SBUXStarbucks

We have been, are, and in the future may continue to be, subject to litigation and other legal proceedings that may could adversely affect our business. These legal proceedings may involve claims brought by store partners, from employees, customers, government agencies, regulators, suppliers, shareholders, or others through private actions, administrative proceedings, regulatory actions, or other litigation, others, including litigation on a class or collective basis on behalf of what can be a large group of potential claimants. These legal proceedings actions. Allegations have involved, and in the future may involve, allegations of illegal, unfair, or inconsistent included claims related to employment practices, including those governing wage food safety and hour, employment of minors, product defects, data privacy, discrimination, harassment, wrongful termination, and vacation and family leave laws; food-safety issues including food-borne illness, food contamination, and adverse health effects from consumption of our food products; data security or privacy breaches; customer discrimination; personal injury in our stores; marketing and advertising claims, including claims that our environmental and social program claims are misleading or inaccurate; infringement of patent, copyright, or other injury, advertising, intellectual property rights; violation disputes, securities violations, and other matters. A judgment significantly in excess of the federal securities laws; workers’ compensation; any applicable insurance coverage or other concerns. We are party to a number of pending lawsuits and governmental audits alleging violations of federal and state employment laws, including wage and hour claims, and we third-party indemnity could be involved in similar or even more significant litigation and legal proceedings in the future. Even if the allegations against us in current or future legal matters are unfounded or we ultimately are held not liable, the costs to defend ourselves may be significant, and the litigation may subject us to substantial settlements, fines, penalties, or judgments against us and may divert management’s attention away from operating our business, all of which could negatively impact materially adversely affect our financial condition and or results of operations. Even unfounded claims can result in substantial legal costs, management distraction, and potential settlements or penalties. Litigation may also may generate negative publicity, regardless of whether the allegations are valid or we ultimately are not liable, which could damage harming our reputation reputation, customer relationships, and adversely impact our sales as well as our relationships with our store partners and customers. financial performance. See Note 16, Commitments and Contingencies, to the consolidated financial statements included in Item 8 of Part II of this 10-K for information regarding certain legal proceedings in which we are involved.

International North America total net revenues for fiscal 2024 decreased $149 2025 increased $364 million, or 2%, 1%, primarily due driven by net new company-operated store growth of 4%, or 441 stores over the past 12 months ($980 million), prior to unfavorable foreign currency translation impacts ($252 million), as well as the 584 restructuring closures late in the fourth quarter of fiscal 2025. This growth was partially offset by a 4% 2% decline in comparable store sales ($210 million), ($419 million) driven by a 4% decline in comparable transactions, partially offset by a 2% increase in average ticket. ticket, primarily due to annualization of prior year pricing. Also contributing to the decline in international total net revenues were lower product and equipment sales to, and royalty revenues from, our licensees ($69 million), largely driven by continued disruptions due to multiple international conflicts, partially offset by ($143 million) and the performance impact of 654 net new licensed store openings over the past 12 months. These decreases were partially offset by net new company-operated store growth of 10%, or 893 stores, over the past 12 months ($378 unfavorable foreign currency translation ($42 million).

We maintain several equity incentive plans under which we may grant non-qualified stock options, incentive stock options, restricted stock, restricted stock units (“RSUs”), or stock appreciation rights to employees, non-employee directors, and consultants; stock options have not been broadly used as part of our compensation strategy in recent years. We also have an employee stock purchase plan (“ESPP”). RSUs issued by us are equivalent to nonvested shares under the applicable accounting guidance. We record stock-based compensation expense based on the fair value of stock awards at the grant date and recognize the expense over the related service period following a graded vesting expense schedule. Expense for performance-based RSUs is recognized when it is probable the performance goal will be achieved. Performance goals are determined by the Board and may include measures such as earnings per share, comparable store sales, operating income, return on invested capital, total shareholder return, and metrics focused on talent and sustainability. achievement of key components of the “Back to Starbucks” plan. The fair value of RSUs is based on the closing price of Starbucks common stock on the award date, less the present value of the dividends expected to be paid on the underlying shares during the vesting period. The fair value of each stock option granted is estimated on the grant date using the Black-Scholes-Merton option valuation model. The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to reflect market conditions and our historical experience. If applicable, our total shareholder return relative to our peer group is incorporated into the underlying assumptions using a Monte Carlo simulation valuation model to calculate grant date fair value. The related assumptions used in the Monte Carlo simulation valuation model include expected term, volatility, dividend yield, and risk-free interest rate. Compensation expense is recognized over the requisite service period for each separately vesting portion of the award, and only for those awards expected to vest, with forfeitures estimated at the date of grant based on our historical experience and future expectations.