Starbucks 2009 Annual Report Download - page 74

Components of Accumulated other comprehensive income, net of tax (in millions):
Fiscal Year Ended Sep 27, 2009 Sep 28, 2008
Net unrealized losses on available-for-sale securities ................ $ (0.8) $ (4.1)
Net unrealized losses on hedging instruments...................... (23.7) (22.2)
Translation adjustment . . . ................................... 89.9 74.7
Accumulated other comprehensive income........................ $65.4 $ 48.4
As of September 27, 2009, the translation adjustment of $89.9 million was net of tax provisions of $1.0 million. As
of September 28, 2008, the translation adjustment of $74.7 million was net of tax provisions of $7.0 million.
Note 14: Employee Stock and Benefit Plans
The Company maintains several equity incentive plans under which it may grant non-qualified stock options,
incentive stock options, restricted stock, RSUs, or stock appreciation rights to employees, non-employee directors
and consultants. The Company issues new shares of common stock upon exercise of stock options and the vesting of
RSUs. The Company also has employee stock purchase plans (“ESPP”).
As of September 27, 2009, there were 38.2 million shares of common stock available for issuance pursuant to future
equity-based compensation awards and 9.8 million shares available for issuance under its ESPP plans.
Total stock based compensation and ESPP expense recognized in the consolidated financial statements
(in millions):
Fiscal Year Ended Sep 27, 2009 Sep 28, 2008 Sep 30, 2007
Stock option expense ........................... $61.6 $57.6 $ 92.3
RSU expense ................................. 16.6 5.6 —
ESPP expense ................................ 5.0 11.8 11.6
Total stock-based compensation expense on the
consolidated statements of earnings ................ $83.2 $75.0 $103.9
Total related tax benefit ........................... $29.3 $24.0 $ 35.3
Stock-based compensation capitalized in the respective
fiscal year, as included in Net property, plant and
equipment and inventories on the consolidated balance
sheets ...................................... $ 1.3 $ 1.9 $ 2.5
Stock Option Plans
Stock options to purchase the Company’s common stock are granted at the fair market value of the stock on the date
of grant. The majority of options become exercisable in four equal installments beginning a year from the date of
grant and generally expire 10 years from the date of grant, except for options granted in the exchange program,
described below, which have a seven year life. Options granted to non-employee directors generally vest over one to
three years. Nearly all outstanding stock options are non-qualified stock options.
The fair value of each stock option granted is estimated on the grant date using the Black-Scholes-Merton (“BSM”)
option valuation model. The assumptions used to calculate the fair value of options granted are evaluated and
revised, as necessary, to reflect market conditions and the Company’s experience. Options granted are valued using
the multiple option valuation approach, and the resulting expense is recognized over the requisite service period for
each separately vesting portion of the award. Compensation expense is recognized only for those options expected
to vest, with forfeitures estimated at the date of grant based on the Company’s historical experience and future
expectations.
On March 18, 2009, Starbucks shareholders approved a proposal to allow for a one-time stock option exchange
program, designed to provide eligible employees an opportunity to exchange certain outstanding underwater stock
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