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34
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 17.0 10.9 1.3 % 1.3 %
Total operating expenses 1,037.0 652.6 80.3 % 75.8 %
Income from equity investees 85.2 75.6 6.6 % 8.8 %
Operating income $ 340.4 $ 283.5 26.3% 32.9%
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 660 basis points over fiscal 2011.
All Other Segments
Fiscal Year Ended
Sep 30,
2012
Oct 2,
2011
%
Change
Total net revenues $ 208.6 $ 175.8 18.7 %
Cost of sales 140.1 103.0 36.0 %
Other operating expenses 74.4 93.0 (20.0 )%
Depreciation and amortization expenses 2.5 1.0 150.0 %
General and administrative expenses 19.7 12.2 61.5 %
Total operating expenses 236.7 209.2 13.1 %
Income/(Loss) from equity investees 0.7 (2.4) nm
Operating loss $ (27.4) $ (35.8)(23.5)%
All other segments includes operating results from Teavana, Seattle’s Best Coffee, Evolution Fresh and Digital Ventures.
Total net revenues increased $33 million, primarily due to incremental revenues from Evolution Fresh, which was acquired
during the first quarter of fiscal 2012.
Total operating expenses increased $28 million, primarily due to increased cost of sales resulting from higher coffee costs.
2013 10-K
Starbucks Corporation Form