What changed in this filing

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Item 1. Financial Statements

2021-01-26 compared with 2020-07-28 · 199 added, 445 removed, 546 unchanged (54% of the section changed)

3 unchanged sentences

(in millions, except per share data)

Quarter Ended Three Quarters Ended

Quarter Ended

Net revenues:

11 unchanged sentences

Income from equity investees 82.7 73.9

Operating income/(loss) ( 703.9 ) 1,121.3 1,003.4 2,994.6

Net gain resulting from divestiture of certain operations — 601.8 — 622.8

Operating income 913.5 1,219.8

Interest income and other, net 15.5 15.9

Interest expense ( 120.7 ) ( 91.9 )

Earnings/(loss) before income taxes ( 812.0 ) 1,676.9 722.0 3,462.3

Income tax expense/(benefit) ( 133.9 ) 303.7 190.0 670.1

Net earnings/(loss) including noncontrolling interests ( 678.1 ) 1,373.2 532.0 2,792.2

Net earnings/(loss) attributable to noncontrolling interests 0.3 0.4 ( 3.7 ) ( 4.2 )

Net earnings/(loss) attributable to Starbucks $ ( 678.4 ) $ 1,372.8 $ 535.7 $ 2,796.4

Earnings/(loss) per share - basic $ ( 0.58 ) $ 1.13 $ 0.46 $ 2.27

Earnings/(loss) per share - diluted $ ( 0.58 ) $ 1.12 $ 0.45 $ 2.25

Earnings before income taxes 808.3 1,143.8

Income tax expense 186.1 258.5

Net earnings including noncontrolling interests 622.2 885.3

Net loss attributable to noncontrolling interests — ( 0.4 )

Net earnings attributable to Starbucks $ 622.2 $ 885.7

Earnings per share - basic $ 0.53 $ 0.75

Earnings per share - diluted $ 0.53 $ 0.74

Weighted average shares outstanding:

5 unchanged sentences

(in millions, unaudited)

Quarter Ended Three Quarters Ended

Net earnings/(loss) including noncontrolling interests $ ( 678.1 ) $ 1,373.2 $ 532.0 $ 2,792.2

Quarter Ended

Net earnings including noncontrolling interests $ 622.2 $ 885.3

Other comprehensive income/(loss), net of tax:

10 unchanged sentences

Other comprehensive income/(loss) 218.7 111.1

Comprehensive income/(loss) including noncontrolling interests ( 686.2 ) 1,295.7 500.6 2,773.5

Comprehensive income including noncontrolling interests 840.9 996.4

Comprehensive income/(loss) attributable to noncontrolling interests — ( 0.4 )

Comprehensive income/(loss) attributable to Starbucks $ ( 686.5 ) $ 1,295.3 $ 504.3 $ 2,777.7

Comprehensive income attributable to Starbucks $ 840.9 $ 996.8

See Notes to Consolidated Financial Statements.

34 unchanged sentences

Total liabilities 37,872.4 37,173.9

Shareholders’ equity/(deficit):

Shareholders' deficit:

Common stock ($ 0.001 par value) — authorized, 2,400.0 shares;

1 unchanged sentence

Additional paid-in capital 488.6 373.9

Retained earnings/(deficit) ( 8,208.3 ) ( 5,771.2 )

Retained deficit ( 8,253.6 ) ( 7,815.6 )

Accumulated other comprehensive loss ( 145.9 ) ( 364.6 )

Total shareholders’ equity/(deficit) ( 8,621.6 ) ( 6,232.2 )

Total shareholders’ deficit ( 7,909.7 ) ( 7,805.1 )

Noncontrolling interests 5.7 5.7

Total equity/(deficit) ( 8,624.3 ) ( 6,231.0 )

Total deficit ( 7,904.0 ) ( 7,799.4 )

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT) $ 29,968.4 $ 29,374.5

3 unchanged sentences

(in millions, unaudited)

Three Quarters Ended

Quarter Ended

OPERATING ACTIVITIES:

5 unchanged sentences

Distributions received from equity method investees 77.2 64.3

Net gain resulting from divestiture of certain retail operations — ( 622.8 )

Stock-based compensation 99.3 90.3

Goodwill impairments — 10.5

Non-cash lease costs 308.3 294.9

1 unchanged sentence

Other ( 10.2 ) ( 7.6 )

Cash provided by/(used in) changes in operating assets and liabilities:

Cash provided by changes in operating assets and liabilities:

Accounts receivable 19.6 ( 22.9 )

12 unchanged sentences

Additions to property, plant and equipment ( 324.2 ) ( 394.3 )

Net proceeds from the divestiture of certain operations — 684.2

Other ( 17.7 ) ( 19.9 )

1 unchanged sentence

FINANCING ACTIVITIES:

Proceeds from issuance of short-term debt 1,157.2 —

Net proceeds from issuance of commercial paper — 398.9

Net proceeds from issuance of short-term debt 192.9 99.0

Repayments of short-term debt ( 144.7 ) —

Proceeds from issuance of long-term debt 4,727.6 1,996.0

Repayments of long-term debt ( 500.0 ) —

3 unchanged sentences

Minimum tax withholdings on share-based awards ( 88.6 ) ( 78.4 )

Other ( 37.8 ) ( 17.6 )

Net cash provided by/(used in) financing activities 2,493.0 ( 7,422.8 )

Net cash used in financing activities ( 965.8 ) ( 1,123.0 )

Effect of exchange rate changes on cash and cash equivalents 79.8 27.1

Net increase/(decrease) in cash and cash equivalents 1,279.3 ( 3,993.0 )

Net increase in cash and cash equivalents 677.2 353.9

CASH AND CASH EQUIVALENTS:

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CONSOLIDATED STATEMENTS OF EQUITY

For the Quarter Ended June 28, 2020 and June 30, 2019

(in millions, except per share data, unaudited)

Common Stock Additional Paid-in Capital Retained

Earnings/(Deficit) Accumulated

Comprehensive

Income/(Loss) Shareholders’

Equity/(Deficit) Noncontrolling

Interests Total

Shares Amount

Balance, March 29, 2020 1,168.1 $ 1.2 $ 41.1 $ ( 7,050.6 ) $ ( 521.8 ) $ ( 7,530.1 ) $ ( 2.8 ) $ ( 7,532.9 )

Net earnings/(loss) — — — ( 678.4 ) — ( 678.4 ) 0.3 ( 678.1 )

Other comprehensive income/(loss) — — — — ( 8.1 ) ( 8.1 ) — ( 8.1 )

Stock-based compensation expense — — 42.3 — — 42.3 — 42.3

Exercise of stock options/vesting of RSUs 0.6 — 22.2 — — 22.2 — 22.2

Sale of common stock 0.2 — 9.8 — — 9.8 — 9.8

Repurchase of common stock — — — — — — — —

Cash dividends declared, $ 0.41 per share

— — — ( 479.3 ) — ( 479.3 ) ( 0.2 ) ( 479.5 )

Balance, June 28, 2020 1,168.9 $ 1.2 $ 115.4 $ ( 8,208.3 ) $ ( 529.9 ) $ ( 8,621.6 ) $ ( 2.7 ) $ ( 8,624.3 )

Balance, March 31, 2019 1,210.0 $ 1.2 $ 41.1 $ ( 4,807.7 ) $ ( 271.5 ) $ ( 5,036.9 ) $ 1.7 $ ( 5,035.2 )

Net earnings/(loss) — — — 1,372.8 — 1,372.8 0.4 1,373.2

Other comprehensive income/(loss) — — — — ( 77.5 ) ( 77.5 ) — ( 77.5 )

Stock-based compensation expense — — 64.0 — — 64.0 — 64.0

Exercise of stock options/vesting of RSUs 3.2 — 24.4 — — 24.4 — 24.4

Sale of common stock 0.1 — 8.6 — — 8.6 — 8.6

Repurchase of common stock ( 6.8 ) — ( 97.0 ) ( 144.1 ) — ( 241.1 ) — ( 241.1 )

Cash dividends declared, $ 0.36 per share

— — — ( 434.9 ) — ( 434.9 ) — ( 434.9 )

Net distributions to noncontrolling interests — — — — — — ( 0.5 ) ( 0.5 )

Balance, June 30, 2019 1,206.5 $ 1.2 $ 41.1 $ ( 4,013.9 ) $ ( 349.0 ) $ ( 4,320.6 ) $ 1.6 $ ( 4,319.0 )

See Notes to Consolidated Financial Statements.

STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

For the Three Quarters Ended June 28, 2020 and June 30, 2019

For the Quarters Ended December 27, 2020 and December 29, 2019

(in millions, except per share data, unaudited)

7 unchanged sentences

Balance, September 27, 2020

1,173.3 $ 1.2 $ 373.9 $ ( 7,815.6 ) $ ( 364.6 ) $ ( 7,805.1 ) $ 5.7 $ ( 7,799.4 )

Cumulative effect of adoption of new accounting guidance — — — ( 2.2 ) — ( 2.2 ) — ( 2.2 )

Net earnings/(loss) — — — 535.7 — 535.7 ( 3.7 ) 532.0

Net earnings — — — 622.2 — 622.2 — 622.2

Other comprehensive income/(loss) — — — — 218.7 218.7 — 218.7

2 unchanged sentences

Sale of common stock 0.1 — 10.2 — — 10.2 — 10.2

Repurchase of common stock ( 20.3 ) — ( 126.4 ) ( 1,548.6 ) — ( 1,675.0 ) — ( 1,675.0 )

Cash dividends declared, $ 0.90 per share

— — — ( 1,058.0 ) — ( 1,058.0 ) — ( 1,058.0 )

Balance, June 28, 2020 1,168.9 $ 1.2 $ 115.4 $ ( 8,208.3 ) $ ( 529.9 ) $ ( 8,621.6 ) $ ( 2.7 ) $ ( 8,624.3 )

Balance, December 27, 2020

1,177.2 $ 1.2 $ 488.6 $ ( 8,253.6 ) $ ( 145.9 ) $ ( 7,909.7 ) $ 5.7 $ ( 7,904.0 )

Balance, September 29, 2019

1,184.6 $ 1.2 $ 41.1 $ ( 5,771.2 ) $ ( 503.3 ) $ ( 6,232.2 ) $ 1.2 $ ( 6,231.0 )

Cumulative effect of adoption of new accounting guidance — — — 12.5 4.8 17.3 — 17.3

7 unchanged sentences

— — — ( 480.0 ) — ( 480.0 ) — ( 480.0 )

Net distributions to noncontrolling interests — — — — — — ( 0.5 ) ( 0.5 )

Balance, June 30, 2019 1,206.5 $ 1.2 $ 41.1 $ ( 4,013.9 ) $ ( 349.0 ) $ ( 4,320.6 ) $ 1.6 $ ( 4,319.0 )

Balance, December 29, 2019

1,174.5 $ 1.2 $ 41.1 $ ( 6,414.8 ) $ ( 387.4 ) $ ( 6,759.9 ) $ 0.8 $ ( 6,759.1 )

See Notes to Consolidated Financial Statements.

2 unchanged sentences

Note 1 Summary of Significant Accounting Policies

Note 2 Acquisitions, Divestitures and Strategic Alliance

Note 2 Derivative Financial Instruments

7 unchanged sentences

Note 11 Employee Stock Plans

Note 13 Income Taxes

Note 14 Earnings / (Loss) per Share

Note 12 Earnings per Share

Note 13 Commitments and Contingencies

4 unchanged sentences

Financial Statement Preparation

The unaudited consolidated financial statements as of June 28, 2020, and for the quarter and three quarters ended June 28, 2020 and June 30, 2019, have been prepared by Starbucks Corporation under the rules and regulations of the Securities and Exchange Commission (“SEC”).

In the opinion of management, the financial information for the quarter and three quarters ended June 28, 2020 and June 30, 2019 reflects all adjustments and accruals, which are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods.

The unaudited consolidated financial statements as of December 27, 2020, and for the quarters ended December 27, 2020 and December 29, 2019, have been prepared by Starbucks Corporation under the rules and regulations of the Securities and Exchange Commission (“SEC”).

In the opinion of management, the financial information for the quarters ended December 27, 2020 and December 29, 2019 reflects all adjustments and accruals, which are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods.

In this Quarterly Report on Form 10-Q (“10-Q”), Starbucks Corporation is referred to as “Starbucks,” the “Company,” “we,” “us” or “our.”

Beginning with the Form 10-Q for the quarter and three quarters ended June 28, 2020, we renamed the "cost of sales" caption on our consolidated statement of earnings to "product and distribution costs," which more accurately reflects the substance of costs classified within this line item.

There were no classification or other changes made in conjunction with the new caption.

Descriptions of material operating expenses presented on our consolidated statements of earnings are described below.

Product and distribution costs

Product and distribution costs primarily consist of raw materials, purchased goods and packaging costs as well as operational costs of our supply chain organization, such as wages and benefits, occupancy costs and depreciation expenses, in support of sourcing, procuring, manufacturing, warehousing and transportation activities of products sold at our company-operated and licensed stores as well as through Channel Development and our other businesses.

Also included are inventory and supply chain asset impairment costs.

Store operating expenses

Store operating expenses consist of costs incurred in our company-operated stores, primarily wages and benefits related to store partners (employees), occupancy costs and other costs that directly support the operation and sales-related activities of those stores.

General and administrative expenses

General and administrative expenses primarily consist of wages and benefits, professional service fees and occupancy costs for corporate headquarter and regional offices that support our corporate functions, including technology, finance, legal and partner (employee) resources.

Expense reclassification in fiscal 2019

In the fourth quarter of fiscal 2019, we changed the classification of certain costs on our consolidated statements of earnings and revised prior period information to be consistent with the current period presentation.

The most significant impact for the quarter and three quarters ended June 30, 2019, was the reclassification of our company-operated store occupancy costs from product and distribution costs to store operating expenses of $ 611.6 million and $ 1.8 billion, respectively.

We also made certain other immaterial changes.

There was no impact on consolidated revenues, consolidated operating income or net earnings per share as a result of these changes.

Additionally, certain prior period information on the consolidated statements of cash flows was reclassified to conform to the current year presentation.

The financial information as of September 27, 2020 is derived from our audited consolidated financial statements and notes for the fiscal year ended September 27, 2020 (“fiscal 2020”) included in Item 8 in the Fiscal 2020 Annual Report on Form 10-K (“10-K”).

The information included in this 10-Q should be read in conjunction with the footnotes and management’s discussion and analysis of the consolidated financial statements in the 10-K.

The results of operations for the quarter and three quarters ended June 28, 2020 are not necessarily indicative of the results of operations that may be achieved for the entire fiscal year ending September 27, 2020 (“fiscal 2020”).

The novel coronavirus, known as the global pandemic COVID-19, was first identified in December 2019.

The outbreak of the virus initially impacted our China market before spreading to other markets where we have company-operated stores or licensed stores, including the U.S., our largest market.

The temporary store closures, reduced customer traffic and changes made to our operations, which began in the second quarter of fiscal 2020, have had a material negative impact on our financial results to date.

The most adverse impact occurred in our fiscal third quarter when the total number of company-operated and licensed store closures had reached its peak in early May.

Since that time, nearly all our company-operated stores in major markets such as the U.S., China, Japan and Canada re-opened during the fiscal quarter, most with modified hours and operations.

Given the magnitude of the effects of COVID-19 on our operations and financial results, key assumptions and estimates were updated during the fiscal third quarter, particularly with respect to business recovery trends and their impacts on future revenue growth and profitability for assessing impairment of our company-operated retail store and related operating lease right-of-use assets.

For the lower-performing stores identified in the analysis, we compared the carrying value of the assets to the estimated undiscounted cash flows.

For stores with estimated undiscounted future cash flows less than their asset carrying values, we determined the related impairment losses by comparing asset carrying values to their estimated fair values.

As a result, we recorded $ 20.0 million of impairm ent losses within store operating expenses on our consolidated statement of earnings during the quarter ended June 28, 2020.

In June 2020, we announced a plan to optimize our U.S.

store portfolio in urban markets by blending store formats to better cater to changing customer tastes and preferences.

As a result, we expect the closure of up to 400 incremental stores over the next 18 months.

Additionally, we will restructure our company-operated business in Canada with an expected closure of up to 200 incremental stores over the next two years.

As of June 28, 2020, we had identified 78 stores for closure under our restructuring plans, and as a result we recorded approximately $ 56.0 million to restructuring and impairments on our consolidated statement of earnings.

Of this total, $ 41.5 million related to the impairment of store assets for which either a triggering event occurred and the assets were determined not to be recoverable or the store was permanently closed.

The remaining $ 14.5 million was primarily associated with lease termination activities for identified stores.

For impaired store asset groups, we estimated the fair values using an income approach incorporating internal projections of revenue growth and operating expenses that are considered Level 3 fair value measurements, as well as applicable discount rates and market lease rates.

For stores yet to be identified for closure in both markets, future restructuring costs are estimated to be approximately $ 300 million to $ 400 million.

Estimated future restructuring costs are based on actual costs incurred for recently closed stores of similar profile under the restructuring plans.

As store closure decisions are still in process and the actual number of store closures may vary, the final costs to close the stores may be different from the initial estimates depending on the associated asset values and remaining lease terms.

Future restructuring costs are expected to be primarily comprised of lease exit costs, accelerated depreciation costs, fixed asset impairment and disposal costs not previously recorded as part of our ongoing store impairment process, and severance.

Future restructuring costs are expected to be incurred over the next 18 to 24 months as stores are specifically identified for closure or, in the case of lease exit costs, when the stores cease operations.

The assessment of our other assets, mainly accounts receivable and inventory, did not indicate significant impairment risks as of the end of the third quarter of fiscal 2020.

Our accounts receivable are mainly comprised of unpaid invoices for product sales to and royalties from our licensees.

Our allowance for doubtful accounts is calculated based on historical experience, licensee credit risk and application of the specific identification method.

We also assessed incremental risks due to COVID-19 on our licensees' financial viability.

During the quarter ended June 28, 2020, we did not observe a significant deterioration of our receivable portfolio that required a significant increase in bad debt expense.

To assist our international licensed partners during the outbreak, we provided a short-term payment extension for their outstanding receivables as of the end of the fiscal second quarter.

We may also offer longer-term payment extensions to help certain licensees dedicate their capital to further develop stores and build the brand as the business recovers.

We expect to charge a market interest rate on receivables when payment terms have been extended beyond twelve months.

During the fiscal third quarter, we waived royalty payments from our international licensees and did not recognize royalty revenues associated with these accounts.

We do not believe the terms and forms of these financial relief actions changed our revenue recognition policy or had a significant impact on future collectability.

In the second quarter of fiscal 2020, we recorded significant inventory write-offs due to expired or expected expiration of perishable ingredients and products relating to the temporary store closures.

Since the majority of our stores were re-opened during the fiscal third quarter, there were no significant inventory write-offs during the period.

See Note 5 , Inventories, for additional details.

During the second quarter of fiscal 2020, we received an immaterial amount of COVID-19-related rent concessions for certain stores in China, generally correlating with the temporary store closure period.

Consistent with updated guidance from the Financial Accounting Standards Board (“FASB”) in April 2020, we have elected to treat COVID-19-related rent concessions as variable rent.

During the third quarter of fiscal 2020, we received $ 21.7 million of additional concessions for stores in our International segment that were recognized as an offset to our rent expense within store operating expenses.

See Note 9 , Leases, for additional details.

The results of operations for the quarter ended December 27, 2020 are not necessarily indicative of the results of operations that may be achieved for the entire fiscal year ending October 3, 2021 (“fiscal 2021”).

Additionally, our 2021 fiscal year will include 53 weeks, with the 53rd week falling in the fourth fiscal quarter.

The novel coronavirus, known as the global pandemic COVID-19, was first identified in December 2019 before spreading to markets where we have company-operated or licensed stores.

We have since established the necessary protocols to operate safely, and our businesses continue to recover.

As of the end of the first quarter of fiscal 2021, nearly all our company-operated and licensed stores have re-opened;

however, many were operating at less than full capacity.

Government Subsidies

On March 27, 2020, the U.S.

government enacted the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), which among other things, provides employer payroll tax credits for wages paid to employees who are unable to work during the COVID-19 outbreak and options to defer payroll tax payments for a limited period.

Based on our evaluation of the CARES Act, we qual ify for certain employer payroll tax credits as well as the deferral of payroll tax payments in the future.

Additionally, the Canadian government enacted the Canada Emergency Wage Subsidy (“CEWS”) to help employers offset a portion of their employee salaries and wages for a limited period.

Based on our evaluation of the CARES Act, we qualify for certain employer payroll tax credits as well as the deferral of payroll tax payments in the future.

Additionally, the Canadian government enacted the Canada Emergency Wage Subsidy (“CEWS”) to help employers offset a portion of their employee wages for a limited period.

We elected to treat qualified government subsidies from the U.S., Canada and other governments as offsets to the related operating expenses.

During the quarter and three quarters ended

June 28, 2020, the qualified payroll credits reduced our store operating expenses by $ 266.0 million and $ 301.0 million on our consolidated statement of earnings, respectively.

During the first quarter of fiscal 2021, qualified payroll credits reduced our store operating expenses by $ 19.8 million on our consolidated statement of earnings.

After netting the qualified U.S.

payroll tax credits against our payroll tax payable, we recorded approximately $ 214.0 million within prepaid expenses and other current assets as of the end of the quarter ending June 28, 2020.

We recorded our income tax expense, deferred tax assets and related liabilities based on management’s best estimates.

Additionally, we assessed the likelihood of realizing the benefits of our deferred tax assets.

During the third quarter of fiscal 2020, we recorded valuation allowances of $ 55.0 million against deferred tax assets as of the beginning of fiscal 2020 relating to certain foreign jurisdictions that are not expected to be recovered due to estimated operating losses.

We will continue to record valuation allowances against deferred tax assets established during fiscal 2020 for these jurisdictions through the current annual effective tax rate.

Based on our current business forecast, we expect to realize the benefits from deferred tax assets recognized relating to other foreign jurisdictions.

See Note 13 , Income Taxes for additional details.

Recent Accounting Pronouncements

payroll tax credits against our payroll tax payable, a receivable of $ 149.3 million was included in prepaid expenses and other current assets as of December 27, 2020.

During the first fiscal quarter of fiscal 2021, we deferred $ 76.5 million of qualified payroll tax payments, and as of December 27, 2020, deferred payroll tax payments of $ 227.5 million were included in other long-term liabilities on our consolidated balance sheets.

Restructuring

In fiscal 2020, we announced a plan to optimize our North America store portfolio, primarily in dense metropolitan markets by blending store formats to better cater to changing customer tastes and preferences.

As of December 27, 2020, we expect the total number of closures to be approximately 800 stores in the U.S.

As of December 27, 2020, we have identified 713 stores for closure under our restructuring plans, and as a result we recorded approximately $ 72.2 million to restructuring and impairments on our consolidated statement of earnings.

Of this total, $ 42.6 million related to the impairment of store assets for which either a triggering event occurred and the assets were determined not to be recoverable or the store was permanently closed.

An additional $ 29.6 million was associated with accelerated amortization of right-of-use (“ROU”) lease assets due to planned store closures prior to the end of contractual lease terms.

The application of these projections and fair value measurements did not have a significant impact on our final impairment decisions given that we plan to fully exit the majority of these identified stores over the next 9 to 12 months.

We expect total future restructuring costs, which are attributable to our Americas segment, to be approximately $ 100 million to $ 120 million.

These restructuring costs include accelerated amortization or impairments of ROU assets due to planned store closures prior to the end of contractual lease terms ($ 90 million to $ 100 million), store impairment and disposal costs not previously recorded as part of our ongoing store impairment process ($ 10 million to $ 15 million), with the remaining amount related to employee termination costs.

As we have previously recorded impairment charges for stores that may be identified for

closure under our plans, and because store closure decisions are still subject to change, the final costs associated with these store closures may vary from these estimates.

These costs will depend on the asset carrying value and remaining lease term of the specific stores identified.

Future restructuring costs are expected to be incurred primarily over the next 9 to 12 months as stores are specifically identified for closure or, in the case of lease exit costs, either when a store ceases operations or when a reduced lease term is reasonably certain due to expected, early lease termination.

As of December 27, 2020, restructuring liabilities totaling $ 24.4 million were included in current and non-current operating lease liability for the remaining outstanding rent liabilities due to landlords.

The associated expense was recognized in fiscal 2020 or during the first quarter of fiscal 2021 for stores that were either closed or reasonably certain to close in fiscal 2021.

Additionally, $ 14.9 million of accrued employee termination costs is included in accrued payroll and benefits.

Cash payments were immaterial for the first quarter of fiscal 2021.

Recently Adopted Accounting Pronouncements

In the second quarter of fiscal 2020, we adopted the new guidance from the FASB on simplifying the accounting for income taxes by removing certain exceptions to the general principles.

The guidance was adopted on a prospective basis and had no material impact on the consolidated financial statements.

On September 30, 2019, we adopted the new guidance from the FASB on the recognition and measurement of leases utilizing the modified retrospective approach.

As a result, the prior period information reported under the previous lease guidance has not been restated.

As permitted under the new FASB lease guidance, we elected the package of practical expedients, which allowed us to retain our prior conclusions regarding lease identification, classification and initial direct costs.

For our lease agreements with lease and non-lease components, we elected the practical expedient to account for these as a single lease component for all underlying classes of assets.

For our adoption, we did not elect to use hindsight for our existing leases.

Additionally, for short-term leases with an initial lease term of 12 months or less and with purchase options we are reasonably certain will not be exercised, we elected to not record right-of-use assets or corresponding lease obligations on our consolidated balance sheet.

We will continue to record rent expense for each short-term lease on a straight-line basis over the lease term.

The new FASB lease guidance had a material impact on our consolidated balance sheet;

however, it did not have a material impact on our consolidated statement of earnings.

The most material impact was the recognition of right-of-use assets of $ 8.4 billion upon adoption, with corresponding lease liabilities of $ 9.0 billion relating to our operating leases.

Existing deferred rent and tenant improvement allowances of approximately $ 568.0 million, previously recorded within other long-term liabilities, were recorded as an offset to our gross operating lease right-of-use assets.

Additionally, pursuant to the transition guidance, we derecognized build-to-suit lease assets, previously recorded in property, plant and equipment, net, along with the corresponding liabilities on the consolidated balance sheet as of September 30, 2019.

Accordingly, these leases have been recorded as operating leases as of the adoption date and are now included in operating lease, right-of-use assets and operating lease liabilities on the consolidated balance sheet.

As of the adoption date, accumulated deficit within shareholder's equity on our consolidated balance sheet decreased by $ 17.3 million, primarily related to the derecognition of build-to-suit leasing arrangements.

See Note 9 , Leases, for further discussion regarding the adoption of the new guidance.

In the first quarter of fiscal 2020, we adopted the new guidance from the FASB on the reclassification of certain tax effects from accumulated other comprehensive income (loss) (“AOCI”) which permits entities to reclassify the stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Act”) from AOCI to retained earnings.

The guidance was adopted prospectively with no material impact on the consolidated financial statements as of June 28, 2020.

In June 2016, the FASB issued guidance replacing the incurred loss impairment methodology with a new methodology that reflects current expected credit losses on financial assets, including receivables and available-for-sale securities.

The new methodology requires entities to estimate and recognize expected credit losses each reporting period.

The guidance was adopted during the first quarter of fiscal 2021 under the modified retrospective approach which included a $ 2.2 million transition adjustment to opening shareholders' retained deficit on our consolidated statements of equity upon adoption.

Recent Accounting Pronouncements Not Yet Adopted

3 unchanged sentences

We are currently evaluating the impact of the transition from LIBOR to alternative reference rates but do not expect a significant impact to our consolidated financial statements.

Acquisitions, Divestitures and Strategic Alliance

In the third quarter of fiscal 2019, we sold our company-operated retail business in Thailand to Coffee Concepts Thailand, a joint venture between Maxim's Caterers Limited and F&N Retail Connection Co.

Ltd, converting this operation to a fully licensed market.

This transaction resulted in a pre-tax gain of $ 601.9 million, which was included in net gains resulting from divestiture of certain operations on our consolidated statements of earnings.

In the second quarter of fiscal 2019, we sold our company-operated retail businesses in France and the Netherlands to Alsea, S.A.B.

converting these operations to fully licensed markets.

These transactions did not have a material impact to our consolidated financial statements.

Derivative Financial Instruments

12 unchanged sentences

From time to time, we may enter into financial instruments, including, but not limited to, forward and swap contracts or foreign currency-denominated debt, to hedge the currency exposure of our net investments in certain international operations.

The resulting gains and losses from these derivatives are generally recorded in AOCI and are subsequently reclassified to net earnings when the hedged net investment is either sold or substantially liquidated.

The resulting gains and losses from these derivatives are recorded in AOCI and are subsequently reclassified to net earnings when the hedged net investment is either sold or substantially liquidated.

Foreign currency forward and swap contracts not designated as hedging instruments are used to mitigate the foreign exchange risk of certain other balance sheet items.

5 unchanged sentences

The resulting gains or losses are recorded in AOCI and are subsequently reclassified to product and distribution costs when the hedged exposure affects net earnings.

To mitigate the price uncertainty of a portion of our future purchases, including diesel fuel and other commodities, we enter into swap contracts, futures and collars that are not designated as hedging instruments.

The resulting gains and losses are recorded in interest income and other, net to help offset price fluctuations on our beverage, food, packaging and transportation costs, which are included in product and distribution costs on our consolidated statements of earnings.

Cash flow hedges related to anticipated transactions are designated and documented at the inception of each hedge.

Cash flows from hedging transactions are classified in the same categories as the cash flows from the respective hedged items.

For de-designated cash flow hedges in which the underlying transactions are no longer likely to occur, the related accumulated derivative gains or losses are recognized in interest income and other, net on our consolidated statements of earnings.

During the quarters ended March 29, 2020 and June 28, 2020, we de-designated certain cash flow hedges due to the global COVID-19 impacts, resulting in the release of an insignificant net gain from AOCI to our consolidated statement of earnings.

We continue to believe transactions relating to our other designated cash flow hedges are probable to occur as of the end of the fiscal quarter.

For de-designated cash flow hedges in which the underlying transactions are no longer probable of occurring, the related accumulated derivative gains or losses are recognized in interest income and other, net on our consolidated statements of earnings.

There was no such significant cash flow hedge dedesignations in the periods presented.

Gains and losses on derivative contracts and foreign currency-denominated debt designated as hedging instruments included in AOCI and expected to be reclassified into earnings within 12 months, net of tax ( in millions ):

2 unchanged sentences

Net Gains/(Losses) Expected to be Reclassified from AOCI into Earnings within 12 Months Outstanding Contract/Debt Remaining Maturity

Dec 27, 2020 Sep 27, 2020

Cash Flow Hedges:

Interest rates $ ( 93.7 ) $ 0.5 $ 8.7 148

Cross-currency swaps 5.3 ( 1.4 ) — 53

Foreign currency - other 17.9 12.9 10.1 36

Coffee $ 7.4 $ ( 2.5 ) $ 1.0 12

Cross-currency swaps 5.6 5.2 — 47

Dairy 0.4 0.5 0.4 8

Foreign currency - other ( 15.4 ) 5.3 ( 6.4 ) 33

Interest rates ( 73.5 ) ( 90.6 ) ( 1.2 ) 142

Net Investment Hedges:

Foreign currency 16.0 16.0 — 0

Cross-currency swaps 17.9 32.6 — 105

Foreign currency 16.0 16.0 — 0

Foreign currency debt ( 47.4 ) ( 37.1 ) — 39

7 unchanged sentences

Location of gain/(loss)

Dec 27, 2020 Dec 29, 2019 Dec 27, 2020 Dec 29, 2019

Cash Flow Hedges:

Interest rates $ ( 8.5 ) $ 5.3 $ ( 0.7 ) $ 1.1 Interest expense

Cross-currency swaps ( 1.0 ) ( 5.8 ) 1.5 0.1 Interest expense

( 6.9 ) ( 9.9 ) Interest income and other, net

Foreign currency - other ( 14.5 ) ( 2.7 ) — 2.2 Licensed stores revenues

( 5.0 ) 1.4 Product and distribution costs

3.9 — Interest income and other, net (1)

Coffee $ 12.0 $ 11.0 $ 0.7 $ — Product and distribution costs

Dairy 8.6 — 4.1 — Product and distribution costs

( 1.1 ) — Interest income and other, net (1)

Net Investment Hedges:

Cross-currency swaps ( 3.4 ) 6.2 1.0 ( 0.2 ) Interest expense

Foreign currency debt ( 17.3 ) ( 21.1 ) — —

(1) As a result of the global COVID-19 impacts, Starbucks discontinued cash flow hedges during the quarter ended June 28, 2020.

Three Quarters Ended

Gains/(Losses)

Recognized in

OCI Before Reclassifications Gains/(Losses) Reclassified from

AOCI to Earnings Location of gain/(loss)

Cash Flow Hedges:

Interest rates $ ( 129.1 ) $ ( 25.3 ) $ 0.6 $ 3.9 Interest expense

Cross-currency swaps 8.1 ( 8.4 ) 0.9 ( 0.5 ) Interest expense

( 4.8 ) 5.6 Interest income and other, net

Dairy 2.5 ( 0.1 ) 2.6 — Product and distribution costs

Foreign currency - other ( 25.9 ) ( 4.7 ) — 1.7 Licensed stores revenues

— ( 0.3 ) Product and distribution costs

6.1 — Interest income and other, net (1)

Coffee ( 14.3 ) — — ( 0.3 ) Product and distribution costs

Dairy 3.6 — 4.8 — Product and distribution costs

( 1.7 ) — Interest income and other, net (1)

Interest rates 22.5 20.0 ( 0.6 ) 0.8 Interest expense

Net Investment Hedges:

1 unchanged sentence

Foreign currency debt ( 13.7 ) 13.0 — —

(1) As a result of the global COVID-19 impacts, Starbucks discontinued cash flow hedges during the quarters ended March 29, 2020 and June 28, 2020.

Pre-tax gains and losses on non-designated derivatives and designated fair value hedging instruments and the related fair value hedged item recognized in earnings ( in millions ):

Gains/(Losses) Recognized in Earnings

Location of gain/(loss) recognized in earnings Quarter Ended Three Quarters Ended

Jun 28, 2020 Jun 30, 2019 Jun 28, 2020 Jun 30, 2019

Location of gain/(loss) recognized in earnings Quarter Ended

Dec 27, 2020 Dec 29, 2019

Non-Designated Derivatives:

Foreign currency - other Interest income and other, net $ ( 5.0 ) $ ( 2.3 ) $ 3.3 $ ( 9.7 )

Dairy Interest income and other, net ( 1.7 ) 0.3 ( 1.6 ) ( 1.9 )

Diesel fuel and other commodities Interest income and other, net $ 1.2 $ 0.9

Foreign currency - other Interest income and other, net ( 0.8 ) 3.4

Fair Value Hedges:

2 unchanged sentences

Notional amounts of outstanding derivative contracts (in millions) :

Jun 28, 2020 Sep 29, 2019

Interest rate swap $ 1,750 $ 1,500

Dec 27, 2020 Sep 27, 2020

Coffee $ 109 $ 63

Cross-currency swaps 854 870

Foreign currency - other 1,206 1,125

Diesel fuel and other commodities 11 5

Foreign currency - other 1,000 1,140

Interest rate swap 1,750 1,750

Fair value of outstanding derivative contracts ( in millions ) including the location of the asset and/or liability on the consolidated balance sheets:

Derivative Assets

Balance Sheet Location Jun 28, 2020 Sep 29, 2019

Balance Sheet Location Dec 27, 2020 Sep 27, 2020

Designated Derivative Instruments:

Interest rates Other long-term assets $ — $ 0.1

Coffee Prepaid expenses and other current assets $ 13.6 $ 2.6

Cross-currency swaps Other long-term assets 17.3 37.7

Dairy Prepaid expenses and other current assets 1.7 2.1

Foreign currency - other Prepaid expenses and other current assets 1.8 8.6

Other long-term assets 0.3 3.8

Coffee Prepaid expenses and other current assets 0.2 —

Dairy Prepaid expenses and other current assets 1.9 —

Interest rate swap Other long-term assets 35.9 45.8

Non-designated Derivative Instruments:

Foreign currency Prepaid expenses and other current assets 3.5 1.0

Diesel fuel and other commodities Prepaid expenses and other current assets 0.9 —

Foreign currency Prepaid expenses and other current assets 6.7 2.3

Derivative Liabilities

Balance Sheet Location Jun 28, 2020 Sep 29, 2019

Balance Sheet Location Dec 27, 2020 Sep 27, 2020

Designated Derivative Instruments:

Interest rates Other long-term liabilities $ 72.3 $ 2.6

Cross-currency swaps Other long-term liabilities 6.6 9.7

Foreign currency - other Accrued liabilities 0.1 0.6

Other long-term liabilities 1.0 0.1

Coffee Accrued liabilities $ — $ 1.4

Other long-term liabilities — 0.1

Cross-currency swaps Other long-term liabilities 9.9 7.3

Dairy Accrued liabilities 1.3 1.4

Foreign currency - other Accrued liabilities 10.3 1.6

Other long-term liabilities 10.7 2.6

Interest rates Other long-term liabilities 46.8 69.3

Non-designated Derivative Instruments:

Foreign currency Accrued liabilities 2.1 3.0

Diesel fuel and other commodities Accrued liabilities 0.2 1.7

Foreign currency Accrued liabilities 1.4 1.2

The following amounts were recorded on the consolidated balance sheets related to fixed-to-floating interest rate swaps designated in fair value hedging relationships:

Carrying amount of hedged item Cumulative amount of fair value hedging adjustment included in the carrying amount

Jun 28, 2020 Sep 29, 2019 Jun 28, 2020 Sep 29, 2019

Dec 27, 2020 Sep 27, 2020 Dec 27, 2020 Sep 27, 2020

Location on the balance sheet

4 unchanged sentences

Fair Value Measurements at Reporting Date Using

June 28, 2020 Quoted Prices

December 27, 2020 Quoted Prices

Identical Assets

4 unchanged sentences

Available-for-sale debt securities

Certificates of deposit 1.6 — 1.6 —

Commercial paper 71.8 — 71.8 —

Corporate debt securities 78.5 — 78.5 —

Foreign government obligations 8.5 — 8.5 —

Mortgage and other asset-backed securities 16.7 — 16.7 —

Certificates of deposit 6.2 — 6.2 —

State and local government obligations 1.0 — 1.0 —

Total available-for-sale debt securities 169.6 — 169.6 —

5 unchanged sentences

Available-for-sale debt securities

Corporate debt securities 90.6 — 90.6 —

Auction rate securities 5.7 — — 5.7

government treasury securities 98.9 98.9 — —

State and local government obligations 3.6 — 3.6 —

Corporate debt securities 82.6 — 82.6 —

Mortgage and other asset-backed securities 9.8 — 9.8 —

State and local government obligations 2.6 — 2.6 —

government treasury securities 90.2 90.2 — —

Total long-term investments 190.9 90.2 95.0 5.7

15 unchanged sentences

Available-for-sale debt securities

Certificates of deposit 1.6 — 1.6 —

Commercial paper 66.8 — 66.8 —

Corporate debt securities 123.6 — 123.6 —

Foreign government obligations 8.5 — 8.5 —

Mortgage and other asset-backed securities 15.8 — 15.8 —

Total available-for-sale debt securities 216.3 — 216.3 —

5 unchanged sentences

Available-for-sale debt securities

Corporate debt securities 101.2 — 101.2 —

Auction rate securities 5.7 — — 5.7

government treasury securities 106.5 106.5 — —

Corporate debt securities 82.6 — 82.6 —

Mortgage and other asset-backed securities 19.3 — 19.3 —

State and local government obligations 3.6 — 3.6 —

Mortgage and other asset-backed 1.6 — 1.6 —

government treasury securities 94.9 94.9 — —

Total long-term investments 206.1 94.9 105.5 5.7

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The fair values of any financial instruments presented above exclude the impact of netting assets and liabilities when a legally enforceable master netting agreement exists.

Gross unrealized holding gains and losses on available-for-sale debt securities and marketable equity securities were not material as of June 28, 2020 and September 29, 2019.

Gross unrealized holding gains and losses on available-for-sale debt securities and marketable equity securities were not material as of December 27, 2020 and September 27, 2020.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities recognized or disclosed at fair value on the consolidated financial statements on a nonrecurring basis include items such as property, plant and equipment, goodwill and other intangible assets and other assets.

Assets and liabilities recognized or disclosed at fair value on the consolidated financial statements on a nonrecurring basis include items such as property, plant and equipment, ROU assets, goodwill and other intangible assets and other assets.

These assets are measured at fair value if determined to be impaired.

During our fiscal third quarter, we recorded asset impairment charges, primarily related to our store assets as discussed in Note 1 , Summary of Significant Accounting Policies.

Also see Note 7 , Other Intangible Assets and Goodwill.

During our first quarter of fiscal 2021, we recorded asset impairment charges, primarily related to restructuring efforts for our North America store portfolio.

See Note 1 , Summary of Significant Accounting Policies, for further discussion.

The estimated fair value of our long-term debt based on the quoted market price (Level 2) is included at Note 7 , Debt.

There were no material fair value adjustments during the three quarters ended June 28, 2020 and June 30, 2019.

There were no material fair value adjustments during the quarters ended December 27, 2020 and December 29, 2019.

Inventories (in millions) :

Jun 28, 2020 Sep 29, 2019

Dec 27, 2020 Sep 27, 2020

Unroasted $ 625.8 $ 664.7

5 unchanged sentences

Inventory levels vary due to seasonality, commodity market supply and price fluctuations.

As of June 28, 2020, we had committed to purchasing green coffee totaling $ 725 million under fixed-price contracts and an estimated $ 384 million under price-to-be-fixed contracts.

As of December 27, 2020, we had committed to purchasing green coffee totaling $ 809 million under fixed-price contracts and an estimated $ 554 million under price-to-be-fixed contracts.

We expect to take physical delivery for these contracts.

A portion of our price-to-be-fixed contracts are effectively fixed through the use of futures.

See Note 3 , Derivative Financial Instruments, for further discussion.

Price-to-be-fixed contracts are purchase commitments whereby the quality, quantity, delivery period and other negotiated terms are agreed upon, but the date, and therefore the price, at which the base “C” coffee commodity price component will be fixed has not yet been established.

3 unchanged sentences

We believe, based on relationships established with our suppliers in the past and continuous monitoring, the risk of non-delivery on these purchase commitments is remote.

During our fiscal second quarter, we wrote off approximately $ 50 million of inventory that was expiring or expected to expire due to COVID-19 related store closures, primarily perishable food and beverage ingredients located at our stores, distribution centers and suppliers.

We did not record significant write-offs related to COVID-19 during the third fiscal quarter.

Supplemental Balance Sheet and Statement of Earnings Information (in millions) :

Prepaid Expenses and Other Current Assets

Jun 28, 2020 Sep 29, 2019

Dec 27, 2020 Sep 27, 2020

Income tax receivable $ 332.6 $ 356.9

3 unchanged sentences

Property, Plant and Equipment, net

Jun 28, 2020 Sep 29, 2019

Dec 27, 2020 Sep 27, 2020

Land $ 46.2 $ 46.0

9 unchanged sentences

Accrued Liabilities

Jun 28, 2020 Sep 29, 2019

Dec 27, 2020 Sep 27, 2020

Accrued occupancy costs $ 79.9 $ 76.9

5 unchanged sentences

Store Operating Expenses

Quarter Ended Three Quarters Ended

Jun 28, 2020 Jun 30, 2019 Jun 28, 2020 Jun 30, 2019

Quarter Ended

Dec 27, 2020 Dec 29, 2019

Wages and benefits $ 1,606.2 $ 1,598.0

3 unchanged sentences

Other Intangible Assets and Goodwill

During the third quarter of fiscal 2020, we completed our annual goodwill impairment analysis.

The results of our analysis indicated significant excess fair values over carrying values across the different reporting units, and therefore no goodwill impairment was recorded.

Due to changes in branding and marketing strategy, certain indefinite-lived intangible assets became definite-lived.

As a result, approximately $ 105.5 million was reclassified primarily into Trade names, trademarks and patents within the Finite-lived intangible assets table below.

We estimated the fair values of these assets under an income approach with an average remaining useful life of approximately five years.

The analysis indicated that the fair value of one of the assets exceeded its carrying value.

As a result, we recorded a charge of $ 22.1 million to restructuring and impairments on our consolidated statement of earnings during the third quarter of fiscal 2020.

For our remaining intangible assets, our analysis did not indicate further impairment.

Indefinite-Lived Intangible Assets

(in millions) Jun 28, 2020 Sep 29, 2019

(in millions) Dec 27, 2020 Sep 27, 2020

Trade names, trademarks and patents $ 95.4 $ 95.0

Finite-Lived Intangible Assets

Jun 28, 2020 Sep 29, 2019

Dec 27, 2020 Sep 27, 2020

(in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount

5 unchanged sentences

Total finite-lived intangible assets $ 1,350.6 $ ( 939.6 ) $ 411.0 $ 1,307.9 $ ( 850.8 ) $ 457.1

Amortization expense for finite-lived intangible assets was $ 55.9 million and $ 164.5 million for the quarter and three quarters ended June 28, 2020 and $ 55.2 million and $ 178.4 million for the quarter and three quarters ended June 30, 2019, respectively.

Estimated future amortization expense as of June 28, 2020 ( in millions ):

Amortization expense for finite-lived intangible assets was $ 61.2 million for the quarter ended December 27, 2020 and $ 54.1 million for the quarter ended December 29, 2019, respectively.

Estimated future amortization expense as of December 27, 2020 ( in millions ):

Fiscal Year Total

2020 (excluding the three quarters ended June 28, 2020)

2021 (excluding the quarter ended December 27, 2020)

Thereafter 2.8

5 unchanged sentences

$ 496.5 $ 3,065.0 $ 34.7 $ 1.0 $ 3,597.2

Goodwill balance at June 28, 2020

1.0 108.6 — — 109.6

Goodwill balance at December 27, 2020

$ 497.5 $ 3,173.6 $ 34.7 $ 1.0 $ 3,706.8

(1) “Other” consists of changes in the goodwill balance resulting from foreign currency translation.

3 unchanged sentences

The proceeds from borrowings under our commercial paper program may be used for working capital needs, capital expenditures and other corporate purposes, including, but not limited to, business expansion, payment of cash dividends on our common stock and share repurchases.

As of June 28, 2020, we had $ 296.5 million of borrowings outstanding under the program, net of unamortized discount, of which a majority matures in the second quarter of fiscal 2021.

During the second quarter of fiscal 2020, we entered into a new $ 500 million unsecured 364-day term-loan facility (“the 2020 term-loan facility”), which is available for general corporate purposes.

The 2020 term-loan facility is currently set to mature on March 19, 2021 .

Borrowings under the term-loan facility are subject to terms defined within the 2020 term-loan facility and will bear interest depending on if the loan is a Eurocurrency Rate Loan or a Base Loan.

Eurocurrency Rate Loans will bear interest on the outstanding principal amount equal to the Eurocurrency Rate for such Interest Period plus the applicable margin.

Each Base Rate Loan will bear interest on the outstanding principal amount equal to the Base Rate plus the applicable margin.

The applicable margin is based on the Company's long-term credit ratings assigned by Moody's and Standard & Poor's rating agencies.

The current applicable margin is 1.000 % for Eurocurrency Rate Loans and 0.000 % (nil) for Base Rate Loans.

As of June 28, 2020, we had $ 500.0 million of borrowings outstanding under this term-loan facility program.

During the third quarter of fiscal 2020, we expanded our ¥ 1 billion unsecured credit facility to ¥ 5 billion, or $ 46.6 million.

This facility is currently set to mature on December 31, 2020 .

Borrowings under the credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on TIBOR plus an applicable margin of 0.300 % or 0.400 %, depending on the tranche borrowed.

Additionally during the third quarter, we expanded our ¥ 2 billion unsecured credit facility to ¥ 10 billion, or $ 93.4 million.

This facility is currently set to mature on March 26, 2021 .

Borrowings under the credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on TIBOR plus 0.300 %.

As of June 28, 2020, we had ¥ 15 billion, or $ 140.0 million, of borrowings outstanding under these credit facilities.

As of December 27, 2020, we had $ 299.7 million of borrowings outstanding under the program, net of unamortized discount, of which the majority matures in the second quarter of fiscal 2021.

Additionally, we hold the following Japanese yen-denominated credit facilities that are available for working capital needs and capital expenditures within our Japanese market:

• A ¥ 10 billion, or $ 96.5 million, facility is currently set to mature on March 26, 2021 .

Borrowings under the credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on TIBOR plus an applicable margin of 0.300 %.

• A ¥ 10 billion, or $ 96.5 million, facility is currently set to mature on October 29, 2021 .

Borrowings under the credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on TIBOR plus an applicable margin of 0.350 %.

• A ¥ 5 billion, or $ 48.2 million, facility is currently set to mature on December 30, 2021 .

Borrowings under the credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on TIBOR plus an applicable margin of 0.400 %.

As of December 27, 2020, we had ¥ 20 billion , or $ 192.9 million, of borrowings outstanding under these credit facilities.

Long-term Debt

Components of long-term debt including the associated interest rates and related estimated fair values by calendar maturity ( in millions, except interest rates) :

Jun 28, 2020 Sep 29, 2019 Stated Interest Rate Effective Interest Rate (1)

Dec 27, 2020 Sep 27, 2020 Stated Interest Rate Effective Interest Rate (1)

Issuance Amount Estimated Fair Value Amount Estimated Fair Value

November 2020 notes (2)

$ — $ — $ 500.0 $ 501.5 2.200 % 2.228 %

February 2021 notes 500.0 500.6 500.0 502.3 2.100 % 2.293 %

1 unchanged sentence

May 2022 notes 500.0 506.3 500.0 506.5 1.300 % 1.334 %

500.0 506 — — 1.300 % 1.334 %

June 2022 notes 500.0 515.0 500.0 517.5 2.700 % 2.819 %

7 unchanged sentences

March 2027 notes 500.0 529.0 500.0 528.9 2.000 % 2.058 %

500.0 525 — — 2.000 % 2.058 %

March 2028 notes 600.0 688.0 600.0 679.5 3.500 % 3.529 %

2 unchanged sentences

March 2030 notes 750.0 791.6 750.0 778.0 2.250 % 3.084 %

750.0 778 — — 2.250 % 3.084 %

November 2030 notes 1,250.0 1,344.1 1,250.0 1,325.9 2.550 % 2.582 %

1,250.0 1,309 — — 2.550 % 2.582 %

June 2045 notes 350.0 428.9 350.0 412.4 4.300 % 4.348 %

3 unchanged sentences

March 2050 notes 500.0 553.3 500.0 517.1 3.350 % 3.362 %

500.0 511 — — 3.350 % 3.362 %

November 2050 notes 1,250.0 1,436.5 1,250.0 1,332.2 3.500 % 3.528 %

1,250.0 1,321 — — 3.500 % 3.528 %

Total 15,520.1 17,408.7 16,006.4 17,498.7

2 unchanged sentences

Total $ 15,423.5 $ 15,909.5

(1) Includes the effects of the amortization of any premium or discount and any gain or loss upon settlement of related treasury locks or forward-starting interest rate swaps utilized to hedge the interest rate risk prior to the debt issuance.

(2) November 2020 notes were repaid in the first quarter of fiscal 2021.

(3) Amount includes the change in fair value due to changes in benchmark interest rates related to our October 2023 notes.

1 unchanged sentence

(4) Japanese yen-denominated long-term debt.

(4) Issued in March 2020.

(5) Issued in May 2020.

The following table summarizes our long-term debt maturities as of June 28, 2020 by fiscal year ( in millions ):

The following table summarizes our long-term debt maturities as of December 27, 2020 by fiscal year ( in millions ):

Fiscal Year Total

1 unchanged sentence

Total $ 15,520.1

The following significant lease accounting policies from our most recent Annual Report on Form 10-K have been updated to reflect the adoption of FASB's new guidance on the recognition and measurement of leases.

The majority of our leases are operating leases for our company-operated retail store locations.

We also lease, among other things, roasting, distribution and warehouse facilities and office space for corporate administrative purposes.

We do not enter into lease transactions with related parties.

We categorize leases as either operating or finance leases at the commencement date of the lease.

Operating lease agreements may contain tenant improvement allowances, rent holidays, rent escalation clauses and/or contingent rent provisions.

We have lease agreements with lease and non-lease components, which are accounted for together as a single lease component for all underlying classes of assets.

We recognize a right-of-use (“ROU”) asset and lease liability for each operating and finance lease with a contractual term greater than 12 months at the time of lease inception.

We do not record leases with an initial term of 12 months or less on our consolidated balance sheet but continue to record rent expense on a straight-line basis over the lease term.

Our leases often include options to extend or terminate at our sole discretion, which are included in the determination of lease term when they are reasonably certain to be exercised.

Our lease liability represents the present value of future lease payments over the lease term.

Given our policy election to combine lease and non-lease components, we also consider fixed common area maintenance (“CAM”) part of our fixed future lease payments;

therefore, fixed CAM is also included in our lease liability.

We cannot determine the interest rate implicit in each of our leases.

Therefore, we use market and term-specific incremental borrowing rates.

Our incremental borrowing rate for a lease is the rate of interest we expect to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

Because we do not borrow on a collateralized basis, we consider a combination of factors, including our credit-adjusted risk-free interest rate, the risk profile and funding cost of the specific geographic market of the lease, the lease term and the effect of adjusting the rate to reflect consideration of collateral.

Our credit-adjusted risk-free rate takes into consideration interest rates we pay on our unsecured long-term bonds as well as quoted interest rates obtained from financial institutions.

Total lease costs recorded as rent and other occupancy costs include fixed operating lease costs, variable lease costs and short-term lease costs.

Most of our real estate leases require we pay certain expenses, such as CAM costs, real estate taxes and other executory costs, of which the fixed portion is included in operating lease costs.

We recognize operating lease costs on a straight-line basis over the lease term.

In addition to the above costs, variable lease costs also include amounts based on a percentage of gross sales in excess of specified levels and are recognized when probable and are not included in determining the present value of our lease liability.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

A significant majority of our leases are related to our company-operated stores, and their related costs are recorded within store operating expenses.

The ROU asset is measured at the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, initial direct costs, and any tenant improvement allowances received.

For operating leases, ROU assets are reduced over the lease term by the recognized straight-line lease expense less the amount of accretion of the lease liability determined using the effective interest method.

For finance leases, ROU assets are amortized on a straight-line basis over the shorter of the useful life of the leased asset or the lease term.

Interest expense on each finance lease liability is recognized utilizing the effective interest method.

ROU assets are tested for impairment in the same manner as long-lived assets.

Additionally, we monitor for events or changes in circumstances that may require a reassessment of one of our leases and determine if a remeasurement is required.

We received $ 21.7 million in rent concessions for the quarter and three quarters

ended June 28, 2020, which was recorded as a reduction to store operating expenses on our consolidated statement of earnings.

Additionally, for the quarter and three quarters ended June 28, 2020, we recorded total lease exit costs of $ 13.4 million and $ 17.0 million, respectively, and an immaterial ROU asset impairment charge, which were recorded within restructuring and impairments on the consolidated statements of earnings.

For the quarter ended December 27, 2020, we recognized accelerated lease right-of-use ("ROU") asset amortization costs of $ 29.6 million, which was recognized within restructuring and impairments on the consolidated statements of earnings.

The components of lease costs (in millions) :

Quarter Ended Three Quarters Ended

Jun 28, 2020 Jun 28, 2020

Quarter Ended

Dec 27, 2020 Dec 29, 2019

Operating lease costs (1)

3 unchanged sentences

Total lease costs $ 640.5 $ 610.2

(1) Operating lease costs includes an immaterial amount of sublease income .

(1) Operating lease costs were net of immaterial amounts of sublease income and rent concessions .

The following table includes supplemental information (in millions) :

Three Quarters Ended

Quarter Ended

Dec 27, 2020 Dec 29, 2019

Cash paid related to operating lease liabilities $ 385.6 $ 368.9

Operating lease liabilities arising from obtaining ROU assets 353.8 226.4

Weighted-average remaining operating lease term 8.9 years

Dec 27, 2020 Dec 29, 2019

Weighted-average remaining operating lease term 8.8 years 9.0 years

Weighted-average operating lease discount rate 2.5 % 2.5 %

(1) Excludes the initial impact of adoption.

See Note 1 , Summary of Significant Accounting Policies for additional information.

Finance lease assets are recorded in property, plant and equipment, net with the corresponding lease liabilities included in accrued liabilities and other long-term liabilities on the consolidated balance sheet.

Finance leases were immaterial as of June 28, 2020.

There were no material finance leases as of December 27, 2020.

Minimum future maturities of operating lease liabilities (in millions) :

Fiscal Year Total

2020 (excluding the three quarters ended June 28, 2020)

2021 (excluding the quarter ended December 27, 2020)

Thereafter 3,992.3

2 unchanged sentences

Total $ 9,022.1

As of June 28, 2020, we have entered into operating leases that have not yet commenced of $ 681.2 million, primarily related to real estate leases.

These leases will commence between fiscal year 2020 and fiscal year 2026 with lease terms of 3 years to 20 years.

Previous Lease Guidance Disclosures

Rent expense under operating lease agreements under the previous lease guidance, which excludes certain amounts required under the new guidance, for the quarter and three quarters ended June 30, 2019 (in millions) :

Quarter Ended Three Quarters Ended

Jun 30, 2019 Jun 30, 2019

Minimum rent $ 367.6 $ 1,084.6

Contingent rent 57.7 169.7

Total $ 425.3 $ 1,254.3

As previously reported in our 10-K, the minimum future rental payments under non-cancelable operating leases and lease financing arrangements under the previous lease guidance as of September 29, 2019 (in millions) :

Fiscal Year Operating Leases Lease Financing Arrangements

2020 $ 1,432.9 $ 5.2

2021 1,342.2 5.2

2022 1,247.4 5.0

2023 1,124.3 5.0

2024 996.4 4.9

Thereafter 4,087.7 42.6

Total minimum lease payments $ 10,230.9 $ 67.9

As of December 27, 2020, we have entered into operating leases that have not yet commenced of $ 723.4 million, primarily related to real estate leases.

These leases will commence between fiscal year 2021 and fiscal year 2027 with lease terms ranging from 3 years to 20 years.

Deferred Revenue

Our deferred revenue primarily consists of the up-front prepaid royalty from Nestlé, for which we have continuing performance obligations to support the Global Coffee Alliance, and our unredeemed stored value card liability and unredeemed loyalty points (“Stars”) associated with our loyalty program.

At June 28, 2020, the current and long-term deferred revenue related to the Nestlé up-front payment was $ 176.5 million and $ 6.6 billion, respectively.

During the quarter and three quarters ended June 28, 2020, we recognized $ 44.2 million and $ 132.6 million in current deferred revenue, respectively, related to amortization of the up-front payment.

For the quarter and three quarters ended June 30, 2019, we recognized $ 43.7 million and $ 131.5 million in current deferred revenue, respectively, related to amortization of the up-front payment.

Our deferred revenue primarily consists of the prepaid royalty from Nestlé, for which we have continuing performance obligations to support the Global Coffee Alliance, our unredeemed stored value card liability and unredeemed loyalty points (“Stars”) associated with our loyalty program.

At December 27, 2020, the current and long-term deferred revenue related to the Nestlé was $ 180.3 million and $ 6.5 billion, respectively.

During both quarters ended December 27, 2020 and December 29, 2019, we recognized $ 44.2 million of prepaid royalty revenue related to Nestlé.

Changes in our deferred revenue balance related to our stored value cards and loyalty program (in millions) :

Quarter Ended June 28, 2020 Total

Stored value cards and loyalty program at March 29, 2020

Quarter Ended December 27, 2020 Total

Stored value cards and loyalty program at September 27, 2020

Revenue deferred - card activations, card reloads and Stars earned 3,437.4

Revenue recognized - card and Stars redemptions and breakage ( 2,980.2 )

Stored value cards and loyalty program at June 28, 2020 (2)

Three Quarters Ended June 28, 2020 Total

Stored value cards and loyalty program at December 27, 2020 (2)

Quarter Ended December 29, 2019 Total

Stored value cards and loyalty program at September 29, 2019

1 unchanged sentence

Revenue recognized - card and Stars redemptions and breakage ( 3,061.9 )

Stored value cards and loyalty program at June 28, 2020 (2)

Stored value cards and loyalty program at December 29, 2019 (2)

(1) “Other” primarily consists of changes in the stored value cards and loyalty program balances resulting from foreign currency translation.

(2) Approximately $ 1,226.4 million of this amount is current.

(2) As of December 27, 2020 and December 29, 2019, approximately $ 1,623.7 million and $ 1,460.9 million of these amounts were current, respectively.

Changes in AOCI by component, net of tax (in millions) :

Quarter Ended Available-for-Sale Debt Securities Cash Flow Hedges Net Investment Hedges Translation Adjustment and Other Total

June 28, 2020

Net gains/(losses) in AOCI, beginning of period $ 5.6 $ ( 64.8 ) $ 47.8 $ ( 510.4 ) $ ( 521.8 )

Net gains/(losses) recognized in OCI before reclassifications 4.0 ( 22.3 ) ( 18.4 ) 29.0 ( 7.7 )

Net (gains)/losses reclassified from AOCI to earnings ( 1.7 ) 3.4 ( 2.1 ) — ( 0.4 )

Other comprehensive income/(loss) attributable to Starbucks 2.3 ( 18.9 ) ( 20.5 ) 29.0 ( 8.1 )

Net gains/(losses) in AOCI, end of period $ 7.9 $ ( 83.7 ) $ 27.3 $ ( 481.4 ) $ ( 529.9 )

June 30, 2019

December 27, 2020

Net gains/(losses) in AOCI, beginning of period $ 5.7 $ ( 82.1 ) $ 11.5 $ ( 299.7 ) $ ( 364.6 )

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Net gains/(losses) in AOCI, end of period $ 4.1 $ ( 75.5 ) $ ( 13.5 ) $ ( 61.0 ) $ ( 145.9 )

Three Quarters Ended Available-for-Sale Debt Securities Cash Flow Hedges Net Investment Hedges Translation Adjustment and Other Total

June 28, 2020

December 29, 2019

Net gains/(losses) in AOCI, beginning of period $ 3.9 $ 11.0 $ ( 10.1 ) $ ( 508.1 ) $ ( 503.3 )

4 unchanged sentences

Net gains/(losses) in AOCI, end of period $ 3.2 $ 33.7 $ 7.7 $ ( 432.0 ) $ ( 387.4 )

June 30, 2019

Net gains/(losses) in AOCI, beginning of period $ ( 4.9 ) $ 17.7 $ 19.6 $ ( 362.7 ) $ ( 330.3 )

Net gains/(losses) recognized in OCI before reclassifications 7.5 ( 18.8 ) ( 29.9 ) 16.4 ( 24.8 )

Net (gains)/losses reclassified from AOCI to earnings 0.6 7.2 — ( 1.7 ) 6.1

Other comprehensive income/(loss) attributable to Starbucks 8.1 ( 11.6 ) ( 29.9 ) 14.7 ( 18.7 )

Net gains/(losses) in AOCI, end of period $ 3.2 $ 6.1 $ ( 10.3 ) $ ( 348.0 ) $ ( 349.0 )

Impact of reclassifications from AOCI on the consolidated statements of earnings (in millions) :

2 unchanged sentences

the Statements of Earnings

Jun 28, 2020 Jun 30, 2019

Gains/(losses) on available-for-sale debt securities $ 2.2 $ 0.2 Interest income and other, net

Gains/(losses) on cash flow hedges ( 4.2 ) ( 5.1 ) Please refer to Note 3 , Derivative Financial Instruments for additional information.

Gains/(losses) on net investment hedges 2.9 — Interest expense

Translation adjustment (1)

Thailand — 1.7 Net gain resulting from divestiture of certain operations

0.9 ( 3.2 ) Total before tax

( 0.5 ) 0.3 Tax (expense)/benefit

$ 0.4 $ ( 2.9 ) Net of tax

(1) Release of cumulative translation adjustments to earnings upon sale or liquidation of foreign businesses.

Three Quarters Ended

Components Amounts Reclassified from AOCI Affected Line Item in

the Statements of Earnings

Jun 28, 2020 Jun 30, 2019

Dec 27, 2020 Dec 29, 2019

Gains/(losses) on available-for-sale debt securities $ 1.5 $ ( 0.2 ) Interest income and other, net

1 unchanged sentence

Gains/(losses) on net investment hedges 3.2 3.3 Interest expense

Translation adjustment (1)

Thailand — 1.7 Net gain resulting from divestiture of certain operations

3.6 10.7 Total before tax

1 unchanged sentence

$ 1.8 $ 8.4 Net of tax

(1) Release of cumulative translation adjustments to earnings upon sale or liquidation of foreign businesses.

In addition to 2.4 billion shares of authorized common stock with $ 0.001 par value per share, the Company has authorized 7.5 million shares of preferred stock, none of which was outstanding as of June 28, 2020.

During the three quarters ended June 28, 2020, we repurchased 20.3 million shares of common stock for $ 1.7 billion.

On March 18, 2020, we announced that our Board of Directors authorized the repurchase of up to an additional 40 million shares under our ongoing share repurchase program.

On April 8, 2020, we announced a temporary suspension of our share repurchase program.

Repurchases pursuant to this program were last made in mid-March.

As of June 28, 2020, 48.9 million shares remained available for repurchase under current authorizations.

In September 2018, we entered into accelerated share repurchase agreements (“ASR agreements”) with third-party financial institutions totaling $ 5.0 billion, effective October 1, 2018.

We made a $ 5.0 billion up-front payment to the financial institutions and received an initial delivery of 72.0 million shares.

In March 2019 , we received an additional 4.9 million shares upon the completion of the program based on a volume-weighted average share price (less discount) of $ 65.03 .

In March 2019, we entered into ASR agreements with third-party financial institutions totaling $ 2.0 billion, effective March 22, 2019.

We made a $ 2.0 billion up-front payment to the financial institutions and received an initial delivery of 22.2 million shares.

In June 2019 , we received an additional 3.9 million shares upon the completion of the program based on a volume-weighted average share price (less discount) of $ 76.50 .

During the third quarter of fiscal 2020, our Board of Directors declared a quarterly cash dividend to shareholders of $ 0.41 per share to be paid on August 21, 2020 to shareholders of record as of the close of business on August 7, 2020 .

As of December 27, 2020, 48.9 million shares remained available for repurchase under current authorizations.

We have suspended our share repurchase program until we restore certain financial leverage targets, which we currently expect to occur in late fiscal 2021.

On September 30, 2020, which was early in the first quarter of fiscal 2021, our Board of Directors approved a quarterly cash dividend to shareholders of $ 0.45 per share to be paid on November 27, 2020 to shareholders of record as of the close of business on November 12, 2020.

In November 2020, our Board of Directors approved a quarterly cash dividend to shareholders of $ 0.45 per share to be paid on March 5, 2021 to shareholders of record as of the close of business on February 18, 2021.

Employee Stock Plans

As of June 28, 2020, there were 46.5 million shares of common stock available for issuance pursuant to future equity-based compensation awards and 12.0 million shares available for issuance under our employee stock purchase plan.

As of December 27, 2020, there were 39.4 million shares of common stock available for issuance pursuant to future equity-based compensation awards and 11.8 million shares available for issuance under our employee stock purchase plan.

Stock-based compensation expense recognized in the consolidated statements of earnings (in millions) :

Quarter Ended Three Quarters Ended

Jun 28, 2020 Jun 30, 2019 Jun 28, 2020 Jun 30, 2019

Quarter Ended

Dec 27, 2020 Dec 29, 2019

Options $ 0.9 $ 1.7

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Total stock-based compensation expense $ 99.3 $ 90.3

Stock option and RSU transactions from September 29, 2019 through June 28, 2020 ( in millions ):

Stock option and RSU transactions from September 27, 2020 through December 27, 2020 ( in millions ):

Stock Options RSUs

3 unchanged sentences

Forfeited/expired ( 0.1 ) ( 0.4 )

Options outstanding/Nonvested RSUs, June 28, 2020

Total unrecognized stock-based compensation expense, net of estimated forfeitures, as of June 28, 2020

Options outstanding/Nonvested RSUs, December 27, 2020

Total unrecognized stock-based compensation expense, net of estimated forfeitures, as of December 27, 2020

$ 0.4 $ 309.7

The effective tax rate for the first three quarters ended June 28, 2020 was 26.3 % compared to 19.4 % for the same period in fiscal 2019.

The increase was primarily due to the valuation allowances recorded against deferred tax assets of certain international jurisdictions (approximately 1,390 basis points).

This unfavorable impact was partially offset by the impact of changes in indefinite reinvestment assertions for certain foreign subsidiaries in the first quarter of fiscal 2019 (approximately 220 basis points), release of income tax reserves (approximately 210 basis points) and lower pre-tax earnings including the foreign rate differential on our jurisdictional mix of earnings.

Earnings/(Loss) per Share

Calculation of net earnings/(loss) per common share — basic and diluted ( in millions, except earnings/(loss) per share ):

Quarter Ended Three Quarters Ended

Jun 28, 2020 Jun 30, 2019 Jun 28, 2020 Jun 30, 2019

Net earnings/(loss) attributable to Starbucks $ ( 678.4 ) $ 1,372.8 $ 535.7 $ 2,796.4

Earnings per Share

Calculation of net earnings per common share (“EPS”) — basic and diluted ( in millions, except EPS ):

Quarter Ended

Dec 27, 2020 Dec 29, 2019

Net earnings attributable to Starbucks $ 622.2 $ 885.7

Weighted average common shares outstanding (for basic calculation) 1,175.0 1,180.4

1 unchanged sentence

Weighted average common and common equivalent shares outstanding (for diluted calculation) 1,183.0 1,191.0

Earnings/(loss) per share — basic $ ( 0.58 ) $ 1.13 $ 0.46 $ 2.27

Earnings/(loss) per share — diluted $ ( 0.58 ) $ 1.12 $ 0.45 $ 2.25

EPS — basic $ 0.53 $ 0.75

EPS — diluted $ 0.53 $ 0.74

Potential dilutive shares consist of the incremental common shares issuable upon the exercise of outstanding stock options (both vested and non-vested) and unvested RSUs, calculated using the treasury stock method.

For the three months ended June 28, 2020, the Company had 8.1 million of outstanding stock options and unvested RSUs that could potentially dilute earnings per share in future periods that were excluded from the computation of diluted earnings per share because the effect would have been antidilutive given the net loss during the period.

The calculation of dilutive shares outstanding also excludes out-of-the-money stock options (i.e., such options’ exercise prices were greater than the average market price of our common shares for the period) because their inclusion would have been antidilutive.

As of June 28, 2020 and June 30, 2019, we had no out-of-the-money stock options .

The calculation of dilutive shares outstanding would exclude out-of-the-money stock options (i.e., such options’ exercise prices were greater than the average market price of our common shares for the period) because their inclusion would be antidilutive.

As of December 27, 2020 and December 29, 2019, we had no out-of-the-money stock options .

Commitments and Contingencies

8 unchanged sentences

Plaintiff alleges that the Company and the other defendants failed to provide warnings for their coffee products of exposure to the chemical acrylamide as required under California Health and Safety Code section 25249.5, the California Safe Drinking Water and Toxic Enforcement Act of 1986, better known as Proposition 65.

Plaintiff seeks equitable relief, including providing warnings to consumers of coffee products, as well as civil penalties in the amount of the statutory maximum of two thousand five hundred dollars per day per violation of Proposition 65.

Plaintiff seeks equitable relief, including

providing warnings to consumers of coffee products, as well as civil penalties in the amount of the statutory maximum of two thousand five hundred dollars per day per violation of Proposition 65.

The Plaintiff asserts that every consumed cup of coffee, absent a compliant warning, is equivalent to a violation under Proposition 65.

12 unchanged sentences

On June 24, 2019, the Court of Appeal lifted the stay of the litigation.

A status conference before the trial judge to discuss the motions that each party has filed has been scheduled for August 10, 2020.

At this stage of the proceedings, Starbucks believes that the likelihood that the Company will ultimately incur a loss in connection with this litigation is remote.

At the status conference on August 25, 2020, the trial judge granted the defendants’ motion for summary judgment, ruling that the coffee exemption regulation is a complete defense to the Plaintiff’s complaint.

The Notice of Entry of Judgment from the court was served on October 6, 2020 and the Plaintiff filed a Notice of Appeal on November 20, 2020.

Starbucks believes that the likelihood that the Company will ultimately incur a material loss in connection with this litigation is less than reasonably possible.

Accordingly, no loss contingency was recorded for this matter.

3 unchanged sentences

Consolidated revenue mix by product type (1) ( in millions ):

Quarter Ended Three Quarters Ended

Jun 28, 2020 Jun 30, 2019 Jun 28, 2020 Jun 30, 2019

Quarter Ended

Dec 27, 2020 Dec 29, 2019

$ 4,251.9 63 % $ 4,260.9 60 %

2 unchanged sentences

Total $ 6,749.4 100 % $ 7,097.1 100 %

(1) Certain prior period amounts have been reclassified to conform to current year presentation.

(1) Certain prior period amounts have been reclassified to conform to current period presentation.

(2) Beverage represents sales within our company-operated stores.

(3) Food includes sales within our company-operated stores.

(4) “Other” primarily consists of packaged and single-serve coffees and teas, royalty and licensing revenues, serveware, beverage-related ingredients and ready-to-drink beverages, among other items.

(4) “Other” primarily consists of packaged and single-serve coffees and teas, serveware, royalty and licensing revenues, beverage-related ingredients and ready-to-drink beverages, among other items.

The table below presents financial information for our reportable operating segments and Corporate and Other segment (in millions) :

Quarter Ended

Americas International Channel

Corporate and Other Total

June 28, 2020

Total net revenues $ 2,805.5 $ 949.6 $ 447.3 $ 19.7 $ 4,222.1

Depreciation and amortization expenses 191.3 128.5 0.3 40.9 361.0

Income from equity investees — 17.4 51.0 — 68.4

Operating income/(loss) $ ( 404.9 ) $ ( 86.0 ) $ 124.2 $ ( 337.2 ) $ ( 703.9 )

June 30, 2019

Total net revenues (1)

$ 4,681.1 $ 1,585.3 $ 533.3 $ 23.3 $ 6,823.0

Depreciation and amortization expenses 175.6 127.7 0.2 39.6 343.1

Income from equity investees — 27.2 48.8 — 76.0

Operating income/(loss) $ 1,018.7 $ 270.2 $ 181.9 $ ( 349.5 ) $ 1,121.3

Three Quarters Ended

Americas International Channel

Corporate and Other Total

June 28, 2020

Americas International Channel Development Corporate and Other Total

December 27, 2020

Total net revenues $ 4,703.2 $ 1,654.3 $ 371.4 $ 20.5 $ 6,749.4

2 unchanged sentences

Operating income/(loss) 813.5 274.8 180.8 ( 355.6 ) 913.5

June 30, 2019

December 29, 2019

Total net revenues $ 5,010.9 $ 1,571.1 $ 494.6 $ 20.5 $ 7,097.1

$ 13,607.6 $ 4,618.6 $ 1,484.5 $ 50.9 $ 19,761.6

Depreciation and amortization expenses 189.2 126.6 0.3 34.9 351.0

1 unchanged sentence

Operating income/(loss) 1,098.8 275.9 175.5 ( 330.4 ) 1,219.8

(1) Prior period amounts have been restated to reflect the fourth quarter fiscal 2019 realigned Starbucks operating segment reporting structure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements