interest expense. Restatement of financial statements for earlier years presented is not permitted. The adoption of this statement will result in the inclusion of the dividends on the preferred stock (equal to $23.4 million per year) as interest expense. While the inclusion will impact net earnings, net earnings attributable to common stock and earnings per common share will be unaffected. Given that the dividends are not deductible for income tax purposes, the inclusion of the preferred stock dividends as interest expense will cause an increase in the Company’s effec- tive tax rate. The adoption of SFAS No. 150 will have no impact on the Company’s financial condition. In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure” (“SFAS No.148”). SFAS No.148 provides alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation as originally defined by SFAS No. 123. Additionally, SFAS No. 148 amends the disclo- sure requirements of SFAS No. 123 to require prominent disclosure in both the annual and interim financial state- ments about the method of accounting for stock-based compensation and the effect of the method used on reported results. The transitional requirements of SFAS No. 148 are effective for all financial statements for fiscal years ending after December 15, 2002. The Company adopted the disclosure portion of this statement for the fiscal quarter ended March 31, 2003. The application of the disclosure portion of this standard has no impact on the Company’s consolidated financial position or results of operations. The FASB recently indicated that it will require stock-based employee compensation to be recorded as a charge to earnings pursuant to a standard on which it is currently deliberating. The FASB anticipates issuing an Exposure Draft in the fourth quarter of 2003 and a final statement in the second quarter of 2004. The Company will continue to monitor the FASB’s progress on the issuance of this standard as well as evaluate its posi- tion with respect to current guidance. During October 2001, a member of the Lauder family sold 5,000,000 shares of Class A Common Stock in a reg- istered public offering. The Company did not receive any proceeds from the sale of these shares. In May 2003, the Company entered into a license agreement for fragrances and beauty products under the “Michael Kors” trademarks with Michael Kors L.L.C. and purchased certain related rights and inventory from American Designer Fragrances, a division of LVMH. Subsequent to year-end, the Company acquired the Rodan & Fields skin care line (see Note 20). The aggregate purchase price for these transactions, which includes acquisition costs, was $50.4 million, $18.5 million, and $16.0 million in fiscal 2003, 2002 and 2001, respectively, and each transaction was accounted for using the purchase method of accounting. Accordingly, the results of operations for each of the acquired busi- nesses are included in the accompanying consolidated financial statements commencing with its date of original acquisition. Pro forma results of operations, as if each of such businesses had been acquired as of the beginning of the year of acquisition, have not been presented, as the impact on the Company’s consolidated financial results would not have been material. In fiscal 2001, the Company purchased a wholesale distributor business in Israel, a majority interest of the wholesale distributor business in Chile and created a joint venture in Greece in which the Company owns a con- trolling majority interest. In fiscal 2002, the Company acquired the remaining minority interest of its joint venture in Chile. At various times during fiscal 2003, 2002 and 2001, the Company acquired businesses engaged in the wholesale distribution and retail sale of Aveda products, as well as other products, in the United States and other countries. In fiscal 2002, the Company purchased an Aveda wholesale distributor business in Korea and acquired  the minority interest of its Aveda joint venture in the  United Kingdom. On April 30, 2003, the Company completed the acquisi- tion of the Paris-based Darphin group of companies that develops, manufactures and markets the “Darphin” brand of skin care and makeup products. The initial purchase price, paid at closing, was funded by cash provided by operations, the payment of which did not have a material effect on the Company’s results of operations or financial condition. An additional payment is expected to be made in fiscal 2009, the amount of which will depend on future net sales and earnings of the Darphin business. NOTE 4 – ACQUISITION OF BUSINESSES AND LICENSE ARRANGEMENTS NOTE 3 – PUBLIC OFFERINGS 65 THEEST{E LAUDER COMPANIES INC.