Starbucks 2003 Annual Report Download - page 8

20฀ Fiscal฀2003฀Annual฀Report
Fiscal฀2003฀Annual฀Report฀ 21
The฀Company’s฀effective฀tax฀rate฀for฀fiscal฀2002฀was฀37.3%฀
compared฀ to฀ 37.4%฀in฀ fiscal฀ 2001.฀The฀effective฀tax฀ rate฀ in฀
fiscal฀ 2001฀ was฀ impacted฀ by฀ the฀ establishment฀ of฀ valuation฀
allowances฀against฀deferred฀tax฀benefits฀resulting฀from฀losses฀
from฀investments฀in฀majority-owned฀foreign฀subsidiaries฀and฀
Internet-related฀ investment฀losses.฀Management฀determined฀
that฀ a฀ portion฀ of฀ these฀ losses฀ may฀ not฀ be฀ realizable฀ for฀ tax฀
purposes฀within฀the฀allowable฀carryforward฀period.฀
Segment฀Results฀of฀Operations
The฀following฀tables฀summarize฀the฀Company’s฀results฀of฀operations฀by฀segment฀for฀fiscal฀2002฀and฀2001฀(in฀thousands):
฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀%฀of ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ %฀of
฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ United฀States฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ International฀ Unallocated ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
Fiscal฀year฀ended฀September฀29,฀2002฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀United฀States ฀฀฀฀฀฀ Revenue฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀International ฀฀฀฀฀฀฀ Revenue฀ Corporate ฀฀฀฀฀฀฀฀฀฀฀฀ Consolidated
Net฀revenues:
฀ Retail฀ $฀ 2,425,163฀ 85.7%฀ $฀ 367,741฀ 79.8%฀ $฀ –฀ ฀ ฀ $฀2,792,904
฀ Specialty฀ ฀ 403,090฀ 14.3฀ ฀ 92,914฀ 20.2฀ ฀ –฀ ฀ ฀ ฀ 496,004
Total฀net฀revenues฀ ฀ 2,828,253฀ 100.0฀ ฀ 460,655฀ 100.0฀ ฀ –฀ ฀ ฀ ฀3,288,908
Cost฀of฀sales฀and฀related฀occupancy฀costs฀ ฀ 1,114,535฀ 39.4฀ ฀ 235,476฀ 51.1฀ ฀ –฀ ฀ ฀ ฀1,350,011
Store฀operating฀expenses฀฀ ฀ 961,617฀ 39.7฀(1)฀ ฀ 148,165฀ 40.3฀(1)฀ ฀ –฀ ฀ ฀ ฀1,109,782
Other฀operating฀expenses฀฀ ฀ 87,718฀ 21.8฀(2)฀ ฀ 18,366฀ 19.8฀(2)฀ ฀ –฀ ฀ ฀ ฀ 106,084
Depreciation฀and฀amortization฀expenses฀ ฀ 142,752฀ 5.0฀ ฀ 34,069฀ 7.4฀ ฀ 28,736฀ ฀ 205,557
General฀and฀administrative฀expenses฀ ฀ 33,928฀ 1.2฀ ฀ 35,007฀ 7.6฀ ฀ 165,646฀ ฀ 234,581
Income฀from฀equity฀investees฀ ฀ 19,182฀ 0.7฀ ฀ 14,263฀ 3.1฀ ฀ –฀ ฀ ฀ ฀ 33,445
฀ Operating฀income฀ $฀ 506,885฀ 17.9%฀ $฀ 3,835฀ 0.8%฀ $฀(194,382฀)฀ $฀ 316,338
฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀%฀of ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ %฀of
฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ United฀States฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ International฀ Unallocated ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
Fiscal฀year฀ended฀September฀30,฀2001฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀United฀States ฀฀฀฀฀฀ Revenue฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀International ฀฀฀฀฀฀฀ Revenue฀ Corporate ฀฀฀฀฀฀฀฀฀฀฀฀ Consolidated
Net฀revenues:
฀ Retail฀ $฀ 1,942,052฀ 84.5%฀ $฀ 287,542฀ 82.1%฀ $฀ –฀ ฀ ฀ $฀2,229,594
฀ Specialty฀ ฀ 356,511฀ 15.5฀ ฀ 62,875฀ 17.9฀ ฀ –฀ ฀ ฀ ฀ 419,386
Total฀net฀revenues฀ ฀ 2,298,563฀ 100.0฀ ฀ 350,417฀ 100.0฀ ฀ –฀ ฀ ฀ ฀2,648,980
Cost฀of฀sales฀and฀related฀occupancy฀costs฀ ฀ 940,705฀ 40.9฀ ฀ 172,080฀ 49.1฀ ฀ –฀ ฀ ฀ ฀1,112,785
Store฀operating฀expenses฀฀ ฀ 755,175฀ 38.9฀(1)฀ ฀ 112,782฀ 39.2฀(1)฀ ฀ –฀ ฀ ฀ ฀ 867,957
Other฀operating฀expenses฀฀ ฀ 67,239฀ 18.9฀(2)฀ ฀ 5,167฀ 8.2฀(2)฀ ฀ –฀ ฀ ฀ ฀ 72,406
Depreciation฀and฀amortization฀expenses฀ ฀ 113,945฀ 5.0฀ ฀ 24,162฀ 6.9฀ ฀ 25,394฀ ฀ 163,501
General฀and฀administrative฀expenses฀ ฀ 33,289฀ 1.4฀ ฀ 30,160฀ 8.6฀ ฀ 116,403฀ ฀ 179,852
Income฀from฀equity฀investees฀ ฀ 12,668฀ 0.6฀ ฀ 15,072฀ 4.3฀ ฀ –฀ ฀ ฀ ฀ 27,740
฀ Operating฀income฀ $฀ 400,878฀ 17.4%฀ $฀ 21,138฀ 6.0%฀ $฀(141,797฀)฀ $฀ 280,219
(1) ฀฀ Shown฀as฀a฀percentage฀of฀retail฀revenues.
(2) ฀฀ Shown฀as฀a฀percentage฀of฀specialty฀revenues.
United฀States
United฀States฀total฀net฀revenues฀increased฀by฀$529.7฀million,฀
or฀ 23.0%,฀ to฀ $2.8฀ billion฀ in฀ fiscal฀ 2002฀ from฀ $2.3฀ billion฀
in฀ fiscal฀ 2001.฀ United฀ States฀ retail฀ revenues฀ increased฀
$483.1฀million,฀or฀24.9%,฀to฀$2.4฀billion,฀primarily฀due฀to฀the฀
opening฀of฀503฀new฀Company-operated฀retail฀stores฀in฀fiscal฀
2002฀and฀comparable฀store฀sales฀growth฀of฀7%.฀The฀increase฀
in฀ comparable฀ store฀ sales฀ was฀ almost฀ entirely฀ due฀ to฀ higher฀
transaction฀volume.฀Management฀believes฀increased฀customer฀
traffic฀ continues฀ to฀ be฀ driven฀ by฀ new฀ product฀ innovation,฀
customer฀satisfaction฀and฀improved฀speed฀of฀service฀through฀
enhanced฀ technology,฀ training฀ and฀ execution฀ at฀ Company-
operated฀retail฀stores.
United฀States฀specialty฀revenues฀increased฀by฀$46.6฀million,฀or฀
13.1%,฀to฀$403.1฀million฀in฀fiscal฀2002.฀Of฀the฀total฀growth,฀
expanded฀retail฀licensing฀operations฀provided฀$25.4฀million,฀or฀
54.5%,฀an฀increase฀in฀the฀grocery฀and฀warehouse฀club฀business฀
provided฀ $14.7฀ million,฀ or฀ 31.5%,฀ and฀ broader฀ distribution฀
and฀additional฀accounts฀in฀foodservice฀provided฀$4.3฀million,฀
or฀9.2%.
Operating฀income฀for฀the฀United฀States฀increased฀by฀26.4%฀
to฀ $506.9฀ million฀ in฀ fiscal฀ 2002,฀ from฀ $400.9฀ million฀ in฀
fiscal฀2001.฀Operating฀margin฀increased฀to฀17.9%฀of฀related฀
revenues฀ from฀ 17.4%฀ in฀ the฀ prior฀ year,฀ primarily฀ due฀ to฀ a฀
shift฀in฀sales฀mix฀to฀higher฀margin฀products฀and฀lower฀green฀
coffee฀costs,฀partially฀offset฀by฀higher฀retail฀advertising฀and฀
payroll-related฀expenditures.
International฀
International฀total฀net฀revenues฀increased฀by฀$110.2฀million,฀or฀
31.5%,฀to฀$460.7฀million฀in฀fiscal฀2002,฀from฀$350.4฀million฀
in฀ fiscal฀ 2001.฀ International฀ retail฀ revenues฀ increased฀
$80.2฀million,฀ or฀ 27.9%,฀ to฀ $367.7฀ million,฀ primarily฀ due฀
to฀ the฀ opening฀ of฀ 111฀ new฀ Company-operated฀ retail฀ stores฀
in฀fiscal฀2002฀and฀comparable฀store฀sales฀growth฀of฀1%.฀The฀
increase฀in฀comparable฀store฀sales฀was฀almost฀entirely฀due฀to฀
higher฀transaction฀volume.
International฀ specialty฀ revenues฀ increased฀ $30.0฀ million,฀ or฀
47.8%,฀to฀$92.9฀million฀in฀fiscal฀2002,฀primarily฀due฀to฀the฀
addition฀of฀299฀new฀licensed฀stores฀and฀resulting฀increases฀in฀
royalty฀revenues฀from฀and฀product฀sales฀to฀those฀licensees.฀
Operating฀income฀for฀International฀decreased฀to฀$3.8฀million฀
in฀fiscal฀2002,฀from฀$21.1฀million฀in฀fiscal฀2001.฀International฀
operating฀margin฀was฀0.8%฀in฀fiscal฀2002,฀compared฀to฀6.0%฀
in฀ fiscal฀ 2001,฀ primarily฀ due฀ to฀ higher฀ occupancy฀ costs฀ for฀
Company-operated฀retail฀stores฀and฀increased฀provisions฀for฀
asset฀impairment,฀partially฀offset฀by฀lower฀green฀coffee฀costs.฀
Excluding฀ Canadian฀ operations,฀ operating฀ losses฀ increased฀
$17.9฀ million฀ to฀ $16.7฀ million฀ in฀ fiscal฀ 2002,฀ compared฀ to฀
operating฀income฀of฀$1.2฀million฀in฀2001.