Starbucks 2008 Annual Report Download - page 68

for the program and the facility. The Company may issue commercial paper from time to time, and the proceeds of
the commercial paper financing will be used for working capital needs, capital expenditures and other corporate
purposes, which may include acquisitions and share repurchases.
As of September 28, 2008, the Company also had $15.9 million in letters of credit outstanding under the revolving
credit facility, leaving a total of $270.9 million in remaining borrowing capacity under the combined revolving
credit facility and commercial paper program. As of September 30, 2007, letters of credit totaling $12.9 million
were outstanding.
Long-term Debt
In August 2007, the Company issued $550 million of 6.25% Senior Notes (the “notes”) due in August 2017, in an
underwritten registered public offering. Interest is payable semi-annually on February 15 and August 15 of each
year. The notes require the Company to maintain compliance with certain covenants, which limit future liens and
sale and leaseback transactions on certain material properties. The notes were priced at a discount, resulting in
proceeds to the Company of $549 million, before expenses.
Other long term debt, totaling $0.4 million as of September 28, 2008, matures in fiscal 2011.
Scheduled principal payments on long-term debt are as follows (in millions):
Fiscal Year Ending
2009 ................................................................. $ 0.8
2010 ................................................................. 0.3
2011 ................................................................. 0.1
2012 ................................................................. —
2013 ................................................................. —
Thereafter . . . .......................................................... 550.0
Total principal payments .................................................. $551.2
Interest Expense
Interest expense, net of interest capitalized, was $53.4 million, $38.2 million and $8.4 million in fiscal 2008, 2007
and 2006, respectively. In fiscal 2008, 2007 and 2006, $7.2 million, $3.9 million and $2.7 million, respectively, of
interest was capitalized for new store and other asset construction projects, and included in “Property, plant and
equipment, net,” on the consolidated balance sheets.
Note 11: Other Long-term Liabilities
The Company’s other long-term liabilities consisted of the following (in millions):
Fiscal Year Ended Sep 28, 2008 Sep 30, 2007
Deferred rent ............................................. $303.9 $271.7
Unrecognized tax benefits . ................................... 60.4 —
Asset retirement obligations .................................. 44.6 43.7
Minority interest ........................................... 18.3 17.3
Other ................................................... 15.2 21.4
Total ................................................... $442.4 $354.1
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. Unrecognized tax benefits represent the
estimated long-term portion of the Company’s gross unrecognized tax benefits including interest under FIN 48. See
Notes 1 and 15 for additional information. Asset retirement obligations represent the estimated fair value of the
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