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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 27, 201530, 2018
or
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to            .
Commission File Number: 0-20322
Starbucks Corporation
(Exact Name of Registrant as Specified in its Charter)
sbuxlogo09302018a11.jpg
Washington 91-1325671
(State of Incorporation) (IRS Employer ID)
2401 Utah Avenue South, Seattle, Washington 98134
(206) 447-1575
(Address of principal executive offices, zip code, telephone number)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
Common Stock, $0.001 par value per share Nasdaq Global Select Market
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No  ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.            Yes  ¨No  x
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation of S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of "large“large accelerated filer," "accelerated filer"” “accelerated filer,” “smaller reporting company” and "smaller reporting company"“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerxAccelerated filer
¨

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

Emerging growth company¨
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes   ¨    No  x
The aggregate market value of the voting stock held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter, based upon the closing sale price of the registrant’s common stock on March 29, 2015April 1, 2018 as reported on the NASDAQ Global Select Market was $69$77.8 billion. As of November 6, 2015,9, 2018, there were 1,484.81,240.6 million shares of the registrant’s Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the registrant’s Annual Meeting of Shareholders to be held on March 23, 201620, 2019 have been incorporated by reference into Part III of this Annual Report on Form 10-K.

Table of Contents

STARBUCKS CORPORATION
Form 10-K
For the Fiscal Year Ended September 27, 201530, 2018
TABLE OF CONTENTS
PART I
Item 1
Business
2
Item 1A
Risk Factors
10
Item 1B
Unresolved Staff Comments
1618
Item 2
Properties
1618
Item 3
Legal Proceedings
1618
Item 4
Mine Safety Disclosures
1619
PART II
Item 5
Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
1720
Item 6
Selected Financial Data
1922
Item 7
Management’s Discussion and Analysis of Financial Condition and Results of Operations
2225
Item 7A
Quantitative and Qualitative Disclosures About Market Risk
4548
Item 8
Financial Statements and Supplementary Data
4649
 
Index For Notes to Consolidated Financial Statements
5154
 
Report of Independent Registered Public Accounting Firm
8889
Item 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
8990
Item 9A
Controls and Procedures
8990
Item 9B
Other Information
9192
PART III
Item 10
Directors, Executive Officers and Corporate Governance
9293
Item 11
Executive Compensation
9293
Item 12
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
9293
Item 13
Certain Relationships and Related Transactions, and Director Independence
9293
Item 14
Principal Accounting Fees and Services
9293
PART IV
Item 15
Exhibits, Financial Statement Schedules
9394
SIGNATURES
94
INDEX TO EXHIBITS
96101
 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K includes "forward-looking"“forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "seeks"“believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “seeks” or words of similar meaning, or future or conditional verbs, such as "will," "should," "could," "may," "aims," "intends,"“will,” “should,” “could,” “may,” “aims,” “intends,” or "projects."“projects.” A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. These forward-looking statements are all based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Our actual future results and trends may differ materially depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed under "Risk Factors"“Risk Factors” and "Management’s“Management’s Discussion and Analysis of Financial Condition and Results of Operations".Operations.” Given these risks and uncertainties, you should not rely on forward-looking statements as a prediction of actual results. Any or all of the forward-looking statements contained in this Annual Report on Form 10-K and any other public statement made by us, including by our management, may turn out to be incorrect. We are including this cautionary note to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.



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PART I
Item 1. Business
General
Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world, operating in 68 countries.78 markets. Formed in 1985, Starbucks Corporation’s common stock trades on the NASDAQ Global Select Market ("NASDAQ"(“NASDAQ”) under the symbol "SBUX."“SBUX.” We purchase and roast high-quality coffees that we sell, along with handcrafted coffee, tea and other beverages and a variety of freshhigh-quality food items including snack offerings, through company-operated stores. We also sell a variety of coffee and tea products and license our trademarks through other channels such as licensed stores, grocery and foodservice accounts. In addition to our flagship Starbucks Coffee brand, we sell goods and services under the following brands: Teavana, Tazo, Seattle’s Best Coffee, Evolution Fresh, La Boulange, Ethos, Starbucks Reserve and Ethos.Princi.
Our objective is to maintain Starbucks standing as one of the most recognized and respected brands in the world. To achieve this, we are continuing the disciplined expansion of our global store base, adding stores in both existing, developed markets such as the U.S., and in newer, higher growth markets such as China, as well as optimizing the mix of company-operated and licensed stores in each market.around the world. In addition, by leveraging the experience gained through our traditional store model, we continue to offer consumers new coffee and other products in a variety of forms, across new categories, diverse channels and through diverse channels.alternative store formats. We also believe our Starbucks Global ResponsibilitySocial Impact strategy, commitments related to ethically sourcing high-quality coffee, and contributing positively to the communities we do business in and being an employer of choice are contributors to our objective.
In this Annual Report on Form 10-K ("10-K"(“10-K” or "Report"“Report”) for the fiscal year ended September 27, 2015 ("30, 2018 (“fiscal 2015"2018”), Starbucks Corporation (together with its subsidiaries) is referred to as "Starbucks,"“Starbucks,” the "Company," "we," "us"“Company,” “we,” “us” or "our."“our.”
Segment Financial Information
Segment information is prepared on the same basis that our management reviews financial information for operational decision-making purposes. On August 26, 2018, our Channel Development segment finalized licensing and distribution agreements with Nestlé S.A. (“Nestlé”) to sell and market our consumer packaged goods (“CPG”) and foodservice products and received an upfront prepaid royalty payment of approximately $7 billion. As a result, we realigned our organizational and operating segment structures in support of the newly established Global Coffee Alliance. The scope of the arrangement converts the majority of our previously defined Channel Development segment operations, as well as certain smaller businesses previously reported in the Americas, EMEA and Corporate and Other (previously All Other Segments), to licensed operations with Nestlé, and our reportable segments have been restated as if those smaller businesses were previously within our Channel Development segment.
We have four reportable operating segments: 1) Americas, which is inclusive of the U.S., Canada, and Latin America; 2) China/Asia Pacific ("CAP"(“CAP”); 3) Europe, Middle East, and Africa ("EMEA"(“EMEA”) and 4) Channel Development. We also have several non-reportable operating segments, including Teavana, Seattle's Best Coffee, Evolution Fresh, and our Digital Ventures business, as well as certain developing businesses such as theSiren Retail, which consists of Starbucks Reserve®TM Roastery & Tasting Room,Rooms, Starbucks Reserve brand stores and products and Princi operations, as well as Evolution Fresh and the Teavana retail business which aresubstantially ceased operations during fiscal 2018.Collectively, the combined group of non-reportable operating segments is reported within Corporate and referred to as All Other Segments.Other. Revenues from our reportable segments and AllCorporate and Other Segments as a percentage of total net revenues for fiscal 20152018 were as follows: Americas (69%(68%), CAP (13%(18%), EMEA (6%(4%), Channel Development (9%) and AllCorporate and Other Segments (3%(1%).
Our Americas, CAP and EMEA segments include both company-operated and licensed stores. Our Americas segment is our most mature business and has achieved significant scale. Certain markets within our CAP and EMEA operations are stilleither in the earlyvarious stages of development andor undergoing transformations of their business models. Therefore, they may require a more extensive support organization, relative to their current levels of revenue and operating income, than our Americas operations. In certain markets within CAP and EMEA, occupancy costs and store operating expenses can be higher than in the Americas segment due to higher rents for prime store locations or costs of compliance with country-specific regulatory requirements. The Americas and EMEA segments also include certain foodservice accounts, primarily in Canada and the U.K.
Our Channel Development segment includes roasted whole bean and ground coffees, premium TazoSeattle's Best Coffee® teas,, Starbucks- and Tazo-brandedTeavana-branded single-serve products, a variety of ready-to-drink beverages, such as Frappuccino®, Starbucks Doubleshot® and, Starbucks Refreshers® beverages and TeavanaTM/MC iced tea, and other branded products sold worldwide through channels such asoutside of our company-operated and licensed stores. Historically our consumer packaged goods have been sold directly to grocery, stores, warehouse clubs,club and specialty retailers, convenienceretail stores and U.S.through institutional foodservice accounts.companies. With the establishment of the Global Coffee Alliance with Nestlé, a large portion of our Channel Development business transitioned to a licensed model in the fourth quarter of fiscal 2018. Additionally, the CPG and foodservice businesses previously included in our Americas, EMEA and Corporate and Other (previously All Other Segments) were also transitioned to a licensed model under the Global Coffee Alliance and realigned to the Channel Development segment. Our collaborative relationships with PepsiCo, Inc., Anheuser-Busch InBev, Tingyi Holding Corp., Arla Foods and others for our global ready-to-drink beverage businesses in this segment are excluded from the Global Coffee Alliance.

Starbucks segment information is included in Note 16, Segment Reporting, to the consolidated financial statements included in Item 8 of Part II of this 10-K.


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Revenue Components
We generate nearly allthe majority of our revenues through company-operated stores and licensed stores, consumer packaged goods ("CPG") and foodservice operations.stores.
Company-operated and Licensed Store Summary as of September 27, 201530, 2018

Americas 
As a% of 
Total
Americas Stores
 CAP As a% of 
Total
CAP
Stores		 EMEA 
As a% of 
Total
EMEA Stores
 All Other Segments 
As a% of 
Total
All Other Segments Stores
 Total 
As a% of
Total 
Stores
Americas 
As a% of 
Total
Americas Stores
 CAP As a% of 
Total
CAP
Stores		 EMEA 
As a% of 
Total
EMEA Stores
 Corporate and Other 
As a% of 
Total
Corporate and Other
 Total 
As a% of
Total 
Stores
Company-operated stores8,671
 59% 2,452
 45% 737
 31% 375
 90% 12,235
 53%9,684
 55% 5,159
 60% 490
 15% 8
 40% 15,341
 52%
Licensed stores6,132
 41% 3,010
 55% 1,625
 69% 41
 10% 10,808
 47%7,770
 45% 3,371
 40% 2,830
 85% 12
 60% 13,983
 48%
Total14,803
 100% 5,462
 100% 2,362
 100% 416
 100% 23,043
 100%17,454
 100% 8,530
 100% 3,320
 100% 20
 100% 29,324
 100%
The mix of company-operated versus licensed stores in a given market will vary based on several factors, including our ability to access desirable local retail space, the complexity, profitability and expected ultimate size of the market for Starbucks and our ability to leverage the support infrastructure in an existingwithin a geographic region.
Company-operated Stores
Revenue from company-operated stores accounted for 79%80% of total net revenues during fiscal 2015.2018. Our retail objective is to be the leading retailer and brand of coffee and tea in each of our target markets by selling the finest quality coffee, tea and related products, as well as complementary food and snack offerings, and by providing each customer with a unique Starbucks Experience. The Starbucks Experience is built upon superior customer service and a seamless digital experience as well as clean and well-maintained stores that reflect the personalities of the communities in which they operate, thereby building a high degree of customer loyalty.
Our strategy for expanding our global retail business is to increase our market share in a disciplined manner, by selectively opening additional stores in new and existing markets, as well as increasing sales in existing stores, to support our long-term strategic objective to maintain Starbucks standing as one of the most recognized and respected brands in the world. Store growth in specific existing markets will vary due to many factors, including expected financial returns, the maturity of the market, economic conditions, consumer behavior and local business practices.

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Company-operated store data for the year-ended September 27, 2015:30, 2018:
Stores Open
as of
         
Stores Open
as of
Stores Open
as of
         
Stores Open
as of
Sep 28, 2014 Opened Closed Transfers Net Sep 27, 2015Oct 1, 2017 Opened Closed Transfers Net Sep 30, 2018
Americas:           
Americas(1):
           
U.S.7,303
 312
 (56) —
 256
 7,559
8,222
 401
 (48) —
 353
 8,575
Canada983
 41
 (15) —
 26
 1,009
1,083
 65
 (39) —
 26
 1,109
Brazil89
 18
 (4) —
 14
 103
108
 4
 —
 (112) (108) —
Puerto Rico20
 —
 (1) (19) (20) —
Total Americas8,395
 371
 (76) (19) 276
 8,671
9,413
 470
 (87) (112) 271
 9,684
China/Asia Pacific(1):
           
China/Asia Pacific(2):
           
China1,540
 528
 (24) 1,477
 1,981
 3,521
Japan—
 77
 (13) 1,009
 1,073
 1,073
1,218
 84
 (16) —
 68
 1,286
China823
 212
 (9) —
 203
 1,026
Thailand203
 36
 (2) —
 34
 237
312
 41
 (1) —
 40
 352
Singapore106
 14
 (4) —
 10
 116
Total China/Asia Pacific1,132
 339
 (28) 1,009
 1,320
 2,452
3,070
 653
 (41) 1,477
 2,089
 5,159
EMEA:                      
U.K.506
 4
 (18) (64) (78) 428
345
 15
 (23) (2) (10) 335
Germany152
 2
 (5) —
 (3) 149
France78
 —
 (2) —
 (2) 76
Switzerland55
 1
 —
 —
 1
 56
Austria17
 1
 —
 —
 1
 18
Netherlands9
 1
 —
 —
 1
 10
All Other157
 3
 (5) —
 (2) 155
Total EMEA817
 9
 (25) (64) (80) 737
502
 18
 (28) (2) (12) 490
All Other Segments:           
Corporate and Other:           
Teavana365
 11
 (5) —
 6
 371
288
 —
 (288) —
 (288) —
Evolution Fresh4
 —
 (1) —
 (1) 3
Starbucks Reserve® Roastery & Tasting Room
—
 1
 —
 —
 1
 1
Total All Other Segments369
 12
 (6) —
 6
 375
Siren Retail2
 6
 —
 —
 6
 8
Total Corporate and Other290
 6
 (288) —
 (282) 8
Total company-operated10,713

731

(135)
926

1,522

12,235
13,275

1,147

(444)
1,363

2,066

15,341
(1)
(1) Americas store data includes the transfer of 112 company-operated retail stores in Brazil to licensed stores as a result of the sale of our Brazil retail operations in the second quarter of fiscal 2018.
(2) China/Asia Pacific store data includes the transfer of 1,477 licensed stores in East China to company-operated retail stores as a result of the purchase of our East China joint venture in the first quarter of fiscal 2018.
China/Asia Pacific store data includes the transfer of 1,009 Japan stores from licensed stores to company-operated as a result of the acquisition of Starbucks Japan in the first quarter of fiscal 2015.
Starbucks® company-operated stores are typically located in high-traffic, high-visibility locations. Our ability to vary the size and format of our stores allows us to locate them in or near a variety of settings, including downtown and suburban retail centers, office buildings, university campuses and in select rural and off-highway locations. We are continuing the expansion of our various store formats, includingstores, inclusive of Drive Thru and express stores, toformats that provide a greaterhigher degree of access and convenience, and alternative store formats, which are focused on an elevated Starbucks Experience for our customers.
Starbucks® stores offer a choice of coffee and tea beverages, as well as other premium coffee, tea and related products, including distinctively packaged roasted whole bean and ground coffees, a variety of premium single-serve and ready-to-drink coffee and tea products, juices and bottled water. Starbucks® stores also offer an assortment of fresh food and snack offerings, including selections focusing on high-quality ingredients, nutritional value and great flavor. A focused selection of beverage-making equipment and accessories are also sold in our stores. Each Starbucks® store varies its product mix depending upon the size of the store and its location. To complement the in-store experience, our company-operated Starbucks® stores in the U.S., Canada, and certain other international markets also provide customers free access to wireless internet.

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Retail sales mix by product type for company-operated stores:
Fiscal Year EndedSep 27,
2015		 Sep 28,
2014		 Sep 29,
2013		Sep 30,
2018		 Oct 1,
2017		 Oct 2,
2016
Beverages73% 73% 74%74% 73% 74%
Food19% 18% 18%20% 20% 19%
Packaged and single-serve coffees and teas3% 4% 4%2% 3% 3%
Other(1)
5% 5% 4%4% 4% 4%
Total100% 100% 100%100% 100% 100%
(1) 
"Other"“Other” primarily consists of sales of serveware, ready-to-drink beverages serveware and coffee-making equipment, among other items.
In fiscal 2014, we moved ready-to-drink beverage revenues from the "Food" category to the "Other" category and combined packaged and single-serve teas, which were previously included in the "Other" category, with packaged and single-serve coffees, which are now categorized as "Packaged and single-serve coffees and teas." Additionally, we revised our discount allocation methodology in fiscal 2014 to more precisely allocate sales discounts to the various revenue product categories. None of these changes had a material impact on the composition of our retail sales mix by product type.

Stored Value Cards and Loyalty Program
The Starbucks Card, and our other branded stored value card programs areprogram, is designed to provide customers with a convenient payment method, support gifting and increase the frequency of store visits by cardholders, in part through the related My Starbucks Rewards®™ loyalty program where available, as discussed below. Stored value cards are issued to customers when they initially load them with an account balance. They can be obtained in our company-operated and most licensed stores in North America, China, Brazil,Japan, Latin America, and many of our markets in theour CAP and EMEA segment, as well assegments. Stored value cards can also be obtained on-line, via the Starbucks® mobile app,Mobile App, and through other retailers, including a number of otherU.S. and international locations.retailers. Customers may access their card balances by utilizing their stored value card or the Starbucks® mobile appMobile App in participating stores, which also include certain Teavana® and Evolution Fresh™ locations.stores. Using the Mobile Order and Pay functionality of the Starbucks® mobile app,Mobile App, customers can also place orders in advance for pick-up at certain participating locations in the U.S. Customersand Canada. In nearly all markets, including the U.S. and Canada, customers who register their card in the U.S., Canada, and certain other countriesStarbucks Cards are automatically enrolled in the My Starbucks Rewards®™ program andprogram. Registered members can receive various benefits depending on factors such as the number of reward points ("Stars"(“Stars”) earned in a 12-month period.earned. Refer to Note 1, Summary of Significant Accounting Policies, included in Item 8 of Part II of this 10-K, for further discussion of our stored value cards and loyalty program.
Licensed Stores
Revenues from our licensed stores accounted for 10%11% of total net revenues in fiscal 2015.2018. Licensed stores generally have a lower gross margin and 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 our share of costs as these are primarily incurred by the licensee.
In our licensed store operations, we leverage the expertise of our local partners and share our operating and store development experience. Licensees provide improved, and at times the only, access to desirable retail space. Most licensees are prominent retailers with in-depth market knowledge and access. As part of these arrangements, we sell coffee, tea, food and related products to licensees for resale to customers and receive royalties and license fees from the licensees. We also sell certain equipment, such as coffee brewers and espresso machines, to our licensees for use in their operations. Employees working in licensed retail locations are required to follow our detailed store operating procedures and attend training classes similar to those given to employees in company-operated stores. For Teavana® and Seattle's Best Coffee®, as well as Starbucks® stores within certainIn a limited number of international markets, we also use traditional franchising and include these stores in the results of operations from our other licensed stores.

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Licensed store data for the year-ended September 27, 201530, 2018:
 
Stores Open
as of
         
Stores Open
as of
 Sep 28, 2014 Opened Closed Transfers Net Sep 27, 2015
Americas(1):
           
U.S.4,659
 357
 (54) —
 303
 4,962
Mexico434
 73
 (1) —
 72
 506
Canada462
 23
 (136) —
 (113) 349
Other241
 55
 —
 19
 74
 315
Total Americas5,796
 508
 (191) 19
 336
 6,132
China/Asia Pacific(2):
           
South Korea700
 149
 (18) —
 131
 831
China544
 244
 (3) —
 241
 785
Taiwan323
 41
 (8) —
 33
 356
Philippines240
 24
 —
 —
 24
 264
Japan1,060
 22
 (15) (1,009) (1,002) 58
Other625
 101
 (10) —
 91
 716
Total China/Asia Pacific3,492
 581
 (54) (1,009) (482) 3,010
EMEA:           
U.K.285
 65
 (1) 65
 129
 414
Turkey220
 44
 (4) —
 40
 260
United Arab Emirates115
 18
 (2) —
 16
 131
Russia87
 21
 (4) —
 17
 104
Spain86
 4
 (1) —
 3
 89
Kuwait72
 5
 —
 —
 5
 77
Saudi Arabia67
 8
 (4) —
 4
 71
Other391
 92
 (3) (1) 88
 479
Total EMEA1,323
 257
 (19) 64
 302
 1,625
All Other Segments:           
Teavana29
 8
 (2) —
 6
 35
Seattle's Best Coffee13
 —
 (7) —
 (7) 6
Total All Other Segments42
 8
 (9) —
 (1) 41
Total licensed10,653

1,354

(273)
(926)
155

10,808
(1)
Americas store data includes the closure of 132 Target Canada licensed stores in the second quarter of fiscal 2015.
(2)
China/Asia Pacific store data includes the transfer of 1,009 Japan stores from licensed stores to company-operated as a result of the acquisition of Starbucks Japan in the first quarter of fiscal 2015.
Consumer Packaged Goods
 
Stores Open
as of
         
Stores Open
as of
 Oct 1, 2017 Opened Closed Transfers Net Sep 30, 2018
Americas(1):
           
U.S.5,708
 442
 (119) —
 323
 6,031
Mexico632
 76
 —
 —
 76
 708
Latin America429
 83
 (2) 112
 193
 622
Canada377
 44
 (12) —
 32
 409
Total Americas7,146
 645
 (133) 112
 624
 7,770
China/Asia Pacific(2):
           
China1,396
 84
 (3) (1,477) (1,396) —
Korea1,108
 138
 (15) —
 123
 1,231
Taiwan420
 43
 (5) —
 38
 458
Philippines324
 37
 (1) —
 36
 360
Indonesia317
 56
 (8) —
 48
 365
Malaysia248
 23
 (3) —
 20
 268
All Other596
 101
 (8) —
 93
 689
Total China/Asia Pacific4,409
 482
 (43) (1,477) (1,038) 3,371
EMEA:           
U.K.606
 62
 (17) 2
 47
 653
Turkey387
 67
 (1) —
 66
 453
United Arab Emirates164
 26
 (4) —
 22
 186
Germany156
 10
 (14) —
 (4) 152
Saudi Arabia124
 46
 (4) —
 42
 166
Kuwait118
 24
 —
 —
 24
 142
Spain113
 34
 (5) —
 29
 142
All Other804
 157
 (25) —
 132
 936
Total EMEA2,472
 426
 (70) 2
 358
 2,830
Corporate and Other:           
Teavana37
 —
 (25) —
 (25) 12
Total Corporate and Other37
 —
 (25) —
 (25) 12
Total licensed14,064

1,553

(271)
(1,363)
(81)
13,983
(1) Americas store data includes the transfer of 112 company-operated retail stores in Brazil to licensed stores as a result of the sale of our Brazil retail operations in the second quarter of fiscal 2018.
(2) China/Asia Pacific store data includes the transfer of 1,477 licensed stores in East China to company-operated retail stores as a result of the purchase of our East China joint venture in the first quarter of fiscal 2018.
Other Revenues from
Other revenues primarily are recorded in our Channel Development segment and include sales of consumer packaged goods comprised 8%coffee, tea and ready-to-drink beverages to customers outside of total netour company-operated and licensed stores. Historically revenues in fiscal 2015. Our consumer packaged goods business includes bothhave included domestic and international sales of our packaged coffee, tea and tea as well as a variety of ready-to-drink beverages and single-serve coffee and tea products to grocery, warehouse clubsclub and specialty retail stores. It alsostores and through institutional foodservice companies which serviced businesses. In the fourth quarter of fiscal 2018, we began licensing the rights to sell and market Starbucks-branded products in authorized channels to Nestlé. As a result, other revenues includes revenues from product sales to and licensing revenuesrevenue from manufacturers that produceNestlé under this arrangement and market Starbucks-, Seattle’s Best Coffee- and Tazo-branded products through licensing agreements.


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Foodservice
Revenues from foodservice accounts comprised 3% of total net revenues in fiscal 2015. We sell Starbucks® and Seattle’s Best Coffee® roasted whole bean and ground coffees, a selection of premium Tazo® teas, Starbucks VIA® Ready Brew, and other coffee and tea-related products to institutional foodservice companies that service business and industry, education, healthcare, office coffee distributors, hotels, restaurants, airlines and other retailers. We also sell our Seattle’s Best Coffee® through arrangements with national accounts. The majoritythe amortization of the sales in this channel come through national broadline distribution networksupfront prepaid royalty payment. Our collaborative business relationships for global ready-to-drink products and the associated revenues remain unchanged due to the Global Coffee Alliance with SYSCO Corporation, U.S. Foodservice™, and other distributors.Nestlé.

Product Supply
Starbucks is committed to selling the finest whole bean coffees and coffee beverages. To ensure compliance with our rigorous coffee standards, we control coffee purchasing, roasting and packaging and the global distribution of coffee used in our operations. We purchase green coffee beans from multiple coffee-producing regions around the world and custom roast them to our exacting standards for our many blends and single origin coffees.
The price of coffee is subject to significant volatility. Although most coffee trades in the commodity market, high-altitude arabica coffee of the quality sought by Starbucks tends to trade on a negotiated basis at a premium above the "C"“C” coffee commodity price. Both the premium and the commodity price depend upon the supply and demand at the time of purchase. Supply and price can 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. Price is also impacted by trading activities in the arabica coffee futures market, including hedge funds and commodity index funds. In addition, green coffee prices have been affected in the past, and may be affected in the future, by 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.
We buy coffee using fixed-price and price-to-be-fixed purchase commitments, depending on market conditions, to secure an adequate supply of quality green coffee. Price-to-be-fixed contracts are purchase commitments whereby the quality, quantity, delivery period, and other negotiated terms are agreed upon, but the date, and therefore the price, at which the base "C"“C” coffee commodity price component will be fixed has not yet been established. For these types ofmost contracts, either Starbucks or the seller has the option to select a date on which to "fix"“fix” the base "C"“C” coffee commodity price prior to the delivery date. For other contracts, Starbucks and the seller may agree upon pricing parameters determined by the base “C” coffee commodity price. Until prices are fixed, we estimate the total cost of these purchase commitments. Total green coffee purchase commitments as of September 27, 201530, 2018 were $1.1 billion, comprised of $819$996 million under fixed-price contracts and an estimated $266$166 million under price-to-be-fixed contracts. As of September 27, 2015, approximately $38 million30, 2018, none of our price-to-be-fixed contracts were effectively fixed through the use of futures contracts. AllMost price-to-be-fixed contracts as of September 27, 201530, 2018 were at the Company’s option to fix the base "C"“C” coffee commodity price component. Total purchase commitments, together with existing inventory, are expected to provide an adequate supply of green coffee through fiscal 2016.2019.
We depend upon our relationships with coffee producers, outside trading companies and exporters for our supply of green coffee. We believe, based on relationships established with our suppliers, the risk of non-delivery on such purchase commitments is remote.
To help ensure the future supply of high-quality green coffee and to reinforce our leadership role in the coffee industry, Starbucks operates sevennine farmer support centers. The farmer support centers are staffed with agronomists and sustainability experts who work with coffee farming communities to promote best practices in coffee production designed to improve both coffee quality, yields and yields.agronomy support to address climate and other impacts.
In addition to coffee, we also purchase significant amounts of dairy products, particularly fluid milk, to support the needs of our company-operated stores. We believe, based on relationships established with our dairy suppliers, that the risk of non-delivery of sufficient fluid milk to support our stores is remote.
Products other than whole bean coffees and coffee beverages sold in Starbucks® stores include tea and a number of ready-to-drink beverages that are purchased from several specialty suppliers, usually under long-term supply contracts. Food products, such as La Boulange™pastries, breakfast sandwiches and lunch items, are purchased from national, regional and local sources. As we continue to develop our food program, we expect the amount of food products purchased to become more significant to our operations. We also purchase a broad range of paper and plastic products, such as cups and cutlery, from several companies to support the needs of our retail stores as well as our manufacturing and distribution operations. We believe, based on relationships established with these suppliers and manufacturers, that the risk of material non-delivery of sufficient amounts of these items is remote.

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Competition
Our primary competitors for coffee beverage sales are specialty coffee shops offering premium and quick-service restaurants.artisanal products and experiences. In almost all markets in which we do business, there are numerous competitors in the specialty coffee beverage business. We believe that our customers choose among specialty coffee retailers primarily on the basis of product quality, service and convenience, as well as price. We continue to experience direct competition from large competitors in the U.S. quick-service restaurant sector and the U.S. ready-to-drink coffee beverage market, in addition to well-established companies in many international markets. We also compete with restaurants and other specialty retailers for prime retail locations and qualified personnel to operate both new and existing stores.
Our coffee and tea products sold through our Channel Development segment compete directly against specialty coffees and teas sold through grocery stores, warehouse clubs, specialty retailers, convenience stores and U.S. foodservice accounts and compete indirectly against all other coffees and teas on the market.

Trademarks, Copyrights, Patents and Domain Names
Starbucks owns and has applied to register numerous trademarks and service marks in the U.S. and in other countries throughout the world. Some of our trademarks, including Starbucks, the Starbucks logo, Tazo,Starbucks Reserve, Seattle’s Best Coffee, Teavana, Frappuccino, Starbucks VIA Evolution Fresh and La Boulange are of material importance. The duration of trademark registrations varies from country to country. However, trademarks are generally valid and may be renewed indefinitely as long as they are in use and/or their registrations are properly maintained.
We own numerous copyrights for items such as product packaging, promotional materials, in-store graphics and training materials. We also hold patents on certain products, systems and designs. In addition, Starbucks has registered and maintains numerous Internet domain names, including "Starbucks.com," "Starbucks.net," "Tazo.com," "Seattlesbest.com"“Starbucks.com,” “Starbucks.net,” “Starbucksreserve.com,” “Seattlesbest.com” and "Teavana.com."“Teavana.com.”
Seasonality and Quarterly Results
Our business is subject to moderate seasonal fluctuations, including fluctuations resulting from the holiday season in December. Excluding the impact of a $2.8 billion cash payment in the firstwhich our fiscal second quarter of fiscal 2014 related to the Kraft arbitration matter, our cash flows from operations are considerably higher in the first fiscal quarter than the remainder of the year. This is largely driven by cash receivedtypically experiences lower revenues and operating income. Additionally, as Starbucks Cards are issued to and loaded by customers during the holiday season. Sinceseason, we tend to have higher cash flows from operations during the first quarter of the fiscal year. However, since revenues from Starbucks Cards are recognized upon redemption and not when cash is loaded onto them,the Card, the impact of seasonal fluctuations on the consolidated statements of earnings is much less pronounced. Quarterly results are also affected by the timingAs a result of the opening of new stores and the closing of existing stores. For these reasons,moderate seasonal fluctuations, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.
Employees
Starbucks employed approximately 238,000291,000 people worldwide as of September 27, 2015.30, 2018. In the U.S., Starbucks employed approximately 157,000191,000 people, with approximately 150,000183,000 in company-operated stores and the remainder in support facilities, store development, and roasting, manufacturing, warehousing and distribution operations. Approximately 81,000100,000 employees were employed outside of the U.S., with approximately 78,00097,000 in company-operated stores and the remainder in regional support operations. The number of Starbucks employees represented by unions is not significant. We believe our current relations with our employees are good.
Executive Officers of the Registrant
Name Age Position
Howard SchultzKevin R. Johnson 6258 chairmanpresident and chief executive officer
Kevin R. JohnsonRosalind G. Brewer 5556 group president, Americas and chief operating officer
Cliff Burrows 5659 group president, U.S. and AmericasSiren Retail
John Culver 5558 group president, China, Asia Pacific,International, Channel Development and Emerging BrandsGlobal Coffee & Tea
Scott MawRachel A. Gonzalez 48executive vice president, chief financial officer
Lucy Lee Helm5849 executive vice president, general counsel and secretary
Patrick J. Grismer56
executive vice president, effective November 12, 2018;
executive vice president, chief financial officer and chief accounting officer, effective November 30, 2018
Lucy Lee Helm61executive vice president, chief partner officer
Scott Maw51executive vice president, chief financial officer (retiring November 30, 2018)
Vivek Varma52executive vice president, Public Affairs

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Howard Schultz is the founder of Starbucks Corporation and serves as the chairman and chief executive officer. Mr. Schultz has served as chairman of the board of directors since Starbucks inception in 1985, and in January 2008, he reassumed the role of president and chief executive officer. He served as president until March 2015. From June 2000 to February 2005, Mr. Schultz also held the title of chief global strategist. From November 1985 to June 2000, he served as chairman of the board and chief executive officer. From November 1985 to June 1994, Mr. Schultz also served as president. From January 1986 to July 1987, Mr. Schultz was the chairman of the board, chief executive officer and president of Il Giornale Coffee Company, a predecessor to the Company. From September 1982 to December 1985, Mr. Schultz was the director of retail operations and marketing for Starbucks Coffee Company, a predecessor to the Company.
Kevin R. Johnson has served as our president and chief operatingexecutive officer since March 2015April 2017, and has been a Starbucks director since March 2009. Mr. Johnson served as president and chief operating officer from March 2015 to April 2017. Mr. Johnson served as Chief Executive Officer of Juniper Networks, Inc., a leading provider of high-performance networking products and services, from September 2008 to December 2013. He also served on the Board of Directors of Juniper Networks from September 2008 through February 2014. Prior to joining Juniper Networks, Mr. Johnson served as President, Platforms and Services Division for Microsoft Corporation, a worldwide provider of software, services and solutions. Mr. Johnson was a member of Microsoft’s Senior Leadership Team and held a number of senior executive positions over the course of his 16 years at Microsoft. Prior to joining Microsoft in 1992, Mr. Johnson worked in International Business Machine Corp.’s systems integration and consulting business.
Rosalind G. Brewer has served as group president, Americas and chief operating officer since October 2017, and has been a director of Starbucks since March 2017. Ms. Brewer served as President and Chief Executive Officer of Sam's Club, a membership-only retail warehouse club and a division of Walmart Inc., from February 2012 to February 2017. Previously, Ms.

Brewer was Executive Vice President and President of Walmart's East Business Unit from February 2011 to January 2012; Executive Vice President and President of Walmart South from February 2010 to February 2011; Senior Vice President and Division President of the Southeast Operating Division from March 2007 to January 2010; and Regional General Manager, Georgia Operations, from 2006 to February 2007. Prior to joining Walmart, Ms. Brewer was President of Global Nonwovens Division for Kimberly-Clark Corporation, a global health and hygiene products company, from 2004 to 2006 and held various management positions at Kimberly-Clark Corporation from 1984 to 2006. She serves as the Chair of the Board of Trustees for Spelman College and formerly served on the Board of Directors for Lockheed Martin Corporation and Molson Coors Brewing Company.
Cliff Burrows joined Starbucks in April 2001 and has served as group president, Siren Retail, since September 2016, which includes the Starbucks ReserveTM Roastery & Tasting Rooms, Starbucks Reserve brand and Princi operations. From July 2015 to September 2016, he served as group president, U.S. and Americas since July 2015.Americas. From February 2014 to June 2015, he served as group president, U.S., Americas and Teavana. From May 2013 to February 2014, he served as group president, Americas and U.S., EMEA (Europe, Middle East and Africa) and Teavana. Mr. Burrows served as president, Starbucks Coffee Americas and U.S. from October 2011 to May 2013 and as president, Starbucks Coffee U.S. from March 2008 to October 2011. He served as president, Europe, Middle East and Africa (EMEA)EMEA from April 2006 to March 2008. He served as vice president and managing director, U.K. prior to April 2006. Prior to joining Starbucks, Mr. Burrows served in various management positions with Habitat Designs Limited, a furniture and housewares retailer.
John Culver joined Starbucks in August 2002 and has served as group president, International, Channel Development and Global Coffee & Tea, since July 2018. From October 2017 to July 2018, Mr. Culver served as group president, International and Channels. From September 2016 to October 2017, he served as group president, Starbucks Global Retail. From May 2013 to September 2016, he served as group president, China, Asia Pacific, Channel Development and Emerging Brands since May 2013.Brands. Mr. Culver served as president, Starbucks Coffee China and Asia Pacific from October 2011 to May 2013. From December 2009 to October 2011, he served as president, Starbucks Coffee International. Mr. Culver served as executive vice president; president, Global Consumer Products, Foodservice and Seattle’s Best Coffee from February 2009 to September 2009, and then as president, Global Consumer Products and Foodservice from October 2009 to November 2009. He previously served as senior vice president; president, Starbucks Coffee Asia Pacific from January 2007 to February 2009, and vice president; general manager, Foodservice from August 2002 to January 2007.
Scott Maw Rachel A. Gonzalezjoined Starbucks in August 2011 and has served as executive vice president, general counsel and secretary since joining Starbucks in April 2018. Prior to joining Starbucks, Ms. Gonzalez served as executive vice president and chief financialadministrative officer since February 2014.of Sabre Corporation, a technology provider to the travel industry, from May 2017 to April 2018 and as Sabre’s executive vice president and general counsel from September 2014 to May 2017. From OctoberMarch 2013 to September 2014, Ms. Gonzalez served as executive vice president, general counsel and corporate secretary of Dean Foods Company, a food and beverage company, and as its executive vice president, general counsel designate from November 2012 to February 2014, heMarch 2013. She served as chief counsel, corporate and securities of Dean Foods from 2008 to November 2012. From 2006 to 2008, Ms. Gonzalez served as senior vice president Corporate Finance and as corporate controller from August 2011 to October 2012.group counsel for Affiliated Computer Services, Inc., an information technology service provider. Prior to joiningthat, Ms. Gonzalez was a partner with the law firm of Morgan, Lewis & Bockius LLP, where she focused on corporate finance, mergers and acquisitions, SEC compliance and corporate governance. Ms. Gonzalez serves on the Board of Directors of Dana Incorporated.
Patrick J. Grismer joined Starbucks Mr. Maw servedin November 2018, as executive vice president, effective November 12, 2018 and will be executive vice president, chief financial officer and chief accounting officer, effective November 30, 2018. From March 2016 to November 2018, Mr. Grismer served as Executive Vice President, Chief Financial Officer of SeaBright Insurance Company from February 2010 to August 2011.Hyatt Hotels Corporation, a global hospitality company. From October 2008May 2012 to February 2010,2016, Mr. MawGrismer served as chief financial officer of the Consumer Banking division of JPMorgan Chase & Co.Chief Financial Officer at Yum! Brands, Inc., havinga global restaurant company. He previously held a similar positionnumber of roles at Washington Mutual Bank priorYum!, including Chief Planning and Control Officer and Chief Financial Officer for Yum! Restaurants International. Prior to its acquisition by Chase. From 1994 to 2003, hethat, Mr. Grismer served in various finance leadership positionsroles at General Electric Company.The Walt Disney Company including Vice President, Business Planning and Development for The Disneyland Resort and Chief Financial Officer for the Disney Vacation Club. Mr. Grismer began his career with Price Waterhouse.
Lucy Lee Helmjoined Starbucks in September 1999, and has served as executive vice president, chief partner officer since August 2017. From May 2012 to August 2017, Ms. Helm served as executive vice president, general counsel and secretary since May 2012.secretary. She served as senior vice president and deputy general counsel from October 2007 to April 2012 and served as interim general counsel and secretary from April 2012 to May 2012. Ms. Helm previously served as vice president, assistant general counsel from June 2002 to September 2007 and as director, corporate counsel from September 1999 to May 2002. During her tenure at Starbucks, Ms. Helm has led various teams of the Starbucks legal department, including the Litigation and Brand protection team, the Global Business (Commercial) team and the Litigation and Employment team. Prior to joining Starbucks, Ms. Helm was a principal at the Seattle law firm of Riddell Williams P.S. from 1990 to 1999, where she was a trial lawyer specializing in commercial, insurance coverage and environmental litigation.

Scott Maw joined Starbucks in August 2011, and has served as executive vice president, chief financial officer since February 2014. He will retire from the Company on November 30, 2018. From October 2012 to February 2014, he served as senior vice president, Corporate Finance and as corporate controller from August 2011 to October 2012. Prior to joining Starbucks, Mr. Maw served as chief financial officer of SeaBright Insurance Company from February 2010 to August 2011. From October 2008 to February 2010, Mr. Maw served as chief financial officer of the Consumer Banking division of JPMorgan Chase & Co., having held a similar position at Washington Mutual Bank prior to its acquisition by Chase. From 1994 to 2003, he served in various finance leadership positions at General Electric Company. Mr. Maw serves on the Board of Directors of Avista Corporation.
Vivek Varmajoined Starbucks in September of 2008, and has served as executive vice president, Public Affairs since May 2010. From September 2008 to May 2010, Mr. Varma served as senior vice president, Public Affairs. Prior to joining Starbucks, Mr. Varma was general manager of communications and public relations for the Platforms and Services Division of Microsoft Corporation, a worldwide provider of software, services and solutions, from April 2006 to September 2008. From January 2002 to April 2006, Mr. Varma served in a number of other positions with Microsoft, including as senior director of corporate communications and public relations in Microsoft’s Corporate Marketing Group.
Global ResponsibilitySocial Impact
We are committed to being a deeply responsible company in the communities where we do business. Our focus is on ethically sourcing high-quality coffee and tea, reducing our environmental impacts and contributing positively to communities around the world. Starbucks Global ResponsibilitySocial Impact strategy and commitments are integral to our overall business strategy. As a result, we believe we deliver benefits to our stakeholders, including employees, business partners, customers, suppliers, shareholders, community members and others. For an overview of Starbucks Global ResponsibilitySocial Impact strategy and commitments, please visit www.starbucks.com/responsibility.


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Available Information
Starbucks 10-K reports, along with all other reports and amendments filed with or furnished to the Securities and Exchange Commission ("SEC"(“SEC”), are publicly available free of charge on the Investor Relations section of our website at investor.starbucks.com or at www.sec.gov as soon as reasonably practicable after these materials are filed with or furnished to the SEC. Our corporate governance policies, code of ethics and Board committee charters and policies are also posted on the Investor Relations section of Starbucks website at investor.starbucks.com.website. The information on our website is not part of this or any other report Starbucks files with, or furnishes to, the SEC.
Item 1A. Risk Factors
You should carefully consider the risks described below. If any of the risks and uncertainties described in the cautionary factors described below actually occurs, our business, financial condition and results of operations, and the trading price of our common stock could be materially and adversely affected. Moreover, we operate in a veryan increasingly competitive and rapidly changing environment. New factors emerge from time to time and it is not possible to predict the impact of all these factors on our business, financial condition or results of operation.

operations.
Economic conditions in the U.S. and international markets could adversely affect our business and financial results.
As a retailer that is dependent upon consumer discretionary spending, our results of operations are sensitive to changes in or uncertainty about macro-economic conditions. Our customers may have less money for discretionary purchases and may stop or reduce their purchases of our products or trade down to Starbucks or competitors' lower priced products as a result of job losses, foreclosures, bankruptcies, increased fuel and energy costs, higher interest rates, inflation, higher taxes, and reduced access to credit.credit, economic uncertainty and potential negative impacts relating to federal economic policy changes and recent international trade disputes. These factors may also result in a general downturn in the restaurant industry. Decreases in customer traffic and/or average value per transaction will negatively impact our financial performance as reduced revenues without a corresponding decrease in expenses result in sales de-leveraging, which creates downward pressure on margins and also negatively impacts comparable store sales, net revenues, operating income and earnings per share. There is also a risk that if negative economic conditions or uncertainty persist for a long period of time or worsen, consumers may make long-lasting changes to their discretionary purchasing behavior, including less frequent discretionary purchases on a more permanent basis.

Our success depends substantially on the value of our brands and failure to preserve their value, either through our actions or those of our business partners, 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 corporateglobal social responsibilityimpact programs. The Starbucks brand is recognized throughout the world and we have received high ratings in global brand value studies. To be successful in the future, particularly outside of the U.S., 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.
Additionally, our business strategy, including our plans for new stores, foodservice, branded products and other initiatives, relies significantly on a variety of business partners, including licensee and joint venture relationships, particularly in our international markets, and third partythird-party manufacturers, distributors and retailers, particularly infor our internationalentire global Channel Development business. Licensees, retailers and foodservice operators are often authorized to use our logos and provide branded beverages, food, beverage 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 our control, including financial pressures they may face. We believe customers expect the same quality of products and service from our licensees and foodservice providerslicensed-store operators as they do from us and we strive to ensure customers receive the same quality of products and service experience whether they visit a company-operated store or a licensed store or foodservice location.store. We also source our food, beverage and other products from a wide variety of domestic and international business partners in our supply chain operations, and in certain cases such products are produced or sourced by our licensees directly.
Business incidents, whether isolated or recurring And although foodservice operators are authorized to use our logos and whether originating from us or ourprovide branded products as part of their foodservice business, partners, that erode consumer trust, such as actual or perceived breaches of privacy, contaminated food, recalls or other potential incidents discussed in this risk factors section, particularly if the incidents receive considerable publicity, including rapidly through social or digital media, 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 or other business partners fail to preservedo not monitor the quality of ournon-Starbucks products are perceived to actserved in an unethical or socially irresponsible manner, including with respect to the sourcing, content or sale of our products, fail to comply with laws and regulations or fail to deliver a consistently positive consumer experience in each of our markets.those locations. 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

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our intellectual property assets, can erode consumer trust and our brand value and have a material negative impact on our financial results.
Business incidents, whether isolated or recurring and whether originating from us or our business partners, that erode consumer trust, such as actual or perceived breaches of privacy or violations of domestic or international privacy laws, contaminated food, product recalls, store employees or other food handlers infected with communicable diseases or other potential incidents discussed in this risk factors section, particularly if the incidents receive considerable publicity, including rapidly through social or digital media (including for malicious reasons), or result in litigation, and failure to respond appropriately to these incidents (or being perceived to not have reacted appropriately), can significantly reduce brand value, trigger boycotts of our stores or products or demonstrations at our stores, result in civil and criminal liability and have a negative impact on our financial results. Consumer demand for our products and our brand equity could diminish significantly if we, our employees or our licensees or other business partners fail to preserve the quality of our products, act or are perceived to act in an unethical, illegal, racially-biased or unequal treatment basis or socially irresponsible manner, including with respect to the sourcing, content or sale of our products, service and treatment at Starbucks stores or the use of customer data for general or direct marketing or other purposes, fail to comply with laws and regulations, publicly take controversial positions or actions or fail to deliver a consistently positive consumer experience in each of our markets, including by failing to invest in the right balance of wages and benefits to attract and retain employees that represent the brand well.
Incidents involving food or beverage-borne illnesses, tampering, adulteration, contamination or mislabeling, whether or not accurate, as well as adverse public or medical opinions about the health effects of consuming our products, could harm our business.
Instances or reports, whether true or not, of unclean water supply or food-safety issues, such as food or beverage-borne illnesses, tampering, adulteration, contamination or mislabeling, either during growing, manufacturing, packaging, storing or preparation, have in the past severely injured the reputations of companies in the food and beverage processing, grocery and quick-service restaurant sectors and could affect us as well. Any report linking us to the use of unclean water, food or beverage-borne illnesses, tampering, adulteration, contamination, mislabeling or other food or beverage-safety issues could damage our brand value and severely hurt sales of our food and beverage products and possibly lead to product liability claims, litigation (including class actions) or damages. Clean water is critical to the preparation of coffee, tea and other beverages, as well as ice for our cold beverages, and our ability to ensure a clean water and ice supply to our stores can be limited, particularly in some international locations. We are also continuing to incorporate more products in our food and beverage lineup that require freezing or refrigeration, including produce (such as fruits and vegetables in our salads and juices), dairy products (such as milk and cheeses), non-dairy alternative products (such as soymilk and almondmilk), ice for our cold drinks and meats. We also face risk by relying on third-party food suppliers to provide and transport ingredients and finished products to our stores. We 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 our control, which make it more difficult to detect contamination or other defect in these products. Additionally, we are evolving our product lineup to include more local or smaller suppliers for some of our products who may not have as rigorous quality and safety systems and protocols as larger or more national suppliers. If customers become ill from food or beverage-borne illnesses, tampering, adulteration, contamination, mislabeling or other food or beverage-safety issues, we could be forced to temporarily close some stores and/or supply chain facilities, as well as recall products. In addition, instances of food or beverage-safety issues, even those involving solely the restaurants or stores of competitors or of suppliers or distributors (regardless of whether we use or have used those suppliers or distributors), could, by resulting in negative publicity about us or the foodservice industry in general, adversely affect our sales on a regional or global basis. A decrease in customer traffic as a result of food-safety concerns or negative publicity, or as a result of a temporary

closure of any of our stores, product recalls or food or beverage-safety claims or litigation, could materially harm our business and results of operations.
Some of our products contain caffeine, dairy products, sugar and other compounds and allergens, the health effects of which are the subject of public and regulatory scrutiny, including the suggestion that excessive consumption of caffeine, dairy products, sugar and other compounds can lead to a variety of adverse health effects. Particularly in the U.S., 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 and beverage 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, whether accurate or not, imposition of additional taxes on certain types of beverages, or negative publicity or litigation arising from certain health risks could significantly reduce the demand for our beverages and food products and could materially harm our business and results of operations.
The unauthorized access, use, theft or destruction of customer or employee personal, financial or other data or of Starbucks proprietary or confidential information that is stored in our information systems or by third parties on our behalf could impact our reputation and brand and expose us to potential liability and loss of revenues.
OurMany of our information technology systems, such as those we use for our point-of-sale, web and mobile platforms, including online and mobile payment systems, delivery services and rewards programs, and for administrative functions, including human resources, payroll, accounting and internal and external communications, as well as the information technology systems of our third partylicensees, franchisees and other third-party business partners and service providers, canwhether cloud-based or hosted in proprietary servers, contain personal, financial or other information that is entrusted to us by our customers and employees. OurMany of our information technology systems also contain Starbucks proprietary and other confidential information related to our business, such as business plans, product development initiatives and designs. Similar to many other retail companies and because of the prominence of our brand, we have experienced frequentare consistently subject to attempts to compromise our information technology systems. To the extent we or a third party were to experience a material breach of our or such third party’s information technology systems that result in the unauthorized access, theft, use, destruction or destructionother compromises of customers' or employees' data or thatconfidential information of the Company stored in such systems, including through cyber-attacks or other external or internal methods, it could result in a material loss of revenues from the potential adverse impact to our reputation and brand, our ability to retain or attract new customers and the potential disruption to our business and plans. Such security breaches also could result in a violation of applicable U.S. and international privacy and other laws, and subject us to private consumer, business partner, or securities litigation and governmental investigations and proceedings, any of which could result in our exposure to material civil or criminal liability. For example, the European Union adopted a new regulation that became effective in May 2018, called the General Data Protection Regulation (“GDPR”), which requires companies to meet new requirements regarding the handling of personal data, including its use, protection and transfer and the ability of persons whose data is stored to correct or delete such data about themselves. Failure to meet the GDPR requirements could result in penalties of up to 4% of annual worldwide revenue. The GDPR also confers a private right of action on certain individuals and associations. Our reputation and brand and our ability to attract new customers could also be adversely impacted if we fail, or are perceived to have failed, to properly respond to these incidents. Such failure to properly respond could also result in similar exposure to liability.
Compliance with the GDPR and other applicable international and U.S. privacy, cybersecurity and related laws can be costly and time-consuming. Significant capital investments and other expenditures could also be required to remedy the problemcybersecurity problems and prevent future breaches, including costs associated with additional security technologies, personnel, experts and credit monitoring services for those whose data has been breached. These costs, which could be material, could adversely impact our results of operations in the period in which they are incurred and may not meaningfully limit the success of future attempts to breach our information technology systems.
Media or other reports of existing or perceived security vulnerabilities in our systems or those of our third partythird-party business partners or service providers even if no breach has been attempted or has occurred, can also adversely impact our brand and reputation and materially impact our business.business, even if no breach has been attempted or has occurred. Additionally, the techniques and sophistication used to conduct cyber-attacks and breaches of information technology systems, as well as the sources and targets of these attacks, change frequently and are often not recognized until such attacks are launched or have been in place for a period of time. We continue to make significant investments in technology, third partythird-party services and personnel to develop and implement systems and processes that are designed to anticipate cyber-attacks and to prevent or minimize breaches of our information technology systems or data loss, but these security measures cannot provide assurance that we will be successful in preventing such breaches or data loss.

Incidents involving food-borne illnesses, food tampering, food contamination or mislabeling, whether or not accurate, as well as adverse public or medical opinions about the health effects of consuming our products, could harm our business.
Instances or reports, whether true or not, of unclean water supply or food-safety issues, such as food-borne illnesses, food tampering, food contamination or mislabeling, either during growing, manufacturing, packaging, storing 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 or food tampering, contamination, mislabeling or other food-safety issues could damage our brand value and severely hurt sales of our food products, including our beverages, 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. We are also continuing to incorporate more products in our food lineup that require freezing or refrigeration, including produce (such as fruits and vegetables in our salads and juices), dairy products (such as milk and cheeses) and meats. If customers become ill from food-borne illnesses, tampering, contamination, mislabeling or other food-safety issues, we could be forced to temporarily close some stores and/or supply chain facilities, as well as recall products. In addition, instances of food-safety issues, even those involving solely the restaurants or stores of competitors or of suppliers or distributors (regardless of whether we use or have used those suppliers or distributors), could, by resulting in negative publicity about us or the foodservice industry in general, adversely affect our sales on a regional or global basis. A decrease in customer traffic as a result of food-safety concerns or negative publicity, or as a result of a temporary closure of any of our stores, product recalls or food-safety claims or litigation, could materially harm our business and results of operations.
Some of our products contain caffeine, dairy products, sugar and other 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 compounds

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can lead to a variety of adverse health effects. Particularly in the U.S., 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, whether accurate or not, or negative publicity or litigation arising from certain health risks could significantly reduce the demand for our beverages and food products and could materially harm our business and results of operations.

We rely heavily on information technology in our operations and growth initiatives, and any material failure, inadequacy, interruption or security failure of that technology could harm our ability to effectively operate and grow our business and 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, delivery services, mobile technology, including mobile payments and ordering apps, reloads and loyalty functionality and various other processes and transactions.transactions, and many of these systems are interdependent on one another for their functionality. Additionally, the success of several of our initiatives to drive growth, including our priority to increase digital relationships with our customers to drive incremental traffic and spend, is highly dependent on our technology systems. Our ability to effectively manage our business, launch digital and other initiatives, and coordinate the production, distribution, administration and sale of our products depends significantly on the reliability, integrity and capacity of these systems. We also rely on third partythird-party providers and platforms for some of these information technology systems and support, including a small number of large third party providers for some of our administrative functions.support. Additionally, our systems hardware, software and services provided by third-party service providers are not fully redundant within a market or across our markets. As a result, we may be unable to use information systems in one market to cover system failures in such market or another market. Although we have security measuresoperational safeguards 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, physical theft, computer and network failures, inadequate or ineffective redundancy, problems with transitioning to upgraded or replacement systems or platforms, flaws in third partythird-party software or services, errors or improper use by our employees or third party service providers, or a breach in the security of these systems or platforms, including through cyber-attacks such as those that result in the blockage of our or our third-party business partners’ or service providers’ systems and platforms and those discussed in more detail in this risk factors section. If our incident response, disaster recovery and business continuity plans do not resolve these issues in an effective manner they could result in an interruption in our operations and could cause material negative impacts to our product availability and sales, the efficiency of our operations and our financial results. In addition, remediation of any problems with our systems could result in significant, unplanned expenses.
We may not be successful in implementing important strategic initiatives or effectively managing growth, which may have an adverse impact on our business and financial results.
There is no assurance that we will be able to implement important strategic initiatives in accordance with our expectations or that they will generate expected returns, which may result in an adverse impact on our business and financial results. These strategic initiatives are designed to create growth, improve our results of operations and drive long-term shareholder value, and include:
being an employer of choice and investing in employees to deliver a superior customer experience;
building our leadership position around coffee;
driving convenience, brand engagement and digital relationships through our mobile, loyalty, delivery and digital capabilities both domestically and internationally;
simplifying store administrative tasks to allow store partners to better engage with customers;
increasing the scale of the Starbucks store footprint with disciplined global expansion and introducing flexible and unique store formats; 
moving to a more licensed store model in some markets and a more company-owned model in other markets;
creating new occasions in stores across all dayparts with new product offerings;offerings, including our growing lunch food and beverage product lineup;
continuing the global growth of our Channel Development business;
delivering continued growth in our tea business through the Teavana brand;our supply, distribution and
driving convenience licensing agreements with Nestlé and brand engagementother Channel Development business partners;
•
delivering continued growth in our cold beverage business, including our tea business through the Teavana brand in our Starbucks® retail stores and other channels and internationally; and
reducing our mobile, loyaltygeneral and digital capabilities.administrative costs.
In addition to other factors listed in this risk factors section, factors that may adversely affect the successful implementation of these initiatives, which could adverselyhave a material adverse impact on our business and financial results, include the following:
increases in labor costs, including wages and benefits, which, in a retail business such as ours, are two of our most significant costs, both domestically and internationally, such as general marketinternationally; these increases include significant and minimum wage levelssudden increases in labor costs triggered by regulatory actions regarding wages and investing in competitive compensation,scheduling and benefits requirements; they also include increased health care and workers’ compensation insurance costs, as well as increased wages and costs of other

benefits necessary to attract and retain high quality employees with the right skill sets, whether due to regulatory mandates or changing industry practices;practices, competition or our expansion into new channels or technology dependent operations;
not successfully developing and implementing new technologies necessary to effectuate our growth strategies, including increasing our digital relationships with customers to drive growth, due to inability to attract and retain qualified high-tech personnel or other factors;
increasing competition in channels in which we operate or seek to operate from new and existing large competitors or well-funded smaller ones that sell high-quality specialty coffee beverages;
continuing disruption in retail caused by on-line commerce, resulting in reduced foot traffic to “brick & mortar” retail stores;
consumers shifting categories of where they spend their discretionary income away from outside-the-home food and beverage;
imposition of additional taxes by jurisdictions, such as on certain types of beverages or based on number of employees;
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 U.S. and internationally;
not successfully scaling our supply chain infrastructure as our product offerings increase and as we continue to expand;expand, including our emphasis on a broad range of high-quality food offerings;
the ability of our licensee partners to implement our growth platforms and product innovation;

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lack of customer acceptance of new products (including due to price increases necessary to cover the costs of new products or higher input costs), brands (such as the global expansion of Teavana) and platforms (such as mobile technology)
•
lack of customer acceptance of new products (including due to price increases necessary to cover the costs of new products or higher input costs), brands (such as the global expansion of the Teavana brand in our Starbucks® retail stores and other channels) and platforms (such as features of our mobile technology, changes in our loyalty rewards programs and our delivery services initiatives), or customers reducing their demand for our current offerings as new products are introduced;
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 and the performance of our business partners under such agreements;
not successfully consummating and implementing favorable strategic transactions or integrating acquired businesses;businesses, including our East China business;
the effects of the Tax Cuts and Jobs Act and related guidance and regulations that may be promulgated; and
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.
Our Channel Development business is heavily reliant on Nestlé, which acquired the right to sell and distribute our packaged goods and foodservice products to retailers and operators, with few exceptions. If Nestlé fails to perform its distribution and marketing commitments under our agreements and/or fails to support, protect and grow our brand in Channel Development, our Channel Development business could be adversely impacted for a period of time, present long-term challenges to our brand, limit our ability to grow our Channel Development business and have a material adverse impact on our business and financial results. Additionally, our Channel Development business is also in part dependent on the level of support our retail business partners provide our products, and in some markets there are only a few retailers. If our retail business partners do not provide sufficient levels of support for our products, which is at their discretion, it could limit our ability to grow our Channel Development business.
Also, a relatively small number of licensee partners own a large number of licensed stores. If such licensee partners are not able to access sufficient funds or financing, or are otherwise unable to successfully operate and grow their businesses, including their licensed stores, it could adversely affecthave a material adverse effect on our results in the markets in which they operate their licensed stores.
Effectively managing growth can be challenging, particularly as we continue to expand into new channels outside the retail store model, increaseimplement our focus onarrangement with Nestlé for most of our global Channel Development business and grow our Teavana businesses,brand in our Starbucks® retail stores and other channels, as well as 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 qualityhigh-quality product and customer

experience. Furthermore, if we are not successful in implementing these strategic initiatives, such as large acquisitions and integrations, we may be required to evaluate whether certain assets, including goodwill and other intangibles, have become impaired. In the event we record an impairment charge, it could have a material impact on our financial results.

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, such as delivery service and mobile ordering, 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 U.S., 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 affecting our sales and results of operations. Similarly, continued competition from well-established competitors, or competition from large new entrants or well-funded smaller companies in our domestic and international markets could hinder growth and adversely affect our sales and results of operations in those markets. Many small competitors also continue to open coffee specialty stores in many of our markets across the world, which in the aggregate may also lead to significant decreases of customer traffic to our stores in those markets. Increased competition globally in the U.S. 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,Furthermore, declines in general consumer demand for specialty coffee products for any reason, including due to consumer preference for other products or flattening demand for our products, could have a negative effect on our business.

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 69%68% of consolidated total net revenues in fiscal 2015.2018. If the Americas operating segment revenue trends slow or decline, especially in our U.S. and Canada markets, our other segments may be unable to make up any significant shortfall and our business and financial results could be adversely 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 CAP and EMEA operating segmentscertain international markets in order to achieve our growth targets.
Our future growth increasingly depends on the growth and sustained profitability of our CAP and EMEA operating segments.certain international markets. 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 operate. In particular, both our China and Japan MBUs contribute meaningfully to both net revenues and earnings for our CAP segment. In the EMEA segment, our UK MBU accounts for a significant portion of the net revenues. A decline in performance of anyone or more of theseour significant international MBUs could have a material adverse impact on the resultsour consolidated results.
The CAP segment is now one of our international operations.

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Tabletwo significant profit centers driving our global returns, along with our Americas segment. In particular, our China MBU contributes meaningfully to both consolidated and CAP net revenues and earnings. China is currently our fastest growing market and second largest market overall. With our recent acquisition of Contentsthe East China business, the China market is now 100% company owned and, along with the U.S. market. Due to the significance of our China market for our profit and growth, we are exposed to risks in China, including the risks mentioned elsewhere below and the following:
the effects of current U.S.-China relations, including rounds of tariff increases and retaliations and increasing restrictive regulations, potential boycotts and increasing anti-Americanism;

entry of new competitors to the specialty coffee market in China;
changes in economic conditions in China and potential negative effects to the growth of its middle class, wages, labor, inflation discretionary spending and real estate and supply chain costs;
ongoing government regulatory reform, including relating to food safety, tariffs and tax, bringing uncertainty and inconsistent interpretations, which may be contrary to ours, as well as potential significant increases in compliance costs;
food-safety related matters, including compliance with food-safety regulations and ability to ensure product quality and safety; and
the ability to successfully integrate the East China business.
Additionally, some factors that will be critical to the success of the CAP and EMEA segmentsour international operations overall are different than those affecting our U.S. 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 U.S. or other international markets. Occupancy costs and store operating expenses can be higher internationally than in the U.S. 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 U.S. 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, as well as negative effects on U.S. businesses due to increasing anti-American sentiment in certain markets;
interpretation and application of laws and regulations, including tax, tariffs, labor, merchandise, anti-bribery and privacy laws and regulations;
uncertainties and effects of the implementation of the United Kingdom's referendum to withdraw membership from the European Union (refer to as “Brexit”), including financial, legal, tax and trade implications;
restrictive actions of foreign or U.S. governmental authorities affecting trade and foreign investment, especially during periods of heightened tension between the U.S. 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;
limitations on the repatriation of funds and foreign currency exchange restrictions due to current or new U.S. and international regulations;
in developing economies, the growth rate in the portion of the population achieving 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.

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 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, includingsuch as weather (including the potential effects of climate change), 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 a material

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 ana material adverse impact on our profitability.

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We also purchase significant amounts of dairy products, particularly fluid milk, to support the needs of our company-operated retail stores. Additionally, and although less significant to our operations than coffee or dairy, other commodities, including but not limited to tea and those related to food and beverage inputs, such as cocoa, produce, baking ingredients, meats, eggs and energy, as well as the processing of these inputs, are important to our operations. Increases in the cost of dairy products and other commodities, or lack of availability, whether due to supply shortages, delays or interruptions in processing, or otherwise, especially in international markets, could have ana material adverse impact on our profitability.

Our financial condition and results of operations are sensitive to, and may be adversely affected by, a number of factors, many of which are largely outside our control.
Our operating results have been in the past and will continue to be subject to a number of factors, many of which are largely outside our control. Any one or more of the factors listed below or described elsewhere in this risk factors section could adverselyhave a material adverse impact our business, financial condition and/or results of operations:
increases in real estate costs in certain domestic and international markets;
adverse outcomes of litigation;
severe weather or other natural or man-made disasters affecting a large market or several closely located markets that may temporarily but significantly affect our retail business in such markets; and
especially in our larger or fast growing markets, labor discord or disruption, geopolitical events, war, terrorism (including incidents targeting us), political instability, boycotts, increasing anti-American sentiment in certain markets, social unrest, and natural disasters, including 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 by our third party logistic service providers or common carriers that ship goods within our distribution channels, trade restrictions, such as increased tariffs or quotas, embargoes or customs restrictions, or natural disasters or political disputes and military conflicts that cause a material disruption in our supply chain could negativelyhave a negative material impact on our business and our profitability.
Additionally, our food, beverage and 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 U.S., especially countries or regions with diminished infrastructure, developing or failing economies or experiencing political instability or social unrest, and as we increase our fresh and prepared food offerings. For certain products, we may rely on one or very few suppliers or vendors.suppliers. A vendor's or supplier's failure to meet our standards, provide products in a timely and efficient manner, or comply with applicable laws is beyond our control. These issues, especially for those products for which we rely on one or few suppliers, or vendors, could negativelyhave a material negative impact on our business and profitability.

Failure to meet market expectations for our financial performance and fluctuations in the stock market as a whole 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, shareholder returns 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.

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 and elevate our brand. 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. Our ability to attract and retain both corporate and retail personnel is also acutely impacted in certain international and domestic markets where the competition for a relatively small number of qualified employees is intense or in markets where large high-tech companies are able to offer more competitive salaries and benefits, as well as where there is a strong economy with many available jobs and intense competition for the available workforce. Additionally, there is intense competition for qualified technology systems developers necessary to develop and implement new technologies for our growth initiatives, including increasing our digital relationships with customers. 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.


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Failure to comply with applicable laws and changing legal and regulatory requirements 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,Nasdaq, and foreign countries, as well as applicable trade, labor, healthcare, privacy (including the European Union’s GDPR, discussed in more detail in this risk factors section), food and beverage, sanitation, safety, environmental, labeling, 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, and the fact that foreign laws occasionally conflict with domestic laws. In addition to potential damage to our reputation and brand, failure by us or our business partners to comply with the various applicable 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.statements and have an adverse impact on our business and financial results.
Item 1B.Unresolved Staff Comments
Item 1B. Unresolved Staff Comments
None.
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:
LocationApproximate Size
in Square Feet		 Purpose
Rancho Cucamonga, CA265,000
 Manufacturing
San Francisco, CAWashington, DC79,000
Warehouse and distribution
Stratford, CT81,000130,000
 Warehouse and distribution
Augusta, GA131,000
 Manufacturing
Minden, NV (Carson Valley)360,0001,080,000
 Roasting and distribution
York, PA888,0001,957,000
 Roasting, distribution and warehouse
Gaston, SC (Sandy Run)117,000
 Roasting and distribution
Lebanon, TN680,000
 Distribution centerWarehouse and distribution
Stratford, CT196,000
Warehouse and distribution
Auburn, WA491,000
 Warehouse and distribution
Kent, WA510,000
 Roasting and distribution
Seattle, WA1,004,0001,283,000
Corporate administrative
Shanghai, China211,000
 Corporate administrative
Amsterdam, Netherlands97,000
 Roasting and distribution
Samutprakarn, Thailand81,000
 Warehouse and distribution
We own most of our roasting facilities and lease the majority of our warehousing and distribution locations. As of September 27, 2015,30, 2018, Starbucks had 12,23515,341 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. In addition to the locations listed above, we hold inventory at various locations managed by third-party warehouses.
Item 3.Legal Proceedings
See Note 15, Commitments and Contingencies, to the consolidated financial statements included in Item 8 of Part II of this 10-K for information regarding certain legal proceedings in which we are involved.

Item 4.Mine Safety Disclosures
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
SHAREHOLDER INFORMATION
MARKET INFORMATION AND DIVIDEND POLICY
Starbucks common stock is traded on NASDAQ, under the symbol "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, as adjusted to give effect to the two-for-one stock split discussed in Note 1, Summary of Significant Accounting Policies, included in Item 8 of Part II of this 10-K:
 High Low Cash Dividends
Declared
Fiscal 2015:     
Fourth Quarter$59.32
 $42.05
 $0.20
Third Quarter54.75
 46.28
 0.16
Second Quarter49.60
 39.28
 0.16
First Quarter42.10
 35.39
 0.16
Fiscal 2014:     
Fourth Quarter$40.32
 $36.89
 $0.16
Third Quarter39.18
 33.97
 0.13
Second Quarter39.42
 34.34
 0.13
First Quarter41.25
 37.23
 0.13
“SBUX.”
As of November 6, 2015,9, 2018, we had approximately 17,90018,100 shareholders of record. This does not include persons whose stock is in nominee or "street name"“street name” accounts through brokers.
Future decisions to pay cash dividends continue to be at the discretion of the Board of Directors and will be dependent on our operating performance, financial condition, capital expenditure requirements and other factors that the Board of Directors considers relevant.
ISSUER PURCHASES OF EQUITY SECURITIES
The following table provides information regarding repurchases of our common stock during the quarter ended September 27, 2015:30, 2018:
  Total
Number of
Shares
Purchased		 Average
Price
Paid per
Share		 
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs(2)
 Maximum
Number of
Shares that May
Yet Be
Purchased
Under the Plans
or Programs
Period(1)
        
June 29, 2015 — July 26, 2015 7,503,869
 $55.14
 7,503,869
 53,497,642
July 27, 2015 — August 23, 2015 200,780
 52.03
 200,780
 53,296,862
August 24, 2015 — September 27, 2015 592,087
 56.63
 592,087
 52,704,775
Total 8,296,736
 $55.17
 8,296,736
  
  Total
Number of
Shares
Purchased		 Average
Price
Paid per
Share		 
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs(2)
 
Maximum
Number of
Shares that May
Yet Be
Purchased
Under the Plans
or Programs(3)
Period(1)
        
July 2, 2018 - July 29, 2018 19,506,300
 $50.54
 19,506,300
 87,808,124
July 30, 2018 - August 26, 2018 15,000,000
 52.70
 15,000,000
 72,808,124
August 27, 2018 - September 30, 2018 24,000,000
 55.10
 24,000,000
 48,808,124
Total 58,506,300
 $52.96
 58,506,300
  
(1) 
Monthly information is presented by reference to our fiscal months during the fourth quarter of fiscal 2015.2018.
(2) 
TheShare repurchases are conducted under our ongoing share repurchase program is conductedannounced in September 2001, which has no expiration date.
(3)
This column includes the total remaining number of shares available for repurchase under authorizations made from time to time by our Board of Directors. On November 15, 2012, we publicly announced the authorization announced on April 26, 2018 as part of up to 50our ongoing share repurchase program. These amounts do not include the additional 120 million shares as adjustedauthorized for repurchase announced on November 1, 2018. Shares under our ongoing share repurchase program may be repurchased in open market transactions, including pursuant to give effect toa trading plan adopted in accordance with Rule 10b5-1 of the two-for-one stock split discussed in Note 1, SummarySecurities Exchange Act of Significant Accounting Policies, included in Item 81934, or through privately negotiated transactions. The timing, manner, price and amount of Part II of this 10-K. On July 23, 2015, we publicly announcedrepurchases will be determined at the authorization of up to an additional 50 million shares. These authorizations have no expiration date.Company's discretion, and the share repurchase program may be suspended, terminated or modified at any time for any reason.

17

Performance Comparison Graph
The following graph depicts the total return to shareholders from October 3, 2010September 29, 2013 through September 27, 2015,30, 2018, relative to the performance of the Standard & Poor’s 500 Index, the NASDAQ Composite Index and the Standard & Poor’s 500 Consumer Discretionary Sector, a peer group that includes Starbucks. All indices shown in the graph have been reset to a base of 100 as of October 3, 2010,September 29, 2013, and assume an investment of $100 on that date and the reinvestment of dividends paid since that date. The stock price performance shown in the graph is not necessarily indicative of future price performance.
sbux-09302018_chart.jpg
Oct 3, 2010 Oct 2, 2011 Sep 30, 2012 Sep 29, 2013 Sep 28, 2014 Sep 27, 2015Sep 29, 2013 Sep 28, 2014 Sep 27, 2015 Oct 2, 2016 Oct 1, 2017 Sep 30, 2018
Starbucks Corporation$100.00
 $146.04
 $201.46
 $311.59
 $307.16
 $480.45
$100.00
 $98.58
 $154.19
 $145.93
 $147.36
 $159.57
S&P 500100.00
 101.14
 131.69
 157.17
 188.18
 187.02
100.00
 119.73
 119.00
 137.36
 162.92
 192.10
NASDAQ Composite100.00
 103.65
 136.22
 168.91
 202.57
 208.69
100.00
 121.64
 127.37
 148.79
 183.54
 230.21
S&P Consumer Discretionary100.00
 106.17
 145.07
 191.26
 213.77
 241.95
100.00
 111.77
 126.50
 138.69
 158.83
 210.51

18

Item 6.Selected Financial Data
The following selected financial data is derived from the consolidated financial statements. All per-share data has been retroactively adjusted to give effect to the two-for-one stock split discussed in Note 1, Summary of Significant Accounting Policies, included in Item 8 of Part II of this 10-K. The data below should be read in conjunction with "Management’s“Management’s Discussion and Analysis of Financial Condition and Results of Operations," "Risk” “Risk Factors,"” and the consolidated financial statements and notes.
Financial Information (in millions, except per share data):
 
As of and for the Fiscal Year Ended (1)
Sep 27,
2015
(52 Wks)
  Sep 28,
2014
(52 Wks)		 Sep 29,
2013
(52 Wks)		 Sep 30,
2012
(52 Wks)		 Oct 2,
2011
(52 Wks)
 
 Results of Operations         
 Net revenues:         
  Company-operated stores$15,197.3
 $12,977.9
 $11,793.2
 $10,534.5
 $9,632.4
 Licensed stores1,861.9
 1,588.6
 1,360.5
 1,210.3
 1,007.5
 CPG, foodservice and other2,103.5
 1,881.3
 1,713.1
 1,532.0
 1,060.5
 Total net revenues$19,162.7
 $16,447.8
 $14,866.8
 $13,276.8
 $11,700.4
 
Operating income/(loss)(2)
$3,601.0
 $3,081.1
 $(325.4) $1,997.4
 $1,728.5
 
Net earnings including noncontrolling interests(2)
2,759.3
 2,067.7
 8.8
 1,384.7
 1,248.0
 Net earnings attributable to noncontrolling interests1.9
 (0.4) 0.5
 0.9
 2.3
 
Net earnings attributable to Starbucks(2)
2,757.4
 2,068.1
 8.3
 1,383.8
 1,245.7
 
EPS — diluted(2)
1.82
 1.35
 0.01
 0.90
 0.81
 Cash dividends declared per share0.680
 0.550
 0.445
 0.360
 0.280
 Net cash provided by operating activities3,749.1
 607.8
 2,908.3
 1,750.3
 1,612.4
 Capital expenditures (additions to property, plant and equipment)1,303.7
 1,160.9
 1,151.2
 856.2
 531.9
 Balance Sheet         
 Total assets$12,446.1
 $10,752.9
 $11,516.7
 $8,219.2
 $7,360.4
 Long-term debt (including current portion)2,347.5
 2,048.3
 1,299.4
 549.6
 549.5
 Shareholders’ equity5,818.0
 5,272.0
 4,480.2
 5,109.0
 4,384.9
 
As of and for the Fiscal Year Ended (1)
Sept 30,
2018
(52 Wks)		 Oct 1,
2017
(52 Wks)		 Oct 2,
2016
(53 Wks)		 Sep  27,
2015
(52 Wks)		 Sep  28,
2014
(52 Wks)
 
 Results of Operations         
 Net revenues:         
  Company-operated stores$19,690.3
 $17,650.7
 $16,844.1
 $15,197.3
 $12,977.9
 Licensed stores2,652.2
 2,355.0
 2,154.2
 1,861.9
 1,588.6
 Other2,377.0
 2,381.1
 2,317.6
 2,103.5
 1,881.3
 Total net revenues$24,719.5
 $22,386.8
 $21,315.9
 $19,162.7
 $16,447.8
 Operating income/(loss)$3,883.3
 $4,134.7
 $4,171.9
 $3,601.0
 $3,081.1
 
Net earnings including noncontrolling interests(2)
4,518.0
 2,884.9
 2,818.9
 2,759.3
 2,067.7
 Net earnings/(loss) attributable to noncontrolling interests(0.3) 0.2
 1.2
 1.9
 (0.4)
 
Net earnings attributable to Starbucks(2)
4,518.3
 2,884.7
 2,817.7
 2,757.4
 2,068.1
 
EPS — diluted(2)
3.24
 1.97
 1.90
 1.82
 1.35
 Cash dividends declared per share1.32
 1.05
 0.85
 0.68
 0.55
 
Net cash provided by operating activities(3)
11,937.8
 4,251.8
 4,697.9
 3,881.5
 722.2
 Capital expenditures (additions to property, plant and equipment)1,976.4
 1,519.4
 1,440.3
 1,303.7
 1,160.9
 Balance Sheet         
 Total assets$24,156.4
 $14,365.6
 $14,312.5
 $12,404.1
 $10,745.0
 Long-term debt (including current portion)9,440.1
 3,932.6
 3,585.2
 2,335.3
 2,041.3
 Shareholders’ equity1,169.5
 5,450.1
 5,884.0
 5,818.0
 5,272.0
(1) 
Our fiscal year ends on the Sunday closest to September 30. The fiscal year ended on October 2, 2016 included 53 weeks, with the 53rd week falling in our fourth fiscal quarter.
(2) 
Fiscal 20132018 results include a pretax chargegain not subject to income tax of $2,784.1 million$1.4 billion resulting from the conclusionacquisition of our arbitration with Kraft Foods Global, Inc.East China joint venture. The impact of this chargethe gain to net earnings attributable to Starbucks andour diluted EPS netwas $0.99.
(3)
Net cash provided by operating activities for fiscal 2014 through fiscal 2017 have been adjusted for the adoption of thenew accounting guidance related to excess tax benefit, was $1,713.1 million and $1.12 per share, respectively.benefits as discussed in Note 1, Summary of Significant Accounting Policies.

19

Comparable Store Sales:
 Fiscal Year EndedSep 27,
2015
(52 Wks)		  Sep 28,
2014
(52 Wks)		 Sep 29,
2013
(52 Wks)		 Sep 30,
2012
(52 Wks)		 Oct 2,
2011
(52 Wks)
 
 
Percentage change in comparable store sales(3)
         
 Americas         
 Sales growth7% 6% 7 % 8% 8%
 Change in transactions3% 2% 5 % 6% 5%
 Change in ticket4% 3% 2 % 2% 2%
 China/Asia Pacific         
 Sales growth9% 7% 9 % 15% 22%
 Change in transactions8% 6% 7 % 11% 20%
 Change in ticket1% —% 2 % 3% 2%
 EMEA         
 Sales growth4% 5% — % —% 3%
 Change in transactions2% 3% 2 % —% 3%
 Change in ticket1% 2% (2)% —% —%
 Consolidated         
 Sales growth7% 6% 7 % 7% 8%
 Change in transactions3% 3% 5 % 6% 6%
 Change in ticket4% 3% 2 % 1% 2%
 Fiscal Year EndedSep 30,
2018		 Oct 1,
2017		 Oct 2,
2016		  Sep 27,
2015		 Sep 28,
2014
 
 
Percentage change in comparable store sales(1)
         
 Americas         
 Sales growth2 % 3 % 6% 7% 6%
 Change in transactions(1)% — % 1% 3% 2%
 Change in ticket3 % 4 % 5% 4% 3%
 
China/Asia Pacific(2)
         
 Sales growth1 % 3 % 3% 9% 7%
 Change in transactions(1)% 1 % 1% 8% 6%
 Change in ticket2 % 1 % 2% 1% —%
 
EMEA(3)
         
 Sales growth— % 1 % —% 4% 5%
 Change in transactions(3)% (1)% 1% 2% 3%
 Change in ticket3 % 1 % —% 1% 2%
 Consolidated         
 Sales growth2 % 3 % 5% 7% 6%
 Change in transactions(1)% — % 1% 3% 3%
 Change in ticket3 % 3 % 4% 4% 3%
(3)(1) 
Includes only Starbucks® company-operated stores open 13 months or longer. Comparable store sales exclude the effect of fluctuations in foreign currency exchange rates. For fiscal year 2016, comparable store sales percentages were calculated excluding the 53rd week.

20

Store Count Data:
 As of and for the Fiscal Year EndedSep 27,
2015
(52 Wks)		  Sep 28,
2014
(52 Wks)		 Sep 29,
2013
(52 Wks)		 Sep 30,
2012
(52 Wks)		 Oct 2,
2011
(52 Wks)
 
 Net stores opened/(closed) and transferred during the year:         
 
Americas(4,5)
         
 Company-operated stores276
 317
 276
 228
 32
 Licensed stores336
 381
 404
 280
 215
 
China/Asia Pacific (6,7)
         
 Company-operated stores1,320
 250
 239
 152
 74
 Licensed stores(482) 492
 349
 296
 192
 
EMEA(8)
         
 Company-operated stores(80) (9) (29) 10
 25
 Licensed stores302
 180
 129
 101
 79
 
All Other Segments (9)
         
 Company-operated stores6
 12
 343
 —
 6
 
Licensed stores(10)
(1) (24) (10) (4) (478)
 Total1,677
 1,599
 1,701
 1,063
 145
 Stores open at year end:         
 
Americas (4,5)
         
 Company-operated stores8,671
 8,395
 8,078
 7,802
 7,574
 Licensed stores6,132
 5,796
 5,415
 5,011
 4,731
 
China/Asia Pacific(6,7)
         
 Company-operated stores2,452
 1,132
 882
 643
 491
 Licensed stores3,010
 3,492
 3,000
 2,651
 2,355
 
EMEA(8)
         
 Company-operated stores737
 817
 826
 855
 845
 Licensed stores1,625
 1,323
 1,143
 1,014
 913
 
All Other Segments (9)
         
 Company-operated stores375
 369
 357
 14
 14
 
Licensed stores (10)
41
 42
 66
 76
 80
 Total23,043
 21,366
 19,767
 18,066
 17,003
(4)
Americas store data has been adjusted for the sale of store locations in Chile to a joint venture partner in the fourth quarter of fiscal 2013 by reclassifying historical information from company-operated stores to licensed stores, and to exclude Seattle's Best Coffee and Evolution Fresh, which are reported within All Other Segments.
(5)(2)
Beginning in December of fiscal 2016, comparable store sales include the results of the 1,009 company-operated stores acquired as part of the acquisition of Starbucks Japan in the first quarter of fiscal 2015.
(3)
Company-operated stores represent 15% of the EMEA segment store portfolio as of September 30, 2018.

Store Count Data:
 As of and for the Fiscal Year EndedSept 30,
2018
(52 Wks)		 Oct 1,
2017
(52 Wks)		 Oct 2,
2016
(53 Wks)		 Sep  27,
2015
(52 Wks)		 Sep  28,
2014
(52 Wks)
 
 Net stores opened/(closed) and transferred during the year:         
 
Americas(1)
         
 Company-operated stores271
 394
 348
 276
 317
 Licensed stores624
 558
 456
 336
 381
 
China/Asia Pacific(2)
         
 Company-operated stores2,089
 259
 359
 1,320
 250
 Licensed stores(1,038) 777
 622
 (482) 492
 
EMEA(3)
         
 Company-operated stores(12) (21) (214) (80) (9)
 Licensed stores358
 353
 494
 302
 180
 
Corporate and Other(4)
         
 Company-operated stores(282) (68) (17) 6
 12
 Licensed stores(25) 2
 (6) (1) (24)
 Total1,985
 2,254
 2,042
 1,677
 1,599
 Stores open at year end:         
 
Americas(1)
         
 Company-operated stores9,684
 9,413
 9,019
 8,671
 8,395
 Licensed stores7,770
 7,146
 6,588
 6,132
 5,796
 
China/Asia Pacific(2)
         
 Company-operated stores5,159
 3,070
 2,811
 2,452
 1,132
 Licensed stores3,371
 4,409
 3,632
 3,010
 3,492
 
EMEA(3)
         
 Company-operated stores490
 502
 523
 737
 817
 Licensed stores2,830
 2,472
 2,119
 1,625
 1,323
 
Corporate and Other(4)
         
 Company-operated stores8
 290
 358
 375
 369
 Licensed stores12
 37
 35
 41
 42
 Total29,324
 27,339
 25,085
 23,043
 21,366
(1) 
Americas store data includes the transfer of 112 company-operated retail stores in Brazil to licensed stores as a result of the sale of our Brazil retail operations in the second quarter of fiscal 2018 and the closure of 132 Target Canada licensed stores in the second quarter of fiscal 2015.
(6)(2) 
China/Asia Pacific store data has been adjusted for the transfer of certain company-operated stores to licensed stores in the fourth quarter of fiscal 2014.
(7)
China/Asia Pacific store data also includes the transfer of 1,009 Japan stores from licensed stores to company-operated as a result of the acquisition of Starbucks Japan in the first quarter of fiscal 2015.
(8)
EMEA store data has been adjusted for the acquisition of store locations in Austria and Switzerland in the fourth quarter of fiscal 2011 by reclassifying historical information from licensed stores to company-operated stores, and2015, the transfer of certain133 Singapore stores from company-operated stores to licensed stores in the fourth quarter of fiscal 20122017 and the transfer of 1,477 licensed stores in East China to company-operated retail stores as a result of the purchase of our East China joint venture in the second and fourth quartersfirst quarter of fiscal 2014.2018.
(9)(3) 
Includes 337 Teavana®EMEA store data also includes the transfer of 144 Germany company-operated retail stores acquiredto licensed stores as a result of the sale to AmRest Holdings SE in the secondthird quarter of fiscal 2013.
2016.
(10)(4) 
Includes the closureAs of 475September 30, 2018, Corporate and Other included 12 licensed Seattle’s Best Coffee® locations in Borders Bookstores during fiscal 2011.
Teavana-branded stores.


21

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 years ended on September 27, 2015, September 28, 201430, 2018 and September 29, 2013 allOctober 1, 2017 included 52 weeks. Starbucks 2016The fiscal year will includeended on October 2, 2016 included 53 weeks, with the 53rdextra week falling in our fourth fiscal quarter. Comparable store sales percentages for fiscal 2016 are calculated excluding the 53rd 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 17%10% to $19.2$24.7 billion in fiscal 20152018 compared to $16.4$22.4 billion in fiscal 2014.2017.
Global comparable store sales grew 7%2% driven by a 4% increase in average ticket and a 3% increase in the number of transactions.average ticket.
Consolidated operating income increaseddecreased to $3.6$3.9 billion in fiscal 20152018 compared to operating income of $3.1$4.1 billion in fiscal 2014.2017. Fiscal 20152018 operating margin was 18.8%15.7% compared to 18.7%18.5% in fiscal 2014. The operating2017. Operating margin expansioncompression in fiscal 2018 was primarily driven by sales leverage, partially offset byfood and beverage-related mix shifts, largely in the Americas segment, the impact of our ownership change in Starbucks JapanEast China at the end of the first quarter of fiscal 2018, higher restructuring and increasedimpairment costs and higher salaries and benefits duerelated to increased store partner (employee) investments.digital platforms, technology infrastructure and innovations.
•
Restructuring and impairment charges increased to $224 million in fiscal 2018 compared to $154 million in fiscal 2017. Increased costs were primarily related to higher asset impairments associated with the decision to close certain Starbucks® company-operated stores in the U.S. and Canada, higher goodwill impairment charges related to our Switzerland retail reporting unit and EMEA restructuring costs.
Earnings per share ("EPS"(“EPS”) for fiscal 20152018 increased to $1.82,$3.24, compared to EPS of $1.35$1.97 in fiscal 2014, primarily due to the gain resulting from the fair value adjustment of our preexisting equity interest in Starbucks Japan upon acquisition, which increased EPS by $0.26 per share in fiscal 2015.2017. The remaining increase was primarily due to improved sales leveragedriven by the gains from the acquisition of our East China joint venture and the incremental tax benefit relatedsale of our Tazo brand. Additionally, the net favorable impact from the Tax Cuts and Jobs Act (the “Tax Act”) also contributed to domestic manufacturing deductions claimed for the current year and on U.S. corporate income tax returns for fiscal years 2010 through 2014.increase.
Cash flows from operations were $3.7$11.9 billion in fiscal 20152018 compared to $607.8 million$4.3 billion in fiscal 2014.2017. The increase was primarily driven by lapping the prior year payment of $2.8 billion for the Kraft arbitration matter. The remaining change of $377 million was primarily due to strong earnings, partially offset by unfavorable changes in working capital accounts, mainly duereceipt of the upfront payment from Nestlé related to timing.the Global Coffee Alliance.
Capital expenditures were $1.3$2.0 billion in fiscal 20152018 compared to $1.2$1.5 billion in fiscal 2014.2017.
We returned $2.4$8.9 billion to our shareholders in fiscal 20152018 through share repurchases and dividends compared to $1.6$3.5 billion in fiscal 2014.2017.
Overview
Starbucks results for fiscal 20152018 reflect the impact of certain restructuring and streamlining efforts, beginning in the fourth quarter of fiscal 2017, to focus on accelerating growth in high-returning businesses and removing non-core, slow growth activities. These efforts primarily include the acquisition of our East China joint venture, the conversion of our Singapore, Taiwan and Brazil operations to licensed models, the closure of TeavanaTM/MC retail stores, the sale of the Tazo brand, the licensing of our CPG and foodservice businesses to Nestlé, and the closure of certain company-operated stores in the U.S. and Canada, among other actions. These streamlining efforts span across all segments and our corporate functions.
On August 26, 2018, our Channel Development segment finalized licensing and distribution agreements with Nestlé to sell and market our CPG and foodservice products. The scope of the arrangement converts the majority of our previously defined Channel Development segment operations, as well as certain smaller businesses previously reported in the Americas, EMEA and Corporate and Other (previously All Other Segment), from company-owned to licensed operations with Nestlé. As a result, we realigned our organizational and operating segment structures in support of the newly established Global Coffee Alliance. Our reportable segments have been restated as if those smaller businesses were previously within our Channel Development segment.
Concurrent with the change in reportable operating segments, we revised our prior period financial information to reflect comparable financial information for the new segment structure. Further, in an effort to report operating expenses in line with the corresponding revenue generating activities, we have changed the classification of certain costs, primarily within our CAP segment and mainly from other operating expenses to general and administrative expenses. This reclassification has been retrospectively applied and was determined to be immaterial.
Starbucks largest acquisition to date affects our CAP segment. As a result of acquiring the remaining interest in our East China joint venture at the end of the first quarter of fiscal 2018, we began recording 100% of its revenues and expenses on our consolidated statements of earnings at the beginning of the second quarter of fiscal 2018. This is in contrast with our previous joint venture model, where we recorded only revenues and expenses from products sales to and royalties received from East China, as well as our proportionate share of the joint venture's net profit. The change from equity method to consolidation

method lowered the operating margin of our Consolidated and CAP segment, primarily due to incremental depreciation and amortization expenses and lower income from equity investees.
Starbucks results for fiscal 2018 continued to demonstrate the continued strength of our global business model and our ability to successfully make disciplined investments in our business and our partners (employees). Ourpartners. Consolidated total net revenues grew 17% over fiscal 2014 and all reportable segments drove an increase in consolidated operating income. Consolidated operating margin expandedincreased 10% to 18.8% from 18.7% in fiscal 2014, largely$24.7 billion, primarily driven by sales leverage, partially offset byincremental revenues from 1,997 net new store openings over the 90 basis pointpast 12 months, incremental revenues from the impact of our ownership change in Starbucks Japan as well as increasedEast China, 2% growth in global comparable store sales and favorable foreign currency translation. These increases were partially offset by the absence of revenue related to the closure of our TeavanaTM/MC retail stores, initiated in the fourth quarter of fiscal 2017 and substantially ceased during fiscal 2018 and the sale of our Singapore retail operations to a licensed partner in the fourth quarter of fiscal 2017. Consolidated operating income declined $251 million, or 6%, to $3.9 billion. Operating margin declined 280 basis points to 15.7%, primarily due to food and beverage-related mix shifts, largely in the Americas segment, the impact of our ownership change in East China, higher restructuring and impairment costs and higher salaries and benefits duerelated to investments in our store partners (employees) indigital platforms, technology infrastructure and innovations. Earnings per share of $3.24 increased 64% over the prior year earnings per share of $1.97.
Americas segment. The ownership change in Starbucks Japan reflects the change in accounting from a joint venturerevenue grew by 7% to a consolidated market and includes the acquisition-related transaction and integration costs.
The Americas segment continued to perform well in fiscal 2015, with revenues growing 11% to $13.3$16.7 billion, primarily driven by comparable store sales growth of 7%, comprised of a 4% increase in average ticket and a 3% increase in number of transactions, as well as incremental revenues from 612895 net new store openings over the last 12 months. Growth in our core beverages, paired with the success of our food offeringsmonths and beverage innovation, drove the increase in comparable store sales. Americas operating margin grew 80 basis points to 24.2% in fiscal 2015, primarily driven by sales leverage,growth of 2%, partially offset by increased salariesthe absence of revenue related to the conversion of our Brazil retail business to fully licensed operations in the second quarter of fiscal 2018. Operating income declined $39 million to $3.6 billion and benefitsoperating margin of 21.6% declined 180 basis points from a year ago, primarily due to food and beverage-related mix shifts, increased investments in our store partners (employees) and digital platforms related to in-store initiatives. Looking forward, we expect to continue to drive revenue growth and moderate margin expansion through new stores and leveraging investments in both our store partners (employees) and our digital platforms, such as Mobile Order and Pay.
Our fiscal 2015 China/Asia Pacific segment results reflect the impact of fully consolidating Starbucks Japan since October 31, 2014. Incrementalthe May 29th anti-bias training. These increases were partially offset by sales leverage.
In our CAP segment, revenue grew by 38% to $4.5 billion, primarily driven by the impact of our ownership change in East China at the end of the first quarter of fiscal 2018, incremental revenues from the change in ownership of Starbucks Japan were the primary driver of the 112% increase in segment revenues, to $2.4 billion. Also contributing were increased sales from the opening of 767756 net new stores over the past year, along with a 9% increase12 months. These increases were partially offset by the absence of revenue related to the sale of our Singapore retail operations to fully licensed operations in comparable store sales, primarily driven by an 8% increase in transactions.the fourth quarter of fiscal 2017. Operating income grew 34%,13% to $501$867 million, while operating margin declined 1,210420 basis points to 20.9%. The overall operating margin decline was19.4%, primarily due to the 1,410 basis point impact of theour ownership change in Starbucks Japan, which was partially offset by 200 basis points of expansion primarily due to sales leverage.East China. We expectnow operate 8,530 stores in 15 markets in our CAP segment making this segment will become a more significant contributor to overall company revenue growth in the future as we look forward to continued net new store openings and the first full year ofour second largest reportable segment.

22

consolidating Starbucks Japan. In fiscal 2016, we also expect China to continue to move towards being one of our largest international markets, primarily driven by expanding our retail store presence and increasing transaction growth.
Our EMEA segment, revenues declined 6%revenue grew by 9% to $1.2$1.0 billion, primarily driven by unfavorableincreased revenues from the opening of 356 net new licensed stores over the past 12 months and favorable foreign currency translationtranslation. Operating margin declined 400 basis points to 5.9% primarily due to higher impairment of approximately $116 million. This wasgoodwill related to our Switzerland retail business and restructuring costs, including severance, asset impairments and business process optimization expenses. These decreases were partially offset by revenue growthlapping of $38 million that was primarily driven by incremental revenues from 238 net new licensed store openings over the past year. EMEA operating margin expanded 460 basis points to 13.8% in fiscal 2015, primarily due to sales leverage driven by our ongoing portfolio shift to higher-margin licensed stores. We expect our continued disciplined licensed store expansion and focus on the customer experience in this region will result in improved operating performance, with operating margin approaching 15% in fiscal 2016.a prior year tax settlement.
The Channel Development segment revenues grew 12%by 2% to $1.7$2.3 billion, in fiscal 2015, primarily due todriven by increased sales of packaged coffee and premium single-serve products, drivenlapping a prior year revenue deduction adjustment and favorable foreign currency translation. These increases were partially offset by salesthe net impact from the sale of Starbucks-our Tazo brand in the first quarter of fiscal 2018 and Tazo-branded K-Cup® portion packs,licensing our CPG and improved packaged coffee sales.foodservice businesses to Nestlé beginning on August 26, 2018. Operating income declined $40 million, or 4%, to $927 million. Operating margin increased 180declined 250 basis points to 37.8%40.4%, primarily driven by leverage on cost of salesbusiness taxes associated with the upfront payment received from Nestlé, Global Coffee Alliance headcount related costs, including employee bonus and increased income due to strong performance by our North American Coffee Partnership joint venture. We continue to expand customer occasions outsideretention costs, and the impact of our retail storesownership changes, including licensing our CPG and throughfoodservice businesses to Nestlé and the sale of our developing international presence. For fiscal 2016, we expect moderate margin expansion primarily driven by growing our premium single-serve category with innovative new beverages, including the ready-to-drink market.Tazo brand.
Fiscal 20162019 — The View Ahead
ForTurning to fiscal 2016,2019, we expect continued growth through thoughtful long-term investments that create value and reward shareholders. These results are expected to be driven by our three strategic priorities, which include:
Accelerate growth in our targeted, long-term growth markets of the U.S. and China
Expand the global reach of the Starbucks brand leveraging the Global Coffee Alliance
Sharpen our focus on increasing shareholder returns
To successfully achieve these priorities, we will undertake a number of initiatives, including growing our core business in the U.S. through enhancement of the in-store experience, delivery of customer-relevant beverage innovation and digital relationships, and growing our business in China through new store expansion, comparable store sales and business partnerships. Further, we will continue expanding the reach of the Starbucks brand through retail market realignment, including our plans to license the France, Netherlands, Belgium and Luxembourg markets, business simplification and the Global Coffee Alliance. These additional streamlining initiatives will enable us to amplify our focus and resources on core value drivers with the greatest prospect for returns.
We expect moderate revenue growth in excessfiscal 2019, reflecting implementation of 10%,our streamlining activities and driven by strong comparable store sales slightly abovegrowth and the mid-single digits, the additionopening of approximately 1,8002,100 net new stores and a 53rd fiscal week, whichglobally.

Consolidated operating margin is expected to contribute an incremental 2%decrease slightly in fiscal 2019 when compared to fiscal 2018, and our revenue growth rate. Approximately one-half of net new store openings will be in our China/Asia Pacific segment, with approximately 40% comingeffective tax rate is expected to increase slightly from the Americas and the remaining 10% from the EMEA segment.
We expect consolidated operating margin andfiscal 2018. While GAAP full-year diluted earnings per share is expected to increase slightlydecrease in fiscal 2016 when compared to our fiscal 2015 results, primarily due to leverage on revenue growth and a 53rd fiscal week, which we expect to contribute approximately $0.06 to2019, full-year non-GAAP diluted earnings per share partially offset by continued investments in our store partners (employees) in the Americas segment and the development of these initiatives in our international markets, as well as digital innovation.
The effective tax rate for fiscal 2016 is expected to be between 34%grow when excluding gains from acquisitions and divestitures in fiscal 2018, integration costs related to 35%.East China and Japan and restructuring and impairment expenses.
Capital expenditures in fiscal 20162019 are expected to be approximately $1.4$2.0 billion, primarily forrelated to our retail portfolio including investments in our new and existing stores and store renovations, as well as for other investments to support our ongoing growthstrategic store-related initiatives.
Acquisitions and Divestitures
See Note 2, Acquisitions, Divestitures and Divestitures,Strategic Alliance, to the consolidated financial statements included in Item 8 of Part II of this 10-K for information regarding acquisitions and divestitures.

RESULTS OF OPERATIONS — FISCAL 20152018 COMPARED TO FISCAL 20142017
Consolidated results of operations (in millions):
Revenues
Fiscal Year EndedSep 27,
2015		 Sep 28,
2014		 
%
Change
Sep 30,
2018		 Oct 1,
2017		 
%
Change
Net revenues:          
Company-operated stores$15,197.3
 $12,977.9
 17.1%$19,690.3
 $17,650.7
 11.6 %
Licensed stores1,861.9
 1,588.6
 17.2
2,652.2
 2,355.0
 12.6
CPG, foodservice and other2,103.5
 1,881.3
 11.8
Other2,377.0
 2,381.1
 (0.2)
Total net revenues$19,162.7
 $16,447.8
 16.5%$24,719.5
 $22,386.8
 10.4 %
Total net revenues increased $2.7$2.3 billion, or 17%10%, over fiscal 2014,2017, primarily due todriven by increased revenues from company-operated stores (contributing $2.2($2.0 billion). The growth in company-operated store revenues was primarily driven by incremental revenues from the acquisition of Starbucks Japan (approximately $1.1 billion), an increase in comparable store sales (approximately 7% growth, or $852 million) and incremental revenues from 550816 net new Starbucks® company-operated store openings over the past 12 months (approximately $590($904 million). Partially offsetting these increases was, incremental revenues from the impact of unfavorable foreign currency translation (approximately $252our ownership change in East China ($903 million). and a 2% increase in comparable store sales ($345 million), attributable to a 3% increase in average ticket.

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Table of Contents

Licensed store revenue growth also contributed $273 million to the increase in total net revenues ($297 million), primarily resultingdue to increased product and equipment sales to and royalty revenues from our licensees ($298 million), largely due to the opening of 1,0751,181 net new Starbucks® licensed stores over the past 12 months, the conversions of both the Singapore and improved comparable store sales as well as increased La Boulange food salesTaiwan markets to our licenseesfully licensed in the Americas segment. Partially offsetting thesefourth quarter of fiscal 2017 and the first quarter of fiscal 2018, respectively ($44 million). These increases was a decrease in licensed store revenues resulting fromwere partially offset by the impact of our ownership change in Starbucks Japan (approximately $45East China at the end of the first quarter of fiscal 2018 ($53 million).
CPG, foodservice and otherOther revenues increased $222decreased $4 million, primarily duedriven by the absence of revenue from the sale of our Tazo brand in the first quarter of fiscal 2018 ($56 million), the closure of our e-commerce business in the fourth quarter of fiscal 2017 ($51 million) and licensing our CPG and foodservice businesses to Nestlé late in the fourth quarter of fiscal 2018 ($50 million). Partially offsetting these decreases were increased sales of packaged coffee and premium single-serve products (approximately $116 million), U.S. packaged coffee (approximately $55 million) and foodservice sales (approximately $40($115 million).
Operating Expenses
Fiscal Year EndedSep 27,
2015		 Sep 28,
2014		 Sep 27,
2015		 Sep 28,
2014		Sep 30,
2018		 Oct 1,
2017		 Sep 30,
2018		 Oct 1,
2017
    
% of Total
Net Revenues
    
As a % of Total
Net Revenues
Cost of sales including occupancy costs$7,787.5
 $6,858.8
 40.6% 41.7 %$10,174.5
 $9,034.3
 41.2% 40.4%
Store operating expenses5,411.1
 4,638.2
 28.2
 28.2
7,193.2
 6,493.3
 29.1
 29.0
Other operating expenses522.4
 457.3
 2.7
 2.8
539.3
 500.3
 2.2
 2.2
Depreciation and amortization expenses893.9
 709.6
 4.7
 4.3
1,247.0
 1,011.4
 5.0
 4.5
General and administrative expenses1,196.7
 991.3
 6.2
 6.0
1,759.0
 1,450.7
 7.1
 6.5
Litigation credit—
 (20.2) —
 (0.1)
Restructuring and impairments224.4
 153.5
 0.9
 0.7
Total operating expenses15,811.6
 13,635.0
 82.5
 82.9
21,137.4
 18,643.5
 85.5
 83.3
Income from equity investees249.9
 268.3
 1.3
 1.6
301.2
 391.4
 1.2
 1.7
Operating income$3,601.0
 $3,081.1
 18.8% 18.7 %$3,883.3
 $4,134.7
 15.7% 18.5%
Store operating expenses as a % of related revenues    35.6% 35.7 %    36.5% 36.8%
Other operating expenses as a % of non-company-operated store revenues    10.7% 10.6%
Cost of sales including occupancy costs as a percentage of total net revenues decreased 110increased 80 basis points, primarily driven by salesdue to food and operating leverage on cost of salesbeverage-related mix shifts (approximately 60120 basis points), driven by strong sales and initiativeslargely in our supply chain, such as improvements in sourcing, as well as sales leverage on occupancy costs (approximately 40 basis points).the Americas segment.
Store operating expenses were flat as a percentage of total net revenues.revenues increased 10 basis points. Store operating expenses as a percentage of company-operated store revenues decreased 1030 basis points, primarily driven by sales leverage (approximately 50 basis points) and decreased expenses, largely salaries and benefits, due to the shift to more licensed stores in EMEA (approximately 40 basis points), partially offset by increased investments in store partners (employees) and digital platforms related to in-store initiatives (approximately 100 basis points) in the Americas segment.
Other operating expenses as a percentage of total net revenues decreased 10 basis points. Excluding the impact of company-operated store revenues, other operating expenses were flat, primarily due to sales leverage (approximately 70 basis points), partially offset by increased marketing (approximately 20 basis points), largely due to timing, the impairment of certain assets in the Americas segment (approximately 20 basis points) and the impact of our ownership change in Starbucks JapanEast China (approximately 2060 basis points).
Depreciation and amortization expenses as a percentage of total net revenues increased 4050 basis points, primarily due to the impact of our ownership change in Starbucks JapanEast China (approximately 60 basis points).

General and administrative expenses as a percentage of total net revenues increased 60 basis points, primarily due to higher salaries and benefits related to digital platforms, technology infrastructure and innovations (approximately 20 basis points) and the 2018 U.S. stock award (approximately 20 basis points).
Restructuring and impairment expenses increased $71 million, primarily due to higher asset impairments associated with the decision to close certain company-operated stores in the U.S. and Canada ($23 million), higher goodwill impairment charges associated with our Switzerland company-operated retail reporting unit ($20 million) and EMEA restructuring costs, including severance and asset impairments ($18 million).
Income from equity investees decreased $90 million, primarily due to the impact of ownership changes in our East China and Taiwan joint ventures, partially offset by higher South Korea joint venture income.
The combination of these changes resulted in an overall decrease in operating margin of 280 basis points in fiscal 2018 when compared to fiscal 2017.
Other Income and Expenses
Fiscal Year EndedSep 30,
2018		 Oct 1,
2017		 Sep 30,
2018		 Oct 1,
2017
     
As a % of Total
Net Revenues
Operating income$3,883.3
 $4,134.7
 15.7 % 18.5 %
Gain resulting from acquisition of joint venture1,376.4
 —
 5.6
 —
Net gain resulting from divestiture of certain operations499.2
 93.5
 2.0
 0.4
Interest income and other, net191.4
 181.8
 0.8
 0.8
Interest expense(170.3) (92.5) (0.7) (0.4)
Earnings before income taxes5,780.0
 4,317.5
 23.4
 19.3
Income tax expense1,262.0
 1,432.6
 5.1
 6.4
Net earnings including noncontrolling interests4,518.0
 2,884.9
 18.3
 12.9
Net earnings/(loss) attributable to noncontrolling interests(0.3) 0.2
 —
 —
Net earnings attributable to Starbucks$4,518.3
 $2,884.7
 18.3 % 12.9 %
Effective tax rate including noncontrolling interests    21.8 % 33.2 %
Gain resulting from acquisition of joint venture was due to remeasuring our preexisting 50% ownership interest in our East China joint venture to fair value upon acquisition.
Net gain resulting from divestiture of certain operations primarily consists of sales of our Tazo brand and Taiwan joint venture, partially offset by the net loss from the sale of our Brazil retail operations in fiscal 2018. The gain in fiscal 2017 was primarily due to the sale of our Singapore retail operations.
Interest income and other, net increased $10 million, primarily due to recognizing higher income on unredeemed stored value card balances, partially offset by lapping the gain on the sale of our investment in Square, Inc. warrants in the prior year period.
Interest expense increased $78 million primarily related to additional interest incurred on long-term debt issued in November 2017, March 2018 and August 2018.
The effective tax rate for fiscal 2018 was 21.8% compared to 33.2% for fiscal 2017. The decrease in the effective tax rate was primarily due to the gain on the purchase of our East China joint venture that is not subject to income tax (approximately 580 basis points) and the Tax Act (approximately 480 basis points). The impact from the Tax Act primarily included favorability from the lower corporate income tax rate applied to our fiscal 2018 results (approximately 760 basis points) and the remeasurement of our net deferred tax liabilities (approximately 130 basis points). This favorability was partially offset by the estimated transition tax on our accumulated undistributed foreign earnings (approximately 400 basis points). See Note 13, Income Taxes, for further discussion.

Segment Information
Results of operations by segment (in millions):
Americas
Fiscal Year EndedSep 30,
2018		 Oct 1,
2017		 Sep 30,
2018		 Oct 1,
2017
     
As a % of Americas 
Total Net Revenues
Net revenues:       
Company-operated stores$14,905.1
 $13,996.4
 89.1% 89.6%
Licensed stores1,814.0
 1,617.3
 10.8
 10.4
Other13.1
 6.3
 0.1
 —
Total net revenues16,732.2
 15,620.0
 100.0
 100.0
Cost of sales including occupancy costs6,301.2
 5,695.0
 37.7
 36.5
Store operating expenses5,747.9
 5,320.2
 34.4
 34.1
Other operating expenses150.0
 130.8
 0.9
 0.8
Depreciation and amortization expenses638.3
 614.9
 3.8
 3.9
General and administrative expenses247.0
 201.4
 1.5
 1.3
Restructuring and impairments33.4
 4.1
 0.2
 —
Total operating expenses13,117.8
 11,966.4
 78.4
 76.6
Operating income$3,614.4
 $3,653.6
 21.6% 23.4%
Store operating expenses as a % of related revenues    38.6% 38.0%
Other operating expenses as a % of non-company-operated store revenues    8.2% 8.1%
Revenues
Americas total net revenues for fiscal 2018 increased $1.1 billion, or 7%, over fiscal 2017, primarily due to increased revenues from company-operated stores (contributing $909 million) and licensed stores (contributing $197 million).
The increase in company-operated store revenues was driven by incremental revenues from 383 net new Starbucks® company-operated store openings over the past 12 months ($604 million) and a 2% increase incomparable store sales ($319 million), attributable to a 3% increase in average ticket, partially offset by the conversion of our Brazil retail business to fully licensed operations in the second quarter of fiscal 2018 ($40 million).
The increase in licensed store revenues was primarily driven by higher product sales to and royalty revenues from our licensees ($173 million), primarily resulting from the opening of 512 net new Starbucks® licensed stores over the past 12 months.
Operating Expenses
Cost of sales including occupancy costs as a percentage of total net revenues increased 120 basis points, primarily due to food and beverage-related mix shifts (approximately 130 basis points).
Store operating expenses as a percentage of total net revenues increased 30 basis points. As a percentage of company-operated store revenues, store operating expenses increased 60 basis points, primarily driven by increased investments in our store partners (approximately 140 basis points), which included incremental investments funded by the Tax Act, partially offset by sales leverage (approximately 60 basis points).
General and administrative expenses as a percentage of total net revenues increased 20 basis points, primarily driven by the impact of our ownership change in Starbucks JapanMay 29th anti-bias training (approximately 1020 basis points).
The $20Restructuring and impairment charges increased $29 million decrease in litigation credit for fiscal 2015 was due to lapping a prior year credit relatedhigher asset impairments in fiscal 2018 compared to a reduction of our estimated prejudgment interest payablefiscal 2017 associated with the Kraft arbitration,decision to close certain U.S. company-operated stores ($23 million) and costs associated with the closure of certain company-operated stores in the U.S. and Canada ($6 million) in fiscal 2018.
The combination of these changes resulted in an overall decrease in operating margin of 180 basis points in fiscal 2018 when compared to fiscal 2017.

CAP
Fiscal Year EndedSep 30,
2018		 Oct 1,
2017		 Sep 30,
2018		 Oct 1,
2017
      As a % of China/Asia Pacific 
Total Net Revenues
Net revenues:       
Company-operated stores$4,096.9
 $2,906.0
 91.6% 89.7%
Licensed stores365.7
 327.4
 8.2
 10.1
Other11.0
 6.8
 0.2
 0.2
Total net revenues4,473.6
 3,240.2
 100.0
 100.0
Cost of sales including occupancy costs1,898.3
 1,396.2
 42.4
 43.1
Store operating expenses1,148.7
 845.5
 25.7
 26.1
Other operating expenses22.9
 21.2
 0.5
 0.7
Depreciation and amortization expenses412.1
 202.2
 9.2
 6.2
General and administrative expenses241.6
 207.1
 5.4
 6.4
Total operating expenses3,723.6
 2,672.2
 83.2
 82.5
Income from equity investees117.4
 197.0
 2.6
 6.1
Operating income$867.4
 $765.0
 19.4% 23.6%
Store operating expenses as a % of related revenues    28.0% 29.1%
Other operating expenses as a % of non-company-operated store revenues    6.1% 6.3%
Discussion of our China/Asia Pacific segment results below reflects the impact of fully consolidating our East China business due to the ownership change from an equity method joint venture to a company-operated market since the acquisition date of December 31, 2017. Under the joint venture model, we recognized royalties and product sales within revenue and related product cost of sales as a resultwell as our proportionate share of paying our obligation earlier than anticipated.
IncomeEast China's net earnings, which we recognized within income from equity investees decreased $18 million,investees. This resulted in a higher operating margin. Under the company-operated ownership model, East China’s operating results are reflected in most income statement lines of this segment.
Revenues
China/Asia Pacific total net revenues for fiscal 2018 increased $1.2 billion, or 38%, over fiscal 2017, primarily driven by higher company-operated store revenues ($1.2 billion) due to the impact of our ownership change in Starbucks JapanEast China ($903 million) and the absence of income from our Malaysia joint venture sold in the fourth quarter of fiscal 2014, partially offset by improved performance from our North American Coffee Partnership and China joint ventures. As a percentage of total revenues, income from equity investees decreased 30 basis points, primarily due to the impact of our ownership change in Starbucks Japan (approximately 30 basis points).
The overall increase in operating margin of 10 basis points was driven by the changes discussed above, including the impact of our ownership change in Starbucks Japan and the acquisition-related transaction and integration costs, which contributed unfavorably to operating margin (approximately 90 basis points).

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Other Income and Expenses
Fiscal Year EndedSep 27,
2015		 Sep 28,
2014		 Sep 27,
2015		 Sep 28,
2014
     
% of Total
Net Revenues
Operating income$3,601.0
 $3,081.1
 18.8 % 18.7 %
Gain resulting from acquisition of joint venture390.6
 —
 2.0
 —
Loss on extinguishment of debt(61.1) —
 (0.3) —
Interest income and other, net43.0
 142.7
 0.2
 0.9
Interest expense(70.5) (64.1) (0.4) (0.4)
Earnings before income taxes3,903.0
 3,159.7
 20.4
 19.2
Income taxes1,143.7
 1,092.0
 6.0
 6.6
Net earnings including noncontrolling interests2,759.3
 2,067.7
 14.4
 12.6
Net earnings/(loss) attributable to noncontrolling interests1.9
 (0.4) —
 —
Net earnings attributable to Starbucks$2,757.4
 $2,068.1
 14.4 % 12.6 %
Effective tax rate including noncontrolling interests    29.3 % 34.6 %
During the first quarter of fiscal 2015, we recorded a gain of $391 million as a result of remeasuring our preexisting 39.5% ownership interest in Starbucks Japan to fair value upon acquisition.
During the fourth quarter of fiscal 2015, we recorded a loss of $61 million related to the redemption of our $550 million of 6.250% Senior Notes (the "2017 notes"), which were originally scheduled to mature in August 2017. The loss primarily relates to the optional redemption premium outlined in the 2017 notes indenture, as well as expenses related to the previously capitalized original issuance costs and accelerated amortization of the unamortized discount.
Net interest income and other decreased $100 million, primarily due to lapping the gain on the sale of our equity interest in our Malaysia joint venture (approximately $68 million) in the prior year and net unfavorable fair value adjustments from derivative instruments used to manage our risk of commodity price fluctuations (approximately $25 million) in fiscal 2015.
Interest expense increased $6 million primarily due to incurring a full quarter of interest in the first quarter of fiscal 2015 on the long-term debt we issued in December of fiscal 2014 as well as the reclassification of $2 million from accumulated other comprehensive income to interest expense related to remaining unrecognized losses from interest rate contracts associated with the 2017 notes redeemed in the fourth quarter of fiscal 2015.
Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of 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 2015 was 29.3% compared to 34.6% for fiscal 2014. The decrease in the rate for fiscal 2015 was primarily due to the 3.7% impact of the gain associated with the remeasurement of our preexisting 39.5% ownership interest in Starbucks Japan upon acquisition, which was almost entirely non-taxable, as well as the 1.5% incremental tax benefit related to domestic manufacturing deductions claimed in fiscal 2015 on U.S. corporate income tax returns for fiscal years 2010 through 2015.

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Segment Information
Results of operations by segment (in millions):
Americas
Fiscal Year EndedSep 27,
2015		 Sep 28,
2014		 Sep 27,
2015		 Sep 28,
2014
     
As a % of Americas 
Total Net Revenues
Net revenues:       
Company-operated stores$11,925.6
 $10,866.5
 89.7% 90.7%
Licensed stores1,334.4
 1,074.9
 10.0
 9.0
Foodservice and other33.4
 39.1
 0.3
 0.3
Total net revenues13,293.4
 11,980.5
 100.0
 100.0
Cost of sales including occupancy costs4,845.0
 4,487.0
 36.4
 37.5
Store operating expenses4,387.9
 3,946.8
 33.0
 32.9
Other operating expenses122.8
 100.4
 0.9
 0.8
Depreciation and amortization expenses522.3
 469.5
 3.9
 3.9
General and administrative expenses192.1
 167.8
 1.4
 1.4
Total operating expenses10,070.1
 9,171.5
 75.8
 76.6
Operating income$3,223.3
 $2,809.0
 24.2% 23.4%
Store operating expenses as a % of related revenues    36.8% 36.3%
Revenues
Americas total net revenues for fiscal 2015 increased $1.3 billion, or 11%, primarily due to increased revenues from company-operated stores (contributing $1.1 billion) and licensed stores (contributing $260 million).
The increase in company-operated store revenues was driven by a 7% increase in comparable store sales (approximately $745 million), as well as incremental revenues from 318443 net new Starbucks® company-operated store openings over the past 12 months (approximately $455($300 million). Also contributing were favorable foreign currency translation ($82 million) and a 1% increase in comparable store sales ($26 million). Partially offsetting these increases was unfavorable foreign currency translation (approximately $139the conversion of our Singapore retail business to fully licensed operations in the fourth quarter of fiscal 2017 ($121 million),.
Licensed store revenues increased $38 million, primarily driven by the strengthening of the U.S. dollar against the Canadian dollar.
The increase in licensed store revenues was primarily due to higherincreased product sales to and royalty revenues from our licensees ($44 million), primarily resulting from increased La Boulange™ food sales to our licensees beginning in the first quarter of fiscal 2015, as well as the opening of 317313 net newlicensed stores over the past 12 months, the conversion of our Taiwan joint venture to fully licensed operations at the end of the first quarter of fiscal 2018 ($25 million) and improved comparable store sales.the conversion of our Singapore retail operations to fully licensed operations in the fourth quarter of fiscal 2017 ($20 million). These increases were partially offset by the absence of revenue from our ownership change in East China ($53 million).
Operating Expenses
Cost of sales including occupancy costs as a percentage of total net revenues decreased 70 basis points, primarily due to the ownership change in East China (approximately 60 basis points).
Store operating expenses as a percentage of total net revenues decreased 40 basis points. As a percentage of company-operated store revenues, store operating expenses decreased 110 basis points, primarily due to the ownership change in East China (approximately 90 basis points).
General and administrative expenses as a percentage of total revenues decreased 100 basis points, primarily due to sales leverage on salaries and benefits (approximately 50 basis points) and the impact of ownership change in East China (approximately 30 basis points).
Income from equity investees decreased $80 million, primarily due to the impact of our ownership changes in East China and Taiwan joint ventures, partially offset by higher South Korea joint venture income.

The combination of these changes resulted in an overall decrease in operating margin of 420 basis points in fiscal 2018 when compared to fiscal 2017.
EMEA
Fiscal Year EndedSep 30,
2018		 Oct 1,
2017		 Sep 30,
2018		 Oct 1,
2017
      As a % of EMEA 
Total Net Revenues
Net revenues:       
Company-operated stores$575.6
 $551.0
 54.9% 57.5%
Licensed stores471.3
 407.7
 45.0
 42.5
Other1.1
 —
 0.1
 —
Total net revenues1,048.0
 958.7
 100.0
 100.0
Cost of sales including occupancy costs559.2
 508.6
 53.4
 53.1
Store operating expenses226.0
 214.1
 21.6
 22.3
Other operating expenses62.8
 51.3
 6.0
 5.4
Depreciation and amortization expenses31.7
 30.6
 3.0
 3.2
General and administrative expenses51.7
 41.7
 4.9
 4.3
Restructuring and impairments55.1
 17.9
 5.3
 1.9
Total operating expenses986.5
 864.2
 94.1
 90.1
Operating income$61.5
 $94.5
 5.9% 9.9%
Store operating expenses as a % of related revenues    39.3% 38.9%
Other operating expenses as a % of non-company-operated store    13.3% 12.6%
Revenues
EMEA total net revenues for fiscal 2018 increased $89 million, or 9%, over fiscal 2017, primarily due to higher revenue from licensed stores ($64 million) and company-operated stores ($25 million).
Company-operated stores increased $25 million, or 4%, primarily due to favorable currency translation ($31 million).
Licensed store revenues increased $64 million, or 16%, due to higher product sales to and royalty revenues from our licensees ($56 million), resulting from the opening of 356 net new licensed stores, and favorable foreign currency translation ($4 million).
Operating Expenses
Cost of sales including occupancy costs as a percentage of total net revenues increased 30 basis points, primarily due to growth in our licensed stores which have a lower gross margin (approximately 30 basis points).
Store operating expenses as a percentage of total net revenues decreased 70 basis points. As a percentage of company-operated store revenues, store operating expenses increased 40 basis points, primarily due to sales deleverage on salaries and benefits, largely due to increased minimum wage in certain markets(approximately 140 basis points), partially offset by lapping a prior year tax settlement (approximately 100 basis points).
Other operating expenses as a percentage of total net revenues increased 60 basis points. Excluding the impact of company-operated store revenues, other operating expenses increased 70 basis points, primarily due to business process optimization expenses (approximately 60 basis points).
General and administrative expenses as a percentage of total net revenues increased 60 basis points, primarily due to business process optimization expenses (approximately 50 basis points).
Restructuring and impairment expenses increased $37 million, primarily due to higher goodwill impairment expense associated with our Switzerland retail reporting unit in fiscal 2018 than in the prior year period ($20 million) and EMEA restructuring costs, including severance and asset impairments ($18 million).
The combination of these changes resulted in an overall decrease in operating margin of 400 basis points in fiscal 2018 when compared to fiscal 2017.

Channel Development
Fiscal Year EndedSep 30,
2018		 Oct 1,
2017		 Sep 30,
2018		 Oct 1,
2017
      As a % of Channel Development 
Total Net Revenues
Net revenues$2,297.3
 $2,256.6
    
Cost of sales1,252.3
 1,209.3
 54.5
 53.6
Other operating expenses286.5
 260.4
 12.5
 11.5
Depreciation and amortization expenses1.3
 3.0
 0.1
 0.1
General and administrative expenses13.9
 11.3
 0.6
 0.5
Total operating expenses1,554.0
 1,484.0
 67.6
 65.8
Income from equity investees183.8
 194.4
 8.0
 8.6
Operating income$927.1
 $967.0
 40.4% 42.9%
Discussion of our Channel Development segment results reflect the impact of the licensing of our CPG and foodservice businesses to Nestlé, the sale of Tazo and an immaterial, unfavorable revenue deduction adjustment recorded in the second quarter of fiscal 2017. Late in the fourth quarter of fiscal 2018, we licensed our CPG (Starbucks-, Starbucks Reserve-, Teavana-, Seattle's Best Coffee-, Starbucks VIA- and Torrefazione Italia-branded packaged coffee and tea) and foodservice businesses to Nestlé and formed a Global Coffee Alliance. Eleven months of fiscal 2018 results reflect our CPG and foodservice businesses as company-owned and one month as licensed operations. Our collaborative business relationships for our global ready-to-drink products and the associated revenues remain unchanged due to the Global Coffee Alliance.
Revenues
Channel Development net revenues for fiscal 2018 increased $41 million, or 2%, over fiscal 2017. Revenue growth was driven by an increase in sales of our packaged coffee and premium single-serve products ($115 million), lapping a prior year revenue deduction adjustment ($13 million) and favorable foreign currency translation ($10 million). These increases were partially offset by the absence of revenue from the sale of our Tazo brand in the first quarter of fiscal 2018 ($56 million) and licensing our CPG and foodservice businesses to Nestlé late in the fourth quarter of fiscal 2018 ($50 million).
Operating Expenses
Cost of sales as a percentage of total net revenues increased 90 basis points, primarily driven by the impact of licensing our CPG and foodservice businesses to Nestlé and the sale of our Tazo brand (approximately 120 basis points), partially offset by lapping a revenue deduction adjustment recorded in the second quarter of fiscal 2017 (approximately 30 basis points).
Other operating expenses as a percentage of total net revenues increased 100 basis points, primarily driven by business taxes associated with the upfront payment received from Nestlé (approximately 120 basis points) and Global Coffee Alliance headcount-related costs, including employee bonus and retention costs (approximately 80 basis points). These increases were partially offset by the cost savings related to our ownership changes, including licensing our CPG and foodservice businesses to Nestlé and the sale of our Tazo brand (approximately 40 basis points), and lower marketing expenses (approximately 40 basis points).
Income from equity investees decreased $11 million for fiscal 2018, due to lower income from our North American Coffee Partnership joint venture, driven by decreased sales of Frappuccino®, Starbucks Doubleshot® and Iced Coffee beverages.
The combination of these changes contributed to an overall decrease in operating margin of 250 basis points in fiscal 2018 when compared to fiscal 2017.

Corporate and Other
Fiscal Year EndedSep 30,
2018		 Oct 1,
2017		 % Change
Net revenues:     
Company-operated stores$112.7
 $197.3
 (42.9)%
Licensed stores1.2
 2.6
 (53.8)
Other54.5
 111.4
 (51.1)
Total net revenues168.4
 311.3
 (45.9)
Cost of sales including occupancy costs163.5
 225.2
 (27.4)
Store operating expenses70.6
 113.5
 (37.8)
Other operating expenses17.1
 36.6
 (53.3)
Depreciation and amortization expenses163.6
 160.7
 1.8
General and administrative expenses1,204.8
 989.2
 21.8
Restructuring and impairments135.9
 131.5
 3.3
Total operating expenses1,755.5
 1,656.7
 6.0
Operating loss$(1,587.1) $(1,345.4) 18.0 %
Corporate and Other primarily consists of our unallocated corporate expenses, the results from Siren Retail, as well as Evolution Fresh and the legacy operations of the Teavana retail business, which substantially ceased during fiscal 2018. Unallocated corporate expenses include corporate administrative functions that support the 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.
RESULTS OF OPERATIONS — FISCAL 2017 COMPARED TO FISCAL 2016
Consolidated results of operations (in millions):
Revenues
Fiscal Year EndedOct 1,
2017		 Oct 2,
2016		 %
Change
 (52 Weeks Ended) (53 Weeks Ended) 
Net revenues:     
Company-operated stores$17,650.7
 $16,844.1
 4.8%
Licensed stores2,355.0
 2,154.2
 9.3
Other2,381.1
 2,317.6
 2.7
Total net revenues$22,386.8
 $21,315.9
 5.0%
Total net revenues increased $1.1 billion, or 5%, over fiscal 2016, primarily driven by increased revenues from company operated stores ($807 million). The growth in company-operated store revenues was primarily driven by incremental revenues from 768 net new Starbucks® company-operated store openings over the past 12 months ($869 million) and a 3% increase in comparable store sales ($496 million), attributable to a 3% increase in average ticket. Partially offsetting these incremental revenues was the absence of the 53rd week ($324 million), the absence of sales from the conversion of certain company operated stores to licensed stores ($121 million) and the impact of unfavorable foreign currency translation ($70 million).
Licensed store revenue growth also contributed to the increase in total net revenue ($201 million), primarily due to increased product sales to and royalty revenues from our licensees ($260 million), largely due to the opening of 1,552 net new Starbucks® licensed stores and improved comparable store sales, partially offset by the absence of the 53rd week ($41 million) and unfavorable foreign currency translation ($27 million).
Other revenues increased $64 million, primarily driven by increased sales of packaged coffee, tea and premium single-serve products ($73 million), our ready-to-drink beverages ($21 million) and higher foodservice sales ($26 million). Increased sales were partially offset by the absence of the 53rd week ($47 million) and an unfavorable revenue deduction adjustment pertaining to periods prior to 2017 ($13 million).

Operating Expenses
Fiscal Year EndedOct 1,
2017		 Oct 2,
2016		 Oct 1,
2017		 Oct 2,
2016
 (52 Weeks Ended) (53 Weeks Ended)  
     
As a % of Total
Net Revenues
Cost of sales including occupancy costs$9,034.3
 $8,509.0
 40.4% 39.9%
Store operating expenses6,493.3
 6,064.3
 29.0
 28.4
Other operating expenses500.3
 499.2
 2.2
 2.3
Depreciation and amortization expenses1,011.4
 980.8
 4.5
 4.6
General and administrative expenses1,450.7
 1,408.9
 6.5
 6.6
Restructuring and impairments153.5
 —
 0.7
 —
Total operating expenses18,643.5
 17,462.2
 83.3
 81.9
Income from equity investees391.4
 318.2
 1.7
 1.5
Operating income$4,134.7
 $4,171.9
 18.5% 19.6%
Store operating expenses as a % of related revenues    36.8% 36.0%
Other operating expenses as a % of non-company-operated store revenues    10.6% 11.2%
Cost of sales including occupancy costs as a percentage of total net revenues increased 50 basis points, primarily driven by a product mix shift (approximately 70 basis points) largely towards premium food in the Americas segment, partially offset by leverage on cost of sales (approximately 60 basis points), lower commodity costs (approximately 30 basis points), mainly dairy, and sales leverage on occupancy costs (approximately 30 basis points).
Store operating expenses as a percentage of total net revenues increased 60 basis points. Store operating expenses as a percentage of company-operated store revenues increased 80 basis points, primarily driven by higher partner and digital investments, largely in the Americas segment (approximately 150 basis points), partially offset by sales leverage (approximately 90 basis points).
Other operating expenses as a percentage of total net revenues decreased 10 basis points. Excluding the impact of company operated store revenues, other operating expenses decreased 60 basis points, primarily due to lower performance-based compensation (approximately 20 basis points).
General and administrative expenses as a percentage of total net revenues decreased 10 basis points, primarily driven by lower performance-based compensation (approximately 30 basis points), and employment taxes, including the lapping of higher employment taxes resulting from a multiple year audit in the prior year (approximately 20 basis points). These were partially offset by increased salaries and benefits related to digital platforms, technology infrastructure and innovations.
Restructuring and impairments charges in fiscal 2017 were primarily the result of our strategic changes in Teavana. We recorded $130 million of restructuring–related costs, including a partial goodwill impairment charge of $69 million, store asset impairments, and costs related to early store closure obligations and severance. Additionally, we recorded $18 million of partial goodwill impairment relating to our Switzerland retail business.
Income from equity investees increased $73 million, due to higher income from our CAP joint venture operations, primarily China and South Korea, as well as our North American Coffee Partnership.
The combination of these changes resulted in an overall decrease in operating margin of 110 basis points in fiscal 2017 when compared to fiscal 2016.


Other Income and Expenses
Fiscal Year EndedOct 1,
2017		 Oct 2,
2016		 Oct 1,
2017		 Oct 2,
2016
 (52 Weeks Ended) (53 Weeks Ended)  
     
As a % of Total
Net Revenues
Operating income$4,134.7
 $4,171.9
 18.5 % 19.6
Net gain resulting from divestiture of certain operations93.5
 5.4
 0.4
 —
Interest income and other, net181.8
 102.6
 0.8
 0.5
Interest expense(92.5) (81.3) (0.4) (0.4)
Earnings before income taxes4,317.5
 4,198.6
 19.3
 19.7
Income tax expense1,432.6
 1,379.7
 6.4
 6.5
Net earnings including noncontrolling interests2,884.9
 2,818.9
 12.9
 13.2
Net earnings attributable to noncontrolling interests0.2
 1.2
 —
 —
Net earnings attributable to Starbucks$2,884.7
 $2,817.7
 12.9 % 13.2 %
Effective tax rate including noncontrolling interests    33.2 % 32.9 %
Net gain resulting from divestiture of certain operations increased $88 million, primarily due to the gain from the sale of our Singapore retail operations in the fourth quarter of fiscal 2017 ($84 million).
Interest income and other, net increased $79 million, primarily driven by gain in our investment in Square, Inc. warrants ($41 million) and higher income recognized on unredeemed stored value card balances ($44 million).
Interest expense increased $11 million primarily related to additional interest incurred on long-term debt issued in February 2016, May 2016 and March 2017, partially offset by lower interest expense from the repayment of our December 2016 notes.
The effective tax rate for fiscal 2017 was 33.2% compared to 32.9% for fiscal 2016. The increase in the effective tax rate was primarily due to unfavorability from non-deductible goodwill impairment charges recorded in the third quarter of fiscal 2017 (approximately 70 basis points) and the lapping of the release of certain tax reserves in the third quarter of fiscal 2016, primarily related to statute closures (approximately 30 basis points). The increase was partially offset by the largely non-taxable gain on the sale of our Singapore retail operations in the fourth quarter of fiscal 2017 (approximately 70 basis points).

Segment Information
Results of operations by segment (in millions):
Americas
Fiscal Year EndedOct 1,
2017		 Oct 2,
2016		 Oct 1,
2017		 Oct 2,
2016
 (52 Weeks Ended) (53 Weeks Ended)  
     
As a % of Americas 
Total Net Revenues
Net revenues:       
Company-operated stores$13,996.4
 $13,247.4
 89.6% 89.7%
Licensed stores1,617.3
 1,518.5
 10.4
 10.3
Other6.3
 9.3
 —
 0.1
Total net revenues15,620.0
 14,775.2
 100.0
 100.0
Cost of sales including occupancy costs5,695.0
 5,254.2
 36.5
 35.6
Store operating expenses5,320.2
 4,909.3
 34.1
 33.2
Other operating expenses130.8
 97.1
 0.8
 0.7
Depreciation and amortization expenses614.9
 590.0
 3.9
 4.0
General and administrative expenses201.4
 186.1
 1.3
 1.3
Restructuring and impairments4.1
 —
 —
 —
Total operating expenses11,966.4
 11,036.7
 76.6
 74.7
Income from equity investees—
 —
 —
 —
Operating income$3,653.6
 $3,738.5
 23.4% 25.3%
Store operating expenses as a % of related revenues    38.0% 37.1%
Other operating expenses as a % of non-company-operated store revenues    8.1% 6.4%
Revenues
Americas total net revenues for fiscal 2017 increased $845 million, or 6%, over fiscal 2016, primarily due to increased revenues from company-operated stores (contributing $749 million) and licensed stores (contributing $99 million).
The increase in company-operated store revenues was driven by incremental revenues from 383 net new Starbucks® company-operated store openings over the past 12 months ($585 million) and a 3% increase in comparable store sales ($426 million), attributable to a 4% increase in average ticket, partially offset by the absence of the 53rd week ($258 million).
The increase in licensed store revenues was primarily driven by increased product sales to and royalty revenues from our licensees ($127 million), primarily resulting from the opening of 569 net new Starbucks® licensed stores over the past 12 months and improved comparable store sales, partially offset by the absence of the 53rd week ($31 million).
Operating Expenses
Cost of sales including occupancy costs as a percentage of total net revenues increased 90 basis points, primarily due to a product mix shift (approximately 90 basis points) largely towards premium food.
Store operating expenses as a percentage of total net revenues increased 90 basis points. As a percentage of company-operated store revenues, store operating expenses increased 5090 basis points, primarily driven by increased investments in store partners (employees)partner and digital platforms related to in-store initiativesinvestments (approximately 130180 basis points), partially offset by sales leverage on salaries and benefits (approximately 10080 basis points).
Other operating expenses as a percentage of total net revenues increased 10 basis points. Excluding the impact of company-operated store revenues, other operating expenses were flat,increased 170 basis points, primarily driven by sales leverage (approximately 60 basis points), offset by the impairment of certain assetsdue to lapping a settlement received in the regionfourth quarter of fiscal 2016 related to the closure of Target Canada stores in fiscal 2015 (approximately 60120 basis points).
DepreciationRestructuring and amortization expenses as a percentageimpairment charges of total revenues were flat, primarily driven by sales leverage (approximately 10 basis points), offset by incremental costs from investments$4 million related to asset impairments of certain company-operated stores in our existing store portfolio (approximately 10 basis points).Canada.
The combination of these changes resulted in an overall increasedecrease in operating margin of 80190 basis points overin fiscal 2014.

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China/Asia Pacific2017 when compared to fiscal 2016.

CAP
Fiscal Year EndedSep 27,
2015		 Sep 28,
2014		 Sep 27,
2015		 Sep 28,
2014
      As a % of China/Asia Pacific 
Total Net Revenues
Net revenues:       
Company-operated stores$2,127.3
 $859.4
 88.8% 76.1%
Licensed stores264.4
 270.2
 11.0
 23.9
Foodservice and other4.2
 —
 0.2
 —
Total net revenues2,395.9
 1,129.6
 100.0
 100.0
Cost of sales including occupancy costs1,071.5
 547.4
 44.7
 48.5
Store operating expenses609.8
 221.1
 25.5
 19.6
Other operating expenses62.2
 48.0
 2.6
 4.2
Depreciation and amortization expenses150.7
 46.1
 6.3
 4.1
General and administrative expenses120.8
 58.5
 5.0
 5.2
Total operating expenses2,015.0
 921.1
 84.1
 81.5
Income from equity investees119.6
 164.0
 5.0
 14.5
Operating income$500.5
 $372.5
 20.9% 33.0%
Store operating expenses as a % of related revenues    28.7% 25.7%
Discussion of our China/Asia Pacific segment results below reflects the impact of fully consolidating Starbucks Japan due to the ownership change from an equity method joint venture to a company-operated market since the acquisition date of October 31, 2014. Under the joint venture model, we recognized royalties and product sales within revenue and related product cost of sales as well as our proportionate share of Starbucks Japan's net earnings, which we recognized within income from equity investees. This resulted in a lower gross margin and a very high operating margin. Under the company-operated ownership model, Starbucks Japan's operating results are reflected in most income statement lines of this segment and have an operating margin more in line with that of our other retail businesses.
Fiscal Year EndedOct 1,
2017		 Oct 2,
2016		 Oct 1,
2017		 Oct 2,
2016
 (52 Weeks Ended) (53 Weeks Ended)  
      As a % of China/Asia Pacific 
Total Net Revenues
Net revenues:       
Company-operated stores$2,906.0
 $2,640.4
 89.7% 89.8%
Licensed stores327.4
 292.3
 10.1
 9.9
Other6.8
 6.1
 0.2
 0.2
Total net revenues3,240.2
 2,938.8
 100.0
 100.0
Cost of sales including occupancy costs1,396.2
 1,298.9
 43.1
 44.2
Store operating expenses845.5
 779.4
 26.1
 26.5
Other operating expenses21.2
 24.2
 0.7
 0.8
Depreciation and amortization expenses202.2
 180.6
 6.2
 6.1
General and administrative expenses207.1
 174.2
 6.4
 5.9
Total operating expenses2,672.2
 2,457.3
 82.5
 83.6
Income from equity investees197.0
 150.1
 6.1
 5.1
Operating income$765.0
 $631.6
 23.6% 21.5%
Store operating expenses as a % of related revenues    29.1% 29.5%
Other operating expenses as a % of non-company-operated store revenues    6.3% 8.1%
Revenues
China/Asia Pacific total net revenues for fiscal 20152017 increased $1.3 billion,$301 million, or 112%10%, largely due to increased revenuesover fiscal 2016, primarily from company-operated stores (approximately $1.3 billion). The increase inhigher company-operated store revenues was primarily($266 million), driven by incremental revenues from the acquisition of Starbucks Japan (approximately $1.1 billion). Also contributing were incremental revenues from the opening of 247392 net new company-operated storesstore
openings over the past 12 months (approximately $160($293 million) and. Also contributing was a 9%3% increase in comparable store sales (approximately $74($67 million), partially offset by the absence of the 53rd week ($52 million) and unfavorable foreign currency translation ($40 million).
Licensed store revenues decreased $6increased $35 million, primarily due to our ownership change in Starbucks Japan to mostly company-operated stores (approximately $45 million). This decrease was partially offsetdriven by increased product sales to and royalty revenues from licensees (approximately $27($39 million), primarily resulting from the opening of 520 net new licensed store openings over the past 12 months, improved comparable store sales, and incremental revenues from the ownership changes in Australia and Malaysia (approximately $17 million) in the fourth quarter of fiscal 2014.
Operating Expenses
Cost of sales including occupancy costs as a percentage of total net revenues decreased 380 basis points, primarily due to the impact of our ownership change in Starbucks Japan (approximately 230 basis points) and the shift in our cost of sales mix resulting from growth of company-operated stores, which have a higher gross margin (approximately 50 basis points). Sales leverage (approximately 40 basis points) also contributed.
Store operating expenses as a percentage of total net revenues increased 590 basis points. As a percentage of company-operated store revenues, store operating expenses increased 300 basis points, primarily driven by the impact of our ownership change in Starbucks Japan (approximately 410 basis points), partially offset by the sale of our Australia retail operations in the fourth quarter of fiscal 2014 (approximately 70 basis points) and sales leverage (approximately 50 basis points).
Other operating expenses as a percentage of total net revenues decreased 160 basis points. Excluding the impact of company-operated store revenues, other operating expenses increased 540 basis points, primarily due to the impact of our ownership change in Starbucks Japan (approximately 350 basis points) as well as increased salaries and benefits largely due to increased headcount to support growth in our China market (approximately 150 basis points).

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Depreciation and amortization expenses as a percentage of total revenues increased 220 basis points, primarily due to the impact of our ownership change in Starbucks Japan (approximately 210 basis points).
General and administrative expenses as a percentage of total revenues decreased 20 basis points, primarily due to sales leverage (approximately 40 basis points) and the impact of the sale of our Australia retail operations in the fourth quarter of fiscal 2014 (approximately 20 basis points), which includes lapping professional fees associated with the sale. The impact of our ownership change in Starbucks Japan contributed unfavorably (approximately 60 basis points).
Income from equity investees decreased $44 million, primarily due to the impact of our ownership change in Starbucks Japan and absence of income from our Malaysia joint venture sold in the fourth quarter of fiscal 2014, partially offset by improved performance from our China joint venture. As a percentage of total net revenues, income from equity investees declined 950 basis points, primarily due to the impact of our ownership change in Starbucks Japan (approximately 870 basis points).
The overall decrease in operating margin of 1,210 basis points over fiscal 2014 was primarily driven by the impact of our ownership change in Starbucks Japan (approximately 1,410 basis points), partially offset by 200 basis points of margin expansion driven by the other items discussed above.
EMEA
Fiscal Year EndedSep 27,
2015		 Sep 28,
2014		 Sep 27,
2015		 Sep 28,
2014
      As a % of EMEA 
Total Net Revenues
Net revenues:       
Company-operated stores$911.2
 $1,013.8
 74.9% 78.3%
Licensed stores257.2
 238.4
 21.1
 18.4
Foodservice48.3
 42.6
 4.0
 3.3
Total net revenues1,216.7
 1,294.8
 100.0
 100.0
Cost of sales including occupancy costs582.5
 646.8
 47.9
 50.0
Store operating expenses308.7
 365.8
 25.4
 28.3
Other operating expenses51.8
 48.2
 4.3
 3.7
Depreciation and amortization expenses52.0
 59.4
 4.3
 4.6
General and administrative expenses56.6
 59.1
 4.7
 4.6
Total operating expenses1,051.6
 1,179.3
 86.4
 91.1
Income from equity investees3.1
 3.7
 0.3
 0.3
Operating income$168.2
 $119.2
 13.8% 9.2%
Store operating expenses as a % of related revenues    33.9% 36.1%
Revenues
EMEA total net revenues for fiscal 2015 decreased $78 million, or 6%. The decrease was primarily due to a decline in company-operated store revenues (approximately $103 million), which was largely due to unfavorable foreign currency translation (approximately $94 million). Also contributing to the decrease in company-operated revenues was the shift to more licensed stores in the region, which includes net store closures as well as the absence of revenues from the conversion of certain stores in the U.K. from company-operated to licensed. This decline was partially offset by 4% growth in comparable store sales.
Licensed store revenues increased $19 million, or 8%, primarily due to higher product sales to and royalty revenues from our licensees (approximately $45 million), resulting from the opening of 238644 net new licensed stores over the past 12 months, and improved comparable store sales, partially offset by unfavorable foreign currency translation (approximately $22the absence of the 53rd week ($4 million).
Operating Expenses
Cost of sales including occupancy costs as a percentage of total net revenues decreased 210110 basis points, primarily duedriven by favorability from the transition to favorable foreign currency exchangeChina's new value added tax structure (approximately 130120 basis points). We buy and sell products, primarily roasted coffee, in multiple currencies throughout the region depending on the functional currency of each market. Differences in those rates generated favorable foreign currency exchange for fiscal 2015 resulting in a benefit in cost of sales. Sales leverage(approximately 40 basis points) also contributed to the decrease.

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Store operating expenses as a percentage of total net revenues decreased 29040 basis points. As a percentage of company-operated store revenues, store operating expenses decreased 22040 basis points, primarily due to gainssales leverage on the sales of certain store assets in the region (approximately 150 basis points) as well as decreased expenses, largely salaries and benefits driven by the shift to more licensed stores (approximately 40 basis points).
Other operating expenses as a percentage of total net revenues increased 60 basis points. Excluding the impact of company-operated store revenues, other operating expenses decreased 20 basis points, primarily driven by the gain on the sale of certain assets in the region (approximately 40 basis points) and improved collection results (approximately 20 basis points). These decreases were partially offset by increased costs to grow our non-retail operations in the region (approximately 50 basis points), largely driven by higher marketing costs.
The combination of these changes resulted in an overall increase in operating margin of 460 basis points over fiscal 2014.
Channel Development
Fiscal Year EndedSep 27,
2015		 Sep 28,
2014		 Sep 27,
2015		 Sep 28,
2014
      As a % of Channel Development 
Total Net Revenues
Net revenues:       
CPG$1,329.0
 $1,178.8
 76.8% 76.2%
Foodservice401.9
 367.2
 23.2
 23.8
Total net revenues1,730.9
 1,546.0
 100.0
 100.0
Cost of sales974.8
 882.4
 56.3
 57.1
Other operating expenses210.5
 187.0
 12.2
 12.1
Depreciation and amortization expenses2.7
 1.8
 0.2
 0.1
General and administrative expenses16.2
 18.2
 0.9
 1.2
Total operating expenses1,204.2
 1,089.4
 69.6
 70.5
Income from equity investees127.2
 100.6
 7.3
 6.5
Operating income$653.9
 $557.2
 37.8% 36.0%
Revenues
Channel Development total net revenues for fiscal 2015 increased $185 million, or 12%, over the prior year, primarily driven by higher sales of premium single-serve products (approximately $97 million) and U.S. packaged coffee (approximately $42 million), as well as an increase in foodservice sales (approximately $35 million).
Operating Expenses
Cost of sales as a percentage of total net revenues decreased 80 basis points, primarily due to leverage on cost of sales (approximately 100 basis points).
Other operating expenses as a percentage of total net revenues increased 10 basis points, primarily driven by increased marketing (approximately 60 basis points), largely due to new premium single-serve product launches. This increase was partially offset by lower professional fees (approximately 30 basis points) and sales leveragelower performance-based compensation in Japan (approximately 20 basis points).
Income from equity investees increased $27 million, driven by higher income from our North American Coffee Partnership joint venture, primarily due to increased sales of bottled Frappuccino® and Starbucks Doubleshot® beverages, largely driven by new product launches and higher sales volumes.
The combination of these changes contributed to an overall increase in operating margin of 180 basis points over fiscal 2014.

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All Other Segments
Fiscal Year EndedSep 27,
2015		 Sep 28,
2014		 % Change
Net revenues:     
Company-operated stores$233.2
 $238.2
 (2.1)%
Licensed stores5.9
 5.1
 15.7
CPG, foodservice and other286.7
 253.6
 13.1
Total net revenues525.8
 496.9
 5.8
Cost of sales including occupancy costs316.5
 287.2
 10.2
Store operating expenses104.7
 104.5
 0.2
Other operating expenses76.5
 74.6
 2.5
Depreciation and amortization expenses16.3
 15.2
 7.2
General and administrative expenses36.6
 42.2
 (13.3)
Total operating expenses550.6
 523.7
 5.1
Operating loss$(24.8) $(26.8) (7.5)%
All Other Segments primarily includes Teavana, Seattle’s Best Coffee, Evolution Fresh, and Digital Ventures, as well as certain developing businesses such as the Starbucks Reserve® Roastery & Tasting Room.
Total net revenues for All Other Segments increased $29 million over the prior year, primarily driven by higher Seattle's Best Coffee® (approximately $23 million) and e-commerce (approximately $8 million) sales.
Total operating expenses increased $27 million, primarily due to an increase in cost of sales.
RESULTS OF OPERATIONS — FISCAL 2014 COMPARED TO FISCAL 2013

Consolidated results of operations (in millions):
Revenues
Fiscal Year EndedSep 28,
2014		 Sep 29,
2013		 %
Change
Net revenues:     
Company-operated stores$12,977.9
 $11,793.2
 10.0%
Licensed stores1,588.6
 1,360.5
 16.8
CPG, foodservice and other1,881.3
 1,713.1
 9.8
Total net revenues$16,447.8
 $14,866.8
 10.6%
Total net revenues were $16.4 billion for fiscal 2014, an increase of $1.6 billion, or 11%, over fiscal 2013, primarily due to increased revenues from company-operated stores (contributing $1.2 billion). The growth in company-operated store revenues was driven by a 6% increase in comparable store sales (approximately $641 million) and incremental revenues from 555 net new Starbucks® company-operated store openings over the past 12 months (approximately $529 million).
Licensed store revenue growth contributed $228 million to the increase in total net revenues, primarily due to increased product sales to and royalty revenues from our licensees, as a result of improved comparable store sales and the opening of 1,029 net new licensed stores over the past 12 months.
CPG, foodservice and other revenues increased $168 million, primarily due to increased sales of premium single-serve products (approximately $111 million) and increased foodservice sales (approximately $17 million).

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Operating Expenses
Fiscal Year EndedSep 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 expenses4,638.2
 4,286.1
 28.2
 28.8
Other operating expenses457.3
 431.8
 2.8
 2.9
Depreciation and amortization expenses709.6
 621.4
 4.3
 4.2
General and administrative expenses991.3
 937.9
 6.0
 6.3
Litigation charge/(credit)(20.2) 2,784.1
 (0.1) 18.7
Total operating expenses13,635.0
 15,443.6
 82.9
 103.9
Income from equity investees268.3
 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 decreased 120 basis points, primarily driven by lower commodity costs (approximately 80 basis points), mainly coffee, and sales leverage (approximately 40 basis points).
Store operating expenses as a percentage of total net revenues, and as a percentage of company-operated store revenues, decreased 60 basis points, mainly driven by sales leverage (approximately 8010 basis points).
Other operating expenses as a percentage of total net revenues decreased 10 basis points. Excluding the impact of company-operatedcompany operated store revenues, other operating expenses decreased 80180 basis points, primarily due to sales leveragelower performance-based compensation (approximately 30100 basis points) and timing of certain reimbursable expenses (approximately 90 basis points).
General and administrative expenses as a percentage of total net revenues decreased 30increased 50 basis points, mainlyprimarily due to lapping of costs associated with our leadership conference heldcontinued focus and investment in the prior year.
The litigation charge of $2,784.1 million in fiscal 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 damagesproduct quality and $556.6 million in estimated interestinnovation (approximately 20 basis points) 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 Kraft arbitration as a result of paying our obligation earlier than anticipated.higher salaries and benefits (approximately 20 basis points).
Income from equity investees increased $17$47 million, primarily due to improved performancedriven by higher income from our joint venture operations, primarily in East China and South Korea,Korea. Favorability in both regions was attributable to comparable store sales growth and Japan, as well as improved performancethe addition of net new licensed stores over the past 12 months. East China also benefited from our North American Coffee Partnership joint venture, which produces, bottles and distributes our ready-to-drink beverages.the new value added tax structure.
The combination of these changes resulted in an overall increase in operating margin to 18.7%of 210 basis points in fiscal 2017 when compared to (2.2)% in the prior year period.

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Other Income and Expensesfiscal 2016.

EMEA
Fiscal Year EndedSep 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, net142.7
 123.6
 0.9
 0.8
Interest expense(64.1) (28.1) (0.4) (0.2)
Earnings/(loss) before income taxes3,159.7
 (229.9) 19.2
 (1.5)
Income taxes1,092.0
 (238.7) 6.6
 (1.6)
Net earnings including noncontrolling interests2,067.7
 8.8
 12.6
 0.1
Net earnings/(loss) 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 increased $19 million over the prior year, primarily due to a net benefit from transactions in the fourth quarter of fiscal 2014, driven by a gain on the sale of our equity interest in our Malaysia joint venture (approximately $68 million), favorable fair value adjustments from derivatives used to manage our risk of commodity price and foreign currency fluctuations (approximately $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 sales of 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 2013 (approximately $35 million).
Interest expense increased $36 million due to interest on the long-term debt we issued in the first quarter of fiscal 2014 and the fourth quarter of fiscal 2013.
Our tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of 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 effective tax rate from the litigation charge, see Note 13, Income Taxes, to 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
Results of operations by segment (in millions):
Americas
Fiscal Year EndedSep 28,
2014		 Sep 29,
2013		 Sep 28,
2014		 Sep 29,
2013		Oct 1,
2017		 Oct 2,
2016		 Oct 1,
2017		 Oct 2,
2016
    
As a % of Americas Total
Net Revenues
(52 Weeks Ended) (53 Weeks Ended)  
     As a % of EMEA 
Total Net Revenues
Net revenues:              
Company-operated stores$10,866.5
 $10,038.3
 90.7% 91.3%$551.0
 $732.0
 57.5% 68.3%
Licensed stores1,074.9
 915.4
 9.0
 8.3
407.7
 339.5
 42.5
 31.7
Foodservice and other39.1
 47.1
 0.3
 0.4
Total net revenues11,980.5
 11,000.8
 100.0
 100.0
958.7
 1,071.5
 100.0
 100.0
Cost of sales including occupancy costs4,487.0
 4,214.9
 37.5
 38.3
508.6
 540.7
 53.1
 50.5
Store operating expenses3,946.8
 3,710.2
 32.9
 33.7
214.1
 260.6
 22.3
 24.3
Other operating expenses100.4
 96.9
 0.8
 0.9
51.3
 49.4
 5.4
 4.6
Depreciation and amortization expenses469.5
 429.3
 3.9
 3.9
30.6
 39.9
 3.2
 3.7
General and administrative expenses167.8
 186.7
 1.4
 1.7
41.7
 51.4
 4.3
 4.8
Restructuring and impairments17.9
 —
 1.9
 —
Total operating expenses9,171.5
 8,638.0
 76.6
 78.5
864.2
 942.0
 90.1
 87.9
Income from equity investees—
 2.4
 —
 —
—
 1.5
 —
 0.1
Operating income$2,809.0
 $2,365.2
 23.4% 21.5%$94.5
 $131.0
 9.9% 12.2%
Store operating expenses as a percentage of company-operated store revenues    36.3% 37.0%
Store operating expenses as a % of related revenues    38.9% 35.6%
Other operating expenses as a % of non-company-operated store revenues    12.6% 14.6%
Revenues
AmericasEMEA total net revenues for fiscal 2014 increased $9802017 decreased $113 million, or 9%11%, over fiscal 2016. The decrease was primarily due to increased revenues from company-operated stores (contributing $828 million) and licensed stores (contributing $160 million).
The increasea decline in company-operated store revenues was($181 million), driven by a 6% increasethe shift to more licensed stores in comparable store sales (approximately $554the region ($121 million), attributablewhich includes the absence of revenues related to a 3% increasethe sale of our Germany retail operations in average ticket and a 2% increase in numberthe third quarter of transactions, and incremental revenues from 314 net new Starbucks® company-operated store openings overfiscal 2016. Also contributing to the past 12 months (approximately $377 million). Partially offsetting these increasesdecline was unfavorable foreign currency translation (approximately $65($43 million), primarily and the absence of the 53rd week ($11 million).
Licensed store revenues increased $68 million, driven by the strengthening of the U.S. dollar against the Canadian dollar.
The increase in licensed store revenues was primarily due to increasedhigher product sales to and royalty revenues from our licensees as a result of an increase in comparable store sales and($95 million), resulting from the opening of 381339 net new licensed stores and the transfer of 14 company-operated stores to licensed stores over the past 12 months. These increases were partially offset by unfavorable foreign currency translation ($24 million) and the absence of the 53rd week ($6 million).
Operating Expenses
Cost of sales including occupancy costs as a percentage of total net revenues decreased 80increased 260 basis points, primarily due to sales leverageunfavorable foreign currency transactions (approximately 40150 basis points) and the shift in the composition of our store portfolio to more licensed stores, which have a lower commodity costsgross margin (approximately 30100 basis points), mainly coffee..
Store operating expenses as a percentage of total net revenues decreased 80200 basis points. As a percentage of company-operated store revenues, store operating expenses increased 330 basis points, primarily due to sales deleverage in certain company-operated stores (approximately 320 basis points) and the impact of a tax settlement (approximately 100 basis points), partially offset by the shift in the portfolio towards more licensed stores (approximately 140 basis points).
Other operating expenses as a percentage of total net revenues increased 80 basis points. Excluding the impact of company operated store revenues, other operating expenses decreased 200 basis points, primarily due to sales leverage driven by the shift to more licensed stores (approximately 160 basis points).
Depreciation and amortization expenses as a percentage of total net revenues decreased 50 basis points, primarily due to the shift in portfolio towards more licensed stores (approximately 50 basis points).
Restructuring and impairment charges in fiscal 2017 relate to a partial goodwill impairment expense recorded in our Switzerland company-operated retail reporting unit, which we fully acquired in the fourth quarter of fiscal 2011. The overall economic backdrop in Europe, coupled with the strengthening of the Swiss franc when compared to the relatively inexpensive euro in surrounding countries, caused ongoing unfavorable changes in consumer behavior and depressed tourism. Our latest mitigation efforts for our Switzerland retail business are not expected to fully recover the reporting unit's carrying value given

the sustained nature of these and other external factors. As a result, we recorded a goodwill impairment charge of $18 million in the third quarter of fiscal 2017.
The combination of these changes resulted in an overall decrease in operating margin of 230 basis points in fiscal 2017 when compared to fiscal 2016.
Channel Development
Fiscal Year EndedOct 1,
2017		 Oct 2,
2016		 Oct 1,
2017		 Oct 2,
2016
 (52 Weeks Ended) (53 Weeks Ended)  
      As a % of Channel Development 
Total Net Revenues
Total net revenues$2,256.6
 $2,195.1
 

��

Cost of sales1,209.3
 1,191.8
 53.6
 54.3
Other operating expenses260.4
 270.7
 11.5
 12.3
Depreciation and amortization expenses3.0
 3.9
 0.1
 0.2
General and administrative expenses11.3
 18.0
 0.5
 0.8
Total operating expenses1,484.0
 1,484.4
 65.8
 67.6
Income from equity investees194.4
 166.6
 8.6
 7.6
Operating income$967.0
 $877.3
 42.9% 40.0%
Discussion of our Channel Development segment results reflects the impact of an unfavorable revenue deduction adjustment recorded in the second quarter of fiscal 2017. While this adjustment was immaterial, the discussion below quantifies the impact to provide a better understanding of our results for fiscal 2017.
Revenues
Channel Development total net revenues for fiscal 2017 increased $62 million, or 3%, over fiscal 2016. Revenue growth was driven by increased sales of packaged coffee, tea and premium single-serve products ($73 million), our ready-to-drink beverages ($21 million) and higher foodservice sales ($26 million). Higher foodservice sales were primarily the result of a change to a direct distribution model and recognizing the benefit of full revenue from premium single-serve product sales. Increased sales were partially offset by the absence of the 53rd week ($45 million) and an unfavorable revenue deduction adjustment pertaining to prior periods ($13 million).
Operating Expenses
Cost of sales as a percentage of total net revenues decreased 70 basis points, mainlyprimarily driven by lower coffee costs (approximately 80 basis points) and leverage on cost of sales leverage (approximately 60 basis points), partially offset by a shift toward lower margin products (approximately 80 basis points) and the revenue deduction adjustment pertaining to prior periods (approximately 30 basis points).
Other operating expenses as a percentage of total net revenues decreased 80 basis points, primarily driven by lower performance-based compensation (approximately 40 basis points).
General and administrative expenses as a percentage of total net revenues decreased 30 basis points, primarily due to lapping of costs associated with our leadership conference held in the prior yeardriven by lower performance-based compensation (approximately 20 basis points) and sales leveragesalaries and benefits (approximately 10 basis points).
The combination of these changes resulted in an overall increase in operating margin of 190 basis points over fiscal 2013.


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China/Asia Pacific
Fiscal Year EndedSep 28,
2014		 Sep 29,
2013		 Sep 28,
2014		 Sep 29,
2013
      As a % of CAP Total
Net Revenues
Net revenues:       
Company-operated stores$859.4
 $671.7
 76.1% 73.2%
Licensed stores270.2
 245.3
 23.9
 26.8
Total net revenues1,129.6
 917.0
 100.0
 100.0
Cost of sales including occupancy costs547.4
 449.5
 48.5
 49.0
Store operating expenses221.1
 170.0
 19.6
 18.5
Other operating expenses48.0
 46.1
 4.2
 5.0
Depreciation and amortization expenses46.1
 33.8
 4.1
 3.7
General and administrative expenses58.5
 48.4
 5.2
 5.3
Total operating expenses921.1
 747.8
 81.5
 81.5
Income from equity investees164.0
 152.0
 14.5
 16.6
Operating income$372.5
 $321.2
 33.0% 35.0%
Store operating expenses as a percentage of company-operated store revenues    25.7% 25.3%
Revenues
China/Asia Pacific total net revenues for fiscal 2014 increased $213 million, or 23%, primarily due to increased revenues from company-operated stores (contributing $188 million). This increase was primarily driven by the opening of 250 net new company-operated stores over the past 12 months (approximately $154 million) and a 7% increase in comparable store sales (approximately $44 million), mainly attributable to a 6% increase in the number of transactions.
Licensed store revenues contributed $25 million to the increase in total net revenues, mainly due to higher royalty revenues from and product sales to licensees, as a result of 492 net new licensed store openings over the past 12 months and an increase in comparable store sales.
Operating Expenses
Cost of sales including occupancy costs as a percentage of total net revenues decreased 50 basis points, primarily due to sales leverage (approximately 40 basis points).
Store operating expenses as a percentage of total net revenues increased 110 basis points, or 40 basis points as a percentage of company-operated store revenues, over the prior year period, as a result of company-operated store growth outpacing licensed store growth.
Other operating expenses as a percentage of total net revenues decreased 80 basis points. Excluding the impact of company-operated store revenues, other operating expenses decreased 100 basis points, largely due to cost management (approximately 60 basis points) and sales leverage (approximately 40 basis points).
Income from equity investees increased $12$28 million primarily driven by improved performance from our joint venture operations in China, South Korea and Japan. This increase was partially offset by unfavorable foreign currency fluctuations, driven by the weakening of the Japanese yen against the U.S. dollar and lapping a reduction to the estimated asset retirement obligations of our store leases in the region in fiscal 2013. These fluctuations, paired with the accelerated growth in segment revenues resulting from the shift in the composition of the store portfolio to more company-operated stores, resulted in income from equity investees declining 210 basis points as a percentage of total net revenues.
The combination of these changes resulted in an overall decline in operating margin of 200 basis points over fiscal 2013.

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EMEA
Fiscal Year EndedSep 28,
2014		 Sep 29,
2013		 Sep 28,
2014		 Sep 29,
2013
      As a % of EMEA Total
Net Revenues
Net revenues:       
Company-operated stores$1,013.8
 $932.8
 78.3% 80.4%
Licensed stores238.4
 190.3
 18.4
 16.4
Foodservice42.6
 36.9
 3.3
 3.2
Total net revenues1,294.8
 1,160.0
 100.0
 100.0
Cost of sales including occupancy costs646.8
 590.9
 50.0
 50.9
Store operating expenses365.8
 339.4
 28.3
 29.3
Other operating expenses48.2
 38.5
 3.7
 3.3
Depreciation and amortization expenses59.4
 55.5
 4.6
 4.8
General and administrative expenses59.1
 71.9
 4.6
 6.2
Total operating expenses1,179.3
 1,096.2
 91.1
 94.5
Income from equity investees3.7
 0.4
 0.3
 —
Operating income$119.2
 $64.2
 9.2% 5.5%
Store operating expenses as a percentage of company-operated store revenues    36.1% 36.4%
Revenues
EMEA total net revenues for fiscal 2014 increased $135 million, or 12%, over the prior year primarily2017, due to an increase in company-operated stores revenues (approximately $81 million). This increase was primarily driven by favorable foreign currency translation (approximately $47 million) and a 5% increase in comparable store sales (approximately $42 million), attributable to a 3% increase in number of transactions and a 2% increase in average ticket.
Licensed store revenues grew $48 million, or 25%, primarily due to increased product and equipment sales to and royalty revenues from our licensees, primarily resulting from the opening of 180 net new licensed stores over the past 12 months and improved comparable store sales.
Operating Expenses
Cost of sales including occupancy costs as a percentage of total net revenues decreased 90 basis points, primarily driven by lower coffee costs (approximately 50 basis points), sales leverage (approximately 40 basis points) and favorable foreign currency fluctuations (approximately 40 basis points). This favorability was partially offset by lapping a reduction to the estimated asset retirement obligations of our store leases in the region in fiscal 2013 (approximately 60 basis points).
Store operating expenses as a percentage of total net revenues decreased 100 basis points primarily due to sales leverage from more licensed stores in the region compared to the prior year. As a percentage of company-operated store revenues, store operating expenses decreased 30 basis points mainly due to sales leverage.
Other operating expenses as a percentage of total net revenues increased 40 basis points over fiscal 2013. Excluding the impact of company-operated store revenues, other operating expenses increased 30 basis points, driven by increased costs to grow our non-retail operations in the region (approximately 40 basis points).
General and administrative expenses as a percentage of total net revenues decreased 160 basis points, primarily due to sales leverage and reduced support costs, largely driven by the shift to more licensed stores.
The combination of these changes resulted in an overall increase in operating margin of 370 basis points over fiscal 2013.


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Channel Development
Fiscal Year EndedSep 28,
2014		 Sep 29,
2013		 Sep 28,
2014		 Sep 29,
2013
     
As a % of Channel Development
Total Net Revenues
Net revenues:       
CPG$1,178.8
 $1,056.0
 76.2% 75.5%
Foodservice367.2
 342.9
 23.8
 24.5
Total net revenues1,546.0
 1,398.9
 100.0
 100.0
Cost of sales882.4
 878.4
 57.1
 62.8
Other operating expenses187.0
 179.4
 12.1
 12.8
Depreciation and amortization expenses1.8
 1.1
 0.1
 0.1
General and administrative expenses18.2
 21.1
 1.2
 1.5
Total operating expenses1,089.4
 1,080.0
 70.5
 77.2
Income from equity investees100.6
 96.6
 6.5
 6.9
Operating income$557.2
 $415.5
 36.0% 29.7%
Revenues
Channel Development total net revenues for fiscal 2014 increased $147 million, or 11%, over the prior year, primarily driven by increased sales of premium single-serve products (approximately $111 million) and increased foodservice sales (approximately $24 million).
Operating Expenses
Cost of sales as a percentage of total net revenues decreased 570 basis points, largely due to lower coffee costs (approximately 440 basis points) and other cost of goods sold efficiencies (approximately 150 basis points).
Other operating expenses as a percentage of total net revenues decreased 70 basis points, primarily driven by sales leverage (approximately 40 basis points).
Income from equity investees increased $4 million, driven by higher income from our North American Coffee Partnership joint venture, primarily due to strongdriven by increased sales of bottled Frappuccino® beverages. The growth in segment revenues resulted in our joint venture income declining 40 basis pointsFrappuccino® and Starbucks Doubleshot® beverages as a percentage of total net revenues.well as new product launches over the past 12 months.
The combination of these changes contributed to an overall increase in operating margin of 630290 basis points overin fiscal 2013.

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All Other Segments2017 when compared to fiscal 2016.


Corporate and Other
Fiscal Year EndedSep 28,
2014		 Sep 29,
2013		 
%
Change
Oct 1,
2017		 Oct 2,
2016		 
%
Change
(52 Weeks Ended) (53 Weeks Ended) 
Net revenues:          
Company-operated stores$238.2
 $150.4
 58.4 %$197.3
 $224.3
 (12.0)%
Licensed stores5.1
 9.5
 (46.3)%2.6
 3.9
 (33.3)%
CPG, foodservice and other253.6
 230.2
 10.2
Other111.4
 107.1
 4.0
Total net revenues496.9
 390.1
 27.4
311.3
 335.3
 (7.2)
Cost of sales287.2
 239.8
 19.8
Cost of sales including occupancy costs225.2
 223.4
 0.8
Store operating expenses104.5
 66.5
 57.1
113.5
 115.0
 (1.3)
Other operating expenses74.6
 71.7
 4.0
36.6
 57.8
 (36.7)
Depreciation and amortization expenses15.2
 11.7
 29.9
160.7
 166.4
 (3.4)
General and administrative expenses42.2
 34.9
 20.9
989.2
 979.2
 1.0
Restructuring and impairments131.5
 —
 nm
Total operating expenses523.7
 424.6
 23.3
1,656.7
 1,541.8
 7.5
Operating loss$(26.8) $(34.5) (22.3)%$(1,345.4) $(1,206.5) 11.5 %
AllCorporate and Other Segments includes the results of our Teavana, Seattle’s Best Coffee,Siren Retail, Evolution Fresh and Digital Ventures.our unallocated corporate expenses. Unallocated corporate expenses include corporate administrative functions that support the 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.
Total net revenues for All Other Segments increased $107 million,The increase in the operating loss in fiscal 2017 compared to fiscal 2016 was primarily due to having an additional quarterrestructuring and impairment charges related to our strategy to close TeavanaTM/MC retail stores and focus on TeavanaTM/MC tea within Starbucks® stores. We recorded $69 million for the partial impairment of Teavana revenuesgoodwill and $60 million in fiscal 2014 as Teavana was acquired atrestructuring-related costs, including asset impairments, costs associated with the beginningearly closure of the second quarter of fiscal 2013 (approximately $92 million).stores and their related obligations, and severance.
Total operating expenses increased $99 million, primarily due to having an additional quarter of Teavana expenses in fiscal 2014 as Teavana was acquired at the beginning of the second quarter of fiscal 2013.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Cash and Investment Overview
StarbucksOur cash and investments were $1.9$9.2 billion and $2.2$3.2 billion as of September 27, 201530, 2018 and September 28, 2014, respectively.October 1, 2017, respectively with the increase driven primarily by the upfront payment associated with the Global Coffee Alliance. We actively manage our cash and investments in order to internally fund operating needs, make scheduled interest and principal payments on our borrowings, make acquisitions, and return cash to shareholders through common stock cash dividend payments and share repurchases. Our investment portfolio primarily includes highly liquid available-for-sale securities, including corporate debt securities, government treasury securities (foreign(domestic and domestic)foreign), mortgage and asset-backed securities, state and local government obligationscommercial paper, and agency obligations. As of September 27, 2015,30, 2018, approximately $1.0$1.3 billion of cash and investments werewas held in foreign subsidiaries.
Borrowing capacity
Our $750 million$2.0 billion unsecured 5-year revolving credit facility (the "2013“2018 credit facility"facility”) with various banks,and our $1.0 billion unsecured 364-Day credit facility (the “364-day credit facility”) are available for working capital, capital expenditures and other corporate purposes, including acquisitions and share repurchases.
The 2018 credit facility, of which $150 million may be used for issuances of letters of credit, is available for working capital, capital expenditures and other corporate purposes, including acquisitions and share repurchases. During the second quarter of fiscal 2015, we extended the duration of our credit facility, which is nowcurrently set to mature on January 21, 2020, and amended certain facility fees and borrowing rates. Starbucks hasOctober 25, 2022. We have the option, subject to negotiation and agreement with the related banks, to increase the maximum commitment amount by an additional $750$500 million. Borrowings under the credit facility will bear interest at a variable rate based on LIBOR, and, for U.S. dollar-denominated loans under certain circumstances, a Base Rate (as defined in the credit facility), in each case plus an applicable margin. The applicable margin is based on the better of (i) the Company's long-term credit ratings assigned by Moody's and Standard & Poor's rating agencies and (ii) the Company's fixed charge coverage ratio, pursuant to a pricing grid set forth in the five-year credit facility.agreement. The current applicable margin is 0.565%0.680% for Eurocurrency Rate Loans and 0.00% (nil) for Base Rate Loans.
The 364-day credit facility, containsof which no amount may be used for issuances of letters of credit, was originally set to mature on October 25, 2018. In the first quarter of fiscal 2019, the maturity has been extended to October 23, 2019. We have the option, subject to negotiation and agreement with the related banks, to increase the maximum commitment amount by an additional $500 million. Borrowings under the credit facility will bear interest at a variable rate based on LIBOR, and, for U.S. dollar-

denominated loans under certain circumstances, a Base Rate (as defined in the credit facility), in each case plus an applicable margin. The applicable margin was increased from 0.585% to 0.92% for Eurocurrency Rate Loans and 0.00% (nil) for Base Rate Loans as a result of the extension.
Both credit facilities contain provisions requiring us to maintain compliance with certain covenants, including a minimum fixed charge coverage ratio, which measures our ability to cover financing expenses. As of September 27, 2015,30, 2018, we were in compliance with all applicable credit facility covenants. No amounts were outstanding under our credit facility as of September 27, 2015. During the first quarter of fiscal 2016, we replaced the 2013 credit facility with a new $1.5 billion unsecured, revolving credit facility (the "2016 credit facility") with various banks, which is now set to mature on November 6, 2020. The terms and conditions of the 2016 credit facility are substantially consistent with those of the 2013 credit facility.30, 2018.
Under our commercial paper program, we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of $1$3 billion, with individual maturities that may vary but not exceed 397 days from the date of issue.

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Amounts outstanding under the commercial paper program are required to be backstopped by available commitments under our credit facilityfacilities discussed above. As of September 27, 2015, availability under our commercial paper program was approximately $750 million (which represents the full committed credit facility amount, as the amount of outstanding letters of credit was not material as of September 27, 2015). The proceeds from borrowings under our commercial paper program may be used for working capital needs, capital expenditures and other corporate purposes, including, share repurchases,but not limited to, business expansion, payment of cash dividends on our common stock or the financingand share repurchases. As of possible acquisitions. In the fourth quarter of fiscal 2015,September 30, 2018, we issued and subsequently repaid commercial paper borrowings of $93 million for general corporate purposes. We had no other borrowings under our commercial paper program during fiscal 2015.program.
In June 2015,August 2018, we issued additionallong-term debt in an underwritten registered public offering, which consisted of $1.25 billion of 7-year 3.800% Senior Notes (the “2025 notes”) due August 2025, $750 million of 10-year 4.000% Senior Notes (the “2028 notes”) due November 2028 and $1 billion of 30-year 4.500% Senior Notes (the “2048 notes”) due November 2048. Interest on the 2025 notes is payable semi-annually on February 15 and August 15, commencing on February 15, 2019. Interest on the 2028 and 2048 notes is payable semi-annually on May 15 and November 15, commencing on November 15, 2018.
In February 2018, we issued long-term debt in an underwritten registered public offering, which consisted of $1 billion of 5-year 3.100% Senior Notes (the “2023 notes”) due March 2023 and $600 million of 10-year 3.500% Senior Notes (the “2028 notes”) due March 2028. Interest on the 2023 and 2028 notes is payable semi-annually on March 1 and September 1, commencing on September 1, 2018.
In November 2017, we issued long-term debt in an underwritten registered public offering, which consisted of $500 million of 7-year 2.700%3-year 2.200% Senior Notes (the "2022 notes"“2020 notes”) due June 2022,November 2020 and $350$500 million of 30-year 4.300%3.750% Senior Notes (the "2045 notes"“2047 notes”) due June 2045.December 2047. Interest on the 20222020 notes is payable semi-annually on May 22 and November 22, commencing on May 22, 2018 and interest on the 20452047 notes is payable semi-annually on June 151 and December 15 of each year,1, commencing on December 15, 2015. June 1, 2018.
The net proceeds from these offerings are used for general corporate purposes, including repurchases of our common stock under our ongoing share repurchase program and payment of dividends.
See Note 9, Debt, to the consolidated financial statements included in Item 8 of Part II of this 10-K for details of the components of our long-term debt.
As discussed in Note 3, Derivative Financial Instruments, to the consolidated financial statements included in Item 8 of Part II of this 10-K, during the first quarter of fiscal 2015, we entered into forward-starting interest rate swap agreements to hedge the variability in cash flows due to changes in the benchmark interest rate related to the 2022 notes. During the third quarter of fiscal 2015, we entered into forward-starting interest rate swap agreements to hedge the variability in cash flows due to changes in the benchmark interest rate related to the 2045 notes. The swap agreements were cash settled in the third quarter of fiscal 2015 at the time the 2022 notes and the 2045 notes were priced. The resulting net losses from these agreements are included in accumulated other comprehensive income and will be amortized as an increase to interest expense on the consolidated statements of net earnings over the lives of the 2022 notes and the 2045 notes.
In July 2015, we redeemed our $550 million of 6.250% Senior Notes (the "2017 notes") that were originally scheduled to mature in August 2017. See Note 9, Debt, to the consolidated financial statements included in Item 8 of Part II of this 10-K for details of the components of our long-term debt.
We continually evaluate liquidity and funding needs and anticipate issuing long-term debt in fiscal 2016 to provide us with financial flexibility. As discussed further in Note 3, Derivative Financial Instruments, to the consolidated financial statements included in Item 8 of Part II of this 10-K, during the fourth quarter of fiscal 2015, we entered into forward-starting interest rate swap agreements to hedge the variability in cash flows due to changes in the benchmark interest rate related to this anticipated debt issuance.
The indentures under which all of our Senior Notes were issued require us to maintain compliance with certain covenants, including limits on future liens and sale and leaseback transactions on certain material properties. As of September 27, 2015,30, 2018, we were in compliance with all applicable covenants. See Note 9, Debt, to the consolidated financial statements included in Item 8 of Part II of this 10-K for details of the components of our long-term debt.
Use of Cash
We expect to use our available cash and investments, including, but not limited to, additional potential future borrowings under the credit facility andfacilities, commercial paper program and the issuance of debt, to invest in our core businesses, including capital expenditures, new product innovations, related marketing support and partner and digital investments, return cash to shareholders through common stock cash dividend payments and share repurchases, as well as other new business opportunities related to our core and other developing businesses. Further, we may use our available cash resources to make proportionate capital contributions to our equity method and cost method investees. We may also seek strategic acquisitions to leverage existing capabilities and further build our business in support of our growth agenda. Acquisitions may include increasing our ownership interests in our equity method and cost method investees. Any decisions to increase such ownership interests will be driven by valuation and fit with our ownership strategy.
We believe that future cash flows generated from operations and existing cash and investments both domestically and internationally combined with our ability to leverage our balance sheet through the issuance of debt will be sufficient to finance capital requirements for our core businesses in those respective markets as well as any shareholder distributions for the foreseeable future. Significant new joint ventures, acquisitions and/or other new business opportunities may require additional outside funding. We have borrowed funds domestically and continue to believe we have the ability to do so at reasonable interest rates; however, additional borrowings would result in increased interest expense in the future.
As described in Note 2, Acquisitions In this regard, we may incur additional debt, within targeted levels, as part of our plans to fund our capital programs, including cash returns to shareholders through dividends and Divestitures, to the consolidated financial statements included in Item 8 of Part II of this 10-K, in September 2014, we entered into a tender offer bid agreement with Starbucks Japan and our former joint venture partner, Sazaby League, Ltd., to acquire the remaining 60.5% ownership interest in Starbucks Japan for approximately $876 million, through a two-step tender offer. In the first quarter of fiscal 2015, we funded the first tender offer step with $509 million in offshore cash. We funded the second tender offer step in the second quarter of fiscal 2015 and the related cash-out procedure during the remainder of fiscal 2015, which required a combined total of $362 million in offshore cash. The remaining $6 million of the purchase price represents cash that was unclaimed by minority shareholders as of September 27,

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2015 and is recorded in accrued liabilities on our consolidated balance sheets. There are no legal restrictions on the remaining unclaimed balance.share repurchases.
We considerhave historically considered the majority of undistributed earnings of our foreign subsidiaries and equity investees as of September 27, 2015 to be indefinitely reinvested, and, accordingly, no U.S. income and foreign withholding taxes have been provided on such earnings. We continue to

evaluate our plans for reinvestment or repatriation of unremitted foreign earnings and thus have not adjusted our previous indefinite reinvestment assertions for the effects of the Tax Act. We have not, nor do we anticipate the need to, repatriatefor, repatriated funds to the U.S. to satisfy domestic liquidity needs; however,needs. However, the Tax Act requires a one-time transition tax for deemed repatriation of accumulated undistributed earnings of certain foreign investments. This one-time transition tax is payable over eight years, with most of the cash outlay expected to be made in the later years. In connection with our initial analysis, we have estimated a provisional amount of $262 million, of which $237 million of income taxes payable was included in other long-term liabilities on the consolidated balance sheet, as of September 30, 2018. See Note 13, Income Taxes, for further discussion.
We regularly review our cash positions and our determination of permanent reinvestment of foreign earnings. In the event that we need to repatriatedetermine that all or a portion of oursuch foreign cash to the U.S.,earnings are no longer indefinitely reinvested, we wouldmay be subject to additional foreign withholding taxes and U.S. state income taxes, beyond the Tax Act's one-time transition tax, which could be material. We do not believe it is practicable to calculate the potential tax impact of repatriation, as there is a significant amount of uncertainty around the calculation, including the availability and amount of foreign tax credits at the time of repatriation, tax rates in effect, and other indirect tax consequences associated with repatriation.
During each of the first three quarters of fiscal 2014,2017, we declared and paid a cash dividend to shareholders of $0.13$0.25 per share. In the fourth quarter of fiscal 20142017 and each of the first threetwo quarters of fiscal 20152018, we declared a cash dividend of $0.16$0.30 per share.share, and we declared $0.36 per share in the last two quarters of fiscal 2018. Dividends are paid in the quarter following the declaration date. Cash returned to shareholders through dividends in fiscal 20152018 and 20142017 totaled $958.7 million$1.7 billion and $783.1 million,$1.5 billion, respectively. In the fourth quarter of fiscal 2015,2018, we declared a cash dividend of $0.20$0.36 per share to be paid on November 27, 201530, 2018 with an expected payout of approximately $297.0$445 million.
During fiscal years 20152018 and 2014,2017, we repurchased 29.0131.5 million and 21.037.5 million shares of common stock, respectively, or $1.4$7.2 billion and $769.8 million,$2.1 billion, respectively, under share repurchase authorizations. On July 23, 2015, we announced that our Board of Directors approved an increase of 50 million shares to our ongoing share repurchase program. The numberIn early fiscal 2019, we commenced the repurchase of remaining shares authorized for$5.0 billion of our common stock under accelerated share repurchase at September 27, 2015 totaled 52.7 million.agreements.
Other than normal operating expenses, cash requirements for fiscal 20162019 are expected to consist primarily of capital expenditures for new company-operated stores; remodeling and refurbishment of, and equipment upgrades for, existing company-operated stores; systems and technology investments in our new and existing stores, our developing Siren Retail business and in the support infrastructure;our supply chain and additional investments in manufacturing capacity.corporate facilities. Total capital expenditures for fiscal 20162019 are expected to be approximately $1.4$2 billion.
Cash Flows
Cash provided by operating activities was $3.7$11.9 billion for fiscal 2015,2018, compared to $607.8 million$4.3 billion for fiscal 2014.2017. The increase was driven by lapping the prior year payment of $2.8 billion for the Kraft arbitration matter. The remaining change of $377 million was primarily due to increased earnings, partially offset by changesreceipt of the upfront payment from Nestlé in working capital accounts mainly due to timing.the fourth quarter of fiscal 2018.
Cash used by investing activities totaled $1.5$2.4 billion for fiscal 2015,2018, compared to $817.7 million$0.9 billion for fiscal 2014.2017. The change was primarily due to the use of cash used to acquire Sazaby's 39.5%the 50% ownership interest in Japanour East China joint venture in the first quarter of fiscal 2015, as well as lapping the liquidation of a significant portion of our offshore investment portfolio in the fourth quarter of fiscal 2014 in order to fund the acquisition of Starbucks Japan. Additions2018 and additions to property, plant and equipment also contributed, driven by new store openings and increased store renovations, and additions for new store openings.partially offset by the net proceeds from the divestiture of certain operations.
Cash used by financing activities for fiscal 20152018 totaled $2.3$3.2 billion, compared to $623.3 million$3.1 billion for fiscal 2014.2017. The change was primarily due to increasedan increase in cash returned to shareholders through higher share repurchases and dividend payments, compared to fiscal 2014 and cash used to redeem our 2017 notes, as discussed above, as well as cash used to fund the second tender offer step and the cash-out procedure of the Starbucks Japan acquisition in fiscal 2015. These changes were partially offset by incrementalhigher proceeds from the issuance of long-term debt we issued in June of fiscal 2015 over the prior year's issuance.debt.

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Contractual Obligations
The following table summarizes our contractual obligations and borrowings as of September 27, 2015,30, 2018, and the timing and effect that such commitments are expected to have on our liquidity and capital requirements in future periods (in millions):
Payments Due by PeriodPayments 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)
$5,669.5
 $1,032.4
 $1,632.3
 $1,172.9
 $1,831.9
$9,353.8
 $1,340.6
 $2,463.4
 $2,045.4
 $3,504.4
Financing lease obligations(3)
47.1
 3.2
 6.4
 6.4
 31.1
58.0
 4.4
 8.7
 8.3
 36.6
Debt obligations                  
Principal payments2,350.0
 —
 400.0
 350.0
 1,600.0
9,548.4
 350.0
 1,250.0
 1,500.0
 6,448.4
Interest payments(4)
821.2
 67.9
 130.6
 118.4
 504.3
3,698.0
 278.9
 586.0
 488.0
 2,345.1
Purchase obligations(5)(3)
1,257.1
 884.0
 284.7
 76.0
 12.4
1,267.1
 806.6
 342.9
 101.0
 16.6
Other obligations(6)(4)
122.7
 19.2
 28.3
 13.0
 62.2
417.7
 31.0
 64.3
 98.8
 223.6
Total$10,267.6
 $2,006.7
 $2,482.3
 $1,736.7
 $4,041.9
$24,343.0
 $2,811.5
 $4,715.3
 $4,241.5
 $12,574.7
(1) 
Income tax liabilities for uncertain tax positions wereWe have excluded as we are not able to make a reasonably reliable estimate of the amount and period of related future payments. As of September 27, 2015, we had $159.3 million oflong-term gross unrecognized tax benefits for uncertain tax positions, which includes accruedincluding interest and penalties.penalties of $237.2 million from the amounts presented as the timing of these obligations is uncertain.
(2) 
Amounts include direct lease obligations, excluding any taxes, insurance and other related expenses.
(3) 
Amounts consist of build-to-suit lease arrangements primarily related to the Starbucks Japan acquisition, which are described further in Note 2, Acquisitions and Divestitures, to the consolidated financial statements included in Item 8 of Part II of this 10-K.
(4)
Amounts exclude any gain or loss upon settlement of related interest rate swap agreements, which are described further in Note 3, Derivative Financial Instruments, to the consolidated financial statements included in Item 8 of Part II of this 10-K.
(5)
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 86%92% of total purchase obligations.
(6)(4) 
Other obligations include other long-term liabilities primarily consisting of the Tax Act transition tax, asset retirement obligations and hedging instruments.
Starbucks currently expects to fund these commitments primarily with operating cash flows generated in the normal course of business.
Off-Balance Sheet Arrangements
Off-balance sheet arrangements relate to operating lease and purchase commitments detailed in the footnotes to the consolidated financial statements included in Item 8 of Part II of this 10-K.
COMMODITY PRICES, AVAILABILITY AND GENERAL RISK CONDITIONS
Commodity price risk represents Starbucks primary market risk, generated by our purchases of green coffee and dairy products, among other items. We purchase, roast and sell high-quality arabica coffee and related products and risk arises from the price volatility of green coffee. In addition to coffee, we also purchase significant amounts of dairy products to support the needs of our company-operated stores. The price and availability of these commodities directly impacts our results of operations, and we expect commodity prices, particularly coffee, to impact future results of operations. For additional details see Product Supply in Item 1, as well as Risk Factors in Item 1A of this 10-K.
FINANCIAL RISK MANAGEMENT
Market risk is defined as the risk of losses due to changes in commodity prices, foreign currency exchange rates, equity security prices and interest rates. We manage our exposure to various market-based risks according to a market price risk management policy. Under this policy, market-based risks are quantified and evaluated for potential mitigation strategies, such as entering into hedging transactions. The market price risk management policy governs how hedging instruments may be used to mitigate risk. Risk limits are set annually and prohibit speculative trading activity. We also monitor and limit the amount of associated counterparty credit risk. In general,risk, which we consider to be low. Excluding interest rate swaps, hedging instruments generally do not have maturities in excess of three years. Refer to

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Significant Accounting Policies, and Note 3, Derivative Financial Instruments, to the consolidated financial statements included in Item 8 of Part II of this 10-K for further discussion of our hedging instruments.
The sensitivity analyses disclosed below provide only a limited, point-in-time view of the market risk of the financial instruments discussed. The actual impact of the respective underlying rates and price changes on the financial instruments may differ significantly from those shown in the sensitivity analyses.

Commodity Price Risk
We purchase commodity inputs, includingprimarily coffee, dairy products, diesel, cocoa, sugar and dieselother commodities, that are used in our operations and are subject to price fluctuations that impact our financial results. We use a combination of pricing features embedded within supply contracts, such as fixed-price and price-to-be-fixed contracts for coffee purchases, and financial derivatives to manage our commodity price risk exposure.
The following table summarizes the potential impact as of September 27, 201530, 2018 to Starbucks future net earnings and other comprehensive income ("OCI"(“OCI”) from changes in commodity prices. The information provided below relates only to the hedging instruments and does not represent the corresponding changes in the underlying hedged items (in millions):
 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$6
 $(6) $4
 $(4)
 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$4
 $(4) $—
 $—
Foreign Currency Exchange Risk
The majority of our revenue, expense and capital purchasing activities are transacted in U.S. dollars. However, because a portion of our operations consists of activities outside of the U.S., we have transactions in other currencies, primarily the Canadian dollar,Chinese renminbi, Japanese yen, Chinese renminbi,Canadian dollar, British pound, South Korean won and euro. To reduce cash flow volatility from foreign currency fluctuations, we enter into derivative instruments to hedge portions of cash flows of anticipated intercompany royalty payments, inventory purchases, intercompany borrowing and lending activities and certain other transactions in currencies other than the functional currency of the entity that enters into the arrangements, as well as the translation risk of certain balance sheet items. See Note 3, Derivative Financial Instruments, to the consolidated financial statements included in Item 8 of Part II of this 10-K for further discussion.
The following table summarizes the potential impact as of September 27, 201530, 2018 to Starbucks future net earnings and other comprehensive income ("OCI") from changes in the fair value of these derivative financial instruments due to a change in the value of the U.S. dollar as compared to foreign exchange rates. The information provided below relates only to the hedging instruments and does not represent the corresponding changes in the underlying hedged items (in millions):
 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
Foreign currency hedges$10
 $(10) $120
 $(120)
 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
Foreign currency hedges$27
 $(27) $108
 $(108)
Equity Security Price Risk
We have minimal exposure to price fluctuations on equity mutual funds and equity exchange-traded funds within our trading securities portfolio. Trading securities are recorded at fair value with unrealized holding gains and losses recorded in net interest income and other in the consolidated statements of earnings. Our trading securities portfolio approximates a portion of our liability under our Management Deferred Compensation Plan ("MDCP"(“MDCP”), which is included in accrued compensation. Gains and related costs, within accrued liabilities onlosses from the consolidated balance sheets. Changesportfolio and the change in our MDCP liability are recorded in general and administrative expenses in theour consolidated statements of earnings.
We performed a sensitivity analysis based on a 10% change in the underlying equity prices of our investments as of September 27, 201530, 2018 and determined that such a change would not have a significant impact on the fair value of these instruments.

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Interest Rate Risk
Long-term Debt
We utilize short-term and long-term financing and may use interest rate hedges to manage our overall interest expense related to our existing fixed-rate debt, as well as to hedge the variability in cash flows due to changes in the benchmark interest raterates related to anticipated debt issuances. See Note 3, Derivative Financial Instruments and Note 9, Debt, to the consolidated financial statements included in Item 8 of Part II of this 10-K for further discussion of our interest rate hedge agreements and details of the components of our long-term debt, respectively, as of September 27, 2015.30, 2018.
The following table summarizes the impact of a change in interest rates as of September 27, 201530, 2018 on the fair value of Starbucks debt (in millions):
    Change in Fair Value    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 notes0.875% $400
 $(5) $5
2018 notes2.000% $354
 $(11) $11
2.000% $350
 $(1) $1
2020 notes2.200% $490
 $(10) $10
2021 notes2.100% $733
 $(17) $17
2022 notes2.700% $503
 $(31) $31
2.700% $486
 $(17) $17
2023 notes(1)
3.850% $759
 $—
 $—
2023 notes3.850% $790
 $(54) $54
3.100% $986
 $(40) $40
2024 notes0.372% $743
 $(40) $40
2025 notes3.800% $1,249
 $(74) $74
2026 notes2.450% $451
 $(34) $34
2028 notes3.500% $576
 $(47) $47
2028 notes4.000% $754
 $(61) $61
2045 notes4.300% $355
 $(61) $61
4.300% $330
 $(53) $53
2047 notes3.750% $438
 $(81) $81
2048 notes4.500% $977
 $(159) $159
(1)
Amount disclosed is net of ($32 million) change in the fair value of our designated interest rate swap. Refer to Note 3, Derivative Financial Instruments, for additional information on our interest rate swap designated as a fair value hedge.
Available-for-Sale Securities
Our available-for-sale securities comprise a diversified portfolio consisting mainly of fixed-income instruments.investment-grade debt securities. The primary objective of these investments is to preserve capital and liquidity. Available-for-sale securities are recorded on the consolidated balance sheets at fair value with unrealized gains and losses reported as a component of accumulated other comprehensive income. We do not hedge the interest rate exposure on our available-for-sale securities. We performed a sensitivity analysis based on a 100 basis point change in the underlying interest rate of our available-for-sale securities as of September 27, 2015,30, 2018 and determined that such a change would not have a significant impact on the fair value of these instruments.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
Critical accounting policies are those that management believes are both most important to the portrayal of our financial condition and results and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions.
Our significant accounting policies are discussed in Note 1, Summary of Significant Accounting Policies, to the consolidated financial statements included in Item 8 of Part II of this 10-K. We believe that of our significant accounting policies, the following policies involve a higher degree of judgment and/or complexity.
We consider financial reporting and disclosure practices and accounting policies quarterly to ensure that they provide accurate and transparent information relative to the current economic and business environment. During the past threefive fiscal years, we have not made any material changes to the accounting methodologies used to assess the areas discussed below, unless noted otherwise.

Property, Plant and Equipment and Other Finite-Lived Assets
We evaluate property, plant and equipment and other finite-lived assets for impairment when facts and circumstances indicate that the carrying values of such assets may not be recoverable. When evaluating for impairment, we first compare the carrying value of the asset to the asset’s estimated future undiscounted cash flows. If the estimated undiscounted future cash flows are less than the carrying value of the asset, we determine if we have an impairment loss by comparing the carrying value of the asset to the asset's estimated fair value and recognize an impairment charge when the asset’s carrying value exceeds its estimated fair value. The adjusted carrying amount of the asset becomes its new cost basis and is depreciated over the asset's remaining useful life.
Long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. For company-operated store assets, the impairment test is performed at the individual store asset group level. The fair value of a store’s assets is estimated using a discounted cash flow model. For other long-lived assets, fair value is determined using an approach that is appropriate based on the relevant facts and circumstances, which may include discounted cash flows, comparable transactions, or comparable company analyses.

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Our impairment calculations contain uncertainties because they require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values. Key assumptions used in estimating future cash flows and asset fair values include projected revenue growth and operating expenses, as well as forecasting asset useful lives and selecting an appropriate discount rate. For company-operated stores, estimates of revenue growth and operating expenses are based on internal projections and consider the store’s historical performance, the local market economics and the business environment impacting the store’s performance. The discount rate is selected based on what we believe a buyer would assume when determining a purchase price for the store. These estimates are subjective and our ability to realize future cash flows and asset fair values is affected by factors such as ongoing maintenance and improvement of the assets, changes in economic conditions, and changes in operating performance.
During fiscal 2015,2018, there were no significant changes in any of our estimates or assumptions, thataside from those related to the decision to close certain company-operated stores in the U.S. and Canada, which had a material impact on the outcome of our impairment calculations. However, as we periodically reassess estimated future cash flows and asset fair values, changes in our estimates and assumptions may cause us to realize material impairment charges in the future.
Goodwill and Indefinite-Lived Intangible Assets
We evaluate goodwill and indefinite-lived intangible assets (primarily trade names and trademarks) for impairment annually during our third fiscal quarter, or more frequently if an event occurs or circumstances change that would indicate that impairment may exist. When evaluating these assets for impairment, we may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit or intangible asset group is impaired. If we do not perform a qualitative assessment, or if we determine that it is not more likely than not that the fair value of the reporting unit or intangible asset group exceeds its carrying amount, we calculate the estimated fair value of the reporting unit using discounted cash flows or intangible asset group. Fair value is the price a market participant would pay for the reporting unit or intangible asset and is typically calculated using an income approach, such as acombination of discounted cash flow or relief-from-royalty method. For certain reporting units, where deemed appropriate, we may also utilize aand market approach. Under the market approach, fair value is estimated by reviewing prices in market transactions involving identical or comparable assets or liabilities with a similar risk profile. If the carrying amount of the reporting unit or intangible asset group exceeds the estimated fair value, anapproaches.
When assessing goodwill for impairment, charge is recorded to reduce the carrying value to the estimated fair value.
Ourour decision to perform a qualitative impairment assessment for an individual reporting unit in a given year is influenced by a number of factors, inclusive of the size of the reporting unit's goodwill, the significance of the excess of the reporting unit's estimated fair value over carrying value at the last quantitative assessment date, the amount of time in between quantitative fair value assessments and the date of acquisition. During fiscal 2015, as part of our annual goodwill impairment analysis, we performed the qualitative assessment for approximately $941 million, or 60%, of our total goodwill balance of $1.6 billion, the majority of which resides in our Japan retail, U.S. company-operated and Canada company-operated reporting units. Our Japan retail reporting unit, which was acquired in fiscal 2015, represented approximately $730 million of the goodwill balance that was assessed qualitatively.
As part of our ongoing operations, we may close certain stores within a reporting unit containing goodwill due to underperformance of the store or inability to renew our lease, among other reasons. We may abandon certain assets associated with a closed store, including leasehold improvements and other non-transferable assets. When a portion of a reporting unit that constitutes a business is to be disposed of, the associated goodwill is included in the carrying amount when determining any loss on disposal. Our evaluation of whether the portion of a reporting unit being disposed of constitutes a business occurs on the date of abandonment. Although an operating store meets the accounting definition of a business prior to abandonment, it does not constitute a business on the closure date because the remaining assets on that date do not constitute an integrated set of assets that are capable of being managed for the purpose of providing a return to investors. As a result, when closing individual stores, we do not include goodwill in the calculation of any loss on disposal of the related assets. If store closures are indicative of potential impairment of goodwill at the reporting unit level, we perform a quantitative assessment of an evaluation ofindividual reporting unit’s goodwill, our reporting unit goodwill when such closures occur.
Our impairment calculations contain uncertainties because they require management to make assumptions and to apply judgment when performing a qualitative assessment or when estimating future cash flows and asset fair values. Key assumptions used in estimating future cash flows and asset fair values, typically includeincluding projected revenue growth and operating expenses related to existing businesses, product innovation and new store concepts, as well as utilizing valuation multiples of similar publicly traded companies and selecting an appropriate discount rate. For indefinite-lived intangible assets, management also makes assumptions around the royalty rate that could hypothetically be charged by a licensor of the asset to an unrelated licensee. For a goodwill reporting unit, estimatesEstimates of revenue growth and operating expenses are based on internal projections considering the reporting unit’s past performance and forecasted growth, strategic initiatives, local market economics and the local business environment impacting the reporting unit’s performance. The discount rate is selected based on the estimated cost of capital for a market participant to operate the reporting unit in the region. For indefinite-lived intangible assets,These estimates, as well as the selection of revenue growth are based on internal projections consideringcomparable companies and valuation multiples used in the intangible asset group's past performance and forecasted growth, and the royalty rate used is based on observed market royalty rates for similar licensing arrangements, adjusted for our particular facts and circumstances. The discount rate is

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selected based on the estimated cost of capital that reflects the risk profile of the related business. These estimatesapproaches are highly subjective, judgments and our ability to realize the future cash flows used in our fair value calculations is affected by factors such as the success of strategic initiatives, changes in economic conditions, changes in our operating performance and changes in our business strategies, including retail initiatives and international expansion.
For fiscal 2015,When assessing indefinite-lived intangible assets for impairment, where we determinedperform a qualitative assessment, we evaluate if changes in events or circumstances have occurred that indicate that impairment may exist. If we do not perform a qualitative impairment assessment or if changes in events and circumstances indicate that a quantitative assessment should be performed, management is required to calculate the fair value of our material reporting units andthe intangible asset groups were significantlygroup. The fair value calculation includes estimates of revenue growth, which are based on past performance and internal projections for the intangible asset group's forecasted growth, and royalty rates, which are adjusted for our particular facts and circumstances. The discount rate is selected based on the estimated cost of capital that reflects the risk profile of the related business. These estimates are highly subjective, and our

ability to achieve the forecasted cash flows used in excessour fair value calculations is affected by factors such as the success of their carrying values. Accordingly, we did not recognize any material impairment charges during the current fiscal year. During fiscal 2015, there were no significantstrategic initiatives, changes in any of our estimates or assumptions that had a material impact on the outcome of our impairment calculations. However, as we periodically reassess estimated future cash flows and asset fair values,economic conditions, changes in our estimatesoperating performance and assumptions may cause us to realize materialchanges in our business strategies, including retail initiatives and international expansion.
The goodwill impairment charges related to the Switzerland reporting unit are discussed in Note 8, Other Intangible Assets and Goodwill, to the future.consolidated financial statements included in Item 8 of Part II of this 10-K.
Income Taxes
We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the respective tax bases of our assets and liabilities. Deferred tax assets and liabilities are measured using current enacted tax rates expected to apply to taxable income in the years in which we expect the temporary differences to reverse. We routinely evaluate the likelihood of realizing the benefit of our deferred tax assets and may record a valuation allowance if, based on all available evidence, we determine that some portion of the tax benefit will not be realized. Changes in tax laws and rates may affect recorded deferred tax assets and liabilities and our effective tax rate in the future; however, we do not expect changes from recently enacted tax laws to be material to the consolidated financial statements.
In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of operations. In projecting future taxable income, we consider historical results and incorporate assumptions about the amount of future state, federal and foreign pretax operating income adjusted for items that do not have tax consequences. Our assumptions regarding future taxable income are consistent with the plans and estimates we are usinguse to manage theour underlying businesses. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income/(loss).
In addition, our income tax returns are periodically audited by domestic and foreign tax authorities. These audits include review of our tax filing positions, including the timing and amount of deductions taken and the allocation of income between tax jurisdictions. We evaluate our exposures associated with our various tax filing positions and recognize a tax benefit only if it is more likely than not that the tax position will be sustained upon examination by the relevant taxing authorities, including resolutions of any related appeals or litigation processes, based on the technical merits of our position. For uncertain tax positions that do not meet this threshold, we record a related liability. We adjust our unrecognized tax benefit liability and income tax expense in the period in which the uncertain tax position is effectively settled, the statute of limitations expires for the relevant taxing authority to examine the tax position or when new information becomes available. As discussed in Note 13, Income Taxes, to the consolidated financial statements included in Item 8 of Part II of this 10-K, there is a reasonable possibility that our unrecognized tax benefit liability will be adjusted within 12 months due to the expiration of a statute of limitations and expected consent fromand/or resolution of examinations with taxing authorities.
We have generated income in certain foreign jurisdictions that has not beenmay be subject to U.S.additional income or withholding taxes. We intendhave historically asserted our intent to reinvest these earnings for the foreseeable future. The Company continues to evaluate its plans for reinvestment or repatriation of unremitted foreign earnings and thus has not adjusted its previous indefinite reinvestment assertions for the effects of the Tax Act. While we do not expect to repatriate cash to the U.S. to satisfy domestic liquidity needs, if these amounts were distributed to the U.S., in the form of dividends or otherwise, we wouldmay be subject to additional U.S. income or withholding taxes, which could be material. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable because such liability, if any, is dependent on circumstances existing if and when remittance occurs.
Our income tax expense, deferred tax assets and liabilities and liabilities for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. Deferred tax asset valuation allowances and our liabilities for unrecognized tax benefits require significant management judgment regarding applicable statutes and their related interpretation, the status of various income tax audits and our particular facts and circumstances. Although we believe that the judgments and estimates discussed herein are reasonable, actual results could differ, and we may be exposed to losses or gains that could be material. To the extent we prevail in matters for which a liability has been established or are required to pay amounts in excess of our established liability, our effective income tax rate in a given financial statement period could be materially affected.
Refer to Note 13, Income Taxes, to the consolidated financial statements included in Item 8 of Part II of this 10-K, for additional discussion surrounding the changes as a result of the Tax Act.
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 1, Summary of Significant Accounting Policies, to the consolidated financial statements included in Item 8 of Part II of this 10-K for a detailed description of recent accounting pronouncements.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The information required by this item is incorporated by reference to the section entitled "Management’s“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Commodity Prices, Availability and General Risk Conditions"Conditions” and "Management’s“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Risk Management"Management” in Item 7 of this Report.

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Item 8.Financial Statements and Supplementary Data
STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(in millions, except per share data)
 
Fiscal Year EndedSep 27,
2015		 Sep 28,
2014		 Sep 29,
2013		Sep 30,
2018		 Oct 1,
2017		 Oct 2,
2016
Net revenues:          
Company-operated stores$15,197.3
 $12,977.9
 $11,793.2
$19,690.3
 $17,650.7
 $16,844.1
Licensed stores1,861.9
 1,588.6
 1,360.5
2,652.2
 2,355.0
 2,154.2
CPG, foodservice and other2,103.5
 1,881.3
 1,713.1
Other2,377.0
 2,381.1
 2,317.6
Total net revenues19,162.7
 16,447.8
 14,866.8
24,719.5
 22,386.8
 21,315.9
Cost of sales including occupancy costs7,787.5
 6,858.8
 6,382.3
10,174.5
 9,034.3
 8,509.0
Store operating expenses5,411.1
 4,638.2
 4,286.1
7,193.2
 6,493.3
 6,064.3
Other operating expenses522.4
 457.3
 431.8
539.3
 500.3
 499.2
Depreciation and amortization expenses893.9
 709.6
 621.4
1,247.0
 1,011.4
 980.8
General and administrative expenses1,196.7
 991.3
 937.9
1,759.0
 1,450.7
 1,408.9
Litigation charge/(credit)—
 (20.2) 2,784.1
Restructuring and impairments224.4
 153.5
 —
Total operating expenses15,811.6
 13,635.0
 15,443.6
21,137.4
 18,643.5
 17,462.2
Income from equity investees249.9
 268.3
 251.4
301.2
 391.4
 318.2
Operating income/(loss)3,601.0
 3,081.1
 (325.4)
Operating income3,883.3
 4,134.7
 4,171.9
Gain resulting from acquisition of joint venture390.6
 —
 —
1,376.4
 —
 —
Loss on extinguishment of debt(61.1) —
 —
Net gain resulting from divestiture of certain operations499.2
 93.5
 5.4
Interest income and other, net43.0
 142.7
 123.6
191.4
 181.8
 102.6
Interest expense(70.5) (64.1) (28.1)(170.3) (92.5) (81.3)
Earnings/(loss) before income taxes3,903.0
 3,159.7
 (229.9)
Income tax expense/(benefit)1,143.7
 1,092.0
 (238.7)
Earnings before income taxes5,780.0
 4,317.5
 4,198.6
Income tax expense1,262.0
 1,432.6
 1,379.7
Net earnings including noncontrolling interests2,759.3
 2,067.7
 8.8
4,518.0
 2,884.9
 2,818.9
Net earnings/(loss) attributable to noncontrolling interests1.9
 (0.4) 0.5
(0.3) 0.2
 1.2
Net earnings attributable to Starbucks$2,757.4
 $2,068.1
 $8.3
$4,518.3
 $2,884.7
 $2,817.7
Earnings per share — basic$1.84
 $1.37
 $0.01
$3.27
 $1.99
 $1.91
Earnings per share — diluted$1.82
 $1.35
 $0.01
$3.24
 $1.97
 $1.90
Weighted average shares outstanding:          
Basic1,495.9
 1,506.3
 1,498.5
1,382.7
 1,449.5
 1,471.6
Diluted1,513.4
 1,526.3
 1,524.5
1,394.6
 1,461.5
 1,486.7


See Notes to Consolidated Financial Statements.



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STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)

Sep 27,
2015		 Sep 28,
2014		 Sep 29,
2013
Fiscal Year EndedSep 30,
2018		 Oct 1,
2017		 Oct 2,
2016
Net earnings including noncontrolling interests$2,759.3
 $2,067.7
 $8.8
$4,518.0
 $2,884.9
 $2,818.9
Other comprehensive income/(loss), net of tax:          
Unrealized holding gains/(losses) on available-for-sale securities1.4
 1.6
 (0.6)(7.0) (9.5) 3.5
Tax (expense)/benefit(0.5) (0.6) 0.2
1.9
 2.9
 (1.3)
Unrealized gains/(losses) on cash flow hedging instruments47.6
 24.1
 47.1
24.4
 53.2
 (109.6)
Tax (expense)/benefit(16.8) (7.8) (24.6)(6.5) (12.6) 27.5
Unrealized gains/(losses) on net investment hedging instruments4.3
 25.5
 32.8
7.8
 20.1
 —
Tax (expense)/benefit(1.6) (9.4) (12.1)(2.2) (7.4) —
Translation adjustment(222.7) (75.8) (41.6)
Translation adjustment and other(220.0) (38.3) 85.5
Tax (expense)/benefit6.0
 (1.6) 0.3
3.4
 (2.4) 19.0
Reclassification adjustment for net (gains)/losses realized in net earnings for available-for-sale securities, hedging instruments, and translation adjustment(65.9) (1.5) 46.3
24.7
 (67.2) 78.2
Tax expense/(benefit)23.5
 3.8
 (3.5)(1.2) 14.0
 (11.8)
Other comprehensive income/(loss)(224.7) (41.7) 44.3
(174.7) (47.2) 91.0
Comprehensive income including noncontrolling interests2,534.6
 2,026.0
 53.1
4,343.3
 2,837.7
 2,909.9
Comprehensive income/(loss) attributable to noncontrolling interests(29.2) (0.4) 0.5
(0.3) 0.2
 1.2
Comprehensive income attributable to Starbucks$2,563.8
 $2,026.4
 $52.6
$4,343.6
 $2,837.5
 $2,908.7


See Notes to Consolidated Financial Statements.



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STARBUCKS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in millions, except per share data)
 
Sep 27,
2015		 Sep 28,
2014		Sep 30,
2018		 Oct 1,
2017
ASSETS      
Current assets:      
Cash and cash equivalents$1,530.1
 $1,708.4
$8,756.3
 $2,462.3
Short-term investments81.3
 135.4
181.5
 228.6
Accounts receivable, net719.0
 631.0
693.1
 870.4
Inventories1,306.4
 1,090.9
1,400.5
 1,364.0
Prepaid expenses and other current assets334.2
 285.6
1,462.8
 358.1
Deferred income taxes, net381.7
 317.4
Total current assets4,352.7
 4,168.7
12,494.2
 5,283.4
Long-term investments312.5
 318.4
267.7
 542.3
Equity and cost investments352.0
 514.9
334.7
 481.6
Property, plant and equipment, net4,088.3
 3,519.0
5,929.1
 4,919.5
Deferred income taxes, net828.9
 903.3
134.7
 795.4
Other long-term assets415.9
 198.9
412.2
 362.8
Other intangible assets520.4
 273.5
1,042.2
 441.4
Goodwill1,575.4
 856.2
3,541.6
 1,539.2
TOTAL ASSETS$12,446.1
 $10,752.9
$24,156.4
 $14,365.6
LIABILITIES AND EQUITY      
Current liabilities:      
Accounts payable$684.2
 $533.7
$1,179.3
 $782.5
Accrued liabilities1,760.7
 1,514.4
2,298.4
 1,934.5
Insurance reserves224.8
 196.1
213.7
 215.2
Stored value card liability983.8
 794.5
Stored value card liability and current portion of deferred revenue1,642.9
 1,288.5
Current portion of long-term debt349.9
 —
Total current liabilities3,653.5
 3,038.7
5,684.2
 4,220.7
Long-term debt2,347.5
 2,048.3
9,090.2
 3,932.6
Deferred revenue6,775.7
 4.4
Other long-term liabilities625.3
 392.2
1,430.5
 750.9
Total liabilities6,626.3
 5,479.2
22,980.6
 8,908.6
Shareholders’ equity:      
Common stock ($0.001 par value) — authorized, 2,400.0 shares; issued and outstanding, 1,485.1 and 1,499.1 shares, respectively1.5
 0.7
Common stock ($0.001 par value) — authorized, 2,400.0 shares; issued and outstanding, 1,309.1 and 1,431.6 shares, respectively1.3
 1.4
Additional paid-in capital41.1
 39.4
41.1
 41.1
Retained earnings5,974.8
 5,206.6
1,457.4
 5,563.2
Accumulated other comprehensive income/(loss)(199.4) 25.3
Accumulated other comprehensive loss(330.3) (155.6)
Total shareholders’ equity5,818.0
 5,272.0
1,169.5
 5,450.1
Noncontrolling interest1.8
 1.7
Noncontrolling interests6.3
 6.9
Total equity5,819.8
 5,273.7
1,175.8
 5,457.0
TOTAL LIABILITIES AND EQUITY$12,446.1
 $10,752.9
$24,156.4
 $14,365.6

See Notes to Consolidated Financial Statements.



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STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Fiscal Year EndedSep 27,
2015		 Sep 28,
2014		 Sep 29,
2013		Sep 30,
2018		 Oct 1,
2017		 Oct 2,
2016
OPERATING ACTIVITIES:          
Net earnings including noncontrolling interests$2,759.3
 $2,067.7
 $8.8
$4,518.0
 $2,884.9
 $2,818.9
Adjustments to reconcile net earnings to net cash provided by operating activities:          
Depreciation and amortization933.8
 748.4
 655.6
1,305.9
 1,067.1
 1,030.1
Litigation charge—
 —
 2,784.1
Deferred income taxes, net21.2
 10.2
 (1,045.9)714.9
 95.1
 265.7
Income earned from equity method investees(190.2) (182.7) (171.8)(242.8) (310.2) (250.2)
Distributions received from equity method investees148.2
 139.2
 115.6
226.8
 186.6
 223.3
Gain resulting from acquisition/sale of equity in joint ventures and certain retail operations(394.3) (70.2) (80.1)
Loss on extinguishment of debt61.1
 —
 —
Gain resulting from acquisition of joint venture(1,376.4) —
 —
Net gain resulting from divestiture of certain retail operations(499.2) (93.5) (6.1)
Stock-based compensation209.8
 183.2
 142.3
250.3
 176.0
 218.1
Excess tax benefit on share-based awards(132.4) (114.4) (258.1)
Goodwill impairments37.6
 87.2
 —
Other53.8
 36.2
 23.0
89.0
 68.9
 45.1
Cash provided/(used) by changes in operating assets and liabilities:     
Cash provided by changes in operating assets and liabilities:     
Accounts receivable(82.8) (79.7) (68.3)131.0
 (96.8) (55.6)
Inventories(207.9) 14.3
 152.5
(41.2) 14.0
 (67.5)
Accounts payable137.7
 60.4
 88.7
391.6
 46.4
 46.9
Accrued litigation charge—
 (2,763.9) —
Income taxes payable, net87.6
 309.8
 298.4
Accrued liabilities and insurance reserves124.4
 103.9
 47.3
Stored value card liability170.3
 140.8
 139.9
Prepaid expenses, other current assets and other long-term assets49.5
 4.6
 76.3
Deferred revenue7,109.4
 130.8
 180.4
Other operating assets and liabilities(677.1) (4.7) 248.8
Net cash provided by operating activities3,749.1
 607.8
 2,908.3
11,937.8
 4,251.8
 4,697.9
INVESTING ACTIVITIES:          
Purchases of investments(567.4) (1,652.5) (785.9)(191.9) (674.4) (1,585.7)
Sales of investments600.6
 1,454.8
 60.2
459.0
 1,054.5
 680.7
Maturities and calls of investments18.8
 456.1
 980.0
45.3
 149.6
 27.9
Acquisitions, net of cash acquired(284.3) —
 (610.4)(1,311.3) —
 —
Additions to property, plant and equipment(1,303.7) (1,160.9) (1,151.2)(1,976.4) (1,519.4) (1,440.3)
Proceeds from sale of equity in joint ventures and certain retail operations8.9
 103.9
 108.0
Net proceeds from the divestiture of certain operations608.2
 85.4
 69.6
Other6.8
 (19.1) (11.9)5.6
 54.3
 24.9
Net cash used by investing activities(1,520.3) (817.7) (1,411.2)(2,361.5) (850.0) (2,222.9)
FINANCING ACTIVITIES:          
Proceeds from issuance of long-term debt848.5
 748.5
 749.7
5,584.1
 750.2
 1,254.5
Repayments of long-term debt(610.1) —
 (35.2)—
 (400.0) —
Cash used for purchase of non-controlling interest(360.8) —
 —
Proceeds from issuance of common stock191.8
 139.7
 247.2
153.9
 150.8
 160.7
Excess tax benefit on share-based awards132.4
 114.4
 258.1
Cash dividends paid(928.6) (783.1) (628.9)(1,743.4) (1,450.4) (1,178.0)
Repurchase of common stock(1,436.1) (758.6) (588.1)(7,133.5) (2,042.5) (1,995.6)
Minimum tax withholdings on share-based awards(75.5) (77.3) (121.4)(62.7) (82.8) (106.0)
Other(18.1) (6.9) 10.4
(41.2) (4.4) (8.4)
Net cash used by financing activities(2,256.5) (623.3) (108.2)(3,242.8) (3,079.1) (1,872.8)
Effect of exchange rate changes on cash and cash equivalents(150.6) (34.1) (1.8)(39.5) 10.8
 (3.5)
Net (decrease)/increase in cash and cash equivalents(178.3) (867.3) 1,387.1
Net increase in cash and cash equivalents6,294.0
 333.5
 598.7
CASH AND CASH EQUIVALENTS:          
Beginning of period1,708.4
 2,575.7
 1,188.6
2,462.3
 2,128.8
 1,530.1
End of period$1,530.1
 $1,708.4
 $2,575.7
$8,756.3
 $2,462.3
 $2,128.8
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:          
Cash paid during the period for:          
Interest, net of capitalized interest$69.5
 $56.2
 $34.4
$137.1
 $96.6
 $74.7
Income taxes, net of refunds$1,072.2
 $766.3
 $539.1
$1,176.9
 $1,389.1
 $878.7
See Notes to Consolidated Financial Statements.

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STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY
(in millions, except per share data)
Common Stock Additional Paid-in Capital Retained
Earnings		 Accumulated
Other
Comprehensive
Income/(Loss)		 Shareholders’
Equity		 Noncontrolling
Interest		 TotalCommon Stock Additional Paid-in Capital Retained
Earnings		 Accumulated
Other
Comprehensive
Income/(Loss)		 Shareholders’
Equity		 Noncontrolling
Interests		 Total
Shares Amount Shares Amount 
Balance, September 30, 2012749.3
 $0.7
 $39.4
 $5,046.2
 $22.7
 $5,109.0
 $5.5
 $5,114.5
Balance, September 27, 20151,485.1
 $1.5
 $41.1
 $5,974.8
 $(199.4) $5,818.0
 $1.8
 $5,819.8
Net earnings—
 —
 —
 2,817.7
 —
 2,817.7
 1.2
 2,818.9
Other comprehensive income—
 —
 —
 —
 91.0
 91.0
 —
 91.0
Stock-based compensation expense—
 —
 219.6
 —
 —
 219.6
 —
 219.6
Exercise of stock options/vesting of RSUs, including tax benefit of $124.39.8
 —
 153.0
 —
 —
 153.0
 —
 153.0
Sale of common stock, including tax benefit of $0.20.5
 —
 26.5
 —
 —
 26.5
 —
 26.5
Repurchase of common stock(34.9) —
 (399.1) (1,596.5) —
 (1,995.6) —
 (1,995.6)
Cash dividends declared, $0.85 per share—
 —
 —
 (1,246.2) —
 (1,246.2) —
 (1,246.2)
Noncontrolling interest resulting from acquisition—
 —
 —
 —
 —
 —
 3.7
 3.7
Balance, October 2, 20161,460.5
 $1.5
 $41.1
 $5,949.8
 $(108.4) $5,884.0
 $6.7
 $5,890.7
Net earnings—
 —
 —
 8.3
 —
 8.3
 0.5
 8.8
—
 —
 —
 2,884.7
 —
 2,884.7
 0.2
 2,884.9
Other comprehensive income/(loss)

 

 

 

 44.3
 44.3
 —
 44.3
—
 —
 —
 —
 (47.2) (47.2) —
 (47.2)
Stock-based compensation expense—
 —
 144.1
 —
 —
 144.1
 —
 144.1
—
 —
 177.9
 —
 —
 177.9
 —
 177.9
Exercise of stock options/vesting of RSUs, including tax benefit of $259.914.4
 0.1
 366.7
 —
 —
 366.8
 —
 366.8
Exercise of stock options/vesting of RSUs, including tax benefit of $77.48.1
 —
 117.0
 —
 —
 117.0
 —
 117.0
Sale of common stock, including tax benefit of $0.20.3
 —
 20.4
 —
 —
 20.4
 —
 20.4
0.5
 —
 28.7
 —
 —
 28.7
 —
 28.7
Repurchase of common stock(10.8) —
 (288.5) (255.6) —
 (544.1) —
 (544.1)(37.5) (0.1) (323.6) (1,755.4) —
 (2,079.1) —
 (2,079.1)
Cash dividends declared, $0.445 per share—
 —
 —
 (668.6) —
 (668.6) —
 (668.6)
Noncontrolling interest resulting from divestiture—
 —
 —
 —
 —
 —
 (3.9) (3.9)
Balance, September 29, 2013753.2
 $0.8
 $282.1
 $4,130.3
 $67.0
 $4,480.2
 $2.1
 $4,482.3
Net earnings—
 —
 —
 2,068.1
 —
 2,068.1
 (0.4) 2,067.7
Cash dividends declared, $1.05 per share—
 —
 —
 (1,515.9) —
 (1,515.9) —
 (1,515.9)
Balance, October 1, 20171,431.6

$1.4

$41.1

$5,563.2

$(155.6)
$5,450.1

$6.9

$5,457.0
Net earnings/(loss)—
 —
 —
 4,518.3
 —
 4,518.3
 (0.3) 4,518.0
Other comprehensive income/(loss)

 

 

 

 (41.7) (41.7) —
 (41.7)—
 —
 —
 —
 (174.7) (174.7) —
 (174.7)
Stock-based compensation expense—
 —
 185.1
 —
 —
 185.1
 —
 185.1
—
 —
 253.8
 —
 —
 253.8
 —
 253.8
Exercise of stock options/vesting of RSUs, including tax benefit of $114.86.5
 —
 154.8
 —
 —
 154.8
 —
 154.8
Sale of common stock, including tax benefit of $0.20.3
 —
 22.3
 —
 —
 22.3
 —
 22.3
Exercise of stock options/vesting of RSUs8.4
 —
 59.4
 —
 —
 59.4
 —
 59.4
Sale of common stock0.6
 —
 31.8
 —
 —
 31.8
 —
 31.8
Repurchase of common stock(10.5) (0.1) (604.9) (164.8) —
 (769.8) —
 (769.8)(131.5) (0.1) (345.0) (6,863.6) —
 (7,208.7) —
 (7,208.7)
Cash dividends declared, $0.550 per share—
 —
 —
 (827.0) —
 (827.0) —
 (827.0)
Balance, September 28, 2014749.5
 $0.7
 $39.4
 $5,206.6
 $25.3
 $5,272.0
 $1.7
 $5,273.7
Net earnings—
 —
 —
 2,757.4
 —
 2,757.4
 1.9
 2,759.3
Other comprehensive income/(loss)

 

 

 

 (193.6) (193.6) (31.1) (224.7)
Stock-based compensation expense—
 —
 211.7
 —
 —
 211.7
 —
 211.7
Exercise of stock options/vesting of RSUs, including tax benefit of $131.314.6
 —
 224.4
 —
 —
 224.4
 —
 224.4
Sale of common stock, including tax benefit of $0.20.6
 —
 23.5
 —
 —
 23.5
 —
 23.5
Repurchase of common stock(29.0) —
 (459.6) (972.2) —
 (1,431.8) —
 (1,431.8)
Cash dividends declared, $0.680 per share—
 —
 —
 (1,016.2) —
 (1,016.2) —
 (1,016.2)
Two-for-one stock split749.4
 0.8
 —
 (0.8) —
 —
 —
 —
Noncontrolling interest resulting from acquisition—
 —
 —
 —
 —
 —
 411.1
 411.1
Purchase of noncontrolling interest—
 —
 1.7
 —
 (31.1) (29.4) (381.7) (411.1)
Balance, September 27, 20151,485.1

$1.5

$41.1

$5,974.8

$(199.4)
$5,818.0

$1.8

$5,819.8
Cash dividends declared, $1.32 per share—
 —
 —
 (1,760.5) —
 (1,760.5) —
 (1,760.5)
Net distributions to noncontrolling interests—
 —
 —
 —
 —
 —
 (0.3) (0.3)
Balance, September 30, 20181,309.1

$1.3

$41.1

$1,457.4

$(330.3)
$1,169.5

$6.3

$1,175.8
See Notes to Consolidated Financial Statements.

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STARBUCKS CORPORATION
INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1
Summary of Significant Accounting Policies
5255
Note 2
Acquisitions, Divestitures and DivestituresStrategic Alliance
6165
Note 3
Derivative Financial Instruments
6567
Note 4
Fair Value Measurements
6970
Note 5
Inventories
7172
Note 6
Equity and Cost Investments
72
Note 7
Supplemental Balance Sheet Information
73
Note 8
Other Intangible Assets and Goodwill
7374
Note 9
Debt
75
Note 10
Leases
7678
Note 11
Equity
7778
Note 12
Employee Stock and Benefit Plans
7980
Note 13
Income Taxes
8182
Note 14
Earnings per Share
8485
Note 15
Commitments and Contingencies
8485
Note 16
Segment Reporting
8586
Note 17
Selected Quarterly Financial Information (unaudited)
8788
Note 18
Subsequent Events
8788


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STARBUCKS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fiscal Years ended September 27, 201530, 2018, September 28, 2014October 1, 2017 and September 29, 2013October 2, 2016
Note 1: Summary of Significant Accounting Policies
Description of Business
We purchase and roast high-quality coffees that we sell, along with handcrafted coffee and tea beverages and a variety of fresh and prepared food items, through our company-operated stores. We also sell a variety of coffee and tea products and license our trademarks through other channels such as licensed stores, grocery and national foodservice accounts.
In this 10-K, Starbucks Corporation (together with its subsidiaries) is referred to as "Starbucks,"“Starbucks,” the "Company," "we," "us"“Company,” “we,” “us” or "our."“our.”
Segment information is prepared on the same basis that our management reviews financial information for operational decision-making purposes. On August 26, 2018, our Channel Development segment finalized licensing and distribution agreements with Nestlé to sell and market our consumer packaged goods and foodservice products. The scope of the arrangement converts the majority of our previously defined Channel Development segment operations, as well as certain smaller businesses previously reported in the Americas, EMEA and Corporate and Other (previously All Other segments), from company-owned to licensed operations with Nestlé. As a result, we realigned our organizational and operating segment structures in support of this newly established Global Coffee Alliance, and our reportable segments were restated as if those smaller businesses were previously within our Channel Development segment.
We have four reportable operating segments: 1) Americas, which is inclusive of the U.S., Canada, and Latin America; 2) China/Asia Pacific ("CAP"(“CAP”); 3) Europe, Middle East, and Africa ("EMEA"(“EMEA”) and 4) Channel Development. We also have several non-reportable operating segments, including Teavana, Seattle's Best Coffee, Evolution Fresh, and our Digital Ventures business, as well as certain developing businesses such as the Starbucks Reserve®TM Roastery & Tasting Room,Rooms, Starbucks Reserve brand and products and Princi operations, Evolution Fresh and the legacy operations of the Teavana retail business, which are combined and referred to as All Other Segments.substantially ceased during fiscal 2018. Unallocated corporate operating expenses, which pertain primarily to corporate administrative functions that support the operating segments but are not specifically attributable to or managed by any segment, are presented as a reconciling item between totalcombined with the non-reportable operating segments and reported within Corporate and Other.
Further, in an effort to report operating expenses in line with the corresponding revenue generating activities, we have changed the classification of certain costs, primarily within our CAP segment and mainly from other operating resultsexpenses to general and consolidated financial results.administrative expenses. These reclassifications have been retrospectively applied and was determined to be immaterial.
Additional details on the nature of our business and our reportable operating segments are included in Note 16, Segment Reporting, of these Consolidated Financial Statements.Reporting.
Principles of Consolidation
Our consolidated financial statements reflect the financial position and operating results of Starbucks, including wholly-owned subsidiaries and investees that we control. Investments in entities that we do not control, but have the ability to exercise significant influence over operating and financial policies, are accounted for under the equity method. Investments in entities in which we do not have the ability to exercise significant influence are accounted for under the cost method. Intercompany transactions and balances have been eliminated.
Fiscal Year End
Our fiscal year ends on the Sunday closest to September 30. Fiscal years 2018 and 2017 included 52 weeks. Fiscal year 2016 included 53 weeks, with the 532015, 2014rd and 2013 included 52 weeks.week falling in the fourth fiscal quarter.
Estimates and Assumptions
Preparing financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"(“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Examples include, but are not limited to, estimates for inventory reserves, asset and goodwill impairments, assumptions underlying self-insurance reserves, income from unredeemed stored value cards, stock-based compensation forfeiture rates, future asset retirement obligations and the potential outcome of future tax consequences of events that have been recognized in the financial statements. Actual results and outcomes may differ from these estimates and assumptions.

Cash and Cash Equivalents
We consider all highly liquid instruments with maturities of three months or less at the time of purchase, as well as credit card receivables for sales to customers in our company-operated stores that generally settle within two to five business days, to be cash equivalents. We maintain cash and cash equivalent balances with financial institutions that exceed federally-insured limits. We have not experienced any losses related to these balances, and we believe credit risk to be minimal.
Our cash management system provides for the funding of all major bank disbursement accounts on a daily basis as checks are presented for payment. Under this system, outstanding checks are in excess of the cash balances at certain banks, which creates book overdrafts. Book overdrafts are presented as a current liability in accrued liabilities on our consolidated balance sheets.

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Investments
Available-for-sale Securities
Our short-term and long-term investments consist primarily of investment-grade debt securities, all of which are classified as available-for-sale. Available-for-sale debt securities are recorded at fair value, and unrealized holding gains and losses are recorded, net of tax, as a component of accumulated other comprehensive income. Available-for-sale securities with remaining maturities of less than one year and those identified by management at the time of purchase to be used to fund operations within one year are classified as short-term. All other available-for-sale securities are classified as long-term. We evaluate our available-for-sale securities for other than temporaryother-than-temporary impairment on a quarterly basis. Unrealized losses are charged against net earnings when a decline in fair value is determined to be other than temporary. We review several factors to determine whether a loss is other than temporary, such as the length and extent of the fair value decline, the financial condition and near-term prospects of the issuer and whether we have the intent to sell or will more likely than not be required to sell before the securities' anticipated recovery, which may be at maturity. Realized gains and losses are accounted for using the specific identification method. Purchases and sales are recorded on a trade date basis.
Trading Securities
We also have a trading securities portfolio, which is comprised of marketable equity mutual funds and equity exchange-traded funds. Trading securities are recorded at fair value with unrealized holding gains and losses recorded in net interest income and other on our consolidated statements of earnings. Our trading securities portfolio approximates a portion of our liability under our Management Deferred Compensation Plan ("MDCP"(“MDCP”), which is included in accrued compensation. Gains or losses from the portfolio and related costs, within accrued liabilities on our consolidated balance sheets. Changesthe change in our MDCP liability are recorded in general and administrative expenses on our consolidated statements of earnings.
Equity and Cost Method Investments
Equity investments are accounted for using the equity method of accounting if the investment gives us the ability to exercise significant influence, but not control, over an investee. Equity method investments are included within long-term investments on our consolidated balance sheets. Our share of the earnings or losses as reported by equity method investees are classified as income from equity investees on our consolidated statements of earnings.
Equity investments for which we do not have the ability to exercise significant influence are accounted for using the cost method of accounting and are recorded in long-term investments on our consolidated balance sheets. Under the cost method, investments are carried at cost and are adjusted only for other-than-temporary declines in fair value, certain distributions and additional investments.
We evaluate our equity and cost method investments for impairment annually and when facts and circumstances indicate that the carrying value of such investments may not be recoverable. We review several factors to determine whether the loss is other than temporary, such as the length and extent of the fair value decline, the financial condition and near-term prospects of the investee, and whether we have the intent to sell or will more likely than not be required to sell before the investment’s anticipated recovery. If a decline in fair value is determined to be other than temporary,other-than-temporary, an impairment charge is recorded in net earnings.
Fair Value
Fair value is the price we would receive to sell an asset or pay to transfer a liability (exit price) in an orderly transaction between market participants. For assets and liabilities recorded or disclosed at fair value on a recurring basis, we determine fair value based on the following:
Level 1: The carrying value of cash and cash equivalents approximates fair value because of the short-term nature of these instruments. For trading and U.S. government treasury securities and commodity futures contracts, we use quoted prices in active markets for identical assets to determine fair value.
Level 2: When quoted prices in active markets for identical assets are not available, we determine the fair value of our available-for-sale securities and our over-the-counter forward contracts, collars and swaps based upon factors such as the quoted market price of similar assets or a discounted cash flow model using readily observable market data, which may include

interest rate curves and forward and spot prices for currencies and commodities, depending on the nature of the investment. The fair value of our long-term debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to us for debt of the same remaining maturities.
Level 3: We determine the fair value of our auction rate securities using an internally-developed valuation model, using inputs that include interest rate curves, credit and liquidity spreads and effective maturity.
Assets and liabilities recognized or disclosed at fair value on a nonrecurring basis may include items such as property, plant and equipment, goodwill and other intangible assets, equity and cost method investments and other assets. We determine the fair value of these items using Level 3 inputs, as described in the related sections below.
Derivative Instruments
We manage our exposure to various risks within our consolidated financial statements according to a market price risk management policy. Under this policy, we may engage in transactions involving various derivative instruments to hedge interest rates, commodity prices and foreign currency denominated revenue streams, inventory purchases, assets and liabilities and investments in certain foreign operations. We record all derivatives onIn order to manage our consolidated balance sheets at fair value. We generally do not offset derivative assets and liabilities in our consolidated balance sheets or enter into derivative instruments

53
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with maturities longer than three years. Referexposure to Note 3, Derivative Financial Instruments, for further discussion of our derivative instruments. We do not enter into derivative instruments for trading purposes.
Wethese risks, we use various types of derivative instruments including forward contracts, commodity futures contracts, collars and swaps. Forward contracts and commodity futures contracts are agreements to buy or sell a quantity of a currency or commodity at a predetermined future date and at a predetermined rate or price. A collar is a strategy that uses a combination of a purchased call option and a sold put option with equal premiums to hedge a portion of anticipated cash flows, or to limit the range of possible gains or losses on an underlying asset or liability to a specific range. A swap agreement is a contract between two parties to exchange cash flows based on specified underlying notional amounts, assets and/or indices. We do not enter into derivative instruments for speculative purposes.
We record all derivatives on our consolidated balance sheets at fair value and typically do not offset derivative assets and liabilities. Excluding interest rate swaps and foreign currency debt, we generally do not enter into derivative instruments with maturities longer than three years. However, we are allowed to net settle transactions with respective counterparties for certain derivative contracts, inclusive of interest rate swaps and foreign currency forwards, with a single, net amount payable by one party to the other. We also enter into collateral security arrangements that provide for collateral to be received or posted when the net fair value of certain financial instruments fluctuates from contractually established thresholds. As of September 30, 2018 and October 1, 2017, we received $5.4 million and $5.8 million, respectively, of cash collateral related to the derivative instruments under collateral security arrangements. As of September 30, 2018 and October 1, 2017, the potential effects of netting arrangements with our derivative contracts, excluding the effects of collateral, would be a reduction to both derivative assets and liabilities of $5.5 million and $7.4 million, respectively, resulting in net derivative assets of $29.4 million and net derivative liabilities of $44.5 million as of September 30, 2018, and net derivative assets of $30.4 million and net derivative liabilities of $31.1 million as of October 1, 2017.
By using these derivative instruments, we expose ourselves to potential credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. We minimize this credit risk by entering into transactions with carefully selected, credit-worthy counterparties and distribute contracts among several financial institutions to reduce the concentration of credit risk.
Cash Flow Hedges
For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the derivative's gain or loss is reported as a component of other comprehensive income ("OCI"(“OCI”) and recorded in accumulated other comprehensive income ("AOCI"(“AOCI”) on our consolidated balance sheets. The gain or loss is subsequently reclassified into net earnings when the hedged exposure affects net earnings.
To the extent that the change in the fair value of the contract corresponds to the change in the value of the anticipated transaction using forward rates on a monthly basis, the hedge is considered effective and is recognized as described above. The remaining change in fair value of the contract represents the ineffective portion, which is immediately recorded in net interest income and other, net on our consolidated statements of earnings.
Cash flow hedges related to anticipated transactions are designated and documented at the inception of each hedge by matching the terms of the contract to the underlying transaction. Cash flows from hedging transactions are classified in the same categories as the cash flows from the respective hedged items, which is discussed further at Note 3, Derivative Financial Instruments.items. Once established, cash flow hedges generally remain designated as such until the hedgehedged item impacts net earnings, or the anticipated transaction is no longer likely to occur. For dedesignatedde-designated cash flow hedges or for transactions that are no longer likely to occur, the related accumulated derivative gains or losses are recognized in net interest income and other, net or interest expense on our consolidated statements of earnings based on the nature of the underlying transaction.

Net Investment Hedges
For derivative instruments that are designated and qualify as a net investment hedge, the effective portion of the derivative's gain or loss is reported as a component of OCI and recorded in AOCI. The gain or loss will be subsequently reclassified into net earnings when the hedged net investment is either sold or substantially liquidated.
To the extent that the change in the fair value of the forward contract corresponds to the change in value of the anticipated transactions using spot rates on a monthly basis, the hedge is considered effective and is recognized as described above. The remaining change in fair value of the forward contract represents the ineffective portion, which is immediately recognized in net interest income and other, net on our consolidated statements of earnings.
Fair Value Hedges
For derivative instruments that are designated and qualify as a fair value hedge, the changes in fair value of the derivative instruments and the offsetting changes in fair values of the underlying hedged item are recorded in interest income and other, net or interest expense on our consolidated statements of earnings.
Derivatives Not Designated As Hedging Instruments
We also enter into certain foreign currency forward contracts, commodity futures contracts, collars and swaps that are not designated as hedging instruments for accounting purposes. The change in the fair value of these contracts is immediately recognized in net interest income and other, net on our consolidated statements of earnings.
Normal Purchase Normal Sale
We enter into fixed-price and price-to-be-fixed green coffee purchase commitments, which are described further at Note 5, Inventories. For both fixed-price and price-to-be-fixed purchase commitments, we expect to take delivery of and to utilize the coffee in a reasonable period of time and in the conduct of normal business. Accordingly, these purchase commitments qualify as normal purchases and are not recorded at fair value on our balance sheets.
Refer to Note 3, Derivative Financial Instruments, and Note 5, Inventories, for further discussion of our derivative instruments and green coffee purchase commitments.
Receivables, net of Allowance for Doubtful Accounts
Our receivables are mainly comprised of receivables for product and equipment sales to and royalties from our licensees, as well as receivables from our CPG and foodservice business customers. Our allowance for doubtful accounts is calculated based on historical experience, customer credit risk and application of the specific identification method. As of September 27, 201530, 2018 and September 28, 2014, theOctober 1, 2017, our allowance for doubtful accounts was $10.8$8.0 million and $6.7$9.8 million,, respectively.
Inventories
Inventories are stated at the lower of cost (primarily moving average cost) or market.net realizable value. We record inventory reserves for obsolete and slow-moving inventory and for estimated shrinkage between physical inventory counts. Inventory reserves are based on

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inventory obsolescence trends, historical experience and application of the specific identification method. As of September 27, 201530, 2018 and September 28, 2014,October 1, 2017, inventory reserves were $33.8$41.5 million and $31.2$38.4 million,, respectively.
Property, Plant and Equipment
Property, plant and equipment, which includes assets under capital leases, are carried at cost less accumulated depreciation. Cost includes all direct costs necessary to acquire and prepare assets for use, including internal labor and overhead in some cases. Depreciation is computed using the straight-line method over estimated useful lives of the assets, generally ranging from 2 to 15 years for equipment and 30 to 40 years for buildings. Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease life, generally 10 years. For leases with renewal periods at our option, we generally use the original lease term, excluding renewal option periods, to determine estimated useful lives. If failure to exercise a renewal option imposes an economic penalty to us, we may determine at the inception of the lease that renewal is reasonably assured and include the renewal option period in the determination of the appropriate estimated useful lives.
The portion of depreciation expense related to production and distribution facilities is included in cost of sales including occupancy costs on our consolidated statements of earnings. The costs of repairs and maintenance are expensed when incurred, while expenditures for refurbishments and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. When assets are disposed of, whether through retirement or sale, the net gain or loss is recognized in net earnings. Long-lived assets to be disposed of are reported at the lower of their carrying amount or fair value less estimated costs to sell.
We evaluate property, plant and equipment for impairment when facts and circumstances indicate that the carrying values of such assets may not be recoverable. When evaluating for impairment, we first compare the carrying value of the asset to the

asset’s estimated future undiscounted cash flows. If the estimated undiscounted future cash flows are less than the carrying value of the asset, we determine if we have an impairment loss by comparing the carrying value of the asset to the asset's estimated fair value and recognize an impairment charge when the asset’s carrying value exceeds its estimated fair value. The fair value of the asset is estimated using a discounted cash flow model based on forecasted future revenues and operating costs, using internal projections. Property, plant and equipment assets are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. For company-operated store assets, the impairment test is performed at the individual store asset group level.
We recognized net disposition charges of $12.5$32.8 million, $14.7$46.9 million, and $17.4$25.1 million in fiscal 2018, 2017, and 2016, respectively. Additionally, we recognized net impairment charges of $25.8$42.8 million, $19.0$56.1 million, and $12.7$24.1 million in fiscal 2015, 2014,2018, 2017, and 2013,2016, respectively. TheOf the total net impairment charges, $37.0 million and $39.9 million in fiscal 2018 and 2017, respectively, were restructuring related and recorded in restructuring and impairment expenses. Unless it is restructuring related, the nature of the underlying asset that is impaired or disposed of will determine the operating expense line on which the related impact is recorded on our consolidated statements of earnings. For assets within our retail operations, net impairment and disposition charges are recorded in store operating expenses. For all other assets, these charges are recorded in cost of sales including occupancy costs, other operating expenses, or general and administrative expenses.
Goodwill
We evaluate goodwill for impairment annually during our third fiscal quarter, or more frequently if an event occurs or circumstances change, such as material deterioration in performance or a significant number of store closures, that would indicate that impairment may exist. When evaluating goodwill for impairment, we may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. If we do not perform a qualitative assessment, or if we determine that it is not more likely than not that the fair value of the reporting unit exceeds its carrying amount, we calculate the estimated fair value of the reporting unit. Fair value is the price a willing buyer would pay for the reporting unit and is typically calculated using a discounted cash flow model. For certain reporting units, where deemed appropriate, we may also utilize a market approach for estimating fair value. If the carrying amount of the reporting unit exceeds the estimated fair value, an impairment charge is recorded to reduce the carrying value to the estimated fair value.
As part of our ongoing operations, we may close certain stores within a reporting unit containing goodwill due to underperformance of the store or inability to renew our lease, among other reasons. We may abandon certain assets associated with a closed store, including leasehold improvements and other non-transferable assets. When a portion of a reporting unit that constitutes a business is to be disposed of, goodwill associated with the business is included in the carrying amount of the business in determining any loss on disposal. Our evaluation of whether the portion of a reporting unit being disposed of constitutes a business occurs on the date of abandonment. Although an operating store meets the accounting definition of a business prior to abandonment, it does not constitute a business on the closure date because the remaining assets on that date do not constitute an integrated set of activities (substantive processes) and assets that are capable of being managed for the purpose of providing a return to investors. As a result, when closing individual stores, we do not include goodwill in the calculation of any loss on disposal of the related assets.
For goodwill related to our Switzerland retail reporting unit, we initially recorded an impairment charge of $17.9 million in the third quarter of fiscal 2017. This was primarily due to the impacts of the strength of the Swiss franc, continued shift of consumer behaviors to neighboring countries and the relocations of certain businesses sustaining beyond our projections and indicating the reporting unit's carrying value would not be fully recovered. Since then, the operational investments and improvements we made did not sufficiently slow the performance decline, and we recorded impairment charges of $37.6 million for the remaining Switzerland goodwill balance during fiscal 2018.
As noted above, if store closures are indicative of potential impairment of goodwill at the reporting unit level, we perform an evaluation of our reporting unit goodwill when such closures occur. Due to the strategic decision to close Teavana branded retail stores and our subsequent review of this reporting unit's fair value, we recorded goodwill impairment charges of $69.3 million during the third quarter of fiscal 2017.
There were no material goodwill impairment charges recorded during fiscal 2016. Refer to 2015Note 8, 2014,Other Intangible Assets and 2013.Goodwill, for further discussions.

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Other Intangible Assets
Other intangible assets consist primarily ofinclude finite-lived intangible assets, which mainly consist of acquired and reacquired rights, trade secrets, licensing agreements, contract-based patents and copyrights,copyrights. These assets are amortized over their estimated useful lives and are tested for impairment using a similar methodology to our property, plant and equipment, as described above.
Indefinite-lived intangibles, which consist primarily of trade names and trademarks, are tested for impairment annually during the third fiscal quarter, or more frequently if an event occurs or circumstances change that would indicate that impairment may exist. When evaluating other intangible assets for impairment, we may first perform a qualitative assessment to determine whether it is more likely than not that an intangible asset group is impaired. If we do not perform the qualitative assessment, or if we determine that it is not more likely than not that the fair value of the intangible asset group exceeds its carrying amount,

we calculate the estimated fair value of the intangible asset group. Fair value is the price a willing buyer would pay for the reporting unitintangible asset group and is typically calculated using an income approach, such as a relief-from-royalty model. If the carrying amount of the intangible asset group exceeds the estimated fair value, an impairment charge is recorded to reduce the carrying value to the estimated fair value. In addition, we continuously monitor and may revise our intangible asset useful lives if and when facts and circumstances change.
There were no significant other intangible asset impairment charges recorded during fiscal 2015, 2014,2018, 2017, and 2013.2016.
Insurance Reserves
We use a combination of insurance and self-insurance mechanisms, including a wholly-owned captive insurance entity and participation in a reinsurance treaty, to provide for the potential liabilities for certain risks, including workers’ compensation, healthcare benefits, general liability, property insurance and director and officers’ liability insurance. Liabilities associated with the risks that are retained by us are not discounted and are estimated, in part, by considering historical claims experience, demographics, exposure and severity factors and other actuarial assumptions.
Revenue Recognition
Consolidated revenues are presented net of intercompany eliminations for wholly-owned subsidiaries and investees controlled by us and for product sales to and royalty and other fees from licensees accounted for under the equity method. Additionally, consolidated revenues are recognized net of any discounts, returns, allowances and sales incentives, including coupon redemptions and rebates.
Company-operated Store Revenues
Company-operated store revenues are recognized when payment is tendered at the point of sale. Company-operated store revenues are reported net of sales, use or other transaction taxes that are collected from customers and remitted to taxing authorities.
Licensed Store Revenues
Licensed store revenues consist of product and equipment sales to licensees, as well as royalties and other fees paid by licensees to use the Starbucks brand.licensees. Sales of coffee, tea, food and related products are generally recognized upon shipment to licensees, depending on contract terms. Shipping charges billed to licensees are also recognized as revenue, and the related shipping costs are included in cost of sales including occupancy costs on our consolidated statements of earnings.
Initial nonrefundable developmentlicense fees for licensed stores are recognized upon substantial performance of services for new market business development activities, such as initial business, real estate and store development planning, as well as providing operational materials and functional training courses for opening new licensed retail markets. Additional store licensing fees are recognized when new licensed stores are opened. Royalty revenues based upon a percentage of reported sales, and other continuing fees, such as marketing and service fees, are recognized on a monthly basis when earned.
CPG, Foodservice and Other Revenues
CPG, foodservice and otherOther revenues primarily include sales of packaged coffee, and tea as well asand a variety of ready-to-drink beverages and single-serve coffee and tea products to customers outside of our company-operated and licensed stores. Historically revenues have included domestic and international sales of our packaged coffee, tea and ready-to-drink products to grocery, warehouse clubs and specialty retail stores sales to our nationaland through institutional foodservice accounts, and revenues from sales of products to and license fee revenues from manufacturers that produce and market Starbucks-, Seattle’s Best Coffee- and Tazo-branded products through licensing agreements.accounts. Sales of coffee, tea, ready-to-drink beverages and related products to grocery, and warehouse club stores areand foodservice accounts were generally recognized when received by the customer or distributor, depending on contract terms. Revenues arewere recorded net of sales discounts given to customers for trade promotions and other incentives and for sales return allowances, which are determined based on historical patterns.
Revenues from sales of products to manufacturers that produce and market Starbucks-, Seattle’s Best Coffee- and Tazo-branded products through licensing agreements are generally recognized when the product is received by the manufacturer or

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distributor. License fee revenues from manufacturers are based on a percentage of sales and are recognized on a monthly basis when earned. National foodservice account revenues are recognized, when the product is received by the customer or distributor.
Sales to customers through CPG channels and national foodservice accounts, including sales to national distributors, arewere recognized net of certain fees paid to the customer. We characterizecharacterized these fees as a reduction of revenue unless we arewere able to identify a sufficiently separable benefit from the customer's purchase of our products such that we could have entered into an exchange transaction with a party other than the customer in order to receive such benefit, and we cancould reasonably estimate the fair value of such benefit.
Revenues from sales of products to manufacturers that produce, market and sell our products through licensing agreements are generally recognized when the product is received by the manufacturer or distributor. License fee revenues from manufacturers are based on a percentage of sales and are recognized on a monthly basis when earned.
In the fourth quarter of fiscal 2018, we licensed the rights to sell and market our products in authorized channels to Nestlé and also received an upfront prepaid royalty. The upfront payment was recorded as deferred revenue and will be recognized as other revenue on a straight-line basis over the estimated economic life of the arrangement of 40 years. At September 30, 2018, the current and long term deferred revenue related to the Nestlé upfront payment was $174 million and $6.8 billion, respectively.

Additionally, other revenues will include product sales to and licensing revenue from Nestlé under this arrangement. Product sales to Nestlé are generally recognized when the product is shipped, whereas license and royalty revenues are based on a percentage of sales and are recognized on a monthly basis when earned.
Stored Value Cards
Stored value cards, primarily Starbucks Cards, can be loadedactivated at our company-operated and most licensed store locations, online at StarbucksStore.comStarbucks.com or via mobile devices held by our customers, and at certain other third party locations, such as grocery stores.stores, although they cannot be reloaded at these third party locations. When an amount is loaded onto a stored value card at any of these locations, we recognize a corresponding liability for the full amount loaded onto the card, which is recorded within stored value card liability on our consolidated balance sheets.
Stored value cards can be redeemed at company-operated and most licensed stores, as well as online.stores. When a stored value card is redeemed at a company-operated store, or online, we recognize revenue by reducing the stored value card liability. When a stored value card is redeemed at a licensed store location, we reduce the corresponding stored value card liability and cash, which is reimbursed to the licensee.
ThereIn most markets, there are no expiration dates on our stored value cards and we do not charge service fees that cause a decrement to customer balances. While we will continue to honor all stored value cards presented for payment, management may determine the likelihood of redemption, based on historical experience, is deemed to be remote for certain cards due to long periods of inactivity. In these circumstances, if management also determines there is no requirement for remitting balances to government agencies under unclaimed property laws, unredeemed card balances may then be recognized as breakage income, which is included in net interest income and other, net on our consolidated statements of earnings. In fiscal 2015, 2014,2018, 2017, and 2013,2016, we recognized breakage income of $39.3$155.9 million, $38.3$104.6 million, and $60.5 million, respectively. Refer to the $33.0 millionRecent Accounting Pronouncements, respectively. section of this footnote for further discussion regarding the expected changes to breakage income in the first quarter of fiscal 2019.
Loyalty Program
Starbucks has aIn the U.S. and Canada, effective April 2016, we modified our transaction-based loyalty program, called My Starbucks Rewards®to a spend-based program, Starbucks RewardsTM. For fiscal 2016, the existing transaction-based programs remain unchanged for other markets. During fiscal 2017, we launched Starbucks RewardsTM ("MSR").in Japan. Customers in the U.S., Canada, and certain other countries who register their Starbucks Card are automatically enrolled in thatthe program. They earn loyalty points ("Stars"(“Stars”) with each purchase at participating Starbucks®, Teavana®, and Evolution Fresh™ stores, as well as on certain packaged coffee products purchased in select Starbucks® stores, online, and through CPG channels.channels, and when making purchases with the Starbucks branded credit and debit cards. After accumulating a certain number of Stars, the customer earns a reward that can be redeemed for free product that, regardless of where the related Stars were earned within that country, will be honored at company-operated stores and certain participating licensed store locations in that same country.
WeRegardless of whether it is a spend or transaction-based program, we defer revenue associated with the estimated selling price of Stars earned by our program members towards free product as each Star is earned, and a corresponding liability is established within stored value card liability on our consolidated balance sheets. The estimated selling price of each Star earned is based on the estimated value of the product for which the reward is expected to be redeemed, net of Stars we do not expect to be redeemed, based on historical redemption patterns. Fully earned rewards generally expire if unredeemed after approximately 30 days. Stars generally expire if inactive for a period of one year.six months.
When a customer redeems an earned reward, we recognize revenue for the redeemed product and reduce the related loyalty program liability.
Marketing & Advertising
Our annual marketing expenses include many components, one of which is advertising costs. We expense most advertising costs as they are incurred, except for certain production costs that are expensed the first time the advertising takes place.
Marketing Advertising expenses totaled $351.5$260.3 million, $315.5$282.6 million and $306.8$248.6 million in fiscal 2015, 2014,2018, 2017, and 2013,2016, respectively. Included in these costs were advertising expenses, which totaled $227.9 million, $198.9 million and $205.8 million in fiscal 2015, 2014, and 2013, respectively.
Store Preopening Expenses
Costs incurred in connection with the start-up and promotion of new store openings are expensed as incurred.

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Leases
Operating Leases
We lease retail stores, roasting, distribution and warehouse facilities and office space for corporate administrative purposes under operating leases. Most lease agreements contain tenant improvement allowances, rent holidays, lease premiums, rent escalation clauses and/or contingent rent provisions. We recognize amortization of lease incentives, premiums and minimum

rent expenses on a straight-line basis beginning on the date of initial possession, which is generally when we enter the space and begin to make improvements in preparation for intended use.
For tenant improvement allowances and rent holidays, we record a deferred rent liability within accrued liabilities, or other long-term liabilities, on our consolidated balance sheets and amortize the deferred rent over the terms of the leases as reductions to rent expense in cost of sales including occupancy costs on our consolidated statements of earnings.
For premiums paid upfront to enter a lease agreement, we record a prepaid rent asset in prepaid expenses and other current assets and other long-term assets on our consolidated balance sheets and amortize the deferred rentpremium over the terms of the leases as additional rent expense in cost of sales including occupancy costs on our consolidated statements of earnings.
For scheduled rent escalation clauses during the lease terms or for rental payments commencing at a date other than the date of initial possession, we record minimum rent expense on a straight-line basis over the terms of the leases in cost of sales including occupancy costs on our consolidated statements of earnings.earnings, with the adjustments to cash rent accrued as deferred rent in our consolidated balance sheets.
Certain leases provide for contingent rent, which is determined as a percentage of gross sales in excess of specified levels. We record a contingent rent liability in accrued occupancy costs within accrued liabilities on our consolidated balance sheets and the corresponding rent expense when specified levels have been achieved or when we determine that achieving the specified levels during the fiscal year is probable.
When ceasing operations of company-operated stores under operating leases, in cases where the lease contract specifies a termination fee due to the landlord, we record such expense at the time written notice is given to the landlord. In cases where terms, including termination fees, are yet to be negotiated with the landlord, we will record the expense upon signing of an agreement with the landlord. In cases where the landlord does not allow us to prematurely exit the lease, but allows for subleasing, we estimate the fair value of any sublease income that can be generated from the location and recognize an expensea lease abandonment accrual equal to the present value of the remaining lease payments to the landlord and other rent related payments such as common area maintenance, taxes and insurance, less any projected sublease income at the cease-use date.
Lease Financing Arrangements
We are sometimes involved in the construction of leased buildings, primarily stores. When we qualify as the deemed owner of these buildings due to significant involvement during the construction period under build-to-suit lease accounting requirements and do not qualify for sales recognition under sales-leaseback accounting guidance, we record the cost of the related buildings in property, plant and equipment.equipment, net. The offsetting lease financing obligations are recorded in other long-term liabilities, with the current portion recorded in in accrued occupancy costs within accrued liabilities on our consolidated balance sheets. These assets and obligations are amortized in depreciation and amortization and interest expense, respectively, on our consolidated statements of earnings based on the terms of the related lease agreements.
Asset Retirement Obligations
We recognize a liability for the fair value of required asset retirement obligations ("ARO"(“ARO”) when such obligations are incurred. Our AROs are primarily associated with leasehold improvements, which, at the end of a lease, we are contractually obligated to remove in order to comply with the lease agreement. At the inception of a lease with such conditions, we record an ARO liability and a corresponding capital asset in an amount equal to the estimated fair value of the obligation. We estimate the liability using a number of assumptions, including store closing costs, cost inflation rates and discount rates, and accrete the liability to its projected future value over time. The capitalized asset is depreciated using the same depreciation convention as leasehold improvement assets. Upon satisfaction of the ARO conditions, any difference between the recorded ARO liability and the actual retirement costs incurred is recognized as a gain or loss in cost of sales including occupancy costs on our consolidated statements of earnings. As of September 27, 201530, 2018 and September 28, 2014,October 1, 2017, our net ARO assets included in property, plant and equipment were $5.8$19.1 million and $4.1$12.4 million, respectively, and our net ARO liabilities included in other long-term liabilities were $60.1$82.4 million and $28.4$70.0 million, respectively. The increases in our net ARO assets and net ARO liabilities in fiscal 2015 were primarily due to the acquisition of Starbucks Japan, which is discussed in Note 2, Acquisitions and Divestitures.
Stock-based Compensation
We maintain several equity incentive plans under which we may grant non-qualified stock options, incentive stock options, restricted stock, restricted stock units ("RSUs"(“RSUs”) or stock appreciation rights to employees, non-employee directors and

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consultants. We also have an employee stock purchase plan ("ESPP"(“ESPP”). RSUs issued by us are equivalent to nonvested shares under the applicable accounting guidance. We record stock-based compensation expense based on the fair value of stock awards at the grant date and recognize the expense over the related service period following a graded vesting expense schedule. Expense for performance-based RSUs is recognized when it is probable the performance goal will be achieved. Performance goals are determined by the Board of Directors and may include measures such as earnings per share, operating income and return on invested capital. The fair value of each stock option granted is estimated on the grant date using the Black-Scholes-Merton option valuation model. The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market conditions and our historical experience. The fair value of RSUs is based on the closing price of Starbucks common stock on the award date, less the present value of expected dividends not received during the vesting period.

Compensation expense is recognized over the requisite service period for each separately vesting portion of the award, and only for those optionsawards expected to vest, with forfeitures estimated at the date of grant based on our historical experience and future expectations.
Foreign Currency Translation
Our international operations generally use their local currency as their functional currency. Assets and liabilities are translated at exchange rates in effect at the balance sheet date. Income and expense accounts are translated at the average monthly exchange rates during the year. Resulting translation adjustments are reported as a component of OCI and recorded in AOCI on our consolidated balance sheets.
Income Taxes
We compute income taxes using the asset and liability method, under which deferred income taxes are recognized based on the differences between the financial statement carrying amounts and the respective tax basis of our assets and liabilities. Deferred tax assets and liabilities are measured using current enacted tax rates expected to apply to taxable income in the years in which we expect the temporary differences to reverse. The effect of a change in tax rates on deferred taxes is recognized in income in the period that includes the enactment date.
We routinely evaluate the likelihood of realizing the benefit of our deferred tax assets and may record a valuation allowance if, based on all available evidence, we determine that some portion of the tax benefit will not be realized. In evaluating our ability to recover our deferred tax assets within the jurisdictionjurisdictions from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
In addition, our income tax returns are periodically audited by domestic and foreign tax authorities. These audits include review of our tax filing positions, including the timing and amount of deductions taken and the allocation of income between tax jurisdictions. We evaluate our exposures associated with our various tax filing positions and recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the relevant taxing authorities, including resolutions of any related appeals or litigation processes, based on the technical merits of our position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. For uncertain tax positions that do not meet this threshold, we record a related liability. We adjust our unrecognized tax benefit liability and income tax expense in the period in which the uncertain tax position is effectively settled, the statute of limitations expires for the relevant taxing authority to examine the tax position or when new information becomes available.
Starbucks recognizes interest and penalties related to income tax matters in income tax expense on our consolidated statements of earnings. Accrued interest and penalties are included within the related tax liability on our consolidated balance sheets.
Stock Split
On April 9, 2015, we effected a two-for-one stock split of our $0.001 par value common stock for shareholders of record as of March 30, 2015. All share and per-share data in our consolidated financial statements and notes has been retroactively adjusted to reflect this stock split. We adjusted shareholders' equity to reflect the stock split by reclassifying an amount equal to the par value of the additional shares arising from the split from retained earnings to common stock during the second quarter of fiscal 2015, resulting in no net impact to shareholders' equity on our consolidated balance sheets.
Earnings per Share
Basic earnings per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed based on the weighted average number of shares of common stock and the

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effect of dilutive potential common shares outstanding during the period, calculated using the treasury stock method. Dilutive potential common shares include outstanding stock options and RSUs. Performance-based RSUs are considered dilutive when the related performance criterion has been met.
Common Stock Share Repurchases
We may repurchase shares of Starbucks common stock under a program authorized by our Board of Directors, including pursuant to a contract, instruction or written plan meeting the requirements of Rule 10b5-1(c)(1) of the Securities Exchange Act of 1934. Under applicable Washington State law, shares repurchased are retired and not displayed separately as treasury stock on the financial statements. Instead, the par value of repurchased shares is deducted from common stock and the excess repurchase price over par value is deducted from additional paid-in capital and from retained earnings, once additional paid-in capital is depleted.earnings.
Recent Accounting Pronouncements
In September 2015,February 2018, the Financial Accounting Standards Board ("FASB"(“FASB”) issued guidance on the recognitionreclassification of adjustmentscertain tax effects from AOCI. The guidance permits entities to preliminary amounts recognized in a business combination, which removesreclassify the requirementstranded tax effects resulting from the Tax Act from AOCI to retrospectively account for these adjustments.retained earnings. The guidance will becomebe effective for us at the beginning of our first quarter of fiscal 2017.2020 but permits adoption in an earlier period. The guidance may be applied in the period of adoption or retrospectively to each period in which the effect of the change related to the Tax Act was recognized. We will applyare currently evaluating the impact this guidance prospectively and do not expect the adoption will have a material impact on our consolidated financial statements.statements and the timing of adoption.

In July 2015,August 2017, the FASB issuedamended its guidance on the subsequent measurement of inventory, which changesaccounting for hedging relationships. The new guidance eliminates the measurement from lower of cost or marketrequirement to lower of costseparately measure and net realizable value.report hedge ineffectiveness, expands permissible cash flow hedges on contractually specified components, and simplifies hedge documentation and effectiveness assessment. The guidance will require prospective applicationbe effective at the beginning of our first quarter of fiscal 2018, but permits adoption in an earlier period.2020 and will require a modified retrospective approach on existing cash flow and net investment hedges. The presentation and disclosure requirements will be applied prospectively. We are currently evaluating the impact this guidance will have on our consolidated financial statements and the timing of adoption.
In April 2015,January 2017, the FASB issued new accounting guidance that changes the definition of a business to assist companies in evaluating when a set of transferred assets and activities constitutes a business. We elected to adopt this guidance in fiscal 2018, which was applied to transactions subsequent to adoption.
In October 2016, the FASB issued guidance on the financial statement presentationaccounting for income tax effects of debt issuance costs.intercompany sales or transfers of assets other than inventory. The guidance requires entities to recognize the income tax impact of an intra-entity sale or transfer of an asset other than inventory when the sale or transfer occurs, rather than when the asset has been sold to an outside party. The guidance will require a modified retrospective application with a cumulative catch-up adjustment to opening retained earnings at the beginning of our first quarter of fiscal 2019. We expect to record a deferred tax asset relating to these historical intercompany activities; however, we are still assessing its final impact.
In March 2016, the FASB issued guidance related to stock-based compensation, which changes the accounting and classification of excess tax benefits and minimum tax withholdings on share-based awards. This guidance requires debt issuance coststhat excess tax benefits and tax deficiencies related to stock-based compensation be prospectively reflected as income tax expense in our consolidated statement of earnings instead of additional paid-in capital on our consolidated balance sheet. Additionally, within our consolidated statement of cash flows, this guidance requires excess tax benefits to be presented as an operating activity, rather than a financing activity, in the same manner as other cash flows related to income taxes. We adopted this guidance in the first quarter of fiscal 2018. The primary impact of the adoption was the recognition of excess tax benefits that reduced income tax expenses by $60.2 million for the year ended September 30, 2018, instead of additional paid-in capital. As a result, net income increased $60.2 million for the year ended September 30, 2018, and basic and diluted earnings per share increased $0.04 for the year ended September 30, 2018, respectively. Excess tax benefits of $77.5 million and $122.8 million, for the years ended October 1, 2017 and October 2, 2016, respectively, previously reported in financing activities have been reclassified to operating activities in the consolidated statements of cash flows.
In March 2016, the FASB issued guidance for financial liabilities resulting from selling prepaid stored value products that are redeemable at third-party merchants. Under the new guidance, expected breakage amounts associated with these products must be recognized proportionately in earnings as redemption occurs. Our current accounting policy of applying the remote method to all of our stored value cards, including cards redeemable at the third-party licensed locations, will no longer be allowed. We will adopt and implement the provisions of this guidance and the new revenue recognition standard issued by the FASB, as discussed below, in the first quarter of fiscal 2019.
In February 2016, the FASB issued guidance on the recognition and measurement of leases. Under the new guidance, lessees are required to recognize a lease liability, which represents the discounted obligation to make future minimum lease payments, and a corresponding right-of-use asset on the balance sheet asfor most leases. The guidance retains the current accounting for lessors and does not make significant changes to the recognition, measurement, and presentation of expenses and cash flows by a reductionlessee. Enhanced disclosures will also be required to give financial statement users the ability to assess the amount, timing and uncertainty of cash flows arising from leases. In July 2018, the FASB issued an alternative method that permits application of the related debt liability rather than an asset.new guidance at the beginning of the year of adoption. This is in addition to the method of applying the new guidance retrospectively to each prior reporting period presented. The guidance will becomebe effective for us at the beginning of our first quarter of fiscal 20172020, with optional practical expedients. Early adoption is permitted. We are currently evaluating the impact this guidance will have on our consolidated financial statements and the method of adoption. We expect this adoption will only result in an immaterial changea material increase in presentation of these coststhe assets and liabilities on our consolidated balance sheets.
In February 2015, the FASB issued guidance that changes the evaluation criteria for consolidation and related disclosure requirements. This guidance introduces evaluation criteria specific to limited partnerships and other similar entities, as well as amends the criteria for evaluating variable interest entities with which the reporting entity is involved and certain investment funds. The guidancesheets but will become effective for us at the beginning of our first quarter of fiscal 2017. We do not expect the adoption of this guidance willlikely have a materialan insignificant impact on our consolidated statements of earnings. In preparation for the adoption of the guidance, we are in the process of implementing controls and key system changes to enable the preparation of financial statements.information.
In May 2014, the FASB issued guidance outlining a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers that supersedes most current revenue recognition guidance. This guidance requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The original effective date of the guidance would have required us to adopt at the beginning of our first quarter of fiscal 2018. In July 2015, the FASB approved an optional one-year deferral of the effective date. The new guidance may be applied retrospectively to each prior period presented or retrospectivelyprospectively with the cumulative effect recognized as of the date of adoption.adoption (“modified retrospective method”). We are currently evaluating the overall impact this guidance will have on our consolidated financial statements, as well as the expected timing and method of adoption. Based on our preliminary assessment, we determined the adoption will change the timing of recognition and classification of our stored value card breakage income, which is currently recognized using the remote method and recorded in net interest income and other.other, net. The new guidance will require application of the proportional method and classification within total net revenues on our consolidated statements of earnings. Additionally, the new guidance requires enhanced disclosures, including revenue recognition policies to identify performance obligations to customers and significant judgments in

measurement and recognition. We are continuing our assessment, which may identify other impacts.
In April 2014,will adopt this guidance in the FASB issued guidance that changes the criteria for reporting discontinued operations. To qualify as a discontinued operation under the amended guidance, a component or group of components of an entity that has been disposed of or is classified as held for sale must represent a strategic shift that has or will have a major effect on the entity's operations and financial results. This guidance also expands related disclosure requirements. The guidance will become effective for us at the beginning of our first quarter of fiscal 2016. 2019 utilizing the modified retrospective method with a cumulative adjustment to retained earnings of approximately $300 million.
Note 2:    Acquisitions, Divestitures and Strategic Alliance
Fiscal 2018
We do not expectentered into an agreement on May 6, 2018 to establish the adoptionGlobal Coffee Alliance with Nestlé. On August 26, 2018, Nestlé licensed the rights to market, sell and distribute Starbucks consumer packaged goods and foodservice products in authorized channels. We received an upfront payment of this guidance will have a material impact on our financial statements.
In July 2013, the FASB issued guidance on the financial statement presentationapproximately $7 billion primarily of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This guidance requires the unrecognized tax benefit to be presented in the financial statements as a reduction to a deferred tax asset. When a deferred tax asset is not available, or the asset is not intended to be used for this purpose, the unrecognized tax benefit should be presented in the

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financial statementsprepaid royalties which was recorded as a liability to current and not netted with along-term deferred tax asset. The guidance became effective for us at the beginning of our first quarter of fiscal 2015revenue and did not have a material impact on our consolidated financial statements. 
In March 2013, the FASB issued guidancewill be recognized as other revenue on a parent's accounting forstraight-line basis over the cumulative translation adjustment upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. This guidance requires a parent to release any related cumulative translation adjustment into net income only if the sale or transfer results in the complete or substantially complete liquidationestimated economic life of the foreign entity in which the subsidiary or group of assets had resided. The guidance became effective for us at the beginning of our first quarter of fiscal 2015 and did not have a material impact on our consolidated financial statements.
Note 2:    Acquisitions and Divestituresarrangement.
Fiscal 2015
During the fourth quarter of fiscal 2015,On March 23, 2018, we sold our company-operated retail store assets and operations in Puerto RicoBrazil to Baristas Del Caribe, LLC,SouthRock, converting these operations to a fully licensed market, for a total of $8.9$48.2 million. This transaction resulted in an insignificant pre-tax loss. This pre-tax loss was included in net gain resulting from divestiture of certain operations on our consolidated statements of earnings.
On December 31, 2017, we acquired the remaining 50% interest of our East China joint venture (“East China”) from President Chain Store (Hong Kong) Holding Ltd. and Kai Yu (BVI) collectively, “Uni-President Group” or “UPG”, for approximately $1.4 billion. Approximately $90.5 million of pre-existing liabilities owed by East China to Starbucks were effectively settled upon the acquisition. Acquiring the remaining interest of East China, which operates over 1,400 stores in the Shanghai, Jiangsu and Zhejiang Provinces, builds on the Company's ongoing investment in China. The estimated fair values of the assets acquired and liabilities assumed are based on valuation and analysis performed by management. The valuation of certain assets and liabilities is preliminary and are subject to change as additional information becomes available.
Concurrently with the purchase of our East China joint venture, we sold our 50% interest in President Starbucks Coffee Taiwan Limited, our joint venture operations in Taiwan, to UPG for approximately $181.2 million. The transaction resulted in a pre-tax gain of $3.7$156.6 million which was included in net interest income and othergain resulting from divestiture of certain operations on theour consolidated statements of earnings.
On September 23, 2014, we entered into a tender offer bid agreement with Starbucks Coffee Japan, Ltd. ("Starbucks Japan"), at the time a 39.5% owned equity method investment, and our former joint venture partner, Sazaby League, Ltd. ("Sazaby"), to acquire the remaining 60.5% ownership interest in Starbucks Japan. Acquiring Starbucks Japan further leverages our existing infrastructure to continue disciplined retail store growth and expand our presence into other channels in the Japan market, such as consumer packaged goods ("CPG"), licensing and foodservice. This acquisition was structured as a two-step tender offer.
On October 31, 2014, we acquired Sazaby's 39.5% ownership interest in Starbucks Japan through the first tender offer step for ¥55 billion in cash, or $509 million with Japanese yen converted into U.S. dollars at a reference conversion rate of 108.13 JPY to USD, based on a spot rate that approximates the rate as of the acquisition date, bringing our total ownership in Starbucks Japan to a controlling 79% interest.
The following table summarizes the preliminary allocation of the total consideration to the fair values of the assets acquired and liabilities assumed as of OctoberDecember 31, 20142017, which are reported within our China/Asia Pacific segment (in millions):
Consideration:  
Cash paid for Sazaby's 39.5% equity interest $508.7
Fair value of our preexisting 39.5% equity interest 577.0
Total consideration $1,085.7
   
Fair value of assets acquired and liabilities assumed:  
Cash and cash equivalents $224.4
Accounts receivable, net 37.4
Inventories 26.4
Prepaid expenses and other current assets 35.7
Deferred income taxes, net (current) 23.4
Property, plant and equipment 282.9
Other long-term assets 141.4
Other intangible assets 323.0
Goodwill 815.6
Total assets acquired 1,910.2
Accounts payable (54.5)
Accrued liabilities (115.9)
Stored value card liability (36.5)
Deferred income taxes (noncurrent) (90.7)
Other long-term liabilities (115.8)
Total liabilities assumed (413.4)
Noncontrolling interest (411.1)
Total consideration $1,085.7

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During fiscal 2015, the acquisition date fair value of goodwill increased due to revisions that decreased the acquisition date fair value of accrued liabilities and deferred income taxes (noncurrent) and increased the acquisition date fair value of other-long-term liabilities. None of the adjustments had a material effect on our current or interim period consolidated financial statements.
The assets acquired and liabilities assumed are reported within our China/Asia Pacific segment. Other current and long-term assets acquired primarily include various deposits, specifically lease and key money deposits. Accrued liabilities and other long-term liabilities assumed primarily include the financing obligations associated with the build-to-suit leases discussed below, as well as asset retirement obligations.
The intangible assets are finite-lived and include reacquired rights, licensing agreements with Starbucks Japan's current licensees and Starbucks Japan's customer loyalty program. The reacquired rights of $305.0 million represent the fair value, calculated over the remaining original contractual period, to exclusively operate licensed Starbucks® retail stores in Japan. These rights will be amortized on a straight-line basis through March 2021, or over a period of approximately 6.4 years. The licensing agreements were valued at $15.0 million and will be amortized on a straight-line basis over a period of approximately 10.9 years, which is based on the remaining terms of the respective licensing agreements. The customer loyalty program was valued at $3.0 million and will be amortized on a straight-line basis over a period of 4.0 years, which represents the period during which we expect to benefit from these customer relationships.
Below is a tabular summary of the acquired intangible assets as of September 27, 2015, for which the gross balances in total are $33.7 million lower than as of the October 31, 2014 acquisition date due to foreign currency translation (in millions):
 Sep 27, 2015
 Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Reacquired rights$273.2
 $(39.0) $234.2
Licensing agreements13.4
 (1.1) 12.3
Customer loyalty program2.7
 (0.6) 2.1
Total acquired finite-lived intangible assets$289.3
 $(40.7) $248.6
Amortization expense for these finite-lived intangible assets for the year ended September 27, 2015 was $41.0 million and is estimated to be approximately $44 million each year for the next five years and approximately $29 million thereafter.
The $815.6 million of goodwill represents the intangible assets that do not qualify for separate recognition and primarily includes the acquired customer base, the acquired workforce including store partners in the region that have strong relationships with these customers, the existing geographic retail and online presence, and the expected geographic presence in new channels. The goodwill was allocated to the China/Asia Pacific segment and is not deductible for income tax purposes. Due to foreign currency translation, the balance of goodwill related to the acquisition declined $85.1 million to $730.5 million as of September 27, 2015.
As a part of this acquisition, we acquired a significant number of operating leases, including $7.5 million of favorable lease assets, which are included in prepaid expenses and other current assets and other long-term assets, and $15.5 million of unfavorable lease liabilities, which are included in accrued liabilities and other long-term liabilities on the consolidated balance sheets. The fair values of these assets and liabilities were determined based on market terms for similar leases as of the date of the acquisition, and will be amortized on a straight-line basis as rent expense, or a reduction of rent expense, respectively, in cost of sales including occupancy costs on the consolidated statements of earnings over the remaining terms of the leases, for which the weighted-average period was 9.4 years as of the October 31, 2014 acquisition date. We recorded a net reduction of rent expense of $0.8 million for the year ended September 27, 2015, in connection with the leases acquired.
Additionally, we acquired a number of build-to-suit lease arrangements that are accounted for as financing leases. Starbucks Japan is the deemed owner of buildings under build-to-suit lease accounting requirements since Starbucks Japan has significant involvement with the respective lessors and does not qualify for sales recognition under sale-leaseback accounting guidance. Accordingly, we have recorded the acquired buildings in property, plant and equipment, and the assumed lease financing obligations, representing the related future minimum lease payments, in other long-term liabilities, with the current portion recorded in accrued occupancy costs within accrued liabilities on the consolidated balance sheets. These financing obligations will be amortized based on the terms of the related lease agreements.

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The table below summarizes our estimated minimum future rental payments under the acquired non-cancelable operating leases and lease financing arrangements as of September 27, 2015 (in millions):
 Operating Leases Lease Financing Arrangements
Year 1$83.7
 $2.8
Year 266.5
 2.8
Year 349.0
 2.8
Year 437.5
 2.8
Year 530.3
 2.7
Thereafter129.4
 24.8
Total minimum lease payments$396.4
 $38.7
The fair value of the noncontrolling interest in Starbucks Japan was estimated by applying the market approach. Specifically, the fair value was determined based on the purchase price we expected to pay for the remaining 21% noncontrolling interest, which was comprised of a set market price and a premium above the market price. The market price premium is a customary business practice for public tender offer transactions in Japan, so we believe this is what a market participant would pay and should be included in the fair value determination.
Consideration:  
Cash paid for UPG 50% equity interest $1,440.8
Fair value of our pre-existing 50% equity interest 1,440.8
Settlement of pre-existing liabilities 90.5
Total consideration $2,972.1
   
Fair value of assets acquired and liabilities assumed:  
Cash and cash equivalents $129.5
Accounts receivable 14.3
Inventories 16.1
Prepaid expenses and other current assets 20.6
Property, plant and equipment 254.1
Other long-term assets 44.6
Other intangible assets 818.0
Goodwill 2,164.1
Total assets acquired 3,461.3
Accounts payable 34.7
Accrued liabilities 187.7
Stored value card liability 21.7
Other long-term liabilities 245.1
Total liabilities assumed 489.2
Total consideration $2,972.1
As a result of this acquisition, we remeasured the carrying value of our preexisting 39.5%50% equity method investment to fair value, which resulted in a pre-taxtotal gain of $390.6 million$1.4 billion that is not subject to income tax, and was presented separately as gain resulting from acquisition of joint venture within other income and expenses on theour consolidated statements of earnings. The fair value of $577.0 million$1.4 billion was calculated using an average of the income and market approach. The

income approach, fair value measurementwhich was based on significant inputs that are not observable in the market and thus represents a fair value measurement categorized within Level 3 of the fair value hierarchy. Key assumptions used in estimating future cash flows included projected revenue growth and operating expenses, as well as the selection of an appropriate discount rate. Estimates of revenue growth and operating expenses were based on internal projections and considered the historical performance of stores, local market economics and the business environmentenvironments impacting the stores'store performance. The discount rate applied was based on Starbucks Japan'sEast China's weighted-average cost of capital and included a company-specific and size risk premium. premiums.
The market approachassets acquired and liabilities assumed are reported within our China/Asia Pacific segment. Other current and long-term assets acquired primarily include lease deposits and prepaid rent. Accrued liabilities and other long-term liabilities assumed primarily include deferred income tax, dividend payable, accrued payroll, income tax payable and accrued occupancy costs.
The definite-lived intangibles primarily relate to reacquired rights to operate stores exclusively in East China. The reacquired rights of $798.0 million represent the fair value measurementcalculated over the remaining original contractual period and will be amortized on a straight-line basis through September 2022. Amortization expense for these definite-lived intangible assets for the fiscal year 2018 was based on$129.8 million. The estimated future amortization expense is approximately $163.8 million each year for the implied fair valuenext three years and approximately $160.4 million in the final year of Starbucks Japan usingfiscal 2022.
Goodwill represents the purchase price of Sazaby's 39.5% ownership interestintangible assets that do not qualify for separate recognition and primarily includes the acquired customer base, the acquired workforce including store partners in the region that have strong relationships with these customers, and the expected purchase priceexisting geographic retail and online presence. The entire balance was allocated to the China/Asia Pacific segment and is not deductible for income tax purposes. Due to foreign currency translation, the balance of goodwill related to the 21% remaining noncontrolling interest.acquisition decreased $115.2 million since the date of acquisition to $2.0 billion as of September 30, 2018.
We began consolidating Starbucks Japan'sEast China's results of operations and cash flows into our consolidated financial statements beginning after OctoberDecember 31, 2014.2017. For the year ended September 27, 2015, Starbucks Japan's net revenues and30, 2018, East China's revenue included in our consolidated statements of earnings was $903.0 million. For the year ended September 30, 2018, East China's net earnings included in our consolidated statements of earnings were $1.1 billion and $108.5 million, respectively.was $73.1 million.
The following table provides the supplemental pro forma revenue and net earnings of the combined entity had the acquisition date of Starbucks JapanEast China been October 3, 2016, the first day of our first quarter of fiscal 20142017, rather than duringthe end of our first quarter of fiscal 20152018 (in millions):
 Pro Forma (unaudited)Pro Forma (unaudited)
 Year EndedYear Ended
 Sep 27, 2015 Sep 28, 2014Sep 30, 2018 
Oct 1, 2017 (1)
Revenue $19,254.5
 $17,646.4
$24,990.4
 $23,315.0
Net earnings attributable to Starbucks(1)
 2,380.9
 2,449.9
3,196.8
 4,209.0
(1) 
The pro forma net earnings attributable to Starbucks for fiscal 20142017 includes the acquisition-related gain of $390.6 million,$1.4 billion and transaction and integration costs of $13.6$39.3 million for the year ended September 28, 2014.October 1, 2017.
The amounts in the supplemental pro forma earnings for the periods presented above fully eliminate intercompany transactions, apply our accounting policies and reflect adjustments for additional occupancy costs as well as depreciation and amortization that would have been charged assuming the same fair value adjustments to leases, property, plant and equipment and acquired intangibles had been applied on September 30, 2013.October 3, 2016. These pro forma results are unaudited and are not necessarily indicative of results of operations that would have occurred had the acquisition actually occurredclosed in the prior year period or indicative of the results of operations for any future period.
We initiated the second tender offer step on November 10, 2014 to acquire the remaining 21% ownership interest held by the public shareholders and option holders of Starbucks Japan's common stock, with the objective of acquiring all of the remaining outstanding shares including outstanding stock options. At the close of the second tender offer period on December 22, 2014, we funded the second tender offer step to acquire an additional 14.7% ownership interest for ¥31 billion in cash, or $258

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million with Japanese yen converted into U.S. dollars at a reference conversion rate of 120.39 JPY to USD. However, we did not complete the second tender offer nor obtain control of these shares until the settlement date of December 29, 2014, which was the first day of our second quarter of fiscal 2015.
Subsequent to the completion of the second tender offer step, we commenced a cash-out procedure under Japanese law (the "Cash-out") to acquire all remaining shares of Starbucks Japan (an approximate 6.3% interest). On March 26, 2015, we obtained control of these shares resulting in 100% ownership of Starbucks Japan. The purchase price for the Cash-out was ¥13.5 billion, or $109 million. During the third quarter of fiscal 2015, we settled ¥9.6 billion, or $78 million, of the purchase price in cash, with Japanese yen converted into U.S. dollars at a reference conversion rate of 123.87 JPY to USD. During the fourth quarter of fiscal 2015, we settled ¥3.2 billion, or $26 million, of the purchase price in cash, with Japanese yen converted into U.S. dollars at a reference conversion rate of 120.72 JPY to USD. The remaining ¥674 million ($6 million) was recorded in accrued liabilities on our consolidated balance sheets and represents cash that was unclaimed by minority shareholders as of September 27, 2015. There are no legal restrictions on the remaining unclaimed balance.
For the first quarter of fiscal 2015, net earnings attributable to noncontrolling interests in our consolidated statement of earnings related to Starbucks Japan reflects the 21% of minority shareholders’ interests that we did not own as of the end of the first quarter of fiscal 2015. For the second quarter of fiscal 2015, net earnings attributable to noncontrolling interests in our consolidated statement of earnings related to Starbucks Japan reflects the approximate 6.3% of minority shareholders’ interests that we did not obtain control of until March 26, 2015.
The following table shows the effects of the change in Starbucks ownership interest in Starbucks Japan on Starbucks equity:
 Year Ended
 Sep 27, 2015 Sep 28, 2014
Net earnings attributable to Starbucks$2,757.4
 $2,068.1
Transfers (to)/from the noncontrolling interest:   
Increase/(decrease) in additional paid-in capital for purchase of interest in subsidiary1.7
 —
Change from net earnings attributable to Starbucks and transfers (to)/from noncontrolling interest$2,759.1
 $2,068.1
During the year ended September 27, 2015,30, 2018, we incurred approximately $11.9$3.6 million of acquisition-related costs, such as regulatory, legal, and advisory fees, which we havewere recorded within unallocated corporatein general and administrative expenses.
On December 11, 2017, we sold the assets associated with our Tazo brand including Tazo® signature recipes, intellectual property and inventory to Unilever for a total of $383.8 million. The transaction resulted in a pre-tax gain of $347.9 million, which was included in the net gain from divestiture of certain operations on our consolidated statements of earnings. Results from Tazo operations prior to the sale are reported primarily in Channel Development.
Fiscal 20142017
DuringIn the fourth quarter of fiscal 2014,2017, we sold our Australian company-operated retail store assets and operations in Singapore to the Withers Group,Maxim's Caterers Limited, converting these operations to a fully licensed market, for a total of $15.9$119.9 million. This transaction resulted in a pre-tax gain of $2.4$83.9 million, which was included in the net interest income and othergain resulting from divestiture of certain operations on our consolidated statements of earnings. On an after-tax basis, this transaction resulted in a loss that was not material to our financial statements.

Fiscal 20132016
During the fourththird quarter of fiscal 2013,2016, we sold our 82%ownership interest in Starbucks Coffee Chile S.A.our Germany retail business to our joint venture partner Alsea, S.A.B. de C.V., converting this market to a 100% licensed market,AmRest Holdings SE for a total purchase price of $68.6 million, which includes final working capital adjustments.$47.3 million. This transaction converted these company-operated stores to a fully licensed market and resulted in aan insignificant pre-tax gain, of $45.9 million, which was included in the net interest income and othergain resulting from divestiture of certain operations on our consolidated statements of earnings.
In the third quarter of fiscal 2013, we acquired 100% ownership of a coffee farm in Costa Rica for $8.1 million in cash. The fair value of the net assets acquired on the acquisition date primarily comprised property, plant and equipment.

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On December 31, 2012, we acquired 100% of the outstanding shares of Teavana Holdings, Inc. ("Teavana"), a specialty retailer of premium loose-leaf teas, authentic artisanal teawares and other tea-related merchandise, to elevate our tea offerings as well as expand our domestic and global tea footprint. We acquired Teavana for $615.8 million in cash. Of the total cash paid, $12.2 million was excluded from the purchase price allocation below as it represented contingent consideration receivable, all of which has been settled. At closing, we also repaid $35.2 million for long-term debt outstanding on Teavana's balance sheet, which was recognized separately from the business combination. The following table summarizes the allocation of the purchase price to the fair values of the assets acquired and liabilities assumed on the closing date (in millions):
  
Fair Value at
 Dec 31, 2012
Cash and cash equivalents $47.0
Inventories 21.3
Property, plant and equipment 59.7
Other intangible assets 120.8
Goodwill 467.5
Other current and noncurrent assets 19.8
Current liabilities (36.0)
Deferred income taxes (noncurrent) (54.3)
Long-term debt (35.2)
Other long-term liabilities (7.0)
Total consideration $603.6
The assets acquired and liabilities assumed are reported within All Other Segments. Other current and noncurrent assets acquired primarily include prepaid expenses, trade receivables, and deferred tax assets. In addition, we assumed various current liabilities primarily consisting of accounts payable, accrued payroll-related liabilities and other accrued operating expenses. The intangible assets acquired as part of the transaction include the Teavana trade name, tea blends and non-compete agreements. The Teavana trade name was valued at $105.5 million and determined to have an indefinite life, based on our expectation that the brand will be used indefinitely and has no contractual limitations. The intangible asset related to the tea blends was valued at $13.0 million and will be amortized on a straight-line basis over a period of 10 years, and the intangible asset related to the non-compete agreements was valued at $2.3 million and will be amortized on a straight-line basis over a period of 3 years. The $467.5 million of goodwill represents the intangible assets that do not qualify for separate recognition, primarily including Teavana's established global store presence in high traffic mall locations and other high-sales-volume retail venues, Teavana's global customer base, and Teavana's "Heaven of tea" retail experience in which store employees engage and educate customers about the ritual and enjoyment of tea. The goodwill was allocated to All Other Segments and is not deductible for income tax purposes.
Note 3:    Derivative Financial Instruments
Interest Rates
Depending on market conditions,We are subject to interest rate volatility with regard to existing and future issuances of debt. From time to time, we enter into interest rate swap agreements to manage our exposure to interest rate fluctuations.
To hedge the variability in cash flows due to changes in the benchmark interest rates, we enter into interest rate swap agreements related to anticipated debt issuances. These agreements are cash settled at the time of the pricing of the related debt. The effective portion of the derivative's gain or loss is recorded in accumulated other comprehensive income ("AOCI")AOCI and is subsequently reclassified to interest expense over the life of the related debt.
During the first quarter of fiscal 2015, we entered into forward-starting interest rate swap agreements with an aggregate notional amount of $250.0 million related to the $500 million of 7-year 2.700% Senior Notes (the "2022 notes") due in June 2022 issued in the third quarter of fiscal 2015. During the third quarter of fiscal 2015, we entered into forward-starting interest rate swap agreements with an aggregate notional amount of $250.0 million related to the $350 million of 30-year 4.300% Senior Notes (the "2045 notes") due in June 2045 issued in the third quarter of fiscal 2015. We cash settled these swap agreements at the time of the pricing of the 2022 and the 2045 notes, effectively locking in the benchmark interest rate in effect at the time the swap agreements were initiated. In July 2015, we redeemed our $550 million of 6.250% Senior Notes (the "2017 notes") originally scheduled to mature in August 2017. In connection with the redemption in the fourth quarter of fiscal 2015, we reclassified $2.0 million from accumulated other comprehensive income to interest expense on our consolidated statements of earnings related to remaining unrecognized losses from interest rate contracts entered into in conjunction with the 2017 notes and designated as cash flow hedges. In the fourth quarter of fiscal 2015, we entered into forward-starting interest rate swap agreements with an aggregate notional amount of $125 million related to an anticipated debt issuance in fiscal 2016. Refer to Note 9, Debt, for details of the components of our long-term debt.

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TableTo hedge the exposure to changes in the fair value of Contentsour fixed-rate debt, we enter into interest rate swap agreements, which are designated as fair value hedges. The changes in fair value of these derivative instruments and the offsetting changes in fair values of the underlying hedged debt are recorded in interest expense and have an insignificant impact on our consolidated statements of earnings. Refer to Note 9, Debt, for additional information on our long-term debt.

Foreign Currency
To reduce cash flow volatility from foreign currency fluctuations, we enter into forward and swap contracts to hedge portions of cash flows of anticipated revenue streams andintercompany royalty payments, inventory purchases in currencies other than the entity's functional currency.and intercompany borrowing and lending activities. The effective portion of the derivative's gain or loss is recorded in AOCI and is subsequently reclassified to revenue, or cost of sales including occupancy costs or interest income and other, net, respectively, when the hedged exposure affects net earnings.
In connection with the acquisition of Starbucks Japan that is discussed in Note 2, Acquisitions and Divestitures, we entered into cross-currency swap contracts during the first and third quarters of fiscal 2015 to hedge theTo mitigate foreign currency transaction risk of certain yen-denominated intercompany loans with a total notional value of ¥86.5 billion, or approximately $717 millionborrowings, we enter into cross-currency swap contracts, which are designated as of September 27, 2015.cash flow hedges. Gains and losses from these swaps offset the changes in value of interest and principal payments as a result of changes in foreign exchange rates, which are also recorded in net interest income and other on the consolidated statements of earnings. We recognize the difference between the U.S. dollar interest payments received from the swap counterparty and the U.S. dollar equivalent of the Japanese yen interest payments made to the swap counterparty in interest income and other, net or interest expense on our consolidated statements of earnings. This difference varies over time and is driven by a number of market factors, including relevant interest rate differentials and foreign exchange rates. These swaps have been designated as cash flow hedges and mature in September 2016 and November 2024 at the same time as the related loans. There are no credit-risk-related contingent features associated with these swaps, although we may hold or post collateral depending upon the gain or loss position of the swap agreements.
We also enter into forward contracts or use foreign currency-denominated debt to hedge the foreign currency exposure of our net investment in certain foreigninternational operations. The effective portion of the derivative's gain or loss is recorded in AOCI and will beis subsequently reclassified to net earnings when the hedged net investment is either sold or substantially liquidated.
As a result of our acquisition of Starbucks Japan, we reclassified the pretax cumulative net gains in AOCI of $7.2 million related to our net investment derivative instruments used to hedge our preexisting 39.5% equity method investment in Starbucks Japan into earnings, which was included in the gain resulting from acquisition of joint venture line item on the consolidated statements of earnings. These gains offset the cumulative translation adjustment loss balance associated with our preexisting investment included in the calculation of the remeasurement gain, which is described further in Note 2, Acquisitions and Divestitures.
To mitigate the translationforeign exchange risk of certain balance sheet items, we enter into foreign currency forward and swap contracts that are not designated as hedging instruments. Gains and losses from these derivatives are largely offset by the financial impact of translating foreign currency denominated payables and receivables; both are recorded in net interest income and other, on our consolidated statements of earnings.net.
Commodities
Depending on market conditions, we may enter into coffee futures contracts and collars (the combination of a purchased call option and a sold put option) to hedge a portion of anticipated cash flows under our price-to-be-fixed green coffee contracts, which are described further in Note 5, Inventories. The effective portion of theeach derivative's gain or loss is recorded in AOCI and is subsequently reclassified to cost of sales including occupancy costs when the hedged exposure affects net earnings.
To mitigate the price uncertainty of a portion of our future purchases, primarily of dairy products, and diesel fuel and other commodities, we enter into swaps,swap contracts, futures and collars that are not designated as hedging instruments. Gains and losses from these derivatives are recorded in net interest income and other, net and help offset price fluctuations on our dairy purchasesbeverage, food, packaging and the financial impact of diesel fuel fluctuations on our shippingtransportation costs, which are included in cost of sales including occupancy costs on our consolidated statements of earnings.

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Gains and losses on derivative contracts designated as hedging instruments included in AOCI and expected to be reclassified into earnings within 12 months, net of tax (in millions):
Net Gains/(Losses)
Included in AOCI		 Net Gains/(Losses) Expected to be Reclassified from AOCI into Earnings within 12 Months Contract Remaining Maturity
(Months)		Net Gains/(Losses)
Included in AOCI		 Net Gains/(Losses) Expected to be Reclassified from AOCI into Earnings within 12 Months Contract Remaining Maturity
(Months)
Sep 27,
2015		 Sep 28,
2014		 Sep 30,
2018		 Oct 1,
2017		 Oct 2,
2016		 
Cash Flow Hedges:                
Interest rates$30.1
 $36.4
 $3.5
 4$24.7
 $17.6
 $20.5
 $4.2
 0
Cross-currency swaps(27.8) —
 —
 111(12.6) (6.0) (7.7) —
 74
Foreign currency - other29.0
 10.6
 19.2
 355.8
 (9.1) (0.4) 3.8
 36
Coffee(5.7) (0.7) (2.5) 12(0.2) (6.6) (1.6) (0.2) 5
Net Investment Hedges:              
Foreign currency1.3
 3.2
 —
 016.0
 16.2
 1.3
 —
 0
Foreign currency debt3.6
 (2.2) —
 —
 66
Pretax gains and losses on derivative contracts designated as hedging instruments recognized in other comprehensive income ("OCI"(“OCI”) and reclassifications from AOCI to earnings (in millions):
Year EndedYear Ended
Gains/(Losses) Recognized in
OCI Before Reclassifications		 Gains/(Losses) Reclassified from AOCI to EarningsGains/(Losses) Recognized in
OCI Before Reclassifications		 Gains/(Losses) Reclassified from AOCI to Earnings
Sep 27,
2015		 Sep 28,
2014		 Sep 27,
2015		 Sep 28,
2014		Sep 30,
2018		 Oct 1,
2017		 Oct 2,
2016		 Sep 30,
2018		 Oct 1,
2017		 Oct 2,
2016
Cash Flow Hedges:                  
Interest rates$(6.8) $0.5
 $3.2
 $5.0
$14.1
 $—
 $(10.3) $4.9
 $4.8
 $5.0
Cross-currency swaps11.4
 —
 46.2
 —
(6.1) 59.5
 (75.7) 2.2
 57.2
 (101.1)
Foreign currency - other52.0
 24.0
 26.1
 8.0
16.7
 1.8
 (25.4) (3.6) 11.4
 19.1
Coffee(9.0) (0.4) (3.5) (13.1)(0.3) (8.1) 1.7
 (7.4) (2.7) (2.8)
Net Investment Hedges:                  
Foreign currency4.3
 25.5
 7.2
 —
(0.1) 23.6
 —
 —
 —
 —
Foreign currency debt7.9
 (3.5) —
 —
 —
 —
Pretax gains and losses on derivative contracts notnon-designated derivatives and designated asfair value hedging instruments recognized in earnings (in millions):
 Gains/(Losses) Recognized in Earnings
 Sep 27, 2015 Sep 28, 2014
Foreign currency$27.1
 $1.7
Coffee(0.2) —
Dairy(3.8) 12.6
Diesel fuel(9.0) (1.0)
 Gains/(Losses) Recognized in Earnings
 Sep 30, 2018 Oct 1, 2017 Oct 2, 2016
Non-Designated Derivatives:     
Foreign currency - other$4.6
 $4.6
 $(5.7)
Dairy(2.4) —
 (5.5)
Diesel fuel and other commodities3.7
 1.3
 (0.2)
Designated Fair Value Hedging Instruments:     
Interest rate swap(33.7) (5.2) —

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Notional amounts of outstanding derivative contracts (in millions):
Sep 27, 2015 Sep 28, 2014Sep 30, 2018 Oct 1, 2017
Interest rates$125
 $—
Interest rate swap$750
 $750
Cross-currency swaps717
 —
434
 514
Foreign currency - other577
 542
914
 901
Coffee38
 45
Dairy43
 24
16
 14
Diesel fuel14
 17
Diesel fuel and other commodities21
 41
The fair valuesFair value of ouroutstanding derivative assets and liabilities are included contracts (in millionsNote 4, Fair Value Measurements, and additional):
 Derivative Assets Derivative Liabilities
 Sep 30, 2018 Oct 1, 2017 Sep 30, 2018 Oct 1, 2017
Designated Derivative Instruments:       
Cross-currency swaps$5.8
 $12.4
 $9.3
 $9.8
Foreign currency - other13.6
 7.7
 5.3
 20.8
Net investment hedges—
 0.3
 —
 —
Interest rate swap—
 —
 32.5
 3.8
Non-designated Derivative Instruments:       
Foreign currency13.7
 15.8
 2.5
 1.4
Dairy0.2
 —
 0.1
 2.4
Diesel fuel and other commodities1.6
 1.6
 0.3
 0.3
Additional disclosures related to cash flow hedge gains and losses included in accumulated other comprehensive income,AOCI, as well as subsequent reclassifications to earnings, are included in Note 11, Equity.

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Note 4:    Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Recurring Basis (in millions):
   Fair Value Measurements at Reporting Date Using
 Balance at
September 30, 2018		 
Quoted Prices
in Active
Markets for 
Identical Assets
(Level 1)
 
Significant 
Other Observable 
Inputs
(Level 2)
 
Significant
Unobservable  Inputs
(Level 3)
Assets:       
Cash and cash equivalents$8,756.3
 $8,756.3
 $—
 $—
Short-term investments:       
Available-for-sale securities       
Commercial paper8.4
 —
 8.4
 —
Corporate debt securities91.8
 —
 91.8
 —
Mortgage and other asset-backed securities6.0
 —
 6.0
 —
Total available-for-sale securities106.2
 —
 106.2
 —
Trading securities75.3
 75.3
 —
 —
Total short-term investments181.5
 75.3
 106.2
 —
Prepaid expenses and other current assets:       
Derivative assets24.5
 1.2
 23.3
 —
Long-term investments:       
Available-for-sale securities       
Agency obligations5.9
 —
 5.9
 —
Corporate debt securities114.5
 —
 114.5
 —
Auction rate securities5.9
 —
 —
 5.9
Foreign government obligations3.6
 —
 3.6
 —
U.S. government treasury securities108.1
 108.1
 —
 —
State and local government obligations4.8
 —
 4.8
 —
Mortgage and other asset-backed securities24.9
 —
 24.9
 —
Total long-term investments267.7
 108.1
 153.7
 5.9
Other long-term assets:       
Derivative assets10.4
 —
 10.4
 —
Total assets$9,240.4
 $8,940.9
 $293.6
 $5.9
Liabilities:       
Accrued liabilities:       
Derivative liabilities$6.5
 $0.4
 $6.1
 $—
Other long-term liabilities:       
Derivative liabilities43.5
 —
 43.5
 —
Total liabilities$50.0
 $0.4
 $49.6
 $—

   Fair Value Measurements at Reporting Date Using
 Balance at
Sep 27, 2015		 
Quoted Prices
in Active
Markets for 
Identical Assets
(Level 1)
 
Significant 
Other Observable 
Inputs
(Level 2)
 
Significant
Unobservable  Inputs
(Level 3)
Assets:       
Cash and cash equivalents$1,530.1
 $1,530.1
 $—
 $—
Short-term investments:       
Available-for-sale securities       
Corporate debt securities10.2
 —
 10.2
 —
Foreign government obligations2.0
 —
 2.0
 —
State and local government obligations3.3
 —
 3.3
 —
Total available-for-sale securities15.5
 —
 15.5
 —
Trading securities65.8
 65.8
 —
 —
Total short-term investments81.3
 65.8
 15.5
 —
Prepaid expenses and other current assets:       
Derivative assets50.8
 —
 50.8
 —
Long-term investments:       
Available-for-sale securities       
Agency obligations8.6
 —
 8.6
 —
Corporate debt securities121.8
 —
 121.8
 —
Auction rate securities5.9
 —
 —
 5.9
Foreign government obligations18.5
 —
 18.5
 —
U.S. government treasury securities104.8
 104.8
 —
 —
State and local government obligations9.7
 —
 9.7
 —
Mortgage and other asset-backed securities43.2
 —
 43.2
 —
Total long-term investments312.5
 104.8
 201.8
 5.9
Other long-term assets:       
Derivative assets54.7
 —
 54.7
 —
Total assets$2,029.4
 $1,700.7
 $322.8
 $5.9
Liabilities:       
Accrued liabilities:       
Derivative liabilities$19.2
 $3.6
 $15.6
 $—
Other long-term liabilities:       
Derivative liabilities14.5
 —
 14.5
 —
Total liabilities$33.7
 $3.6
 $30.1
 $—

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  Fair Value Measurements at Reporting Date Using  Fair Value Measurements at Reporting Date Using
Balance at
Sep 28, 2014		 Quoted Prices
in Active
Markets for 
Identical Assets
(Level 1)		 Significant 
Other Observable 
Inputs
(Level 2)		 Significant
Unobservable  Inputs
(Level 3)		Balance at
Oct 1, 2017		 Quoted Prices
in Active
Markets for 
Identical Assets
(Level 1)		 Significant 
Other Observable 
Inputs
(Level 2)		 Significant
Unobservable  Inputs
(Level 3)
Assets:              
Cash and cash equivalents$1,708.4
 $1,708.4
 $—
 $—
$2,462.3
 $2,462.3
 $—
 $—
Short-term investments:              
Available-for-sale securities              
Agency obligations7.5
 —
 7.5
 —
Commercial paper2.0
 —
 2.0
 —
Corporate debt securities4.9
 —
 4.9
 —
49.4
 —
 49.4
 —
Foreign government obligations33.7
 —
 33.7
 —
7.1
 —
 7.1
 —
U.S. government treasury securities10.9
 10.9
 —
 —
81.4
 81.4
 —
 —
State and local government obligations12.7
 —
 12.7
 —
2.0
 —
 2.0
 —
Certificates of deposit1.0
 —
 1.0
 —
2.3
 —
 2.3
 —
Total available-for-sale securities63.2
 10.9
 52.3
 —
151.7
 81.4
 70.3
 —
Trading securities72.2
 72.2
 —
 —
76.9
 76.9
 —
 —
Total short-term investments135.4
 83.1
 52.3
 —
228.6
 158.3
 70.3
 —
Prepaid expenses and other current assets:              
Derivative assets28.7
 0.9
 27.8
 —
13.4
 0.1
 13.3
 —
Long-term investments:              
Available-for-sale securities              
Agency obligations8.9
 —
 8.9
 —
21.8
 —
 21.8
 —
Corporate debt securities130.9
 —
 130.9
 —
207.4
 —
 207.4
 —
Auction rate securities13.8
 —
 —
 13.8
5.9
 —
 —
 5.9
Foreign government obligations17.4
 —
 17.4
 —
17.1
 —
 17.1
 —
U.S. government treasury securities94.8
 94.8
 —
 —
127.4
 127.4
 —
 —
State and local government obligations6.7
 —
 6.7
 —
7.0
 —
 7.0
 —
Mortgage and other asset-backed securities45.9
 —
 45.9
 —
155.7
 —
 155.7
 —
Total long-term investments318.4
 94.8
 209.8
 13.8
542.3
 127.4
 409.0
 5.9
Other long-term assets:              
Derivative assets18.0
 —
 18.0
 —
24.4
 —
 24.4
 —
Total assets$2,208.9
 $1,887.2
 $307.9
 $13.8
$3,271.0
 $2,748.1
 $517.0
 $5.9
Liabilities:              
Accrued liabilities:              
Derivative liabilities$2.4
 $0.4
 $2.0
 $—
$16.4
 $2.5
 $13.9
 $—
Other long-term liabilities:       
Derivative liabilities22.1
 —
 22.1
 —
Total$38.5
 $2.5
 $36.0
 $—
There were no material transfers between levels and there was no significant activity within Level 3 instruments during the periods presented. The fair values of any financial instruments presented above exclude the impact of netting assets and liabilities when a legally enforceable master netting agreement exists.
Available-for-sale Securities
Long-term investments generally mature within 4 years. Proceeds from sales of available-for-sale securities were $600.6$459.0 million, $1.5 billion,$999.7 million, and $60.2$680.7 million for fiscal years 2015, 20142018, 2017 and 2013,2016, respectively. The increase in fiscal 2014 was due to the liquidation of a significant portion of our offshore investment portfolio in the fourth quarter of fiscal 2014 in anticipation of funding the acquisition of Starbucks Japan. Realized gains and losses on sales and maturities of available-for-sale securities were not material for fiscal years 2015, 2014,2018, 2017, and 2013.2016. Gross unrealized holding gains and losses on available-for-sale securities were not material as of September 27, 201530, 2018 and September 28, 2014.October 1, 2017.


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Trading Securities
Trading securities include equity mutual funds and exchange-traded funds. Our trading securities portfolio approximates a portion of our liability under our Management Deferred Compensation Plan ("MDCP"),MDCP, a defined contribution plan. Our MDCP liability was $98.3$102.2 million and $106.4$105.9 million as of September 27, 201530, 2018 and September 28, 2014, respectively, which is included in accrued compensation and related costs within accrued liabilities on the consolidated balance sheets.October 1, 2017, respectively. The changes in net unrealized holding gains and losses in the trading securities portfolio included in earnings for fiscal years 2015, 20142018, 2017 and 20132016 were a net loss of $4.5 million, and net gains of $1.2 million, and $11.7 million, respectively.not material. Gross unrealized holding gains and losses on trading securities were not material as of September 27, 201530, 2018 and September 28, 2014.October 1, 2017.
Derivative Assets and Liabilities
Derivative assets and liabilities include foreign currency forward contracts, commodity futures contracts, collars and swaps, which are described further in Note 3, Derivative Financial Instruments.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Assets and liabilities recognized or disclosed at fair value on a nonrecurring basis include items such as property, plant and equipment, goodwill and other intangible assets, equity and cost method investments, and other assets. These assets are measured at fair value if determined to be impaired. Impairment of property, plant, and equipment is included at Note 1, Summary of Significant Accounting Policies. During fiscal 2015
Other than the impairments discussed in Note 8, Other Intangible Assets and 2014,Goodwill, and the aforementioned fair value adjustments, there were no other material fair value adjustments.adjustments during fiscal 2018 and 2017.
Fair Value of Other Financial Instruments
The estimated fair value of our long-term debt based on the quoted market price (Level 2) is included at Note 9, Debt.
Note 5:    Inventories (in millions)
Sep 27, 2015 Sep 28, 2014Sep 30, 2018 Oct 1, 2017
Coffee:      
Unroasted$529.4
 $432.3
$588.6
 $541.0
Roasted279.7
 238.9
281.2
 301.1
Other merchandise held for sale318.3
 265.7
273.1
 301.1
Packaging and other supplies179.0
 154.0
257.6
 220.8
Total$1,306.4
 $1,090.9
$1,400.5
 $1,364.0
Other merchandise held for sale includes, among other items, serveware and tea. Inventory levels vary due to seasonality, commodity market supply and price fluctuations.
As of September 27, 2015,30, 2018, we had committed to purchasing green coffee totaling $819$996 million under fixed-price contracts and an estimated $266$166 million under price-to-be-fixed contracts. As of September 27, 2015, approximately $38 million30, 2018, none of our price-to-be-fixed contracts were effectively fixed through the use of futures contracts. Price-to-be-fixed contracts are purchase commitments whereby the quality, quantity, delivery period and other negotiated terms are agreed upon, but the date, and therefore the price, at which the base "C"“C” coffee commodity price component will be fixed has not yet been established. For these types ofmost contracts, either Starbucks or the seller has the option to "fix"“fix” the base "C"“C” coffee commodity price prior to the delivery date. For other contracts, Starbucks and the seller may agree upon pricing parameters determined by the base “C” coffee commodity price. Until prices are fixed, we estimate the total cost of these purchase commitments. We believe, based on relationships established with our suppliers in the past, the risk of non-delivery on suchthese purchase commitments is remote.

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Note 6:    Equity and Cost Investments (in millions)
Sep 27,
2015		 Sep 28,
2014		Sep 30,
2018		 Oct 1,
2017
Equity method investments$306.4
 $469.3
$296.0
 $432.8
Cost method investments45.6
 45.6
38.7
 48.8
Total$352.0
 $514.9
$334.7
 $481.6
Equity Method Investments
As of September 27, 2015,30, 2018, we had a 50% ownership interestinterests in each of the following international equity method investees: President Starbucks Coffee (Shanghai); Starbucks Coffee Korea Co., Ltd.; President Starbucks Coffee Corporation (Taiwan) Company Limited; and Tata Starbucks Limited (India). In addition, we had a 49% ownership interest in Starbucks Coffee España, S.L. ("Starbucks Spain"). These international entities operate licensed Starbucks® retail stores. Additional disclosure regarding changes in our equity method investments due to acquisition or divestiture is included at Note 2, Acquisitions, Divestitures and Strategic Alliance.

We also license the rights to produce and distribute Starbucks-branded products to our 50% owned joint venture, The North American Coffee Partnership with the Pepsi-Cola Company, which develops and distributes bottled Starbucks® beverages, including Frappuccino® coffee drinks, Starbucks Doubleshot® espresso drinks, Starbucks Refreshers® beverages, and Starbucks Discoveries Iced Café Favorites®. Iced Espresso Classics.
On September 23, 2014, we entered into a two-step tender offer bid agreement to acquire the remaining 60.5% interest in Starbucks Japan, at the time a 39.5% owned equity method investment. Upon the completion of the first tender offer step in the first quarter of fiscal 2015, we obtained a controlling interest in Starbucks Japan and began consolidating its results instead of applying equity method accounting. See further discussion at Note 2, Acquisitions and Divestitures.
In the fourth quarter of fiscal 2014, we sold our 50% equity method ownership interest in our Malaysian joint venture, Berjaya Starbucks Coffee Company Sdn. Bhd., to our joint venture partner, Berjaya Food Berhad, for a total purchase price of $88.0 million. This transaction resulted in a gain of $67.8 million, which was included in net interest income and other on our consolidated statements of earnings.
In the fourth quarter of fiscal 2013, we acquired a 49% equity method ownership interest in Starbucks Spain from our licensee partner Sigla S.A. (Grupo Vips) for approximately $33 million in cash.
Our share of income and losses from our equity method investments is included in income from equity investees on our consolidated statements of earnings. Also included in this line item is our proportionate share of gross profit resulting from coffee and other product sales to, and royalty and license fee revenues generated from, equity investees. Revenues generated from these related parties were $153.4$112.8 million, $219.2$187.3 million,, and $205.1$164.2 million in fiscal years 2015, 2014,2018, 2017 and 2013,2016, respectively. Related costs of sales were $94.5$71.5 million, $121.2$109.3 million,, and $115.4$97.5 million in fiscal years 2015, 2014,2018, 2017 and 2013,2016, respectively. As of September 27, 201530, 2018 and September 28, 2014,October 1, 2017, there were $36.7$41.2 million and $54.9$54.3 million of accounts receivable from equity investees, respectively, on our consolidated balance sheets, primarily related to product sales and royalty revenues.
Summarized combined financial information of our equity method investees, which represent 100% of the investees’ financial information (in millions):
Financial Position as ofSep 27,
2015		 Sep 28,
2014
Current assets$402.8
 $701.3
Noncurrent assets578.8
 873.9
Current liabilities490.0
 615.6
Noncurrent liabilities38.7
 79.1
Results of Operations for Fiscal Year EndedSep 27,
2015		 Sep 28,
2014		 Sep 29,
2013
Net revenues$2,688.0
 $3,461.3
 $3,018.7
Operating income426.4
 467.7
 434.8
Net earnings392.1
 382.6
 358.0

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Cost Method Investments
As of September 27, 2015, we had $19 million investedWe invest in equity interests of entities that develop and operate Starbucks®licensed stores in several global markets. Wemarkets and in other entities, unrelated to licensed stores, from time to time. As of September 30, 2018 and October 1, 2017, we had $23 million invested in entities that develop and operate Starbucks® licensed stores and have the ability to acquire additional interests in some of these cost method investees at certain intervals. Depending on our total percentage ownership interest and our ability to exercise significant influence over financial and operating policies, additional investments may require a retroactive application of the equity method of accounting. We also had a $25 million investment in the preferred stock of Square, Inc.
During the fourth quarter of fiscal 2013, we sold our 18% interest in Starbucks Coffee Argentina S.R.L. to our joint venture partner Alsea, S.A.B. de C.V., for a total purchase price of $4.4 million. This transaction resulted in a loss of $1.0 million, which was included in net interest income and other on our consolidated statements of earnings.
During the second quarter of fiscal 2013, we sold our 18% interest in Cafe Sirena S. de R.L. de CV (a Mexican limited liability company), to our controlling joint venture partner, SC de Mexico, S.A. de CV, owned by Alsea, S.A.B. de C.V., for a total purchase price of $50.3 million, which included final working capital adjustments. This transaction resulted in a gain of $35.2 million, which was included in net interest income and other on our consolidated statements of earnings.
Note 7:    Supplemental Balance Sheet Information (in millions)
Prepaid Expenses and Other Current Assets
 Sep 30, 2018 Oct 1, 2017
Income tax receivable$955.4
 $68.0
Other prepaid expenses and current assets507.4
 290.1
Total prepaid expenses and current assets$1,462.8
 $358.1
Property, Plant and Equipment, net
Sep 27, 2015 Sep 28, 2014Sep 30, 2018 Oct 1, 2017
Land$46.6
 $46.7
$46.8
 $46.9
Buildings411.5
 278.1
557.3
 481.7
Leasehold improvements5,409.6
 4,858.4
7,372.8
 6,401.0
Store equipment1,707.5
 1,493.3
2,400.2
 2,110.7
Roasting equipment542.4
 410.9
658.8
 619.8
Furniture, fixtures and other1,281.7
 1,078.1
1,659.3
 1,514.1
Work in progress242.5
 415.6
501.9
 409.8
Property, plant and equipment, gross9,641.8
 8,581.1
13,197.1
 11,584.0
Accumulated depreciation(5,553.5) (5,062.1)(7,268.0) (6,664.5)
Property, plant and equipment, net$4,088.3
 $3,519.0
$5,929.1
 $4,919.5
Accrued Liabilities
Sep 27, 2015 Sep 28, 2014Sep 30, 2018 Oct 1, 2017
Accrued compensation and related costs$522.3
 $437.9
$656.8
 $524.5
Accrued occupancy costs137.2
 119.8
164.2
 151.3
Accrued taxes259.0
 272.0
286.6
 226.6
Accrued dividends payable297.0
 239.8
445.4
 429.5
Other545.2
 444.9
Accrued capital and other operating expenditures745.4
 602.6
Total accrued liabilities$1,760.7
 $1,514.4
$2,298.4
 $1,934.5

Note 8:    Other Intangible Assets and Goodwill
Indefinite-Lived Intangible Assets
(in millions)Sep 27, 2015 Sep 28, 2014Sep 30, 2018 Oct 1, 2017
Trade names, trademarks and patents$202.8
 $197.5
$215.9
 $212.1
Other indefinite-lived intangible assets15.1
 15.1
15.1
 15.1
Total indefinite-lived intangible assets$217.9
 $212.6
$231.0
 $227.2
Additional disclosure regarding changes in our intangible assets due to acquisitions is included at Note 2, Acquisitions, Divestitures and Divestitures.Strategic Alliance.

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Goodwill
Changes in the carrying amount of goodwill by reportable operating segment (in millions):
 Americas China/Asia Pacific EMEA Channel
Development		 All Other Segments Total
Balance at September 29, 2013           
Goodwill prior to impairment$230.2
 $75.1
 $62.2
 $23.8
 $480.2
 $871.5
Accumulated impairment charges(8.6) —
 —
 —
 —
 (8.6)
Goodwill$221.6

$75.1
 $62.2
 $23.8
 $480.2
 $862.9
Impairment—
 —
 —
 —
 (0.8) (0.8)
Other(1)
(2.6) (0.2) (3.1) —
 —
 (5.9)
Balance at September 28, 2014
          
Goodwill prior to impairment$227.6
 $74.9
 $59.1
 $23.8
 $480.2
 $865.6
Accumulated impairment charges(8.6) —
 —
 —
 (0.8) (9.4)
Goodwill$219.0

$74.9
 $59.1
 $23.8
 $479.4
 $856.2
Acquisition/(divestiture)(2.5) 815.6
 —
 —
 —
 813.1
Impairment—
 —
 —
 —
 (0.5) (0.5)
Other(1)
(5.3) (86.4) (1.7) —
 —
 (93.4)
Balance at September 27, 2015           
Goodwill prior to impairment$219.8
 $804.1
 $57.4
 $23.8
 $480.2
 $1,585.3
Accumulated impairment charges(8.6) —
 —
 —
 (1.3) (9.9)
Goodwill$211.2

$804.1
 $57.4
 $23.8
 $478.9
 $1,575.4
 Americas China/Asia Pacific EMEA Channel
Development		 Corporate and Other Total
Goodwill balance at October 2, 2016$210.1
 $944.9
 $55.1
 $30.2
 $479.3
 $1,719.6
Acquisition/(divestiture)—
 (7.6) —
 —
 —
 (7.6)
Impairment—
 —
 (17.9) —
 (69.3) (87.2)
Other1.5
 (87.1) —
 —
 —
 (85.6)
Goodwill balance at October 1, 2017$211.6
 $850.2
 $37.2
 $30.2
 $410.0
 $1,539.2
Acquisition/(divestiture)—
 2,164.0
 —
 (1.5) —
 2,162.5
Impairment—
 —
 (37.6) —
 —
 (37.6)
Other285.8
 (27.6) 11.7
 6.0
 (398.4) (122.5)
Goodwill balance at September 30, 2018$497.4
 $2,986.6
 $11.3
 $34.7
 $11.6
 $3,541.6
“Other” consists of changes in the goodwill balance resulting from transfers between segments due to the dissolution of the Teavana reporting unit as well as foreign currency translation, as applicable.
For goodwill related to our Switzerland retail reporting unit, we initially recorded an impairment charge of $17.9 million in the third quarter of fiscal 2017. This was primarily due to the impacts of the strength of the Swiss franc, continued shift of consumer behaviors to neighboring countries and the relocation of certain businesses sustaining beyond our projections and indicating the reporting unit's carrying value would not be fully recovered. Since then, the operational investments and improvements we made did not sufficiently slow the performance decline, and we recorded impairment charges of $37.6 million for the remaining Switzerland goodwill balance during fiscal 2018.
During the third quarter of fiscal 2017, management finalized its long-term strategy for the Teavana reporting unit. The plan emphasizes sales of premium TeavanaTM/MC tea products at Starbucks branded stores and, to a lesser extent, consumer product channels. This change in strategic direction triggered an impairment test first of the retail store assets and then an impairment test of the goodwill asset, which also coincided with our annual goodwill testing process. The retail store assets were determined to be fully impaired, which resulted in a charge of $33.0 million. For goodwill, we utilized a combination of income and market approaches to determine the implied fair value of the reporting unit. These approaches used primarily unobservable inputs, including discount, sales growth and royalty rates and valuation multiples of a selection of similar publicly traded companies, which are considered Level 3 fair value measurements. We then compared the implied fair value with the carrying value and recognized a goodwill impairment charge of $69.3 million, thus reducing goodwill of the Teavana reporting unit to $398.3 million as of July 2, 2017. During the third quarter of fiscal 2018, we dissolved the Teavana reporting unit upon completion of the retail store closures. As a result, we reorganized the Teavana business and allocated the remaining $398.3 million of goodwill to other reporting units, primarily within the Americas segment, based on a relative fair value approach. Other intangible assets of $117.2 million, consisting primarily of the indefinite-lived tradename and definite-lived tea recipes, were also tested, and no impairment losses were recorded.

(1)
Other is primarily comprised of changes in the goodwill balance as a result of foreign currency translation.
Finite-Lived Intangible Assets
Sep 27, 2015 Sep 28, 2014Sep 30, 2018 Oct 1, 2017
(in millions)Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying AmountGross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Acquired and reacquired rights$308.6
 $(52.5) $256.1
 $36.8
 $(10.1) $26.7
$1,081.7
 $(320.1) $761.6
 $328.8
 $(154.2) $174.6
Acquired trade secrets and processes27.6
 (8.2) 19.4
 27.6
 (5.4) 22.2
27.6
 (16.5) 11.1
 27.6
 (13.7) 13.9
Trade names, trademarks and patents33.0
 (19.5) 13.5
 31.5
 (17.6) 13.9
Licensing agreements13.4
 (1.1) 12.3
 —
 —
 —
14.3
 (5.1) 9.2
 14.4
 (3.8) 10.6
Trade names, trademarks and patents24.5
 (13.0) 11.5
 21.6
 (11.6) 10.0
Other finite-lived intangible assets6.5
 (3.3) 3.2
 3.8
 (1.8) 2.0
25.6
 (9.8) 15.8
 6.7
 (5.5) 1.2
Total finite-lived intangible assets$380.6
 $(78.1) $302.5
 $89.8
 $(28.9) $60.9
$1,182.2
 $(371.0) $811.2
 $409.0
 $(194.8) $214.2
Amortization expense for finite-lived intangible assets was $50.0$186.5 million, $8.7$57.5 million, and $7.7$57.3 million during fiscal 2015, 2014,2018, 2017 and 2013,2016, respectively.

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Estimated future amortization expense as of September 27, 201530, 2018 (in millions):
Fiscal Year Ending  
2016$53.2
201752.9
201851.5
201951.2
$218.1
202051.1
218.0
2021195.2
2022168.5
20235.1
Thereafter42.6
6.3
Total estimated future amortization expense$302.5
$811.2
Additional disclosure regarding changes in our intangible assets due to acquisitions is included at Note 2, Acquisitions, Divestitures and Divestitures.Strategic Alliance.
Note 9:    Debt
Revolving Credit Facility and Commercial Paper Program
Our $750 million$2.0 billion unsecured 5-year revolving credit facility with various banks,(the “2018 credit facility”) and a $1.0 billion unsecured 364-Day credit facility (the “364-day credit facility”) are available for working capital, capital expenditures and other corporate purposes, including acquisitions and share repurchases.
The 2018 credit facility, of which $150 million may be used for issuances of letters of credit, is available for working capital, capital expenditures and other corporate purposes, including acquisitions and share repurchases. During the second quarter of fiscal 2015, we extended the duration of our credit facility, which is nowcurrently set to mature on January 21, 2020, and amended certain facility fees and borrowing rates. Starbucks hasOctober 25, 2022. We have the option, subject to negotiation and agreement with the related banks, to increase the maximum commitment amount by an additional $750 million.$500 million. Borrowings under the credit facility will bear interest at a variable rate based on LIBOR, and, for U.S. dollar-denominated loans under certain circumstances, a Base Rate (as defined in the credit facility), in each case plus an applicable margin. The applicable margin is based on the better of (i) the Company's long-term credit ratings assigned by Moody's and Standard & Poor's rating agencies and (ii) the Company's fixed charge coverage ratio, pursuant to a pricing grid set forth in the five-year credit facility.agreement. The current applicable margin is 0.565%0.680% for Eurocurrency Rate Loans and 0.00% (nil) for Base Rate Loans.
The 364-day credit facility, containsof which no amount may be used for issuances of letters of credit, matured on October 25, 2018. See Note 18, Subsequent Events, for information about the extension of the 364-day credit facility. We had the option, subject to negotiation and agreement with the related banks, to increase the maximum commitment amount by an additional $500 million. Borrowings under the credit facility bear interest at a variable rate based on LIBOR, and, for U.S. dollar-denominated loans under certain circumstances, a Base Rate (as defined in the credit facility), in each case plus an applicable margin. The applicable margin was 0.585% for Eurocurrency Rate Loans and 0.00% (nil) for Base Rate Loans.
Both credit facilities contain provisions requiring us to maintain compliance with certain covenants, including a minimum fixed charge coverage ratio, which measures our ability to cover financing expenses. As of September 27, 2015,30, 2018, we were in compliance with all applicable covenants. No amounts were outstanding under our credit facility as of September 27, 2015.30, 2018.
Under our commercial paper program, we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of $1$3.0 billion, with individual maturities that may vary but not exceed 397 days from the date of issue. Amounts outstanding under the commercial paper program are required to be backstopped by available commitments under our

credit facility discussed above. As of September 27, 2015, availability under our commercial paper program was approximately $750 million (which represents the full committed credit facility amount, as the amount of outstanding letters of credit was not material as of September 27, 2015). The proceeds from borrowings under our commercial paper program may be used for working capital needs, capital expenditures and other corporate purposes, including, share repurchases,but not limited to, business expansion, payment of cash dividends on our common stock or the financingand share repurchases. As of possible acquisitions. In the fourth quarter of fiscal 2015, we issued and subsequently repaid commercial paper borrowings of $93 million for general corporate purposes. We had no other borrowingsSeptember 30, 2018, availability under our commercial paper program during fiscal 2015 or fiscal 2014, and there werewas approximately $3.0 billion (which represents the full committed credit facility amount, as no amounts were outstanding as of September 27, 2015 or September 28, 2014.under our commercial paper program).
Long-term Debt
In July 2015,August 2018, we redeemed our $550 millionissued long-term debt in an underwritten registered public offering, which consisted of 6.250%$1.25 billion of 7-year 3.800% Senior Notes (the "2017 notes"“2025 notes”) originally scheduled to mature indue August 2017. The redemption resulted in a charge2025, $750 million of $61.1 million, which10-year 4.000% Senior Notes (the “2028 notes”) due November 2028 and $1 billion of 30-year 4.500% Senior Notes (the “2048 notes”) due November 2048. Interest on the 2025 notes is presented separately as losspayable semi-annually on extinguishment of debt within other incomeFebruary 15 and expensesAugust 15, commencing on our consolidated statements of earnings. This loss primarily relates toFebruary 15, 2019. Interest on the optional redemption payment as outlined in the 20172028 and 2048 notes indenture, as well as non-cash expenses related to the previously capitalized original issuance costsis payable semi-annually on May 15 and accelerated amortization of the unamortized discount. In connection with the redemption, we also reclassified $2.0 million from accumulated other comprehensive income to interest expenseNovember 15, commencing on our consolidated statements of earnings related to remaining unrecognized losses from interest rate contracts entered into in conjunction with the 2017 notes and designated as cash flow hedges.November 15, 2018.
In June 2015,February 2018, we issued additionallong-term debt in an underwritten registered public offering, which consisted of $1 billion of 5-year 3.100% Senior Notes (the “2023 notes”) due March 2023 and $600 million of 10-year 3.500% Senior Notes (the “2028 notes”) due March 2028. Interest on the 2023 and 2028 notes is payable semi-annually on March 1 and September 1, commencing on September 1, 2018.
In November 2017, we issued long-term debt in an underwritten registered public offering, which consisted of $500 million of 7-year 2.700%3-year 2.200% Senior Notes (the "2022 notes"“2020 notes”) due November 2020 and $500 million of 30-year 3.750% Senior Notes (the “2047 notes”) due December 2047. Interest on the 2020 notes is payable semi-annually on May 22 and November 22, commencing on May 22, 2018 and interest on the 2047 notes is payable semi-annually on June 1 and December 1, commencing on June 1, 2018.
In March 2017, we issued Japanese yen-denominated long-term debt in an underwritten registered public offering. The 7-year 0.372% Senior Notes (the “2024 notes”) due March 2024 were issued with a face value of ¥85 billion, all of which has been designated to hedge the foreign currency exposure of our net investment in Japan. Interest on the 2024 notes is payable semi-annually on March 15 and September 15 of each year, commencing on September 15, 2017.
In December 2016, we repaid the $400 million of 0.875% Senior Notes (the “2016 notes”) at maturity.
In May 2016, we issued long-term debt in an underwritten registered public offering, which consisted of $500 million of 10-year 2.450% Senior Notes (the “2026 notes”) due June 2022, and $350 million of 30-year 4.300% Senior Notes (the "2045 notes") due June 2045.2026. Interest on the 2022 and 20452026 notes is payable semi-annually on June 15 and December 15 of each year, commencing on December 15, 2015.2016.

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In December 2013,February 2016, we issued $400 million of 3-year 0.875% Senior Notes (the "2016 notes") due December 2016, and $350 million of 5-year 2.000% Senior Notes (the "2018 notes") due December 2018,long-term debt in an underwritten registered public offering.offering, which consisted of $500 million of 5-year 2.100% Senior Notes (the “2021 notes”) due February 2021. In May 2016, we reopened this offering with the same terms and issued an additional $250 million of Senior Notes (collectively, the “2021 notes”) for an aggregate amount outstanding of $750 million. Interest on the 2016 and 20182021 notes is payable semi-annually on June 5February 4 and December 5August 4 of each year.year, commencing on August 4, 2016.
In September 2013, we issued $750 million of 10-year 3.85% Senior Notes (the "2023 notes") due October 2023, in an underwritten registered public offering. Interest on the 2023 notes is payable semi-annually on April 1 and October 1 of each year.
Components of long-term debt including the associated interest rates and related fair values by calendar maturity (in millions, except interest rates):
Sep 27, 2015 Sep 28, 2014 Stated Interest Rate
Effective Interest Rate (1)
Sep 30, 2018 Oct 1, 2017 Stated Interest Rate
Effective Interest Rate (1)
IssuanceFace ValueEstimated Fair Value Face ValueEstimated Fair Value Face ValueEstimated Fair Value Face ValueEstimated Fair Value 
2016 notes$400.0
$400
 $400.0
$400
 0.875%0.941%
2017 notes—
—
 550.0
625
 6.250%—%
2018 notes350.0
354
 350.0
353
 2.000%2.012%$350.0
$350
 $350.0
$352
 2.000%2.012%
2020 notes (2)
500.0
490
 —
—
 2.200%2.228%
2021 notes500.0
489
 500.0
501
 2.100%2.293%
2021 notes250.0
244
 250.0
250
 2.100%1.600%
2022 notes500.0
503
 —
—
 2.700%2.819%500.0
486
 500.0
508
 2.700%2.819%
2023 notes750.0
790
 750.0
786
 3.850%2.860%
2023 notes (6)
750.0
759
 750.0
806
 3.850%2.859%
2023 notes (3)
1,000.0
986
 —
—
 3.100%3.107%
2024 notes (5)
748.4
743
 755.3
760
 0.372%0.462%
2025 notes (4)
1,250.0
1,249
 —
—
 3.800%3.721%
2026 notes500.0
451
 500.0
481
 2.450%2.511%
2028 notes (3)
600.0
576
 —
—
 3.500%3.529%
2028 notes (4)
750.0
754
 —
—
 4.000%3.958%
2045 notes350.0
355
 —
—
 4.300%4.348%350.0
330
 350.0
381
 4.300%4.348%
2047 notes (2)
500.0
438
 —
—
 3.750%3.765%
2048 notes (4)
1,000.0
977
 —
—
 4.500%4.504%
Total2,350.0
2,402
 2,050.0
2,164
  9,548.4
9,322
 3,955.3
4,039
  
Aggregate unamortized discount2.5
  1.7
   
Aggregate debt issuance costs and unamortized premium/(discount), net(69.3)  (17.5)   
Hedge accounting fair value adjustment(6)
(39.0)  (5.2)   
Total$2,347.5
  $2,048.3
   $9,440.1
  $3,932.6
   
(1)
Includes the effects of the amortization of any premium or discount and any gain or loss upon settlement of related treasury locks or forward-starting interest rate swaps utilized to hedge the interest rate risk prior to the debt issuance.
(2) Issued in November 2017.
(3) Issued in February 2018.
(4)
Issued in August 2018.
(5) Japanese yen-denominated long-term debt.
(6) Amount represents the change in fair value due to changes in benchmark interest rates related to our 2023 notes. Refer to Note 3, Derivative Financial Instruments, for additional information on our interest rate swap designated as a fair value hedge.
The indentures under which the above notes were issued also require us to maintain compliance with certain covenants, including limits on future liens and sale and leaseback transactions on certain material properties. As of September 27, 2015,October 1, 2018, we were in compliance with each of these covenants.

The following table summarizes our long-term debt maturities as of September 27, 201530, 2018 by fiscal year (in millions):
Fiscal YearTotalTotal
2016$—
2017400.0
2018—
2019350.0
$350.0
2020—
—
20211,250.0
2022500.0
20231,000.0
Thereafter1,600.0
6,448.4
Total$2,350.0
$9,548.4
Interest Expense
Interest expense, net of interest capitalized, was $70.5 million, $64.1 million, and $28.1 million in fiscal 2015, 2014 and 2013, respectively. In fiscal 2015, 2014, and 2013, $3.6 million, $6.2 million, and $10.4 million, respectively, of interest was capitalized for asset construction projects.
Note 10:    Leases
Rent expense under operating lease agreements (in millions):
Fiscal Year EndedSep 27, 2015 Sep 28, 2014 Sep 29, 2013Sep 30, 2018 Oct 1, 2017 Oct 2, 2016
Minimum rent$1,026.3
 $907.4
 $838.3
$1,424.5
 $1,185.7
 $1,092.5
Contingent rent111.5
 66.8
 56.4
200.7
 143.5
 130.7
Total$1,137.8
 $974.2
 $894.7
$1,625.2
 $1,329.2
 $1,223.2

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Minimum future rental payments under non-cancelable operating leases and lease financing arrangements as of September 27, 201530, 2018 (in millions):
Fiscal Year EndingOperating Leases Lease Financing ArrangementsOperating Leases Lease Financing Arrangements
2016$1,032.4
 $3.2
2017892.5
 3.2
2018739.8
 3.2
2019624.0
 3.2
$1,340.6
 $4.4
2020548.9
 3.2
1,273.2
 4.4
20211,190.2
 4.3
20221,087.3
 4.2
2023958.1
 4.1
Thereafter1,831.9
 31.1
3,504.4
 36.6
Total minimum lease payments$5,669.5
 $47.1
$9,353.8
 $58.0
We have subleases related to certain of our operating leases. During fiscal 2015, 2014,2018, 2017 and 2013,2016, we recognized sublease income of $11.9$12.3 million, $13.3$15.5 million,, and $9.3$14.6 million,, respectively. Additionally, as of September 27, 2015,30, 2018 and October 1, 2017, the gross carrying valuevalues of assets related to build-to-suit lease arrangements accounted for as financing leases was $66.8were $103.2 million and $94.3 million, respectively, with associated accumulated depreciation of $2.5 million. We had no built-to-suit$12.7 million and $9.0 million, respectively. Lease exit costs associated with our restructuring efforts, primarily relate to the closure of Teavana retail stores and certain Starbucks company-operated stores, are recognized concurrently with actual store closures. Total lease arrangements asexit costs are expected to be approximately $208.5 million of September 28, 2014.which $119.3 million and $15.7 million were recorded within restructuring and impairments on the consolidated statement of earnings in fiscal 2018 and 2017, respectively.
Note 11:    Equity
As discussed in Note 1, Summary of Significant Accounting Policies, on April 9, 2015, we effected a two-for-one stock split of our $0.001 par value common stock for shareholders of record as of March 30, 2015. All share data presented in this note has been retroactively adjusted to reflect this stock split.
In addition to 2.4 billion shares of authorized common stock with $0.001 par value per share, we have authorized 7.5 million shares of preferred stock, none of which was outstanding at September 27, 2015.30, 2018.
Included in additional paid-in capital in our consolidated statements of equity as of September 27, 2015 and September 28, 2014 is $39.4 million related to the increase in value of our share of the net assets of Starbucks Japan at the time of its initial public stock offering in fiscal 2002.    Also included in additional paid-in capital as of September 27, 2015 is $1.7 million, which represents the difference between the carrying value of the remaining outstanding noncontrolling interests in Starbucks Japan prior to obtaining full ownership and the cash paid to acquire the noncontrolling interests. Refer to Note 2, Acquisitions and Divestitures, for further discussion.
We repurchased 29.0131.5 million shares of common stock at a total cost of $1.4$7.2 billion, and 21.037.5 million shares at a total cost of $769.8$2.1 billion, and 34.9 million shares of common stock at a total cost of $2.0 billion for the years ended September 27, 201530, 2018, October 1, 2017, and October 2, 2016, respectively. As of September 28, 2014, respectively.30, 2018, 48.8 million shares remained available for repurchase. On July 23, 2015,November 1, 2018, we announced that our Board of Directors approved an increase of 50120 million shares to our ongoing share repurchase program. As of September 27, 2015, 52.7 million shares remained available for repurchase under current authorizations.
During fiscal years 2015 and 2014, our Board of Directors declared the following dividends (in millions, except per share amounts):
 Dividend Per Share Record date Total Amount Payment Date
Fiscal Year 2015       
First quarter$0.16 February 5, 2015 $240.1 February 20, 2015
Second quarter$0.16 May 7, 2015 $240.1 May 22, 2015
Third quarter$0.16 August 6, 2015 $239.0 August 21, 2015
Fourth quarter$0.20 November 12, 2015 $297.0 November 27, 2015
Fiscal Year 2014:       
First quarter$0.13 February 6, 2014 $196.4 February 21, 2014
Second quarter$0.13 May 8, 2014 $195.5 May 23, 2014
Third quarter$0.13 August 7, 2014 $195.3 August 22, 2014
Fourth quarter$0.16 November 13, 2014 $239.8 November 28, 2014
Comprehensive Income
Comprehensive income includes all changes in equity during the period, except those resulting from transactions with our shareholders. Comprehensive income is comprised of net earnings and other comprehensive income. Accumulated other

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comprehensive income reported on our consolidated balance sheets consists of foreign currency translation adjustments and

other items and the unrealized gains and losses, net of applicable taxes, on available-for-sale securities and on derivative instruments designated and qualifying as cash flow and net investment hedges.
Changes in accumulated other comprehensive income ("AOCI")AOCI by component for yearthe years ended September 27, 2015,30, 2018, October 1, 2017, and October 2, 2016, net of tax:tax, are as follows:
(in millions) Available-for-Sale Securities  Cash Flow Hedges  Net Investment Hedges Translation Adjustment and Other Total
September 30, 2018         
Net gains/(losses) in AOCI, beginning of period$(2.5) $(4.1) $14.0
 $(163.0) $(155.6)
Net gains/(losses) recognized in OCI before reclassifications(5.1) 17.9
 5.6
 (216.6) (198.2)
Net (gains)/losses reclassified from AOCI to earnings2.7
 3.9
 —
 16.9
 23.5
Other comprehensive income/(loss) attributable to Starbucks(2.4) 21.8
 5.6
 (199.7) (174.7)
Net gains/(losses) in AOCI, end of period$(4.9) $17.7
 $19.6
 $(362.7) $(330.3)
(in millions) Available-for-Sale Securities  Cash Flow Hedges  Net Investment Hedges Translation Adjustment and Other Total
October 1, 2017         
Net gains/(losses) in AOCI, beginning of period$1.1
 $10.9
 $1.3
 $(121.7) $(108.4)
Net gains/(losses) recognized in OCI before reclassifications(6.6) 40.6
 12.7
 (40.7) 6.0
Net (gains)/losses reclassified from AOCI to earnings3.0
 (55.6) —
 (0.6) (53.2)
Other comprehensive income/(loss) attributable to Starbucks(3.6) (15.0) 12.7
 (41.3)
(47.2)
Net gains/(losses) in AOCI, end of period$(2.5) $(4.1) $14.0
 $(163.0) $(155.6)
(in millions) Available-for-Sale Securities  Cash Flow Hedges  Net Investment Hedges Translation Adjustment and Other Total
October 2, 2016         
Net gains/(losses) in AOCI, beginning of period$(0.1) $25.6
 $1.3
 $(226.2) $(199.4)
Net gains/(losses) recognized in OCI before reclassifications2.2
 (82.1) —
 104.5
 24.6
Net (gains)/losses reclassified from AOCI to earnings(1.0) 67.4
 —
 —
 66.4
Other comprehensive income/(loss) attributable to Starbucks1.2
 (14.7) —
 104.5
 91.0
Net gains/(losses) in AOCI, end of period$1.1
 $10.9
 $1.3
 $(121.7) $(108.4)
(in millions) Available-for-Sale Securities  Cash Flow Hedges  Net Investment Hedges Translation Adjustment Total
September 27, 2015         
Net gains/(losses) in AOCI, beginning of period$(0.4) $46.3
 $3.2
 $(23.8) $25.3
Net gains/(losses) recognized in OCI before reclassifications0.9
 30.8
 2.7
 (185.6) (151.2)
Net (gains)/losses reclassified from AOCI to earnings(0.6) (51.5) (4.6) 14.3
 (42.4)
Other comprehensive income/(loss) attributable to Starbucks0.3
 (20.7) (1.9) (171.3) (193.6)
Purchase of noncontrolling interest—
 —
 —
 (31.1) (31.1)
Net gains/(losses) in AOCI, end of period$(0.1) $25.6
 $1.3
 $(226.2) $(199.4)
(in millions) Available-for-Sale Securities  Cash Flow Hedges  Net Investment Hedges Translation Adjustment Total
September 28, 2014         
Net gains/(losses) in AOCI, beginning of period$(0.5) $26.8
 $(12.9) $53.6
 $67.0
Net gains/(losses) recognized in OCI before reclassifications1.0
 16.3
 16.1
 (77.4) (44.0)
Net (gains)/losses reclassified from AOCI to earnings(0.9) 3.2
 —
 —
 2.3
Other comprehensive income/(loss) attributable to Starbucks0.1
 19.5
 16.1
 (77.4)
(41.7)
Net gains/(losses) in AOCI, end of period$(0.4) $46.3
 $3.2
 $(23.8) $25.3

Impact of reclassifications from AOCI on the consolidated statements of earnings (in millions):
AOCI
Components
 Amounts Reclassified from AOCI 
Affected Line Item in
the Statements of Earnings
 Amounts Reclassified from AOCI 
Affected Line Item in
the Statements of Earnings
Fiscal Year Ended  Fiscal Year Ended 
Sep 27, 2015 Sep 28, 2014  Sep 30, 2018 Oct 1, 2017 Oct 2, 2016 
Gains/(losses) on available-for-sale securities $(3.6) $(4.1) $1.6
 Interest income and other, net
Gains/(losses) on cash flow hedges            
Interest rate hedges $3.2
 $5.0
 Interest expense 4.9
 4.8
 5.0
 Interest expense
Cross-currency swaps 46.2
 —
 Interest income and other, net 2.2
 57.2
 (101.1) Interest income and other, net
Foreign currency hedges 14.0
 5.1
 Revenue (0.4) 3.0
 4.9
 Revenues
Foreign currency/coffee hedges 8.6
 (10.0) Cost of sales including occupancy costs (10.6) 5.7
 11.4
 Cost of sales including occupancy costs
Gains/(losses) on net investment hedges(1)
 7.2
 —
 Gain resulting from acquisition of joint venture
Translation adjustment(2)(1)
            
Starbucks Japan (7.2) —
 Gain resulting from acquisition of joint venture
Brazil (24.1) —
 —
 Net gain resulting from divestiture of certain operations
East China joint venture 7.2
 —
 —
 Gain resulting from acquisition of joint venture
Taiwan joint venture 1.4
 —
 —
 Net gain resulting from divestiture of certain operations
Other (7.1) —
 Interest income and other, net (1.7) 0.6
 —
 Interest income and other, net
 64.9
 0.1
 Total before tax (24.7) 67.2
 (78.2) Total before tax
 (23.1) (3.3) Tax (expense)/benefit 1.2
 (14.0) 11.8
 Tax (expense)/benefit
 $41.8
 $(3.2) Net of tax $(23.5) $53.2
 $(66.4) Net of tax
(1)
Release of pretax cumulative net gains in AOCI related to our net investment derivative instruments used to hedge our preexisting 39.5% equity method investment in Starbucks Japan.
(2)  
Release of cumulative translation adjustments to earnings upon sale or liquidation of foreign business.businesses.

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Note 12:    Employee Stock and Benefit Plans
We maintain several equity incentive plans under which we may grant non-qualified stock options, incentive stock options, restricted stock, restricted stock units ("RSUs"(“RSUs”), or stock appreciation rights to employees, non-employee directors and consultants. We issue new shares of common stock upon exercise of stock options and the vesting of RSUs. We also have an employee stock purchase plan ("ESPP"(“ESPP”).
As discussed in Note 1, Summary of Significant Accounting Policies, on April 9, 2015, we effected a two-for-one stock split of our $0.001 par value common stock for shareholders of record as of March 30, 2015. All share and per-share data presented in this note has been retroactively adjusted to reflect this stock split.
As of September 27, 2015,30, 2018, there were 96.356.9 million shares of common stock available for issuance pursuant to future equity-based compensation awards and 14.312.7 million shares available for issuance under our ESPP.
Stock-based compensation expense recognized in the consolidated financial statements (in millions):
Fiscal Year EndedSep 27, 2015 Sep 28, 2014 Sep 29, 2013Sep 30, 2018 Oct 1, 2017 Oct 2, 2016
Options$37.8
 $41.8
 $37.1
$28.0
 $44.3
 $42.7
RSUs172.0
 141.4
 105.2
222.3
 131.7
 175.4
Total stock-based compensation expense recognized in the consolidated statements of earnings$209.8
 $183.2
 $142.3
$250.3
 $176.0
 $218.1
Total related tax benefit$72.3
 $63.4
 $49.8
$62.4
 $57.6
 $73.0
Total capitalized stock-based compensation included in net property, plant and equipment and inventories on the consolidated balance sheets$1.9
 $1.9
 $1.8
$3.5
 $1.9
 $1.5
Stock Option Plans
Stock options to purchase our common stock are granted at the fair value of the stock on the grant date. The majority of options become exercisable in four equal installments beginning a year from the grant date and generally expire 10 years from the grant date. Options granted to non-employee directors generally vest over one to three years. Nearly allAll outstanding stock options are non-qualified stock options.

The fair value of stock option awards was estimated at the grant date with the following weighted average assumptions for fiscal years 2015, 2014,2018, 2017 and 2016:2013:
Employee Stock Options
Granted During the Period		Employee Stock Options
Granted During the Period
Fiscal Year Ended2015 2014 20132018 2017 2016
Expected term (in years)4.2
 4.5
 4.8
3.6
 3.9
 3.9
Expected stock price volatility22.3% 26.8% 34.0%20.5% 21.6% 23.9%
Risk-free interest rate1.1% 1.1% 0.7%2.1% 1.5% 1.2%
Expected dividend yield1.6% 1.3% 1.6%2.2% 1.8% 1.3%
Weighted average grant price$39.89
 $40.12
 $25.62
$56.56
 $56.12
 $60.20
Estimated fair value per option granted$6.58
 $8.36
 $6.44
$7.32
 $8.56
 $10.54
The expected term of the options represents the estimated period of time until exercise and is based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. Expected stock price volatility is based on a combination of historical volatility of our stock and the one-year implied volatility of Starbucks traded options, for the related vesting periods. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term. The dividend yield assumption is based on our anticipated cash dividend payouts. The amounts shown above for the estimated fair value per option granted are before the estimated effect of forfeitures, which reduce the amount of expense recorded in the consolidated statements of earnings.

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Stock option transactions for the year ended September 27, 201530, 2018 (in millions, except per share and contractual life amounts):
 Shares
Subject to
Options		 Weighted
Average
Exercise
Price
per Share		 Weighted
Average
Remaining
Contractual
Life (Years)		 Aggregate
Intrinsic
Value
Outstanding, September 28, 201439.6
 $18.93
 5.8 $754
Granted6.4
 39.89
    
Exercised(11.3) 14.99
    
Expired/forfeited(1.1) 32.38
    
Outstanding, September 27, 201533.6
 23.81
 6.0 1,150
Exercisable, September 27, 201521.1
 16.75
 4.7 872
Vested and expected to vest, September 27, 201532.4
 23.29
 5.9 1,125
 Shares
Subject to
Options		 Weighted
Average
Exercise
Price
per Share		 Weighted
Average
Remaining
Contractual
Life (Years)		 Aggregate
Intrinsic
Value
Outstanding, October 1, 201731.4
 $36.51
 5.8 $589
Granted3.9
 56.56
    
Exercised(6.3) 19.46
    
Expired/forfeited(1.7) 55.24
    
Outstanding, September 30, 201827.3
 42.13
 5.2 418
Exercisable, September 30, 201819.8
 36.95
 4.1 405
Vested and expected to vest, September 30, 201826.3
 41.59
 5.1 417
The aggregate intrinsic value in the table above, which is the amount by which the market value of the underlying stock exceeded the exercise price of outstanding options, is before applicable income taxes and represents the amount optionees would have realized if all in-the-money options had been exercised on the last business day of the period indicated.
As of September 27, 2015,30, 2018, total unrecognized stock-based compensation expense, net of estimated forfeitures, related to nonvested options was approximately $32$19 million, before income taxes, and is expected to be recognized over a weighted average period of approximately 2.62.4 years. The total intrinsic value of options exercised was $358$236 million, $258$181 million, and $539$254 million during fiscal years 2015, 2014,2018, 2017 and 2013,2016, respectively. The total fair value of options vested was $36$53 million, $44$40 million,, and $56$37 million during fiscal years 2015, 2014,2018, 2017 and 2013,2016, respectively.
RSUs
We have both time-vested and performance-based RSUs. Time-vested RSUs are awarded to eligible employees and non-employee directors and entitle the grantee to receive shares of common stock at the end of a vesting period, subject solely to the employee’s continuing employment or the non-employee director's continuing service. The majority of time-vested RSUs vest in two equal annual installments beginning a year from the grant date. Our performance-based RSUs are awarded to eligible employees and entitle the grantee to receive shares of common stock if we achieve specified performance goals during the performance period and the grantee remains employed during the subsequent vesting period. The majority of performance-based RSUs vest in two equal annual installments beginning two years from the grant date.

RSU transactions for the year ended September 27, 201530, 2018 (in millions, except per share and contractual life amounts):
Number
of
Shares		 Weighted
Average
Grant Date
Fair Value
per Share		 Weighted
Average
Remaining
Contractual
Life (Years)		 Aggregate
Intrinsic
Value		Number
of
Shares		 Weighted
Average
Grant Date
Fair Value
per Share		 Weighted
Average
Remaining
Contractual
Life (Years)		 Aggregate
Intrinsic
Value
Nonvested, September 28, 201410.8
 $31.17
 1.0 $407
Nonvested, October 1, 20177.6
 $52.06
 0.9 $410
Granted6.7
 38.56
  9.5
 56.48
  
Vested(5.1) 26.73
  (3.3) 50.18
  
Forfeited/canceled(1.7) 36.10
  (2.6) 54.87
  
Nonvested, September 27, 201510.7
 36.35
 1.0 620
Nonvested, September 30, 201811.2
 55.62
 1.0 636
For fiscal 20142017 and 2013,2016, the weighted average fair value per RSU granted was $40.07$54.30 and $25.12,$58.81, respectively. As of September 30, 2018, total unrecognizSeptember 27, 2015, total unrecognizeded stock-based compensation expense related to nonvested RSUs, net of estimated forfeitures, was approximately $126 $192 million, before income taxes, and is expected to be recognized over a weighted average period of approximately 2.31.9 years. The total fair value of RSUs vested was $137$166 million, $103$182 million and $104$169 million during fiscal years 2015, 2014,2018, 2017 and 2013,2016, respectively.
ESPP
Our ESPP allows eligible employees to contribute up to 10% of their base earnings toward the quarterly purchase of our common stock, subject to an annual maximum dollar amount. The purchase price is 95% of the fair market value of the stock on the last business day of the quarterly offering period. The number of shares issued under our ESPP was 0.50.6 million in fiscal 2015.2018.


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Deferred Compensation Plan
We have a Deferred Compensation Plan for Non-Employee Directors under which non-employee directors may, for any fiscal year, irrevocably elect to defer receipt of shares of common stock the director would have received upon vesting of restricted stock units. The number of deferred shares outstanding related to deferrals made under this plan is not material.
Defined Contribution Plans
We maintain voluntary defined contribution plans, both qualified and non-qualified, covering eligible employees as defined in the plan documents. Participating employees may elect to defer and contribute a portion of their eligible compensation to the plans up to limits stated in the plan documents, not to exceed the dollar amounts set by applicable laws.
Our matching contributions to all U.S. and non-U.S. plans were $70.9$111.7 million, $73.0$101.4 million, and $54.7$86.2 million in fiscal years 2015, 2014,2018, 2017 and 2013,2016, respectively.
Note 13:    Income Taxes
On December 22, 2017, the President of the United States signed and enacted comprehensive tax legislation into law H.R. 1, commonly referred to as the Tax Act. Except for certain provisions, the Tax Act is effective for tax years beginning on or after January 1, 2018. As a fiscal year U.S. taxpayer, the majority of the provisions will apply to our fiscal 2019, such as eliminating the domestic manufacturing deduction, creating new taxes on certain foreign sourced income and introducing new limitations on certain business deductions. For fiscal 2018 and effective in the first fiscal quarter, the most significant impacts included: lowering of the U.S. federal corporate income tax rate; remeasuring certain net deferred tax liabilities; and requiring the transition tax on the deemed repatriation of certain foreign earnings. The phase in of the lower corporate income tax rate resulted in a blended rate of 24.5% for fiscal 2018, as compared to the previous 35%. The tax rate will be reduced to 21% in subsequent fiscal years. We recorded net income tax benefit for the provisional remeasurement of certain deferred taxes and related amounts of $71 million for the year ended September 30, 2018. Additionally, we recorded a provisional $231 million of income tax expense for the estimated effects of the transition tax, net of adjustments related to uncertain tax positions for the year ended September 30, 2018. Of the total provisional transition tax obligation recorded to date, $237 million of income taxes payable was included in other long-term liabilities on the consolidated balance sheet as of September 30, 2018.
Based on our current interpretation of the Tax Act, we made reasonable estimates to record provisional adjustments during fiscal 2018, as described above. Collectively, these items did not have a material impact to our consolidated financial statements. Since we are still accumulating and processing data to finalize the underlying calculations and expect regulators to issue further guidance, among other things, we believe our estimates may change. We continue to refine such amounts within the measurement period allowed, which will be completed no later than the first quarter of fiscal 2019.

Components of earnings/(loss)earnings before income taxes (in millions):
Fiscal Year EndedSep 27, 2015 Sep 28, 2014 Sep 29, 2013Sep 30, 2018 Oct 1, 2017 Oct 2, 2016
 TotalLitigation chargeAll Other
United States$2,837.2
 $2,572.4
 $(674.0)$(2,784.1)$2,110.1
$4,826.0
 $3,393.0
 $3,415.7
Foreign1,065.8
 587.3
 444.1
—
444.1
954.0
 924.5
 782.9
Total earnings/(loss) before income taxes$3,903.0
 $3,159.7
 $(229.9)$(2,784.1)$2,554.2
Total earnings before income taxes$5,780.0
 $4,317.5
 $4,198.6
Provision/(benefit) for income taxes (in millions):
Fiscal Year EndedSep 27, 2015 Sep 28, 2014 Sep 29, 2013Sep 30, 2018 Oct 1, 2017 Oct 2, 2016
 TotalLitigation chargeAll Other
Current taxes:          
U.S. federal$801.0
 $822.7
 $616.6
$—
$616.6
$156.2
 $931.0
 $704.1
U.S. state and local150.1
 132.9
 93.8
—
93.8
52.0
 170.8
 166.5
Foreign172.2
 128.8
 95.9
—
95.9
327.0
 216.6
 218.5
Total current taxes1,123.3
 1,084.4
 806.3
—
806.3
535.2
 1,318.4
 1,089.1
Deferred taxes:          
U.S. federal56.5
 12.0
 (898.8)(922.3)23.5
633.7
 121.2
 351.3
U.S. state and local4.0
 (4.9) (144.0)(148.7)4.7
101.5
 14.2
 25.8
Foreign(40.1) 0.5
 (2.2)—
(2.2)(8.4) (21.2) (86.5)
Total deferred taxes20.4
 7.6
 (1,045.0)(1,071.0)26.0
726.8
 114.2
 290.6
Total income tax expense/(benefit)$1,143.7
 $1,092.0
 $(238.7)$(1,071.0)$832.3
Total income tax expense$1,262.0
 $1,432.6
 $1,379.7

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Reconciliation of the statutory U.S. federal income tax rate with our effective income tax rate:
Fiscal Year EndedSep 27, 2015 Sep 28, 2014 Sep 29, 2013Sep 30, 2018 Oct 1, 2017 Oct 2, 2016
 TotalLitigation chargeAll Other
Statutory rate35.0 % 35.0 % 35.0%35.0%35.0 %24.5 % 35.0 % 35.0 %
State income taxes, net of federal tax benefit2.8
 2.6
 15.8
3.5
2.4
2.1
 2.8
 3.0
Benefits and taxes related to foreign operations(2.1) (1.9) 37.5
—
(3.4)(0.1) (2.8) (2.2)
Domestic production activity deduction(2.2) (0.7) 8.1
—
(0.7)—
 (1.8) (1.9)
Domestic tax credits(0.2) (0.2) 2.8
—
(0.3)
Charitable contributions(0.3) (0.4) 3.9
—
(0.3)
Gain resulting from acquisition of joint venture(3.7) —
 —
—
—
(5.8) —
 —
Impact of the Tax Act2.8
 —
 —
Other, net—
 0.2
 0.7
—
(0.1)(1.7) —
 (1.0)
Effective tax rate29.3 % 34.6 % 103.8%38.5%32.6 %21.8 % 33.2 % 32.9 %
Our effective tax rate in fiscal 2013 was significantly affected byThe Company continues to evaluate its plans for reinvestment or repatriation of unremitted foreign earnings and thus has not adjusted its previous indefinite reinvestment assertions for the litigation charge we recorded as a resulteffects of the conclusionTax Act. In the event we determine that all or a portion of our arbitration with Kraft. In order to provide a more meaningful analysis of tax expense and the effective tax rate, the tables above present separate reconciliations of the effect of the litigation charge. The deferred tax asset related to the litigation charge is estimated to be recovered over a period of 15 years; the deferred tax asset has been classified between current and non-current consistent with the expected recovery period for income tax reporting purposes.
U.S. income andsuch unremitted foreign withholding taxes have not been provided on approximately $2.8 billion of cumulative undistributed earnings of foreign subsidiaries and equity investees. We intend to reinvest these earnings for the foreseeable future. If these amounts were distributed to the U.S., in the form of dividends or otherwise,are no longer indefinitely reinvested, we wouldmay be subject to additional U.S. federal and state income taxes and foreign withholding taxes, beyond the Tax Act's one-time transition tax, which could be material. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable because of the complexities with its hypothetical calculation, and the amount of liability, if any, is dependent on circumstances existing if and when remittance occurs.

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Tax effect of temporary differences and carryforwards that comprise significant portions of deferred tax assets and liabilities (in millions):
Sep 27, 2015 Sep 28, 2014Sep 30, 2018 Oct 1, 2017
Deferred tax assets:      
Property, plant and equipment$121.4
 $78.5
$67.4
 $71.3
Accrued occupancy costs98.4
 58.8
109.0
 118.0
Accrued compensation and related costs81.7
 75.3
64.2
 95.0
Other accrued liabilities49.0
 27.6
Asset retirement obligation asset29.0
 18.6
Stored value card liability99.1
 63.4
Asset impairments26.2
 49.5
Tax credits20.8
 20.3
Stored value card liability and deferred revenue144.2
 130.7
Stock-based compensation135.5
 131.5
96.7
 125.9
Net operating losses93.4
 104.4
79.2
 80.8
Litigation charge931.0
 1,002.0
Litigation charge (1)
—
 792.0
Other104.5
 77.0
129.5
 180.8
Total$1,790.0
 $1,706.9
$690.2
 $1,594.5
Valuation allowance(143.7) (166.8)(129.3) (80.1)
Total deferred tax asset, net of valuation allowance$1,646.3
 $1,540.1
$560.9
 $1,514.4
Deferred tax liabilities:      
Property, plant and equipment(217.5) (148.2)(348.1) (477.2)
Intangible assets and goodwill(177.3) (92.9)(274.2) (159.0)
Other(114.1) (89.4)(74.1) (89.1)
Total(508.9) (330.5)(696.4) (725.3)
Net deferred tax asset$1,137.4
 $1,209.6
Net deferred tax asset (liability)$(135.5) $789.1
Reported as:      
Current deferred income tax assets$381.7
 $317.4
Long-term deferred income tax assets828.9
 903.3
Current deferred income tax liabilities (included in Accrued liabilities)(5.4) (4.2)
Long-term deferred income tax liabilities (included in Other long-term liabilities)(67.8) (6.9)
Net deferred tax asset$1,137.4
 $1,209.6
Deferred income tax assets134.7
 795.4
Deferred income tax liabilities (included in Other long-term liabilities)(270.2) (6.3)
Net deferred tax asset (liability)$(135.5) $789.1
(1) The tax deduction for litigation charges was accelerated during fiscal 2018.
The valuation allowance as of September 27, 201530, 2018 and September 28, 2014October 1, 2017 is primarily related to net operating losses and other deferred tax assets of consolidated foreign subsidiaries. The net change in the total valuation allowance was a decrease of $23.1 million and an increase of $6.3 million for fiscal 2015 and 2014, respectively.
As of September 27, 2015,30, 2018, we had state net operating loss carryforwards of $32.0 million which will begin to expire in fiscal 2024, state tax credit carryforwards of $32.0$9.7 million, with an expiration date of which $9.3 million will begin to expire in fiscal 2024 and the remainder will begin to expire in fiscal 2019, and foreign net operating loss carryforwards of $309.5$290.7 million, the majority of which has no expiration date.$180.8 million have an indefinite carryforward period and the remainder expire at various dates starting from fiscal 2019.
Uncertain Tax Positions
As of September 27, 2015,30, 2018, we had $150.4$224.6 million of gross unrecognized tax benefits of which $101.7$157.3 million, if recognized, would affect our effective tax rate. We recognized a benefit of $0.5 million, an expense of $0.7 million, expense of $5.9$5.2 million and a benefit of $0.8$3.6 million of interest and penalties in income tax expense, prior to the benefit of the federal tax deduction, for fiscal 2015, 20142018, 2017 and 2013,2016, respectively. As of September 27, 201530, 2018 and September 28, 2014,October 1, 2017, we had accrued interest and penalties of $11.3$12.8 million and $10.6$11.2 million,, respectively, before the benefit of the federal tax deduction, included within other long-term liabilities on our consolidated balance sheets.

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The following table summarizes the activity related to our unrecognized tax benefits (in millions):
Sep 27, 2015 Sep 28, 2014 Sep 29, 2013Sep 30, 2018 Oct 1, 2017 Oct 2, 2016
Beginning balance$112.7
 $88.8
 $75.3
$196.9
 $146.5
 $150.4
Increase related to prior year tax positions7.9
 1.4
 8.9
17.5
 10.4
 —
Decrease related to prior year tax positions(0.9) (2.2) (9.3)(41.8) —
 (23.6)
Increase related to current year tax positions32.0
 26.7
 19.3
62.4
 41.3
 33.7
Decrease related to current year tax positions(0.6) (1.9) (0.4)
Decreases related to settlements with taxing authorities(0.7) (0.1) —
(4.5) —
 (3.1)
Decreases related to lapsing of statute of limitations—
 —
 (5.0)
Decrease related to lapsing of statute of limitations(5.9) (1.3) (10.9)
Ending balance$150.4
 $112.7
 $88.8
$224.6
 $196.9
 $146.5
We are currently under examination, or may be subject to examination, by various jurisdictions insideU.S. federal, state, local and outside the U.S. as well as U.S. state and municipal taxingforeign tax jurisdictions for fiscal years 2006 through 2014.2017. We are no longer subject to U.S. federal or state examination for years prior to fiscal year 2010,2011, with the exception of one state and one city.state. We are no longer subject to examination in any material international markets prior to 2006.
ThereIt is reasonably possible that a reasonable possibility that $31.2 millionportion of the currently remainingCompany's gross unrecognized tax benefits may be recognized by the end of fiscal 20162019 for reasons such as a result of a lapse of the statute of limitations and expected consent from taxingor resolution of examinations with tax authorities. We estimate this range to be approximately $79 million to $117 million.
Note 14:    Earnings per Share
As discussed in Note 1, Summary of Significant Accounting Policies, on April 9, 2015, we effected a two-for-one stock split of our $0.001 par value common stock for shareholders of record as of March 30, 2015. All share and per-share data presented in this note has been retroactively adjusted to reflect this stock split.
Calculation of net earnings per common share ("EPS"(“EPS”) — basic and diluted (in millions, except EPS):
Fiscal Year EndedSep 27, 2015 Sep 28, 2014 Sep 29, 2013Sep 30, 2018 Oct 1, 2017 Oct 2, 2016
Net earnings attributable to Starbucks$2,757.4
 $2,068.1
 $8.3
$4,518.3
 $2,884.7
 $2,817.7
Weighted average common shares outstanding (for basic calculation)1,495.9
 1,506.3
 1,498.5
1,382.7
 1,449.5
 1,471.6
Dilutive effect of outstanding common stock options and RSUs17.5
 20.0
 26.0
11.9
 12.0
 15.1
Weighted average common and common equivalent shares outstanding (for diluted calculation)1,513.4
 1,526.3
 1,524.5
1,394.6
 1,461.5
 1,486.7
EPS — basic$1.84
 $1.37
 $0.01
$3.27
 $1.99
 $1.91
EPS — diluted$1.82
 $1.35
 $0.01
$3.24
 $1.97
 $1.90
Potential dilutive shares consist of the incremental common shares issuable upon the exercise of outstanding stock options (both vested and non-vested) and unvested RSUs, calculated using the treasury stock method. The calculation of dilutive shares outstanding excludes out-of-the-money stock options (i.e., such options’ exercise prices were greater than the average market price of our common shares for the period) because their inclusion would have been antidilutive. We had no out-of-the-money stock options as of September 27, 201514.1 million, 11.4 million, and September 29, 2013, respectively. There were 5.35.4 million out-of-the-money stock options as of September 28, 2014.30, 2018, October 1, 2017, and October 2, 2016, respectively.
Note 15:    Commitments and Contingencies
Return of Capital
In September 2018, we entered into accelerated share repurchase agreements (“ASR agreements”) with third-party financial institutions totaling $5.0 billion, effective October 1, 2018. We made a $5.0 billion upfront payment on October 2, 2018 to the financial institutions and received an initial delivery of shares, which approximates 80 percent of the total number of shares to be repurchased under the ASR agreements. Upon completion, the total shares repurchased will be based on the volume-weighted average share price during the term of the ASR agreements less an applicable discount. The financial institutions may be required to deliver additional shares or, under certain circumstances, we may be required to deliver shares or elect to make a cash payment to the financial institutions. Final settlement is expected to be completed as early as February 2019 and no later than March 2019. Refer to Note 18, Subsequent Events, for additional information about our ASR agreements.
Legal Proceedings
On November 12, 2013,April 13, 2010, an organization named Council for Education and Research on Toxics (“Plaintiff”) filed a lawsuit in the arbitratorSuperior Court of the State of California, County of Los Angeles, against the Company and certain other defendants who manufacture, package, distribute or sell brewed coffee. The lawsuit is Council for Education and Research on Toxics v. Starbucks Corporation, et al.. On May 9, 2011, the Plaintiff filed an additional lawsuit in our arbitration with Kraft Foods Global, Inc. (nowthe Superior Court of the State of California, County of Los Angeles, against the Company and additional defendants who manufacture, package, distribute or

sell packaged coffee. The lawsuit is Council for Education and Research on Toxics v. Brad Barry LLC, et al.. Both cases have since been consolidated and now include nearly eighty defendants, which constitute the great majority of the coffee industry in California. Plaintiff alleges that the Company and the other defendants failed to provide warnings for their coffee products of exposure to the chemical acrylamide as required under California Health and Safety Code section 25249.5, the California Safe Drinking Water and Toxic Enforcement Act of 1986, better known as Kraft Foods Group, Inc.) ("Kraft") ordered StarbucksProposition 65. Plaintiff seeks equitable relief, including providing warnings to pay Kraft $2,227.5 millionconsumers of coffee products, as well as civil penalties in the amount of the statutory maximum of two thousand five hundred dollars per day per violation of Proposition 65. The Plaintiff asserts that every consumed cup of coffee, absent a compliant warning, is equivalent to a violation under Proposition 65.
The Company, as part of a joint defense group organized to defend against the lawsuit, disputes the claims of the Plaintiff. Acrylamide is not added to coffee, but is present in all coffee in small amounts (parts per billion) as a byproduct of the coffee bean roasting process. The Company has asserted multiple affirmative defenses. Trial of the first phase of the case commenced on September 8, 2014, and was limited to three affirmative defenses shared by all defendants. On September 1, 2015, the trial court issued a final ruling adverse to defendants on all Phase 1 defenses. Trial of the second phase of the case commenced in the fall of 2017. On May 7, 2018, the trial court issued a ruling adverse to defendants on the Phase 2 defense, the Company's last remaining defense to liability. On June 22, 2018 the California Office of Environmental Health Hazard Assessment (OEHHA) proposed a new regulation clarifying that cancer warnings are not required for coffee under Proposition 65. Defendants anticipate that the proposed regulation will be final by January 2019. The case was set to proceed to a third phase trial on damages, plus prejudgment interest and attorneys' fees. We estimated prejudgment interest, which included an accrual through the estimated payment date,remedies and attorneys' fees to be approximately $556.6 million. Ason October 15, 2018. However, on October 12, 2018, the California Court of Appeal granted the defendants request for a result, westay of the Phase 3 trial.
At this stage of the proceedings, Starbucks believes that the likelihood that the Company will ultimately incur a loss in connection with this litigation is reasonably possible rather than probable. Accordingly, no loss contingency was recorded a litigation charge of $2,784.1 million in our fiscal 2013 operating results.
In the first quarter of fiscal 2014, Starbucks paid all amounts due to Kraft under the arbitration, including prejudgment interest and attorneys' fees, and fully extinguished the litigation charge liability. Of the $2,784.1 million litigation charge accrued in the

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fourth quarter of fiscal 2013, $2,763.9 million was paidfor this matter. The outcome and the remainder was released as a litigation creditfinancial impact of the case to reflect a reduction to our estimated prejudgment interest payable as a result of paying our obligation earlier than anticipated.Starbucks, if any, cannot be predicted.
Starbucks is party to various other legal proceedings arising in the ordinary course of business, including at times, certain employment litigation cases that have been certified as class or collective actions, but, except as noted above, is not currently a party to any legal proceeding that management believes could have a material adverse effect on our consolidated financial position, results of operations or cash flows.
Note 16:    Segment Reporting
Our chief executive officer and chief operating officer comprise the Company's Chief Operating Decision Maker function ("CODM"). Segment information is prepared on the same basis that our CODMceo, who is our Chief Operating Decision Maker, manages the segments, evaluates financial results, and makes key operating decisions.
On August 26, 2018, our Channel Development segment finalized licensing and distribution agreements with Nestlé to sell and market our consumer packaged goods and foodservice products. The scope of the arrangement converts the majority of our previously defined Channel Development segment operations, as well as certain smaller businesses previously reported in the Americas, EMEA and Corporate and Other (previously All Other Segments), from company-owned to licensed operations with Nestlé. As a result, we realigned our organizational and operating segment structures in support of this newly established Global Coffee Alliance, and our reportable segments were restated as if those smaller businesses were previously within our Channel Development segment.
We have four reportable operating segments: 1) Americas, which is inclusive of the U.S., Canada, and Latin America; 2) China/Asia Pacific ("CAP"(“CAP”); 3) Europe, Middle East, and Africa ("EMEA"(“EMEA”) and 4) Channel Development.
Americas, CAP, and EMEA operations sell coffee and other beverages, complementary food, packaged coffees, single-serve coffee products and a focused selection of merchandise through company-operated stores and licensed stores. Our Americas segment is our most mature business and has achieved significant scale. Certain markets within our CAP and EMEA operations are still in the earlyvarious stages of development andor undergoing transformations of their business models. Therefore, they may require a more extensive support organization, relative to their current levels of revenue and operating income, than our Americas operations. The Americas
Channel Development revenues include packaged coffee sales, tea and EMEA segmentsready-to-drink beverages to customers outside of our company-operated and licensed stores. Historically revenues have included domestic and international sales of our packaged coffee, tea and ready-to-drink products to grocery, warehouse club and specialty retail stores and through institutional foodservice companies which serviced businesses. In the fourth quarter of fiscal 2018, we licensed our consumer packaged goods and foodservice businesses to Nestlé. As a result, Channel Development revenues also include certain foodservice accounts, primarily in Canadarevenues from product sales to and royalty revenues from Nestlé. The collaborative business relationships for ready-to-drink products and the U.K.associated revenues remain unchanged due to the Global Coffee Alliance.
Channel Development operations sell a selection of packaged coffees and single-serve products, as well as a selection of premium Tazo® teas globally. Channel Development operations also produce and sell a variety of ready-to-drink beverages, such as Frappuccino® coffee drinks, Starbucks Doubleshot® espresso drinks, Starbucks Refreshers® beverages and chilled multi-serve beverages. The U.S. foodservice business, which is included in the Channel Development segment, sells coffee and other related products to institutional foodservice companies.
Consolidated revenue mix by product type (in millions):
Fiscal Year EndedSep 27, 2015 Sep 28, 2014 Sep 29, 2013Sep 30, 2018 Oct 1, 2017 Oct 2, 2016
Beverage$11,115.4
 58% $9,458.4
 58% $8,674.7
 58%$14,463.1
 59% $12,915.0
 58% $12,383.4
 58%
Food3,085.3
 16% 2,505.2
 15% 2,189.8
 15%4,397.7
 18% 3,832.1
 17% 3,495.0
 16%
Packaged and single-serve coffees and teas2,619.9
 14% 2,370.0
 14% 2,206.5
 15%2,797.5
 11% 2,883.6
 13% 2,866.0
 14%
Other(1)
2,342.1
 12% 2,114.2
 13% 1,795.8
 12%3,061.2
 12% 2,756.1
 12% 2,571.5
 12%
Total$19,162.7
 100% $16,447.8
 100% $14,866.8
 100%$24,719.5
 100% $22,386.8
 100% $21,315.9
 100%
(1) "Other"“Other” primarily consists of royalty and licensing revenues, beverage-related ingredients, serveware, and ready-to-drink beverages, and serveware, among other items.
In fiscal 2014, we moved ready-to-drink beverage revenues from the "Food" category to the "Other" category and combined packaged and single-serve teas, which were previously included in the "Other" category, with packaged and single-serve coffees, which are now categorized as "Packaged and single-serve coffees and teas." Additionally, we revised our discount allocation methodology to more precisely allocate sales discounts to the various revenue product categories. None of these changes had a material impact on the composition of our revenue mix by product type.

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Information by geographic area (in millions):
Fiscal Year EndedSep 27, 2015 Sep 28, 2014 Sep 29, 2013Sep 30, 2018 Oct 1, 2017 Oct 2, 2016
Net revenues:          
United States$14,123.7
 $12,590.6
 $11,389.6
$17,409.4
 $16,527.1
 $15,774.8
Other countries5,039.0
 3,857.2
 3,477.2
7,310.1
 5,859.7
 5,541.1
Total$19,162.7
 $16,447.8
 $14,866.8
$24,719.5
 $22,386.8
 $21,315.9
          
Long-lived assets:          
United States$5,468.1
 $5,135.8
 $4,641.3
$5,635.9
 $5,848.3
 $6,012.8
Other countries2,625.3
 1,448.4
 1,404.0
6,026.3
 3,234.0
 3,541.8
Total$8,093.4
 $6,584.2
 $6,045.3
$11,662.2
 $9,082.3
 $9,554.6
No customer accounts for 10% or more of our revenues. Revenues are shown based on the geographic location of our customers. Revenues from countries other than the U.S. consist primarily of revenues from China, Japan, Canada China and the U.K., which together account for approximately 76%81% of net revenues from other countries for fiscal 2015.2018.
Management evaluates the performance of its operating segments based on net revenues and operating income. The accounting policies of the operating segments are the same as those described in Note 1, Summary of Significant Accounting Policies. Operating income represents earnings before other income and expenses and income taxes. Management does not evaluate the performance of its operating segments using asset measures. The identifiable assets by segment disclosed in this note are those assets specifically identifiable within each segment and include cash and cash equivalents, net property, plant and equipment, equity and cost investments, goodwill, and other intangible assets. Assets not identified byattributed to reportable operating segment belowsegments are corporate assets and are primarily comprised of cash and cash equivalents available for general corporate purposes, investments, assets of the corporate headquarters and roasting facilities, and inventory.

The table below presents financial information for our reportable operating segments and AllCorporate and Other Segmentssegment for the years ended September 27, 2015, September 28, 2014,30, 2018, October 1, 2017 and October 2, 2016.September 29, 2013.
(in millions)
Americas 
China /
Asia Pacific
 EMEA 
Channel
Development
 All Other Segments 
Segment
Total
Americas 
China /
Asia Pacific
 EMEA 
Channel
Development
 Corporate and Other 

Total
Fiscal 2015           
Fiscal 2018           
Total net revenues$13,293.4
 $2,395.9
 $1,216.7
 $1,730.9
 $525.8
 $19,162.7
$16,732.2
 $4,473.6
 $1,048.0
 $2,297.3
 $168.4
 $24,719.5
Depreciation and amortization expenses522.3
 150.7
 52.0
 2.7
 16.3
 744.0
638.3
 412.1
 31.7
 1.3
 163.6
 1,247.0
Income from equity investees—
 119.6
 3.1
 127.2
 —
 249.9
—
 117.4
 —
 183.8
 —
 301.2
Operating income/(loss)3,223.3
 500.5
 168.2
 653.9
 (24.8) 4,521.1
3,614.4
 867.4
 61.5
 927.1
 (1,587.1) 3,883.3
Total assets2,726.7
 2,230.5
 749.1
 87.3
 1,785.3
 7,578.9
4,380.9
 5,863.5
 356.4
 148.2
 13,407.4
 24,156.4
                      
Fiscal 2014           
Fiscal 2017           
Total net revenues$11,980.5
 $1,129.6
 $1,294.8
 $1,546.0
 $496.9
 $16,447.8
$15,620.0
 $3,240.2
 $958.7
 $2,256.6
 $311.3
 $22,386.8
Depreciation and amortization expenses469.5
 46.1
 59.4
 1.8
 15.2
 592.0
614.9
 202.2
 30.6
 3.0
 160.7
 1,011.4
Income from equity investees—
 164.0
 3.7
 100.6
 —
 268.3
—
 197.0
 —
 194.4
 —
 391.4
Operating income/(loss)2,809.0
 372.5
 119.2
 557.2
 (26.8) 3,831.1
3,653.6
 765.0
 94.5
 967.0
 (1,345.4) 4,134.7
Total assets2,521.4
 939.8
 663.0
 84.6
 825.2
 5,034.0
3,327.2
 2,770.9
 273.8
 129.1
 7,864.6
 14,365.6
                      
Fiscal 2013           
Fiscal 2016           
Total net revenues$11,000.8
 $917.0
 $1,160.0
 $1,398.9
 $390.1
 $14,866.8
$14,775.2
 $2,938.8
 $1,071.5
 $2,195.1
 $335.3
 $21,315.9
Depreciation and amortization expenses429.3
 33.8
 55.5
 1.1
 11.7
 531.4
590.0
 180.6
 39.9
 3.9
 166.4
 980.8
Income from equity investees2.4
 152.0
 0.4
 96.6
 —
 251.4
—
 150.1
 1.5
 166.6
 —
 318.2
Operating income/(loss)2,365.2
 321.2
 64.2
 415.5
 (34.5) 3,131.6
3,738.5
 631.6
 131.0
 877.3
 (1,206.5) 4,171.9
Total assets2,323.4
 805.0
 510.6
 89.2
 821.1
 4,549.3
3,424.6
 2,740.2
 552.1
 82.2
 7,513.4
 14,312.5

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The following table reconciles total segment operating income in the table above to consolidated earnings/(loss) before income taxes (in millions):
Fiscal Year EndedSep 27, 2015 Sep 28, 2014 Sep 29, 2013
Total segment operating income$4,521.1
 $3,831.1
 $3,131.6
Unallocated corporate operating expenses(1)
(920.1) (750.0) (3,457.0)
Consolidated operating income/(loss)3,601.0
 3,081.1
 (325.4)
Gain resulting from acquisition of joint venture390.6
 —
 —
Loss on extinguishment of debt(61.1) —
 —
Interest income and other, net43.0
 142.7
 123.6
Interest expense(70.5) (64.1) (28.1)
Earnings/(loss) before income taxes$3,903.0
 $3,159.7
 $(229.9)
(1) Fiscal 2013 includes a pretax charge of $2,784.1 million resulting from the litigation charge we recorded associated with the conclusion of our arbitration with Kraft.
Note 17:    Selected Quarterly Financial Information (unaudited; in millions, except EPS)
 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
 
Full
Year
Fiscal 2018:         
Net revenues$6,073.7
 $6,031.8
 $6,310.3
 $6,303.6
 $24,719.5
Operating income1,116.1
 772.5
 1,038.2
 956.6
 3,883.3
Net earnings attributable to Starbucks2,250.2
 660.1
 852.5
 755.8
 4,518.3
EPS — diluted1.57
 0.47
 0.61
 0.56
 3.24
Fiscal 2017:         
Net revenues$5,732.9
 $5,294.0
 $5,661.5
 $5,698.3
 $22,386.8
Operating income1,132.6
 935.4
 1,044.2
 1,022.5
 4,134.7
Net earnings attributable to Starbucks751.8
 652.8
 691.6
 788.5
 2,884.7
EPS — diluted0.51
 0.45
 0.47
 0.54
 1.97

 
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
 
Full
Year
Fiscal 2015:         
Net revenues$4,803.2
 $4,563.5
 $4,881.2
 $4,914.8
 $19,162.7
Operating income915.5
 777.5
 938.6
 969.4
 3,601.0
Net earnings attributable to Starbucks983.1
 494.9
 626.7
 652.5
 2,757.4
EPS — diluted(1)
0.65
 0.33
 0.41
 0.43
 1.82
Fiscal 2014:         
Net revenues$4,239.6
 $3,873.8
 $4,153.7
 $4,180.8
 $16,447.8
Operating income813.5
 644.1
 768.5
 854.9
 3,081.1
Net earnings attributable to Starbucks540.7
 427.0
 512.6
 587.9
 2,068.1
EPS — diluted(1)
0.35
 0.28
 0.34
 0.39
 1.35
(1)
As discussed in Note 1, Summary of Significant Accounting Policies, on April 9, 2015, we effected a two-for-one stock split of our $0.001 par value common stock for shareholders of record as of March 30, 2015. All per-share data presented in this note has been retroactively adjusted to reflect this stock split.
Note 18:    Subsequent Events
SubsequentOn October 2, 2018 we used $5.0 billion of net proceeds received from Nestlé to our fiscal year end, the European Commission has concluded that decisions by the tax authorities in the Netherlandsenter into an accelerated share repurchase program with regards to the corporate income tax paid by onethird-party financial institutions. As a result, 72.0 million shares of our subsidiaries did not comply with European Union rules on state aid. Based on this decision, which covers a 7-year period from fiscal 2008 to fiscal 2014, we estimate the amount of assessed past taxescommon stock have been retired. Final settlement is expected to be completed as early as February 2019 and no morelater than €30 million, including interest,March 2019. Refer to Note 15, Commitments and Contingencies for further discussion.
On October 24, 2018, we amended and restated our $1.0 billion unsecured 364-Day credit facility to extend the term, which equatesis now set to approximately $32 million with euro converted into U.S. dollars at a reference conversion rate of 1.075 EUR to USD. The exposure amount is not material and we are currently evaluating this decision, including any impact to our fiscal 2016 tax provisions.mature on October 23, 2019.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors and Shareholders of Starbucks Corporation
Seattle, WashingtonOpinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Starbucks Corporation and subsidiaries (the "Company"“Company”) as of September 27, 201530, 2018 and September 28, 2014, andOctober 1, 2017, the related consolidated statements of earnings, comprehensive income, equity, and cash flows for each of the three years in the period ended September 27, 201530, 2018, and the related notes (collectively referred to as the “financial statements”). TheseIn our opinion, the financial statements arepresent fairly, in all material respects, the responsibilityfinancial position of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.Company as of September 30, 2018 and October 1, 2017, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2018, in conformity with accounting principles generally accepted in the United States of America.
We conducted our auditshave also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States). (PCAOB), the Company's internal control over financial reporting as of September 30, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 16, 2018, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesmisstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements. An auditOur audits also includes assessingincluded evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Starbucks Corporation and subsidiaries as of September 27, 2015 and September 28, 2014, and the results of their operations and their cash flows for each of the three years in the period ended September 27, 2015, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of September 27, 2015, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 12, 2015 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ Deloitte & Touche LLP

Seattle, Washington
November 12, 201516, 2018  

We have served as the Company's auditor since 1987.
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Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.

Item 9A.Controls and Procedures

Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed or submitted under the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures are also designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
During the fourth quarter of fiscal 2015,2018, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective, as of the end of the period covered by this report (September 27, 2015)(September 30, 2018).
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during our most recently completed fiscal quarter that materially affected or are reasonably likely to materially affect internal control over financial reporting.
We acquired Starbucks Japan during the first quarter of fiscal 2015our East China joint venture on December 31, 2017 (see Note 2, Acquisitions and Divestitures, to the consolidated financial statements included in Item 8 of Part II of this 10-K). As permitted by the Securities and Exchange Commission Staff interpretive guidance for newly acquired businesses, management excluded Starbucks JapanEast China from its evaluation of internal control over financial reporting as of September 27, 2015.30, 2018. We are in the process of documenting and testing Starbucks Japan'sEast China's internal controls over financial reporting and plan to incorporate Starbucks JapanEast China in our evaluation of internal controls over financial reporting beginning in the first quarter of fiscal 2016. Starbucks Japan2019. East China contributed $1.6$3.1 billion to our consolidated total assets as of September 27, 2015, and $1.1 billion and $159.1 million to our consolidated net revenues and operating income, respectively, for30, 2018. For the year ended September 27, 2015.30, 2018, East China's revenue included in our consolidated statements of earnings was $903.0 million. For the year ended September 30, 2018, East China's net earnings included in our consolidated statements of earnings was $73.1 million.
The certifications required by Section 302 of the Sarbanes-Oxley Act of 2002 are filed as exhibits 31.1 and 31.2, respectively, to this 10-K.

Report of Management on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.
Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control — Integrated Framework(the "2013 Framework"), issued by the Committee of Sponsoring Organizations of the Treadway Commission, excluding Starbucks Japan as mentioned above.Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of September 27, 2015.30, 2018.
Our internal control over financial reporting as of September 27, 2015,30, 2018 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included herein.


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors and Shareholders of Starbucks Corporation
Seattle, WashingtonOpinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Starbucks Corporation and subsidiaries (the "Company"“Company”) as of September 27, 2015,30, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. As describedCommission (COSO). In our opinion, the Company maintained, in the accompanying Report of Management on Internal Control over Financial Reporting, management excluded Starbucks Coffee Japan, Ltd. (“Starbucks Japan”) from its assessment ofall material respects, effective internal control over financial reporting. Starbucks Japan was acquiredreporting as of September 30, 2018, based on October 31, 2014, and its financial statements contributed $1.6 billion, $1.1 billion, and $159.1 million tocriteria established in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated entity’s total assets, net revenues and operating income, respectively,financial statements as of and for the year ended September 27, 2015. Accordingly,30, 2018, of the Company and our audit did not include the internal control overreport dated November 16, 2018, expressed an unqualified opinion on those financial reporting at Starbucks Japan. statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of theits inherent limitations, of internal control over financial reporting including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be preventedprevent or detected on a timely basis.detect misstatements. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 27, 2015, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the fiscal year ended September 27, 2015, of the Company and our report dated November 12, 2015 expressed an unqualified opinion on those financial statements.

/s/ Deloitte & Touche LLP

Seattle, Washington
November 12, 201516, 2018


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Item 9B.Other Information
None.

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PART III

Item 10.Directors, Executive Officers and Corporate Governance
Information regarding our executive officers is set forth in Item 1 of Part 1 of this Report under the caption "Executive“Executive Officers of the Registrant."”
We adopted a code of ethics that applies to our chief executive officer, chief operating officer, chief financial officer, controller and other finance leaders, which is a "code“code of ethics"ethics” as defined by applicable rules of the SEC. This code is publicly available on our website at www.starbucks.com/about-us/company-information/corporate-governance. If we make any amendments to this code other than technical, administrative or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of this code to our chief executive officer, chief operating officer, chief financial officer or controller, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies on our website at www.starbucks.com/about-us/company-information/corporate-governance or in a report on Form 8-K filed with the SEC.
The remaining information required by this item is incorporated herein by reference to the sections entitled "Proposal“Proposal 1 — Election of Directors"Directors” and "Beneficial“Beneficial Ownership of Common Stock — Section 16(a) Beneficial Ownership Reporting Compliance," "Corporate” “Corporate Governance — Board Committees and Related Matters"Matters” and "Corporate“Corporate Governance — Audit and Compliance Committee"Committee” in our definitive Proxy Statement for the Annual Meeting of Shareholders to be held on March 23, 201620, 2019 (the "Proxy Statement"“Proxy Statement”).


Item 11.Executive Compensation
The information required by this item is incorporated by reference to the sections entitled "Executive“Executive Compensation," "Compensation” “Compensation of Directors," "Corporate” “Corporate Governance — Compensation and Management Development Committee"Committee” and "Compensation“Compensation Committee Report"Report” in the Proxy Statement.


Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
The information required by this item is incorporated by reference to the sections entitled "Equity“Equity Compensation Plan Information"Information” and "Beneficial“Beneficial Ownership of Common Stock"Stock” in the Proxy Statement.


Item 13.Certain Relationships, and Related Transactions and Director Independence
The information required by this item is incorporated by reference to the section entitled "Certain“Certain Relationships and Related Transactions"Transactions” and "Corporate“Corporate Governance — Affirmative Determinations Regarding Director Independence and Other Matters"Matters” in the Proxy Statement.


Item 14.Principal Accounting Fees and Services
The information required by this item is incorporated by reference to the sections entitled "Independent“Independent Registered Public Accounting Firm Fees"Fees” and "Policy“Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Registered Public Accounting Firm"Firm” in the Proxy Statement.


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PART IV

Item 15.Exhibits, Financial Statement Schedules
(a) The following documents are filed as a part of this 10-K:

1.    Financial Statements
The following financial statements are included in Part II, Item 8 of this 10-K:
Consolidated Statements of Earnings for the fiscal years ended September 27, 2015, September 28, 2014,30, 2018, October 1, 2017, and September 29, 2013;
October 2, 2016;
Consolidated Statements of Comprehensive Income for the fiscal years ended September 27, 2015, September 28, 2014,30, 2018, October 1, 2017, and September 29, 2013;
October 2, 2016;
Consolidated Balance Sheets as of September 27, 201530, 2018 and September 28, 2014;
October 1, 2017;
Consolidated Statements of Cash Flows for the fiscal years ended September 27, 2015, September 28, 2014,30, 2018, October 1, 2017, and September 29, 2013;
October 2, 2016;
Consolidated Statements of Equity for the fiscal years ended September 27, 2015, September 28, 2014,30, 2018, October 1, 2017, and September 29, 2013;
October 2, 2016;
Notes to Consolidated Financial Statements; and
Reports of Independent Registered Public Accounting Firm

2.    Financial Statement Schedules
Financial statement schedules are omitted because they are not required or are not applicable, or the required information is provided in the consolidated financial statements or notes described in Item 15(a)(1) above.

3.    Exhibits
The Exhibits listed in the Index to Exhibits, which appears immediately following the signature page and is incorporated herein by reference, are filed as part of this 10-K.

93
  
 
  
 Incorporated by Reference 
  
Exhibit
Number
 Exhibit Description Form File No. Date of Filing 
Exhibit
Number
 
Filed
Herewith
2.1
 
Transaction Agreement, dated as of May 6, 2018 by and between Starbucks Corporation and Nestlé S.A. 
 8-K 0-20322 5/7/2018 2.1  
3.1
 
Restated Articles of Incorporation of Starbucks Corporation
 10-Q 0-20322 4/28/2015 3.1  
3.2
 
Amended and Restated Bylaws of Starbucks Corporation (As amended and restated through June 1, 2018)
 8-K 0-20322 6/5/2018 3.1  
4.1
 
Indenture, dated as of September 15, 2016, by and between Starbucks Corporation and U.S. Bank National Association, as trustee
 S-3ASR 
333-213645

 
9/15/2016

 4.1  
4.2
 
First Supplemental Indenture, dated March 17, 2017, by and between Starbucks Corporation and U.S. Bank National Association, as trustee, transfer agent and registrar, and Elavon Financial Services, DAC, UK Branch, as paying agent (0.372% Senior Notes due 2024)
 8-K 0-20322 3/20/2017 4.2  
4.3
 
Form of 0.372% Senior Note due March 15, 2024
 8-K 0-20322 3/20/2017 4.3  
4.4
 
Second Supplemental Indenture, dated as of November 22, 2017, by and between Starbucks Corporation and U.S. Bank National Association, as trustee (2.200% Senior Notes due 2020 and 3.750% Senior Notes due 2047)
 8-K 0-20322 11/22/2017 4.2  
4.5
 
Form of 2.200% Senior Notes due November 22, 2020 (included in Exhibit 4.2)
 8-K 0-20322 11/22/2017 4.3  
4.6
 
Form of 3.750% Senior Notes due December 1, 2047 (included in Exhibit 4.2)
 8-K 0-20322 11/22/2017 4.4  
4.7
 
Third Supplemental Indenture, dated as of February 28, 2018, by and between Starbucks Corporation and U.S. Bank National Association, as trustee (3.100% Senior Notes due 2023 and 3.500% Senior Notes due 2028)
 8-K 0-20322 2/28/2018 4.2  
4.8
 
Form of 3.100% Senior Notes due March 1, 2023
 8-K 0-20322 2/28/2018 4.3  
4.9
 
Form of 3.500% Senior Notes due March 1, 2028
 8-K 0-20322 2/28/2018 4.4  
4.10
 
Fourth Supplemental Indenture, dated as of August 10, 2018, by and between Starbucks Corporation and U.S. Bank National Association, as trustee (3.800% Senior Notes due 2025, 4.000% Senior Notes due 2028 and 4.500% Senior Notes due 2048)
 8-K 0-20322 8/10/2018 4.2  
4.11
 
Form of 3.800% Senior Notes due August 15, 2025
 8-K 0-20322 8/10/2018 4.3  
             

Table of Contents
  
 
  
 Incorporated by Reference 
  
Exhibit
Number
 Exhibit Description Form File No. Date of Filing 
Exhibit
Number
 
Filed
Herewith
4.12
 
Form of 4.000% Senior Notes due November 15, 2028
 8-K 0-20322 8/10/2018 4.4  
4.13
 
Form of 4.500% Senior Notes due November 15, 2048
 8-K 0-20322 8/10/2018 4.5  
4.14
 
Indenture, dated as of August 23, 2007, by and between Starbucks Corporation and Deutsche Bank Trust Company Americas, as trustee
 S-3ASR 333-190955 9/3/2013 4.1  
4.15
 
Second Supplemental Indenture, dated as of September 6, 2013, by and between Starbucks Corporation and Deutsche Bank Trust Company Americas, as trustee (3.850% Senior Notes due October 1, 2023)
 8-K 0-20322 9/6/2013 4.2  
4.16
 
Form of 3.850% Senior Notes due October 1, 2023

 8-K 0-20322 9/6/2013 4.3  
4.17
 
Third Supplemental Indenture, dated as of December 5, 2013, by and between Starbucks Corporation and Deutsche Bank Trust Company Americas, as trustee (0.875% Senior Notes due 2016 and 2.000% Senior Notes due 2018)

 8-K 0-20322 12/5/2013 4.2  
4.18
 
Form of 2.000% Senior Notes due December 5, 2018
 8-K 0-20322 12/5/2013 4.4  
4.19
 
Fourth Supplemental Indenture, dated as of June 10, 2015, by and between Starbucks Corporation and Deutsche Bank Trust Company Americas, as trustee (2.700% Senior Notes due June 15, 2022 and 4.300% Senior Notes due June 15, 2045)
 8-K 0-20322 6/10/2015 4.2  
4.20
 
Form of 2.700% Senior Notes due June 15, 2022

 8-K 0-20322 6/10/2015 4.3  
4.21
 
Form of 4.300% Senior Notes due June 15, 2045
 8-K 0-20322 6/10/2015 4.4  
4.22
 
Fifth Supplemental Indenture, dated as of February 4, 2016, by and between Starbucks Corporation and Deutsche Bank Trust Company Americas, as trustee (2.100% Senior Notes due February 4, 2021)
 8-K 0-20322 2/4/2016 4.2  
4.23
 
Form of 2.100% Senior Notes due February 4, 2021
 8-K 0-20322 2/4/2016 4.3  
4.24
 
Sixth Supplemental Indenture, dated as of May 16, 2016, by and between Starbucks Corporation and Deutsche Bank Trust Company Americas, as trustee (2.450% Senior Notes due June 15, 2026)
 8-K 0-20322 5/16/2016 4.4  
4.25
 
Form of 2.450% Senior Notes due June 15, 2026
 8-K 0-20322 5/16/2016 4.5  

Incorporated by Reference
Exhibit
Number
Exhibit DescriptionFormFile No.Date of Filing
Exhibit
Number
Filed
Herewith
10.1*
Starbucks Corporation Employee Stock Purchase Plan — 1995 as amended and restated on April 9, 2015 to reflect adjustments for the 2-for-1 forward stock split effective on such date
10-Q0-203228/1/201710.1
10.2*
Starbucks Corporation Executive Management Bonus Plan, as amended and restated November 10, 2015, effective September 28, 2015
10-K


0-2032211/18/201610.4
10.3*
Starbucks Corporation Management Deferred Compensation Plan, as amended and restated effective January 1, 2011
10-Q0-203222/4/201110.2
10.4*
Starbucks Corporation UK Share Save Plan
10-K0-2032212/23/200310.9
10.5*
Starbucks Corporation Deferred Compensation Plan for Non-Employee Directors, effective October 3, 2011, as amended and restated effective September 11, 2018
X
10.6*
Starbucks Corporation UK Share Incentive Plan, as amended and restated effective November 14, 2006
10-K0-2032212/14/200610.12
10.7*
Starbucks Corporation 2005 Long-Term Equity Incentive Plan, as amended and restated effective March 20, 2013, as restated on April 9, 2015 to reflect adjustments for the 2-for-1 forward stock split effective on such date, and as amended and restated by the Board on September 11, 2018
X
10.8*
2005 Key Employee Sub-Plan to the Starbucks Corporation 2005 Long-Term Equity Incentive Plan, as amended and restated effective November 15, 2005
10-Q0-203222/10/200610.2
10.9*
2005 Non-Employee Director Sub-Plan to the Starbucks Corporation 2005 Long-Term Equity Incentive Plan, as amended and restated effective September 11, 2018
X
10.10*
Form of Stock Option Grant Agreement for Purchase of Stock under the Key Employee Sub-Plan to the 2005 Long-Term Equity Incentive Plan
10-Q0-203225/2/201210.1
10.11*
Form of Global Stock Option Grant Agreement for Purchase of Stock under the Key Employee Sub-Plan to the 2005 Long Term Equity Incentive Plan
10-K0-2032211/18/201610.14
10.12*
Form of Stock Option Grant Agreement for Purchase of Stock under the 2005 Non-Employee Director Sub-Plan to the Starbucks Corporation 2005 Long-Term Equity Incentive Plan
10-Q0-203224/26/201610.2




  
 
  
 Incorporated by Reference 
  
Exhibit
Number
 Exhibit Description Form File No. Date of Filing 
Exhibit
Number
 
Filed
Herewith
10.13*
 
Form of Restricted Stock Unit Grant Agreement under the 2005 Non-Employee Director Sub-Plan to the Starbucks Corporation 2005 Long-Term Equity Incentive Plan
 10-Q 0-20322 4/26/2016 10.3  
10.14
 
Credit Agreement, dated October 25, 2017, among Starbucks Corporation, Bank of America, N.A., in its capacity as Administrative Agent, Swing Line Lender and L/C Issuer, Wells Fargo Bank, N.A., Citibank, N.A. and U.S. Bank National Association, as L/C Issuers, and the other Lenders from time to time a party thereto.
 8-K 0-20322 10/30/2017 10.1  
10.15
 
Amended and Restated 364-Day Credit Agreement, dated October 24, 2018, among Starbucks Corporation, Bank of America, N.A., in its capacity as Administrative Agent and Swing Line Lender, and the other Lenders from time to time a party thereto.
 8-K 0-20322 10/26/2018 10.1  
10.16
 
Form of Commercial Paper Dealer Agreement between Starbucks Corporation, as Issuer, and the Dealer
 8-K 0-20322 
7/29/2016

 10.1  
10.17*
 
Form of Time Vested Restricted Stock Unit Grant Agreement (U.S.) under the Key Employee Sub-Plan to the 2005 Long-Term Equity Incentive Plan
 10-K 0-20322 11/18/2011 10.30  
10.18*
 
Form of Time Vested Global Restricted Stock Unit Grant Agreement under the Key Employee Sub-Plan to the 2005 Long-Term Equity Incentive Plan
 10-K 0-20322 11/18/2016 10.21  
10.19*
 
Form of Performance Based Global Restricted Stock Unit Grant Agreement under the Key Employee Sub-Plan to the 2005 Long-Term Equity Incentive Plan
 10-K 0-20322 11/18/2016 10.22  
10.20*
 
Form of Global Key Employee Restricted Stock Unit Grant Agreement
 10-K 0-20322 11/17/2017 10.24  
10.21*
 
Form of Global Key Employee Restricted Stock Unit Grant Agreement (Effective November 2018)
         X
10.22*
 
Form of Global Key Employee Stock Option Grant Agreement for Purchase of Stock under the 2005 Long-Term Equity Incentive Plan
 10-K 0-20322 11/17/2017 10.25  
10.23*
 
Form of Global Key Employee Performance-Based Stock Option Grant Agreement for Purchase of Stock under the 2005 Long-Term Equity Incentive Plan
         X
10.24*
 
Form of Global Key Employee Restricted Stock Unit Grant Agreement (Performance-Based)
 10-K 0-20322 11/17/2017 10.26  
             

Incorporated by Reference
Exhibit
Number
Exhibit DescriptionFormFile No.Date of Filing
Exhibit
Number
Filed
Herewith
10.25*
Form of Global Key Employee Restricted Stock Unit Grant Agreement (Performance-Based) (Effective November 2018)
X
10.26*
Exclusive Aircraft Sublease (S/N 6003) dated as of September 27, 2013 by and between Cloverdale Services, LLC and Starbucks Corporation
10-Q0-203224/29/201410.3
10.27*
Transition Agreement dated June 27, 2018 between Scott Maw and Starbucks Corporation
8-K/A0-203226/29/201810.1
10.28*
Offer Letter dated March 23, 2017 between Starbucks Corporation and Kevin Johnson
10-Q0-203225/2/201710.1
10.29*
Offer Letter dated August 23, 2017 between Starbucks Corporation and Rosalind Brewer
8-K0-203229/6/201710.1
10.30*
Retirement Agreement, dated June 1, 2018, by and between Starbucks Corporation and Howard Schultz
8-K0-203226/5/201810.1
10.31*
Offer Letter dated October 5, 2018 between Starbucks Corporation and Patrick J. Grismer
8-K0-2032210/9/201810.1




Incorporated by Reference
Exhibit
Number
Exhibit DescriptionFormFile No.Date of Filing
Exhibit
Number
Filed
Herewith
21
Subsidiaries of Starbucks Corporation
————X
23
Consent of Independent Registered Public Accounting Firm
————X
24
Power of Attorney (included on the Signatures page of this Annual Report on Form 10-K)
________X
31.1
Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
————X
31.2
Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
————X
32**
Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
————
101The following financial statements from the Company’s 10-K for the fiscal year ended September 30, 2018, formatted in XBRL: (i) Consolidated Statements of Earnings, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Equity, and (vi) Notes to Consolidated Financial Statements————X

*Denotes a management contract or compensatory plan or arrangement.
**Furnished herewith.


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
   
 STARBUCKS CORPORATION
  
   
   
   
 By:/s/    Howard SchultzKevin R. Johnson
  
Howard SchultzKevin R. Johnson
chairmanpresident and chief executive officer
  
November 12, 201516, 2018
POWER OF ATTORNEY
Know all persons by these presents, that each person whose signature appears below constitutes and appoints Howard SchultzKevin R. Johnson, Scott Maw and Scott Maw,Rachel A. Gonzalez, and each of them, as such person’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for such person and in such person’s name, place and stead, in any and all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them or their or such person’s substitute or substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated as of November 12, 201516, 2018.
  
 Signature Title
     
By: /s/    Howard SchultzKevin R. Johnson chairman
president and chief executive officer, director
(principal executive officer)
  Howard SchultzKevin R. Johnson 
     
By: /s/    Scott Maw 
executive vice president, chief financial officer
(principal financial officer and principal accounting officer)
  Scott Maw 
     
By: /s/    William W. BradleyRosalind G. Brewer director
  William W. BradleyRosalind G. Brewer  
     
By: /s/    Robert M. GatesMary N. Dillon director
  Robert M. GatesMary N. Dillon  
     
By: /s/    Mellody Hobson director
  Mellody Hobson  
     
By: /s/    Kevin R. JohnsonJørgen Vig Knudstorp director
  Kevin R. Johnson
Jørgen Vig Knudstorp

  
     
By:/s/    Olden Leedirector
Olden Lee

94
Table of Contents

  
 Signature Title
     
By: /s/    Joshua Cooper RamoSatya Nadella director
  Joshua Cooper RamoSatya Nadella  
     
By: /s/    James G. Shennan, Jr.Joshua Cooper Ramo director
  James G. Shennan, Jr.Joshua Cooper Ramo  
     
By: /s/    Clara Shih director
  Clara Shih  
     
By: /s/    Javier G. Teruel director
  Javier G. Teruel  
     
By: /s/    Myron E. Ullman, III director
  Myron E. Ullman, III  
By:/s/    Craig E. Weatherupdirector
Craig E. Weatherup

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Table of Contents

INDEX TO EXHIBITS
  
 
  
 Incorporated by Reference 
  
Exhibit
Number
 Exhibit Description Form File No. Date of Filing 
Exhibit
Number
 
Filed
Herewith
2.1 Agreement and Plan of Merger, dated as of November 14, 2012, among Starbucks Corporation, Taj Acquisition Corp. and Teavana Holdings, Inc. 8-K 0-20322 11/15/2012 2.1  
3.1 Restated Articles of Incorporation of Starbucks Corporation 10-Q 0-20322 4/28/2015 3.1  
3.2 Amended and Restated Bylaws of Starbucks Corporation (As amended and restated through January 20, 2015) 8-K 0-20322 1/22/2015 3.1  
4.1 Indenture, dated as of August 23, 2007, by and between Starbucks Corporation and Deutsche Bank Trust Company Americas, as trustee S-3ASR 333-190955 9/3/2013 4.1  
4.2 Second Supplemental Indenture, dated as of September 6, 2013, by and between Starbucks Corporation and Deutsche Bank Trust Company Americas, as trustee (3.850% Senior Notes due October 1, 2023) 8-K 0-20322 9/6/2013 4.2  
4.3 Form of 3.850% Senior Notes due October 1, 2023 8-K 0-20322 9/6/2013 4.3  
4.4 Third Supplemental Indenture, dated as of December 5, 2013, by and between Starbucks Corporation and Deutsche Bank Trust Company Americas, as trustee (0.875% Senior Notes due 2016 and 2.000% Senior Notes due 2018) 8-K 0-20322 12/5/2013 4.2  
4.5 Form of 0.875% Senior Notes due December 5, 2016 8-K 0-20322 12/5/2013 4.3  
4.6 Form of 2.000% Senior Notes due December 5, 2018 8-K 0-20322 12/5/2013 4.4  
4.7 
Fourth Supplemental Indenture, dated as of June 10, 2015, by and between Starbucks Corporation and Deutsche Bank Trust Company Americas, as trustee (2.700% Senior Notes due June 15, 2022 and 4.300% Senior Notes due June 15, 2045)

 8-K 0-20322 6/10/2015 4.2  
4.8 Form of 2.700% Senior Notes due June 15, 2022 8-K 0-20322 6/10/2015 4.3  
4.9 Form of 4.300% Senior Notes due June 15, 2045 8-K 0-20322 6/10/2015 4.4  
10.1* Starbucks Corporation Amended and Restated Key Employee Stock Option Plan — 1994, as amended and restated through March 18, 2009 8-K 0-20322 3/20/2009 10.2  
10.2* Starbucks Corporation Amended and Restated 1989 Stock Option Plan for Non-Employee Directors 10-K 0-20322 12/23/2003 10.2  
10.3* Starbucks Corporation 1991 Company-Wide Stock Option Plan, as amended and restated through March 18, 2009, and as restated on April 9, 2015 to reflect adjustments for the 2-for-1 forward stock split effective on such date 10-Q 0-20322 4/28/2015 10.6  
Incorporated by Reference

96
Table of Contents

Exhibit
Number
 Exhibit Description Form File No. Date of Filing 
Exhibit
Number
 
Filed
Herewith
10.3.1* Starbucks Corporation 1991 Company-Wide Stock Option Plan — Rules of the UK Sub-Plan, as amended and restated through November 20, 2003 10-K 0-20322 12/23/2003 10.3.1  
10.4* Starbucks Corporation Employee Stock Purchase Plan — 1995 as amended and restated through April 1, 2009, and as restated on April 9, 2015 to reflect adjustments for the 2-for-1 forward stock split effective on such date 10-Q 0-20322 4/28/2015 10.5  
10.5 Amended and Restated Lease, dated as of January 1, 2001, between First and Utah Street Associates, L.P. and Starbucks Corporation 10-K 0-20322 12/20/2001 10.5  
10.6* Starbucks Corporation Executive Management Bonus Plan, as amended and restated effective November 8, 2011 10-Q 0-20322 5/2/2012 10.2  
10.7* Starbucks Corporation Management Deferred Compensation Plan, as amended and restated effective January 1, 2011 10-Q 0-20322 2/4/2011 10.2  
10.8* Starbucks Corporation UK Share Save Plan 10-K 0-20322 12/23/2003 10.9  
10.9* Starbucks Corporation Directors Deferred Compensation Plan, as amended and restated effective September 29, 2003 10-K 0-20322 12/23/2003 10.10  
10.10* Starbucks Corporation Deferred Compensation Plan for Non-Employee Directors, effective October 3, 2011 10-K 0-20322 11/18/2011 10.11  
10.11* Starbucks Corporation UK Share Incentive Plan, as amended and restated effective November 14, 2006 10-K 0-20322 12/14/2006 10.12  
10.12* Starbucks Corporation 2005 Long-Term Equity Incentive Plan, as amended and restated effective March 20, 2013, and as restated on April 9, 2015 to reflect adjustments for the 2-for-1 forward stock split effective on such date 10-Q 0-20322 4/28/2015 10.4  
10.13* 2005 Key Employee Sub-Plan to the Starbucks Corporation 2005 Long-Term Equity Incentive Plan, as amended and restated effective November 15, 2005 10-Q 0-20322 2/10/2006 10.2  
10.14* 2005 Non-Employee Director Sub-Plan to the Starbucks Corporation 2005 Long-Term Equity Incentive Plan, as amended and restated effective September 13, 2011 10-K 0-20322 11/18/2011 10.17  
10.15* Form of Stock Option Grant Agreement for Purchase of Stock under the Key Employee Sub-Plan to the 2005 Long-Term Equity Incentive Plan 10-Q 0-20322 5/2/2012 10.1  
10.16* Form of Global Stock Option Grant Agreement for Purchase of Stock under the Key Employee Sub-Plan to the 2005 Long Term Equity Incentive Plan 10-K 0-20322 11/18/2013 10.17  


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 Incorporated by Reference 
  
Exhibit
Number
 Exhibit Description Form File No. Date of Filing 
Exhibit
Number
 
Filed
Herewith
10.17* Form of Stock Option Grant Agreement for Purchase of Stock under the 2005 Non-Employee Director Sub-Plan to the Starbucks Corporation 2005 Long-Term Equity Incentive Plan 8-K 0-20322 2/10/2005 10.5  
10.18* Form of Restricted Stock Unit Grant Agreement under the 2005 Non-Employee Director Sub-Plan to the Starbucks Corporation 2005 Long-Term Equity Incentive Plan 10-K 0-20322 11/18/2011 10.20  
10.19 Credit Agreement dated November 6, 2015 among Starbucks Corporation, Bank of America, N.A., in its capacity as Administrative Agent, Swing Line Lender and L/C Issuer, and the other Lenders from time to time a party thereto. 8-K 0-20322 11/6/2015 10.1  
10.20 Commercial Paper Dealer Agreement between Starbucks Corporation and Banc of America Securities LLC, dated as of March 27, 2007 8-K 0-20322 3/27/2007 10.1.1  
10.21 Commercial Paper Dealer Agreement between Starbucks Corporation and Goldman, Sachs & Co., dated as of March 27, 2007 8-K 0-20322 3/27/2007 10.1.2  
10.22* Letter Agreement dated February 21, 2008 between Starbucks Corporation and Clifford Burrows 10-Q 0-20322 5/8/2008 10.3  
10.23* Form of Time Vested Restricted Stock Unit Grant Agreement (U.S.) under the Key Employee Sub-Plan to the 2005 Long-Term Equity Incentive Plan 10-K 0-20322 11/18/2011 10.30  
10.24* Form of Time Vested Global Restricted Stock Unit Grant Agreement under the Key Employee Sub-Plan to the 2005 Long-Term Equity Incentive Plan 10-K 0-20322 11/18/2013 10.29  
10.25* Form of Performance Based Global Restricted Stock Unit Grant Agreement under the Key Employee Sub-Plan to the 2005 Long-Term Equity Incentive Plan 10-K 0-20322 11/18/2013 10.30  
10.26* Letter Agreement dated November 30, 2009 between Starbucks Corporation and John Culver 10-Q 0-20322 2/2/2010 10.3  
10.27* Letter Agreement dated May 16, 2012 between Starbucks Corporation and Lucy Lee Helm 10-K 0-20322 11/14/2014 10.33  
10.28* Letter Agreement dated January 29, 2014 between Starbucks Corporation and Troy Alstead 8-K 0-20322 1/29/2014 10.1  
10.29* Letter Agreement dated January 29, 2014 between Starbucks Corporation and Scott Maw 8-K 0-20322 1/29/2014 10.2  
10.30* Exclusive Aircraft Sublease (S/N 6003) dated as of September 27, 2013 by and between Cloverdale Services, LLC and Starbucks Corporation 10-Q 0-20322 4/29/2014 10.3  
10.31* Offer Letter dated January 22, 2015 between Starbucks Corporation and Kevin Johnson 8-K 0-20322 1/22/2015 10.1  

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Incorporated by Reference
Exhibit
Number
Exhibit DescriptionFormFile No.Date of Filing
Exhibit
Number
Filed
Herewith
12
Computation of Ratio of Earnings to Fixed Charges————X
21
Subsidiaries of Starbucks Corporation————X
23
Consent of Independent Registered Public Accounting Firm————X
24Power of Attorney (included on the Signatures page of this Annual Report on Form 10-K)________X
31.1
Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002————X
31.2
Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002————X
32**
Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002————
101The following financial statements from the Company’s 10-K for the fiscal year ended September 27, 2015, formatted in XBRL: (i) Consolidated Statements of Earnings, (ii) Consolidated Statements of Comprehensive Income, (iii)Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Equity, and (vi) Notes to Consolidated Financial Statements————X

*Denotes a management contract or compensatory plan or arrangement.
**Furnished herewith.


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