Starbucks 2008 Annual Report Download - page 76

The tax effect of temporary differences and carryforwards that comprise significant portions of deferred tax assets
and liabilities was as follows (in millions):
Fiscal Year Ended Sep 28, 2008 Sep 30, 2007
Deferred tax assets:
Accrued occupancy costs ................................... $ 54.8 $ 47.6
Accrued compensation and related costs........................ 56.2 65.1
Other accrued expenses . ................................... 25.2 9.4
FIN 47 asset ............................................ 13.3 14.3
Deferred revenue ......................................... 36.0 18.3
Asset impairments ........................................ 80.8 14.9
Foreign tax credits ....................................... 26.1 11.1
Stock based compensation .................................. 79.6 66.8
Other ................................................. 49.6 29.2
Total .................................................. 421.6 276.7
Valuation allowance . . . ................................... (20.0) (13.7)
Total deferred tax asset, net of valuation allowance ................. 401.6 263.0
Deferred tax liabilities:
Property, plant and equipment ............................... (18.1) (22.9)
Other ................................................. (21.4) (23.9)
Total .................................................. (39.5) (46.8)
Net deferred tax asset ....................................... $362.1 $216.2
Reported as:
Current deferred income tax asset ............................ $234.2 $129.4
Long-term deferred income tax asset (included in “Other assets”) ..... 127.9 86.8
Net deferred tax asset ....................................... $362.1 $216.2
The Company will establish a valuation allowance if it is more likely than not that these items will either expire
before the Company is able to realize their benefits, or that future deductibility is uncertain. Periodically, the
valuation allowance is reviewed and adjusted based on management’s assessments of realizable deferred tax assets.
The valuation allowance as of September 28, 2008 and September 30, 2007 was related to net operating losses of
consolidated foreign subsidiaries. The net change in the total valuation allowance for the years ended September 28,
2008, and September 30, 2007, was an increase of $6.3 million and $4.9 million, respectively.
As of September 28, 2008, the Company has foreign tax credit carryforwards of $26.2 million with expiration dates
between fiscal years 2013 and 2018. As of the end of fiscal 2008, the Company also has capital loss carryforwards of
$0.5 million, expiring in fiscal year 2010.
Taxes currently payable of $14.8 million and $38.5 million are included in “Accrued taxes” on the consolidated
balance sheets as of September 28, 2008 and September 30, 2007, respectively.
FIN 48
As described in Note 1, on October 1, 2007, the first day of the Company’s fiscal 2008, Starbucks adopted FIN 48.
The cumulative effects of applying FIN 48 have been recorded as a decrease of $1.7 million and $1.6 million,
respectively, to the Company’s fiscal 2008 opening balances of retained earnings and additional paid-in capital. The
Company also recorded an increase of $28.5 million to current income tax assets, an increase of $12.2 million to
long-term income tax assets, a decrease of $24.6 million to current tax liabilities and an increase of $68.6 million to
long-term tax liabilities.
70