UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

x ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~December 31, 2017~~January 1, 2023

¨ ☐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~~000-20322

Starbucks Corporation

(Exact Name of Registrant as Specified in its Charter)



Washington			91-1325671
(State or Other Jurisdiction of Incorporation or Organization)			(IRS Employer Identification No.)

2401 Utah Avenue South, Seattle, Washington 98134

(Address of principal executive offices)

(206) 447-1575

(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.001 per share	SBUX	Nasdaq Global Select Market

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~~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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

~~Large accelerated filer~~

~~Accelerated 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 check mark 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 Exchange Act): Yes ☐ No x

~~Yes~~ ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



~~Title~~			Shares Outstanding as of January ~~24, 2018~~27, 2023
~~Common Stock, par value $0.001 per share~~			~~1,405.6~~1,149.3 million

Table of Contents

STARBUCKS CORPORATION

FORM 10-Q

For the Quarterly Period Ended ~~December 31, 2017~~January 1, 2023

Table of Contents



PART I. FINANCIAL INFORMATION


~~PART I. FINANCIAL INFORMATION~~

Item 1	Financial Statements (Unaudited):		3
		~~Condensed~~ Consolidated Statements of Earnings		3
		~~Condensed~~ Consolidated Statements of Comprehensive Income		4
		~~Condensed~~ Consolidated Balance Sheets		5
		~~Condensed~~ Consolidated Statements of Cash Flows		6
		Consolidated Statements of Equity		7
		Index ~~For~~for Notes to ~~Condensed~~ Consolidated Financial Statements		78
		Notes to ~~Condensed~~ Consolidated Financial Statements		89
Item 2		Management’s Discussion and Analysis of Financial Condition and Results of Operations		2425
Item 3		Quantitative and Qualitative Disclosures About Market Risk		3735
Item 4		Controls and Procedures		3736

PART II. OTHER INFORMATION

Item 1		Legal Proceedings		3837
Item 1A		Risk Factors		3837
Item 2		Unregistered Sales of Equity Securities and Use of Proceeds		3837
Item 63		~~Exhibits~~Defaults Upon Senior Securities		3937
Item 4		Mine Safety Disclosures		37
Item 5		Other Information		37
Item 6		Exhibits		38
Signatures				4039

Table of Contents

PART I — FINANCIAL INFORMATION


~~Item 1.~~	~~Financial Statements~~

Item 1.Financial Statements

STARBUCKS CORPORATION

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF EARNINGS

(in millions, except per share data)

(unaudited)


	Quarter Ended
	Jan 1, 2023		Jan 2, 2022
Net revenues:
Company-operated stores	$	7,083.5	$	6,722.4
Licensed stores	1,119.5		850.8
Other	510.9		477.2
Total net revenues	8,713.9		8,050.4
Product and distribution costs	2,810.2		2,526.9
Store operating expenses	3,665.3		3,400.0
Other operating expenses	129.3		101.7
Depreciation and amortization expenses	327.1		366.0
General and administrative expenses	580.9		525.8
Restructuring and impairments	5.8		(7.5)
Total operating expenses	7,518.6		6,912.9
Income from equity investees	57.8		40.3
Operating income	1,253.1		1,177.8


Interest income and other, net	11.6		(0.1)
Interest expense	(129.7)		(115.3)
Earnings before income taxes	1,135.0		1,062.4
Income tax expense	279.8		246.3
Net earnings including noncontrolling interests	855.2		816.1
Net earnings attributable to noncontrolling interests	—		0.2
Net earnings attributable to Starbucks	$	855.2	$	815.9
Earnings per share - basic	$	0.74	$	0.70
Earnings per share - diluted	$	0.74	$	0.69
Weighted average shares outstanding:
Basic	1,148.5		1,169.6
Diluted	1,152.9		1,176.6

Quarter Ended
Dec 31,
2017 Jan 1,
2017
Net revenues:
Company-operated stores $ 4,741.8
$ 4,469.3
Licensed stores 682.4
602.4
CPG, foodservice and other 649.5
661.2
Total net revenues 6,073.7
5,732.9
Cost of sales including occupancy costs 2,502.9
2,295.0
Store operating expenses 1,737.0
1,638.2
Other operating expenses 141.6
145.4
Depreciation and amortization expenses 258.8
249.7
General and administrative expenses 379.1
356.4
Restructuring expenses 27.6
—
Total operating expenses 5,047.0
4,684.7
Income from equity investees 89.4
84.4
Operating income 1,116.1
1,132.6
Gain resulting from acquisition of joint venture 1,326.3
—
Gains resulting from divestiture of certain operations 501.2
—
Interest income and other, net 88.2
24.1
Interest expense (25.9 ) (23.8 )
Earnings before income taxes 3,005.9
1,132.9
Income tax expense 755.8
381.4
Net earnings including noncontrolling interests 2,250.1
751.5
Net loss attributable to noncontrolling interests (0.1 ) (0.3 )
Net earnings attributable to Starbucks $ 2,250.2
$ 751.8
Earnings per share - basic $ 1.58
$ 0.52
Earnings per share - diluted $ 1.57
$ 0.51
Weighted average shares outstanding:
Basic 1,421.0
1,457.5
Diluted 1,434.6
1,470.5
Cash dividends declared per share $ 0.30
$ 0.25

See Notes to ~~Condensed~~ Consolidated Financial Statements.

Table of Contents

STARBUCKS CORPORATION

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions, unaudited)


	Quarter Ended
	Jan 1, 2023		Jan 2, 2022
Net earnings including noncontrolling interests	$	855.2	$	816.1
Other comprehensive income/(loss), net of tax:
Unrealized holding gains/(losses) on available-for-sale debt securities	2.0		(3.4)
Tax (expense)/benefit	(0.5)		0.8
Unrealized gains/(losses) on cash flow hedging instruments	(180.7)		88.7
Tax (expense)/benefit	29.5		(11.8)
Unrealized gains/(losses) on net investment hedging instruments	(64.6)		41.5
Tax (expense)/benefit	16.3		(10.5)
Translation adjustment and other	208.9		14.2
Tax (expense)/benefit	—		—
Reclassification adjustment for net (gains)/losses realized in net earnings for available-for-sale debt securities, hedging instruments, and translation adjustment	(98.4)		(16.1)
Tax expense/(benefit)	11.8		2.9
Other comprehensive income/(loss)	(75.7)		106.3
Comprehensive income including noncontrolling interests	779.5		922.4
Comprehensive income attributable to noncontrolling interests	—		0.2
Comprehensive income attributable to Starbucks	$	779.5	$	922.2

Quarter Ended
Dec 31,
2017 Jan 1,
2017
Net earnings including noncontrolling interests $ 2,250.1
$ 751.5
Other comprehensive income/(loss), net of tax:
Unrealized holding losses on available-for-sale securities (2.8 ) (13.4 )
Tax (expense)/benefit 1.0
4.1
Unrealized gains/(losses) on cash flow hedging instruments (3.7 ) 113.5
Tax (expense)/benefit 0.8
(26.5 )
Unrealized gains/(losses) on net investment hedging instruments (0.3 ) 41.1
Tax (expense)/benefit 0.1
(15.2 )
Translation adjustment and other 18.0
(171.8 )
Tax (expense)/benefit 2.9
—
Reclassification adjustment for net (gains)/losses realized in net earnings for available-for-sale securities, hedging instruments, and translation adjustment 15.1
(81.7 )
Tax expense/(benefit) (0.8 ) 16.0
Other comprehensive income/(loss) 30.3
(133.9 )
Comprehensive income including noncontrolling interests 2,280.4
617.6
Comprehensive loss attributable to noncontrolling interests (0.1 ) (0.3 )
Comprehensive income attributable to Starbucks $ 2,280.5
$ 617.9

See Notes to ~~Condensed~~ Consolidated Financial Statements.

Table of Contents

STARBUCKS CORPORATION

~~CONDENSED~~ CONSOLIDATED BALANCE SHEETS

(in millions, except per share data)

(unaudited)


	Jan 1, 2023		Oct 2, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	3,186.5	$	2,818.4
Short-term investments	123.9		364.5
Accounts receivable, net	1,162.9		1,175.5
Inventories	2,088.1		2,176.6
Prepaid expenses and other current assets	373.5		483.7
Total current assets	6,934.9		7,018.7
Long-term investments	283.6		279.1
Equity investments	330.5		311.2
Property, plant and equipment, net	6,699.5		6,560.5
Operating lease, right-of-use asset	8,133.8		8,015.6
Deferred income taxes, net	1,811.8		1,799.7
Other long-term assets	527.6		554.2
Other intangible assets	151.4		155.9
Goodwill	3,383.0		3,283.5
TOTAL ASSETS	$	28,256.1	$	27,978.4
LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
Current liabilities:
Accounts payable	$	1,348.2	$	1,441.4
Accrued liabilities	2,089.6		2,137.1
Accrued payroll and benefits	664.6		761.7
Current portion of operating lease liability	1,257.5		1,245.7
Stored value card liability and current portion of deferred revenue	2,137.0		1,641.9
Short-term debt	—		175.0
Current portion of long-term debt	1,749.3		1,749.0
Total current liabilities	9,246.2		9,151.8
Long-term debt	13,176.7		13,119.9
Operating lease liability	7,635.4		7,515.2
Deferred revenue	6,263.2		6,279.7
Other long-term liabilities	600.5		610.5
Total liabilities	36,922.0		36,677.1
Shareholders' deficit:
Common stock ($0.001 par value) — authorized, 2,400.0 shares; issued and outstanding, 1,148.5 and 1,147.9 shares, respectively	1.1		1.1
Additional paid-in capital	67.2		205.3
Retained deficit	(8,203.2)		(8,449.8)
Accumulated other comprehensive income/(loss)	(538.9)		(463.2)
Total shareholders’ deficit	(8,673.8)		(8,706.6)
Noncontrolling interests	7.9		7.9
Total deficit	(8,665.9)		(8,698.7)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)	$	28,256.1	$	27,978.4

Dec 31,
2017 Oct 1,
2017
ASSETS
Current assets:
Cash and cash equivalents $ 3,661.4
$ 2,462.3
Short-term investments 106.6
228.6
Accounts receivable, net 851.8
870.4
Inventories 1,313.2
1,364.0
Prepaid expenses and other current assets 950.5
358.1
Total current assets 6,883.5
5,283.4
Long-term investments 363.5
542.3
Equity and cost investments 287.6
481.6
Property, plant and equipment, net 5,378.7
4,919.5
Deferred income taxes, net 157.9
795.4
Other long-term assets 526.3
362.8
Other intangible assets 1,246.2
441.4
Goodwill 3,674.8
1,539.2
TOTAL ASSETS $ 18,518.5
$ 14,365.6
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 852.1
$ 782.5
Accrued liabilities 3,761.1
1,934.5
Insurance reserves 210.0
215.2
Stored value card liability 1,668.0
1,288.5
Current portion of long-term debt 349.9
—
Total current liabilities 6,841.1
4,220.7
Long-term debt 4,566.5
3,932.6
Other long-term liabilities 1,352.0
755.3
Total liabilities 12,759.6
8,908.6
Shareholders’ equity:
Common stock ($0.001 par value) — authorized, 2,400.0 shares; issued and outstanding, 1,407.6 and 1,431.6 shares, respectively 1.4
1.4
Additional paid-in capital 41.1
41.1
Retained earnings 5,834.9
5,563.2
Accumulated other comprehensive loss (125.3 ) (155.6 )
Total shareholders’ equity 5,752.1
5,450.1
Noncontrolling interests 6.8
6.9
Total equity 5,758.9
5,457.0
TOTAL LIABILITIES AND EQUITY $ 18,518.5
$ 14,365.6

See Notes to ~~Condensed~~ Consolidated Financial Statements.

Table of Contents

STARBUCKS CORPORATION

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions, unaudited)

Quarter Ended
Dec 31,
2017 Jan 1,
2017
OPERATING ACTIVITIES:
Net earnings including noncontrolling interests $ 2,250.1
$ 751.5
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 272.4
263.2
Deferred income taxes, net 744.8
56.4
Income earned from equity method investees (66.2 ) (65.3 )
Distributions received from equity method investees 81.3
39.1
Gain resulting from acquisition of joint venture (1,326.3 ) —
Gains resulting from divestiture of certain retail operations (501.2 ) —
Stock-based compensation 61.4
55.0
Other 3.3
9.3
Cash provided by changes in operating assets and liabilities:
Accounts receivable 1.3
(128.7 )
Inventories 71.2
146.4
Accounts payable 28.1
(34.7 )
Stored value card liability 359.6
425.0
Other operating assets and liabilities (145.8 ) 12.6
Net cash provided by operating activities 1,834.0
1,529.8
INVESTING ACTIVITIES:
Purchases of investments (35.2 ) (323.4 )
Sales of investments 316.1
149.6
Maturities and calls of investments 21.3
18.1
Additions to property, plant and equipment (429.3 ) (307.4 )
Cash acquired from purchase of equity in joint venture 129.5
—
Net proceeds from the sale of certain operations 397.1
—
Other (4.5 ) 61.6
Net cash provided by/(used by) investing activities 395.0
(401.5 )
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 998.3
—
Repayments of long-term debt —
(400.0 )
Proceeds from issuance of common stock 54.3
51.2
Cash dividends paid (428.1 ) (364.0 )
Repurchase of common stock (1,601.0 ) (408.1 )
Minimum tax withholdings on share-based awards (56.0 ) (68.3 )
Other (7.2 ) 0.1
Net cash used by financing activities (1,039.7 ) (1,189.1 )
Effect of exchange rate changes on cash and cash equivalents 9.8
(33.4 )
Net increase/(decrease) in cash and cash equivalents 1,199.1
(94.2 )
CASH AND CASH EQUIVALENTS:
Beginning of period 2,462.3
2,128.8
End of period $ 3,661.4
$ 2,034.6
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest, net of capitalized interest $ 38.3
$ 41.1
Income taxes, net of refunds $ 140.1
$ 270.8
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Payable for East China acquisition (Note 2) $ 1,431.0
$ —


	Quarter Ended
	Jan 1, 2023		Jan 2, 2022
OPERATING ACTIVITIES:
Net earnings including noncontrolling interests	$	855.2	$	816.1
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	342.5		386.4
Deferred income taxes, net	15.8		(0.3)
Income earned from equity method investees	(56.9)		(46.6)
Distributions received from equity method investees	45.7		44.9


Stock-based compensation	85.2		95.8

Non-cash lease costs	263.7		330.4
Loss on retirement and impairment of assets	21.1		50.7
Other	6.7		(4.9)
Cash provided by/(used in) changes in operating assets and liabilities:
Accounts receivable	42.0		(91.6)
Inventories	108.5		(36.0)


Accounts payable	(117.3)		84.0
Deferred revenue	461.0		461.3
Operating lease liability	(281.4)		(363.3)
Other operating assets and liabilities	(198.6)		144.0
Net cash provided by operating activities	1,593.2		1,870.9
INVESTING ACTIVITIES:
Purchases of investments	(10.5)		(61.0)
Sales of investments	0.8		72.6
Maturities and calls of investments	253.3		45.6

Additions to property, plant and equipment	(516.8)		(416.8)


Other	(6.1)		(41.4)
Net cash used in investing activities	(279.3)		(401.0)
FINANCING ACTIVITIES:
Net proceeds/(payments) from issuance of commercial paper	(175.0)		200.0





Proceeds from issuance of common stock	45.9		41.3
Cash dividends paid	(608.3)		(576.0)
Repurchase of common stock	(191.4)		(3,520.9)
Minimum tax withholdings on share-based awards	(79.0)		(113.6)

Net cash provided by/(used in) financing activities	(1,007.8)		(3,969.2)
Effect of exchange rate changes on cash and cash equivalents	62.0		13.0
Net increase/(decrease) in cash and cash equivalents	368.1		(2,486.3)
CASH AND CASH EQUIVALENTS:
Beginning of period	2,818.4		6,455.7
End of period	$	3,186.5	$	3,969.4
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest, net of capitalized interest	$	116.7	$	108.3
Income taxes	$	106.2	$	161.4

See Notes to ~~Condensed~~ Consolidated Financial Statements.

Table of Contents

STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

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

(in millions, except per share data, unaudited)


	Common Stock			Additional Paid-in Capital		Retained Earnings/(Deficit)		Accumulated Other Comprehensive Income/(Loss)		Shareholders’ Equity/(Deficit)		Noncontrolling Interests		Total
	Shares	Amount
Balance, October 2, 2022	1,147.9	$	1.1	$	205.3	$	(8,449.8)	$	(463.2)	$	(8,706.6)	$	7.9	$	(8,698.7)

Net earnings	—	—		—		855.2		—		855.2		—		855.2
Other comprehensive loss	—	—		—		—		(75.7)		(75.7)		—		(75.7)
Stock-based compensation expense	—	—		86.4		—		—		86.4		—		86.4
Exercise of stock options/vesting of RSUs	2.4	—		(44.7)		—		—		(44.7)		—		(44.7)
Sale of common stock	0.1	—		11.6		—		—		11.6		—		11.6
Repurchase of common stock	(1.9)	—		(191.4)		—		—		(191.4)		—		(191.4)
Cash dividends declared, $0.53 per share	—	—		—		(608.6)		—		(608.6)		—		(608.6)

Balance, January 1, 2023	1,148.5	$	1.1	$	67.2	$	(8,203.2)	$	(538.9)	$	(8,673.8)	$	7.9	$	(8,665.9)

Balance, October 3, 2021	1,180.0	$	1.2	$	846.1	$	(6,315.7)	$	147.2	$	(5,321.2)	$	6.7	$	(5,314.5)

Net earnings	—	—		—		815.9		—		815.9		0.2		816.1
Other comprehensive income	—	—		—		—		106.3		106.3		—		106.3
Stock-based compensation expense	—	—		97.1		—		—		97.1		—		97.1
Exercise of stock options/vesting of RSUs	2.6	—		(84.1)		—		—		(84.1)		—		(84.1)
Sale of common stock	0.1	—		11.8		—		—		11.8		—		11.8
Repurchase of common stock	(31.1)	—		(829.8)		(2,691.1)		—		(3,520.9)		—		(3,520.9)
Cash dividends declared, $0.49 per share	—	—		—		(562.1)		—		(562.1)		—		(562.1)

Balance, January 2, 2022	1,151.6	$	1.2	$	41.1	$	(8,753.0)	$	253.5	$	(8,457.2)	$	6.9	$	(8,450.3)

See Notes to Consolidated Financial Statements.

Table of Contents

STARBUCKS CORPORATION

INDEX FOR NOTES TO ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS


Note 1			Summary of Significant Accounting Policies and Estimates	9
Note 2			Acquisitions, Divestitures and Strategic Alliance	9
Note 3			Derivative Financial Instruments	10
Note 4			Fair Value Measurements	13
Note 5			Inventories	15
Note 6			Supplemental Balance Sheet and Statement of Earnings Information	16
Note 7			Other Intangible Assets and Goodwill	16
Note 8			Debt	18
Note 9			Leases	20
Note 10			Deferred Revenue	21
Note 11			Equity	22
Note 12			Employee Stock Plans	22

Note 113			~~Summary of Significant Accounting Policies~~	8
~~Note 2~~	~~Acquisitions and Divestitures~~	9
~~Note 3~~	~~Derivative Financial Instruments~~	12
~~Note 4~~	~~Fair Value Measurements~~	15
~~Note 5~~	~~Inventories~~	17
~~Note 6~~	~~Supplemental Balance Sheet Information~~	17
~~Note 7~~	~~Debt~~	18
~~Note 8~~	~~Equity~~	20
~~Note 9~~	~~Employee Stock Plans~~	21
~~Note 10~~	~~Income Taxes~~	22
~~Note 11~~	Earnings per Share	2223
Note 1214			Commitments and Contingencies	23
Note 15			Segment Reporting	2324
Note 16			Subsequent Event	24

Table of Contents

STARBUCKS CORPORATION

NOTES TO ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


~~Note 1:~~	~~Summary of Significant Accounting Policies~~

Note 1: Summary of Significant Accounting Policies and Estimates

Financial Statement Preparation

The unaudited ~~condensed~~ consolidated financial statements as of ~~December 31, 2017,~~January 1, 2023, and for the quarters ended ~~December 31, 2017~~January 1, 2023 and January ~~1, 2017,~~2, 2022, have been prepared by Starbucks Corporation under the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, the financial information for the quarters ended ~~December 31, 2017~~January 1, 2023 and January ~~1, 2017~~2, 2022 reflects all adjustments and accruals, which are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. In this Quarterly Report on Form 10-Q (“10-Q”), Starbucks Corporation is referred to as “Starbucks,” the “Company,” “we,” “us” or “our.”

Segment information is prepared on the same basis that our management reviews financial information for operational decision-making purposes.

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

The financial information as of October ~~1, 2017~~2, 2022 is derived from our audited consolidated financial statements and notes for the fiscal year ended October ~~1, 2017~~2, 2022 (“fiscal ~~2017”~~2022”) included in Item 8 in the Fiscal ~~2017~~2022 Annual Report on Form 10-K ~~(the “10-K”~~(“10-K”). The information included in this 10-Q should be read in conjunction with the footnotes and management’s discussion and analysis of the consolidated financial statements in the 10-K.

The results of operations for the quarter ended ~~December 31, 2017~~January 1, 2023 are not necessarily indicative of the results of operations that may be achieved for the entire fiscal year ending ~~September 30, 2018~~October 1, 2023 (“fiscal ~~2018”~~2023”).

~~Recent~~The novel coronavirus, known as the global COVID-19 pandemic, was first identified in December 2019 before spreading to markets where we have company-operated or licensed stores. We have since established the necessary protocols to operate safely, and in many of our markets, our businesses demonstrated powerful momentum beyond recovery from the COVID-19 pandemic. During the first quarter of fiscal 2023, our China market continued to experience pandemic-related business interruptions, including escalating COVID outbreaks that suppressed customer mobility. We continue to monitor the COVID-19 pandemic and its effect on our business and results of operations; however, we cannot predict the duration, scope or severity of the COVID-19 pandemic or its future impact on our business, results of operations, cash flows and financial condition.

Restructuring

In fiscal 2022, we announced our plan in the U.S. market to increase efficiency while elevating the partner and customer experience (the “Reinvention Plan”). We believe the investments in partner wages and trainings will increase retention and productivity while the acceleration of purpose-built store concepts and innovations in technologies will provide additional convenience and connection with our customers. As a result of the restructuring efforts in connection with the Reinvention Plan, we recorded an immaterial charge on our consolidated statements of earnings during the quarter ended January 1, 2023. Future restructuring and impairment costs attributable to our Reinvention Plan are not expected to be material.

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

Recently Adopted Accounting Pronouncements

In ~~August 2017,~~the first quarter of fiscal 2022, we adopted the Financial Accounting Standards Board (“FASB”) amended its guidance on the financial reporting of hedging relationships. The new guidance eliminates the requirement to separately measure and report hedge ineffectiveness, expands permissible cash flow hedges on contractually specified components, and simplifies hedge documentation and effectiveness assessment. The guidance will be effective at the beginning of our first quarter of fiscal year 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 October 2016, the FASB issued guidance on the accounting for income tax effects of 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 but permits adoption in an earlier period. We are currently evaluating the impact this guidance will have on our consolidated financial statements and the timing of adoption.

~~In March 2016, the FASB~~ issued guidance related to ~~stock-based compensation, which changes~~reference rate reform. The pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting ~~and classification of excess tax benefits and minimum tax withholdings on share-based awards. This guidance requires that excess tax benefits and tax deficiencies~~to ease the financial reporting burden related to ~~stock-based compensation~~the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and generally can be 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 benefitsapplied 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 $28.2 million for the three months endedapplicable contract modifications through December 31, ~~2017, instead~~2024. The adoption of additional paid-in capital. As a result, net income increased $28.2 million and basic and diluted earnings per share increased $0.02 for the three months ended December 31, 2017. Excess tax benefits of $34.1 million, for the three months ended January 1, 2017, 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~~did not have 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 for 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 lessee. 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. The guidance will require modified retrospective application at the beginning of our first quarter of fiscal 2020, with optional practical expedients, but permits adoption in an earlier period. We are currently evaluating the impact this guidance will have on our consolidated financial statements. We expect this adoption will result in a material ~~increase in the assets and liabilities on our consolidated balance sheets but will likely have an insignificant~~ impact on our ~~consolidated statements of earnings. In preparation for the adoption of the guidance, we are in the process of implementing controls~~financial statements.

Note 2: Acquisitions, Divestitures and ~~key system changes to enable the preparation of financial 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 new guidance may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. We are currently evaluating the overall impact this guidance will have on our consolidated financial statements, as well as the expected method of adoption. Based on our continued assessment, which may identify other accounting impacts, we have 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 interest income and 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 will adopt this guidance in the first quarter of fiscal 2019.


~~Note 2:~~	~~Acquisitions and Divestitures~~

~~Fiscal 2018~~

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 in the form of a payable to UPG. Approximately $1.3 billion had been settled as of the date of this filing. The final purchase price and remaining payment will be determined upon finalizing East China’s full year results for calendar year 2017. Approximately $86.3 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 preliminary valuation as of the December 31, 2017 acquisition date 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 $177.6 million. The consideration, less associated transaction taxes, was recorded as a receivable from UPG within prepaid expenses and other current assets at December 31, 2017. Approximately $161.6 million of the proceeds have been received as of the date of this filing. The final sales price and remaining proceeds will be determined upon finalizing the Taiwan JV’s full year results for calendar year 2017. The transaction resulted in a pre-tax gain of $153.0 million, which was included in gains from divestiture of certain operations on our consolidated statements of earnings.

The following table summarizes the preliminary allocation of the total consideration to the fair values of the assets acquired and liabilities assumed as of December 31, 2017, which are reported within our China/Asia Pacific segment ~~(in millions)~~:

Consideration:
Acquisition payable for UPG 50% equity interest $ 1,431.0
Fair value of our preexisting 50% equity interest 1,431.0
Settlement of pre-existing liabilities 86.3
Total consideration $ 2,948.3

Fair value of assets acquired and liabilities assumed:
Cash and cash equivalents $ 129.5
Accounts receivable, net 14.3
Inventories 18.0
Prepaid expenses and other current assets 20.6
Property, plant and equipment 256.6
Other long-term assets 35.7
Other intangible assets 818.0
Goodwill 2,137.1
Total assets acquired 3,429.8
Accounts payable 43.2
Accrued liabilities 173.8
Stored value card liability 18.0
Other long-term liabilities 246.5
Total liabilities assumed 481.5
Total consideration $ 2,948.3

The assets 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 calculated 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 will commence in the second quarter of fiscal 2018 and estimated to be approximately $130.3 million in fiscal 2018, $173.7 million each year for the next three years and approximately $166.6 million in the final year of fiscal 2022.

The $2.1 billion 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, and the existing geographic retail and online presence. The goodwill was allocated to the China/Asia Pacific segment and is not deductible for income tax purposes.

~~The table below summarizes our estimated minimum future rental payments under the acquired non-cancelable operating leases as of December 31, 2017~~ ~~(in millions):~~

Operating Leases
Year 1 $ 69.6
Year 2 60.6
Year 3 52.2
Year 4 45.8
Year 5 37.0
Thereafter 83.5
Total minimum lease payments $ 348.7

As a result of this acquisition, we remeasured the carrying value of our preexisting 50% equity method investment to fair value, which resulted in a gain of $1.3 billion, that was largely non-taxable. The gain was recorded in the first quarter of fiscal 2018 and was presented separately as gain resulting from acquisition of joint venture on our consolidated statements of earnings. The fair value of $1.4 billion was calculated using an income approach, which 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 environments impacting store performance. The discount rate applied was based on East China's weighted-average cost of capital and included company-specific and size risk premiums.

We will begin consolidating East China's results of operations and cash flows into our consolidated financial statements after December 31, 2017. For the quarter ended December 31, 2017, the business performance of East China was recorded in income from equity investees on our consolidated statement of earnings as the transaction closed on the last day of the quarter.

The following table provides the supplemental pro forma revenue and net earnings of the combined entity had the acquisition date of East China been October 3, 2016, the first day of our first quarter of fiscal 2017, rather than the end of our first quarter of fiscal 2018 ~~(in millions)~~:

Pro Forma (unaudited)
Quarter Ended
Dec 31, 2017
Jan 1, 2017⁽¹⁾
Revenue $ 6,344.7
$ 5,948.0
Net earnings attributable to Starbucks 1,122.8
1,799.2


⁽¹⁾	The pro forma net earnings attributable to Starbucks for fiscal 2017 includes the acquisition-related gain of $1.3 billion, and transaction and integration costs of $3.7 million for the quarter ended December 31, 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 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 closed in the prior year period or indicative of the results of operations for any future period.

During the quarter ended December 31, 2017, we incurred approximately $2.5 million of acquisition-related costs, such as regulatory, legal, and advisory fees, which we have recorded within unallocated corporate 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 gains 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 2017~~Strategic Alliance

In the fourth quarter of fiscal ~~2017,~~2022, we sold our ~~company-operated retail store assets~~Evolution Fresh brand and ~~operations in Singapore~~business to ~~Maxim's Caterers Limited, converting these operations to a fully licensed market, for a total of $119.9 million.~~Bolthouse Farms. This transaction ~~resulted in~~did not have a ~~pre-tax gain of $83.9 million, which was included in interest income and other, net~~material impact on our consolidated ~~statements~~financial statements.

Table of earnings. An insignificant settlement related to the divestiture was received in the first quarter of 2018 and included in gains from divestiture of certain operations on our consolidated statements of earnings.Contents


~~Note 3:~~	~~Derivative Financial Instruments~~

Note 3: Derivative Financial Instruments

Interest Rates

~~We are subject to interest rate volatility with regard to existing and future issuances of debt.~~ From time to time, we enter into ~~swap agreements~~designated cash flow hedges to manage ~~our exposure to interest rate fluctuations.~~

~~To hedge~~ the variability in cash flows due to changes in benchmark interest ~~rates, we~~rates. We enter into interest rate swap agreements ~~related to anticipated debt issuances.~~and treasury locks, which are synthetic forward sales of U.S. Treasury securities settled in cash based upon the difference between an agreed-upon treasury rate and the prevailing treasury rate at settlement. These agreements are cash settled at the time of the pricing of the related debt. ~~The effective portion of the derivative's~~Each derivative agreement's gain or loss is recorded in accumulated other comprehensive income (“AOCI”) and is subsequently reclassified to interest expense over the life of the related debt.

To hedge the exposure to changes in the fair value of our fixed-rate debt, we enter into interest rate swap agreements, which are designated as fair value hedges. The changes in fair values of these derivative instruments and the offsetting changes in fair values of the underlying hedged debt due to changes in the relevant benchmark interest rates are recorded in interest ~~expense and have an insignificant impact on our condensed consolidated statement of earnings.~~expense. Refer to Note 78, 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 intercompany royalty payments, inventory purchases, and intercompany borrowing and lending activities. The ~~effective portion of the derivative's gain or loss is~~resulting gains and losses from these derivatives are recorded in AOCI and is subsequently reclassified to revenue, ~~cost of sales including occupancy~~product and distribution costs, or interest income and other, net, respectively, when the hedged ~~exposure affects~~exposures affect net earnings.

From time to time, we may enter into financial instruments, including, but not limited to, forward and swap contracts or ~~use~~ foreign currency-denominated debt, to hedge the currency exposure of our net ~~investment~~investments in certain international operations. The ~~effective portion of~~resulting gains and losses from these ~~instruments' gain or loss is~~derivatives are recorded in AOCI and isare subsequently reclassified to net earnings when the hedged net investment is either sold or substantially liquidated.

Foreign currency forward and swap contracts not designated as hedging instruments are used to mitigate the foreign exchange risk of certain other balance sheet items. Gains and losses from these derivatives are largely offset by the financial impact of translating foreign ~~currency denominated~~currency-denominated payables and ~~receivables;~~receivables, and these gains and losses are recorded in interest income and other, net.

Commodities

Depending on market conditions, we may enter into coffee forward contracts, 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.~~ Inventories, or our longer-dated forecasted coffee demand where underlying fixed price and price-to-be-fixed contracts are not yet available. The ~~effective portion of each derivative's gain or loss is~~resulting gains and losses are recorded in AOCI and isare subsequently reclassified to ~~cost of sales including occupancy~~product and distribution costs when the hedged exposure affects net earnings.

Depending on market conditions, we may also enter into dairy forward contracts and futures contracts to hedge a portion of anticipated cash flows under our dairy purchase contracts and our forecasted dairy demand. The resulting gains or losses are recorded in AOCI and are subsequently reclassified to product and distribution costs when the hedged exposure affects net earnings.

Cash flow hedges related to anticipated transactions are designated and documented at the inception of each hedge. Cash flows from hedging transactions are classified in the same categories as the cash flows from the respective hedged items. For de-designated cash flow hedges in which the underlying transactions are no longer probable of occurring, the related accumulated derivative gains or losses are recognized in interest income and other, net on our consolidated statements of earnings. These derivatives may be accounted for prospectively as non-designated derivatives until maturity, re-designated to new hedging relationships or terminated early. We continue to believe transactions related to our other designated cash flow hedges are probable to occur.

To mitigate the price uncertainty of a portion of our future purchases, ~~primarily of dairy products,~~including diesel fuel and other commodities, we enter into swap contracts, futures and collars that are not designated as hedging instruments. ~~Gains~~The resulting gains and losses ~~from these derivatives~~ are recorded in interest income and other, net to help offset price fluctuations on our beverage, food, packaging and transportation costs, which are included in ~~cost of sales including occupancy~~product and distribution costs on our consolidated statements of earnings.

Table of Contents

Gains and losses on derivative contracts and foreign currency-denominated debt 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		Outstanding Contract/Debt Remaining Maturity (Months)
	Jan 1, 2023		Oct 2, 2022
Cash Flow Hedges:
Coffee	$	(36.4)	$	153.9	$	(20.7)	5
Cross-currency swaps	(1.7)		(1.9)		—		23
Dairy	(4.2)		(2.6)		(4.2)		8
Foreign currency - other	12.8		55.3		12.1		33
Interest rates	(5.4)		(5.8)		0.7		0
Net Investment Hedges:
Cross-currency swaps	52.7		67.3		—		111
Foreign currency	16.1		16.1		—		0
Foreign currency debt	88.1		125.7		—		15

Net Gains/(Losses)
Included in AOCI
Net Gains Expected to be Reclassified from AOCI into Earnings within 12 Months
Outstanding Contract/Debt Remaining Maturity
(Months)
Dec 31,
2017 Oct 1,
2017
Cash Flow Hedges:
Interest rates $ 16.8
$ 17.6
$ 3.0
0
Cross-currency swaps (7.5 ) (6.0 ) —
83
Foreign currency - other (8.2 ) (9.1 ) (5.8 ) 36
Coffee (2.3 ) (6.6 ) (2.3 ) 3
Net Investment Hedges:
Foreign currency 16.1
16.2
—
0
Foreign currency debt (2.4 ) (2.2 ) —
76

~~Pretax~~Pre-tax gains and losses on derivative contracts and ~~foreign-denominated~~foreign currency-denominated long-term debt designated as hedging instruments recognized in other comprehensive income (“OCI”) and reclassifications from AOCI to earnings (in millions):


	Quarter Ended
	Gains/(Losses) Recognized in OCI Before Reclassifications			Gains/(Losses) Reclassified from AOCI to Earnings				Location of gain/(loss)
		Jan 1, 2023		Jan 2, 2022		Jan 1, 2023				Jan 2, 2022
Cash Flow Hedges:
Coffee		$	(119.4)	$	71.5	$	96.7	$	6.5		Product and distribution costs

Cross-currency swaps		(11.7)		4.5		(2.7)		(0.8)			Interest expense
						(9.1)		6.9			Interest income and other, net
Dairy		(3.6)		4.6		(1.5)		(0.4)			Product and distribution costs

Foreign currency - other		(46.0)		6.9		8.0		2.2			Licensed stores revenue
						2.2		(1.5)			Product and distribution costs
						0.2		—			Interest income and other, net
Interest rates		—		1.2		(0.5)		(0.4)			Interest expense

Net Investment Hedges:
Cross-currency swaps		(14.0)		16.3		5.3		3.4			Interest expense

Foreign currency debt		(50.6)		25.2		—		—

Quarter Ended

Gains/(Losses)
Recognized in
OCI Before Reclassifications

Gains/(Losses) Reclassified from
AOCI to Earnings
Dec 31,
2017 Jan 1,
2017 Dec 31,
2017 Jan 1,
2017
Cash Flow Hedges:
Interest rates $ —
$ —
$ 1.2
$ 1.2
Cross-currency swaps (2.4 ) 75.3
(0.5 ) 77.6
Foreign currency - other (1.3 ) 37.2
(2.8 ) 4.4
Coffee —
1.0
(4.7 ) (0.7 )
Net Investment Hedges:
Foreign currency (0.3 ) 41.1
0.1
—
Foreign currency debt —
—
—
—

~~Pretax~~Pre-tax gains and losses on non-designated derivatives and designated fair value hedging instruments and the related fair value hedged item recognized in earnings (in millions):


		Gains/(Losses) Recognized in Earnings
	Location of gain/(loss) recognized in earnings	Quarter Ended
		Jan 1, 2023		Jan 2, 2022
Non-Designated Derivatives:

Foreign currency - other	Interest income and other, net	$	(11.6)	$	10.2
Coffee	Interest income and other, net	(5.5)		3.1
Diesel fuel and other commodities	Interest income and other, net	(0.2)		—
Fair Value Hedges:
Interest rate swap	Interest expense	(1.6)		(4.8)
Long-term debt (hedged item)	Interest expense	(3.3)		8.2

Table of Contents

Gains/(Losses) Recognized in Earnings
Quarter Ended
Dec 31, 2017 Jan 1, 2017
Non-Designated Derivatives:
Foreign currency - other $ 3.7
$ 8.3
Dairy (2.1 ) 5.1
Diesel fuel and other commodities 1.4
0.2
Designated Fair Value Hedging Instruments:
Interest rate swap (7.5 ) —

Notional amounts of outstanding derivative contracts (in millions):


	Jan 1, 2023		Oct 2, 2022
Coffee	$	401	$	649
Cross-currency swaps	1,124		741
Dairy	68		94
Diesel fuel and other commodities	25		33
Foreign currency - other	1,305		1,269
Interest rate swaps	1,100		1,100

Dec 31, 2017 Oct 1, 2017
Interest rate swap $ 750
$ 750
Cross-currency swaps 495
514
Foreign currency - other 998
901
Dairy 57
14
Diesel fuel and other commodities 13
41

Fair value of outstanding derivative contracts (in millions) including the location of the asset and/or liability on the consolidated balance sheets:


		Derivative Assets
	Balance Sheet Location	Jan 1, 2023		Oct 2, 2022
Designated Derivative Instruments:
Cross-currency swaps	Other long-term assets	$	85.4	$	115.4

Dairy	Prepaid expenses and other current assets	0.2		0.5

Foreign currency - other	Prepaid expenses and other current assets	22.4		39.9
	Other long-term assets	13.8		33.5


Non-designated Derivative Instruments:


Diesel fuel and other commodities	Prepaid expenses and other current assets	0.1		0.4
Foreign currency	Prepaid expenses and other current assets	15.8		34.3
	Other long-term assets	—		7.3

		Derivative Liabilities
	Balance Sheet Location	Jan 1, 2023		Oct 2, 2022
Designated Derivative Instruments:
Cross-currency swaps	Other long-term liabilities	$	1.6	$	—



Dairy	Accrued liabilities	3.1		2.9
Foreign currency - other	Accrued liabilities	10.0		0.3
	Other long-term liabilities	10.1		—
Interest rate	Accrued liabilities	20.4		12.0
Interest rate swap	Other long-term liabilities	33.6		34.0
Non-designated Derivative Instruments:

Diesel fuel and other commodities	Accrued liabilities	0.4		—
Foreign currency	Accrued liabilities	1.3		5.8

The following amounts were recorded on the consolidated balance sheets related to fixed-to-floating interest rate swaps designated in fair value hedging relationships (in millions):


	Carrying amount of hedged item				Cumulative amount of fair value hedging adjustment included in the carrying amount
	Jan 1, 2023		Oct 2, 2022		Jan 1, 2023		Oct 2, 2022
Location on the balance sheet
Long-term debt	$	1,051.0	$	1,047.7	$	(49.0)	$	(52.3)

Derivative Assets Derivative Liabilities
Dec 31, 2017 Oct 1, 2017 Dec 31, 2017 Oct 1, 2017
Designated Derivative Instruments:
Cross-currency swaps $ 10.0
$ 12.4
$ 9.9
$ 9.8
Foreign currency - other 6.4
7.7
18.0
20.8
Net investment hedges —
0.3
—
—
Interest rate swap —
—
11.6
3.8
Non-designated Derivative Instruments:
Foreign currency 21.2
15.8
4.1
1.4
Dairy —
—
3.8
2.4
Diesel fuel and other commodities 2.7
1.6
0.8
0.3

Additional disclosures related to cash flow gains and losses included in AOCI, as well as subsequent reclassifications to earnings, are included in Note 811, Equity.

Table of Contents


~~Note 4:~~	~~Fair Value Measurements~~

Note 4: Fair Value Measurements

Assets and ~~Liabilities Measured~~liabilities measured at ~~Fair Value~~fair value on a ~~Recurring Basis~~recurring basis (in millions):


			Fair Value Measurements at Reporting Date Using
	Balance at January 1, 2023		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	$	3,186.5	$	3,042.5	$	144.0	$	—
Short-term investments:
Available-for-sale debt securities


Commercial paper	0.2		—		0.2		—
Corporate debt securities	23.2		—		23.2		—
U.S. government treasury securities	8.9		8.9		—		—




Total available-for-sale debt securities	32.3		8.9		23.4		—
Structured deposits	28.8		—		28.8		—
Marketable equity securities	62.8		62.8		—		—
Total short-term investments	123.9		71.7		52.2		—
Prepaid expenses and other current assets:
Derivative assets	38.5		—		38.5		—
Long-term investments:
Available-for-sale debt securities



Corporate debt securities	136.4		—		136.4		—
Foreign government obligations	3.8		—		3.8		—
Mortgage and other asset-backed securities	53.3		—		53.3		—
State and local government obligations	1.3		—		1.3		—
U.S. government treasury securities	88.8		88.8		—		—
Total long-term investments	283.6		88.8		194.8		—
Other long-term assets:
Derivative assets	99.2		—		99.2		—

Total assets	$	3,731.7	$	3,203.0	$	528.7	$	—
Liabilities:
Accrued liabilities:
Derivative liabilities	$	35.2	$	—	$	35.2	$	—
Other long-term liabilities:
Derivative liabilities	45.3		—		45.3		—
Total liabilities	$	80.5	$	—	$	80.5	$	—

Table of Contents

Fair Value Measurements at Reporting Date Using
Balance at
Dec 31, 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 $ 3,661.4
$ 3,661.4
$ —
$ —
Short-term investments:
Available-for-sale securities
Corporate debt securities 14.9
—
14.9
—
U.S. government treasury securities 10.5
10.5
—
—
Total available-for-sale securities 25.4
10.5
14.9
—
Trading securities 81.2
81.2
—
—
Total short-term investments 106.6
91.7
14.9
—
Prepaid expenses and other current assets:
Derivative assets 24.1
—
24.1
—
Long-term investments:
Available-for-sale securities
Agency obligations 8.5
—
8.5
—
Corporate debt securities 165.9
—
165.9
—
Auction rate securities 5.9
—
—
5.9
Foreign government obligations 12.0
—
12.0
—
U.S. government treasury securities 112.1
112.1
—
—
State and local government obligations 7.0
—
7.0
—
Mortgage and other asset-backed securities 52.1
—
52.1
—
Total long-term investments 363.5
112.1
245.5
5.9
Other long-term assets:
Derivative assets 16.2
—
16.2
—
Total assets $ 4,171.8
$ 3,865.2
$ 300.7
$ 5.9
Liabilities:
Accrued liabilities:
Derivative liabilities $ 20.8
$ 4.6
$ 16.2
$ —
Other long-term liabilities:
Derivative liabilities 27.4
—
27.4
—
Total liabilities $ 48.2
$ 4.6
$ 43.6
$ —


			Fair Value Measurements at Reporting Date Using									Fair Value Measurements at Reporting Date Using
	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)			Balance at October 2, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:									Assets:
Cash and cash equivalents	$	2,462.3	$	2,462.3	$	—	$	—	Cash and cash equivalents	$	2,818.4	$	2,797.3	$	21.1	$	—
Short-term investments:									Short-term investments:
Available-for-sale securities
Agency obligations	7.5		—		7.5		—
Commercial paper	2.0		—		2.0		—
Available-for-sale debt securities									Available-for-sale debt securities

Corporate debt securities	49.4		—		49.4		—		Corporate debt securities	22.4		—		22.4		—
Foreign government obligations	7.1		—		7.1		—
U.S. government treasury securities	81.4		81.4		—		—		U.S. government treasury securities	9.3		9.3		—		—
State and local government obligations	2.0		—		2.0		—
Certificates of deposit	2.3		—		2.3		—
Total available-for-sale securities	151.7		81.4		70.3		—
Trading securities	76.9		76.9		—		—

Total available-for-sale debt securities									Total available-for-sale debt securities	31.7		9.3		22.4		—
Structured deposits									Structured deposits	275.1		—		275.1		—
Marketable equity securities									Marketable equity securities	57.7		57.7		—		—
Total short-term investments	228.6		158.3		70.3		—		Total short-term investments	364.5		67.0		297.5		—
Prepaid expenses and other current assets:									Prepaid expenses and other current assets:
Derivative assets	13.4		0.1		13.3		—		Derivative assets	75.1		—		75.1		—
Long-term investments:									Long-term investments:
Available-for-sale securities
Agency obligations	21.8		—		21.8		—
Available-for-sale debt securities									Available-for-sale debt securities

Corporate debt securities	207.4		—		207.4		—		Corporate debt securities	134.7		—		134.7		—
Auction rate securities	5.9		—		—		5.9
Foreign government obligations	17.1		—		17.1		—		Foreign government obligations	3.8		—		3.8		—
Mortgage and other asset-backed securities									Mortgage and other asset-backed securities	56.5		—		56.5		—
State and local government obligations									State and local government obligations	1.3		—		1.3		—
U.S. government treasury securities	127.4		127.4		—		—		U.S. government treasury securities	82.8		82.8		—		—
State and local government obligations	7.0		—		7.0		—
Mortgage and other asset-backed securities	155.7		—		155.7		—
Total long-term investments	542.3		127.4		409.0		5.9		Total long-term investments	279.1		82.8		196.3		—
Other long-term assets:									Other long-term assets:
Derivative assets	24.4		—		24.4		—		Derivative assets	156.2		—		156.2		—
Total assets	$	3,271.0	$	2,748.1	$	517.0	$	5.9	Total assets	$	3,693.3	$	2,947.1	$	746.2	$	—
Liabilities:									Liabilities:
Accrued liabilities:									Accrued liabilities:
Derivative liabilities	$	16.4	$	2.5	$	13.9	$	—	Derivative liabilities	$	21.0	$	—	$	21.0	$	—
Other long-term liabilities:									Other long-term liabilities:
Derivative liabilities	22.1		—		22.1		—		Derivative liabilities	34.0		—		34.0		—
Total	$	38.5	$	2.5	$	36.0	$	—
Total liabilities									Total liabilities	$	55.0	$	—	$	55.0	$	—

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.

Gross unrealized holding gains and losses on ~~investments~~available-for-sale debt securities, structured deposits and marketable equity securities were not material as of ~~December 31, 2017~~January 1, 2023 and October ~~1, 2017.~~

2, 2022.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities recognized or disclosed at fair value on the ~~condensed~~ consolidated financial statements on a nonrecurring basis include items such as property, plant and equipment, ROU assets, 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. ~~During the quarters ended December 31, 2017 and January 1, 2017, there were no material fair value adjustments.~~

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The estimated fair value of our long-term debt based on the quoted market price (Level 2) is included at Note 78, Debt. There were no material fair value adjustments during the quarters ended January 1, 2023 and January 2, 2022.


~~Note 5:~~	~~Inventories~~ ~~(in millions)~~

Dec 31, 2017 Oct 1, 2017 Jan 1, 2017
Coffee:
Unroasted $ 559.9
$ 541.0
$ 550.5
Roasted 283.9
301.1
255.7
Other merchandise held for sale 260.6
301.1
256.2
Packaging and other supplies 208.8
220.8
156.3
Total $ 1,313.2
$ 1,364.0
$ 1,218.7
Note 5: Inventories (in millions):


	Jan 1, 2023		Oct 2, 2022
Coffee:
Unroasted	$	1,015.1	$	1,018.6
Roasted	293.2		310.3
Other merchandise held for sale	383.5		430.9
Packaging and other supplies	396.3		416.8
Total	$	2,088.1	$	2,176.6

Other merchandise held for sale includes, among other items, serveware, food and tea. Inventory levels vary due to seasonality, commodity market supply and price fluctuations.

As of ~~December 31, 2017,~~January 1, 2023, we had committed to purchasing green coffee totaling ~~$762~~$333.3 million under fixed-price contracts and an estimated ~~$369~~$773.2 million under price-to-be-fixed contracts. ~~As of December 31, 2017, none~~A portion of our ~~price-to-be fixed~~price-to-be-fixed contracts ~~were~~are effectively fixed through the use of ~~futures contracts.~~futures. See Note 3, Derivative Financial Instruments, for further discussion. 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” coffee commodity price component will be fixed has not yet been established. For most contracts, either Starbucks or the seller has the option to “fix” the base “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 established relationships ~~established~~ with our suppliers ~~in the past,~~and continuous monitoring, the risk of non-delivery on these purchase commitments is remote.


~~Note 6:~~	~~Supplemental Balance Sheet Information~~ ~~(in millions)~~

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Note 6: Supplemental Balance Sheet and Statement of Earnings Information(in millions):

Prepaid Expenses and Other Current Assets


	Jan 1, 2023		Oct 2, 2022
Income tax receivable	$	10.0	$	27.7
Government subsidies receivable	28.4		69.4
Other prepaid expenses and current assets	335.1		386.6
Total prepaid expenses and current assets	$	373.5	$	483.7

Dec 31, 2017 Oct 1, 2017
Receivable from Taiwan divestiture $ 177.1
$ —
Income tax receivable 438.4
68.0
Other prepaid expenses and current assets 335.0
290.1
Total prepaid expenses and current assets $ 950.5
$ 358.1

Property, Plant and Equipment, net


	Jan 1, 2023		Oct 2, 2022
Land	$	46.1	$	46.1
Buildings	566.6		555.4
Leasehold improvements	9,368.6		9,066.8
Store equipment	3,086.6		3,018.2
Roasting equipment	809.3		838.5
Furniture, fixtures and other	1,578.4		1,526.1
Work in progress	603.0		558.7
Property, plant and equipment, gross	16,058.6		15,609.8
Accumulated depreciation	(9,359.1)		(9,049.3)
Property, plant and equipment, net	$	6,699.5	$	6,560.5

Accrued Liabilities


	Jan 1, 2023		Oct 2, 2022
Accrued occupancy costs	$	77.9	$	84.6
Accrued dividends payable	608.6		608.3
Accrued capital and other operating expenditures	683.8		878.1
Self-insurance reserves	243.6		232.3
Income taxes payable	280.1		139.2
Accrued business taxes	195.6		194.6
Total accrued liabilities	$	2,089.6	$	2,137.1

Store Operating Expenses


	Quarter Ended
	Jan 1, 2023		Jan 2, 2022
Wages and benefits	$	2,215.7	$	2,010.7
Occupancy costs	671.5		665.3
Other expenses	778.1		724.0
Total store operating expenses	$	3,665.3	$	3,400.0

Note 7: Other Intangible Assets and Goodwill

Indefinite-Lived Intangible Assets


(in millions)	Jan 1, 2023		Oct 2, 2022
Trade names, trademarks and patents	$	97.8	$	97.5

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Dec 31, 2017 Oct 1, 2017
Land $ 46.9
$ 46.9
Buildings 487.2
481.7
Leasehold improvements 6,844.0
6,401.0
Store equipment 2,234.3
2,110.7
Roasting equipment 622.0
619.8
Furniture, fixtures and other 1,599.2
1,514.1
Work in progress 395.8
409.8
Property, plant and equipment, gross 12,229.4
11,584.0
Accumulated depreciation (6,850.7 ) (6,664.5 )
Property, plant and equipment, net $ 5,378.7
$ 4,919.5
Finite-Lived Intangible Assets


	Jan 1, 2023						Oct 2, 2022
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Acquired and reacquired rights	$	1,030.4	$	(1,030.4)	$	—	$	990.0	$	(990.0)	$	—
Acquired trade secrets and processes	27.6		(27.6)		—		27.6		(27.3)		0.3
Trade names, trademarks and patents	125.0		(74.5)		50.5		124.6		(69.6)		55.0
Licensing agreements	18.4		(15.3)		3.1		19.3		(16.2)		3.1
Other finite-lived intangible assets	21.0		(21.0)		—		20.6		(20.6)		—
Total finite-lived intangible assets	$	1,222.4	$	(1,168.8)	$	53.6	$	1,182.1	$	(1,123.7)	$	58.4

Amortization expense for finite-lived intangible assets was $5.6 million for the quarter ended January 1, 2023 and $50.2 million for the quarter ended January 2, 2022, respectively.

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


Fiscal Year	Total
2023 (excluding the quarter ended January 1, 2023)	$	15.2
2024	20.0
2025	14.0
2026	1.3
2027	1.0
Thereafter	2.1
Total estimated future amortization expense	$	53.6

~~Accrued Liabilities~~Goodwill

Changes in the carrying amount of goodwill by reportable operating segment (in millions):


	North America		International		Channel Development		Corporate and Other		Total
Goodwill balance at October 2, 2022	$	491.1	$	2,756.7	$	34.7	$	1.0	$	3,283.5


Other(1)	0.3		99.2		—		—		99.5
Goodwill balance at January 1, 2023	$	491.4	$	2,855.9	$	34.7	$	1.0	$	3,383.0

(1)“Other” consists of changes in the goodwill balance resulting from foreign currency translation.

Dec 31, 2017 Oct 1, 2017
Accrued compensation and related costs $ 535.2
$ 524.5
Accrued occupancy costs 178.4
151.3
Accrued taxes 421.5
226.6
Accrued dividends payable 422.3
429.5
Accrued capital and other operating expenditures 772.7
602.6
Payable for East China Acquisition 1,431.0
—
Total accrued liabilities $ 3,761.1
$ 1,934.5

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Note 8: Debt


~~Note 7:~~	~~Debt~~

Revolving Credit Facility

Our $3.0 billion unsecured five-year revolving credit facility (the “2021 credit facility”), of which $150 million may be used for issuances of letters of credit, is currently set to mature on September 16, 2026. The 2021 credit facility is available for working capital, capital expenditures and other corporate purposes, including acquisitions and share repurchases. We have the option, subject to negotiation and agreement with the related banks, to increase the maximum commitment amount by an additional $1.0 billion.

Borrowings under the 2021 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 2021 credit facility), in each case plus an applicable margin. The applicable margin is based on the Company’s long-term credit ratings assigned by the Moody’s and Standard & Poor’s rating agencies. The 2021 credit facility contains alternative interest rate provisions specifying rate calculations to be used at such time LIBOR ceases to be available as a benchmark due to reference rate reform. The “Base Rate” is the highest of (i) the Federal Funds Rate (as defined in the 2021 credit facility) plus 0.500%, (ii) Bank of America’s prime rate, and (iii) the Eurocurrency Rate (as defined in the 2021 credit facility) plus 1.000%.

The 2021 credit facility contains provisions requiring us to maintain compliance with certain covenants, including a minimum fixed charge coverage ratio, which measures our ability to cover financing expenses. As of January 1, 2023, we were in compliance with all applicable covenants. No amounts were outstanding under our 2021 credit facility as of January 1, 2023 or October 2, 2022.

Short-term Debt

Under our commercial paper program, we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of $3$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 2021 credit facility. The proceeds from borrowings under our commercial paper program may be used for working capital needs, capital expenditures and other corporate purposes, including, but not limited to, business expansion, payment of cash dividends on our common stock and share repurchases. As of ~~December 31, 2017,~~January 1, 2023, we had no borrowings outstanding under the program. As of October 2, 2022, we had $175.0 million in borrowings outstanding under this program.

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

•A ¥5 billion, or $37.6 million, credit facility is currently set to mature on January 4, 2024. Borrowings under this credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on Tokyo Interbank Offered Rate ("TIBOR") plus an applicable margin of 0.400%.

•A ¥10 billion, or $75.2 million, credit facility is currently set to mature on March 27, 2023. Borrowings under this credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on TIBOR plus an applicable margin of 0.350%.

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

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Long-term Debt

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


	Jan 1, 2023				Oct 2, 2022				Stated Interest Rate		Effective Interest Rate(1)
Issuance	Amount		Estimated Fair Value		Amount		Estimated Fair Value
March 2023 notes	$	1,000.0	$	996.6	$	1,000.0	$	996.5	3.100	%	3.107	%
October 2023 notes(2)	750.0		745.0		750.0		744.8		3.850	%	2.859	%
February 2024 notes(3)	500.0		496.8		500.0		497.3		4.590	%	4.821	%
March 2024 notes(4)	639.0		653.5		588.4		584.7		0.372	%	0.462	%
August 2025 notes	1,250.0		1,225.3		1,250.0		1,209.6		3.800	%	3.721	%
June 2026 notes	500.0		465.6		500.0		458.3		2.450	%	2.511	%
March 2027 notes	500.0		447.5		500.0		437.9		2.000	%	2.058	%
March 2028 notes	600.0		565.2		600.0		554.8		3.500	%	3.529	%
November 2028 notes	750.0		713.8		750.0		704.7		4.000	%	3.958	%
August 2029 notes(2)	1,000.0		924.7		1,000.0		900.3		3.550	%	3.840	%
March 2030 notes	750.0		625.2		750.0		607.7		2.250	%	3.084	%
November 2030 notes	1,250.0		1,052.7		1,250.0		1,017.9		2.550	%	2.582	%
February 2032 notes	1,000.0		857.8		1,000.0		827.1		3.000	%	3.155	%
June 2045 notes	350.0		296.4		350.0		281.5		4.300	%	4.348	%
December 2047 notes	500.0		381.5		500.0		369.6		3.750	%	3.765	%
November 2048 notes	1,000.0		866.6		1,000.0		824.6		4.500	%	4.504	%
August 2049 notes	1,000.0		857.0		1,000.0		817.8		4.450	%	4.447	%
March 2050 notes	500.0		356.1		500.0		342.0		3.350	%	3.362	%
November 2050 notes	1,250.0		906.3		1,250.0		874.9		3.500	%	3.528	%
Total	15,089.0		13,433.6		15,038.4		13,052.0
Aggregate debt issuance costs and unamortized premium/(discount), net	(114.0)				(117.2)
Hedge accounting fair value adjustment(2)	(49.0)				(52.3)
Total	$	14,926.0			$	14,868.9

(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 interest rate risk prior to the debt issuance.

(2)Amount includes the change in fair value due to changes in benchmark interest rates related to hedging our October 2023 notes and $350 million of our August 2029 notes. Refer to Note 3, Derivative Financial Instruments, for additional information on our interest rate swaps designated as fair value hedges.

(3)Floating rate notes which bear interest at a rate equal to Compounded SOFR (as defined in the February 2024 notes) plus 0.420%, resulting in a stated interest rate of 4.590% at January 1, 2023.

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

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Dec 31, 2017 Oct 1, 2017 Stated Interest Rate
Effective Interest Rate ⁽¹⁾
Issuance Amount Estimated Fair Value Amount Estimated Fair Value
2018 notes $ 350.0
$ 350
$ 350.0
$ 352
2.000 % 2.012 %
2020 notes⁽²⁾
500.0
500
—
—
2.200 % 2.228 %
2021 notes 500.0
497
500.0
501
2.100 % 2.293 %
2021 notes 250.0
248
250.0
250
2.100 % 1.600 %
2022 notes 500.0
504
500.0
508
2.700 % 2.819 %
2023 notes 750.0
796
750.0
806
3.850 % 2.859 %
2024 notes⁽³⁾
755.3
762
755.3
760
0.372 % 0.462 %
2026 notes 500.0
480
500.0
481
2.450 % 2.511 %
2045 notes 350.0
387
350.0
381
4.300 % 4.348 %
2047 notes⁽²⁾
500.0
509
—
—
3.750 % 3.765 %
Total 4,955.3
5,033
3,955.3
4,039

Aggregate debt issuance costs and unamortized premium, net (26.1 ) (17.5 )
Hedge accounting fair value adjustment ⁽⁴⁾
(12.8 ) (5.2 )
Total $ 4,916.4
$ 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⁾	~~Japanese yen-denominated long-term debt.~~


⁽⁴⁾	~~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 require us to maintain compliance with certain covenants, including limits on future liens and sale and leaseback transactions on certain material properties. As of December 31, 2017, we were in compliance with all applicable covenants.

The following table summarizes our long-term debt maturities as of ~~December 31, 2017~~January 1, 2023 by fiscal year (in millions):


Fiscal Year	Total

2023	$	1,750.0
2024	1,139.0
2025	1,250.0
2026	500.0
2027	500.0
Thereafter	9,950.0
Total	$	15,089.0

Note 9: Leases

The components of lease costs (in millions):


	Quarter Ended
	Jan 1, 2023		Jan 2, 2022
Operating lease costs(1)	$	384.8	$	386.1
Variable lease costs	235.3		229.8
Short-term lease costs	7.0		7.1
Total lease costs	$	627.1	$	623.0

(1)Includes immaterial amounts of sublease income and rent concessions.

The following table includes supplemental information (in millions):


	Quarter Ended
	Jan 1, 2023			Jan 2, 2022
Cash paid related to operating lease liabilities	$	404.1		$	410.0
Operating lease liabilities arising from obtaining ROU assets	367.3			346.8

	Jan 1, 2023			Jan 2, 2022
Weighted-average remaining operating lease term	8.5 years			8.6 years
Weighted-average operating lease discount rate	2.7		%	2.5		%

Finance lease assets are recorded in property, plant and equipment, net with the corresponding lease liabilities included in accrued liabilities and other long-term liabilities on the consolidated balance sheet. There were no material finance leases as of January 1, 2023 and October 2, 2022.

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


Fiscal Year	Total
2023 (excluding the quarter ended January 1, 2023)	$	1,511.5
2024	1,472.9
2025	1,332.8
2026	1,177.8
2027	975.4
Thereafter	3,600.2
Total lease payments	10,070.6
Less imputed interest	(1,177.7)
Total	$	8,892.9

As of January 1, 2023, we have entered into operating leases that have not yet commenced of $1.2 billion, primarily related to real estate leases. These leases will commence between fiscal year 2023 and fiscal year 2028 with lease terms ranging from three to twenty years.

Fiscal Year Total
2019 $ 350.0
2020 —
2021 1,250.0
2022 500.0
2023 —
Thereafter 2,855.3
Total $ 4,955.3

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Note 10: Deferred Revenue

Our deferred revenue primarily consists of the prepaid royalty from Nestlé, for which we have continuing performance obligations to support the Global Coffee Alliance, our unredeemed stored value card liability and unredeemed loyalty points (“Stars”) associated with our loyalty program.

As of January 1, 2023, the current and long-term deferred revenue related to Nestlé was $177.0 million and $6.1 billion, respectively. As of October 2, 2022, the current and long-term deferred revenue related to the Nestlé up-front payment was $177.0 million and $6.2 billion, respectively. During the quarter ended January 1, 2023, we recognized $44.1 million of prepaid royalty revenue related to Nestlé. During the quarter ended January 2, 2022, we recognized $44.2 million of prepaid royalty revenue related to Nestlé.

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


Quarter Ended January 1, 2023	Total
Stored value cards and loyalty program at October 2, 2022	$	1,503.0
Revenue deferred - card activations, card reloads and Stars earned	4,223.4
Revenue recognized - card and Stars redemptions and breakage	(3,714.1)
Other(1)	13.3
Stored value cards and loyalty program at January 1, 2023(2)	$	2,025.6

~~Note 8:~~Quarter Ended January 2, 2022	~~Equity~~Total
Stored value cards and loyalty program at October 3, 2021	$	1,448.5
Revenue deferred - card activations, card reloads and Stars earned	3,917.5
Revenue recognized - card and Stars redemptions and breakage	(3,410.8)
Other(1)	(2.7)
Stored value cards and loyalty program at January 2, 2022(2)	$	1,952.5

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

(2)As of January 1, 2023 and January 2, 2022, approximately $1.9 billion and $1.8 billion of these amounts were current, respectively.

Quarter Ended
Dec 31, 2017 Jan 1, 2017
Attributable to Starbucks Noncontrolling interests Total Equity Attributable to Starbucks Noncontrolling interest Total Equity
Beginning balance of total equity $ 5,450.1
$ 6.9
$ 5,457.0
$ 5,884.0
$ 6.7
$ 5,890.7
Net earnings including noncontrolling interests 2,250.2
(0.1 ) 2,250.1
751.8
(0.3 ) 751.5
Translation adjustment and other, net of reclassifications and tax 28.1
—
28.1
(171.8 ) —
(171.8 )
Unrealized gains/(losses), net of reclassifications and tax 2.2
—
2.2
37.9
—
37.9
Other comprehensive income/(loss) 30.3
—
30.3
(133.9 ) —
(133.9 )
Stock-based compensation expense 62.2
—
62.2
55.7
—
55.7
Exercise of stock options/vesting of RSUs (9.1 ) —
(9.1 ) 8.8
—
8.8
Sale of common stock 7.4
—
7.4
7.0
—
7.0
Repurchase of common stock (1,618.2 ) —
(1,618.2 ) (413.7 ) —
(413.7 )
Cash dividends declared (420.8 ) —
(420.8 ) (363.1 ) —
(363.1 )
Ending balance of total equity $ 5,752.1
$ 6.8
$ 5,758.9
$ 5,796.6
$ 6.5
$ 5,803.1

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Note 11: Equity

Changes in AOCI by component, net of tax (in millions):


Quarter Ended	Available-for-Sale Debt Securities		Cash Flow Hedges		Net Investment Hedges		Translation Adjustment and Other		Total
January 1, 2023
Net gains/(losses) in AOCI, beginning of period	$	(15.5)	$	199.0	$	209.1	$	(855.8)	$	(463.2)
Net gains/(losses) recognized in OCI before reclassifications	1.5		(151.2)		(48.3)		208.9		10.9
Net (gains)/losses reclassified from AOCI to earnings	0.1		(82.7)		(4.0)		—		(86.6)
Other comprehensive income/(loss) attributable to Starbucks	1.6		(233.9)		(52.3)		208.9		(75.7)


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

January 2, 2022
Net gains/(losses) in AOCI, beginning of period	$	1.5	$	158.3	$	48.6	$	(61.2)	$	147.2
Net gains/(losses) recognized in OCI before reclassifications	(2.6)		76.9		31.0		14.2		119.5
Net (gains)/losses reclassified from AOCI to earnings	(0.1)		(10.6)		(2.5)		—		(13.2)
Other comprehensive income/(loss) attributable to Starbucks	(2.7)		66.3		28.5		14.2		106.3


Net gains/(losses) in AOCI, end of period	$	(1.2)	$	224.6	$	77.1	$	(47.0)	$	253.5

~~Quarter Ended~~

Available-for-Sale Securities Cash Flow Hedges Net Investment Hedges Translation Adjustment and Other Total
December 31, 2017
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 (1.8 ) (2.9 ) (0.2 ) 20.9
16.0
Net (gains)/losses reclassified from AOCI to earnings 1.3
5.9
(0.1 ) 7.2
14.3
Other comprehensive income/(loss) attributable to Starbucks (0.5 ) 3.0
(0.3 ) 28.1
30.3
Net gains/(losses) in AOCI, end of period $ (3.0 ) $ (1.1 ) $ 13.7
$ (134.9 ) $ (125.3 )

January 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 (9.3 ) 87.0
25.9
(171.8 ) (68.2 )
Net (gains)/losses reclassified from AOCI to earnings 0.6
(66.3 ) —
—
(65.7 )
Other comprehensive income/(loss) attributable to Starbucks (8.7 ) 20.7
25.9
(171.8 ) (133.9 )
Net gains/(losses) in AOCI, end of period $ (7.6 ) $ 31.6
$ 27.2
$ (293.5 ) $ (242.3 )

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

~~Quarter Ended~~

AOCI
Components
Amounts Reclassified from AOCI
Affected Line Item in
the Statements of Earnings
Dec 31, 2017 Jan 1, 2017
Gains/(losses) on available-for-sale securities $ (1.7 ) $ (0.8 ) Interest income and other, net
Gains/(losses) on cash flow hedges
Interest rate hedges 1.2
1.2
Interest expense
Cross-currency swaps (0.5 ) 77.6
Interest income and other, net
Foreign currency hedges (0.4 ) 1.3
Revenues
Foreign currency/coffee hedges (7.1 ) 2.4
Cost of sales including occupancy costs
Gains/(losses) on net investment hedges 0.1
—
Interest income and other, net
Translation adjustment
East China joint venture (7.2 ) —
Gain resulting from acquisition of joint venture
Taiwan joint venture (1.4 ) —
Gains resulting from divestiture of certain operations
Other 1.9
—
Interest income and other, net
(15.1 ) 81.7
Total before tax
0.8
(16.0 ) Tax benefit
$ (14.3 ) $ 65.7
Net of tax


Quarter Ended
AOCI Components	Amounts Reclassified from AOCI				Affected Line Item in the Statements of Earnings
	Jan 1, 2023		Jan 2, 2022
Gains/(losses) on available-for-sale debt securities	$	(0.2)	$	0.2	Interest income and other, net
Gains/(losses) on cash flow hedges	93.3		12.5		Please refer to Note 3, Derivative Financial Instruments for additional information.
Gains/(losses) on net investment hedges	5.3		3.4		Interest expense


	98.4		16.1		Total before tax
	(11.8)		(2.9)		Tax expense
	$	86.6	$	13.2	Net of tax

In addition to 2.4 billion shares of authorized common stock with $0.001 par value per share, the Company has authorized 7.5 million shares of preferred stock, none of which was outstanding as of ~~December 31, 2017.~~January 1, 2023.

WeDuring the quarters ended January 1, 2023 and January 2, 2022, we repurchased ~~28.5~~1.9 million and 31.1 million shares of common stock ~~at a total cost of $1.6~~for $191.4 million and $3.5 billion, ~~and 7.6 million shares at a total cost of $413.7 million for the quarters ended December 31, 2017 and January 1, 2017,~~ respectively. As of ~~December 31, 2017, 51.8~~January 1, 2023, 50.6 million shares remained available for repurchase under current authorizations.

During the first quarter of fiscal ~~2018,~~2023, our Board of Directors ~~declared~~approved a quarterly cash dividend to shareholders of ~~$0.30~~$0.53 per share to be paid on February ~~23, 2018~~24, 2023 to shareholders of record as of the close of business on February ~~8, 2018.~~10, 2023.


~~Note 9:~~	~~Employee Stock Plans~~

Note 12: Employee Stock Plans

As of ~~December 31, 2017~~,January 1, 2023, there were ~~58.6~~91.8 million shares of common stock available for issuance pursuant to future equity-based compensation awards and ~~13.2~~10.7 million shares available for issuance under our employee stock purchase plan.

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


	Quarter Ended
	Jan 1, 2023		Jan 2, 2022
Restricted Stock Units (“RSUs”)	$	85.0	$	95.7
Options	0.1		0.1
Total stock-based compensation expense	$	85.1	$	95.8

Quarter Ended
Dec 31, 2017 Jan 1, 2017
Options $ 14.2
$ 14.9
Restricted Stock Units (“RSUs”) 47.2
40.1
Total stock-based compensation expense $ 61.4
$ 55.0

Stock option and RSU transactions from October ~~1, 2017~~2, 2022 through~~December 31, 2017~~ (~~in millions~~):

Stock Options RSUs
Options outstanding/Nonvested RSUs, October 1, 2017 31.4
7.6
Granted 3.6
5.8
Options exercised/RSUs vested (2.5 ) (2.8 )
Forfeited/expired (0.3 ) (0.3 )
Options outstanding/Nonvested RSUs, December 31, 2017 32.2
10.3
Total unrecognized stock-based compensation expense, net of estimated forfeitures, as of December 31, 2017 $ 49.8
$ 279.9


~~Note 10:~~	~~Income Taxes~~

Our tax provision is determined using an estimated annual effective tax rate and adjusted for discrete taxable events that may occur during the quarter. We recognize the effects of tax legislation in the period in which the law is enacted. Our deferred tax assets and liabilities are remeasured using enacted tax rates expected to apply to taxable income in the years we estimate the related temporary differences to reverse.

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 Cuts and Jobs Act (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 2023 (in the first fiscal quarter, the most significant impacts include: 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. In the first quarter of fiscal 2018, we recorded $77 million net income tax benefit for the provisional remeasurement of certain deferred taxes and related amounts. Additionally, we recorded a provisional $212 million of income tax expense for the estimated effects of the transition tax, net of adjustments related to uncertain tax positions.millions):


	Stock Options		RSUs
Options outstanding/Nonvested RSUs, October 2, 2022	4.1		7.0
Granted	—		4.0
Options exercised/RSUs vested	(0.7)		(2.7)
Forfeited/expired	—		(0.2)
Options outstanding/Nonvested RSUs, January 1, 2023	3.4		8.1
Total unrecognized stock-based compensation expense, net of estimated forfeitures, as of January 1, 2023	$	—	$	345.3

Based on our current interpretation of the Tax Act, we made reasonable estimates to record provisional adjustments during the first quarter of fiscal 2018, as described above. Collectively, these items did not have a material impact to our condensed 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 during fiscal 2018. We continue to refine such amounts within the measurement period allowed, which will be completed no later than the first quarter of fiscal 2019.


~~Note 11:~~	~~Earnings per Share~~

Note 13: Earnings per Share

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

Quarter Ended
Dec 31, 2017 Jan 1, 2017
Net earnings attributable to Starbucks $ 2,250.2
$ 751.8
Weighted average common shares outstanding (for basic calculation) 1,421.0
1,457.5
Dilutive effect of outstanding common stock options and RSUs 13.6
13.0
Weighted average common and common equivalent shares outstanding (for diluted calculation) 1,434.6
1,470.5
EPS — basic $ 1.58
$ 0.52
EPS — diluted $ 1.57
$ 0.51


	Quarter Ended
	Jan 1, 2023		Jan 2, 2022
Net earnings attributable to Starbucks	$	855.2	$	815.9
Weighted average common shares outstanding (for basic calculation)	1,148.5		1,169.6
Dilutive effect of outstanding common stock options and RSUs	4.4		7.0
Weighted average common and common equivalent shares outstanding (for diluted calculation)	1,152.9		1,176.6
EPS — basic	$	0.74	$	0.70
EPS — diluted	$	0.74	$	0.69

Potential dilutive shares consist of the incremental common shares issuable upon the exercise of outstanding stock options (both vested and ~~nonvested)~~non-vested) and unvested RSUs, calculated using the treasury stock method. The calculation of dilutive shares outstanding excludes ~~out-of-the-money~~anti-dilutive stock options ~~(i.e., such options’ exercise prices~~or RSU's, which were ~~greater~~immaterial in the periods presented.

Note 14: Commitments and Contingencies

Legal Proceedings

In 2010 and 2011, an organization named Council for Education and Research on Toxics (“Plaintiff”) filed lawsuits in the Superior Court of the State of California, County of Los Angeles, against the Company and other companies who manufacture, package, distribute or sell brewed coffee. The suits were later consolidated into a single action. Plaintiff alleged that the Company and the other defendants failed to provide warnings for their coffee products of exposure to the chemical acrylamide as required under California Health and Safety Code section 25249.5, the California Safe Drinking Water and Toxic Enforcement Act of 1986, better known as Proposition 65. Plaintiff sought equitable relief, including providing warnings to consumers of coffee products, as well as civil penalties in the amount of the statutory maximum of two thousand five hundred dollars per day per alleged violation of Proposition 65, which the Plaintiff claimed was every day coffee is sold without a compliant warning. The Company denied the claims.

During the pendency of the litigation, the California Office of Environmental Health Hazard Assessment (“OEHHA”) proposed a new regulation clarifying that cancer warnings are not required for coffee under Proposition 65. The regulation was approved by the Office of Administrative Law and became effective on October 1, 2019. In 2020, the trial court granted the defendants’ motion for summary judgment, ruling that the coffee exemption regulation is a complete defense to the Plaintiff’s complaint. On October 26, 2022, the California Court of Appeal affirmed the trial court's dismissal of the case. The Plaintiff’s subsequent request for a rehearing before the California Court of Appeals was denied. On December 2, 2022 Plaintiff filed a petition for review in the California Supreme Court and Starbucks filed a response brief on December 22, 2022. Starbucks believes that the likelihood that the Company will ultimately incur a material loss in connection with this litigation is less than reasonably possible. Accordingly, as of January 1, 2023, no loss contingency has been recorded for this matter.

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Starbucks is involved in various other legal proceedings arising in the ~~average market price~~ordinary course of ~~our common shares for the period) because their inclusion would~~business, including certain employment litigation cases that have been ~~antidilutive. Out-of-the-money stock options totaled approximately 5.0 million and 8.6 million~~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 ~~December 31, 2017 and January 1, 2017, respectively.~~operations or cash flows.


~~Note 12:~~	~~Segment Reporting~~

~~Our chief executive officer and executive chairman comprise the Company's Chief Operating Decision Maker function (“CODM”).~~ Note 15: Segment Reporting

Segment information is prepared on the same basis that our ~~CODM~~interim chief executive officer, who is our chief operating decision maker, manages the segments, evaluates financial results and makes key operating decisions.

Consolidated revenue mix by product type (in millions):


	Quarter Ended
	Jan 1, 2023				Jan 2, 2022
Beverage(1)	$	5,173.0	59	%	$	4,898.4	61	%
Food(2)	1,565.9		18	%	1,434.6		18	%
Other(3)	1,975.0		23	%	1,717.4		21	%
Total	$	8,713.9	100	%	$	8,050.4	100	%

(1)Beverage represents sales within our company-operated stores.

(2)Food includes sales within our company-operated stores.

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

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

Quarter Ended


	North America		International		Channel Development		Corporate and Other		Total
January 1, 2023
Total net revenues	$	6,551.3	$	1,680.1	$	478.2	$	4.3	$	8,713.9
Depreciation and amortization expenses	216.9		81.5		—		28.7		327.1
Income from equity investees	—		0.5		57.3		—		57.8
Operating income/(loss)	1,212.4		240.4		226.3		(426.0)		1,253.1

January 2, 2022
Total net revenues	$	5,732.3	$	1,875.9	$	417.1	$	25.1	$	8,050.4
Depreciation and amortization expenses	200.0		133.1		—		32.9		366.0
Income from equity investees	—		0.7		39.6		—		40.3
Operating income/(loss)	1,083.1		299.6		183.2		(388.1)		1,177.8

Americas
China/
Asia Pacific
EMEA
Channel
Development
All Other Segments
Segment
Total
December 31, 2017
Total net revenues $ 4,265.8
$ 843.7
$ 283.9
$ 560.3
$ 120.0
$ 6,073.7
Depreciation and amortization expenses 158.0
53.7
7.7
0.5
0.7
220.6
Income from equity investees —
50.7
—
38.7
—
89.4
Operating income/(loss) 979.4
196.8
39.1
243.3
(30.0 ) 1,428.6

January 1, 2017
Total net revenues $ 3,991.4
$ 770.8
$ 262.4
$ 553.7
$ 154.6
$ 5,732.9
Depreciation and amortization expenses 152.4
48.6
7.6
0.6
2.9
212.1
Income from equity investees —
42.5
—
41.9
—
84.4
Operating income/(loss) 958.5
163.4
44.1
242.9
9.6
1,418.5
Note 16: Subsequent Event

~~All Other Segments includes our Teavana business,~~On January 13, 2023, Starbucks finalized the sale of the Seattle's Best Coffee brand to Nestlé and ~~fiscal 2018 results reflect the strategy to close Teavana-branded retail stores announced in fiscal 2017 to focus on sales~~will recognize a pre-tax gain of ~~premium Teavana~~^TM/MC tea products at Starbucks branded stores and, to a lesser extent, consumer product channels. The existing portfolio of Teavana stores are expected to be closed during fiscal 2018. Lease exit costs associated with our restructuring efforts will be recognized concurrently with either actual store closures or upon reaching a lease termination agreement with the landlord. Total lease exit costs are expected to be approximately ~~$143.2~~$90 million ~~of which $16.6 million and $0.0 million were recorded within restructuring expenses on the consolidated statement of earnings~~ in the ~~first~~second quarter of ~~2018~~fiscal 2023. With the exception of recognizing the sale to Nestlé, we do not expect the transaction will have a material impact on our ongoing operations and ~~2017, respectively. Previously recorded lease exit costs recorded within restructuring expenses for fiscal year 2017 were $15.7 million.~~

~~Reconciliation of total segment operating income to consolidated earnings before income taxes~~ ~~(in millions)~~:future financial results.

Quarter Ended
Dec 31, 2017 Jan 1, 2017
Total segment operating income $ 1,428.6
$ 1,418.5
Unallocated corporate operating expenses (312.5 ) (285.9 )
Consolidated operating income 1,116.1
1,132.6
Gain resulting from acquisition of joint venture 1,326.3
—
Gains resulting from divestiture of certain operations 501.2
—
Interest income and other, net 88.2
24.1
Interest expense (25.9 ) (23.8 )
Earnings before income taxes $ 3,005.9
$ 1,132.9

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~~Item 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Certain statements contained herein ~~including~~are “forward-looking” statements ~~regarding~~within the meaning of applicable securities laws and regulations. Generally, these statements can be identified by the use of words such as “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “feel,” “forecast,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would,” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements include statements relating to trends in or expectations relating to the ~~expected~~ effects of our existing and any future initiatives, strategies, investments and plans, including our Reinvention Plan, as well as trends in or expectations regarding ~~revenues, operating margins, comparable store sales, anticipated net new stores,~~our financial results and long-term growth model and drivers; our operations in the ~~effects~~U.S. and China; our environmental, social and governance efforts; our partners; economic and consumer trends, including the impact of inflationary pressures; impact of foreign currency ~~translation,~~translation; strategic pricing actions; the ~~purchase~~conversion of certain market operations to fully licensed models; our plans for streamlining our operations, including store openings, closures and changes in store formats and models; the ~~remaining 50% ownership~~success of our ~~East China joint venture and other streamlining activities, earnings per share, tax rates, capital expenditures, sales leverage, other financial results, the health, strength and growth~~licensing relationship with Nestlé, of our ~~business overall~~consumer packaged goods and ~~of specific businesses or markets, benefits of recent initiatives, investments in our~~foodservice business and ~~partners, including~~its effects on our ~~continued focus on operational excellence, product innovation and digital interactions with our customers,~~Channel Development segment results; tax rates; business opportunities, expansions and ~~expansion,~~new initiatives, including Starbucks Odyssey; strategic ~~acquisitions, expenses,~~acquisitions; our dividends ~~share repurchases,~~programs; commodity costs and our mitigation ~~strategies,~~strategies; our liquidity, cash flow from operations, ~~use of cash and cash requirements,~~investments, borrowing capacity and use of ~~proceeds,~~proceeds; continuing compliance with our covenants under our credit facilities and commercial paper program; repatriation of cash to the U.S.,; the ~~potential~~likelihood of the issuance of additional debt and the applicable interest ~~rate,~~rate; the continuing impact of the COVID-19 pandemic on our financial results and future availability of governmental subsidies for COVID-19 or other public health events; our ceo transition; our share repurchase program; our use of cash and cash requirements; the expected effects of new accounting pronouncements and the estimated impact of changes in U.S. tax law, including on tax rates, ~~and~~ investments funded by these changes ~~constitute “forward-looking statements” within the meaning~~and potential outcomes; and effects of ~~the Private Securities Litigation Reform Act of 1995.~~legal proceedings. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Actual future results and trends may differ materially depending on a variety of factors, including, but not limited to: the continuing impact of COVID-19 on our business; regulatory measures or voluntary actions that may be put in place to limit the spread of COVID-19, including restrictions on business operations or social distancing requirements, and the duration and efficacy of such restrictions; the resurgence of COVID-19 infections and the circulation of novel variants of COVID-19; fluctuations in U.S. and international economies and ~~currencies,~~currencies; our ability to preserve, grow and leverage our ~~brands,~~brands; the ability of our business partners and third-party providers to fulfill their responsibilities and commitments; potential negative effects of incidents involving food or beverage-borne illnesses, tampering, adulteration, contamination or ~~mislabeling,~~mislabeling; potential negative effects of material breaches of our information technology systems to the extent we experience a material ~~breach,~~breach; material failures of our information technology ~~systems,~~systems; costs associated with, and the successful execution of, the ~~company's~~Company’s initiatives and plans; new initiatives and plans ~~including the integration of Starbucks Japan, the recently completed purchase of the remaining 50% ownership of~~or revisions to existing initiatives or plans; our ~~East China joint venture and the closure of Teavana stores,~~ability to obtain financing on acceptable terms; the acceptance of the ~~company's~~Company’s products by our customers, evolving consumer preferences and tastes and changes in consumer spending behavior; partner investments, changes in the availability and cost of labor including any union organizing efforts and our responses to such efforts; failure to attract or retain key executive or employee talent or successfully transition executives; significant increased logistics costs; inflationary pressures; the impact of ~~competition,~~competition; inherent risks of operating a global business including any potential negative effects stemming from the Russian invasion of Ukraine; the prices and availability of coffee, dairy and other raw ~~materials prices and availability,~~materials; the effect of legal ~~proceedings,~~proceedings; and the effects of ~~the Tax Cuts and Jobs Act~~changes in tax laws and related guidance and regulations that may be ~~promulgated,~~implemented, including the Inflation Reduction Act of 2022 and other risks detailed in our filings with the SEC, including in ~~Part I Item IA “Risk~~the "Risk Factors” inand “Management's Discussion and Analysis of Financial Condition and Results of Operations” sections of the ~~10-K.~~company’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings.

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 the forward-looking statements, which speak only as of the date of this report. We are under no obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

This information should be read in conjunction with the ~~condensed~~ consolidated financial statements and the notes included in Item 1 of Part I of this 10-Q and the audited consolidated financial statements and notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contained in the ~~10-K.~~10-K filed with the SEC on November 18, 2022.

~~General~~Introduction and Overview

Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world, operating in 84 markets. As of January 1, 2023, Starbucks had more than 36,100 company-operated and licensed stores, an increase of 5% from the prior year. Additionally, we sell a variety of consumer-packaged goods, primarily through the Global Coffee Alliance established with Nestlé and other partnerships and joint ventures. During the quarter ended January 1, 2023, our global comparable store sales

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grew 5%, primarily driven by 10% growth in the U.S. market, partially offset by COVID-19 pandemic-related business conditions in China, leading to a 29% decrease in China comparable store sales.

We have three reportable operating segments: 1) North America, which is inclusive of the U.S. and Canada, 2) International, which is inclusive of China, Japan, Asia Pacific, Europe, Middle East, Africa, Latin America and the Caribbean; and 3) Channel Development. Non-reportable operating segments and unallocated corporate expenses are reported within Corporate and Other.

We believe our financial results and long-term growth model will continue to be driven by new store openings, comparable store sales growth and operating margin management, underpinned by disciplined capital allocation. We believe these key operating metrics are useful to investors because management uses these metrics to assess the growth of our business and the effectiveness of our marketing and operational strategies. Throughout this MD&A, we commonly discuss the following key operating metrics:

•New store openings and store count

•Comparable store sales growth

•Operating margin

Comparable store sales growth represents the percentage change in sales in one period from the same prior year period for company-operated stores open for 13 months or longer and exclude the impact of foreign currency translation. We analyze comparable store sales growth on a constant currency basis as this helps identify underlying business trends, without distortion from the effects of currency movements. Stores that are temporarily closed or operating at reduced hours due to the COVID-19 pandemic remain in comparable store sales while stores identified for permanent closure have been removed.

Our fiscal year ends on the Sunday closest to September 30. Fiscal 2023 and 2022 included 52 weeks. All references to store counts, including data for new store openings, are reported net of store closures, unless otherwise noted.

~~Overview~~

~~During the fourth quarter of fiscal 2017,~~ Starbucks initiated streamlining efforts to focus on accelerating growth in high-returning businesses and remove non-core, slow growth activities. These efforts include acquisitions, divestitures and rationalizing portfolios of stores and products, among other things. The Company’s first quarter of fiscal 2018 reflects these and related restructuring activities, such as the acquisition of its East China joint venture, full conversion of the Singapore retail operations to licensed, ongoing closures of Teavana^TM/MC ~~retail stores and the sale of the Tazo brand, which primarily impacted CAP, Channel Development and All Other Segments.~~

Overall, Starbucks delivered solid growth in net revenues of 6% to $6.1 billion in its first quarter of fiscal 2018. This was primarily driven by incremental revenues from 2,305 net new store openings over the last 12 months and global comparable store sales growth of 2%. Consolidated operating income decreased $16.5 million, or 1%, to $1.1 billion. Operating margin declined 140 basis points to 18.4%, primarily due to a food-related mix shift in the Americas segment and restructuring costs related to the certain streamlining efforts noted above, primarily the planned closure of our Teavana-branded retail stores in All Other Segments.

In December 2017, the U.S. government enacted comprehensive tax legislation into law H.R. 1, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), to reduce the U.S. federal corporate income tax rate and transition to a territorial from a worldwide tax system with deferral, among other changes. As a fiscal year taxpayer, the Company is not subject to the majority of the provisions until fiscal 2019. However, for its first quarter and full year fiscal 2018, the Company has applied a blended

corporate income tax rate of 24.5% from the previous 35%, and remeasured its U.S. federal net deferred tax liabilities to the newly enacted tax rates. These estimated tax benefits were partially offset by the provisional amount recorded for the one-time repatriation tax on accumulated undistributed earnings of foreign subsidiaries and certain equity investments that are indefinitely reinvested. Collectively, the Tax Act did not materially affect the Company’s net earnings during the quarter.

~~Earnings per share of $1.57 increased 208% over the prior year quarter earnings per share of $0.51. The~~ results for the first quarter of fiscal ~~2018 included $0.79~~2023 demonstrate the overall strength and resilience of our brand, despite continued COVID-19 pandemic related ~~to the net gain from remeasuring our preexisting 50% ownership interest~~disruptions in our ~~East~~ China ~~joint venture to fair value upon acquisition~~market and ~~$0.23 for other streamlining efforts, primarily the~~continued inflationary pressures. Consolidated net ~~gains from the divestitures of the Tazo brand and our Taiwan joint venture.~~

Americas revenue grew by 7% to $4.3 billion, primarily driven by incremental revenues from 979 net new store openings over the past 12 months and comparable store sales growth of 2%. Operating income increased $21 million and operating margin of 23.0% declined 100 basis points from a year ago, primarily due to a food-related mix shift.

In our China/Asia Pacific segment, revenues grew by 9% to $844 million, primarily driven by incremental revenues from 1,033 net new stores over the past 12 months and a 1% increase in comparable store sales. The increase was partially offset by the conversion of our Singapore retail business to fully licensed operations in the fourth quarter of fiscal 2017. Operating income grew 20% to $197 million, while operating margin expanded 210 basis points to 23.3%. The overall operating margin expansion was primarily due to sales leverage and favorable foreign currency translation.

~~In our EMEA segment,~~ revenues increased ~~$22 million, or~~ 8%, primarily driven by favorable foreign currency translation and increased revenues from the opening of 365 net new licensed stores over the past 12 months. Partially offsetting the increase was a decrease in comparable store sales of 1%, which represents approximately 16% of the region's store portfolio. Operating margin declined 300 basis points to ~~13.8% primarily due to sales deleverage in our company-operated store portfolio.~~

Channel Development segment revenues grew by 1% to $560 million, primarily driven by higher foodservice, international and packaged coffee product sales, partially offset by lower revenues from competitive pricing on certain items. Operating income was flat and operating margin decreased 50 basis points to 43.4%$8.7 billion in the first quarter of fiscal ~~2018 primarily due to deleverage on cost of sales and lower income from our North American Coffee Partnership joint venture, partially offset by lower marketing expenses.~~

~~Fiscal 2018 — Financial Outlook for the Year~~

~~For fiscal 2018, we expect consolidated revenue growth in the range of 9% to 11% when~~2023 compared to fiscal 2017, with approximately 4% related to the acquisition of East China, offset by approximately 2% of other streamlining activities such as the sale of our Tazo brand and Taiwan joint venture, as well as the planned closure of our Teavana retail stores. Revenue growth for fiscal 2018 is expected to be driven by approximately 2,300 net new stores worldwide, comparable store sales and our continued focus on operational excellence, product innovation and enhancing our digital interactions with customers. Approximately 1,100 net new store openings will be in our China/Asia Pacific segment, approximately 900 net new stores coming from the Americas segment and the remaining store growth from the EMEA segment. Global comparable store sales growth for fiscal 2018 is expected to be near the low end of the targeted long-term 3% to 5% range.

~~Beginning~~$8.1 billion in the second quarter of fiscal 2018, East China’s operating results will be fully consolidated. While we expect significant revenue growth, the consolidated and CAP segment margins will decline for full fiscal year 2018. This is due to the change from a joint venture model to a company-operated model. Under the joint venture model, we recognized royalties and product sales within revenue and related product cost of goods sold as well as our proportionate share of East China’s net earnings, which we recorded within income from equity investees. This resulted in higher operating margin. Under the company-operated model, East China’s results are reflected in each income statement line item and therefore, the basis for its operating margin will be more consistent with our other company-operated markets. We will fully lap the transaction in the second quarter of fiscal 2019 and will begin reporting the comparable store sales growth as part of our China and CAP metrics after 13 months post acquisition in accordance with the Company's policy.

Earnings per share is expected to be in the range of $3.32 to $3.36 for full year fiscal 2018, which includes a $0.94 benefit from the East China acquisition gain, the largest portion of which was recognized in our first quarter of fiscal ~~2018. Revenue~~2022, primarily driven by strength in our U.S. business and growth in our International segment excluding China, partially offset by COVID-19 pandemic related disruptions in China and unfavorable foreign currency translation. Consolidated operating margin decreased 20 basis points from the prior year to 14.4%, primarily driven by previously committed investments in labor including enhanced store partner wages and benefits, inflationary pressures and sales deleverage in China, partially offset by strategic pricing in North America and sales leverage ~~are expected~~across markets outside of China.

For both the North America segment and our U.S. market, comparable store sales increased 10% for the first quarter of fiscal 2023 compared to bean increase of 18% in the first quarter of fiscal 2022. Average ticket for both the North America segment and the U.S. market grew 9%, primarily driven by strategic pricing. The segment also experienced higher costs, primarily related to enhancements in retail store partner wages and benefits, as well as increased supply chain costs due to inflationary pressures.

For the International segment, comparable store sales declined 13% for the first quarter of fiscal 2023, driven by comparable store sales decline of 29% in our China market, which experienced suppressed customer mobility and store closures due to pandemic-related restrictions and a spike in infections. These contributed to a decline in both revenue and operating margin for the segment. The unfavorable impacts were partially offset by ~~investments~~strong growth in our ~~partners (employees) and digital innovations. Savings generated from~~major international markets outside of China.

Net revenues for our Channel Development segment increased $61 million, or 15%, when compared with the ~~lower U.S. corporate income tax rate are expected to fund the Company’s plans to increase returns to shareholders and accelerate certain investments.~~

We expect our fiscal 2018 consolidated effective tax rate to be approximately 23%, which includes a 5% benefit from the primarily non-taxable East China acquisition gain and approximately 5% benefit from the enacted Tax Act. The benefit from the Tax Act included 2% of net expense related to the required transition tax partially offset by a benefit from remeasuring our net deferred tax liabilities. We continue to assess the effects of the Tax Act on our consolidated financial statements, and because of our ongoing assessment, the actual effective tax rate for fiscal 2018 may differ from our initial estimate, primarily due to changes in interpretations of the Tax Act, any legislative or regulatory actions to address questions that arise, any related changes in accounting standards, or any updates or changes to estimates the Company has utilized to calculate the impacts.

~~Comparable Store Sales~~

~~Starbucks comparable store sales for the~~ first quarter of fiscal ~~2018~~:

Quarter Ended Dec 31, 2017

Sales
Growth

Change in
Transactions

Change in
Ticket
Consolidated 2% —% 2%
Americas 2% —% 2%
China/Asia Pacific 1% 1% —%
EMEA⁽¹⁾
(1)% (4)% 3%

⁽¹⁾~~Company-operated stores represent 16% of~~2022. This was due to higher product sales to and royalty revenue from the ~~EMEA segment store portfolio as of December 31, 2017.~~

~~Our comparable store sales represent the~~Global Coffee Alliance and growth in ~~revenues~~our ready-to-drink business.

Despite COVID-19 induced business interruptions in our China market, we have seen the strength and resilience of our brand as well as strong customer demand across our portfolio. While we anticipate continued inflationary pressure, albeit to a lesser extent than in fiscal 2022, and COVID-related interruptions in the China market, we expect improved financial performance in the second half of fiscal 2023, driven by sales leverage, pricing, productivity gains from ~~Starbucks~~^® ~~company-operated stores open 13 months~~Reinvention, as well as recovery in China. Absent significant and prolonged COVID-19 relapses or ~~longer. Comparable store sales exclude~~global economic disruptions, we believe our strategy will result in sustainable and profitable growth over the ~~effect~~long-term.

Table of ~~foreign currency translation. Refer to our~~ ~~Quarterly Store Data~~Contents ~~also included in Item 2 of Part I of this 10-Q, for additional information on our company-operated and licensed store portfolio.~~

Results of Operations (in millions)

Revenues


	Quarter Ended
	Jan 1, 2023		Jan 2, 2022		$ Change		% Change
Company-operated stores	$	7,083.5	$	6,722.4	$	361.1	5.4	%
Licensed stores	1,119.5		850.8		268.7		31.6
Other	510.9		477.2		33.7		7.1
Total net revenues	$	8,713.9	$	8,050.4	$	663.5	8.2	%

Quarter Ended
Dec 31,
2017 Jan 1,
2017
%
Change
Company-operated stores $ 4,741.8
$ 4,469.3
6.1 %
Licensed stores 682.4
602.4
13.3
CPG, foodservice and other 649.5
661.2
(1.8 )
Total net revenues $ 6,073.7
$ 5,732.9
5.9 %

~~Quarter ended December 31, 2017 compared with~~For the quarter ended January 1, ~~2017~~2023 compared with the quarter ended January 2, 2022

Total net revenues for the first quarter of fiscal ~~2018~~2023 increased ~~$341~~$664 million, ~~compared to a year ago,~~ primarily due to ~~increased~~higher revenues from company-operated stores ($~~273~~361 million). The growth inof company-operated ~~store revenues~~stores revenue was driven by a 5% increase in comparable store sales ($328 million), attributable to a 7% increase in average ticket offset by a 2% decrease in comparable transactions. Also contributing was incremental revenues from ~~838~~1,005 net new Starbucks^®company-operated ~~store openings~~stores, or a 6% increase, over the past 12 months ($~~216~~259 million) ~~and a 2% increase in comparable store sales ($72 million), attributable to a 2% increase in average ticket. Also contributing~~. Partially offsetting these increases was ~~favorable~~unfavorable foreign currency translation ($25225 million)~~, partially offset by the sale of our Singapore retail operations in the fourth quarter of fiscal 2017 ($31 million)~~.

Licensed ~~store~~stores revenue ~~growth also contributed~~increased $269 million contributing to the increase in total net revenues, ~~($80 million), primarily due to increased~~driven by higher product and equipment sales to and royalty revenues from our licensees ($74299 million)~~, largely due to the opening of 1,534 net new Starbucks~~^® ~~licensed stores over the past 12 months and improved comparable store sales, and favorable~~. Partially offsetting this increase was unfavorable foreign currency translation ($735 million).

~~CPG (consumer packaged goods), foodservice and other~~Other revenues ~~decreased $12~~increased $34 million, primarily ~~driven by the absence of~~due to higher product sales and royalty revenue ~~from our e-commerce business ($19 million), lower revenues from competitive pricing on certain items ($8 million) and the absence of revenue from the sale of our Tazo brand late~~ in the first quarter of fiscal 2018 ($7 million). Partially offsetting these decreases were higher foodservice sales ($10 million) and increased sales through our international channels, primarily associated with our Americas and European regions ($6 million).Global Coffee Alliance.

Operating Expenses


	Quarter Ended
	Jan 1, 2023		Jan 2, 2022		$ Change		Jan 1, 2023		Jan 2, 2022
							As a % of Total Net Revenues
Product and distribution costs	$	2,810.2	$	2,526.9	$	283.3	32.2	%	31.4	%
Store operating expenses	3,665.3		3,400.0		265.3		42.1		42.2
Other operating expenses	129.3		101.7		27.6		1.5		1.3
Depreciation and amortization expenses	327.1		366.0		(38.9)		3.8		4.5
General and administrative expenses	580.9		525.8		55.1		6.7		6.5
Restructuring and impairments	5.8		(7.5)		13.3		0.1		(0.1)

Total operating expenses	7,518.6		6,912.9		605.7		86.3		85.9
Income from equity investees	57.8		40.3		17.5		0.7		0.5
Operating income	$	1,253.1	$	1,177.8	$	75.3	14.4	%	14.6	%
Store operating expenses as a % of company-operated stores revenue							51.7	%	50.6	%

Quarter Ended
Dec 31,
2017 Jan 1,
2017 Dec 31,
2017 Jan 1,
2017

As a % of Total
Net Revenues
Cost of sales including occupancy costs $ 2,502.9
$ 2,295.0
41.2 % 40.0 %
Store operating expenses 1,737.0
1,638.2
28.6
28.6
Other operating expenses 141.6
145.4
2.3
2.5
Depreciation and amortization expenses 258.8
249.7
4.3
4.4
General and administrative expenses 379.1
356.4
6.2
6.2
Restructuring expenses 27.6
—
0.5
—
Total operating expenses 5,047.0
4,684.7
83.1
81.7
Income from equity investees 89.4
84.4
1.5
1.5
Operating income $ 1,116.1
$ 1,132.6
18.4 % 19.8 %
Store operating expenses as a % of company-operated store revenues 36.6 % 36.7 %
Other operating expenses as a % of non-company-operated store revenues 10.6 % 11.5 %

~~Quarter ended December 31, 2017 compared with~~For the quarter ended January 1, ~~2017~~2023 compared with the quarter ended January 2, 2022

~~Cost of sales including occupancy~~Product and distribution costs as a percentage of total net revenues increased ~~120~~80 basis points for the first quarter of fiscal ~~2018,~~2023, primarily due to ~~a food-related mix shift in the Americas segment (approximately 100 basis points).~~higher supply chain costs driven by inflationary pressures.

Store operating expenses as a percentage of total net revenues ~~were flat~~decreased 10 basis points for the first quarter of fiscal ~~2018.~~2023. Store operating expenses as a percentage of company-operated stores revenue increased 110 basis points, primarily due to enhancements in retail store ~~revenues decreased 10~~partner wages and benefits (approximately 350 basis ~~points.~~points) and increased spend on new partner training (approximately 60 basis points), partially offset by sales leverage.

Other operating expenses ~~as a percentage of total revenues decreased 20 basis points~~increased $28 million for the first quarter of fiscal ~~2018. Other operating expenses as a percentage of non-retail revenues decreased 90 basis points,~~2023, primarily ~~driven by sales leverage (approximately 60 basis points)~~due to higher support costs for our growing licensed markets ($8 million) and ~~lower marketing expenses (approximately 40 basis points)~~strategic investments in technology and other initiatives ($8 million).

~~General~~Depreciation and ~~administrative~~amortization expenses as a percentage of total net revenues ~~were flat.~~

~~Restructuring expenses negatively impacted our operating margin by 50~~decreased 70 basis points, primarily due to ~~restructuring~~lapping amortization expenses of acquisition-related intangibles assets.

Table of Contents

General and administrative expenses increased $55 million, primarily due to incremental investments in technology ($28 million) and increased support costs ~~related~~ to ~~the Company's ongoing efforts to streamline business operations. We recorded $25.9 million in restructuring costs related to the strategy to close our Teavana~~^TM/MC ~~retail stores, including expenses associated with the early closure of stores~~address labor market conditions and ~~termination of agreements with franchisees. Additionally, we recorded $1.6 million in restructuring-related costs associated with the closure of certain North American Starbucks~~^® ~~company-operated stores.~~leadership training ($17 million).

Income from equity investees increased $5$18 million, primarily due to higher income from our ~~CAP~~North American Coffee Partnership joint ~~ventures.~~venture.

The combination of these changes resulted in an overall decrease in operating margin of ~~140~~20 basis points for the first quarter of fiscal ~~2018.~~2023.

Other Income and Expenses


	Quarter Ended
	Jan 1, 2023		Jan 2, 2022		$ Change		Jan 1, 2023		Jan 2, 2022
							As a % of Total Net Revenues
Operating income	$	1,253.1	$	1,177.8	$	75.3	14.4	%	14.6	%


Interest income and other, net	11.6		(0.1)		11.7		0.1		—
Interest expense	(129.7)		(115.3)		(14.4)		(1.5)		(1.4)
Earnings before income taxes	1,135.0		1,062.4		72.6		13.0		13.2
Income tax expense	279.8		246.3		33.5		3.2		3.1
Net earnings including noncontrolling interests	855.2		816.1		39.1		9.8		10.1
Net earnings attributable to noncontrolling interests	—		0.2		(0.2)		—		—
Net earnings attributable to Starbucks	$	855.2	$	815.9	$	39.3	9.8	%	10.1	%
Effective tax rate including noncontrolling interests							24.6	%	23.2	%

Quarter Ended
Dec 31,
2017 Jan 1,
2017 Dec 31,
2017 Jan 1,
2017

As a % of Total
Net Revenues
Operating income $ 1,116.1
$ 1,132.6
18.4 % 19.8 %
Gain resulting from acquisition of joint venture 1,326.3
—
21.8
—
Gains resulting from divestiture of certain operations 501.2
—
8.3
—
Interest income and other, net 88.2
24.1
1.5
0.4
Interest expense (25.9 ) (23.8 ) (0.4 ) (0.4 )
Earnings before income taxes 3,005.9
1,132.9
49.5
19.8
Income tax expense 755.8
381.4
12.4
6.7
Net earnings including noncontrolling interests 2,250.1
751.5
37.0
13.1
Net earnings/(loss) attributable to noncontrolling interests (0.1 ) (0.3 ) —
—
Net earnings attributable to Starbucks $ 2,250.2
$ 751.8
37.0 % 13.1 %
Effective tax rate including noncontrolling interests 25.1 % 33.7 %

~~Quarter ended December 31, 2017 compared with~~For the quarter ended January 1, ~~2017~~2023 compared with the quarter ended January 2, 2022

~~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.~~

~~Gains resulting from divestiture of certain operations primarily includes the gains on the sales of our Tazo brand and our Taiwan joint venture.~~

~~Net interest~~Interest income and other, net increased ~~$64~~$12 million, primarily due to ~~recognizing breakage income on unredeemed stored value card balances outside of the United States and Canada for the first time.~~lower net losses from certain investments.

Interest expense increased $2$14 million, primarily ~~related~~due to rising interest rates on floating rate debt and additional interest incurred on long-term debt issued in ~~March 2017 and November 2017, partially offset by lower interest expense from the repayment of our December 2016 notes.~~February 2022.

The effective tax rate for the quarter ended ~~December 31, 2017~~January 1, 2023 was ~~25.1%~~24.6% compared to ~~33.7%~~23.2% for the same ~~quarter~~period in fiscal ~~2017.~~2022. The ~~decrease~~increase was primarily due to ~~the largely non-taxable gain on the purchase of our East China joint venture~~a decrease in ~~the first quarter of fiscal 2018~~stock-based compensation excess tax benefits (approximately ~~500 basis points) and due to the Tax Act (approximately 350~~150 basis points). ~~The impact from the Tax Act included favorability from the lower corporate income tax rate applied to our fiscal 2018 results (approximately 800 basis points) and the remeasurement~~

Table of our net deferred tax liabilities (approximately 260 basis points). This favorability was partially offset by the estimated transition tax on our accumulated undistributed foreign earnings (approximately 710 basis points). See ~~Note 10~~Contents~~, Income Taxes, for further discussion.~~

Segment Information

Results of operations by segment (in millions):

~~Americas~~

North America


	Quarter Ended
	Jan 1, 2023		Jan 2, 2022		$ Change		Jan 1, 2023		Jan 2, 2022
							As a % of North America Total Net Revenues
Net revenues:
Company-operated stores	$	5,870.6	$	5,214.1	$	656.5	89.6	%	91.0	%
Licensed stores	680.0		515.9		164.1		10.4		9.0
Other	0.7		2.3		(1.6)		—		—
Total net revenues	6,551.3		5,732.3		819.0		100.0		100.0
Product and distribution costs	1,917.6		1,629.4		288.2		29.3		28.4
Store operating expenses	3,031.4		2,702.4		329.0		46.3		47.1
Other operating expenses	65.6		48.2		17.4		1.0		0.8
Depreciation and amortization expenses	216.9		200.0		16.9		3.3		3.5
General and administrative expenses	102.3		76.7		25.6		1.6		1.3
Restructuring and impairments	5.1		(7.5)		12.6		0.1		(0.1)
Total operating expenses	5,338.9		4,649.2		689.7		81.5		81.1

Operating income	$	1,212.4	$	1,083.1	$	129.3	18.5	%	18.9	%
Store operating expenses as a % of company-operated stores revenue							51.6	%	51.8	%

Quarter Ended
Dec 31,
2017 Jan 1,
2017 Dec 31,
2017 Jan 1,
2017

As a % of Americas
Total Net Revenues
Net revenues:
Company-operated stores $ 3,787.0
$ 3,561.0
88.8 % 89.2 %
Licensed stores 466.7
421.3
10.9
10.6
Foodservice and other 12.1
9.1
0.3
0.2
Total net revenues 4,265.8
3,991.4
100.0
100.0
Cost of sales including occupancy costs 1,603.8
1,440.3
37.6
36.1
Store operating expenses 1,433.4
1,356.3
33.6
34.0
Other operating expenses 37.5
31.9
0.9
0.8
Depreciation and amortization expenses 158.0
152.4
3.7
3.8
General and administrative expenses 52.1
52.0
1.2
1.3
Restructuring expenses 1.6
—
—
—
Total operating expenses 3,286.4
3,032.9
77.0
76.0
Operating income $ 979.4
$ 958.5
23.0 % 24.0 %
Store operating expenses as a % of company-operated store revenues 37.9 % 38.1 %
Other operating expenses as a % of non-company-operated store revenues 7.8 % 7.4 %

~~Quarter ended December 31, 2017 compared with~~For the quarter ended January 1, ~~2017~~2023 compared with the quarter ended January 2, 2022

Revenues

~~Americas~~North America total net revenues for the first quarter of fiscal ~~2018~~2023 increased ~~$274~~$819 million, or 7%14%, primarily due to ~~higher revenues from company-operated stores ($226 million) and licensed stores ($45 million).~~

~~The increase in company-operated store revenues was driven by incremental revenues from 420 net new Starbucks~~^®~~company-operated store openings over the past 12 months ($143 million) and~~ a 2%10% increase in comparable store sales ($67498 million)~~, primarily attributable to~~ driven by a 2%9% increase in average ~~ticket.~~

~~The~~ticket and a 1% increase in ~~licensed store revenues was driven by increased product sales~~transactions. Also contributing to ~~and royalty revenues from our licensees ($46 million), primarily resulting from~~these increases were the ~~opening~~performance of ~~559 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 increased 150 basis points for the first quarter of fiscal 2018, primarily due to a food-related mix shift (approximately 130 basis points).

Store operating expenses as a percentage of total net revenues decreased 40 basis points for the first quarter of fiscal 2018. Store operating expenses as a percentage of company-operated store revenues decreased 20 basis points, primarily driven by sales leverage (approximately 60 basis points).

Other operating expenses as a percentage of total revenues increased 10 basis points for the first quarter of fiscal 2018. Other operating expenses as a percentage of non-retail revenues increased 40 basis points, primarily due to a settlement related to Target Canada store closures received this quarter at a lower amount than the related settlement received in the prior year quarter (approximately 30 basis points). The settlement payments are being received over the course of the liquidation proceedings.

~~Restructuring expenses of $1.6 million were recorded associated with the early closure of certain North American Starbucks~~^® ~~company-operated stores and their related obligations in fiscal 2018.~~

~~The combination of these changes resulted in an overall decrease in operating margin of 100 basis points for the first quarter of fiscal 2018.~~

~~China/Asia Pacific~~

Quarter Ended
Dec 31,
2017 Jan 1,
2017 Dec 31,
2017 Jan 1,
2017

As a % of CAP
Total Net Revenues
Net revenues:
Company-operated stores $ 742.5
$ 691.5
88.0 % 89.7 %
Licensed stores 98.4
78.0
11.7
10.1
Foodservice and other 2.8
1.3
0.3
0.2
Total net revenues 843.7
770.8
100.0
100.0
Cost of sales including occupancy costs 371.7
337.3
44.1
43.8
Store operating expenses 218.6
204.3
25.9
26.5
Other operating expenses 21.2
19.1
2.5
2.5
Depreciation and amortization expenses 53.7
48.6
6.4
6.3
General and administrative expenses 32.4
40.6
3.8
5.3
Total operating expenses 697.6
649.9
82.7
84.3
Income from equity investees 50.7
42.5
6.0
5.5
Operating income $ 196.8
$ 163.4
23.3 % 21.2 %
Store operating expenses as a % of company-operated store revenues 29.4 % 29.5 %
Other operating expenses as a % of non-company-operated store revenues 20.9 % 24.1 %

~~Quarter ended December 31, 2017 compared with quarter ended January 1, 2017~~

~~Revenues~~

China/Asia Pacific total net revenues for the first quarter of fiscal 2018 increased $73 million, or 9% over the prior year period, primarily from higher company-operated store revenues ($51 million), driven by incremental revenues from 423 net new company-operated store openings over the past 12 months ($73183 million) and a 1% increase in comparable store sales ($6 million), partially offset by the conversion to fully licensed operations as a result of selling our Singapore retail business in the fourth quarter of fiscal 2017 ($31 million).

~~Licensed store revenues increased $20 million due to increased~~higher product ~~sales to~~ and ~~royalty revenues from licensees ($19 million), primarily resulting from the opening of 610 net new licensed stores over the past 12 months.~~

~~Operating Expenses~~

Store operating expenses as a percentage of total net revenues decreased 60 basis points for the first quarter of fiscal 2018. As a percentage of company-operated store revenues, store operating expenses decreased 10 basis points, primarily due to the absence of Singapore retail operations (approximately 10 basis points).

Other operating expenses as a percentage of total net revenues was flat for the first quarter of fiscal 2018. Excluding the impact of company-operated store revenues, other operating expenses decreased 320 basis points in the first quarter, primarily due to the timing of certain business taxes (approximately 240 basis points) and sales leverage.

~~General and administrative expenses as a percentage of total net revenues decreased 150 basis points for the first quarter of fiscal 2018, primarily due to sales leverage on salaries and benefits.~~

Income from equity investees increased $8 million due to higher income from our joint venture operations, primarily in China and South Korea and favorable foreign currency exchange. Favorability in both regions was attributable to comparable store sales growth and the addition of net new licensed stores over the past 12 months.

The combination of these changes and favorable foreign currency translation (approximately 90 basis points or $9 million) resulted in an overall increase in operating margin of 210 basis points for the first quarter of fiscal 2018.

~~EMEA~~

Quarter Ended
Dec 31,
2017 Jan 1,
2017 Dec 31,
2017 Jan 1,
2017

As a % of EMEA
Total Net Revenues
Net revenues:
Company-operated stores $ 151.6
$ 145.9
53.4 % 55.6 %
Licensed stores 116.2
102.2
40.9
38.9
Foodservice 16.1
14.3
5.7
5.4
Total net revenues 283.9
262.4
100.0
100.0
Cost of sales including occupancy costs 152.1
136.1
53.6
51.9
Store operating expenses 54.7
46.9
19.3
17.9
Other operating expenses 16.3
16.0
5.7
6.1
Depreciation and amortization expenses 7.7
7.6
2.7
2.9
General and administrative expenses 14.0
11.7
4.9
4.5
Total operating expenses 244.8
218.3
86.2
83.2
Operating income $ 39.1
$ 44.1
13.8 % 16.8 %
Store operating expenses as a % of company-operated store revenues 36.1 % 32.1 %
Other operating expenses as a % of non-company-operated store revenues 12.3 % 13.7 %

~~Quarter ended December 31, 2017 compared with quarter ended January 1, 2017~~

~~Revenues~~

EMEA total net revenues increased $22 million, or 8%, for the first quarter of fiscal 2018. The increase was primarily due to increased company-operated store revenues ($6 million) and driven by favorable foreign currency translation ($9 million), partially offset by a decrease in comparable store sales ($2 million).

~~Licensed store revenues increased $14 million, or 14%, due to higher product~~equipment sales to and royalty revenues from our licensees ($~~8 million), primarily resulting from the opening of 365 net new licensed stores over the past 12 months, and favorable foreign currency translation ($5~~160 million).

Operating ~~Expenses~~Margin

~~Cost of sales including occupancy costs as a percentage of total net revenues increased 170 basis points~~North America operating income for the first quarter of fiscal ~~2018,~~2023 increased 12% to $1.2 billion, compared to $1.1 billion in the first quarter of fiscal 2022. Operating margin decreased 40 basis points to 18.5%, primarily due to ~~sales deleverage~~investments in labor, including enhancements in retail store partner wages and benefits (approximately 390 basis points), inflationary pressures on ~~company-operated stores~~commodities and our supply chain (approximately ~~100~~210 basis points), as well as increased spend on new partner training (approximately 70 basis points). These were partially offset by strategic pricing (approximately 510 basis points) and ~~unfavorable foreign currency exchange (approximately 80 basis points).~~sales leverage.

~~Store operating expenses as a percentage~~

Table of Contents

International


	Quarter Ended
	Jan 1, 2023		Jan 2, 2022		$ Change		Jan 1, 2023		Jan 2, 2022
							As a % of International Total Net Revenues
Net revenues:
Company-operated stores	$	1,212.9	$	1,508.3	$	(295.4)	72.2	%	80.4	%
Licensed stores	439.5		334.9		104.6		26.2		17.9
Other	27.7		32.7		(5.0)		1.6		1.7
Total net revenues	1,680.1		1,875.9		(195.8)		100.0		100.0
Product and distribution costs	593.6		615.8		(22.2)		35.3		32.8
Store operating expenses	633.9		697.6		(63.7)		37.7		37.2
Other operating expenses	50.7		39.2		11.5		3.0		2.1
Depreciation and amortization expenses	81.5		133.1		(51.6)		4.9		7.1
General and administrative expenses	80.5		91.3		(10.8)		4.8		4.9

Total operating expenses	1,440.2		1,577.0		(136.8)		85.7		84.1
Income from equity investees	0.5		0.7		(0.2)		—		—
Operating income	$	240.4	$	299.6	$	(59.2)	14.3	%	16.0	%
Store operating expenses as a % of company-operated stores revenue							52.3	%	46.3	%

For the quarter ended January 1, 2023 compared with the quarter ended January 2, 2022

Revenues

International total net revenues ~~increased 140 basis points~~ for the first quarter of fiscal ~~2018. As a percentage of company-operated store revenues, store operating expenses increased 400 basis points,~~2023 decreased $196 million, or 10%, primarily due to ~~sales deleverage on salaries and benefits in certain company-operated stores, primarily due to increased minimum wage in certain markets.~~

~~Other operating expenses~~unfavorable foreign currency translation ($236 million), as well as a ~~percentage of total~~13% decline in comparable store sales ($170 million), driven by a 12% decrease in customer transactions and a 1% decrease in average ticket, primarily attributable to COVID-19 pandemic related disruptions in China. These decreases were partially offset by higher product and equipment sales to and royalty revenues from our licensees ($139 million), as well as 649 net ~~revenues decreased 40 basis points~~new company-operated store openings, or 9% increase, over the past 12 months ($76 million).

Operating Margin

International operating income for the first quarter of fiscal ~~2018. Excluding the impact of company-operated store revenues, other operating expenses~~2023 decreased ~~140 basis points, primarily due~~20% to ~~sales leverage.~~

~~Depreciation and amortization expense as a percentage of total net revenue decreased 20 basis points, primarily due~~$240 million, compared to ~~the shift~~$300 million in ~~the portfolio towards more licensed stores.~~

~~General and administrative expenses as a percentage of total net revenues increased 40 basis points, primarily due to higher salaries and benefits.~~

~~The combination of these changes resulted in an overall decrease in operating margin of 300 basis points for~~ the first quarter of fiscal ~~2018.~~2022. Operating margin decreased 170 basis points to 14.3%, primarily due to sales deleverage related to COVID-19 pandemic related impacts in our China market (approximately 650 basis points) and higher commodity and supply chain costs due to inflationary pressures (approximately 70 basis points). These decreases were partially offset by sales leverage across markets outside of China (approximately 240 basis points) the resulting business mix (approximately 140 basis points), as well as lapping amortization expenses of acquisition-related intangibles assets that are now fully amortized (approximately 230 basis points).

Table of Contents

Channel Development


	Quarter Ended
	Jan 1, 2023		Jan 2, 2022		$ Change		Jan 1, 2023		Jan 2, 2022
							As a % of Channel Development Total Net Revenues
Net revenues	$	478.2	$	417.1	$	61.1
Product and distribution costs	294.2		258.8		35.4		61.5	%	62.0	%
Other operating expenses	13.0		11.4		1.6		2.7		2.7

General and administrative expenses	2.0		3.3		(1.3)		0.4		0.8
Total operating expenses	309.2		273.5		35.7		64.7		65.6
Income from equity investees	57.3		39.6		17.7		12.0		9.5
Operating income	$	226.3	$	183.2	$	43.1	47.3	%	43.9	%

Quarter Ended
Dec 31,
2017 Jan 1,
2017 Dec 31,
2017 Jan 1,
2017
As a % of Channel Development
Total Net Revenues
Net revenues:
CPG $ 435.8
$ 437.1
77.8 % 78.9 %
Foodservice 124.5
116.6
22.2
21.1
Total net revenues 560.3
553.7
100.0
100.0
Cost of sales 296.3
288.5
52.9
52.1
Other operating expenses 55.6
60.4
9.9
10.9
Depreciation and amortization expenses 0.5
0.6
0.1
0.1
General and administrative expenses 3.3
3.2
0.6
0.6
Total operating expenses 355.7
352.7
63.5
63.7
Income from equity investees 38.7
41.9
6.9
7.6
Operating income $ 243.3
$ 242.9
43.4 % 43.9 %

~~Quarter ended December 31, 2017 compared with~~For the quarter ended January 1, ~~2017~~2023 compared with the quarter ended January 2, 2022

Revenues

Channel Development total net revenues for the first quarter of fiscal ~~2018~~2023 increased $7$61 million, or ~~1% when~~15%, primarily due to higher Global Coffee Alliance product sales and royalty revenue ($43 million) and growth in our ready-to-drink business ($26 million).

Operating Margin

Channel Development operating income for the first quarter of fiscal 2023 increased 24% to $226 million, compared to the prior year period primarily driven by our foodservice, international and packaged coffee channels ($17 million), partially offset by competitive pricing on certain items ($8 million) and the absence of revenue from the sale of our Tazo brand late$183 million in the first quarter of fiscal ~~2018 ($7 million).~~

2022. Operating ~~Expenses~~

~~Cost of sales as a percentage of total net revenues~~margin increased 80340 basis points ~~for the first quarter,~~to 47.3%, primarily ~~driven by deleverage on cost of sales (approximately 90 basis points).~~

~~Other operating expenses as a percentage of total net revenues decreased 100 basis points, primarily driven by lower marketing expenses (approximately 80 basis points).~~

~~Income from equity investees decreased $3 million~~ due to ~~lower income from~~growth in our North American Coffee Partnership joint venture income.

Table of Contents

Corporate and Other


	Quarter Ended
	Jan 1, 2023		Jan 2, 2022		$ Change		% Change
Net revenues:


Other	$	4.3	$	25.1	$	(20.8)	(82.9)	%
Total net revenues	4.3		25.1		(20.8)		(82.9)
Product and distribution costs	4.8		22.9		(18.1)		(79.0)

Other operating expenses	—		2.9		(2.9)		nm
Depreciation and amortization expenses	28.7		32.9		(4.2)		(12.8)
General and administrative expenses	396.1		354.5		41.6		11.7
Restructuring and impairments	0.7		—		0.7		nm
Total operating expenses	430.3		413.2		17.1		4.1

Operating loss	$	(426.0)	$	(388.1)	$	(37.9)	9.8	%

Corporate and Other primarily ~~driven~~consists of our unallocated corporate expenses and Evolution Fresh, prior to its sale in the fourth quarter of fiscal 2022. Unallocated corporate expenses include corporate administrative functions that support the operating segments but are not specifically attributable to or managed by ~~decreased sales~~any segment and are not included in the reported financial results of ~~both Frappuccino®~~the operating segments.

For the quarter ended January 1, 2023 compared with the quarter ended January 2, 2022

Corporate and ~~Iced Coffee beverages.~~

~~The combination of these changes resulted in an overall decrease in~~Other operating ~~margin of 50 basis points~~loss increased to $426 million for the first quarter of fiscal ~~2018.~~

~~All Other Segments~~

Quarter Ended
Dec 31,
2017 Jan 1,
2017
%
Change
Net revenues:
Company-operated stores $ 60.7
$ 70.9
(14.4 )%
Licensed stores 1.1
0.9
22.2
CPG, foodservice and other 58.2
82.8
(29.7 )
Total net revenues 120.0
154.6
(22.4 )
Cost of sales including occupancy costs 79.1
90.4
(12.5 )
Store operating expenses 30.3
30.7
(1.3 )
Other operating expenses 11.2
17.5
(36.0 )
Depreciation and amortization expenses 0.7
2.9
(75.9 )
General and administrative expenses 2.7
3.5
(22.9 )
Restructuring expenses 26.0
—
nm
Total operating expenses 150.0
145.0
3.4
Operating income/ (loss) $ (30.0 ) $ 9.6
nm

~~All Other Segments primarily includes Teavana-branded stores, Seattle’s Best Coffee, as well as Starbucks Reserve~~^® ~~and Roastery businesses. The operating loss~~2023, or 10%, compared to $388 million for the first quarter of fiscal 2022. This increase was primarily ~~due~~driven by incremental investments in technology ($28 million) and increased support costs to ~~restructuring costs related to our strategy to close Teavana~~^TM/MC ~~retail stores and focus on Teavana within the Starbucks~~^® ~~stores. We recorded $25.9 million in restructuring-related costs, including expenses associated with the early closure~~address labor market conditions ($9 million). These increases were partially offset by lower performance based compensation ($12 million).

Table of ~~stores and termination of agreements with franchisees.~~Contents

Quarterly Store Data

Our store data for the periods presented is as follows:


	Net stores opened/(closed) and transferred during the period
	Quarter Ended		Stores open as of
	Jan 1, 2023	Jan 2, 2022		Jan 1, 2023	Jan 2, 2022
North America
Company-operated stores	40	39		10,256	9,900
Licensed stores	46	23		7,125	6,988
Total North America	86	62		17,381	16,888
International
Company-operated stores	97	213		8,134	7,485
Licensed stores	276	209		10,655	9,944
Total International	373	422		18,789	17,429




Total Company	459	484		36,170	34,317

Net stores opened/(closed) and
transferred during the period

Quarter Ended Stores open as of
Dec 31,
2017 Jan 1,
2017 Dec 31,
2017 Jan 1,
2017
Americas
Company-operated stores 112
75
9,525
9,094
Licensed stores 166
176
7,312
6,764
Total Americas 278
251
16,837
15,858
China/Asia Pacific ⁽¹⁾

Company-operated stores 1,612
104
4,682
2,915
Licensed stores (1,312 ) 199
3,097
3,831
Total China/Asia Pacific 300
303
7,779
6,746
EMEA
Company-operated stores 1
(18 ) 503
505
Licensed stores 122
113
2,594
2,232
Total EMEA 123
95
3,097
2,737
All Other Segments⁽²⁾

Company-operated stores (1 ) (2 ) 289
356
Licensed stores —
2
37
37
Total All Other Segments (1 ) —
326
393
Total Company 700
649
28,039
25,734

⁽¹⁾ 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.
⁽²⁾ As of December 31, 2017, All Other Segments included 323 Teavana-branded stores, of which 286 stores were company-operated.

Financial Condition, Liquidity and Capital Resources

Cash and Investment Overview

Our cash and investments totaled ~~$4.1~~$3.6 billion as of ~~December 31, 2017~~January 1, 2023 and ~~$3.2~~$3.5 billion as of October ~~1, 2017.~~2, 2022. 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 and domestic)~~, mortgage~~ and ~~asset-backed securities and agency obligations.~~commercial paper as well as principal-protected structured deposits. As of ~~December 31, 2017,~~January 1, 2023, approximately ~~$2.5~~$2.7 billion of ~~our~~ cash and ~~investments~~short-term investment were held in foreign subsidiaries.

Borrowing Capacity

Revolving Credit Facility

Our ~~$2.0~~$3.0 billion unsecured ~~5-year~~five-year revolving credit facility (the ~~“2018~~“2021 credit facility”) 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 currently set to mature on ~~October 25, 2022.~~September 16, 2026. The 2021 credit facility is available for working capital, capital expenditures and other corporate purposes, including acquisitions and share repurchases. We have the option, subject to negotiation and agreement with the related banks, to increase the maximum commitment amount by an additional ~~$500 million.~~ $1.0 billion.

Borrowings under the 2021 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 2021 credit facility), in each case plus an applicable margin. The applicable margin is based on the ~~better of (i) the Company's~~Company’s long-term credit ratings assigned by ~~Moody's~~the Moody’s and Standard & ~~Poor's~~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 agreement.~~agencies. The ~~current applicable margin is 0.910% for Eurocurrency Rate Loans and 0.00% (nil) for Base Rate Loans.~~

~~The 364-day~~2021 credit facility ~~of which no amount may~~contains alternative interest rate provisions specifying rate calculations to be used ~~for issuances~~at such time LIBOR ceases to be available as a benchmark due to reference rate reform. The “Base Rate” is the highest of ~~letters of credit, is currently set to mature on October 25, 2018. We have~~(i) 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 BaseFederal Funds Rate (as defined in the 2021 credit facility) plus 0.500%, ~~in each case plus an applicable margin. The applicable margin is 0.585% for~~(ii) Bank of America’s prime rate and (iii) the Eurocurrency Rate ~~Loans and 0.00% (nil) for Base Rate Loans.~~(as defined in the 2021 credit facility) plus 1.000%.

~~Both~~The 2021 credit ~~facilities contain~~facility contains provisions requiring us to maintain compliance with certain covenants, including a minimum fixed charge coverage ratio, which measures our ability to cover financing expenses. As of ~~December 31, 2017,~~January 1, 2023, we were in compliance with all applicable covenants. No amounts were outstanding under our 2021 credit facility ~~covenants.~~as of January 1, 2023 or October 2, 2022.

Commercial Paper

Under our commercial paper program, we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of $3$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~~the 2021 credit facility discussed above. The proceeds from borrowings under our commercial paper program may be used for working capital needs, capital expenditures and other corporate purposes, including, but not limited to, business expansion, payment of cash dividends on our common stock and share repurchases. As of ~~December 31, 2017,~~January 1, 2023, we had no borrowings outstanding ~~borrowings~~ under ~~the~~our commercial paper program.

~~The indentures under which all of our Senior Notes were issued, as detailed in~~ ~~Note 7~~, Debt, to the condensed consolidated financial statements included in Item 1 of Part I of this 10-Q, require us to maintain compliance with certain covenants, including limits on future liens and sale and leaseback transactions on certain material properties. As of ~~December 31, 2017,~~October 2, 2022, we ~~were~~had $175.0 million in ~~compliance with all applicable covenants.~~borrowings outstanding

~~On November 22, 2017, we issued long-term debt in an underwritten registered public offering, which consisted~~

Table of $500 million of 3-year 2.200% Senior Notes (the “2020 notes”) due November 2020 and $500 million of 30-year 3.750% Senior Notes (the “2047 notes”) due December 2047. We will use the net proceeds from the offeringContents

under this program. Our total contractual borrowing capacity for general corporate purposes ~~including repurchases~~was $3.0 billion as of ~~Starbucks common stock~~the end of our first quarter of fiscal 2023.

Credit facilities in Japan

Additionally, we hold Japanese yen-denominated credit facilities for the use of our Japan subsidiary. These are available for working capital needs and capital expenditures within our Japanese market.

•A ¥5 billion, or $37.6 million, credit facility is currently set to mature on January 4, 2024. Borrowings under ~~our ongoing share repurchase program~~this credit facility are subject to terms defined within the facility and ~~payment~~will bear interest at a variable rate based on TIBOR plus an applicable margin of ~~dividends. Interest~~0.400%.

•A ¥10 billion, or $75.2 million, credit facility is currently set to mature on March 27, 2023. Borrowings under this credit facility are subject to terms defined within the ~~2020 notes is payable semi-annually~~facility and will bear interest at a variable rate based on ~~May 22~~TIBOR plus an applicable margin of 0.350%.

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

See Note 78,, Debt, to the ~~condensed~~ consolidated financial statements included in Item 1 of Part I of this 10-Q for details of the components of our long-term debt.

Our ability to incur new liens and conduct sale and leaseback transactions on certain material properties is subject to compliance with terms of the indentures under which the long-term notes were issued. As of January 1, 2023, we were in compliance with all applicable covenants.

Use of Cash

We expect to use our available cash and investments, including, but not limited to, additional potential future borrowings under the credit facilities, commercial paper program and the issuance of debt to support and invest in our core businesses, including ~~capital expenditures,~~investing in new ~~product innovations, related marketing support~~ways to serve our customers and ~~partner and digital investments, return~~supporting our store partners, repaying maturing debts, as well as returning cash to shareholders through common stock cash dividend payments and discretionary share repurchases ~~as well as other~~and investing in new business opportunities related to our core and developing ~~businesses such as Siren Retail. Further,~~businesses. Furthermore, we may use our available cash resources to make proportionate capital contributions to our investees. We may also seek strategic acquisitions to leverage existing capabilities and further build our ~~business in support of our growth agenda.~~business. Acquisitions may include increasing our ownership interests in our investees. Any decisions to increase such ownership interests will be driven by valuation and fit with our ownership strategy. On December 31, 2017, we acquired the remaining 50% interest of our East China joint venture for approximately $1.4 billion in the form of a payable to UPG. Approximately $1.3 billion had been settled as of the date of this filing, primarily through the use of cash and investments held in foreign subsidiaries.

We believe that net 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 as well as shareholder distributions for at least the ~~foreseeable future. Significant new joint ventures, acquisitions and/~~next 12 months. We are currently not aware of any trends or ~~other new business opportunities may require additional outside funding.~~demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months. We have borrowed funds 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.

~~We consider the majority of undistributed earnings~~ In this regard, we may incur additional debt, within targeted levels, as part of our ~~foreign subsidiaries~~plans to fund our capital programs, including cash returns to shareholders through future dividends and ~~equity investees~~discretionary share repurchases as well as investing in new business opportunities. If necessary, we may pursue additional sources of ~~December 31, 2017 to be indefinitely reinvested~~financing, including both short-term and accordingly no foreign withholding taxes have been provided on such earnings. We have not, nor do we anticipate the need for, repatriated funds to the U.S. to satisfy domestic liquidity 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 $241 million, of which $233 million of income taxes payable was included in other long-term ~~liabilities on the condensed consolidated balance sheet, as of December 31, 2017. See~~ ~~Note 10, Income Taxes, for further discussion.~~

borrowings and debt issuances.

We regularly review our cash positions and our determination of ~~permanent~~indefinite reinvestment of foreign earnings. In the event we determine that all or a portion of such foreign earnings are no longer indefinitely reinvested, we may 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. WeWhile we do not ~~believe it is practicable~~anticipate the need for repatriated funds to ~~calculate~~ the ~~amount of unrecognized deferred income taxes as there is a significant amount of uncertainty around the calculation.~~U.S. to satisfy domestic liquidity requirements, any foreign earnings which are not indefinitely reinvested may be repatriated at management’s discretion.

WeDuring the first quarter of fiscal 2023, we resumed our share repurchase program which was temporarily suspended in April 2022. During the quarter ended January 1, 2023, we repurchased ~~28.5~~1.9 million shares of common stock ~~or $1.6 billion, during the first quarter~~for $191.4 million. As of ~~fiscal 2018 under our ongoing share repurchase program. The number of remaining~~January 1, 2023, 50.6 million shares ~~authorized~~remained available for repurchase ~~as of December 31, 2017 totaled 51.8 million.~~under current authorizations.

Other than normal operating expenses, cash requirements for the remainder of fiscal ~~2018~~2023 are expected to consist primarily of capital expenditures for investments in our new and existing stores, our ~~developing Siren Retail business and our~~ supply chain and corporate facilities. Total capital expenditures for fiscal ~~2018~~2023 are expected to be approximately $2$2.5 billion.

~~Cash Flows~~

Table of Contents

~~Cash provided by operating activities was $1.8 billion for~~In the ~~first quarter of fiscal 2018, compared to $1.5 billion for the same period in fiscal 2017. The change was primarily due to increased earnings.~~

Cash provided by investing activities for the first quarter of fiscal 2018 totaled $395 million, compared to cash used by investing activities of $402 million for the same period in fiscal 2017. The change was primarily due to proceeds from the sale of Tazo and lower purchases of investments.

Cash used by financing activities for the first quarter of fiscal 2018 totaled $1.0 billion, compared to $1.2 billion for the same period in fiscal 2017. The change was primarily due to higher proceeds from issuances of long-term debt, lapping the repayment of the 2016 notes, partially offset by an increase in share repurchases.

~~Contractual Obligations~~

~~In Management’s Discussion and Analysis of Financial Condition and Results of Operations~~MD&A included in the 10-K, we disclosed that we had ~~$14.9~~$33.2 billion ~~in total contractual obligations~~of current and long-term material cash requirements as of October ~~1, 2017. Other than the issuance of our 2020 notes and our 2047 notes and the payable related to the acquisition of East China in the first quarter of fiscal 2018, as described in~~ ~~Note 7, Debt, and~~ ~~Note~~ 2,~~, Acquisitions and Divestitures, respectively to the condensed consolidated financial statements included in Item 1 of Part I of this 10-Q, there~~ 2022. There have been no material changes to our ~~total obligations~~material cash requirements during the period covered by this 10-Q outside of the normal course of our business. ~~Approximately $1.3~~

Cash Flows

Cash provided by operating activities was $1.6 billion for the first quarter of fiscal 2023, compared to $1.9 billion for the ~~East China payable has been settled as~~same period in fiscal 2022. The change was primarily due to the timing of payments, lower non-cash depreciation and amortization expenses in current year, and net cash used by changes in other operating assets and liabilities.

Cash used in investing activities for the ~~date~~first quarter of ~~this filing.~~fiscal 2023 totaled $279 million, compared to cash used in investing activities of $401 million for the same period in fiscal 2022. The change was primarily due to an increase in maturities and calls of investments, partially offset by higher spend on capital expenditures.

Cash used in financing activities for the first quarter of fiscal 2023 totaled $1.0 billion compared to cash used in financing activities of $4.0 billion for the same period in fiscal 2022. The change is primarily due to a decrease in share repurchase activities.

~~Off-Balance Sheet Arrangements~~

~~There has been no material change in our off-balance sheet arrangements discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 10-K.~~

Commodity Prices, Availability and General Risk Conditions

Commodity price risk represents our 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 impact 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 of the 10-K, as well as Risk Factors in Item 1A of the 10-K.

Seasonality and Quarterly Results

Our business is subject to moderate seasonal fluctuations, of which our fiscal second quarter typically experiences lower revenues and operating income. However, the COVID-19 pandemic may have an impact on consumer behaviors and customer traffic that result in changes in the seasonal fluctuations of our business. Additionally, as ~~Starbucks Cards~~our stored value cards are issued to and loaded by customers during the holiday season, we tend to have higher cash flows from operations during the first quarter of the fiscal year. However, since revenues from ~~Starbucks Cards~~our stored value cards are recognized upon redemption and not when cash is loaded, ~~onto the Card,~~ the impact of seasonal fluctuations on the consolidated statements of earnings is much less pronounced. As a result of moderate seasonal fluctuations, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.

~~RECENT ACCOUNTING PRONOUNCEMENTS~~Critical Accounting Estimates

~~See~~ The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Note 1, Summary of Significant Accounting Policies and Estimates, to the ~~condensed~~consolidated financial statements included in Item 1 of Part I of this 10-Q and in the Notes to Consolidated Financial Statements in Part II, Item 8 of the 10-K describe the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. There have been no material changes to the Company’s critical accounting estimates since the 10-K.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 1, Summary of Significant Accounting Policies and Estimates, to the consolidated financial statements included in Item 1 of Part I of this 10-Q, for a detailed description of recent accounting pronouncements.


~~Item 3.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~

Item 3.Quantitative and Qualitative Disclosures About Market Risk

There has been no material change in the commodity price risk, foreign currency exchange risk, equity security price risk or interest rate risk discussed in Item 7A of the 10-K.

Table of Contents

Item 4. 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”), 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 first quarter of fiscal ~~2018,~~2023, we carried out an evaluation, under the supervision and with the participation of our management, including our interim chief executive officer and our chief financial officer, of the effectiveness of the design and operation of the disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation, our interim 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 ~~(December 31, 2017)~~(January 1, 2023).

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, our internal control over financial reporting.

~~The certifications required by Section 302~~

Table of ~~the Sarbanes-Oxley Act of 2002 are filed as exhibits~~ ~~31.1~~Contents ~~and~~ ~~31.2~~ ~~to this 10-Q.~~

PART II — OTHER INFORMATION


~~Item 1.~~	~~Legal Proceedings~~

~~Starbucks is party~~Item 1.Legal Proceedings

See Note 14, Commitments and Contingencies, to ~~various~~the consolidated financial statements included in Item 1 of Part I of this 10-Q for information regarding certain 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 is not currently a party to any legal proceeding that management believes could have a material adverse effect on our consolidated financial position, results of operations or cash flows.which we are involved.


~~Item 1A.~~	~~Risk Factors~~

Item 1A.Risk Factors

In addition to the other information set forth in this 10-Q, you should carefully consider the risks and uncertainties discussed in Part I, Item 1A. Risk Factors in our 10-K and Part II, Item 1A. There have been no material changes to the risk factors ~~previously~~ disclosed in ~~the~~our 10-K.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds


~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~

Information regarding repurchases of our common stock during the quarter ended ~~December 31, 2017:~~January 1, 2023:


	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)
October 3, 2022 - October 30, 2022				—	52,572,178
October 31, 2022 - November 27, 2022	826,522	$	95.83	826,522	51,745,656
November 28, 2022 - January 1, 2023	1,107,480	101.32		1,107,480	50,638,176
Total	1,934,002	$	98.97	1,934,002

(1)Monthly information is presented by reference to our fiscal months during the first quarter of fiscal 2023.

(2)Share repurchases are conducted under our ongoing share repurchase program announced in September 2001, which has no expiration date, and for which the authorized number of shares has been increased by our Board numerous times, with our Board most recently authorizing the repurchase of up to an additional 40 million shares in March 2022.

(3)This column includes the total number of shares available for repurchase under the Company's ongoing share repurchase program. Shares under our ongoing share repurchase program may be repurchased in open market transactions, including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, or through privately negotiated transactions. The timing, manner, price and amount of repurchases will be determined at our discretion and the share repurchase program may be suspended, terminated or modified at any time for any reason.

Item 3.Defaults upon Senior Securities

None.

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information

None.

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⁾

October 2, 2017 — October 29, 2017 4,853,039
$ 54.58
4,853,039
75,464,372
October 30, 2017 — November 26, 2017 11,661,314
56.82
11,661,314
63,803,058
November 27, 2017 — December 31, 2017 11,959,889
57.75
11,959,889
51,843,169
Total 28,474,242
$ 56.83
28,474,242


⁽¹⁾	~~Monthly information is presented by reference to our fiscal months during the first quarter of fiscal 2018.~~


⁽²⁾	~~Share repurchases are conducted under our ongoing share repurchase program announced in September 2001, which has no expiration date.~~


~~Item 6.~~	~~Exhibits~~

Table of Contents

Incorporated by Reference
Exhibit
No.
Exhibit Description Form File No.
Date of
Filing
Exhibit Number
Filed
Herewith
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 September 13, 2016)
8-K 0-20322 9/16/2016 3.1
4.1

Second Supplemental Indenture, dated as of November 22, 2017, by and between Starbucks Corporation and U.S. Bank National Association, as trustee
8-K 0-20322 11/22/2017 4.2
4.2

Form of 2.200% Senior Notes due November 22, 2020
8-K 0-20322 11/22/2017 4.3
4.3

Form of 3.750% Senior Notes due December 1, 2047
8-K 0-20322 11/22/2017 4.4
10.1

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
10.2

364-Day Credit Agreement, dated October 25, 2017, 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 10/30/2017 10.2
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
— — — �� — —
101 The following financial statements from the Company's 10-Q for the fiscal quarter ended December 31, 2017, formatted in XBRL: (i) Condensed Consolidated Statements of Earnings, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements — — — — X
Item 6.Exhibits


		Incorporated by Reference
Exhibit No.	Exhibit Description	Form	File No.	Date of Filing	Exhibit Number	Filed Herewith
3.1	Restated Articles of Incorporation of Starbucks Corporation	10-Q	000-20322	04/28/2015	3.1
3.2	Amended and Restated Bylaws of Starbucks Corporation (As amended and restated through March 17, 2021)	8-K	000-20322	03/19/2021	3.1
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	—	—	—	—	—
101	The following financial statements from the Company's 10-Q for the fiscal quarter ended January 1, 2023, formatted in iXBRL: (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
104	Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)	—	—	—	—	X

* Furnished herewith.

Table of Contents

SIGNATURES

Pursuant to the requirements 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.

~~January 31, 2018~~February 2, 2023



			STARBUCKS CORPORATION

			By:						/s/ ~~Scott Maw~~Rachel Ruggeri
									~~Scott Maw~~Rachel Ruggeri
									executive vice president, chief financial officer
									Signing on behalf of the registrant and as principal financial officer



	Quarter Ended
	Dec 31, 2017			Jan 1, 2017
Net revenues:
Company-operated stores	$	4,741.8		$	4,469.3
Licensed stores	682.4			602.4
CPG, foodservice and other	649.5			661.2
Total net revenues	6,073.7			5,732.9
Cost of sales including occupancy costs	2,502.9			2,295.0
Store operating expenses	1,737.0			1,638.2
Other operating expenses	141.6			145.4
Depreciation and amortization expenses	258.8			249.7
General and administrative expenses	379.1			356.4
Restructuring expenses	27.6			—
Total operating expenses	5,047.0			4,684.7
Income from equity investees	89.4			84.4
Operating income	1,116.1			1,132.6
Gain resulting from acquisition of joint venture	1,326.3			—
Gains resulting from divestiture of certain operations	501.2			—
Interest income and other, net	88.2			24.1
Interest expense	(25.9		)	(23.8		)
Earnings before income taxes	3,005.9			1,132.9
Income tax expense	755.8			381.4
Net earnings including noncontrolling interests	2,250.1			751.5
Net loss attributable to noncontrolling interests	(0.1		)	(0.3		)
Net earnings attributable to Starbucks	$	2,250.2		$	751.8
Earnings per share - basic	$	1.58		$	0.52
Earnings per share - diluted	$	1.57		$	0.51
Weighted average shares outstanding:
Basic	1,421.0			1,457.5
Diluted	1,434.6			1,470.5
Cash dividends declared per share	$	0.30		$	0.25



	Dec 31, 2017			Oct 1, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	3,661.4		$	2,462.3
Short-term investments	106.6			228.6
Accounts receivable, net	851.8			870.4
Inventories	1,313.2			1,364.0
Prepaid expenses and other current assets	950.5			358.1
Total current assets	6,883.5			5,283.4
Long-term investments	363.5			542.3
Equity and cost investments	287.6			481.6
Property, plant and equipment, net	5,378.7			4,919.5
Deferred income taxes, net	157.9			795.4
Other long-term assets	526.3			362.8
Other intangible assets	1,246.2			441.4
Goodwill	3,674.8			1,539.2
TOTAL ASSETS	$	18,518.5		$	14,365.6
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	852.1		$	782.5
Accrued liabilities	3,761.1			1,934.5
Insurance reserves	210.0			215.2
Stored value card liability	1,668.0			1,288.5
Current portion of long-term debt	349.9			—
Total current liabilities	6,841.1			4,220.7
Long-term debt	4,566.5			3,932.6
Other long-term liabilities	1,352.0			755.3
Total liabilities	12,759.6			8,908.6
Shareholders’ equity:
Common stock ($0.001 par value) — authorized, 2,400.0 shares; issued and outstanding, 1,407.6 and 1,431.6 shares, respectively	1.4			1.4
Additional paid-in capital	41.1			41.1
Retained earnings	5,834.9			5,563.2
Accumulated other comprehensive loss	(125.3		)	(155.6		)
Total shareholders’ equity	5,752.1			5,450.1
Noncontrolling interests	6.8			6.9
Total equity	5,758.9			5,457.0
TOTAL LIABILITIES AND EQUITY	$	18,518.5		$	14,365.6



Consideration:
Acquisition payable for UPG 50% equity interest	$	1,431.0
Fair value of our preexisting 50% equity interest	1,431.0
Settlement of pre-existing liabilities	86.3
Total consideration	$	2,948.3

Fair value of assets acquired and liabilities assumed:
Cash and cash equivalents	$	129.5
Accounts receivable, net	14.3
Inventories	18.0
Prepaid expenses and other current assets	20.6
Property, plant and equipment	256.6
Other long-term assets	35.7
Other intangible assets	818.0
Goodwill	2,137.1
Total assets acquired	3,429.8
Accounts payable	43.2
Accrued liabilities	173.8
Stored value card liability	18.0
Other long-term liabilities	246.5
Total liabilities assumed	481.5
Total consideration	$	2,948.3



	Operating Leases
Year 1	$	69.6
Year 2	60.6
Year 3	52.2
Year 4	45.8
Year 5	37.0
Thereafter	83.5
Total minimum lease payments	$	348.7



	Pro Forma (unaudited)
	Quarter Ended
	Dec 31, 2017		Jan 1, 2017⁽¹⁾
Revenue	$	6,344.7	$	5,948.0
Net earnings attributable to Starbucks	1,122.8		1,799.2



	Net Gains/(Losses) Included in AOCI						Net Gains Expected to be Reclassified from AOCI into Earnings within 12 Months			Outstanding Contract/Debt Remaining Maturity (Months)
	Dec 31, 2017			Oct 1, 2017						Outstanding Contract/Debt Remaining Maturity (Months)
Cash Flow Hedges:
Interest rates	$	16.8		$	17.6		$	3.0		0
Cross-currency swaps	(7.5		)	(6.0		)	—			83
Foreign currency - other	(8.2		)	(9.1		)	(5.8		)	36
Coffee	(2.3		)	(6.6		)	(2.3		)	3
Net Investment Hedges:
Foreign currency	16.1			16.2			—			0
Foreign currency debt	(2.4		)	(2.2		)	—			76



	Quarter Ended
	Gains/(Losses) Recognized in OCI Before Reclassifications					Gains/(Losses) Reclassified from AOCI to Earnings
	Dec 31, 2017			Jan 1, 2017		Dec 31, 2017			Jan 1, 2017
Cash Flow Hedges:
Interest rates	$	—		$	—	$	1.2		$	1.2
Cross-currency swaps	(2.4		)	75.3		(0.5		)	77.6
Foreign currency - other	(1.3		)	37.2		(2.8		)	4.4
Coffee	—			1.0		(4.7		)	(0.7		)
Net Investment Hedges:
Foreign currency	(0.3		)	41.1		0.1			—
Foreign currency debt	—			—		—			—



	Dec 31, 2017		Oct 1, 2017
Interest rate swap	$	750	$	750
Cross-currency swaps	495		514
Foreign currency - other	998		901
Dairy	57		14
Diesel fuel and other commodities	13		41



			Fair Value Measurements at Reporting Date Using
	Balance at Dec 31, 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	$	3,661.4	$	3,661.4	$	—	$	—
Short-term investments:
Available-for-sale securities
Corporate debt securities	14.9		—		14.9		—
U.S. government treasury securities	10.5		10.5		—		—
Total available-for-sale securities	25.4		10.5		14.9		—
Trading securities	81.2		81.2		—		—
Total short-term investments	106.6		91.7		14.9		—
Prepaid expenses and other current assets:
Derivative assets	24.1		—		24.1		—
Long-term investments:
Available-for-sale securities
Agency obligations	8.5		—		8.5		—
Corporate debt securities	165.9		—		165.9		—
Auction rate securities	5.9		—		—		5.9
Foreign government obligations	12.0		—		12.0		—
U.S. government treasury securities	112.1		112.1		—		—
State and local government obligations	7.0		—		7.0		—
Mortgage and other asset-backed securities	52.1		—		52.1		—
Total long-term investments	363.5		112.1		245.5		5.9
Other long-term assets:
Derivative assets	16.2		—		16.2		—
Total assets	$	4,171.8	$	3,865.2	$	300.7	$	5.9
Liabilities:
Accrued liabilities:
Derivative liabilities	$	20.8	$	4.6	$	16.2	$	—
Other long-term liabilities:
Derivative liabilities	27.4		—		27.4		—
Total liabilities	$	48.2	$	4.6	$	43.6	$	—



	Dec 31, 2017		Oct 1, 2017		Jan 1, 2017
Coffee:
Unroasted	$	559.9	$	541.0	$	550.5
Roasted	283.9		301.1		255.7
Other merchandise held for sale	260.6		301.1		256.2
Packaging and other supplies	208.8		220.8		156.3
Total	$	1,313.2	$	1,364.0	$	1,218.7



	Dec 31, 2017		Oct 1, 2017
Receivable from Taiwan divestiture	$	177.1	$	—
Income tax receivable	438.4		68.0
Other prepaid expenses and current assets	335.0		290.1
Total prepaid expenses and current assets	$	950.5	$	358.1



	Dec 31, 2017		Oct 1, 2017
Accrued compensation and related costs	$	535.2	$	524.5
Accrued occupancy costs	178.4		151.3
Accrued taxes	421.5		226.6
Accrued dividends payable	422.3		429.5
Accrued capital and other operating expenditures	772.7		602.6
Payable for East China Acquisition	1,431.0		—
Total accrued liabilities	$	3,761.1	$	1,934.5



Fiscal Year	Total
2019	$	350.0
2020	—
2021	1,250.0
2022	500.0
2023	—
Thereafter	2,855.3
Total	$	4,955.3



	Americas		China/ Asia Pacific		EMEA		Channel Development		All Other Segments			Segment Total
December 31, 2017
Total net revenues	$	4,265.8	$	843.7	$	283.9	$	560.3	$	120.0		$	6,073.7
Depreciation and amortization expenses	158.0		53.7		7.7		0.5		0.7			220.6
Income from equity investees	—		50.7		—		38.7		—			89.4
Operating income/(loss)	979.4		196.8		39.1		243.3		(30.0		)	1,428.6

January 1, 2017
Total net revenues	$	3,991.4	$	770.8	$	262.4	$	553.7	$	154.6		$	5,732.9
Depreciation and amortization expenses	152.4		48.6		7.6		0.6		2.9			212.1
Income from equity investees	—		42.5		—		41.9		—			84.4
Operating income/(loss)	958.5		163.4		44.1		242.9		9.6			1,418.5



	Quarter Ended Dec 31, 2017
	Sales Growth	Change in Transactions	Change in Ticket
Consolidated	2%	—%	2%
Americas	2%	—%	2%
China/Asia Pacific	1%	1%	—%
EMEA⁽¹⁾	(1)%	(4)%	3%