Starbucks 2007 Annual Report Download - page 60

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Scheduled principal payments on long-term debt are as follows (in thousands):
Fiscal Year Ending
2008 ............................................................... $ 775
2009 ............................................................... 789
2010 ............................................................... 337
2011 ............................................................... 56
2012 ............................................................... —
Thereafter ........................................................... 550,000
Total principal payments................................................. $551,957
Interest Expense
Interest expense, net of interest capitalized, was $38.2 million, $8.4 million and $1.3 million in fiscal 2007, 2006
and 2005, respectively. In fiscal 2007 and 2006, $3.9 million and $2.7 million, respectively, of interest was
capitalized for new store construction and included in “Property, plant and equipment, net,” on the consolidated
balance sheet. No interest was capitalized in fiscal 2005.
Note 10: Other Long-term Liabilities
The Company’s other long-term liabilities consist of the following (in thousands):
Fiscal Year Ended Sept 30, 2007 Oct 1, 2006
Deferred rent.............................................. $271,736 $203,903
Asset retirement obligations ................................... 43,670 34,271
Minority interest ........................................... 17,252 10,739
Other ................................................... 21,416 13,944
Total .................................................... $354,074 $262,857
Deferred rent liabilities represent amounts for tenant improvement allowances, rent escalation clauses and rent
holidays related to certain operating leases. The Company amortizes deferred rent over the terms of the leases as
reductions to rent expense on the consolidated statements of earnings.
Asset retirement obligations represent the estimated fair value of the Company’s future costs of removing leasehold
improvements at the termination of leases for certain stores and administrative facilities.
Minority interest represents the collective ownership interests of minority shareholders for operations accounted for
under the consolidation method, in which Starbucks owns less than 100% of the equity interest.
The other remaining long-term liabilities generally include obligations to be settled or paid for one year beyond
each period presented, for items such as hedging instruments, guarantees, the long-term portion of capital lease
obligations and donation commitments.
Note 11: Leases
Rental expense under operating lease agreements was as follows (in thousands):
Fiscal Year Ended Sept 30, 2007 Oct 1, 2006 Oct 2, 2005
Minimum rentals — retail stores ..................... $527,877 $406,329 $340,474
Minimum rentals — other .......................... 59,286 52,367 43,532
Contingent rentals ................................ 50,966 40,113 32,910
Total .......................................... $638,129 $498,809 $416,916
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