STARBUCKS CORPORATION

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the Quarterly Period Ended June 30, 2019

OR

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

For the transition period from

to

.

Commission File Number: 0-20322

Starbucks Corporation

(Exact Name of Registrant as Specified in its Charter)

Washington

(State or Other Jurisdiction of Incorporation or Organization)

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:

91-1325671

(IRS Employer Identification No.)

Title

Common Stock, par value $0.001 per share

Trading Symbol

SBUX

Name of each exchange on which registered

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 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 every Interactive Data File required to be submitted 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 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

x Accelerated filer

? Non-accelerated filer

? 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

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

Shares Outstanding as of July 24, 2019

1,197.0 million

Table of Contents

STARBUCKS CORPORATION FORM 10-Q

For the Quarterly Period Ended June 30, 2019 Table of Contents

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

Condensed Consolidated Statements of Equity

7

Index For Notes to Condensed Consolidated Financial Statements

9

Notes to Condensed Consolidated Financial Statements

10

Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

31

Item 3

Quantitative and Qualitative Disclosures About Market Risk

48

Item 4

Controls and Procedures

48

PART II. OTHER INFORMATION

Item 1

Legal Proceedings

49

Item 1A Risk Factors

49

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

49

Item 6

Exhibits

50

Signatures

51

Table of Contents Item 1. Financial Statements

PART I -- FINANCIAL INFORMATION

STARBUCKS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(in

millions,

except

per

share

data) (unaudited)

Net revenues: Company-operated stores Licensed stores Other

Total net revenues Cost of sales including occupancy costs Store operating expenses Other operating expenses Depreciation and amortization expenses General and administrative expenses Restructuring and impairments

Total operating expenses Income from equity investees

Operating income Gain resulting from acquisition of joint venture Net gain resulting from divestiture of certain operations Interest income and other, net Interest expense

Earnings before income taxes Income tax expense

Net earnings including noncontrolling interests Net earnings/(loss) attributable to noncontrolling interests Net earnings attributable to Starbucks Earnings per share - basic Earnings per share - diluted Weighted average shares outstanding: Basic Diluted

Quarter Ended

Jun 30, 2019

Jul 1, 2018

$

5,535.0 $

5,060.4 $

725.0

660.6

563.0

589.3

6,823.0

6,310.3

2,808.6 2,018.5

89.6 343.1

2,553.4 1,825.0

132.3 330.0

480.2 37.7

485.9 16.9

5,777.7

5,343.5

76.0

71.4

1,121.3

1,038.2

-- 601.8 40.2 (86.4)

2.5 -- 31.5 (45.4)

1,676.9 303.7

1,026.8 174.8

1,373.2 0.4

852.0 (0.5)

$

1,372.8 $

852.5 $

$

1.13 $

0.62 $

$

1.12 $

0.61 $

1,211.0 1,223.0

1,377.1 1,388.5

See

Notes

to

Condensed

Consolidated

Financial

Statements.

3

Three Quarters Ended

Jun 30, 2019

Jul 1, 2018

16,064.3 $ 2,140.3 1,557.0

19,761.6 8,171.1 5,961.2 265.2 1,032.5 1,419.2 123.9

16,973.1 206.1

2,994.6 --

622.8 80.2

(235.3) 3,462.3

670.1 2,792.2

(4.2) 2,796.4 $

2.27 $ 2.25 $

14,630.3 1,968.6 1,817.0 18,415.9 7,569.8 5,351.6

382.5 920.4 1,299.0 179.2 15,702.5 213.5 2,926.9 1,376.4 496.3 155.2 (106.4) 4,848.4 1,086.5 3,761.9

(0.9) 3,762.8

2.69 2.67

1,230.8 1,242.4

1,397.7 1,409.9

Table of Contents

STARBUCKS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in

millions,

unaudited)

Net earnings including noncontrolling interests

$

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

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

Tax (expense)/benefit

Unrealized gains/(losses) on cash flow hedging instruments

Tax (expense)/benefit

Unrealized gains/(losses) on net investment hedging instruments

Tax (expense)/benefit

Translation adjustment and other

Tax (expense)/benefit

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

Tax expense/(benefit)

Other comprehensive income/(loss)

Comprehensive income including noncontrolling interests

Comprehensive income/(loss) attributable to noncontrolling interests

Comprehensive income attributable to Starbucks

$

Quarter Ended

Jun 30, 2019

Jul 1, 2018

1,373.2 $

852.0 $

3.7 (0.8) (3.2) 0.6 (21.1) 5.3 (64.9)

--

3.2

(0.3) (77.5) 1,295.7

0.4 1,295.3 $

(0.5) 0.1 46.0 (10.4) 32.4 (8.3) (281.9) 1.3

(17.5)

3.2 (235.6) 616.4

(0.5) 616.9 $

Three Quarters Ended

Jun 30, 2019

Jul 1, 2018

2,792.2 $

3,761.9

9.6 (2.1) (24.7) 5.9 (40.1) 10.2 15.0 1.4

5.5

0.6 (18.7) 2,773.5 (4.2) 2,777.7 $

(6.5) 1.8 0.6 (1.2) (11.8) 2.8 (70.3) 3.5

38.0

(4.0) (47.1) 3,714.8 (0.9) 3,715.7

See

Notes

to

Condensed

Consolidated

Financial

Statements. 4

Table of Contents

STARBUCKS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS

(in

millions,

except

per

share

data) (unaudited)

ASSETS Current assets:

Cash and cash equivalents Short-term investments Accounts receivable, net Inventories Prepaid expenses and other current assets

Total current assets Long-term investments Equity investments Property, plant and equipment, net Deferred income taxes, net Other long-term assets Other intangible assets Goodwill TOTAL ASSETS

LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT) Current liabilities:

Accounts payable Accrued liabilities Insurance reserves Current portion of deferred revenue Current portion of long-term debt

Total current liabilities Long-term liabilities:

Long-term debt Deferred revenue Other long-term liabilities

Total liabilities Shareholders' equity/(deficit):

Common stock ($0.001 par value) -- authorized, 2,400.0 shares; issued and outstanding, 1,206.5 and 1,309.1 shares, respectively Additional paid-in capital Retained earnings/(deficit) Accumulated other comprehensive loss

Total shareholders' equity/(deficit) Noncontrolling interests

Total equity/(deficit) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)

See

Notes

to

Condensed

Consolidated

Financial

Statements.

5

Jun 30, 2019

Sep 30, 2018

$

4,763.3 $

8,756.3

72.1

181.5

790.6

693.1

1,517.2

1,400.5

591.6

1,462.8

7,734.8

12,494.2

222.6

267.7

340.3

334.7

6,187.8

5,929.1

1,533.0

134.7

458.0

412.2

853.2

1,042.2

3,564.7

3,541.6

$

20,894.4 $

24,156.4

$

1,145.4 $

1,179.3

3,238.7

2,298.4

211.5

213.7

1,300.2

1,642.9

--

349.9

5,895.8

5,684.2

11,159.1 6,717.9 1,440.6 25,213.4

9,090.2 6,775.7 1,430.5 22,980.6

1.2

1.3

41.1

41.1

(4,013.9)

1,457.4

(349.0)

(330.3)

(4,320.6)

1,169.5

1.6

6.3

(4,319.0)

1,175.8

$

20,894.4 $

24,156.4

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