<PAGE 1>
- -----------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ___ to ___
Commission File Number 0-20322
-----------------------------
STARBUCKS CORPORATION
(Exact name of registrant as specified in its charter)
Washington 91-1325671
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2401 Utah Avenue South, Seattle, Washington 98134
(Address of principal executive office, including zip code)
(206) 447-1575
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2)
has been subject to such filing requirements for the
past 90 days.
YES [X] NO [ ]
As of February 1, 1997, there were 78,033,307 shares of
the registrant's Common Stock outstanding.
- --------------------------------------------------------
<PAGE 2>
STARBUCKS CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements. . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations. . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K.. . . 12
Signatures. . . . . . . . . . . . . . . . . . . 13
2
<PAGE 3>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except earnings per share)
<CAPTION>
Three Months Ended
December 29, December 31,
1996 1995
(13 Weeks) (13 Weeks)
- ---------------------------------------------------------------
<S> <C> <C>
Net revenues $239,142 $169,537
Cost of sales and related
occupancy costs 115,559 86,518
Store operating expenses 70,101 47,234
Other operating expenses 7,779 5,787
Depreciation and amortization 11,476 7,555
General and administrative
expenses 12,920 6,639
- ---------------------------------------------------------------
Operating income 21,307 15,804
Interest and other income 3,895 2,258
Interest expense (1,804) (2,250)
- ---------------------------------------------------------------
Earnings before income taxes 23,398 15,812
Income taxes 9,008 6,246
- ---------------------------------------------------------------
Net earnings $14,390 $9,566
===============================================================
Net earnings per common and
common equivalent share -
primary $0.18 $0.13
===============================================================
Net earnings per common and
common equivalent share -
fully diluted $0.18 $0.13
===============================================================
Weighted average common and
common equivalent shares
outstanding - primary 81,341 73,928
Weighted average common and
common equivalent shares
outstanding - fully diluted 88,439 79,415
See notes to consolidated financial statements
</TABLE>
3
<PAGE 4>
<TABLE>
STARBUCKS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
<CAPTION>
December 29, September 29,
1996 1996
- ---------------------------------------------------------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 127,754 $ 126,215
Short-term investments 121,522 103,221
Accounts and notes receivable 18,356 17,621
Inventories 63,410 83,370
Prepaid expenses and other
current assets 6,899 6,534
Deferred income taxes, net 2,943 2,580
- ---------------------------------------------------------------
Total current assets 340,884 339,541
Joint ventures and
equity investments 3,118 4,401
Property, plant and
equipment, net 394,140 369,477
Deposits and other assets 14,629 13,194
- ---------------------------------------------------------------
Total $ 752,771 $ 726,613
===============================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 29,827 $ 38,034
Checks drawn in excess of
bank balances 23,050 16,241
Accrued compensation and
related costs 15,744 15,001
Accrued interest payable 1,212 3,004
Other accrued expenses 29,847 26,068
Income taxes payable 6,609 2,743
- ---------------------------------------------------------------
Total current liabilities 106,289 101,091
Deferred income taxes, net 8,421 7,114
Capital lease obligation 1,411 1,728
Convertible subordinated
debentures 165,020 165,020
Shareholders' equity:
Common Stock, no par value
-- 150,000,000 shares
authorized; 77,983,963
and 77,583,868 shares,
respectively, issued
and outstanding 366,773 361,309
Retained earnings
including cumulative
translation adjustment
of $(316) and $(776),
respectively, and net
unrealized holding gain on
investments of $1,702 and
$2,046, respectively 104,857 90,351
- ---------------------------------------------------------------
Total shareholders' equity 471,630 451,660
- ---------------------------------------------------------------
Total $ 752,771 $ 726,613
===============================================================
See notes to consolidated financial statements
</TABLE>
4
<PAGE 5>
<TABLE>
STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
Three Months Ended
- ---------------------------------------------------------------
December 29, December 31,
1996 1995
(13 Weeks) (13 Weeks)
- ---------------------------------------------------------------
<S> <C> <C>
Operating activities:
Net earnings $ 14,390 $ 9,566
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 12,503 8,200
Provision for store remodels
and asset disposals 127 592
Deferred income taxes, net 1,159 1,249
Equity in losses of investees 1,318 734
Cash provided (used) by changes in
operating assets and liabilities:
Accounts and notes receivable (733) 335
Inventories 19,976 14,580
Prepaid expenses and other
current assets (362) 973
Accounts payable (8,104) (8,177)
Income taxes payable 3,860 4,048
Accrued compensation and
related costs 755 (3,076)
Accrued interest payable (1,792) 2,254
Other accrued expenses 3,693 2,921
- ---------------------------------------------------------------
Net cash provided by
operating activities 46,790 34,199
Investing activities:
Purchase of short-term investments (51,442) (49,098)
Sale of short-term investments 882 23,595
Maturity of short-term investments 31,700 12,499
Investments in joint ventures (35) (1,500)
Additions to property, plant
and equipment (36,893) (38,347)
Increase in deposits and
other assets (1,578) (316)
- ---------------------------------------------------------------
Net cash used by investing
activities (57,366) (53,167)
Financing activities:
Increase in cash provided by
checks drawn in excess of
bank balances 6,823 927
Proceeds from sale of
convertible debentures 0 165,020
Debt issuance costs 0 (4,019
Proceeds from sale of common
stock under employee stock
purchase plan 684 375
Exercise of stock options 2,868 587
Tax benefit from exercise of
non-qualified stock options 1,912 246
Payments on capital lease
obligation (217) (62)
--------------------------------------------------------------
Net cash provided by financing
activities 12,070 163,074
- ---------------------------------------------------------------
Balance, carried forward 1,494 144,106
(Continued on next page)
5
<PAGE 6>
Balance, brought forward 1,494 144,106
Effect of exchange rate changes
on cash and cash equivalents 45 (36)
- ---------------------------------------------------------------
Net increase in cash and
cash equivalents 1,539 144,070
Cash and cash equivalents:
Beginning of the period 126,215 20,944
- ---------------------------------------------------------------
End of the period $ 127,754 $ 165,014
================================================================
Supplemental cash flow information:
Cash paid during the period for:
Interest $ 3,555 $ 72
Income taxes 2,071 354
Noncash financing and investing
transactions:
Net unrealized holding(loss)gain
on investments (344) 28
Conversions of convertible debt into
common stock, net of unamortized
issue costs and accrued interest 0 418
See notes to consolidated financial statements
</TABLE>
6
<PAGE 7>
STARBUCKS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the 13 Weeks Ended December 29,1996 and
December 31,1995
(UNAUDITED)
NOTE 1. FINANCIAL STATEMENT PREPARATION:
The consolidated financial statements as of December 29,
1996 and September 29, 1996 and for the 13-week periods
ended December 29, 1996 and December 31, 1995 have been
prepared by Starbucks Corporation ("Starbucks" or the
"Company") pursuant to the rules and regulations of the
Securities and Exchange Commission (the "SEC"). The
financial information for the 13-week periods ended December
29, 1996 and December 31, 1995 is unaudited, but, in the
opinion of management, reflects all adjustments (consisting
only of normal recurring adjustments and accruals) necessary
for a fair presentation of the financial position, results
of operations and cash flows for the interim periods. The
financial information as of September 29, 1996 is derived
from the Company's consolidated financial statements and
notes thereto contained in the Company's Annual Report on
Form 10-K/A for the year ended September 29, 1996 and should
be read in conjunction with such financial statements.
Certain reclassifications of prior year's balances have been
made to conform to the current format.
The results of operations for the 13-week period ended
December 29,1996, are not necessarily indicative of the
results of operations that may be achieved for the entire
fiscal year ending September 28, 1997.
NOTE 2. EARNINGS PER SHARE:
The computation of primary earnings per share is based on
the weighted average number of shares outstanding during the
period plus dilutive common stock equivalents consisting
primarily of certain shares subject to stock options. The
computation of fully-diluted
earnings per share assumes conversion of the Company's
convertible subordinated debentures
using the "if converted" method, when such securities are
dilutive, with net income adjusted for the after-tax
interest expense and amortization of issuance costs
applicable to these debentures.
NOTE 3. INVENTORIES:
<TABLE>
<CAPTION>
Inventories consist of the following (in thousands):
December 29, September 29,
1996 1996
- ---------------------------------------------------------------
<S> <C> <C>
Coffee:
Unroasted $ 22,342 $ 37,127
Roasted 10,930 9,753
Other merchandise held for sale 23,661 29,518
Packaging and other supplies 6,477 6,972
- ---------------------------------------------------------------
$ 63,410 $ 83,370
===============================================================
</TABLE>
As of December 29, 1996, the Company had fixed price
purchase commitments for green coffee totaling
approximately $30 million.
7
<PAGE 8>
NOTE 4. PROPERTY, PLANT, AND EQUIPMENT:
<TABLE>
<CAPTION>
Property, plant, and equipment consist of the following
(in thousands):
December 29, September 29,
1996 1996
- ---------------------------------------------------------------
<S> <C> <C>
Land $ 3,602 $ 3,602
Building 8,338 8,338
Leasehold improvements 275,146 255,567
Roasting and store equipment 135,995 120,575
Furniture, fixtures and other 45,316 38,794
- ---------------------------------------------------------------
468,397 426,876
Less accumulated depreciation and
amortization (100,105) (88,003)
- ---------------------------------------------------------------
368,292 338,873
Construction in process 25,848 30,604
- ---------------------------------------------------------------
$ 394,140 $ 369,477
===============================================================
</TABLE>
8
<PAGE 9>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
During the 13-week period ending December 29, 1996,
Starbucks Corporation ("Starbucks" or the "Company")
derived approximately 86% of net revenues from its
Company-operated retail stores. The Company's specialty
sales operations, which include royalties, fees and
product sales to wholesale customers, licensees, and
joint ventures, account for approximately 10% of net
revenues. Direct response operations account for the
remainder of net revenues.
The Company's fiscal year ends on the Sunday closest to
September 30. Fiscal years ending on September 28, 1997
and September 29, 1996 each include 52 weeks.
Some of the following information, including anticipated
store openings, planned capital expenditures, and trends
in the Company's operations, are forward-looking
statements which are subject to risks and uncertainties.
Actual future results and trends may differ materially
depending on a variety of factors, including, but not
limited to, coffee and other raw materials prices and
availability, successful execution of internal
performance and expansion plans, impact of competition,
availability of financing, legal proceedings, and other
risks detailed herein and in the Company's Securities
and Exchange Commission filings, including the Company's
Annual Report on Form 10-K/A for the year ended
September 29, 1996.
RESULTS OF OPERATIONS -- FOR THE 13 WEEKS ENDED
DECEMBER 29, 1996, COMPARED TO THE 13 WEEKS ENDED
DECEMBER 31, 1995
Revenues. Net revenues for the 13 weeks ended December
29, 1996, increased 41% to $239.1 million from $169.5
million for the corresponding period in fiscal 1996.
Retail sales increased 41% to $205.3 million from $145.7
million, due to the opening of new retail stores
combined with an increase in comparable store sales
(sales from stores open 13 months or longer) of 3% for
the period. The increase in comparable store sales
resulted from an increase in the number of transactions.
The Company anticipates its expansion strategy of
clustering stores in existing markets, as well as
increased competition and other factors, may put
downward pressure on its comparable store sales growth
in future periods.
During the 13 weeks ended December 29, 1996, the Company
opened 93 stores and licensees opened five stores in
continental North America. The Company opened stores in
the new markets of Phoenix, Arizona, Salt Lake City,
Utah and Calgary, Alberta. The Company ended the period
with 1,022 Company-operated stores and 80 licensed
stores in continental North America.
Specialty sales revenues increased 51% to $25.0 million
for the 13 weeks ended December 29, 1996, compared to
$16.6 million for the corresponding period in fiscal
1996. The increase in specialty sales revenues was
broad-based across many industry categories, including
hotels, airlines, and multi-unit retailers. Direct
response revenues increased 22% to $8.8 million for the
13 weeks ended December 29, 1996, compared to $7.2
million for the corresponding period in fiscal 1996.
Cost and Expenses. Cost of sales and related occupancy
costs as a percentage of net revenues decreased to 48.3%
for the 13 weeks ended December 29, 1996, compared to
51.0% for the corresponding period in fiscal 1996. This
decrease was primarily the result of lower green coffee
costs as a percentage of net revenues and a shift in the
retail sales mix toward beverages, a higher margin
product category.
Store operating expenses as a percentage of retail sales
increased to 34.1% for the 13 weeks ended December 29,
1996, from 32.4% for the corresponding period in fiscal
1996. The 1.7% increase was due primarily to higher
store labor and higher regional overhead costs,
partially offset by lower advertising costs as a
percentage of retail sales. The increase in store labor
costs as a percentage of retail sales was due in part to
a shift in the retail sales mix towards the more labor-
intensive beverage category. The increase in regional
overhead costs as a percentage of retail sales was due
to higher costs associated with opening three new
markets during the 13-week period ending December 29,
1996 compared with the opening of no new markets during
the corresponding period in fiscal 1996.
Other operating expenses (those associated with the
Company's specialty sales and direct response
operations as well as the Company's share of profits
and losses of its joint ventures)as a percentage of net
revenues decreased to 3.3% for the 13 weeks ended
December 29, 1996, from 3.4% for the corresponding
period in
9
<PAGE 10>
fiscal 1996. Depreciation and amortization as a
percentage of net revenues increased 0.3% to 4.8%
for the 13 weeks ended December 29, 1996.
General and administrative expenses as a percentage of
net revenues were 5.4% for the 13 weeks ended December
29, 1996, compared to 3.9% for the same period in fiscal
1996. This increase was primarily due to higher payroll-
related costs and associated administrative occupancy
costs as a percentage of net revenues.
Operating Income. Operating income for the 13 weeks
ended December 29, 1996 increased to $21.3 million (8.9%
of net revenues) from $15.8 million (9.3% of net
revenues) for the corresponding period in fiscal 1996.
Operating income as a percentage of net revenues
decreased due to higher general and administrative and
store operating expenses as a percentage of net
revenues, partially offset by lower cost of goods sold
and related occupancy costs as a percentage of net
revenues.
Interest and Other Income. Interest and other income
for the 13 weeks ended December 29, 1996 was $3.9
million compared to $2.3 million for the corresponding
period in fiscal 1996. The increase was due primarily
to higher average investment balances.
Interest Expense. Interest expense for the 13 weeks ended
December 29, 1996 was $1.8 million compared to $2.3 million
for the corresponding period in fiscal 1996. The decrease
was due primarily to the conversion of the Company's 4-1/2%
Convertible Subordinated Debentures due 2003 to equity
during the third quarter of fiscal 1996.
Income Taxes. The Company's effective tax rate for the
13 weeks ended December 29, 1996 was 38.5% compared to
39.5% for the corresponding period in fiscal 1996. The
decrease was due primarily to changes in state tax
allocation and apportionment factors as well as the
implementation of tax-saving strategies. Management
expects the effective tax rate may increase as the
Company expands activities in higher tax jurisdictions.
LIQUIDITY AND CAPITAL RESOURCES
The Company ended the period with $249.3 million in
total cash and short-term investments and working
capital of $234.6 million. Cash provided by operating
activities totaled $46.8 million and resulted primarily
from net income before non-cash charges of $29.5 million
and a $20.0 million reduction in inventories.
Cash provided from financing activities for the first 13
weeks of fiscal 1997 totaled $12.1 million and included
an increase in cash provided by checks drawn in excess
of bank balances, the exercise of employee stock options
and the related income tax benefit available to the
Company upon exercise of such options, and cash
generated from the Company's employee stock purchase
plan. As options granted under the Company's stock
option plans vest, the Company will continue to receive
proceeds and a tax deduction as a result of option
exercises; however, neither the amounts nor the timing
thereof can be predicted.
Cash used by investing activities for the first 13 weeks
of fiscal 1997 totaled $57.4 million. This included
capital additions to property, plant, and equipment of
$36.9 million related to opening 93 new Company-operated
retail stores, remodeling certain existing stores,
purchasing roasting and packaging equipment for the
Company's roasting and distribution facilities,
enhancing information systems, and expanding existing
office space. The Company invested excess cash in short-
term investment-grade marketable debt securities.
Future cash requirements, other than normal operating
expenses, are expected to consist primarily of capital
expenditures related to the addition of new Company-
operated retail stores. The Company also anticipates
remodeling certain existing stores and incurring
additional expenditures for enhancing its production
capacity
and information systems. While there can be no assurance
that current expectations will be realized, and plans
are subject to change upon further review, management
expects capital expenditures for the remainder of fiscal
1997 to be approximately $135 million.
Although the Company had minimal cash requirements for
its joint ventures during the first 13 weeks of fiscal
1997, the Company currently anticipates additional cash
requirements of approximately $30 million for its
domestic joint ventures and
international expansion during the remainder of fiscal
1997. In addition, under the
10
<PAGE 11>
terms of the Company's corporate office lease, the
Company has agreed to provide financing to the building
owner to be used exclusively for facilities and
leasehold development costs to accommodate the Company.
During the first 13 weeks of fiscal 1997, the Company
provided approximately $1.2 million under this
agreement, bringing the total amount outstanding under
this agreement to $5.8 million as of December 29, 1996.
During the remainder of fiscal 1997, the Company intends
to provide additional funds of approximately $2.8
million under this agreement. The maximum amount
available under the agreement is $17 million. Any funds
advanced by the Company will be repaid with interest
over a term not to exceed 20 years.
Management believes that existing cash and investments
plus cash generated from operations should be sufficient
to finance capital requirements for its core businesses
through fiscal 1997. Any new joint ventures, other new
business opportunities, or store expansion rates
substantially in excess of that presently planned may
require outside funding.
COFFEE PRICES, AVAILABILITY, AND GENERAL RISK CONDITIONS
Green coffee commodity prices are subject to substantial
price fluctuations, generally a result of reports of
adverse growing conditions in certain coffee-producing
countries or other supply-related concerns. In
addition, green coffee prices have been affected in the
past, and may be affected in the future, by the actions
of certain organizations and associations, such as the
International Coffee Organization and the Association of
Coffee Producing Countries, which have historically
attempted to influence commodity prices of green coffee
through agreement establishing export quotas or
restricting coffee supplies worldwide. As a result of
Brazilian frosts during 1994 and the ensuing green
coffee commodity price increases, the Company had
acquired higher cost coffees which negatively impacted
gross margins during fiscal 1996. As of December 29,
1996, the Company had sold most of these higher-cost
coffees.
The Company enters into fixed price purchase commitments
in order to secure an adequate supply of quality green
coffee and fix costs for future periods. As of December
29, 1996 the Company had approximately $30 million in
fixed price purchase commitments which, together with
existing inventory, is expected to provide an adequate
supply of green coffee for a substantial portion of
fiscal 1997. The Company believes, based on
relationships established with its suppliers in the
past, that the risk of non-delivery on such purchase
commitments is remote.
In addition to fluctuating coffee prices, management
believes that the Company's future results of operations
and earnings could be significantly impacted by other
factors such as increased competition within the
specialty coffee industry, the Company's ability to find
optimal store locations at favorable lease rates, the
increased costs associated with opening and operating
retail stores in new markets, the Company's continued
ability to hire, train and retain qualified personnel,
and the Company's ability to obtain adequate capital to
finance its planned expansion.
Due to the factors noted above, the Company's future
earnings and the prices of the Company's securities may
be subject to volatility. There can be no assurance that
the Company will continue to generate increases in net
revenues and net earnings, or growth in comparable store
sales. Any variance in the factors noted above, or other
areas, from what is expected by investors could have an
immediate and adverse effect on the trading prices of
the Company's securities.
SEASONALITY AND QUARTERLY RESULTS
The Company's business is subject to seasonal
fluctuations. Significant portions of the Company's net
revenues and profits are realized during the first
quarter of the Company's fiscal year, which includes the
December holiday season. Quarterly results are affected
by the timing of the opening of new stores, and the
Company's rapid growth may conceal the impact of other
seasonal influences. Because of the seasonality of the
Company's business, results for any quarter are not
necessarily indicative of the results that may be
achieved for the full fiscal year.
11
<PAGE 12>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a party to various legal proceedings
arising in the ordinary course of its business, but is
not currently a party to any legal proceeding that the
Company believes would have a material adverse effect on
the financial position or results of operations of the
Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description
11 Statement re: computation of per share
earnings
27 Financial data schedule
(b) Forms 8-K:
No reports on Form 8-K were filed by the Company during the
13-week period ended December 29, 1996
12
<PAGE 13>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto
duly authorized.
STARBUCKS CORPORATION
Dated: February 10, 1997 By: /s/ Michael Casey
----------------------
Michael Casey
senior vice president and
and chief financial officer
Signing on behalf of the
registrant and as principal
financial officer
13
<PAGE 14>
<TABLE>
STARBUCKS CORPORATION
---------------------
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<CAPTION>
Three Months Ended
December 29, December 31,
1996 1995
(13 Weeks) (13 Weeks)
- ---------------------------------------------------------------
NET EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE CALCULATION - PRIMARY:
<S> <C> <C>
- ---------------------------------------------------------------
Net earnings $14,390 $9,566
===============================================================
Weighted average shares outstanding calculation - primary:
Weighted average number of
common shares outstanding 77,725 71,115
Dilutive effect of outstanding
common stock options 3,616 2,813
- ---------------------------------------------------------------
Weighted average common and
common equivalent shares -
primary 81,341 73,928
===============================================================
Net earnings per common and common
equivalent share - primary $ 0.18 $ 0.13
===============================================================
NET EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE CALCULATION -
FULLY DILUTED
Net earnings calculation:
Net earnings $14,390 $9,566
Add after tax interest expense
on debentures 1,075 547
Add after tax amortization
of issuance costs related to
debentures 89 39
- ---------------------------------------------------------------
Net earnings -
fully diluted $15,554 $10,152
===============================================================
Weighted average shares outstanding calculation -
fully diluted:
Weighted average number of
common shares outstanding 77,725 71,115
Dilutive effect of outstanding
common stock options 3,616 2,943
Assuming conversion of
debentures 7,098 5,357
- ---------------------------------------------------------------
Weighted average common and
common equivalent shares
outstanding - fully diluted 88,439 79,415
===============================================================
Net earnings per common and
common equivalent share -
fully diluted $ 0.18 $ 0.13
===============================================================
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STARBUCKS CORPORATION FIRST QUARTER FISCAL 1997 10-Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-28-1997
<PERIOD-START> SEP-30-1996
<PERIOD-END> DEC-29-1996
<CASH> 127,754
<SECURITIES> 121,522
<RECEIVABLES> 18,356
<ALLOWANCES> 180
<INVENTORY> 63,410
<CURRENT-ASSETS> 340,884
<PP&E> 494,245
<DEPRECIATION> 100,105
<TOTAL-ASSETS> 752,771
<CURRENT-LIABILITIES> 106,289
<BONDS> 165,020
0
0
<COMMON> 366,773
<OTHER-SE> 104,857
<TOTAL-LIABILITY-AND-EQUITY> 752,771
<SALES> 239,142
<TOTAL-REVENUES> 239,142
<CGS> 115,559
<TOTAL-COSTS> 115,559
<OTHER-EXPENSES> 102,276
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,804
<INCOME-PRETAX> 23,398
<INCOME-TAX> 9,008
<INCOME-CONTINUING> 14,390
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,390
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
