What changed in this filing

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Item 1. Financial Statements

2022-05-03 compared with 2022-02-01 · 214 added, 102 removed, 637 unchanged (33% of the section changed)

3 unchanged sentences

(in millions, except per share data)

Quarter Ended

Quarter Ended Two Quarters Ended

Net revenues:

28 unchanged sentences

(in millions, unaudited)

Quarter Ended

Quarter Ended Two Quarters Ended

Net earnings including noncontrolling interests $ 675.0 $ 659.4 $ 1,491.1 $ 1,281.6

41 unchanged sentences

Stored value card liability and current portion of deferred revenue 1,781.6 1,596.1

Short-term debt 200.0 —

Current portion of long-term debt 1,998.6 998.9

19 unchanged sentences

(in millions, unaudited)

Quarter Ended

Two Quarters Ended

OPERATING ACTIVITIES:

26 unchanged sentences

FINANCING ACTIVITIES:

Proceeds from issuance of commercial paper 200.0 —

Net proceeds/(payments) from issuance of commercial paper — ( 296.5 )

Net proceeds from issuance of short-term debt 17.4 203.3

Repayments of short-term debt ( 12.6 ) ( 320.5 )

Proceeds from issuance of long-term debt 1,498.1 —

Repayments of long-term debt — ( 1,250.0 )

3 unchanged sentences

Minimum tax withholdings on share-based awards ( 122.1 ) ( 90.1 )

Other ( 9.2 ) —

Net cash used in financing activities ( 3,708.8 ) ( 2,677.4 )

11 unchanged sentences

CONSOLIDATED STATEMENTS OF EQUITY

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

For the Quarters Ended April 3, 2022 and March 28, 2021

(in millions, except per share data, unaudited)

6 unchanged sentences

Shares Amount

Balance, October 3, 2021

Balance, January 2, 2022

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

7 unchanged sentences

— — — ( 560.9 ) — ( 560.9 ) — ( 560.9 )

Balance, January 2, 2022

Net distributions to noncontrolling interests — — — — — — ( 0.6 ) ( 0.6 )

Balance, April 3, 2022

1,146.9 $ 1.1 $ 41.1 $ ( 9,070.5 ) $ 260.3 $ ( 8,768.0 ) $ 6.8 $ ( 8,761.2 )

Balance, December 27, 2020

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

Net earnings — — — 659.4 — 659.4 — 659.4

Other comprehensive income — — — — 19.6 19.6 — 19.6

Stock-based compensation expense — — 76.7 — — 76.7 — 76.7

Exercise of stock options/vesting of RSUs 0.6 — 20.0 — — 20.0 — 20.0

Sale of common stock 0.1 — 10.1 — — 10.1 — 10.1

Cash dividends declared, $ 0.45 per share

— — — ( 530.1 ) — ( 530.1 ) — ( 530.1 )

Balance, March 28, 2021

1,177.9 $ 1.2 $ 595.4 $ ( 8,124.3 ) $ ( 126.3 ) $ ( 7,654.0 ) $ 5.7 $ ( 7,648.3 )

See Notes to Consolidated Financial Statements.

STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

For the Two Quarters Ended April 03, 2022 and March 28, 2021

(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, 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 — — — 1,490.4 — 1,490.4 0.7 1,491.1

Other comprehensive income/(loss) — — — — 113.1 113.1 — 113.1

Stock-based compensation expense — — 151.5 — — 151.5 — 151.5

Exercise of stock options/vesting of RSUs 3.0 ( 0.1 ) ( 88.5 ) — — ( 88.6 ) — ( 88.6 )

Sale of common stock 0.2 — 22.8 — — 22.8 — 22.8

Repurchase of common stock ( 36.3 ) — ( 890.8 ) ( 3,122.2 ) — ( 4,013.0 ) — ( 4,013.0 )

Cash dividends declared, $ 0.98 per share

— — — ( 1,123.0 ) — ( 1,123.0 ) — ( 1,123.0 )

Net distributions to noncontrolling interests — — — — — — ( 0.6 ) ( 0.6 )

Balance, April 3, 2022

1,146.9 $ 1.1 $ 41.1 $ ( 9,070.5 ) $ 260.3 $ ( 8,768.0 ) $ 6.8 $ ( 8,761.2 )

Balance, September 27, 2020

2 unchanged sentences

Net earnings — — — 1,281.6 — 1,281.6 — 1,281.6

Other comprehensive income — — — — 218.7 218.7 — 218.7

Other comprehensive income/(loss) — — — — 238.3 238.3 — 238.3

Stock-based compensation expense — — 177.2 — — 177.2 — 177.2

3 unchanged sentences

— — — ( 1,588.1 ) — ( 1,588.1 ) — ( 1,588.1 )

Balance, December 27, 2020

Balance, March 28, 2021

1,177.9 $ 1.2 $ 595.4 $ ( 8,124.3 ) $ ( 126.3 ) $ ( 7,654.0 ) $ 5.7 $ ( 7,648.3 )

19 unchanged sentences

Financial Statement Preparation

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.

The unaudited consolidated financial statements as of April 3, 2022, and for the quarter and two quarters ended April 3, 2022 and March 28, 2021, 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 two quarters ended April 3, 2022 and March 28, 2021 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.”

9 unchanged sentences

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 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”).

The results of operations for the quarter and two quarters ended April 3, 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.

2 unchanged sentences

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.

Certain markets, primarily China, continue to experience pandemic-related restrictions impacting sales as they battle COVID-19 resurgences and navigate through prolonged lockdowns.

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

3 unchanged sentences

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.

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

However, during the quarter and two quarters ended April 3, 2022, an international government COVID-19 related subsidy reduced our store operating expenses by $ 12.4 million and $ 23.9 million, respectively, on our consolidated statements of earnings.

During the quarter and two quarters ended March 28, 2021, qualified payroll and other credits reduced our store operating expenses by $ 97.4 million and $ 117.2 million, respectively, on our consolidated statements of earnings.

After netting the qualified credits against our payable, a receivable of $ 97.1 million and $ 172.4 million was included in prepaid expenses and other current assets as of April 3, 2022 and October 3, 2021, respectively.

As of April 3, 2022, deferred payroll tax payments of $ 116.4 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 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.

In fiscal 2021, we substantially completed our plan to reposition our North America store portfolio, primarily in dense metropolitan markets by pursuing strategic store closures and focusing on new store formats that better cater to changing customer tastes and preferences.

As a result, we recorded approximately $ 23.0 million and $ 95.2 million to restructuring and

impairments on our consolidated statements of earnings during the quarter ended and two quarters ended March 28, 2021.

Of these totals, $ 8.6 million and $ 51.2 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 two quarters ended March 28, 2021, an additional $ 14.4 million and $ 44.0 million, respectively, 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 and two quarters ended April 3, 2022.

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

Recently Adopted Accounting Pronouncements

30 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.

Due to ongoing global supply chain disruptions, certain coffee cash flow hedges have been de-designated early which resulted in insignificant amounts recognized in earnings during the quarter and two quarters ended April 3, 2022.

These derivatives may be accounted for prospectively as non-designated derivatives until maturity, re-designated to new hedging relationships or terminate early.

We continue to believe transactions related to our other designated cash flow hedges are probable to occur.

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.

4 unchanged sentences

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

Jan 2, 2022 Oct 3, 2021

Apr 3, 2022 Oct 3, 2021

Cash Flow Hedges:

14 unchanged sentences

Location of gain/(loss)

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

Apr 3, 2022 Mar 28, 2021 Apr 3, 2022 Mar 28, 2021

Cash Flow Hedges:

6 unchanged sentences

Interest rates 34.1 71.5 ( 0.5 ) ( 0.5 ) Interest expense

— ( 3.6 ) Interest income and other, net

Net Investment Hedges:

1 unchanged sentence

Foreign currency debt 40.2 41.6 — —

Two Quarters Ended

Gains/(Losses) Recognized in

OCI Before Reclassifications Gains/(Losses) Reclassified from

AOCI to Earnings Location of gain/(loss)

Apr 3, 2022 Mar 28, 2021 Apr 3, 2022 Mar 28, 2021

Cash Flow Hedges:

Coffee 95.5 17.7 24.3 ( 2.7 ) Product and distribution costs

Cross-currency swaps 9.4 10.4 ( 1.6 ) 1.6 Interest expense

16.3 8.7 Interest income and other, net

Dairy 8.0 1.6 2.5 2.0 Product and distribution costs

Foreign currency - other 7.6 ( 18.8 ) 4.5 0.2 Licensed stores revenue

( 1.7 ) ( 1.9 ) Product and distribution costs

Interest rates 35.3 94.0 ( 0.9 ) ( 1.1 ) Interest expense

— ( 3.6 ) Interest income and other, net

Net Investment Hedges:

Cross-currency swaps 14.2 ( 10.4 ) 6.9 6.6 Interest expense

Foreign currency debt 65.4 27.9 — —

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

Jan 2, 2022 Dec 27, 2020

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

Apr 3, 2022 Mar 28, 2021 Apr 3, 2022 Mar 28, 2021

Non-Designated Derivatives:

Dairy Interest income and other, net $ 0.1 $ — $ 0.1 $ —

Foreign currency - other Interest income and other, net 11.6 ( 0.8 ) 21.8 ( 1.7 )

5 unchanged sentences

Notional amounts of outstanding derivative contracts (in millions) :

Jan 2, 2022 Oct 3, 2021

Apr 3, 2022 Oct 3, 2021

Coffee $ 917 $ 481

5 unchanged sentences

Derivative Assets

Balance Sheet Location Jan 2, 2022 Oct 3, 2021

Balance Sheet Location Apr 3, 2022 Oct 3, 2021

Designated Derivative Instruments:

11 unchanged sentences

Derivative Liabilities

Balance Sheet Location Jan 2, 2022 Oct 3, 2021

Balance Sheet Location Apr 3, 2022 Oct 3, 2021

Designated Derivative Instruments:

11 unchanged sentences

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

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

Apr 3, 2022 Oct 3, 2021 Apr 3, 2022 Oct 3, 2021

Location on the balance sheet

4 unchanged sentences

Fair Value Measurements at Reporting Date Using

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

April 3, 2022 Quoted Prices in Active Markets for Identical Assets

(Level 1) Significant Other Observable Inputs

3 unchanged sentences

Available-for-sale debt securities

Commercial paper 3.5 — 3.5 —

Corporate debt securities 8.2 — 8.2 —

Mortgage and other asset-backed securities 0.1 — 0.1 —

Total available-for-sale debt securities 8.2 — 8.2 —

54 unchanged sentences

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 January 2, 2022 and October 3, 2021.

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

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

2 unchanged sentences

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 quarters ended January 2, 2022 and December 27, 2020.

There were no material fair value adjustments during the two quarters ended April 3, 2022 and March 28, 2021.

Inventories (in millions) :

Jan 2, 2022 Oct 3, 2021

Apr 3, 2022 Oct 3, 2021

Unroasted $ 929.1 $ 670.3

5 unchanged sentences

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

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.

As of April 3, 2022, we had committed to purchasing green coffee totaling $ 500 million under fixed-price contracts and an estimated $ 1.3 billion under price-to-be-fixed contracts.

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

7 unchanged sentences

Prepaid Expenses and Other Current Assets

Jan 2, 2022 Oct 3, 2021

Apr 3, 2022 Oct 3, 2021

Income tax receivable $ 183.3 $ 20.7

3 unchanged sentences

Property, Plant and Equipment, net

Jan 2, 2022 Oct 3, 2021

Apr 3, 2022 Oct 3, 2021

Land $ 46.2 $ 46.2

9 unchanged sentences

Accrued Liabilities

Jan 2, 2022 Oct 3, 2021

Apr 3, 2022 Oct 3, 2021

Accrued occupancy costs $ 84.7 $ 107.1

6 unchanged sentences

Store Operating Expenses

Quarter Ended

Jan 2, 2022 Dec 27, 2020

Quarter Ended Two Quarters Ended

Apr 3, 2022 Mar 28, 2021 Apr 3, 2022 Mar 28, 2021

Wages and benefits $ 2,018.3 $ 1,664.9 $ 4,029.0 $ 3,271.1

4 unchanged sentences

Indefinite-Lived Intangible Assets

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

(in millions) Apr 3, 2022 Oct 3, 2021

Trade names, trademarks and patents $ 97.1 $ 96.4

Finite-Lived Intangible Assets

Jan 2, 2022 Oct 3, 2021

Apr 3, 2022 Oct 3, 2021

(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 $ 1,326.1 $ ( 1,168.5 ) $ 157.6 $ 1,338.2 $ ( 1,084.7 ) $ 253.5

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 ):

Amortization expense for finite-lived intangible assets was $ 49.2 million and $99.4 million for the quarter and two quarters ended April 3, 2022, respectively and $ 62.2 million and $123.4 million for the quarter and two quarters ended March 28, 2021, respectively.

Estimated future amortization expense as of April 3, 2022 ( in millions ):

Fiscal Year Total

2022 (excluding the quarter ended January 2, 2022)

2022 (excluding the two quarters ended April 3, 2022)

Thereafter 2.5

5 unchanged sentences

0.4 ( 31.6 ) — — ( 31.2 )

Goodwill balance at January 2, 2022

Goodwill balance at April 3, 2022

$ 493.6 $ 3,116.7 $ 34.7 $ 1.1 $ 3,646.1

10 unchanged sentences

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.

As of April 3, 2022, we were in compliance with all applicable covenants.

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

Short-term Debt

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

As of April 3, 2022 and October 3, 2021, we had no 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:

3 unchanged sentences

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.

As of April 3, 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) :

Jan 2, 2022 Oct 3, 2021 Stated Interest Rate Effective Interest Rate (1)

Apr 3, 2022 Oct 3, 2021 Stated Interest Rate Effective Interest Rate (1)

Issuance Amount Estimated Fair Value Amount Estimated Fair Value

4 unchanged sentences

750.0 762.0 750.0 794.8 3.850 % 2.859 %

February 2024 notes (3)

500.0 500.6 — — 0.553 % 0.783 %

March 2024 notes (4)

6 unchanged sentences

August 2029 notes (2)

1,000.0 1,004.4 1,000.0 1,109.9 3.550 % 3.840 %

March 2030 notes 750.0 684.8 750.0 758.6 2.250 % 3.084 %

November 2030 notes 1,250.0 1,158.7 1,250.0 1,286.9 2.550 % 2.582 %

February 2032 notes 1,000.0 952.7 — — 3.000 % 3.155 %

June 2045 notes 350.0 358.7 350.0 414.1 4.300 % 4.348 %

7 unchanged sentences

Hedge accounting fair value adjustment (2)

( 11.4 ) 21.7

Total $ 16,013.0 $ 14,615.8

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

Refer to Note 2 , Derivative Financial Instruments, for additional information on our interest rate swap designated as a fair value hedge.

(2) Amount includes the change in fair value due to changes in benchmark interest rates related to hedging our October 2023 notes and $ 350 million of our August 2029 notes.

Refer to Note 2 , Derivative Financial Instruments, for additional information on our interest rate swaps designated as fair value hedges.

(3) Floating rate notes which bear interest at a rate equal to Compounded SOFR (as defined in the February 2024 notes) plus 0.420 %, resulting in a stated interest rate of 0.553 % at April 3, 2022.

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

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

The following table summarizes our long-term debt maturities as of April 3, 2022 by fiscal year ( in millions ):

Fiscal Year Total

3 unchanged sentences

The components of lease costs (in millions) :

Quarter Ended

Jan 2, 2022 Dec 27, 2020

Quarter Ended Two Quarters Ended

Apr 3, 2022 Mar 28, 2021 Apr 3, 2022 Mar 28, 2021

Operating lease costs (1)

5 unchanged sentences

The following table includes supplemental information (in millions) :

Quarter Ended

Jan 2, 2022 Dec 27, 2020

Two Quarters Ended

Apr 3, 2022 Mar 28, 2021

Cash paid related to operating lease liabilities $ 845.5 $ 792.4

Operating lease liabilities arising from obtaining ROU assets 710.6 659.6

Jan 2, 2022 Dec 27, 2020

Apr 3, 2022 Mar 28, 2021

Weighted-average remaining operating lease term 8.5 years 8.7 years

1 unchanged sentence

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 January 2, 2022.

There were no material finance leases as of April 3, 2022 and October 3, 2021.

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

Fiscal Year Total

2022 (excluding the quarter ended January 2, 2022)

2022 (excluding the two quarters ended April 3, 2022)

Thereafter 4,059.4

2 unchanged sentences

Total $ 8,904.8

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.

As of April 3, 2022, we have entered into operating leases that have not yet commenced of $ 1.0 billion, 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.

1 unchanged sentence

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

As of April 3, 2022, the current and long-term deferred revenue related to Nestlé was $ 177.0 million and $ 6.3 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.

During both quarters and two quarters ended April 3, 2022 and March 28, 2021, we recognized $ 44.2 million and $ 88.4 million of prepaid royalty revenue related to Nestlé, respectively.

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

Quarter Ended January 2, 2022

Quarter Ended April 3, 2022

Stored value cards and loyalty program at January 2, 2022

Revenue deferred - card activations, card reloads and Stars earned 3,124.0

Revenue recognized - card and Stars redemptions and breakage ( 3,426.3 )

Stored value cards and loyalty program at April 3, 2022 (2)

Quarter Ended March 28, 2021

Stored value cards and loyalty program at December 27, 2020

Revenue deferred - card activations, card reloads and Stars earned 2,709.7

Revenue recognized - card and Stars redemptions and breakage ( 2,977.8 )

Stored value cards and loyalty program at March 28, 2021 (2)

Two Quarters Ended April 3, 2022

Stored value cards and loyalty program at October 3, 2021

1 unchanged sentence

Revenue recognized - card and Stars redemptions and breakage ( 6,837.1 )

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

Quarter Ended December 27, 2020

Stored value cards and loyalty program at April 3, 2022 (2)

Two Quarters Ended March 28, 2021

Stored value cards and loyalty program at September 27, 2020

1 unchanged sentence

Revenue recognized - card and Stars redemptions and breakage ( 5,958.0 )

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

Stored value cards and loyalty program at March 28, 2021 (2)

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

(2) As of January 2, 2022 and December 27, 2020, approximately $ 1.8 billion and $ 1.6 billion of these amounts were current, respectively.

(2) As of April 3, 2022 and March 28, 2021, approximately $ 1.5 billion and $ 1.4 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

January 2, 2022

April 3, 2022

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

3 unchanged sentences

Net gains/(losses) in AOCI, end of period $ ( 9.0 ) $ 251.7 $ 103.0 $ ( 85.4 ) $ 260.3

December 27, 2020

March 28, 2021

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

3 unchanged sentences

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

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

April 3, 2022

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

Net gains/(losses) recognized in OCI before reclassifications ( 10.5 ) 129.8 59.5 ( 24.3 ) 154.5

Net (gains)/losses reclassified from AOCI to earnings — ( 36.4 ) ( 5.1 ) 0.1 ( 41.4 )

Other comprehensive income/(loss) attributable to Starbucks ( 10.5 ) 93.4 54.4 ( 24.2 ) 113.1

Net gains/(losses) in AOCI, end of period $ ( 9.0 ) $ 251.7 $ 103.0 $ ( 85.4 ) $ 260.3

March 28, 2021

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

Net gains/(losses) recognized in OCI before reclassifications ( 2.4 ) 78.1 13.0 157.5 246.2

Net (gains)/losses reclassified from AOCI to earnings ( 1.3 ) ( 1.7 ) ( 4.9 ) — ( 7.9 )

Other comprehensive income/(loss) attributable to Starbucks ( 3.7 ) 76.4 8.1 157.5 238.3

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

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

2 unchanged sentences

the Statements of Earnings

Jan 2, 2022 Dec 27, 2020

Apr 3, 2022 Mar 28, 2021

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

4 unchanged sentences

$ 28.2 $ 6.1 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 January 2, 2022.

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 .

Two Quarters Ended

Components Amounts Reclassified from AOCI Affected Line Item in

the Statements of Earnings

Apr 3, 2022 Mar 28, 2021

Gains/(losses) on available-for-sale debt securities $ — $ 1.7 Interest income and other, net

Gains/(losses) on cash flow hedges 43.4 3.2 Please refer to Note 2 , Derivative Financial Instruments for additional information.

Gains/(losses) on net investment hedges 6.9 6.6 Interest expense

50.3 11.5 Total before tax

( 8.9 ) ( 3.6 ) Tax (expense)/benefit

$ 41.4 $ 7.9 Net of tax

During the two quarters ended April 3, 2022, we repurchased 36.3 million shares of common stock for $ 4.0 billion.

On March 15, 2022, 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 4, 2022, we announced a temporary suspension of our share repurchase program to allow us to augment investments in our stores and partners.

Repurchases pursuant to this program were last made on April 1, 2022.

As of April 3, 2022, 52.6 million shares remained available for repurchase under current authorizations.

During the second quarter of fiscal 2022, our Board of Directors approved a quarterly cash dividend to shareholders of $ 0.49 per share to be paid on May 27, 2022 to shareholders of record as of the close of business on May 13, 2022.

Employee Stock Plans

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.

As of April 3, 2022, there were 34.5 million shares of common stock available for issuance pursuant to future equity-based compensation awards and 11.1 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

Jan 2, 2022 Dec 27, 2020

Quarter Ended Two Quarters Ended

Apr 3, 2022 Mar 28, 2021 Apr 3, 2022 Mar 28, 2021

Restricted Stock Units (“RSUs”) $ 54.1 $ 75.1 $ 149.8 $ 173.5

1 unchanged sentence

Total stock-based compensation expense $ 53.5 $ 76.0 $ 149.3 $ 175.3

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

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

Stock Options RSUs

3 unchanged sentences

Forfeited/expired — ( 0.6 )

Options outstanding/Nonvested RSUs, January 2, 2022

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

Options outstanding/Nonvested RSUs, April 3, 2022

Total unrecognized stock-based compensation expense, net of estimated forfeitures, as of April 3, 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

Quarter Ended Two Quarters Ended

Apr 3, 2022 Mar 28, 2021 Apr 3, 2022 Mar 28, 2021

Net earnings attributable to Starbucks $ 674.5 $ 659.4 $ 1,490.4 $ 1,281.6

6 unchanged sentences

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 anti-dilutive.

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

As of April 3, 2022 and March 28, 2021, we had an immaterial amount of anti-dilutive stock options and unvested RSUs.

Commitments and Contingencies

13 unchanged sentences

The Company has asserted multiple affirmative defenses.

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.

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.

2 unchanged sentences

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 (“Phase 3”) 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.

6 unchanged sentences

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

Accordingly, as of April 3, 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 chief executive officer, 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 interim 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

Jan 2, 2022 Dec 27, 2020

Quarter Ended Two Quarters Ended

Apr 3, 2022 Mar 28, 2021 Apr 3, 2022 Mar 28, 2021

$ 4,599.0 60 % $ 4,212.8 63 % $ 9,497.4 60 % $ 8,464.5 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.

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

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

Quarter Ended

2 unchanged sentences

Channel Development Corporate and Other (1)

January 2, 2022

April 3, 2022

Total net revenues $ 5,445.7 $ 1,702.4 $ 463.1 $ 24.4 $ 7,635.6

2 unchanged sentences

Operating income/(loss) 931.5 180.7 197.9 ( 361.2 ) 948.9

December 27, 2020

March 28, 2021

Total net revenues $ 4,638.5 $ 1,637.0 $ 369.9 $ 22.6 $ 6,668.0

2 unchanged sentences

Operating income/(loss) 896.4 258.1 172.6 ( 339.5 ) 987.6

(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.

Two Quarters Ended

North America International Channel Development Corporate and Other Total

April 3, 2022

Total net revenues $ 11,178.0 $ 3,578.4 $ 880.1 $ 49.5 $ 15,686.0

Depreciation and amortization expenses 402.1 266.5 — 65.2 733.8

Income from equity investees — 1.3 88.1 — 89.4

Operating income/(loss) 2,014.6 480.3 381.1 ( 749.3 ) 2,126.7

March 28, 2021

Total net revenues $ 9,314.2 $ 3,319.0 $ 741.2 $ 43.1 $ 13,417.5

Depreciation and amortization expenses 374.9 283.4 0.6 73.7 732.6

Income from equity investees — 53.0 106.7 — 159.7

Operating income/(loss) 1,699.3 541.0 353.3 ( 692.4 ) 1,901.2

(1) North America and International total net revenues and operating income and Corporate and Other operating loss for the quarter and two quarters ended March 28, 2021, 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