What changed in this filing

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Item 1. Financial Statements

2022-02-01 compared with 2021-07-27 · 189 added, 360 removed, 550 unchanged (50% 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 40.3 82.7

Operating income/(loss) 1,488.7 ( 703.9 ) 3,389.9 1,003.4

Operating income 1,177.8 913.5

Interest income and other, net ( 0.1 ) 15.5

Interest expense ( 115.3 ) ( 120.7 )

Earnings/(loss) before income taxes 1,411.3 ( 812.0 ) 3,109.3 722.0

Income tax expense/(benefit) 257.1 ( 133.9 ) 673.6 190.0

Net earnings/(loss) including noncontrolling interests 1,154.2 ( 678.1 ) 2,435.7 532.0

Net earnings/(loss) attributable to noncontrolling interests 0.8 0.3 0.8 ( 3.7 )

Net earnings/(loss) attributable to Starbucks $ 1,153.4 $ ( 678.4 ) $ 2,434.9 $ 535.7

Earnings/(loss) per share - basic $ 0.98 $ ( 0.58 ) $ 2.07 $ 0.46

Earnings/(loss) per share - diluted $ 0.97 $ ( 0.58 ) $ 2.06 $ 0.45

Earnings before income taxes 1,062.4 808.3

Income tax expense 246.3 186.1

Net earnings including noncontrolling interests 816.1 622.2

Net earnings attributable to noncontrolling interests 0.2 —

Net earnings attributable to Starbucks $ 815.9 $ 622.2

Earnings per share - basic $ 0.70 $ 0.53

Earnings per share - diluted $ 0.69 $ 0.53

Weighted average shares outstanding:

2 unchanged sentences

See Notes to Consolidated Financial Statements.

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STARBUCKS CORPORATION

1 unchanged sentence

(in millions, unaudited)

Quarter Ended Three Quarters Ended

Net earnings/(loss) including noncontrolling interests $ 1,154.2 $ ( 678.1 ) $ 2,435.7 $ 532.0

Quarter Ended

Net earnings including noncontrolling interests $ 816.1 $ 622.2

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

9 unchanged sentences

Tax expense/(benefit) 2.9 1.8

Other comprehensive income/(loss) 96.6 ( 8.1 ) 334.9 ( 31.4 )

Comprehensive income/(loss) including noncontrolling interests 1,250.8 ( 686.2 ) 2,770.6 500.6

Comprehensive income/(loss) attributable to noncontrolling interests 0.8 0.3 0.8 ( 3.7 )

Comprehensive income/(loss) attributable to Starbucks $ 1,250.0 $ ( 686.5 ) $ 2,769.8 $ 504.3

Other comprehensive income 106.3 218.7

Comprehensive income including noncontrolling interests 922.4 840.9

Comprehensive income attributable to noncontrolling interests 0.2 —

Comprehensive income attributable to Starbucks $ 922.2 $ 840.9

See Notes to Consolidated Financial Statements.

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STARBUCKS CORPORATION

22 unchanged sentences

Accrued payroll and benefits 664.1 772.3

Income taxes payable 204.8 98.2

Current portion of operating lease liability 1,253.3 1,251.3

13 unchanged sentences

Retained deficit ( 8,753.0 ) ( 6,315.7 )

Accumulated other comprehensive loss ( 29.7 ) ( 364.6 )

Accumulated other comprehensive income 253.5 147.2

Total shareholders’ deficit ( 8,457.2 ) ( 5,321.2 )

3 unchanged sentences

See Notes to Consolidated Financial Statements.

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STARBUCKS CORPORATION

1 unchanged sentence

(in millions, unaudited)

Three Quarters Ended

Quarter Ended

OPERATING ACTIVITIES:

13 unchanged sentences

Prepaid expenses and other current assets 64.6 5.2

Income taxes payable 128.9 ( 1,224.5 )

Accounts payable 84.0 24.8

11 unchanged sentences

FINANCING ACTIVITIES:

Repayments of commercial paper ( 296.5 ) —

Proceeds from issuance of commercial paper 200.0 —

Net proceeds from issuance of short-term debt — 192.9

Repayments of short-term debt — ( 144.7 )

Proceeds from issuance of long-term debt — 4,727.6

Repayments of long-term debt — ( 500.0 )

3 unchanged sentences

Minimum tax withholdings on share-based awards ( 113.6 ) ( 88.6 )

Other — ( 37.8 )

Net cash provided by/(used in) financing activities ( 3,167.9 ) 2,493.0

Net cash used in financing activities ( 3,969.2 ) ( 965.8 )

Effect of exchange rate changes on cash and cash equivalents 13.0 79.8

Net increase in cash and cash equivalents 402.2 1,279.3

Net increase/(decrease) in cash and cash equivalents ( 2,486.3 ) 677.2

CASH AND CASH EQUIVALENTS:

6 unchanged sentences

See Notes to Consolidated Financial Statements.

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STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

For the Quarters Ended June 27, 2021 and June 28, 2020

For the Quarters Ended January 2, 2022 and December 27, 2020

(in millions, except per share data, unaudited)

6 unchanged sentences

Shares Amount

Balance, March 28, 2021

Balance, October 3, 2021

1,180.0 $ 1.2 $ 846.1 $ ( 6,315.7 ) $ 147.2 $ ( 5,321.2 ) $ 6.7 $ ( 5,314.5 )

Net earnings — — — 815.9 — 815.9 0.2 816.1

Other comprehensive income/(loss) — — — — 96.6 96.6 — 96.6

Stock-based compensation expense — — 80.9 — — 80.9 — 80.9

Exercise of stock options/vesting of RSUs 1.0 — 41.7 — — 41.7 — 41.7

Sale of common stock 0.1 — 11.3 — — 11.3 — 11.3

Cash dividends declared, $ 0.45 per share

— — — ( 530.7 ) — ( 530.7 ) — ( 530.7 )

Balance, June 27, 2021

1,179.0 $ 1.2 $ 729.3 $ ( 7,501.6 ) $ ( 29.7 ) $ ( 6,800.8 ) $ 6.5 $ ( 6,794.3 )

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 )

Other comprehensive income — — — — 106.3 106.3 — 106.3

Stock-based compensation expense — — 97.1 — — 97.1 — 97.1

1 unchanged sentence

Sale of common stock 0.1 — 11.8 — — 11.8 — 11.8

Repurchase of common stock ( 31.1 ) — ( 829.8 ) ( 2,691.1 ) — ( 3,520.9 ) — ( 3,520.9 )

Cash dividends declared, $ 0.49 per share

— — — ( 562.1 ) — ( 562.1 ) — ( 562.1 )

Balance, June 28, 2020

Balance, January 2, 2022

1,151.6 $ 1.2 $ 41.1 $ ( 8,753.0 ) $ 253.5 $ ( 8,457.2 ) $ 6.9 $ ( 8,450.3 )

See Notes to Consolidated Financial Statements.

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STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

For the Three Quarters Ended June 27, 2021 and June 28, 2020

(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, September 27, 2020

2 unchanged sentences

Net earnings — — — 622.2 — 622.2 — 622.2

Other comprehensive income/(loss) — — — — 334.9 334.9 — 334.9

Stock-based compensation expense — — 258.1 — — 258.1 — 258.1

Exercise of stock options/vesting of RSUs 5.4 — 65.7 — — 65.7 — 65.7

Sale of common stock 0.3 — 31.6 — — 31.6 — 31.6

Cash dividends declared, $ 1.80 per share

— — — ( 2,118.7 ) — ( 2,118.7 ) — ( 2,118.7 )

Balance, June 27, 2021

1,179.0 $ 1.2 $ 729.3 $ ( 7,501.6 ) $ ( 29.7 ) $ ( 6,800.8 ) $ 6.5 $ ( 6,794.3 )

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

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

Other comprehensive income/(loss) — — — — ( 31.4 ) ( 31.4 ) — ( 31.4 )

Other comprehensive income — — — — 218.7 218.7 — 218.7

Stock-based compensation expense — — 100.5 — — 100.5 — 100.5

1 unchanged sentence

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

Balance, December 27, 2020

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

See Notes to Consolidated Financial Statements.

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STARBUCKS CORPORATION

INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Summary of Significant Accounting Policies

Note 1 Summary of Significant Accounting Policies and Estimates

Note 2 Derivative Financial Instruments

7 unchanged sentences

Note 11 Employee Stock Plans

Note 12 Income Taxes

Note 13 Earnings/(Loss) per Share

Note 12 Earnings per Share

Note 13 Commitments and Contingencies

Note 14 Segment Reporting

Note 16 Subsequent Event

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STARBUCKS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies and Estimates

Financial Statement Preparation

The unaudited consolidated financial statements as of June 27, 2021, and for the quarter and three quarters ended June 27, 2021 and June 28, 2020, 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 27, 2021 and June 28, 2020 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 January 2, 2022, and for the quarters ended January 2, 2022 and December 27, 2020, 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 January 2, 2022 and December 27, 2020 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.”

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”).

Segment information is prepared on the same basis that our management reviews financial information for operational decision-making purposes.

In the fourth quarter of fiscal 2021, certain changes were made to our management team, and our operating segment reporting structure was realigned as a result.

We realigned our fully licensed Latin America and Caribbean markets from our Americas operating segment to our International operating segment.

We renamed the Americas operating segment to the North America operating segment, since it is comprised of our company-operated and licensed stores in the U.S.

We also made certain other immaterial changes between our International operating segment and Corporate and Other.

Certain prior period information for our North America and International operating segments and our Corporate and Other reportable segment has been reclassified to conform to the current year presentation.

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

Certain prior period information on the consolidated balance sheets and consolidated statements of cash flows have been reclassified to conform to the current presentation.

The financial information as of October 3, 2021 is derived from our audited consolidated financial statements and notes for the fiscal year ended October 3, 2021 (“fiscal 2021”) included in Item 8 in the Fiscal 2021 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 27, 2021 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 results of operations for the quarter ended January 2, 2022 are not necessarily indicative of the results of operations that may be achieved for the entire fiscal year ending October 2, 2022 (“fiscal 2022”).

Our fiscal year ends on the Sunday closest to September 30.

Our fiscal 2022 year includes 52 weeks while our fiscal 2021 year included 53 weeks, with the 53rd week falling in the fourth quarter of fiscal 2021.

The novel coronavirus, known as the global COVID-19 pandemic, 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 demonstrated powerful momentum beyond recovery from the COVID-19 pandemic, despite certain markets in our International segment continuing to experience pandemic-related restrictions during the quarter.

As of the end of the third quarter of fiscal 2021, nearly all our company-operated and licensed stores had re-opened.

Segment Update

Segment information is prepared on the same basis that our management reviews financial information for operational decision-making purposes.

Effective June 28, 2021, certain changes were made to our management team, and our operating segment reporting structure was re-aligned in the fourth quarter of fiscal 2021 as a result.

Specifically, we realigned our fully licensed Latin America and Caribbean markets from our Americas operating segment to our International operating segment.

Additionally, we renamed the Americas operating segment to the North America operating segment, since it is comprised of our company-operated and licensed stores in the U.S.

The financial information presented herein does not reflect this realignment as these changes were not effective until the fourth quarter of fiscal 2021 and our ceo, who is our Chief Operating Decision Maker, continued to manage the business under the existing segment structure through the end of the third quarter of fiscal 2021.

We have since established the necessary protocols to operate safely, and our businesses demonstrated powerful momentum beyond recovery from the COVID-19 pandemic.

However, the Omicron variant quickly spread during the quarter, and our operations continued to experience pandemic-related restrictions, impacting sales in both our North America and International segments, primarily China.

Impacts also included higher than anticipated costs in North America due to staffing shortages in our supply chain and retail stores.

We continue to monitor the COVID-19 pandemic and its effect on our business and results of operations;

however, we cannot predict the duration, scope or severity of the COVID-19 pandemic or its future impact on our business, results of operations, cash flows and financial condition.

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 pandemic and options to defer payroll tax payments 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 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 27, 2021, qualified payroll and other credits reduced our store operating expenses by $ 56.4 million and $ 173.7 million, respectively, on our consolidated statements of earnings.

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 statements of earnings, respectively.

After netting the qualified credits against our payable, a receivable of $ 161.7 million and $ 155.1 million was included in prepaid expenses and other current assets as of June 27, 2021 and September 27, 2020, respectively.

During the three quarters ended June 27, 2021, we deferred $ 81.7 million of qualified payroll tax payments.

During the quarter ended June 27, 2021, there were no similar deferrals.

As of June 27, 2021, deferred payroll tax payments of $ 116.4 million were included in both accrued liabilities and other long-term liabilities, respectively, on our consolidated balance sheets.

As of September 27, 2020, deferred payroll tax payments of $ 151.0 million were included in other long-term liabilities on our consolidated balance sheets.

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In response to the COVID-19 pandemic, certain governments have provided subsidies and assistance to companies.

The most substantial of these were the U.S.

Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and the Canada Emergency Wage Subsidy, which were no longer applicable in late fiscal 2021.

However, during the quarter ended January 2, 2022, an international government subsidy reduced our store operating expenses by $ 11.5 million on our consolidated statements of earnings.

During the quarter ended December 27, 2020, qualified payroll and other credits reduced our store operating expenses by $ 19.8 million on our consolidated statements of earnings.

After netting the qualified credits against our payable, a receivable of $ 98.8 million and $ 172.4 million was included in prepaid expenses and other current assets as of January 2, 2022 and October 3, 2021, respectively.

As of January 2, 2022, deferred payroll tax payments of $ 116.5 million were included in accrued liabilities on our consolidated balance sheets.

As of October 3, 2021, deferred payroll tax payments of $ 116.4 million were included in both accrued liabilities and 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 developing new store formats to better cater to changing customer tastes and preferences.

As of June 27, 2021, we expect the total number of closures to be approximately 820 stores in the U.S.

and Canada and have closed or identified for closure approximately 790 stores under our restructuring plan.

As a result, we recorded approximately $ 19.8 million and $ 115.0 million to restructuring and impairments on our consolidated statements of earnings during the quarter and three quarters ended June 27, 2021, respectively.

Of these totals, $ 7.8 million and $ 59.0 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, respectively.

During the quarter and three quarters ended June 27, 2021, an additional $ 12.2 million and $ 56.2 million, respectively, were associated with accelerated amortization of right-of-use (“ROU”) lease assets and other lease costs due to planned store closures prior to the end of contractual lease terms.

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.

The application of these projections and fair value measurements did not have a significant impact on our final impairment charges given that we plan to fully exit the majority of these identified stores over the next 6 to 12 months.

As of June 27, 2021, we expect total future restructuring costs, which are attributable to our Americas segment, to be approximately $ 20 million to $ 30 million.

These restructuring costs primarily include accelerated amortization of ROU assets due to planned store closures prior to the end of contractual lease terms.

The remaining balance includes store impairment and disposal costs not previously recorded as part of our ongoing store impairment process as well as 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 during 2021 as stores are 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.

Restructuring-related accrued employee termination costs included in accrued payroll and benefits on the consolidated balance sheets were $ 1.8 million and $ 15.2 million as of June 27, 2021 and September 27, 2020, respectively.

Additionally, other accrued restructuring costs included in accrued liabilities on the consolidated balance sheets were $ 8.7 million as of June 27, 2021.

There were no other accrued restructuring costs outstanding as of September 27, 2020.

Cash payments relating to these liabilities were immaterial for the quarter and three quarters ended June 27, 2021.

In fiscal 2021, we substantially completed our plan to optimize our North America store portfolio, primarily in dense metropolitan markets by developing new store formats to better cater to changing customer tastes and preferences.

we recorded approximately $ 72.2 million to restructuring and impairments on our consolidated statements of earnings during the quarter ended December 27, 2020.

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.

During the quarter ended December 27, 2020, an additional $ 29.6 million was associated with accelerated amortization of right-of-use (“ROU”) lease assets and other lease costs due to planned store closures prior to the end of contractual lease terms.

As the restructuring plan was substantially completed in fiscal 2021, we did not recognize any material restructuring and impairment amounts during the quarter ended January 2, 2022.

As of January 2, 2022 and October 3, 2021, there were no material restructuring-related accrued liabilities on our consolidated balance sheets.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board ("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 and resulted in a $ 2.2 million transition adjustment to opening shareholders' retained deficit on our consolidated statements of equity.

Recent Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued guidance related to reference rate reform.

In the first quarter of fiscal 2022, we adopted the Financial Accounting Standards Board (“FASB”) issued guidance related to reference rate reform.

The pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates.

The guidance was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022.

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.

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The adoption of the new guidance did not have a material impact to our financial statements.

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.

Derivative Financial Instruments

14 unchanged sentences

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.

Gains and losses from these derivatives are largely offset by the financial impact of translating foreign currency-denominated payables and receivables;

these gains and losses are recorded in interest income and other, net.

Gains and losses from these derivatives are largely offset by the financial impact of translating foreign currency-denominated payables and receivables, and these gains and losses are recorded in interest income and other, net.

Depending on market conditions, we may enter into coffee forward contracts, futures contracts and collars to hedge anticipated cash flows under our price-to-be-fixed green coffee contracts, which are described further in Note 4, Inventories, or our longer-dated forecasted coffee demand where underlying fixed price and price-to-be-fixed contracts are not yet available.

5 unchanged sentences

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 were no significant cash flow hedge de-designations in fiscal 2021.

During the second and third quarters of fiscal 2020, we de-designated certain cash flow hedges due to the global COVID-19 impacts, which resulted in the release of an insignificant net gain from AOCI to our consolidated statement of 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.

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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

Jun 27, 2021 Sep 27, 2020

Jan 2, 2022 Oct 3, 2021

Cash Flow Hedges:

8 unchanged sentences

Foreign currency debt 13.5 ( 5.3 ) — 27

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Pre-tax gains and losses on derivative contracts and foreign currency-denominated long-term debt designated as hedging instruments recognized in other comprehensive income (“OCI”) and reclassifications from AOCI to earnings ( in millions ):

4 unchanged sentences

Location of gain/(loss)

Jun 27, 2021 Jun 28, 2020 Jun 27, 2021 Jun 28, 2020

Cash Flow Hedges:

Coffee $ 62.8 $ ( 13.2 ) $ ( 2.5 ) $ — Product and distribution costs

Cross-currency swaps 3.1 ( 1.0 ) 0.2 1.5 Interest expense

3.4 ( 6.9 ) Interest income and other, net

Dairy ( 1.7 ) 8.6 0.5 4.1 Product and distribution costs

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

Foreign currency - other ( 5.1 ) ( 14.5 ) — — Licensed stores revenues

( 3.1 ) ( 5.0 ) Product and distribution costs

— 3.9 Interest income and other, net (1)

Interest rates ( 25.1 ) ( 8.5 ) ( 0.3 ) ( 0.7 ) Interest expense

— — Interest income and other, net

Net Investment Hedges:

Cross-currency swaps 20.6 ( 7.3 ) 3.3 2.9 Interest expense

Foreign currency debt 11.8 ( 17.3 ) — —

(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)

Jun 27, 2021 Jun 28, 2020 Jun 27, 2021 Jun 28, 2020

Jan 2, 2022 Dec 27, 2020 Jan 2, 2022 Dec 27, 2020

Cash Flow Hedges:

3 unchanged sentences

Dairy 4.6 2.5 ( 0.4 ) 2.6 Product and distribution costs

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

Foreign currency - other ( 23.9 ) 7.6 0.2 4.0 Licensed stores revenues

Foreign currency - other 6.9 ( 25.9 ) 2.2 — Licensed stores revenue

( 1.5 ) — Product and distribution costs

— 6.1 Interest income and other, net (1)

Interest rates 1.2 22.5 ( 0.4 ) ( 0.6 ) Interest expense

( 3.6 ) — Interest income and other, net

Net Investment Hedges:

1 unchanged sentence

Foreign currency debt 25.2 ( 13.7 ) — —

(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.

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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 27, 2021 Jun 28, 2020 Jun 27, 2021 Jun 28, 2020

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

Jan 2, 2022 Dec 27, 2020

Non-Designated Derivatives:

Dairy Interest income and other, net $ — $ ( 1.7 ) $ — $ ( 1.6 )

Diesel fuel and other commodities Interest income and other, net 0.7 ( 0.8 ) 2.7 ( 8.7 )

Foreign currency - other Interest income and other, net $ 10.2 $ ( 0.8 )

Coffee Interest income and other, net 3.1 —

Diesel fuel and other commodities Interest income and other, net — 1.2

Fair Value Hedges:

2 unchanged sentences

Notional amounts of outstanding derivative contracts (in millions) :

Jun 27, 2021 Sep 27, 2020

Jan 2, 2022 Oct 3, 2021

Coffee $ 686 $ 481

2 unchanged sentences

Foreign currency - other 1,261 1,009

Interest rate swap 1,750 1,750

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Interest rate swaps 1,250 1,250

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 27, 2021 Sep 27, 2020

Balance Sheet Location Jan 2, 2022 Oct 3, 2021

Designated Derivative Instruments:

4 unchanged sentences

Other long-term assets 8.7 6.9

Interest rates Other long-term assets 2.9 —

Interest rate swap Other long-term assets 27.6 45.8

Interest rate swaps Other long-term assets 18.5 22.7

Non-designated Derivative Instruments:

Coffee Prepaid expenses and other current assets 29.8 —

Dairy Prepaid expenses and other current assets 0.6 —

2 unchanged sentences

Derivative Liabilities

Balance Sheet Location Jun 27, 2021 Sep 27, 2020

Balance Sheet Location Jan 2, 2022 Oct 3, 2021

Designated Derivative Instruments:

Coffee Accrued liabilities $ 3.1 $ —

Other long-term liabilities — 0.1

Cross-currency swaps Other long-term liabilities 2.1 3.3

9 unchanged sentences

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

Jun 27, 2021 Sep 27, 2020 Jun 27, 2021 Sep 27, 2020

Jan 2, 2022 Oct 3, 2021 Jan 2, 2022 Oct 3, 2021

Location on the balance sheet

1 unchanged sentence

Additional disclosures related to cash flow gains and losses included in AOCI, as well as subsequent reclassifications to earnings, are included in Note 10 , Equity.

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Fair Value Measurements

1 unchanged sentence

Fair Value Measurements at Reporting Date Using

June 27, 2021 Quoted Prices in Active Markets for Identical Assets

January 2, 2022 Quoted Prices in Active Markets for Identical Assets

(Level 1) Significant Other Observable Inputs

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Corporate debt securities 4.8 — 4.8 —

Mortgage and other asset-backed securities 0.1 — 0.1 —

Total available-for-sale debt securities 8.4 — 8.4 —

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Available-for-sale debt securities

Auction rate securities 5.8 — — 5.8

Corporate debt securities 148.1 — 148.1 —

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Total liabilities $ 17.4 $ 4.0 $ 13.4 $ —

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Fair Value Measurements at Reporting Date Using

September 27, 2020 Quoted Prices in Active Markets for Identical Assets

October 3, 2021 Quoted Prices in Active Markets for Identical Assets

(Level 1) Significant Other Observable Inputs

4 unchanged sentences

Available-for-sale debt securities

Certificates of deposit 1.6 — 1.6 —

Commercial paper 63.0 — 63.0 —

Corporate debt securities 24.7 — 24.7 —

Foreign government obligations 8.5 — 8.5 —

Mortgage and other asset-backed securities 0.1 — 0.1 —

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Corporate debt securities 162.0 — 162.0 —

Foreign government obligations 4.0 — 4.0 —

Mortgage and other asset-backed securities 31.9 — 31.9 —

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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 27, 2021 and September 27, 2020.

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Gross unrealized holding gains and losses on available-for-sale debt securities and marketable equity securities were not material as of January 2, 2022 and October 3, 2021.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

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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 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 27, 2021 and June 28, 2020.

There were no material fair value adjustments during the quarters ended January 2, 2022 and December 27, 2020.

Inventories (in millions) :

Jun 27, 2021 Sep 27, 2020

Jan 2, 2022 Oct 3, 2021

Unroasted $ 676.2 $ 670.3

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

As of June 27, 2021, we had committed to purchasing green coffee totaling $ 517 million under fixed-price contracts and an estimated $ 834 million under price-to-be-fixed contracts.

We expect to take physical delivery for these contracts.

As of January 2, 2022, we had committed to purchasing green coffee totaling $ 617 million under fixed-price contracts and an estimated $ 1,433 million under price-to-be-fixed contracts.

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

See Note 2 , 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.

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

During the second quarter of fiscal 2020, 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 three quarters ended ended June 27, 2021.

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

Prepaid Expenses and Other Current Assets

Jun 27, 2021 Sep 27, 2020

Jan 2, 2022 Oct 3, 2021

Income tax receivable $ 21.6 $ 20.7

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Total prepaid expenses and current assets $ 530.1 $ 594.6

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Property, Plant and Equipment, net

Jun 27, 2021 Sep 27, 2020

Jan 2, 2022 Oct 3, 2021

Land $ 46.2 $ 46.2

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Accrued Liabilities

Jun 27, 2021 Sep 27, 2020

Jan 2, 2022 Oct 3, 2021

Accrued occupancy costs $ 99.9 $ 107.1

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Self-insurance reserves 231.2 229.3

Income taxes payable 394.2 348.0

Accrued business taxes 181.5 218.0

1 unchanged sentence

Store Operating Expenses

Quarter Ended Three Quarters Ended

Jun 27, 2021 Jun 28, 2020 Jun 27, 2021 Jun 28, 2020

Quarter Ended

Jan 2, 2022 Dec 27, 2020

Wages and benefits $ 2,010.7 $ 1,606.2

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Indefinite-Lived Intangible Assets

(in millions) Jun 27, 2021 Sep 27, 2020

(in millions) Jan 2, 2022 Oct 3, 2021

Trade names, trademarks and patents $ 96.8 $ 96.4

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Finite-Lived Intangible Assets

Jun 27, 2021 Sep 27, 2020

Jan 2, 2022 Oct 3, 2021

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

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Total finite-lived intangible assets $ 1,338.0 $ ( 1,132.3 ) $ 205.7 $ 1,338.2 $ ( 1,084.7 ) $ 253.5

Amortization expense for finite-lived intangible assets was $ 50.0 million and $ 173.4 million for the quarter and three quarters ended June 27, 2021, respectively, and $ 55.9 million and $ 164.5 million for the quarter and three quarters ended June 28, 2020, respectively.

During the third quarter of fiscal 2020, we recorded a charge of $ 22.1 million to restructuring and impairments on our consolidated statement of earnings related to changes in branding and marketing strategy.

Estimated future amortization expense as of June 27, 2021 ( in millions ):

Amortization expense for finite-lived intangible assets was $ 50.2 million for the quarter ended January 2, 2022 and $ 61.2 million for the quarter ended December 27, 2020.

Estimated future amortization expense as of January 2, 2022 ( in millions ):

Fiscal Year Total

2021 (excluding the three quarters ended June 27, 2021)

2022 (excluding the quarter ended January 2, 2022)

Thereafter 2.4

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Changes in the carrying amount of goodwill by reportable operating segment (in millions) :

Americas International Channel Development Corporate and Other Total

Goodwill balance at September 27, 2020

North America International Channel Development Corporate and Other Total

Goodwill balance at October 3, 2021

$ 493.2 $ 3,148.3 $ 34.7 $ 1.1 $ 3,677.3

( 0.1 ) ( 1.5 ) — — ( 1.6 )

Goodwill balance at June 27, 2021

Goodwill balance at January 2, 2022

$ 493.1 $ 3,146.8 $ 34.7 $ 1.1 $ 3,675.7

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

During the third quarter of fiscal 2021, 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.

Revolving Credit Facility

Our $ 3 billion unsecured five-year revolving credit facility (the "2021 credit facility"), of which $ 150 million may be used for issuances of letters of credit, is currently set to mature on September 16, 2026 .

The 2021 credit facility is available for working capital, capital expenditures and other corporate purposes, including acquisitions and share repurchases.

We have the option, subject to negotiation and agreement with the related banks, to increase the maximum commitment amount by an additional $ 1.0 billion.

Borrowings under the 2021 credit facility will bear interest at a variable rate based on LIBOR, and, for U.S.

dollar-denominated loans under certain circumstances, a Base Rate (as defined in the 2021 credit facility), in each case plus an applicable margin.

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

The 2021 credit facility contains alternative interest rate provisions specifying rate calculations to be used at such time LIBOR ceases to be available as a benchmark due to reference rate reform.

The “Base Rate” is the highest of (i) the Federal Funds Rate (as defined in the 2021 credit facility) plus 0.025 %, (ii) Bank of America’s prime rate, and (iii) the Eurocurrency Rate (as defined in the 2021 credit facility) plus 1.025 %.

The 2021 credit facility contains provisions requiring us to maintain compliance with certain covenants, including a minimum fixed charge coverage ratio, which measures our ability to cover financing expenses.

As of January 2, 2022, we were in compliance with all applicable covenants.

No amounts were outstanding under our 2021 credit facility as of January 2, 2022 or October 3, 2021.

Short-term Debt

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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 27, 2021, we had no borrowings outstanding under the program.

As of January 2, 2022, we had $ 200 million borrowings outstanding under the program.

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

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• A ¥ 5 billion, or $ 45.1 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 %.

• A ¥ 10 billion, or $ 90.2 million, facility is currently set to mature on March 26, 2022 .

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 %.

As of June 27, 2021, we had no borrowings outstanding under these credit facilities.

• A ¥ 5 billion, or $ 43.4 million, credit facility is currently set to mature on December 31, 2022 .

Borrowings under such credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on Tokyo Interbank Offered Rate ("TIBOR") plus an applicable margin of 0.400 %.

• A ¥ 10 billion, or $ 86.9 million, credit facility is currently set to mature on March 26, 2022 .

Borrowings under such 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 %.

As of January 2, 2022 and October 3, 2021, we had no borrowings outstanding under these Japanese yen-denominated 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 27, 2021 Sep 27, 2020 Stated Interest Rate Effective Interest Rate (1)

Jan 2, 2022 Oct 3, 2021 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 (2)

— — 500.0 502.3 2.100 % 2.293 %

February 2021 notes (2)

— — 250.0 251.1 2.100 % 1.600 %

May 2022 notes $ 500.0 $ 501.7 $ 500.0 $ 503.1 1.300 % 1.334 %

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(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 interest rate risk prior to the debt issuance.

(2) November 2020 and February 2021 notes were repaid in the first and second quarters of fiscal 2021, respectively.

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

1 unchanged sentence

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

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The following table summarizes our long-term debt maturities as of June 27, 2021 by fiscal year ( in millions ):

The following table summarizes our long-term debt maturities as of January 2, 2022 by fiscal year ( in millions ):

Fiscal Year Total

2022 $ 1,000.0

Thereafter 9,450.0

Total $ 14,688.6

For the quarter and three quarters ended June 27, 2021, we recognized accelerated amortization of ROU lease assets and other lease costs of $ 12.2 million and $ 56.2 million, respectively, which were recognized within restructuring and impairments on the consolidated statements of earnings.

For the quarter and three quarters ended June 28, 2020, we recognized accelerated amortization of ROU lease assets and other lease 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.

The components of lease costs (in millions) :

Quarter Ended Three Quarters Ended

Jun 27, 2021 Jun 28, 2020 Jun 27, 2021 Jun 28, 2020

Quarter Ended

Jan 2, 2022 Dec 27, 2020

Operating lease costs (1)

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Total lease costs $ 623.0 $ 640.5

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

For the quarter and three quarters ended June 27, 2021, operating lease costs were also net of immaterial amounts of rent concessions.

For the quarter and three quarters ended June 28, 2020, we received $ 21.7 million in rent concessions, which was recorded as a reduction to store operating expenses on our consolidated statement of earnings.

(1) Includes immaterial amounts of sublease income and rent concessions.

The following table includes supplemental information (in millions) :

Three Quarters Ended

Jun 27, 2021 Jun 28, 2020

Quarter Ended

Jan 2, 2022 Dec 27, 2020

Cash paid related to operating lease liabilities $ 410.0 $ 385.6

Operating lease liabilities arising from obtaining ROU assets 346.8 353.8

Jun 27, 2021 Jun 28, 2020

Jan 2, 2022 Dec 27, 2020

Weighted-average remaining operating lease term 8.6 years 8.8 years

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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.

There were no material finance leases as of June 27, 2021.

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There were no material finance leases as of January 2, 2022.

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

Fiscal Year Total

2021 (excluding the three quarters ended June 27, 2021)

2022 (excluding the quarter ended January 2, 2022)

Thereafter 3,880.4

2 unchanged sentences

Total $ 8,961.3

As of June 27, 2021, we have entered into operating leases that have not yet commenced of $ 846.7 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.

As of January 2, 2022, we have entered into operating leases that have not yet commenced of $ 925.8 million, primarily related to real estate leases.

These leases will commence between fiscal year 2022 and fiscal year 2028 with lease terms ranging from ten to twenty years.

Deferred Revenue

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.

As of June 27, 2021, the current and long-term deferred revenue related to Nestlé was $ 177.9 million and $ 6.4 billion, respectively.

During the quarter and three quarters ended June 27, 2021, we recognized $ 44.2 million and $ 132.5 million of prepaid royalty revenue related to Nestlé, respectively.

During the quarter and three quarters ended June 28, 2020, we recognized $ 44.2 million and $ 132.6 million of prepaid royalty revenue related to Nestlé, respectively.

As of January 2, 2022, the current and long-term deferred revenue related to Nestlé was $ 177.9 million and $ 6.4 billion, respectively.

As of October 3, 2021, the current and long-term deferred revenue related to the Nestlé up-front payment was $ 177.0 million and $ 6.4 billion, respectively.

For each of the quarters ended January 2, 2022 and December 27, 2020, 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 27, 2021

Stored value cards and loyalty program at March 28, 2021

Revenue deferred - card activations, card reloads and Stars earned 3,170.7

Revenue recognized - card and Stars redemptions and breakage ( 3,160.0 )

Stored value cards and loyalty program at June 27, 2021 (2)

Quarter Ended June 28, 2020

Stored value cards and loyalty program at March 29, 2020

Revenue deferred - card activations, card reloads and Stars earned 1,875.4

Revenue recognized - card and Stars redemptions and breakage ( 1,842.4 )

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

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Three Quarters Ended June 27, 2021

Stored value cards and loyalty program at September 27, 2020

Quarter Ended January 2, 2022

Stored value cards and loyalty program at October 3, 2021

Revenue deferred - card activations, card reloads and Stars earned 3,917.5

Revenue recognized - card and Stars redemptions and breakage ( 3,410.8 )

Stored value cards and loyalty program at June 27, 2021 (2)

Three Quarters Ended June 28, 2020

Stored value cards and loyalty program at January 2, 2022 (2)

Quarter Ended December 27, 2020

Stored value cards and loyalty program at September 27, 2020

1 unchanged sentence

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

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

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

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

(2) As of June 27, 2021 and June 28, 2020, approximately $ 1,380.2 million and $ 1,226.4 million of these amounts were current, respectively.

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(2) As of January 2, 2022 and December 27, 2020, approximately $ 1.8 billion and $ 1.6 billion 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 27, 2021

Net gains/(losses) in AOCI, beginning of period $ 2.0 $ ( 5.7 ) $ 19.6 $ ( 142.2 ) $ ( 126.3 )

Net gains/(losses) recognized in OCI before reclassifications ( 0.1 ) 32.9 24.2 40.2 97.2

Net (gains)/losses reclassified from AOCI to earnings ( 0.2 ) 2.1 ( 2.5 ) — ( 0.6 )

Other comprehensive income/(loss) attributable to Starbucks ( 0.3 ) 35.0 21.7 40.2 96.6

Net gains/(losses) in AOCI, end of period $ 1.7 $ 29.3 $ 41.3 $ ( 102.0 ) $ ( 29.7 )

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 )

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

June 27, 2021

January 2, 2022

Net gains/(losses) in AOCI, beginning of period $ 1.5 $ 158.3 $ 48.6 $ ( 61.2 ) $ 147.2

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Net gains/(losses) in AOCI, end of period $ ( 1.2 ) $ 224.6 $ 77.1 $ ( 47.0 ) $ 253.5

June 28, 2020

December 27, 2020

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

2 unchanged sentences

Other comprehensive income/(loss) attributable to Starbucks ( 1.6 ) 6.6 ( 25.0 ) 238.7 218.7

Cumulative effect of accounting adoption ( 0.7 ) 3.0 2.5 — 4.8

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

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

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the Statements of Earnings

Jun 27, 2021 Jun 28, 2020

Gains/(losses) on available-for-sale debt securities $ 0.1 $ 2.2 Interest income and other, net

Gains/(losses) on cash flow hedges ( 1.8 ) ( 4.2 ) Please refer to Note 2 , Derivative Financial Instruments for additional information.

Gains/(losses) on net investment hedges 3.3 2.9 Interest expense

1.6 0.9 Total before tax

( 1.0 ) ( 0.5 ) Tax (expense)/benefit

$ 0.6 $ 0.4 Net of tax

Three Quarters Ended

Components Amounts Reclassified from AOCI Affected Line Item in

the Statements of Earnings

Jun 27, 2021 Jun 28, 2020

Jan 2, 2022 Dec 27, 2020

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

4 unchanged sentences

$ 13.2 $ 1.8 Net of tax

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 27, 2021.

As of June 27, 2021, 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.

We currently expect the suspension of share repurchases to continue for the remainder of fiscal 2021.

During the third quarter of fiscal 2021, our Board of Directors approved a quarterly cash dividend to shareholders of 0.45 per share to be paid on August 27, 2021 to shareholders of record as of the close of business on August 12, 2021.

During the quarter ended January 2, 2022, we repurchased 31.1 million shares of common stock for $ 3.5 billion.

As of January 2, 2022, 17.8 million shares remained available for repurchase under current authorizations.

During the first quarter of fiscal 2022, our Board of Directors approved a quarterly cash dividend to shareholders of $ 0.49 per share to be paid on February 25, 2022 to shareholders of record as of the close of business on February 11, 2022 .

Employee Stock Plans

As of June 27, 2021, there were 40.7 million shares of common stock available for issuance pursuant to future equity-based compensation awards and 11.6 million shares available for issuance under our employee stock purchase plan.

As of January 2, 2022, there were 34.4 million shares of common stock available for issuance pursuant to future equity-based compensation awards and 11.2 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 27, 2021 Jun 28, 2020 Jun 27, 2021 Jun 28, 2020

Options $ 0.2 $ 1.4 $ 2.0 $ 3.8

Quarter Ended

Jan 2, 2022 Dec 27, 2020

Restricted Stock Units (“RSUs”) $ 95.7 $ 98.4

Options 0.1 0.9

Total stock-based compensation expense $ 95.8 $ 99.3

Stock option and RSU transactions from September 27, 2020 through June 27, 2021 ( in millions ):

Stock option and RSU transactions from October 3, 2021 through January 2, 2022 ( in millions ):

Stock Options RSUs

Options outstanding/Nonvested RSUs, September 27, 2020

Options outstanding/Nonvested RSUs, October 3, 2021

Granted — 3.5

1 unchanged sentence

Forfeited/expired — ( 0.3 )

Options outstanding/Nonvested RSUs, June 27, 2021

Total unrecognized stock-based compensation expense, net of estimated forfeitures, as of June 27, 2021

$ 0.2 $ 200.3

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The effective tax rate for the quarter ended June 27, 2021 was 18.2 % compared to 16.5 % for the same quarter in fiscal 2020.

The increase was primarily due to the foreign rate differential on our mix of earnings by tax jurisdiction, as well as a change in the absolute pre-tax operating results when compared to the same period of the prior year.

This was partially offset by lapping valuation allowances recorded against deferred tax assets of certain international jurisdictions in the prior year (approximately 840 basis points), a current year remeasurement of deferred tax assets due to an enacted corporate rate change (approximately 510 basis points) and lapping the release of income tax reserves related to the expiration of statute of limitations in the prior year (approximately 330 basis points).

The effective tax rate for the first three quarters ended June 27, 2021 was 21.7 % compared to 26.3 % for the same period in fiscal 2020.

The decrease was primarily due to lapping valuation allowances recorded against deferred tax assets of certain international jurisdictions in the prior year (approximately 1,400 basis points) and a current year remeasurement of deferred tax assets due to an enacted corporate rate change (approximately 230 basis points).

This was partially offset by the foreign rate differential on our mix of earnings by tax jurisdiction and lapping the release of income tax reserves related to the expiration of statute of limitations in the prior year.

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 27, 2021 Jun 28, 2020 Jun 27, 2021 Jun 28, 2020

Net earnings/(loss) attributable to Starbucks $ 1,153.4 $ ( 678.4 ) $ 2,434.9 $ 535.7

Options outstanding/Nonvested RSUs, January 2, 2022

Total unrecognized stock-based compensation expense, net of estimated forfeitures, as of January 2, 2022

Earnings per Share

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

Quarter Ended

Jan 2, 2022 Dec 27, 2020

Net earnings attributable to Starbucks $ 815.9 $ 622.2

Weighted average common shares outstanding (for basic calculation) 1,169.6 1,175.0

1 unchanged sentence

Weighted average common and common equivalent shares outstanding (for diluted calculation) 1,176.6 1,183.0

Earnings/(loss) per share — basic $ 0.98 $ ( 0.58 ) $ 2.07 $ 0.46

Earnings/(loss) per share — diluted $ 0.97 $ ( 0.58 ) $ 2.06 $ 0.45

EPS — basic $ 0.70 $ 0.53

EPS — diluted $ 0.69 $ 0.53

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 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 June 27, 2021 and June 28, 2020, we had no out-of-the-money stock options .

As of January 2, 2022 and December 27, 2020, we had no out-of-the-money stock options .

Commitments and Contingencies

6 unchanged sentences

Brad Barry LLC, et al .

Both cases have since been consolidated and now include nearly eighty defendants, which constitute the great majority of the coffee industry in California.

Both cases have since been consolidated and now include nearly eighty defendants, which constitute the majority of the coffee industry in California.

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.

2 unchanged sentences

The Company, as part of a joint defense group organized to defend against the lawsuit, disputes the claims of the Plaintiff.

Acrylamide is not added to coffee but is present in all coffee in small amounts (parts per billion) as a byproduct of the coffee

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bean roasting process.

Acrylamide is not added to coffee but is present in all coffee in small amounts (parts per billion) as a byproduct of the coffee bean roasting process.

The Company has asserted multiple affirmative defenses.

Trial of the first phase of the case commenced on September 8, 2014, and was limited to three affirmative defenses shared by all defendants.

Trial of the first phase of the case (“Phase 1”)

commenced on September 8, 2014, and was limited to three affirmative defenses shared by all defendants.

On September 1, 2015, the trial court issued a final ruling adverse to defendants on all Phase 1 defenses.

Trial of the second phase of the case commenced in the fall of 2017.

Trial of the second phase of the case (“Phase 2”) commenced in the fall of 2017.

On May 7, 2018, the trial court issued a ruling adverse to defendants on the Phase 2 defense, the Company's last remaining defense to liability.

On June 22, 2018, the California Office of Environmental Health Hazard Assessment (OEHHA) proposed a new regulation clarifying that cancer warnings are not required for coffee under Proposition 65.

The case was set to proceed to a third phase trial on damages, remedies and attorneys' fees on October 15, 2018.

The case was set to proceed to a third phase trial (“Phase 3”) on damages, remedies and attorneys' fees on October 15, 2018.

However, on October 12, 2018, the California Court of Appeal granted the defendants’ request for a stay of the Phase 3 trial.

On June 3, 2019, the Office of Administrative Law (OAL) approved the coffee exemption regulation.

On June 3, 2019, the California Office of Administrative Law (OAL) approved the coffee exemption regulation.

The regulation became effective on October 1, 2019.

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

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

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 and its opening brief in the appeals process on April 9, 2021.

After the grant of an extension, defendants have until August 9, 2021 to file their brief in response.

Defendants filed their response brief on August 9, 2021, and Plaintiff filed a reply on November 15, 2021.

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.

Accordingly, as of January 2, 2022, no loss contingency has been recorded for this matter.

Starbucks is party to various other legal proceedings arising in the ordinary course of business, including certain employment litigation cases that have been certified as class or collective actions, but, except as noted above, is not currently a party to any legal proceeding that management believes could have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Segment Reporting

Segment information is prepared on the same basis that our ceo, who is our Chief Operating Decision Maker, manages the segments, evaluates financial results and makes key operating decisions.

Segment information is prepared on the same basis that our chief executive officer, who is our chief operating decision maker, manages the segments, evaluates financial results and makes key operating decisions.

Consolidated revenue mix by product type ( in millions ):

Quarter Ended Three Quarters Ended

Jun 27, 2021 Jun 28, 2020 Jun 27, 2021 Jun 28, 2020

Quarter Ended

Jan 2, 2022 Dec 27, 2020

$ 4,898.4 61 % $ 4,251.9 63 %

5 unchanged sentences

(3) “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.

Table of Content s

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

Quarter Ended

Americas International Channel Development Corporate and Other Total

June 27, 2021

Total net revenues $ 5,400.3 $ 1,658.4 $ 414.0 $ 23.8 $ 7,496.5

Depreciation and amortization expenses 188.9 129.7 0.2 35.5 354.3

Income from equity investees — 42.0 63.5 — 105.5

Operating income/(loss) 1,315.7 318.3 216.0 ( 361.3 ) 1,488.7

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 )

Three Quarters Ended

Americas International Channel Development Corporate and Other Total

June 27, 2021

North America (1)

International (1)

Channel Development Corporate and Other (1)

January 2, 2022

Total net revenues $ 5,732.3 $ 1,875.9 $ 417.1 $ 25.1 $ 8,050.4

2 unchanged sentences

Operating income/(loss) 1,083.1 299.6 183.2 ( 388.1 ) 1,177.8

June 28, 2020

December 27, 2020

Total net revenues $ 4,675.6 $ 1,681.9 $ 371.4 $ 20.5 $ 6,749.4

2 unchanged sentences

Operating income/(loss) 802.8 283.0 180.8 ( 353.1 ) 913.5

Subsequent Event

On July 26, 2021 , we entered into agreements to sell our 50 % ownership in Starbucks Coffee Korea Co., Ltd.

such that our in-market joint venture partner, E-Mart Inc., will acquire an additional 17.5 % interest and Apfin Investment Pte Ltd, an affiliate of GIC Private Limited, which is a Singapore sovereign wealth fund, will acquire the remaining 32.5 %.

The sale will have a combined price of $ 1.175 billion.

The transactions are subject to regulatory approval by the Korean government and are expected to close within the next 90 days .

Upon close, the market will be transitioned to a fully licensed model, and we expect to recognize a combined material pre-tax gain on our consolidated statements of earnings.

Table of Content s

(1) North America and International total net revenues and operating income and Corporate and Other operating loss for the quarter ended December 27, 2020, have been restated to conform with current period presentation.

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