What changed in this filing

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Item 1. Financial Statements

2022-08-02 compared with 2022-05-03 · 140 added, 132 removed, 719 unchanged (27% of the section changed)

3 unchanged sentences

(in millions, except per share data)

Quarter Ended Two Quarters Ended

Quarter Ended Three Quarters Ended

Net revenues:

28 unchanged sentences

(in millions, unaudited)

Quarter Ended Two Quarters Ended

Quarter Ended Three Quarters Ended

Net earnings including noncontrolling interests $ 913.7 $ 1,154.2 $ 2,404.8 $ 2,435.7

10 unchanged sentences

Tax expense/(benefit) 9.8 1.0 18.7 4.6

Other comprehensive income 6.8 19.6 113.1 238.3

Other comprehensive income/(loss) ( 325.3 ) 96.6 ( 212.2 ) 334.9

Comprehensive income including noncontrolling interests 588.4 1,250.8 2,192.6 2,770.6

28 unchanged sentences

Stored value card liability and current portion of deferred revenue 1,723.0 1,596.1

Short-term debt 200.0 —

Current portion of long-term debt 999.1 998.9

10 unchanged sentences

Retained deficit ( 8,719.7 ) ( 6,315.7 )

Accumulated other comprehensive income 260.3 147.2

Accumulated other comprehensive income/(loss) ( 65.0 ) 147.2

Total shareholders’ deficit ( 8,666.5 ) ( 5,321.2 )

6 unchanged sentences

(in millions, unaudited)

Two Quarters Ended

Three Quarters Ended

OPERATING ACTIVITIES:

12 unchanged sentences

Inventories ( 557.3 ) 8.4

Prepaid expenses and other current assets ( 120.7 ) 139.7

Accounts payable 341.7 108.2

34 unchanged sentences

CONSOLIDATED STATEMENTS OF EQUITY

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

For the Quarters Ended July 3, 2022 and June 27, 2021

(in millions, except per share data, unaudited)

6 unchanged sentences

Shares Amount

Balance, January 2, 2022

Balance, April 3, 2022

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

Net earnings — — — 912.9 — 912.9 0.8 913.7

Other comprehensive income — — — — 6.8 6.8 — 6.8

Other comprehensive loss — — — — ( 325.3 ) ( 325.3 ) — ( 325.3 )

Stock-based compensation expense — — 58.2 — — 58.2 — 58.2

1 unchanged sentence

Sale of common stock 0.2 — 12.0 — — 12.0 — 12.0

Repurchase of common stock ( 5.2 ) — ( 61.0 ) ( 431.1 ) — ( 492.1 ) — ( 492.1 )

Cash dividends declared, $ 0.49 per share

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

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

Balance, April 3, 2022

Balance, July 3, 2022

1,147.3 $ 1.1 $ 117.1 $ ( 8,719.7 ) $ ( 65.0 ) $ ( 8,666.5 ) $ 7.6 $ ( 8,658.9 )

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 )

6 unchanged sentences

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

Balance, March 28, 2021

Balance, June 27, 2021

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

2 unchanged sentences

CONSOLIDATED STATEMENTS OF EQUITY

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

For the Three Quarters Ended July 3, 2022 and June 27, 2021

(in millions, except per share data, unaudited)

9 unchanged sentences

Net earnings — — — 2,403.3 — 2,403.3 1.5 2,404.8

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

Other comprehensive loss — — — — ( 212.2 ) ( 212.2 ) — ( 212.2 )

Stock-based compensation expense — — 209.7 — — 209.7 — 209.7

5 unchanged sentences

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

Balance, April 3, 2022

Balance, July 3, 2022

1,147.3 $ 1.1 $ 117.1 $ ( 8,719.7 ) $ ( 65.0 ) $ ( 8,666.5 ) $ 7.6 $ ( 8,658.9 )

3 unchanged sentences

Net earnings — — — 2,434.9 — 2,434.9 0.8 2,435.7

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

Other comprehensive income — — — — 334.9 334.9 — 334.9

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

3 unchanged sentences

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

Balance, March 28, 2021

Balance, June 27, 2021

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

12 unchanged sentences

Note 11 Employee Stock Plans

Note 12 Income Taxes

Note 13 Earnings per Share

5 unchanged sentences

Financial Statement Preparation

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.

The unaudited consolidated financial statements as of July 3, 2022, and for the quarter and three quarters ended July 3, 2022 and June 27, 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 three quarters ended July 3, 2022 and June 27, 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 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”).

The results of operations for the quarter and three quarters ended July 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.

9 unchanged sentences

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.

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.

After netting the qualified credits against our payable, a receivable of $ 81.2 million and $ 172.4 million was included in prepaid expenses and other current assets as of July 3, 2022 and October 3, 2021, respectively.

As of July 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 the third quarter of fiscal 2022, we announced a plan to reinvent Starbucks to increase efficiency, enabling us to seamlessly handle increasing demand in our U.S.

stores, and to elevate the partner and customer experiences.

As of July 3, 2022, we identified an immaterial amount of stores for closure due to safety concerns under our U.S.

reinvention restructuring plan;

the resulting restructuring and impairments costs are immaterial to our consolidated statement of earnings.

We estimate future

restructuring costs attributable to our reinvention plan to range from approximately $ 15 million to $ 20 million.

Future restructuring costs are expected to be incurred over the next three to nine months.

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.

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 ended and three quarters ended June 27, 2021.

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 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.

During the quarter and three quarters ended June 27, 2021, an additional $ 12.2 million and $ 56.2 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 this restructuring plan was substantially completed in fiscal 2021, we did not recognize any material restructuring and impairment amounts related to this plan during the quarter and three quarters ended July 3, 2022.

As of July 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.

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

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

5 unchanged sentences

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

Apr 3, 2022 Oct 3, 2021

Jul 3, 2022 Oct 3, 2021

Cash Flow Hedges:

14 unchanged sentences

Location of gain/(loss)

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

Jul 3, 2022 Jun 27, 2021 Jul 3, 2022 Jun 27, 2021

Cash Flow Hedges:

6 unchanged sentences

Interest rates 18.8 ( 25.1 ) ( 0.6 ) ( 0.3 ) Interest expense

— ( 3.6 ) Interest income and other, net

Net Investment Hedges:

1 unchanged sentence

Foreign currency debt 72.2 11.8 — —

Two Quarters Ended

Three Quarters Ended

Gains/(Losses) Recognized in

1 unchanged sentence

AOCI to Earnings Location of gain/(loss)

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

Jul 3, 2022 Jun 27, 2021 Jul 3, 2022 Jun 27, 2021

Cash Flow Hedges:

12 unchanged sentences

Gains/(Losses) Recognized in Earnings

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

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

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

Jul 3, 2022 Jun 27, 2021 Jul 3, 2022 Jun 27, 2021

Non-Designated Derivatives:

7 unchanged sentences

Notional amounts of outstanding derivative contracts (in millions) :

Apr 3, 2022 Oct 3, 2021

Jul 3, 2022 Oct 3, 2021

Coffee $ 717 $ 481

5 unchanged sentences

Derivative Assets

Balance Sheet Location Apr 3, 2022 Oct 3, 2021

Balance Sheet Location Jul 3, 2022 Oct 3, 2021

Designated Derivative Instruments:

Coffee Prepaid expenses and other current assets $ 35.4 $ 130.5

Cross-currency swaps Other long-term assets $ 114.0 $ 54.7

Coffee Prepaid expenses and other current assets — 130.5

Dairy Prepaid expenses and other current assets 1.0 0.8

3 unchanged sentences

Non-designated Derivative Instruments:

Coffee Prepaid expenses and other current assets 2.3 —

Dairy Prepaid expenses and other current assets 0.9 —

Diesel fuel and other commodities Prepaid expenses and other current assets 2.2 0.1

1 unchanged sentence

Derivative Liabilities

Balance Sheet Location Apr 3, 2022 Oct 3, 2021

Balance Sheet Location Jul 3, 2022 Oct 3, 2021

Designated Derivative Instruments:

Coffee Accrued liabilities $ 23.4 $ —

Cross-currency swaps Other long-term liabilities $ — $ 3.3

2 unchanged sentences

Other long-term liabilities 0.4 3.6

Interest rates Other long-term liabilities 11.1 1.3

Interest rate swaps Other long-term liabilities 17.4 1.3

Non-designated Derivative Instruments:

Dairy Accrued liabilities — 0.2

Diesel fuel and other commodities Accrued liabilities 1.0 —

Foreign currency Accrued liabilities 0.5 0.1

1 unchanged sentence

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

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

Jul 3, 2022 Oct 3, 2021 Jul 3, 2022 Oct 3, 2021

Location on the balance sheet

4 unchanged sentences

Fair Value Measurements at Reporting Date Using

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

July 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 0.2 — 0.2 —

Corporate debt securities 14.7 — 14.7 —

government treasury securities 0.2 0.2 — —

Total available-for-sale debt securities 15.1 0.2 14.9 —

13 unchanged sentences

Derivative assets 191.3 — 191.3 —

Structured Deposit 29.9 — 29.9 —

Total assets $ 3,815.2 $ 3,325.0 $ 490.2 $ —

39 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 April 3, 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 July 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 two quarters ended April 3, 2022 and March 28, 2021.

There were no material fair value adjustments during the three quarters ended July 3, 2022 and June 27, 2021.

Inventories (in millions) :

Apr 3, 2022 Oct 3, 2021

Jul 3, 2022 Oct 3, 2021

Unroasted $ 1,046.7 $ 670.3

5 unchanged sentences

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

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.

As of July 3, 2022, we had committed to purchasing green coffee totaling $ 483 million under fixed-price contracts and an estimated $ 1.2 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

Apr 3, 2022 Oct 3, 2021

Jul 3, 2022 Oct 3, 2021

Income tax receivable $ 73.1 $ 20.7

3 unchanged sentences

Property, Plant and Equipment, net

Apr 3, 2022 Oct 3, 2021

Jul 3, 2022 Oct 3, 2021

Land $ 46.1 $ 46.2

9 unchanged sentences

Accrued Liabilities

Apr 3, 2022 Oct 3, 2021

Jul 3, 2022 Oct 3, 2021

Accrued occupancy costs $ 86.3 $ 107.1

6 unchanged sentences

Store Operating Expenses

Quarter Ended Two Quarters Ended

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

Quarter Ended Three Quarters Ended

Jul 3, 2022 Jun 27, 2021 Jul 3, 2022 Jun 27, 2021

Wages and benefits $ 1,983.0 $ 1,750.7 $ 6,012.0 $ 5,021.8

4 unchanged sentences

Indefinite-Lived Intangible Assets

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

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

Trade names, trademarks and patents $ 97.1 $ 96.4

Finite-Lived Intangible Assets

Apr 3, 2022 Oct 3, 2021

Jul 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 $ 1,251.1 $ ( 1,144.8 ) $ 106.3 $ 1,338.2 $ ( 1,084.7 ) $ 253.5

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 ):

Amortization expense for finite-lived intangible assets was $ 47.6 million and $ 147.0 million for the quarter and three quarters ended July 3, 2022, respectively and $ 50.0 million and $ 173.4 million for the quarter and three quarters ended June 27, 2021, respectively.

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

Fiscal Year Total

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

2022 (excluding the three quarters ended July 3, 2022)

Thereafter 2.8

5 unchanged sentences

( 0.4 ) ( 225.7 ) — — ( 226.1 )

Goodwill balance at April 3, 2022

Goodwill balance at July 3, 2022

$ 492.8 $ 2,922.6 $ 34.7 $ 1.1 $ 3,451.2

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 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.

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

No amounts were outstanding under our 2021 credit facility as of July 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 April 3, 2022 and October 3, 2021, we had no borrowings outstanding under the program.

As of July 3, 2022, we had $ 200 million in borrowings outstanding under the program.

As of October 3, 2021, we had no borrowings outstanding under this 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 April 3, 2022 and October 3, 2021, we had no borrowings outstanding under these Japanese yen-denominated credit facilities.

As of July 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) :

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

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

Issuance Amount Estimated Fair Value Amount Estimated Fair Value

32 unchanged sentences

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.

(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 1.504% at July 3, 2022.

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

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

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

Fiscal Year Total

3 unchanged sentences

The components of lease costs (in millions) :

Quarter Ended Two Quarters Ended

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

Quarter Ended Three Quarters Ended

Jul 3, 2022 Jun 27, 2021 Jul 3, 2022 Jun 27, 2021

Operating lease costs (1)

5 unchanged sentences

The following table includes supplemental information (in millions) :

Two Quarters Ended

Apr 3, 2022 Mar 28, 2021

Three Quarters Ended

Jul 3, 2022 Jun 27, 2021

Cash paid related to operating lease liabilities $ 1,248.7 $ 1,200.6

Operating lease liabilities arising from obtaining ROU assets 1,121.6 1,030.7

Apr 3, 2022 Mar 28, 2021

Jul 3, 2022 Jun 27, 2021

Weighted-average remaining operating lease term 8.5 years 8.6 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 April 3, 2022 and October 3, 2021.

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

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

Fiscal Year Total

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

2022 (excluding the three quarters ended July 3, 2022)

Thereafter 4,244.9

2 unchanged sentences

Total $ 8,769.2

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.

As of July 3, 2022, we have entered into operating leases that have not yet commenced of $ 1.1 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 April 3, 2022, the current and long-term deferred revenue related to Nestlé was $ 177.0 million and $ 6.3 billion, respectively.

As of July 3, 2022, the current and long-term deferred revenue related to Nestlé was $ 177.0 million and $ 6.2 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.

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.

During the quarter and three quarters ended July 3, 2022, we recognized $ 44.1 million and $ 132.5 million of prepaid royalty revenue related to Nestlé, 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.

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

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 )

Quarter Ended July 3, 2022

Stored value cards and loyalty program at April 3, 2022

Quarter Ended March 28, 2021

Stored value cards and loyalty program at December 27, 2020

Revenue deferred - card activations, card reloads and Stars earned 3,282.6

Revenue recognized - card and Stars redemptions and breakage ( 3,312.3 )

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

Quarter Ended June 27, 2021

Stored value cards and loyalty program at March 28, 2021

Two Quarters Ended April 3, 2022

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)

Three Quarters Ended July 3, 2022

Stored value cards and loyalty program at October 3, 2021

1 unchanged sentence

Revenue recognized - card and Stars redemptions and breakage ( 10,149.4 )

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

Two Quarters Ended March 28, 2021

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

Three Quarters Ended June 27, 2021

Stored value cards and loyalty program at September 27, 2020

1 unchanged sentence

Revenue recognized - card and Stars redemptions and breakage ( 9,118.0 )

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

Stored value cards and loyalty program at June 27, 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 April 3, 2022 and March 28, 2021, approximately $ 1.5 billion and $ 1.4 billion of these amounts were current, respectively.

(2) As of July 3, 2022 and June 27, 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

April 3, 2022

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

3 unchanged sentences

Net gains/(losses) in AOCI, end of period $ ( 10.5 ) $ 246.0 $ 181.8 $ ( 482.3 ) $ ( 65.0 )

March 28, 2021

June 27, 2021

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

3 unchanged sentences

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

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

April 3, 2022

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

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

3 unchanged sentences

Net gains/(losses) in AOCI, end of period $ ( 10.5 ) $ 246.0 $ 181.8 $ ( 482.3 ) $ ( 65.0 )

March 28, 2021

June 27, 2021

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

7 unchanged sentences

the Statements of Earnings

Apr 3, 2022 Mar 28, 2021

Jul 3, 2022 Jun 27, 2021

Gains/(losses) on available-for-sale debt securities $ ( 0.2 ) $ 0.1 Interest income and other, net

2 unchanged sentences

59.2 1.6 Total before tax

( 6.0 ) ( 1.8 ) Tax (expense)/benefit

( 9.8 ) ( 1.0 ) Tax expense

$ 49.4 $ 0.6 Net of tax

Two Quarters Ended

Three Quarters Ended

Components Amounts Reclassified from AOCI Affected Line Item in

the Statements of Earnings

Apr 3, 2022 Mar 28, 2021

Jul 3, 2022 Jun 27, 2021

Gains/(losses) on available-for-sale debt securities $ ( 0.2 ) $ 1.8 Interest income and other, net

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109.5 13.1 Total before tax

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

( 18.7 ) ( 4.6 ) Tax expense

$ 90.8 $ 8.5 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 April 3, 2022.

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

During the three quarters ended July 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.

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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.

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

During the third quarter of fiscal 2022, our Board of Directors approved a quarterly cash dividend to shareholders of $ 0.49 per share to be paid on August 26, 2022 to shareholders of record as of the close of business on August 12, 2022.

Employee Stock Plans

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.

As of July 3, 2022, there were 99.6 million shares of common stock available for issuance pursuant to future equity-based compensation awards and 10.9 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 Two Quarters Ended

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

Quarter Ended Three Quarters Ended

Jul 3, 2022 Jun 27, 2021 Jul 3, 2022 Jun 27, 2021

Restricted Stock Units (“RSUs”) $ 57.4 $ 79.8 $ 207.2 $ 253.3

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Total stock-based compensation expense $ 57.3 $ 80.0 $ 206.6 $ 255.3

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

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

Stock Options RSUs

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Forfeited/expired — ( 1.0 )

Options outstanding/Nonvested RSUs, April 3, 2022

Total unrecognized stock-based compensation expense, net of estimated forfeitures, as of April 3, 2022

Options outstanding/Nonvested RSUs, July 3, 2022

Total unrecognized stock-based compensation expense, net of estimated forfeitures, as of July 3, 2022

$ 0.0 $ 196.3

The effective tax rate for the quarter ended July 3, 2022 was 23.4 % compared to 18.2 % for the same quarter in fiscal 2021.

The increase was primarily due to lapping a prior year remeasurement of deferred tax assets due to an enacted foreign corporate rate change (approximately 510 basis points).

The effective tax rate for the first three quarters ended July 3, 2022 was 23.2 % compared to 21.7 % for the same period in fiscal 2021.

The increase was primarily due to lapping a prior year remeasurement of deferred tax assets due to an enacted foreign corporate rate change (approximately 230 basis points).

Earnings per Share

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

Quarter Ended Two Quarters Ended

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

Quarter Ended Three Quarters Ended

Jul 3, 2022 Jun 27, 2021 Jul 3, 2022 Jun 27, 2021

Net earnings attributable to Starbucks $ 912.9 $ 1,153.4 $ 2,403.3 $ 2,434.9

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

As of July 3, 2022, we had an immaterial amount of anti-dilutive stock options and anti-dilutive unvested RSUs.

As of June 27, 2021, we had no anti-dilutive stock options and an immaterial amount of anti-dilutive unvested RSUs .

Commitments and Contingencies

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On April 13, 2010, an organization named Council for Education and Research on Toxics (“Plaintiff”) filed a lawsuit in the Superior Court of the State of California, County of Los Angeles, against the Company and certain other defendants who manufacture, package, distribute or sell brewed coffee.

The lawsuit is Council for Education and Research on Toxics v.

The lawsuit is captioned Council for Education and Research on Toxics v.

Starbucks Corporation, et al .

On May 9, 2011, the Plaintiff filed an additional lawsuit in the Superior Court of the State of California, County of Los Angeles, against the Company and additional defendants who manufacture, package, distribute or sell packaged coffee.

The lawsuit is Council for Education and Research on Toxics v.

The lawsuit is captioned Council for Education and Research on Toxics v.

Brad Barry LLC, et al .

1 unchanged sentence

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

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

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

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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.

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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 April 3, 2022, no loss contingency has been recorded for this matter.

Accordingly, as of July 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.

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Consolidated revenue mix by product type ( in millions ):

Quarter Ended Two Quarters Ended

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

Quarter Ended Three Quarters Ended

Jul 3, 2022 Jun 27, 2021 Jul 3, 2022 Jun 27, 2021

$ 4,944.6 61 % $ 4,753.1 63 % $ 14,442.9 61 % $ 13,222.6 63 %

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Channel Development Corporate and Other (1)

April 3, 2022

Total net revenues $ 6,058.4 $ 1,584.7 $ 479.7 $ 27.3 $ 8,150.1

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Operating income/(loss) 1,330.1 135.3 191.7 ( 361.6 ) 1,295.5

March 28, 2021

June 27, 2021

Total net revenues $ 5,370.7 $ 1,688.0 $ 414.0 $ 23.8 $ 7,496.5

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Operating income/(loss) 1,304.3 327.3 216.0 ( 358.9 ) 1,488.7

Two Quarters Ended

North America International Channel Development Corporate and Other Total

April 3, 2022

Three Quarters Ended

North America (1)

International (1)

Channel Development Corporate and Other (1)

Total net revenues $ 17,236.4 $ 5,163.1 $ 1,359.9 $ 76.7 $ 23,836.1

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Operating income/(loss) 3,344.8 615.7 572.7 ( 1,110.9 ) 3,422.3

March 28, 2021

June 27, 2021

Total net revenues $ 14,684.9 $ 5,006.9 $ 1,155.3 $ 66.8 $ 20,913.9

2 unchanged sentences

Operating income/(loss) 3,003.5 868.3 569.3 ( 1,051.2 ) 3,389.9

(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 .

(1) North America and International total net revenues and operating income and Corporate and Other operating loss for the quarter and three quarters ended June 27, 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