The new m.o. at Starbucks Corp. (NASDAQ: SBUX) seems to be: give 'em their dour forecasts, then celebrate if the future is not, after all, entirely decaffeinated. After all, the company's stock is already at a low not seen since November 2001; all of the respectable gains of the past seven years have been wiped away. Starbucks stores may be cheerily decked out in holiday colors and decorations, but its management is nothing but sad, downcast, despondent, glum.

In the company's annual report filed yesterday after market close, management provided a Santa-sized list of all the reasons its sales have been down and its expenses up, as well as providing a dim outlook for a future ravaged by poor discretionary spending, stiff competition from low-priced coffee at its fast-food rivals, nasty landlords who won't go gently into the goodnight of store closings, and to top it all off, financially anxious consumers. To blame for 2008: foreclosures, high food prices, and less generous credit card limits.

At the end of this annual report, you have to wonder if coffee is the right business to be in. After all, the beverage isn't known for being a tonic for the depressed (when have you ever heard of a wronged hero drowning his sorrows in coffee?). Maybe Starbucks should look to add a line of moonshine to its offerings; offer it in Venti and "Jug" sizes and send free gift cards to the investors, who are the only people in America who deserve to be as solemn as Starbucks' annual report.

The Time Warner Inc. (NYSE: TWX) annual report was filed at the SEC today. Perhaps the most important issue in 10-K filings is the legal proceedings section, so that's what I'll focus on here.

According to the report, during the fourth quarter of 2006, the company established an additional reserve of $600 million, bringing the total reserve for unresolved claims to approximately $620 million as of Dec. 31, 2006. During February 2007, Time Warner reached agreements in principle to pay approximately $405 million to settle certain of the remaining claims. As of February 22, 2007, the remaining reserve of approximately $215 million reflects the company's best estimate, based on the many related securities litigation matters that it has resolved to date, of its financial exposure in the remaining lawsuits (which it plans to defend itself against).

Warner Bros. (South) Inc. (a subsidiary) is litigating numerous tax cases in Brazil over VAT. Also of interest, and a note that hasn't been seen before, is that Time Warner is fighting VAT tax cases in Luxembourg and France for the years 2004 to 2006 for the dollar-converted amounts equaling $94 million and $44 million respectively. These are outside of the AOL Europe sales that already took place last year, and have not really been discussed around the sales of AOL Europe.

So, assuming all of the other ongoing litigation was scrubbed, this leaves $758 million targeted that could come this year. In truth, you never know when these settlements occur because so many are obscure and are never picked up in the media and are never announced. Even if you assume the worst case on this pending amount you do not have any blow-up situation for the company. TWX has 3.83 billion shares in the float and TWX has a market cap of $83.5 billion.

It sure sounds like the worst of the old remaining Time Warner combining with AOL suits are finished, and this $405 million alluded to above was noted earlier this month. Now the company can focus on innings five through nine of its restructuring plan.