Starbucks 2012 Annual Report Download - page 91

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85
At this time, Starbucks believes an unfavorable outcome with respect to the arbitration is not probable, but as
noted above is reasonably possible. As also noted above, Starbucks believes we have valid claims of material
breach by Kraft under the Agreement that allowed us to terminate the Agreement without compensation to
Kraft. In addition, Starbucks believes Kraft's damage estimates are highly inflated and based upon faulty
analysis. As a result, we cannot reasonably estimate the possible loss. Accordingly, no loss contingency has been
recorded for this matter.
Starbucks is party to various other legal proceedings arising in the ordinary course of business, including certain
employment litigation cases that have been certified as class or collective actions, but, except as noted above, is
not currently a party to any legal proceeding that management believes could have a material adverse effect on our
consolidated financial position, results of operations or cash flows.
Note 16: Restructuring Charges
The restructuring efforts we began in fiscal 2008 to rationalize our store portfolio and the non-retail support
organization were completed in fiscal 2010. On a cumulative basis we closed 918 stores on a global basis as part
of this effort.
Restructuring charges by type of cost for fiscal 2010 were as follows (in millions):
By Type of Cost
Total
Lease Exit
and Other
Related Costs
Asset
Impairments
Employee
Termination
Costs
Costs incurred and charged to expense in fiscal
2010 $ 53.0 $ 53.0 $ 0.2 $ (0.2)
Accrued liability as of October 3, 2010(1) $ 89.2 $ 89.2 $
—
$
—
Cash payments (27.1) (27.1)
—
—
Other 0.5 0.5
—
—
Accrued liability as of October 2, 2011(1) $ 62.6 $ 62.6 $
—
$
—
Cash payments (18.7)
(
18.7
)
—
—
Other (5.3)
(
5.3
)
—
—
Accrued liability as of September 30, 2012(1) $ 38.6 $ 38.6 $
—
$
—
(1) The remaining liability relates to lease obligations for stores that were previously closed where Starbucks
has been unable to terminate the lease or find subtenants for the unused space.
For fiscal 2010, $28.4 million, $24.5 million and $0.1 million of restructuring charges were recorded to the
Americas, EMEA, and CAP segments, respectively.
Note 17: Segment Reporting
Segment information is prepared on the same basis that our management reviews financial information for
operational decision-making purposes. Beginning with the first quarter of fiscal 2012, we redefined our reportable
operating segments to align with the three-region leadership and organizational structure of our retail business that
took effect at the beginning of fiscal 2012.
The three-region structure includes: 1) Americas, inclusive of the US, Canada, and Latin America; 2) Europe,
Middle East, and Africa, collectively referred to as the “EMEA” region; and 3) China / Asia Pacific (“CAP”). Our
chief executive officer, who is our chief operating decision maker manages these businesses, evaluates financial
results, and makes key operating decisions based on the new organizational structure. Accordingly, beginning
with the first quarter of fiscal 2012, we revised our reportable operating segments from 1) US, 2) International,
and 3) Global Consumer Products Group to the following four reportable segments: 1) Americas, 2) CAP, 3)