Starbucks 2009 Annual Report Download - page 62

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The Company does not intend to sell the ARS, nor is it likely it will be required to sell the ARS before their
anticipated recovery. The Company expects such recoveries to occur prior to the contractual maturities. In fiscal
2009, one ARS was called at par value of $7.4 million and one ARS was partially called at par value of $0.6 million.
The Company had $2.1 million and $6.0 million of accumulated unrealized losses on ARS as of the end of fiscal
2009 and 2008, respectively, determined to be temporary, which is included in Accumulated other comprehensive
income as a reduction in shareholders’ equity. As of September 27, 2009, approximately $4.9 million in ARS were
rated A/B2 by Standard & Poor’s and Moody’s, respectively. All of the remaining securities were rated investment
grade or higher by two or more of the following rating agencies: Moody’s, Standard & Poor’s and Fitch Ratings. The
Company’s ARS are collateralized by portfolios of student loans, substantially all of which are guaranteed by the
United States Department of Education.
The following table presents the length of time available-for-sale securities were in continuous unrealized loss
positions but were not determined to be other-than-temporarily impaired (in millions):
Consecutive Monthly Unrealized Losses
Gross
Unrealized
Holding
Losses Fair
Value
Gross
Unrealized
Holding
Losses Fair
Value
Less Than
12 Months
Greater Than
or Equal to
12 months
September 27, 2009
State and local government obligations ............... $ — $ — $(2.1) $55.7
Total ........................................ $ — $ — $(2.1) $55.7
September 28, 2008
State and local government obligations ............... $(6.0) $59.8 $ — $ —
Corporate debt securities ......................... (0.5) 11.6 — —
Total ........................................ $(6.5) $71.4 $ — $ —
Gross unrealized holding losses on the state and local obligations pertain to the Company’s eleven ARS. As
Starbucks does not intend to sell these securities, nor is it likely it will be required to sell these securities before their
anticipated recovery, which may be at maturity, the Company does not consider these securities to be
other-than-temporarily impaired.
There were no realized losses recorded for other than temporary impairments during fiscal years 2009, 2008 or
2007.
Trading securities
Trading securities are comprised of marketable equity mutual funds and equity exchange-traded funds that
approximate a portion of the Company’s liability under the Management Deferred Compensation Plan (“MDCP”),
a defined contribution plan. The corresponding deferred compensation liability of $68.3 million and $68.0 million
in fiscal 2009 and 2008, respectively, is included in Accrued compensation and related costs on the consolidated
balance sheets. The changes in net unrealized holding gains/losses in the trading portfolio included in earnings for
the years ended September 27, 2009 and September 28, 2008 were a net loss of $4.9 million and $14.5 million,
respectively.
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