What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-11-17 compared with 2022-11-18 · 177 added, 206 removed, 1148 unchanged (25% of the section changed)

17 unchanged sentences

Income from equity investees 298.4 234.1 385.3

Gain from sale of assets 91.3 — —

Operating income 5,870.8 4,617.8 4,872.1

5 unchanged sentences

Net earnings including noncontrolling interests 4,124.7 3,283.4 4,200.3

Net earnings/(loss) attributable to noncontrolling interests 1.8 1.0 ( 3.6 )

Net earnings attributable to noncontrolling interests 0.2 1.8 1.0

Net earnings attributable to Starbucks $ 4,124.5 $ 3,281.6 $ 4,199.3

11 unchanged sentences

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

Unrealized holding gains/(losses) on available-for-sale securities ( 22.8 ) ( 3.4 ) 8.3

Tax benefit/(expense) 5.6 0.7 ( 1.8 )

Unrealized holding gains/(losses) on available-for-sale debt securities 3.3 ( 22.8 ) ( 3.4 )

Tax (expense)/benefit ( 0.8 ) 5.6 0.7

Unrealized gains/(losses) on cash flow hedging instruments ( 149.4 ) 259.5 283.8

1 unchanged sentence

Unrealized gains/(losses) on net investment hedging instruments 73.2 229.0 63.1

Tax (expense) ( 57.9 ) ( 16.0 ) ( 9.8 )

Tax (expense)/benefit ( 18.5 ) ( 57.9 ) ( 16.0 )

Translation adjustment and other ( 109.0 ) ( 794.7 ) 188.2

Tax benefit — 2.2 1.5

Tax (expense)/benefit 1.8 — 2.2

Reclassification adjustment for net (gains)/losses realized in net earnings for available-for-sale securities, hedging instruments, translation adjustment and other ( 158.9 ) ( 210.5 ) 41.8

62 unchanged sentences

Distributions received from equity method investees 222.8 231.2 336.0

Gain on sale of assets ( 91.3 ) — —

Net gain resulting from divestiture of certain operations — — ( 864.5 )

Stock-based compensation 302.7 271.5 319.1

Non-cash lease cost 1,497.7 1,248.6 1,197.6

Non-cash lease costs 1,365.9 1,497.7 1,248.6

Loss on retirement and impairment of assets 101.4 91.4 226.2

14 unchanged sentences

Additions to property, plant and equipment ( 2,333.6 ) ( 1,841.3 ) ( 1,470.0 )

Proceeds from sale of assets 110.0 — —

Net proceeds from the divestiture of certain operations — 59.3 1,175.0

2 unchanged sentences

FINANCING ACTIVITIES:

Repayments of commercial paper 175.0 ( 296.5 ) —

Proceeds from issuance of short-term debt 36.6 215.1 1,406.6

Net (payments)/proceeds from issuance of commercial paper ( 175.0 ) 175.0 ( 296.5 )

Net proceeds from issuance of short-term debt 114.6 36.6 215.1

Repayments of short-term debt ( 78.8 ) ( 36.6 ) ( 349.8 )

Proceeds from issuance of long-term debt 1,498.1 — 4,727.6

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

Repayments of long-term debt ( 1,000.0 ) ( 1,000.0 ) ( 1,250.0 )

4 unchanged sentences

Other ( 11.1 ) ( 9.2 ) —

Net cash provided by/(used in) financing activities ( 5,638.0 ) ( 3,651.0 ) 1,713.3

Net cash used in financing activities ( 2,990.6 ) ( 5,638.0 ) ( 3,651.0 )

Effect of exchange rate changes on cash and cash equivalents ( 14.2 ) ( 250.3 ) 86.2

20 unchanged sentences

Cumulative effect of adoption of new accounting guidance — — — ( 2.2 ) — ( 2.2 ) — ( 2.2 )

Net earnings/(loss) — — — 928.3 — 928.3 ( 3.6 ) 924.7

Net earnings — — — 4,199.3 — 4,199.3 1.0 4,200.3

Other comprehensive income — — — — 511.8 511.8 — 511.8

2 unchanged sentences

Sale of common stock 0.4 — 42.4 — — 42.4 — 42.4

Repurchase of common stock ( 20.3 ) — ( 126.4 ) ( 1,548.6 ) — ( 1,675.0 ) — ( 1,675.0 )

Cash dividends declared, $ 2.29 per share

— — — ( 2,697.2 ) — ( 2,697.2 ) — ( 2,697.2 )

Net distributions to noncontrolling interests — — — — — — 8.3 8.3

Balance, September 27, 2020 1,173.3 $ 1.2 $ 373.9 $ ( 7,815.6 ) $ ( 364.6 ) $ ( 7,805.1 ) $ 5.7 $ ( 7,799.4 )

Cumulative effect of adoption of new accounting guidance — — — ( 2.2 ) — ( 2.2 ) — ( 2.2 )

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 — — — 3,281.6 — 3,281.6 1.8 3,283.4

Other comprehensive income — — — — 511.8 511.8 — 511.8

Other comprehensive loss — — — — ( 610.4 ) ( 610.4 ) — ( 610.4 )

Stock-based compensation expense — — 275.5 — — 275.5 — 275.5

1 unchanged sentence

Sale of common stock 0.6 — 46.9 — — 46.9 — 46.9

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

Cash dividends declared, $ 2.00 per share

— — — ( 2,293.5 ) — ( 2,293.5 ) — ( 2,293.5 )

Noncontrolling interest resulting from divestiture — — — — — — ( 0.6 ) ( 0.6 )

Balance, October 2, 2022 1,147.9 $ 1.1 $ 205.3 $ ( 8,449.8 ) $ ( 463.2 ) $ ( 8,706.6 ) $ 7.9 $ ( 8,698.7 )

7 unchanged sentences

— — — ( 2,474.6 ) — ( 2,474.6 ) — ( 2,474.6 )

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

Purchase of noncontrolling interests and other — — ( 3.0 ) — ( 0.7 ) ( 3.7 ) ( 0.4 ) ( 4.1 )

Balance, October 1, 2023 1,142.6 $ 1.1 $ 38.1 $ ( 7,255.8 ) $ ( 778.2 ) $ ( 7,994.8 ) $ 7.0 $ ( 7,987.8 )

20 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fiscal Years ended October 2, 2022, October 3, 2021 and September 27, 2020

Fiscal Years ended October 1, 2023, October 2, 2022 and October 3, 2021

Summary of Significant Accounting Policies and Estimates

9 unchanged sentences

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

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

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

5 unchanged sentences

Additional details on the nature of our business and our reportable operating segments are included in Note 17 , Segment Reporting.

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

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

Principles of Consolidation

7 unchanged sentences

Preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.

Examples include, but are not limited to, estimates for inventory reserves, asset and goodwill impairments, assumptions underlying self-insurance reserves, income from unredeemed stored value cards, stock-based compensation forfeiture rates, future asset retirement obligations and the potential outcome of future tax consequences of events that have been recognized in the financial statements.

Actual results and outcomes may differ from these estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment due to the global COVID-19 pandemic.

Examples include, but are not limited to, estimates for inventory reserves, asset and goodwill impairments, assumptions underlying self-insurance reserves, income from unredeemed stored value cards, stock-based compensation forfeiture rates, future asset retirement obligations, commitments and contingencies, and the potential outcome of future tax consequences of events that have been recognized in the financial statements.

Actual results and outcomes may differ from these estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment.

Restructuring

1 unchanged sentence

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 $ 46.0 million to restructuring and impairments on our consolidated statements of earnings.

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 have provided additional convenience and connection with our customers.

As a result of the restructuring efforts in connection with the Reinvention Plan, we recorded approximately $ 22 million and $ 46 million to restructuring and impairments on our consolidated statements of earnings during fiscal years 2023 and 2022, respectively.

Future restructuring and impairment costs attributable to our Reinvention Plan are not expected to be material.

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.

During fiscal years 2021 and 2020, we recorded approximately $ 155.4 million and $ 254.7 million, respectively, to restructuring and impairments on our consolidated statements of earnings.

These totals included $ 53.1 million and $ 151.0 million, respectively, related to disposal and impairment of company-operated store assets and $ 89.5 million and $ 87.7 million, respectively, primarily associated with accelerated amortization of ROU lease assets and other lease costs due to 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 fiscal year ended October 2, 2022.

During fiscal 2021, we recorded approximately $ 155.4 million to restructuring and impairments on our consolidated statements of earnings.

This total included $ 53.1 million related to disposal and impairment of company-operated store assets and $ 89.5 million primarily associated with accelerated amortization of ROU lease assets and other lease costs due to store closures prior to the end of contractual lease terms.

As of October 1, 2023 and October 2, 2022, there were no material restructuring-related accrued liabilities on our consolidated balance sheets.

24 unchanged sentences

Marketable equity securities are recorded at fair value and approximates a portion of our liability under our Management Deferred Compensation Plan (“MDCP”).

Gains or losses from the portfolio and the change in our MDCP liability are recorded in our consolidated statements of earnings.

Gains or losses from the portfolio and the change in our MDCP liability are recorded in general and administrative expenses in our consolidated statements of earnings.

Refer to Note 4 , Fair Value Measurements, for further discussion of our MDCP liability.

Equity Investments

26 unchanged sentences

We record all derivatives on our consolidated balance sheets at fair value and typically do not offset derivative assets and liabilities.

Cash flows from derivative financial instruments and the related gains and losses are classified as cash flows from operating activities on the consolidated statements of cash flows.

Excluding interest rate hedging instruments, cross-currency swaps and foreign currency debt hedging instruments, we generally do not enter into derivative instruments with maturities longer than three years.

2 unchanged sentences

As of October 1, 2023 and October 2, 2022, cash collateral held under collateral security arrangements was $ 77.1 million and $ 74.3 million, respectively, and is included in other long-term liabilities on our consolidated balance sheets.

As of October 2, 2022, cash collateral pledged as part of our commodity derivative margin requirements was $ 75.6 million and is included in prepaid expenses and other current assets on our consolidated balance sheets.

As of October 3, 2021, cash collateral pledged as part of our commodity derivative margin requirements was $ 72.5 million and is included in cash and cash equivalents on our consolidated balance sheets.

As of October 1, 2023 and October 2, 2022, cash collateral pledged as part of our commodity derivative margin requirements was $ 20.6 million and $ 75.6 million, respectively, and is included in prepaid expenses and other current assets on our consolidated balance sheets.

The potential effects of netting arrangements with our derivative contracts, excluding the effects of collateral, would not have had a material impact on our consolidated balance sheets.

7 unchanged sentences

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 transactions are no longer likely to occur, the related accumulated derivative gains or losses are recognized in interest income and other, net on our consolidated statements of earnings based on the nature of the underlying transaction.

Net Investment Hedges

11 unchanged sentences

Receivables, net of Allowance for Credit Losses

Our receivables are mainly comprised of receivables for product and equipment sales to and royalties from our licensees, as well as receivables from our Global Coffee Alliance and other Channel Development customers.

Our receivables are mainly generated from product and equipment sales to and royalties from our licensees, as well as from our Global Coffee Alliance and other Channel Development customers.

The primary indicators of the credit quality of our receivables are aging, payment history, economic sector information and outside credit monitoring, and are assessed on a quarterly basis.

1 unchanged sentence

Our allowance for credit losses is calculated using a loss-rate method based on historical experience, current market conditions and reasonable forecasts.

We also assessed incremental risks due to COVID-19 on our licensees’ financial viability.

For the fiscal year ended October 1, 2023, we did not observe a significant deterioration of our receivable portfolio that required a significant increase in our allowance for credit losses.

10 unchanged sentences

For leases with renewal periods at our option, we generally use the original lease term, excluding renewal option periods, to determine estimated useful lives.

If failure to exercise a renewal option imposes an economic penalty to us, we may determine at the inception of the lease that renewal is reasonably assured and include the renewal option period in the determination of the appropriate estimated useful lives.

If failure to exercise a renewal option imposes a significant economic penalty to us, we may determine at the inception of the lease that renewal is reasonably assured and include the renewal option period in the determination of the appropriate estimated useful lives.

The portion of depreciation expense related to production and distribution facilities is included in product and distribution costs on our consolidated statements of earnings.

The costs of repairs and maintenance are expensed when incurred, while expenditures for refurbishments and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized.

When assets are disposed of, whether through retirement or sale, the net gain or loss is recognized in

net earnings.

When assets are disposed of, whether through retirement or sale, the net gain or loss is recognized in net earnings.

Long-lived assets to be disposed of are reported at the lower of their carrying amount or fair value less estimated costs to sell.

6 unchanged sentences

We recognized net disposition and impairment charges of $ 91.1 million, $ 66.6 million and $ 153.1 million in fiscal 2023, 2022 and 2021, respectively.

Of the total net disposition and impairment charges, $ 9.6 million, $ 53.1 million and $ 151.0 million in fiscal 2022, 2021 and 2020, respectively, were restructuring related and recorded in restructuring and impairment expenses.

For fiscal 2022, 2021 and 2020, we evaluated COVID-19 business recovery trends and their estimated impacts on future revenue growth and profitability for assessing impairment of our company-operated retail store and related operating lease ROU assets.

As a result, we recorded $ 14.3 million, $ 44.4 million and $ 59.6 million of impairment losses within store operating expenses on our consolidated statements of earnings during the fiscal years ended October 2, 2022, October 3, 2021 and September 27, 2020, respectively.

We recorded $ 23.2 million, $ 14.3 million and $ 44.4 million of impairment losses within store operating expenses on our consolidated statements of earnings during the fiscal years ended October 1, 2023, October 2, 2022 and October 3, 2021, respectively.

Of the total net disposition and impairment charges recorded in fiscal 2022 and 2021, $ 9.6 million and $ 53.1 million, respectively, were restructuring related and recorded in restructuring and impairment expenses.

Unless it is restructuring related, the nature of the underlying asset that is impaired or disposed of will determine the operating expense line on which the related impact is recorded on our consolidated statements of earnings.

11 unchanged sentences

therefore, fixed CAM is also included in our lease liability.

We cannot determine the interest rate implicit in each of our leases.

Therefore, we use market and term-specific incremental borrowing rates.

We generally cannot determine the interest rate implicit in each of our leases.

Therefore, we typically use market and term-specific incremental borrowing rates.

Our incremental borrowing rate for a lease is the rate of interest we expect to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

8 unchanged sentences

The ROU asset is measured at the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, initial direct costs and any tenant improvement allowances received.

For operating leases, ROU assets are reduced over the lease term by the recognized straight-line lease expense less the amount of accretion of the lease liability

determined using the effective interest method.

For operating leases, ROU assets are reduced over the lease term by the recognized straight-line lease expense less the amount of accretion of the lease liability determined using the effective interest method.

For finance leases, ROU assets are amortized on a straight-line basis over the shorter of the useful life of the leased asset or the lease term.

2 unchanged sentences

Additionally, we monitor for events or changes in circumstances that may require a reassessment of one of our leases and determine if a remeasurement is required.

During fiscal 2022 and fiscal 2021, the COVID-19-related rent concessions we received for stores, primarily in our International segment, were immaterial.

During fiscal 2020, we received $ 27.6 million of COVID-19-related rent concessions for stores in our International segment generally correlating with the temporary period our stores were closed.

Consistent with updated guidance from the Financial Accounting Standards Board (“FASB”) in April 2020, we elected to treat COVID-19-related rent concessions as variable rent.

Rent concessions were recognized as an offset to our rent expense within store operating expenses on our consolidated statement of earnings.

See Note 10 , Leases, for additional details.

Additionally, for the fiscal years ended October 3, 2021 and September 27, 2020, we recognized accelerated amortization of ROU lease assets and other lease costs of $ 89.5 million and $ 87.7 million, respectively, due to planned store closures prior to the end of contractual lease terms, which were recorded in restructuring and impairments on the consolidated statement of earnings.

In fiscal 2021, we substantially completed our plan to optimize our North America store portfolio and we did not recognize any material restructuring and impairment amounts related to this plan during the fiscal year ended October 2, 2022.

For the fiscal year ended October 3, 2021, we recognized accelerated amortization of ROU lease assets and other lease costs of $ 89.5 million, due to planned store closures prior to the end of contractual lease terms, which were recorded in restructuring and impairments on the consolidated statement of earnings.

In fiscal 2021, we substantially completed our plan to optimize our North America store portfolio, and we did not recognize any material restructuring and impairment amounts related to this plan during fiscal 2023 and fiscal 2022.

We evaluate goodwill for impairment annually during our third fiscal quarter, or more frequently if an event occurs or circumstances change, such as material deterioration in performance or a significant number of store closures, that would indicate that impairment may exist.

21 unchanged sentences

In addition, we continuously monitor and may revise our intangible asset useful lives if and when facts and circumstances change.

There were no significant other intangible asset impairment charges recorded during fiscal 2022 and fiscal 2021.

We recorded other intangible asset impairment charges of $ 22.1 million during fiscal 2020.

There were no significant other intangible asset impairment charges recorded during fiscal years 2023, 2022 and 2021.

See Note 8 , Other Intangible Assets and Goodwill, for further information.

4 unchanged sentences

Consolidated revenues are presented net of intercompany eliminations for wholly-owned subsidiaries and investees controlled by us and for product sales to and royalty and other fees from licensees accounted for under the equity method.

Additionally, consolidated revenues are recognized net of any discounts, returns, allowances and sales incentives, including coupon redemptions and rebates.

Additionally,

consolidated revenues are recognized net of any discounts, returns, allowances and sales incentives, including coupon redemptions and rebates.

Company-operated Store Revenues

Company-operated store revenues are recognized when payment is tendered at the point-of-sale as the performance obligation has been satisfied.

For products sold via delivery platforms, revenues are also recognized when control of products are transferred to the customers.

Delivery service fees are immaterial in the periods presented.

For products sold via delivery platforms, contractual terms are evaluated for each service provider to determine gross versus net presentation and revenues are also recognized when control of products are transferred to the customers.

Delivery service fees were immaterial in the periods presented.

Company-operated store revenues are reported excluding sales, use or other transaction taxes that are collected from customers and remitted to taxing authorities.

15 unchanged sentences

Breakage is recognized as company-operated stores and licensed stores revenue within the consolidated statement of earnings.

For the fiscal years ended October 2, 2022, October 3, 2021 and September 27, 2020, we recognized breakage revenue of $ 196.0 million, $ 164.5 million and $ 130.3 million in company-operated store revenues, respectively, and $ 16.7 million, $ 16.6 million and $ 14.3 million in licensed store revenues, respectively.

For the fiscal years ended October 1, 2023, October 2, 2022 and October 3, 2021, we recognized breakage revenue of $ 196.1 million, $ 196.0 million and $ 164.5 million in company-operated store revenues, respectively, and $ 18.9 million, $ 16.7 million and $ 16.6 million in licensed store revenues, respectively.

Loyalty Program

Customers in the U.S., Canada and certain other countries who register their Starbucks Card are automatically enrolled in the Starbucks Rewards program, which is primarily a spend-based loyalty program.

They earn loyalty points (“Stars”) in a variety of ways, including with each purchase at participating Starbucks stores and when making purchases with the Starbucks-branded credit cards.

Starbucks Rewards members can earn Stars by paying with cash, credit or debit cards, or selected mobile wallets at company-operated stores in the U.S.

They earn loyalty points (“Stars”) in a variety of ways, including with each purchase at participating Starbucks stores.

Starbucks Rewards members can earn Stars by paying with cash, credit or debit cards, or selected mobile wallets at company-operated and certain participating licensed stores in the U.S.

After accumulating a certain number of Stars, the customer earns a reward that can be redeemed for free product that, regardless of where the related Stars were earned within that country, will be honored at company-operated stores and certain participating licensed store locations in that same country.

We defer revenue associated with the estimated selling price of Stars earned by Starbucks Rewards members towards free product as each Star is earned and a corresponding liability is established in deferred revenue.

We defer revenue associated with the estimated selling price of Stars earned by Starbucks Rewards members towards free products as each Star is earned and a corresponding liability is established in deferred revenue.

This deferral is based on the estimated value of the product for which the reward is expected to be redeemed, net of estimated unredeemed Stars.

12 unchanged sentences

Product and Distribution Costs

Product and distribution costs primarily consist of raw materials, purchased goods and packaging costs as well as operational costs of our supply chain organization, such as wages and benefits, occupancy costs and depreciation expenses, in support of sourcing, procuring, manufacturing, warehousing and transportation activities of products sold at our company-operated and licensed stores as well as through Channel Development and our other businesses.

Product and distribution costs primarily consist of raw materials, purchased goods, packaging costs and delivery-related expenses as well as operational costs of our supply chain organization, such as wages and benefits, occupancy costs and depreciation expenses, in support of sourcing, procuring, manufacturing, warehousing and transportation activities of products sold at our company-operated and licensed stores as well as through Channel Development and our other businesses.

Also included are inventory and supply chain asset impairment costs.

Store Operating Expenses

Store operating expenses consist of costs incurred in our company-operated stores, primarily wages and benefits related to store partners (employees), occupancy costs and other costs that directly support the operation and sales-related activities of those stores.

Store operating expenses consist of costs incurred in our company-operated stores, primarily wages and benefits related to store partners (employees), occupancy costs, delivery commissions and other costs that directly support the operation and sales-related activities of those stores.

General and Administrative Expenses

4 unchanged sentences

On March 27, 2020, the U.S.

government enacted the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), which among other things, provides employer payroll tax credits for wages paid to employees who are unable to work during the COVID-19 pandemic and options to defer payroll tax payments for a limited period.

Based on our evaluation of the CARES Act, we qualify for certain employer payroll tax credits as well as the deferral of payroll tax payments in the future.

government enacted the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), which among other things, provided employer payroll tax credits for wages paid to employees who are unable to work during the COVID-19 pandemic and options to defer payroll tax payments for a limited period.

Based on our evaluation of the CARES Act, we qualified for certain employer payroll tax credits as well as the deferral of payroll tax payments in the future.

Additionally, the Canadian government enacted the Canada Emergency Wage Subsidy (“CEWS”) to help employers offset a portion of their employee wages for a limited period.

1 unchanged sentence

The CARES Act and CEWS were no longer applicable to us in late fiscal 2021.

The qualified payroll credits reduced our store operating expenses by $ 210.0 million and $ 349.6 million on our consolidated statement of earnings during fiscal 2021 and 2020, respectively.

The qualified payroll credits reduced our store operating expenses by $ 210.0 million on our consolidated statement of earnings during fiscal 2021.

After netting the qualified credits against our payable, a receivable balance of $ 15.6 million and $ 69.4 million was included in prepaid expenses and other current assets as of October 1, 2023 and October 2, 2022, respectively.

As of October 1, 2023, the deferred payroll tax payments have been remitted in full.

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

As of October 3, 2021, deferred payroll tax payments of $ 116.4 million were included in both accrued liabilities and other long-term liabilities, respectively, on our consolidated balance sheets.

Store Preopening Expenses

6 unchanged sentences

The capitalized asset is depreciated using the same depreciation convention as leasehold improvement assets.

Upon satisfaction of the ARO conditions, any difference between the recorded ARO liability and the actual retirement costs incurred is recognized as a gain or loss in store operating expense on our consolidated statements of earnings.

As of October 1, 2023 and October 2, 2022, our net ARO assets included in property, plant and equipment were $ 25.6 million and $ 26.1 million, respectively, and our net ARO liabilities included in other long-term liabilities were $ 110.3 million and $ 104.7 million, respectively.

28 unchanged sentences

For uncertain tax positions that do not meet this threshold, we record a related liability.

We adjust our unrecognized tax benefit liability and income tax expense in the period in which the uncertain tax position is effectively settled, the statute of limitations expires for the relevant taxing authority to examine the tax position or when new information becomes available.

We adjust our unrecognized tax benefit liability and income tax expense in the

period in which the uncertain tax position is effectively settled, the statute of limitations expires for the relevant taxing authority to examine the tax position or when new information becomes available.

Starbucks recognizes interest and penalties related to income tax matters in income tax expense on our consolidated statements of earnings.

16 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 to our financial statements.

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

In June 2016, the FASB issued guidance replacing the incurred loss impairment methodology with a new methodology that reflects current expected credit losses on financial assets, including receivables and available-for-sale securities.

2 unchanged sentences

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.

7 unchanged sentences

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, including forward-starting interest rate swaps and treasury locks, settled in cash based upon the difference between an agreed-upon benchmark rate and the prevailing benchmark rate at settlement.

We enter into interest rate swap agreements, including forward-starting interest rate swaps and

treasury locks, settled in cash based upon the difference between an agreed-upon benchmark rate and the prevailing benchmark rate at settlement.

These agreements are generally settled around the time of the pricing of the related debt.

8 unchanged sentences

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.

Gains and losses from these derivatives representing hedged components excluded from the assessment of effectiveness are amortized over the life of the hedging instrument using a systematic and rational method and recognized in interest expense.

Foreign currency forward and swap contracts not designated as hedging instruments are used to mitigate the foreign exchange risk of certain other balance sheet items.

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

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

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

Depending on market conditions, we may enter into coffee forward contracts, futures contracts and collars to hedge anticipated cash flows under our price-to-be-fixed green coffee contracts, which are described further in Note 5 , Inventories, or our longer-dated forecasted coffee demand where underlying fixed price and price-to-be-fixed contracts are not yet available.

5 unchanged sentences

For de-designated cash flow hedges in which the underlying transactions are no longer probable of occurring, the related accumulated derivative gains or losses are recognized in interest income and other, net on our consolidated statements of earnings.

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 fiscal year ended October 2, 2022 and October 3, 2021.

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

27 unchanged sentences

Dairy ( 11.1 ) 3.6 0.5 ( 12.3 ) 6.5 1.7 Product and distribution costs

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

Foreign currency - other 9.4 103.9 ( 10.0 ) 23.6 22.0 1.8 Licensed stores revenues

4 unchanged sentences

Net Investment Hedges:

Cross-currency swaps 53.5 20.5 56.8 14.3 13.4 13.3 Interest expense

Cross-currency swaps (1)

54.1 53.5 20.5 27.4 14.3 13.4 Interest expense

Foreign currency debt 19.1 175.5 42.6 — — —

(1) As a result of the global COVID-19 impacts, we discontinued certain cash flow hedges during the fiscal year ended September 27, 2020.

(1) Gains and losses recognized in earnings relate to components excluded from the assessment of effectiveness.

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 ):

1 unchanged sentence

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

Oct 2, 2022 Oct 3, 2021 Sep 27, 2020

Oct 1, 2023 Oct 2, 2022 Oct 3, 2021

Non-Designated Derivatives:

17 unchanged sentences

Designated Derivative Instruments:

Coffee Prepaid expenses and other current assets $ — $ 130.5

Cross-currency swaps Other long-term assets $ 130.1 $ 115.4

2 unchanged sentences

Other long-term assets 22.9 33.5

Interest rate swap Other long-term assets — 22.7

Interest rate swap

Prepaid expenses and other current assets

Non-designated Derivative Instruments:

5 unchanged sentences

Designated Derivative Instruments:

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

Dairy Accrued liabilities $ 1.1 $ 2.9

Foreign currency - other Accrued liabilities 2.0 0.3

Other long-term liabilities — 3.6

Interest rates Accrued liabilities 12.0 —

Interest rate swaps

Accrued liabilities — 12.0

Other long-term liabilities 41.4 34.0

Interest rate swap Other long-term liabilities 34.0 —

Non-designated Derivative Instruments:

Dairy Accrued liabilities — 0.2

Foreign currency Accrued liabilities 0.5 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:

Other long-term liabilities 1.8 —

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

2 unchanged sentences

Long-term debt (1)

$ 1,060 $ 1,047.7 $ ( 40.0 ) $ ( 52.3 )

(1) Includes $750 million in Senior Notes that matured on October 1, 2023 but remained in current portion of long-term debt on the consolidated balance sheet as the debt repayment was not made until the first day of fiscal 2024.

Additional disclosures related to cash flow gains and losses included in AOCI, as well as subsequent reclassifications to earnings, are included in Note 12 , Equity .

11 unchanged sentences

government treasury securities 2.8 2.8 — —

Foreign government obligations 3.9 — 3.9 —

Total available-for-sale debt securities 70.7 2.8 67.9 —

7 unchanged sentences

Corporate debt securities 91.1 — 91.1 —

Foreign government obligations 3.8 — 3.8 —

Mortgage and other asset-backed securities 50.2 — 50.2 —

20 unchanged sentences

Available-for-sale debt securities

Commercial paper 63.0 — 63.0 —

Corporate debt securities 22.4 — 22.4 —

Mortgage and other asset-backed securities 0.1 — 0.1 —

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 — —

4 unchanged sentences

Available-for-sale debt securities

Auction rate securities 6.0 — — 6.0

Corporate debt securities 134.7 — 134.7 —

16 unchanged sentences

Long-term in vestments generally mature within 5 years .

Proceeds from sales of securities were $ 72.6 million , $ 134.1 million and $ 177.4 million for fiscal 2022, 2021 and 2020, respectively.

Proceeds from sales of securities we re $ 2.5 million, $ 72.6 million and $ 134.1 million for fiscal 2023, 2022 and 2021, respectively.

Realized gains and losses were not material f or fiscal 2023, 2022 and 2021.

5 unchanged sentences

The changes in net unrealized holding gains and losses in the marketable equity securities portfolio included in earnings for fiscal 2023, 2022 and 2021 were not material.

Gross unrealized holding gains and losses on marketable equity securities were not material a s of October 2, 2022 and October 3, 2021.

Gross unrealized holding gains and losses on marketable equity securities were not material as of October 1, 2023 and October 2, 2022 .

Derivative Assets and Liabilities

Derivative assets and liabilities include foreign currency forward contracts, commodity futures contracts, collars and swaps, which are described further in Note 3 , Derivative Financial Instruments.

Derivative assets and liabilities are described further in Note 3 , Derivative Financial Instruments.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities recognized or disclosed at fair value on a nonrecurring basis include items such as property, plant and equipment, goodwill and other intangible assets, equity and other investments and other assets.

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, equity and other investments and other assets.

These assets are measured at fair value if determined to be impaired.

Impairment of property, plant and equipment and ROU assets is included in Note 1 , Summary of Significant Accounting Policies and Estimates.

We recognized impairments during fiscal years ended October 2, 2022, October 3, 2021 and September 27, 2020.

Impairments recognized in fiscal years ended October 3, 2021 and September 27, 2020 were primarily related to our restructuring plan.

See Note 1 , Summary of Significant Accounting Policies and Estimates, Note 8 , Other Intangible Assets and Goodwill and Note 10 , Leases for additional discussion of these impairments.

We recognized impairments during fiscal years ended October 1, 2023, October 2, 2022 and October 3, 2021.

Impairments recognized in the fiscal year ended October 3, 2021 were primarily related to our restructuring plan.

See Note 1 , Summary of Significant Accounting Policies and Estimates and Note 10 , Leases for additional discussion of these impairments.

Fair Value of Other Financial Instruments

10 unchanged sentences

As of October 1, 2023, we had committed to purchasing green coffee totaling $ 412 million under fixed-price contracts and an estimated $ 577 million under price-to-be-fixed contracts.

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

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.

3 unchanged sentences

Until prices are fixed, we estimate the total cost of these purchase commitments.

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

During the fiscal years ended October 2, 2022 and October 3, 2021, we did not record significant write-offs related to the COVID-19 pandemic.

During fiscal 2020, we wrote off approximately $ 50 million of inventory that was expiring or expected to expire due to COVID-19 pandemic related store closures, primarily perishable food and beverage ingredients located at our stores, distribution centers and suppliers.

This was included in product and distribution costs on our consolidated statement of earnings.

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

Equity Investments (in millions)

5 unchanged sentences

As of October 1, 2023, we had a 50 % ownership interest in Tata Starbucks Limited (India), which operates licensed Starbucks ® retail stores.

Prior to its divestiture in September 2021, we had a 50 % ownership interest in Starbucks Coffee Korea Co., Ltd.

Additional disclosure regarding changes in our equity method investments due to acquisition or divestiture is included in Note 2 , Acquisitions, Divestitures and Strategic Alliance.

We also license the rights to produce and distribute Starbucks-branded products to our 50 % owned joint venture, The North American Coffee Partnership with the Pepsi-Cola Company, which develops and distributes bottled Starbucks ® beverages, including Frappuccino coffee drinks, Starbucks Doubleshot espresso drinks, Starbucks ® Iced Espresso Classics and Starbucks ® Iced Coffee.

including Frappuccino coffee drinks, Starbucks Doubleshot espresso drinks, Starbucks ® Iced Espresso Classics and Starbucks ® Iced Coffee.

Our share of income and losses from our equity method investments is included in income from equity investees on our consolidated statements of earnings.

3 unchanged sentences

As of October 1, 2023 and October 2, 2022, there were $ 19.1 million and $ 14.8 million of accounts receivable from equity investees, respectively, on our consolidated balance sheets, primarily related to product sales and royalty revenues.

Additionally, we hold equity interests in other entities to support our corporate and investment strategies.

We also hold equity interests in other entities to support our corporate and investment strategies, including our limited partnership interest in Valor Siren Ventures I L.P.

and Valor Siren Ventures II L.P, which are private equity funds investing in technologies, products and solutions relating to food or retail.

The related financial statements activities were not material during the periods presented.

Additional disclosure regarding changes in our equity method investments due to acquisition or divestiture is included in Note 2 , Acquisitions, Divestitures and Strategic Alliance.

Other Investments

3 unchanged sentences

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

Prepaid Expenses and Other Current Assets

Oct 2, 2022 Oct 3, 2021

Income tax receivable $ 27.7 $ 20.7

Government subsidies receivable 69.4 172.4

Other prepaid expenses and current assets 386.6 401.5

Total prepaid expenses and current assets $ 483.7 $ 594.6

Property, Plant and Equipment, net

15 unchanged sentences

Accrued capital and other operating expenditures 771.7 878.1

Self-insurance reserves 232.3 229.3

Insurance reserves

Income taxes payable 189.3 139.2

2 unchanged sentences

Store Operating Expenses

Oct 2, 2022 Oct 3, 2021 Sep 27, 2020

Oct 1, 2023 Oct 2, 2022 Oct 3, 2021

Wages and benefits $ 8,733.4 $ 8,157.7 $ 6,989.3

16 unchanged sentences

Amortization expense for finite-lived intangible assets was $ 21.5 million, $ 192.7 million and $ 223.4 million during fiscal 2023, 2022 and 2021, respectively.

Our fiscal 2022 and 2021 analyses indicated excess fair values over carrying values for these assets, and therefore no impairment charge was recorded during these years.

During the fiscal year ended September 27, 2020, we recorded a charge of $ 22.1 million to restructuring and impairments on our consolidated statement of earnings as the analysis indicated the carrying value of one of the assets exceeded its fair value.

Estimated future amortization expense as of October 1, 2023 ( in millions ):

5 unchanged sentences

Development Corporate and Other Total

Goodwill balance at September 27, 2020 $ 491.8 $ 3,069.7 $ 34.7 $ 1.0 $ 3,597.2

Goodwill balance at October 3, 2021 $ 493.2 $ 3,148.3 $ 34.7 $ 1.1 $ 3,677.3

( 2.1 ) ( 391.6 ) — ( 0.1 ) ( 393.8 )

6 unchanged sentences

Revolving Credit Facility

Our $ 3.0 billion unsecured 5-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 .

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

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, which was most recently amended in April 2023, 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 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” of interest is the highest of (i) the Federal Funds Rate plus 0.500 %, (ii) Bank of America’s prime rate, and (iii) the Eurocurrency Rate (as defined in the credit facility) plus 1.000 %.

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 October 1, 2023, we were in compliance with all applicable covenants.

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

No amounts were outstanding under our 2021 credit facility as of October 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 credit facility discussed above.

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 October 2, 2022, we had $ 175.0 million in borrowings outstanding under the program.

As of October 3, 2021, we had no borrowings outstanding under this program.

As of October 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 $34.6 million, facility is currently set to mature on December 31, 2022 .

Borrowings under the credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on TIBOR plus an applicable margin of 0.400 %.

• A ¥ 10 billion, or $69.2 million, facility is currently set to mature on March 27, 2023 .

Borrowings under the credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on TIBOR plus 0.350 %.

As of October 2, 2022 and October 3, 2021, we had no borrowings outstanding under these Japanese yen-denominated credit facilities.

• A ¥ 5 billion, or $33.5 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 $67.0 million, credit facility is currently set to mature on March 27, 2024 .

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 October 1, 2023 we had ¥ 5 billion, or $ 33.5 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 fair values by calendar maturity ( in millions, except interest rates):

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

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

Issuance Face Value Estimated Fair Value Face Value Estimated Fair Value

May 2022 notes — — 500.0 503.1 1.300 % 1.334 %

June 2022 notes — — 500.0 506.7 2.700 % 2.819 %

March 2023 notes $ — $ — $ 1,000.0 $ 996.5 3.100 % 3.107 %

6 unchanged sentences

August 2025 notes 1,250.0 1,210.5 1,250.0 1,209.6 3.800 % 3.721 %

February 2026 notes 1,000.0 985.5 — — 4.750 % 4.788 %

June 2026 notes 500.0 463.5 500.0 458.3 2.450 % 2.511 %

7 unchanged sentences

February 2032 notes 1,000.0 828.0 1,000.0 827.1 3.000 % 3.155 %

February 2033 notes 500.0 470.7 — — 4.800 % 3.798 %

June 2045 notes 350.0 275.3 350.0 281.5 4.300 % 4.348 %

16 unchanged sentences

Fiscal Year Total

2023 $ 1,750.0

Thereafter 9,850.0

Total $ 15,519.3

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

During the fiscal years ended October 3, 2021 and September 27, 2020, we recognized accelerated amortization of ROU lease assets and other lease costs of $ 89.5 million and $ 87.7 million, respectively, which were recognized within restructuring and impairments on the consolidated statements of earnings.

We did not recognize any material restructuring and impairment amounts related to this plan during the fiscal year ended October 2, 2022.

During the fiscal year ended October 3, 2021, we recognized accelerated amortization of ROU lease assets and other lease costs of $ 89.5 million, which were recognized within restructuring and impairments on the consolidated statements of earnings.

We did not recognize any material restructuring and impairment amounts related to this plan during the fiscal years ended October 1, 2023 and October 2, 2022.

The components of lease costs (in millions) :

Oct 2, 2022 Oct 3, 2021 Sep 27, 2020

Oct 1, 2023 Oct 2, 2022 Oct 3, 2021

Operating lease costs (1)

5 unchanged sentences

The following table includes supplemental information (in millions) :

Oct 2, 2022 Oct 3, 2021 Sep 27, 2020

Oct 1, 2023 Oct 2, 2022 Oct 3, 2021

Cash paid related to operating lease liabilities $ 1,657.2 $ 1,647.3 $ 1,707.1

1 unchanged sentence

1,893.4 1,639.4 1,590.3

(1) Excludes the initial impact of adoption during the fiscal year ended September 27, 2020.

Oct 2, 2022 Oct 3, 2021 Sep 27, 2020

Oct 1, 2023 Oct 2, 2022 Oct 3, 2021

Weighted-average remaining operating lease term 8.5 years 8.5 years 8.7 years

Weighted-average operating lease discount rate 3.1 % 2.6 % 2.5 %

Finance lease assets are recorded in property, plant and equipment, net with the corresponding lease liabilities included in accrued liabilities on the consolidated balance sheet.

Finance leases were immaterial as of October 2, 2022, October 3, 2021 and September 27, 2020.

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.

Finance leases were not material as of October 1, 2023, October 2, 2022 and October 3, 2021.

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

8 unchanged sentences

Deferred Revenue

In the fourth quarter of fiscal 2018, we licensed the rights to sell and market our products in authorized channels through the Global Coffee Alliance and received an up-front prepaid royalty from Nestlé.

During fiscal 2018, we licensed the rights to sell and market our products in authorized channels through the Global Coffee Alliance and received an up-front prepaid royalty from Nestlé.

The up-front payment of approximately $ 7 billion was recorded as deferred revenue as we have continuing performance obligations to support the Global Coffee Alliance, including providing Nestlé access to certain intellectual properties and products for future resale.

2 unchanged sentences

Therefore, a ratable recognition pattern is reflective of how we will satisfy our performance obligations.

At 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.

At 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 the fiscal years ended October 2, 2022, October 3, 2021 and September 27, 2020, we recognized $ 176.5 million, $ 176.6 million and $ 176.8 million of current deferred revenue, respectively, related to amortization of the up-front payment.

As of October 1, 2023, the current and long-term deferred revenue related to the Nestlé up-front payment was $ 177.0 million and $ 6.0 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 fiscal years ended October 1, 2023, October 2, 2022 and October 3, 2021, we recognized $ 176.5 million, $ 176.5 million and $ 176.6 million of prepaid royalty revenue, respectively, related to Nestlé.

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

5 unchanged sentences

Fiscal Year Ended October 2, 2022

Stored value cards and loyalty program at September 27, 2020

Stored value cards and loyalty program at October 3, 2021

Revenue deferred - card activations, card reloads and Stars earned 13,464.7

5 unchanged sentences

In addition to 2.4 billion shares of authorized common stock with $ 0.001 par value per share, we have authorized 7.5 million shares of preferred stock, none of which was outstanding at October 1, 2023.

Through open market transactions under our share repurchase program, we repurchased 20.3 million shares of common stock for $ 1.7 billion during the fiscal year ended September 27, 2020.

During the second fiscal quarter of 2020, our Board authorized the repurchase of up to an additional 40 million shares under our ongoing share repurchase program.

We temporarily suspended our share repurchase program in March 2020 upon the onset of the COVID-19 pandemic, and did not make any share repurchases in fiscal 2021.

Due to our business recovery and restoration of certain leverage metrics, we resumed our share repurchase program in the first quarter of fiscal 2022 and repurchased 36.3 million shares of common stock for $ 4.0 billion on the open market during the fiscal year ended October 2, 2022.

During the first quarter of fiscal 2022, we resumed our share repurchase program which was temporarily suspended in March 2020 upon the onset of the COVID-19 pandemic.

During the fiscal year ended October 2, 2022, we repurchased 36.3 million shares of common stock for $ 4.0 billion on the open market.

On March 15, 2022, we announced that our Board authorized the repurchase of up to an additional 40 million shares under our ongoing share repurchase program.

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

During the first quarter of fiscal 2023, we resumed our share repurchase program.

During the fiscal year ended October 1, 2023, we repurchased 10.0 million shares of common stock for $ 1.0 billion on the open market.

As of October 1, 2023, 42.6 million shares remained available for repurchase under current authorizations.

We have resumed our share repurchase program in the first quarter of fiscal 2023.

During the fourth quarter of fiscal 2023, our Board declared a quarterly cash dividend to shareholders of $ 0.57 per share to be paid on November 24, 2023 to shareholders of record as of the close of business on November 10, 2023.

3 unchanged sentences

Accumulated other comprehensive income reported on our consolidated balance sheets consists of foreign currency translation adjustments and other items and the unrealized gains and losses, net of applicable taxes, on available-for-sale debt securities and on derivative instruments designated and qualifying as cash flow and net investment hedges.

Changes in AOCI by component for the fiscal years ended October 2, 2022, October 3, 2021 and September 27, 2020, net of tax, are as follows:

Changes in AOCI by component for the fiscal years ended October 1, 2023, October 2, 2022 and October 3, 2021, net of tax, are as follows:

(in millions) Available-for-Sale Securities Cash Flow Hedges Net Investment Hedges Translation Adjustment and Other Total

4 unchanged sentences

Other comprehensive income/(loss) attributable to Starbucks 3.2 ( 246.5 ) 34.2 ( 105.2 ) ( 314.3 )

Other comprehensive income/(loss) attributable to NCI — — — ( 0.7 ) ( 0.7 )

Net gains/(losses) in AOCI, end of period $ ( 12.3 ) $ ( 47.5 ) $ 243.3 $ ( 961.7 ) $ ( 778.2 )

7 unchanged sentences

(in millions) Available-for-Sale Securities Cash Flow Hedges Net Investment Hedges Translation Adjustment and Other Total

September 27, 2020

October 3, 2021

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

2 unchanged sentences

Other comprehensive income/(loss) attributable to Starbucks ( 4.2 ) 240.4 37.1 238.5 511.8

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

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

2 unchanged sentences

the Statements of Earnings

Oct 2, 2022 Oct 3, 2021 Sep 27, 2020

Oct 1, 2023 Oct 2, 2022 Oct 3, 2021

Gains/(losses) on available-for-sale securities $ ( 0.7 ) $ ( 0.4 ) $ 1.8 Interest income and other, net

3 unchanged sentences

Korea — — ( 58.9 ) Net gain resulting from divestiture of certain operations

Other ( 1.3 ) — — Interest income and other, net

158.9 210.5 ( 41.8 ) Total before tax

1 unchanged sentence

$ 132.8 $ 176.3 $ ( 36.8 ) Net of tax

(1) Release of cumulative translation adjustments and other activities to earnings upon sale or liquidation of foreign businesses.

(1) Release of cumulative translation adjustments and other activities to earnings upon sale, liquidation, or dissolution of foreign businesses.

Employee Stock and Benefit Plans

4 unchanged sentences

Stock-based compensation expense recognized in the consolidated financial statements (in millions) :

Fiscal Year Ended Oct 2, 2022 Oct 3, 2021 Sep 27, 2020

Fiscal Year Ended Oct 1, 2023 Oct 2, 2022 Oct 3, 2021

RSUs $ 302.6 $ 271.8 $ 316.9

21 unchanged sentences

We may provide stock options as a form of employee compensation, which are primarily time-vested.

Stock options have not been broadly used as part of our compensation strategy in recent years.

The majority of time-vested options become exercisable in four equal installments beginning a year from the grant date and generally expire 10 years from the grant date.

1 unchanged sentence

All outstanding stock options are non-qualified stock options.

No stock options were granted during the fiscal year ended October 2, 2022.

The fair value of stock option awards was estimated at the grant date with the following weighted average assumptions for fiscal 2022, 2021 and 2020:

No stock options were granted during the fiscal years ended October 1, 2023 and October 2, 2022.

The fair value of stock option awards was estimated at the grant date with the following weighted average assumptions for fiscal 2021:

Stock Options

22 unchanged sentences

Exercisable, October 1, 2023 2.0 55.16 2.3 72

Vested and expected to vest, October 2, 2022 4.1 55.86 3.6 117

Vested, October 1, 2023 2.0 55.16 2.3 72

The aggregate intrinsic value in the table above, which is the amount by which the market value of the underlying stock exceeded the exercise price of outstanding options, is before applicable income taxes and represents the amount optionees would have realized if all in-the-money options had been exercised on the last business day of the period indicated.

As of October 2, 2022, there was immaterial unrecognized stock-based compensation expense, net of estimated forfeitures, related to nonvested options.

As of October 1, 2023, all options outstanding were vested and exercisable.

No options vested during fiscal 2023.

The total fair value of options vested was $ 8 million and $ 14 million during fiscal 2022 and 2021, respectively.

The total intrinsic value of options exercised was $ 98 million, $ 57 million and $ 219 million during fiscal 2023, 2022 and 2021, respectively.

The total fair value of options vested was $ 8 million, $ 14 million and $ 25 million during fiscal 2022, 2021 and 2020, respectively.

Our ESPP allows eligible employees to contribute up to 10 % of their base earnings toward the quarterly purchase of our common stock, subject to an annual maximum dollar amount.

10 unchanged sentences

Components of earnings before income taxes (in millions):

Fiscal Year Ended Oct 2, 2022 Oct 3, 2021 Sep 27, 2020

Fiscal Year Ended Oct 1, 2023 Oct 2, 2022 Oct 3, 2021

United States $ 4,488.6 $ 3,484.9 $ 4,138.5

2 unchanged sentences

Provision/(benefit) for income taxes (in millions):

Fiscal Year Ended Oct 2, 2022 Oct 3, 2021 Sep 27, 2020

Fiscal Year Ended Oct 1, 2023 Oct 2, 2022 Oct 3, 2021

Current taxes:

11 unchanged sentences

federal income tax rate with our effective income tax rate:

Fiscal Year Ended Oct 2, 2022 Oct 3, 2021 Sep 27, 2020

Fiscal Year Ended Oct 1, 2023 Oct 2, 2022 Oct 3, 2021

Statutory rate 21.0 % 21.0 % 21.0 %

1 unchanged sentence

Foreign rate differential 0.4 0.3 0.5

Foreign derived intangible income ( 0.8 ) ( 0.5 ) ( 1.4 )

Valuation allowances ( 0.7 ) 0.2 10.0

Excess tax benefits of stock-based compensation ( 0.5 ) ( 0.9 ) ( 4.2 )

Charitable contributions ( 0.3 ) ( 0.4 ) ( 1.7 )

Change in tax rates 0.0 0.0 ( 1.3 )

22 unchanged sentences

The valuation allowances as of October 1, 2023 and October 2, 2022 were primarily related to net operating losses and other deferred tax assets of consolidated foreign subsidiaries.

As of October 2, 2022, we had federal net operating loss carryforwards of $ 70.8 million which have an indefinite carryforward period, state net operating loss carryforwards of $ 78.6 million which will begin to expire in fiscal 2024, federal tax credit carryforwards of $ 31.8 million which will begin to expire in fiscal 2030, state tax credit carryforwards of $ 1.4 million which will begin to expire in fiscal 2024 and foreign net operating loss carryforwards of $ 369.1 million, of which $ 102.0 million have an indefinite carryforward period and the remainder expire at various dates starting from fiscal 2023.

As of October 1, 2023, we had federal net operating loss carryforwards of $ 70.8 million which have an indefinite carryforward period, federal tax credit carryforwards of $ 50.4 million which will begin to expire in fiscal 2030 and foreign net operating loss carryforwards of $ 434.8 million, of which $ 95.4 million have an indefinite carryforward period and the remainder will begin to expire in fiscal 2024.

Uncertain Tax Positions

As of October 1, 2023, we had $ 105.0 million of gross unrecognized tax benefits of which $ 72.8 million , if recognized, would affect our effective tax rate.

We recognized an expense of $ 2.3 million , a benefit of $ 4.6 million and an expense of $ 3.0 million of interest and penalties in income tax expense, prior to the benefit of the federal tax deduction, for fiscal 2022, 2021 and 2020, respectively.

As of October 2, 2022 and October 3, 2021, we had accrued interest and penalties of $ 9.4 million and $ 7.1 million, respectively, within our consolidated balance sheets.

We recognized an expense of $ 5.7 million , an expense of $ 2.3 million and a benefit of $ 4.6 million of interest and penalties in income tax expense, prior to the benefit of the federal tax deduction, for fiscal 2023, 2022 and 2021, respectively.

As of October 1, 2023 and October 2, 2022, we had accrued interest and penalties of $ 15.1 million and $ 9.4 million, respectively, on our consolidated balance sheets.

The following table summarizes the activity related to our unrecognized tax benefits (in millions) :

Oct 2, 2022 Oct 3, 2021 Sep 27, 2020

Oct 1, 2023 Oct 2, 2022 Oct 3, 2021

Beginning balance $ 89.7 $ 82.6 $ 123.7

9 unchanged sentences

federal examination for years prior to fiscal 2018, U.S.

state and local examinations for years prior to fiscal 2016 or examination in any material international markets prior to fiscal 2017.

We do not expect a significant amount of Company's gross unrecognized tax benefits to be recognized by the end of fiscal 2023 for reasons such as a lapse of the statute of limitations or resolution of examinations with tax authorities .

state and local examinations for years prior to fiscal 2016 or examination in any material foreign markets prior to fiscal 2018.

It is reasonably possible that up to approximately $ 54 million of the Company's gross unrecognized tax benefits may be recognized by the end of fiscal 2024 for reasons such as a lapse of the statute of limitations or resolution of examinations with tax authorities.

Earnings per Share

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

Fiscal Year Ended Oct 2, 2022 Oct 3, 2021 Sep 27, 2020

Fiscal Year Ended Oct 1, 2023 Oct 2, 2022 Oct 3, 2021

Net earnings attributable to Starbucks $ 4,124.5 $ 3,281.6 $ 4,199.3

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 would exclude out-of-the-money stock options (i.e., such options’ exercise prices were greater than the average market price of our common shares for the period) because their inclusion would be antidilutive.

As of October 2, 2022, we had an immaterial amount of out-of-the-money stock options and antidilutive RSUs.

As of October 3, 2021 and September 27, 2020, we had an immaterial amount of antidilutive RSUs and no out-of-the-money stock options.

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

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 Court of Appeals was denied.

The Plaintiff has until December 5, 2022 to file a petition for review in the California Supreme Court.

Starbucks believes that the likelihood that the Company will ultimately incur a material loss in connection with this litigation is less than reasonably possible.

Accordingly, no loss contingency was recorded for this matter.

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.

Starbucks is involved in various 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 ceo, who is our Chief Operating Decision Maker, manages the segments, evaluates financial results and makes key operating decisions.

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

We have three reportable operating segments:

4 unchanged sentences

Our North America segment is our most mature business and has achieved significant scale.

Channel Development revenues include packaged coffee, tea, foodservice products and ready-to-drink beverages to customers outside of our company-operated and licensed stores.

Channel Development revenues include packaged coffee, tea, foodservice products and ready-to-drink beverage sales to customers outside of our company-operated and licensed stores.

Most of our Channel Development revenues are from product sales to and royalty revenues from Nestlé through the Global Coffee Alliance.

Consolidated revenue mix by product type (in millions):

Fiscal Year Ended Oct 2, 2022 Oct 3, 2021 Sep 27, 2020

Fiscal Year Ended Oct 1, 2023 Oct 2, 2022 Oct 3, 2021

$ 21,684.8 60 % $ 19,555.3 61 % $ 18,317.0 63 %

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, beverage-related ingredients, serveware 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 and serveware, among other items.

Information by geographic area ( in millions ):

Fiscal Year Ended Oct 2, 2022 Oct 3, 2021 Sep 27, 2020

Fiscal Year Ended Oct 1, 2023 Oct 2, 2022 Oct 3, 2021

Net revenues:

3 unchanged sentences

Total $ 35,975.6 $ 32,250.3 $ 29,060.6

Oct 1, 2023 Oct 2, 2022

Long-lived assets:

12 unchanged sentences

Assets not attributed to reportable operating segments are corporate assets and are primarily comprised of cash and cash equivalents available for general corporate purposes, investments, assets of the corporate headquarters and roasting facilities and inventory.

The table below presents financial information for our reportable operating segments and Corporate and Other segment for the fiscal years ended October 2, 2022, October 3, 2021 and September 27, 2020.

The financial information below is presented for our reportable operating segments and Corporate and Other for the fiscal years ended October 1, 2023, October 2, 2022 and October 3, 2021 and as of October 1, 2023 and October 2, 2022.

( in millions )

5 unchanged sentences

Operating income/(loss) $ 5,495.7 $ 1,230.9 $ 967.6 $ ( 1,823.4 ) $ 5,870.8

Total assets $ 10,029.9 $ 8,602.8 $ 130.5 $ 9,215.2 $ 27,978.4

Total net revenues $ 23,370.8 $ 6,940.1 $ 1,843.6 $ 95.8 $ 32,250.3

2 unchanged sentences

Operating income/(loss) $ 4,486.5 $ 833.2 $ 817.3 $ ( 1,519.2 ) $ 4,617.8

Total assets $ 10,571.8 $ 10,083.3 $ 125.4 $ 10,612.1 $ 31,392.6

Total net revenues $ 20,447.9 $ 6,921.6 $ 1,593.6 $ 97.5 $ 29,060.6

$ 16,296.2 $ 5,230.6 $ 1,925.0 $ 66.2 $ 23,518.0

Depreciation and amortization expenses 753.9 544.7 1.2 141.9 1,441.7

1 unchanged sentence

Operating income/(loss) $ 4,259.3 $ 1,245.7 $ 789.1 $ ( 1,422.0 ) $ 4,872.1

( in millions )

North America International Channel

Corporate and Other

Total assets at October 1, 2023

$ 10,869.1 $ 8,045.3 $ 188.8 $ 10,342.3 $ 29,445.5

Total assets $ 10,717.4 $ 9,449.7 $ 165.0 $ 9,042.4 $ 29,374.5

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

Total assets at October 2, 2022

10,029.9 8,602.8 130.5 9,215.2 27,978.4

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

25 unchanged sentences

As o f October 1, 2023 , th e Company is partially indefinitely reinvested in certain foreign subsidiaries.

The Company has recorded a deferred tax liability of $75 million related to the taxable temporary difference for which it is not indefinitely reinvested.

The Company has recorded an immaterial deferred tax liability related to the taxable temporary difference for which it is not indefinitely reinvested.

For the remaining $2.5 billion of taxable temporary difference, there could be up to approximately $250 million of unrecognized tax liability.

23 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data