Starbucks 2001 Annual Report Download - page 28

DEFINED CONTRIBUTION PLANS
Starbucks maintains voluntary defined contribution plans covering eligible employees as defined in
the plan documents. Participating employees may elect to defer and contribute a percentage of their
compensation to the plan, not to exceed the dollar amount set by law. For certain plans, the Company
matches 25% of each employee’s eligible contribution up to a maximum of the first 4% of each
employee’s compensation.
The Company’s matching contributions to the plans were approximately $1.6 million, $1.1 million
and $0.9 million for fiscal 2001, 2000 and 1999, respectively.
Note 14: Income Taxes
A reconciliation of the statutory federal income tax rate with the Company’s effective income tax rate
is as follows:
Fiscal year ended Sept 30, 2001 Oct 1, 2000 Oct 3, 1999
Statutory rate 35.0 % 35.0 % 35.0 %
State income taxes, net of federal income tax benefit 3.8 3.7 3.7
Valuation allowance change from prior year 0.9 3.5 -
Other, net (2.4) (1.1) (0.7)
Effective tax rate 37.3 % 41.1 % 38.0 %
The provision for income taxes consists of the following (in thousands):
Fiscal year ended Sept 30, 2001 Oct 1, 2000 Oct 3, 1999
Currently payable:
Federal $ 94,948 $ 71,758 $ 52,207
State 17,656 12,500 9,332
Deferred/ (asset) liability, net (4,892) (18,252) 794
Total $ 107,712 $ 66,006 $ 62,333
Deferred income taxes or (tax benefits) reflect the tax effect of temporary differences between the
amounts of assets and liabilities for financial reporting purposes and amounts as measured for tax
purposes.The Company will establish a valuation allowance if it is more likely than not these items
will either expire before the Company is able to realize their benefits, or that future deductibility is
uncertain.As a result of losses from investments in majority owned foreign subsidiaries and Internet-
related companies, the Company established valuation allowances of $3.0 million and $5.7 million for
the fiscal years ended September 30, 2001, and October 1, 2000, respectively. The tax effect of
temporary differences and carryforwards that cause significant portions of deferred tax assets and
liabilities is as follows (in thousands):
Sept 30, 2001 Oct 1, 2000
Deferred tax assets:
Loss on investments $ 23,666 $ 22,635
Accrued rent 12,317 10,321
Accrued compensation and related costs 9,898 9,212
Other accrued expenses 7,245 5,957
Other 13,382 10,313
Total 66,508 58,438
Valuation allowance (8,704) (5,659)
To tal deferred tax asset, net of valuation allowance 57,804 52,779
Deferred tax liabilities:
Depreciation (39,466) (36,249)
Investments in joint ventures (4,614) (4,616)
Other (988) (4,020)
Total (45,068) (44,885)
Net deferred tax asset/ (liability) $ 12,736 $ 7,894
Taxes currently payable of $50.3 million and $17.9 million are included in “Accrued taxes” on the
accompanying consolidated balance sheets as of September 30,2001,and October 1,2000,respectively.