Accounting Policies
Stock Split
Accounting Changes
Unearned Revenue
Cash and Short-Term Investments
Inventories
Property and Equipment
Equity and Other Investments
Goodwill
Intangible Assets
Derivatives
Investment Income/(Loss)
Income Taxes
Stockholders' Equity
Other Comprehensive Income
Employee Stock and Savings Plans
Earnings Per Share
Acquisitions
Commitments and Guarantees
Contingencies
Segment Information
Note 3-Accounting Changes
Effective July 1, 2000, we adopted
SFAS 133 which establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts and for hedging activities. The adoption of SFAS 133 on July 1,
2000, resulted in a cumulative pre-tax reduction to income of $560 million
($375 million after-tax) and a cumulative pre-tax reduction to OCI of $112 million ($75
million after-tax). The reduction to income was mostly attributable to a loss
of approximately $300 million reclassified from OCI for the time value of
options and a loss of approximately $250 million reclassified from OCI for
derivatives not designated as hedging instruments. The reduction to OCI was
mostly attributable to losses of approximately $670 million on cash flow
hedges offset by reclassifications out of OCI of the approximately $300 million
loss for the time value of options and the approximately $250 million loss for
derivative instruments not designated as hedging instruments. The net
derivative losses included in OCI as of July 1, 2000 were reclassified into earnings
during the twelve months ended June 30, 2001. The change in accounting from
the adoption of SFAS 133 did not materially affect net income in 2001.
Effective July 1, 2001, we adopted
SFAS 141, Business Combinations, and SFAS 142. SFAS 141 requires
business combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting. It also specifies the types of acquired
intangible assets that are required to be recognized and reported separate from
goodwill. SFAS 142 requires that goodwill and certain intangibles no longer be
amortized, but instead tested for impairment at least annually. There was no
impairment of goodwill upon adoption of SFAS 142.
Net income and earnings per share for
fiscal 2001 adjusted to exclude amortization expense (net of taxes) is as
follows:
(In
millions, except earnings per share)
|
|
Year Ended June 30
|
2001
|
|
|
Net income:
|
|
Reported net income
|
$7,346
|
Goodwill amortization
|
252
|
Equity method goodwill amortization
|
26
|
Adjusted net income
|
$7,624
|
|
|
Basic earnings per share:
|
|
Reported basic earnings per share
|
$ 0.69
|
Goodwill amortization
|
0.02
|
Equity method goodwill amortization
|
-
|
Adjusted basic earnings per share
|
$ 0.71
|
|
|
Diluted earnings per share:
|
|
Reported diluted earnings per share
|
$ 0.66
|
Goodwill amortization
|
0.02
|
Equity method goodwill amortization
|
-
|
Adjusted diluted earnings per share
|
$ 0.68
|
|