Starbucks 2012 Annual Report Download - page 39

Download and view the complete annual report

Please find page 39 of the 2012 Starbucks annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 110

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110

33
Income from equity investees increased $30 million, primarily driven by an increase in income from our Japan
(approximately $11 million) and Shanghai (approximately $10 million) joint venture operations.
The combination of these changes, along with increased sales leverage on depreciation and amortization
(approximately 10 basis points) and general and administrative expenses (approximately 70 basis points), resulted
in an increase in operating margin of 10 basis points over fiscal 2011.
Channel Development
Fiscal Year Ended
Sep 30,
2012
Oct 2,
2011
Sep 30,
2012
Oct 2,
2011
As a % of Channel Development
Total Net Revenues
Total net revenues $ 1,292.2 $ 860.5 100.0% 100.0%
Cost of sales 827.6 487.5 64.0% 56.7%
Other operating expenses 191.1 151.8 14.8% 17.6%
Depreciation and amortization expenses 1.3 2.4 0.1% 0.3%
General and administrative expenses 8.9 6.6 0.7% 0.8%
Total operating expenses 1,028.9 648.3 79.6% 75.3%
Income from equity investees 85.2 75.6 6.6% 8.8%
Operating income $ 348.5 $ 287.8 27.0% 33.4%
Revenues
Channel Development total net revenues for fiscal 2012 increased 50%, or $432 million, primarily due to sales of
Starbucks and Tazo branded K-Cup®portion packs (approximately $232 million). The benefit of recognizing full
revenue from packaged coffee and tea sales under the direct distribution model through the second quarter of
fiscal 2012 (approximately $70 million) and increased foodservice revenues (approximately $33 million) also
contributed.
Operating Expenses
Cost of sales as a percentage of total net revenues increased 730 basis points, primarily due to increased
commodity costs (approximately 570 basis points), mainly coffee, and a shift in our product mix driven by the
introduction of Starbucks and Tazo branded K-Cup®portion packs (approximately 140 basis points).
Other operating expenses as a percentage of total net revenues decreased 280 basis points, primarily due to
increased sales leverage.
Income from equity investees increased $10 million over the prior year period, driven by increased income from
our North American Coffee Partnership joint venture. Income from equity investees declined as a percentage of
total net revenues (approximately 220 basis points) primarily due to the growth in segment revenues.
The combination of these changes resulted in a decrease in operating margin of 640 basis points over fiscal 2011.