Starbucks 2006 Annual Report Download - page 27

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the settlement in the third quarter of fiscal 2006 of a multi-year income tax audit in a foreign jurisdiction for which the
Company had established a contingent liability, and to increased effectiveness of the Company’s long-term tax planning
strategies. The effective tax rate for fiscal 2007 is expected to be approximately 38%, with quarterly variations.
OPERATING SEGMENTS
Segment information is prepared on the same basis that the Company’s management reviews financial information for
operational decision-making purposes. Beginning in the fiscal fourth quarter of 2006, the Company increased its
reporting segments from two to three to include a Global CPG segment in addition to the United States and International
segments. This additional operating segment reflects the culmination of internal management realignments in fiscal
2006, and the successful development and launch of certain branded products in the United States and internationally
commencing in fiscal 2005 and continuing throughout fiscal 2006. Additionally, with the 100% acquisition of the
Company’s operations in Hawaii in fiscal 2006 and the shift in internal management of this market to the United States,
these operations have been moved from the International segment into the United States segment. Segment information
for all prior periods presented has been revised to reflect these changes.
The following tables summarize the Company’s results of operations by segment for fiscal 2006 and 2005 (in thousands):
UNITED STATES
As a % of
U.S. Total Net Revenues
Oct 1, 2006 Oct 2, 2005 % Change Oct 1, 2006 Oct 2, 2005
52 Weeks Ended 52 Weeks Ended
Net revenues:
Company-operated retail $5,495,240 $4,539,455 21.1% 88.9% 89.1%
Specialty:
Licensing 369,155 277,987 32.8 6.0 5.4
Foodservice and other 314,162 280,073 12.2 5.1 5.5
Total specialty 683,317 558,060 22.4 11.1 10.9
Total net revenues 6,178,557 5,097,515 21.2 100.0 100.0
Cost of sales including occupancy costs 2,374,485 1,944,356 38.4 38.1
Store operating expenses 2,280,044 1,848,836 41.5
(1)
40.7
(1)
Other operating expenses 190,624 150,712 27.9
(2)
27.0
(2)
Depreciation and amortization expenses 284,625 250,339 4.6 4.9
General and administrative expenses 93,754 85,362 1.5 1.7
Income from equity investees 151 592 — —
Operating income $ 955,176 $ 818,502 16.7% 15.5% 16.1%
(1) Shown as a percentage of related Company-operated retail revenues.
(2) Shown as a percentage of related total specialty revenues.
STARBUCKS CORPORATION, FORM 10-K 23