Starbucks 2003 Annual Report Download - page 21

32฀ Fiscal฀2003฀Annual฀Report
Fiscal฀2003฀Annual฀Report฀ 33
Accumulated฀ other฀ comprehensive฀ income/(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฀f low฀and฀net฀investment฀hedges.฀Comprehensive฀income,฀net฀of฀
related฀tax฀effects,฀is฀as฀follows฀(in฀thousands):
Fiscal฀year฀ended฀ Sept฀28,฀2003฀ Sept฀29,฀2002฀ Sept฀30,฀2001
Net฀earnings ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀$ ฀฀฀฀ 268,346฀฀ ฀฀฀฀ $ ฀฀฀฀212,686฀฀฀฀฀฀฀ $ ฀฀฀฀ 180,335
฀ Unrealized฀holding฀gains฀on฀available-for-sale฀securities,
฀ ฀ net฀of฀tax฀provision฀of฀$53,฀$231,฀and฀$434฀in฀2003,฀2002,฀and฀2001,฀respectively฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 142฀ ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 394฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 738
฀ Unrealized฀holding฀gains/(losses)฀on฀cash฀flow฀hedges,฀net฀of฀tax฀
฀ ฀ benefit/(provision)฀of฀$804,฀($1,066),฀and฀($683)฀in฀2003,฀2002฀and฀2001,฀respectively฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ (1,369฀) ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 1,815฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 1,163
฀ Unrealized฀holding฀gains/(losses)฀on฀net฀investment฀hedges,฀net฀
฀ ฀ of฀tax฀benefit/(provision)฀of฀$1,903,฀$415,฀and฀($109)฀in฀2003,฀2002,฀and฀2001,฀respectively ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ (3,241฀) ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀(706฀)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 186
฀ Reclassification฀adjustment฀for฀(gains)/losses฀realized฀in฀net฀earnings,฀
฀ ฀ net฀of฀tax฀benefit/(provision)฀of฀($41),฀$1,769,฀and฀$0฀in฀2003,฀2002,฀and฀2001,฀respectively฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀42฀ ฀฀฀฀฀฀฀฀฀฀฀฀฀฀ (3,012฀)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀–฀
฀ Net฀unrealized฀gain/(loss) ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ (4,426฀) ฀฀฀฀฀฀฀฀฀฀฀฀฀฀ (1,509฀)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 2,087
฀ Translation฀adjustment ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀27,255฀ ฀฀฀฀฀฀฀฀฀฀฀฀฀฀ (1,664฀)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 3,481
Total฀comprehensive฀income ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ $ ฀฀฀฀ 291,175฀ ฀฀฀฀฀ $ ฀฀฀฀209,513฀฀฀฀฀฀฀ $ ฀฀฀฀ 185,903
Expanded฀foreign-currency฀based฀operations฀in฀Europe฀and฀Canada฀and฀the฀change฀in฀value฀from฀translating฀foreign฀currency฀
exchange฀rates฀to฀the฀United฀States฀dollar฀have฀resulted฀in฀a฀favorable฀translation฀adjustment฀during฀fiscal฀2003,฀compared฀to฀
an฀unfavorable฀translation฀adjustment฀in฀fiscal฀2002.
Note฀13:฀Employee฀Stock฀and฀Benefit฀Plans
Stock฀Option฀Plans
The฀Company฀maintains฀several฀stock฀option฀plans฀ under฀which฀the฀Company฀may฀grant฀incentive฀stock฀options฀and฀non-
qualified฀stock฀options฀to฀employees,฀consultants฀and฀non-employee฀directors.฀Stock฀options฀have฀been฀granted฀at฀prices฀at฀or฀
above฀the฀fair฀market฀value฀on฀the฀date฀of฀grant.฀Options฀vest฀and฀expire฀according฀to฀terms฀established฀at฀the฀grant฀date.฀
The฀following฀summarizes฀all฀stock฀option฀transactions฀from฀October฀1,฀2000,฀through฀September฀28,฀2003:
฀ ฀ Weighted฀ ฀ Weighted
฀ ฀ Average฀ Shares฀ Average
฀Shares฀ Exercise฀ Subject฀to฀ Exercise
฀Subject฀to฀ Price฀ Exercisable฀ Price
฀Options฀ Per฀Share฀ Options฀ Per฀Share
Outstanding,฀October฀1,฀2000฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 41,889,726 ฀฀฀฀฀฀฀฀฀ $ ฀฀฀฀฀฀฀฀฀ 9.55฀฀฀฀฀฀฀฀ 20,330,740฀฀฀฀฀฀฀฀ $ ฀฀฀฀฀฀฀฀฀ 7.82
฀ Granted ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀9,907,292 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 20.48
฀ Exercised฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀(6,289,892 )฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 7.45
฀ Cancelled฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀(2,496,195 )฀฀฀฀฀฀฀฀฀฀ ฀฀฀฀฀฀฀ 14.22
Outstanding,฀September฀30,฀2001฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀43,010,931 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 12.13฀฀฀฀฀฀฀฀ 24,407,135฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 9.16
฀ Granted ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀10,262,709 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 15.79
฀ Exercised฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀(9,830,136 )฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 9.29
฀ Cancelled฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀(2,983,701 )฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 15.15
Outstanding,฀September฀29,฀2002฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀40,459,803 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 13.55฀฀฀฀฀฀฀฀ 20,975,598฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 11.07
฀ Granted ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀9,537,730 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 21.10
฀ Exercised฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀(8,019,604 )฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 11.69
฀ Cancelled฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀(2,912,483 )฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 17.90
Outstanding,฀September฀28,฀2003฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 39,065,446 ฀฀฀฀฀฀฀฀฀ $ ฀฀฀฀฀฀฀ 15.47฀฀฀฀฀฀฀฀ 20,888,694฀฀฀฀฀฀฀฀ $ ฀฀฀฀฀฀฀ 12.55
As฀of฀September฀28,฀2003,฀there฀were฀28.2฀million฀shares฀of฀common฀stock฀available฀for฀issuance฀pursuant฀to฀future฀stock฀option฀
grants.฀Additional฀information฀regarding฀options฀outstanding฀as฀of฀September฀28,฀2003,฀is฀as฀follows:฀
฀ ฀ ฀ ฀ Options฀Outstanding฀ ฀ ฀ Options฀Exercisable
฀ ฀ ฀ ฀ Weighted
฀ ฀ ฀ ฀ Average฀ Weighted฀ ฀ Weighted
฀ ฀ ฀ ฀ Remaining฀ Average฀ ฀ Average
฀ Range฀of฀ ฀ ฀ Contractual฀ Exercise฀ ฀ Exercise
฀ Exercisable฀Prices฀ ฀ Shares฀ Life฀(Years)฀ Price฀ Shares฀ Price
฀ $฀ 2.87฀ –฀ $฀ 5.88 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 1,665,970 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀1.85 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀$฀฀฀฀฀฀฀฀฀฀฀฀฀4.83 ฀฀฀฀฀฀฀฀฀฀ 1,665,970 ฀฀฀฀฀฀฀฀฀ $ ฀฀฀฀฀฀฀฀฀ 4.83
฀ ฀ 6.73฀ –฀ ฀ 11.63 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀12,017,544 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀4.63 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀9.98 ฀฀฀฀฀฀฀฀฀11,287,641 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 9.89
฀ ฀ 11.88฀ –฀ ฀ 14.80 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 7,863,648 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀7.53 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀14.40 ฀฀฀฀฀฀฀฀฀฀ 2,961,643 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 13.87
฀ ฀ 15.34฀ –฀ ฀ 20.64 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀14,224,022 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀8.08 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀20.20 ฀฀฀฀฀฀฀฀฀฀ 3,941,931 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 19.89
฀ ฀ 20.76฀ –฀ ฀ 28.87 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 3,294,262 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀8.59 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀22.98 ฀฀฀฀฀฀฀฀฀฀ 1,031,509 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 22.38
฀ $฀ 2.87฀ –฀ $฀ 28.87 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀39,065,446 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀6.69 ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀$฀฀฀฀฀฀฀฀฀฀฀15.47 ฀฀฀฀฀฀฀฀฀20,888,694 ฀฀฀฀฀฀฀฀฀ $ ฀฀฀฀฀฀฀ 12.55
Employee฀Stock฀Purchase฀Plans
The฀ Company฀ has฀ an฀ employee฀ stock฀ purchase฀ plan฀ which฀
provides฀ that฀ eligible฀ employees฀ may฀ contribute฀ up฀ to฀ 10%฀
of฀their฀base฀earnings฀towards฀the฀quarterly฀purchase฀of฀the฀
Company’s฀ common฀ stock.฀ The฀ employee’s฀ purchase฀ price฀
is฀85%฀of฀the฀lesser฀of฀the฀fair฀market฀value฀of฀the฀stock฀on฀
the฀first฀business฀day฀or฀the฀last฀business฀day฀of฀the฀quarterly฀
offering฀period.฀Employees฀may฀purchase฀shares฀having฀a฀fair฀
market฀value฀of฀up฀to฀$25,000฀(measured฀as฀of฀the฀first฀day฀
of฀each฀quarterly฀offering฀period฀for฀each฀calendar฀year).฀No฀
compensation฀ expense฀ is฀ recorded฀ in฀ connection฀ with฀ the฀
plan.฀ The฀ total฀ number฀ of฀ shares฀ issuable฀ under฀ the฀ plan฀ is฀
16.0฀million.฀There฀were฀712,046฀shares฀issued฀under฀the฀plan฀
during฀ fiscal฀ 2003฀ at฀ prices฀ ranging฀ from฀$17.32฀to฀ $20.87.฀
There฀were฀991,742฀shares฀issued฀under฀the฀plan฀during฀fiscal฀
2002฀ at฀ prices฀ ranging฀ from฀ $12.58฀ to฀ $19.81.฀ There฀ were฀
813,635฀shares฀issued฀under฀the฀plan฀during฀fiscal฀2001฀at฀prices฀
ranging฀from฀$12.70฀to฀$18.28.฀Since฀inception฀of฀the฀plan,฀
5.7฀million฀shares฀have฀been฀purchased,฀leaving฀10.3฀million฀
shares฀available฀for฀future฀issuance.฀Of฀the฀42,666฀employees฀
eligible฀to฀participate,฀11,184฀were฀participants฀in฀the฀plan฀as฀
of฀September฀28,฀2003.฀Starbucks฀has฀an฀additional฀employee฀
stock฀ purchase฀ plan฀ which฀ allows฀ eligible฀ United฀ Kingdom฀
employees฀ to฀ save฀ towards฀ the฀ purchase฀ of฀ the฀ Company’s฀
common฀stock.฀The฀plan฀is฀in฀compliance฀with฀applicable฀tax฀
laws฀in฀the฀United฀Kingdom.฀The฀employee’s฀purchase฀price฀
is฀85%฀of฀the฀fair฀value฀of฀the฀stock฀on฀the฀first฀business฀day฀
of฀ a฀ three-year฀ offering฀ period.฀ No฀ compensation฀ expense฀
was฀recorded฀in฀connection฀with฀the฀plan฀during฀Fiscal฀2002.฀
The฀total฀number฀of฀shares฀issuable฀under฀the฀plan฀is฀600,000.฀