10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended December 28, 2003

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            .

Commission File Number: 0-20322

STARBUCKS CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Washington	91-1325671
(State or Other Jurisdiction of	(IRS Employer
Incorporation or Organization)	Identification No.)

2401 Utah Avenue South, Seattle, Washington 98134
(Address of principal executive offices)

(206) 447-1575
(Registrant’s Telephone Number, including Area Code)

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x          No  o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act):

Yes x          No  o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Title	Shares Outstanding as of February 2, 2004
Common Stock, par value $0.001 per share		396,140,031

STARBUCKS CORPORATION

FORM 10-Q

For the Quarterly Period Ended December 28, 2003

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
	Item 1. Financial Statements
		CONSOLIDATED STATEMENTS OF EARNINGS
		CONSOLIDATED BALANCE SHEETS
		CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
	Item 4. Controls and Procedures
PART II - OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
INDEX TO EXHIBITS
Exhibit 3.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

Table of Contents

				Page
		PART I. FINANCIAL INFORMATION
Item 1 Financial Statements:
	Consolidated Statements of Earnings				1
	Consolidated Balance Sheets				2
	Consolidated Statements of Cash Flows				3
	Notes to Consolidated Financial Statements				4
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations					9
Item 3 Quantitative and Qualitative Disclosures About Market Risk					16
Item 4 Controls and Procedures					16
			PART II. OTHER INFORMATION
Item 1 Legal Proceedings					17
Item 6 Exhibits and Reports on Form 8-K					17
Signatures					17
Index to Exhibits					E1

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except earnings per share)
(unaudited)

				13 Weeks Ended
				December 28,		December 29,
				2003		2002
Net revenues:
	Company-operated retail			$	1,080,495	$	849,486
	Specialty:
		Licensing			133,499		98,972
		Foodservice and other			67,197		55,068
			Total specialty		200,696		154,040
Total net revenues					1,281,191		1,003,526
Cost of sales and related occupancy costs					530,371		419,161
Store operating expenses					406,100		320,287
Other operating expenses					44,198		31,516
Depreciation and amortization expenses					65,863		57,385
General and administrative expenses					69,551		60,943
Income from equity investees					10,412		6,601
Operating income					175,520		120,835
Interest and other income, net					3,208		4,496
Earnings before income taxes					178,728		125,331
Income taxes					67,917		46,968
	Net earnings			$	110,811	$	78,363
Net earnings per common share – basic				$	0.28	$	0.20
Net earnings per common share – diluted				$	0.27	$	0.20
Weighted average shares outstanding:
	Basic				395,057		388,652
	Diluted				407,645		399,218

See Notes to Consolidated Financial Statements.

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STARBUCKS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

			December 28,		September 28,
			2003		2003
			(unaudited)
ASSETS
Current assets:
	Cash and cash equivalents		$	448,312	$	200,907
	Short-term investments - Available-for-sale securities			190,329		128,905
	Short-term investments - Trading securities			26,388		20,199
	Accounts receivable, net of allowances of $4,333 and $4,809, respectively			122,809		114,448
	Inventories			305,529		342,944
	Prepaid expenses and other current assets			59,825		55,173
	Deferred income taxes, net			71,527		61,453
		Total current assets		1,224,719		924,029
Long-term investments – Available-for-sale securities				178,867		136,159
Equity and other investments				150,462		144,257
Property, plant and equipment, net				1,381,296		1,384,902
Other assets				53,070		52,113
Other intangible assets				25,270		24,942
Goodwill				63,374		63,344
	TOTAL ASSETS		$	3,077,058	$	2,729,746
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable		$	144,748	$	168,984
	Accrued compensation and related costs			154,962		152,608
	Accrued occupancy costs			58,012		56,179
	Accrued taxes			113,891		54,934
	Other accrued expenses			171,555		101,800
	Deferred revenue			146,151		73,476
	Current portion of long-term debt			725		722
		Total current liabilities		790,044		608,703
Deferred income taxes, net				33,873		33,217
Long-term debt				4,171		4,354
Other long-term liabilities				2,533		1,045
Shareholders’ equity:
	Common stock and additional paid-in capital - Authorized, 600,000,000; issued and outstanding, 395,701,806 and 393,692,536 shares, respectively, (includes 1,697,100 common stock units in both periods)			999,217		959,103
	Other additional paid-in-capital			39,393		39,393
	Retained earnings			1,180,494		1,069,683
	Accumulated other comprehensive income			27,333		14,248
		Total shareholders’ equity		2,246,437		2,082,427
	TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	3,077,058	$	2,729,746

See Notes to Consolidated Financial Statements.

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STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)

				13 Weeks Ended
				December 28,			December 29,
				2003			2002
OPERATING ACTIVITIES:
Net earnings				$	110,811		$	78,363
Adjustments to reconcile net earnings to net cash provided by operating activities:
		Depreciation and amortization			72,028			61,562
		Provision for impairments and asset disposals			2,176			(1,761	)
		Deferred income taxes, net			(6,861	)		(1,649	)
		Equity in income of investees			(3,748	)		(2,865	)
		Tax benefit from exercise of non-qualified stock options			9,439			4,274
		Net amortization of premium on securities			1,831			1,138
		Cash provided/(used) by changes in operating assets and liabilities:
			Accounts receivable		(8,162	)		(13,661	)
			Inventories		39,450			53,407
			Accounts payable		(25,835	)		(12,439	)
			Accrued taxes		58,456			24,940
			Deferred revenue		72,545			49,442
			Other accrued expenses		58,664			1,633
			Other operating assets and liabilities		(2,046	)		(8,636	)
Net cash provided by operating activities					378,748			233,748
INVESTING ACTIVITIES:
	Purchase of available-for-sale securities				(138,022	)		(60,489	)
	Maturity of available-for-sale securities				17,060			45,270
	Sale of available-for-sale securities				14,585			40,094
	Net additions to equity, other investments and other assets				(4,394	)		(2,240	)
	Distributions from equity investees				5,085			6,976
	Net additions to property, plant and equipment				(59,127	)		(93,751	)
Net cash used by investing activities					(164,813	)		(64,140	)
FINANCING ACTIVITIES:
	Proceeds from issuance of common stock				30,675			11,789
	Principal payments on long-term debt				(180	)		(176	)
	Repurchase of common stock				—			(29,936	)
Net cash provided/(used) by financing activities					30,495			(18,323	)
Effect of exchange rate changes on cash and cash equivalents					2,975			499
Net increase in cash and cash equivalents					247,405			151,784
CASH AND CASH EQUIVALENTS:
Beginning of period					200,907			99,677
End of the period				$	448,312		$	251,461
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
	Interest			$	51		$	37
	Income taxes			$	14,858		$	21,663

       See Notes to Consolidated Financial Statements.

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STARBUCKS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the 13 Weeks Ended December 28, 2003

Note 1: Financial Statement Preparation

The consolidated financial statements as of December 28, 2003, and September 28, 2003, and for the 13-week periods ended December 28, 2003, and December 29, 2002, have been prepared by Starbucks Corporation (“Starbucks” or the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The financial information for the 13-week periods ended December 28, 2003, and December 29, 2002, is unaudited, but, in the opinion of management, reflects all adjustments and accruals necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods.

The financial information as of September 28, 2003, is derived from the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended September 28, 2003 (“Fiscal 2003”), included in Item 8 in the Fiscal 2003 Annual Report on Form 10-K, and should be read in conjunction with such financial statements.

Certain reclassifications of prior year’s balances have been made to conform to the current format.

The results of operations for the 13-week period ended December 28, 2003, are not necessarily indicative of the results of operations that may be achieved for the entire fiscal year ending October 3, 2004.

Note 2: Summary of Significant Accounting Policies

Revenue Recognition

In most instances, Company-operated retail store revenues are recognized when payment is tendered at the point of sale. Revenues from stored value cards are recognized upon redemption. Until the redemption of stored value cards, outstanding customer balances on such cards are included in “Deferred revenue” on the accompanying consolidated balance sheets. Specialty revenues consist primarily of product sales to customers other than through Company-operated retail stores, as well as royalties and other fees generated from licensing operations. Sales of coffee, tea and related products are generally recognized upon shipment to customers. Initial non-refundable development fees required under licensing agreements are recognized upon substantial performance of services for new market business development activities, such as initial business, real estate and store development planning as well as providing operational materials and functional training courses for opening new licensed retail markets. Additional store licensing fees are recognized when new licensed stores are opened. Royalty revenues based upon a percentage of reported sales and other continuing fees, such as marketing and service fees, are recognized on a monthly basis when earned. Arrangements involving multiple elements and deliverables are individually evaluated for revenue recognition. Cash payments received in advance of product or service revenue are recorded as deferred revenue. Consolidated revenues are net of all intercompany eliminations for wholly owned subsidiaries and for licensees accounted for under the equity method based on the Company’s percentage ownership. All revenues are recognized net of any discounts.

Accounting for Stock-Based Compensation

The Company maintains several stock option plans under which incentive stock options and non-qualified stock options may be granted to employees, consultants and non-employee directors. Starbucks accounts for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. Accordingly, because the grant price equals the market price on the date of grant, no compensation expense is recognized by the Company for stock options issued to employees.

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Had compensation cost for the Company’s stock options been recognized based upon the estimated fair value on the grant date under the fair value methodology allowed by Statement of Financial Accounting Standard (“SFAS”) No. 123, “Accounting for Stock Based Compensation,” as amended by SFAS No. 148 “Accounting for Stock-Based Compensation - Transition and Disclosure,” the Company’s net earnings and earnings per share would have been as follows (in thousands, except earnings per share):

		13 Weeks Ended
		December 28,			December 29,
		2003			2002
Net earnings		$	110,811		$	78,363
Deduct stock-based compensation expense determined under fair value method, net of tax			(8,342	)		(8,507	)
Pro forma net income		$	102,469		$	69,856
Earnings per share:
	Basic – as reported	$	0.28		$	0.20
	Basic – pro forma	$	0.26		$	0.18
	Diluted – as reported	$	0.27		$	0.20
	Diluted – pro forma	$	0.25		$	0.18

The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market conditions and the Company’s experience.

Recently Issued Accounting Pronouncements

In December 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46 Revised, “Consolidation of Variable Interest Entities – an Interpretation of ARB No. 51” (“FIN No. 46R”), which provided, among other things, immediate deferral of the application of FIN No. 46 for entities which did not originally qualify as special purpose entities, and provided additional scope exceptions for joint ventures with business operations and franchises. The Company’s adoption of FIN No. 46R did not have an impact on its consolidated financial statements.

Note 3: Inventories

Inventories consist of the following (in thousands):

		December 28,		September 28,
		2003		2003
Coffee:
	Unroasted	$	131,816	$	167,674
	Roasted		42,029		41,475
Other merchandise held for sale			74,708		83,784
Packaging and other supplies			56,976		50,011
Total		$	305,529	$	342,944

As of December 28, 2003, the Company had committed to fixed-price purchase contracts for green coffee totaling approximately $391.4 million.

Note 4: Derivative Financial Instruments

Cash Flow Hedges

Cash flow derivative instruments hedge portions of anticipated revenue streams and purchases denominated in Japanese yen, Canadian dollars and/or United States dollars. These contracts expire within 21 months. During the 13-week periods ended December 28, 2003, and December 29, 2002, derivative losses of $0.5 million and $0.2 million were reclassified into revenues, respectively. During the 13-week period ended December 28, 2003, derivative losses of $0.2 million were reclassified into cost of sales. The Company had accumulated net derivative losses of $2.8 million, net of taxes, in other comprehensive income as of December 28, 2003, related to cash flow hedges. Of this amount, $2.0 million of net derivative losses will be reclassified into earnings within 12 months. No significant cash flow hedges were discontinued during the 13-week periods ended December 28, 2003, and

5

December 29, 2002.

Net Investment Hedges

Net investment derivative instruments hedge the Company’s equity method investment in Starbucks Coffee Japan, Ltd. These contracts expire within 11 months and are intended to minimize foreign currency exposure to fluctuations in the Japanese yen. As a result of using the spot-to-spot method, the Company recognized net gains of $0.1 million and $0.4 million for the 13-week periods ended December 28, 2003, and December 29, 2002, respectively. In addition, the Company had accumulated net derivative losses of $5.3 million, net of taxes, in other comprehensive income as of December 28, 2003.

Note 5: Property, Plant, and Equipment

Property, plant and equipment are recorded at cost and consist of the following (in thousands):

	December 28,			September 28,
	2003			2003
Land	$	11,414		$	11,414
Buildings		64,427			64,427
Leasehold improvements		1,356,167			1,311,024
Roasting and store equipment		639,782			613,825
Furniture, fixtures and other		393,242			375,854
		2,465,032			2,376,544
Less accumulated depreciation and amortization		(1,124,190	)		(1,049,810	)
		1,340,842			1,326,734
Work in progress		40,454			58,168
Property, plant and equipment, net	$	1,381,296		$	1,384,902

Note 6: Shareholders’ Equity

Pursuant to the Company’s authorized share repurchase programs, Starbucks acquired 1.5 million shares at an average price of $20.62 for a total cost of $29.9 million during the 13-week period ended December 29, 2002. No shares were repurchased during the 13-week period ended December 28, 2003. As of December 28, 2003, there were approximately 14.6 million additional shares authorized for repurchase. Share repurchases are funded through cash, cash equivalents and available-for-sale securities.

Note 7: Comprehensive Income

Comprehensive income, net of related tax effects, is as follows (in thousands):

		13 Weeks Ended
		December 28,			December 29,
		2003			2002
Net earnings		$	110,811		$	78,363
	Unrealized holding losses on cash flow hedging instruments		(2,351	)		(481	)
	Unrealized holding losses on net investment hedging instruments		(1,564	)		(1,066	)
	Unrealized holding gains/(losses) on available-for-sale securities		(222	)		35
	Reclassification adjustment for gains realized in net income		(153	)		(30	)
Net unrealized loss			(4,290	)		(1,542	)
Translation adjustment			17,375			(77	)
Total comprehensive income		$	123,896		$	76,744

The increase in the translation adjustment for the 13 weeks ended December 28, 2003, was primarily due to the weakening of the United States dollar against the Euro, pound sterling and Japanese yen.

6

Note 8: Earnings Per Share

The following table represents the calculation of net earnings per common share – basic (in thousands, except earnings per share):

		13 Weeks Ended
		December 28,		December 29,
		2003		2002
Net earnings		$	110,811	$	78,363
	Weighted average common shares and common stock units outstanding		395,057		388,652
Net earnings per common share - basic		$	0.28	$	0.20

The following table represents the calculation of net earnings per common and common equivalent share – diluted (in thousands, except earnings per share):

		13 Weeks Ended
		December 28,		December 29,
		2003		2002
Net earnings		$	110,811	$	78,363
	Weighted average common shares and common stock units outstanding		395,057		388,652
	Dilutive effect of outstanding common stock options		12,588		10,566
	Weighted average common and common equivalent shares outstanding		407,645		399,218
Net earnings per common and common equivalent share - diluted		$	0.27	$	0.20

Options with exercise prices greater than the average market price were not included in the computation of diluted earnings per share. For the 13-week period ended December 28, 2003, these options totaled 44,320 and for the 13-week period ended December 29, 2002, these options totaled 1.8 million, during which periods the average market price of the Company’s common stock was $31.52 and $21.90, respectively.

Note 9: Commitments and Contingencies

The Company has unconditionally guaranteed the repayment of certain yen-denominated bank loans and related interest and fees of an unconsolidated equity investee, Starbucks Coffee Japan, Ltd. The guarantees continue until the loans, including accrued interest and fees, have been paid in full. The maximum amount is limited to the sum of unpaid principal and interest amounts, as well as other related expenses. These amounts will vary based on fluctuations in the yen foreign exchange rate. As of December 28, 2003, the maximum amount of the guarantees was approximately $12.3 million.

Additionally, Starbucks has unconditionally guaranteed 5% of a Chinese renminbi-denominated credit facility of Shanghai President Coffee Co., an unconsolidated equity investee. The guarantee amount will vary based on fluctuations in the Chinese renminbi foreign exchange rate. As of December 28, 2003, the outstanding amount of the guarantee was approximately $42,000.

Coffee brewing and espresso equipment sold to customers through Company-operated and licensed retail stores as well as equipment sold to the Company’s licensees for use in retail licensing operations are under warranty for defects in materials and workmanship for a period ranging from 12 months to 24 months. The Company establishes an accrual for estimated warranty costs at the time of sale, based on historical experience. Product warranty costs and changes to the related accrual were not significant for the 13 weeks ended December 28, 2003.

The Company is party to various legal proceedings arising in the ordinary course of its business, but it is not currently a party to any legal proceeding that management believes would have a material adverse effect on the financial position or results of operations of the Company.

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Note 10: Segment Reporting

Segment information is prepared on the same basis that the Company’s management internally reviews financial information for operational decision making purposes. The tables below present information by operating segment for the 13 weeks ended (in thousands):

	United					Unallocated
	States(1)		International(1)			Corporate(2)			Total
December 28, 2003
Total net revenues	$	1,090,617	$	190,574		$	—		$	1,281,191
Earnings/(loss) before income taxes		216,686		10,987			(48,945	)		178,728
Depreciation and amortization expenses		46,481		10,600			8,782			65,863
Income from equity investees		6,435		3,977			—			10,412
December 29, 2002
Total net revenues	$	859,438	$	144,088		$	—		$	1,003,526
Earnings/(loss) before income taxes		170,122		(1,423	)		(43,368	)		125,331
Depreciation and amortization expenses		40,256		9,181			7,948			57,385
Income from equity investees		6,021		580			—			6,601

⁽¹⁾ For purposes of internal management and segment reporting, licensed operations in Hawaii and Puerto Rico are included in the International segment, although geographically they are part of the United States.

⁽²⁾ Unallocated corporate includes certain general and administrative expenses, related depreciation and amortization expenses and amounts included in “Interest and other income, net” on the accompanying consolidated statements of earnings.

The tables below represent information by geographic area (in thousands):

		13 Weeks Ended
		December 28,		December 29,
		2003		2002
Net revenues from external customers:
	United States	$	1,093,491	$	861,616
	Foreign countries		187,700		141,910
Total		$	1,281,191	$	1,003,526

Revenues from foreign countries are based on the geographic location of the customers and consist primarily of revenues from the United Kingdom and Canada, which together account for approximately 82% of these revenues, as well as specialty revenues generated from product sales to international licensees. No customer accounts for 10% or more of the Company’s revenues.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Certain statements herein, including anticipated store openings, trends in or expectations regarding Starbucks Corporation’s revenue growth, operating expenses, capital expenditures, and net earnings, all constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Actual future results and trends may differ materially depending on a variety of factors, including, but not limited to, coffee, dairy and other raw materials prices and availability, successful execution of internal performance and expansion plans, fluctuations in United States and international economies, ramifications from the war on terrorism, or other international events or developments, the impact of competitors’ initiatives, the effect of legal proceedings, and other risks detailed herein and in Starbucks Corporation’s other filings with the Securities and Exchange Commission, including the “Certain Additional Risks and Uncertainties” section of the Starbucks Annual Report on Form 10-K for the fiscal year ended September 28, 2003.

A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Users should not place undue reliance on the forward-looking statements, which speak only as of the date of this report. The Company is under no obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

This information should be read in conjunction with the consolidated financial statements and the notes thereto included in Item 1 of Part I of this Quarterly Report and the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 28, 2003.

General

Starbucks Corporation’s fiscal year ends on the Sunday closest to September 30. Fiscal year 2003 had 52 weeks. The fiscal year ending on October 3, 2004, will include 53 weeks, with the 53rd week falling entirely in the fourth fiscal quarter.

Management’s Overview

During the 13 weeks ended December 28, 2003, Starbucks established a strong foundation for achieving its full year operational targets, which include: (1) opening 1,300 new retail stores on a global basis, (2) increasing total net revenues by approximately 20%, and (3) increasing earnings per share by 20-25% compared to fiscal year 2003.

Historically, the primary driver of the Company’s revenue growth has been the opening of new retail stores, both Company-operated and licensed, in the United States. Since entering Japan in 1996, Starbucks first retail market outside of North America, the Company accelerated its international expansion plans for both Company-operated and licensed retail stores to pursue the Company’s objective to establish Starbucks as the most recognized and respected brand in the world. With a presence today in more than 30 countries, management believes that the Company’s long term goal of operating at least 25,000 Starbucks retail locations throughout the United States and in International markets is achievable. Management also believes the Company has the personnel and the financial resources to continue to open retail stores at or above the current rate for the foreseeable future.

In addition to opening new retail stores, Starbucks is targeting to increase revenues generated at Company-operated stores open for 13 months or longer (comparable store sales growth) by 3-7% by attracting new customers and increasing the frequency of visits by current customers. The strategy to achieve this target is to continuously improve the level of customer service, maintain a steady stream of product innovation and improve the speed of service through training, technology and process improvement. In the first quarter of fiscal 2004, comparable store sales in Company-operated markets increased by 10% as a result of these efforts. Most noteworthy were the strong holiday sales of seasonal products and the increased usage of the Starbucks stored value card. In licensed markets, Starbucks shared operating and store development experience to help licensees improve the profitability of existing stores and build new stores, which generated additional royalty income and product sales.

The combination of more retail stores, higher revenues from existing stores, and growth in other related activities in both the United States and International segments resulted in a 27.7% increase in total net revenues in the first

9

quarter of fiscal 2004 compared to the first quarter of fiscal 2003, which was well above the Company’s target. Since additional retail stores can leverage existing support organizations and facilities, that infrastructure can be expanded more slowly than the rate of revenue growth and generate margin improvement. In the first quarter of fiscal 2004, operating income as a percentage of total net revenues increased to 13.7% from 12.0% in the comparable period of fiscal 2003, and net earnings increased by 41.4%, compared to the first quarter of fiscal 2003.

Management realizes that comparable store sales growth at the current level is not sustainable over the long term. However, management believes that new store development opportunities on a global basis are sufficient for the Company to maintain a high level of unit growth for the foreseeable future and that the execution of the current retail operating strategy can achieve 3-7% comparable store sales growth. These revenue growth opportunities, coupled with continuous focus on controlling both operating and capital costs, should allow Starbucks to continue to leverage the existing infrastructure, improve margins and achieve annual earnings per share growth of 20-25%

Results of Operations for the 13 Weeks Ended December 28, 2003 and December 29, 2002

CONSOLIDATED RESULTS

Net revenues for the 13 weeks ended December 28, 2003, increased 27.7% to $1.3 billion from $1.0 billion for the corresponding period of fiscal 2003. During the 13-week period ended December 28, 2003, Starbucks derived approximately 84.3% of total net revenues from its Company-operated retail stores. Company-operated retail revenues increased 27.2% to $1.1 billion for the 13 weeks ended December 28, 2003, from $849.5 million for the same period in fiscal 2003. The increase was primarily attributable to the opening of 670 new Company-operated retail stores in the last 12 months and comparable store sales growth of 10% for the 13 weeks ended December 28, 2003. The increase in comparable store sales was due almost entirely to an increase in the number of customer transactions. Management believes increased traffic in Company-operated retail stores continues to be driven by new product innovation, continued popularity of core products, a high level of customer satisfaction and improved speed of service through enhanced technology, training and execution at retail stores.

The Company derived the remaining 15.7% of total net revenues from its specialty operations. Specialty revenues, which include licensing revenues and foodservice and other revenues, increased 30.3% to $200.7 million for the 13 weeks ended December 28, 2003, from $154.0 million for the corresponding period of fiscal 2003.

Licensing revenues, which are derived from retail store licensing arrangements, grocery and warehouse club licensing, and certain other branded-product operations, increased 34.9% to $133.5 million for the 13 weeks ended December 28, 2003, from $99.0 million for the corresponding period of fiscal 2003. The increase was primarily attributable to the opening of 704 new licensed retail stores in the last 12 months, increased grocery revenues as a result of the acquisition of Seattle Coffee Company in the fourth quarter of fiscal 2003 and increased warehouse club revenues due to growth in existing accounts.

Foodservice and other revenues increased 22.0% to $67.2 million for the 13 weeks ended December 28, 2003, from $55.1 million for the corresponding period of fiscal 2003. The increase was primarily attributable to the growth of the foodservice business as a result of the acquisition of Seattle Coffee Company in the fourth quarter of fiscal 2003 and the addition of new Starbucks foodservice accounts.

Cost of sales and related occupancy costs were 41.4% of total net revenues for the 13 weeks ended December 28, 2003, compared to 41.8% for the corresponding period of fiscal 2003. This decrease was primarily due to efficiencies gained in the Company’s international supply chain operations and leverage gained on fixed occupancy costs distributed over an expanded revenue base, partially offset by a shift in sales mix in the Company’s United States operating segment. United States Company-operated retail sales, which include higher margin, handcrafted beverages, comprised a lower proportion of total United States net revenues compared to the corresponding period of fiscal 2003.

Store operating expenses as a percentage of Company-operated retail revenues decreased to 37.6% for the 13 weeks ended December 28, 2003, from 37.7% for the corresponding period of fiscal 2003. This decrease was primarily due to leverage gained on fixed expenditures spread over an expanded revenue base, partially offset by higher holiday marketing expenditures.

Other operating expenses (expenses associated with the Company’s specialty operations) increased to 22.0% of total specialty revenues for the 13 weeks ended December 28, 2003, compared to 20.5% in the corresponding period of fiscal 2003, primarily attributable to expanding the foodservice distribution network and maintaining new and

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existing customer accounts.

Depreciation and amortization expenses increased to $65.9 million for the 13 weeks ended December 28, 2003, compared to $57.4 million for the corresponding period of fiscal 2003. The increase was primarily due to the opening of 670 Company-operated retail stores and refurbishment of certain existing Company-operated retail stores. As a percentage of total net revenues, depreciation and amortization decreased to 5.1% for the 13 weeks ended December 28, 2003, from 5.7% for the same period in fiscal 2003.

General and administrative expenses increased to $69.6 million for the 13 weeks ended December 28, 2003, compared to $60.9 million for the corresponding period of fiscal 2003. The increase was primarily due to higher payroll-related expenditures. However, as a percentage of total net revenues, general and administrative expenses decreased to 5.4% for the 13 weeks ended December 28, 2003, from 6.1% for the same period in fiscal 2003.

Income from equity investees increased $3.8 million to $10.4 million for the 13 weeks ended December 28, 2003, from $6.6 million for the same period in fiscal 2003. The increase was primarily the result of new international licensed retail store openings, improved operating results due to reduced administrative costs in several international markets, and the July 2003 increase in the Company’s ownership interest from 5% to 50% for the Taiwan and Shanghai licensed operations.

Operating income increased 45.3% to $175.5 million for the 13 weeks ended December 28, 2003, compared to $120.8 million for the same period in fiscal 2003. Operating margin increased to 13.7% of total net revenues in the 13 weeks ended December 28, 2003, compared to 12.0% in the corresponding period of fiscal 2003, primarily due to the leverage gained in most operating expense line items from strong revenue growth as described above.

Interest and other income decreased to $3.2 million for the 13 weeks ended December 28, 2003, from $4.5 million in the corresponding period of fiscal 2003, primarily due to lower foreign currency exchange gains in the 13 weeks ended December 28, 2003, related to the Company’s application of the spot-to-spot method for net investment hedges, and a small loss this year compared to a small gain last year related to transactions based in currencies other than the United States dollar.

Income taxes for the 13 weeks ended December 28, 2003, were based on an effective tax rate of 38.0%, compared to 37.5% in the corresponding period of fiscal 2003. For the full fiscal year 2003, the effective tax rate was 38.5%. During fiscal 2003, operations based in the United States were more profitable and international operations, which are in various phases of development, generated greater non-deductible losses than had been anticipated. The decrease in the effective tax rate from 38.5% at the end of fiscal 2003, to 38.0% for the 13 weeks ended December 28, 2003, was primarily attributed to improved operating results from international businesses.

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SEGMENT RESULTS

Segment information is prepared on the same basis that the Company’s management internally reviews financial information for operational decision making purposes. The following table summarizes the Company’s results of operations by segment for the 13 weeks ended (in thousands):

						% of					% of
						United					Inter-
				United		States			Inter-		national			Unallocated
December 28, 2003				States		Revenue			national		Revenue			Corporate			Consolidated
Net revenues:
	Company-operated retail			$	924,544		84.8	%	$	155,951		81.8	%	$	—		$	1,080,495
	Specialty:
		Licensing			102,616		9.4			30,883		16.2			—			133,499
		Foodservice and other			63,457		5.8			3,740		2.0			—			67,197
			Total specialty		166,073		15.2			34,623		18.2			—			200,696
Total net revenues					1,090,617		100.0			190,574		100.0			—			1,281,191
Cost of sales and related occupancy costs					432,810		39.7			97,561		51.2			—			530,371
Store operating expenses					349,146		37.8	(1)		56,954		36.5	(1)		—			406,100
Other operating expenses					37,458		22.6	(2)		6,740		19.5	(2)		—			44,198
Depreciation and amortization expenses					46,481		4.3			10,600		5.6			8,782			65,863
General and administrative expenses					14,471		1.3			11,709		6.1			43,371			69,551
Income from equity investees					6,435		0.6			3,977		2.1			—			10,412
	Operating income			$	216,686		19.9	%	$	10,987		5.8	%	$	(52,153	)	$	175,520

						% of						% of
						United						Inter-
				United		States			Inter-			national			Unallocated
December 29, 2002				States		Revenue			national			Revenue			Corporate			Consolidated
Net revenues:
	Company-operated retail			$	735,449		85.6	%	$	114,037			79.1	%	$	—		$	849,486
	Specialty:
		Licensing			71,692		8.3			27,280			18.9			—			98,972
		Foodservice and other			52,297		6.1			2,771			2.0			—			55,068
			Total specialty		123,989		14.4			30,051			20.9			—			154,040
Total net revenues					859,438		100.0			144,088			100.0			—			1,003,526
Cost of sales and related occupancy costs					340,246		39.6			78,915			54.8			—			419,161
Store operating expenses					278,499		37.9	(1)		41,788			36.6	(1)		—			320,287
Other operating expenses					26,316		21.2	(2)		5,200			17.3	(2)		—			31,516
Depreciation and amortization expenses					40,256		4.7			9,181			6.4			7,948			57,385
General and administrative expenses					10,020		1.2			11,007			7.6			39,916			60,943
Income from equity investees					6,021		0.7			580			0.4			—			6,601
	Operating income			$	170,122		19.8	%	$	(1,423	)		(1.0	)%	$	(47,864	)	$	120,835

⁽¹⁾ Shown as a percentage of Company-operated retail revenues.

⁽²⁾ Shown as a percentage of total specialty revenues.

United States

United States operations (“United States”) sell coffee and other beverages, whole bean coffees, complementary food, coffee brewing equipment and merchandise primarily through Company-operated retail stores. Specialty operations within the United States include retail store and other licensing operations, foodservice accounts and other initiatives related to the Company’s core businesses.

United States total net revenues increased by $231.2 million, or 26.9%, to $1.1 billion for the 13 weeks ended December 28, 2003, compared to $859.4 million for the corresponding period of fiscal 2003. United States Company-operated retail revenues increased by $189.1 million, or 25.7%, to $924.5 million for the 13 weeks ended December 28, 2003, compared to $735.4 million for the corresponding period of fiscal 2003, primarily due to the opening of 563 new Company-operated retail stores in the last 12 months and comparable store sales growth of 11% for the 13 weeks ended December 28, 2003. The increase in comparable store sales was almost entirely due to an

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increase in the number of customer transactions.

Total United States specialty revenues increased $42.1 million, or 33.9%, to $166.1 million for the 13 weeks ended December 28, 2003, compared to $124.0 million in the corresponding period of fiscal 2003. United States licensing revenues increased $30.9 million, or 43.1%, to $102.6 million, compared to $71.7 million for the corresponding period of fiscal 2003, primarily due to growth in the grocery business as a result of the acquisition of Seattle Coffee Company in the fourth quarter of fiscal 2003 and the opening of 428 licensed retail stores in the last 12 months. United States foodservice and other revenues increased $11.2 million, or 21.3%, primarily due to the acquisition of Seattle Coffee Company and the addition of new Starbucks foodservice accounts.

United States operating income increased by 27.4% to $216.7 million for the 13 weeks ended December 28, 2003, from $170.1 million for the same period in fiscal 2003. Operating margin increased to 19.9% of related revenues from 19.8% in the corresponding period of fiscal 2003, primarily due to leverage gained on fixed operating costs spread over an expanded revenue base, partially offset by higher expenditures to support the Company’s expansion of its specialty operations and higher dairy costs.

International

International operations (“International”) sell coffee and other beverages, whole bean coffees, complementary food, coffee brewing equipment and merchandise through Company-operated retail stores in Canada, the United Kingdom, Thailand and Australia, as well as through retail store licensing operations and foodservice accounts in these and 27 other countries. Because International operations are in an early stage of development and have country-specific regulatory requirements, they require a more extensive support organization than the United States.

International total net revenues increased by $46.5 million, or 32.3%, to $190.6 million for the 13 weeks ended December 28, 2003, compared to $144.1 million for the corresponding period of fiscal 2003. International Company-operated retail revenues increased by $41.9 million, or 36.8%, to $156.0 million for the 13 weeks ended December 28, 2003, compared to $114.0 million for the corresponding period for fiscal 2003, primarily due to the opening of 107 new Company-operated retail stores in the last 12 months and comparable store sales growth of 7% for the 13 weeks ended December 28, 2003. The increase in comparable store sales resulted from a 5% increase in the number of customer transactions coupled with a 2% increase in the average value per transaction.

Total international specialty revenues increased $4.6 million, or 15.2%, to $34.6 million for the 13 weeks ended December 28, 2003, compared to $30.1 million in the corresponding period of fiscal 2003, primarily due to licensing operations. International licensing revenues increased $3.6 million, or 13.2%, to $30.9 million for the 13 weeks ended December 28, 2003, from $27.3 million for the corresponding period of fiscal 2003. The increase was primarily due to the opening of 276 licensed retail stores in the last 12 months, partially offset by proportionate eliminations of sales to equity investees in which the Company increased its ownership interests in late fiscal 2003.

International operating income increased to $11.0 million for the 13 weeks ended December 28, 2003, from an operating loss of $1.4 million in the corresponding period of fiscal 2003. Operating margin increased to 5.8% of related revenues from a negative (1.0)% in the corresponding period of fiscal 2003, primarily due to leverage gained on fixed costs spread over an expanded revenue base, improved operating results of equity investees and efficiencies gained in the Company’s international supply chain operations. Excluding Canadian operations, operating income increased to $1.3 million for the 13 weeks ended December 28, 2003, compared to an operating loss of $7.8 million in the corresponding period of fiscal 2003.

Unallocated Corporate

Unallocated corporate expenses pertain to certain functions, such as executive management, accounting, administration, tax, treasury, and information technology infrastructure, which are not specifically attributable to the Company’s operating segments and include related depreciation and amortization expenses. Unallocated general and administrative expenses increased to $43.4 million in the 13 weeks ended December 28, 2003, from $39.9 million in the corresponding period of fiscal 2003, primarily due to higher payroll-related expenditures. Depreciation and amortization expenses increased to $8.8 million in the 13 weeks ended December 28, 2003, from $7.9 million in the corresponding period of fiscal 2003, primarily due to expanded support facilities and capital spending for information technology enhancements. Total unallocated corporate expenses as a percentage of total net revenues decreased to 4.1% in the 13 weeks ended December 28, 2003, from 4.8% in the corresponding period of fiscal 2003.

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Store Data

The following table summarizes the Company’s retail store information as of and for the 13-week periods ended:

		December 28, 2003				December 29, 2002
		Stores		Net Stores		Stores		Net Stores
		Open		Added		Open		Added
United States:
	Company-operated Stores		3,879		100		3,316		107
	Licensed Stores		1,532		110		1,104		71
			5,411		210		4,420		178
International:(1)
	Company-operated Stores		804		37		697		26
	Licensed Stores		1,352		95		1,076		103
			2,156		132		1,773		129
Total Stores			7,567		342		6,193		307

⁽¹⁾   International store counts now include Canadian locations.

Starbucks plans to open approximately 1,300 new stores on a global basis for fiscal 2004. In the United States the Company plans to open approximately 525 new Company-operated locations and 350 licensed locations. Internationally, including Canada, Starbucks plans to open approximately 100 locations in Company-operated markets and 325 locations in licensed markets.

Liquidity and Capital Resources

Cash and cash equivalents increased by $247.4 million for the 13 weeks ended December 28, 2003, to $448.3 million. The Company ended the period with $843.9 million in total cash and cash equivalents and liquid investments. Working capital as of December 28, 2003 totaled $434.7 million compared to $337.7 million as of December 29, 2002. The Company intends to use its available cash resources to invest in its core businesses and other new business opportunities related to its core businesses. The Company may use its available cash resources to make proportionate capital contributions to its equity method and cost method investees. Depending on market conditions, Starbucks may acquire additional shares of its common stock in accordance with its existing share repurchase programs.

Cash provided by operating activities totaled $378.7 million for the 13 weeks ended December 28, 2003. Net earnings provided $110.8 million, the change in deferred revenue attributed to the growth of Starbucks Card balances not yet redeemed provided $72.5 million, non-cash depreciation and amortization expenses provided $72.0 million, the change in accrued expenses provided $58.7 million as a result of pending purchases of available-for-sale securities and the change in accrued taxes provided $58.5 million as a result of the timing of payments.

Cash used by investing activities for the 13 weeks ended December 28, 2003, totaled $164.8 million. The net activity in the Company’s portfolio of available-for-sale securities during the 13-week period used $106.4 million, and net capital additions to property, plant and equipment used $59.1 million related to opening 137 new Company-operated retail stores and remodeling certain existing stores. Gross capital additions for the 13 weeks ended December 28, 2003, were $80.3 million and were offset by the change in currency translation adjustments, disposals, and impairment provisions of $21.2 million.

Cash provided by financing activities for the 13 weeks ended December 28, 2003, totaled $30.5 million. This was primarily due to the exercise of stock options and sale of the Company’s common stock from employee stock purchase plans, which provided $30.7 million.

Cash requirements in fiscal 2004, other than normal operating expenses, are expected to consist primarily of capital expenditures related to the addition of new Company-operated retail stores as Starbucks plans to open approximately 625 Company-operated stores, remodel certain existing stores and enhance its production capacity and information systems. Management expects capital expenditures in fiscal 2004 to be in the range of $450 million to $475 million, or approximately 10% to 15% growth over fiscal 2003.

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Management believes that existing cash and investments as well as cash generated from operations should be sufficient to finance capital requirements for its core businesses for the foreseeable future. New joint ventures, acquisitions or other new business opportunities may require outside funding.

The following table summarizes the Company’s contractual obligations and borrowings as of December 28, 2003, and the timing and effect that such commitments are expected to have on the Company’s liquidity and capital requirements in future periods (in thousands):

	Payments due by Period
			Less than 1						More than
Contractual obligations	Total		year		1 - 3 years		3 - 5 years		5 years
Long-term debt obligations	$	4,896	$	725	$	1,490	$	1,544	$	1,137
Operating lease obligations		2,272,213		300,815		564,624		490,032		916,742
Purchase obligations		419,070		277,355		137,784		3,931		—
Total	$	2,696,179	$	578,895	$	703,898	$	495,507	$	917,879

Starbucks expects to fund these commitments primarily with operating cash flows generated in the normal course of business.

Guarantees of Indebtedness of Others

The Company has unconditionally guaranteed the repayment of certain yen-denominated bank loans and related interest and fees of an unconsolidated equity investee, Starbucks Coffee Japan, Ltd. The guarantees continue until the loans, including accrued interest and fees, have been paid in full. The maximum amount is limited to the sum of unpaid principal and interest amounts, as well as other related expenses. These amounts will vary based on fluctuations in the yen foreign exchange rate. As of December 28, 2003, the maximum amount of the guarantees was approximately $12.3 million.

Additionally, Starbucks has unconditionally guaranteed 5% of a Chinese renminbi-denominated credit facility of Shanghai President Coffee Co., an unconsolidated equity investee. The guarantee amount will vary based on fluctuations in the Chinese renminbi foreign exchange rate. As of December 28, 2003, the outstanding amount of the guarantee was approximately $42,000.

Product Warranties

Coffee brewing and espresso equipment sold to customers through Company-operated and licensed retail stores as well as equipment sold to the Company’s licensees for use in retail licensing operations are under warranty for defects in materials and workmanship for a period ranging from 12 months to 24 months. The Company establishes an accrual for estimated warranty costs at the time of sale, based on historical experience. Product warranty costs and changes to the related accrual were not significant for the 13 weeks ended December 28, 2003.

Coffee Prices, Availability and General Risk Conditions

The supply and price of coffee are subject to significant volatility. Although most coffee trades in the commodity market, coffee of the quality sought by Starbucks tends to trade on a negotiated basis at a substantial premium above commodity coffee prices, depending upon the supply and demand at the time of purchase. Supply and price can be affected by multiple factors in the producing countries, including weather, political and economic conditions. In addition, green coffee prices have been affected in the past and may be affected in the future by the actions of certain organizations and associations that have historically attempted to influence commodity prices of green coffee through agreements establishing export quotas or restricting coffee supplies worldwide. The Company’s ability to raise sales prices in response to rising coffee prices may be limited, and the Company’s profitability could be adversely affected if coffee prices were to rise substantially.

The Company enters into fixed-price purchase commitments in order to secure an adequate supply of quality green coffee and bring greater certainty to the cost of sales in future periods. As of December 28, 2003, the Company had approximately $391.4 million in fixed-price purchase commitments which, together with existing inventory, is expected to provide an adequate supply of green coffee through calendar 2004 and well into 2005 for many types of coffees. The Company believes, based on relationships established with its suppliers in the past, that the risk of non-delivery on such purchase commitments is low.

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In addition to fluctuating coffee prices, management believes that the Company’s future results of operations and earnings could be significantly impacted by other factors such as increased competition within the specialty coffee industry, fluctuating dairy prices, the Company’s ability to find optimal store locations at favorable lease rates, increased costs associated with opening and operating retail stores and the Company’s continued ability to hire, train and retain qualified personnel, expensing of stock options when required, and other factors discussed under “Certain Additional Risks and Uncertainties” in the “Business” section of the Company’s Fiscal 2003 Annual Report on Form 10-K.

Seasonality and Quarterly Results

The Company’s business is subject to seasonal fluctuations. Significant portions of the Company’s net revenues and profits are realized during the first quarter of the Company’s fiscal year, which includes the December holiday season. In addition, quarterly results are affected by the timing of the opening of new stores, and the Company’s rapid growth may conceal the impact of other seasonal influences. Because of the seasonality of the Company’s business, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.

Recently Issued Accounting Pronouncements

In December 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46 Revised, “Consolidation of Variable Interest Entities - an Interpretation of ARB No. 51” (“FIN No. 46R”), which provided, among other things, immediate deferral of the application of FIN No. 46 for entities which did not originally qualify as special purpose entities, and provided additional scope exceptions for joint ventures with business operations and franchises. The Company’s adoption of FIN No. 46R did not have an impact on its consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Risk

As of December 28, 2003, the Company had forward foreign exchange contracts that qualify as cash flow hedges under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” to hedge a portion of anticipated international revenue. In addition, Starbucks had forward foreign exchange contracts that qualify as a hedge of its net investment in Starbucks Coffee Japan, Ltd. These contracts expire within 21 months.

Based on the foreign exchange contracts outstanding as of December 28, 2003, a 10% devaluation of the United States dollar as compared to the level of foreign exchange rates for currencies under contract as of December 28, 2003, would result in a reduction in the fair value of these derivative financial instruments of approximately $20.5 million, of which $13.8 million may reduce the Company’s future net earnings. Conversely, a 10% appreciation of the United States dollar would result in an increase in the fair value of these instruments of approximately $18.4 million, of which $12.9 million may increase the Company’s future net earnings. Consistent with the nature of the economic hedges provided by these foreign exchange contracts, increases or decreases in the fair value would be mostly offset by corresponding decreases or increases, respectively, in the dollar value of the Company’s foreign investment and future foreign currency royalty and license fee payments that would be received within the hedging period.

There have been no material changes in the equity security price risk or interest rate risk discussed in Item 7A of the Company’s Fiscal 2003 Annual Report on Form 10-.

Item 4. Controls and Procedures

(a)

Evaluation of disclosure controls and procedures.

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the chief executive officer and the chief financial officer, of the effectiveness of the design and operation of the disclosure controls and procedures, as defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures are effective, as of the end of the quarterly period covered by this Report (December 28, 2003), in ensuring that material information relating to Starbucks Corporation, including its consolidated subsidiaries,

16

	required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
(b)	Changes in internal control over financial reporting.
	There have been no significant changes in the Company’s internal controls over financial reporting during its most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company is party to various legal proceedings arising in the ordinary course of its business, but it is not currently a party to any legal proceeding that management believes would have a material adverse effect on the financial position or results of operations of the Company.

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits:

Exhibit
No.	Description
3.1	Amended and Restated Bylaws of Starbucks Corporation, as amended January 7, 2004
31.1	Certification of Principal Executive Officer Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b)	Reports on Form 8-K:
	The Company furnished one Report on Form 8-K to the Securities and Exchange Commission during the period covered by this report. The report was furnished on November 13, 2003 and related to the Company’s earnings release announcing its financial results for the 13 and 52 weeks ended September 28, 2003.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	STARBUCKS CORPORATION
February 4, 2004	By:	/s/ MICHAEL CASEY
		Michael Casey
		executive vice president and chief financial officer
		Signing on behalf of the registrant and as principal
		financial officer

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INDEX TO EXHIBITS

Exhibit
No.	Description of Exhibit
3.1	Amended and Restated Bylaws of Starbucks Corporation, as amended January 7, 2004
31.1	Certification of Principal Executive Officer Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer Pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

E1 EX-3.1 3 v96189exv3w1.txt EXHIBIT 3.1 EXHIBIT 3.1 AMENDED AND RESTATED BYLAWS OF STARBUCKS CORPORATION (AS AMENDED AND RESTATED THROUGH JANUARY 7, 2004) ARTICLE I. SHAREHOLDERS Section 1.1 Annual Meeting. The annual meeting of the shareholders of the Corporation shall be held each year on a date between January l and June 30, with a specific date and time to be determined from time to time by the Board of Directors. The failure to hold an annual meeting at the time stated in these bylaws does not affect the validity of any corporate action. At each annual meeting of shareholders, the shareholders shall elect a class of directors as set forth in Section 2.1 hereof and in the Corporation's Articles of Incorporation, and transact such other business as may properly be brought before the meeting. No business may be transacted at an annual meeting of shareholders other than business that is (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the annual meeting by any shareholder of the corporation (i) who is a shareholder on the date of the giving of the notice provided for in Section 1.4 hereof and on the record date for the determination of shareholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in Section 1.12 hereof. Section 1.2 Special Meetings. Special meetings of the shareholders may be held upon call of the Board of Directors or of the President and shall be called by the Board of Directors or the President upon the delivery of a written request of the holders of ten percent of the outstanding stock entitled to vote to the Secretary of the Corporation. Section 1.3 Meeting Place. All meetings of the shareholders shall be held at a location determined from time to time by the Board of Directors, and the place at which any such meeting shall be held shall be stated in the notice of the meeting. Section 1.4 Notice of Meetings. Written notice of the time and place of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called shall be delivered personally or mailed not less than ten days nor more than 60 days before the date of the meeting to each shareholder of record entitled to vote, at the address appearing upon the stock transfer books of the Corporation. If the shareholders will be voting on (i) an amendment to the Articles of Incorporation, (ii) a plan of merger or share exchange, (iii) the sale of all or substantially all of the Corporation's assets, or (iv) the dissolution of the Corporation, notice shall be delivered personally or mailed not less than 20 nor more than 60 days before the date of the meeting. Meetings may be held without notice if all shareholders entitled to vote are present or represented by proxy or if notice is waived by those not present or so represented at the beginning of the meeting. Section 1.5 Waiver of Notice. Notice of time, place and purpose of any meeting may be waived in writing before or after the time of the meeting, and will be waived by any shareholder by his or her attendance at such meeting in person or by proxy unless at the beginning of the meeting such shareholder objects to the meeting or the transaction of business at such meeting. Any shareholder waiving his or her right to notice shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given. Section 1.6 Quorum. Except as otherwise required by law: (a) A quorum at any annual or special meeting of shareholders shall consist of shareholders representing, either in person or by proxy, a majority of the outstanding shares of the Corporation entitled to E2 vote at such meeting. If a quorum is not present, the holders of a majority of the shares so present or represented may adjourn the meeting from time to time until a quorum is present. (b) Action on a matter other than the election of directors is approved if the votes cast favoring the action exceed the number of votes cast opposing the action. Section 1.7 Organization of Meetings. Meetings of the shareholders shall be presided over by the President, but if the President is not present, then by a Vice President. If neither the President nor a Vice President is present, by a chairman to be chosen at the meeting. The Secretary of the Corporation shall act as Secretary of the meeting, if present. Section 1.8 Proxies. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his duly authorized attorney in fact. Such proxy shall be filed with the Secretary of the Corporation or other officer of the Corporation or agent authorized to tabulate votes before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in such proxy. Any proxy regular on its face shall be presumed to be valid. Section 1.9 Shareholders' Action Without Meeting. Any action required or which may be taken at a meeting of the shareholders may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. Section 1.10 Action of Shareholders by Communication Equipment. Shareholders may participate in a meeting of shareholders by means of a conference telephone or similar communication equipment by means of which all persons participating in the meeting can hear each other at the same time. Participation by such means shall constitute presence in person at a meeting. Section 1.11 List of Shareholders. At least ten days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting, or any adjournment thereof, shall be made. Such list shall be arranged in alphabetical order with the address of and number of shares held by each shareholder. Such record shall be kept on file at the principal office of the Corporation for a period of ten days prior to such meeting. The record shall be produced and kept open at the time and place of such meeting for the inspection of any shareholder. Failure to comply with the requirements of this section shall not affect the validity of any action taken at such meeting. Section 1.12 Notice of Shareholder Business to be Conducted at the Annual Meeting of Shareholders. In order for a shareholder to properly bring any item of business before an annual meeting of shareholders, such shareholder must give timely notice thereof in proper written form to the Secretary of the Corporation. This Section 1.12 shall constitute an "advance notice provision" for purposes of Rule 14a-4(c)(1), promulgated under the Securities Exchange Act of 1934, as such rule may be amended from time to time (the "Exchange Act"). (a) To be timely, a shareholder's notice to the Secretary must be delivered at the principal executive offices of the Corporation not less than one hundred twenty (120) days prior to the anniversary of the date of the Corporation's proxy statement released to shareholders in connection with the previous year's annual meeting; provided, however, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after the date of the immediately preceding annual meeting of shareholders, notice by the shareholder must be received no later than the close of business on the tenth (10th) day following the day on which notice of the date of the annual meeting was mailed or public disclosure of the date of the annual meeting was made, whichever first occurs. (b) To be in proper form, a shareholder's notice to the Secretary must set forth as to each matter such shareholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual 2 meeting, (ii) the name and address of such shareholder, (iii) the class or series and number of shares of capital stock of the Corporation that are owned beneficially or of record by such shareholder, (iv) a description of all arrangements or understandings between such shareholder and any other person or persons (including their names) in connection with the proposal of such business by such shareholder and any material interest of such shareholder in such business and (v) a representation that such shareholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. (c) A shareholder intending to nominate one or more persons for election as a Director at an annual meeting must comply with the notice provisions set forth in Section 1.12(a) and Section 1.12(b) hereof (as such provisions may be amended from time to time) for such nomination or nominations to be properly brought before such meeting. In addition, for a nomination to be made properly by a shareholder, the notice to the Secretary of the Corporation must set forth (i) as to each person whom the shareholder proposes to nominate for election as a director (A) the name, age, business address and residence address of the person being nominated, (B) the principal occupation or employment of the person being nominated, (C) the class or series and number of shares of capital stock of the Corporation that are owned beneficially or of record by the person being nominated and (D) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with the solicitation of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; and (b) as to the shareholder giving the notice, any information (in addition to the information required pursuant to Section 1.12 (a) and Section 1.12(b) hereof) relating to such shareholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with the solicitation of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. ARTICLE II. DIRECTORS Section 2.1 Number, Election, and Powers. (a) All corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of the Board of Directors, except as may be otherwise provided in the Articles of Incorporation. The Board of Directors shall consist of nine members. The number of directors may be changed by a resolution of the Board of Directors or by a vote of the shareholders at the annual shareholders' meeting. (b) Directors shall serve staggered terms as set forth in the Articles of Incorporation of the Corporation. Each director shall hold office for the term for which elected and until his or her successor shall have been elected and qualified. (c) Directors need not be shareholders or residents of the state of Washington. In addition to the powers and authorities expressly conferred upon the Corporation by these Bylaws and the Articles of Incorporation, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these Bylaws directed or required to be exercised or done by the shareholders. Section 2.2 Vacancies. Any vacancy occurring in the Board of Directors, whether caused by resignation, death, increase in size or otherwise, may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board of Directors. A director elected to fill any vacancy shall hold office until the next election of directors by the shareholders Section 2.3 Quorum. A majority of the members of the Board of Directors then holding office shall constitute a quorum for the transaction of business, but if at any meeting of the Board of 3 Directors there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum shall have been obtained. Section 2.4 Removal of Directors. Except as otherwise provided by law or by the Articles of Incorporation, at a meeting of shareholders called expressly for that purpose at which a quorum exists, the entire Board of Directors or any member thereof may be removed with or without cause by a vote of the holders of a majority of the shares present and entitled to vote for the election of directors. Section 2.5 Regular Meetings. (a) Meetings of the Board of Directors shall be held from time to time at the principal place of business of the Corporation or at such other place or places, either within or without the state of Washington, as the Board of Directors may from time to time designate. (b) Regular meetings of any committee designated by the Board of Directors may be held at the principal place of business of the Corporation or at such other place or places, either within or without the state of Washington as such committee may from time to time designate. The schedule for meetings of any committee shall be set by said committee. Section 2.6 Special Meetings. (a) Special meetings of the Board of Directors may be called at any time by the President, Secretary or by any one Director, to be held at the principal place of business of the Corporation or at such other place or places as the Board of Directors or the person or persons calling such meeting may from time to time designate. (b) Special meetings of any committee may be called at any time by such person or persons and with such notice as shall be specified for such committee by the Board of Directors, or in the absence of such specification, in the manner and with the notice required for special meetings of the Board of Directors. Section 2.7 Notice of Special Meetings. Notice of each special meeting of the Board of Directors shall be delivered to each Director at least two days before the meeting. The notice of any special meeting shall identify the business to be transacted at or the purpose of the special meeting. Section 2.8 Committees. The Board of Directors may, in its discretion, by resolution passed by a majority of the whole Board of Directors, appoint various committees consisting of two or more members, including an Executive Committee, which shall have and may exercise such powers as shall be conferred or authorized by the resolution appointing such committee. A majority of any such committee, composed of more than two members, may determine its action and fix the time and place of its meetings, unless the Board of Directors shall otherwise provide. The Board of Directors shall have the power at any time to change the members of any such committee, to fill vacancies, and to discharge any such committee. Section 2.9 Action by Directors Without a Meeting. Any action required or which might be taken at a meeting of the Board of Directors or of a committee thereof may be taken without a meeting if a consent in writing, setting forth the action so taken or to be taken, shall be signed by all of the directors, or all of the members of the committee, as the case may be. Such consent shall be filed in the Corporation's minute book, or with the records of the committee so acting. Section 2.10 Meeting by Telephone. Members of the Board of Directors or any committee designated by the Bylaws or appointed by the Board of Directors may participate in a meeting of such Board of Directors or committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time, and participation by such means shall constitute presence in person at a meeting. 4 ARTICLE III. CONFLICTS OF INTEREST The Corporation may enter into contracts and otherwise transact business as vendor, purchaser, or otherwise, with its directors and officers and with corporations, associations, firms, and entities in which they are or may be or become interested as directors, officers, shareholders, members, or otherwise, as freely as though such adverse interest did not exist, even though the vote, action, or presence of such director or officer may be necessary to obligate the Corporation upon such contracts or transactions; and, in the absence of fraud, no such contract or transaction shall be voided and no such director or officer shall be held liable to account to the Corporation, by reason of such adverse interests or by reason of any fiduciary relationship to the Corporation arising out of such office or stock ownership, for any profit or benefit realized through any such contract or transaction; provided that in the case of directors, such director makes the disclosures required by RCW 23B.08.710 through RCW 23.B.08.710, and in the case of officers of the Corporation the nature of the interest of such officer, be disclosed or known to the Board of Directors of the Corporation. Officers need make no disclosure under this article when their interest is less than or equal to five percent of the voting power or control of the other corporation, association, firm or entity. ARTICLE IV. OFFICERS Section 4.1 Election or Appointment. The Board of Directors, as soon as practicable after the election of directors held each year, shall appoint a President and a Secretary, and from time to time may appoint a Chairman of the Board, one or more Vice Presidents, a Treasurer and such Assistant Secretaries, Assistant Treasurers and other officers as it may deem proper. Any two or more offices may be held by the same person, except the offices of President and Secretary. Unless otherwise required by law, no officer need be a shareholder of the Corporation or a member of the Board of Directors. Section 4.2 Term. The term of office of all officers shall be one year or until their respective successors are appointed. Any officer may be removed from office at any time by the affirmative vote of a majority of the Board of Directors or by the action of the duly appointed superior officer to whom he or she reports. The vacancy so created may be filled by the Board of Directors or by such duly appointed superior officer. Section 4.3 Removal. Any officer appointed by the Board of Directors may be removed with or without cause by the Board of Directors or the duly appointed superior officer to which such officer reports, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Section 4.4 Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or any other cause, may be filled by the Board of Directors or by a duly appointed superior officer. Section 4.5 Delegation. In the case of the absence or inability to act of any officer of the Corporation and of any person herein authorized to act in such person's place, the Board of Directors may from time to time delegate the powers or duties of such officer to any other officer, employee or agent. Section 4.6 Bonds. The Board of Directors may, by resolution, require any or all of the officers to give bonds to the Corporation, with sufficient surety or sureties, conditioned for the faithful performance of the duties of their respective offices, and to comply with such other conditions as may from time to time be required by the Board of Directors. Section 4.7 President. The President shall be the principal executive officer of the Corporation and, subject to the Board of Directors' control, shall supervise and control all of the business and affairs of the Corporation. When present, the President shall preside over all meetings of shareholders and directors. With the Secretary or other officer of the Corporation authorized by the Board of Directors, he may sign certificates for shares of the Corporation, deeds, mortgages, bonds, contracts, or other instruments that the Board of Directors has authorized to be executed, except when the signing and 5 execution thereof has been expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or is required by law to be otherwise signed or executed by some other officer or in some other manner. In general, he shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors from time to time. Section 4.8 Secretary. The Secretary shall: (a) keep the minutes of shareholders' and Board of Directors' meetings in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) have responsibility for maintaining the corporate records and the seal of the Corporation and see that the seal of the Corporation is affixed to all documents, the execution of which on behalf of the Corporation under its seal is duly authorized; (d) sign with the President or other officer of the Corporation authorized by the Board of Directors certificates for shares of the Corporation, the issuance of which have been authorized by resolution of the Board of Directors; (e) have general responsibility for the stock transfer books of the Corporation; and (f) in general perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the President or by the Board of Directors. ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS Section 5.1 Contracts. The Board of Directors may authorize any officer, employee or agent to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation. Section 5.2 Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation, shall be signed by such officer, employee or agent of the Corporation and in such manner as is from time to time determined by resolution of the Board of Directors. ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER Section 6.1 Issuance of Shares. No shares of the Corporation shall be issued unless authorized by the Board of Directors. Such authorization shall include the maximum number of shares to be issued and the consideration to be received for each share. No certificate shall be issued for any share until such share is fully paid. Section 6.2 Certificates for Shares. Certificates representing shares of the Corporation shall be signed by the Chairman of the Board or the President and by the Secretary and shall include on their face written notice of any restrictions which the Board of Directors may impose on the transferability of such shares. All certificates shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Corporation. All certificates surrendered to the Corporation for transfer shall be canceled and no new certificate shall be issued until the former certificates for a like number of shares shall have been surrendered and canceled except that in case of a lost, destroyed or mutilated certificate, a new one may be issued therefor upon such terms and indemnity to the Corporation as the Board of Directors may prescribe. Section 6.3 Transfers. (a) Transfers of shares shall be made only upon the share transfer books of the Corporation, kept at the registered office of the Corporation or at its principal place of business, or at the office of its transfer agent or registrar, and before a new certificate is issued the old certificate shall be surrendered for cancellation. The Board of Directors may, by resolution, open a share register in any state of the United States, and may employ an agent or agents to keep such register, and to record transfers of shares therein. 6 (b) Shares shall be transferred by delivery of the certificates therefor, accompanied either by an assignment in writing on the back of the certificate or an assignment separate from certificate, or by a written power of attorney to sell, assign and transfer the same, signed by the holder of said certificate. No shares of stock shall be transferred on the books of the Corporation until the outstanding certificates therefor have been surrendered to the Corporation. The Board of Directors may, by resolution, adopt appropriate procedures to allow transfers of shares, the certificates for which have been lost, stolen, mutilated or destroyed. Section 6.4 Restriction on Transfer. All certificates representing unregistered shares of the Corporation shall bear an appropriate restrictive legend on the face of the certificate or on the reverse of the certificate. ARTICLE VII. SEAL The seal of this Corporation shall consist of the name of the Corporation and the state and year of its incorporation. ARTICLE VIII. INDEMNIFICATION Section 8.1 Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is involved (including, without limitation, as a witness) in any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director, officer, employee, or agent of the Corporation or, being or having been such a director, officer, employee or agent, he or she is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation or of a partnership, joint venture, trust, or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee, or agent or in any other capacity while serving as a director, officer, employee, or agent, shall be indemnified and held harmless by the Corporation to the full extent authorized by the Washington Business Corporation Act or other applicable law, as the same exists or may hereafter be amended, against all expense, liability, and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts to be paid in settlement) actually and reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of his or her heirs, executors, and administrators; provided, however, that except as provided in Paragraph 8.2 of this Article with respect to proceedings seeking to enforce rights to indemnification, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Paragraph 8.1 shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that the payment of such expenses in advance of the final disposition of a proceeding shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director, officer, employee, or agent, to repay all amounts so advanced if it shall ultimately be determined that such director, officer, employee, or agent is not entitled to be indemnified under this Paragraph 8.1 or otherwise. Section 8.2 Right of Claimant To Bring Suit. If a claim under Paragraph 8.1 of this article is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, except in the case of a claim for expenses incurred in defending a proceeding in advance of its final disposition, in which case the applicable period shall be twenty days, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, to the extent successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. The claimant shall be presumed to be entitled to indemnification under this article upon submission of a written claim (and, in an action brought to enforce a claim for expenses incurred in defending any 7 proceeding in advance of its final disposition, where the required undertaking has been tendered to the Corporation) and thereafter the Corporation shall have the burden of proof to overcome the presumption that the claimant is not so entitled. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of, or reimbursement or advancement, of expenses to the claimant is proper in the circumstances nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its shareholders) that the claimant is not entitled to indemnification or to the reimbursement or advancement of expenses shall be a defense to the action or create a presumption that the claimant is not so entitled. Section 8.3 Non-exclusivity of Rights. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Articles of Incorporation, Bylaws, agreement, vote of shareholders or disinterested directors, or otherwise. Section 8.4 Insurance Contracts and Funding. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee, or agent of the Corporation or another corporation, partnership, joint venture, trust, or other enterprise against any expense, liability, or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability, or loss under the Washington Business Corporation Act. The Corporation may enter into contracts with any director, officer, employee, or agent of the Corporation in furtherance of the provisions of this Article and may create a trust fund, grant a security interest, or use other means (including, without limitation, a letter of credit) to ensure the payment of such amounts as may be necessary to effect indemnification as provided in this article. Section 8.5 Indemnification of Employees and Agents of the Corporation. The Corporation may, by action of its Board of Directors from time to time, provide indemnification and pay expenses in advance of the final disposition of a proceeding to employees and agents of the Corporation with the same scope and effect as the provisions of this Article with respect to the indemnification and advancement of expenses of directors and officers of the Corporation or pursuant to rights granted pursuant to, or provided by, the Washington Business Corporation Act or otherwise. ARTICLE IX. BOOKS AND RECORDS The Corporation shall keep correct and complete books and records of account and shall keep minutes of the proceedings of its shareholders and Board of Directors; and shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, a record of its shareholders, giving the names and addresses of all shareholders and the number and class of the shares held by each. Any books, records, and minutes may be in written form or any other form capable of being converted into written form within a reasonable time. ARTICLE X. AMENDMENTS Except to the extent prohibited by law, and only upon a vote of two-thirds of the Board of Directors, these Bylaws may be altered, amended or repealed, and new Bylaws may be adopted by the Board of Directors at any regular or special meeting of the Board of Directors. Amended December 14, 1987; January l8, 1991; May 29, 1991; June 4, 1992; September 27, 1993; May 17, 1995; December 20, 1995; November 14, 2000; May 8, 2002; and January 7, 2004. 8 EX-31.1 4 v96189exv31w1.txt EXHIBIT 31.1 EXHIBIT 31.1 CERTIFICATION PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Orin C. Smith, certify that: 1. I have reviewed this quarterly report on Form 10-Q for the period ended December 28, 2003 of Starbucks Corporation (the "Registrant"); 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 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)) for the Registrant and we 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) [Reserved] [Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986]; 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; 5. The Registrant's other certifying officer 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 function): 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. February 4, 2004 /s/ ORIN C. SMITH -------------------------------------- Orin C. Smith president and chief executive officer E3 EX-31.2 5 v96189exv31w2.txt EXHIBIT 31.2 EXHIBIT 31.2 CERTIFICATION PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Michael Casey, certify that: 1. I have reviewed this quarterly report on Form 10-Q for the period ended December 28, 2003 of Starbucks Corporation (the "Registrant"); 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 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)) for the Registrant and we 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) [Reserved] [Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986]; 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; 5. The Registrant's other certifying officer 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 function): 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. February 4, 2004 /s/ MICHAEL CASEY ----------------------------------- Michael Casey executive vice president and chief financial officer E4 EX-32.1 6 v96189exv32w1.txt EXHIBIT 32.1 EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Starbucks Corporation ("Starbucks") on Form 10-Q for the period ended December 28, 2003, as filed with the Securities and Exchange Commission on February 4, 2004 (the "Report"), I, Orin C. Smith, president and chief executive officer of Starbucks, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (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. February 4, 2004 /s/ ORIN C. SMITH ------------------------------------- Orin C. Smith president and chief executive officer E5 EX-32.2 7 v96189exv32w2.txt EXHIBIT 32.2 EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Starbucks Corporation ("Starbucks") on Form 10-Q for the period ended December 28, 2003, as filed with the Securities and Exchange Commission on February 4, 2004 (the "Report"), I, Michael Casey, executive vice president and chief financial officer of Starbucks, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (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. February 4, 2004 /s/ MICHAEL CASEY --------------------------------- Michael Casey executive vice president and chief financial officer E6 -----END PRIVACY-ENHANCED MESSAGE-----

EX-3.1

                                                                     EXHIBIT 3.1

                              AMENDED AND RESTATED
                                     BYLAWS
                                       OF
                              STARBUCKS CORPORATION

                (AS AMENDED AND RESTATED THROUGH JANUARY 7, 2004)

                             ARTICLE I. SHAREHOLDERS

         Section 1.1 Annual Meeting. The annual meeting of the shareholders of
the Corporation shall be held each year on a date between January l and June 30,
with a specific date and time to be determined from time to time by the Board of
Directors. The failure to hold an annual meeting at the time stated in these
bylaws does not affect the validity of any corporate action. At each annual
meeting of shareholders, the shareholders shall elect a class of directors as
set forth in Section 2.1 hereof and in the Corporation's Articles of
Incorporation, and transact such other business as may properly be brought
before the meeting. No business may be transacted at an annual meeting of
shareholders other than business that is (a) specified in the notice of meeting
(or any supplement thereto) given by or at the direction of the Board of
Directors (or any duly authorized committee thereof), (b) otherwise properly
brought before the annual meeting by or at the direction of the Board of
Directors (or any duly authorized committee thereof) or (c) otherwise properly
brought before the annual meeting by any shareholder of the corporation (i) who
is a shareholder on the date of the giving of the notice provided for in Section
1.4 hereof and on the record date for the determination of shareholders entitled
to vote at such annual meeting and (ii) who complies with the notice procedures
set forth in Section 1.12 hereof.

         Section 1.2 Special Meetings. Special meetings of the shareholders may
be held upon call of the Board of Directors or of the President and shall be
called by the Board of Directors or the President upon the delivery of a written
request of the holders of ten percent of the outstanding stock entitled to vote
to the Secretary of the Corporation.

         Section 1.3 Meeting Place. All meetings of the shareholders shall be
held at a location determined from time to time by the Board of Directors, and
the place at which any such meeting shall be held shall be stated in the notice
of the meeting.

         Section 1.4 Notice of Meetings. Written notice of the time and place of
the meeting and, in the case of a special meeting, the purpose or purposes for
which the meeting is called shall be delivered personally or mailed not less
than ten days nor more than 60 days before the date of the meeting to each
shareholder of record entitled to vote, at the address appearing upon the stock
transfer books of the Corporation. If the shareholders will be voting on (i) an
amendment to the Articles of Incorporation, (ii) a plan of merger or share
exchange, (iii) the sale of all or substantially all of the Corporation's
assets, or (iv) the dissolution of the Corporation, notice shall be delivered
personally or mailed not less than 20 nor more than 60 days before the date of
the meeting. Meetings may be held without notice if all shareholders entitled to
vote are present or represented by proxy or if notice is waived by those not
present or so represented at the beginning of the meeting.

         Section 1.5 Waiver of Notice. Notice of time, place and purpose of any
meeting may be waived in writing before or after the time of the meeting, and
will be waived by any shareholder by his or her attendance at such meeting in
person or by proxy unless at the beginning of the meeting such shareholder
objects to the meeting or the transaction of business at such meeting. Any
shareholder waiving his or her right to notice shall be bound by the proceedings
of any such meeting in all respects as if due notice thereof had been given.

         Section 1.6 Quorum. Except as otherwise required by law:

         (a)      A quorum at any annual or special meeting of shareholders
shall consist of shareholders representing, either in person or by proxy, a
majority of the outstanding shares of the Corporation entitled to


                                       E2


vote at such meeting. If a quorum is not present, the holders of a majority of
the shares so present or represented may adjourn the meeting from time to time
until a quorum is present.

         (b)      Action on a matter other than the election of directors is
approved if the votes cast favoring the action exceed the number of votes cast
opposing the action.

         Section 1.7 Organization of Meetings. Meetings of the shareholders
shall be presided over by the President, but if the President is not present,
then by a Vice President. If neither the President nor a Vice President is
present, by a chairman to be chosen at the meeting. The Secretary of the
Corporation shall act as Secretary of the meeting, if present.

         Section 1.8 Proxies. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by his duly authorized
attorney in fact. Such proxy shall be filed with the Secretary of the
Corporation or other officer of the Corporation or agent authorized to tabulate
votes before or at the time of the meeting. No proxy shall be valid after eleven
months from the date of its execution, unless otherwise provided in such proxy.
Any proxy regular on its face shall be presumed to be valid.

         Section 1.9 Shareholders' Action Without Meeting. Any action required
or which may be taken at a meeting of the shareholders may be taken without a
meeting if a consent in writing setting forth the action so taken shall be
signed by all of the shareholders entitled to vote with respect to the subject
matter thereof.

         Section 1.10 Action of Shareholders by Communication Equipment.
Shareholders may participate in a meeting of shareholders by means of a
conference telephone or similar communication equipment by means of which all
persons participating in the meeting can hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.

         Section 1.11 List of Shareholders. At least ten days before each
meeting of shareholders, a complete list of the shareholders entitled to vote at
such meeting, or any adjournment thereof, shall be made. Such list shall be
arranged in alphabetical order with the address of and number of shares held by
each shareholder. Such record shall be kept on file at the principal office of
the Corporation for a period of ten days prior to such meeting. The record shall
be produced and kept open at the time and place of such meeting for the
inspection of any shareholder. Failure to comply with the requirements of this
section shall not affect the validity of any action taken at such meeting.

         Section 1.12 Notice of Shareholder Business to be Conducted at the
Annual Meeting of Shareholders. In order for a shareholder to properly bring any
item of business before an annual meeting of shareholders, such shareholder must
give timely notice thereof in proper written form to the Secretary of the
Corporation. This Section 1.12 shall constitute an "advance notice provision"
for purposes of Rule 14a-4(c)(1), promulgated under the Securities Exchange Act
of 1934, as such rule may be amended from time to time (the "Exchange Act").

         (a)      To be timely, a shareholder's notice to the Secretary must be
delivered at the principal executive offices of the Corporation not less than
one hundred twenty (120) days prior to the anniversary of the date of the
Corporation's proxy statement released to shareholders in connection with the
previous year's annual meeting; provided, however, that in the event that the
annual meeting is called for a date that is not within thirty (30) days before
or after the date of the immediately preceding annual meeting of shareholders,
notice by the shareholder must be received no later than the close of business
on the tenth (10th) day following the day on which notice of the date of the
annual meeting was mailed or public disclosure of the date of the annual meeting
was made, whichever first occurs.

         (b)      To be in proper form, a shareholder's notice to the Secretary
must set forth as to each matter such shareholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual

                                       2



meeting, (ii) the name and address of such shareholder, (iii) the class or
series and number of shares of capital stock of the Corporation that are owned
beneficially or of record by such shareholder, (iv) a description of all
arrangements or understandings between such shareholder and any other person or
persons (including their names) in connection with the proposal of such business
by such shareholder and any material interest of such shareholder in such
business and (v) a representation that such shareholder intends to appear in
person or by proxy at the annual meeting to bring such business before the
meeting.

         (c)      A shareholder intending to nominate one or more persons for
election as a Director at an annual meeting must comply with the notice
provisions set forth in Section 1.12(a) and Section 1.12(b) hereof (as such
provisions may be amended from time to time) for such nomination or nominations
to be properly brought before such meeting. In addition, for a nomination to be
made properly by a shareholder, the notice to the Secretary of the Corporation
must set forth (i) as to each person whom the shareholder proposes to nominate
for election as a director (A) the name, age, business address and residence
address of the person being nominated, (B) the principal occupation or
employment of the person being nominated, (C) the class or series and number of
shares of capital stock of the Corporation that are owned beneficially or of
record by the person being nominated and (D) any other information relating to
the person that would be required to be disclosed in a proxy statement or other
filings required to be made in connection with the solicitation of proxies for
election of directors pursuant to Section 14 of the Exchange Act and the rules
and regulations promulgated thereunder; and (b) as to the shareholder giving the
notice, any information (in addition to the information required pursuant to
Section 1.12 (a) and Section 1.12(b) hereof) relating to such shareholder that
would be required to be disclosed in a proxy statement or other filings required
to be made in connection with the solicitation of proxies for election of
directors pursuant to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder. Such notice must be accompanied by a written
consent of each proposed nominee to being named as a nominee and to serve as a
director if elected.

                              ARTICLE II. DIRECTORS

         Section 2.1 Number, Election, and Powers.

         (a)      All corporate powers shall be exercised by or under the
authority of, and the business and affairs of the Corporation shall be managed
under the direction of the Board of Directors, except as may be otherwise
provided in the Articles of Incorporation. The Board of Directors shall consist
of nine members. The number of directors may be changed by a resolution of the
Board of Directors or by a vote of the shareholders at the annual shareholders'
meeting.

         (b)      Directors shall serve staggered terms as set forth in the
Articles of Incorporation of the Corporation. Each director shall hold office
for the term for which elected and until his or her successor shall have been
elected and qualified.

         (c)      Directors need not be shareholders or residents of the state
of Washington. In addition to the powers and authorities expressly conferred
upon the Corporation by these Bylaws and the Articles of Incorporation, the
Board of Directors may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by statute or by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or done by
the shareholders.

         Section 2.2 Vacancies. Any vacancy occurring in the Board of Directors,
whether caused by resignation, death, increase in size or otherwise, may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the Board of Directors. A director elected to fill any
vacancy shall hold office until the next election of directors by the
shareholders

         Section 2.3 Quorum. A majority of the members of the Board of Directors
then holding office shall constitute a quorum for the transaction of business,
but if at any meeting of the Board of

                                       3



Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting from time to time until a quorum shall have been
obtained.

         Section 2.4 Removal of Directors. Except as otherwise provided by law
or by the Articles of Incorporation, at a meeting of shareholders called
expressly for that purpose at which a quorum exists, the entire Board of
Directors or any member thereof may be removed with or without cause by a vote
of the holders of a majority of the shares present and entitled to vote for the
election of directors.

         Section 2.5 Regular Meetings.

         (a)      Meetings of the Board of Directors shall be held from time to
time at the principal place of business of the Corporation or at such other
place or places, either within or without the state of Washington, as the Board
of Directors may from time to time designate.

         (b)      Regular meetings of any committee designated by the Board of
Directors may be held at the principal place of business of the Corporation or
at such other place or places, either within or without the state of Washington
as such committee may from time to time designate. The schedule for meetings of
any committee shall be set by said committee.

         Section 2.6 Special Meetings.

         (a)      Special meetings of the Board of Directors may be called at
any time by the President, Secretary or by any one Director, to be held at the
principal place of business of the Corporation or at such other place or places
as the Board of Directors or the person or persons calling such meeting may from
time to time designate.

         (b)      Special meetings of any committee may be called at any time by
such person or persons and with such notice as shall be specified for such
committee by the Board of Directors, or in the absence of such specification, in
the manner and with the notice required for special meetings of the Board of
Directors.

         Section 2.7 Notice of Special Meetings. Notice of each special meeting
of the Board of Directors shall be delivered to each Director at least two days
before the meeting. The notice of any special meeting shall identify the
business to be transacted at or the purpose of the special meeting.

         Section 2.8 Committees. The Board of Directors may, in its discretion,
by resolution passed by a majority of the whole Board of Directors, appoint
various committees consisting of two or more members, including an Executive
Committee, which shall have and may exercise such powers as shall be conferred
or authorized by the resolution appointing such committee. A majority of any
such committee, composed of more than two members, may determine its action and
fix the time and place of its meetings, unless the Board of Directors shall
otherwise provide. The Board of Directors shall have the power at any time to
change the members of any such committee, to fill vacancies, and to discharge
any such committee.

         Section 2.9 Action by Directors Without a Meeting. Any action required
or which might be taken at a meeting of the Board of Directors or of a committee
thereof may be taken without a meeting if a consent in writing, setting forth
the action so taken or to be taken, shall be signed by all of the directors, or
all of the members of the committee, as the case may be. Such consent shall be
filed in the Corporation's minute book, or with the records of the committee so
acting.

         Section 2.10 Meeting by Telephone. Members of the Board of Directors or
any committee designated by the Bylaws or appointed by the Board of Directors
may participate in a meeting of such Board of Directors or committee by means of
a conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other at the same time, and
participation by such means shall constitute presence in person at a meeting.

                                       4



                       ARTICLE III. CONFLICTS OF INTEREST

         The Corporation may enter into contracts and otherwise transact
business as vendor, purchaser, or otherwise, with its directors and officers and
with corporations, associations, firms, and entities in which they are or may be
or become interested as directors, officers, shareholders, members, or
otherwise, as freely as though such adverse interest did not exist, even though
the vote, action, or presence of such director or officer may be necessary to
obligate the Corporation upon such contracts or transactions; and, in the
absence of fraud, no such contract or transaction shall be voided and no such
director or officer shall be held liable to account to the Corporation, by
reason of such adverse interests or by reason of any fiduciary relationship to
the Corporation arising out of such office or stock ownership, for any profit or
benefit realized through any such contract or transaction; provided that in the
case of directors, such director makes the disclosures required by RCW
23B.08.710 through RCW 23.B.08.710, and in the case of officers of the
Corporation the nature of the interest of such officer, be disclosed or known to
the Board of Directors of the Corporation. Officers need make no disclosure
under this article when their interest is less than or equal to five percent of
the voting power or control of the other corporation, association, firm or
entity.

                              ARTICLE IV. OFFICERS

         Section 4.1 Election or Appointment. The Board of Directors, as soon as
practicable after the election of directors held each year, shall appoint a
President and a Secretary, and from time to time may appoint a Chairman of the
Board, one or more Vice Presidents, a Treasurer and such Assistant Secretaries,
Assistant Treasurers and other officers as it may deem proper. Any two or more
offices may be held by the same person, except the offices of President and
Secretary. Unless otherwise required by law, no officer need be a shareholder of
the Corporation or a member of the Board of Directors.

         Section 4.2 Term. The term of office of all officers shall be one year
or until their respective successors are appointed. Any officer may be removed
from office at any time by the affirmative vote of a majority of the Board of
Directors or by the action of the duly appointed superior officer to whom he or
she reports. The vacancy so created may be filled by the Board of Directors or
by such duly appointed superior officer.

         Section 4.3 Removal. Any officer appointed by the Board of Directors
may be removed with or without cause by the Board of Directors or the duly
appointed superior officer to which such officer reports, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.

         Section 4.4 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause, may be filled by the
Board of Directors or by a duly appointed superior officer.

         Section 4.5 Delegation. In the case of the absence or inability to act
of any officer of the Corporation and of any person herein authorized to act in
such person's place, the Board of Directors may from time to time delegate the
powers or duties of such officer to any other officer, employee or agent.

         Section 4.6 Bonds. The Board of Directors may, by resolution, require
any or all of the officers to give bonds to the Corporation, with sufficient
surety or sureties, conditioned for the faithful performance of the duties of
their respective offices, and to comply with such other conditions as may from
time to time be required by the Board of Directors.

         Section 4.7 President. The President shall be the principal executive
officer of the Corporation and, subject to the Board of Directors' control,
shall supervise and control all of the business and affairs of the Corporation.
When present, the President shall preside over all meetings of shareholders and
directors. With the Secretary or other officer of the Corporation authorized by
the Board of Directors, he may sign certificates for shares of the Corporation,
deeds, mortgages, bonds, contracts, or other instruments that the Board of
Directors has authorized to be executed, except when the signing and

                                       5



execution thereof has been expressly delegated by the Board of Directors or by
these Bylaws to some other officer or agent of the Corporation or is required by
law to be otherwise signed or executed by some other officer or in some other
manner. In general, he shall perform all duties incident to the office of
President and such other duties as may be prescribed by the Board of Directors
from time to time.

         Section 4.8 Secretary. The Secretary shall: (a) keep the minutes of
shareholders' and Board of Directors' meetings in one or more books provided for
that purpose; (b) see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law; (c) have responsibility for
maintaining the corporate records and the seal of the Corporation and see that
the seal of the Corporation is affixed to all documents, the execution of which
on behalf of the Corporation under its seal is duly authorized; (d) sign with
the President or other officer of the Corporation authorized by the Board of
Directors certificates for shares of the Corporation, the issuance of which have
been authorized by resolution of the Board of Directors; (e) have general
responsibility for the stock transfer books of the Corporation; and (f) in
general perform all duties incident to the office of Secretary and such other
duties as from time to time may be assigned to him or her by the President or by
the Board of Directors.

                ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS

         Section 5.1 Contracts. The Board of Directors may authorize any
officer, employee or agent to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation.

         Section 5.2 Checks, Drafts, etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation, shall be signed by such officer, employee or agent of
the Corporation and in such manner as is from time to time determined by
resolution of the Board of Directors.

             ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER

         Section 6.1 Issuance of Shares. No shares of the Corporation shall be
issued unless authorized by the Board of Directors. Such authorization shall
include the maximum number of shares to be issued and the consideration to be
received for each share. No certificate shall be issued for any share until such
share is fully paid.

         Section 6.2 Certificates for Shares. Certificates representing shares
of the Corporation shall be signed by the Chairman of the Board or the President
and by the Secretary and shall include on their face written notice of any
restrictions which the Board of Directors may impose on the transferability of
such shares. All certificates shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the Corporation. All certificates
surrendered to the Corporation for transfer shall be canceled and no new
certificate shall be issued until the former certificates for a like number of
shares shall have been surrendered and canceled except that in case of a lost,
destroyed or mutilated certificate, a new one may be issued therefor upon such
terms and indemnity to the Corporation as the Board of Directors may prescribe.

         Section 6.3       Transfers.

         (a)      Transfers of shares shall be made only upon the share transfer
books of the Corporation, kept at the registered office of the Corporation or at
its principal place of business, or at the office of its transfer agent or
registrar, and before a new certificate is issued the old certificate shall be
surrendered for cancellation. The Board of Directors may, by resolution, open a
share register in any state of the United States, and may employ an agent or
agents to keep such register, and to record transfers of shares therein.

                                       6



         (b)      Shares shall be transferred by delivery of the certificates
therefor, accompanied either by an assignment in writing on the back of the
certificate or an assignment separate from certificate, or by a written power of
attorney to sell, assign and transfer the same, signed by the holder of said
certificate. No shares of stock shall be transferred on the books of the
Corporation until the outstanding certificates therefor have been surrendered to
the Corporation. The Board of Directors may, by resolution, adopt appropriate
procedures to allow transfers of shares, the certificates for which have been
lost, stolen, mutilated or destroyed.

         Section 6.4 Restriction on Transfer. All certificates representing
unregistered shares of the Corporation shall bear an appropriate restrictive
legend on the face of the certificate or on the reverse of the certificate.

                                ARTICLE VII. SEAL

         The seal of this Corporation shall consist of the name of the
Corporation and the state and year of its incorporation.

                          ARTICLE VIII. INDEMNIFICATION

         Section 8.1 Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved (including, without
limitation, as a witness) in any actual or threatened action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he or she is or was a director, officer, employee, or agent of
the Corporation or, being or having been such a director, officer, employee or
agent, he or she is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation or of a
partnership, joint venture, trust, or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee, or
agent or in any other capacity while serving as a director, officer, employee,
or agent, shall be indemnified and held harmless by the Corporation to the full
extent authorized by the Washington Business Corporation Act or other applicable
law, as the same exists or may hereafter be amended, against all expense,
liability, and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts to be paid in settlement) actually and reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of his or her heirs,
executors, and administrators; provided, however, that except as provided in
Paragraph 8.2 of this Article with respect to proceedings seeking to enforce
rights to indemnification, the Corporation shall indemnify any such person
seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Paragraph 8.1 shall be a contract right and
shall include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that the payment of such expenses in advance of the final disposition
of a proceeding shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such director, officer, employee, or agent, to
repay all amounts so advanced if it shall ultimately be determined that such
director, officer, employee, or agent is not entitled to be indemnified under
this Paragraph 8.1 or otherwise.

         Section 8.2 Right of Claimant To Bring Suit. If a claim under Paragraph
8.1 of this article is not paid in full by the Corporation within sixty days
after a written claim has been received by the Corporation, except in the case
of a claim for expenses incurred in defending a proceeding in advance of its
final disposition, in which case the applicable period shall be twenty days, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, to the extent successful in whole or
in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. The claimant shall be presumed to be entitled to
indemnification under this article upon submission of a written claim (and, in
an action brought to enforce a claim for expenses incurred in defending any

                                       7



proceeding in advance of its final disposition, where the required undertaking
has been tendered to the Corporation) and thereafter the Corporation shall have
the burden of proof to overcome the presumption that the claimant is not so
entitled. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its shareholders) to have made a
determination prior to the commencement of such action that indemnification of,
or reimbursement or advancement, of expenses to the claimant is proper in the
circumstances nor an actual determination by the Corporation (including its
Board of Directors, independent legal counsel, or its shareholders) that the
claimant is not entitled to indemnification or to the reimbursement or
advancement of expenses shall be a defense to the action or create a presumption
that the claimant is not so entitled.

         Section 8.3 Non-exclusivity of Rights. The right to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Articles of Incorporation, Bylaws, agreement, vote of
shareholders or disinterested directors, or otherwise.

         Section 8.4 Insurance Contracts and Funding. The Corporation may
maintain insurance, at its expense, to protect itself and any director, officer,
employee, or agent of the Corporation or another corporation, partnership, joint
venture, trust, or other enterprise against any expense, liability, or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability, or loss under the Washington Business
Corporation Act. The Corporation may enter into contracts with any director,
officer, employee, or agent of the Corporation in furtherance of the provisions
of this Article and may create a trust fund, grant a security interest, or use
other means (including, without limitation, a letter of credit) to ensure the
payment of such amounts as may be necessary to effect indemnification as
provided in this article.

         Section 8.5 Indemnification of Employees and Agents of the Corporation.
The Corporation may, by action of its Board of Directors from time to time,
provide indemnification and pay expenses in advance of the final disposition of
a proceeding to employees and agents of the Corporation with the same scope and
effect as the provisions of this Article with respect to the indemnification and
advancement of expenses of directors and officers of the Corporation or pursuant
to rights granted pursuant to, or provided by, the Washington Business
Corporation Act or otherwise.

                          ARTICLE IX. BOOKS AND RECORDS

         The Corporation shall keep correct and complete books and records of
account and shall keep minutes of the proceedings of its shareholders and Board
of Directors; and shall keep at its registered office or principal place of
business, or at the office of its transfer agent or registrar, a record of its
shareholders, giving the names and addresses of all shareholders and the number
and class of the shares held by each. Any books, records, and minutes may be in
written form or any other form capable of being converted into written form
within a reasonable time.

                              ARTICLE X. AMENDMENTS

         Except to the extent prohibited by law, and only upon a vote of
two-thirds of the Board of Directors, these Bylaws may be altered, amended or
repealed, and new Bylaws may be adopted by the Board of Directors at any regular
or special meeting of the Board of Directors.

Amended December 14, 1987; January l8, 1991; May 29, 1991; June 4, 1992;
September 27, 1993; May 17, 1995; December 20, 1995; November 14, 2000; May 8,
2002; and January 7, 2004.

                                       8

EX-31.1

                                                                    EXHIBIT 31.1

        CERTIFICATION PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

      AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Orin C. Smith, certify that:

1.       I have reviewed this quarterly report on Form 10-Q for the period ended
         December 28, 2003 of Starbucks Corporation (the "Registrant");

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 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)) for the
         Registrant and we 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)       [Reserved] [Paragraph omitted pursuant to SEC Release Nos.
                  33-8238 and 34-47986];

         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;

5.       The Registrant's other certifying officer 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
         function):

         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.

February 4, 2004                          /s/ ORIN C. SMITH
                                          --------------------------------------
                                          Orin C. Smith
                                          president and chief executive officer

                                       E3

EX-31.2

                                                                    EXHIBIT 31.2

        CERTIFICATION PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE
                                  ACT OF 1934

      AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael Casey, certify that:

1.       I have reviewed this quarterly report on Form 10-Q for the period ended
         December 28, 2003 of Starbucks Corporation (the "Registrant");

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 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)) for the
         Registrant and we 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)       [Reserved] [Paragraph omitted pursuant to SEC Release Nos.
                  33-8238 and 34-47986];

         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;

5.       The Registrant's other certifying officer 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
         function):

         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.

February 4, 2004                           /s/ MICHAEL CASEY
                                           -----------------------------------
                                           Michael Casey
                                           executive vice president and chief
                                           financial officer

                                       E4

EX-32.1

                                                                    EXHIBIT 32.1

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
      AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Starbucks Corporation ("Starbucks")
on Form 10-Q for the period ended December 28, 2003, as filed with the
Securities and Exchange Commission on February 4, 2004 (the "Report"), I, Orin
C. Smith, president and chief executive officer of Starbucks, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that, to my knowledge:

(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.

February 4, 2004                          /s/ ORIN C. SMITH
                                          -------------------------------------
                                          Orin C. Smith
                                          president and chief executive officer

                                       E5

EX-32.2

                                                                    EXHIBIT 32.2

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
      AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Starbucks Corporation ("Starbucks")
on Form 10-Q for the period ended December 28, 2003, as filed with the
Securities and Exchange Commission on February 4, 2004 (the "Report"), I,
Michael Casey, executive vice president and chief financial officer of
Starbucks, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(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.

February 4, 2004                               /s/ MICHAEL CASEY
                                               ---------------------------------
                                               Michael Casey
                                               executive vice president and
                                               chief financial officer

                                       E6