Note  1 -- Summary of Significant Accounting Policies Note  2 -- Accounting Changes Note  3 -- Special Charges Note  4 -- Segment Information Note  5 -- Leases Note  6 -- Supplementary Income Statement Information Note  7 -- Provision for Income Taxes Note  8 -- Earnings Per Share Note  9 -- Supplementary Balance Sheet Information Note 10 -- Property, Plant and Equipment - Net Note 11 -- Deferred Income Taxes Note 12 -- Goodwill Note 13 -- Other Intangible Assets Note 14 -- Debt Note 15 -- Financial Instruments Note 16 -- Shareholder's Equity Note 17 -- Preferred Stock Note 18 -- Incentive Plans and Stock Options Note 19 -- Retirement Programs Note 20 -- Commitments and Contingencies Note 21 -- Quarterly Data (Unaudited)
 

NOTE 12. GOODWILL
As described in Note 2, the company adopted SFAS 142 as of January 1, 2002, which eliminates goodwill amortization expense prospectively. The following table reconciles 2001 reported net income and earnings per share amounts to their respective amounts adjusted to exclude goodwill amortization expense. Results for 2003 and 2002 are presented for comparative purposes.

(Millions of dollars, except per share data)
YEAR ENDED DECEMBER 31,	2003	2002	2001
NET INCOME
Reported net income	$585	$409	$430
Add back: goodwill amortization, net of tax	—	—	33
Net income excluding goodwill amortization	$585	$409	$463
PER SHARE DATA
Basic earnings per share
Reported net income	$1.79	$1.26	$1.33
Add back: goodwill amortization, net of tax	—	—	0.10
Net income excluding goodwill amortization	$1.79	$1.26	$1.43
Diluted earnings per share
Reported net income	$1.77	$1.24	$1.31
Add back: goodwill amortization, net of tax	—	—	0.10
Net income excluding goodwill amortization	$1.77	$1.24	$1.41

Changes in the carrying amount of goodwill for the years ended December 31, 2003 and 2002, were as follows:

	North	South			Surface
(Millions of dollars)	America	America	Europe	Asia	Technologies	Total
Balance, December 31, 2001	$712	$253	$48	$35	$88	$1,136
Acquisitions	53	2	3	—	—	58
Cumulative effect of an accounting change (Note 2)	—	(84)	(18)	(17)	(25)	(144)
Foreign currency translation	(6)	(72)	6	2	5	(65)
Balance, December 31, 2002	759	99	39	20	68	985
Acquisitions	26	—	17	5	—	48
Purchase adjustments*	(13)	(2)	—	—	—	(15)
Foreign currency translation	12	27	10	1	7	57
Balance, December 31,2003	$784	$124	$66	$26	$75	$1,075
* Purchase adjustments in North America pertain to the resolution of tax matters for previous years related to deferred income tax allowances on capital loss carryforwards from the 1996 CBI acquisition. The adjustment to goodwill was offset by a corresponding adjustment to deferred income taxes included in deferred credits.