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Starbucks Corporation 2014 Form 10-K 75
Reconciliation of the statutory US federal income tax rate with our effective income tax rate:
Fiscal Year Ended Sep 28, 2014 Sep 29, 2013 Sep 30, 2012
Total Litigation
charge All Other
Statutory rate 35.0% 35.0% 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefit 2.6 15.8 3.5 2.4 2.5
Benefits and taxes related to foreign operations (1.9) 37.5 — (3.4)(3.3)
Domestic production activity deduction (0.7) 8.1 — (0.7)(0.7)
Domestic tax credits (0.2) 2.8 — (0.3)(0.3)
Charitable contributions (0.4) 3.9 — (0.3)(0.5)
Other, net 0.2 0.7 — (0.1) 0.1
Effective tax rate 34.6% 103.8% 38.5% 32.6% 32.8%
Our effective tax rate in fiscal 2013 was significantly affected by the litigation charge we recorded as a result of the conclusion
of our arbitration with Kraft. In order to provide a more meaningful analysis of tax expense and the effective tax rate, the tables
above present separate reconciliations of the effect of the litigation charge. The deferred tax asset related to the litigation charge
is estimated to be recovered over a period of 15 years; the deferred tax asset has been classified between current and non-
current consistent with the expected recovery period for income tax reporting purposes.
US income and foreign withholding taxes have not been provided on approximately $2.2 billion 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 of the complexities with its hypothetical calculation, and the amount of liability, if any, is dependent on
circumstances existing if and when remittance occurs.