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Starbucks Corporation—Understanding Financial Statements
1
© Copyright 2015 by Cambridge Business Publishers, LLC. All rights reserved. No part of this publication may be reproduced in any form for
any purpose without the written permission of the publisher.
Starbucks Corporation—
Understanding Financial Statements
Starbucks purchases and roasts high-quality whole bean coffees and sells them, along with fresh, rich-brewed
coffees, Italian-style espresso beverages, cold blended beverages, a variety of complementary food items, a selection
of premium teas, and beverage-related accessories and equipment, primarily through company-operated retail
stores. Starbucks also sells coffee and tea products and licenses its trademark through other channels such as
licensed retail stores and, through certain of its licensees and equity investees, Starbucks produces and sells a
variety of ready-to-drink beverages. (Source: investor.starbucks.com)
Learning Objectives
• Become familiar with a set of financial statements including auditor opinions and significant
accounting policy footnotes.
• Perform a basic analysis and interpretation of the financial statements, including common-size
income statements and balance sheets.
• Recognize the role of estimation in the preparation of financial statements.
Refer to the Starbucks financial statements for fiscal year 2013 (that is, the year ended September 29,
2013).
! Concepts !
a. What is the nature of Starbucks’ business? That is, based on what you know about the company and
on the accompanying financial statements, how does Starbucks make money?
b. What financial statements are commonly prepared for external reporting purposes? What titles does
Starbucks give these statements? What does “consolidated” mean?
c. How often do publicly traded corporations typically prepare financial statements for external
reporting purposes?
d. Who is responsible for the financial statements? Discuss the potential users of the Starbucks financial
statements and the type of information they are likely interested in.
e. Who are Starbucks’ external auditors? Describe the two “opinion” letters that Starbucks received in

1. In your own words, what do these opinions mean? Why are both opinions dated several months
   after Starbucks’ year-end?
   ! Analysis !
   f. Use a spreadsheet to construct common-size income statements (which Starbucks calls statements of
   earnings) and balance sheets for 2013 and 2012. Common-size income statements scale each income
   statement line item by total net revenues (sales). Common-size balance sheets are created by dividing
   each figure on a given year’s balance sheet by that year’s total assets, thereby creating a balance sheet
   on a “percent of assets” basis. You will use these common-size statements in answering several of the
   questions below. (Starbucks’ investor relations website—investor.starbucks.com—contains a link to
   SEC filings. The company’s Form 10-K can be found under annual filings and contains an Excel
   spreadsheet with financial statement data that may be helpful in creating the common-size
   statements).
   g. Refer to Starbucks’ balance sheet for fiscal 2013 (the year ended September 29, 2013).
   i. Demonstrate that the accounting equation holds for Starbucks. Recall that the accounting
   equation is: Assets = Liabilities + Equity.
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   Starbucks Corporation—Understanding Financial Statements
   2
   ii. What are Starbucks’ major assets? Calculate the proportion of short-term and long-term assets
   for 2013. Does this seem appropriate for a company such as Starbucks?
   iii. In general, what are intangible assets? What is goodwill? What specific intangible assets might
   Starbucks have?
   iv. How is Starbucks financed? What proportion of total financing comes from non-owners?
   h. Refer to Starbucks’ statement of earnings for fiscal 2013 (the year ended September 29, 2013) and to
   the common-size income statement you developed in part f, above.
   i. Review the revenue recognition policies of Starbucks discussed in Note 1 (Summary of
   Significant Accounting Policies). Does Starbucks record revenue when they receive cash from
   their customers (cash-basis accounting) or do they follow a different rubric (for example,
   accrual accounting)? How does Starbucks record revenue on stored value cards (i.e., gift
   cards)? What challenges in measuring revenue do you observe? That is, are there any
   significant judgments management needs to make in recording sales revenues at Starbucks?
   ii. What are Starbucks’ major expenses?
   iii. Were there any significant changes in the cost structure during the most recent year?
   iv. In fiscal 2013, Starbucks separately reported a litigation charge and included it in operating
   income. Why didn’t the company just include this amount within the line item for general and
   administrative expenses? Why is it an operating expense?
   v. Was the company profitable during 2013? During 2012? Explain your definition of
   “profitable.”
   i. Refer to Starbucks’ fiscal 2013 statement of cash flows.
   i. Compare Starbucks’ net earnings to net cash provided by operating activities and explain the
   difference.
   ii. How much cash did Starbucks use for expenditures for property, plant and equipment during
   fiscal 2013?
   iii. What amount of dividends did Starbucks pay during the year? How does this amount compare
   to the amount of dividends declared as shown in the statement of equity?
   j. Several notes to the financial statements refer to the use of “estimates.” Which accounts on
   Starbucks’ balance sheet require estimates? List as many accounts as you can. Are any accounts
   estimate-free?
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   43
   Item 8. Financial Statements and Supplementary Data
   STARBUCKS CORPORATION
   CONSOLIDATED STATEMENTS OF EARNINGS
   (in millions, except per share data)
   Fiscal Year Ended
   Sep 29,
   2013
   Sep 30,
   2012
   Oct 2,
   2011
   Net revenues:
   Company-operated stores $ 11,793.2 $ 10,534.5 $ 9,632.4
   Licensed stores 1,360.5 1,210.3 1,007.5
   CPG, foodservice and other 1,738.5 1,554.7 1,060.5
   Total net revenues 14,892.2 13,299.5 11,700.4
   Cost of sales including occupancy costs 6,382.3 5,813.3 4,915.5
   Store operating expenses 4,286.1 3,918.1 3,594.9
   Other operating expenses 457.2 429.9 392.8
   Depreciation and amortization expenses 621.4 550.3 523.3
   General and administrative expenses 937.9 801.2 749.3
   Litigation charge 2,784.1 — —
   Total operating expenses 15,469.0 11,512.8 10,175.8
   Gain on sale of properties — — 30.2
   Income from equity investees 251.4 210.7 173.7
   Operating income/(loss) (325.4) 1,997.4 1,728.5
   Interest income and other, net 123.6 94.4 115.9
   Interest expense (28.1) (32.7) (33.3)
   Earnings/(loss) before income taxes (229.9) 2,059.1 1,811.1
   Income taxes (238.7) 674.4 563.1
   Net earnings including noncontrolling interests 8.8 1,384.7 1,248.0
   Net earnings attributable to noncontrolling interests 0.5 0.9 2.3
   Net earnings attributable to Starbucks $ 8.3 $ 1,383.8 $ 1,245.7
   Earnings per share — basic $ 0.01 $ 1.83 $ 1.66
   Earnings per share — diluted $ 0.01 $ 1.79 $ 1.62
   Weighted average shares outstanding:
   Basic 749.3 754.4 748.3
   Diluted 762.3 773.0 769.7
   Cash dividends declared per share $ 0.89 $ 0.72 $ 0.56
   See Notes to Consolidated Financial Statements.
   Starbucks Corporation 2013 10-K Form
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   44
   STARBUCKS CORPORATION
   CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
   (in millions)
   Sep 29,
   2013
   Sep 30,
   2012
   Oct 2,
   2011
   Net earnings including noncontrolling interests $ 8.8 $ 1,384.7 $ 1,248.0
   Other comprehensive income/(loss), net of tax:
   Unrealized holding gains/(losses) on available-for-sale securities (0.6) 0.7 0.7
   Tax (expense)/benefit 0.2 (0.3) (0.3)
   Unrealized holding gains/(losses) on cash flow hedging instruments 47.1 (42.2) (12.2)
   Tax (expense)/benefit (24.6) 4.3 4.5
   Unrealized holding gains/(losses) on net investment hedging
   instruments 32.8 1.0 (12.1)
   Tax (expense)/benefit (12.1) (0.4) 4.5
   Reclassification adjustment for net (gains)/losses realized in net
   earnings for cash flow hedges 46.3 14.8 16.6
   Tax expense/(benefit) (3.5) (4.3) (6.1)
   Net unrealized holding gains/(losses) 85.6 (26.4) (4.4)
   Translation adjustment (41.6) 6.1 (7.4)
   Tax (expense)/benefit 0.3 (3.3) 0.9
   Other comprehensive income/(loss) 44.3 (23.6) (10.9)
   Comprehensive income/(loss) including noncontrolling interests 53.1 1,361.1 1,237.1
   Comprehensive income attributable to noncontrolling interests 0.5 0.9 2.3
   Comprehensive income attributable to Starbucks $ 52.6 $ 1,360.2 $ 1,234.8
   See Notes to Consolidated Financial Statements.
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   45
   STARBUCKS CORPORATION
   CONSOLIDATED BALANCE SHEETS
   (in millions, except per share data)
   Sep 29,
   2013
   Sep 30,
   2012
   ASSETS
   Current assets:
   Cash and cash equivalents $ 2,575.7 $ 1,188.6
   Short-term investments 658.1 848.4
   Accounts receivable, net 561.4 485.9
   Inventories 1,111.2 1,241.5
   Prepaid expenses and other current assets 287.7 196.5
   Deferred income taxes, net 277.3 238.7
   Total current assets 5,471.4 4,199.6
   Long-term investments 58.3 116.0
   Equity and cost investments 496.5 459.9
   Property, plant and equipment, net 3,200.5 2,658.9
   Deferred income taxes, net 967.0 97.3
   Other assets 185.3 144.7
   Other intangible assets 274.8 143.7
   Goodwill 862.9 399.1
   TOTAL ASSETS $ 11,516.7 $ 8,219.2
   LIABILITIES AND EQUITY
   Current liabilities:
   Accounts payable $ 491.7 $ 398.1
   Accrued litigation charge 2,784.1 —
   Accrued liabilities 1,269.3 1,133.8
   Insurance reserves 178.5 167.7
   Deferred revenue 653.7 510.2
   Total current liabilities 5,377.3 2,209.8
   Long-term debt 1,299.4 549.6
   Other long-term liabilities 357.7 345.3
   Total liabilities 7,034.4 3,104.7
   Shareholders’ equity:
   Common stock ($0.001 par value) — authorized, 1,200.0 shares; issued and
   outstanding, 753.2 shares and 749.3 shares (includes 3.4 common stock units),
   respectively 0.8 0.7
   Additional paid-in capital 282.1 39.4
   Retained earnings 4,130.3 5,046.2
   Accumulated other comprehensive income 67.0 22.7
   Total shareholders’ equity 4,480.2 5,109.0
   Noncontrolling interests 2.1 5.5
   Total equity 4,482.3 5,114.5
   TOTAL LIABILITIES AND EQUITY $ 11,516.7 $ 8,219.2
   See Notes to Consolidated Financial Statements.
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   46
   STARBUCKS CORPORATION
   CONSOLIDATED STATEMENTS OF CASH FLOWS
   (in millions)
   Fiscal Year Ended
   Sep 29,
   2013
   Sep 30,
   2012
   Oct 2,
   2011
   OPERATING ACTIVITIES:
   Net earnings including noncontrolling interests $ 8.8 $ 1,384.7 $ 1,248.0
   Adjustments to reconcile net earnings to net cash provided by operating activities:
   Depreciation and amortization 655.6 580.6 550.0
   Litigation charge 2,784.1 — —
   Gain on sale of properties — — (30.2)
   Deferred income taxes, net (1,045.9) 61.1 106.2
   Income earned from equity method investees, net of distributions (56.2) (49.3) (32.9)
   Gain resulting from sale/acquisition of equity in joint ventures (80.1) — (55.2)
   Stock-based compensation 142.3 153.6 145.2
   Other 23.0 23.6 33.3
   Cash provided/(used) by changes in operating assets and liabilities:
   Accounts receivable (68.3) (90.3) (88.7)
   Inventories 152.5 (273.3) (422.3)
   Accounts payable 88.7 (105.2) 227.5
   Accrued liabilities and insurance reserves 87.6 23.7 (81.8)
   Deferred revenue 139.9 60.8 35.8
   Prepaid expenses, other current assets and other assets 76.3 (19.7) (22.5)
   Net cash provided by operating activities 2,908.3 1,750.3 1,612.4
   INVESTING ACTIVITIES:
   Purchase of investments (785.9) (1,748.6) (966.0)
   Sales, maturities and calls of investments 1,040.2 1,796.4 430.0
   Acquisitions, net of cash acquired (610.4) (129.1) (55.8)
   Additions to property, plant and equipment (1,151.2) (856.2) (531.9)
   Proceeds from the sale of property, plant, and equipment 15.3 5.3 117.4
   Proceeds from sale of equity in joint ventures 108.0 — —
   Other (27.2) (41.8) (13.2)
   Net cash used by investing activities (1,411.2) (974.0) (1,019.5)
   FINANCING ACTIVITIES:
   Proceeds from issuance of long-term debt 749.7 — —
   Principal payments on long-term debt (35.2) — —
   (Payments)/proceeds from short-term borrowings — (30.8) 30.8
   Purchase of noncontrolling interest — — (27.5)
   Proceeds from issuance of common stock 247.2 236.6 250.4
   Excess tax benefit on share-based awards 258.1 169.8 103.9
   Cash dividends paid (628.9) (513.0) (389.5)
   Repurchase of common stock (588.1) (549.1) (555.9)
   Minimum tax withholdings on share-based awards (121.4) (58.5) (15.0)
   Other 10.4 (0.5) (5.2)
   Net cash used by financing activities (108.2) (745.5) (608.0)
   Effect of exchange rate changes on cash and cash equivalents (1.8) 9.7 (0.8)
   Net increase/(decrease) in cash and cash equivalents 1,387.1 40.5 (15.9)
   CASH AND CASH EQUIVALENTS:
   Beginning of period 1,188.6 1,148.1 1,164.0
   End of period $ 2,575.7 $ 1,188.6 $ 1,148.1
   SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid during the period for:
   Interest, net of capitalized interest $ 34.4 $ 34.4 $ 34.4
   Income taxes $ 539.1 $ 416.9 $ 350.1
   See Notes to Consolidated Financial Statements.
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   47
   STARBUCKS CORPORATION
   CONSOLIDATED STATEMENTS OF EQUITY
   (in millions)
   Common Stock
   Additional Paidin Capital Retained Earnings
   Accumulated
   Other
   Comprehensive
   Income/(Loss)
   Shareholders’
   Equity
   Noncontrolling
   Interest Total Shares Amount
   Balance, October 3, 2010 742.6 $ 0.7 $ 145.6 $ 3,471.2 $ 57.2 $ 3,674.7 $ 7.6 $ 3,682.3
   Net earnings
   —
   — — 1,245.7 — 1,245.7 2.3 1,248.0
   Other comprehensive income/(loss) (10.9) (10.9) — (10.9)
   Stock-based compensation expense
   —
   — 147.2
   —
   — 147.2 — 147.2
   Exercise of stock options, including tax benefit of
   $96.1 17.3
   — 312.5
   —
   — 312.5 — 312.5
   Sale of common stock, including tax benefit of $0.1 0.5
   — 19.1
   —
   — 19.1 — 19.1
   Repurchase of common stock (15.6) — (555.9)
   — — (555.9) — (555.9)
   Cash dividends declared
   —
   — — (419.5) — (419.5) — (419.5)
   Purchase of noncontrolling interests
   —
   — (28.0)
   —
   — (28.0) (7.5) (35.5)
   Balance, October 2, 2011 744.8 $ 0.7 $ 40.5 $ 4,297.4 $ 46.3 $ 4,384.9 $ 2.4 $ 4,387.3
   Net earnings
   —
   — — 1,383.8 — 1,383.8 0.9 1,384.7
   Other comprehensive income/(loss) (23.6) (23.6) — (23.6)
   Stock-based compensation expense
   —
   — 155.2
   —
   — 155.2 — 155.2
   Exercise of stock options, including tax benefit of
   $167.3 16.5
   — 326.1
   —
   — 326.1 — 326.1
   Sale of common stock, including tax benefit of $0.2 0.3
   — 19.5
   —
   — 19.5 — 19.5
   Repurchase of common stock (12.3) — (501.9) (91.3) — (593.2) — (593.2)
   Cash dividends declared
   —
   — — (543.7) — (543.7) — (543.7)
   Noncontrolling interest resulting from acquisition
   —
   —
   —
   —
   —
   — 2.2 2.2
   Balance, September 30, 2012 749.3 $ 0.7 $ 39.4 $ 5,046.2 $ 22.7 $ 5,109.0 $ 5.5 $ 5,114.5
   Net earnings
   —
   —
   — 8.3
   — 8.3 0.5 8.8
   Other comprehensive income/(loss) 44.3 44.3 — 44.3
   Stock-based compensation expense
   —
   — 144.1
   —
   — 144.1 — 144.1
   Exercise of stock options, including tax benefit of
   $259.9 14.4 0.1 366.7
   —
   — 366.8 — 366.8
   Sale of common stock, including tax benefit of $0.2 0.3
   — 20.4
   —
   — 20.4 — 20.4
   Repurchase of common stock (10.8) — (288.5) (255.6) — (544.1) — (544.1)
   Cash dividends declared
   —
   — — (668.6) — (668.6) — (668.6)
   Noncontrolling interest resulting from divestiture
   —
   —
   —
   —
   —
   — (3.9) (3.9)
   Balance, September 29, 2013 753.2 $ 0.8 $ 282.1 $ 4,130.3 $ 67.0 $ 4,480.2 $ 2.1 $ 4,482.3
   See Notes to Consolidated Financial Statements.
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   48
   STARBUCKS CORPORATION
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Fiscal Years ended September 29, 2013, September 30, 2012 and October 2, 2011
   Note 1: Summary of Significant Accounting Policies
   Description of Business
   We purchase and roast high-quality coffees that we sell, along with handcrafted coffee and tea beverages and a variety of fresh
   food items, through our company-operated stores. We also sell a variety of coffee and tea products and license our trademarks
   through other channels such as licensed stores, grocery and national foodservice accounts.
   In this 10-K, Starbucks Corporation (together with its subsidiaries) is referred to as “Starbucks,” the “Company,” “we,” “us” or
   “our.”
   We have four reportable operating segments: 1) Americas, inclusive of the US, Canada, and Latin America; 2) Europe, Middle
   East, and Africa (“EMEA”); 3) China / Asia Pacific (“CAP”) and 4) Channel Development. Teavana, Seattle’s Best Coffee,
   Evolution Fresh and our Digital Ventures business are included in All Other Segments. Unallocated corporate operating
   expenses, which pertain primarily to corporate administrative functions that support the operating segments but are not
   specifically attributable to or managed by any segment, are presented as a reconciling item between total segment operating
   results and consolidated financial results.
   Additional details on the nature of our business and our reportable operating segments are included in Note 16 of these
   Consolidated Financial Statements.
   Principles of Consolidation
   The consolidated financial statements reflect the financial position and operating results of Starbucks, including wholly owned
   subsidiaries and investees that we control. Investments in entities that we do not control, but have the ability to exercise
   significant influence over operating and financial policies, are accounted for under the equity method. Investments in entities in
   which we do not have the ability to exercise significant influence are accounted for under the cost method. Intercompany
   transactions and balances have been eliminated.
   Fiscal Year End
   Our fiscal year ends on the Sunday closest to September 30. Fiscal years 2013, 2012 and 2011 included 52 weeks.
   Estimates and Assumptions
   Preparing financial statements in conformity with accounting principles generally accepted in the United States of America
   (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities,
   revenues and expenses. Examples include, but are not limited to, estimates for asset and goodwill impairments, stock-based
   compensation forfeiture rates, future asset retirement obligations, and inventory reserves; assumptions underlying selfinsurance reserves and income from unredeemed stored value cards; and the potential outcome of future tax consequences of
   events that have been recognized in the financial statements. Actual results and outcomes may differ from these estimates and
   assumptions.
   Cash and Cash Equivalents
   We consider all highly liquid instruments with a maturity of three months or less at the time of purchase to be cash equivalents.
   We maintain cash and cash equivalent balances with financial institutions that exceed federally insured limits. We have not
   experienced any losses related to these balances and we believe credit risk to be minimal.
   Our cash management system provides for the funding of all major bank disbursement accounts on a daily basis as checks are
   presented for payment. Under this system, outstanding checks are in excess of the cash balances at certain banks, which creates
   book overdrafts. Book overdrafts are presented as a current liability in accounts payable on the consolidated balance sheets.
   Short-term and Long-term Investments
   Our short-term and long-term investments consist primarily of investment grade debt securities all of which are classified as
   available-for-sale. Also included in our available-for-sale investment portfolio are certificates of deposit placed through an
   account registry service. Available-for-sale securities are recorded at fair value, and unrealized holding gains and losses are
   recorded, net of tax, as a component of accumulated other comprehensive income. Available-for-sale securities with remaining
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   49
   maturities of less than one year and those identified by management at the time of purchase to be used to fund operations
   within one year are classified as short term. All other available-for-sale securities, including all of our auction rate securities,
   are classified as long term. Unrealized losses are charged against net earnings when a decline in fair value is determined to be
   other than temporary. We review several factors to determine whether a loss is other than temporary, such as the length and
   extent of the fair value decline, the financial condition and near term prospects of the issuer, and whether we have the intent to
   sell or will likely be required to sell before the securities anticipated recovery, which may be at maturity. Realized gains and
   losses are accounted for using the specific identification method. Purchases and sales are recorded on a trade date basis.
   We also have a trading securities portfolio, which is comprised of marketable equity mutual funds and equity exchange-traded
   funds. Trading securities are recorded at fair value with unrealized holding gains and losses included in net earnings.
   Fair Value
   Fair value is the price we would receive to sell an asset or pay to transfer a liability (exit price) in an orderly transaction
   between market participants. We determine fair value based on the following:
   Level 1: The carrying value of cash and cash equivalents approximates fair value because of the short-term nature of these
   instruments. For government treasury securities, we use quoted prices in active markets for identical assets to determine fair
   value.
   Level 2: For corporate and agency bonds, for which a quoted market price is not available for identical assets, we determine fair
   value based upon the quoted market price of similar assets or the present value of expected future cash flows, calculated by
   applying revenue multiples to estimate future operating results and using discount rates appropriate for the duration and the
   risks involved. Fair values for commercial paper are estimated using a discounted cash flow calculation that applies current
   imputed interest rates of similar securities. Fair values for certificates of deposit are estimated using a discounted cash flow
   calculation that applies current interest rates to aggregate expected maturities. The fair value of our long-term debt is estimated
   based on the quoted market prices for the same or similar issues or on the current rates offered to us for debt of the same
   remaining maturities.
   Level 3: We determine fair value of our auction rate securities using an internally developed valuation model, using inputs that
   include interest rate curves, credit and liquidity spreads, and effective maturity.
   Derivative Instruments
   We manage our exposure to various risks within the consolidated financial statements according to a market price risk
   management policy. Under this policy, we may engage in transactions involving various derivative instruments to hedge
   interest rates, commodity prices and foreign currency denominated revenues, purchases, assets and liabilities. We generally do
   not offset derivative assets and liabilities in our consolidated balance sheets or enter into derivative instruments with maturities
   longer than five years.
   We enter into fixed-price and price-to-be-fixed green coffee purchase commitments. Price-to-be-fixed contracts are purchase
   commitments whereby the quality, quantity, delivery period, and other negotiated terms are agreed upon, but the date, and
   therefore price, at which the base “C” coffee commodity price component will be fixed has not yet been established. For these
   types of contracts, either Starbucks or the seller has the option to “fix” the base “C” coffee commodity price prior to the
   delivery date. For both fixed-price and price-to-be-fixed purchase commitments, we expect to take delivery of and to utilize the
   coffee in a reasonable period of time and in the conduct of normal business. Accordingly, these purchase commitments qualify
   as normal purchases and are not recorded at fair value on our balance sheets.
   We record all derivatives on the balance sheets at fair value. For a cash flow hedge, the effective portion of the derivative’s gain
   or loss is initially reported as a component of other comprehensive income (“OCI”) and subsequently reclassified into net
   earnings when the hedged exposure affects net earnings. For a net investment hedge, the effective portion of the derivative’s
   gain or loss is reported as a component of OCI.
   Cash flow hedges related to anticipated transactions are designated and documented at the inception of each hedge by matching
   the terms of the contract to the underlying transaction. We classify the cash flows from hedging transactions in the same
   categories as the cash flows from the respective hedged items. Once established, cash flow hedges are generally not removed
   until maturity unless an anticipated transaction is no longer likely to occur. For discontinued or dedesignated cash flow hedges,
   the related accumulated derivative gains or losses are recognized in net interest income and other on the consolidated
   statements of earnings.
   Forward contract effectiveness for cash flow hedges is calculated by comparing the fair value of the contract to the change in
   value of the anticipated transaction using forward rates on a monthly basis. For net investment hedges, the spot-to-spot method
   is used to calculate effectiveness. Under this method, the change in fair value of the forward contract attributable to the changes
   in spot exchange rates (the effective portion) is reported as a component of OCI. The remaining change in fair value of the
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   forward contract (the ineffective portion) is reclassified into net earnings. Any ineffectiveness is recognized immediately in net
   interest income and other on the consolidated statements of earnings.
   Certain foreign currency forward contracts, commodity swap contracts, and futures contracts are not designated as hedging
   instruments for accounting purposes. These contracts are recorded at fair value, with the changes in fair value recognized in net
   interest income and other on the consolidated statements of earnings.
   Allowance for Doubtful Accounts
   Allowance for doubtful accounts is calculated based on historical experience, customer credit risk and application of the
   specific identification method. As of September 29, 2013 and September 30, 2012, the allowance for doubtful accounts was
   $5.7 million and $5.6 million, respectively.
   Inventories
   Inventories are stated at the lower of cost (primarily moving average cost) or market. We record inventory reserves for obsolete
   and slow-moving inventory and for estimated shrinkage between physical inventory counts. Inventory reserves are based on
   inventory obsolescence trends, historical experience and application of the specific identification method. As of September 29,
   2013 and September 30, 2012, inventory reserves were $52.0 million and $22.6 million, respectively.
   Property, Plant and Equipment
   Property, plant and equipment are carried at cost less accumulated depreciation. Cost includes all direct costs necessary to
   acquire and prepare assets for use, including internal labor and overhead in some cases. Depreciation of property, plant and
   equipment, which includes assets under capital leases, is provided on the straight-line method over estimated useful lives,
   generally ranging from 2 to 15 years for equipment and 30 to 40 years for buildings. Leasehold improvements are amortized
   over the shorter of their estimated useful lives or the related lease life, generally 10 years. For leases with renewal periods at
   our option, we generally use the original lease term, excluding renewal option periods, to determine estimated useful lives. If
   failure to exercise a renewal option imposes an economic penalty to us, we may determine at the inception of the lease that
   renewal is reasonably assured and include the renewal option period in the determination of the appropriate estimated useful
   lives. The portion of depreciation expense related to production and distribution facilities is included in cost of sales including
   occupancy costs on the consolidated statements of earnings. The costs of repairs and maintenance are expensed when incurred,
   while expenditures for refurbishments and improvements that significantly add to the productive capacity or extend the useful
   life of an asset are capitalized. When assets are retired or sold, the asset cost and related accumulated depreciation are
   eliminated with any remaining gain or loss recognized in net earnings.
   Goodwill
   We test goodwill for impairment on an annual basis during our third fiscal quarter, or more frequently if circumstances, such as
   material deterioration in performance or a significant number of store closures, indicate reporting unit carrying values may
   exceed their fair values. When evaluating goodwill for impairment, we may first perform a qualitative assessment to determine
   if the fair value of the reporting unit is more likely than not greater than its carrying amount. If we do not perform a qualitative
   assessment or if the fair value of the reporting unit is not more likely than not greater than its carrying amount, we calculate the
   implied estimated fair value of the reporting unit. If the carrying amount of goodwill exceeds the implied estimated fair value,
   an impairment charge to current operations is recorded to reduce the carrying value to the implied estimated fair value.
   As a part of our ongoing operations, we may close certain stores within a reporting unit containing goodwill due to
   underperformance of the store or inability to renew our lease, among other reasons. We abandon certain assets associated with a
   closed store including leasehold improvements and other non-transferable assets. When a portion of a reporting unit that
   constitutes a business is to be disposed of, goodwill associated with the business is included in the carrying amount of the
   business in determining any loss on disposal. Our evaluation of whether the portion of a reporting unit being disposed of
   constitutes a business occurs on the date of abandonment. Although an operating store meets the accounting definition of a
   business prior to abandonment, it does not constitute a business on the closure date because the remaining assets on that date do
   not constitute an integrated set of assets that are capable of being conducted and managed for the purpose of providing a return
   to investors. As a result, when closing individual stores, we do not include goodwill in the calculation of any loss on disposal of
   the related assets. As noted above, if store closures are indicative of potential impairment of goodwill at the reporting unit level,
   we perform an evaluation of our reporting unit goodwill when such closures occur. There were no goodwill impairment charges
   recorded during fiscal 2013, 2012, and 2011.
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   Other Intangible Assets
   Other intangible assets consist primarily of trade names and trademarks with indefinite lives, which are tested for impairment
   annually during the third quarter of the fiscal year, or more frequently if events or changes in circumstances indicate that assets
   might be impaired. When evaluating other intangible assets for impairment, we may first perform a qualitative assessment to
   determine if the fair value of the intangible asset group is more likely than not greater than its carrying amount. If we do not
   perform the qualitative assessment or if the fair value of the intangible asset group is not more likely than not greater than its
   carrying amount, we calculate the implied estimated fair value of the intangible asset group. If the carrying amount of the
   intangible asset group exceeds the implied estimated fair value, an impairment charge to current operations is recorded to
   reduce the carrying value to the implied estimated fair value.
   Definite-lived intangible assets, which mainly consist of acquired rights, trade secrets, contract-based patents and copyrights,
   are amortized over their estimated useful lives, and are tested for impairment when facts and circumstances indicate that the
   carrying values may not be recoverable. There were no other intangible asset impairment charges recorded during fiscal 2013,
   2012, and 2011.
   Long-lived Assets
   When facts and circumstances indicate that the carrying values of long-lived assets may not be recoverable, we evaluate longlived assets for impairment. We first compare the carrying value of the asset to the asset’s estimated future cash flows
   (undiscounted). If the estimated future cash flows are less than the carrying value of the asset, we calculate an impairment loss
   based on the asset’s estimated fair value. The fair value of the assets is estimated using a discounted cash flow model based on
   forecasted future revenues and operating costs, using internal projections. Property, plant and equipment assets are grouped at
   the lowest level for which there is identifiable cash flows when assessing impairment. Cash flows for company-operated store
   assets are identified at the individual store level. Long-lived assets to be disposed of are reported at the lower of their carrying
   amount, or fair value less estimated costs to sell.
   We recognized net disposition and impairment losses of $30.1 million, $31.7 million, and $36.2 million in fiscal 2013, 2012,
   and 2011, respectively. The nature of the underlying asset that is impaired will determine which operating expense line the
   impairment charge is recorded in on the consolidated statements of earnings. For assets within our retail operations, net
   impairment and disposition losses are recorded in store operating expenses. For all other assets, these losses are recorded in
   cost of sales including occupancy costs, other operating expenses, or general and administrative expenses.
   Insurance Reserves
   We use a combination of insurance and self-insurance mechanisms, including a wholly owned captive insurance entity and
   participation in a reinsurance treaty, to provide for the potential liabilities for certain risks, including workers’ compensation,
   healthcare benefits, general liability, property insurance, and director and officers’ liability insurance. Liabilities associated with
   the risks that are retained by us are not discounted and are estimated, in part, by considering historical claims experience,
   demographic, exposure and severity factors, and other actuarial assumptions.
   Revenue Recognition
   Consolidated revenues are presented net of intercompany eliminations for wholly owned subsidiaries and investees controlled
   by us and for product sales to and royalty and other fees from licensees accounted for under the equity method. Additionally,
   consolidated revenues are recognized net of any discounts, returns, allowances and sales incentives, including coupon
   redemptions and rebates.
   Company-operated Stores Revenues
   Company-operated stores revenues are recognized when payment is tendered at the point of sale. Company-operated store
   revenues are reported net of sales, use or other transaction taxes that are collected from customers and remitted to taxing
   authorities.
   Licensed Stores Revenues
   Licensed stores revenues consist of product sales to licensed stores, as well as royalties and other fees paid by licensees to use
   the Starbucks brand. Sales of coffee, tea and related products are generally recognized upon shipment to licensees, depending
   on contract terms. Shipping charges billed to licensees are also recognized as revenue, and the related shipping costs are
   included in cost of sales including occupancy costs on the consolidated statements of earnings.
   Initial nonrefundable development fees for licensed stores are recognized upon substantial performance of services for new
   market business development activities, such as initial business, real estate and store development planning, as well as
   providing operational materials and functional training courses for opening new licensed retail markets. Additional store
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   licensing fees are recognized when new licensed stores are opened. Royalty revenues based upon a percentage of reported sales
   and other continuing fees, such as marketing and service fees, are recognized on a monthly basis when earned.
   CPG, Foodservice and Other Revenues
   CPG, foodservice and other revenues primarily consist of packaged coffee and tea as well as a variety of ready-to-drink
   beverages and single-serve coffee and tea products to grocery, warehouse club and specialty retail stores, sales to our national
   foodservice accounts, and revenues from sales of products to and license fee revenues from manufacturers that produce and
   market Starbucks and Seattle’s Best Coffee branded products through licensing agreements. Sales of coffee, tea, ready-to-drink
   beverages and related products to grocery and warehouse club stores are generally recognized when received by the customer
   or distributor, depending on contract terms. Revenues are recorded net of sales discounts given to customers for trade
   promotions and other incentives and for sales return allowances, which are determined based on historical patterns.
   Revenues from sales of products to manufacturers that produce and market Starbucks and Seattle’s Best Coffee branded
   products through licensing agreements are generally recognized when the product is received by the manufacturer or
   distributor. License fee revenues from manufacturers are based on a percentage of sales and are recognized on a monthly basis
   when earned. National foodservice account revenues are recognized when the product is received by the customer or
   distributor.
   Stored Value Cards
   Revenues from our stored value cards, primarily Starbucks Cards, are recognized when redeemed or when the likelihood of
   redemption, based on historical experience, is deemed to be remote. Outstanding customer balances are included in deferred
   revenue on the consolidated balance sheets. There are no expiration dates on our stored value cards, and we do not charge any
   service fees that cause a decrement to customer balances. While we will continue to honor all stored value cards presented for
   payment, management may determine the likelihood of redemption to be remote for certain cards due to long periods of
   inactivity. In these circumstances, if management also determines there is no requirement for remitting balances to government
   agencies under unclaimed property laws, card balances may then be recognized in the consolidated statements of earnings, in
   net interest income and other. For the fiscal years ended September 29, 2013, September 30, 2012, and October 2, 2011, income
   recognized on unredeemed stored value card balances was $33.0 million, $65.8 million, and $46.9 million, respectively.
   Customers in the US, Canada, the UK and Germany who register their Starbucks Card are automatically enrolled in the My
   Starbucks Rewards program and earn reward points (“Stars”) with each purchase. Reward program members receive various
   benefits depending on the number of Stars earned in a 12-month period. The value of Stars earned by our program members
   towards free product is included in deferred revenue and recorded as a reduction in revenue at the time the Stars are earned,
   based on the value of Stars that are projected to be redeemed.
   Marketing & Advertising
   Our annual marketing expenses include many components, one of which is advertising costs. We expense most advertising
   costs as they are incurred, except for certain production costs that are expensed the first time the advertising campaign takes
   place.
   Marketing expenses totaled $306.8 million, $277.9 million and $244.0 million in fiscal 2013, 2012, and 2011, respectively.
   Included in these costs were advertising expenses, which totaled $205.8 million, $182.4 million and $141.4 million in fiscal
   2013, 2012, and 2011, respectively.
   Store Preopening Expenses
   Costs incurred in connection with the start-up and promotion of new store openings are expensed as incurred.
   Operating Leases
   We lease retail stores, roasting, distribution and warehouse facilities, and office space under operating leases. Most lease
   agreements contain tenant improvement allowances, rent holidays, lease premiums, rent escalation clauses and/or contingent
   rent provisions. For purposes of recognizing incentives, premiums and minimum rental expenses on a straight-line basis over
   the terms of the leases, we use the date of initial possession to begin amortization, which is generally when we enter the space
   and begin to make improvements in preparation of intended use.
   For tenant improvement allowances and rent holidays, we record a deferred rent liability on the consolidated balance sheets and
   amortize the deferred rent over the terms of the leases as reductions to rent expense on the consolidated statements of earnings.
   For premiums paid upfront to enter a lease agreement, we record a deferred rent asset on the consolidated balance sheets and
   amortize the deferred rent over the terms of the leases as additional rent expense on the consolidated statements of earnings.
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   For scheduled rent escalation clauses during the lease terms or for rental payments commencing at a date other than the date of
   initial occupancy, we record minimum rental expenses on a straight-line basis over the terms of the leases on the consolidated
   statements of earnings.
   Certain leases provide for contingent rents, which are determined as a percentage of gross sales in excess of specified levels.
   We record a contingent rent liability on the consolidated balance sheets and the corresponding rent expense when specified
   levels have been achieved or when we determine that achieving the specified levels during the fiscal year is probable.
   When ceasing operations in company-operated stores under operating leases, in cases where the lease contract specifies a
   termination fee due to the landlord, we record such expense at the time written notice is given to the landlord. In cases where
   terms, including termination fees, are yet to be negotiated with the landlord, we will record the expense upon signing of an
   agreement with the landlord. In cases where the landlord does not allow us to prematurely exit the lease, but allows for
   subleasing, we estimate the fair value of any sublease income that can be generated from the location and expense the present
   value of the excess of remaining lease payments to the landlord over the projected sublease income at the cease-use date.
   Asset Retirement Obligations
   We recognize a liability for the fair value of required asset retirement obligations (“ARO”) when such obligations are incurred.
   Our AROs are primarily associated with leasehold improvements, which, at the end of a lease, we are contractually obligated to
   remove in order to comply with the lease agreement. At the inception of a lease with such conditions, we record an ARO
   liability and a corresponding capital asset in an amount equal to the estimated fair value of the obligation. The liability is
   estimated based on a number of assumptions requiring management’s judgment, including store closing costs, cost inflation
   rates and discount rates, and is accreted to its projected future value over time. The capitalized asset is depreciated using the
   same depreciation convention as leasehold improvement assets. Upon satisfaction of the ARO conditions, any difference
   between the recorded ARO liability and the actual retirement costs incurred is recognized as an operating gain or loss, included
   in cost of sales including occupancy costs, in the consolidated statements of earnings. As of September 29, 2013 and
   September 30, 2012, our net ARO asset included in property, plant and equipment was $3.8 million and $8.8 million,
   respectively, and our net ARO liability included in other long-term liabilities was $27.7 million and $42.6 million, respectively.
   Stock-based Compensation
   We maintain several equity incentive plans under which we may grant non-qualified stock options, incentive stock options,
   restricted stock, restricted stock units (“RSUs”) or stock appreciation rights to employees, non-employee directors and
   consultants. We also have an employee stock purchase plan (“ESPP”). RSUs issued by us are equivalent to nonvested shares
   under the applicable accounting guidance. We record stock-based compensation expense based on the fair value of stock
   awards at the grant date and recognize the expense over the related service period following a graded vesting expense schedule.
   For stock option awards we use the Black-Scholes-Merton option pricing model to measure fair value. For RSUs, fair value is
   calculated using the stock price at the date of grant.
   Foreign Currency Translation
   Our international operations generally use their local currency as their functional currency. Assets and liabilities are translated
   at exchange rates in effect at the balance sheet date. Income and expense accounts are translated at the average monthly
   exchange rates during the year. Resulting translation adjustments are recorded as a component of accumulated other
   comprehensive income on the consolidated balance sheets.
   Income Taxes
   We compute income taxes using the asset and liability method, under which deferred income taxes are provided for the
   temporary differences between the financial statement carrying amounts and the tax basis of our assets and liabilities. We
   routinely evaluate the likelihood of realizing the benefit of our deferred tax assets and may record a valuation allowance if,
   based on all available evidence, we determine that some portion of the tax benefit will not be realized. We recognize the tax
   benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by
   the relevant taxing authorities, based on the technical merits of our position. The tax benefits recognized in the financial
   statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being
   realized upon ultimate settlement. Starbucks recognizes interest and penalties related to income tax matters in income tax
   expense.
   Earnings per Share
   Basic earnings per share is computed based on the weighted average number of shares of common stock outstanding during the
   period. Diluted earnings per share is computed based on the weighted average number of shares of common stock and the
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   effect of dilutive potential common shares outstanding during the period, calculated using the treasury stock method. Dilutive
   potential common shares include outstanding stock options and RSUs. Performance-based RSUs are considered dilutive when
   the related performance criterion has been met.
   Common Stock Share Repurchases
   We may repurchase shares of Starbucks common stock under a program authorized by our Board of Directors, including
   pursuant to a contract, instruction or written plan meeting the requirements of Rule 10b5-1(c)(1) of the Securities Exchange Act
   of 1934. Under applicable Washington State law, shares repurchased are retired and not displayed separately as treasury stock
   on the financial statements. Instead, the par value of repurchased shares is deducted from common stock and the excess
   repurchase price over par value is deducted from additional paid-in capital and from retained earnings, once additional paid-in
   capital is depleted.
   Recent Accounting Pronouncements
   In July 2013, the FASB issued guidance on the financial statement presentation of an unrecognized tax benefit when a net
   operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This guidance requires the unrecognized tax
   benefit to be presented in the financial statements as a reduction to a deferred tax asset. When a deferred tax asset is not
   available, or the asset is not intended to be used for this purpose, an entity should present the unrecognized tax benefit in the
   financial statements as a liability and should not net the unrecognized tax benefit with a deferred tax asset. The guidance will
   become effective for us at the beginning of our first quarter of fiscal 2015. We do not expect the adoption of this guidance will
   have a material impact on our financial statements.
   In March 2013, the FASB issued guidance on a parent’s accounting for the cumulative translation adjustment upon
   derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. This
   guidance requires a parent to release any related cumulative translation adjustment into net income only if the sale or transfer
   results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had
   resided. The guidance will become effective for us at the beginning of our first quarter of fiscal 2015. We do not expect the
   adoption of this guidance will have a material impact on our financial statements.
   In February 2013, the FASB issued guidance that adds additional disclosure requirements for items reclassified out of
   accumulated other comprehensive income. This guidance requires the disclosure of significant amounts reclassified from each
   component of accumulated other comprehensive income and the income statement line items affected by the reclassification.
   The guidance will become effective for us at the beginning of our first quarter of fiscal 2014. The adoption of this guidance will
   result in the disclosure of reclassifications from accumulated other comprehensive income by component in the consolidated
   statements of comprehensive income either on the face of the consolidated statements of earnings or in the Notes.
   In January 2013, the FASB issued guidance clarifying the scope of disclosure requirements for offsetting assets and liabilities.
   The amended guidance limits the scope of balance sheet offsetting disclosures to derivatives, repurchase agreements, and
   securities lending transactions to the extent that they are offset in the financial statements or subject to an enforceable master
   netting arrangement or similar agreement. The guidance will become effective for us at the beginning of our first quarter of
   fiscal 2014. We do not expect the adoption of this guidance will have a material impact on our financial statements.
   In July 2012, the FASB issued guidance that revises the requirements around how entities test indefinite-lived intangible assets,
   other than goodwill, for impairment. The guidance allows companies to perform a qualitative assessment before calculating the
   fair value of the indefinite-lived intangible asset. If entities determine, on the basis of qualitative factors, that the fair value of
   the indefinite-lived intangible asset is more likely than not greater than the carrying amount, a quantitative calculation would
   not be needed. The guidance became effective for us at the beginning of our first quarter of fiscal 2013. The adoption of this
   guidance did not have a material impact on our financial statements.
   In June 2011, the FASB issued guidance that revises the manner in which entities present comprehensive income in their
   financial statements. The guidance requires entities to report the components of comprehensive income in either a single,
   continuous statement or two separate but consecutive statements. The guidance became effective for us at the beginning of our
   first quarter of fiscal 2013. In adopting this guidance, we added the consolidated statements of comprehensive income
   following our consolidated statements of earnings.
   Reclassifications
   Change in shared service allocations
   Effective at the beginning of fiscal 2012, we implemented a strategic realignment of our organizational structure designed to
   accelerate our global growth strategy. A president for each region, reporting directly to our chief executive officer, was
   appointed to oversee the company-operated retail business working closely with both the licensed and joint-venture business
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   partners in each market. The regional presidents were to also work closely with our Channel Development team to continue
   building out our brands and channels in each region.
   In connection with the changes to our organizational structure and reporting, we changed the accountability for, and reporting
   of, certain indirect overhead costs. Certain indirect merchandising, manufacturing costs and back-office shared service costs,
   which were previously allocated to segment level costs of sales and operating expenses, are now managed at a corporate level
   and are reported within unallocated corporate expenses. These expenses have therefore been removed from the segment level
   financial results. In order to conform prior period classifications with the new alignment, the historical consolidated financial
   statements have been recast with the following adjustments to previously reported amounts (in millions):
   Year Ended October 2, 2011
   As Filed Reclass As Adjusted
   Total net revenues $ 11,700.4 $ — $ 11,700.4
   Cost of sales including occupancy costs 4,949.3 (33.8) 4,915.5
   Store operating expenses 3,665.1 (70.2) 3,594.9
   Other operating expenses 402.0 (9.2) 392.8
   Depreciation and amortization expenses 523.3 — 523.3
   General and administrative expenses 636.1 113.2 749.3
   Total operating expenses 10,175.8 — 10,175.8
   Gain on sale of properties 30.2 — 30.2
   Income from equity investees 173.7 — 173.7
   Operating income $ 1,728.5 $ — $ 1,728.5
   There was no impact on consolidated net revenues, total operating expenses, operating income, or net earnings as a result of
   this change. Additional discussion regarding the change in our organizational structure and segment results is included at Note
   16.
   Effective in the second half of fiscal 2013, there were further changes to the leadership team which resulted in the promotion of
   two of these regional presidents to the role of group president. In these new roles, the group presidents have oversight of
   multiple operating segments. However, this did not change how we manage costs or report on our segment results and therefore
   did not have an impact on the historical presentation of our financial statements.
   Note 2: Acquisitions and Divestitures
   In the fourth quarter of fiscal 2013, we acquired a 49% equity method ownership interest in Starbucks Spain from our licensee
   partner Sigla S.A. (Grupo Vips) for approximately $33 million in cash.
   During the fourth quarter of 2013, we sold our 82% interest in Starbucks Coffee Chile S.A. to our joint venture partner Alsea,
   S.A.B. de C.V., converting this to a 100% licensed market, for a total purchase price of $68.6 million, which includes final
   working capital adjustments. This transaction resulted in a gain of $45.9 million, which was included in net interest income and
   other in the consolidated statements of earnings.
   In the third quarter of fiscal 2013, we acquired 100% ownership of a coffee farm in Costa Rica for $8.1 million in cash. The fair
   value of the net assets acquired on the acquisition date primarily comprises property, plant and equipment.
   On December 31, 2012, we acquired 100% of the outstanding shares of Teavana Holdings, Inc. (“Teavana”), a specialty retailer
   of premium loose-leaf teas, authentic artisanal teawares and other tea-related merchandise, to elevate our tea offerings as well
   as expand our domestic and global tea footprint. We acquired Teavana for $615.8 million in cash. Of the total cash paid, $12.2
   million was excluded from the purchase price allocation below as it represents contingent consideration receivable. At closing,
   we also repaid $35.2 million for long term debt outstanding on Teavana’s balance sheet, which was recognized separately from
   the business combination. The following table summarizes the allocation of the purchase price to the fair values of the assets
   acquired and liabilities assumed on the closing date (in millions):
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   REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   To the Board of Directors and Shareholders of Starbucks Corporation
   Seattle, Washington
   We have audited the accompanying consolidated balance sheets of Starbucks Corporation and subsidiaries (the “Company”) as
   of September 29, 2013 and September 30, 2012, and the related consolidated statements of earnings, comprehensive income,
   equity, and cash flows for each of the three years in the period ended September 29, 2013. These financial statements are the
   responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on
   our audits.
   We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
   Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
   statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
   disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
   made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
   reasonable basis for our opinion.
   In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Starbucks
   Corporation and subsidiaries as of September 29, 2013 and September 30, 2012, and the results of their operations and their
   cash flows for each of the three years in the period ended September 29, 2013, in conformity with accounting principles
   generally accepted in the United States of America.
   We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
   the Company’s internal control over financial reporting as of September 29, 2013, based on criteria established in Internal
   Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission
   and our report dated November 18, 2013 expressed an unqualified opinion on the Company’s internal control over financial
   reporting.
   /s/ Deloitte & Touche LLP
   Seattle, Washington
   November 18, 2013
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   Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
   Not applicable.
   Item 9A. Controls and Procedures
   Disclosure Controls and Procedures
   We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in
   our periodic reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is
   recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure
   controls and procedures are also designed to ensure that information required to be disclosed in the reports we file or submit
   under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and
   principal financial officer as appropriate, to allow timely decisions regarding required disclosure.
   During the fourth quarter of fiscal 2013, we carried out an evaluation, under the supervision and with the participation of our
   management, including our chief executive officer and our chief financial officer, of the effectiveness of the design and
   operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.
   Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and
   procedures were effective, as of the end of the period covered by this report (September 29, 2013).
   There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the
   Exchange Act) during our most recently completed fiscal quarter that materially affected or are reasonably likely to materially
   affect internal control over financial reporting.
   The certifications required by Section 302 of the Sarbanes-Oxley Act of 2002 are filed as exhibits 31.1 and 31.2, respectively,
   to this 10-K.
   Report of Management on Internal Control over Financial Reporting
   Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal
   control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting
   for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal
   control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our
   transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial
   statements; providing reasonable assurance that receipts and expenditures are made in accordance with management
   authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that
   could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its
   inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement
   of our financial statements would be prevented or detected.
   Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the
   framework and criteria established in Internal Control — Integrated Framework (the “1992 Framework”), issued by the
   Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation
   of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion
   on this evaluation. Based on this evaluation, management concluded that our internal control over financial reporting was
   effective as of September 29, 2013.
   Our internal control over financial reporting as of September 29, 2013, has been audited by Deloitte & Touche LLP, an
   independent registered public accounting firm, as stated in their report which is included herein.
   Starbucks Corporation 2013 10-K Form
   This document is authorized for use by Na’Aim Colbert, from 1/15/2020 to 5/15/2020, in the course:
   ACCT 2101, Augusta University.
   Any unauthorized use or reproduction of this document is strictly prohibited.
   79
   REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   To the Board of Directors and Shareholders of Starbucks Corporation
   Seattle, Washington
   We have audited the internal control over financial reporting of Starbucks Corporation and subsidiaries (the “Company”) as of
   September 29, 2013, based on criteria established in Internal Control — Integrated Framework (1992) issued by the
   Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for
   maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
   financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Our
   responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
   We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
   Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal
   control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of
   internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
   operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
   necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
   A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s
   principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s
   board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial
   reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
   principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
   maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of
   the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
   statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
   being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
   assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that
   could have a material effect on the financial statements.
   Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or
   improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a
   timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future
   periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of
   compliance with the policies or procedures may deteriorate.
   In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
   September 29, 2013, based on the criteria established in Internal Control — Integrated Framework (1992) issued by the
   Committee of Sponsoring Organizations of the Treadway Commission.
   We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
   the consolidated financial statements as of and for the fiscal year ended September 29, 2013, of the Company and our report
   dated November 18, 2013 expressed an unqualified opinion on those financial statements.
   /s/ Deloitte & Touche LLP
   Seattle, Washington
   November 18, 2013
   Starbucks Corporation 2013 10-K Form
   This document is authorized for use by Na’Aim Colbert, from 1/15/2020 to 5/15/2020, in the course:
   ACCT 2101, Augusta University.
   Any unauthorized use or reproduction of this document is strictly prohibited.

Sample Solution

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Select one of the following diets and provide a 1 day menu, including 3 meals and 2-3 snacks.

As a class, please also try to represent all four types of menu options listed below.

vegan
lacto-vegetarian
ovo-vegetarian
lacto-ovo-vegetarian
This needs your creativity, and you should not simply use a menu you find on the internet.

Try to develop a menu that you might actually eat. You do not need to write in sentences for this (you may list out the menu). Make sure you include all relevant details, including serving sizes.

Sample Solution

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