Starbucks 2005 Annual Report Download - page 23

Download and view the complete annual report

Please find page 23 of the 2005 Starbucks annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 96

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96

(1) The Company's fiscal year ends on the Sunday closest to September 30.
(2) During fiscal 2001, the Company recognized losses of $2.9 million for impairments of Internet-related
investments determined to be other-than-temporary.
(3) On October 10, 2001, the Company sold 30,000 of its shares of Starbucks Coffee Japan, Ltd. at
approximately $495 per share, net of related costs, which resulted in a gain of $13.4 million.
(4) Earnings per share data for fiscal years presented above have been restated to reflect the two-for-one
stock splits in fiscal 2006 and 2001.
(5) Working capital deficit as of October 2, 2005 was primarily due to lower investments from the sale of
securities to fund common stock repurchases and increased current liabilities from short term borrowings
under the revolving credit facility. See (6) below.
(6) In August 2005, the Company entered into a $500 million five-year revolving credit facility and had
borrowings of $277 million outstanding as of October 2, 2005.
(7) Includes only Starbucks Company-operated retail stores open 13 months or longer. Comparable store
sales percentage for fiscal 2004 excludes the extra sales week.
(8) Store openings are reported net of closures.
(9) International store information has been adjusted for the fiscal 2005 acquisitions of Germany, Southern
China and Chile licensed operations by reclassifying historical information from Licensed stores to
Company-operated stores.
(10) United States stores open at fiscal 2003 year end included 43 SBC and 21 Torrefazione Italia Company-
operated stores and 74 SBC franchised stores.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
General
Starbucks Corporation's fiscal year ends on the Sunday closest to September 30. The fiscal years ended on
October 2, 2005 and September 28, 2003, included 52 weeks. The fiscal year ended October 3, 2004, included
53 weeks, with the 53rd week falling in the fiscal fourth quarter.
Management Overview
During the fiscal year ended October 2, 2005, all areas of Starbucks business, from U.S. and International
Company-operated retail operations to the Company's specialty businesses, delivered strong financial
performance. Starbucks believes the Company's ability to achieve the balance between growing its core
business and building the foundation for future growth is the key to increasing long-term shareholder value.
Starbucks fiscal 2005 performance reflects the Company's continuing commitment to achieving this balance.
The primary driver of the Company's revenue growth continues to be the opening of new retail stores, both
Company-operated and licensed, in pursuit of the Company's objective to establish Starbucks as the most
recognized and respected brand in the world. Starbucks opened 1,672 new stores in fiscal 2005 and plans to
open approximately 1,800 in fiscal 2006. With a presence in 37 countries, management continues to believe
that the Company's long-term goal of 15,000 Starbucks retail locations throughout the United States and at
least 15,000 stores in International markets is achievable.
In addition to opening new retail stores, Starbucks works to increase revenues generated at new and existing
Company-operated stores by attracting new customers and increasing the frequency of visits by current
21