Starbucks 2012 Annual Report Download - page 76

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70
Note 5: Inventories (in millions)
September 30, 2012 October 2, 2011
Coffee:
Unroasted $ 711.3 $ 431.3
Roasted 222.2 246.5
Other merchandise held for sale 181.6 150.8
Packaging and other supplies 126.4 137.2
Total $ 1,241.5 $ 965.8
Other merchandise held for sale includes, among other items, serveware and tea. Inventory levels vary due to
seasonality, commodity market supply and price fluctuations.
As of September 30, 2012, we had committed to purchasing green coffee totaling $557 million under fixed-price
contracts and an estimated $297 million under price-to-be-fixed contracts. As of September 30, 2012,
approximately $125 million of our price-to-be-fixed contracts were effectively fixed through the use of futures
contracts. Until prices are fixed, we estimate the total cost of these purchase commitments. We believe, based on
relationships established with our suppliers in the past, the risk of non-delivery on such purchase commitments is
remote.
Note 6: Equity and Cost Investments (in millions)
September 30, 2012 October 2, 2011
Equity method investments $ 393.9 $ 334.4
Cost method investments 66.0 37.9
Total $ 459.9 $ 372.3
Equity Method Investments
As of September 30, 2012, we had a 50 percent ownership interest in each of the following international equity
investees: Starbucks Coffee Korea Co., Ltd.; President Starbucks Coffee Taiwan Ltd.; Shanghai President Coffee
Co.; Berjaya Starbucks Coffee Company Sdn. Bhd. (Malaysia); and Tata Starbucks Limited (India). In addition,
we had a 39.6 percent ownership interest in Starbucks Coffee Japan, Ltd. These international entities operate
licensed Starbucks retail stores. We also have licensed the rights to produce and distribute Starbucks branded
products to The North American Coffee Partnership with the Pepsi-Cola Company. We have a 50 percent
ownership interest in The North American Coffee Partnership, which develops and distributes bottled
Frappuccino®beverages, Starbucks DoubleShot®espresso drinks, Seattle’s Best Coffee®ready-to-drink espresso
beverages and Starbucks Refreshers™ beverages.
Our share of income and losses from our equity method investments is included in income from equity investees
on the consolidated statements of earnings. Also included in this line item is our proportionate share of gross
margin resulting from coffee and other product sales to, and royalty and license fee revenues generated from,
equity investees. Revenues generated from these related parties, net of eliminations, were $190.3 million, $151.6
million, and $125.7 million in fiscal years 2012, 2011, and 2010, respectively. Related costs of sales, net of
eliminations, were $111.0 million, $83.2 million, and $65.3 million in fiscal years 2012, 2011, and 2010,
respectively. As of September 30, 2012 and October 2, 2011, there were $33.0 million and $31.9 million of
accounts receivable from equity investees, respectively, on our consolidated balance sheets, primarily related to
product sales and royalty revenues.