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ACQUISITION OF BUSINESS | 12 Months Ended
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Jun. 30, 2020
Business Combinations [Abstract] |
ACQUISITION OF BUSINESS | ACQUISITION OF BUSINESS On December 18, 2019, the Company acquired the remaining 66.66% equity interest in Have&Be Co. Ltd. (“Have & Be”), the global skin care company behind Dr. Jart+ and men’s grooming brand Do The Right Thing, for $1,268 million in cash. Based on the final purchase price and working capital adjustments, the Company estimated a refund receivable of $32 million that was still outstanding as of June 30, 2020. This acquisition is expected to further strengthen the Company’s leadership position in skin care and expand its consumer reach in Asia/Pacific, North America, the United Kingdom and travel retail. The Company originally acquired a minority interest in Have & Be in December 2015, and that investment structure included a formula-based call option for the remaining equity interest. The original minority interest was accounted for as an equity method investment, which had a carrying value of $133 million at the acquisition date. The acquisition of the remaining equity interest in Have & Be was considered a step acquisition, whereby the Company remeasured the previously held equity method investment to its fair value. The acquisition of the remaining equity interest also resulted in the recognition of a previously unrealized foreign currency gain, which was reclassified from accumulated OCI. The total gain on the Company’s previously held equity method investment is included in Other income, net in the consolidated statements of earnings. The fair value of the previously held equity method investment was determined based upon a valuation of the acquired business, as of the date of acquisition, using 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. The accounting for the Have & Be business combination was finalized as of June 30, 2020. The amount paid at closing was funded by cash on hand including the proceeds from the issuance of debt. In anticipation of the closing, the Company transferred cash to a foreign subsidiary for purposes of making the closing payment. As a result, the Company recognized a foreign currency gain, which is also included in Other income, net in the consolidated statements of earnings. A summary of the total purchase price and the total gain recognized in Other income, net in the consolidated statements of earnings is as follows:
(In millions) |  | December 18, 2019 |  | Measurement Period Adjustments |  | June 30, 2020
Purchase price |  |  |  |  |  |
Purchase price |  | $ | 1,268 |  |  | $ | (32) |  |  | $ | 1,236 |
Fair value of previously held equity method investment |  | 682 |  |  | (22) |  |  | 660 |
Write-off of call option relating to previously held equity method investment |  | 4 |  |  | — |  |  | 4 |
Total purchase price |  | $ | 1,954 |  |  | $ | (54) |  |  | $ | 1,900 |
|  | For the Six Months Ended December 31, 2019 |  | Measurement Period Adjustments |  | For the Year Ended June 30, 2020
Gains recognized in the consolidated statement of earnings |  |  |  |  |  |
Gain on previously held equity method investment |  | $ | 549 |  |  | $ | (19) |  |  | $ | 530 |
Recognition of a previously unrealized foreign currency gain |  | 4 |  |  | — |  |  | 4 |
Total gain on previously held equity method investment |  | 553 |  |  | (19) |  |  | 534 |
Foreign currency gain on cash |  | 23 |  |  | — |  |  | 23 |
Total Other income, net |  | $ | 576 |  |  | $ | (19) |  |  | $ | 557 |
The Company has recorded an allocation of the total consideration transferred, which includes the cash paid at closing and the fair value of its previously held equity method investment, to the tangible and identifiable intangible assets acquired and liabilities assumed based on their fair value at the acquisition date. The measurement period adjustments, which consist of changes in estimates from the preliminary purchase price allocation performed in December 2019, considered the final calculation of the purchase price, final opening balance sheet (working capital adjustments) and final valuation report. The excess of the total consideration transferred over the fair value of the net tangible and intangible assets acquired was recorded as goodwill. The rollforward of the final allocation of the total consideration transferred as of December 18, 2019 to allocation as of June 30, 2020 is as follows:
(In millions, unaudited) |  | December 18, 2019 |  | Measurement Period Adjustments |  | June 30, 2020
Cash |  | $ | 228 |  |  | $ | 1 |  |  | $ | 229 |
Accounts receivable |  | 48 |  |  | (35) |  |  | 13 |
Inventory |  | 83 |  |  | 5 |  |  | 88 |
Other current assets |  | 5 |  |  | (1) |  |  | 4 |
Property, plant and equipment |  | 3 |  |  | — |  |  | 3 |
Right-of-use assets |  | 3 |  |  | — |  |  | 3 |
Intangible assets |  | 1,427 |  |  | 232 |  |  | 1,659 |
Goodwill |  | 556 |  |  | (210) |  |  | 346 |
Other long-term assets |  | 3 |  |  | 1 |  |  | 4 |
Total assets acquired |  | 2,356 |  |  | (7) |  |  | 2,349 |
Accounts payable |  | 27 |  |  | (13) |  |  | 14 |
Other accrued liabilities |  | 22 |  |  | 5 |  |  | 27 |
Deferred income taxes |  | 352 |  |  | 55 |  |  | 407 |
Lease liability |  | 1 |  |  | — |  |  | 1 |
Total liabilities assumed |  | 402 |  |  | 47 |  |  | 449 |
Total consideration transferred |  | $ | 1,954 |  |  | $ | (54) |  |  | $ | 1,900 |
The results of operations of Have & Be are reported on a one-month lag to facilitate consolidated reporting. For the year ended June 30, 2020, the Company's consolidated statements of earnings included approximately $165 million of net sales and $40 million of net loss, net of tax, inclusive of acquisition-related costs, related to Have & Be. Acquisition-related costs, which primarily include financial advisory, accounting and legal fees, in the amount of $7 million are included in Selling, general and administrative expenses in the accompanying consolidated statements of earnings for the year ended June 30, 2020. Pro forma results of operations reflecting the acquisition of Have & Be are not presented, as the impact on the Company’s consolidated financial results would not have been material.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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