Starbucks 1999 Annual Report Download - page 20

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NOTE 5: INVENTORIES
Inventories consist of the following (in thousands):
 ,   , 
Coffee
Unroasted $ 95,001 $ 77,400
Roasted 28,065 18,996
Other merchandise held for sale 46,655 36,850
Packaging and other supplies 11,165 9,872
$ 180,886 $ 143,118
As of October 3, 1999, the Company had fixed-price inventory purchase commitments for green
coffee totaling approximately $84 million. The Company believes, based on relationships estab-
lished with its suppliers in the past, that the risk of non-delivery on such purchase commitments
is remote.
NOTE 6: JOINT VENTURES AND OTHER INVESTMENTS
Starbucks has several joint ventures that are accounted for using the equity method. The
Company’s share of joint venture income or losses is included in “Other operating expenses” in the
accompanying consolidated statements of earnings.
The Company has two joint ventures to produce and distribute Starbucks branded products: a
50/50 joint venture and partnership agreement with Pepsi-Cola Company (“Pepsi”) to develop
ready-to-drink coffee-based beverages and a 50/50 joint venture agreement with Dreyer’s Grand
Ice Cream, Inc. to develop and distribute premium ice creams.
The Company is a partner in several other joint ventures that operate licensed Starbucks retail
stores. The Company has a 50/50 joint venture partnership with SAZABY Inc., a Japanese
retailer and restauranteur, to develop Starbucks retail stores in Japan.The Company also has a 5%
interest in a joint venture to develop Starbucks retail stores in Hawaii and a 5% interest in a joint
venture to develop Starbucks retail stores in Taiwan.
The Company’s investments in these joint ventures are as follows (in thousands):
  
 
  
Balance, September 29, 1996 $ 2,618 $ 1,781 $ 4,399
Allocated share of losses (2,384) (376) (2,760)
Capital contributions 27,259 365 27,624
Balance, September 28, 1997 27,493 1,770 29,263
Allocated share of (losses) income (30) 16 (14)
Distributions from joint ventures – (2,750) (2,750)
Capital contributions 7,616 4,802 12,418
Balance, September 27, 1998 35,079 3,838 38,917
Allocated share of (losses) income 3,046 (728) 2,318
Distributions from joint ventures (5,733) (3,250) (8,983)
Capital contributions – 10,466 10,466
Balance, October 3, 1999 $ 32,392 $ 10,326 $ 42,718
In addition, the Company has a consolidated 50/50 joint venture with Johnson Development
Corporation to develop retail stores in under-served urban communities.
As of October 3,1999, the Company had a $20.3 million investment in convertible securities of
Living.com, Inc. Subsequent to year-end, the investment was converted into shares of Living.com,
Inc. Series B Preferred Stock.
.  STARBUCKS COFFEE COMPANY