Starbucks 2007 Annual Report Download - page 35

cash resources to make proportionate capital contributions to its equity method and cost method investees, as well as
purchase larger ownership interests in selected equity method investees and licensed operations, particularly in
international markets. Depending on market conditions, Starbucks may repurchase shares of its common stock
under its authorized share repurchase program. Management believes that strong cash flow generated from
operations, existing cash and liquid investments, as well as borrowing capacity under the revolving credit facility
and commercial paper program, should be sufficient to finance capital requirements for its core businesses for the
foreseeable future. Significant new joint ventures, acquisitions, share repurchases and/or other new business
opportunities may require additional outside funding.
Other than normal operating expenses, cash requirements for fiscal 2008 are expected to consist primarily of capital
expenditures for new Company-operated retail stores and the remodeling and refurbishment of existing Company-
operated retail stores, as well as potential increased investments in International licensees and for additional share
repurchases, if any. Management expects capital expenditures for fiscal 2008 to be consistent with the $1.1 billion
invested in fiscal 2007, primarily driven by new store development and existing store renovations.
Cash provided by operating activities totaled $1.3 billion for fiscal 2007. Of this amount, net earnings provided
$673 million and noncash depreciation and amortization expenses further increased cash provided by operating
activities by $491 million. In addition, an increase in accrued taxes payable due to the timing of payments provided
$86 million.
Cash used by investing activities for fiscal 2007 totaled $1.2 billion. Net capital additions to property, plant and
equipment used $1.1 billion, primarily from opening 1,342 new Company-operated retail stores and remodeling
certain existing stores. During fiscal 2007, the Company used $53 million for acquisitions, net of cash acquired. In
addition, the net activity in the Company’s portfolio of available-for-sale securities used $12 million.
Cash used by financing activities for fiscal 2007 totaled $172 million. Cash used to repurchase shares of the
Company’s common stock totaled $997 million. This amount includes the effect of the net change in unsettled
trades from October 1, 2006. Share repurchases, up to the limit authorized by the Board of Directors, are at the
discretion of management and depend on market conditions, capital requirements and other factors. As of
September 30, 2007, a total of up to 13.5 million shares remained available for repurchase, under existing
authorizations.
During the fourth quarter of fiscal 2007, the Company issued $550 million of 6.25% Senior Notes due in August
2017, in an underwritten registered public offering. The proceeds of $549 million, before expenses, were primarily
used to repay short-term borrowings and fund additional share repurchases. Net new borrowings under the
Company’s credit facility and commercial paper program were $10 million for fiscal 2007. As of September 30,
2007, a total of $710 million in borrowings were outstanding under the commercial paper program and $13 million
in letters of credit were outstanding under the credit facility, leaving $275 million of capacity available under the
$1 billion combined commercial paper program and revolving credit facility.
Partially offsetting cash used for share repurchases were proceeds of $177 million from the exercise of employee
stock options and the sale of the Company’s common stock from employee stock purchase plans. As options granted
are exercised, the Company will continue to receive proceeds and a tax deduction; however, the amounts and the
timing cannot be predicted.
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