WASHINGTON (Dow Jones/AP) -- Starbucks Corp. requested a five-day extension for filing its first-quarter report with the Securities and Exchange Commission.
The Seattle-based coffee retailer said in a regulatory filing released Friday by the SEC that it filed a request for an extension to incorporate the views expressed by the chief accountant of the SEC on Feb. 7 regarding some operating lease accounting issues and their application under Generally Accepted Accounting Principles.
Starbucks said the accounting matters won't affect its previously reported fiscal first-quarter 2005 earnings per share, its fiscal 2005 earnings per share target range of $1.15 to $1.17, or its longer-term goal to increase earnings per share by 20 percent to 25 percent a year for the next three to five years. The company's fiscal first quarter ended Jan. 2
The company said its management has made a preliminary determination that its current method of accounting for leasehold improvements funded by landlord incentives or allowances under operating leases and its current method of accounting for rent holidays aren't consistent with the views expressed by the SEC staff earlier this week.
Starbucks said for tenant improvement allowances, it expects that cost of sales including occupancy costs will decrease and depreciation and amortization expenses will increase by the same amount. The filing didn't provide further details on the amount changes.
Also, Starbucks said it expects that net property, plant and equipment and total assets will increase, and that there will be corresponding increases in accrued occupancy costs, other long-term liabilities, total liabilities and shareholders' equity as of Jan. 2.
For rent holidays, the company expects that cost of sales including occupancy costs will decrease and net earnings will increase by an immaterial amount that isn't expected to change previously reported earnings per share for its first quarter, according to the filing.
Starbucks said it hasn't reached a final decision yet as to whether the matters will require a restatement of prior period financial statements but believes a restatement is likely.
The company said if it restates its results, it believes there would be a reduction for rent holidays in retained earnings in fiscal 2002 and subsequent immaterial increases in reported net earnings for fiscal years 2002 through 2004. Starbucks also said it would make corrections for tenant improvement allowances.
Shares of Starbucks closed Friday unchanged at $50.18 on the Nasdaq Stock Market.
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