Starbucks Annual Report

STARBUCKS CORPORATION

2013 FISCAL ANNUAL REPORT

ANNUAL REPORT

TABLE OF CONTENTS

BUSINESS/OVERVIEW

04

THE YEAR IN REVIEW

06

Our Heritage

32

08

Our Company

36

Selected Financial Data

10

Our Mission Statement

38

Total Store Data

12

Letter to Shareholders

40

U.S. Store Data

16

2013 Financial Highlights

42

Management’s Analysis

18 Business

46

Result of Operations 12-13

26

Financial Highlights

58

Quarterly Financial Information

28

The View Ahead

Shareholder Information

30

FINANCIAL STATEMENTS

64

APPENDICES & REFERENCES

66

Consolidated Earnings

92

68

Consolidated Income

94 Signatures

70

Consolidated Balance Sheets

96

Board of Directors

72

Consolidated Cash Flows

98

Senior Leadership Team

74

Consolidated Equity

78

Notes to Consolidated Statements

Market Information

90

Starbucks Annual Report

5

OUR HERITAGE

Every day, we go to work hoping to do two

He had a vision to bring the Italian coffeehouse

things: share great coffee with our friends

tradition back to the United States. A place

and help make the world a little better. It was

for conversation and a sense of community. A

true when the first Starbucks opened in 1971,

third place between work and home. He left

and it’s just as true today.

Starbucks for a short period of time to start his

Back then, the company was a single store

August 1987 to purchase Starbucks with the

just a narrow storefront, Starbucks offered

help of local investors.

some of the world’s finest fresh-roasted whole

From the beginning, Starbucks set out to be

bean coffees. The name, inspired by Moby Dick,

a different kind of company. One that not only

evoked the romance of the high seas and the

celebrated coffee and the rich tradition, but

seafaring tradition of the early coffee traders.

that also brought a feeling of connection.

In 1981, Howard Schultz (Starbucks

human spirit – one person, one cup, and one

had first walked into a Starbucks store. From

neighborhood at a time.

into Starbucks and joined a year later.

A year later, in 1983, Howard traveled to

Our Heritage

Our mission to inspire and nurture the

chairman, president and chief executive officer) his first cup of Sumatra, Howard was drawn

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own Il Giornale coffeehouses and returned in

in Seattle’s historic Pike Place Market. From

Today, with more than 18,000 stores in 62 countries, Starbucks is the premier roaster and retailer of specialty coffee in the world. And

Italy and became captivated with Italian coffee

with every cup, we strive to bring both our

bars and the romance of the coffee experience.

heritage and an exceptional experience to life.

OUR COMPANY

It happens millions of times each week – a customer receives a drink from a Starbucks barista – but each interaction is unique.

Store front of original Pike Place store

the essence of what we do – but it hardly tells the whole story.

Our coffeehouses have become a beacon for coffee lovers everywhere. Why do they

It’s just a moment in time – just one hand

insist on Starbucks? Because they know they

reaching over the counter to present a cup to

can count on genuine service, an inviting

another outstretched hand.

atmosphere and a superb cup of expertly

But it’s a connection.

roasted and richly brewed coffee every time.

We make sure everything we do honors that connection – from our commitment to the highest quality coffee in the world, to

coffee, but everything else that goes with a full

communities to do business responsibly.

and rewarding coffeehouse experience. We also offer a selection of premium Tazo® teas,

forty years ago, in every place that we’ve been,

fine pastries and other delectable treats to

and every place that we touch, we’ve tried to

please the taste buds. And the music you hear

make it a little better than we found it.

in store is chosen for its artistry and appeal.

To say Starbucks purchases and roasts highquality whole bean coffees is very true. That’s

Our Company

We’re not just passionate purveyors of

the way we engage with our customers and From our beginnings as a single store over

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EXPECT MORE THAN COFFEE

It’s not unusual to see people coming to Starbucks to chat, meet up or even work. We’re

a neighborhood gathering place, a part of the daily routine – and we couldn’t be happier about it. Get to know us and you’ll see: we are so much more than what we brew.

BEING A RESPONSIBLE COMPANY We have always believed Starbucks can – and should — have a positive impact on the communities we serve. One person, one cup and one neighborhood at a time.

As we have grown to now more than 20,000 stores in over 60 countries, so too has our commitment to use our scale for good. So it is our vision that together we will elevate our partners, customers, suppliers and neighbors to create positive change. To be innovators, leaders and contributors to an inclusive society and a healthy environment so that Starbucks and everyone we touch can endure and thrive.

OUR MISSION STATEMENT

To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.

Here are the principles of how we live that every day.

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Our Mission Statement

OUR COFFEE

OUR STORES

OUR NEIGHBORHOOD

It has always been, and will always be, about

When our customers feel this sense of

Every store is part of a community, and we

quality. We’re passionate about ethically

belonging, our stores become a haven, a

take our responsibility to be good neighbors

sourcing the finest coffee beans, roasting them

break from the worries outside, a place

seriously. We want to be invited in wherever

with great care, and improving the lives of

where you can meet with friends. It’s about

we do business. We can be a force for positive

people who grow them. We care deeply about

enjoyment at the speed of life – sometimes

action – bringing together our partners,

all of this; our work is never done.

slow and savored, sometimes faster.

customers, and the community to contribute

Always full of humanity.

every day. Now we see that our responsibility –

OUR PARTNERS We’re called partners, because it’s not just a

OUR SHAREHOLDERS

job, it’s our passion. Together, we embrace

We know that as we deliver in each of these

diversity to create a place where each of us can

areas, we enjoy the kind of success that

be ourselves. We always treat each other with

rewards our shareholders. We are fully

respect and dignity. And we hold each other to

accountable to get each of these elements

that standard.

right so that Starbucks – and everyone it

OUR CUSTOMERS

and our potential for good – is even larger. The world is looking to Starbucks to set the new standard, yet again. We will lead.

touches – can endure and thrive.

When we are fully engaged, we connect with, laugh with, and uplift the lives of our customers – even if just for a few moments. Sure, it starts with the promise of a perfectly made beverage, but our work goes far beyond that. It’s really about human connection.

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TO OUR SHAREHOLDERS

I am honored to share with you that

excellent margin improvement, led to record

performance in fiscal 2013, exceeding

non-GAAP earnings per share* of $2.26, up 26

expectations on almost all fronts as

percent over fiscal 2012. Through dividends

we continued to drive growth across

and share repurchases, Starbucks returned a

geographies, categories, and our multiple

record $1.2 billion of cash to our shareholders.

channels of distribution. As you review the

Letter to Shareholders

Today, Starbucks is healthier and more

highlights of our 42nd year, I hope you will

diverse than at any time in our history. In

agree that we are achieving our goals in

addition to the incredibly hard work of our

ways in which we can all be proud.

more than 200,000 partners (employees) who

In fiscal 2013, Starbucks consolidated

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This strong revenue growth, coupled with

Starbucks has once again delivered record

proudly wear the green apron, as well as our

revenues reached a record $14.9 billion, a 12

leaders in Seattle and throughout the world,

percent increase over last year driven by a 7

our success would not be possible without our

percent rise in global comparable store sales

bold, strategic vision; a dedication to disruptive

and the opening of 1,701 net new stores

innovation and operational excellence; and a

around the globe. Our non-GAAP operating

foundation of strong values. Together, these

income* was $2.5 billion, a 23 percent increase,

tenets are driving our performance.

with record non-GAAP operating margin* of

A distinctive set of values has always

16.5 percent, an impressive 150 basis points

shaped how we engage our customers, our

higher than last year.

partners, and the communities where we do

business. This past year, given the tenuous

equity awards, and by retaining industry-

and communities that is deeper than at any

economic and political environment we

leading health care benefits regardless of

time in our history. In the years to come,

continued to observe in the U.S. and around

changes to the U.S. health care laws. Our

we will—indeed we must—continue to ask

the world, Starbucks was particularly cognizant

efforts to serve communities included a

ourselves how we can use our scale for good.

of our responsibility to stay true to our

company-wide volunteer effort of more

guiding principles, and to lead by example.

than 600,000 hours to help foster long-term

Starbucks had more than 3 billion customer

The complexity of these times requires, in

improvements in neighborhoods around

visits to our more than 19,000 stores in 62

my view, that businesses complement their

the world. And in November 2013, we made

countries. The Americas, our largest segment,

main goal of profitability with actions that

the strategic business decision to commit to

produced revenue growth of 11 percent, led

can help our society move forward in ways

hiring 10,000 veterans and military spouses

by the strength of the U.S., where comparable

that benefit as many people as possible.

over the next five years, a talent base with

store sales have grown 7 percent or higher for

With this in mind, those of us who lead public

demonstrated leadership, discipline, and

15 consecutive quarters, which is particularly

companies, in particular, have a duty to share

operational skills.

noteworthy given the size of the market. In

our organizations’ success with our people

Taking these and other steps during 2013

Global performance. In fiscal 2013,

addition, Canada exceeded $1 billion in full-

and reach out to the communities we serve,

reinforced once again that we can stand for

year revenues for the first time ever, while our

in addition to creating shareholder value.

something more than just profitability, while

dynamic Latin America business grew to nearly

also delivering record performance. Indeed,

700 stores, an 18 percent increase, with sales

we continued to reward and invest in our

that harmonious achievement is threaded into

growth in all 12 markets.

full- and part-time partners by helping them to

the equity of the Starbucks brand, creating a

realize more than $230 million in value from

reservoir of trust with our customers, partners,

At Starbucks, we are proud that, in 2013,

We also are pleased that our EMEA segment—Europe, the Middle East, and

Starbucks Annual Report

13

Africa—is once again positively contributing

segment, revenues grew by 10 percent to $1.4

exciting concept that leverages Starbucks®

to the company’s performance as a result of

billion as we continued to provide consumers

beverage and retail expertise while expanding

ongoing efforts to transform this business.

more opportunities to enjoy their favorite

our refreshment options.

Looking ahead, our plans to open 1,500 net new stores, paired with continued financial

Beyond our coffee core, the grand

What’s more, delicious new food offerings, led by the La Boulange™ bakery items in more

discipline and productivity improvements, will

opening of Teavana® Fine Teas + Tea Bar, our

than 3,500 U.S. company-operated stores today,

fuel momentum in every region.

reimagined Teavana® store in New York City,

are receiving strong customer response and

with its unique tea bar concept, extended

lifting sales.

Innovative concepts. Sustainable growth

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Starbucks® products outside our retail stores.

requires that we preserve the integrity of

our Teavana retail platform while heralding

our core business as we carefully expand our

our plans to do for the $90 billion global tea

that we have with our customers has always

products and expertise into new channels,

industry what we have done for coffee. In juice,

been core to our brand. These are currently

brands, and markets. Throughout 2013,

we exceeded our aggressive growth plans for

more powerful than ever because of the

we once again delighted our customers

Evolution Fresh™, which is now available in

combined, complementary influence of our

with iconic beverages as well as new menu

more than 8,000 locations, while the opening

global retail footprint, our world-class digital

choices. Pumpkin Spice Latte celebrated

of our state-of-the-art juicery in California will

and mobile technologies, and our innovative

its 10th year, while new creations debuted,

help us further increase our share of the $1.6

loyalty programs.

including Hazelnut Macchiato, a fantastic

billion super-premium juice category, while

single origin coffee from Ethiopia, and a

bringing more manufacturing jobs to the U.S.

reach: In our thousands of stores, our engaging,

wonderful Starbucks Reserve® coffee from

We also began exploring the potential of

talented baristas and new store designs are

Colombia. And in our Channel Development

handcrafted carbonated beverages, another

enhancing the Starbucks Experience; indeed,

Letter to Shareholders

Customer connections. The relationship

Consider the depth and scope of our

To realize our ambition of ranking among

our fleet of new stores is among the best performing in the company’s history. What’s

the world’s most admired brands and enduring

more, nearly 7 million people are active My

companies, we understand more than ever

Starbucks Rewards™ members in the U.S.,

what it means to grow responsibly—with fiscal

with $4 billion loaded onto cards in fiscal

discipline grounded in our guiding principles.

2013 globally, and one in every three U.S.

Today, I have no doubt that our values are

transactions paid for with a Starbucks Card.

driving our ability to deliver increased value

What’s more, our customers are using our

to our stakeholders, and I want to thank our

mobile payment apps to make, on average,

partners for all they do every day to contribute

more than 4 million mobile transactions per

to our success.

Finally, thank you, our shareholders, for

week in the U.S. The value that these assets and capabilities

your trust in us as we do our best to exceed

bring to our brand, and how that is translating

expectations and enter the most exciting

into record financial performance, cannot be

period of our existence.

understated. Few if any companies can match the diversity of our customer touch points.

Warm Regards,

chairman, president, and executive chief officer

Like a flywheel effect, the momentum from the intersecting nature of this unique network drives our business every day, giving Starbucks a potent competitive advantage.

2013 FISCAL FINANCIAL HIGHLIGHTS

NET REVENUES

2009 2010 2011 2012 2013

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2013 Fiscal Financial Highlights

$9.8 Billion $10.7 Billion $11.7 Billion $13.3 Billion $14.9 Billion

STORE SALES GROWTH

2009 2010 2011 2012 2013

6% 7% 8% 7% 7%

OPERATING INCOME / LOSS

OPERATING MARGIN

OPERATING CASH FLOW & EXPENDITURES (in millions)

(in millions)

**

**

*

*

*

* * *

GAAP

NON-GAAP

GAAP

NON-GAAP

Cash from Operations Capital Expenditures

* Non-GAAP measure. Excludes $332 million and $53 million in pretax restructuring and transformation charges in 2009 and 2010, respectively. Also excludes a

benefit from the 53rd week in 2010 of approximately $59 million and a gain on the sale of properties in 2011 of $30 million. ** Non-GAAP measure. Excludes a pretax charge of $2,784.1 million resulting from the conclusion of the arbitration with Kraft Foods Global, Inc.

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BUSINESS

GENERAL INFORMATION

standing as one of the most recognized and

and retailer of specialty coffee in the world,

respected brands in the world. To achieve this,

operating in 62 countries. Formed in 1985,

we are continuing the disciplined expansion

Starbucks Corporation’s common stock

of our global store base. In addition, by

trades on the NASDAQ Global Select Market

leveraging the experience gained through our

(“NASDAQ”) under the symbol “SBUX.” We

traditional store model, we continue to offer

purchase and roast high-quality coffees that

consumers new coffee and other products in

we sell, along with handcrafted coffee, tea and

a variety of forms, across new categories, and

other beverages and avariety of fresh food

through diverse channels. Starbucks Global

items, through company-operated stores. We

Responsibility strategy and commitments

also sell a variety of coffee and tea products

related to coffee and the communities we do

and license our trademarks through other

business in, as well as our focus on being an

channels such as licensed stores, grocery and

employer of choice, are also key complements

national foodservice accounts. In addition to

to our business strategies.

our flagship Starbucks brand, our portfolio

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Business

Our objective is to maintain Starbucks

Starbucks is the premier roaster, marketer

In this Annual Report on Form 10-K for

also includes goods and services offered under

the fiscal year ended September 29, 2013,

these brands: Teavana, Tazo, Seattle’s Best

Starbucks Corporation (together with its

Coffee, Starbucks VIA, Starbucks Refreshers,

subsidiaries) is referred to as “Starbucks,” the

Evolution Fresh, La Boulange and Verismo.

“Company,” “we,” “us” or “our.”

SEGMENT FINANCIAL INFORMATION

and EMEA segments also include certain

We have four operating segments: 1) Americas,

foodservice accounts, primarily in Canada and

we decentralized certain leadership functions

inclusive of the US, Canada, and Latin America;

the UK. Our Americas segment also includes

in the areas of retail marketing and category

2) Europe, Middle East, and Africa (“EMEA”);

our La Boulange® retail stores.

management, global store development and

3) China / Asia Pacific (“CAP”) and 4) Channel

Our Channel Development segment

Effective at the beginning of fiscal 2013,

partner resources to support and align with the

Development. Segment revenues as a

includes whole bean and ground coffees,

respective operating segment presidents. In

percentage of total net revenues for fiscal year

premium Tazo® teas, Starbucks and Tazo

conjunction with these moves, certain general

2013 were as follows: Americas (74%), EMEA

branded single serve products, a variety of

and administrative and depreciation and

(8%), CAP (6%), Channel Development (9%),

ready-to-drink beverages, such as Starbucks

amortization expenses associated with these

and all other segments (3%).

Refreshers™ beverages, and other products

functions, which were previously reported as

Our Americas, EMEA, and CAP segments

sold world wide through channels such as

unallocated corporate expenses within “Other,”

include both company-operated and licensed

grocery stores, warehouse clubs, specialty

are now reported within the respective

stores. Our Americas segment is our most

retailers, convenience stores, and US

reportable operating segments to align with

mature business and has achieved significant

foodservice accounts.

the regions they support.

scale. Certain markets within our EMEA and

Our other, non-reportable, operating

Beginning in the second quarter of fiscal

CAP operations are still in the early stages of

segments include the operating results from

2013, we changed the presentation of our

development and require a more extensive

Teavana, Seattle’s Best Coffee, Evolution Fresh,

unallocated corporate expenses, which were

support organization, relative to their current

and our Digital Ventures business. These other

previously combined with our non-reportable

levels of revenue and operating income,

operating segments are referred to as All

operating segments in “Other”. Unallocated

than our Americas operations. The Americas

Other Segments.

corporate operating expenses pertain primarily

Starbucks Annual Report

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to corporate administrative functions that

the leading retailer and brand of coffee in

support the operating segments but are not

each of our target markets by selling the finest

specifically attributable to or managed by any

quality coffee and related products, and by

segment. These expenses are now presented

providing each customer a unique Starbucks

as a reconciling item between total segment

Experience. The Starbucks Experience is built

operating results and consolidated operating

upon superior customer service, as well as

results.

clean and well-maintained company-operated

Concurrent with the reporting changes

stores that reflect the personalities of the

noted above, we revised our prior period

communities in which they operate, thereby

financial information to reflect comparable

building a high degree of customer loyalty.

financial information. Historical financial

Our strategy for expanding our global retail

information presented herein reflects these

business is to increase our market share in

changes. There was no impact on consolidated

a disciplined manner, by selectively opening

net revenues, total operating expenses,

additional stores in new and existing markets,

operating income, or net earnings as a result of

as well as increasing sales in existing stores,

these changes.

to support our long-term strategic objective to maintain Starbucks standing as one of the

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Business

COMPANY OPERATED STORES

most recognized and respected brands in the

Revenue from company-operated stores

world. Store growth in specific existing markets

accounted for 79% of total net revenues during

will vary due to many factors, including the

fiscal 2013. Our retail objective is to be

maturity of the market.

COMPANY-OPERATED AND LICENSED STORE SUMMARY AS OF SEPTEMBER 29, 2013

REVENUE COMPONENTS

LICENSED STORES

license fees and sell coffee, tea and related

We generate nearly all of our revenues

Product sales to and royalty and license fee

products for resale in licensed locations.

through company-operated stores, licensed

revenues from our licensed stores accounted

Employees working in licensed retail locations

stores, consumer packaged goods (“CPG”) and

for 9% of total net revenues in the fiscal 2013

are required to follow our detailed store

foodservice operations. The mix of company-

year. In our licensed store operations, we

operating procedures in order to maintain

operated versus licensed stores in a given

leverage the expertise of our local partners and

optimal service and product sales as well as

market will vary based on several factors,

share our operating and store development

attend training classes similar to those given

including our ability to access desirable local

experience. Licensees provide improved, and at

to employees in company-operated stores

retail space, the complexity and expected

times the only, access to desirable retail space.

in order to maintain the goals and image of

ultimate size of the market for Starbucks,

Most licensees are prominent retailers with

the company. For Teavana and Seattle’s Best

and our ability to leverage the support

in-depth market knowledge and access. As part

Coffee, as well as Starbucks in the UK, we also

infrastructure in an existing geographic region.

of these arrangements, we receive royalties and

implement traditional franchising.

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COMPANY OPERATED STORE DATA FOR THE YEAR - ENDED SEPTEMBER 29, 2013

22

Business

* Americas store data has been adjusted for the sale of store locations in Chile to a joint venture partner in the fourth quarter of fiscal 2013 by reclassifying historical information from company-operated stores to licensed stores ** EMEA store data has been adjusted for the transfer of certain company-operated stores to licensees in the fourth quarter of fiscal 2012. *** Acquired during the second quarter of fiscal 2013.

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LICENSED STORE DATA FOR THE YEAR - ENDED SEPTEMBER 29, 2013

*

**

24

Business

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FINANCIAL HIGHLIGHTS

1

Total net revenues increased 12.0% to $14.9 billion in fiscal 2013 compared to

$13.3 billion in fiscal 2012.

5

Arbitration concluded on litigation with Kraft Foods Global, Inc. (“Kraft�) on

November 12, 2013, which resulted in a pretax charge to fiscal 2013 operating results of $2.8

2

Global comparable store sales grew 7%

billion. This charge reduced EPS by $2.25 per

driven by 5% increase in the number of

share in fiscal 2013.

transactions and a 2% increase in tickets.

3

6

compared to $2.0 billion in fiscal 2012 and

fiscal 2012. Capital expenditures were $1.2

fiscal 2013 operating margin was (2.2)%

billion in fiscal 2013 compared to $856 million

compared to 15.0% in fiscal 2012. Declines

in fiscal 2012.

Consolidated operating income has decreased to $(0.3) billion in fiscal 2013

Cash flow from operations was $2.9 billion in fiscal 2013 compared to $1.8 billion in

were due to the litigation charges noted.

4

7

The decline was due to the litigation charge

$1.2 billion of cash to our shareholders through

noted below.

dividends and share repurchases.

EPS for fiscal 2013 decreased to $0.01, compared to EPS of $1.79 in fiscal 2012.

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Financial Highlights

Available operating cash flow after capital expenditures was directed at returning

FISCAL 2014 — THE VIEW AHEAD

For fiscal year 2014, we expect revenue growth driven by mid-single-digit global comparable store sales growth, 1,500 new store openings, and continued growth in the Channel Development business.

We expect fiscal year 2014 consolidated operating margin improvement, when compared to our fiscal 2013 operating results excluding the litigation charge associated with the Kraft arbitration, of 150 to 200 basis points and strong EPS growth, driven primarily by leverage on revenue growth. The effective tax rate for fiscal 2014 is expected to be approximately 34.5%.

Capital expenditures in fiscal 2014 are expected to be approximately $1.2 billion, primarily for store renovations and new stores, as well for other investments to support our ongoing growth initiatives.

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Fiscal 2014 — The View Ahead

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SHAREHOLDER INFORMATION

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Shareholder Information

Starbucks common stock is traded on NASDAQ,

ISSUER PURCHASES OF EQUITY SECURITIES

under the symbol “SBUX.” The table shows the

Starbucks did not repurchase any shares

quarterly high and low sale prices per share

during the fourth quarter of fiscal 2013. As of

of Starbucks common stock as reported by

the end of the quarter, the maximum number

NASDAQ for each quarter during the last two

of shares that may yet be purchased under

fiscal years and the quarterly cash dividend

our current share repurchase program was

declared per share of our common stock during

26,359,511 shares. The share repurchase

the periods indicated. As of November 8, 2013,

program is conducted under authorizations

we had approximately 18,470 shareholders of

made from time to time by our Board of

record. This does not include persons whose

Directors. On November 3,2011, we publicly

stock is in nominee or “street name” accounts

announced the authorization of up to an

through brokers. Future decisions to pay cash

additional 20 million shares, and on November

dividends continue to be at the discretion of the

15, 2012, we announced the authorization of

Board of Directors and will be dependent on our

up to an additional 25 million shares. These

operating performance, and other such factors

authorizations have no expiration date and

that the Board of Directors considers relevant.

are currently in effect.

MARKET DIVIDEND POLICY

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PERFORMANCE COMPARISON GRAPH The following graph depicts the total return to shareholders from September 28, 2008 through September 29, 2013, 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 Starbucks.

All indices shown in the graph have been reset to a base of 100 as of September 28, 2008, 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.

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Shareholder Information

Starbucks Annual Report

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SELECTED FINANCIAL DATA

36

Selected Financial Data

FINANCIAL INFORMATION (in millions)

COMPARABLE STORE SALES * Our fiscal year ends on the Sunday closest to September 30. The fiscal year ended on October 3, 2010 included 53 weeks with the 53rd week falling in our fourth fiscal quarter. ** Includes the revenue reclassification described in Note 1. For fiscal years 2010 and 2009, we reclassified $465.7 million and $427.3 million, respectively, from “Licensed stores” revenue to “CPG, foodservice and other” revenue. *** Fiscal 2010 and 2009 results include pretax restructuring charges of $53.0 million and $332.4 million, respectively. **** Fiscal 2013 results include a pretax charge of $2,784.1 million resulting from the conclusion of our arbitration with Kraft Foods Global, Inc. The impact of this charge to net earnings attributable to Starbucks and diluted EPS, net of the related tax benefit, was $1,713.1 million and $2.25 per share, respectively. ***** Includes stores only open 13+ months.

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TOTAL STORE DATA EMEA Company-operated Licensed

THE AMERICAS Company-operated 8,078 Licensed

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Total Store Data

5,415

853 1,116

ALL OTHER SEGMENTS Company-operated Licensed

357 66

CAP Company-operated Licensed

906 2,976

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U.S. STORE DATA

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U.S. Store Data

This is a map of which U.S. states have the most number of Starbucks per capita.

The darker the green, the higher the density of Starbucks retail stores. #1 Washington

#18 Florida

#35 Tennessee

#2 Nevada

#19

New York

#36 Nebraska

#3

#20

New Mexico

#37 Montana

Colorado

#4 Oregon

#21 Delaware

#38 Iowa

#5 California

#22

#39

#6 Hawaii

#23 Georgia

#40 Maine

#7 Arizona

#24 Utah

#41

#8 Alaska

#25 Wyoming

#42 Kentucky

#9 Illinois

#26 Ohio

#43 Oklahoma

#10 Virginia

#27

South Dakota

#44 Louisiana

#11 Maryland

#28

New Jersey

#45 Alabama

#12 Idaho

#29 Kansas

#46

New Hampshire

#13 Texas

#30 Michigan

#47

West Virginia

#14 Massachussetts

#31 Missouri

#48 Mississippi

#15 Minnesota

#32

#49 Vermont

#16

#33 Wisconsin

Indiana

#17 Connecticut

North Dakota

North Carolina

Rhode Island

South Carolina

#50 Arkansas

#34 Pennsylvania

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MANAGEMENT’S ANALYSIS

GENERAL

The Americas segment continued its

Our fiscal year ends on the Sunday closest

strong performance in fiscal 2013, with

to September 30. The fiscal years ended on

revenues growing 11% and with a comparable

September 29, 2013, September 30, 2012

store sales growth of 7%. Strength in beverage

and October 2, 2011 all included 52 weeks. All

innovation and promotions, operational

references to store counts, including data for

improvements, and expanded food offerings

new store openings, are reported net of store

all contributed to the increase in comparable

closures, unless otherwise noted.

store sales. Operating margin expanded 120 basis points to 21.5%, driven by sales leverage,

OVERVIEW

store efficiencies, and lower commodity costs.

Starbucks segment results for fiscal 2013

Looking forward, we expect to continue to

demonstrate the fundamental health of our

drive sales and profitability through new stores

global business model and our continued

and enhanced product offerings, including

ability to successfully execute new growth

the continued roll out of La Boulange™ bakery

initiatives in a disciplined manner. Our strong

items into all of our company-operated

revenue growth of 12% and segment margin

stores by the end of fiscal 2014.

expansion drove increased cash flows, which

42

Management’s Analysis

In the EMEA segment, we are continuing

allowed us to both fund our growth initiatives

to make steady progress toward long-term

and increase cash returned to shareholders

profitability in the region. Revenues grew 2%

through dividends and share repurchases.

compared to the prior year, with licensed

store revenue growth nearly offset by a

base, including our joint venture operations in

decline in company-operated store revenues.

China and Japan. New store growth, along with

This reflects the shift in our ownership

a 9% increase in comparable store sales, drove

structure, as we have closed underperforming

a 27% increase in total net revenues for fiscal

company-operated stores and are focused on

2013. Operating income grew 27% to $321

growing our licensed store base in profitable

million and operating margin was unchanged at

locations. Comparable store sales were flat

35%, primarily due to our rapid growth shifting

year over year, but were modestly positive in

away from our historically licensed model.

the second half of fiscal 2013. EMEA operating

We expect this segment will become a more

margin improved to 5.5% in fiscal 2013 due

meaningful contributor to overall company

to our ongoing cost management efforts

profitability in the future, as we look forward

and store portfolio optimization activities

to continued store openings and establishing

which began the prior year. We expect the

China as our largest market outside of the US.

investments we are making in this segment

Channel Development segment revenues

will improve operating performance as we

grew 10% in fiscal 2013, primarily due to

progress on our plan towards mid-teens

increased sales of premium single serve

operating margin over time.

products. Lower coffee costs was the primary

Our CAP segment results reflect a

contributor to the 290 basis point increase

combination of rapid new store growth and

in operating margin for fiscal 2013. As we

solid performance from our existing store

continue to expand customer occasions outside

Starbucks Annual Report

43

of our retail stores, including growing our presence in the premium single serve category,

Fresh, as well as our Digital Ventures business.

The Americas, EMEA and CAP segments

we expect this segment will become a more

include company-operated stores and licensed

significant contributor to our future growth.

stores. Licensed stores generally have a higher

Our consolidated operating results included

operating margin than company-operated

a litigation charge as a result of arbitration

stores. Under the licensed model, Starbucks

with Kraft which resulted in a pretax charge

receives a reduced share of the total store

of $2.8 billion. We believe we have adequate

revenues, but this is more than offset by the

liquidity to fund this expected payment, both

reduction in its share of costs as these are

in the form of cash on hand and the expected

primarily incurred by the licensee. The EMEA

issuance of additional debt in fiscal 2014.

and CAP segments have a higher relative share of licensed stores versus company-operated

44

Management’s Analysis

OPERATING SEGMENT OVERVIEW

stores compared to the Americas segment;

Starbucks has four reportable operating

however, the Americas segment has been

segments: 1) Americas, inclusive of the

operating significantly longer than the other

US, Canada, and Latin America markets; 2)

segments and has developed deep awareness

Europe, Middle East, and Africa, (“EMEA”); 3)

of, and attachment to, the Starbucks brand

China / Asia Pacific (“CAP”) and 4) Channel

and stores among its customer base. As a

Development. All Other Segments includes

result, the more mature Americas segment

Teavana, Seattle’s Best Coffee and Evolution

has significantly more stores and higher

total revenues than the other two segments.

China. Our disciplined approach to expanding

Average sales per store are also higher in the

our global store base also includes optimizing

Americas due to various factors including

the mix of company operated and licensed

length of time in market.

stores in each market.

In certain international markets costs and

Our Channel Development segment

store operating expenses can be higher than

includes whole bean and ground coffees,

in the US market due to higher rents for prime

premium TazoÂŽ teas, Starbucks- and Tazo

store locations or costs of compliance with

branded single serve products, a variety of

country-specific regulatory requirements.

ready-to-drink beverages, such as Starbucks

Because many of our international operations

Refreshers™ beverages, and other branded

are in an early phase of development,

products sold worldwide through channels

operating expenses as a percentage of related

such as grocery stores, warehouse clubs,

revenues are often higher compared to the US.

specialty retailers, convenience stores, and

markets in the early stages of development

US foodservice accounts. Ready-to-drink

require a more extensive support organization,

beverages are primarily manufactured and

relative to the current levels of revenue and

distributed through The North American Coffee

operating income, than the US market.

Partnership, a joint venture with the Pepsi-

We continue to add new stores in both

Cola Company. The proportionate share of the

existing, more-mature markets such as the US,

results of the joint venture is included, on a net

and in newer, higher growth markets such as

basis, in income from equity investees on the

Starbucks Annual Report

45

RESULT OF OPERATIONS 2012-2013

REVENUE COMPARISON

premium single serve products (approximately

Total net revenues were $14.9 billion for fiscal

$116 million) and increased foodservice sales

2013, an increase of $1.6 billion, or 12%, over

(approximately $37 million).

fiscal 2012, due to increased revenues from company-operated stores (contributing $1.3 billion). The increase in company-operated

percentage of total net revenues decreased 80

comparable store sales (7%, or approximately

basis points, primarily due to lower commodity

$720 million) and incremental revenues from

costs (approximately 50 basis points), driven

492 net new company-operated store openings

by a decrease in coffee costs.

Licensed store revenue growth contributed

Result of Operations Fiscal 2012-2013

Cost of sales including occupancy costs as a

store revenue was driven by an increase in

over the past year (approximately $386 million).

46

OPERATING EXPENSES

Store operating expenses as a percentage of total net revenues decreased 70 basis

$150 million to the increase in total net

points. As a percentage of company-operated

revenues in fiscal 2013, primarily due to higher

store revenues, store operating expenses

product sales to and royalty revenues from our

decreased 90 basis points, primarily driven

licensees, as a result of improved comparable

by sales leverage in our Americas segment

store sales and the opening of 843 net new

(approximately 90 basis points) and store

licensed stores over the past 12 months. CPG,

portfolio optimization initiatives in Europe

foodservice and other revenues increased $184

that began in the fourth quarter of fiscal 2012

million, primarily driven by increased sales of

(approximately 50 basis points). This was

CONSOLIDATED RESULTS OF OPERATIONS (in millions)

partially offset by the addition of Teavana and continued investment in our emerging brands (approximately 60 basis points).

expenses (approximately 20 basis points).

Income from equity investees increased

reflects the accrual we recorded as a result of the conclusion of the arbitration with Kraft

$41 million, primarily due to increased income

Arbitration. This charge includes $2,227.5

Other operating expenses as a percentage

from of our joint venture operations in Japan

million in damages and $556.6 million in

of total net revenues decreased 10 basis points.

and China, as well as improved performance

estimated interest and attorneys’ fees.

As a percentage of non-company operated

from our North American Coffee Partnership

The combination of the above resulted in

revenues, other expenses decreased 70 basis

joint venture, which produces bottles, and

an operating loss of $325.4 million and an

points, driven by sales leverage (approximately

distributes our ready-to-drink beverages.

operating margin of (220) basis points.

40 basis points) and decreased marketing

Litigation charge of $2,784.1 million

Starbucks Annual Report

47

OPERATING EXPENSES

OTHER INCOME AND EXPENSES Net interest income and other increased $29 million over the prior year, primarily due to gains on the sale of the equity in our Chile and Argentina joint ventures in the fourth quarter of fiscal 2013 (approximately $45 million) and in Mexico in the second quarter of fiscal 2013 (approximately $35 million). These gains were partially offset by the absence of additional income recognized in the prior year associated with unredeemed gift cards following a court ruling related to state unclaimed property laws (approximately $29 million). Also offsetting the gains were unfavorable mark-to-market adjustments in fiscal 2013 compared to favorable mark-to-market adjustments in fiscal 2012 from derivatives used to manage our risk of commodity price fluctuations (approximately $24 million).

48

Result of Operations Fiscal 2012-2013

Income taxes for fiscal year 2013 resulted

OTHER INCOME AND EXPENSES

in an effective tax rate of 103.8% compared to 32.8% for fiscal year 2012. The change in our effective tax rate was primarily due to the impact of the litigation charge associated with the Kraft arbitration in fiscal 2013. For additional information on the impact to our fiscal 2013 effective tax rate from the litigation charge, see the consolidated financial statements. Excluding the impact of the litigation charge, the effective tax rate for fiscal year 2013 decreased slightly compared to fiscal 2012 primarily due to benefits from releasing certain tax reserves in fiscal 2013 and a further benefit in fiscal 2013 primarily relating to state income tax expense adjustments for returns filed in prior years. These items were partially offset by a decrease in tax benefits relating to coffee procurement in the current year.

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SEGMENT INFORMATION — AMERICAS

REVENUES

OPERATING EXPENSES

Americas total net revenues for fiscal

Cost of sales including occupancy costs as a

2013 increased $1.1 bil. or 11%, primarily due

percentage of total net revenues decreased 80

to increased revenues from company operated

basis points, primarily due to store initiatives

stores (contributing $961 million) and licensed

in order to reduce waste (approximately 40

stores (contributing $90 million).

basis points) and lower commodity costs

The increase in company-operated store revenues was driven by an increase in comparable store sales (7%, or approximately

50

Result of Operations Fiscal 2012-2013

(approximately 30 basis points), driven by a decrease in coffee costs.

Store operating expenses as a percent

$676 million) and incremental revenues

of total net revenues (as well as a percentage

from 276 net new company-operated store

of company-operated store revenues

openings over the past year (approximately

decreased 80 basis points, primarily driven by

$273 million). The increase in licensed stores

sales leverage (approximately 60 basis points).

revenue was due to higher product sales to and

General and administrative expenses as a

royalty revenues from our licensees as a result

percentage of total net revenues increased 40

of improved comparable store sales and the

basis points primarily due to the costs related

opening of 404 net new licensed stores

to our October Global Leadership Conference

over the past 12 months.

(approximately 20 basis points).

RESULTS OF OPERATIONS FOR THE AMERICAS (in millions)

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51

SEGMENT INFORMATION — EMEA

REVENUES

occupancy costs resulting from our store

EMEA total net revenues for fiscal 2013

portfolio optimization initiatives in Europe

increased $19 million, or 2%, over fiscal 2012.

that began in the fourth quarter of fiscal

Licensed stores revenue grew $51 million,

2012 (approximately 120 basis points) and a

or 36%, due to increased product sales to

reduction to the estimated asset retirement

and higher royalty revenues from licensees,

obligations of our store leases in the region

primarily from the opening of 129 net new

in fiscal 2013 (approximately 70 basis points).

licensed stores over the past 12 months and

These improvements were partially offset by

improved comparable store sales. This growth

the impact of the shift in composition of our

was largely offset by a decline of $36 million

store portfolio in the region to more licensed

in company-operated stores revenue resulting

stores, which have a lower gross margin.

from our store portfolio optimization which began in the prior year.

Store operating expenses as a percentage of total net revenues decreased 320 basis points. As a percentage of companyoperated

52

Result of Operations Fiscal 2012-2013

OPERATING EXPENSES

store revenues, store operating expenses

Cost of sales including occupancy costs as a

decreased 190 basis points, primarily from

percentage of total net revenues decreased

our store portfolio optimization initiatives

140 basis points, primarily due to lower

(approximately 120 basis points).

RESULTS OF OPERATIONS FOR EMEA (in millions)

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SEGMENT INFORMATION — CAP

REVENUES

130 basis points, primarily driven by company-

China/Asia Pacific total net revenues for fiscal

operated store growth (approximately

2013 increased $196 million, or 27%, primarily

170 basis points) as product sales through

due to increased revenues from company-

company-operated stores have higher gross

operated stores (contributing $183 million),

margins than product sales to licensees.

driven by the opening of 240 net new stores

Store operating expenses as a percentage

over the past 12 months (approximately $129

of total net revenues increased 200 basis

million) and a 9% increase in comparable store

points due primarily to new store growth.

sales (approximately $43 million). Licensed

As a percentage of company-operated

store revenues contributed $13 million to the

store revenues, store operating expenses

increase in total net revenues, mainly from

increased 90 basis points due to a change in

increased royalty from and product sales to

classification of certain operating costs that

licensees, driven by the opening of 348 net

were included in general and administrative

new licensed stores over the past 12 months.

expenses (approximately 50 basis points) and other operating expenses (approximately 40

54

Result of Operations Fiscal 2012-2013

OPERATING EXPENSES

basis points) in the prior year. Other operating

Cost of sales including occupancy costs as a

expenses as a percent of total net revenues

percentage of total net revenues decreased

decreased 150 basis points.

RESULTS OF OPERATIONS FOR CHINA/ASIA PACIFIC (in millions)

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SEGMENT INFORMATION — ALL OTHER SEGMENTS

RESULTS OF OPERATIONS FOR ALL OTHER SEGMENTS (in millions)

All Other Segments includes Teavana, Seattle’s Best Coffee, Evolution Fresh, and Digital Ventures.

56

Result of Operations Fiscal 2012-2013

CHANNEL DEVELOPMENT REVENUES Channel Development total net revenues for fiscal 2013 increased $129 million, or 10%, primarily due to increased sales of single serve products (approximately $116 million).

OPERATING EXPENSES Cost of sales as a percentage of total net revenues decreased 220 basis points, primarily due to lower coffee costs (approximately 250 basis points). Other operating expenses as a percentage of total net revenues decreased 60 basis points, due to lower marketing outlay (approximately 20 basis points) and increased sales leverage (approximately 20 basis points).

The above changes contributed to an increase in operating margin of 290 basis points.

Starbucks Annual Report

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SUMMARIZED QUARTERLY FINANCIAL INFORMATION (unaudited; in millions, except EPS)

* The fourth quarter of fiscal 2013 includes a pretax charge of $2,784.1 million resulting from the conclusion of the arbitration with Kraft.

58

Summarized Quarterly Financial Information

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES INVESTMENT OVERVIEW

short-term investment portfolio are certificates

$150 million may be used for issuances of

Starbucks cash and short-term investments

of deposit placed through an account registry

letters of credit.

were $3.2 billion and $2.0 billion as of Sept.

service, with maturities ranging from 91 days

29, 2013 and Sept. 30, 2012, respectively.

to one year. The principal amounts of the

working capital, capital expenditures and other

As of Sept. 29, 2013, approximately $994.4

individual certificates of deposit do not exceed

corporate purposes, including acquisitions

million of cash was held in foreign subsidiaries.

the Federal Deposit Insurance Corporation

and share repurchases, and is currently set

Of our cash held in foreign subsidiaries,

limits. Our portfolio of long-term available for

to mature on February 5, 2018. Starbucks

$527.4 million is denominated in the US

sale securities consists predominantly of high

has the option, subject to negotiation and

dollar. We actively manage our cash and

investment-grade corporate bonds, diversified

agreement with the related banks, to increase

short-term investments in order to internally

among industries and individual issuers.

the maximum commitment amount by an

The 2013 credit facility is available for

additional $750 million. Borrowings under

fund operating needs domestically and internationally, make scheduled interest and

BORROWING CAPACITY

the 2013 credit facility will bear interest

principal payments on our borrowings, and

Our previous $500 million unsecured, revolving

at a variable rate based on LIBOR, and, for

return cash to shareholders through common

credit facility (the “2010 credit facility”) was

US dollar-denominated loans under certain

stock cash dividend payments and share

set to mature in November 2014. In the

circumstances, a Base Rate (as defined in

repurchases. Our short-term investments

second quarter of fiscal 2013, we replaced the

the 2013 credit facility), in each case plus an

consisted predominantly of US Treasury

2010 credit facility with a new $750 million

applicable margin. The applicable margin

securities, commercial paper, corporate bonds,

unsecured, revolving credit facility (the “2013

is based on the better of (i) the Company’s

and US Agency securities. Also included in our

credit facility”) with various banks, of which

long-term credit ratings assigned by Moody’s

Starbucks Annual Report

59

and Standard & Poor’s rating agencies, and (ii)

60

Under our commercial paper program, as

commercial paper programs. As of September

the Company’s fixed charge coverage ratio,

approved by our board of directors, we may

29, 2013 and September 30, 2012, a total of

pursuant to a pricing grid set forth in the 2013

issue unsecured commercial paper notes up to

$21 million and $18 million, respectively, in

credit facility. The current applicable margin is

a maximum aggregate amount outstanding at

letters of credit were outstanding under the

0.795% for Eurocurrency Rate Loans and 0.00%

any time of $1 billion, with individual maturities

credit facility.

for Base Rate Loans. The 2013 credit facility

that may vary, but not exceed 397 days from

contains provisions requiring us to maintain

the date of issue. Amounts outstanding

of 10-year 3.85% Senior Notes due in October

compliance with certain covenants, including

under the commercial paper program are to

2023, in an underwritten registered public

a minimum fixed charge coverage ratio,

be backstopped by available commitments

offering. Interest on the notes is payable semi

which measures our ability to cover financing

under our credit facility. Currently, we may

annually on April 1 and October 1 of each

expenses. As a result of the arbitrator’s ruling

issue up to $729 million under our commercial

year, commencing April 1, 2014. As discussed

on the Kraft litigation, which is discussed

paper program (the $750 million committed

further in Note 3 to the consolidated financial

further in Note 15 to the consolidated financial

credit facility amount, less $21 million in

statements included in Item 8 of Part II of this

statements included in Item 8 of Part II of

outstanding letters of credit). The proceeds

10-K, during the third quarter of fiscal 2013

this 10- K, the credit facility was amended on

from under commercial paper program may

we entered into forward-starting interest rate

November 15, 2013 to exclude the impact of

be used for working capital needs, capital

swap agreements to hedge the variability in

the litigation charge, including the impact

expenditures and other corporate purposes,

cash flows due to changes in the benchmark

on our fixed charge coverage ratio. As of

including acquisitions and share repurchases.

interest rate related to these Senior Notes. We

September 29, 2013, we were in compliance

During fiscal 2013 and fiscal 2012, there were

cash settled these swap agreements during the

with each of these covenants, as amended.

no borrowings under the credit facility or

fourth quarter of fiscal 2013 at the time of the

Summarized Quarterly Financial Information

In September 2013, we issued $750 million

pricing of the $750 million in Senior Notes. The

commercial dispute relating to a distribution

generated from operations and existing cash

resulting net gains from these agreements are

agreement we previously held with Kraft.

and short-term investments both domestically

included in accumulated other comprehensive

As a result of the arbitration proceedings,

and internationally will be sufficient to finance

income and will be amortized as a reduction

Starbucks was ordered to pay Kraft $2.23

capital requirements for our core businesses in

to interest expense on the consolidated

billion in damages plus prejudgment interest

those respective markets as well as shareholder

statements of earnings over the life of these

and attorneys’ fees. We have estimated

distributions for the foreseeable future.

Senior Notes.

prejudgment interest and attorneys’ fees to

The indentures under which our $550 million

We consider the majority of undistributed

be approximately $557 million. We expect

earnings of our foreign subsidiaries and equity

of 10-year 6.25% Senior Notes and our $750

to fund our payment to Kraft through the

investees as of September 29, 2013 to be

million of 10-year 3.85% Senior Notes were

use of available cash on hand in the US and

indefinitely reinvested and, accordingly, no US

issued also require us to maintain compliance

anticipated additional issuance of debt.

income and foreign withholding taxes have

with certain covenants, including limits on

We expect to use additional available

been provided on such earnings. We have not,

future liens and sale and leaseback transactions

cash and short-term investments, including

nor do we anticipate the need to, repatriate

on certain material properties. As of September

additional potential future borrowings under

funds to the US to satisfy domestic liquidity

29, 2013, we were in compliance with each of

the credit facility and commercial paper

needs; however, in the event that we need to

these covenants.

program, to invest in our core businesses,

repatriate all or a portion of our foreign cash

including new product innovations and related

to the US we would be subject to additional

USE OF CASH

marketing support, as well as other new

US income taxes, which could be material. We

As discussed further in the consolidated

business opportunities related to our core

do not believe it is practical to calculate the

financial statements, the arbitration for a

businesses. We believe that future cash flows

potential tax impact of repatriation, as there

Starbucks Annual Report

61

is a significant amount of uncertainty around

Other than the expected payment to

the calculation, including the availability and

Kraft and normal operating expenses, cash

2013, we declared a cash dividend of $0.26 per

amount of foreign tax credits at the time,

requirements for fiscal 2014 are expected to

share to be paid on November 29, 2013 with an

tax rates in effect, and other indirect tax

consist primarily of new company-operated

expected payout of $196 million.

consequences associated with repatriation.

stores; capital expenditures for remodeling and

We may use our available cash resources to

During fiscal years 2013 and 2012, we

refurbishment of, and equipment upgrades

repurchased 11 million and 12 million shares

make proportionate capital contributions to

for, existing company-operated stores; systems

of common stock, respectively, or $544 million

our equity method and cost method investees.

and technology investments in the stores and

and $593 million, respectively, under share

We may also seek strategic acquisitions to

in the support infrastructure; and additional

repurchase authorizations. The number of

leverage existing capabilities and further

investments in manufacturing capacity Total

remaining shares authorized for repurchase at

build our business in support of our growth

capital expenditures for fiscal 2014 are

September 29, 2013 totaled 26.4 million.

agenda. Acquisitions may include increasing

expected to be approximately $1.2 billion.

our ownership interests in our equity method

62

respectively. In the fourth quarter of fiscal

During each of the first three quarters

CASH FLOWS

and cost method investees. Any decisions

of fiscal 2012, we declared and paid a cash

Cash provided by operating activities was

to increase such ownership interests will be

dividend to shareholders of $0.17 per share.

$2.9 billion for fiscal year 2013, compared to

driven by valuation and fit with our ownership

In the fourth quarter of fiscal 2012 and each

$1.8 billion for fiscal year 2012. The increase

strategy. Significant new joint ventures,

of the first three quarters of fiscal 2013

was primarily due to increased earnings,

acquisitions and/or other new business

we declared a cash dividend of $0.21 per

excluding the accrued litigation charge, and

opportunities may require additional

share. Cash dividends paid in fiscal 2013 and

improvements in working capital accounts,

outside funding.

2012 totaled $629 million and $513 million,

primarily driven by a decrease in inventories

Summarized Quarterly Financial Information

and an increase in accounts payable.

Cash used by investing activities totaled $1.4

CONTRACTUAL OBLIGATIONS Our contractual obligations and borrowings as of September 29, 2013, and the timing and

billion for fiscal years 2013, compared to $974

effect that such commitments are expected to have on our liquidity and capital requirements

million for fiscal year 2012. The increase was

in future periods (in millions):

primarily due to cash paid to acquire Teavana and increasing capital expenditures, primarily for remodeling and renovating existing company-operated stores and opening new retail stores, offset by a net increase in cash received from investment securities.

Cash used by financing activities for fiscal year 2013 totaled $108 million, compared to $746 million for fiscal year 2012. The decrease

(1) Income tax liabilities for uncertain tax positions were excluded as we are not able to make a reasonably

was primarily due to the net cash proceeds

reliable estimate of the amount and period of related future payments. As of Sept. 29, 2013, we had $91.1

from the fiscal 2013 issuance of long-term

million of gross unrecognized tax benefits for uncertain tax positions.

debt, partially offset by an increase in cash

(2) Amounts include direct lease obligations, excluding any taxes, insurance and other related expenses.

returned to shareholders through higher

(3) Purchase obligations include agreements to purchase goods or services that are enforceable and legally

dividend payments in fiscal 2013. Starbucks

binding on Starbucks and that specify all significant terms. Green coffee purchase commitments comprise

expects to fund these commitments with

96% of total purchase obligations.

operating cash flows generated.

(4) Debt amounts include principal maturities and scheduled interest payments on our long-term debt.

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CONSOLIDATED STATEMENTS OF EARNINGS (in millions, except per share data)

66

Consolidated Statements of Earnings

TOTAL NET REVENUES

CPG, foodservice, etc.

Licensed Company-operated

11% 9% 79%

TOTAL OPERATING EXPENSES

Other

3%

Depreciation/Amortization

4%

General/Administrative

6%

Store

28%

Litigation

18%

Cost of Sales

41%

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CONSOLIDATED STATEMENTS OF INCOME (in millions)

68

Consolidated Statements of Income

TOTAL LIABILITIES

2012

$3,104.7 million

2013

$7,034.4 million

TOTAL ASSETS

TOTAL EQUITY

2012

$8,219.2 million

2013

$11,516.7 million

2012

$5,114.5 million

2013

$4,482.3 million

Starbucks Annual Report

69

CONSOLIDATED BALANCE SHEETS (in millions, except per share data)

70

Consolidated Balance Sheets

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71

CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions)

72

Consolidated Statements of Cash Flows

Starbucks Annual Report

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CONSOLIDATED STATEMENTS OF EQUITY (in millions)

74

Consolidated Statements of Equity

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REVENUES

BY PRODUCT TYPE

76

Additional Consolidated Data

REVENUES

BY GEOGRAPHIC AREA

Other

11%

Other

Packaged Coffees

15%

United States 11,415.0 million

3,477.2 million

Food

16%

Beverages

58%

FINANCIAL INFORMATION FOR OUR REPORTABLE OPERATING SEGMENTS (in millions)

Starbucks Annual Report

77

NOTES

DESCRIPTION OF BUSINESS

operating expenses, which pertain primarily

We purchase and roast high-quality coffees

to corporate administrative functions that

that we sell, along with handcrafted coffee and

support the operating segments but are not

tea beverages and a variety of fresh food items,

specifically attributable to or managed by any

through our company-operated stores. We also

segment, are presented as a reconciling item

sell a variety of coffee and tea products and

between total segment operating results

license our trademarks through other channels

and consolidated financial results. Additional

such as licensed stores, grocery and national

details on the nature of our business and our

foodservice accounts.

reportable operating segments are included in

In this report, Starbucks Corporation

the Consolidated Financial Statements.

(together with its subsidiaries) is referred to as “Starbucks,” the “Company,” “we,” “us” or “our.”

We have four reportable operating

78

Notes to Consolidated Financial Statements

PRINCIPLES OF CONSOLIDATION The consolidated financial statements reflect

segments: 1) Americas, inclusive of the US,

the financial position and operating results of

Canada, and Latin America; 2) Europe, Middle

Starbucks, including wholly owned subsidiaries

East, and Africa (“EMEA”); 3) China / Asia Pacific

and investees that we control. Investments in

(“CAP”) and 4) Channel Development. Teavana,

entities that we do not control, but have the

Seattle’s Best Coffee, Evolution Fresh and

ability to exercise significant influence over

our Digital Ventures business are included in

operating and financial policies, are accounted

All Other Segments. Unallocated corporate

for under the equity method. Investments in

entities in which we do not have the ability

future asset retirement obligations, and

accounts on a daily basis as checks are

to exercise significant influence are accounted

inventory reserves; assumptions underlying

presented for payment. Under this system,

for under the cost method. Intercompany

selfinsurance reserves and income from

outstanding checks are in excess of the cash

transactions and balances are eliminated.

unredeemed stored value cards; and the

balances at certain banks, which creates book

potential outcome of future tax consequences

overdrafts. Book overdrafts are presented as

FISCAL YEAR END

of events that have been recognized in the

a current liability in accounts payable on the

Our fiscal year ends on the Sunday closest

financial statements. Actual results may differ

consolidated balance sheets.

to September 30. Fiscal years 2013, 2012 and

from these estimates and assumptions.

CASH & CASH EQUIVALENTS

SHORT-TERM & LONG-TERM INVESTMENTS

ESTIMATIONS & ASSUMPTIONS

We consider all highly liquid instruments

Our short-term and long-term investments

Preparing financial statements in conformity

with a maturity of three months or less at the

consist of investment grade debt securities

with accounting principles generally accepted

time of purchase to be cash equivalents. We

all of which are classified as available-for-

in the United States of America (“GAAP�)

maintain cash and cash equivalent balances

sale. Also included in our available-for-sale

requires management to make estimates and

with financial institutions that exceed federally

investment portfolio are certificates of

assumptions that affect the reported amounts

insured limits. We have not experienced any

deposit placed through an account registry

of assets, liabilities, revenues and expenses.

losses related to these balances and we

service. Available-for-sale securities are

Examples include, but are not limited to,

believe credit risk to be minimal.

recorded at fair value, and unrealized

2011 included 52 weeks.

estimates for asset and goodwill impairments, stock-based compensation forfeiture rates,

Our cash management system provides for the funding of all major bank disbursement

holding gains and losses are recorded, net of tax, as a component of accumulated

Starbucks Annual Report

79

other comprehensive income. Available-for-

method. Purchases and sales are recorded on a

Coffee branded products through licensing

sale securities with remaining maturities

trade date basis.

agreements. Sales of coffee, tea, ready-to-drink

of less than one year and those identified

We also have a trading securities portfolio, which is comprised of marketable

warehouse club stores are generally recognized

to be used to fund operations within one

equity mutual funds and equity exchange-

when received by the customer or distributor,

year are classified as short term. All other

traded funds. Trading securities are recorded

depending on contract terms. Revenues

available-for-sale securities, including all of our

at fair value with unrealized holding gains and

are recorded net of sales discounts given to

auction rate securities, are classified as long

losses included in net earnings.

customers for trade promotions and other

term. Unrealized losses are charged against

incentives and for sales return allowances, which are determined based on historical

determined to be other than temporary. We

CPG, FOODSERVICE, & OTHER REVENUES

review several factors to determine whether

CPG, foodservice and other revenues primarily

to manufacturers that produce and market

a loss is other than temporary, such as the

consist of packaged coffee and tea as well as a

Starbucks and Seattle’s Best Coffee branded

length andextent of the fair value decline, the

variety of ready-to-drink beverages and single-

products through licensing agreements are

financial condition and near term prospects of

serve coffee and tea products to grocery,

generally recognized when the product is

the issuer, and whether we have the intent to

warehouse club and specialty retail stores,

received by the manufacturer or distributor.

sell or will likely be required to sell before the

sales to our national foodservice accounts, and

License fee revenues from manufacturers

securities anticipated recovery, which may

revenues from sales of products to and license

are based on a percentage of sales and are

be at maturity. Realized gains and losses are

fee revenues from manufacturers that produce

recognized on a monthly basis when earned.

accounted for using the specific identification

and market Starbucks and Seattle’s Best

National foodservice account revenues are

net earnings when a decline in fair value is

80

beverages and related products to grocery and

by management at the time of purchase

Notes to Consolidated Financial Statements

patterns. Revenues from sales of products

recognized when the product is received by

remitting balances to government agencies

as a reduction in revenue at the time the Stars

the customer or distributor.

under unclaimed property laws, card balances

are earned, based on the value of Stars that are

may then be recognized in the consolidated

projected to be redeemed.

STORED VALUE CARDS

statements of earnings, in net interest

Revenues from our stored value cards,

income and other. For the fiscal years ended

MARKETING & ADVERTISING

primarily Starbucks Cards, are recognized when

September 29, 2013, September 30, 2012,

Our annual marketing expenses include many

redeemed or when the redemption, based on

and October 2, 2011, income recognized on

components, one of which is advertising costs.

historical experience, is deemed to be remote.

unredeemed stored value card balances was

We expense most advertising costs as they are

Outstanding customer balances are included in

$33.0 million, $65.8 million, and $46.9

incurred, except for certain production costs

deferred revenue on the consolidated balance

million, respectively.

that are expensed the first time the advertising

sheets. There are no expiration dates on our

Customers in the US, Canada, the UK and

campaign takes place.

stored value cards, and we do not charge

Germany who register their Starbucks Card

any service fees that cause a decrement to

are automatically enrolled in the My Starbucks

$277.9 million and $244.0 million in fiscal 2013,

customer balances. While we will continue

Rewards™ program and earn reward points

2012, and 2011, respectively. Included in these

to honor all stored value cards presented for

(“Stars�) with each purchase. Reward program

costs were advertising expenses, which totaled

payment, management may determine the

members receive various benefits depending

$205.8 million, $182.4 million and $141.4

likelihood of redemption to be remote for

on the number of Stars earned in a 12-month

million in fiscal 2013, 2012, and 2011.

certain cards due to long periods of inactivity.

period. The value of Stars earned by our

In these circumstances, if management also

program members towards free product is

determines there is no requirement for

included in deferred revenue and recorded

Marketing expenses totaled $306.8 million,

Starbucks Annual Report

81

82

EARNINGS PER SHARE

internal labor and overhead in some cases.

production and distribution facilities is included

Basic earnings per share is computed based

Depreciation of property, plant and equipment,

in cost of sales including occupancy costs on

on the weighted average number of shares of

which includes assets under capital leases,

the consolidated statements of earnings.

common stock outstanding during the period.

is provided on the straight-line method over

The costs of repairs and maintenance are

Diluted earnings per share is computed based

estimated useful lives, generally ranging from

expensed when incurred, while expenditures

on the weighted average number of shares

2 to 15 years for equipment and 30 to 40 years

for refurbishments and improvements that

of common stock and the effect of dilutive

for buildings. Leasehold improvements are

significantly add to the productive capacity

potential common shares outstanding during

amortized over the shorter of their estimated

or extend the useful life of an asset are

the period, calculated using the treasury stock

useful lives or the related lease life, generally

capitalized. When assets are retired or sold,

method. Dilutive potential common shares

10 years. For leases with renewal periods at

the asset cost and related accumulated

include outstanding stock options and RSUs.

our option, we generally use the original lease

depreciation are eliminated with any remaining

Performance-based RSUs are considered

term, excluding renewal option periods, to

gain or loss recognized in net earnings.

dilutive when the related performance

determine estimated useful lives. If failure

criterion has been met.

to exercise a renewal option imposes an

COMPANY-OPERATED STORE REVENUE

economic penalty to us, we may determine

Company-operated stores revenues are

PROPERTY, PLANT & EQUIPMENT

at the inception of the lease that renewal is

recognized when payment is tendered at

Property, plant and equipment are carried

reasonably assured and include the renewal

the point of sale. Company-operated store

at cost less accumulated depreciation. Cost

option period in the determination of the

revenues are reported net of sales, use or

includes all direct costs necessary to we

appropriate estimated useful lives. The

other transaction taxes that are collected from

acquire and prepare assets for use, including

portion of depreciation expense related to

customers and remitted to taxing authorities.

Notes to Consolidated Financial Statements

LICENSED STORE REVENUE

licensing fees are recognized when new

if it is more likely than not that the tax

Licensed stores revenues consist of product

licensed stores are opened. Royalty revenues

position will be sustained on examination

sales to licensed stores, as well as royalties

based upon a percentage of reported sales

by the relevant taxing authorities, based

and other fees paid by licensees to use the

and other continuing fees, such as marketing

on the technical merits of our position.

Starbucks brand. Sales of coffee, tea and

and service fees, are recognized on a monthly

The tax benefits recognized in the financial

related products are generally recognized upon

basis when earned.

statements from such a position are measured based on the largest benefit that

shipment to licensees, depending on contract terms. Shipping charges billed to licensees are

INCOME TAXES

has a greater than 50% likelihood of being

also recognized as revenue, and the related

We compute income taxes using the asset

realized upon ultimate settlement. Starbucks

shipping costs are included in cost of sales

and liability method, under which deferred

recognizes interest and penalties related to

including occupancy costs on the consolidated

income taxes are provided for the temporary

income tax matters in income tax expense.

statements of earnings.

differences between the financial statement carrying amounts and the tax basis of our

FOREIGN CURRENCY TRANSLATION

licensed stores are recognized upon substantial

assets and liabilities. We routinely evaluate

Our international operations generally

performance of services for new market

the likelihood of realizing the benefit of our

use their local currency as their functional

business development activities, such as initial

deferred tax assets and may record a valuation

currency. Assets are translated at exchange

business, real estate and store development

allowance if, based on all available evidence, we

rates. Resulting translation adjustments are

planning, as well as providing operational

determine that some portion of the tax benefit

recorded as a component of accumulated

materials and functional training courses for

will not be realized. We recognize the tax

other comprehensive income on the

opening new licensed retail markets. Store

benefit from an uncertain tax position only

consolidated balance sheets.

Initial nonrefundable development fees for

Starbucks Annual Report

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SEGMENT REPORTING

4) Global Consumer Products Group. In the

operating expenses noted above, we revised

Segment information is prepared on the same

second quarter of fiscal 2012, we renamed our

our prior period financial information to reflect

basis that our ceo, who is our chief operating

Global Consumer Products Group segment

comparable financial information for the new

decision maker, manages the segments,

“Channel Development.”

segment structure and reporting changes.

evaluates financial results, and makes key

Historical financial information presented

operating decisions. Beginning with the first

we decentralized certain leadership functions

herein reflects these changes. There was no

quarter of fiscal 2012, we redefined our

in the areas of retail marketing and category

impact on consolidated net revenues, total

reportable operating segments to align with

management, global store development and

operating expenses, operating income, or net

the three-region leadership and organizational

partner resources to support and align with the

earnings as a result of these changes.

structure of our retail business that took effect

respective operating segment presidents. In

at the beginning of fiscal 2012. The three-

conjunction with these moves, certain general

2013, we removed corporate expenses from

region structure includes: 1) Americas, inclusive

and administrative and depreciation and

Other. Other is now referred to as All Other

of the US, Canada, and Latin America; 2)

amortization expenses associated with these

Segments and includes Teavana, Seattle’s

Europe, Middle East, and Africa (“EMEA”); and

functions, which were previously reported as

Best Coffee and Evolution Fresh, as well as

3) China / Asia Pacific (“CAP”).

unallocated corporate expenses within “Other,”

our Digital Ventures business. Unallocated

are now reported within the respective

corporate operating expenses, which pertain

2012, we revised our operating segments from

reportable operating segments to align with

primarily to corporate administrative functions

1) US, 2) International, and 3) Global Consumer

the regions which they support.

that support the operating segments but are

Beginning with the first quarter of fiscal

Products Group to these four reportable segments: 1) Americas, 2) EMEA, 3) CAP, and

84

Effective at the beginning of fiscal 2013,

Notes to Consolidated Financial Statements

Concurrent with the change in reportable operating segments and realignment of certain

Beginning in the second quarter of fiscal

not specifically attributable to or managed by any segment, are presented as a reconciling

item between total segment operating results

focused selection of merchandise through

CHANNEL DEVELOPMENT

and consolidated financial results. While our

company-operated stores and licensed stores.

Channel Development operations sell a

consolidated results are not impacted, our

Certain markets within EMEA operations are in

selection of packaged coffees as well as a

historical segment financial information has

the early stages of development and require a

selection of premium Tazo® teas globally.

been revised to be consistent with the current

more extensive support organization, relative

Channel Development operations also

presentation.

to the current levels of revenue and operating

produce and sell a variety of ready-to-drink

income, than Americas.

beverages, Starbucks- and Tazo- single

AMERICAS

serve products, and Starbucks Refreshers™

Americas operations sell coffee and other

CHINA/ASIA PACIFIC

beverages. The US food service business,

beverages, complementary food, packaged

China /Asia Pacific operations sell coffee

which is included in the Channel

coffees, single serve coffee products and a

and other beverages, complementary food,

Development segment, sells coffee and

focused selection of merchandise through

packaged coffees, single serve coffee

other related products to institutional

company-operated stores and licensed stores.

products and a selection of merchandise

foodservice companies.

The Americas segment is our most mature

through company-operated stores and

business and has achieved significant scale.

licensed stores. Certain markets within China /

ALL OTHER SEGMENTS

Asia Pacific operations are in the early stages

All Other Segments includes Teavana, Seattle’s

EUROPE, MIDDLE EAST, AND ASIA

of development and require a more extensive

Best Coffee and Evolution Fresh, as well as our

EMEA operations sell coffee and other

support organization, relative to the current

Digital Ventures business.

beverages, complementary food, packaged

levels of revenue and operating income,

coffees, single serve coffee products and a

than Americas.

Starbucks Annual Report

85

SUPPLEMENTAL BALANCE SHEET INFORMATION (in millions) Other merchandise held for sale includes, among other items, serveware and tea Inventory levels vary due to seasonality, commodity market supply and price changes.

As of September 29, 2013, we had committed to purchasing green coffee totaling $588 million under fixed-price contracts and an estimated $294 million under price-to-befixed contracts. As of September 29, 2013, approximately $0.3 million of our price-to-befixed contracts were effectively fixed through the use of futures contracts. Price-to-be-fixed contracts are purchase commitments where by the quality, quantity, delivery period, and other negotiated terms are agreed upon, but the date, and therefore the price, at which the base “C� coffee commodity price will be fixed has not yet been established. For these

86

Notes to Consolidated Financial Statements

INVENTORIES (in millions)

seller has the option to “fix” the base “C”

6.25% Senior Notes (“the 2007 notes”) due in

REVOLVING CREDIT FACILITY AND COMMERCIAL PAPER PROGRAM

coffee commodity price prior to the delivery

August 2017, in an underwritten

Our previous $500 million unsecured, revolving

date. Until prices are fixed, we estimate the

registered public offering. Interest on the 2007

credit facility (the “2010 credit facility”) was

total cost of these purchase commitments.

notes is payable semi-annually on February 15

set to mature in November 2014. In the

We believe, based on relationships established

and August 15 of each year. As

second quarter of fiscal 2013, we replaced the

with our suppliers in the past, the risk of non-

of September 29, 2013 and September 30,

2010 credit facility with a new $750 million

delivery on such commitments is remote.

2012, the carrying value of the 2007 notes,

unsecured, revolving credit facility (the “2013

types of contracts, either Starbucks or the

In August 2007, we issued $550 million of

Starbucks Annual Report

87

credit facility”) with various banks, of which

and Standard & Poor’s rating agencies, and (ii)

a maximum aggregate amount outstanding at

$150 million may be used for issuances of

the Company’s fixed charge coverage ratio,

any time of $1 billion, with individual maturities

letters of credit.

pursuant to a pricing grid set forth in the 2013

that may vary, but not exceed 397 days from

credit facility. The current applicable margin is

the date of issue. Amounts outstanding under

working capital, capital expenditures and other

0.795% for Eurocurrency Rate Loans and 0.00%

the commercial paper program are to be

corporate purposes, including acquisitions

for Base Rate Loans. The 2013 credit facility

backstopped by available commitments under

and share repurchases, and is currently

contains provisions requiring us to maintain

our credit facility. Currently, we may issue up

set to mature in February 2018. Starbucks

compliance with certain covenants, including

to $729 million under our commercial paper

has the option, subject to negotiation and

a minimum fixed charge coverage ratio,

program (the $750 million committed credit

agreement with the related banks, to increase

which measures our ability to cover financing

facility amount, less $21 million in

the maximum commitment amount by an

expenses. As a result of the arbitrator’s ruling

outstanding letters of credit).

additional $750 million. Borrowings under

on the Kraft litigation, the credit facility was

The proceeds from borrowings under our

the 2013 credit facility will bear interest

amended on November 15, 2013 to exclude

commercial paper program may be used for

at a variable rate based on LIBOR, and, for

the impact of the litigation charge, including

working capital needs, capital expenditures

US dollar-denominated loans under certain

the impact on our fixed charge coverage

and other corporate purposes, including

circumstances, a Base Rate (as defined in

ratio. As of September 29, 2013, we were in

acquisitions and share repurchases. During

the 2013 credit facility), in each case plus an

compliance with each of these covenants.

fiscal 2013 and fiscal 2012, there were

The 2013 credit facility is available for

applicable margin. The applicable margin

88

Under our commercial paper program, as

no borrowings under the credit facility or

is based on the better of (i) the Company’s

approved by our board of directors, we may

commercial paper programs. As of September

long-term credit ratings assigned by Moody’s

issue unsecured commercial paper notes up to

29, 2013 and September 30, 2012, a total of

Notes to Consolidated Financial Statements

$21 million and $18 million, respectively, in

August 2017, in an underwritten registered

respectively. In fiscal 2013, 2012, and 2011,

letters of credit were outstanding under the

public offering. Interest on the 2007 notes

$10.4 million, $3.2 million, and $4.4 million,

revolving credit facility.

is payable semi-annually on February 15 and

respectively, of interest was capitalized for

LONG-TERM DEBT

August 15 of each year. As of September 29,

asset construction projects.

2013 and September 30, 2012, the carrying

SHAREHOLDERS’ EQUITY

In September 2013, we issued $750 million of 10-year 3.85% Senior Notes (“the 2013 notes”) due October 2023, in an underwritten registered public offering. Interest on the 2013 notes is payable semi-annually on April 1 and October 1 of each year, commencing April 1, 2014. As discussed in Note 3, we entered into forward-starting interest rate swap agreements related to this debt issuance that effectively locked in the benchmark interest rate, resulting in an effective borrowing cost of 2.86%. As of September 29, 2013, the carrying value of the 2013 notes, recorded on the consolidated balance sheets, was $749.8 million.

In August 2007, we issued $550 million of 6.25% Senior Notes (“the 2007 notes”) due in

value of the 2007 notes, recorded on the consolidated balance sheets, was $549.7 million and $549.6 million, respectively.

The indentures under which the 2013 notes and the 2007 notes were issued also require us to maintain compliance with certain covenants, including limits on future liens and sale and leaseback transactions on certain material properties. As of September 29, 2013 and September 30, 2012, we were in compliance with each of these covenants.

INTEREST EXPENSE

In addition to 1.2 billion shares of authorized common stock with $0.001 par value per share, we have authorized 7.5 million shares of preferred stock, none of which was outstanding at September 29, 2013.

Included in additional paid-in capital in our consolidated statements of equity as of September 29, 2013 and September 30, 2012 is $39.4 million related to the increase in value of our share of the net assets of Starbucks Japan at the time of its initial public stock offering in fiscal 2002.

Interest expense, net of interest capitalized, was $28.1 million, $32.7 million, and $33.3 million in fiscal 2013, 2012 and 2011,

Starbucks Annual Report

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Starbucks Annual Report

91

MARKET INFORMATION

92

Senior Leadership Team

Starbucks common stock is traded on the

The company’s U.S. Securities and Exchange

NASDAQ Global Select Market (“NASDAQ”),

Commission filings may be obtained without

under the symbol SBUX. The following table

charge and can asses it in the Investor Relations

shows the quarterly high and low sale prices

section of the company’s website at http://

per share of Starbucks common stock for each

investor.starbucks.com, at http://sec.gov,

quarter during the last two fiscal years and the

or by making a request to Investor Relations

quarterly cash dividend declared per share of

through the address, phone number or

its common stock during the periods indicated:

website listed below.

STARBUCKS COFFEE COMPANY

ANNUAL MEETING OF SHAREHOLDERS

UPDATED FINANCIAL INFORMATION

Investor Relations, Mailstop: EX4

March 19, 2014, 10:00 a.m. PDT

Please visit http://investor.starbucks.com

2401 Utah Avenue South

Marion Oliver McCaw Hall

to find the latest financial information publicly

Seattle, WA 98134

Seattle, Washington

available for the company.

Phone: (206) 318-7118

Live webcast at: http://investor.starbucks.com

investorrelations@starbucks.com

Keurig, the Cup and Star design, Keurig

GLOBAL RESPONSIBILITY

Brewed, K-Cup, and the Keurig brewer trade

Starbucks is committed to being a deeply

dress are trademarks of Keurig, Incorporated,

INDEPENDENT AUDITORS

responsible company in the communities

used with permission. K-Cup® packs for use in

Deloitte & Touche LLP

where it does business around the world.

Keurig® K-Cup® brewing systems.

http://investor.starbucks.com

The programs and goals that address these

TRANSFER AGENT

commitments are integral to the company’s

Computershare

overall business strategy and can be reviewed

PO Box 43078

in the annual Global Responsibility report.

Providence, RI 02940-3078

Please see Starbucks fiscal 2013 Global

Phone: (888) 835-2866

Responsibility Report, available online

https://www-us.computershare

this spring at http://www.starbucks.com/

.com/investor

responsibility/global-report.

Starbucks Annual Report

93

SIGNATURES

Pursuant to the requirements of Section 13

connection therewith, with the Securities

or 15(d) of the Securities Exchange Act of 1934,

and Exchange Commission, granting unto

the registrant has duly caused this report to

said attorneys-in-fact and agents, and each

be signed on its behalf by the undersigned,

of them, full power and authority to do and

thereunto duly authorized.

perform each and every act and thing requisite and necessary to be done in connection

POWER OF ATTORNEY

therewith, as fully to all intents and purposes

Know all persons by these presents, that

as such person might or could do in person,

each person whose signature appears below

hereby ratifying and confirming all that said

constitutes and appoints Howard Schultz

attorneys-in-fact and agents, or any of them or

and Troy Alstead, and each of them, as such

their or such person’s substitute or substitutes,

person’s true and lawful attorneys-in-fact and

may lawfully do or cause to be done by virtue

agents, with full power of substitution and

thereof. Pursuant to the requirements of the

resubstitution, for such person and in such

Securities Exchange Act of 1934, this report has

person’s name, place and stead, in any and all

been signed below by the following persons on

capacities, to sign any and all amendments

behalf of the registrant and in the capacities

to this Report, and to file the same, with all

indicated as of November 18, 2013.

exhibits thereto, and other documents in

94

Board of Directors

/s/ Howard Schultz

/s/ Kevin R. Johnson

/s/ Javier G. Teruel

Chairmain, president, and executive chief officer

Director

Director

/s/ Troy Alstead

/s/ Olden Lee

/s/ Myron E. Ullman, III

Chief financial officer and group

Director

Director

/s/ William W. Bradley

/s/ Joshua Cooper Ramo

/s/ Craig. E Weatherup

Director

Director

Director

/s/ Robert M. Gates

/s/ James G. Shennan, Jr.

Director

Director

/s/ Mellody Hobson

/s/ Clara Shih

Director

Director

president of Global Business Services

Starbucks Annual Report

95

BOARD OF DIRECTORS

Howard Schultz

Mellody Hobson

STARBUCKS CORPORATION

ARIEL INVESTMENTS, LLC

Chairman, president and chief

President

executive officer

96

Board of Directors

William W. Bradley

Kevin R. Johnson

ALLEN & COMPANY LLC

JUNIPER NETWORKS, INC

Managing director

Retired chief executive officer

Robert M. Gates

Olden Lee

Former United States Secretary

PEPSICO, INC

of Defense

Retired executive

Joshua Cooper Ramo

Javier G. Teruel

KISSINGER ASSOCIATES, INC

COLGATE-PALMOLIVE CO

Vice chairman

Retired vice chairman

James G. Shennan, Jr.

Myron E. Ullman, III

TRINITY VENTURES

JCPENNY CO, INC

General partner emeritus

Chief executive officer

Clara Shih

Craig E. Weatherup

HEARSAY SOCIAL, INC

PEPSI-COLA, CO

Chief executive officer

Retired chief executive officer

Starbucks Annual Report

97

SENIOR LEADERSHIP TEAM

98

Senior Leadership Team

Howard Schultz

John Culver

Chairman, president and

Group president, Starbucks Coffee China

chief executive officer

and Asia Pacific, Channel Development

Troy Alstead

Clifford Burrows

Chief financial officer and group

Group president, Starbucks Coffee

president, Global Business Services

Americas, EMEA, and Teavana

Marissa Andrada

Michael Conway

Senior vice president, Global

Executive vice president, Global

Partner Resources

Channel Development

Adam Brotman

Curtis Garner

Executive vice president, chief

Executive vice president, chief

digital officer

information officer

Jeff Hansberry

Arthur Rubinfeld

Blair Taylor

President, Starbucks Coffee

Chief creative officer, president, Global

Executive vice president, chief community

China and Asia Pacific

Innovation and Evolution Fresh retail

officer and Global Partner Resources

Lucy Lee Helm

Matthew Ryan

Vivek Varma

Executive vice president, general

Executive vice president, global chief

Executive vice president, Public Affairs

counsel and secretary

strategy officer

Deverl Maserang

Marissa Andrada

Executive vice president, Global

Senior vice president, Global

Supply Chain

Partner Resources

Sharon Rothstein

Craig Russell

Executive vice president, global chief

Senior vice president, Global Coffee

marketing officer

Starbucks Annual Report

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