Starbucks 2000 Annual Report Download - page 7

business combinations
During fiscal 2000, Starbucks acquired the outstanding stock of Tympanum, Inc. (d/b/a “Hear Music”),
a music retailer, and of Coffee Partners Co. Ltd., the company licensed to operate Starbucks stores in
Thailand (“Thailand Operations”). The combined purchase price for these two acquisitions was $14.1
million. During fiscal 1999, Starbucks acquired the net assets of Tazo, L.L.C., a Portland, Oregon-
based tea company that produces premium tea products, and the stock of Pasqua Inc., a San Francisco,
California-based roaster and retailer of specialty coffee. The combined purchase price for these two
acquisitions was $16.5 million. All of the above acquisitions were accounted for under the purchase
method of accounting. Results of operations of the acquired companies are included on the accompanying
consolidated financial statements from the dates of acquisition. During fiscal 1998, Starbucks acquired
the United Kingdom-based Seattle Coffee Holdings Limited (“Seattle Coffee Company”) in a pooling-
of-interests transaction (the “Transaction”). In conjunction with the Transaction, Starbucks recorded
pre-tax charges of $8.9 million in direct merger costs and $6.6 million in other charges
associated with the integration of Seattle Coffee Company. The historical financial statements for the
periods prior to the Transaction were restated as though the companies had always been combined.
results of operations — fiscal 2000 compared to fiscal 1999
Systemwide Retail Store Sales
Systemwide retail store sales, which include net sales for both Company-operated and licensed retail
stores, were $2.3 billion for fiscal 2000 (52 weeks) an increase of 38% from $1.6 billion in fiscal
1999 (53 weeks), primarily due to the opening of an additional 1,035 stores. Systemwide retail store
sales provides a broader perspective of global brand sales; however, it excludes net revenues from non-
retail channels.
Revenues
Consolidated net revenues increased 29% to $2.2 billion for fiscal 2000, compared to $1.7 billion for
fiscal 1999. Retail revenues increased 28% to $1.8 billion from $1.4 billion. The increase in retail
revenues was due to the addition of new Company-operated stores and comparable store sales growth of
9%. The increase in comparable store sales resulted from a 5% increase in the number of transactions
and a 4% increase in the average dollar value per transaction. During fiscal 2000, the Company opened
417 stores in continental North America, 63 stores in the United Kingdom, eight in Thailand and two
in Australia. As of fiscal year-end, there were 2,446 Company-operated stores in continental North
America, 156 in the United Kingdom, 15 in Thailand and two in Australia. During fiscal 2001,
the Company expects to open at least 450 Company-operated stores in North America and 75 in
international markets.
Specialty revenues increased 35% to $346 million for fiscal 2000 from $257 million for fiscal 1999.
The increase was driven primarily by higher sales to licensees, grocery channel and food service accounts.
Licensees (including those in which the Company is a joint venture partner) opened 361 stores in
continental North America, of which over 280 stores related to the Company’s expansion into grocery
stores, and 184 stores in international markets. The Company ended the year with 530 licensed stores
in continental North America and 352 licensed stores in international markets. During fiscal 2001, the
Company expects to open at least 575 licensed stores.
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