Starbucks 2010 Annual Report Download - page 49

STARBUCKS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fiscal Years ended October 3, 2010, September 27, 2009 and September 28, 2008
Note 1: Summary of Significant Accounting Policies
Description of Business
Starbucks purchases and roasts high-quality whole bean coffees and sells them, along with handcrafted coffee and
tea beverages and a variety of fresh food items, through its company-operated retail stores. We also sell coffee and
tea products and license our trademarks through other channels such as licensed stores, and through certain of our
licensees and equity investees, we produce and sell a variety of ready-to-drink beverages. All channels outside the
company-operated retail stores are collectively known as specialty operations. Additional details on the nature of our
business are in Item 1 of this 10-K.
In this 10-K, Starbucks Corporation (together with its subsidiaries) is referred to as “Starbucks,” the “Company,”
“we,” “us” or “our”.
We have three reportable operating segments: United States (“US”), International, and Global Consumer Products
Group (“CPG”).
Principles of Consolidation
The consolidated financial statements reflect the financial position and operating results of Starbucks, including
wholly owned subsidiaries and investees controlled by us. Investments in entities that we do not control, but have
the ability to exercise significant influence over operating and financial policies, are accounted for under the equity
method. Investments in entities in which we do not have the ability to exercise significant influence are accounted
for under the cost method. Intercompany transactions and balances have been eliminated.
Fiscal Year End
Our fiscal year ends on the Sunday closest to September 30. Fiscal year 2010 included 53 weeks, with the 53rd week
falling in the fourth fiscal quarter. Fiscal years 2009 and 2008 included 52 weeks.
Estimates and Assumptions
Preparing financial statements in conformity with accounting principles generally accepted in the United States of
America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses. Examples include, but are not limited to, estimates for asset and goodwill
impairments, stock-based compensation forfeiture rates, and future asset retirement obligations; assumptions
underlying self-insurance reserves; and the potential outcome of future tax consequences of events that have been
recognized in the financial statements. Actual results and outcomes may differ from these estimates and
assumptions.
Cash and Cash Equivalents
We consider all highly liquid instruments with a maturity of three months or less at the time of purchase to be cash
equivalents. We maintain cash and cash equivalent balances with financial institutions that exceed federally insured
limits. We have not experienced any losses related to these balances, and management believes its credit risk to be
minimal.
Cash Management
Our cash management system provides for the funding of all major bank disbursement accounts on a daily basis as
checks are presented for payment. Under this system, outstanding checks are in excess of the cash balances at certain
banks, which creates book overdrafts. Book overdrafts are presented as a current liability in accounts payable on the
consolidated balance sheets.
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