Starbucks 2008 Annual Report Download - page 79

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has appealed the denial of its motion for summary judgment and the California Court of Appeals has agreed to hear
the Company’s appeal. The Company cannot estimate the possible loss to the Company, if any. No trial date has
been set. The Company believes its employment application complies with California law, and the Company
intends to vigorously defend the lawsuit.
As previously disclosed in the Company’s Form 10-Q for the Quarterly Period Ended June 29, 2008, two former
employees of the Company filed a lawsuit, entitled Sean Pendlebury and Laurel Overton v. Starbucks Coffee
Company, in the U.S. District Court for the Southern District of Florida claiming the Company violated require-
ments of the Fair Labor Standards Act (“FLSA”). In August 2008, the Company and the plaintiffs agreed upon
terms of a settlement which was approved by the court on August 21, 2008.
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 18: Segment Reporting
Segment information is prepared on the same basis that the Company’s management reviews financial information
for operational decision making purposes. Starbucks has three reportable operating segments: United States,
International and CPG.
United States
The Company’s United States operations represent 80% of total Company-operated retail revenues, 55% of total
specialty revenues and 76% of total net revenues for fiscal year 2008. United States operations sell coffee and other
beverages, complementary food, whole bean coffees, and 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 represent the remaining 20% of Company-operated retail revenues and
21% of total specialty revenues as well as 20% of total net revenues for fiscal year 2008. International operations
sell coffee and other beverages, complementary food, whole bean coffees, and coffee brewing equipment and
merchandise through Company-operated retail stores in the UK, Canada and nine other markets. Specialty
operations in International primarily include retail store licensing operations in nearly 40 countries and
foodservice accounts, primarily in Canada and Japan. Many of the Company’s International operations are in
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.
Global Consumer Products Group
The Company’s CPG segment represents 24% of total specialty revenues and 4% of total net revenues for fiscal year
2008. CPG operations sell a selection of whole bean and ground coffees as well as a selection of premium Tazo»
teas through licensing arrangements in US and international markets. CPG operations also produce and sell ready-
to-drink beverages which include, among others, bottled Frappuccino»beverages, Starbucks DoubleShot»espresso
drinks, and Discoveries»chilled cup coffee, as well as Starbucks»superpremium ice creams and Starbucks
TM
Coffee and Cream Liqueurs, through its joint ventures and marketing and distribution agreements.
Unallocated Corporate includes expenses pertaining to corporate administrative functions that support the oper-
ating segments but are not specifically attributable to or managed by any segment and are not included in the
reported financial results of the operating segments. These unallocated corporate expenses include certain general
and administrative expenses, related depreciation and amortization expenses, restructuring charges and amounts
included in “Interest income and other, net” and “Interest expense” on the consolidated statements of earnings.
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