SEATTLE (AP) - Despite flat traffic in U.S. stores, Starbucks' aggressive global expansion helped second-quarter profit jump 18.5 percent, executives said.

In a separate announcement before the quarterly results were released Thursday, Starbucks and the Ethiopian government said they expect to complete a licensing, distribution and marketing deal with Ethiopia this month that would settle a dispute over trademarks for three coffees produced in the African nation.

Starbucks shares slipped 46 cents, or 1.45 percent, to $31.16 in early trading on Friday.

Starbucks Corp. said net income for the 13 weeks ended April 1 was $150.8 million, or 19 cents a share - up from earnings of $127.3 million, or 16 cents per share, in the same period last year.

Revenue for the latest quarter rose 20 percent to $2.26 billion, compared with $1.89 billion last year.

Analysts surveyed by Thomson Financial had projected earnings of 19 cents per share on revenue of $2.3 billion.

Sales at stores open at least 13 months rose 4 percent over the same quarter last year. That's toward the low end of the company's forecast, but Jim Donald, Starbucks' president and chief executive, noted that comparable-store sales growth climbed to a record 10 percent in the second of quarter last year.

"We're very pleased that our business is right where our plans were and we were able to continue to deliver another solid quarter for our shareholders," Donald told The Associated Press.

In a conference call with analysts, executives brushed aside questions about flat traffic in U.S. stores, which posted 3 percent comparable-store sales growth on a 3 percent increase in the average value of transactions.

Donald said Starbucks is "very comfortable" with its performance both in the United States and abroad, noting that the company has seen strong results from the growing number of stores that are offering warm breakfast sandwiches and lunch.

For fiscal 2007, Starbucks said it continues to expect net revenue growth of about 20 percent, comparable-store sales growth of 3 percent to 7 percent, and earnings of between 87 cents and 89 cents per share.

Starbucks, the world's largest coffeehouse chain, has more than 13,700 stores around the world and a long-term goal of 40,000 coffeehouses, about half of them abroad. The company said it plans to open about 2,400 stores this fiscal year, about 70 percent of them in the United States.

Executives declined to discuss any details about the agreement in principle Starbucks said it had signed with the Ethiopian government, which wants to secure rights to three coffee names through the U.S. Patent and Trademark Office.

Starbucks has opposed Ethiopia's trademarking efforts, saying instead that it wants to help officials establish a geographic certification for the coffee bean names, as is done with Washington state apples or Kona coffee.

Donald said Starbucks is eager to "drive the value for farmers" and that the company is "looking forward to formalizing the details of this agreement in mid-May."

Revenue in Starbucks' international segment rose 30 percent to $387 million in the latest quarter. The company recently opened its first stores in Brazil, Egypt and Romania, and plans to debut in Russia and India by the end of the year. It's also is gearing up to add coffee shops in airports in Copenhagen and Amsterdam, though it has not announced a timeline.

The company's cost of sales as a percentage of net revenue rose to 41.9 percent, up slightly from 40.3 percent from the year-ago period. Starbucks said the increase was due primarily to higher distribution costs in its growing store base and food programs, and steeper rent in higher-priced real estate markets.

Donald said the company sees those costs as key investments, and analysts said they don't think the company is being overly optimistic about is growth plans overseas.

"I've spent a lot of time traveling around the world looking at Starbucks locations, and there's no question that they experience tremendous consumer acceptance abroad," said Sharon Zackfia, an analyst with William Blair & Co. She said Starbucks is "investing ahead of the curve" in several overseas markets, and that she has "no doubt that that will pay off in the long term."