Starbucks 2002 Annual Report Download - page 17

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Note 9: Long-term Debt
In September 1999, the Company purchased the land and
building comprising its York County, Pennsylvania, roasting
plant and distribution facility. The total purchase price was
$12.9 million. In connection with this purchase, the Company
assumed loans totaling $7.7 million from the York County
Industrial Development Corporation. The remaining
maturities of these loans range from 7 to 8 years, with interest
rates from 0.0% to 2.0%.
Scheduled principal payments on long-term debt are as
follows (in thousands):
Fiscal year ending
2003 $ 710
2004 722
2005 735
2006 748
2007 762
Thereafter 2,109
Total principal payments $ 5,786
Note 10: Leases
The Company leases retail stores, roasting and distribution
facilities and office space under operating leases expiring
through 2025. Most lease agreements contain renewal options
and rent escalation clauses. Certain leases provide for
contingent rentals based upon gross sales.
Rental expense under these lease agreements was as follows
(in thousands):
Fiscal year ended Sept 29, Sept 30, Oct 1,
2002 2001 2000
Minimum rentals – Retail $ 200,827 $ 150,510 $ 114,239
Minimum rentals – Other 19,143 16,033 12,910
Contingent rentals 5,415 4,018 3,743
Total $ 225,385 $ 170,561 $ 130,892
Minimum future rental payments under non-cancelable lease
obligations as of September 29, 2002, are as follows
(in thousands):
Fiscal year ending
2003 $ 248,016
2004 243,519
2005 232,641
2006 219,384
2007 203,395
Thereafter 863,874
Total minimum lease payments $2,010,829
Note 11: Shareholders’ Equity
During fiscal 2001, the Company amended and restated its
Articles of Incorporation to, among other things, change the
par value of the Company’s common stock and preferred stock
from no par value per share to $0.001 par value per share.
In addition to 600.0 million shares of authorized common stock,
the Company has authorized 7.5 million shares of preferred
stock, none of which was outstanding at September 29, 2002.
In September 2001, the Company’s Board of Directors
approved a plan to repurchase up to $60.0 million of its
common stock in the open market.This plan was completed
through the acquisition of 515,000 shares and 3.4 million
shares during fiscal years 2002 and 2001, respectively.
In June 2002, the Board of Directors authorized the repurchase
of up to an additional 10.0 million shares of common stock.
During fiscal year 2002, the Company acquired 2.1 million
shares at a cost of $42.0 million, leaving 7.9 million additional
shares authorized for repurchase under this plan as of
September 29, 2002.
Comprehensive Income
Comprehensive income includes all changes in equity during
the period, except those resulting from transactions with
shareholders and subsidiaries of the Company. It has two
components: net earnings and other comprehensive income.
Accumulated other comprehensive loss reported on the
Company’s consolidated balance sheets consists of foreign
currency translation adjustments and the unrealized gains and
losses, net of applicable taxes, on available-for-sale securities
and on derivative instruments designated and qualifying as
cash flow and net investment hedges.
Comprehensive income, net of related tax effects, is as follows (in thousands):
Fiscal year ended Sept 29, 2002 Sept 30, 2001 Oct 1, 2000
Net earnings $215,073 $ 181,210 $ 94,564
Unrealized holding gains/(losses) on available-for-sale securities,
net of tax benefit/(provision) of ($231), ($434) and $52 in 2002, 2001 and 2000, respectively 394 738 (85 )
Unrealized holding gains on cash flow hedges, net of tax provision
of $1,066, $683 and $0 in 2002, 2001 and 2000, respectively 1,815 1,163 -
Unrealized holding gains/(losses) on net investment hedges, net of
tax benefit/(provision) of $415, ($109) and $0 in 2002, 2001 and 2000, respectively (706) 186 -
Reclassification adjustment for gains realized in net income, net of
tax provision of $1,769, $0 and $48 in 2002, 2001 and 2000, respectively (3,012) - (78)
Net unrealized gain/(loss) (1,509) 2,087 (163)
Translation adjustment (1,664) 3,481 (6,867)
Total comprehensive income $ 211,900 $ 186,778 $ 87,534