Starbucks 2000 Annual Report Download - page 18

Notes to Consolidated Financial Statements
Years ended October 1, 2000, October 3, 1999 and September 27, 1998
Note 1: Summary of significant accounting policies
description of business
Starbucks Corporation and its subsidiaries (collectively “Starbucks” or the “Company”) purchases and
roasts high quality whole bean coffees and sells them, along with fresh, rich-brewed coffees, Italian-style
espresso beverages, cold blended beverages, a variety of pastries and confections, coffee-related
accessories and equipment and a line of premium teas, primarily through its Company-operated retail
stores. In addition to sales through its Company-operated retail stores, Starbucks sells coffee and tea
products through other channels of distribution (collectively, “specialty operations”). Starbucks, through
its joint venture partnerships, also produces and sells bottled Frappuccino®coffee drink and a line of
premium ice creams. The Company’s objective is to establish Starbucks as the most recognized and
respected brand in the world. To achieve this goal, the Company plans to continue to rapidly expand
its retail operations, grow its specialty operations and selectively pursue other opportunities to leverage
the Starbucks brand through the introduction of new products and the development of new
distribution channels.
principles of consolidation
The consolidated financial statements reflect the financial position and operating results of Starbucks,
its subsidiaries and investments in joint ventures in which the Company has significant control. All
significant intercompany transactions have been eliminated.
The Company has investments in unconsolidated joint ventures that are accounted for under the equity
method, as the Company does not exercise control over the operating and financial policies of such joint
ventures. The Company also has other investments that are accounted for under the cost method.
fiscal year-end
The Company’s fiscal year ends on the Sunday closest to September 30. The fiscal years ended October
1, 2000 and September 27, 1998 each included 52 weeks. The fiscal year ended October 3, 1999,
included 53 weeks.
estimates and assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in
the United States of America requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from these estimates.
cash and cash equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time
of purchase to be cash equivalents.
cash management
The Company’s cash management system provides for the reimbursement of all major bank disbursement
accounts on a daily basis. Checks issued but not presented for payment to the bank are reflected as “Checks
drawn in excess of bank balances” on the accompanying consolidated financial statements.
short-term investments
The Company’s investments consist primarily of investment-grade marketable debt and equity securities,
all of which are classified as trading or available-for-sale. Trading securities are recorded at fair value with
unrealized holding gains and losses included in earnings. Available-for-sale securities are recorded at fair
value, and unrealized holding gains and losses are recorded, net of tax, as a separate component of
accumulated other comprehensive income. Unrealized losses are charged against net earnings when a
decline in fair value is determined to be other than temporary. Realized gains and losses are accounted for
on the specific identification method. Purchases and sales are recorded on a trade date basis.
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