Starbucks 2012 Annual Report Download - page 46

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40
Ready Brew in fiscal 2011 (approximately $24 million), partially offset by the extra week in fiscal 2010
(approximately $16 million).
Operating Expenses
Operating margin decreased 490 basis points over the prior year primarily due to increased commodity costs
(approximately 830 basis points), driven by higher coffee costs. Partially offsetting the increase in commodity
costs was the benefit of price increases (approximately 200 basis points) and lower marketing expenses for
Starbucks VIA®Ready Brew in 2011 (approximately 120 basis points).
Other
Fiscal Year Ended
Oct 2,
2011
Oct 3,
2010
%
Change
Total net revenues $ 175.8 $ 150.8 16.6%
Cost of sales 103.0 89.6 15.0%
Other operating expenses 93.0 34.9 166.5%
Depreciation and amortization expenses 58.6 47.4 23.6%
General and administrative expenses 584.0 558.1 4.6%
Total operating expenses 838.6 730.0 14.9%
Gain on sale of properties 30.2
—
n
m
Loss from equity investee (2.4) (3.3) (27.3)%
Operating loss $ (635.0) $ (582.5) 9.0%
Substantially all net revenues in Other are generated from the Seattle’s Best Coffee operating segment. The
increase in revenues for Seattle’s Best Coffee was primarily due to the recognition of a full year of sales to
national accounts added in the latter part of fiscal 2010 as well as new accounts added during fiscal
2011(approximately $20 million). This was partially offset by the impact of the closure of the Seattle’s Best
Coffee locations in Borders Bookstores.
Total operating expenses in fiscal 2011 increased 15%, or $109 million. This increase is the result of an increase
of $59 million in other operating expenses primarily due to the impairment of certain assets in our Seattle’s Best
Coffee business associated with the Borders bankruptcy in April 2011 and an increase in marketing expenses.
Also contributing was a $26 million increase in general and administrative expenses due to higher corporate
expenses to support growth initiatives and higher donations to the Starbucks Foundation. These increases in
operating expenses were partially offset by a gain on the sale of corporate real estate in fiscal 2011 (approximately
$30 million).