STARBUCKS CORP, 10-K/A, 1997-04-24

STARBUCKS CORP
10-K/A, 1997-04-24
EATING & DRINKING PLACES

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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-K/A

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934

For the Fiscal Year Ended September 29, 1996 or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

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 offices) (Zip Code)

Registrant's telephone number, including area code: (206) 447-1575

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange
Title of each class on which registered
- ------------------------------------------------------------
None N/A

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, NO PAR VALUE
4 1/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2002
(Title of Class)

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 [ ]
<PAGE> 2
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value of the voting stock held by non- affiliates of the
registrant, based upon the closing sale price of the registrant's Common Stock
on December 1, 1996, as reported on the NASDAQ National Market System, was
$2,598,426,062.

As of December 1, 1996, there were 77,786,819 shares of the registrant's Common
Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Annual Report to Shareholders for the fiscal year
ended September 29, 1996 have been incorporated by reference into Parts II and
IV of this Form 10-K. Portions of the definitive Proxy Statement for the
registrant's Annual Meeting of Shareholders to be held on March 6, 1997 have
been incorporated by reference into Part III of this report.

STARBUCKS CORPORATION

ANNUAL REPORT ON FORM 10-K (as amended)

TABLE OF CONTENTS

Part I

PAGE

Item 1. Business . . . . . . . . . . . . . . . . . . . 1

Item 2. Properties . . . . . . . . . . . . . . . . . . 5

Item 3. Legal Proceedings . . . . . . . . . . . . . . .6

Item 4. Submission of Matters
to a Vote of Security Holders . . . . . . . . .6

Part II

Item 5. Market for Registrant's Common
Equity and Related Stockholder Matters . . . . 7

Item 6. Selected Financial Data . . . . . . . . . . . .7

Item 7. Management's Discussion and
Analysis of Financial Condition
and Results of Operations . . . . . . . . . . .7

Item 8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . . 7

Item 9. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosures . . . . . . . . . . .7

Part III

Item 10. Directors and Executive
Officers of the Registrant . . . . . . . . . .8

Item 11. Executive Compensation . . . . . . . . . . . .10

Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . .10

Item 13. Certain Relationships and
Related Transactions . . . . . . . . . . . . .10

Part IV

Item 14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K . . . . . . 11
<PAGE> 3
PART I

Item 1. Business

GENERAL. Starbucks Corporation and its subsidiaries ("Starbucks" or the
"Company") purchases and roasts high-quality whole bean coffees and sells them,
along with fresh, rich-brewed coffees and Italian-style espresso beverages,
primarily through Company-operated and licensed retail stores. The Company's
objective is to establish Starbucks as the most recognized and respected brand
of coffee in the world. To achieve this goal, the Company plans to continue to
rapidly expand its retail operations, grow its direct response and specialty
sales operations, and selectively pursue other opportunities to leverage and
grow the Starbucks brand through the introduction of new products and the
development of new distribution channels.

Starbucks is committed to selling only the finest whole bean coffees and coffee
beverages. To ensure compliance with its rigorous standards, Starbucks is
vertically integrated, controlling its coffee sourcing, roasting, and
distribution through its Company-operated retail stores. The Company purchases
green coffee beans for its many blends and varietals from coffee-producing
regions throughout the world and custom roasts them to its exacting standards.

Company-operated retail stores accounted for approximately 86% of net revenues
during the fiscal year ended September 29, 1996. Starbucks retail objective is
to become the leading retailer and brand of coffee in each of its target markets
by selling the finest quality coffees and related products, and by providing a
superior level of customer service, thereby building a high degree of customer
loyalty. Of the 1,006 Starbucks stores open on September 29, 1996, 929 were
Company-operated retail stores located in 21 states, the District of Columbia,
British Columbia and Ontario, Canada. Licensees operated 75 stores in North
America. In addition, the first two Starbucks stores outside North America
opened in Tokyo, Japan during the fourth quarter of fiscal 1996.

In addition to its retail operations, the Company sells primarily whole bean
coffees through a specialty sales group and a national direct response business.
The Company has also entered into joint ventures with the Pepsi-Cola Company, a
division of PepsiCo, Inc. ("Pepsi"), to develop ready-to-drink coffee-based
products and with Dreyer's Grand Ice Cream, Inc. ("Dreyer's") to develop premium
coffee ice cream products.

RETAIL STORES. Starbucks stores are typically clustered in high- traffic,
high-visibility locations in each market. Because the Company has the ability to
vary the size of its stores, Starbucks stores are located in a variety of
settings, including office buildings, downtown and suburban retail centers, and
kiosks located generally in building lobbies, airport terminals, supermarket
foyers, and university campuses. While the Company selectively locates stores in
suburban malls, its focus is on stores that are convenient for pedestrian street
traffic.

The Company combines its merchandising strategy with its marketing programs to
create and reinforce a distinctive brand image for its coffees. The Company's
merchandising strategy is reflected in its product mix, product pricing, and
sale and educational materials.

All Starbucks stores offer a choice of regular or decaffeinated coffee
beverages, changing "coffees of the day," and a broad selection of Italian-style
espresso beverages, as well as distinctively packaged, freshly roasted whole
bean coffees, a selection of fresh pastries and other food items, sodas, juices,
tea, and coffee-related hardware products and equipment. During fiscal 1996, the
Company's retail sales mix by product type was approximately 61% coffee
beverages, 15% whole bean coffees, 16% food items, and 8% coffee-related
hardware products and equipment.

The product mix in each store varies and is dependent on the size of the store
and its location. Larger stores carry a revolving selection that can include any
of the Company's whole bean coffees and a range of coffee-related products,
<PAGE> 4
including exclusive, high-quality coffee-making equipment as well as accessories
bearing various Company trademarks, such as coffee mugs, coffee grinders,
storage containers, coffee filters, and finely packaged gourmet food products.
The smaller stores and kiosks typically sell a full line of coffee beverages, a
limited selection of whole bean coffees and a few hardware items, most notably
logo mugs and small equipment items.

The Company and its licensees intend to open at least 325 new stores in North
America during fiscal 1997. The Company plans to enter at least three major new
markets in North America during fiscal 1997, including Phoenix, Arizona, and
Miami, Florida. For information on expansion plans outside of continental North
America, see discussion below under International.

OTHER DISTRIBUTION CHANNELS. Starbucks retail expansion strategy is to increase
its market share in existing markets and to open stores in new markets where it
believes it can become the leading specialty coffee retailer. In addition, the
Company will continue to expand its specialty sales and direct response
operations, and will selectively pursue other distribution channels.

Specialty Sales. Specialty Sales includes distribution to restaurants and a wide
range of institutional customers, including airlines, hotels, wholesale
warehouses, business offices, multi-unit retailers, universities, hospitals, and
country clubs. Specialty sales revenues (which for financial reporting purposes
include royalties and fees from licensees as well as sales of products to
licensees and joint ventures) accounted for approximately 11% of the Company's
net revenues during the fiscal year ended September 29, 1996. Starbucks is
committed to expanding its specialty sales operations. During fiscal 1996, the
Company entered into an alliance with U.S. Office Products to serve Starbucks
coffee in the workplace environment.

Licensed Stores. Starbucks has entered into a development agreement that allows
Host International, Inc. ("Host") to operate Starbucks retail stores in airport
locations. Starbucks receives a license fee and a royalty from Host and sells
coffee to Host for resale in the licensed airport stores. All licensed airport
stores operated by Host must follow Starbucks detailed store operating
procedures and all Host managers and employees who work in the licensed airport
stores must receive the same core training given to Starbucks store managers and
employees. During fiscal 1996, the Company entered into a licensing arrangement
with ARAMARK Food and Services Group, Inc. ("ARAMARK") to put licensed Starbucks
operations at various locations operated by ARAMARK. During the fiscal year
ended September 29, 1996, sales to and royalties from licensees were
approximately one percent of the Company's net revenues.

Starbucks does not currently intend to turn over operational control of
Starbucks stores in North America in any environment in which it can control
retail space; however, in limited situations where a master concessionaire
controls the retail space, Starbucks may consider licensing its operations.

Direct Response. The Company publishes a mail order catalog that is distributed
approximately six times a year and which offers its coffees, certain food items,
and select coffee-making equipment and accessories. The Company ships products
to customers located in all 50 states and many foreign countries. Direct
Response also operates an electronic store on America Online, allowing customers
to order their favorite coffees and products. During fiscal 1996, Direct
Response accounted for approximately three percent of the Company's net
revenues. Management believes its direct response operations will continue to
support its retail store expansion into new markets and reinforce brand
recognition in existing markets.

Joint Ventures. The Company has entered into a joint venture agreement with
Pepsi, to develop and distribute ready-to-drink coffee-based products. The joint
venture agreement contemplates the distribution of products within the United
States and Canada by Pepsi-owned and independently licensed bottlers and other
distributors or retailers. In May 1996, the joint venture introduced bottled
Frappuccino (TM) coffee drink in supermarkets and other retail points of
distribution throughout the West Coast. Frappuccino (TM) coffee drink is
currently available in two flavors - coffee and mocha. Based on trade and
consumer reception of this product, the joint venture is planning wider
distribution. The joint venture concluded test marketing of
<PAGE> 5
MAZAGRAN (TM), a lightly carbonated coffee drink, and currently does not have
plans to market this product nationwide.

On October 31, 1995, the Company announced an agreement to form a joint venture
with Dreyer's to develop and distribute Starbucks premium coffee ice creams.
During fiscal 1996, the joint venture introduced five flavors of Starbucks Ice
Cream, available in grocery stores throughout the United States.

International. The Company considers locations outside of continental North
America to be part of its international operations. On October 25, 1995, the
Company signed an agreement with SAZABY Inc., a Japanese retailer and
restaurateur, to form a joint venture which will primarily develop Starbucks
retail stores in Japan. The joint venture opened its first two stores in Tokyo,
Japan during fiscal 1996. The joint venture currently anticipates opening ten to
twelve additional stores in Japan during fiscal 1997.

On August 3, 1996, the Company signed a joint venture partnership agreement with
a Hawaii-based management team formed by the MacNaughton Group, to develop
Starbucks locations in Hawaii. The joint venture opened the first Starbucks
retail location in Hawaii during the first quarter of fiscal 1997.

The Company also signed an agreement with a subsidiary of Bonvests Holding
Limited ("Bonvests") on August 8, 1996, that makes them a licensee for Starbucks
retail locations in Singapore. The first retail location in Singapore opened
during the first quarter of fiscal 1997. The Company and Bonvests currently
anticipate opening five additional stores in Singapore in fiscal 1997.

PRODUCT SUPPLY. The Company depends upon both its outside brokers and its direct
contacts with exporters in countries of origin for the supply of its primary raw
material, green coffee. Coffee is the world's second largest traded commodity
and its supply and price are subject to volatility. Although most coffee trades
in the commodity market, coffee of the quality sought by the Company tends to
trade on a negotiated basis at a substantial premium above commodity coffee
pricing, depending upon the supply and demand at the time of purchase. Supply
and price can be affected by multiple factors in the producing countries,
including weather, political and economic conditions. 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 agreements establishing export quotas or restricting coffee supplies
worldwide.

Green coffee commodity prices are subject to substantial price fluctuations,
generally a result of reports of adverse growing conditions in certain
coffee-producing countries. Due to green coffee commodity price increases, the
Company effected sales price increases during fiscal 1994 and 1995 to mitigate
the effects of anticipated increases in its cost of goods sold. Because the
Company had established fixed purchase prices for some of its supply of green
coffees, the Company's margins were favorably impacted by such sales price
increases during much of fiscal 1995. During the latter part of fiscal 1995 and
throughout fiscal 1996, gross margins were negatively impacted relative to the
prior year by the sell-through of higher-cost coffee inventories. The Company
expects to have sold most of these higher-cost coffees by the end of the first
quarter of fiscal 1997.

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
September 29, 1996, the Company had approximately $47 million in fixed price
purchase commitments which, together with existing inventory, is expected to
provide an adequate supply of green coffee well into 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, the Company may from time to time purchase coffee futures contracts
to provide additional price protection when it is not able to enter into fixed
price purchase commitments. There can be no assurance that these activities will
successfully protect the Company against the risks of increases in coffee prices
or that they will not
<PAGE> 6
result in the Company having to pay substantially more for its supply than it
would have been required to pay absent such activities. The Company did not
engage in any hedging activities or futures contracts in fiscal 1996.

Specialty foods, such as pastries, are generally purchased from local sources
based on quality and price. Items bearing the Company's logos and trademarks are
purchased under contract. Hardware items, such as coffee makers, are generally
purchased directly from manufacturers.

COMPETITION. The Company's whole bean coffees compete directly against specialty
coffees sold at retail through supermarkets, specialty retailers, and a growing
number of specialty coffee stores. The Company's coffee beverages compete
directly against all restaurant and beverage outlets that serve coffee and a
growing number of espresso stands, carts, and stores. Both the Company's whole
bean coffees and its coffee beverages compete indirectly against all other
coffees on the market. The Company believes that its customers choose among
retailers primarily on the basis of quality and convenience, and, to a lesser
extent, on price.

Management believes that supermarkets pose the greatest competitive challenge in
the whole bean coffee market, in part because supermarkets offer customers the
convenience of not having to make a separate trip to the Company's stores. A
number of nationwide coffee manufacturers, such as Kraft General Foods, Procter
& Gamble, and Nestle, are distributing premium coffee products in supermarkets,
which products may serve as substitutes for the Company's coffees. Regional
specialty coffee companies also sell whole bean coffees in supermarkets.

In addition, the Company competes for whole bean coffee sales with franchise
operators and independent specialty coffee stores in both the United States and
Canada. There are a number of competing specialty coffee retailers, such as
Second Cup, a Canadian franchisor with stores primarily in Canada. Second Cup
also owns Gloria Jeans, a franchisor of specialty coffee stores, with locations
primarily in malls throughout the United States. In addition, in virtually every
major metropolitan area where Starbucks operates and expects to expand, there
are local or regional competitors with substantial market presence in the
specialty coffee business.

The Company's primary competitors for beverage sales are restaurants, shops, and
street carts. In almost all markets in which the Company does business there has
been a significant increase in competition in the specialty coffee beverage
business and management expects this trend to continue. Although competition in
the beverage market is currently fragmented, a major competitor with
substantially greater financial, marketing and operating resources than the
Company could enter this market at any time and compete directly against the
Company.

In addition, the Company competes with established suppliers in its specialty
sales and direct response businesses, many of whom have greater financial and
marketing resources than the Company. The Company also expects that competition
for suitable sites for new stores to support the Company's planned growth will
be intense. The Company competes against both restaurants and other specialty
retailers for these sites, and there can be no assurance that management will be
able to continue to secure adequate sites at acceptable rent levels. The Company
also competes for qualified personnel to operate its retail stores.

PATENTS, TRADEMARKS AND COPYRIGHTS. The Company owns and/or has applied to
register numerous trademarks and service marks in the United States, Canada and
in some sixty countries throughout the world. One of the Company's subsidiaries,
The Coffee Connection, Inc. ("The Coffee Connection"), also owns a number of
trademarks and service marks in the United States, Canada and elsewhere,
including registrations for "The Coffee Connection" name and logo. Some of the
Company's trademarks, including "Starbucks," the Starbucks logo and
"Frappuccino," are of material importance to the Company. Trademarks are
generally valid as long as they are in use and/or their registrations are
properly maintained, and they have not been found to have become generic.
Trademark registrations can generally be renewed indefinitely so long as the
marks are in use.
<PAGE> 7
The Company owns numerous copyrights for its product packaging, promotional
materials, in-store graphics, and training materials, among other things. The
Company also holds patents on certain products and systems. While valuable,
individual copyrights and patents currently held by the Company are not viewed
as material to the Company's business.

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. In addition, 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.

EMPLOYEES. As of September 29, 1996, the Company employed approximately 16,600
individuals, including approximately 15,000 in retail stores and regional
offices, and the remainder in the Company's administrative, sales, real estate,
direct response, roasting, and warehousing operations. As of September 29, 1996,
five of the Company's stores (out of a total of 929 Company-operated stores in
North America), located in Vancouver, British Columbia, were unionized.
Starbucks has never experienced a strike or work stoppage, and the Company
believes that its relations with its employees are excellent.

FORWARD-LOOKING STATEMENTS. Some of the information in this Form 10-K, 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 material prices and availability, successful execution of internal
performance and expansion plans, impact of competition, availability of
financing, legal proceedings, and other risks detailed in the Company's
Securities and Exchange Commission filings and the documents incorporated by
reference therein.

Item 2. Properties

Starbucks currently operates three roasting and distribution facilities: two in
the Seattle area, and one in East Manchester Township, York County,
Pennsylvania. In the Seattle area, the Company leases approximately 92,000
square feet in one building located in Seattle, Washington, pursuant to a lease
extendible through 2009 (the "Seattle Plant"), and owns an additional roasting
plant and distribution facility of approximately 305,000 square feet located in
Kent, Washington. The Company has a lease agreement with York County Industrial
Development Corporation for a roasting and distribution facility (the "York
Plant"), providing for approximately 365,000 square feet initially. The lease
has a 15 year term and the Company has an option to purchase the land and
building within five years of the date of occupancy. Such option to purchase
also provides that the Company may purchase, within seven years of occupancy,
additional land adjacent to the York Plant which would expand it to 1,000,000
square feet. The Company is party to a letter of intent and a commitment letter
which provide that in the event that the Company exercises its option to
purchase the York Plant, the Company will have the right to assume loans
incurred in connection with the development of it. The Company has determined
that it no longer needs its much-smaller roasting plant located in Boston (which
formerly operated as the roasting plant for The Coffee Connection) and has
sublet it to a third party. The lease on this facility runs through 2002.

The Company leases approximately 302,000 square feet used for administrative
offices in Seattle, Washington, and has options to lease approximately 298,000
additional square feet. The Company owns 2.36 acres (102,800 square feet) of
undeveloped land adjacent to the Seattle Plant, which is currently used for
parking.

As of September 29, 1996, Starbucks operated a total of 929 retail stores. All
Starbucks stores are located in leased premises. The Company also leases office
space for regional, district and other administrative offices.
<PAGE> 8
Item 3. 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
which the Company believes will have a material adverse effect on the financial
position or results of operations of the Company.

Item 4. Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of security holders during the fourth
quarter of fiscal year 1996.
<PAGE> 9
PART II

Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters

The information required by this item is incorporated herein by reference to the
Company's 1996 Annual Report to Shareholders, and is filed herein by reference
to Exhibit 13.1 to the Company's Form 10-K/A for the fiscal year ended
September 29, 1996 filed with the SEC on February 4, 1997.

Item 6. Selected Financial Data

The information required by this item is incorporated herein by reference to the
Company's 1996 Annual Report to Shareholders, and is filed herein by reference
to Exhibit 13.2 to the Company's Form 10-K/A for the fiscal year ended
September 29, 1996 filed with the SEC on February 4, 1997.

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The information required by this item is incorporated herein by reference to the
Company's 1996 Annual Report to Shareholders, and is filed herein by reference
to Exhibit 13.3 to the Company's Form 10-K/A for the fiscal year ended
September 29, 1996 filed with the SEC on February 4, 1997.

Item 8. Financial Statements and Supplementary Data

The information required by this item is incorporated herein by reference to the
Company's 1996 Annual Report to Shareholders, and is filed herein as Exhibits
13.5 and 13.6 and by reference to Exhibit 13.4 to the Company's Form 10-K/A
for the fiscal year ended September 29, 1996 filed with the SEC on February 4,
1997.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures

None.
<PAGE> 10
PART III

Item 10. Directors and Executive Officers of the Registrant

Information concerning the directors of the Company is incorporated herein by
reference to pages 3 through 5 of the definitive Proxy Statement for the
Company's Annual Meeting of Shareholders to be held on March 6, 1997. The
required information concerning compliance with Section 16(a) of the Securities
Exchange Act of 1934, as amended, is incorporated herein by reference to page 12
of the definitive Proxy Statement for the Company's Annual Meeting of
Shareholders to be held on March 6, 1997, which will be filed within 120 days
after the end of the Company's fiscal year.

The executive officers of the Company, each of whom serves a one year term and
until his or her successor is elected and qualified, are as follows:

<TABLE>
<CAPTION>
Executive
Name Age Position Officer Since
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Howard Schultz 43 chairman of the
board and chief
executive officer 1985

Orin Smith 54 director, president
and chief operating
officer 1990

Howard Behar 52 director and president,
Starbucks International 1989

Scott Bedbury 39 senior vice president,
marketing 1995

Michael Casey 51 senior vice president
and chief financial
officer 1995

Vincent Eades 37 senior vice president,
specialty sales and
marketing 1995

Carol Eastin 55 senior vice president,
management information
systems 1993

Sharon E. Elliott 45 senior vice president,
human resources 1994

E. R. (Ted) Garcia 49 senior vice president,
supply chain operations 1995

Wanda Herndon 44 senior vice president,
communications and
public affairs 1996

Shelley B. Lanza 40 senior vice president,
law & corporate affairs
and general counsel 1995

David M. Olsen 50 senior vice president,
coffee 1991

John A. Rodgers 65 senior vice president,
new business development 1991

Arthur I. Rubinfeld 43 senior vice president,
store development 1992

Deidra Wager 41 senior vice president,
retail operations 1993
</TABLE>
<PAGE> 11
There are no family relationships between any directors or executive officers of
the Company.

Howard Schultz is the founder of the Company and has been chairman of the Board
and chief executive officer since its inception in 1985. From 1985 to June 1994,
Mr. Schultz was also the Company's president. From September 1982 to December
1985, Mr. Schultz was the director of retail operations and marketing for
Starbucks Coffee Company, a predecessor to the Company; and from January 1986 to
July 1987, he was the chairman of the Board, chief executive officer, and
president of Il Giornale Coffee Company, a predecessor to the Company.

Orin Smith joined the Company in 1990 and has served as president and chief
operating officer of the Company since June 1994. Prior to June 1994, Mr. Smith
served as the Company's vice president and chief financial officer and later, as
its executive vice president and chief financial officer.

Howard Behar joined the Company in 1989 and has served as president of Starbucks
International since June 1994. From February 1993 to June 1994, Mr. Behar served
as the Company's executive vice president, sales and operations. From February
1991 to February 1993, Mr. Behar served as senior vice president, retail
operations of the Company and from August 1989 to January 1991, he served as the
Company's vice president, retail stores.

Scott Bedbury joined Starbucks in June 1995 as senior vice president, marketing.
From November 1987 to October 1994, Mr. Bedbury held the position of worldwide
director of advertising for Nike, Inc. Prior to joining Nike, Inc., Mr. Bedbury
was vice president for Cole and Weber Advertising in Seattle, Washington, which
is an affiliate of Ogilvy and Mather.

Michael Casey joined Starbucks in 1995 as senior vice president and chief
financial officer. Prior to joining Starbucks, Mr. Casey served as executive
vice president and chief financial officer of Family Restaurants, Inc. from its
inception in 1986. During his tenure there, he also served as a director from
1986 to 1993, and as president of its El Torito Restaurants, Inc. division from
1988 to 1993.

Vincent Eades joined Starbucks in April 1995 as senior vice president, specialty
sales and marketing. From February 1993 to April 1995, Mr. Eades served as a
regional sales manager for Hallmark Cards, Inc. From August 1989 to February
1993, Mr. Eades was general manager of the Christmas Celebrations business unit
at Hallmark Cards, Inc.

Carol Eastin joined Starbucks in 1991 and has served as the Company's senior
vice president, management information systems since June 1993. From November
1991 to June 1993, Ms. Eastin served as the vice president, management
information systems of the Company. From September 1986 to September 1990, she
served as the director of corporate systems for McDonald's (R) Corporation.

Sharon E. Elliott joined Starbucks in 1994 as senior vice president, human
resources. From September 1993 to June 1994, Ms. Elliott served as the corporate
director, staffing and development of Allied Signal Corporation. From July 1987
to August 1993, she held several human resources management positions with
Bristol-Myers Squibb, including serving as the director of human
resources--corporate staff.

E. R. (Ted) Garcia joined Starbucks in April 1995 as senior vice president,
supply chain operations. From May 1993 to April 1995, Mr. Garcia was an
executive for Gemini Consulting. From January 1990 until May 1993, he was the
vice president of operations strategy for Grand Metropolitan PLC, Food Sector.

Wanda Herndon joined Starbucks in July 1995 as vice president, communications
and public affairs and was promoted to senior vice president, communications and
public affairs in November 1996. From February 1990 to June 1995, Ms. Herndon
held several communications management positions at DuPont. Prior to that time,
Ms. Herndon held several public affairs and marketing communications positions
for Dow Chemical Company.
<PAGE> 12
Shelley B. Lanza joined Starbucks in June 1995 as senior vice president and
general counsel. From 1986 to 1995, Ms. Lanza served as vice president and
general counsel of Honda of America Manufacturing, Inc. From 1982 to 1986, Ms.
Lanza practiced law at the law firm of Vorys, Sater, Seymour and Pease in
Columbus, Ohio.

David M. Olsen joined Starbucks in 1986 and has served as the Company's senior
vice president, coffee since September 1991. From November 1987 to September
1991, Mr. Olsen served as its vice president, coffee, and from February 1986 to
November 1987, he served as the Company's director of training.

John A. Rodgers joined Starbucks in 1989 and has served as senior vice
president, new business development since February 1993. From February 1991 to
February 1993, he served as the Company's senior vice president--special
projects. Since January 1982, Mr. Rodgers has also served as a general partner
of Western Franchise Development Corporation, an owner and operator of several
Red Robin Restaurants.

Arthur I. Rubinfeld joined the Company in 1992 as senior vice president, real
estate. From April 1986 to May 1992, Mr. Rubinfeld served as a managing partner
of Epsteen & Associates, a commercial real estate company.

Deidra Wager joined Starbucks in 1992 and has served as the Company's senior
vice president, retail operations since August 1993. From September 1992 to
August 1993, Ms. Wager served as the Company's vice president, operation
services. From March 1992 to September 1992, she was the Company's California
regional manager. From September 1988 to March 1992, Ms. Wager held several
operations positions with Taco Bell, Inc., including having served as its
director of operations systems development.

Item 11. Executive Compensation

The required information is incorporated by reference to pages 6 through 11 of
the definitive Proxy Statement for the Company's Annual Meeting of Shareholders
to be held on March 6, 1997.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The required information is incorporated by reference to pages 2 through 3 of
the definitive Proxy Statement for the Company's Annual Meeting of Shareholders
to be held on March 6, 1997.

Item 13. Certain Relationships and Related Transactions

The required information is incorporated by reference to page 12 of the
definitive Proxy Statement for the Company's Annual Meeting of Shareholders to
be held on March 6, 1997.
<PAGE> 13
PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) The following documents are filed as a part of this report on Form
10-K:

1. Financial Statements.

The Company's consolidated financial statements to be included in Part II, Item
8, are incorporated herein by reference to the Company's 1996 Annual Report to
Shareholders, a copy of which accompanies this report on Form 10-K, and is filed
herein as Exhibits 13.5 and 13.6 and by reference to Exhibit 13.4 to the
Company's Form 10-K/A for the fiscal year ended September 29, 1996 filed with
the SEC on February 4, 1997.

2. Financial Statement Schedule.

The following financial statement schedule of Starbucks Corporation for the
fiscal years ended September 29, 1996, October 1, 1995, and October 2, 1994 is
filed as part of this report on Form 10-K and should be read in conjunction with
the consolidated financial statements of the Company described in Item 14(a)(1)
above.

SCHEDULE PAGE

Schedule II Valuation and
Qualifying Accounts 17

Schedules other than the one listed above are omitted for the reason that they
are not required or are not applicable, or the required information is shown in
the financial statements or notes thereto.

3. Exhibits.

The Exhibits listed below and on the accompanying Index to Exhibits immediately
following the financial statement schedule are filed as part of, or incorporated
by reference into, this report.

EXHIBIT NO. DESCRIPTION

3.1 Restated Articles of Incorporation of Starbucks Corporation
(incorporated herein by reference to Exhibit 3.1 to the Company's
Form 10-Q for the fiscal quarter ended March 31, 1996, filed with
the SEC on May 15, 1996)

3.1.1 Amendment dated November 22, 1995 to the Restated Articles of
Incorporation of Starbucks Corporation (incorporated herein by
reference to Exhibit 3.1.1 to the Company's Form 10-Q for the
fiscal quarter ended March 31, 1996, filed with the SEC on May
15, 1996)

3.1.2 Amendment dated March 18, 1996 to the Restated Articles of
Incorporation of Starbucks Corporation (incorporated herein by
reference to Exhibit 3.1.2 to the Company's Form 10-Q for the
quarterly period ended March 31, 1996, filed with the SEC on May
15, 1996)

3.2 Amended and Restated Bylaws of Starbucks Corporation
(incorporated herein by reference to Exhibit 3.2 to the Company's
Form 10-Q for the fiscal quarter ended March 31, 1996, filed with
the SEC on May 15, 1996)
<PAGE> 14
4.1 Indenture, dated as of October 24, 1995, between Starbucks
Corporation and First Interstate Bank of Washington, N.A., as
Trustee (incorporated herein by reference to Exhibit 4.3 to the
Company's Form 10-K for the Fiscal Year ended October 1, 1995,
filed with the SEC on December 28, 1995)

4.2 Form of Debenture relating to the Indenture described in Exhibit
4.3 (included in Exhibit 4.3) (incorporated herein by reference
to Exhibit 4.4 to the Company's Form 10-K for the Fiscal Year
ended October 1, 1995, filed with the SEC on December 28, 1995)

10.1 Starbucks Corporation Key Employee Stock Option Plan--1994
(incorporated herein by reference to Appendix A to the Company's
1994 Proxy Statement filed with the SEC on December 23, 1994)*

10.1.1 Starbucks Corporation Key Employee Stock Option Plan--1994, as
amended*

10.2 Starbucks Corporation 1989 Stock Option Plan for Non-Employee
Directors, as amended (incorporated herein by reference to
Appendix B to the Company's 1994 Proxy Statement filed with the
SEC on December 23, 1994)*

10.2.1 Starbucks Corporation 1989 Stock Option Plan for Non-Employee
Directors, as amended*

10.3 Starbucks Corporation 1991 Company-Wide Stock Option Plan, as
amended (incorporated herein by reference to the Company's
Registration Statement No. 33-52528 on Form S-8, filed with the
SEC on September 28, 1992)*

10.3.1 Starbucks Corporation 1991 Company-Wide Stock Option Plan, as
amended*

10.4 Starbucks Corporation Employee Stock Purchase Plan -- 1995
(incorporated herein by reference to Appendix C to the Company's
1994 Proxy Statement filed with the SEC on December 23, 1994)*

10.5 Industrial Lease, dated March 31, 1989, between Starbucks
Corporation, David A. Sabey and Sandra L. Sabey (incorporated
herein by reference to Exhibit 10.4 to the Company's Registration
Statement No. 33-47951 on Form S-1, filed with the SEC on May 15,
1992)

10.6 Office Lease, dated as of July 15, 1993, between First and Utah
Street Associates, L.P. and Starbucks Corporation (incorporated
herein by reference to Exhibit 10.17 to the Company's Form 10-K
for the Fiscal Year ended October 3, 1993, filed with the SEC on
December 30, 1993)

10.7 Development Agreement, dated as of February 11, 1994, between
Starbucks Corporation and Host International, Inc. (incorporated
herein by reference to Exhibit 10.18 to the Company's Form 10-K
for the Fiscal Year ended October 2, 1994, filed with the SEC on
December 23, 1994)

10.8 Special Warranty Deed, dated March 7, 1994, between Kent North
Corporate Park, as grantor and Starbucks Corporation, as grantee
(incorporated herein by reference to Exhibit 10.14 to the
Company's Form 10-K for the Fiscal Year ended October 2, 1994,
filed with the SEC on December 23, 1994)
<PAGE> 15
10.9 Agreement and Plan of Merger, dated as of April 30, 1994, among
Starbucks Corporation, TCC Acquisition Corp., and The Coffee
Connection, Inc. (incorporated herein by reference to Exhibit 2
to the Company's Form 10-Q for the Quarterly Period ended April
3, 1994, filed with the SEC on May 26, 1994)

10.10 Joint Venture and Partnership Agreement, dated August 10, 1994,
between Pepsi-Cola Company, a division of PepsiCo, Inc., and
Starbucks New Venture Company (incorporated herein by reference
to Exhibit 10 to the Company's Form 10-Q for the Quarterly Period
ended July 3, 1994, filed with the SEC on August 16, 1994)

10.12 Credit Agreement, dated October 24, 1994, between Starbucks
Corporation and Seattle-First National Bank (incorporated herein
by reference to Exhibit 10.1 to the Company's Registration
Statement No. 33-85172 on Form S-3, filed with the SEC on October
14, 1994)

10.13 Second Amendment to Office Lease, dated as of January 1, 1995,
between First & Utah Street Associates, L.P. and Starbucks
Corporation (incorporated herein by reference to the Company's
Registration Statement No. 33-93974 on Form S-3, filed with the
SEC on June 27, 1995)

10.14 Starbucks Corporation Amended and Restated Consulting/Employment
Agreement with Jeffrey H. Brotman, dated as of January 14, 1995
(incorporated herein by reference to Exhibit 10.14 to the
Company's Form 10-K for the Fiscal Year ended October 1, 1995,
filed with the SEC on December 28, 1995)

10.15 Series B Preferred Stock Purchase Agreement dated March 31, 1995,
among Starbucks Corporation, Noah's New York Bagels, Inc. and
certain shareholders of Noah's New York Bagels, Inc.
(incorporated herein by reference to the Company's Registration
Statement No. 33-91780 on Form S-3, filed with the SEC on April
28, 1995)

10.16 Amended and Restated Investor Rights Agreement dated March 31,
1995, among Starbucks Corporation, Noah's New York Bagels, Inc.
and certain shareholders of Noah's New York Bagels, Inc.
(incorporated herein by reference to the Company's Registration
Statement No. 33-91780 on Form S-3, filed with the SEC on April
28, 1995)

10.18 Protective Covenants Agreement dated March 31, 1995, among
Starbucks Corporation, Noah's New York Bagels, Inc. and certain
shareholders of Noah's New York Bagels, Inc. (incorporated herein
by reference to the Company's Registration Statement No. 33-91780
on Form S-3, filed with the SEC on April 28, 1995)
<PAGE> 16
10.19 Third Amendment to Office Lease, dated as of September 30, 1995,
between First and Utah Street Associates, L.P. and Starbucks
Corporation (incorporated herein by reference to Exhibit 10.19 to
the Company's Form 10-K for the Fiscal Year ended October 1,
1995, filed with the SEC on December 28, 1995)

10.20 Amendment to Credit Agreement and Note, dated October 23, 1995
between Starbucks Corporation and Seattle-First National Bank
(incorporated herein by reference to Exhibit 10.20 to the
Company's Form 10-K for the Fiscal Year ended October 1, 1995,
filed with the SEC on December 28, 1995)

10.21 Merger Agreement among Noah's New York Bagels, Inc. Shareholders
and Certain Optionholders of Noah's New York Bagels, Inc.,
Einstein Brothers Bagels, Inc. and NNYB Acquisition Corporation,
dated January 22, 1996 (incorporated herein by reference to
Exhibit 10.21 to the Company's Form 10-Q for the Quarterly Period
Ended March 31, 1996, filed with the SEC on May 15, 1996)

10.22 Amendment dated February 1, 1996, to Merger Agreement among
Noah's New York Bagels, Inc., Shareholders and Certain
Optionholders of Noah's New York Bagels, Inc., Einstein Brothers
Bagels, Inc. and NNYB Acquisition Corporation dated January 22,
1996 (incorporated herein by reference to Exhibit 10.22 to the
Company's Form 10-Q for the Quarterly Period Ended March 31,
1996, filed with the SEC on May 15, 1996)

10.23 Master Licensing Agreement between the Company and ARAMARK Food
and Services Group, Inc. dated as of January 30, 1996, as amended
and restated May 7, 1996 (incorporated herein by reference to
Exhibit 10.23 to the Company's Form 10-Q for the Quarterly Period
Ended March 31, 1996, filed with the SEC on May 15, 1996)

11 Computation of Per Share Earnings

12 Ratio of Earnings to Fixed Charges

13.1 Market Information. (Incorporated herein by reference to Exhibit
13.1 to the Company's Form 10-K/A for the fiscal year ended
September 29, 1996 filed with the SEC on February 4, 1997).

13.2 Selected Financial Data (Incorporated herein by reference to
Exhibit 13.2 to the Company's Form 10-K/A for the fiscal year
ended September 29, 1996 filed with the SEC on February 4, 1997).

13.3 Management's Discussion and Analysis of Financial Condition and
Results of Operations (Incorporated herein by reference to
Exhibit 13.3 to the Company's Form 10-K/A for the fiscal year
ended September 29, 1996 filed with the SEC on February 4, 1997).

13.4 Financial Statements (Incorporated herein by reference to Exhibit
13.4 to the Company's Form 10-K/A for the fiscal year ended
September 29, 1996 filed with the SEC on February 4, 1997).

13.5 Independent Auditors' Report on financial statement

13.6 Letter on Management's Responsibility for Financial Reporting

21 Subsidiaries of the Registrant

23 Independent Auditors' Consent

27 Financial Data Schedule

- -------------

* Management contract or compensatory plan or arrangement.

(b) REPORTS ON FORM 8-K No reports on Form 8-K were filed by the Company during
the fiscal quarter ended September 29, 1996.
<PAGE> 17
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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

By: /s/ M. Michael Casey
------------------------
M. Michael Casey
senior vice president and
chief financial officer

January 31, 1997
<PAGE> 18
STARBUCKS CORPORATION

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
Balance at Beginning Balance at End
Description of Year of Year
- -----------------------------------------------------------------
Allowance for Doubtful Accounts
<S> <C> <C>
Fiscal Year Ended
September 29, 1996 $242,000 $116,000

Fiscal Year Ended
October 1, 1995 $126,000 $242,000

Fiscal Year Ended
October 2, 1994 $ 71,000 $126,000
</TABLE>
<PAGE> 19
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION

<S> <C>
3.1 Restated Articles of Incorporation of Starbucks Corporation
(incorporated herein by reference to Exhibit 3.1 to the Company's Form
10-Q for the fiscal quarter ended March 31, 1996, filed with the SEC on
May 15, 1996)

3.1.1 Amendment dated November 22, 1995 to the Restated Articles of
Incorporation of Starbucks Corporation (incorporated herein by reference
to Exhibit 3.1.1 to the Company's Form 10-Q for the fiscal quarter ended
March 31, 1996, filed with the SEC on May 15, 1996)

3.1.2 Amendment dated March 18, 1996 to the Restated Articles of Incorporation
of Starbucks Corporation (incorporated herein by reference to Exhibit
3.1.2 to the Company's Form 10-Q for the quarterly period ended March
31, 1996, filed with the SEC on May 15, 1996)

4.1 Indenture, dated as of October 24, 1995, between Starbucks Corporation
and First Interstate Bank of Washington, N.A., as Trustee (incorporated
herein by reference to Exhibit 4.3 to the Company's Form 10-K
</TABLE>
<PAGE> 20
for the Fiscal Year ended October 1, 1995, filed with the SEC on
December 28, 1995)

4.2 Form of Debenture relating to the Indenture described in Exhibit 4.3
(included in Exhibit 4.3) (incorporated herein by reference to Exhibit
4.4 to the Company's Form 10-K for the Fiscal Year ended October 1,
1995, filed with the SEC on December 28, 1995)

10.1 Starbucks Corporation Key Employee Stock Option Plan--1994
(incorporated herein by reference to Appendix A to the Company's 1994
Proxy Statement filed with the SEC on December 23, 1994)*

10.1.1 Starbucks Corporation Key Employee Stock Option Plan--1994, as
amended*

10.2 Starbucks Corporation 1989 Stock Option Plan for Non-Employee Directors,
as amended (incorporated herein by reference to Appendix B to the
Company's 1994 Proxy Statement filed with the SEC on December 23, 1994)*

10.2.1 Starbucks Corporation 1989 Stock Option Plan for Non-Employee Directors,
as amended*

10.3 Starbucks Corporation 1991 Company-Wide Stock Option Plan, as amended
(incorporated herein by reference to the Company's Registration
Statement No. 33-52528 on Form S-8, filed with the SEC on September 28,
1992)*

10.3.1 Starbucks Corporation 1991 Company-Wide Stock Option Plan, as
amended*

10.4 Starbucks Corporation Employee Stock Purchase Plan -- 1995 (incorporated
herein by reference to Appendix C to the Company's 1994 Proxy Statement
filed with the SEC on December 23, 1994)*

10.5 Industrial Lease, dated March 31, 1989, between Starbucks Corporation,
David A. Sabey and Sandra L. Sabey (incorporated herein by reference to
Exhibit 10.4 to the Company's Registration Statement No.
<PAGE> 21
33-47951 on Form S-1, filed with the SEC on May 15, 1992)

10.6 Office Lease, dated as of July 15, 1993, between First and Utah Street
Associates, L.P. and Starbucks Corporation (incorporated herein by
reference to Exhibit 10.17 to the Company's Form 10-K for the Fiscal
Year ended October 3, 1993, filed with the SEC on December 30, 1993)

10.7 Development Agreement, dated as of February 11, 1994, between Starbucks
Corporation and Host International, Inc. (incorporated herein by
reference to Exhibit 10.18 to the Company's Form 10-K for the Fiscal
Year ended October 2, 1994, filed with the SEC on December 23, 1994)

10.9 Agreement and Plan of Merger, dated as of April 30, 1994, among
Starbucks Corporation, TCC Acquisition Corp., and The Coffee Connection,
Inc. (incorporated herein by reference to Exhibit 2 to the Company's
Form 10-Q for the Quarterly Period ended April 3, 1994, filed with the
SEC on May 26, 1994)

10.10 Joint Venture and Partnership Agreement, dated August 10, 1994, between
Pepsi-Cola Company, a division of PepsiCo, Inc., and Starbucks New
Venture Company (incorporated herein by reference to Exhibit 10 to the
Company's Form 10-Q for the Quarterly Period ended July 3, 1994, filed
with the SEC on August 16, 1994)

10.11 Lease, dated August 22, 1994, between York County Industrial Development
Corporation and Starbucks Corporation (incorporated herein by reference
to Exhibit 10 to the Company's Form 10-Q for the Quarterly Period Ended
July 2, 1995, filed with the
SEC on August 15, 1995)
<PAGE> 22
10.12 Credit Agreement, dated October 24, 1994, between Starbucks Corporation
and Seattle-First National Bank (incorporated herein by reference to
Exhibit 10.1 to the Company's Registration Statement No. 33-85172 on
Form S-3, filed with the SEC on October 14, 1994)

10.13 Second Amendment to Office Lease, dated as of January 1, 1995, between
First & Utah Street Associates, L.P. and Starbucks Corporation
(incorporated herein by reference to the Company's Registration
Statement No. 33-93974 on Form S-3, filed with the SEC on June 27, 1995)

10.14 Starbucks Corporation Amended and Restated Consulting/Employment
Agreement with Jeffrey H. Brotman, dated as of January 14, 1995
(incorporated herein by reference to Exhibit 10.14 to the Company's Form
10-K for the Fiscal Year ended October 1, 1995, filed with the SEC on
December 28, 1995)

10.15 Series B Preferred Stock Purchase Agreement dated March 31, 1995, among
Starbucks Corporation, Noah's New York Bagels, Inc. and certain
shareholders of Noah's New York Bagels, Inc. (incorporated herein by
reference to the Company's Registration Statement No. 33-91780 on Form
S-3, filed with the SEC on April 28, 1995)

10.16 Amended and Restated Investor Rights Agreement dated March 31, 1995,
among Starbucks Corporation, Noah's New York Bagels, Inc. and certain
shareholders of Noah's New York Bagels, Inc. (incorporated herein by
reference to the Company's Registration Statement No. 33-91780 on Form
S-3, filed with the SEC on April 28, 1995)

10.17 Amended and Restated Voting Rights Agreement dated March 31, 1995, among
Starbucks Corporation, Noah's New York Bagels, Inc. and certain
shareholders of Noah's New York Bagels, Inc. (incorporated herein by
reference to the Company's Registration Statement No. 33-91780 on Form
S-3, filed on April 28, 1995)
<PAGE> 23
10.18 Protective Covenants Agreement dated March 31, 1995, among Starbucks
Corporation, Noah's New York Bagels, Inc. and certain shareholders of
Noah's New York Bagels, Inc. (incorporated herein by reference to the
Company's Registration Statement No. 33-91780 on Form S-3, filed with
the SEC on April 28, 1995)

10.19 Third Amendment to Office Lease, dated as of September 30, 1995,
between First and Utah Street Associates, L.P. and Starbucks
Corporation (incorporated herein by reference to Exhibit 10.19 to the
Company's Form 10-K for the Fiscal Year ended October 1, 1995, filed
with the SEC on December 28, 1995)

10.20 Amendment to Credit Agreement and Note, dated October 23, 1995 between
Starbucks Corporation and Seattle-First National Bank (incorporated
herein by reference to Exhibit 10.20 to the Company's Form 10-K for the
Fiscal Year ended October 1, 1995, filed with the SEC on December 28,
1995)

10.21 Merger Agreement among Noah's New York Bagels, Inc. Shareholders and
Certain Optionholders of Noah's New York Bagels, Inc., Einstein
Brothers Bagels, Inc. and NNYB Acquisition Corporation, dated January
22, 1996 (incorporated herein by reference to Exhibit 10.21 to the
Company's Form 10-Q for the Quarterly Period Ended March 31, 1996,
filed with the SEC on May 15, 1996)

10.22 Amendment dated February 1, 1996, to Merger Agreement among Noah's New
York Bagels, Inc., Shareholders and Certain Optionholders of Noah's New
York Bagels, Inc., Einstein Brothers Bagels, Inc. and NNYB Acquisition
Corporation dated January 22, 1996 (incorporated herein by reference to
Exhibit 10.22 to the Company's Form 10-Q for the Quarterly Period Ended
March 31, 1996, filed with the SEC on May 15, 1996)

10.23 Master Licensing Agreement between the Company and ARAMARK Food and
Services Group, Inc. dated as of January 30, 1996, as amended and
restated May 7,
<PAGE> 24
1996 (incorporated herein by reference to Exhibit 10.23 to the
Company's Form 10-Q for the Quarterly Period Ended March 31, 1996,
filed with the SEC on May 15, 1996)

11 Computation of Per Share Earnings

12 Ratio of Earnings to Fixed Charges

13.1 Market Information. (Incorporated herein by reference to Exhibit 13.1
to the Company's Form 10-K/A for the fiscal year ended September 29,
1996 filed with the SEC on February 4, 1997)

13.2 Selected Financial Data (Incorporated herein by reference to Exhibit
13.2 to the Company's Form 10-K/A for the fiscal year ended September
29, 1996 filed with the SEC on February 4, 1997)

13.3 Management's Discussion and Analysis of Financial Condition and Results
of Operations (Incorporated herein by reference to Exhibit 13.3 to
the Company's Form 10-K/A for the fiscal year ended September 29,
1996 filed with the SEC on February 4, 1997)

13.4 Financial Statements (Incorporated herein by reference to Exhibit 13.4
to the Company's Form 10-K/A for the fiscal year ended September 29,
1996 filed with the SEC on February 4, 1997)

13.5 Independent Auditors' Report on financial statement

13.6 Letter on Management's Responsibility for Financial Reporting

21 Subsidiaries of the Registrant

23 Independent Auditors' Consent

27 Financial Data Schedule

- -------------

* Management contract or compensatory plan or arrangement.

<PAGE> 1
STARBUCKS CORPORATION
KEY EMPLOYEE STOCK OPTION PLAN - 1994
(Adopted 9/94, amended 9/96)

1. THE PLAN AND DEFINITIONS

1.1 PURPOSE OF PLAN.

This Plan is the "Starbucks Corporation Key Employee Stock Option Plan, -
1994," and is also sometimes referred to as the Company's "KEY EMPLOYEE PLAN."
The Company's purposes in adopting this Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to encourage
ownership of the Company's common stock by key employees of the Company and any
current or future Subsidiary, and to promote the Company's business success.
This Plan provides for the granting of both Incentive Stock Options and
Nonqualified Stock Options. This Plan is adopted to be effective for a ten year
period commencing on September 27, 1994, and ending on September 26, 2004.

1.2 DEFINITIONS:

Capitalized terms used in this Plan shall have the following meanings:

"ACT." "Act" shall mean the Securities Act of 1933, as amended from time to
time, or any replacement act or legislation.

"BOARD." The "Board" shall mean the Board of Directors of the Company.

"COMMITTEE." "Committee" shall mean the Board committee of not less than two
nonemployee directors appointed pursuant to Section 2.3 herein.

"CODE." "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any replacement act or legislation.

"COMMON STOCK." "Common Stock" shall mean the no par value common stock of
Starbucks Corporation.

"COMPANY." The "Company" shall mean Starbucks Corporation.

"CONSULTANT." "Consultant" shall mean any person engaged by the Company as a
non-Employee service provider pursuant to the terms of a written contract.

"DISABILITY." "Disability" of an Employee shall mean "permanent and total
disability," within the meaning of Section 22(e)(3) of the Code.

"EMPLOYEE." The term "Employee" for purposes of this Plan shall include all
persons employed by the Company or any Parent or Subsidiary, including officers,
whether full-time or part-time, and those individuals whose service as an
Employee has been temporarily interrupted due to any leave of absence that is
authorized by a Vice President of the Company.

"EXCHANGE ACT." "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time, or any replacement act or legislation.

"FAIR MARKET VALUE." The "Fair Market Value" of the Common Stock shall be
the closing price per share of the Common Stock on the National Association of
Securities Dealers Automated Quotation ("NASDAQ")

1
<PAGE> 2
National Market System. If the Common Stock ceases to be listed on the NASDAQ
National Market System, the Board shall designate an alternative method of
determining the fair market value of the Common Stock.

"INCENTIVE STOCK OPTION." "Incentive Stock Option" shall mean any stock
option intended to qualify as an "incentive stock option" within the meaning of
Section 422 of the Code.

"NONQUALIFIED STOCK OPTION." "Nonqualified Stock Option" shall mean any
stock option not intended to qualify as an Incentive Stock Option.

"OPTIONED SHARES." "Optioned Shares" shall mean Shares subject to a stock
option granted pursuant to this Plan.

"OPTIONEE." "Optionee" shall mean an individual who has received a stock
option pursuant to this Plan.

"PARENT." "Parent" shall mean a "parent corporation," whether now or
hereafter existing, within the meaning of Section 424(e) of the Code.

"PLAN." This "Plan" shall mean the Starbucks Corporation Key Employee Stock
Option Plan - 1994, which also may be referred to as the "Key Employee Plan."

"SHARE" AND "SHARES." A "Share" shall mean one share of the Company's Common
Stock, as adjusted in accordance with Section 2.9 of this Plan. The "Shares"
shall mean the Company's authorized and unissued Shares reserved for issuance
under this Plan as further defined in Section 2.2.

"SUBSIDIARY." "Subsidiary" shall mean a "subsidiary corporation," whether
now or hereafter existing, within the meaning of Section 424(f) of the Code.

2. GENERAL PROVISIONS

THE PROVISIONS OF THIS SECTION 2 APPLY TO BOTH NONQUALIFIED OPTIONS AND
INCENTIVE STOCK OPTIONS GRANTED BY THE COMPANY.

2.1 OBJECTIVE AND USE OF PLAN.

The objective of this Plan is to provide an incentive for maximum effort in
the successful operation of the Company and is expected to benefit the
shareholders by enabling the Company to attract and retain personnel of the best
available talent through the opportunity to share in the increased value of the
Company's Common Stock to which such personnel have contributed. The benefits of
this Plan are not a substitute for compensation otherwise payable to Employees
pursuant to the terms of their employment. This Plan sets forth provisions
applicable to options that may be granted hereunder generally, to Incentive
Stock Options only, to Nonqualified Options only, and to the procedures allowed
for the conversion of Nonqualified Stock Options into Incentive Stock Options.
This Plan also allows for and provides a means for the granting of stock options
to Consultants.

2.2 STOCK SUBJECT TO PLAN.

Subject to the provisions of Section 2.9 of this Plan, the maximum aggregate
number of Shares reserved for issuance upon the exercise of options granted
pursuant to this Plan is three million. Shares subject to any option under this
Plan which is not exercised in full or Shares as to which the right to purchase
under an option is forfeited through expiration, default, or otherwise, shall
remain available for other options under this Plan, provided that the aggregate
number of Shares subject to options under this Plan shall not exceed three
million unless the Board approves an increase in said number and such increase
is then duly approved by the Company's shareholders.

2
<PAGE> 3
2.3 ADMINISTRATION OF PLAN.

This Plan shall be administered by the Board, provided that at all times
during which the Company is subject to the periodic reporting requirements of
the Exchange Act each member of the Board who participates in administration
must be a nonemployee director as that term is defined in Rule 16b-3 promulgated
by the Securities and Exchange Commission. The Board may appoint a Board
committee (the "Committee") of not less than two nonemployee directors to
administer the Plan in the name of the Board. The Board or the Committee shall
have full power and authority to administer and interpret this Plan and to
adopt, from time to time, such guidelines, rules, regulations, agreements, and
instruments for the administration of this Plan as the Board or the Committee,
as the case may be, deems necessary or advisable. Such powers include, but are
not limited to (subject to the specific limitations described herein), authority
to determine the Employees to be granted options under this Plan, to determine
the size, type, and applicable terms and conditions of grants to be made to such
Employees, to determine a time when options will be granted, and to authorize
grants to eligible Employees. In addition, the Board or the Committee may engage
a qualified brokerage or other financial services firm to assist it in the
administration of the Plan, including, without limitation, the tracking of
disqualifying dispositions under the Code, whether through a separately
established brokerage account or otherwise, of Shares that are issued upon the
exercise of options granted under the Plan so that the Company may capture any
related tax benefit to which it may be entitled.

The Board's or the Committee's interpretations of this Plan, and all actions
taken and determinations made by the Board or the Committee, as the case may be,
concerning any matter arising under or with respect to this Plan or any options
granted pursuant to this Plan, shall be final, binding, and conclusive on all
interested parties, including the Company, its shareholders, and all former,
present, and future Employees of the Company. The Board or the Committee may, as
to questions of accounting, rely conclusively upon any determinations made by
independent public accountants of the Company.

2.4 ELIGIBILITY; FACTS TO BE CONSIDERED IN GRANTING OPTIONS.

The Board or the Committee, as the case may be, shall have the authority to
determine the persons eligible to receive a stock option grant, the time or
times at which the Optioned Shares may be purchased, and whether all of the
options may be exercised at one time or in increments.

2.5 RIGHTS OF OPTIONEE IN EVENT OF MERGER, CONSOLIDATION, TENDER OFFER,
TAKEOVER BID, SALE OF ASSETS OR DISSOLUTION.

(a) Notwithstanding anything in this Plan to the contrary, the Optionee may
purchase the full amount of Optioned Shares for which options have been granted
to the Optionee and for which the options have not been exercised under the
following conditions:

(1) the Optionee may conditionally purchase any or all Optioned Shares
during the period commencing twenty-seven (27) days and ending seven (7) days
prior to the scheduled effective date of a merger or consolidation (as such
effective date may be delayed from time to time) wherein the Company is not to
be the surviving corporation, which merger or consolidation is not between or
among the Company and other corporations related to or affiliated with the
Company;

(2) the Optionee may conditionally purchase any or all Optioned Shares
during the period commencing on the initial date of a tender offer or takeover
bid for the Shares (other than a tender offer by the Company) subject to the
Exchange Act and the rules promulgated thereunder and ending on the day
preceding the scheduled termination date of acceptance of tenders of Shares by
the offeror under any such tender offer or takeover bid (as such termination
date may be extended by such offeror);

(3) the Optionee may conditionally purchase any or all Optioned Shares
during the period commencing the date the shareholders of the Company approve a
sale of substantially all the assets of the Company and ending seven (7) days
prior to the scheduled closing date of such sale (as such closing date may be
delayed from time to time); and

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(4) the Optionee may conditionally purchase any or all Optioned Shares
during the period commencing the date the shareholders of the Company approve
the dissolution of the Company and ending seven (7) days prior to the date of
filing its Articles of Dissolution.

(b) If the merger, consolidation, tender offer, takeover bid, sale of
assets, or dissolution, as the case may be and as described in Subsections (1)
through (4) of Section 2.5(a), once commenced, is canceled or revoked, the
conditional purchase of Shares for which the option to purchase would not have
otherwise been exercisable at the time of said cancellation or revocation, but
for the operation of this Section 2.5, shall be rescinded. With respect to all
other Shares conditionally purchased, the Optionee may rescind such purchase at
Optionee's option.

(c) If the merger, consolidation, tender offer, takeover bid, or sale of
assets does occur or Articles of Dissolution are filed, as the case may be and
as described in Subsections (1) through (4) of Section 2.5(a), and the Optionee
has not conditionally purchased all Optioned Shares, all unexercised options
shall terminate on the effective, termination, closing, or filing date, as the
case may be.

(d) If the Company shall be the surviving corporation in any merger or is a
party to a merger or consolidation which is between or among the Company and
other corporations related to or affiliated with the Company, any option granted
hereunder shall pertain and apply to the securities to which a holder of the
number of Shares subject to the option would have been entitled.

(e) Nothing herein shall allow the Optionee to purchase Optioned Shares, the
options for which have expired.

2.6 TERMS AND EXPIRATION OF OPTIONS.

Each option granted under this Plan shall be in writing, shall be subject to
such amendment or modification from time to time as the Board shall deem
necessary or appropriate to comply with or take advantage of applicable laws or
regulations, and shall contain provisions as to the following effect, together
with such other provisions as the Board shall from time to time approve:

(a) that, subject to the provisions of Section 2.6(b) below, the option, as
to the whole or any part thereof, may be exercised only by the Optionee or
Optionee's personal representative;

(b) that neither the whole nor any part of the option shall be transferable
by the Optionee or by operation of law otherwise than (i) by will of, or by the
laws of descent and distribution applicable to, a deceased Optionee, or (ii) in
the case of a Nonqualified Stock Option, by gift or, with the consent of the
Company, for value to immediate family members of the Optionee, partnerships of
which the only partners are members of the Optionee's immediate family, and
trusts established solely for the benefit of such immediate family members; that
the option and any and all rights granted to the Optionee thereunder and not
theretofore effectively and completely exercised, or transferred as expressly
permitted by this Section 2.6(b), shall automatically terminate and expire upon
any other sale, transfer, or hypothecation or any other attempted sale,
transfer, or hypothecation of such rights or upon the bankruptcy or insolvency
of the Optionee or Optionee's estate, and that solely as it pertains to
effecting an exercise of an option transferred in accordance with this Section
2.6(b), the term Optionee shall include a permitted transferee;

(c) that subject to the foregoing provisions, an option may be exercised at
different times for portions of the total number of Optioned Shares for which
the right to purchase shall have vested, provided that an option may not be
exercised for a fraction of a Share;

(d) that no Optionee shall have the right to receive any dividend on or to
vote or exercise any right in respect to any Shares unless and until the
certificates for such Shares have been issued to such Optionee;

(e) that the option shall expire at the earliest of the following:

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(1) the date specified in the option;

(2) with respect to any Employee;

(i) three (3) months after voluntary or involuntary
termination of Optionee's employment other than termination as
described in subparagraphs (ii) or (iii) below;

(ii) upon the discharge of Optionee for misconduct, willfully
or wantonly harmful to the Company or Subsidiary; or

(iii) twelve (12) months after Optionee's death or Disability;
or

(3) in the event of a merger, consolidation, tender offer, takeover bid,
sale of assets, or filing of Articles of Dissolution, as the case may be and as
described in subsections (1) through (4) of Section 2.5(a), on the date
specified in Section 2.5(c): provided, however, that if the merger,
consolidation, tender offer, takeover bid, or sale of assets does not occur or
if Articles of Dissolution are not filed, as the case may be and as described in
Subsections (1) through (4) of Section 2.5(a), all options which are terminated
pursuant to this Subsection (e)(3) shall be reinstated as if no action with
respect to any of said events had been contemplated or taken by any party
thereto and all Optionees shall be returned to their respective positions on the
date of termination;

(f) that, to the extent an option provides for the vesting thereof in
increments, such vesting shall cease as of the date of the Optionee's death,
Disability, or, in the case of any Employee, voluntary or involuntary
termination of Optionee's employment with the Company or a Subsidiary;

(g) that, in the case of any Employee, the terms of the option shall not be
affected by any changes of duties or position so long as the Optionee shall
continue to be employed by the Company or a Subsidiary.

2.7 EXERCISE OF OPTIONS.

The Optionee (or other person or persons, if any, entitled thereto
hereunder) desiring to exercise an option granted and exercisable hereunder as
to all or part of the Shares covered thereby shall notify the Company or, if the
Company requires, the brokerage firm designated by the Company to facilitate
exercises and sales under this Plan, specifying the number of option Shares to
be purchased and, if required by the Company, representing in form satisfactory
to the Company that the Shares are being purchased for investment and not with a
view to resale or distribution. The notification to the brokerage firm shall be
made in accordance with procedures of such brokerage firm approved by the
Company. With respect to any Shares conditionally purchased pursuant to Section
2.5(a) above and for which such purchase has not been voluntarily or otherwise
rescinded pursuant to Section 2.5(b), the Optionee shall be deemed to have given
the notice required by this Section 2.7 as of ten (10) days prior to the closing
or effective date of the merger, consolidation, tender offer, takeover bid, or
sale of assets or as of the twentieth (20th) day after a Statement of Intent to
Dissolve is filed (or the tenth (10th) day before the filing of Articles of
Dissolution if it precedes said twentieth (20th) day), as the case may be and as
described in Subsections (1) through (4) of Section 2.5(a).

2.8 METHOD OF EXERCISE OF OPTION.

The option shall be exercised as to the number of Shares specified in the
notice provided pursuant to Section 2.7 above by payment to the Company of the
amount specified below in Section 3.2. Payment of the option price shall be made
in cash or in accordance with procedures for a "cashless exercise" as the same
shall have been established from time to time by the Company and the brokerage
firm designated by the Company to facilitate exercises and sales under this
Plan. Payment in shares of the Company's common stock shall be deemed to be the
equivalent of payment in cash at the Fair Market Value of those shares. No such
payment in shares of the Company's common stock shall be allowed when the same
may in the reasonable opinion of the Company cause the Company to record a loss
or expense as a result thereof.

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2.9 RECAPITALIZATION.

Subject to any required action by the shareholders of the Company, the
aggregate number of Shares for which options may be granted hereunder, the
number of Shares covered by each outstanding option, and the price per Share
thereof in each such option shall be proportionately adjusted for an increase or
decrease in the number of outstanding shares of Common Stock resulting from a
stock split or reverse split of shares or any other capital adjustment or the
payment of a stock dividend or other increase or decrease in such shares
effected without receipt of consideration by the Company excluding any decrease
resulting from a redemption of Common Stock by the Company. If the adjustment
would result in a fractional Share, the Optionee shall be entitled to one (1)
additional Share, provided that the total number of Shares to be granted under
this Plan shall not be increased above the equivalent number of Shares initially
allocated or later increased by approved amendment to this Plan. Any such
adjustment made pursuant to this Section shall be made by the Board, whose
determination in that respect shall be final, binding, and conclusive.

2.10 SUBSTITUTIONS AND ASSUMPTIONS.

The Board shall have the right to substitute or assume options in connection
with mergers, reorganizations, separations, or other "corporate transactions" as
that term is defined in and said substitutions and assumptions are permitted by
Section 424 of the Code and the regulations promulgated thereunder. The number
of Shares reserved pursuant to Section 2.2 may be increased without further
action by the shareholders by the corresponding number of options assumed and,
in the case of a substitution, by the net increase in the number of Shares
subject to options before and after the substitution.

2.11 TERMINATION.

The Board may at any time modify, amend, or terminate this Plan provided,
however, that, without shareholder approval, no amendment or modification shall
increase the number of Shares as to which options may be granted under this
Plan. No amendment, modification, or termination of the Plan may adversely
affect options granted prior to such action.

2.12 GRANTING OF OPTIONS.

The granting of any option pursuant to this Plan shall be entirely in the
discretion of the Board or the Committee, as the case may be, and nothing herein
contained shall be construed to give any Employee any right to participate under
this Plan or to receive any option under it. The maximum number of Optioned
Shares that may be granted to any Employee in any one year hereunder is 500,000.

The granting of an option pursuant to this Plan shall not constitute any
agreement or an understanding, express or implied on the part of the Company or
a Subsidiary to employ the Optionee for any specified period.

2.13 WITHDRAWAL.

An Optionee may at any time elect in writing to abandon an option with
respect to the number of Shares as to which the option shall not have been
exercised.

2.14 GOVERNMENT REGULATIONS.

This Plan and the granting and exercise of any option hereunder and the
obligations of the Company to sell and deliver Shares under any such option
shall be subject to all applicable laws, rules, and regulations and to such
approvals by any governmental agencies as may be required.

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2.15 PROCEEDS FROM SALE OF STOCK.

Proceeds of the purchase of Optioned Shares by an Optionee shall be used for
the general business purposes of the Company.

2.16 SHAREHOLDER APPROVAL.

This Plan shall be submitted to the shareholders for their approval no later
than twelve (12) months from the date hereof.

2.17 COMPLIANCE WITH SECURITIES LAWS.

The Board shall have the right to:

(a) require an Optionee to execute, as a condition of exercise of an option,
a letter evidencing Optionee's intent to acquire the Shares for investment and
not with a view to the resale or distribution thereof;

(b) place appropriate legends upon the certificate or certificates for the
Shares; and

(c) take such other acts as it deems necessary in order to cause the
issuance of Optioned Shares to comply with applicable provisions of state and
federal securities laws.

In furtherance of the foregoing, and not by way of limitation thereof, no
option shall be exercisable unless such option and the Shares to be issued
pursuant thereto shall be registered under appropriate federal and state
securities laws, or shall be exempt therefrom, in the opinion of the Board upon
advice of counsel to the Company. Each option agreement shall contain adequate
provisions to assure that there will be no violation of such laws. This
provision shall in no way obligate the Company to undertake registration of
options or Shares hereunder. Issue, transfer or delivery of certificates for
Shares pursuant to the exercise of options may be delayed, at the discretion of
the Board until the Board is satisfied that the applicable requirements of the
federal and state securities laws have been met.

The dollar value and number of options granted under this Plan may be
limited pursuant to Rule 701 promulgated by the Securities and Exchange
Commission which provides an exemption from the registration requirements under
the Act. At any time during which the Company is not subject to the periodic
reporting requirements of the Exchange Act, the guidelines adopted by the Board
pursuant to this Plan shall contain the current limitations specified in said
Rule 701.

2.18 TERMINAL DATE OF PLAN.

This Plan shall not extend beyond a date ten years from the Effective Date
hereof as established by the Board and approved by the shareholders of the
Company, provided that any termination hereof shall not affect options already
granted, and any option to purchase shares duly granted hereunder prior to any
termination hereof shall be exercisable pursuant to its terms and the terms
hereof until expiration or earlier termination of such option.

3. PROVISIONS APPLICABLE SOLELY TO NONQUALIFIED STOCK OPTIONS

In addition to the provisions of Section 2 above, the following paragraphs
shall apply to any options granted under this Plan which are not Incentive Stock
Options.

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3.1 OPTION PRICE.

The option or purchase price of each Share optioned as a Nonqualified Stock
Option under this Plan shall be determined by the Board or the Committee, as the
case may be, at the time of the action for the granting of the option.

3.2 METHOD OF EXERCISE OF OPTION.

The amount to be paid by the Optionee upon exercise of a Nonqualified Option
shall be the full purchase price thereof provided in the option, together with
the amount of federal, state, and local income and FICA taxes required to be
withheld by the Company. If allowed by the Board or the Committee at its
respective discretion, an Optionee may elect to pay Optionee's federal, state,
or local income and FICA withholding tax by having the Company withhold Shares
having a Fair Market Value at the time of exercise equal to the amount required
to be withheld. An election by an Optionee to have shares withheld for this
purpose will be subject to the following restrictions:

(a) If an Optionee has received multiple option grants, a separate election
must be made for each grant;

(b) The election must be made prior to the day the option is exercised;

(d) The election will be subject to the approval of the Board or the
Committee, as the case may be;

(e) If the Optionee is an "officer" of the Company within the meaning of
Section 16 of the Exchange Act ("Section 16") as defined in Rule 16a-1
promulgated by the Securities Exchange Commission, the election may not be made
within six months following the grant of the option; and

4. PROVISIONS APPLICABLE SOLELY TO INCENTIVE STOCK OPTIONS

In addition to the provisions of Section 2 above, the following paragraphs
shall apply to any options granted under this Plan which are Incentive Stock
Options.

4.1 CONFORMANCE WITH INTERNAL REVENUE CODE.

Incentive Stock Options granted under this Plan shall conform to, be
governed by, and be interpreted in accordance with Section 422 of the Code and
any regulations promulgated thereunder and amendments to the Code and
Regulations, including, without limitation, those provisions of Section 422 of
the Code that prohibit an option by its terms to be exercisable after ten (10)
years from the date that it was granted. Only Employees may be granted Incentive
Stock Options hereunder. To the extent that any option granted hereunder as an
Incentive Stock Option fails to conform to the foregoing requirements, it shall
be treated as, and honored by the Company as, a Nonqualified Stock Option.

4.2 OPTION PRICE.

The option or purchase price of each Share optioned under the Incentive
Stock Option provisions of this Plan shall be determined by the Board or the
Committee, as the case shall be, at the time of the action for the granting of
the option but shall not, in any event, be less than the Fair Market Value of
the Common Stock on the date of grant.

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4.3 LIMITATION ON AMOUNT OF INCENTIVE STOCK OPTION.

The aggregate Fair Market Value of the Optioned Shares (determined on the
date of grant) with respect to which an Employee has the right to purchase
vesting in any one calendar year (under this Plan or any other plan of the
Company which authorizes Incentive Stock Options) shall not exceed the maximum
amount allowed in any one year by the Code in connection with the grant of
Incentive Stock Options.

4.4 LIMITATION ON GRANTS TO SUBSTANTIAL SHAREHOLDERS.

An Employee may not, immediately prior to the grant of an Incentive Stock
Option hereunder, own stock in the Company representing more than ten percent
(10%) of the voting power of all classes of stock of the Company unless the per
share option price specified by the Board or the Committee, as the case may be,
for the Incentive Stock Options granted such an Employee is at least one hundred
ten percent (110%) of the Fair Market Value of the Company's stock on the date
of grant and such option, by its terms, is not exercisable after the expiration
of five (5) years from the date such option is granted. For purposes of this
limitation, Section 424(d) of the Code governs the attributes of stock
ownership.

4.5 METHOD OF EXERCISE OF OPTION.

The amount to be paid by the Optionee upon exercise of an Incentive Stock
Option shall be the full purchase price thereof provided in the option.

5. EXCHANGE OF NONQUALIFIED OPTIONS FOR INCENTIVE STOCK OPTIONS

At the Optionee's election and in accordance with the procedures described
below, an Employee may exchange a Nonqualified Stock Option granted pursuant to
this Plan for an Incentive Stock Option for the identical number of Shares.

5.1 NOTICE OF INTENT TO EXCHANGE.

Not less than seven (7) days prior to the desired date of exchange, the
Optionee shall notify the Company in writing to that effect specifying the
number of Shares subject to grants as Nonqualified Stock Options under this Plan
which are to be exchanged for Shares subject to grants as Incentive Stock
Options under this Plan and the desired date of exchange.

5.2 LIMITATIONS ON AMOUNT OF OPTIONS EXCHANGED.

Notwithstanding the number of Optioned Shares specified by the Optionee as
desired to be exchanged pursuant to this Section 5, the Company will allow
exchanges for only so many options as will not violate the aggregate dollar
limitations specified in Section 4.3 above with that limit being based on a
calculation of the fair market value on the date of exchange. If an Optionee
requests to exchange more Optioned Shares than would be allowed by the preceding
sentence, the Company shall deem the request to apply only to the maximum number
of Optioned Shares which would be allowed and shall disregard the request as to
the excess. Exchanges may not occur after the terminal date of this Plan.

5.3 EFFECT OF EXCHANGE.

If an exchange does occur, the Optionee shall surrender the Nonqualified
Option for cancellation and shall execute a new Incentive Stock Option for the
number of Optioned Shares exchanged and, if all of the Nonqualified Options have
not been exchanged, shall execute a new Nonqualified Option (or an amendment to
the existing option) to specify the remainder of Shares under the Nonqualified
Option. The new Incentive Stock Option shall be deemed a new option granted on
the date of exchange with the exercise price established as of such date.

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6. AMENDMENT

This Plan and all rules, guidelines, and regulations adopted in respect
hereof may be terminated, suspended, or amended at any time by a majority vote
of the Board, provided that no such action shall adversely affect any rights of
Optionees granted under this Plan prior to such action, and further provided
that the following revisions or amendments require approval of or ratification
by the shareholders of the Company: (i) any increase in the number of Shares
subject to this Plan, other than in connection with an adjustments under either
or both of Sections 2.9 and 2.10 of this Plan; and (ii) any change that would
require shareholder approval pursuant to Rule 16b-3 promulgated by the
Securities and Exchange Commission pursuant to its authority under the Exchange
Act. The Board may amend the terms and conditions of outstanding options,
provided, however, that (i) no such amendment would be adverse to the holders of
such options, (ii) no such amendment shall extend the period for exercise of an
option, and (iii) the amended terms of an option would be permitted under this
Plan.

7. FOREIGN EMPLOYEES OR CONSULTANTS

Without amending the Plan, the Board or the Committee may grant options to
eligible Employees or Consultants who are foreign nationals on such terms and
conditions different from those specified in this Plan as may in the judgment of
the Board or the Committee, as the case may be, be necessary or desirable to
foster and promote achievement of the purposes of the plan, and, in furtherance
of such purposes the Board or the Committee may make such modifications,
amendments, procedures, subplans, and the like as may be necessary or advisable
to comply with the provisions of the laws in other countries in which the
Company operates or has Employees or Consultants.

8. REGISTRATION, LISTING, AND QUALIFICATION OF SHARES

Each option shall be subject to the requirement that if at any time the
Board shall determine that the registration, listing, or qualification of the
Shares covered thereby upon any securities exchange or under any foreign,
federal, state, or local law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such option or the purchase of Shares thereunder, no such
option may be exercised unless and until such registration, listing,
qualification, consent, or approval shall have been effected or obtained free of
any condition not acceptable to the Board. Any person exercising an option shall
make such representations and agreements and furnish such information as the
Board may request to assure compliance with the foregoing or any other
applicable legal requirements.

9. NO RIGHTS TO OPTIONS OR EMPLOYMENT; NO RESTRICTIONS

No Employee or other person shall have any claim or right to be granted an
option under this Plan. Having received an option under this Plan shall not give
an Employee or Consultant any right to receive any other grant or option under
this Plan. An Optionee shall have no rights to or interest in any option except
as set forth herein. Neither this Plan nor any action taken hereunder shall be
construed as giving any Employee or Consultant any right to be retained in the
employ of the Company. Nothing in this Plan shall restrict the Company's rights
to adopt other option plans pertaining to any or all of the Employees covered
under this Plan or other Employees not covered under this Plan.

10. COSTS AND EXPENSES

Except as provided herein with respect to the payment of taxes, all costs
and expenses of administering the Plan shall be borne by the Company and shall
not be charged to any grant nor any Employee or Consultant receiving a grant.

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11. PLAN UNFUNDED

This Plan shall be unfunded. Except for the Board's reservation of a
sufficient number of authorized shares to the extent required by law to meet the
requirements of the Plan, the Company shall not be required to establish any
special or separate fund or to make any other segregation of assets to assure
payment of any grant under the Plan.

12. GOVERNING LAW

This Plan shall be governed by and construed in accordance with the laws of
the state of Washington.

<PAGE> 1
STARBUCKS CORPORATION
1989 STOCK OPTION PLAN
FOR
NON-EMPLOYEE DIRECTORS
(Adopted 1/89, amended 4/89, 5/91, 9/94 and 9/96)

1. PURPOSE.

The purpose of the Starbucks Corporation 1989 Stock Option Plan for
Non-Employee Directors (the "Plan") is to attract and retain the services of
experienced and knowledgeable independent directors of Starbucks Corporation
(the "Corporation") for the benefit of the Corporation and its stockholders and
to provide an additional incentive for such directors to continue to work for
the best interest of the Corporation and its stockholders through continuing
ownership of its common stock.

2. SHARES SUBJECT TO THE PLAN.

The total number of shares of common stock, no par value of the Corporation
("Shares"), for which options may be granted under the Plan shall not exceed
350,000 in the aggregate, subject to adjustment hereafter in accordance with
Section 11 hereof. Within the foregoing limitations, Shares for which options
have been granted pursuant to the Plan but which options have lapsed or
otherwise terminated shall become available for the grant of additional options.
There will be reserved for issuance or transfer from the Corporation's reserve
of authorized but unissued shares upon the exercise of options granted under the
Plan 350,000 Shares, subject to adjustment hereafter in accordance with Section
11 hereof.

3. ADMINISTRATION OF PLAN.

The Plan shall be administered by the Board of Directors of the Corporation
(the "Board"). The Board shall have the power to construe the Plan, to determine
all questions arising thereunder, and to adopt and amend such rules and
regulations for the administration of the Plan as it may deem desirable.

4. ELIGIBILITY; GRANT OF OPTION.

Each director of the Corporation who is not, and has not during the
immediately preceding 12 month period been, an employee of the Corporation or
any parent or subsidiary of the Corporation (a "Participant") shall
automatically be a Participant in the Plan. Each Participant who is in office on
December 31 of any year beginning December 31, 1994, shall, on the immediately
succeeding January 15, automatically be granted an option to acquire 10,000
shares under the Plan.

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<PAGE> 2
5. OPTION AGREEMENT.

Each option granted under the Plan shall be evidenced by an option agreement
(the "Agreement") duly executed on behalf of the Corporation and by the
Participant to whom such option is granted, which Agreements may but need not be
identical and which shall (i) comply with and be subject to the terms and
conditions of the Plan and (ii) provide that the Participant agrees to continue
to serve as a director of the Corporation during the term for which he or she
was elected. Any Agreement may contain such other terms, provisions, and
conditions not inconsistent with the Plan as may be determined by the Board. No
option shall be deemed granted within the meaning of the Plan and no purported
grant of any option shall be effective, until such Agreement shall have been
duly executed on behalf of the Corporation and the Participant to whom the
option is to be granted.

6. OPTION EXERCISE PRICE.

The option exercise price for an option granted under the Plan shall be the
fair market value of the Shares covered by the option on the grant date (the
"Pricing Date"). For purposes hereof, the fair market value of the Shares
covered by an option shall be the average of the high and low sales prices of
the Shares on the applicable date as reported in the National Market List of the
National Association of Securities Dealers Inc. Automated Quotation System or on
the principal national securities exchange on which the Shares are then listed
for trading, or if the Shares are not listed for trading on any such system or
exchange, the fair market value shall be as determined by the Company's Board of
Directors.

7. TIME AND MANNER OF EXERCISE OF OPTION.

a. Options granted under the Plan shall be immediately exercisable.

b. The option may be exercised from time to time, by giving notice to
the Corporation or, if the Corporation requires, the brokerage firm designated
by the Corporation, stating the number of Shares with respect to which the
option is being exercised. The option shall be exercised by payment in full for
such Shares, which payment may be in whole or in part in shares of the common
stock of the Corporation already owned by the person or persons exercising the
option, valued at fair market value on the date of payment (as determined
pursuant to Section 6 hereof). The notification to the brokerage firm shall be
made in accordance with procedures of such brokerage firm approved by the
Corporation.

c. Upon exercise of the option, delivery of a certificate for fully paid
and nonassessable Shares shall be made at the principal office of the
Corporation or the Corporation's brokerage firm to the person or persons
exercising the option as soon as practicable (but in no event more than 30 days)
after the date of receipt of the notice of exercise by the Corporation, or the
Corporation's brokerage firm, or at such time, place,

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<PAGE> 3
and manner as may be agreed upon by the Corporation and the person or persons
exercising the option.

8. TERM OF OPTIONS.

Each option shall expire ten years from the date of the granting thereof,
but shall be subject to earlier termination as follows:

a. In the event of the death of a Participant, the option granted to
such Participant may be exercised by the estate of such Participant, or by any
person or persons who acquired the right to exercise such option by will or by
the laws of descent and distribution. Such option may be exercised at any time
within 180 days after the date of death of such Participant or prior to the date
on which the option expires by its terms, whichever is earlier.

b. Except as stated in paragraph (c) below, in the event that a
Participant ceases to be a director of the Corporation, other than by reason of
his or her death, the options granted to such Participant may be exercised, for
a period of thirty (30) days after such date, or prior to the date on which the
option expires by its terms, whichever is earlier.

c. In the event a Participant is removed from the Board of Directors for
cause as determined by the shareholders, the options granted to such Participant
must be exercised prior to his removal.

9. TRANSFERABILITY OF OPTIONS.

The right of any Participant to exercise an option granted to him or her
under the Plan shall not be assignable or transferable by such Participant
otherwise than (i) by will or the laws of descent and distribution, or (ii) by
gift or, with the consent of the Corporation, for value to immediate family
members of the Participant, partnerships of which the only partners are members
of the Participant's immediate family and trusts established solely for the
benefit of such family members; and solely as it pertains to effecting an
exercise of an option transferred in accordance with this Section 9, the term
Participant shall include a permitted transferee.

10. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.

Neither the recipient of an option under the Plan nor his or her successors
in interest shall have any rights as a stockholder the Corporation with respect
to any Shares subject to an option granted to such person until such person
becomes a holder of record of such Shares.

-3-
<PAGE> 4
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

In the event that the outstanding shares of the common stock of the
Corporation are changed into or exchanged for a different number or kind of
shares or other securities of the Corporation or of another corporation, by
reason of any reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination of shares, or dividend payable in
capital stock, appropriate adjustment shall be made in the number and kind of
shares subject to and reserved for issuance or transfer under the Plan and as to
which outstanding options (or portions thereof then unexercised) shall be
exercisable, to the end that the proportionate interest of Participants and
prospective Participants, with respect to options theretofore granted and to be
granted, shall be maintained as before the occurrence of such event. Such
adjustment in outstanding options shall be made without change in the total
price applicable to the unexercised portion of such options, but with a
corresponding adjustment in the option price per share.

12. RESTRICTIONS ON ISSUE OF SHARES.

Anything in this Plan to the contrary notwithstanding, the Corporation may
delay the issuance of Shares covered by the exercise of any option and the
delivery of a certificate for such Shares until on the following conditions
shall be satisfied:

(i) the Shares with respect to which an option has been exercised are at
the time of the issue or transfer of such Shares effectively registered under
applicable federal securities laws now in force or hereafter amended; or

(ii) counsel for the Corporation shall have given an opinion, which
opinion shall not be unreasonably conditioned or withheld, that such Shares are
exempt from registration under applicable federal securities laws now in force
or hereafter amended.

It is intended that all exercises of options shall be effective. Accordingly,
the Corporation shall use its best efforts to bring about compliance with the
above conditions within a reasonable time, except that the Corporation shall be
under no obligation to cause a registration statement or a posteffective
amendment to any registration statement to be prepared at its expense solely for
the purpose of covering the issuance or transfer from the Corporation's reserve
of authorized but unissued Shares in respect of which any option may be
exercised.

13. PURCHASE FOR INVESTMENT.

Unless the Shares to be issued upon exercise of an option granted under the
Plan have been effectively registered under the Securities Act of 1933 as now in
force or hereafter amended, the Corporation shall be under no obligation to
issue or transfer any Shares covered by any option unless the person or persons
who exercise such option, in whole or in part, shall give a written
representation and undertaking to the Corporation,

-4-
<PAGE> 5
which is satisfactory in form and scope to counsel to the Corporation and upon
which, in the opinion of such counsel, the Corporation may reasonably rely, that
he or she is acquiring the Shares issued or transferred to him or her for his or
her own account as an investment and not with a view to, or for sale in
connection with, the distribution for any such Shares, and that he or she will
make no transfer of the same except in compliance with any rules and regulations
in force at the time of such transfer under the Securities Act of 1933, or any
other applicable law, and that if Shares are issued or transferred without such
registration a legend to this effect may be placed upon the certificates
representing the Shares.

14. EFFECTIVE DATE.

The effective date (the "Effective Date") of this Plan was January 17, 1989.

15. EXPENSES OF THE PLAN.

All costs and expenses of the adoption and administration of the Plan shall
be borne by the Corporation and none of such expenses shall be charged to any
Participant.

16. TERMINATION AND AMENDMENT OF PLAN.

Unless sooner terminated as herein provided, the Plan shall terminate ten
years from the Effective Date. The Board may at any time terminate the Plan or
make such modification or amendment thereof as it deems advisable; provided,
however, that, except as provided in Section 11, the Board may not, without the
approval of the stockholders of the Corporation, increase the maximum aggregate
number of shares for which options may be granted under the Plan or the number
of Shares for which an option may be granted to any Participant. Termination or
any modification or amendment of the Plan shall not, without the consent of a
Participant, affect his or her rights under an option previously granted to him
or her.

-5-

<PAGE> 1
STARBUCKS CORPORATION
1991 COMPANY-WIDE
STOCK OPTION
PLAN

(Adopted effective 10/90; Amended 9/92,2/93, 1/94, and 9/96)

1. INTRODUCTION AND DEFINITIONS

1.1 THE PLAN:

This 1991 Company-Wide Stock Option Plan (this "Plan") establishes the right
of and procedures for STARBUCKS CORPORATION (the "Company") to grant stock
options to its employees.

1.2 DEFINITIONS:

Capitalized terms used in this Plan shall have the following meanings:

"ACT." "Act" shall mean the Securities Act of 1933.

"BOARD." The "Board" shall mean the Board of Directors of Starbucks
Corporation.

"BUY OUT NOTICE." "Buy Out Notice" shall have the meaning set forth in
Section 7 hereof.

"CODE." "Code" shall mean the Internal Revenue Code of 1986, as amended.

"COMPANY." The "Company" shall mean Starbucks Corporation d/b/a Starbucks
Coffee Company.

"FAIR MARKET VALUE." The "Fair Market Value" of the Company's equity
securities shall be determined, as of any time, based upon the prevailing bid
price of the Company's common stock as of such time on the national exchange,
over-the-counter, or other stock trading market on which the Company is listed,
and in the absence of which shall be determined by the Board.

"PLAN." "Plan" shall mean the Starbucks Corporation 1991 Company-Wide Stock
Option Plan, as amended.

"SHARES." The "Shares" shall mean the Shares reserved for issuance under
this Plan as further defined in Section 2.2.

2. GENERAL PROVISIONS

2.1 OBJECTIVES OF THE PLAN:

The purpose of this Plan is to encourage ownership of common stock of the
Company by all employees of the Company and any current or future subsidiary.
This Plan is intended to provide an incentive and bonus for maximum effort in
the successful operation of the Company and is expected to benefit the
shareholders by associating the interests of the Company's employees with those
of its shareholders and by enabling the Company to attract and retain personnel
of the best available talent through the opportunity to share, by the
proprietary interests created by this Plan, in the increased value of the
Company's shares to which such personnel have contributed. The benefits of this
Plan are not a substitute for compensation otherwise payable to Company
employees pursuant to the terms of their employment. This Plan provides for the
granting of "Non-Qualified Stock Options," which options are not to be construed
as "Incentive Stock Options" as defined and governed by Section 422A of the
Code. This Plan sets forth provisions applicable to Non-Qualified Options only.

2.2 STOCK RESERVED FOR THIS PLAN:

The Stock reserved for issue upon the exercise of options granted under this
Plan will not exceed 1,000,000 shares of the no par value common stock of the
Company (the "Shares") which may be either authorized and unissued shares or
issued shares held in or hereafter acquired for the treasury of the Company.
Shares subject to any option under this Plan which are not exercised in full or
Shares as to which the right to purchase is forfeited through default or
otherwise, shall remain available for other options under this Plan provided
that the aggregate number of Shares subject to options under this Plan shall not
exceed 1,000,000 Shares of said stocks unless the Board approves an increase in
said number.
<PAGE> 2
2.3 ADMINISTRATION OF THIS PLAN:

This Plan shall be administered by the Company's Board of Directors
(sometimes referred to herein as the "Board"), provided that each member of the
Board who participates in administration must be a "disinterested person" as
that term is defined in Rule 16b(3) of the Securities Exchange Act of 1934. The
Board may appoint a Board committee of not less than three such disinterested
persons to administer the Plan in the name of the Board. Such committee shall
have sole discretion to determine the employees to be granted options under this
Plan, to determine the size and applicable terms and conditions of grants to be
made to such employees, to determine a time when options will be granted, and to
authorize grants to eligible employees. Such committee shall have full power and
authority to administer and interpret this Plan and to adopt, from time to time,
such guidelines, rules, regulations, agreements, and instruments for the
administration of this plan as it deems necessary or advisable.

The Board's interpretations of this Plan, and all actions taken and
determinations made by the Board concerning any matter arising under or with
respect to this Plan or any options granted pursuant to this Plan, shall be
final, binding, and conclusive on all interest parties, including the Company,
its shareholders, and all former, present and future employees of the Company.
The Board may, as to all questions of accounting rely conclusively upon any
determinations made by independent public accounts of the Company.

The guidelines for administration of this plan as adopted by and amended by
the Board shall be attached to this Plan for reference.

2.4 ELIGIBILITY; FACTS TO BE CONSIDERED IN GRANTING OPTIONS:

An option may be granted to any full-time or part-time employee who, as
of the date the option is granted, is then an employee and had been an employee
of the Company or of any subsidiary for at least 180 consecutive days during the
Company's last fully-completed fiscal year, provided that employees who hold any
of the positions of President, Chief Executive Officer, Chief Financial Officer,
or Principal Accounting Officer may not participate. In its determination of an
employee to whom an option shall be granted and the number of shares to be
covered by such option, the Board may also take into account any or all of the
following factors: the salary and/or wages of the employee; the duties of the
employee; the present and potential contributions of the employee to the success
of the Company; the anticipated number of years of service remaining before the
attainment by the employee of the age of retirement; and other factors deemed
relevant by the Board in connection with accomplishing the purpose of this Plan.
An employee who has been granted an option to purchase Shares of the Company,
whether under this Plan or otherwise, may, if the board shall so determine, be
granted additional options, provided that no employee may be granted options
under this Plan that in the aggregate would result in such employee receiving
more than 5% of the maximum number of Shares available for issuance under this
Plan.

2.5 VESTING OF OPTIONS:

The Board shall have the authority to establish the time or times at which
the optioned Shares may be purchased and whether all of the options may be
exercised at one time or in increments.

2.6 RIGHTS OF OPTIONEE IN EVENT OF MERGER, CONSOLIDATION, TENDER
OFFER, TAKEOVER BID, SALE OF ASSETS OR DISSOLUTION:

(a) Notwithstanding Section 2.5 above or anything else in this Plan
to the contrary, the Optionee may purchase the full amount of optioned Shares
for which options have been granted to the Optionee and for which the options
have not been exercised under the following conditions:

(1) The Optionee may conditionally purchase any or all optioned
Shares during the period commencing twenty-seven (27) days and ending (7) days
prior to the scheduled effective date of a merger or consolidation (as such
effective date may be delayed from time to time) wherein the Company is not to
be the surviving corporation, which merger or consolidation is not between or
among the Company and other corporations related to or affiliated with the
Company;

(2) The Optionee may conditionally purchase any or all optioned
Shares during the period commencing on the initial date of a tender offer or
takeover bid for the optioned Shares (other than a tender offer by the Company)
subject to the Securities Exchange Act of 1934 and the rules promulgated
thereunder and ending on the day preceding

2
<PAGE> 3
the scheduled termination date of acceptance of tenders of Shares by the offeror
under any such tender offer or takeover bid (as such termination date may be
extended by such offeror);

(3) The Optionee may conditionally purchase any or all optioned
Shares during the period commencing on the date the shareholders of the Company
approve a sale of substantially all the assets of the Company and ending seven
(7) days prior to the scheduled closing date of such sale (as such closing date
may be delayed from time to time); and

(4) The Optionee may conditionally purchase any or all optioned
Shares during the period commencing on the date the Company files its Statement
of Intent to Dissolve and ending thirty (30) days later but not in any event
later than the day before the Company files its Articles of Dissolution.

(b) If the merger, consolidation, tender offer, takeover bid, sale
of assets, or dissolution, as the case may be and as described in Subsections
(1) through (4) of Section 2.6(a), once commenced, is cancelled or revoked, the
conditional purchase of Shares for which the option to purchase would not have
otherwise been exercisable at the time of said cancellation or revocation, but
for the operation of this Section 2.6, shall be rescinded. With respect to all
other Shares conditionally purchased, the Optionee may rescind such purchase at
his or her option.

(c) If the merger, consolidation, tender offer, takeover bid, or
sale of assets does occur or thirty (30) days passes after a Statement of Intent
to Dissolve is filed (or Articles of Dissolution are filed), as the case may be
and as described in Subsections (1) through (4) of Section 2.6(a), and the
Optionee has not conditionally purchased all optioned Shares, all unexercised
options shall terminate on the effective, termination, or closing date, or
thirty (30) days after the date of said filing date (but not later than the day
before Articles of Dissolution are filed), as the case may be.

(d) If the Company shall be the surviving corporation in any merger
or is a party to a merger or consolidation which is between or among the Company
and other corporations related to or affiliated with the Company, any option
granted hereunder shall pertain and apply to the securities to which a holder of
the number of Shares of common stock subject to the option would have been
entitled.

(e) Nothing herein shall allow the Optionee to purchase optioned
Shares, the options for which have expired.

2.7 TERMS AND EXPIRATION OF OPTIONS:

Each option granted under this Plan shall be in writing, shall be subject to
such amendment or modification from time to time as the Board shall deem
necessary or appropriate to comply with or take advantage of applicable laws or
regulations and shall contain provisions to the following effect, together with
such other provisions as the Board shall from time to time approve:

(a) that, subject to the provisions of Section 2.7(b) below, the
option, as to the whole or any part thereof, may be exercised only by the
Optionee or such Optionee's personal representative;

(b) that neither the whole nor any part of the option shall be
transferable by the Optionee or by operation of law otherwise than by the will
of, or by the laws of descent and distribution applicable to, a deceased
Optionee and that the option and any and all rights granted to the Optionee
thereunder and not theretofore effectively and completely exercised shall
automatically terminate and expire upon any sale, transfer, or hypothecation or
any attempted sale, transfer, or hypothecation of such rights or upon the
bankruptcy or insolvency of the Optionee or his or her estate;

(c) that subject to the foregoing provisions, an option may be
exercised at different times for portions of the total number of Shares for
which the right to purchase shall have vested provided that such portions are in
multiples of 10 shares if the Optionee holds vested options for 99 or fewer
shares and otherwise in multiples of 100 shares;

(d) that no Optionee shall have the right to receive any dividend on
or to vote or exercise any right in respect of any Shares unless and until the
certificates for such Shares have been issued to such Optionee;

3
<PAGE> 4
(e) that the option shall expire at the earliest of the following:

(1) The date specified in the option;

(2) Ninety (90) days after voluntary or involuntary termination
of Optionee's employment other than termination as described in Paragraphs (3)
or (4) below:

(3) Upon the discharge of Optionee for misconduct, willfully
or wantonly harmful to the Company;

(4) Twelve (12) months after Optionee's death or disability; or

(5) In the event of a merger, consolidation, tender offer,
takeover bid, sale of assets, or filing of a Statement of Intent to Dissolve (or
the filing of Articles of Dissolution), as the case may be and as described in
Subsections (1) through (4) of Section 2.6(a), on the date specified in Section
2.6(c). However, if the merger, consolidation, tender offer, takeover bid, or
sale of assets does not occur or if a Statement of Intent to Dissolve is not
filed, as the case may be and as described in Subsections (1) through (4) of
Section 2.6(a), all options which are terminated pursuant to this Subsection
(e)(5) shall be reinstated as if no action with respect to any of said events
had been contemplated or taken by any party thereto and all Optionees shall be
returned to their respective positions on the date of termination;

(f) that, to the extent an option provides for the vesting thereof
in increments, such vesting shall cease as of the date of the Optionee's death,
disability, or voluntary or involuntary termination of Optionee's employment
with the Company;

(g) that the terms of the option shall not be affected by any change
of duties or position so long as the Optionee shall continue to be employed by
the Company or a subsidiary.

2.8 EXERCISE OF OPTIONS:

The Optionee (or other person or persons, if any, entitled thereto
hereunder) desiring to exercise an option granted and exercisable hereunder as
to all or part of the Shares covered thereby shall notify the Company or, if
required by the Company, the brokerage firm designated by the Company to
facilitate exercises and sales under this Plan, specifying the number of option
Shares to be purchased and, if required by the Company, representing in form
satisfactory to the Company that the Shares are being purchased for investment
and not with a view to resale or distribution. The notification to the brokerage
firm shall be made in accordance with procedures of such brokerage firm approved
by the Company. With respect to any Shares conditionally purchased pursuant to
Section 2.6(a) above and for which such purchase has not been voluntarily or
otherwise rescinded pursuant to Section 2.6(b), the Optionee shall be deemed to
have given the notice required by this Section 2.8 as of ten (10) days prior to
the closing or effective date of the merger, consolidation, tender offer,
takeover bid, or sale of assets or as of the twentieth (20th) day after a
Statement of Intent to Dissolve is filed (or the tenth (10th) day before the
filing of Articles of Dissolution if it precedes said twentieth (20th) day), as
the case may be and as described in Subsections (1) through (4) of Section
2.6(a).

2.9 METHOD OF EXERCISE OF OPTION:

The option shall be exercised as to the number of Shares specified in the
notice provided pursuant to Section 2.8 above by payment to the Company of the
amount specified below in Section 3.2. Payment of the option price shall be made
in cash or in accordance with procedures for a "cashless exercise" as the same
shall have been established from time to time by the Company and the brokerage
firm designated by the Company to facilitate exercises and sales under this
Plan. Payment in shares of the Company's common stock shall be deemed to be the
equivalent of payment in cash at the Fair Market Value of those shares. No such
payment in shares of the Company's common stock shall be allowed when the same
may in the reasonable opinion of the Company cause the Company to record a loss
or expense as a result thereof.

2.10 RECAPITALIZATION:

The aggregate number of Shares for which options may be granted hereunder,
the number of Shares covered by each outstanding option, and the price per Share
thereof in each such option shall be proportionately adjusted for an increase or
decrease in the number of outstanding shares of common stock of the Company
resulting from a stock split or reverse split of shares or

4
<PAGE> 5
any other capital adjustment or the payment of a stock dividend or other
increase or decrease in such shares effected without receipt of consideration by
the Company excluding any decrease resulting from the purchase of shares for the
treasury. If the adjustment would result in a fractional Share, the Optionee
shall be entitled to one (1) additional Share, provided that the total number of
Shares to be granted under this Plan shall not be increased above the equivalent
number of Shares initially allocated or later increased by approved amendment to
this Plan.

2.11 SUBSTITUTIONS AND ASSUMPTIONS:

The Board shall have the right to substitute or assume options in connection
with mergers, reorganizations, separations, or other "corporate transactions" as
that term is defined in and said substitutions and assumptions are permitted by
Section 425 of the Code and the regulations promulgated thereunder. The number
of Shares reserved pursuant to Section 2.2 may be increased by the corresponding
number of options assumed and, in the case of a substitution, by the net
increase in the number of Shares subject to options before and after the
substitution.

2.12 TERMINATION:

The directors of the Company may at any time modify, amend, or terminate
this Plan. No amendment, modification, or termination of the Plan may adversely
affect options granted prior to such action.

2.13 GRANTING OF OPTIONS:

The granting of any option pursuant to this Plan shall be entirely in the
discretion of the Board and nothing herein contained shall be construed to give
any employee any right to participate under this Plan.

2.14 WITHDRAWAL:

An Optionee may at any time elect in writing to abandon an option with
respect to the number of Shares as to which the option shall not have been
exercised.

2.15 GOVERNMENT REGULATIONS:

2.16 PROCEEDS FROM SALE OF STOCK:

Proceeds of the purchase of optioned Shares by an Optionee shall be for the
general business purposes of the Company.

2.17 BOARD AUTHORIZATION:

This Plan has been adopted and authorized by the Board for a period of ten
years beginning as of the first day of the Company's 1991 fiscal year.

2.18 COMPLIANCE WITH SECURITIES LAWS:

The Board shall have the right to:

(a) require an Optionee to execute, as a condition of the exercise
of an option, a letter evidencing Optionee's intent to acquire the Shares for
investment and not with a view to the resale or distribution thereof;

(b) place appropriate legends upon the certificate or certificates
for the Shares; and

(c) take such other acts as it deems necessary in order to cause the
issuance of optioned Shares to comply with applicable provisions of State and
Federal Securities Laws.

In furtherance of the foregoing, and not by way of limitation thereof, no
option shall be exercisable unless such option and the Shares to be issued
pursuant thereto shall be registered under appropriate Federal and State
Securities Laws, or shall be exempt therefrom, in the opinion of the Board upon
advice of counsel to the Company. Each option agreement shall contain adequate
provisions to assure that there will be no violation of such Laws. This
provision shall in no way obligate the Company to undertake registration of
options or Shares hereunder. Issue, transfer or delivery of certificates for
Shares pursuant to the exercise of options may be delayed, at the discretion of
the board, until the Board is satisfied that the applicable requirements of the
Federal and State Securities Laws have been met.

5
<PAGE> 6
2.19 TERMINAL DATE OF PLAN:

This Plan shall not extend beyond October 1, 2000.

3. OPTION PRICE AND WITHHOLDING TAX

In addition to the provisions of Section 2 above, the following paragraphs
shall apply to any options granted under this Plan:

3.1 OPTION PRICE:

The option or purchase price of each Share optioned under this Plan shall be
determined by the Board at the time of the action for the granting of the
option.

3.2 WITHHOLDING ON PAYMENT FOR OPTIONED SHARES:

The amount to be paid by the Optionee upon exercise of an option shall be
the full purchase price thereof provided in the option, together with the amount
of federal, state, and local income and FICA taxes required to be withheld by
the Company. An Optionee may elect to pay his or her federal, state, or local
income and FICA withholding tax by having the Company withhold shares of Company
common stock having a value equal to the amount required to be withheld. The
value of the shares to be withheld is deemed to equal the fair market value of
the shares on the day the option is exercised, as determined in accordance with
Section 2.9. An election by an Optionee to have shares withheld for this purpose
will be subject to the following restrictions:

(a) If an Optionee has received multiple option grants, a separate
election must be made for each grant;

(b) The election must be made prior to the day the option is
exercised;

(d) The election will be subject to the disapproval of the Board;

(e) If the Optionee is an officer of the Company within the meaning
of Section 16 of the Securities Exchange Act of 1934 ("Section 16"), the
election may not be made within six months following the grant of the option;
and

(f) If the Optionee is an officer of the Company within the meaning
of said Section 16, the election must be made either six months prior to the day
the option is exercised or the ten day "window" beginning on the third day
following the release of the Company's quarterly or annual summary statement of
sales and earnings.

4. AMENDMENT

This Plan and all rules and regulations adopted in respect hereof may be
terminated, suspended, or amended at any time by a majority vote of the Board,
except as otherwise specifically set forth in Section 2.12, provided that no
such action shall adversely affect any rights of Optionees granted under this
Plan prior to such action. The Board may amend the terms and conditions of
outstanding options, provided, however, that (i) no such amendment would be
adverse to the holders of such options, (ii) no such amendment shall extend the
period for exercise of an option, and (iii) the amended terms of an option would
be permitted under this Plan.

5. FOREIGN EMPLOYEES

Without amending the Plan, the Board may grant options to eligible employees
who are foreign nationals on such terms and conditions different from those
specified in this Plan as may in the judgment of the Board be necessary or
desirable to foster and promote achievement of the purposes of the Plan, and, in
furtherance of such purposes the Board may make such modifications, amendments,
procedures, subplans, and the like as may be necessary or advisable to comply
with the provisions of laws in other countries in which the Company operates or
has employees.

6. REGISTRATION, LISTING, AND QUALIFICATION OF SHARES

Each option shall be subject to the requirement that if at any time the
Board shall determine that the registration, listing, or qualification of the
shares covered thereby upon any securities exchange or under any foreign,
federal, state, or local law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such option or the purchase of shares thereunder, no such
option may be exercised

6
<PAGE> 7
unless and until such registration, listing, qualification, consent, or approval
shall have been effected or obtained free of any condition not acceptable to the
Board. Any person exercising an option shall make such representations and
agreements and furnish such information as the Board may request to assure
compliance with the foregoing or any other applicable legal requirements.

7. BUY OUT OF OPTION GAINS

At any time after any option becomes exercisable, the Board shall have the
right to elect, in its sole discretion and without the consent of the Optionee,
to cancel such option and to pay such Optionee the excess of the fair market
value of the shares of the Company's common stock covered by such option over
the option exercise price of such option at the date the Board provides written
notice (the "Buy Out Notice") of its intention to exercise such right. Buy outs
pursuant to this provision shall be effected by the Company as promptly as
possible after the date of the Buy Out Notice. Payments of buy out amounts may
be made in cash, in shares of the Company's common stock, or partly in cash and
partly in common stock, as the Board deems advisable. To the extent payment is
made in shares of common stock, the number of shares shall be determined by
dividing the amount of the payment to be made by the fair market value of a
share of common stock at the date of the Buy Out Notice. In no event shall the
Company be required to deliver a fractional share of common stock in
satisfaction of this buy out provision. Payment of any such buy out amount shall
be made net of any applicable foreign, federal (including FICA), state, and
local withholding taxes.

8. NO RIGHTS TO OPTIONS OR EMPLOYMENT; NO RESTRICTIONS

No employee or other person shall have any claim or right to be granted an
option under this Plan. Having received an option under this Plan shall not give
an employee any right to receive any other grant or option under this Plan. An
Optionee shall have no rights to or interest in any option except as set forth
herein. Neither this Plan nor any action taken hereunder shall be construed as
giving any employee any right to be retained in the employ of the Company.
Nothing in this Plan shall restrict the Company's rights to adopt other option
plans pertaining to any or all of the employees covered under this Plan or other
employees not covered under this Plan.

9. COSTS AND EXPENSES

10. PLAN UNFUNDED

11. GOVERNING LAW

This Plan shall be governed by and construed in accordance with the laws of
the state of Washington.

<PAGE> 1
STARBUCKS CORPORATION

EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS
(in thousands, except earnings per share)

<TABLE>
<CAPTION>
September 29, October 1, October 2,
1996 1995 1994
------------- ---------- ----------
<S> <C> <C> <C>
CALCULATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT
SHARE - PRIMARY:

Net earnings $42,128 $26,102 $10,206
======= ======= =======
Weighted average shares outstanding calculation:
Weighted average number of common shares outstanding 73,849 68,898 56,936
Dilutive effect of outstanding common stock options and warrants 3,115 2,411 2,782
------- ------- -------
Weighted average shares outstanding 76,964 71,309 59,718
======= ======= =======
Earnings per share $ 0.55 $ 0.37 $ 0.17
======= ======= =======
CALCULATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT
SHARE - FULLY-DILUTED: (1)

Net earnings calculation:
Net earnings $42,128 $26,102 $10,206
Add after tax interest expense on debentures 1,248 -- --
Add after tax amortization of issuance costs related to the
debentures 93 -- --
------- ------- -------
Adjusted net earnings $43,469 $26,102 $10,206
======= ======= =======
Weighted average shares outstanding calculation:
Weighted average number of common shares outstanding 73,849 68,898 56,936
Dilutive effect of outstanding common stock options and warrants 3,956 3,011 2,821
Assuming conversion of convertible subordinated debentures 3,026 -- --
------- ------- -------
Weighted average shares outstanding 80,831 71,909 59,757
======= ======= =======
Earnings per common and common equivalent share - fully-diluted $ 0.54 $ 0.36 $ 0.17
======= ======= =======
</TABLE>

- ------------

(1) - 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 income adjusted for the after-tax
interest expense and amortization applicable to these debentures.

<PAGE> 1
STARBUCKS CORPORATION

EXHIBIT 12 - STATEMENT REGARDING COMPUTATION OF
RATIO OF EARNINGS TO FIXED CHARGES (1)
(In thousands, except ratio data)

<TABLE>
<CAPTION>
September 29, October 1, October 2, October 3, September 27,
1996 1995 1994 1993 1992
------------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
COMPUTATION OF EARNINGS:
Earnings before income taxes $ 68,501 $ 43,143 $ 17,754 $13,526 $ 7,152
Interest expense 8,739 3,765 3,807 772 612
Amortization of debt
expense 682 260 260 43 192
Portion of rents
representative of
interest factor 20,612 14,713 7,144 3,892 2,300
Less: Capitalized interest (306) (160) (99) -- --
-------- -------- -------- ------- -------
Total earnings (as calculated) $ 98,228 $ 61,721 $ 28,866 $18,233 $10,256
======== ======== ======== ======= =======
COMPUTATION OF FIXED CHARGES:
Interest expense $ 8,739 $ 3,765 $ 3,807 $ 772 $ 612
Amortization of debt
expense 682 260 260 43 192
Portion of rents
representative of
interest factor 20,612 14,713 7,144 3,892 2,300
-------- -------- -------- ------- -------
Total fixed charges $ 30,033 $ 18,738 $ 11,211 $ 4,707 $ 3,104
======== ======== ======== ======= =======
Ratio of earnings to fixed charges 3.27x 3.29x 2.57x 3.87x 3.30x
======== ======== ======== ======= =======
</TABLE>

- --------------

(1) For purposes of computing the ratio of earnings to fixed charges, earnings
include earnings before income taxes, amortization of debt expense, and
interest expense, including that portion of rental expense attributable to
interest costs. Fixed charges consist of interest expense, including that
portion of rental expense attributable to interest costs, and interest
capitalized during the period.

<PAGE> 1
STARBUCKS CORPORATION

(SEATTLE, WASHINGTON)

We have audited the accompanying consolidated balance sheets of Starbucks
Corporation and subsidiaries (the Company) as of September 29, 1996, and October
1, 1995, and the related consolidated statements of earnings, shareholders'
equity, and cash flows for each of the three years in the period ended September
29, 1996. 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 generally accepted auditing
standards. 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, 1996, and October 1, 1995, and the results of
their operations and their cash flows for each of the three years in the period
ended September 29, 1996, in conformity with generally accepted accounting
principles.

/S/Deloitte & Touche LLP
Seattle, Washington
November 22, 1996

<PAGE> 1
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

(STARBUCKS CORPORATION)

The management of Starbucks Corporation is responsible for the preparation and
integrity of the financial statements included in this Annual Report to
Shareholders. The financial statements have been prepared in conformity with
generally accepted accounting principles and include amounts based on
management's best judgment where necessary. Financial information included
elsewhere in this Annual Report is consistent with these financial statements.

Management maintains a system of internal controls and procedures designed to
provide reasonable assurance that transactions are executed in accordance with
proper authorization, that transactions are properly recorded in the Company's
records, that assets are safeguarded, and that accountability for assets is
maintained. The concept of reasonable assurance is based on the recognition that
the cost of maintaining our system of internal accounting controls should not
exceed benefits expected to be derived from the system. Internal controls and
procedures are periodically reviewed and revised, when appropriate, due to
changing circumstances and requirements.

Independent auditors are appointed by the Company's Board of Directors and
ratified by the Company's share-holders to audit the financial statements in
accordance with generally accepted auditing standards and to independently
assess the fair presentation of the Company's financial position, results of
operations, and cash flows. Their report appears in this Annual Report.

The Audit Committee of the Board of Directors, a majority of whom are outside
directors, is responsible for monitoring the Company's accounting and reporting
practices. The Audit Committee meets periodically with management and the
independent auditors to ensure that each is properly discharging its
responsibilities. The independent auditors have full and free access to the
Committee without the presence of management to discuss the results of their
audits, the adequacy of internal accounting controls, and the quality of
financial reporting.

/s/ Howard Schultz /s/ Orin Smith /s/ Michael Casey
Howard Schultz Orin Smith Michael Casey
chairman and president and senior vice president and
chief executive officer chief operating officer chief financial officer

<PAGE> 1
STARBUCKS CORPORATION

-------------------------------

EXHIBIT 21 - SUBSIDIARIES OF THE REGISTRANT

The Coffee Connection, Inc.

Starbucks New Venture Company

Starbucks Coffee International, Inc.

Starship I, Inc.

Starbucks Holding Company

Starbucks Manufacturing Corporation

SBI Nevada, Inc. (a wholly-owned subsidiary of
Starbucks Coffee International, Inc.)

Circadia Corporation

<PAGE> 1

EXHIBIT 23

INDEPENDENT AUDITORS' CONSENT
- --------------------------------------------------------------------------------

We consent to the incorporation by reference in Registration Statements No.
33-52526, 33-52528, 33-92208 and 33-92184 of Starbucks Corporation on Form S-8
and Registration Statement No. 33-95690 of Starbucks Corporation on Form S-3 of
our reports dated November 22, 1996, appearing in and incorporated by reference
in the Annual Report on Form 10-K/A of Starbucks Corporation for the year ended
September 29, 1996.

/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP
Seattle, Washington

April 21, 1997

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STARBUCKS CORPORATION FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 29, 1996,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-29-1996
<PERIOD-START> OCT-02-1996
<PERIOD-END> SEP-29-1996
<CASH> 126,215
<SECURITIES> 103,221
<RECEIVABLES> 17,621
<ALLOWANCES> 116
<INVENTORY> 83,370
<CURRENT-ASSETS> 339,541
<PP&E> 457,480
<DEPRECIATION> 88,003
<TOTAL-ASSETS> 726,613
<CURRENT-LIABILITIES> 101,091
<BONDS> 165,020
0
0
<COMMON> 361,309
<OTHER-SE> 90,351
<TOTAL-LIABILITY-AND-EQUITY> 726,613
<SALES> 696,481
<TOTAL-REVENUES> 696,481
<CGS> 335,800
<TOTAL-COSTS> 335,800
<OTHER-EXPENSES> 303,688
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,739
<INCOME-PRETAX> 68,501
<INCOME-TAX> 26,373
<INCOME-CONTINUING> 42,128
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,128
<EPS-PRIMARY> 0.55
<EPS-DILUTED> 0.54

</TABLE>