0001157523-12-005647.txt : 20121101 0001157523-12-005647.hdr.sgml : 20121101 20121101160635 ACCESSION NUMBER: 0001157523-12-005647 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20121101 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20121101 DATE AS OF CHANGE: 20121101 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STARBUCKS CORP CENTRAL INDEX KEY: 0000829224 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING & DRINKING PLACES [5810] IRS NUMBER: 911325671 STATE OF INCORPORATION: WA FISCAL YEAR END: 0928 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20322 FILM NUMBER: 121173601 BUSINESS ADDRESS: STREET 1: P O BOX 34067 CITY: SEATTLE STATE: WA ZIP: 98124-1067 BUSINESS PHONE: 2064471575 MAIL ADDRESS: STREET 1: 2401 UTAH AVENUE SOUTH CITY: SEATTLE STATE: WA ZIP: 98134 8-K 1 a50460311.htm STARBUCKS CORPORATION 8-K a50460311.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 1, 2012

STARBUCKS CORPORATION
(Exact Name of Registrant as Specified in its Charter)

Washington
0-20322
91-1325671
(State or other jurisdiction of
incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
 
2401 Utah Avenue South, Seattle, Washington 98134
(Address of principal executive offices)
 
(206) 447-1575
(Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
     
o
  
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
     
o
  
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
     
o
  
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
     
o
  
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
Item 2.02
 Results of Operations and Financial Condition.
 
On November 1, 2012, Starbucks Corporation (“Starbucks” or the “Company”) issued a press release announcing its financial results for the fourth quarter and fiscal year ended September 30, 2012.  A copy of the press release is attached as Exhibit 99.1.
 
Item 9.01 
 Financial Statements and Exhibits.

(d) Exhibits.
     
Exhibit No.
  
Description
     
99.1
  
Earnings release of Starbucks Corporation dated November 1, 2012
 
 
 
 
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

       
 
STARBUCKS CORPORATION
     
Dated: November 1, 2012
  
    
 
By:  
/s/ Troy Alstead 
  
   
Troy Alstead
   
chief financial officer and chief administrative officer
 
 
 
 
 
EXHIBIT INDEX
 
     
Exhibit No.
  
Description
     
99.1
  
Earnings release of Starbucks Corporation dated November 1, 2012

 

 
 EX-99.1 2 a50460311_ex991.htm EXHIBIT 99.1 a50460311_ex991.htm
Exhibit 99.1
 

Starbucks Reports Record Fourth Quarter and Fiscal 2012 Results
Q4 Revenues up 11% to a Record $3.4 Billion
Q4 EPS of $0.46; Up 24% After Excluding Non-Routine Gains in Prior Year
Strong Traffic Drives 7% US Comparable Store Sales Growth; 6% Global Growth
Channel Development Revenue Grows 32%
Board Raises Quarterly Cash Dividend 24% on Strength of Business and Outlook

SEATTLE; November 1, 2012 – Starbucks Corporation (NASDAQ: SBUX) today reported financial results for its 13-week fiscal fourth quarter and 52-week fiscal year ended September 30, 2012.  When comparing with prior year results, note that fiscal 2011 included non-routine gains related to the sale of corporate real estate and the acquisition of the company’s joint venture operations in Switzerland and Austria.  A reconciliation of select FY11 GAAP measures to non-GAAP measures is included at the end of this document.

Fiscal Fourth Quarter 2012 Highlights:
●  
Total net revenues increased 11% to a fourth-quarter record of $3.4 billion
●  
Global comparable store sales increased 6% driven by a 5% increase in traffic and a 1% increase in average ticket
o  
Americas comparable store sales increased 7% driven by 5% growth in traffic and 2% growth in average ticket
●  
Operating margin expanded 60 basis points to 15.4% over the prior year’s operating margin of 14.8%, which included a 100 basis point benefit from a non-routine gain in Q4 FY11
o  
Operating margin expanded 160 basis points when compared to prior year non-GAAP operating margin of 13.8% after excluding the non-routine gain in Q4 FY11
●  
EPS was $0.46 per share compared to the prior year EPS of $0.47 per share, which included $0.10 relating to non-routine gains in Q4 FY11
o  
Fourth quarter EPS of $0.46 grew 24% over Q4 FY11 non-GAAP EPS of $0.37 per share, which excluded the non-routine gains in Q4 FY11
o  
EPS includes charges of $0.02 per share related to store portfolio optimization initiatives in Europe
●  
The Board of Directors declared a cash dividend of $0.21 per share, a 24% increase from $0.17 per share

Fiscal Year 2012 Highlights:
●  
Total net revenues increased 14% reaching a record $13.3 billion
●  
Global comparable store sales increased 7% driven by a 6% increase in traffic and a 1% increase in average ticket
o  
Americas comparable store sales increased 8% driven by a 6% increase in traffic and a 2% increase in average ticket
●  
Channel Development revenue grew 50% to $1.3 billion
●  
The company opened 1,063 net new stores globally
●  
Operating margin improved 20 basis points to 15.0% over the prior year’s operating margin of 14.8%, which included a non-routine gain in FY11, despite 160 basis points of impact due to higher commodity costs in FY12
o  
Operating margin expanded 50 basis points when compared to prior year non-GAAP operating margin of 14.5% after excluding the non-routine gain from FY11
●  
EPS increased 10% to $1.79 per share compared to the prior year EPS of $1.62 per share, which included $0.10 relating to non-routine gains in FY11
o  
EPS of $1.79 grew 18% over the prior year non-GAAP EPS of $1.52, excluding the non-routine gains in FY11
●  
Operating cash flow totaled $1.7 billion
●  
Starbucks returned approximately $1.1 billion to shareholders through share repurchases and dividend payments
 
 
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“Our Q4 and overall 2012 fiscal year performance demonstrates the strength of our business and brand,” said Howard Schultz, chairman, president and chief executive officer, Starbucks Coffee Company. “The resiliency and relevance of our U.S. retail business, acceleration of the Channel Development business and expansion in Asia all contributed significantly to our strong results. I am incredibly proud of our 200,000 Starbucks partners around the world who have contributed to the success of the company and I am optimistic about achieving our aspirations for the future. “
 
“Our excellent fourth quarter and full fiscal year results reflect the strength of our business and the solid execution by our partners, specifically illustrated in the fourth quarter by strong traffic growth, continued momentum in Channel Development, and rapid earnings growth,” stated Troy Alstead, chief financial officer. “By delivering relevant innovation to our customers while increasing focus on execution and operating efficiencies, we drove sales growth and expanded profit margins. On the strength of our business in fiscal 2012 and the momentum we carry into the new fiscal year, we remain confident in our fiscal 2013 outlook of continued strong profitable growth on a global scale.”
 
 
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Fourth Quarter Fiscal 2012 Summary
 
 
Quarter Ended Sep 30, 2012
Comparable Store Sales(1)
Sales Growth
Change in Transactions
Change in Ticket
Consolidated
6%
5%
1%
Americas
7%
5%
2%
EMEA
(1%)
0%
(1%)
CAP
10%
7%
2%
(1) Includes only Starbucks company-operated stores open 13 months or longer.
 
Operating Results
Quarter Ended
  
($ in millions, except per share amounts)
Sep 30, 2012
Oct 2, 2011
Change
Net New Stores (1)
415
(15)
430
Revenues
$3,364.2
$3,031.9
11%
Operating Income
$519.6
$448.3
16%
Operating Margin
15.4%
14.8%
60 bps
EPS
$0.46
$0.47
(2%)
(1)  Net new stores includes the addition of 20 La Boulange company-operated cafés in the fourth quarter of fiscal 2012 and the closure of 248 licensed Seattle's Best Coffee locations in Borders Bookstores in the fourth quarter of fiscal 2011.
 
Consolidated net revenues reached a fourth-quarter record $3.4 billion in Q4 FY12, an increase of 11% over Q4 FY11.  The increase was primarily due to a 6% increase in global comparable stores sales, 32% revenue growth in Channel Development and 14% revenue growth in licensed stores.  The 6% increase in comparable store sales was comprised of a 5% increase in the number of transactions and a 1% increase in average ticket.

Consolidated operating income increased 16% to a record $519.6 million, compared to $448.3 million for the same period a year ago.  Operating margin expanded 60 basis points to a record 15.4% this quarter, compared to 14.8% in the same period last year. Operating margin expanded 160 basis points from 13.8% after excluding the non-routine gain in the prior year. Increased sales leverage was the primary driver of margin expansion.

Q4 Americas Segment Results
 
Quarter Ended
  
($ in millions)
Sep 30, 2012
Oct 2, 2011
Change
Net New Stores(1)
250
(124)
374
Revenues
$2,511.7
$2,296.4
9%
Operating Income
$536.3
$444.2
21%
Operating Margin
21.4%
19.3%
210 bps
(1)  Net new stores includes the addition of 20 La Boulange company-operated cafés in the fourth quarter of fiscal 2012 and the closure of 248 licensed Seattle's Best Coffee locations in Borders Bookstores in the fourth quarter of fiscal 2011.

Net revenues for the Americas segment were $2.5 billion in Q4 FY12, an increase of 9% over Q4 FY11.  The increase was primarily due to a 7% increase in comparable store sales, comprised of a 5% increase in the number of transactions and a 2% increase in average ticket. Also contributing to the increase were incremental revenues from 504 net new store openings over the past 12 months.
 
 
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Operating income increased to $536.3 million in Q4 FY12, compared to $444.2 million for the same period a year ago.  Operating margin increased 210 basis points to 21.4% in Q4 FY12 primarily due to increased sales leverage.

Q4 EMEA Segment Results
 
 
Quarter Ended
  
($ in millions)
Sep 30, 2012
Oct 2, 2011
Change
Net New Stores
33
28
5
Revenues
$283.7
$290.1
(2%)
Operating Income / (Loss)
($6.5)
$2.5
nm
Operating Margin
(2.3%)
0.9%
(320) bps

Net revenues for the EMEA segment were $283.7 million in Q4 FY12, a decrease of 2% over Q4 FY11 primarily driven by unfavorable foreign currency exchange and partially offset by 29% revenue growth in licensed stores.

The EMEA segment had an operating loss of $6.5 million in Q4 FY12, compared to operating income of $2.5 million for the same period a year ago.  Operating margin decreased 320 basis points to -2.3% compared to 0.9% in the prior-year period.  The margin contraction was driven by costs related to store portfolio optimization initiatives in Europe, which had 410 basis points of impact. Excluding these costs, operating margin expanded as a result of improved operational efficiencies.

Q4 China/Asia Pacific Segment Results
 
 
Quarter Ended
  
($ in millions)
Sep 30, 2012
Oct 2, 2011
Change
Net New Stores
132
81
51
Revenues
$198.0
$161.2
23%
Operating Income
$65.2
$58.5
11%
Operating Margin
32.9%
36.3%
(340) bps

Net revenues for the China/Asia Pacific segment were $198.0 million in Q4 FY12, an increase of 23% over Q4 FY11.  The increase was primarily due to incremental revenues from 154 net new company-operated store openings over the last 12 months and a 10% increase in comparable store sales. The increase in comparable store sales was attributable to a 7% increase in number of transactions and a 2% increase in average ticket.

Operating income increased 11% to $65.2 million in Q4 FY12, compared to $58.5 million for the same period a year ago.  Operating margin decreased 340 basis points to 32.9% in Q4 FY12 compared to 36.3% in the prior-year period.  The margin decline was primarily due to increased spending to support accelerated store growth in China.
 
 
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- Page 5 -
 

Q4 Channel Development Segment Results
 
 
Quarter Ended
  
($ in millions)
Sep 30, 2012
Oct 2, 2011
Change
Revenues
$318.5
$242.2
32%
Operating Income
$100.8
$80.3
26%
Operating Margin
31.6%
33.2%
(160) bps

Channel Development net revenues were $318.5 million in Q4 FY12, an increase of 32% over Q4 FY11.  The increase was primarily due to sales of Starbucks- and Tazo-branded K-Cup® portion packs.

Channel Development operating income was $100.8 million in Q4 FY12 compared to $80.3 million for the same period a year ago.  Operating margin declined by 160 basis points to 31.6% in Q4 FY12 compared to 33.2% in the prior-year period.  The margin contraction was mainly due to shifts in product mix and higher commodity costs, primarily coffee.
 
Full Year Financial Results
 
 
Year Ended Sep 30, 2012
Comparable Store Sales(1)
Sales Growth
Change in
Transactions
Change in Ticket
Consolidated
7%
6%
1%
Americas
8%
6%
2%
EMEA
0%
0%
0%
CAP
15%
11%
3%
(1) Includes only Starbucks company-operated stores open 13 months or longer.

 
Year Ended
  
($ in millions, except per share amounts)
Sep 30, 2012
Oct 2, 2011
Change
Net New Stores(1)
1,063
145
918
Revenues
$13,299.5
$11,700.4
14%
Operating Income
$1,997.4
$1,728.5
16%
Operating Margin
15.0%
14.8%
20 bps
EPS
$1.79
$1.62
10%
(1)  Net new stores for fiscal 2012 includes the addition of 20 La Boulange company-operated cafés in fiscal 2012 and the closure of 475 licensed Seattle's Best Coffee locations in Borders Bookstores in fiscal 2011.

Consolidated net revenues reached a record $13.3 billion in FY12, an increase of 14% over FY11.  The increase was primarily due to a 7% increase in global comparable stores sales, consisting of a 6% increase in the number of transactions and a 1% increase in average ticket, 50% revenue growth in Channel Development, and 20% growth in licensed stores revenue.

Consolidated operating income grew 16% to a record $2.0 billion in FY12, compared to $1.7 billion in FY11.  Operating margin expanded 20 basis points to a record 15.0% in FY12 compared to 14.8% in FY11.  The operating margin expansion was 50 basis points when excluding the non-routine gain in the prior year.  This improvement was primarily due to increased sales leverage. Increased commodity costs, mainly coffee, negatively impacted operating income and operating margin in FY12 by approximately $214 million and 160 basis points, respectively.
 
 
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Fiscal 2013 Targets
 
Starbucks has updated its fiscal 2013 targets as follows:

●  
The company is further accelerating its store growth target through the opening of approximately 1,300 net new stores globally, representing 22% growth over fiscal 2012.
 
o  
Maintaining its growth target of approximately 600 net new stores in the Americas, with the majority of those in the U.S.  Of the approximately 600 stores, approximately half of the additions will be licensed stores.
 
o  
Accelerating growth in China/Asia Pacific to approximately 600 net new stores, with licensed stores comprising approximately half of the new additions.  Of the approximately 600 stores, slightly more than half will be in China.
 
o  
Maintaining growth of approximately 100 net new stores in EMEA (Europe, Middle East, Russia and Africa), with licensed stores comprising more than two thirds of the new stores.
 
●  
Starbucks continues to target approximately 10% - 13% revenue growth, driven by mid-single-digit comparable store sales growth, approximately 1,300 net new store openings, and continued strong growth in the Channel Development business.
 
●  
The company now expects full-year consolidated operating margin improvement of approximately 100 basis points over FY12 results.
 
●  
Reflecting the strength of its global business and the pipeline of profitable growth initiatives, Starbucks is raising its earnings per share target to a rangeof $2.06 to $2.15, representing growth in the range of 15% - 20%, and consistent with its long-term outlook.
 
●  
Capital expenditures are now expected to be approximately $1.2 billion for the full year, reflecting the increase in new store growth and an increase in production capacity to support recently-announced initiatives.
 
Company Updates
 
●  
Starbucks Coffee Company and its joint venture partner in India, Tata Global Beverages Limited, opened the first three Starbucks stores in India in October, located in Mumbai. Starbucks now operates retail stores in 61 countries around the world.
 
●  
The company opened its 700th store in China as it continues to execute against its significant growth plans in the CAP region.
 
●  
The Verismo™ System by Starbucks was introduced and is now available at more than 6,400 locations including participating Starbucks retail stores in the US, Canada and select international markets, Verismo.com, and specialty retailers in the US and Canada.
 
●  
Starbucks announced a partnership with Square, Inc. to provide enhancements to its mobile payment platform.
 
●  
In August, Starbucks announced plans to open a high-tech juicery that will significantly expand the production and distribution capacity of Evolution FreshTM juices.
 
●  
Evolution Fresh opened new retail locations in downtown Seattle and San Francisco. The San Francisco opening is the first outside of the Seattle area.
 
●  
Starbucks announced a partnership with Umoe Restaurant Group to open stores in Scandinavia. The first high street locations are expected to open in 2013 in Sweden and Norway.
 
●  
Starbucks hosted approximately 10,000 store managers in Houston on Oct 3-6 for its 2012 Global Leadership Conference.
 
●  
The Board of Directors declared a cash dividend of $0.21 per share, an increase from $0.17 per share, payable on November 30, 2012, to shareholders of record as of November 15, 2012.
 
●  
The company repurchased approximately 12 million shares of common stock in fiscal 2012; approximately 12 million shares remain available for purchase under previous authorizations.
 

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Conference Call
 
Starbucks will be holding a conference call today at 2:00 p.m. Pacific Time, which will be hosted by Howard Schultz, chairman, president and ceo, Michelle Gass, president, Starbucks Coffee EMEA and Troy Alstead, cfo.  The call will be broadcast live over the Internet and can be accessed at the company’s web site address of http://investor.starbucks.com. A replay of the call will be available via telephone through 9:00 p.m. Pacific Time on Friday, November 2, 2012 by calling 1-855-859-2056, reservation number 99153013.  A replay of the webcast will also be available via the Investor Relations page on Starbucks.com through approximately 5:00 p.m. Pacific Time on Friday, November 30, 2012 at the following URL: http://investor.starbucks.com.

The company’s consolidated statements of earnings, operating segment results, and other additional information have been provided on the following pages in accordance with current year classifications. This information should be reviewed in conjunction with this press release. Please refer to the company’s Annual Report on Form 10-K for the fiscal year ended
October 2, 2011 for additional information.
 
About Starbucks
 
Since 1971, Starbucks Coffee Company has been committed to ethically sourcing and roasting the highest quality arabica coffee in the world. Today, with stores around the globe, the company is the premier roaster and retailer of specialty coffee in the world. Through our unwavering commitment to excellence and our guiding principles, we bring the unique Starbucks Experience to life for every customer through every cup. To share in the experience, please visit us in our stores or online at www.starbucks.com.
 
Forward-Looking Statements
This release contains forward-looking statements relating to certain company initiatives, strategies and plans, as well as trends in or expectations regarding, earnings per share, revenues, shareholder value, operational improvements and efficiencies, diversified business model, changes to the organizational and leadership structures, business momentum, growth and growth opportunities overall and of specific businesses, markets and channels, sales leverage, store traffic, average ticket, overall performance of new and existing stores, loyalty programs, operating margins, profits, capital expenditures, operating costs, charges, comparable store sales, store openings and closings,  the strength, health and potential of our business and brand, product innovations, store experience, tax rate and commodity costs and their impact.  These forward-looking statements are based on currently available operating, financial and competitive information and are subject to a number of significant risks and uncertainties.  Actual future results may differ materially depending on a variety of factors including, but not limited to, coffee, dairy and other raw material prices and availability, costs associated with, and the successful execution of, the company’s initiatives, strategies and plans, the acceptance of the company’s products by our customers, fluctuations in U.S. and international economies and currencies, the impact of competition, the effect of legal proceedings, and other risks detailed in the company filings with the Securities and Exchange Commission, including the “Risk Factors” section of Starbucks Annual Report on Form 10-K for the fiscal year ended October 2, 2011.  The company assumes no obligation to update any of these forward-looking statements.
 
 
Contacts:  
   
Starbucks Contact, Investor Relations: Starbucks Contact, Media:
JoAnn DeGrande  Zack Hutson 
206-318-7118  206-318-7100 
investorrelations@starbucks.com press@starbucks.com
 
 
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STARBUCKS CORPORATION
  
CONSOLIDATED STATEMENTS OF EARNINGS
  
(unaudited, in millions, except per share data)
  
                               
   
Quarter Ended
    
Quarter Ended
  
   
September 30,
    
October 2,
    
%
    
September 30,
    
October 2,
  
   
2012
    
2011
    
Change
    
2012
    
2011
  
                     
As a % of total net revenues
  
Net revenues:
                              
Company-operated stores
   $ 2,665.9     $ 2,470.4       7.9   %     79.2 %     81.5   %
Licensed stores
     305.3       266.8       14.4       9.1       8.8  
CPG, foodservice and other
     393.0       294.7       33.4       11.7       9.7  
Total net revenues
     3,364.2       3,031.9       11.0       100.0       100.0  
                                         
Cost of sales including occupancy costs
     1,459.2       1,314.5       11.0       43.4       43.4  
Store operating expenses
     989.9       922.9       7.3       29.4       30.4  
Other operating expenses
     111.9       103.7       7.9       3.3       3.4  
Depreciation and amortization expenses
     141.7       137.1       3.4       4.2       4.5  
General and administrative expenses
     203.8       192.3       6.0       6.1       6.3  
Total operating expenses
     2,906.5       2,670.5       8.8       86.4       88.1  
                                         
Gain on sale of properties
     -       30.2       (100.0 )     -       1.0  
Income from equity investees
     61.9       56.7       9.2       1.8       1.9  
Operating income
     519.6       448.3       15.9       15.4       14.8  
                                         
Interest income and other, net
     26.3       65.7       (60.0 )     0.8       2.2  
Interest expense
     (6.4 )     (9.8 )     (34.7 )     (0.2 )     (0.3 )
Earnings before income taxes
     539.5       504.2       7.0       16.0       16.6  
                                         
Income taxes
     180.2       145.9       23.5       5.4       4.8  
Net earnings including noncontrolling interest
     359.3       358.3       0.3       10.7       11.8  
                                         
Net earnings attributable to noncontrolling interest
     0.3       (0.2 )  
nm
       0.0       (0.0 )
Net earnings attributable to Starbucks
   $ 359.0     $ 358.5       0.1   %     10.7 %     11.8   %
                                         
Net earnings per common share - diluted
   $ 0.46     $ 0.47       (2.1 ) %                
Weighted avg. shares outstanding - diluted
     773.5       768.5                          
                                         
Cash dividends declared per share
   $ 0.21     $ 0.17                          
                                         
Supplemental Ratios:
                                        
Store operating expenses as a percentage of company-operated stores revenue
       37.1 %     37.4   %
Effective tax rate including noncontrolling interest
               33.4 %     28.9   %
 
 
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STARBUCKS CORPORATION
  
CONSOLIDATED STATEMENTS OF EARNINGS
  
(unaudited, in millions, except per share data)
  
                               
   
Year Ended
    
Year Ended
  
   
September 30,
    
October 2,
    
%
    
September 30,
    
October 2,
  
   
2012
     2011     
Change
    
2012
    
2011
  
                     
As a % of total net revenues
  
Net revenues:
                              
Company-operated stores
   $ 10,534.5     $ 9,632.4       9.4   %     79.2   %     82.3   %
Licensed stores
     1,210.3       1,007.5       20.1       9.1       8.6  
CPG, foodservice and other
     1,554.7       1,060.5       46.6       11.7       9.1  
Total net revenues
     13,299.5       11,700.4       13.7       100.0       100.0  
                                         
Cost of sales including occupancy costs
     5,813.3       4,915.5       18.3       43.7       42.0  
Store operating expenses
     3,918.1       3,594.9       9.0       29.5       30.7  
Other operating expenses
     429.9       392.8       9.4       3.2       3.4  
Depreciation and amortization expenses
     550.3       523.3       5.2       4.1       4.5  
General and administrative expenses
     801.2       749.3       6.9       6.0       6.4  
Total operating expenses
     11,512.8       10,175.8       13.1       86.6       87.0  
                                         
Gain on sale of properties
     -       30.2       (100.0 )     -       0.3  
Income from equity investees
     210.7       173.7       21.3       1.6       1.5  
Operating income
     1,997.4       1,728.5       15.6       15.0       14.8  
                                         
Interest income and other, net
     94.4       115.9       (18.6 )     0.7       1.0  
Interest expense
     (32.7 )     (33.3 )     (1.8 )     (0.2 )     (0.3 )
Earnings before income taxes
     2,059.1       1,811.1       13.7       15.5       15.5  
                                         
Income taxes
     674.4       563.1       19.8       5.1       4.8  
Net earnings including noncontrolling interest
     1,384.7       1,248.0       11.0       10.4       10.7  
                                         
Net earnings attributable to noncontrolling interest
     0.9       2.3       (60.9 )     0.0       0.0  
Net earnings attributable to Starbucks
   $ 1,383.8     $ 1,245.7       11.1   %     10.4   %     10.6   %
                                         
Net earnings per common share - diluted
   $ 1.79     $ 1.62       10.5   %                
Weighted avg. shares outstanding - diluted
     773.0       769.7                          
                                         
Cash dividends declared per share
   $ 0.72     $ 0.56                          
                                         
Supplemental Ratios:
                                        
Store operating expenses as a percentage of company-operated stores revenue
       37.2 %     37.3   %
Effective tax rate including noncontrolling interest
               32.8 %     31.1   %
 
 
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Segment Results
 
The tables below present reportable segment results net of intersegment eliminations (in millions):
                           
Americas
September 30,
  
October 2,
    
%
    
September 30,
    
October 2,
  
 
2012
  
2011
    
Change
    
2012
    
2011
  
Quarter Ended
                    
As a % of Americas
total net revenues
  
Net revenues:
                              
Company-operated stores
   $ 2,294.2     $ 2,112.2       8.6   %     91.3   %     92.0   %
Licensed stores
     202.2       178.6       13.2       8.1       7.8  
Foodservice and other
     15.3       5.6       173.2       0.6       0.2  
Total net revenues
     2,511.7       2,296.4       9.4       100.0       100.0  
                                         
Cost of sales including occupancy costs
     972.0       910.4       6.8       38.7       39.6  
Store operating expenses
     857.6       805.5       6.5       34.1       35.1  
Other operating expenses
     24.4       20.2       20.8       1.0       0.9  
Depreciation and amortization expenses
     100.8       98.4       2.4       4.0       4.3  
General and administrative expenses
     20.6       17.7       16.4       0.8       0.8  
Total operating expenses
     1,975.4       1,852.2       6.7       78.6       80.7  
                                         
Income from equity investees
     -       -       -       -       -  
Operating income
   $ 536.3     $ 444.2       20.7   %     21.4   %     19.3   %
                                         
Supplemental Ratios:
                                        
Store operating expenses as a percentage of company-operated stores revenue
     37.4   %     38.1   %
                                         
Year Ended
                                        
Net revenues:
                                        
Company-operated stores
   $ 9,077.0     $ 8,365.5       8.5   %     91.4   %     92.3   %
Licensed stores
     825.8       676.7       22.0       8.3       7.5  
Foodservice and other
     33.2       22.8       45.6       0.3       0.3  
Total net revenues
     9,936.0       9,065.0       9.6       100.0       100.0  
                                         
Cost of sales including occupancy costs
     3,885.5       3,512.7       10.6       39.1       38.8  
Store operating expenses
     3,427.8       3,184.2       7.7       34.5       35.1  
Other operating expenses
     83.8       75.8       10.6       0.8       0.8  
Depreciation and amortization expenses
     392.3       390.8       0.4       3.9       4.3  
General and administrative expenses
     74.3       60.8       22.2       0.7       0.7  
Total operating expenses
     7,863.7       7,224.3       8.9       79.1       79.7  
                                         
Income from equity investees
     2.1       1.6       31.3       0.0       0.0  
Operating income
   $ 2,074.4     $ 1,842.3       12.6   %     20.9   %     20.3   %
                                         
Supplemental Ratios:
                                        
Store operating expenses as a percentage of company-operated stores revenue
     37.8   %     38.1   %


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EMEA
  
September 30,
  
October 2,
    
%
    
September 30,
    
October 2,
  
   
2012
    
2011
    
Change
    
2012
    
2011
  
Quarter Ended
                    
As a % of EMEA
total net revenues
  
Net revenues:
                              
Company-operated stores
   $ 233.2     $ 250.4       (6.9 ) %     82.2   %     86.3   %
Licensed stores
     40.4       31.3       29.1       14.2       10.8  
Foodservice
     10.1       8.4       20.2       3.6       2.9  
Total net revenues
     283.7       290.1       (2.2 )     100.0       100.0  
                                         
Cost of sales including occupancy costs
     153.2       152.9       0.2       54.0       52.7  
Store operating expenses
     97.1       91.0       6.7       34.2       31.4  
Other operating expenses
     7.6       11.6       (34.5 )     2.7       4.0  
Depreciation and amortization expenses
     14.2       15.8       (10.1 )     5.0       5.4  
General and administrative expenses
     18.1       16.3       11.0       6.4       5.6  
Total operating expenses
     290.2       287.6       0.9       102.3       99.1  
                                         
Income from equity investees
     -       -       -       -       -  
Operating income / (loss)
   $ (6.5 )   $ 2.5    
nm
   %     (2.3 ) %     0.9   %
                                         
Supplemental Ratios:
                                        
Store operating expenses as a percentage of company-operated stores revenue
     41.6 %     36.3   %
                                         
Year Ended
                                        
Net revenues:
                                        
Company-operated stores
   $ 968.3     $ 905.5       6.9   %     84.8   %     86.5   %
Licensed stores
     139.5       112.2       24.3       12.2       10.7  
Foodservice
     33.5       29.1       15.1       2.9       2.8  
Total net revenues
     1,141.3       1,046.8       9.0       100.0       100.0  
                                         
Cost of sales including occupancy costs
     597.3       530.3       12.6       52.3       50.7  
Store operating expenses
     371.1       327.3       13.4       32.5       31.3  
Other operating expenses
     33.6       36.5       (7.9 )     2.9       3.5  
Depreciation and amortization expenses
     57.1       53.4       6.9       5.0       5.1  
General and administrative expenses
     72.1       65.0       10.9       6.3       6.2  
Total operating expenses
     1,131.2       1,012.5       11.7       99.1       96.7  
                                         
Income from equity investees
     0.3       6.0       (95.0 )     0.0       0.6  
Operating income
   $ 10.4     $ 40.3       (74.2 ) %     0.9   %     3.8   %
                                         
Supplemental Ratios:
                                        
Store operating expenses as a percentage of company-operated stores revenue
     38.3   %     36.1   %
 
 
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China/Asia Pacific (CAP)
  
September 30,
  
October 2,
    
%
      
September 30,
    
October 2,
  
   
2012
    
2011
    
Change
      
2012
    
2011
  
Quarter Ended
                      
As a % of CAP
total net revenues
Net revenues:
                                
Company-operated stores
   $ 138.5     $ 107.8       28.5  
%
     69.9   %     66.9   %
Licensed stores
     59.5       53.4       11.4         30.1       33.1  
Total net revenues
     198.0       161.2       22.8         100.0       100.0  
                                           
Cost of sales including occupancy costs
     100.1       83.7       19.6         50.6       51.9  
Store operating expenses
     35.2       26.4       33.3         17.8       16.4  
Other operating expenses
     14.6       9.5       53.7         7.4       5.9  
Depreciation and amortization expenses
     6.7       4.9       36.7         3.4       3.0  
General and administrative expenses
     8.0       8.8       (9.1 )       4.0       5.5  
Total operating expenses
     164.6       133.3       23.5         83.1       82.7  
                                           
Income from equity investees
     31.8       30.6       3.9         16.1       19.0  
Operating income
   $ 65.2     $ 58.5       11.5  
%
     32.9   %     36.3   %
                                           
Supplemental Ratios:
                                          
Store operating expenses as a percentage of company-operated stores revenue
          
 
     25.4   %     24.5   %
                                           
Year Ended
                                          
Net revenues:
                                          
Company-operated stores
   $ 489.2     $ 361.4       35.4  
%
     67.8   %     65.4   %
Licensed stores
     232.2       190.9       21.6         32.2       34.6  
Total net revenues
     721.4       552.3       30.6         100.0       100.0  
                                           
Cost of sales including occupancy costs
     362.8       282.0       28.7         50.3       51.1  
Store operating expenses
     119.2       83.4       42.9         16.5       15.1  
Other operating expenses
     47.0       35.7       31.7         6.5       6.5  
Depreciation and amortization expenses
     23.2       18.1       28.2         3.2       3.3  
General and administrative expenses
     38.1       32.9       15.8         5.3       6.0  
Total operating expenses
     590.3       452.1       30.6         81.8       81.9  
                                           
Income from equity investees
     122.4       92.9       31.8         17.0       16.8  
Operating income
   $ 253.5     $ 193.1       31.3  
%
     35.1   %     35.0   %
                                           
Supplemental Ratios:
                                          
Store operating expenses as a percentage of company-operated stores revenue
     24.4   %     23.1   %
 
 
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Channel Development
  
September 30,
    
October 2,
    
%
  
September 30,
    
October 2,
  
   
2012
    
2011
    
Change
  
2012
    
2011
  
Quarter Ended
                    
As a % of Channel
Development
 total net revenues
Net revenues:
                              
CPG
   $ 235.0     $ 162.2       44.9   %     73.8   %     67.0   %
Foodservice
     83.5       80.0       4.4       26.2       33.0  
Total net revenues
     318.5       242.2       31.5       100.0       100.0  
                                         
Cost of sales
     201.2       139.6       44.1       63.2       57.6  
Other operating expenses
     43.8       47.0       (6.8 )     13.8       19.4  
Depreciation and amortization expenses
     0.3       0.5       (40.0 )     0.1       0.2  
General and administrative expenses
     2.2       1.9       15.8       0.7       0.8  
Total operating expenses
     247.5       189.0       31.0       77.7       78.0  
                                         
Income from equity investees
     29.8       27.1       10.0       9.4       11.2  
Operating income
   $ 100.8     $ 80.3       25.5   %     31.6   %     33.2   %
                                         
Year Ended
                                        
Net revenues:
                                        
CPG
   $ 952.1     $ 553.2       72.1   %     73.7   %     64.3   %
Foodservice
     340.1       307.3       10.7       26.3       35.7  
Total net revenues
     1,292.2       860.5       50.2       100.0       100.0  
                                         
Cost of sales
     827.6       487.5       69.8       64.0       56.7  
Other operating expenses
     191.1       151.8       25.9       14.8       17.6  
Depreciation and amortization expenses
     1.3       2.4       (45.8 )     0.1       0.3  
General and administrative expenses
     8.9       6.6       34.8       0.7       0.8  
Total operating expenses
     1,028.9       648.3       58.7       79.6       75.3  
                                         
Income from equity investees
     85.2       75.6       12.7       6.6       8.8  
Operating income
   $ 348.5     $ 287.8       21.1   %     27.0   %     33.4   %
 
 
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- Page 14 -
 
                   
Other
  
September 30,
    
October 2,
    
%
   
2012
    
2011
    
Change
Quarter Ended
                  
Net revenues:
                  
Licensed stores
   $ 3.2     $ 3.5       (8.6 ) %
CPG, foodservice and other
     49.1       38.5       27.5  
Total net revenues
     52.3       42.0       24.5  
                         
Cost of sales
     32.7       27.9       17.2  
Other operating expenses
     21.5       15.4       39.6  
Depreciation and amortization expenses
     19.7       17.5       12.6  
General and administrative expenses
     154.9       147.6       4.9  
Total operating expenses
     228.8       208.4       9.8  
                         
Gain on sale of properties
     -       30.2       (100.0 )
Income from equity investees
     0.3       (1.0 )  
nm
  
Operating loss
   $ (176.2 )   $ (137.2 )     28.4   %
                         
Year Ended
                        
Net revenues:
                        
Licensed stores
   $ 12.8     $ 27.7       (53.8 ) %
CPG, foodservice and other
     195.8       148.1       32.2  
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
     76.4       58.6       30.4  
General and administrative expenses
     607.8       584.0       4.1  
Total operating expenses
     898.7       838.6       7.2  
                         
Gain on sale of properties
     -       30.2       (100.0 )
Income from equity investees
     0.7       (2.4 )  
nm
  
Operating loss
   $ (689.4 )   $ (635.0 )     8.6   %
 
 
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STARBUCKS CORPORATION
  
CONSOLIDATED BALANCE SHEETS
  
(in millions, except per share data)
  
(unaudited)
  
   
September 30,
    
October 2,
  
   
2012
    
2011
  
ASSETS
            
Current assets:
            
Cash and cash equivalents
   $ 1,188.6     $ 1,148.1  
Short-term investments
     848.4       902.6  
Accounts receivable, net
     485.9       386.5  
Inventories
     1,241.5       965.8  
Prepaid expenses and other current assets
     196.5       161.5  
Deferred income taxes, net
     238.7       230.4  
Total current assets
     4,199.6       3,794.9  
                 
Long-term investments – available-for-sale securities
     116.0       107.0  
Equity and cost investments
     459.9       372.3  
Property, plant and equipment, net
     2,658.9       2,355.0  
Other assets
     385.7       409.6  
Goodwill
     399.1       321.6  
TOTAL ASSETS
   $ 8,219.2     $ 7,360.4  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
Current liabilities:
                
Accounts payable
   $ 398.1     $ 540.0  
Acccrued liabilities
     1,133.8       940.9  
Insurance reserves
     167.7       145.6  
Deferred revenue
     510.2       449.3  
Total current liabilities
     2,209.8       2,075.8  
                 
Long-term debt
     549.6       549.5  
Other long-term liabilities
     345.3       347.8  
Total liabilities
     3,104.7       2,973.1  
                 
Shareholders’ equity:
                
Common stock ($0.001 par value) - authorized, 1,200 shares; issued
          
and outstanding, 749.3 and 744.8 shares, respectively, (includes 3.4 common stock units in both periods)
     0.7       0.7  
Additional paid-in-capital
     39.4       40.5  
Retained earnings
     5,046.2       4,297.4  
Accumulated other comprehensive income
     22.7       46.3  
Total shareholders’ equity
     5,109.0       4,384.9  
Noncontrolling interests
     5.5       2.4  
Total equity
     5,114.5       4,387.3  
TOTAL LIABILITIES AND EQUITY
   $ 8,219.2     $ 7,360.4  
 
 
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- Page 16 -
 
 
STARBUCKS CORPORATION
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
  
(unaudited and in millions)
  
   
Year Ended
  
Year Ended
   
September 30,
  
October 2,
   
2012
  
2011
OPERATING ACTIVITIES:
            
Net earnings including noncontrolling interests
   $ 1,384.7     $ 1,248.0  
Adjustments to reconcile net earnings to net cash provided by operating activities:
          
Depreciation and amortization
     580.6       550.0  
Gain on sale of properties
     -       (30.2 )
Deferred income taxes, net
     61.1       106.2  
Income earned from equity method investees, net of distributions
     (49.3 )     (32.9 )
Gain resulting from acquisition of joint ventures
     -       (55.2 )
Stock-based compensation
     153.6       145.2  
Other
     23.6       33.3  
Cash provided/(used) by changes in operating assets and liabilities:
          
Accounts receivable
     (90.3 )     (88.7 )
Inventories
     (273.3 )     (422.3 )
Accounts payable
     (136.0 )     227.5  
Accrued liabilities and insurance reserves
     23.7       (81.8 )
Deferred revenue
     60.8       35.8  
Prepaid expenses, other current assets and other assets
     (19.7 )     (22.5 )
Net cash provided by operating activities
     1,719.5       1,612.4  
                 
INVESTING ACTIVITIES:
                
Purchase of investments
     (1,748.6 )     (966.0 )
Maturities and calls of investments
     1,796.4       430.0  
Acquistions, net of cash acquired
     (129.1 )     (55.8 )
Additions to property, plant and equipment
     (856.2 )     (531.9 )
Cash proceeds from sale of property, plant and equipment
     5.3       117.4  
Other
     (41.8 )     (13.2 )
Net cash used by investing activities
     (974.0 )     (1,019.5 )
                 
FINANCING ACTIVITIES:
                
Proceeds from short-term borrowings
     -       30.8  
Purchase of noncontrolling interest
     -       (27.5 )
Proceeds from issuance of common stock
     236.6       250.4  
Excess tax benefit from exercise of stock options
     169.8       103.9  
Cash dividends paid
     (513.0 )     (389.5 )
Repurchase of common stock
     (549.1 )     (555.9 )
Minimum tax witholdings on share-based awards
     (58.5 )     (15.0 )
Other
     (0.5 )     (5.2 )
Net cash used by financing activities
     (714.7 )     (608.0 )
                 
Effect of exchange rate changes on cash and cash equivalents
     9.7       (0.8 )
Net increase/(decrease) in cash and cash equivalents
     40.5       (15.9 )
CASH AND CASH EQUIVALENTS:
                
Beginning of period
     1,148.1       1,164.0  
                 
End of the period
   $ 1,188.6     $ 1,148.1  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
          
Cash paid during the period for:
                
Interest, net of capitalized interest
   $ 34.4     $ 34.4  
Income taxes
   $ 416.9     $ 350.1  
 
 
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Supplemental Information
The following supplemental information is provided for historical and comparative purposes.  The U.S. data is included as a transitional tool to provide insight into the U.S. business, as it was previously a reportable segment and is now the largest component of the Americas segment:

Fourth Quarter 2012 U.S. Supplemental Data
 
       
 
Quarter Ended
    
($ in millions)
Sep 30, 2012
Oct 2, 2011
Change
  
Comparable Store Sales Growth
7%
10%
    
Change in Transactions
5%
7%
    
Change in Ticket
2%
3%
    
Revenues
$2,204.7
$2,029.8
9%
  
Operating Income
$497.3
$411.6
21%
  
Operating Margin
22.6%
20.3%
230 bps
  

Fiscal Fourth Quarter 2012 Store Data
The company’s store data for the periods presented are as follows:
 
     
Net stores opened/(closed) during the period
              
     
Quarter Ended
    
Year Ended
    
Stores open as of
  
     
Sep 30,
    
Oct 2,
    
Sep 30,
    
Oct 2,
    
Sep 30,
    
Oct 2,
  
     
2012
    
2011
    
2012
    
2011
    
2012
    
2011
  
Americas:
                                    
 
Company-operated stores(1)
     151       39       234       43       7,857       7,623  
 
Licensed stores(2)
     99       (163 )     270       (268 )     5,046       4,776  
        250       (124 )     504       (225 )     12,903       12,399  
EMEA:
                                                
 
Company-operated stores (3)
     3       5       10       25       882       872  
 
Licensed stores (3)
     30       23       101       79       987       886  
        33       28       111       104       1,869       1,758  
CAP:
                                                
 
Company-operated stores
     59       21       154       73       666       512  
 
Licensed stores
     73       60       294       193       2,628       2,334  
        132       81       448       266       3,294       2,846  
                                                   
Total
     415       (15 )     1,063       145       18,066       17,003  
                                                   
(1)
Includes the addition of 20 La Boulange company-operated cafés in the fourth quarter of fiscal 2012.
  
     
(2)
Includes the closure of 248 and 475 licensed Seattle's Best Coffee locations in Borders Bookstores in the fourth quarter of fiscal 2011 and the full year ending October 2, 2011, respectively.
  
     
(3)
EMEA store data has been adjusted for the acquisition of store locations in Austria and Switzerland in the fourth quarter of fiscal 2011 by reclassifying historical information from licensed stores to company-operated stores, and the transfer of certain company-operated stores to licensees in the fourth quarter of fiscal 2012.
  
 
 
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Non-GAAP Disclosure
In addition to the GAAP results provided in this release, the company provides non-GAAP operating margin and non-GAAP earnings per share (non-GAAP EPS) for fiscal 2011.  These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States.  The GAAP measure most directly comparable to non-GAAP operating margin and non-GAAP earnings per share (non-GAAP EPS) are operating margin and diluted net earnings per share, respectively.

The fiscal 2011 non-GAAP financial measures provided in this release exclude non-routine gains from the sale of properties and the acquisition of the company’s joint venture operations in Switzerland and Austria in fiscal 2011. The company’s management believes that providing these non-GAAP financial measures better enables investors to understand and evaluate the company’s historical and prospective operating performance.  More specifically, for historical non-GAAP financial measures, management excludes the non-routine gains in fiscal 2011 because it believes that the impact of non-routine gains do not reflect expected future expenses and do not contribute to a meaningful evaluation of the company’s future operating performance or comparisons to the company’s past operating performance.

These non-GAAP financial measures may have limitations as analytical tools, and these measures should not be considered in isolation or as a substitute for analysis of the company’s results as reported under GAAP.  Other companies may calculate these non-GAAP financial measures differently than the company does, limiting the usefulness of those measures for comparative purposes.
 
STARBUCKS CORPORATION
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(unaudited)
 
 
   
Quarter Ended
  
Year Ended
  
   
October 2,
    
October 2,
  
   
2011
    
2011
  
             
Consolidated
            
Operating margin, as reported  (GAAP)
     14.8 %     14.8 %
Gain on sale of properties
     (1.0 )     (0.3 )
Non-GAAP operating margin
     13.8 %     14.5 %
                 
                 
                 
Diluted EPS, as reported  (GAAP)
   $ 0.47     $ 1.62  
Gain on sale of properties
     (0.02 )     (0.02 )
Gain from Switzerland and Austria transaction
     (0.07 )     (0.07 )
Non-GAAP Diluted EPS
   $ 0.37     $ 1.52  
 
© 2012 Starbucks Coffee Company. All rights reserved.
 
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