Document and Company Informatio
Document and Company Information | ||
Share data in Millions | 6 Months Ended
Mar. 28, 2010 | Apr. 26, 2010
|
Entity Registrant Name | STARBUCKS CORP | |
Entity Central Index Key | 0000829224 | |
Document Type | 10-Q | |
Document Period End Date | 2010-03-28 | |
Document Fiscal Year Focus | 2,010 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --10-03 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 745.1 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Earnings (USD $) | ||||
In Millions, except Per Share data | 3 Months Ended
Mar. 28, 2010 | 3 Months Ended
Mar. 29, 2009 | 6 Months Ended
Mar. 28, 2010 | 6 Months Ended
Mar. 29, 2009 |
Net revenues: | ||||
Company-operated retail | 2128.9 | 1961.8 | 4421.8 | $4,138 |
Specialty: | ||||
Licensing | 310.4 | 282.8 | 636.5 | 617.1 |
Foodservice and other | 95.4 | 88.7 | 199.1 | 193.4 |
Total specialty | 405.8 | 371.5 | 835.6 | 810.5 |
Total net revenues | 2534.7 | 2333.3 | 5257.4 | 4948.5 |
Cost of sales including occupancy costs | 1064.1 | 1043.5 | 2209.8 | 2240.3 |
Store operating expenses | 828 | 819.6 | 1724.1 | 1756.2 |
Other operating expenses | 61.8 | 64 | 133.7 | 136.6 |
Depreciation and amortization expenses | 128.5 | 134.1 | 259.1 | 268.4 |
General and administrative expenses | 139 | 104.3 | 275.9 | 209.5 |
Restructuring charges | 7.9 | 152.1 | 26.2 | 227.6 |
Total operating expenses | 2229.3 | 2317.6 | 4628.8 | 4838.6 |
Income from equity investees | 34.4 | 25.2 | 63.8 | 48.7 |
Operating income | 339.8 | 40.9 | 692.4 | 158.6 |
Interest income and other, net | 4.7 | 3 | 29.8 | (3) |
Interest expense | (8) | -8.9 | -16.2 | -21.9 |
Earnings before income taxes | 336.5 | 35 | 706 | 133.7 |
Income taxes | 118.7 | 9.9 | 244.7 | 43.9 |
Net earnings including noncontrolling interests | 217.8 | 25.1 | 461.3 | 89.8 |
Net earnings attributable to noncontrolling interests | 0.5 | 0.1 | 2.5 | 0.5 |
Net earnings attributable to Starbucks | 217.3 | 25 | 458.8 | 89.3 |
Earnings per share - basic | 0.29 | 0.03 | 0.62 | 0.12 |
Earnings per share - diluted | 0.28 | 0.03 | 0.6 | 0.12 |
Weighted average shares outstanding: | ||||
Basic | 747.1 | 738 | 745.6 | 737.2 |
Diluted | 766.9 | 739.9 | 764.9 | 739.5 |
Cash dividends declared per share | 0.1 | $0 | 0.1 | $0 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (USD $) | ||
In Millions | Mar. 28, 2010
| Sep. 27, 2009
|
Current assets: | ||
Cash and cash equivalents | $1,086 | 599.8 |
Short-term investments - available-for-sale securities | 158.3 | 21.5 |
Short-term investments - trading securities | 49.6 | 44.8 |
Accounts receivable, net | 299.7 | 271 |
Inventories | 488.7 | 664.9 |
Prepaid expenses and other current assets | 136.1 | 147.2 |
Deferred income taxes, net | 272 | 286.6 |
Total current assets | 2490.4 | 2035.8 |
Long-term investments - available-for-sale securities | 270 | 71.2 |
Equity and cost investments | 318.8 | 352.3 |
Property, plant and equipment, net | 2414.6 | 2536.4 |
Other assets | 319 | 253.8 |
Other intangible assets | 69.1 | 68.2 |
Goodwill | 262.8 | 259.1 |
TOTAL ASSETS | 6144.7 | 5576.8 |
Current liabilities: | ||
Accounts payable | 286.8 | 267.1 |
Accrued compensation and related costs | 308.3 | 307.5 |
Accrued occupancy costs | 164.4 | 188.1 |
Accrued taxes | 66.1 | 127.8 |
Insurance reserves | 152.5 | 154.3 |
Other accrued liabilities | 234.6 | 147.5 |
Deferred revenue | 433.9 | 388.7 |
Total current liabilities | 1646.6 | 1,581 |
Long-term debt | 549.3 | 549.3 |
Other long-term liabilities | 394.1 | 389.6 |
Total liabilities | 2,590 | 2519.9 |
Shareholders' equity: | ||
Common stock ($0.001 par value) - authorized, 1,200.0 shares; issued and outstanding, 748.2 and 742.9 shares, respectively (includes 3.4 common stock units in both periods) | 0.7 | 0.7 |
Additional paid-in-capital | 275.9 | 147 |
Other additional paid-in-capital | 39.4 | 39.4 |
Retained earnings | 3177.1 | 2793.2 |
Accumulated other comprehensive income | 47.9 | 65.4 |
Total shareholders' equity | 3,541 | 3045.7 |
Noncontrolling interests | 13.7 | 11.2 |
Total equity | 3554.7 | 3056.9 |
TOTAL LIABILITIES AND EQUITY | 6144.7 | 5576.8 |
1_Condensed Consolidated Balanc
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | ||
Share data in Millions, except Per Share data | Mar. 28, 2010
| Sep. 27, 2009
|
Shareholders' equity: | ||
Common stock, par value | 0.001 | 0.001 |
Common stock, shares authorized | 1,200 | 1,200 |
Common stock, shares issued | 748.2 | 742.9 |
Common stock, shares outstanding | 748.2 | 742.9 |
Common stock units | 3.4 | 3.4 |
2_Condensed Consolidated Statem
Condensed Consolidated Statements of Cash Flows (USD $) | ||
In Millions | 6 Months Ended
Mar. 28, 2010 | 6 Months Ended
Mar. 29, 2009 |
OPERATING ACTIVITIES: | ||
Net earnings including noncontrolling interest | 461.3 | 89.8 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization | 272.5 | 282.2 |
Provision for impairments and asset disposals | 44.3 | 145.7 |
Deferred income taxes | -10.6 | -29.9 |
Equity in income of investees | -41.4 | -29.6 |
Distributions of income from equity investees | 41 | 18.8 |
Stock-based compensation | 53.4 | 42.5 |
Tax benefit from exercise of stock options | 6.9 | 0.6 |
Excess tax benefit from exercise of stock options | -13.8 | -5.9 |
Other | -8.5 | 16.1 |
Cash provided/(used) by changes in operating assets and liabilities: | ||
Inventories | 174.7 | 59.9 |
Accounts payable | 3.3 | -47.3 |
Accrued taxes | -48.6 | 29.9 |
Deferred revenue | 44.3 | 66.9 |
Other operating assets | -1.6 | 60.8 |
Other operating liabilities | -19.4 | 14.9 |
Net cash provided by operating activities | 957.8 | 715.4 |
INVESTING ACTIVITIES: | ||
Purchase of available-for-sale securities | -359.8 | (7) |
Maturities and calls of available-for-sale securities | 23.9 | 0 |
Acquisitions, net of cash acquired | -10.6 | 0 |
Net purchases of equity, other investments and other assets | 1.2 | -10.7 |
Additions to property, plant and equipment, net | -184.5 | -236.9 |
Net cash used by investing activities | -529.8 | -254.6 |
FINANCING ACTIVITIES: | ||
Proceeds from issuance of commercial paper | 0 | 20928.4 |
Repayments of commercial paper | 0 | -21335.5 |
Proceeds from short-term borrowings | 0 | 1,033 |
Repayments of short-term borrowings | 0 | (1,113) |
Proceeds from issuance of common stock | 62.7 | 17.1 |
Excess tax benefit from exercise of stock options | 13.8 | 5.9 |
Principal payments on long-term debt | -6.5 | -0.3 |
Other | -0.9 | -0.8 |
Net cash provided/(used) by financing activities | 69.1 | -465.2 |
Effect of exchange rate changes on cash and cash equivalents | -10.9 | -12.2 |
Net increase in cash and cash equivalents | 486.2 | -16.6 |
CASH AND CASH EQUIVALENTS: | ||
Beginning of period | 599.8 | 269.8 |
End of period | 1,086 | 253.2 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Net change in short-term borrowings and commercial paper for the period | 0 | -487.1 |
Cash paid during the period for: | ||
Interest, net of capitalized interest | 16.2 | 22.6 |
Income taxes | $292 | 47.1 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | |
6 Months Ended
Mar. 28, 2010 | |
Summary of Significant Accounting Policies | Note 1: Summary of Significant Accounting Policies Financial Statement Preparation The unaudited condensed consolidated financial statements as of March 28, 2010, and for the 13-week and 26-week periods ended March 28, 2010 and March 29, 2009, have been prepared by Starbucks Corporation under the rules and regulations of the Securities and Exchange Commission ("SEC"). In the opinion of management, the financial information for the 13-week and 26-week periods ended March 28, 2010 and March 29, 2009 reflect all adjustments and accruals, which are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. In this Quarterly Report on Form 10-Q ("10-Q") Starbucks Corporation is referred to as "Starbucks," the "Company," "we," "us" or "our". The financial information as of September 27, 2009 is derived from our audited consolidated financial statements and notes for the fiscal year ended September 27, 2009 ("fiscal 2009"), included in Item 8 in the Fiscal 2009 Annual Report on Form 10-K (the "10-K"). The information included in this 10-Q should be read in conjunction with the footnotes and management's discussion and analysis of the financial statements in the 10-K. The results of operations for the 13-week and 26-week periods ended March 28, 2010 are not necessarily indicative of the results of operations that may be achieved for the entire fiscal year ending October 3, 2010 ("fiscal 2010"). Additionally, our 2010 fiscal year will include 53 weeks, with the 53rd week falling in the fourth fiscal quarter. Recent Accounting Pronouncements In 2007, the Financial Accounting Standards Board ("FASB") issued authoritative guidance on accounting and reporting for noncontrolling interests in subsidiaries. The guidance clarifies that a noncontrolling interest in a subsidiary should be accounted for as a component of equity separate from the parent company's equity. We adopted the new guidance relating to noncontrolling interests beginning September 28, 2009 on a prospective basis, except for the presentation and disclosure requirements, which were applied retrospectively. In June 2009, the FASB issued authoritative guidance on the consolidation of variable interest entities ("VIE"), which will be effective for our first fiscal quarter of 2011. The new guidance requires a qualitative approach to identify a controlling financial interest in a VIE, and requires ongoing assessment of whether an entity is a VIE and whether an interest in a VIE makes the holder the primary beneficiary of the VIE. We are evaluating the impact that adoption may have on our consolidated financial statements. |
Restructuring Charges
Restructuring Charges | |
6 Months Ended
Mar. 28, 2010 | |
Restructuring Charges | Note 2: Restructuring Charges In the second quarter of fiscal 2010, we closed 13 International stores and 2 US stores as a part of Starbucks store portfolio rationalization which began in fiscal 2008. A total of 909 stores globally have been closed as a part of this effort. We expect to complete the remaining closures by the end of the current fiscal year, and will recognize the associated lease exit costs concurrently with the actual closures. Nearly all of the remaining closures are in the International segment. Restructuring charges by type of cost, by reportable segment and reconciliation of the associated accrued liability (in millions): By Type of Cost By Segment Total LeaseExitand OtherRelatedCosts AssetImpairments EmployeeTerminationCosts US International UnallocatedCorporate Total expected costs $ 644.3 $ 276.0 $ 331.5 $ 36.8 $ 466.9 $ 81.4 $ 96.0 Costs incurred and charged to expense during the period ended March28, 2010 13 weeks 7.9 8.2 (0.3 ) 0.0 1.2 6.7 0.0 26 weeks 26.2 25.5 0.7 0.0 9.1 17.1 0.0 Costs incurred and charged to expense during the period ended March29, 2009 13 weeks 152.0 50.3 87.8 13.9 106.6 14.9 30.5 26 weeks 227.6 91.0 120.2 16.4 161.2 16.9 49.5 Cumulative costs incurred to date 625.6 257.6 331.5 36.5 466.2 63.4 96.0 Accrued liability as of September27, 2009 $ 104.0 $ 102.8 $ 1.2 Costs incurred, excluding non-cash charges (1) 26.2 26.2 0.0 Cash payments (46.5 ) (45.7 ) (0.8 ) Accrued liability as of March28, 2010 $ 83.7 $ 83.3 $ 0.4 (1) Non-cash charges and credits for lease exit and other related costs primarily represent deferred rent balances recognized as expense credits at the cease-use date. |
Acquisitions
Acquisitions | |
6 Months Ended
Mar. 28, 2010 | |
Acquisitions | Note 3: Acquisitions In the first quarter of fiscal 2010, on September 30, 2009, we acquired 100% ownership of our business in France, converting it from a 50% joint venture with Sigla S.A. (Grupo Vips) of Spain to a Company-operated market. We simultaneously sold our 50% ownership interests in the Spain and Portugal markets to Grupo Vips, converting them to licensed markets. |
Derivative Financial Instrument
Derivative Financial Instruments | |
6 Months Ended
Mar. 28, 2010 | |
Derivative Financial Instruments | Note 4: Derivative Financial Instruments Cash Flow Hedges Net derivative losses of $8.1 million and $3.9 million, net of taxes, are included in accumulated other comprehensive income as of March 28, 2010 and September 27, 2009, respectively, related to cash flow hedges. Of the net derivative losses accumulated as of March 28, 2010, $2.6 million pertain to hedging instruments that will be dedesignated within 12 months and will also continue to experience fair value changes before affecting earnings. Ineffectiveness from hedges that were discontinued in the first and second quarters of fiscal year 2010 and 2009 was insignificant. Outstanding contracts will expire within 30 months. Net Investment Hedges Net derivative losses of $18.6 million and $19.8 million, net of taxes, are included in accumulated other comprehensive income as of March 28, 2010 and September 27, 2009, respectively, related to net investment derivative hedges. Outstanding contracts will expire within 35 months. Other Derivatives To mitigate the translation risk of certain balance sheet items, we enter into certain foreign currency forward contracts that are not designated as hedging instruments. These contracts are recorded at fair value, with the changes in fair value recognized in net interest income and other on the consolidated statements of earnings. Gains and losses from these instruments are largely offset by the financial impact of translating foreign currency denominated payables and receivables, which are also recognized in net interest income and other. We also enter into certain swap and futures contracts that are not designated as hedging instruments to mitigate the price uncertainty of a portion of our future purchases of dairy products and diesel fuel. These contracts are recorded at fair value, with the changes in fair value recognized in net interest income and other on the consolidated statement of earnings. The following table presents the effect of derivative instruments on the consolidated statement of earnings for the 13-week and 26-week periods ended (in millions): Gain/(Loss)recognizedinOCI Gain/(Loss)recognizedinearnings 13WeeksEnded 26WeeksEnded 13WeeksEnded 26WeeksEnded March28, 2010 Cash Flow Hedges $ (2.1 ) $ (8.5 ) $ (1.4 ) $ (2.4 ) Net Investment Hedges 0.7 2.0 0.0 0.0 Other Derivatives 0.0 0.0 10.1 8.6 March29, 2009 Cash Flow Hedges $ 11.7 $ 41.6 $ 0.4 $ 0.4 Net Investment Hedges 8.2 4.4 0.0 0.0 Other Derivatives 0.0 0.0 5.9 45.5 Notional amounts of outstanding derivative contracts as of March 28, 2010: * $683 million in foreign exchange contracts * $27 million in dairy contracts * $1 million in diesel contracts |
Investments
Investments | |
6 Months Ended
Mar. 28, 2010 | |
Investments | Note 5: Investments (in millions) AmortizedCost GrossUnrealizedHoldingGains GrossUnrealizedHoldingLosses FairValue March28, 2010 Short-term investments: Available-for-sale securities Corporate debt securities $ 5.6 $ 5.6 Available-for-sale securities Government treasury securities 152.7 152.7 Trading securities 59.1 49.6 Total short-term investments $ 217.4 $ 207.9 Long-term investments: Available-for-sale securities State and local government obligations $ 52.7 $ 0.0 $ (1.5 ) $ 51.2 Available-for-sale securities Agency obligations 92.0 0.0 0.0 92.0 Available-for-sale securities Corporate debt securities 126.1 1.0 (0.3 ) 126.8 Total long-term investments $ 270.8 $ 1.0 $ (1.8 ) $ 270.0 September27, 2009 Short-term investments: Available-for-sale securities Corporate debt securities $ 2.5 $ 2.5 Available-for-sale securities Government treasury securities 19.0 19.0 Trading securities 58.5 44.8 Total short-term investments $ 80.0 $ 66.3 Long-term investments: Available-for-sale securities State and local government obligations $ 57.8 $ 0.0 $ (2.1 ) $ 55.7 Available-for-sale securities Corporate debt securities 14.7 0.8 0.0 15.5 Total long-term investments $ 72.5 $ 0.8 $ (2.1 ) $ 71.2 The gross unrealized holding losses on the state and local obligations relate to our auction rate securities ("ARS"). We do not intend to sell these securities, nor is it likely we will be required to sell these securities before their anticipated recovery, which may be at maturity. In the first half of fiscal 2010, two of the ARS were partially called at par value of $4.9 million. |
Fair Value Measurements
Fair Value Measurements | |
6 Months Ended
Mar. 28, 2010 | |
Fair Value Measurements | Note 6: Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis (in millions): FairValueMeasurementsatReportingDateUsing Balance atMar28,2010 QuotedPricesin ActiveMarketsforIdenticalAssets(Level 1) SignificantOtherObservable Inputs(Level 2) SignificantUnobservableInputs (Level 3) Assets: Trading securities $ 49.6 $ 49.6 $ 0.0 $ 0.0 Available-for-sale securities 428.3 152.7 224.4 51.2 Derivatives 5.7 0.0 5.7 0.0 Total $ 483.6 $ 202.3 $ 230.1 $ 51.2 Liabilities: Derivatives $ 10.9 $ 0.0 $ 10.9 $ 0.0 Balance atSep 27, 2009 Assets: Trading securities $ 44.8 $ 44.8 $ 0.0 $ 0.0 Available-for-sale securities 92.7 19.0 18.0 55.7 Derivatives 13.2 0.0 13.2 0.0 Total $ 150.7 $ 63.8 $ 31.2 $ 55.7 Liabilities: Derivatives $ 33.2 $ 0.0 $ 33.2 $ 0.0 Changes in Level 3 Instruments Measured at Fair Value on a Recurring Basis (in millions): 13WeeksEnded 26WeeksEnded Mar28,2010 Mar29,2009 Mar28,2010 Mar29,2009 Beginning balance $ 53.0 $ 62.6 $ 55.7 $ 59.8 Total reduction in unrealized losses included in other comprehensive income 0.3 0.0 0.6 2.8 Realized losses recognized in net earnings 0.0 0.0 (0.2 ) 0.0 Purchases, sales, issuances, calls, and settlements (2.1 ) 0.0 (4.9 ) 0.0 Ending balance $ 51.2 $ 62.6 $ 51.2 $ 62.6 Financial instruments measured using level 3 inputs described above are comprised entirely of our ARS portfolio. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis (in millions) Effective September 28, 2009, we adopted new fair value measurement guidance for all nonfinancial assets and liabilities recognized or disclosed at fair value in the financial statements on a nonrecurring basis. These assets and liabilities include items such as property, plant and equipment, goodwill and other intangible assets that are measured at fair value resulting from impairment, if deemed necessary. Starbucks measures certain financial assets, including equity and cost method investments, at fair value on a nonrecurring basis. These assets are recognized at fair value when they are determined to be other-than-temporarily impaired. During the 13 and 26 weeks ended March 28, 2010, we recognized fair market value adjustments with a charge to earnings to assets measured at fair value (Level 3) on a non-recurring basis, as follows: 13 Weeks Ended 26 Weeks Ended CarryingValuebeforeadjustment Fair valueadjustment Carryingvalue afteradjustment CarryingValuebeforeadjustment Fair valueadjustment Carryingvalue afteradjustment P |
Inventories
Inventories | |
6 Months Ended
Mar. 28, 2010 | |
Inventories | Note 7: Inventories (in millions) Mar 28,2010 Sep 27,2009 Mar 29,2009 Coffee: Unroasted $ 252.1 $ 381.6 $ 359.9 Roasted 71.9 76.7 64.8 Other merchandise held for sale 85.2 116.0 96.1 Packaging and other supplies 79.5 90.6 107.0 Total $ 488.7 $ 664.9 $ 627.8 As of March 28, 2010, we had committed to purchasing green coffee totaling $105 million under fixed-price contracts and an estimated $219 million under price-to-be-fixed contracts. Price-to-be-fixed contracts are green coffee purchase commitments whereby the quality, quantity, delivery period, and other negotiated terms are agreed upon, but the date at which the base "C" coffee commodity price component will be fixed has not yet been established. For these types of contracts, either the buyer (Starbucks) or the seller has the option to select a date on which to "fix" the base "C" coffee commodity price prior to the delivery date. Until prices are fixed, we estimate the total cost of these purchase commitments. We believe, based on relationships established with our suppliers in the past, the risk of non-delivery on these purchase commitments is remote. |
Property, Plant and Equipment
Property, Plant and Equipment | |
6 Months Ended
Mar. 28, 2010 | |
Property, Plant and Equipment | Note 8: Property, Plant and Equipment (in millions) Mar 28,2010 Sep 27,2009 Land $ 58.0 $ 58.2 Buildings 264.5 231.5 Leasehold improvements 3,354.1 3,349.0 Store equipment 1,009.2 1,073.4 Roasting equipment 286.8 282.9 Furniture, fixtures and other 598.0 586.7 Work in progress 135.0 119.2 5,705.6 5,700.9 Less accumulated depreciation (3,291.0 ) (3,164.5 ) Property, plant and equipment, net $ 2,414.6 $ 2,536.4 |
Debt
Debt | |
6 Months Ended
Mar. 28, 2010 | |
Debt | Note 9: Debt (in millions) Mar 28,2010 Sep 27,2009 Current portion of long-term debt (included in other accrued liabilities) $ 0.1 $ 0.2 6.25% Senior Notes (10 year, due Aug 2017) 549.3 549.2 Other long-term debt 0.0 0.1 Long-term debt 549.3 549.3 Total debt $ 549.4 $ 549.5 |
Other Long-term Liabilities
Other Long-term Liabilities | |
6 Months Ended
Mar. 28, 2010 | |
Other Long-term Liabilities | Note 10: Other Long-term Liabilities (in millions) Mar 28,2010 Sep 27,2009 Deferred rent $ 252.6 $ 266.0 Unrecognized tax benefits 76.4 55.1 Asset retirement obligations 44.9 43.4 Other 20.2 25.1 Total $ 394.1 $ 389.6 |
Equity
Equity | |
6 Months Ended
Mar. 28, 2010 | |
Equity | Note 11: Equity Components of equity for the 26 weeks ended March 28, 2010 and March 29, 2009 (in millions): Shareholders'Equity NoncontrollingInterest TotalEquity Balance, September27, 2009 $ 3,045.7 $ 11.2 $ 3,056.9 Net earnings 458.8 2.5 461.3 Unrealized holding gains on available-for-sale securities 0.1 0.0 0.1 Unrealized holding losses on cash flow hedging instruments (5.9 ) 0.0 (5.9 ) Unrealized holding gains on net investment hedging instruments 1.3 0.0 1.3 Reclassification adjustment for net losses realized in net earnings for available-for-sale securities 0.2 0.0 0.2 Reclassification adjustment for net losses realized in net earnings for cash flow hedges 1.6 0.0 1.6 Translation adjustment (14.8 ) 0.0 (14.8 ) Comprehensive income 441.3 2.5 443.8 Stock-based compensation expense 54.3 0.0 54.3 Exercise of stock options 65.1 0.0 65.1 Sale of common stock 9.4 0.0 9.4 Cash dividends declared (74.8 ) 0.0 (74.8 ) Net distributions to noncontrolling interests 0.0 0.0 0.0 Balance, March28, 2010 $ 3,541.0 $ 13.7 $ 3,554.7 Balance, September28, 2008 $ 2,490.9 $ 18.3 $ 2,509.2 Net earnings 89.3 0.5 89.8 Unrealized holding gains on available-for-sale securities 2.3 0.0 2.3 Unrealized holding gains on cash flow hedging instruments 25.6 0.0 25.6 Unrealized holding gains on net investment hedging instruments 2.7 0.0 2.7 Reclassification adjustment for net losses realized in net earnings for cash flow hedges 0.5 0.0 0.5 Translation adjustment (42.1 ) 0.0 (42.1 ) Comprehensive income 78.3 0.5 78.8 Stock-based compensation expense 43.0 0.0 43.0 Exercise of stock options 2.7 0.0 2.7 Sale of common stock 15.5 0.0 15.5 Net distributions to noncontrolling interests 0.0 (0.5 ) (0.5 ) Balance, March29, 2009 $ 2,630.4 $ 18.3 $ 2,648.7 In addition to 1.2 billion shares of authorized common stock with $0.001 par value per share, the Company has authorized 7.5 million shares of preferred stock, none of which was outstanding as of March 28, 2010. During the second quarter, Starbucks Board of Directors approved the initiation of a cash dividend to shareholders. A quarterly dividend of $0.10 per share was paid on April 23, 2010, to shareholders of record on the close of business on April 7, 2010. The accrued dividend payable is recorded in other accrued liabilities on the consolidated balance sheet. Components of accumulated other comprehensive income, net of tax (in millions): Mar28,2010 Sep27,2009 Net unrealized losses on available-for-sale securities $ (0.5 ) $ |
Employee Stock Plans
Employee Stock Plans | |
6 Months Ended
Mar. 28, 2010 | |
Employee Stock Plans | Note 12: Employee Stock Plans As of March 28, 2010, there were 33.8 million shares of common stock available for issuance pursuant to future equity-based compensation awards and employee stock purchase plans ("ESPP"). Stock-based compensation expense recognized in the consolidated statement of earnings (in millions): 13WeeksEnded 26WeeksEnded Mar28,2010 Mar29,2009 Mar28,2010 Mar29,2009 Options $ 19.7 $ 14.7 $ 37.2 $ 31.1 Restricted stock units ("RSUs") 9.8 3.1 16.2 6.5 ESPP 0.0 2.4 0.0 4.9 Total stock-based compensation $ 29.5 $ 20.2 $ 53.4 $ 42.5 Value of awards granted and exercised during the period: 13 Weeks Ended 26 Weeks Ended Mar28,2010 Mar29,2009 Mar28,2010 Mar29,2009 Estimated fair value per option granted $ 7.61 $ 4.16 $ 8.44 $ 3.51 Weighted average option grant price $ 23.64 $ 10.44 $ 22.10 $ 8.70 Weighted average price per options exercised $ 12.42 $ 8.56 $ 12.06 $ 5.75 Weighted average RSU grant price $ 23.27 $ 11.14 $ 22.13 $ 8.71 Stock option and RSU transactions from September 27, 2009 through March 28, 2010 (in millions): StockOptions RSUs Options outstanding/Nonvested RSUs, September27, 2009 63.6 4.4 Options/RSUs granted 14.3 2.3 Options exercised/RSUs vested (4.6 ) (0.4 ) Options/RSUs forfeited/expired (4.5 ) (0.3 ) Options outstanding/Nonvested RSUs, March28, 2010 68.8 6.0 Total unrecognized stock-based compensation expense, net of forfeitures, as of March28, 2010 $ 108 $ 62 |
Earnings Per Share
Earnings Per Share | |
6 Months Ended
Mar. 28, 2010 | |
Earnings Per Share | Note 13: Earnings Per Share Calculation of net earnings per common share ("EPS") basic and diluted (in millions, except EPS): 13 Weeks Ended 26 Weeks Ended Mar28,2010 Mar29,2009 Mar28,2010 Mar29,2009 Net earnings attributable to Starbucks $ 217.3 $ 25.0 $ 458.8 $ 89.3 Weighted average common shares and common stock units outstanding (for basic calculation) 747.1 738.0 745.6 737.2 Dilutive effect of outstanding common stock options and RSUs 19.8 1.9 19.3 2.3 Weighted average common and common equivalent shares outstanding (for diluted calculation) 766.9 739.9 764.9 739.5 EPS basic $ 0.29 $ 0.03 $ 0.62 $ 0.12 EPS diluted $ 0.28 $ 0.03 $ 0.60 $ 0.12 Potential dilutive shares consist of the incremental common shares issuable upon the exercise of outstanding stock options (both vested and non-vested) and unvested RSUs, using the treasury stock method. Potential dilutive shares are excluded from the computation of earnings per share if their effect is antidilutive. The number of antidilutive options totaled 21 million and 74 million for the 13-week periods ended March 28, 2010 and March 29, 2009, respectively. The number of antidilutive options totaled 24 million and 71 million for the 26-week periods ended March 28, 2010 and March 29, 2009, respectively. |
Commitments and Contingencies
Commitments and Contingencies | |
6 Months Ended
Mar. 28, 2010 | |
Commitments and Contingencies | Note 14: Commitments and Contingencies Guarantees Unconditional guarantees as of March 28, 2010 (in millions): MaximumExposure YearGuaranteeExpires in EstimatedFairValueRecorded onBalance Sheet Japanese yen-denominated bank loans (Starbucks Japan an unconsolidated equity investee) $ 2.3 2014 $ 0.0 (1) Borrowings of other unconsolidated equity investees $ 7.7 2014 $ 2.2 (1) Since there has been no modification of these loan guarantees subsequent to the adoption of accounting requirements for guarantees, we have applied the disclosure provisions only and have not recorded the guarantees on our consolidated balance sheets. Legal Proceedings On June 30, 2005, three individuals, Erik Lords, Hon Yeung, and Donald Brown filed a lawsuit in Orange County Superior Court, California. The lawsuit alleged that we violated the California Labor Code section 432.8 by asking job applicants to disclose at the time of application convictions for marijuana related offenses more than two years old. The California Court of Appeal issued a ruling on December 10, 2008 instructing the trial judge to enter summary judgment against plaintiffs and the California Supreme Court has rejected the plaintiffs' appeal. The plaintiffs have moved to amend the complaint to add new plaintiffs. We have opposed this effort and are asking for final dismissal of the case. Starbucks is party to various other legal proceedings arising in the ordinary course of business, but is not currently a party to any legal proceeding that management believes would have a material adverse effect on our consolidated financial position or results of operations. |
Segment Reporting
Segment Reporting | |
6 Months Ended
Mar. 28, 2010 | |
Segment Reporting | Note 15: Segment Reporting Segment information is prepared on the same basis that management reviews financial information for operational decision making purposes. The tables below present information by operating segment (in millions): UnitedStates International GlobalCPG UnallocatedCorporate Total 13 Weeks Ended March28, 2010 Company-operated retail revenues $ 1,680.0 $ 448.9 $ 0.0 $ 0.0 $ 2,128.9 Licensing revenues 138.0 72.8 99.6 0.0 310.4 Foodservice and other revenues 2.1 12.5 80.8 0.0 95.4 Total net revenues 1,820.1 534.2 180.4 0.0 2,534.7 Depreciation and amortization expenses 88.6 27.4 1.2 11.3 128.5 Income from equity investees 0.0 20.9 13.5 0.0 34.4 Operating income/(loss) 321.9 40.9 67.8 (90.8 ) 339.8 Net impairment and disposition losses 3.6 2.8 0.0 0.7 7.1 March29, 2009 Company-operated retail revenues $ 1,602.2 $ 359.6 $ 0.0 $ 0.0 $ 1,961.8 Licensing revenues 123.9 64.1 94.8 0.0 282.8 Foodservice and other revenues 0.8 10.0 77.9 0.0 88.7 Total net revenues 1,726.9 433.7 172.7 0.0 2,333.3 Depreciation and amortization expenses 95.7 23.9 1.5 13.0 134.1 Income from equity investees 0.0 11.1 14.1 0.0 25.2 Operating income/(loss) 72.9 6.0 63.0 (101.0 ) 40.9 Net impairment and disposition losses 42.4 15.0 0.0 23.0 80.4 26 Weeks Ended March28, 2010 Company-operated retail revenues $ 3,468.3 $ 953.5 $ 0.0 $ 0.0 $ 4,421.8 Licensing revenues 283.0 144.4 209.1 0.0 636.5 Foodservice and other revenues 3.7 27.3 168.1 0.0 199.1 Total net revenues 3,755.0 1,125.2 377.2 0.0 5,257.4 Depreciation and amortization expenses 178.3 55.6 2.4 22.8 259.1 Income from equity investees 0.0 37.9 25.9 0.0 63.8 Operating income/(loss) 656.4 84.4 135.0 (183.4 ) 692.4 Net impairment and disposition losses 25.6 11.7 0.0 7.0 44.3 March29, 2009 Company-operated retail revenues $ 3,364.0 $ 774.0 $ 0.0 $ 0.0 $ 4,138.0 Licensing revenues 274.8 133.2 209.1 0.0 617.1 Foodservice and other revenues 1.7 22.2 169.5 0.0 193.4 Total net revenues 3,640.5 929.4 378.6 0.0 4,948.5 Depreciation and amortization expenses 191.6 49.3 3.0 24.5 268.4 Income from equity investees 0.5 23.0 25.2 0.0 48.7 Operating income/(loss) 183.7 18.9 137.7 (181.7 ) 158.6 Net impairment and disposition |