Starbucks 2013 Annual Report Download - page 43

Download and view the complete annual report

Please find page 43 of the 2013 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 100

  • 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

35
SUMMARIZED QUARTERLY FINANCIAL INFORMATION (unaudited; in millions, except EPS)
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Full
Year
Fiscal 2013:(1)
Net revenues $ 3,799.6 $ 3,555.9 $ 3,741.7 $ 3,795.0 $ 14,892.2
Operating income/(loss) 630.6 544.1 615.2 (2,115.2)(325.4)
Net earnings/(loss) attributable to Starbucks 432.2 390.4 417.8 (1,232.0) 8.3
EPS — diluted $ 0.57 $ 0.51 $ 0.55 $ (1.64) $ 0.01
Fiscal 2012:
Net revenues $ 3,435.9 $ 3,195.9 $ 3,303.6 $ 3,364.2 $ 13,299.5
Operating income 556.0 430.4 491.6 519.6 1,997.4
Net earnings attributable to Starbucks 382.1 309.9 333.1 359.0 1,383.8
EPS — diluted $ 0.50 $ 0.40 $ 0.43 $ 0.46 $ 1.79
(1) The fourth quarter of fiscal 2013 includes a pretax charge of $2,784.1 million resulting from the conclusion of the arbitration
with Kraft.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Investment Overview
Starbucks cash and short-term investments were $3.2 billion and $2.0 billion as of September 29, 2013 and September 30,
2012, respectively. As of September 29, 2013, approximately $994.4 million of cash was held in foreign subsidiaries. Of our
cash held in foreign subsidiaries, $527.4 million is denominated in the US dollar. We actively manage our cash and short-term
investments in order to internally fund operating needs domestically and internationally, make scheduled interest and principal
payments on our borrowings, and return cash to shareholders through common stock cash dividend payments and share
repurchases. Our short-term investments consisted predominantly of US Treasury securities, commercial paper, corporate
bonds, and US Agency securities. Also included in our short-term investment portfolio are certificates of deposit placed through
an account registry service, with maturities ranging from 91 days to one year. The principal amounts of the individual
certificates of deposit do not exceed the Federal Deposit Insurance Corporation limits. Our portfolio of long-term available for
sale securities consists predominantly of high investment-grade corporate bonds, diversified among industries and individual
issuers.
Borrowing capacity
Our previous $500 million unsecured, revolving credit facility (the “2010 credit facility”) was set to mature in November 2014.
In the second quarter of fiscal 2013, we replaced the 2010 credit facility with a new $750 million unsecured, revolving credit
facility (the “2013 credit facility”) with various banks, of which $150 million may be used for issuances of letters of credit.
The 2013 credit facility is available for working capital, capital expenditures and other corporate purposes, including
acquisitions and share repurchases, and is currently set to mature on February 5, 2018. Starbucks has the option, subject to
negotiation and agreement with the related banks, to increase the maximum commitment amount by an additional $750 million.
Borrowings under the 2013 credit facility will bear interest at a variable rate based on LIBOR, and, for US dollar-denominated
loans under certain circumstances, a Base Rate (as defined in the 2013 credit facility), in each case plus an applicable margin.
The applicable margin is based on the better of (i) the Company's long-term credit ratings assigned by Moody's and Standard &
Poor's rating agencies, and (ii) the Company's fixed charge coverage ratio, pursuant to a pricing grid set forth in the 2013 credit
facility. The current applicable margin is 0.795% for Eurocurrency Rate Loans and 0.00% for Base Rate Loans. The 2013 credit
facility contains provisions requiring us to maintain compliance with certain covenants, including a minimum fixed charge
coverage ratio, which measures our ability to cover financing expenses. As a result of the arbitrator’s ruling on the Kraft
litigation, which is discussed further in Note 15 to the consolidated financial statements included in Item 8 of Part II of this 10-
K, the credit facility was amended on November 15, 2013 to exclude the impact of the litigation charge, including the impact
on our fixed charge coverage ratio. As of September 29, 2013, we were in compliance with each of these covenants, as
amended.
2013 10-K
Starbucks Corporation Form