Starbucks 2007 Annual Report Download - page 24

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Acquisitions
In the first quarter of fiscal 2007, the Company purchased a 90% stake in its previously-licensed operations in
Beijing, China. Due to its majority ownership of these operations, Starbucks applied the consolidation method of
accounting subsequent to the date of acquisition.
RESULTS OF OPERATIONS — FISCAL 2007 COMPARED TO FISCAL 2006
The following table presents the consolidated statement of earnings as well as the percentage relationship to total
net revenues, unless otherwise indicated, of items included in the Company’s consolidated statements of earnings
(amounts in thousands):
Fiscal Year Ended
Sept 30,
2007
%of
Revenues
Oct 1,
2006
%of
Revenues
Oct 2,
2005
%of
Revenues
STATEMENTS OF EARNINGS DATA
Net revenues:
Company-operated retail .......... $7,998,265 85.0% $6,583,098 84.5% $5,391,927 84.7%
Specialty:
Licensing ................... 1,026,338 10.9 860,676 11.1 673,015 10.5
Foodservice and other .......... 386,894 4.1 343,168 4.4 304,358 4.8
Total specialty ................. 1,413,232 15.0 1,203,844 15.5 977,373 15.3
Total net revenues ............... 9,411,497 100.0 7,786,942 100.0 6,369,300 100.0
Cost of sales including occupancy
costs ........................ 3,999,124 42.5 3,178,791 40.8 2,605,212 40.9
Store operating expenses(1) ......... 3,215,889 34.2 2,687,815 34.5 2,165,911 34.0
Other operating expenses(2) ......... 294,136 3.1 253,724 3.3 192,525 3.0
Depreciation and amortization
expenses ..................... 467,160 4.9 387,211 5.0 340,169 5.3
General and administrative expenses . . . 489,249 5.2 479,386 6.1 361,613 5.7
Total operating expenses.......... 8,465,558 89.9 6,986,927 89.7 5,665,430 88.9
Income from equity investees ........ 108,006 1.1 93,937 1.2 76,648 1.2
Operating income .............. 1,053,945 11.2 893,952 11.5 780,518 12.3
Net interest and other income ........ 2,419 — 12,291 0.1 15,829 0.2
Earnings before income taxes ........ 1,056,364 11.2 906,243 11.6 796,347 12.5
Income taxes .................... 383,726 4.1 324,770 4.1 301,977 4.7
Earnings before cumulative effect of
change in accounting principle ..... 672,638 7.1 581,473 7.5 494,370 7.8
Cumulative effect of accounting change
for FIN 47, net of taxes .......... — — 17,214 0.3 — —
Net earnings .................. $ 672,638 7.1% $ 564,259 7.2% $ 494,370 7.8%
(1) As a percentage of related Company-operated retail revenues, store operating expenses were 40.2%, 40.8% and
40.2% for the fiscal years ended September 30, 2007, October 1, 2006 and October 2, 2005, respectively.
(2) As a percentage of related total specialty revenues, other operating expenses were 20.8%, 21.1% and 19.7% for
the fiscal years ended September 30, 2007, October 1, 2006 and October 2, 2005, respectively.
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