Starbucks 2013 Annual Report Download - page 63

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partners in each market. The regional presidents were to also work closely with our Channel Development team to continue
building out our brands and channels in each region.
In connection with the changes to our organizational structure and reporting, we changed the accountability for, and reporting
of, certain indirect overhead costs. Certain indirect merchandising, manufacturing costs and back-office shared service costs,
which were previously allocated to segment level costs of sales and operating expenses, are now managed at a corporate level
and are reported within unallocated corporate expenses. These expenses have therefore been removed from the segment level
financial results. In order to conform prior period classifications with the new alignment, the historical consolidated financial
statements have been recast with the following adjustments to previously reported amounts (in millions):
Year Ended October 2, 2011
As Filed Reclass As Adjusted
Total net revenues $ 11,700.4 $ — $ 11,700.4
Cost of sales including occupancy costs 4,949.3 (33.8) 4,915.5
Store operating expenses 3,665.1 (70.2) 3,594.9
Other operating expenses 402.0 (9.2) 392.8
Depreciation and amortization expenses 523.3 — 523.3
General and administrative expenses 636.1 113.2 749.3
Total operating expenses 10,175.8 — 10,175.8
Gain on sale of properties 30.2 — 30.2
Income from equity investees 173.7 — 173.7
Operating income $ 1,728.5 $ — $ 1,728.5
There was no impact on consolidated net revenues, total operating expenses, operating income, or net earnings as a result of
this change. Additional discussion regarding the change in our organizational structure and segment results is included at Note
16.
Effective in the second half of fiscal 2013, there were further changes to the leadership team which resulted in the promotion of
two of these regional presidents to the role of group president. In these new roles, the group presidents have oversight of
multiple operating segments. However, this did not change how we manage costs or report on our segment results and therefore
did not have an impact on the historical presentation of our financial statements.
Note 2: Acquisitions and Divestitures
In the fourth quarter of fiscal 2013, we acquired a 49% equity method ownership interest in Starbucks Spain from our licensee
partner Sigla S.A. (Grupo Vips) for approximately $33 million in cash.
During the fourth quarter of 2013, we sold our 82% interest in Starbucks Coffee Chile S.A. to our joint venture partner Alsea,
S.A.B. de C.V., converting this to a 100% licensed market, for a total purchase price of $68.6 million, which includes final
working capital adjustments. This transaction resulted in a gain of $45.9 million, which was included in net interest income and
other in the consolidated statements of earnings.
In the third quarter of fiscal 2013, we acquired 100% ownership of a coffee farm in Costa Rica for $8.1 million in cash. The fair
value of the net assets acquired on the acquisition date primarily comprises property, plant and equipment.
On December 31, 2012, we acquired 100% of the outstanding shares of Teavana Holdings, Inc. (“Teavana”), a specialty retailer
of premium loose-leaf teas, authentic artisanal teawares and other tea-related merchandise, to elevate our tea offerings as well
as expand our domestic and global tea footprint. We acquired Teavana for $615.8 million in cash. Of the total cash paid, $12.2
million was excluded from the purchase price allocation below as it represents contingent consideration receivable. At closing,
we also repaid $35.2 million for long term debt outstanding on Teavana's balance sheet, which was recognized separately from
the business combination. The following table summarizes the allocation of the purchase price to the fair values of the assets
acquired and liabilities assumed on the closing date (in millions):
2013 10-K
Starbucks Corporation Form