Starbucks 2015 Annual Report Download - page 65

financial statements as a liability and not netted with a deferred tax asset. The guidance became effective for us at the beginning
of our first quarter of fiscal 2015 and did not have a material impact on our consolidated financial statements.
In March 2013, the FASB issued guidance on a parent's accounting for the cumulative translation adjustment upon
derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. This
guidance requires a parent to release any related cumulative translation adjustment into net income only if the sale or transfer
results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had
resided. The guidance became effective for us at the beginning of our first quarter of fiscal 2015 and did not have a material
impact on our consolidated financial statements.
Note 2: Acquisitions and Divestitures
Fiscal 2015
During the fourth quarter of fiscal 2015, we sold our company-operated retail store assets and operations in Puerto Rico to
Baristas Del Caribe, LLC, converting these operations to a fully licensed market, for a total of $8.9 million. This transaction
resulted in a pre-tax gain of $3.7 million, which was included in net interest income and other on the consolidated statements of
earnings.
On September 23, 2014, we entered into a tender offer bid agreement with Starbucks Coffee Japan, Ltd. ("Starbucks Japan"), at
the time a 39.5% owned equity method investment, and our former joint venture partner, Sazaby League, Ltd. ("Sazaby"), to
acquire the remaining 60.5% ownership interest in Starbucks Japan. Acquiring Starbucks Japan further leverages our existing
infrastructure to continue disciplined retail store growth and expand our presence into other channels in the Japan market, such
as consumer packaged goods ("CPG"), licensing and foodservice. This acquisition was structured as a two-step tender offer.
On October 31, 2014, we acquired Sazaby's 39.5% ownership interest in Starbucks Japan through the first tender offer step for
¥55 billion in cash, or $509 million with Japanese yen converted into U.S. dollars at a reference conversion rate of 108.13 JPY
to USD, based on a spot rate that approximates the rate as of the acquisition date, bringing our total ownership in Starbucks
Japan to a controlling 79% interest.
The following table summarizes the allocation of the total consideration to the fair values of the assets acquired and liabilities
assumed as of October 31, 2014 (in millions):
Consideration:
Cash paid for Sazaby's 39.5% equity interest $ 508.7
Fair value of our preexisting 39.5% equity interest 577.0
Total consideration $ 1,085.7
Fair value of assets acquired and liabilities assumed:
Cash and cash equivalents $ 224.4
Accounts receivable, net 37.4
Inventories 26.4
Prepaid expenses and other current assets 35.7
Deferred income taxes, net (current) 23.4
Property, plant and equipment 282.9
Other long-term assets 141.4
Other intangible assets 323.0
Goodwill 815.6
Total assets acquired 1,910.2
Accounts payable (54.5)
Accrued liabilities (115.9)
Stored value card liability (36.5)
Deferred income taxes (noncurrent) (90.7)
Other long-term liabilities (115.8)
Total liabilities assumed (413.4)
Noncontrolling interest (411.1)
Total consideration $ 1,085.7
Starbucks Corporation 2015 Form 10-K 61