Starbucks 2005 Annual Report Download - page 32

Download and view the complete annual report

Please find page 32 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

52-week fiscal 2003 period, primarily due to the leverage of fixed depreciation expenses from the extra sales
week in 2004.
General and administrative expenses increased to $304 million in fiscal 2004, compared to $245 million in
fiscal 2003, primarily due to higher payroll-related expenditures. As a percentage of total net revenues, general
and administrative expenses decreased to 5.7% for the 53 weeks ended October 3, 2004, from 6.0% for the
52 weeks ended September 28, 2003.
Income from equity investees was $59 million in fiscal 2004, compared to $37 million in fiscal 2003. The
increase was primarily due to volume-driven operating results for The North American Coffee Partnership,
which produces bottled Frappuccino» coffee drinks and Starbucks DoubleShot» coffee drink, and improved
profitability of Starbucks Coffee Japan, Ltd. (""Starbucks Japan''). The July 2003 increase in the Company's
ownership interest from 5% to 50% in the Taiwan and Shanghai licensed operations also contributed to the
growth.
Operating income increased 44% to $607 million in fiscal 2004, from $421 million in fiscal 2003. The
operating margin increased to 11.5% of total net revenues in fiscal 2004, compared to 10.3% in fiscal 2003,
primarily due to leverage gained on most fixed operating costs distributed over an expanded revenue base,
partially offset by higher dairy and green coffee commodity costs.
Net interest and other income, which primarily consists of interest income, increased to $14 million in fiscal
2004, from $12 million in fiscal 2003. The growth was a result of interest income earned on higher cash and
liquid investment balances during fiscal 2004, compared to the prior year.
Income taxes for the 53 weeks ended October 3, 2004, resulted in an effective tax rate of 37.3%, compared to
38.6% in fiscal 2003. The lower effective tax rate was primarily due to improved operating results as fewer
nondeductible losses were generated from international markets, which are in various phases of development.
30