Starbucks 2011 Annual Report Download - page 60

Earnings per Share
Basic earnings per share is computed based on the weighted average number of shares of common stock outstanding
during the period. Diluted earnings per share is computed based on the weighted average number of shares of
common stock and the effect of dilutive potential common shares outstanding during the period, calculated using the
treasury stock method. Dilutive potential common shares include outstanding stock options and RSUs. Performance-
based RSUs are considered dilutive when the related performance criterion has been met.
Common Stock Share Repurchases
We may repurchase shares of Starbucks common stock under a program authorized by our Board of Directors,
including pursuant to a contract, instruction or written plan meeting the requirements of Rule 10b5-1(c)(1) of the
Securities Exchange Act of 1934. Under applicable Washington State law, shares repurchased are retired and not
displayed separately as treasury stock on the financial statements. Instead, the par value of repurchased shares is
deducted from common stock and the excess repurchase price over par value is deducted from additional paid-in
capital and from retained earnings, once additional paid-in capital is depleted.
Recent Accounting Pronouncements
In September 2011, the FASB issued guidance that revises the requirements around how entities test goodwill for
impairment. The guidance allows companies to perform a qualitative assessment before calculating the fair value of
the reporting unit. If entities determine, on the basis of qualitative factors, that the fair value of the reporting unit is
more likely than not greater than the carrying amount, a quantitative calculation would not be needed. We plan to
early adopt this guidance effective for our fiscal 2012 annual goodwill impairment test. The adoption of this
guidance will result in a change in how we perform our goodwill impairment assessment; however, it will not have a
material impact on our financial statements.
In June 2011, the FASB issued guidance that revises the manner in which entities present comprehensive income in
their financial statements. The guidance requires entities to report the components of comprehensive income in
either a single, continuous statement or two separate but consecutive statements. The guidance will become effective
for us at the beginning of our first quarter of fiscal 2013. The adoption of this new guidance will result in a change in
how we present the components of comprehensive income, which is currently presented within our consolidated
statements of equity.
In May 2011, the FASB issued guidance to amend the fair value measurement and disclosure requirements. The
guidance requires the disclosure of quantitative information about unobservable inputs used, a description of the
valuation processes used, and a qualitative discussion around the sensitivity of the measurements. The guidance will
become effective for us at the beginning of our second quarter of fiscal 2012. The adoption of this new guidance will
not have a material impact on our financial statements.
In June 2009, the FASB issued guidance on the consolidation of variable interest entities. We adopted this new
guidance effective at the beginning of the first quarter of fiscal 2011, with no impact on our financial statements.
Reclassifications
In the second quarter of fiscal 2011, concurrent with the change in our distribution method for packaged coffee and
tea in the US, we revised the presentation of revenues. Non-retail licensing revenues were reclassified on the
consolidated financial statements to the renamed “CPG, foodservice and other” revenue line, which includes
revenues from our direct sale of packaged coffee and tea as well as licensing revenues received under the previous
distribution arrangement. The previous “Licensing” revenue line now includes only licensed store revenue and
therefore has been renamed “Licensed stores.” For fiscal 2010 and 2009, $465.7 million and $427.3 million,
respectively, were reclassified from the previously named Licensing revenue to CPG, foodservice and other
revenue. There was no impact to consolidated or segment total net revenues from this change in presentation.
In addition, certain other reclassifications have been made to prior year amounts to conform to the current year
presentation.
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