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 and Exchange Act of 1934

Date of Report (Date of earliest event reported): April 27, 2005

STARBUCKS CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Washington
(State or Other Jurisdiction of
Incorporation or Organization) 0-20322
(Commission File Number) 91-1325671
(IRS Employer
Identification No.)

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

(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):

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

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

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

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

Item 2.02. Results of Operation and Financial Condition.

     On April 27, 2005, Starbucks Corporation issued an earnings release announcing its financial results for the 13 weeks ended April 3, 2005. A copy of the earnings release is attached as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits.

     (c) Exhibits.

Exhibit No.	Description
99.1	Earnings release of Starbucks Corporation dated April 27, 2005.

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
Dated: April 27, 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
Number	Description
99.1	Earnings release of Starbucks Corporation dated April 27, 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 Announces Record Second Quarter Fiscal 2005 Results & Raises Full Year EPS Target
Earnings Per Share Increase 26 Percent to $0.24
Fiscal 2005 Earnings Per Share Target Raised to $1.17 to $1.19
Highlights Opportunities in China and Expansion into Qingdao

SEATTLE; April 27, 2005 – Starbucks Corporation (Nasdaq: SBUX) today announced revenues and earnings for its fiscal second quarter ended April 3, 2005.

For the 13 weeks ended April 3, 2005, consolidated net revenues increased 22 percent to $1.5 billion from $1.2 billion for the same period in fiscal 2004. Net earnings for the 13 weeks ended April 3, 2005, increased 27 percent to $101 million from $79 million for the same period in fiscal 2004. Earnings per share for the 13 weeks ended April 3, 2005, increased 26 percent to $0.24, compared to $0.19 per share for the comparable period in fiscal 2004.

“Our strong second quarter financial results, including continued operating margin expansion, reflects our ongoing ability to deliver performance in existing markets while building the platform for future growth,” commented Howard Schultz, chairman. “We are pleased with all areas of our business, from our retail operations both domestically and internationally, to our specialty businesses, and we are well positioned for the second half of the fiscal year.”

Schultz added, “With more than 300 Starbucks locations in greater China, I am especially excited about the opportunities awaiting us with our expansion in the broader China market, including the opening of Starbucks first Company-operated store in Qingdao. The Company continues to seek opportunities to add stores and bring the Starbucks Experience to new markets worldwide.”

Consolidated Financial and Operating Summary

Company-operated retail revenues increased 22 percent to $1.3 billion for the 13 weeks ended April 3, 2005, from $1.1 billion for the same period in fiscal 2004. The increase was primarily attributable to the opening of 669 new Company-operated retail stores in the last 12 months and comparable store sales growth of seven percent for the quarter. The increase in comparable store sales was due to a four percent increase in the number of customer transactions and a three percent increase in the average value per transaction.

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Specialty revenues increased 23 percent to $235 million for the 13 weeks ended April 3, 2005, compared to $191 million for the corresponding period of fiscal 2004. Licensing revenues increased 32 percent to $161 million primarily due to higher product sales and royalty revenues from the opening of 758 new licensed retail stores in the last 12 months. Foodservice and other revenues increased eight percent to $73 million primarily due to growth in new and existing U.S. and International foodservice accounts.

Cost of sales and related occupancy costs increased to 41.4 percent of total net revenues for the 13 weeks ended April 3, 2005, compared to 41.0 percent in the corresponding 13-week period of fiscal 2004. This increase was primarily due to higher initial costs associated with the Company’s continued expansion of the lunch program in Company-operated retail stores, as well as higher dairy costs, offset in part by a higher average value per retail transaction.

Store operating expenses as a percentage of Company-operated retail revenues increased to 41.5 percent for the 13 weeks ended April 3, 2005, from 40.6 percent for the corresponding period of fiscal 2004, primarily due to higher payroll-related expenditures for future planned acceleration in Company-operated store openings, extended store operating hours and a higher number of drive-thru locations opened in the past year, as well as higher maintenance and repair expenditures to ensure a consistent Starbucks Experience in existing stores.

Other operating expenses (expenses associated with the Company’s specialty operations) decreased to 19.7 percent of total specialty revenues for the 13 weeks ended April 3, 2005, compared to 21.4 percent in the corresponding period of fiscal 2004. The decrease was primarily due to lower expenditures within the grocery and warehouse club businesses and efficiencies gained from the expansion of the foodservice distribution network.

Depreciation and amortization expenses increased to $88 million for the 13 weeks ended April 3, 2005, compared to $74 million for the corresponding period of fiscal 2004. The increase was primarily due to the opening of 669 new Company-operated retail stores in the last 12 months. As a percentage of total net revenues, depreciation and amortization expenses decreased to 5.8 percent for the 13 weeks ended April 3, 2005, from 6.0 percent for the corresponding 13-week period of fiscal 2004.

General and administrative expenses increased to $82 million for the 13 weeks ended April 3, 2005, compared to $80 million for the corresponding period of fiscal 2004. The increase was primarily due to higher professional fees in support of both domestic and international expansion, partially offset by a lower provision for incentive compensation. As a percentage of total net revenues, general and administrative expenses decreased to 5.4 percent for the 13 weeks ended April 3, 2005, from 6.4 percent for the corresponding period of fiscal 2004.

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Income from equity investees increased to $16 million for the 13 weeks ended April 3, 2005, compared to $12 million for the corresponding period of fiscal 2004. The increase was primarily due to volume driven operating results for The North American Coffee Partnership, which produces bottled Frappuccino^® and Starbucks DoubleShot^® coffee drinks, and improved results from international investees as a result of new licensed retail store openings, particularly in Japan.

Operating income increased 27 percent to $157 million for the 13 weeks ended April 3, 2005, compared to $124 million for the corresponding 13-week period of fiscal 2004. Operating margin increased to 10.3 percent of total net revenues for the 13 weeks ended April 3, 2005, compared to 10.0 percent for the corresponding period of fiscal 2004, primarily due to strong revenue growth and leverage of general and administrative and other operating expenses, partially offset by higher retail store operating expenses.

Interest and other income remained unchanged at $4 million for both the 13 weeks ended April 3, 2005, and March 28, 2004. Higher interest income earned on higher cash and liquid investment balances was offset by a decrease in the market value of trading securities for the 13 weeks ended April 3, 2005, compared to an increase in market value in the corresponding period in fiscal 2004.

Net earnings for the 13 weeks ended April 3, 2005, increased 27 percent to $101 million from $79 million for the same period in fiscal 2004. Earnings per share for the 13 weeks ended April 3, 2005, increased 26 percent to $0.24, compared to $0.19 per share for the comparable period in fiscal 2004.

Fiscal 2005 Targets

The Company also provided updated fiscal 2005 targets:

•   Starbucks still expects to open approximately 1,500 new stores on a global basis in fiscal 2005. In the United States, Starbucks plans to open approximately 550 Company-operated locations and 525 licensed locations. In International markets, Starbucks plans to open approximately 100 Company-operated stores and 325 licensed stores;

•   Starbucks is targeting total net revenue growth in the range of at least 20 percent in fiscal 2005, excluding the 53^rd week impact on 2004. While the Company’s longer term target range of three percent to seven percent comparable store sales growth remains unchanged, Starbucks currently expects the remainder of fiscal 2005 to be at or slightly above the high end of that range, with monthly anomalies;

•   Based on strong second quarter earnings and the Company’s updated forecast for the remainder of the year, Starbucks is raising its earnings per share target range to $1.17 to $1.19 for fiscal 2005, excluding the impact from expensing stock options. The new target represents a $0.02 increase over the previous range of $1.15 to $1.17 per share. Excluding the $0.03 per share impact of the 53rd week in fiscal 2004, Starbucks new fiscal 2005 target range equates to 27 percent to 29 percent growth over $0.92 earnings per share in fiscal 2004;

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•   Starbucks began the year targeting quarterly earnings per share growth rates in the 20 percent to 25 percent range, and while the first half earnings per share growth of 28 percent slightly exceeded that range, the Company believes growth for the third quarter will be as originally projected and expects fourth quarter earnings per share growth to be moderately higher. More specifically, the Company continues to target quarterly earnings per share in the range of $0.29 — $0.30 for the third quarter and has broadened its fourth quarter target range to $0.29 - $0.30, resulting in the Company’s fiscal year target range of $1.17 to $1.19;

•   Consistent with the first half of the year, Starbucks is now targeting a full year effective tax rate of 37.7 percent with minor variations from quarter to quarter, and;

•   Starbucks continues to target capital expenditures in the range of $600 to $650 million in fiscal 2005.

Starbucks will be holding a conference call today at 1:30 p.m. Pacific time, which will be hosted by Howard Schultz, chairman, Jim Donald, president and ceo, and Michael Casey, executive vice president and chief financial officer. The call will be broadcast live over the Internet and can be accessed at the Company’s web site address of http://www.starbucks.com/aboutus/investor.asp. A replay of the call will be available via telephone through 5:30 p.m. Pacific time on Wednesday, May 4, 2005, by calling 1-800-642-1687, reservation number 4093381. A posting of speaker remarks and a replay of the call will also be available via the Investor Relations page on Starbucks.com through approximately 5:00 p.m. Pacific time on Thursday, May 26, 2005, at the following URL: http://www.starbucks.com/aboutus/investor.asp.

The Company’s consolidated financial statements, operating segment results, and other additional information have been provided on the following pages in accordance with current year classifications, including the reclassification of auction rate securities from “Cash and cash equivalents” to “Short-term investments — available-for-sale securities” on the consolidated balance sheets. This information should be reviewed in conjunction with this press release. Please refer to the Company’s Annual Report on Form 10-K/A filed with the Securities and Exchange Commission on February 18, 2005, for additional information.

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STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)

								13 Weeks Ended
	13 Weeks Ended										March 28,
			March 28,					April 3,			2004
	April 3,		2004		%			2005			(as restated*)
	2005		(as restated*)		Change			As a % of total net revenues
	(in thousands, except per share data)							(unless otherwise indicated)
Net revenues:
Company-operated retail	$	1,283,947	$	1,050,481		22.2	%		84.5	%		84.6	%
Specialty:
Licensing		161,292		122,517		31.6	%		10.6	%		9.9	%
Foodservice and other		73,477		68,070		7.9	%		4.9	%		5.5	%
Total specialty		234,769		190,587		23.2	%		15.5	%		15.4	%
Total net revenues		1,518,716		1,241,068		22.4	%		100.0	%		100.0	%
Cost of sales including occupancy costs		628,740		508,268					41.4	%		41.0	%
Store operating expenses		532,944		425,976					(a) 41.5	%		(a) 40.6	%
Other operating expenses		46,347		40,802					(b) 19.7	%		(b) 21.4	%
Depreciation and amortization expenses		87,772		74,225					5.8	%		6.0	%
General and administrative expenses		81,929		79,982					5.4	%		6.4	%
Subtotal operating expenses		1,377,732		1,129,253		22.0	%
Income from equity investees		16,369		11,944					1.1	%		1.0	%
Operating income		157,353		123,759		27.1	%		10.3	%		10.0	%
Interest and other income, net		4,014		3,685					0.3	%		0.3	%
Earnings before income taxes		161,367		127,444		26.6	%		10.6	%		10.3	%
Income taxes(c)		60,831		48,559					4.0	%		3.9	%
Net earnings	$	100,536	$	78,885		27.4	%		6.6	%		6.4	%
Net earnings per common share - diluted	$	0.24	$	0.19
Weighted average shares outstanding - diluted		414,031		411,559

(a)	Calculated as a percentage of Company-operated retail revenues.
(b)	Calculated as a percentage of total specialty revenues.
(c)	The effective tax rates were 37.7 percent for the 13 weeks ended April 3, 2005, and 38.1 percent for the 13 weeks ended March 28, 2004.
*	Amounts have been restated for lease accounting corrections. Please refer to Note 2 in the Company’s Annual Report on Form 10-K/A for the fiscal year ended October 3, 2004, for additional information.

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STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)

								26 Weeks Ended
	26 Weeks Ended										March 28,
			March 28,					April 3,			2004
	April 3,		2004		%			2005			(as restated*)
	2005		(as restated*)		Change			As a % of total net revenues
	(in thousands, except per share data)							(unless otherwise indicated)
Net revenues:
Company-operated retail	$	2,642,608	$	2,130,976		24.0	%		85.0	%		84.5	%
Specialty:
Licensing		318,505		256,016		24.4	%		10.3	%		10.2	%
Foodservice and other		147,147		135,267		8.8	%		4.7	%		5.3	%
Total specialty		465,652		391,283		19.0	%		15.0	%		15.5	%
Total net revenues		3,108,260		2,522,259		23.2	%		100.0	%		100.0	%
Cost of sales including occupancy costs		1,276,495		1,036,977					41.1	%		41.1	%
Store operating expenses		1,053,950		831,797					(a) 39.9	%		(a) 39.0	%
Other operating expenses		90,628		84,500					(b) 19.5	%		(b) 21.6	%
Depreciation and amortization expenses		166,331		142,154					5.4	%		5.6	%
General and administrative expenses		165,528		150,399					5.3	%		6.0	%
Subtotal operating expenses		2,752,932		2,245,827		22.6	%
Income from equity investees		29,259		21,988					0.9	%		0.9	%
Operating income		384,587		298,420		28.9	%		12.4	%		11.8	%
Interest and other income, net		9,136		6,893					0.3	%		0.3	%
Earnings before income taxes		393,723		305,313		29.0	%		12.7	%		12.1	%
Income taxes(c)		148,434		116,293					4.8	%		4.6	%
Net earnings	$	245,289	$	189,020		29.8	%		7.9	%		7.5	%
Net earnings per common share - diluted	$	0.59	$	0.46
Weighted average shares outstanding - diluted		414,676		409,608

(a)	Calculated as a percentage of Company-operated retail revenues.
(b)	Calculated as a percentage of total specialty revenues.
(c)	The effective tax rates were 37.7 percent for the 26 weeks ended April 3, 2005, and 38.1 percent for the 26 weeks ended March 28, 2004.
*	Amounts have been restated for lease accounting corrections. Please refer to Note 2 in the Company’s Annual Report on Form 10-K/A for the fiscal year ended October 3, 2004, for additional information.

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

	April 3,		October 3,
	2005		2004
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	177,142	$	145,053
Short-term investments — available-for-sale securities		490,379		483,157
Short-term investments — trading securities		33,083		24,799
Accounts receivable, net of allowances of $3,249 and $2,231, respectively		151,638		140,226
Inventories		406,073		422,663
Prepaid expenses and other current assets		83,175		71,347
Deferred income taxes, net		70,877		63,650
Total current assets		1,412,367		1,350,895
Long-term investments – available-for-sale securities		142,782		135,179
Equity and other investments		189,115		168,177
Property, plant and equipment, net		1,698,803		1,551,416
Other assets		58,978		85,561
Other intangible assets		29,620		26,800
Goodwill		71,662		68,950
TOTAL ASSETS	$	3,603,327	$	3,386,978
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	181,754	$	199,346
Accrued compensation and related costs		204,324		208,927
Accrued occupancy costs		44,138		29,231
Accrued taxes		76,124		62,959
Other accrued expenses		156,834		123,684
Deferred revenue		168,610		121,377
Current portion of long-term debt		742		735
Total current liabilities		832,526		746,259
Deferred income taxes, net		5,929		21,770
Long-term debt		3,246		3,618
Other long-term liabilities		157,189		144,683
Shareholders’ equity:
Common stock and additional paid-in capital — Authorized, 600,000,000 shares; issued and outstanding, 397,899,707 and 397,405,844 shares, respectively, (includes 1,697,100 common stock units in both periods)		832,251		956,685
Other additional paid-in capital		39,393		39,393
Retained earnings		1,690,618		1,445,329
Accumulated other comprehensive income		42,175		29,241
Total shareholders’ equity		2,604,437		2,470,648
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	3,603,327	$	3,386,978

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

	26 Weeks Ended
				March 28,
	April 3,			2004
	2005			(as restated*)
OPERATING ACTIVITIES:
Net earnings	$	245,289		$	189,020
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		179,857			152,283
Provision for impairments and asset disposals		6,790			5,949
Deferred income taxes, net		(20,946	)		(10,440	)
Equity in income of investees		(16,102	)		(8,724	)
Tax benefit from exercise of non-qualified stock options		88,781			31,363
Net amortization of premium on securities		7,112			4,641
Cash provided/(used) by changes in operating assets and liabilities:
Inventories		18,894			36,907
Accounts payable		(20,350	)		(13,081	)
Accrued compensation and related costs		(5,488	)		32,093
Deferred revenue		47,061			31,734
Other accrued expenses		23,753			23,570
Other operating assets and liabilities		11,842			(2,154	)
Net cash provided by operating activities		566,493			473,161
INVESTING ACTIVITIES:
Purchase of available-for-sale securities		(582,992	)		(532,580	)
Maturity of available-for-sale securities		362,666			63,639
Sale of available-for-sale securities		196,395			148,538
Acquisition, net of cash acquired		(11,282	)		—
Net additions to equity, other investments and other assets		12,676			(22,916	)
Distribution from equity investees		11,287			15,234
Net additions to property, plant and equipment		(311,690	)		(137,726	)
Net cash used by investing activities		(322,940	)		(465,811	)
FINANCING ACTIVITIES:
Proceeds from issuance of common stock		121,534			73,118
Principal payments on long-term debt		(366	)		(360	)
Repurchase of common stock		(334,749	)		(40,724	)
Net cash (used) provided by financing activities		(213,581	)		32,034
Effect of exchange rate changes on cash and cash equivalents		2,117			2,753
Net increase in cash and cash equivalents		32,089			42,137
CASH AND CASH EQUIVALENTS:
Beginning of period		145,053			99,462
End of the period	$	177,142		$	141,599
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the 26 weeks ended:
Interest	$	108		$	289
Income taxes	$	68,526		$	100,179

* Amounts have been restated for lease accounting corrections. Please refer to Note 2 in the Company’s Annual Report on Form 10-K/A for the fiscal year ended October 3, 2004, for additional information.

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Stock Compensation Expense

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement No. 123R, “Share-Based Payment” (“SFAS 123R”), a revision of FASB Statement No. 123, “Accounting for Stock-Based Compensation.” SFAS 123R will require Starbucks to measure all employee stock-based compensation awards using the fair value method and record compensation expense in the Company’s consolidated financial statements. Starbucks is continuing to evaluate the impact of SFAS 123R and the Securities and Exchange Commission’s (“SEC”) interpretive guidance released in late March 2005. In the interim, the Company will continue to regularly disclose the pro forma impact of stock compensation on the Company’s net earnings and earnings per share within its periodic filings with the SEC in accordance with current accounting rules. The pro forma impacts for the 13 and 26 weeks ended April 3, 2005, and March 28, 2004, were as follows for the information presented (in thousands, except earnings per share):

	13 Weeks Ended						26 Weeks Ended
	April 3,			March 28,			April 3,			March 28,
	2005			2004			2005			2004
Net earnings	$	100,536		$	78,885		$	245,289		$	189,020
Deduct: stock-based compensation expense determined under fair value method, net of tax		(15,983	)		(12,407	)		(28,059	)		(20,828	)
Pro forma net income	$	84,553		$	66,478		$	217,230		$	168,192
Earnings per share:
Diluted – as reported	$	0.24		$	0.19		$	0.59		$	0.46
Diluted – pro forma	$	0.21		$	0.16		$	0.53		$	0.41

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Segment Results

Segment information is prepared on the basis that the Company’s management reviews financial information for operational decision-making purposes. The tables below present, by operating segment, total net revenues, operating income and operating income as a percentage of related revenues, net of intersegment eliminations for the periods ended (in thousands):

			% of					% of						% of
			United					Inter-						Total
	United		States			Inter-		national			Unallocated			Net
13 Weeks Ended April 3, 2005	States		Revenue			national		Revenue			Corporate			Revenues			Consolidated
Net revenues:
Company-operated retail	$	1,084,737		85.0	%	$	199,210		82.2	%	$	—			—	%	$	1,283,947
Specialty:
Licensing		124,136		9.7			37,156		15.3			—			—			161,292
Foodservice and other		67,545		5.3			5,932		2.5			—			—			73,477
Total specialty		191,681		15.0			43,088		17.8			—			—			234,769
Total net revenues		1,276,418		100.0			242,298		100.0			—			—			1,518,716
Cost of sales and related occupancy costs		504,076		39.5			124,664		51.5			—			—			628,740
Store operating expenses		456,838		42.1	(1)		76,106		38.2	(1)		—			—			532,944
Other operating expenses		38,841		20.3	(2)		7,506		17.4	(2)		—			—			46,347
Depreciation and amortization expenses		64,819		5.1			14,128		5.8			8,825			0.6			87,772
General and administrative expenses		24,350		1.9			10,216		4.2			47,363			3.1			81,929
Income from equity investees		8,564		0.7			7,805		3.2			—			—			16,369
Operating income/(loss)	$	196,058		15.4	%	$	17,483		7.2	%	$	(56,188	)		(3.7	)%	$	157,353

			% of					% of						% of
			United					Inter-						Total
	United		States			Inter-		national			Unallocated			Net
13 Weeks Ended March 28, 2004	States		Revenue			national		Revenue			Corporate			Revenues			Consolidated
Net revenues:
Company-operated retail	$	898,249		85.1	%	$	152,232		82.0	%	$	—			—	%	$	1,050,481
Specialty:
Licensing		93,157		8.8			29,360		15.8			—			—			122,517
Foodservice and other		64,067		6.1			4,003		2.2			—			—			68,070
Total specialty		157,224		14.9			33,363		18.0			—			—			190,587
Total net revenues		1,055,473		100.0			185,595		100.0			—			—			1,241,068
Cost of sales and related occupancy costs		412,315		39.1			95,953		51.7			—			—			508,268
Store operating expenses		369,348		41.1	(1)		56,628		37.2	(1)		—			—			425,976
Other operating expenses		34,743		22.1	(2)		6,059		18.2	(2)		—			—			40,802
Depreciation and amortization expenses		54,217		5.1			11,647		6.3			8,361			0.7			74,225
General and administrative expenses		18,362		1.7			12,495		6.7			49,125			3.9			79,982
Income from equity investees		6,682		0.6			5,262		2.8			—			—			11,944
Operating income/(loss)	$	173,170		16.4	%	$	8,075		4.4	%	$	(57,486	)		(4.6	)%	$	123,759

(1)	Shown as a percentage of related Company-operated retail revenues.
(2)	Shown as a percentage of related total specialty revenues.

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The tables below present, by operating segment, total net revenues, operating income and operating income as a percentage of related revenues, net of intersegment eliminations for the periods ended (in thousands):

			% of					% of						% of
			United					Inter-						Total
	United		States			Inter-		national			Unallocated			Net
26 Weeks Ended April 3, 2005	States		Revenue			national		Revenue			Corporate			Revenues			Consolidated
Net revenues:
Company-operated retail	$	2,234,367		85.4	%	$	408,241		82.8	%	$	—			—	%		$	2,642,608
Specialty:
Licensing		245,271		9.4			73,234		14.9			—			—				318,505
Foodservice and other		135,553		5.2			11,594		2.3			—			—				147,147
Total specialty		380,824		14.6			84,828		17.2			—			—				465,652
Total net revenues		2,615,191		100.0			493,069		100.0			—			—				3,108,260
Cost of sales and related occupancy costs		1,025,789		39.2			250,706		50.8			—			—				1,276,495
Store operating expenses		900,899		40.3	(1)		153,051		37.5	(1)		—			—				1,053,950
Other operating expenses		75,944		19.9	(2)		14,684		17.3	(2)		—			—				90,628
Depreciation and amortization expenses		122,154		4.7			27,217		5.5			16,960			0.6				166,331
General and administrative expenses		45,973		1.8			22,115		4.5			97,440			3.1				165,528
Income from equity investees		17,272		0.7			11,987		2.4			—			—				29,259
Operating income/(loss)	$	461,704		17.7	%	$	37,283		7.6	%	$	(114,400	)		(3.7	)%		$	384,587

			% of					% of						% of
			United					Inter-						Total
	United		States			Inter-		national			Unallocated			Net
26 Weeks Ended March 28, 2004	States		Revenue			national		Revenue			Corporate			Revenues			Consolidated
Net revenues:
Company-operated retail	$	1,822,793		84.9	%	$	308,183		81.9	%	$	—			—	%		$	2,130,976
Specialty:
Licensing		195,773		9.1			60,243		16.0			—			—				256,016
Foodservice and other		127,524		6.0			7,743		2.1			—			—				135,267
Total specialty		323,297		15.1			67,986		18.1			—			—				391,283
Total net revenues		2,146,090		100.0			376,169		100.0			—			—				2,522,259
Cost of sales and related occupancy costs		843,647		39.3			193,330		51.4			—			—				1,036,977
Store operating expenses		718,493		39.4	(1)		113,304		36.8	(1)		—			—				831,797
Other operating expenses		71,700		22.2	(2)		12,800		18.8	(2)		—			—				84,500
Depreciation and amortization expenses		103,255		4.8			22,345		5.9			16,554			0.7				142,154
General and administrative expenses		35,001		1.6			24,482		6.5			90,916			3.6				150,399
Income from equity investees		13,117		0.6			8,871		2.4			—			—				21,988
Operating income/(loss)	$	387,111		18.0	%	$	18,779		5.0	%	$	(107,470	)		(4.3	)%		$	298,420

(1)	Shown as a percentage of related Company-operated retail revenues.
(2)	Shown as a percentage of related total specialty revenues.

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United States

United States total net revenues increased by $221 million, or 21 percent, to $1.3 billion for the 13 weeks ended April 3, 2005, compared to $1.1 billion for the corresponding period of fiscal 2004. United States Company-operated retail revenues increased by $186 million, or 21 percent, to $1.1 billion for the 13 weeks ended April 3, 2005, compared to $898 million for the corresponding period of fiscal 2004, primarily due to the opening of 543 new Company-operated retail stores in the last 12 months and comparable store sales growth of seven percent for the quarter. The increase in comparable store sales was due to a four percent increase in the number of customer transactions and a three percent increase in the average value per transaction.

Total United States specialty revenues increased by $34 million, or 22 percent, to $192 million for the 13 weeks ended April 3, 2005, compared to $157 million in the corresponding period of fiscal 2004. United States licensing revenues increased $31 million, or 33 percent, to $124 million, compared to $93 million for the corresponding period of fiscal 2004. The increase was primarily due to higher product sales and royalty revenues as a result of opening 461 new licensed retail stores in the last 12 months and the national rollout of the Starbucks™ Coffee Liqueur during the fiscal second quarter of 2005. United States foodservice and other revenues increased five percent to $68 million from $64 million in fiscal 2004, primarily due to growth in new and existing foodservice accounts.

United States operating income increased by 13 percent to $196 million for the 13 weeks ended April 3, 2005, from $173 million for the same period in fiscal 2004. Operating margin decreased to 15.4 percent of related revenues from 16.4 percent in the corresponding period of fiscal 2004, primarily due to higher payroll-related expenditures related to future planned acceleration in Company-operated store openings, extended store operating hours and a higher number of drive-thru locations opened in the past year, as well as higher maintenance and repair expenditures to ensure a consistent Starbucks Experience in existing stores.

International

International total net revenues increased by $57 million, or 31 percent, to $242 million for the 13 weeks ended April 3, 2005, compared to $186 million for the corresponding period of fiscal 2004. International Company-operated retail revenues increased by $47 million, or 31 percent, to $199 million for the 13 weeks ended April 3, 2005, compared to $152 million for the corresponding period for fiscal 2004, primarily due to the opening of 126 new Company-operated retail stores in the last 12 months, comparable store sales growth of five percent for the quarter and favorable foreign currency exchange rates for both the Canadian dollar and British pound sterling. The increase in comparable store sales resulted from a four percent increase in the number of customer transactions coupled with a one percent increase in the average value per transaction.

Total international specialty revenues increased by $10 million, or 29 percent, to $43 million for the 13 weeks ended April 3, 2005, compared to $33 million in the corresponding period of fiscal 2004. The increase was primarily due to higher product sales and royalty revenues from opening 297 licensed retail stores in the last 12 months and expansion of the Canadian grocery and warehouse club business.

International operating income increased to $17 million for the 13 weeks ended April 3, 2005, compared to $8 million in the corresponding period of fiscal 2004. Operating margin increased to 7.2 percent of related revenues from 4.4 percent in the corresponding period of fiscal 2004, primarily due to leverage gained on fixed costs distributed over an expanded revenue base.

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Store Data

The Company’s store data for the periods presented are as follows:

	Net stores opened during the period
	13-week period				26-week period				Stores open as of
	April 3,		March 28,		April 3,		March 28,		April 3,		March 28,
	2005		2004		2005		2004		2005		2004
United States:
Company-operated Stores		131		103		232		203		4,525		3,982
Licensed Stores		98		87		241		197		2,080		1,619
		229		190		473		400		6,605		5,601
International:
Company-operated Stores (1)		21		22		61		65		1,018		892
Licensed Stores (1)		62		55		158		144		1,638		1,341
		83		77		219		209		2,656		2,233
Total		312		267		692		609		9,261		7,834

⁽¹⁾ International store data has been adjusted for the 100% acquisition of the Germany and Singapore operations by reclassifying historical information from Licensed Stores to Company-operated Stores.

Starbucks Corporation is the leading retailer, roaster and brand of specialty coffee in the world, with more than 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.

This release includes the following forward-looking statements: anticipated store openings, comparable store sales expectations, trends in or expectations regarding the Company’s revenue and expense growth, capital expenditures, effective tax rate, net earnings and earnings per share results. These forward-looking statements 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 materials prices and availability, successful execution of internal performance and expansion plans, fluctuations in U.S. and international economies and currencies, 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/A for the fiscal year ended October 3, 2004. The Company assumes no obligations to update any of these forward-looking statements.

© 2005 Starbucks Coffee Company. All rights reserved.

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