Washington | 91-1325671 | |
(State of Incorporation) | (IRS Employer ID) |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, $0.001 par value per share | Nasdaq Global Select Market |
Large accelerated filer | x | Accelerated filer | ¨ |
Non-accelerated filer | ¨ | Smaller reporting company | ¨ |
Emerging growth company | ¨ |
PART I | ||
Item 1 | ||
Item 1A | ||
Item 1B | ||
Item 2 | ||
Item 3 | ||
Item 4 | ||
PART II | ||
Item 5 | ||
Item 6 | ||
Item 7 | ||
Item 7A | ||
Item 8 | ||
Item 9 | ||
Item 9A | ||
Item 9B | ||
PART III | ||
Item 10 | ||
Item 11 | ||
Item 12 | ||
Item 13 | ||
Item 14 | ||
PART IV | ||
Item 15 | ||
Americas | As a% of Total Americas Stores | CAP | As a% of Total CAP Stores | EMEA | As a% of Total EMEA Stores | Corporate and Other | As a% of Total Corporate and Other | Total | As a% of Total Stores | ||||||||||||||||||||
Company-operated stores | 9,684 | 55 | % | 5,159 | 60 | % | 490 | 15 | % | 8 | 40 | % | 15,341 | 52 | % | ||||||||||||||
Licensed stores | 7,770 | 45 | % | 3,371 | 40 | % | 2,830 | 85 | % | 12 | 60 | % | 13,983 | 48 | % | ||||||||||||||
Total | 17,454 | 100 | % | 8,530 | 100 | % | 3,320 | 100 | % | 20 | 100 | % | 29,324 | 100 | % |
Stores Open as of | Stores Open as of | ||||||||||||||||
Oct 1, 2017 | Opened | Closed | Transfers | Net | Sep 30, 2018 | ||||||||||||
Americas(1): | |||||||||||||||||
U.S. | 8,222 | 401 | (48 | ) | — | 353 | 8,575 | ||||||||||
Canada | 1,083 | 65 | (39 | ) | — | 26 | 1,109 | ||||||||||
Brazil | 108 | 4 | — | (112 | ) | (108 | ) | — | |||||||||
Total Americas | 9,413 | 470 | (87 | ) | (112 | ) | 271 | 9,684 | |||||||||
China/Asia Pacific(2): | |||||||||||||||||
China | 1,540 | 528 | (24 | ) | 1,477 | 1,981 | 3,521 | ||||||||||
Japan | 1,218 | 84 | (16 | ) | — | 68 | 1,286 | ||||||||||
Thailand | 312 | 41 | (1 | ) | — | 40 | 352 | ||||||||||
Total China/Asia Pacific | 3,070 | 653 | (41 | ) | 1,477 | 2,089 | 5,159 | ||||||||||
EMEA: | |||||||||||||||||
U.K. | 345 | 15 | (23 | ) | (2 | ) | (10 | ) | 335 | ||||||||
All Other | 157 | 3 | (5 | ) | — | (2 | ) | 155 | |||||||||
Total EMEA | 502 | 18 | (28 | ) | (2 | ) | (12 | ) | 490 | ||||||||
Corporate and Other: | |||||||||||||||||
Teavana | 288 | — | (288 | ) | — | (288 | ) | — | |||||||||
Siren Retail | 2 | 6 | — | — | 6 | 8 | |||||||||||
Total Corporate and Other | 290 | 6 | (288 | ) | — | (282 | ) | 8 | |||||||||
Total company-operated | 13,275 | 1,147 | (444 | ) | 1,363 | 2,066 | 15,341 |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | |||||
Beverages | 74 | % | 73 | % | 74 | % | ||
Food | 20 | % | 20 | % | 19 | % | ||
Packaged and single-serve coffees and teas | 2 | % | 3 | % | 3 | % | ||
Other(1) | 4 | % | 4 | % | 4 | % | ||
Total | 100 | % | 100 | % | 100 | % |
(1) | “Other” primarily consists of sales of serveware, ready-to-drink beverages and coffee-making equipment, among other items. |
Stores Open as of | Stores Open as of | ||||||||||||||||
Oct 1, 2017 | Opened | Closed | Transfers | Net | Sep 30, 2018 | ||||||||||||
Americas(1): | |||||||||||||||||
U.S. | 5,708 | 442 | (119 | ) | — | 323 | 6,031 | ||||||||||
Mexico | 632 | 76 | — | — | 76 | 708 | |||||||||||
Latin America | 429 | 83 | (2 | ) | 112 | 193 | 622 | ||||||||||
Canada | 377 | 44 | (12 | ) | — | 32 | 409 | ||||||||||
Total Americas | 7,146 | 645 | (133 | ) | 112 | 624 | 7,770 | ||||||||||
China/Asia Pacific(2): | |||||||||||||||||
China | 1,396 | 84 | (3 | ) | (1,477 | ) | (1,396 | ) | — | ||||||||
Korea | 1,108 | 138 | (15 | ) | — | 123 | 1,231 | ||||||||||
Taiwan | 420 | 43 | (5 | ) | — | 38 | 458 | ||||||||||
Philippines | 324 | 37 | (1 | ) | — | 36 | 360 | ||||||||||
Indonesia | 317 | 56 | (8 | ) | — | 48 | 365 | ||||||||||
Malaysia | 248 | 23 | (3 | ) | — | 20 | 268 | ||||||||||
All Other | 596 | 101 | (8 | ) | — | 93 | 689 | ||||||||||
Total China/Asia Pacific | 4,409 | 482 | (43 | ) | (1,477 | ) | (1,038 | ) | 3,371 | ||||||||
EMEA: | |||||||||||||||||
U.K. | 606 | 62 | (17 | ) | 2 | 47 | 653 | ||||||||||
Turkey | 387 | 67 | (1 | ) | — | 66 | 453 | ||||||||||
United Arab Emirates | 164 | 26 | (4 | ) | — | 22 | 186 | ||||||||||
Germany | 156 | 10 | (14 | ) | — | (4 | ) | 152 | |||||||||
Saudi Arabia | 124 | 46 | (4 | ) | — | 42 | 166 | ||||||||||
Kuwait | 118 | 24 | — | — | 24 | 142 | |||||||||||
Spain | 113 | 34 | (5 | ) | — | 29 | 142 | ||||||||||
All Other | 804 | 157 | (25 | ) | — | 132 | 936 | ||||||||||
Total EMEA | 2,472 | 426 | (70 | ) | 2 | 358 | 2,830 | ||||||||||
Corporate and Other: | |||||||||||||||||
Teavana | 37 | — | (25 | ) | — | (25 | ) | 12 | |||||||||
Total Corporate and Other | 37 | — | (25 | ) | — | (25 | ) | 12 | |||||||||
Total licensed | 14,064 | 1,553 | (271 | ) | (1,363 | ) | (81 | ) | 13,983 |
Name | Age | Position | ||
Kevin R. Johnson | 58 | president and chief executive officer | ||
Rosalind G. Brewer | 56 | group president, Americas and chief operating officer | ||
Cliff Burrows | 59 | group president, Siren Retail | ||
John Culver | 58 | group president, International, Channel Development and Global Coffee & Tea | ||
Rachel A. Gonzalez | 49 | executive vice president, general counsel and secretary | ||
Patrick J. Grismer | 56 | executive vice president, effective November 12, 2018; executive vice president, chief financial officer and chief accounting officer, effective November 30, 2018 | ||
Lucy Lee Helm | 61 | executive vice president, chief partner officer | ||
Scott Maw | 51 | executive vice president, chief financial officer (retiring November 30, 2018) | ||
Vivek Varma | 52 | executive vice president, Public Affairs |
• | Economic conditions in the U.S. and international markets could adversely affect our business and financial results. |
• | Our success depends substantially on the value of our brands and failure to preserve their value, either through our actions or those of our business partners, could have a negative impact on our financial results. |
• | Incidents involving food or beverage-borne illnesses, tampering, adulteration, contamination or mislabeling, whether or not accurate, as well as adverse public or medical opinions about the health effects of consuming our products, could harm our business. |
• | The unauthorized access, use, theft or destruction of customer or employee personal, financial or other data or of Starbucks proprietary or confidential information that is stored in our information systems or by third parties on our behalf could impact our reputation and brand and expose us to potential liability and loss of revenues. |
• | We rely heavily on information technology in our operations and growth initiatives, and any material failure, inadequacy, interruption or security failure of that technology could harm our ability to effectively operate and grow our business and could adversely affect our financial results. |
• | We may not be successful in implementing important strategic initiatives or effectively managing growth, which may have an adverse impact on our business and financial results. |
• | being an employer of choice and investing in employees to deliver a superior customer experience; |
• | building our leadership position around coffee; |
• | driving convenience, brand engagement and digital relationships through our mobile, loyalty, delivery and digital capabilities both domestically and internationally; |
• | simplifying store administrative tasks to allow store partners to better engage with customers; |
• | increasing the scale of the Starbucks store footprint with disciplined global expansion and introducing flexible and unique store formats; |
• | moving to a more licensed store model in some markets and a more company-owned model in other markets; |
• | creating new occasions in stores across all dayparts with new product offerings, including our growing lunch food and beverage product lineup; |
• | continuing the global growth of our Channel Development business through our supply, distribution and licensing agreements with Nestlé and other Channel Development business partners; |
• | delivering continued growth in our cold beverage business, including our tea business through the Teavana brand in our Starbucks® retail stores and other channels and internationally; and |
• | reducing our general and administrative costs. |
• | increases in labor costs, including wages and benefits, which, in a retail business such as ours, are two of our most significant costs, both domestically and internationally; these increases include significant and sudden increases in labor costs triggered by regulatory actions regarding wages and scheduling and benefits requirements; they also include increased health care and workers’ compensation insurance costs, as well as increased wages and costs of other |
• | not successfully developing and implementing new technologies necessary to effectuate our growth strategies, including increasing our digital relationships with customers to drive growth, due to inability to attract and retain qualified high-tech personnel or other factors; |
• | increasing competition in channels in which we operate or seek to operate from new and existing large competitors or well-funded smaller ones that sell high-quality specialty coffee beverages; |
• | continuing disruption in retail caused by on-line commerce, resulting in reduced foot traffic to “brick & mortar” retail stores; |
• | consumers shifting categories of where they spend their discretionary income away from outside-the-home food and beverage; |
• | imposition of additional taxes by jurisdictions, such as on certain types of beverages or based on number of employees; |
• | construction cost increases associated with new store openings and remodeling of existing stores; delays in store openings for reasons beyond our control or a lack of desirable real estate locations available for lease at reasonable rates, either of which could keep us from meeting annual store opening targets in the U.S. and internationally; |
• | not successfully scaling our supply chain infrastructure as our product offerings increase and as we continue to expand, including our emphasis on a broad range of high-quality food offerings; |
• | the ability of our licensee partners to implement our growth platforms and product innovation; |
• | lack of customer acceptance of new products (including due to price increases necessary to cover the costs of new products or higher input costs), brands (such as the global expansion of the Teavana brand in our Starbucks® retail stores and other channels) and platforms (such as features of our mobile technology, changes in our loyalty rewards programs and our delivery services initiatives), or customers reducing their demand for our current offerings as new products are introduced; |
• | the degree to which we enter into, maintain, develop and are able to negotiate appropriate terms and conditions of, and enforce, commercial and other agreements and the performance of our business partners under such agreements; |
• | not successfully consummating and implementing favorable strategic transactions or integrating acquired businesses, including our East China business; |
• | the effects of the Tax Cuts and Jobs Act and related guidance and regulations that may be promulgated; and |
• | the deterioration in our credit ratings, which could limit the availability of additional financing and increase the cost of obtaining financing to fund our initiatives. |
• | We face intense competition in each of our channels and markets, which could lead to reduced profitability. |
• | We are highly dependent on the financial performance of our Americas operating segment. |
• | We are increasingly dependent on the success of certain international markets in order to achieve our growth targets. |
• | the effects of current U.S.-China relations, including rounds of tariff increases and retaliations and increasing restrictive regulations, potential boycotts and increasing anti-Americanism; |
• | entry of new competitors to the specialty coffee market in China; |
• | changes in economic conditions in China and potential negative effects to the growth of its middle class, wages, labor, inflation discretionary spending and real estate and supply chain costs; |
• | ongoing government regulatory reform, including relating to food safety, tariffs and tax, bringing uncertainty and inconsistent interpretations, which may be contrary to ours, as well as potential significant increases in compliance costs; |
• | food-safety related matters, including compliance with food-safety regulations and ability to ensure product quality and safety; and |
• | the ability to successfully integrate the East China business. |
• | foreign currency exchange rate fluctuations, or requirements to transact in specific currencies; |
• | changes or uncertainties in economic, legal, regulatory, social and political conditions in our markets, as well as negative effects on U.S. businesses due to increasing anti-American sentiment in certain markets; |
• | interpretation and application of laws and regulations, including tax, tariffs, labor, merchandise, anti-bribery and privacy laws and regulations; |
• | uncertainties and effects of the implementation of the United Kingdom's referendum to withdraw membership from the European Union (refer to as “Brexit”), including financial, legal, tax and trade implications; |
• | restrictive actions of foreign or U.S. governmental authorities affecting trade and foreign investment, especially during periods of heightened tension between the U.S. and such foreign governmental authorities, including protective measures such as export and customs duties and tariffs, government intervention favoring local competitors, and restrictions on the level of foreign ownership; |
• | import or other business licensing requirements; |
• | the enforceability of intellectual property and contract rights; |
• | limitations on the repatriation of funds and foreign currency exchange restrictions due to current or new U.S. and international regulations; |
• | in developing economies, the growth rate in the portion of the population achieving sufficient levels of disposable income may not be as fast as we forecast; |
• | difficulty in staffing, developing and managing foreign operations and supply chain logistics, including ensuring the consistency of product quality and service, due to governmental actions affecting supply chain logistics, distance, language and cultural differences, as well as challenges in recruiting and retaining high quality employees in local markets; |
• | local laws that make it more expensive and complex to negotiate with, retain or terminate employees; |
• | delays in store openings for reasons beyond our control, competition with locally relevant competitors or a lack of desirable real estate locations available for lease at reasonable rates, any of which could keep us from meeting annual store opening targets and, in turn, negatively impact net revenues, operating income and earnings per share; and |
• | disruption in energy supplies affecting our markets. |
• | Increases in the cost of high-quality arabica coffee beans or other commodities or decreases in the availability of high-quality arabica coffee beans or other commodities could have an adverse impact on our business and financial results. |
• | Our financial condition and results of operations are sensitive to, and may be adversely affected by, a number of factors, many of which are largely outside our control. |
• | increases in real estate costs in certain domestic and international markets; |
• | adverse outcomes of litigation; |
• | severe weather or other natural or man-made disasters affecting a large market or several closely located markets that may temporarily but significantly affect our retail business in such markets; and |
• | especially in our larger or fast growing markets, labor discord or disruption, geopolitical events, war, terrorism (including incidents targeting us), political instability, boycotts, increasing anti-American sentiment in certain markets, social unrest, and natural disasters, including health pandemics that lead to avoidance of public places or restrictions on public gatherings such as in our stores. |
• | Interruption of our supply chain could affect our ability to produce or deliver our products and could negatively impact our business and profitability. |
• | Failure to meet market expectations for our financial performance and fluctuations in the stock market as a whole will likely adversely affect the market price and volatility of our stock. |
• | The loss of key personnel or difficulties recruiting and retaining qualified personnel could adversely impact our business and financial results. |
• | Failure to comply with applicable laws and changing legal and regulatory requirements could harm our business and financial results. |
Item 2. | Properties |
Location | Approximate Size in Square Feet | Purpose | ||
Rancho Cucamonga, CA | 265,000 | Manufacturing | ||
Washington, DC | 130,000 | Warehouse and distribution | ||
Augusta, GA | 131,000 | Manufacturing | ||
Minden, NV (Carson Valley) | 1,080,000 | Roasting and distribution | ||
York, PA | 1,957,000 | Roasting, distribution and warehouse | ||
Gaston, SC (Sandy Run) | 117,000 | Roasting and distribution | ||
Lebanon, TN | 680,000 | Warehouse and distribution | ||
Stratford, CT | 196,000 | Warehouse and distribution | ||
Auburn, WA | 491,000 | Warehouse and distribution | ||
Kent, WA | 510,000 | Roasting and distribution | ||
Seattle, WA | 1,283,000 | Corporate administrative | ||
Shanghai, China | 211,000 | Corporate administrative | ||
Amsterdam, Netherlands | 97,000 | Roasting and distribution | ||
Samutprakarn, Thailand | 81,000 | Warehouse and distribution |
Item 3. | Legal Proceedings |
Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2) | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs(3) | ||||||||||
Period(1) | |||||||||||||
July 2, 2018 - July 29, 2018 | 19,506,300 | $ | 50.54 | 19,506,300 | 87,808,124 | ||||||||
July 30, 2018 - August 26, 2018 | 15,000,000 | 52.70 | 15,000,000 | 72,808,124 | |||||||||
August 27, 2018 - September 30, 2018 | 24,000,000 | 55.10 | 24,000,000 | 48,808,124 | |||||||||
Total | 58,506,300 | $ | 52.96 | 58,506,300 |
(1) | Monthly information is presented by reference to our fiscal months during the fourth quarter of fiscal 2018. |
(2) | Share repurchases are conducted under our ongoing share repurchase program announced in September 2001, which has no expiration date. |
(3) | This column includes the total remaining number of shares available for repurchase under the authorization announced on April 26, 2018 as part of our ongoing share repurchase program. These amounts do not include the additional 120 million shares authorized for repurchase announced on November 1, 2018. Shares under our ongoing share repurchase program may be repurchased in open market transactions, including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, or through privately negotiated transactions. The timing, manner, price and amount of repurchases will be determined at the Company's discretion, and the share repurchase program may be suspended, terminated or modified at any time for any reason. |
Sep 29, 2013 | Sep 28, 2014 | Sep 27, 2015 | Oct 2, 2016 | Oct 1, 2017 | Sep 30, 2018 | ||||||||||||||||||
Starbucks Corporation | $ | 100.00 | $ | 98.58 | $ | 154.19 | $ | 145.93 | $ | 147.36 | $ | 159.57 | |||||||||||
S&P 500 | 100.00 | 119.73 | 119.00 | 137.36 | 162.92 | 192.10 | |||||||||||||||||
NASDAQ Composite | 100.00 | 121.64 | 127.37 | 148.79 | 183.54 | 230.21 | |||||||||||||||||
S&P Consumer Discretionary | 100.00 | 111.77 | 126.50 | 138.69 | 158.83 | 210.51 |
Item 6. | Selected Financial Data |
As of and for the Fiscal Year Ended (1) | Sept 30, 2018 (52 Wks) | Oct 1, 2017 (52 Wks) | Oct 2, 2016 (53 Wks) | Sep 27, 2015 (52 Wks) | Sep 28, 2014 (52 Wks) | |||||||||||||||
Results of Operations | ||||||||||||||||||||
Net revenues: | ||||||||||||||||||||
Company-operated stores | $ | 19,690.3 | $ | 17,650.7 | $ | 16,844.1 | $ | 15,197.3 | $ | 12,977.9 | ||||||||||
Licensed stores | 2,652.2 | 2,355.0 | 2,154.2 | 1,861.9 | 1,588.6 | |||||||||||||||
Other | 2,377.0 | 2,381.1 | 2,317.6 | 2,103.5 | 1,881.3 | |||||||||||||||
Total net revenues | $ | 24,719.5 | $ | 22,386.8 | $ | 21,315.9 | $ | 19,162.7 | $ | 16,447.8 | ||||||||||
Operating income/(loss) | $ | 3,883.3 | $ | 4,134.7 | $ | 4,171.9 | $ | 3,601.0 | $ | 3,081.1 | ||||||||||
Net earnings including noncontrolling interests(2) | 4,518.0 | 2,884.9 | 2,818.9 | 2,759.3 | 2,067.7 | |||||||||||||||
Net earnings/(loss) attributable to noncontrolling interests | (0.3 | ) | 0.2 | 1.2 | 1.9 | (0.4 | ) | |||||||||||||
Net earnings attributable to Starbucks(2) | 4,518.3 | 2,884.7 | 2,817.7 | 2,757.4 | 2,068.1 | |||||||||||||||
EPS — diluted(2) | 3.24 | 1.97 | 1.90 | 1.82 | 1.35 | |||||||||||||||
Cash dividends declared per share | 1.32 | 1.05 | 0.85 | 0.68 | 0.55 | |||||||||||||||
Net cash provided by operating activities(3) | 11,937.8 | 4,251.8 | 4,697.9 | 3,881.5 | 722.2 | |||||||||||||||
Capital expenditures (additions to property, plant and equipment) | 1,976.4 | 1,519.4 | 1,440.3 | 1,303.7 | 1,160.9 | |||||||||||||||
Balance Sheet | ||||||||||||||||||||
Total assets | $ | 24,156.4 | $ | 14,365.6 | $ | 14,312.5 | $ | 12,404.1 | $ | 10,745.0 | ||||||||||
Long-term debt (including current portion) | 9,440.1 | 3,932.6 | 3,585.2 | 2,335.3 | 2,041.3 | |||||||||||||||
Shareholders’ equity | 1,169.5 | 5,450.1 | 5,884.0 | 5,818.0 | 5,272.0 |
(1) | Our fiscal year ends on the Sunday closest to September 30. The fiscal year ended on October 2, 2016 included 53 weeks, with the 53rd week falling in our fourth fiscal quarter. |
(2) | Fiscal 2018 results include a gain not subject to income tax of $1.4 billion resulting from the acquisition of our East China joint venture. The impact of the gain to our diluted EPS was $0.99. |
(3) | Net cash provided by operating activities for fiscal 2014 through fiscal 2017 have been adjusted for the adoption of new accounting guidance related to excess tax benefits as discussed in Note 1, Summary of Significant Accounting Policies. |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | Sep 27, 2015 | Sep 28, 2014 | ||||||||||
Percentage change in comparable store sales(1) | |||||||||||||||
Americas | |||||||||||||||
Sales growth | 2 | % | 3 | % | 6 | % | 7 | % | 6 | % | |||||
Change in transactions | (1 | )% | — | % | 1 | % | 3 | % | 2 | % | |||||
Change in ticket | 3 | % | 4 | % | 5 | % | 4 | % | 3 | % | |||||
China/Asia Pacific(2) | |||||||||||||||
Sales growth | 1 | % | 3 | % | 3 | % | 9 | % | 7 | % | |||||
Change in transactions | (1 | )% | 1 | % | 1 | % | 8 | % | 6 | % | |||||
Change in ticket | 2 | % | 1 | % | 2 | % | 1 | % | — | % | |||||
EMEA(3) | |||||||||||||||
Sales growth | — | % | 1 | % | — | % | 4 | % | 5 | % | |||||
Change in transactions | (3 | )% | (1 | )% | 1 | % | 2 | % | 3 | % | |||||
Change in ticket | 3 | % | 1 | % | — | % | 1 | % | 2 | % | |||||
Consolidated | |||||||||||||||
Sales growth | 2 | % | 3 | % | 5 | % | 7 | % | 6 | % | |||||
Change in transactions | (1 | )% | — | % | 1 | % | 3 | % | 3 | % | |||||
Change in ticket | 3 | % | 3 | % | 4 | % | 4 | % | 3 | % |
(1) | Includes only Starbucks® company-operated stores open 13 months or longer. Comparable store sales exclude the effect of fluctuations in foreign currency exchange rates. For fiscal year 2016, comparable store sales percentages were calculated excluding the 53rd week. |
(2) | Beginning in December of fiscal 2016, comparable store sales include the results of the 1,009 company-operated stores acquired as part of the acquisition of Starbucks Japan in the first quarter of fiscal 2015. |
(3) | Company-operated stores represent 15% of the EMEA segment store portfolio as of September 30, 2018. |
As of and for the Fiscal Year Ended | Sept 30, 2018 (52 Wks) | Oct 1, 2017 (52 Wks) | Oct 2, 2016 (53 Wks) | Sep 27, 2015 (52 Wks) | Sep 28, 2014 (52 Wks) | ||||||||||
Net stores opened/(closed) and transferred during the year: | |||||||||||||||
Americas(1) | |||||||||||||||
Company-operated stores | 271 | 394 | 348 | 276 | 317 | ||||||||||
Licensed stores | 624 | 558 | 456 | 336 | 381 | ||||||||||
China/Asia Pacific(2) | |||||||||||||||
Company-operated stores | 2,089 | 259 | 359 | 1,320 | 250 | ||||||||||
Licensed stores | (1,038 | ) | 777 | 622 | (482 | ) | 492 | ||||||||
EMEA(3) | |||||||||||||||
Company-operated stores | (12 | ) | (21 | ) | (214 | ) | (80 | ) | (9 | ) | |||||
Licensed stores | 358 | 353 | 494 | 302 | 180 | ||||||||||
Corporate and Other(4) | |||||||||||||||
Company-operated stores | (282 | ) | (68 | ) | (17 | ) | 6 | 12 | |||||||
Licensed stores | (25 | ) | 2 | (6 | ) | (1 | ) | (24 | ) | ||||||
Total | 1,985 | 2,254 | 2,042 | 1,677 | 1,599 | ||||||||||
Stores open at year end: | |||||||||||||||
Americas(1) | |||||||||||||||
Company-operated stores | 9,684 | 9,413 | 9,019 | 8,671 | 8,395 | ||||||||||
Licensed stores | 7,770 | 7,146 | 6,588 | 6,132 | 5,796 | ||||||||||
China/Asia Pacific(2) | |||||||||||||||
Company-operated stores | 5,159 | 3,070 | 2,811 | 2,452 | 1,132 | ||||||||||
Licensed stores | 3,371 | 4,409 | 3,632 | 3,010 | 3,492 | ||||||||||
EMEA(3) | |||||||||||||||
Company-operated stores | 490 | 502 | 523 | 737 | 817 | ||||||||||
Licensed stores | 2,830 | 2,472 | 2,119 | 1,625 | 1,323 | ||||||||||
Corporate and Other(4) | |||||||||||||||
Company-operated stores | 8 | 290 | 358 | 375 | 369 | ||||||||||
Licensed stores | 12 | 37 | 35 | 41 | 42 | ||||||||||
Total | 29,324 | 27,339 | 25,085 | 23,043 | 21,366 |
(1) | Americas store data includes the transfer of 112 company-operated retail stores in Brazil to licensed stores as a result of the sale of our Brazil retail operations in the second quarter of fiscal 2018 and the closure of 132 Target Canada licensed stores in the second quarter of fiscal 2015. |
(2) | China/Asia Pacific store data has been adjusted for the transfer of certain company-operated stores to licensed stores in the fourth quarter of fiscal 2014. China/Asia Pacific store data also includes the transfer of 1,009 Japan stores from licensed stores to company-operated as a result of the acquisition of Starbucks Japan in the first quarter of fiscal 2015, the transfer of 133 Singapore stores from company-operated stores to licensed stores in the fourth quarter of fiscal 2017 and the transfer of 1,477 licensed stores in East China to company-operated retail stores as a result of the purchase of our East China joint venture in the first quarter of fiscal 2018. |
(3) | EMEA store data also includes the transfer of 144 Germany company-operated retail stores to licensed stores as a result of the sale to AmRest Holdings SE in the third quarter of fiscal 2016. |
(4) | As of September 30, 2018, Corporate and Other included 12 licensed Teavana-branded stores. |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | Total net revenues increased 10% to $24.7 billion in fiscal 2018 compared to $22.4 billion in fiscal 2017. |
• | Global comparable store sales grew 2% driven by a 3% increase in average ticket. |
• | Consolidated operating income decreased to $3.9 billion in fiscal 2018 compared to operating income of $4.1 billion in fiscal 2017. Fiscal 2018 operating margin was 15.7% compared to 18.5% in fiscal 2017. Operating margin compression in fiscal 2018 was primarily driven by food and beverage-related mix shifts, largely in the Americas segment, the impact of our ownership change in East China at the end of the first quarter of fiscal 2018, higher restructuring and impairment costs and higher salaries and benefits related to digital platforms, technology infrastructure and innovations. |
• | Restructuring and impairment charges increased to $224 million in fiscal 2018 compared to $154 million in fiscal 2017. Increased costs were primarily related to higher asset impairments associated with the decision to close certain Starbucks® company-operated stores in the U.S. and Canada, higher goodwill impairment charges related to our Switzerland retail reporting unit and EMEA restructuring costs. |
• | Earnings per share (“EPS”) for fiscal 2018 increased to $3.24, compared to EPS of $1.97 in fiscal 2017. The increase was primarily driven by the gains from the acquisition of our East China joint venture and the sale of our Tazo brand. Additionally, the net favorable impact from the Tax Cuts and Jobs Act (the “Tax Act”) also contributed to the increase. |
• | Cash flows from operations were $11.9 billion in fiscal 2018 compared to $4.3 billion in fiscal 2017. The change was primarily due to receipt of the upfront payment from Nestlé related to the Global Coffee Alliance. |
• | Capital expenditures were $2.0 billion in fiscal 2018 compared to $1.5 billion in fiscal 2017. |
• | We returned $8.9 billion to our shareholders in fiscal 2018 through share repurchases and dividends compared to $3.5 billion in fiscal 2017. |
• | Accelerate growth in our targeted, long-term growth markets of the U.S. and China |
• | Expand the global reach of the Starbucks brand leveraging the Global Coffee Alliance |
• | Sharpen our focus on increasing shareholder returns |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | % Change | |||||||
Net revenues: | ||||||||||
Company-operated stores | $ | 19,690.3 | $ | 17,650.7 | 11.6 | % | ||||
Licensed stores | 2,652.2 | 2,355.0 | 12.6 | |||||||
Other | 2,377.0 | 2,381.1 | (0.2 | ) | ||||||
Total net revenues | $ | 24,719.5 | $ | 22,386.8 | 10.4 | % |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Sep 30, 2018 | Oct 1, 2017 | |||||||||
As a % of Total Net Revenues | |||||||||||||
Cost of sales including occupancy costs | $ | 10,174.5 | $ | 9,034.3 | 41.2 | % | 40.4 | % | |||||
Store operating expenses | 7,193.2 | 6,493.3 | 29.1 | 29.0 | |||||||||
Other operating expenses | 539.3 | 500.3 | 2.2 | 2.2 | |||||||||
Depreciation and amortization expenses | 1,247.0 | 1,011.4 | 5.0 | 4.5 | |||||||||
General and administrative expenses | 1,759.0 | 1,450.7 | 7.1 | 6.5 | |||||||||
Restructuring and impairments | 224.4 | 153.5 | 0.9 | 0.7 | |||||||||
Total operating expenses | 21,137.4 | 18,643.5 | 85.5 | 83.3 | |||||||||
Income from equity investees | 301.2 | 391.4 | 1.2 | 1.7 | |||||||||
Operating income | $ | 3,883.3 | $ | 4,134.7 | 15.7 | % | 18.5 | % | |||||
Store operating expenses as a % of related revenues | 36.5 | % | 36.8 | % | |||||||||
Other operating expenses as a % of non-company-operated store revenues | 10.7 | % | 10.6 | % |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Sep 30, 2018 | Oct 1, 2017 | |||||||||
As a % of Total Net Revenues | |||||||||||||
Operating income | $ | 3,883.3 | $ | 4,134.7 | 15.7 | % | 18.5 | % | |||||
Gain resulting from acquisition of joint venture | 1,376.4 | — | 5.6 | — | |||||||||
Net gain resulting from divestiture of certain operations | 499.2 | 93.5 | 2.0 | 0.4 | |||||||||
Interest income and other, net | 191.4 | 181.8 | 0.8 | 0.8 | |||||||||
Interest expense | (170.3 | ) | (92.5 | ) | (0.7 | ) | (0.4 | ) | |||||
Earnings before income taxes | 5,780.0 | 4,317.5 | 23.4 | 19.3 | |||||||||
Income tax expense | 1,262.0 | 1,432.6 | 5.1 | 6.4 | |||||||||
Net earnings including noncontrolling interests | 4,518.0 | 2,884.9 | 18.3 | 12.9 | |||||||||
Net earnings/(loss) attributable to noncontrolling interests | (0.3 | ) | 0.2 | — | — | ||||||||
Net earnings attributable to Starbucks | $ | 4,518.3 | $ | 2,884.7 | 18.3 | % | 12.9 | % | |||||
Effective tax rate including noncontrolling interests | 21.8 | % | 33.2 | % |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Sep 30, 2018 | Oct 1, 2017 | |||||||||
As a % of Americas Total Net Revenues | |||||||||||||
Net revenues: | |||||||||||||
Company-operated stores | $ | 14,905.1 | $ | 13,996.4 | 89.1 | % | 89.6 | % | |||||
Licensed stores | 1,814.0 | 1,617.3 | 10.8 | 10.4 | |||||||||
Other | 13.1 | 6.3 | 0.1 | — | |||||||||
Total net revenues | 16,732.2 | 15,620.0 | 100.0 | 100.0 | |||||||||
Cost of sales including occupancy costs | 6,301.2 | 5,695.0 | 37.7 | 36.5 | |||||||||
Store operating expenses | 5,747.9 | 5,320.2 | 34.4 | 34.1 | |||||||||
Other operating expenses | 150.0 | 130.8 | 0.9 | 0.8 | |||||||||
Depreciation and amortization expenses | 638.3 | 614.9 | 3.8 | 3.9 | |||||||||
General and administrative expenses | 247.0 | 201.4 | 1.5 | 1.3 | |||||||||
Restructuring and impairments | 33.4 | 4.1 | 0.2 | — | |||||||||
Total operating expenses | 13,117.8 | 11,966.4 | 78.4 | 76.6 | |||||||||
Operating income | $ | 3,614.4 | $ | 3,653.6 | 21.6 | % | 23.4 | % | |||||
Store operating expenses as a % of related revenues | 38.6 | % | 38.0 | % | |||||||||
Other operating expenses as a % of non-company-operated store revenues | 8.2 | % | 8.1 | % |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Sep 30, 2018 | Oct 1, 2017 | |||||||||
As a % of China/Asia Pacific Total Net Revenues | |||||||||||||
Net revenues: | |||||||||||||
Company-operated stores | $ | 4,096.9 | $ | 2,906.0 | 91.6 | % | 89.7 | % | |||||
Licensed stores | 365.7 | 327.4 | 8.2 | 10.1 | |||||||||
Other | 11.0 | 6.8 | 0.2 | 0.2 | |||||||||
Total net revenues | 4,473.6 | 3,240.2 | 100.0 | 100.0 | |||||||||
Cost of sales including occupancy costs | 1,898.3 | 1,396.2 | 42.4 | 43.1 | |||||||||
Store operating expenses | 1,148.7 | 845.5 | 25.7 | 26.1 | |||||||||
Other operating expenses | 22.9 | 21.2 | 0.5 | 0.7 | |||||||||
Depreciation and amortization expenses | 412.1 | 202.2 | 9.2 | 6.2 | |||||||||
General and administrative expenses | 241.6 | 207.1 | 5.4 | 6.4 | |||||||||
Total operating expenses | 3,723.6 | 2,672.2 | 83.2 | 82.5 | |||||||||
Income from equity investees | 117.4 | 197.0 | 2.6 | 6.1 | |||||||||
Operating income | $ | 867.4 | $ | 765.0 | 19.4 | % | 23.6 | % | |||||
Store operating expenses as a % of related revenues | 28.0 | % | 29.1 | % | |||||||||
Other operating expenses as a % of non-company-operated store revenues | 6.1 | % | 6.3 | % |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Sep 30, 2018 | Oct 1, 2017 | |||||||||
As a % of EMEA Total Net Revenues | |||||||||||||
Net revenues: | |||||||||||||
Company-operated stores | $ | 575.6 | $ | 551.0 | 54.9 | % | 57.5 | % | |||||
Licensed stores | 471.3 | 407.7 | 45.0 | 42.5 | |||||||||
Other | 1.1 | — | 0.1 | — | |||||||||
Total net revenues | 1,048.0 | 958.7 | 100.0 | 100.0 | |||||||||
Cost of sales including occupancy costs | 559.2 | 508.6 | 53.4 | 53.1 | |||||||||
Store operating expenses | 226.0 | 214.1 | 21.6 | 22.3 | |||||||||
Other operating expenses | 62.8 | 51.3 | 6.0 | 5.4 | |||||||||
Depreciation and amortization expenses | 31.7 | 30.6 | 3.0 | 3.2 | |||||||||
General and administrative expenses | 51.7 | 41.7 | 4.9 | 4.3 | |||||||||
Restructuring and impairments | 55.1 | 17.9 | 5.3 | 1.9 | |||||||||
Total operating expenses | 986.5 | 864.2 | 94.1 | 90.1 | |||||||||
Operating income | $ | 61.5 | $ | 94.5 | 5.9 | % | 9.9 | % | |||||
Store operating expenses as a % of related revenues | 39.3 | % | 38.9 | % | |||||||||
Other operating expenses as a % of non-company-operated store | 13.3 | % | 12.6 | % |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Sep 30, 2018 | Oct 1, 2017 | |||||||||
As a % of Channel Development Total Net Revenues | |||||||||||||
Net revenues | $ | 2,297.3 | $ | 2,256.6 | |||||||||
Cost of sales | 1,252.3 | 1,209.3 | 54.5 | 53.6 | |||||||||
Other operating expenses | 286.5 | 260.4 | 12.5 | 11.5 | |||||||||
Depreciation and amortization expenses | 1.3 | 3.0 | 0.1 | 0.1 | |||||||||
General and administrative expenses | 13.9 | 11.3 | 0.6 | 0.5 | |||||||||
Total operating expenses | 1,554.0 | 1,484.0 | 67.6 | 65.8 | |||||||||
Income from equity investees | 183.8 | 194.4 | 8.0 | 8.6 | |||||||||
Operating income | $ | 927.1 | $ | 967.0 | 40.4 | % | 42.9 | % |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | % Change | |||||||
Net revenues: | ||||||||||
Company-operated stores | $ | 112.7 | $ | 197.3 | (42.9 | )% | ||||
Licensed stores | 1.2 | 2.6 | (53.8 | ) | ||||||
Other | 54.5 | 111.4 | (51.1 | ) | ||||||
Total net revenues | 168.4 | 311.3 | (45.9 | ) | ||||||
Cost of sales including occupancy costs | 163.5 | 225.2 | (27.4 | ) | ||||||
Store operating expenses | 70.6 | 113.5 | (37.8 | ) | ||||||
Other operating expenses | 17.1 | 36.6 | (53.3 | ) | ||||||
Depreciation and amortization expenses | 163.6 | 160.7 | 1.8 | |||||||
General and administrative expenses | 1,204.8 | 989.2 | 21.8 | |||||||
Restructuring and impairments | 135.9 | 131.5 | 3.3 | |||||||
Total operating expenses | 1,755.5 | 1,656.7 | 6.0 | |||||||
Operating loss | $ | (1,587.1 | ) | $ | (1,345.4 | ) | 18.0 | % |
Fiscal Year Ended | Oct 1, 2017 | Oct 2, 2016 | % Change | |||||||
(52 Weeks Ended) | (53 Weeks Ended) | |||||||||
Net revenues: | ||||||||||
Company-operated stores | $ | 17,650.7 | $ | 16,844.1 | 4.8 | % | ||||
Licensed stores | 2,355.0 | 2,154.2 | 9.3 | |||||||
Other | 2,381.1 | 2,317.6 | 2.7 | |||||||
Total net revenues | $ | 22,386.8 | $ | 21,315.9 | 5.0 | % |
Fiscal Year Ended | Oct 1, 2017 | Oct 2, 2016 | Oct 1, 2017 | Oct 2, 2016 | |||||||||
(52 Weeks Ended) | (53 Weeks Ended) | ||||||||||||
As a % of Total Net Revenues | |||||||||||||
Cost of sales including occupancy costs | $ | 9,034.3 | $ | 8,509.0 | 40.4 | % | 39.9 | % | |||||
Store operating expenses | 6,493.3 | 6,064.3 | 29.0 | 28.4 | |||||||||
Other operating expenses | 500.3 | 499.2 | 2.2 | 2.3 | |||||||||
Depreciation and amortization expenses | 1,011.4 | 980.8 | 4.5 | 4.6 | |||||||||
General and administrative expenses | 1,450.7 | 1,408.9 | 6.5 | 6.6 | |||||||||
Restructuring and impairments | 153.5 | — | 0.7 | — | |||||||||
Total operating expenses | 18,643.5 | 17,462.2 | 83.3 | 81.9 | |||||||||
Income from equity investees | 391.4 | 318.2 | 1.7 | 1.5 | |||||||||
Operating income | $ | 4,134.7 | $ | 4,171.9 | 18.5 | % | 19.6 | % | |||||
Store operating expenses as a % of related revenues | 36.8 | % | 36.0 | % | |||||||||
Other operating expenses as a % of non-company-operated store revenues | 10.6 | % | 11.2 | % |
Fiscal Year Ended | Oct 1, 2017 | Oct 2, 2016 | Oct 1, 2017 | Oct 2, 2016 | |||||||||
(52 Weeks Ended) | (53 Weeks Ended) | ||||||||||||
As a % of Total Net Revenues | |||||||||||||
Operating income | $ | 4,134.7 | $ | 4,171.9 | 18.5 | % | 19.6 | ||||||
Net gain resulting from divestiture of certain operations | 93.5 | 5.4 | 0.4 | — | |||||||||
Interest income and other, net | 181.8 | 102.6 | 0.8 | 0.5 | |||||||||
Interest expense | (92.5 | ) | (81.3 | ) | (0.4 | ) | (0.4 | ) | |||||
Earnings before income taxes | 4,317.5 | 4,198.6 | 19.3 | 19.7 | |||||||||
Income tax expense | 1,432.6 | 1,379.7 | 6.4 | 6.5 | |||||||||
Net earnings including noncontrolling interests | 2,884.9 | 2,818.9 | 12.9 | 13.2 | |||||||||
Net earnings attributable to noncontrolling interests | 0.2 | 1.2 | — | — | |||||||||
Net earnings attributable to Starbucks | $ | 2,884.7 | $ | 2,817.7 | 12.9 | % | 13.2 | % | |||||
Effective tax rate including noncontrolling interests | 33.2 | % | 32.9 | % |
Fiscal Year Ended | Oct 1, 2017 | Oct 2, 2016 | Oct 1, 2017 | Oct 2, 2016 | |||||||||
(52 Weeks Ended) | (53 Weeks Ended) | ||||||||||||
As a % of Americas Total Net Revenues | |||||||||||||
Net revenues: | |||||||||||||
Company-operated stores | $ | 13,996.4 | $ | 13,247.4 | 89.6 | % | 89.7 | % | |||||
Licensed stores | 1,617.3 | 1,518.5 | 10.4 | 10.3 | |||||||||
Other | 6.3 | 9.3 | — | 0.1 | |||||||||
Total net revenues | 15,620.0 | 14,775.2 | 100.0 | 100.0 | |||||||||
Cost of sales including occupancy costs | 5,695.0 | 5,254.2 | 36.5 | 35.6 | |||||||||
Store operating expenses | 5,320.2 | 4,909.3 | 34.1 | 33.2 | |||||||||
Other operating expenses | 130.8 | 97.1 | 0.8 | 0.7 | |||||||||
Depreciation and amortization expenses | 614.9 | 590.0 | 3.9 | 4.0 | |||||||||
General and administrative expenses | 201.4 | 186.1 | 1.3 | 1.3 | |||||||||
Restructuring and impairments | 4.1 | — | — | — | |||||||||
Total operating expenses | 11,966.4 | 11,036.7 | 76.6 | 74.7 | |||||||||
Income from equity investees | — | — | — | — | |||||||||
Operating income | $ | 3,653.6 | $ | 3,738.5 | 23.4 | % | 25.3 | % | |||||
Store operating expenses as a % of related revenues | 38.0 | % | 37.1 | % | |||||||||
Other operating expenses as a % of non-company-operated store revenues | 8.1 | % | 6.4 | % |
Fiscal Year Ended | Oct 1, 2017 | Oct 2, 2016 | Oct 1, 2017 | Oct 2, 2016 | |||||||||
(52 Weeks Ended) | (53 Weeks Ended) | ||||||||||||
As a % of China/Asia Pacific Total Net Revenues | |||||||||||||
Net revenues: | |||||||||||||
Company-operated stores | $ | 2,906.0 | $ | 2,640.4 | 89.7 | % | 89.8 | % | |||||
Licensed stores | 327.4 | 292.3 | 10.1 | 9.9 | |||||||||
Other | 6.8 | 6.1 | 0.2 | 0.2 | |||||||||
Total net revenues | 3,240.2 | 2,938.8 | 100.0 | 100.0 | |||||||||
Cost of sales including occupancy costs | 1,396.2 | 1,298.9 | 43.1 | 44.2 | |||||||||
Store operating expenses | 845.5 | 779.4 | 26.1 | 26.5 | |||||||||
Other operating expenses | 21.2 | 24.2 | 0.7 | 0.8 | |||||||||
Depreciation and amortization expenses | 202.2 | 180.6 | 6.2 | 6.1 | |||||||||
General and administrative expenses | 207.1 | 174.2 | 6.4 | 5.9 | |||||||||
Total operating expenses | 2,672.2 | 2,457.3 | 82.5 | 83.6 | |||||||||
Income from equity investees | 197.0 | 150.1 | 6.1 | 5.1 | |||||||||
Operating income | $ | 765.0 | $ | 631.6 | 23.6 | % | 21.5 | % | |||||
Store operating expenses as a % of related revenues | 29.1 | % | 29.5 | % | |||||||||
Other operating expenses as a % of non-company-operated store revenues | 6.3 | % | 8.1 | % |
Fiscal Year Ended | Oct 1, 2017 | Oct 2, 2016 | Oct 1, 2017 | Oct 2, 2016 | |||||||||
(52 Weeks Ended) | (53 Weeks Ended) | ||||||||||||
As a % of EMEA Total Net Revenues | |||||||||||||
Net revenues: | |||||||||||||
Company-operated stores | $ | 551.0 | $ | 732.0 | 57.5 | % | 68.3 | % | |||||
Licensed stores | 407.7 | 339.5 | 42.5 | 31.7 | |||||||||
Total net revenues | 958.7 | 1,071.5 | 100.0 | 100.0 | |||||||||
Cost of sales including occupancy costs | 508.6 | 540.7 | 53.1 | 50.5 | |||||||||
Store operating expenses | 214.1 | 260.6 | 22.3 | 24.3 | |||||||||
Other operating expenses | 51.3 | 49.4 | 5.4 | 4.6 | |||||||||
Depreciation and amortization expenses | 30.6 | 39.9 | 3.2 | 3.7 | |||||||||
General and administrative expenses | 41.7 | 51.4 | 4.3 | 4.8 | |||||||||
Restructuring and impairments | 17.9 | — | 1.9 | — | |||||||||
Total operating expenses | 864.2 | 942.0 | 90.1 | 87.9 | |||||||||
Income from equity investees | — | 1.5 | — | 0.1 | |||||||||
Operating income | $ | 94.5 | $ | 131.0 | 9.9 | % | 12.2 | % | |||||
Store operating expenses as a % of related revenues | 38.9 | % | 35.6 | % | |||||||||
Other operating expenses as a % of non-company-operated store revenues | 12.6 | % | 14.6 | % |
Fiscal Year Ended | Oct 1, 2017 | Oct 2, 2016 | Oct 1, 2017 | Oct 2, 2016 | |||||||||
(52 Weeks Ended) | (53 Weeks Ended) | ||||||||||||
As a % of Channel Development Total Net Revenues | |||||||||||||
Total net revenues | $ | 2,256.6 | $ | 2,195.1 | |||||||||
Cost of sales | 1,209.3 | 1,191.8 | 53.6 | 54.3 | |||||||||
Other operating expenses | 260.4 | 270.7 | 11.5 | 12.3 | |||||||||
Depreciation and amortization expenses | 3.0 | 3.9 | 0.1 | 0.2 | |||||||||
General and administrative expenses | 11.3 | 18.0 | 0.5 | 0.8 | |||||||||
Total operating expenses | 1,484.0 | 1,484.4 | 65.8 | 67.6 | |||||||||
Income from equity investees | 194.4 | 166.6 | 8.6 | 7.6 | |||||||||
Operating income | $ | 967.0 | $ | 877.3 | 42.9 | % | 40.0 | % |
Fiscal Year Ended | Oct 1, 2017 | Oct 2, 2016 | % Change | |||||||
(52 Weeks Ended) | (53 Weeks Ended) | |||||||||
Net revenues: | ||||||||||
Company-operated stores | $ | 197.3 | $ | 224.3 | (12.0 | )% | ||||
Licensed stores | 2.6 | 3.9 | (33.3 | )% | ||||||
Other | 111.4 | 107.1 | 4.0 | |||||||
Total net revenues | 311.3 | 335.3 | (7.2 | ) | ||||||
Cost of sales including occupancy costs | 225.2 | 223.4 | 0.8 | |||||||
Store operating expenses | 113.5 | 115.0 | (1.3 | ) | ||||||
Other operating expenses | 36.6 | 57.8 | (36.7 | ) | ||||||
Depreciation and amortization expenses | 160.7 | 166.4 | (3.4 | ) | ||||||
General and administrative expenses | 989.2 | 979.2 | 1.0 | |||||||
Restructuring and impairments | 131.5 | — | nm | |||||||
Total operating expenses | 1,656.7 | 1,541.8 | 7.5 | |||||||
Operating loss | $ | (1,345.4 | ) | $ | (1,206.5 | ) | 11.5 | % |
Payments Due by Period | |||||||||||||||||||
Contractual Obligations (1) | Total | Less than 1 Year | 1 - 3 Years | 3 - 5 Years | More than 5 Years | ||||||||||||||
Operating lease obligations(2) | $ | 9,353.8 | $ | 1,340.6 | $ | 2,463.4 | $ | 2,045.4 | $ | 3,504.4 | |||||||||
Financing lease obligations | 58.0 | 4.4 | 8.7 | 8.3 | 36.6 | ||||||||||||||
Debt obligations | |||||||||||||||||||
Principal payments | 9,548.4 | 350.0 | 1,250.0 | 1,500.0 | 6,448.4 | ||||||||||||||
Interest payments | 3,698.0 | 278.9 | 586.0 | 488.0 | 2,345.1 | ||||||||||||||
Purchase obligations(3) | 1,267.1 | 806.6 | 342.9 | 101.0 | 16.6 | ||||||||||||||
Other obligations(4) | 417.7 | 31.0 | 64.3 | 98.8 | 223.6 | ||||||||||||||
Total | $ | 24,343.0 | $ | 2,811.5 | $ | 4,715.3 | $ | 4,241.5 | $ | 12,574.7 |
(1) | We have excluded long-term gross unrecognized tax benefits for uncertain tax positions, including interest and penalties of $237.2 million from the amounts presented as the timing of these obligations is uncertain. |
(2) | Amounts include direct lease obligations, excluding any taxes, insurance and other related expenses. |
(3) | Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on Starbucks and that specify all significant terms. Green coffee purchase commitments comprise 92% of total purchase obligations. |
(4) | Other obligations include other long-term liabilities primarily consisting of the Tax Act transition tax, asset retirement obligations and hedging instruments. |
Increase/(Decrease) to Net Earnings | Increase/(Decrease) to OCI | ||||||||||||||
10% Increase in Underlying Rate | 10% Decrease in Underlying Rate | 10% Increase in Underlying Rate | 10% Decrease in Underlying Rate | ||||||||||||
Commodity hedges | $ | 4 | $ | (4 | ) | $ | — | $ | — |
Increase/(Decrease) to Net Earnings | Increase/(Decrease) to OCI | ||||||||||||||
10% Increase in Underlying Rate | 10% Decrease in Underlying Rate | 10% Increase in Underlying Rate | 10% Decrease in Underlying Rate | ||||||||||||
Foreign currency hedges | $ | 27 | $ | (27 | ) | $ | 108 | $ | (108 | ) |
Change in Fair Value | ||||||||||||||
Stated Interest Rate | Fair Value | 100 Basis Point Increase in Underlying Rate | 100 Basis Point Decrease in Underlying Rate | |||||||||||
2018 notes | 2.000 | % | $ | 350 | $ | (1 | ) | $ | 1 | |||||
2020 notes | 2.200 | % | $ | 490 | $ | (10 | ) | $ | 10 | |||||
2021 notes | 2.100 | % | $ | 733 | $ | (17 | ) | $ | 17 | |||||
2022 notes | 2.700 | % | $ | 486 | $ | (17 | ) | $ | 17 | |||||
2023 notes(1) | 3.850 | % | $ | 759 | $ | — | $ | — | ||||||
2023 notes | 3.100 | % | $ | 986 | $ | (40 | ) | $ | 40 | |||||
2024 notes | 0.372 | % | $ | 743 | $ | (40 | ) | $ | 40 | |||||
2025 notes | 3.800 | % | $ | 1,249 | $ | (74 | ) | $ | 74 | |||||
2026 notes | 2.450 | % | $ | 451 | $ | (34 | ) | $ | 34 | |||||
2028 notes | 3.500 | % | $ | 576 | $ | (47 | ) | $ | 47 | |||||
2028 notes | 4.000 | % | $ | 754 | $ | (61 | ) | $ | 61 | |||||
2045 notes | 4.300 | % | $ | 330 | $ | (53 | ) | $ | 53 | |||||
2047 notes | 3.750 | % | $ | 438 | $ | (81 | ) | $ | 81 | |||||
2048 notes | 4.500 | % | $ | 977 | $ | (159 | ) | $ | 159 |
(1) | Amount disclosed is net of ($32 million) change in the fair value of our designated interest rate swap. Refer to Note 3, Derivative Financial Instruments, for additional information on our interest rate swap designated as a fair value hedge. |
Item 8. | Financial Statements and Supplementary Data |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | ||||||||
Net revenues: | |||||||||||
Company-operated stores | $ | 19,690.3 | $ | 17,650.7 | $ | 16,844.1 | |||||
Licensed stores | 2,652.2 | 2,355.0 | 2,154.2 | ||||||||
Other | 2,377.0 | 2,381.1 | 2,317.6 | ||||||||
Total net revenues | 24,719.5 | 22,386.8 | 21,315.9 | ||||||||
Cost of sales including occupancy costs | 10,174.5 | 9,034.3 | 8,509.0 | ||||||||
Store operating expenses | 7,193.2 | 6,493.3 | 6,064.3 | ||||||||
Other operating expenses | 539.3 | 500.3 | 499.2 | ||||||||
Depreciation and amortization expenses | 1,247.0 | 1,011.4 | 980.8 | ||||||||
General and administrative expenses | 1,759.0 | 1,450.7 | 1,408.9 | ||||||||
Restructuring and impairments | 224.4 | 153.5 | — | ||||||||
Total operating expenses | 21,137.4 | 18,643.5 | 17,462.2 | ||||||||
Income from equity investees | 301.2 | 391.4 | 318.2 | ||||||||
Operating income | 3,883.3 | 4,134.7 | 4,171.9 | ||||||||
Gain resulting from acquisition of joint venture | 1,376.4 | — | — | ||||||||
Net gain resulting from divestiture of certain operations | 499.2 | 93.5 | 5.4 | ||||||||
Interest income and other, net | 191.4 | 181.8 | 102.6 | ||||||||
Interest expense | (170.3 | ) | (92.5 | ) | (81.3 | ) | |||||
Earnings before income taxes | 5,780.0 | 4,317.5 | 4,198.6 | ||||||||
Income tax expense | 1,262.0 | 1,432.6 | 1,379.7 | ||||||||
Net earnings including noncontrolling interests | 4,518.0 | 2,884.9 | 2,818.9 | ||||||||
Net earnings/(loss) attributable to noncontrolling interests | (0.3 | ) | 0.2 | 1.2 | |||||||
Net earnings attributable to Starbucks | $ | 4,518.3 | $ | 2,884.7 | $ | 2,817.7 | |||||
Earnings per share — basic | $ | 3.27 | $ | 1.99 | $ | 1.91 | |||||
Earnings per share — diluted | $ | 3.24 | $ | 1.97 | $ | 1.90 | |||||
Weighted average shares outstanding: | |||||||||||
Basic | 1,382.7 | 1,449.5 | 1,471.6 | ||||||||
Diluted | 1,394.6 | 1,461.5 | 1,486.7 |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | ||||||||
Net earnings including noncontrolling interests | $ | 4,518.0 | $ | 2,884.9 | $ | 2,818.9 | |||||
Other comprehensive income/(loss), net of tax: | |||||||||||
Unrealized holding gains/(losses) on available-for-sale securities | (7.0 | ) | (9.5 | ) | 3.5 | ||||||
Tax (expense)/benefit | 1.9 | 2.9 | (1.3 | ) | |||||||
Unrealized gains/(losses) on cash flow hedging instruments | 24.4 | 53.2 | (109.6 | ) | |||||||
Tax (expense)/benefit | (6.5 | ) | (12.6 | ) | 27.5 | ||||||
Unrealized gains/(losses) on net investment hedging instruments | 7.8 | 20.1 | — | ||||||||
Tax (expense)/benefit | (2.2 | ) | (7.4 | ) | — | ||||||
Translation adjustment and other | (220.0 | ) | (38.3 | ) | 85.5 | ||||||
Tax (expense)/benefit | 3.4 | (2.4 | ) | 19.0 | |||||||
Reclassification adjustment for net (gains)/losses realized in net earnings for available-for-sale securities, hedging instruments, and translation adjustment | 24.7 | (67.2 | ) | 78.2 | |||||||
Tax expense/(benefit) | (1.2 | ) | 14.0 | (11.8 | ) | ||||||
Other comprehensive income/(loss) | (174.7 | ) | (47.2 | ) | 91.0 | ||||||
Comprehensive income including noncontrolling interests | 4,343.3 | 2,837.7 | 2,909.9 | ||||||||
Comprehensive income/(loss) attributable to noncontrolling interests | (0.3 | ) | 0.2 | 1.2 | |||||||
Comprehensive income attributable to Starbucks | $ | 4,343.6 | $ | 2,837.5 | $ | 2,908.7 |
Sep 30, 2018 | Oct 1, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 8,756.3 | $ | 2,462.3 | |||
Short-term investments | 181.5 | 228.6 | |||||
Accounts receivable, net | 693.1 | 870.4 | |||||
Inventories | 1,400.5 | 1,364.0 | |||||
Prepaid expenses and other current assets | 1,462.8 | 358.1 | |||||
Total current assets | 12,494.2 | 5,283.4 | |||||
Long-term investments | 267.7 | 542.3 | |||||
Equity and cost investments | 334.7 | 481.6 | |||||
Property, plant and equipment, net | 5,929.1 | 4,919.5 | |||||
Deferred income taxes, net | 134.7 | 795.4 | |||||
Other long-term assets | 412.2 | 362.8 | |||||
Other intangible assets | 1,042.2 | 441.4 | |||||
Goodwill | 3,541.6 | 1,539.2 | |||||
TOTAL ASSETS | $ | 24,156.4 | $ | 14,365.6 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,179.3 | $ | 782.5 | |||
Accrued liabilities | 2,298.4 | 1,934.5 | |||||
Insurance reserves | 213.7 | 215.2 | |||||
Stored value card liability and current portion of deferred revenue | 1,642.9 | 1,288.5 | |||||
Current portion of long-term debt | 349.9 | — | |||||
Total current liabilities | 5,684.2 | 4,220.7 | |||||
Long-term debt | 9,090.2 | 3,932.6 | |||||
Deferred revenue | 6,775.7 | 4.4 | |||||
Other long-term liabilities | 1,430.5 | 750.9 | |||||
Total liabilities | 22,980.6 | 8,908.6 | |||||
Shareholders’ equity: | |||||||
Common stock ($0.001 par value) — authorized, 2,400.0 shares; issued and outstanding, 1,309.1 and 1,431.6 shares, respectively | 1.3 | 1.4 | |||||
Additional paid-in capital | 41.1 | 41.1 | |||||
Retained earnings | 1,457.4 | 5,563.2 | |||||
Accumulated other comprehensive loss | (330.3 | ) | (155.6 | ) | |||
Total shareholders’ equity | 1,169.5 | 5,450.1 | |||||
Noncontrolling interests | 6.3 | 6.9 | |||||
Total equity | 1,175.8 | 5,457.0 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 24,156.4 | $ | 14,365.6 |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | ||||||||
OPERATING ACTIVITIES: | |||||||||||
Net earnings including noncontrolling interests | $ | 4,518.0 | $ | 2,884.9 | $ | 2,818.9 | |||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 1,305.9 | 1,067.1 | 1,030.1 | ||||||||
Deferred income taxes, net | 714.9 | 95.1 | 265.7 | ||||||||
Income earned from equity method investees | (242.8 | ) | (310.2 | ) | (250.2 | ) | |||||
Distributions received from equity method investees | 226.8 | 186.6 | 223.3 | ||||||||
Gain resulting from acquisition of joint venture | (1,376.4 | ) | — | — | |||||||
Net gain resulting from divestiture of certain retail operations | (499.2 | ) | (93.5 | ) | (6.1 | ) | |||||
Stock-based compensation | 250.3 | 176.0 | 218.1 | ||||||||
Goodwill impairments | 37.6 | 87.2 | — | ||||||||
Other | 89.0 | 68.9 | 45.1 | ||||||||
Cash provided by changes in operating assets and liabilities: | |||||||||||
Accounts receivable | 131.0 | (96.8 | ) | (55.6 | ) | ||||||
Inventories | (41.2 | ) | 14.0 | (67.5 | ) | ||||||
Accounts payable | 391.6 | 46.4 | 46.9 | ||||||||
Deferred revenue | 7,109.4 | 130.8 | 180.4 | ||||||||
Other operating assets and liabilities | (677.1 | ) | (4.7 | ) | 248.8 | ||||||
Net cash provided by operating activities | 11,937.8 | 4,251.8 | 4,697.9 | ||||||||
INVESTING ACTIVITIES: | |||||||||||
Purchases of investments | (191.9 | ) | (674.4 | ) | (1,585.7 | ) | |||||
Sales of investments | 459.0 | 1,054.5 | 680.7 | ||||||||
Maturities and calls of investments | 45.3 | 149.6 | 27.9 | ||||||||
Acquisitions, net of cash acquired | (1,311.3 | ) | — | — | |||||||
Additions to property, plant and equipment | (1,976.4 | ) | (1,519.4 | ) | (1,440.3 | ) | |||||
Net proceeds from the divestiture of certain operations | 608.2 | 85.4 | 69.6 | ||||||||
Other | 5.6 | 54.3 | 24.9 | ||||||||
Net cash used by investing activities | (2,361.5 | ) | (850.0 | ) | (2,222.9 | ) | |||||
FINANCING ACTIVITIES: | |||||||||||
Proceeds from issuance of long-term debt | 5,584.1 | 750.2 | 1,254.5 | ||||||||
Repayments of long-term debt | — | (400.0 | ) | — | |||||||
Proceeds from issuance of common stock | 153.9 | 150.8 | 160.7 | ||||||||
Cash dividends paid | (1,743.4 | ) | (1,450.4 | ) | (1,178.0 | ) | |||||
Repurchase of common stock | (7,133.5 | ) | (2,042.5 | ) | (1,995.6 | ) | |||||
Minimum tax withholdings on share-based awards | (62.7 | ) | (82.8 | ) | (106.0 | ) | |||||
Other | (41.2 | ) | (4.4 | ) | (8.4 | ) | |||||
Net cash used by financing activities | (3,242.8 | ) | (3,079.1 | ) | (1,872.8 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (39.5 | ) | 10.8 | (3.5 | ) | ||||||
Net increase in cash and cash equivalents | 6,294.0 | 333.5 | 598.7 | ||||||||
CASH AND CASH EQUIVALENTS: | |||||||||||
Beginning of period | 2,462.3 | 2,128.8 | 1,530.1 | ||||||||
End of period | $ | 8,756.3 | $ | 2,462.3 | $ | 2,128.8 | |||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||||||
Cash paid during the period for: | |||||||||||
Interest, net of capitalized interest | $ | 137.1 | $ | 96.6 | $ | 74.7 | |||||
Income taxes, net of refunds | $ | 1,176.9 | $ | 1,389.1 | $ | 878.7 |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Shareholders’ Equity | Noncontrolling Interests | Total | ||||||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||||||
Balance, September 27, 2015 | 1,485.1 | $ | 1.5 | $ | 41.1 | $ | 5,974.8 | $ | (199.4 | ) | $ | 5,818.0 | $ | 1.8 | $ | 5,819.8 | ||||||||||||||
Net earnings | — | — | — | 2,817.7 | — | 2,817.7 | 1.2 | 2,818.9 | ||||||||||||||||||||||
Other comprehensive income | — | — | — | — | 91.0 | 91.0 | — | 91.0 | ||||||||||||||||||||||
Stock-based compensation expense | — | — | 219.6 | — | — | 219.6 | — | 219.6 | ||||||||||||||||||||||
Exercise of stock options/vesting of RSUs, including tax benefit of $124.3 | 9.8 | — | 153.0 | — | — | 153.0 | — | 153.0 | ||||||||||||||||||||||
Sale of common stock, including tax benefit of $0.2 | 0.5 | — | 26.5 | — | — | 26.5 | — | 26.5 | ||||||||||||||||||||||
Repurchase of common stock | (34.9 | ) | — | (399.1 | ) | (1,596.5 | ) | — | (1,995.6 | ) | — | (1,995.6 | ) | |||||||||||||||||
Cash dividends declared, $0.85 per share | — | — | — | (1,246.2 | ) | — | (1,246.2 | ) | — | (1,246.2 | ) | |||||||||||||||||||
Noncontrolling interest resulting from acquisition | — | — | — | — | — | — | 3.7 | 3.7 | ||||||||||||||||||||||
Balance, October 2, 2016 | 1,460.5 | $ | 1.5 | $ | 41.1 | $ | 5,949.8 | $ | (108.4 | ) | $ | 5,884.0 | $ | 6.7 | $ | 5,890.7 | ||||||||||||||
Net earnings | — | — | — | 2,884.7 | — | 2,884.7 | 0.2 | 2,884.9 | ||||||||||||||||||||||
Other comprehensive income/(loss) | — | — | — | — | (47.2 | ) | (47.2 | ) | — | (47.2 | ) | |||||||||||||||||||
Stock-based compensation expense | — | — | 177.9 | — | — | 177.9 | — | 177.9 | ||||||||||||||||||||||
Exercise of stock options/vesting of RSUs, including tax benefit of $77.4 | 8.1 | — | 117.0 | — | — | 117.0 | — | 117.0 | ||||||||||||||||||||||
Sale of common stock, including tax benefit of $0.2 | 0.5 | — | 28.7 | — | — | 28.7 | — | 28.7 | ||||||||||||||||||||||
Repurchase of common stock | (37.5 | ) | (0.1 | ) | (323.6 | ) | (1,755.4 | ) | — | (2,079.1 | ) | — | (2,079.1 | ) | ||||||||||||||||
Cash dividends declared, $1.05 per share | — | — | — | (1,515.9 | ) | — | (1,515.9 | ) | — | (1,515.9 | ) | |||||||||||||||||||
Balance, October 1, 2017 | 1,431.6 | $ | 1.4 | $ | 41.1 | $ | 5,563.2 | $ | (155.6 | ) | $ | 5,450.1 | $ | 6.9 | $ | 5,457.0 | ||||||||||||||
Net earnings/(loss) | — | — | — | 4,518.3 | — | 4,518.3 | (0.3 | ) | 4,518.0 | |||||||||||||||||||||
Other comprehensive income/(loss) | — | — | — | — | (174.7 | ) | (174.7 | ) | — | (174.7 | ) | |||||||||||||||||||
Stock-based compensation expense | — | — | 253.8 | — | — | 253.8 | — | 253.8 | ||||||||||||||||||||||
Exercise of stock options/vesting of RSUs | 8.4 | — | 59.4 | — | — | 59.4 | — | 59.4 | ||||||||||||||||||||||
Sale of common stock | 0.6 | — | 31.8 | — | — | 31.8 | — | 31.8 | ||||||||||||||||||||||
Repurchase of common stock | (131.5 | ) | (0.1 | ) | (345.0 | ) | (6,863.6 | ) | — | (7,208.7 | ) | — | (7,208.7 | ) | ||||||||||||||||
Cash dividends declared, $1.32 per share | — | — | — | (1,760.5 | ) | — | (1,760.5 | ) | — | (1,760.5 | ) | |||||||||||||||||||
Net distributions to noncontrolling interests | — | — | — | — | — | — | (0.3 | ) | (0.3 | ) | ||||||||||||||||||||
Balance, September 30, 2018 | 1,309.1 | $ | 1.3 | $ | 41.1 | $ | 1,457.4 | $ | (330.3 | ) | $ | 1,169.5 | $ | 6.3 | $ | 1,175.8 |
Note 1 | ||
Note 2 | ||
Note 3 | ||
Note 4 | ||
Note 5 | ||
Note 6 | ||
Note 7 | ||
Note 8 | ||
Note 9 | ||
Note 10 | ||
Note 11 | ||
Note 12 | ||
Note 13 | ||
Note 14 | ||
Note 15 | ||
Note 16 | ||
Note 17 | ||
Note 18 |
Consideration: | ||||
Cash paid for UPG 50% equity interest | $ | 1,440.8 | ||
Fair value of our pre-existing 50% equity interest | 1,440.8 | |||
Settlement of pre-existing liabilities | 90.5 | |||
Total consideration | $ | 2,972.1 | ||
Fair value of assets acquired and liabilities assumed: | ||||
Cash and cash equivalents | $ | 129.5 | ||
Accounts receivable | 14.3 | |||
Inventories | 16.1 | |||
Prepaid expenses and other current assets | 20.6 | |||
Property, plant and equipment | 254.1 | |||
Other long-term assets | 44.6 | |||
Other intangible assets | 818.0 | |||
Goodwill | 2,164.1 | |||
Total assets acquired | 3,461.3 | |||
Accounts payable | 34.7 | |||
Accrued liabilities | 187.7 | |||
Stored value card liability | 21.7 | |||
Other long-term liabilities | 245.1 | |||
Total liabilities assumed | 489.2 | |||
Total consideration | $ | 2,972.1 |
Pro Forma (unaudited) | |||||||
Year Ended | |||||||
Sep 30, 2018 | Oct 1, 2017 (1) | ||||||
Revenue | $ | 24,990.4 | $ | 23,315.0 | |||
Net earnings attributable to Starbucks | 3,196.8 | 4,209.0 |
(1) | The pro forma net earnings attributable to Starbucks for fiscal 2017 includes acquisition-related gain of $1.4 billion and transaction and integration costs of $39.3 million for the year ended October 1, 2017. |
Net Gains/(Losses) Included in AOCI | Net Gains/(Losses) Expected to be Reclassified from AOCI into Earnings within 12 Months | Contract Remaining Maturity (Months) | |||||||||||||||
Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | |||||||||||||||
Cash Flow Hedges: | |||||||||||||||||
Interest rates | $ | 24.7 | $ | 17.6 | $ | 20.5 | $ | 4.2 | 0 | ||||||||
Cross-currency swaps | (12.6 | ) | (6.0 | ) | (7.7 | ) | — | 74 | |||||||||
Foreign currency - other | 5.8 | (9.1 | ) | (0.4 | ) | 3.8 | 36 | ||||||||||
Coffee | (0.2 | ) | (6.6 | ) | (1.6 | ) | (0.2 | ) | 5 | ||||||||
Net Investment Hedges: | |||||||||||||||||
Foreign currency | 16.0 | 16.2 | 1.3 | — | 0 | ||||||||||||
Foreign currency debt | 3.6 | (2.2 | ) | — | — | 66 |
Year Ended | |||||||||||||||||||||||
Gains/(Losses) Recognized in OCI Before Reclassifications | Gains/(Losses) Reclassified from AOCI to Earnings | ||||||||||||||||||||||
Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | ||||||||||||||||||
Cash Flow Hedges: | |||||||||||||||||||||||
Interest rates | $ | 14.1 | $ | — | $ | (10.3 | ) | $ | 4.9 | $ | 4.8 | $ | 5.0 | ||||||||||
Cross-currency swaps | (6.1 | ) | 59.5 | (75.7 | ) | 2.2 | 57.2 | (101.1 | ) | ||||||||||||||
Foreign currency - other | 16.7 | 1.8 | (25.4 | ) | (3.6 | ) | 11.4 | 19.1 | |||||||||||||||
Coffee | (0.3 | ) | (8.1 | ) | 1.7 | (7.4 | ) | (2.7 | ) | (2.8 | ) | ||||||||||||
Net Investment Hedges: | |||||||||||||||||||||||
Foreign currency | (0.1 | ) | 23.6 | — | — | — | — | ||||||||||||||||
Foreign currency debt | 7.9 | (3.5 | ) | — | — | — | — |
Gains/(Losses) Recognized in Earnings | |||||||||||
Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | |||||||||
Non-Designated Derivatives: | |||||||||||
Foreign currency - other | $ | 4.6 | $ | 4.6 | $ | (5.7 | ) | ||||
Dairy | (2.4 | ) | — | (5.5 | ) | ||||||
Diesel fuel and other commodities | 3.7 | 1.3 | (0.2 | ) | |||||||
Designated Fair Value Hedging Instruments: | |||||||||||
Interest rate swap | (33.7 | ) | (5.2 | ) | — |
Sep 30, 2018 | Oct 1, 2017 | ||||||
Interest rate swap | $ | 750 | $ | 750 | |||
Cross-currency swaps | 434 | 514 | |||||
Foreign currency - other | 914 | 901 | |||||
Dairy | 16 | 14 | |||||
Diesel fuel and other commodities | 21 | 41 |
Derivative Assets | Derivative Liabilities | ||||||||||||||
Sep 30, 2018 | Oct 1, 2017 | Sep 30, 2018 | Oct 1, 2017 | ||||||||||||
Designated Derivative Instruments: | |||||||||||||||
Cross-currency swaps | $ | 5.8 | $ | 12.4 | $ | 9.3 | $ | 9.8 | |||||||
Foreign currency - other | 13.6 | 7.7 | 5.3 | 20.8 | |||||||||||
Net investment hedges | — | 0.3 | — | — | |||||||||||
Interest rate swap | — | — | 32.5 | 3.8 | |||||||||||
Non-designated Derivative Instruments: | |||||||||||||||
Foreign currency | 13.7 | 15.8 | 2.5 | 1.4 | |||||||||||
Dairy | 0.2 | — | 0.1 | 2.4 | |||||||||||
Diesel fuel and other commodities | 1.6 | 1.6 | 0.3 | 0.3 |
Fair Value Measurements at Reporting Date Using | |||||||||||||||
Balance at September 30, 2018 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets: | |||||||||||||||
Cash and cash equivalents | $ | 8,756.3 | $ | 8,756.3 | $ | — | $ | — | |||||||
Short-term investments: | |||||||||||||||
Available-for-sale securities | |||||||||||||||
Commercial paper | 8.4 | — | 8.4 | — | |||||||||||
Corporate debt securities | 91.8 | — | 91.8 | — | |||||||||||
Mortgage and other asset-backed securities | 6.0 | — | 6.0 | — | |||||||||||
Total available-for-sale securities | 106.2 | — | 106.2 | — | |||||||||||
Trading securities | 75.3 | 75.3 | — | — | |||||||||||
Total short-term investments | 181.5 | 75.3 | 106.2 | — | |||||||||||
Prepaid expenses and other current assets: | |||||||||||||||
Derivative assets | 24.5 | 1.2 | 23.3 | — | |||||||||||
Long-term investments: | |||||||||||||||
Available-for-sale securities | |||||||||||||||
Agency obligations | 5.9 | — | 5.9 | — | |||||||||||
Corporate debt securities | 114.5 | — | 114.5 | — | |||||||||||
Auction rate securities | 5.9 | — | — | 5.9 | |||||||||||
Foreign government obligations | 3.6 | — | 3.6 | — | |||||||||||
U.S. government treasury securities | 108.1 | 108.1 | — | — | |||||||||||
State and local government obligations | 4.8 | — | 4.8 | — | |||||||||||
Mortgage and other asset-backed securities | 24.9 | — | 24.9 | — | |||||||||||
Total long-term investments | 267.7 | 108.1 | 153.7 | 5.9 | |||||||||||
Other long-term assets: | |||||||||||||||
Derivative assets | 10.4 | — | 10.4 | — | |||||||||||
Total assets | $ | 9,240.4 | $ | 8,940.9 | $ | 293.6 | $ | 5.9 | |||||||
Liabilities: | |||||||||||||||
Accrued liabilities: | |||||||||||||||
Derivative liabilities | $ | 6.5 | $ | 0.4 | $ | 6.1 | $ | — | |||||||
Other long-term liabilities: | |||||||||||||||
Derivative liabilities | 43.5 | — | 43.5 | — | |||||||||||
Total liabilities | $ | 50.0 | $ | 0.4 | $ | 49.6 | $ | — |
Fair Value Measurements at Reporting Date Using | |||||||||||||||
Balance at Oct 1, 2017 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Assets: | |||||||||||||||
Cash and cash equivalents | $ | 2,462.3 | $ | 2,462.3 | $ | — | $ | — | |||||||
Short-term investments: | |||||||||||||||
Available-for-sale securities | |||||||||||||||
Agency obligations | 7.5 | — | 7.5 | — | |||||||||||
Commercial paper | 2.0 | — | 2.0 | — | |||||||||||
Corporate debt securities | 49.4 | — | 49.4 | — | |||||||||||
Foreign government obligations | 7.1 | — | 7.1 | — | |||||||||||
U.S. government treasury securities | 81.4 | 81.4 | — | — | |||||||||||
State and local government obligations | 2.0 | — | 2.0 | — | |||||||||||
Certificates of deposit | 2.3 | — | 2.3 | — | |||||||||||
Total available-for-sale securities | 151.7 | 81.4 | 70.3 | — | |||||||||||
Trading securities | 76.9 | 76.9 | — | — | |||||||||||
Total short-term investments | 228.6 | 158.3 | 70.3 | — | |||||||||||
Prepaid expenses and other current assets: | |||||||||||||||
Derivative assets | 13.4 | 0.1 | 13.3 | — | |||||||||||
Long-term investments: | |||||||||||||||
Available-for-sale securities | |||||||||||||||
Agency obligations | 21.8 | — | 21.8 | — | |||||||||||
Corporate debt securities | 207.4 | — | 207.4 | — | |||||||||||
Auction rate securities | 5.9 | — | — | 5.9 | |||||||||||
Foreign government obligations | 17.1 | — | 17.1 | — | |||||||||||
U.S. government treasury securities | 127.4 | 127.4 | — | — | |||||||||||
State and local government obligations | 7.0 | — | 7.0 | — | |||||||||||
Mortgage and other asset-backed securities | 155.7 | — | 155.7 | — | |||||||||||
Total long-term investments | 542.3 | 127.4 | 409.0 | 5.9 | |||||||||||
Other long-term assets: | |||||||||||||||
Derivative assets | 24.4 | — | 24.4 | — | |||||||||||
Total assets | $ | 3,271.0 | $ | 2,748.1 | $ | 517.0 | $ | 5.9 | |||||||
Liabilities: | |||||||||||||||
Accrued liabilities: | |||||||||||||||
Derivative liabilities | $ | 16.4 | $ | 2.5 | $ | 13.9 | $ | — | |||||||
Other long-term liabilities: | |||||||||||||||
Derivative liabilities | 22.1 | — | 22.1 | — | |||||||||||
Total | $ | 38.5 | $ | 2.5 | $ | 36.0 | $ | — |
Sep 30, 2018 | Oct 1, 2017 | ||||||
Coffee: | |||||||
Unroasted | $ | 588.6 | $ | 541.0 | |||
Roasted | 281.2 | 301.1 | |||||
Other merchandise held for sale | 273.1 | 301.1 | |||||
Packaging and other supplies | 257.6 | 220.8 | |||||
Total | $ | 1,400.5 | $ | 1,364.0 |
Sep 30, 2018 | Oct 1, 2017 | ||||||
Equity method investments | $ | 296.0 | $ | 432.8 | |||
Cost method investments | 38.7 | 48.8 | |||||
Total | $ | 334.7 | $ | 481.6 |
Sep 30, 2018 | Oct 1, 2017 | ||||||
Income tax receivable | $ | 955.4 | $ | 68.0 | |||
Other prepaid expenses and current assets | 507.4 | 290.1 | |||||
Total prepaid expenses and current assets | $ | 1,462.8 | $ | 358.1 |
Sep 30, 2018 | Oct 1, 2017 | ||||||
Land | $ | 46.8 | $ | 46.9 | |||
Buildings | 557.3 | 481.7 | |||||
Leasehold improvements | 7,372.8 | 6,401.0 | |||||
Store equipment | 2,400.2 | 2,110.7 | |||||
Roasting equipment | 658.8 | 619.8 | |||||
Furniture, fixtures and other | 1,659.3 | 1,514.1 | |||||
Work in progress | 501.9 | 409.8 | |||||
Property, plant and equipment, gross | 13,197.1 | 11,584.0 | |||||
Accumulated depreciation | (7,268.0 | ) | (6,664.5 | ) | |||
Property, plant and equipment, net | $ | 5,929.1 | $ | 4,919.5 |
Sep 30, 2018 | Oct 1, 2017 | ||||||
Accrued compensation and related costs | $ | 656.8 | $ | 524.5 | |||
Accrued occupancy costs | 164.2 | 151.3 | |||||
Accrued taxes | 286.6 | 226.6 | |||||
Accrued dividends payable | 445.4 | 429.5 | |||||
Accrued capital and other operating expenditures | 745.4 | 602.6 | |||||
Total accrued liabilities | $ | 2,298.4 | $ | 1,934.5 |
(in millions) | Sep 30, 2018 | Oct 1, 2017 | |||||
Trade names, trademarks and patents | $ | 215.9 | $ | 212.1 | |||
Other indefinite-lived intangible assets | 15.1 | 15.1 | |||||
Total indefinite-lived intangible assets | $ | 231.0 | $ | 227.2 |
Americas | China/Asia Pacific | EMEA | Channel Development | Corporate and Other | Total | ||||||||||||||||||
Goodwill balance at October 2, 2016 | $ | 210.1 | $ | 944.9 | $ | 55.1 | $ | 30.2 | $ | 479.3 | $ | 1,719.6 | |||||||||||
Acquisition/(divestiture) | — | (7.6 | ) | — | — | — | (7.6 | ) | |||||||||||||||
Impairment | — | — | (17.9 | ) | — | (69.3 | ) | (87.2 | ) | ||||||||||||||
Other | 1.5 | (87.1 | ) | — | — | — | (85.6 | ) | |||||||||||||||
Goodwill balance at October 1, 2017 | $ | 211.6 | $ | 850.2 | $ | 37.2 | $ | 30.2 | $ | 410.0 | $ | 1,539.2 | |||||||||||
Acquisition/(divestiture) | — | 2,164.0 | — | (1.5 | ) | — | 2,162.5 | ||||||||||||||||
Impairment | — | — | (37.6 | ) | — | — | (37.6 | ) | |||||||||||||||
Other | 285.8 | (27.6 | ) | 11.7 | 6.0 | (398.4 | ) | (122.5 | ) | ||||||||||||||
Goodwill balance at September 30, 2018 | $ | 497.4 | $ | 2,986.6 | $ | 11.3 | $ | 34.7 | $ | 11.6 | $ | 3,541.6 |
Sep 30, 2018 | Oct 1, 2017 | ||||||||||||||||||||||
(in millions) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||
Acquired and reacquired rights | $ | 1,081.7 | $ | (320.1 | ) | $ | 761.6 | $ | 328.8 | $ | (154.2 | ) | $ | 174.6 | |||||||||
Acquired trade secrets and processes | 27.6 | (16.5 | ) | 11.1 | 27.6 | (13.7 | ) | 13.9 | |||||||||||||||
Trade names, trademarks and patents | 33.0 | (19.5 | ) | 13.5 | 31.5 | (17.6 | ) | 13.9 | |||||||||||||||
Licensing agreements | 14.3 | (5.1 | ) | 9.2 | 14.4 | (3.8 | ) | 10.6 | |||||||||||||||
Other finite-lived intangible assets | 25.6 | (9.8 | ) | 15.8 | 6.7 | (5.5 | ) | 1.2 | |||||||||||||||
Total finite-lived intangible assets | $ | 1,182.2 | $ | (371.0 | ) | $ | 811.2 | $ | 409.0 | $ | (194.8 | ) | $ | 214.2 |
Fiscal Year Ending | |||
2019 | $ | 218.1 | |
2020 | 218.0 | ||
2021 | 195.2 | ||
2022 | 168.5 | ||
2023 | 5.1 | ||
Thereafter | 6.3 | ||
Total estimated future amortization expense | $ | 811.2 |
Sep 30, 2018 | Oct 1, 2017 | Stated Interest Rate | Effective Interest Rate (1) | |||||||||||||||
Issuance | Face Value | Estimated Fair Value | Face Value | Estimated Fair Value | ||||||||||||||
2018 notes | $ | 350.0 | $ | 350 | $ | 350.0 | $ | 352 | 2.000 | % | 2.012 | % | ||||||
2020 notes (2) | 500.0 | 490 | — | — | 2.200 | % | 2.228 | % | ||||||||||
2021 notes | 500.0 | 489 | 500.0 | 501 | 2.100 | % | 2.293 | % | ||||||||||
2021 notes | 250.0 | 244 | 250.0 | 250 | 2.100 | % | 1.600 | % | ||||||||||
2022 notes | 500.0 | 486 | 500.0 | 508 | 2.700 | % | 2.819 | % | ||||||||||
2023 notes (6) | 750.0 | 759 | 750.0 | 806 | 3.850 | % | 2.859 | % | ||||||||||
2023 notes (3) | 1,000.0 | 986 | — | — | 3.100 | % | 3.107 | % | ||||||||||
2024 notes (5) | 748.4 | 743 | 755.3 | 760 | 0.372 | % | 0.462 | % | ||||||||||
2025 notes (4) | 1,250.0 | 1,249 | — | — | 3.800 | % | 3.721 | % | ||||||||||
2026 notes | 500.0 | 451 | 500.0 | 481 | 2.450 | % | 2.511 | % | ||||||||||
2028 notes (3) | 600.0 | 576 | — | — | 3.500 | % | 3.529 | % | ||||||||||
2028 notes (4) | 750.0 | 754 | — | — | 4.000 | % | 3.958 | % | ||||||||||
2045 notes | 350.0 | 330 | 350.0 | 381 | 4.300 | % | 4.348 | % | ||||||||||
2047 notes (2) | 500.0 | 438 | — | — | 3.750 | % | 3.765 | % | ||||||||||
2048 notes (4) | 1,000.0 | 977 | — | — | 4.500 | % | 4.504 | % | ||||||||||
Total | 9,548.4 | 9,322 | 3,955.3 | 4,039 | ||||||||||||||
Aggregate debt issuance costs and unamortized premium/(discount), net | (69.3 | ) | (17.5 | ) | ||||||||||||||
Hedge accounting fair value adjustment(6) | (39.0 | ) | (5.2 | ) | ||||||||||||||
Total | $ | 9,440.1 | $ | 3,932.6 |
(1) | Includes the effects of the amortization of any premium or discount and any gain or loss upon settlement of related treasury locks or forward-starting interest rate swaps utilized to hedge the interest rate risk prior to the debt issuance. |
(4) | Issued in August 2018. |
Fiscal Year | Total | ||
2019 | $ | 350.0 | |
2020 | — | ||
2021 | 1,250.0 | ||
2022 | 500.0 | ||
2023 | 1,000.0 | ||
Thereafter | 6,448.4 | ||
Total | $ | 9,548.4 |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | ||||||||
Minimum rent | $ | 1,424.5 | $ | 1,185.7 | $ | 1,092.5 | |||||
Contingent rent | 200.7 | 143.5 | 130.7 | ||||||||
Total | $ | 1,625.2 | $ | 1,329.2 | $ | 1,223.2 |
Fiscal Year Ending | Operating Leases | Lease Financing Arrangements | |||||
2019 | $ | 1,340.6 | $ | 4.4 | |||
2020 | 1,273.2 | 4.4 | |||||
2021 | 1,190.2 | 4.3 | |||||
2022 | 1,087.3 | 4.2 | |||||
2023 | 958.1 | 4.1 | |||||
Thereafter | 3,504.4 | 36.6 | |||||
Total minimum lease payments | $ | 9,353.8 | $ | 58.0 |
(in millions) | Available-for-Sale Securities | Cash Flow Hedges | Net Investment Hedges | Translation Adjustment and Other | Total | ||||||||||||||
September 30, 2018 | |||||||||||||||||||
Net gains/(losses) in AOCI, beginning of period | $ | (2.5 | ) | $ | (4.1 | ) | $ | 14.0 | $ | (163.0 | ) | $ | (155.6 | ) | |||||
Net gains/(losses) recognized in OCI before reclassifications | (5.1 | ) | 17.9 | 5.6 | (216.6 | ) | (198.2 | ) | |||||||||||
Net (gains)/losses reclassified from AOCI to earnings | 2.7 | 3.9 | — | 16.9 | 23.5 | ||||||||||||||
Other comprehensive income/(loss) attributable to Starbucks | (2.4 | ) | 21.8 | 5.6 | (199.7 | ) | (174.7 | ) | |||||||||||
Net gains/(losses) in AOCI, end of period | $ | (4.9 | ) | $ | 17.7 | $ | 19.6 | $ | (362.7 | ) | $ | (330.3 | ) |
(in millions) | Available-for-Sale Securities | Cash Flow Hedges | Net Investment Hedges | Translation Adjustment and Other | Total | ||||||||||||||
October 1, 2017 | |||||||||||||||||||
Net gains/(losses) in AOCI, beginning of period | $ | 1.1 | $ | 10.9 | $ | 1.3 | $ | (121.7 | ) | $ | (108.4 | ) | |||||||
Net gains/(losses) recognized in OCI before reclassifications | (6.6 | ) | 40.6 | 12.7 | (40.7 | ) | 6.0 | ||||||||||||
Net (gains)/losses reclassified from AOCI to earnings | 3.0 | (55.6 | ) | — | (0.6 | ) | (53.2 | ) | |||||||||||
Other comprehensive income/(loss) attributable to Starbucks | (3.6 | ) | (15.0 | ) | 12.7 | (41.3 | ) | (47.2 | ) | ||||||||||
Net gains/(losses) in AOCI, end of period | $ | (2.5 | ) | $ | (4.1 | ) | $ | 14.0 | $ | (163.0 | ) | $ | (155.6 | ) |
(in millions) | Available-for-Sale Securities | Cash Flow Hedges | Net Investment Hedges | Translation Adjustment and Other | Total | ||||||||||||||
October 2, 2016 | |||||||||||||||||||
Net gains/(losses) in AOCI, beginning of period | $ | (0.1 | ) | $ | 25.6 | $ | 1.3 | $ | (226.2 | ) | $ | (199.4 | ) | ||||||
Net gains/(losses) recognized in OCI before reclassifications | 2.2 | (82.1 | ) | — | 104.5 | 24.6 | |||||||||||||
Net (gains)/losses reclassified from AOCI to earnings | (1.0 | ) | 67.4 | — | — | 66.4 | |||||||||||||
Other comprehensive income/(loss) attributable to Starbucks | 1.2 | (14.7 | ) | — | 104.5 | 91.0 | |||||||||||||
Net gains/(losses) in AOCI, end of period | $ | 1.1 | $ | 10.9 | $ | 1.3 | $ | (121.7 | ) | $ | (108.4 | ) |
AOCI Components | Amounts Reclassified from AOCI | Affected Line Item in the Statements of Earnings | ||||||||||||
Fiscal Year Ended | ||||||||||||||
Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | ||||||||||||
Gains/(losses) on available-for-sale securities | $ | (3.6 | ) | $ | (4.1 | ) | $ | 1.6 | Interest income and other, net | |||||
Gains/(losses) on cash flow hedges | ||||||||||||||
Interest rate hedges | 4.9 | 4.8 | 5.0 | Interest expense | ||||||||||
Cross-currency swaps | 2.2 | 57.2 | (101.1 | ) | Interest income and other, net | |||||||||
Foreign currency hedges | (0.4 | ) | 3.0 | 4.9 | Revenues | |||||||||
Foreign currency/coffee hedges | (10.6 | ) | 5.7 | 11.4 | Cost of sales including occupancy costs | |||||||||
Translation adjustment(1) | ||||||||||||||
Brazil | (24.1 | ) | — | — | Net gain resulting from divestiture of certain operations | |||||||||
East China joint venture | 7.2 | — | — | Gain resulting from acquisition of joint venture | ||||||||||
Taiwan joint venture | 1.4 | — | — | Net gain resulting from divestiture of certain operations | ||||||||||
Other | (1.7 | ) | 0.6 | — | Interest income and other, net | |||||||||
(24.7 | ) | 67.2 | (78.2 | ) | Total before tax | |||||||||
1.2 | (14.0 | ) | 11.8 | Tax (expense)/benefit | ||||||||||
$ | (23.5 | ) | $ | 53.2 | $ | (66.4 | ) | Net of tax |
(1) | Release of cumulative translation adjustments to earnings upon sale or liquidation of foreign businesses. |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | ||||||||
Options | $ | 28.0 | $ | 44.3 | $ | 42.7 | |||||
RSUs | 222.3 | 131.7 | 175.4 | ||||||||
Total stock-based compensation expense recognized in the consolidated statements of earnings | $ | 250.3 | $ | 176.0 | $ | 218.1 | |||||
Total related tax benefit | $ | 62.4 | $ | 57.6 | $ | 73.0 | |||||
Total capitalized stock-based compensation included in net property, plant and equipment and inventories on the consolidated balance sheets | $ | 3.5 | $ | 1.9 | $ | 1.5 |
Employee Stock Options Granted During the Period | |||||||||||
Fiscal Year Ended | 2018 | 2017 | 2016 | ||||||||
Expected term (in years) | 3.6 | 3.9 | 3.9 | ||||||||
Expected stock price volatility | 20.5 | % | 21.6 | % | 23.9 | % | |||||
Risk-free interest rate | 2.1 | % | 1.5 | % | 1.2 | % | |||||
Expected dividend yield | 2.2 | % | 1.8 | % | 1.3 | % | |||||
Weighted average grant price | $ | 56.56 | $ | 56.12 | $ | 60.20 | |||||
Estimated fair value per option granted | $ | 7.32 | $ | 8.56 | $ | 10.54 |
Shares Subject to Options | Weighted Average Exercise Price per Share | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | |||||||||
Outstanding, October 1, 2017 | 31.4 | $ | 36.51 | 5.8 | $ | 589 | ||||||
Granted | 3.9 | 56.56 | ||||||||||
Exercised | (6.3 | ) | 19.46 | |||||||||
Expired/forfeited | (1.7 | ) | 55.24 | |||||||||
Outstanding, September 30, 2018 | 27.3 | 42.13 | 5.2 | 418 | ||||||||
Exercisable, September 30, 2018 | 19.8 | 36.95 | 4.1 | 405 | ||||||||
Vested and expected to vest, September 30, 2018 | 26.3 | 41.59 | 5.1 | 417 |
Number of Shares | Weighted Average Grant Date Fair Value per Share | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | |||||||||
Nonvested, October 1, 2017 | 7.6 | $ | 52.06 | 0.9 | $ | 410 | ||||||
Granted | 9.5 | 56.48 | ||||||||||
Vested | (3.3 | ) | 50.18 | |||||||||
Forfeited/canceled | (2.6 | ) | 54.87 | |||||||||
Nonvested, September 30, 2018 | 11.2 | 55.62 | 1.0 | 636 |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | ||||||||
United States | $ | 4,826.0 | $ | 3,393.0 | $ | 3,415.7 | |||||
Foreign | 954.0 | 924.5 | 782.9 | ||||||||
Total earnings before income taxes | $ | 5,780.0 | $ | 4,317.5 | $ | 4,198.6 |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | ||||||||
Current taxes: | |||||||||||
U.S. federal | $ | 156.2 | $ | 931.0 | $ | 704.1 | |||||
U.S. state and local | 52.0 | 170.8 | 166.5 | ||||||||
Foreign | 327.0 | 216.6 | 218.5 | ||||||||
Total current taxes | 535.2 | 1,318.4 | 1,089.1 | ||||||||
Deferred taxes: | |||||||||||
U.S. federal | 633.7 | 121.2 | 351.3 | ||||||||
U.S. state and local | 101.5 | 14.2 | 25.8 | ||||||||
Foreign | (8.4 | ) | (21.2 | ) | (86.5 | ) | |||||
Total deferred taxes | 726.8 | 114.2 | 290.6 | ||||||||
Total income tax expense | $ | 1,262.0 | $ | 1,432.6 | $ | 1,379.7 |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | |||||
Statutory rate | 24.5 | % | 35.0 | % | 35.0 | % | ||
State income taxes, net of federal tax benefit | 2.1 | 2.8 | 3.0 | |||||
Benefits and taxes related to foreign operations | (0.1 | ) | (2.8 | ) | (2.2 | ) | ||
Domestic production activity deduction | — | (1.8 | ) | (1.9 | ) | |||
Gain resulting from acquisition of joint venture | (5.8 | ) | — | — | ||||
Impact of the Tax Act | 2.8 | — | — | |||||
Other, net | (1.7 | ) | — | (1.0 | ) | |||
Effective tax rate | 21.8 | % | 33.2 | % | 32.9 | % |
Sep 30, 2018 | Oct 1, 2017 | ||||||
Deferred tax assets: | |||||||
Property, plant and equipment | $ | 67.4 | $ | 71.3 | |||
Accrued occupancy costs | 109.0 | 118.0 | |||||
Accrued compensation and related costs | 64.2 | 95.0 | |||||
Stored value card liability and deferred revenue | 144.2 | 130.7 | |||||
Stock-based compensation | 96.7 | 125.9 | |||||
Net operating losses | 79.2 | 80.8 | |||||
Litigation charge (1) | — | 792.0 | |||||
Other | 129.5 | 180.8 | |||||
Total | $ | 690.2 | $ | 1,594.5 | |||
Valuation allowance | (129.3 | ) | (80.1 | ) | |||
Total deferred tax asset, net of valuation allowance | $ | 560.9 | $ | 1,514.4 | |||
Deferred tax liabilities: | |||||||
Property, plant and equipment | (348.1 | ) | (477.2 | ) | |||
Intangible assets and goodwill | (274.2 | ) | (159.0 | ) | |||
Other | (74.1 | ) | (89.1 | ) | |||
Total | (696.4 | ) | (725.3 | ) | |||
Net deferred tax asset (liability) | $ | (135.5 | ) | $ | 789.1 | ||
Reported as: | |||||||
Deferred income tax assets | 134.7 | 795.4 | |||||
Deferred income tax liabilities (included in Other long-term liabilities) | (270.2 | ) | (6.3 | ) | |||
Net deferred tax asset (liability) | $ | (135.5 | ) | $ | 789.1 |
Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | |||||||||
Beginning balance | $ | 196.9 | $ | 146.5 | $ | 150.4 | |||||
Increase related to prior year tax positions | 17.5 | 10.4 | — | ||||||||
Decrease related to prior year tax positions | (41.8 | ) | — | (23.6 | ) | ||||||
Increase related to current year tax positions | 62.4 | 41.3 | 33.7 | ||||||||
Decreases related to settlements with taxing authorities | (4.5 | ) | — | (3.1 | ) | ||||||
Decrease related to lapsing of statute of limitations | (5.9 | ) | (1.3 | ) | (10.9 | ) | |||||
Ending balance | $ | 224.6 | $ | 196.9 | $ | 146.5 |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | ||||||||
Net earnings attributable to Starbucks | $ | 4,518.3 | $ | 2,884.7 | $ | 2,817.7 | |||||
Weighted average common shares outstanding (for basic calculation) | 1,382.7 | 1,449.5 | 1,471.6 | ||||||||
Dilutive effect of outstanding common stock options and RSUs | 11.9 | 12.0 | 15.1 | ||||||||
Weighted average common and common equivalent shares outstanding (for diluted calculation) | 1,394.6 | 1,461.5 | 1,486.7 | ||||||||
EPS — basic | $ | 3.27 | $ | 1.99 | $ | 1.91 | |||||
EPS — diluted | $ | 3.24 | $ | 1.97 | $ | 1.90 |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | |||||||||||||||||
Beverage | $ | 14,463.1 | 59 | % | $ | 12,915.0 | 58 | % | $ | 12,383.4 | 58 | % | ||||||||
Food | 4,397.7 | 18 | % | 3,832.1 | 17 | % | 3,495.0 | 16 | % | |||||||||||
Packaged and single-serve coffees and teas | 2,797.5 | 11 | % | 2,883.6 | 13 | % | 2,866.0 | 14 | % | |||||||||||
Other(1) | 3,061.2 | 12 | % | 2,756.1 | 12 | % | 2,571.5 | 12 | % | |||||||||||
Total | $ | 24,719.5 | 100 | % | $ | 22,386.8 | 100 | % | $ | 21,315.9 | 100 | % |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | ||||||||
Net revenues: | |||||||||||
United States | $ | 17,409.4 | $ | 16,527.1 | $ | 15,774.8 | |||||
Other countries | 7,310.1 | 5,859.7 | 5,541.1 | ||||||||
Total | $ | 24,719.5 | $ | 22,386.8 | $ | 21,315.9 | |||||
Long-lived assets: | |||||||||||
United States | $ | 5,635.9 | $ | 5,848.3 | $ | 6,012.8 | |||||
Other countries | 6,026.3 | 3,234.0 | 3,541.8 | ||||||||
Total | $ | 11,662.2 | $ | 9,082.3 | $ | 9,554.6 |
(in millions) | Americas | China / Asia Pacific | EMEA | Channel Development | Corporate and Other | Total | |||||||||||||||||
Fiscal 2018 | |||||||||||||||||||||||
Total net revenues | $ | 16,732.2 | $ | 4,473.6 | $ | 1,048.0 | $ | 2,297.3 | $ | 168.4 | $ | 24,719.5 | |||||||||||
Depreciation and amortization expenses | 638.3 | 412.1 | 31.7 | 1.3 | 163.6 | 1,247.0 | |||||||||||||||||
Income from equity investees | — | 117.4 | — | 183.8 | — | 301.2 | |||||||||||||||||
Operating income/(loss) | 3,614.4 | 867.4 | 61.5 | 927.1 | (1,587.1 | ) | 3,883.3 | ||||||||||||||||
Total assets | 4,380.9 | 5,863.5 | 356.4 | 148.2 | 13,407.4 | 24,156.4 | |||||||||||||||||
Fiscal 2017 | |||||||||||||||||||||||
Total net revenues | $ | 15,620.0 | $ | 3,240.2 | $ | 958.7 | $ | 2,256.6 | $ | 311.3 | $ | 22,386.8 | |||||||||||
Depreciation and amortization expenses | 614.9 | 202.2 | 30.6 | 3.0 | 160.7 | 1,011.4 | |||||||||||||||||
Income from equity investees | — | 197.0 | — | 194.4 | — | 391.4 | |||||||||||||||||
Operating income/(loss) | 3,653.6 | 765.0 | 94.5 | 967.0 | (1,345.4 | ) | 4,134.7 | ||||||||||||||||
Total assets | 3,327.2 | 2,770.9 | 273.8 | 129.1 | 7,864.6 | 14,365.6 | |||||||||||||||||
Fiscal 2016 | |||||||||||||||||||||||
Total net revenues | $ | 14,775.2 | $ | 2,938.8 | $ | 1,071.5 | $ | 2,195.1 | $ | 335.3 | $ | 21,315.9 | |||||||||||
Depreciation and amortization expenses | 590.0 | 180.6 | 39.9 | 3.9 | 166.4 | 980.8 | |||||||||||||||||
Income from equity investees | — | 150.1 | 1.5 | 166.6 | — | 318.2 | |||||||||||||||||
Operating income/(loss) | 3,738.5 | 631.6 | 131.0 | 877.3 | (1,206.5 | ) | 4,171.9 | ||||||||||||||||
Total assets | 3,424.6 | 2,740.2 | 552.1 | 82.2 | 7,513.4 | 14,312.5 |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Full Year | |||||||||||||||
Fiscal 2018: | |||||||||||||||||||
Net revenues | $ | 6,073.7 | $ | 6,031.8 | $ | 6,310.3 | $ | 6,303.6 | $ | 24,719.5 | |||||||||
Operating income | 1,116.1 | 772.5 | 1,038.2 | 956.6 | 3,883.3 | ||||||||||||||
Net earnings attributable to Starbucks | 2,250.2 | 660.1 | 852.5 | 755.8 | 4,518.3 | ||||||||||||||
EPS — diluted | 1.57 | 0.47 | 0.61 | 0.56 | 3.24 | ||||||||||||||
Fiscal 2017: | |||||||||||||||||||
Net revenues | $ | 5,732.9 | $ | 5,294.0 | $ | 5,661.5 | $ | 5,698.3 | $ | 22,386.8 | |||||||||
Operating income | 1,132.6 | 935.4 | 1,044.2 | 1,022.5 | 4,134.7 | ||||||||||||||
Net earnings attributable to Starbucks | 751.8 | 652.8 | 691.6 | 788.5 | 2,884.7 | ||||||||||||||
EPS — diluted | 0.51 | 0.45 | 0.47 | 0.54 | 1.97 |
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
Item 9A. | Controls and Procedures |
Item 9B. | Other Information |
Item 10. | Directors, Executive Officers and Corporate Governance |
Item 11. | Executive Compensation |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters |
Item 13. | Certain Relationships, Related Transactions and Director Independence |
Item 14. | Principal Accounting Fees and Services |
Item 15. | Exhibits, Financial Statement Schedules |
• | Consolidated Statements of Earnings for the fiscal years ended September 30, 2018, October 1, 2017, and October 2, 2016; |
• | Consolidated Statements of Comprehensive Income for the fiscal years ended September 30, 2018, October 1, 2017, and October 2, 2016; |
• | Consolidated Balance Sheets as of September 30, 2018 and October 1, 2017; |
• | Consolidated Statements of Cash Flows for the fiscal years ended September 30, 2018, October 1, 2017, and October 2, 2016; |
• | Consolidated Statements of Equity for the fiscal years ended September 30, 2018, October 1, 2017, and October 2, 2016; |
• | Notes to Consolidated Financial Statements; and |
• | Reports of Independent Registered Public Accounting Firm |
Incorporated by Reference | ||||||||||||
Exhibit Number | Exhibit Description | Form | File No. | Date of Filing | Exhibit Number | Filed Herewith | ||||||
8-K | 0-20322 | 5/7/2018 | 2.1 | |||||||||
10-Q | 0-20322 | 4/28/2015 | 3.1 | |||||||||
8-K | 0-20322 | 6/5/2018 | 3.1 | |||||||||
S-3ASR | 333-213645 | 9/15/2016 | 4.1 | |||||||||
8-K | 0-20322 | 3/20/2017 | 4.2 | |||||||||
8-K | 0-20322 | 3/20/2017 | 4.3 | |||||||||
8-K | 0-20322 | 11/22/2017 | 4.2 | |||||||||
8-K | 0-20322 | 11/22/2017 | 4.3 | |||||||||
8-K | 0-20322 | 11/22/2017 | 4.4 | |||||||||
8-K | 0-20322 | 2/28/2018 | 4.2 | |||||||||
8-K | 0-20322 | 2/28/2018 | 4.3 | |||||||||
8-K | 0-20322 | 2/28/2018 | 4.4 | |||||||||
8-K | 0-20322 | 8/10/2018 | 4.2 | |||||||||
8-K | 0-20322 | 8/10/2018 | 4.3 | |||||||||
Incorporated by Reference | ||||||||||||
Exhibit Number | Exhibit Description | Form | File No. | Date of Filing | Exhibit Number | Filed Herewith | ||||||
8-K | 0-20322 | 8/10/2018 | 4.4 | |||||||||
8-K | 0-20322 | 8/10/2018 | 4.5 | |||||||||
S-3ASR | 333-190955 | 9/3/2013 | 4.1 | |||||||||
8-K | 0-20322 | 9/6/2013 | 4.2 | |||||||||
8-K | 0-20322 | 9/6/2013 | 4.3 | |||||||||
8-K | 0-20322 | 12/5/2013 | 4.2 | |||||||||
8-K | 0-20322 | 12/5/2013 | 4.4 | |||||||||
8-K | 0-20322 | 6/10/2015 | 4.2 | |||||||||
8-K | 0-20322 | 6/10/2015 | 4.3 | |||||||||
8-K | 0-20322 | 6/10/2015 | 4.4 | |||||||||
8-K | 0-20322 | 2/4/2016 | 4.2 | |||||||||
8-K | 0-20322 | 2/4/2016 | 4.3 | |||||||||
8-K | 0-20322 | 5/16/2016 | 4.4 | |||||||||
8-K | 0-20322 | 5/16/2016 | 4.5 |
Incorporated by Reference | ||||||||||||
Exhibit Number | Exhibit Description | Form | File No. | Date of Filing | Exhibit Number | Filed Herewith | ||||||
10-Q | 0-20322 | 8/1/2017 | 10.1 | |||||||||
10-K | 0-20322 | 11/18/2016 | 10.4 | |||||||||
10-Q | 0-20322 | 2/4/2011 | 10.2 | |||||||||
10-K | 0-20322 | 12/23/2003 | 10.9 | |||||||||
X | ||||||||||||
10-K | 0-20322 | 12/14/2006 | 10.12 | |||||||||
X | ||||||||||||
10-Q | 0-20322 | 2/10/2006 | 10.2 | |||||||||
X | ||||||||||||
10-Q | 0-20322 | 5/2/2012 | 10.1 | |||||||||
10-K | 0-20322 | 11/18/2016 | 10.14 | |||||||||
10-Q | 0-20322 | 4/26/2016 | 10.2 |
Incorporated by Reference | ||||||||||||
Exhibit Number | Exhibit Description | Form | File No. | Date of Filing | Exhibit Number | Filed Herewith | ||||||
10-Q | 0-20322 | 4/26/2016 | 10.3 | |||||||||
8-K | 0-20322 | 10/30/2017 | 10.1 | |||||||||
8-K | 0-20322 | 10/26/2018 | 10.1 | |||||||||
8-K | 0-20322 | 7/29/2016 | 10.1 | |||||||||
10-K | 0-20322 | 11/18/2011 | 10.30 | |||||||||
10-K | 0-20322 | 11/18/2016 | 10.21 | |||||||||
10-K | 0-20322 | 11/18/2016 | 10.22 | |||||||||
10-K | 0-20322 | 11/17/2017 | 10.24 | |||||||||
X | ||||||||||||
10-K | 0-20322 | 11/17/2017 | 10.25 | |||||||||
X | ||||||||||||
10-K | 0-20322 | 11/17/2017 | 10.26 | |||||||||
Incorporated by Reference | ||||||||||||
Exhibit Number | Exhibit Description | Form | File No. | Date of Filing | Exhibit Number | Filed Herewith | ||||||
X | ||||||||||||
10-Q | 0-20322 | 4/29/2014 | 10.3 | |||||||||
8-K/A | 0-20322 | 6/29/2018 | 10.1 | |||||||||
10-Q | 0-20322 | 5/2/2017 | 10.1 | |||||||||
8-K | 0-20322 | 9/6/2017 | 10.1 | |||||||||
8-K | 0-20322 | 6/5/2018 | 10.1 | |||||||||
8-K | 0-20322 | 10/9/2018 | 10.1 |
Incorporated by Reference | ||||||||||||
Exhibit Number | Exhibit Description | Form | File No. | Date of Filing | Exhibit Number | Filed Herewith | ||||||
— | — | — | — | X | ||||||||
— | — | — | — | X | ||||||||
__ | __ | __ | __ | X | ||||||||
— | — | — | — | X | ||||||||
— | — | — | — | X | ||||||||
— | — | — | — | |||||||||
101 | The following financial statements from the Company’s 10-K for the fiscal year ended September 30, 2018, formatted in XBRL: (i) Consolidated Statements of Earnings, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Equity, and (vi) Notes to Consolidated Financial Statements | — | — | — | — | X |
STARBUCKS CORPORATION | ||
By: | /s/ Kevin R. Johnson | |
Kevin R. Johnson president and chief executive officer | ||
Signature | Title | |||
By: | /s/ Kevin R. Johnson | president and chief executive officer, director (principal executive officer) | ||
Kevin R. Johnson | ||||
By: | /s/ Scott Maw | executive vice president, chief financial officer (principal financial officer and principal accounting officer) | ||
Scott Maw | ||||
By: | /s/ Rosalind G. Brewer | director | ||
Rosalind G. Brewer | ||||
By: | /s/ Mary N. Dillon | director | ||
Mary N. Dillon | ||||
By: | /s/ Mellody Hobson | director | ||
Mellody Hobson | ||||
By: | /s/ Jørgen Vig Knudstorp | director | ||
Jørgen Vig Knudstorp | ||||
Signature | Title | |||
By: | /s/ Satya Nadella | director | ||
Satya Nadella | ||||
By: | /s/ Joshua Cooper Ramo | director | ||
Joshua Cooper Ramo | ||||
By: | /s/ Clara Shih | director | ||
Clara Shih | ||||
By: | /s/ Javier G. Teruel | director | ||
Javier G. Teruel | ||||
By: | /s/ Myron E. Ullman, III | director | ||
Myron E. Ullman, III |
(a) | “Board” means the Board of Directors of the Company. |
(b) | “Code” means the Internal Revenue Code of 1986, as amended. |
(c) | “Committee” means the Committee that has been appointed by the Board pursuant to Article V of the Plan, which shall initially be the Nominating and Corporate Governance Committee. |
(d) | “Common Stock” means the common stock, par value $0.001 per share, of the Company, subject to adjustment as described in Section 5 of the Omnibus Plan. |
(e) | “Company” means Starbucks Corporation, a Washington corporation, and any successor thereto. |
(f) | “Deferred Compensation Account” shall have the meaning set forth in Article III of the Plan. |
(g) | “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. |
(h) | “Exchange Act” means the Securities Exchange Act of 1934, as amended. |
(i) | “Non-Employee Director” means any Director of the Company who is not an officer or employee of either the Company or any of its affiliates. |
(j) | “Omnibus Plan” means the Starbucks Corporation Amended and Restated 2005 Long-Term Equity Incentive Plan, as amended, or any successor thereto. |
(k) | “Participant” means a Non-Employee Director of the Company (and, if applicable, their beneficiaries) who has elected to (or been required to) participate in the Plan. |
(l) | “Plan” means this Starbucks Corporation Deferred Compensation Plan for Non-Employee Directors, including any amendments thereto. |
(m) | “Plan Year” means the period beginning immediately following an Annual Meeting of Shareholders of the Company and ending immediately prior to the next Annual Meeting of Shareholders of the Company. |
(n) | “Separation Date” means the date on which the Participant terminates his or her services as a Non-Employee Director. |
(o) | “Stock Award” means any stock award, restricted stock unit award or restricted stock award granted to a Non-Employee Director in respect of his or her service on the Board (including service on any committee thereof). |
(p) | “Subsidiary” means any corporation or partnership in which the Company owns, directly or indirectly, more than 50% of the total combined voting power of all classes of stock of such corporation or of the capital interest or profits interest of such partnership or an entity with respect to which the Company possesses the power, directly or indirectly, to direct or cause the direction of the management and policies of that entity, whether through the Company’s ownership of voting securities, by contract or otherwise. |
(a) | Separation Distributions. Unless an In-Service Distribution is elected pursuant to Section 4.1(b), payment of amounts credited to a Participant’s Deferred Compensation Account for any Plan Year shall be made in one lump sum within 90 days following the Participant’s Separation Date. |
(b) | Scheduled In-Service Distributions. A Participant may elect pursuant to Section 2.2 to receive payment of the portion of the Participant’s Deferred Compensation Account attributable to deferrals for any Plan Year while the Participant is still a member of the Board (an “In-Service Distribution”) in the following manner: |
(i) | Payments shall be made in a lump sum on the date that is three (3) years following the vesting date for the Stock Award. |
(ii) | Any desired In-Service Distribution must be separately elected for each Plan Year’s Elective Deferrals. |
(iii) | Notwithstanding the above, if the Participant’s service on the Board terminates before payments under the In-Service Distribution are paid, the In-Service Distribution shall cease and the balance of the Participant’s Deferred Compensation Account shall be paid in accordance with Section 4.1(a). |
(c) | Normal Form of Benefits. In the event no election is made pursuant to this Article IV, payments shall be made in lump sum within 90 days following the Participant’s Separation Date. |
(d) | Death of Participant. Notwithstanding the above, if the Participant dies before payment in full of the Participant’s Deferred Compensation Account, the balance of the Participant’s Deferred Compensation Account shall immediately become due and payable in one lump sum to the Participant’s beneficiary or, if no beneficiary is designated or then living, to the Participant’s estate within 90 days of the date of the Participant’s death. |
(e) | Form of Distribution. For all distributions under the Plan, the portion of a Participant’s Deferred Compensation Account notionally invested in Deferred Stock Units shall be distributed in whole shares of Common Stock (one share for each Deferred Stock Unit) and the remainder of the Participant’s Deferred Compensation Account shall be distributed in cash. No fractional shares will be issued under the Plan. |
Section 1. | Purpose of the Plan | 1 | |
Section 2. | Definitions | 1 | |
(a) | Active Status | 1 | |
(b) | ASC 718 | 1 | |
(c) | Award | 2 | |
(d) | Award Agreement | 2 | |
(e) | Beneficial Ownership | 2 | |
(f) | Board | 2 | |
(g) | Change of Control | 2 | |
(h) | Code | 3 | |
(i) | Committee | 3 | |
(j) | Common Stock | 3 | |
(k) | Company | 3 | |
(l) | Consultant | 3 | |
(m) | Director | 3 | |
(n) | Disability | 3 | |
(o) | Exchange Act | 3 | |
(p) | Executive Officers | 3 | |
(q) | Fair Market Value | 3 | |
(r) | FLSA | 3 | |
(s) | Prior Plans | 4 | |
(t) | Incentive Stock Option | 4 | |
(u) | Independent Director | 4 | |
(v) | Maximum Annual Participant Award | 4 | |
(w) | Misconduct | 4 | |
(x) | Nasdaq | 5 | |
(y) | Nominating and Corporate Governance Committee | 5 | |
(z) | Non-Employee Director | 5 | |
(aa) | Nonqualified Stock Option | 5 | |
(bb) | Option | 5 | |
(cc) | Optionee | 5 | |
(dd) | Original Effective Date | 5 | |
(ee) | Parent | 5 | |
(ff) | Participant | 5 | |
(gg) | Partner | 5 | |
(hh) | Performance Criteria | 5 | |
(ii) | Plan | 6 | |
(jj) | Plan Minimum Vesting or Issuance Requirements | 6 | |
(kk) | Reprice | 6 | |
(ll) | Resignation (or Resign) for Good Reason | 6 | |
(mm) | Restated Effective Date | 6 | |
(nn) | Restricted Stock | 6 | |
(oo) | Restricted Stock Units | 6 | |
(pp) | Retirement | 6 | |
(qq) | SAR | 6 | |
(rr) | SEC | 7 | |
(ss) | Share | 7 | |
(tt) | Stand-Alone SARs | 7 | |
(uu) | Stock Award | 7 | |
(vv) | Subcommittee | 7 | |
(ww) | Subsidiary | 7 | |
(xx) | Tandem SARs | 7 | |
Section 3. | Administration of the Plan | 7 | |
(a) | Authority | 7 | |
(b) | Powers of the Committee | 7 | |
(c) | Effect of Committee's Decision | 8 | |
(d) | Delegation | 8 | |
(e) | Administration | 9 | |
Section 4. | Shares Subject to the Plan | 9 | |
(a) | Reservation of Shares | 9 | |
(b) | Time of Granting Awards | 10 | |
(c) | Securities Law Compliance | 10 | |
(d) | Substitutions and Assumptions | 10 | |
Section 5. | Adjustments to Shares Subject to the Plan | 10 | |
Section 6. | General Eligibility | 11 | |
(a) | Awards | 11 | |
(b) | Maximum Annual Participant Award | 11 | |
(c) | No Employment/Service Rights | 11 | |
Section 7. | Procedure for Exercise of Awards; Rights as a Shareholder | 11 | |
(a) | Procedure | 11 | |
(b) | Method of Payment | 12 | |
(c) | Withholding Obligations | 12 | |
(d) | Shareholder Rights | 12 | |
(e) | Non-Transferability of Awards | 12 | |
Section 8. | Expiration of Awards | 12 | |
(a) | Expiration, Termination or Forfeiture of Awards | 13 | |
(b) | Extension of Term | 13 | |
Section 9. | Effect of Change of Control | 13 |
(a) | Acceleration | 13 | |
(b) | Definition | 14 | |
Section 10. | Grant, Terms and Conditions of Options | 14 | |
(a) | Designation | 14 | |
(b) | Terms of Options | 14 | |
(c) | Option Exercise Prices | 15 | |
(d) | Vesting | 15 | |
(e) | Substitution of SARs for Options | 15 | |
(f) | Exercise | 16 | |
(g) | One-Time Option Exchange Offer | 16 | |
Section 11. | Grant, Terms and Conditions of Stock Awards, Restricted Stock and Restricted Stock Units | 16 | |
(a) | Designation | 16 | |
(b) | Performance Criteria | 16 | |
(c) | Vesting | 17 | |
(d) | Plan Minimum Vesting or Issuance Requirements | 17 | |
Section 12. | Grant, Terms and Conditions of SARs | 18 | |
(a) | Grants | 18 | |
(b) | Tandem SARs | 18 | |
(c) | Stand-Alone SARs | 19 | |
(d) | Exercised SARs | 19 | |
Section 13. | Term of Plan | 19 | |
Section 14. | Amendment and Termination of the Plan | 20 | |
(a) | Amendment and Termination | 20 | |
(b) | Participants in Foreign Countries | 20 | |
(c) | Effect of Amendment or Termination | 20 | |
Section 15. | Shareholder Approval | 20 | |
Section 16. | No Liability of Company | 20 | |
Section 17. | Non-Exclusivity of Plan | 20 | |
Section 18. | Governing Law | 21 |
(a) | “Active Status” shall mean (i) for Partners, the absence of any interruption or termination of service as a Partner, (ii) for Directors, that the Director has not been removed from the Board for cause (as determined by the Company’s shareholders), and (iii) for Consultants, the absence of any interruption, expiration, or termination of such person’s consulting or advisory relationship with the Company or any Subsidiary or the occurrence of any termination event as set forth in such person’s Award Agreement. Active Status shall not be considered interrupted (A) for a Partner in the case of sick leave, maternity leave, infant care leave, medical emergency leave, military leave, or any other leave of absence properly taken in accordance with the policies of the Company or any applicable Subsidiary as may be in effect from time to time, and (B) for a Consultant, in the case of any temporary interruption in such person’s availability to provide services to the Company or any Subsidiary which has been granted in writing by an authorized officer of the Company. Whenever a mandatory severance period applies under applicable law with respect to a termination of service as a Partner, Active Status shall be considered terminated upon such Partner’s receipt of notice of termination in whatever form prescribed by applicable law. |
(b) | “ASC 718” shall mean Accounting Standards Codification (ASC) Topic 718, “Stock Compensation,” as promulgated by the Financial Accounting Standards Board. |
(c) | “Award” shall mean any award or benefits granted under the Plan, including Options, Stock Awards, Restricted Stock, Restricted Stock Units, and SARs. |
(d) | “Award Agreement” shall mean a written or electronic agreement or other instrument as may be approved from time to time by the Committee setting forth the terms of the Award. An Award Agreement may be in the form of an agreement to be executed by both the Participant and the Company (or an authorized representative of the Company) or certificates, notices or similar instruments as approved by the Committee. |
(e) | “Beneficial Ownership” shall have the meaning set forth in Rule 13d-3 promulgated under the Exchange Act. |
(f) | “Board” shall mean the Board of Directors of the Company. |
(g) | “Change of Control” shall mean the first day that any one or more of the following conditions shall have been satisfied: |
(i) | the sale, liquidation or other disposition of all or substantially all of the Company’s assets in one or a series of related transactions; |
(ii) | an acquisition (other than directly from the Company) of any outstanding voting securities by any person, after which such person (as the term is used for purposes of Section 13(d) or 14(d) of the Exchange Act) has Beneficial Ownership of twenty-five percent (25%) or more of the then outstanding voting securities of the Company, other than a Board approved transaction; |
(iii) | during any 12-consecutive month period, the individuals who, at the beginning of such period, constitute the Board (“Incumbent Directors”) cease for any reason other than death to constitute at least a majority of the members of the Board; provided however that except as set forth in this Section 2(g)(iii), an individual who becomes a member of the Board subsequent to the beginning of the 12-month period, shall be deemed to have satisfied such 12-month requirement and shall be deemed an Incumbent Director if such Director was elected by or on the recommendation of or with the approval of at least two-thirds of the Directors who then qualified as Incumbent Directors either actually (because they were Directors at the beginning of such period) or by operation of the provisions of this section; if any such individual initially assumes office as a result of or in connection with either an actual or threatened solicitation with respect to the election of Directors (as such terms are used in Rule 14a-12(c) of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitations of proxies or consents by or on behalf of a person other than the Board, then such individual shall not be considered an Incumbent Director; or |
(iv) | a merger, consolidation or reorganization of the Company, as a result of which the shareholders of the Company immediately prior to such merger, consolidation or reorganization own directly or indirectly immediately following such merger, consolidation or reorganization less than fifty percent (50%) of the combined voting |
(h) | “Code” shall mean the Internal Revenue Code of 1986, as amended. |
(i) | “Committee” shall mean the Compensation and Management Development Committee appointed by the Board. |
(j) | “Common Stock” shall mean the common stock of the Company, par value $0.001 per share, subject to adjustment as provided in Section 5. |
(k) | “Company” shall mean Starbucks Corporation, a Washington corporation, and any successor thereto. |
(l) | “Consultant” shall mean any person, except a Partner, engaged by the Company or any Subsidiary of the Company, to render personal services to such entity, including as an advisor, pursuant to the terms of a written agreement. |
(m) | “Director” shall mean a member of the Board. |
(n) | “Disability” shall mean (i) in the case of a Participant whose employment with the Company or a Subsidiary is subject to the terms of an employment or consulting agreement that includes a definition of “Disability,” the term “Disability” as used in this Plan shall have the meaning set forth in such employment or consulting agreement during the period that such employment or consulting agreement remains in effect; and (ii) in all other cases, the term “Disability” as used in this Plan shall have the same meaning as set forth under the Company’s long-term disability plan applicable to the Participant as may be amended from time to time, and in the event the Company does not maintain any such plan with respect to a Participant, a physical or mental condition resulting from bodily injury, disease or mental disorder which renders the Participant incapable of continuing his or her usual and customary employment with the Company or a Subsidiary, as the case may be, for a period of not less than 120 days or such other period as may be required by applicable law. |
(o) | “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. |
(p) | “Executive Officers” shall mean the officers of the Company as such term is defined in Rule 16a-1 under the Exchange Act. |
(q) | “Fair Market Value” shall mean the closing price per share of the Common Stock on Nasdaq as to the date specified (or the previous trading day if the date specified is a day on which no trading occurred), or if Nasdaq shall cease to be the principal exchange or quotation system upon which the shares of Common Stock are listed or quoted, then such exchange or quotation system as the Company elects to list or quote its shares of Common Stock and that the Committee designates as the Company’s principal exchange or quotation system. |
(r) | “FLSA” shall mean the Fair Labor Standards Act of 1938, as amended. |
(s) | “Prior Plans” shall mean the Starbucks Corporation Company-Wide 1991 Stock Option Plan, as amended, the Starbucks Corporation Amended and Restated Key Employee Stock Option Plan-1994, as amended, and the Starbucks Corporation Amended and Restated 1989 Stock Option Plan for Non-Employee Directors. |
(t) | “Incentive Stock Option” shall mean any Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code. |
(u) | “Independent Director” shall mean a Director who: (1) meets the independence requirements of Nasdaq, or if Nasdaq shall cease to be the principal exchange or quotation system upon which the shares of Common Stock are listed or quoted, then such exchange or quotation system as the Company elects to list or quote its shares of Common Stock and that the Committee designates as the Company’s principal exchange or quotation system; (2) qualifies as an “outside director” under Section 162(m) of the Code; (3) qualifies as a “non-employee director” under Rule 16b-3 promulgated under the Exchange Act; and (4) satisfies independence criteria under any other applicable laws or regulations relating to the issuance of Shares to Partners. |
(v) | “Maximum Annual Participant Award” shall have the meaning set forth in Section 6(b). |
(w) | “Misconduct” shall mean any of the following; provided, however, that with respect to Non-Employee Directors “Misconduct” shall mean subsection (viii) only: |
(i) | any material breach of an agreement between the Participant and the Company or any Subsidiary which, if curable, has not been cured within twenty (20) days after the Participant has been given written notice of the need to cure such breach, or which breach, if previously cured, recurs; |
(ii) | willful unauthorized use or disclosure of confidential information or trade secrets of the Company or any Subsidiary by the Participant; |
(iii) | the Participant’s continued willful and intentional failure to satisfactorily perform Participant’s essential responsibilities, provided that the Participant has been given at least thirty (30) days’ written notice of the need to cure the failure and cure has not been effected within that time period, or which failure, if previously cured, recurs; |
(iv) | material failure of the Participant to comply with rules, policies or procedures of the Company or any Subsidiary as they may be amended from time to time, provided that the Participant has been given at least thirty (30) days’ written notice of the need to cure the failure, if such failure is curable, and cure has not been effected within that time period, or which failure, if previously cured, recurs; |
(v) | Participant’s dishonesty, fraud or gross negligence related to the business or property of the Company or any Subsidiary; |
(vi) | personal conduct that is materially detrimental to the business of the Company or any Subsidiary; |
(vii) | conviction of or plea of nolo contendere to a felony; or |
(vii) | in the case of Non-Employee Directors, the removal from the Board for cause (as determined by the Company’s shareholders). |
(x) | “Nasdaq” shall mean The Nasdaq Stock Market, Inc. |
(y) | “Nominating and Corporate Governance Committee” shall mean the Nominating and Corporate Governance Committee appointed by the Board. |
(z) | “Non-Employee Director” shall mean a Director who is not a Partner. |
(aa) | “Nonqualified Stock Option” shall mean an Option that does not qualify or is not intended to qualify as an Incentive Stock Option. |
(a) | Authority. The Plan shall be administered by the Committee. The Committee shall have full and exclusive power to administer the Plan on behalf of the Board, subject to such terms and conditions as the Committee may prescribe. Notwithstanding anything herein to the contrary, the Committee’s power to administer the Plan, and actions the Committee takes under the Plan, shall be subject to the limitation that certain actions may be subject to review and approval by either the full Board or a panel consisting of all of the Independent Directors of the Company. |
(b) | Powers of the Committee. Subject to the other provisions of this Plan, the Committee shall have the authority, in its discretion: |
(i) | to grant Incentive Stock Options, Nonqualified Stock Options, Stock Awards, Restricted Stock, Restricted Stock Units, and SARs to Participants and to determine the terms and conditions of such Awards, including the determination of the Fair Market Value of the Shares and the exercise price, and to modify or amend each Award, with the consent of the Participant when required; |
(ii) | to determine the Participants, to whom Awards, if any, will be granted hereunder, the timing of such Awards, and the number of Shares to be represented by each Award; |
(iii) | to construe and interpret the Plan and the Awards granted hereunder; |
(iv) | to prescribe, amend, and rescind rules and regulations relating to the Plan, including the forms of Award Agreement and manner of acceptance of an Award, and to take or approve such further actions as it determines necessary or appropriate to the administration of the Plan and Awards, such as correcting a defect or supplying any omission, or reconciling any inconsistency so that the Plan or any Award Agreement complies with applicable law, regulations and listing requirements and so as to avoid unanticipated consequences or address unanticipated events (including any temporary closure of Nasdaq, disruption of communications or natural catastrophe) deemed by the Committee to be inconsistent with the purposes of the Plan or any Award Agreement, provided that no such action shall be taken absent shareholder approval to the extent required under Section 14; |
(v) | to establish performance criteria for Awards made pursuant to the Plan in accordance with a methodology established by the Committee, and to determine whether performance goals have been attained; |
(vi) | to accelerate or defer (with the consent of the Participant) the exercise or vested date of any Award; |
(vii) | to authorize any person to execute on behalf of the Company any instrument required to effectuate the grant of an Award previously granted by the Committee; |
(c) | Effect of Committee’s Decision. All decisions, determinations, and interpretations of the Committee shall be final and binding on all Participants, the Company (including its Subsidiaries), any shareholder and all other persons. |
(d) | Delegation. Consistent with the Committee’s charter, as such charter may be amended from time to time, the Committee may delegate (i) to one or more separate committees consisting of members of the Committee or other Directors (any such committee a “Subcommittee”), or (ii) to an Executive Officer of the Company, the ability to grant Awards and take the other actions described in Section 3(b) with respect to Participants who are not Executive Officers, and such actions shall be treated for all purposes as if taken by the Committee; provided that the grant of Awards shall be made in accordance with parameters established by the Committee. Any action by any such Subcommittee or Executive Officer within the scope of such delegation shall be deemed for all purposes to have been taken by the Committee. |
(e) | Administration. The Committee may delegate the administration of the Plan to an officer or officers of the Company, and such administrator(s) may have the authority to directly, or under their supervision, execute and distribute agreements or other documents evidencing or relating to Awards granted by the Committee under this Plan, to maintain records relating to the grant, vesting, exercise, forfeiture or expiration of Awards, to process or oversee the issuance of Shares upon the exercise, vesting and/or settlement of an Award, to interpret the terms of Awards and to take such other actions as the Committee may specify. Any action by any such administrator within the scope of its delegation shall be deemed for all purposes to have been taken by the Committee and references in this Plan to the Committee shall include any such administrator, provided that the actions and interpretations of any such administrator shall be subject to review and approval, disapproval or modification by the Committee. |
(a) | Reservation of Shares. Subject to the provisions of Sections 5 of the Plan, the number of shares authorized for issuance under the Plan pursuant to Awards granted on or after September 30, 2012 shall be 139,224,716 (as adjusted to reflect the 2-for-1 forward stock split effective on April 9, 2015) plus any shares that on September 30, 2012 are subject to outstanding awards under the Plan or the Prior Plans that after such date cease to be subject to such awards for any reason other than such awards having been exercised. Subject to the provisions of Sections 5 of the Plan, the maximum aggregate number of Shares (adjusted, proportionately, in the event of any stock split or stock dividend with respect to the Shares) which may be granted as Incentive Stock Options under the Plan shall not exceed 139,224,716. The aggregate number of Shares available for issuance under the Plan will be reduced by 2.1 Shares for each Share delivered in settlement of any Stock Award or any award of Restricted Stock or Restricted Stock Unit and one Share for each Share delivered in settlement of an Option or a SAR. If an Award expires, is forfeited, is settled in cash or becomes unexercisable for any reason without having been exercised in full, the undelivered Shares which were subject thereto shall, unless the Plan shall have been terminated, become available for future Awards under the Plan. Notwithstanding the foregoing, Shares subject to an Award under this Plan may not again be made available for issuance under this Plan if such Shares are: (i) shares that were subject to a stock-settled SAR and were not issued upon the net settlement or net exercise of such SAR, (ii) shares used to pay the exercise price of an Option, (iii) shares delivered to or withheld by the Company to pay the withholding taxes related to an Option or a Stock Appreciation Right, or (iv) shares repurchased on the open market with the proceeds of an Option exercise. Shares available for issuance under the Plan shall be increased by any shares of Common Stock subject to outstanding awards under the Prior Plans on the date of shareholder approval of the Plan that later cease to be subject to such awards for any reason other than such awards having been exercised, subject to adjustment from time to time as provided in Section 5, which shares of Common Stock shall, as of the date such shares cease to be subject to such awards, cease to be available for grant and issuance under the Prior Plans, but shall be available for issuance under the Plan. Any Shares that become available for grant pursuant to this Section 4(a) shall be added back as one Share if such shares were subject to Options |
(b) | Time of Granting Awards. The date of grant of an Award shall, for all purposes, be the date on which the Company completes the corporate action relating to the grant of such Award and all conditions to the grant have been satisfied, provided that conditions to the exercise of an Award shall not defer the date of grant. Notice of a grant shall be given to each Participant to whom an Award is so granted within a reasonable time after the determination has been made. |
(c) | Securities Law Compliance. Shares shall not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated under either such Act, and the requirements of any stock exchange or quotation system upon which the Shares may then be listed or quoted, and shall be further subject to the approval of counsel for the Company with respect to such compliance. |
(d) | Substitutions and Assumptions. The Board or the Committee shall have the right to substitute or assume Awards in connection with mergers, reorganizations, separations, or other transactions to which Section 424(a) of the Code applies, provided such substitutions and assumptions are permitted by Section 424 of the Code and the regulations promulgated thereunder. The number of Shares reserved pursuant to Section 4(a) may be increased by the corresponding number of Awards assumed and, in the case of a substitution, by the net increase in the number of Shares subject to Awards before and after the substitution. |
(a) | Awards. Awards may be granted to Participants who are Partners, Directors or Consultants; provided however that Incentive Stock Options may only be granted to Partners. |
(b) | Maximum Annual Participant Award. Subject to adjustment pursuant to Section 5, the aggregate number of Shares with respect to which an Award or Awards may be granted to any one Participant in any one taxable year of the Company (the “Maximum Annual Participant Award”) shall not exceed 10,000,000 shares of Common Stock. If an Option is in tandem with a SAR, such that the exercise of the Option or SAR with respect to a Share cancels the tandem SAR or Option right, respectively, with respect to each Share, the tandem Option and SAR rights with respect to each Share shall be counted as covering but one Share for purposes of the Maximum Annual Participant Award. |
(c) | No Employment/Service Rights. Nothing in the Plan shall confer upon any Participant the right to an Award or to continue in service as a Partner or Consultant for any period of specific duration, or interfere with or otherwise restrict in any way the rights of the Company (or any Subsidiary employing or retaining such person), or of any Participant, which rights are hereby expressly reserved by each, to terminate such person’s services at any time for any reason, with or without cause. |
(a) | Procedure. An Award shall be exercised when written, electronic or verbal notice of exercise has been given to the Company, or the brokerage firm or firms approved by the Company to facilitate exercises and sales under this Plan, in accordance with the terms of the Award by the person entitled to exercise the Award and full payment for the Shares with respect to which the Award is exercised has been received by the Company or the brokerage firm or firms, as applicable. The notification to the brokerage firm shall be made in accordance with procedures of such brokerage firm approved by the Company. Full payment may, as authorized by the Committee, consist of any consideration and method of payment allowable under Section 7(b) of the Plan. The Company shall issue (or cause to be issued) such share certificate promptly upon exercise of the Award. In the event that the exercise of an Award is treated in part as |
(b) | Method of Payment. The consideration to be paid for any Shares to be issued upon exercise or other required settlement of an Award, including the method of payment, shall be determined by the Committee and which forms may include: (i) with respect to an Option, a request that the Company or the designated brokerage firm conduct a cashless exercise of the Option; (ii) cash; (iii) tender of shares of Common Stock owned by the Participant; and (iv) withholding of shares of Common Stock that otherwise would be issued upon exercise or settlement of the Award, in each case, in accordance with rules established by the Committee from time to time. Shares used to pay the exercise price shall be valued at their Fair Market Value on the exercise date. |
(c) | Withholding Obligations. To the extent required by applicable federal, state, local or foreign law, the Committee may and/or a Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise with respect to any Incentive Stock Option, Nonqualified Stock Option, SAR, Stock Award, Restricted Stock or Restricted Stock Units, or any sale of Shares. The Company shall not be required to issue Shares or to recognize the disposition of such Shares until such obligations are satisfied. These obligations may be satisfied by having the Company withhold a portion of the Shares that otherwise would be issued to a Participant under such Award or by tendering Shares previously acquired by the Participant in accordance with rules established by the Committee from time to time. The value of the Shares so withheld or tendered may not exceed the employer’s minimum required tax withholding rate. |
(d) | Shareholder Rights. Except as otherwise provided in this Plan, until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the share certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares subject to the Award, notwithstanding the exercise of the Award. |
(e) | Non-Transferability of Awards. An Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in exchange for consideration, except that an Award may be transferred by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant; unless the Committee permits further transferability, on a general or specific basis, in which case the Committee may impose conditions and limitations on any permitted transferability. |
(a) | Expiration, Termination or Forfeiture of Awards. Unless otherwise provided in this Plan or in the applicable Award Agreement or any severance or employment agreement, unvested Awards granted under this Plan shall expire, terminate, or otherwise be forfeited immediately upon termination of a Participant’s Active Status for any reason, and vested Awards granted under this Plan shall expire, terminate, or otherwise be forfeited as follows: |
(i) | three (3) months after the date the Company delivers a notice of termination of Active Status for a Participant other than a Non-Employee Director, other than in circumstances covered by (ii), (iii), (iv) or (v) below; or thirty-six (36) months after the date a Non-Employee Director ceases to be a Director, other than in circumstances covered by (ii) and (iv) below; |
(ii) | immediately upon termination of a Participant’s Active Status for Misconduct; |
(iii) | twelve (12) months after the date on which a Participant other than a Non-Employee Director ceased performing services as a result of his or her total and permanent Disability; |
(iv) | twelve (12) months after the date of the death of a Participant whose Active Status terminated as a result of his or her death; and |
(v) | thirty-six (36) months after the date on which the Participant ceased performing services as a result of Retirement. |
(b) | Extension of Term. Notwithstanding subsection (a) above, the Committee shall have the authority to extend the expiration date of any outstanding Option, other than an Incentive Stock Option, or SAR in circumstances in which it deems such action to be appropriate (provided that no such extension shall extend the term of an Option or SAR beyond the date on which the Option or SAR would have expired if no termination of the Partner’s Active Status had occurred). |
(a) | Acceleration. Awards of a Participant shall be Accelerated (as defined in Section 9(b) below) as follows: |
(i) | With respect to Non-Employee Directors, upon the occurrence of a Change of Control; |
(ii) | With respect to any Partner, upon the occurrence of a Change of Control described in Section 2(g)(i); |
(iii) | With respect to any Partner who Resigns for Good Reason or whose Active Status is terminated within one year after a Change of Control described in Section 2(g)(ii) or (iii); |
(iv) | With respect to any Partner, upon the occurrence of a Change of Control described in Section 2(g)(iv) in connection with which each Award is not assumed or an equivalent award substituted by such successor entity or a parent or subsidiary of such successor entity; and |
(v) | With respect to any Partner who Resigns for Good Reason or whose Active Status is terminated within one year after a Change of Control described in Section 2(g)(iv) in connection with which each Award is assumed or an equivalent award substituted by the successor entity or a parent or subsidiary of such successor entity. |
(b) | Definition. For purposes of this Section 9, Awards of a Participant being “Accelerated” means, with respect to such Participant: |
(i) | any and all Options and SARs shall become fully vested and immediately exercisable, and shall remain exercisable throughout their entire term; |
(ii) | any restriction periods and restrictions imposed on Restricted Stock or Restricted Stock Units that are not performance-based shall lapse; |
(iii) | any restriction periods and restrictions imposed on Restricted Stock or Restricted Stock Units that are performance-based (and for which the performance period has not yet been completed) shall lapse, with such performance-based criteria deemed achieved at the target level specified in the Award Agreement; and |
(iv) | the restrictions and deferral limitations and other conditions applicable to any other Awards shall lapse, and such other Awards shall become free of all restrictions, limitations or conditions and become fully vested and transferable to the full extent of the original grant. |
(a) | Designation. Each Option shall be designated in an Award Agreement as either an Incentive Stock Option or a Nonqualified Stock Option. However, notwithstanding such designations, to the extent that the aggregate Fair Market Value of the Shares with respect to which Options designated as Incentive Stock Options are exercisable for the first time by any Partner during any calendar year (under all plans of the Company) exceeds $100,000, such excess Options shall be treated as Nonqualified Stock Options. Options shall be taken into account in the order in which they were granted. |
(b) | Terms of Options. The term of each Incentive Stock Option shall be no more than ten (10) years from the date of grant. However, in the case of an Incentive Stock Option granted to a Participant who, at the time the Option is granted, owns Shares representing more than ten percent (10%) of the voting power of all classes of shares of the Company or any Parent or Subsidiary, the term of the Option shall be no more than five (5) years from the date of grant. The term of all Nonqualified Stock Options shall be no more than ten (10) years from the date of grant. |
(c) | Option Exercise Prices. |
(i) | The per Share exercise price under an Incentive Stock Option shall be as follows: |
(A) | If granted to a Partner who, at the time of the grant of such Incentive Stock Option, owns shares representing more than ten percent (10%) of the voting power of all classes of shares of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. |
(B) | If granted to any other Partner, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. |
(ii) | The per Share exercise price under a Nonqualified Stock Option or SAR shall be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. |
(iii) | In no event shall the Board or the Committee be permitted to Reprice an Option after the date of grant without shareholder approval. |
(d) | Vesting. Unless otherwise provided in the applicable Award Agreement or any written severance or employment agreement between the Company and the Optionee, to the extent Options vest and become exercisable in increments, such Options shall cease vesting as of the date of the Optionee’s Disability or termination of such Optionee’s Active Status (or, for Directors, as of the date the Director ceases to serve as a Director) for reasons other than Retirement or death, and, in case of such Optionee’s termination of Active Status (or, for Directors, the Director’s ceasing to serve as a Director) due to Retirement or death, such Options shall become fully vested and immediately exercisable. |
(e) | Substitution of SARs for Options. Notwithstanding anything in this Plan to the contrary, if the Company is required to or elects to record as an expense in its consolidated statements of earnings the cost of Options pursuant to ASC 718 or a similar accounting requirement, the Committee shall have the sole discretion to substitute, without receiving Participants’ permission, SARs paid only in stock for outstanding Options; provided, the terms of the substituted SARs are the same as the terms of the Options, the number of shares underlying the number of SARs equals the number of shares underlying the Options and the difference between the Fair Market Value of the underlying Shares and the grant price of the SARs is equivalent to the |
(f) | Exercise. Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by the Committee at the time of grant, and as are permissible under the terms of the Plan. An Option may not be exercised for a fraction of a Share. |
(g) | One-Time Option Exchange Offer. Notwithstanding any other provision of the Plan to the contrary, upon approval of the Company’s shareholders, the Committee may provide for, and the Company may implement, a one-time-only option exchange offer, pursuant to which certain outstanding Options could, at the election of the person holding such Option, be tendered to the Company for cancellation in exchange for the issuance of a lesser amount of Options with a lower exercise price, provided that such one-time-only option exchange offer is commenced within six months of the date of such shareholder approval. |
(a) | Designation. Stock Awards, Restricted Stock or Restricted Stock Units may be granted either alone, in addition to, or in tandem with other Awards granted under the Plan. Restricted Stock or Restricted Stock Units may include dividend or dividend equivalent rights, as may be specified in the Award Agreement; provided, however, that dividends or dividend equivalent rights shall not be paid currently with respect to any Shares underlying awards of Restricted Stock or Restricted Stock Units that vest or are earned on the basis of Performance Criteria, except to the extent that such Shares are earned. After the Committee determines that it will offer a Stock Award, Restricted Stock or Restricted Stock Units, it will advise the Participant in writing or electronically, by means of an Award Agreement, of the terms, conditions and restrictions, including vesting, if any, related to the offer, including the number of Shares that the Participant shall be entitled to receive or purchase, the price to be paid, if any, and, if applicable, the time within which the Participant must accept the offer. The offer shall be accepted by execution of an Award Agreement or as otherwise directed by the Committee. Payment, if any, of a Stock Award, Restricted Stock and Restricted Stock Units may be made as permitted by Section 7(b). Restricted Stock Units can be settled in Shares valued at Fair Market Value on the settlement date, in cash, or partly in Shares and partly in cash, as the Committee shall deem appropriate. The term of each award of Restricted Stock or Restricted Stock Units shall be at the discretion of the Committee. |
(b) | Performance Criteria. Restricted Stock and Restricted Stock Units granted pursuant to the Plan that are intended to qualify as “performance based compensation” under Section 162(m) of the Code shall be subject to the attainment of performance goals relating to the Performance Criteria selected by the Committee and specified at the time such Restricted Stock and Restricted Stock Units are granted. For purposes of this Plan, “Performance Criteria” means one or more of the following (as selected by the Committee): (i) cash flow; (ii) earnings per share, as adjusted for any stock split, stock |
(c) | Vesting. Unless the Committee determines otherwise, the Award Agreement shall provide for the forfeiture of the non-vested Shares underlying Restricted Stock or Restricted Stock Units upon the termination of a Participant’s Active Status. To the extent that the Participant purchased the Shares granted under such Restricted Stock or Restricted Stock Units and any such Shares remain non-vested at the time the Participant’s Active Status terminates, the termination of Active Status shall cause an immediate sale of such non-vested Shares to the Company at the original price per Share paid by the Participant. |
(d) | Plan Minimum Vesting or Issuance Requirements. Subject to the exceptions in Section 11(e), all Restricted Stock or Restricted Stock Units granted to Executive Officers that are subject to vesting or issuance solely based on such Participant’s continuing in Active Status may not vest in full or be issued earlier (except if accelerated pursuant to (A) Change of Control as described in Section 9 (including vesting acceleration in connection with employment termination following such event), (B) the death of the Participant, (C) the Disability of the Participant, or (D) the Participant’s Retirement) than the three-year anniversary of the grant date, and all Restricted Stock or Restricted Stock Units granted to Executive Officers that are subject to vesting or issuance based in whole or in part on performance conditions and/or the level of achievement versus such performance conditions shall be subject to a performance period of not less than one year. |
(e) | Exception to Plan Minimum Vesting or Issuance Requirements. |
(i) | Stock Awards, Restricted Stock or Restricted Stock Units that result in issuing up to 5% of the maximum aggregate number of Shares authorized for issuance under the Plan (the “5% Limit” ) may be granted to any one or more Executive Officers without respect to the Plan Minimum Vesting or Issuance Requirements. |
(ii) | All Restricted Stock or Restricted Stock Units granted to Executive Officers that have their vesting or issuance discretionarily accelerated, other than pursuant to (A) Change of Control as described in Section 9 (including vesting acceleration in connection with employment termination following such event), (B) the death of the Participant, (C) the Disability of the Participant, or (D) the Participant’s Retirement, are subject to the 5% Limit. |
(iii) | Notwithstanding the foregoing, the Committee may accelerate the vesting of Restricted Stock or Restricted Stock Units such that the Plan Minimum Vesting Requirements are still satisfied, without such vesting acceleration counting toward the 5% Limit. |
(iv) | The 5% Limit applies in the aggregate to Stock Awards, Restricted Stock or Restricted Stock Unit grants that do not satisfy Plan Minimum Vesting or Issuance Requirements and to the discretionary acceleration of Awards. |
(a) | Grants. The Committee shall have the full power and authority, exercisable in its sole discretion, to grant SARs to selected Participants. The Committee is authorized to grant both tandem stock appreciation rights, consisting of SARs with underlying Options (“Tandem SARs”), and stand-alone stock appreciation rights (“Stand-Alone SARs”) as described below. The terms of SARs shall be at the discretion of the Committee. In no event shall the Board or the Committee be permitted to Reprice a SAR after the date of grant without shareholder approval. |
(b) | Tandem SARs. |
(i) | Participants may be granted a Tandem SAR, exercisable upon such terms and conditions as the Committee shall establish, to elect between the exercise of the underlying Option for Shares or the surrender of the Option in exchange for a distribution from the Company in an amount equal to the excess of (A) the Fair Market Value (on the Option surrender date) of the number of Shares in which the Participant is at the time vested under the surrendered Option (or surrendered portion thereof) over (B) the aggregate exercise price payable for such vested Shares. |
(ii) | No such Option surrender shall be effective unless it is approved by the Committee, either at the time of the actual Option surrender or at any earlier time. If the surrender is so approved, then the distributions to which the Participant shall become entitled under this Section 12(b) may be made in Shares valued at Fair Market Value (on the Option |
(iii) | If the surrender of an Option is not approved by the Committee, then the Participant shall retain whatever rights he or she had under the surrendered Option (or surrendered portion thereof) on the Option surrender date and may exercise such rights at any time prior to the later of (A) five (5) business days after the receipt of the rejection notice or (B) the last day on which the Option is otherwise exercisable in accordance with the terms of the instrument evidencing such Option, but in no event may such rights be exercised more than ten (10) years after the date of the Option grant. |
(c) | Stand-Alone SARs. |
(i) | A Participant may be granted a Stand-Alone SAR not tied to any underlying Option under Section 10 of the Plan. The Stand-Alone SAR shall cover a specified number of Shares and shall be exercisable upon such terms and conditions as the Committee shall establish. Upon exercise of the Stand-Alone SAR, the holder shall be entitled to receive a distribution from the Company in an amount equal to the excess of (A) the aggregate Fair Market Value (on the exercise date) of the Shares underlying the exercised right over (B) the aggregate base price in effect for those Shares. |
(ii) | The number of Shares underlying each Stand-Alone SAR and the base price in effect for those Shares shall be determined by the Committee at the time the Stand-Alone SAR is granted. In no event, however, may the base price per Share be less than the Fair Market Value per underlying Share on the grant date. |
(iii) | The distribution with respect to an exercised Stand-Alone SAR may be made in Shares valued at Fair Market Value on the exercise date, in cash, or partly in Shares and partly in cash, as the Committee shall deem appropriate. |
(iv) | The term of all Stand-Alone SARs shall be no more than ten (10) years from the date of grant. |
(d) | Exercised SARs. The Shares issued in settlement of any SARs exercised under this Section 12, and the Shares underlying any exercised SARs that were not issued in settlement of the SAR, shall not be available for subsequent issuance under the Plan. |
(a) | Amendment and Termination. The Board or the Committee may amend or terminate the Plan from time to time in such respects as the Board may deem advisable (including, but not limited to amendments which the Board deems appropriate to enhance the Company’s ability to claim deductions related to stock option exercises); provided that to the extent required by the Code or the rules of Nasdaq or the SEC, shareholder approval shall be required for any amendment of the Plan. Subject to the foregoing, it is specifically intended that the Board or Committee may amend the Plan without shareholder approval to comply with legal, regulatory and listing requirements and to avoid unanticipated consequences deemed by the Committee to be inconsistent with the purpose of the Plan or any Award Agreement. |
(b) | Participants in Foreign Countries. The Committee shall have the authority to adopt such modifications, procedures, and sub-plans as may be necessary or desirable to comply with provisions of the laws of foreign countries in which the Company or its Subsidiaries may operate to assure the viability of the benefits from Awards granted to Participants performing services in such countries and to meet the objectives of the Plan. |
(c) | Effect of Amendment or Termination. Any amendment or termination of the Plan shall not impair the rights of holders of Awards and such Awards shall remain in full force and effect as if this Plan had not been amended or terminated, unless mutually agreed otherwise between the Participant and the Committee, which agreement must be in writing and signed by the Participant and the Company. |
1. | Purpose. The purpose of this Sub-Plan is (i) to assist in the administration and implementation of the Starbucks Corporation 2005 Long-Term Equity Incentive Plan, as it may be amended from time to time (the “Plan”), by providing additional procedures and guidelines which apply specifically to Non-Employee Directors, and (ii) to attract and retain the services of experienced and knowledgeable Non-Employee Directors for the benefit of the Company and its shareholders. This Sub-Plan is intended to provide an incentive for Non-Employee Directors by linking the interests of the Non-Employee Directors with those of the Company’s shareholders. |
2. | Definitions. Capitalized terms used without definition in this Sub-Plan shall have the meanings given to such terms in the Plan. To the extent that any term defined herein conflicts with the definition of such term under the Plan, the definition in this Sub-Plan shall control. |
(a) | “Award” shall mean any award or benefits granted under this Sub-Plan, including Options, Stock Awards, Restricted Stock and Restricted Stock Units. |
(b) | “Award Agreement” shall mean the written or electronic agreement between the Company and the Participant setting forth the terms of the Award. |
(c) | “Board” shall mean the Board of Directors of the Company. |
(d) | “Disability” shall mean a physical or mental condition resulting from bodily injury, disease or mental disorder which renders the Participant incapable of continuing his or her usual and customary service with the Company for a period of not less than 120 days or such other period as may be required by applicable law. |
(e) | “Misconduct” shall mean in the case of Non-Employee Directors, the removal from the Board for cause (as determined by the Company’s shareholders). |
(f) | “Non-Employee Director” shall mean a Director who is not a Partner. |
(g) | “Option” shall mean an option to purchase Shares granted pursuant to this Sub-Plan that does not qualify or is not intended to qualify as an incentive stock option under Section 422 of the Code. |
(h) | “Participant” shall mean each Non-Employee Director who has not been a Partner at any time during the immediately preceding 12-month period, and each permitted transferee of an Award under Section 6(e). |
(i) | “Plan” shall mean the Starbucks Corporation 2005 Long‑Term Equity Incentive Plan, as it may be amended from time to time. |
(j) | “Restricted Stock” shall mean a grant of Shares subject to restrictions pursuant to this Sub-Plan. |
(k) | “Restricted Stock Units” shall mean a grant of the right to receive Shares or their cash equivalent (or both) pursuant to this Sub-Plan and may be paid in Shares, their cash equivalent or both. |
(l) | “Stock Award” shall mean a grant of fully vested Shares pursuant to this Sub-Plan. |
(m) | “Sub-Plan” means this Starbucks Corporation 2005 Non-Employee Director Sub-Plan to the Plan, as such plan may be amended and restated from time to time. |
3. | Administration of the Sub-Plan. |
(a) | Board. This Sub-Plan shall be administered by the Board, subject to such terms and conditions as the Board may prescribe; provided that they are consistent with the terms of the Plan. Notwithstanding anything herein to the contrary, in its discretion the Board may delegate some or all of its authority to administer this Sub-Plan to one or more committees of the Board. |
(b) | Authority; Powers. Subject to the express terms and conditions set forth herein and the Plan, the Board shall have the discretion from time to time: |
(i) | to grant Options, Stock Awards, Restricted Stock and Restricted Stock Units to Participants and to determine the terms and conditions of such Awards, including the determination of the Fair Market Value of the Shares and the exercise price, and to modify or amend each Award, with the consent of the Participant when required; |
(ii) | to determine the Participants to whom Awards, if any, will be granted hereunder, the timing of such Awards, and the number of Shares to be represented by each Award; |
(iii) | to construe and interpret this Sub-Plan and the Awards granted hereunder; |
(iv) | to prescribe, amend, and rescind rules and regulations relating to this Sub-Plan, including the form of Award Agreement, and manner of acceptance of an Award, such as correcting a defect or supplying any omission, or reconciling any inconsistency so that this Sub-Plan or any Award Agreement complies with applicable law, regulations and listing requirements and to avoid unanticipated consequences deemed by the Board to be inconsistent with the purposes of the Plan or any Award Agreement; |
(v) | to establish Performance Criteria (as defined in Section 11(b) of the Plan) for Awards made pursuant to the Plan in accordance with a methodology established by the Board, and to determine whether performance goals have been attained; |
(vi) | to accelerate or defer (with the consent of the Participant) the exercise or vested date of any Award; |
(vii) | to authorize any Person to execute on behalf of the Company any instrument required to effectuate the grant of an Award previously granted by the Board; |
(viii) | to establish sub-plans, procedures, or guidelines for the grant of Awards to Non-Employee Directors; and |
(ix) | to make all other determinations deemed necessary or advisable for the administration of this Sub-Plan; |
(c) | Effect of Board’s Decision. All decisions, determinations, and interpretations of the Board shall be final and binding on all Participants, the Company (including its Subsidiaries), any shareholder and all other Persons. |
4. | Award Grants. |
(a) | Initial Award Grant. Each Participant initially elected or appointed to the Board effective other than at the Company’s Annual Meeting of Shareholders (the “Effective Date of Initial Election or Appointment”) shall be granted an Award, pursuant to one or more Award Agreements, of an Option and/or Restricted Stock Units (based on the Participant’s election in a manner and within the limitations specified by the Board) with a value on the date of grant equal to that portion of the annual compensation for Directors in effect on the Effective Date of Initial Election or Appointment that the Participant has elected to receive in the form of an Option and/or Restricted Stock Units multiplied by a fraction, the numerator of which is the number of |
(b) | Annual Award Grant. Beginning with the 2019 Annual Meeting of Shareholders, each Participant who is serving as a Director immediately following each of the Company’s Annual Meeting of Shareholders shall be granted, on the date thereof, an Award, pursuant to one or more Award Agreements, of an Option and/or Restricted Stock Units (based on the Participant’s election in a manner and within the limitations specified by the Board) with a value on the date of grant equal to that portion of the annual compensation for Directors in effect for such fiscal year that the Participant has elected to receive in the form of an Option and/or Restricted Stock Units. The number of shares subject to an Option and/or Award of Restricted Stock Units under this Section 4(b) shall be determined pursuant to the formula set forth in Section 4(c). |
(c) | Grant Formula. The number of Shares subject to Awards to be granted under Sections 4(a) or 4(b) shall be determined as follows: (i) for Restricted Stock Units, by dividing the amount of director compensation that the Participant has elected to receive in the form of Restricted Stock Units by the Fair Market Value of the Common Stock on date of grant (rounded down to the nearest whole share) and (ii) for Options, by dividing the amount of director compensation that the Participant has elected to receive in the form of Options by the grant date fair value of an option, as determined in accordance with procedures generally utilized by the Company for its financial reporting purposes at the time of grant (rounded down to the nearest whole share). |
5. | Vesting of Awards. Unless otherwise approved by action of the Board and reflected in the applicable Award Agreement, Awards granted under this Sub-Plan shall be fully vested on the date of grant. |
6. | Procedure for Exercise of Awards; Rights as a Shareholder. |
(a) | Procedure. An Award shall be exercised when written, electronic or verbal notice of exercise has been given to the Company, or the brokerage firm or firms approved by the Company to facilitate exercises and sales under this Sub-Plan, in accordance with the terms of the Award by the Person entitled to exercise the Award and full payment for the Shares with respect to which the Award is exercised has been received by the Company or the brokerage firm or firms, as applicable. The notification to the brokerage firm shall be made in accordance with procedures of such brokerage firm approved by the Company. Full payment may, as authorized by the Board, consist of any consideration and method of payment allowable under Section 6(b) of this Sub-Plan. The Company shall issue (or cause to be issued) such Shares promptly upon exercise of or settlement of the Award. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 7 of this Sub-Plan. |
(b) | Method of Payment. The consideration to be paid for any Shares to be issued upon exercise or other required settlement of an Award, including the method of payment, shall be determined by the Board at or prior to the time of settlement and which forms may include: (i) with respect to an Option, a request that the Company or the designated brokerage firm conduct a cashless exercise of the Option; (ii) cash; and (iii) tender of shares of Common Stock owned by the Participant in accordance with rules established by the Board from time to time. Shares used to pay the exercise price shall be valued at their Fair Market Value on the exercise date. Payment of the aggregate exercise price by means of tendering previously-owned shares of Common Stock shall not be permitted when the same may, in the reasonable opinion of the Company, cause the Company to record a loss or expense as a result thereof. |
(c) | Withholding Obligations. To the extent required by applicable federal, state, local or foreign law, the Board may and/or a Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise with respect to any Option, Stock Award, Restricted Stock or Restricted Stock Units, or any sale of Shares. The Company shall not be required to issue Shares or to recognize the disposition of such Shares until such obligations are satisfied. These obligations may be satisfied by having the Company withhold a portion of the Shares that otherwise would be issued to a Participant under such Award, such withholding to be done at the minimum tax rate required under applicable law or by tendering Shares previously acquired by the Participant in accordance with rules established by the Board from time to time. |
(d) | Shareholder Rights. Except as otherwise provided in this Sub-Plan, until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of such Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares subject to the Award, notwithstanding the exercise of the Award. |
(e) | Non-Transferability of Awards. An Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in exchange for consideration, and may be exercised, during the lifetime of the Participant, only by the Participant, except that an Award may be transferred (i) by will or by the laws of descent or distribution, (ii) by gift or, with the consent of the Company for value, to immediate family members of the Participant, partnerships of which the only partners are members of the Participant’s immediate family and trusts established solely for the benefit of such family members; and solely as it pertains to effecting an exercise of Awards transferred in accordance with this Section 6(e), the term Participant shall include a permitted transferee, (iii) to the extent permitted by the Board, to one or more beneficiaries on a Company-approved form who may exercise the Award after the Participant’s death, or (iv) such further transferability as the Board may permit, on a general or specific basis, in which case the Board may impose conditions and limitations on any permitted transferability. |
7. | Adjustments to Shares Subject to the Plan. If any change is made to the Shares by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Shares as a class without the Company’s receipt of consideration, appropriate adjustments shall be made to the number of Shares that are subject to outstanding Awards under this Sub-Plan. The Board may also make adjustments described in the previous sentence in the event of any distribution of assets to shareholders other than a normal cash dividend. In determining adjustments to be made under this Section 7, the Board may take into account such factors as it deems appropriate, including the restrictions of applicable law and the potential tax consequences of an adjustment, and in light of such factors may make adjustments that are not uniform or proportionate among outstanding Awards. Adjustments, if any, and any determinations or interpretations, including any determination of whether a distribution is other than a normal cash dividend, made by the Board shall be final, binding and conclusive. For purposes of this Section 7, conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” |
8. | Expiration of Options. |
(a) | Expiration, Termination or Forfeiture of Options. Unless otherwise provided in the applicable Award Agreement or any severance agreement, vested Options granted under this Sub-Plan shall expire, terminate, or otherwise be forfeited as follows: |
(i) | thirty-six (36) months after the date the Participant ceases to be a Director, other than in circumstances covered by (ii), (iii) or (iv) below; |
(ii) | immediately upon a Participant ceasing to be a Director due to Misconduct; |
(iii) | twelve (12) months after the date of the death of a Participant who ceased to be a Director as a result of his or her death; and |
(iv) | twelve (12) months after the date on which a Participant ceased to be a Director as a result of Disability. |
(b) | Extension of Term. Notwithstanding subsection (a) above, the Board shall have the authority to extend the expiration date of any outstanding Option in circumstances in which it deems such action to be appropriate (provided that no such extension shall extend the term of an Option beyond the date on which the Option would have expired if no termination of the Participant’s status as a Director had occurred). |
9. | Terms and Conditions of Awards. |
(a) | Award Agreement. The terms and conditions of the grant of Awards to a Participant shall be set forth in an Award Agreement, which will include the terms, conditions and restrictions, including but not limited to vesting, if any, related to the offer. |
(b) | Exercise Price. The exercise price for each Option shall be 100% of the Fair Market Value of a Share on the date the Option is granted. |
(c) | Repricing. In no event shall the Board or any committee of the Board be permitted to reprice an Award after the date of grant without shareholder approval. |
(d) | Term of Award. Unless otherwise provided in the applicable Award Agreement, the term of an Award shall be at the discretion of the Board. |
10. | Termination and Amendment of the Sub-Plan. This Sub-Plan shall terminate on the date of termination of the Plan and no Award may be granted pursuant to this Sub-Plan thereafter. The Board may, at any time and from time to time, amend, modify or suspend this Sub-Plan and all administrative rules, regulations and practices hereunder; provided, however, that no such amendment, modification, suspension or termination shall impair or adversely alter any Awards theretofore granted under this Sub-Plan, except with the consent of the Participant, nor shall any amendment, modification, suspension or termination deprive any Participant of any Shares that he or she may have acquired through or as a result of this Sub-Plan. |
11. | Non-Exclusivity of this Sub-Plan. Except as otherwise explicitly stated herein, the adoption of this Sub-Plan by the Board shall not be construed as amending, modifying or rescinding the Plan but is intended to serve as a framework for the Board with respect to grants to Participants. |
12. | Multiple Award Grants. The terms of each Award grant may differ from the terms of any other Award granted under this Sub-Plan. The Board may also make more than one grant of Awards to a given Participant during the term of this Sub-Plan. |
Participant: | |
Number of Units: | |
Date of Grant: | |
Vesting Schedule: | 25% on 1st Anniversary of Date of Grant 25% on 2nd Anniversary of Date of Grant 25% on 3rd Anniversary of Date of Grant 25% on 4th Anniversary of Date of Grant |
1. | Vesting Schedule; Form and Timing of Payment of Vested Restricted Stock Units. Subject to the terms and conditions of this Agreement and the Plan, a number of the Restricted Stock Units will vest as set forth above, subject to the Participant’s continued Active Status through the applicable Vesting Date (except as provided in Sections 3.2, 3.3 or 3.4 below). Any Restricted Stock Units that vest will be paid to the Participant solely in whole Shares (and not in cash, as the Plan permits) on, or within thirty (30) days after, the relevant Vesting Date on which the Restricted Stock Units vest in accordance with this Section 1 (or, if earlier, upon a vesting event contemplated under Sections 3.2 or 3.4 below, as applicable), subject to any delayed payment required under Section 6 below. |
2. | Dividend Equivalents. On each date that a cash dividend is paid to holders of Shares, an amount (the “Dividend Equivalent Amount”) equal to the cash dividend that is paid on each Share, multiplied by the number of Shares subject to the Restricted Stock Units and any Dividend Equivalent RSUs (as defined below) that remain unvested and outstanding as of the dividend payment date, shall be credited for the benefit of the Participant, and such credited amount shall be converted into an additional number of Restricted Stock Units (“Dividend Equivalent RSUs”) determined by dividing the Dividend Equivalent Amount by the Fair Market Value of a Share on the dividend payment date, rounded up or down to the nearest whole number. Dividend Equivalent RSUs will be subject to the same conditions as the underlying Restricted Stock Units with respect to which the Dividend Equivalent RSUs were paid, including, without limitation, the vesting conditions and the provisions governing time and form of settlement applicable to the underlying Restricted Stock Units. Unless expressly provided otherwise, as used elsewhere in this Agreement “Restricted Stock Units” shall include any Dividend Equivalent RSUs that have been credited to the Participant’s account. |
3. | Termination of Employment; Change of Control. |
3.1 | Termination of Employment. Except as provided in Sections 3.3 or 3.4 below, any unvested Restricted Stock Units subject to this Agreement shall immediately terminate and be automatically forfeited by the Participant to the Company upon the termination of the Participant’s Active Status with the Company or any Subsidiary or affiliate of the Company for any reason (as further described in Section 8(l) below), including without limitation, voluntary termination by the Participant, or termination by the Company or any Subsidiary or affiliate of the Company because of Misconduct. |
3.2 | Change of Control. Upon a Change of Control, the vesting of the Restricted Stock Units shall accelerate, and the Restricted Stock Units shall become fully vested and payable to the extent and under the terms and conditions set |
3.3 | Retirement. If the Participant’s Active Status terminates due to Retirement, the Participant will continue to vest in all unvested Restricted Stock Units as if the Participant’s Active Status had not terminated, subject to and conditioned upon compliance with the terms of Section 4 through each Vesting Date. |
3.4 | Disability or Death. If the Participant’s Active Status terminates due to Disability or death, all unvested Restricted Stock Units will vest in full as of the date of termination of Active Status due to Disability or death. |
4. | Misconduct. As a condition to receiving and becoming eligible to vest in the Restricted Stock Units, the Participant hereby agrees not to engage in Misconduct. |
5. | Clawback. If the Company determines, in its sole discretion, that the Participant has engaged in Misconduct, the Participant agrees and covenants that (a) any unvested portion of the Restricted Stock Units shall be immediately forfeited as of the date the Company determines that the Participant has engaged in Misconduct (the “Determination Date”); (b) if any part of the Restricted Stock Units vested and were settled prior to the Determination Date, upon the Company’s demand, the Participant shall immediately deliver to the Company (i) the Shares that the Participant acquired upon settlement of such Restricted Stock Units and (ii) to the extent any such Shares were previously sold by the Participant, a cash amount equal to the Fair Market Value as of the Determination Date of the Shares contemplated to be returned to the Company under this clause; and (c) the foregoing remedies set forth in this Section 5. shall not be the Company’s exclusive remedies, which shall include, among other remedies, injunctive relief and damages that may be available to the Company. The Company reserves all other rights and remedies available to it at law or in equity. |
6. | Code Section 409A. The provisions in this Section 6 shall apply if the Participant is subject to taxation in the United States. |
6.1 | To the extent the Restricted Stock Units constitute “nonqualified deferred compensation” that is subject to Code Section 409A (“NQ Deferred Compensation”), any Restricted Stock Units that are payable upon or with reference to the date that the Participant’s Active Service terminates (i) shall not be paid unless the Participant experiences a “separation from service” within the meaning of Code Section 409A and (ii) if the Participant is a “specified employee” within the meaning of Code Section 409A on the date of the Participant’s separation from service, then the Restricted Stock Units shall be paid on the first business day of the seventh month following the Participant’s separation from service, or, if earlier, on the date of the Participant’s death, to the extent such delayed payment is required in order to avoid a prohibited distribution under Code Section 409A. |
6.2 | This Award and payments made pursuant to this Agreement and the Plan are intended to qualify for an exemption from or comply with Code Section 409A. Notwithstanding any other provision in this Agreement and the Plan, the Company, to the extent it deems necessary or advisable in its sole discretion, reserves the right, but shall not be required, to unilaterally amend or modify this Agreement and/or the Plan so that the Restricted Stock Units granted to the Participant qualify for exemption from or comply with Code Section 409A; provided, however, that |
6.3 | If the vesting of the Restricted Stock Units is accelerated upon a Change of Control, the Restricted Stock Units are considered NQ Deferred Compensation, and the Change of Control does not constitute a “change in control event,” within the meaning of the U.S. Treasury Regulations, then the cash equivalent of the Restricted Stock Units calculated as of the date of the Change in Control shall be paid on the earliest of the applicable Vesting Date, the date of the Participant’s death or the date the Participant’s Active Status terminates due to Disability. |
7. | Responsibility for Taxes. Regardless of any action the Company or, if different, the Participant’s employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, fringe benefit tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and may exceed the amount, if any, actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock Units, including, but not limited to the grant of the Restricted Stock Units, the vesting or settlement of the Restricted Stock Units, the issuance of Shares in settlement of the Restricted Stock Units, the subsequent sale of Shares acquired at vesting and the receipt of any dividends and/or any dividend equivalents; and (ii) do not commit to and are under no obligation to structure the terms of the Award or any aspect of the Restricted Stock Units to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Furthermore, if the Participant is subject to tax in more than one jurisdiction, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. |
(a) | withholding from the Participant’s wages or other cash compensation paid to the Participant by the Company and/or the Employer; or |
(b) | withholding from proceeds of the sale of Shares issued in settlement of the vested Restricted Stock Units, either through a voluntary sale or through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization without further consent), to the extent and in the manner permitted by all applicable securities laws, including making any necessary securities registration or taking any other necessary actions; or |
(c) | withholding in whole Shares to be issued in settlement of the vested Restricted Stock Units based on the Fair Market Value of the underlying Shares on the date the withholding obligation arises, in an amount equal to the aggregate withholding obligation as determined by the Company and/or the Employer with respect to such Award, provided, however that if the Participant is a Section 16 officer of the Company under the Exchange Act, then the Company will withhold in Shares upon the relevant taxable or tax withholding event, as applicable, unless the use of such withholding method is problematic under applicable tax or securities law or has materially adverse accounting consequences, in which case, the obligation for Tax-Related Items may be satisfied by one or a combination of methods (a) and (b) above. |
8. | Nature of Grant. In accepting the grant of the Award, the Participant acknowledges, understands and agrees that: |
(a) | the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan; |
(b) | the grant of the Award is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of restricted stock units or other awards, or benefits in lieu of restricted stock units, even if restricted stock units have been granted in the past; |
(c) | all decisions with respect to future restricted stock units or other awards, if any, will be at the sole discretion of the Company; |
(d) | the Award and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or service relationship with the Company and shall not interfere with the ability of the Employer to terminate the Participant’s employment or service relationship, if any; |
(e) | the Participant’s participation in the Plan is voluntary; |
(f) | the Restricted Stock Units and the Shares subject to the Restricted Stock Units, and the income from and value of same, are not intended to replace any pension rights or compensation; |
(g) | the Restricted Stock Units and the Shares subject to the Restricted Stock Units, and the income from and value of same, are not part of normal or expected compensation or salary for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, holiday pay, bonuses, long-service awards, pension or retirement or welfare benefits or similar mandatory payments; |
(h) | unless otherwise agreed with the Company, the Restricted Stock Units and the Shares subject to the Restricted Stock Units, and the income from and value of same, are not granted as consideration for, or in connection with, the service that the Participant may provide as a director of a Subsidiary or affiliate of the Company; |
(i) | the future value of the Shares subject to the Restricted Stock Units is unknown, indeterminable, and cannot be predicted with certainty; |
(j) | after termination of the Participant’s Active Status, the Participant is no longer eligible to receive any new restricted stock units under the Plan; |
(k) | no claim or entitlement to compensation or damages shall arise from forfeiture of the Restricted Stock Units resulting from termination of the Participant’s Active Status (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or providing services or the terms of the Participant’s employment or service contract, if any); |
(l) | for purposes of the Restricted Stock Units, and notwithstanding anything to the contrary provided in the Plan, the Participant’s Active Status will be considered terminated as of the date the Participant is no longer actively providing services to the Company or one of its Subsidiaries or affiliates (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where |
(m) | unless otherwise provided in the Plan or by the Company in its discretion, the Restricted Stock Units and the benefits evidenced by this Agreement do not create any entitlement to have the Restricted Stock Units or any such benefits transferred to, or assumed by, another company nor be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Common Stock; and |
(n) | the following provisions apply only if the Participant is providing services outside the United States: |
(1) | the Restricted Stock Units and the Shares subject to the Restricted Stock Units, and the income from and value of same, are not part of normal or expected compensation or salary for any purpose; and |
(2) | neither the Company, the Employer nor any other Subsidiary or affiliate of the Company shall be liable for any foreign exchange rate fluctuation between Participant’s local currency and the United States Dollar that may affect the value of the Restricted Stock Units or of any amounts due to the Participant pursuant to the settlement of the Restricted Stock Units or the subsequent sale of any Shares acquired upon settlement. |
9. | No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant should consult with his or her own personal tax, legal and financial advisors regarding the Participant’s participation in the Plan before taking any action related to the Plan. |
10. | Data Privacy. |
(a) | Data Collection and Usage. The Company and any Subsidiary or affiliate of the Company, including the Employer, may collect, process and use certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, email address, date of birth, social insurance, passport or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all restricted stock units or any other entitlement to Shares or equivalent benefits awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the purposes of implementing, administering and managing the Plan. The legal basis, where required, for the processing of Data is the Participant’s consent. |
(b) | Stock Plan Administration Service Providers. The Company transfers Data to Fidelity Plan Services, LLC and its affiliated companies (collectively, “Fidelity”), an independent service provider based in the United States, which is assisting the Company with the implementation, administration and management of the Plan. The Company may select a different service provider or additional service providers and share Data with such other provider(s) serving in a similar manner. The Participant may be asked to agree on separate terms and data processing practices with the service provider, with such agreement being a condition to the ability to participate in the Plan. |
(c) | International Data Transfers. The Company and its service providers are based in the United States. The Participant’s country or jurisdiction may have different data privacy laws and protections than the United States. For example, the European Commission has issued a limited adequacy finding with respect to the United States that applies only to the extent companies register for the EU-U.S. Privacy Shield program. The Company’s legal basis, where required, for the transfer of Data is the Participant’s consent. |
(d) | Data Retention. The Company will hold and use Data only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan, or as required to comply with legal or regulatory obligations, including under tax, securities, exchange control and labor laws. |
(e) | Voluntariness and Consequences of Consent Denial or Withdrawal. Participation in the Plan is voluntary and the Participant is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke his or her consent, the Participant’s salary from or employment and career with the Employer will not be affected; the only consequence of refusing or withdrawing the Participant’s consent is that the Company would not be able to grant Restricted Stock Units or other equity awards to the Participant or administer or maintain such awards. |
(f) | Data Subject Rights. The Participant may have a number of rights under data privacy laws in his or her jurisdiction. Depending on where the Participant is based, such rights may include the right to (i) request access or copies of Data the Company processes, (ii) rectification of incorrect Data, (iii) deletion of Data, (iv) restrictions on processing of Data, (v) portability of Data, (vi) lodge complaints with competent authorities in the Participant’s jurisdiction, and/or (vii) receive a list with the names and addresses of any potential recipients of Data. To receive clarification regarding these rights or to exercise these rights, the Participant can contact his or her local human resources representative. |
11. | Governing Law/Choice of Venue. The Award and the provisions of this Agreement are governed by, and subject to, the laws of the State of Washington, as provided in the Plan, without regard for its conflict of laws provisions. For purposes of litigating any dispute that arises under this grant or this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of Washington, and agree that such litigation shall be conducted exclusively in the courts of King County, or the federal courts of the United States for the 9th Circuit, and no other courts, where this grant is made and/or to be performed. |
12. | Compliance with Law. Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Shares, the Company shall not be required to deliver any Shares issuable upon settlement of the Restricted Stock Units prior to the completion of any registration or qualification of the Shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable. The Participant understands that the Company is under no obligation to register or qualify the Shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Further, the Participant agrees that the Company shall have unilateral authority to amend the Plan and this Agreement without the Participant’s consent to the extent necessary to comply with securities or other laws applicable to issuance of Shares. |
13. | Language. The Participant acknowledges and represents that he or she is proficient in the English language or has consulted with an advisor who is sufficiently proficient in English, as to allow the Participant to understand the terms of this Agreement and any other documents related to the Plan. If the Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control. |
14. | Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such |
15. | Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable. |
16. | Undertakings. The Participant hereby agrees to take whatever additional action and execute whatever additional documents the Company may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either the Participant or the Restricted Stock Units pursuant to the provisions of this Agreement. |
17. | No Rights as Shareholder. Except as otherwise provided in Section 2, the Participant will not have dividend, voting or any other rights as a shareholder of the Shares with respect to the Restricted Stock Units. Upon payment of the vested Restricted Stock Units in Shares, the Participant will obtain full dividend, voting and other rights as a shareholder of the Company. |
18. | Restrictions on Transfer. Notwithstanding anything in the Plan to the contrary, the Restricted Stock Units granted pursuant to this Award may not be sold, pledged (as collateral for a loan or as security for the performance of an obligation or for any other purpose), assigned, hypothecated, transferred, disposed of in exchange for consideration, made subject to attachment or similar proceedings, or otherwise disposed of under any circumstances, except that this Award may be transferred (i) by will or by laws of descent and distribution applicable to a deceased Participant or (ii) pursuant to a domestic relations order. |
19. | Appendix A. Notwithstanding any provisions in this Agreement, the Award of Restricted Stock Units shall be subject to any special terms and conditions set forth in Appendix A for the Participant’s country. Moreover, if the Participant relocates to one of the countries included in Appendix A, the special terms and conditions for such country will apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix A constitutes part of this Global Key Employee Restricted Stock Unit Agreement. |
20. | Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the Restricted Stock Units and on any Shares acquired under the Plan, to the extent that the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings (as provided in Section 16 above) that may be necessary to accomplish the foregoing. |
21. | Waiver. If the Participant breaches or otherwise does not comply with any provision of this Agreement, but the Company does not act upon this breach or non-compliance and continues to comply with its obligations under this Agreement, this shall not mean that the Company waives any other provision of this Agreement or will otherwise permit any further breach of or non-compliance with any provision of this Agreement. |
22. | Insider Trading/Market Abuse Laws. Depending on the Participant’s country or the country in which Shares are listed, the Participant may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, including the United States and the Participant’s country, which may affect the Participant’s ability to accept, acquire, sell or attempt to sell, or otherwise dispose of Shares, rights to Shares (e.g., Restricted Stock Units) or rights linked to the value of Shares during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws or regulations in the applicable jurisdiction). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders the Participant placed before possessing inside information. Furthermore, the Participant may be prohibited from (i) disclosing insider information to any third party (other than on a “need to know” basis) and (ii) “tipping” third parties or causing them otherwise to buy or sell securities, including third parties who are fellow employees. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable insider trading policy of the Company. The Participant acknowledges that it is the Participant’s responsibility to comply with any applicable restrictions, and the Participant should consult with the Participant’s own personal legal and financial advisors on this matter before taking any action related to the Plan. |
23. | Foreign Asset/Account Reporting; Exchange Controls. The Participant’s country may have certain foreign asset and/or account reporting requirements and/or exchange controls which may affect the Participant’s ability to acquire or hold Shares under the Plan or cash received from participating in the Plan (including from any dividends received or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside the Participant’s country. The Participant |
STARBUCKS CORPORATION | |
By_________________________ | |
Its_________________________ | |
PARTICIPANT | |
Signature___________________ |
Optionee: | |
Number of Options: | |
Type of Option Grant: | Non-Qualified Stock Option |
Exercise Price: | |
Date of Grant: | |
Term of Option: | 10 years from Date of Grant |
Performance Period: | |
Vesting Date |
1. | Vesting Conditions. Except as provided in Section 2, the number of Options granted under the Award shall vest and become exercisable on the Vesting Date to the extent the Performance Goal set forth on the schedule that is attached hereto as Schedule I is attained as of the Vesting Date and subject to the Optionee’s continued Active Status through the Vesting Date. |
2. | Termination of Employment; Change of Control. |
2.1 | Termination of Employment. Except as provided in Section 2.2 or 2.3 below (or as otherwise determined by the Board), any unvested Options subject to this Agreement shall immediately terminate and be automatically forfeited by the Optionee to the Company upon the termination of the Optionee’s Active Status with the Company or any Subsidiary or affiliate of the Company for any reason (as further described in Section 6(n) below), including without limitation, voluntary termination by the Optionee, or termination by the Company or any Subsidiary or affiliate of the Company because of Misconduct. |
2.2 | Change of Control. Upon a Change of Control, the vesting of the Options shall accelerate, and the Options shall become fully vested and exercisable to the extent and under the terms and conditions set forth in the Plan if the Performance Goal has been attained or will be attained in connection with the Change of Control; provided, that for purposes of this Section, “Resignation (or Resign) for Good Reason” shall have the following meaning: |
2.3 | Death, Disability and Certain Termination Events. If the Optionee’s Active Status terminates due to death, Disability, voluntary Resignation for Good Reason (in the absence of a Change of Control) or involuntary termination absent Misconduct prior to the last day of the Performance Period, the Optionee shall vest in the Options on the Vesting Date to the extent the Performance Goal is attained as of the Vesting Date. For avoidance of doubt, Retirement by the Optionee shall not accelerate vesting of the Options. |
3. | Misconduct. As a condition to receiving and becoming eligible to vest and exercise the Options, the Optionee hereby agrees not to engage in Misconduct. |
4. | Clawback. If the Company determines, in its sole discretion, that the Optionee has engaged in Misconduct, the Optionee agrees and covenants that (a) any unexercised portion of the Options shall be immediately forfeited as of the date the Company determines that the Optionee has engaged in Misconduct (the “Determination Date”); (b) if any part of the Options were exercised prior to the Determination Date, upon the Company’s demand, the Optionee shall immediately deliver to the Company (i) the Shares that the Optionee acquired upon exercise of such Options (net of the value of cash paid by Optionee in a cash exercise, if applicable) and (ii) to the extent any such Shares were previously sold by the Optionee, a cash amount equal to the Fair Market Value as of the Determination Date of the Shares contemplated to be returned to the Company under this clause (net of the value of cash paid by Optionee in a cash exercise, if applicable); and (c) the foregoing remedies set forth in this Section 4 shall not be the Company’s exclusive remedies, which shall include, among other remedies, injunctive relief and damages that may be available to the Company. The Company reserves all other rights and remedies available to it at law or in equity. |
5. | Responsibility for Taxes. Regardless of any action the Company or, if different, the Optionee’s employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, fringe benefit tax, payment on account or other tax-related items related to the Optionee’s participation in the Plan and legally applicable to the Optionee (“Tax-Related Items”), the Optionee acknowledges that the ultimate liability for all Tax-Related Items is and remains his or her responsibility and may exceed the amount, if any, actually withheld by the Company or the Employer. The Optionee further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Options, including but not limited to, the grant, vesting or exercise of the Options, the subsequent sale of Shares acquired pursuant to such exercise and the receipt of any dividends; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Options to reduce or eliminate the Optionee’s liability for Tax-Related Items or achieve any particular tax result. Furthermore, if the Optionee is subject to tax in more than one jurisdiction, he or she acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. |
(a) | withholding from the Optionee’s wages or other cash compensation paid to the Optionee by the Company and/or the Employer; or |
(b) | withholding from proceeds of the sale of Shares acquired upon exercise of the Options, either through a voluntary sale or through a mandatory sale arranged by the Company (on the Optionee’s behalf pursuant to this authorization without further consent), to the extent and in the manner permitted by all applicable securities laws, including making any necessary securities registration or taking any other necessary actions; or |
(c) | withholding in whole Shares to be issued at exercise of the Options based on the Fair Market Value of the underlying Shares on the date the withholding obligation arises, in an amount equal to the aggregate withholding obligation as determined by the Company and/or the Employer with respect to such Options. |
6. | Nature of Grant. In accepting the grant of the Options, the Optionee acknowledges, understands and agrees that: |
(a) | the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan; |
(b) | the grant of the Options is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of options or other awards, or benefits in lieu of options, even if options have been granted in the past; |
(c) | all decisions with respect to future option or other grants, if any, will be at the sole discretion of the Company; |
(d) | the Optionee’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or service relationship with the Company and shall not interfere with the ability of the Employer to terminate his or her employment or service relationship, if any; |
(e) | the Optionee is voluntarily participating in the Plan; |
(f) | the Options and the Shares subject to the Options, and the income from and value of same, are not intended to replace any pension rights or compensation; |
(g) | the Options and the Shares subject to the Options, and the income from and value of same, are not part of normal or expected compensation or salary for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, holiday pay, bonuses, long-service awards, pension or retirement or welfare benefits or similar mandatory payments; |
(h) | unless otherwise agreed with the Company, the Options and the Shares subject to the Options, and the income from and value of same, are not granted as consideration for, or in connection with, the service that the Optionee may provide as a director of a Subsidiary or affiliate of the Company; |
(i) | the future value of the Shares subject to the Options is unknown, indeterminable, and cannot be predicted with certainty; |
(j) | if the underlying Shares do not increase in value, the Options will have no value; |
(k) | if the Optionee exercises the Option and acquires Shares, the value of such Shares may increase or decrease in value even below the Exercise Price; |
(l) | after termination of the Optionee’s Active Status, the Optionee is no longer eligible to receive any new options under the Plan; |
(m) | no claim or entitlement to compensation or damages shall arise from termination of the Options resulting from termination of the Optionee’s Active Status (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Optionee is employed or providing services or the terms of the Optionee’s employment or service contract, if any); |
(n) | for purposes of the Options, and notwithstanding anything to the contrary provided in the Plan, the Optionee’s Active Status will be considered terminated as of the date the Optionee is no longer actively providing services to the Company or one of its Subsidiaries or affiliates (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Optionee is employed or providing services or the terms of the Optionee’s employment or service contract, if any), and, unless otherwise provided in this Agreement or the Plan, (i) the Optionee’s right to vest in the Options under the Plan, if any will terminate as of such date and will not be extended by any notice period (e.g., the Optionee’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Optionee is employed or providing services or the terms of the Optionee’s employment or service contract, if any), and (ii) the period (if any) during which the Optionee may exercise the Options after termination of the Optionee’s Active Status will commence on such date and will not be extended by any notice period under employment laws in the jurisdiction where the Optionee is employed or providing services or the terms of the Optionee’s employment or service contract, if any; the Committee shall have the exclusive discretion to determine when the Optionee’s Active Status for purposes of the Option grant is terminated (including whether the Optionee may still be considered to be providing services while on a leave of absence); |
(o) | unless otherwise provided in the Plan or by the Company in its discretion, the Option and the benefits evidenced by this Agreement do not create any entitlement to have the Option or any such benefits transferred to, or assumed by, another company nor be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Common Stock; and |
(p) | the following provisions apply only if the Optionee is providing services outside the United States: |
(1) | the Option and the Shares subject to the Option, and the income from and value of same, are not part of normal or expected compensation or salary for any purpose; and |
(2) | neither the Company, the Employer nor any other Subsidiary or affiliate of the Company shall be liable for any foreign exchange rate fluctuation between the Optionee’s local currency and the United States Dollar that may affect the value of the Options or of any amounts due to the Optionee pursuant to the exercise of the Options or the subsequent sale of any Shares acquired upon exercise. |
7. | Method of Payment. The permissible methods of payment of consideration for any Shares to be issued upon exercise of an Option shall be (i) a request that the Company or the designated brokerage firm conduct a cashless exercise of the Option and (ii) cash. |
8. | No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Optionee’s participation in the Plan, or the Optionee’s acquisition or sale of the underlying Shares. The Optionee should consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan. |
9. | Data Privacy. |
(a) | Data Collection and Usage. The Company and any Subsidiary or affiliate of the Company, including the Employer, may collect, process and use certain personal information about the Optionee, including, but not limited to, the Optionee’s name, home address and telephone number, email address, date of birth, social insurance, passport or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all Options or any other entitlement to Shares or equivalent benefits awarded, |
(b) | Stock Plan Administration Service Providers. The Company transfers Data to Fidelity Plan Services, LLC and its affiliated companies (collectively, “Fidelity”), an independent service provider based in the United States, which is assisting the Company with the implementation, administration and management of the Plan. The Company may select a different service provider or additional service providers and share Data with such other provider(s) serving in a similar manner. The Optionee may be asked to agree on separate terms and data processing practices with the service provider, with such agreement being a condition to the ability to participate in the Plan. |
(c) | International Data Transfers. The Company and its service providers are based in the United States. The Optionee’s country or jurisdiction may have different data privacy laws and protections than the United States. For example, the European Commission has issued a limited adequacy finding with respect to the United States that applies only to the extent companies register for the EU-U.S. Privacy Shield program. The Company’s legal basis, where required, for the transfer of Data is the Optionee’s consent. |
(d) | Data Retention. The Company will hold and use Data only as long as is necessary to implement, administer and manage the Optionee’s participation in the Plan, or as required to comply with legal or regulatory obligations, including under tax, securities, exchange control and labor laws. |
(e) | Voluntariness and Consequences of Consent Denial or Withdrawal. Participation in the Plan is voluntary and the Optionee is providing the consents herein on a purely voluntary basis. If the Optionee does not consent, or if the Optionee later seeks to revoke his or her consent, the Optionee’s salary from or employment and career with the Employer will not be affected; the only consequence of refusing or withdrawing the Optionee’s consent is that the Company would not be able to grant Options or other equity awards to the Optionee or administer or maintain such awards. |
(f) | Data Subject Rights. The Optionee may have a number of rights under data privacy laws in his or her jurisdiction. Depending on where the Optionee is based, such rights may include the right to (i) request access or copies of Data the Company processes, (ii) rectification of incorrect Data, (iii) deletion of Data, (iv) restrictions on processing of Data, (v) portability of Data, (vi) lodge complaints with competent authorities in the Optionee’s jurisdiction, and/or (vii) receive a list with the names and addresses of any potential recipients of Data. To receive clarification regarding these rights or to exercise these rights, the Optionee can contact his or her local human resources representative. |
10. | Governing Law/Choice of Venue. The Options and the provisions of this Agreement are governed by, and subject to, the laws of the State of Washington, as provided in the Plan, without regard for its conflict of laws provisions. For purposes of litigating any dispute that arises under this grant or this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of Washington, agree that such litigation shall be conducted exclusively in the courts of King County, or the federal courts of the United States for the 9th Circuit, and no other courts, where this grant is made and/or to be performed. |
11. | Compliance with Law. Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Shares, the Company shall not be required to deliver any Shares issuable upon exercise of the Options prior to the completion of any registration or qualification of the Shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable. The Optionee understands that the Company is under no obligation to register or qualify the Shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Further, the Optionee agrees that the Company shall have unilateral authority to amend the Plan and this Agreement without the Optionee’s consent to the extent necessary to comply with securities or other laws applicable to issuance of shares. |
12. | Language. Optionee acknowledges and represents that he or she is proficient in the English language or has consulted with an advisor who is sufficiently proficient in English, as to allow Optionee to understand the terms of this Agreement and any other documents related to the Plan. If the Optionee has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control. |
13. | Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Optionee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company. |
14. | Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable. |
15. | Undertakings. The Optionee hereby agrees to take whatever additional action and execute whatever additional documents the Company may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either the Optionee or the Option pursuant to the provisions of this Agreement. |
16. | Restrictions on Transfer. Notwithstanding anything in the Plan to the contrary, the Options granted pursuant to this Award may not be sold, pledged (as collateral for a loan or as security for the performance of an obligation or for any other purpose), assigned, hypothecated, transferred, disposed of in exchange for consideration, made subject to attachment or similar proceedings, or otherwise disposed of under any circumstances, except that the Options may be transferred (i) by will or by laws of descent and distribution applicable to a deceased Optionee, (ii) pursuant to a domestic relations order, (iii) to the extent permitted by the Board or Committee, to one or more of the beneficiaries on a Company-approved form who may exercise the Option after the Optionee’s death; and/or (iv) by gift to a Family Member of the Optionee. For purposes of this Section 16, a “Family Member” shall include any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing an Optionee’s household (other than a tenant or an employee), a trust in which these persons have more than fifty percent (50%) of the beneficial interest, a foundation in which these persons (or an Optionee) control the management of assets, and any other entity in which these persons (or an Optionee) own more than fifty percent (50%) of the voting interests. |
17. | Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Optionee’s participation in the Plan, on the Options and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Optionee to sign any additional agreements or undertakings (as provided in Section 15 above) that may necessary to accomplish the foregoing. |
18. | Waiver. If the Optionee breaches or otherwise does not comply with any provision of this Agreement, but the Company does not act upon this breach or non-compliance and continues to comply with its obligations under this Agreement, this shall not mean that the Company waives any other provision of this Agreement or will otherwise permit any further breach of or non-compliance with any provision of this Agreement. |
STARBUCKS CORPORATION | |
By_________________________ | |
Its_________________________ | |
OPTIONEE | |
Signature___________________ |
Partner Name: | |
Target Restricted Stock Units: | |
Date of Grant: | |
Performance Period: |
1. | Vesting Schedule. The number of Performance RSUs granted under the Award that actually vest and that will be settled shall be determined pursuant to a two-step process: (i) first the maximum number of Performance RSUs that are eligible to vest shall be determined as provided under Section 1.1 hereof on the basis of the level at which the Performance Goals specified on attached Schedule I are actually attained and (ii) then the maximum number of Performance RSUs calculated under clause (i) that will actually vest shall be determined on the basis of the Participant’s completion of the requirements set forth in Section 1.2 hereof. |
1.1 | Performance Goal Requirements. The attached Schedule I specifies the Performance Goals required to be attained during the Performance Period in order for the Performance RSUs to become eligible to vest. As soon as reasonably practicable following the end of the Performance Period, the Committee shall determine in its sole discretion the attainment level of the Performance Goals. On the basis of the determined level of attainment of the Performance Goals, the Target RSUs will be multiplied by the applicable percentage determined in accordance with the performance matrix set forth in Schedule I. The number of Performance RSUs resulting from such determination shall constitute the maximum number of Performance RSUs in which the Participant may vest under this Award (the “Earned Performance RSUs”). |
1.2 | Active Status Vesting. Subject to the terms and conditions of this Award, a number of Earned Performance RSUs will vest as detailed in the attached Schedule I of this Agreement, subject to the Participant’s continued Active Status through the date the Performance RSUs are paid pursuant to Section 3. |
2. | Dividend Equivalents. On each date that a cash dividend is paid to holders of Shares during the Performance Period, an amount (the “Dividend Equivalent Amount”) equal to the cash dividend that is paid on each Share, multiplied by the number of Shares subject to the Target RSUs and any Dividend Equivalent RSUs (as defined below) that remain unvested and outstanding as of the dividend payment date, shall be credited for the benefit of the Participant, and such credited amount shall be converted into an additional number of Performance RSUs (“Dividend Equivalent RSUs”) determined by dividing the Dividend Equivalent Amount by the Fair Market Value of a Share on the dividend payment date, rounded up or down to the nearest whole number. At the end of the Performance Period, the number of Dividend Equivalent RSUs will be adjusted to reflect the number of Dividend Equivalent RSUs that would have been credited to the Participant as of the Date of Grant if such calculations had been based on the number of Earned Performance RSUs (such adjusted number, the “Earned Dividend Equivalent RSUs”). During the period beginning immediately following the last day of the Performance Period and ending on the date the Performance RSUs granted hereunder are paid pursuant to Section 3 below, Dividend Equivalent RSUs will accrue on any Earned Performance RSUs and any Earned Dividend Equivalent RSUs. Dividend Equivalent RSUs will be |
3. | Form and Timing of Payment of Vested Performance RSUs. Subject to the terms and conditions of this Agreement and the Plan, any Performance RSUs that vest will be paid to the Participant solely in whole Shares (and not in cash, as the Plan permits), on, or within sixty (60) days after, (i) the last day of the Performance Period, including upon a vesting resulting from the Participant’s termination due the Participant’s Retirement pursuant to Section 4.3 below or from the Participant’s termination prior to the last day of the Performance Period resulting from the Participant’s termination due to death or Disability pursuant to Section 4.4 below or (ii) a vesting event contemplated in Section 4.2 below or vesting event resulting from the Participant’s termination following the last day of the Performance Period resulting from the Participant’s termination due to death or Disability pursuant to Section 4.4 below. |
4. | Termination of Employment; Change of Control. |
4.1 | Termination of Employment. Except as provided in Sections 4.2, 4.3 or 4.4 below, any unvested Performance RSUs subject to this Agreement shall immediately terminate and be automatically forfeited by the Participant to the Company upon the termination of the Participant’s Active Status with the Company or any Subsidiary or affiliate of the Company for any reason (as further described in Section 9(l) below), including without limitation, voluntary termination by the Participant, or termination by the Company or any Subsidiary or affiliate of the Company because of Misconduct. |
4.2 | Change of Control. Upon a Change of Control, the vesting of the Performance RSUs shall accelerate, and the Performance RSUs shall become fully vested and payable to the extent and under the terms and conditions set forth in the Plan; provided that, for purposes of this Section 4.2, “Resignation (or Resign) for Good Reason” shall have the following meaning: |
4.3 | Retirement. If the Participant’s Active Status terminates due to Retirement on a day following the date that is six (6) months after the Date of Grant, the Participant will continue to be eligible to vest in a number of Performance RSUs equal to the Earned Performance RSUs. |
4.4 | Death or Disability. If the Participant’s Active Status terminates due to Disability or death on or prior to the last day of the Performance Period, a number of Performance RSUs equal to the Target RSUs will vest in full as of the date of termination of Active Status due to Disability or death. If the Participant’s Active Status terminates due to Disability or death following the last day of the Performance Period, a number of Performance RSUs equal to the Earned Performance RSUs will vest in full as of the date of termination of Active Status due to Disability or death. |
5. | Misconduct. As a condition to receiving and becoming eligible to vest in the Performance RSUs, the Participant hereby agrees not to engage in Misconduct. |
6. | Clawback. If the Company determines, in its sole discretion, that the Participant has engaged in Misconduct, the Participant agrees and covenants that (a) any unvested portion of the Performance RSUs shall be immediately forfeited as of the date the Company determines that the Participant has engaged in Misconduct (the “Determination Date”); (b) if any part of the |
7. | Code Section 409A. The provisions in this Section 7 shall apply if the Participant is subject to taxation in the United States. |
7.1 | To the extent the Performance RSUs constitute “nonqualified deferred compensation” that is subject to Code Section 409A (“NQ Deferred Compensation”), any Performance RSUs that are payable upon or with reference to the date that the Participant’s Active Service terminates (i) shall not be paid unless the Participant experiences a “separation from service” within the meaning of Code Section 409A and (ii) if the Participant is a “specified employee” within the meaning of Code Section 409A on the date of the Participant’s separation from service, then the Performance RSUs shall be paid on the first business day of the seventh month following the Participant’s separation from service, or, if earlier, on the date of the Participant’s death, to the extent such delayed payment is required in order to avoid a prohibited distribution under Code Section 409A. |
7.2 | This Award and payments made pursuant to this Agreement and the Plan are intended to qualify for an exemption from or comply with Code Section 409A. Notwithstanding any other provision in this Agreement and the Plan, the Company, to the extent it deems necessary or advisable in its sole discretion, reserves the right, but shall not be required, to unilaterally amend or modify this Agreement and/or the Plan so that the Performance RSUs granted to the Participant qualify for exemption from or comply with Code Section 409A; provided, however, that the Company makes no representations that the Performance RSUs shall be exempt from or comply with Code Section 409A and makes no undertaking to preclude Code Section 409A from applying to the Performance RSUs. Nothing in this Agreement or the Plan shall provide a basis for any person to take action against the Company or any Subsidiary or affiliate of the Company based on matters covered by Code Section 409A, including the tax treatment of any amount paid or Award made under this Agreement, and neither the Company nor any of its Subsidiaries or affiliates shall under any circumstances have any liability to any Participant or his or her estate or any other party for any taxes, penalties or interest imposed under Code Section 409A for any amounts paid or payable under this Agreement. |
7.3 | If the vesting of the Performance RSUs is accelerated in connection with a Change of Control, the Performance RSUs are considered NQ Deferred Compensation, and the Change of Control does not constitute a “change in control event,” within the meaning of the U.S. Treasury Regulations, then the cash equivalent of the Performance RSUs as of the date of the Change in Control shall be paid on the earliest of the applicable Vesting Date, the date of the Participant’s death or the date the Participant’s Active Status terminates due to Disability. |
8. | Responsibility for Taxes. Regardless of any action the Company or, if different, the Participant’s employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, fringe benefit tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“Tax-Related Items”), the Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and may exceed the amount, if any, actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Performance RSUs, including, but not limited to the grant of the Performance RSUs, the vesting or settlement of the Performance RSUs, the issuance of Shares in settlement of the Performance RSUs, the subsequent sale of Shares acquired at vesting and the receipt of any dividends and/or any dividend equivalents; and (ii) do not commit to and are under no obligation to structure the terms of the Award or any aspect of the Performance RSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Furthermore, if the Participant is subject to tax in more than one jurisdiction, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. |
(a) | withholding from the Participant’s wages or other cash compensation paid to the Participant by the Company and/or the Employer; or |
(b) | withholding from proceeds of the sale of Shares issued in settlement of the vested Performance RSUs, either through a voluntary sale or through a mandatory sale arranged by the Company (on the Participant’s behalf pursuant to this authorization without further consent), to the extent and in the manner permitted by all applicable securities laws, including making any necessary securities registration or taking any other necessary actions; or |
(c) | withholding in whole Shares to be issued in settlement of the vested Performance RSUs based on the Fair Market Value of the underlying Shares on the date the withholding obligation arises in an amount equal to the aggregate withholding obligation as determined by the Company and/or the Employer with respect to such Award, provided, however that if the Participant is a Section 16 officer of the Company under the Exchange Act, then the Company will withhold in Shares upon the relevant taxable or tax withholding event, as applicable, unless the use of such withholding method is problematic under applicable tax or securities law or has materially adverse accounting consequences, in which case, the obligation for Tax-Related Items may be satisfied by one or a combination of methods (a) and (b) above. |
9. | Nature of Grant. In accepting the grant of the Award, the Participant acknowledges, understands and agrees that: |
(a) | the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time; to the extent permitted by the Plan; |
(b) | the grant of the Award is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of restricted stock units or other awards, or benefits in lieu of restricted stock units, even if restricted stock units have been granted in the past; |
(c) | all decisions with respect to future restricted stock units or other awards, if any, will be at the sole discretion of the Company; |
(d) | the Award and the Participant’s participation in the Plan shall not create a right to employment or be interpreted as forming an employment or service relationship with the Company and shall not interfere with the ability of the Employer to terminate the Participant’s employment or service relationship, if any; |
(e) | the Participant’s participation in the Plan is voluntary; |
(f) | the Performance RSUs and the Shares subject to the Performance RSUs, and the income from and value of same, are not intended to replace any pension rights or compensation; |
(g) | the Performance RSUs and the Shares subject to the Performance RSUs, and the income from and value of same, are not part of normal or expected compensation or salary for purposes of calculating any severance, |
(h) | unless otherwise agreed with the Company. the Performance RSUs and the Shares subject to the Performance RSUs, and the income from and value of same, are not granted as consideration for, or in connection with, the service that the Participant may provide as a director of a Subsidiary or affiliate of the Company; |
(i) | the future value of the Shares subject to the Performance RSUs is unknown, indeterminable, and cannot be predicted with certainty; |
(j) | after termination of the Participant’s Active Status, the Participant is no longer eligible to receive any new restricted stock units under the Plan; |
(k) | no claim or entitlement to compensation or damages shall arise from forfeiture of the Performance RSUs resulting from termination of the Participant’s Active Status (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or providing services or the terms of the Participant’s employment or service contract, if any); |
(l) | for purposes of the Performance RSUs, and notwithstanding anything to the contrary provided in the Plan, the Participant’s Active Status will be considered terminated as of the date the Participant is no longer actively providing services to the Company or one of its Subsidiaries or affiliates (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where the Participant is employed or providing services or the terms of the Participant’s employment or service contract, if any), and unless otherwise provided in this Agreement or the Plan, the Participant’s right to vest in the Performance RSUs under the Plan, if any, will terminate as of such date and will not be extended by any notice period (e.g., the Participant’s period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Participant is employed or providing services or the terms of the Participant’s employment or service contract, if any); the Committee shall have the exclusive discretion to determine when the Participant’s Active Status for purposes of the Award is terminated (including whether the Participant may still be considered to be providing services while on a leave of absence); |
(m) | unless otherwise provided in the Plan or by the Company in its discretion, the Performance RSUs and the benefits evidenced by this Agreement do not create any entitlement to have the Performance RSUs or any such benefits transferred to, or assumed by, another company nor be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Common Stock; and |
(n) | the following provisions apply only if the Participant is providing services outside the United States: |
(1) | the Performance RSUs and the Shares subject to the Performance RSUs, and the income from and value of same, are not part of normal or expected compensation or salary for any purpose; and |
(2) | neither the Company, the Employer nor any other Subsidiary or affiliate of the Company shall be liable for any foreign exchange rate fluctuation between Participant’s local currency and the United States Dollar that may affect the value of the Performance RSUs or of any amounts due to the Participant pursuant to the settlement of the Performance RSUs or the subsequent sale of any Shares acquired upon settlement. |
10. | No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant should consult with his or her own personal tax, legal and financial advisors regarding the Participant’s participation in the Plan before taking any action related to the Plan. |
11. | Data Privacy. |
(a) | Data Collection and Usage. The Company and any Subsidiary or affiliate of the Company, including the Employer, may collect, process and use certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, email address, date of birth, social insurance, passport or other identification number, salary, nationality, job title, any Shares or |
(b) | Stock Plan Administration Service Providers. The Company transfers Data to Fidelity Plan Services, LLC and its affiliated companies (collectively, “Fidelity”), an independent service provider based in the United States, which is assisting the Company with the implementation, administration and management of the Plan. The Company may select a different service provider or additional service providers and share Data with such other provider(s) serving in a similar manner. The Participant may be asked to agree on separate terms and data processing practices with the service provider, with such agreement being a condition to the ability to participate in the Plan. |
(c) | International Data Transfers. The Company and its service providers are based in the United States. The Participant’s country or jurisdiction may have different data privacy laws and protections than the United States. For example, the European Commission has issued a limited adequacy finding with respect to the United States that applies only to the extent companies register for the EU-U.S. Privacy Shield program. The Company’s legal basis, where required, for the transfer of Data is the Participant’s consent. |
(d) | Data Retention. The Company will hold and use Data only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan, or as required to comply with legal or regulatory obligations, including under tax, securities, exchange control and labor laws. |
(e) | Voluntariness and Consequences of Consent Denial or Withdrawal. Participation in the Plan is voluntary and the Participant is providing the consents herein on a purely voluntary basis. If the Participant does not consent, or if the Participant later seeks to revoke his or her consent, the Participant’s salary from or employment and career with the Employer will not be affected; the only consequence of refusing or withdrawing the Participant’s consent is that the Company would not be able to grant Performance RSUs or other equity awards to the Participant or administer or maintain such awards. |
(f) | Data Subject Rights. The Participant may have a number of rights under data privacy laws in his or her jurisdiction. Depending on where the Participant is based, such rights may include the right to (i) request access or copies of Data the Company processes, (ii) rectification of incorrect Data, (iii) deletion of Data, (iv) restrictions on processing of Data, (v) portability of Data, (vi) lodge complaints with competent authorities in the Participant’s jurisdiction, and/or (vii) receive a list with the names and addresses of any potential recipients of Data. To receive clarification regarding these rights or to exercise these rights, the Participant can contact his or her local human resources representative. |
12. | Governing Law/Choice of Venue. The Award and the provisions of this Agreement are governed by, and subject to, the laws of the State of Washington, as provided in the Plan, without regard for its conflict of laws provisions. For purposes of litigating any dispute that arises under this grant or this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of Washington, and agree that such litigation shall be conducted exclusively in the courts of King County, or the federal courts of the United States for the 9th Circuit, and no other courts, where this grant is made and/or to be performed. |
13. | Compliance with Law. Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Shares, the Company shall not be required to deliver any Shares issuable upon settlement of the Performance RSUs prior to the completion of any registration or qualification of the Shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable. The Participant understands that the Company is under no obligation to register or qualify the Shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Further, the Participant agrees that the Company shall have unilateral authority to amend the Plan and this Agreement without the Participant’s consent to the extent necessary to comply with securities or other laws applicable to issuance of Shares. |
14. | Language. The Participant acknowledges and represents that he or she is proficient in the English language, or has consulted with an advisor who is sufficiently proficient in English, as to allow the Participant to understand the terms of this Agreement and any other documents related to the Plan. If the Participant has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control. |
15. | Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company. |
16. | Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable. |
17. | Undertakings. The Participant hereby agrees to take whatever additional action and execute whatever additional documents the Company may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either the Participant or the Performance RSUs pursuant to the provisions of this Agreement. |
18. | No Rights as Shareholder. Except as otherwise provided in Section 2, the Participant will not have dividend, voting or any other rights as a shareholder of the Shares with respect to the Performance RSUs. Upon payment of the vested Performance RSUs in Shares, the Participant will obtain full dividend, voting and other rights as a shareholder of the Company. |
19. | Restrictions on Transfer. Notwithstanding anything in the Plan to the contrary, the Performance RSUs granted pursuant to this Award may not be sold, pledged (as collateral for a loan or as security for the performance of an obligation or for any other purpose), assigned, hypothecated, transferred, disposed of in exchange for consideration, made subject to attachment or similar proceedings, or otherwise disposed of under any circumstances, except that this Award may be transferred (i) by will or by laws of descent and distribution applicable to a deceased Participant or (ii) pursuant to a domestic relations order. |
20. | Appendix A. Notwithstanding any provisions in this Agreement, the Award of Performance RSUs shall be subject to any special terms and conditions set forth in Appendix A for the Participant’s country. Moreover, if the Participant relocates to one of the countries included in Appendix A, the special terms and conditions for such country will apply to the Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Appendix A constitutes part of this Agreement. |
21. | Imposition of Other Requirements. The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the Performance RSUs and on any Shares acquired under the Plan, to the extent that the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings (as provided in Section 17 above) that may be necessary to accomplish the foregoing. |
22. | Waiver. If the Participant breaches or otherwise does not comply with any provision of this Agreement, but the Company does not act upon this breach or non-compliance and continues to comply with its obligations under this Agreement, this shall not mean that the Company waives any other provision of this Agreement or will otherwise permit any further breach of or non-compliance with any provision of this Agreement. |
23. | Insider Trading/Market Abuse Laws. Depending on the Participant’s country or the country in which Shares are listed, the Participant may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, including the United States and the Participant’s country, which may affect the Participant’s ability to accept, acquire, sell or attempt to |
24. | Foreign Asset/Account Reporting; Exchange Controls. The Participant’s country may have certain foreign asset and/or account reporting requirements and/or exchange controls which may affect the Participant’s ability to acquire or hold Shares under the Plan or cash received from participating in the Plan (including from any dividends received or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside the Participant’s country. The Participant may be required to report such accounts, assets or transactions to the tax or other authorities in the Participant’s country. The Participant also may be required to repatriate sale proceeds or other funds received as a result of the Participant’s participation in the Plan to the Participant’s country through a designated bank or broker and/or within a certain time after receipt. The Participant acknowledges that it is his or her responsibility to comply with such regulations, and the Participant should consult his or her personal legal advisor for any details. |
STARBUCKS CORPORATION | |
By_________________________ | |
Its_________________________ | |
PARTICIPANT | |
Signature___________________ |
Entity Name | Organized Under the Laws of: | |
AmRest Coffee s.r.o. | Czech Republic | |
AmRest Coffee Sp. z o. o. | Poland | |
AmRest Kavezo Kft. | Hungary | |
Bay Bread LLC | Delaware | |
Beijing Starbucks Coffee Co., Ltd. | China | |
Chengdu Starbucks Coffee Company Limited | China | |
CHH Cafe LLC | Texas | |
CHH Holdings of Texas LLC | Texas | |
Coffee Concepts (Southern China) Limited | Hong Kong | |
Coffee House Holdings, Inc. | Washington | |
Conifer Ventures Limited | United Kingdom | |
Corporacion Starbucks Farmer Support Center Colombia | Colombia | |
Emerald City C.V. | Netherlands | |
Evolution Fresh, Inc. | Delaware | |
Farmer Support Center, Asociacion Civil | Mexico | |
Guangdong Starbucks Coffee Company Limited | China | |
High Grown Investment Group (Hong Kong) Ltd. | Hong Kong | |
Holding Company International Limited | United Kingdom | |
Hubei Starbucks Coffee Company Limited | China | |
Koffee Sirena LLC | Russia | |
North American Coffee Partnership | New York | |
Olympic Casualty Insurance Company | Vermont | |
Princi Global Limited | United Kingdom | |
Princi London Limited | United Kingdom | |
Princi Properties Limited | United Kingdom | |
Princi UK Limited | United Kingdom | |
Qingdao American Starbucks Coffee Company Limited | China | |
SBI Nevada, Inc. | Nevada | |
SCI Europe I, LLC | Washington | |
SCI Europe II, LLC | Washington | |
SCI Investment, Inc. | Washington | |
Seastar Colombia Supply Company S.A.S. | Colombia | |
Seattle Coffee Company | Georgia | |
Seattle’s Best Coffee LLC | Washington | |
Shanghai Starbucks Coffee Enterprise Co., Ltd. | China | |
Shaya Coffee Limited | Cyprus | |
Siren Retail Corporation | Washington | |
SR Holdings Corporation | Washington | |
SR2 Holdings Corporation | Washington | |
Starbucks (China) Company Limited | China | |
Starbucks (Shanghai) Coffee Company Limited | China | |
Starbucks (Shanghai) Supply Chain Co., Ltd. | China | |
Starbucks (Shanghai) Trade Company Limited | China | |
Starbucks AINI Coffee (Yunnan) Company Limited | China |
Starbucks Asia Pacific Investment Holding II Limited | Hong Kong | |
Starbucks Asia Pacific Investment Holding III Limited | Hong Kong | |
Starbucks Asia Pacific Investment Holding Limited | Hong Kong | |
Starbucks Capital Asset Leasing Company, LLC | Delaware | |
Starbucks Card Europe Limited | United Kingdom | |
Starbucks Coffee (Cayman) Holdings Ltd. | Cayman Islands | |
Starbucks Coffee (Dalian) Company Limited | China | |
Starbucks Coffee (Liaoning) Company Limited | China | |
Starbucks Coffee (Shenzhen) Company Limited | China | |
Starbucks Coffee (Thailand) Co., Ltd. | Thailand | |
Starbucks Coffee Agronomy Company S.R.L. | Costa Rica | |
Starbucks Coffee Asia Pacific Limited | Hong Kong | |
Starbucks Coffee Austria GmbH | Austria | |
Starbucks Coffee Canada, Inc. | Canada | |
Starbucks Coffee Company (Australia) Pty Ltd | Australia | |
Starbucks Coffee Company (UK) Limited | United Kingdom | |
Starbucks Coffee Development (Yunnan) Company Limited | China | |
Starbucks Coffee EMEA B.V. | Netherlands | |
Starbucks Coffee France S.A.S. | France | |
Starbucks Coffee Holdings (UK) Limited | United Kingdom | |
Starbucks Coffee International, Inc. | Washington | |
Starbucks Coffee Japan, Ltd. | Japan | |
Starbucks Coffee Korea Co., Ltd. | South Korea | |
Starbucks Coffee Netherlands B.V. | Netherlands | |
Starbucks Coffee Switzerland GmbH | Switzerland | |
Starbucks Coffee Trading Company Sarl | Switzerland | |
Starbucks EMEA Holdings Ltd | United Kingdom | |
Starbucks EMEA Investment Ltd | United Kingdom | |
Starbucks EMEA Ltd | United Kingdom | |
Starbucks Farmer Support Center Rwanda Ltd | Rwanda | |
Starbucks Farmer Support Center Tanzania Limited | Tanzania | |
Starbucks Holding Company | Washington | |
Starbucks Holding Company Pte. Ltd. | Singapore | |
Starbucks International (Holdings) Ltd | United Kingdom | |
Starbucks Italy S.r.l. | Italy | |
Starbucks Manufacturing Corporation | Washington | |
Starbucks Manufacturing EMEA B.V. | Netherlands | |
Starbucks New Venture Company | Washington | |
Starbucks Singapore Investment Pte. Ltd. | Singapore | |
Starbucks Switzerland Austria Holdings B.V. | Netherlands | |
Starbucks Trading, G.K. | Japan | |
Tata Starbucks Private Limited | India | |
Teavana Puerto Rico, LLC | Delaware | |
The New French Bakery, Inc. | California | |
Torrefazione Italia LLC | Washington | |
Torz and Macatonia Limited | United Kingdom | |
Xi’an Starbucks Coffee Company Limited | China |
1. | I have reviewed this Annual Report on Form 10-K for the fiscal year ended September 30, 2018 of Starbucks Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Kevin R. Johnson | ||
Kevin R. Johnson | ||
president and chief executive officer |
1. | I have reviewed this Annual Report on Form 10-K for the fiscal year ended September 30, 2018 of Starbucks Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Scott Maw | ||
Scott Maw | ||
executive vice president, chief financial officer |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Starbucks. |
/s/ Kevin R. Johnson | ||
Kevin R. Johnson | ||
president and chief executive officer |
/s/ Scott Maw | ||
Scott Maw | ||
executive vice president, chief financial officer |
O\H;P?X\\<_#O5QK_ ( \8>+O!&OP<+KGA/Q%
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M8;-)ULIK\W6,8YC1P\:C7_3J=1;:JZO^MM%
I%PG3HOWH5LQC:=6R6!G&CS5ZTTTTMU+///.9YIO](N+B
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M:UTHQ(R6?A[XEN0J+I"D:7XO?_D"&RUASX=K^(NI()KBVD@N+>?R;JWQ