Starbucks 2011 Annual Report Download - page 65

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Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Assets and liabilities recognized or disclosed at fair value on a nonrecurring basis include items such as property,
plant and equipment, goodwill and other intangible assets, equity and cost method investments, and other assets.
These assets are measured at fair value if determined to be impaired.
During fiscal 2011 and 2010, we recognized fair market value adjustments with a charge to earnings for these assets
as follows:
Year Ended October 2, 2011
Carrying
Value before
adjustment
Fair value
adjustment
Carrying
value after
adjustment
Other assets(1) ....................................... $22.1 $(22.1) $0.0
Property, plant and equipment(2) ........................ $ 8.8 $ (5.9) $2.9
Year Ended October 3, 2010
Carrying
Value before
adjustment
Fair value
adjustment
Carrying
value after
adjustment
Property, plant and equipment(2) ........................ $26.8 $(22.3) $4.5
Goodwill(3) ......................................... $ 4.1 $ (1.6) $2.5
(1) The fair value was determined using valuation techniques, including discounted cash flows, comparable
transactions, and/or comparable company analyses. The resulting impairment charge was included in other
operating expenses.
(2) These assets primarily consist of leasehold improvements in underperforming stores. The fair value was
determined using a discounted cash flow model based on expected future store revenues and operating costs,
using internal projections. The resulting impairment charge was included in store operating expenses.
(3) The fair value was determined using a discounted cash flow model based on future cash flows for the reporting
unit, using internal projections. The resulting impairment charge was included in store operating expenses
Fair Value of Other Financial Instruments
The estimated fair value of the $550 million of 6.25% Senior Notes based on the quoted market price was
approximately $648 million and $637 million as of October 2, 2011 and October 3, 2010, respectively.
Note 4: Inventories (in millions)
Oct 2, 2011 Oct 3, 2010
Coffee:
Unroasted..................................................... $431.3 $238.3
Roasted ...................................................... 246.5 95.1
Othermerchandiseheldforsale...................................... 150.8 115.6
Packagingandothersupplies ........................................ 137.2 94.3
Total .......................................................... $965.8 $543.3
Other merchandise held for sale includes, among other items, serveware and tea.
Levels of inventory vary due to seasonality driven primarily by the holiday season, commodity market supply and
price variations, and changes in our use of fixed-price and price-to-be-fixed coffee contracts.
As of October 2, 2011, we had committed to purchasing green coffee totaling $846 million under fixed-price
contracts and an estimated $193 million under price-to-be-fixed contracts. Price-to-be-fixed contracts are purchase
commitments whereby the quality, quantity, delivery period, and other negotiated terms are agreed upon, but the
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