STARBUCKS CORPORATION
[Pages:51]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 March 28, 2021
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)
Securities registered pursuant to Section 12(b) of the Act:
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 April 21, 2021
1,178.3 million
Table of Contents
STARBUCKS CORPORATION FORM 10-Q
For the Quarterly Period Ended March 28, 2021 Table of Contents
PART I. FINANCIAL INFORMATION
Item 1
Financial Statements (Unaudited):
3
Consolidated Statements of Earnings
3
Consolidated Statements of Comprehensive Income
4
Consolidated Balance Sheets
5
Consolidated Statements of Cash Flows
6
Consolidated Statements of Equity
7
Index for Notes to Consolidated Financial Statements
9
Notes to Consolidated Financial Statements
10
Item 2
Management's Discussion and Analysis of Financial Condition and Results of Operations
30
Item 3
Quantitative and Qualitative Disclosures About Market Risk
44
Item 4
Controls and Procedures
44
PART II. OTHER INFORMATION
Item 1
Legal Proceedings
45
Item 1A
Risk Factors
45
Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
45
Item 6
Exhibits
46
Signatures
47
Table of Contents
Item 1. Financial Statements
PART I -- FINANCIAL INFORMATION
STARBUCKS CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS
(in millions, except per share data) (unaudited)
Net revenues:
Quarter Ended
Mar 28, 2021
Mar 29, 2020
Company-operated stores
$
5,653.1 $
4,766.0 $
Licensed stores
595.0
689.8
Other
419.9
539.9
Total net revenues
6,668.0
5,995.7
Product and distribution costs
1,992.4
1,997.7
Store operating expenses
2,823.3
2,721.4
Other operating expenses
87.7
95.0
Depreciation and amortization expenses
366.7
356.3
General and administrative expenses
464.4
406.5
Restructuring and impairments
23.0
(0.7)
Total operating expenses
5,757.5
5,576.2
Income from equity investees
77.1
67.9
Operating income
987.6
487.4
Interest income and other, net
17.3
2.0
Interest expense
(115.0)
(99.2)
Earnings before income taxes
889.9
390.2
Income tax expense
230.5
65.4
Net earnings including noncontrolling interests
659.4
324.8
Net loss attributable to noncontrolling interests
--
(3.6)
Net earnings attributable to Starbucks
$
659.4 $
328.4 $
Earnings per share - basic
$
0.56 $
0.28 $
Earnings per share - diluted
$
0.56 $
0.28 $
Weighted average shares outstanding:
Basic
1,177.5
1,171.8
Diluted
1,184.8
1,180.7
Two Quarters Ended
Mar 28, 2021
Mar 29, 2020
11,379.6 $ 1,208.8
829.1 13,417.5 4,041.5 5,690.7
179.5 732.6 936.5 95.2 11,676.0 159.7 1,901.2 32.7 (235.8) 1,698.1 416.5 1,281.6
-- 1,281.6 $
1.09 $ 1.08 $
10,546.6 1,481.9 1,064.3 13,092.8 4,234.2 5,542.9
196.7 707.4 840.7
5.6 11,527.5
141.9 1,707.2
18.0 (191.1) 1,534.1 324.0 1,210.1
(4.0) 1,214.1
1.03 1.02
1,176.3 1,183.9
1,176.1 1,185.8
See Notes to Consolidated Financial Statements.
3
Table of Contents
STARBUCKS CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions, unaudited)
Quarter Ended
Mar 28, 2021
Mar 29, 2020
Net earnings including noncontrolling interests
$
659.4 $
324.8 $
Other comprehensive income/(loss), net of tax:
Unrealized holding gains/(losses) on available-for-sale debt securities
(2.5)
3.2
Tax (expense)/benefit
0.5
(0.7)
Unrealized gains/(losses) on cash flow hedging instruments
97.2
(127.9)
Tax (expense)/benefit
(23.9)
31.2
Unrealized gains/(losses) on net investment hedging instruments
47.7
57.6
Tax (expense)/benefit
(12.1)
(14.6)
Translation adjustment and other
(83.4)
(79.9)
Tax (expense)/benefit
2.2
1.5
Reclassification adjustment for net (gains)/losses realized in net earnings for available-for-sale debt securities, hedging instruments, and translation adjustment
(7.9)
(6.4)
Tax expense/(benefit)
1.8
1.6
Other comprehensive income/(loss)
19.6
(134.4)
Comprehensive income including noncontrolling interests
679.0
190.4
Comprehensive income/(loss) attributable to noncontrolling interests
--
(3.6)
Comprehensive income attributable to Starbucks
$
679.0 $
194.0 $
Two Quarters Ended
Mar 28, 2021
Mar 29, 2020
1,281.6 $
1,210.1
(3.0) 0.6 104.9 (26.8) 17.5 (4.5) 155.3 2.2
(11.5)
3.6 238.3 1,519.9
-- 1,519.9 $
3.1 (0.7) (95.5) 24.6 81.3 (20.6) (3.8) 1.5
(17.1)
3.9 (23.3) 1,186.8 (4.0) 1,190.8
See Notes to Consolidated Financial Statements.
4
Table of Contents
STARBUCKS CORPORATION 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
Operating lease, right-of-use asset
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
Accrued payroll and benefits
Income taxes payable
Current portion of operating lease liability
Stored value card liability and current portion of deferred revenue
Short-term debt
Current portion of long-term debt
Total current liabilities
Long-term debt
Operating lease liability
Deferred revenue
Other long-term liabilities
Total liabilities
Shareholders' deficit:
Common stock ($0.001 par value) -- authorized, 2,400.0 shares; issued and outstanding, 1,177.9 and 1,173.3 shares, respectively
Additional paid-in capital
Retained deficit
Accumulated other comprehensive loss
Total shareholders' deficit
Noncontrolling interests
Total deficit
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
$
Mar 28, 2021
3,880.7 $ 123.0 880.2
1,503.6 592.0
6,979.5 284.8 499.4
6,123.1 8,036.8 1,770.0
574.9 444.3 3,658.9 28,371.7 $
1,033.6 $ 1,771.6
646.1 117.0 1,296.4 1,622.1 18.3
-- 6,505.1 14,630.3 7,577.7 6,532.1
774.8 36,020.0
1.2 595.4 (8,124.3) (126.3) (7,654.0)
5.7 (7,648.3) 28,371.7 $
Sep 27, 2020
4,350.9 281.2 883.4
1,551.4 739.5
7,806.4 206.1 478.7
6,241.4 8,134.1 1,789.9
568.6 552.1 3,597.2 29,374.5
997.9 1,160.7
696.0 98.2 1,248.8 1,456.5 438.8 1,249.9 7,346.8 14,659.6 7,661.7 6,598.5 907.3 37,173.9
1.2 373.9 (7,815.6) (364.6) (7,805.1)
5.7 (7,799.4) 29,374.5
See Notes to Consolidated Financial Statements. 5
Table of Contents
STARBUCKS CORPORATION 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 Stock-based compensation Non-cash lease costs Loss on retirement and impairment of assets Other Cash provided by/(used in) changes in operating assets and liabilities:
Accounts receivable Inventories Prepaid expenses and other current assets Income taxes payable Accounts payable Deferred revenue Operating lease 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 Other Net cash used in investing activities FINANCING ACTIVITIES: Net proceeds/(payments) from issuance of commercial paper Net proceeds from issuance of short-term debt Repayments of short-term debt 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 provided by/(used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net 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
See Notes to Consolidated Financial Statements.
6
Two Quarters Ended
Mar 28, 2021
Mar 29, 2020
$
1,281.6 $
1,210.1
772.9 (25.2) (131.3) 130.2 175.3 617.9 175.4 (15.4)
746.9 47.7 (116.3) 98.1 146.6 596.3 30.9 36.8
12.8 51.3 139.7 40.0 21.3 89.8 (676.3) 59.5 2,719.5
(60.7) 36.9 (247.7) (1,227.4) (186.4) 112.1 (608.6) (140.5) 474.8
(321.7) 121.7 289.0 (647.9) (20.1) (579.0)
(65.1) 93.7
4.3 (758.3)
(22.5) (747.9)
(296.5) 203.3 (320.5)
-- (1,250.0)
134.4 (1,058.0)
-- (90.1)
-- (2,677.4)
66.7 (470.2)
613.0 494.1
-- 1,739.7
-- 65.4 (965.2) (1,698.9) (87.6) (10.4) 150.1
8.7 (114.3)
4,350.9
2,686.6
$
3,880.7 $
2,572.3
$
250.8 $
186.3
$
236.2 $
1,726.2
Table of Contents
Balance, December 27, 2020 Net earnings Other comprehensive income/(loss) Stock-based compensation expense Exercise of stock options/vesting of RSUs Sale of common stock Cash dividends declared, $0.45 per share Balance, March 28, 2021
Balance, December 29, 2019 Net earnings/(loss) Other comprehensive income/(loss) Stock-based compensation expense Exercise of stock options/vesting of RSUs Sale of common stock Repurchase of common stock Cash dividends declared, $0.41 per share Balance, March 29, 2020
STARBUCKS CORPORATION CONSOLIDATED STATEMENTS OF EQUITY For the Quarters Ended March 28, 2021 and March 29, 2020
(in millions, except per share data, unaudited)
Common Stock
Shares
Amount
Additional Paid-in Capital
Accumulated
Other
Retained
Comprehensive Shareholders' Noncontrolling
Earnings/(Deficit) Income/(Loss) Equity/(Deficit) Interests
Total
1,177.2 $
1.2 $ 488.6 $ (8,253.6) $ (145.9) $ (7,909.7) $
5.7 $ (7,904.0)
--
--
--
659.4
--
659.4
--
659.4
--
--
--
--
19.6
19.6
--
19.6
--
--
76.7
--
--
76.7
--
76.7
0.6
--
20.0
0.1
--
10.1
--
--
20.0
--
20.0
--
--
10.1
--
10.1
-- 1,177.9 $
-- 1.2 $
-- 595.4 $
(530.1) (8,124.3) $
--
(530.1)
(126.3) $ (7,654.0) $
--
(530.1)
5.7 $ (7,648.3)
1,174.5 $ -- -- --
0.8 0.1 (7.3)
-- 1,168.1 $
1.2 $ -- -- --
-- -- --
-- 1.2 $
41.1 $ -- --
57.1
13.6 9.6
(80.3)
-- 41.1 $
(6,414.8) $ 328.4 -- --
-- -- (486.8)
(477.4) (7,050.6) $
(387.4) $ --
(134.4) --
(6,759.9) $ 328.4 (134.4) 57.1
--
13.6
--
9.6
--
(567.1)
--
(477.4)
(521.8) $ (7,530.1) $
0.8 $ (6,759.1)
(3.6)
324.8
--
(134.4)
--
57.1
--
13.6
--
9.6
--
(567.1)
--
(477.4)
(2.8) $ (7,532.9)
See Notes to Consolidated Financial Statements.
7
Table of Contents
Balance, September 27, 2020 Cumulative effect of adoption of new accounting guidance Net earnings Other comprehensive income/(loss) Stock-based compensation expense Exercise of stock options/vesting of RSUs Sale of common stock Cash dividends declared, $1.35 per share Balance, March 28, 2021
Balance, September 29, 2019 Cumulative effect of adoption of new accounting guidance Net earnings/(loss) Other comprehensive income/(loss) Stock-based compensation expense Exercise of stock options/vesting of RSUs Sale of common stock Repurchase of common stock Cash dividends declared, $0.82 per share Balance, March 29, 2020
STARBUCKS CORPORATION CONSOLIDATED STATEMENTS OF EQUITY For the Two Quarters Ended March 28, 2021 and March 29, 2020
(in millions, except per share data, unaudited)
Common Stock
Shares
Amount
Additional Paid-in Capital
Accumulated
Other
Retained
Comprehensive Shareholders' Noncontrolling
Earnings/(Deficit) Income/(Loss) Equity/(Deficit) Interests
Total
1,173.3 $
1.2 $ 373.9 $ (7,815.6) $ (364.6) $ (7,805.1) $
5.7 $ (7,799.4)
--
--
--
(2.2)
--
(2.2)
--
--
--
1,281.6
--
1,281.6
--
--
--
--
238.3
238.3
--
--
177.2
--
--
177.2
--
(2.2)
--
1,281.6
--
238.3
--
177.2
4.4
--
24.0
0.2
--
20.3
--
--
24.0
--
24.0
--
--
20.3
--
20.3
-- 1,177.9 $
-- 1.2 $
-- 595.4 $
(1,588.1) (8,124.3) $
--
(1,588.1)
(126.3) $ (7,654.0) $
-- (1,588.1) 5.7 $ (7,648.3)
1,184.6 $
-- -- -- --
3.6 0.2 (20.3)
-- 1,168.1 $
1.2 $ 41.1 $
--
--
--
--
--
--
--
148.4
--
(40.5)
--
18.5
--
(126.4)
-- 1.2 $
-- 41.1 $
(5,771.2) $
12.5 1,214.1
-- --
-- -- (1,548.6)
(957.4) (7,050.6) $
(503.3) $ (6,232.2) $
4.8 -- (23.3) --
17.3 1,214.1
(23.3) 148.4
--
(40.5)
--
18.5
--
(1,675.0)
--
(957.4)
(521.8) $ (7,530.1) $
1.2 $ (6,231.0)
--
17.3
(4.0)
1,210.1
--
(23.3)
--
148.4
--
(40.5)
--
18.5
-- (1,675.0)
--
(957.4)
(2.8) $ (7,532.9)
See Notes to Consolidated Financial Statements.
8
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