Starbucks (SBUX) 8-K Results of Operations and Financial Condition

Exhibit 99.1

Starbucks Contact, Investor Relations:	Starbucks Contact, Media:
JoAnn DeGrande	Valerie O’Neil
206-318-7893	206-318-8953
jdegrand@starbucks.com	voneil@starbucks.com

Starbucks Reports Strong Fourth Quarter and Record Full Year 2007 Results
Revenue Growth of 22 Percent for the Quarter and 21 Percent for Fiscal 2007
Comparable Store Sales Growth of Four Percent for the Quarter and Five Percent for Fiscal Year 2007
Significant Q4 International Operating Margin Expansion
EPS of $0.21 for the Quarter and $0.87 for Fiscal 2007

SEATTLE; November 15, 2007 — Starbucks Corporation (NASDAQ: SBUX) today announced financial results for its fiscal fourth quarter and fiscal year ended September 30, 2007.

Fiscal Fourth Quarter 2007 Highlights:

• Consolidated net revenues of $2.4 billion, a 22 percent increase

• Comparable store sales growth of four percent

• Operating margin improved 30 basis points to 10.2 percent

• Earnings per share of $0.21, compared to $0.15 per share

Fiscal Year End 2007 Highlights:

• 2,571 new store openings; 70 percent in the U.S. and 30 percent in International markets

• Consolidated net revenues of $9.4 billion, a 21 percent increase

• Comparable store sales growth of five percent

• Operating margin contracted 30 basis points to 11.2 percent

• Earnings per share of $0.87, compared to $0.71 per share

“For the year, we delivered solid results, in spite of a difficult economic and operating environment,” said Jim Donald, president and CEO. “Looking ahead, we believe in the global opportunity for Starbucks, and we remain focused on delivering the highest quality beverages and legendary service, while driving innovation and extending theStarbucks Experienceto more customers throughout the world.”

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Consolidated net revenues increased 22 percent to $2.4 billion for the 13 weeks ended September 30, 2007, compared to $2.0 billion for the fiscal fourth quarter of 2006. Net earnings totaled $159 million in the fourth quarter 2007 versus $117 million for the same period a year ago. Earnings per share for the fourth quarter rose to $0.21 from $0.15 in the prior year period. Net earnings and earnings per share in fiscal 2006 included a one-time cumulative accounting charge of $17 million or $0.02 per share recorded in the fourth quarter of fiscal 2006 resulting from the company’s adoption of the new accounting requirements of FIN 47, which addresses asset retirement obligations. Excluding the cumulative effect of the adjustment, fiscal 2007 fourth quarter earnings grew 18 percent and earnings per share increased 24 percent.

Fiscal Year 2007 in Review

Fiscal year 2007 consolidated net revenues increased 21 percent to $9.4 billion, compared to $7.8 billion for the 52 weeks ended October 1, 2006. Company-operated retail revenues in fiscal 2007 rose 21 percent to $8.0 billion from $6.6 billion in fiscal 2006, predominantly due to the opening of 1,342 stores and comparable store sales growth of five percent. The increase in comparable store sales was due to a four percent increase in the average value per transaction and one percent growth in the number of customer transactions. Specialty revenues grew 17 percent to $1.4 billion from $1.2 billion in fiscal 2006.

For fiscal 2007, operating income increased to $1.1 billion, compared to $894 million for fiscal 2006. Operating margin contracted 30 basis points to 11.2 percent of total net revenues for the full year ended September 30, 2007, from 11.5 percent for the same period a year ago. Margin compression was due to higher costs of sales and occupancy costs as a percentage of total net revenues due to a shift in sales to higher cost products and higher distribution costs, rent expense and dairy costs. These cost pressures were offset in part by lower general and administrative and store operating expenses as a percentage of total net revenues.

Net earnings rose to $673 million in fiscal 2007 from $564 million for the previous year. Earnings per share for the period increased to $0.87 compared to $0.71 a year ago. Excluding the adjustment for FIN 47 in fourth quarter 2006, earnings grew 16 percent and earnings per share increased 19 percent.

Fourth Quarter Summary of Results

Company-operated retail revenuesincreased 21 percent to $2.1 billion for the 13 weeks ended September 30, 2007, from $1.7 billion for the same period in fiscal 2006, resulting primarily from opening 1,342 new company-operated retail stores in the last 12 months and comparable store sales growth of four percent for the quarter. The increase in comparable store sales was due to a four percent increase in the average value per transaction.

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Specialty revenuesincreased 24 percent to $383 million for the 13 weeks ended September 30, 2007, compared to $309 million for the corresponding period of fiscal 2006. Licensing revenues increased 27 percent to $283 million for the 13 weeks ended September 30, 2007, driven by revenue growth of 44 percent from the company’s Global Consumer Products business, and from higher product sales and royalty revenues from the opening of 1,229 new licensed retail stores in the last 12 months.

Cost of sales including occupancyincreased to 43.7 as a percent of total net revenues for the 13 weeks ended September 30, 2007, compared to 41.7 percent in the corresponding 13-week period of fiscal 2006. The increase was primarily due to a shift in sales to higher cost products and higher dairy costs.

Store operating expensesas a percentage of company-operated retail revenues improved to 41.0 percent for the 13 weeks ended September 30, 2007, from 42.1 percent for the corresponding period of fiscal 2006. The improvement was due to the benefit gained from price increases coupled with leverage on regional overhead, partially offset by higher payroll expenditures from wage increases for retail store partners.

Other operating expenses(expenses associated with the company’s specialty operations) decreased to 19.5 percent of total specialty revenues for the 13 weeks ended September 30, 2007, compared to 21.4 percent in the corresponding period of fiscal 2006. The improvement resulted primarily from lower payroll-related expenditures as a percentage of total specialty revenues.

General and administrative expensesas a percentage of total net revenues decreased to 5.0 percent for the fourth quarter fiscal 2007, from 5.8 percent for the corresponding period of fiscal 2006. The improvement was a result of leveraging of the company’s scale and infrastructure against continued global growth.

Operating incomeincreased to $248 million for the 13 weeks ended September 30, 2007, compared to $198 million for the corresponding period of fiscal 2006. Operating margin increased 30 basis points to 10.2 percent of total net revenues for the 13 weeks ended September 30, 2007, from 9.9 percent for the corresponding period of fiscal 2006. Lower store operating expenses, general and administrative expenses, and other operating expenses as a percentage of total net revenues more than offset the increase in cost of sales including occupancy.

Net interest and otherwas an expense of $1.2 million for the 13 weeks ended September 30, 2007, compared to income of $3.9 million for the corresponding period of fiscal 2006, primarily due to a higher level of borrowings outstanding, which include the $550 million senior notes issued in August 2007.

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Fourth Quarter Results — United States

United States total net revenues increased 19 percent to $1.9 billion for the 13 weeks ended September 30, 2007, compared to $1.6 billion for the corresponding period of fiscal 2006. United States company-operated retail revenues increased 19 percent to $1.7 billion, primarily due to the opening of 1,065 new company-operated retail stores in the last 12 months and comparable store sales growth of four percent for the quarter. Comparable store sales growth was due to a five percent increase in the average value per transaction, which included the impact of price increases taken during the fiscal year, partially offset by a one percent decrease in number of transactions.

Total United States specialty revenues increased 16 percent to $201 million for the 13 weeks ended September 30, 2007, compared to $173 million in the corresponding period of fiscal 2006. United States licensing revenues in the fourth quarter 2007 increased 17 percent to $111 million from $95 million for the same period a year ago. The growth was primarily due to higher product sales and royalty revenues as a result of opening 723 new licensed retail stores in the last 12 months.

United States operating income increased 12 percent to $225 million for the 13 weeks ended September 30, 2007, from $201 million for the corresponding period in fiscal 2006. Operating margin decreased 70 basis points to 12.1 percent of related revenues from 12.8 percent in the corresponding period of fiscal 2006. The decrease was driven by higher cost of sales including occupancy costs, primarily due to higher dairy costs.

Fourth Quarter Results — International

International total net revenues increased 31 percent to $472 million for the 13 weeks ended September 30, 2007, compared to $361 million for the corresponding period of fiscal 2006. International company-operated retail revenues increased 32 percent to $399 million, primarily due to the opening of 277 new company-operated retail stores in the last 12 months, favorable foreign currency exchange for the British pound sterling and Canadian dollar, and comparable store sales growth of six percent for the quarter. The increase in comparable store sales resulted from a five percent increase in the number of customer transactions coupled with a one percent increase in the average value per transaction.

Total International specialty revenues increased by $13 million, or 23 percent, to $73 million for the 13 weeks ended September 30, 2007, compared to $59 million in the corresponding period of fiscal 2006. The growth was primarily due to higher product sales and royalty revenues from opening 506 licensed retail stores in the last 12 months.

International operating income increased to $51 million for the 13 weeks ended September 30, 2007, compared to $27 million in the corresponding period of fiscal 2006. Operating margin increased 350 basis points to 10.8 percent of related revenues from 7.3 percent in the corresponding period of fiscal 2006, primarily due to lower general and administrative expenses and lower store operating expenses as a percentage of related revenues, as well as higher income from equity investees.

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Fourth Quarter Results — Global Consumer Products Group

For the Global Consumer Products Group (CPG), total net revenues increased by $33 million, or 44 percent, to $110 million for the 13 weeks ended September 30, 2007, compared to $76 million for the corresponding period of fiscal 2006. The increase in revenues was primarily due to higher sales of U.S. packaged coffee and tea and increased product sales and royalties in the international ready-to-drink business.

CPG operating income increased to $62 million for the 13 weeks ended September 30, 2007, compared to $47 million in the same period of fiscal 2006. Operating margin decreased to 56.9 percent of related revenues from 61.8 percent in fiscal fourth quarter 2006. Contraction of operating margin for the quarter was due to slower growth in income from equity investees from The North American Coffee Partnership, which produces ready-to-drink beverages.

Fourth Quarter Results — Unallocated Corporate Expenses

Total unallocated corporate expenses as a percentage of total net revenues improved to 3.7 percent for the 13-weeks ended September 30, 2007, from 3.8 percent for the corresponding period of fiscal 2006, primarily due to leverage from growth.

Cash Flow and Balance Sheet

For the 52 weeks ended September 30, 2007, net cash flow from operating activities totaled $1.3 billion, compared to $1.1 billion in the same period a year ago. Capital expenditures for fiscal year 2007 were $1.1 billion, of which approximately 80 percent was used to fund new store openings and existing store remodels.

On August 23rd, the company issued $550 million of 6.25% Senior Notes due in August 2017. The proceeds were primarily used to repay short-term borrowings and fund additional share repurchases.

During the fourth quarter, the company repurchased a total of 12.6 million shares at a cost of $342 million. During fiscal year 2007, Starbucks repurchased 33.0 million shares at a cost of $1.0 billion. At the end of the fiscal fourth quarter, 13.5 million shares remained available for repurchase under the current authorization.

Fiscal 2008 Targets

During the fourth quarter, Starbucks evaluated its plan for fiscal 2008 given the challenging operating environment. As a result, the company has established the following fiscal 2008 targets:

• The company has adjusted its new store opening target to approximately 2,500 net new stores on a global basis in fiscal 2008; approximately 900 company-operated locations and 700 licensed locations in the U.S., and approximately 300 company-operated stores and 600 licensed stores in international markets;

• Comparable store sales growth in the range of three to five percent;

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• Total net revenue growth of approximately 17 to 18 percent;

• Total company operating margin to expand slightly year-over-year, with improvement expected to be in the second half of fiscal 2008;

• U.S. operating margin relatively stable and International operating margin improvement of at least 100 basis points over fiscal 2007;

• Diluted earnings per share in the range of $1.02 to $1.05 representing 17 percent to 21 percent growth, with earnings per share expansion expected to be greater in the second half of fiscal 2008;

• First quarter fiscal 2008 earnings per share of $0.28; impacted by ongoing dairy cost pressure coupled with expectations of continued softness in the U.S. consumer and economic environment compared to first quarter fiscal 2007;

• Effective tax rate in-line with fiscal 2007; and,

• Capital expenditures in-line with the $1.1 billion invested in fiscal 2007.

Pete Bocian, chief financial officer, commented, “Given the current economic environment, and the commodity costs that are not expected to ease until the latter part of the year, we expect EPS expansion to be greater in the second half of fiscal 2008.”

Conference Call

Starbucks will be holding a conference call today at 2:00 p.m. PST, which will be hosted by Jim Donald, president and ceo, Martin Coles, chief operating officer, and Pete Bocian, executive vice president and chief financial officer. 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 5:30 p.m. PST on Thursday, November 22, 2007, by calling 1-800-642-1687, reservation number 4132564. A posting of speaker remarks and a replay of the call will also be available via the Investor Relations page on Starbucks.com through approximately 5:00 p.m. PST on Friday, December 14, 2007, 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 filed with the Securities and Exchange Commission on December 14, 2006, as amended by Amendment No.1 to Annual Report on Form 10-K/A filed on December 21, 2006, for additional information.

About Starbucks

Starbucks Coffee Company provides an uplifting experience that enriches people’s lives one moment, one human being, one extraordinary cup of coffee at a time. To share in the experience, visit www.starbucks.com.

Forward-Looking Statements

This release includes forward-looking statements about trends in or expectations regarding: store openings, comparable store sales, net revenue, earnings per share, operating margin, commodity costs, effective tax rate, and capital expenditures. These forward-looking statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Actual future results and trends may differ materially depending on a variety of factors including, but not limited to, coffee, dairy and other raw material prices and availability, successful execution of internal performance and expansion plans, fluctuations in U.S. and international economies and currencies, the impact of initiatives by competitors, the effect of legal proceedings, and other risks detailed in the company’s 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 1, 2006. The company assumes no obligation to update any of these forward-looking statements.

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STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)

	13 Weeks Ended								13 Weeks Ended
	Sept 30,			Oct 1,		%			Sept 30,			Oct 1,
	2007			2006		Change			2007			2006
	(in thousands, except per share data)								As a % of total net revenues
Net revenues:
Company-operated retail	$	2,057,977		$	1,694,294		21.5	%		84.3	%		84.6	%
Specialty:
Licensing		282,705			222,905		26.8			11.6			11.1
Food service and other		100,253			86,156		16.4			4.1			4.3
Total specialty		382,958			309,061		23.9			15.7			15.4
Total net revenues		2,440,935			2,003,355		21.8			100.0			100.0
Cost of sales including occupancy costs		1,065,674			834,991		27.6			43.7			41.7
Store operating expenses(a)		843,725			713,774		18.2			34.6			35.6
Other operating expenses(b)		74,510			66,230		12.5			3.0			3.3
Depreciation and amortization expenses		124,170			102,876		20.7			5.1			5.1
General and administrative expenses		123,312			116,412		5.9			5.0			5.8
Subtotal operating expenses		2,231,391			1,834,283		21.6			91.4			91.5
Income from equity investees		38,489			28,566		34.7			1.6			1.4
Operating income		248,033			197,638		25.5			10.2			9.9
Net interest and other (expense) / income		(1,187	)		3,852					(0.1	)		0.2
Earnings before income taxes		246,846			201,490		22.5			10.1			10.1
Income taxes(c)		88,343			66,987					3.6			3.4
Earnings before cumulative effect		158,503			134,503		17.8			6.5			6.7
Cumulative effect of accounting change		—			17,214					—			0.8
Net earnings	$	158,503		$	117,289		35.1			6.5	%		5.9	%
Earnings before cumulative effect of change in accounting principle — diluted		0.21			0.17		23.5
Cumulative effect of accounting change		—			0.02
Net earnings per common share — diluted	$	0.21		$	0.15		40.0	%
Weighted avg. shares outstanding — diluted		759,113			784,196

(a)	As a percentage of related company-operated retail revenues, store operating expenses were 41.0 percent for the 13 weeks ended September 30, 2007, and 42.1 percent for the 13 weeks ended October 1, 2006.
(b)	As a percentage of related total specialty revenues, other operating expenses were 19.5 percent for the 13 weeks ended September 30, 2007, and 21.4 percent for the 13 weeks ended October 1, 2006.
(c)	The effective tax rates were 35.8 percent for the 13 weeks ended September 30, 2007, and 33.2 percent for the 13 weeks ended October 1, 2006.

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STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)

	52 Weeks Ended							52 Weeks Ended
	Sept 30,		Oct 1,		%			Sept 30,			Oct 1,
	2007		2006		Change			2007			2006
	(in thousands, except per share data)							As a % of total net revenues
Net revenues:
Company-operated retail	$	7,998,265	$	6,583,098		21.5	%		85.0	%		84.5	%
Specialty:
Licensing		1,026,338		860,676		19.2			10.9			11.1
Food service and other		386,894		343,168		12.7			4.1			4.4
Total specialty		1,413,232		1,203,844		17.4			15.0			15.5
Total net revenues		9,411,497		7,786,942		20.9			100.0			100.0
Cost of sales including occupancy costs		3,999,124		3,178,791		25.8			42.5			40.8
Store operating expenses(a)		3,215,889		2,687,815		19.6			34.2			34.5
Other operating expenses(b)		294,136		253,724		15.9			3.1			3.3
Depreciation and amortization expenses		467,160		387,211		20.6			4.9			5.0
General and administrative expenses		489,249		479,386		2.1			5.2			6.1
Subtotal operating expenses		8,465,558		6,986,927		21.2			89.9			89.7
Income from equity investees		108,006		93,937		15.0			1.1			1.2
Operating income		1,053,945		893,952		17.9			11.2			11.5
Net interest and other (expense) / income		2,419		12,291					—			0.1
Earnings before income taxes		1,056,364		906,243		16.6			11.2			11.6
Income taxes(c)		383,726		324,770					4.1			4.1
Earnings before cumulative effect		672,638		581,473		15.7			7.1			7.5
Cumulative effect of accounting change		—		17,214					—			0.3
Net earnings	$	672,638	$	564,259		19.2			7.1	%		7.2	%
Earnings before cumulative effect of accounting change — diluted		0.87		0.73		19.2
Cumulative effect of accounting change		—		0.02
Net earnings per common share — diluted	$	0.87	$	0.71		22.5	%
Weighted avg. shares outstanding — diluted		770,091		792,556

(a)	As a percentage of related company-operated retail revenues, store operating expenses were 40.2 percent for the 52 weeks ended September 30, 2007, and 40.8 percent for the 52 weeks ended October 1, 2006.
(b)	As a percentage of related total specialty revenues, other operating expenses were 20.8 percent for the 52 weeks ended September 30, 2007, and 21.1 percent for the 52 weeks ended October 1, 2006.
(c)	The effective tax rates were 36.3 percent for the 52 weeks ended September 30, 2007, and 35.8 percent for the 52 weeks ended October 1, 2006.

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Segment Results

The tables below present reportable segment results net of intersegment eliminations(in thousands):

United States	Sept 30,		Oct 1,		%			Sept 30,			Oct 1,
	2007		2006		Change			2007			2006
								As a % of U.S. total net
								revenues
13 Weeks Ended
Net revenues:
Company-operated retail	$	1,658,978	$	1,392,089		19.2	%		89.2	%		88.9	%
Specialty:
Licensing		110,932		95,155		16.6			6.0			6.1
Food service and other		89,584		78,226		14.5			4.8			5.0
Total specialty		200,516		173,381		15.7			10.8			11.1
Total net revenues		1,859,494		1,565,470		18.8			100.0			100.0
Cost of sales including occupancy costs		774,921		617,178		25.6			41.7			39.4
Store operating expenses(a)		699,433		600,676		16.4			37.6			38.4
Other operating expenses(b)		48,742		47,444		2.7			2.6			3.1
Depreciation and amortization expenses		93,273		75,169		24.1			5.0			4.8
General and administrative expenses		19,324		24,124		(19.9	)		1.0			1.5
Total operating expenses		1,635,693		1,364,591		19.9			87.9			87.2
Income from equity investees		768		—	nm				—			—
Operating income	$	224,569	$	200,879		11.8	%		12.1	%		12.8	%
52 Weeks Ended
Net revenues:
Company-operated retail	$	6,560,864	$	5,495,240		19.4	%		89.3	%		88.9	%
Specialty:
Licensing		439,161		369,155		19.0			6.0			6.0
Food service and other		348,968		314,162		11.1			4.7			5.1
Total specialty		788,129		683,317		15.3			10.7			11.1
Total net revenues		7,348,993		6,178,557		18.9			100.0			100.0
Cost of sales including occupancy costs		2,956,231		2,374,485		24.5			40.2			38.4
Store operating expenses(c)		2,684,196		2,280,044		17.7			36.5			36.9
Other operating expenses(d)		204,672		190,624		7.4			2.8			3.1
Depreciation and amortization expenses		348,199		284,625		22.3			4.7			4.6
General and administrative expenses		85,948		93,754		(8.3	)		1.2			1.5
Total operating expenses		6,279,246		5,223,532		20.2			85.4			84.5
Income from equity investees		768		151	nm				—			—
Operating income	$	1,070,515	$	955,176		12.1	%		14.6	%		15.5	%

(a)	As a percentage of related company-operated retail revenues, store operating expenses were 42.2 percent for the 13 weeks ended September 30, 2007, and 43.1 percent for the 13 weeks ended October 1, 2006.
(b)	As a percentage of related total specialty revenues, other operating expenses were 24.3 percent for the 13 weeks ended September 30, 2007, and 27.4 percent for the 13 weeks ended October 1, 2006.
(c)	As a percentage of related company-operated retail revenues, store operating expenses were 40.9 percent for the 52 weeks ended September 30, 2007, and 41.5 percent for the 52 weeks ended October 1, 2006.
(d)	As a percentage of related total specialty revenues, other operating expenses were 26.0 percent for the 52 weeks ended September 30, 2007, and 27.9 percent for the 52 weeks ended October 1, 2006.

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International	Sept 30,		Oct 1,		%			Sept 30,			Oct 1,
	2007		2006		Change			2007			2006
								As a % of International
								total net revenues
13 Weeks Ended
Net revenues:
Company-operated retail	$	398,999	$	302,205		32.0	%		84.6	%		83.6	%
Specialty:
Licensing		62,110		51,351		21.0			13.2			14.2
Food service and other		10,669		7,930		34.5			2.2			2.2
Total specialty		72,779		59,281		22.8			15.4			16.4
Total net revenues		471,778		361,486		30.5			100.0			100.0
Cost of sales including occupancy costs		225,052		172,053		30.8			47.7			47.6
Store operating expenses(a)		144,292		113,098		27.6			30.6			31.3
Other operating expenses(b)		20,599		15,755		30.7			4.4			4.4
Depreciation and amortization expenses		21,764		18,245		19.3			4.6			5.0
General and administrative expenses		21,892		23,171		(5.5	)		4.6			6.4
Total operating expenses		433,599		342,322		26.7			91.9			94.7
Income from equity investees		12,874		7,358		75.0			2.7			2.0
Operating income	$	51,053	$	26,522		92.5	%		10.8	%		7.3	%
52 Weeks Ended
Net revenues:
Company-operated retail	$	1,437,401	$	1,087,858		32.1	%		84.7	%		83.5	%
Specialty:
Licensing		220,832		186,050		18.7			13.0			14.3
Food service and other		37,926		29,006		30.8			2.3			2.2
Total specialty		258,758		215,056		20.3			15.3			16.5
Total net revenues		1,696,159		1,302,914		30.2			100.0			100.0
Cost of sales including occupancy costs		824,594		625,008		31.9			48.6			48.0
Store operating expenses(c)		531,693		407,771		30.4			31.4			31.3
Other operating expenses(d)		69,881		50,900		37.3			4.1			3.9
Depreciation and amortization expenses		84,165		66,800		26.0			5.0			5.1
General and administrative expenses		93,806		78,337		19.7			5.5			6.0
Total operating expenses		1,604,139		1,228,816		30.5			94.6			94.3
Income from equity investees		45,723		34,370		33.0			2.7			2.6
Operating income	$	137,743	$	108,468		27.0	%		8.1	%		8.3	%

(a)	As a percentage of related company-operated retail revenues, store operating expenses were 36.2 percent for the 13 weeks ended September 30, 2007, and 37.4 percent for the 13 weeks ended October 1, 2006.
(b)	As a percentage of related total specialty revenues, other operating expenses were 28.3 percent for the 13 weeks ended September 30, 2007, and 26.6 percent for the 13 weeks ended October 1, 2006.
(c)	As a percentage of related company-operated retail revenues, store operating expenses were 37.0 percent for the 52 weeks ended September 30, 2007, and 37.5 percent for the 52 weeks ended October 1, 2006.
(d)	As a percentage of related total specialty revenues, other operating expenses were 27.0 percent for the 52 weeks ended September 30, 2007, and 23.7 percent for the 52 weeks ended October 1, 2006.

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	Sept 30,		Oct 1,		%			Sept 30,			Oct 1,
Global Consumer Products Group (CPG)	2007		2006		Change			2007			2006
								As a % of CPG total net revenues
13 Weeks Ended
Net revenues:
Specialty:
Licensing	$	109,663	$	76,399		43.5	%		100.0	%		100.0	%
Total specialty		109,663		76,399		43.5			100.0			100.0
Total net revenues		109,663		76,399		43.5			100.0			100.0
Cost of sales		65,701		45,760		43.6			59.9			59.9
Other operating expenses		5,169		3,031		70.5			4.7			4.0
Depreciation and amortization expenses		15		21		(28.6	)		—			—
General and administrative expenses		1,269		1,583		(19.8	)		1.2			2.1
Total operating expenses		72,154		50,395		43.2			65.8			66.0
Income from equity investees		24,847		21,208		17.2			22.7			27.8
Operating income	$	62,356	$	47,212		32.1	%		56.9	%		61.8	%
52 Weeks Ended
Net revenues:
Specialty:
Licensing	$	366,345	$	305,471		19.9	%		100.0	%		100.0	%
Total specialty		366,345		305,471		19.9			100.0			100.0
Total net revenues		366,345		305,471		19.9			100.0			100.0
Cost of sales		218,299		179,298		21.8			59.6			58.7
Other operating expenses		19,583		12,200		60.5			5.4			4.0
Depreciation and amortization expenses		76		108		(29.6	)		—			—
General and administrative expenses		6,349		6,363		(0.2	)		1.7			2.1
Total operating expenses		244,307		197,969		23.4			66.7			64.8
Income from equity investees		61,515		59,416		3.5			16.8			19.4
Operating income	$	183,553	$	166,918		10.0	%		50.1	%		54.6	%

	Sept 30,			Oct 1,			%			Sept 30,			Oct 1,
Unallocated Corporate	2007			2006			Change			2007			2006
										As a % of total net revenues
13 Weeks Ended
Depreciation and amortization expenses	$	9,118		$	9,441			(3.4	)%		0.4	%		0.4	%
General and administrative expenses		80,827			67,534			19.7			3.3			3.4
Operating loss	$	(89,945	)	$	(76,975	)		16.8	%		(3.7	)%		(3.8	)%
52 Weeks Ended
Depreciation and amortization expenses	$	34,720		$	35,678			(2.7	)%		0.4	%		0.4	%
General and administrative expenses		303,146			300,932			0.7			3.2			3.9
Operating loss	$	(337,866	)	$	(336,610	)		0.4	%		(3.6	)%		(4.3	)%

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STARBUCKS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)

	September 30,		October 1,
	2007		2006
ASSETS
Current assets:
Cash and cash equivalents	$	281,261	$	312,606
Short-term investments — available-for-sale securities		83,845		87,542
Short-term investments — trading securities		73,588		53,496
Accounts receivable, net		287,925		224,271
Inventories		691,658		636,222
Prepaid expenses and other current assets		148,757		126,874
Deferred income taxes, net		129,453		88,777
Total current assets		1,696,487		1,529,788
Long-term investments — available-for-sale securities		21,022		5,811
Equity and other investments		258,846		219,093
Property, plant and equipment, net		2,890,433		2,287,899
Other assets		219,422		186,917
Other intangible assets		42,043		37,955
Goodwill		215,625		161,478
TOTAL ASSETS	$	5,343,878	$	4,428,941
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Commercial paper and short-term borrowings	$	710,248	$	700,000
Accounts payable		390,836		340,937
Accrued compensation and related costs		332,331		288,963
Accrued occupancy costs		74,591		54,868
Accrued taxes		92,516		94,010
Other accrued expenses		257,369		224,154
Deferred revenue		296,900		231,926
Current portion of long-term debt		775		762
Total current liabilities		2,155,566		1,935,620
Long-term debt		550,121		1,958
Other long-term liabilities		354,074		262,857
Total liabilities		3,059,761		2,200,435
Shareholders’ equity:
Common stock ($0.001 par value) — authorized, 1,200,000,000 shares; issued and outstanding, 738,285,285 and 756,602,055 shares, respectively, (includes 3,420,448 common stock units in both periods)		738		756
Other additional paid-in-capital		39,393		39,393
Retained earnings		2,189,366		2,151,084
Accumulated other comprehensive income		54,620		37,273
Total shareholders’ equity		2,284,117		2,228,506
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	5,343,878	$	4,428,941

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STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)

	52 Weeks Ended
	Sept 30,			Oct 1,
	2007			2006
OPERATING ACTIVITIES:
Net earnings	$	672,638		$	564,259
Adjustments to reconcile net earnings to net cash provided by operating activities:
Cumulative effect of accounting change for FIN47, net of taxes		—			17,214
Depreciation and amortization		491,238			412,625
Provision for impairments and asset disposals		26,032			19,622
Deferred income taxes, net		(37,326	)		(84,324	)
Equity in income of investees		(65,743	)		(60,570	)
Distributions from equity investees		65,927			49,238
Stock-based compensation		103,865			105,664
Tax benefit from exercise of stock options		7,705			1,318
Excess tax benefit from exercise of stock options		(93,055	)		(117,368	)
Net amortization of premium on securities		653			2,013
Cash provided/(used) by changes in operating assets and liabilities:
Inventories		(48,576	)		(85,527	)
Accounts payable		36,068			104,966
Accrued compensation and related costs		38,628			54,424
Accrued taxes		86,371			132,725
Deferred revenue		63,233			56,547
Other operating assets and liabilities		(16,437	)		(41,193	)
Net cash provided by operating activities		1,331,221			1,131,633
INVESTING ACTIVITIES:
Purchase of available-for-sale securities		(237,422	)		(639,192	)
Maturity of available-for-sale securities		178,167			269,134
Sale of available-for-sale securities		47,497			431,181
Acquisitions, net of cash acquired		(53,293	)		(91,734	)
Net purchases of equity, other investments and other assets		(56,552	)		(39,199	)
Net additions to property, plant and equipment		(1,080,348	)		(771,230	)
Net cash used by investing activities		(1,201,951	)		(841,040	)
FINANCING ACTIVITIES:
Repayments of commercial paper		(16,600,841	)		—
Proceeds from issuance of commercial paper		17,311,089			—
Repayments of short-term borrowings		(1,470,000	)		(993,093	)
Proceeds from short-term borrowings		770,000			1,416,093
Proceeds from issuance of common stock		176,937			159,249
Excess tax benefit from exercise of stock options		93,055			117,368
Principal payments on long-term debt		(784	)		(898	)
Proceeds from issuance of long-term debt		548,960			—
Repurchase of common stock		(996,798	)		(854,045	)
Other		(3,505	)		—
Net cash used by financing activities		(171,887	)		(155,326	)
Effect of exchange rate changes on cash and cash equivalents		11,272			3,530
Net increase/(decrease) in cash and cash equivalents		(31,345	)		138,797
CASH AND CASH EQUIVALENTS:
Beginning of period		312,606			173,809
End of the period	$	281,261		$	312,606
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest, net of capitalized interest	$	35,294		$	10,576
Income taxes	$	342,223		$	274,134

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Fiscal Fourth Quarter 2007 Store Data

The company’s store data for the periods presented are as follows:

	Net stores opened during the period
	13-week period				52-week period				Stores open as of
	Sept 30,		Oct 1,		Sept 30,		Oct 1,		Sept 30,		Oct 1,
	2007		2006		2007		2006		2007		2006
United States:
Company-operated Stores(1)		227		278		1,065		810		6,793		5,728
Licensed Stores		162		216		723		733		3,891		3,168
		389		494		1,788		1,543		10,684		8,896
International:
Company-operated Stores(1)		99		75		277		233		1,712		1,435
Licensed Stores(1)		127		87		506		423		2,615		2,109
		226		162		783		656		4,327		3,544
Total		615		656		2,571		2,199		15,011		12,440

⁽¹⁾ International store data has been adjusted for the acquisition of the Beijing operations by reclassifying historical information from Licensed Stores to company-operated Stores. United States store data was also adjusted to align with the Hawaii operations segment change by reclassifying historical information from International company-operated stores to the United States.

© 2007 Starbucks Coffee Company. All rights reserved.

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