Starbucks 2014 Annual Report Download - page 81

Starbucks Corporation 2014 Form 10-K 77
The following table summarizes the activity related to our unrecognized tax benefits (in millions):
Sep 28, 2014 Sep 29, 2013 Sep 30, 2012
Beginning balance $ 88.8 $ 75.3 $ 52.9
Increase related to prior year tax positions 1.4 8.9 8.8
Decrease related to prior year tax positions (2.2)(9.3) —
Increase related to current year tax positions 26.7 19.3 20.0
Decrease related to current year tax positions (1.9)(0.4)(1.1)
Decreases related to settlements with taxing authorities (0.1) — (0.5)
Decreases related to lapsing of statute of limitations —(5.0)(4.8)
Ending balance $ 112.7 $ 88.8 $ 75.3
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 2013. We are no longer subject to US federal or state examination for years prior to fiscal year
2011, with the exception of eleven states. We are no longer subject to examination in any material international markets prior to
2006.
There is a reasonable possibility that our unrecognized tax benefit liability will change within 12 months; however, we do not
expect this change to be material 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 28, 2014 Sep 29, 2013 Sep 30, 2012
Net earnings attributable to Starbucks $ 2,068.1 $ 8.3 $ 1,383.8
Weighted average common shares and common stock units
outstanding (for basic calculation) 753.1 749.3 754.4
Dilutive effect of outstanding common stock options and RSUs 10.0 13.0 18.6
Weighted average common and common equivalent shares
outstanding (for diluted calculation) 763.1 762.3 773.0
EPS — basic $ 2.75 $ 0.01 $ 1.83
EPS — diluted $ 2.71 $ 0.01 $ 1.79
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 2.7 million and 0.2
million out-of-the-money stock options as of September 28, 2014 and September 30, 2012, respectively. There were no out-of-
the-money stock options as of September 29, 2013.
Note 15: Commitments and Contingencies
Legal Proceedings
On November 12, 2013, the arbitrator in our arbitration with Kraft Foods Global, Inc. (now known as Kraft Foods Group, Inc.)
("Kraft") ordered Starbucks to pay Kraft $2,227.5 million in damages plus prejudgment interest and attorneys' fees. We
estimated prejudgment interest, which included an accrual through the estimated payment date, and attorneys' fees to be
approximately $556.6 million. As a result, we recorded a litigation charge of $2,784.1 million in our fiscal 2013 operating
results.
In the first quarter of fiscal 2014, Starbucks paid all amounts due to Kraft under the arbitration, including prejudgment interest
and attorneys' fees, and fully extinguished the litigation charge liability. Of the $2,784.1 million litigation charge accrued in the
fourth quarter of fiscal 2013, $2,763.9 million was paid and the remainder was released as a litigation credit to reflect a
reduction to our estimated prejudgment interest payable as a result of paying our obligation earlier than anticipated.