Lululemon 2010 Annual Report Download - page 69

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Table of Contents
lululemon athletica inc. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
These amounts have been calculated after applying the Company’s accounting policies and adjusting the results
of lululemon australia to reflect the additional depreciation and amortization that would have been charged assuming
the fair value adjustments to inventory and intangible assets had been applied from February 1, 2010, together with
the consequential tax effects.
In fiscal 2010, the Company incurred $181 of acquisition-related costs. These costs are included in general and
administrative expenses in the Company’
s consolidated statements of operations for the year ended January 30, 2011.
The following tables summarize the consideration transferred to acquire lululemon australia and the amounts of
identified assets acquired and liabilities assumed at the acquisition date, as well as the fair value of the non-
controlling interest in lululemon australia at the acquisition date:
Fair value of consideration transferred :
The following table summarizes the fair values of the net assets acquired at the date of acquisition:
As a result of the Company obtaining control over lululemon australia, the Company’s previously held
13 percent interest was remeasured to fair value, resulting in a gain of $1,792. This gain has been recognized in the
line item Other income (expense), net in the Company’s consolidated statements of operations.
The fair value of the non-controlling interest of $3,554 in lululemon australia was estimated by applying a
market approach and an income approach. This fair value measurement is based on significant inputs not observable
in the market and thus represents a Level 3 measurement as defined in ASC Topic 820, Fair Value Measurements
and Disclosures (“ASC 820”). The fair value estimates use standard valuation techniques, including discounted cash
flows, comparable transactions and internal projections, and include assumed adjustments due to the lack of control
or lack of marketability that market participants would consider when estimating the fair value of the non-
controlling
interest in lululemon australia.
In July 2010, the Company reacquired in an asset purchase transaction a franchised store in Saskatoon,
Saskatchewan for total cash consideration of $6,610. Included in the Company’s consolidated statements of
operations for the year ended January 30, 2011 are the results of the reacquired Saskatoon franchised store from the
date of acquisition to January 30, 2011.
64
Cash
$
5,872
Conversion of note receivable to equity
3,481
Total
9,353
Investment in lululemon australia held prior to the business combination
2,345
Fair value of the non
-
controlling interest in lululemon australia
3,554
$
15,252
Inventory
$
3,053
Prepaid and other assets
709
Property and equipment
1,812
Goodwill and intangible assets
11,874
Total assets acquired
17,448
Current and non
-
current liabilities
2,196
Total liabilities assumed
2,196
Total identifiable net assets
$
15,252