What changed in this filing

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Item 1. Financial Statements

2023-05-02 compared with 2023-02-02 · 214 added, 109 removed, 598 unchanged (35% of the section changed)

3 unchanged sentences

(in millions, except per share data)

Quarter Ended

Quarter Ended Two Quarters Ended

Net revenues:

11 unchanged sentences

Income from equity investees 51.4 49.1 109.2 89.4

Gain from sale of assets 91.3 — 91.3 —

Operating income 1,327.5 948.9 2,580.7 2,126.7

15 unchanged sentences

(in millions, unaudited)

Quarter Ended

Quarter Ended Two Quarters Ended

Net earnings including noncontrolling interests $ 908.3 $ 675.0 $ 1,763.6 $ 1,491.1

63 unchanged sentences

(in millions, unaudited)

Quarter Ended

Two Quarters Ended

OPERATING ACTIVITIES:

5 unchanged sentences

Distributions received from equity method investees 88.0 100.8

Gain on sale of assets ( 91.3 ) —

Stock-based compensation 159.3 149.2

15 unchanged sentences

Additions to property, plant and equipment ( 1,002.0 ) ( 871.9 )

Proceeds from sale of assets 110.0 —

Other ( 39.2 ) ( 69.8 )

1 unchanged sentence

FINANCING ACTIVITIES:

Net proceeds/(payments) from issuance of commercial paper ( 175.0 ) 200.0

Net (payments)/proceeds from issuance of commercial paper ( 175.0 ) —

Net proceeds from issuance of short-term debt 52.8 17.4

Repayments of short-term debt — ( 12.6 )

Net proceeds from issuance of long-term debt 1,497.8 1,498.1

Repayments of long-term debt ( 1,000.0 ) —

Proceeds from issuance of common stock 129.8 56.3

2 unchanged sentences

Minimum tax withholdings on share-based awards ( 81.4 ) ( 122.1 )

Other ( 10.7 ) ( 9.2 )

Net cash provided by/(used in) financing activities ( 1,283.4 ) ( 3,708.8 )

11 unchanged sentences

CONSOLIDATED STATEMENTS OF EQUITY

For the Quarters Ended January 1, 2023 and January 2, 2022

For the Quarter Ended April 2, 2023 and April 3, 2022

(in millions, except per share data, unaudited)

6 unchanged sentences

Shares Amount

Balance, October 2, 2022

Balance, January 1, 2023

1,148.5 $ 1.1 $ 67.2 $ ( 8,203.2 ) $ ( 538.9 ) $ ( 8,673.8 ) $ 7.9 $ ( 8,665.9 )

7 unchanged sentences

— — — ( 608.2 ) — ( 608.2 ) — ( 608.2 )

Purchase of noncontrolling interests — — ( 3.0 ) — — ( 3.0 ) ( 0.4 ) ( 3.4 )

Balance, April 2, 2023

1,147.0 $ 1.1 $ 38.2 $ ( 8,024.6 ) $ ( 521.6 ) $ ( 8,506.9 ) $ 7.5 $ ( 8,499.4 )

Balance, January 2, 2022

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

Net earnings — — — 674.5 — 674.5 0.5 675.0

Other comprehensive income — — — — 6.8 6.8 — 6.8

Stock-based compensation expense — — 54.4 — — 54.4 — 54.4

Exercise of stock options/vesting of RSUs 0.4 ( 0.1 ) ( 4.4 ) — — ( 4.5 ) — ( 4.5 )

Sale of common stock 0.1 — 11.0 — — 11.0 — 11.0

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

Cash dividends declared, $ 0.49 per share

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

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 )

See Notes to Consolidated Financial Statements.

STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

For the Two Quarters Ended April 2, 2023 and April 3, 2022

(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 2, 2022

1 unchanged sentence

Net earnings — — — 1,763.6 — 1,763.6 — 1,763.6

Other comprehensive loss — — — — ( 58.4 ) ( 58.4 ) — ( 58.4 )

Stock-based compensation expense — — 161.4 — — 161.4 — 161.4

Exercise of stock options/vesting of RSUs 3.7 — 23.5 — — 23.5 — 23.5

Sale of common stock 0.3 — 24.9 — — 24.9 — 24.9

Repurchase of common stock ( 4.9 ) — ( 373.9 ) ( 121.5 ) — ( 495.4 ) — ( 495.4 )

Cash dividends declared, $ 1.06 per share

— — — ( 1,216.9 ) — ( 1,216.9 ) — ( 1,216.9 )

Purchase of noncontrolling interests — — ( 3.0 ) — — ( 3.0 ) ( 0.4 ) ( 3.4 )

Balance, April 2, 2023

1,147.0 $ 1.1 $ 38.2 $ ( 8,024.6 ) $ ( 521.6 ) $ ( 8,506.9 ) $ 7.5 $ ( 8,499.4 )

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 — — — — 113.1 113.1 — 113.1

5 unchanged sentences

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

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 )

16 unchanged sentences

Note 15 Segment Reporting

Note 16 Subsequent Event

STARBUCKS CORPORATION

2 unchanged sentences

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.

The unaudited consolidated financial statements as of April 2, 2023, and for the quarters and two quarters ended April 2, 2023 and April 3, 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 and two quarters ended April 2, 2023 and April 3, 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.”

3 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 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 results of operations for the quarter and two quarters ended April 2, 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.

During the quarter ended April 2, 2023, our China market began recovering from pandemic-related business interruptions in previous quarters that had suppressed customer mobility.

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

3 unchanged sentences

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.

We believe the company-operated market investments in partner wages and trainings have increased 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 and two quarters ended April 2, 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.

As of April 2, 2023 and October 2, 2022, there were no material restructuring-related accrued liabilities on our consolidated balance sheets.

Recently Adopted Accounting Pronouncements

2 unchanged sentences

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.

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

Acquisitions, Divestitures and Strategic Alliance

On January 13, 2023, we sold the assets, primarily consisting of intellectual properties associated with the Seattle's Best Coffee brand, to Nestlé for $ 110.0 million.

The transaction resulted in a pre-tax gain of $ 91.3 million, which was included in gain from sale of assets on our consolidated statements of earnings.

Results from Seattle's Best Coffee operations prior to the sale are reported in our Channel Development operating segment.

In the fourth quarter of fiscal 2022, we sold our Evolution Fresh brand and business to Bolthouse Farms.

32 unchanged sentences

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

Jan 1, 2023 Oct 2, 2022

Apr 2, 2023 Oct 2, 2022

Cash Flow Hedges:

14 unchanged sentences

Location of gain/(loss)

Jan 1, 2023 Jan 2, 2022 Jan 1, 2023 Jan 2, 2022

Apr 2, 2023 Apr 3, 2022 Apr 2, 2023 Apr 3, 2022

Cash Flow Hedges:

5 unchanged sentences

2.2 ( 0.3 ) Product and distribution costs

Interest rates 0.3 34.1 0.2 ( 0.5 ) Interest expense

Net Investment Hedges:

Cross-currency swaps ( 1.1 ) ( 2.1 ) 7.0 3.5 Interest expense

Foreign currency debt ( 1.6 ) 40.2 — —

Two Quarters Ended

Gains/(Losses) Recognized in

OCI Before Reclassifications Gains/(Losses) Reclassified from

AOCI to Earnings Location of gain/(loss)

Apr 2, 2023 Apr 3, 2022 Apr 2, 2023 Apr 3, 2022

Cash Flow Hedges:

Coffee $ ( 119.9 ) $ 95.5 $ 156.6 $ 24.3 Product and distribution costs

Cross-currency swaps ( 14.2 ) 9.4 ( 5.7 ) ( 1.6 ) Interest expense

( 9.2 ) 16.3 Interest income and other, net

Dairy ( 5.9 ) 8.0 ( 4.8 ) 2.5 Product and distribution costs

Foreign currency - other ( 42.2 ) 7.6 11.9 4.5 Licensed stores revenue

4.4 ( 1.7 ) Product and distribution costs

0.2 — Interest income and other, net

Interest rates 0.3 35.3 ( 0.3 ) ( 0.9 ) Interest expense

4 unchanged sentences

Gains/(Losses) Recognized in Earnings

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

Jan 1, 2023 Jan 2, 2022

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

Apr 2, 2023 Apr 3, 2022 Apr 2, 2023 Apr 3, 2022

Non-Designated Derivatives:

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

Foreign currency - other Interest income and other, net 1.6 11.6 ( 10.0 ) 21.8

5 unchanged sentences

Notional amounts of outstanding derivative contracts (in millions) :

Jan 1, 2023 Oct 2, 2022

Apr 2, 2023 Oct 2, 2022

Coffee $ 186 $ 649

5 unchanged sentences

Derivative Assets

Balance Sheet Location Jan 1, 2023 Oct 2, 2022

Balance Sheet Location Apr 2, 2023 Oct 2, 2022

Designated Derivative Instruments:

8 unchanged sentences

Derivative Liabilities

Balance Sheet Location Jan 1, 2023 Oct 2, 2022

Balance Sheet Location Apr 2, 2023 Oct 2, 2022

Designated Derivative Instruments:

3 unchanged sentences

Other long-term liabilities 8.1 —

Interest rate Accrued liabilities 20.4 12.0

Interest rate swap Other long-term liabilities 33.6 34.0

Interest rate swaps Accrued liabilities 10.0 12.0

Other long-term liabilities 25.9 34.0

Non-designated Derivative Instruments:

3 unchanged sentences

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

Apr 2, 2023 Oct 2, 2022 Apr 2, 2023 Oct 2, 2022

Location on the balance sheet

4 unchanged sentences

Fair Value Measurements at Reporting Date Using

January 1, 2023 Quoted Prices in Active Markets for Identical Assets

April 2, 2023 Quoted Prices in Active Markets for Identical Assets

(Level 1) Significant Other Observable Inputs

6 unchanged sentences

government treasury securities 5.4 5.4 — —

Foreign government obligations 3.8 — 3.8 —

Mortgage and other asset-backed securities 0.7 — 0.7 —

Total available-for-sale debt securities 63.2 5.4 57.8 —

7 unchanged sentences

Corporate debt securities 101.0 — 101.0 —

Foreign government obligations 3.8 — 3.8 —

Mortgage and other asset-backed securities 50.7 — 50.7 —

44 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, structured deposits and marketable equity securities were not material as of January 1, 2023 and October 2, 2022.

Gross unrealized holding gains and losses on available-for-sale debt securities, structured deposits and marketable equity securities were not material as of April 2, 2023 and October 2, 2022.

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 8 , Debt.

There were no material fair value adjustments during the quarters ended January 1, 2023 and January 2, 2022.

There were no material fair value adjustments during the two quarters ended April 2, 2023 and April 3, 2022.

Inventories (in millions) :

Jan 1, 2023 Oct 2, 2022

Apr 2, 2023 Oct 2, 2022

Unroasted $ 944.2 $ 1,018.6

5 unchanged sentences

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.

As of April 2, 2023, we had committed to purchasing green coffee totaling $ 408.4 million under fixed-price contracts and an estimated $ 828.3 million under price-to-be-fixed contracts.

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

6 unchanged sentences

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

Apr 2, 2023 Oct 2, 2022

Land $ 46.1 $ 46.1

9 unchanged sentences

Accrued Liabilities

Jan 1, 2023 Oct 2, 2022

Apr 2, 2023 Oct 2, 2022

Accrued occupancy costs $ 82.8 $ 84.6

6 unchanged sentences

Store Operating Expenses

Quarter Ended

Jan 1, 2023 Jan 2, 2022

Quarter Ended Two Quarters Ended

Apr 2, 2023 Apr 3, 2022 Apr 2, 2023 Apr 3, 2022

Wages and benefits $ 2,174.3 $ 2,018.3 $ 4,389.9 $ 4,029.0

4 unchanged sentences

Indefinite-Lived Intangible Assets

(in millions) Jan 1, 2023 Oct 2, 2022

(in millions) Apr 2, 2023 Oct 2, 2022

Trade names, trademarks and patents $ 79.7 $ 97.5

Finite-Lived Intangible Assets

Jan 1, 2023 Oct 2, 2022

Apr 2, 2023 Oct 2, 2022

(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 $ 1,224.1 $ ( 1,173.0 ) $ 51.1 $ 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 ):

Amortization expense for finite-lived intangible assets was $ 5.3 million and $ 10.9 million for the quarter and two quarters ended April 2, 2023, respectively and $ 49.2 million and $ 99.4 million for the quarter and two quarters ended April 3, 2022, respectively.

Estimated future amortization expense as of April 2, 2023 ( in millions ):

Fiscal Year Total

2023 (excluding the quarter ended January 1, 2023)

2023 (excluding the two quarters ended April 2, 2023)

Thereafter 2.5

5 unchanged sentences

0.3 128.5 — — 128.8

Goodwill balance at January 1, 2023

Goodwill balance at April 2, 2023

$ 491.4 $ 2,885.2 $ 34.7 $ 1.0 $ 3,412.3

4 unchanged sentences

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.

Borrowings under the 2021 credit facility 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.

2 unchanged sentences

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 %.

On April 17, 2023, Starbucks amended the 2021 credit facility to replace LIBOR with Term SOFR (Secured Overnight Financing Rate) as a successor rate.

All other material terms and conditions of the 2021 credit facility were unchanged.

Borrowings under the amended 2021 credit facility will bear interest at a variable rate based on Term SOFR, 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 “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) Term SOFR plus 1.000 %.

Term SOFR means the forward-looking SOFR term rate administrated by the Chicago Mercantile Exchange plus a SOFR Adjustment of 0.100 %.

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.

As of April 2, 2023, we were in compliance with all applicable covenants.

No amounts were outstanding under our 2021 credit facility as of April 2, 2023 or October 2, 2022.

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 1, 2023, we had no borrowings outstanding under the program.

As of April 2, 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.

4 unchanged sentences

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 0.300 %.

As of January 1, 2023 and October 2, 2022, we had no borrowings outstanding under these Japanese yen-denominated credit facilities.

As of April 2, 2023, we had ¥ 7 billion, or $ 52.8 million, of borrowings outstanding under these credit facilities.

As of October 2, 2022, we had no borrowings outstanding under these credit facilities.

Long-term Debt

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

Jan 1, 2023 Oct 2, 2022 Stated Interest Rate Effective Interest Rate (1)

Apr 2, 2023 Oct 2, 2022 Stated Interest Rate Effective Interest Rate (1)

Issuance Amount Estimated Fair Value Amount Estimated Fair Value

7 unchanged sentences

August 2025 notes 1,250.0 1,230.2 1,250.0 1,209.6 3.800 % 3.721 %

February 2026 notes 1,000.0 1,008.8 — — 4.750 % 4.788 %

June 2026 notes 500.0 469.2 500.0 458.3 2.450 % 2.511 %

7 unchanged sentences

February 2032 notes 1,000.0 889.3 1,000.0 827.1 3.000 % 3.155 %

February 2033 notes 500.0 508.8 — — 4.800 % 3.798 %

June 2045 notes 350.0 310.3 350.0 281.5 4.300 % 4.348 %

12 unchanged sentences

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.

(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 5.147 % at April 2, 2023.

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

The following table summarizes our long-term debt maturities as of January 1, 2023 by fiscal year ( in millions ):

The following table summarizes our long-term debt maturities as of April 2, 2023 by fiscal year ( in millions ):

Fiscal Year Total

2023 $ 1,750.0

Thereafter 10,450.0

1 unchanged sentence

The components of lease costs (in millions) :

Quarter Ended

Jan 1, 2023 Jan 2, 2022

Quarter Ended Two Quarters Ended

Apr 2, 2023 Apr 3, 2022 Apr 2, 2023 Apr 3, 2022

Operating lease costs (1)

5 unchanged sentences

The following table includes supplemental information (in millions) :

Quarter Ended

Jan 1, 2023 Jan 2, 2022

Two Quarters Ended

Apr 2, 2023 Apr 3, 2022

Cash paid related to operating lease liabilities $ 819.0 $ 845.5

Operating lease liabilities arising from obtaining ROU assets 828.0 710.6

Jan 1, 2023 Jan 2, 2022

Apr 2, 2023 Apr 3, 2022

Weighted-average remaining operating lease term 8.5 years 8.5 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 1, 2023 and October 2, 2022.

There were no material finance leases as of April 2, 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)

2023 (excluding the two quarters ended April 2, 2023)

Thereafter 4,183.1

2 unchanged sentences

Total $ 9,023.0

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.

As of April 2, 2023, we have entered into operating leases that have not yet commenced of $ 1.3 billion, primarily related to real estate leases.

These leases will commence between fiscal year 2023 and fiscal year 2029 with lease terms ranging from three 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 1, 2023, the current and long-term deferred revenue related to Nestlé was $ 177.0 million and $ 6.1 billion, respectively.

As of April 2, 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.

During the quarter and two quarters ended April 2, 2023, we recognized $ 44.1 million and $ 88.2 million of prepaid royalty revenue related to Nestlé.

During the quarter and two quarters ended April 3, 2022, we recognized $ 44.2 million and $ 88.4 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

Stored value cards and loyalty program at October 2, 2022

Quarter Ended April 2, 2023

Stored value cards and loyalty program at January 1, 2023

Revenue deferred - card activations, card reloads and Stars earned 3,416.0

Revenue recognized - card and Stars redemptions and breakage ( 3,778.4 )

Stored value cards and loyalty program at April 2, 2023 (2)

Quarter Ended April 3, 2022

Stored value cards and loyalty program at January 2, 2022

Quarter Ended 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)

Two Quarters Ended April 2, 2023

Stored value cards and loyalty program at October 2, 2022

1 unchanged sentence

Revenue recognized - card and Stars redemptions and breakage ( 7,492.5 )

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

Stored value cards and loyalty program at April 2, 2023 (2)

Two Quarters Ended April 3, 2022

Stored value cards and loyalty program at October 3, 2021

Revenue deferred - card activations, card reloads and Stars earned 7,041.5

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

Stored value cards and loyalty program at April 3, 2022 (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 1, 2023 and January 2, 2022, approximately $ 1.9 billion and $ 1.8 billion of these amounts were current, respectively.

(2) As of April 2, 2023 and April 3, 2022, approximately $ 1.6 billion and $ 1.5 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 1, 2023

April 2, 2023

Net gains/(losses) in AOCI, beginning of period $ ( 13.9 ) $ ( 34.9 ) $ 156.8 $ ( 646.9 ) $ ( 538.9 )

3 unchanged sentences

Net gains/(losses) in AOCI, end of period $ ( 10.9 ) $ ( 88.1 ) $ 149.6 $ ( 572.2 ) $ ( 521.6 )

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

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

April 2, 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 4.3 ( 152.3 ) ( 50.3 ) 283.6 85.3

Net (gains)/losses reclassified from AOCI to earnings 0.3 ( 134.8 ) ( 9.2 ) — ( 143.7 )

Other comprehensive income/(loss) attributable to Starbucks 4.6 ( 287.1 ) ( 59.5 ) 283.6 ( 58.4 )

Net gains/(losses) in AOCI, end of period $ ( 10.9 ) $ ( 88.1 ) $ 149.6 $ ( 572.2 ) $ ( 521.6 )

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

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

2 unchanged sentences

the Statements of Earnings

Jan 1, 2023 Jan 2, 2022

Apr 2, 2023 Apr 3, 2022

Gains/(losses) on available-for-sale debt securities $ ( 0.3 ) $ ( 0.2 ) Interest income and other, net

4 unchanged sentences

$ 57.1 $ 28.2 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 .

Two Quarters Ended

Components Amounts Reclassified from AOCI Affected Line Item in

the Statements of Earnings

Apr 2, 2023 Apr 3, 2022

Gains/(losses) on available-for-sale debt securities $ ( 0.4 ) $ — Interest income and other, net

Gains/(losses) on cash flow hedges 153.1 43.4 Please refer to Note 3 , Derivative Financial Instruments for additional information.

Gains/(losses) on net investment hedges 12.3 6.9 Interest expense

165.0 50.3 Total before tax

( 21.3 ) ( 8.9 ) Tax expense

$ 143.7 $ 41.4 Net of tax

During the two quarters ended April 2, 2023 and April 3, 2022, we repurchased 4.9 million and 36.3 million shares of common stock for $ 495.3 million and $ 4,013.0 million, respectively.

As of April 2, 2023, 47.7 million shares remained available for repurchase under current authorizations.

During the second quarter of fiscal 2023, our Board of Directors approved a quarterly cash dividend to shareholders of $ 0.53 per share to be paid on May 26, 2023 to shareholders of record as of the close of business on May 12, 2023 .

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.

As of April 2, 2023, there were 92.3 million shares of common stock available for issuance pursuant to future equity-based compensation awards and 10.5 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 1, 2023 Jan 2, 2022

Quarter Ended Two Quarters Ended

Apr 2, 2023 Apr 3, 2022 Apr 2, 2023 Apr 3, 2022

Restricted Stock Units (“RSUs”) $ 74.1 $ 54.1 $ 159.2 $ 149.8

1 unchanged sentence

Total stock-based compensation expense $ 74.1 $ 53.5 $ 159.3 $ 149.3

Stock option and RSU transactions from October 2, 2022 through January 1, 2023 ( in millions ):

Stock option and RSU transactions from October 2, 2022 through April 2, 2023 ( in millions ):

Stock Options RSUs

3 unchanged sentences

Forfeited/expired — ( 0.6 )

Options outstanding/Nonvested RSUs, January 1, 2023

Total unrecognized stock-based compensation expense, net of estimated forfeitures, as of January 1, 2023

Options outstanding/Nonvested RSUs, April 2, 2023

Total unrecognized stock-based compensation expense, net of estimated forfeitures, as of April 2, 2023

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

Quarter Ended Two Quarters Ended

Apr 2, 2023 Apr 3, 2022 Apr 2, 2023 Apr 3, 2022

Net earnings attributable to Starbucks $ 908.3 $ 674.5 $ 1,763.6 $ 1,490.4

5 unchanged sentences

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.

The calculation of dilutive shares outstanding excludes anti-dilutive stock options or unvested RSUs, which were immaterial in the periods presented.

Commitments and Contingencies

3 unchanged sentences

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.

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.

In 2020, the trial court granted defendants’ motion for summary judgment, which was affirmed by the California Court of Appeal.

The California Supreme Court denied Plaintiff’s petition for review on February 15, 2023, concluding the matter.

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 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 interim 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 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

Quarter Ended Two Quarters Ended

Apr 2, 2023 Apr 3, 2022 Apr 2, 2023 Apr 3, 2022

$ 5,226.9 60 % $ 4,599.0 60 % $ 10,401.4 60 % $ 9,497.4 60 %

4 unchanged sentences

(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.

(3) Other primarily consists of packaged and single-serve coffees and teas, royalty and licensing revenues, beverage-related ingredients, serveware 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) :

1 unchanged sentence

North America International Channel Development Corporate and Other Total

January 1, 2023

April 2, 2023

Total net revenues $ 6,380.6 $ 1,854.8 $ 480.7 $ 3.7 $ 8,719.8

2 unchanged sentences

Operating income/(loss) 1,217.9 314.7 262.1 ( 467.2 ) 1,327.5

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

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.

Two Quarters Ended

North America International Channel Development Corporate and Other Total

April 2, 2023

Total net revenues $ 12,931.8 $ 3,534.9 $ 958.9 $ 8.2 $ 17,433.8

Depreciation and amortization expenses 443.1 167.7 0.1 58.1 669.0

Income from equity investees — 1.2 108.0 — 109.2

Operating income/(loss) 2,430.4 555.1 488.4 ( 893.2 ) 2,580.7

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

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