Starbucks 2012 Annual Report Download - page 60

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STARBUCKS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fiscal Years ended September 30, 2012, October 2, 2011 and October 3, 2010
Note 1: Summary of Significant Accounting Policies
Description of Business
We purchase and roast high-quality coffees that we sell, along with handcrafted coffee and tea beverages and a
variety of fresh food items, through our company-operated stores. We also sell a variety of coffee and tea products
and license our trademarks through other channels such as licensed stores, grocery and national foodservice
accounts.
In this 10-K, Starbucks Corporation (together with its subsidiaries) is referred to as “Starbucks,” the “Company,”
“we,” “us” or “our.”
We have four reportable operating segments: Americas; Europe, Middle East, and Africa, collectively referred to
as “EMEA;” China / Asia Pacific (“CAP”) and Channel Development. Our Seattle’s Best Coffee operating
segment is reported in “Other” with Evolution Fresh, our Digital Ventures business and unallocated corporate
expenses.
Additional details on the nature of our business and our reportable operating segments are in Item 1 of this 10-K.
Principles of Consolidation
The consolidated financial statements reflect the financial position and operating results of Starbucks, including
wholly owned subsidiaries and investees that we control. Investments in entities that we do not control, but have
the ability to exercise significant influence over operating and financial policies, are accounted for under the
equity method. Investments in entities in which we do not have the ability to exercise significant influence are
accounted for under the cost method. Intercompany transactions and balances have been eliminated.
Fiscal Year End
Our fiscal year ends on the Sunday closest to September 30. Fiscal years 2012 and 2011 included 52 weeks. Fiscal
year 2010 included 53 weeks, with the 53rdweek falling in the fourth fiscal quarter.
Estimates and Assumptions
Preparing financial statements in conformity with accounting principles generally accepted in the United States of
America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses. Examples include, but are not limited to, estimates for asset and
goodwill impairments, stock-based compensation forfeiture rates, future asset retirement obligations, and
inventory reserves; assumptions underlying self-insurance reserves and income from unredeemed stored value
cards; and the potential outcome of future tax consequences of events that have been recognized in the financial
statements. Actual results and outcomes may differ from these estimates and assumptions.
Cash and Cash Equivalents
We consider all highly liquid instruments with a maturity of three months or less at the time of purchase to be cash
equivalents. Cash and cash equivalents are valued using active markets for identical assets. We maintain cash and
cash equivalent balances with financial institutions that exceed federally insured limits. We have not experienced
any losses related to these balances and we believe credit risk to be minimal.
Our cash management system provides for the funding of all major bank disbursement accounts on a daily basis as
checks are presented for payment. Under this system, outstanding checks are in excess of the cash balances at