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PART I
Item 1. Business
General
Starbucks Corporation (together with its subsidiaries, ""Starbucks'' or the ""Company''), formed in 1985,
purchases and roasts high-quality whole bean coffees and sells them, along with fresh, rich-brewed coffees,
Italian-style espresso beverages, cold blended beverages, a variety of complementary food items, coffee-related
accessories and equipment, a selection of premium teas and a line of compact discs, primarily through
Company-operated retail stores. Starbucks also sells coffee and tea products and licenses its trademark
through other channels and, through certain of its equity investees, Starbucks produces and sells bottled
Frappuccino» coffee drinks and Starbucks DoubleShot»espresso drink and a line of superpremium ice
creams. All channels outside the Company-operated retail stores are collectively known as ""Specialty
Operations.'' The Company's objective is to establish Starbucks as the most recognized and respected brand in
the world. To achieve this goal, the Company plans to continue rapid expansion of its retail operations, to grow
its Specialty Operations and to selectively pursue other opportunities to leverage the Starbucks brand through
the introduction of new products and the development of new channels of distribution.
Segment Financial Information
Starbucks has two operating segments, United States and International, each of which includes Company-
operated retail stores and Specialty Operations. Information about Starbucks total net revenues, earnings
before income taxes, depreciation and amortization, income from equity investees, equity method investments,
identifiable assets, net impairment and disposition losses and capital expenditures by segment is included in
Note 19 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K
(""Form 10-K'' or ""Report'').
The following table shows the Company's revenue components for the fiscal year ended October 2, 2005:
% of Total % of Specialty
Revenues Net Revenues Revenues
Company-operated retailÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 85%
Specialty:
Licensing:
Retail stores ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6% 42%
Grocery and warehouse club ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4% 24%
Branded productsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ G1% 2%
Total licensing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10% 68%
Foodservice and other:
FoodserviceÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4% 29%
Other initiatives ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1% 3%
Total foodservice and other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5% 32%
Total specialty ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 15% 100%
Total net revenues ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 100%
1