Starbucks 2005 Annual Report Download - page 72

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Note 16: Earnings per Share
The following table represents the calculation of net earnings per common share Ì basic and diluted (in
thousands, except earnings per share):
Fiscal Year Ended Oct 2, 2005 Oct 3, 2004 Sept 28, 2003
Net earningsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $494,467 $388,973 $265,355
Weighted average common shares and common stock
units outstanding (for basic calculation) ÏÏÏÏÏÏÏÏÏÏÏ 789,570 794,347 781,505
Dilutive effect of outstanding common stock options ÏÏÏ 25,847 28,583 21,791
Weighted average common and common equivalent
shares outstanding (for diluted calculation)ÏÏÏÏÏÏÏÏÏ 815,417 822,930 803,296
Net earnings per common share Ì basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.63 $ 0.49 $ 0.34
Net earnings per common and common equivalent
share Ì diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.61 $ 0.47 $ 0.33
Options with exercise prices greater than the average market price were not included in the computation of
diluted earnings per share. These options totaled 13.7 million, 0.3 million and 1.3 million in fiscal years 2005,
2004 and 2003, respectively.
Note 17: Related Party Transactions
In April 2001, certain members of the Board of Directors and other investors, organized as The Basketball
Club of Seattle, LLC (""The Basketball Club''), purchased the franchises for The Seattle Supersonics and
The Seattle Storm basketball teams. An executive officer of the Company and member of the Board of
Directors, Howard Schultz, owns a controlling interest in The Basketball Club. Starbucks paid approximately
$0.8 million, $0.8 million and $0.7 million during fiscal years 2005, 2004 and 2003, respectively, for team
sponsorships and ticket purchases. Terms of the team sponsorship agreements did not change as a result of the
related party relationship.
Prior to January 2003, a former member of the Company's Board of Directors served as a board member of,
and owned an indirect interest in, a privately held company that provides Starbucks with in-store music
services. Starbucks paid $0.7 million to the privately held company for music services during fiscal year 2003
while the related party relationship existed.
In June 2005, a member of the Company's Board of Directors was appointed president and chief financial
officer of Oracle Corporation. Starbucks had a pre-existing business relationship with Oracle related to
financial systems and systems consulting at the time of the appointment and Starbucks continued to make
payments for supplies and services subsequent to June 2005 in the ordinary course of business. These
payments totaled approximately $2.6 million since the inception of the related party relationship through
October 2, 2005. The Board member's employment relationship with Oracle ended on November 15, 2005.
Note 18: Commitments and Contingencies
The Company has unconditionally guaranteed the repayment of certain Japanese yen-denominated bank loans
and related interest and fees of an unconsolidated equity investee, Starbucks Coffee Japan, Ltd. The
guarantees continue until the loans, including accrued interest and fees, have been paid in full, with the final
loan amount due in 2014. The maximum amount is limited to the sum of unpaid principal and interest
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