) a deferred vested retirement income in an amount per month equal to his accrued normal retirement income computed as of the date he ceases to be an Employee (including benefits accrued before the provisions of this Section 18 apply). Notwithstanding the foregoing, each such Employee who has completed not less than three (3) Years of Service shall be permitted to elect, within 90 days after the first day of the Plan Year for which the provisions of this Section 18 apply, to have his nonforfeitable percentage computed in accordance with the provisions of Section 8 hereof without regard to this paragraph. 18.2 In any Plan Year for which the provisions of this Section 18 apply, if the accrued normal retirement income of any Participant who is not a Key Employee, when expressed as an equivalent actuarial value of a benefit payable annually in the form of a single life annuity (with no ancillary benefits) beginning when the Participant attains age 65 (without taking into account contributions or benefits under Chapter 2 of Chapter 21 of Title II of the Social Security Act, or any other Federal or State law), is less than the Compensation from Estee Lauder not in excess of $150,000 ($200,000 for Plan Years beginning on or after January 1, 2002), for years in the Participant's Testing Period, then the accrued normal retirement income of that Participant shall be increased to an amount equal at the last day of that Plan Year to such Applicable Percentage of the Participant's average Compensation from the Employer for years in the Participant's Testing Period. 18.3 In any Plan Year for which the provisions of this Section 18 apply, the Compensation from the Employer of each Participant taken into account under the Plan shall not exceed the first $150,000 ($200,000 for Plan Years beginning on or after January 1, 2002) (or such other figure as shall result from such annual cost-of-living adjustments as the Secretary of the Treasury or his delegate shall make pursuant to Section 401(a)(17)(B) of the Code). 18.4 In any Plan Year commencing prior to January 1, 2000 for which the provisions of this Section 18 apply, the figure "1.0" shall be substituted for the figure "1.25" as required by Section 416 of the Code for the purpose of determining an Employee's "defined contribution plan fraction" and "defined benefit plan fraction" under Section 415(e) of the Code. 18.5 For purposes of this Section, the following definitions shall apply: (a) "Applicable Percentage" means, in respect of any Participant, the lesser of (i) 2% multiplied by the number of the Participant's Years of Service (disregarding any Year of Service in which ended a Plan Year for which the provisions of this Section 18 were not applicable and any Year of Service completed in a Plan Year beginning before January 1, 1984) or (ii) 20%. (b) "Compensation" means, for purposes of this Section only, Compensation as defined in Section 2.10 hereof but including any special pay or remuneration reportable to the Internal Revenue Service on Form W-2 for Federal income tax purposes, but with respect to Plan Years commencing prior to January 1, 1998, "Compensation" excludes

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51 contributions made by an Employer on behalf of an Employee under a "cash or deferred arrangement" described in Section 401(k) of the Code. (c) "Key Employee" means a Participant, former Participant or the contingent annuitant of any Participant who, at any time during the Plan Year or, for determinations prior to January 1, 2002, any of the four (4) preceding Plan Years, is or was (i) an officer of an Employer whose compensation from the Employer for the Plan Year exceeds (A) for determinations prior to January 1, 2002, 50% of the dollar limitation in effect under Section 415(b)(1)(A) of the Code for the calendar year in which such Plan Year ends, or (B) for determinations on or after January 1, 2002, $130,000 (as adjusted to reflect increases in the cost of living as determined by the Secretary of the Treasury); (ii) solely for determinations prior to January 1, 2002, one (1) of the ten (10) employees having annual compensation from the Employer in excess of the limitation in effect under Section 415(c)(1)(A) of the Code and owning (or considered as owning within the meaning of Section 318 of the Code) the largest interests in the Employer; (iii) the owner of 5% or more of the outstanding stock of the Employer (or stock possessing more than 5% of the total combined voting power of all stock of the Employer); or (iv) an owner of 1% or more of the outstanding stock of the Employer (or stock possessing more than 1% of the total combined voting power of all stock of the Employer) whose Compensation from the Employer for the Plan Year is more than $150,000. Any Employee who is not a Key Employee shall be deemed a Non- Key Employee. (d) "Testing Period" means, in respect of any Participant, the period of consecutive years (not exceeding five (5)), and disregarding any Year of Service in which ended a Plan Year for which the provisions of this Section 18 were not applicable, any Year of Service completed in a Plan Year beginning before January 1, 1984, and any year that begins after the close of the last Plan Year for which the provisions of this Section 18 were applicable), during which the Participant had the greatest aggregate Compensation from the Employer.

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52 SECTION 19 FUNDING-BASED LIMITATIONS 19.1 Limitations Applicable if the Plan's Adjusted Funding Target Attainment Percentage is less than 80 Percent, but not less than 60 Percent. Notwithstanding any other provisions of the Plan, if the Plan's Adjusted Funding Target Attainment Percentage for a Plan Year is less than 80 percent (or would be less than 80 percent to the extent described in Section 19.1(b) below) but is not less than 60 percent, then the limitations set forth in this Section 19.1 apply. (a) (a) 50 Percent Limitation on Single Sum Payments, other Accelerated Forms of Distribution, and other Prohibited Payments. A Participant or Beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a Prohibited Payment with an Annuity Starting Date on or after the applicable Section 436 Measurement Date, and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a Prohibited Payment, unless the present value of the portion of the benefit that is being paid in a Prohibited Payment does not exceed the lesser of: (i) 50 percent of the present value of the benefit payable in the optional form of benefit that includes the Prohibited Payment; or (ii) 100 percent of the PBGC maximum benefit guarantee amount (as defined in Treasury Regulation Section 1.436-1(d)(3)(iii)(C)). The limitation set forth in this Section 19.1(a) does not apply to any payment of a benefit which under Code Section 411(a)(11) may be immediately distributed without the consent of the Participant. If an optional form of benefit that is otherwise available under the terms of the Plan is not available to a Participant or Beneficiary as of the Annuity Starting Date because of the application of the requirements of this Section 19.1(a), the Participant or Beneficiary is permitted to elect to bifurcate the benefit into unrestricted and restricted portions (as described in Treasury Regulation Section 1.436-1(d)(3)(iii)(D)). The Participant or Beneficiary may also elect any other optional form of benefit otherwise available under the Plan at that Annuity Starting Date that would satisfy the 50 percent/PBGC maximum benefit guarantee amount limitation described in this Section 19.1(a), or may elect to defer the benefit in accordance with any general right to defer commencement of benefits under the Plan. (b) (b) Plan Amendments Increasing Liability for Benefits. No amendment to the Plan that has the effect of increasing liabilities of the Plan by reason of increases in benefits, establishment of new benefits, changing the rate of benefit accrual, or changing the rate at which benefits become nonforfeitable shall take effect in a Plan Year if the Adjusted Funding Target Attainment Percentage for the Plan Year is: (i) Less than 80 percent; or

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53 (ii) 80 percent or more, but would be less than 80 percent if the benefits attributable to the amendment were taken into account in determining the Adjusted Funding Target Attainment Percentage. The limitation set forth in this Section 19.1(b) does not apply to any amendment to the Plan that provides a benefit increase under a Plan formula that is not based on compensation, provided that the rate of such increase does not exceed the contemporaneous rate of increase in the average wages of Participants covered by the amendment. 19.2 Limitations Applicable if the Plan's Adjusted Funding Target Attainment Percentage is less than 60 Percent. Notwithstanding any other provisions of the Plan, if the Plan's Adjusted Funding Target Attainment Percentage for a Plan Year is less than 60 percent (or would be less than 60 percent to the extent described in Section 19.2(b) below), then the limitations in this Section 19.2 apply. (a) (a) Single Sums, other Accelerated Forms of Distribution, and other Prohibited Payments Not Permitted. A Participant or Beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a Prohibited Payment with an Annuity Starting Date on or after the applicable Section 436 Measurement Date, and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a Prohibited Payment. The limitation set forth in this Section 19.2(a) does not apply to any payment of a benefit which under Code Section 411(a)(11) may be immediately distributed without the consent of the participant. (b) (b) Shutdown Benefits and Other Unpredictable Contingent Event Benefits Not Permitted to Be Paid. An Unpredictable Contingent Event Benefit with respect to an Unpredictable Contingent Event occurring during a Plan Year shall not be paid if the Adjusted Funding Target Attainment Percentage for the Plan Year is: (i) Less than 60 percent; or (ii) 60 percent or more, but would be less than 60 percent if the Adjusted Funding Target Attainment Percentage were redetermined applying an actuarial assumption that the likelihood of occurrence of the Unpredictable Contingent Event during the Plan Year is 100 percent. (c) (c) Benefit Accruals Frozen. Benefit accruals under the Plan shall cease as of the applicable Section 436 Measurement Date. In addition, if the Plan is required to cease benefit accruals under this Section 19.2(c), then the Plan is not permitted to be amended in a manner that would increase the liabilities of the Plan by reason of an increase in benefits or establishment of new benefits. 19.3 Limitations Applicable if the Plan Sponsor is in Bankruptcy. Notwithstanding any other provisions of the Plan, a Participant or Beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a Prohibited Payment with an Annuity Starting Date that occurs during any period in which the Plan sponsor is a debtor in a case under title 11, United States Code, or similar Federal

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54 or State law, except for payments made within a Plan Year with an Annuity Starting Date that occurs on or after the date on which the Plan's enrolled actuary certifies that the Plan's Adjusted Funding Target Attainment Percentage for that Plan Year is not less than 100 percent. In addition, during such period in which the Plan sponsor is a debtor, the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a Prohibited Payment, except for payments that occur on a date within a Plan Year that is on or after the date on which the Plan's enrolled actuary certifies that the Plan's Adjusted Funding Target Attainment Percentage for that Plan Year is not less than 100 percent. The limitation set forth in this Section 19.3 does not apply to any payment of a benefit which under Code Section 411(a)(11) of the Internal Revenue Code may be immediately distributed without the consent of the Participant. 19.4 Provisions Applicable After Limitations Cease to Apply. (a) (a) Resumption of Prohibited Payments. If a limitation on Prohibited Payments under Section 19.1(a), Section 19.2(a), or Section 19.3 applied to the Plan as of a Section 436 Measurement Date, but that limit no longer applies to the Plan as of a later Section 436 Measurement Date, then that limitation does not apply to benefits with Annuity Starting Dates that are on or after that later Section 436 Measurement Date. (b) (b) Resumption of Benefit Accruals. If a limitation on benefit accruals under Section 19.2(c) applied to the Plan as of a Section 436 Measurement Date, but that limitation no longer applies to the Plan as of a later Section 436 Measurement Date, then benefit accruals shall resume prospectively and that limitation does not apply to benefit accruals that are based on service on or after that later Section 436 Measurement Date, except as otherwise provided under the Plan. The Plan shall comply with the rules relating to partial years of participation and the prohibition on double proration under Department of Labor regulation 29 CFR § 2530.204-2(c) and (d). (c) (c) Shutdown and Other Unpredictable Contingent Event Benefits. If an Unpredictable Contingent Event Benefit with respect to an Unpredictable Contingent Event that occurs during the Plan Year is not permitted to be paid after the occurrence of the event because of the limitation of Section 19.2(b), but is permitted to be paid later in the same Plan Year (as a result of additional contributions or pursuant to the enrolled actuary's certification of the Adjusted Funding Target Attainment Percentage for the Plan Year that meets the requirements of Treasury Regulation Section 1.436-1(g)(5)(ii)(B)), then that Unpredictable Contingent Event Benefit shall be paid, retroactive to the period that benefit would have been payable under the terms of the Plan (determined without regard to Section 19.2(b)). If the Unpredictable Contingent Event Benefit does not become payable during the Plan Year in accordance with the preceding sentence, then the Plan is treated as if it does not provide for that benefit. (d) (d) Treatment of Plan Amendments That Do Not Take Effect. If a Plan amendment does not take effect as of the effective date of the amendment because of the limitation of Section 19.1(b) or Section 19.2(c), but is permitted to take effect later in the same Plan Year (as a result of additional contributions or pursuant to the enrolled actuary's certification of the Adjusted Funding Target Attainment Percentage for the Plan Year that meets

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55 the requirements of Treasury Regulation Section 1.436-1(g)(5)(ii)(C)), then the Plan amendment must automatically take effect as of the first day of the Plan Year (or, if later, the original effective date of the amendment). If the Plan amendment cannot take effect during the same Plan Year, then it shall be treated as if it were never adopted, unless the Plan amendment provides otherwise. 19.5 Notice Requirement. See ERISA Section 101(j) for rules requiring the plan administrator of a single employer defined benefit pension plan to provide a written notice to participants and beneficiaries within 30 days after certain specified dates if the plan has become subject to a limitation described in Section 19.1(a), Section 19.2, or Section 19.3. 19.6 Methods to Avoid or Terminate Benefit Limitations. See Code Sections 436(b)(2), (c)(2), (e)(2), and (f) and Treasury Regulation Section 1.436-1(f) for rules relating to employer contributions and other methods to avoid or terminate the application of the limitations set forth in Sections 19.1 through 19.3 for a Plan Year. In general, the methods a plan sponsor may use to avoid or terminate one or more of the benefit limitations under Sections 19.1 through 19.3 for a plan year include employer contributions and elections to increase the amount of plan assets which are taken into account in determining the Adjusted Funding Target Attainment Percentage, making an employer contribution that is specifically designated as a current year contribution that is made to avoid or terminate application of certain of the benefit limitations, or providing security to the plan. 19.7 Special Rules. (a) Rules of Operation for Periods Prior to and After Certification of Plan's Adjusted Funding Target Attainment Percentage. (i) In General. Code Section 436(h) and Treasury Regulation Section 1.436-1(h) set forth a series of presumptions that apply: (X) before the Plan's enrolled actuary issues a certification of the Plan's Adjusted Funding Target Attainment Percentage for the Plan Year, and (Y) if the Plan's enrolled actuary does not issue a certification of the Plan's Adjusted Funding Target Attainment Percentage for the Plan Year before the first day of the 10th month of the Plan Year (or if the Plan's enrolled actuary issues a range certification for the Plan Year pursuant to Treasury Regulation Section 1.436-1(h)(4)(ii) but does not issue a certification of the specific Adjusted Funding Target Attainment Percentage for the Plan by the last day of the Plan Year). For any period during which a presumption under Code Section 436(h) and Treasury Regulation Section 1.436-1(h) applies to the Plan, the limitations under Sections 19.1 through 19.3 are applied to the Plan as if the Adjusted Funding Target Attainment Percentage for the Plan Year were the presumed Adjusted Funding Target Attainment Percentage determined under the rules of Code Section 436(h) and Treasury Regulations Sections 1.436-1(h)(1), (2), or (3). These presumptions are set forth in Section 19.7(a)(2) through (a)(4). (ii) Presumption of Continued Underfunding Beginning First Day of Plan Year. If a limitation under Section 19.1, 19.2, or 19.3 applied to the Plan on

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56 the last day of the preceding Plan Year, then, commencing on the first day of the current Plan Year and continuing until the Plan's enrolled actuary issues a certification of the Adjusted Funding Target Attainment Percentage for the Plan for the current Plan Year, or, if earlier, the date Section 19.7(a)(3) or Section 19.7(a)(4) applies to the Plan: (A) The Adjusted Funding Target Attainment Percentage of the Plan for the current Plan Year is presumed to be the Adjusted Funding Target Attainment Percentage in effect on the last day of the preceding Plan Year; and (B) The first day of the current Plan Year is a Section 436 Measurement Date. (iii) Presumption of Underfunding Beginning First Day of 4th Month. If the Plan's enrolled actuary has not issued a certification of the Adjusted Funding Target Attainment Percentage for the Plan Year before the first day of the 4th month of the Plan Year and the Plan's Adjusted Funding Target Attainment Percentage for the preceding Plan Year was either at least 60 percent but less than 70 percent or at least 80 percent but less than 90 percent, or is described in Treasury Regulation Section 1.436-1(h)(2)(ii), then, commencing on the first day of the 4th month of the current Plan Year and continuing until the Plan's enrolled actuary issues a certification of the Adjusted Funding Target Attainment Percentage for the Plan for the current Plan Year, or, if earlier, the date Section 19.7(a)(4) applies to the Plan: (A) The Adjusted Funding Target Attainment Percentage of the Plan for the current Plan Year is presumed to be the Adjusted Funding Target Attainment Percentage for the preceding Plan Year reduced by 10 percentage points; and (B) The first day of the 4th month of the current Plan Year is a Section 436 Measurement Date. (iv) Presumption of Underfunding On and After First Day of 10th Month. If the Plan's enrolled actuary has not issued a certification of the Adjusted Funding Target Attainment Percentage for the Plan Year before the first day of the 10th month of the Plan Year (or if the Plan's enrolled actuary has issued a range certification for the Plan Year pursuant to Treasury Regulation Section § 1.436-1(h)(4)(ii) but has not issued a certification of the specific Adjusted Funding Target Attainment Percentage for the Plan by the last day of the Plan Year), then, commencing on the first day of the 10th month of the current Plan Year and continuing through the end of the Plan Year: (A) The Adjusted Funding Target Attainment Percentage of the Plan for the current Plan Year is presumed to be less than 60 percent; and (B) The first day of the 10th month of the current Plan Year is a Section 436 Measurement Date.

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57 (b) New Plans, Plan Termination, Certain Frozen Plans, and Other Special Rules. (i) First 5 Plan Years. The limitations in Section 19.1(b), Section 19.2(b), and Section 19.2(c) do not apply to a new Plan for the first 5 Plan Years of the Plan, determined under the rules of Code Section 436(i) and Treasury Regulation Section 1.436-1(a)(3)(i). (ii) Plan Termination. The limitations on Prohibited Payments in Section 19.1(a), Section 19.2(a), and Section 19.3 do not apply to Prohibited Payments that are made to carry out the termination of the Plan in accordance with applicable law. Any other limitations under this section of the Plan do not cease to apply as a result of termination of the Plan. (iii) Exception to Limitations on Prohibited Payments under Certain Frozen Plans. The limitations on Prohibited Payments set forth in Section 19.1(a), Section 19.2(a), and Section 19.3 do not apply for a Plan Year if the terms of the Plan, as in effect for the period beginning on September 1, 2005, and continuing through the end of the Plan Year, provide for no benefit accruals with respect to any Participants. This Section 19.7(b)(3) shall cease to apply as of the date any benefits accrue under the Plan or the date on which a Plan amendment that increases benefits takes effect. (iv) Special Rules Relating to Unpredictable Contingent Event Benefits and Plan Amendments Increasing Benefit Liability. During any period in which none of the presumptions under Section 19.7(a) apply to the Plan and the Plan's enrolled actuary has not yet issued a certification of the Plan's Adjusted Funding Target Attainment Percentage for the Plan Year, the limitations under Section 19.1(b) and Section 19.2 (b) shall be based on the inclusive presumed Adjusted Funding Target Attainment Percentage for the Plan, calculated in accordance with the rules of Treasury Regulation Section 1.436-1(g)(2)(iii). (c) Special Rules Under PRA 2010. (i) Payments under Social Security Leveling Options. For purposes of determining whether the limitations under Section 19.1(a) or 19.2(a) apply to payments under a social security leveling option, within the meaning of Code Section 436(j)(3)(C)(i), the Adjusted Funding Target Attainment Percentage for a Plan Year shall be determined in accordance with the "Special Rule for Certain Years" under Code Section 436(j)(3) and any Treasury Regulations or other published guidance thereunder issued by the Internal Revenue Service. (ii) Limitation on Benefit Accruals. For purposes of determining whether the accrual limitation under Section 19.2(c) applies to the Plan, the Adjusted Funding Target Attainment Percentage for a Plan Year shall be determined in accordance with the "Special Rule for Certain Years" under Code Section 436(j)(3) (except as provided under section 203(b) of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, if applicable).

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58 (d) Interpretation of Provisions. The limitations imposed by this section of the Plan shall be interpreted and administered in accordance with Code Section 436 and Treasury Regulation Section 1.436-1. 19.8 Definitions. The definitions in the following Treasury Regulations apply for purposes of Sections 19.1 through 19.7: (a) Adjusted Funding Target Attainment Percentage has the meaning provided in Treasury Regulation Section 1.436-1(j)(1); (b) Annuity Starting Date has the meaning provided in Treasury Regulation Section 1.436-1(j)(2); (c) Prohibited Payment has the meaning provided in Treasury Regulation Section 1.436-1(j)(6); (d) Section 436 Measurement Date has the meaning provided in Treasury Regulation Section 1.436-1(j)(8); and (e) Unpredictable Contingent Event and Unpredictable Contingent Event Benefit have the meanings provided in Treasury Regulation Section 1.436-1(j)(9). 19.9 Effective Date. The rules in Sections 19.1 through 19.8 are effective for Plan Years beginning on or after January 1, 2008.

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59 SECTION 20 EXECUTION To record the amendment and restatement of the Plan as set forth herein, the Board of Directors of Estee Lauder Inc. has adopted this restatement effective as of January 1, 2023 and authorized its execution below. By: Michael O'Hare Chairman, Estee Lauder Inc. Employee Benefits Committee Date: /s/Michael O'Hare 1/18/2023

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A-1 APPENDIX A 1. Except as otherwise provided in this Appendix A, the assumptions to be used to determine an Actuarial Equivalent benefit shall be as follows: Interest Rate: 6% Mortality Table: For Participants, the 1971 TPF&C Mortality Table for male lives, set back four (4) years. For contingent annuitants, the 1971 TPF&C Mortality Table for male lives, set back two (2) years. Notwithstanding the foregoing, for Retirement Income Commencement Dates on or after May 1, 2021, the assumptions to be used to convert a single life annuity into any other form of benefit, other than a lump sum distribution or a level income annuity (Option 5 of Section 9.3), shall be either the assumptions specified above or the following assumptions, whichever set of assumptions produces the greatest benefit: Interest Rate: The "applicable interest rate" (as defined under Section 417(e)(3) of the Code) as in effect for the fourth calendar month immediately prior to the first day of the calendar quarter in which falls the date as of which such distribution is otherwise to occur. Mortality Table: The "applicable mortality table" (as defined under Section 417(e)(3) of the Code). 2. To the extent that (A) any Participant's Retirement Account is to be converted into an equivalent, immediately payable, annual amount of single life annuity or an equivalent, immediately payable, annual amount of level income annuity (Option 5 of Section 9.3) and (B) the distribution of such single life annuity is to begin as of date prior to January 1, 1999, such conversion shall be done by applying an immediate conversion factor to such Participant's Retirement Account, with such factor based upon the above specified mortality table and the Pension Benefit Guaranty Corporation ("PBGC") immediate interest rate applicable to the month as of which the distribution of the single life annuity is otherwise to begin. To the extent that (A) any Participant's Retirement Account is to be converted into an equivalent, immediately payable, annual amount of single life annuity or an equivalent, immediately payable, annual amount of level income annuity (Option 5 of Section 9.3) and (B) the distribution of such single life annuity is to begin as of date during calendar year 1999, such conversion shall be done by applying an immediate conversion factor to such Participant's Retirement Account, with such factor based upon the "applicable mortality table" (as defined under Section 417(e)(3) of the Code) and whichever of the following two (2) interest rates results in the larger single life annuity:

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A-2 (i) the "applicable interest rate" (as defined under Section 417(e)(3) of the Code) as in effect for the second calendar month immediately prior to the first day of the calendar quarter in which falls the date as of which the distribution of the single life annuity is otherwise to begin, and (ii) such same "applicable interest rate" as in effect for the second calendar month immediately prior to the month in which falls the date as of which such distribution of the single life annuity is otherwise to begin. To the extent that (A) any Participant's Retirement Account is to be converted into an equivalent, immediately payable, annual amount of single life annuity or an equivalent, immediately payable, annual amount of level income annuity (Option 5 of Section 9.3) and (B) the distribution of such single life annuity is to begin as of a date on or after January 1, 2000, such conversion shall be done by applying an immediate conversion factor to such Participant's Retirement Account, with such factor based upon the "applicable mortality table" (as defined under Section 417(e)(3) of the Code) and the "applicable interest rate" (as defined under Section 417(e)(3) of the Code) as in effect for the second calendar month immediately prior to the first day of the calendar quarter in which falls the date as of which the distribution of the single life annuity is otherwise to begin. Effective for distributions commencing on or after August 1, 2008, the "applicable interest rate" shall be determined as of the fourth calendar month immediately prior to the first day of such calendar quarter; provided, however, that for the one-year period beginning on August 1, 2008, the "applicable interest rate" shall be determined as of either the second or the fourth calendar month immediately prior to the first day of such calendar quarter, whichever results in the larger distribution. For purposes of this Appendix A, the "applicable mortality table" (as defined under Section 417(e)(3) of the Code) shall be the table prescribed by Revenue Ruling 95-6 for distributions on or after January 1, 1999 and prior to December 31, 2002, and the table prescribed by Revenue Ruling 2001-62 for distributions on or after December 31, 2002 and prior to January 1, 2008, and the table prescribed by Revenue Ruling 2007-67 for distributions on or after January 1, 2008 (except to the extent that sections 4 and 5 of this Appendix A permit use on or after January 1, 2008 of a table determined without giving effect to the changes in Section 417(e)(3) of the Code made by the Pension Protection Act of 2006 ("PPA 2006")). 3. To the extent that (A) any immediately payable, lump sum distribution under the Plan is the equivalent of a single life annuity otherwise deferred to a Participant's Normal Retirement Date and (B) such distribution is to occur as of a date prior to January 1, 1999, such Participant's Retirement Account is converted into an annual amount of such a deferred single life annuity using a deferred conversion factor, with such factor based upon the above specified mortality table and the PBGC immediate/deferred blended interest rate (under Section 417(e)(3) of the Code, as in effect immediately prior to the enactment of Public Law 103-465) applicable to the month as of which the distribution of such lump sum benefit is otherwise to occur.

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A-3 To the extent that (A) any immediately payable, lump sum distribution under the Plan is the equivalent of a single life annuity otherwise deferred to a Participant's Normal Retirement Date and (B) such distribution is to occur as of a date during calendar year 1999, such Participant's Retirement Account is converted into an annual amount of such a deferred single life annuity using a deferred conversion factor, with such factor based upon the "applicable mortality table" (as defined under Section 417(e)(3) of the Code) and whichever of the following two (2) interest rates results in the larger single life annuity: (i) the "applicable interest rate" (as defined under Section 417(e)(3) of the Code) as in effect for the second calendar month immediately prior to the first day of the calendar quarter in which falls the date as of which such distribution is otherwise to occur, and (ii) such same "applicable interest rate" as in effect for the second calendar month immediately prior to the month in which falls the date as of which such distribution is otherwise to occur. To the extent that (A) any immediately payable, lump sum distribution under the Plan is the equivalent of a single life annuity otherwise deferred to a Participant's Normal Retirement Date and (B) such distribution is to occur as of a date on or after January 1, 2000, such Participant's Retirement Account is converted into an annual amount of such a deferred single life annuity using a deferred conversion factor, with such factor based upon the "applicable mortality table" (as defined under Section 417(e)(3) of the Code) and the applicable interest rate" (as defined under Section 417(e)(3) of the Code) as in effect for the second calendar month immediately prior to the first day of the calendar quarter in which falls the date as of which such distribution is otherwise to occur. Effective for distributions commencing on or after August 1, 2008, the "applicable interest rate" shall be determined as of the fourth calendar month immediately prior to the first day of such calendar quarter; provided, however, that for the one-year period beginning on August 1, 2008, the "applicable interest rate" shall be determined as of either the second or the fourth calendar month immediately prior to the first day of such calendar quarter, whichever results in the larger distribution. 4. To the extent that (A) any Participant's single life annuity otherwise payable immediately is converted into an equivalent, immediately payable lump sum distribution or an equivalent, immediately payable, annual amount of level income annuity (Option 5 of Section 9.3) and (B) the distribution of such benefit is to occur or commence as of a date prior to January 1, 1999, such conversion shall be done by applying an immediate conversion factor to the annual amount of such single life annuity, with such factor based upon the above specified mortality table and the PBGC immediate interest rate applicable to the month as of which the distribution of such lump sum benefit is otherwise to occur. To the extent that (A) any Participant's single life annuity otherwise payable immediately is converted into an equivalent, immediately payable lump sum distribution or an equivalent, immediately payable, annual amount of level income annuity (Option 5 of Section 9.3) and (B) the distribution of such benefit is to occur or commence as of a date during calendar year 1999, such conversion shall be done by applying an immediate conversion factor to the annual amount of such single life annuity, with such factor based upon the "applicable mortality

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A-4 table" (as defined under Section 417(e)(3) of the Code) and whichever of the following two (2) interest rates results in the larger single life annuity: (i) the "applicable interest rate" (as defined under Section 417(e)(3) of the Code) as in effect for the second calendar month immediately prior to the first day of the calendar quarter in which falls the date as of which such distribution is otherwise to occur, and (ii) such same "applicable interest rate" as in effect for the second calendar month immediately prior to the month in which falls the date as of which such distribution is otherwise to occur. To the extent that (A) any Participant's single life annuity otherwise payable immediately is converted into an equivalent, immediately payable lump sum distribution or an equivalent, immediately payable, annual amount of level income annuity (Option 5 of Section 9.3) and (B) the distribution of such benefit is to occur or commence as of a date on or after January 1, 2000 and prior to January 1, 2008, such conversion shall be done by applying an immediate conversion factor to the annual amount of such single life annuity, with such factor based upon the "applicable mortality table" (as defined under Section 417(e)(3) of the Code) and the "applicable interest rate" (as defined under Section 417(e)(3) of the Code) as in effect for the second calendar month immediately prior to the first day of the calendar quarter in which falls the date as of which such distribution is otherwise to occur. To the extent that (A) any Participant's single life annuity otherwise payable immediately is converted into an equivalent, immediately payable lump sum distribution or an equivalent, immediately payable, annual amount of level income annuity (Option 5 of Section 9.3) and (B) the distribution of such benefit is to occur or commence as of a date on or after January 1, 2008, such conversion shall be done by applying to the annual amount of such single life annuity the immediate conversion factor specified in clause (i) or (ii) below that produces the greater lump sum benefit amount: (i) the factor based upon the "applicable mortality table" and "applicable interest rate" determined in accordance with the immediately preceding paragraph, without giving effect to the changes in Section 417(e)(3) of the Code made by PPA 2006; or (ii) the factor based upon the "applicable mortality table" (as defined under Section 417(e)(3) of the Code as amended by PPA 2006) and the "applicable interest rate" (as defined under Section 417(e)(3) of the Code as amended by PPA 2006) as in effect for the second calendar month immediately prior to the first day of the calendar quarter in which falls the date as of which such distribution is otherwise to occur. Effective for distributions commencing on or after August 1, 2008, the "applicable interest rate" for purposes of both clauses (i) and (ii) of this paragraph shall be determined as of the fourth calendar month immediately prior to the first day of such calendar quarter; provided, however, that for the one-year period beginning on August 1, 2008, the "applicable interest rate" shall be determined as of either the second or the fourth calendar month immediately prior to the first day of such calendar quarter, whichever results in the larger distribution. 5. Each Participant's single life annuity otherwise deferred to such Participant's Normal Retirement Date is, if the distribution of a lump sum benefit is otherwise to occur as of a date prior to January 1, 1999, converted into an equivalent, immediately payable lump sum distribution by using a deferred conversion factor, with such factor based upon the

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A-5 above specified mortality table and the PBGC immediate/deferred blended interest rate (under Section 417(e)(3) of the Code, as in effect immediately prior to the enactment of Public Law 103-465) applicable to the month as of which the distribution of such lump sum benefit is otherwise to occur. Each Participant's single life annuity otherwise deferred to such Participant's Normal Retirement Date is, if the distribution of a lump sum benefit is otherwise to occur as of a date during calendar year 1999, converted into an equivalent, immediately payable lump sum distribution by using a deferred conversion factor, with such factor based upon the "applicable mortality table" (as defined under Section 417(e)(3) of the Code) and whichever of the following two (2) interest rates results in the larger single life annuity: (i) the "applicable interest rate" (as defined under Section 417(e)(3) of the Code) as in effect for the second calendar month immediately prior to the first day of the calendar quarter in which falls the date as of which such distribution is otherwise to occur, and (ii) such same "applicable interest rate" as in effect for the second calendar month immediately prior to the month in which falls the date as of which such distribution is otherwise to occur. Each Participant's single life annuity otherwise deferred to such Participant's Normal Retirement Date is, if the distribution of a lump sum benefit is otherwise to occur as of a date on or after January 1, 2000 and prior to January 1, 2008, converted into an equivalent, immediately payable lump sum distribution by using a deferred conversion factor, with such factor based upon the "applicable mortality table" (as defined under Section 417(e)(3) of the Code) and the "applicable interest rate" (as defined under Section 417(e)(3) of the Code) as in effect for the second calendar month immediately prior to the first day of the calendar quarter in which falls the date as of which such distribution is otherwise to occur. Each Participant's single life annuity otherwise deferred to such Participant's Normal Retirement Date shall be, if the distribution of a lump sum benefit is otherwise to occur as of a date on or after January 1, 2008, converted into an equivalent, immediately payable lump sum distribution by using the deferred conversion factor specified in clause (i) or (ii) below that produces the greater lump sum benefit amount: (i) the factor based upon the "applicable mortality table" and "applicable interest rate" determined in accordance with the immediately preceding paragraph, without giving effect to the changes in Section 417(e)(3) of the Code made by PPA 2006; or (ii) the factor based upon the "applicable mortality table" (as defined under Section 417(e)(3) of the Code as amended by PPA 2006) and the "applicable interest rate" (as defined under Section 417(e)(3) of the Code as amended by PPA 2006) as in effect for the second calendar month immediately prior to the first day of the calendar quarter in which falls the date as of which such distribution is otherwise to occur. Effective for distributions commencing on or after August 1, 2008, the "applicable interest rate" for purposes of both clauses (i) and (ii) of this paragraph shall be determined as of the fourth calendar month immediately prior to the first day of such calendar quarter; provided, however, that for the one- year period beginning on August 1, 2008, the "applicable interest rate" shall be determined as of either the second or the fourth calendar month immediately prior to the first day of such calendar quarter, whichever results in the larger distribution.

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A-6 6. If and to the extent it becomes necessary to correct for a failure to commence a Participant's or Beneficiary's Plan distribution on the date required under the terms of the Plan, and such correction includes the payment of a lump sum (a "make-up payment") equal to the missed payment or payments plus an adjustment for interest from the date the missed payment or payments would have been made to the date of the actual make-up payment, such interest shall be calculated using an interest rate of: (i) 6% per annum, for failures to commence a Participant's or Beneficiary's distribution by the Required Beginning Date or such other commencement date required under Section 10.2 of the Plan and Section 401(a)(9) of the Code; or (ii) 5% per annum, for all other failures.

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B-1 APPENDIX B In order to receive the benefits described in Section 5.5 of the Plan, a Participant must have been a participant under a Prior Plan on December 31, 1990 and must satisfy the requirements set forth below that correspond to his termination of employment date. Termination of Employment Date Requirements 1. After December 31, 1990 and prior to July 1, 1991 1. Age 50 with 10 Years of Service on December 31, 1990; age 55 with 10 Years of Service on his termination of employment date 2. After June 30, 1991 and prior to January 1, 1993 2. Age 55 with 10 Years of Service on his termination of employment date 3. After December 31, 1992 3. Age 50 with 5 Years of Service, or any age and 10 Years of Service, as of January 1, 1993

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C-1 APPENDIX C ADDITIONAL EARLY RETIREMENT BENEFITS SECTION 1.1 ELIGIBILITY FOR ADDITIONAL BENEFITS A. Any Participant employed in the United States by an Employer, or on sick leave or long-term disability under the Employer's Long-Term Disability Plan, may elect to retire on August 1, 1991 (such designated date of retirement hereinafter referred to in this Appendix C as the "Retirement Day") and be eligible to receive the additional benefits ("Additional Benefits") set forth under this Appendix C, provided that (i) on or before July 31, 1991 such Participant shall have attained at least age 55 and completed at least ten Years of Service under the Plan (including periods of disability in which no Years of Service were credited), (ii) the document entitled "Special Retirement Option Agreement," which includes a General Release in favor of the Employer, is signed, witnessed and dated no earlier than July 8, 1991 but no later than July 18, 1991 in strict accordance with the instructions contained therein, and (iii) such Participant shall have made an election to retire on such other forms as the Employer may require during the period commencing 45 days after such Participant receives the "Special Retirement Option Agreement" from the Employer but ending no later than July 31, 1991. Participants who previously retired on or after January 1, 1991 and before August 1, 1991 and who were employed in the United States by the Employer shall also be eligible for the Additional Benefits under this Appendix C, provided the preceding requirements in clauses (i)- (iii) hereof are satisfied. B. Notwithstanding the provisions of paragraph A hereof, any individual whose active employment with an Employer ceased by mutual agreement on or before May 17, 1991 shall not be eligible for any benefits under this Appendix C. C. Notwithstanding the provisions of paragraph A above, any individual who is classified by an Employer as a Corporate Department Head or President of a division shall not be eligible for the Additional Benefits under this Appendix C. SECTION 1.2 ADDITIONAL BENEFITS Each Participant eligible for Additional Benefits under this Appendix C to the Plan who elects to retire on the Retirement Day shall be entitled to the following: A. The Additional Benefits shall be equal to the benefit determined, under Section 5.5 of the Plan, by increasing the Participant's age as of August 1, 1991, by five (5) years and Years of Service as of August 1, 1991, by five (5) years. The Additional Benefits shall be added to the regular pension benefit determined under Section 5.5 of the Plan. B. The reduction contained in Section 5.5 of the Plan, which applies to the early commencement of a Participant's benefits prior to age 62, shall be applied after increasing the Participant's age by five (5) years as provided under paragraph A above.

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C-2 C. The Additional Benefits provided under this Appendix C to the Plan shall be payable in the form applicable to the Participant in accordance with the provisions of Section 9 of the Plan. D. Participants who (i) retired on or after January 1, 1991 and prior to August 1, 1991, (ii) are receiving retirement benefits under the Plan prior to August 1, 1991, and (iii) are eligible under Section 1.1 A hereof, shall have the amount of their retirement benefits recomputed under this Appendix C from the date of their previous retirement and paid in accordance with the form of benefit previously elected under Section 9 of the Plan. No changes to the form of benefit previously elected shall be permitted; however, the Additional Benefits payable for the period of time from the date of the previous retirement to July 31, 1991 shall be paid in the form of a lump sum distribution at the time prescribed under paragraph E hereof. In no event shall Additional Benefits be paid to Participants who retired before January 1, 1991. E. If a Participant elects the Additional Benefits provided under this Appendix C to the Plan, such Participant's retirement benefits shall be payable commencing in the first month following the month in which the Retirement Day occurs.

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![](exhibit101-esteelauderxr073.jpg)

D-1 APPENDIX D ADDITIONAL EARLY RETIREMENT BENEFITS SECTION 1.1 ELIGIBILITY FOR ADDITIONAL BENEFITS A. Any Participant employed in the Commonwealth of Puerto Rico by the Estee Lauder Hemisphere Division of Clinique (the "Employer"), or on sick leave or long- term disability under the Employer's Long-Term Disability Plan, may elect to retire on December 1, 1991 (such designated date of retirement hereinafter referred to in this Appendix D as the "Retirement Day") and be eligible to receive the additional benefits ("Additional Benefits") set forth under this Appendix D, provided that (i) on or before November 30, 1991 such Participant shall have attained at least age 55 and completed at least ten (10) Years of Service under the Plan (including periods of disability in which no Years of Service were credited), (ii) the document entitled "Special Retirement Option Agreement and General Release," which includes a General Release in favor of the Employer, is signed, witnessed and dated no earlier than November 4, 1991 but no later than November 14, 1991 in strict accordance with the instructions contained therein, and (iii) such Participant shall have made an election to retire on such other forms as the Employer may require during the period commencing 45 days after such Participant receives the "Special Retirement Option Agreement" from the Employer but ending no later than November 30, 1991. Participants who previously retired on or after January 1, 1991 and before December 1, 1991 and who were employed in the Commonwealth of Puerto Rico by the Employer shall also be eligible for the Additional Benefits under this Appendix D, provided the preceding requirements in clauses (i)-(iii) hereof are satisfied. B. Notwithstanding the provisions of paragraph A hereof, any individual whose active employment with the Employer ceased by mutual agreement on or before September 19, 1991 shall not be eligible for any benefits under this Appendix D. C. Notwithstanding the provisions of paragraph A above, any individual who is classified by the Employer as a Corporate Department Head or President of a division shall not be eligible for the Additional Benefits under this Appendix D. SECTION 1.2 ADDITIONAL BENEFITS Each Participant eligible for Additional Benefits under this Appendix D to the Plan who elects to retire on the Retirement Day shall be entitled to the following: A. The Additional Benefits shall be equal to the benefit determined, under Section 5.5 of the Plan, by increasing the Participant's age as of December 1, 1991, by five (5) years and Years of Service as of December 1, 1991, by five (5) years. The Additional Benefits shall be added to the regular pension benefit determined under Section 5.5 of the Plan. B. The reduction contained in Section 5.5 of the Plan, which applies to the early commencement of a Participant's benefits, shall be applied after increasing the Participant's age by five (5) years as provided under paragraph A above.

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D-2 C. The Additional Benefits provided under this Appendix D to the Plan shall be payable in the form applicable to the Participant in accordance with the provisions of Section 9 of the Plan. D. Participants who (i) retired on or after January 1, 1991 and prior to December 1, 1991, (ii) are receiving retirement benefits under the Plan prior to December 1, 1991, and (iii) are eligible under Section 1.1 A hereof, shall have the amount of their retirement benefits recomputed under this Appendix D from the date of their previous retirement and paid in accordance with the form of benefit previously elected under Section 8 of the Plan. No changes to the form of benefit previously elected shall be permitted; however, the Additional Benefits payable for the period of time from the date of the previous retirement to November 30, 1991 shall be paid in the form of a lump sum distribution at the time prescribed under paragraph E hereof. In no event shall Additional Benefits be paid to Participants who retired before January 1, 1991. E. If a Participant elects the Additional Benefits provided under this Appendix D to the Plan, such Participant's retirement benefits shall be payable commencing in the first month following the month in which the Retirement Day occurs.

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E-1 APPENDIX E SPECIAL PROVISIONS GOVERNING EMPLOYEES OF WHITMAN PACKAGING CORPORATION WHO DID NOT OTHERWISE BECOME ELIGIBLE EMPLOYEES PRIOR TO JANUARY 1, 1992 SECTION 1.1 SCOPE. The provisions of this Appendix E shall apply with respect to each person who first became an employee of Whitman Packaging Corporation prior to January 1, 1992; other than any such person who, prior to that date, terminated such employment and immediately thereupon transferred to, and became an employee of, an entity which was then an Employer under the Plan as then in effect (a "Whitman Employee"). The provisions of this Appendix E shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall (except with reference to the first sentence of the preceding paragraph) be to the Plan as in effect at the time such provision is applied to a Whitman Employee, as the context shall require. The provisions of this Appendix E shall not apply with respect to (a) any person described in Appendix F or (b) any person who first becomes an employee of Whitman Packaging Corporation ("Whitman") on or after January 1, 1992. SECTION 1.2 COMMENCEMENT OF STATUS AS A PARTICIPATING EMPLOYER Whitman shall become an Employer under the Plan on January 1, 1992. SECTION 1.3 COMMENCEMENT OF PLAN PARTICIPATION BY WHITMAN EMPLOYEES No Whitman Employee shall be permitted to become a Participant prior to January 1, 1992. The first date on or after January 1, 1992 on which any such person may become a Participant shall be governed by the otherwise applicable provisions of Section 3 of the Plan. In applying the terms of such participation eligibility provision, there shall be taken into account all of such Whitman Employee's period of employment with Whitman on or after January 1, 1984, but only to the extent that any such period of employment would have been taken into account had Whitman otherwise been an Employer throughout such person's entire such period of employment. SECTION 1.4 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of a Whitman Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, there shall be taken into account all periods of such person's employment with Whitman on or after January 1, 1984 which would otherwise have been taken into account for such purpose had

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![](exhibit101-esteelauderxr076.jpg)

E-2 Whitman otherwise been an Employer throughout such person's entire such period of employment; provided, however, that there shall be taken into account for this purpose with respect to any Whitman Employee who becomes a Participant (i) who transferred from a non- exempt position to an exempt position prior to January 1, 1992, all periods of employment beginning with the date on which such Whitman Employee first became a regular, full-time employee of Whitman; (ii) who is in a non-exempt position, all periods of employment beginning on the later of (A) January 1, 1984, or (B) such Whitman Employee's Plan Entry Date for purposes of the Whitman Packaging Corporation Money Purchase Plan. SECTION 1.5 VESTING In determining the extent to which any Whitman Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with Whitman which are otherwise taken into account with respect to such employee pursuant to the provisions of Section 1.4 of this Appendix E.

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![](exhibit101-esteelauderxr077.jpg)

F-1 APPENDIX F SPECIAL PROVISIONS GOVERNING EMPLOYEES OF WHITMAN PACKAGING CORPORATION WHO OTHERWISE BECOME ELIGIBLE EMPLOYEES PRIOR TO JANUARY 1, 1992 SECTION 1.1 SCOPE The provisions of this Appendix F shall apply with respect to each person who, prior to January 1, 1992, (a) became an employee of Whitman Packaging Corporation and (b) thereafter terminated such employment and immediately thereupon transferred to, and became an employee of an entity which was then an Employer under the Plan as then in effect (a "Transferred Whitman Employee"). The provisions of this Appendix F shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall (except with reference to the first sentence of the preceding paragraph) be to the Plan as in effect at the time such provision is applied to a Transferred Whitman Employee, as the context shall require. The provisions of this Appendix F shall not apply with respect to (a) any person subject to the provisions of Appendix E or (b) any person who first becomes an employee of Whitman Packaging Corporation ("Whitman") on or after January 1, 1992. SECTION 1.2 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of a Transferred Whitman Employee for the Plan Year commencing January 1, 1992 and for each subsequent Plan Year (but not for any prior Plan Year) pursuant to the provisions of Section 5 of the Plan, but only in the case of such a person who is otherwise entitled to have an amount so credited for such Plan Year, there shall be taken into account all periods of such person's employment with Whitman on or after January 1, 1984 which would otherwise have been taken into account for such purpose had Whitman otherwise been an Employer throughout such person's entire such period of employment; provided, however, that there shall be taken into account for this purpose with respect to any Transferred Whitman Employee (i) who transferred from a non-exempt position to an exempt position with Whitman prior to becoming a Transferred Whitman Employee, all periods of employment beginning with the date on which such Transferred Whitman Employee first became a regular, full-time employee of Whitman; (ii) who was in a non-exempt position with Whitman prior to becoming a Transferred Whitman Employee, all periods of employment beginning on the later of (iii) January 1, 1984, or (iv) such Transferred Whitman Employee's Plan Entry Date for purposes of the Whitman Packaging Corporation Money Purchase Plan.

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F-2 SECTION 1.3 VESTING In determining the extent to which any Transferred Whitman Employee is, for the Plan Year commencing January 1, 1992 and each subsequent Plan Year, vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with Whitman which are otherwise taken into account with respect to such employee pursuant to the provisions of Section 1.2 of this Appendix F. In determining the extent to which any Transferred Whitman Employee is, for any Plan Year beginning prior to January 1, 1992, vested in such aforementioned Account, such person's prior employment with Whitman shall be taken into account only to the extent required under the provisions of Section 411 of the Code.

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![](exhibit101-esteelauderxr079.jpg)

G-1 APPENDIX G SPECIAL PROVISIONS GOVERNING EMPLOYEES OF NORTHTEC INC. WHO DID NOT OTHERWISE BECOME ELIGIBLE EMPLOYEES PRIOR TO JANUARY 1, 1992 SECTION 1.1 SCOPE The provisions of this Appendix G shall apply with respect to each person who first became an employee of Northtec Inc. prior to January 1, 1992 at either its Trevose, Pa. or Bristol, Pa. locations; other than any such person who, prior to that date, terminated such employment and immediately thereupon transferred to, and became an employee of, an entity which was then an Employer under the Plan as then in effect (a "Northtec Employee"). The provisions of this Appendix G shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall (except with reference to the first sentence of the preceding paragraph) be to the Plan as in effect at the time such provision is applied to a Northtec Employee, as the context shall require. The provisions of this Appendix G shall not apply with respect to (a) any person described in Appendix H or (b) any person who first becomes an employee of Northtec Inc. ("Northtec") on or after January 1, 1992. SECTION 1.2 COMMENCEMENT OF STATUS AS A PARTICIPATING EMPLOYER Northtec shall become an Employer under the Plan on January 1, 1992. SECTION 1.3 COMMENCEMENT OF PLAN PARTICIPATION BY NORTHTEC EMPLOYEES A. No Northtec Employee shall be permitted to become a Participant prior to January 1, 1992. The first date on or after January 1, 1992 on which any such person may become a Participant shall be governed by the otherwise applicable provisions of Section 2 of the 1992 Plan. B. In applying the terms of the participation eligibility provision referred to in subsection (a) of this Section 1.3 in the case of any Northtec Employee employed at the Trevose, Pa. location prior to January 1, 1992, there shall be taken into account all of such employee's period of employment with Northtec on or after July 17, 1989, but only to the extent that any such period of employment would have been taken into account had Northtec otherwise been an Employer throughout such person's entire such period of employment.

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G-2 C. In applying the terms of the participation eligibility provision referred to in Section 1.3 in the case of any Northtec Employee employed at the Bristol, Pa. location prior to January 1, 1992, there shall be taken into account all of such employee's period of employment with Northtec (including, for such purpose, all periods of employment on and after November 1, 1987, with Powder Masters, which formerly operated such location), but only to the extent that any such period of employment would have been taken into account had Northtec (or Powder Masters, as the case may be) otherwise been an Employer throughout such person's entire such period of employment. SECTION 1.4 CREDITS TO RETIREMENT ACCOUNTS A. In determining the amount to be credited to the Retirement Account of a Northtec Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, on behalf of any Northtec Employee employed at the Trevose, Pa. location prior to January 1, 1992, who otherwise becomes a Participant, there shall be taken into account all periods of such person's employment with Northtec on or after July 17, 1989 which would otherwise have been taken into account for such purpose had Northtec otherwise been an Employer throughout such person's entire such period of employment. B. In determining the amount to be credited to the Retirement Account of a Northtec Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, on behalf of any Northtec Employee employed at the Bristol, Pa. location prior to January 1, 1992, who otherwise becomes a Participant, there shall be taken into account all periods of such person's employment with Northtec (including, for such purpose, all periods of employment on and after November 1, 1987, with Powder Masters) which would otherwise have been taken into account for such purpose had Northtec (or Powder Masters, as the case may be) otherwise been an Employer throughout such person's entire such period of employment. C. In addition to the credits referred to in subsections (b) and (c) of this Section 1.4, each Northtec Employee who becomes a Participant on January 1, 1992 shall, as of such date, be credited with $400 for each full calendar year of employment prior to January 1, 1992, but with such calendar years being limited to the period otherwise taken into account under the foregoing provisions of this Section 1.4. SECTION 1.5 VESTING In determining the extent to which any Northtec Employee is vested in his Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with Northtec which are otherwise taken into account with respect to such employee pursuant to the provisions of Section 1.4 of this Appendix G. SECTION 1.6 TRANSFER BETWEEN LOCATIONS In the case of any Northtec Employee who, prior to January 1, 1992 had been employed at both the Trevose, Pa. location and the Bristol, Pa. location, the provisions of this Appendix G shall, notwithstanding any other provision of this Appendix G to the contrary, be applied as if such person had, throughout the entire period prior to January 1, 1992, remained employed at whichever of such two locations such Northtec Employee was first employed.

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![](exhibit101-esteelauderxr081.jpg)

H-1 APPENDIX H SPECIAL PROVISIONS GOVERNING EMPLOYEES OF NORTHTEC INC. WHO OTHERWISE BECOME ELIGIBLE EMPLOYEES PRIOR TO JANUARY 1, 1992 SECTION 1.1 SCOPE The provisions of this Appendix H shall apply with respect to each person who, prior to January 1, 1992, (a) became an employee of Northtec Inc. at either its Trevose, Pa. or Bristol, Pa. locations and (b) thereafter terminated such employment and immediately thereupon transferred to, and became an employee of an entity which was then an Employer under the Plan as then in effect (a "Transferred Northtec Employee"). The provisions of this Appendix H shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall (except with reference to the first sentence of the preceding paragraph) be to the Plan as in effect at the time such provision is applied to a Transferred Northtec Employee, as the context shall require. The provisions of this Appendix H shall not apply with respect to (a) any person subject to the provisions of Appendix G or (b) any person who first becomes an employee of Northtec Inc. ("Northtec") on or after January 1, 1992. SECTION 1.2 CREDITS TO RETIREMENT ACCOUNTS A. In determining the amount to be credited to the Retirement Account of a Transferred Northtec Employee, who was employed at the Trevose, Pa. location prior to becoming a Transferred Northtec Employee, for the Plan Year commencing January 1, 1992 and for each subsequent Plan Year (but not for any prior Plan Year) pursuant to the provisions of Section 5 of the Plan, but only in the case of such a person who is otherwise entitled to have an amount so credited for such Plan Year, there shall be taken into account all periods of such person's employment with Northtec on or after July 17, 1989 which would otherwise have been taken into account for such purpose had Northtec otherwise been an Employer throughout such person's entire such period of employment. B. In determining the amount to be credited to the Retirement Account of a Transferred Northtec Employee, who was employed at the Bristol, Pa. location prior to becoming a Transferred Northtec Employee, for the Plan Year commencing January 1, 1992 and for each subsequent Plan Year (but not for any prior Plan Year) pursuant to the provisions of Section 5 of the Plan, but only in the case of such a person who is otherwise entitled to have an amount so credited for such Plan Year, there shall be taken into account all periods of such person's employment with Northtec (including, for such purpose, all periods of employment on and after November 1, 1987, with Powder Masters) which would otherwise have been taken into account for such purpose had Northtec (or Powder Masters, as the case may be) otherwise been an Employer throughout such person's entire such period of employment.

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![](exhibit101-esteelauderxr082.jpg)

H-2 C. In addition to the credits referred to in subsections (b) and (c) of this Section 1.2, each Transferred Northtec Employee who was otherwise a Participant in the Plan on January 1, 1992, shall, as of such date, be credited with the greater of (a) the balance otherwise determined under the Plan as of that date, without regard to this Appendix H or (b) an amount equal to the sum of $400 multiplied by the number of such person's full calendar years of employment prior to January 1, 1992. For this purpose, such calendar years of employment for any Transferred Northtec Employee shall be determined by taking into account all periods of employment otherwise taken into account with respect to such person under the foregoing provisions of this Section 1.2 as well as all periods otherwise recognized under the Plan without regard to this Appendix H. SECTION 1.3 VESTING In determining the extent to which any Transferred Northtec Employee is, for the Plan Year commencing January 1, 1992 and each subsequent Plan Year, vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with Northtec which are otherwise taken into account with respect to such employee pursuant to the provisions of Section 1.2 of this Appendix H. In determining the extent to which any Transferred Northtec Employee is, for any Plan Year beginning prior to January 1, 1992, vested in such aforementioned Account, such person's prior employment with Northtec shall be taken into account only to the extent required under the provisions of Section 411 of the Code. SECTION 1.4 TRANSFER BETWEEN LOCATIONS In the case of any Transferred Northtec Employee who, prior to so becoming a Transferred Northtec Employee, had been employed at both the Trevose, Pa. location and the Bristol, Pa. location, the provisions of this Appendix H shall, notwithstanding any other provisions of this Appendix H to the contrary, be applied as if such person had, throughout the entire period prior to becoming a Transferred Northtec Employee, remained employed at whichever of such two locations such person was first employed.

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![](exhibit101-esteelauderxr083.jpg)

I-1 APPENDIX I ADDITIONAL RETIREMENT BENEFITS SECTION 1.1 ELIGIBILITY FOR ADDITIONAL BENEFITS The following Participants shall receive the additional benefits provided pursuant to this Appendix I: SECTION 1.2 ADDITIONAL BENEFITS Each Participant described in the foregoing Section 1.1 of this Appendix I shall be entitled to the following: A. The Additional Benefits shall be equal to the benefit determined, under Section 5.5 of the Plan, by increasing the Participant's age by five (5) years and Years of Credited Service by five (5) years. The Additional Benefits shall be added to the regular pension benefit determined under Section 5.5 of the Plan. B. The reduction contained in Section 5.5 of the Plan, which applies to the early commencement of a Participant's benefits, shall be applied after increasing the Participant's age by five (5) years as provided under paragraph A above. C. The Additional Benefits provided under this Appendix I shall be payable in the form otherwise applicable to the Participant in accordance with the generally applicable provisions of the Plan. [XXXX] [XXXX] [XXXX] [XXXX] [XXXX] [XXXX] [XXXX]

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![](exhibit101-esteelauderxr084.jpg)

J-1 APPENDIX J ADDITIONAL EARLY RETIREMENT BENEFITS - II SECTION 1.1 ELIGIBILITY FOR ADDITIONAL BENEFITS (1) Any Participant who is (i) employed by the Employer, (ii) on an Approved Absence (paid or unpaid) from the Employer, (iii) on sick leave or long-term disability under the Employer's Long-Term Disability Plan with disability payments continuing on and after January 1, 1997 or (iv) receiving severance payments from the Employer that are being paid on or after January 1, 1997 (such persons being hereinafter referred to as a "Covered Employee"), may elect to retire on the first day of any month commencing on January 1, 1997 and ending on July 1, 1998 as designated by the Employer and Covered Employee in the "General Release" (such designated date of retirement hereinafter referred to in this Appendix J as the "Retirement Date"). Such Covered Employee shall be eligible to receive the benefit described in Paragraph 1.2 of this Appendix J, provided that (i) on or before December 31, 1996, such Covered Employee shall have attained at least age 50 and completed at least ten (10) Years of Service or Years of Credited Service under the Plan, (ii) on or before December 31, 1996, any such Covered Employee who was employed by Whitman Packaging Corporation has completed at least four Years of Eligibility Service under the Plan, (iii) the document entitled "Special Retirement Opportunity" is signed, witnessed and dated no earlier than November 8, 1996 in strict accordance with the instructions contained therein, and (iv) such Covered Employee shall have made an election to retire on such other forms as the Employer may require during the period commencing at least 45 days after such Covered Employee receives the "General Release" from the Employer but ending no later than June 4, 1998. Participants who previously retired on or after January 1, 1996 and before January 1, 1997 and who were employed in the United States by the Employer shall also be eligible for the benefits described in Paragraph 1.2 of this Appendix J, provided the preceding requirements in clauses (i)-(iv) hereof are satisfied (such persons are hereinafter referred to as "Retired Covered Employees"). (2) Notwithstanding the provisions of paragraph 1 above, any individual who is classified by an Employer as a Corporate Department Head or President of a division shall not be eligible for the benefit described in Paragraph 1.2 of this Appendix J. SECTION 1.2 ADDITIONAL BENEFITS (1) Each Covered Employee who elects to retire on the Retirement Date shall be entitled to his Accrued Benefit which will be calculated as if such Covered Employee was five (5) years older than his actual age as of December 31, 1996, and by increasing his Years of Service and Years of Credited Service as of December 31, 1996 (the difference between the Covered Employee's benefit determined under this Appendix J and his benefit determined without regard to the enhancement provided under this Appendix J shall hereinafter be referred to as the "Additional Benefit").

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J-2 (2) The reduction contained in Section 5.5 of the Plan, which applies to the early commencement of a Covered Employee's Accrued Benefit determined under the terms of the Prior Plan, shall be applied after increasing the Covered Employee's age by five (5) years as provided under Paragraph 1.2(1) above. (3) If the Covered Employee elects to retire pursuant to the provisions of this Appendix J, such Covered Employee may elect at any time prior to the date of commencement of his benefit to receive his benefit, calculated in accordance with the provisions of the Plan and this Appendix J, in the forms of payment applicable to the Covered Employee in accordance with the provisions of Section 9 of the Plan. (4) All Retired Covered Employees who (i) retired on or after January 1, 1996 and prior to January 1, 1997 and (ii) are receiving retirement benefits under the Plan prior to January 1, 1997 shall have the amount of their retirement benefits recomputed under this Appendix J (taking into the account the provisions of paragraphs (1) and (2) hereof) from the date of their previous retirement and paid in accordance with the form of benefit previously elected under Section 9 of the Plan. No changes to the form of benefit previously elected shall be permitted. In no event shall Additional Benefits be paid to Participants who retired before January 1, 1996. (5) If a Covered Employee or Retired Covered Employee elects to receive the Additional Benefits provided under this Appendix J to the Plan, such Covered Employee's or Retired Covered Employee's retirement benefits shall be payable with respect to or commencing on the first month following the month in which the Retirement Date occurs. SECTION 1.3 DEFINED TERMS Except to the extent set forth above, the provisions of this Appendix J are subject to the terms and conditions of the Plan and defined terms used in this Appendix J shall have the same meaning as used in the Plan.

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![](exhibit101-esteelauderxr086.jpg)

K-1 APPENDIX K SPECIAL PROVISIONS GOVERNING EMPLOYEES OF BOBBI BROWN PROFESSIONAL COSMETICS, INC. WHO DID NOT OTHERWISE BECOME ELIGIBLE EMPLOYEES SECTION 1.1 SCOPE The provisions of this Appendix K shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall (except with reference to the first sentence of the preceding paragraph) be to the Plan as in effect at the time such provision is applied to a Bobbi Brown Employee (as defined below), as the context shall require. SECTION 1.2 COMMENCEMENT OF STATUS AS A PARTICIPATING EMPLOYER Bobbi Brown Professional Cosmetics, Inc. ("Bobbi Brown") shall become an Employer under the Plan on January 1, 1996. SECTION 1.3 COMMENCEMENT OF PLAN PARTICIPATION BY BOBBI BROWN EMPLOYEES No Bobbi Brown employee shall be permitted to become a Participant prior to January 1, 1996. Each person who (i) is employed by Bobbi Brown on January 1, 1996 and (ii) is otherwise an Employee on that date shall become a Participant on January 1, 1996. (Each person who so becomes a Participant on that date is hereafter referred to as a "Bobbi Brown Employee".) SECTION 1.4 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of a Bobbi Brown Employee who becomes a Participant, pursuant to the provisions of Section 5 of the Plan, such person's Years of Service, for such purpose, shall be determined based upon the date that such person would otherwise have, without regard to this Appendix K, first become a Participant had Bobbi Brown been an Employer throughout such person's entire period of employment with Bobbi Brown. SECTION 1.5 VESTING In determining the extent to which any Bobbi Brown Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, such person's Years of Service, for such purpose, shall be determined by taking into account all periods of such person's employment with Bobbi Brown which would otherwise have been taken into account for such

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![](exhibit101-esteelauderxr087.jpg)

K-2 purpose had Bobbi Brown otherwise been an Employer throughout such person's entire period of employment with Bobbi Brown.

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![](exhibit101-esteelauderxr088.jpg)

L-1 APPENDIX L SPECIAL PROVISIONS GOVERNING ESTEE LAUDER EMPLOYEES WHO WERE PREVIOUSLY EMPLOYED BY THE DONNA KARAN COMPANY WHO DID NOT OTHERWISE BECOME ELIGIBLE EMPLOYEES SECTION 1.1 SCOPE The provisions of this Appendix L shall apply with respect to each person who was an employee of The Donna Karan Company ("DK") immediately prior to November 10, 1997 and becomes an Employee prior to December 31, 1998 (a "DK Employee"). The provisions of this Appendix L shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall be to the Plan as in effect at the time such provision is applied to a DK Employee, as the context shall require. SECTION 1.2 COMMENCEMENT OF PLAN PARTICIPATION BY DK EMPLOYEES No DK Employee shall be permitted to become a Participant prior to November 10, 1997. The first date on or after November 10, 1997 on which any such person may become a Participant shall be governed by the otherwise applicable provisions of Section 3 of the Plan. In applying the terms of such participation eligibility provision, there shall be taken into account all of such DK Employee's period of employment with DK, but only to the extent that any such period of employment would have been taken into account had DK otherwise been an Employer throughout such person's entire period of employment with DK. SECTION 1.3 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of a DK Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, there shall be taken into account all periods of such person's employment with DK which would otherwise have been taken into account for such purpose had DK otherwise been an Employer throughout such person's entire such period of employment. SECTION 1.4 VESTING In determining the extent to which any DK Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with DK which are otherwise taken into account with respect to such employee pursuant to the provisions of Section 1.4 of this Appendix L.

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M-1 APPENDIX M SPECIAL PROVISIONS GOVERNING CERTAIN TRANSFERRED EMPLOYEES SECTION 1.1 SCOPE The provisions of this Appendix M shall apply with respect to each person (i) who was an employee of one of the companies listed below on or after the date specified below for such company, and (ii) whose employment is subsequently transferred from such company to an Employer (each a "Transferred Employee"): Company Date Make-Up Art Cosmetics Inc. Make-UP Art Cosmetics (U.S.) Inc., FFJD, Inc. December 28, 1994 Sassaby Cosmetics, Inc. October 31, 1997 Aveda Corporation Aveda Services Inc. December 1, 1997 The provisions of the Appendix M shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall be to the Plan as in effect at the time such provision is applied to a Transferred Employee, as the context shall require. SECTION 1.2 COMMENCEMENT OF PLAN PARTICIPATION BY TRANSFERRED EMPLOYEES The first date on which any Transferred Employee may become a Participant shall be governed by the otherwise applicable provisions of Section 3 of the Plan. In applying the terms of such participation eligibility provision, there shall be taken into account all of such Transferred Employee's period of employment with his prior employer listed in Section 1.1 of this Appendix M (including any corporate predecessor thereof), but only to the extent that any such period of employment would have been taken into account had such prior employer otherwise been an Employer throughout such person's entire period of employment.

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M-2 SECTION 1.3 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of a Transferred Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, there shall be taken into account all periods of such person's employment with his prior employer listed in Section 1.1 of this Appendix M (including any corporate predecessor thereof) which would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire such period of employment. SECTION 1.4 VESTING In determining the extent to which any Transferred Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with his prior employer listed in Section 1.1 of this Appendix M (including any corporate predecessor thereof) which would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment.

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![](exhibit101-esteelauderxr091.jpg)

N-1 APPENDIX N PROVISIONS GOVERNING CERTAIN EMPLOYEES OF MAKE-UP ART COSMETICS INC. AND ITS AFFILIATES AND PREDECESSORS SECTION 1.1 SCOPE The provisions of this Appendix N to the Estee Lauder Inc. Retirement Growth Account Plan shall apply with respect to each person employed by Make-Up Art Cosmetics Inc., Make- Up Art Cosmetics (U.S.), Inc., FFJD, Inc., or their respective predecessors (collectively, the "MAC Companies") on December 31, 1999 ("MAC Employee"). The provisions of this Appendix N shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall be to the Plan as in effect at the time such provision is applied to a MAC Employee, as the context shall require. SECTION 1.2 COMMENCEMENT OF STATUS AS PARTICIPATING EMPLOYER Make-Up Art Cosmetics Inc., Make-Up Art Cosmetics (U.S.), Inc., and FFJD, Inc. shall become Participating Employers under the Plan on January 1, 2000. SECTION 1.3 COMMENCEMENT OF PLAN PARTICIPATION BY MAC EMPLOYEES No MAC Employee shall be permitted to become a Participant prior to January 1, 2000. Each MAC Employee who is regularly scheduled to work twenty hours or more per week as of December 31, 1999, may become a Participant in the Plan on January 1, 2000, notwithstanding any otherwise applicable provisions of Section 3 of the Plan. Each other MAC Employee may become a Participant in the Plan on the first applicable entry date on or after January 1, 2000, in accordance with the provisions of Section 3 of the Plan; however, for purposes of determining eligibility under the Plan, there shall be taken into account all periods attributable to such person's employment with the MAC Companies, prior to December 31, 1999, that would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment. Any other individual who becomes actively employed by the MAC Companies on or after January 1, 2000, may become a Participant of the Plan on the first applicable entry date on or after January 1, 2000, in accordance with the provisions of Section 3 of the Plan.

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N-2 SECTION 1.4 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of a MAC Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, there shall be taken into account all periods of such person's employment with the MAC Companies that would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment. SECTION 1.5 VESTING In determining the extent to which any MAC Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with the MAC Companies that would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment.

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O-1 APPENDIX O ADDITIONAL EARLY RETIREMENT BENEFIT - III SECTION 1.1 ELIGIBILITY FOR ADDITIONAL BENEFITS (1) Any Participant who is a non-exempt Employee in Manufacturing, Engineering, Distribution and Quality Assurance at the Melville Complex or the Oakland, New Jersey facility and is either (i) actively employed by the Employer, or (ii) on an Approved Absence (paid or unpaid) from the Employer, (each such person being hereinafter referred to as a "Covered Employee"), may elect to retire on May 1, 2000, as designated by the Employer and Covered Employee in the "General Release" (such designated date of retirement hereinafter referred to in this Appendix O as the "Retirement Date"). Such Covered Employee shall be eligible to receive the benefit described in Section 1.2 of this Appendix O, provided that (i) on or before April 30, 2000, such Covered Employee shall have attained at least age 55 and completed at least ten (10) Years of Service or Years of Credited Service under the Plan, (ii) the document entitled "Special Retirement Opportunity" is signed, witnessed and dated no earlier than March 10, 2000, in strict accordance with the instructions contained therein and (iii) such Covered Employee shall have made an election to retire on such other forms as the Employer may require during the period commencing at least 45 days after such Covered Employee receives the "General Release" from the Employer but ending no later than April 24, 2000. Individuals who would have been Covered Employees but for the fact that they previously retired on or after January 1, 2000, and before May 1, 2000, shall also be eligible for the benefits described in Section 1.2 of this Appendix O, provided the requirements in clauses (i) and (ii) of this paragraph are satisfied (such persons are hereinafter referred to as "Retired Covered Employees"). SECTION 1.2 ADDITIONAL BENEFITS (1) Each Covered Employee who elects to retire on the Retirement Date shall be entitled to his Accrued Benefit which will be calculated as if such Covered Employee was five (5) years older than his actual age as of April 30, 2000, and by increasing by five (5) years his Years of Service and Years of Credited Service as of April 30, 2000, (the difference between the Covered Employee's benefit determined under this Appendix O and his benefit determined without regard to the enhancement provided under this Appendix O shall hereinafter be referred to as the "Additional Benefit"). (2) The reduction contained in Section 5.5 of the Plan, which applies to the early commencement of a Covered Employee's Accrued Benefit determined under the terms of the Prior Plan, shall be applied after increasing the Covered Employee's age by five (5) years as provided under Section 1.2(1) above. (3) If the Covered Employee elects to retire pursuant to the provisions of this Appendix O, such Covered Employee may elect at any time prior to the date of commencement of his Additional Benefit to receive such benefit, calculated in accordance with the provisions of the Plan and this Appendix O, in any of the forms of payment applicable to the Covered Employee in

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O-2 accordance with the provisions of Section 9 of the Plan. Notwithstanding the foregoing, in the case of a Covered Employee whose Additional Benefit is computed by reference to Section 5.6 of the Plan, such Covered Employee may elect to receive such Additional Benefit in the form of a lump sum distribution or any other form of payment allowed under Section 9 of the Plan. (4) If a Covered Employee elects to retire and receive the Additional Benefit provided under this Appendix O to the Plan, such Covered Employee's retirement benefits shall be payable commencing on the first day of the first month coincident with or next following the date on which the Covered Employee retires. (5) All Retired Covered Employees shall have the amount of their retirement benefits computed under this Appendix O (taking into account the provisions of paragraphs (1) and (2) of this Section 1.2) as of May 1, 2000, and such amount shall be paid in accordance with the form of benefit previously elected under Section 9 of the Plan. No changes to the form of benefit previously elected shall be permitted except to the extent necessary to permit a Retired Covered Employee whose Additional Benefit is calculated by reference to Section 5.6 of the Plan to elect a lump sum distribution under paragraph (3) of this Section 1.2. In no event shall Additional Benefits be paid to Participants who retired prior to January 1, 2000. SECTION 1.3 DEFINED TERMS Except to the extent set forth above, the provisions of this Appendix O are subject to the terms and conditions of the Plan and capitalized terms not otherwise defined in this Appendix O shall have the same meaning as used in the Plan.

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P-1 APPENDIX P PROVISIONS GOVERNING CERTAIN EMPLOYEES OF STILA COSMETICS, INC. AND ITS AFFILIATES AND PREDECESSORS SECTION 1.1 SCOPE The provisions of this Appendix P to the Estee Lauder Inc. Retirement Growth Account Plan shall apply with respect to each person employed by Stila Cosmetics, Inc. or its predecessor on December 31, 2000 ("Stila Employee"). The provisions of this Appendix P shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall be to the Plan as in effect at the time such provision is applied to a Stila Employee, as the context shall require. For purposes of Section 1.6 hereof, the term "Stila Employee" shall also include any other individual who became actively employed by Stila Cosmetics, Inc. on or after January 1, 2001, became a Participant in the Plan in accordance with the provisions of Section 3 of this Plan, and continued to be a Participant as of April 10, 2006. SECTION 1.2 COMMENCEMENT OF STATUS AS PARTICIPATING EMPLOYER Stila Cosmetics, Inc., shall become a Participating Employer under the Plan on January 1, 2001. SECTION 1.3 COMMENCEMENT OF PLAN PARTICIPATION BY STILA EMPLOYEES No Stila Employee shall be permitted to become a Participant prior to January 1, 2001. Each Stila Employee who is regularly scheduled to work twenty hours or more per week as of December 31, 2000, may become a Participant in the Plan on January 1, 2001, notwithstanding any otherwise applicable provisions of Section 3 of the Plan. Each other Stila Employee may become a Participant in the Plan on the first applicable entry date on or after January 1, 2001, in accordance with the provisions of Section 3 of the Plan; however, for purposes of determining eligibility under the Plan, there shall be taken into account all periods attributable to such person's employment with the Stila, prior to December 31, 2000, that would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment. Any other individual who becomes actively employed by Stila Cosmetics, Inc. on or after January 1, 2001, may become a Participant of the Plan on the first applicable entry date on or after January 1, 2001, in accordance with the provisions of Section 3 of the Plan.

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P-2 SECTION 1.4 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of a Stila Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, there shall be taken into account all periods of such person's employment with Stila that would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment. SECTION 1.5 VESTING In determining the extent to which any Stila Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with Stila that would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment. SECTION 1.6 SALE OF STILA ASSETS AND OPERATIONS On April 10, 2006, the Employer sold certain assets and operations of Stila Cosmetics, Inc. to Stila Corp., an unrelated purchaser. In connection with such sale, each Stila Employee who was actively employed by Stila Cosmetics, Inc. as of April 10, 2006 shall be fully vested in his or her Accrued Benefit under the Plan.

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Q-1 APPENDIX Q PROVISIONS GOVERNING CERTAIN EMPLOYEES OF AVEDA CORPORATION AND ITS AFFILIATES AND PREDECESSORS SECTION 1.1 SCOPE The provisions of this Appendix Q to the Estee Lauder Inc. Retirement Growth Account Plan shall apply with respect to each person employed by Aveda Corporation, Aveda Services Inc., Aveda Environmental Lifestyle Stores Inc. and Aveda Institute Inc. or their respective predecessors (collectively, the "Aveda Companies") on December 31, 2001 ("Aveda Employee"). The provisions of this Appendix Q shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall be to the Plan as in effect at the time such provision is applied to an Aveda Employee, as the context shall require. SECTION 1.2 COMMENCEMENT OF STATUS AS PARTICIPATING EMPLOYER Aveda Corporation, Aveda Services Inc., Aveda Environmental Lifestyle Stores Inc. and Aveda Institute Inc., shall become Participating Employers under the Plan on January 1, 2002. SECTION 1.3 COMMENCEMENT OF PLAN PARTICIPATION BY AVEDA EMPLOYEES No Aveda Employee shall be permitted to become a Participant prior to January 1, 2002. Each Aveda Employee may become a Participant in the Plan on the first applicable entry date on or after January 1, 2002, in accordance with the provisions of Section 3 of the Plan; however, for purposes of determining eligibility under the Plan, there shall be taken into account all periods attributable to such person's employment with the Aveda Companies, prior to December 31, 2001, that would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment. Any other individual who becomes actively employed by the Aveda Companies on or after January 1, 2002, may become a Participant of the Plan on the first applicable entry date on or after January 1, 2002, in accordance with the provisions of Section 3 of the Plan. SECTION 1.4 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of an Aveda Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, there

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Q-2 shall be taken into account all periods of such person's employment with the Aveda Companies that would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment. SECTION 1.5 VESTING In determining the extent to which any Aveda Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with the Aveda Companies that would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment.

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R-1 APPENDIX R PROVISIONS GOVERNING CERTAIN EMPLOYEES OF SASSABY COSMETICS INC. AND ITS AFFILIATES AND PREDECESSORS SECTION 1.1 SCOPE The provisions of this Appendix R shall apply with respect to each person employed by Sassaby Cosmetics Inc. or its predecessors ("Sassaby") on June 30, 2002 ("Sassaby Employee"). The provisions of this Appendix R shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall be to the Plan as in effect at the time such provision is applied to a Sassaby Employee, as the context shall require. SECTION 1.2 COMMENCEMENT OF STATUS AS PARTICIPATING EMPLOYER Sassaby Cosmetics Inc., shall become a Participating Employer under the Plan on July 1, 2002. SECTION 1.3 COMMENCEMENT OF PLAN PARTICIPATION BY SASSABY EMPLOYEES No Sassaby Employee shall be permitted to become a Participant prior to July 1, 2002. Each Sassaby Employee may become a Participant in the Plan on the first applicable entry date on or after July 1, 2002, in accordance with the provisions of Section 3 of the Plan; however, for purposes of determining eligibility under the Plan, there shall be taken into account all periods attributable to such person's employment with Sassaby, prior to December 31, 2001, that would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment. Any other individual who becomes actively employed by Sassaby on or after July 1, 2002, may become a Participant of the Plan on the first applicable entry date on or after July 1, 2002, in accordance with the provisions of Section 3 of the Plan. SECTION 1.4 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of a Sassaby Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, there shall be taken into account all periods of such person's employment with Sassaby that would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment.

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R-2 SECTION 1.5 VESTING In determining the extent to which any Sassaby Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with Sassaby that would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment.

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S-1 APPENDIX S SPECIAL PROVISIONS GOVERNING TRANSFERRED EMPLOYEES OF RODAN & FIELDS LLC SECTION 1.1 SCOPE The provisions of this Appendix S shall apply with respect to each person (i) who was an employee of Rodan & Fields LLC on or after July 17, 2003, and (ii) whose employment is subsequently transferred from such company to an Employer (each a "Transferred Employee"). The provisions of the Appendix S shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall be to the Plan as in effect at the time such provision is applied to a Transferred Employee, as the context shall require. For purposes of Section 1.5 hereof, the term "Transferred Employee" shall also include any other individual who became actively and primarily employed in connection with the Rodan & Fields business on or after July 17, 2003, became a Participant in the Plan in accordance with the provisions of Section 3 of this Plan, and continued to be a Participant as of August 8, 2007. SECTION 1.2 COMMENCEMENT OF PLAN PARTICIPATION BY TRANSFERRED EMPLOYEES The first date on which any Transferred Employee may become a Participant shall be governed by the otherwise applicable provisions of Section 3 of the Plan. In applying the terms of such participation eligibility provision, there shall be taken into account all of such Transferred Employee's period of employment with Rodan & Fields LLC, the prior employer (including any corporate predecessor thereof), but only to the extent that any such period of employment would have been taken into account had such prior employer otherwise been an Employer throughout such person's entire period of employment. SECTION 1.3 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of a Transferred Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, there shall be taken into account all periods of such person's employment with his prior employer, Rodan & Fields LLC (including any corporate predecessor thereof) which would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire such period of employment.

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S-2 SECTION 1.4 VESTING In determining the extent to which any Transferred Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with his prior employer, Rodan & Fields LLC (including any corporate predecessor thereof) which would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment. SECTION 1.5 SALE OF RODAN & FIELDS The Retirement Accounts of Transferred Employees who were actively performing services primarily for Rodan & Fields as of August 8, 2007, and who remained employed by the purchaser of the Rodan & Fields business through December 31, 2007, shall be fully vested as of December 31, 2007.

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T-1 APPENDIX T PROVISIONS GOVERNING CERTAIN EMPLOYEES OF DARPHIN LLC AND ITS AFFILIATES AND PREDECESSORS SECTION 1.1 SCOPE The provisions of this Appendix T shall apply with respect to each person employed by Darphin LLC or its predecessors ("Darphin") on December 31, 2004 ("Darphin Employee"). The provisions of this Appendix T shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall be to the Plan as in effect at the time such provision is applied to a Darphin Employee, as the context shall require. SECTION 1.2 COMMENCEMENT OF STATUS AS PARTICIPATING EMPLOYER Darphin LLC shall become a Participating Employer under the Plan on January 1, 2005. SECTION 1.3 COMMENCEMENT OF PLAN PARTICIPATION BY DARPHIN EMPLOYEES No Darphin Employee shall be permitted to become a Participant prior to January 1, 2005. Each Darphin Employee may become a Participant in the Plan on the first applicable entry date on or after January 1, 2005, in accordance with the provisions of Section 3 of the Plan; however, for purposes of determining eligibility under the Plan, there shall be taken into account all periods attributable to such person's employment with Darphin, prior to January 1, 2005, that would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment. Any other individual who becomes actively employed by Darphin on or after January 1, 2005, may become a Participant of the Plan on the first applicable entry date on or after January 1, 2005, in accordance with the provisions of Section 3 of the Plan. SECTION 1.4 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of a Darphin Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, there shall be taken into account all periods of such person's employment with Darphin or any affiliate of Darphin (e.g., Laboratories Darphin SAS in France) that would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment.

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T-2 SECTION 1.5 VESTING In determining the extent to which any Darphin Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with Darphin that would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment.

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U-1 APPENDIX U PROVISIONS GOVERNING CERTAIN EMPLOYEES OF APPLIED GENETICS INC. DERMATICS AND ITS AFFILIATES AND PREDECESSORS SECTION 1.1 SCOPE The provisions of this Appendix U shall apply with respect to each person employed by Applied Genetics Inc. Dermatics or its predecessors ("AGI") on September 17, 2008 and whose employment is subsequently transferred from AGI to an Employer on or before April 1, 2009 (each an "AGI Employee"). The provisions of this Appendix U shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall be to the Plan as in effect at the time such provision is applied to an AGI Employee, as the context shall require. SECTION 1.2 COMMENCEMENT OF PLAN PARTICIPATION BY AGI EMPLOYEES No AGI Employee shall be permitted to become a Participant prior to the first date after September 17, 2008 that such AGI Employee became an Employee of an Employer. The first date on which any AGI Employee may become a Participant shall be governed by the otherwise applicable provisions of Section 3 of the Plan. In applying the terms of such participation eligibility provision, there shall be taken into account all of such AGI Employee's period of employment with AGI, the prior employer (including any corporate predecessor thereof), but only to the extent that any such period of employment would have been taken into account had such prior employer otherwise been an Employer throughout such person's entire period of employment. SECTION 1.3 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of an AGI Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, there shall not be taken into account any periods of such person's employment with AGI or any corporate predecessor thereof. SECTION 1.4 VESTING In determining the extent to which any AGI Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with AGI which would otherwise have been taken into

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U-2 account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment.

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V-1 APPENDIX V RETIREE MEDICAL ACCOUNT SECTION 1.1 ESTABLISHMENT OF SEPARATE ACCOUNT Effective as of June 28, 2010, the Trustee shall establish a separate account under the Trust Fund (the "Retiree Medical Account") which shall be used to account for the payment of Retiree Medical Benefits in accordance with this Appendix V, and to account for all Employer contributions made to the Trust Fund to fund such benefits. The Trustee may, for investment purposes, commingle the assets allocated to the Retiree Medical Account with the other assets of the Trust Fund, provided that the Trustee allocates in a reasonable manner the investment income of the Trust Fund among the Retiree Medical Account and the other accounts under the Trust Fund. The Retiree Medical Account is intended to satisfy the requirements of Section 401(h) of the Code. SECTION 1.2 DEFINITIONS For purposes of this Appendix V: "Medical Plan" means either The Estee Lauder Companies Medical Plan or The Estee Lauder Companies Retiree Medical Plan, whichever is applicable to the Participant. "Medical Retiree" means a Participant who (i) on and after his or her Retirement Date is eligible to receive both payment of a retirement benefit under this Plan and coverage under the Medical Plan for himself or herself, his or her spouse and/or dependents; and (ii) is not, and has not been for any Plan Year beginning on or after January 1, 2010, a "key employee" within the meaning of Section 416(i) of the Code. "Retiree Medical Account" means the separate account established under the Trust Fund pursuant to this Appendix V. "Retiree Medical Benefits" means the sickness, accident, hospitalization and medical benefits payable to or on behalf of a Medical Retiree, his or her spouse and/or dependents on and after his Retirement Date pursuant to the Medical Plan. "Retirement Date" means the date of the Participant's retirement in accordance with Section 4 of the Plan. All other capitalized terms not defined herein shall have the meanings assigned to such terms in Section 2 of the Plan.

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V-2 SECTION 1.3 PAYMENT OF RETIREE MEDICAL BENEFITS Beginning as of January 1, 2017 and continuing until all of the assets allocated to the Retiree Medical Account have been paid (the "Payment Period"), the Trustee, as directed periodically by the Committee or its delegate, shall pay all Retiree Medical Benefits for all Medical Retirees and their spouses and/or dependents from assets allocated to the Retiree Medical Account. Such benefits shall be paid in a nondiscriminatory manner with respect to all Medical Retirees. The amount of Retiree Medical Benefits payable pursuant to this Appendix V shall be determined by the Committee or its delegate from time to time in a uniform nondiscriminatory manner but shall not exceed the benefits payable to Medical Retirees, their spouses and/or dependents pursuant to the Medical Plan. The Committee or its delegate may direct that assets allocated to the Retiree Medical Account be used to reimburse the Employer for Retiree Medical Benefits paid by the Employer during the Payment Period, provided that the Employer's payment of such benefits and such reimbursement meet the requirements of U.S. Department of Labor Prohibited Transaction Exemption 80-26, as such exemption may be amended from time to time. The Committee may adopt such procedures as it deems necessary to effectuate compliance with such exemption. All claims for medical benefits by a Medical Retiree, his or her spouse and/or dependents shall be submitted and determined solely in accordance with the terms of the Medical Plan. Nothing in this Appendix V shall be construed to limit the authority of the plan administrator of the Medical Plan to determine the validity of claims under, and to otherwise administer, the Medical Plan. SECTION 1.4 EMPLOYER CONTRIBUTIONS The Employer shall designate, at the time it makes contributions to the Trust Fund, the amount of such contributions (if any) that are to be allocated to the Retiree Medical Account. The aggregate amount of Employer contributions allocated to the Retiree Medical Account after June 28, 2010 shall not exceed 25% of the aggregate Employer contributions made to the Trust Fund after such date (excluding Employer contributions made to fund past service credits). All Employer contributions allocated to the Retiree Medical Account shall be conditioned on their deductibility, and if such contributions are determined to be nondeductible they shall be returned to the Employer. SECTION 1.5 IMPOSSIBILITY OF DIVERSION No assets allocated to the Retiree Medical Account (including investment income allocated to such Account) shall be used for, or diverted to, any purpose other than the payment of Retiree Medical Benefits prior to the satisfaction of all liabilities payable pursuant to this Appendix V.

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V-3 SECTION 1.6 FORFEITURES If any rights of a Medical Retiree, his or her spouse and/or dependents to have Retiree Medical Benefits paid from the Trust Fund shall be forfeited, all amounts forfeited shall be applied as soon as possible to reduce the Employer contributions that otherwise would be allocated to the Retiree Medical Account. SECTION 1.7 AMENDMENT AND TERMINATION The Employer reserves the right to amend the Medical Plan as it relates to Retiree Medical Benefits and no provision hereof shall preclude the Employer from making such amendment. If the Medical Plan is amended to change or eliminate the benefits payable to Medical Retirees, their spouses and/or dependents, including amendments reducing or eliminating such benefits as a result of legislation that requires governmental provision of post- retirement health care benefits or that requires an alternative procedure that largely provides for the provision of such benefits, the liabilities for Retiree Medical Benefits payable under this Appendix V shall be appropriately adjusted. Upon satisfaction of all liabilities for Retiree Medical Benefits, all amounts remaining in the Trust Fund that are allocated to the Retiree Medical Account shall be returned to the Employer.

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W-1 APPENDIX W PROVISIONS GOVERNING CERTAIN EMPLOYEES OF BUMBLE AND BUMBLE, LLC, BUMBLE AND BUMBLE PRODUCTS, LLC AND THEIR PREDECESSORS SECTION 1.1 SCOPE The provisions of this Appendix W to The Estee Lauder Companies Retirement Growth Account Plan shall apply with respect to each person employed by Bumble and Bumble, LLC or Bumble and Bumble Products, LLC (collectively, the "Bumble Companies") on December 31, 2011 ("Bumble Employee"). The provisions of this Appendix W shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall be to the Plan as in effect at the time such provision is applied to a Bumble Employee, as the context shall require. SECTION 1.2 COMMENCEMENT OF STATUS AS PARTICIPATING EMPLOYER Bumble and Bumble, LLC and Bumble and Bumble Products, LLC shall become Participating Employers under the Plan on January 1, 2012. SECTION 1.3 COMMENCEMENT OF PLAN PARTICIPATION BY BUMBLE EMPLOYEES No Bumble Employee shall be permitted to become a Participant prior to January 1, 2012. Each Bumble Employee may become a Participant in the Plan on the first applicable entry date on or after January 1, 2012, in accordance with the provisions of Section 3 of the Plan; however, for purposes of determining eligibility under the Plan, there shall be taken into account all periods attributable to such person's employment with the Bumble Companies prior to December 31, 2011, that would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment. Any other individual who becomes actively employed by the Bumble Companies on or after January 1, 2012, may become a Participant of the Plan on the first applicable entry date on or after January 1, 2012, in accordance with the provisions of Section 3 of the Plan. SECTION 1.4 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of a Bumble Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, there shall be taken into account all periods of such person's employment with the Bumble Companies

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W-2 that would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment. SECTION 1.5 VESTING In determining the extent to which any Bumble Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with the Bumble Companies that would otherwise have been taken into account for such purpose had such prior employer otherwise been an Employer throughout such person's entire period of employment.

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X-1 APPENDIX X PROVISIONS GOVERNING CERTAIN EMPLOYEES OF DJF ENTERPRISES, INC. AND ITS PREDECESSORS SECTION 1.1 SCOPE The provisions of this Appendix X to The Estee Lauder Companies Retirement Growth Account Plan shall apply with respect to each person actively employed by DJF Enterprises, Inc., doing business as Smashbox Cosmetics, on December 31, 2012 ("Smashbox Employee"). The provisions of this Appendix X shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall be to the Plan as in effect at the time such provision is applied to a Smashbox Employee, as the context shall require. SECTION 1.2 COMMENCEMENT OF STATUS AS PARTICIPATING EMPLOYER DJF Enterprises, Inc., doing business as Smashbox Cosmetics ("Smashbox"), shall become a Participating Employer under the Plan on January 1, 2013. SECTION 1.3 COMMENCEMENT OF PLAN PARTICIPATION BY SMASHBOX EMPLOYEES No Smashbox Employee shall be permitted to become a Participant prior to January 1, 2013. Each Smashbox Employee may become a Participant in the Plan on the first applicable entry date on or after January 1, 2013, in accordance with the provisions of Section 3 of the Plan; however, for purposes of determining eligibility under the Plan, there shall be taken into account all periods attributable to such person's employment with Smashbox prior to December 31, 2012, that would otherwise have been taken into account for such purpose had Smashbox otherwise been an Employer throughout such person's entire period of employment. Any other individual who becomes actively employed by Smashbox on or after January 1, 2013, may become a Participant of the Plan on the first applicable entry date on or after January 1, 2013, in accordance with the provisions of Section 3 of the Plan. SECTION 1.4 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of a Smashbox Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, there shall be taken into account all periods of such person's employment with Smashbox that would otherwise have been taken into account for such purpose had Smashbox otherwise been an Employer throughout such person's entire period of employment.

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X-2 SECTION 1.5 VESTING In determining the extent to which any Smashbox Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with Smashbox that would otherwise have been taken into account for such purpose had Smashbox otherwise been an Employer throughout such person's entire period of employment.

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Y-1 APPENDIX Y SPECIAL SUPPLEMENT RELATING TO CERTAIN PARTICIPANTS EMPLOYED IN PUERTO RICO The provisions of this Special Supplement to The Estee Lauder Companies Retirement Growth Account Plan (the "Plan"), relating only to certain participants, as set forth herein, are generally effective as of January 1, 2011, except as may otherwise be provided herein. SECTION 1.1 NAME AND CONSTRUCTION (1) Purpose. The purpose of this Puerto Rico Supplement is to comply with the qualification requirements of Section 1081.01(a) of the Puerto Rico Internal Revenue Code of 2011, as amended ("PR Code"). In the event of an amendment to the PR Code or enactment of a successor statute which replaces or renumbers a section of the PR Code referenced in this supplement, all such references shall automatically be renumbered or replaced, as applicable. The provisions of this supplement shall only apply to Puerto Rico Participants as defined below. (2) General Provisions. Except as provided herein, the provisions of the Plan shall apply to this Puerto Rico Supplement. Wherever a term used in the Plan is specially defined in this Puerto Rico Supplement, such definition shall apply for purposes of applying the provisions of the Plan in the context of this Puerto Rico Supplement. In addition, where the terms and provisions of the Plan and this Puerto Rico Supplement conflict, the terms and provisions of this Puerto Rico Supplement shall govern. SECTION 1.2 DEFINITIONS (1) Compensation means, for a particular Plan Year, the straight time basic salary or wages paid to an Employee by the Employer on and after the Entry Date on which the Employee first becomes eligible to participate in the Plan pursuant to Section 3, inclusive of salary reduction contributions made by an Employer on behalf of the Employee under a "cash or deferred arrangement" described in Section 401(k) of the Code or Section 1081.01 of the PR Code and pre-tax contributions made by the Employee under a "cafeteria plan" described in Section 125 of the Code or Section 1031.6 of the PR Code or (effective January 1, 2001) under an arrangement described in Section 132(f)(4) of the Code, in each case maintained by the Employer, and including bonuses, shift differential, back-up pay, overtime pay, paid time off, training and travel time pay, but excluding (i) commissions, (ii) payments in lieu of unused vacation time, sick time, holidays, seniority days or other unused paid time off, (iii) referral fees, (iv) gratuities, (v) relocation payments, (vi) special allowance payments, (vii) sign-on payments, (viii) on-call compensation, (ix) any other amounts which are not currently included in the Employee's income for Federal income tax purposes, and (x) amounts paid under Estee Lauder's Short-Term Disability Plan or Long-Term Disability Plan. In

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Y-2 addition to other applicable limitations that may be set forth in the Plan and notwithstanding any other contrary provision of the Plan, Compensation taken into account under the Plan for the purpose of calculating a Plan Participant's Accrued Benefit shall not exceed the dollar limitation under Section 401(a)(17) of the Code, subject to any adjustment to reflect increases in the cost of living determined by the Secretary of the Treasury pursuant to Section 401(a)(17) of the Code. Notwithstanding the foregoing, for Participants who terminate employment on or after December 1, 2002, the annual amounts credited to their Retirement Account pursuant to Section 5 for Plan Years prior to 2002 shall be retroactively adjusted as though the $200,000 dollar limitation in effect under Section 401(a)(17) of the Code for 2002 had been in effect for such prior Plan Years (subject to the Plan's compliance with Sections 401(a)(4) and 415 of the Code and the Treasury Regulations thereunder). Effective as of January 1, 2009, Compensation shall also include any "differential pay." For this purpose, "differential pay" shall mean any payment which (i) is made by an Employer to an individual with respect to any period during which he or she is performing service in the uniformed services (as defined in Chapter 43, Title 38, United States Code) while on active duty for a period of more than 30 days, and (ii) represents all or a portion of the amount the individual would have received from the Employer if he or she were performing services for such Employer. Notwithstanding the exclusion of commissions from "Compensation", commissions paid on or after April 1, 2010 to Employees of Aveda Corporation, Aveda Experience Centers Inc., Aveda Institute Inc. or Aveda Services Inc. shall be counted as "Compensation" for all purposes under the Plan. (2) Group means Estee Lauder and any other unit or organization that is related to Estee Lauder as member of a "controlled group of corporations", within the meaning of Sections 1010.04 of the PR Code, is a member of a group of related entities which includes Estee Lauder and any participating Employer within the meaning of Section 1010.05 of the PR Code or is a member of an "affiliated service group" which includes Estee Lauder and any participating Employer within the meaning of Section 1081.01(a)(14) of the PR Code. For purposes of determining whether or not a person is an Employee and the period of employment of such person, each such unit or organization shall be included in the Group only for such period or periods during which it is a "member" of the Group. (3) Highly Compensated Participant means any PR Employee who at any time during the Plan Year is eligible to be a PR Participant in this Plan, or a participant in any other plan maintained by any member of the Group if all or a portion of the contributions to or benefits under such plan are aggregated with this Plan for purposes of Section 1081.01 of the PR Code, and if either: (a) was an officer of the sponsoring Employer; (b) owns more than five-percent (5%) of shares with voting rights or owns more than five percent (5%) of the total value of all classes of the corporation that is the sponsoring employer;

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Y-3 (c) owns more than five-percent (5%) of the capital or interest in the profits of the Employer, in the case on an entity other than a corporation; and, (d) during the preceding year, received Compensation from the Employer in excess of the applicable limit for the particular taxable year under Section 414(q)(1)(B) of the Code, as adjusted by the Internal Revenue Service. (e) To determine if an employee owns more than five-percent (5%) of shares, capital stock or profits, there shall be taken into consideration the rules for the controlled group of the employer, the group of related entities and affiliated service group as defined under the PR Code. who is a PR Participant that is not a Highly Compensated Participant. (4) Non-highly Compensated Participant means any PR Employee who at any time during the Plan Year is eligible to be a PR Participant in this Plan, or a participant in any other plan maintained by any member of the Group if all or a portion of the contributions to or benefits under such plan are aggregated with this Plan for purposes of Section 1081.01 of the PR Code, and who is a PR Participant that is not a Highly Compensated Participant. (5) Puerto Rico Internal Revenue Code or PR Code means the Puerto Rico Internal Revenue Code of 2011, as amended. (6) Puerto Rico Employee. The words "Puerto Rico Employee" or "PR Employee" shall mean an Employee: (a) whose compensation is subject to Puerto Rico income taxes, and, (b) for the time in which the services are or were provided, is or was a bona fide resident of Puerto Rico. (7) Puerto Rico Participant. The words "Puerto Rico Participant" or "PR Participant" shall mean any PR Employee of a Participating Employer who has met the eligibility and participation requirements provided in the Plan at a time when he/she is a Puerto Rico Employee, or any other individual who is a former PR Employee in the Plan whose services are or were primarily provided in Puerto Rico and has an accrued benefit under the Plan. SECTION 1.3 CONTRIBUTIONS (1) Except as provided in paragraphs (a) and (b) below, and except as provided in Section 16 of the Plan, Employer contributions made under the Plan will be held for the exclusive benefit of Participants, and their joint annuitants or Beneficiaries and may not revert to the Employer.

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Y-4 (a) A contribution made by the Employer under a mistake of fact may be returned to the Employer within one (1) year after it is contributed to the Plan. (b) A contribution conditioned upon its deductibility under Section 404 of the Code may be returned, to the extent the deduction is disallowed, to the Employer within one (1) year after the disallowance. All contributions to the Plan are hereby conditioned upon their deductibility. (c) For purposes of the Puerto Rico Participants, all contributions made by an Employer are conditional upon qualification of the plan under PR Code Section 1081.01(a) and upon deductibility under PR Code Section 1033.09. Notwithstanding anything in the Plan to the contrary, it shall be prohibited at any time for any part of the Trust Fund (other than such part as is required to pay taxes and administration expenses) to be used for, or diverted to purposes other than for the exclusive benefit of the Participants or their Beneficiaries, except that upon the direction of the Employer, any contribution made by an Employer by a mistake of fact shall be returned to an Employer within one year after the payment of the contribution; (b) any contribution shall be returned to the Employer within one year after the denial of initial qualification of the Plan under PR Code Section 1081.01(a); and (c) any contribution may be returned to the extent disallowed as a deduction under PR Code Section 1033.09 within one year after the disallowance of the deduction. The maximum contribution that may be returned to the Employer will not exceed the amount actually contributed to the Plan, or the value of such contribution on the date it is returned to the Employer, if less. SECTION 1.4 OPTIONAL FORMS OF BENEFIT (1) Direct Rollovers for PR Participants. In the event the PR Participant demonstrates to the Employer's satisfaction that the plan contribution qualifies as a rollover contribution, a Puerto Rico Participant may elect, at the time and in the manner prescribed by the Employer, to have any portion of an eligible rollover distribution paid directly to a PR Eligible Retirement Plan specified by the distributee in a direct rollover subject to the terms and conditions set forth below. In no event, however, shall the provisions of this section be construed to provide any form of benefit, or entitle any person to a benefit, not otherwise provided under the terms of this Plan, except to the extent expressly required by this Section. For purposes of this Section 9.7: (a) Eligible Rollover Distribution. An Eligible Rollover Distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include:

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Y-5 (I) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated Beneficiary, or for a specified period of ten (10) years or more; and, (II) any distribution to the extent such distribution is required pursuant to Section 401(a)(9) of the Code. A portion of a distribution shall not fail to be an "eligible rollover distribution" merely because the portion consists of amounts which are not includible in gross income. However, such portion may be transferred only to a qualified trust described in Section 401(a) of the Code and 1081.01(a) of the PR Code that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is not so includible. (b) PR Eligible Retirement Plan. A PR Eligible Retirement Plan is a qualified trust described in Section 401(a) of the Code and Section 1081.01(a) of the PR Code. (c) Distributee. A distributee includes: (1) A PR Participant; (2) a PR Participant's surviving spouse and a PR Participant's or former PR Participant's spouse or former spouse who is the Alternate Payee under a Qualified Domestic Relations Order, without regard to the interest of the spouse or former spouse; and, (3) any beneficiary who is a named beneficiary in accordance with Section 7.3 of the Plan. (d) Direct Rollover. A direct rollover is a payment by the Plan to the PR Eligible Retirement Plan specified by the distributee. (e) Partial Direct Rollover. A distributee may elect to have a portion of such an eligible rollover distribution paid to a PR Eligible Retirement Plan in a direct rollover. If a distributee elects such a partial direct rollover, the remaining portion of the eligible rollover distribution must be paid to the distributee. (f) Multiple Direct Rollovers Not Permitted. A distributee is not permitted to divide an eligible rollover distribution into separate distributions to be paid to two or more eligible retirement plans in direct rollovers. A distributee must elect that the eligible rollover distribution or portion thereof be distributed in a direct rollover payable to a single eligible retirement plan selected by the distributee.

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Y-6 (g) Elections For Periodic Payments. If distribution is made to a distributee in a series of periodic payments, his election to make or not to make a direct rollovemsmr with respect to one payment in a series of payments shall apply to all subsequent payments in the series unless the distributee makes a subsequent election to change his prior election. SECTION 1.5 PAYMENT OF RETIREMENT INCOME (1) Withholding on Distribution of Benefits (a) A PR Participant shall be subject to withholding at source in an amount equal to ten percent (10%) on any distribution or payment other than nontaxable total distributions or loans to participants payable with respect to any PR Participant or beneficiary (such as partial distributions made after participant's separation from service and withdrawals made before the separation from service). The withholding at source shall only apply on any amount that exceeds the amounts the PR Participant has already been taxed. Notwithstanding the foregoing, in the case of distributions to a PR Participant or beneficiary in the form of an annuity or periodic payments by reason of separation from employment or to a beneficiary, there shall be deducted and withheld ten percent (10%) of the amount of distributions paid during the taxable year in excess of the amounts contributed by the participant to the plan that have been taxed to him, increased by: Amounts not subject to withholding Taxable Year Pensioners under 60 years of age Pensioners 60 years of age or older 2011 $19,500 $23,500 2012 $21,000 $25,000 2013 $23,500 $27,500 2014 $26,500 $30,500 2015 and after $31,000 $35,000 For purposes of this Section the term "periodic payments" shall have the same meaning as defined in Section 1031.02(a)(13)(D) of the PR Code. SECTION 1.6 MISCELLANEOUS PROVISIONS (1) Payments to Incompetent or Minors. If any person entitled to receive any benefits from the Trust Fund is a minor or, in the judgment of the Committee, legally, physically or mentally incapable of personally receiving any distributions, the Committee may only make a payment due to such person under the Plan to any person or entity that is appointed tutor or legal guardian by court of competent jurisdiction for the

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Y-7 benefit of the incapacitated PR Participant or beneficiary. Once a proper claim has been made to the Committee, any payments to which the minor or incapacitated PR Participant or Beneficiary is entitled will be made to the legal guardian or other person legally charged with the care of the person or of his estate. (2) Construction The Plan and all rights thereunder shall be construed, administered and enforced according to the laws of the Commonwealth of Puerto Rico to the extent such laws are not inconsistent with and/or preempted by ERISA. (3) Administrator and Trustee. The Plan Administrator and Trustee will furnish each other such information relating to the Plan and Trust as may be required under the PR Code and its regulations, or as required by any form adopted by the Puerto Rico Treasury Department, or under ERISA and its regulations, or as required by any form adopted by the US and PR Labor Departments. SECTION 1.7 LIMITATION ACCORDING TO UNITED STATES AND PUERTO RICO TREASURY DEPARTMENT REQUIREMENTS The purpose of this Section is to conform the Plan to the requirements of Section 1.401(a)(4)-5(b) of the Income Tax Regulations and to the PR Code. (1). If a benefit becomes or is payable for a Plan Year to a Participant who is among the 25 highest paid "highly compensated employees" or "highly compensated former employees" (each as defined in Section 414(q) of the Code and regu1ations and rulings issued thereunder) for a Plan Year, such benefit cannot exceed an amount equal to the payments that would be made during the Plan Year on behalf of the Participant under a single life annuity that is the Actuarial Equivalent of the sum of the Participant's Accrued Benefit and any other benefits under the Plan; provided, however, that this Section shall not apply if (i) benefits that would be payable to such a Participant are less than 1% of the total value of current liabilities under the Plan, or (ii) the assets of the Trust Fund exceed, immediately after payment of a benefit to such a Participant, 11O% of the value of current liabilities under the Plan, (For purposes of this Section, the value of current liabilities shall be as defined in Section 412(1)(7) of the Code.) For purposes of applicable PR Code requirements only, a PR Participant shall be considered a "Highly Compensated Employee" if either: (a) was an officer of the participating Employer; (b) owns more than five-percent (5%) of shares with voting rights or owns more than five percent (5%) of the total value of all classes of the entity that is the participating Employer; (c) owns more than five-percent (5%) of the capital or interest in the profits of the Employer, in the case on an entity other than a corporation; and,

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Y-8 (d) during the preceding year, received Compensation from the Employer in excess of the applicable limit for the particular taxable year under Section 414(q)(1)(B) of the Code, as adjusted by the Internal Revenue Service. (e) To determine if an employee owns more than five-percent (5%) of shares, capital stock or profits, there shall be taken into consideration the rules for the controlled group of the employer, the group of related entities and affiliated service group as defined under the PR Code.

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Z-1 APPENDIX Z PROVISIONS GOVERNING CERTAIN EMPLOYEES OF GLAMGLOW LLC SECTION 1.1 SCOPE The provisions of this Appendix Z to The Estee Lauder Companies Retirement Growth Account Plan shall apply with respect to each person employed by GlamGlow LLC ("GlamGlow") on December 31, 2015 ("GlamGlow Employee"). The provisions of this Appendix Z shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall be to the Plan as in effect at the time such provision is applied to a GlamGlow Employee, as the context shall require. SECTION 1.2 COMMENCEMENT OF STATUS AS PARTICIPATING EMPLOYER GlamGlow shall become a participating Employer under the Plan on January 1, 2016. SECTION 1.3 COMMENCEMENT OF PLAN PARTICIPATION BY GLAMGLOW EMPLOYEES No GlamGlow Employee shall be permitted to become a Participant prior to January I, 2016. Each GlamGlow Employee may become a Participant in the Plan on the first applicable Entry Date on or after January 1, 2016, in accordance with the provisions of Section 3 of the Plan; however, for purposes of determining eligibility under the Plan, there shall be taken into account all periods attributable to such person's employment with GlamGlow that would otherwise have been taken into account for such purpose had GlamGlow been an Employer throughout such person's entire period of employment. Any other individual who becomes actively employed by GlamGlow on or after January 1, 2016 may become a Participant in the Plan on or after January 1, 2016 in accordance with the provisions of Section 3 of the Plan.

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Z-2 SECTION 1.4 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of a GlamGlow Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, there shall be taken into account all periods of such person's employment by GlamGlow that would otherwise have been taken into account for such purpose had GlamGlow been an Employer throughout such person's entire period of employment. SECTION 1.5 VESTING In determining the extent to which any GlamGlow Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with GlamGlow that would otherwise have been taken into account for such purpose had GlamGlow been an Employer throughout such person's entire period of employment.

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AA-1 APPENDIX AA PROVISIONS GOVERNING CERTAIN EMPLOYEES OF BY KILIAN INC AND EDITIONS DE PARFUMS LCC SECTION 1.1 SCOPE The provisions of this Appendix AA to The Estee Lauder Companies Retirement Growth Account Plan shall apply with respect to each person actively employed by By Kilian Inc ("Kilian") and Editions de Parfums LLC ("Parfums") on June 30, 2017 ("Appendix AA Employee"). The provisions of this Appendix AA shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall be to the Plan as in effect at the time such provision is applied to an Appendix AA Employee, as the context shall require. SECTION 1.2 COMMENCEMENT OF STATUS AS PARTICIPATING EMPLOYER Kilian and Parfums shall each become a Participating Employer under the Plan on July 1, 2017. SECTION 1.3 COMMENCEMENT OF PLAN PARTICIPATION BY APPENDIX AA EMPLOYEES No Appendix AA Employee shall be permitted to become a Participant prior to July 1, 2017. Each Appendix AA Employee may become a Participant in the Plan on the first applicable Entry Date on or after July 1, 2017, in accordance with the provisions of Section 3 of the Plan; however, for purposes of determining eligibility under the Plan, there shall be taken into account all periods attributable to such person's employment with either Kilian or Parfums that would otherwise have been taken into account for such purpose had the applicable company been an Employer throughout such person's entire period of employment. Any other individual who becomes actively employed by either Kilian or Parfums on or after July 1, 2017 may become a Participant in the Plan on or after July 1, 2017 in accordance with the provisions of Section 3 of the Plan. SECTION 1.4 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of an Appendix AA Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, there shall be taken into account all periods of such person's employment by either Kilian or Parfums that would otherwise have been taken into account for such purpose had such company been an Employer throughout such person's entire period of employment.

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AA-2 SECTION 1.5 VESTING In determining the extent to which any Appendix AA Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with either Kilian or Parfums that would otherwise have been taken into account for such purpose had such company been an Employer throughout such person's entire period of employment.

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BB-1 APPENDIX BB PROVISIONS GOVERNING CERTAIN EMPLOYEES OF LE LABO HOLDING LLC SECTION 1.1 SCOPE The provisions of this Appendix BB to The Estee Lauder Companies Retirement Growth Account Plan shall apply with respect to each person actively employed by Le Labo Holding LLC on December 31, 2017 ("Le Labo Employee"). The provisions of this Appendix BB shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall be to the Plan as in effect at the time such provision is applied to a Le Labo Employee, as the context shall require. SECTION 1.2 COMMENCEMENT OF STATUS AS PARTICIPATING EMPLOYER Le Labo Holding LLC ("Le Labo"), shall become an Employer under the Plan on January 1, 2018. SECTION 1.3 COMMENCEMENT OF PLAN PARTICIPATION BY LE LABO EMPLOYEES No Le Labo Employee shall be permitted to become a Participant prior to January 1, 2018. Each Le Labo Employee may become a Participant in the Plan on the first applicable entry date on or after January 1, 2018, in accordance with the provisions of Section 3 of the Plan; however, for purposes of determining eligibility under the Plan, there shall be taken into account all periods attributable to such person's employment with Le Labo that would otherwise have been taken into account for such purpose had Le Labo been an Employer throughout such person's entire period of employment. Any other individual who becomes actively employed by Le Labo on or after January 1, 2018, may become a Participant in the Plan in accordance with the provisions of Section 3 of the Plan. SECTION 1.4 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of a Le Labo Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, there shall be taken into account all periods of such person's employment with Le Labo that would otherwise have been taken into account for such purpose had Le Labo been an Employer throughout such person's entire period of employment.

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![](exhibit101-esteelauderxr127.jpg)

BB-2 SECTION 1.5 VESTING In determining the extent to which any Le Labo Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with Le Labo that would otherwise have been taken into account for such purpose had Le Labo been an Employer throughout such person's entire period of employment.

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![](exhibit101-esteelauderxr128.jpg)

CC-1 APPENDIX CC PROVISIONS GOVERNING CERTAIN EMPLOYEES OF ALZHEIMER'S DRUG DISCOVERY FOUNDATION SECTION 1.1 SCOPE The provisions of this Appendix CC to The Estee Lauder Companies Retirement Growth Account Plan shall apply with respect to each person actively employed by Alzheimer's Drug Discovery Foundation ("ADDF") on January 1, 2020 (an "ADDF Employee"). The provisions of this Appendix CC shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall be to the Plan as in effect at the time such provision is applied to an ADDF Employee, as the context shall require. SECTION 1.2 COMMENCEMENT OF STATUS AS EMPLOYER ADDF shall become an Employer under the Plan on January 1, 2020. SECTION 1.3 COMMENCEMENT OF PLAN PARTICIPATION BY ADDF EMPLOYEES No ADDF Employee shall be permitted to become a Participant prior to January 1, 2020. Each ADDF Employee may become a Participant in the Plan on the first applicable entry date on or after January 1, 2020, in accordance with the provisions of Section 3 of the Plan; however, for purposes of determining eligibility under the Plan, there shall be taken into account all periods attributable to such person's employment with ADDF that would otherwise have been taken into account for such purpose had ADDF been an Employer throughout such person's entire period of employment. Any other individual who becomes actively employed by ADDF on or after January 1, 2020, may become a Participant in the Plan in accordance with the provisions of Section 3 of the Plan. SECTION 1.4 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of an ADDF Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, there shall be taken into account all periods of such person's employment with ADDF that would otherwise have been taken into account for such purpose had ADDF been an Employer throughout such person's entire period of employment.

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![](exhibit101-esteelauderxr129.jpg)

CC-2 SECTION 1.5 VESTING In determining the extent to which any ADDF Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with ADDF that would otherwise have been taken into account for such purpose had ADDF been an Employer throughout such person's entire period of employment. SECTION 1.6 CESSATION OF STATUS AS EMPLOYER ADDF shall withdraw from and shall cease to be an Employer under the Plan effective as of May 31, 2022, and all Plan benefit accruals for ADDF Employees shall cease as of such date. Without limiting the foregoing, (a) Each ADDF Employee who has become a Participant in the Plan shall cease to be eligible for Retirement Account credits under Section 5.2 of the Plan after May 31, 2022 (eligibility for such credits for Plan Years beginning prior to such date shall be determined in accordance with the otherwise applicable provisions of the Plan), but shall remain eligible for Retirement Account credits under Section 5.4 of the Plan based on the Periodic Adjustment Percentage until the last date as of which a Retirement Account balance is maintained for such Participant. (b) For all purposes under the Plan, each ADDF Employee shall be treated as having terminated employment with the Employer as of May 31, 2022 or, if earlier, the date the ADDF Employee terminated employment with ADDF. (c) This Plan shall remain responsible for the payment of all Plan benefits accrued on behalf of ADDF Employees, which benefits shall be payable in accordance with the applicable provisions of the Plan. For Plan valuation purposes, such benefits shall be assigned to the same Group as includes Estee Lauder.

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![](exhibit101-esteelauderxr130.jpg)

DD-1 APPENDIX DD PROVISIONS GOVERNING CERTAIN EMPLOYEES OF TOO FACED COSMETICS HOLDINGS, LLC SECTION 1.1 SCOPE The provisions of this Appendix DD to The Estee Lauder Companies Retirement Growth Account Plan shall apply with respect to each person actively employed by Too Faced Cosmetics Holdings, LLC ("Too Faced") on January 1, 2021 (a "Too Faced Employee"). The provisions of this Appendix DD shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall be to the Plan as in effect at the time such provision is applied to a Too Faced Employee, as the context shall require. SECTION 1.2 COMMENCEMENT OF STATUS AS EMPLOYER Too Faced shall become an Employer under the Plan on January 1, 2021. SECTION 1.3 COMMENCEMENT OF PLAN PARTICIPATION BY TOO FACED EMPLOYEES No Too Faced Employee shall be permitted to become a Participant prior to January 1, 2021. Each Too Faced Employee may become a Participant in the Plan on the first applicable entry date on or after January 1, 2021, in accordance with the provisions of Section 3 of the Plan; however, for purposes of determining eligibility under the Plan, there shall be taken into account all periods attributable to such person's employment with Too Faced that would otherwise have been taken into account for such purpose had Too Faced been an Employer throughout such person's entire period of employment. Any other individual who becomes actively employed by Too Faced after January 1, 2021, may become a Participant in the Plan in accordance with the provisions of Section 3 of the Plan. SECTION 1.4 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of a Too Faced Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, there shall be taken into account all periods of such person's employment with Too Faced that would otherwise have been taken into account for such purpose had Too Faced been an Employer throughout such person's entire period of employment.

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![](exhibit101-esteelauderxr131.jpg)

DD-2 SECTION 1.5 VESTING In determining the extent to which any Too Faced Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with Too Faced that would otherwise have been taken into account for such purpose had Too Faced been an Employer throughout such person's entire period of employment.

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![](exhibit101-esteelauderxr132.jpg)

EE-1 APPENDIX EE PROVISIONS GOVERNING CERTAIN EMPLOYEES OF HAVE & BE USA, INC. SECTION 1.1 SCOPE The provisions of this Appendix EE to The Estee Lauder Companies Retirement Growth Account Plan shall apply with respect to each person actively employed by Have & Be USA, Inc. on January 1, 2023 (a "Have & Be Employee"). The provisions of this Appendix EE shall apply notwithstanding any contrary provisions of the Plan, of which this Appendix is a part. Except to the extent expressly provided to the contrary herein, all defined terms shall have the same meanings as provided under the Plan. Each reference to the Plan shall be to the Plan as in effect at the time such provision is applied to a Have & Be Employee, as the context shall require. COMMENCEMENT OF STATUS AS EMPLOYER Have & Be USA, Inc. ("Have & Be") shall become an Employer under the Plan on January 1, 2023. SECTION 1.3 COMMENCEMENT OF PLAN PARTICIPATION BY HAVE & BE EMPLOYEES No Have & Be Employee shall be permitted to become a Participant prior to January 1, 2023. Each Have & Be Employee may become a Participant in the Plan on the first applicable entry date on or after January 1, 2023, in accordance with the provisions of Section 3 of the Plan; however, for purposes of determining eligibility under the Plan, there shall be taken into account all periods attributable to such person's employment with Have & Be that would otherwise have been taken into account for such purpose had Have & Be been an Employer throughout such person's entire period of employment. Any other individual who becomes actively employed by Have & Be after January 1, 2023, may become a Participant in the Plan in accordance with the provisions of Section 3 of the Plan. SECTION 1.4 CREDITS TO RETIREMENT ACCOUNTS In determining the amount to be credited to the Retirement Account of a Have & Be Employee who becomes a Participant pursuant to the provisions of Section 5 of the Plan, there shall be taken into account all periods of such person's employment with Have & Be that would otherwise have been taken into account for such purpose had Have & Be been an Employer throughout such person's entire period of employment.

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![](exhibit101-esteelauderxr133.jpg)

EE-2 SECTION 1.5 VESTING In determining the extent to which any Have & Be Employee is vested in his Retirement Account pursuant to the provisions of Section 8 of the Plan, there shall be taken into account all periods of such person's employment with Have & Be that would otherwise have been taken into account for such purpose had Have & Be been an Employer throughout such person's entire period of employment.

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## Exhibit 31.1

**Exhibit 31.1**

**Certification**

I, Fabrizio Freda certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of The Estée Lauder Companies Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: February 2, 2023 | |
| | /s/ Fabrizio Freda |
| | Fabrizio Freda<br>President and Chief Executive Officer |

---

## Exhibit 31.2

**Exhibit 31.2**

**Certification**

I, Tracey T. Travis certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of The Estée Lauder Companies Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: February 2, 2023 | |
| | /s/ Tracey T. Travis |
| | Tracey T. Travis<br>Executive Vice President and Chief Financial Officer |

---

## Exhibit 32.1

**Exhibit 32.1**

**Certification**

**Pursuant to 18 U.S.C. Section 1350**

**(as adopted pursuant to Section 906 of the**

**Sarbanes-Oxley Act of 2002)**

Pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002), the undersigned officer of The Estée Lauder Companies Inc., a Delaware corporation (the "Company"), does hereby certify, to such officer's knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended December 31, 2022 (the "10-Q") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m or 78o(d)), and the information contained in the 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| Date: February 2, 2023 | |
| | /s/ Fabrizio Freda |
| | Fabrizio Freda<br>President and Chief Executive Officer |

---

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002) and for no other purpose.

## Exhibit 32.2

**Exhibit 32.2**

**Certification**

**Pursuant to 18 U.S.C. Section 1350**

**(as adopted pursuant to Section 906 of the**

**Sarbanes-Oxley Act of 2002)**

Pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002), the undersigned officer of The Estée Lauder Companies Inc., a Delaware corporation (the "Company"), does hereby certify, to such officer's knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended December 31, 2022 (the "10-Q") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m or 78o(d)), and the information contained in the 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| Date: February 2, 2023 | |
| | /s/ Tracey T. Travis |
| | Tracey T. Travis<br>Executive Vice President and Chief Financial Officer |

---

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002) and for no other purpose.

<br>