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Starbucks Coffee Company
Barclays Capital Retail and Restaurants ConferenceApril 28, 2010
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Forward Looking Statements
This presentation contains forward-looking statements. Forward-looking statements are subject to various risks and uncertaintiesthat could cause our actual results to differ materially from thesestatements, and should be considered in conjunction withcautionary statements and risk factor discussions in our filingswith the SEC, including our last annual report on Form 10K andsubsequent reports on Form 10Q. Starbucks assumes noobligation to update any of these forward-looking statements orinformation.
Please refer to the appendix to find reconciliations of non-GAAP
financial measures noted in this presentation with theircorresponding GAAP measures.
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Starbucks Coffee Company
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Building for the Future
Deliver enhanced customer experience
Drive operational leverage
Deliver relevant innovation and profitablegrowth platforms through multiple channels
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Q2 Fiscal 2010 Highlights
Strong momentum continues Revenue of $2.5B; 9% growth
Comparable store sales growth of 7% 5th sequential quarter of improvement
Highest comp since Q206
Operating margin: GAAP = 13.4% compared to 1.8% prior year
Non-GAAP = 13.7% compared to 8.3% prior year
Earnings per share: GAAP = $0.28 vs. $0.03 in prior year Non-GAAP = $0.29 vs. $0.16 in prior year
Initiated first-ever cash dividend
Note: Non-GAAP reconciliations available in the appendix
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-10%
-5%
0%
5%
10%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
-10%
-5%
0%
5%
10%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Comparable Store Sales
Return to growthU.S. Segment
FY2008 FY2009 FY2010International Segment
FY2008 FY2009 FY2010
(1%)(8%)4%) (5%) (10%) (1%)6%)
5%
0%3% 2%
(3%) (3%) (2%)
(8%)
0%4%
7%
4%7%
TransactionsTicket
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0.0%
5.0%
10.0%
15.0%
FY05 FY06 FY07 FY08 FY09 1H FY09 1H FY10 FY10
Outlook
GAAP Non-GAAP Outlook Range
Margin ImprovementDriven by cost discipline and powerful sales leverage
Consolidated Operating Margin
Notes: 1) Line on FY05 bar indicates operating margin including FAS 123 expensing of stock option compensation, 2) Non-GAAPreconciliations available in the appendix
8.1%9.2%
12% - 13%12.3%11.5%
11.2%
4.9% 5.7%
7.8%
13.7%
3.2%
13.2%
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$0.61
$0.71
$0.87
$0.43
$0.52
$0.12
$0.60
$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
FY05 FY06 FY07 FY08 FY09 1H FY09 1H FY10 FY10
Outlook
GAAP EPS Non-GAAP EPS Outlook Range
Earnings per Share
Profitable growth in a challenging environment
$0.71
$0.80
Notes: 1) FY05 EPS was before the adoption of FAS 123R, 2) FY06 includes $0.02 expense related to the cumulative effect of anaccounting change, 3) Non-GAAP reconciliations available in the appendix, 4) FY10 outlook includes ~$0.04 due to a 53 rd week andexcludes ~$0.03 for restructuring
49% - 53%growth
$0.62
$0.32
$1.19-$1.22
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$0.16
$0.29
$0.00
$0.10
$0.20
$0.30
Q2 FY09 Q2 FY10
GAAP EPS Non-GAAP EPS
Profitable Growth
Record second quarter earnings
Note: Non-GAAP reconciliation available in the appendix
$0.28
$0.03
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$0.16
$0.29
$0.00
$0.10
$0.20
$0.30
Q2 FY09 Q2 FY10
GAAP EPS Non-GAAP EPS
Profitable Growth
Record second quarter earnings
Note: Non-GAAP reconciliation available in the appendix
$0.28
$0.03
Non-GAAP Net Earnings$121.1 Million $223.1 Million
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Revenue
$7,023 $7,532 $7,105
$3,641 $3,755
$0
$3,000
$6,000
$9,000
2007 2008 2009 1H FY09 1H FY10
$1,005
$454 $532
$184
$656
$0
$250
$500
$750
$1,000
$1,250
2007 2008 2009 1H FY09 1H FY10
14.3%
6.0%7.5%
5.0%
17.5%
0.0%
5.0%
10.0%
15.0%
20.0%
2007 2008 2009 1H FY09 1H FY10 Long-term
target
Operating Margin
Fiscal Year Fiscal 1HFiscal Year Fiscal 1H
United States
(in millions)
Fiscal Year Fiscal 1H
Operating Income (in millions)
$778*$730*
$345*
$666*
9.7%*11.0%*
Highteens
9.5%*
17.7%*
Healthy business provides foundation for Starbucks growth
GAAP
Non-GAAP
Note: Non-GAAP reconciliation available in the appendix
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Revenue
$1,696$2,103 $1,920
$929 $1,125
$0
$500
$1,000
$1,500
$2,000
$2,500
2007 2008 2009 1H FY09 1H FY10
$138$110
$93
$19
$84
$0
$50
$100
$150
2007 2008 2009 1H FY09 1H FY10
8.1%
5.2% 4.8%
2.0%
7.5%
0.0%
5.0%
10.0%
15.0%
20.0%
2007 2008 2009 1H FY09 1H FY10 Long-term
target
Operating Margin
Fiscal Year Fiscal 1H
Fiscal Year Fiscal 1Hr
International
(in millions)
Fiscal Year Fiscal 1H
Operating Income (in millions)
$120*$137*
$36*
$102*
6.5%*6.2%*
MidtoHighteens
3.9%*
9.0%*
On the path to an enormous opportunity
GAAP
Non-GAAP
Note: Non-GAAP reconciliation available in the appendix
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Revenue
$692 $748 $750
$379 $377
$0
$200
$400
$600
$800
2007 2008 2009 1H09 1H10
$249 $279$296
$138 $135$0
$70
$140
$210$280
$350
2007 2008 2009 1H09 1H10
35.9% 39.6% 36.4% 35.8%37.3%
0.0%
15.0%
30.0%
45.0%
2007 2008 2009 1H09 1H10 Long-term
target
Operating Margin
35%
Fiscal Year Fiscal 1H
Fiscal Year Fiscal 1H
Consumer Products Group
(in millions)
Fiscal Year Fiscal 1H
Operating Income (in millions)
High margin, high return business with growth ahead
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OWNERSHIPCHANNEL
FY 2005
FY 2009
GEOGRAPHY
37 markets
50 markets65%25%
10%
76%
16%8%
47%
41%
53%
59%
CPG Op Income*
International Op Income*
U.S. Op Income*
Licensed Stores
Company-operated Stores
Diversifying Our Business
As we expand our reach
* Non-GAAP
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AND INNOVATEBEYOND STARBUCKSSTORES
SEATTLES BEST COFFEE
U.S. AND INTERNATIONAL STARBUCKS VIA
PACKAGED GOODS
Building for the Future
Investing for disciplined and profitable growth
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Innovation: New Store Designs
Locally relevant, sustainable and fresh designsDisney Village Paris University Village Seattle
1st
& Pike Seattle
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Innovation: VIATM Ready Brew
Single serve coffee on-the-go and at-home
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US:
Compete in single serve market
Grow Starbucks 4% share in the65B cup Brewed Coffee category
Create new usage occasions
International:
Take share from the $23B global
instant and single serve category
Instant coffee represents a higher mixof retail coffee sales Internationally:
U.K. = 80%
Japan = 53%
Russia = 85%
At home25 billion cups
Away from home3.7 billion cups(restaurant, specialtycoffee houses)
On the go37 billion cups(e.g., office, travel)
3%Starbucks share
13%Starbucks share
4% Starbucksshare
Innovation: VIATM Ready Brew
Single serve coffee on-the-go and at-home
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Seattles Best Coffee
Creating a $1 Billion global business
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Seattles Best Coffee
Meaningful multi-channel growth opportunity
Today
GrowthOpportunity
Innovation PipelineFranchising
RETAIL PACKAGEDGOODS
SERVING THROUGHOTHERS
New Partnerships
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$923
$643
$1,132
$771
$1,331
$1,080
$1,259
$985
$1,389
$446
$0
$500
$1,000
$1,500
FY05 FY06 FY07 FY08 FY09 FY10 Outlook
Cash from Operations Capital Expenditure
Operating Cash Flow Remains Strong
FY10 Free Cash Flow expected to be at least $1B
millions
9% 5%1%0%0%apex % of
net revenues
~$500
>$1.5
Billion
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DIVIDEND
Improving Shareholder Return
Through the distribution of excess cash
SHARE REPURCHASE
InitiatedQ2 2010
$0.10 pershare paidquarterly
Firstdistribution
April 23, 2010
Shareholders of recordon Apri l 7, 2010
Targeted 35% - 40%payout ratio
15 mil lion sharesnewly authorized
21 mil lion sharesavailable forrepurchase
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Investment Highlights
ABUNDANTMULTI-CHANNELGLOBAL GROWTHOPPORTUNITIES
RELEVANTPRODUCTINNOVATION
ESTABLISHEDBLUE-CHIPPARTNERSHIPS
CSRLEADERSHIP
ROBUSTFREE CASH FLOWGENERATION
UNPARALLELEDATTRACTIVE & LOYALCUSTOMERDEMOGRAPHIC
GLOBALLYDIVERSIFIEDEARNINGS
EXPERIENCEDMANAGEMENT
UNDISPUTEDCOFFEE AUTHORITY& MARKET LEADER
ICONICBRAND WITHGLOBAL FOOTPRINT
GROWTHOPPORTUNITIES
LEVERAGABLEPLATFORM
SOLIDFOUNDATION
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Starbucks Coffee CompanyAppendix
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Reconciliation of Selected GAAP Measures
to Non-GAAP Measures13 w ee k s 1 3 W e ek s 2 6 w ee k s 2 6 w ee k s 5 2 w ee k s 5 2 w eek s 53 w eek sQ 2 F Y 0 9 Q 2 F Y 1 0 Q 2 F Y 0 9 Q 2 F Y 1 0 F Y 0 8 F Y 0 9 F Y 1 0
C o n s o l id a te d
O pe ra t ing m a rgin a s rep o r te d (G A A P ) 1 .8 % 13 .4 % 3.2 % 1 3.2 % 4 .9% 5 .7 % 12 % -1 3 %R e s tru c tu r ing c h a rg e s 6 .5 % 0.3 % 4.6 % 0 .5 % 2 .6% 3 .4 % < 1 %
O the r t ra s n fo rm at io n c h arg e s - - - - 0 .6% -N o n-G A A P o pe ra t ing m a rgin 8 .3 % 13 .7 % 7.8 % 1 3.7 % 8 .1% 9 .2 % 12 % -1 3 %
D ilu ted E P S , as re p or te d (G A A P ) 0.0 3 0 .28 0 .12 0 .60 0 . 4 3 0 . 5 2 1 .1 6 -1 .1 9
R e s tru c tu r ing c h a rg e s , n et o f ta x 0.1 3 0 .01 0 .20 0 .02 0 . 2 2 0 . 2 8 0 . 0 3O the r t ra n s fo rm at io n c h arg e s , n e t o f ta x - - - - 0 . 0 6 -N o n-G A A P E P S 0.1 6 0 .29 0 .32 0 .62 0 . 7 1 0 . 8 0 1 .1 9 -1 .2 2
N e t e a rnin g s a s re p o r te d (G A A P ) 25 .0 2 1 7 .3 89 .3 4 5 8 .8
R e s tru c tu r ing c h a rg e s , n et o f ta x 96 .1 5. 8 1 4 4 .9 18 .6O the r t ra n s fo rm at io n c h arg e s , n e t o f ta x - - - -N o n-G A A P n et e a rn in g s 1 21 .1 2 2 3 .1 2 3 4 .2 4 7 7 .4
N e t c a s h p ro v id e d b y o p e ra t in g a c t i v it ie sN e t a d d i ti on s t o p ro p e r t y , p la n t a n d e q u ip m e n t
Fre e c as h flo w > $ 1B **
U S
O pe ra t ing in c o m e a s re po r te d (G A A P ) 1 84 6 56 4 5 4 5 3 2R e s tru c tu r ing c h a rg e s 1 61 9 2 1 1 2 4 6
O the r t ra n s fo rm at io n c h arg e s - - 6 5 -N o n-G A A P o pe ra t ing in c o m e 3 4 5 66 6 7 30 7 78
O pe ra t ing m a rgin a s r ep o r te d (G A A P ) 5 .0% 1 7 .5% 6 .0 % 7 .5 %
R e s tru c tu r ing c h a rg e s 4 .4% 0 .2% 2 .8 % 3 .5 %O the r t ra s n fo rm at io n c h arg e s - - 0 .9 % -N o n-G A A P o pe ra t ing m a rgin 9 .5% 1 7 .7% 9 .7 % 11 .0 % hig h te en s **
I n t e rn a t i o n a l
O pe ra t ing in c o m e a s re po r te d (G A A P ) 19 84 1 1 0 9 3R e s tru c tu r ing c h a rg e s 17 17 1 9 2 7
O the r t ra n s fo rm at io n c h arg e s - - 8 -N o n-G A A P o pe ra t ing in c o m e 36 1 02 1 3 7 1 2 0
O pe ra t ing m a rgin a s rep o r te d (G A A P ) 2 .0% 7 .5% 5 .2 % 4 .8 %
R e s tru c tu r ing c h a rg e s 1 .8% 1 .5% 0 .9 % 1 .4 %O the r t ra s n fo rm at io n c h arg e s - - 0 .4 % -N o n-G A A P o pe ra t ing m a rgin 3 .9% 9 .0% 6 .5 % 6 .2 % hig h te en s **