Item 1. Financial Statements
Item 1. Financial Statements
STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(in millions, except per share data)
(unaudited)
Quarter Ended
Jan 1,
2023 Jan 2,
2022
Net revenues:
Company-operated stores $ 7,083.5 $ 6,722.4
Licensed stores 1,119.5 850.8
Other 510.9 477.2
Total net revenues 8,713.9 8,050.4
Product and distribution costs 2,810.2 2,526.9
Store operating expenses 3,665.3 3,400.0
Other operating expenses 129.3 101.7
Depreciation and amortization expenses 327.1 366.0
General and administrative expenses 580.9 525.8
Restructuring and impairments 5.8 ( 7.5 )
Total operating expenses 7,518.6 6,912.9
Income from equity investees 57.8 40.3
Operating income 1,253.1 1,177.8
Interest income and other, net 11.6 ( 0.1 )
Interest expense ( 129.7 ) ( 115.3 )
Earnings before income taxes 1,135.0 1,062.4
Income tax expense 279.8 246.3
Net earnings including noncontrolling interests 855.2 816.1
Net earnings attributable to noncontrolling interests — 0.2
Net earnings attributable to Starbucks $ 855.2 $ 815.9
Earnings per share - basic $ 0.74 $ 0.70
Earnings per share - diluted $ 0.74 $ 0.69
Weighted average shares outstanding:
Basic 1,148.5 1,169.6
Diluted 1,152.9 1,176.6
See Notes to Consolidated Financial Statements.
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STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions, unaudited)
Quarter Ended
Jan 1,
2023 Jan 2,
2022
Net earnings including noncontrolling interests $ 855.2 $ 816.1
Other comprehensive income/(loss), net of tax:
Unrealized holding gains/(losses) on available-for-sale debt securities 2.0 ( 3.4 )
Tax (expense)/benefit ( 0.5 ) 0.8
Unrealized gains/(losses) on cash flow hedging instruments ( 180.7 ) 88.7
Tax (expense)/benefit 29.5 ( 11.8 )
Unrealized gains/(losses) on net investment hedging instruments ( 64.6 ) 41.5
Tax (expense)/benefit 16.3 ( 10.5 )
Translation adjustment and other 208.9 14.2
Tax (expense)/benefit — —
Reclassification adjustment for net (gains)/losses realized in net earnings for available-for-sale debt securities, hedging instruments, and translation adjustment ( 98.4 ) ( 16.1 )
Tax expense/(benefit) 11.8 2.9
Other comprehensive income/(loss) ( 75.7 ) 106.3
Comprehensive income including noncontrolling interests 779.5 922.4
Comprehensive income attributable to noncontrolling interests — 0.2
Comprehensive income attributable to Starbucks $ 779.5 $ 922.2
See Notes to Consolidated Financial Statements.
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STARBUCKS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions, except per share data)
(unaudited)
Jan 1,
2023 Oct 2,
2022
ASSETS
Current assets:
Cash and cash equivalents $ 3,186.5 $ 2,818.4
Short-term investments 123.9 364.5
Accounts receivable, net 1,162.9 1,175.5
Inventories 2,088.1 2,176.6
Prepaid expenses and other current assets 373.5 483.7
Total current assets 6,934.9 7,018.7
Long-term investments 283.6 279.1
Equity investments 330.5 311.2
Property, plant and equipment, net 6,699.5 6,560.5
Operating lease, right-of-use asset 8,133.8 8,015.6
Deferred income taxes, net 1,811.8 1,799.7
Other long-term assets 527.6 554.2
Other intangible assets 151.4 155.9
Goodwill 3,383.0 3,283.5
TOTAL ASSETS $ 28,256.1 $ 27,978.4
LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
Current liabilities:
Accounts payable $ 1,348.2 $ 1,441.4
Accrued liabilities 2,089.6 2,137.1
Accrued payroll and benefits 664.6 761.7
Current portion of operating lease liability 1,257.5 1,245.7
Stored value card liability and current portion of deferred revenue 2,137.0 1,641.9
Short-term debt — 175.0
Current portion of long-term debt 1,749.3 1,749.0
Total current liabilities 9,246.2 9,151.8
Long-term debt 13,176.7 13,119.9
Operating lease liability 7,635.4 7,515.2
Deferred revenue 6,263.2 6,279.7
Other long-term liabilities 600.5 610.5
Total liabilities 36,922.0 36,677.1
Shareholders' deficit:
Common stock ($ 0.001 par value) — authorized, 2,400.0 shares; issued and outstanding, 1,148.5 and 1,147.9 shares, respectively
1.1 1.1
Additional paid-in capital 67.2 205.3
Retained deficit ( 8,203.2 ) ( 8,449.8 )
Accumulated other comprehensive income/(loss) ( 538.9 ) ( 463.2 )
Total shareholders’ deficit ( 8,673.8 ) ( 8,706.6 )
Noncontrolling interests 7.9 7.9
Total deficit ( 8,665.9 ) ( 8,698.7 )
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT) $ 28,256.1 $ 27,978.4
See Notes to Consolidated Financial Statements.
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STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions, unaudited)
Quarter Ended
Jan 1,
2023 Jan 2,
2022
OPERATING ACTIVITIES:
Net earnings including noncontrolling interests $ 855.2 $ 816.1
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 342.5 386.4
Deferred income taxes, net 15.8 ( 0.3 )
Income earned from equity method investees ( 56.9 ) ( 46.6 )
Distributions received from equity method investees 45.7 44.9
Stock-based compensation 85.2 95.8
Non-cash lease costs 263.7 330.4
Loss on retirement and impairment of assets 21.1 50.7
Other 6.7 ( 4.9 )
Cash provided by/(used in) changes in operating assets and liabilities:
Accounts receivable 42.0 ( 91.6 )
Inventories 108.5 ( 36.0 )
Accounts payable ( 117.3 ) 84.0
Deferred revenue 461.0 461.3
Operating lease liability ( 281.4 ) ( 363.3 )
Other operating assets and liabilities ( 198.6 ) 144.0
Net cash provided by operating activities 1,593.2 1,870.9
INVESTING ACTIVITIES:
Purchases of investments ( 10.5 ) ( 61.0 )
Sales of investments 0.8 72.6
Maturities and calls of investments 253.3 45.6
Additions to property, plant and equipment ( 516.8 ) ( 416.8 )
Other ( 6.1 ) ( 41.4 )
Net cash used in investing activities ( 279.3 ) ( 401.0 )
FINANCING ACTIVITIES:
Net proceeds/(payments) from issuance of commercial paper ( 175.0 ) 200.0
Proceeds from issuance of common stock 45.9 41.3
Cash dividends paid ( 608.3 ) ( 576.0 )
Repurchase of common stock ( 191.4 ) ( 3,520.9 )
Minimum tax withholdings on share-based awards ( 79.0 ) ( 113.6 )
Net cash provided by/(used in) financing activities ( 1,007.8 ) ( 3,969.2 )
Effect of exchange rate changes on cash and cash equivalents 62.0 13.0
Net increase/(decrease) in cash and cash equivalents 368.1 ( 2,486.3 )
CASH AND CASH EQUIVALENTS:
Beginning of period 2,818.4 6,455.7
End of period $ 3,186.5 $ 3,969.4
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest, net of capitalized interest $ 116.7 $ 108.3
Income taxes $ 106.2 $ 161.4
See Notes to Consolidated Financial Statements.
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STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY
For the Quarters Ended January 1, 2023 and January 2, 2022
(in millions, except per share data, unaudited)
Common Stock Additional Paid-in Capital Retained
Earnings/(Deficit) Accumulated
Other
Comprehensive
Income/(Loss) Shareholders’
Equity/(Deficit) Noncontrolling
Interests Total
Shares Amount
Balance, October 2, 2022
1,147.9 $ 1.1 $ 205.3 $ ( 8,449.8 ) $ ( 463.2 ) $ ( 8,706.6 ) $ 7.9 $ ( 8,698.7 )
Net earnings — — — 855.2 — 855.2 — 855.2
Other comprehensive loss — — — — ( 75.7 ) ( 75.7 ) — ( 75.7 )
Stock-based compensation expense — — 86.4 — — 86.4 — 86.4
Exercise of stock options/vesting of RSUs 2.4 — ( 44.7 ) — — ( 44.7 ) — ( 44.7 )
Sale of common stock 0.1 — 11.6 — — 11.6 — 11.6
Repurchase of common stock ( 1.9 ) — ( 191.4 ) — — ( 191.4 ) — ( 191.4 )
Cash dividends declared, $ 0.53 per share
— — — ( 608.6 ) — ( 608.6 ) — ( 608.6 )
Balance, January 1, 2023
1,148.5 $ 1.1 $ 67.2 $ ( 8,203.2 ) $ ( 538.9 ) $ ( 8,673.8 ) $ 7.9 $ ( 8,665.9 )
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 — — — — 106.3 106.3 — 106.3
Stock-based compensation expense — — 97.1 — — 97.1 — 97.1
Exercise of stock options/vesting of RSUs 2.6 — ( 84.1 ) — — ( 84.1 ) — ( 84.1 )
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, 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
INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Summary of Significant Accounting Policies and Estimates
9
Note 2 Acquisitions, Divestitures and Strategic Alliance
9
Note 3 Derivative Financial Instruments
10
Note 4 Fair Value Measurements
13
Note 5 Inventories
15
Note 6 Supplemental Balance Sheet and Statement of Earnings Information
16
Note 7 Other Intangible Assets and Goodwill
16
Note 8 Debt
18
Note 9 Leases
20
Note 10 Deferred Revenue
21
Note 11 Equity
22
Note 12 Employee Stock Plans
22
Note 13 Earnings per Share
23
Note 14 Commitments and Contingencies
23
Note 15 Segment Reporting
24
Note 16 Subsequent Event
24
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STARBUCKS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1: Summary of Significant Accounting Policies and Estimates
Financial Statement Preparation
The unaudited consolidated financial statements as of January 1, 2023, and for the quarters ended January 1, 2023 and January 2, 2022, 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 1, 2023 and January 2, 2022 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.”
Segment information is prepared on the same basis that our management reviews financial information for operational decision-making purposes.
Certain prior period information on the consolidated statements of cash flows have been reclassified to conform to the current presentation.
The financial information as of October 2, 2022 is derived from our audited consolidated financial statements and notes for the fiscal year ended October 2, 2022 (“fiscal 2022”) included in Item 8 in the Fiscal 2022 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 ended January 1, 2023 are not necessarily indicative of the results of operations that may be achieved for the entire fiscal year ending October 1, 2023 (“fiscal 2023”).
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 in many of our markets, our businesses demonstrated powerful momentum beyond recovery from the COVID-19 pandemic. During the first quarter of fiscal 2023, our China market continued to experience pandemic-related business interruptions, including escalating COVID outbreaks that suppressed customer mobility. 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.
Restructuring
In fiscal 2022, we announced our plan in the U.S. market to increase efficiency while elevating the partner and customer experience (the “Reinvention Plan”). We believe the investments in partner wages and trainings will increase retention and productivity while the acceleration of purpose-built store concepts and innovations in technologies will provide additional convenience and connection with our customers. As a result of the restructuring efforts in connection with the Reinvention Plan, we recorded an immaterial charge on our consolidated statements of earnings during the quarter ended January 1, 2023. Future restructuring and impairment costs attributable to our Reinvention Plan are not expected to be material.
As of January 1, 2023 and October 2, 2022, there were no material restructuring-related accrued liabilities on our consolidated balance sheets.
Recently Adopted Accounting Pronouncements
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, 2024. The adoption of the new guidance did not have a material impact on our financial statement s.
Note 2: Acquisitions, Divestitures and Strategic Alliance
In the fourth quarter of fiscal 2022, we sold our Evolution Fresh brand and business to Bolthouse Farms. This transaction did not have a material impact on our consolidated financial statements.
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Note 3: Derivative Financial Instruments
Interest Rates
From time to time, we enter into designated cash flow hedges to manage the variability in cash flows due to changes in benchmark interest rates. We enter into interest rate swap agreements and treasury locks, which are synthetic forward sales of U.S. Treasury securities settled in cash based upon the difference between an agreed-upon treasury rate and the prevailing treasury rate at settlement. These agreements are cash settled at the time of the pricing of the related debt. Each derivative agreement's gain or loss is recorded in accumulated other comprehensive income (“AOCI”) and is subsequently reclassified to interest expense over the life of the related debt.
To hedge the exposure to changes in the fair value of our fixed-rate debt, we enter into interest rate swap agreements, which are designated as fair value hedges. The changes in fair values of these derivative instruments and the offsetting changes in fair values of the underlying hedged debt due to changes in the relevant benchmark interest rates are recorded in interest expense. Refer to Note 8 , Debt, for additional information on our long-term debt.
Foreign Currency
To reduce cash flow volatility from foreign currency fluctuations, we enter into forward and swap contracts to hedge portions of cash flows of anticipated intercompany royalty payments, inventory purchases, and intercompany borrowing and lending activities. The resulting gains and losses from these derivatives are recorded in AOCI and subsequently reclassified to revenue, product and distribution costs, or interest income and other, net, respectively, when the hedged exposures affect net earnings.
From time to time, we may enter into financial instruments, including, but not limited to, forward and swap contracts or foreign currency-denominated debt, to hedge the currency exposure of our net investments in certain international operations. The resulting gains and losses from these derivatives are recorded in AOCI and are subsequently reclassified to net earnings when the hedged net investment is either sold or substantially liquidated.
Foreign currency forward and swap contracts not designated as hedging instruments are used to mitigate the foreign exchange risk of certain other balance sheet items. 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.
Commodities
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 5, Inventories, or our longer-dated forecasted coffee demand where underlying fixed price and price-to-be-fixed contracts are not yet available. The resulting gains and losses are recorded in AOCI and are subsequently reclassified to product and distribution costs when the hedged exposure affects net earnings.
Depending on market conditions, we may also enter into dairy forward contracts and futures contracts to hedge a portion of anticipated cash flows under our dairy purchase contracts and our forecasted dairy demand. The resulting gains or losses are recorded in AOCI and are subsequently reclassified to product and distribution costs when the hedged exposure affects net earnings.
Cash flow hedges related to anticipated transactions are designated and documented at the inception of each hedge. Cash flows from hedging transactions are classified in the same categories as the cash flows from the respective hedged items. For de-designated cash flow hedges in which the underlying transactions are no longer probable of occurring, the related accumulated derivative gains or losses are recognized in interest income and other, net on our consolidated statements of earnings. 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.
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 ):
Net Gains/(Losses)
Included in AOCI
Net Gains/(Losses) Expected to be Reclassified from AOCI into Earnings within 12 Months Outstanding Contract/Debt Remaining Maturity
(Months)
Jan 1, 2023 Oct 2, 2022
Cash Flow Hedges:
Coffee $ ( 36.4 ) $ 153.9 $ ( 20.7 ) 5
Cross-currency swaps ( 1.7 ) ( 1.9 ) — 23
Dairy ( 4.2 ) ( 2.6 ) ( 4.2 ) 8
Foreign currency - other 12.8 55.3 12.1 33
Interest rates ( 5.4 ) ( 5.8 ) 0.7 0
Net Investment Hedges:
Cross-currency swaps 52.7 67.3 — 111
Foreign currency 16.1 16.1 — 0
Foreign currency debt 88.1 125.7 — 15
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 ):
Quarter Ended
Gains/(Losses) Recognized in
OCI Before Reclassifications Gains/(Losses) Reclassified from
AOCI to Earnings
Location of gain/(loss)
Jan 1, 2023 Jan 2, 2022 Jan 1, 2023 Jan 2, 2022
Cash Flow Hedges:
Coffee $ ( 119.4 ) $ 71.5 $ 96.7 $ 6.5 Product and distribution costs
Cross-currency swaps ( 11.7 ) 4.5 ( 2.7 ) ( 0.8 ) Interest expense
( 9.1 ) 6.9 Interest income and other, net
Dairy ( 3.6 ) 4.6 ( 1.5 ) ( 0.4 ) Product and distribution costs
Foreign currency - other ( 46.0 ) 6.9 8.0 2.2 Licensed stores revenue
2.2 ( 1.5 ) Product and distribution costs
0.2 — Interest income and other, net
Interest rates — 1.2 ( 0.5 ) ( 0.4 ) Interest expense
Net Investment Hedges:
Cross-currency swaps ( 14.0 ) 16.3 5.3 3.4 Interest expense
Foreign currency debt ( 50.6 ) 25.2 — —
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 1, 2023 Jan 2, 2022
Non-Designated Derivatives:
Foreign currency - other Interest income and other, net $ ( 11.6 ) $ 10.2
Coffee Interest income and other, net ( 5.5 ) 3.1
Diesel fuel and other commodities Interest income and other, net ( 0.2 ) —
Fair Value Hedges:
Interest rate swap Interest expense ( 1.6 ) ( 4.8 )
Long-term debt (hedged item) Interest expense ( 3.3 ) 8.2
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Notional amounts of outstanding derivative contracts (in millions) :
Jan 1, 2023 Oct 2, 2022
Coffee $ 401 $ 649
Cross-currency swaps 1,124 741
Dairy 68 94
Diesel fuel and other commodities 25 33
Foreign currency - other 1,305 1,269
Interest rate swaps 1,100 1,100
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 Jan 1, 2023 Oct 2, 2022
Designated Derivative Instruments:
Cross-currency swaps Other long-term assets $ 85.4 $ 115.4
Dairy Prepaid expenses and other current assets 0.2 0.5
Foreign currency - other Prepaid expenses and other current assets 22.4 39.9
Other long-term assets 13.8 33.5
Non-designated Derivative Instruments:
Diesel fuel and other commodities Prepaid expenses and other current assets 0.1 0.4
Foreign currency Prepaid expenses and other current assets 15.8 34.3
Other long-term assets — 7.3
Derivative Liabilities
Balance Sheet Location Jan 1, 2023 Oct 2, 2022
Designated Derivative Instruments:
Cross-currency swaps Other long-term liabilities $ 1.6 $ —
Dairy Accrued liabilities 3.1 2.9
Foreign currency - other Accrued liabilities 10.0 0.3
Other long-term liabilities 10.1 —
Interest rate Accrued liabilities 20.4 12.0
Interest rate swap Other long-term liabilities 33.6 34.0
Non-designated Derivative Instruments:
Diesel fuel and other commodities Accrued liabilities 0.4 —
Foreign currency Accrued liabilities 1.3 5.8
The following amounts were recorded on the consolidated balance sheets related to fixed-to-floating interest rate swaps designated in fair value hedging relationships ( in millions ):
Carrying amount of hedged item Cumulative amount of fair value hedging adjustment included in the carrying amount
Jan 1, 2023 Oct 2, 2022 Jan 1, 2023 Oct 2, 2022
Location on the balance sheet
Long-term debt $ 1,051.0 $ 1,047.7 $ ( 49.0 ) $ ( 52.3 )
Additional disclosures related to cash flow gains and losses included in AOCI, as well as subsequent reclassifications to earnings, are included in Note 11 , Equity.
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Note 4: Fair Value Measurements
Assets and liabilities measured at fair value on a recurring basis (in millions) :
Fair Value Measurements at Reporting Date Using
Balance at
January 1, 2023 Quoted Prices in Active Markets for Identical Assets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3)
Assets:
Cash and cash equivalents $ 3,186.5 $ 3,042.5 $ 144.0 $ —
Short-term investments:
Available-for-sale debt securities
Commercial paper 0.2 — 0.2 —
Corporate debt securities 23.2 — 23.2 —
U.S. government treasury securities 8.9 8.9 — —
Total available-for-sale debt securities 32.3 8.9 23.4 —
Structured deposits 28.8 — 28.8 —
Marketable equity securities 62.8 62.8 — —
Total short-term investments 123.9 71.7 52.2 —
Prepaid expenses and other current assets:
Derivative assets 38.5 — 38.5 —
Long-term investments:
Available-for-sale debt securities
Corporate debt securities 136.4 — 136.4 —
Foreign government obligations 3.8 — 3.8 —
Mortgage and other asset-backed securities 53.3 — 53.3 —
State and local government obligations 1.3 — 1.3 —
U.S. government treasury securities 88.8 88.8 — —
Total long-term investments 283.6 88.8 194.8 —
Other long-term assets:
Derivative assets 99.2 — 99.2 —
Total assets $ 3,731.7 $ 3,203.0 $ 528.7 $ —
Liabilities:
Accrued liabilities:
Derivative liabilities $ 35.2 $ — $ 35.2 $ —
Other long-term liabilities:
Derivative liabilities 45.3 — 45.3 —
Total liabilities $ 80.5 $ — $ 80.5 $ —
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Fair Value Measurements at Reporting Date Using
Balance at
October 2, 2022 Quoted Prices in Active Markets for Identical Assets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant
Unobservable Inputs
(Level 3)
Assets:
Cash and cash equivalents $ 2,818.4 $ 2,797.3 $ 21.1 $ —
Short-term investments:
Available-for-sale debt securities
Corporate debt securities 22.4 — 22.4 —
U.S. government treasury securities 9.3 9.3 — —
Total available-for-sale debt securities 31.7 9.3 22.4 —
Structured deposits 275.1 — 275.1 —
Marketable equity securities 57.7 57.7 — —
Total short-term investments 364.5 67.0 297.5 —
Prepaid expenses and other current assets:
Derivative assets 75.1 — 75.1 —
Long-term investments:
Available-for-sale debt securities
Corporate debt securities 134.7 — 134.7 —
Foreign government obligations 3.8 — 3.8 —
Mortgage and other asset-backed securities 56.5 — 56.5 —
State and local government obligations 1.3 — 1.3 —
U.S. government treasury securities 82.8 82.8 — —
Total long-term investments 279.1 82.8 196.3 —
Other long-term assets:
Derivative assets 156.2 — 156.2 —
Total assets $ 3,693.3 $ 2,947.1 $ 746.2 $ —
Liabilities:
Accrued liabilities:
Derivative liabilities $ 21.0 $ — $ 21.0 $ —
Other long-term liabilities:
Derivative liabilities 34.0 — 34.0 —
Total liabilities $ 55.0 $ — $ 55.0 $ —
There were no material transfers between levels and there was no significant activity within Level 3 instruments during the periods presented. 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, structured deposits and marketable equity securities were not material as of January 1, 2023 and October 2, 2022.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Assets and liabilities recognized or disclosed at fair value on the consolidated financial statements on a nonrecurring basis include items such as property, plant and equipment, ROU assets, goodwill and other intangible assets and other assets. These assets are measured at fair value if determined to be impaired.
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The estimated fair value of our long-term debt based on the quoted market price (Level 2) is included at Note 8 , Debt. There were no material fair value adjustments during the quarters ended January 1, 2023 and January 2, 2022.
Note 5: Inventories (in millions) :
Jan 1, 2023 Oct 2, 2022
Coffee:
Unroasted $ 1,015.1 $ 1,018.6
Roasted 293.2 310.3
Other merchandise held for sale 383.5 430.9
Packaging and other supplies 396.3 416.8
Total $ 2,088.1 $ 2,176.6
Other merchandise held for sale includes, among other items, serveware, food and tea. Inventory levels vary due to seasonality, commodity market supply and price fluctuations.
As of January 1, 2023, we had committed to purchasing green coffee totaling $ 333.3 million under fixed-price contracts and an estimated $ 773.2 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 3 , Derivative Financial Instruments, for further discussion. Price-to-be-fixed contracts are purchase commitments whereby the quality, quantity, delivery period and other negotiated terms are agreed upon, but the date, and therefore the price, at which the base “C” coffee commodity price component will be fixed has not yet been established. For most contracts, either Starbucks or the seller has the option to “fix” the base “C” coffee commodity price prior to the delivery date. For other contracts, Starbucks and the seller may agree upon pricing parameters determined by the base “C” coffee commodity price. Until prices are fixed, we estimate the total cost of these purchase commitments. We believe, based on established relationships with our suppliers and continuous monitoring, the risk of non-delivery on these purchase commitments is remote.
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Note 6: Supplemental Balance Sheet and Statement of Earnings Information (in millions) :
Prepaid Expenses and Other Current Assets
Jan 1, 2023 Oct 2, 2022
Income tax receivable $ 10.0 $ 27.7
Government subsidies receivable 28.4 69.4
Other prepaid expenses and current assets 335.1 386.6
Total prepaid expenses and current assets $ 373.5 $ 483.7
Property, Plant and Equipment, net
Jan 1, 2023 Oct 2, 2022
Land $ 46.1 $ 46.1
Buildings 566.6 555.4
Leasehold improvements 9,368.6 9,066.8
Store equipment 3,086.6 3,018.2
Roasting equipment 809.3 838.5
Furniture, fixtures and other 1,578.4 1,526.1
Work in progress 603.0 558.7
Property, plant and equipment, gross 16,058.6 15,609.8
Accumulated depreciation ( 9,359.1 ) ( 9,049.3 )
Property, plant and equipment, net $ 6,699.5 $ 6,560.5
Accrued Liabilities
Jan 1, 2023 Oct 2, 2022
Accrued occupancy costs $ 77.9 $ 84.6
Accrued dividends payable 608.6 608.3
Accrued capital and other operating expenditures 683.8 878.1
Self-insurance reserves 243.6 232.3
Income taxes payable 280.1 139.2
Accrued business taxes 195.6 194.6
Total accrued liabilities $ 2,089.6 $ 2,137.1
Store Operating Expenses
Quarter Ended
Jan 1, 2023 Jan 2, 2022
Wages and benefits $ 2,215.7 $ 2,010.7
Occupancy costs 671.5 665.3
Other expenses 778.1 724.0
Total store operating expenses $ 3,665.3 $ 3,400.0
Note 7: Other Intangible Assets and Goodwill
Indefinite-Lived Intangible Assets
(in millions) Jan 1, 2023 Oct 2, 2022
Trade names, trademarks and patents $ 97.8 $ 97.5
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Finite-Lived Intangible Assets
Jan 1, 2023 Oct 2, 2022
(in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Acquired and reacquired rights $ 1,030.4 $ ( 1,030.4 ) $ — $ 990.0 $ ( 990.0 ) $ —
Acquired trade secrets and processes 27.6 ( 27.6 ) — 27.6 ( 27.3 ) 0.3
Trade names, trademarks and patents 125.0 ( 74.5 ) 50.5 124.6 ( 69.6 ) 55.0
Licensing agreements 18.4 ( 15.3 ) 3.1 19.3 ( 16.2 ) 3.1
Other finite-lived intangible assets 21.0 ( 21.0 ) — 20.6 ( 20.6 ) —
Total finite-lived intangible assets $ 1,222.4 $ ( 1,168.8 ) $ 53.6 $ 1,182.1 $ ( 1,123.7 ) $ 58.4
Amortization expense for finite-lived intangible assets was $ 5.6 million for the quarter ended January 1, 2023 and $ 50.2 million for the quarter ended January 2, 2022, respectively.
Estimated future amortization expense as of January 1, 2023 ( in millions ):
Fiscal Year Total
2023 (excluding the quarter ended January 1, 2023)
$ 15.2
2024 20.0
2025 14.0
2026 1.3
2027 1.0
Thereafter 2.1
Total estimated future amortization expense $ 53.6
Goodwill
Changes in the carrying amount of goodwill by reportable operating segment (in millions) :
North America International Channel Development Corporate and Other Total
Goodwill balance at October 2, 2022
$ 491.1 $ 2,756.7 $ 34.7 $ 1.0 $ 3,283.5
Other (1)
0.3 99.2 — — 99.5
Goodwill balance at January 1, 2023
$ 491.4 $ 2,855.9 $ 34.7 $ 1.0 $ 3,383.0
(1) “Other” consists of changes in the goodwill balance resulting from foreign currency translation.
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Note 8: Debt
Revolving Credit Facility
Our $ 3.0 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 0.500 %, (ii) Bank of America’s prime rate, and (iii) the Eurocurrency Rate (as defined in the 2021 credit facility) plus 1.000 %.
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 1, 2023, we were in compliance with all applicable covenants. No amounts were outstanding under our 2021 credit facility as of January 1, 2023 or October 2, 2022.
Short-term Debt
Under our commercial paper program, we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of $ 3.0 billion, with individual maturities that may vary but not exceed 397 days from the date of issue. Amounts outstanding under the commercial paper program are required to be backstopped by available commitments under our 2021 credit facility. 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 1, 2023, we had no borrowings outstanding under the program. As of October 2, 2022, we had $ 175.0 million in 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:
• A ¥ 5 billion, or $ 37.6 million, credit facility is currently set to mature on January 4, 2024 . Borrowings under this 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 $ 75.2 million, credit facility is currently set to mature on March 27, 2023 . Borrowings under this 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 1, 2023 and October 2, 2022, we had no borrowings outstanding under these Japanese yen-denominated credit facilities.
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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 1, 2023 Oct 2, 2022 Stated Interest Rate Effective Interest Rate (1)
Issuance Amount Estimated Fair Value Amount Estimated Fair Value
March 2023 notes $ 1,000.0 $ 996.6 $ 1,000.0 $ 996.5 3.100 % 3.107 %
October 2023 notes (2)
750.0 745.0 750.0 744.8 3.850 % 2.859 %
February 2024 notes (3)
500.0 496.8 500.0 497.3 4.590 % 4.821 %
March 2024 notes (4)
639.0 653.5 588.4 584.7 0.372 % 0.462 %
August 2025 notes 1,250.0 1,225.3 1,250.0 1,209.6 3.800 % 3.721 %
June 2026 notes 500.0 465.6 500.0 458.3 2.450 % 2.511 %
March 2027 notes 500.0 447.5 500.0 437.9 2.000 % 2.058 %
March 2028 notes 600.0 565.2 600.0 554.8 3.500 % 3.529 %
November 2028 notes 750.0 713.8 750.0 704.7 4.000 % 3.958 %
August 2029 notes (2)
1,000.0 924.7 1,000.0 900.3 3.550 % 3.840 %
March 2030 notes 750.0 625.2 750.0 607.7 2.250 % 3.084 %
November 2030 notes 1,250.0 1,052.7 1,250.0 1,017.9 2.550 % 2.582 %
February 2032 notes 1,000.0 857.8 1,000.0 827.1 3.000 % 3.155 %
June 2045 notes 350.0 296.4 350.0 281.5 4.300 % 4.348 %
December 2047 notes 500.0 381.5 500.0 369.6 3.750 % 3.765 %
November 2048 notes 1,000.0 866.6 1,000.0 824.6 4.500 % 4.504 %
August 2049 notes 1,000.0 857.0 1,000.0 817.8 4.450 % 4.447 %
March 2050 notes 500.0 356.1 500.0 342.0 3.350 % 3.362 %
November 2050 notes 1,250.0 906.3 1,250.0 874.9 3.500 % 3.528 %
Total 15,089.0 13,433.6 15,038.4 13,052.0
Aggregate debt issuance costs and unamortized premium/(discount), net ( 114.0 ) ( 117.2 )
Hedge accounting fair value adjustment (2)
( 49.0 ) ( 52.3 )
Total $ 14,926.0 $ 14,868.9
(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 hedging our October 2023 notes and $ 350 million of our August 2029 notes. Refer to Note 3 , 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 4.590 % at January 1, 2023.
(4) Japanese yen-denominated long-term debt.
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The following table summarizes our long-term debt maturities as of January 1, 2023 by fiscal year ( in millions ):
Fiscal Year Total
2023 $ 1,750.0
2024 1,139.0
2025 1,250.0
2026 500.0
2027 500.0
Thereafter 9,950.0
Total $ 15,089.0
Note 9: Leases
The components of lease costs (in millions) :
Quarter Ended
Jan 1, 2023 Jan 2, 2022
Operating lease costs (1)
$ 384.8 $ 386.1
Variable lease costs 235.3 229.8
Short-term lease costs 7.0 7.1
Total lease costs $ 627.1 $ 623.0
(1) Includes immaterial amounts of sublease income and rent concessions.
The following table includes supplemental information (in millions) :
Quarter Ended
Jan 1, 2023 Jan 2, 2022
Cash paid related to operating lease liabilities $ 404.1 $ 410.0
Operating lease liabilities arising from obtaining ROU assets 367.3 346.8
Jan 1, 2023 Jan 2, 2022
Weighted-average remaining operating lease term 8.5 years 8.6 years
Weighted-average operating lease discount rate 2.7 % 2.5 %
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 1, 2023 and October 2, 2022.
Minimum future maturities of operating lease liabilities (in millions) :
Fiscal Year Total
2023 (excluding the quarter ended January 1, 2023)
$ 1,511.5
2024 1,472.9
2025 1,332.8
2026 1,177.8
2027 975.4
Thereafter 3,600.2
Total lease payments 10,070.6
Less imputed interest ( 1,177.7 )
Total $ 8,892.9
As of January 1, 2023, we have entered into operating leases that have not yet commenced of $ 1.2 billion, primarily related to real estate leases. These leases will commence between fiscal year 2023 and fiscal year 2028 with lease terms ranging from three to twenty years.
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Note 10: 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 January 1, 2023, the current and long-term deferred revenue related to Nestlé was $ 177.0 million and $ 6.1 billion, respectively. As of October 2, 2022, the current and long-term deferred revenue related to the Nestlé up-front payment was $ 177.0 million and $ 6.2 billion, respectively. During the quarter ended January 1, 2023, we recognized $ 44.1 million of prepaid royalty revenue related to Nestlé. During the quarter ended January 2, 2022, 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 January 1, 2023
Total
Stored value cards and loyalty program at October 2, 2022
$ 1,503.0
Revenue deferred - card activations, card reloads and Stars earned 4,223.4
Revenue recognized - card and Stars redemptions and breakage ( 3,714.1 )
Other (1)
13.3
Stored value cards and loyalty program at January 1, 2023 (2)
$ 2,025.6
Quarter Ended January 2, 2022
Total
Stored value cards and loyalty program at October 3, 2021
$ 1,448.5
Revenue deferred - card activations, card reloads and Stars earned 3,917.5
Revenue recognized - card and Stars redemptions and breakage ( 3,410.8 )
Other (1)
( 2.7 )
Stored value cards and loyalty program at January 2, 2022 (2)
$ 1,952.5
(1) “Other” primarily consists of changes in the stored value cards and loyalty program balances resulting from foreign currency translation.
(2) As of January 1, 2023 and January 2, 2022, approximately $ 1.9 billion and $ 1.8 billion of these amounts were current, respectively.
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Note 11: Equity
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 1, 2023
Net gains/(losses) in AOCI, beginning of period $ ( 15.5 ) $ 199.0 $ 209.1 $ ( 855.8 ) $ ( 463.2 )
Net gains/(losses) recognized in OCI before reclassifications 1.5 ( 151.2 ) ( 48.3 ) 208.9 10.9
Net (gains)/losses reclassified from AOCI to earnings 0.1 ( 82.7 ) ( 4.0 ) — ( 86.6 )
Other comprehensive income/(loss) attributable to Starbucks 1.6 ( 233.9 ) ( 52.3 ) 208.9 ( 75.7 )
Net gains/(losses) in AOCI, end of period $ ( 13.9 ) $ ( 34.9 ) $ 156.8 $ ( 646.9 ) $ ( 538.9 )
January 2, 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 ( 2.6 ) 76.9 31.0 14.2 119.5
Net (gains)/losses reclassified from AOCI to earnings ( 0.1 ) ( 10.6 ) ( 2.5 ) — ( 13.2 )
Other comprehensive income/(loss) attributable to Starbucks ( 2.7 ) 66.3 28.5 14.2 106.3
Net gains/(losses) in AOCI, end of period $ ( 1.2 ) $ 224.6 $ 77.1 $ ( 47.0 ) $ 253.5
Impact of reclassifications from AOCI on the consolidated statements of earnings (in millions) :
Quarter Ended
AOCI
Components Amounts Reclassified from AOCI Affected Line Item in
the Statements of Earnings
Jan 1, 2023 Jan 2, 2022
Gains/(losses) on available-for-sale debt securities $ ( 0.2 ) $ 0.2 Interest income and other, net
Gains/(losses) on cash flow hedges 93.3 12.5 Please refer to Note 3 , Derivative Financial Instruments for additional information.
Gains/(losses) on net investment hedges 5.3 3.4 Interest expense
98.4 16.1 Total before tax
( 11.8 ) ( 2.9 ) Tax expense
$ 86.6 $ 13.2 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 1, 2023.
During the quarters ended January 1, 2023 and January 2, 2022, we repurchased 1.9 million and 31.1 million shares of common stock for $ 191.4 million and $ 3.5 billion, respectively. As of January 1, 2023, 50.6 million shares remained available for repurchase under current authorizations.
During the first quarter of fiscal 2023, our Board of Directors approved a quarterly cash dividend to shareholders of $ 0.53 per share to be paid on February 24, 2023 to shareholders of record as of the close of business on February 10, 2023 .
Note 12: Employee Stock Plans
As of January 1, 2023, there were 91.8 million shares of common stock available for issuance pursuant to future equity-based compensation awards and 10.7 million shares available for issuance under our employee stock purchase plan.
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Stock-based compensation expense recognized in the consolidated statements of earnings (in millions) :
Quarter Ended
Jan 1, 2023 Jan 2, 2022
Restricted Stock Units (“RSUs”) $ 85.0 $ 95.7
Options 0.1 0.1
Total stock-based compensation expense $ 85.1 $ 95.8
Stock option and RSU transactions from October 2, 2022 through January 1, 2023 ( in millions ):
Stock Options RSUs
Options outstanding/Nonvested RSUs, October 2, 2022
4.1 7.0
Granted — 4.0
Options exercised/RSUs vested ( 0.7 ) ( 2.7 )
Forfeited/expired — ( 0.2 )
Options outstanding/Nonvested RSUs, January 1, 2023
3.4 8.1
Total unrecognized stock-based compensation expense, net of estimated forfeitures, as of January 1, 2023
$ — $ 345.3
Note 13: Earnings per Share
Calculation of net earnings per common share (“EPS”) — basic and diluted ( in millions, except EPS ):
Quarter Ended
Jan 1, 2023 Jan 2, 2022
Net earnings attributable to Starbucks $ 855.2 $ 815.9
Weighted average common shares outstanding (for basic calculation) 1,148.5 1,169.6
Dilutive effect of outstanding common stock options and RSUs 4.4 7.0
Weighted average common and common equivalent shares outstanding (for diluted calculation) 1,152.9 1,176.6
EPS — basic $ 0.74 $ 0.70
EPS — diluted $ 0.74 $ 0.69
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. The calculation of dilutive shares outstanding excludes anti-dilutive stock options or RSU's, which were immaterial in the periods presented.
Note 14: Commitments and Contingencies
Legal Proceedings
In 2010 and 2011, an organization named Council for Education and Research on Toxics (“Plaintiff”) filed lawsuits in the Superior Court of the State of California, County of Los Angeles, against the Company and other companies who manufacture, package, distribute or sell brewed coffee. The suits were later consolidated into a single action. Plaintiff alleged 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 sought 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 alleged violation of Proposition 65, which the Plaintiff claimed was every day coffee is sold without a compliant warning. The Company denied the claims.
During the pendency of the litigation, 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 regulation was approved by the Office of Administrative Law and became effective on October 1, 2019. In 2020, the trial court granted the defendants’ motion for summary judgment, ruling that the coffee exemption regulation is a complete defense to the Plaintiff’s complaint. On October 26, 2022, the California Court of Appeal affirmed the trial court's dismissal of the case. The Plaintiff’s subsequent request for a rehearing before the California Court of Appeals was denied. On December 2, 2022 Plaintiff filed a petition for review in the California Supreme Court and Starbucks filed a response brief on December 22, 2022. 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 1, 2023, no loss contingency has been recorded for this matter.
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Starbucks is involved in 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.
Note 15: Segment Reporting
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 1, 2023 Jan 2, 2022
Beverage (1)
$ 5,173.0 59 % $ 4,898.4 61 %
Food (2)
1,565.9 18 % 1,434.6 18 %
Other (3)
1,975.0 23 % 1,717.4 21 %
Total $ 8,713.9 100 % $ 8,050.4 100 %
(1) Beverage represents sales within our company-operated stores.
(2) Food includes sales within our company-operated stores.
(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 tables below present financial information for our reportable operating segments and Corporate and Other segment (in millions) :
Quarter Ended
North America International Channel Development Corporate and Other Total
January 1, 2023
Total net revenues $ 6,551.3 $ 1,680.1 $ 478.2 $ 4.3 $ 8,713.9
Depreciation and amortization expenses 216.9 81.5 — 28.7 327.1
Income from equity investees — 0.5 57.3 — 57.8
Operating income/(loss) 1,212.4 240.4 226.3 ( 426.0 ) 1,253.1
January 2, 2022
Total net revenues $ 5,732.3 $ 1,875.9 $ 417.1 $ 25.1 $ 8,050.4
Depreciation and amortization expenses 200.0 133.1 — 32.9 366.0
Income from equity investees — 0.7 39.6 — 40.3
Operating income/(loss) 1,083.1 299.6 183.2 ( 388.1 ) 1,177.8
Note 16: Subsequent Event
On January 13, 2023, Starbucks finalized the sale of the Seattle's Best Coffee brand to Nestlé and will recognize a pre-tax gain of approximately $ 90 million in the second quarter of fiscal 2023. With the exception of recognizing the sale to Nestlé, we do not expect the transaction will have a material impact on our ongoing operations and future financial results.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.