SBUX ISIncome Statement - As Reported 10K in millionsIncome Statement - As Reported 10Q in millions9/30/139/30/149/30/159/30/169/30/179/30/18TTM12/30/173/30/186/30/189/30/1812/29/18TTM Company-operated stores$11,793.2$12,977.9$15,197.3$16,844.1$17,650.719,690.320,318.8 Company-operated stores4,741.84,828.05,060.45,060.1$5,370.3020,318.8 Total specialty$3,073.6$3,469.9$3,965.4$4,471.8$4,736.15,029.24,959.6 Total specialty1,331.91,203.81,249.91,243.5$1,262.404,959.6 Licensed stores$1,360.5$1,588.6$1,861.9$2,154.2$2,355.02,652.22,706.9 Licensed stores682.4625.6660.6683.6$737.102,706.9 CPG, foodservice and other$1,713.1$1,881.3$2,103.5$2,317.6$2,381.12,377.02,252.7 CPG, foodservice and other649.5578.2589.3559.9$525.302,252.7Total net revenues$14,866.8$16,447.8$19,162.7$21,315.9$22,386.8$24,719.525,278.4Total net revenues6,073.76,031.86,310.36,303.6$6,632.7025,278.4 Cost of sales including occupancy costs-$6,382.3-$6,858.8-$7,787.5-$8,511.1-$9,038.2-10,174.5-10,434.2 Cost of sales including occupancy costs-2,502.9-2,516.0-2,554.9-2,604.6($2,758.70)-10,434.2 Store operating expenses-$4,286.1-$4,638.2-$5,411.1-$6,064.3-$6,493.3-7,193.2-7,449.2 Store operating expenses-1,737.0-1,789.6-1,825.0-1,841.6($1,993.00)-7,449.2 Other operating expenses-$431.8-$457.3-$522.4-$545.4-$553.8-539.3-532.2 Other operating expenses-141.6-134.3-148.0-156.7($93.20)-532.2 Depreciation and amortization expenses-$621.4-$709.6-$893.9-$980.8-$1,011.4-1,247.0-1,321.6 Depreciation and amortization expenses-258.8-331.6-330.0-326.6($333.40)-1,321.6 General and administrative expenses-$937.9-$991.3-$1,196.7-$1,360.6-$1,393.3-1,759.0-1,797.8 General and administrative expenses-379.1-405.8-468.7-460.0($463.30)-1,797.8 Restructuring and impairments$0.0$0.0$0.0$0.0-$153.5-224.4-240.0 Restructuring and impairments-27.6-134.7-16.9-45.2($43.20)-240.0 Litigation credit / charge-$2,784.1$20.2$0.0$0.0$0.0$0.0Income from equity investees89.452.771.487.7$67.80279.6Income from equity investees$251.4$268.3$249.9$318.2$391.4301.2279.6Operating income / loss1,116.1772.51,038.2956.6$1,015.703,783.0Operating income / loss-$325.4$3,081.1$3,601.0$4,171.9$4,134.7$3,883.33,783.0Gain resulting from acquisition of joint venture1,326.3Net interest and other income62.3483-$24.8074.9 Gain resulting from acquisition of joint venture$0.0$0.0$390.6$0.0$0.01,376.4$0.0 Interest income and other, net88.2313239$24.80126.0Loss on divestiture of certain operations$0.0$0.0-$61.1$0.0$0.0499.2 Interest expense-25.9-503($75.00)-77.0 Interest income and other, net$123.6$142.7$43.0$108.0$275.3191.4$126.0Earnings / loss before income taxes3,005.9363236$965.501,068.7 Interest expense-$28.1-$64.1-$70.5-$81.3-$92.5-170.3-$77.0Income tax expense / benefit-755.8-35-45-64($205.10)-349.4Earnings / loss before income taxes-$229.9$3,159.7$3,903.0$4,198.6$4,317.5$5,780.0$1,068.7Net earnings / loss including noncontrolling interests2,250.18161,027932$760.403,534.721.83%Net earnings / loss attributab.
SBUX ISIncome Statement - As Reported 10K in millionsIncome Statem.docx
1. SBUX ISIncome Statement - As Reported 10K in
millionsIncome Statement - As Reported 10Q in
millions9/30/139/30/149/30/159/30/169/30/179/30/18TTM12/30
/173/30/186/30/189/30/1812/29/18TTM Company-operated
stores$11,793.2$12,977.9$15,197.3$16,844.1$17,650.719,690.3
20,318.8 Company-operated
stores4,741.84,828.05,060.45,060.1$5,370.3020,318.8 Total
specialty$3,073.6$3,469.9$3,965.4$4,471.8$4,736.15,029.24,95
9.6 Total
specialty1,331.91,203.81,249.91,243.5$1,262.404,959.6
Licensed
stores$1,360.5$1,588.6$1,861.9$2,154.2$2,355.02,652.22,706.9
Licensed stores682.4625.6660.6683.6$737.102,706.9 CPG,
foodservice and
other$1,713.1$1,881.3$2,103.5$2,317.6$2,381.12,377.02,252.7
CPG, foodservice and
other649.5578.2589.3559.9$525.302,252.7Total net
revenues$14,866.8$16,447.8$19,162.7$21,315.9$22,386.8$24,7
19.525,278.4Total net
revenues6,073.76,031.86,310.36,303.6$6,632.7025,278.4 Cost
of sales including occupancy costs-$6,382.3-$6,858.8-$7,787.5-
$8,511.1-$9,038.2-10,174.5-10,434.2 Cost of sales including
occupancy costs-2,502.9-2,516.0-2,554.9-2,604.6($2,758.70)-
10,434.2 Store operating expenses-$4,286.1-$4,638.2-$5,411.1-
$6,064.3-$6,493.3-7,193.2-7,449.2 Store operating expenses-
1,737.0-1,789.6-1,825.0-1,841.6($1,993.00)-7,449.2 Other
operating expenses-$431.8-$457.3-$522.4-$545.4-$553.8-539.3-
532.2 Other operating expenses-141.6-134.3-148.0-
156.7($93.20)-532.2 Depreciation and amortization expenses-
$621.4-$709.6-$893.9-$980.8-$1,011.4-1,247.0-1,321.6
Depreciation and amortization expenses-258.8-331.6-330.0-
326.6($333.40)-1,321.6 General and administrative expenses-
$937.9-$991.3-$1,196.7-$1,360.6-$1,393.3-1,759.0-1,797.8
General and administrative expenses-379.1-405.8-468.7-
2. 460.0($463.30)-1,797.8 Restructuring and
impairments$0.0$0.0$0.0$0.0-$153.5-224.4-240.0
Restructuring and impairments-27.6-134.7-16.9-45.2($43.20)-
240.0 Litigation credit / charge-
$2,784.1$20.2$0.0$0.0$0.0$0.0Income from equity
investees89.452.771.487.7$67.80279.6Income from equity
investees$251.4$268.3$249.9$318.2$391.4301.2279.6Operating
income /
loss1,116.1772.51,038.2956.6$1,015.703,783.0Operating
income / loss-
$325.4$3,081.1$3,601.0$4,171.9$4,134.7$3,883.33,783.0Gain
resulting from acquisition of joint venture1,326.3Net interest
and other income62.3483-$24.8074.9 Gain resulting from
acquisition of joint venture$0.0$0.0$390.6$0.0$0.01,376.4$0.0
Interest income and other, net88.2313239$24.80126.0Loss on
divestiture of certain operations$0.0$0.0-$61.1$0.0$0.0499.2
Interest expense-25.9-503($75.00)-77.0 Interest income and
other, net$123.6$142.7$43.0$108.0$275.3191.4$126.0Earnings
/ loss before income taxes3,005.9363236$965.501,068.7
Interest expense-$28.1-$64.1-$70.5-$81.3-$92.5-170.3-
$77.0Income tax expense / benefit-755.8-35-45-64($205.10)-
349.4Earnings / loss before income taxes-
$229.9$3,159.7$3,903.0$4,198.6$4,317.5$5,780.0$1,068.7Net
earnings / loss including noncontrolling
interests2,250.18161,027932$760.403,534.721.83%Net earnings
/ loss attributable to noncontrolling interests-0.1-156-175-
176$0.20-505.9Income tax expense / benefit$238.7-$1,092.0-
$1,143.7-$1,379.7-$1,432.6-1,262.0-349.4Net earnings / loss
attributable to
Starbucks2,250.0660852756$760.603,028.8Earnings before
cumulative effect of change in accounting
principle$8.8$2,067.7$2,759.3$2,818.9$2,884.9$4,518.0Per
shareNet earnings / loss including noncontrolling
interests$8.8$2,067.7$2,759.3$2,818.9$2,884.9$4,518.0$3,534.
7 Basic1.580.470.620.451.54Net earnings / loss attributable to
noncontrolling interests-$0.5$0.4-$1.9-$1.2-$0.20.3-$505.9
3. Diluted1.570.470.610.56$0.612.25Net earnings / loss
attributable to
Starbucks$8.3$2,068.1$2,757.4$2,817.7$2,884.7$4,518.3$3,028
.8Weighted average sharesPer share
Basic1,421.01,394.91,377.1-1,240.6
Basic$0.01$1.37$1.84$1.91$1.99$3.27$2.52
Diluted1,434.61,406.61,388.51,348.71,253.4
Diluted$0.01$1.35$1.82$1.90$1.97$3.24$2.25Weighted average
shares Basic1,498.51,506.31,495.91,471.61,449.51,382.7
Diluted1,524.51,526.31,513.41,486.71,461.51,394.6
SBUX BSBalance Sheet - As Reported 10KBalance Sheet - As
Reported
10QTTM9/30/139/30/149/30/159/30/169/30/179/30/18TTM12/3
1/189/30/186/30/183/30/1812/31/17Cash and cash
equivalents4761.68,7561,8922,1423,661 Cash and cash
equivalents$2,575.7$1,708.4$1,530.1$2,128.8$2,462.3$8,756.3$
4,761.6Short-term investments230.218285101107 Short-term
investments$658.1$135.4$81.3$134.4$228.6$181.5$230.2Accou
nts receivable, net721.4693855870852 Accounts receivable,
net$561.4$631.0$719.0$768.8$870.4$693.1$721.4Inventories13
54.61,4011,3871,3761,313
Inventories$1,111.2$1,090.9$1,306.4$1,378.5$1,364.0$1,400.5$
1,354.6Prepaid expenses and other current
assets608.51,4631,3651,169951 Prepaid expenses and other
CA$287.7$285.6$334.2$347.4$358.1$1,462.8$608.5Total
current assets7,67612,4945,5835,6576,884 Deferred income
taxes, net$277.3$317.4$0.0$0.0$0.0$0.0$0.0Long-term
investments265268261293364 Total current
assets$5,471.4$4,168.7$3,971.0$4,757.9$5,283.4$12,494.2$7,67
6.3Equity and cost investments336.1335323298288 Long-term
investments$58.3$318.4$312.5$1,141.7$542.3$267.7$265.0Prop
erty, plant and equipment, net6039.35,9295,6905,5775,379
Equity and cost
investments$496.5$514.9$352.0$354.5$481.6$334.7$336.1Defe
rred income taxes, net650135149165158 Property, plant and
equipment,
4. net$3,200.5$3,519.0$4,088.3$4,533.8$4,919.5$5,929.1$6,039.3
Other long-term assets472.7412405542526 Deferred income
taxes, net$967.0$903.3$1,180.8$885.4$795.4$134.7$650.0Other
intangible assets981.61,0421,1231,2281,246 Other long-term
assets$185.3$198.9$415.9$403.3$362.8$412.2$472.7Goodwill3
560.33,5423,6483,7943,675 Other intangible
assets$274.8$273.5$520.4$516.3$441.4$1,042.2$981.6Total
Assets19,98124,15617,18217,55318,519
Goodwill$862.9$856.2$1,575.4$1,719.6$1,539.2$3,541.6$3,560
.3Total
assets$11,516.7$10,752.9$12,416.3$14,312.5$14,365.6$24,156.
4$19,981.3Accounts payable1100.51,179921870852Accrued
liabilities, net25642,6482,6712,6114,111 Accounts
payable$491.7$533.7$684.2$730.6$782.51,1791,101Insurance
reserves208.8214215222210 Accrued litigation
charge$2,784.1$0.0$0.0$0.0$0.0$0.0$0.0Stored value card
liability and deferred revenue1554.21,6431,4451,4841,668
Accrued
liabilities$1,269.3$1,514.4$1,755.3$1,999.1$1,934.5$2,298.4$2
,564.0Short-term debt-300- Current portion of long-term
debt$0.0$0.0$0.0$399.9$0.0$349.9$0.0Total current
liabilities5,4285,6845,5525,1876,841 Insurance
reserves$178.5$196.1$224.8$246.0$215.2$213.7$208.8Long-
term debt9130.79,0906,1496,1854,567 Stored value card
liability & deferred
revenue$653.7$794.5$983.8$1,171.2$1,288.5$1,642.9$1,554.2D
eferred revenue6823.76,776-- Total current
liabilities$5,377.3$3,038.7$3,648.1$4,546.8$4,220.7$5,684.2$5
,427.5Other long-term liabilities1478.21,4311484.71,4641,352
Long-term
debt$1,299.4$2,048.3$2,347.5$3,185.3$3,932.6$9,090.2$9,130.
7 Capitalized Long Term
Leases$0.0$0.0$43.9$57.7$55.0$53.6Common stock1.21111
Deferred
revenue$357.7$0.0$0.0$0.0$4.4$6,775.7$6,823.7Additional
paid-in capital41.141414141 Deferred tax & other long term
5. liabilities$392.2$557.0$632.0$695.9$1,376.9$1,478.2Retained
earnings-25841,4574,1514,6365,835Accumulated other
comprehensive income / loss-343.2-330-20333-125 Common
stock$0.8$0.7$1.5$1.5$1.4$1.3$1.2Noncontrolling
interest6.16677 Additional paid-in
capital$282.1$39.4$41.1$41.1$41.1$41.1$41.1Total
shareholders' equity-2,8851,1703,9914,7115,752 Retained
earnings$4,130.3$5,206.6$5,974.8$5,949.8$5,563.2$1,457.4-
$2,584.0Total equity-2,8791,1763,9974,7185,759 Accum
other comprehensive inc / loss$67.0$25.3-$199.4-$108.4-
$155.6-$330.3-$343.2Total liabilities and
equity19,98124,15617,18217,55318,519 Noncontrolling
interest$2.1$1.7$1.8$6.7$6.9$6.3$6.1 Total shareholders’
equity$4,480.2$5,272.0$5,818.0$5,884.0$5,450.1$1,169.5-
$2,884.9 Total
equity$4,482.3$5,273.7$5,819.8$5,890.7$5,457.0$1,175.8-
$2,878.8Total Liabilities &
Equity$11,516.7$10,752.9$12,416.3$14,312.5$14,365.6$24,156
.4$19,981.3Balance Sheet0000000
SBUX CFCash Flow Statement - As Reported
10K9/30/139/30/149/30/159/30/169/30/179/30/18 Net earnings
including noncontrolling
interests$8.8$2,067.7$2,759.3$2,818.9$2,884.9$4,518.0
Depreciation and
amortization$655.6$748.4$933.8$1,030.1$1,067.1$1,305.9
Litigation charge$2,784.1-------- Deferred income taxes, net-
$1,045.9$10.2$21.2$265.7$95.1$714.9 Income earned from
equity method investees-$171.8-$182.7-$190.2-$250.2-$310.2-
$242.8 Distributions received from equity method
investees$115.6$139.2$148.2$223.3$186.6$226.8
Deconsolidation, gain / loss, amount----$0.0-$6.1-$93.5-$499.2
Gain resulting from acquisition / sale of equity in joint
ventures-$80.1-$70.2-$394.3$0.0$0.0-$1,376.4 Other
excluding gain resulting from acquisition / sale of equity in
joint ventures$23.0$36.2$53.8$45.1$68.9$89.0 Loss on
extinguishment of debt$0.0$0.0$61.1$0.0$0.0$0.0 Stock-
6. based compensation$142.3$183.2$209.8$218.1$176.0$250.3
Excess tax benefit on share-based awards-$258.1-$114.4-
$132.4-$122.8-$77.5$0.0 Goodwill, impairment loss----
$0.0$0.0$87.2$37.6 Cash provided / used by changes in OA &
Liab$734.8-$2,209.8$278.8$353.0$89.7$6,913.7 Accounts
receivable-$68.3-$79.7-$82.8-$55.6-$96.8$131.0 Other
operating assets and liabilities$422.0$418.3$261.5$248.8-$4.7-
$677.1 Inventories$152.5$14.3-$207.9-$67.5$14.0-$41.2
Accounts payable$88.7$60.4$137.7$46.9$46.4$391.6
Accrued litigation charge$0.0-$2,763.9-------- Stored value
card liability$139.9$140.8$170.3$180.4$130.8$7,109.4Net cash
provided / used by operating activities$3,643.1-
$1,602.0$4,027.9$4,928.1$4,264.0$18,851.5 Purchases of
investments-$785.9-$1,652.5-$567.4-$1,585.7-$674.4-$191.9
Other, net-$11.9-$19.1$6.8$24.9$1,108.8$464.6 Proceeds
from sale and maturity of available-for-sale
securities$60.2$1,454.8$600.6$680.7$1,054.5$459.0 Other-
$11.9-$19.1$6.8$24.9$54.3$5.6 Maturities and calls of
investments$980.0$456.1$18.8$27.9$149.6$45.3 Acquisitions,
net of cash acquired-$610.4$0.0-$284.3$0.0$0.0-$1,311.3
Additions to PP&E excl proceeds from sale of equity in joint
ventures & certain retail oper-$1,151.2-$1,160.9-$1,303.7-
$1,440.3-$1,519.4-$1,976.4 Proceeds from sale of equity in
joint ventures and certain retail
operations$108.0$103.9$8.9$69.6$85.4$608.2Net cash provided
/ used by investing activities-$1,411.20-$817.70-$1,520.30-
$2,222.90-$850.00-$2,361.5 Proceeds from issuance of long-
term debt$749.7$748.5$848.5$1,254.5$750.2$5,584.1
Repayments of long-term debt-$35.2$0.0-$610.1$0.0-
$400.0$0.0 Other excluding repayments of long-term
debt$10.4-$6.9-$18.1-$8.4-$4.4-$41.2 Cash used for purchase
of noncontrolling interest$0.0$0.0-$360.8$0.0$0.0$0.0
Proceeds from issuance of cs excl min tax withholdings on
share-based awards$247.2$139.7$191.8$160.7$150.8$153.9
Minimum tax withholdings on share-based awards-$121.4-
$77.3-$75.5-$106.0-$82.8-$62.7 Excess tax benefit on share-
7. based awards$258.1$114.4$132.4$122.8$77.5$0.0 Cash
dividends paid-$628.9-$783.1-$928.6-$1,178.0-$1,450.4-
$1,743.4 Repurchase of common stock-$588.1-$758.6-
$1,436.1-$1,995.6-$2,042.5-$7,133.5Net cash used / provided
by financing activities-$108.2-$623.3-$2,256.5-$1,750.0-
$3,001.6-$3,242.8Effect of exchange rate changes on cash and
cash equivalents-$1.8-$34.1-$150.6-$3.5$10.8-$39.5Net
increase / decrease in cash and cash equivalents$2,121.9-
$3,077.1$100.5$951.7$423.2$13,207.7Cash and cash
equivalents beginning of
period$1,188.6$2,575.7$1,708.4$1,530.1$2,128.8$2,462.3Cash
and cash equivalents end of period$3,310.5-
$501.4$1,808.9$2,481.8$2,552.0$15,670.0Supplemental
disclosure Cash paid during the period for Interest, net of
capitalized interest-$34.4-$56.2-$69.5-$74.7-$96.6$137.1
Income taxes, net of refunds-$539.1-$766.3-$1,072.2-$878.7-
$1,389.1-$1,176.9
SegmentSales Segment BreakdownForecasted Sales GrowthSEP
'13SEP '14SEP '15SEP '16SEP '17SEP '18Sep '19Sep '20Sep
'21Sep '22Sep
'23Americas11,00111,98113,29314,79515,62016,732Segment
sales forecasting is required - margins extra creditChina/Asia
Pacific9171,1302,3962,9393,2404,474Details of how you are
forecasting segment is up to you. You willChannel
Development1,4111,5461,7311,9332,2572,297see in rows 64-75
a breakdown in company vs licensed stores & ChannelEurope,
Middle East, & Africa1,1451,2951,2171,1259591,048You can
also look at ticket and transaction. See "Comp Sales" tabAll
Other
Segments394497526524311168Total14,86716,44819,16321,316
22,38724,72000000Growth in
salesAmericas10.7%8.9%11.0%11.3%5.6%7.1%China/Asia
Pacific27.1%23.2%112.1%22.7%10.3%38.1%Channel
Development9.4%9.6%12.0%11.6%16.8%1.8%Europe, Middle
East, & Africa2.1%13.1%-6.0%-7.5%-14.8%9.3%Corporate &
Other88.7%26.2%5.8%-0.3%-40.6%-45.9%TV Growth
8. rateTotal12.0%10.6%16.5%11.2%5.0%10.4%-
100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO
R:#DIV/0!0.0%% of whole
SalesAmericas74.0%72.8%69.4%69.4%69.8%67.7%If you
predict % of the whole and total growth line, back into growth
of each segmentChina/Asia
Pacific6.2%6.9%12.5%13.8%14.5%18.1%If you predict growth
of each segment, then back into % of the wholeChannel
Development9.5%9.4%9.0%9.1%10.1%9.3%Europe, Middle
East, & Africa7.7%7.9%6.3%5.3%4.3%4.2%Corporate &
Other2.6%3.0%2.7%2.5%1.4%0.7%Total100.00%100.00%100.0
0%100.00%100.00%100.0%0.0%0.0%0.0%0.0%0.0%Operating
Income Segment BreakdownForecasted Operating Income
GrowthSEP '13SEP '14SEP '15SEP '16SEP '17SEP '18Sep
'19Sep '20Sep '21Sep '22Sep
'23Americas2,3652,8093,2233,7423,6543,614Growth17.07%18.
76%14.75%16.09%-2.36%-1.07%China/Asia
Pacific321373501632765867Growth4623.53%15.97%34.36%26.
19%21.12%13.39%Europe, Middle East, &
Africa641191681529571Growth-74.58%85.67%41.11%-9.87%-
37.66%-24.87%Channel
Development416557654807967927Growth22.06%34.10%17.35
%23.46%19.78%-4.13%Corporate & Other-3,492-777-945-
1,161-1,345-1,587Growth25.91%-
77.75%21.64%22.83%15.92%17.96%Consolidated Operating
Income-3253,0813,6014,1724,1353,89300000% of wholeSEP
'13SEP '14SEP '15SEP '16SEP '17SEP '18Americas-
726.9%91.2%89.5%89.7%88.4%92.8%China/Asia Pacific-
98.7%12.1%13.9%15.1%18.5%22.3%Europe, Middle East, &
Africa-19.7%3.9%4.7%3.6%2.3%1.8%Channel Development-
127.7%18.1%18.2%19.4%23.4%23.8%Corporate &
Other1073.0%-25.2%-26.2%-27.8%-32.5%-
40.8%Total100.0%100.0%100.0%100.0%100.0%100.0%Forecas
ted Operating Margin GrowthOperating MarginSEP '13SEP
'14SEP '15SEP '16SEP '17SEP '18Sep '18Sep '19Sep '20Sep
'21Sep
10. …201320142015201620172018TTM20192020202120222023Seg
ment?Transaction and Price?<---------------------- Historical ---
-----------------><---------------------- Projection ------------------
-->% Change in
Revenue201320142015201620172018TTM201920202021202220
23TVOverall Revenue growth
rate10.6%16.5%11.2%5.0%10.4%2.3%Growth rates should be
connected to segment tabCompany Operated
Revenue10.0%17.1%10.8%4.8%11.6%3.2%Or can build up
growth rates in rows 4 thru … in thisLicensed Store
Revenue16.8%17.2%15.7%9.3%12.6%2.1%tab based on
alternative forecastingCPG & Other9.8%11.8%10.2%2.7%-
0.2%-5.2%Same Store Sales
Systemwide7%6%7%5%3%2%4%Same Store
Americas7%6%7%6%3%2%4%Same Store
CAP9%7%9%3%3%1%3%% of SalesCost of salesCost of sales
wo depreciation & amortizationStore operating expensesOther
operating incom expenseGross Profit MarginTotal Depreciation
and Amortization expensesRemember part of d&a was in COGS
- get total from CF statementGeneral & administrative
expensesRestructuring & impairments & LitigationI'm assuming
these costs are non-recurring as the majority ofIncome from
equity investorsrestructuring seems to be done. If you disagree,
add this cost inEBIT Margin GAAPNon-GAAP EBIT
MarginNon-GAAP EBITDA MarginTax rate (effective tax
rate)103.8%34.6%29.3%32.9%33.2%21.8%Capital Expenditures
use Net PPE % of salesuse PPE1 - PPE0 + DepreciationCapital
Expenditures using CF Stmt % of salesUse CF Statement
methodAcquisitions4.1%0.0%1.5%0.0%0.0%5.3%only forecast
if ongoing and if so incl in DCF% of Given Intangible and
PP&E as notedAmortization as a % of Intangible
AssetsDepreciation as a % of PP&E% of Given Intangible and
PP&E as notedAmortization as a % of Intangible
AssetsDepreciation as a % of PP&EInvested Capital (% of Sales
or
Days)201320142015201620172018TTM20192020202120222023
11. Cash and Cash Equivalents (actual)Operating Cash (% of sales -
hard coded in)do not assume 2% unless appropriate - look at
historical numbers (below) and peer dataDays Sales
OutstandingDays Inventory OutstandingPrepaid Expenses (% of
sales)Days Payables OutstandingAccrued liabilities % of
SalesInsurance Reserves % of SalesStored Value card liability
% of SalesCash Conversion
Cycle0.000.000.000.000.000.000.000.000.000.000.000.00% of
SalesEquity & Cost InvestmentsPlant, property & equip,
netIntangible AssetsNet investment in direct financing
leasesOther assets net of Other liabilities$
millionsGoodwill862.9856.21575.41719.61539.23541.63560.3H
istorical Cash and
Revenue2005200620072008200920102011201220132014201520
1620172018Cash and Cash
Equivalents3003134383236661450205120373233.81843.81611.
42263.22690.98937.799805Total Sales
Revenue63697787941110383977510707117001330014866.8164
47.819162.721315.922386.824719.500976Cash as a % of
Revenue4.71%4.02%4.65%3.11%6.81%13.54%17.53%15.32%2
1.75%11.21%8.41%10.62%12.02%36.16%Avg prior toLong
termSince '12ultra low ratesaverageaverageCash as a % of
Revenue4.12%10.28%13.22%Left out 2018 as that was the year
they tripled their leverage
ROICROIC & Economic ProfitROIC Including
Goodwill20132014201520162017201820192020202120222023R
eturn on avg invested
capital0.0%0.0%0.0%0.0%0.0%0.0%ERROR:#DIV/0!ERROR:#
DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!Return on avg invested
capital with oper leaseReturn on avg unadjusted invested
cap47.0%46.4%47.0%43.6%38.6%0.0%0.0%0.0%0.0%0.0%Retu
rn on avg unadjusted invested cap w lease$
Millions20132014201520162017201820192020202120222023Ec
onomic profit capital chargeEconomic profit spreadNOPLAT
(adjusted
values)20132014201520162017201820192020202120222023Tot
12. al
Revenues14,866.816,447.819,162.721,315.922,386.824,719.5Ca
n break this down by geography or Company/ Licensed/
CPGCompany Operated
Sales11,793.212,977.915,197.316,844.117,650.719,690.3Licens
ed Store Sales1,360.51,588.61,861.92,154.22,355.02,652.2CPG
& Other1,713.11,881.32,103.52,317.62,381.12,377.0Cost of
sales(6,382.3)(6,858.8)(7,787.5)(8,511.1)(9,038.2)(10,174.5)Co
st of sales wo depreciation &
amortization(6,348.1)(6,820.0)(7,747.6)(8,461.8)(8,982.5)(10,1
15.6)Store operating
expenses(4,286.1)(4,638.2)(5,411.1)(6,064.3)(6,493.3)(7,193.2)
Other operating incom
expense(431.8)(457.3)(522.4)(545.4)(553.8)(539.3)Gross
Profit3,800.84,532.35,481.66,244.46,357.26,871.4Total
Depreciation and Amortization
expenses(655.6)(748.4)(933.8)(1,030.1)(1,067.1)(1,305.9)0.00.0
0.00.00.0General & administrative
expenses(937.9)(991.3)(1,196.7)(1,360.6)(1,393.3)(1,759.0)Rest
ructuring & impairments &
Litigation(2,784.1)20.20.00.0(153.5)(224.4)I am assuming this
is non-recurring. If you believe differently, then includeIncome
from equity
investors251.4268.3249.9318.2391.4301.2EBIT(325.4)3,081.13,
601.04,171.94,134.73,883.30.00.00.00.00.0Reported Operating
Income
GAAP(325.4)3,081.13,601.04,171.94,134.73,883.3Adjusted
Operating Income Non-
GAAP2,458.73,060.93,601.04,171.94,288.24,107.70.00.00.00.0
0.0Tax expenseNOPLAT Non-GAAPNon-GAAP
EBITDADepreciation and Amortization CF
Stmt655.6748.4933.81,030.11,067.11,305.90.00.00.00.00.0Depr
eciation and Amortization Inc
Stmt621.4709.6893.9980.81,011.41,247.0Break Out
Depreciation & Amortization
(10K)DepreciationAmortizationCapital Expenditures using Net
13. PPE formulause Net PPE1 - Net PPE0 + DepreciationCapital
Expenditures using CF
STMT1,151.21,160.91,303.71,440.31,519.41,976.4use % of
sales methodAcquisitions (only incl in FCF if ongoing
strategy)610.40.0284.30.00.01,311.3only forecast if ongoing
and if so incl in DCFInvested Capital$
millions20132014201520162017201820192020202120222023O
perating Cash0.00.00.00.00.00.0Accounts
receivable561.4631.0719.0768.8870.4693.1Inventories1111.210
90.91306.41378.51364.01400.5Prepaid expenses and other
current assets287.7285.6334.2347.4358.11462.8Operating
current assets1960.32007.52359.62494.72592.53556.4Accounts
payable491.7533.7684.2730.6782.51,179.3Accrued expenses
and other current
liabilities1,269.31,514.41,755.31,999.11,934.52,298.4Insurance
Reserves178.5196.1224.8246.0215.2213.7Stored Card &
Deferred
Revenue653.7794.5983.81,171.21,288.51,642.9Operating
current
liabilities2,593.23,038.73,648.14,146.94,220.75,334.3Operating
working capital-632.9-1,031.2-1,288.5-1,652.2-1,628.2-
1,777.9Equity & Cost
Investments496.5514.9352.0354.5481.6334.7Plant, property &
equip, net3200.53519.04088.34533.84919.55929.1Other LT
Assets185.3198.9415.9403.3362.8412.2Intangible
assets274.8273.5520.4516.3441.41042.2Goodwill862.9856.2157
5.41719.61539.23541.6Deferred
Revenue(357.7)0.00.00.0(4.4)(6,775.7)Invested
Capital4,029.44,331.35,663.55,875.36,111.92,706.2Total Funds
Invested (Sources)Current portion of LT
Debt0.00.00.0399.90.0349.9Long-term
debt1299.42048.32347.53185.33932.69090.2Capitalized Lease
Obligations0.00.043.957.755.053.6Total
Debt1299.42048.32391.43642.93987.69493.7Deferred Income
Tax-1244.3-828.5-623.8-253.4-99.51242.2Total Debt &
Equivalents55.11219.81767.63389.53888.110735.9Shareholder
14. Equity4482.35273.75819.85890.75457.01175.8Equity & Equity
Equivalents4482.35273.75819.85890.75457.01175.8Non-
operating AssetsExcess
Cash3233.81843.81611.42263.22690.98937.8Investments58.331
8.4312.51141.7542.3267.7Litigation Charge-
2784.10.00.00.00.00.0Total Non-operating
assets508.02162.21923.93404.93233.29205.5Adjusted Invested
Capital4,029.44,331.35,663.55,875.36,111.92,706.2Check
invested
capitalbalancebalancebalancebalancebalancebalanceUnadjusted
Invested
Capital5781.77322.08211.29533.69444.610669.57963.37963.37
963.37963.37963.3
WACCStarbucks CorporationSettlement3/7/19Price History:
Beta3 yearCan choose other time periods if relevant Amount
Outstanding in millions of USD5 yearBalance SheetInstrument
IDDescriptionAmount OutCoupon RateCoupon TypeIssue
DateMaturity DateIssue CurrSeniorityPriceYTWMarket Value%
of
TotalSBUXS&PNotes/BondsDatePriceDatePrice855244AL3Star
bucks Corp500.00.022Fixed11/201711/2020USDSNR
Unsec98.86103/01/1970.8503/01/192803.691855244AJ8Starbuc
ks Corp750.00.021Fixed02/201602/2021USDSNR
Unsec98.492.91202/22/1971.302/22/192792.6710222261855244
AG4Starbucks Corp500.00.027Fixed06/201506/2022USDSNR
Unsec99.043.01302/15/1970.7102/15/192775.597100523855244
AD1Starbucks Corp750.00.0385Fixed09/201310/2023USDSNR
Unsec102.563.21402/08/1969.7502/08/192707.88038489778552
44AN9Starbucks
Corp1,000.00.031Fixed02/201803/2023USDSNR
Unsec99.823.15502/01/1968.1102/01/192706.533459959385524
4AQ2Starbucks
Corp1,250.00.038Fixed08/201808/2025USDSNR
Unsec101.323.56601/25/1967.0901/25/192664.76050957338552
44AK5Starbucks
Corp500.00.0245Fixed05/201606/2026USDSNR
22. historical, industry and numbers that make the investment rate
make senseExit Multiple (EV/EBITDA)Less: debtTerminal
growth rate0.00%0.00%EBITDA (2023)0.0Terminal
ValueTerminal ValuePV Terminal Value- 0- 0PV Terminal
Value0.0Equity ValueEnterprise Value- 0- 0% of Enterprise
ValueERROR:#DIV/0!% of Enterprise
ValueERROR:#DIV/0!ERROR:#DIV/0!Enterprise Value-
0Shares outstandingEquity ValueEquity Value/
shareERROR:#DIV/0!Equity Value/
shareERROR:#DIV/0!ERROR:#DIV/0!DeviationERROR:#DIV/
0!Equity ValueExit MultipleEquity ValuePerpetuity Growth
RateWACCWACCToggleWACCDon't automatically use my
variation on yourEV/EBITDAsensitivity analysis. Determine
what makesgsense for SBUX given their historyTTM
EPSMultipleROICImplied Equity Value/
shareERROR:#DIV/0!ERROR:#DIV/0!Implied P/E
RatioERROR:#DIV/0!ERROR:#DIV/0!Historical Average P/E
ratio26.58fiscalexcluded 2013 as an outlierHistorical Average
P/E ratio27.50CalendarCurrent Ratio28.17LT Industry
AverageMultipleROICImplied Enterprise
Value$0.00$0.00Implied EV/EBITDA Ratio0.000.00Historical
Average EV/EBITDA ratio LT14.60Historical Average
EV/EBITDA ratio 5 yr20.96Current EV/EBITDA14.61 LT
Industry Average
DCF w oper leaseHistorical valuesForecasted
Values(millions)201320142015201620172018CAGR201920202
02120222023TVSales14,866.816,447.819,162.721,315.922,386.
824,719.50.00.00.00.00.0growth
rate10.6%16.5%11.2%5.0%10.4%10.7%-
100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO
R:#DIV/0!COGS11,066.011,915.513,681.115,071.516,029.617,8
48.10.00.00.00.00.0Gross
profit3,800.84,532.35,481.66,244.46,357.26,871.40.00.00.00.00
.0gross
margin25.6%27.6%28.6%29.3%28.4%27.8%ERROR:#DIV/0!ER
ROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!
23. SG&A937.9991.31196.71360.61393.31759.00.00.00.00.00.0Oth
er income
(expense)251.4268.3249.9318.2391.4301.20.00.00.00.00.0EBIT
DA3,114.33,809.34,534.85,202.05,355.35,413.6EBITDA
margin20.9%23.2%23.7%24.4%23.9%21.9%11.7%ERROR:#DI
V/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:
#DIV/0!EBITDA growth22.3%19.0%14.7%2.9%1.1%-
100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO
R:#DIV/0!Depreciation &
Amortization655.6748.4933.81030.11067.11305.90.00.00.00.00.
0EBIT2,458.73,060.93,601.04,171.94,288.24,107.70.00.00.00.0
0.0EBIT or Operating
margin16.5%18.6%18.8%19.6%19.2%16.6%10.8%ERROR:#DI
V/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:
#DIV/0!EBIT growth24.5%17.6%15.9%2.8%-4.2%-
100.0%ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERRO
R:#DIV/0!tax
expense536.8668.3786.2910.9936.3896.90.00.00.00.00.0NOPL
AT1,921.92,392.62,814.83,261.03,351.93,210.8plus: Depr and
Amortization655.6748.4933.81,030.11,067.11,305.90.00.00.00.0
0.0less:
Capex1,151.21,160.91,303.71,440.31,519.41,976.411.4%Decide
which method you are using for capexless: Change NWC734.8-
398.3-257.3-363.724.0-
149.7FCF2,161.11,581.82,187.62,487.12,923.62,390.6Investme
nt Rate-
12.45%33.89%22.28%23.73%12.78%25.54%ERROR:#DIV/0!E
RROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/0!ERROR:#DIV/
0!Net Reinvestment-
239.2810.8627.2773.9428.3820.20.00.00.00.00.0TimeWACCPV
of FCFMultiple Approach to Terminal
ValueImpliedKeyFCFgrowthEquity Value w/
MultipleDrivergrowthSum of PV FCF- 0Enterprise
Value0.0Terminal ROICwhen deciding LT ROIC, look at
historical, industry and numbers that make the investment rate
make senseExit Multiple (EV/EBITDA)Less: debtTerminal
24. growth rate0.00%0.00%EBITDA (2023)0.0Terminal
ValueTerminal ValuePV Terminal Value- 0- 0PV Terminal
Value0.0Equity ValueEnterprise Value- 0- 0% of Enterprise
ValueERROR:#DIV/0!% of Enterprise
ValueERROR:#DIV/0!ERROR:#DIV/0!Enterprise Value-
0Shares outstandingEquity ValueEquity Value/
shareERROR:#DIV/0!Equity Value/
shareERROR:#DIV/0!ERROR:#DIV/0!DeviationERROR:#DIV/
0!Equity ValueExit MultipleEquity ValuePerpetuity Growth
RateWACCWACCToggleWACCDon't automatically use my
variation on yourEV/EBITDAsensitivity analysis. Determine
what makesgsense for SBUX given their historyTTM
EPSMultipleROICImplied Equity Value/
shareERROR:#DIV/0!ERROR:#DIV/0!Implied P/E
RatioERROR:#DIV/0!ERROR:#DIV/0!Historical Average P/E
ratio26.58fiscalexcluded 2013 as an outlierHistorical Average
P/E ratio27.50CalendarCurrent Ratio28.17LT Industry
AverageMultipleROICImplied Enterprise
Value$0.00$0.00Implied EV/EBITDA Ratio0.000.00Historical
Average EV/EBITDA ratio LT14.60Historical Average
EV/EBITDA ratio 5 yr20.96Current EV/EBITDA14.61 LT
Industry Average
Operating LeasesRentAdjustedPMTTimeLeaseLeasePV
LeaseFormulasRent PMTLease201801424.5Avg lease life =
Year 6 Lease/ average yrs 1-5201801424.52019113451345Depr
Exp = PV oper lease/ lease
life201911345202021277.61277.6Adj Debt = Debt + PV oper
Lease202021277.6202131194.51194.5Adj Invested Capital =
Adj Debt + Equity202131194.5202241091.51091.5Adj EBIT =
EBIT - rent exp + depr lease
exp202241091.520235962.2962.2Adj ROIC = Adj EBIT (1-t)/
Adj Invested
Capital20235962.2202463541.020246354178kdAvg yr 1-5Sum
PV LeaseAvg lease lifeDepr expNo
adjustmentEBIT4,107.7Debt9,493.7Inv
Capital10,669.5Equity1,175.8Tax
25. rate21.8%D/E8.07ROIC30.09%PP&E5,929.1With
adjustmentEBIT w/ adjust5,452.7Debt w/ adjust9,493.7Inv
Capital10,669.5Equity1,175.8Tax
rate21.8%D/E8.07ROIC39.95%PP&E adjusted5,929.1
Cash & Capex PeersSpecific CompetitorsMcDonaldsDEC
'18DEC '17DEC '16DEC '15DEC '14DEC '13DEC '12DEC
'11DEC '10DEC '09DEC '08 Cash and
equivalents8662,4641,2237,6862,0782,7992,3362,3362,3871,79
62,063Total
revenues21,02522,82024,62225,41327,44128,10627,56727,0062
4,07522,74523,522 Capital
expenditures2,7421,8541,8211,8142,5832,8253,0492,7302,1361,
9522,136Cash as % of
Sales4.12%10.80%4.97%30.24%7.57%9.96%8.47%8.65%9.92%
7.90%8.77%Capital expenditure as a % of
Sales13.04%8.12%7.40%7.14%9.41%10.05%11.06%10.11%8.87
%8.58%9.08%Shake ShackDEC '18DEC '17DEC '16DEC
'15DEC '14DEC '13DEC '12 Cash and cash
equivalents2521.511.670.82.713.157.0Total
revenue459358.8268.5190.6118.582.557.0Company operated
stores and IPO 2015 - see cash go up a lot Capital
expenditures8861.5354.4332.1228.5216.1911.04Cash as % of
Sales5.39%5.99%4.32%37.17%2.26%15.86%NMCapital
expenditure as a % of
Sales19.05%17.15%20.27%16.85%24.06%19.64%19.35%Dunki
n BrandsDEC '18DEC '17DEC '16DEC '15DEC '14DEC '13DEC
'12 Cash and cash
equivalents5181018.3361.40260.40208.10256.90252.60Total
revenue1,322860.5828.9810.9748.7713.8658.0 Capital
expenditures51.914.615.1730.2523.6431.122.4Cash as % of
Sales39.16%118.34%43.60%32.11%27.79%35.99%38.39%Capit
al expenditure as a % of
Sales3.93%1.70%1.83%3.73%3.16%4.36%3.40%Whitbread
(Costa Coffee)DEC '18DEC '17DEC '16DEC '15DEC '14DEC
'13 Cash and cash equivalents916357.102.1041.4040.00Total
revenue3,2953,106.02,921.82,608.12,294.32,030.0 Capital
33. 23,0502,9672,8462,7652,6982,6422,5802,5262,5012,488
EMEA
Licensed2,8302,4722,1191,6251,3231,1431,1091,0671,0411,014
984950930913890868856834795769755 EMEA Co-
operated4905025237378178268328318358558528508538458408
26829820820824840 (ME
Subtotal)643538436369326302310301295287285285282278279
280285281281277277Total
EMEA3,3202,9742,6422,3622,1401,9691,9411,8981,8761,8691,
8361,8001,7831,7581,7301,6941,6851,6541,6151,5931,595All
Other Segments 201820172016201520142013
Licensed123735414266808666768281808032732655255855854
9552 Co-
operated8290358375369357350323171414161314131098889Tot
al All Other
Segments203273934164114234304098390969793943403365615
66566557561 Total
Licensed13,98314,06412,37410,80810,6539,6249,3109,1078,90
98,7528,5488,3958,2688,0798,1568,0298,1858,0717,9527,8757,
878 Total Co-
operated15,34113,27512,71112,23510,71310,1439,8999,7619,36
99,3149,1039,0258,9768,9248,8628,8348,8248,7878,7858,7898,
828Grand
Total29,32427,33925,08523,04321,36619,76719,20918,86818,2
7818,06617,65117,42017,24417,00317,01816,86317,00916,8581
6,73716,66416,706Licensed Rate of Growth-
0.58%13.66%14.49%1.45%10.69%Company Oper Rate of
Growth15.56%4.44%3.89%14.21%5.62%4 Restated for Austria
& Switzerland acquisitionsNote:8 Restated for licensing
ChileHistorical store counts have been recast for any ownership
or segment reporting changes made prior to Q1 FY15. Effective
in Q1 FY15, we changed our store count policy such that we
will no longer recast historical store counts upon a change in
ownership. These transfers will be reflected as current period
activity within "net stores opened/(closed) or transferred"
during the period.(1) Q1 FY18 reflects the transfer of 112
34. Brazil stores from company-operated to licensed.(2) Q1 FY18
reflects the transfer of 1,477 China stores from licensed to
company-operated as a result of the acquisition of East China
JV on 12/31/2017.(3) Q4 FY17 reflects the transfer of all
Singapore stores from company-operated to licensed.(4) Q3
FY16 reflects the transfer of all Germany stores from company-
operated to licensed.(5) Q4 FY15 reflects the transfer of all
Puerto Rico stores from company-operated to licensed.(6) Q1
FY15 reflects the transfer of 1,009 Japan stores from licensed to
company-operated as a result of the acquisition of Starbucks
Japan in the first quarter of fiscal 2015.(7) Includes Bahrain,
Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia,
UAE - Dubai
(6)
(6)
(2, 3, 6)
(2, 3, 6)
(7)
(5)
(5)
(1, 5)
(4)
(4)
(3)
(3)
(4)
(4)
(2)
(2)
(1)
(1)
Comp SalesStarbucks Coffee CompanyHistorical Comparable
Store Sales(Updated through the period ending December 30,
2018)ConsolidatedFY 01FY 02FY 03FY 04FY 05FY 06FY
07FY 08FY 09FY 10FY 11FY 12FY 13FY 14FY 15FY 16FY
17FY 18FY 19Q-1Total10%2%9%10%10%7%6%1%-
37. 1%Ticket2%2%2%3%2%0%1%2%1%2%EMEAFY 01FY 02FY
03FY 04FY 05FY 06FY 07FY 08FY 09FY 10FY 11FY 12FY
13FY 14FY 15FY 16FY 17FY 18FY 19Q-1Total-5%3%3%2%-
1%5%4%1%-1%-1%-1%Transaction-4%6%2%2%2%3%3%1%-
2%-4%-1%Ticket-1%-2%2%1%-3%1%1%0%1%3%0%Q-2Total-
4%4%4%-1%-2%6%2%1%-1%-1%Transaction-1%6%5%0%-
1%5%2%0%0%-4%Ticket-3%-2%-1%0%0%1%1%1%-1%3%Q-
3Total-2%5%3%0%2%3%3%-
1%2%0%Transaction1%5%3%0%5%2%2%0%0%-2%Ticket-
3%0%1%0%-3%2%1%-2%2%3%Q-4Total0%7%1%-
1%2%5%5%-1%1%2%Transaction4%5%2%0%3%2%3%0%-
2%0%Ticket-4%2%-1%-1%-1%2%3%-1%3%2%FYTotal-
3%5%3%0%0%5%4%0%1%0%Transaction0%6%3%0%2%3%2
%1%-1%-3%Ticket-3%-1%0%0%-2%2%1%0%1%3%NOTE:
Includes only Starbucks company-operated stores open 13
months or longer. Comparable store sales exclude the effect of
fluctuations in foreign currency exchange rates.
HW RatiosStarbucks (SBUX)Tax
rate21.83%WACC7.50%Download any other relevant data from
Starbucks or its competition% ofData from Dunkin Donuts is
given in the DNKN tabFiscal Year &
TTM201320142015201620172018TTMTotalSales14,866.816,44
7.819,162.721,315.922,386.824,719.525,278.420182017201620
152014Company11,793.212,977.915,197.316,844.117,650.719,6
90.320,318.880.4%Beverages74%73%74%73%73%Licensed1,36
0.51,588.61,861.92,154.22,355.02,652.22,706.910.7%Food20%
20%19%19%19%CPG &
Other1,713.11,881.32,103.52,317.62,381.12,377.02,252.78.9%P
ackaged2%3%3%3%3%Other4%4%4%5%5%EBIT-
325.43,081.13,601.04,171.94,134.73,883.33,783.0Total100%10
0%100%100%100%NOPLAT GAAP-
254.42,408.42,814.83,261.03,231.93,035.42,957.0Adjustments
to EBIT-2,784.120.20.00.0-153.5-224.4-240.0% of Total
Sales20182017201620152014NOPLAT non-
GAAP1,921.92,392.62,814.83,261.03,351.93,210.83,144.6Total
100.0100.0100.0100.0100.0Net
39. Pacific19.3923.6121.4920.8932.98Shares
(Diluted)1,524.51,526.31,513.41,486.71,461.51,394.6EMEA5.8
711.4513.4813.829.21Market
capitalization$57,677.27$56,832.70$85,026.96$79,672.42$77,8
52.65$78,592.67Enterprise
Value$55,745.0$57,038.9$85,808.8$81,058.8$79,156.2$79,154.
9Q1 2019 operating marginTotal15.30%down 310 bp - non
GAAP 17.4%P/E
ratio6949.1x27.5x30.8x28.3x27.0x17.4xAmericas22.00%EV/
EBITDA168.8x14.9x18.9x15.6x15.2x15.3xChannel
Development34.80%EV/EBITDA non-
GAAP17.9x15.0x18.9x15.6x14.8x14.6xChina/Asia
Pacific18.00%EMEA10.10%Calendar Year
End201320142015201620172018YTDStock Price
(Data)$39.20$41.03$60.03$55.52$57.43$64.40$67.09Same store
sales by geographyShares
(Data)1513.001,498.81,485.91,457.51,421.01,240.6$1,240.60A
mericas 4% increase all due to priceMarket
capitalization$59,309.6$61,495.8$89,198.6$80,920.4$81,608.0$
79,894.6$83,231.9CAP 3% increase with 2% due to price and
1% transactions - China same store up 1% with transactions
down 2%EMEA down 1% due to 1% decline in
transactionsChannel Development revenue down 20% and
margins down to 34.8%Fiscal
Year20142015201620172018TTMAverageIndustryROIC
w/goodwill36.8%36.2%36.8%34.1%30.2%34.8%20.9%ROIC
w/o goodwill42.0%43.0%45.1%42.6%42.7%43.1%ROIC non-
GAAP36.5%36.2%36.8%35.3%31.9%35.4%average only fiscal
yearsROE42.4%49.7%48.1%50.8%136.2%65.5%-
700.6%ROA18.6%23.8%21.1%20.1%23.5%21.4%13.2%Gross
Margin58.3%59.4%60.1%59.6%58.8%58.7%59.2%24.6%Operat
ing Margin
GAAP18.7%18.8%19.6%18.5%15.7%15.0%18.3%16.3%Operati
ng Margin non-
GAAP18.6%18.8%19.6%19.2%16.6%15.9%18.5%Net
Margin12.6%14.4%13.2%12.9%18.3%12.0%14.3%12.3%Curren
40. t Ratio1.371.091.051.252.201.39Quick
Ratio1.010.730.740.931.951.07Debt/Equity0.390.410.620.738.0
72.04-3487.83Interest
Coverage48.0751.0851.3144.7022.8043.597.02Debt/
EBITDA0.530.490.580.731.300.732.89Economic Profit Spread
($)$1,917.0$2,232.3$2,595.6$2,520.3$2,281.1Economic Profit
Charge ($)$1,917.0$2,232.3$2,595.6$2,520.3$2,281.1As a % of
Sales20142015201620172018TTMAverageCapEx7.1%6.8%6.8%
6.8%8.0%7.1%Acquisition0.0%1.5%0.0%0.0%5.3%1.4%averag
e only fiscal years%
Change20142015201620172018TTMAverageCAGRRevenue
10.6%16.5%11.2%5.0%10.4%2.3%10.8%10.7%Company10.0%1
7.1%10.8%4.8%11.6%3.2%10.9%10.8%Licensed16.8%17.2%15
.7%9.3%12.6%2.1%14.3%14.3%CPG9.8%11.8%10.2%2.7%-
0.2%-5.2%6.9%6.8%Same Store Sales
(data)6.0%7.0%5.0%3.0%2.0%4.0%4.6%Domestic Same Store
Sales (data)6.0%7.0%6.0%3.0%2.0%4.0%4.8%Operating
Income GAAP846.9%16.9%15.9%-0.9%-6.1%-
2.6%174.5%264.2%average only fiscal yearsOperating Income
non-GAAP24.5%17.6%15.9%2.8%-4.2%-2.1%11.3%10.8%Net
Income24816.9%33.3%2.2%2.4%56.6%-
33.0%4982.3%252.5%FCF1311.8%-1373.2%17.6%-
10.4%223.4%33.8%260.9%FCF w/ acquisition65.8%-
1240.3%31.3%-10.4%177.7%-195.2%66.3%Capex
0.8%12.3%10.5%5.5%30.1%11.8%Economic
Profit16.4%16.3%-2.9%-9.5%5.1%Fiscal Year %
Change20142015201620172018AverageCAGRStock Price-
1.97%50.65%-4.75%-0.79%5.83%9.79%8.11%Total Return-
0.62%52.35%-3.34%1.05%8.17%11.52%9.85%Calendar Year %
Change20142015201620172018YTDAverageCAGRStock
Price4.7%46.3%-7.5%3.4%12.1%4.2%11.81%10.44%Total
Return (data)6.2%48.2%-6.1%5.4%14.8%14.8%13.69%Industry
(data)5.7%15.4%-0.3%19.8%4.94%5.38%9.11%average only
calendar yearsS&P 500 Price (data & calc)11.4%-
0.8%9.5%19.4%-6.26%2.08%6.65%6.28%Moody's
S&PFitchCurrent Credit Rating
41. (Data)Baa1BBB+BBB+Downgraded in 2016,17,18 by each
agency** Everything must be calculated or carried over from
financial statements UNLESS specifically noted by the term
"data"S&P 50020131848.3620182506.85
The downgrade reflects Starbucks' aggressive change in
financial policy, the third material revision within the past year,
with an increased commitment to return $25 billion of cash to
shareholders via dividends and share repurchases over the three
year period ending fiscal 2020 (September), up from $9 billion
returned during the previous three years. Fitch anticipates total
debt could increase by almost $10 billion by fiscal 2020 to help
finance Starbucks' cash return goal given Fitch's projection of
FCF before dividends of more than $8 billion over that period
and roughly $5 billion of after-tax proceeds from the Nestle
licensing agreement. At fiscal year-end 2017, Starbucks had
$3.9 billion of total debt. (FITCH)
The downgrade was prompted by Starbucks decision to
materially increase debt to support returns to shareholders.
Shareholder returns are now targeted at $25 billion -- up from
$15 billion in November 2017 -- over the three year period from
2018 through 2020. This change in policy will be partially
funded with additional debt and result in a deterioration in
credit metrics that are more representative of the revised
ratings.
"The material increase in Starbuck's fixed shareholder return
target will result in significantly higher debt levels and weaker
credit metrics at a time of operating challenges" stated Moody's
Senior Credit Officer Bill Fahy." We estimate that the
additional debt needed to fund the proposed shareholder returns
will result in leverage exceeding 2.8 times and retained cash
flow to total debt of around 20%. "In addition, we remain
concerned that Starbucks willingness to curtail shareholder
returns in the event operating results fall short of expectations
remains uncertain and could lead to a further deterioration in
credit metrics," added Fahy. (MOODYS)
43. Store Sales (data)6.0%7.0%5.0%3.0%2.0%4.0%Operating
Margin GAAP18.7%18.8%19.6%18.5%15.7%15.0%
Correlation of NOPLAT & Invested Capital
NOPLAT 2013 2014 2015 2016 2017 2018 TTM -
254.35246704806849 2408.3754954572905
2814.7610136450312 3261.0112393295458
3231.9334526848406 3035.4245284806821
2957.0232945450653 Invested Capital 2013 2014
2015 2016 2017 2018 TTM 5781.7000000000007
7322.0000000000009 8211.2000000000007 9533.6
9444.5999999999985 10669.499843
12056.534822589998
Correlation of Sales & NOPLAT
Sales 2013 2014 2015 2016 2017 2018 TTM
14866.800000000001 16447.8 19162.7
21315.899999999998 22386.800000000003
24719.500976000003 25278.399950999999
NOPLAT 2013 2014 2015 2016 2017 2018 TTM -
254.35246704806849 2408.3754954572905
2814.7610136450312 3261.0112393295458
3231.9334526848406 3035.4245284806821
2957.0232945450653
All Screen Shots
Fin 332 – Take Home Project for Starbucks
The second assignment is a take home project. I will allow you
44. to work in groups of two if you choose. This is not required,
meaning you may work alone as well. Given this is a take
home, I expect you to work as if this were an in-class exam in
terms of copying and/or sharing of information. You are NOT
to work with others unless they are part of your 2-person team.
You will abide by Drexel’s honesty code. If for ANY reason, I
suspect sharing of information, all parties will receive a “0” on
the exam or possibly fail the class. You will be reported to the
Dean no questions asked. No project will be accepted unless
you sign off on these terms.
If you delete any rows, change how I want the calculations to be
constructed, change up the tabs, etc., you will lose ten points
per change you make. Unfortunately, I have had too much
experience with students copying in various different ways and
therefore need to be VERY STRICT on this. In addition, you
will be signing a full statement saying you have not in any way
shared or plagiarized information.
You have until Thursday, March 7th at 11:59 pm to complete
the exam. If I receive your work after the required time, you
will receive a “0” for your grade. Late assignments WILL NOT
be accepted. I am happy to give guidance on the project but
will not sit with you while you complete each part of the exam.
Office hours will be held Tuesday, March 5th from 2:30-5:00
pm and Thursday March 7th from 8:00 – 9:50 AM, 12 - 3:00
pm. All work must be shown in excel (NO COPY AND PASTE
VALUES unless part of forecasting) and all qualitative
questions must be answered in a word document. If you choose
to work in a group of two, only one excel file and one word
document should be sent, with the names of your group on the
email itself and the documents. Make sure you upload your
work to the BBLearn icon in the week 9 folder as well as upload
your word document to the turnitin icon in week 9. DO NOT
give any definitions in your qualitative analysis unless
specifically asked.
GOOD LUCK!
Our final objective is to take the information we analyzed in the
45. first homework assignment and attempt to value Starbucks
(SBUX) and determine if you should invest in the stock today
(3/7/19). Use the excel template provided to assess any
historical and forecasted data. Most of your quantitative
information will come from your calculations but if you have
downloaded anything, i.e. ERP, it must be sourced appropriately
(screen shots are typically sufficient and should be copied
directly into excel). Forecasts, if they come from research,
must also be sourced in footnotes and/or bibliography. Lack of
sourcing results in point deductions (including 10K).
Quantitative Analysis (70 pts)
1) Fill in all highlighted items on all tabs starting with the
historical data through the forecasted data (necessary items are
highlighted in yellow and extra comments in blue).
a. Historical Valuation & Forecast: I’d highly suggest starting
with the historical part of this tab and the WACC historical
values b/c they are based on actual data and do not require
opinions. All historical ratios must be calculated using the data
on the ROIC tab and all forecasted data should be hardcoded in
(unless you are using trend analysis or another process and
therefore should show your calculation in the appropriate cells).
i. Income/ Balance Sheet/ CF Statement:Given
ii. Historical & Forecast: This tab has both the whole Company
and some breakdown of revenues. You can calculate projected
sales growth either by segment, by transaction/price or by
license, company revenue & other. If you simply do
company/license/other, you must still have some overall
breakdown by geography. This tab (with the exception of row
68 down) should all be % and ratios as noted.
b. ROIC: Most values have been linked up to the Income
Statement, Balance Sheet and Cash Flow Statement. Some
things like the break-down of depreciation and amortization
should be input based on the 10K. You must convert your
forecast % to actual dollar values in this tab. Operating lease
46. data is also there. Nothing hard coded in meaning everything
must be linked back to the forecast tab.
c. Data Given on Several Tabs: There’s no calculations needed
on these tabs. It’s all historical information on SBUX,
Industry, Peers, etc.
d. WACC: Calculate the WACC based on market and book
values. Source appropriately for this tab. For all yellow
highlights, you should either calculate a value or link to data.
You may adjust things like the risk-free rate or beta according
to your predictions and/or the industry numbers given. It’s your
choice which WACC (meaning MV vs BV) to use in your DCF.
e. Operating Lease: You have a sample of this calculation on
the excel worksheet we used in the online class. Fill in
necessary data and calculations. Either create a separate DCF or
simply adjust the current DCF for operating leases as it is a
more conservative way to value. Assume current year PV, debt,
etc. applies both historically and forecasted for simplicity.
f. DCF: Calculate all yellow highlights or link data up to your
ROIC tab for values already calculated. Calculate a sensitivity
analysis for your exit multiple, growth rate and WACC. The
spread to EV/EBITDA, WACC, and growth should reflect the
historical volatility of these numbers and/or your view of things
going forward.
g. Fill in all remaining values on the excel template and
calculate your equity value. Based on this calculation, should
you buy, sell or hold WEN stock.
h. Extra credit: Create best, base and worst-case scenarios,
calculating the overall expected value. You’ll need three DCF’s
to complete this as extra credit only – it is not required. Once
you’ve completed your base case, simply make copies for the
other outcomes and then change your forecasts directly in the
DCF. You have to change multiple variables, explain your
changes and calculate an overall expected value to receive extra
credit.
Qualitative Assessment in a WORD document (30 pts)
47. 1) Start your paper with a buy, sell or hold recommendation
stating the level of valuation as compared to the current market
price as of 3/7/19. Include both the current and forecasted
growth strategy of SBUX and how these plans have been
incorporated into your forecasts. This should incorporate both
domestic, international & franchise plans. (approximately 1
page)
a. You do NOT need to reiterate what you already wrote in your
homework assignment
b. How aggressive/conservative were you in your predictions
and how did this impact your overall decision.
2) OUTLINE FORMAT: Explain the inputs into your DCF
model. When I say “explain” I do not want a reiteration of the
number or the formula but rather what determined the number in
your analysis. You must support your thought process and
cannot just look at the history of the company and assume that
will continue. Bullet points should be used. Do not write up a
paper for this section.
a. Revenue growth, gross and operating profit margin
projections over the 2019-2023-time frame. Even if you read an
analyst report you still need to explain what is behind their
evaluation of SBUX growth. Did you include the economy in
your projections? Also include if your forecasts include things
like restructuring and impairment costs. Include your
assessment of segments, price, transaction, etc.
b. Terminal growth rate, ROIC and Exit multiple, you used in
the continuing value.
c. Invested capital projections – include your assessment of
NWC accounts (meaning what was behind your thoughts on how
you came up with your forecasted values), PP&E and intangible
assets.
d. WACC used and how you chose your inputs of Beta, Risk
free rate, Risk premium, MV or BV.
48. Based upon our forecasts for P&G, we have placed a HOLD
rating on the stock given its current trading levels. Using the
Exit Multiple, Key Driver, and FCF approaches we have
projected a stock price for P&G in the $82 to $83 range
indicating approximately a 5-6% drop in price from its current
closing price of $87.25.
The most recent Q3 earnings call for PG did not meet our
expectations. The company is still facing headwinds primarily
due to foreign currency and competition. Sales in Q3 were
slightly down (-1%) year-over-year, reflecting yet another
quarter of negative revenue growth as P&G is restructuring its
business to focus on key markets and sheds less profitable
product categories. The divesture of 41 beauty brands to Coty
Inc., which was completed in October 2016, negatively
impacted overall revenue growth by 2 percentage points.
However, the strongest negative contributor to revenue growth
in the quarter was the Grooming segment, which presented a 6%
drag on overall revenue growth due to unfavorable product mix
(-4%) and challenging pricing (-2%). A bright spot was the
Health Care segment, which contributed 4% to net sales growth,
driven by higher volumes. The results of Q3 are incorporated in
our TTM, which has been a large determinant of our estimated
sales growth for fiscal 2017.
As noted from PG’s CFO, a good year for PG is between 1-3%
all-in sales growth and a great year 3-5% all-in sales growth. In
terms of their current strategy, product innovation and repeat
customers are key for PG’s developed markets especially the
U.S. PG forecasted “organic sales growth for its U.S. market to
be about 2% for the first half of FY 2017”[footnoteRef:1].
Internationally, PG sees China as its biggest opportunity with
their growth drivers set on “premiumization of our brands,
digital execution, transforming our Go-To Market, and
dedicated category- customer organization”[footnoteRef:2]. [1:
PG CAGNY 2017 Presentation] [2: PG 2016 Analyst Day
Presentation]
49. In PG’s FY 2017 guidance, foreign currency is expected to be
“2-3% drag on the company’s all-in sales growth resulting in
their expectation for FY 2017 to be flat”[footnoteRef:3]. We
feel foreign currency is going to continue to be a headwind for
PG due to the outlook of rising U.S. interest rates driving the
strength of the USD. Internationally, China has become a
concern due to PG losing market share in the country “primarily
driven to the Baby Category”[footnoteRef:4]. Political unrest in
Brazil and Venezuela along with trouble in economies that are
dependent on oil make us feel international sales growth will
still be a challenge. Analyst research has reflected closer to 2-
3% growth per year based on the full restructuring succeeding &
emerging market pickup. We forecast PG can remain flat in ’17
and adjusted down our future estimates due to foreign currency
(as US interest rates are expected to continue to rise), softness
internationally in sales, and industry /population growth trends.
Our estimates are .40% in ‘17, 1.4% in ‘18, 1.9% in ‘19, 2.3%
in ‘20, 2.7% in ‘21. (see segment for more detail) [3: PG Q3
2017 Earnings Presentation] [4: PG Q3 2017 Earnings
Transcript]
Our sensitivity analysis most definitely had an impact on our
investment decision, particularly when looking at WACC vs
Growth. When WACC was above 6.5%, our decision would have
changed from “Hold” to “Sell” in all growth cases. When
WACC was 5.3% our decision would have changed from “Hold”
to “Buy” in all growth cases. As we see more upside risk in
WACC give current economic conditions, we stayed in the
“Hold” camp unless the EV/EBITDA multiple dropped below
12.70 then we would have placed a “Sell” rating on PG.
The EV/EBITDA multiple we chose was 13.2 implying a 2%
growth rate. In comparison to Colgate-Palmolive which our
50. speaker described as PG’s closest competitor, our 13.2 multiple
is more conservative than Colgate’s multiple of 15.98. We feel
13.2 is a realistic assumption due to PG’s 5-year average being
13.21 and 13.2 being slightly in the middle between its median
level EV/EBITDA multiple of 12.03 and it’s all time high of
14.28. This multiple also implied growth between 1.5-2%
terminal growth which is in line with our assumptions.
Outline Format:
A.
· Tax rate - We researched the historical tax rate and observed
slight increases from 22% in 2011 to 25% in 2016. We feel tax
reform by the Trump administration is ways away from
becoming legislation due to political gridlock; therefore, we
decided to keep the effective tax rate constant at 25% to keep
the forecasting consistent with future years.
· Sales Segment Growth- The sales segment growth was based
off our trailing twelve month assessments. We forecast growth
rates to remain the same in FY ‘17, for each segment to keep
results slightly above flat. For the future years, we see Fabric
generally increasing about a .5% to 1% due to increased market
penetration of fabric enhancers and beads. We see health care
continuing to excel at a nice pace with growth plateauing at
4.5% based in industry expectations. We see the bleeding in
Grooming stop in FY ‘20 and return to growth as the product
pipeline is strong, which is slightly pessimistic to analysts who
view Grooming returning to growth in FY ‘19. (Factset). We see
Beauty marginally increasing each year plateauing at 2% in FY
‘19 due to stabilization from brand divestitures as part of the
COTY deal. Beauty worldwide has been strong as evidenced by
the international sales in this segment. We also see pricing
power in this segment as the products remaining have stong
brand loyalty and units sold are strong. Finally, for Baby,
Feminine, & Family, we view this segment returning to growth
in FY ’18 and plateauing at 2.5% in FY ‘20; however, we are
51. nowhere near as optimistic as analysts “2.71% in FY ‘18” due to
concerns with China as we mentioned in the Baby Category.
· Gross Margin and Operating Margin - PG went through large
restructuring changes previously, but now that those changes
appear to be finished (we adjusted past years to see actual
margins wo these costs), we don’t predict more restructuring in
their future. We also didn’t assume impairments as well. All
other operating expenses we assumed in our forecasts.
However, PG has announced that they will be implementing a
new “$10 billion productivity and supply chain program from
2017 to 2021”[footnoteRef:5]. This new program is meant to
streamline supply networks across the United States and create
a more direct way to link PG to their customers. Because of this
and analyst research, we see gross margins and operating
margins increasing to 52.55% and 24.75% by FY ‘21. We aren’t
nearly as optimistic due to foreign currency concerns driving up
costs internationally and increased R&D spending incurred so
the company can continue to innovate to improve sales growth.
We forecast gross margins increasing .25%-.5% each year to
51.25% and Operating margins rising .2%-.5% to 24.2% by FY
‘21. We also see the higher margin healthcare and beauty
division driving some of this growth now that the product line
has been paired down. [5: PG 2016 Annual Report]
· Growth rate- We presumed a 2% long term growth rate for PG.
Historically the U.S. economy has been growing at about 2-
2.5% and we don’t see PG being able to outperform the U.S.
economy. Also, PG reported weakness internationally as we
mentioned earlier in our report; therefore, we are being
moderately conservative with a 2% terminal growth rate. This
also aligns with industry research as consumer staples will tend
to grow with GDP are not very volatile to economic trends.
· ROIC- Our terminal ROIC projection is 12.4%. We see
NOPLAT rising slightly $400M each year offset $3 billion of
increased capital needs; thus, causing ROIC to grind slowly up
to 12.4%. This estimation is slightly higher than the PG’s 6 year
52. average ROIC of 11.07%. still pretty conservative as the
restructuring is showing signs of success thus returning the
Company to higher ROI.
· EV/EBITDA multiple- Our estimation for this multiple was
13.2. We determined this was by looking at the average
EV/EBITDA ratios and its closest competitors. Terry from PG
mentioned Colgate- Palmolive as a close competitor with a
EV/EBITDA of 15.98; however, we feel this is too high because
PG’s multiple has never reached 15.98 historically. We chose
13.2 because it’s a more appropriate near PG’s 5-year average
of 13.21 and given the restructuring is almost complete, we feel
this is in line with the future growth of the firm.
· Operating Cash - For Operating cash as % of revenues we
chose 5% because it closest to the industry standard of cash as
percentage of revenues excluding PG. PG is a bit of an outlier
with their cash being historically about 8.95% on a 5-year
average.
· Goodwill - We projected to be flat for the foreseeable future
due to the fact their last major acquisition was Gillette in 2005.
· Capex- We estimated capital expenditures to stay
approximately 5%-6% of sales. Historically and as mentioned in
PG’s FY ‘17 presentation CAPEX is “expected between about
5%-5.5% of sales.”[footnoteRef:6] [6: PG Q3 2017 Earnings
Presentation]
· PP&E and NWC- We see PP&E ramping up from 31% in ‘17
to 35% in ‘21 as the firm continues to expand overseas. As the
restructuring is stated to end next year, NWC needs will
increase due to restructuring being over and the company
needed new equipment as well for growth and as part of their
planned supply chain overall.
· Intangible Assets- We estimate intangibles to incrementally
return to their historical average of 38.5% as NWC needs
increase due to restructuring ending.
· DSO-We estimate that our DSO ratio slightly increases in our
forecasting years returning to average levels of 27 days in 2021.
53. We attribute the prior years due to declining sales and divesting
brands equating to less accounts receivable.
· DIO- We forecast DIO increasing back to normal averages of
58 by 2021. We attribute the precipitous drop in inventory from
2014 to 2015 that stayed consistent in 2016 due to divesting
businesses. We see inventory picking back for our future
expected sales growth forecasts.
· DPO-Our DPO ratio shows our accounts payable decreasing
steadily to the 5-year average of 80 by 2021. FY 2016’s DPO of
100 days appears to be an outlier when looking at the
company’s historical operating cycle. DPO was 100 days just
once in 2016 out of the past 15 years of historical data. Much of
this was due to their restructuring efforts and with the Company
returning to more efficiency overall, this will improve DSO,
DIO and DPO
Sources:
http://www.snl.com/interactive/newlookandfeel/4004124/CAGN
Y2017Handout.pdf
http://www.pginvestor.com/Cache/1001223393.PDF?O=PDF&T
=&Y=&D=&FID=1001223393&iid=4004124
http://www.pginvestor.com/Cache/1001216941.PDF?O=PDF&T
=&Y=&D=&FID=1001216941&iid=4004124
https://seekingalpha.com/article/4065580-procter-and-gamble-
pg-q3-2017-results-earnings-call-transcript?page=1
http://www.pginvestor.com/Cache/1500090608.PDF?O=PDF&T
=&Y=&D=&FID=1500090608&iid=4004124