Starbucks 2015 Annual Report Download - page 29

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Other Income and Expenses
Fiscal Year Ended
Sep 27,
2015
Sep 28,
2014
Sep 27,
2015
Sep 28,
2014
% of Total
Net Revenues
Operating income $ 3,601.0 $ 3,081.1 18.8 % 18.7 %
Gain resulting from acquisition of joint venture 390.6 — 2.0 —
Loss on extinguishment of debt (61.1) — (0.3) —
Interest income and other, net 43.0 142.7 0.2 0.9
Interest expense (70.5)(64.1) (0.4) (0.4)
Earnings before income taxes 3,903.0 3,159.7 20.4 19.2
Income taxes 1,143.7 1,092.0 6.0 6.6
Net earnings including noncontrolling interests 2,759.3 2,067.7 14.4 12.6
Net earnings/(loss) attributable to noncontrolling
interests 1.9 (0.4) — —
Net earnings attributable to Starbucks $ 2,757.4 $ 2,068.1 14.4% 12.6%
Effective tax rate including noncontrolling interests 29.3 % 34.6 %
During the first quarter of fiscal 2015, we recorded a gain of $391 million as a result of remeasuring our preexisting 39.5%
ownership interest in Starbucks Japan to fair value upon acquisition.
During the fourth quarter of fiscal 2015, we recorded a loss of $61 million related to the redemption of our $550 million of
6.250% Senior Notes (the "2017 notes"), which were originally scheduled to mature in August 2017. The loss primarily relates
to the optional redemption premium outlined in the 2017 notes indenture, as well as expenses related to the previously
capitalized original issuance costs and accelerated amortization of the unamortized discount.
Net interest income and other decreased $100 million, primarily due to lapping the gain on the sale of our equity interest in our
Malaysia joint venture (approximately $68 million) in the prior year and net unfavorable fair value adjustments from derivative
instruments used to manage our risk of commodity price fluctuations (approximately $25 million) in fiscal 2015.
Interest expense increased $6 million primarily due to incurring a full quarter of interest in the first quarter of fiscal 2015 on the
long-term debt we issued in December of fiscal 2014 as well as the reclassification of $2 million from accumulated other
comprehensive income to interest expense related to remaining unrecognized losses from interest rate contracts associated with
the 2017 notes redeemed in the fourth quarter of fiscal 2015.
Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn
in those jurisdictions, as well as discrete items that may occur in any given year, but are not consistent from year to year. The
effective tax rate for fiscal 2015 was 29.3% compared to 34.6% for fiscal 2014. The decrease in the rate for fiscal 2015 was
primarily due to the 3.7% impact of the gain associated with the remeasurement of our preexisting 39.5% ownership interest in
Starbucks Japan upon acquisition, which was almost entirely non-taxable, as well as the 1.5% incremental tax benefit related to
domestic manufacturing deductions claimed in fiscal 2015 on U.S. corporate income tax returns for fiscal years 2010 through
2015.
Starbucks Corporation 2015 Form 10-K 25