Starbucks 2008 Annual Report Download - page 7

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PART I
Item 1. Business
General
Starbucks Corporation was formed in 1985 and today is the world’s leading roaster and retailer of specialty coffee.
Starbucks (together with its subsidiaries, “Starbucks” or the “Company”) 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, a selection of premium teas, and coffee-related accessories and
equipment, primarily through Company-operated retail stores. Starbucks also sells coffee and tea products and
licenses its trademark through other channels such as licensed retail stores and, through certain of its equity
investees and licensees, Starbucks produces and sells a variety of ready-to-drink beverages. 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 disciplined expansion of its retail operations, to grow its
specialty operations and to selectively pursue other opportunities by introducing new products and developing new
channels of distribution.
Segment Financial Information
Starbucks has three reportable operating segments, with each segment providing the indicated percentage of total
net revenues for fiscal year ended September 28, 2008 (“fiscal 2008”): United States (76%), International (20%)
and Global Consumer Products Group (“CPG”) (4%). The United States and International segments both include
Company-operated retail stores and certain components of specialty operations. Specialty operations within the
United States includes licensed retail stores, foodservice accounts and other initiatives related to the Company’s
core business. International specialty operations primarily consists of retail store licensing operations in more than
30 countries and foodservice accounts in Canada and the United Kingdom (“UK”). The International segment’s
largest markets, based on number of retail stores, currently are Canada, Japan and the UK. The CPG segment
includes packaged coffee and tea as well as branded products sold worldwide through channels such as grocery
stores, warehouse clubs and convenience stores, and operates primarily through joint ventures and licensing
arrangements with large consumer products business partners. This operating model leverages the business
partners’ existing infrastructures and as a result, the CPG segment reflects relatively lower revenues, a modest
cost structure, and a resulting higher operating margin, compared to the Company’s other two reporting segments,
which consist primarily of retail stores.
Financial information about Starbucks segments is included in Note 18 to the consolidated financial statements
included in Item 8 of this Annual Report on Form 10-K (“10-K” or “Report”).
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