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62 Starbucks Corporation 2014 Form 10-K
To mitigate the price uncertainty of a portion of our future purchases of dairy products and diesel fuel, we enter into dairy and
diesel fuel swap contracts, as well as dairy futures and collars that are not designated as hedging instruments. Gains and losses
from these derivatives are recorded in net interest income and other. Gains and losses from dairy swaps, futures and collars
largely offset price fluctuations on our dairy purchases, which are included in cost of sales. Gains and losses from diesel fuel
swaps largely offset the financial impact of diesel fuel fluctuations on our shipping costs, which are included in operating
expenses.
Gains and losses on derivative contracts designated as hedging instruments included in AOCI and expected to be reclassified
into earnings within 12 months, net of tax (in millions):
Net Gains/(Losses)
Included in AOCI Net Gains/(Losses)
Expected to be
Reclassified from
AOCI into Earnings
within 12 Months
Contract
Remaining
Maturity
(Months)
Sep 28,
2014 Sep 29,
2013
Cash Flow Hedges:
Interest rates $ 36.4 $ 41.4 $ 3.3
Foreign currency 10.6 (0.3)7.0 34
Coffee (0.7)(12.2)(1.3) 14
Net Investment Hedges:
Foreign currency 3.2 (12.9) 1.8 36
Pretax gains and losses on derivative contracts designated as hedging instruments recognized in other comprehensive income
("OCI") and reclassifications from AOCI to earnings (in millions):
Year Ended
Gains/(Losses) Recognized in
OCI Before Reclassifications Gains/(Losses) Reclassified from
AOCI to Earnings
Sep 28,
2014 Sep 29,
2013 Sep 28,
2014 Sep 29,
2013
Cash Flow Hedges:
Interest rates $ 0.5 $ 66.2 $ 5.0 $ 0.5
Foreign currency 24.0 7.4 8.0 3.5
Coffee (0.4)(26.5)(13.1)(49.4)
Net Investment Hedges:
Foreign currency 25.5 32.8 — —
Pretax gains and losses on derivative contracts not designated as hedging instruments recognized in earnings (in millions):
Gains/(Losses) Recognized in
Earnings
Sep 28, 2014 Sep 29, 2013
Foreign currency $ 1.7 $ (1.8)
Coffee — (2.1)
Dairy 12.6 (4.7)
Diesel fuel (1.0) 0.3