STARBUCKS CORPORATION
[Pages:44]Table of Contents
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
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)
91-1325671
(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)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x
No ?
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (?232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x
No ?
Indicate by check mark 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
?
(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
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Title
Common Stock, par value $0.001 per share
Shares Outstanding as of January 24, 2018
1,405.6 million
Table of Contents
STARBUCKS CORPORATION FORM 10-Q
For the Quarterly Period Ended December 31, 2017 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
Index For Notes to Condensed Consolidated Financial Statements
7
Notes to Condensed Consolidated Financial Statements
8
Item 2
Management's Discussion and Analysis of Financial Condition and Results of Operations
24
Item 3
Quantitative and Qualitative Disclosures About Market Risk
37
Item 4
Controls and Procedures
37
PART II. OTHER INFORMATION
Item 1
Legal Proceedings
38
Item 1A Risk Factors
38
Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
38
Item 6
Exhibits
39
Signatures
40
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 CPG, foodservice and 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 expenses
Total operating expenses Income from equity investees
Operating income Gain resulting from acquisition of joint venture Gains 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 loss attributable to noncontrolling interests Net earnings attributable to Starbucks Earnings per share - basic Earnings per share - diluted Weighted average shares outstanding: Basic Diluted Cash dividends declared per share
See
Notes
to
Condensed
Consolidated
Financial
Statements.
3
Quarter Ended
Dec 31, 2017
Jan 1, 2017
$
4,741.8 $
4,469.3
682.4 649.5
602.4 661.2
6,073.7 2,502.9 1,737.0
141.6
5,732.9 2,295.0 1,638.2
145.4
258.8
249.7
379.1 27.6
356.4 --
5,047.0 89.4
4,684.7 84.4
1,116.1 1,326.3
501.2 88.2
1,132.6 -- --
24.1
(25.9)
(23.8)
3,005.9
1,132.9
755.8
381.4
2,250.1 (0.1)
751.5 (0.3)
$
2,250.2 $
751.8
$
1.58 $
0.52
$
1.57 $
0.51
1,421.0
1,457.5
1,434.6
1,470.5
$
0.30 $
0.25
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 losses on available-for-sale 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 securities, hedging instruments, and translation adjustment
Tax expense/(benefit)
Other comprehensive income/(loss)
Comprehensive income including noncontrolling interests
Comprehensive loss attributable to noncontrolling interests
Comprehensive income attributable to Starbucks
$
Quarter Ended
Dec 31, 2017
Jan 1, 2017
2,250.1 $
751.5
(2.8) 1.0 (3.7) 0.8 (0.3) 0.1 18.0 2.9
15.1
(0.8) 30.3 2,280.4 (0.1) 2,280.5 $
(13.4) 4.1
113.5 (26.5) 41.1 (15.2) (171.8)
--
(81.7)
16.0 (133.9) 617.6
(0.3) 617.9
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 and cost investments Property, plant and equipment, net Deferred income taxes, net Other long-term assets Other intangible assets Goodwill TOTAL ASSETS
LIABILITIES AND EQUITY Current liabilities:
Accounts payable Accrued liabilities Insurance reserves Stored value card liability Current portion of long-term debt
Total current liabilities Long-term debt Other long-term liabilities
Total liabilities 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 Additional paid-in capital Retained earnings Accumulated other comprehensive loss
Total shareholders' equity Noncontrolling interests
Total equity TOTAL LIABILITIES AND EQUITY
See
Notes
to
Condensed
Consolidated
Financial
Statements.
5
Dec 31, 2017
Oct 1, 2017
$
3,661.4 $
2,462.3
106.6
228.6
851.8
870.4
1,313.2
1,364.0
950.5
358.1
6,883.5
5,283.4
363.5
542.3
287.6
481.6
5,378.7
4,919.5
157.9
795.4
526.3
362.8
1,246.2
441.4
3,674.8
1,539.2
$
18,518.5 $
14,365.6
$
852.1 $
3,761.1
210.0
1,668.0
349.9
6,841.1
4,566.5
1,352.0
12,759.6
782.5 1,934.5
215.2 1,288.5
-- 4,220.7 3,932.6
755.3 8,908.6
1.4
1.4
41.1
41.1
5,834.9
5,563.2
(125.3)
(155.6)
5,752.1
5,450.1
6.8
6.9
5,758.9
5,457.0
$
18,518.5 $
14,365.6
Table of Contents
STARBUCKS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in
millions,
unaudited)
OPERATING ACTIVITIES:
Net earnings including noncontrolling interests
$
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
Deferred income taxes, net Income earned from equity method investees Distributions received from equity method investees Gain resulting from acquisition of joint venture
Gains resulting from divestiture of certain retail operations
Stock-based compensation Other Cash provided by changes in operating assets and liabilities:
Accounts receivable
Inventories Accounts payable Stored value card liability Other operating assets and liabilities
Net cash provided by operating activities
INVESTING ACTIVITIES:
Purchases of investments
Sales of investments Maturities and calls of investments Additions to property, plant and equipment
Cash acquired from purchase of equity in joint venture
Net proceeds from the sale of certain operations Other Net cash provided by/(used by) investing activities
FINANCING ACTIVITIES: Proceeds from issuance of long-term debt Repayments of long-term debt
Proceeds from issuance of common stock
Cash dividends paid Repurchase of common stock Minimum tax withholdings on share-based awards
Other
Net cash used by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase/(decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS:
Beginning of period
End of period
$
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest, net of capitalized interest
$
Income taxes, net of refunds
$
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Payable for East China acquisition (Note 2)
$
See
Notes
to
Condensed
Consolidated
Financial
Statements.
Quarter Ended
Dec 31, 2017
Jan 1, 2017
2,250.1 $
751.5
272.4 744.8 (66.2) 81.3 (1,326.3) (501.2) 61.4
3.3
263.2 56.4 (65.3) 39.1 -- -- 55.0 9.3
1.3 71.2 28.1 359.6 (145.8) 1,834.0
(128.7) 146.4 (34.7) 425.0
12.6 1,529.8
(35.2) 316.1 21.3 (429.3) 129.5 397.1
(4.5) 395.0
(323.4) 149.6
18.1 (307.4)
-- -- 61.6 (401.5)
998.3 --
54.3 (428.1) (1,601.0) (56.0)
(7.2) (1,039.7)
9.8 1,199.1
-- (400.0)
51.2 (364.0) (408.1) (68.3)
0.1 (1,189.1)
(33.4) (94.2)
2,462.3 3,661.4 $
2,128.8 2,034.6
38.3 $ 140.1 $
1,431.0 $
41.1 270.8
--
6
Table of Contents
STARBUCKS CORPORATION INDEX FOR NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1
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
22
Note 12
Segment Reporting
23
7
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