05.05.06

5.5.2006: Meldung: Starbucks Announces Q2 2006 Results and April 2006 Revenues

Starbucks Corporation today announced record earnings for its fiscal second quarter ended April 2, 2006, revenues for the four-week period ended April 30, 2006, and updated targets for fiscal 2006.

Fiscal Second Quarter 2006 Results:

* Record second quarter consolidated net revenues of $1.9 billion, an increase of 24 percent
* Record second quarter net earnings of $127 million, an increase of 27 percent
* Earnings per share of $0.16 compared to $0.12 in the second quarter of fiscal 2005

April 2006 Revenue Highlights:

* Net revenues increased 23 percent, to $597 million
* Comparable store sales rose six percent

Updated Fiscal 2006 Targets:
# Fiscal 2006 earnings per share target range raised to $0.71 - $0.72 from $0.68 - $0.70 per share

For the 13 weeks ended April 2, 2006, consolidated net revenues increased 24 percent to $1.9 billion from $1.5 billion for the same period in fiscal 2005, and net earnings increased 27 percent to $127 million from $100 million for the same period in fiscal 2005. Fully diluted earnings per share were $0.16 for the 13 weeks ended April 2, 2006, compared to a split adjusted $0.12 per share for the comparable period in fiscal 2005. The Company adopted the new accounting requirements related to expensing stock-based compensation at the beginning of its fiscal 2006 year, which reduced net earnings by $0.02 per share in the second quarter.

"Our outstanding quarterly results reflect diligent execution throughout our business," commented Jim Donald, Starbucks president and ceo. "Continued innovation and an expanding retail footprint allowed us to reach more customers through more channels worldwide than any time in the history of Starbucks, and keeps the Company on track to achieve our long-term growth targets."

Donald added, "We started the third quarter with strong 23 percent revenue growth in April and six percent comparable store sales growth -- near the top of our three to seven percent target range. These results were driven by continued customer demand for our handcrafted beverages, with particular strength in our spring line up of Green Tea beverages."

"Our strong first half performance -- and increased confidence in our second half forecast -- has allowed us to raise our full year earnings per share target and narrow the range to $0.71 to $0.72 from the prior range of $0.68 to $0.70," commented Michel Casey, Starbucks chief financial officer. "We are very pleased with our year-to-date results and believe that we have laid a solid foundation toward achieving our targets and delivering superior value to our shareholders."

Consolidated Financial and Operating Summary

Company-operated retail revenues increased 25 percent to $1.6 billion for the 13 weeks ended April 2, 2006, from $1.3 billion for the same period in fiscal 2005. The increase was primarily attributable to the opening of 874 new Company-operated retail stores in the last 12 months and comparable store sales growth of ten percent for the quarter. The increase in comparable store sales was due to an eight percent increase in the number of customer transactions and a two percent increase in the average value per transaction.

Specialty revenues increased 22 percent to $286 million for the 13 weeks ended April 2, 2006, compared to $235 million for the corresponding period of fiscal 2005. Licensing revenues increased 25 percent to $202 million primarily due to higher product sales and royalty revenues from the opening of 1,090 new licensed retail stores in the last 12 months and growth in the licensed grocery and warehouse club business. Foodservice and other revenues increased 14 percent to $84 million primarily due to growth in the U.S. foodservice business.

Cost of sales including occupancy costs improved to 40.3 percent of total net revenues for the 13 weeks ended April 2, 2006, compared to 41.4 percent in the corresponding 13-week period of fiscal 2005. This improvement was primarily due to fixed rent costs in the current year being distributed over an expanded revenue base, as well as higher occupancy costs in the prior year resulting from intensified store maintenance activities. These favorable items, together with other lesser improvements, offset higher green coffee costs in the second quarter.

Store operating expenses as a percentage of Company-operated retail revenues increased slightly to 41.6 percent for the 13 weeks ended April 2, 2006, from 41.5 percent for the corresponding period of fiscal 2005, primarily due to higher payroll-related expenditures for incentive compensation based on the Company"s strong operating results in fiscal 2006 and the recognition of stock-based compensation expense. The increase was partially offset by higher costs in the prior year associated with the North American leadership conference held for retail management employees, as well as leverage gained from higher retail revenues. Regional leadership conferences in fiscal 2006 will be held during the Company"s third fiscal quarter.

Other operating expenses (expenses associated with the Company"s specialty operations) increased to 22.3 percent of total specialty revenues for the 13 weeks ended April 2, 2006, compared to 19.7 percent in the corresponding period of fiscal 2005. The increase was primarily due to the recognition of stock-based compensation expense as well as higher payroll-related expenditures to support the expansion of U.S. and International licensed retail store businesses.

Depreciation and amortization expenses increased to $95 million for the 13 weeks ended April 2, 2006, compared to $88 million for the corresponding period of fiscal 2005. The increase was primarily due to the opening of 874 new Company-operated retail stores in the last 12 months. As a percentage of total net revenues, depreciation and amortization expenses decreased to 5.0 percent for the 13 weeks ended April 2, 2006, from 5.8 percent for the corresponding 13-week period of fiscal 2005.

General and administrative expenses increased to $120 million for the 13 weeks ended April 2, 2006, compared to $82 million for the corresponding period of fiscal 2005. The increase was primarily due to higher payroll-related expenditures from stock-based compensation, additional employees to support continued global growth and higher provisions for incentive compensation based on the Company"s strong operating results in fiscal 2006. As a percentage of total net revenues, general and administrative expenses increased to 6.3 percent for the 13 weeks ended April 2, 2006, from 5.4 percent for the corresponding period of fiscal 2005.

Income from equity investees increased 23 percent to $20 million for the 13 weeks ended April 2, 2006, compared to $16 million for the corresponding period of fiscal 2005. The increase was primarily due to volume-driven results for The North American Coffee Partnership, which produces bottled Frappuccino® and Starbucks DoubleShot® coffee drinks, and improved results from international investees primarily as a result of additional licensed retail stores.

Operating income increased 28 percent to $202 million for the 13 weeks ended April 2, 2006, compared to $157 million for the corresponding 13-week period of fiscal 2005. Operating margin increased to 10.7 percent of total net revenues for the 13 weeks ended April 2, 2006, compared to 10.4 percent for the corresponding period of fiscal 2005, primarily due to lower cost of sales including occupancy costs, offset in part by higher general and administrative expenses.

Net earnings for the 13 weeks ended April 2, 2006, increased 27 percent to $127 million from $100 million for the same period in fiscal 2005. Earnings per share were $0.16 for the 13 weeks ended April 2, 2006, compared to $0.12 per share for the comparable period in fiscal 2005.

Updated Fiscal 2006 Targets

Looking ahead, Starbucks provided updated fiscal 2006 targets:

* Starbucks continues to target opening at least 1,800 new stores on a global basis in fiscal 2006. In the United States, Starbucks plans to open approximately 700 Company-operated locations and 600 licensed locations. In International markets, Starbucks plans to open approximately 150 Company-operated stores and 350 licensed stores;
* The Company is targeting total net revenue growth of approximately 20 percent on a quarterly and full year basis. Starbucks continues to expect comparable store sales growth in the range of three percent to seven percent for the remainder of fiscal 2006, with monthly anomalies;
* Based on very strong second quarter results along with its current outlook for the balance of year, Starbucks is raising its fiscal 2006 earnings per share target range to $0.71 - $0.72 per share. This target range is an increase from the previous target range of $0.68 - $0.70 per share. Both the new target and the previous target ranges include stock-based compensation expense estimated at approximately $0.09 per share. On a quarterly basis the Company is now targeting earnings per share of $0.17 in the third quarter, which is at the high end of its previous range, and continues to target a range of $0.16 - $0.17 per share for the fourth quarter;
* The effective tax rate is expected to be approximately 38 percent in fiscal 2006, with quarterly variations; and,
* Starbucks is now targeting capital expenditures in the range of $750 million -- $775 million in fiscal 2006, an increase from the Company"s previous target range of $700 million -- $725 million.

Starbucks will be holding a conference call today at 1:30 p.m. Pacific Time, which will be hosted by Howard Schultz, chairman, Jim Donald, president and ceo, and Michael Casey, executive vice president and chief financial officer. The call will be broadcast live over the Internet and can be accessed at the Company"s web site address of http://www.starbucks.com/aboutus/investor.asp. A replay of the call will be available via telephone through 5:30 p.m. Pacific Time on Wednesday, May 10, 2006, by calling 1-800-642-1687, reservation number 3728538. A posting of speaker remarks and a replay of the call will also be available via the Investor Relations page on Starbucks.com through approximately 5:00 p.m. Pacific Time on Wednesday, May 31, 2006, at the following URL: http://www.starbucks.com/aboutus/investor.asp.

The Company"s consolidated financial statements, operating segment results, and other additional information have been provided on the following pages in accordance with current year classifications. This information should be reviewed in conjunction with this press release. Please refer to the Company"s Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 16, 2005, for additional information.

STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)

13 Weeks Ended 13 Weeks Ended
------------------------------ ------------
April 2, April 3, % April April
2006 2005 Change 2, 3,
2006 2005
------------------------------- ------------
(in thousands, except per share
data)
As a % of
total net
revenues
------------
Net revenues:
Company-operated retail $1,599,844 $1,283,947 24.6% 84.8% 84.5%
Specialty:
Licensing 202,354 161,292 25.5% 10.7% 10.6%
Foodservice and other 83,624 73,477 13.8% 4.5% 4.9%
---------------------- ------------
Total specialty 285,978 234,769 21.8% 15.2% 15.5%
---------------------- ------------
Total net revenues 1,885,822 1,518,716 24.2% 100.0%100.0%

Cost of sales including
occupancy costs 760,873 628,740 40.3% 41.4%
Store operating expenses (a) 665,273 532,944 35.4% 35.1%
Other operating expenses (b) 63,648 46,347 3.4% 3.0%
Depreciation and
amortization expenses 94,508 87,772 5.0% 5.8%
General and administrative
expenses 119,611 81,929 6.3% 5.4%
---------------------- ------------
Subtotal operating
expenses 1,703,913 1,377,732 23.7% 90.4% 90.7%

Income from equity
investees 19,985 16,294 1.1% 1.1%
---------------------- ------------
Operating income 201,894 157,278 28.4% 10.7% 10.4%

Interest and other income,
net 3,063 4,014 0.2% 0.2%
---------------------- ------------

Earnings before income
taxes 204,957 161,292 27.1% 10.9% 10.6%

Income taxes (c) 77,641 60,831 4.1% 4.0%
---------------------- ------------

Net earnings $ 127,316 $ 100,461 26.7% 6.8% 6.6%
====================== ============


Net earnings per common
share - diluted $ 0.16 $ 0.12
======================
Weighted average shares
outstanding - diluted 794,613 828,062
======================

(a) As a percentage of related Company-operated retail revenues,
store operating expenses were 41.6 percent for the 13 weeks ended
April 2, 2006, and 41.5 percent for the 13 weeks ended April 3, 2005.

(b) As a percentage of related total specialty revenues, other
operating expenses were 22.3 percent for the 13 weeks ended April 2,
2006, and 19.7 percent for the 13 weeks ended April 3, 2005.

(c) The effective tax rates were 37.9 percent for the 13 weeks
ended April 2, 2006, and 37.7 percent for the 13 weeks ended April 3,
2005.

STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)

26 Weeks Ended 26 Weeks
Ended
------------------------------- ------------
April 2, April 3, % April April
2006 2005 Change 2, 3,
2006 2005
------------------------------- ------------
(in thousands, except per share
data)
As a % of
total net
revenues
------------
Net revenues:
Company-operated retail $3,227,827 $2,642,608 22.1% 84.5% 85.0%
Specialty:
Licensing 421,504 318,505 32.3% 11.0% 10.3%
Foodservice and other 170,583 147,147 15.9% 4.5% 4.7%
---------------------- ------------
Total specialty 592,087 465,652 27.2% 15.5% 15.0%
---------------------- ------------
Total net revenues 3,819,914 3,108,260 22.9% 100.0%100.0%

Cost of sales including
occupancy costs 1,538,911 1,276,495 40.3% 41.1%
Store operating expenses
(a) 1,287,439 1,053,950 33.6% 33.8%
Other operating expenses (b) 122,796 90,628 3.2% 2.9%
Depreciation and
amortization expenses 185,796 166,331 4.9% 5.4%
General and administrative
expenses 242,936 165,528 6.4% 5.3%
---------------------- ------------
Subtotal operating
expenses 3,377,878 2,752,932 22.7% 88.4% 88.5%

Income from equity
investees 39,705 29,105 1.0% 0.9%
---------------------- ------------

Operating income 481,741 384,433 25.3% 12.6% 12.4%

Interest and other income,
net 3,411 9,136 0.1% 0.3%
---------------------- ------------
Earnings before income
taxes 485,152 393,569 23.3% 12.7% 12.7%

Income taxes (c) 183,680 148,434 4.8% 4.8%
---------------------- ------------

Net earnings $ 301,472 $ 245,135 23.0% 7.9% 7.9%
====================== ============

Net earnings per common
share - diluted $ 0.38 $ 0.30
======================
Weighted average shares
outstanding - diluted 793,936 829,352
======================

(a) As a percentage of related Company-operated retail revenues,
store operating expenses were 39.9 percent for both the 26 weeks ended
April 2, 2006, and April 3, 2005.

(b) As a percentage of related total specialty revenues, other
operating expenses were 20.7 percent for the 26 weeks ended April 2,
2006, and 19.5 percent for the 26 weeks ended April 3, 2005.

(c) The effective tax rates were 37.9 percent for the 26 weeks
ended April 2, 2006, and 37.7 percent for the 26 weeks ended April 3,
2005.

STARBUCKS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

April 2, October 2,
2006 2005
------------ -------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 202,671 $ 173,809
Short-term investments -
available-for-sale securities 193,231 95,379
Short-term investments -
trading securities 49,546 37,848
Accounts receivable, net of
allowances of $4,627 and
$3,079, respectively 190,452 190,762
Inventories 456,215 546,299
Prepaid expenses and other
current assets 87,163 94,429
Deferred income taxes, net 87,477 70,808
------------ -------------
Total current assets 1,266,755 1,209,334

Long-term investments -
available-for-sale securities 37,639 60,475
Equity and other investments 214,780 201,089
Property, plant and equipment,
net 1,963,701 1,842,019
Other assets 125,171 72,893
Other intangible assets 36,657 35,409
Goodwill 172,337 92,474
------------ -------------
TOTAL ASSETS $3,817,040 $ 3,513,693
============ =============

LIABILITIES AND SHAREHOLDERS" EQUITY
Current liabilities:
Accounts payable $ 230,060 $ 220,975
Accrued compensation and
related costs 283,342 232,354
Accrued occupancy costs 49,350 44,496
Accrued taxes 100,108 78,293
Short-term borrowings 95,000 277,000
Other accrued expenses 194,580 198,082
Deferred revenue 233,269 175,048
Current portion of long-term
debt 755 748
------------ -------------
Total current liabilities 1,186,464 1,226,996

Long-term debt 2,491 2,870
Other long-term liabilities 210,176 193,565

Shareholders" equity:
Common stock and additional
paid-in-capital - Authorized,
1,200,000,000 shares; issued
and outstanding 769,274,760 and
767,442,110 shares, respectively,
(includes 3,394,200 common
stock units in both periods) 111,878 90,968
Other additional paid-in-
capital 39,393 39,393
Retained earnings 2,240,459 1,938,987
Accumulated other
comprehensive income 26,179 20,914
------------ -------------
Total shareholders" equity 2,417,909 2,090,262
------------ -------------

TOTAL LIABILITIES AND
SHAREHOLDERS" EQUITY $3,817,040 $ 3,513,693
============ =============

STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)

26 Weeks Ended
---------------------
April 2, April 3,
2006 2005
---------- ----------
OPERATING ACTIVITIES:
Net earnings $ 301,472 $ 245,135
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 198,633 179,857
Provision for impairments and asset
retirements 9,153 6,554
Deferred income taxes, net (57,131) (20,946)
Equity in income of investees (24,807) (15,947)
Distribution from equity investees 16,393 11,287
Stock-based compensation 51,297 -
Tax benefit from exercise of non-qualified
stock options 520 88,781
Excess tax benefit from exercise of non-
qualified stock options (54,872) -
Net amortization of premium on securities 1,209 7,112
Cash provided/(used) by changes in
operating assets and liabilities:
Inventories 92,455 18,894
Accounts payable 7,611 (20,350)
Accrued compensation and related
costs 50,099 (5,488)
Accrued taxes 76,716 12,322
Deferred revenue 58,250 47,061
Other operating assets and
liabilities 34,994 23,272
---------- ----------
Net cash provided by operating activities 761,992 577,544

INVESTING ACTIVITIES:
Purchase of available-for-sale securities (356,681) (582,992)
Maturity of available-for-sale securities 127,604 362,666
Sale of available-for-sale securities 154,250 196,395
Acquisitions, net of cash acquired (90,219) (11,282)
Net (purchases)/sales of equity, other
investments and other assets (19,103) 12,676
Net additions to property, plant and
equipment (310,331) (311,454)
---------- ----------
Net cash used by investing activities (494,480) (333,991)

FINANCING ACTIVITIES:
Proceeds from issuance of common stock 91,618 121,534
Excess tax benefit from exercise of non-
qualified stock options 54,872 -
Net repayments of revolving credit facility (182,000) -
Principal payments on long-term debt (372) (366)
Repurchase of common stock (204,186) (334,749)
---------- ----------
Net cash used by financing activities (240,068) (213,581)
Effect of exchange rate changes on cash and cash
equivalents 1,418 2,117
---------- ----------
Net increase in cash and cash equivalents 28,862 32,089

CASH AND CASH EQUIVALENTS:
Beginning of period 173,809 145,053
---------- ----------

End of the period $ 202,671 $ 177,142
========== ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the 26 weeks ended:
Interest $ 4,444 $ 108
Income taxes $ 167,286 $ 68,523


Stock Compensation Expense

Effective October 3, 2005, the beginning of Starbucks first fiscal quarter of 2006, the Company adopted the fair value recognition provisions of Financial Accounting Standards Board Statement No. 123R, "Share-Based Payment" ("SFAS 123R"). SFAS 123R requires all stock-based compensation, including grants of employee stock options, to be recognized in the statement of earnings based on their fair values. The Company adopted this accounting treatment using the modified prospective transition method, as permitted under SFAS 123R; therefore results for prior periods have not been restated. Prior to the adoption of SFAS 123R, the Company accounted for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. Accordingly, stock-based compensation was included as pro forma disclosure in the financial statement footnotes. The Company is providing the table below because management believes it provides useful information to investors regarding the Company"s results of operations by separately identifying the stock-based compensation expense and providing reported amounts on a basis comparable to that used in prior periods. In addition, the Company"s internal reporting and budgeting, as well as the calculation of its incentive compensation payments, includes the use of reported amounts excluding stock-based compensation. The amounts shown in the column below entitled "Using Previous Accounting" are considered "non-GAAP financial measures" under applicable SEC rules because they exclude the stock-based payment expense that is included in the directly comparable measures calculated in accordance with generally accepted accounting principles ("GAAP") in the United States, which are shown in the column entitled "As Reported." These non-GAAP financial measures are not a substitute for the reported GAAP measures.

The application of SFAS 123R had the following effect on reported amounts for the 13 and 26 weeks ended April 2, 2006 relative to the amounts that would have been reported using the intrinsic value method under the Company"s previous accounting (in thousands, except earnings per share):

Consolidated Statements of Earnings
----------------------------------------------------------------------
13 Weeks Ended April 2, 2006
-----------------------------------
Using Stock- As
Previous based Reported
Accounting Compensation
----------- ------------ --------
Cost of sales including occupancy
costs $758,090 $ 2,783 $760,873
Store operating expenses 658,595 6,678 665,273
Other operating expenses 60,470 3,178 63,648
General and administrative expenses 104,420 15,191 119,611
Operating income 229,724 (27,830) 201,894
Earnings before income taxes 232,787 (27,830) 204,957
Income taxes 87,217 (9,576) 77,641
Net earnings 145,570 (18,254) 127,316
Net earnings per common share
- diluted $ 0.18 $ (0.02) $ 0.16

Consolidated Statements of Earnings
----------------------------------------------------------------------
26 Weeks Ended April 2, 2006
-----------------------------------
Using Stock- As
Previous based Reported
Accounting Compensation
----------- ------------ --------
Cost of sales including occupancy
costs $1,533,606 $ 5,305 $1,538,911
Store operating expenses 1,274,603 12,836 1,287,439
Other operating expenses 117,423 5,373 122,796
General and administrative expenses 215,817 27,119 242,936
Operating income 532,374 (50,633) 481,741
Earnings before income taxes 535,785 (50,633) 485,152
Income taxes 200,962 (17,282) 183,680
Net earnings 334,823 (33,351) 301,472
Net earnings per common share
- diluted $ 0.42 $ (0.04) $ 0.38

Segment Results

Segment information is prepared on the basis that the Company"s
management reviews financial information for operational
decision-making purposes. The tables below present operating segment
results net of intersegment eliminations for the 13 weeks ended April
2, 2006 (in thousands):

13 Weeks Ended 13 Weeks Ended
---------------------------- ------------------

April 2, April 3, % April 2, April 3,
2006 2005 Change 2006 2005
---------------------------- ------------------
As a % of U.S.
total net
United States revenues
---------------------- ------------------
Net revenues:
Company-operated
retail $1,338,118 $1,084,737 23.4% 85.2% 85.0%
Specialty:
Licensing 155,794 124,136 25.5% 9.9% 9.7%
Foodservice and
other 76,584 67,545 13.4% 4.9% 5.3%
---------------------- ---------------
Total
specialty 232,378 191,681 21.2% 14.8% 15.0%
---------------------- ---------------
Total net revenues 1,570,496 1,276,418 23.0% 100.0% 100.0%

Cost of sales
including occupancy
costs 609,168 504,076 38.8% 39.5%
Store operating
expenses 562,429 456,838 42.0%(1) 42.1%(1)
Other operating
expenses 51,439 38,841 22.1%(2) 20.3%(2)
Depreciation and
amortization expenses 69,102 64,819 4.4% 5.1%
General and
administrative
expenses 23,201 24,350 1.5% 1.9%

Income from equity
investees 10,761 8,564 0.7% 0.7%
---------------------- ---------------
Operating income $ 265,918 $ 196,058 35.6% 16.9% 15.4%
====================== ===============

------------------
As a % of
International
total net
International revenues
---------------------- ------------------
Net revenues:
Company-operated
retail $ 261,726 $ 199,210 31.4% 83.0% 82.2%
Specialty:
Licensing 46,560 37,156 25.3% 14.8% 15.3%
Foodservice and
other 7,040 5,932 18.7% 2.2% 2.5%
---------------------- ---------------
Total
specialty 53,600 43,088 24.4% 17.0% 17.8%
---------------------- ---------------
Total net revenues 315,326 242,298 30.1% 100.0% 100.0%

Cost of sales
including occupancy
costs 151,705 124,664 48.1% 51.5%
Store operating
expenses 102,844 76,106 39.3%(1) 38.2%(1)
Other operating
expenses 12,209 7,506 22.8%(2) 17.4%(2)
Depreciation and
amortization expenses 16,745 14,128 5.3% 5.8%
General and
administrative
expenses 18,570 10,216 5.9% 4.2%

Income from equity
investees 9,224 7,730 2.9% 3.2%
---------------------- ---------------
Operating income $ 22,477 $ 17,408 29.1% 7.1% 7.2%
====================== ===============

------------------
As a % of total
Unallocated Corporate net revenues
---------------------- ------------------
Depreciation and
amortization expenses $ 8,661 $ 8,825 0.5% 0.6%
General and
administrative
expenses 77,840 47,363 4.1% 3.1%
---------------------- ---------------
Operating loss $ (86,501)$ (56,188) (4.6)% (3.7)%
====================== ===============

(1) Shown as a percentage of related Company-operated retail
revenues.

(2) Shown as a percentage of related total specialty revenues.

The tables below present operating segment results net of
intersegment eliminations for the 26 weeks ended April 2, 2006 (in
thousands):

26 Weeks Ended 26 Weeks Ended
---------------------------- ------------------
April 2, April 3, % April 2, April 3,
2006 2005 Change 2006 2005
---------------------------- ------------------
As a % of U.S.
total net
United States revenues
---------------------- ------------------
Net revenues:
Company-operated
retail $2,708,805 $2,234,367 21.2% 84.9% 85.4%
Specialty:
Licensing 325,317 245,271 32.6% 10.2% 9.4%
Foodservice and
other 156,955 135,553 15.8% 4.9% 5.2%
---------------------- ---------------
Total
specialty 482,272 380,824 26.6% 15.1% 14.6%
---------------------- ---------------
Total net revenues 3,191,077 2,615,191 22.0% 100.0% 100.0%

Cost of sales
including occupancy
costs 1,237,531 1,025,789 38.8% 39.2%
Store operating
expenses 1,091,204 900,899 40.3%(1) 40.3%(1)
Other operating
expenses 98,581 75,944 20.4%(2) 19.9%(2)
Depreciation and
amortization expenses 136,820 122,154 4.3% 4.7%
General and
administrative
expenses 44,734 45,973 1.4% 1.8%

Income from equity
investees 22,460 17,272 0.7% 0.7%
---------------------- ---------------
Operating income $ 604,667 $ 461,704 31.0% 18.9% 17.7%
====================== ===============

------------------
As a % of
International
total net
International revenues
---------------------- ------------------
Net revenues:
Company-operated
retail $ 519,022 $ 408,241 27.1% 82.5% 82.8%
Specialty:
Licensing 96,187 73,234 31.3% 15.3% 14.9%
Foodservice and
other 13,628 11,594 17.5% 2.2% 2.3%
---------------------- ---------------
Total
specialty 109,815 84,828 29.5% 17.5% 17.2%
---------------------- ---------------
Total net revenues 628,837 493,069 27.5% 100.0% 100.0%

Cost of sales
including occupancy
costs 301,380 250,706 47.9% 50.8%
Store operating
expenses 196,235 153,051 37.8%(1) 37.5%(1)
Other operating
expenses 24,215 14,684 22.1%(2) 17.3%(2)
Depreciation and
amortization expenses 31,754 27,217 5.0% 5.5%
General and
administrative
expenses 34,757 22,115 5.5% 4.5%

Income from equity
investees 17,245 11,833 2.7% 2.4%
---------------------- ---------------
Operating income $ 57,741 $ 37,129 55.5% 9.2% 7.5%
====================== ===============

------------------
As a % of total
Unallocated Corporate net revenues
---------------------- ------------------
Depreciation and
amortization expenses $ 17,222 $ 16,960 0.4% 0.6%
General and
administrative
expenses 163,445 97,440 4.3% 3.1%
---------------------- ---------------
Operating loss $(180,667) $ (114,400) (4.7)% (3.7)%
====================== ===============

(1) Shown as a percentage of related Company-operated retail
revenues.

(2) Shown as a percentage of related total specialty revenues.


United States

United States total net revenues increased by $294 million, or 23 percent, to $1.6 billion for the 13 weeks ended April 2, 2006, compared to $1.3 billion for the corresponding period of fiscal 2005. United States Company-operated retail revenues increased by $253 million, or 23 percent, to $1.3 billion, primarily due to the opening of 660 new Company-operated retail stores in the last 12 months and comparable store sales growth of ten percent for the quarter. The increase in comparable store sales was due to an eight percent increase in the number of customer transactions and a two percent increase in the average value per transaction.

Total United States specialty revenues increased by $41 million, or 21 percent, to $232 million for the 13 weeks ended April 2, 2006, compared to $192 million in the corresponding period of fiscal 2005. United States licensing revenues increased 26 percent to $156 million from $124 million in fiscal 2005, primarily due to higher product sales and royalty revenues as a result of opening 685 new licensed retail stores in the last 12 months and growth in the licensed grocery and warehouse club business. United States foodservice and other revenues increased to $77 million, or 13 percent, from $68 million in fiscal 2005, primarily due to growth in new and existing foodservice accounts.

United States operating income increased by 36 percent to $266 million for the 13 weeks ended April 2, 2006, from $196 million for the same period in fiscal 2005. Operating margin increased to 16.9 percent of related revenues from 15.4 percent in the corresponding period of fiscal 2005, primarily due to leverage gained from fixed costs, including occupancy, depreciation and general and administrative expenses, distributed over an expanded revenue base in the current year period, and to higher costs in the prior year period for intensified store maintenance activities in Company-operated retail stores.

International

International total net revenues increased by $73 million, or 30 percent, to $315 million for the 13 weeks ended April 2, 2006, compared to $242 million for the corresponding period of fiscal 2005. International Company-operated retail revenues increased by $63 million, or 31 percent, to $262 million, primarily due to the opening of 214 new Company-operated retail stores in the last 12 months and comparable store sales growth of nine percent for the quarter. The increase in comparable store sales resulted from a seven percent increase in the number of customer transactions coupled with a two percent increase in the average value per transaction.

Total international specialty revenues increased by $11 million, or 24 percent, to $54 million for the 13 weeks ended April 2, 2006, compared to $43 million in the corresponding period of fiscal 2005. The increase was primarily due to higher product sales and royalty revenues from opening 405 licensed retail stores in the last 12 months and expansion of the Canadian grocery and warehouse club business.

International operating income increased by 29 percent to $22 million for the 13 weeks ended April 2, 2006, compared to $17 million in the corresponding period of fiscal 2005. Operating margin decreased slightly to 7.1 percent of related revenues from 7.2 percent in the corresponding period of fiscal 2005. This decrease was primarily due to higher general and administrative expenses and an increase in other operating expenses for expanding infrastructure to support global growth, as well as increased retail store operating expenses related to higher provisions for incentive compensation. These were partially offset by lower costs of sales including occupancy costs due primarily to leverage gained from fixed costs distributed over an expanded revenue base, as well as improvements in the food program.

Unallocated Corporate

Unallocated corporate expenses increased to $87 million for the 13 weeks ended April 2, 2006, compared to $56 million in the corresponding period of fiscal 2005, primarily due to higher payroll-related expenses from stock-based compensation, higher provisions for incentive compensation based on the Company"s strong operating results for the quarter and additional employees to support continued rapid global growth. Total unallocated corporate expenses as a percentage of total net revenues increased to 4.6 percent for the 13 weeks ended April 2, 2006, compared to 3.7 percent for the corresponding period of fiscal 2005.

Store Data
----------
The Company"s store data for the periods presented are as follows:

Net stores opened
during the period
---------------------
13-week 26-week Stores open
period period as of
---------- ---------- -------------
April April April April April April
2, 3, 2, 3, 2, 3,
2006 2005 2006 2005 2006 2005
---------- ---------- -------------
United States:
Company-operated Stores 157 131 318 232 5,185 4,525
Licensed Stores 132 98 330 241 2,765 2,080
---------- ---------- -------------
289 229 648 473 7,950 6,605
International:
Company-operated Stores (1) 55 22 115 73 1,310 1,096
Licensed Stores (1) 80 61 221 146 1,965 1,560
---------- ---------- -------------
135 83 336 219 3,275 2,656
---------- ---------- -------------

Total 424 312 984 692 11,225 9,261
========== ========== =============

(1) International store data has been adjusted for the
acquisitions of the Southern China, Chile, Hawaii and Puerto Rico
operations by reclassifying historical information from Licensed
Stores to Company-operated Stores.


April 2006 Revenues

Starbucks Corporation today also reported consolidated net revenues of $597 million for the four-week period ended April 30, 2006, an increase of 23 percent from consolidated net revenues of $487 million for the same period in fiscal 2005. On a comparable store sales basis (stores open for at least 13 months), sales at Company-operated stores increased six percent for the four weeks ended April 30, 2006, as compared to the same four-week period in fiscal 2005.

For the 30 weeks ended April 30, 2006, consolidated net revenues were $4.4 billion, an increase of 23 percent from consolidated net revenues of $3.6 billion for the same 30 week period in 2005. Comparable store sales increased eight percent for the 30 weeks ended April 30, 2006, as compared to the same 30 weeks in fiscal 2005.

April"s comparable store sales growth - near the top of the Company"s three to seven percent target range - was driven primarily by sales of handcrafted beverages, including new seasonal offerings as well as core beverages, and food. Strong customer demand for Starbucks Green Tea beverages led to robust blended beverage sales during the month.

Fiscal YTD Store Data
---------------------
The Company"s store data for the periods presented are as follows:

Net stores
opened during
the 30 weeks
ended Stores open as of
April 30, 2006 April 30, 2006
-------------------------------------
United States:
Company-operated Stores 364 5,231
Licensed Stores 391 2,826
-------------------------------------
755 8,057
International:
Company-operated Stores 130 1,325
Licensed Stores 251 1,995
-------------------------------------
381 3,320
-------------------------------------

Total 1,136 11,377
=====================================


Through the dedication of our passionate partners (employees), Starbucks Coffee Company has transformed the way people in 37 countries enjoy their coffee, one cup at a time. Starbucks is the premier purveyor of the finest coffee in the world, with more than 11,000 retail locations in North America, Latin America, Europe, the Middle East and the Pacific Rim. The Company is committed to offering its customers the highest quality coffee and human connection through the Starbucks Experience, while striving to improve the social, environmental and economic well being of its partners, coffee farmers, countries of coffee origin, and the communities which it serves. Through Ethos Water, Starbucks demonstrates its long history of integrating a social conscience into all aspects of its business. The Company surprises and delights its customers by producing and selling bottled Starbucks Frappuccino® coffee drinks, Starbucks DoubleShot® espresso drink and Starbucks® superpremium ice creams through its joint venture partnerships, and Starbucks(TM) Coffee and Cream Liqueurs through a marketing and distribution agreement, in other convenient locations outside its retail operations. The Company"s brand portfolio includes superpremium Tazo® teas, Starbucks Hear Music(TM) compact discs, Seattle"s Best Coffee and Torrefazione Italia. These brands" unique and innovative personalities allow Starbucks to appeal to a broad consumer base.

This release includes the following forward-looking statements: anticipated store openings, comparable store sales expectations, trends in or expectations regarding the Company"s net revenue, estimated stock based compensation expense, capital expenditures, effective tax rate, and earnings per share results. These forward-looking 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, dairy and other raw material prices and availability, successful execution of internal performance and expansion plans, fluctuations in U.S. and international economies and currencies, the impact of initiatives by competitors, the effect of legal proceedings, and other risks detailed in the Company"s 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 October 2, 2005. The Company assumes no obligation to update any of these forward-looking statements.

© 2006 Starbucks Coffee Company. All rights reserved.

http://www.businesswire.com/cnn/sbux.shtml


Contact:

Starbucks
Investor Relations:
JoAnn DeGrande, 206-318-7893
jdegrand@starbucks.com
or
Media:
T. May Kulthol, 206-318-7100
mkulthol@starbucks.com

Source: Starbucks Corporation
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