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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED OCTOBER 1, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________ .
COMMISSION FILE NUMBER 0-20322
STARBUCKS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WASHINGTON 91-1325671
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
2401 UTAH AVENUE SOUTH, SEATTLE, WASHINGTON 98134
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (206) 447-1575
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, NO PAR VALUE PER SHARE
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, based upon the closing sale price of the Registrant's Common
Stock on December 15, 2000, as reported on the National Market tier of The
Nasdaq Stock Market, Inc. was $7,704,027,788.
As of December 15, 2000, there were 188,187,571 shares of the Registrant's
Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal
year ended October 1, 2000 have been incorporated by reference into Parts II and
IV of this Annual Report on Form 10-K. Portions of the definitive Proxy
Statement for the Registrant's Annual Meeting of Shareholders to be held on
March 20, 2001 have been incorporated by reference into Part III of this Annual
Report on Form 10-K.
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CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
Certain statements set forth in or incorporated by reference into this
Annual Report on Form 10-K, including anticipated store and market openings,
planned capital expenditures and trends in or expectations regarding the
Company's operations, constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Such statements are
based on currently available operating , financial and competitive information
and are subject to various risks and uncertainties. Actual future results and
trends may differ materially depending on a variety of factors, including, but
not limited to, coffee and other raw materials prices and availability,
successful execution of internal performance and expansion plans, the impact of
competition, the effect of legal proceedings and other risks detailed herein.
PART I
ITEM 1. BUSINESS
General. 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(R) 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.
Company-Operated Retail Stores. The Company's retail goal is to become the
leading retailer and brand of coffee in each of its target markets by selling
the finest quality coffee and related products and by providing superior
customer service, thereby building a high degree of customer loyalty. Starbucks
strategy for expanding its retail business is to increase its market share in
existing markets and to open stores in new markets where the opportunity exists
to become the leading specialty coffee retailer. In furtherance of this
strategy, the Company opened 490 new stores during the fiscal year ended October
1, 2000 ("fiscal 2000"). At fiscal year end, Starbucks had 2,619
Company-operated stores in 34 states, the District of Columbia and five Canadian
provinces (which comprise the Company-operated North American retail
operations), as well as the United Kingdom, Thailand and Australia (which
comprise the Company-operated international retail operations). Company-operated
retail stores accounted for approximately 84% of net revenues during fiscal
2000. The Company intends to finance additional growth in the number of
Company-operated retail stores with cash flow from operations.
Starbucks retail stores are typically clustered in high-traffic,
high-visibility locations. Because the Company can vary the size and format of
its stores, Starbucks stores are located in a variety of settings, including
downtown and suburban retail centers, office buildings, supermarket foyers and
university campuses. While the Company selectively locates stores in suburban
malls, it focuses on stores that have convenient access for pedestrians and
drivers.
All Starbucks stores offer a choice of regular and decaffeinated coffee
beverages, including at least one "coffee of the day," a broad selection of
Italian-style espresso beverages, cold blended beverages, a selection of teas
and distinctively packaged, roasted whole bean coffees. Starbucks stores also
offer a selection of fresh pastries and other food items, sodas, juices, and
coffee-making equipment and accessories. Each Starbucks store varies its product
mix depending upon the size of the store and its location. Larger stores carry a
broad selection of the Company's whole bean coffees in various sizes and types
of packaging, as well as an assortment of coffee and espresso-making equipment
and accessories such as coffee grinders, coffee makers, espresso machines,
coffee filters, storage containers, travel tumblers and mugs. Smaller Starbucks
stores and kiosks typically sell a full line of coffee beverages, a more limited
selection of whole bean coffees and a few
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accessories such as travel tumblers and logo mugs. Approximately 15% of
Starbucks stores carry a selection of "grab and go" sandwiches and salads.
During fiscal 2000, the Company's retail sales mix by product type was
approximately 73% handcrafted beverages, 14% food items, 8% whole bean coffees,
and 5% coffee-making equipment and accessories.
Specialty Operations. Starbucks specialty operations strive to develop the
Starbucks brand outside the Company-operated retail store environment through a
number of channels. Starbucks strategy for expanding its specialty operations is
to reach customers where they work, travel, shop and dine by establishing
relationships with prominent third parties who share Starbucks values and
commitment to quality. These relationships take various forms, including retail
store licensing agreements, wholesale accounts, grocery channel licensing
agreements and joint ventures. Starbucks specialty operations also include
direct-to-consumer marketing channels. In certain licensing situations, the
licensee is a joint venture in which Starbucks has an equity ownership interest.
During fiscal 2000, specialty revenues (which include royalties and fees from
licensees as well as product sales) accounted for approximately 16% of the
Company's net revenues.
North American Retail Store Licensing. Although the Company does not
generally relinquish operational control of its retail stores in North
America, in situations in which a master concessionaire or another company
controls or can provide improved access to desirable retail space, the
Company may consider licensing its operations. As part of these
arrangements, Starbucks receives license fees and royalties and sells
coffee and related products for resale in the licensed locations. Employees
working in the licensed locations must follow Starbucks detailed
store-operating procedures and attend training classes similar to those
given to Starbucks store managers and employees. As of October 1, 2000, the
Company had 530 licensed stores in continental North America.
International Retail Store Licensing. Starbucks retail stores located
outside of North America, the United Kingdom, Thailand and Australia are
operated through a number of joint venture and licensing arrangements with
prominent retailers. During fiscal 2000, the Company expanded its
international presence by opening 184 new international licensed stores,
including the first stores in Lebanon, the United Arab Emirates, Qatar,
Hong Kong and Shanghai. At fiscal year end, the Company had 154 stores in
Japan, 47 in Taiwan, 28 in China, 28 in Singapore, 27 in the Philippines,
20 in Hawaii, 15 in New Zealand, 14 in Malaysia, six in South Korea, five
in the United Arab Emirates, four in Kuwait, three in Lebanon, and one in
Qatar.
Wholesale Accounts. Starbucks sells whole bean and ground coffees to
several types of wholesale accounts, including office coffee distributors
and institutional foodservice management companies that service business,
industry, education and healthcare accounts, and hotels, airlines and
restaurants.
Grocery Channel Licensing. In fiscal 1998, Starbucks entered into a
long-term licensing agreement with Kraft Foods, Inc. ("Kraft") to
accelerate the growth of the Starbucks brand into the grocery channel in
the United States. Pursuant to such agreement, Kraft manages all
distribution, marketing, advertising and promotions for Starbucks whole
bean and ground coffee in grocery, warehouse club and mass merchandise
stores. By the end of fiscal 2000, the Company's whole bean and ground
coffees were available throughout the United States in approximately 16,000
supermarkets.
Joint Ventures. The Company has two non-retail domestic 50-50 joint
ventures. The North American Coffee Partnership, a joint venture with the
Pepsi-Cola Company, a division of PepsiCo, Inc., was formed in fiscal 1994
to develop and distribute ready-to-drink coffee-based products. By the end
of fiscal 2000, the joint venture was distributing bottled Frappuccino
coffee drink to approximately 250,000 supermarkets, convenience and drug
stores and other locations throughout the United States and Canada. The
Company formed a joint venture with Dreyer's Grand Ice Cream, Inc. in
fiscal 1996 to develop and distribute Starbucks premium coffee ice creams.
By the end of fiscal 2000, the joint venture was distributing a variety of
ice cream and novelty products to over 21,000 supermarkets throughout the
United States. (See Note 6 to the Company's consolidated financial
statements, "Joint Ventures," incorporated by reference to the Company's
Fiscal 2000 Annual Report to Shareholders in Item 8 of this Form 10-K.)
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Direct-to-Consumer Marketing. The Company makes fresh Starbucks coffee
and coffee-related products conveniently available via mail order and
on-line. Starbucks publishes and distributes a mail order catalog that
offers its coffees, certain food items and select coffee-making equipment
and accessories, and the Company maintains a web site at www.starbucks.com
with an on-line store that allows customers to browse for and purchase
coffee, gifts and other items via the Internet. Management believes that
the Company's direct-to-consumer operations support its retail store
expansion into new markets and reinforce brand recognition in existing
markets.
Product Supply. Starbucks is committed to selling only the finest whole
bean coffees and coffee beverages. To ensure compliance with its rigorous coffee
standards, Starbucks controls it coffee purchasing, roasting and packaging, and
the distribution of coffee to its retail stores. The Company purchases green
coffee beans for its many blends and single origin coffees from coffee-producing
regions around the world and custom roasts them to its exacting standards.
The supply and price of coffee are subject to significant volatility.
Although most coffee trades in the commodity market, coffee of the quality
sought by the Company tends to trade on a negotiated basis at a substantial
premium above commodity coffee prices, depending upon the supply and demand at
the time of purchase. Supply and price can be affected by multiple factors in
the producing countries, including weather, political and economic conditions.
In addition, green coffee prices have been affected in the past, and may be
affected in the future, by the actions of certain organizations and associations
that have historically attempted to influence commodity prices of green coffee
through agreements establishing export quotas or restricting coffee supplies
worldwide.
The Company depends upon its relationship with outside trading companies
and exporters for its supply or green coffee. To secure an adequate supply and
to fix costs for future periods, the Company routinely enters into fixed-price
purchase commitments for future deliveries of coffee. As of October 1, 2000, the
Company had approximately $84 million in fixed-price purchase commitments which,
together with existing inventory, is expected to provide an adequate supply of
green coffee for the majority of fiscal 2001. The Company believes, based on
relationships established with its suppliers in the past, that the risk of
non-delivery on such purchase commitments is remote. There can be no assurance
that these activities will successfully protect the Company against the risks of
higher coffee prices or that such activities will not result in the Company
having to pay substantially more for its coffee supply than it would have been
required to pay absent such activities.
In addition to coffee, the Company also purchases significant amounts of
dairy products to support the needs of its retail stores. Fluid milk
requirements are purchased from local processors and distributors to ensure
quality and reliable service. Dairy prices vary throughout the year as supply
and demand fluctuate and are subject to additional changes due to government
regulations. The Company obtains competitive prices through a combination of
competitive bidding and negotiations with its suppliers.
The Company also purchases a broad range of paper and plastic products,
such as paper cups, plastic cold cups, hot cup lids, napkins, straws, shopping
bags and corrugated paper boxes from several companies to support the needs of
its retail stores as well as its manufacturing and distribution operations. The
cost of these materials are somewhat dependent upon commodity paper and plastic
resin costs, but the Company believes it mitigates the effect of short-term raw
material price increases through strategic relationships with key suppliers.
Products other than whole bean coffees and coffee beverages sold in
Starbucks retail stores are obtained through a number of different channels.
Specialty foods, such as fresh pastries and lunch items, are generally purchased
from both regional and local sources based on quality and price. Coffee-making
equipment, such as drip, vacuum and french press coffee makers, espresso
machines and coffee grinders, are generally purchased directly from their
manufacturers for resale. Coffee-related accessories, including items bearing
the Company's logos and trademarks, are produced and distributed through
contracts with a number of different vendors.
Competition. The Company's primary competitors for coffee beverage sales
are restaurants, coffee shops, and street carts. In almost all markets in which
the Company does business there are numerous
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competitors in the specialty coffee beverage business, and management expects
this to continue. Although competition in the beverage market is currently
fragmented, a major competitor with substantially greater financial, marketing
and operating resources than the Company could enter this market at any time and
compete directly against the Company.
The Company's whole bean coffees compete directly against specialty coffees
sold at retail through supermarkets, specialty retailers, and a growing number
of specialty coffee stores. Both the Company's whole bean coffees and its coffee
beverages compete indirectly against all other coffees on the market. The
Company believes that its customers choose among retailers primarily on the
basis of product quality, service and convenience, and, to a lesser extent, on
price.
Management believes that supermarkets are the most competitive distribution
channel for specialty whole bean coffee, in part because supermarkets offer
customers a variety of choices without having to make a separate trip to a
specialty coffee store. A number of nationwide coffee manufacturers are
distributing premium coffee products in supermarkets that may serve as
substitutes for the Company's coffees. Regional specialty coffee companies also
sell whole bean coffees in supermarkets.
In addition to the competition generated by supermarket sales of coffee,
Starbucks competes for whole bean coffee sales with franchise operators and
independent specialty coffee stores. In virtually every major metropolitan area
where Starbucks operates and expects to expand, there are local or regional
competitors with substantial market presence in the specialty coffee business.
Starbucks specialty operations also face significant competition from
established wholesale and mail order suppliers, some of whom have greater
financial and marketing resources than the Company.
In addition, the Company faces intense competition from both restaurants
and other specialty retailers for suitable sites for new stores and qualified
personnel to operate both new and existing stores. There can be no assurance
that Starbucks will be able to continue to secure adequate sites at acceptable
rent levels or that the Company will be able to attract a sufficient number of
qualified workers.
Patents, Trademarks, Copyrights and Domain Names. The Company owns and/or
has applied to register numerous trademarks and service marks in the United
States, Canada and in more than 125 additional countries throughout the world.
Rights to the trademarks and service marks in the United States are generally
held by Starbucks U.S. Brands Corporation, a wholly-owned subsidiary of the
Company, and are used by the Company under license. Some of the Company's
trademarks, including "Starbucks," the Starbucks logo and "Frappuccino," are of
material importance to the Company. Trademarks are generally valid as long as
they are in use and/or their registrations are properly maintained, and they
have not been found to have become generic. Trademark registrations can
generally be renewed indefinitely so long as the marks are in use.
The Company also owns numerous copyrights for its product packaging,
promotional materials, in-store graphics and training materials, among other
things. The Company also holds patents on certain products, systems and designs.
In addition, the Company has registered and maintains numerous Internet domain
names, including "Starbucks.com" and "Starbucks.net." While valuable, individual
copyrights, patents and domain names currently held by the Company are not
viewed as material to the Company's business.
Research and Development. The Company's research and development efforts
are led by food scientists, engineers, chemists and culinarians in the Technical
Support Services and Development department who are responsible for the
technical development of food and beverage products and new equipment. Recent
development efforts have resulted in successful flavor line extensions for latte
beverages, Frappuccino blended beverages and new items for the Company's morning
pastry and lunch lines. The department also introduced improvements in base
ingredients to aid in the distribution of products to international markets and
formulation changes to tea-based beverages. The Company spent approximately $4.0
million during fiscal 2000 on technical research and development activities, in
addition to customary product testing and product and process improvements in
all areas of the Company's business.
Seasonality and Quarterly Results. The Company's business is subject to
seasonal fluctuations. Significant portions of the Company's net revenues and
profits are realized during the first quarter of the Company's fiscal year that
includes the December holiday season. In addition, quarterly results are
affected by the timing
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of the opening of new stores, and the Company's rapid growth may conceal the
impact of other seasonal influences. Because of the seasonality of the Company's
business, results for any quarter are not necessarily indicative of the results
that may be achieved for the full fiscal year.
Employees. As of October 1, 2000, the Company employed approximately 47,000
individuals, approximately 43,000 in retail stores and regional offices and the
remainder in the Company's administrative, specialty, real estate, roasting, and
warehousing operations. At fiscal year end, employees at 12 of the Company's
stores and a group of maintenance mechanics and technicians at one roasting
plant were represented by unions. Starbucks has entered into a labor agreement
governing such stores that extends until July 2001 and is currently in
negotiations with the union representing the roasting plant employees. The
Company believes that its current relations with its employees are good.
ITEM 2. PROPERTIES
Starbucks currently operates three roasting and distribution
facilities -- one in the Seattle, Washington area, one in East Manchester
Township, York County, Pennsylvania and a smaller facility in London, England.
In the Seattle area, the Company owns a roasting plant and distribution facility
of approximately 305,000 square feet and leases two warehouse facilities
totaling approximately 200,000 square feet in Kent, Washington (the "Kent
Plant"). The Company also owns a 365,000 square foot roasting and distribution
facility that it previously had leased in York County, Pennsylvania (the "York
Plant"). The Company has an option to purchase an additional parcel of land
adjacent to the York Plant until August 2001. In connection with the purchase of
the York Plant, the Company assumed loans totaling approximately $7.7 million
incurred in connection with its development. In addition, the Company leases a
small roasting and storage facility in London, England that supports its
operations in the United Kingdom. The lease for this facility expires in 2002
unless extended by the parties.
The Company leases approximately 510,000 square feet of a building located
in Seattle, Washington for administrative offices and has options to lease
approximately 40,000 additional square feet in such building. The Company also
leases approximately 38,000 square feet in a building in Seattle, Washington
pursuant to a lease extendable through June 2001 (the "Resource Center"). The
Company owns 2.36 acres (102,800 square feet) of undeveloped land near its
administrative offices and adjacent to the Resource Center, which is used for
parking.
As of October 1, 2000, Starbucks operated a total of 2,619 retail stores.
All Starbucks stores are located in leased premises. The Company also leases
space in approximately 75 additional locations for regional, district and other
administrative offices, training facilities and storage, not including certain
seasonal retail storage locations.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to various legal proceedings arising in the ordinary
course of its business, but is not currently a party to any legal proceeding
which the Company believes will have a material adverse effect on the financial
position or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal year 2000.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information required by this item is incorporated herein by reference
to the section entitled "Shareholder Information" in the Company's Fiscal 2000
Annual Report to Shareholders.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated herein by reference
to the section entitled "Selected Financial Data" in the Company's Fiscal 2000
Annual Report to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item is incorporated herein by reference
to the section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's Fiscal 2000 Annual Report
to Shareholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is incorporated herein by reference
to the section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Financial Risk Management" in the
Company's Fiscal 2000 Annual Report to Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated herein by reference
to the Consolidated Financial Statements and the notes thereto in the Company's
Fiscal 2000 Annual Report to Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the directors of the Company and compliance with
Section 16(a) of the Securities Exchange Act of 1934, as amended, is
incorporated herein by reference to the sections entitled "Proposal
1 -- Election of Directors" and "Executive Compensation -- Section 16(a)
Beneficial Ownership Reporting Compliance" in the Company's definitive Proxy
Statement for the Annual Meeting of Shareholders to be held on March 20, 2001
(the "Proxy Statement"). The Company intends to file the Proxy Statement within
120 days after the end of its fiscal year.
The executive officers of the Company, each of whom serves a one-year term
and until his or her successor is elected and qualified, are as follows:
EXECUTIVE
NAME AGE POSITION OFFICER SINCE
---- --- -------- -------------
Howard Schultz....................... 47 chairman of the Board of Directors and chief 1985
global strategist
Orin C. Smith........................ 58 director, president and chief executive 1990
officer
Paul D. Davis........................ 43 president, North America 1999
Peter Maslen......................... 48 president, Starbucks Coffee International, 1999
Inc.
Michael Casey........................ 55 executive vice president, chief financial 1995
officer and chief administrative officer
Eduardo R. (Ted) Garcia.............. 53 executive vice president, Supply Chain and 1995
Coffee Operations
Shelley B. Lanza..................... 44 executive vice president, Human Resources, 1995
Law and Corporate Affairs and Corporate
Social Responsibility, general counsel and
secretary
Deidra Wager......................... 45 executive vice president, Retail 1993
Wanda Herndon........................ 48 senior vice president, Worldwide Public 1996
Affairs
Darren Huston........................ 34 senior vice president, New Ventures 2000
HOWARD SCHULTZ is the founder of the Company and has been chairman of the
board since its inception in 1985. Mr. Schultz served as chief executive officer
from 1985 until June 2000, when he transitioned into the role of chief global
strategist. From 1985 to June 1994, Mr. Schultz was also the Company's
president. From September 1982 to December 1985, Mr. Schultz was the director of
Retail Operations and Marketing for Starbucks Coffee Company, a predecessor to
the Company; and from January 1986 to July 1987, he was the chairman of the
board, chief executive officer and president of Il Giornale Coffee Company, a
predecessor to the Company.
ORIN C. SMITH joined the Company in 1990 and has served as president and
chief executive officer of the Company since June 2000. From June 1994 to June
2000, Mr. Smith served as the Company's president and chief operating officer.
Prior to June 1994, Mr. Smith served as the Company's vice president and chief
financial officer and later, as its executive vice president and chief financial
officer.
PAUL D. DAVIS joined Starbucks in March 1999 as president of Consumer
Products and was appointed president, Retail North America in November 1999. In
January 2000, Mr. Davis was promoted to president, North American Operations and
in November 2000 his title was changed to president, North America. Prior to
joining Starbucks, Mr. Davis worked with Frito-Lay, a division of PepsiCo, Inc.
for 14 years where he held several sales, marketing and general management
positions. Most recently, he served as president of Frito-Lay's Canadian
division. Prior to joining Frito-Lay, Mr. Davis held various positions with
Procter & Gamble.
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PETER MASLEN joined Starbucks in August 1999 as president, Starbucks Coffee
International, Inc. Prior to joining Starbucks, Mr. Maslen served in various
executive positions with Mars Inc., PepsiCo, Inc. and most recently Tricon
Global Restaurants from 1992 to 1999, including most recently serving as the
Senior Vice President and General Manager of its Central Europe division.
MICHAEL CASEY joined Starbucks in August 1995 as senior vice president and
chief financial officer and was promoted to executive vice president, chief
financial officer and chief administrative officer in September 1997. Prior to
joining Starbucks, Mr. Casey served as executive vice president and chief
financial officer of Family Restaurants, Inc. from its inception in 1986. During
his tenure there, he also served as a director from 1986 to 1993, and as
president and chief executive officer of its El Torito Restaurants, Inc.
subsidiary from 1988 to 1993.
EDUARDO R. (TED) GARCIA joined Starbucks in April 1995 as senior vice
president, Supply Chain Operations and was promoted to executive vice president,
Supply Chain and Coffee Operations in September 1997. From May 1993 to April
1995, Mr. Garcia was an executive for Gemini Consulting. From January 1990 until
May 1993, he was the vice president of Operations Strategy for Grand
Metropolitan PLC, Food Sector.
SHELLY B. LANZA joined Starbucks in June 1995 as senior vice president, Law
and Corporate Affairs and general counsel and was promoted to executive vice
president, Human Resources, Law and Corporate Affairs and Corporate Social
Responsibility, general counsel and secretary in March 2000. From 1986 to 1995,
Ms. Lanza served as vice president and general counsel of Honda of America
Manufacturing, Inc. From 1982 to 1986, Ms. Lanza practiced law at the law firm
of Vorys, Sater, Seymour and Pease in Columbus, Ohio.
DEIDRA WAGER joined Starbucks in 1992 and served as the Company's senior
vice president, Retail Operations from August 1993 to September 1997 when she
was promoted to executive vice president, Retail. In March 1999, Ms. Wager moved
to Tokyo, Japan to serve as a consultant to Starbucks Coffee International, Inc.
and work with Starbucks Coffee Japan Limited. Prior to joining Starbucks Ms.
Wager held several operations with Taco Bell(R), Inc. from 1988 to 1992.
WANDA HERNDON joined Starbucks in July 1995 as vice president,
Communications and Public Affairs and was promoted to senior vice president,
Communications and Public Affairs (now known as Worldwide Public Affairs) in
November 1996. From February 1990 to June 1995, Ms. Herndon held several
communications management positions at DuPont Company. From November 1978 to
February 1990, Ms. Herndon held several public affairs and marketing
communications positions at the Dow Chemical Company.
DARREN HUSTON joined Starbucks in June 1998 as vice president, Retail
Strategy and New Business and was promoted to senior vice president, New
Ventures in March 2000. From 1994 to 1998, Mr. Huston worked at McKinsey &
Company and was a leader in McKinsey's strategy and marketing practices.
There are no family relationships between any directors or executive
officers of the Company.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to the
section entitled "Executive Compensation" in the Company's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference to the
section entitled "Beneficial Ownership of Common Stock" in the Company's Proxy
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference to the
section entitled "Executive Compensation -- Certain Transactions" in the
Company's Proxy Statement.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this Annual Report on
Form 10-K:
1. Financial Statements.
The following financial statements are incorporated by reference in
Part II, Item 8 of this Annual Report on Form 10-K:
Consolidated Balance Sheets as of October 1, 2000 and October 3,
1999;
Consolidated Statements of Earnings for the fiscal years ended
October 1, 2000, October 3, 1999 and September 27, 1998;
Consolidated Statements of Cash Flows for the fiscal years ended
October 1, 2000, October 3, 1999 and September 27, 1998
Consolidated Statements of Shareholders' Equity for the fiscal years
ended October 1, 2000, October 3, 1999 and September 27, 1998;
Notes to Consolidated Financial Statements; and
Independent Auditors' Report.
2. Financial Statement Schedules.
Financial statement schedules are omitted because they are not
required or are not applicable, or the required information is provided in
the consolidated financial statements or notes thereto described in Item
14(a)(1) above.
3. Exhibits.
The Exhibits listed below and on the accompanying Index to Exhibits
immediately following the signature page hereto are filed as part of, or
incorporated by reference into, this Annual Report on Form 10-K.
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
3.1 Restated Articles of Incorporation of Starbucks Corporation
(incorporated herein by reference to Exhibit 3.1 to the
Company's Form 10-Q for the fiscal quarter ended March 31,
1996, filed with the SEC on May 15, 1996)
3.1.1 Amendment dated November 22, 1995 to the Restated Articles
of Incorporation of Starbucks Corporation (incorporated
herein by reference to Exhibit 3.1.1 to the Company's Form
10-Q for the fiscal quarter ended March 31, 1996, filed with
the SEC on May 15, 1996)
3.1.2 Amendment dated March 18, 1996 to the Restated Articles of
Incorporation of Starbucks Corporation (incorporated herein
by reference to Exhibit 3.1.2 to the Company's Form 10-Q for
the quarterly period ended March 31, 1996, filed with the
SEC on May 15, 1996)
3.1.3 Amendment dated March 4, 1999 to the Restated Articles of
Incorporation of Starbucks Corporation (incorporated herein
by reference to Exhibit 3(i) to the Company's Form 10-Q for
the quarterly period ended March 28, 1999, filed with the
SEC on May 12, 1990)
3.2 Amended and Restated Bylaws of Starbucks Corporation
10.1 Starbucks Corporation Amended and Restated Key Employee
Stock Option Plan -- 1994 (incorporated herein by reference
to Appendix A to the Company's Proxy Statement filed with
the SEC on January 11, 2000)*
10.2 Starbucks Corporation Amended and Restated 1989 Stock Option
Plan for Non-Employee Directors (incorporated herein by
reference to Appendix A to the Company's Proxy Statement
filed with the SEC on January 13, 1999)*
9
11
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
10.3 Starbucks Corporation 1991 Company-Wide Stock Option Plan,
as amended and restated through August 28, 2000*
10.3.1 Starbucks Corporation 1991 Company-Wide Stock Option
Plan -- Rules of the UK Sub-Plan, as amended and restated
through August 28, 2000*
10.4 Starbucks Corporation Employee Stock Purchase Plan -- 1995,
as amended and restated through June 30, 2000*
10.5 Industrial Lease, dated March 31, 1989, between Starbucks
Corporation and the City of Seattle (successor in interest
to David A. Sabey and Sandra L. Sabey)(incorporated herein
by reference to Exhibit 10.4 to the Company's Registration
Statement No. 33-47951 on Form S-1, filed with the SEC on
May 15, 1992)
10.6 Office Lease, dated as of July 15, 1993, between First and
Utah Street Associates, L.P. and Starbucks Corporation
(incorporated herein by reference to Exhibit 10.17 to the
Company's Form 10-K for the fiscal year ended October 3,
1993, filed with the SEC on December 30, 1993)
10.6.1 Second Amendment to Office Lease, dated as of January 1,
1995, between First and Utah Street Associates, L.P. and
Starbucks Corporation (incorporated herein by reference to
the Company's Registration Statement No. 33-93974 on Form
S-3, filed with the SEC on June 27, 1995)
10.6.2 Third Amendment to Office Lease, dated as of September 30,
1995, between First and Utah Street Associates, L.P. and
Starbucks Corporation (incorporated herein by reference to
Exhibit 10.19 to the Company's Form 10-K for the fiscal year
ended October 1, 1995, filed with the SEC on December 28,
1995)
10.6.3 Fourth Amendment to Office Lease dated as of October 31,
1997 between First and Utah Street Associates, L.P. and
Starbucks Corporation
10.6.4 Fifth Amendment to Office Lease dated as of March 5, 1998,
between First and Utah Street Associates, L.P. and Starbucks
Corporation
10.6.5 Sixth Amendment to Office Lease dated as of January 4, 1999,
between First and Utah Street Associates, L.P. and Starbucks
Corporation
10.7 Development Agreement, dated as of February 11, 1994,
between Starbucks Corporation and Host International, Inc.
(incorporated herein by reference to Exhibit 10.18 to the
Company's Form 10-K for the fiscal year ended October 2,
1994, filed with the SEC on December 23, 1994)
10.7.1 Development Agreement Addendum regarding Specialty Sandwich
Program dated January 3, 1998 between Starbucks Corporation
and Host International, Inc.
10.7.2 Development Agreement Addendum dated March 2, 1998 between
Starbucks Corporation and Host International, Inc.
10.7.3 Development Agreement Addendum dated April 16, 1998 between
Starbucks Corporation and Host International, Inc.
10.7.4 Development Agreement Addendum dated May 1, 1998 between
Starbucks Corporation and Host International, Inc.
10.8 Special Warranty Deed, dated March 7, 1994, between Kent
North Corporate Park, as grantor and Starbucks Corporation,
as grantee (incorporated herein by reference to Exhibit
10.14 to the Company's Form 10-K for the fiscal year ended
October 2, 1994, filed with the SEC on December 23, 1994)
10.9 Joint Venture and Partnership Agreement, dated August 10,
1994, between Pepsi-Cola Company, a division of PepsiCo,
Inc., and Starbucks New Venture Company (incorporated herein
by reference to Exhibit 10 to the Company's Form 10-Q for
the quarterly period ended July 3, 1994, filed with the SEC
on August 16, 1994)
10
12
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
10.10 Lease, dated August 22, 1994, between York County Industrial
Development Corporation and Starbucks Corporation
(incorporated herein by reference to Exhibit 10 to the
Company's Form 10-Q for the quarterly period ended July 2,
1995, filed with the SEC on August 15, 1995)
10.14 Starbucks Corporation Executive Management Bonus Plan
(incorporated herein by reference to Exhibit 10.15 to the
Company's Form 10-K for the fiscal year ended October 3,
1999)*
10.15 Starbucks Corporation Management Deferred Compensation Plan
(incorporated herein by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-8 filed with the
SEC on January 1, 1998)*
10.16 Starbucks Corporation 1997 Deferred Stock Plan (incorporated
herein by reference to Exhibit 10.17 to the Company's Annual
Report on Form 10-K for the fiscal year ended October 3,
1999)*
13 Portions of the Fiscal 2000 Annual Report to Shareholders
21 Subsidiaries of the Registrant
23 Independent Auditors' Consent
27 Financial Data Schedule
- ---------------
* Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K on August 16, 2000
announcing the write-down of its entire investment in living.com Inc.
11
13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
STARBUCKS CORPORATION
By: /s/ HOWARD SCHULTZ
------------------------------------
Howard Schultz
chairman of the Board of Directors
and chief global strategist
December 15, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ HOWARD SCHULTZ chairman of the board of December 15, 2000
- ------------------------------------------------ directors and chief global
Howard Schultz strategist
/s/ ORIN C. SMITH director, president and chief December 18, 2000
- ------------------------------------------------ executive officer
Orin C. Smith
/s/ MICHAEL CASEY executive vice president, chief December 15, 2000
- ------------------------------------------------ financial officer and chief
Michael Casey administrative officer (principal
financial officer and principal
accounting officer)
/s/ BARBARA BASS director December 10, 2000
- ------------------------------------------------
Barbara Bass
/s/ HOWARD BEHAR director December 10, 2000
- ------------------------------------------------
Howard Behar
/s/ CRAIG J. FOLEY director December 15, 2000
- ------------------------------------------------
Craig J. Foley
/s/ GREGORY B. MAFFEI director December 19, 2000
- ------------------------------------------------
Gregory B. Maffei
/s/ ARLEN I. PRENTICE director December 15, 2000
- ------------------------------------------------
Arlen I. Prentice
/s/ JAMES G. SHENNAN, JR. director December 15, 2000
- ------------------------------------------------
James G. Shennan, Jr.
/s/ CRAIG E. WEATHERUP director December 14, 2000
- ------------------------------------------------
Craig E. Weatherup
12
14
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
3.1 Restated Articles of Incorporation of Starbucks Corporation
(incorporated herein by reference to Exhibit 3.1 to the
Company's Form 10-Q for the fiscal quarter ended March 31,
1996, filed with the SEC on May 15, 1996)
3.1.1 Amendment dated November 22, 1995 to the Restated Articles
of Incorporation of Starbucks Corporation (incorporated
herein by reference to Exhibit 3.1.1 to the Company's Form
10-Q for the fiscal quarter ended March 31, 1996, filed with
the SEC on May 15, 1996)
3.1.2 Amendment dated March 18, 1996 to the Restated Articles of
Incorporation of Starbucks Corporation (incorporated herein
by reference to Exhibit 3.1.2 to the Company's Form 10-Q for
the quarterly period ended March 31, 1996, filed with the
SEC on May 15, 1996)
3.1.3 Amendment dated March 4, 1999 to the Restated Articles of
Incorporation of Starbucks Corporation (incorporated herein
by reference to Exhibit 3(i) to the Company's Form 10-Q for
the quarterly period ended March 28, 1999, filed with the
SEC on May 12, 1990)
3.2 Amended and Restated Bylaws of Starbucks Corporation
10.1 Starbucks Corporation Amended and Restated Key Employee
Stock Option Plan -- 1994 (incorporated herein by reference
to Appendix A to the Company's Proxy Statement filed with
the SEC on January 11, 2000)*
10.2 Starbucks Corporation Amended and Restated 1989 Stock Option
Plan for Non-Employee Directors (incorporated herein by
reference to Appendix A to the Company's Proxy Statement
filed with the SEC on January 13, 1999)*
10.3 Starbucks Corporation 1991 Company-Wide Stock Option Plan,
as amended and restated through August 28, 2000*
10.3.1 Starbucks Corporation 1991 Company-Wide Stock Option
Plan -- Rules of the UK Sub-Plan, as amended and restated
through August 28, 2000*
10.4 Starbucks Corporation Employee Stock Purchase Plan -- 1995,
as amended and restated through June 30, 2000*
10.5 Industrial Lease, dated March 31, 1989, between Starbucks
Corporation and the City of Seattle (successor in interest
to David A. Sabey and Sandra L. Sabey)(incorporated herein
by reference to Exhibit 10.4 to the Company's Registration
Statement No. 33-47951 on Form S-1, filed with the SEC on
May 15, 1992)
10.6 Office Lease, dated as of July 15, 1993, between First and
Utah Street Associates, L.P. and Starbucks Corporation
(incorporated herein by reference to Exhibit 10.17 to the
Company's Form 10-K for the fiscal year ended October 3,
1993, filed with the SEC on December 30, 1993)
10.6.1 Second Amendment to Office Lease, dated as of January 1,
1995, between First and Utah Street Associates, L.P. and
Starbucks Corporation (incorporated herein by reference to
the Company's Registration Statement No. 33-93974 on Form
S-3, filed with the SEC on June 27, 1995)
10.6.2 Third Amendment to Office Lease, dated as of September 30,
1995, between First and Utah Street Associates, L.P. and
Starbucks Corporation (incorporated herein by reference to
Exhibit 10.19 to the Company's Form 10-K for the fiscal year
ended October 1, 1995, filed with the SEC on December 28,
1995)
10.6.3 Fourth Amendment to Office Lease dated as of October 31,
1997 between First and Utah Street Associates, L.P. and
Starbucks Corporation
10.6.4 Fifth Amendment to Office Lease dated as of March 5, 1998,
between First and Utah Street Associates, L.P. and Starbucks
Corporation
10.6.5 Sixth Amendment to Office Lease dated as of January 4, 1999,
between First and Utah Street Associates, L.P. and Starbucks
Corporation
15
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
10.7 Development Agreement, dated as of February 11, 1994,
between Starbucks Corporation and Host International, Inc.
(incorporated herein by reference to Exhibit 10.18 to the
Company's Form 10-K for the fiscal year ended October 2,
1994, filed with the SEC on December 23, 1994)
10.7.1 Development Agreement Addendum regarding Specialty Sandwich
Program dated January 3, 1998 between Starbucks Corporation
and Host International, Inc.
10.7.2 Development Agreement Addendum dated March 2, 1998 between
Starbucks Corporation and Host International, Inc.
10.7.3 Development Agreement Addendum dated April 16, 1998 between
Starbucks Corporation and Host International, Inc.
10.7.4 Development Agreement Addendum dated May 1, 1998 between
Starbucks Corporation and Host International, Inc.
10.8 Special Warranty Deed, dated March 7, 1994, between Kent
North Corporate Park, as grantor and Starbucks Corporation,
as grantee (incorporated herein by reference to Exhibit
10.14 to the Company's Form 10-K for the fiscal year ended
October 2, 1994, filed with the SEC on December 23, 1994)
10.9 Joint Venture and Partnership Agreement, dated August 10,
1994, between Pepsi-Cola Company, a division of PepsiCo,
Inc., and Starbucks New Venture Company (incorporated herein
by reference to Exhibit 10 to the Company's Form 10-Q for
the quarterly period ended July 3, 1994, filed with the SEC
on August 16, 1994)
10.10 Lease, dated August 22, 1994, between York County Industrial
Development Corporation and Starbucks Corporation
(incorporated herein by reference to Exhibit 10 to the
Company's Form 10-Q for the quarterly period ended July 2,
1995, filed with the SEC on August 15, 1995)
10.14 Starbucks Corporation Executive Management Bonus Plan
(incorporated herein by reference to Exhibit 10.15 to the
Company's Form 10-K for the fiscal year ended October 3,
1999)*
10.15 Starbucks Corporation Management Deferred Compensation Plan
(incorporated herein by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-8 filed with the
SEC on January 1, 1998)*
10.16 Starbucks Corporation 1997 Deferred Stock Plan (incorporated
herein by reference to Exhibit 10.17 to the Company's Annual
Report on Form 10-K for the fiscal year ended October 3,
1999)*
13 Portions of the Fiscal 2000 Annual Report to Shareholders
21 Subsidiaries of the Registrant
23 Independent Auditors' Consent
27 Financial Data Schedule
- ---------------
* Management contract or compensatory plan or arrangement.