Starbucks 2006 Annual Report Download - page 70

amended his complaint to include allegations that he and other retail assistant store managers were not paid overtime
compensation for all hours worked in excess of 40 hours in a work week after they were re-classified as non-exempt
employees in September 2002. In both claims, Plaintiff seeks to represent himself and a putative class of all current and
former assistant store managers employed by the Company in the United States from March 11, 2002 until the present.
He also seeks, on behalf of himself and the class, reimbursement for an unspecified amount of unpaid overtime
compensation, liquidated damages, injunctive relief, and attorney’s fees and costs. On September 13, 2005, the plaintiff
filed a motion for conditional collective action treatment and court-supervised notice to all putative class members under
the opt-in procedures in section 16(b) of the FLSA. On November 29, 2005, the court entered an order authorizing
notice to the class of the existence of the lawsuit and their opportunity to join as plaintiffs. The Company has a policy
requiring that all non-exempt partners, including assistant store managers, be paid for all hours worked, including any
hours worked in excess of 40 per week. The Company also believes that this policy is, and at all relevant times has been,
communicated and followed consistently. Further, the Company believes that the plaintiff and other assistant store
managers were properly classified as exempt under the FLSA prior to September 2002. The Company cannot estimate the
possible loss to the Company, if any, and believes that a loss in this case is unlikely. No trial date has been set. The
Company intends to vigorously defend the lawsuit.
The Company is party to various other legal proceedings arising in the ordinary course of its business, but it is not
currently a party to any legal proceeding that management believes would have a material adverse effect on the
consolidated financial position or results of operations of the Company.
Note 19: Segment Reporting
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.
United States
The Company’s United States operations (“United States”) represent 83% of total Company-operated retail revenues,
57% of total specialty revenues and 79% of total net revenues. United States operations sell coffee and other beverages,
whole bean coffees, complementary food, coffee brewing equipment and merchandise primarily through Company-
operated retail stores. Specialty Operations within the United States include licensed retail stores, foodservice accounts
and other initiatives related to the Company’s core business.
International
The Company’s International operations (“International”) represent the remaining 17% of Company-operated retail
revenues and 18% of total specialty revenues as well as 17% of total net revenues. International operations sell coffee and
other beverages, whole bean coffees, complementary food, coffee brewing equipment and merchandise through
Company-operated retail stores in the United Kingdom, Canada, Thailand, Australia, Germany, China, Singapore,
Puerto Rico, Chile and Ireland. Specialty Operations in International primarily include retail store licensing operations in
more than 25 countries and foodservice accounts in Canada and the United Kingdom. The Company’s International
operations are in various early stages of development that require a more extensive support organization, relative to the
current levels of revenue and operating income, than in the United States.
66 STARBUCKS CORPORATION, FORM 10-K