~~Table~~In addition to other factors listed in this risk factors section, factors that may adversely affect the successful implementation of ~~Contents~~these initiatives, which could adversely impact our business and financial results, include construction cost increases associated with new store openings and remodeling of existing stores; delays in store openings for reasons beyond our control or a lack of desirable real estate locations available for lease at reasonable rates, either of which could keep us from meeting annual store opening targets in the US and internationally; lack of customer acceptance of new products due to price increases necessary to cover the costs of new products or higher input costs; the degree to which we enter into, maintain, develop and are able to negotiate appropriate terms and conditions of, and enforce, commercial and other agreements; not successfully consummating favorable strategic transactions or integrating acquired businesses; or the deterioration in our credit ratings, which could limit the availability of additional financing and increase the cost of obtaining financing to fund our initiatives. If we are not successful in implementing these strategic initiatives, we may be required to evaluate whether certain assets, including other intangibles and goodwill, have become impaired. In the event we record an impairment charge, it could have a material impact on our financial results.

Additionally, effectively managing growth can be challenging, particularly as we continue to expand into new channels outside the retail store model, increase our focus on our Channel Development business, and expand into new markets internationally where we must balance the need for flexibility and a degree of autonomy for local management against the need for consistency with our goals, philosophy and standards. Growth can make it increasingly difficult to ensure a consistent supply of high-quality raw materials, to locate and hire sufficient numbers of key employees, to maintain an effective system of internal controls for a globally dispersed enterprise and to train employees worldwide to deliver a consistently high quality product and customer experience.

We face intense competition in each of our channels and markets, which could lead to reduced profitability.

The specialty coffee market is intensely competitive, including with respect to product quality, innovation, service, convenience, and price, and we face significant and increasing competition in all these areas in each of our channels and markets. Accordingly, we do not have leadership positions in all channels and markets. In the US, the ongoing focus by large competitors in the quick-service restaurant sector on selling high-quality specialty coffee beverages could lead to decreases in customer traffic to Starbucks^® stores and/or average value per transaction adversely ~~affect~~affecting our sales and results of operations. Similarly, continued competition from well-established competitors in our international markets could hinder growth and adversely affect our sales and results of operations in those markets. Increased competition in the US packaged coffee and tea and single-serve and ready-to-drink coffee beverage markets, including from new and large entrants to this market, could adversely affect the profitability of the Channel Development segment. Additionally, declines in general consumer demand for specialty coffee products for any reason, including due to consumer preference for other products, could have a negative effect on our business.

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We are highly dependent on the financial performance of our Americas operating segment.

Our financial performance is highly dependent on our Americas operating segment, as it comprised approximately ~~75%~~73% of consolidated total net revenues in fiscal ~~2012.~~2014. If the Americas operating segment revenue trends slow or decline our other segments may be unable to make up any significant shortfall and our business and financial results could be adversely ~~affected, and~~affected. And because the Americas segment is relatively mature and produces the large majority of our operating cash flows, such a slowdown or decline could result in reduced cash flows for funding the expansion of our international business and other initiatives and for returning cash to shareholders.

We are increasingly dependent on the success of our ~~EMEA~~CAP and ~~CAP~~EMEA operating segments in order to achieve our growth targets.

Our future growth increasingly depends on the growth and sustained profitability of our ~~EMEA~~CAP and ~~CAP~~EMEA operating segments. Some or all of our international market business units ~~(“MBUs”~~("MBUs"), which we generally define by the countries in which they operate, may not be successful in their operations or in achieving expected growth, which ultimately requires achieving consistent, stable net revenues and earnings. The performance of these international operations may be adversely affected by economic downturns in one or more of the countries in which our large ~~MBUs.~~MBUs operate. In particular, our China MBU contributes meaningfully to both net revenues and earnings for our CAP segment and our Japan MBU contributes significantly to earnings in that segment. In the EMEA segment, our UK ~~and China MBUs account~~MBU accounts for a significant portion of the net ~~revenue and earnings of our EMEA and CAP segments and a~~revenues. A decline in ~~the~~ performance of any of these MBUs could have a material adverse impact on the results of our international operations.

Additionally, some factors that will be critical to the success of the ~~EMEA~~CAP and ~~CAP~~EMEA segments are different than those affecting our US stores and licensees. Tastes naturally vary by region, and consumers in some MBUs may not embrace our products to the same extent as consumers in the US or other international markets. Occupancy costs and store operating expenses can be higher internationally than in the US due to higher rents for prime store locations or costs of compliance with country-specific regulatory requirements. Because many of our international operations are in an early phase of development, operating expenses as a percentage of related revenues are often higher compared to more developed operations, such as in the US. Additionally, our international joint venture partners or licensees may face capital constraints or other factors that may limit the speed at which they are able to expand and develop in a certain market.

Our international operations are also subject to additional inherent risks of conducting business abroad, such as:

foreign currency exchange rate fluctuations, or requirements to transact in specific currencies;

changes or uncertainties in economic, legal, regulatory, social and political conditions in our markets;

interpretation and application of laws and regulations;

restrictive actions of foreign or US governmental authorities affecting trade and foreign investment, especially during periods of heightened tension between the US and such foreign governmental authorities, including protective measures such as export and customs duties and tariffs, government intervention favoring local competitors, and restrictions on the level of foreign ownership;

import or other business licensing requirements;

the enforceability of intellectual property and contract rights;

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limitations on the repatriation of funds and foreign currency exchange restrictions due to current or new US and international regulations;

in developing economies, the growth rate in the portion of the population achieving ~~targeted~~sufficient levels of disposable income may not be as fast as we forecast;

difficulty in staffing, developing and managing foreign operations and supply chain logistics, including ensuring the consistency of product quality and service, due to governmental actions affecting supply chain logistics, distance, language and cultural differences, as well as challenges in recruiting and retaining high quality employees in local markets;

local laws that make it more expensive and complex to negotiate with, retain or terminate employees;

delays in store openings for reasons beyond our control, competition with locally relevant competitors or a lack of desirable real estate locations available for lease at reasonable rates, any of which could keep us from meeting annual store opening targets and, in turn, negatively impact net revenues, operating income and earnings per share; and

disruption in energy supplies affecting our markets.

Moreover, many of the foregoing risks are particularly acute in developing countries, which are important to our long-term growth prospects.

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Increases in the cost of high-quality arabica coffee beans or other commodities or decreases in the availability of high-quality arabica coffee beans or other commodities could have an adverse impact on our business and financial results.

We purchase, roast, and sell high-quality whole bean arabica coffee beans and related coffee products. The price of coffee is subject to significant volatility and ~~although coffee prices have come down from their near-record highs of 2011, they are still above the historical average price of coffee~~has and may again increase significantly due to one or more of the factors described below. The high-quality arabica coffee of the quality we seek tends to trade on a negotiated basis at a premium above the ~~“C”~~"C" price. This premium depends upon the supply and demand at the time of purchase and the amount of the premium can vary significantly. Increases in the ~~“C”~~"C" coffee commodity price do increase the price of high-quality arabica coffee and also impact our ability to enter into fixed-price purchase commitments. We frequently enter into supply contracts whereby the quality, quantity, delivery period, and other negotiated terms are agreed upon, but the date, and therefore price, at which the base ~~“C”~~"C" coffee commodity price component will be fixed has not yet been established. These are known as price-to-be-fixed contracts. The supply and price of coffee we purchase can also be affected by multiple factors in the producing countries, including weather, natural disasters, crop disease, general increase in farm inputs and costs of production, inventory levels and political and economic conditions, as well as the actions of certain organizations and associations that have historically attempted to influence prices of green coffee through agreements establishing export quotas or by restricting coffee supplies. Speculative trading in coffee commodities can also influence coffee prices. Because of the significance of coffee beans to our operations, combined with our ability to only partially mitigate future price risk through purchasing practices and hedging activities, increases in the cost of high-quality arabica coffee beans could have an adverse impact on our profitability. In addition, if we are not able to purchase sufficient quantities of green coffee due to any of the above factors or to a worldwide or regional shortage, we may not be able to fulfill the demand for our coffee, which could have an adverse impact on our profitability.

~~In addition to coffee, we~~We also purchase significant amounts of dairy products, particularly fluid milk, to support the needs of our company-operated retail stores. ~~Although~~Additionally, and although less ~~material~~significant to our operations than coffee or dairy, other commodities, including but not limited to tea and those related to food inputs, such as cocoa, produce, baking ingredients, meats and energy, are important to our operations. Increases in the cost of dairy products and other commodities, or lack of availability, especially in international markets, could have an adverse impact on our profitability.

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Our ~~success depends substantially on the value~~financial condition and results of ~~our brands~~operations are sensitive to, and ~~failure to preserve their value could have a negative impact on our financial results.~~

We believe we have built an excellent reputation globally for the quality of our products, for delivery of a consistently positive consumer experience and for our corporate social responsibility programs. The Starbucks brand has been highly rated in several global brand value studies. To be successful in the future, particularly outside of US, where the Starbucks brand and our other brands are less well-known, we believe we must preserve, grow and leverage the value of our brands across all sales channels. Brand value is based in part on consumer perceptions on a variety of subjective qualities. Even isolated business incidents that erode consumer trust, such as contaminated food, recalls or privacy breaches, particularly if the incidents receive considerable publicity or result in litigation, can significantly reduce brand value and have a negative impact on our financial results. Consumer demand for our products and our brand equity could diminish significantly if we or our licensees fail to preserve the quality of our products, are perceived to act in an unethical or socially irresponsible manner or fail to deliver a consistently positive consumer experience in each of our markets. Additionally, inconsistent uses of our brand and other of our intellectual property assets, as well as failure to protect our intellectual property, including from unauthorized uses of our brand or other of our intellectual property assets, can erode consumer trust and our brand value and have a negative impact on our financial results.

~~Our business depends in large part on the success of our business partners and suppliers, and our brand and reputation~~ may be ~~harmed~~adversely affected by, ~~actions taken by third parties that~~a number of factors, many of which are largely outside of our control.

Our ~~business strategy, including our plans for new stores, foodservice, branded products~~operating results have been in the past and ~~other initiatives, relies significantly on~~will continue to be subject to a variety of business partners, and licensee and partnership relationships, particularly in our international markets. Licensees are often authorized to use our logos and provide branded beverages, food and other products directly to customers. We provide training and support to, and monitor the operations of, certain of these business partners, but the product quality and service they deliver may be diminished by any number of factors, ~~beyond~~many of which are largely outside our ~~control,~~control. Any one or more of the factors listed below or described elsewhere in this risk factors section could adversely impact our business, financial condition and/or results of operations:

increases in labor costs such as increased health care costs, general market and minimum wage levels and workers' compensation insurance costs;

adverse outcomes of litigation; and

especially in our larger or fast growing markets, labor discord, war, terrorism (including incidents targeting us), political instability, boycotts, social unrest, and natural disasters, including ~~financial pressures. We believe customers expect the same quality~~health pandemics that lead to avoidance of public places or restrictions on public gatherings such as in our stores.

Interruption of our supply chain could affect our ability to produce or deliver our products and could negatively impact our business and profitability.

Any material interruption in our supply chain, such as material interruption of roasted coffee supply due to the casualty loss of any of our roasting plants, interruptions in service ~~from~~by our ~~licensees~~third party logistic service providers or common carriers that ship goods within our distribution channels, trade restrictions, such as ~~they do from us~~increased tariffs or quotas, embargoes or customs restrictions, or natural disasters that cause a material disruption in our supply chain could negatively impact our business and we strive to ensure customers have the same experience whether they visit a company-operated or licensed store. Any shortcoming of a Starbucks business partner, particularly an issue affecting the quality of the service experience, the safety of beverages orour profitability.

Additionally, our food, ~~or compliance with laws~~beverage and ~~regulations, may be attributed by customers to us, thus damaging our reputation and brand value and potentially affecting our results of operations.~~

~~Our food and beverage~~other products are sourced from a wide variety of domestic and international business partners in our supply chain operations, and in certain cases are produced or sourced by our licensees directly. We rely on these suppliers and vendors to provide high quality products and to comply with applicable laws. Our ability to find qualified suppliers and vendors who meet our standards and supply products in a timely and efficient manner is a significant challenge, especially with respect to goods sourced from outside the US. A vendor's or supplier's failure to meet our standards, provide products in a timely and efficient manner, and comply with applicable laws is beyond our control. These issues could negatively impact our business and profitability.

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Failure to meet market expectations for our financial performance will likely adversely affect the market price and volatility of our stock.

Failure to meet market expectations going forward, particularly with respect to operating margins, earnings per share, comparable store sales, operating cash flows, and net revenues, will likely result in a decline and/or increased volatility in the market price of our stock. In addition, price and volume fluctuations in the stock market as a whole may affect the market price of our stock in ways that may be unrelated to our financial performance.

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The loss of key personnel or difficulties recruiting and retaining qualified personnel could adversely impact our business and financial results.

Much of our future success depends on the continued availability and service of senior management personnel. The loss of any of our executive officers or other key senior management personnel could harm our business. We must continue to recruit, retain and motivate management and other employees sufficiently, both to maintain our current business and to execute our strategic initiatives, some of which involve ongoing expansion in business channels outside of our traditional company-operated store model. Our success also depends substantially on the contributions and abilities of our retail store employees whom we rely on to give customers a superior in-store experience. Accordingly, our performance depends on our ability to recruit and retain high quality employees to work in and manage our stores, both domestically and internationally. If we are unable to recruit, retain and motivate employees sufficiently to maintain our current business and support our projected growth, our business and financial performance may be adversely affected.

Adverse public or medical opinions about the health effects of consuming our products, as well as reports of incidents involving food-borne illnesses, food tampering or food contamination, whether or not accurate, could harm our business.

Some of our products contain caffeine, dairy products, sugar and other active compounds, the health effects of which are the subject of public scrutiny, including the suggestion that excessive consumption of caffeine, dairy products, sugar and other active compounds can lead to a variety of adverse health effects. Particularly in the US, there is increasing consumer awareness of health risks, including obesity, due in part to increased publicity and attention from health organizations, as well as increased consumer litigation based on alleged adverse health impacts of consumption of various food products. While we have a variety of beverage and food items, including items that are coffee-free and have reduced calories, an unfavorable report on the health effects of caffeine or other compounds present in our products, or negative publicity or litigation arising from certain health risks could significantly reduce the demand for our beverages and food products.

Similarly, instances or reports, whether true or not, of unclean water supply, food-borne illnesses, food tampering and food contamination, either during manufacturing, packaging or preparation, have in the past severely injured the reputations of companies in the food processing, grocery and quick-service restaurant sectors and could affect us as well. Any report linking us to the use of unclean water, food-borne illnesses, food tampering or food contamination could damage our brand value and severely hurt sales of our beverages and food products, and possibly lead to product liability claims, litigation (including class actions) or damages. Clean water is critical to the preparation of coffee and tea beverages and our ability to ensure a clean water supply to our stores can be limited, particularly in some international locations. If customers become ill from food-borne illnesses, tampering or contamination, we could also be forced to temporarily close some stores. In addition, instances of food-borne illnesses, food tampering or food contamination, even those occurring solely at the restaurants or stores of competitors, could, by resulting in negative publicity about the foodservice industry, adversely affect our sales on a regional or global basis. A decrease in customer traffic as a result of these health concerns or negative publicity, or as a result of a temporary closure of any of our stores, as well adverse results of claims or litigation, could materially harm our business and results of operations.

Effectively managing growth both in our retail store business and our Channel Development business is challenging and places significant strain on our management and employees and our operational, financial, and other resources.

Effectively managing growth can be challenging, particularly as we continue to expand into new channels outside the retail store model, increase our focus on our Channel Development business, and expand into new markets internationally where we must balance the need for flexibility and a degree of autonomy for local management against the need for consistency with our goals, philosophy and standards. Growth can make it increasingly difficult to ensure a consistent supply of high-quality raw materials, to locate and hire sufficient numbers of key employees, to maintain an effective system of internal controls for a globally dispersed

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~~enterprise and to train employees worldwide to deliver a consistently high quality product and customer experience.~~

~~As we pursue strategic acquisitions, divestitures or joint ventures, we may not be able to successfully consummate favorable transactions or successfully integrate acquired businesses.~~

~~We have recently completed several acquisitions and we continue to evaluate potential acquisitions, divestitures, or joint ventures with third parties. These transactions create risks such as:~~

~~disruption of our ongoing business, including loss of management focus on existing businesses;~~

~~problems retaining key personnel;~~

~~operating losses and expenses of the businesses we acquire or in which we invest;~~

~~the potential impairment of tangible assets, intangible assets and goodwill acquired in the acquisitions;~~

~~the difficulty of incorporating an acquired business into our business and unanticipated expenses related to such integration; and~~

~~potential unknown liabilities associated with a business we acquire or in which we invest~~

In the event of any future acquisitions, we might need to issue additional equity securities, spend our cash, incur debt, or take on contingent liabilities, any of which could reduce our profitability and harm our business.

We rely heavily on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our ability to effectively operate our business and ~~expose us to potential liability and loss of revenues.~~could adversely affect our financial results.

We rely heavily on information technology systems across our operations, including for administrative functions, point-of-sale processing and payment in our stores and online, management of our supply chain, Starbucks Cards, online business, mobile payments, reloads and loyalty functionality and various other processes and transactions. Our ability to effectively manage our business and coordinate the production, distribution and sale of our products depends significantly on the reliability, integrity and capacity of these systems. We also rely on third party providers and platforms for some of these information technology systems and support. ~~The~~Although we have security measures in place, they may not be effective in preventing the failure of these systems or platforms to operate effectively and be available. Such failures may be caused by various factors, including power outages, catastrophic events, problems with transitioning to upgraded or replacement systems or platforms, flaws in third party software, or a breach in the security of these systems or platforms, including through cyber-attacks. If our disaster recovery and business continuity plans do not resolve these issues in an effective manner they could cause material negative impacts to our product availability and sales, the efficiency of our operations and our financial results. Significant capital investments and other expenditures could be required to remedy the problem. Furthermore, security breaches of our employees' or customers' private data could result in a violation of applicable U.S. and international privacy and other laws, loss of revenues from the potential adverse impact to our reputation and our ability to retain or attract new customers, and could result in litigation, potential liability and the imposition of penalties.

The effect of changes to healthcare laws in the United States may increase the number of employees who choose to participate in our healthcare plans, which may significantly increase our healthcare costs and negatively impact our financial results.

Since 1988 we have offered comprehensive healthcare coverage to eligible full-time and part-time employees in the US. We currently have relatively low minimum work hour requirements for our US employees to be eligible for healthcare coverage under our healthcare plans but for various reasons many of our eligible employees choose not to participate in our plans. However, many of such eligible employees who currently choose not to participate in our healthcare plans may find it more advantageous to do so when recent changes to healthcare laws in the United States become effective in 2014. Such changes include potential fees to persons for not obtaining healthcare coverage and being ineligible for certain healthcare subsidies if an employee is eligible for healthcare coverage under an employer's plan. If a large portion of current eligible employees who

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currently choose not to participate in our plans choose to enroll when or after the law becomes effective, it may significantly increase our healthcare coverage costs and negatively impact on our financial results.

Failure to comply with applicable laws and regulations could harm our business and financial results.

Our policies and procedures are designed to comply with all applicable laws, accounting and reporting requirements, tax rules and other regulations and requirements, including those imposed by the SEC, NASDAQ, and foreign countries, as well as applicable trade, labor, healthcare, privacy, food, anti-bribery and corruption and merchandise laws. The complexity of the regulatory environment in which we operate and the related cost of compliance are both increasing due to additional or changing legal and regulatory requirements, our ongoing expansion into new markets and new channels, ~~together with~~and the fact that foreign laws occasionally conflict with domestic laws. In addition to potential damage to our reputation and brand, failure to comply with the various laws and regulations, as well as changes in laws and regulations or the manner in which they are interpreted or applied, may result in litigation, civil and criminal liability, damages, fines and penalties, increased cost of regulatory compliance and restatements of our financial statements.


Item 1B.	Unresolved Staff Comments

None.

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Item 2.	Properties

The significant properties used by Starbucks in connection with its roasting, manufacturing, warehousing, distribution and corporate administrative operations, serving all segments, are as follows:



Location	Approximate Size in Square Feet	Purpose
Rancho Cucamonga, CA	265,000	Manufacturing
~~Carson Valley,~~San Francisco, CA	79,000	Warehouse and distribution
Augusta, GA	131,000	Manufacturing
Minden, NV (Carson Valley)	~~384,000~~360,000	Roasting and distribution
York, PA	1,035,000	Roasting, distribution and warehouse
~~York County, PA~~	~~748,000~~	~~Roasting, distribution and warehouse~~
~~Sandy Run,~~Gaston, SC (Sandy Run)	117,000	Roasting and distribution
Lebanon, TN	680,000	Distribution center
Auburn, WA	~~351,000~~491,000	Warehouse and distribution
Kent, WA	~~332,000~~510,000	Roasting and distribution
Seattle, WA	~~1,000,000~~1,001,000	Corporate administrative
Amsterdam, Netherlands	97,000	Roasting and distribution
~~Basildon, United Kingdom~~Samutprakarn, Thailand	~~142,000~~80,000	Warehouse and distribution

We own our roasting facilities and lease the majority of our warehousing and distribution locations. As of September ~~30, 2012~~28, 2014, Starbucks had ~~approximately 9,400~~ 10,713 company-operated stores,almost all of which are leased. We also lease space in various locations worldwide for regional, district and other administrative offices, training facilities and ~~storage.~~storag

e. In addition to the locations listed above, we hold inventory at various locations managed by third-party warehouses.


Item 3.	Legal Proceedings

In the first quarter of fiscal 2011, Starbucks notified Kraft Foods Global, Inc. (“Kraft”) that we were discontinuing our distribution arrangement with Kraft on March 1, 2011 due to material breaches by Kraft of its obligations under the SupplySee Note 15, Commitments and License Agreement between the Company and Kraft, dated March 29, 2004 (the “Agreement”), which defined the main distribution arrangement between the parties. Through our arrangement with Kraft, Starbucks sold a selection of Starbucks and Seattle's Best Coffee branded packaged coffees in grocery and warehouse club stores throughout the US, and to grocery stores in Canada, the UK and

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~~other European countries. Kraft managed the distribution, marketing, advertising and promotion of these products.~~

Kraft denies it has materially breached the Agreement. On November 29, 2010, Starbucks received a notice of arbitration from Kraft putting the commercial dispute between the parties into binding arbitration pursuantContingencies, to the ~~terms~~consolidated financial statements included in Item 8 of the Agreement. In addition to denying it materially breached the Agreement, Kraft further alleges that if Starbucks wished to terminate the Agreement it must compensate Kraft as provided in the Agreement in an amount equal to the fair valuePart II of ~~the Agreement, with an additional premium of up to 35% under~~this 10-K for information regarding certain ~~circumstances.~~

~~On December 6, 2010, Kraft commenced a federal court action against Starbucks, entitled~~ ~~Kraft Foods Global, Inc. v. Starbucks Corporation~~, in the U.S. District Court for the Southern District of New York (the “District Court”) seeking injunctive relief to prevent Starbucks from terminating the distribution arrangement until the parties' dispute is resolved through the arbitration proceeding. On January 28, 2011, the District Court denied Kraft's request for injunctive relief. Kraft appealed the District Court's decision to the Second Circuit Court of Appeals. On February 25, 2011, the Second Circuit Court of Appeals affirmed the District Court's decision. As a result, Starbucks is in full control of our packaged coffee business as of March 1, 2011.

While Starbucks believes we have valid claims of material breach by Kraft under the Agreement that allowed us to terminate the Agreement and certain other relationships with Kraft without compensation to Kraft, there exists the possibility of material adverse outcomes to Starbucks in the arbitration or to resolve the matter. Although Kraft disclosed to the press and in federal court filings a $750 million offer Starbucks made to Kraft in August 2010 to avoid litigation and ensure a smooth transition of the business, the figure is not a proper basis upon which to estimate a possible outcome of the arbitration but was based upon facts and circumstances at the time. Kraft rejected the offer immediately and did not provide a counter-offer, effectively ending the discussions between the parties with regard to any payment. Moreover, the offer was made prior to our investigation of Kraft's breaches and without consideration of Kraft's continuing failure to comply with material terms of the agreements.

On April 2, 2012, Starbucks and Kraft exchanged expert reports regarding alleged damages on their affirmative claims. Starbucks claimed damages of up to $62.9 million from the loss of sales resulting from Kraft's failure to use commercially reasonable efforts to market Starbucks^® coffee, plus attorney fees. Kraft's expert opined that the fair market value of the Agreement was $1.9 billion. After applying a 35% premium and 9% interest, Kraft claimed damages of up to $2.9 billion, plus attorney fees. The arbitration hearing commenced on July 11, 2012 and was completed on August 3. Starbucks presented evidence of material breaches on Kraft's part and sought nominal damages from Kraft for those breaches. Kraft presented evidence denying it had breached the parties' Agreement and sought damages of $2.9 billion plus attorney fees. We expect a decision from the Arbitrator in the first half of fiscal 2013.

At this time, Starbucks believes an unfavorable outcome with respect to the arbitration is not probable, but as noted above is reasonably possible. As also noted above, Starbucks believes we have valid claims of material breach by Kraft under the Agreement that allowed us to terminate the Agreement without compensation to Kraft. In addition, Starbucks believes Kraft's damage estimates are highly inflated and based upon faulty analysis. As a result, we cannot reasonably estimate the possible loss. Accordingly, no loss contingency has been recorded for this matter.

~~Starbucks is party to various other~~ legal proceedings ~~arising~~ in the ordinary course of business, including certain employment litigation cases that have been certified as class or collective actions, but, except as noted above, is not currently a party to any legal proceeding that management believes could have a material adverse effect on our consolidated financial position, results of operations or cash flows.

which we are involved.


Item 4.	Mine Safety Disclosures

Not applicable.

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PART II


~~Item 5.~~	~~Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities~~

Item 5. Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

SHAREHOLDER INFORMATION

MARKET INFORMATION AND DIVIDEND POLICY

Starbucks common stock is traded on NASDAQ, under the symbol ~~“SBUX.”~~"SBUX."

The following table shows the quarterly high and low sale prices per share of Starbucks common stock as reported by NASDAQ for each quarter during the last two fiscal years and the quarterly cash dividend declared per share of our common stock during the periods indicated:


	High		Low		Cash Dividends Declared		High		Low		Cash Dividends Declared
2012:
Fiscal 2014:
Fourth Quarter	$	54.28	$	43.04	$	0.21	$	80.64	$	73.78	$	0.32
Third Quarter	62.00		51.03		0.17		78.35		67.93		0.26
Second Quarter	56.55		45.28		0.17		78.83		68.67		0.26
First Quarter	46.50		35.12		0.17		82.50		74.45		0.26
2011:
Fiscal 2013:
Fourth Quarter	$	42.00	$	33.72	$	0.17	$	77.84	$	65.82	$	0.26
Third Quarter	40.26		34.61		0.13		67.48		56.65		0.21
Second Quarter	38.21		30.75		0.13		58.97		52.39		0.21
First Quarter	33.15		25.37		0.13		54.90		44.27		0.21


⁽⁸⁾	CAP store data has been adjusted for the transfer of certain company-operated stores to licensed stores in the fourth quarter of fiscal 2014.


⁽⁹⁾	Includes 337 Teavana^® stores acquired in the second quarter of fiscal 2013.


⁽¹⁰⁾	Includes the closure of 475 licensed Seattle’s Best Coffee^® locations in Borders Bookstores during fiscal 2011.

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Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

Our fiscal year ends on the Sunday closest to September 30. The fiscal ~~year ended on October 3, 2010 included 53 weeks with the 53~~^rd ~~week falling in the fourth fiscal quarter. The fiscal~~ years ended on ~~October 2, 2011~~September 28, 2014, September 29, 2013 and September 30, 2012 ~~both~~all included 52 weeks. ~~Comparable store sales percentages for fiscal 2010 are calculated excluding the 53~~^rd ~~week.~~ All references to store counts, including data for new store openings, are reported net of related store closures, unless otherwise noted.

Financial Highlights

Total net revenues increased ~~14%~~11% to ~~$13.3~~$16.4 billion in fiscal ~~2012~~2014 compared to ~~$11.7~~$14.9 billion in fiscal ~~2011. The increase was due primarily to a~~ 7% ~~increase in global~~2013.

Global comparable store sales ~~50%~~ ~~revenue growth in Channel Development, and~~ ~~20%~~ ~~growth in licensed stores revenue. The comparable store sales growth in company-operated stores was comprised of~~grew 6% driven by a 6%3% increase in the number of transactions and a 1%3% increase in average ticket.

Consolidated operating income ~~was~~ ~~$2.0~~increased to $3.1 billion in fiscal ~~2012~~2014 compared to ~~$1.7 billion~~an operating loss of $325.4 million in fiscal ~~2011~~ ~~and~~2013. Fiscal 2014 operating margin ~~increased to~~ ~~15.0%~~was 18.7% compared to ~~14.8%~~(2.2)% in fiscal ~~2011~~.2013. The operating margin expansion was primarily due to lapping the $2.8 billion Kraft litigation charge in the prior year. The remaining change in operating margin was primarily driven by ~~increased~~ sales leverage and ~~the absence of charges in fiscal 2012 related to the Seattle's Best Coffee store closures in Border's bookstores, partially offset by higher~~lower commodity ~~costs.~~

costs, mainly coffee.

~~EPS~~Earnings per share for fiscal ~~2012~~ ~~was~~ ~~$1.79~~,2014 increased to $2.71, compared to EPS of ~~$1.62~~ ~~reported~~$0.01 in fiscal ~~2011, with~~2013, primarily due to lapping the Kraft litigation charge, which reduced EPS by $2.25 per share in fiscal 2013. The remaining increase ~~driven by~~was primarily due to the improved sales leverage ~~partially offset by the impact of higher~~and lower commodity costs, in fiscal 2012 and certain gains recorded in the fourth quarter of fiscal 2011, including a gain from a fair market value adjustment resulting from the acquisition of the remaining ownership interest in our joint venture in Switzerland and Austria as well as a gain on the sale of ~~corporate real estate.~~

our equity interest in our Malaysia joint venture.

Cash ~~flow~~flows from operations ~~was~~ ~~$1.8 billion~~were $607.8 million in fiscal ~~2012~~2014 compared to ~~$1.6~~$2.9 billion in fiscal ~~2011~~. 2013. The decline in fiscal 2014 was driven by the payment of $2.8 billion during the year for the Kraft arbitration matter. This was partially offset by cash provided by operating activities of $3.4 billion resulting from strong earnings and favorable changes in working capital accounts in the current year.

Capital expenditures were ~~approximately~~ ~~$856 million~~$1.2 billion in fiscal ~~2012~~ ~~compared to~~ ~~$532 million~~ in2014 and fiscal ~~2011. Available operating cash flow after capital expenditures during fiscal~~ ~~2012~~ ~~was directed at returning approximately~~ ~~$1.1~~2013.

We returned $1.6 billion ~~of cash~~ to our shareholders ~~via~~in fiscal 2014 through dividends and share ~~repurchases and dividends.~~

repurchases.

Overview

Starbucks results for fiscal ~~2012 reflect~~2014 demonstrate the continued strength of our global business ~~model. We continue~~model and our ability to successfully execute ~~on our~~ new ~~regional~~growth initiatives in a disciplined manner. All reportable segments contributed to strong revenue growth and collectively drove an increase in consolidated operating ~~model which we implemented at the beginning of~~income and operating margin expansion.

The Americas segment continued its strong performance in fiscal 2012. We now have four reportable operating segments: Americas; Europe, Middle East, and Africa ("EMEA"); China / Asia Pacific ("CAP") and Channel Development. Each segment is managed by an operating segment president.

~~Total net~~2014, with revenues ~~increased 14%~~growing 9% to ~~$13.3~~$12.0 billion, primarily driven by ~~global~~ comparable store sales growth of 7% and a 50% increase in Channel Development revenue. This growth drove increased sales leverage and resulted in higher operating margin and net earnings compared to fiscal 2011. This helped mitigate the impact of higher commodity costs, mostly coffee, which negatively impacted operating income by approximately $214 million for the year, equivalent to approximately 160 basis points of impact on operating margin.

~~Our Americas business continued its strong momentum and contributed 75% of total net revenues in fiscal 2012. The revenue growth for the year was driven by an 8% increase in comparable store sales,~~6%, comprised of a 6%3% increase in ~~traffic~~average ticket and a 2% increase in ~~average ticket. This sales growth, combined with a continued focus on operational efficiencies, drove increased sales leverage that offset~~number of transactions. Enhanced food offerings, including the full rollout of our La Boulange™ food platform in the US, the impact of ~~higher~~price increases in our retail stores and successful promotional beverages contributed to the growth in comparable store sales. Americas operating margin grew 190 basis points to 23.4% in fiscal 2014, primarily driven by sales leverage and lower commodity costs. Looking forward, we expect to continue ~~driving sales~~to drive revenue growth and ~~profitability~~margin expansion through new stores and continued ~~store efficiency efforts, new store development,~~product innovation, targeted at driving growth across all geographies and ~~expanding our pipeline of new product offerings to increase revenues throughout~~ all dayparts. We plan to continue to expand our beverage platforms and elevate our food program, in part with continued enhancements to our lunch options.

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In the EMEA segment, ~~results reflect both~~fiscal 2014 benefited from the ~~investments we have begun making as part~~significant performance improvement of ~~our transformation plan for~~this segment, reaching double-digit revenue growth and increased profitability compared to the ~~region, as well as the macro-economic headwinds we,~~prior year. Revenues grew 12% to $1.3 billion, primarily driven by favorable foreign currency exchange and ~~others, face there. This resulted in flat~~ comparable store sales growth of 5%. Incremental revenues from 180 net new licensed store openings over the past year also contributed. EMEA operating margin expanded 370 basis points to 9.2% in fiscal 2014, primarily due to sales leverage and ~~operating income of~~ ~~$10 million~~ ~~for fiscal 2012, a decrease of $30 million compared~~continued cost management, largely driven by the shift in our store portfolio to ~~fiscal 2011.~~more licensed stores in this segment. We ~~started the year by putting in place a new leadership team that is focused on increasing the Starbucks brand presence, health~~expect our continued disciplined licensed store expansion and ~~relevancy across the region, improving the profitability of the existing store base through a~~ focus on ~~revenue growth and operating costs, and identifying opportunities for new store growth through licensing arrangements. We expect~~ the ~~investments we are making as part of~~customer experience in this ~~transformation effort~~region will result in improved operating performance as we progress on our plan towards mid-teens operating ~~margin; however, this turnaround will take time to gain traction.~~margin over time.

~~CAP~~Our China/Asia Pacific segment ~~revenues increased~~ ~~31%, driven by~~results reflect the growth and strong performance of new stores in the region, including 250 company-operated and 492 licensed net new store openings over the past year. This new store growth, ~~and~~along with a 7% increase in comparable store sales, drove a 23% increase in total net revenues to $1.1 billion for fiscal 2014. Operating income grew $51.3 million, or 16%, to $373 million compared to the prior year. Operating margin declined 200 basis points primarily resulting from the shift in the composition of ~~15%. This~~our store portfolio in this segment ~~continues~~ to ~~grow rapidly and is becoming~~more company-operated stores. We expect this segment will become a more ~~meaningful~~significant contributor to overall company ~~profitability.~~profitability in the future. We ~~expect~~look forward to continued ~~growth will be from a mix of~~ new store openings and comparable store sales growth. China continues to be a significant growth opportunity for us as we remain on track to reach our goal of 1,500 stores in 2015. In addition, other key markets such as Japan, Korea, Thailand, Singaporethe acquisition and ~~Indonesia all continue to be profitable and provide a solid foundation for continued growth in the region.~~

~~Our Channel Development segment represents another important, profitable growth opportunity for us. Channel Development results were a solid contributor to overall revenue growth with a~~ ~~50%~~ ~~increase in revenues primarily due to sales~~integration of Starbucks ~~and Tazo branded K-Cup® portion packs which launched at the start of fiscal 2012 and~~Japan, including expanding our transition to a direct distribution model for packaged coffee, which occurred during the second quarter of fiscal 2011. High commodity costs continued to be a significant drag on operating margin; however, despite these higher costs, operating income increased ~~$61 million~~ to ~~$349 million~~ for fiscal 2012. We expect continued innovation and new product offerings such as the Verismo™ system by Starbucks and Starbucks Refreshers™ beverages will drive further growth and profitability within this segment over time.

~~Fiscal 2013 — The View Ahead~~

For fiscal year 2013, we expect moderate revenue growth driven by mid single-digit increased comparable store sales, new store openings and strong growth in the Channel Development business. Licensed stores will comprise between one-half and two-thirds of new store openings.

~~We expect continued robust consolidated operating margin and EPS improvement compared to fiscal 2012, reflecting the strength of our global business and the pipeline of profitable growth initiatives.~~

~~We expect increased capital expenditures in fiscal 2013 compared to fiscal 2012, reflecting additional investments in store renovations, new store growth and manufacturing capacity.~~

~~Operating Segment Overview~~

Starbucks has four reportable operating segments: Americas, Europe, Middle East, and Africa ("EMEA"), China and Asia Pacific ("CAP") and Channel Development. Seattle’s Best Coffee is reported in “Other,” along with Evolution Fresh, Digital Ventures and unallocated corporate expenses that pertain to corporate administrative functions that support our operating segments but are not specifically attributable to or managed by any segment and are not included in the reported financial results of the operating segments.

The Americas, EMEA and CAP segments include company-operated stores and licensed stores. Licensed stores generally have a higher operating margin than company-operated stores. Under the licensed model, Starbucks receives a reduced share of the total store revenues, but this is more than offset by the reduction in its share of costs as these are primarily incurred by the licensee. The EMEA and CAP segments have a higher relative share of licensed stores versus company-operated stores compared to the Americas segment; however, the Americas segment has been operating significantly longer than the other segments and has developed deeper awareness of, and attachment to, the Starbucks brand and stores among its customer base. As a result, the more mature Americas segment has significantly more stores and higher total revenues than the other segments. Average sales per store are also higher in the Americas due to various factors including length of time in market and local income levels.presence into

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~~Starbucks store base~~other channels in ~~EMEA~~the Japan market, such as CPG, licensing and ~~CAP continues~~foodservice. We also expect that China will continue to ~~expand and~~grow toward being one of our largest markets outside of the US.

Channel Development segment revenues grew 11% to $1.5 billion, in fiscal 2014, primarily due to increased sales of premium single-serve products. Lower coffee costs was the primary contributor to the 630 basis point increase in operating margin for fiscal 2014. As we continue to ~~focus on achieving sustainable~~expand customer occasions outside of our retail stores, including growing our presence in the premium single-serve category, we expect this segment to become a more significant contributor to future growth.

Fiscal 2015 — The View Ahead

For fiscal 2015, we expect revenue growth of 16% to 18%, including 6% to 7% of incremental growth from ~~established international markets while at~~ the ~~same time investing~~acquisition of Starbucks Japan. The remaining growth will primarily come from mid-single-digit global comparable store sales growth and the addition of approximately 1,650 net new stores. Approximately one-half of net new store openings will be in ~~emerging markets, such as China. Occupancy costs~~our China/Asia Pacific segment, with the remaining half coming primarily from the Americas.

We expect consolidated operating margin to decline slightly in fiscal 2015 when compared to our fiscal 2014 results, primarily due to the mildly dilutive margin impact of the acquisition of Starbucks Japan, largely driven by the change in business model from a joint venture to a company-operated market. We expect strong EPS growth in fiscal 2015, due in part to an anticipated acquisition-related gain of approximately $325 million to $375 million after-tax, or $0.43 to $0.49 per share, resulting from a fair value adjustment of our current 39.5% ownership interest in Starbucks Japan. We expect sales leverage to also contribute to the EPS growth.

The effective tax rate for fiscal 2015 is expected to be approximately 31%, including a net tax benefit of approximately 4% from the acquisition of Starbucks Japan.

Capital expenditures in fiscal 2015 are expected to be approximately $1.4 billion, primarily for new stores and store operating expenses can be higher in certain international markets than in the Americas segment due to higher rents for prime store locations or costs of compliance with country-specific regulatory requirements. Because many of our international operations are in an early phase of development, operating expenses as a percentage of related revenues are often higher compared to the Americas segment. International markets in the early stages of development require a more extensive support organization, relative to the current levels of revenue and operating income, than the Americas.

~~The Channel Development segment includes packaged coffee and tea, a variety of ready-to-drink beverages, single-serve coffee and tea products and other branded product operations worldwide,~~renovations, as well as ~~the US foodservice business. In prior years through the first several months of fiscal 2011, we sold a selection of Starbucks and Seattle’s Best Coffee branded packaged coffees and Tazo~~^® ~~teas in grocery and warehouse club stores throughout the US and~~for other investments to grocery stores in Canada, the UK and other European countries through a distribution arrangement with Kraft Foods Global, Inc. Kraft managed the distribution, marketing, advertising and promotion of these products as a part of that arrangement. During fiscal 2011, we successfully transitioned these businesses including the marketing, advertising, and promotion of these products, fromsupport our previous distribution arrangement with Kraft and began selling these products directly to the grocery and warehouse club stores. Our Channel Development segment also includes ready-to-drink beverages, which are primarily manufactured and distributed through The North American Coffee Partnership, a joint venture with the Pepsi-Cola Company. The proportionate share of the results of the joint venture is included, on a net basis, in income from equity investees on the consolidated statements of earnings. The US foodservice business sells coffee and other related products to institutional foodservice companies with the majority of its sales through national broad-line distribution networks. The Channel Development segment reflects a modest cost structure and a resulting higher operating margin, compared to the other reporting segments, which consist primarily of retail stores.

ongoing growth initiatives.

Acquisitions and Divestitures

See Note 2, Acquisitions and Divestitures, to the consolidated financial statements included in Item 8 of Part II of this ~~10-K.~~

10-K for information regarding acquisitions and divestitures.

RESULTS OF OPERATIONS — FISCAL ~~2012~~2014 COMPARED TO FISCAL ~~2011~~2013

Consolidated results of operations ~~(in~~(in millions):

Revenues

Fiscal Year Ended Sep 30,
2012 Oct 2,
2011
%
Change
Sep 30,
2012 Oct 2,
2011

% of Total
Net Revenues
Net revenues:
Company-operated stores $ 10,534.5
$ 9,632.4
9.4 % 79.2 % 82.3 %
Licensed stores 1,210.3
1,007.5
20.1 % 9.1 % 8.6 %
CPG, foodservice and other 1,554.7
1,060.5
46.6 % 11.7 % 9.1 %
Total net revenues $ 13,299.5
$ 11,700.4
13.7 % 100.0 % 100.0 %



Fiscal Year Ended	Sep 28, 2014		Sep 29, 2013		% Change
Net revenues:
Company-operated stores	$	12,977.9	$	11,793.2	10.0	%
Licensed stores	1,588.6		1,360.5		16.8
CPG, foodservice and other	1,881.3		1,713.1		9.8
Total net revenues	$	16,447.8	$	14,866.8	10.6	%

~~Consolidated~~Total net revenues were $~~13.3~~$16.4 billion for fiscal ~~2012~~,2014, an increase of ~~13.7%~~,$1.6 billion, or $~~1.6 billion~~11%, over fiscal ~~2011~~,2013, primarily due to increased revenues from company-operated stores (contributing ~~$902 million),~~$1.2 billion). The growth in company-operated store revenues was driven by ana 6% increase in comparable store sales (approximately ~~7%, or $680~~$641 million)~~. Also contributing to the increase were~~

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and incremental revenues from 555 net new Starbucks^® company-operated store openings over the past 12 months (approximately ~~$184~~$529 million).

Licensed store ~~revenues~~revenue growth contributed ~~$203~~$228 million to the increase in total net revenues, ~~in fiscal 2012,~~ primarily due to ~~higher~~increased product sales to and royalty revenues from our licensees, ~~resulting from~~as a result of improved comparable store sales and the opening of ~~665~~1,029 net new licensed stores over the past 12 months.

CPG, foodservice and other revenues increased ~~$494~~$168 million, primarily due to increased sales of ~~Starbucks and Tazo branded K-Cup~~^® ~~portion packs launched in the CPG channel on November 1, 2011~~premium single-serve products (approximately ~~$232 million). The benefit of recognizing full revenue from packaged coffee and tea under the direct distribution model (approximately $78~~$111 million) and ~~an increase in~~increased foodservice ~~revenues~~sales (approximately ~~$50~~$17 million) ~~also contributed.~~.

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Operating Expenses

Fiscal Year Ended Sep 30,
2012 Oct 2,
2011 Sep 30,
2012 Oct 2,
2011

% of Total
Net Revenues
Cost of sales including occupancy costs $ 5,813.3
$ 4,915.5
43.7 % 42.0 %
Store operating expenses 3,918.1
3,594.9
29.5 % 30.7 %
Other operating expenses 429.9
392.8
3.2 % 3.4 %
Depreciation and amortization expenses 550.3
523.3
4.1 % 4.5 %
General and administrative expenses 801.2
749.3
6.0 % 6.4 %
Total operating expenses 11,512.8
10,175.8
86.6 % 87.0 %
Gain on sale of properties —
30.2
— % 0.3 %
Income from equity investees 210.7
173.7
1.6 % 1.5 %
Operating income $ 1,997.4
$ 1,728.5
15.0 % 14.8 %
Supplemental ratios as a % of related revenues:
Store operating expenses 37.2 % 37.3 %



Fiscal Year Ended	Sep 28, 2014			Sep 29, 2013			Sep 28, 2014		Sep 29, 2013
							% of Total Net Revenues
Cost of sales including occupancy costs	$	6,858.8		$	6,382.3		41.7	%	42.9	%
Store operating expenses	4,638.2			4,286.1			28.2		28.8
Other operating expenses	457.3			431.8			2.8		2.9
Depreciation and amortization expenses	709.6			621.4			4.3		4.2
General and administrative expenses	991.3			937.9			6.0		6.3
Litigation charge	(20.2		)	2,784.1			(0.1	)	18.7
Total operating expenses	13,635.0			15,443.6			82.9		103.9
Income from equity investees	268.3			251.4			1.6		1.7
Operating income/(loss)	$	3,081.1		$	(325.4	)	18.7	%	(2.2	)%
Store operating expenses as a percentage of company-operated store revenues							35.7	%	36.3	%

Cost of sales including occupancy costs as a percentage of total net revenues ~~increased 170~~decreased 120 basis points, primarily driven by ~~increased~~lower commodity costs (approximately ~~160~~80 basis points), ~~primarily due to higher~~mainly coffee, ~~costs.~~and sales leverage (approximately 40 basis points).

Store operating expenses as a percentage of total net revenues, ~~decreased 120 basis points, due to increased Channel Development~~ and ~~licensed store revenues. Store operating expenses~~ as a ~~percent~~percentage of company-operated store revenues, decreased 1060 basis points, ~~due to increased~~mainly driven by sales ~~leverage.~~

leverage (approximately 80 basis points).

Other operating expenses as a percentage of total net revenues decreased 2010 basis points. ~~As a percentage~~Excluding the impact of ~~net revenues excluding~~ company-operated store revenues, other operating expenses decreased ~~350~~80 basis ~~points. This decrease was~~points, primarily ~~driven by increased~~due to sales leverage (approximately ~~150~~30 basis points),.

General and administrative expenses as a percentage of total net revenues decreased 30 basis points, mainly due to lapping of costs associated with our leadership conference held in the ~~absence~~prior year.

The litigation charge of ~~charges~~$2,784.1 million in fiscal ~~2012 related~~2013 reflects the charge we recorded as a result of the conclusion of the arbitration with Kraft. This charge included $2,227.5 million in damages and $556.6 million in estimated interest and attorneys' fees. The $20.2 million litigation credit recorded in fiscal 2014 reflects a reduction to our estimated prejudgment interest payable associated with the ~~Seattle’s Best Coffee store closures in Borders bookstores (approximately 80 basis points) and~~Kraft arbitration as a ~~shift in the timing~~result of ~~marketing spend (approximately 60 basis points).~~paying our obligation earlier than anticipated.

Income from equity investees increased ~~$37.0~~$17 million, primarily due to ~~an increase~~improved performance from our joint venture operations in ~~income~~China, South Korea, and Japan, as well as improved performance from our North American Coffee Partnership ~~(approximately $13 million), Japan (approximately $11 million) and Shanghai (approximately $10 million)~~ joint venture, ~~operations.~~which produces, bottles and distributes our ready-to-drink beverages.

The combination of these changes ~~along with increased sales leverage on depreciation and amortization (approximately 40 basis points) and general and administrative expenses (approximately 40 basis points),~~ resulted in an overall increase in operating margin ~~of 20 basis points over fiscal 2011.~~

to 18.7% compared to (2.2)% in the prior year period.

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Other Income and Expenses

Fiscal Year Ended Sep 30,
2012 Oct 2,
2011 Sep 30,
2012 Oct 2,
2011

% of Total
Net Revenues
Operating income $ 1,997.4
$ 1,728.5
15.0 % 14.8 %
Interest income and other, net 94.4
115.9
0.7 % 1.0 %
Interest expense (32.7 ) (33.3 ) (0.2 )% (0.3 )%
Earnings before income taxes 2,059.1
1,811.1
15.5 % 15.5 %
Income taxes 674.4
563.1
5.1 % 4.8 %
Net earnings including noncontrolling interests 1,384.7
1,248.0
10.4 % 10.7 %
Net earnings (loss) attributable to noncontrolling interests 0.9
2.3
— % — %
Net earnings attributable to Starbucks $ 1,383.8
$ 1,245.7
10.4 % 10.6 %
Effective tax rate including noncontrolling interests 32.8 % 31.1 %



Fiscal Year Ended	Sep 28, 2014			Sep 29, 2013			Sep 28, 2014		Sep 29, 2013
							% of Total Net Revenues
Operating income/(loss)	$	3,081.1		$	(325.4	)	18.7	%	(2.2	)%
Interest income and other, net	142.7			123.6			0.9		0.8
Interest expense	(64.1		)	(28.1		)	(0.4	)	(0.2	)
Earnings/(loss) before income taxes	3,159.7			(229.9		)	19.2		(1.5	)
Income taxes	1,092.0			(238.7		)	6.6		(1.6	)
Net earnings including noncontrolling interests	2,067.7			8.8			12.6		0.1
Net earnings attributable to noncontrolling interests	(0.4		)	0.5			—		—
Net earnings attributable to Starbucks	$	2,068.1		$	8.3		12.6	%	0.1	%
Effective tax rate including noncontrolling interests							34.6	%	103.8	%

Net interest income and other ~~decreased $21~~increased $19 million over the prior year, primarily due to ~~the absence of the gain recognized~~a net benefit from transactions in the fourth quarter of fiscal ~~2011 resulting from~~2014, driven by a gain on the ~~acquisition~~sale of ~~the remaining~~our equity interest in our ~~previous~~Malaysia joint venture ~~operations in Switzerland~~(approximately $68 million), favorable fair value adjustments from derivatives used to manage our risk of commodity price and ~~Austria~~foreign currency fluctuations (approximately ~~$55~~$14 million), net favorable foreign exchange fluctuations (approximately $9 million), and realized gains on sales of investments (approximately $6 million). These increases were partially offset by lapping gains on the ~~recognition~~sales of ~~additional income associated with unredeemed gifts cards~~our equity interests in our joint ventures in Chile and Argentina in the fourth quarter of fiscal 2013 (approximately $45 million) and in Mexico in the second quarter of fiscal ~~2012~~2013 (approximately ~~$29~~$35 million)~~, following a court ruling related~~.

Interest expense increased $36 million due to ~~state unclaimed property laws.~~interest on the long-term debt we issued in the first quarter of fiscal 2014 and the fourth quarter of fiscal 2013.

~~Income taxes for the fiscal year ended 2012 resulted in an effective~~Our tax rate ~~of 32.8% compared to 31.1% for fiscal year 2011. The rate increased~~is affected by recurring items, such as tax rates in ~~fiscal year 2012 primarily due to tax benefits recognized in fiscal 2011 from the Switzerland and Austria transaction~~foreign jurisdictions and the ~~release~~relative amounts of ~~foreign valuation allowances.~~ income we earn in those jurisdictions, as well as discrete items that may occur in any given year, but are not consistent from year to year.

The effective tax rate for fiscal 2014 was 34.6% compared to 103.8% for fiscal 2013. The change in our effective tax rate was primarily due to lapping the 71.2% impact of the litigation charge associated with the Kraft arbitration in fiscal 2013. For additional information on the impact to our fiscal 2013 ~~is expected~~effective tax rate from the litigation charge, see Note 13, Income Taxes, to ~~be approximately 33%.~~

the consolidated financial statements included in Item 8 of Part II of this 10-K. The remaining change in the effective tax rate over fiscal 2013 was an increase of 2.0%, which was primarily due to net higher discrete benefits in the prior year. In fiscal 2013, our effective tax rate benefited from releasing certain tax reserves that did not recur in fiscal 2014 and a net tax benefit from state income tax expense adjustments for returns filed in prior years. Also contributing to the increase in fiscal 2014 was additional tax resulting from the sale of our Australian company-operated retail store assets and operations and our 50% equity interest in our Malaysia joint venture.

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Segment Information

~~Segment information is prepared on the same basis that our management reviews financial information for operational decision-making purposes. The following tables summarize the results~~Results of operations by segment (in millions):

Americas

Fiscal Year Ended Sep 30,
2012 Oct 2,
2011 Sep 30,
2012 Oct 2,
2011

As a % of Americas
Total Net Revenues
Total net revenues $ 9,936.0
$ 9,065.0
100.0 % 100.0 %
Cost of sales including occupancy costs 3,885.5
3,512.7
39.1 % 38.8 %
Store operating expenses 3,427.8
3,184.2
34.5 % 35.1 %
Other operating expenses 83.8
75.8
0.8 % 0.8 %
Depreciation and amortization expenses 392.3
390.8
3.9 % 4.3 %
General and administrative expenses 74.3
60.8
0.7 % 0.7 %
Total operating expenses 7,863.7
7,224.3
79.1 % 79.7 %
Income from equity investees 2.1
1.6
— % — %
Operating income $ 2,074.4
$ 1,842.3
20.9 % 20.3 %
Supplemental ratios as a % of related revenues:
Store operating expenses 37.8 % 38.1 %



Fiscal Year Ended	Sep 28, 2014		Sep 29, 2013		Sep 28, 2014		Sep 29, 2013
					As a % of Americas Total Net Revenues
Net revenues:
Company-operated stores	$	10,866.5	$	10,038.3	90.7	%	91.3	%
Licensed stores	1,074.9		915.4		9.0		8.3
CPG, foodservice and other	39.1		47.1		0.3		0.4
Total net revenues	11,980.5		11,000.8		100.0		100.0
Cost of sales including occupancy costs	4,487.0		4,214.9		37.5		38.3
Store operating expenses	3,946.8		3,710.2		32.9		33.7
Other operating expenses	100.4		96.9		0.8		0.9
Depreciation and amortization expenses	469.5		429.3		3.9		3.9
General and administrative expenses	167.8		186.7		1.4		1.7
Total operating expenses	9,171.5		8,638.0		76.6		78.5
Income from equity investees	—		2.4		—		—
Operating income	$	2,809.0	$	2,365.2	23.4	%	21.5	%
Store operating expenses as a percentage of company-operated store revenues					36.3	%	37.0	%

Revenues

Americas total net revenues for fiscal ~~2012~~2014 increased ~~10%,~~$980 million, or ~~$871 million,~~9%, primarily due to increased revenues from company-operated stores (contributing ~~$712~~$828 million), and licensed stores (contributing $160 million).

The increase in company-operated store revenues was driven by ana 6% increase in comparable store sales (approximately 8%$554 million), ~~or $626 million). Also contributing~~attributable to ~~the~~a 3% increase ~~were~~in average ticket and a 2% increase in number of transactions, and incremental revenues from 314 net new Starbucks^® company-operated store openings over the past 12 months (approximately ~~$100~~$377 million). Partially offsetting these increases was unfavorable foreign currency exchange (approximately $65 million), primarily driven by the strengthening of the US dollar against the Canadian dollar.

~~Licensed~~The increase in licensed store revenues ~~also contributed to the increase in total net revenues with an increase of $149 million in fiscal 2012 over the prior year period,~~was primarily due to ~~higher~~increased product sales to and royalty revenues from our licensees ~~resulting from improved~~as a result of an increase in comparable store sales and the opening of ~~270~~381 net new licensed stores ~~over the past 12 months.~~

~~Operating Expenses~~

Cost of sales including occupancy costs as a percentage of total net revenues increased 30 basis points, primarily driven by higher commodity costs (approximately 110 basis points), mainly coffee, partially offset by increased sales leverage on occupancy costs (approximately 70 basis points).

Store operating expenses as a percentage of total net revenues decreased 60 basis points. Increased licensed store revenues contributed approximately 30 basis points of the decrease. Store operating expenses as a percentage of company-operated store revenues decreased 30 basis points, primarily due to increased sales leverage (approximately 70 basis points), partially offset by higher debit card transaction fees (approximately 20 basis points).

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Other operating expenses as a percentage of total net revenues was flat over prior year. As a percentage of net revenues excluding company-operated store revenues, other operating expenses decreased 100 basis points, primarily driven by increased sales leverage.

The combination of these changes, along with increased sales leverage on depreciation and amortization expense (approximately 40 basis points), resulted in an increase in operating margin of 60 basis points over fiscal 2011.

~~EMEA~~

Fiscal Year Ended Sep 30,
2012 Oct 2,
2011 Sep 30,
2012 Oct 2,
2011

As a % of EMEA
Total Net Revenues
Total net revenues $ 1,141.3
$ 1,046.8
100.0 % 100.0 %
Cost of sales including occupancy costs 597.3
530.3
52.3 % 50.7 %
Store operating expenses 371.1
327.3
32.5 % 31.3 %
Other operating expenses 33.6
36.5
2.9 % 3.5 %
Depreciation and amortization expenses 57.1
53.4
5.0 % 5.1 %
General and administrative expenses 72.1
65.0
6.3 % 6.2 %
Total operating expenses 1,131.2
1,012.5
99.1 % 96.7 %
Income from equity investees 0.3
6.0
— % 0.6 %
Operating income $ 10.4
$ 40.3
0.9 % 3.8 %
Supplemental ratios as a % of related revenues:
Store operating expenses 38.3 % 36.1 %

~~Revenues~~

EMEA total net revenues for fiscal 2012 increased 9%, or $95 million, primarily driven by increased revenues from company-operated stores (contributing $63 million), due to the acquisition of the remaining interest in our previous joint venture operations in Switzerland and Austria in the fourth quarter of fiscal 2011 (approximately $80 million), partially offset by unfavorable foreign currency fluctuations (approximately $33 million).

An increase in licensed store revenues of $27 million also contributed to the increase in total net revenues, primarily due to higher product sales to and royalty revenues from our licensees, resulting from the opening of 101 net new licensed stores over the past 12 months.

~~Operating Expenses~~

Cost of sales including occupancy costs as a percentage of total net revenues increased 160 basis points, primarily driven by higher costs related to the transition to a consolidated food and dairy distribution model in the UK that began in the first quarter of fiscal 2012 (approximately 180 basis points). These costs are expected to decline over time as the full benefits of the transition are realized. Also contributing to the decrease were costs related to store portfolio optimization initiatives occurring in the fourth quarter of fiscal 2012 (approximately 60 basis points), partially offset by increased sales leverage on occupancy costs.

Store operating expenses as a percentage of total net revenues increased 120 basis points. Store operating expenses as a percentage of company-operated store revenues increased 220 basis points, primarily driven by asset impairments related to underperforming stores (approximately 140 basis points). Also contributing to the decrease were costs related to store portfolio optimization initiatives occurring in the fourth quarter of fiscal 2012 (approximately 40 basis points).

~~Table of Contents~~

Other operating expenses as a percentage of total net revenues decreased 60 basis points. Excluding the impact of company-operated store revenues, other operating expenses decreased 640 basis points, primarily driven by operational efficiencies.

~~Income from equity investees declined to $0.3 million in fiscal 2012, due to the acquisition of the remaining interest in our previous joint venture operations in Switzerland and Austria.~~

~~The above changes contributed to a decrease in operating margin of 290 basis points over the prior year.~~

~~China / Asia Pacific~~

Fiscal Year Ended Sep 30,
2012 Oct 2,
2011 Sep 30,
2012 Oct 2,
2011

As a % of CAP
Total Net Revenues
Total net revenues $ 721.4
$ 552.3
100.0 % 100.0 %
Cost of sales including occupancy costs 362.8
282.0
50.3 % 51.1 %
Store operating expenses 119.2
83.4
16.5 % 15.1 %
Other operating expenses 47.0
35.7
6.5 % 6.5 %
Depreciation and amortization expenses 23.2
18.1
3.2 % 3.3 %
General and administrative expenses 38.1
32.9
5.3 % 6.0 %
Restructuring charges —
—
— % — %
Total operating expenses 590.3
452.1
81.8 % 81.9 %
Income from equity investees 122.4
92.9
17.0 % 16.8 %
Operating income $ 253.5
$ 193.1
35.1 % 35.0 %
Supplemental ratios as a % of related revenues:
Store operating expenses 24.4 % 23.1 %

~~Revenues~~

China / Asia Pacific total net revenues for fiscal 2012 increased 31%, or $169 million, primarily driven by increased revenues from company-operated stores (contributing $128 million). The increase in company-operated store revenues was primarily due to the opening of 154 net new stores over the past 12 months (approximately $71 million) and an increase in comparable store sales (approximately 15%, or $53 million).

Also contributing to the increase in revenues was an increase in licensed store revenues of $41 million, due to increased royalty revenues from and product sales to licensees, primarily driven by 294 net new licensed store openings over the past 12 months.

Operating Expenses

Cost of sales including occupancy costs as a percentage of total net revenues decreased 80 basis points, primarily ~~driven by the accelerated growth of company-operated stores, which contribute a higher gross margin, in China~~due to sales leverage (approximately ~~140~~40 basis points)~~, partially offset by increased~~ and lower commodity costs (approximately ~~120~~30 basis points), mainly ~~higher coffee costs.~~

Store operating expenses as a percentage of total net revenues increased 140 basis points. Store operating expenses as a percentage of company-operated store revenues increased 130 basis points, primarily driven by increased costs associated with the expansion efforts of company-operated stores in mainland China.

~~Table of Contents~~

Income from equity investees increased $30 million, primarily driven by an increase in income from our Japan (approximately $11 million) and Shanghai (approximately $10 million) joint venture operations.

The combination of these changes, along with increased sales leverage on depreciation and amortization (approximately 10 basis points) and general and administrative expenses (approximately 70 basis points), resulted in an increase in operating margin of 10 basis points over fiscal 2011.

~~Channel Development~~

Fiscal Year Ended Sep 30,
2012 Oct 2,
2011 Sep 30,
2012 Oct 2,
2011

As a % of Channel Development
Total Net Revenues
Total net revenues $ 1,292.2
$ 860.5
100.0 % 100.0 %
Cost of sales 827.6
487.5
64.0 % 56.7 %
Other operating expenses 191.1
151.8
14.8 % 17.6 %
Depreciation and amortization expenses 1.3
2.4
0.1 % 0.3 %
General and administrative expenses 8.9
6.6
0.7 % 0.8 %
Total operating expenses 1,028.9
648.3
79.6 % 75.3 %
Income from equity investees 85.2
75.6
6.6 % 8.8 %
Operating income $ 348.5
$ 287.8
27.0 % 33.4 %

~~Revenues~~

~~Channel Development total net revenues for fiscal 2012 increased 50%, or $432 million, primarily due to sales of Starbucks and Tazo branded K-Cup~~^® portion packs (approximately $232 million). The benefit of recognizing full revenue from packaged coffee and tea sales under the direct distribution model through the second quarter of fiscal 2012 (approximately $70 million) and increased foodservice revenues (approximately $33 million) also contributed.

~~Operating Expenses~~

Cost of sales as a percentage of total net revenues increased 730 basis points, primarily due to increased commodity costs (approximately 570 basis points), mainly coffee, and a shift in our product mix driven by the introduction of Starbucks and Tazo~~branded K-Cup~~^® ~~portion packs (approximately 140 basis points).~~

~~Other operating expenses as a percentage of total net revenues decreased 280 basis points, primarily due to increased sales leverage.~~

Income from equity investees increased $10 million over the prior year period, driven by increased income from our North American Coffee Partnership joint venture. Income from equity investees declined as a percentage of total net revenues (approximately 220 basis points) primarily due to the growth in segment revenues.

~~The combination of these changes resulted in a decrease in operating margin of 640 basis points over fiscal 2011.~~

~~Table of Contents~~

~~Other~~

Fiscal Year Ended Sep 30,
2012 Oct 2,
2011 % Change

Total net revenues $ 208.6
$ 175.8
18.7 %
Cost of sales 140.1
103.0
36.0 %
Other operating expenses 74.4
93.0
(20.0 )%
Depreciation and amortization expenses 76.4
58.6
30.4 %
General and administrative expenses 607.8
584.0
4.1 %
Total operating expenses 898.7
838.6
7.2 %
Gain on sale of properties —
30.2
(100.0 )%
Income from equity investees 0.7
(2.4 ) nm
Operating loss $ (689.4 ) $ (635.0 ) 8.6 %

Other includes operating results from Seattle’s Best Coffee, Evolution Fresh, and Digital Ventures, as well as expenses pertaining to corporate administrative functions that support our operating segments but are not specifically attributable to, or managed by, any segment and are not included in the reported financial results of the operating segments.

~~Other total net revenues increased $33 million, primarily due to incremental revenues from Evolution Fresh, which was acquired during the first quarter of fiscal 2012.~~

Total operating expenses increased $60 million, primarily due to increased cost of sales resulting from higher commodity costs, primarily coffee, and higher general and administrative expenses to support the growth of the business.

~~RESULTS OF OPERATIONS — FISCAL 2011 COMPARED TO FISCAL 2010~~

~~Consolidated results of operations (in millions):~~

~~Revenues~~

Fiscal Year Ended Oct 2,
2011 Oct 3,
2010
%
Change
Oct 2,
2011 Oct 3,
2010

% of Total
Net Revenues
Net revenues:
Company-operated stores $ 9,632.4
$ 8,963.5
7.5 % 82.3 % 83.7 %
Licensed stores 1,007.5
875.2
15.1 % 8.6 % 8.2 %
CPG, foodservice and other 1,060.5
868.7
22.1 % 9.1 % 8.1 %
Total net revenues $ 11,700.4
$ 10,707.4
9.3 % 100.0 % 100.0 %

~~Consolidated net revenues were~~ ~~$11.7 billion~~ ~~for fiscal 2011, an increase of~~ 9%~~, or~~ ~~$993 million~~ over fiscal 2010. The increase was primarily due to an increase in company-operated store revenues driven by an 8% increase in global comparable stores sales (contributing approximately $672 million). The increase in comparable store sales was due to a 6% increase in number of transactions (contributing approximately $499 million) and a 2% increase in average value per transaction (contributing approximately $173 million). Also contributing to the increase in

~~Table of Contents~~

total net revenues was favorable foreign currency translation (approximately $126 million) resulting from a weakening of the US dollar relative to foreign currencies and an increase in licensed store revenues (approximately $106 million). This increase was partially offset by the impact of the extra week in fiscal 2010 (approximately $207 million).

~~Operating Expenses~~

Fiscal Year Ended Oct 2,
2011 Oct 3,
2010 Oct 2,
2011 Oct 3,
2010

% of Total
Net Revenues
Cost of sales including occupancy costs $ 4,915.5
$ 4,416.5
42.0 % 41.2 %
Store operating expenses 3,594.9
3,471.9
30.7 % 32.4 %
Other operating expenses 392.8
279.7
3.4 % 2.6 %
Depreciation and amortization expenses 523.3
510.4
4.5 % 4.8 %
General and administrative expenses 749.3
704.6
6.4 % 6.6 %
Restructuring charges —
53.0
— % 0.5 %
Total operating expenses 10,175.8
9,436.1
87.0 % 88.1 %
Gain on sale of properties 30.2
—
0.3 % — %
Income from equity investees 173.7
148.1
1.5 % 1.4 %
Operating income $ 1,728.5
$ 1,419.4
14.8 % 13.3 %
Supplemental ratios as a % of related revenues:
Store operating expenses 37.3 % 38.7 %

Cost of sales including occupancy costs as a percentage of total net revenues increased 80 basis points. The increase was primarily due to higher commodity costs (approximately 220 basis points), mainly driven by increased coffee costs. Partially offsetting this increase was lower occupancy costs as a percentage of total net revenues (approximately 70 basis points), driven by increased sales leverage.coffee.

Store operating expenses as a percentage of total net revenues decreased ~~170~~80 basis ~~points primarily due to increased sales leverage.~~

~~Other operating expenses as~~points. As a percentage of ~~total net~~company-operated store revenues, ~~increased 80~~store operating expenses decreased 70 basis points, primarily due to higher expenses to support the direct distribution model for packaged coffee and tea (approximately 40 basis points) and the impairment of certain assets in our Seattle’s Best Coffee business associated with the Borders bankruptcy in April 2011 (approximately 20 basis points).

The above changes contributed to an overall increase in operating margin of 150 basis points for fiscal 2011. Considering the impact from all line items, the primary drivers for the increase in operating margin for fiscal 2011 were increasedmainly driven by sales leverage (approximately 300 basis points), the absence of restructuring charges in the current year (approximately 50 basis points) and the gain on the sale of corporate real estate in fiscal 2011 (approximately 30 basis points). These increases were partially offset by higher commodity costs (approximately 220 basis points).

~~Table of Contents~~

~~Other Income and Expenses~~

Fiscal Year Ended Oct 2,
2011 Oct 3,
2010 Oct 2,
2011 Oct 3,
2010

% of Total
Net Revenues
Operating income $ 1,728.5
$ 1,419.4
14.8 % 13.3 %
Interest income and other, net 115.9
50.3
1.0 % 0.5 %
Interest expense (33.3 ) (32.7 ) (0.3 )% (0.3 )%
Earnings before income taxes 1,811.1
1,437.0
15.5 % 13.4 %
Income taxes 563.1
488.7
4.8 % 4.6 %
Net earnings including noncontrolling interests 1,248.0
948.3
10.7 % 8.9 %
Net earnings (loss) attributable to noncontrolling interests 2.3
2.7
— % — %
Net earnings attributable to Starbucks $ 1,245.7
$ 945.6
10.6 % 8.8 %
Effective tax rate including noncontrolling interests 31.1 % 34.0 %

~~Net interest income and other increased~~ ~~$66 million~~ over the prior year. The increase primarily resulted from the gain recorded in the fourth quarter of fiscal 2011 related to our acquisition of the remaining ownership interest in our joint venture operations in Switzerland and Austria (approximately $55 million).

~~Income taxes for the fiscal year ended 2011 resulted in an effective tax rate of~~ ~~31.1%~~ ~~compared to~~ ~~34.0%~~ ~~for fiscal 2010. The lower rate in fiscal 2011 was primarily due to a benefit from the Switzerland and Austria transaction and to an increase in income in foreign jurisdictions having lower tax rates.~~

~~Segment Information~~

~~The following tables summarize our results of operations by segment for fiscal 2011 and 2010 (in millions~~).

~~Americas~~

Fiscal Year Ended Oct 2,
2011 Oct 3,
2010 Oct 2,
2011 Oct 3,
2010

As a % of Americas Total
Net Revenues
Total net revenues $ 9,065.0
$ 8,488.5
100.0 % 100.0 %
Cost of sales including occupancy costs 3,512.7
3,258.5
38.8 % 38.4 %
Store operating expenses 3,184.2
3,083.3
35.1 % 36.3 %
Other operating expenses 75.8
63.1
0.8 % 0.7 %
Depreciation and amortization expenses 390.8
392.9
4.3 % 4.6 %
General and administrative expenses 60.8
56.4
0.7 % 0.7 %
Restructuring charges —
28.4
— % 0.3 %
Total operating expenses 7,224.3
6,882.6
79.7 % 81.1 %
Income from equity investees 1.6
0.9
— % —
Operating income $ 1,842.3
$ 1,606.8
20.3 % 18.9 %
Supplemental ratios as a % of related revenues:
Store operating expenses 38.1 % 39.2 %

~~Table of Contents~~

~~Revenues~~

~~Americas total net revenues for fiscal 2011 increased~~ 7%~~, or~~ ~~$577 million~~. The increase was primarily driven by an increase in comparable store sales in our company-operated stores of 8% (contributing approximately $590 million), driven by a 5% increase in number of transactions and a 2% increase in average value per transaction. Also contributing to the increase was favorable foreign currency translation resulting from the weakening of the US dollar (approximately $51 million), primarily in relation to the Canadian dollar, and an increase in product sales to and royalty revenues from licensees (approximately $73 million), primarily due to improved comparable store sales and net new store openings. These increases were partially offset by the absence of the extra week in fiscal 2010 (approximately $162 million).

~~Operating Expenses~~

Cost of sales including occupancy costs as a percentage of total net revenues increased 40 basis points over the prior year. The increase was primarily due to higher commodity costs (approximately 140 basis points), mainly coffee, partially offset by increased sales leverage on occupancy costs (approximately 60 basis points).

~~Store operating~~General and administrative expenses as a percentage of total net revenues decreased ~~120~~30 basis points primarily due to ~~increased sales leverage.~~

~~Also contributing to~~lapping of costs associated with our leadership conference held in the ~~increase in operating margin was the absence of restructuring charges in fiscal 2011~~prior year (approximately 3020 basis points) and ~~increased~~ sales leverage ~~resulting in lower depreciation and amortization expenses as a percentage of total net revenues (contributing 30~~(approximately 10 basis points).

The combination of these changes resulted in an overall increase in operating margin of ~~140~~190 basis points ~~for~~over fiscal ~~2011.~~2013.

Table of Contents



Washington		91-1325671
(State of Incorporation)		(IRS Employer ID)



Title of Each Class		Name of Each Exchange on Which Registered
Common Stock, $0.001 par value per share		Nasdaq Global Select Market



Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨



PART I
Item 1	Business	2
Item 1A	Risk Factors	10
Item 1B	Unresolved Staff Comments	1715
Item 2	Properties	1716
Item 3	Legal Proceedings	1716
Item 4	Mine Safety Disclosures	1816
PART II
Item 5	Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	1917
Item 6	Selected Financial Data	2219
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2522
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	4944
Item 8	Financial Statements and Supplementary Data	45
	Index For Notes to the Consolidated Financial Statements	50
	Report of Independent Registered Public Accounting Firm	8982
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	9083
Item 9A	Controls and Procedures	9083
Item 9B	Other Information	9285
PART III
Item 10	Directors, Executive Officers and Corporate Governance	9386
Item 11	Executive Compensation	9386
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	9386
Item 13	Certain Relationships and Related Transactions, and Director Independence	9386
Item 14	Principal ~~Accountant~~Accounting Fees and Services	9386
PART IV
Item 15	Exhibits, Financial Statement Schedules	9487
SIGNATURES		9588
INDEX TO EXHIBITS		9790



Name	Age	Position
Howard Schultz	5961	chairman, president and chief executive officer
Troy Alstead	51	chief operating officer
Cliff Burrows	5355	group president, ~~Starbucks Coffee~~US, Americas and USTeavana
John Culver	5254	group president, ~~Starbucks Coffee~~ China, ~~and~~ Asia Pacific,
~~Jeff Hansberry~~	48	~~president,~~ Channel Development and Emerging Brands
~~Michelle Gass~~Scott Maw	4447	executive vice president, ~~Starbucks Coffee EMEA~~
~~Troy Alstead~~	49	chief financial ~~officer and chief administrative~~ officer
Lucy Lee Helm	5557	executive vice president, general counsel and secretary


	Americas	As a% of Total Americas Stores		EMEA	As a% of Total EMEA Stores		CAP	As a% of Total CAP Stores		Total	As a% of Total Stores		Americas	As a% of Total Americas Stores		EMEA	As a% of Total EMEA Stores		CAP	As a% of Total CAP Stores		All Other Segments	As a% of Total All Other Segments Stores		Total	As a% of Total Stores
Company-operated stores	7,857	61	%	882	47	%	666	20	%	9,405	52	%	8,395	59	%	817	38	%	1,132	24	%	369	90	%	10,713	50	%
Licensed stores	5,046	39	%	987	53	%	2,628	80	%	8,661	48	%	5,796	41	%	1,323	62	%	3,492	76	%	42	10	%	10,653	50	%
Total	12,903	100	%	1,869	100	%	3,294	100	%	18,066	100	%	14,191	100	%	2,140	100	%	4,624	100	%	411	100	%	21,366	100	%


	Net Stores Opened (Closed) During the Fiscal Year Ended⁽¹⁾				Stores Open as of		Stores Open as of						Stores Open as of
	Sep 30, 2012		Oct 2, 2011		Sep 30, 2012	Oct 2, 2011	Sep 29, 2013	Opened	Closed		Net		Sep 28, 2014
Americas:
US	161		(2	)	6,866	6,705	7,049	287	(33	)	254		7,303
Canada	42		37		878	836	940	56	(13	)	43		983
Chile	6		5		41	35
Brazil	25		5		53	28	70	19	—		19		89
Puerto Rico	—		(2	)	19	19	19	1	—		1		20
Total Americas	234		43		7,857	7,623	8,078	363	(46	)	317		8,395
EMEA:
UK	(7	)	5		593	600
EMEA⁽¹⁾:
UK⁽¹⁾							522	1	(17	)	(16	)	506
Germany	7		8		157	150	157	1	(6	)	(5	)	152
France	5		8		67	62	72	6	—		6		78
Switzerland	4		—		50	46	52	3	—		3		55
Austria	—		2		12	12	16	2	(1	)	1		17
Netherlands	1		2		3	2	7	2	—		2		9
Total EMEA	10		25		882	872	826	15	(24	)	(9	)	817
CAP:
CAP⁽²⁾:
China	130		58		408	278	614	217	(8	)	209		823
Thailand	14		8		155	141	174	31	(2	)	29		203
Singapore	8		8		80	72	94	16	(4	)	12		106
Australia	2		(1	)	23	21
Total CAP	154		73		666	512	882	264	(14	)	250		1,132
All Other Segments:
Teavana							338	27	—		27		365
Seattle's Best Coffee							15	—	(15	)	(15	)	—
Evolution Fresh							4	—	—		—		4
Total All Other Segments							357	27	(15	)	12		369
Total company-operated	398		141		9,405	9,007	10,143	669	(99	)	570		10,713


⁽¹⁾	~~Store openings are reported net~~EMEA store data has been adjusted for the transfer of ~~closures. In the Americas,~~ ~~279~~ ~~and~~ ~~100~~certain company-operated stores ~~were opened during~~to licensed stores in the second and fourth quarters of fiscal 2014.


⁽¹⁾	"Other" primarily includes sales of ready-to-drink beverages, serveware and coffee-making equipment, among other items.


Americas		Europe/Middle East/Africa		China / Asia Pacific
						Stores Open as of						Stores Open as of
						Sep 29, 2013	Opened	Closed		Net		Sep 28, 2014
Americas:
US	4,262	Turkey	171	Japan	965	4,408	361	(110	)	251		4,659
Mexico	356	UK	168	South Korea	467	403	31	—		31		434
Canada	303	United Arab Emirates	99	China	292	397	69	(4	)	65		462
Other	125	Spain	78	Taiwan	271	207	37	(3	)	34		241
		Kuwait	65	Philippines	201
		Saudi Arabia	64	Malaysia	134
		Russia	60	Indonesia	133
		Greece	42	Hong Kong	131
		Other	240	New Zealand	34
Total	5,046	Total	987	Total	2,628
Total Americas						5,415	498	(117	)	381		5,796
EMEA⁽¹⁾:
UK⁽¹⁾						242	47	(4	)	43		285
Turkey						193	32	(5	)	27		220
United Arab Emirates						107	12	(4	)	8		115
Spain						82	5	(1	)	4		86
Kuwait						69	4	(1	)	3		72
Saudi Arabia						62	9	(4	)	5		67
Russia						65	24	(2	)	22		87
Other						323	74	(6	)	68		391
Total EMEA						1,143	207	(27	)	180		1,323
CAP⁽²⁾:
Japan						1,000	61	(1	)	60		1,060
China						403	146	(5	)	141		544
South Korea						559	159	(18	)	141		700
Taiwan						297	32	(6	)	26		323
Philippines						216	25	(1	)	24		240
Other⁽²⁾						525	117	(17	)	100		625
Total CAP						3,000	540	(48	)	492		3,492
All Other Segments:
Teavana						28	3	(2	)	1		29
Seattle's Best Coffee						38	1	(26	)	(25	)	13
Total All Other Segments						66	4	(28	)	(24	)	42
Total licensed						9,624	1,249	(220	)	1,029		10,653


⁽²⁾	CAP store data has been adjusted for the transfer of certain company-operated stores to licensed stores in the fourth quarter of fiscal 2014.


•	~~timely completing certain supply chain capacity expansion initiatives, including increased roasting capacity and construction of a new soluble products plant and a new Evolution Fresh~~^TM ~~plant; and~~



	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2)
Period(1)
July 2, 2012 — July 29, 2012	—	$	—	—	24,015,356
July 30, 2012 — August 26, 2012	5,265,260	46.44		5,265,260	18,750,096
August 27, 2012 — September 30, 2012	6,622,320	50.27		6,622,320	12,127,776
Total	11,887,580	$	48.58	11,887,580


⁽¹⁾	Monthly information is presented by reference to our fiscal months during the fourth quarter of fiscal ~~2012~~. 2014.


	9/30/2007	9/28/2008	9/27/2009	10/3/2010	10/2/2011	9/30/2012	Sep 27, 2009		Oct 3, 2010		Oct 2, 2011		Sep 30, 2012		Sep 29, 2013		Sep 28, 2014
Starbucks Corporation	100.00	57.10	75.69	99.93	145.94	201.33	$	100.00	$	132.04	$	192.82	$	266.00	$	411.41	$	405.56
S&P 500	100.00	78.02	72.63	80.01	80.93	105.37	100.00		110.16		111.42		145.07		173.13		207.30
NASDAQ Composite	100.00	69.59	74.90	84.99	86.87	110.79	100.00		112.55		116.28		153.12		189.49		227.09
S&P Consumer Discretionary	100.00	77.59	77.55	95.87	101.79	139.08	100.00		123.63		131.26		179.35		236.45		264.29


~~Item 1.~~	~~Business~~



As of and for the Fiscal Year Ended⁽¹⁾	Sep 30, 2012 (52 Wks)		Oct 2, 2011 (52 Wks)		Oct 3, 2010 (53 Wks)		Sep 27, 2009 (52 Wks)		Sep 28, 2008 (52 Wks)
As of and for the Fiscal Year Ended⁽¹⁾	Sep 30, 2012 (52 Wks)		Oct 2, 2011 (52 Wks)		Oct 3, 2010 (53 Wks)		Sep 27, 2009 (52 Wks)		Sep 28, 2008 (52 Wks)
Results of Operations
Net revenues:
Company-operated stores	$	10,534.5	$	9,632.4	$	8,963.5	$	8,180.1	$	8,771.9
Licensed stores⁽²⁾	1,210.3		1,007.5		875.2		795.0		779.0
CPG, foodservice and other⁽²⁾	1,554.7		1,060.5		868.7		799.5		832.1
Total net revenues	$	13,299.5	$	11,700.4	$	10,707.4	$	9,774.6	$	10,383.0
Operating income⁽³⁾	$	1,997.4	$	1,728.5	$	1,419.4	$	562.0	$	503.9
Net earnings including noncontrolling interests	1,384.7		1,248.0		948.3		391.5		311.7
Net earnings (loss) attributable to noncontrolling interests	0.9		2.3		2.7		0.7		(3.8		)
Net earnings attributable to Starbucks	1,383.8		1,245.7		945.6		390.8		315.5
EPS — diluted	1.79		1.62		1.24		0.52		0.43
Cash dividends declared per share	0.72		0.56		0.36		—		—
Net cash provided by operating activities	1,750.3		1,612.4		1,704.9		1,389.0		1,258.7
Capital expenditures (additions to property, plant and equipment)	856.2		531.9		440.7		445.6		984.5
Balance Sheet
Total assets	$	8,219.2	$	7,360.4	$	6,385.9	$	5,576.8	$	5,672.6
Short-term borrowings	—		—		—		—		713.0
Long-term debt (including current portion)	549.6		549.5		549.4		549.5		550.3
Shareholders’ equity	5,109.0		4,384.9		3,674.7		3,045.7		2,490.9



As of and for the Fiscal Year Ended ⁽¹⁾	Sep 28, 2014 (52 Wks)			Sep 29, 2013 (52 Wks)			Sep 30, 2012 (52 Wks)		Oct 2, 2011 (52 Wks)		Oct 3, 2010 (53 Wks)
As of and for the Fiscal Year Ended ⁽¹⁾	Sep 28, 2014 (52 Wks)			Sep 29, 2013 (52 Wks)			Sep 30, 2012 (52 Wks)		Oct 2, 2011 (52 Wks)		Oct 3, 2010 (53 Wks)
Results of Operations
Net revenues:
Company-operated stores	$	12,977.9		$	11,793.2		$	10,534.5	$	9,632.4	$	8,963.5
Licensed stores	1,588.6			1,360.5			1,210.3		1,007.5		875.2
CPG, foodservice and other⁽²⁾	1,881.3			1,713.1			1,532.0		1,060.5		868.7
Total net revenues⁽²⁾	$	16,447.8		$	14,866.8		$	13,276.8	$	11,700.4	$	10,707.4
Operating income/(loss)^(3,4)	$	3,081.1		$	(325.4	)	$	1,997.4	$	1,728.5	$	1,419.4
Net earnings including noncontrolling interests^(3,4)	2,067.7			8.8			1,384.7		1,248.0		948.3
Net earnings attributable to noncontrolling interests	(0.4		)	0.5			0.9		2.3		2.7
Net earnings attributable to Starbucks^(3,4)	2,068.1			8.3			1,383.8		1,245.7		945.6
EPS — diluted^(3,4)	2.71			0.01			1.79		1.62		1.24
Cash dividends declared per share	1.10			0.89			0.72		0.56		0.36
Net cash provided by operating activities	607.8			2,908.3			1,750.3		1,612.4		1,704.9
Capital expenditures (additions to property, plant and equipment)	1,160.9			1,151.2			856.2		531.9		440.7
Balance Sheet
Total assets	$	10,752.9		$	11,516.7		$	8,219.2	$	7,360.4	$	6,385.9
Long-term debt (including current portion)	2,048.3			1,299.4			549.6		549.5		549.4
Shareholders’ equity	5,272.0			4,480.2			5,109.0		4,384.9		3,674.7


⁽³⁾	Fiscal 2010 ~~2009, and 2008~~ results include pretax restructuring charges of $53.0 million.


⁽⁴⁾	Fiscal 2013 results include a pretax charge of $2,784.1 million ~~$332.4~~resulting from the conclusion of our arbitration with Kraft Foods Global, Inc. The impact of this charge to net earnings attributable to Starbucks and diluted EPS, net of the related tax benefit, was $1,713.1 million and ~~$266.9 million,~~$2.25 per share, respectively.


~~(4)~~ ⁽⁵⁾	Includes only Starbucks^® company-operated stores open 13 months or longer. For fiscal ~~year~~ 2010, comparable store sales percentages were calculated excluding the 53^rd week. Comparable store sales exclude the effect of fluctuations in foreign currency exchange rates.



As of and for the Fiscal Year Ended	Sep 30, 2012 (52 Wks)	Oct 2, 2011 (52 Wks)		Oct 3, 2010 (53 Wks)		Sep 27, 2009 (52 Wks)		Sep 28, 2008 (52 Wks)
As of and for the Fiscal Year Ended	Sep 30, 2012 (52 Wks)	Oct 2, 2011 (52 Wks)		Oct 3, 2010 (53 Wks)		Sep 27, 2009 (52 Wks)		Sep 28, 2008 (52 Wks)
Net stores opened (closed) during the year:
Americas
Company-operated stores	234	43		(33	)	(417	)	561
Licensed stores⁽⁵⁾	270	(268	)	111		101		558
EMEA⁽⁶⁾
Company-operated stores	10	25		(64	)	20		127
Licensed stores	101	79		100		98		153
China / Asia Pacific
Company-operated stores	154	73		30		24		9
Licensed stores	294	193		79		129		261
Total	1,063	145		223		(45	)	1,669
Stores open at year end:
Americas
Company-operated stores	7,857	7,623		7,580		7,613		8,030
Licensed stores	5,046	4,776		5,044		4,933		4,832
EMEA⁽⁶⁾
Company-operated stores	882	872		847		911		891
Licensed stores	987	886		807		707		609
China / Asia Pacific
Company-operated stores	666	512		439		409		385
Licensed stores	2,628	2,334		2,141		2,062		1,933
Total	18,066	17,003		16,858		16,635		16,680



Fiscal Year Ended	Oct 2, 2011		Oct 3, 2010		% Change		Oct 2, 2011		Oct 3, 2010
Fiscal Year Ended	Oct 2, 2011		Oct 3, 2010		% Change		Oct 2, 2011		Oct 3, 2010
							% of Total Net Revenues
Net revenues:
Company-operated stores	$	9,632.4	$	8,963.5	7.5	%	82.3	%	83.7	%
Licensed stores	1,007.5		875.2		15.1	%	8.6	%	8.2	%
CPG, foodservice and other	1,060.5		868.7		22.1	%	9.1	%	8.1	%
Total net revenues	$	11,700.4	$	10,707.4	9.3	%	100.0	%	100.0	%



	First		Second		Third		Fourth		Total
2012:
Net revenues	$	3,435.9	$	3,195.9	$	3,303.6	$	3,364.2	$	13,299.5
Operating income	556.0		430.4		491.6		519.6		1,997.4
Net earnings attributable to Starbucks	382.1		309.9		333.1		359.0		1,383.8
EPS — diluted	$	0.50	$	0.40	$	0.43	$	0.46	$	1.79
2011:
Net revenues	$	2,950.8	$	2,785.7	$	2,932.2	$	3,031.9	$	11,700.4
Operating income	501.9		376.1		402.2		448.3		1,728.5
Net earnings attributable to Starbucks	346.6		261.6		279.1		358.5		1,245.7
EPS — diluted	$	0.45	$	0.34	$	0.36	$	0.47	$	1.62


	Payments Due by Period										Payments Due by Period
Contractual Obligations⁽¹⁾	Total		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years		Total		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years
Operating lease obligations⁽²⁾	$	4,060.2	$	787.9	$	1,368.9	$	934.9	$	968.5	$	4,957.9	$	925.6	$	1,522.9	$	1,007.1	$	1,502.3
Purchase obligations⁽³⁾	911.0		727.9		170.0		13.1		—
Debt obligations⁽⁴⁾	722.0		34.4		68.8		618.8		—
Debt obligations
Principal payments											2,050.0		—		950.0		350.0		750.0
Interest payments⁽³⁾											417.7		73.8		145.8		68.2		129.9
Purchase obligations⁽⁴⁾											1,254.7		848.9		365.7		27.7		12.4
Other obligations⁽⁵⁾	94.9		19.4		9.6		8.3		57.6		55.1		2.7		5.6		5.3		41.5
Total	$	5,788.1	$	1,569.6	$	1,617.3	$	1,575.1	$	1,026.1	$	8,735.4	$	1,851.0	$	2,990.0	$	1,458.3	$	2,436.1


⁽¹⁾	Income tax liabilities for uncertain tax positions were excluded as we are not able to make a reasonably reliable estimate of the amount and period of related future payments. As of September ~~30, 2012~~,28, 2014, we had ~~$78.4~~$121.0 million of gross unrecognized tax benefits for uncertain tax ~~positions.~~ positions, which includes accrued interest and penalties.


⁽²⁾	Amounts include ~~the~~ direct lease obligations, excluding any taxes, insurance and other related expenses.


⁽³⁾	Amounts exclude any gain or loss upon settlement of related interest rate swap agreements, which are described further in Note 3, Derivative Financial Instruments.


⁽⁴⁾	Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on Starbucks and that specify all significant terms. Green coffee purchase commitments comprise ~~94%~~90% of total purchase obligations.


~~(4)~~	~~Debt amounts include principal maturities and scheduled interest payments on our long-term debt.~~


⁽⁵⁾	Other obligations include other long-term liabilities primarily consisting of asset retirement obligations, capital lease obligations and hedging instruments.



	Increase/(Decrease) to Net Earnings					Increase/(Decrease) to OCI
	10% Increase in Underlying Rate		10% Decrease in Underlying Rate			10% Increase in Underlying Rate		10% Decrease in Underlying Rate
Commodity hedges	$	10	$	(10	)	$	13	$	(13	)



			Change in Fair Value
	Fair Value		100 Basis Point Increase in Underlying Rate		100 Basis Point Decrease in Underlying Rate
	Fair Value		100 Basis Point Increase in Underlying Rate		100 Basis Point Decrease in Underlying Rate
Debt	$	674	$	29	$	(29	)



					Change in Fair Value
	Stated Interest Rate		Fair Value		100 Basis Point Increase in Underlying Rate			100 Basis Point Decrease in Underlying Rate
	Stated Interest Rate		Fair Value		100 Basis Point Increase in Underlying Rate			100 Basis Point Decrease in Underlying Rate
2016 notes	0.875	%	$	400	$	(9	)	$	9
2017 notes	6.250	%	$	625	$	(17	)	$	17
2018 notes	2.000	%	$	353	$	(14	)	$	14
2023 notes	3.850	%	$	786	$	(58	)	$	58


~~Item 7A.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~



	Common Stock				Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income/(Loss)			Shareholders’ Equity			Noncontrolling Interest			Total
	Shares		Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income/(Loss)			Shareholders’ Equity			Noncontrolling Interest			Total
Balance, September 27, 2009	742.9		$	0.7	$	186.4		$	2,793.2		$	65.4		$	3,045.7		$	11.2		$	3,056.9
Net earnings	—		—		—			945.6			—			945.6			2.7			948.3
Unrealized holding loss, net	—		—		—			—			(17.0		)	(17.0		)	—			(17.0		)
Translation adjustment, net of tax	—		—		—			—			8.8			8.8			—			8.8
Comprehensive income														937.4			2.7			940.1
Stock-based compensation expense	—		—		115.6			—			—			115.6			—			115.6
Exercise of stock options, including tax benefit of $27.7	10.1		—		137.5			—			—			137.5			—			137.5
Sale of common stock, including tax benefit of $0.1	0.8		—		18.5			—			—			18.5			—			18.5
Repurchase of common stock	(11.2	)	—		(285.6		)	—			—			(285.6		)	—			(285.6		)
Net distributions to noncontrolling interests	—		—		—			—			—			—			(0.8		)	(0.8		)
Cash dividend	—		—		—			(267.6		)	—			(267.6		)	—			(267.6		)
Purchase of noncontrolling interests	—		—		(26.8		)	—			—			(26.8		)	(5.5		)	(32.3		)
Balance, October 3, 2010	742.6		$	0.7	$	145.6		$	3,471.2		$	57.2		$	3,674.7		$	7.6		$	3,682.3
Net earnings	—		—		—			1,245.7			—			1,245.7			2.3			1,248.0
Unrealized holding loss, net	—		—		—			—			(4.4		)	(4.4		)	—			(4.4		)
Translation adjustment, net of tax	—		—		—			—			(6.5		)	(6.5		)	—			(6.5		)
Comprehensive income														1,234.8			2.3			1,237.1
Stock-based compensation expense	—		—		147.2			—			—			147.2			—			147.2
Exercise of stock options, including tax benefit of $96.1	17.3		—		312.5			—			—			312.5			—			312.5
Sale of common stock, including tax benefit of $0.1	0.5		—		19.1			—			—			19.1			—			19.1
Repurchase of common stock	(15.6	)	—		(555.9		)	—			—			(555.9		)	—			(555.9		)
Cash dividend	—		—		—			(419.5		)	—			(419.5		)	—			(419.5		)
Purchase of noncontrolling interests	—		—		(28.0		)	—			—			(28.0		)	(7.5		)	(35.5		)
Balance, October 2, 2011	744.8		$	0.7	$	40.5		$	4,297.4		$	46.3		$	4,384.9		$	2.4		$	4,387.3
Net earnings	—		—		—			1,383.8			—			1,383.8			0.9			1,384.7
Unrealized holding loss, net	—		—		—			—			(26.4		)	(26.4		)	—			(26.4		)
Translation adjustment, net of tax	—		—		—			—			2.8			2.8			—			2.8
Comprehensive income														1,360.2			0.9			1,361.1
Stock-based compensation expense	—		—		155.2			—			—			155.2			—			155.2
Exercise of stock options, including tax benefit of $167.3	16.5		—		326.1			—			—			326.1			—			326.1
Sale of common stock, including tax benefit of $0.2	0.3		—		19.5			—			—			19.5			—			19.5
Repurchase of common stock	(12.3	)	—		(501.9		)	(91.3		)	—			(593.2		)	—			(593.2		)
Cash dividend	—		—		—			(543.7		)	—			(543.7		)	—			(543.7		)
Non-controlling interest resulting from acquisition	—		—		—			—			—			—			2.2			2.2
Balance, September 30, 2012	749.3		$	0.7	$	39.4		$	5,046.2		$	22.7		$	5,109.0		$	5.5		$	5,114.5