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Author: ivangrowth Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 25140  
Subject: Store Cards...Income and Liab Date: 2/15/2006 6:11 PM
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We have discussed this topic several times and without resolution as to how SBUX handles the liability on unredeemed cards.

I wrote investor relations and received this reply:

>>>Revenues from the Company's stored value cards, such as the Starbucks
Card, are recognized when tendered for payment, or upon redemption.
Outstanding customer balances are included in "Deferred revenue" on the
consolidated balance sheets. There are no expiration dates on the
Company's stored value cards, and Starbucks does not charge any service
fees that decrement customer balances.

While the Company will continue to honor all stored value cards
presented for payment, management may determine the likelihood of
redemption to be remote for certain card balances due to, among other
things, long periods of inactivity. In these circumstances, to the
extent management determines there is no requirement for remitting card
balances to government agencies under unclaimed property laws, card
balances may be recognized in the consolidated statements of earnings in
"Income and other income, net." For the 13 weeks ended January 1, 2006,
income recognized on unredeemed stored value card balances was $1.2
million. There was no income recognized on unredeemed stored value card
balances during the 13 weeks ended January 2, 2005. <end>

Please be aware that Q1 2006 was the first quarter that Starbucks
recorded income related to expected unredeemed balances.

If you are interested in reading the full 10-Q filing, please visit us
online at http://www.starbucks.com/aboutus/investor.asp. Just click on
"Starbucks SEC Filings."...>>>

There you have it, straight from the coffee pot,
Ivan
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