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Note 1: Summary of Significant Accounting Policies
Financial Statement Preparation
The unaudited condensed consolidated financial statements as of June 27, 2010, and for the 13-week and 39-week periods ended June 27, 2010 and June 28, 2009, have been prepared by Starbucks Corporation under the rules and regulations of the Securities and Exchange Commission ("SEC"). In the opinion of management, the financial information for the 13-week and 39-week periods ended June 27, 2010 and June 28, 2009 reflect all adjustments and accruals, which are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. In this Quarterly Report on Form 10-Q ("10-Q") Starbucks Corporation is referred to as "Starbucks," the "Company," "we," "us" or "our".
The financial information as of September 27, 2009 is derived from our audited consolidated financial statements and notes for the fiscal year ended September 27, 2009 ("fiscal 2009"), included in Item 8 in the Fiscal 2009 Annual Report on Form 10-K (the "10-K"). The information included in this 10-Q should be read in conjunction with the footnotes and management's discussion and analysis of the financial statements in the 10-K.
The results of operations for the 13-week and 39-week periods ended June 27, 2010 are not necessarily indicative of the results of operations that may be achieved for the entire fiscal year ending October 3, 2010 ("fiscal 2010"). Additionally, our 2010 fiscal year will include 53 weeks, with the 53rd week falling in the fourth fiscal quarter.
Goodwill
We test goodwill for impairment on an annual basis, or more frequently if circumstances, such as material deterioration in performance or a significant number of store closures, indicate reporting unit carrying values may exceed their fair values. If the carrying amount of goodwill exceeds the implied estimated fair value, an impairment charge to current operations is recorded to reduce the carrying value to the implied estimated fair value.
As a part of Starbucks ongoing operations, we may close certain stores within a reporting unit containing goodwill due to underperformance of the store or inability to renew our lease, among other reasons. We abandon certain assets associated with a closed store including leasehold improvements and other non-transferrable assets. Under US Generally Accepted Accounting Principals ("GAAP"), when a portion of a reporting unit that constitutes a business is to be disposed of, goodwill associated with the business is included in the carrying amount of the business in determining any loss on disposal. Our evaluation of whether the portion of a reporting unit being disposed of constitutes a business occurs on the date of abandonment. Although an operating store meets the accounting definition of a business prior to abandonment, it does not constitute a business on the closure date because the remaining assets on that date do not constitute an integrated set of assets that are capable of being conducted and managed for the purpose of providing a return to investors. As a result, when closing individual stores, we do not include goodwill in the calculation of any loss on disposal of the related assets. As noted above, if store closures are indicative of potential impairment of goodwill at the reporting unit level, we perform an evaluation of our reporting unit goodwill when such closures occur.
Recent Accounting Pronouncements
In 2007, the Financial Accounting Standards Board ("FASB") issued authoritative guidance on accounting and reporting for noncontrolling interests in subsidiaries. The guidance clarifies that a noncontrolling interest in a subsidiary should be accounted for as a component of equity separate from the parent company's equity. It also requires the presentation of both net earnings attributable to noncontrolling interests and net earnings attributable to Starbucks on the face of the consolidated statement of earnings. We adopted the new guidance relating to noncontrolling interests beginning September 28, 2009 on a prospective basis, except for the presentation and disclosure requirements, which were applied retrospectively.
In June 2009, the FASB issued authoritative guidance on the consolidation of variable interest entities ("VIE"), which will be effective for our first fiscal quarter of 2011. The new guidance requires a qualitative approach to identify a controlling financial interest in a VIE, and requires ongoing assessment of whether an entity is a VIE and whether an interest in a VIE makes the holder the primary beneficiary of the VIE. We are evaluating the impact that adoption may have on our consolidated financial statements.
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Note 2: Restructuring Charges
In the third quarter of fiscal 2010, we closed 3 International stores and 1 US store as a part of Starbucks store portfolio rationalization which began in fiscal 2008. A total of 913 stores globally have been closed as a part of this effort. The remaining closures will be in the International segment, and we will recognize the associated lease exit costs concurrently with the actual closures.
Restructuring charges by type of cost, by reportable segment and reconciliation of the associated accrued liability (in millions):
| By Type of Cost | By Segment | |||||||||||||||||||||||
| Total | Lease Exit and Other Related Costs |
Asset Impairments |
Employee Termination Costs |
US | International | Unallocated Corporate | ||||||||||||||||||
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Total expected costs |
$ | 651.0 | $ | 283.3 | $ | 331.5 | $ | 36.2 | $ | 484.5 | $ | 70.5 | $ | 96.0 | ||||||||||
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Costs incurred and charged to expense during the period ended June 27, 2010 |
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13 weeks |
20.4 | 20.7 | 0.0 | (0.3 | ) | 17.0 | 3.4 | 0.0 | ||||||||||||||||
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39 weeks |
46.6 | 46.2 | 0.7 | (0.3 | ) | 26.1 | 20.5 | 0.0 | ||||||||||||||||
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Costs incurred and charged to expense during the period ended June 28, 2009 |
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13 weeks |
51.6 | 44.1 | 5.6 | 1.9 | 38.4 | 4.5 | 8.7 | |||||||||||||||||
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39 weeks |
279.2 | 135.1 | 125.8 | 18.3 | 199.6 | 21.4 | 58.2 | |||||||||||||||||
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Cumulative costs incurred to date |
646.0 | 278.3 | 331.5 | 36.2 | 483.2 | 66.8 | 96.0 | |||||||||||||||||
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Accrued liability as of September 27, 2009 |
$ | 104.0 | $ | 102.8 | $ | 1.2 | ||||||||||||||||||
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Costs incurred, excluding non-cash charges (1) |
46.4 | 46.7 | (0.3 | ) | ||||||||||||||||||||
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Cash payments |
(57.0 | ) | (56.1 | ) | (0.9 | ) | ||||||||||||||||||
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Accrued liability as of June 27, 2010 (2) |
$ | 93.4 | $ | 93.4 | $ | 0.0 | ||||||||||||||||||
| (1) |
Non-cash charges and credits for lease exit and other related costs primarily represent deferred rent balances recognized as expense credits at the cease-use date. |
| (2) |
The remaining liability relates to lease obligations for stores that were previously closed where Starbucks has been unable to terminate the lease or find subtenants for the unused space. |
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Note 3: Acquisitions
In the first quarter of fiscal 2010, on September 30, 2009, we acquired 100% ownership of our business in France, converting it from a 50% joint venture with Sigla S.A. (Grupo Vips) of Spain to a Company-operated market. We simultaneously sold our 50% ownership interests in the Spain and Portugal markets to Grupo Vips, converting them to licensed markets.
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Note 4: Derivative Financial Instruments
Cash Flow Hedges
Net derivative losses of $8.5 million and $3.9 million, net of taxes, are included in accumulated other comprehensive income as of June 27, 2010 and September 27, 2009, respectively, related to cash flow hedges. Of the net derivative losses accumulated as of June 27, 2010, $3.1 million pertain to hedging instruments that will be dedesignated within 12 months and will also continue to experience fair value changes before affecting earnings. Ineffectiveness from hedges that were discontinued during the year-to-date periods in fiscal 2010 and 2009 was insignificant. Outstanding contracts will expire within 27 months.
Net Investment Hedges
Net derivative losses of $21.2 million and $19.8 million, net of taxes, are included in accumulated other comprehensive income as of June 27, 2010 and September 27, 2009, respectively, related to net investment derivative hedges. Outstanding contracts will expire within 33 months.
Other Derivatives
To mitigate the translation risk of certain balance sheet items, we enter into certain foreign currency forward 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 are also recognized in net interest income and other.
We also enter into certain swap and futures contracts that are not designated as hedging instruments to mitigate the price uncertainty of a portion of our future purchases of dairy products and diesel fuel. These contracts are recorded at fair value, with the changes in fair value recognized in net interest income and other on the consolidated statement of earnings.
The following table presents the effect of derivative instruments on other comprehensive income and earnings for the 13-week and 39-week periods ended (in millions):
| Gain/(Loss) recognized in OCI | Gain/(Loss) recognized in earnings | |||||||||||||||
| 13 Weeks Ended | 39 Weeks Ended | 13 Weeks Ended | 39 Weeks Ended | |||||||||||||
|
June 27, 2010 |
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Cash Flow Hedges |
$ | (2.2 | ) | $ | (10.7 | ) | $ | (1.4 | ) | $ | (3.8 | ) | ||||
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Net Investment Hedges |
(4.3 | ) | (2.3 | ) | 0.0 | 0.0 | ||||||||||
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Other Derivatives |
0.5 | 9.1 | ||||||||||||||
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June 28, 2009 |
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Cash Flow Hedges |
$ | (17.4 | ) | $ | 24.2 | $ | 1.0 | $ | 1.4 | |||||||
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Net Investment Hedges |
(8.2 | ) | (3.8 | ) | 0.0 | 0.0 | ||||||||||
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Other Derivatives |
(25.0 | ) | 20.5 | |||||||||||||
Notional amounts of outstanding derivative contracts as of June 27, 2010:
| • |
$655 million in foreign exchange contracts |
| • |
$29 million in dairy contracts |
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Note 5: Investments (in millions)
| Amortized Cost |
Gross Unrealized Holding Gains |
Gross Unrealized Holding Losses |
Fair Value | ||||||||||
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June 27, 2010 |
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Short-term investments: |
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Available-for-sale securities — Corporate debt securities |
$ | 3.1 | $ | 0.0 | $ | 0.0 | $ | 3.1 | |||||
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Available-for-sale securities — Agency obligations |
17.0 | 0.0 | 0.0 | 17.0 | |||||||||
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Available-for-sale securities — Government treasury securities |
203.7 | 0.1 | 0.0 | 203.8 | |||||||||
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Trading securities |
59.2 | 0.0 | 0.0 | 46.0 | |||||||||
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Total short-term investments |
$ | 283.0 | $ | 0.1 | $ | 0.0 | $ | 269.9 | |||||
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Long-term investments: |
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Available-for-sale securities — State and local government obligations |
$ | 46.5 | $ | 0.0 | $ | (1.1 | ) | $ | 45.4 | ||||
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Available-for-sale securities — Agency obligations |
87.0 | 0.1 | 0.0 | 87.1 | |||||||||
|
Available-for-sale securities — Corporate debt securities |
130.7 | 1.5 | (0.8 | ) | 131.4 | ||||||||
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Total long-term investments |
$ | 264.2 | $ | 1.6 | $ | (1.9 | ) | $ | 263.9 | ||||
|
September 27, 2009 |
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Short-term investments: |
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Available-for-sale securities — Corporate debt securities |
$ | 2.5 | $ | 0.0 | $ | 0.0 | $ | 2.5 | |||||
|
Available-for-sale securities — Government treasury securities |
19.0 | 0.0 | 0.0 | 19.0 | |||||||||
|
Trading securities |
58.5 | 0.0 | 0.0 | 44.8 | |||||||||
|
Total short-term investments |
$ | 80.0 | $ | 0.0 | $ | 0.0 | $ | 66.3 | |||||
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Long-term investments: |
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Available-for-sale securities — State and local government obligations |
$ | 57.8 | $ | 0.0 | $ | (2.1 | ) | $ | 55.7 | ||||
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Available-for-sale securities — Corporate debt securities |
14.7 | 0.8 | 0.0 | 15.5 | |||||||||
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Total long-term investments |
$ | 72.5 | $ | 0.8 | $ | (2.1 | ) | $ | 71.2 | ||||
The gross unrealized holding losses on the state and local obligations relate to our auction rate securities ("ARS"). We do not intend to sell these securities, nor is it likely we will be required to sell these securities before their anticipated recovery, which may be at maturity.
In the first three quarters of fiscal 2010, two of the ARS were partially called at par value of $5.0 million and two of the ARS were fully called at a par value of $6.1 million.
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Note 6: Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Recurring Basis (in millions):
| Fair Value Measurements at Reporting Date Using | ||||||||||||
| Balance at Jun 27, 2010 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) | |||||||||
|
Assets: |
||||||||||||
|
Trading securities |
$ | 46.0 | $ | 46.0 | $ | 0.0 | $ | 0.0 | ||||
|
Available-for-sale securities |
487.8 | 203.8 | 238.6 | 45.4 | ||||||||
|
Derivatives |
1.4 | 0.0 | 1.4 | 0.0 | ||||||||
|
Total |
$ | 535.2 | $ | 249.8 | $ | 240.0 | $ | 45.4 | ||||
|
Liabilities: |
||||||||||||
|
Derivatives |
$ | 17.0 | $ | 0.0 | $ | 17.0 | $ | 0.0 | ||||
| Balance at Sep 27, 2009 |
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|
Assets: |
||||||||||||
|
Trading securities |
$ | 44.8 | $ | 44.8 | $ | 0.0 | $ | 0.0 | ||||
|
Available-for-sale securities |
92.7 | 19.0 | 18.0 | 55.7 | ||||||||
|
Derivatives |
13.2 | 0.0 | 13.2 | 0.0 | ||||||||
|
Total |
$ | 150.7 | $ | 63.8 | $ | 31.2 | $ | 55.7 | ||||
|
Liabilities: |
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|
Derivatives |
$ | 33.2 | $ | 0.0 | $ | 33.2 | $ | 0.0 | ||||
Changes in Level 3 Instruments Measured at Fair Value on a Recurring Basis (in millions):
| 13 Weeks Ended | 39 Weeks Ended | |||||||||||||||
| Jun 27, 2010 | Jun 28, 2009 | Jun 27, 2010 | Jun 28, 2009 | |||||||||||||
|
Beginning balance |
$ | 51.2 | $ | 62.6 | $ | 55.7 | $ | 59.8 | ||||||||
|
Total reduction in unrealized losses included in other comprehensive income |
0.4 | 0.7 | 1.0 | 3.5 | ||||||||||||
|
Realized losses recognized in net earnings |
0.0 | 0.0 | (0.2 | ) | 0.0 | |||||||||||
|
Calls |
(6.2 | ) | (7.4 | ) | (11.1 | ) | (7.4 | ) | ||||||||
|
Ending balance |
$ | 45.4 | $ | 55.9 | $ | 45.4 | $ | 55.9 | ||||||||
Financial instruments measured using level 3 inputs described above are comprised entirely of our ARS portfolio.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis (in millions)
Effective September 28, 2009, we adopted new fair value measurement guidance for all nonfinancial assets and liabilities recognized or disclosed at fair value in the financial statements on a nonrecurring basis. These assets and liabilities include items such as property, plant and equipment, goodwill and other intangible assets that are measured at fair value resulting from impairment, if deemed necessary.
Starbucks measures certain financial assets, including equity and cost method investments, at fair value on a nonrecurring basis. These assets are recognized at fair value when they are determined to be other-than-temporarily impaired.
During the 13 and 39 weeks ended June 27, 2010, we recognized fair market value adjustments with a charge to earnings to assets measured at fair value (Level 3) on a non-recurring basis, as follows:
| 13 Weeks Ended | 39 Weeks Ended | |||||||||||||||||||
| Carrying Value before adjustment |
Fair value adjustment |
Carrying value after adjustment |
Carrying Value before adjustment |
Fair value adjustment |
Carrying value after adjustment | |||||||||||||||
|
Property, plant and equipment (1) |
$ | 9.2 | $ | (7.8 | ) | $ | 1.4 | $ | 25.6 | $ | (21.1 | ) | $ | 4.5 | ||||||
|
Equity and cost investments (2) |
$ | 0.8 | $ | (0.2 | ) | $ | 0.6 | $ | 10.4 | $ | (7.7 | ) | $ | 2.7 | ||||||
|
Goodwill (3) |
$ | 4.1 | $ | (1.6 | ) | $ | 2.5 | $ | 4.1 | $ | (1.6 | ) | $ | 2.5 | ||||||
| (1) |
The fair value was determined using a discounted cash flow model based on future store revenues and operating costs, using internal projections. The resulting impairment charge was included in store operating expenses. |
| (2) |
The fair value was determined using standard valuation techniques, including discounted cash flows, comparable transactions, and comparable company analyses. The resulting impairment charge was included in other operating expenses. |
| (3) |
The fair value was determined using a discounted cash flow model based on future cash flows for the reporting unit, using internal projections. The resulting impairment charge was included in store operating expenses. |
Fair Value of Other Financial Instruments
The carrying value of cash and cash equivalents approximates fair value because of the short-term nature of those instruments. The estimated fair value of the $550 million of 6.25% Senior Notes was approximately $622 million and $591 million as of June 27, 2010 and September 27, 2009, respectively.
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Note 7: Inventories (in millions)
| Jun 27, 2010 |
Sep 27, 2009 |
Jun 28, 2009 | |||||||
|
Coffee: |
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Unroasted |
$ | 233.7 | $ | 381.6 | $ | 451.4 | |||
|
Roasted |
85.8 | 76.7 | 56.5 | ||||||
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Other merchandise held for sale |
81.8 | 116.0 | 92.2 | ||||||
|
Packaging and other supplies |
95.3 | 90.6 | 103.5 | ||||||
|
Total |
$ | 496.6 | $ | 664.9 | $ | 703.6 | |||
As of June 27, 2010, we had committed to purchasing green coffee totaling $108 million under fixed-price contracts and an estimated $285 million under price-to-be-fixed contracts. Price-to-be-fixed contracts are green coffee purchase commitments whereby the quality, quantity, delivery period, and other negotiated terms are agreed upon, but the date at which the base "C" coffee commodity price component will be fixed has not yet been established. For these types of contracts, either the buyer (Starbucks) or the seller has the option to select a date on which to "fix" the base "C" coffee commodity price prior to the delivery date. Until prices are fixed, we estimate the total cost of these purchase commitments. We believe, based on relationships established with our suppliers in the past, the risk of non-delivery on these purchase commitments is remote.
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Note 8: Property, Plant and Equipment (in millions)
| Jun 27, 2010 |
Sep 27, 2009 |
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|
Land |
$ | 58.0 | $ | 58.2 | ||||
|
Buildings |
265.3 | 231.5 | ||||||
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Leasehold improvements |
3,360.2 | 3,349.0 | ||||||
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Store equipment |
1,024.0 | 1,073.4 | ||||||
|
Roasting equipment |
286.1 | 282.9 | ||||||
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Furniture, fixtures and other |
598.2 | 586.7 | ||||||
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Work in progress |
154.6 | 119.2 | ||||||
| 5,746.4 | 5,700.9 | |||||||
|
Less accumulated depreciation |
(3,384.9 | ) | (3,164.5 | ) | ||||
|
Property, plant and equipment, net |
$ | 2,361.5 | $ | 2,536.4 | ||||
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Note 9: Debt (in millions)
| Jun 27, 2010 |
Sep 27, 2009 | |||||
|
Current portion of long-term debt (included in other accrued liabilities) |
$ | 0 | $ | 0.2 | ||
|
6.25% Senior Notes (10 year, due Aug 2017) |
549.4 | 549.2 | ||||
|
Other long-term debt |
0.0 | 0.1 | ||||
|
Long-term debt |
549.4 | 549.3 | ||||
|
Total debt |
$ | 549.4 | $ | 549.5 | ||
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Note 10: Other Long-term Liabilities (in millions)
| Jun 27, 2010 |
Sep 27, 2009 | |||||
|
Deferred rent |
$ | 245.3 | $ | 266.0 | ||
|
Unrecognized tax benefits |
84.1 | 55.1 | ||||
|
Asset retirement obligations |
45.1 | 43.4 | ||||
|
Other |
21.8 | 25.1 | ||||
|
Total |
$ | 396.3 | $ | 389.6 | ||
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Note 11: Equity
Components of equity for the 39 weeks ended June 27, 2010 and June 28, 2009 (in millions):
| Shareholders' Equity |
Noncontrolling Interest |
Total Equity |
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|
Balance, September 27, 2009 |
$ | 3,045.7 | $ | 11.2 | $ | 3,056.9 | ||||||
|
Net earnings |
666.7 | 3.1 | 669.8 | |||||||||
|
Unrealized holding gains / (losses) on available-for-sale securities |
0.4 | 0.0 | 0.4 | |||||||||
|
Unrealized holding gains / (losses) on cash flow hedging instruments |
(7.2 | ) | 0.0 | (7.2 | ) | |||||||
|
Unrealized holding gains / (losses) on net investment hedging instruments |
(1.4 | ) | 0.0 | (1.4 | ) | |||||||
|
Reclassification adjustment for net (gains) / losses realized in net earnings for available-for-sale securities |
0.2 | 0.0 | 0.2 | |||||||||
|
Reclassification adjustment for net (gains) / losses realized in net earnings for cash flow hedges |
2.5 | 0.0 | 2.5 | |||||||||
|
Translation adjustment |
(29.5 | ) | 0.0 | (29.5 | ) | |||||||
|
Comprehensive income |
631.7 | 3.1 | 634.8 | |||||||||
|
Stock-based compensation expense |
83.3 | 0.0 | 83.3 | |||||||||
|
Exercise of stock options |
91.0 | 0.0 | 91.0 | |||||||||
|
Sale of common stock |
14.0 | 0.0 | 14.0 | |||||||||
|
Repurchase of common stock |
(173.3 | ) | 0.0 | (173.3 | ) | |||||||
|
Cash dividends declared |
(171.5 | ) | 0.0 | (171.5 | ) | |||||||
|
Net distributions to noncontrolling interests |
0.0 | (0.6 | ) | (0.6 | ) | |||||||
|
Balance, June 27, 2010 |
$ | 3,520.9 | $ | 13.7 | $ | 3,534.6 | ||||||
|
Balance, September 28, 2008 |
$ | 2,490.9 | $ | 18.3 | $ | 2,509.2 | ||||||
|
Net earnings |
240.8 | (2.8 | ) | 238.0 | ||||||||
|
Unrealized holding gains / (losses) on available-for-sale securities |
3.0 | 0.0 | 3.0 | |||||||||
|
Unrealized holding gains / (losses) on cash flow hedging instruments |
14.9 | 0.0 | 14.9 | |||||||||
|
Unrealized holding gains / (losses) on net investment hedging instruments |
(2.4 | ) | 0.0 | (2.4 | ) | |||||||
|
Reclassification adjustment for net (gains) / losses realized in net earnings for cash flow hedges |
(0.6 | ) | 0.0 | (0.6 | ) | |||||||
|
Translation adjustment |
(15.5 | ) | 0.0 | (15.5 | ) | |||||||
|
Comprehensive income |
240.2 | (2.8 | ) | 237.4 | ||||||||
|
Stock-based compensation expense |
63.9 | 0.0 | 63.9 | |||||||||
|
Exercise of stock options |
3.0 | 0.0 | 3.0 | |||||||||
|
Sale of common stock |
20.0 | 0.0 | 20.0 | |||||||||
|
Net distributions to noncontrolling interests |
0.0 | 0.0 | 0.0 | |||||||||
|
Balance, June 28, 2009 |
$ | 2,818.0 | $ | 15.5 | $ | 2,833.5 | ||||||
In addition to 1.2 billion shares of authorized common stock with $0.001 par value per share, the Company has authorized 7.5 million shares of preferred stock, none of which was outstanding as of June 27, 2010.
During the third quarter, Starbucks Board of Directors declared a quarterly cash dividend to shareholders of $0.13 per share to be paid on August 20, 2010, to shareholders of record on the close of business on August 4, 2010. The accrued dividend payable is recorded in other accrued liabilities on the consolidated balance sheet.
Components of accumulated other comprehensive income, net of tax (in millions):
| Jun 27, 2010 | Sep 27, 2009 | |||||||
|
Net unrealized gains / (losses) on available-for-sale securities |
$ | (0.2 | ) | $ | (0.8 | ) | ||
|
Net unrealized gains / (losses) on hedging instruments |
(29.7 | ) | (23.7 | ) | ||||
|
Translation adjustment |
60.3 | 89.9 | ||||||
|
Accumulated other comprehensive income |
$ | 30.4 | $ | 65.4 | ||||
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Note 12: Employee Stock Plans
As of June 27, 2010, there were 35.6 million shares of common stock available for issuance pursuant to future equity-based compensation awards and employee stock purchase plans ("ESPP").
Stock-based compensation expense recognized in the consolidated statement of earnings (in millions):
| 13 Weeks Ended | 39 Weeks Ended | |||||||||||
| Jun 27, 2010 | Jun 28, 2009 | Jun 27, 2010 | Jun 28, 2009 | |||||||||
|
Options |
$ | 18.9 | $ | 16.6 | $ | 56.1 | $ | 47.7 | ||||
|
Restricted stock units ("RSUs") |
9.6 | 3.9 | 25.8 | 10.4 | ||||||||
|
ESPP |
0.0 | 0.1 | 0.0 | 5.0 | ||||||||
|
Total stock-based compensation |
$ | 28.5 | $ | 20.6 | $ | 81.9 | $ | 63.1 | ||||
|
Value of awards granted and exercised during the period: | ||||||||||||
| 13 Weeks Ended | 39 Weeks Ended | |||||||||||
| Jun 27, 2010 | Jun 28, 2009 | Jun 27, 2010 | Jun 28, 2009 | |||||||||
|
Estimated fair value per option granted |
$ | 9.49 | $ | 4.93 | $ | 8.50 | $ | 3.54 | ||||
|
Weighted average option grant price |
$ | 26.92 | $ | 12.90 | $ | 22.23 | $ | 8.78 | ||||
|
Weighted average price per options exercised |
$ | 12.98 | $ | 9.09 | $ | 12.33 | $ | 6.17 | ||||
|
Weighted average RSU grant price |
$ | 25.92 | $ | 11.66 | $ | 22.22 | $ | 8.71 | ||||
Stock option and RSU transactions from September 27, 2009 through June 27, 2010 (in millions):
| Stock Options |
RSUs | |||||||
|
Options outstanding/Nonvested RSUs, September 27, 2009 |
63.6 | 4.4 | ||||||
|
Options/RSUs granted |
14.7 | 2.3 | ||||||
|
Options exercised/RSUs vested |
(6.5 | ) | (0.5 | ) | ||||
|
Options/RSUs forfeited/expired |
(6.7 | ) | (0.5 | ) | ||||
|
Options outstanding/Nonvested RSUs, June 27, 2010 |
65.1 | 5.7 | ||||||
|
Total unrecognized stock-based compensation expense, net of forfeitures, as of June 27, 2010 |
$ | 90 | $ | 54 | ||||
|
|||
Note 14: Commitments and Contingencies
Guarantees
Unconditional guarantees as of June 27, 2010 (in millions):
| Maximum Exposure |
Year Guarantee Expires in |
Estimated Fair Value Recorded on Balance Sheet |
|||||||
|
Japanese yen-denominated bank loans (Starbucks Japan — an unconsolidated equity investee) |
$ | 2.4 | 2014 | $ | 0.0 | (1) | |||
|
Borrowings of other unconsolidated equity investees |
$ | 7.4 | various | $ | 2.2 | ||||
| (1) |
Since there has been no modification of these loan guarantees subsequent to the adoption of accounting requirements for guarantees, we have applied the disclosure provisions only and have not recorded the guarantees on our consolidated balance sheets. |
Legal Proceedings
Starbucks is party to various legal proceedings arising in the ordinary course of business, but is not currently a party to any legal proceeding that management believes would have a material adverse effect on our consolidated financial position or results of operations.
|
|||
Note 15: Segment Reporting
Segment information is prepared on the same basis that management reviews financial information for operational decision making purposes. The tables below present information by operating segment (in millions):
| United States |
International | Global CPG | Unallocated Corporate |
Total | ||||||||||||
|
13 Weeks Ended |
||||||||||||||||
|
June 27, 2010 |
||||||||||||||||
|
Company-operated retail revenues |
$ | 1,726.7 | $ | 460.0 | $ | 0.0 | $ | 0.0 | $ | 2,186.7 | ||||||
|
Licensing revenues |
135.5 | 78.0 | 117.1 | 0.0 | 330.6 | |||||||||||
|
Foodservice and other revenues |
0.8 | 13.1 | 80.8 | 0.0 | 94.7 | |||||||||||
|
Total net revenues |
1,863.0 | 551.1 | 197.9 | 0.0 | 2,612.0 | |||||||||||
|
Depreciation and amortization expenses |
86.1 | 26.3 | 1.2 | 11.6 | 125.2 | |||||||||||
|
Income from equity investees |
0.0 | 19.0 | 17.3 | 0.0 | 36.3 | |||||||||||
|
Operating income/(loss) |
290.8 | 56.8 | 60.1 | (80.0 | ) | 327.7 | ||||||||||
|
Net impairment and disposition losses |
3.3 | 12.1 | 0.0 | 0.5 | 15.9 | |||||||||||
|
June 28, 2009 |
||||||||||||||||
|
Company-operated retail revenues |
$ | 1,613.2 | $ | 400.6 | $ | 0.0 | $ | 0.0 | $ | 2,013.8 | ||||||
|
Licensing revenues |
129.4 | 65.3 | 106.3 | 0.0 | 301.0 | |||||||||||
|
Foodservice and other revenues |
1.1 | 11.5 | 76.5 | 0.0 | 89.1 | |||||||||||
|
Total net revenues |
1,743.7 | 477.4 | 182.8 | 0.0 | 2,403.9 | |||||||||||
|
Depreciation and amortization expenses |
94.2 | 26.3 | 1.4 | 11.8 | 133.7 | |||||||||||
|
Income from equity investees |
0.0 | 15.5 | 14.2 | 0.0 | 29.7 | |||||||||||
|
Operating income/(loss) |
188.1 | 34.4 | 65.7 | (84.2 | ) | 204.0 | ||||||||||
|
Net impairment and disposition losses |
32.9 | 6.8 | 0.0 | 13.6 | 53.3 | |||||||||||
|
39 Weeks Ended |
||||||||||||||||
|
June 27, 2010 |
||||||||||||||||
|
Company-operated retail revenues |
$ | 5,195.0 | $ | 1,413.5 | $ | 0.0 | $ | 0.0 | $ | 6,608.5 | ||||||
|
Licensing revenues |
418.5 | 222.4 | 326.2 | 0.0 | 967.1 | |||||||||||
|
Foodservice and other revenues |
4.5 | 40.4 | 248.9 | 0.0 | 293.8 | |||||||||||
|
Total net revenues |
5,618.0 | 1,676.3 | 575.1 | 0.0 | 7,869.4 | |||||||||||
|
Depreciation and amortization expenses |
264.4 | 81.9 | 3.6 | 34.4 | 384.3 | |||||||||||
|
Income from equity investees |
0.0 | 56.9 | 43.2 | 0.0 | 100.1 | |||||||||||
|
Operating income/(loss) |
947.2 | 141.2 | 195.1 | (263.4 | ) | 1,020.1 | ||||||||||
|
Net impairment and disposition losses |
28.9 | 23.8 | 0.0 | 7.5 | 60.2 | |||||||||||
|
June 28, 2009 |
||||||||||||||||
|
Company-operated retail revenues |
$ | 4,977.2 | $ | 1,174.6 | $ | 0.0 | $ | 0.0 | $ | 6,151.8 | ||||||
|
Licensing revenues |
404.2 | 198.5 | 315.4 | 0.0 | 918.1 | |||||||||||
|
Foodservice and other revenues |
2.8 | 33.7 | 246.0 | 0.0 | 282.5 | |||||||||||
|
Total net revenues |
5,384.2 | 1,406.8 | 561.4 | 0.0 | 7,352.4 | |||||||||||
|
Depreciation and amortization expenses |
285.8 | 75.6 | 4.4 | 36.3 | 402.1 | |||||||||||
|
Income from equity investees |
0.5 | 38.5 | 39.4 | 0.0 | 78.4 | |||||||||||
|
Operating income/(loss) |
371.8 | 53.3 | 203.4 | (265.9 | ) | 362.6 | ||||||||||
|
Net impairment and disposition losses |
106.2 | 38.2 | 0.0 | 54.6 | 199.0 | |||||||||||
The table below reconciles the total of the reportable segments' operating income to consolidated earnings before income taxes (in millions):
|
13 Weeks Ended |
Jun 27, 2010 | Jun 28, 2009 | ||||||
|
Operating income |
$ | 327.7 | $ | 204.0 | ||||
|
Interest income and other, net |
(1.4 | ) | 18.6 | |||||
|
Interest expense |
(7.9 | ) | (8.6 | ) | ||||
|
Earnings before income taxes |
$ | 318.4 | $ | 214.0 | ||||
|
39 Weeks Ended |
Jun 27, 2010 | Jun 28, 2009 | ||||||
|
Operating income |
$ | 1,020.1 | $ | 362.6 | ||||
|
Interest income and other, net |
28.4 | 15.6 | ||||||
|
Interest expense |
(24.1 | ) | (30.5 | ) | ||||
|
Earnings before income taxes |
$ | 1,024.4 | $ | 347.7 | ||||
|
|||
Goodwill
We test goodwill for impairment on an annual basis, or more frequently if circumstances, such as material deterioration in performance or a significant number of store closures, indicate reporting unit carrying values may exceed their fair values. If the carrying amount of goodwill exceeds the implied estimated fair value, an impairment charge to current operations is recorded to reduce the carrying value to the implied estimated fair value.
As a part of Starbucks ongoing operations, we may close certain stores within a reporting unit containing goodwill due to underperformance of the store or inability to renew our lease, among other reasons. We abandon certain assets associated with a closed store including leasehold improvements and other non-transferrable assets. Under US Generally Accepted Accounting Principals ("GAAP"), when a portion of a reporting unit that constitutes a business is to be disposed of, goodwill associated with the business is included in the carrying amount of the business in determining any loss on disposal. Our evaluation of whether the portion of a reporting unit being disposed of constitutes a business occurs on the date of abandonment. Although an operating store meets the accounting definition of a business prior to abandonment, it does not constitute a business on the closure date because the remaining assets on that date do not constitute an integrated set of assets that are capable of being conducted and managed for the purpose of providing a return to investors. As a result, when closing individual stores, we do not include goodwill in the calculation of any loss on disposal of the related assets. As noted above, if store closures are indicative of potential impairment of goodwill at the reporting unit level, we perform an evaluation of our reporting unit goodwill when such closures occur.
|
|||
| By Type of Cost | By Segment | |||||||||||||||||||||||
| Total | Lease Exit and Other Related Costs |
Asset Impairments |
Employee Termination Costs |
US | International | Unallocated Corporate | ||||||||||||||||||
|
Total expected costs |
$ | 651.0 | $ | 283.3 | $ | 331.5 | $ | 36.2 | $ | 484.5 | $ | 70.5 | $ | 96.0 | ||||||||||
|
Costs incurred and charged to expense during the period ended June 27, 2010 |
||||||||||||||||||||||||
|
13 weeks |
20.4 | 20.7 | 0.0 | (0.3 | ) | 17.0 | 3.4 | 0.0 | ||||||||||||||||
|
39 weeks |
46.6 | 46.2 | 0.7 | (0.3 | ) | 26.1 | 20.5 | 0.0 | ||||||||||||||||
|
Costs incurred and charged to expense during the period ended June 28, 2009 |
||||||||||||||||||||||||
|
13 weeks |
51.6 | 44.1 | 5.6 | 1.9 | 38.4 | 4.5 | 8.7 | |||||||||||||||||
|
39 weeks |
279.2 | 135.1 | 125.8 | 18.3 | 199.6 | 21.4 | 58.2 | |||||||||||||||||
|
Cumulative costs incurred to date |
646.0 | 278.3 | 331.5 | 36.2 | 483.2 | 66.8 | 96.0 | |||||||||||||||||
|
Accrued liability as of September 27, 2009 |
$ | 104.0 | $ | 102.8 | $ | 1.2 | ||||||||||||||||||
|
Costs incurred, excluding non-cash charges (1) |
46.4 | 46.7 | (0.3 | ) | ||||||||||||||||||||
|
Cash payments |
(57.0 | ) | (56.1 | ) | (0.9 | ) | ||||||||||||||||||
|
Accrued liability as of June 27, 2010 (2) |
$ | 93.4 | $ | 93.4 | $ | 0.0 | ||||||||||||||||||
| (1) |
Non-cash charges and credits for lease exit and other related costs primarily represent deferred rent balances recognized as expense credits at the cease-use date. |
| (2) |
The remaining liability relates to lease obligations for stores that were previously closed where Starbucks has been unable to terminate the lease or find subtenants for the unused space. |
|
|||
| Gain/(Loss) recognized in OCI | Gain/(Loss) recognized in earnings | |||||||||||||||
| 13 Weeks Ended | 39 Weeks Ended | 13 Weeks Ended | 39 Weeks Ended | |||||||||||||
|
June 27, 2010 |
||||||||||||||||
|
Cash Flow Hedges |
$ | (2.2 | ) | $ | (10.7 | ) | $ | (1.4 | ) | $ | (3.8 | ) | ||||
|
Net Investment Hedges |
(4.3 | ) | (2.3 | ) | 0.0 | 0.0 | ||||||||||
|
Other Derivatives |
0.5 | 9.1 | ||||||||||||||
|
June 28, 2009 |
||||||||||||||||
|
Cash Flow Hedges |
$ | (17.4 | ) | $ | 24.2 | $ | 1.0 | $ | 1.4 | |||||||
|
Net Investment Hedges |
(8.2 | ) | (3.8 | ) | 0.0 | 0.0 | ||||||||||
|
Other Derivatives |
(25.0 | ) | 20.5 | |||||||||||||
|
|||
| Amortized Cost |
Gross Unrealized Holding Gains |
Gross Unrealized Holding Losses |
Fair Value | ||||||||||
|
June 27, 2010 |
|||||||||||||
|
Short-term investments: |
|||||||||||||
|
Available-for-sale securities — Corporate debt securities |
$ | 3.1 | $ | 0.0 | $ | 0.0 | $ | 3.1 | |||||
|
Available-for-sale securities — Agency obligations |
17.0 | 0.0 | 0.0 | 17.0 | |||||||||
|
Available-for-sale securities — Government treasury securities |
203.7 | 0.1 | 0.0 | 203.8 | |||||||||
|
Trading securities |
59.2 | 0.0 | 0.0 | 46.0 | |||||||||
|
Total short-term investments |
$ | 283.0 | $ | 0.1 | $ | 0.0 | $ | 269.9 | |||||
|
Long-term investments: |
|||||||||||||
|
Available-for-sale securities — State and local government obligations |
$ | 46.5 | $ | 0.0 | $ | (1.1 | ) | $ | 45.4 | ||||
|
Available-for-sale securities — Agency obligations |
87.0 | 0.1 | 0.0 | 87.1 | |||||||||
|
Available-for-sale securities — Corporate debt securities |
130.7 | 1.5 | (0.8 | ) | 131.4 | ||||||||
|
Total long-term investments |
$ | 264.2 | $ | 1.6 | $ | (1.9 | ) | $ | 263.9 | ||||
|
September 27, 2009 |
|||||||||||||
|
Short-term investments: |
|||||||||||||
|
Available-for-sale securities — Corporate debt securities |
$ | 2.5 | $ | 0.0 | $ | 0.0 | $ | 2.5 | |||||
|
Available-for-sale securities — Government treasury securities |
19.0 | 0.0 | 0.0 | 19.0 | |||||||||
|
Trading securities |
58.5 | 0.0 | 0.0 | 44.8 | |||||||||
|
Total short-term investments |
$ | 80.0 | $ | 0.0 | $ | 0.0 | $ | 66.3 | |||||
|
Long-term investments: |
|||||||||||||
|
Available-for-sale securities — State and local government obligations |
$ | 57.8 | $ | 0.0 | $ | (2.1 | ) | $ | 55.7 | ||||
|
Available-for-sale securities — Corporate debt securities |
14.7 | 0.8 | 0.0 | 15.5 | |||||||||
|
Total long-term investments |
$ | 72.5 | $ | 0.8 | $ | (2.1 | ) | $ | 71.2 | ||||
|
| Fair Value Measurements at Reporting Date Using | ||||||||||||
| Balance at Jun 27, 2010 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) | |||||||||
|
Assets: |
||||||||||||
|
Trading securities |
$ | 46.0 | $ | 46.0 | $ | 0.0 | $ | 0.0 | ||||
|
Available-for-sale securities |
487.8 | 203.8 | 238.6 | 45.4 | ||||||||
|
Derivatives |
1.4 | 0.0 | 1.4 | 0.0 | ||||||||
|
Total |
$ | 535.2 | $ | 249.8 | $ | 240.0 | $ | 45.4 | ||||
|
Liabilities: |
||||||||||||
|
Derivatives |
$ | 17.0 | $ | 0.0 | $ | 17.0 | $ | 0.0 | ||||
| Balance at Sep 27, 2009 |
||||||||||||
|
Assets: |
||||||||||||
|
Trading securities |
$ | 44.8 | $ | 44.8 | $ | 0.0 | $ | 0.0 | ||||
|
Available-for-sale securities |
92.7 | 19.0 | 18.0 | 55.7 | ||||||||
|
Derivatives |
13.2 | 0.0 | 13.2 | 0.0 | ||||||||
|
Total |
$ | 150.7 | $ | 63.8 | $ | 31.2 | $ | 55.7 | ||||
|
Liabilities: |
||||||||||||
|
Derivatives |
$ | 33.2 | $ | 0.0 | $ | 33.2 | $ | 0.0 | ||||
| 13 Weeks Ended | 39 Weeks Ended | |||||||||||||||
| Jun 27, 2010 | Jun 28, 2009 | Jun 27, 2010 | Jun 28, 2009 | |||||||||||||
|
Beginning balance |
$ | 51.2 | $ | 62.6 | $ | 55.7 | $ | 59.8 | ||||||||
|
Total reduction in unrealized losses included in other comprehensive income |
0.4 | 0.7 | 1.0 | 3.5 | ||||||||||||
|
Realized losses recognized in net earnings |
0.0 | 0.0 | (0.2 | ) | 0.0 | |||||||||||
|
Calls |
(6.2 | ) | (7.4 | ) | (11.1 | ) | (7.4 | ) | ||||||||
|
Ending balance |
$ | 45.4 | $ | 55.9 | $ | 45.4 | $ | 55.9 | ||||||||
| 13 Weeks Ended | 39 Weeks Ended | |||||||||||||||||||
| Carrying Value before adjustment |
Fair value adjustment |
Carrying value after adjustment |
Carrying Value before adjustment |
Fair value adjustment |
Carrying value after adjustment | |||||||||||||||
|
Property, plant and equipment (1) |
$ | 9.2 | $ | (7.8 | ) | $ | 1.4 | $ | 25.6 | $ | (21.1 | ) | $ | 4.5 | ||||||
|
Equity and cost investments (2) |
$ | 0.8 | $ | (0.2 | ) | $ | 0.6 | $ | 10.4 | $ | (7.7 | ) | $ | 2.7 | ||||||
|
Goodwill (3) |
$ | 4.1 | $ | (1.6 | ) | $ | 2.5 | $ | 4.1 | $ | (1.6 | ) | $ | 2.5 | ||||||
| (1) |
The fair value was determined using a discounted cash flow model based on future store revenues and operating costs, using internal projections. The resulting impairment charge was included in store operating expenses. |
| (2) |
The fair value was determined using standard valuation techniques, including discounted cash flows, comparable transactions, and comparable company analyses. The resulting impairment charge was included in other operating expenses. |
| (3) |
The fair value was determined using a discounted cash flow model based on future cash flows for the reporting unit, using internal projections. The resulting impairment charge was included in store operating expenses. |
|
|||
| Jun 27, 2010 |
Sep 27, 2009 |
Jun 28, 2009 | |||||||
|
Coffee: |
|||||||||
|
Unroasted |
$ | 233.7 | $ | 381.6 | $ | 451.4 | |||
|
Roasted |
85.8 | 76.7 | 56.5 | ||||||
|
Other merchandise held for sale |
81.8 | 116.0 | 92.2 | ||||||
|
Packaging and other supplies |
95.3 | 90.6 | 103.5 | ||||||
|
Total |
$ | 496.6 | $ | 664.9 | $ | 703.6 | |||
|
|||
| Jun 27, 2010 |
Sep 27, 2009 |
|||||||
|
Land |
$ | 58.0 | $ | 58.2 | ||||
|
Buildings |
265.3 | 231.5 | ||||||
|
Leasehold improvements |
3,360.2 | 3,349.0 | ||||||
|
Store equipment |
1,024.0 | 1,073.4 | ||||||
|
Roasting equipment |
286.1 | 282.9 | ||||||
|
Furniture, fixtures and other |
598.2 | 586.7 | ||||||
|
Work in progress |
154.6 | 119.2 | ||||||
| 5,746.4 | 5,700.9 | |||||||
|
Less accumulated depreciation |
(3,384.9 | ) | (3,164.5 | ) | ||||
|
Property, plant and equipment, net |
$ | 2,361.5 | $ | 2,536.4 | ||||
|
|||
| Jun 27, 2010 |
Sep 27, 2009 | |||||
|
Current portion of long-term debt (included in other accrued liabilities) |
$ | 0 | $ | 0.2 | ||
|
6.25% Senior Notes (10 year, due Aug 2017) |
549.4 | 549.2 | ||||
|
Other long-term debt |
0.0 | 0.1 | ||||
|
Long-term debt |
549.4 | 549.3 | ||||
|
Total debt |
$ | 549.4 | $ | 549.5 | ||
|
|||
| Jun 27, 2010 |
Sep 27, 2009 | |||||
|
Deferred rent |
$ | 245.3 | $ | 266.0 | ||
|
Unrecognized tax benefits |
84.1 | 55.1 | ||||
|
Asset retirement obligations |
45.1 | 43.4 | ||||
|
Other |
21.8 | 25.1 | ||||
|
Total |
$ | 396.3 | $ | 389.6 | ||
|
| Shareholders' Equity |
Noncontrolling Interest |
Total Equity |
||||||||||
|
Balance, September 27, 2009 |
$ | 3,045.7 | $ | 11.2 | $ | 3,056.9 | ||||||
|
Net earnings |
666.7 | 3.1 | 669.8 | |||||||||
|
Unrealized holding gains / (losses) on available-for-sale securities |
0.4 | 0.0 | 0.4 | |||||||||
|
Unrealized holding gains / (losses) on cash flow hedging instruments |
(7.2 | ) | 0.0 | (7.2 | ) | |||||||
|
Unrealized holding gains / (losses) on net investment hedging instruments |
(1.4 | ) | 0.0 | (1.4 | ) | |||||||
|
Reclassification adjustment for net (gains) / losses realized in net earnings for available-for-sale securities |
0.2 | 0.0 | 0.2 | |||||||||
|
Reclassification adjustment for net (gains) / losses realized in net earnings for cash flow hedges |
2.5 | 0.0 | 2.5 | |||||||||
|
Translation adjustment |
(29.5 | ) | 0.0 | (29.5 | ) | |||||||
|
Comprehensive income |
631.7 | 3.1 | 634.8 | |||||||||
|
Stock-based compensation expense |
83.3 | 0.0 | 83.3 | |||||||||
|
Exercise of stock options |
91.0 | 0.0 | 91.0 | |||||||||
|
Sale of common stock |
14.0 | 0.0 | 14.0 | |||||||||
|
Repurchase of common stock |
(173.3 | ) | 0.0 | (173.3 | ) | |||||||
|
Cash dividends declared |
(171.5 | ) | 0.0 | (171.5 | ) | |||||||
|
Net distributions to noncontrolling interests |
0.0 | (0.6 | ) | (0.6 | ) | |||||||
|
Balance, June 27, 2010 |
$ | 3,520.9 | $ | 13.7 | $ | 3,534.6 | ||||||
|
Balance, September 28, 2008 |
$ | 2,490.9 | $ | 18.3 | $ | 2,509.2 | ||||||
|
Net earnings |
240.8 | (2.8 | ) | 238.0 | ||||||||
|
Unrealized holding gains / (losses) on available-for-sale securities |
3.0 | 0.0 | 3.0 | |||||||||
|
Unrealized holding gains / (losses) on cash flow hedging instruments |
14.9 | 0.0 | 14.9 | |||||||||
|
Unrealized holding gains / (losses) on net investment hedging instruments |
(2.4 | ) | 0.0 | (2.4 | ) | |||||||
|
Reclassification adjustment for net (gains) / losses realized in net earnings for cash flow hedges |
(0.6 | ) | 0.0 | (0.6 | ) | |||||||
|
Translation adjustment |
(15.5 | ) | 0.0 | (15.5 | ) | |||||||
|
Comprehensive income |
240.2 | (2.8 | ) | 237.4 | ||||||||
|
Stock-based compensation expense |
63.9 | 0.0 | 63.9 | |||||||||
|
Exercise of stock options |
3.0 | 0.0 | 3.0 | |||||||||
|
Sale of common stock |
20.0 | 0.0 | 20.0 | |||||||||
|
Net distributions to noncontrolling interests |
0.0 | 0.0 | 0.0 | |||||||||
|
Balance, June 28, 2009 |
$ | 2,818.0 | $ | 15.5 | $ | 2,833.5 | ||||||
| Jun 27, 2010 | Sep 27, 2009 | |||||||
|
Net unrealized gains / (losses) on available-for-sale securities |
$ | (0.2 | ) | $ | (0.8 | ) | ||
|
Net unrealized gains / (losses) on hedging instruments |
(29.7 | ) | (23.7 | ) | ||||
|
Translation adjustment |
60.3 | 89.9 | ||||||
|
Accumulated other comprehensive income |
$ | 30.4 | $ | 65.4 | ||||
|
| 13 Weeks Ended | 39 Weeks Ended | |||||||||||
| Jun 27, 2010 | Jun 28, 2009 | Jun 27, 2010 | Jun 28, 2009 | |||||||||
|
Options |
$ | 18.9 | $ | 16.6 | $ | 56.1 | $ | 47.7 | ||||
|
Restricted stock units ("RSUs") |
9.6 | 3.9 | 25.8 | 10.4 | ||||||||
|
ESPP |
0.0 | 0.1 | 0.0 | 5.0 | ||||||||
|
Total stock-based compensation |
$ | 28.5 | $ | 20.6 | $ | 81.9 | $ | 63.1 | ||||
| 13 Weeks Ended | 39 Weeks Ended | |||||||||||
| Jun 27, 2010 | Jun 28, 2009 | Jun 27, 2010 | Jun 28, 2009 | |||||||||
|
Estimated fair value per option granted |
$ | 9.49 | $ | 4.93 | $ | 8.50 | $ | 3.54 | ||||
|
Weighted average option grant price |
$ | 26.92 | $ | 12.90 | $ | 22.23 | $ | 8.78 | ||||
|
Weighted average price per options exercised |
$ | 12.98 | $ | 9.09 | $ | 12.33 | $ | 6.17 | ||||
|
Weighted average RSU grant price |
$ | 25.92 | $ | 11.66 | $ | 22.22 | $ | 8.71 | ||||
| Stock Options |
RSUs | |||||||
|
Options outstanding/Nonvested RSUs, September 27, 2009 |
63.6 | 4.4 | ||||||
|
Options/RSUs granted |
14.7 | 2.3 | ||||||
|
Options exercised/RSUs vested |
(6.5 | ) | (0.5 | ) | ||||
|
Options/RSUs forfeited/expired |
(6.7 | ) | (0.5 | ) | ||||
|
Options outstanding/Nonvested RSUs, June 27, 2010 |
65.1 | 5.7 | ||||||
|
Total unrecognized stock-based compensation expense, net of forfeitures, as of June 27, 2010 |
$ | 90 | $ | 54 | ||||
|
|||
| Maximum Exposure |
Year Guarantee Expires in |
Estimated Fair Value Recorded on Balance Sheet |
|||||||
|
Japanese yen-denominated bank loans (Starbucks Japan — an unconsolidated equity investee) |
$ | 2.4 | 2014 | $ | 0.0 | (1) | |||
|
Borrowings of other unconsolidated equity investees |
$ | 7.4 | various | $ | 2.2 | ||||
| (1) |
Since there has been no modification of these loan guarantees subsequent to the adoption of accounting requirements for guarantees, we have applied the disclosure provisions only and have not recorded the guarantees on our consolidated balance sheets. |
|
| United States |
International | Global CPG | Unallocated Corporate |
Total | ||||||||||||
|
13 Weeks Ended |
||||||||||||||||
|
June 27, 2010 |
||||||||||||||||
|
Company-operated retail revenues |
$ | 1,726.7 | $ | 460.0 | $ | 0.0 | $ | 0.0 | $ | 2,186.7 | ||||||
|
Licensing revenues |
135.5 | 78.0 | 117.1 | 0.0 | 330.6 | |||||||||||
|
Foodservice and other revenues |
0.8 | 13.1 | 80.8 | 0.0 | 94.7 | |||||||||||
|
Total net revenues |
1,863.0 | 551.1 | 197.9 | 0.0 | 2,612.0 | |||||||||||
|
Depreciation and amortization expenses |
86.1 | 26.3 | 1.2 | 11.6 | 125.2 | |||||||||||
|
Income from equity investees |
0.0 | 19.0 | 17.3 | 0.0 | 36.3 | |||||||||||
|
Operating income/(loss) |
290.8 | 56.8 | 60.1 | (80.0 | ) | 327.7 | ||||||||||
|
Net impairment and disposition losses |
3.3 | 12.1 | 0.0 | 0.5 | 15.9 | |||||||||||
|
June 28, 2009 |
||||||||||||||||
|
Company-operated retail revenues |
$ | 1,613.2 | $ | 400.6 | $ | 0.0 | $ | 0.0 | $ | 2,013.8 | ||||||
|
Licensing revenues |
129.4 | 65.3 | 106.3 | 0.0 | 301.0 | |||||||||||
|
Foodservice and other revenues |
1.1 | 11.5 | 76.5 | 0.0 | 89.1 | |||||||||||
|
Total net revenues |
1,743.7 | 477.4 | 182.8 | 0.0 | 2,403.9 | |||||||||||
|
Depreciation and amortization expenses |
94.2 | 26.3 | 1.4 | 11.8 | 133.7 | |||||||||||
|
Income from equity investees |
0.0 | 15.5 | 14.2 | 0.0 | 29.7 | |||||||||||
|
Operating income/(loss) |
188.1 | 34.4 | 65.7 | (84.2 | ) | 204.0 | ||||||||||
|
Net impairment and disposition losses |
32.9 | 6.8 | 0.0 | 13.6 | 53.3 | |||||||||||
|
39 Weeks Ended |
||||||||||||||||
|
June 27, 2010 |
||||||||||||||||
|
Company-operated retail revenues |
$ | 5,195.0 | $ | 1,413.5 | $ | 0.0 | $ | 0.0 | $ | 6,608.5 | ||||||
|
Licensing revenues |
418.5 | 222.4 | 326.2 | 0.0 | 967.1 | |||||||||||
|
Foodservice and other revenues |
4.5 | 40.4 | 248.9 | 0.0 | 293.8 | |||||||||||
|
Total net revenues |
5,618.0 | 1,676.3 | 575.1 | 0.0 | 7,869.4 | |||||||||||
|
Depreciation and amortization expenses |
264.4 | 81.9 | 3.6 | 34.4 | 384.3 | |||||||||||
|
Income from equity investees |
0.0 | 56.9 | 43.2 | 0.0 | 100.1 | |||||||||||
|
Operating income/(loss) |
947.2 | 141.2 | 195.1 | (263.4 | ) | 1,020.1 | ||||||||||
|
Net impairment and disposition losses |
28.9 | 23.8 | 0.0 | 7.5 | 60.2 | |||||||||||
|
June 28, 2009 |
||||||||||||||||
|
Company-operated retail revenues |
$ | 4,977.2 | $ | 1,174.6 | $ | 0.0 | $ | 0.0 | $ | 6,151.8 | ||||||
|
Licensing revenues |
404.2 | 198.5 | 315.4 | 0.0 | 918.1 | |||||||||||
|
Foodservice and other revenues |
2.8 | 33.7 | 246.0 | 0.0 | 282.5 | |||||||||||
|
Total net revenues |
5,384.2 | 1,406.8 | 561.4 | 0.0 | 7,352.4 | |||||||||||
|
Depreciation and amortization expenses |
285.8 | 75.6 | 4.4 | 36.3 | 402.1 | |||||||||||
|
Income from equity investees |
0.5 | 38.5 | 39.4 | 0.0 | 78.4 | |||||||||||
|
Operating income/(loss) |
371.8 | 53.3 | 203.4 | (265.9 | ) | 362.6 | ||||||||||
|
Net impairment and disposition losses |
106.2 | 38.2 | 0.0 | 54.6 | 199.0 | |||||||||||
|
13 Weeks Ended |
Jun 27, 2010 | Jun 28, 2009 | ||||||
|
Operating income |
$ | 327.7 | $ | 204.0 | ||||
|
Interest income and other, net |
(1.4 | ) | 18.6 | |||||
|
Interest expense |
(7.9 | ) | (8.6 | ) | ||||
|
Earnings before income taxes |
$ | 318.4 | $ | 214.0 | ||||
|
39 Weeks Ended |
Jun 27, 2010 | Jun 28, 2009 | ||||||
|
Operating income |
$ | 1,020.1 | $ | 362.6 | ||||
|
Interest income and other, net |
28.4 | 15.6 | ||||||
|
Interest expense |
(24.1 | ) | (30.5 | ) | ||||
|
Earnings before income taxes |
$ | 1,024.4 | $ | 347.7 | ||||
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