Starbucks 2011 Annual Report Download - page 40

SUMMARIZED QUARTERLY FINANCIAL INFORMATION (unaudited; in millions, except EPS)
First Second Third Fourth Total
2011:
Netrevenues ............................... $2,950.8 $2,785.7 $2,932.2 $3,031.9 $11,700.4
Operatingincome ........................... 501.9 376.1 402.2 448.3 1,728.5
Net earnings attributable to Starbucks ............ 346.6 261.6 279.1 358.5 1,245.7
EPS—diluted.............................. $ 0.45 $ 0.34 $ 0.36 $ 0.47 $ 1.62
2010:
Netrevenues ............................... $2,722.7 $2,534.7 $2,612.0 $2,838.0 $10,707.4
Operating income(1) .......................... 352.6 339.8 327.7 399.3 1,419.4
Net earnings attributable to Starbucks(1) .......... 241.5 217.3 207.9 278.9 945.6
EPS—diluted.............................. $ 0.32 $ 0.28 $ 0.27 $ 0.37 $ 1.24
(1) Includes pretax restructuring charges of $18.3 million, $7.9 million, $20.4 million and $6.4 million for the first,
second, third and fourth fiscal quarters respectively.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Investment Overview
Starbucks cash and short-term investments were $2.1 billion and $1.4 billion and as of October 2, 2011 and
October 3, 2010, respectively. As of October 2, 2011, approximately $367.5 million of cash was held in foreign
subsidiaries. Of our cash held in foreign subsidiaries, $69.5 million is denominated in the US dollar. We actively
manage our cash and short-term investments in order to internally fund operating needs domestically and
internationally, make scheduled interest and principal payments on our borrowings, and return cash to shareholders
through common stock cash dividend payments and share repurchases. Our short-term investments consisted
predominantly of US Treasury securities, commercial paper, corporate bonds, and US Agency securities. Also
included in our short-term investment portfolio are certificates of deposit placed through an account registry service
(“CDARS”), with maturities ranging from 91 days to one year, which we began investing into during the fourth
quarter of fiscal year 2011. The principal amounts of the individual certificates of deposit do not exceed the Federal
Deposit Insurance Corporation limits.
Our portfolio of long-term available for sale securities consists predominantly of high investment-grade corporate
bonds, diversified among industries and individual issuers, as well as certificates of deposits placed through CDARS
with maturities greater than 1 year. We also have investments in auction rate securities (“ARS”), all of which are
classified as long-term. ARS totaling $28 million and $41 million were outstanding as of October 2, 2011 and
October 3, 2010, respectively. The reduction in ARS was due to $16 million in redemptions during the fiscal year,
with all redemptions done at par. While the ongoing auction failures will limit the liquidity of these ARS
investments for some period of time, we do not believe this will materially impact our ability to fund our working
capital needs, capital expenditures, shareholder dividends or other business requirements.
Borrowing capacity
Starbucks previous $1 billion unsecured credit facility (the “2005 credit facility”) was available through November
of 2010, when we replaced the 2005 credit facility with a new $500 million unsecured credit facility (the “2010
credit facility”) with various banks, of which $100 million may be used for issuances of letters of credit.
The 2010 credit facility is available for working capital, capital expenditures and other corporate purposes, including
acquisitions and share repurchases and is currently set to mature in November 2014. Starbucks has the option,
subject to negotiation and agreement with the related banks, to increase the maximum commitment amount by an
additional $500 million. The interest rate for any borrowings under the credit facility, based on Starbucks current
ratings and fixed charge coverage ratio, is 1.075% over LIBOR. The specific spread over LIBOR will depend upon
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