Equity and Cost Investments (in millions)
|
| | | | | | | |
| Sep 29,
2013 | | Sep 30,
2012 |
Equity method investments | $ | 450.9 |
| | $ | 393.9 |
|
Cost method investments | 45.6 |
| | 66.0 |
|
Total | $ | 496.5 |
| | $ | 459.9 |
|
Equity Method Investments
As of September 29, 2013, we had a 50 percent ownership interest in each of the following international equity method investees: Starbucks Coffee Korea Co., Ltd.; President Starbucks Coffee Taiwan Ltd.; Shanghai President Coffee Co.; Berjaya Starbucks Coffee Company Sdn. Bhd. (Malaysia); and Tata Starbucks Limited (India). In addition, we had a 49 percent ownership interest in Starbucks Coffee España, S.L. and a 39.6 percent ownership interest in Starbucks Coffee Japan, Ltd. These international entities operate licensed Starbucks® retail stores. We also have licensed the rights to produce and distribute Starbucks branded products to The North American Coffee Partnership with the Pepsi-Cola Company. We have a 50 percent ownership interest in The North American Coffee Partnership with the Pepsi-Cola Company, which develops and distributes bottled Starbucks® beverages, including Frappuccino®coffee drinks, Starbucks Doubleshot® espresso drinks, Starbucks Refreshers™ beverages, and Starbucks Discoveries Iced Café Favorites™.
Our share of income and losses from our equity method investments is included in income from equity investees on the consolidated statements of earnings. Also included in this line item is our proportionate share of gross profit resulting from coffee and other product sales to, and royalty and license fee revenues generated from, equity investees. Revenues generated from these related parties, net of eliminations, were $205.1 million, $190.3 million, and $151.6 million in fiscal years 2013, 2012, and 2011, respectively. Related costs of sales, net of eliminations, were $115.4 million, $111.0 million, and $83.2 million in fiscal years 2013, 2012, and 2011, respectively. As of September 29, 2013 and September 30, 2012, there were $48.3 million and $33.0 million of accounts receivable from equity investees, respectively, on our consolidated balance sheets, primarily related to product sales and royalty revenues.
As of September 29, 2013, the aggregate market value of our investment in Starbucks Japan was approximately $691 million, determined based on its available quoted market price, which exceeds its carrying value of $182 million.
Summarized combined financial information of our equity method investees, which represent 100% of the investees’ financial information (in millions):
|
| | | | | | | |
Financial Position as of | Sep 29,
2013 | | Sep 30,
2012 |
Current assets | $ | 675.8 |
| | $ | 603.1 |
|
Noncurrent assets | 783.3 |
| | 735.3 |
|
Current liabilities | 466.6 |
| | 411.2 |
|
Noncurrent liabilities | 148.9 |
| | 119.7 |
|
|
| | | | | | | | | | | |
Results of Operations for Fiscal Year Ended | Sep 29,
2013 | | Sep 30,
2012 | | Oct 2,
2011 |
Net revenues | $ | 3,018.7 |
| | $ | 2,796.7 |
| | $ | 2,395.1 |
|
Operating income | 434.8 |
| | 353.5 |
| | 277.0 |
|
Net earnings | 358.0 |
| | 286.7 |
| | 231.1 |
|
Cost Method Investments
As of September 29, 2013, we had a $19 million investment of equity interests in entities that develop and operate Starbucks® licensed retail stores in several global markets. We have the ability to acquire additional interests in some of these cost method investees at certain intervals. Depending on our total percentage ownership interest and our ability to exercise significant influence over financial and operating policies, additional investments may require a retroactive application of the equity method of accounting.
During the fourth quarter of 2013, we sold our 18% interest in Starbucks Coffee Argentina S.R.L. to our joint venture partner Alsea, S.A.B. de C.V., for a total purchase price of $4.4 million. This transaction resulted in a loss of $1.0 million, which was included in net interest income and other in the consolidated statements of earnings.
During the second quarter of fiscal 2013, we sold our 18% interest in Cafe Sirena S. de R.L. de CV (a Mexican limited liability company), to our controlling joint venture partner, SC de Mexico, S.A. de CV, owned by Alsea, S.A.B. de C.V., for a total purchase price of $50.3 million, which includes final working capital adjustments. This transaction resulted in a gain of $35.2 million, which was included in net interest income and other in the consolidated statements of earnings.
During the fourth quarter of fiscal 2012, we made a $25 million investment in the preferred stock of Square, Inc. In addition, in conjunction with a commercial agreement with Square, we also received warrants to purchase common stock of Square that are subject to certain vesting conditions.
