Starbucks 2011 Annual Report Download - page 63

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Fair Value Measurements at Reporting Date Using
Balance at
October 3,
2010
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets:
Short-term investments:
Available-for-sale securities
Agencyobligations ............. $ 30.0 $ 0.0 $ 30.0 $ 0.0
Corporate debt securities ......... 15.0 0.0 15.0 0.0
Government treasury securities .... 190.8 190.8 0.0 0.0
State and local government
obligations .................. 0.7 0.0 0.7 0.0
Total available-for-sale securities ..... 236.5 190.8 45.7 0.0
Trading securities ................. 49.2 49.2 0.0 0.0
Total short-term investments .......... 285.7 240.0 45.7 0.0
Long-term investments:
Available-for-sale securities
Agencyobligations ............. 27.0 0.0 27.0 0.0
Corporate debt securities ......... 123.5 0.0 123.5 0.0
State and local government
obligations .................. 41.3 0.0 0.0 41.3
Totallong-terminvestments........... 191.8 0.0 150.5 41.3
Total........................... $477.5 $240.0 $196.2 $41.3
Liabilities:
Derivatives...................... $ 34.7 $ 0.0 $ 34.7 $ 0.0
Gross unrealized holding gains and losses on investments were not material at October 2, 2011 and October 3, 2010.
Available-for-sale Securities
Available-for-sale securities include government treasury securities, corporate and agency bonds, certificates of
deposit placed through an account registry service (“CDARS”) and auction rate securities (“ARS”). For government
treasury securities, we use quoted prices in active markets for identical assets to determine fair value, thus these
securities are considered Level 1 instruments. For corporate and agency bonds, for which a quoted market price is
not available for identical assets, we determine fair value based upon the quoted market price of similar assets or the
present value of expected future cash flows, calculated by applying revenue multiples to estimate future operating
results and using discount rates appropriate for the duration and the risks involved. Fair values for certificates of
deposit are estimated using a discounted cash flow calculation that applies current interest rates to aggregate
expected maturities. Fair values for commercial paper are estimated using a discounted cash flow calculation that
applies current imputed interest rates of similar securities. These securities are considered Level 2 instruments.
Level 3 instruments are comprised solely of ARS. We determine fair value of our ARS using an internally
developed valuation model, using inputs that include interest rate curves, credit and liquidity spreads, and effective
maturity. Proceeds from sales of available-for-sale securities were $0.0 million, $1.1 million, and $5.0 million in
fiscal years 2011, 2010, and 2009, respectively. For fiscal years 2011, 2010, and 2009 realized gains and losses on
sales and maturities were not material.
Certificates of deposit placed through CDARS have maturity dates ranging from 4 weeks to 2 years and principal
amounts, that when aggregated with interest that will accrue over the investment term, will not exceed Federal
Deposit Insurance Corporation limits. Certificates of deposit with original maturities of 90 days or less are included
57