Starbucks 2000 Annual Report Download - page 28

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As required by SFAS No. 123, the Company has determined that the weighted average estimated fair
values of options granted during fiscal 2000, 1999 and 1998 were $10.74, $8.86 and $7.20 per share,
respectively. Had compensation costs for the Company’s stock-based compensation plans been accounted
for using the fair value method of accounting described by SFAS No. 123, the Company’s net earnings and
earnings per share would have been as follows (in thousands, except earnings per share):
PRO FORMA
UNDER SFAS
Fiscal year ended AS REPORTED NO. 123
October 1, 2000:
Net earnings $ 94,564 $ 66,241
Net earnings per common share:
Basic $ 0.51 $ 0.36
Diluted $ 0.49 $ 0.35
October 3, 1999:
Net earnings $ 101,693 $ 75,326
Net earnings per common share:
Basic $ 0.56 $ 0.41
Diluted $ 0.54 $ 0.40
September 27, 1998:
Net earnings $ 68,372 $ 51,595
Net earnings per common share:
Basic $ 0.39 $ 0.30
Diluted $ 0.37 $ 0.28
In applying SFAS No. 123, the impact of outstanding stock options granted prior to 1996 has been excluded
from the pro forma calculations; accordingly, the 2000, 1999 and 1998 pro forma adjustments are not
necessarily indicative of future period pro forma adjustments.
defined contribution plans
Starbucks maintains voluntary defined contribution plans covering eligible employees as defined in
the plan documents. Participating employees may elect to defer and contribute a percentage of their
compensation to the plan, not to exceed the dollar amount set by law. For certain plans, the Company
matches 25% of each employee’s eligible contribution up to a maximum of the first 4% of each
employee’s compensation.
The Company’s matching contributions to the plans were approximately $1.1 million, $0.9 million and
$0.8 million for fiscal 2000, 1999 and 1998, respectively.
Note 13: Income taxes
A reconciliation of the statutory federal income tax rate with the Company’s effective income tax rate is
as follows:
Fiscal year ended Oct 1, 2000 Oct 3, 1999 Sept 27, 1998
Statutory rate 35.0% 35.0% 35.0%
State income taxes, net of federal
income tax benefit 3.7 3.7 3.8
Non-deductible losses and merger costs - - 2.6
Valuation allowance change from prior year 3.5 - -
Other, net (1.1) (0.7) (0.2)
Effective tax rate 41.1% 38.0% 41.2%
The provision for income taxes consists of the following (in thousands):
Fiscal year ended Oct 1, 2000 Oct 3, 1999 Sept 27, 1998
Currently payable:
Federal $ 71,758 $ 52,207 $ 39,267
State 12,500 9,332 6,586
Deferred (asset) liability, net (18,252) 794 2,125
Total $ 66,006 $ 62,333 $ 47,978
P. 44 starbucks coffee company