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Noncontrolling Interests

9 Months Ended

Jun. 23, 2012

Noncontrolling Interests

Noncontrolling Interests

9. Noncontrolling Interests

In the CBU segment, a portion of the coffee services business operates through non-wholly owned subsidiaries. The financial statements consolidate entities in which the Company has a controlling financial interest. Net income attributable to noncontrolling interests reflect the portion of the net income (loss) applicable to the noncontrolling interest partners in the consolidated statement of operations. The net income attributable to noncontrolling interests is classified in the consolidated statements of operations as part of consolidated net income with the net income attributable to the noncontrolling interests deducted from total consolidated net income.

If a change in ownership of a consolidated subsidiary results in a loss of control or deconsolidation, any retained ownership interests are remeasured with the gain or loss reported to net earnings.

Redeemable Noncontrolling Interests

Redeemable noncontrolling interests may be redeemed by the Company at amounts based on formulas specific to each entity. The Company classifies redeemable noncontrolling interests outside of shareholders’ equity in the consolidated balance sheet under the caption, Redeemable noncontrolling interests, and measures it at the redemption value at the end of each period. If the redemption value is greater than the carrying value, an adjustment is recorded in retained earnings to record the noncontrolling interest at its redemption value.

On March 26, 2012, two entities in which the Company had redeemable noncontrolling interests were merged. Under the terms of the merger, the Company retained controlling interest of the newly merged entity. As a result, no gain or loss was recognized as a result of the merger. In addition, as the Company’s ownership interest in the newly merged entity remained proportionate with its historical ownership interest in the pre-merged entities, there was no adjustment to the historical carrying amounts.

Mandatorily Redeemable Noncontrolling Interests

On June 22, 2012, the Company executed a purchase agreement under which the Company is required to purchase a noncontrolling interest holder’s shares in an entity in which the Company has a controlling interest within 30 days of the end of the Company’s third quarter of fiscal year 2014. As a result, as of June 22, 2012, the Company has a controlling financial interest in an entity whereby the shares held by the noncontrolling interest holder are mandatorily redeemable by the Company. The Company classifies the mandatorily redeemable noncontrolling interest as a liability in the consolidated balance sheet under the caption, Other long-term liabilities, and measures the liability at the amount of cash that would be paid if settlement occurred at the balance sheet date based on the formula in the shareholder agreement with any change from the prior period recognized as interest expense. Prior to June 22, 2012, the noncontrolling interest was classified as a redeemable noncontrolling interest outside of shareholders’ equity in the consolidated balance sheet under the caption, Redeemable noncontrolling interests, with any adjustments to record the noncontrolling interest at its redemption value recognized in retained earnings. At June 23, 2012, the mandatorily redeemable noncontrolling interest included in other long-term liabilities was $4.7 million.

The entire disclosure for noncontrolling interest in consolidated subsidiaries, which could include the name of the subsidiary, the ownership percentage held by the parent, the ownership percentage held by the noncontrolling owners, the amount of the noncontrolling interest, the location of this amount on the balance sheet (when not reported separately), an explanation of the increase or decrease in the amount of the noncontrolling interest, the noncontrolling interest share of the net Income or Loss of the subsidiary, the location of this amount on the income statement (when not reported separately), the nature of the noncontrolling interest such as background information and terms, the amount of the noncontrolling interest represented by preferred stock, a description of the preferred stock, and the dividend requirements of the preferred stock.

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