SBUX » Topics » Comprehensive Income

This excerpt taken from the SBUX 10-K filed Dec 14, 2006.
Comprehensive Income
 
Comprehensive income includes all changes in equity during the period, except those resulting from transactions with shareholders and subsidiaries of the Company. It has two components: net earnings and other comprehensive income. Accumulated other comprehensive income reported on the Company’s consolidated balance sheets consists of foreign currency translation adjustments and the unrealized gains and losses, net of applicable taxes, on available-for-sale securities and on derivative instruments designated and qualifying as cash flow and net investment hedges.
 
58 STARBUCKS CORPORATION, FORM 10-K


Table of Contents

Comprehensive income, net of related tax effects, is as follows (in thousands):
 
                         
FISCAL YEAR ENDED   Oct 1, 2006     Oct 2, 2005     Oct 3, 2004  
 
 
Net earnings
  $ 564,259     $ 494,370     $ 388,880  
Unrealized holding gains/(losses) on available-for-sale securities, net of tax benefit/(provision) of ($1,298), $889 and $618 in 2006, 2005 and 2004, respectively
    2,164       (1,482 )     (1,005 )
Unrealized holding losses on cash flow hedges, net of tax benefit of $1,646, $2,268 and $2,801 in 2006, 2005 and 2004, respectively
    (2,803 )     (3,861 )     (4,769 )
Unrealized holding gains/(losses) on net investment hedges, net of tax benefit/(provision) of ($21), ($609) and $328 in 2006, 2005 and 2004, respectively
    35       1,037       (558 )
Reclassification adjustment for net (gains)/losses realized in net earnings for available-for-sale securities, net of tax provision/(benefit) of $1,060, ($812) and ($127) in 2006, 2005 and 2004, respectively
    (1,767 )     1,354       207  
Reclassification adjustment for net losses realized in net earnings for cash flow hedges, net of tax benefit of $2,430, $1,939 and $705 in 2006, 2005 and 2004, respectively
    4,138       3,302       1,200  
     
     
Net unrealized gain/(loss)
    1,767       350       (4,925 )
Translation adjustment
    14,592       (8,677 )     19,892  
 
 
Total comprehensive income
  $ 580,618     $ 486,043     $ 403,847  
 
 
 
The favorable translation adjustment change during fiscal 2006 of $14.6 million was primarily due to the weakening of the U.S. dollar against the British pound sterling, euro and Canadian dollar. The unfavorable translation adjustment change during fiscal 2005 of $8.7 million was primarily due to the strengthening of the U.S. dollar against the euro, British pound sterling and Japanese yen. The favorable translation adjustment change during fiscal 2004 of $19.9 million was primarily due to the weakening of the U.S. dollar against several currencies, such as the British pound sterling, euro, Australian dollar and Canadian dollar.
 
The components of accumulated other comprehensive income, net of tax, were as follows (in thousands):
 
                 
FISCAL YEAR ENDED   Oct 1, 2006     Oct 2, 2005  
 
 
Net unrealized holding losses on available-for-sale securities
  $ (254 )   $ (651 )
Net unrealized holding losses on hedging instruments
    (6,416 )     (7,786 )
Translation adjustment
    43,943       29,351  
 
 
Accumulated other comprehensive income
  $ 37,273     $ 20,914  
 
 
 
As of October 1, 2006, the translation adjustment of $43.9 million was net of tax provisions of $7.3 million. As of October 2, 2005, the translation adjustment of $29.4 million was net of tax provisions of $5.5 million.
 
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