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 ~~December 27, 2020~~January 2, 2022

☐ 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~~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 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

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 January ~~20, 2021~~26, 2022
~~1,177.3~~1,150.3 million

Table of Contents

STARBUCKS CORPORATION

FORM 10-Q

For the Quarterly Period Ended ~~December 27, 2020~~January 2, 2022

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1.Financial Statements

STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(in millions, except per share data)

(unaudited)

Quarter Ended
Dec 27,
2020 Dec 29,
2019
Net revenues:
Company-operated stores $ 5,726.5 $ 5,780.7
Licensed stores 613.8 792.0
Other 409.1 524.4
Total net revenues 6,749.4 7,097.1
Product and distribution costs 2,049.1 2,236.4
Store operating expenses 2,867.3 2,821.5
Other operating expenses 91.8 101.8
Depreciation and amortization expenses 366.1 351.0
General and administrative expenses 472.1 434.2
Restructuring and impairments 72.2 6.3
Total operating expenses 5,918.6 5,951.2
Income from equity investees 82.7 73.9
Operating income 913.5 1,219.8
Interest income and other, net 15.5 15.9
Interest expense (120.7) (91.9)
Earnings before income taxes 808.3 1,143.8
Income tax expense 186.1 258.5
Net earnings including noncontrolling interests 622.2 885.3
Net loss attributable to noncontrolling interests 0 (0.4)
Net earnings attributable to Starbucks $ 622.2 $ 885.7
Earnings per share - basic $ 0.53 $ 0.75
Earnings per share - diluted $ 0.53 $ 0.74
Weighted average shares outstanding:
Basic 1,175.0 1,180.4
Diluted 1,183.0 1,191.0


	Quarter Ended
	Jan 2, 2022		Dec 27, 2020
Net revenues:
Company-operated stores	$	6,722.4	$	5,726.5
Licensed stores	850.8		613.8
Other	477.2		409.1
Total net revenues	8,050.4		6,749.4
Product and distribution costs	2,526.9		2,049.1
Store operating expenses	3,400.0		2,867.3
Other operating expenses	101.7		91.8
Depreciation and amortization expenses	366.0		366.1
General and administrative expenses	525.8		472.1
Restructuring and impairments	(7.5)		72.2
Total operating expenses	6,912.9		5,918.6
Income from equity investees	40.3		82.7
Operating income	1,177.8		913.5


Interest income and other, net	(0.1)		15.5
Interest expense	(115.3)		(120.7)
Earnings before income taxes	1,062.4		808.3
Income tax expense	246.3		186.1
Net earnings including noncontrolling interests	816.1		622.2
Net earnings attributable to noncontrolling interests	0.2		—
Net earnings attributable to Starbucks	$	815.9	$	622.2
Earnings per share - basic	$	0.70	$	0.53
Earnings per share - diluted	$	0.69	$	0.53
Weighted average shares outstanding:
Basic	1,169.6		1,175.0
Diluted	1,176.6		1,183.0

See Notes to Consolidated Financial Statements.

Table of Contents

STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions, unaudited)


		Quarter Ended				Quarter Ended
		Dec 27, 2020		Dec 29, 2019				Jan 2, 2022		Dec 27, 2020
Net earnings including noncontrolling interests	Net earnings including noncontrolling interests	$	622.2	$	885.3		Net earnings including noncontrolling interests	$	816.1	$	622.2
Other comprehensive income/(loss), net of tax:	Other comprehensive income/(loss), net of tax:						Other comprehensive income/(loss), net of tax:
Unrealized holding gains/(losses) on available-for-sale debt securities	Unrealized holding gains/(losses) on available-for-sale debt securities	(0.5)		(0.1)			Unrealized holding gains/(losses) on available-for-sale debt securities	(3.4)		(0.5)
Tax (expense)/benefit	Tax (expense)/benefit	0.1		0			Tax (expense)/benefit	0.8		0.1
Unrealized gains/(losses) on cash flow hedging instruments	Unrealized gains/(losses) on cash flow hedging instruments	7.7		32.4			Unrealized gains/(losses) on cash flow hedging instruments	88.7		7.7
Tax (expense)/benefit	Tax (expense)/benefit	(2.9)		(6.6)			Tax (expense)/benefit	(11.8)		(2.9)
Unrealized gains/(losses) on net investment hedging instruments	Unrealized gains/(losses) on net investment hedging instruments	(30.2)		23.7			Unrealized gains/(losses) on net investment hedging instruments	41.5		(30.2)
Tax (expense)/benefit	Tax (expense)/benefit	7.6		(6.0)			Tax (expense)/benefit	(10.5)		7.6
Translation adjustment and other	Translation adjustment and other	238.7		76.1			Translation adjustment and other	14.2		238.7
Tax (expense)/benefit	Tax (expense)/benefit	0		0			Tax (expense)/benefit	—		—
Reclassification adjustment for net (gains)/losses realized in net earnings for available-for-sale debt securities, hedging instruments, and translation adjustment	Reclassification adjustment for net (gains)/losses realized in net earnings for available-for-sale debt securities, hedging instruments, and translation adjustment	(3.6)		(10.7)			Reclassification adjustment for net (gains)/losses realized in net earnings for available-for-sale debt securities, hedging instruments, and translation adjustment	(16.1)		(3.6)
Tax expense/(benefit)	Tax expense/(benefit)	1.8		2.3			Tax expense/(benefit)	2.9		1.8
Other comprehensive income/(loss)		218.7		111.1
Other comprehensive income							Other comprehensive income	106.3		218.7
Comprehensive income including noncontrolling interests	Comprehensive income including noncontrolling interests	840.9		996.4			Comprehensive income including noncontrolling interests	922.4		840.9
Comprehensive income/(loss) attributable to noncontrolling interests		0		(0.4)
Comprehensive income attributable to noncontrolling interests							Comprehensive income attributable to noncontrolling interests	0.2		—
Comprehensive income attributable to Starbucks	Comprehensive income attributable to Starbucks	$	840.9	$	996.8		Comprehensive income attributable to Starbucks	$	922.2	$	840.9

See Notes to Consolidated Financial Statements.

Table of Contents

STARBUCKS CORPORATION

CONSOLIDATED BALANCE SHEETS

(in millions, except per share data)

(unaudited)


	Jan 2, 2022		Oct 3, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	3,969.4	$	6,455.7
Short-term investments	87.4		162.2
Accounts receivable, net	1,031.1		940.0
Inventories	1,637.1		1,603.9
Prepaid expenses and other current assets	530.1		594.6
Total current assets	7,255.1		9,756.4
Long-term investments	299.6		281.7
Equity investments	251.9		268.5
Property, plant and equipment, net	6,398.0		6,369.5
Operating lease, right-of-use asset	8,203.4		8,236.0
Deferred income taxes, net	1,859.7		1,874.8
Other long-term assets	588.0		578.5
Other intangible assets	302.5		349.9
Goodwill	3,675.7		3,677.3
TOTAL ASSETS	$	28,833.9	$	31,392.6
LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
Current liabilities:
Accounts payable	$	1,289.4	$	1,211.6
Accrued liabilities	2,444.3		2,321.2
Accrued payroll and benefits	664.1		772.3

Current portion of operating lease liability	1,253.3		1,251.3
Stored value card liability and current portion of deferred revenue	2,070.7		1,596.1
Short-term debt	200.0		—
Current portion of long-term debt	999.3		998.9
Total current liabilities	8,921.1		8,151.4
Long-term debt	13,586.3		13,616.9
Operating lease liability	7,708.0		7,738.0
Deferred revenue	6,447.7		6,463.0
Other long-term liabilities	621.1		737.8
Total liabilities	37,284.2		36,707.1
Shareholders' deficit:
Common stock ($0.001 par value) — authorized, 2,400.0 shares; issued and outstanding, 1,151.6 and 1,180.0 shares, respectively	1.2		1.2
Additional paid-in capital	41.1		846.1
Retained deficit	(8,753.0)		(6,315.7)
Accumulated other comprehensive income	253.5		147.2
Total shareholders’ deficit	(8,457.2)		(5,321.2)
Noncontrolling interests	6.9		6.7
Total deficit	(8,450.3)		(5,314.5)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)	$	28,833.9	$	31,392.6

Dec 27,
2020 Sep 27,
2020
ASSETS
Current assets:
Cash and cash equivalents $ 5,028.1 $ 4,350.9
Short-term investments 235.5 281.2
Accounts receivable, net 888.0 883.4
Inventories 1,471.5 1,551.4
Prepaid expenses and other current assets 734.4 739.5
Total current assets 8,357.5 7,806.4
Long-term investments 190.9 206.1
Equity investments 496.0 478.7
Property, plant and equipment, net 6,177.9 6,241.4
Operating lease, right-of-use asset 8,199.4 8,134.1
Deferred income taxes, net 1,792.4 1,789.9
Other long-term assets 541.1 568.6
Other intangible assets 506.4 552.1
Goodwill 3,706.8 3,597.2
TOTAL ASSETS $ 29,968.4 $ 29,374.5
LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
Current liabilities:
Accounts payable $ 1,050.6 $ 997.9
Accrued liabilities 1,616.9 1,160.7
Accrued payroll and benefits 685.3 696.0
Income taxes payable 149.7 98.2
Current portion of operating lease liability 1,267.6 1,248.8
Stored value card liability and current portion of deferred revenue 1,871.2 1,456.5
Short-term debt 492.6 438.8
Current portion of long-term debt 750.0 1,249.9
Total current liabilities 7,883.9 7,346.8
Long-term debt 14,673.5 14,659.6
Operating lease liability 7,754.5 7,661.7
Deferred revenue 6,597.7 6,598.5
Other long-term liabilities 962.8 907.3
Total liabilities 37,872.4 37,173.9
Shareholders' deficit:
Common stock ($0.001 par value) — authorized, 2,400.0 shares; issued and outstanding, 1,177.2 and 1,173.3 shares, respectively 1.2 1.2
Additional paid-in capital 488.6 373.9
Retained deficit (8,253.6) (7,815.6)
Accumulated other comprehensive loss (145.9) (364.6)
Total shareholders’ deficit (7,909.7) (7,805.1)
Noncontrolling interests 5.7 5.7
Total deficit (7,904.0) (7,799.4)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT) $ 29,968.4 $ 29,374.5

See Notes to Consolidated Financial Statements.

Table of Contents

STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions, unaudited)

Quarter Ended
Dec 27,
2020 Dec 29,
2019
OPERATING ACTIVITIES:
Net earnings including noncontrolling interests $ 622.2 $ 885.3
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 388.4 369.2
Deferred income taxes, net (6.1) 10.4
Income earned from equity method investees (69.0) (62.9)
Distributions received from equity method investees 77.2 64.3
Stock-based compensation 99.3 90.3
Non-cash lease costs 308.3 294.9
Loss on retirement and impairment of assets 132.6 12.7
Other (10.2) (7.6)
Cash provided by changes in operating assets and liabilities:
Accounts receivable 19.6 (22.9)
Inventories 90.1 122.8
Prepaid expenses and other current assets 5.2 (28.5)
Income taxes payable 56.9 125.1
Accounts payable 24.8 (110.3)
Deferred revenue 398.9 426.7
Operating lease liability (314.8) (301.6)
Other operating assets and liabilities 12.3 (31.8)
Net cash provided by operating activities 1,835.7 1,836.1
INVESTING ACTIVITIES:
Purchases of investments (135.5) (38.0)
Sales of investments 91.2 64.6
Maturities and calls of investments 113.7 1.3
Additions to property, plant and equipment (324.2) (394.3)
Other (17.7) (19.9)
Net cash used in investing activities (272.5) (386.3)
FINANCING ACTIVITIES:
Net proceeds from issuance of commercial paper 0 398.9
Net proceeds from issuance of short-term debt 192.9 99.0
Repayments of short-term debt (144.7) 0
Repayments of long-term debt (500.0) 0
Proceeds from issuance of common stock 102.8 33.1
Cash dividends paid (528.2) (484.2)
Repurchase of common stock 0 (1,091.4)
Minimum tax withholdings on share-based awards (88.6) (78.4)
Net cash used in financing activities (965.8) (1,123.0)
Effect of exchange rate changes on cash and cash equivalents 79.8 27.1
Net increase in cash and cash equivalents 677.2 353.9
CASH AND CASH EQUIVALENTS:
Beginning of period 4,350.9 2,686.6
End of period $ 5,028.1 $ 3,040.5
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest, net of capitalized interest $ 130.0 $ 87.2
Income taxes $ 109.4 $ 92.1


	Quarter Ended
	Jan 2, 2022		Dec 27, 2020
OPERATING ACTIVITIES:
Net earnings including noncontrolling interests	$	816.1	$	622.2
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	386.4		388.4
Deferred income taxes, net	(0.3)		(6.1)
Income earned from equity method investees	(46.6)		(69.0)
Distributions received from equity method investees	44.9		77.2


Stock-based compensation	95.8		99.3

Non-cash lease costs	330.4		308.3
Loss on retirement and impairment of assets	50.7		132.6
Other	(4.9)		(10.2)
Cash provided by/(used in) changes in operating assets and liabilities:
Accounts receivable	(91.6)		19.6
Inventories	(36.0)		90.1
Prepaid expenses and other current assets	64.6		5.2

Accounts payable	84.0		24.8
Deferred revenue	461.3		398.9
Operating lease liability	(363.3)		(314.8)
Other operating assets and liabilities	79.4		69.2
Net cash provided by operating activities	1,870.9		1,835.7
INVESTING ACTIVITIES:
Purchases of investments	(61.0)		(135.5)
Sales of investments	72.6		91.2
Maturities and calls of investments	45.6		113.7

Additions to property, plant and equipment	(416.8)		(324.2)


Other	(41.4)		(17.7)
Net cash used in investing activities	(401.0)		(272.5)
FINANCING ACTIVITIES:
Proceeds from issuance of commercial paper	200.0		—
Net proceeds from issuance of short-term debt	—		192.9
Repayments of short-term debt	—		(144.7)

Repayments of long-term debt	—		(500.0)

Proceeds from issuance of common stock	41.3		102.8
Cash dividends paid	(576.0)		(528.2)
Repurchase of common stock	(3,520.9)		—
Minimum tax withholdings on share-based awards	(113.6)		(88.6)

Net cash used in financing activities	(3,969.2)		(965.8)
Effect of exchange rate changes on cash and cash equivalents	13.0		79.8
Net increase/(decrease) in cash and cash equivalents	(2,486.3)		677.2
CASH AND CASH EQUIVALENTS:
Beginning of period	6,455.7		4,350.9
End of period	$	3,969.4	$	5,028.1
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest, net of capitalized interest	$	108.3	$	130.0
Income taxes	$	161.4	$	109.4

See Notes to Consolidated Financial Statements.

Table of Contents

STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

For the Quarters Ended January 2, 2022 and December 27, 2020 ~~and December 29, 2019~~

(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, September 27, 2020 1,173.3 $ 1.2 $ 373.9 $ (7,815.6) $ (364.6) $ (7,805.1) $ 5.7 $ (7,799.4)
Cumulative effect of adoption of new accounting guidance — 0 0 (2.2) 0 (2.2) 0 (2.2)
Net earnings — 0 0 622.2 0 622.2 0 622.2
Other comprehensive income/(loss) — 0 0 0 218.7 218.7 0 218.7
Stock-based compensation expense — 0 100.5 0 0 100.5 0 100.5
Exercise of stock options/vesting of RSUs 3.8 0 4.0 0 0 4.0 0 4.0
Sale of common stock 0.1 0 10.2 0 0 10.2 0 10.2
Cash dividends declared, $0.90 per share — 0 0 (1,058.0) 0 (1,058.0) 0 (1,058.0)
Balance, December 27, 2020 1,177.2 $ 1.2 $ 488.6 $ (8,253.6) $ (145.9) $ (7,909.7) $ 5.7 $ (7,904.0)
Balance, September 29, 2019 1,184.6 $ 1.2 $ 41.1 $ (5,771.2) $ (503.3) $ (6,232.2) $ 1.2 $ (6,231.0)
Cumulative effect of adoption of new accounting guidance — 0 0 12.5 4.8 17.3 0 17.3
Net earnings/(loss) — 0 0 885.7 0 885.7 (0.4) 885.3
Other comprehensive income/(loss) — 0 0 0 111.1 111.1 0 111.1
Stock-based compensation expense — 0 91.3 0 0 91.3 0 91.3
Exercise of stock options/vesting of RSUs 2.8 0 (54.1) 0 0 (54.1) 0 (54.1)
Sale of common stock 0.1 0 8.9 0 0 8.9 0 8.9
Repurchase of common stock (13.0) 0 (46.1) (1,061.8) 0 (1,107.9) 0 (1,107.9)
Cash dividends declared, $0.41 per share — 0 0 (480.0) 0 (480.0) 0 (480.0)
Balance, December 29, 2019 1,174.5 $ 1.2 $ 41.1 $ (6,414.8) $ (387.4) $ (6,759.9) $ 0.8 $ (6,759.1)


	Common Stock			Additional Paid-in Capital		Retained Earnings/(Deficit)		Accumulated Other Comprehensive Income/(Loss)		Shareholders’ Equity/(Deficit)		Noncontrolling Interests		Total
	Shares	Amount
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)

Balance, September 27, 2020	1,173.3	$	1.2	$	373.9	$	(7,815.6)	$	(364.6)	$	(7,805.1)	$	5.7	$	(7,799.4)
Cumulative effect of adoption of new accounting guidance	—	—		—		(2.2)		—		(2.2)		—		(2.2)
Net earnings	—	—		—		622.2		—		622.2		—		622.2
Other comprehensive income	—	—		—		—		218.7		218.7		—		218.7
Stock-based compensation expense	—	—		100.5		—		—		100.5		—		100.5
Exercise of stock options/vesting of RSUs	3.8	—		4.0		—		—		4.0		—		4.0
Sale of common stock	0.1	—		10.2		—		—		10.2		—		10.2

Cash dividends declared, $0.90 per share	—	—		—		(1,058.0)		—		(1,058.0)		—		(1,058.0)

Balance, December 27, 2020	1,177.2	$	1.2	$	488.6	$	(8,253.6)	$	(145.9)	$	(7,909.7)	$	5.7	$	(7,904.0)

See Notes to Consolidated Financial Statements.

Table of Contents

STARBUCKS CORPORATION

INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1	Summary of Significant Accounting Policies and Estimates	9

Note 2	Derivative Financial Instruments	1011
Note 3	Fair Value Measurements	14
Note 4	Inventories	16
Note 5	Supplemental Balance Sheet and Statement of Earnings Information	16
Note 6	Other Intangible Assets and Goodwill	17
Note 7	Debt	1819
Note 8	Leases	20
Note 9	Deferred Revenue	21
Note 10	Equity	2223
Note 11	Employee Stock Plans	23

Note 12	Earnings per Share	2324
Note 13	Commitments and Contingencies	2324
Note 14	Segment Reporting	2425

Table of Contents

STARBUCKS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1: Summary of Significant Accounting Policies and Estimates

Financial Statement Preparation

The unaudited consolidated financial statements as of ~~December 27, 2020,~~January 2, 2022, and for the quarters ended January 2, 2022 and December 27, 2020, ~~and December 29, 2019,~~ 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 January 2, 2022 and December 27, 2020 ~~and December 29, 2019~~ 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. In the fourth quarter of fiscal 2021, certain changes were made to our management team, and our operating segment reporting structure was realigned as a result. We realigned our fully licensed Latin America and Caribbean markets from our Americas operating segment to our International operating segment. We renamed the Americas operating segment to the North America operating segment, since it is comprised of our company-operated and licensed stores in the U.S. and Canada. We also made certain other immaterial changes between our International operating segment and Corporate and Other. Certain prior period information for our North America and International operating segments and our Corporate and Other reportable segment has been reclassified to conform to the current year presentation. There was no impact on consolidated net revenues, total operating expenses, operating income or net earnings per share as a result of these changes.

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

The financial information as of ~~September 27, 2020~~October 3, 2021 is derived from our audited consolidated financial statements and notes for the fiscal year ended ~~September 27, 2020~~October 3, 2021 (“fiscal ~~2020”~~2021”) included in Item 8 in the Fiscal ~~2020~~2021 Annual Report on Form 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 27, 2020~~January 2, 2022 are not necessarily indicative of the results of operations that may be achieved for the entire fiscal year ending October ~~3, 2021~~2, 2022 (“fiscal ~~2021”~~2022”). ~~Additionally, our 2021~~Our fiscal year ~~will include~~ends on the Sunday closest to September 30. Our fiscal 2022 year includes 52 weeks while our fiscal 2021 year included 53 weeks, with the 53rd week falling in the fourth quarter of fiscal ~~quarter.~~2021.

The novel coronavirus, known as the global COVID-19 pandemic, ~~COVID-19,~~ 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 our businesses demonstrated powerful momentum beyond recovery from the COVID-19 pandemic. However, the Omicron variant quickly spread during the quarter, and our operations continued to experience pandemic-related restrictions, impacting sales in both our North America and International segments, primarily China. Impacts also included higher than anticipated costs in North America due to staffing shortages in our supply chain and retail stores. We continue to ~~recover. As~~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 ~~end~~COVID-19 pandemic or its future impact on our business, results of ~~the first quarter of fiscal 2021, nearly all our company-operated~~operations, cash flows and ~~licensed stores have re-opened; however, many were operating at less than full capacity.~~financial condition.

Government Subsidies

~~On March 27, 2020,~~In response to the COVID-19 pandemic, certain governments have provided subsidies and assistance to companies. The most substantial of these were the U.S. ~~government enacted the~~ Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”)~~, which among other things, provides employer payroll tax credits for wages paid to employees who are unable to work during the COVID-19 outbreak~~ and options to defer payroll tax payments for a limited period. Based on our evaluation of the CARES Act, we qualify for certain employer payroll tax credits as well as the deferral of payroll tax payments in the future. Additionally, the Canadian government enacted the Canada Emergency Wage Subsidy, ~~(“CEWS”) to help employers offset a portion~~which were no longer applicable in late fiscal 2021. However, during the quarter ended January 2, 2022, an international government subsidy reduced our store operating expenses by $11.5 million on our consolidated statements of ~~their employee wages for a limited period. We elected to treat qualified government subsidies from the U.S., Canada and other governments as offsets to the related operating expenses.~~earnings. During the ~~first~~ quarter ~~of fiscal 2021,~~ended December 27, 2020, qualified payroll and other credits reduced our store operating expenses by $19.8 million on our consolidated ~~statement~~statements of earnings. After netting the qualified ~~U.S. payroll tax~~ credits against our ~~payroll tax~~ payable, a receivable of ~~$149.3~~$98.8 million and $172.4 million was included in prepaid expenses and other current assets as of ~~December 27, 2020. During the first fiscal quarter~~January 2, 2022 and October 3, 2021, respectively. As of ~~fiscal 2021, we deferred $76.5 million of qualified payroll tax payments, and as of December 27, 2020,~~January 2, 2022, deferred payroll tax payments of ~~$227.5~~$116.5 million were included in accrued liabilities on our consolidated balance sheets. As of October 3, 2021, deferred payroll tax payments of $116.4 million were included in both accrued liabilities and other long-term liabilities on our consolidated balance sheets.

Restructuring

In fiscal ~~2020,~~2021, we ~~announced a~~substantially completed our plan to optimize our North America store portfolio, primarily in dense metropolitan markets by ~~blending~~developing new store formats to better cater to changing customer tastes and preferences. As of December 27, 2020, we expect the total number of closures to be approximately 800 stores in the U.S. and Canada. As of December 27, 2020, we have identified 713 stores for closure under our restructuring plans, and as a result,

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we recorded approximately $72.2 million to restructuring and impairments on our consolidated ~~statement~~statements of ~~earnings.~~earnings during the quarter ended December 27, 2020. Of this total, $42.6 million related to the impairment of store assets for which either a triggering event occurred and the assets were determined not to be recoverable or the store was permanently closed. AnDuring the quarter ended December 27, 2020, an additional $29.6 million was associated with accelerated amortization of right-of-use (“ROU”) lease assets and other lease costs due to planned store closures prior to the end of contractual lease terms. ~~For impaired store asset groups,~~As the restructuring plan was substantially completed in fiscal 2021, we estimated the fair values using an income approach incorporating internal projections of revenue growth and operating expenses that are considered Level 3 fair value measurements, as well as applicable discount rates and market lease rates. The application of these projections and fair value measurements did not ~~have a significant impact~~recognize any material restructuring and impairment amounts during the quarter ended January 2, 2022. As of January 2, 2022 and October 3, 2021, there were no material restructuring-related accrued liabilities on our ~~final impairment decisions given that we plan to fully exit the majority of these identified stores over the next 9 to 12 months.~~consolidated balance sheets.

We expect total future restructuring costs, which are attributable to our Americas segment, to be approximately $100 million to $120 million. These restructuring costs include accelerated amortization or impairments of ROU assets due to planned store closures prior to the end of contractual lease terms ($90 million to $100 million), store impairment and disposal costs not previously recorded as part of our ongoing store impairment process ($10 million to $15 million), with the remaining amount related to employee termination costs. As we have previously recorded impairment charges for stores that may be identified forRecently Adopted Accounting Pronouncements

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closure under our plans, and because store closure decisions are still subject to change, the final costs associated with these store closures may vary from these estimates. These costs will depend on the asset carrying value and remaining lease term of the specific stores identified. Future restructuring costs are expected to be incurred primarily over the next 9 to 12 months as stores are specifically identified for closure or, in the case of lease exit costs, either when a store ceases operations or when a reduced lease term is reasonably certain due to expected, early lease termination.

As of December 27, 2020, restructuring liabilities totaling $24.4 million were included in current and non-current operating lease liability for the remaining outstanding rent liabilities due to landlords. The associated expense was recognized in fiscal 2020 or duringIn the first quarter of fiscal ~~2021 for stores that were either closed or reasonably certain~~2022, we adopted the Financial Accounting Standards Board (“FASB”) issued guidance related to ~~close in fiscal 2021. Additionally, $14.9 million~~reference rate reform. The pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burden related to 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 applied to applicable contract modifications through December 31, 2022. The adoption of ~~accrued employee termination costs is included in accrued payroll and benefits. Cash payments were immaterial for~~ the ~~first quarter of fiscal 2021.~~

~~Recently Adopted Accounting Pronouncements~~new guidance did not have a material impact to our financial statements.

In June 2016, the FASB issued guidance replacing the incurred loss impairment methodology with a new methodology that reflects current expected credit losses on financial assets, including receivables and available-for-sale securities. The new methodology requires entities to estimate and recognize expected credit losses each reporting period. The guidance was adopted during the first quarter of fiscal 2021 under the modified retrospective approach ~~which included~~and resulted in a $2.2 million transition adjustment to opening shareholders' retained deficit on our consolidated statements of ~~equity upon adoption.~~equity.

~~Recent Accounting Pronouncements Not Yet Adopted~~

In March 2020, the FASB issued guidance related to reference rate reform. The pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burden related to 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 applied to applicable contract modifications through December 31, 2022. We are currently evaluating the impact of the transition from LIBOR to alternative reference rates but do not expect a significant impact to our consolidated financial statements.

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Note 2: Derivative Financial Instruments

Interest Rates

From time to time, we enter into designated cash flow hedges to manage the variability in cash flows due to changes in benchmark interest rates. We enter into interest rate swap agreements and treasury locks, which are synthetic forward sales of U.S. ~~treasury~~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. Each derivative agreement's gain or loss is recorded in ~~AOCI~~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. Refer to Note 7, 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 resulting gains and losses from these derivatives are recorded in AOCI and subsequently reclassified to revenue, product and distribution costs, or interest income and other, net, respectively, when the hedged exposures affect net earnings.

From time to time, we may enter into financial instruments, including, but not limited to, forward and swap contracts or foreign currency-denominated debt, to hedge the currency exposure of our net investments in certain international operations. The resulting gains and losses from these derivatives are recorded in AOCI and are 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 payables and ~~receivables;~~receivables, and these gains and losses are recorded in interest income and other, net.

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Commodities

Depending on market conditions, we may enter into coffee forward contracts, futures contracts and collars to hedge anticipated cash flows under our price-to-be-fixed green coffee contracts, which are described further in Note 4,, Inventories, or our longer-dated forecasted coffee demand where underlying fixed price and price-to-be-fixed contracts are not yet available. The resulting gains and losses are recorded in AOCI and are subsequently reclassified to 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. ~~There was no such significant cash flow hedge dedesignations in the periods presented.~~

To mitigate the price uncertainty of a portion of our future purchases, including diesel fuel and other commodities, we enter into swap contracts, futures and collars that are not designated as hedging instruments. The resulting gains and losses 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 product and distribution costs on our consolidated statements of earnings.

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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)
Dec 27, 2020 Sep 27, 2020
Cash Flow Hedges:
Coffee $ 7.4 $ (2.5) $ 1.0 12
Cross-currency swaps 5.6 5.2 0 47
Dairy 0.4 0.5 0.4 8
Foreign currency - other (15.4) 5.3 (6.4) 33
Interest rates (73.5) (90.6) (1.2) 142
Net Investment Hedges:
Cross-currency swaps 17.9 32.6 0 105
Foreign currency 16.0 16.0 0 0
Foreign currency debt (47.4) (37.1) 0 39

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	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 2, 2022		Oct 3, 2021
Cash Flow Hedges:
Coffee	$	255.2	$	197.8	$	202.2	5
Cross-currency swaps	3.0		4.4		—		35
Dairy	3.4		(0.4)		3.4		8
Foreign currency - other	6.6		1.3		2.9		36
Interest rates	(43.6)		(44.8)		(1.4)		130
Net Investment Hedges:
Cross-currency swaps	47.6		37.9		—		93
Foreign currency	16.0		16.0		—		0
Foreign currency debt	13.5		(5.3)		—		27

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


		Quarter Ended														Quarter Ended
		Gains/(Losses) Recognized in OCI Before Reclassifications				Gains/(Losses) Reclassified from AOCI to Earnings						Location of gain/(loss)				Gains/(Losses) Recognized in OCI Before Reclassifications						Gains/(Losses) Reclassified from AOCI to Earnings										Location of gain/(loss)
			Dec 27, 2020			Dec 29, 2019			Dec 27, 2020					Dec 29, 2019								Jan 2, 2022				Dec 27, 2020									Location of gain/(loss)			Dec 27, 2020
Cash Flow Hedges:	Cash Flow Hedges:																Cash Flow Hedges:
Coffee	Coffee		$	12.0		$	11.0		$	0.7		$	0		Product and distribution costs		Coffee					$	71.5			$	12.0					$	6.5					$	0.7				Product and distribution costs

Cross-currency swaps	Cross-currency swaps		(3.4)			6.2			1.0			(0.2)			Interest expense		Cross-currency swaps								4.5							(3.4)						(0.8)					1.0				Interest expense
								(4.8)			5.6			Interest income and other, net									6.9							(4.8)									Interest income and other, net
Dairy																		Dairy						4.6				2.5						(0.4)						2.6				Product and distribution costs
	Dairy		2.5					(0.1)			2.6			0			Product and distribution costs
Foreign currency - other	Foreign currency - other		(25.9)			(4.7)			0			1.7			Licensed stores revenues		Foreign currency - other						6.9								(25.9)						2.2					—				Licensed stores revenue
								0			(0.3)			Product and distribution costs											(1.5)					—								Product and distribution costs

Interest rates	Interest rates				22.5				20.0			(0.6)			0.8					Interest expense	Interest rates								1.2								22.5					(0.4)				(0.6)		Interest expense

Net Investment Hedges:	Net Investment Hedges:																	Net Investment Hedges:
Cross-currency swaps	Cross-currency swaps		(16.5)					10.7			3.2			3.3			Interest expense		Cross-currency swaps						16.3					(16.5)						3.4					3.2				Interest expense

Foreign currency debt	Foreign currency debt		(13.7)			13.0			0			0					Foreign currency debt					25.2				(13.7)						—						—

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 2, 2022		Dec 27, 2020
Non-Designated Derivatives:

Foreign currency - other	Interest income and other, net	$	10.2	$	(0.8)
Coffee	Interest income and other, net	3.1		—
Diesel fuel and other commodities	Interest income and other, net	—		1.2
Fair Value Hedges:
Interest rate swap	Interest expense	(4.8)		0.4
Long-term debt (hedged item)	Interest expense	8.2		2.9

Gains/(Losses) Recognized in Earnings
Location of gain/(loss) recognized in earnings Quarter Ended
Dec 27, 2020 Dec 29, 2019
Non-Designated Derivatives:
Diesel fuel and other commodities Interest income and other, net $ 1.2 $ 0.9
Foreign currency - other Interest income and other, net (0.8) 3.4
Fair Value Hedges:
Interest rate swap Interest expense 0.4 (10.9)
Long-term debt (hedged item) Interest expense 2.9 4.2

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Notional amounts of outstanding derivative contracts (in millions):

Dec 27, 2020 Sep 27, 2020
Coffee $ 109 $ 63
Cross-currency swaps 854 870
Dairy 44 61
Diesel fuel and other commodities 11 5
Foreign currency - other 1,000 1,140
Interest rate swap 1,750 1,750

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	Jan 2, 2022		Oct 3, 2021
Coffee	$	686	$	481
Cross-currency swaps	789		806
Dairy	39		53
Diesel fuel and other commodities	96		10
Foreign currency - other	1,261		1,009
Interest rate swaps	1,250		1,250

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 2, 2022		Oct 3, 2021
Designated Derivative Instruments:
Coffee	Prepaid expenses and other current assets	$	90.8	$	130.5

Cross-currency swaps	Other long-term assets	70.8		54.7
Dairy	Prepaid expenses and other current assets	5.5		0.8

Foreign currency - other	Prepaid expenses and other current assets	9.5		8.9
	Other long-term assets	8.7		6.9

Interest rate swaps	Other long-term assets	18.5		22.7
Non-designated Derivative Instruments:
Coffee	Prepaid expenses and other current assets	29.8		—
Dairy	Prepaid expenses and other current assets	0.6		—
Diesel fuel and other commodities	Prepaid expenses and other current assets	0.1		0.1
Foreign currency	Prepaid expenses and other current assets	18.1		7.3

		Derivative Liabilities
	Balance Sheet Location	Jan 2, 2022		Oct 3, 2021
Designated Derivative Instruments:
Coffee	Accrued liabilities	$	3.1	$	—

Cross-currency swaps	Other long-term liabilities	2.1		3.3
Dairy	Accrued liabilities	1.3		0.9
Foreign currency - other	Accrued liabilities	5.5		7.4
	Other long-term liabilities	3.2		3.6
Interest rates	Other long-term liabilities	0.6		1.3

Non-designated Derivative Instruments:
Dairy	Accrued liabilities	0.2		0.2
Diesel fuel and other commodities	Accrued liabilities	0.1		—
Foreign currency	Accrued liabilities	1.3		0.1

Derivative Assets
Balance Sheet Location Dec 27, 2020 Sep 27, 2020
Designated Derivative Instruments:
Coffee Prepaid expenses and other current assets $ 13.6 $ 2.6
Cross-currency swaps Other long-term assets 17.3 37.7
Dairy Prepaid expenses and other current assets 1.7 2.1
Foreign currency - other Prepaid expenses and other current assets 1.8 8.6
Other long-term assets 0.3 3.8
Interest rate swap Other long-term assets 35.9 45.8
Non-designated Derivative Instruments:
Diesel fuel and other commodities Prepaid expenses and other current assets 0.9 0
Foreign currency Prepaid expenses and other current assets 6.7 2.3
Derivative Liabilities
Balance Sheet Location Dec 27, 2020 Sep 27, 2020
Designated Derivative Instruments:
Coffee Accrued liabilities $ 0 $ 1.4
Other long-term liabilities 0 0.1
Cross-currency swaps Other long-term liabilities 9.9 7.3
Dairy Accrued liabilities 1.3 1.4
Foreign currency - other Accrued liabilities 10.3 1.6
Other long-term liabilities 10.7 2.6
Interest rates Other long-term liabilities 46.8 69.3
Non-designated Derivative Instruments:
Diesel fuel and other commodities Accrued liabilities 0.2 1.7
Foreign currency Accrued liabilities 1.4 1.2

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

Carrying amount of hedged item Cumulative amount of fair value hedging adjustment included in the carrying amount
Dec 27, 2020 Sep 27, 2020 Dec 27, 2020 Sep 27, 2020
Location on the balance sheet
Long-term debt $ 782.7 $ 785.6 $ 32.7 $ 35.6


	Carrying amount of hedged item				Cumulative amount of fair value hedging adjustment included in the carrying amount
	Jan 2, 2022		Oct 3, 2021		Jan 2, 2022		Oct 3, 2021
Location on the balance sheet
Long-term debt	$	763.5	$	771.7	$	13.5	$	21.7

Additional disclosures related to cash flow gains and losses included in AOCI, as well as subsequent reclassifications to earnings, are included in Note 10, Equity.

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Note 3: Fair Value Measurements

Assets and liabilities measured at fair value on a recurring basis (in millions):

Fair Value Measurements at Reporting Date Using
Balance at
December 27, 2020
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 $ 5,028.1 $ 5,028.1 $ 0 $ 0
Short-term investments:
Available-for-sale debt securities
Certificates of deposit 1.6 0 1.6 0
Commercial paper 71.8 0 71.8 0
Corporate debt securities 78.5 0 78.5 0
Mortgage and other asset-backed securities 16.7 0 16.7 0
State and local government obligations 1.0 0 1.0 0
Total available-for-sale debt securities 169.6 0 169.6 0
Marketable equity securities 65.9 65.9 0 0
Total short-term investments 235.5 65.9 169.6 0
Prepaid expenses and other current assets:
Derivative assets 24.7 14.6 10.1 0
Long-term investments:
Available-for-sale debt securities
Auction rate securities 5.7 0 0 5.7
Corporate debt securities 82.6 0 82.6 0
Mortgage and other asset-backed securities 9.8 0 9.8 0
State and local government obligations 2.6 0 2.6 0
U.S. government treasury securities 90.2 90.2 0 0
Total long-term investments 190.9 90.2 95.0 5.7
Other long-term assets:
Derivative assets 53.5 0 53.5 0
Total assets $ 5,532.7 $ 5,198.8 $ 328.2 $ 5.7
Liabilities:
Accrued liabilities:
Derivative liabilities $ 13.2 $ 0.8 $ 12.4 $ 0
Other long-term liabilities:
Derivative liabilities 67.4 0 67.4 0
Total liabilities $ 80.6 $ 0.8 $ 79.8 $ 0


			Fair Value Measurements at Reporting Date Using
	Balance at January 2, 2022		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	$	3,969.4	$	3,969.4	$	—	$	—
Short-term investments:
Available-for-sale debt securities


Commercial paper	3.5		—		3.5		—
Corporate debt securities	4.8		—		4.8		—

Mortgage and other asset-backed securities	0.1		—		0.1		—


Total available-for-sale debt securities	8.4		—		8.4		—
Marketable equity securities	79.0		79.0		—		—
Total short-term investments	87.4		79.0		8.4		—
Prepaid expenses and other current assets:
Derivative assets	154.4		123.6		30.8		—
Long-term investments:
Available-for-sale debt securities



Corporate debt securities	148.1		—		148.1		—
Foreign government obligations	4.0		—		4.0		—
Mortgage and other asset-backed securities	59.9		—		59.9		—
State and local government obligations	1.4		—		1.4		—
U.S. government treasury securities	86.2		86.2		—		—
Total long-term investments	299.6		86.2		213.4		—
Other long-term assets:
Derivative assets	98.0		—		98.0		—
Total assets	$	4,608.8	$	4,258.2	$	350.6	$	—
Liabilities:
Accrued liabilities:
Derivative liabilities	$	11.5	$	4.0	$	7.5	$	—
Other long-term liabilities:
Derivative liabilities	5.9		—		5.9		—
Total liabilities	$	17.4	$	4.0	$	13.4	$	—

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				Fair Value Measurements at Reporting Date Using									Fair Value Measurements at Reporting Date Using
		Balance at September 27, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Balance at October 3, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:	Assets:									Assets:
Cash and cash equivalents	Cash and cash equivalents	$	4,350.9	$	4,350.9	$	0	$	0	Cash and cash equivalents	$	6,455.7	$	6,455.7	$	—	$	—
Short-term investments:	Short-term investments:									Short-term investments:
Available-for-sale debt securities	Available-for-sale debt securities									Available-for-sale debt securities
Certificates of deposit		1.6		0		1.6		0

Commercial paper	Commercial paper	66.8		0		66.8		0		Commercial paper	63.0		—		63.0		—
Corporate debt securities	Corporate debt securities	123.6		0		123.6		0		Corporate debt securities	24.7		—		24.7		—
Foreign government obligations		8.5		0		8.5		0

Mortgage and other asset-backed securities	Mortgage and other asset-backed securities	15.8		0		15.8		0		Mortgage and other asset-backed securities	0.1		—		0.1		—
Total available-for-sale debt securities	Total available-for-sale debt securities	216.3		0		216.3		0		Total available-for-sale debt securities	87.8		—		87.8		—
Marketable equity securities	Marketable equity securities	64.9		64.9		0		0		Marketable equity securities	74.4		74.4		—		—
Total short-term investments	Total short-term investments	281.2		64.9		216.3		0		Total short-term investments	162.2		74.4		87.8		—
Prepaid expenses and other current assets:	Prepaid expenses and other current assets:									Prepaid expenses and other current assets:
Derivative assets	Derivative assets	15.6		3.6		12.0		0		Derivative assets	147.6		131.1		16.5		—
Long-term investments:	Long-term investments:									Long-term investments:
Available-for-sale debt securities	Available-for-sale debt securities									Available-for-sale debt securities

Auction rate securities	Auction rate securities	5.7		0		0		5.7		Auction rate securities	6.0		—		—		6.0

Corporate debt securities	Corporate debt securities	82.6		0		82.6		0		Corporate debt securities	162.0		—		162.0		—

Foreign government obligations										Foreign government obligations	4.0		—		4.0		—
Mortgage and other asset-backed securities	Mortgage and other asset-backed securities	19.3		0		19.3		0		Mortgage and other asset-backed securities	31.9		—		31.9		—
State and local government obligations	State and local government obligations	3.6		0		3.6		0		State and local government obligations	1.5		—		1.5		—
U.S. government treasury securities	U.S. government treasury securities	94.9		94.9		0		0		U.S. government treasury securities	76.3		76.3		—		—
Total long-term investments	Total long-term investments	206.1		94.9		105.5		5.7		Total long-term investments	281.7		76.3		199.4		6.0
Other long-term assets:	Other long-term assets:									Other long-term assets:
Derivative assets	Derivative assets	87.3		0		87.3		0		Derivative assets	84.3		—		84.3		—
Total assets	Total assets	$	4,941.1	$	4,514.3	$	421.1	$	5.7	Total assets	$	7,131.5	$	6,737.5	$	388.0	$	6.0
Liabilities:	Liabilities:									Liabilities:
Accrued liabilities:	Accrued liabilities:									Accrued liabilities:
Derivative liabilities	Derivative liabilities	$	7.3	$	1.9	$	5.4	$	0	Derivative liabilities	$	8.6	$	0.3	$	8.3	$	—
Other long-term liabilities:	Other long-term liabilities:									Other long-term liabilities:
Derivative liabilities	Derivative liabilities	79.3		0.1		79.2		0		Derivative liabilities	8.2		—		8.2		—
Total liabilities	Total liabilities	$	86.6	$	2.0	$	84.6	$	0	Total liabilities	$	16.8	$	0.3	$	16.5	$	—

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 available-for-sale debt securities and marketable equity securities were not material as of ~~December 27, 2020~~January 2, 2022 and ~~September 27, 2020.~~

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October 3, 2021.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities recognized or disclosed at fair value on the consolidated financial statements on a nonrecurring basis include items such as property, plant and equipment, ROU assets, goodwill and other intangible assets and other assets. These assets are measured at fair value if determined to be impaired. ~~During our first quarter~~

Table of ~~fiscal 2021, we recorded asset impairment charges, primarily related to restructuring efforts for our North America store portfolio. See~~ ~~Note 1~~Contents~~, Summary of Significant Accounting Policies, for further discussion.~~

The estimated fair value of our long-term debt based on the quoted market price (Level 2) is included at Note 7, Debt. There were no material fair value adjustments during the quarters ended January 2, 2022 and December 27, ~~2020 and December 29, 2019.~~2020.

Note 4: Inventories (in millions):


		Dec 27, 2020		Sep 27, 2020			Jan 2, 2022		Oct 3, 2021
Coffee:	Coffee:					Coffee:
Unroasted	Unroasted	$	625.8	$	664.7	Unroasted	$	676.2	$	670.3
Roasted	Roasted	226.9		223.5		Roasted	273.3		233.5
Other merchandise held for sale	Other merchandise held for sale	282.0		293.9		Other merchandise held for sale	332.2		329.3
Packaging and other supplies	Packaging and other supplies	336.8		369.3		Packaging and other supplies	355.4		370.8
Total	Total	$	1,471.5	$	1,551.4	Total	$	1,637.1	$	1,603.9

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 27, 2020,~~January 2, 2022, we had committed to purchasing green coffee totaling ~~$809~~$617 million under fixed-price contracts and an estimated ~~$554~~$1,433 million under price-to-be-fixed ~~contracts. We expect to take physical delivery for these~~ contracts. A portion of our price-to-be-fixed contracts are effectively fixed through the use of futures. See Note 2, 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 5: Supplemental Balance Sheet and Statement of Earnings Information (in millions):

Prepaid Expenses and Other Current Assets

Dec 27, 2020 Sep 27, 2020
Income tax receivable $ 332.6 $ 356.9
Government subsidies receivable 149.3 155.1
Other prepaid expenses and current assets 252.5 227.5
Total prepaid expenses and current assets $ 734.4 $ 739.5


	Jan 2, 2022		Oct 3, 2021
Income tax receivable	$	21.6	$	20.7
Government subsidies receivable	98.8		172.4
Other prepaid expenses and current assets	409.7		401.5
Total prepaid expenses and current assets	$	530.1	$	594.6

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Property, Plant and Equipment, net


	Jan 2, 2022		Oct 3, 2021
Land	$	46.2	$	46.2
Buildings	582.1		587.6
Leasehold improvements	8,739.5		8,637.6
Store equipment	2,981.9		2,934.1
Roasting equipment	893.4		857.2
Furniture, fixtures and other	1,422.9		1,392.0
Work in progress	420.1		374.1
Property, plant and equipment, gross	15,086.1		14,828.8
Accumulated depreciation	(8,688.1)		(8,459.3)
Property, plant and equipment, net	$	6,398.0	$	6,369.5

Dec 27, 2020 Sep 27, 2020
Land $ 46.2 $ 46.0
Buildings 597.4 586.8
Leasehold improvements 8,231.7 8,262.6
Store equipment 2,817.0 2,800.3
Roasting equipment 805.6 796.6
Furniture, fixtures and other 1,274.7 1,285.7
Work in progress 335.8 377.3
Property, plant and equipment, gross 14,108.4 14,155.3
Accumulated depreciation (7,930.5) (7,913.9)
Property, plant and equipment, net $ 6,177.9 $ 6,241.4

Accrued Liabilities

Dec 27, 2020 Sep 27, 2020
Accrued occupancy costs $ 79.9 $ 76.9
Accrued dividends payable 529.7 0
Accrued capital and other operating expenditures 629.2 677.2
Self-insurance reserves 221.2 243.9
Accrued business taxes 156.9 162.7
Total accrued liabilities $ 1,616.9 $ 1,160.7


	Jan 2, 2022		Oct 3, 2021
Accrued occupancy costs	$	99.9	$	107.1
Accrued dividends payable	564.5		578.1
Accrued capital and other operating expenditures	973.0		840.7
Self-insurance reserves	231.2		229.3
Income taxes payable	394.2		348.0
Accrued business taxes	181.5		218.0
Total accrued liabilities	$	2,444.3	$	2,321.2

Store Operating Expenses


		Quarter Ended				Quarter Ended
		Dec 27, 2020		Dec 29, 2019				Jan 2, 2022		Dec 27, 2020
Wages and benefits	Wages and benefits	$	1,606.2	$	1,598.0		Wages and benefits	$	2,010.7	$	1,606.2
Occupancy costs	Occupancy costs	628.1		618.7			Occupancy costs	665.3		628.1
Other expenses	Other expenses	633.0		604.8			Other expenses	724.0		633.0
Total store operating expenses	Total store operating expenses	$	2,867.3	$	2,821.5		Total store operating expenses	$	3,400.0	$	2,867.3

Note 6: Other Intangible Assets and Goodwill

Indefinite-Lived Intangible Assets

(in millions) Dec 27, 2020 Sep 27, 2020
Trade names, trademarks and patents $ 95.4 $ 95.0


(in millions)	Jan 2, 2022		Oct 3, 2021
Trade names, trademarks and patents	$	96.8	$	96.4

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Finite-Lived Intangible Assets

Dec 27, 2020 Sep 27, 2020
(in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Acquired and reacquired rights $ 1,157.3 $ (845.3) $ 312.0 $ 1,116.1 $ (765.0) $ 351.1
Acquired trade secrets and processes 27.6 (22.7) 4.9 27.6 (22.0) 5.6
Trade names, trademarks and patents 125.1 (37.1) 88.0 124.8 (32.1) 92.7
Licensing agreements 16.9 (15.9) 1.0 16.6 (15.0) 1.6
Other finite-lived intangible assets 23.7 (18.6) 5.1 22.8 (16.7) 6.1
Total finite-lived intangible assets $ 1,350.6 $ (939.6) $ 411.0 $ 1,307.9 $ (850.8) $ 457.1


	Jan 2, 2022						Oct 3, 2021
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Acquired and reacquired rights	$	1,138.1	$	(1,009.5)	$	128.6	$	1,141.5	$	(971.9)	$	169.6
Acquired trade secrets and processes	27.6		(25.4)		2.2		27.6		(24.8)		2.8
Trade names, trademarks and patents	126.9		(56.8)		70.1		126.3		(51.9)		74.4
Licensing agreements	21.2		(16.4)		4.8		18.8		(13.5)		5.3
Other finite-lived intangible assets	24.2		(24.2)		—		24.0		(22.6)		1.4
Total finite-lived intangible assets	$	1,338.0	$	(1,132.3)	$	205.7	$	1,338.2	$	(1,084.7)	$	253.5

Amortization expense for finite-lived intangible assets was $50.2 million for the quarter ended January 2, 2022 and $61.2 million for the quarter ended December 27, ~~2020 and $54.1 million for the quarter ended December 29, 2019, respectively.~~2020.

Estimated future amortization expense as of ~~December 27, 2020~~January 2, 2022 (in millions):


Fiscal Year	Fiscal Year	Total		Fiscal Year	Total
2021 (excluding the quarter ended December 27, 2020)		$	165.4
2022		190.8
2022 (excluding the quarter ended January 2, 2022)				2022 (excluding the quarter ended January 2, 2022)	$	146.1
2023	2023	19.7		2023	21.0
2024	2024	19.1		2024	20.4
2025	2025	13.2		2025	14.4
2026				2026	1.4
Thereafter	Thereafter	2.8		Thereafter	2.4
Total estimated future amortization expense	Total estimated future amortization expense	$	411.0	Total estimated future amortization expense	$	205.7

Goodwill

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

Americas International Channel
Development Corporate and Other Total
Goodwill balance at September 27, 2020 $ 496.5 $ 3,065.0 $ 34.7 $ 1.0 $ 3,597.2
Other(1)
1.0 108.6 0 0 109.6
Goodwill balance at December 27, 2020 $ 497.5 $ 3,173.6 $ 34.7 $ 1.0 $ 3,706.8


	North America		International		Channel Development		Corporate and Other		Total
Goodwill balance at October 3, 2021	$	493.2	$	3,148.3	$	34.7	$	1.1	$	3,677.3


Other(1)	(0.1)		(1.5)		—		—		(1.6)
Goodwill balance at January 2, 2022	$	493.1	$	3,146.8	$	34.7	$	1.1	$	3,675.7

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

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Note 7: Debt

Revolving Credit Facility

Our $3 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 0.025%, (ii) Bank of America’s prime rate, and (iii) the Eurocurrency Rate (as defined in the 2021 credit facility) plus 1.025%.

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 2, 2022, we were in compliance with all applicable covenants. No amounts were outstanding under our 2021 credit facility as of January 2, 2022 or October 3, 2021.

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 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 27, 2020,~~January 2, 2022, we had ~~$299.7~~$200 million of borrowings outstanding under the ~~program, net of unamortized discount, of which the majority matures in the second quarter of fiscal 2021.~~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 ~~¥10~~¥5 billion, or ~~$96.5~~$43.4 million, credit facility is currently set to mature on ~~March 26, 2021.~~December 31, 2022. Borrowings under ~~the~~such credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on ~~TIBOR~~Tokyo Interbank Offered Rate ("TIBOR") plus an applicable margin of ~~0.300%~~0.400%.

~~Table of Contents~~

•A ¥10 billion, or ~~$96.5~~$86.9 million, credit facility is currently set to mature on ~~October 29, 2021.~~March 26, 2022. Borrowings under ~~the~~such 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%.

•A ¥5 billion, or $48.2 million, facility is currently set to mature on December 30, 2021. Borrowings under the 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 0.400%.

As of ~~December 27, 2020,~~January 2, 2022 and October 3, 2021, we had ~~¥20 billion , or $192.9 million, of~~no borrowings outstanding under these Japanese yen-denominated credit facilities.

Table of Contents

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):


		Dec 27, 2020				Sep 27, 2020				Stated Interest Rate		Effective Interest Rate(1)			Jan 2, 2022				Oct 3, 2021				Stated Interest Rate		Effective Interest Rate(1)
Issuance	Issuance	Amount		Estimated Fair Value		Amount		Estimated Fair Value						Issuance	Amount		Estimated Fair Value		Amount		Estimated Fair Value
November 2020 notes(2)		$	0	$	0	$	500.0	$	501.5	2.200	%	2.228	%
February 2021 notes		500.0		500.6		500.0		502.3		2.100	%	2.293	%
February 2021 notes		250.0		250.3		250.0		251.1		2.100	%	1.600	%

May 2022 notes	May 2022 notes	500.0		506.3		500.0		506.5		1.300	%	1.334	%	May 2022 notes	$	500.0	$	501.7	$	500.0	$	503.1	1.300	%	1.334	%
June 2022 notes	June 2022 notes	500.0		515.0		500.0		517.5		2.700	%	2.819	%	June 2022 notes	500.0		503.2		500.0		506.7		2.700	%	2.819	%
March 2023 notes	March 2023 notes	1,000.0		1,056.5		1,000.0		1,058.8		3.100	%	3.107	%	March 2023 notes	1,000.0		1,023.6		1,000.0		1,035.9		3.100	%	3.107	%
October 2023 notes~~(3)~~(2)	October 2023 notes~~(3)~~(2)	750.0		814.0		750.0		817.5		3.850	%	2.859	%	October 2023 notes~~(3)~~(2)	750.0		782.3		750.0		794.8		3.850	%	2.859	%
March 2024 notes~~(4)~~(3)	March 2024 notes~~(4)~~(3)	820.1		828.7		806.4		794.4		0.372	%	0.462	%	March 2024 notes~~(4)~~(3)	738.6		737.4		763.8		761.0		0.372	%	0.462	%
August 2025 notes	August 2025 notes	1,250.0		1,416.7		1,250.0		1,414.5		3.800	%	3.721	%	August 2025 notes	1,250.0		1,347.1		1,250.0		1,371.5		3.800	%	3.721	%
June 2026 notes	June 2026 notes	500.0		540.7		500.0		542.6		2.450	%	2.511	%	June 2026 notes	500.0		516.2		500.0		526.4		2.450	%	2.511	%
March 2027 notes	March 2027 notes	500.0		529.0		500.0		528.9		2.000	%	2.058	%	March 2027 notes	500.0		502.2		500.0		513.0		2.000	%	2.058	%
March 2028 notes	March 2028 notes	600.0		688.0		600.0		679.5		3.500	%	3.529	%	March 2028 notes	600.0		648.4		600.0		663.2		3.500	%	3.529	%
November 2028 notes	November 2028 notes	750.0		888.4		750.0		886.0		4.000	%	3.958	%	November 2028 notes	750.0		837.3		750.0		855.9		4.000	%	3.958	%
August 2029 notes	August 2029 notes	1,000.0		1,161.1		1,000.0		1,147.1		3.550	%	3.840	%	August 2029 notes	1,000.0		1,084.0		1,000.0		1,109.9		3.550	%	3.840	%
March 2030 notes	March 2030 notes	750.0		791.6		750.0		778.0		2.250	%	3.084	%	March 2030 notes	750.0		746.6		750.0		758.6		2.250	%	3.084	%
November 2030 notes	November 2030 notes	1,250.0		1,344.1		1,250.0		1,325.9		2.550	%	2.582	%	November 2030 notes	1,250.0		1,265.0		1,250.0		1,286.9		2.550	%	2.582	%
June 2045 notes	June 2045 notes	350.0		428.9		350.0		412.4		4.300	%	4.348	%	June 2045 notes	350.0		406.0		350.0		414.1		4.300	%	4.348	%
December 2047 notes	December 2047 notes	500.0		582.7		500.0		546.6		3.750	%	3.765	%	December 2047 notes	500.0		541.6		500.0		556.5		3.750	%	3.765	%
November 2048 notes	November 2048 notes	1,000.0		1,287.7		1,000.0		1,222.8		4.500	%	4.504	%	November 2048 notes	1,000.0		1,219.7		1,000.0		1,248.6		4.500	%	4.504	%
August 2049 notes	August 2049 notes	1,000.0		1,288.6		1,000.0		1,215.5		4.450	%	4.447	%	August 2049 notes	1,000.0		1,221.9		1,000.0		1,241.0		4.450	%	4.447	%
March 2050 notes	March 2050 notes	500.0		553.3		500.0		517.1		3.350	%	3.362	%	March 2050 notes	500.0		520.2		500.0		527.5		3.350	%	3.362	%
November 2050 notes	November 2050 notes	1,250.0		1,436.5		1,250.0		1,332.2		3.500	%	3.528	%	November 2050 notes	1,250.0		1,322.3		1,250.0		1,339.5		3.500	%	3.528	%
Total	Total	15,520.1		17,408.7		16,006.4		17,498.7						Total	14,688.6		15,726.7		14,713.8		16,014.1
Aggregate debt issuance costs and unamortized premium/(discount), net	Aggregate debt issuance costs and unamortized premium/(discount), net	(129.3)				(132.5)								Aggregate debt issuance costs and unamortized premium/(discount), net	(116.5)				(119.7)
Hedge accounting fair value adjustment~~(3)~~(2)	Hedge accounting fair value adjustment~~(3)~~(2)	32.7				35.6								Hedge accounting fair value adjustment~~(3)~~(2)	13.5				21.7
Total	Total	$	15,423.5			$	15,909.5							Total	$	14,585.6			$	14,615.8

(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)~~November 2020 notes were repaid in the first quarter of fiscal 2021.~~

~~(3)~~Amount includes the change in fair value due to changes in benchmark interest rates related to our October 2023 notes. Refer to Note 2, Derivative Financial Instruments, for additional information on our interest rate swap designated as a fair value hedge.

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~~(4)~~(3)Japanese yen-denominated long-term debt.

The following table summarizes our long-term debt maturities as of ~~December 27, 2020~~January 2, 2022 by fiscal year (in millions):

Fiscal Year Total
2021 $ 750.0
2022 1,000.0
2023 1,000.0
2024 1,570.1
2025 1,250.0
Thereafter 9,950.0
Total $ 15,520.1


Fiscal Year	Total

2022	$	1,000.0
2023	1,000.0
2024	1,488.6
2025	1,250.0
2026	500.0
Thereafter	9,450.0
Total	$	14,688.6

Note 8: Leases

~~For the quarter ended December 27, 2020, we recognized accelerated lease right-of-use ("ROU") asset amortization costs~~

Table of ~~$29.6 million, which was recognized within restructuring and impairments on the consolidated statements of earnings.~~Contents

The components of lease costs (in millions):


		Quarter Ended					Quarter Ended
		Dec 27, 2020		Dec 29, 2019			Jan 2, 2022		Dec 27, 2020
Operating lease costs(1)	Operating lease costs(1)	$	409.4	$	373.1	Operating lease costs(1)	$	386.1	$	409.4
Variable lease costs	Variable lease costs	222.4		228.8		Variable lease costs	229.8		222.4
Short-term lease costs	Short-term lease costs	8.7		8.3		Short-term lease costs	7.1		8.7
Total lease costs	Total lease costs	$	640.5	$	610.2	Total lease costs	$	623.0	$	640.5

(1)~~Operating lease costs were net of~~Includes immaterial amounts of sublease income and rent concessions.

The following table includes supplemental information (in millions):


		Quarter Ended							Quarter Ended
		Dec 27, 2020			Dec 29, 2019				Jan 2, 2022			Dec 27, 2020
Cash paid related to operating lease liabilities	Cash paid related to operating lease liabilities	$	385.6		$	368.9		Cash paid related to operating lease liabilities	$	410.0		$	385.6
Operating lease liabilities arising from obtaining ROU assets	Operating lease liabilities arising from obtaining ROU assets	353.8			226.4			Operating lease liabilities arising from obtaining ROU assets	346.8			353.8

		Dec 27, 2020			Dec 29, 2019				Jan 2, 2022			Dec 27, 2020
Weighted-average remaining operating lease term	Weighted-average remaining operating lease term	8.8 years			9.0 years			Weighted-average remaining operating lease term	8.6 years			8.8 years
Weighted-average operating lease discount rate	Weighted-average operating lease discount rate	2.5		%	2.5		%	Weighted-average operating lease discount rate	2.5		%	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 ~~December 27, 2020.~~

~~Table of Contents~~

January 2, 2022.

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


Fiscal Year	Total
2022 (excluding the quarter ended January 2, 2022)	$	1,127.4
2023	1,460.7
2024	1,346.1
2025	1,200.5
2026	1,040.5
Thereafter	3,880.4
Total lease payments	10,055.6
Less imputed interest	(1,094.3)
Total	$	8,961.3

Fiscal Year Total
2021 (excluding the quarter ended December 27, 2020) $ 1,173.9
2022 1,463.3
2023 1,321.2
2024 1,180.3
2025 1,030.6
Thereafter 3,992.3
Total lease payments 10,161.6
Less imputed interest (1,139.5)
Total $ 9,022.1

As of ~~December 27, 2020,~~January 2, 2022, we have entered into operating leases that have not yet commenced of ~~$723.4~~$925.8 million, primarily related to real estate leases. These leases will commence between fiscal year ~~2021~~2022 and fiscal year ~~2027~~2028 with lease terms ranging from ~~3 years~~ten to 20twenty years.

Note 9: 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.

~~At December 27, 2020,~~As of January 2, 2022, the current and long-term deferred revenue related to Nestlé was $177.9 million and $6.4 billion, respectively. As of October 3, 2021, the current and long-term deferred revenue related to the Nestlé up-front payment was ~~$180.3~~$177.0 million and ~~$6.5~~$6.4 billion, respectively. ~~During both~~For each of the quarters ended January 2, 2022 and December 27, 2020, ~~and December 29, 2019,~~ we recognized $44.2 million of prepaid royalty revenue related to Nestlé.

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


Quarter Ended January 2, 2022	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

Quarter Ended December 27, 2020	Total
Stored value cards and loyalty program at September 27, 2020	$	1,280.5
Revenue deferred - card activations, card reloads and Stars earned	3,437.4
Revenue recognized - card and Stars redemptions and breakage	(2,980.2)
Other(1)	12.3
Stored value cards and loyalty program at December 27, 2020(2)	$	1,750.0

~~Quarter Ended December 29, 2019~~	~~Total~~
~~Stored value cards and loyalty program at September 29, 2019~~	$	~~1,113.7~~
~~Revenue deferred - card activations, card reloads and Stars earned~~	~~3,507.5~~
~~Revenue recognized - card and Stars redemptions and breakage~~	~~(3,061.9)~~
~~Other(1)~~	~~1.7~~
~~Stored value cards and loyalty program at December 29, 2019(2)~~	$	~~1,561.0~~

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

(2)As of January 2, 2022 and December 27, 2020, approximately $1.8 billion and ~~December 29, 2019, approximately $1,623.7 million and $1,460.9 million~~$1.6 billion of these amounts were current, respectively.

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Note 10: Equity

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


Quarter Ended	Quarter Ended	Available-for-Sale Debt Securities		Cash Flow Hedges		Net Investment Hedges		Translation Adjustment and Other		Total		Quarter Ended	Available-for-Sale Debt Securities		Cash Flow Hedges		Net Investment Hedges		Translation Adjustment and Other		Total
December 27, 2020
January 2, 2022												January 2, 2022
Net gains/(losses) in AOCI, beginning of period	Net gains/(losses) in AOCI, beginning of period	$	5.7	$	(82.1)	$	11.5	$	(299.7)	$	(364.6)	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	Net gains/(losses) recognized in OCI before reclassifications	(0.4)		4.8		(22.6)		238.7		220.5		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	Net (gains)/losses reclassified from AOCI to earnings	(1.2)		1.8		(2.4)		0		(1.8)		Net (gains)/losses reclassified from AOCI to earnings	(0.1)		(10.6)		(2.5)		—		(13.2)
Other comprehensive income/(loss) attributable to Starbucks	Other comprehensive income/(loss) attributable to Starbucks	(1.6)		6.6		(25.0)		238.7		218.7		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	Net gains/(losses) in AOCI, end of period	$	4.1	$	(75.5)	$	(13.5)	$	(61.0)	$	(145.9)	Net gains/(losses) in AOCI, end of period	$	(1.2)	$	224.6	$	77.1	$	(47.0)	$	253.5

December 29, 2019
December 27, 2020												December 27, 2020
Net gains/(losses) in AOCI, beginning of period	Net gains/(losses) in AOCI, beginning of period	$	3.9	$	11.0	$	(10.1)	$	(508.1)	$	(503.3)	Net gains/(losses) in AOCI, beginning of period	$	5.7	$	(82.1)	$	11.5	$	(299.7)	$	(364.6)
Net gains/(losses) recognized in OCI before reclassifications	Net gains/(losses) recognized in OCI before reclassifications	(0.1)		25.8		17.7		76.1		119.5		Net gains/(losses) recognized in OCI before reclassifications	(0.4)		4.8		(22.6)		238.7		220.5
Net (gains)/losses reclassified from AOCI to earnings	Net (gains)/losses reclassified from AOCI to earnings	0.1		(6.1)		(2.4)		0		(8.4)		Net (gains)/losses reclassified from AOCI to earnings	(1.2)		1.8		(2.4)		—		(1.8)
Other comprehensive income/(loss) attributable to Starbucks	Other comprehensive income/(loss) attributable to Starbucks	0		19.7		15.3		76.1		111.1		Other comprehensive income/(loss) attributable to Starbucks	(1.6)		6.6		(25.0)		238.7		218.7

Cumulative effect of accounting adoption		(0.7)		3.0		2.5		0		4.8

Net gains/(losses) in AOCI, end of period	Net gains/(losses) in AOCI, end of period	$	3.2	$	33.7	$	7.7	$	(432.0)	$	(387.4)	Net gains/(losses) in AOCI, end of period	$	4.1	$	(75.5)	$	(13.5)	$	(61.0)	$	(145.9)

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


Quarter Ended	Quarter Ended						Quarter Ended
AOCI Components	AOCI Components	Amounts Reclassified from AOCI				Affected Line Item in the Statements of Earnings	AOCI Components	Amounts Reclassified from AOCI				Affected Line Item in the Statements of Earnings
		Dec 27, 2020		Dec 29, 2019				Jan 2, 2022		Dec 27, 2020
Gains/(losses) on available-for-sale debt securities	Gains/(losses) on available-for-sale debt securities	$	1.5	$	(0.2)	Interest income and other, net	Gains/(losses) on available-for-sale debt securities	$	0.2	$	1.5	Interest income and other, net
Gains/(losses) on cash flow hedges	Gains/(losses) on cash flow hedges	(1.1)		7.6		Please refer to Note 2, Derivative Financial Instruments for additional information.	Gains/(losses) on cash flow hedges	12.5		(1.1)		Please refer to Note 2, Derivative Financial Instruments for additional information.
Gains/(losses) on net investment hedges	Gains/(losses) on net investment hedges	3.2		3.3		Interest expense	Gains/(losses) on net investment hedges	3.4		3.2		Interest expense

		3.6		10.7		Total before tax		16.1		3.6		Total before tax
		(1.8)		(2.3)		Tax (expense)/benefit		(2.9)		(1.8)		Tax (expense)/benefit
		$	1.8	$	8.4	Net of tax		$	13.2	$	1.8	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, ~~NaN~~none of which was outstanding as of ~~December 27, 2020.~~January 2, 2022.

During the quarter ended January 2, 2022, we repurchased 31.1 million shares of common stock for $3.5 billion. As of ~~December 27, 2020, 48.9~~January 2, 2022, 17.8 million shares remained available for repurchase under current authorizations. ~~We have suspended our share repurchase program until we restore certain financial leverage targets, which we currently expect to occur in late fiscal 2021.~~

~~On September 30, 2020, which was early in~~During the first quarter of fiscal ~~2021,~~2022, our Board of Directors approved a quarterly cash dividend to shareholders of ~~$0.45~~$0.49 per share to be paid on November 27, 2020 to shareholders of record as of the close of business on November 12, 2020. In November 2020, our Board of Directors approved a quarterly cash dividend to shareholders of $0.45 per share to be paid on March 5, 2021February 25, 2022 to shareholders of record as of the close of business on February ~~18, 2021.~~

11, 2022.

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Note 11: Employee Stock Plans

As of ~~December 27, 2020,~~January 2, 2022, there were ~~39.4~~34.4 million shares of common stock available for issuance pursuant to future equity-based compensation awards and ~~11.8~~11.2 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
Dec 27, 2020 Dec 29, 2019
Options $ 0.9 $ 1.7
Restricted Stock Units (“RSUs”) 98.4 88.6
Total stock-based compensation expense $ 99.3 $ 90.3


	Quarter Ended
	Jan 2, 2022		Dec 27, 2020
Restricted Stock Units (“RSUs”)	$	95.7	$	98.4
Options	0.1		0.9
Total stock-based compensation expense	$	95.8	$	99.3

Stock option and RSU transactions from ~~September 27, 2020~~October 3, 2021 through ~~December 27, 2020~~January 2, 2022 (in millions):

Stock Options RSUs
Options outstanding/Nonvested RSUs, September 27, 2020 9.2 8.3
Granted 0 3.8
Options exercised/RSUs vested (1.8) (2.9)
Forfeited/expired (0.1) (0.4)
Options outstanding/Nonvested RSUs, December 27, 2020 7.3 8.8
Total unrecognized stock-based compensation expense, net of estimated forfeitures, as of December 27, 2020 $ 0.4 $ 309.7


	Stock Options		RSUs
Options outstanding/Nonvested RSUs, October 3, 2021	5.2		7.7
Granted	—		3.5
Options exercised/RSUs vested	(0.6)		(3.2)
Forfeited/expired	—		(0.3)
Options outstanding/Nonvested RSUs, January 2, 2022	4.6		7.7
Total unrecognized stock-based compensation expense, net of estimated forfeitures, as of January 2, 2022	$	—	$	311.9��

Note 12: Earnings per Share

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


		Quarter Ended				Quarter Ended
		Dec 27, 2020		Dec 29, 2019				Jan 2, 2022		Dec 27, 2020
Net earnings attributable to Starbucks	Net earnings attributable to Starbucks	$	622.2	$	885.7		Net earnings attributable to Starbucks	$	815.9	$	622.2
Weighted average common shares outstanding (for basic calculation)	Weighted average common shares outstanding (for basic calculation)	1,175.0		1,180.4			Weighted average common shares outstanding (for basic calculation)	1,169.6		1,175.0
Dilutive effect of outstanding common stock options and RSUs	Dilutive effect of outstanding common stock options and RSUs	8.0		10.6			Dilutive effect of outstanding common stock options and RSUs	7.0		8.0
Weighted average common and common equivalent shares outstanding (for diluted calculation)	Weighted average common and common equivalent shares outstanding (for diluted calculation)	1,183.0		1,191.0			Weighted average common and common equivalent shares outstanding (for diluted calculation)	1,176.6		1,183.0
EPS — basic	EPS — basic	$	0.53	$	0.75		EPS — basic	$	0.70	$	0.53
EPS — diluted	EPS — diluted	$	0.53	$	0.74		EPS — diluted	$	0.69	$	0.53

Potential dilutive shares consist of the incremental common shares issuable upon the exercise of outstanding stock options (both vested and non-vested) and unvested RSUs, calculated using the treasury stock method. The calculation of dilutive shares outstanding would exclude out-of-the-money stock options (i.e., such options’ exercise prices were greater than the average market price of our common shares for the period) because their inclusion would be ~~antidilutive.~~anti-dilutive. As of January 2, 2022 and December 27, 2020, ~~and December 29, 2019,~~ we had 0no out-of-the-money stock options.

Note 13: Commitments and Contingencies

Legal Proceedings

On April 13, 2010, an organization named Council for Education and Research on Toxics (“Plaintiff”) filed a lawsuit in the Superior Court of the State of California, County of Los Angeles, against the Company and certain other defendants who manufacture, package, distribute or sell brewed coffee. The lawsuit is Council for Education and Research on Toxics v. Starbucks Corporation, et al. On May 9, 2011, the Plaintiff filed an additional lawsuit in the Superior Court of the State of California, County of Los Angeles, against the Company and additional defendants who manufacture, package, distribute or sell packaged coffee. The lawsuit is Council for Education and Research on Toxics v. Brad Barry LLC, et al... Both cases have since been consolidated and now include nearly eighty defendants, which constitute the ~~great~~ majority of the coffee industry in California. Plaintiff alleges that the Company and the other defendants failed to provide warnings for their coffee products of exposure to the chemical acrylamide as required under California Health and Safety Code ~~section~~Section 25249.5, the California Safe Drinking Water and Toxic Enforcement Act of 1986, better known as Proposition 65. Plaintiff seeks equitable relief, including

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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 violation of Proposition 65. The Plaintiff asserts that every consumed cup of coffee, absent a compliant warning, is equivalent to a violation under Proposition 65.

The Company, as part of a joint defense group organized to defend against the lawsuit, disputes the claims of the Plaintiff. Acrylamide is not added to coffee but is present in all coffee in small amounts (parts per billion) as a byproduct of the coffee bean roasting process. The Company has asserted multiple affirmative defenses. Trial of the first phase of the case (“Phase 1”)

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commenced on September 8, 2014, and was limited to three affirmative defenses shared by all defendants. On September 1, 2015, the trial court issued a final ruling adverse to defendants on all Phase 1 defenses. Trial of the second phase of the case (“Phase 2”) commenced in the fall of 2017. On May 7, 2018, the trial court issued a ruling adverse to defendants on the Phase 2 defense, the Company's last remaining defense to liability. On June 22, 2018, the California Office of Environmental Health Hazard Assessment (OEHHA) proposed a new regulation clarifying that cancer warnings are not required for coffee under Proposition 65. The case was set to proceed to a third phase trial (“Phase 3”) on damages, remedies and attorneys' fees on October 15, 2018. However, on October 12, 2018, the California Court of Appeal granted the ~~defendants~~defendants’ request for a stay of the Phase 3 trial.

On June 3, 2019, the California Office of Administrative Law (OAL) approved the coffee exemption regulation. The regulation became effective on October 1, 2019. On June 24, 2019, the California Court of Appeal lifted the stay of the litigation. At the status conference on August 25, 2020, the trial judge granted the defendants’ motion for summary judgment, ruling that the coffee exemption regulation is a complete defense to the Plaintiff’s complaint. The Notice of Entry of Judgment from the court was served on October 6, 2020, and the Plaintiff filed a Notice of Appeal on November 20, ~~2020.~~2020 and its opening brief in the appeals process on April 9, 2021. Defendants filed their response brief on August 9, 2021, and Plaintiff filed a reply on November 15, 2021. 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 2, 2022, no loss contingency ~~was~~has been recorded for this matter.

Starbucks is party to various other legal proceedings arising in the ordinary course of business, including certain employment litigation cases that have been certified as class or collective actions, but, except as noted above, is not currently a party to any legal proceeding that management believes could have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Note 14: Segment Reporting

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

Consolidated revenue mix by product type~~(1)~~ (in millions):


		Quarter Ended								Quarter Ended
		Dec 27, 2020				Dec 29, 2019					Jan 2, 2022		Dec 27, 2020
Beverage~~(2)~~(1)	Beverage~~(2)~~(1)	$	4,251.9	63	%	$	4,260.9	60	%			Beverage~~(2)~~(1)	$	4,898.4	61	%	$	4,251.9	63	%
Food~~(3)~~(2)	Food~~(3)~~(2)	1,140.8		17	%	1,162.1		16	%			Food~~(3)~~(2)	1,434.6		18	%	1,140.8		17	%
Other~~(4)~~(3)	Other~~(4)~~(3)	1,356.7		20	%	1,674.1		24	%			Other~~(4)~~(3)	1,717.4		21	%	1,356.7		20	%
Total	Total	$	6,749.4	100	%	$	7,097.1	100	%			Total	$	8,050.4	100	%	$	6,749.4	100	%

(1)~~Certain prior period amounts have been reclassified to conform to current period presentation.~~

~~(2)~~Beverage represents sales within our company-operated stores.

~~(3)~~(2)Food includes sales within our company-operated stores.

~~(4)~~(3)“Other” primarily consists of packaged and single-serve coffees and teas, ~~serveware,~~ royalty and licensing revenues, serveware, beverage-related ingredients and ready-to-drink beverages, among other items.

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

Quarter Ended


		Americas		International		Channel Development		Corporate and Other		Total			North America (1)		International (1)		Channel Development		Corporate and Other (1)		Total
December 27, 2020
January 2, 2022												January 2, 2022
Total net revenues	Total net revenues	$	4,703.2	$	1,654.3	$	371.4	$	20.5	$	6,749.4	Total net revenues	$	5,732.3	$	1,875.9	$	417.1	$	25.1	$	8,050.4
Depreciation and amortization expenses	Depreciation and amortization expenses	188.9		140.0		0.2		37.0		366.1		Depreciation and amortization expenses	200.0		133.1		—		32.9		366.0
Income from equity investees	Income from equity investees	0		26.3		56.4		0		82.7		Income from equity investees	—		0.7		39.6		—		40.3
Operating income/(loss)	Operating income/(loss)	813.5		274.8		180.8		(355.6)		913.5		Operating income/(loss)	1,083.1		299.6		183.2		(388.1)		1,177.8

December 29, 2019
December 27, 2020												December 27, 2020
Total net revenues	Total net revenues	$	5,010.9	$	1,571.1	$	494.6	$	20.5	$	7,097.1	Total net revenues	$	4,675.6	$	1,681.9	$	371.4	$	20.5	$	6,749.4
Depreciation and amortization expenses	Depreciation and amortization expenses	189.2		126.6		0.3		34.9		351.0		Depreciation and amortization expenses	188.9		140.0		0.2		37.0		366.1
Income from equity investees	Income from equity investees	0		30.9		43.0		0		73.9		Income from equity investees	—		26.3		56.4		—		82.7
Operating income/(loss)	Operating income/(loss)	1,098.8		275.9		175.5		(330.4)		1,219.8		Operating income/(loss)	802.8		283.0		180.8		(353.1)		913.5

(1)North America and International total net revenues and operating income and Corporate and Other operating loss for the quarter ended December 27, 2020, have been restated to conform with current period presentation.

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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 herein are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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,” “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 and plans, as well as trends in or expectations regarding our financial results and long-term growth model and drivers, the anticipated timing and effects of recovery of our business, the conversion of several market operations to fully licensed models, our plans for streamlining our operations, including store openings, closures and changes in store formats and models, expanding our licensing to Nestlé of our consumer packaged goods and Foodservice businesses and its effects on our Channel Development segment results, tax rates, business opportunities and expansion, strategic acquisitions, our future relationship with Starbucks Coffee Korea Co., Ltd., expenses, dividends, share repurchases, commodity costs and our mitigation strategies, liquidity, cash flow from operations, use of cash and cash requirements, investments, borrowing capacity and use of proceeds, continuing compliance with our covenants under our credit facilities and commercial paper program, repatriation of cash to the U.S., the likelihood of the issuance of additional debt and the applicable interest rate, the continuing impact of the COVID-19 ~~outbreak~~pandemic on our financial results, ~~credits available to us under the CARES Act and~~future availability of governmental subsidies for COVID-19 or other ~~government credits,~~public health events, the expected effects of new accounting pronouncements and the estimated impact of changes in U.S. tax law, including on tax rates, investments funded by these changes and potential outcomes and effects of 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: further spread of COVID-19 and related disruptions to 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 potential for a resurgence of COVID-19 infections and the circulation of novel variants of COVID-19 in a given geographic region after it has hit its “peak”; fluctuations in U.S. and international economies and currencies; our ability to preserve, grow and leverage our 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; potential negative effects of material breaches of our information technology systems to the extent we experience a material breach; material failures of our information technology systems; costs associated with, and the successful execution of, the Company’s initiatives and plans, including the successful expansion of our Global Coffee Alliance with Nestlé; our ability to obtain financing on acceptable terms; the acceptance of the 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;~~labor including any union organizing efforts and our responses to such efforts; significant increased logistics costs; inflationary pressures; the impact of competition; inherent risks of operating a global business; the prices and availability of coffee, dairy and other raw materials; the effect of legal proceedings; the effects of changes in tax laws and related guidance and regulations that may be implemented and other risks detailed in our filings with the SEC, including in Part I Item IA “Risk Factors” in the 10-K.

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 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 19, 2021.

Introduction and Overview

Starbucks is the premier coffee roaster and retailer of specialty coffee with operations in 8384 markets around the world. As of ~~December 27, 2020,~~January 2, 2022, Starbucks had over ~~32,900~~34,300 company-operated and licensed stores, an increase of 4% from the prior year. Additionally, we sell a variety of consumer-packaged goods, ~~or CPG,~~ primarily through the Global Coffee Alliance established with Nestlé and other partnerships and joint ventures. ~~Our~~During the quarter ended January 2, 2022, our global comparable store sales grew 13%, demonstrating powerful momentum beyond recovery from the significant adverse impacts from the pandemic in the prior year period.

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

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Development. Non-reportable operating segments such as Evolution Fresh 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.~~ 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 ~~represent~~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 ~~outbreak~~pandemic remain in comparable store sales while stores identified for permanent closure have been removed. ~~During~~Additionally, we monitor our two-year comparable sales metric based on a multiplicative basis(1) to better analyze our performance due to the ~~quarter ended December 27, 2020, our global comparable store sales declined 5%, including~~adverse impacts from the ~~negative impacts of COVID-19.~~

We have three reportable operating segments: Americas, International and Channel Development. Non-reportable operating segments and unallocated corporate expenses are reported within Corporate and Other.

~~Table of Contents~~pandemic.

Our fiscal year ends on the Sunday closest to September 30. Our ~~2021~~ fiscal 2022 year includes 5352 weeks ~~with the 53rd week falling in the fourth~~while our fiscal ~~quarter, while fiscal~~2021 year ~~2020~~ included 5253 weeks. All references to store counts, including data for new store openings, are reported net of store closures, unless otherwise noted.

~~COVID-19 Update~~

Starbucks results for the first quarter of fiscal ~~2021 reflect continued recovery from the effects of the COVID-19 pandemic. The sequential improvements in our quarterly results~~2022 demonstrate the ~~resilience of our business model~~overall strength and ~~the strength~~resilience of our brand. Consolidated net revenues ~~declined 5%~~increased 19% to ~~$6.7 billion in first quarter of fiscal 2021 compared to $7.1~~$8.1 billion in the first quarter of fiscal 2020, driven primarily by reduced customer traffic, modified business operations, reduced store operating hours and temporary closures of our company-operated and licensed stores. As of December 27, 2020, nearly all of our company-operated and licensed stores were re-opened; however, many were operating at less than full capacity.

~~For the Americas segment, comparable store sales declined by 6% for~~2022 compared to $6.7 billion in the first quarter of fiscal 2021, primarily driven by strength in our U.S. business attributable to strong holiday performance, partially offset by continued COVID-19 related disruptions in certain North America and International markets. Consolidated operating margin expanded 110 basis points from the prior year to 14.6%, primarily due to ~~reduced customer traffic, temporary~~sales leverage from business recovery, pricing in North America and lower restructuring costs, partially offset by investments in store ~~closures~~partner wages and ~~modified store operations. As of December 27, 2020, approximately 40% of our U.S. company-operated stores offered limited seating. Our business in~~benefits as well as inflation.

For the ~~U.S. continued its steady recovery, with a 5% decline in~~North America segment, comparable store sales increased 18% for the first quarter of fiscal ~~2021~~2022 compared to ~~declines~~a decline of 9% and 40% for the fourth and third fiscal quarters of 2020, respectively. We continued to incur incremental costs attributable to COVID-19, including catastrophe pay programs for company-operated store partners (employees). These were partially offset by qualified tax credits provided by the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) and the Canada Emergency Wage Subsidy (“CEWS”). In fiscal year 2020, we announced a plan to optimize our Americas store portfolio, primarily6% in ~~dense, metropolitan markets, by blending store formats to better cater to changing customer tastes and preferences. During~~ the first quarter of fiscal ~~2021, we closed approximately 170 stores~~2021. Comparable store sales for our U.S. market increased 18% for the first quarter of fiscal 2022 compared to a decline of 5% in the first quarter of fiscal 2021. The U.S. ~~and Canada, and we expect to close an additional 500 stores~~market also had a 12% increase in ~~those markets primarily over the next 9 to 12 months to complete our restructuring efforts. Costs incurred~~two-year comparable store sales, despite modified store operations related to the ~~restructuring efforts are recorded as restructuring~~COVID-19 pandemic, which have been ongoing, whether intermittently or concentrated, since the COVID-19 pandemic began, The segment also experienced higher than anticipated costs, primarily related to enhancements in retail store partner wages, increased supply chain costs due to inflationary pressures and ~~impairments~~increased spend on ~~our consolidated statement of earnings~~new partner training and ~~will continue~~support costs to ~~be recorded as stores are identified for closure and are eventually closed.~~address labor market conditions.

For the International segment, comparable store sales declined 3%, inclusive of a 3% adverse impact from lapping the prior-year value-added tax benefit. Comparable store sales for our China market declined 14% for the first quarter of fiscal ~~2021, primarily due to modifications of store operations in our our company-operated international markets. Our business in China has substantially recovered. Comparable store sales increased 5%,~~2022, inclusive of a ~~nearly 5% benefit~~4% adverse impact from lapping the ~~temporary VAT exemption ending in December 2020. The~~prior-year value-added tax benefit. Our China market continued to ~~demonstrate upward momentum in sales and profitability. As of December 27, 2020, nearly all company-operated stores within~~experience pandemic-related restrictions that significantly impacted customer mobility during the quarter, while our other International ~~segment~~markets were ~~open. Most of our International licensed stores were also open at the end of the first quarter of fiscal 2021.~~not as severely impacted.

Net revenues for our Channel Development segment ~~declined $123~~increased $46 million, or ~~25%~~12%, when compared with the first quarter of fiscal ~~2020.~~2021. This was largely due to ~~the transition of certain single-serve~~higher product ~~activities~~sales to ~~Nestlé beginning in~~and royalty revenue from the ~~fourth quarter of fiscal 2020 and lapping~~ Global Coffee Alliance transition-related activities. Also contributing were lower Global Coffee Alliance revenues, primarily driven by the Foodservice business, which experienced softening due to COVID-19. Our Channel Development segment continues to grow category share as customers adjust to their at-home routines.and growth in our international ready-to-drink business.

~~We continue to invest in technologies and innovations to elevate the customer and partner experience and to drive long-term growth.~~ Absent significant COVID-19 relapses or global economic disruptions, and based on the current trend of our retail business ~~recovery~~operations and our focused efforts to expand contactless customer experiences, enhance digital capabilities and drive beverage innovation, we are confident in the strength of our brand and the durability of our long-term growth model. However, our business is experiencing, and expects to continue to experience, operating margin pressures such as accelerated inflation, increased spend due to labor market conditions and extended COVID-19 related pay and benefits for our partners. We believe we have plans to effectively mitigate these pressures, such as improving retail store operations and potential adjustments to pricing. However, if our mitigation plans are ~~well positioned to regain the positive business momentum we had demonstrated prior to the pandemic.~~not effective, these pressures and other factors could have an adverse impact on our business.

~~Comparable Store Sales~~

~~Starbucks~~(1)Two-year comparable store sales metric is calculated as ((1 + % change in comparable store sales in FY21) * (1 + % change in comparable store sales in FY22)) - 1. Two-year comparable store sales for the ~~first quarter~~U.S. of ~~fiscal 2021:~~

Quarter Ended Dec 27, 2020

Change in Comparable Store Sales
Change in
Transactions
Change in
Ticket
Consolidated (5)% (19)% 17%
Americas (6)% (21)% 20%
International (3)% (10)% 8%

The above comparable store sales for the quarter ended December 27, 2020 decreased primarily due to reduced customer traffic, temporary store closures and stores with modified operations and business hours as a result of COVID-19.

~~Refer to our~~ ~~Quarterly Store Data, also included in Item 2 of Part I of this 10-Q, for additional information on our company operated and licensed store portfolio.~~12% = ((1 + (-5%)) * (1 + 18%)) - 1.

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Results of Operations (in millions)

Revenues


		Quarter Ended								Quarter Ended
		Dec 27, 2020		Dec 29, 2019		$ Change		% Change				Jan 2, 2022		Dec 27, 2020		$ Change		% Change
Company-operated stores	Company-operated stores	$	5,726.5	$	5,780.7	$	(54.2)	(0.9)	%		Company-operated stores	$	6,722.4	$	5,726.5	$	995.9	17.4	%
Licensed stores	Licensed stores	613.8		792.0		(178.2)		(22.5)			Licensed stores	850.8		613.8		237.0		38.6
Other	Other	409.1		524.4		(115.3)		(22.0)			Other	477.2		409.1		68.1		16.6
Total net revenues	Total net revenues	$	6,749.4	$	7,097.1	$	(347.7)	(4.9)	%		Total net revenues	$	8,050.4	$	6,749.4	$	1,301.0	19.3	%

For the quarter ended January 2, 2022 compared with the quarter ended December 27, 2020 ~~compared with the quarter ended December 29, 2019~~

Total net revenues for the first quarter of fiscal ~~2021 decreased $348 million. Company-operated~~2022 increased $1.3 billion, primarily due to higher revenues from company-operated stores ($1.0 billion). The growth of company-operated stores revenue ~~declined $54 million, reflecting~~was driven by a ~~5% decrease~~13% increase in comparable store sales ($~~279~~719 million) ~~attributed~~, attributable to a ~~19% decrease~~10% increase in comparable transactions ~~partially offset by~~and a ~~17%~~3% increase in average ticket. ~~This decrease was partially offset by 667~~Also contributing to the increase were incremental revenues from 664 net new Starbucks® company-operated stores, or a 4% increase, over the past 12 months ($~~170 million) and favorable foreign currency translation ($69~~254 million).

Licensed stores revenue ~~decreased $178~~increased $237 million ~~primarily~~also contributed to the increase in total net revenues, driven by ~~lower~~higher product and equipment sales to and royalty revenues from our ~~licensees.~~licensees ($206 million) and the conversion of our Korea market from a joint venture to a fully licensed market in the fourth quarter of fiscal 2021 ($39 million).

Other revenues ~~decreased $115~~increased $68 million, primarily due to ~~the transition of certain single-serve~~higher product ~~activities to Nestlé~~sales and ~~lapping of transition activities related to~~royalty revenue in the Global Coffee Alliance and growth in ~~the prior year. Also contributing were lower Global Coffee Alliance revenues, mainly driven by the Foodservice business, which experienced softening due to COVID-19.~~our international ready-to-drink business.

Operating Expenses


		Quarter Ended										Quarter Ended
		Dec 27, 2020		Dec 29, 2019		$ Change		Dec 27, 2020		Dec 29, 2019				Jan 2, 2022		Dec 27, 2020		$ Change		Jan 2, 2022		Dec 27, 2020
								As a % of Total Net Revenues										As a % of Total Net Revenues
Product and distribution costs	Product and distribution costs	$	2,049.1	$	2,236.4	$	(187.3)	30.4	%	31.5	%		Product and distribution costs	$	2,526.9	$	2,049.1	$	477.8	31.4	%	30.4	%
Store operating expenses	Store operating expenses	2,867.3		2,821.5		45.8		42.5		39.8			Store operating expenses	3,400.0		2,867.3		532.7		42.2		42.5
Other operating expenses	Other operating expenses	91.8		101.8		(10.0)		1.4		1.4			Other operating expenses	101.7		91.8		9.9		1.3		1.4
Depreciation and amortization expenses	Depreciation and amortization expenses	366.1		351.0		15.1		5.4		4.9			Depreciation and amortization expenses	366.0		366.1		(0.1)		4.5		5.4
General and administrative expenses	General and administrative expenses	472.1		434.2		37.9		7.0		6.1			General and administrative expenses	525.8		472.1		53.7		6.5		7.0
Restructuring and impairments	Restructuring and impairments	72.2		6.3		65.9		1.1		0.1			Restructuring and impairments	(7.5)		72.2		(79.7)		(0.1)		1.1

Total operating expenses	Total operating expenses	5,918.6		5,951.2		(32.6)		87.7		83.9			Total operating expenses	6,912.9		5,918.6		994.3		85.9	%	87.7	%
Income from equity investees	Income from equity investees	82.7		73.9		8.8		1.2		1.0			Income from equity investees	40.3		82.7		(42.4)		0.5		1.2
Operating income	Operating income	$	913.5	$	1,219.8	$	(306.3)	13.5	%	17.2	%		Operating income	$	1,177.8	$	913.5	$	264.3	14.6	%	13.5	%
Store operating expenses as a % of company-operated store revenues								50.1	%	48.8	%
Store operating expenses as a % of company-operated stores revenue													Store operating expenses as a % of company-operated stores revenue							50.6	%	50.1	%

For the quarter ended January 2, 2022 compared with the quarter ended December 27, 2020 ~~compared with the quarter ended December 29, 2019~~

Product and distribution costs as a percentage of total net revenues ~~decreased 110~~increased 100 basis points for the first quarter of fiscal ~~2021,~~2022, primarily due to ~~the transfer of certain single-serve products~~supply chain costs due to ~~Nestlé beginning in the fourth quarter of fiscal 2020~~inflationary pressures (approximately 90180 basis points) and product mix changes (approximately 40 basis points), partially offset by pricing in ~~Americas.~~North America (approximately 150 basis points).

Store operating expenses as a percentage of total net revenues ~~increased 270~~decreased 30 basis points for the first quarter of fiscal ~~2021.~~2022. Store operating expenses as a percentage of company-operated ~~store revenues~~stores revenue increased ~~130~~50 basis points, primarily due to ~~sales deleverage attributable to COVID-19 impacts, as well as catastrophe pay programs for~~enhancements in retail ~~partners, net of benefits provided by temporary subsidies from the U.S. and certain foreign governments (approximately 50 basis points), and growth in~~store partner wages and benefits (approximately 180 basis points)~~. These were~~ and increased spend on new partner training and support costs to address labor market conditions (approximately 110 basis points), partially offset by ~~labor efficiencies (approximately 250 basis points).~~

~~Other operating expenses decreased $10 million for the first quarter of fiscal 2021, primarily due to lapping prior year incremental costs to develop and grow the Global Coffee Alliance.~~

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sales leverage from business recovery.

Depreciation and amortization expenses as a percentage of total net revenues ~~increased 50~~decreased 90 basis points, primarily due to sales ~~deleverage.~~

General and administrative expenses increased $38 million, primarily due to incremental strategic investments in technology ($28 million) and higher performance-based compensation, recognizing the strength of the company's overall recovery from pandemic-related business impacts ($18 million).

Restructuring and impairment expenses increased $66 million, primarily due to higher asset impairment related to store portfolio optimization ($42 million) and accelerated amortization of right-of-use lease assets associated with the closure of certain company-operated stores ($26 million).

Income from equity investees increased $9 million, primarily due to higher income from our North American Coffee Partnership joint venture, partially offset by temporary store closures and reduced operating hours in our South Korea and India joint ventures.

~~The combination of these changes resulted in an overall decrease in operating margin of 370 basis points for the first quarter of fiscal 2021.~~

~~Other Income and Expenses~~

Quarter Ended
Dec 27,
2020 Dec 29,
2019
$
Change
Dec 27,
2020 Dec 29,
2019
As a % of Total
Net Revenues
Operating income $ 913.5 $ 1,219.8 $ (306.3) 13.5 % 17.2 %
Interest income and other, net 15.5 15.9 (0.4) 0.2 0.2
Interest expense (120.7) (91.9) (28.8) (1.8) (1.3)
Earnings before income taxes 808.3 1,143.8 (335.5) 12.0 16.1
Income tax expense 186.1 258.5 (72.4) 2.8 3.6
Net earnings including noncontrolling interests 622.2 885.3 (263.1) 9.2 12.5
Net loss attributable to noncontrolling interests — (0.4) 0.4 — —
Net earnings attributable to Starbucks $ 622.2 $ 885.7 $ (263.5) 9.2 % 12.5 %
Effective tax rate including noncontrolling interests 23.0 % 22.6 %

~~For the quarter ended December 27, 2020 compared with the quarter ended December 29, 2019~~

~~Interest expense increased $29 million, primarily due to additional interest incurred on long-term debt issued in March 2020 and May 2020.~~

The effective tax rate for the quarter ended December 27, 2020 was 23.0% compared to 22.6% for the same quarter in fiscal 2020. The increase was primarily due to the effect of lower pre-tax earnings and the proportionate impacts from certain permanent differences and discrete items, as well as the foreign rate differential on our jurisdictional mix of earnings. This was partially offset by an increase in stock-based compensation excess tax benefits (approximately 190 basis points).leverage.

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General and administrative expenses increased $54 million, primarily due to incremental investments in technology ($29 million) and increased partner wages and benefits ($19 million), partially offset by lower performance-based compensation ($8 million).

Restructuring and impairment expenses decreased $80 million, primarily due to lapping our North America store portfolio optimization in the prior year, specifically lower asset impairment charges ($41 million) and accelerated lease right-of-use asset amortization costs ($39 million).

Income from equity investees decreased $42 million, primarily due to the conversion of our Korea market from a joint venture to a fully licensed market in the fourth quarter of fiscal 2021 ($27 million) and lower income from our North American Coffee Partnership joint venture ($17 million).

The combination of these changes resulted in an overall increase in operating margin of 110 basis points for the first quarter of fiscal 2022.

Other Income and Expenses


	Quarter Ended
	Jan 2, 2022		Dec 27, 2020		$ Change		Jan 2, 2022		Dec 27, 2020
							As a % of Total Net Revenues
Operating income	$	1,177.8	$	913.5	$	264.3	14.6	%	13.5	%


Interest income and other, net	(0.1)		15.5		(15.6)		—		0.2
Interest expense	(115.3)		(120.7)		5.4		(1.4)		(1.8)
Earnings before income taxes	1,062.4		808.3		254.1		13.2		12.0
Income tax expense	246.3		186.1		60.2		3.1		2.8
Net earnings including noncontrolling interests	816.1		622.2		193.9		10.1		9.2
Net earnings attributable to noncontrolling interests	0.2		—		0.2		—		—
Net earnings attributable to Starbucks	$	815.9	$	622.2	$	193.7	10.1	%	9.2	%
Effective tax rate including noncontrolling interests							23.2	%	23.0	%

For the quarter ended January 2, 2022 compared with the quarter ended December 27, 2020

Interest income and other, net decreased $16 million, primarily due to higher net losses from certain investments.

Interest expense decreased $5 million, primarily due to lower debt balances attributed to repayments of short-term and current portion of long-term debt balances.

Segment Information

Results of operations by segment (in millions):

~~Americas~~Table of Contents

North America (1)


	Quarter Ended
	Jan 2, 2022		Dec 27, 2020		$ Change		Jan 2, 2022		Dec 27, 2020
							As a % of North America Total Net Revenues
Net revenues:
Company-operated stores	$	5,214.1	$	4,284.8	$	929.3	91.0	%	91.6	%
Licensed stores	515.9		388.6		127.3		9.0		8.3
Other	2.3		2.2		0.1		—		—
Total net revenues	5,732.3		4,675.6		1,056.7		100.0		100.0
Product and distribution costs	1,629.4		1,260.6		368.8		28.4		27.0
Store operating expenses	2,702.4		2,238.8		463.6		47.1		47.9
Other operating expenses	48.2		41.5		6.7		0.8		0.9
Depreciation and amortization expenses	200.0		188.9		11.1		3.5		4.0
General and administrative expenses	76.7		70.8		5.9		1.3		1.5
Restructuring and impairments	(7.5)		72.2		(79.7)		(0.1)		1.5
Total operating expenses	4,649.2		3,872.8		776.4		81.1		82.8

Operating income	$	1,083.1	$	802.8	$	280.3	18.9	%	17.2	%
Store operating expenses as a % of company-operated stores revenue							51.8	%	52.2	%

Quarter Ended
Dec 27,
2020 Dec 29,
2019
$
Change
Dec 27,
2020 Dec 29,
2019
As a % of Americas
Total Net Revenues
Net revenues:
Company-operated stores $ 4,284.8 $ 4,471.0 $ (186.2) 91.1 % 89.2 %
Licensed stores 416.2 537.3 (121.1) 8.8 10.7
Other 2.2 2.6 (0.4) — 0.1
Total net revenues 4,703.2 5,010.9 (307.7) 100.0 100.0
Product and distribution costs 1,276.2 1,388.4 (112.2) 27.1 27.7
Store operating expenses 2,238.8 2,214.4 24.4 47.6 44.2
Other operating expenses 42.8 42.5 0.3 0.9 0.8
Depreciation and amortization expenses 188.9 189.2 (0.3) 4.0 3.8
General and administrative expenses 70.8 72.4 (1.6) 1.5 1.4
Restructuring and impairments 72.2 5.2 67.0 1.5 0.1
Total operating expenses 3,889.7 3,912.1 (22.4) 82.7 78.1
Operating income $ 813.5 $ 1,098.8 $ (285.3) 17.3 % 21.9 %
Store operating expenses as a % of company-operated store revenues 52.2 % 49.5 %

~~For~~(1)North America licensed stores revenue, total net revenues, product and distribution costs, other operating expenses, total operating expenses and operating income for the quarter ended December 27, 2020, have been restated to conform with current period presentation.

For the quarter ended January 2, 2022 compared with the quarter ended December ~~29, 2019~~27, 2020

Revenues

~~Americas~~North America total net revenues for the first quarter of fiscal ~~2021 decreased $308 million,~~2022 increased $1.1 billion, or 6%23%, primarily due to ~~a 6% decrease~~an 18% increase in comparable store sales ($~~242~~762 million) driven by a ~~21% decrease~~12% increase in transactions ~~partially offset by~~and a ~~20%~~6% increase in average ticket. ~~These declines~~Also contributing to these increases were ~~slightly offset by~~ the ~~opening~~performance of new ~~company-operated~~ stores ~~($62 million).~~

~~Licensed~~compared to the closure of underperforming stores ~~revenues declined by $121.1 million, primarily due~~in prior year including stores related to ~~lower~~our restructuring plan ($140 million) and higher product and equipment sales to and royalty revenues from our ~~licensees.~~licensees ($130 million) primarily due to business recovery from the COVID-19 pandemic.

Operating Margin

~~Americas~~North America operating income for the first quarter of fiscal ~~2021 decreased 26% to $814 million, compared~~2022 increased 35% to $1.1 billion, in the first quarter of fiscal 2020. Operating margin decreased 460 basis points to 17.3%, primarily due to sales deleverage attributed to COVID-19 impacts. In addition, we also incurred additional costs, primarily catastrophe pay programs for retail store partners incurred, net of benefits provided by the CARES Act and CEWS (approximately 40 basis points), and growth in wages and benefits (approximately 200 basis points). Higher restructuring expenses relating to our Americas portfolio optimization (approximately 140 basis points) also contributed to the decrease. Partially offsetting these decreases were improved labor efficiencies (approximately 260 basis points) and pricing (approximately 110 basis points).

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~~International~~

Quarter Ended
Dec 27,
2020 Dec 29,
2019
$
Change
Dec 27,
2020 Dec 29,
2019
As a % of International
Total Net Revenues
Net revenues:
Company-operated stores $ 1,441.7 $ 1,309.7 $ 132.0 87.1 % 83.4 %
Licensed stores 197.6 254.7 (57.1) 11.9 16.2
Other 15.0 6.7 8.3 0.9 0.4
Total net revenues 1,654.3 1,571.1 83.2 100.0 100.0
Product and distribution costs 520.4 488.5 31.9 31.5 31.1
Store operating expenses 628.5 607.1 21.4 38.0 38.6
Other operating expenses 34.3 35.9 (1.6) 2.1 2.3
Depreciation and amortization expenses 140.0 126.6 13.4 8.5 8.1
General and administrative expenses 82.6 67.2 15.4 5.0 4.3
Restructuring and impairments — 0.8 (0.8) — 0.1
Total operating expenses 1,405.8 1,326.1 79.7 85.0 84.4
Income from equity investees 26.3 30.9 (4.6) 1.6 2.0
Operating income $ 274.8 $ 275.9 $ (1.1) 16.6 % 17.6 %
Store operating expenses as a % of company-operated store revenues 43.6 % 46.4 %

~~For the quarter ended December 27, 2020 compared with the quarter ended December 29, 2019~~

~~Revenues~~

~~International total net revenues for the first quarter of fiscal 2021 increased $83 million, or 5%. Company-operated store revenues increased $132 million, primarily driven by 658 net new Starbucks~~® company-operated stores, or an 11% increase, over the past 12 months ($108 million) and favorable foreign currency translation ($71 million). These were partially offset by a 3% decline in comparable store sales ($37 million), driven by a 10% decrease in transactions, partially offset by an 8% increase in average ticket.

~~Licensed stores revenues declined by $57.1 million, primarily due to lower product and equipment sales to and royalty revenues from our licensees.~~

~~Operating Margin~~

~~International operating income for the first quarter of fiscal 2021 was $275 million,~~ compared to ~~$276~~$803 million in the first quarter of fiscal ~~2020.~~2021. Operating margin ~~decreased 100~~increased 170 basis points to ~~16.6%~~18.9%, primarily due to sales ~~deleverage attributable~~leverage from business recovery. Also contributing to ~~COVID-19, as well as additional costs incurred to invest in partner wages~~the margin improvement was pricing (approximately 210 basis points), lower restructuring expenses (approximately 170 basis points), sourcing savings (approximately 70 basis points) and benefits from the closure of lower-performing stores (approximately 70 basis points). These increases were partially offset by higher supply chain costs due to inflationary pressures (approximately 240 basis points), enhancements in retail store partner wages and benefits (approximately 190 basis points) and increased spend on new partner training and support costs to address labor ~~efficiencies~~market conditions (approximately 80130 basis points).

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~~Channel Development~~International (1)


	Quarter Ended
	Jan 2, 2022		Dec 27, 2020		$ Change		Jan 2, 2022		Dec 27, 2020
							As a % of International Total Net Revenues
Net revenues:
Company-operated stores	$	1,508.3	$	1,441.7	$	66.6	80.4	%	85.7	%
Licensed stores	334.9		225.2		109.7		17.9		13.4
Other	32.7		15.0		17.7		1.7		0.9
Total net revenues	1,875.9		1,681.9		194.0		100.0		100.0
Product and distribution costs	615.8		536.0		79.8		32.8		31.9
Store operating expenses	697.6		628.5		69.1		37.2		37.4
Other operating expenses	39.2		35.6		3.6		2.1		2.1
Depreciation and amortization expenses	133.1		140.0		(6.9)		7.1		8.3
General and administrative expenses	91.3		85.1		6.2		4.9		5.1

Total operating expenses	1,577.0		1,425.2		151.8		84.1		84.7
Income from equity investees	0.7		26.3		(25.6)		—		1.6
Operating income	$	299.6	$	283.0	$	16.6	16.0	%	16.8	%
Store operating expenses as a % of company-operated stores revenue							46.3	%	43.6	%

Quarter Ended
Dec 27,
2020 Dec 29,
2019
$
Change
Dec 27,
2020 Dec 29,
2019
As a % of Channel Development
Total Net Revenues
Net revenues $ 371.4 $ 494.6 $ (123.2)
Product and distribution costs 233.5 338.8 (105.3) 62.9 % 68.5 %
Other operating expenses 11.1 20.6 (9.5) 3.0 4.2
Depreciation and amortization expenses 0.2 0.3 (0.1) 0.1 0.1
General and administrative expenses 2.2 2.4 (0.2) 0.6 0.5
Total operating expenses 247.0 362.1 (115.1) 66.5 73.2
Income from equity investees 56.4 43.0 13.4 15.2 8.7
Operating income $ 180.8 $ 175.5 $ 5.3 48.7 % 35.5 %

~~For~~(1)International licensed stores revenue, total net revenues, product and distribution costs, other operating expenses, general and administrative expenses, total operating expenses and operating income for the quarter ended December 27, 2020, have been restated to conform with current period presentation.

For the quarter ended January 2, 2022 compared with the quarter ended December ~~29, 2019~~27, 2020

Revenues

International total net revenues for the first quarter of fiscal 2022 increased $194 million, or 12%, primarily due to 774 net new Starbucks company-operated store openings, or a 12% increase over the past 12 months ($113 million). Additionally, there were higher product and equipment sales to and royalty revenues from our licensees ($76 million) primarily due to lapping the impact of the COVID-19 pandemic in the prior year. Also contributing to the increase was the conversion of our Korea market from a joint venture to a fully licensed market in the fourth quarter of fiscal 2021 ($39 million). These increases were partially offset by a 3% decline in comparable store sales ($43 million), driven by a 5% decrease in average ticket, partially offset by a 2% increase in transactions, as well as unfavorable foreign currency translation ($17 million).

Operating Margin

International operating income for the first quarter of fiscal 2022 increased 6% to $300 million, compared to $283 million in the first quarter of fiscal 2021. Operating margin decreased 80 basis points to 16.0%, primarily due to investments and growth in retail store partner wages and benefits (approximately 150 basis points), strategic investments, largely in China (approximately 110 basis points) and product mix changes (approximately 90 basis points). These decreases were partially offset by sales leverage outside of China driven by lapping the more severe impact of the COVID-19 pandemic in the prior year.

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Channel Development


	Quarter Ended
	Jan 2, 2022		Dec 27, 2020		$ Change		Jan 2, 2022		Dec 27, 2020
							As a % of Channel Development Total Net Revenues
Net revenues	$	417.1	$	371.4	$	45.7
Product and distribution costs	258.8		233.5		25.3		62.0	%	62.9	%
Other operating expenses	11.4		11.1		0.3		2.7		3.0
Depreciation and amortization expenses	—		0.2		(0.2)		—		0.1
General and administrative expenses	3.3		2.2		1.1		0.8		0.6
Total operating expenses	273.5		247.0		26.5		65.6		66.5
Income from equity investees	39.6		56.4		(16.8)		9.5		15.2
Operating income	$	183.2	$	180.8	$	2.4	43.9	%	48.7	%

For the quarter ended January 2, 2022 compared with the quarter ended December 27, 2020

Revenues

Channel Development total net revenues for the first quarter of fiscal ~~2021 decreased $123~~2022 increased $46 million, or ~~25%~~12%, primarily due to ~~the transition of certain single-serve product activities to Nestlé ($91 million) and lapping of transition activities related to the~~higher Global Coffee Alliance product sales and royalty revenue ($2131 million)~~. Also contributing were lower Global Coffee Alliance revenues ($18 million), mainly driven by the Foodservice business, which experienced softening due to COVID-19. These were partially offset by~~ and volume growth in ~~at-home coffee and~~ our ready-to-drink ~~business.~~businesses ($16 million).

Operating Margin

Channel Development operating income for the first quarter of fiscal ~~2021~~2022 increased 3%1% to ~~$181~~$183 million, compared to ~~$176~~$181 million in the first quarter of fiscal ~~2020.~~2021. Operating margin ~~increased 1,320~~decreased 480 basis points to ~~48.7%~~43.9%, primarily due to ~~the transfer of certain single-serve products to Nestlé as part of the Global Coffee Alliance (approximately 820 basis points). Strong performance from~~a decline in our North American Coffee Partnership joint venture ~~also contributed.~~income due to supply chain constraints and inflationary pressures as well as a business mix shift.

Corporate and Other(1)


	Quarter Ended
	Jan 2, 2022		Dec 27, 2020		$ Change		% Change
Net revenues:


Other	$	25.1	$	20.5	$	4.6	22.4	%
Total net revenues	25.1		20.5		4.6		22.4
Product and distribution costs	22.9		19.0		3.9		20.5

Other operating expenses	2.9		3.6		(0.7)		(19.4)
Depreciation and amortization expenses	32.9		37.0		(4.1)		(11.1)
General and administrative expenses	354.5		314.0		40.5		12.9

Total operating expenses	413.2		373.6		39.6		10.6

Operating loss	$	(388.1)	$	(353.1)	$	(35.0)	9.9	%

Quarter Ended
Dec 27,
2020 Dec 29,
2019
$
Change
%
Change
Net revenues:
Other $ 20.5 $ 20.5 $ — — %
Total net revenues 20.5 20.5 — —
Product and distribution costs 19.0 20.7 (1.7) (8.2)
Other operating expenses 3.6 2.8 0.8 28.6
Depreciation and amortization expenses 37.0 34.9 2.1 6.0
General and administrative expenses 316.5 292.2 24.3 8.3
Restructuring and impairments — 0.3 (0.3) nm
Total operating expenses 376.1 350.9 25.2 7.2
Operating loss $ (355.6) $ (330.4) $ (25.2) 7.6 %
(1)Corporate and other general and administrative expenses, total operating expenses and operating loss for the fiscal year ended December 27, 2020, have been restated to conform with current period presentation.

Corporate and Other primarily consists of our unallocated corporate expenses, as well as Evolution Fresh. Unallocated corporate expenses include corporate administrative functions that support the operating segments but are not specifically attributable to or managed by any segment and are not included in the reported financial results of the operating segments.

For the quarter ended January 2, 2022 compared with the quarter ended December 27, 2020

Corporate and Other operating loss increased to ~~$356~~$388 million for the first ~~fiscal~~ quarter of ~~2021,~~fiscal 2022, or 8%10%, compared to ~~$330~~$353 million for the first ~~fiscal~~ quarter of ~~2020.~~fiscal 2021. This increase was primarily driven by incremental ~~strategic~~ investments in technology ($22 million) and ~~higher performance-based compensation recognizing the strength of the company's overall recovery from pandemic-related business impacts.~~increased partner wages and benefits ($9 million).

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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
Dec 27,
2020 Dec 29,
2019 Dec 27,
2020 Dec 29,
2019
Americas
Company-operated stores (80) 46 10,029 10,020
Licensed stores 34 90 8,279 8,183
Total Americas (46) 136 18,308 18,203
International
Company-operated stores 185 199 6,713 6,059
Licensed stores 139 204 7,917 7,533
Total International 324 403 14,630 13,592
Total Company 278 539 32,938 31,795


	Net stores opened/(closed) and transferred during the period
	Quarter Ended		Stores open as of
	Jan 2, 2022	Dec 27, 2020		Jan 2, 2022	Dec 27, 2020
North America
Company-operated stores	39	(80)		9,900	10,029
Licensed stores	23	30		6,988	6,861
Total North America (1)	62	(50)		16,888	16,890
International
Company-operated stores	213	185		7,485	6,713
Licensed stores	209	143		9,944	9,335
Total International (1)	422	328		17,429	16,048




Total Company	484	278		34,317	32,938

(1)North America and International licensed stores as of December 27, 2020, have been recast as a result of our fiscal 2021 operating segment reporting structure realignment.

Financial Condition, Liquidity and Capital Resources

Investment Overview

Our cash and investments totaled ~~$5.5~~$4.4 billion as of ~~December 27, 2020~~January 2, 2022 and ~~$4.8~~$6.9 billion as of ~~September 27, 2020.~~October 3, 2021. 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) and commercial paper. As of ~~December 27, 2020,~~January 2, 2022, approximately ~~$2.3~~$3.0 billion of cash was held in foreign subsidiaries.

Borrowing Capacity

~~The 2018 credit facility~~Revolving Credit Facility

Our ~~$2.0~~$3 billion unsecured ~~5-year~~five-year revolving credit facility ~~("the 2018~~(the "2021 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 ~~are subject to terms defined within the 2018 credit facility and~~ 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~~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 0.025%, (ii) Bank of America’s prime rate and ~~(ii)~~(iii) the ~~Company's~~Eurocurrency Rate (as defined in the 2021 credit facility) plus 1.025%.

The 2021 credit facility contains provisions requiring us to maintain compliance with certain covenants, including a minimum fixed charge coverage ratio, ~~pursuant~~which measures our ability to ~~a pricing grid set forth~~cover financing expenses. As of January 2, 2022, we were in ~~the five-year credit agreement. The current~~compliance with all applicable ~~margin is 1.100% for Eurocurrency Rate Loans and 0.100% for Base Rate Loans. The 2018~~covenants. No amounts were outstanding under our 2021 credit facility ~~is available for general corporate purposes. As~~as of ~~December 27, 2020, we had no borrowings under the 2018 credit facility.~~

~~The 364-day credit facility~~

~~Our $1.0 billion unsecured 364-day credit facility (the "364-day credit facility"), of which no amount may be used for issuances of letters of credit, is currently set to mature on September 22,~~January 2, 2022 or October 3, 2021. We have the option, subject to negotiation and agreement with the related banks, to increase the maximum commitment amount by an additional $500 million. Borrowings under the credit facility are subject to terms defined within the 364-day credit facility and will bear interest at a variable rate based on LIBOR, and, for U.S. dollar-denominated loans under certain circumstances, a Base Rate, in each case plus an applicable margin. The applicable margin is based on the better of (i) the Company's long-term credit ratings assigned by Moody's and Standard & Poor's rating agencies and (ii) the Company's fixed charge coverage ratio, pursuant to a pricing grid set forth in the 364-day credit agreement. The applicable margin is 1.150% for Eurocurrency Rate Loans and 0.150% for Base Rate Loans. The 364-day credit facility is available for general purposes. As of December 27, 2020, we had no borrowings under the 364-day credit facility.

Due to the financial impacts from COVID-19, we reached an agreement with our lenders to amend the fixed charge coverage ratio covenant for our combined $3 billion revolving lines of credit, through the fourth quarter of fiscal 2021.

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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 $3.0 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 the ~~2018 and 364-day~~2021 credit ~~facilities~~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 27, 2020,~~January 2, 2022, we had $200.0 million

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borrowings ~~of $299.7 million~~ outstanding ~~net of unamortized discount,~~ under our commercial paper ~~program, of which a majority will mature during the second quarter of fiscal 2021. As such, our~~program. Our total contractual borrowing capacity for general corporate purposes was $2.8 billion as of the end of our first quarter of fiscal ~~2021 was $2.7 billion when combining the unused commercial paper program and credit facilities, less outstanding borrowing.~~2022.

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 ~~¥10~~¥5 billion, or ~~$96.5~~$43.4 million, credit facility is currently set to mature on ~~March 26, 2021.~~December 31, 2022. Borrowings under ~~the~~such 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 ~~0.300%~~0.400%.

As of ~~December 27, 2020,~~January 2, 2022, we had ~~$192.9 million of~~no borrowings outstanding under these Japanese yen-denominated credit facilities.

See Note 7, Debt, to the 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 ~~Senior Notes~~long-term notes were issued. As of ~~December 27, 2020,~~January 2, 2022, 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 investing in new ways to serve our customers and supporting our store partners, repaying maturing debts, as well as returning cash to shareholders through common stock cash dividend payments and discretionary share repurchases and investing in new business opportunities related to our core and developing businesses. ~~Further,~~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 at Scale” agenda. 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.

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 the foreseeable future. Significant new joint ventures, acquisitions and/or other new business opportunities may require additional outside funding. 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. In this regard, we may incur additional debt, within targeted levels, as part of our plans to fund our capital programs, including cash returns to shareholders through future dividends and discretionary share repurchases. ~~To further strengthen our liquidity in the near term, we currently expect the suspension of share repurchases to continue into late fiscal 2021.~~ If necessary, we may pursue additional sources of financing, including both short-term and long-term borrowings and debt issuances.

We regularly review our cash positions and our determination of 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

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foreign withholding taxes and U.S. state income taxes, which could be material. We do not anticipate the need for repatriated funds to the U.S. to satisfy domestic liquidity needs.

~~In November 2020,~~During the first quarter of fiscal 2022, our Board of Directors approved a quarterly cash dividend to shareholders of ~~$0.45~~$0.49 per share to be paid on ~~March 5, 2021~~ February 25, 2022 to shareholders of record as of the close of business on February ~~18, 2021. As~~11, 2022.

During the first quarter of ~~the date of this report,~~fiscal 2022, we ~~do not expect to reduce our quarterly dividend as a result of the COVID-19 pandemic.~~

~~On April 8, 2020, we announced a temporary suspension of~~resumed our share repurchase ~~program. Repurchases pursuant to this~~ program ~~were last made~~which was temporarily suspended in ~~mid-March~~March 2020. During the quarter ended January 2, 2022, we repurchased 31.1 million shares of common stock for $3.5 billion. As of ~~December 27, 2020, 48.9~~January 2, 2022, 17.8 million shares remained available for repurchase under current authorizations. The existing share repurchase program remains authorized by the Board of Directors, however, we have temporarily suspended our share repurchase program until we restore certain financial leverage targets, which we currently expect to occur in late fiscal 2021.

Other than normal operating expenses, cash requirements for the remainder of fiscal ~~2021~~2022 are expected to consist primarily of capital expenditures for investments in our new and existing stores and our supply chain and corporate facilities. Total capital expenditures for fiscal ~~2021~~2022 are expected to be approximately ~~$1.9~~$2.0 billion.

~~Cash Flows~~

Cash provided by operating activities was $1.8 billion for the first quarter of fiscal 2021, compared to $1.8 billion for the same period in fiscal 2020. Although our net earnings were negatively impacted by the COVID-19 pandemic, our cash flows from operations were flat when compared to the same period in fiscal 2020. This is largely attributable to the non-cash loss on retirement and impairment of assets and improvements to our working capital.

Cash used in investing activities for the first quarter of fiscal 2021 totaled $0.3 billion, compared to cash used in investing activities of $0.4 billion for the same period in fiscal 2020. The change was primarily due to lower existing and new store investments, partially offset by higher maturities and calls of investments.

Cash used in financing activities for the first quarter of fiscal 2021 totaled $1.0 billion compared to cash used in financing activities of $1.1 billion for the same period in fiscal 2020. The change was primarily due to temporary suspension of our share repurchase program, partially offset by increased debt repayments and lower net proceeds from new debt issuances.

~~Contractual Obligations~~

In ~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations included in the 10-K, we disclosed that we had ~~$35.4~~$33.7 billion ~~in total contractual obligations~~of current and long-term material cash requirements as of ~~September 27, 2020.~~October 3, 2021. There have been no

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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.

Cash Flows

~~Off-Balance Sheet Arrangements~~Cash provided by operating activities was $1.9 billion for the first quarter of fiscal 2022, compared to $1.8 billion for the same period in fiscal 2021. The increase was primarily due to higher net earnings, partially offset by lower losses on retirement and impairment of assets and increases in net cash used by changes in operating assets and liabilities.

~~There has been no material~~Cash used in investing activities for the first quarter of fiscal 2022 totaled $401 million, compared to cash used in investing activities of $273 million for the same period in fiscal 2021. The change was primarily due to a increase in spend on capital expenditures.

Cash used in financing activities for the first quarter of fiscal 2022 totaled $4.0 billion compared to cash used by financing activities of $1.0 billion for the same period in fiscal 2021. The increase was primarily due to resuming our ~~off-balance sheet arrangements discussed in Management’s Discussion and Analysis~~share repurchase program, partially offset by lower repayments of ~~Financial Condition and Results of Operations included in the 10-K.~~long-term debt.

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 ~~outbreak~~pandemic may have an impact on consumer behaviors and customer traffic that result in changes in the seasonal fluctuations of our business. Additionally, as 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 our stored value cards are recognized upon redemption and not when cash is loaded, 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.

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RECENT ACCOUNTING PRONOUNCEMENTS

See Note 1, Summary of Significant Accounting Policies, 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

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.

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 ~~2021,~~2022, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, of the effectiveness of the design and operation of 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 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 27, 2020)~~(January 2, 2022).

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during our most recently completed fiscal quarter that materially affected or are reasonably likely to materially affect internal control over financial reporting.

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The certifications required by Section 302 of the Sarbanes-Oxley Act of 2002 are filed as exhibits 31.1 and 31.2 to this 10-Q.

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PART II — OTHER INFORMATION

Item 1.Legal Proceedings

See Note 13, Commitments and Contingencies, to the consolidated financial statements included in Item 1 of Part I of this 10-Q for information regarding certain legal proceedings in which we are involved.

Item 1A.Risk Factors

~~There~~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 2021 Form 10-K, which could materially adversely affect our business, financial condition, or future results. The information presented below updates, and should be read in conjunction with, the risk factors disclosed in our 2021 Form 10-K. Otherwise, except as presented below, there have been no material changes to the risk factors ~~previously~~ disclosed in our 2021 Form 10-K.

Changes in the ~~10-K.~~availability of and the cost of labor could adversely affect our business.

Our business could be adversely impacted by increases in labor costs, including wages and benefits, which, in a retail business such as ours, are two of our most significant costs, both domestically and internationally, including those increases triggered by regulatory actions regarding wages, scheduling and benefits; increased health care and workers’ compensation insurance costs; increased wages and costs of other benefits necessary to attract and retain high quality employees with the right skill sets and increased wages, benefits and costs related to the COVID-19 pandemic and inflationary and other pressure on wages now being experienced. The growth of our business can make it increasingly difficult to locate and hire sufficient numbers of employees, to maintain an effective system of internal controls for a globally dispersed enterprise and to train employees worldwide to deliver a consistently high-quality product and customer experience, which could materially harm our business and results of operations. Furthermore, we have experienced, and could continue to experience, a shortage of labor for store positions, including due to concerns around and illnesses arising from COVID-19 and its various novel variants and other factors, which could decrease the pool of available qualified talent for key functions and require stores to operate on reduced hours. Such labor shortages could be further exacerbated by expanded federal, state and local COVID-19 vaccination requirements. In addition, our wages and benefits programs may be insufficient to attract and retain the best talent especially in a rising wage market. Furthermore, while the number of partners represented by unions is not significant, if a significant portion of our employees were to become unionized, our labor costs could increase and our business could be negatively affected by other requirements and expectations that could increase our costs, change our employee culture, decrease our flexibility and disrupt our business. In December 2021, Starbucks partners at two stores in New York voted in favor of union representation and soon after stores in multiple jurisdictions across the United States have filed for unionization with the National Labor Relation Board with more that may follow. Further, our responses to any union organizing efforts could negatively impact how our brand is perceived and have adverse effects on our business, including on our financial results.

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

Information regarding repurchases of our common stock during the quarter ended January 2, 2022:


	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 4, 2021 - October 31, 2021	—	$	—	—	48,904,441
November 1, 2021 - November 28, 2021	14,500,000	112.43		14,500,000	34,404,441
November 29, 2021 - January 2, 2022	16,625,000	113.72		16,625,000	17,779,441
Total	31,125,000	$	113.12	31,125,000

(1)Monthly information is presented by reference to our fiscal months during the first quarter of fiscal 2022.

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

(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. ~~On April 8, 2020, we announced a temporary suspension of our share repurchase program. During the first fiscal quarter ended December 27, 2020, there was no share repurchase activity.~~

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Item 3.Defaults upon Senior Securities

None.

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information

None.

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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 0-20322 04/28/2015 3.1
3.2
Amended and Restated Bylaws of Starbucks Corporation (As amended and restated through June 1, 2018)
8-K 0-20322 06/05/2018 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 December 27, 2020, 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


		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
10.1	Starbucks Corporation Executive Management Bonus Plan as amended and restated on January 12, 2022	8-K	000-20322	01/14/2022	10.1
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 2, 2022, 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.

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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 26, 2021~~February 1, 2022


			STARBUCKS CORPORATION

			By:						/s/ ~~Patrick J. Grismer~~Rachel Ruggeri
									~~Patrick J. Grismer~~Rachel Ruggeri
									executive vice president, chief financial officer
									Signing on behalf of the registrant and as principal financial officer

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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	8
	Notes to Consolidated Financial Statements	9
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2627
Item 3	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4	Controls and Procedures	36

PART II. OTHER INFORMATION

Item 1	Legal Proceedings	3738
Item 1A	Risk Factors	3738
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	3738
Item 3	Defaults Upon Senior Securities	39
Item 4	Mine Safety Disclosures	39
Item 5	Other Information	39
Item 6	Exhibits	3840
Signatures		3941


	Dec 27, 2020		Sep 27, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	5,028.1	$	4,350.9
Short-term investments	235.5		281.2
Accounts receivable, net	888.0		883.4
Inventories	1,471.5		1,551.4
Prepaid expenses and other current assets	734.4		739.5
Total current assets	8,357.5		7,806.4
Long-term investments	190.9		206.1
Equity investments	496.0		478.7
Property, plant and equipment, net	6,177.9		6,241.4
Operating lease, right-of-use asset	8,199.4		8,134.1
Deferred income taxes, net	1,792.4		1,789.9
Other long-term assets	541.1		568.6
Other intangible assets	506.4		552.1
Goodwill	3,706.8		3,597.2
TOTAL ASSETS	$	29,968.4	$	29,374.5
LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
Current liabilities:
Accounts payable	$	1,050.6	$	997.9
Accrued liabilities	1,616.9		1,160.7
Accrued payroll and benefits	685.3		696.0
Income taxes payable	149.7		98.2
Current portion of operating lease liability	1,267.6		1,248.8
Stored value card liability and current portion of deferred revenue	1,871.2		1,456.5
Short-term debt	492.6		438.8
Current portion of long-term debt	750.0		1,249.9
Total current liabilities	7,883.9		7,346.8
Long-term debt	14,673.5		14,659.6
Operating lease liability	7,754.5		7,661.7
Deferred revenue	6,597.7		6,598.5
Other long-term liabilities	962.8		907.3
Total liabilities	37,872.4		37,173.9
Shareholders' deficit:
Common stock ($0.001 par value) — authorized, 2,400.0 shares; issued and outstanding, 1,177.2 and 1,173.3 shares, respectively	1.2		1.2
Additional paid-in capital	488.6		373.9
Retained deficit	(8,253.6)		(7,815.6)
Accumulated other comprehensive loss	(145.9)		(364.6)
Total shareholders’ deficit	(7,909.7)		(7,805.1)
Noncontrolling interests	5.7		5.7
Total deficit	(7,904.0)		(7,799.4)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)	$	29,968.4	$	29,374.5


			Fair Value Measurements at Reporting Date Using
	Balance at December 27, 2020		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	$	5,028.1	$	5,028.1	$	0	$	0
Short-term investments:
Available-for-sale debt securities

Certificates of deposit	1.6		0		1.6		0
Commercial paper	71.8		0		71.8		0
Corporate debt securities	78.5		0		78.5		0

Mortgage and other asset-backed securities	16.7		0		16.7		0
State and local government obligations	1.0		0		1.0		0

Total available-for-sale debt securities	169.6		0		169.6		0
Marketable equity securities	65.9		65.9		0		0
Total short-term investments	235.5		65.9		169.6		0
Prepaid expenses and other current assets:
Derivative assets	24.7		14.6		10.1		0
Long-term investments:
Available-for-sale debt securities

Auction rate securities	5.7		0		0		5.7

Corporate debt securities	82.6		0		82.6		0

Mortgage and other asset-backed securities	9.8		0		9.8		0
State and local government obligations	2.6		0		2.6		0
U.S. government treasury securities	90.2		90.2		0		0
Total long-term investments	190.9		90.2		95.0		5.7
Other long-term assets:
Derivative assets	53.5		0		53.5		0
Total assets	$	5,532.7	$	5,198.8	$	328.2	$	5.7
Liabilities:
Accrued liabilities:
Derivative liabilities	$	13.2	$	0.8	$	12.4	$	0
Other long-term liabilities:
Derivative liabilities	67.4		0		67.4		0
Total liabilities	$	80.6	$	0.8	$	79.8	$	0


	Americas		International		Channel Development		Corporate and Other		Total
Goodwill balance at September 27, 2020	$	496.5	$	3,065.0	$	34.7	$	1.0	$	3,597.2


Other(1)	1.0		108.6		0		0		109.6
Goodwill balance at December 27, 2020	$	497.5	$	3,173.6	$	34.7	$	1.0	$	3,706.8


Fiscal Year	Total

2021	$	750.0
2022	1,000.0
2023	1,000.0
2024	1,570.1
2025	1,250.0
Thereafter	9,950.0
Total	$	15,520.1


	Stock Options		RSUs
Options outstanding/Nonvested RSUs, September 27, 2020	9.2		8.3
Granted	0		3.8
Options exercised/RSUs vested	(1.8)		(2.9)
Forfeited/expired	(0.1)		(0.4)
Options outstanding/Nonvested RSUs, December 27, 2020	7.3		8.8
Total unrecognized stock-based compensation expense, net of estimated forfeitures, as of December 27, 2020	$	0.4	$	309.7


	Quarter Ended Dec 27, 2020
	Change in Comparable Store Sales	Change in Transactions	Change in Ticket
Consolidated	(5)%	(19)%	17%
Americas	(6)%	(21)%	20%
International	(3)%	(10)%	8%