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Derivative Financial Instruments
 6 Months Ended
Mar. 31, 2013
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
Derivative Financial Instruments
Foreign Currency
We enter into forward and swap contracts to hedge portions of cash flows of anticipated revenue streams and inventory purchases in currencies other than the entity's functional currency. Net derivative gains from these cash flow hedges of $1.0 million and net derivative losses of $2.9 million, net of taxes, were included in accumulated other comprehensive income as of March 31, 2013 and September 30, 2012, respectively. Of the net derivative gains accumulated as of March 31, 2013, $1.0 million pertains to derivative instruments that will be dedesignated as cash flow hedges within 12 months and will also continue to experience fair value changes before affecting earnings. Outstanding contracts will expire within 11 months.
We also enter into net investment derivative instruments to hedge our equity method investment in Starbucks Coffee Japan, Ltd., to minimize foreign currency exposure. Net derivative losses from net investment hedges of $16.9 million and $33.6 million, net of taxes, were included in accumulated other comprehensive income as of March 31, 2013 and September 30, 2012, respectively. Outstanding contracts will expire within 35 months.
In addition to the hedging instruments above, to mitigate the translation risk of certain balance sheet items, we enter into foreign currency swap contracts that are not designated as hedging instruments. These contracts are recorded at fair value, with the changes in fair value recognized in net interest income and other on the consolidated statements of earnings. Gains and losses from these instruments are largely offset by the financial impact of translating foreign currency denominated payables and receivables, which is also recognized in net interest income and other.
Coffee
Depending on market conditions, we also enter into futures contracts to hedge a portion of anticipated cash flows under our price-to-be-fixed green coffee contracts, which are described further in Note 5. Net derivative losses of $42.6 million and $32.9 million, net of taxes, were included in accumulated other comprehensive income as of March 31, 2013 and September 30, 2012, respectively, related to coffee hedges. Of the net derivative losses accumulated as of March 31, 2013, $41.9 million pertains to derivative instruments that will be dedesignated as cash flow hedges within 12 months and will also continue to experience fair value changes before affecting earnings. Outstanding contracts will expire within 12 months.
Dairy
To mitigate the price uncertainty of a portion of our future purchases of dairy products, we enter into futures contracts that are not designated as hedging instruments. These contracts are recorded at fair value, with the changes in fair value recognized in net interest income and other. Gains and losses from these instruments are largely offset by price fluctuations on our dairy purchases, which are included in cost of sales.
Diesel Fuel
To mitigate the price uncertainty of a portion of our future purchases of diesel fuel, we enter into swap contracts that are not designated as hedging instruments. These contracts are recorded at fair value, with the changes in fair value recognized in net interest income and other. Gains and losses from these instruments are largely offset by the financial impact of diesel fuel fluctuations on our shipping costs, which are included in operating expenses.

The following table presents the pretax effect of derivative contracts designated as hedging instruments on earnings and other comprehensive income ("OCI") for the quarter and two quarters ended (in millions):
 
Foreign Currency
 
Coffee
Quarter Ended
Mar 31, 2013
 
Apr 1, 2012
 
Mar 31, 2013
 
Apr 1, 2012
 
 
 
 
 
 
 
 
Cash Flow Hedges:
 
 
 
 
 
 
 
Gain/(Loss) recognized in earnings
$
1.2

 
$
(2.8
)
 
$
(11.1
)
 
$
—

Gain/(Loss) recognized in OCI
$
1.8

 
$
5.0

 
$
(5.6
)
 
$
(20.2
)
Net Investment Hedges:
 
 
 
 
 
 
 
Gain/(Loss) recognized in earnings
$
—

 
$
—

 
 
 
 
Gain/(Loss) recognized in OCI
$
11.7

 
$
10.3

 
 
 
 
 
Foreign Currency
 
Coffee
Two Quarters Ended
Mar 31, 2013
 
Apr 1, 2012
 
Mar 31, 2013
 
Apr 1, 2012
 
 
 
 
 
 
 
 
Cash Flow Hedges:
 
 
 
 
 
 
 
Gain/(Loss) recognized in earnings
$
0.6

 
$
(5.9
)
 
$
(16.3
)
 
$
—

Gain/(Loss) recognized in OCI
$
6.4

 
$
2.9

 
$
(27.1
)
 
$
(19.4
)
Net Investment Hedges:
 
 
 
 
 
 
 
Gain/(Loss) recognized in earnings
$
—

 
$
—

 
 
 
 
Gain/(Loss) recognized in OCI
$
26.4

 
$
10.3

 
 
 
 

The amounts shown in the above table as recognized in earnings for foreign currency and coffee hedges represent the realized gains/(losses) reclassified from OCI to net earnings during the year. The amounts shown as recognized in OCI are prior to these reclassifications.

The following table presents the pretax effect of derivative contracts not designated as hedging instruments on earnings for the quarter and two quarters ended (in millions):
 
 
Foreign Currency
 
Coffee
 
Dairy
 
Diesel Fuel
 
Mar 31, 2013
 
Apr 1, 2012
 
Mar 31, 2013
 
Apr 1, 2012
 
Mar 31, 2013
 
Apr 1, 2012
 
Mar 31, 2013
 
Apr 1, 2012
Gain/(Loss) recognized in earnings for the quarter ended
$
3.3

 
$
(5.4
)
 
$
0.6

 
$
(0.4
)
 
$
(1.1
)
 
$
(1.6
)
 
$
0.1

 
$
1.7

Gain/(Loss) recognized in earnings for the two quarters ended
$
2.2

 
$
(4.3
)
 
$
(2.1
)
 
$
5.9

 
$
(2.6
)
 
$
0.8

 
$
0.1

 
$
1.6


Notional amounts of outstanding derivative contracts (in millions):
 
Mar 31, 2013
 
Sep 30, 2012
Foreign currency
$
365

 
$
383

Coffee
74

 
125

Dairy
48

 
72

Diesel fuel
6

 
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