Starbucks 2011 Annual Report Download - page 76

US income and foreign withholding taxes have not been provided on approximately $987 million of cumulative
undistributed earnings of foreign subsidiaries and equity investees. We intend to reinvest these earnings for the
foreseeable future. If these amounts were distributed to the US, in the form of dividends or otherwise, we would be
subject to additional US income taxes, which could be material. Determination of the amount of unrecognized
deferred income tax liabilities on these earnings is not practicable because such liability, if any, is dependent on
circumstances existing if and when remittance occurs.
Tax effect of temporary differences and carryforwards that comprise significant portions of deferred tax assets and
liabilities (in millions):
Oct 2, 2011 Oct 3, 2010
Deferred tax assets:
Property,plantandequipment ....................................... $ 46.4 $ 32.6
Accruedoccupancycosts ........................................... 55.9 55.2
Accruedcompensationandrelatedcosts ............................... 69.6 100.8
Other accrued liabilities ............................................ 27.8 25.0
Asset retirement obligation asset ..................................... 19.0 14.9
Deferredrevenue ................................................. 47.8 58.4
Asset impairments ................................................ 60.0 94.8
Taxcredits ...................................................... 23.0 41.0
Stock based compensation .......................................... 128.8 115.9
Net operating losses ............................................... 85.5 43.7
Other .......................................................... 58.6 50.6
Total .......................................................... $622.4 $632.9
Valuationallowance .............................................. (137.4) (88.1)
Total deferred tax asset, net of valuation allowance ....................... $485.0 $544.8
Deferred tax liabilities:
Property,plantandequipment ....................................... (66.4) (26.2)
Other .......................................................... (43.3) (19.1)
Total .......................................................... (109.7) (45.3)
Net deferred tax asset .............................................. $375.3 $499.5
Reported as:
Current deferred income tax assets ................................... $230.4 $304.2
Long-term deferred income tax assets (included in Other assets) ............. 156.3 195.3
Current deferred income tax liabilities ................................. (4.9) 0.0
Long-term deferred income tax liabilities .............................. (6.5) 0.0
Net deferred tax asset .............................................. $375.3 $499.5
We will establish a valuation allowance if either it is more likely than not that the deferred tax asset will expire
before we are able to realize the benefit, or the future deductibility is uncertain. Periodically, the valuation allowance
is reviewed and adjusted based on our assessments of the likelihood of realizing the benefit of our deferred tax
assets. The valuation allowance as of October 2, 2011 and October 3, 2010 primarily related to net operating losses
and other deferred tax assets of consolidated foreign subsidiaries. The net change in the total valuation allowance for
the years ended October 2, 2011 and October 3, 2010, was an increase of $49.3 million and $67.8 million,
respectively. During fiscal 2011 and 2010, we recognized approximately $32 million and $40 million, respectively,
of previously unrecognized deferred tax assets in certain foreign jurisdictions, with a corresponding increase to the
valuation allowance due to the uncertainty of their realization.
70