Strong Holiday Performance Drives 9% Comp
Growth in the U.S. and Americas, 8% Globally; Global Traffic up
4%
Consolidated Net Revenues Rise 12% to a Record
$5.4 Billion; Channel Development Revenues Jump 16%
Consolidated Operating Income up 16% to a
Record $1.1 Billion; GAAP EPS of $0.46; Non-GAAP EPS up 15% to a
Record $0.46
Dollars Loaded on Starbucks Cards Increase 18%
to a Record $1.9 Billion
Starbucks Corporation (NASDAQ: SBUX) today reported financial
results for its 13-week fiscal first quarter ended
December 27, 2015. Fiscal 2016 and fiscal 2015 GAAP results
include items which are excluded from non-GAAP results. Please
refer to the reconciliation of GAAP measures to non-GAAP measures
at the end of this release for more information.
Q1 Fiscal 2016 Highlights:
- Global comparable store sales increased
8%, including a 4% increase in traffic
- Americas comp store sales increased 9%,
including a 4% increase in traffic
- China/Asia Pacific comp store sales
increased 5%, driven by a 4% increase in traffic
- EMEA comp store sales increased 1%,
driven by a 1% increase in traffic
- Consolidated net revenues grew 12% over
Q1 FY15, to a record $5.4 billion
- Consolidated GAAP operating income
increased 16% over Q1 FY15, to a record $1.1 billion
- Non-GAAP operating income increased 15%
over Q1 FY15 non-GAAP, to a record $1.1 billion
- Consolidated GAAP operating margin
increased 60 basis points over Q1 FY15, to a Q1 record 19.7%
- Non-GAAP operating margin expanded 40
basis points over Q1 FY15 non-GAAP, to a Q1 record 19.9%
- GAAP EPS of $0.46 versus Q1 FY15 GAAP
EPS of $0.65
- Non-GAAP EPS increased 15% over Q1 FY15
non-GAAP, to a record $0.46
- Opened 528 net new stores in the
quarter globally, including a record 281 stores in China/Asia
Pacific and a record 79 stores in EMEA
- Channel Development revenues increased
16%; operating margin expanded 210 basis points and operating
income increased 23% over Q1 FY15
- Company served over 23 million more
customer occasions from its global comp store base - 18 million in
the U.S. - in Q1 over the prior year
- Record $1.9 billion loaded on Starbucks
Cards in the U.S. and Canada; 1 in 6 American adults received a
Starbucks Card over Holiday, up from 1 in 7 in Q1 FY15
- Membership in the company's My
Starbucks Rewards loyalty program increased 23%; the company now
has more than 11 million active members in the U.S.
“Starbucks record Q1 2016 financial and operating results,
highlighted by comp sales increases of 9% in the U.S., 8% globally,
another 4% increase in global traffic - and record performance from
our Channel Development segment - underscore the accelerating
strength and relevance of the Starbucks brand around the world,”
said Howard Schultz, Starbucks chairman and ceo. “Successful
retail, CPG, digital, mobile, loyalty, card and investment
strategies are combining to accelerate our revenue growth and drive
significant margin expansion and EPS leverage.”
“We’ve entered fiscal 2016 with another record-breaking quarter
and a continuation of the accelerating momentum we saw in our
business throughout 2015,” said Scott Maw, Starbucks cfo. “The
investments we are making in our people and our business are
driving record, industry leading operating and financial
performance and consistently strong comp growth, and are both
paying off today and setting us up for continued strong performance
into the future.”
First Quarter Fiscal 2016
Summary
Quarter Ended Dec 27, 2015 Comparable Store
Sales(1) Sales Growth Change in
Transactions Change in Ticket Consolidated(2) 8%
4% 4% Americas 9% 4% 5% CAP(2) 5% 4% 2% EMEA
1% 1% 0% (1) Includes only Starbucks company-operated
stores open 13 months or longer. (2) Beginning in December
of fiscal 2016, comparable store sales include the results of the
1,009 company-operated stores acquired as part of the acquisition
of Starbucks Japan in the first quarter of fiscal 2015.
Operating Results Quarter
Ended ($ in millions, except per share amounts)
Dec 27, 2015 Dec 28, 2014 Change
Net New Stores 528 512 16 Revenues $5,373.5 $4,803.2 12%
Operating Income $1,058.0 $915.5 16% Operating Margin 19.7% 19.1%
60 bps EPS $0.46 $0.65 (29)%
Consolidated net revenues were $5.4 billion in Q1 FY16, an
increase of 12% over Q1 FY15. The increase was primarily driven by
an 8% increase in global comparable store sales and the opening of
1,693 net new stores over the past 12 months.
Consolidated operating income grew 16% to $1,058.0 million in Q1
FY16, up from $915.5 million in Q1 FY15. Consolidated operating
margin expanded 60 basis points to 19.7%. The increase was
primarily due to sales leverage and was partially offset by
investments in our partners (employees) and digital platforms.
Q1 Americas Segment
Results
Quarter Ended
($ in millions)
Dec 27, 2015 Dec 28,
2014 Change Net New Stores 171 210 (39)
Revenues $3,726.2 $3,366.9 11% Operating Income $934.6 $817.5 14%
Operating Margin 25.1% 24.3% 80 bps
Net revenues for the Americas segment were $3.7 billion in Q1
FY16, an increase of 11% over Q1 FY15. The increase was driven by a
9% increase in comparable store sales and incremental revenues from
573 net new store openings over the past 12 months.
Operating income of $934.6 million in Q1 FY16 grew 14% versus
$817.5 million in Q1 FY15. Operating margin of 25.1% expanded 80
basis points due to sales leverage and savings in cost of sales,
primarily dairy, and was partially offset by investments in our
partners (employees) and digital platforms.
Q1 China/Asia Pacific Segment
Results
Quarter Ended
($ in millions)
Dec 27, 2015 Dec 28,
2014 Change Net New Stores 281 234 47
Revenues $653.6 $495.8 32% Operating Income $127.1 $108.3 17%
Operating Margin 19.4% 21.8% (240) bps
Net revenues for the China/Asia Pacific segment grew 32% over Q1
FY15 to $653.6 million in Q1 FY16. The increase was primarily
driven by incremental revenues from the acquisition of Starbucks
Japan during Q1 FY15. Also contributing were incremental revenues
from 885 net new store openings over the past 12 months and a 5%
increase in comparable store sales.
Operating income grew 17% over Q1 FY15 to $127.1 million in Q1
FY16. Operating margin declined 240 basis points to 19.4% primarily
due to the impact of our ownership change in Starbucks Japan, which
drove a 330 basis point decline. The remaining 90 basis point
expansion was primarily due to sales leverage and higher income
from our joint venture operations, and was partially offset by
increased store operating expenses related to higher compensation
and benefits.
Q1 EMEA Segment Results
Quarter Ended
($ in millions)
Dec 27, 2015 Dec 28,
2014 Change Net New Stores 79 58 21
Revenues $313.0 $333.3 (6)% Operating Income $48.1 $50.0 (4)%
Operating Margin 15.4% 15.0% 40 bps
Net revenues for the EMEA segment were $313.0 million in Q1
FY16, a 6% decrease versus Q1 FY15. The decrease was primarily due
to unfavorable foreign currency translation and the shift in the
portfolio towards more licensed stores. Partially offsetting the
decrease were incremental revenues from the opening of 263 net new
licensed stores over the past 12 months.
Operating income decreased 4% to $48.1 million in Q1 FY16, down
from $50 million in Q1 FY15. Operating margin expanded 40 basis
points to 15.4%, primarily driven by gains on the sales of certain
store assets in the region which were partially offset by higher
cost of sales in our licensed stores operations and lower sales
from our company-operated stores business.
Q1 Channel Development Segment
Results
Quarter Ended
($ in millions)
Dec 27, 2015 Dec 28,
2014 Change Revenues $512.1 $442.6 16%
Operating Income $193.3 $157.5 23% Operating Margin 37.7%
35.6% 210 bps
Net revenues for the Channel Development segment grew 16% over
Q1 FY15 to $512.1 million in Q1 FY16, primarily driven by increased
sales of premium single-serve products. Also contributing to the
increase were higher foodservice and packaged coffee sales.
Operating income of $193.3 million in Q1 FY16 increased 23%
compared to Q1 FY15. Operating margin increased 210 basis points to
37.7%, primarily driven by higher income from our North American
Coffee Partnership and leverage on cost of sales.
Q1 All Other Segments
Results
Quarter Ended
($ in millions)
Dec 27, 2015 Dec 28,
2014 Change Net New Stores (3) 10 (13)
Revenues $168.6 $164.6 2% Operating Income $5.9 $10.2
(42)%
Fiscal 2016 Targets
Starbucks fiscal year 2016 will include an extra week in the
fourth quarter, as fiscal 2016 is a 53-week year for the
company.
The company reiterates the following FY16 targets, unless
otherwise noted. FY16 targets are based on actual FY15 non-GAAP
results and projected FY16 non-GAAP results as noted. Projected
FY16 non-GAAP adjustments relate to the acquisition of Starbucks
Japan; please refer to the reconciliation of GAAP measures to
non-GAAP measures at the end of this release.
- Approximately 1,800 net new store
openings in the fiscal year:
- Americas: approximately 700, half
licensed
- China/Asia Pacific: approximately 900,
two-thirds licensed
- EMEA: approximately 200, primarily
licensed
- Full year consolidated revenue growth
of 10%+ on a 52 week basis, the 53rd week expected to add
approximately 2%
- Global comparable store sales growth
somewhat above mid-single digits
- FY16 operating margin is expected to
increase slightly versus prior year:
- Americas: expect moderate improvement
over prior year
- China/Asia Pacific: expected to be flat
to down slightly versus prior year
- EMEA: expected to approach 15%
- Channel Development: expect moderate
improvement versus prior year
- Expecting a consolidated tax rate
between 34% and 35%
- Full year FY16 earnings per share,
including the 53rd week in Q4 FY16:
- GAAP EPS in the range of $1.84 to
$1.86
- Non-GAAP EPS in the range of $1.87 to
$1.89
- Introduced - Q2 FY16 earnings
per share:
- GAAP EPS in the range of $0.37 to
$0.38
- Non-GAAP EPS in the range of $0.38 to
$0.39
- Capital expenditures of approximately
$1.4 billion
Company Updates
- The company elected Mary Dillon, CEO of
Ulta Beauty, to its Board of Directors on January 4; she will serve
on the Board’s Compensation and Management Development
Committee.
- Starbucks and long-time strategic
partner Hong Kong Maxim’s Group together opened the first Starbucks
store in Cambodia in Q1; the company also opened its first two
locations in Kazakhstan in the quarter, in collaboration with
strategic licensing partner Alshaya. The company now operates in 70
countries worldwide.
- In December, the company launched
Starbucks Delivery by Postmates, a pilot program in collaboration
with leading on-demand delivery service Postmates, where customers
can have Starbucks food or beverages delivered to them within
designated areas in Seattle.
- Starbucks extended its successful
Mobile Order & Pay program to Vancouver, B.C. in January,
allowing customers to pre-order their favorite beverages and food
in over 130 locations in the city.
- The company announced a number of new
market-leading initiatives in its China market - in addition to
existing pay and benefits programs - including a monthly housing
allowance subsidy and the Career Coffee Break (sabbatical)
benefit.
- Starbucks hosted the second
“Opportunity Fair and Forum” in the quarter, together with the
100,000 Opportunities Initiative in Phoenix where more than 500 job
offers were given to “opportunity youth” by the 25 companies in
attendance. In addition, Starbucks Canada committed 10 percent of
its store hires to opportunity youth and will further create
600 work placements for Non-Job-Ready Youth over the next three
years.
- The company announced an enhancement to
its Starbucks College Achievement Plan whereby partners who are
current or former members of the U.S. Armed Forces may extend 100
percent tuition reimbursement to a spouse or child through the
program.
- The company repurchased 4.5 million
shares of common stock in Q1 FY16; 48 million shares remain
available for purchase under current authorizations.
- The Board of Directors declared a cash
dividend of $0.20 per share, payable on February 19, 2016 to
shareholders of record as of February 4, 2016.
Conference Call
Starbucks will hold a conference call today at 2:00 p.m. Pacific
Time, which will be hosted by Howard Schultz, chairman and ceo;
Kevin Johnson, president and coo; Scott Maw, cfo; and Michael
Conway, president, Global Channel Development. The call will be
webcast and can be accessed at http://investor.starbucks.com. A replay of the
webcast will be available until end of day Saturday, February 20,
2016.
About Starbucks
Since 1971, Starbucks Coffee Company has been committed to
ethically sourcing and roasting high-quality arabica coffee. Today,
with stores around the globe, the company is the premier roaster
and retailer of specialty coffee in the world. Through our
unwavering commitment to excellence and our guiding principles, we
bring the unique Starbucks Experience to life for every customer
through every cup. To share in the experience, please visit us in
our stores or online at news.starbucks.com or www.starbucks.com.
Forward-Looking
Statements
This release contains forward-looking statements relating to
certain company initiatives, strategies and plans, as well as
trends in or expectations regarding our diversified business model,
the strength, momentum, health and potential of our business,
operations and brand, our innovation, growth and growth
opportunities and related investments, shareholder value, earnings
per share, revenues, operating margins, profitability, capital
expenditures, tax rate, anticipated costs related to the
integration of Starbucks Japan, comparable store sales and net new
stores. These forward-looking statements are based on currently
available operating, financial and competitive information and are
subject to a number of significant risks and uncertainties. Actual
future results may differ materially depending on a variety of
factors including, but not limited to, fluctuations in U.S. and
international economies and currencies, our ability to preserve,
grow and leverage our brands, potential negative effects of
material breaches of our information technology systems to the
extent we experience a material breach, potential negative effects
of incidents involving food-borne illnesses, food tampering, food
contamination or mislabeling, material failures of our information
technology systems, costs associated with, and the successful
execution of, the company’s initiatives and plans, including the
integration of Starbucks Japan, the acceptance of the company’s
products by our customers, the impact of competition, coffee, dairy
and other raw materials prices and availability, the effect of
legal proceedings, and other risks detailed in the company filings
with the Securities and Exchange Commission, including the “Risk
Factors” section of Starbucks Annual Report on Form 10-K for the
fiscal year ended September 27, 2015. The company assumes no
obligation to update any of these forward-looking statements.
STARBUCKS CORPORATION CONSOLIDATED STATEMENTS OF
EARNINGS
(unaudited, in millions, except per share
data)
Quarter Ended Quarter Ended
Dec 27,
2015
Dec 28,
2014
%
Change
Dec 27,
2015
Dec 28,
2014
As a % of total
net revenues
Net revenues: Company-operated stores $ 4,210.6 $ 3,772.8
11.6 % 78.4 % 78.5 % Licensed stores 540.6 483.9 11.7 10.1 10.1
CPG, foodservice and other 622.3 546.5 13.9 11.6
11.4
Total net revenues 5,373.5
4,803.2 11.9 100.0 100.0 Cost of sales
including occupancy costs 2,186.2 1,991.2 9.8 40.7 41.5 Store
operating expenses 1,506.2 1,315.5 14.5 28.0 27.4 Other operating
expenses 146.2 129.4 13.0 2.7 2.7 Depreciation and amortization
expenses 235.5 206.0 14.3 4.4 4.3 General and administrative
expenses 305.5 298.4 2.4 5.7 6.2 Total
operating expenses 4,379.6 3,940.5 11.1 81.5 82.0 Income from
equity investees 64.1 52.8 21.4 1.2 1.1
Operating income 1,058.0 915.5 15.6
19.7 19.1 Gain resulting from acquisition of joint
venture — 390.6 (100.0 ) — 8.1 Interest income and other, net 8.1
9.7 (16.5 ) 0.2 0.2 Interest expense (16.5 ) (16.3 ) 1.2 (0.3 )
(0.3 ) Earnings before income taxes 1,049.6 1,299.5 (19.2 )
19.5 27.1 Income taxes 361.9 315.0 14.9 6.7
6.6 Net earnings including noncontrolling interests 687.7
984.5 (30.1 ) 12.8 20.5 Net earnings/(loss) attributable to
noncontrolling interests 0.1 1.4 (92.9 ) — —
Net earnings attributable to Starbucks $
687.6 $ 983.1 (30.1
) 12.8 % 20.5 % Net
earnings per common share - diluted $ 0.46
$ 0.65 (29.2
)%
Weighted avg. shares outstanding - diluted 1,503.3 1,516.8
Cash dividends declared per share $ 0.20 $ 0.16
Supplemental Ratios: Store operating expenses as a
percentage of company-operated store revenues 35.8 % 34.9 %
Effective tax rate including noncontrolling interests 34.5 % 24.2 %
Segment Results (in
millions)
Americas
Dec 27,
2015
Dec 28,
2014
%
Change
Dec 27,
2015
Dec 28,
2014
Quarter
Ended
As a % of Americas
total net revenues
Net revenues: Company-operated stores $ 3,330.7 $ 3,010.6
10.6 % 89.4 % 89.4 % Licensed stores 387.6 346.2 12.0 10.4 10.3
Foodservice and other 7.9 10.1 (21.8 ) 0.2 0.3
Total net revenues 3,726.2 3,366.9
10.7 100.0 100.0 Cost of sales including
occupancy costs 1,346.9 1,261.0 6.8 36.1 37.5 Store operating
expenses 1,226.8 1,084.4 13.1 32.9 32.2 Other operating expenses
32.6 30.2 7.9 0.9 0.9 Depreciation and amortization expenses 140.8
127.1 10.8 3.8 3.8 General and administrative expenses 44.5
46.7 (4.7 ) 1.2 1.4 Total operating expenses
2,791.6 2,549.4 9.5 74.9 75.7
Operating income $ 934.6 $
817.5 14.3 % 25.1 %
24.3 % Supplemental Ratios: Store operating
expenses as a percentage of company-operated store revenues 36.8 %
36.0 %
China/Asia Pacific (CAP)
Dec 27,
2015
Dec 28,
2014
%
Change
Dec 27,
2015
Dec 28,
2014
Quarter
Ended
As a % of CAP
total net revenues
Net revenues: Company-operated stores $ 580.1 $ 421.8 37.5 %
88.8 % 85.1 % Licensed stores 72.2 73.2 (1.4 ) 11.0 14.8
Foodservice and other 1.3 0.8 62.5 0.2 0.2
Total net revenues 653.6 495.8
31.8 100.0 100.0 Cost of sales including
occupancy costs 295.0 233.6 26.3 45.1 47.1 Store operating expenses
175.3 117.7 48.9 26.8 23.7 Other operating expenses 14.8 15.1 (2.0
) 2.3 3.0 Depreciation and amortization expenses 42.1 28.1 49.8 6.4
5.7 General and administrative expenses 30.5 25.7
18.7 4.7 5.2 Total operating expenses 557.7 420.2
32.7 85.3 84.8 Income from equity investees 31.2 32.7
(4.6 ) 4.8 6.6
Operating income $
127.1 $ 108.3 17.4
% 19.4 % 21.8 % Supplemental
Ratios: Store operating expenses as a percentage of
company-operated store revenues 30.2 % 27.9 %
EMEA
Dec 27,
2015
Dec 28,
2014
%
Change
Dec 27,
2015
Dec 28,
2014
Quarter
Ended
As a % of EMEA
total net revenues
Net revenues: Company-operated stores $ 218.9 $ 257.6 (15.0
)% 69.9 % 77.3 % Licensed stores 79.7 63.3 25.9 25.5 19.0
Foodservice 14.4 12.4 16.1 4.6 3.7
Total net revenues 313.0 333.3 (6.1
) 100.0 100.0 Cost of sales including
occupancy costs 151.4 156.2 (3.1 ) 48.4 46.9 Store operating
expenses 73.9 85.8 (13.9 ) 23.6 25.7 Other operating expenses 14.8
13.7 8.0 4.7 4.1 Depreciation and amortization expenses 11.5 13.8
(16.7 ) 3.7 4.1 General and administrative expenses 14.5
14.0 3.6 4.6 4.2 Total operating expenses
266.1 283.5 (6.1 ) 85.0 85.1 Income from equity investees 1.2
0.2 500.0 0.4 0.1
Operating
income $ 48.1 $ 50.0
(3.8 )% 15.4 % 15.0 %
Supplemental Ratios: Store operating expenses as a
percentage of company-operated store revenues 33.8 % 33.3 %
Channel Development
Dec 27, 2015
Dec 28, 2014
%
Change
Dec 27, 2015
Dec 28, 2014
Quarter
Ended
As a % of
Channel Development
total net revenues
Net revenues: CPG $ 399.2 $ 343.8 16.1 % 78.0 % 77.7 %
Foodservice 112.9 98.8 14.3 22.0 22.3
Total net revenues 512.1 442.6 15.7
100.0 100.0 Cost of sales 285.4 249.3 14.5 55.7 56.3
Other operating expenses 60.3 51.0 18.2 11.8 11.5 Depreciation and
amortization expenses 0.7 0.6 16.7 0.1 0.1 General and
administrative expenses 4.1 4.1 — 0.8 0.9
Total operating expenses 350.5 305.0 14.9 68.4 68.9 Income
from equity investees 31.7 19.9 59.3 6.2 4.5
Operating income $ 193.3
$ 157.5 22.7 % 37.7
% 35.6 %
All Other Segments
Dec 27,
2015
Dec 28,
2014
%
Change
Quarter
Ended
Net revenues: Company-operated stores $ 80.9 $ 82.8
(2.3 )% Licensed stores 1.1 1.2 (8.3 ) CPG, foodservice and other
86.6 80.6 7.4
Total net revenues 168.6
164.6 2.4 Cost of sales including occupancy costs
95.3 93.3 2.1 Store operating expenses 30.2 27.6 9.4 Other
operating expenses 23.7 19.5 21.5 Depreciation and amortization
expenses 3.6 4.0 (10.0 ) General and administrative expenses 9.9
10.0 (1.0 ) Total operating expenses 162.7
154.4 5.4
Operating income $ 5.9
$ 10.2 (42.2 )%
Supplemental
Information
The following supplemental information is provided for
historical and comparative purposes.
U.S. Supplemental Data
Quarter Ended ($ in
millions)
Dec 27, 2015 Dec 28, 2014
Change Revenues $3,410.8 $3,022.0 13%
Comparable Store Sales Growth(1) 9% 5% Change in Transactions 4% 2%
Change in Ticket 5% 4%
(1) Includes only Starbucks
company-operated stores open 13 months or longer.
Store Data
Net stores opened (closed) and
transferred during the period
Quarter Ended Stores
open as of
Dec 27,
2015
Dec 28,
2014
Dec 27,
2015
Dec 28,
2014
Americas: Company-operated stores 81 67 8,752 8,462 Licensed stores
90
143 6,222 5,939 Total Americas 171 210
14,974 14,401 China/Asia Pacific(1): Company-operated
stores 90 1,071 2,542 2,203 Licensed stores 191 (837 ) 3,201
2,655 Total China/Asia Pacific 281 234 5,743
4,858 EMEA: Company-operated stores (39 ) (7 ) 698 810
Licensed stores 118 65 1,743 1,388 Total EMEA
79 58 2,441 2,198 All Other Segments:
Company-operated stores (1 ) 9 374 378 Licensed stores (2 ) 1
39 43 Total All Other Segments (3 ) 10 413
421
Total Company
528 512 23,571
21,878
(1) China/Asia Pacific store data includes
the transfer of 1,009 Japan stores from licensed stores to
company-operated as a result of the acquisition of Starbucks Japan
in the first quarter of fiscal 2015.
Non-GAAP Disclosure
In addition to the GAAP results provided in this release, the
company provides consolidated non-GAAP operating income,
consolidated non-GAAP operating margin and consolidated non-GAAP
earnings per share ("non-GAAP EPS") for Q1 fiscal 2016 and fiscal
2015; China/Asia Pacific (“CAP”) segment non-GAAP operating income
and non-GAAP operating margin for Q1 fiscal 2016 and fiscal 2015;
and consolidated non-GAAP EPS for Q2 and full year fiscal 2015, as
well as projected consolidated non-GAAP EPS for Q2 and full year
fiscal 2016. These non-GAAP financial measures are not in
accordance with, or alternatives for, generally accepted accounting
principles in the United States. The GAAP measures most directly
comparable to non-GAAP operating income, non-GAAP operating margin,
and non-GAAP EPS are operating income, operating margin, and
diluted net earnings per share, respectively. The company’s
management believes that providing these non-GAAP financial
measures better enables investors to understand and evaluate the
company’s historical and prospective operating performance.
The consolidated Q1 fiscal 2016 as well as the consolidated Q1
and Q2 fiscal 2015 non-GAAP financial measures exclude certain
Starbucks Japan acquisition-related items, specifically
amortization expense from acquired intangible assets and
transaction and integration costs. The Q1 fiscal 2016 and fiscal
2015 CAP segment non-GAAP financial measures exclude the
amortization expense from acquired intangible assets related to the
acquisition of Starbucks Japan. The Q1 fiscal 2016 CAP segment
non-GAAP financial measures also exclude integration costs,
including incremental information technology and
compensation-related costs associated with the acquisition. The
consolidated Q1 and full year fiscal 2015 non-GAAP EPS financial
measures exclude the Starbucks Japan acquisition-related items as
well as a gain resulting from a fair value adjustment of Starbucks
preexisting 39.5% ownership interest in Starbucks Japan prior to
the acquisition. The consolidated full year fiscal 2015 non-GAAP
EPS financial measure also excludes losses and costs related to the
redemption of the company's $550 million of 6.250% 2017 Senior
Notes and an incremental tax benefit related to a U.S.
manufacturing deduction. Losses and costs related to the redemption
are included as debt extinguishment-related items. Management
excludes the acquisition-related transaction costs described above
because they believe these items do not reflect expected future
expenses and do not contribute to a meaningful evaluation of the
company’s future operating performance or comparisons to the
company’s past operating performance. In addition, management
believes it is useful to exclude the integration costs and the
amortization of the acquired intangible assets when evaluating
performance because they are not representative of our core
business operations. Although these items will affect earnings per
share beyond the current fiscal year, the majority of these costs
will be recognized over a finite period of time. More specifically,
integration costs are expected to be concentrated in the first
several years post-acquisition. Additionally, the amounts of the
acquired intangible assets are specific to the transaction and the
related amortization was fixed at the time of acquisition and
generally cannot subsequently be changed or influenced by
management in a future period. Management excludes the fair value
gain, debt extinguishment-related items and the incremental tax
benefit because they believe these items do not reflect future
gains, losses, costs or tax benefits and do not contribute to a
meaningful evaluation of the company’s fiscal 2015 operating
performance or comparisons of the company’s fiscal 2015 operating
performance to the company’s past or future operating
performance.
The projected consolidated non-GAAP EPS for Q2 and full year
fiscal 2016 financial measures exclude certain Starbucks Japan
acquisition-related items comprised of projected amortization
expense from acquired intangible assets and transaction and
integration costs. Management is excluding these items from our
projected non-GAAP measures for the same reasons described
above.
These non-GAAP financial measures may have limitations as
analytical tools, and these measures should not be considered in
isolation or as a substitute for analysis of the company’s results
as reported under GAAP. Other companies may calculate these
non-GAAP financial measures differently than the company does,
limiting the usefulness of those measures for comparative
purposes.
STARBUCKS CORPORATION RECONCILIATION OF SELECTED
GAAP MEASURES TO NON-GAAP MEASURES
(unaudited)
Quarter Ended
Dec 27,
2015
Dec 28,
2014
Change
Consolidated
Operating income, as reported (GAAP) $ 1,058.0 $ 915.5
15.6
%
Starbucks Japan acquisition-related items - other(1) 12.3
19.3 Non-GAAP operating income $ 1,070.3 $ 934.8
14.5
% Operating margin, as reported (GAAP) 19.7 % 19.1 % 60 bps
Starbucks Japan acquisition-related items - other(1) 0.2 0.4
Non-GAAP operating margin 19.9 % 19.5 % 40 bps
Diluted net earnings per share, as reported (GAAP) $ 0.46 $ 0.65
(29.2
)% Starbucks Japan acquisition-related items - gain(2) — (0.26 )
Starbucks Japan acquisition-related items - other(1) 0.01
0.01 Non-GAAP net earnings per share $ 0.46 $ 0.40
15.0
%
China/Asia
Pacific (CAP)
Operating income, as reported (GAAP) $ 127.1 $ 108.3
17.4
% Starbucks Japan acquisition-related items(3) 12.1 7.7
Non-GAAP operating income $ 139.2 $ 116.0
20.0
% Operating margin, as reported (GAAP) 19.4 % 21.8 % (240 )
bps Starbucks Japan acquisition-related items(3) 1.9 1.6
Non-GAAP operating margin 21.3 % 23.4 % (210 ) bps
(1) Includes ongoing amortization expense
of acquired intangible assets and transaction and integration
costs, such as incremental information technology ("IT") and
compensation-related costs associated with the acquisition.
(2) Gain represents the fair value
adjustment of Starbucks preexisting 39.5% ownership interest in
Starbucks Japan upon acquisition.
(3) Includes ongoing amortization expense
of acquired intangible assets associated with the acquisition; the
first quarter of FY16 also includes post-acquisition integration
costs, including incremental IT and compensation-related costs.
Quarter Ended
Mar 27,
2016
Mar 29,
2015
Consolidated
(Projected) (As Reported)
Change Diluted net earnings
per share (GAAP) $0.37 - $0.38 $ 0.33 12% - 15% Starbucks Japan
acquisition-related items - other(1) 0.01 0.01
Non-GAAP net earnings per share $0.38 - $0.39 $ 0.33
15% - 18%
Year
Ended
Oct 2,
2016
Sep 27,
2015
Consolidated
(Projected
53-weeks)
(As Reported
52-weeks)
Change Diluted net earnings per share (GAAP) $1.84 - $1.86 $
1.82 1% - 2% Starbucks Japan acquisition-related items - gain(2) —
(0.26 ) Starbucks Japan acquisition-related items - other(1) 0.03
0.03 Debt extinguishment-related items(3) — 0.03 Tax benefit from
domestic manufacturing deduction(4)
—
(0.04 ) Non-GAAP net earnings per share $1.87
- $1.89 $ 1.58 18% - 20%
(1) Includes ongoing amortization expense
of acquired intangible assets and transaction and integration
costs, such as incremental information technology ("IT") and
compensation-related costs associated with the acquisition.
(2) Gain represents the fair value
adjustment of Starbucks preexisting 39.5% ownership interest in
Starbucks Japan upon acquisition.
(3) Represents the loss on extinguishment
of debt ($61.1M), which is comprised of the cost of the optional
redemption provision, unamortized debt issuance costs, and
unamortized discount associated with the $550 million of 6.250%
2017 Senior Notes redeemed in Q4 FY15, as well as the related
unamortized interest rate hedge loss ($2.0M), which was recorded in
interest expense.
(4) Represents the incremental benefit
related to additional domestic manufacturing deductions to be
claimed in our U.S. consolidated tax returns for FY10 through FY14
and through Q3 FY15.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160121006349/en/
Starbucks Contact, Investor Relations:Durga Doraisamy,
206-318-7118investorrelations@starbucks.comorStarbucks Contact,
Media:Alisha Damodaran, 206-318-7100press@starbucks.com
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