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PART I
Item 1. Business
GENERAL
Starbucks Corporation (together with its subsidiaries, “Starbucks” or the “Company”) was formed in 1985. Starbucks
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 ready-to-drink beverages which include, among others, bottled
Frappuccino»coffee drinks and Starbucks DoubleShot»espresso drinks, 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 one of the most recognized and respected brands 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. The Company’s brand portfolio includes superpremium Tazo»teas,
Starbucks Hear Music
»
compact discs, Seattle’s Best Coffee»and Torrefazione Italia»coffee.
SEGMENT FINANCIAL INFORMATION
Beginning in the fiscal fourth quarter of 2006, the Company increased its reporting segments from two to three to include
a Global Consumer Products Group (“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 United States and International segments both include Company-operated retail stores and certain components of
Specialty Operations. Specialty operations within the United States include licensed retail stores, foodservice accounts
and other initiatives related to the Company’s core business. International specialty operations primarily include retail
store licensing operations in more than 25 countries and foodservice accounts in Canada and the United Kingdom. The
CPG segment includes the Company’s grocery and warehouse club business as well as branded products operations
worldwide. Information about Starbucks 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 “Segment Reporting” to the consolidated financial statements included
in Item 8 of this Annual Report on Form 10-K (“Form 10-K” or “Report”).
2STARBUCKS CORPORATION, FORM 10-K