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Starbucks Corp – ‘8-K’ for 7/25/19 – ‘EX-99.1’

On:  Thursday, 7/25/19, at 4:11pm ET   ·   For:  7/25/19   ·   Accession #:  829224-19-30   ·   File #:  0-20322

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  As Of               Filer                 Filing    For·On·As Docs:Size

 7/25/19  Starbucks Corp                    8-K:2,9     7/25/19   13:2.6M

Current Report   —   Form 8-K   —   Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                      HTML     30K 
 2: EX-99.1     Miscellaneous Exhibit                               HTML    386K 
 9: R1          Document and Entity Information                     HTML     48K 
11: XML         IDEA XML File -- Filing Summary                      XML     12K 
 8: XML         XBRL Instance -- sbux-6302019x8xk_htm                XML     16K 
10: EXCEL       IDEA Workbook of Financial Reports                  XLSX      6K 
 4: EX-101.CAL  XBRL Calculations -- sbux-20190725_cal               XML      7K 
 5: EX-101.DEF  XBRL Definitions -- sbux-20190725_def                XML      9K 
 6: EX-101.LAB  XBRL Labels -- sbux-20190725_lab                     XML     67K 
 7: EX-101.PRE  XBRL Presentations -- sbux-20190725_pre              XML     36K 
 3: EX-101.SCH  XBRL Schema -- sbux-20190725                         XSD     17K 
12: JSON        XBRL Instance as JSON Data -- MetaLinks               12±    19K 
13: ZIP         XBRL Zipped Folder -- 0000829224-19-000030-xbrl      Zip    533K

‘EX-99.1’   —   Miscellaneous Exhibit

This Exhibit is an HTML Document rendered as filed.  [ Alternative Formats ]

 <!   C:   C: 
  Exhibit  
1

Exhibit 99.1
Starbucks Reports Q3 Fiscal 2019 Results
Q3 Comparable Store Sales Up 6% Globally, Led by 7% Comp Growth in the U.S. and 6% Comp Growth in China
Global Net Store Growth of 7% Versus Prior Year, Led by 16% Net Store Growth in China
GAAP EPS of $1.12; Non-GAAP EPS of $0.78, Up 26% Year-Over-Year
Active Starbucks® Rewards Membership in the U.S. Increases 14% Year-Over-Year to 17.2 Million


SEATTLE; July 25, 2019 – Starbucks Corporation (NASDAQ: SBUX) today reported financial results for its 13-week fiscal third quarter ended June 30, 2019. GAAP results in fiscal 2019 and fiscal 2018 include items which are excluded from non-GAAP results. Please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release for more information.

“Starbucks delivered strong operating performance in the third quarter, further demonstrating that our ‘Growth at Scale’ agenda is working,” says Kevin Johnson, president and ceo. “Our two targeted long-term growth markets, the U.S. and China, performed extremely well across a number of measures as a result of our focus on enhancing the customer experience, driving new beverage innovation and accelerating the expansion of our digital customer relationships. Given the strong momentum across our business, we are raising our full-year financial outlook.”

“Starbucks continues to be focused and disciplined in the execution of our three key strategic priorities that we established last year: accelerating growth in the U.S. and China, expanding the global reach of the Starbucks brand through our Global Coffee Alliance with Nestlé, and increasing shareholder returns. With our efforts to streamline the company and elevate the Starbucks brand, we are positioning the company to deliver predictable and sustainable operating results while building an enduring company that creates meaningful long-term value for Starbucks shareholders,” concluded Johnson.


Q3 Fiscal 2019 Highlights
•
Global comparable store sales increased 6%, driven by a 3% increase in average ticket and a 3% increase in comparable transactions
◦
Americas comparable store sales increased 7%, driven by a 4% increase in average ticket and a 3% increase in transactions; U.S. comparable store sales increased 7%, with transactions up 3%
◦
China/Asia Pacific comparable store sales increased 5%, driven by a 3% increase in average ticket and a 2% increase in transactions; China comparable store sales increased 6%, with transactions up 2%
•
The company opened 442 net new stores in Q3, yielding 30,626 stores at the end of the quarter, a 7% increase over the prior year. Nearly one-third of net new store openings were in China and 48% were in other international markets
•
Consolidated net revenues of $6.8 billion grew 8% over the prior year
◦
Consolidated net revenues grew 11% over the prior year adjusted for unfavorable impacts of approximately 2% from Streamline-driven activities and 1% from foreign currency translation
◦
Streamline-driven activities include the licensing of our CPG and foodservice businesses to Nestlé following the close of the transaction on August 26, 2018, and the conversion of certain international retail operations from company-operated to licensed models
•
GAAP operating margin, inclusive of restructuring and impairment charges, declined 10 basis points year-over-year to 16.4%, primarily due to partner (employee) investments, largely in the Americas segment, licensing of our CPG and foodservice businesses to Nestlé, product mix and higher inventory reserves, partially offset by sales leverage, cost savings initiatives and the adoption of new revenue recognition accounting for stored value card (SVC) breakage
◦
Non-GAAP operating margin of 18.3% declined 20 basis points compared to the prior year. Excluding a 70-basis point unfavorable impact from Streamline-related activities, non-GAAP operating margin expanded by approximately 50 basis points
•
GAAP Earnings Per Share of $1.12, up 84% over the prior year

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2

◦
Non-GAAP EPS of $0.78, up 26% over the prior year, inclusive of a $0.03 benefit from discrete income tax items
•
The company returned $581 million to shareholders through a combination of share repurchases and dividends
•
Starbucks® Rewards loyalty program grew to 17.2 million active members in the U.S., up 14% year-over-year

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3

Q3 Americas Segment Results
 
 
 
 
 
 
 
Quarter Ended
 
Change (%)
($ in millions)
Jun 30, 2019
 
Jul 1, 2018
 
Comparable Store Sales Growth (1)
7%
 
1%
 
 
Change in Transactions
3%
 
(2)%
 
 
Change in Ticket
4%
 
4%
 
 
Store Count
17,845
 
17,204
 
4%
Revenues
$4,671.8
 
$4,224.0
 
11%
Operating Income
$1,067.1
 
$906.8
 
18%
Operating Margin
22.8%
 
21.5%
 
130 bps
(1) Includes only Starbucks® company-operated stores open 13 months or longer. Comparable store sales exclude the effect of fluctuations in foreign currency exchange rates.

Net revenues for the Americas segment grew 11% over Q3 FY18 to $4.7 billion in Q3 FY19, primarily driven by 7% growth in comparable store sales and 641 net new store openings, or 4% store growth, over the past 12 months, and the impact of the adoption of new revenue recognition accounting for SVC breakage.

Operating income grew 18% to $1,067.1 million in Q3 FY19, up from $906.8 million in Q3 FY18. Operating margin of 22.8% expanded 130 basis points, primarily due to sales leverage and cost savings initiatives, partially offset by growth in wages and higher inventory reserves.
Q3 China/Asia Pacific Segment Results
 
 
 
 
 
 
 
Quarter Ended
 
Change (%)
($ in millions)
Jun 30, 2019
 
Jul 1, 2018
 
Comparable Store Sales Growth (1)
5%
 
(1)%
 
 
Change in Transactions
2%
 
(3)%
 
 
Change in Ticket
3%
 
2%
 
 
Store Count
9,246
 
8,252
 
12%
Revenues
$1,336.9
 
$1,229.0
 
9%
Operating Income
$269.8
 
$234.1
 
15%
Operating Margin
20.2%
 
19.0%
 
120 bps
(1) Includes only Starbucks® company-operated stores open 13 months or longer. Comparable store sales exclude the effect of fluctuations in foreign currency exchange rates.

Net revenues for the China/Asia Pacific segment grew 9% over Q3 FY18 to $1.3 billion in Q3 FY19, primarily driven by 994 net new store openings, or 12% store growth, over the past 12 months, and a 5% increase in comparable store sales. The conversion of the Thailand retail business from company-operated to fully licensed occurred toward the end of Q3 FY19 and did not have a significant impact on revenue growth.

Q3 FY19 operating income of $269.8 million grew 15% over Q3 FY18 operating income of $234.1 million. Operating margin expanded 120 basis points to 20.2%, primarily due to sales leverage and cost savings initiatives, partially offset by product mix and strategic investments.

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4

Q3 EMEA Segment Results
 
 
 
 
 
 
 
Quarter Ended
 
Change (%)
($ in millions)
Jun 30, 2019
 
Jul 1, 2018
 
Comparable Store Sales (1) (2)
3%
 
0%
 
 
Change in Transactions
0%
 
(2)%
 
 
Change in Ticket
3%
 
3%
 
 
Store Count
3,523
 
3,237
 
9%
Revenues
$231.7
 
$261.7
 
(11)%
Operating Income
$16.6
 
$29.2
 
(43)%
Operating Margin
7.2%
 
11.2%
 
(400) bps
(1) Includes only Starbucks® company-operated stores open 13 months or longer. Comparable store sales exclude the effect of fluctuations in foreign currency exchange rates.
(2) Company-operated stores represent 11% of the EMEA segment store portfolio as of June 30, 2019.

Net revenues for the EMEA segment declined 11% from Q3 FY18 to $231.7 million in Q3 FY19 due to the conversion of our France and Netherlands retail businesses to fully licensed operations in Q2 FY19 and the closure of certain company-operated stores, partially offset by 286 net new store openings, or 9% store growth, over the past 12 months.

Operating income of $16.6 million in Q3 FY19 declined 43% compared to $29.2 million in Q3 FY18. Operating margin declined 400 basis points to 7.2%, primarily due to higher restructuring costs associated with the closure of certain company-operated stores, partially offset by the shift in portfolio towards more licensed stores.
Q3 Channel Development Segment Results
 
 
 
 
 
 
 
Quarter Ended
 
Change (%)
($ in millions)
Jun 30, 2019
 
Jul 1, 2018
 
Revenues
$533.3
 
$567.4
 
(6)%
Operating Income
$181.9
 
$232.8
 
(22)%
Operating Margin
34.1%
 
41.0%
 
(690) bps

Net revenues for the Channel Development segment declined 6% from Q3 FY18 to $533.3 million in Q3 FY19, primarily due to licensing our CPG and foodservice businesses to Nestlé.

Operating income of $181.9 million in Q3 FY19 declined 22% compared to Q3 FY18. Operating margin declined 690 basis points to 34.1%, primarily due to licensing our CPG and foodservice businesses to Nestlé, partially offset by lower costs related to the Global Coffee Alliance.

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5

Fiscal 2019 Guidance
The company updates the following fiscal year 2019 guidance (all growth targets are relative to fiscal year 2018 non-GAAP measures unless specified):
•
Global comparable store sales growth of approximately 4% (previously 3% to 4%)
•
Consolidated GAAP revenue growth of approximately 7% (previously 5% to 7%)
◦
Includes approximately 2% of net unfavorable impact from Streamline-driven activities and approximately 1% of unfavorable impact from foreign currency translation
•
Approximately 2,000 net new Starbucks stores globally (previously approximately 2,100 net new stores)
◦
Americas over 600
◦
CAP ~1,100 (nearly 600 in China)
◦
EMEA ~300 (virtually all licensed; previously ~400)
•
GAAP tax rate in the range of 19% to 20% (previously 20% to 22%) and non-GAAP tax rate also in the range of 19% to 20% (previously 19% to 21%)
•
GAAP EPS in the range of $2.86 to $2.88 (previously $2.40 to $2.44)
•
Non-GAAP EPS in the range of $2.80 to $2.82 (previously $2.75 to $2.79)

The company introduces the following fiscal year 2019 guidance:
•
Interest expense of approximately $330 million, reflecting our latest $2 billion debt offering

The company reiterates the following fiscal year 2019 guidance (all growth targets are relative to fiscal year 2018 non-GAAP measures unless specified):
•
Consolidated operating margin down moderately
◦
Americas operating margin up slightly
◦
CAP operating margin roughly flat
◦
EMEA operating margin improving over the course of 2019
◦
Channel Development operating margin in mid-30% range
•
Capital expenditures ~$2.0 billion


Long-term General and Administrative Expense (G&A) Guidance
The company reiterates its commitment to G&A reduction:
•
Non-GAAP G&A as a percentage of system sales down 100 basis points over a three-year period, resulting in FY21 non-GAAP G&A at approximately $1.7 billion
◦
GAAP G&A in FY18 was $1.76 billion and non-GAAP G&A was $1.65 billion

Please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release.

The company will provide additional information regarding its business outlook during its regularly scheduled quarterly earnings conference call; this information will also be available following the call on the company's website at http://investor.starbucks.com.


Company Updates

1.
In April, Starbucks announced its partnership with Cypress Creek Renewables and U.S. Bank to develop a portfolio of solar farms across Texas, providing enough energy to supply 360 Starbucks stores in Texas. Investing in green energy is one way that Starbucks supports its aspiration of sustainable coffee served sustainably.

2.
In April, Starbucks partnered with 25 other U.S. employers in the Employers for Pay Equity consortium to help eliminate the gender pay gap. The Pay Equity Principles signed by all consortium participants seek to help businesses eradicate the pay gap through equal footing, transparency, and accountability.


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3.
In May, Starbucks completed the issuance of a $1 billion sustainability bond, which will support Starbucks ethical coffee sourcing, Greener Retail initiatives, and the Starbucks Global Farmer Fund. The 30-year Sustainability Bond was part of a larger bond offering of $2 billion, with another $1 billion bond issued for general corporate purposes including the repurchase of common stock as part of the previously communicated $25 billion shareholder return target. This is the largest sustainability bond the company has issued to date and follows two previously issued sustainability bonds in 2016 and 2017.

4.
In May, Starbucks opened its first signing store in China. The signing store located in Guangzhou is dedicated to offering employment and career advancement opportunities for the deaf and hard of hearing community as part of the company’s ongoing commitment to inclusion, accessibility, and diversity. This is Starbucks third signing store globally.

5.
During Q3, Starbucks celebrated its first stores in Serbia and Malta; the company now operates in 80 markets globally.

6.
The company repurchased 6.8 million shares of common stock in Q3 FY19; approximately 52.7 million shares remain available for purchase under the current authorization.

7.
The Board of Directors declared a cash dividend of $0.36 per share, payable on August 23, 2019, to shareholders of record as of August 8, 2019.


Conference Call
Starbucks will hold a conference call today at 2:00 p.m. Pacific Time, which will be hosted by Kevin Johnson, president and ceo, and Patrick Grismer, cfo. The call will be webcast and can be accessed at http://investor.starbucks.com. A replay of the webcast will be available until end of day Friday, August 23, 2019.


About Starbucks
Since 1971, Starbucks Coffee Company has been committed to ethically sourcing and roasting high-quality arabica coffee. Today, with more than 30,000 stores around the globe, the company is the premier roaster and retailer of specialty coffee in the world. Through our unwavering commitment to excellence and our guiding principles, we bring the unique Starbucks Experience to life for every customer through every cup. To share in the experience, please visit us in our stores or online at stories.starbucks.com or www.starbucks.com.


Forward-Looking Statements
Certain statements contained herein are “forward-looking” statements within the meaning of the applicable securities laws and regulations. Generally, these statements can be identified by the use of words such as “anticipate,” “expect,” “believe,” “could,” “estimate,” “feel,” “forecast,” “outlook,” “intend,” “may,” “plan,” “potential,” “project,” “should,” “will,” “would,” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements include statements relating to certain company initiatives, strategies and plans, as well as trends in or expectations regarding our diversified business model, the strength, resilience, momentum, and potential of our business, operations, and brand, the impacts, benefits, goals and expectations of our Streamline initiatives, the execution and anticipated impact of our Growth-at-Scale agenda, with a focus on our long-term growth markets of the U.S. and China, expanding the global reach of the Starbucks brand through our Global Coffee Alliance with Nestlé, increasing shareholder returns, the company's position to deliver predictable and sustainable results, building an enduring company, and the creation of meaningful long-term value for shareholders, the estimated impact of the changes in U.S. tax law, net new stores, outlook, guidance and projections for revenues, earnings per share, operating margins, comparable store sales, capital expenditures, interest expense, G&A expenses, tax rates, and our fiscal 2019 financial targets, fiscal 2019 guidance and long-term G&A expense guidance. These forward-looking statements are based on currently available operating, financial, and competitive information and are subject to a number of significant risks

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7

and uncertainties. Actual future results may differ materially depending on a variety of factors including, but not limited to, fluctuations in U.S. and international economies and currencies, our ability to preserve, grow, and leverage our brands, potential negative effects of incidents involving food or beverage-borne illnesses, tampering, adulteration, contamination, or mislabeling, potential negative effects of material breaches of our information technology systems to the extent we experience a material breach, material failures of our information technology systems, costs associated with, and the successful execution of the company’s initiatives and plans, including the integration the East China business and successful execution of our Global Coffee Alliance with Nestlé, the acceptance of the company’s products by our customers, our ability to obtain financing on acceptable terms, the impact of competition, the prices and availability of coffee, dairy, and other raw materials, the effect of legal proceedings, the effects of changes in U.S. tax law and related guidance and regulations that may be implemented, and other risks detailed in the company filings with the Securities and Exchange Commission, including the “Risk Factors” section of Starbucks Annual Report on Form 10-K for the fiscal year ended September 30, 2018. The company assumes no obligation to update any of these forward-looking statements.


Non-GAAP Financial Measures
Certain non‐GAAP measures included in our press release were not reconciled to the comparable GAAP financial measures because the GAAP measures are not accessible on a forward‐looking basis. The Company is unable to reconcile these forward-looking non-GAAP financial measures to the most directly comparable GAAP measures without unreasonable efforts because the Company is currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures for these periods but would not impact the non-GAAP measures. Such items may include acquisitions, divestitures, restructuring and other items. The unavailable information could have a significant impact on the Company’s GAAP financial results.


Contacts:
Starbucks Contact, Investor Relations:
 
Starbucks Contact, Media:
Durga Doraisamy
 
Reggie Borges
206-318-7118
 
206-318-7100
investorrelations@starbucks.com
 
press@starbucks.com


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8

STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited, in millions, except per share data)
 
 
Quarter Ended
 
Quarter Ended
 
 
Jun 30,
2019
 
Jul 1,
2018
 
%
Change
 
Jun 30,
2019
 
Jul 1,
2018
 
 
 
 
 
 
 
 
 
As a % of total net revenues
 
Net revenues:
 
 
 
 
 
 
 
 
 
 
Company-operated stores
$
5,535.0

 
$
5,060.4

 
9.4
 %
 
81.1
 %
 
80.2
 %
 
Licensed stores
725.0

 
660.6

 
9.7

 
10.6

 
10.5

 
Other
563.0

 
589.3

 
(4.5
)
 
8.3

 
9.3

 
Total net revenues
6,823.0

 
6,310.3

 
8.1

 
100.0

 
100.0

 
Cost of sales including occupancy costs
2,808.6

 
2,553.4

 
10.0

 
41.2

 
40.5

 
Store operating expenses
2,018.5

 
1,825.0

 
10.6

 
29.6

 
28.9

 
Other operating expenses
89.6

 
132.3

 
(32.3
)
 
1.3

 
2.1

 
Depreciation and amortization expenses
343.1

 
330.0

 
4.0

 
5.0

 
5.2

 
General and administrative expenses
480.2

 
485.9

 
(1.2
)
 
7.0

 
7.7

 
Restructuring and impairments
37.7

 
16.9

 
123.1

 
0.6

 
0.3

 
Total operating expenses
5,777.7

 
5,343.5

 
8.1

 
84.7

 
84.7

 
Income from equity investees
76.0

 
71.4

 
6.4

 
1.1

 
1.1

 
Operating income
1,121.3

 
1,038.2

 
8.0

 
16.4

 
16.5

 
Gain resulting from acquisition of joint venture
—

 
2.5

 
nm

 
—

 
—

 
Net gain resulting from divestiture of certain operations
601.8

 
—

 
nm

 
8.8

 
—

 
Interest income and other, net
40.2

 
31.5

 
27.6

 
0.6

 
0.5

 
Interest expense
(86.4
)
 
(45.4
)
 
90.3

 
(1.3
)
 
(0.7
)
 
Earnings before income taxes
1,676.9

 
1,026.8

 
63.3

 
24.6

 
16.3

 
Income tax expense
303.7

 
174.8

 
73.7

 
4.5

 
2.8

 
Net earnings including noncontrolling interests
1,373.2

 
852.0

 
61.2

 
20.1

 
13.5

 
Net earnings/(loss) attributable to noncontrolling interests
0.4

 
(0.5
)
 
nm

 
—

 
—

 
Net earnings attributable to Starbucks
$
1,372.8

 
$
852.5

 
61.0

 
20.1
 %
 
13.5
 %
 
Net earnings per common share - diluted
$
1.12

 
$
0.61

 
83.6
 %
 
 
 
 
 
Weighted avg. shares outstanding - diluted
1,223.0

 
1,388.5

 
 
 
 
 
 
 
Cash dividends declared per share
$
0.36

 
$
0.36

 
 
 
 
 
 
 
Supplemental Ratios:
 
 
 
 
 
 
 
 
 
 
Store operating expenses as a % of company-operated store revenues
 
 
 
36.5
 %
 
36.1
 %
 
Effective tax rate including noncontrolling interests
 
 
 
18.1
 %
 
17.0
 %


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9

 
 
Three Quarters Ended
 
Three Quarters Ended
 
 
Jun 30,
2019
 
Jul 1,
2018
 
%
Change
 
Jun 30,
2019
 
Jul 1,
2018
 
 
 
 
 
 
 
 
 
As a % of total net revenues
 
Net revenues:
 
 
 
 
 
 
 
 
 
 
Company-operated stores
$
16,064.3

 
$
14,630.3

 
9.8
 %
 
81.3
 %
 
79.4
 %
 
Licensed stores
2,140.3

 
1,968.6

 
8.7

 
10.8

 
10.7

 
Other
1,557.0

 
1,817.0

 
(14.3
)
 
7.9

 
9.9

 
Total net revenues
19,761.6

 
18,415.9

 
7.3

 
100.0

 
100.0

 
Cost of sales including occupancy costs
8,171.1

 
7,569.8

 
7.9

 
41.3

 
41.1

 
Store operating expenses
5,961.2

 
5,351.6

 
11.4

 
30.2

 
29.1

 
Other operating expenses
265.2

 
382.5

 
(30.7
)
 
1.3

 
2.1

 
Depreciation and amortization expenses
1,032.5

 
920.4

 
12.2

 
5.2

 
5.0

 
General and administrative expenses
1,419.2

 
1,299.0

 
9.3

 
7.2

 
7.1

 
Restructuring and impairments
123.9

 
179.2

 
(30.9
)
 
0.6

 
1.0

 
Total operating expenses
16,973.1

 
15,702.5

 
8.1

 
85.9

 
85.3

 
Income from equity investees
206.1

 
213.5

 
(3.5
)
 
1.0

 
1.2

 
Operating income
2,994.6

 
2,926.9

 
2.3

 
15.2

 
15.9

 
Gain resulting from acquisition of joint venture
—

 
1,376.4

 
nm

 
—

 
7.5

 
Net gain resulting from divestiture of certain operations
622.8

 
496.3

 
25.5

 
3.2

 
2.7

 
Interest income and other, net
80.2

 
155.2

 
(48.3
)
 
0.4

 
0.8

 
Interest expense
(235.3
)
 
(106.4
)
 
121.1

 
(1.2
)
 
(0.6
)
 
Earnings before income taxes
3,462.3

 
4,848.4

 
(28.6
)
 
17.5

 
26.3

 
Income tax expense
670.1

 
1,086.5

 
(38.3
)
 
3.4

 
5.9

 
Net earnings including noncontrolling interests
2,792.2

 
3,761.9

 
(25.8
)
 
14.1

 
20.4

 
Net loss attributable to noncontrolling interests
(4.2
)
 
(0.9
)
 
nm

 
—

 
—

 
Net earnings attributable to Starbucks
$
2,796.4

 
$
3,762.8

 
(25.7
)
 
14.2
 %
 
20.4
 %
 
Net earnings per common share - diluted
$
2.25

 
$
2.67

 
(15.7
)%
 
 
 
 
 
Weighted avg. shares outstanding - diluted
1,242.4

 
1,409.9

 
 
 
 
 
 
 
Cash dividends declared per share
$
1.08

 
$
0.96

 
 
 
 
 
 
 
Supplemental Ratios:
 
 
 
 
 
 
 
 
 
 
Store operating expenses as a % of company-operated store revenues
 
 
 
37.1
 %
 
36.6
 %
 
Effective tax rate including noncontrolling interests
 
 
 
19.4
 %
 
22.4
 %




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10

Segment Results (in millions)

Americas
 
 
Jun 30,
2019
 
Jul 1,
2018
 
%
Change
 
Jun 30,
2019
 
Jul 1,
2018
 
 
Quarter Ended
 
 
 
 
 
 
As a % of Americas
total net revenues
 
Net revenues:
 
 
 
 
 
 
 
 
 
 
Company-operated stores
$
4,172.9

 
$
3,768.5

 
10.7
 %
 
89.3
%
 
89.2
%
 
Licensed stores
496.3

 
452.0

 
9.8

 
10.6

 
10.7

 
Other
2.6

 
3.5

 
(25.7
)
 
0.1

 
0.1

 
Total net revenues
4,671.8

 
4,224.0

 
10.6

 
100.0

 
100.0

 
Cost of sales including occupancy costs
1,700.8

 
1,570.8

 
8.3

 
36.4

 
37.2

 
Store operating expenses
1,615.6

 
1,447.6

 
11.6

 
34.6

 
34.3

 
Other operating expenses
41.3

 
36.7

 
12.5

 
0.9

 
0.9

 
Depreciation and amortization expenses
173.2

 
159.3

 
8.7

 
3.7

 
3.8

 
General and administrative expenses
58.7

 
84.4

 
(30.5
)
 
1.3

 
2.0

 
Restructuring and impairments
15.1

 
18.4

 
(17.9
)
 
0.3

 
0.4

 
Total operating expenses
3,604.7

 
3,317.2

 
8.7

 
77.2

 
78.5

 
Operating income
$
1,067.1

 
$
906.8

 
17.7
 %
 
22.8
%
 
21.5
%
 
Supplemental Ratio:
 
 
 
 
 
 
 
 
 
 
Store operating expenses as a % of company-operated store revenues
 
 
 
38.7
%
 
38.4
%
 
 
 
 
 
 
 
 
 
 
 
 
Three Quarters Ended
 
 
 
 
 
 
 
 
 
 
Net revenues:
 
 
 
 
 
 
 
 
 
 
Company-operated stores
$
12,100.1

 
$
11,120.5

 
8.8
 %
 
89.1
%
 
89.1
%
 
Licensed stores
1,474.0

 
1,348.0

 
9.3

 
10.9

 
10.8

 
Other
9.7

 
9.5

 
2.1

 
0.1

 
0.1

 
Total net revenues
13,583.8

 
12,478.0

 
8.9

 
100.0

 
100.0

 
Cost of sales including occupancy costs
5,002.2

 
4,694.9

 
6.5

 
36.8

 
37.6

 
Store operating expenses
4,741.6

 
4,292.9

 
10.5

 
34.9

 
34.4

 
Other operating expenses
124.2

 
109.2

 
13.7

 
0.9

 
0.9

 
Depreciation and amortization expenses
509.6

 
477.7

 
6.7

 
3.8

 
3.8

 
General and administrative expenses
172.0

 
196.4

 
(12.4
)
 
1.3

 
1.6

 
Restructuring and impairments
56.2

 
21.0

 
167.6

 
0.4

 
0.2

 
Total operating expenses
10,605.8

 
9,792.1

 
8.3

 
78.1

 
78.5

 
Operating income
$
2,978.0

 
$
2,685.9

 
10.9
 %
 
21.9
%
 
21.5
%
 
Supplemental Ratio:
 
 
 
 
 
 
 
 
 
 
Store operating expenses as a % of company-operated store revenues
 
 
 
39.2
%
 
38.6
%




- more -
11

China/Asia Pacific (CAP)
 
 
Jun 30,
2019
 
Jul 1,
2018
 
%
Change
 
Jun 30,
2019
 
Jul 1,
2018
 
 
Quarter Ended
 
 
 
 
 
 
As a % of CAP
total net revenues
 
Net revenues:
 
 
 
 
 
 
 
 
 
 
Company-operated stores
$
1,229.8

 
$
1,136.5

 
8.2
 %
 
92.0
%
 
92.5
%
 
Licensed stores
103.8

 
90.1

 
15.2

 
7.8

 
7.3

 
Other
3.3

 
2.4

 
37.5

 
0.2

 
0.2

 
Total net revenues
1,336.9

 
1,229.0

 
8.8

 
100.0

 
100.0

 
Cost of sales including occupancy costs
548.7

 
505.4

 
8.6

 
41.0

 
41.1

 
Store operating expenses
347.9

 
310.2

 
12.2

 
26.0

 
25.2

 
Other operating expenses
4.7

 
4.4

 
6.8

 
0.4

 
0.4

 
Depreciation and amortization expenses
118.9

 
120.7

 
(1.5
)
 
8.9

 
9.8

 
General and administrative expenses
74.1

 
77.7

 
(4.6
)
 
5.5

 
6.3

 
Total operating expenses
1,094.3

 
1,018.4

 
7.5

 
81.9

 
82.9

 
Income from equity investees
27.2

 
23.5

 
15.7

 
2.0

 
1.9

 
Operating income
$
269.8

 
$
234.1

 
15.2
 %
 
20.2
%
 
19.0
%
 
Supplemental Ratio:
 
 
 
 
 
 
 
 
 
 
Store operating expenses as a % of company-operated store revenues
 
 
 
28.3
%
 
27.3
%
 
 
 
 
 
 
 
 
 
 
 
 
Three Quarters Ended
 
 
 
 
 
 
 
 
 
 
Net revenues:
 
 
 
 
 
 
 
 
 
 
Company-operated stores
$
3,539.7

 
$
2,977.6

 
18.9
 %
 
91.9
%
 
91.4
%
 
Licensed stores
303.1

 
272.8

 
11.1

 
7.9

 
8.4

 
Other
10.6

 
8.7

 
21.8

 
0.3

 
0.3

 
Total net revenues
3,853.4

 
3,259.1

 
18.2

 
100.0

 
100.0

 
Cost of sales including occupancy costs
1,620.9

 
1,388.9

 
16.7

 
42.1

 
42.6

 
Store operating expenses
1,020.8

 
835.3

 
22.2

 
26.5

 
25.6

 
Other operating expenses
17.8

 
18.7

 
(4.8
)
 
0.5

 
0.6

 
Depreciation and amortization expenses
357.2

 
296.0

 
20.7

 
9.3

 
9.1

 
General and administrative expenses
188.9

 
175.8

 
7.5

 
4.9

 
5.4

 
Restructuring and impairments
0.6

 
—

 
nm

 
—

 
—

 
Total operating expenses
3,206.2

 
2,714.7

 
18.1

 
83.2

 
83.3

 
Income from equity investees
75.7

 
91.0

 
(16.8
)
 
2.0

 
2.8

 
Operating income
$
722.9

 
$
635.4

 
13.8
 %
 
18.8
%
 
19.5
%
 
Supplemental Ratio:
 
 
 
 
 
 
 
 
 
 
Store operating expenses as a % of company-operated store revenues
 
 
 
28.8
%
 
28.1
%

- more -
12

EMEA
 
 
Jun 30,
2019
 
Jul 1,
2018
 
%
Change
 
Jun 30,
2019
 
Jul 1,
2018
 
 
Quarter Ended
 
 
 
 
 
 
As a % of EMEA
total net revenues
 
Net revenues:
 
 
 
 
 
 
 
 
 
 
Company-operated stores
$
106.4

 
$
142.9

 
(25.5
)%
 
45.9
%
 
54.6
%
 
Licensed stores
124.9

 
118.5

 
5.4

 
53.9

 
45.3

 
Other
0.4

 
0.3

 
33.3

 
0.2

 
0.1

 
Total net revenues
231.7

 
261.7

 
(11.5
)
 
100.0

 
100.0

 
Cost of sales including occupancy costs
123.3

 
137.2

 
(10.1
)
 
53.2

 
52.4

 
Store operating expenses
38.9

 
58.0

 
(32.9
)
 
16.8

 
22.2

 
Other operating expenses
17.7

 
14.3

 
23.8

 
7.6

 
5.5

 
Depreciation and amortization expenses
5.4

 
8.0

 
(32.5
)
 
2.3

 
3.1

 
General and administrative expenses
13.2

 
15.0

 
(12.0
)
 
5.7

 
5.7

 
Restructuring and impairments
16.6

 
—

 
nm

 
7.2

 
—

 
Total operating expenses
215.1

 
232.5

 
(7.5
)
 
92.8

 
88.8

 
Operating income
$
16.6

 
$
29.2

 
(43.2
)%
 
7.2
%
 
11.2
%
 
Supplemental Ratio:
 
 
 
 
 
 
 
 
 
 
Store operating expenses as a % of company-operated store revenues
 
 
 
36.6
%
 
40.6
%
 
 
 
 
 
 
 
 
 
 
 
 
Three Quarters Ended
 
 
 
 
 
 
 
 
Net revenues:
 
 
 
 
 
 
 
 
 
 
Company-operated stores
$
361.1

 
$
433.1

 
(16.6
)%
 
49.8
%
 
55.5
%
 
Licensed stores
363.2

 
346.7

 
4.8

 
50.1

 
44.4

 
Other
1.3

 
1.0

 
30.0

 
0.2

 
0.1

 
Total net revenues
725.6

 
780.8

 
(7.1
)
 
100.0

 
100.0

 
Cost of sales including occupancy costs
380.8

 
420.7

 
(9.5
)
 
52.5

 
53.9

 
Store operating expenses
142.2

 
170.4

 
(16.5
)
 
19.6

 
21.8

 
Other operating expenses
54.0

 
47.0

 
14.9

 
7.4

 
6.0

 
Depreciation and amortization expenses
20.1

 
23.5

 
(14.5
)
 
2.8

 
3.0

 
General and administrative expenses
41.1

 
40.1

 
2.5

 
5.7

 
5.1

 
Restructuring and impairments
46.6

 
28.5

 
63.5

 
6.4

 
3.7

 
Total operating expenses
684.8

 
730.2

 
(6.2
)
 
94.4

 
93.5

 
Operating income
$
40.8

 
$
50.6

 
(19.4
)%
 
5.6
%
 
6.5
%
 
Supplemental Ratio:
 
 
 
 
 
 
 
 
 
 
Store operating expenses as a % of company-operated store revenues
 
 
 
39.4
%
 
39.3
%



- more -
13

Channel Development
 
 
Jun 30,
2019
 
Jul 1,
2018
 
%
Change
 
Jun 30,
2019
 
Jul 1,
2018
 
 
Quarter Ended
 
 
 
 
 
 
As a % of
Channel Development
net revenues
 
Net revenues
$
533.3

 
$
567.4

 
(6.0
)%
 


 


 
Cost of sales
377.1

 
304.6

 
23.8

 
70.7
%
 
53.7
%
 
Other operating expenses
20.2

 
74.0

 
(72.7
)
 
3.8

 
13.0

 
Depreciation and amortization expenses
0.2

 
0.2

 
nm

 
—

 
—

 
General and administrative expenses
2.7

 
3.7

 
(27.0
)
 
0.5

 
0.7

 
Total operating expenses
400.2

 
382.5

 
4.6

 
75.0

 
67.4

 
Income from equity investees
48.8

 
47.9

 
1.9

 
9.2

 
8.4

 
Operating income
$
181.9

 
$
232.8

 
(21.9
)%
 
34.1
%
 
41.0
%
 
 
 
 
 
 
 
 
 
 
 
 
Three Quarters Ended
 
 
 
 
 
 
 
 
 
 
Net revenues
$
1,484.5

 
$
1,758.0

 
(15.6
)%
 


 


 
Cost of sales
1,030.9

 
938.0

 
9.9

 
69.4
%
 
53.4
%
 
Other operating expenses
55.9

 
194.5

 
(71.3
)
 
3.8

 
11.1

 
Depreciation and amortization expenses
12.6

 
1.2

 
nm

 
0.8

 
0.1

 
General and administrative expenses
8.9

 
10.6

 
(16.0
)
 
0.6

 
0.6

 
Total operating expenses
1,108.3

 
1,144.3

 
(3.1
)
 
74.7

 
65.1

 
Income from equity investees
130.4

 
122.5

 
6.4

 
8.8

 
7.0

 
Operating income
$
506.6

 
$
736.2

 
(31.2
)%
 
34.1
%
 
41.9
%

- more -
14

Corporate and Other
 
Jun 30,
2019
 
Jul 1,
2018
 
%
Change
Quarter Ended
 
 
Net revenues:
 
 
 
 
 
Company-operated stores
$
25.9

 
$
12.5

 
107.2
 %
Other
23.4

 
15.7

 
49.0

Total net revenues
49.3

 
28.2

 
74.8

Cost of sales including occupancy costs
58.7

 
35.4

 
65.8

Store operating expenses
16.1

 
9.2

 
75.0

Other operating expenses
5.7

 
2.9

 
96.6

Depreciation and amortization expenses
45.4

 
41.8

 
8.6

General and administrative expenses
331.5

 
305.1

 
8.7

Restructuring and impairments
6.0

 
(1.5
)
 
nm

Total operating expenses
463.4

 
392.9

 
17.9

Operating loss
$
(414.1
)
 
$
(364.7
)
 
13.5
 %
 
 
 
 
 
 
Three Quarters Ended
 
 
 
 
 
Net revenues:
 
 
 
 
 
Company-operated stores
$
63.4

 
$
99.1

 
(36.0
)%
Licensed stores
—

 
1.1

 
nm

Other
50.9

 
39.8

 
27.9

Total net revenues
114.3

 
140.0

 
(18.4
)
Cost of sales including occupancy costs
136.3

 
127.3

 
7.1

Store operating expenses
56.6

 
53.0

 
6.8

Other operating expenses
13.3

 
13.1

 
1.5

Depreciation and amortization expenses
133.0

 
122.0

 
9.0

General and administrative expenses
1,008.3

 
876.1

 
15.1

Restructuring and impairments
20.5

 
129.7

 
(84.2
)
Total operating expenses
1,368.0

 
1,321.2

 
3.5

Operating loss
$
(1,253.7
)
 
$
(1,181.2
)
 
6.1
 %
Corporate and Other primarily consists of our unallocated corporate operating expenses, the results from Starbucks ReserveTM Roastery & Tasting Rooms, Starbucks Reserve brand and products and Princi operations, Evolution Fresh and formerly, the Teavana retail business.


- more -
15

Supplemental Information

The following supplemental information is provided for historical and comparative purposes. 
U.S. Supplemental Data
 
Quarter Ended
 
 
($ in millions)
Jun 30, 2019
 
Jul 1, 2018
 
Change (%)
Revenues
$4,278.8
 
$3,876.8
 
10%
Comparable Store Sales Growth (1)
7%
 
1%
 
 
Change in Transactions
3%
 
(3%)
 
 
Change in Ticket
3%
 
4%
 
 
Store Count
14,875
 
14,433
 
3%
(1) Includes only Starbucks® company-operated stores open 13 months or longer.
China Supplemental Data
 
Quarter Ended
 
 
($ in millions)
Jun 30, 2019
 
Jul 1, 2018
 
Change (%)
Revenues
$728.8
 
$662.7
 
10%
Comparable Store Sales Growth (1) (2)
6%
 
(1%)
 
 
Change in Transactions
2%
 
(3%)
 
 
Change in Ticket
4%
 
3%
 
 
Store Count
3,922
 
3,382
 
16%
(1) Includes only Starbucks® company-operated stores open 13 months or longer. Comparable store sales exclude the effect of fluctuations in foreign currency exchange rates.
(2) Historical information has been updated. Please see page 17 of this release for additional information.



- more -
16

Store Data
 
Net stores opened/(closed) and transferred during the period
 
 
 
 
 
 
 
 
 
Quarter Ended
 
Three Quarters Ended
 
Stores open as of
 
Jun 30,
2019
 
Jul 1,
2018
 
Jun 30,
2019
 
Jul 1,
2018
 
Jun 30,
2019
 
Jul 1,
2018
Americas:
 
 
 
 
 
 
 
 
 
 
 
Company-operated stores
82

 
94

 
165

 
177

 
9,849

 
9,590

Licensed stores
53

 
86

 
226

 
468

 
7,996

 
7,614

Total Americas
135

 
180

 
391

 
645

 
17,845

 
17,204

China/Asia Pacific(1):
 
 
 
 
 
 
 
 
 
 
 
Company-operated stores
(217
)
 
163

 
107

 
1,909

 
5,266

 
4,979

Licensed stores
470

 
94

 
609

 
(1,136
)
 
3,980

 
3,273

Total China/Asia Pacific
253

 
257

 
716

 
773

 
9,246

 
8,252

EMEA(2):
 
 
 
 
 
 
 
 
 
 
 
Company-operated stores
(16
)
 
—

 
(114
)
 
(6
)
 
376

 
496

Licensed stores
71

 
76

 
317

 
269

 
3,147

 
2,741

Total EMEA
55

 
76

 
203

 
263

 
3,523

 
3,237

Corporate and Other:
 
 
 
 
 
 
 
 
 
 
 
Company-operated stores
(1
)
 
1

 
4

 
(285
)
 
12

 
5

Licensed stores
—

 
(3
)
 
(12
)
 
(15
)
 
—

 
22

Total Corporate and Other
(1
)
 
(2
)
 
(8
)
 
(300
)
 
12

 
27

 
 
 
 
 
 
 
 
 
 
 
 
Total Company
442

 
511

 
1,302

 
1,381

 
30,626

 
28,720

(1) China/Asia Pacific store data includes the transfer of 377 company-operated stores in Thailand to licensed stores as a result of the sale of operations toward the end of the third quarter of fiscal 2019 and the transfer of 1,477 licensed stores in East China to company-operated retail stores as a result of the purchase of our East China joint venture on December 31, 2017.
(2) EMEA store data includes the transfer of 82 company-operated retail stores in France and the Netherlands to licensed stores in the second quarter of fiscal 2019.


- more -
17

Comparable Store Sales Growth - Update

The company determined minor adjustments were necessary to harmonize the calculations of comparable store sales growth across company-operated retail markets. The resulting changes, which only affected the ticket component of comparable sales growth for the China market and to a lesser extent the CAP segment, had no impact to previously reported consolidated financial statements or segment results—including total net revenues, operating income and diluted earnings per share—and did not impact comparable transaction growth. The following information is provided for historical and comparative purposes:

China Comparable Store Sales Growth Data (1)
 
QTD
Period Ended
Previously
Reported
 
Revised
 
Change
Dec 31, 2017
6%
 
7%
 
+1%
Apr 1, 2018
4%
 
4%
 
—%
Jul 1, 2018
(2)%
 
(1)%
 
+1%
Sep 30, 2018
1%
 
1%
 
—%
Dec 30, 2018
1%
 
—%
 
(1)%
Mar 31, 2019
3%
 
2%
 
(1)%
CAP Comparable Store Sales Growth Data (1)
 
 
 
 
 
 
 
QTD
 
YTD
Period Ended
Previously
Reported
 
Revised
 
Change
 
Previously
Reported
 
Revised
 
Change
Dec 31, 2017
1%
 
1%
 
—%
 
 
 
 
 

Apr 1, 2018
3%
 
2%
 
(1)%
 
2%
 
2%
 
—%
Jul 1, 2018
(1)%
 
(1)%
 
—%
 
1%
 
1%
 
—%
Sep 30, 2018
1%
 
1%
 
—%
 
1%
 
1%
 
—%
Dec 30, 2018
3%
 
3%
 
—%
 
 
 
 
 

Mar 31, 2019
2%
 
2%
 
—%
 
3%
 
2%
 
(1)%
(1) Includes only Starbucks company-operated stores open 13 months or longer. Comparable store sales exclude the effect of fluctuations in foreign currency exchange rates.


- more -
18

Non-GAAP Disclosure

In addition to the GAAP results provided in this release, the company provides certain non-GAAP financial measures that are not in accordance with, or alternatives for, generally accepted accounting principles in the United States. Our non-GAAP financial measures of non-GAAP G&A, non-GAAP operating income, non-GAAP operating margin, non-GAAP effective tax rate and non-GAAP EPS exclude the below-listed items and their related tax impacts, as they do not contribute to a meaningful evaluation of the company's future operating performance or comparisons to the company's past operating performance. The GAAP measures most directly comparable to non-GAAP G&A, non-GAAP operating income, non-GAAP operating margin, non-GAAP effective tax rate and non-GAAP EPS are general and administrative expenses, operating income, operating margin, effective tax rate and diluted net earnings per share, respectively.
Non-GAAP Exclusion
Rationale
Sale of Tazo brand
Management excludes the net gain on the sale of our assets associated with our Tazo brand and associated transaction costs as these items do not reflect future gains, losses, costs or tax benefits and for reasons discussed above.
Sale of certain retail operations
Management excludes the gains and net loss related to the sale of our Thailand, France, the Netherlands and Brazil retail operations as these items do not reflect future gains, losses or tax impacts for reasons discussed above.
Restructuring, impairment and optimization costs
Management excludes restructuring charges and business process optimization costs related to strategic shifts in its Teavana, EMEA, U.S., e-commerce and other business units. Additionally, management excludes expenses related to divesting certain lower-margin businesses and assets, such as closure of certain company-operated stores and Switzerland intangible asset impairments. Management excludes these items for reasons discussed above. These expenses are anticipated to be completed within a finite period of time.
CAP transaction and integration-related costs
Management excludes transaction and integration costs and amortization of the acquired intangible assets for reasons discussed above. Additionally, the majority of these costs will be recognized over a finite period of time.
2018 U.S. stock award
Management excludes the incremental stock-based compensation award granted in the third quarter of fiscal 2018 for reasons discussed above.
Nestlé transaction-related costs
Management excludes the transaction-related costs associated with Nestlé for reasons discussed above.
Other tax matters
On December 22, 2017, the Tax Cuts and Jobs Act was signed into U.S. law. Management excludes the estimated transition tax on undistributed foreign earnings, the impacts of estimated incremental foreign withholding taxes on expected repatriated earnings and the re–measurement of deferred tax assets and liabilities due to the reduction of the U.S. federal corporate income tax rate for reasons discussed above.

Non-GAAP G&A, non-GAAP operating income, non-GAAP operating margin, non-GAAP effective tax rate and non-GAAP EPS may have limitations as analytical tools. These measures should not be considered in isolation or as a substitute for analysis of the company's results as reported under GAAP. Other companies may calculate these non-GAAP financial measures differently than the company does, limiting the usefulness of those measures for comparative purposes.


- more -
19

STARBUCKS CORPORATION
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(unaudited)
($ in millions)
Quarter Ended
 
 
Consolidated
Jun 30,
2019
 
Jul 1,
2018
 
Change
General and administrative expenses, as reported (GAAP)
$
480.2

 
$
485.9

 
(1.2)%
Restructuring, impairment and optimization costs (1)
0.4

 
(4.9
)
 
 
CAP transaction and integration-related items (2)
(10.5
)
 
(19.0
)
 
 
2018 U.S. stock award (3)
(14.4
)
 
(21.7
)
 
 
Nestlé transaction-related costs
(0.8
)
 
(7.2
)
 
 
Sale of Tazo brand
—

 
(0.4
)
 
 
Non-GAAP G&A
$
454.9

 
$
432.7

 
5.1%
 
 
 
 
 
 
Operating income, as reported (GAAP)
$
1,121.3

 
$
1,038.2

 
8.0%
Restructuring, impairment and optimization costs (1)
39.6

 
21.7

 
 
CAP transaction and integration-related items (2)
69.0

 
75.8

 
 
2018 U.S. stock award (3)
14.4

 
21.7

 
 
Nestlé transaction-related costs
2.3

 
12.1

 
 
Sale of Tazo brand
—

 
0.4

 
 
Non-GAAP operating income
$
1,246.6

 
$
1,169.9

 
6.6%
 
 
 
 
 
 
Operating margin, as reported (GAAP)
16.4
%
 
16.5
%
 
(10) bps
Restructuring, impairment and optimization costs (1)
0.7

 
0.3

 
 
CAP transaction and integration-related items (2)
1.0

 
1.2

 
 
2018 U.S. stock award (3)
0.2

 
0.3

 
 
Nestlé transaction-related costs
—

 
0.2

 
 
Sale of Tazo brand
—

 
—

 
 
Non-GAAP operating margin
18.3
%
 
18.5
%
 
(20) bps
 
 
 
 
 
 
Diluted net earnings per share, as reported (GAAP)
$
1.12

 
$
0.61

 
83.6%
Gain on sale of certain retail operations (Thailand)
(0.49
)
 
—

 
 
Restructuring, impairment and optimization costs (1)
0.04

 
0.02

 
 
CAP transaction and integration-related items (2)
0.06

 
0.05

 
 
2018 U.S. stock award (3)
0.01

 
0.02

 
 
Nestlé transaction related costs
—

 
0.01

 
 
Other tax matters (4)
—

 
(0.01
)
 
 
Income tax effect on Non-GAAP adjustments (5)
0.04

 
(0.08
)
 
 
Non-GAAP EPS
$
0.78

 
$
0.62

 
25.8%
(1) 
Represents costs associated with our restructuring efforts, primarily severance, lease termination costs and asset impairments related to certain company-operated store closures, as well as business process optimization costs, largely consulting fees.
(2) 
Includes transaction costs for the acquisition of our East China joint venture, the divestitures of our Taiwan joint venture and Thailand company-operated market; ongoing amortization expense of acquired intangible assets associated with the acquisition of East China and Starbucks Japan; and the related post-acquisition integration costs, such as incremental information technology and compensation-related costs.
(3) 
Represents incremental stock-based compensation award for U.S. partners (employees).
(4) 
Represents the estimated impact of the U.S. Tax Cuts and Jobs Act, specifically the transition tax on undistributed foreign earnings, estimated incremental foreign withholding taxes on expected repatriated earnings and the re-measurement of deferred taxes.
(5) 
Adjustments were determined based on the nature of the underlying items and their relevant jurisdictional tax rates.


- more -
20

($ in millions)
 
Year Ended
Consolidated
 
Sep 30,
2018
General and administrative expenses, as reported (GAAP)
 
$
1,759.0

Restructuring, impairment and optimization costs
 
(10.0
)
CAP transaction and integration-related items
 
(38.0
)
2018 U.S. stock award
 
(45.8
)
Nestlé transaction-related costs
 
(16.9
)
Sale of certain retail operations transaction costs
 
(1.1
)
Sale of Tazo brand
 
(2.2
)
Non-GAAP G&A
 
$
1,645.0



- more -
21

STARBUCKS CORPORATION
NON-GAAP DISCLOSURE DETAILS
(unaudited, $ in millions)


Q3 QTD FY19 ($ in millions)
Americas
China/Asia Pacific
EMEA
Channel Dev
Corporate and Other
Consolidated
Consolidated Statement of Earnings Line Item
Restructuring, Impairment and Optimization Costs
CAP Transaction and Integration Costs
Restructuring, Impairment and Optimization Costs
Nestlé Transaction- Related Costs
Nestlé Transaction- Related Costs
2018 U.S. Stock Award
Restructuring, Impairment & Optimization Costs
Total Non-GAAP Adjustment
Net revenue
 
 
 
 
 
 
 


Cost of sales including occupancy costs
 
 
 
 
 
 
 


Store operating expenses
 
4.9

 
 
 
 
 
4.9

Other operating expenses
 
 
2.3

1.5

 
 
 
3.8

Depreciation and amortization expenses
 
53.6

 
 
 
 
 
53.6

General and administrative expenses
(0.1)

10.5

1.3

 
0.8

14.4

(1.6)

25.3

Restructuring and impairments
15.1

 
16.6

 
 
 
6.0

37.7

Income from equity investees
 
 
 
 
 
 
 
0.0

Total impact to operating income
$
(15.0
)
$
(69.0
)
$
(20.2
)
$
(1.5
)
$
(0.8
)
$
(14.4
)
$
(4.4
)
$
(125.3
)
 
 
 
 
 
 
 
 
 
Non-Operating gains
 
 
 
 
 
 
 
 
Gains resulting from divestiture of certain operations
 
 
 
 
 
 
 
$
(601.8
)



- more -
22

 
Year Ended
Consolidated
Sep 29,
2019
 
(Projected)
Diluted net earnings per share (GAAP)
$ 2.86 - 2.88

Restructuring, impairment and optimization costs (1)
0.15

CAP transaction and integration-related items (2)
0.22

Sale of certain retail operations
(0.51
)
2018 U.S. stock award (3)
0.05

Nestlé transaction related costs
0.01

Other tax matters (4)
0.06

Income tax effect on Non-GAAP adjustments (5)
(0.04
)
Non-GAAP EPS
$ 2.80 - 2.82

 
 

(1) 
Represents restructuring, impairment and business optimization costs.
(2) 
Includes transaction costs for the acquisition of our East China joint venture, the divestitures of our Taiwan joint venture and Thailand company-operated market; ongoing amortization expense of acquired intangible assets associated with the acquisition of our East China joint venture and Starbucks Japan; and the related post-acquisition integration costs, such as incremental information technology and compensation-related costs.
(3) 
Represents incremental stock-based compensation award for U.S. partners (employees).
(4) 
Represents the estimated impact of the U.S. Tax Cuts and Jobs Act, including the transition tax on undistributed foreign earnings, estimated incremental foreign withholding taxes on expected repatriated earnings and the re-measurement of deferred taxes.
(5) 
Adjustments were determined based on the nature of the underlying items and their relevant jurisdictional tax rates.

#


Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘8-K’ Filing    Date    Other Filings
8/23/19
8/8/19UPLOAD
Filed on / For Period end:7/25/19
6/30/1910-Q
9/30/1810-K
8/26/188-K
12/31/1710-Q,  8-K,  SD
12/22/17
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