Starbucks 2014 Annual Report Download - page 64

60 Starbucks Corporation 2014 Form 10-K
Note 2: Acquisitions and Divestitures
Fiscal 2014
During the fourth quarter of fiscal 2014, we sold our Australian company-operated retail store assets and operations to the
Withers Group, converting these operations to a fully licensed market, for a total of $15.9 million. This transaction resulted in a
pre-tax gain of $2.4 million, which was included in net interest income and other in the consolidated statements of earnings. On
an after-tax basis, this transaction resulted in a loss that was not material to our financial statements.
Fiscal 2013
During the fourth quarter of fiscal 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 market 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 comprised 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 represented contingent consideration receivable, all of
which has been settled. 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):
Fair Value at
Dec 31, 2012
Cash and cash equivalents $ 47.0
Inventories 21.3
Property, plant and equipment 59.7
Intangible assets 120.8
Goodwill 467.5
Other current and noncurrent assets 19.8
Current liabilities (36.0)
Long-term deferred tax liability (54.3)
Long-term debt (35.2)
Other long-term liabilities (7.0)
Total purchase price $ 603.6
The assets acquired and liabilities assumed are reported within All Other Segments. Other current and noncurrent assets
acquired primarily include prepaid expenses, trade receivables, and deferred tax assets. In addition, we assumed various current
liabilities primarily consisting of accounts payable, accrued payroll related liabilities and other accrued operating expenses. The
intangible assets acquired as part of the transaction include the Teavana trade name, tea blends and non-compete agreements.
The Teavana trade name was valued at $105.5 million and determined to have an indefinite life, based on our expectation that
the brand will be used indefinitely and has no contractual limitations. The intangible asset related to the tea blends was valued
at $13.0 million and will be amortized on a straight-line basis over a period of 10 years, and the intangible asset related to the
non-compete agreements was valued at $2.3 million and will be amortized on a straight-line basis over a period of 3 years. The
$467.5 million of goodwill represents the intangible assets that do not qualify for separate recognition, primarily including
Teavana's established global store presence in high traffic mall locations and other high-sales-volume retail venues, Teavana's
global customer base, and Teavana's "Heaven of tea" retail experience in which store employees engage and educate customers
about the ritual and enjoyment of tea. The goodwill was allocated to All Other Segments and is not deductible for income tax
purposes.