Estee Lauder 2003 Annual Report Download - page 62

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THEEST{E LAUDER COMPANIES INC.
determine fair value, the Company relied on three valua-
tion models: guideline public companies, acquisition
analysis and discounted cash flow. For goodwill valuation
purposes only, the revised fair value of this unit was allo-
cated to the assets and liabilities of the business unit to
arrive at an implied fair value of goodwill, based upon
known facts and circumstances, as if the acquisition
occurred currently. This allocation resulted in a write-
down of recorded goodwill in the amount of $20.6
million, which has been reported as the cumulative effect
of a change in accounting principle, as of July 1, 2001, in
the accompanying consolidated statements of earnings.
On a product category basis, this write-down would have
primarily impacted the Company’s makeup category.
During fiscal 2002, the Company recorded a goodwill
impairment charge related to its Gloss.com business as
a component of its restructuring expense (see Note 5).
61
The following table presents adjusted net earnings and earnings per share data restated to include the retroactive impact
of the adoption of SFAS No. 142.
YEAR ENDED JUNE 30 2003 2002 2001
(In millions, except per share data)
Reported Net Earnings before Accounting Change $319.8 $212.5 $307.4
Cumulative effect of a change in accounting principle, net of tax —(20.6) (2.2)
Net Earnings 319.8 191.9 305.2
Preferred stock dividends 23.4 23.4 23.4
Reported Net Earnings Attributable to Common Stock 296.4 168.5 281.8
Add back:
Goodwill amortization, net of tax —— 13.4
Adjusted Net Earnings $296.4 $168.5 $295.2
Basic net earnings per common share:
Reported net earnings attributable to common stock before accounting change $1.27 $ .79 $ 1.19
Cumulative effect of a change in accounting principle, net of tax —(.08) (.01)
Net earnings attributable to common stock 1.27 .71 1.18
Goodwill amortization, net of tax —— .06
Adjusted net earnings attributable to common stock $1.27 $ .71 $ 1.24
Diluted net earnings per common share:
Reported net earnings attributable to common stock before accounting change $1.26 $ .78 $ 1.17
Cumulative effect of a change in accounting principle, net of tax —(.08) (.01)
Net earnings attributable to common stock 1.26 .70 1.16
Goodwill amortization, net of tax —— .06
Adjusted net earnings attributable to common stock $1.26 $ .70 $ 1.22
Weighted average common shares outstanding:
Basic 232.6 238.2 238.4
Diluted 234.7 241.1 242.2
Goodwill
The change in the carrying amount of goodwill is as follows:
YEAR ENDED JUNE 30 2003 2002
(In millions)
Net beginning balance $675.6 $699.7
Goodwill impairment loss upon
adoption of newaccounting principle
—(20.6)
Restructuring write-off of Gloss.com acquisition goodwill —(20.1)
Goodwill acquired during the period
19.7 16.6
Net ending balance $695.3 $675.6