Starbucks 2011 Annual Report Download - page 22

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Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
The significant properties used by Starbucks in connection with its roasting and distribution operations, serving all
segments, are as follows:
Location
Approximate Size
in Square Feet
Owned or
Leased Purpose
Auburn, WA ........................ 351,000 Leased Warehouse and distribution
Kent,WA .......................... 332,000 Owned Roasting and distribution
Renton,WA ........................ 125,000 Leased Warehouse
York County, PA ..................... 450,000 Owned Roasting and distribution
York County, PA ..................... 298,000 Owned Warehouse
CarsonValley,NV ................... 360,000 Owned Roasting and distribution
CarsonValley,NV ................... 24,000 Leased Warehouse
SandyRun,SC ...................... 117,000 Owned Roasting and distribution
Portland, OR ........................ 68,000 Leased Warehouse
Atlanta,GA ......................... 32,000 Leased Warehouse and distribution
Basildon, United Kingdom ............. 142,000 Leased Warehouse and distribution
Amsterdam,Netherlands ............... 97,000 Leased Roasting and distribution
We lease approximately one million square feet of office space in Seattle, Washington for corporate administrative
purposes. On August 8, 2011, we completed the sale of two commercial buildings located in Seattle, Washington, a
205,000 square foot office building and an adjacent 285,000 square foot office building.
As of October 2, 2011, Starbucks had more than 9,000 company-operated stores, almost all of which are leased. We
also lease space in various locations worldwide for regional, district and other administrative offices, training
facilities and storage.
Item 3. Legal Proceedings
In the first quarter of fiscal 2011, Starbucks notified Kraft Foods Global, Inc. (“Kraft”) that we were discontinuing
our distribution arrangement with Kraft on March 1, 2011 due to material breaches by Kraft of its obligations under
the Supply and License Agreement between the Company and Kraft, dated March 29, 2004 (the “Agreement”),
which defined the main distribution arrangement between the parties. Through our arrangement with Kraft,
Starbucks sold a selection of Starbucks and Seattle’s Best Coffee branded packaged coffees in grocery and
warehouse club stores throughout the US, and to grocery stores in Canada, the UK and other European countries.
Kraft managed the distribution, marketing, advertising and promotion of these products.
Kraft denies it has materially breached the Agreement. On November 29, 2010, Starbucks received a notice of
arbitration from Kraft putting the commercial dispute between the parties into binding arbitration pursuant to the
terms of the Agreement. In addition to denying it materially breached the Agreement, Kraft further alleges that if
Starbucks wished to terminate the Agreement it must compensate Kraft as provided in the Agreement in an amount
equal to the fair value of the Agreement, with an additional premium of up to 35% under certain circumstances. The
parties are now engaged in extensive discovery with an arbitration trial expected in mid- 2012.
On December 6, 2010, Kraft commenced a federal court action against Starbucks, entitled Kraft Foods Global, Inc.
v. Starbucks Corporation, in the U.S. District Court for the Southern District of New York (the “District Court”)
seeking injunctive relief to prevent Starbucks from terminating the distribution arrangement until the parties’ dispute
is resolved through the arbitration proceeding. On January 28, 2011, the District Court denied Kraft’s request for
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