Starbucks 2012 Annual Report Download - page 75

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69
based observable inputs, including interest rate curves and forward and spot prices for currencies and
commodities.
Changes in Level 3 Instruments Measured at Fair Value on a Recurring Basis
Financial instruments measured using Level 3 inputs described above are comprised entirely of our ARS. Changes
in this balance related primarily to calls of certain of our ARS. In fiscal 2012 and 2011, $10.7 million and $15.8
million, respectively, of our ARS were called at par.
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 2012 and 2011, we recognized fair market value adjustments with a charge to earnings for these
assets as follows:
Year Ended September 30, 2012
Carrying
Value before
adjustment
Fair value
adjustment
Carrying
value after
adjustment
Property, plant and equipment (1) $ 21.5 $ (14.4) $ 7.1
Year Ended October 2, 2011
Property, plant, and equipment (1) $8.8$(5.9)$2.9
Other assets (2) $ 22.1 $ (22.1) $ —
(1) 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.
(2) 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.
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 (Level 2)
was approximately $674 million and $648 million as of September 30, 2012 and October 2, 2011, respectively.
Carrying
Value before
adjustment
Fair value
adjustment
Carrying
value after
adjustment
Carrying
Value before
adjustment
Fair value
adjustment
Carrying
value after
adjustment