Starbucks 2000 Annual Report Download - page 24

Note 7: Other investments
In fiscal 1999, the Company invested $20.3 million in living.com Inc. (“living.com”), an online furniture
retailer. Also in 1999, the Company established an alliance with Cooking.com, Inc. (“Cooking.com”), a
privately held web-based retailer of cookware, accessories and specialty foods and provider of information
about cooking. As part of this alliance, the Company made a $10.0 million investment in Cooking.com.
During fiscal 2000, the Company invested $25.0 million in Kozmo.com, an Internet-to-door delivery
service for food, entertainment and convenience items. Starbucks and Kozmo.com also entered into a
commercial agreement to provide in-store return boxes in Starbucks stores in exchange for cash, a
channel for selling the Company’s products and other marketing opportunities. In connection with this
agreement, Starbucks received a $15.0 million payment that is being recognized as revenue on a straight-
line basis over twelve months. The Company does not expect to continue recording revenue from the
current Kozmo.com relationship after February 2001.
During fiscal 2000, the Company determined that its investments in Internet-related companies had
suffered declines in value that were other than temporary. As a result, the Company recognized losses
totaling $52.0 million to reduce its investments in living.com, Cooking.com and Kozmo.com to their
aggregate fair value of $3.6 million as of October 1, 2000.
The Company also had various other investments recorded at their estimated aggregate fair value of $0.2
million as of October 1, 2000.
Note 8: Property, plant and equipment
Property, plant and equipment are recorded at cost and consist of the following (in thousands):
Oct 1, 2000 Oct 3, 1999
Land $ 5,084 $ 5,084
Building 19,795 19,795
Leasehold improvements 736,471 591,640
Roasting and store equipment 369,587 273,612
Furniture, fixtures and other 182,528 130,223
1,313,465 1,020,354
Less accumulated depreciation and amortization (446,403) (320,982)
867,062 699,372
Work in progress 63,697 60,917
Property, plant and equipment, net $ 930,759 $ 760,289
Note 9: Long-term debt
In September 1999, the Company purchased the land and building comprising its York County,
Pennsylvania roasting plant and distribution facility. The total purchase price was $12.9 million. In
connection with this purchase, the Company assumed loans totaling $7.7 million from the York County
Industrial Development Corporation. The remaining maturities of these loans range from 9 to 10 years,
with interest rates from 0.0% to 2.0%.
Scheduled principal payments on long-term debt are as follows (in thousands):
Fiscal year ending
2001 $ 685
2002 697
2003 710
2004 722
2005 735
Thereafter 3,619
Total principal payments $ 7,168
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