Starbucks 2008 Annual Report Download - page 67

The changes in the carrying amount of goodwill by reportable operating segment for the fiscal year ended
September 28, 2008 were as follows (in millions):
United States International Global CPG Total
Balance as of September 30, 2007 ........... $127.6 $ 78.3 $9.7 $215.6
Business Acquisitions .................. 11.8 39.3 — 51.1
Other .............................. — (0.2) — (0.2)
Balance as of September 28, 2008 ........... $139.4 $117.4 $9.7 $266.5
United States
The $11.8 million increase in goodwill was due to the acquisition of CEC.
International
The increase in goodwill was due to the acquisition of CVI and CVAI, as well as the remaining equity interest in
Beijing during the fiscal year, which increased goodwill by $33.0 million and $6.3 million, respectively (see
Note 2). The decrease related to “Other” was due to foreign currency fluctuations.
Note 10: Debt
The Company’s debt consisted of the following (in millions):
Sep 28, 2008 Sep 30, 2007
Commercial paper program (weighted average interest rate of 3.4% and
5.4%, respectively) ....................................... $ 413.0 $ 710.3
Revolving credit facility (weighted average interest rate of 3.5%) ....... 300.0 —
Current portion of long-term debt .............................. 0.7 0.8
Short-term debt .......................................... 713.7 711.1
6.25% 10-year Senior Notes (due Aug 2017) ...................... 549.2 549.0
Other long-term debt........................................ 0.4 1.1
Long-term debt .......................................... 549.6 550.1
Total debt .............................................. $1,263.3 $1,261.2
Revolving Credit Facility and Commercial Paper Program
The Company has a $1 billion unsecured credit facility (the “facility”) with various banks, of which $100 million
may be used for issuances of letters of credit. The facility is available for working capital, capital expenditures and
other corporate purposes, which may include acquisitions and share repurchases. The facility is currently set to
terminate in August 2011. The interest rate for borrowings under the facility as of September 28, 2008 ranged from
0.11% to 0.27% over LIBOR or an alternate base rate, which is the greater of the bank prime rate or the Federal
Funds Rate plus 0.50%. On October 31, 2008, the Company entered into an amendment to its facility that, amongst
other changes, increased the interest rate range for borrowings under the facility to 0.21% to 0.67% over LIBOR or
the greater of the bank prime rate or the Federal Funds Rate plus 0.50%. The specific spread over LIBOR will
continue to depend upon the Company’s long-term credit ratings assigned by Moody’s and Standard & Poor’s rating
agencies and the Company’s coverage ratio. The facility contains provisions requiring the Company to maintain
compliance with certain covenants, including a minimum fixed charge coverage ratio which measures the
Company’s ability to cover financing expenses.
The Company established a commercial paper program (the “program”) in March 2007. Under the program the
Company may issue unsecured commercial paper notes, up to a maximum aggregate amount outstanding at any
time of $1 billion, with individual maturities that may vary, but not exceed 397 days from the date of issue. The
program is backstopped by the Company’s revolving credit facility, and the combined borrowing limit is $1 billion
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