Less imputed interest

[Table of Contents](#i2ba0bd92bcb14d27a1d59d9667569d45_7)THE ESTÉE LAUDER COMPANIES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe total future minimum lease payments, over the remaining lease term, relating to the Company’s operating and finance leases for each of the next five fiscal years and thereafter is as follows: 

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (In millions) |  | Operating Leases |  | Finance Leases |
| Fiscal 2023 |  | $ | 414  |  |  | $ | 13  |  |
| Fiscal 2024 |  | 377  |  |  | 7  |  |
| Fiscal 2025 |  | 308  |  |  | 2  |  |
| Fiscal 2026 |  | 260  |  |  | 1  |  |
| Fiscal 2027 |  | 215  |  |  | —  |  |
| Thereafter |  | 941  |  |  | —  |  |
| Total future minimum lease payments |  | 2,515  |  |  | 23  |  |
| Less imputed interest |  | (282) |  |  | —  |  |
| Total |  | $ | 2,233  |  |  | $ | 23  |  |

Operating lease and finance lease liabilities included in the consolidated balance sheet are as follows:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  | June 30 |
|  |  | 2022 |  | 2021 |
| (In millions) |  | Operating Leases |  | Finance Leases |  | Operating Leases |  | Finance Leases |
| Total current liabilities |  | $ | 365  |  |  | 13  |  |  | $ | 379  |  |  | $ | 18  |  |
| Total noncurrent liabilities |  | 1,868  |  |  | 10  |  |  | 2,151  |  |  | 27  |  |
| Total |  | $ | 2,233  |  |  | $ | 23  |  |  | $ | 2,530  |  |  | $ | 45  |  |

The ROU assets and lease liabilities related to finance leases are included in Other assets and in Current debt and Long-term debt, respectively, in the accompanying consolidated balance sheets as of June 30, 2022 and 2021. During fiscal 2021 and fiscal 2020, as a result of the continued challenging retail environment due to the COVID-19 pandemic, certain of the Company’s freestanding stores experienced lower net sales and lower expectations of future cash flows. These changes were an indicator that the carrying amounts may not be recoverable. Accordingly, the Company performed a recoverability test by comparing projected undiscounted cash flows from the use and eventual disposition of an asset or asset group to its carrying value. For those freestanding stores that failed step one of this test, the Company then compared the assets carrying values to their estimated fair values. Specifically, for the related ROU assets, the fair value was based on discounting market rent using a real estate discount rate. As a result, the Company recognized $71 million and $215 million of long-lived asset impairments, included in Impairments of other intangible and long-lived assets, in the accompanying consolidated statements of earnings for the year ended June 30, 2021 and 2020, respectively. The fiscal 2021 impairments related to other assets (i.e. rights associated with commercial operating leases) of $27 million, operating lease right-of-use assets of $25 million and the related property, plant and equipment in certain freestanding stores of $19 million. The fiscal 2020 impairments related to operating lease ROU assets of $131 million, as well as the related property, plant and equipment and other long-lived assets in certain freestanding stores of $84 million, combined.   
  
  
  
  
  
  
  
  
  
  
  
F-33
