Estimated recognition of deferred revenue

[Table of Contents](#i2ba0bd92bcb14d27a1d59d9667569d45_7)THE ESTÉE LAUDER COMPANIES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 14 – REVENUE RECOGNITION  
For further information on the Company's policies relating to revenue recognition and accounts receivable see Note 2 – Summary of Significant Accounting Policies.  
Accounts ReceivableAccounts receivable, net is stated net of the allowance for doubtful accounts and customer deductions totaling $27 million and $40 million as of June 30, 2022 and June 30, 2021, respectively. Payment terms are short-term in nature and are generally less than one year.  
Changes in the allowance for credit losses are as follows:  


|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | June 30 |
| (In millions) |  | 2022 |  | 2021 |
| Allowance for credit losses, beginning of period |  | $ | 20  |  |  | $ | 36  |  |
| ASC 326 cumulative effect adjustment (pre-tax) |  | —  |  |  | 4  |  |
| Adjustment for expected credit losses |  | (3) |  |  | (8) |  |
| Write-offs, net & other |  | (7) |  |  | (12) |  |
| Allowance for credit losses, end of period |  | $ | 10  |  |  | 20  |  |

As a result of the adoption of ASC 326, the Company recorded a cumulative adjustment of approximately $3 million, net of tax, as a reduction to its fiscal 2021 opening balance of retained earnings relating to its trade receivables.The remaining balance of the allowance for doubtful accounts of $17 million, as of June 30, 2022, relates to non-credit losses, which are primarily due to customer deductions.Deferred RevenueChanges in deferred revenue are as follows:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | June 30 |
| (In millions) |  | 2022 |  | 2021 |
| Deferred revenue, beginning of period |  | $ | 371  |  |  | $ | 279  |  |
| Revenue recognized that was included in the deferred revenue balance at the beginning of the period |  | (285) |  |  | (201) |  |
| Revenue deferred during the period |  | 284  |  |  | 294  |  |
| Other |  | (8) |  |  | (1) |  |
| Deferred revenue, end of period |  | $ | 362  |  |  | $ | 371  |  |

  
Transaction Price Allocated to the Remaining Performance Obligations  
At June 30, 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 $312 million. The remaining balance of deferred revenue at June 30, 2022 will be recognized beyond the next twelve months.  
NOTE 15 – PENSION, DEFERRED COMPENSATION AND POST-RETIREMENT BENEFIT PLANSThe Company maintains pension plans covering substantially all of its full-time employees for its U.S. operations and a majority of its international operations. Several plans provide pension benefits based primarily on years of service and employees’ earnings. In certain instances, the Company adjusts benefits in connection with international employee transfers.F-55
