Starbucks Fiscal 2023 Annual Report © 2024 STARBUCKS CORPORATION UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-K È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended October 1, 2023 or For the transition period from to . Commission File Number: 000-20322 Starbucks Corporation (Exact Name of Registrant as Specified in its Charter) Washington (State of Incorporation) 91-1325671 (IRS Employer ID) 2401 Utah Avenue South, Seattle, Washington 98134 (206) 447-1575 (Address of principal executive office, zip code, telephone number) Securities Registered Pursuant to Section 12(b) of the Act: Trading Symbol Name of Each Exchange on Which Registered Title of Each Class Common Stock, $0.001 par value per share SBUX Securities Registered Pursuant to Section 12(g) of the Act: None Nasdaq Global Select Market Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes È No ‘ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No È Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes È 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 È No ‘ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 È Non-accelerated filer ‘ ‘ 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. È If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ‘ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ‘ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No È The aggregate market value of the voting stock held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter, based upon the closing sale price of the registrant’s common stock on April 2, 2023 as reported on the Nasdaq Global Select Market was $117.1 billion. As of November 10, 2023, there were 1,136.7 million shares of the registrant’s Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the definitive Proxy Statement for the registrant’s Annual Meeting of Shareholders to be held on March 13, 2024 have been incorporated by reference into Part III of this Annual Report on Form 10-K. STARBUCKS CORPORATION Form 10-K For the Fiscal Year Ended October 1, 2023 TABLE OF CONTENTS PART I Business Risk Factors Unresolved Staffff Comments Cybersecurity Properties Legal Proceedings Mine Safety Disclosures PART II Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Reserved Management’s Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Suppl u Index for Notes to Consolidated Financial Statements Report of Independent Registered Publu ic Accounting Firm Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedurd es Other Information Disclosure Regarding Foreign Jurisdictions that Prevent Inspections ementary Data PART III Directors, Executive Offiff cers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters Certain Relationships and Related Transactions and Director Independence Principal Accountant Fees and Services Item 1 Item 1A Item 1B Item 1C Item 2 Item 3 Item 4 Item 5 Item 6 Item 7 Item 7A Item 8 Item 9 Item 9A Item 9B Item 9C Item 10 Item 11 Item 12 Item 13 Item 14 Item 15 Item 16 Exhibits and Financial Statement Schedules rr Form 10-K Summary SIGNATURES PART IV 3 11 23 23 23 24 24 25 27 28 41 42 47 81 83 83 85 85 86 86 86 86 86 87 3 9 94 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS e e ctations, estimates, forecaststt and projections about our business, our resultstt of t on Form 10-K includes “forff ward-ldd ooking” statements within the meaning of the Private Securities ding future events and the future resultstt of Starbucks Corporation (together with itstt This Annual Repor Litigation Refoe rm Act of 1995 regar subsidiaries)s that are based on our current expex operations, the industryr in which we operate, our economic and marketkk outlook,kk and the beliefse and assumptions of our management. Forward-looking statements can be idendd tifiei d by the fact that they do not relate stritt ctly to histii orical or current facts.tt They ofteff n include wordsdd such as “believes,” “expee wordsdd of similar meaning, or future or conditional verbs, such as “will,”l “should,”l “projeo cts.tt ” By their nature, forward-looking statements involve riskii contrott or projections. Our forward-looking statements, and the riskii those described under the “Risk Factors”rr Operations” sections and in othett ects,” “anticipates,” “estimates,” “intends,” “plans,” “seeks” or “may,”yy “aims,” “intends,” or “could,”l r factorsrr (many beyoe nd our s,kk uncertainties, and othett ctations skk and uncertainties related thereto, include, but are not limited to, is of Financial Condition and Resultstt of to diffi erff materially from our histii orical experience or from our current expex ts we file with the U.S. Securities and Exchange Commissi and “ManMM agement's Discii ussion and Analysll l) that couldl cause our actual resultstt on (“SEC”),” as well as: e r repor ii i ff i i r e u u suppl r taxesaa ics costs;tt ziii ng effoff rtstt r iers, whethett r innovations; impacm ts of par , dairy,yy energyr iers and third-pa- turers and source suppl ificant increases in logistii , political instability,tt highe ability of our business partners,rr execution and effeff ctstt offf our existii lower quality,yy or unavailability of coffo eeff coststt associated with, and the successfulff ing and any future business opportunities, unemploymo r interest rates, highe ,yy water, raw materials,ll or product ingredients;tt rtytt providerdd srr to fulfill their responsibilities and commitments; tegie es, investments and plans, including our Reinvention Plan; terms and conditions upon which we engage with our manufacff skk of operating a global business including geopolitical instability; tner investments and changes in the availability and cost of labor including any union organi its, burdensome government debt,t austerity tion, or deflae ent, weak credit or capia tal marketkk s,tt budget defice r inflan lure to attract or retain key executive or partner talent or successfulff potential negat • our ability to preserve, grow and leverage our brands; acceptance of the company’s products and changes in consumer preferff ences, consumptm ion, or spending behavior and our • thett ability to anticipate or react to them; shifts in demographic or health and wellness trends; or unfavff orable consumer reaction to new products, platfot rms, refoe rmulations, or othett • our anticipated operating expenses, including our anticipated total capia tal expenditures; • thett expansions, initiatives, strat • thett and our responses to such effoff rts;tt • thett • highegg r costs,tt • thett impacm t of signi • a worsening in thett resulting from broader local or global conditions, or dynamics specific to our relationshipsi with such parties; • unfavff orable global or regie onal economic conditions and related economic slowdowns or recessions, low consumer confidff endd ce, highi measures, highe • inherent riskii • faiff • thett or mislii abeling; • negative publicity related to our company,yy products, brands, marketkk ing, executive leadership, partners,rr board of directors,rr founder, operations, business perforff mance, or prospes • potential negat direct and indirect business partners,rr laws; • our environmental, social and governance (“ES“ G”)” effoff rtstt and any reaction related thereto such as the riseii ESG and inclusion and diversirr ty effoff rts;tt • risks associated with acquisiii termination diffici impacm t of foff • thett • thett impacm t of substantial competition from new entrants,tt as pricing actions (including price reductions, promotions, discii ounting, couponing, or free goods),s marketkk ing, categor yr expansion, product introductions, or entryr or expansion in our geographic marketkk s;tt • thett and the Inflan • thett negat e restritt ctions on business operations or social distii ancing requirements,tt and the duration and efficff acyc of such restrit ctions; • faiff • thett lure to comply with anti-corruptu ion laws, trade sanctions and restritt ctions or similar laws or regul impacm t of signi ly transition executives; involving food or beverage-borne illnesses, tampering, adulteration, contamination ulties or coststt or impaim rment in recordeddd reigngg currencyc translation, particularly a strot nger U.S. dollar; ive effeff ctstt of a material breach, failure, or corruptu ion of our infon rmation technology systyy ems or those of our impacm t of health epidemdd ive economic impacm ts and related regul atl oryr measures or voluntaryr actions that maya be put in place, including r public health events on our business and financial results, and the riskii impacm t of changes in U.S. taxaa law and related guidance and regul rtytt providerdd s,rr or failure to comply with personal data protection dispii utes and proceedings, or government investigations. ions that maya be implm emented, including on taxaa rates ics, pandemics or othett e consolidatdd ions by competitors, and othett tions, dispii ositions, business partnershrr ips, or investments – such as acquisiii r competitive activities, such tion Reduction Act of 2022; ive effeff ctstt of incidentstt tion integre ation, in opposition to iers or third-pa- ificant legal ions; and value; u suppl tion; cts;tt atl atl of e e e e e In addition, many of the foregoi business and economic environment. A forward-looking statement is neither a prediction nor a guarantee of fuff skk and uncertainties are, or couldl be, exacerbated by any worsening of the global ng riskii ture events or e 1 circumstances, and those future events or circumstances maya not occur. You shouldl not place undue reliance on the forward- looking statements, which speak onlyll as of the date of this repor t. We are under no obligation to update or alter any forward- looking statements, whethett r as a result of new infon rmation, future events or othett rwise. e 2 Item 1. Business General PART I In this Annual Report on Form 10-K (“10-K” or “Report”) for the fiscal year ended October 1, 2023 (“fiscal 2023”), Starbur Corporation (together with its subsu idiaries) is referred to as “Starbucks,” the “Company,” “we,” “us” or “our.” cks ks is the premier roaster, marketer and retailer of specialty coffee in the world, operating in 86 markets. Formed in 1985, ks Corporation’s common stock trades on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “SBUX.” We r Starbuc Starbuc r purchase and roast high-quality coffees that we sell, along with handcrafted coffee, tea and other beverages and a variety of high-quality food items through company-operated stores. We also sell a variety of coffee and tea products and license our trademarks through other channels, such as licensed stores as well as groceryrr and foodservice through our Global Coffee Alliance with Nestlé S.A. (“Nestlé”). In addition to our flagship Starbuc following brands: Teavana®, Ethos®, Starbuc ks Coffee® brand, we sell goods and services under the r ks Reserve® and Princi®. r r ks standing as one of the most recognized and respected brands in the world. We Our primary objective is to maintain Starbuc believe the continuous investments in our brand and operations will deliver long-term targeted revenue and income growth. This includes expansion of our global store base, adding stores in both existing, developed markets such as the U.S. and in higher growth markets such as China, as well as optimizing the mix of company-operated and licensed stores around the world. In addition, by leveraging experiences gained through our stores and elsewhere, we continue to drive beverage, equipment, r consumers process and technology innovation, including in our industry-rr new, innovative coffee and other products in a variety of forms, across new categories, diverse channels and alternative store formats. leading digital platform. We strive to regularly offeff ks has always been a different kind of company – one deep with purpos r Starbuc impact in the world. With coffee at our core, we pursue ambitious goals for our partners (employees), our communities and our planet, which we believe also contributes to the long-term sustainabia lity of our business to create a thriving business powered by thriving people for a thriving planet and communities. Our work to upliftff one another extends well beyond our partners to the communities where we do business around the world. We are committed to responsible and ethical sourcing led by Coffeeff and Farmer Equity Practices (C.A.F.E. Practices), the Company’s third-party verification program and the cornerstone of our approach to ethical sourcing of coffee with over 98% of our coffeeff as ethically sourced. having been historically verified through C.A.F.E. Practices e, where we work together to create a positive r Human Capital Management We invest in the well-being – the mental, physical and financial health – of everyrr partner through our practices, policies and benefits. This work is grounded in the belief that we are at our best when we create inclusive, suppor environments, where we upliftff one another with dignity, respect and kindness. And we are hard at work upliftinff communities and building environments in our stores that are welcoming and safe. We believe the strength of our workforce is one of the significant contributors to our success as a global brand that leads with purpos e. Thereforff e, one of our core strategies is to invest in and suppor market, including the following areas of focus: t our partners to differentiate our brand, products and services in the competitive specialty coffee tive and welcoming g our u u r Oversirr ght i and Management We recognize the diversity of customers, partners and communities and believe in creating an inclusive and equitabla e environment that represents a broad spectrum of backgrounds and cultures. Working under these principles, our Partner Resources Organization is tasked with managing employment-related matters, including recruirr training, compensation planning, performance management and profesff “Board”) and Board committees provide oversight on certain human capital matters, including our Inclusion and Diversity programs and initiatives. As noted in its charter, our Compensation and Management Development Committee is responsible for periodically reviewing Starbuc as our management development and succession planning practices and strategies. Our Audit and Compliance Committee ks cfoff and general counsel, to monitor and mitigate current works closely with the Risk Management Committee, led by Starbuc and emerging labor and human capia tal management risks. Furthermore, our Nominating and Corporate Governance Committee, in consultation with management, annually evaluates the effeff ctiveness of our social responsibility policies, goals and programs, which also include partner-related issues. These reports and recommendations to the Board and its committees are part of the broader framework that guides how Starbuc and strategies. ks partner resource programs and initiatives, including healthcare and other benefits, as well ks should attract, retain and develop a skilled workforce that aligns with our values sional development. Our Board of Directors (the ting and hiring, onboarding and a r r r We regularly conduct anonymous surveys to seek feedbad ck from our partners on a variety of topics, including confidff ence in company leadership, competitiveness of our compensation and benefits package, career growth opportunities and 3 recommendations on how we can remain an employer of choice. The results are shared with our partners and reviewed by senior leadership, who analyze areas of progress or deterioration and prioritize actions and activities in response to this feedbad ck to drive meaningfulff closely to evaluate human capia tal management issues such as partner retention, workplkk ace safety, harassment and bullying, as well as to implement measures to mitigate these risks. improvements in partner engagement. Our management and cross-functional teams also work Diversity,yy Equity and Inclusion tive and inclusive environment. We are committed to advancing inclusion We are committed to creating a welcoming, suppor and racial and social equity, and we seek to further that work with intention, transparency and accountability. We continue to welcome our partners, customers, civil rights and community leaders, along with our senior vice president, talent and inclusion, to advise us along this journey. u ks has made specificff r Starbuc levels: equity commitments based on our principles of being intentional, transparent and accountable at all • Being intentional in cultivating a culture of inclusion, with a focus on partner retention and development. ◦ Expanding our mentorship program designed to prioritize our partners’ sense of belonging by creating an u inclusive and suppor r guidance, encouragement and a safe space for partners to share their experiences, challenges and aspirations. As of 2023, the program has welcomed nearly 1,400 partners and was expanded to include U.S. based store and district managers in 2023. tive environment. Mentors offeff • Being transparent in our approach to Inclusion and Diversity goal setting and progress. ◦ Publu icly sharing workforce diversity data. ◦ Setting aspirational Inclusion and Diversity goals based on retention rates and progress towards achieving racial and ethnic diversity. Our goal is to achieve racial and ethnic diversity of at least 30% of all corporate roles and at least 40% of all retail and manufact ting parameters and through inclusive and legally compliant employment practices. ing roles in the U.S. by 2025, by setting broad recruir urt ff • HolHH dil ng ourserr lves accountable at the highe i st levelsll of the organi r zaii tion. ◦ Incorporating our effoff rts to build and retain inclusive and diverse teams into our executive compensation programs. ◦ Joining the Board Diversity Action Alliance to act alongside other companies similarly committed to increasing diverse representation on corporate boards. ◦ Publu icizing self-iff dentifieff d race/ethnicity/gender of each member of our Board. Total Rewardsdd We have demonstrated a historyrr of investing in our workforce by offeff assessing the current business environment and labor attract talent to suppor t our growth strategy and to elevate the customer experience. To foster a stronger sense of ownership and align the interests of partners with shareholders, restricted stock units are provided to eligible non-executive partners under our broad-based stock incentive programs. Furthermore, we offeff eligible partners. In the U.S., our largest and most mature market, these include: market. We have consistently made enhancements in wages in order to r comprehensive, locally relevant and innovative benefits to all ring competitive salaries and wages by continuously u a • Comprehensive health insurance coverage is offeff red to partners working an average of 20 hours or more each week. • 100% upfroff nt tuition coverage through the Starbur cks College Achievement Plan for partners to earn a first-time bachelor's degree online at Arizona State University is offeff each week. red to partners working an average of 20 hours or more • Our Future Roast 401(k) savings plan helps partners save for their financial goal through convenient payroll deductions. Partners can contribute pre-tax or Roth afteff contributions with immediate vesting in those matching contributions. r-tax dollars, and Starbuc r ks matches 5% of eligible • 100% paid parental leave is availabla e to new parents that welcome a child through birth, adoption or foster placement and work an average of 20 hours or more each week. • A Partner and Family Sick Time program is provided and allows partners to accruerr paid sick time based on hours worked and use that time for themselves or family members in need of care. 4 • We view mental health as a fundamental part of our humanity and provide a comprehensive suite of related programs and benefits. These include a free subsu cription to Headspace, an online application that enables guided meditation, and 20 free mental health therapy or coaching sessions annually with Lyra. Outside of the U.S., we have provided other innovative benefits to help address market-specific needs, such as providing interest-free loans to our U.K. partners to help cover rental deposits, mental health services in Canada, and in China, an extra 14th Month Pay initiative, giving retail partners an additional month’s salary as a bonus on top of the 13th month pay that is customaryrr comprehensive health insurance coverage for parents of partners. in China, as well as a monthly housing subsu idy for full-time Starbuc ks baristas and shiftff supeu rvisors, and r Role-based Support To help our partners succeed in their roles, we emphasize continuous training and development opportunities. These include, but are not limited to, safety and security protocols, updates on new products and service offeff technologies. Training provided through our Pour Over sessions, which are a series of inspiring talks with thought leaders to help partners understand how to bring the Starbucks Expex setting, giving and receiving construcrr promote an inclusive culturt e and to better serve our customers, we encourage U.S.-based partners to enroll in the To Be Welcoming courses we created in partnership with Arizona State University to address different forms of bias and discrimination. rience to life, include a wide variety of topics such as achievabla e goal tive feedbad ck, and effeff ctive engagement with customers and communities. To help further rings and deployment of Paya Equity To be an employer of choice and maintain the strength of our workforce, we consistently assess the current business environment and labor market to refine our compensation and benefits programs and other resources availabla e to our partners. a We previously achieved and currently maintain 100 percent pay equity in the U.S. for women and men and people of all races for partners performing similar work. We have made a commitment to achieve gender pay equity in all company-operated markets. Further, we have formulated pay-equity principles which provide equal footing, transparency and accountability as best practices that help address known, systemic barriers to global pay equity. r ks employed approximately 381,000 people worldwide. In the U.S., Starbuc As of October 1, 2023, Starbuc approximately 228,000 people, with approximately 219,000 in company-operated stores and the remainder in corporate suppor store development, roasting, manufact ing, warehousing and distribution operations. Approximately 153,000 employees were employed outside of the U.S., with approximately 148,000 in company-operated stores and the remainder in regional suppor t operations. Approximately 3.6% of Starbuc our effoff satisfaction during fiscal 2023. rts in managing our workforce have been effeff ctive, evidenced by improved retention, lower turnover, and employee ks partners in U.S. company-operated stores are represented by unions. We believe ks employed urt u u r ff r t, Information about our Executive Offiff cers Name Laxman Narasimhan Michael Conway Sara Kelly Brad Lerman Rachel Ruggeri Age 56 57 44 67 54 chief executive offiff cer Position group president, International and Channel Development executive vice president and chief partner offiff cer executive vice president and general counsel executive vice president and chief financial offiff cer r r an joined Starbuc ks director since March 2023. Prior to joining Starbuc ks as its chief executive offiff cer-elect in 2022 and has served as chief executive offiff cer and ks, Mr. Narasimhan served as Chief Executive Offiff cer an Narasimhii Laxmaa has been a Starbuc of Reckitt Benckiser Group Plc (“Reckitt”), a FTSE 12 listed British multinational consumer health, hygiene, and nutrition company, from 2019 to 2022. Prior to joining Reckitt, Mr. Narasimhan held various executive roles at PepsiCo from 2012 to 2019 including as PepsiCo’s Group Chief Commercial Offiff cer and as Chief Executive Offiff cer - Latin America, Europe, and Sub-u Saharan Afriff ca, Chief Executive Offiff cer - Latin America, and Chief Financial Offiff cer of PepsiCo Americas Foods. Prior to joining PepsiCo, Mr. Narasimhan spent 19 years at McKinsey & Company, where he focused on its consumer, retail, and technology practices in the U.S., Asia, and India. Mr. Narasimhan currently serves on the Board of Directors of Verizon Communications, Inc., a NYSE-listed telecommunications company. Mr. Narasimhan is a trusr and a member of the Council on Foreign Relations. tee of the Brookings Institutt ion r Michael Conway joined Starbuc where he is responsible for leading Starbuc Middle East and Afriff ca, Latin America and the Caribbean and growth for the Global Channel Development business, which consists of consumer packaged goods, ready-to-drink businesses and strategic partnerships, including those with Nestlé, ks in 2013 and was named group president, International and Channel Development in 2021, ks retail growth and operations in over 80 markets across Asia Pacific, Europe, r r 5 PepsiCo, and other key business partners. Prior to this, he served as executive vice president and president, International Licensed Markets, from 2020 to 2021. He also served as executive vice president and president of Starbuc to 2020, president of Starbuc president of Starbuc McCormick & Company, Incorporated, a NYSE-listed a spice and extract manufacff ks Global Channel Development from 2013 to 2016. He currently serves on the Board of Directors of ks Licensed Stores Operations for the United States and Latin America from 2016 to 2018, and turing company. ks Canada from 2018 r r r r ks in 2001 and was named executive vice president and chief partner offiff cer in 2022, where she is Sara Kelly joined Starbuc responsible for helping partners realize their career potential and building global partner capaa bia lity to enable growth and deliver on the Company’s strategic plan. Prior to her current role, Ms. Kelly was senior vice president, Talent & Partner Experience from 2021 to 2022, where she was responsible for advancing Starbuc ks talent and organizational leadership agenda and was focused on amplifyiff ng the strategic work being led by the talent acquisition, talent management, partner experience, learning and development, and organization and leadership effeff ctiveness teams. From 2014 to 2021, Ms. Kelly served as vice president, Partner Resources, suppor ting partners in our global markets. u r r irs organization. Prior to Starbuc ks in April 2023 as executive vice president and general counsel. In this role, he leads the Brad Lerman joined Starbuc Company’s Legal and Corporate Affaff counsel and corporate secretaryrr of Medtronic plc from 2014 to 2022; and prior to that he was an executive vice president, general counsel and corporate secretaryrr Lerman has also served as chief litigation counsel for Pfizff er and has worked in private practice as a partner at Winston & Strawn LLP in Chicago. He also served as an Assistant United States Attorney in the Northern District of Illinois. Mr. Lerman currently serves on the Board of Directors of McKesson Corporation, a NYSE-listed health care, pharmaceutical, and medical u suppl for the Federal National Mortgage Association (Fannie Mae) from 2012 to 2014. Mr. ks, Mr. Lerman served as senior vice president, general y company. r r ri joined Starbuc ks in 2001 as a member of the accounting team and was named executive vice president and Rachel Ruggeu chief financial offiff cer in 2021. In this leadership role, Rachel is responsible for the global finance function for Starbur includes developing and executing the financial strategies that enable the long-term growth of the Company. Prior to her promotion in 2021, she served as senior vice president of Americas with responsibility for the retail portfolff io across the segment, including company-operated and licensed stores from 2020 to 2021. From 2016 to 2020, she held various leadership roles in finance both internal and external to Starbuc ks in suppor 2020 and prior to that she was senior vice president of Finance at Starbuc u u 2016 to 2018. She also served as vice president of Finance from 2010 to 2016 suppor Analysis and the U.S. Retail business. t of the Americas and Global Retail from ting Corporate Financial Planning & ks, including Chief Financial Offiff cer of Continental Mills from 2018 to r r cks, which Segment Financial Information Segment information is prepared on the same basis that our management reviews financial information for operational decision- making purpos es. r We have three reportabla e operating segments: 1) North America, which is inclusive of the U.S. and Canada; 2) International, which is inclusive of China, Japaa n, Asia Pacific, Europe, Middle East and Afriff ca, Latin America and Caribbean; and 3) Channel Development. Non-reportabla e operating segments and unallocated corporate expenses are reported within Corporate and Other. Revenues from our reportabla e operating segments as a percentage of total net revenues for fiscal 2023 were as follows: North America (74%), International (21%) and Channel Development (5%). Our North America and International segments include both company-operated and licensed stores. Our North America segment is our most mature business and has achieved significant scale. Certain markets within our International operations are in various stages of development and may require more extensive suppor operating income, than our North America operations. t, relative to their current levels of revenue and u Our Channel Development segment includes roasted whole bean and ground coffees, Starbuc serve products, a variety of ready-to-drink beverages, such as Frappuccino® and Starbuc and other branded products sold worldwide outside of our company-operated and licensed stores. A large portion of our Channel Development business operates under a licensed model of the Global Coffee Alliance with Nestlé, while our global ready-to-drink businesses operate under collaborative relationships with PepsiCo, Inc., Tingyi-Ashi Beverages Holding Co., Ltd., Arla Foods amba, Nestlé and others. ks- and Teavana-branded single- r ks Doubleshot®, foodservice products r 6 Revenue Components We generate the majoa rity of our revenues through company-operated stores and licensed stores. Company-operated and Licensed Store Summary as of October 1, 2023: Company-operated stores Licensed stores Tota l As a % of Total North America Stores 60 % 40 % 100 % International 8,964 11,264 20,228 As a % of Total International Stores 44 % 56 % 100 % North America 10,628 7,182 7,810 1 Total 19,592 18,446 38,038 As a % of Total Stores 52 % 48 % 100 % The mix of company-operated versus licensed stores in a given market generally varies based on several factors, including our ability to access desirabla e local retail space, the complexity, profitaff bia lity and expected ultimate size of the market for Starbuc ks and our ability to leverage the suppor t infrastructurt e within a geographic region. u r Company-operated Stores Revenue from company-operated stores accounted for 82% of total net revenues during fiscal 2023. Our retail objective is to be the leading retailer and brand of coffee and tea in each of our target markets by selling the finest quality coffee, tea and related rience. The products, as well as complementaryrr Starbucks Expex rience is built upon supeu rior customer service, convenience and a seamless digital experience as well as safe, clean and well-maintained stores that reflect the personalities of the communities in which they operate, thereby building a high degree of customer loyalty. rings, and by providing each customer with a unique Starbucks Expex food offeff Our strategy for expanding our global retail business is to increase our categoryrr share in a disciplined manner, by selectively opening additional stores in new and existing markets, as well as increasing sales in existing stores, to suppor t our long-term strategic objective to maintain Starbuc ks standing as one of the most recognized and respected brands in the world. Store growth in specific existing markets will vary due to many factors, including expected financial returns, the maturity of the market, economic conditions, consumer behavior and the local business environment. u r Company-operated store data for the fiscal year-ended October 1, 2023: North America: U.S. Canada Siren Retail Total North America International: China Japaa n U.K. All Other Siren Retail Total International Total company-operated Stores Open as of Oct 2, 2022 9,265 946 5 10,216 6,019 1,630 318 65 5 8,037 18,253 Opened Closed Transfers Net 483 43 1 527 857 110 42 3 — 1,012 1,539 (103) (12) — (115) (72) (8) (5) (1) — (86) (201) — — — — — 1 — — — 1 1 380 31 1 412 785 103 37 2 — 927 1,339 Stores Open as of Oct 1, 2023 9,645 977 6 10,628 6,804 1,733 355 67 5 8,964 19,592 ks company-operated stores are typically located in high-traffiff c, high-visibility locations. Our ability to vary the size and Starbuc r format of our stores allows us to locate them in or near a variety of settings, including downtown and subur offiff ce buildings, university campuses and rural and off-hff particularly drive-thru formats that provide a higher degree of access and convenience, and alternative store formats, which are designed to provide a more streamlined customer experience in dense metropolitan areas. ighway locations. We are continuing the expansion of our stores, bar n retail centers, u In fiscal 2022, we announced our plan in the U.S. market to increase effiff ciency while elevating the partner and customer experience (the “Reinvention Plan”). We believe the company-operated market investments in partner wages and trainings have 7 rr e-built store concepts and innovations in technologies have increased retention and productivity while the acceleration of purpos provided additional convenience and connection with our customers. In our majoa r international markets, we also continue to invest in technology and establa ish partnerships with third parties with relevant expertise to increase digital adoption to provide convenience and elevate the customer experience. Additionally, as our business has evolved, we have built an omni-channel business to meet more occasions as we serve a more diverse customer base through growth in online, e-commerce, delivery,rr mobile ordering and the in-store experience. In China, we leverage platforms such as Starbuc seamless integration of physical and digital customer touchpoints. Orders may be placed in advance through the Starbur Mobile App or Starbuc retail format locations. These strategies align closely with rapia dly evolving customer preferff ences, including higher levels of mobile ordering, more contactless pick-upu experiences and reduced in-store congestion. Our investments in a digital third place offeff r members access to new benefits, a digital community and immersive coffee experiences, giving our customers new ways r to experience and connect with Starbuc technology will enhance the customer experience and position Starbuc ks DeliversTM and can be conveniently picked up by customers and delivery providers in these express ks. We believe our continued effoff rts to transforff m our store portfolff ks NowTM stores to enable a ks for long-term growth. io and elevate cks r r r Retail sales mix by product type for company-operated stores: Fiscal Year Ended Beverages Food Other(1) Total Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 74 % 22 % 4 % 100 % 74 % 22 % 4 % 100 % 74 % 21 % 5 % 100 % (1) “Other” primarily consists of sales of serveware, packaged and single-serve coffees and teas and ready-to-drink beverages, among other items. Stored Value Cardsdd and Loyao lty Program r ks Card, our branded stored value card program, is designed to provide customers with a convenient payment t gifting and increase the frequency of store visits by cardholders, in part through the related Starbuc The Starbuc r method, suppor u Rewards loyalty program where availabla e, as discussed below. Stored value cards are issued to customers when they initially load them with an account balance. They can be obtained in our company-operated and most licensed stores in North America, China, Japaa n and many of our other markets in our International segment. Stored value cards can also be obtained online, via ks® Mobile App and through other U.S. and international retailers. Customers may access their card balances by the Starbuc ks Mobile App in participating stores. In nearly all markets, including the U.S. utilizing their stored value card or the Starbuc and Canada, customers who register their Starbuc r Registered members can receive various benefits depending on factors such as the number of reward points (“Stars”) earned. In addition to using their Starbuc ks Rewards members can earn Stars by paying with cash, credit or debit cards, or selected mobile wallets at all company-operated stores and a majoa rity of licensed stores in North America. Using the Mobile Order and Pay functionality of the Starbuc participating locations in several markets. Refer to Note 1, Summaryrr of Significant Accounting Policies and Estimates, included in Item 8 of Part II of this 10-K, for further discussion of our stored value cards and loyalty program. ks Mobile App, customers can also place orders in advance for pick-upu at certain ks Cards are automatically enrolled in the Starbuc ks Rewards program. ks Cards, Starbuc ks® r r r r r r Licensed Stores Revenues from our licensed stores accounted for 13% of total net revenues in fiscal 2023. Licensed stores generally have a lower gross margin and a higher operating margin than company-operated stores. Under the licensed model, Starbur a margin on branded products and suppl responsible for operating costs and capital investments, which more than offsff et the lower revenues we receive under the licensed store model. cks receives ies sold to the licensed store operator along with a royalty on retail sales. Licensees are u In our licensed store operations, we seek to leverage the expertise of our local partners and share our operating and store development experience. Licensees provide improved, and at times the only, access to desirabla e retail space. Most licensees are prominent retailers with in-depth market knowledge and access. As part of these arrangements, we sell coffee, tea, food and related products to licensees for resale to customers and receive royalties and license fees from the licensees. We also sell certain equipment, such as coffee brewers and espresso machines, to our licensees for use in their operations. Licensee employees working in licensed retail locations are required to follow our detailed store operating procedurd es and attend training classes similar to those given to employees in company-operated stores. In a limited number of international markets, we also use traditional franchising and include these stores in the results of operations from our other licensed stores. 8 Licensed store data for the fiscal year-ended October 1, 2023: Stores Open as of Oct 2, 2022 Opened Closed Transfers Net Stores Open as of Oct 1, 2023 North America: U.S. Canada Total North America International: Korea Latin America U.K. Turkey Taiwan Indonesia Thailand Philippines All Other Total International Total licensed Other Revenues 6,608 471 7,079 1,750 1,549 838 604 544 523 446 418 3,707 10,379 17,458 206 17 223 153 108 77 81 30 58 29 29 469 1,034 1,257 (113) (7) (120) (33) (8) (4) (9) (11) — (1) — (82) (148) (268) — — — — — — — — — — — (1) (1) (1) 93 10 103 120 100 73 72 19 58 28 29 386 885 988 6,701 481 7,182 1,870 1,649 911 676 563 581 474 447 4,093 11,264 18,446 Other revenues primarily are recorded in our Channel Development segment and include sales of packaged coffee, tea and ready-to-drink beverages to customers outside of our company-operated and licensed stores, as well as royalties received from Nestlé under the Global Coffee Alliance and other collabor ative partnerships. a Product Supply ks is committed to selling the finest whole bean coffeeff s and coffee beverages. To help ensure compliance with our r Starbuc rigorous coffee standards, we generally control subsu tantially all coffee purchasing, roasting and packaging and the global distribution of coffee used in our operations. Nestlé controls distribution of Starbuc ks packaged coffee products outside of Starbuc ks stores through the Global Coffee Alliance, and in some cases, also roasts and packages these products. We purchase r green coffee beans from multiple coffee-producing regions around the world and custom roast them to our exacting standards forff our many blends and single-origin coffees. r ks tends to trade on a negotiated basis at a premium above the “C” coffeeff y and price can be affeff cted by multiple factors in the producing countries, including weather, water suppl The price of coffee is subju ect to significant volatility. Although most coffee trades in the commodity market, high-altitude arabica coffee of the quality sought by Starbuc r commodity price. Both the premium and the commodity price depend upon the suppl Suppl u availabia lity throughout the coffee production chain, natural disasters, crop disease and pests, general increase in farm inputs and costs of production, inventoryrr these factors. Price is also impacted by trading activities in the arabica coffee futures market, including hedge funds and commodity index funds. In addition, green coffee prices have been affeff cted in the past, and may be affeff cted in the future, by the actions of certain organizations and associations that have historically attempted to influence prices of green coffee through agreements establa ishing export quotas or by restricting coffee suppl y and demand at the time of purchase. y quality and levels and political and economic conditions. Climate change may further exacerbar te many of ies. u u u u We buy coffee using fixed-price and price-to-be-fixed purchase commitments, depending on market conditions, to secure an adequate suppl y of quality green coffee. We also utilize forward contracts, futures contracts and collars to hedge “C” price exposure under our price-to-be-fixed green coffee contracts and our long-term forecasted coffee demand where underlying fixed-price and price-to-be-fixed contracts are not yet availabla e. Total purchase commitments, together with existing inventory,rr are expected to provide an adequate suppl y of green coffee through fiscal 2024. u We depend upon our relationships with coffee producers, outside trading companies and exporters for our suppl coffee. We believe, based on relationships establa ished with our suppl commitments is remote. iers, the risk of non-deliveryrr on such purchase u u y of green 9 u ks operates ten farmer suppor To help ensure the future suppl Starbuc r this high-growth market. Farmer suppor farming communities to promote best practices in coffeeff agronomy suppor y of high-quality green coffeeff u t to address climate change and other impacts. u u and to reinforce our leadership role in the coffee industry,rr t centers, including our China Farmer Suppor t Center located in the Yunnan Province of t centers are staffeff d with agronomists and sustainabia lity experts who work with coffeeff u production designed to improve both coffee quality and yields and In addition to coffee, we also purchase significant amounts of dairy,rr dairy-rr free alternative products, such as oat milk and almond milk, to suppor believe, based on relationships establa ished with our dairyrr and plant-based dairy-rr sufficient fluid milk and plant-based dairy-rr free alternatives to suppor u u particularly fluid milk, and to a lesser degree, plant-based t the needs of our company-operated stores. We u free suppl t our stores generally is remote. iers, that the risk of non-delivery of Products other than whole bean coffees and coffee beverages sold in Starbuc drink beverages that are purchased from several specialty suppl such as pastries, breakfasff purchase a broad range of papea our retail stores as well as our manufacff to reduce landfillff waste. We believe, based on relationships establa ished with these suppl non-deliveryrr of sufficff ient amounts of these items generally is remote. t sandwiches and lunch items, are purchased from national, regional and local sources. We also and cutlery,rr t the needs of turing and distribution operations. We are also expanding our use of reusable packaging turers, that the risk of u ks stores include tea and a number of ready-to- r and plastic products, such as cupsu iers, usually under long-term suppl from several companies to suppor y contracts. Food products, iers and manufacff u u u r Competition Our primaryrr competitors for coffeeff beverage sales are specialty coffee retailers and shops. We believe that our customers choose among specialty coffee retailers and shops primarily on the basis of product quality, brand reputation, service and convenience, as well as price. We continue to experience direct competition from large competitors in the quick-service restaurant sector and the ready-to-drink coffee beverage market, in addition to both well-establa ished and start-up companies in many international markets. We also compete with restaurants and other specialty retailers for prime retail locations and qualified personnel to operate both new and existing stores. Our coffee and tea products sold through our Channel Development segment compete directly against specialty coffees and teas sold through groceryrr stores, warehouse clubs, specialty retailers, convenience stores and foodservice accounts and compete indirectly against all other coffees and teas on the market. Trademarks, Copyrights, Patents and Domain Names ks owns and has applied to register numerous trademarks and service marks in the U.S. and in other countries Starbuc r throughout the world. Some of our trademarks, including Starbuc r of material importance. The duration of trademark registrations varies from country to country. However, trademarks are generally valid and may be renewed indefinitely as long as they are in use and/or their registrations are properly maintained. ks logo, Starbuc ks, the Starbuc ks Reserve and Frappuccino are r r We own numerous copyrights for items such as product packaging, promotional materials, in-store graphics and training life of materials. We also hold patents on certain products, systems and designs which have an average remaining usefulff approximately five years. In addition, Starbuc “Starbucks.com,” “Starbucks.net” and “Starbucksreserve.com.” ks has registered and maintains numerous Internet domain names, including r Seasonality and Quarterly Results Our business is subju ect to moderate seasonal fluctuations, of which our second fiscal quarter typically experiences lower revenues and operating income. Additionally, as Starbuc season, we tend to have higher cash flows from operations during the first quarter of the fiscal year. However, since revenues from Starbuc 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. ks Cards are recognized upon redemption and not when cash is loaded onto the Card, the impact of seasonal ks Cards are issued to and loaded by customers during the holiday r r Government Regulation As a company with global operations, we are subju ect to the laws and regulations of the United States and the multiple foreign jurisdictions in which we operate as well as the rules, reporting obligations and interpretations of all such requirements and obligations by various governing bodies, which may differ among jurisdictions. In addition, changes to such laws, regulations, rules, reporting obligations and related compliance obligations could result in significant costs but are not expected to have a material effeff ct on our capia tal expenditures, results of operations and competitive position as compared to prior periods. 10 Available Information ks Annual Report on Form 10-K reports, along with all other reports and amendments filed with or furnished to the Starbuc r Securities and Exchange Commission (the “SEC”), are publicly availabla e free of charge on the Investor Relations section of our website at investor.starbucks.com as soon as reasonabla y practicabla e afteff r these materials are filed with or furnished to the SEC. In addition, the SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. We also use our website as a tool to disclose important information about the company and comply with our disclosure obligations under Regulation Fair Disclosure. Our corporate governance policies, code of ethics and Board committee charters and policies are also posted on the Investor Relations section of Starbuc ks website. The information on our website (or any webpages referenced in this Annual Report on Form 10-K) is not r part of this or any other report Starbuc ks files with, or furnishes to, the SEC. r Item 1A. Risk Factors You should carefully consider the risks described below in addition to the other information set forth in this Annual Report on Form 10-K, including the Management’s Discussion and Analysis of Financial Conditions and Results of Operations section, the Quantitative and Qualitative Disclosures About Market Risk section and the consolidated financial statements and related notes. If any of the risks and uncertainties described in the cautionary factors described below actually occur or continue to occur, our business, financial condition and results of operations and the trading price of our common stock could be materially and adversely affeff cted. The considerations and risks that follow are organized within relevant headings but may be relevant to other headings as well. Moreover, the risks below are not the only risks we face and additional risks not currently known to us or that we presently deem immaterial may emerge or become material at any time and may negatively impact our business, reputation, financial condition, results of operations or the trading price of our common stock. It is not possible for management to predict all such risks, nor can it assess the impact of all such risks on Starbuc combination of risks, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. ks business or the extent to which any risk, or r Risks Related to Brand Relevance and Brand Execution • Our success depeee ndsdd substantiatt impact on our finaii ncial results.tt lly on the value of our brands and failure to preserve theirii value couldll have a negat e ivtt e We believe we have built an excellent reputation globally for the quality of our products, for deliveryrr of a consistently positive consumer experience and for our global social and environmental impact programs. The Starbuc throughout most of the world, and we have received high ratings in global brand value studi particularly outside of the U.S. where the Starbuc r preserve, grow and leverage the value of our brands across all sales channels. Brand value is based in part on consumer perceptions on a variety of subju ective qualities. ks brand and our other brands are less well-known, we believe we must r es. To be successfulff ks brand is recognized in the future, t t in our brand value include actual t in our brand value can be caused by isolated or recurring incidents originating both from us or our business Erosion of trusr partners, or from external events. Such incidents can potentially trigger boycotts of our stores or result in civil or criminal liabia lity and can have a negative impact on our financial results. Incidents that can erode trusr or perceived breaches of privacy or violations of domestic or international privacy laws, contaminated food, product recalls, store employees or other food handlers infected with communicable diseases, safety-related incidents or other potential incidents discussed in this risk factors section. The impact of such incidents may be exacerbar ted if they receive considerable publicity, including rapia dly through social or digital media (including for malicious reasons) or result in litigation. Consumer demand for our products and our brand value could diminish significantly if we, our employees, licensees or other business partners fail to preserve the quality of our products, act or are perceived to act in an unethical, illegal, racially-biased, unequal, inequitabla e or socially irresponsible manner, including with respect to the sourcing, content or sale of our products, service and treatment of customers at Starbuc ient of customer data for general or direct marketing or other purpos progress toward our social and environmental program goals or in executing on our Reinvention Plan, consumer trusr t in our brand may suffer, and this perception could result in negative publicity or litigation. Additionally, if we fail to comply with laws and regulations, take controversial positions or actions or fail to deliver a consistently positive consumer experience in each of our markets, including by failing to invest in the right balance of wages and benefits to attract and retain employees that represent the brand well or to foster an inclusive and diverse environment, our brand value may be diminished. ks stores, treatment of employees, including our responses to unionization effoff es. Furthermore, if we are not effeff ctive in making sufficff rts, or the use r r The ongoing relevance of our brand may depend on making sufficff goals as well as the successfulff y chain of any effeff cts of climate change alignment. We are working to manage risks and costs to us, our licensees and our suppl as well as diminishing energy and water resources. These risks include any increased public focus, including by governmental execution of the Reinvention Plan, each of which requires company-wide coordination and ient progress toward our social and environmental program u 11 and nongovernmental organizations, on these and other environmental sustainabia lity matters, including packaging and waste, animal health and welfarff e, deforestation and land use. These risks may also include any increased pressure to make commitments or set goals and take actions to meet them, which could expose us to market, operational and execution costs or risks. Some third parties may object to the scope or nature of our social and environmental program initiatives or goals, or any revisions to these initiatives or goals, which could give rise to negative responses by governmental actors (such as retaliatoryrr legislative treatment) or consumers (such as boycotts or negative publicity campaigns) that could adversely affeff ct our brand value. • We maya not be successfulff in our marketintt g, promotiott nal and advertising planll s and pricing stratt tegie es. Our continued success depends in part on our ability to adjud st our marketing, promotional and advertising plans and pricing strategy to respond quickly and effeff ctively to shiftiff ng economic and competitive conditions as well as evolving customer preferff ences. We operate in a complex and costly marketing, promotional and advertising environment. Competition to attract and retain high-quality marketing partners and endorsers has increased. Our decisions to collabor ating with certain endorsers or marketing partners in light of actions taken or statements made by them could seriously harm our brand image with consumers and, as a result, could have an adverse effeff ct on our sales and financial condition. Our marketing, in reaching consumers in the way we intend. Our success depends promotional and advertising programs may not be successfulff in part on whether the allocation of our advertising, promotional and marketing resources across different channels, including digital, allows us to reach consumers effeff ctively and effiff ciently, and in ways that are meaningfulff promotional and marketing programs or our pricing strategies are not successfulff competitors, our sales and market share could decrease. to them. If the advertising, , or are not as successfulff ate or to cease collabor as those of our a a Finally, consumers are focusing more on sustainabia lity and the environmental impacts of operations, as well as the alignment of Starbuc ks actions with its stated mission, values and promises. An inability to meet consumer expectations with respect to these r issues could adversely affeff ct our financial results. Risks Related to Our Business • If our busineii ss partnersrr and third-par - ty providerdd srr do not satisfas ctortt ily fulfillff ii theirii responsibii litie s and commitmii ents,s it .rr couldll damage our brand and our finaii ncial resultstt couldll suffu erff Our global business strategy, including our plans for new stores, branded products and other initiatives, relies significantly on a variety of business partners, including licensee and joint venturt e relationships, third-party manufact retailers, particularly for our entire global Channel Development business. Licensees, retailers and foodservice operators are ofteff n authorized to use our logos and provide branded food, beverage and other products directly to customers. We believe our customers expect the same quality of service regardless of whether they visit a licensed or company-operated store, so we provide training and suppor the product quality and service they deliver may still be diminished by any number of factors beyond our control, including financial constraints or solvency, adherence to sanitation protocols and guidance, labor have direct control over our business partners and may not have visibility into their practices. t to, and monitor the operations of,ff certain of these licensees and other business partners. However, shortages and other factors. We do not urt ers, distributors and u a ff We also source our food, beverage and other products from a wide variety of domestic and international business partners, and in certain cases such products are produced or sourced by our licensees directly. We do not monitor the quality of non- r Starbuc of their foodservice business. Additionally, inconsistent uses of our brand and other of our intellectuat as failure to protect our intellectual property, can erode consumer trusr on our financial results. ks products served by foodservice operators we have authorized to use our logos and provide branded products as part l property assets, as well t and our brand value and have a material negative impact • IncII idendd ts involving food or beverage-borne illnesses, tampering, adulteration, contamtt not accurate,e as well as adverserr harm our busineii ss. publicll or medical opiniii ons about the healthll inatiott n or mislabeling, whethett effeff ctstt of consuming our products,tt couldll r or or not, of unclean water suppl y or food-safety issues, such as food or beverage-borne u Instances or reports, whether truerr illnesses, tampering, aduld teration, contamination or mislabea ing, packaging, storing or ling, either during growing, manufact preparation, have in the past severely injun red the reputations of companies in the food and beverage processing, groceryrr and quick-service restaurant sectors. Any report linking us to such instances could severely hurt our sales and could possibly lead to product liabia lity claims, litigation (including class actions), temporaryrr store closures, or other adverse consequences. Clean water is critical to the preparation of coffee, tea and other beverages, as well as ice for our cold beverages, and our ability to ensure adequate suppl also continuing to incorporate more products in our food and beverage lineupu that require freezing or refrigeration, which increases the risk of food safety related incidents if correct temperaturt es are not maintained due to mechanical malfunff human error. ies of clean water and ice to our stores can be limited, particularly in some international locations. We are ction or urt u ff 12 We also face risk by relying on third-party food suppl stores. The product quality and service they deliver may be diminished by any number of factors beyond our control and it may be difficult to detect contamination or other defects in these products. There is greater risk from those we do not monitor, or do not monitor as closely. Furthermore, stemming from the COVID-19 pandemic, there are stricter health regulations and guidelines and increased public concern over food safety standards and controls. Potential food safety incidents, whether at our stores or involving our business partners, could lead to wide public exposure, which could materially harm our business. iers to provide and transport ingredients and finished products to our u iers or distributors (regardless of whether we use or have used those suppl In addition, instances of food or beverage-safetff y issues, even those involving solely the restaurants or stores of competitors or iers or distributors), could adversely affeff ct u of suppl our sales on a regional or global basis by resulting in negative publicity about us or the foodservice industryrr decrease in customer traffiff c as a result of food-safety concerns or negative publicity, or as a result of a temporaryrr closure of any of our stores, product recalls, viral-contaminated food or beverage claims or other food or beverage-safetff y claims or litigation, could materially harm our business and results of operations. in general. A u • We maya not be successfulff an adverserr impact on our busineii in implementintt g important stratt ss and finaii ncial results.tt tegie c initiatives or effeff ctivtt elyll managia ngii growth, which maya have There is no assurance that we will be able to implement important strategic initiatives in accordance with our expectations or that they will generate expected returns, which may result in an adverse impact on our business and financial results. These strategic initiatives, which include our Reinvention Plan, are designed to create growth, improve our results of operations and drive long-term shareholder value, and include: • being an employer of choice and investing in employees to deliver a supeu rior customer experience; ; • building our leadership position around coffeeff • driving convenience, brand engagement and digital relationships through our mobile, loyalty, deliveryrr and digital capabilities both domestically and internationally; • simplifyiff ng store administrative tasks to allow store partners to better engage with customers; • increasing the scale of the Starbuc r ks store footprt unique store formats, including the accelerated development of alternative store formats (such as Starbuc stores, Starbuc ks Now stores and curbside pickup) k r r ; int with disciplined global expansion and introducing flexible and ks Pickupkk • adjusting rapia dly to changing customer preferff ences and behaviors as a result of the COVID-19 pandemic, changing economic conditions, increased global interest rates and inflation; • moving to a more licensed store model in certain markets and a more company-operated model in other markets; • creating new occasions in stores across all dayparts with new product offeff rings, including our growing lunch food and beverage product lineup; • continuing the global growth of our Channel Development business through our suppl u y, distribution and licensing agreements with Nestlé and other Channel Development business partners; • delivering continued growth in our cold beverage business; • working to address the potential effeff cts of climate change and the sustainabia lity of our business; and • reducd ing our operating costs, particularly general and administrative expenses. In addition to other factors listed in this risk factors section, factors that may adversely affeff ct the successfulff these initiatives, which could have a material adverse impact on our business and financial results, include the following: implementation of • imposition of additional taxes by jurisdictions, such as on certain types of beverages or based on number of employees; • construcr tion cost increases associated with new store openings and remodeling of existing stores; delays in store openings for reasons beyond our control, such as potential shortages of materials and labor lack of desirabla e real estate locations availabla e for lease at reasonabla e rates, either of which could keep us from meeting annual store opening targets in the U.S. and internationally; and delays in permits, or a a • governmental regulations or other health guidelines concerning operations of stores, including due to public health emergencies; • not successfulff ly scaling our suppl u y chain infrastrucr ture as our product offeff rings increase and as we continue to expand, including our emphasis on a broad range of high-quality food offeff rings; 13 • not successfulff ly adapting to customer or market factors affeff cting our suppl u y chain as we work to address sustainabia lity and climate change; • the deterioration in our credit ratings, which could limit the availabia lity of additional financing and increase the cost of obtaining financing to fund our initiatives; and • geopolitical instability and international conflicff ts. Effeff ctively managing growth can be challenging, particularly as we continue to expand in international markets where we must balance the need for flexibility and a degree of autonomy for local management against the need for consistency with our goals, policies and standards. If we are not successfulff acquisitions, integrations and divestitures, we may be required to evaluate whether certain assets, including goodwill and other intangibles, have become impaired. In the event we record an impairment charge, it could have a material impact on our financial results. in implementing our strategic initiatives, or, in the event we undertake large t ss. ly affeff ct our busineii consumer preferff ences and tastestt maya adverserr services initiatives); or customers reducing their demand for our current offeff • Evolvill ngii Our continued success depends on our ability to attract and retain customers. Our financial results could be adversely affeff cted by a shiftff in consumer spending away from outside-the-home food and beverages (such as a reduction in discretionary spending as a result of the resumption of stude nt loan payments); lack of customer acceptance of new products (including due to price increases necessary to cover the costs of new producd ts or higher input costs), brands (such as the global expansion of the ks brand) and platforms (such as featurt es of our mobile technology, changes in our loyalty rewards programs and our Starbuc r deliveryrr rings as new products are introducd ed. In ine, dairyrr producd ts, sugar and other compounds and allergens, the health effeff cts of addition, some of our products contain caffeff which are the subju ect of public and regulatoryrr scrutiny, including the suggestion of linkages to a variety of adverse health effeff cts. Particularly in the U.S., there is increasing consumer awareness of health risks, including obesity, as well as increased consumer litigation based on alleged adverse health impacts of consumption of various food and beverage producd ts. An ine or other compounds present in our products, whether accurate or not, unfavff orable report on the health effeff cts of caffeff imposition of additional taxes on certain types of food and beverage components, or negative publicity or litigation arising from certain health risks could significantly reduce the demand for our beverages and food products and could materially harm our business and results of operations. Our financial results have been, and could continue to be, adversely affeff cted by changes in macroeconomic conditions, including increases in real estate costs in certain domestic and international markets, inflationary y chain, changes in governmental rules and pressures and changes in prevailing interest rates, disrupt approaches to taxation, and fluctuations in foreign currency exchange rates. Such changes could affeff ct consumer behavior and their ability or willingness to spend discretionary income on our products. Furthermore, our financial results have been and could continue to be adversely affeff cted by the persisting impacts of the COVID-19 pandemic, including the disrupt ion of customer routines, changes to employer “work-from-home” policies and changes in consumer behavior and the ability or willingness to spend discretionary income on our products. ions to our suppl u r r Risks Related to Operating a Global Business p g • We are highi ly depeee ndendd t on the finaii ncial perforff marr nce of our Northtt America operating segme ent. Our financial performance is highly dependent on our North America operating segment, which comprised approximately 74% of consolidated total net revenues in fiscal year 2023. If the North America operating segment revenue trends slow or decline, especially in our U.S. market, our other segments may be unabla e to make up any significant shortfalff financial results could be adversely affeff cted. And because the North America segment is relatively mature and produces the large majoa rity of our operating cash flows, such a slowdown or decline could result in reduced cash flows for funding the expansion of our international businesses and other initiatives and for returning cash to shareholders. l and our business and • We are increasingii lygg depeee ndendd t on the success of certain internatiott nal marketstt in order to achieve our growth targets.tt Our future growth increasingly depends on the growth and sustained profitaff bia lity of certain international markets. Some or all of our international market business units (“MBUs”), which we generally define by the countries in which they operate, may in their operations or in achieving expected growth, which ultimately requires achieving consistent, stable net not be successfulff revenues and earnings. The performance of these international operations may be adversely affeff cted by economic downturt ns in one or more of the countries in which our large MBUs operate. A decline in performance of one or more of our significant international MBUs could have a material adverse impact on our consolidated results. The International segment is a significant profitff center driving our global returns, along with our North America segment. In particular, our China MBU contributes meaningfulff ly to both consolidated and International net revenues and operating income. China is expected to be our fastest growing market in terms of percentage growth, our second largest market overall and 100% company-owned. Due to the significff ance of our China market for our profitff and growth, we are exposed to risks in China, including the risks mentioned elsewhere and the following: 14 • the effeff cts of current U.S.-China relations, including rounds of tariff increases and retaliations and increasing restrictive regulations, potential boycotts and increasing anti-Americanism; • escalating U.S.-China tension and increasing political sensitivities in China; • the lingering effeff cts of the COVID-19 pandemic and related governmental regulations and restrictions on our operations in China; • entry of new competitors to the specialty coffeeff market in China; , • changes in economic conditions in China and potential negative effeff cts to the growth of its middle class, wages, labor a inflation, discretionary spending and real estate and suppl u y chain costs; • ongoing government regulatoryrr reform, including relating to public health, food safety, tariffs and tax, sustainabia lity and responses to climate change, which result in regulatoryrr uncertainty as well as potential significant increases in compliance costs; • data-privacy and cybersecurity risks unique to the conduct of business in China; and safety related matters, including compliance with food-safety regulations and ability to ensure product quality ff • food- and safety. Additionally, some factors that will be critical to the success of our international operations overall are different than those affeff cting our U.S. stores and licensees. Tastes naturally vary by region, and consumers in some MBUs may not embrace our products to the same extent as consumers in the U.S. or other international markets. Occupau ncy costs and store operating expenses can be higher internationally than in the U.S. due to higher rents for prime store locations or costs of compliance with country-specific regulatoryrr operating expenses as a percentage of related revenues are ofteff n higher compared to more developed operations. requirements. Because many of our international operations are in an early phase of development, • WeWW face riskii skk as a global ll busineii ss that couldll adverserr ly affeff ct our finaii ncial perforff marr nce. We operate in 86 markets globally. Our international operations are also subju ect to additional inherent risks of conducting business abroad, such as: • forff eign currency exchange rate fluctuations, or requirements to transact in specific currencies; • changes or uncertainties in economic, legal, regulatory,rr social and political conditions in our markets, as well as negative effeff cts on U.S. businesses due to increasing anti-American sentiment in certain markets; • interprr etation and application of laws and regulations, including tax, tariffs, labor a , merchandise, anti-briberyrr and privacy laws and regulations; • restrictive actions of foreign or U.S. governmental authorities affeff cting trade and foreign investment, especially during periods of heightened tension between the U.S. and such foreign governmental authorities, including protective measures such as export and customs duties and tariffs,ff government intervention favoring local competitors and restrictions on the level of foreign ownership; • import or other business licensing requirements; • the enforceabia lity of intellectuat l property and contract rights; • limitations on the repatriation of funds and foreign currency exchange restrictions due to current or new U.S. and international regulations; • in developing economies, the growth rate in the portion of the population achieving sufficient levels of disposable income may not be as fast as we forecast; • diffiff culty in staffiff ng, developing and managing foreign operations and suppl u y chain logistics, including ensuring the consistency of product quality and service, due to governmental actions affeff cting suppl language and culturt al differences, as well as challenges in recruir markets; y chain logistics, distance, ting and retaining high-quality employees in local u • local laws that make it more expensive and complex to negotiate with, retain or terminate employees; • local regulations, health guidelines and safety protocols affeff cting our operations; and • delays in store openings for reasons beyond our control, competition with locally relevant competitors or a lack of desirabla e real estate locations availabla e for lease at reasonable rates, any of which could keep us from meeting annual store opening targets and, in turn, negatively impact net revenues, operating income and earnings per share. 15 Moreover, many of the foregoing risks are particularly acute in developing countries, which are important to our long-term growth prospects. An inability to manage effeff ctively the risks associated with our international operations could adversely affeff ct our business and financial results. • Our reliance on keye busineii ss partnersrr maya adverserr ly affeff ct our busineii ss and operations. The growth of our business relies on the ability of our licensee partners to implement our growth platforms and product innovations as well as on the degree to which we are able to enter into, maintain, develop and negotiate appropriate terms and conditions of,ff and enforce, commercial and other agreements and the performance of our business partners under such agreements. Our international licensees may face capia tal constraints or other factors that may limit the speed at which they are able to expand and develop in a certain market. Our Channel Development business is heavily reliant on Nestlé, which has the right to sell and distribute our packaged goods and foodservice products to retailers and operators, with few exceptions. If Nestlé fails to perform its distribution and marketing commitments under our agreements and/or fails to suppor grow our brand in Channel Development, our Channel Development business could be adversely impacted for a period of time, present long-term challenges to our brand, limit our ability to grow our Channel Development business and have a material adverse impact on our business and financial results. Additionally, the growth of our Channel Development business is in part dependent on the level of discretionary suppor t provided by our retail and licensed store businesses. t, protect and u u There are generally a relatively small number of licensee partners operating in specific markets. If they are not able to access sufficient funds or financing, or are otherwise unabla e or unwilling to successfulff ly operate and grow their businesses, it could have a material adverse effeff ct on our results in the applicable markets. Risks Related to Supply Chain pp y • IncII reases in the cost of highi -quality arabica coffo eeff qualityll arabica coffeff e beans or othett r commoditiii es couldll have an adverserr impact on our busineii beans or othett r commoditieii s or decreases in the availaii bilityii - of highi ss and finaii ncial results.tt The availabia lity and prices of coffee beans and other commodities are subju ect to significant volatility. We purchase, roast and sell high-quality whole bean arabica coffee beans and related coffee products. The high-quality arabica coffee of the quality we seek tends to trade on a negotiated basis at a premium above the “C” price. This premium depends upon the suppl y and demand at the time of purchase and the amount of the premium can vary significantly. Increases in the “C” coffee commodity price increase the price of high-quality arabica coffee and also impact our ability to enter into fixed-price purchase commitments. We frequently enter into suppl y contracts whereby the quality, quantity, deliveryrr period and other negotiated terms are agreed upon, but the date, and thereforff e price, at which the base “C” coffee commodity price component will be fixed has not yet been establa ished. u u u y and price of coffee we purchase can also be affeff cted by multiple factors in the producing countries, such as weather, production chain, natural disasters, crop disease and pests, general levels, political and economic conditions and the actions of certain The suppl u water suppl y quality and availabia lity throughout the coffeeff increase in farm inputs and costs of production, inventoryrr organizations and associations that have historically attempted to influence prices of green coffee through agreements establa ishing export quotas or by restricting coffee suppl Speculative trading in coffee commodities can also influence coffeeff prices. For example, extreme weather conditions such as drought or frost in Brazil have impacted coffee prices in the past, and in the likely event that such weather conditions were to reoccur in the future, they would have similar consequences on coffee price volatility. Because of the significance of coffeeff beans to our operations, combined with our ability to only partially mitigate future price risk through purchasing practices and hedging activities, increases in the cost of high-quality arabica coffee beans could have a material adverse impact on our profitaff bia lity. In addition, if we are not able to purchase sufficient quantities of green coffee due to any of the above factors or the demand for our coffee, which could have a material due to a worldwide or regional shortage, we may not be able to fulfillff adverse impact on our business operations and financial performance. ies. Climate change may further exacerbar te many of these factors. u We also purchase significant amounts of dairyrr products, particularly fluid milk, and to a lesser degree, plant-based dairy-rr alternative products, such as oat milk and almond milk, to suppor u Additionally, other commodities, including tea and those related to food and beverage inputs, such as cocoa, produce, baking ingredients, meats, eggs and energy, as well as the processing of these inputs, are important to our operations. Increases in the cost of dairyrr products and other commodities, or lack of availabia lity, whether due to suppl processing, or otherwise, especially in international markets, could have a material adverse impact on our profitaff bia lity. y shortages, delays or interruptu ions in the Similarly, increases in the cost of,ff or lack of availabia lity, whether due to suppl processing of plant-based alternatives could have a material adverse impact on our profitaff bia lity. t the needs of our company-operated retail stores. y shortages, delays or interruptions in free u u 16 • IntII ertt ruptu iott n of our supplu ss and profitff abi yll chainii couldll affeff ct our abilitii ytt litii y.tt tt our busineii to produce or deliver our productstt and couldll negat e ivtt elyll impact a a u u ion in our suppl unrest, labor u y due to the casualty loss of y chain, such as material interruptu ion of roasted coffee suppl shortages, natural disasters or political disputes and militaryrr confliff cts that cause a y chain could have a negative material impact on our business and our profitff ability. Any material interruptu ion in our suppl any of our roasting plants, interruptu ions in service by our third-party logistic service providers or common carriers that ship goods within our distribution channels, trade restrictions, such as increased tariffs or quotas, embargoes or customs restrictions, pandemics, social or labor r material disrupt Additionally, our food, beverage and other products are sourced from a wide variety of domestic and international business partners in our suppl suppl u our standards and suppl prepared food offeff diminished infrastructurt e, developing or failing economies or which are experiencing political instability or social unrest. For certain products, we may rely on one or very few suppl u iers. A suppl timely and effiff cient manner or comply with applicable laws is beyond our control. These issues could have a material negative impact on our business and profitff ability. y chain operations, and in certain cases are produced or sourced by our licensees directly. We rely on these iers who meet u rings, especially with respect to goods sourced from outside the U.S. and from countries or regions with iers to provide high-quality products and to comply with applicable laws. Our ability to find qualifieff d suppl y products in a timely and effiff cient manner is a significant challenge as we increase our fresh and ier's failure to meet our standards, provide producd ts in a u u u Risks Related to Macroeconomic Conditions • Our finaii ncial conditidd on and resultstt of operations are subject to, and maya be adverserr largelyll outsidedd our contrott s,rr many of which are alsoll macroeconomic and othett r factortt ly affeff ctedtt l. by,yy a number of Our operating results have been in the past and will continue to be subju ect to a number of macroeconomic and other factors, many of which are largely outside our control. Any one or more of the factors listed below or described elsewhere in this risk factors section could have a material adverse impact on our business, financial condition and/or results of operations: • increases in real estate costs in certain domestic and international markets; • inflaff tionary pressures and changes in prevailing interest rates; • disruptu ions to our suppl u y chain; • changes in governmental rules and approaches to taxation; • fluff ctuat tions in foreign currency exchange rates; • adverse outcomes of litigation; • severe weather or other natural or man-made disasters affeff cting a large market or several closely located markets that may temporarily but significantly affeff ct our retail business in such markets; • changes in climate, including changes to the frequency or severity of extreme weather events, that impact the price and availabia lity or cost of goods and services, energy and other materials throughout our suppl u y chain; and • especially in our largest markets, including the U.S. and China, labor a discord or disrupt rr ion, geopolitical events, war, terrorism (including incidents targeting us), political instability, acts of public violence, boycotts, increasing anti- American sentiment in certain markets, hostilities and social unrest and health pandemics that lead to avoidance of public places or restrictions on public gatherings such as in our stores. Unfavorable economic conditions could also adversely affeff ct our suppl flow problems, more costly or unavailabla e financing, credit defaults and other financial hardships. This could lead to suppl licensee insolvency, increase our bad debt expense, or cause us to increase the levels of unsecured credit that we provide to suppl u and negatively impact our reputation. For example, one of our licensees is experiencing financial solvency issues, which may require the Company to expend capital resources to help fund their operating expenses in the short term. iers and licensees. Further, if any of our licensees becomes insolvent this could result in our exit from a particular market, iers and licensees, who in turn could experience cash u u ier or • Economic conditdd iott ns in the U.S. and internatiott nal marketstt couldll adverserr ly affeff ct our busineii ss and finaii ncial results.tt As a retailer that is dependent upon consumer discretionary spending, our results of operations are sensitive to changes in or uncertainty about macroeconomic conditions. A continued economic downturt n or recession, or slowing or stalled recovery therefroff m, may have a material adverse effeff ct on our business, financial condition or results of operations. Our customers may have or in the future have less money for discretionary purchases and may stop or reduce their purchases of our products or switch to Starbuc ks or competitors’ lower-priced products as a result of various factors, including job losses, inflation, changes in prevailing interest rates, higher taxes, reduced access to credit, changes in federal economic policy, a global health pandemic, international trade disputes or geopolitical instability. We may also experience a reduction and increased volatility in demand for our products in connection with a global health pandemic. For example, in China, reductions and continuing volatility in r 17 that market may be caused by, among other things: store closures or modified operating hours and business model, reduced customer traffiff c due to illness, quarantine or government or self-iff mposed restrictions placed on our stores’ operations, impacts caused by precautionary measures such as those related to face coverings and vaccinations and changes in consumer spending behaviors, including those caused by social distancing, a decrease in consumer confidff ence in general macroeconomic conditions and a decrease in consumer discretionary spending. Decreases in customer traffiff c and/or average value per transaction without a corresponding decrease in costs would put downward pressure on margins and would negatively impact our financial results. There is also a risk that if negative economic conditions or uncertainty persist for a long period of time or worsen, consumers may make long-lasting changes to their discretionary purchasing behavior, including less frequent discretionary purchases on a more permanent basis or enduring changes in behavior that precipitate a more general downturt n in the restaurant industry.rr These and other macroeconomic factors could have an adverse effeff ct on our sales, profitff ability or development plans, which could harm our results of operations and financial condition. • FaiFF luii re to meet market expexx ctattt iott ns for our finaii ncial perforff marr nce and fluctuatiott ns in the stoctt k market as a wholell willii likelyll adverserr ly affeff ct the market price and volatiliii tyii of our stoctt k. Failure to meet market expectations going forward, particularly with respect to our operational and financial results, and expectations regarding the success of our Reinvention Plan and related guidance, environmental performance and shareholder returns, will likely result in a decline and/or increased volatility in the market price of our stock. In addition, price and volume fluctuations in the stock market as a whole may affeff ct the market price of our stock in ways that may be unrelated to our financial performance. Risks Related to Human Capitalp • Changes in the availaii biliii tyii of and the cost of labor couldll adverserr ly affeff ct our busineii ss. a costs, including wages and benefits, which, in a retail business Our business could be adversely impacted by increases in labor such as ours, are two of our most significant costs, both domestically and internationally, including those increases triggered by state and federal legislation and regulatoryrr actions regarding wages, scheduling and benefits; increased healthcare and workers’ compensation insurance costs; and increased wages and costs of other benefits necessary to attract and retain high-quality employees with the right skill sets. The growth of our business can make it increasingly difficult to locate and hire sufficff numbers of employees, to maintain an effeff ctive 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 a store positions, and the increased availabia lity of alternative telecommuting employment options by other employers could decrease the pool of availabla e qualifieff d talent for key functions. In addition, our wages and benefits programs may be insufficient to attract and retain the best talent. ient Starting in September 2021, Starbur cks partners at a number of company-operated stores sought union representation through elections conducted by the authorities. Unions have secured representation rights at a number of these stores, with potentially more to follow. The law places limitations on unilateral actions taken with respect to employees who are represented by unions because in certain circumstances the law requires the employer to notifyff and to bargain with the union prior to making certain operational or other changes that may affeff ct employee wages, hours or other terms and conditions of employment. These limitations could negatively affeff ct our costs, change our employee culturt e, and decrease our flexibility. They also present the potential to disrupt rr our current operational model by affeff cting our ability to fully implement operational changes to enhance our effiff ciency and adapt to changing business needs. Moreover, we have experienced job actions in some company-operated stores. Such job actions and work stoppages have the potential to negatively impact our operations, third-party providers upon whom we rely to deliver product, our sales, and our costs. Additionally, our position with respect to unions and the unionization of partners could negatively impact how our brand is perceived and have adverse effeff cts on our business, including on our financial results. These positions could also expose us to legal risk, causing us to incur costs to defend legal and regulatoryrr actions, potential penalties and restrictions, and reputational harm. • The loss of keye personnel or diffi our workfok rce couldll adverserr culties recruitiii ngii ly impacm t our busineii and retaining qualifll ss and finaii ncial results. i ieff d personnel or effeff ctivtt elyll managia ngii changes in Much of our future success depends on the continued availabia lity and service of key personnel and employees. The loss of any of our executive offiff cers or other key senior management personnel could harm our business. Our success also depends subsu tantially on the contributions and abilities of our retail store employees upon whom we rely to give customers a supeu rior in- 18 store experience and elevate our brand. Accordingly, our performance depends on our ability to recruirr management personnel and other employees to work in and manage our stores, both domestically and internationally. Our ability to do so has been and may continue to be impacted by challenges in the labor market, which has experienced and may r shortages, increased employee turnover, changes in availabia lity of our workforce continue to experience wage inflation, laboa and a shiftff toward remote or hybrid work arrangements. Our ability to attract and retain corporate, retail and other personnel is also acutely impacted in certain international and domestic markets where the competition for a relatively small number of qualifieff d employees is intense or in markets where large high-tech companies are able to offeff benefits. Additionally, there is intense competition for qualifieff d technology systems developers necessary to develop and implement new technologies for our growth initiatives, including increasing our digital relationships with customers. If we are unabla e to recruirr growth, our business and financial perforff mance may be adversely affeff cted. t, retain and motivate employees sufficiently to maintain our current business and suppor r more competitive salaries and t and retain high-quality t our projected u a Risks Related to Competition p • We face intense competititt on in each of our channels and markets,tt which couldll lead to reduced profitaff .yy bilityii r ks® stores and/or average value per transaction The specialty coffee market is intensely competitive, including with respect to product quality, innovation, service, convenience, such as deliveryrr service and mobile ordering, and price, and we face significant and increasing competition in all of these areas in each of our channels and markets. Accordingly, we do not have leadership positions in all channels and markets. In the U.S., the ongoing focus by large competitors in the quick-service restaurant sector on selling high-quality specialty coffee beverages could lead to decreases in customer traffiff c to Starbuc adversely affeff cting our sales and results of operations. Similarly, continued competition from well-establa ished competitors, or competition from large new entrants or well-funded smaller companies, in our domestic and international markets could hinder growth and adversely affeff ct our sales and results of operations in those markets. Many small competitors also continue to open coffee specialty stores in many of our markets across the world, which in the aggregate may also lead to significant decreases of customer traffiff c to our stores in those markets. Increased competition globally in packaged coffee and tea and single-serve and ready-to-drink coffee beverage markets, including from new and large entrants to this market, could adversely affeff ct the profitaff bia lity of the Channel Development segment. In addition, not all of our competitors may seek to establa ish environmental or sustainabia lity goals at a comparable level to ours, which could result in lower suppl competitors. We may incur increased costs associated with reducing carbon reducing the use of plastic or imposing performance obligations on our suppl and our business partners and could affeff ct our profitff ability. Additionally, if we are unabla e to respond to consumer demand for healthy beverages and foods, or our competitors respond more effeff ctively, this could have a negative effeff ct on our business. Furthermore, declines in general consumer demand for specialty coffee products for any reason, including due to consumer preferff ence for other products, flattening demand for our products, changed customer daily routines or traffiff c to stores, or changed customer spending behaviors due to challenging economic conditions, could have a negative effeff ct on our business. dioxide and other greenhouse gas emissions, iers that could increase financial obligations for us y chain or operating costs for our u u r , Risks Related to Environmental, Social and Governance Matters ll • Clima te change maya have an adverserr impact on our busineii ss. u y quality and availabia lity, which factors may be caused by or exacerbar We recognize that there are inherent climate-related risks wherever business is conducted. For example, as we noted above, the y and price of coffee we purchase can also be affeff cted by multiple factors in the producing countries, such as weather and u suppl water suppl also result in decreased availability, less favorable pricing, or other adverse consequences for non-coffee inputs in our products. In particular, climate change may affeff ct the availabia lity of water in the markets in which we operate and expect to operate and elsewhere in our suppl properties and operations may be vulnerabla e to the adverse effeff cts of climate change, which are predicted to increase the frequency and severity of extreme weather events and other natural cycles such as wildfires and droughts. Such events have the potential to disrupt customers, all of which may cause us to suffer losses and additional costs to maintain or resume operations. y chain, which could have adverse impacts on our business. We operate in 86 markets globally. Our our operations, cause store closures, disrupt ted by climate change. Climate change may the business of our third-party suppl iers and impact our u u r r • Our busineii ss is subject to evolvill ngii corporatett governance and publicll discii losure regue lations and expexx ctattt iott ns,s includindd g withii respect to enviroii nmental, social and governance matters, that couldll expos xx e us to numerous riskii s.kk We are subju ect to changing rules and regulations promulgated by a number of governmental and self-reff including the SEC, the Nasdaq Stock Market and the Financial Accounting Standards Board. These rules and regulations continue to evolve in scope and complexity and many new requirements have been created in response to laws enacted by Congress, making compliance more difficult and uncertain. In addition, increasingly regulators, customers, investors, employees and other stakeholders are focusing on environmental, social and governance (“ESG”) matters and related gulatoryrr organizations, 19 disclosures. These changing rules, regulations and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such regulations and expectations. For example, developing and acting on initiatives within the scope of ESG, and collecting, measuring and reporting ESG-related information and metrics can be costly, difficult and time consuming and is subju ect to evolving reporting standards, including the SEC’s proposed climate-related reporting requirements, and similar proposals by other international regulatoryrr bodies. We may also communicate certain initiatives and goals, regarding environmental matters, diversity, responsible sourcing and social investments and other ESG-related matters, in our SEC filings or in other public disclosures. These initiatives and goals within the scope of ESG could be difficult and expensive to implement, the technologies needed to implement them may not be cost effeff ctive and may not advance at a sufficient pace, and we could be criticized for the accuracy, adequacy or completeness of the disclosure. Further, statements about our ESG-related initiatives and goals, and progress toward those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subju ect to change in the future. If we are unabla e to meet our ESG-related goals or evolving stakeholder or industryrr expectations and standards, or if we are perceived to have not responded appropriately to the growing concern for ESG issues, customers and consumers may choose to stop purchasing our products or purchase products from another company or a competitor, and our reputation, business or financial condition may be adversely affeff cted. If our ESG-related data, processes and reporting are incomplete or inaccurate, or if we fail to achieve progress with respect to our goals within the scope of ESG on a timely basis, or at all, our reputation, business, financial performance and growth could be adversely affeff cted. In addition, we could be criticized by ESG detractors for the scope or nature of our ESG initiatives or goals or for any revisions to these goals. We could also be subju ected to negative responses by governmental actors (such as anti-ESG legislation or retaliatoryrr adversely affeff ct our reputation, business, financial performance and growth. legislative treatment) or consumers (such as boycotts or negative publicity campaigns) targeting Starbuc ks that could r y Risks Related to Intellectual Property p • We maya not be ablell to adequateltt yll protect tt our intellecll tual propertytt or adequateltt yll ensure that we are not infrn ingingii the intellectual propertytt of othett rs, which couldll harm the value of our brand and our busineii ss. Our brand names, trademarks and related intellectuat continued ability to use our existing trademarks and service marks in order to increase brand awareness and further develop our branded products in both domestic and international markets. We rely on a combination of trademarks, copyrights, service marks, trade secrets, patents and other intellectuat l property rights are critical assets, and our success depends on our l property rights to protect our brand and branded products. We have registered certain trademarks and have other trademark registrations pending in the U.S. and certain foreign jurisdictions. The trademarks that we currently use have not been registered in all of the countries outside of the U.S. in which we do business or may do business in the future and may never be registered in all of these countries. It may be costly and time consuming to protect our intellectual property, and the steps we have taken to protect our intellectuat l property in the U.S. and foreign countries may not be adequate. In addition, the steps we have taken may not adequately ensure that we do not infringe the intellectuat whether or not it has merit, could be time-consuming, result in costly litigation and harm our business. In addition, we cannot ensure that licensees will not take actions that adversely affeff ct the value of our intellectuat l property of others, and third parties may claim infringement by us in the future. Any claim of infringement, l property. y Risks Related to Cybersecurity and Data Privacy y y • Failure to maintaitt nii e l negat to substantiatt satisfii acff tory compliance withii certain privacyc and datatt protect iott ns laws and regue tt lations maya subject us ivtt e finaii ncial consequences,s repuee tational harm and civilii or criminal penalties. Complex local, state, national, foreign and international laws and regulations apply to the collection, use, retention, protection, disclosure, transferff and other processing of personal data. These privacy and data protection laws and regulations are quickly evolving, with new or modified laws and regulations proposed and implemented frequently and existing laws and regulations subju ect to new or different interpretations and enforcement. In addition, our legal and regulatoryrr obligations in jurisdictions outside the U.S. are subju ect to unexpected changes, including the potential for regulatoryrr or other governmental entities to enact new or additional laws or regulations, to issue rulings that invalidate prior laws or regulations or to increase penalties significantly. Complying with these laws and regulations can be costly and can impede the development and offeff products and services. ring of new For example, Europe’s General Data Protection Regulation (“GDPR”) and the U.K. General Data Protection Regulation (which implements the GDPR into U.K. law), impose stringent data protection requirements and provide for significant penalties for noncompliance. In China, the Personal Information Protection Law (“PIPL”), has establa ished personal information processing rules, data subju ect rights, and obligations for personal information processors, among other things. In addition to the PIPL, China’s Data Security Law, regulates data processing activities associated with personal and non-personal data. Noncompliance 20 with these laws may result in significant civil and criminal penalties. Other newly enacted and proposed privacy and data protection laws in other jurisdictions served by Starbur restrictions on cross-border data transferff s. Such laws may impact Starbuc expense of compliance. cks and its licensees may impose similar requirements, including ks business operations and increase the cost and r In the United States, the California Consumer Privacy Act (“CCPA”) requires, among other things, covered companies to provide new disclosures to California consumers and allows such consumers new abilities such as the right to opt-out of certain sales of personal information. The CCPA also provides for civil penalties for violations as well as a private right of action for data breaches that may increase data breach litigation. Further, the Califorff nia Privacy Rights Act, which became effeff ctive in January 2023, significantly modified the CCPA and includes additional compliance obligations. Colorado, Connecticut and Virginia recently enacted similar data privacy legislation that has also gone into effeff ct in 2023, and a new privacy law in Utah will go into effeff ct at the end of 2023. In addition, a number of other states have passed or are considering additional privacy laws that are expected to take effeff ct in the near future. These laws will require us to incur additional costs and expenses in our effoff rts to comply. Privacy and data protection laws such as those referenced above may impact Starbuc such as Starbuc licensed markets. As such, Starbur markets served by participating licensees. ks Digital Solutions, which rely on Starbuc r r ks operation and new business models, ks functioning as controller of customer personal information in r cks may be primarily responsible for compliance with privacy and data protection laws in the Our failure to comply with applicable laws and regulations or other obligations to which we may be subju ect relating to personal data, or to protect personal data from unauthorized access, use or other processing, could result in enforcement actions and regulatoryrr brand reputation, any of which could have a material adverse effeff ct on our operations, financial performance and business. The amount and scope of insurance we maintain may not cover all types of claims that may arise. investigations against us, claims for damages by customers and other affeff cted individuals, fines and damage to our • The unauthott rizeii d access, use, theftff or destrutt ctiott n of customtt Startt buckskk proprietary or confidff endd tial infon rmatiott n that is stortt behalf couldll tation and brand and expos impact our repuee er or emplm oyll ed in our infon rmatiott n systemtt tial liabilityii e us to potentt xx and loss of revenues. ee personal, finaii ncial or othett r datatt or of s or by third parties on our ks proprietary and other confidff ential ted to us by our customers, business r Many of our information technology systems (whether cloud-based or hosted in proprietary servers), including those used for our point-of-sale, web and mobile platforms, online and mobile payment systems, deliveryrr services and rewards programs and administrative functions, contain personal, financial or other information that is entrusr partners and employees. Many of our information technology systems also contain Starbuc information related to our business, such as business plans and product development initiatives and designs, and confidff ential information about third parties, such as licensees and business partners. Similar to many other retail companies and because of the prominence of our brand, we have in the past experienced, and we expect to continue to experience, cyber-attacks, including phishing, and other attempts to breach, or gain unauthorized access to, our systems and databaa ses. To date, these attacks have not had a material impact on our operations, but we cannot provide assurance that they will not have an impact in the future. ses are likewise subju ect to such Our third-party providers’ and business partners’ information technology systems and databaa risks. The number and frequency of these attempts varies from year to year but could be exacerbar increase in our digital operations. In addition, we provide some customer and employee data, as well as Starbuc information and other confidff ential information important to our business, to third parties to conduct our business, including ks and such third parties also may access some of this licensees and business partners. Individuals performing work for Starbuc data, including on personally-owned digital devices. To the extent we, a third party or such an individual were to experience a breach of our or their information technology systems that results in the unauthorized access, theft,ff use, destruction or other compromises of customers’ or employees’ data or confidff ential information of the Company stored in or transmitted through such systems, including through cyber-attacks or other external or internal methods, it could result in a material loss of revenues from the potential adverse impact to our reputation and brand, a decrease in our ability to retain customers or attract new ones, the imposition of potentially significant costs (including loss of data or payment for recovery of data) and liabia lities, loss of business, loss of business partners and licensees and the disrupt access, theft,ff use, destruction or other compromises are becoming increasingly sophisticated and may occur through a variety of methods, including attacks using malicious code, vulnerabia lities in software, hardware or other infrastructurt e (including systems used by our suppl adoption of artificff capabilities of third parties, are not always complete or sufficff of security breaches. ial intelligence technologies may intensifyff our cybersecurity risks. Our logging capabilities, or the logging y chain), system misconfigff urations, phishing or social engineering. The rapia d evolution and increased iently granular, affeff cting our ability to fully understand the scope y chain, business and plans. Unauthorized ted to some extent by an ion to our suppl ks proprietary u u r r r Such security breaches also could result in a violation of applicable U.S. and international privacy, cyber and other laws or trigger data breach notificff ation laws, including new disclosure rules promulgated by the SEC, and subju ect us to private consumer, business partner or licensee or securities litigation and governmental investigations and proceedings, any of which could result in our exposure to material civil or criminal liabia lity. These risks also exist in acquired businesses, joint venturt es or 21 companies we invest in or partner with that use separate information systems or that have not yet been fully integrated into our information systems. Significant capia tal investments and other expenditures could also be required to investigate security incidents, remedy cybersecurity problems, recupeu rate lost data, prevent future compromises and adapt systems and practices to react to the changing threat environment. These include costs associated with notifyiff ng affeff cted individuals and other agencies, additional security technologies, trainings, personnel, experts and credit monitoring services for those whose data has been breached. These costs, which could be material, could adversely impact our results of operations in the period in which they are incurred, including by interfering with the pursuit of other important business strategies and initiatives, and may not meaningfulff the success of future attempts to breach our information technology systems. ly limit Media or other reports of existing or perceived security vulnerabia lities in our systems or those of our third-party business partners or service providers can also adversely impact our brand and reputation and materially impact our business. Additionally, the techniques and sophistication used to conduct cyber-attacks and compromise information technology systems, as well as the sources and targets of these attacks, change frequently and are ofteff n not recognized until such attacks are launched or have been in place for a period of time. The rapia d evolution and increased adoption of artificial intelligence technologies amplifieff s these concerns. We continue to make significant investments in technology, third-party services and personnel to develop and implement systems and processes that are designed to anticipate cyber-attacks and to prevent or minimize breaches of our information technology systems or data loss, but these security measures cannot provide assurance that we will be successfulff in preventing such breaches or data loss. • We rely heavily on infon rmatiott n technologyo interruptu iott n or securityii couldll adverserr ly affeff ct our finaii ncial results. failure of that technologyo in our operations and growth initiatives,s and anyn material failure,e inadequacy,c ss and to effeff ctivtt elyll operate and grow our busineii couldll harm our abilityii r r ks Cards, y chain, Starbuc ks Digital Solutions to participating es including for administrative We rely heavily on information technology systems across our operations for numerous purpos r u functions, point-of-sale processing and payment in our stores and online, management of our suppl online business, deliveryrr services, mobile technology, including mobile payments and ordering apps, reloads and loyalty functionality and various other processes and transactions, including providing Starbuc licensees, and many of these systems are interdependent on one another for their functionality. Many of our non-store employees continue to work on a remote or hybrid basis, which has resulted in increased demand on our information technology infrastructurt e. Additionally, the success of several of our initiatives to drive growth, including our ability to increase digital relationships with our customers to drive incremental traffiff c and spend, is highly dependent on our technology systems. Furthermore, we continue to expand convenience-led formats, which depend heavily on our mobile ordering capabilities. We t. Additionally, also rely on third-party providers and platforms for some of these information technology systems and suppor our systems hardware, software and services provided by third-party service providers are not fully redundant within a market or across our markets. Our contractuat systems or platforms to operate effeff ctively and be availabla e. Such failures may be caused by various factors, including power outages, climate change-related impacts, catastrophic events, physical theft,ff computer and network failures, inadequate or ineffeff ctive redundancy, problems with transitioning to upgraded or replacement systems or platforms, flaws in third-party software or services, errors or improper use by our employees or third-party service providers, or a breach in the security of these systems or platforms, including through cyber-attacks such as those that result in the blockage of our or our third-party business partners’ or service providers’ systems and platforms and those discussed in more detail in this risk factors section. If our incident response, disaster recovery and business continuity plans do not resolve these issues in an effeff ctive and timely manner, they could result in an interruptu ion in our operations and could cause material negative impacts to our product availabia lity and sales, the effiff ciency of our operations and our financial results. In addition, remediation of any problems with our systems and related customer suppor l and operational safeguards may not be effeff ctive in preventing the failure of these t could result in significant, unplanned expenses. u u Risks Related to Pandemics or Epidemics p • Future healthll epidemdd ics or pandemics couldll adverserr ly affeff ct our busineii ss and finaii ncial results. u availabia lity and suppl y chain management, as well as local operations in impacted markets, all of which can adversely Health epidemics or pandemics have in the past and may in the future impact macroeconomic conditions, consumer behavior, labor a affeff ct our business, financial results and outlook. Governmental responses to health epidemics or pandemics, including operational restrictions, can also affeff ct the foregoing items and adversely affeff ct our business and financial results. The duration and scope of a health epidemic or pandemic can be difficult to predict and depends on many factors, including the emergence of new variants and the availabia lity, acceptance and effeff ctiveness of preventative measures. A health epidemic or pandemic may also heighten other risks disclosed in these risk factors, including, but not limited to, those related to the availabia lity and costs of a labor y chain interruptu ions, consumer behavior, and consumer perceptions of our brand and industry.rr and commodities, suppl u 22 Risks Related to Governmental and Regulatory Changes g g y • Failure to comply withii applicll ablell laws and changingii e legal and regue latory requirements couldll harm our busineii ss and finaii ncial results. a , healthcare, food and beverage, sanitation, safety, environmental, labea Our policies and procedurd es are designed to comply with all applicable laws, accounting and reporting requirements, tax rules and other regulations and requirements, including those imposed by the SEC, Nasdaq and foreign countries, as well as applicable trade, labor tion and merchandise laws. Such laws and regulations are complex and ofteff n subju ect to differing interpretations, which can lead to unintentional or unknown instances of non-compliance. Changes in the enforcement priorities of regulators may also shiftff the impact of applicable regulations on the business and the costs necessary to ensure compliance therewith, including through an expansion in the nature, scope or complexity of matters on which we are required to report. Changes in applicable r environmental laws and regulations, including increased or additional regulations and associated costs to limit carbon and other greenhouse gas emissions, to discourage the use of plastic or to limit or impose additional costs on commercial water use, may result in increased compliance costs, capital expenditures, incremental investments and other financial obligations for us and our business partners, which could affeff ct our profitff ability. ling, anti-briberyrr and corrupr dioxide In addition, our business is subju ect to complex and rapia dly evolving U.S. and international laws and regulations regarding data privacy and data protection, and companies are under increased regulatoryrr scrutiny relating to these matters. The Federal Trade Commission and many state attorneys general are also interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination and security of data. The interpretation and application of existing laws and regulations regarding data privacy and data protection are in flux and authorities around the world are considering a number of additional legislative and regulatoryrr proposals in this area. Current and future data privacy and data protection laws and regulations (including the GDPR and the CCPA, discussed in more detail in this risk factors section, and other applicable international and U.S. privacy laws), or new interpretations of existing laws and regulations, may limit our ability to collect and use data, require us to otherwise modify our data processing practices and policies or result in the possibility of fines, litigation or orders, which may have an adverse effeff ct on our business and results of operations. The burdens imposed by these and other laws and regulations that may be enacted, or new interpretations of existing and future laws and regulations, may also require us to incur subsu tantial costs in reaching compliance in a manner adverse to our business. The complexity of the regulatoryrr environment in which we operate and the related costs of compliance are both increasing due to additional or changing legal and regulatoryrr requirements, our ongoing expansion into new markets and new channels and the fact that foreign laws occasionally conflicff failure by us or our business partners to comply with the various applicable laws and regulations, as well as changes in laws and regulations or the manner in which they are interpreted or applied, may result in litigation, civil and criminal liabia lity, damages, fines and penalties, increased cost of regulatoryrr compliance and restatements of our financial statements and have an adverse impact on our business and financial results. t with domestic laws. In addition to potential damage to our reputation and brand, Item 1B. Unresolved Staff Comments None. Item 1C. Cybersecurity Not applicable. Item 2. Properties r The material properties used by Starbuc corporate administrative operations, serving all segments, are as follows: ks in connection with its roasting, manufact ff urt ing, warehousing, distribution and Location rk, PA Seattle, WA Minden, NV (Carson Valley) Lebanon, TN Kunshan, China Kent, WA Auburu Shanghai, China n, WA Approximate Size in Square Feet Purpose 1,957,000 Roasting, warehousing and distribution 1,294,000 Corporate administrative 1,080,000 Roasting, warehousing and distribution 680,000 Warehousing and distribution 630,000 Roasting, warehousing and distribution 510,000 Roasting and distribution 491,000 Warehousing and distribution 225,000 Corporate administrative We own most of our roas iti gng fa icili ilities andd llease hthe majojoa 2023, Starbbuc kks hah d 19,592 company-operated stores, r iri yty of our warehhousiingg andd didist iribbutiion llocatiions. As of Octobber 1, lalll of hwhiichh are lleas ded. We lalso llease space iin va irious llocatiions lalmost 23 wo lrlddwidide ffor regigionall, didist irict andd othher dad iminiistratiive foffififff ces, tr iai ini gng ffa icili ilities andd stor gage. In addition to the locations listed above, we hold inventoryrr at various locations managed by third-party warehouses. We believe our existing facilities, both owned and leased, are in good condition and suitabla e for the conduct of our business. Item 3. Legal Proceedings See Note 16, Commitments and Contingencies, to the consolidated financial statements included in Item 8 of Part II of this 10- K for information regarding certain legal proceedings in which we are involved. Item 4. Mine Safety Disclosures Not applicable. 24 Item 5. Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity PART II Securities SHAREHOLDER INFORMATION MARKET INFORMATION AND DIVIDEND POLICY r Starbuc ks common stock is traded on Nasdaq, under the symbol “SBUX.” As of November 10, 2023, we had approximately 18,000 shareholders of record. This does not include persons whose stock is in nominee or “street name” accounts through brokers. Future decisions to pay comparable cash dividends continue to be at the discretion of the Board and will be dependent on our operating performance, financial condition, capia tal expenditure requirements and other factors that the Board considers relevant. ISSUER PURCHASES OF EQUITY SECURITIES ThThee fof llowing tabla e provides information regarding repurchases of our common stock during the quarter ended OcOctotobeberr 1,1 2023 2023. riod (1) July 3, 2023 - July 30, 2023 July 31, 2023 - August 27, 2023 August 28, 2023 - October 1, 2023 Total 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) — $ 1,072,090 2,059,067 3,131,157 $ — 98.16 95.39 96.34 — 1,072,090 2,059,067 3,131,157 45,720,818 44,648,728 42,589,661 (1) Monthly information is presented by reference to our fiscal months during the fourth quarter of fiscal 2023. (2) Share repurchases are conducted under our ongoing share repurchase program announced in September 2001, which has no expiration date, and for which the authorized number of shares has been increased by our Board numerous times, with our Board most recently authorizing the repurchase of up to an additional 40 million shares in March 2022. (3) This column includes the total number of shares availabla e 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. 25 Perforff mance Comparison Graph The following graph depicts the total return to shareholders from September 30, 2018, through October 1, 2023, relative to the performance of the Standard & Poor’s 500 Index, the Nasdaq Composite Index and the Standard & Poor’s 500 Consumer Discretionary Sector, a peer group that includes Starbuc ks. All indices shown in the graph have been reset to a base of 100 as of September 30, 2018, and assume an investment of $100 on that date and the reinvestment of dividends paid since that date. The stock price performance shown in the graph is not necessarily indicative of future price performance. r $300 $250 $200 $150 $100 $50 $0 9/30/2018 9/29/2019 9/27/2020 10/3/2021 10/2/2022 10/1/2023 Starbucks Corporation Nasdaq Composite S&P 500 S&P Consumer Discretionary Sep 30, 2018 Sep 29, 2019 Sep 27, 2020 Oct 3, 2021 Oct 2, 2022 Oct 1, 2023 ks Corporation Starbuc r S&P 500 Nasdaq Composite S&P Consumer Discretionary $ $ 100.00 100.00 100.00 100.00 $ 158.45 104.25 100.52 102.36 $ 154.26 120.05 141.70 131.93 $ 210.18 156.07 184.58 157.19 $ 160.32 131.92 136.12 124.35 177.34 160.44 171.65 141.47 26 Item 6. [Reserved] 27 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations General Our fiscal year ends on the Sunday closest to September 30. All references to store counts, including data for new store openings, are reported net of related store closures, unless otherwise noted. Fiscal years 2023 and 2022 included 52 weeks. Fiscal year 2021 included 53 weeks, with the 53rd week falling in the fourth fiscal quarter. The discussion of our financial condition and results of operations for the fiscal year ended October 3, 2021, included in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) can be found in the Annual Report on Form 10-K for the fiscal year ended October 2, 2022. Overview We have three reportabla e operating segments: 1) North America, which is inclusive of the U.S. and Canada; 2) International, which is inclusive of China, Japaa n, Asia Pacific, Europe, Middle East and Afriff ca, Latin America and the Caribbean; and 3) Channel Development. Non-reportabla e operating segments and unallocated corporate expenses are reported within Corporate and Other. Our financial results and long-term growth model will continue to be driven by new store openings, comparable store sales and margin management. We believe these key operating metrics are usefulff to investors because management uses these metrics to assess the growth of our business and the effeff ctiveness of our marketing and operational strategies. Throughout this MD&A, we commonly discuss the following key operating metrics: New store openings and store count Comparabla e store sales Operating margin • • • ks results for fiscal 2023 demonstrate the overall strength of our brand. Consolidated revenues increased 12% to $36.0 r Starbuc billion in fiscal 2023 compared to $32.3 billion in fiscal 2022, primarily driven by strength in our U.S. business and growth in our International segment, partially offsff et by the impact of unfavff orable foreign currency translation. For both the North America segment and U.S. market, comparable store sales increased 9% for fiscal 2023 compared to an increase of 12% in fiscal 2022. Average ticket for both the North America segment and the U.S. market grew 6%, primarily driven by pricing in our U.S. market. The segment also experienced higher costs, primarily related to previously-committed investments in store partner wages and benefits and increased spend on partner training, as well as inflationary pressures on commodities and our suppl while elevating the partner and customer experience. We believe the investments in partner wages and training have increased retention and in-store operational effiff ciencies while the acceleration of purpos technologies have provided additional convenience and connection with our customers. y chain. In fiscal 2022, we announced our Reinvention Plan in the U.S. market to increase effiff ciency e-built store concepts and innovations in u r For the International segment, despite COVID-19 pandemic-related headwinds in China in the first half of the year, revenue grew 8% in fiscal 2023 compared to fiscal 2022, primarily driven by net new company-operated store openings and higher product sales to and royalty revenues from our licensees. Also contributing to the increase was a 5% increase in comparable store sales, driven by customer transactions, compared to a decrease of 9% in fiscal 2022. These increases were partially offsff et by the impact of unfavff orable foreign currency translation. Revenue for our Channel Development segment increased 3% in fiscal 2023 compared with fiscal 2022, primarily driven by higher Global Coffee Alliance product sales and royalty revenue and growth in our global ready-to-drink business. In fiscal 2023, we sold the assets associated with the Seat ltle's Best Coffee bbrandd to Nestllé, hwhiichh resulltedd iin a pre-tax ggaiin of $$91.3 illmilliion. We have seen the strength and resilience of our brand as well as strong customer demand across our portfolff io, with revenue and operating margin growth in fiscal 2023. We expect to continue our trend of global new store growth in fiscal 2024, driven by a dynamic portfolff io of store formats in the U.S. and leveraging the strength of our brand internationally. We anticipate continued benefits from increased sales leverage and pricing decisions as well as in-store operational effiff ciencies driven by our Reinvention Plan. We expect the inflationary pressures on commodities and suppl y chain that impacted fiscal 2023 to moderate in fiscal 2024, relative to the impact on our business and financial metrics, including operating margin. Absent global economic disrupt r confidff ent in the strength of our brand and strategy for sustainabla e, profitaff bla e growth over the long-term. ions, and based on the current trend of our business operations and our focused effoff rts on the Reinvention Plan, we are u 28 Financial Highlights • • • Total net revenues increased 12% to $36.0 billion in fiscal 2023 compared to $32.3 billion in fiscal 2022. Consolidated operating income increased to $5.9 billion in fiscal 2023 compared to $4.6 billion in fiscal 2022. Fiscal 2023 operating margin was 16.3% compared to 14.3% in fiscal 2022. Operating margin expansion of 200 basis points oximately 250 basis points), sales leverage (appr was primarily due to pricing (appr oximately 240 basis points) and in- store operational effiff ciencies (appr oximately 160 basis points). These increases were partially offsff et by previously- committed investments in store partner wages (appr expenses, primarily in suppor oximately 250 basis points) and higher general and administrative t of our Reinvention Plan (appr oximately 130 basis points). a a u a a a Diluted earnings per share (“EPS”) for fiscal 2023 increased to $3.58, compared to EPS of $2.83 in fiscal 2022. The increase was primarily driven by sales growth and in-store operational effiff ciencies. This increase was partially offsff et by previously-committed investments in store partner wages and higher general and administrative expenses, primarily in u suppor t of our Reinvention Plan. • Capital expenditures were $2.3 billion in fiscal 2023 and $1.8 billion in fiscal 2022. • We returned $3.4 billion to our shareholders in fiscal 2023 through share repurchases and dividends. We returned $6.3 billion in fiscal 2022 through share repurchases and dividends. Acquisitions and Divestitures See Note 2, Acquisitions, Divestitures and Strategic Alliance, to the consolidated financial statements included in Item 8 of Part II of this 10-K for information regarding acquisitions and divestitures. RESULTS OF OPERATIONS — FISCAL 2023 COMPARED TO FISCAL 2022 Consolidated results of operations (inii millioii ns)s : Revenues Fiscal Year Ended Net revenues: Company-operated stores Licensed stores Other Total net revenues Oct 1, 2023 Oct 2, 2022 % Change $ $ 29,462.3 $ 4,512.7 2,000.6 35,975.6 $ 26,576.1 3,655.5 2,018.7 32,250.3 10.9 % 23.4 (0.9) 11.6 % Total net revenues increased $3.7 billion, or 12%, over fiscal 2022, primarily due to higher revenues from company-operated stores ($2.9 billion). The growth in company-operated store revenue was driven by an 8% increase in comparable store sales ($2.1 billion) attributed to a 5% increase in average ticket and 3% increase in comparable transactions. Also contributing were the incremental revenues from 1,339 net new Starbuc months ($1.2 billion). These increases were partially offsff et by the impact of unfavff orable foreign currency translation ($555 million). ks company-operated store openings, or a 7% increase, over the past 12 r Licensed stores revenue increased $857 million, primarily driven by higher product and equipment sales to and royalty revenues from our licensees ($898 million), largely due to revenue growth from existing stores and the opening of 988 net new Starbuc r ($64 million). ks licensed stores over the past 12 months, partially offsff et by the impact of unfavff orable foreign currency translation Other revenues decreased $18 million, primarily due to the absence of revenues from the Evolution Fresh business following its sale in the fourth quarter of fiscal 2022 ($60 million), partially offsff et by an increase in revenue in the Global Coffee Alliance ($37 million). 29 g Operating Expenses p p Fiscal Year Ended Oct 1, 2023 Oct 2, 2022 Oct 1, 2023 Oct 2, 2022 Product and distribution costs $ 11,409.1 $ Store operating expenses Other operating expenses Depreciation and amortization expenses General and administrative expenses Restructurt ing and impairments Total operating expenses Income from equity investees Gain from sale of assets Operating income Store operating expenses as a % of related revenues $ 14,720.3 539.4 1,362.6 2,441.3 21.8 30,494.5 298.4 91.3 5,870.8 $ 10,317.4 13,561.8 461.5 1,447.9 2,032.0 46.0 27,866.6 234.1 — 4,617.8 As a % of Total Net Revenues 31.7 % 40.9 1.5 3.8 6.8 0.1 84.8 0.8 0.3 16.3 % 50.0 % Product and distribution costs as a percentage of total net revenues decreased 30 basis points, primarily due to pricing (appr y chain (appr a 80 basis points). oximately 120 basis points), partially offsff et by inflationary pressures on commodities and our suppl u a 32.0 % 42.1 1.4 4.5 6.3 0.1 86.4 0.7 — 14.3 % 51.0 % oximately Store operating expenses as a percentage of total net revenues decreased 120 basis points. Store operating expenses as a percentage of company-operated store revenues decreased 100 basis points, primarily due to in-store operational effiff ciencies (appr a These were partially offsff et by previously-committed investments in store partner wages and benefits (appr points) and increased spend on partner training (appr oximately 160 basis points), sales leverage (appr oximately 160 basis points) and pricing (appr oximately 160 basis points). oximately 290 basis oximately 30 basis points). a a a a Other operating expenses increased $78 million, primarily due to higher strategic investments in technology and other initiatives ($32 million) and suppu ort costs for our growing licensed markets ($25 million). Depreciation and amortization expenses as a percentage of total net revenues decreased 70 basis points, primarily due to lappi amortization expenses of acquisition-related intangibles assets that are now fully amortized. a ng General and administrative expenses increased $409.3 million, primarily due to incremental investments in technology ($140 million), increased suppor u compensation ($74 million) and other labor t costs of strategic initiatives including the Reinvention Plan ($86 million), higher performance-based t costs ($31 million). and leadership suppor u a Income from equity investees increased $64 million, primarily due to higher income from our North American Coffeeff Partnership joint venturt e ($64 million). Gain from sale of assets includes the sale of our Seattle's Best Coffee brand to Nestlé in the second quarter of fiscal 2023. The combination of these changes resulted in an overall increase in operating margin of 200 basis points in fiscal 2023 when compared to fiscal 2022. 30 Other Income and Expenses p Fiscal Year Ended Operating income Interest income and other, net Interest expense Earnings before income taxes Income tax expense Net earnings including noncontrolling interests Net earnings/(loss) attributable to noncontrolling interests Net earnings attributable to Starbucks Effeff ctive tax rate including noncontrolling interests Oct 1, 2023 Oct 2, 2022 Oct 1, 2023 Oct 2, 2022 $ 5,870.8 $ 81.2 (550.1) 5,401.9 1,277.2 4,617.8 97.0 (482.9) 4,231.9 948.5 4,124.7 3,283.4 0.2 1.8 $ 4,124.5 $ 3,281.6 As a % of Total Net Revenues 16.3 % 14.3 % 0.2 (1.5) 15.0 3.6 11.5 0.0 11.5 % 23.6 % 0.3 (1.5) 13.1 2.9 10.2 0.0 10.2 % 22.4 % Interest iincome andd othher, net ddecreasedd $$16 a imillillion, priimarilyily ddue to lla ippi gng hihighegher iinvestment ggaiins iin hthe priior yyear. Interest expense iincreaseded $$67 imillillion priimarililyy ddue to hihighegher ddebbt bballances andd hihighegher iinterest rates. The effeff ctive tax rate for fiscal 2023 was 23.6% compared to 22.4% for fiscal 2022.The increase was due to lappi beneficial return-to-provision adjud stment related to the divestiture of certain joint venturt e operations (appr points) and a year-over-year decrease in beneficial valuation allowance activity related to international jurisdictions a (appr oximately 40 basis points). See Note 14, Income Taxes, for further discussion. a a ng a oximately 50 basis 31 Segment Information Results of operations by segment (in millions)s : Northtt America Fiscal Year Ended Net revenues: Company-operated stores Licensed stores Other Total net revenues Product and distribution costs Store operating expenses Other operating expenses Depreciation and amortization expenses General and administrative expenses Restructurt ing and impairments Total operating expenses Operating income Store operating expenses as a % of related revenues Revenues Oct 1, 2023 Oct 2, 2022 Oct 1, 2023 Oct 2, 2022 As a % of North America Total Net Revenues $ $ 23,905.4 2,659.1 5.1 26,569.6 7,530.4 11,959.2 263.8 910.1 389.7 20.7 21,073.9 5,495.7 $ $ 21,214.2 2,150.5 6.1 23,370.8 6,677.2 10,860.0 202.1 808.4 303.3 33.3 18,884.3 4,486.5 % 90.0 10.0 0.0 100.0 28.3 45.0 1.0 3.4 1.5 0.1 79.3 20.7 % 50.0 % 9 0.8 % 9.2 0.0 100.0 28.6 46.5 0.9 3.5 1.3 0.1 80.8 9.2 % 1 5 1.2 % North America total net revenues for fiscal 2023 increased $3.2 billion, or 14%, primarily due to a 9% increase in comparable store sales ($1.9 billion) driven by a 6% increase in average ticket and a 3% increase in comparable transactions. Also contributing to the increase were the performance of net new company-operated store openings over the past 12 months ($813 million) and higher product and equipment sales to and royalty revenues from our licensees ($487 million). g Operating Margin p g North America operating income for fiscal 2023 increased 22% to $5.5 billion, compared to $4.5 billion in fiscal 2022. Operating margin expanded 150 basis points to 20.7%, primarily due to pricing (appr operational effiff ciencies (appr committed investments in store partner wages and benefits (appr training (appr 80 basis points). oximately 40 basis points), as well as inflationary pressures on commodities and our suppl oximately 230 basis points) and sales leverage. These were partially offsff et by previously- oximately 300 basis points) and increased spend on partner oximately 300 basis points), in-store y chain (appa u a a a a roximately 32 Internatiott nal Fiscal Year Ended Net revenues: Company-operated stores Licensed stores Other Total net revenues Product and distribution costs Store operating expenses Other operating expenses Depreciation and amortization expenses General and administrative expenses Total operating expenses Income from equity investees Operating income Store operating expenses as a % of related revenues Revenues Oct 1, 2023 Oct 2, 2022 Oct 1, 2023 Oct 2, 2022 As a % of International Total Net Revenues $ $ 5,556.9 1,853.6 77.1 7,487.6 2,608.4 2,761.1 219.0 335.1 335.8 6,259.4 2.7 1,230.9 $ $ 5,361.9 1,505.0 73.2 6,940.1 2,357.7 2,701.8 191.4 513.0 345.3 6,109.2 2.3 833.2 74.2 24.8 1.0 100.0 34.8 36.9 2.9 4.5 4.5 83.6 0.0 16.4 % % 49.7 % 7 7.3 % 21.7 1.1 100.0 34.0 38.9 2.8 7.4 5.0 88.0 0.0 2.0 % 1 5 0.4 % International total net revenues for fiscal 2023 increased $548 million, or 7.9%, primarily due to 927 net new Starbuc company-operated stores, or a 12% increase over the past 12 months ($421 million), as well as higher product sales to and royalty revenues from our licensees ($411 million). Also contributing to the increase was a 5% increase in comparable store sales ($233 million), primarily driven by customer transactions. These were partially offsff et by the impact of unfavff orable foreign currency translation ($543 million). ks r g Operating Margin g p International operating income for fiscal 2023 increased 48% to $1.2 billion, compared to $833.2 million in fiscal 2022. Operating margin increased 440 basis points to 16.4%, primarily due to sales leverage (appr lappi a points). ng amortization expenses of acquisition-related intangibles assets that are now fully amortized (appr oximately 270 basis points) and oximately 240 basis a a 33 Channel Developmll ent Fiscal Year Ended Net revenues Product and distribution costs Other operating expenses Depreciation and amortization expenses General and administrative expenses Total operating expenses Income from equity investees Gain from sale of assets Operating income Revenues $ $ Oct 1, 2023 Oct 2, 2022 Oct 1, 2023 Oct 2, 2022 As a % of Channel Development Total Net Revenues 1,893.8 $ 1,250.1 54.6 0.1 8.4 1,313.2 295.7 91.3 967.6 $ 1,843.6 1,194.2 51.6 0.1 12.2 1,258.1 231.8 — 817.3 66.0 % 4.8 % 6 2.9 0.0 0.4 69.3 15.6 4.8 51.1 % 2.8 0.0 0.7 68.2 12.6 — 4.3 % 4 Channel Development total net revenues for fiscal 2023 increased $50 million, or 3%, compared to fiscal 2022, primarily due to higher Global Coffee Alliance product sales and royalty revenue ($37 million) and growth in our ready-to-drink business ($22 million). g Operating Margin g p Channel Development operating income for fiscal 2023 increased 18% to $968 million, compared to $817 million in fiscal 2022. Operating margin increased 680 basis points to 51.1%, primarily due to the gain from sale of our Seattle's Best Coffee brand (appr (appr a 100 basis points). oximately 480 basis points) and growth in our North American Coffee Partnership joint venturt e income ing assets (appr oximately 300 basis points), partially offsff et by impairment charges against certain manufact oximately urt a a ff 34 Corporatett and Othett r Fiscal Year Ended Net revenues: Other Total net revenues Product and distribution costs Other operating expenses Depreciation and amortization expenses General and administrative expenses Restructurt ing and impairments Total operating expenses Operating loss Oct 1, 2023 Oct 2, 2022 % Change $ $ $ 24.6 24.6 20.2 2.0 117.3 1,707.4 1.1 1,848.0 (1,823.4) $ 95.8 95.8 88.3 16.4 126.4 1,371.2 12.7 1,615.0 (1,519.2) (74.3) % (74.3) (77.1) (87.8) (7.2) 24.5 (91.3) 14.4 20.0 % Corporate and Other primarily consists of our unallocated corporate expenses and Evolution Fresh, prior to its sale in the fourth quarter of fiscal 2022. Unallocated corporate expenses include corporate administrative functions that suppor segments but are not specificff ally attributable to or managed by any segment and are not included in the reported financial results of the operating segments. t the operating u Corporate and Other operating loss increased to $1.8 billion for fiscal 2023, or 20%, compared to $1.5 billion in fiscal 2022. This increase was primarily driven by incremental investments in technology ($131 million), increased suppor strategic initiatives including the Reinvention Plan ($86 million) and higher performance-based compensation ($56 million). t costs of u FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Cash and Investment Overview Our cash and investments were $4.2 billion and $3.5 billion as of October 1, 2023 and October 2, 2022, respectively. We actively manage our cash and investments in order to internally fund operating needs, make scheduled interest and principal payments on our borrowings, fund acquisitions and return cash to shareholders through common stock cash dividend payments and share repurchases. Our investment portfolff corporate debt securities, government treasuryrr securities (domestic and foreign) and commercial papea protected structurt ed deposits. As of October 1, 2023, approximately $$2.5 bibilllliion of cash and short-term investments were held in foreign subsu idiaries. io primarily includes highly liquid availabla e-for-sale securities, including r as well as principal- Borrowing Capacity Creditdd Facilitie ii s and Commercial Papea r Revolvingg Credit Facilityy Our $3.0 billion unsecured five-year revolving credit facility (the “2021 credit facility”), of which $150.0 million may be used for issuances of letters of credit, is currently set to mature on September 16, 2026. The 2021 credit facility is availabla e for working capital, capia tal expenditures and other corporate purpos rr option, subju ect to negotiation and agreement with the related banks, to increase the maximum commitment amount by an additional $1.0 billion. es, including acquisitions and share repurchases. We have the Borrowings under the 2021 credit facility, which was most recently amended in April 2023, will bear interest at a variable rate based on Term SOFR, 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 “Base Rate” is the highest of (i) the Federal Funds Rate (as defined in the 2021 credit facility) plus 0.500%, (ii) Bank of America’s prime rate, and (iii) Term SOFR plus 1.000%. Term SOFR means the forward-looking SOFR term rate administrated by the Chicago Mercantile Exchange plus a SOFR Adjud stment of 0.100%. 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 October 1, 2023, we were in compliance with all applicable covenants. No amounts were outstanding under our 2021 credit facility as of October 1, 2023 or October 2, 2022. 35 Our total contractuat l borrowing capaa city for general corporate purposes was $3.0 billion as of the end of fiscal 2023. p Commercial Papea r r program, we may issue unsecured commercial papea Under our commercial papea 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 papea r program are required to be backstopped by availabla e commitments under our 2021 credit facility. The proceeds from borrowings under our commercial papea needs, capia tal expenditures and other corporate purpos dividends on our common stock and share repurchases. As of October 1, 2023, we had no amounts outstanding under our r program. As of October 2, 2022, we had $175.0 million in borrowings outstanding under this program. commercial papea es, including, but not limited to, business expansion, payment of cash r notes up to a maximum aggregate amount r program may be used for working capia tal rr Credit Facilities in Japaa n p Additionally, we hold the following Japaa nese yen-denominated credit facilities that are are availabla e for working capia tal needs and capia tal expenditures within our Japaa nese market: • • A ¥5 billion, or $33.5 million, credit facility is currently set to mature on January 4, 2024. Borrowings under this credit facility are subju ect to terms defined within the facility and will bear interest at a variable rate based on TIBOR plus an applicable margin of 0.400%. A ¥10 billion, or $67.0 million, credit facility is currently set to mature on March 27, 2024. Borrowings under this credit facility are subju ect to terms defined within the facility and will bear interest at a variable rate based on TIBOR plus an appl icable margin of 0.300%. a As of October 1, 2023 we had ¥5 billion, or $33.5 million, of borrowings outstanding under these credit facilities. As of October 2, 2022, we had no borrowings outstanding under these credit facilities. See Note 9, Debt, to the consolidated financial statements included in Item 8 of Part II of this 10-K 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 subju ect to compliance with terms of the indenturt es under which the long-term notes were issued. As of October 1, 2023, we were in compliance with all applicable covenants. Use of Cash r program and the issuance of debt to suppor We expect to use our availabla e cash and investments, including, but not limited to, additional potential future borrowings under t and invest in our core businesses, including the credit facilities, commercial papea investing in new ways to serve our customers and suppor ting 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. Furthermore, we may use our availabla e 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. 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. u u We believe that net future cash flows generated from operations and existing cash and investments both domestically and internationally, combined with our ability to leverage our balance sheet through the issuance of debt, will be sufficient to finance capital requirements for our core businesses as well as shareholder distributions for at least the next 12 months. We are currently not aware of any trends or demands, commitments, events or uncertainties that will result in, or that are reasonabla y likely to result in, our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months. We have borrowed funds and continue to believe we have the ability to do so at reasonabla e 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 capia tal programs, including cash returns to shareholders through future dividends and discretionary share repurchases, refinancing debt maturities, as well as investing in new business opportunities. 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 partial indefinite reinvestment of foreign earnings. In the event we determine that all or another portion of such foreign earnings are no longer indefinitely reinvested, we may be subju ect to additional foreign withholding taxes and U.S. state income taxes, which could be material. While we do not anticipate the need for repatriated funds to the U.S. to satisfy domestic liquidity requirements, any foreign earnings which are not indefinitely reinvested may be repatriated at management’s discretion. See Note 14, Income Taxes, for further discussion. During each of the first three quarters of fiscal 2022, we declared a cash dividend to shareholders of $0.49 per share. During the fourth quarter of fiscal 2022, and for each of the first three quarters of fiscal 2023, we declared a cash dividend of $0.53 per 36 share. Dividends are generally paid in the quarter following the declaration date. Cash returned to shareholders through dividends in fiscal 2023 and 2022 totaled $2.4 billion and $2.3 billion, respectively. During the fourth quarter of fiscal 2023, we declared a cash dividend of $0.57 per share to be paid on November 24, 2023, with an expected payout of approximately $651.2 million. During the fiscal year ended October 2, 2022, we repurchased 36.3 million shares of common stock for $4.0 billion on the open market. During the fiscal year ended October 1, 2023, we repurchased 10.0 million shares of common stock for $1.0 billion on the open market. On March 15, 2022, we announced that our Board authorized the repurchase of up to an additional 40 million shares under our ongoing share repurchase program. As of October 1, 2023, 42.6 million shares remained availabla e for repurchase under current authorizations. Other than normal operating expenses, cash requirements for fiscal 2024 are expected to consist primarily of capia tal expenditures for investments in our new and existing stores, our suppl for fiscal 2024 are expected to be approximately $3.0 billion. y chain and corporate facilities. Total capia tal expenditures u The following tabla e summarizes current and long-term material cash requirements as of October 1, 2023, which we expect to fund primarily with operating cash flows (in millions): Operating lease obligations(1) Debt obligations Principal payments Material Cash Requirements Total Less than 1 Year 1 - 3 Years 3 - 5 Years More than 5 Years $ 10,594.2 $ 1,577.6 $ 2,931.1 $ 2,206.9 $ 3,878.6 15,519.3 1,819.3 2,750.0 1,100.0 9,850.0 6,362.2 Interest payments Purchase obligations(2) Other obligations(3) Total 33,945.5 (1) Amounts include direct lease obligations, excluding any taxes, insurance and other related expenses. (2) Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on 1,078.4 7,047.4 4,153.3 4,726.7 391.4 694.6 740.6 114.4 311.4 145.6 520.8 909.3 72.4 33.4 $ $ $ $ $ 4,191.5 — 98.0 18,018.1 ks and that specifyff all significant terms. Green coffeeff Starbuc r obligations. purchase commitments comprise 92% of total purchase (3) Other obligations include other long-term liabia lities primarily consisting of long-term income taxes payabla e, asset retirement obligations, equity investment capital commitments and finance lease obligations. Cash Flows Cash provided by operating activities was $6.0 billion for fiscal 2023, compared to $4.4 billion for fiscal 2022. The change was primarily due to a decrease in net cash used by changes in operating assets and liabia lities, including lower inventoryrr purchases driven by reduced coffeff e commodity prices, and higher net earnings during the period. Cash used in investing activities was $2.3 billion for fiscal 2023, compared to $2.1 billion for fiscal 2022. The change was primarily due to an increase in spend on capital expenditures and increased purchases of investments in fiscal 2023, partially offsff et by increased maturities and calls of investments in fiscal 2023. Cash used in financing activities was $3.0 billion for fiscal 2023, compared to $5.6 billion for fiscal 2022. The change was primarily due to a decrease in share repurchase activities, partially offsff et by an increase in net payments of commercial papea r. COMMODITY PRICES, AVAILABILITY AND GENERAL RISK CONDITIONS Commodity price risk represents our primary market risk, generated by our purchases of green coffee and dairyrr products, among other items. We purchase, roast and sell high-quality arabica coffee and related products and risk arises from the price t the needs of volatility of green coffee. In addition to coffee, we also purchase significant amounts of dairyrr products to suppor our company-operated stores. The price and availabia lity 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 Suppl y in Item 1, as well as Risk Factors in Item 1A of this 10-K. u u FINANCIAL RISK MANAGEMENT Market risk is defined as the risk of losses due to changes in commodity prices, foreign currency exchange rates, equity security prices and interest rates. We manage our exposure to various market-based risks according to a market price risk management policy. Under this policy, market-based risks are quantifieff d and evaluated for potential mitigation strategies, such as entering into hedging transactions. The market price risk management policy governs how hedging instruments may be used to mitigate 37 risk. Risk limits are set annually and speculative trading activities are prohibited. We also monitor and limit the amount of associated counterpar rty credit risk, which we consider to be low. We use interest rate swap agreements and treasury locks to primarily hedge against changes in benchmark interest rates related to anticipated debt issuances. We also use cross-currency swaps and foreign exchange debt instruments to hedge against changes in the fair value of our net investments in foreign operations. Excluding interest rate hedging instruments, cross currency swaps and foreign currency debt, hedging instruments generally do not have maturities in excess of three years. Refer to Note 1, Summary of Significant Accounting Policies and Estimates, and Note 3, Derivative Financial Instruments, to the consolidated financial statements included in Item 8 of Part II of this 10-K for further discussion of our hedging instruments. The sensitivity analyses disclosed below provide only a limited, point-in-time view of the market risk of the financial instruments discussed. The actual impact of the respective underlying rates and price changes on the financial instruments may differ significantly from those shown in the sensitivity analyses. Commodity Price Risk We purchase commodity inputs, primarily coffee, dairyrr products, diesel, cocoa, sugar and other commodities, that are used in our operations and are subju ect to price fluctuations that impact our financial results. We use a combination of pricing featurt es y contracts, such as fixed-price and price-to-be-fixed contracts and financial derivatives to manage our embedded within suppl commodity price risk exposure. u The following tabla e summarizes the potential impact as of October 1, 2023 to Starbuc comprehensive income (“OCI”) from changes in commodity prices. The information provided below relates only to the hedging instruments and does not represent the corresponding changes in the underlying hedged items (in millions)s : ks future net earnings and other r Increase/(Decrease) to Net Earnings Increase/(Decrease) to OCI 10% Increase in Underlying Rate 10% Decrease in Underlying Rate 10% Increase in Underlying Rate 10% Decrease in Underlying Rate Commodity hedges $ 1.2 $ (1.2) $ 33 $ (33) Foreign Currency Exchange Risk The majoa rity of our revenue, expense and capital purchasing activities are transacted in U.S. dollars. However, because a portion of our operations consists of activities outside of the U.S., we have transactions in other currencies, primarily the Chinese renminbi, Japaa nese yen, Canadian dollar, British pound, South Korean won and euro. To reduce cash flow volatility from foreign currency fluctuations, we enter into derivative instruments to hedge portions of cash flows of anticipated intercompany royalty payments, inventoryrr purchases, intercompany borrowing and lending activities and certain other transactions in currencies other than the functional currency of the entity that enters into the arrangements, as well as the translation risk of certain balance sheet items. The volatility in the foreign exchange market may lead to significant fluctuation in foreign currency exchange rates and adversely impact our financial results in the case of weakening foreign currencies relative to the U.S. dollar. The following tabla e summarizes the potential impact as of October 1, 2023 to Starbuc comprehensive income from changes in the fair value of these derivative financial instruments due to a change in the value of the U.S. dollar as compared to foreign exchange rates. The information provided below relates only to the hedging instruments and does not represent the corresponding changes in the underlying hedged items (in millions): ks future net earnings and other r Foreign currency hedges $ 27 $ (27) $ 197 $ (197) Increase/(Decrease) to Net Earnings Increase/(Decrease) to OCI 10% Increase in Underlying Rate 10% Decrease in Underlying Rate 10% Increase in Underlying Rate 10% Decrease in Underlying Rate Equity Security Price Risk We have minimal exposure to price fluctuations on equity mutual funds and equity exchange-traded funds within our marketable equity securities portfolff liabia lity under our Management Deferred Compensation Plan (“MDCP”). Gains and losses from the portfolff our MDCP liabia lity are recorded in our consolidated statements of earnings. io. Marketable equity securities are recorded at fair value and approximates a portion of our io and the change in We performed a sensitivity analysis based on a 10% change in the underlying equity prices of our investments as of October 1, 2023 and determined that such a change would not have a significant impact on the fair value of these instruments. 38 Interest Rate Risk Long-term Debt We utilize short-term and long-term financing and may use interest rate hedges to manage our overall interest expense related to our existing fixed-rate debt, as well as to hedge the variability in cash flows due to changes in benchmark interest rates related to anticipated debt issuances. See Note 3, Derivative Financial Instruments and Note 9, Debt, to the consolidated financial statements included in Item 8 of Part II of this 10-K for further discussion of our interest rate hedge agreements and details of the components of our long-term debt, respectively, as of October 1, 2023. The following tabla e summarizes the impact of a change in interest rates as of October 1, 2023 on the fair value of Starbur debt (in millions)s : cks Fair Value Decrease in Fair Value for a 100 Basis Point Increase in Underlying Rate Long-term debt(1)(2) $ 13,426 $ (820) (1) Amount disclosed is net of $16 million change in the fair value of our designated interest rate swaps. Refer to Note 3, Derivative Financial Instruments, for additional information on our interest rate swap designated as a fair value hedge. (2) Includes $750 million in Senior Notes that matured on October 1, 2023 but remained in current portion of long-term debt on the consolidated balance sheet as the debt repayment was not made until the first day of fiscal 2024. Available-fo- r-Sale Debt Securities io consisting mainly of investment-grade debt securities. The Our availabla e-for-sale securities comprise a diversifieff d portfolff primary objective of these investments is to preserve capital and liquidity. Availabla e-for-sale securities are recorded on the consolidated balance sheets at fair value with unrealized gains and losses reported as a component of accumulated other comprehensive income. We do not hedge the interest rate exposure on our investments. We performed a sensitivity analysis based on a 100 basis point change in the underlying interest rate of our availabla e-for-sale securities as of October 1, 2023 and determined that such a change would not have a significant impact on the fair value of these instruments. CRITICAL ACCOUNTING ESTIMATES Critical accounting estimates are those that management believes are the most important to the portrayal of our financial condition and results and require the most difficult, subju ective or complex judgments, ofteff n as a result of the need to make estimates about the effeff ct of matters that are inherently uncertain. Judgments and uncertainties may result in materially different amounts being reported under different conditions or using different assumptions. Our significant accounting estimates are discussed in additional detail in Note 1, Summary of Significant Accounting Policies and Estimates, to the consolidated financial statements included in Item 8 of Part II of this 10-K. We consider financial reporting and disclosure practices and accounting policies quarterly to ensure that they provide accurate and transparent information relative to the current economic and business environment. During the past five fiscal years, we have not made any material changes to the accounting methodologies used to assess the areas discussed below, unless noted otherwise. We believe that our significant accounting estimates involve a higher degree of judgment and/or complexity for the reasons discussed below: Income Taxes We recognize deferred tax assets and liabia lities based on the differences between the financial statement carrying amounts and the respective tax bases of our assets and liabia lities. Deferred tax assets and liabia lities are measured using current enacted tax rates expected to apply to taxabla e income in the years in which we expect the temporaryrr differences to reverse. We routinely evaluate the likelihood of realizing the benefit of our deferred tax assets and may record a valuation allowance if,ff based on all availabla e evidence, we determine that some portion of the tax benefit will not be realized. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all availabla e positive and negative evidence, including scheduled reversals of deferred tax liabia lities, projected future taxabla e income, tax-planning strategies and results of operations. In projecting future taxabla e income, we consider historical results and incorporate assumptions about the amount of future state, federal and foreign pre-tax operating income adjud sted for items that do not have tax consequences. Our assumptions regarding future taxabla e income are consistent with the plans and estimates we use to manage our underlying businesses. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income/(loss). 39 In addition, our income tax returns are periodically audited by domestic and foreign tax authorities. These audits include review of our tax filing positions, such as the timing and amount of deductions taken and the allocation of income between tax jurisdictions. We evaluate our exposures associated with our various tax filing positions and recognize a tax benefit only if it is more likely than not that the tax position will be sustained upon examination by the relevant taxing authorities, including resolutions of any related appeals or litigation processes, based on the technical merits of our position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. For uncertain tax positions that do not meet this threshold, we record a related liability. We adjud st our unrecognized tax benefit liabia lity and income tax expense in the period in which the uncertain tax position is effeff ctively settled, the statutt e of limitations expires for the relevant taxing authority to examine the tax position or when new information becomes availabla e. As discussed in Note 14, Income Taxes, to the consolidated financial statements included in Item 8 of Part II of this 10-K, there is a reasonabla e possibility that our unrecognized tax benefit liability will be adjud sted within 12 months due to the expiration of a statutt e of limitations and/or resolution of examinations with taxing authorities. We have generated income in certain foreign jurisdictions that may be subju ect to additional foreign withholding taxes and U.S. state income taxes. We regularly review our plans for reinvestment or repatriation of unremitted foreign earnings. The possibility exists that foreign earnings declared as indefinitely reinvested may be repatriated as our plans are based on our estimated working and other capia tal needs in jurisdictions where our earnings are generated. While we do not expect to repatriate cash to the U.S. to satisfyff domestic liquidity needs, if these amounts were distributed to the U.S., in the form of dividends or otherwise, we may be subju ect to additional foreign withholding taxes and U.S. state income taxes, which could be material. Our income tax expense, deferred tax assets and liabilities for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. Deferred tax asset valuation allowances and our liabilities for unrecognized tax benefits require significant management judgment regarding applicable statutt es and their related interpretation, the statust of various income tax audits and our particular facts and circumstances. Although we believe that the judgments and estimates discussed herein are reasonabla e, actual results, including forecasted business performance, could differ, and we may be exposed to losses or gains that could be material. To the extent we prevail in matters for which a liability has been establa ished or are required to pay amounts in excess of our establa ished liabia lity, our effeff ctive income tax rate in a given financial statement period could be materially affeff cted. Property, Plant and Equipment and Other Finite-Lived Assets We evaluate property, plant and equipment, operating lease right-of-uff se (“ROU”) assets and other finite-lived assets for impairment when facts and circumstances indicate that the carryirr ng values of such assets may not be recoverabla e. When evaluating for impairment, we first compare the carrying value of the asset to the asset’s estimated future undiscounted cash flows. If the estimated undiscounted future cash flows are less than the carrying value of the asset, we determine if we have an impairment loss by comparing the carrying value of the asset to the asset's estimated fair value and recognize an impairment charge when the asset’s carrying value exceeds its estimated fair value. The adjud sted carrying amount of the asset becomes its new cost basis and is depreciated over the asset's remaining usefulff life.ff Long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiaff bla e cash flows are largely independent of the cash flows of other assets and liabia lities. For company-operated store assets, the impairment test is performed at the individual store asset group level, which is inclusive of property, plant and equipment and lease ROU assets. The fair value of a store’s assets is estimated using a discounted cash flow model. For other long-lived assets, fair value is determined using an approach that is appropriate based on the relevant facts and circumstances, which may include discounted cash flows, comparable transactions or comparable company analyses. Our impairment calculations contain uncertainties because they require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values. Key assumptions used in estimating future cash flows and asset fair values include projected revenue growth and operating expenses, as well as forecasting asset usefulff lives and selecting an appropriate discount rate. For company-operated stores, estimates of revenue growth and operating expenses are based on internal projections and consider the store’s historical perforff mance, the local market economics and the business environment impacting the store’s performance. The discount rate is selected based on what we believe a buyer would assume when determining a purchase price for the store. The fair value of a store’s ROU asset is estimated considering what a market participant would pay to lease the asset for its highest and best use. These estimates are subju ective and our ability to realize future cash flows and asset fair values is affeff cted by factors such as ongoing maintenance and improvement of the assets, changes in economic conditions and changes in operating performance. 40 In fiscal 2022, we announced our Reinvention Plan in the U.S. market to increase effiff ciency while elevating the partner and customer experience. As a result of the restructurt rts in connection with the Reinvention Plan, we recorded immaterial impairment charges on our consolidated statements of earnings during the fiscal years ended October 1, 2023 and October 2, 2022. Future impairment charges attributed to our Reinvention Plan are not expected to be material. ing effoff Asset impairment charges are discussed in Note 1, Summaryrr of Significant Accounting Policies and Estimates, to the consolidated financial statements included in Item 8 of Part II of this 10-K. Goodwill and Indefinite-Lived Intangible Assets We evaluate goodwill and indefinite-lived intangible assets for impairment annually during our third fiscal quarter, or more frequently if an event occurs or circumstances change that would indicate impairment may exist. When evaluating these assets for impairment, we may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. If we do not perform a qualitative assessment, or if we determine that it is not more likely than not that the fair value of the reporting unit exceeds its carrying amount, we calculate the estimated fair value of the reporting unit using discounted cash flows or a combination of discounted cash flow and market approaches. When assessing goodwill for impairment, our decision to perform a qualitative impairment assessment for an individual reporting unit is influenced by a number of factors, inclusive of the carrying value of the reporting unit’s goodwill, the significance of the excess of the reporting unit’s estimated fair value over carrying value at the last quantitative assessment date, the amount of time in between quantitative fair value assessments and the date of acquisition. If we perform a quantitative assessment of an individual reporting unit’s goodwill, our impairment calculations contain uncertainties because they require management to make assumptions and to apply judgment when estimating future cash flows and asset fair values, including projected revenue growth and operating expenses related to existing businesses, product innovation and new store concepts, as well as utilizing valuation multiples of similar publicly traded companies and selecting an appropriate discount rate. Estimates of revenue growth and operating expenses are based on internal projections considering the reporting unit’s past performff ance and forecasted growth, strategic initiatives, local market economics and the local business environment impacting the reporting unit’s performance. The discount rate is selected based on the estimated cost of capia tal for a market participant to operate the reporting unit in the region. These estimates, as well as the selection of comparable companies and valuation multiples used in the market approaches are highly subju ective, and our ability to realize the future cash flows used in our fair value calculations is affeff cted by factors such as the success of strategic initiatives, changes in economic conditions, changes in our operating performance and changes in our business strategies, including retail initiatives and international expansion. We continue to believe the fair value of each of our reporting units is significantly in excess of its carrying value, and absent a sustained multi- year global decline in our business in key markets such as the U.S. and China, we do not anticipate incurring significant goodwill impairment in the next 12 months. Our fiscal 2023 annual goodwill impairment testing was completed in the third fiscal quarter. Where a quantitative assessment was performed, the estimated fair value of our reporting units exceeded carryirr ng value by approximately $101 billion. When assessing indefinite-lived intangible assets for impairment, where we perform a qualitative assessment, we evaluate if changes in events or circumstances have occurred that indicate that impairment may exist. If we do not perform a qualitative impairment assessment or if changes in events and circumstances indicate that a quantitative assessment should be performff ed, management is required to calculate the fair value of the intangible asset group. The fair value calculation includes estimates of revenue growth, which are based on past performance and internal projections for the intangible asset group’s forecasted growth, and royalty rates, which are adjud sted for our particular facts and circumstances. The discount rate is selected based on the estimated cost of capia tal that reflects the risk profilff e of the related business. These estimates are highly subju ective, and our ability to achieve the forecasted cash flows used in our fair value calculations is affeff cted by factors such as the success of strategic initiatives, changes in economic conditions, changes in our operating performance and changes in our business strategies, including retail initiatives and international expansion. We do not anticipate recording significant impairment charges in the next 12 months. Definite-lived intangible asset impairment charges are discussed in Note 8, Other Intangible Assets and Goodwill, to the consolidated financial statements included in Item 8 of Part II of this 10-K. RECENT ACCOUNTING PRONOUNCEMENTS See Note 1, Summaryrr of Significant Accounting Policies and Estimates, to the consolidated financial statements included in Item 8 of Part II of this 10-K for a detailed description of recent accounting pronouncements. Item 7A. Quantitative and Qualitative Disclosures About Market Risk The information required by this item is incorporated by reference to the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Commodity Prices, Availabia lity and General Risk Conditions” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Risk Management” in Item 7 of this Report. 41 Item 8. Financial Statements and Supplementary Data STARBUCKS CORPORATRR ION CONSOLIDATED STATEMENTS OF EARNINGS (in millions, except per share data) Fiscal Year Ended Net revenues: Company-operated stores Licensed stores Other Total net revenues Product and distribution costs Store operating expenses Other operating expenses Depreciation and amortization expenses General and administrative expenses Restructurt ing and impairments Total operating expenses Income from equity investees Gain from sale of assets Operating income Net gain resulting from divestiturt e of certain operations Interest income and other, net Interest expense Earnings before income taxes Income tax expense Net earnings including noncontrolling interests Net earnings attributable to noncontrolling interests Net earnings attributable to Starbuc r ks Earnings per share — basic Earnings per share — diluted Weighted average shares outstanding: Basic Diluted Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 $ 29,462.3 $ 26,576.1 $ 24,607.0 4,512.7 2,000.6 35,975.6 11,409.1 14,720.3 539.4 1,362.6 2,441.3 21.8 30,494.5 298.4 91.3 5,870.8 — 81.2 (550.1) 5,401.9 1,277.2 4,124.7 0.2 4,124.5 3.60 3.58 1,146.8 1,151.3 $ $ $ 3,655.5 2,018.7 32,250.3 10,317.4 13,561.8 461.5 1,447.9 2,032.0 46.0 27,866.6 234.1 — 4,617.8 — 97.0 (482.9) 4,231.9 948.5 3,283.4 1.8 3,281.6 2.85 2.83 1,153.3 1,158.5 $ $ $ 2,683.6 1,770.0 29,060.6 8,738.7 11,930.9 359.5 1,441.7 1,932.6 170.4 24,573.8 385.3 — 4,872.1 864.5 90.1 (469.8) 5,356.9 1,156.6 4,200.3 1.0 4,199.3 3.57 3.54 1,177.6 1,185.5 $ $ $ See Notes to Consolidated Financial Statements. 42 STARBUCKS CORPORATRR ION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions)s Fiscal Year Ended Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 Net earnings including noncontrolling interests $ 4,124.7 $ 3,283.4 $ 4,200.3 Other comprehensive income/(loss), net of tax: Unrealized holding gains/(losses) on availabla e-for-sale debt securities Tax (expense)/benefitff Unrealized gains/(losses) on cash flow hedging instruments Tax (expense)/benefitff Unrealized gains/(losses) on net investment hedging instruments Tax (expense)/benefitff Translation adjud stment and other Tax (expense)/benefitff Reclassification adjud stment for net (gains)/losses realized in net earnings for availabla e-for-sale securities, hedging instruments, translation adjud stment and other Tax expense/(benefitff ) Other comprehensive income/(loss) Comprehensive income including noncontrolling interests Comprehensive income/(loss) attributable to noncontrolling interests Comprehensive income attributable to Starbuc r ks 3.3 (0.8) (149.4) 17.2 73.2 (18.5) (109.0) 1.8 (158.9) 26.1 (315.0) 3,809.7 (22.8) 5.6 259.5 (52.8) 229.0 (57.9) (794.7) — (210.5) 34.2 (610.4) 2,673.0 (0.5) 1.8 $ 3,810.2 $ 2,671.2 $ (3.4) 0.7 283.8 (43.6) 63.1 (16.0) 188.2 2.2 41.8 (5.0) 511.8 4,712.1 1.0 4,711.1 See Notes to Consolidated Financial Statements. 43 STARBUCKS CORPORATRR ION CONSOLIDATED BALANCE SHEETS (in millions, except per share data) Oct 1, 2023 Oct 2, 2022 $ $ $ ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts receivabla e, net Inventories Prepaid expenses and other current assets Total current assets Long-term investments Equity investments Property, plant and equipment, net Operating lease, right-of-use asset Deferred income taxes, net Other long-term assets Other intangible assets Goodwill TOTAL ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT) Current liabia lities: Accounts payabla e Accruer d liabia lities Accruer d payroll and benefits Current portion of operating lease liability Stored value card liability and current portion of deferred revenue Short-term debt Current portion of long-term debt Total current liabilities Long-term debt Operating lease liability Deferred revenue Other long-term liabilities Total liabia lities Shareholders’ deficit: Common stock ($0.001 par value) — authorized, 2,400.0 shares; issued and outstanding, 1,142.6 and 1,147.9 shares, respectively Additional paid-in capital Retained deficit Accumulated other comprehensive income/(loss) Total shareholders’ deficit Noncontrolling interests Total deficit TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY/(DEFICIT) $ See Notes to Consolidated Financial Statements. 44 $ $ $ 3,551.5 401.5 1,184.1 1,806.4 359.9 7,303.4 247.4 439.9 7,387.1 8,412.6 1,769.8 546.5 120.5 3,218.3 29,445.5 1,544.3 2,145.1 828.3 1,275.3 1,700.2 33.5 1,818.6 9,345.3 13,547.6 7,924.8 6,101.8 513.8 37,433.3 1.1 38.1 (7,255.8) (778.2) (7,994.8) 7.0 (7,987.8) 29,445.5 $ 2,818.4 364.5 1,175.5 2,176.6 483.7 7,018.7 279.1 311.2 6,560.5 8,015.6 1,799.7 554.2 155.9 3,283.5 27,978.4 1,441.4 2,137.1 761.7 1,245.7 1,641.9 175.0 1,749.0 9,151.8 13,119.9 7,515.2 6,279.7 610.5 36,677.1 1.1 205.3 (8,449.8) (463.2) (8,706.6) 7.9 (8,698.7) 27,978.4 STARBUCKS CORPORATRR ION CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions)s Fiscal Year Ended OPERATRR ING ACTIVITIES: Net earnings including noncontrolling interests Adjud stments to reconcile net earnings to net cash provided by operating activities: Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 $ 4,124.7 $ 3,283.4 $ 4,200.3 Depreciation and amortization Deferred income taxes, net Income earned from equity method investees Distributions received from equity method investees Gain on sale of assets Net gain resulting from divestiture of certain operations Stock-based compensation Non-cash lease costs Loss on retirement and impairment of assets Other Cash provided by/(used in) changes in operating assets and liabilities: Accounts receivabla e Inventories Income taxes payabla e Accounts payabla e Deferred revenue Operating lease liability Other operating assets and liabilities Net cash provided by operating activities INVESTING ACTIVITIES: Purchases of investments Sales of investments Maturities and calls of investments Additions to property, plant and equipment Proceeds from sale of assets Net proceeds from the divestiturt e of certain operations Other Net cash used in investing activities FINANCING ACTIVITIES: Net (payments)/proceeds from issuance of commercial papea r Net proceeds from issuance of short-term debt Repayments of short-term debt Net proceeds from issuance of long-term debt Repayments of long-term debt Proceeds from issuance of common stock Cash dividends paid Repurchase of common stock Minimum tax withholdings on share-based awards Other Net cash used in financing activities Effeff ct of exchange rate changes on cash and cash equivalents Net increase/(decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS: Beginning of period End of period SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest, net of capia talized interest Income taxes 1,450.3 (59.4) (301.8) 222.8 (91.3) — 302.7 1,365.9 101.4 26.8 (4.1) 366.4 52.5 100.1 (110.8) (1,443.8) (93.7) 6,008.7 (610.5) 2.5 616.9 (2,333.6) 110.0 — (56.1) (2,270.8) (175.0) 114.6 (78.8) 1,497.8 (1,000.0) 167.4 (2,431.8) (984.4) (89.3) (11.1) (2,990.6) (14.2) 733.1 2,818.4 3,551.5 524.3 1,294.2 $ $ $ 1,529.4 (37.8) (268.7) 231.2 — — 271.5 1,497.7 91.4 (67.8) (326.1) (641.0) (149.6) 345.5 (75.8) (1,625.6) 339.6 4,397.3 (377.9) 72.6 67.3 (1,841.3) — 59.3 (126.3) (2,146.3) 175.0 36.6 (36.6) 1,498.1 (1,000.0) 101.6 (2,263.3) (4,013.0) (127.2) (9.2) (5,638.0) (250.3) (3,637.3) 6,455.7 2,818.4 474.7 1,157.6 $ $ $ 1,524.1 (146.2) (347.3) 336.0 — (864.5) 319.1 1,248.6 226.2 (6.0) (43.0) (49.8) 286.1 189.9 (6.1) (1,488.1) 609.8 5,989.1 (432.0) 143.2 345.5 (1,470.0) — 1,175.0 (81.2) (319.5) (296.5) 215.1 (349.8) — (1,250.0) 246.2 (2,119.0) — (97.0) — (3,651.0) 86.2 2,104.8 4,350.9 6,455.7 501.1 756.3 $ $ $ See Notes to Consolidated Financial Statements. 45 N O I T A R RR O P R O C S K C U B R A T S Y T I U Q E F O S T N E M E T A T S D E T A D I L O S N O C ) a t a d e r a h s r e p t p e e c x e , s n o i l l i m n i ( l a t o T g n i l l o r t n o c n o N s t s e r e t n I ’ s r e d l o h e r a h S ) t i c i f e D ( / y t i u q E e v i s n e h e r p m o C ) s s o L ( / e m o c n I d e t a l u m u c c A r e h t O d e n i a t e R / s g n i n r a E ) t i c i f e D ( l a n o i t i d d A l a t i p a C n i - d i a P k c o t S n o m m o C t n u o m A s e r a h S ) 4 . 9 9 7 , 7 ( $ 7 . 5 $ ) 1 . 5 0 8 , 7 ( $ ) 6 . 4 6 3 ( $ ) 6 . 5 1 8 , 7 ( $ 9 . 3 7 3 $ 2 . 1 $ 3 . 3 7 1 , 1 0 2 0 2 , 7 2 r e b m e t p e S , e c n a l a B ) 2 . 2 ( 3 . 0 0 2 , 4 8 . 1 1 5 8 . 2 2 3 0 . 7 0 1 4 . 2 4 ) 2 . 7 9 6 , 2 ( ) 5 . 4 1 3 , 5 ( ) 4 . 0 1 6 ( 4 . 3 8 2 , 3 5 . 5 7 2 ) 5 . 2 7 ( 9 . 6 4 ) 6 . 0 ( ) 0 . 3 1 0 , 4 ( ) 5 . 3 9 2 , 2 ( $ ) 0 . 5 1 3 ( 4 . 6 0 3 7 . 4 2 1 , 4 4 . 8 2 6 . 9 4 ) 1 . 4 ( ) 5 . 4 0 0 , 1 ( ) 6 . 4 7 4 , 2 ( ) 7 . 8 9 6 , 8 ( $ — 0 . 1 — — — — — 7 . 6 8 . 1 — — — — — — ) 6 . 0 ( 9 . 7 2 . 0 ) 7 . 0 ( — — — — — ) 4 . 0 ( ) 2 . 2 ( 3 . 9 9 1 , 4 8 . 1 1 5 8 . 2 2 3 0 . 7 0 1 4 . 2 4 ) 2 . 7 9 6 , 2 ( — — 8 . 1 1 5 — — — — — — — — ) 2 . 2 ( 3 . 9 9 1 , 4 ) 2 . 7 9 6 , 2 ( — — — 8 . 2 2 3 0 . 7 0 1 — 4 . 2 4 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e r a h s r e p 6 1 . 2 $ , d e r a l c e d s d n e d i v i d h s a C 2 2 0 2 , 2 r e b o t c O , e c n a l a B s s o l e v i s n e h e r p m o c r e h t O s g n i n r a e t e N ) 8 . 7 8 9 , 7 ( $ 0 . 7 $ ) 8 . 4 9 9 , 7 ( $ ) 2 . 8 7 7 ( $ ) 8 . 5 5 2 , 7 ( $ 1 . 8 3 $ 1 . 1 $ 6 . 2 4 1 , 1 3 2 0 2 , 1 r e b o t c O , e c n a l a B . s t n e m e t a t S l a i c n a n i F d e t a d i l o s n o C o t s e t o N e e S STARBUCKS CORPORATRR ION INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Summaryrr of Significant Accounting Policies and Estimates Acquisitions, Divestitures and Strategic Alliance Derivative Financial Instruments Fair Value Measurements Inventories Equity Investments u Suppl emental Balance Sheet and Statement of Earnings Information Other Intangible Assets and Goodwill Debt Leases Deferred Revenue Equity Employee Stock and Benefit Plans Income Taxes Earnings per Share Commitments and Contingencies Segment Reporting Note 1 Note 2 Note 3 Note 4 Note 5 Note 6 Note 7 Note 8 Note 9 Note 10 Note 11 Note 12 Note 13 Note 14 Note 15 Note 16 Note 17 48 57 57 62 64 64 66 67 67 70 71 71 73 75 78 78 78 47 STARBUCKS CORPORATRR ION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Fiscal Years ended October 1, 2023, October 2, 2022 and October 3, 2021 Note 1: Summary of Significff ant Accounting Policies and Estimates Descriptii iott n of Busineii ss We purchase and roast high-quality coffees that we sell, along with handcrafted coffee and tea beverages and a variety of fresh and prepared food items, through our company-operated stores. We also sell a variety of coffee and tea products and license our trademarks through other channels such as licensed stores, groceryrr and foodservice. The groceryrr and foodservice business is primarily through our Global Coffee Alliance with Nestlé establa ished in August 2018. In this 10-K, Starbur “our.” cks Corporation (together with its subsu idiaries) is referred to as “Starbucks,” the “Company,” “we,” “us” or r es. In the fourth quarter of fiscal 2021, certain changes were made to our management team, and our operating Segment information is prepared on the same basis that our management reviews financial information for operational decision- making purpos segment reporting structurt e 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. There was no impact on consolidated net revenues, total operating expenses, operating income or net earnings per share as a result of these changes. We have three reportabla e operating segments: 1) North America, which is inclusive of the U.S. and Canada; 2) International, which is inclusive of China, Japaa n, Asia Pacific, Europe, Middle East and Afriff ca, Latin America and the Caribbean; and 3) Channel Development. Non-reportabla e operating segments and unallocated corporate expenses are reported within Corporate and Other. Additional details on the nature of our business and our reportabla e operating segments are included in Note 17, Segment Reporting. Certain prior period information on the consolidated statements of cash flows have been reclassified to conforff m to the current presentation. Principlii esll of Consolidll atdd iott n Our consolidated financial statements reflect the financial position and operating results of Starbuc subsu idiaries and investees that we control. Intercompany transactions and balances have been eliminated. r ks, including wholly-owned Fiscii al Year End Our fiscal year ends on the Sunday closest to September 30. Fiscal years 2023, 2022 and 2021 included 52, 52 and 53 weeks, respectively. The 53rd week in fiscal 2021 fell in the fourth fiscal quarter. Estimates and Assumptions Preparing financial statements in conforff mity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affeff ct the reported amounts of assets, liabia lities, revenues and expenses. Examples include, but are not limited to, estimates for inventoryrr assumptions underlying self-iff nsurance reserves, income from unredeemed stored value cards, stock-based compensation forfeiture rates, future asset retirement obligations, commitments and contingencies, and the potential outcome of future tax consequences of events that have been recognized in the financial statements. Actual results and outcomes may differ from these estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment. reserves, asset and goodwill impairments, Restrutt cturing In fiscal 2022, we announced our plan in the U.S. market to increase effiff ciency while elevating the partner and customer experience (the “Reinvention Plan”). We believe the company-operated market investments in partner wages and trainings have increased retention and productivity while the acceleration of purpos e-built store concepts and innovations in technologies have r provided additional convenience and connection with our customers. As a result of the restructurt the Reinvention Plan, we recorded approximately $22 million and $46 million to restructurt consolidated statements of earnings during fiscal years 2023 and 2022, respectively. Future restructurt attributable to our Reinvention Plan are not expected to be material. ing and impairments on our ing and impairment costs rts in connection with ing effoff 48 In fiscal 2021, we subsu tantially completed our plan to reposition our North America store portfolff metropolitan markets by pursuing strategic store closures and focusing on new store formats that better cater to changing customer tastes and preferff ences. During fiscal 2021, we recorded approximately $155.4 million to restructurt impairments on our consolidated statements of earnings. This total included $53.1 million related to disposal and impairment of company-operated store assets and $89.5 million primarily associated with accelerated amortization of ROU lease assets and other lease costs due to store closures prior to the end of contractuat ing plan was subsu tantially completed in fiscal 2021, we did not recognize any material restructurt ing and impairment amounts related to this plan during the fiscal years ended October 1, 2023 and October 2, 2022. l lease terms. As this restructurt io, primarily in dense ing and As of October 1, 2023 and October 2, 2022, there were no material restructurt balance sheets. ing-related accruer d liabia lities on our consolidated Cash and Cash Equivalentstt We consider all highly liquid instruments with maturities of three months or less at the time of purchase, as well as credit card receivables for sales to customers in our company-operated stores that generally settle within two to five business days, to be cash equivalents. We maintain cash and cash equivalent balances with financial institutions that exceed federally-insured limits. We have not experienced any losses related to these balances, and we believe credit risk to be minimal. Our cash management system provides for the funding of all majoa r bank disbursement accounts on a daily basis as checks are presented for payment. Under this system, outstanding checks are in excess of the cash balances at certain banks, which creates book overdrafts. Book overdrafts are presented as a current liabia lity in accruerr d liabilities on our consolidated balance sheets. Investmett ntstt Available-fo- r-sale Debt Securities Our short-term and long-term investments include investment-grade debt securities, all of which are classified as availabla e-for- sale. Availabla e-for-sale debt securities are recorded at fair value, and unrealized holding gains and losses are recorded, net of tax, as a component of accumulated other comprehensive income. Availabla e-for-sale securities with remaining maturities of less than one year and those identified by management at the time of purchase to be used to fund operations within one year are classified as short-term. All other availabla e-for-sale securities are classified as long-term. We evaluate our availabla e-for-sale securities for other-than-temporaryrr decline in fair value is determined to be other than temporary.rr We review several factors to determine whether a loss is other than temporary,rr such as the length and extent of the fair value decline, the financial condition and near-term prospects of the issuer and whether we have the intent to sell or will more likely than not be required to sell before the securities' anticipated recovery, which may be at maturity. Realized gains and losses are accounted for using the specificff Purchases and sales are recorded on a trade date basis. impairment on a quarterly basis. Unrealized losses are charged against net earnings when a identificff ation method. Strutt ctured Depos e itstt We hold short-term, principal-protected structurt ed deposits that provide returns in the form of both fixed and variable yields; such variable yields are indexed to foreign exchange rates, equity-linked instruments or interest rate indices. The Company has elected to account for these using the fair value option with gains and losses recorded in our consolidated statements of earnings. For fiscal 2023, 2022 and 2021, resulting gains and losses were immaterial to our consolidated statements of earnings. Marketkk able Equity Securities We also have a marketable equity securities portfolff exchange-traded funds. Marketable equity securities are recorded at fair value and approximates a portion of our liability under our Management Deferred Compensation Plan (“MDCP”). Gains or losses from the portfolff liability are recorded in general and administrative expenses in our consolidated statements of earnings. Refer to Note 4, Fair Value Measurements, for further discussion of our MDCP liability. io, which is comprised of marketable equity mutual funds and equity io and the change in our MDCP Equity Investmett ntstt Equity investments are accounted for under the equity method if we are able to exercise significant influence, but not control, over an investee. Our share of the earnings or losses as reported by the investees is classified as income from equity investees on our consolidated statements of earnings. The investments are evaluated for impairment annually and when facts and circumstances indicate that the carrying value may not be recoverabla e. If a decline in fair value is determined to be other-than- temporary,rr an impairment charge is recorded in interest income and other, net on our consolidated statements of earnings. We account for equity investments for which we do not have significant influence and without readily determinable fair values at cost with adjud stments for observabla e changes in price or impairments as permitted by the measurement alternative. Investments for which the measurement alternative has been elected are assessed for impairment quarterly, or if a triggering 49 event indicates impairment may be present. Any adjud stments as a result of price changes or impairments are recorded in interest income and other, net on our consolidated statements of earnings. Fair Value Fair value is the price we would receive to sell an asset or pay to transferff between market participants. For assets and liabia lities recorded or disclosed at fair value on a recurring basis, we determine fair value based on the following: a liabia lity (exit price) in an orderly transaction Level 1: The carrying value of cash and cash equivalents approximates fair value because of the short-term nature of these instruments. For equity and U.S. government treasury securities and commodity futures contracts, we use quoted prices in active markets for identical assets to determine fair value. Level 2: When quoted prices in active markets for identical assets are not availabla e, we determine the fair value of certain assets based upon factors such as the quoted market price of similar assets or a discounted cash flow model using readily observabla e market data, which may include interest rate curves and forward and spot prices for currencies and commodities, depending on the nature of the investment. The fair value of our long-term debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offeff red to us for debt of the same remaining maturities. Level 3: We determine the fair value of our auction rate securities using an internally-developed valuation model, using inputs that include interest rate curves, credit and liquidity spreads and effeff ctive maturity. Assets and liabia lities recognized or disclosed at fair value on a nonrecurring basis may include items such as property, plant and equipment, goodwill and other intangible assets, equity and other investments and other assets. We determine the fair value of these items using Level 3 inputs, as described in the related sections below. Derivative Instrutt mentstt We manage our exposure to various risks within our consolidated financial statements according to a market price risk management policy. Under this policy, we may engage in transactions involving various derivative instruments to hedge interest rates, commodity prices and foreign currency-denominated revenue streams, inventoryrr purchases, assets and liabilities and investments in certain foreign operations. In order to manage our exposure to these risks, we use various types of derivative instruments including forward contracts, commodity futures contracts, collars and swaps. Forward contracts and commodity futures contracts are agreements to buy or sell a quantity of a currency or commodity at a predetermined future date and at a predetermined rate or price. A collar is a strategy that uses a combination of a purchased call option and a sold put option with equal premiums to hedge a portion of anticipated cash flows, or to limit possible gains or losses on an underlying asset or liability to a specificff underlying notional amounts, assets and/or indices. We do not enter into derivative instruments for speculative purpos range. A swap agreement is a contract between two parties to exchange cash flows based on specifieff d es. rr We record all derivatives on our consolidated balance sheets at fair value and typically do not offsff et derivative assets and liabilities. Cash flows from derivative financial instruments and the related gains and losses are classified as cash flows from operating activities on the consolidated statements of cash flows. Excluding interest rate hedging instruments, cross-currency swaps and foreign currency debt hedging instruments, we generally do not enter into derivative instruments with maturities longer than three years. However, we are allowed to net settle transactions with respective counterpar rties for certain derivative contracts, inclusive of interest rate swaps and foreign currency forwards, with a single, net amount payabla e by one party to the other. We also enter into collateral security arrangements that provide for collateral to be received or posted when the net fair value of certain financial instruments fluctuates from contractuat 2022, cash collateral held under collateral security arrangements was $77.1 million and $74.3 million, respectively, and is included in other long-term liabilities on our consolidated balance sheets. As of October 1, 2023 and October 2, 2022, cash collateral pledged as part of our commodity derivative margin requirements was $20.6 million and $75.6 million, respectively, and is included in prepaid expenses and other current assets on our consolidated balance sheets. The potential effeff cts of netting arrangements with our derivative contracts, excluding the effeff cts of collateral, would not have had a material impact on our consolidated balance sheets. lly establa ished thresholds. As of October 1, 2023 and October 2, rty By using these derivative instruments, we expose ourselves to potential credit risk. Credit risk is the failure of the counterpar to perform under the terms of the derivative contract. We minimize this credit risk by entering into transactions with carefully selected, credit-worthy counterparr rties and distribute contracts among several financial institutt credit risk. ions to reduce the concentration of Cash Flow Hedges For derivative instruments that are designated and qualify as a cash flow hedge, the derivative's gain or loss is reported as a component of other comprehensive income (“OCI”) and recorded in accumulated other comprehensive income (“AOCI”) on our consolidated balance sheets. The gain or loss is subsu equently reclassified into net earnings when the hedged exposure affeff cts net earnings, in the same line item as the underlying hedged item on our consolidated statements of earnings. 50 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 transactions are no longer likely to occur, the related accumulated derivative gains or losses are recognized in interest income and other, net on our consolidated statements of earnings. Net Investmett nt Hedges For derivative instruments that are designated and qualify as a net investment hedge, the derivative's, or qualifyiff ng non- derivative instrument’s gain or loss is reported as a component of OCI and recorded in AOCI. The gain or loss will be subsu equently reclassified into net earnings when the hedged net investment is either sold or subsu tantially liquidated. Fair Value Hedges For derivative instruments that are designated and qualify as a fair value hedge, the changes in fair value of the derivative instrument and the offsff etting changes in fair value of the underlying hedged item due to changes in the hedged risk are recorded in interest income and other, net or interest expense on our consolidated statements of earnings. Derivatives Not Designat i ed As Hedging Instrut mentstt We also enter into certain foreign currency forward contracts, commodity futures contracts, collars and swaps that are not designated as hedging instruments for accounting purpos recognized in interest income and other, net on our consolidated statements of earnings. es. The changes in the fair values of these contracts are immediately r Normal Purchase Normal Sale We enter into fixed-price and price-to-be-fixed green coffeeff purchase commitments, which we expect to take delivery and to utilize in a reasonabla e period of time in the ordinary course of business. Since these types of purchase commitments qualifyff for the normal purchase normal sale exemption, they are not recorded as derivative instruments on our consolidated balance sheets. Refer to Note 3, Derivative Financial Instruments, and Note 5, Inventories, for further discussion of our derivative instruments and green coffee purchase commitments. Receivablesll ,s net of Alloll wance for Creditdd Losses Our receivables are mainly generated from product and equipment sales to and royalties from our licensees, as well as from our Global Coffee Alliance and other Channel Development customers. The primaryrr receivables are aging, payment history,rr quarterly basis. Our credit loss exposure is mainly concentrated in our accounts receivable portfolff losses is calculated using a loss-rate method based on historical experience, current market conditions and reasonabla e forecasts. For the fiscal year ended October 1, 2023, we did not observe a significant deterioration of our receivable portfolff io that required a significant increase in our allowance for credit losses. As of October 1, 2023 and October 2, 2022, our allowance for credit losses was $23.8 million and $27.2 million, respectively. economic sector information and outside credit monitoring, and are assessed on a indicators of the credit quality of our io. Our allowance for credit Inventortt ies Inventories are stated at the lower of cost (primarily moving average cost) or net realizable value. We record inventoryrr for obsolete and slow-moving inventoryrr and for estimated shrinkage between physical inventoryrr counts. Inventoryrr based on inventoryrr obsolescence trends, historical experience and application of the specificff October 1, 2023 and October 2, 2022, inventoryrr reserves were $44.4 million and $43.1 million, respectively. identification method. As of reserves reserves are Property,tt Planll t and Equipmii ent Property, plant and equipment is carried at cost less accumulated depreciation. Cost includes all direct costs necessary to acquire and prepare assets for use, including internal labor straight-line method over estimated usefulff years for buildings. Leasehold improvements are amortized over the shorter of their estimated usefulff life, generally 10 years. For leases with renewal periods at our option, we generally use the original lease term, excluding renewal option periods, to determine estimated usefulff economic penalty to us, we may determine at the inception of the lease that renewal is reasonabla y assured and include the renewal option period in the determination of the appropriate estimated usefulff lives of the assets, generally ranging from 2 to 15 years for equipment and 30 to 40 lives or the related lease lives. If failure to exercise a renewal option imposes a significant and overhead in some cases. Depreciation is computed using the lives. a The portion of depreciation expense related to production and distribution facilities is included in product and distribution costs on our consolidated statements of earnings. The costs of repairs and maintenance are expensed when incurred, while expenditures for refurbishments and improvements that significantly add to the productive capaa an asset are capia talized. When assets are disposed of,ff whether through retirement or sale, the net gain or loss is recognized in net earnings. Long-lived assets to be disposed of are reported at the lower of their carrying amount or fair value less estimated costs to sell. city or extend the usefulff life of 51 We evaluate property, plant and equipment for impairment when facts and circumstances indicate that the carrying values of such assets may not be recoverabla e. When evaluating for impairment, we first compare the carrying value of the asset to the asset’s estimated future undiscounted cash flows. If the estimated undiscounted future cash flows are less than the carryirr ng value of the asset, we determine if we have an impairment loss by comparing the carrying value of the asset to the asset's estimated fair value and recognize an impairment charge when the asset’s carrying value exceeds its estimated fair value. The fair value of the asset is estimated using a discounted cash flow model based on forecasted future revenues and operating costs, using internal projections. Property, plant and equipment assets and ROU assets related to the store lease are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. For company-operated store assets, the impairment test is performed at the individual store asset group level. We recognized net disposition and impairment charges of $91.1 million, $66.6 million and $153.1 million in fiscal 2023, 2022 and 2021, respectively. We recorded $23.2 million, $14.3 million and $44.4 million of impairment losses within store operating expenses on our consolidated statements of earnings during the fiscal years ended October 1, 2023, October 2, 2022 and October 3, 2021, respectively. Of the total net disposition and impairment charges recorded in fiscal 2022 and 2021, $9.6 million and $53.1 million, respectively, were restructurt ing and impairment expenses. Unless it is restructurt expense line on which the related impact is recorded on our consolidated statements of earnings. ing related and recorded in restructurt ing related, the nature of the underlying asset that is impaired or disposed of will determine the operating Leases The majoa rity of our leases are operating leases for our company-operated retail store locations. We also lease, among other things, roasting, distribution and warehouse facilities and offiff ce space for corporate administrative purpos es. r We categorize leases as either operating or finance leases at the commencement date of the lease. Operating lease agreements may contain tenant improvement allowances, rent holidays, rent escalation clauses and/or contingent rent provisions. We have lease agreements with lease and non-lease components, which are accounted for together as a single lease component for all underlying classes of assets. We recognize a ROU asset and lease liability for each operating and finance lease with a contractuat months at the time of lease inception. We do not record leases with an initial term of 12 months or less on our consolidated balance sheet but continue to record rent expense on a straight-line basis over the lease term. We review contracts for identified assets where we have the right to direct the use of the asset and record those agreements as embedded leases on our consolidated balance sheet. Our leases ofteff n include options to extend or terminate at our sole discretion, which are included in the determination of lease term when they are reasonabla y certain to be exercised. l term greater than 12 Our lease liability represents the present value of future lease payments over the lease term. Given our policy election to combine lease and non-lease components, we also consider fixed common area maintenance (“CAM”) part of our fixed future lease payments; thereforff e, fixed CAM is also included in our lease liabia lity. We generally cannot determine the interest rate implicit in each of our leases. Thereforff e, we typically use market and term- incremental borrowing rates. Our incremental borrowing rate for a lease is the rate of interest we expect to pay on a specificff collateralized basis to borrow an amount equal to the lease payments under similar terms. Because we do not borrow on a collateralized basis, we consider a combination of factors, including our credit-adjusted risk-free interest rate, the risk profilff e and funding cost of the specificff geographic market of the lease, the lease term and the effeff ct of adjud sting the rate to reflect consideration of collateral. Our credit-adjusted risk-freff e rate takes into consideration interest rates we pay on our unsecured long-term bonds as well as quoted interest rates obtained from financial institutt ions. Total lease costs recorded as rent and other occupau ncy costs include fixed operating lease costs, variable lease costs and short- term lease costs. Most of our real estate leases require we pay certain expenses, such as CAM costs, real estate taxes and other executoryrr costs, of which the fixed portion is included in operating lease costs. We recognize operating lease costs on a straight-line basis over the lease term. In addition to the above costs, variable lease costs also include amounts based on a percentage of gross sales in excess of specifieff d levels and are recognized when probabla e and are not included in determining the present value of our lease liabia lity. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. A significant majoa rity of our leases are related to our company-operated stores, and their related costs are recorded within store operating expenses. The ROU asset is measured at the initial amount of the lease liability adjud sted for lease payments made at or before the lease commencement date, initial direct costs and any tenant improvement allowances received. For operating leases, ROU assets are reduced over the lease term by the recognized straight-line lease expense less the amount of accretion of the lease liability determined using the effeff ctive interest method. For finance leases, ROU assets are amortized on a straight-line basis over the shorter of the usefulff utilizing the effeff ctive interest method. ROU assets are tested for impairment in the same manner as long-lived assets. life of the leased asset or the lease term. Interest expense on each finance lease liability is recognized 52 Additionally, we monitor for events or changes in circumstances that may require a reassessment of one of our leases and determine if a remeasurement is required. See Note 10, Leases, for additional details. For the fiscal year ended October 3, 2021, we recognized accelerated amortization of ROU lease assets and other lease costs of $89.5 million, due to planned store closures prior to the end of contractuat statement of earnings. In fiscal 2021, we subsu tantially completed our plan to optimize our North America store portfolff we did not recognize any material restructurt ing and impairments on the consolidated io, and ing and impairment amounts related to this plan during fiscal 2023 and fiscal 2022. l lease terms, which were recorded in restructurt Goodwill We evaluate goodwill for impairment annually during our third fiscal quarter, or more frequently if an event occurs or circumstances change, such as material deterioration in performance or a significant number of store closures, that would indicate that impairment may exist. When evaluating goodwill for impairment, we may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. If we do not perform a qualitative assessment, or if we determine that it is not more likely than not that the fair value of the reporting unit exceeds its carrying amount, we calculate the estimated fair value of the reporting unit. Fair value is typically calculated using a discounted cash flow model. For certain reporting units, where deemed appropriate, we may also utilize a market approach for estimating fair value. If the carrying amount of the reporting unit exceeds the estimated fair value, an impairment charge is recorded to reduce the carrying value to the estimated fair value. As part of our ongoing operations, we may close certain stores within a reporting unit containing goodwill due to underperformance of the store or inability to renew our lease, among other reasons. We may abandon certain assets associated with a closed store, including leasehold improvements and other non-transferff able assets. When a portion of a reporting unit that constitutes a business is to be disposed of,ff goodwill associated with the business is included in the carrying amount of the business in determining any loss on disposal. Our evaluation of whether the portion of a reporting unit being disposed of constitutes a business occurs on the date of abandonment. Although an operating store meets the accounting definition of a business prior to abandonment, it does not constitute a business on the closure date because the remaining assets on that date do not constitute an integrated set of activities (substantive processes) and assets that are capaa bla e of being managed for the purpos e of providing a return to investors. As a result, when closing individual stores, we do not include goodwill in the calculation of any loss on disposal of the related assets. rr We recorded no goodwill impairment during fiscal 2023, fiscal 2022 and fiscal 2021. See Note 8, Other Intangible Assets and Goodwill, for further information. Othett r Intangible Assets Other intangible assets include finite-lived intangible assets, which mainly consist of acquired and reacquired rights, trade secrets, licensing agreements, contract-based patents and copyrights. These assets are amortized over their estimated usefulff lives and are tested for impairment using a similar methodology to our property, plant and equipment, as described above. Indefinite-lived intangibles, which consist primarily of trade names and trademarks, are tested for impairment annually during the third fiscal quarter, or more frequently if an event occurs or circumstances change that would indicate that impairment may exist. When evaluating other intangible assets for impairment, we may first perform a qualitative assessment to determine whether it is more likely than not that an intangible asset group is impaired. If we do not perform the qualitative assessment, or if we determine that it is not more likely than not that the fair value of the intangible asset group exceeds its carrying amount, we calculate the estimated fair value of the intangible asset group. Fair value is the price a willing buyer would pay for the intangible asset group and is typically calculated using an income approach, such as a relief-froff m-royalty model. If the carrying amount of the intangible asset group exceeds the estimated fair value, an impairment charge is recorded to reduce the carrying value to the estimated fair value. In addition, we continuously monitor and may revise our intangible asset usefulff when facts and circumstances change. lives if and There were no significant other intangible asset impairment charges recorded during fiscal years 2023, 2022 and 2021. See Note 8, Other Intangible Assets and Goodwill, for further information. Insurance Reserves We use a combination of insurance and self-iff nsurance mechanisms, including a wholly-owned capta ive insurance entity and participation in a reinsurance treaty, to provide for the potential liabilities for certain risks, including workers’ compensation, healthcare benefits, general liability, property insurance and director and offiff cers’ liability insurance. Liabilities associated with the risks that are retained by us are not discounted and are estimated, in part, by considering historical claims experience, demographics, exposure and severity factors and other actuat rial assumptions. Revenue Recogno itiott n Consolidated revenues are presented net of intercompany eliminations for wholly-owned subsu idiaries and investees controlled by us and for product sales to and royalty and other fees from licensees accounted for under the equity method. Additionally, 53 consolidated revenues are recognized net of any discounts, returns, allowances and sales incentives, including coupon redemptions and rebates. Company-opeo rated Store Revenues Company-operated store revenues are recognized when payment is tendered at the point-of-sale as the performance obligation has been satisfieff d. For products sold via deliveryrr platforms, contractuat determine gross versus net presentation and revenues are also recognized when control of products are transferff customers. Delivery service fees were immaterial in the periods presented. Company-operated store revenues are reported excluding sales, use or other transaction taxes that are collected from customers and remitted to taxing authorities. l terms are evaluated for each service provider to red to the Licensed Store Revenues Licensed store revenues consist of product and equipment sales, royalties and other fees paid by licensees using the Starbur brand. Sales of coffee, tea, food and related products are generally recognized upon shipment to licensees, depending on contract terms. Shipping charges billed to licensees are also recognized as revenue, and the related shipping costs are included in product and distribution costs on our consolidated statements of earnings. cks We consider pre-opening services, including site evaluation and selection, store architecturt al/design and development and operational training, to be performance obligations that are separate from the license to operate under the Starbuc ks brand. These services provide distinct value to our licensees, including business and industryrr insight and knowledge that transferff s value apart from the license. Revenues associated with pre-opening services are recognized upon completion of the related performance obligations, generally when a store is opened. Royalty revenues are recognized based upon a percentage of reported sales, and other continuing fees, such as marketing and service fees, are recognized as the performance obligations are met. r Stored Value Cardsdd Stored value cards can be activated through various channels, including at our company-operated and most licensed store locations, online at Starbuc locations, such as groceryrr stores, although they cannot be reloaded at these third-party websites or locations. Amounts loaded onto stored value cards are initially recorded as deferred revenue and recognized as revenue upon redemption. Historically, the majoa rity of stored value cards are redeemed within one year. ks.com or via mobile devices held by our customers and at certain other third-party websites and r In many of our company-owned markets, including the U.S., our stored value cards do not have an expiration date nor do we charge service fees that cause a decrement to customer balances. Based on historical redemption rates, a portion of stored value cards is not expected to be redeemed and will be recognized as breakage over time in proportion to stored value card redemptions. The redemption rates are based on historical redemption patterns for each market, including the timing and business channel in which the card was activated or reloaded, and remittance to government agencies under unclaimed property laws, if applicable. Breakage is recognized as company-operated stores and licensed stores revenue within the consolidated statement of earnings. For the fiscal years ended October 1, 2023, October 2, 2022 and October 3, 2021, we recognized breakage revenue of $196.1 million, $196.0 million and $164.5 million in company-operated store revenues, respectively, and $18.9 million, $16.7 million and $16.6 million in licensed store revenues, respectively. Loyao ltytt Program ks Card are automatically enrolled in the Customers in the U.S., Canada and certain other countries who register their Starbuc ks Rewards program, which is primarily a spend-based loyalty program. They earn loyalty points (“Stars”) in a variety Starbuc r ks Rewards members can earn Stars by paying of ways, including with each purchase at participating Starbur with cash, credit or debit cards, or selected mobile wallets at company-operated and certain participating licensed stores in the U.S. and Canada. Afteff product that, regardless of where the related Stars were earned within that country, will be honored at company-operated stores and certain participating licensed store locations in that same country. r accumulating a certain number of Stars, the customer earns a reward that can be redeemed for free cks stores. Starbuc r r We defer revenue associated with the estimated selling price of Stars earned by Starbuc products as each Star is earned and a corresponding liabia lity is establa ished in deferred revenue. This deferral is based on the estimated value of the product for which the reward is expected to be redeemed, net of estimated unredeemed Stars. Stars generally expire afteff ks Rewards members towards free r six months. r When a customer redeems an earned reward, we recognize revenue for the redeemed product and reduce the related deferred revenue. 54 Othett r Revenues Other revenues primarily include royalty revenues, sales of packaged coffee, tea and a variety of ready-to-drink beverages and single-serve coffee and tea products to customers outside of our company-operated and licensed stores. Sales of these products are generally recognized upon shipment to customers, depending on contract terms. Other revenues also include producd t sales to and licensing revenue from Nestlé related to our Global Coffee Alliance. Product sales to Nestlé are generally recognized when the product is shipped whereas royalty revenues are recognized based on a percentage of reported sales. Defee rred Revenues Our deferred revenue primarily consists of the up-front prepaid royalty from Nestlé, for which we have continuing performance obligations to suppor associated with our loyalty program. See Note 11, Deferred Revenue, for further information. t the Global Coffee Alliance, and our unredeemed stored value card liability and unredeemed Stars u Disaii ggregation of Revenues Revenues disaggregated by segment, product type and geographic area are disclosed in Note 17, Segment Reporting. Product and Distii ritt bui tion Coststt Product and distribution costs primarily consist of raw materials, purchased goods, packaging costs and delivery-related expenses as well as operational costs of our suppl y chain organization, such as wages and benefits, occupau ncy costs and depreciation expenses, in suppor sold at our company-operated and licensed stores as well as through Channel Development and our other businesses. Also included are inventoryrr and suppl turing, warehousing and transportation activities of products t of sourcing, procuring, manufacff y chain asset impairment costs. u u u Stortt e Operatintt g Expexx nses Store operating expenses consist of costs incurred in our company-operated stores, primarily wages and benefits related to store partners (employees), occupau ncy costs, delivery commissions and other costs that directly suppor related activities of those stores. t the operation and sales- u General and Admidd niii stii ratt tive Expexx nses General and administrative expenses primarily consist of wages and benefits, profesff corporate headquarters and regional offiff ces that suppor partner resources. u t our corporate functions, including technology, finance, legal and sional service fees and occupau ncy costs for Advedd rtistt ing We expense most advertising costs as they are incurred, except for certain production costs that are expensed the first time the advertising takes place. Advertising expenses totaled $507.8 million, $416.7 million and $305.1 million in fiscal 2023, 2022 and 2021, respectively. Government Subsidies On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), which among other things, provided employer payroll tax credits for wages paid to employees who are unabla e to work during the COVID-19 pandemic and options to defer payroll tax payments for a limited period. Based on our evaluation of the CARES Act, we qualified 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 Subsu idy (“CEWS”) to help employers offsff et a portion of their employee wages for a limited period. We elected to treat qualifieff d government subsu idies from the U.S., Canada and other governments as offsff ets to the related operating expenses. The CARES Act and CEWS were no longer applicable to us in late fiscal 2021. The qualifieff d payroll credits reduced our store operating expenses by $210.0 million on our consolidated statement of earnings during fiscal 2021. Afteff million and $69.4 million was included in prepaid expenses and other current assets as of October 1, 2023 and October 2, 2022, respectively. As of October 1, 2023, the deferred payroll tax payments have been remitted in full. As of October 2, 2022, deferred payroll tax payments of $116.5 million were included in accruerr d liabilities on our consolidated balance sheets. r netting the qualified credits against our payabla e, a receivable balance of $15.6 Stortt e Preopeo ningii Expexx nses Costs incurred in connection with the start-up and promotion of new company-operated store openings are expensed as incurred. Asset Retireii ment Obligat iott ns i 55 We recognize a liabia lity for the fair value of required asset retirement obligations (“ARO”) when such obligations are incurred. Our AROs are primarily associated with leasehold improvements, which, at the end of a lease, we are contractuat lly obligated to remove in order to comply with the lease agreement. At the inception of a lease with such conditions, we record an ARO liability and a corresponding capia tal asset in an amount equal to the estimated fair value of the obligation. We estimate the liability using a number of assumptions, including store closing costs, cost inflation rates and discount rates, and accrete the liability to its projected future value over time. The capia talized asset is depreciated using the same depreciation convention as leasehold improvement assets. Upon satisfaction of the ARO conditions, any difference between the recorded ARO liability and the actual retirement costs incurred is recognized as a gain or loss in store operating expenses on our consolidated statements of earnings. As of October 1, 2023 and October 2, 2022, our net ARO assets included in property, plant and equipment were $25.6 million and $26.1 million, respectively, and our net ARO liabilities included in other long-term liabilities were $110.3 million and $104.7 million, respectively. Stoctt k-based Compensation We maintain several equity incentive plans under which we may grant non-qualified stock options, incentive stock options, restricted stock, restricted stock units (“RSUs”) or stock appreciation rights to employees, non-employee directors and consultants; stock options have not been broadly used as part of our compensation strategy in recent years. We also have an employee stock purchase plan (“ESPP”). RSUs issued by us are equivalent to nonvested shares under the applicable accounting guidance. We record stock-based compensation expense based on the fair value of stock awards at the grant date and recognize the expense over the related service period following a graded vesting expense schedule. Expense for performance-based RSUs is recognized when it is probabla e the performance goal will be achieved. Performance goals are determined by the Board and may include measures such as earnings per share, operating income, return on invested capia tal, total shareholder return and metrics focused on building inclusive and diverse teams. The fair value of each stock option granted is estimated on the grant date using the Black-Scholes-Merton option valuation model. The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market conditions and our historical experience. The fair value of ks common stock on the award date, less the present value of expected dividends RSUs is based on the closing price of Starbuc not received during the vesting period. If applicable, our total shareholder return relative to our peer group is incorporated into the underlying assumptions using a Monte Carlo simulation valuation model to calculate grant date fair value. Compensation expense is recognized over the requisite service period for each separately vesting portion of the award, and only for those awards expected to vest, with forfeiturt es estimated at the date of grant based on our historical experience and future expectations. r Foreigngg Currencyc Translatll iott n Our international operations generally use their local currency as their functional currency. Assets and liabilities are translated at exchange rates in effeff ct at the balance sheet date. Income and expense accounts are translated at the average monthly exchange rates during the year. Resulting translation adjud stments are reported as a component of OCI and recorded in AOCI on our consolidated balance sheets. Income Taxeaa s We compute income taxes using the asset and liabia lity method, under which deferred income taxes are recognized based on the differences between the financial statement carrying amounts and the respective tax bases of our assets and liabilities. Deferred tax assets and liabilities are measured using current enacted tax rates expected to apply to taxabla e income in the years in which we expect the temporaryrr differences to reverse. The effeff ct of a change in tax rates on deferred taxes is recognized in income in the period that includes the enactment date. We routinely evaluate the likelihood of realizing the benefit of our deferred tax assets and may record a valuation allowance if,ff based on all availabla e evidence, we determine that some portion of the tax benefit will not be realized. In evaluating our ability to recover our deferred tax assets within the jurisdictions from which they arise, we consider all availabla e positive and negative evidence, including scheduled reversals of deferred tax liabia lities, projected future taxabla e income, tax-planning strategies and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjud stment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. In addition, our income tax returns are periodically audited by domestic and foreign tax authorities. These audits include review of our tax filing positions, including the timing and amount of deductions taken and the allocation of income between tax jurisdictions. We evaluate our exposures associated with our various tax filing positions and recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the relevant taxing authorities, including resolutions of any related appeals or litigation processes, based on the technical merits of our position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. For uncertain tax positions that do not meet this threshold, we record a related liability. We adjud st our unrecognized tax benefit liabia lity and income tax expense in the 56 period in which the uncertain tax position is effeff ctively settled, the statutt e of limitations expires for the relevant taxing authority to examine the tax position or when new information becomes availabla e. ks recognizes interest and penalties related to income tax matters in income tax expense on our consolidated statements r Starbuc of earnings. Accruer d interest and penalties are included within the related tax balances on our consolidated balance sheets. Global intangible low-taxed income (“GILTI”) provisions are applied, providing an incremental tax on foreign income. We have made a policy election to classify taxes due under the GILTI provision as a current period expense. Earnings per Share Basic earnings per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed based on the weighted average number of shares of common stock and the effeff ct of dilutive potential common shares outstanding during the period, calculated using the treasury stock method. Dilutive potential common shares include outstanding stock options and RSUs. Performance-based RSUs are considered dilutive when the related performance criterion has been met. Common Stoctt k Share Repuee rchases r We may repurchase shares of Starbuc ks common stock under a program authorized by our Board, including pursuant to a contract, instruction or written plan meeting the requirements of Rule 10b5-1(c)(1) of the Exchange Act. Under applicable Washington State law, shares repurchased are retired and not displayed separately as treasury stock on the financial statements. Instead, the par value of repurchased shares is deducted from common stock and the excess repurchase price over par value is deducted from additional paid-in capia tal and from retained earnings (deficff it). Recent Accountintt g Pronouncements Recently Adopt dd ed Accounting Pronouncements In the first quarter of fiscal 2022, we adopted the Financial Accounting Standards Board (“FASB”) issued guidance related to reference rate reform. The pronouncement provides temporaryrr 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 Offeff guidance was effeff ctive upon issuance and generally can be applied to applicable contract modifications through December 31, 2024. The adoption of the new guidance did not have a material impact on our financial statements. red Rate (“LIBOR”) and other interbank offeff red rates to alternative reference rates. The 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 availabla e-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 and resulted in a $2.2 million transition adjud stment to opening shareholders’ retained deficit on our consolidated statements of equity. Note 2: Acquisitions, Divestitures and Strategic Alliance Fiscii al 2023 On January 13, 2023, we sold the assets, ppriimarililyy consiis iti gng of iintellllectu lal propertiies associated with the Seat ltle's Best Coffee brbrandd, to Nestllé for $$110.0 imillillion, hwhiichh was iin lcl dudedd iin ggaiin from salle of assets on our cons lolididat ded statements of ear ini gngs. Resullts from Seat ltle's Best Coffee opera itions priior to hthe salle are reportedd iin our hChannell Devellopment opera itingg seggment. imillillion. hThe transactiion resullt ded iin a pre-tax ggaiin of $$91.3 Fiscii al 2022 In the fourth quarter of fiscal 2022, we sold our Evolution Fresh brand and business to Bolthouse Farms. This transaction did not have a material impact on our consolidated financial statements. Fiscii al 2021 ks Coffee Korea Co., Ltd. where our joint In the fourth quarter of fiscal 2021, we sold our 50% ownership interest in Starbuc venturt e partner, E-Mart Inc., acquired an additional 17.5% interest and Apfin Investment Pte Ltd, an affiff liate of GIC Private Limited, which is a Singapor e sovereign wealth fund, acquired the remaining 32.5%. The sale had a combined price of $1.175 billion. This transaction resulted in a pre-tax gain of $864.5 million, which is included in net gain resulting from divestiture of certain operations on our consolidated statements of earnings. a r Note 3: 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, including forward-starting interest rate swaps and 57 treasury locks, settled in cash based upon the difference between an agreed-upon rate at settlement. These agreements are generally settled around the time of the pricing of the related debt. Each derivative agreement's gain or loss is recorded in AOCI and is subsu equently reclassified to interest expense over the life of the related debt. benchmark rate and the prevailing benchmark u 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 offsff etting 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 9, Debt, for additional information on our long-term debt. Foreigngg Currencyc 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, inventoryrr purchases and intercompany borrowing and lending activities. The resulting gains and losses from these derivatives are recorded in AOCI and subsu equently reclassified to revenue, product and distribution costs, or interest income and other, net, respectively, when the hedged exposures affeff ct 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 subsu equently reclassified to net earnings when the hedged net investment is either sold or subsu tantially liquidated. Gains and losses from these derivatives representing hedged components excluded from the assessment of effeff ctiveness are amortized over the life of the hedging instrument using a systematic and rational method and recognized in interest expense. 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 offsff et by the financial impact of translating foreign currency-denominated payabla es and receivables, and these gains and losses are recorded in interest income and other, net. Commoditiii es 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 5, Inventories, or our longer- dated forecasted coffee demand where underlying fixed price and price-to-be-fixed contracts are not yet availabla e. The resulting gains and losses are recorded in AOCI and are subsu equently reclassified to product and distribution costs when the hedged exposure affeff cts net earnings. Depending on market conditions, we may also enter into dairyrr forward contracts and futures contracts to hedge a portion of anticipated cash flows under our dairyrr purchase contracts and our forecasted dairyrr demand. The resulting gains or losses are recorded in AOCI and are subsu equently reclassified to product and distribution costs when the hedged exposure affeff cts 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 probabla e of occurring, the related accumulated derivative gains or losses are recognized in interest income and other, net on our consolidated statements of earnings. These derivatives may be accounted for prospectively as non-designated derivatives until maturity, re-designated to new hedging relationships or terminated early. We continue to believe transactions related to our other designated cash flow hedges are probabla e to occur. 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 offsff et price fluctuations on our beverage, food, packaging and transportation costs, which are included in product and distribution costs on our consolidated statements of earnings. 58 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): Cash Flow Hedges: Coffee Cross-currency swaps Dairyrr Foreign currency - other Interest rates Net Investment Hedges: Cross-currency swaps Foreign currency Foreign currency debt Net Gains/(Losses) Included in AOCI Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 Net Gains/(Losses) Expected to be Reclassified from AOCI into Earnings within 12 Months Outstanding Contract/Debt Remaining Maturity (Months) $ (78.1) $ (0.6) (1.8) 39.6 (6.6) 87.1 16.0 140.2 $ 153.9 (1.9) (2.6) 55.3 (5.8) 67.3 16.1 125.7 $ 197.8 4.4 (0.4) 1.3 (44.8) 37.9 16.0 (5.3) (70.8) — (1.8) 25.9 (3.1) — — — 6 14 6 34 0 102 0 6 Pre-tax gains and losses on derivative contracts and foreign currency-denominated long-term debt designated as hedging instruments recognized in OCI and reclassifications from AOCI to earnings (in millions): Year Ended Gains/(Losses) Recognized in OCI Before Reclassifications Gains/(Losses) Reclassified from AOCI to Earnings Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 Location of gain/(loss) $(152.9) $ 76.9 $ 223.5 $ 110.5 $ 126.2 $ (3.5) Product and distribution costs Cash Flow Hedges: Coffee Cross-currency swaps 4.9 24.8 13.7 Dairyrr (11.1) 3.6 0.5 Foreign currency - other Interest rates Net Investment Hedges: Cross-currency swaps (1) Foreign currency debt 9.4 103.9 (10.0) 0.3 50.3 56.1 54.1 19.1 53.5 175.5 20.5 42.6 3.1 0.3 (12.3) 23.6 6.7 0.2 1.4 — 27.4 — (6.9) 39.4 6.5 22.0 (2.3) 13.7 (2.0) — 14.3 — 1.9 Interest expense 12.7 Interest income and other, net 1.7 Product and distribution costs 1.8 Licensed stores revenues (7.3) Product and distribution costs — Interest income and other, net (1.8) Interest expense (3.6) Interest income and other, net 13.4 Interest expense — (1) Gains and losses recognized in earnings relate to components excluded from the assessment of effeff ctiveness. 59 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): Location of gain/(loss) recognized in earnings Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 Gains/(Losses) Recognized in Earnings Year Ended Non-Designated Derivatives: Dairyrr Interest income and other, net $ (0.1) $ Diesel fuel and other commodities Interest income and other, net Coffeff e Interest income and other, net Foreign currency - other Interest income and other, net Fair Value Hedges: Interest rate swap Interest expense Long-term debt (hedged item) Interest expense Notional amounts of outstanding derivative contracts (in millions)s : Coffee Cross-currency swaps rr Dairy Diesel fuel and other commodities Foreign currency - other Interest rate swaps (2.0) (5.4) (3.6) (18.7) (12.3) $ $ 0.2 3.7 9.2 46.8 (65.0) 73.9 — 2.6 — 7.5 (0.5) 14.0 Oct 1, 2023 Oct 2, 2022 266 $ 1,076 7 1 7 1,164 1,100 649 741 94 33 1,269 1,100 60 Fair value of outstanding derivative contracts (in millions) including the location of the asset and/or liability on the consolidated balance sheets: signated Derivative Instruments: Cross-currency swaps rr Dairy Foreign currency - other Balance Sheet Location Oct 1, 2023 Oct 2, 2022 Derivative Assets Other long-term assets $ 130.1 $ 115.4 P repaid expenses and other current assets Prepaid expenses and other current assets Other long-term assets Interest rate swap Prepaid expenses and other current assets Non-designated Derivative Instruments: Diesel fuel and other commodities Foreign currency Prepaid expenses and other current assets Prepaid expenses and other current assets Other long-term assets 0.4 32.0 22.9 0.4 0.7 7.5 — 0.5 39.9 33.5 — 0.4 34.3 7.3 Balance Sheet Location Oct 1, 2023 Oct 2, 2022 Derivative Liabilities Designated Derivative Instruments: Dairy rr Foreign currency - other Interest rate swaps Non-designated Derivative Instruments: Foreign currency A ccrued liabilities Accruer d liabilities Accruer d liabilities Other long-term liabilities Accruer d liabilities Other long-term liabilities $ $ 1.1 2.0 — 41.4 0.5 1.8 2.9 0.3 12.0 34.0 5.8 — The following amounts were recorded on the consolidated balance sheets related to fixed-to-floating interest rate swaps designated in fair value hedging relationships (in millions)s : Carrying amount of hedged item Cumulative amount of fair value hedging adjustment included in the carrying amount Oct 1, 2023 Oct 2, 2022 Oct 1, 2023 Oct 2, 2022 Location on the balance sheet Long-term debt(1) $ 1,060 $ 1,047.7 $ (40.0) $ (52.3) (1) Includes $750 million in Senior Notes that matured on October 1, 2023 but remained in current portion of long-term debt on the consolidated balance sheet as the debt repayment was not made until the first day of fiscal 2024. Additional disclosures related to cash flow gains and losses included in AOCI, as well as subsu equent reclassifications to earnings, are included in Note 12, Equity. 61 Note 4: Fair Value Measurements Assets and Liabiliii tieii s Measured at Fair Value on a Recurring Basisii (inii millii ioll ns:ss Assets: Cash and cash equivalents Short-term investments: Availabla e-for-sale debt securities Corporate debt securities U.S. government treasury securities Foreign government obligations Total availabla e-for-sale debt securities Structurt ed deposits Marketable equity securities Total short-term investments Prepaid expenses and other current assets: Derivative assets Long-term investments: Availabla e-for-sale debt securities Corporate debt securities Mortgage and other asset-backed securities State and local government obligations U.S. government treasury securities Total long-term investments Other long-term assets: Derivative assets Total assets Liabilities: Accruer d liabia lities: Derivative liabia lities Other long-term liabilities: Derivative liabia lities Total liabilities Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance at October 1, 2023 $ 3,551.5 $ 3,551.5 $ — $ 64.0 2.8 3.9 70.7 261.2 69.6 401.5 41.0 91.1 50.2 1.3 104.7 247.3 — 2.8 — 2.8 — 69.6 72.4 — — — — 104.7 104.7 64.0 — 3.9 67.9 261.2 — 329.1 41.0 91.1 50.2 1.3 — 142.6 153.0 4,394.3 $ — 3,728.6 $ 153.0 665.7 $ 3.6 $ 43.2 46.8 $ — $ — — $ 3.6 $ 43.2 46.8 $ $ $ $ — — — — — — — — — — — — — — — — — — — 62 Assets: Cash and cash equivalents Short-term investments: Availabla e-for-sale debt securities Corporate debt securities U.S. government treasury securities Total availabla e-for-sale debt securities Structurt ed deposits Marketable equity securities Total short-term investments Prepaid expenses and other current assets: Derivative assets Long-term investments: Availabla e-for-sale debt securities Corporate debt securities Foreign government obligations Mortgage and other asset-backed securities State and local government obligations U.S. government treasury securities Total long-term investments Other long-term assets: Derivative assets Total assets Liabilities: Accruer d liabia lities: Derivative liabia lities Other long-term liabilities: Derivative liabia lities Total liabilities Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance at October 2, 2022 $ 2,818.4 $ 2,797.3 $ 21.1 $ 22.4 9.3 31.7 275.1 57.7 364.5 75.1 134.7 3.8 56.5 1.3 82.8 279.1 — 9.3 9.3 — 57.7 67.0 — — — — — 82.8 82.8 22.4 — 22.4 275.1 — 297.5 75.1 134.7 3.8 56.5 1.3 — 196.3 156.2 3,693.3 $ — 2,947.1 $ 156.2 746.2 $ 21.0 $ — $ 21.0 $ 34.0 55.0 $ — — $ 34.0 55.0 $ $ $ $ — — — — — — — — — — — — — — — — — — — There were no material transferff s 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 liabia lities when a legally enforceabla e master netting agreement exists. Availaii ble-ll fo- s r-sale Debt Securitieii imilllliion andd ilmillilion for fifisc lal 2023, 2022 andd 2021, respec itiv lelyy. Realized gains and losses were not material for fifisc lal 2023, 2022 Long-term investments ggenerallylly mature $$134.1 andd 2021. Gross unrealili dzed h lholdidi gng ggaiins andd llosses were not material as of Octobber 1, 2023 andd Octobber 2, 2022. iwi hthiin 5 years. Proc deeds from salles of secu iri ities were $2.5 million, $$72.6 63 Marketabl tt ell Equityii Securitiii es Marketable equity securities include equity mutual funds and exchange-traded funds. Our marketable equity securities portfolff approximates a portion of our liability under our MDCP, a defined contribution plan. Our MDCP liabia lity was $90.4 million and $85.9 million as of October 1, 2023 and October 2, 2022, respectively. The changes in net unrealized holding gains and losses in the marketable equity securities portfolff unrealized holding gains and losses on marketable equity securities were not material as of October 1, 2023 and October 2, 2022. io included in earnings for fiscal 2023, 2022 and 2021 were not material. Gross io Derivative Assets and Liabiliii tiii es Derivative assets and liabia lities are described further in Note 3, Derivative Financial Instruments. Assets and Liabiliii tieii s Measured at Fair Value on a Nonrecurringii Basisii Assets and liabia lities 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, equity and other investments and other assets. These assets are measured at fair value if determined to be impaired. Impairment of property, plant and equipment and ROU assets is included in Note 1, Summaryrr of Significant Accounting Policies and Estimates. We recognized impairments during fiscal years ended Octobber 1, 2023, Octobber 2, 2022 andd Octobber 3, 2021. Impaiirments recognigni dzed iin hthe fifisc lal yyear e dndedd Octobber 3, 2021 were prp imarily related to our restructurt Significant Accounting Policies and Estimates and Note 10, Leases for additional discussion of these impairments. ing plan. See Note 1, Summary of Fair Value of Othett r Finaii ncial Instrutt mentstt The estimated fair value of our long-term debt based on the quoted market price (Level 2) is included at Note 9, Debt. Note 5: Inventories (in millions)s Coffee: Unroasted Roasted Other merchandise held for sale Packaging and other suppl u ies Total $ $ Oct 1, 2023 Oct 2, 2022 747.7 $ 1,018.6 280.3 364.6 413.8 310.3 430.9 416.8 1,806.4 $ 2,176.6 levels vary due to seasonality, Other merchandise held for sale includes, among other items, serveware, food and tea. Inventoryrr commodity market suppl y and price fluctuations. u As of October 1, 2023, we had committed to purchasing green coffee totaling $412 million under fixed-price contracts and an estimated $577 million under price-to-be-fixed contracts. A portion of our price-to-be-fixed contracts are effeff ctively fixed through the use of futures. See Note 3, Derivative Financial Instruments for further discussion. Price-to-be-fixed contracts are purchase commitments whereby the quality, quantity, delivery period and other negotiated terms are agreed upon, but the date, and thereforff e the price, at which the base “C” coffee commodity price component will be fixed has not yet been establa ished. For ks or the seller has the option to “fixff ” the base “C” coffee commodity price prior to the deliveryrr most contracts, either Starbuc date. For other contracts, Starbuc ks and the seller may agree upon pricing parameters determined by the base “C” coffeeff r commodity price. Until prices are fixed, we estimate the total cost of these purchase commitments. We believe, based on establa ished relationships with our suppl is remote. iers and continuous monitoring, the risk of non-deliveryrr on these purchase commitments u r Note 6: Equity Investments (in millions)s Equity method investments Other investments Total Oct 1, 2023 Oct 2, 2022 $ $ 415.7 24.2 439.9 $ $ 283.1 28.1 311.2 Equityii Method Investmett As of October 1, 2023, we had a 50% ownership interest in Tata Starbuc r Starbuc ks® retail stores. ntstt r ks Limited (India), which operates licensed We also license the rights to producd e and distribute Starbuc American Coffee Partnership with the Pepsi-Cola Company, which develops and distributes bottled Starbuc ks-branded products to our 50% owned joint venturt e, The North ks® beverages, r r 64 including Frappuccino coffee drinks, Starbuc Iced Coffee. r ks Doubleshot espresso drinks, Starbuc r ks® Iced Espresso Classics and Starbuc r ks® Our share of income and losses from our equity method investments is included in income from equity investees on our consolidated statements of earnings. Also included in this line item is our proportionate share of gross profitff coffee and other product sales to, and royalty and license fee revenues generated from, equity investees. Revenues generated from these entities were $85.7 million, $80.9 million and $160.8 million in fiscal 2023, 2022 and 2021, respectively. Related product and distribution costs were $85.6 million, $76.5 million and $92.1 million in fiscal 2023, 2022 and 2021, respectively. As of October 1, 2023 and October 2, 2022, there were $19.1 million and $14.8 million of accounts receivabla e from equity investees, respectively, on our consolidated balance sheets, primarily related to product sales and royalty revenues. resulting from We also hold equity interests in other entities to suppor partnership interest in Valor Siren Venturt es I L.P. and Valor Siren Venturt es II L.P, which are private equity funds investing in technologies, products and solutions relating to food or retail. The related financial statements activities were not material during the periods presented. t our corporate and investment strategies, including our limited u Additional disclosure regarding changes in our equity method investments due to acquisition or divestiturt e is included in Note 2, Acquisitions, Divestiturt es and Strategic Alliance. Othett r Investmett ntstt We have equity interests in entities that develop and operate Starbur t our strategic initiatives. We do not have significant influence over these entities and their fair values are companies that suppor not readily determinable. Thereforff e, we elected to measure these investments at cost with adjud stments for observabla e changes in price or impairment. cks licensed stores in several global markets, as well as in u 65 Note 7: Supplemental Balance Sheet and Statement of Earnings Information (in millions)s Property,tt Planll t and Equipmii ent, net Land Buildings Leasehold improvements Store equipment Roasting equipment Furniture, fixturt es and other Work in progress Property, plant and equipment, gross Accumulated depreciation Property, plant and equipment, net s Accrued Liabilitie ii cruer d occupau ncy costs Accruer d dividends payabla e Accruer d capital and other operating expenditures Insurance reserves Income taxes payabla e Accruer d business taxes Total accruerr d liabia lities Stortt e Operatintt g Expexx nses Wages and benefits Occupau ncy costs Other expenses Total store operating expenses Oct 1, 2023 Oct 2, 2022 $ 46.1 $ 666.5 10,133.7 3,332.5 859.4 1,664.5 607.5 17,310.2 (9,923.1) 7,387.1 $ 46.1 555.4 9,066.8 3,018.2 838.5 1,526.1 558.7 15,609.8 (9,049.3) 6,560.5 Oct 1, 2023 Oct 2, 2022 $ 86.7 651.2 771.7 233.5 189.3 212.7 84.6 608.3 878.1 232.3 139.2 194.6 2,145.1 $ 2,137.1 $ $ $ Oct 1, 2023 Year Ended Oct 2, 2022 Oct 3, 2021 $ $ 8,733.4 $ 8,157.7 $ 2,871.0 3,115.9 2,674.1 2,730.0 6,989.3 2,561.5 2,380.1 14,720.3 $ 13,561.8 $ 11,930.9 66 Note 8: Other Intangible Assets and Goodwill Indefie niii teii -Lived Intangible Assets (in millions)s Trade names, trademarks and patents Oct 1, 2023 Oct 2, 2022 $ 79.4 $ 97.5 Finiii teii -Lived Intangible Assets (in millions)s Oct 1, 2023 Oct 2, 2022 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Acquired and reacquired rights $ 957.6 $ (957.6) $ — $ 990.0 $ (990.0) $ Acquired trade secrets and processes Trade names, trademarks and patents Licensing agreements Other finite-lived intangible assets 27.6 131.0 13.0 20.1 (27.6) (91.9) (11.0) (20.1) — 39.1 2.0 — 27.6 124.6 19.3 20.6 (27.3) (69.6) (16.2) (20.6) Total finite-lived intangible assets $ 1,149.3 $ (1,108.2) $ 41.1 $ 1,182.1 $ (1,123.7) $ — 0.3 55.0 3.1 — 58.4 Amortization expense for finite-lived intangible assets was $21.5 million, $192.7 million and $223.4 million during fiscal 2023, 2022 and 2021, respectively. Estimated future amortization expense as of October 1, 2023 (in millions): Fiscal Year Endingg 2024 2025 2026 2027 2028 r Thereafteff Total estimated future amortization expens e Goodwill $ $ 19.8 14.0 2.1 1.8 1.2 .2 2 41.1 Changes in the carryirr ng amount of goodwill by reportabla e operating segment (in millions)s : North America International Channel Development Corporate and Other Total Goodwill balance at October 3, 2021 Other (1) Goodwill balance at October 2, 2022 Other (1) Goodwill balance at October 1, 2023 $ $ $ 493.2 (2.1) 491.1 0.4 491.5 $ $ $ 3,148.3 (391.6) 2,756.7 (65.6) 2,691.1 $ $ $ 34.7 — 34.7 — 34.7 $ $ $ 1.1 (0.1) 1.0 — 1.0 $ $ $ 3,677.3 (393.8) 3,283.5 (65.2) 3,218.3 (1) “Other” consists of changes in the goodwill balance resulting from foreign currency translation. During the fiscal year ended October 1, 2023, we completed our annual goodwill impairment analysis. The results of our analysis indicated significant excess fair values over carrying values across the different reporting units, and thereforeff no goodwill impairment was recorded. Note 9: Debt Revolving Creditdd Faciliii tyii Our $3.0 billion unsecured five-year revolving credit facility (the “2021 credit facility”), of which $150 million may be used for issuances of letters of credit, is currently set to mature on September 16, 2026. The 2021 credit facility is availabla e for working capital, capital expenditures and other corporate purpos es, including acquisitions and share repurchases. We have the option, subju ect to negotiation and agreement with the related banks, to increase the maximum commitment amount by an additional $1.0 billion. rr 67 Borrowings under the 2021 credit facility, which was most recently amended in April 2023, will bear interest at a variable rate based on Term SOFR, 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 “Base Rate” is the highest of (i) the Federal Funds Rate (as defined in the 2021 credit facility) plus 0.500%, (ii) Bank of America’s prime rate, and (iii) Term SOFR plus 1.000%. Term SOFR means the forward-looking SOFR term rate administrated by the Chicago Mercantile Exchange plus a SOFR Adjud stment of 0.100%. 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 October 1, 2023, we were in compliance with all applicable covenants. No amounts were outstanding under our 2021 credit facility as of October 1, 2023 or October 2, 2022. Short-ttt ertt mrr Debt r program, we may issue unsecured commercial papea Under our commercial papea outstanding at any time of $3.0 billion, with individual maturities that may vary but not exceed 397 days from the date of issue. r program are required to be backstopped by availabla e commitments under our Amounts outstanding under the commercial papea 2021 credit facility. The proceeds from borrowings under our commercial papea needs, capia tal expenditures and other corporate purpos es, including, but not limited to, business expansion, payment of cash dividends on our common stock and share repurchases. As of October 1, 2023, we had no borrowings outstanding under the program. As of October 2, 2022, we had $175.0 million in borrowings outstanding under this program. r notes up to a maximum aggregate amount r program may be used for working capia tal rr Additionally, we hold the following Japaa nese yen-denominated credit facilities that are availabla e for working capia tal needs and capia tal expenditures within our Japaa nese market: • • A ¥5 billion, or $33.5 million, credit facility is currently set to mature on January 4, 2024. Borrowings under this credit facility are subju ect to terms defined within the facility and will bear interest at a variable rate based on Tokyo Interbank Offeff red Rate (“TIBOR”) plus an applicable margin of 0.400%. A ¥10 billion, or $67.0 million, credit facility is currently set to mature on March 27, 2024. Borrowings under this credit facility are subju ect to terms defined within the facility and will bear interest at a variable rate based on TIBOR plus an appl icable margin of 0.300%. a As of October 1, 2023 we had ¥5 billion, or $33.5 million, of borrowings outstanding under these credit facilities. As of October 2, 2022, we had no borrowings outstanding under these credit facilities. 68 Long-tgg ertt mrr Debt Components of long-term debt including the associated interest rates and related estimated fair values by calendar maturity (in millions, excepte interest rates): Issuance March 2023 notes October 2023 notes(2) ry 2024 notes(3) Februarr March 2024 notes(4) August 2025 notes Februarr ry 2026 notes June 2026 notes March 2027 notes March 2028 notes November 2028 notes August 2029 notes(2) March 2030 notes November 2030 notes Februarr ry 2032 notes Februarr ry 2033 notes June 2045 notes December 2047 notes November 2048 notes August 2049 notes March 2050 notes November 2050 notes Total Oct 1, 2023 Oct 2, 2022 Face Value Estimated Fair Value Face Value Estimated Fair Value Stated Interest Rate Effective Interest Rate (1) $ — $ — $ 1,000.0 $ 750.0 500.0 569.3 1,250.0 1,000.0 500.0 500.0 600.0 750.0 1,000.0 750.0 1,250.0 1,000.0 500.0 350.0 500.0 1,000.0 1,000.0 500.0 1,250.0 749.9 504.2 569.3 750.0 500.0 588.4 996.5 744.8 497.3 584.7 1,210.5 1,250.0 1,209.6 985.5 463.5 446.1 554.7 704.5 904.1 615.1 1,027.1 828.0 470.7 275.3 354.0 799.0 792.7 328.6 843.4 — 500.0 500.0 600.0 750.0 1,000.0 750.0 1,250.0 1,000.0 — 350.0 500.0 1,000.0 1,000.0 500.0 1,250.0 — 458.3 437.9 554.8 704.7 900.3 607.7 1,017.9 827.1 — 281.5 369.6 824.6 817.8 342.0 874.9 3.100 % 3.850 % 5.853 % 0.372 % 3.800 % 4.750 % 2.450 % 2.000 % 3.500 % 4.000 % 3.550 % 2.250 % 2.550 % 3.000 % 4.800 % 4.300 % 3.750 % 4.500 % 4.450 % 3.350 % 3.500 % 3.107 % 2.859 % 6.084 % 0.462 % 3.721 % 4.788 % 2.511 % 2.058 % 3.529 % 3.958 % 3.840 % 3.084 % 2.582 % 3.155 % 3.798 % 4.348 % 3.765 % 4.504 % 4.447 % 3.362 % 3.528 % 15,519.3 13,426.2 15,038.4 13,052.0 Aggregate debt issuance costs and unamortized premium/ (discount), net Hedge accounting fair value adjud stment(2) (113.1) (40.0) (117.2) (52.3) Total $ 15,366.2 $ 14,868.9 (1) Includes the effeff cts of the amortization of any premium or discount and any gain or loss upon settlement of related treasuryrr locks or forward-starting interest rate swaps utilized to hedge the interest rate risk prior to the debt issuance. (2) Amount includes the change in fair value due to changes in benchmark interest rates related to hedging our October 2023 notes and $350 million of our August 2029 notes. Refer to Note 3, Derivative Financial Instruments, for additional information on our interest rate swap designated as a fair value hedge. (3) Floating rate notes which bear interest at a rate equal to Compounded SOFR (as defined in the Februarr ry 2024 notes) plus 0.420%, resulting in a stated interest rate of 5.853% at October 1, 2023. (4) Japaa nese yen-denominated long-term debt. 69 The following tabla e summarizes our long-term debt maturities as of October 1, 2023 by fiscal year (in millions): Fiscal Year 2024(1) 2025 2026 2027 2028 Thereafteff r Total $ Total 1,819.3 1,250.0 1,500.0 500.0 600.0 9,850.0 $ 15,519.3 (1) Includes $750 million in Senior Notes that matured on October 1, 2023 but remained in current portion of long-term debt on the consolidated balance sheet as the debt repayment was not made until the first day of fiscal 2024. Note 10: Leases In fiscal 2021, we subsu tantially completed our plan to optimize our North America store portfolff metropolitan markets by developing new store formats to better cater to changing customer tastes and preferff ences. During the fiscal year ended October 3, 2021, we recognized accelerated amortization of ROU lease assets and other lease costs of $89.5 million, which were recognized within restructurt not recognize any material restructurt 2023 and October 2, 2022. ing and impairment amounts related to this plan during the fiscal years ended October 1, ing and impairments on the consolidated statements of earnings. We did io, primarily in dense The components of lease costs (in millions)s : Operating lease costs(1) Variable lease costs Short-term lease costs Total lease costs Oct 1, 2023 Year Ended Oct 2, 2022 Oct 3, 2021 $ $ 1,601.0 $ 1,554.8 $ 1,050.3 28.0 939.1 28.1 2,679.3 $ 2,522.0 $ 1,579.2 949.6 30.9 2,559.7 (1) Includes immaterial amounts of sublu ease income and rent concessions. The following tabla e includes suppl u emental information (in millions)s : Cash paid related to operating lease liabia lities $ Operating lease liabilities arising from obtaining ROU assets 1,657.2 $ 1,893.4 1,647.3 $ 1,639.4 1,707.1 1,590.3 Oct 1, 2023 Year Ended Oct 2, 2022 Oct 3, 2021 Weighted-average remaining operating lease term Weighted-average operating lease discount rate Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 8.5 years 3.1 % 8.5 years 2.6 % 8.7 years 2.5 % Finance lease assets are recorded in property, plant and equipment, net with the corresponding lease liabia lities included in accruer d liabia lities and other long-term liabia lities on the consolidated balance sheet. Finance leases were not material as of October 1, 2023, October 2, 2022 and October 3, 2021. 70 Minimum future maturities of operating lease liabilities (in millions)s : Fiscal Year 2024 2025 2026 2027 2028 Thereafteff r Total lease payments Less imputed interest Total Total 1,577.6 1,532.0 1,399.1 1,206.7 1,000.2 3,878.5 10,594.1 (1,394.0) 9,200.1 $ $ As of October 1, 2023, we have entered into operating leases that have not yet commenced of $1.4 billion, primarily related to real estate leases. These leases will commence between fiscal year 2024 and fiscal year 2027 with lease terms of 2 years to 20 years. Note 11: Deferred Revenue During fiscal 2018, we licensed the rights to sell and market our products in authorized channels through the Global Coffee Alliance and received an up-front prepaid royalty from Nestlé. The up-front payment of approximately $7 billion was recorded as deferred revenue as we have continuing performance obligations to suppor t the Global Coffee Alliance, including providing Nestlé access to certain intellectual properties and products for future resale. The up-front payment is being recognized as other revenue on a straight-line basis over the estimated economic lifeff of the arrangement of 40 years for the ongoing access to the licenses within the contractuat l properties are generally constant throughout the term of the arrangement. Thereforff e, a ratabla e recognition pattern is reflective of how we will satisfy our performance obligations. l territories. Our obligations to maintain the Starbuc ks brand and other intellectuat u r As of October 1, 2023, the current and long-term deferred revenue related to the Nestlé up-front payment was $177.0 million and $6.0 billion, respectively. As of October 2, 2022, the current and long-term deferred revenue related to the Nestlé up-front payment was $177.0 million and $6.2 billion, respectively. During the fiscal years ended October 1, 2023, October 2, 2022 and October 3, 2021, we recognized $176.5 million, $176.5 million and $176.6 million of prepaid royalty revenue, respectively, related to Nestlé. Changes in our deferred revenue balance related to our stored value cards and loyalty program (in millions)s : Fiscal Year Ended October 1, 2023 Stored value cards and loyalty program at October 2, 2022 Revenue deferred - card activations, card reloads and Stars earned Revenue recognized - card and Stars redemptions and breakage Other(1) Stored value cards and loyalty program at October 1, 2023(2) Fiscal Year Ended October 2, 2022 Stored value cards and loyalty program at October 3, 2021 Revenue deferred - card activations, card reloads and Stars earned Revenue recognized - card and Stars redemptions and breakage Other(1) Stored value cards and loyalty program at October 2, 2022(2) Total 1,503.0 14,922.1 (14,853.0) (4.6) 1,567.5 Total 1,448.5 13,464.7 (13,361.9) (48.3) 1,503.0 $ $ $ $ (1) “Other” primarily consists of changes in the stored value cards and loyalty program balances resulting from foreign currency translation. (2) As of October 1, 2023, approximately $1.5 billion of this amount was current. As of October 2, 2022, approximately $1.4 billion of this amount was current. Note 12: Equity In addition to 2.4 billion shares of authorized common stock with $0.001 par value per share, we have authorized 7.5 million shares of preferff red stock, none of which was outstanding at October 1, 2023. 71 During the first quarter of fiscal 2022, we resumed our share repurchase program which was temporarily suspended in March 2020 upon the onset of the COVID-19 pandemic. During the fiscal year ended October 2, 2022, we repurchased 36.3 million shares of common stock for $4.0 billion on the open market. On March 15, 2022, we announced that our Board authorized the repurchase of up to an additional 40 million shares under our ongoing share repurchase program. On April 4, 2022, we announced a temporaryrr suspension of our share repurchase program to allow us to augment investments in our stores and partners. During the first quarter of fiscal 2023, we resumed our share repurchase program. During the fiscal year ended October 1, 2023, we repurchased 10.0 million shares of common stock for $1.0 billion on the open market. As of October 1, 2023, 42.6 million shares remained availabla e for repurchase under current authorizations. During the fourth quarter of fiscal 2023, our Board declared a quarterly cash dividend to shareholders of $0.57 per share to be paid on November 24, 2023 to shareholders of record as of the close of business on November 10, 2023. Comprehensive Income Comprehensive income includes all changes in equity during the period, except those resulting from transactions with our shareholders. Comprehensive income is comprised of net earnings and other comprehensive income. Accumulated other comprehensive income reported on our consolidated balance sheets consists of foreign currency translation adjud stments and other items and the unrealized gains and losses, net of applicable taxes, on availabla e-for-sale debt securities and on derivative instruments designated and qualifyiff ng as cash flow and net investment hedges. Changes in AOCI by component for the fiscal years ended October 1, 2023, October 2, 2022 and October 3, 2021, net of tax, are as follows: (in millions)s October 1, 2023 Net gains/(losses) in AOCI, beginning of period Net gains/(losses) recognized in OCI before reclassifications Net (gains)/losses reclassified from AOCI to earnings Other comprehensive income/(loss) attributable to r Starbuc Other comprehensive income/(loss) attributable to NCI ks Available- for-Sale Securities Cash Flow Hedges Net Investment Hedges Translation Adjustment and Other Total $ (15.5) $ 199.0 $ 209.1 $ (855.8) $ (463.2) 2.5 0.7 3.2 — (132.2) 54.7 (106.5) (181.5) (114.3) (246.5) — (20.5) 1.3 (132.8) 34.2 — (105.2) (314.3) (0.7) (0.7) Net gains/(losses) in AOCI, end of period $ (12.3) $ (47.5) $ 243.3 $ (961.7) $ (778.2) (in millions)s October 2, 2022 Net gains/(losses) in AOCI, beginning of period Net gains/(losses) recognized in OCI before reclassifications Net (gains)/losses reclassified from AOCI to earnings Other comprehensive income/(loss) attributable to r Starbuc ks Available- for-Sale Securities Cash Flow Hedges Net Investment Hedges Translation Adjustment and Other Total $ 1.5 $ 158.3 $ 48.6 $ (61.2) $ 147.2 (17.2) 206.7 171.1 (794.7) (434.1) 0.2 (166.0) (10.6) 0.1 (176.3) (17.0) 40.7 160.5 (794.6) (610.4) (463.2) Net gains/(losses) in AOCI, end of period $ (15.5) $ 199.0 $ 209.1 $ (855.8) $ 72 (in millions)s October 3, 2021 Net gains/(losses) in AOCI, beginning of period Net gains/(losses) recognized in OCI before reclassifications Net (gains)/losses reclassified from AOCI to earnings Other comprehensive income/(loss) attributable to r Starbuc ks Available- for-Sale Securities Cash Flow Hedges Net Investment Hedges Translation Adjustment and Other Total $ 5.7 $ (82.1) $ 11.5 $ (299.7) $ (364.6) (2.7) (1.5) (4.2) 240.2 47.1 190.4 475.0 0.2 (10.0) 48.1 240.4 37.1 48.6 238.5 $ (61.2) $ 36.8 511.8 147.2 Net gains/(losses) in AOCI, end of period $ 1.5 $ 158.3 $ Impact of reclassifications from AOCI on the consolidated statements of earnings (in millions)s : Amounts Reclassified from AOCI AOCI Components Gains/(losses) on availabla e-for-sale securities Gains/(losses) on cash flow hedges Gains/(losses) on net investment hedges Translation adjud stment and other (1) Korea Other Year Ended Oct 2, 2022 Oct 1, 2023 $ (0.7) $ Oct 3, 2021 1.8 (0.4) $ Affected Line Item in the Statements of Earnings Interest income and other, net 133.5 196.6 1.9 Please refer to Note 3, Derivative Instruments 27.4 14.3 13.4 for additional information. Interest expense — — (58.9) Net gain resulting from divestiture of certain (1.3) 158.9 (26.1) 132.8 $ — 210.5 (34.2) 176.3 $ operations — Interest income and other, net (41.8) Total before tax 5.0 Tax (expense)/benefitff $ (36.8) Net of tax (1) Release of cumulative translation adjud stments and other activities to earnings upon sale, liquidation, or dissolution of foreign businesses. Note 13: Employee Stock and Benefit Plans We maintain several equity incentive plans under which we may grant non-qualifieff d stock options, incentive stock options, restricted stock, restricted stock units (“RSUs”) or stock appreciation rights to employees, non-employee directors and consultants. We issue new shares of common stock upon exercise of stock options and the vesting of RSUs. We also have an employee stock purchase plan (“ESPP”). As of October 1, 2023, there were 92.6 million shares of common stock availabla e for issuance pursuant to future equity-based compensation awards and 10.3 million shares availabla e for issuance under our ESPP. Stock-based compensation expense recognized in the consolidated financial statements (in millions)s : Fiscal Year Ended RSUs Options Total stock-based compensation expense recognized in the consolidated statements of earnings Total related tax benefit Total capia talized stock-based compensation included in net property, plant and equipment on the consolidated balance sheets RSUs Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 $ $ $ $ 302.6 $ 0.1 302.7 50.9 3.7 $ $ $ 271.8 $ (0.2) 271.6 45.9 3.9 $ $ $ 316.9 2.2 319.1 51.6 3.7 We have both time-vested and performance-based RSUs. Time-vested RSUs are awarded to eligible employees and entitle the grantee to receive shares of common stock at the end of a vesting period, subju ect to the employee’s continuing employment. The time-vested RSUs generally either vest in two or four equal annual installments beginning a year from the grant date. Our 73 performance-based RSUs are awarded to eligible employees and entitle the grantee to receive shares of common stock if we achieve specifieff d performance goals during the perforff mance period and the grantee remains employed through the vesting period. RSU transactions for the fiscal year ended October 1, 2023 (in millions, excepte per share and contrat ctual lifei amounts)tt : Nonvested, October 2, 2022 Granted Vested Forfeited/canceled Nonvested, October 1, 2023 Number of Shares Weighted Average Grant Date Fair Value per Share Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value $ 7.0 4.5 (3.1) (1.1) 7.3 98.88 97.66 95.89 95.28 99.56 1.0 $ 587 1.0 670 As of October 1, 2023, total unrecogniz ded stockk-bbasedd compensa ition expense rellatedd to nonvest ded RSUs, net of es itimat ded forfeiitures, was appr ppe iri dod of appr fiscal 2023, 2022 and 2021, respectively. For fiscal 2022 and 2021, the weighted average fair value per RSU granted was $107.71 and $96.05, respectively. ioximatelyly $175 million, bbefore iincome taxes, andd iis expect ded to bbe recognigni dzed over a weigighht ded aver gage ioximatelyly 2.1 years. The total fair value of RSUs vested was $292 million, $298 million and $226 million during Stoctt k Options We may provide stock options as a form of employee compensation, which are primarily time-vested. Stock options have not been broadly used as part of our compensation strategy in recent years. The majoa rity of time-vested options become exercisabla e in four equal installments beginning a year from the grant date and generally expire 10 years from the grant date. Options granted to non-employee directors generally vest immediately or one year from grant. All outstanding stock options are non- qualifieff d stock options. No stock options were granted during the fiscal years ended October 1, 2023 and October 2, 2022. The fair value of stock option awards was estimated at the grant date with the following weighted average assumptions for fiscal 2021: Fiscal Year Ended Expected term (in years) Expected stock price volatility Risk-free interest rate Expected dividend yield Weighted average grant price Estimated fair value per option granted Stock Options Granted During the Period 2021 8.1 26.3 % 1.4 % 1.6 % 110.46 27.59 $ $ The expected term of the options represents the estimated period of time until exercise and is based on historical experience of similar awards, giving consideration to the contractuat l terms, vesting schedules and expectations of future employee behavior. Expected stock price volatility is based on a combination of historical volatility of our stock and the one-year implied volatility ks traded options, for the related vesting periods. The risk-free interest rate is based on the implied yield availabla e on r of Starbuc U.S. Treasury zero-coupon issues with an equivalent remaining term. The dividend yield assumption is based on our anticipated cash dividend payouts. The amounts shown above for the estimated fair value per option granted are before the estimated effeff ct of forfeitures, which reduce the amount of expense recorded in the consolidated statements of earnings. 74 Stock option transactions for the fiscal year ended October 1, 2023 (in millions, excepte per share and contratt ctual lifei amounts)tt : Outstanding, October 2, 2022 Granted Exercised Expired/forfeited Outstanding, October 1, 2023 Exercisabla e, October 1, 2023 Vested, October 1, 2023 Shares Subject to Options Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value $ 4.1 — (2.1) 0.0 2.0 2.0 2.0 55.86 — 56.55 50.26 55.16 55.16 55.16 3.6 $ 117 2.3 2.3 2.3 72 72 72 The aggregate intrinsic value in the tabla e above, which is the amount by which the market value of the underlying stock exceeded the exercise price of outstanding options, is before applicable income taxes and represents the amount optionees would have realized if all in-the-money options had been exercised on the last business day of the period indicated. As of October 1, 2023, all options outstanding were vested and exercisabla e. No options vested during fiscal 2023. The total fair value of options vested was $8 million and $14 million during fiscal 2022 and 2021, respectively. The total intrinsic value of options exercised was $98 million, $57 million and $219 million during fiscal 2023, 2022 and 2021, respectively. ESPPSS Our ESPP allows eligible employees to contribute up to 10% of their base earnings toward the quarterly purchase of our common stock, subju ect to an annual maximum dollar amount. The purchase price is 95% of the fair market value of the stock on the last business day of the quarterly offeff ring period. The number of shares issued under our ESPP was 0.5 million in fiscal 2023. Defee rred Compensation Planll We have a Deferred Compensation Plan for Non-Employee Directors under which non-employee directors may, for any fiscal year, irrevocably elect to defer receipt of shares of common stock the director would have received upon vesting of restricted stock units. The number of deferred shares outstanding related to deferrals made under this plan is not material. Defie neii d Contritt bui tion Planll s We maintain voluntaryrr defined contribution plans, both qualifieff d and non-qualifieff d, covering eligible employees as defined in the plan documents. Participating employees may elect to defer and contribute a portion of their eligible compensation to the plans up to limits stated in the plan documents, not to exceed the dollar amounts set by applicable laws. Our matching contributions to all U.S. and non-U.S. plans were $178.1 million, $156.7 million and $145.1 million in fiscal 2023, 2022 and 2021, respectively. Note 14: Income Taxes Components of earnings before income taxes (in millions):s Fiscal Year Ended United States Foreign Total earnings before income taxes Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 $ $ 4,488.6 913.3 5,401.9 $ $ 3,484.9 747.0 4,231.9 $ $ 4,138.5 1,218.4 5,356.9 75 Provision/(benefit)ff for income taxes (in millions):s Fiscal Year Ended Current taxes: U.S. federal U.S. state and local Foreign Total current taxes Deferred taxes: U.S. federal U.S. state and local Foreign Total deferred taxes Total income tax expense Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 $ 678.2 $ 477.6 $ 235.9 422.4 1,336.5 117.0 (0.8) (175.5) (59.3) 164.0 283.8 925.4 92.6 10.5 (80.0) 23.1 $ 1,277.2 $ 948.5 $ 681.8 190.0 409.8 1,281.6 10.4 (6.4) (129.0) (125.0) 1,156.6 Reconciliation of the statutt oryrr U.S. federal income tax rate with our effeff ctive income tax rate: Fiscal Year Ended Statutt oryrr State income taxes, net of federal tax benefit rate Foreign rate differential Change in tax rates Other, net Effeff ctive tax rate Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 21.0 % 3.4 0.4 0.0 (1.2) 23.6 % 21.0 % 3.3 0.3 0.0 (2.2) 22.4 % 21.0 % 2.7 0.5 (1.3) (1.3) 21.6 % As of October 1, 2023, in certain foreign subsu idiaries in which we are partially indefinitely reinvested, the gross taxabla e temporaryrr difference between the accounting basis and tax basis was approximately $2.5 billion for which there could be up to approximately $250 million of unrecognized tax liability. 76 Tax effeff ct of temporaryrr differences and carryforwards that comprise significant portions of deferred tax assets and liabia lities (in millions):s Oct 1, 2023 Oct 2, 2022 Deferred tax assets: Operating lease liabilities Stored value card liability and deferred revenue Intangible assets and goodwill Other Total Valuation allowance Total deferred tax asset, net of valuation allowance Deferred tax liabia lities: Operating lease, right-of-use assets Property, plant and equipment Other Total Net deferred tax asset (liabia lity) Reported as: Deferred income tax assets Deferred income tax liabilities (included in Other long-term liabilities) Net deferred tax asset (liabia lity) $ 2,395.3 $ 1,638.1 313.4 642.3 4,989.1 (148.6) 4,840.5 (2,291.8) (525.4) (268.1) (3,085.3) 1,755.2 1,769.8 (14.6) 1,755.2 $ $ $ $ $ $ 2,289.1 1,662.6 313.6 605.7 4,871.0 (228.7) 4,642.3 (2,194.3) (482.2) (284.7) (2,961.2) 1,681.1 1,799.7 (118.6) 1,681.1 The valuation allowances as of October 1, 2023 and October 2, 2022 were primarily related to net operating losses and other deferred tax assets of consolidated foreign subsu idiaries. As of October 1, 2023, we had federal net operating loss carryforwards of $70.8 million which have an indefinite carryforw ard period, federal tax credit carryforwards of $50.4 million which will begin to expire in fiscal 2030 and foreign net operating loss carryforwards of $434.8 million, of which $95.4 million have an indefinite carryforward period and the remainder will begin to expire in fiscal 2024. rr Uncertain Taxaa Positioii ns ogni dzed tax bbenefifits of hwhiichh $72.8 million, ifif recognigni dzed, wo luldd As of October 1, 2023, we had $105.0 million of ggross unrecogni imillillion affeff ct our effeff ctiive tax rate. We recognigni dzed an expense of $5.7 million, an expense of $$2.3 of interest and penalties in income tax expense, prior to the benefit of the federal tax deduction, for fiscal 2023, 2022 and 2021, respectively. As of October 1, 2023 and October 2, 2022, we had accruer d interest and penalties of $15.1 million and $9.4 million, respectively, on our consolidated balance sheets. imillillion andd a benefit of $$4.6 The following tabla e summarizes the activity related to our unrecognized tax benefits (in millions)s : Beginning balance Increase related to prior year tax positions Decrease related to prior year tax positions Increase related to current year tax positions Decreases related to settlements with taxing authorities Decrease related to lapsa ing of statutt e of limitations Ending balance Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 $ $ 89.7 $ 82.6 $ 1.2 (0.4) 14.5 — — 0.2 (0.7) 9.0 — (1.4) 105.0 $ 89.7 $ 123.7 4.8 (11.9) 8.9 (4.4) (38.5) 82.6 We are currently under examination, or may be subju ect to examination, by various U.S. federal, state, local and foreign tax jurisdictions for fiscal 2016 through 2022. We are no longer subju ect to U.S. federal examination for years prior to fiscal 2018, U.S. state and local examinations for years prior to fiscal 2016 or examination in any material foreign markets prior to fiscal 2018. 77 It is reasonabla y possible that up to approximately $54 million of the Company's gross unrecognized tax benefits may be recognized by the end of fiscal 2024 for reasons such as a lapsa e of the statutt e of limitations or resolution of examinations with tax authorities. Note 15: Earnings per Share Calculation of net earnings per common share (“EPS”) — basic and diluted (in millions, excepte EPS)PP : Fiscal Year Ended Net earnings attributable to Starbuc r ks Weighted average common shares outstanding (forff calculation) Dilutive effeff ct of outstanding common stock options and RSUs basic Weighted average common and common equivalent shares outstanding (for diluted calculation) EPS — basic EPS — diluted Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 4,124.5 $ 3,281.6 $ 4,199.3 1,146.8 4.5 1,151.3 1,153.3 5.2 1,158.5 3.60 3.58 $ $ 2.85 2.83 $ $ 1,177.6 7.9 1,185.5 3.57 3.54 $ $ $ 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 treasuryrr stock method. The calculation of dilutive shares outstanding excludes anti-dilutive stock options or unvested RSUs, which were immaterial in the periods presented. Note 16: Commitments and Contingencies e Legal Proceedindd gs ks is involved in various legal proceedings arising in the ordinaryrr course of business, including certain employment r Starbuc litigation cases that have been certifieff d as class or collective actions, but is not currently a party to any legal proceeding that management believes could have a material adverse effeff ct on our consolidated financial position, results of operations or cash flows. Note 17: Segment Reporting Segment information is prepared on the same basis that our ceo, who is our Chief Operating Decision Maker, manages the segments, evaluates financial results and makes key operating decisions. We have three reportabla e operating segments: 1) North America, which is inclusive of the U.S. and Canada; 2) International, which is inclusive of China, Japaa n, Asia Pacific, Europe, Middle East and Afriff ca, Latin America and the Caribbean; and 3) Channel Development. North America and International operations sell coffee and other beverages, complementaryrr serve coffee products and a focused selection of merchandise through company-operated stores and licensed stores. Our North America segment is our most mature business and has achieved significant scale. food, packaged coffees, single- Channel Development revenues include packaged coffeeff customers outside of our company-operated and licensed stores. Most of our Channel Development revenues are from product sales to and royalty revenues from Nestlé through the Global Coffee Alliance. , tea, foodservice products and ready-to-drink beverage sales to Consolidated revenue mix by product type (in millions):s Fiscal Year Ended Beverage(1) Food(2) Other(3) Total Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 $ 21,684.8 60 % $ 19,555.3 61 % $ 18,317.0 6,585.1 7,705.7 18 % 22 % 5,804.2 6,890.8 18 % 21 % 5,053.4 5,690.2 63 % 17 % 20 % $ 35,975.6 100 % $ 32,250.3 100 % $ 29,060.6 100 % (1) (2) (3) Beverage represents sales within our company-operated stores. Food includes sales within our company-operated stores. “Other” primarily consists of packaged and single-serve coffees and teas, royalty and licensing revenues, beverage- related ingredients and serveware, among other items. 78 Information by geographic area (in millions): scal Year Ended Net revenues: United States China Other countries Total Long-lived assets: United States China Other countries Total Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 $ $ 26,398.3 $ 23,365.6 $ 3,081.5 6,495.8 3,008.3 5,876.4 35,975.6 $ 32,250.3 $ 20,377.8 3,674.8 5,008.0 29,060.6 Oct 1, 2023 Oct 2, 2022 $ $ 14,011.4 $ 4,244.9 3,885.8 22,142.1 $ 13,176.2 4,174.0 3,609.5 20,959.7 No customer accounts for 10% or more of our revenues. Revenues are shown based on the geographic location of our customers. Revenues from countries other than the U.S. and China consist primarily of revenues from Japaa n, Canada and the U.K., which together account for approximately 71% of net revenues from other countries for fiscal 2023. Management evaluates the performance of its operating segments based on net revenues and operating income. The accounting policies of the operating segments are the same as those described in Note 1, Summary of Significant Accounting Policies and Estimates. Operating income represents earnings before other income and expenses and income taxes. The identifiaff bla e assets by segment disclosed in this note are those assets specifically identifiaff bla e within each segment and include cash and cash equivalents, ROU assets, net property, plant and equipment, equity and cost investments, goodwill and other intangible assets. Assets not attributed to reportabla e operating segments are corporate assets and are primarily comprised of cash and cash equivalents availabla e for general corporate purpos es, investments, assets of the corporate headquarters and roasting facilities and inventory.rr rr 79 The financial information below is presented for our reportabla e operating segments and Corporate and Other for the fiscal years ended October 1, 2023, October 2, 2022 and October 3, 2021 and as of October 1, 2023 and October 2, 2022. (in millions) Fiscii al 2023 Total net revenues Depreciation and amortization expenses Income from equity investees Operating income/(loss) Fiscii al 2022 Total net revenues Depreciation and amortization expenses Income from equity investees Operating income/(loss) Fiscii al 2021 Total net revenues Depreciation and amortization expenses Income from equity investees Operating income/(loss) North America International Channel Development Corporate and Other Total $ 26,569.6 $ 7,487.6 $ 1,893.8 $ 24.6 $ 35,975.6 910.1 — 335.1 2.7 0.1 295.7 117.3 — 1,362.6 298.4 $ 5,495.7 $ 1,230.9 $ 967.6 $ (1,823.4) $ 5,870.8 $ 23,370.8 $ 6,940.1 $ 1,843.6 $ 95.8 $ 32,250.3 808.4 — 513.0 2.3 0.1 231.8 126.4 — 1,447.9 234.1 $ 4,486.5 $ 833.2 $ 817.3 $ (1,519.2) $ 4,617.8 $ 20,447.9 $ 6,921.6 $ 1,593.6 $ 97.5 $ 29,060.6 753.9 — 544.7 135.3 1.2 250.0 141.9 — 1,441.7 385.3 $ 4,259.3 $ 1,245.7 $ 789.1 $ (1,422.0) $ 4,872.1 (in millions) Total assets at October 1, 2023 Total assets at October 2, 2022 North America International Channel Development Corporate and Other Total $ 10,869.1 $ 8,045.3 $ 188.8 $ 10,342.3 $ 29,445.5 10,029.9 8,602.8 130.5 9,215.2 27,978.4 80 REPORT OF INDEPENDENT REGGISSTERED PUBLICC CACCOCOUNTINGG FIRM To hthe hshar heh loldders andd hthe Boardd of iDirectors of Starbbur kcks Corporatiion Opiiniion on the iFinanciial SStatements heach of hthe hthree yyears iin hthe pe iri dod ended Octobber 1, We hhave audiditedd hthe accompanyinyi gng cons lolididat ded bballance hsheets of Starbbuc of Octobber 1, 2023 andd Octobber 2, 2022, hthe rellatedd cons lolididat ded statements of ear ini gngs, comprehhensiive iincome, eq iui yty, andd cashh flflows, for 2023 and the related notes (collectively referred to as the “finff ancial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of Octobber 1, 2023 and Octobber 2, years in the period ended Octobber 1, America. 2023 in conforff mity with accounting principles generally accepted in the United States of 2022 and the results of its operations and its cash flows for each of the three kks Corporatiion andd subbsu ididiia iries ((thhe “Compa yny”)) as r , , , We have also audited, in accordance with the standards of the Publu ic Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of Octobber 1, Internal Controt Commission and our report dated November 17, 2023, expressedd an unqualiflifiiefff dd fiinff an ici lal repor itingg. 2023 based on criteria establa ished in l - Integre ated Frameworkrr (2013) issued by the Committee of Sponsoring Organizations of the Treadway iopi inion on hthe Companyy's iintern lal controll over , Ba isis ffor Opiiniion hThese fifinanciiall statements are hthe responsibibilityility of hthe Companyy's managgement. Our responsibibilityility iis to express an hthe Companyy's fifinanciiall statements bbasedd on our audidits. We are a re rulles andd regulgulatiions of hthe Secu iri ities andd Ex hchangge Commiis ision andd hthe PCAOB. bl iwi hth respect to hthe Companyy iin acco drdance publiic accountiingg fifirm regigister ded iwi hth hthe PCAOB andd are iwi hth hthe U.S. fedderall secu iri ities llaws andd hthe ap lpliic bablle iquiredd to bbe iinddepe dndent iopi inion on iwi hth hthe standda drds of hthe PCAOB. hThose standda drds re We co dnductedd our audidits iin accorddance audidit to bobt iain reasonablbla e assurance babout hwhethher hthe fifinanciiall statements are free of mate iri lal error or fra dud. Our audidits iin lcl dud ded performiingg proc dedurd es to assess hthe iri ksks of mate iri lal statements, hwhethher ddue to error or fra dud, andd performiingg proc dedurd es hthat resp examiiniingg, on a test bba isis, evididence regga drdiingg hthe amounts andd didiscllosures iin hthe fifinanciiall statements. Our audidits lalso iin lcl dudedd ev lalua itingg hthe accountiingg priin ici lples us ded andd isignignifificant es itimates madde byby managgement, as wellll as ev lalua itingg hthe overallll ppresenta ition of hthe fifinanciiall statements. We bbelilieve hthat our audidits pr iquire hthat we lplan andd perform hthe imisstatement, hwhethher ddue to dond to hthose iri ksks. Su hch proc dedurd es iin lcl dudedd iovidde a reasonablbla e bba isis for our imisstatement of hthe fifinanciiall iopi inion. CCriitiical Au idit Matter iquiredd to bbe commu inicat ded to hthe Audidit andd Compliliance Co lcal audidit matter comm iunicat ded bbellow iis a matter ariisiingg from hthe current-periiodd audidit of hthe fifinanciiall statements hthat hThe cri iiti was commu inicatedd or re didiscllosures hthat are mate iri lal to hthe fifinanciiall statements andd ((2)) iin lvolvedd our espe ici lallyly hch lalllengingi gng, subjbju ectiive or compllex jujudgmdgments. hThe comm iunica ition of cri iitic lal audidit matters ddoes not as a hwh lole, andd we are not, byby commu inicatiingg hthe cri iiticall audidit matter bbellow, pr matter or on hthe accounts or didiscllosures to hwhiichh iit rellates. iopi inion on hthe fifinanciiall statements, takken iopi inion on hthe cri iitic lal audidit immittee andd hthat ((1)) rellates to accounts or lalter iin anyy wayy our iovididi gng a separate IIncome Taxeaa s — Inddefifie iniiii teii Reiinvestment ofof Foreigigngg Earniinggs - Refefee r to Note 14 to hthe fifinaii nciiall stattt emtt ents Critic lal Auddit Matter Descripti ion di iovi isions of ASC 740, Income Taxes, ((“ASC 740”)), hthere iis a presumptiion hthat iinvestments iin foreigign subbsu ididiia iries subjbju ect Undder hthe pr iwillll bbe recoveredd upon salle or hthroughugh a partiiall or compllete didist iribbutiion of ear ini gngs to hthe parent entitytity, andd hthereforeff hthe parent entitytity to daddidi itionall taxes. If suffiffi icient evididence hshows hthe foreigign subbsu ididiia yry hhas iinvest ded or iwillll iinvest hthe undist iribbut ded ear ini gngs iinddefifi initelyly, hthe ASC 740 presumptiion mayy bbe overcome, andd no daddidi itionall taxes hsh lalll bbe accruer dd. hThe Companyy hhas iinvestments iin hthe profiitaff blbla e opera itions of cert iain foreigign subbsu ididiia iries hthat mayy bbe subjbju ect to daddidi itionall foreigign iwi hthh lholdidi gng taxes and/d/or U.S. fedderall andd state iincome taxes upon salle or a partiiall or compllete didist iribbutiion of ear ini gngs, iincrementall to llocall iincome taxes lalre dadyy paidid. As fo Octobber 1, certaiin foreigign subbsu ididiia iries. The Company has recorded an immaterial deferred tax liabia lity related to the taxabla e temporaryrr difference for which it is not indefinitely reinvested. For the remaining $2.5 billion of taxabla e temporaryrr difference, there could be up to approximately $250 million of unrecognized tax liabia lity. 2023 the Companyy iis partiiallylly iinddefifi initelyly reiinvest ded iin , hThe Companyy’s assertiion of partiiall iinddefifi inite reiinvestment for certaiin foreigign subbsu ididiia iries re term forecas itingg assump itions andd ddetaililedd lplans for reiinvestment. hThe most iinddefifi inite reiinvestment assertiion iis hthe forecast of ca ipia tall expe dinditures iin iinternatiionall ma krkets. Performiingg audidit proc dedurd es to ev laluate hthe reasonablbla eness of managgement’s iinddefifi inite reiinvestment an lalyysiis andd capiitall expe dinditures forecast re iquiredd a hihighgh ddeggree of audiditor jujudgmdgment andd an iincreas ded extent of effoff iquires managgement to makke llo gng- itingg hthe Companyy’s rt, iin lcl diudi gng hthe ne ded to iin lvolve our iincome tax sp ieci laliists. isignignifificant assump ition suppor u 81 HHow hthe Critic lal Matter Was dAdddrddd essedd in hthe Audditt Our priin icipall audidit proc dedurd es rellatedd to managgement’s iinddefifi inite reiinvestment an lalyysiis andd hthe suppor expe dinditures for cert iain foreigign subbsu ididiia iries, iin lcl dudedd hthe follllowiingg, am gong othhers: u itingg forecast of capiit lal • We test ded hthe effeff ctiiveness of controlls rellatedd to managgement’s forecast of capiitall expe dinditures. • We perform ded a retrospectiive re iview of managgement’s hihistoriic lal babilityility to accuratelyly forecast capiitall expe dinditures byby compariingg actu lal resullts to managgement’s hihistoriic lal forecast. • We inquired of senior executives of the Company to corroborate strategic plans for growth. • We compared the forecasts obtained to suppor u t the indefinite reinvestment assertion to: iHistoriic lal ca ipia tall expe dinditures, iin lcl diudi gng costs per new store ope ini gng; iHistoriic lal new store ggrow hth; andd iHistoriic lal profiitff babiliili yty of new stores byby regigion; andd ◦ ◦ ◦ ◦ Forecasts us ded byby hthe Companyy for fifinanciiall repor iti gng purpos r es iin othher areas, su hch as hthe ev lalua ition of hthe recoverabibia litylity of goodw goodwillill; andd ◦ Intern lal commu inicatiions to managgement andd hthe Boardd of ◦ Forecastedd iinformatiion iin lcl dudedd iin hthe Companyy’s press relleases, othher extern lal commu inicatiions andd an lalyyst iDirectors; andd reports; andd ◦ Extern lal publiicatiions of expect ded iinddustryyrr ggrow hth. bl • iWi hth hthe as isistance of our tax sp ieci laliists, we ev laluatedd hthe appropriiateness of managgement’s an lalyysiis andd hthe suffiffi icien ycy of hthe evididence pr di ppartiiallylly iinddefifi initelyly reiinvest hthe dunder ASC 740 t hthat hthe Companyy hhas hthe iintent andd babililiityy to ioviddedd byby managgement to suppor undist iribbut ded earniinggs. u /s/ Deloitte & Touche LLP Seat ltle, Washihi gngton November 17, 2023 We hhave serv ded as hthe Companyy's audiditor isince 1987. 82 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable. Item 9A. Controls and Procedures Disclosure Controls and Procedures We maintain disclosure controls and procedurd es that are designed to ensure that material information required to be disclosed in itted under the Exchange Act, is recorded, processed, summarized and reported within the our periodic reports filed or submu time periods specifieff d in the SEC’s rules and forms. Our disclosure controls and procedurd es are also designed to ensure that information required to be disclosed in the reports we file or submu to our management, including our principal executive offiff cer and principal financial offiff cer, as appropriate to allow timely decisions regarding required disclosure. it under the Exchange Act is accumulated and communicated During the fourth quarter of fiscal 2023, we carried out an evaluation, under the supeu rvision and with the participation of our management, including our chief executive offiff cer and our chief financial offiff cer, of the effeff ctiveness of the design and operation of our disclosure controls and procedurd es, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation, our chief executive offiff cer and chief financial offiff cer concluded that our disclosure controls and procedurd es were effeff ctive, as of the end of the period covered by this report (October 1, 2023). There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during our most recently completed fiscal quarter that materially affeff cted or are reasonabla y likely to materially affeff ct internal control over financial reporting. The certificff ations required by Section 302 of the Sarbanes-Oxley Act of 2002 are filed as exhibits 31.1 and 31.2, respectively, to this 10-K. Report of Management on Internal Control over Financial Reporting rr es in accordance with accounting principles generally accepted in the United States of America. Internal Our management is responsible for establa ishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process to provide reasonabla e assurance regarding the reliability of our financial reporting for external purpos control over financial reporting includes maintaining records that in reasonabla e detail accurately and fairly reflect our transactions; providing reasonabla e assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonabla e assurance that receipts and expenditures are made in accordance with management authorization; and providing reasonabla e assurance that unauthorized acquisition, use or disposition of company assets that could have a material effeff ct on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Management conducted an evaluation of the effeff ctiveness of our internal control over financial reporting based on the framework and criteria establa ished in Internal Contrott Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effeff ctiveness of controls, testing of the operating effeff ctiveness of controls and a conclusion on this evaluation. Based on this evaluation, management concluded that our internal control over financial reporting was effeff ctive as of October 1, 2023. l — Integre ated Frameworkrr , issued by the Committee of Sponsoring Our internal control over financial reporting as of October 1, 2023 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included herein. 83 REPORT OF INDEPENDENT REGGISSTERED PUBLICC CACCOCOUNTINGG FIRM To hthe hshar heh loldders andd hthe Boardd of iDirectors of Starbbur kcks Corporatiion Opiiniion on Internal CControl over iFinanciial Reportiingg We hhave audiditedd hthe iintern lal controll over fifinanciiall repor itingg of Starbbuc October 1, 2023, based on criteria establa ished in Internal Contrott Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effeff ctive internal control over financial reporting as of October 1, 2023, based on criteria establa ished in Internal Controt kks Corporatiion andd subbsu ididiia iries ((thhe “Compa yny”)) as of l - Integre ated Frameworkrr (2013) issued by the Committee of l - Integre ated Frameworkrr (2013) issued by COSO. r We have also audited, in accordance with the standards of the Publu ic Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended October 1, 2023, of the Company and our report dated November 17, 2023, expressedd an unqualilififi ded iopi inion on hthose fifinanciiall statements. Ba isis ffor Opiiniion hThe Companyy’s managgement iis responsibiblle for maiintaiiniingg effeff ctiive iintern lal controll over fifinanciiall repor itingg andd for iits assessment of hthe effeff ctiiveness of iintern lal controll over fifinanciiall repor itingg, iin lcl dudedd iin hthe accompanyiyi gng Report of Managgement on Intern lal Controll over iintern lal controll over fifinanciiall repor itingg bbasedd on our audidit. We are a re rulles andd regulgulatiions of hthe Secu iri ities andd Ex hchangge Commiis ision andd hthe PCAOB. bl publiic accountiingg fifirm regigister ded iwi hth hthe PCAOB andd are iwi hth hthe U.S. fedderall secu iri ities llaws andd hthe ap lpliic bablle iFinanciiall Repor itingg. Our responsibibilityility iis to express an iwi hth respect to hthe Companyy iin acco drdance iopi inion on hthe Companyy’s iquiredd to bbe iinddepe dndent iwi hth hthe standda drds of hthe PCAOB. hThose standda drds re We co dnductedd our audidit iin acco drdance audidit to bobt iain reasonablbla e assurance babout hwhethher effeff ctiive iintern lal controll over fifinanciiall repor itingg was maiintaiin ded iin lalll mate iri lal respects. Our audidit iin lcl dudedd bobt iai ini gng an hthat a mate iri lal we kakness exiists, testiingg andd ev lalua iti gng hthe dde isiggn andd opera itingg effeff ctiiveness of iintern lal controll bbasedd on hthe assessedd iri ksk, andd performiingg su hch othher proc dedurd es as we considider ded necessa yry iin hthe icircumstances. We bbelilieve hthat our audidit ppr dundersta dindi gng of iintern lal controll over fifinanciiall repor itingg, asse issi gng hthe iri ksk iquire hthat we lplan andd perform hthe ioviddes a reasonablbla e bba isis for our iopi inion. Defifi ini ition and iLi imita itions fof Internal CControl over iFinanciial Reportiingg A companyy’s iintern lal controll over fifinanciiall repor iti gng iis a process dde isiggnedd to pr reliliabibia litylity of fifinanciiall repor iti gng andd hthe preparatiion of fifinanciiall statements for extern lal purpos acceptedd accountiingg priin ici lples. A companyy’s iintern lal controll over fifinanciiall repor itingg iin lcl dudes hthose hthat ((1)) pert iain to hthe maiintenance of reco drds hthat, iin reasonablbla e ddetailil, accuratelyly andd faiirlyly reflflect hthe transactiions andd didisposi iitions of hthe assets of hthe companyy; ((2)) pr ppreparatiion of fifinanciiall statements iin acco drdance expe dinditures of hthe companyy are bbeiingg madde companyy; andd ((3)) pr didisposi iition of hthe companyy’s assets hthat co luldd hhave a mate iri lal effeff ct on hthe fifinanciiall statements. iwi hth ggenerallllyy acceptedd accountiingg priin ici lples, andd hthat re iceipts andd iovidde reason bablle assurance regga drdiingg preven ition or itimelyly ddetectiion of unauthhoriiz ded acq iui isi ition, use, or iwi hth au hthoriizatiions of managgement andd didirectors of hthe iovidde reasonablbla e assurance hthat transactiions are reco drd ded as necessa yry to permiit iwi hth ggenerallllyy lpoliiciies andd proc dedurd es iovidde reasonablbla e assurance regga drdiingg hthe lonlyy iin acco drdance es iin acco drdance r Because of iits iinhherent lilimiitatiions, iintern lal controll over fifinanciiall repor itingg mayy not prevent or ddetect lAlso, pprojojectiions of anyy ev lalua ition of effeff ctiiveness to future pe iri dods are subjbju ect to hthe iri ksk hthat controlls mayy bbecome iin dadequate bebecause of hchangges iin co dindi itions, or hthat hthe ddeggree of compliliance lpoliiciies or proc dedurd es mayy ddete iriorate. imisstatements. iwi hth hthe //s// Delloiitte & Touchhe LLP Seat ltle, Washihi gngton November 17, 2023 84 Item 9B. Other Information In isider Adop ition or Termiinatiion fof Tradiingg Arra gngements: During the fiscal quarter ended October 1, 2023, none of our directors or offiff cers informed us of the adoption or termination of a “RulRR e 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408, except as described in the tabla e below: Aggregate Number of Shares of Common Stock to be Purchased or Sold Pursuant to Trading Arrangement Up to 3,500 shares to be Sold (2) Character of Trading Arrangement (1) Rule 10b5-1 Trading Arrangement Name & Title Date Adopted Sara Kelly, executive vice president, chief partner offiff cer August 5, 2023 Duration (3) Other Material Terms Date Terminated 6/7/2024 (4) N/A N/A (1(1)) Except as iindidicatedd byby footnote, ea hch tr dadiingg arra gngement ma krk ded as a “R lulRR e )e”). to sa itis yfy hthe affififf rmatiive ddefense of Rulle b10b5- (1( )c), as amenddedd ((thhe “R lulRR b10b5-1 Tr dadiingg Arra gngement” iis iinte dndedd (2(2)) Ms. Kellylly’s tr dadiingg lplan pr ioviddes for hthe salle of up to 500 hshares on a monthlhlyy bba isis bbegigi inni gng iin Nove bmber 2023 iwi hth 250 hshares subjbju ect to a lili imit priice of $$110. (3(3)) (4(4)) Except as iindidicatedd byby footnote, ea hch tr dadiingg arra gngement permiittedd or permiits transactiions hthroughugh andd iin lcl diudi gng the earlier to occur of (a) the completion of all purchases or sales or the expiration of all of the orders relating to such trades, lonlyy permiits or (b) hthe ddate lilist ded iin hthe tablbla e. hThe tr dadiingg arra gngement ma krk ded as a “R lulRR e transactiions upon ex ipira ition of hthe ap lpliic bablle ma dndato yry co loliingg-offff pe iri dod b10b5-1 Tr dadiingg Arra gngement” dunder hthe Rulle. hThe arra gngement lalso pr ioviddes for automa itic ex ipira ition iin hthe event of Ms. Kellylly’s ddeathh, bba knkrupt r ycy or iinsollven ycy. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 85 PART III Item 10. Directors, Executive Officers and Corporate Governance Information regarding our executive offiff cers is set forth in Item 1 of Part I of this Report under the caption “Inforff mation about our Executive Offiff cers.” We adopted a code of ethics that applies to our chief executive offiff cer, chief financial offiff cer, chief accounting offiff cer, controller and other finance leaders, which is a “code of ethics” as defined by applicable rules of the SEC. This code is publicly availabla e on our website at www.starbuc amendments to this code other than technical, administrative or other non-subsu tantive amendments, or grant any waivers, including implicit waivers, from a provision of this code to our chief executive offiff cer, chief financial offiff cer, chief accounting offiff cer or controller, we will disclose the nature of the amendment or waiver, its effeff ctive date and to whom it applies on our website at www.starbuc electronically with the SEC at www.sec.gov. -us/company-information/corporate-governance or in a report on Form 8-K filed -us/company-information/corporate-governance. If we make any ks.com/about ks.com/about a a r r The remaining information required by this item is incorporated herein by reference to the sections entitled “Proposal 1 - Election of Directors,” “Beneficff ate Governance - Audit and Compliance Committee” in our definitive Proxy Statement for the Annual Meeting of Shareholders to be held on March 13, 2024 (the “Proxy Statement”). ial Ownership of Common Stock,” “Corpor ate Governance” and “Corpor r r We will provide disclosure of delinquent Section 16(a) reports, if any, in our Proxy Statement in a section entitled “Delinquent Section 16(a) Reports”, and such disclosure, if any, is incorporated herein by reference. Item 11. Executive Compensation The information required by this item is incorporated by reference to the sections entitled “Executive Compensation,” “Executive Compensation Tabla es,” “Compensation of Directors” and “Compensation Committee Interlocks and Insider Participation” in the Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters The information required by this item is incorporated by reference to the sections entitled “Equity Compensation Plan Information” and “Beneficff ial Ownership of Common Stock” in the Proxy Statement. Item 13. Certain Relationships and Related Transactions and Director Independence The information required by this item is incorporated by reference to the section entitled “Certain Relationships and Related Person Transactions” and “Corporr rate Governance - Affiff rmative Determinations Regarding Director Independence and Other Matters” in the Proxy Statement. Item 14. Principal Accountant Fees and Services The information required by this item is incorporated by reference to the sections entitled “Proposal 3 - Ratificff ation of Selection of Deloitte & Touche LLP as our Independent Registered Publu ic Accounting Firm - Independent Registered Publu ic Accounting Firm Fees” and “Proposal 3 - Ratificff ation of Selection of Deloitte & Touche LLP as our Independent Registered Publu ic Accounting Firm - Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Registered Publu ic Accounting Firm” in the Proxy Statement. 86 PART IV Item 15. Exhibits and Financial Statement Schedules (a) The following documents are filed as a part of this 10-K: 1. Financial Statements The following financial statements are included in Part II, Item 8 of this 10-K: • Consolidated Statements of Earnings for the fiscal years ended October 1, 2023, October 2, 2022 and October 3, 2021; • Consolidated Statements of Comprehensive Income for the fiscal years ended October 1, 2023, October 2, 2022 and October 3, 2021; • Consolidated Balance Sheets as of October 1, 2023 and October 2, 2022; • Consolidated Statements of Cash Flows for the fiscal years ended October 1, 2023, October 2, 2022 and October 3, 2021; • Consolidated Statements of Equity for the fiscal years ended October 1, 2023, October 2, 2022 and October 3, 2021; • Notes to Consolidated Financial Statements; and • Reports of Independent Registered Publu ic Accounting Firm (PCAOB ID No. 34) 2. Financial Statement Schedules Financial statement schedules are omitted because they are not required or are not applicable, or the required information is provided in the consolidated financial statements or notes described in Item 15(a)(1) above. 87 3. Exhibits Exhibit Number 2.1 Exhibit Description Transaction Agreement, dated as of May 6, 2018, by and between Starbuc r Corporation and Nestlé S.A. ks Incorporated by Reference Form 8-K File No. 0-20322 Date of Filing 5/7/2018 Exhibit Number 2.1 Filed Herewith 3.1 3.2 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 ks Corporation Restated Articles of Incorporation of Starbuc r Amended and Restated Bylaws of Starbuc r restated through March 17, 2021) ks Corporation (As amended and Indenturt e, dated as of September 15, 2016, by and between Starbuc ks Corporation and U.S. Bank Trusr Company, National Association, as trusr Bank National Association) tee (as successor in interest to U.S. r t u emental Indenturt e, dated ks Corporation and U.S. Bank First Suppl March 17, 2017, by and between r Starbuc National Association, as trusrr tee, transferff agent and registrar, and Elavon Financial Services, DAC, UK Branch, as paying agent (0.372% Senior Notes due 2024) u emental Indenturt e, dated Form of 0.372% Senior Note due March 15, 2024 Second Suppl as of November 22, 2017, by and between Starbuc Bank National Association, as trusr (2.200% Senior Notes due 2020 and 3.750% Senior Notes due 2047) ks Corporation and U.S. tee r Form of 3.750% Senior Notes due December 1, 2047 (included in Exhibit 4.2) emental Indenturt e, dated as ry 28, 2018, by and between ks Corporation and U.S. Bank Third Suppl u of Februarr r Starbuc National Association, as trusrr Senior Notes due 2023 and 3.500% Senior Notes due 2028) tee (3.100% u emental Indenturt e, dated as Form of 3.500% Senior Notes due March 1, 2028 Fourth Suppl of August 10, 2018, by and between Starbuc r National Association, as trusrr Senior Notes due 2025, 4.000% Senior Notes due 2028 and 4.500% Senior Notes due 2048) ks Corporation and U.S. Bank tee (3.800% 10-Q 0-20322 4/28/2015 8-K 0-20322 3/19/2021 S-3ASR 333-213645 9/15/2016 3.1 3.1 4.1 8-K 0-20322 3/20/2017 4.2 8-K 8-K 0-20322 3/20/2017 0-20322 11/22/2017 8-K 0-20322 11/22/2017 8-K 0-20322 2/28/2018 8-K 8-K 0-20322 2/28/2018 0-20322 8/10/2018 4.3 4.2 4.4 4.2 4.4 4.2 4.3 4.4 4.9 4.10 Form of 3.800% Senior Notes due August 15, 2025 Form of 4.000% Senior Notes due November 15, 2028 8-K 0-20322 8/10/2018 8-K 0-20322 8/10/2018 88 Exhibit Number 4.11 Exhibit Description Form of 4.500% Senior Notes due November 15, 2048 Incorporated by Reference Form 8-K File No. 0-20322 Date of Filing 8/10/2018 Exhibit Number 4.2 Filed Herewith 4.12 4.13 4.14 4.15 4.16 u emental Indenturt e, dated as Fifth Suppl of May 13, 2019, by and between Starbuc r National Association, as trusrr Senior Notes due 2029 and 4.450% Senior Notes due 2049) ks Corporation and U.S. Bank tee (3.550% Form of 3.550% Senior Notes due August 15, 2029 (included in Exhibit 4.2) Form of 4.450% Senior Notes due August 15, 2049 (included in Exhibit 4.2) emental Indenturt e, dated as ks Corporation and U.S. Bank Sixth Supplu of March 12, 2020, by and between Starbuc r National Association, as trusrr Senior Notes due 2027, 2.250% Senior Notes due 2030 and 3.350% Senior Notes due 2050) Form of 2.000% Senior Notes due March 12, 2027 (included in Exhibit 4.2) tee (2.000% 8-K 0-20322 5/13/2019 4.2 8-K 0-20322 5/13/2019 4.3 8-K 0-20322 5/13/2019 8-K 0-20322 3/12/2020 4.4 4.2 8-K 0-20322 3/12/2020 4.3 4.17 Form of 2.250% Senior Notes due March 12, 2030 (included in Exhibit 4.2) 8-K 0-20322 3/12/2020 4.4 4.18 Form of 3.350% Senior Notes due March 12, 2050 (included in Exhibit 4.2) 8-K 0-20322 3/12/2020 4.5 4.19 4.20 4.21 4.22 u emental Indenturt e, dated ks Corporation and U.S. Bank Seventh Suppl as of May 7, 2020, by and between Starbuc r National Association, as trusrr Senior Notes due 2022, 2.550% Senior Notes due 2030 and 3.500% Senior Notes due 2050) tee (1.300% Form of 2.550% Senior Notes due November 15, 2030 (included in Exhibit 4.2) Form of 3.500% Senior Notes due November 15, 2050 (included in Exhibit 4.2) emental Indenturt e, dated as u Eighth Suppl ry 14, 2022, by and between of Februarr ks Corporation and U.S. Bank r Starbuc t Company, National Association, as Trusr trusr tee and as successor in interest to U.S. Bank National Association (Floating Rate Senior Notes due 2024 and 3.000% Senior Notes due 2032) 8-K 0-20322 5/7/2020 4.2 8-K 0-20322 5/7/2020 4.4 8-K 0-20322 5/7/2020 4.5 8-K 0-20322 2/14/2022 4.2 89 Exhibit Number 4.24 4.25 4.26 4.27 4.28 4.29 4.30 4.31 4.32 4.33 10.1* 10.2* 10.3* 10.4* Incorporated by Reference Form 8-K File No. 0-20322 Date of Filing 2/14/2022 Exhibit Number 4.3 Filed Herewith 8-K 0-20322 2/14/2022 S-3ASR 333-190955 9/3/2013 4.4 4.1 8-K 0-20322 6/10/2015 4.2 Exhibit Description Form of Floating Rate Senior Notes due 2024 (included as Exhibit A to Exhibit 4.24) Form of 3.000% Senior Notes due 2032 (included as Exhibit B to Exhibit 4.24) Indenturt e, dated as of August 23, 2007, ks Corporation by and between Starbuc r t Company and Deutsche Bank Trusr Americas, as trusr tee u emental Indenturt e, dated as Fourth Suppl of June 10, 2015, by and between r Starbuc Bank Trusrr trusr tee (2.700% Senior Notes due June 15, 2022 and 4.300% Senior Notes due June 15, 2045) ks Corporation and Deutsche t Company Americas, as 8-K 8-K 0-20322 6/10/2015 0-20322 5/16/2016 8-K 0-20322 5/16/2016 10-K 8-K 0-20322 0-20322 11/15/2019 2/16/2023 Form of 4.300% Senior Notes due June 15, 2045 emental Indenturt e, dated as tee (2.450% Senior Notes due June ks Corporation and Deutsche t Company Americas, as Sixth Supplu of May 16, 2016, by and between r Starbuc Bank Trusrr trusr 15, 2026) Form of 2.450% Senior Notes due June 15, 2026 Description of Securities emental Indenturt e, dated as Ninth Suppl u ry 16, 2023, by and between of Februarr ks Corporation and U.S. Bank r Starbuc t Company, National Association, as Trusr trusr tee and as successor in interest to U.S. Bank National Association (4.750% Senior Notes due 2026 and 4.800% Senior Notes due 2033) Form of 4.750% Senior Notes due 2026 (included as Exhibit A to Exhibit 4.31) 8-K 0-20322 2/16/2023 Form of 4.800% Senior Notes due 2033 (included as Exhibit B to Exhibit 4.31) 8-K 0-20322 2/16/2023 4.4 4.4 4.5 4.29 4.2 4.3 4.4 ks Corporation Employee Stock r Starbuc Purchase Plan — 1995 as amended and restated on April 9, 2015 to reflect adjud stments for the 2-for-1 forward stock split effeff ctive on such date Starbuc ks Corporation Executive r Management Bonus Plan, as amended and restated on January 12, 2022 ks Corporation Management Starbuc r Deferred Compensation Plan, as amended and restated effeff ctive January 1, 2011 Fifth Amendment to Starbuc Corporation Management Deferred Compensation Plan ks r 10-Q 0-20322 8/1/2017 10.1 8-K 0-20322 1/14/2022 10.1 10-Q 0-20322 2/4/2011 10.2 10-Q 0-20322 7/28/2020 10.1 90 Exhibit Number 10.5* 10.6* 10.7* 10.8* 10.9* 10.10* 10.11 10.12 10.13* 10.14* 10.15* Exhibit Description ks Corporation Deferred r Starbuc Compensation Plan for Non-Employee Directors, effeff ctive October 3, 2011, as amended and restated effeff ctive September 11, 2018 Starbuc r Equity Incentive Plan, as amended and restated effective March 16, 2022 ks Corporation 2005 Long-Term 2005 Key Employee Sub-u Plan to the Starbuc r Equity Incentive Plan, as amended and restated effective November 15, 2005 ks Corporation 2005 Long-Term r 2005 Non-Employee Director Sub-u Plan to the Starbuc ks Corporation 2005 Long- Term Equity Incentive Plan, as amended and restated effeff ctive September 11, 2018 Form of Global Stock Option Grant Agreement for Purchase of Stock under the Key Employee Sub-u Plan to the 2005 Long Term Equity Incentive Plan Form of Stock Option Grant Agreement for Purchase of Stock under the 2005 Non-Employee Director Sub-u Plan to the ks Corporation 2005 Long-Term r Starbuc Equity Incentive Plan ks Corporation, Credit Agreement, dated September 16, r 2021, among Starbuc Bank of America, N.A., in its capaa Administrative Agent, Swing Line Lender and L/C Issuer, Wells Fargo Bank, N.A., Citibank, N.A. and U.S. Bank National Association, as L/C Issuers, and the other Lenders from time to time a party thereto city as Form of Commercial Papea Agreement between Starbuc Corporation, as Issuer, and the Dealer r Dealer ks r Form of Time Vested Global Restricted Stock Unit Grant Agreement under the Key Employee Sub-u Plan to the 2005 Long-Term Equity Incentive Plan Form of Global Key Employee Restricted Stock Unit Grant Agreement (Effective November 2019) Form of Global Key Employee Restricted Stock Unit Grant Agreement - No Retirement Vesting (Effective November 2020) Incorporated by Reference Form 10-K File No. 0-20322 Date of Filing 11/16/2018 Exhibit Number 10.5 Filed Herewith 10-Q 0-20322 5/3/2022 10.1 10-Q 0-20322 2/10/2006 10.2 10-K 0-20322 11/16/2018 10.9 10-K 0-20322 11/18/2016 10.14 10-Q 0-20322 4/26/2016 10.2 8-K 0-20322 9/17/2021 10.1 8-K 0-20322 7/29/2016 10.1 10-K 0-20322 11/18/2016 10.21 10-K 0-20322 11/15/2019 10.22 10-K 0-20322 11/12/2020 10.23 91 Exhibit Number 10.16* 10.17* 10.18* 10.19* 10.20* 10.21* 10.22* 10.23* 10.24* 10.25* 10.26* 10.27* 10.28 Exhibit Description Form of Global Key Employee Restricted Stock Unit Grant Agreement - Retirement Vesting (Effective November 2020) Form of Global Key Employee Stock Option Grant Agreement for Purchase of Stock under the 2005 Long-Term Equity Incentive Plan Form of Global Key Employee Restricted Stock Unit Grant Agreement (Performance-Based - Retirement Vesting) (Effective November 2020) r Letter dated September 1, 2022 ks Corporation and Offeff between Starbuc Laxman Narasimhan r ks Corporation Global Key ks Corporation Global Key ks Corporation Key Employee Starbuc r Employee Restricted Stock Unit Grant Agreement (Promotion - Time-Based - No Retirement Vesting) (Effective August 2022) Starbuc r Restricted Stock Unit Grant Agreement (New Hire - Time-Based - No Retirement Vesting) (Effective August 2022) Starbuc r Employee Restricted Stock Unit Grant Agreement (Annual - Time-Based - Retirement Vesting) (Effective August 2022) r Starbuc Employee Restricted Stock Unit Grant Agreement (Annual - Performance Based - Retirement Vesting) (Effective August 2022) r Starbuc Employee Restricted Stock Unit Grant Agreement (Executive Advisor - Time- Based) (Effective August 2022) ks Corporation Global Key ks Corporation Global Key Incorporated by Reference Form 10-K File No. 0-20322 Date of Filing 11/12/2020 Exhibit Number 10.24 Filed Herewith 10-K 0-20322 11/17/2017 10.25 10-K 0-20322 11/12/2020 10.29 8-K 0-20322 9/1/2022 10.1 10-K 0-20322 11/18/2022 10.23 10-K 0-20322 11/18/2022 10.24 10-K 0-20322 11/18/2022 10.25 10-K 0-20322 11/18/2022 10.26 10-K 0-20322 11/18/2022 10.27 Retirement Agreement, dated June 1, 2018, by and between Starbuc ks Corporation and Howard Schultz r Amendment Agreement, dated September 12, 2023, by and between r Starbuc Schultz ks Corporation and Howard Starbuc ks Corporation Executive r Severance and Change in Control Plan effeff ctive August 31, 2022 and amended on March 22, 2023 Amendment No. 1 to Credit Agreement dated April 17, 2023, among Starbuc ks Corporation and Bank of America, N.A. city as administrative agent for in its capaa the Lenders and each of the Lenders party thereto r 8-K 0-20322 6/5/2018 10.1 — — — — X 8-K 0-20322 3/28/2023 10.1 8-K 0-20322 4/21/2023 10.1 92 Incorporated by Reference Form — File No. — Date of Filing — Exhibit Number — Filed Herewith X — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — X X X X X X X X Exhibit Number 10.29* 10.30* 10.31* 21 23 31.1 31.2 32** 97 101 104 Exhibit Description ks Corporation Global Key r Starbuc Employee Restricted Stock Unit Grant Agreement (Performance-Based) (Effective November 2023) ks Corporation Global Key Starbuc r Employee Restricted Stock Unit Grant Agreement (Time-Based) (Effective November 2023) ks Corporation Global Key r Starbuc Employee Restricted Stock Unit Grant Agreement (Promotion and New Hire) (Effective November 2023) Subsu idiaries of Starbuc r ks Corporation Consent of Independent Registered Publu ic Accounting Firm Certificff ation of Principal Executive Offiff cer 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 Certificff ation of Principal Financial Offiff cer 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 Certificff ations of Principal Executive Offiff cer and Principal Financial Offiff cer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 r Starbuc Incentive Compensation Policy The following financial statements from the Company’s 10-K for the fiscal year ended October 1, 2023, formatted in iXBRL: (i) Consolidated Statements of Earnings, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Equity, and (vi) Notes to Consolidated Financial Statements Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101) ks Corporation Recovery of * ** Denotes a management contract or compensatory plan or arrangement. Furnished herewith. Item 16. Form 10-K Summary None. 93 Pursuant to the requirements of Section 13 or 15(d) 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. SIGNATURES STARBUCKS CORPORATRR ION By: /s/ Laxman Narasimhan Laxman Narasimhan chief executive offiff cer November 17, 2023 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated as of November 17, 2023. Signature g Title By: /s/ Laxman Narasimhan Laxman Narasimhan By: /s/ Rachel Ruggeri Rachel Ruggeri By: /s/ Richard E. Allison, Jr. Richard E. Allison, Jr. By: /s/ Andrew Campion Andrew Campion By: /s/ Beth Ford Beth Ford By: /s/ Mellody Hobson Mellody Hobson By: /s/ Jørgen Vig Knudstorp Jørgen Vig Knudstorp By: /s/ Satya Nadella Satya Nadella By: /s/ Wei Zhang Wei Zhang chief executive offiff cer, director (principal executive offiff cer) executive vice president, chief financial offiff cer (principal financial offiff cer and principal accounting offiff cer) director director director director director director director 94 Starbucks Corporation 2401 Utah Avenue South Seattle, Washington 98134 starbucks.com © 2024 STARBUCKS CORPORATION