ACQUISITION OF BUSINESSES

6 Months Ended

Dec. 31, 2016

ACQUISITION OF BUSINESSES

ACQUISITION OF BUSINESSES

NOTE 3 — ACQUISITION OF BUSINESSES

On December 19, 2016, the Company acquired 100% of Too Faced, a makeup brand, for approximately $1.5 billion.  This acquisition is expected to complement the Company’s distribution in the specialty-multi channel.  The amount paid at closing was funded by cash on hand including the proceeds from the issuance of commercial paper.  The purchase price recorded is provisional pending final working capital adjustments and completion of the final valuation.  The results of operations of Too Faced are included in the Company’s consolidated financial statements commencing on the acquisition date.

The Company has recorded an allocation of the purchase price to the Company’s tangible and identifiable intangible assets acquired and liabilities assumed based on their fair value at the acquisition date.  The excess of the purchase price over the fair value of the net tangible and intangible assets was recorded as goodwill, which includes value associated with assembled workforce.  The calculation of purchase price and purchase price allocation is as follows:

(In millions, unaudited)
Cash	$	28
Accounts receivable(1)	40
Inventory	105
Other current assets	3
Property, plant and equipment	8
Intangible assets	858
Goodwill	613
Total assets acquired	1,655
Accounts payable	56
Other accrued liabilities	15
Deferred income taxes	100
Total liabilities assumed	171
Total purchase price	$	1,484

⁽¹⁾ Represents the gross amount of trade receivables of $44 million, net of estimated customer deductions of $4 million.

For the three and six months ended December 31, 2016, the Company’s statements of earnings included approximately $13 million of net sales and $(4) million, net of tax, of net earnings (loss), inclusive of acquisition-related costs, related to Too Faced.  Acquisition-related costs, which primarily include financial advisory, accounting and legal fees, in the amount of $9 million are included in Selling, general and administrative expenses in the accompanying consolidated statements of earnings.

On November 14, 2016, the Company also acquired 100% of BECCA, a makeup brand.  Pro forma results of operations reflecting the Too Faced and BECCA acquisitions have not been presented, as the impact on the Company’s consolidated financial results would not have been material.