Starbucks 2007 Annual Report Download - page 29

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International operating income increased 27% to $138 million for the fiscal year ended 2007, compared to
$108 million in fiscal 2006. Operating margin decreased to 8.1% of related revenues from 8.3% in fiscal 2006,
primarily due to higher cost of sales including occupancy costs due in part to a shift in sales mix to higher cost
products such as food and merchandise and higher distribution costs. Partially offsetting this increase was lower
general and administrative expenses as a percentage of total net revenues.
Global Consumer Products Group
Sept 30,
2007
Oct 1,
2006
%
Change
Sept 30,
2007
Oct 1,
2006
52 Weeks Ended 52 Weeks Ended
As a % of CPG
total net revenues
Net revenues:
Specialty:
Licensing ................................ $366,345 $305,471 19.9% 100.0% 100.0%
Total specialty .......................... 366,345 305,471 19.9 100.0 100.0
Cost of sales ................................. 218,299 179,298 21.8 59.6 58.7
Other operating expenses ........................ 19,583 12,200 60.5 5.4 4.0
Depreciation and amortization expenses ............. 76 108 (29.6) — —
General and administrative expenses................ 6,349 6,363 (0.2) 1.7 2.1
Total operating expenses ..................... 244,307 197,969 23.4 66.7 64.8
Income from equity investees ..................... 61,515 59,416 3.5 16.8 19.4
Operating income ......................... $183,553 $166,918 10.0% 50.1% 54.6%
The CPG operating segment sells a selection of whole bean and ground coffees and premium Tazo»teas through
licensing arrangements in United States and international markets. CPG also produces and sells ready-to-drink
beverages through its joint ventures and marketing and distribution agreements. CPG “General and administrative
expenses,” previously included in “Other operating expenses,” are now presented separately.
CPG total net revenues increased 20% to $366 million for the fiscal year ended 2007, compared to $305 million for
fiscal 2006. The increase was primarily due to increased sales of U.S. packaged coffee and tea as well as increased
product sales and royalties in the international ready-to-drink business.
CPG operating income increased by 10% to $184 million for the fiscal year ended 2007, compared to $167 million
in fiscal 2006. Operating margin decreased to 50.1% of related revenues, from 54.6% in fiscal 2006. Contraction of
operating margin was primarily due to slower growth in income from the North American Coffee Partnership, an
equity investee, which produces ready-to-drink beverages.
Unallocated Corporate
Sept 30,
2007
Oct 1,
2006
%
Change
Sept 30,
2007
Oct 1,
2006
52 Weeks Ended 52 Weeks Ended
As a % of total net
revenues
Depreciation and amortization expenses ............ $ 34,720 $ 35,678 (2.7)% 0.4% 0.4%
General and administrative expenses............... 303,146 300,932 0.7 3.2 3.9
Operating loss ............................. $(337,866) $(336,610) 0.4% (3.6)% (4.3)%
Unallocated corporate expenses pertain to corporate administrative functions that support but are not specifically
attributable to the Company’s operating segments.
27