What changed in this filing

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Item 1. Financial Statements

2024-01-30 compared with 2023-08-01 · 121 added, 219 removed, 570 unchanged (37% of the section changed)

3 unchanged sentences

(in millions, except per share data)

Quarter Ended Three Quarters Ended

Quarter Ended

Net revenues:

11 unchanged sentences

Income from equity investees 55.9 57.8

Gain from sale of assets — — 91.3 —

Operating income 1,485.4 1,253.1

15 unchanged sentences

(in millions, unaudited)

Quarter Ended Three Quarters Ended

Quarter Ended

Net earnings including noncontrolling interests $ 1,024.4 $ 855.2

59 unchanged sentences

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY/(DEFICIT)

$ 29,179.7 $ 29,445.5

See Notes to Consolidated Financial Statements.

2 unchanged sentences

(in millions, unaudited)

Three Quarters Ended

Quarter Ended

OPERATING ACTIVITIES:

5 unchanged sentences

Distributions received from equity method investees 105.2 45.7

Gain on sale of assets ( 91.3 ) —

Stock-based compensation 94.8 85.2

5 unchanged sentences

Inventories 174.3 108.5

Income taxes payable 189.6 147.6

Accounts payable ( 95.8 ) ( 117.3 )

8 unchanged sentences

Additions to property, plant and equipment ( 595.9 ) ( 516.8 )

Proceeds from sale of assets 110.0 —

Other ( 9.3 ) ( 6.1 )

4 unchanged sentences

Repayments of short-term debt ( 33.8 ) —

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

Repayments of long-term debt ( 750.0 ) —

3 unchanged sentences

Minimum tax withholdings on share-based awards ( 92.1 ) ( 79.0 )

Other ( 11.0 ) ( 9.2 )

Net cash used in financing activities ( 2,409.3 ) ( 1,007.8 )

11 unchanged sentences

CONSOLIDATED STATEMENTS OF EQUITY

For the Quarter Ended July 2, 2023 and July 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, April 2, 2023

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

Net earnings — — — 1,141.7 — 1,141.7 0.2 1,141.9

Other comprehensive loss — — — — ( 255.2 ) ( 255.2 ) ( 0.7 ) ( 255.9 )

Stock-based compensation expense — — 69.9 — — 69.9 — 69.9

Exercise of stock options/vesting of RSUs 0.3 — 1.6 — — 1.6 — 1.6

Sale of common stock 0.1 — 12.4 — — 12.4 — 12.4

Repurchase of common stock ( 2.0 ) — ( 83.8 ) ( 121.1 ) — ( 204.9 ) — ( 204.9 )

Cash dividends declared, $ 0.53 per share

— — — ( 606.5 ) — ( 606.5 ) — ( 606.5 )

Purchase of non-controlling interests and other

— — — — ( 0.7 ) ( 0.7 ) — ( 0.7 )

Balance, July 2, 2023

1,145.4 $ 1.1 $ 38.3 $ ( 7,610.5 ) $ ( 777.5 ) $ ( 8,348.6 ) $ 7.0 $ ( 8,341.6 )

Balance, April 3, 2022

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

Net earnings — — — 912.9 — 912.9 0.8 913.7

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

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

Exercise of stock options/vesting of RSUs 0.2 — 5.8 — — 5.8 — 5.8

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

Cash dividends declared, $ 0.49 per share

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

Balance, July 3, 2022

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

See Notes to Consolidated Financial Statements.

STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

For the Three Quarters Ended July 2, 2023 and July 3, 2022

For the Quarter Ended December 31, 2023 and January 1, 2023

(in millions, except per share data, unaudited)

9 unchanged sentences

Net earnings — — — 1,024.4 — 1,024.4 — 1,024.4

Other comprehensive loss — — — — ( 313.6 ) ( 313.6 ) ( 0.7 ) ( 314.3 )

Other comprehensive income — — — — 220.2 220.2 0.2 220.4

Stock-based compensation expense — — 96.1 — — 96.1 — 96.1

4 unchanged sentences

— — — ( 642.1 ) — ( 642.1 ) — ( 642.1 )

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

Balance, July 2, 2023

— — — — 0.2 0.2 ( 0.1 ) 0.1

Balance, December 31, 2023

1,132.2 $ 1.1 $ 38.2 $ ( 8,097.5 ) $ ( 557.8 ) $ ( 8,616.0 ) $ 7.1 $ ( 8,608.9 )

Balance, October 2, 2022

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— — — ( 608.6 ) — ( 608.6 ) — ( 608.6 )

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

Balance, July 3, 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 )

3 unchanged sentences

Note 1 Summary of Significant Accounting Policies and Estimates

Note 2 Acquisitions, Divestitures and Strategic Alliance

Note 2 Derivative Financial Instruments

14 unchanged sentences

Financial Statement Preparation

The unaudited consolidated financial statements as of July 2, 2023, and for the quarters and three quarters ended July 2, 2023 and July 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 three quarters ended July 2, 2023 and July 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.

The unaudited consolidated financial statements as of December 31, 2023, and for the quarters ended December 31, 2023 and January 1, 2023, 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 December 31, 2023 and January 1, 2023 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.”

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The information included in this 10-Q should be read in conjunction with the footnotes and management’s discussion and analysis of the consolidated financial statements in the 10-K.

The results of operations for the quarter and three quarters ended July 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 quarter ended July 2, 2023, our China market continued its recovery 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;

however, we cannot predict the duration, scope or severity of the COVID-19 pandemic or its future impact on our business, results of operations, cash flows and financial condition.

Restructuring

In fiscal 2022, we announced our plan in the U.S.

market to increase efficiency while elevating the partner and customer experience (the “Reinvention Plan”).

We believe the 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 three quarters ended July 2, 2023.

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

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

Recently Adopted Accounting Pronouncements

In the first quarter of fiscal 2022, we adopted the Financial Accounting Standards Board (“FASB”) issued guidance related to reference rate reform.

The pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates.

The guidance was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2024.

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

This transaction did not have a material impact on our consolidated financial statements.

The results of operations for the quarter ended December 31, 2023 are not necessarily indicative of the results of operations that may be achieved for the entire fiscal year ending September 29, 2024 (“fiscal 2024”).

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance expanding segment disclosure requirements.

The amendments require enhanced disclosure for certain segment items and required disclosure on how management uses reported measures to assess segment performance.

The amendments do not change how segments are determined, aggregated, or how thresholds are applied to determine reportable segments.

We expect to adopt the guidance for the fiscal year ending September 28, 2025.

We are currently evaluating the expanded disclosure requirements and do not expect the adoption of the amendments to have a material impact on our consolidated financial statements.

In December 2023, the FASB issued guidance expanding disclosure requirements related to income taxes.

The amendments require enhanced jurisdictional disclosures for the income tax rate reconciliation and related to cash income taxes paid.

Additionally, specific disclosures related to unrecognized tax benefits and indefinite reinvestment assertions were removed.

The amendments are effective for our fiscal year ending September 27, 2026.

While we are still evaluating the specific impacts and timing of adoption, we anticipate this guidance will have a significant impact on our annual income tax disclosures.

Derivative Financial Instruments

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From time to time, we enter into designated cash flow hedges to manage the variability in cash flows due to changes in benchmark interest rates.

We enter into interest rate swap agreements and treasury locks, which are synthetic forward sales of U.S.

Treasury securities settled in cash based upon the difference between an agreed-upon treasury rate and the prevailing treasury rate at settlement.

These agreements are cash settled at the time of the pricing of the related debt.

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.

Each derivative agreement’s gain or loss is recorded in accumulated other comprehensive income (“AOCI”) and is subsequently reclassified to interest expense over the life of the related debt.

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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.

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

Jul 2, 2023 Oct 2, 2022

Dec 31, 2023 Oct 1, 2023

Cash Flow Hedges:

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Location of gain/(loss)

Jul 2, 2023 Jul 3, 2022 Jul 2, 2023 Jul 3, 2022

Cash Flow Hedges:

Coffee $ ( 20.0 ) $ ( 19.3 ) $ 0.3 $ 32.2 Product and distribution costs

Cross-currency swaps 4.2 12.9 ( 3.5 ) ( 2.1 ) Interest expense

7.5 16.0 Interest income and other, net

Dairy ( 6.1 ) ( 1.4 ) ( 3.8 ) 4.4 Product and distribution costs

Foreign currency - other 26.5 43.4 6.1 6.6 Licensed stores revenue

1.4 ( 0.9 ) Product and distribution costs

Interest rates — 18.8 0.8 ( 0.6 ) Interest expense

Net Investment Hedges:

Cross-currency swaps 47.6 37.0 7.8 3.8 Interest expense

Foreign currency debt 53.4 72.2 — —

Three Quarters Ended

Gains/(Losses) Recognized in

OCI Before Reclassifications Gains/(Losses) Reclassified from

AOCI to Earnings Location of gain/(loss)

Jul 2, 2023 Jul 3, 2022 Jul 2, 2023 Jul 3, 2022

Dec 31, 2023 Jan 1, 2023 Dec 31, 2023 Jan 1, 2023

Cash Flow Hedges:

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Net Investment Hedges:

Cross-currency swaps 32.5 51.2 20.1 10.7 Interest expense

Cross-currency swaps (1)

6.6 ( 14.0 ) 8.9 5.3 Interest expense

Foreign currency debt ( 31.8 ) ( 50.6 ) — —

(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 ):

Gains/(Losses) Recognized in Earnings

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

Jul 2, 2023 Jul 3, 2022 Jul 2, 2023 Jul 3, 2022

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

Dec 31, 2023 Jan 1, 2023

Non-Designated Derivatives:

Dairy Interest income and other, net $ ( 0.1 ) $ 0.1 $ ( 0.1 ) $ 0.2

Foreign currency - other Interest income and other, net $ ( 2.4 ) $ ( 11.6 )

2 unchanged sentences

Fair Value Hedges:

Interest rate swap Interest expense ( 12.2 ) ( 11.6 ) ( 9.1 ) ( 37.7 )

Interest rate swaps

Interest expense 11.1 ( 1.6 )

Long-term debt (hedged item) Interest expense ( 14.3 ) ( 3.3 )

Notional amounts of outstanding derivative contracts (in millions) :

Jul 2, 2023 Oct 2, 2022

Dec 31, 2023 Oct 1, 2023

Coffee $ 212 $ 266

5 unchanged sentences

Derivative Assets

Balance Sheet Location Jul 2, 2023 Oct 2, 2022

Balance Sheet Location Dec 31, 2023 Oct 1, 2023

Designated Derivative Instruments:

Cross-currency swaps Other long-term assets $ 117.3 $ 115.4

Cross-currency swaps Prepaid expenses and other current assets

Other long-term assets 108.5 130.1

Dairy Prepaid expenses and other current assets 0.1 0.4

1 unchanged sentence

Other long-term assets 10.7 22.9

Interest rate swaps

Prepaid expenses and other current assets

Non-designated Derivative Instruments:

1 unchanged sentence

Foreign currency Prepaid expenses and other current assets 5.4 7.5

Other long-term assets — 7.3

Derivative Liabilities

Balance Sheet Location Jul 2, 2023 Oct 2, 2022

Balance Sheet Location Dec 31, 2023 Oct 1, 2023

Designated Derivative Instruments:

Cross-currency swaps Other long-term liabilities $ 0.8 $ —

Dairy Accrued liabilities 0.9 1.1

1 unchanged sentence

Other long-term liabilities 7.2 —

Interest rate swaps Accrued liabilities 12.9 12.0

Other long-term liabilities 37.1 34.0

Interest rate swaps Other long-term liabilities 30.4 41.4

Non-designated Derivative Instruments:

Dairy Accrued liabilities 0.3 —

Diesel fuel and other commodities Accrued liabilities 0.4 —

Foreign currency Accrued liabilities 1.6 0.5

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

Jul 2, 2023 Oct 2, 2022 Jul 2, 2023 Oct 2, 2022

Dec 31, 2023 Oct 1, 2023 Dec 31, 2023 Oct 1, 2023

Location on the balance sheet

Long-term debt (1)

$ 324.2 $ 1,060.0 $ ( 25.8 ) $ ( 40.0 )

(1) Balance as of October 1, 2023 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 10 , Equity.

2 unchanged sentences

Fair Value Measurements at Reporting Date Using

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

December 31, 2023 Quoted Prices in Active Markets for Identical Assets

(Level 1) Significant Other Observable Inputs

6 unchanged sentences

Foreign government obligations 4.0 — 4.0 —

Mortgage and other asset-backed securities 0.3 — 0.3 —

Total available-for-sale debt securities 79.8 10.4 69.4 —

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Derivative assets 119.2 — 119.2 —

Structured deposits 0.1 — 0.1 —

Total assets $ 3,779.7 $ 3,187.7 $ 581.7 $ 10.3

14 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 —

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Corporate debt securities 91.1 — 91.1 —

Foreign government obligations 3.8 — 3.8 —

Mortgage and other asset-backed securities 50.2 — 50.2 —

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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 July 2, 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 December 31, 2023 and October 1, 2023.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities recognized or disclosed at fair value on the consolidated financial statements on a nonrecurring basis include items such as property, plant and equipment, ROU assets, goodwill and other intangible assets and other assets.

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

The estimated fair value of our long-term debt based on the quoted market price (Level 2) is included at Note 7 , Debt.

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

There were no material fair value adjustments during the quarter ended December 31, 2023 and January 1, 2023.

Inventories (in millions) :

Jul 2, 2023 Oct 2, 2022

Dec 31, 2023 Oct 1, 2023

Unroasted $ 632.7 $ 747.7

5 unchanged sentences

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

As of July 2, 2023, we had committed to purchasing green coffee totaling $ 300.5 million under fixed-price contracts and an estimated $ 786.0 million under price-to-be-fixed contracts.

As of December 31, 2023, we had committed to purchasing green coffee totaling $ 396.4 million under fixed-price contracts and an estimated $ 843.7 million under price-to-be-fixed contracts.

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

7 unchanged sentences

Property, Plant and Equipment, net

Jul 2, 2023 Oct 2, 2022

Dec 31, 2023 Oct 1, 2023

Land $ 46.1 $ 46.1

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Accrued Liabilities

Jul 2, 2023 Oct 2, 2022

Dec 31, 2023 Oct 1, 2023

Accrued occupancy costs $ 84.7 $ 86.7

1 unchanged sentence

Accrued capital and other operating expenditures 745.9 771.7

Self-insurance reserves 255.1 232.3

Insurance reserves

Income taxes payable 374.6 189.3

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Store Operating Expenses

Quarter Ended Three Quarters Ended

Jul 2, 2023 Jul 3, 2022 Jul 2, 2023 Jul 3, 2022

Quarter Ended

Dec 31, 2023 Jan 1, 2023

Wages and benefits $ 2,209.3 $ 2,215.7

4 unchanged sentences

Indefinite-Lived Intangible Assets

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

(in millions) Dec 31, 2023 Oct 1, 2023

Trade names, trademarks and patents $ 79.5 $ 79.4

Finite-Lived Intangible Assets

Jul 2, 2023 Oct 2, 2022

Dec 31, 2023 Oct 1, 2023

(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 $ 1,183.7 $ ( 1,147.4 ) $ 36.3 $ 1,149.3 $ ( 1,108.2 ) $ 41.1

Amortization expense for finite-lived intangible assets was $ 5.4 million and $ 16.4 million for the quarter and three quarters ended July 2, 2023, respectively, and $ 47.6 million and $ 147.0 million for the quarter and three quarters ended July 3, 2022, respectively.

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

Amortization expense for finite-lived intangible assets was $ 5.1 million for the quarter ended December 31, 2023 and $ 5.6 million for the quarter ended January 1, 2023.

Estimated future amortization expense as of December 31, 2023 ( in millions ):

Fiscal Year Total

2023 (excluding the three quarters ended July 2, 2023)

2024 (excluding the quarter ended December 31, 2023)

Thereafter 2.2

5 unchanged sentences

0.5 84.0 — — 84.5

Goodwill balance at July 2, 2023

Goodwill balance at December 31, 2023

$ 492.0 $ 2,775.1 $ 34.7 $ 1.0 $ 3,302.8

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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 July 2, 2023, we were in compliance with all applicable covenants.

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

As of December 31, 2023, we were in compliance with all applicable covenants.

No amounts were outstanding under our 2021 credit facility as of December 31, 2023 or October 1, 2023.

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 July 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.

As of December 31, 2023, we had $ 300.0 million in borrowings outstanding under the program.

As of October 1, 2023, we had no borrowings outstanding under this program.

Additionally, we hold the following Japanese yen-denominated credit facilities that are available for working capital needs and capital expenditures within our Japanese market:

• A ¥ 5 billion, or $ 34.5 million, credit facility is currently set to mature on January 4, 2024 .

• A ¥ 5.0 billion, or $ 35.4 million, credit facility is currently set to mature on December 30, 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 %.

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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 July 2, 2023, we had ¥ 5 billion, or $ 34.5 million, of borrowings outstanding under these credit facilities.

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

As of December 31, 2023, we had ¥ 7.0 billion, or $ 49.5 million, of borrowings outstanding under these credit facilities.

As of October 1, 2023, we had ¥ 5.0 billion, or $ 33.5 million, of 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) :

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

Dec 31, 2023 Oct 1, 2023 Stated Interest Rate Effective Interest Rate (1)

Issuance Amount Estimated Fair Value Amount Estimated Fair Value

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

October 2023 notes (2)

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

Refer to Note 3 , Derivative Financial Instruments, for additional information on our interest rate swaps designated as fair value hedges.

(3) Floating rate notes which bear interest at a rate equal to Compounded SOFR (as defined in the February 2024 notes) plus 0.420 %, resulting in a stated interest rate of 5.600 % at July 2, 2023.

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

(3) Floating rate notes that 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 5.998 % at December 31, 2023.

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

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

The following table summarizes our long-term debt maturities as of December 31, 2023 by fiscal year ( in millions ):

Fiscal Year Total

2024 $ 1,101.1

Thereafter 9,850.0

1 unchanged sentence

The components of lease costs (in millions) :

Quarter Ended Three Quarters Ended

Jul 2, 2023 Jul 3, 2022 Jul 2, 2023 Jul 3, 2022

Quarter Ended

Dec 31, 2023 Jan 1, 2023

Operating lease costs (1)

5 unchanged sentences

The following table includes supplemental information (in millions) :

Three Quarters Ended

Jul 2, 2023 Jul 3, 2022

Quarter Ended

Dec 31, 2023 Jan 1, 2023

Cash paid related to operating lease liabilities $ 428.6 $ 404.1

Operating lease liabilities arising from obtaining ROU assets 1,245.5 1,121.6

Jul 2, 2023 Jul 3, 2022

Operating lease liabilities arising from obtaining right-of-use assets

Dec 31, 2023 Jan 1, 2023

Weighted-average remaining operating lease term 8.6 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 July 2, 2023 and October 2, 2022.

There were no material finance leases as of December 31, 2023 and October 1, 2023.

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

Fiscal Year Total

2023 (excluding the three quarters ended July 2, 2023)

2024 (excluding the quarter ended December 31, 2023)

Thereafter 4,260.5

2 unchanged sentences

Total $ 9,448.4

As of July 2, 2023, we have entered into operating leases that have not yet commenced of $ 1.4 billion, primarily related to real estate leases.

As of December 31, 2023, we have entered into operating leases that have not yet commenced of $ 1.5 billion, primarily related to real estate leases.

These leases will commence between fiscal year 2024 and fiscal year 2027 with lease terms ranging from two to twenty years.

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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 July 2, 2023, the current and long-term deferred revenue related to Nestlé 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 quarter and three quarters ended July 2, 2023, we recognized $ 44.1 million and $ 132.3 million of prepaid royalty revenue related to Nestlé.

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

As of December 31, 2023 and 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.

During each of the quarters ended December 31, 2023 and January 1, 2023, we recognized $ 44.1 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 July 2, 2023

Stored value cards and loyalty program at April 2, 2023

Revenue deferred - card activations, card reloads and Stars earned 3,641.3

Revenue recognized - card and Stars redemptions and breakage ( 3,662.9 )

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

Quarter Ended July 3, 2022

Stored value cards and loyalty program at April 3, 2022

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

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

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

Three Quarters Ended July 2, 2023

Quarter Ended December 31, 2023

Stored value cards and loyalty program at October 1, 2023

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Revenue recognized - card and Stars redemptions and breakage ( 4,098.4 )

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

Three Quarters Ended July 3, 2022

Stored value cards and loyalty program at December 31, 2023 (2)

Quarter Ended January 1, 2023

Stored value cards and loyalty program at October 2, 2022

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Revenue recognized - card and Stars redemptions and breakage ( 3,714.1 )

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

Stored value cards and loyalty program at January 1, 2023 (2)

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

(2) As of July 2, 2023 and July 3, 2022, approximately $ 1.5 billion and $ 1.5 billion of these amounts were current, respectively.

(2) As of December 31, 2023 and January 1, 2023, approximately $ 2.0 billion and $ 1.9 billion, respectively, of these amounts were current.

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

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

Net gains/(losses) recognized in OCI before reclassifications ( 1.7 ) 0.8 75.5 ( 317.4 ) ( 242.8 )

Net (gains)/losses reclassified from AOCI to earnings 0.2 ( 6.8 ) ( 5.8 ) — ( 12.4 )

Other comprehensive income/(loss) attributable to Starbucks ( 1.5 ) ( 6.0 ) 69.7 ( 317.4 ) ( 255.2 )

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

Net gains/(losses) in AOCI, end of period $ ( 12.4 ) $ ( 94.1 ) $ 219.3 $ ( 890.3 ) $ ( 777.5 )

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

Net gains/(losses) recognized in OCI before reclassifications ( 1.6 ) 41.0 81.6 ( 396.9 ) ( 275.9 )

Net (gains)/losses reclassified from AOCI to earnings 0.1 ( 46.7 ) ( 2.8 ) — ( 49.4 )

Other comprehensive income/(loss) attributable to Starbucks ( 1.5 ) ( 5.7 ) 78.8 ( 396.9 ) ( 325.3 )

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

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

December 31, 2023

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

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Net gains/(losses) in AOCI, end of period $ ( 7.9 ) $ 15.7 $ 217.7 $ ( 783.3 ) $ ( 557.8 )

January 1, 2023

Net gains/(losses) in AOCI, beginning of period $ ( 15.5 ) $ 199.0 $ 209.1 $ ( 855.8 ) $ ( 463.2 )

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the Statements of Earnings

Jul 2, 2023 Jul 3, 2022

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

Gains/(losses) on cash flow hedges 8.8 55.6 Please refer to Note 3 , Derivative Financial Instruments for additional information.

Gains/(losses) on net investment hedges 7.8 3.8 Interest expense

16.5 59.2 Total before tax

( 4.1 ) ( 9.8 ) Tax expense

$ 12.4 $ 49.4 Net of tax

Three Quarters Ended

Components Amounts Reclassified from AOCI Affected Line Item in

the Statements of Earnings

Jul 2, 2023 Jul 3, 2022

Dec 31, 2023 Jan 1, 2023

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

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$ ( 23.1 ) $ 86.6 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 July 2, 2023.

During the three quarters ended July 2, 2023 and July 3, 2022, we repurchased 6.9 million and 36.3 million shares of common stock for $ 699.3 million and $ 4.0 billion, respectively.

As of July 2, 2023, 45.7 million shares remained available for repurchase under current authorizations.

During the third quarter of fiscal 2023, our Board of Directors approved a quarterly cash dividend to shareholders of $ 0.53 per share to be paid on August 25, 2023 to shareholders of record as of the close of business on August 11, 2023 .

In addition to 2.4 billion shares of authorized common stock with $ 0.001 par value per share, we have 7.5 million shares of authorized preferred stock, none of which was outstanding as of December 31, 2023.

During the quarters ended December 31, 2023 and January 1, 2023, we repurchased 12.8 million and 1.9 million shares of common stock on the open market for $ 1,250.1 million and $ 191.4 million, respectively.

As of December 31, 2023, 29.8 million shares remained available for repurchase under current authorizations.

During the first quarter of fiscal 2024, our Board of Directors approved a quarterly cash dividend to shareholders of $ 0.57 per share to be paid on February 23, 2024 to shareholders of record as of the close of business on February 9, 2024 .

Employee Stock Plans

As of July 2, 2023, there were 92.5 million shares of common stock available for issuance pursuant to future equity-based compensation awards and 10.4 million shares available for issuance under our employee stock purchase plan.

As of December 31, 2023, there were 84.9 million shares of common stock available for issuance pursuant to future equity-based compensation awards and 10.1 million shares available for issuance under our employee stock purchase plan.

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

Quarter Ended Three Quarters Ended

Jul 2, 2023 Jul 3, 2022 Jul 2, 2023 Jul 3, 2022

Quarter Ended

Dec 31, 2023 Jan 1, 2023

Restricted Stock Units (“RSUs”) $ 94.8 $ 85.0

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Total stock-based compensation expense $ 94.8 $ 85.1

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

Stock option and RSU transactions from October 1, 2023 through December 31, 2023 ( in millions ):

Stock Options RSUs

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Forfeited/expired — ( 0.2 )

Options outstanding/Nonvested RSUs, July 2, 2023

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

Options outstanding/Nonvested RSUs, December 31, 2023

Total unrecognized stock-based compensation expense, net of estimated forfeitures, as of December 31, 2023

Earnings per Share

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

Quarter Ended Three Quarters Ended

Jul 2, 2023 Jul 3, 2022 Jul 2, 2023 Jul 3, 2022

Quarter Ended

Dec 31, 2023 Jan 1, 2023

Net earnings attributable to Starbucks $ 1,024.4 $ 855.2

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Legal Proceedings

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.

Starbucks is involved in various legal proceedings arising in the ordinary course of business, including litigation matters associated with labor union organizing efforts and 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.

While we are closely monitoring the operational and financial impacts of labor union organizing efforts on our business, as of the date of this filing, we believe the risk of a material contingent loss associated with these litigation matters is remote.

Refer to the Risk Factors in Part I, Item 1A of our most recently filed 10-K for further discussion of potential risks to our brand and related impacts on our financial results.

Segment Reporting

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Consolidated revenue mix by product type ( in millions ):

Quarter Ended Three Quarters Ended

Jul 2, 2023 Jul 3, 2022 Jul 2, 2023 Jul 3, 2022

Quarter Ended

Dec 31, 2023 Jan 1, 2023

$ 5,695.9 60 % $ 5,173.0 59 %

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(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 and serveware, among other items.

(3) “ Other” primarily consists of packaged and single-serve coffees and teas, royalty and licensing revenues, serveware, and beverage-related ingredients, among other items.

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

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North America International Channel Development Corporate and Other Total

Total net revenues $ 6,737.8 $ 1,972.9 $ 448.8 $ 8.8 $ 9,168.3

Depreciation and amortization expenses 230.4 83.1 0.0 28.7 342.2

Income from equity investees — 0.8 68.9 — 69.7

Operating income/(loss) 1,463.9 374.5 208.0 ( 462.5 ) 1,583.9

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

Depreciation and amortization expenses 201.2 125.0 0.0 30.6 356.8

Income from equity investees — 0.4 53.7 — 54.1

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

Three Quarters Ended

North America International Channel Development Corporate and Other Total

December 31, 2023

Total net revenues $ 7,120.7 $ 1,846.3 $ 448.0 $ 10.3 $ 9,425.3

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Operating income/(loss) $ 1,520.8 $ 241.5 $ 209.7 $ ( 486.6 ) $ 1,485.4

January 1, 2023

Total net revenues $ 6,551.3 $ 1,680.1 $ 478.2 $ 4.3 $ 8,713.9

3 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-Q

Item 1. Financial Statements