Starbucks Investor Relations

Financial Release

<< Back
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--(BUSINESS WIRE)--Nov. 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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

“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.”

 

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.

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.

                                                                                                                                       

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

Change in

Comparable Store Sales(1) Sales Growth

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.

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.
    • 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.
    • 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.
    • 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 range of $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 Fresh™ 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.

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.

                   
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 %
 
                   
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 %
 

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
As a % of Americas

Quarter Ended

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 %
 
                       
                               
EMEA September 30, October 2, % September 30, October 2,
2012     2011     Change 2012     2011
As a % of EMEA

Quarter Ended

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 %
 
                     
                               
China/Asia Pacific (CAP) September 30, October 2, % September 30, October 2,
2012     2011     Change 2012     2011
As a % of CAP

Quarter Ended

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 %
 
                       
                               
Channel Development September 30, October 2, % September 30, October 2,
2012     2011     Change 2012     2011
As a % of Channel
Development

Quarter Ended

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 %
 
               
                   
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 %
 
         
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

Accrued 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
 
         
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

Acquisitions, 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 withholdings 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
 

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.

 

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.

Source: Starbucks Coffee Company

Starbucks Coffee Company
Investor Relations:
JoAnn DeGrande, 206-318-7118
investorrelations@starbucks.com
or
Media:
Zack Hutson, 206-318-7100
press@starbucks.com