Starbucks 2011 Annual Report Download - page 41

our long-term credit ratings assigned by Moody’s and Standard & Poor’s rating agencies and our fixed charge
coverage ratio. As with the 2005 credit facility, the 2010 credit facility contains provisions requiring us to maintain
compliance with certain covenants, including a minimum fixed charge coverage ratio, which measures our ability to
cover financing expenses. As of October 2, 2011 and October 3, 2010, we were in compliance with each of these
covenants.
Under Starbucks commercial paper program we may issue unsecured commercial paper notes, up to a maximum
aggregate amount outstanding at any time of $500 million, with individual maturities that may vary, but not exceed
397 days from the date of issue. The program is backstopped by the 2010 credit facility, and the combined
borrowing limit is $500 million for the commercial paper program and the credit facility. Starbucks may issue
commercial paper from time to time, and the proceeds of the commercial paper financing will be used for working
capital needs, capital expenditures and other corporate purposes, including acquisitions and share repurchases. The
2005 credit facility was also paired with a commercial paper program whereby we could issue unsecured
commercial paper notes, up to a maximum amount outstanding at any time of $1 billion. The commercial paper
program was secured by the 2005 credit facility, and the combined borrowing limit was $1 billion for the
commercial paper program and the credit facility. During fiscal 2011 and fiscal 2010, there were no borrowings
under the credit facilities or commercial paper programs. As of October 2, 2011 and October 3, 2010, a total of $17
million and $15 million in letters of credit were outstanding under the respective revolving credit facility.
The $550 million of 10-year 6.25% Senior Notes also require us to maintain compliance with certain covenants,
including limits on future liens and sale and leaseback transactions on certain material properties. As of October 2,
2011 and October 3, 2010, we were in compliance with each of these covenants.
Use of Cash
We expect to use our cash and short-term investments, including any potential future borrowings under the credit
facility and commercial paper program, to invest in our core businesses, including new product innovations and
related marketing support, as well as other new business opportunities related to our core businesses. We believe
that future cash flows generated from operations and existing cash and short-term investments both domestically and
internationally will be sufficient to finance capital requirements for our core businesses in those respective markets
as well as shareholder distributions for the foreseeable future. However, in the event that we need to repatriate all or
a portion of our international cash to the US we would be subject to additional US income taxes.
We may use our available cash resources to make proportionate capital contributions to our equity method and cost
method investees. We may also seek strategic acquisitions to leverage existing capabilities and further build our
business in support of our growth agenda. Acquisitions may include increasing our ownership interests in our equity
method and cost method investees. Any decisions to increase such ownership interests will be driven by valuation
and fit with our ownership strategy. Significant new joint ventures, acquisitions and/or other new business
opportunities may require additional outside funding.
Other than normal operating expenses, cash requirements for fiscal 2012 are expected to consist primarily of capital
expenditures for remodeling and refurbishment of, and equipment upgrades for, existing company-operated stores;
systems and technology investments in the stores and in the support infrastructure; new company-operated stores;
and additional investments in manufacturing capacity. Total capital expenditures for fiscal 2012 are expected to be
in the range of approximately $800 million to $900 million.
During the second quarter of fiscal 2010, we declared our first ever cash dividend to shareholders of $0.10 per share.
During the third quarter of fiscal 2010 and each subsequent quarter through the third quarter of fiscal 2011, we
declared and paid a cash dividend to shareholders of $0.13 per share totaling $390 million and $171 million paid in
fiscal 2011 and 2010, respectively. In the fourth quarter, we declared a cash dividend of $0.17 per share to be paid
on December 2, 2011 with an expected payout of $127 million.
During fiscal years 2011 and 2010, we repurchased 16 million and 11 million shares of common stock ($556 million
and $286 million, respectively) under share repurchase authorizations. The number of remaining shares authorized
for repurchase at October 2, 2011 totaled 24 million.
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