8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

February 16, 2005
Date of Report (Date of earliest event reported)

STARBUCKS CORPORATION

(Exact name of registrant as specified in its charter)

Washington	0-20322	91-1325671
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2401 Utah Avenue South
Seattle, Washington 98134

(Address of principal executive offices) (Zip Code)

(206) 447-1575

(Registrant’s telephone number, including area code)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

     £ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     £ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     £ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     £ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EXHIBIT 99.1

Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.

(a) On February 8, 2005, management of Starbucks Corporation (the “Company”) discussed with the Audit and Compliance Committee of the Board of Directors of the Company (the “Audit Committee”) the views expressed by the Office of the Chief Accountant of the Securities and Exchange Commission (the “SEC”) on February 7, 2005 regarding certain operating lease accounting issues and their application under generally accepted accounting principles (“GAAP”). The Audit Committee concurred with management’s plan to further evaluate its accounting practices relative to leases.

     On February 10, 2005, in a telephonic meeting with the Chair of the Audit Committee and the Company’s independent registered public accounting firm, Deloitte & Touche LLP, management made a preliminary determination that its then-current method of accounting for leasehold improvements funded by landlord incentives or allowances under operating leases (tenant improvement allowances) and its then-current method of accounting for rent holidays were not in accordance with GAAP. Because the Company’s Quarterly Report on Form 10-Q for the first quarter of fiscal 2005 (the “10-Q”) was due February 11, 2005, management recommended filing a Form 12b-25 with the SEC for a five-day extension on the due date of the 10-Q in order to give management time to incorporate the correct accounting for these items into the 10-Q and to give the Audit Committee and the Company’s independent registered public accounting firm time to review the filing. The Chair of the Audit Committee concurred with management’s recommendation. On February 11, 2005, the Company filed the Form 12b-25 and a Current Report on Form 8-K to report the filing extension.

     On February 16, 2005, management and the Audit Committee, in consultation with the Company’s independent registered public accounting firm, discussed the issues regarding the Company’s method of accounting for tenant improvement allowances and rent holidays and the Audit Committee concurred with management’s assessment that the Company’s accounting for these items was incorrect and that the Company’s previously issued audited consolidated financial statements for fiscal 2002, 2003 and 2004 and the unaudited comparative 2003 and 2004 quarterly information should be restated.

     These matters will not impact the Company’s previously reported first quarter fiscal 2005 earnings per share.

     As a result of the Company’s determination to restate its consolidated financial statements as discussed above, the financial statements included in the Company’s Annual Report on Form 10-K for fiscal 2004 should no longer be relied upon. The Company will file a Form 10-K/A with restated consolidated financial statements, and the Company’s Forms 10-Q for fiscal 2005 will reflect the restated information for the corresponding quarters in fiscal 2004.

Item 8.01. Other Events.

On February 16, 2005, the Company issued a press release announcing that it had filed the Company’s first quarter fiscal 2005 Form 10-Q with the SEC.

The Company announced that it had determined that its current method of accounting for tenant improvement allowances and rent holidays was not in accordance with GAAP. Accordingly, the Company announced that it had conducted a review of its accounting related to leases and had corrected its accounting for both these items.

The Company also announced that it had made the decision to restate the Company’s consolidated financial statements previously issued in its Annual Report on Form 10-K for the fiscal year ended October 3, 2004 and that it will quantify these restatements in a Form 10-K/A to be filed with the SEC. Investors or other interested parties should refer to the Form 10-Q filed with the SEC on February 16, 2005 and, after it has been filed with the SEC, the Company’s Form 10-K/A for fiscal 2004, for amended information.

A copy of the Company’s February 16, 2005 press release is attached as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits.

      (c) Exhibits.

Exhibit No.		Description
	99.1	Press release of Starbucks Corporation dated February 16, 2005

SIGNATURES

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

	STARBUCKS CORPORATION
Dated:   February 16, 2005	By:	/s/ Michael Casey
		Michael Casey
		executive vice president and chief financial officer Signing on behalf of the registrant and as principal financial officer

EXHIBIT INDEX

Exhibit
No.	Description
99.1	Press release of Starbucks Corporation dated February 16, 2005

EX-99.1

Exhibit 99.1

Starbucks Contact, Investor Relations:	Starbucks Contact, Media:
Mary Ellen Fukuhara	Audrey Lincoff
206-318-4025	206-447-7950 ext. 52690

Starbucks Files First Quarter Fiscal 2005 Form 10-Q
Review of Lease Accounting Practices Complete
No Change to Previously Reported Fiscal 2004 or Q1 2005 EPS, or Fiscal 2005 Targets

SEATTLE, February 16, 2005 – Starbucks Corporation (NASDAQ: SBUX) announced today that it has filed the Company’s first quarter fiscal 2005 Form 10-Q with the Securities and Exchange Commission (SEC). On Friday, February 11, 2005, Starbucks issued a notification via press release and Form 8-K filing that the Company had requested a five-day extension of the filing date for its Form 10-Q in order to correct its accounting for tenant improvement allowances and rent holidays, in light of the views expressed by the Office of the Chief Accountant of the SEC on February 7, 2005, in a letter to the American Institute of Certified Public Accountants.

Company management has reviewed its lease-related accounting and determined that its current method of accounting for tenant improvement allowances and rent holidays is not consistent with generally accepted accounting principles. Accordingly, the Company has corrected its accounting for both of these items.

These matters do not impact the Company’s previously reported fiscal 2004 or first quarter 2005 earnings per share results, its fiscal 2005 earnings per share target range of $1.15 to $1.17, excluding the impact from expensing stock options, or its longer term goal to increase earnings per share by 20 to 25 percent per year for the next three to five years.

For tenant improvement allowances, the Company’s Cost of Sales Including Occupancy Costs decreased by $2.7 million and Depreciation and Amortization Expenses increased by the same amount in today’s first quarter fiscal 2005 Form 10-Q filing as compared to the Company’s first quarter fiscal 2005 press release issued on January 26, 2005. This correction did not change previously reported earnings per share for the quarter. Further, the Company’s Net Property, Plant and Equipment and Total Assets increased by $80.8 million, and there was a corresponding increase in Accrued Occupancy Costs, Other Long-Term Liabilities, and Total Liabilities and Shareholders’ Equity in today’s first quarter fiscal 2005 Form 10-Q filing as compared to the Company’s first quarter fiscal 2005 press release.

For rent holidays, upon further review of the Company’s operating leases, Starbucks has determined that the impact of the adjustment of the Company’s accounting method has caused an immaterial decrease to reported Net Earnings, rather than an immaterial increase as previously estimated based on management’s preliminary analysis last week. This change did not impact previously reported earnings per share for the quarter ended January 2, 2005.

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Starbucks has made the decision to restate the Company’s consolidated financial statements previously issued in its Annual Report on Form 10-K for the year ended October 3, 2004 and plans to quantify these restatements in a Form 10-K/A to be filed with the SEC. The Company also plans to file with the SEC a report on Form 8-K indicating that the financial statements reported in the Company’s Form 10-K for the fiscal year ended October 3, 2004 should no longer be relied upon. Investors or other interested parties should refer to the Company’s filing on Form 10-Q filed with the SEC on February 16, 2005, and the Form 10-K/A to be filed with the SEC, for amended information. For rent holidays, there will be a reduction in beginning Retained Earnings in fiscal 2002 of $8.6 million and subsequent immaterial decreases in reported Net Earnings for fiscal years 2002 through 2004. The cumulative effect of the accounting changes through fiscal 2004 is a reduction to retained earnings of $12.6 million as of October 3, 2004.

This release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements, including anticipated trends in or expectations regarding the Company’s net earnings and earnings per share results, are all 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 material prices and availability, successful execution of internal performance and expansion plans, fluctuations in U.S. and international economies and currencies, ramifications from the war on terrorism, or other international events or developments, the impact of initiatives by competitors, the effect of legal proceedings, and other risks detailed in the Company’s filings with the Securities and Exchange Commission, including the “Certain Additional Risks and Uncertainties” section of Starbucks Annual Report on Form 10-K for the fiscal year ended October 3, 2004.

Starbucks Corporation is the leading retailer, roaster and brand of specialty coffee in the world, with approximately 9,000 retail locations in North America, Latin America, Europe, the Middle East and the Pacific Rim. The Company is committed to offering the highest quality coffee and the Starbucks Experience while conducting its business in ways that produce social, environmental and economic benefits for communities in which it does business. In addition to its retail operations, the Company produces and sells bottled Frappuccino® coffee drinks, Starbucks DoubleShot® coffee drink, and a line of superpremium ice creams through its joint venture partnerships. The Company’s brand portfolio provides a wide variety of consumer products. Tazo Tea’s line of innovative superpremium teas and Hear Music’s exceptional compact discs enhance the Starbucks Experience through best-of-class products. The Seattle’s Best Coffee® and Torrefazione Italia® Coffee brands enable Starbucks to appeal to a broader consumer base by offering an alternative variety of coffee flavor profiles.

© 2005 Starbucks Coffee Company. All rights reserved.

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