Starbucks 2013 Annual Report Download - page 80

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The following table summarizes the activity related to our unrecognized tax benefits (in millions):
Sep 29, 2013 Sep 30, 2012 Oct 2, 2011
Beginning balance $ 75.3 $ 52.9 $ 68.4
Increase related to prior year tax positions 8.9 8.8 4.4
Decrease related to prior year tax positions (9.3) — (32.3)
Increase related to current year tax positions 19.3 20.0 26.0
Decrease related to current year tax positions (0.4)(1.1)(0.8)
Decreases related to settlements with taxing authorities —(0.5)(5.0)
Decreases related to lapsing of statute of limitations (5.0)(4.8)(7.8)
Ending balance $ 88.8 $ 75.3 $ 52.9
We are currently under routine audit by various jurisdictions inside and outside the US as well as US state taxing jurisdictions
for fiscal years 2006 through 2012. We are no longer subject to US federal or state examination for years prior to fiscal year
2010, with the exception of nine states. We are no longer subject to examination in any material international markets prior to
2006.
There is a reasonable possibility that the unrecognized tax benefits will change within 12 months, but we do not expect this
change to be significant to the consolidated financial statements.
Note 14: Earnings per Share
Calculation of net earnings per common share (“EPS”) — basic and diluted (in millions, except EPS):
Fiscal Year Ended Sep 29, 2013 Sep 30, 2012 Oct 2, 2011
Net earnings attributable to Starbucks $ 8.3 $ 1,383.8 $ 1,245.7
Weighted average common shares and common stock units
outstanding (for basic calculation) 749.3 754.4 748.3
Dilutive effect of outstanding common stock options and RSUs 13.0 18.6 21.4
Weighted average common and common equivalent shares
outstanding (for diluted calculation) 762.3 773.0 769.7
EPS — basic $ 0.01 $ 1.83 $ 1.66
EPS — diluted $ 0.01 $ 1.79 $ 1.62
Potential dilutive shares consist of the incremental common shares issuable upon the exercise of outstanding stock options
(both vested and non-vested) and unvested RSUs, calculated using the treasury stock method. The calculation of dilutive shares
outstanding excludes out-of-the-money stock options (i.e., such options’ exercise prices were greater than the average market
price of our common shares for the period) because their inclusion would have been antidilutive. We had no out-of-the-money
stock options as of September 29, 2013. We had 0.2 million and 0.1 million out-of-the-money stock options as
of September 30, 2012, and October 2, 2011, respectively.
Note 15: Commitments and Contingencies
Legal Proceedings
In the first quarter of fiscal 2011, Starbucks notified Kraft Foods Global, Inc. (now known as Kraft Foods Group, Inc.)
(“Kraft”) that we were discontinuing our distribution arrangement with Kraft on March 1, 2011 due to material breaches by
Kraft of its obligations under the Supply and License Agreement between the Company and Kraft, dated March 29, 2004 (the
“Agreement”), which defined the main distribution arrangement between the parties. Through our arrangement with Kraft,
Starbucks sold a selection of Starbucks and Seattle's Best Coffee branded packaged coffees in grocery and warehouse club
stores throughout the US, and to grocery stores in Canada, the UK and other European countries. Kraft managed the
distribution, marketing, advertising and promotion of these products.
Kraft denied it had materially breached the Agreement. On November 29, 2010, Starbucks received a notice of arbitration from
Kraft putting the commercial dispute between the parties into binding arbitration pursuant to the terms of the Agreement. In
addition to denying it materially breached the Agreement, Kraft further alleged that if Starbucks wished to terminate the
2013 10-K
Starbucks Corporation Form