Starbucks 1999 Annual Report Download - page 15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended October 3, 1999, September 27, 1998 and September 28, 1997
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  
Starbucks Corporation and its subsidiaries (collectively “Starbucks” or the “Company”) purchases
and roasts high quality whole bean coffees and sells them, along with fresh, rich-brewed coffees,
Italian-style espresso beverages, a variety of pastries and confections, coffee-related accessories and
equipment and a line of premium teas, primarily through its Company-operated retail stores.
In addition to sales through its Company-operated retail stores, Starbucks sells coffee and tea
products through other channels of distribution (collectively, “specialty operations”). Starbucks,
through its joint venture partnerships, also produces and sells bottled Frappuccino®coffee drink
and a line of premium ice creams. The Company’s objective is to establish Starbucks as the most
recognized and respected brand in the world.To achieve this goal, the Company plans to continue
to rapidly expand its retail operations, grow its specialty operations and selectively pursue other
opportunities to leverage the Starbucks brand through the introduction of new products and the
development of new distribution channels.
  
The consolidated financial statements reflect the financial position and operating results
of Starbucks and its subsidiaries. Material intercompany transactions have been eliminated.
Investments in unconsolidated joint ventures are accounted for under the equity method, as
the Company does not exercise control over the operating and financial policies of such
joint ventures.
 -
The Company’s fiscal year ends on the Sunday closest to September 30. The fiscal year ended
October 3, 1999, included 53 weeks. Fiscal years 1998 and 1997 each included 52 weeks.
  
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses.Actual results may differ from these estimates.
   
The Company considers all highly liquid instruments with a maturity of three months or less at
the time of purchase to be cash equivalents.
 
The Company’s cash management system provides for the reimbursement of all major bank
disbursement accounts on a daily basis. Checks issued but not presented for payment to the bank
are reflected as “Checks drawn in excess of bank balances” in the accompanying consolidated
financial statements.

The Company’s investments consist primarily of investment-grade marketable debt and equity
securities, all of which are classified as available-for-sale and recorded at fair value. Unrealized hold-
ing gains and losses are recorded, net of any tax effect, as a separate component of accumulated
other comprehensive income.
.  
STARBUCKS COFFEE COMPANY