ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Washington
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|
91-1223280
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(State or other jurisdiction of
incorporation or organization)
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|
(I.R.S. Employer Identification No.)
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Large accelerated filer
ý
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|
Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
o
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Page
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PART I
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|
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Item 1.
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||
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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February 14,
2016 |
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August 30,
2015 |
||||
ASSETS
|
|
|
|
||||
CURRENT ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
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3,633
|
|
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$
|
4,801
|
|
Short-term investments
|
1,222
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1,618
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|
||
Receivables, net
|
1,453
|
|
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1,224
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Merchandise inventories
|
8,908
|
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8,908
|
|
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Other current assets
|
313
|
|
|
228
|
|
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Total current assets
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15,529
|
|
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16,779
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PROPERTY AND EQUIPMENT
|
|
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|
||||
Land
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5,140
|
|
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4,961
|
|
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Buildings and improvements
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13,212
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12,618
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Equipment and fixtures
|
5,623
|
|
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5,274
|
|
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Construction in progress
|
727
|
|
|
811
|
|
||
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24,702
|
|
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23,664
|
|
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Less accumulated depreciation and amortization
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(8,637
|
)
|
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(8,263
|
)
|
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Net property and equipment
|
16,065
|
|
|
15,401
|
|
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OTHER ASSETS
|
794
|
|
|
837
|
|
||
TOTAL ASSETS
|
$
|
32,388
|
|
|
$
|
33,017
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
CURRENT LIABILITIES
|
|
|
|
||||
Accounts payable
|
$
|
8,222
|
|
|
$
|
9,011
|
|
Current portion of long-term debt
|
89
|
|
|
1,283
|
|
||
Accrued salaries and benefits
|
2,619
|
|
|
2,468
|
|
||
Accrued member rewards
|
846
|
|
|
813
|
|
||
Deferred membership fees
|
1,377
|
|
|
1,269
|
|
||
Other current liabilities
|
2,280
|
|
|
1,695
|
|
||
Total current liabilities
|
15,433
|
|
|
16,539
|
|
||
LONG-TERM DEBT, excluding current portion
|
4,886
|
|
|
4,852
|
|
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OTHER LIABILITIES
|
835
|
|
|
783
|
|
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Total liabilities
|
21,154
|
|
|
22,174
|
|
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COMMITMENTS AND CONTINGENCIES
|
|
|
|
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EQUITY
|
|
|
|
||||
Preferred stock $.005 par value; 100,000,000 shares authorized; no shares issued and outstanding
|
0
|
|
|
0
|
|
||
Common stock $.005 par value; 900,000,000 shares authorized; 439,256,000 and 437,952,000 shares issued and outstanding
|
2
|
|
|
2
|
|
||
Additional paid-in capital
|
5,341
|
|
|
5,218
|
|
||
Accumulated other comprehensive loss
|
(1,344
|
)
|
|
(1,121
|
)
|
||
Retained earnings
|
7,001
|
|
|
6,518
|
|
||
Total Costco stockholders’ equity
|
11,000
|
|
|
10,617
|
|
||
Noncontrolling interests
|
234
|
|
|
226
|
|
||
Total equity
|
11,234
|
|
|
10,843
|
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
32,388
|
|
|
$
|
33,017
|
|
|
12 Weeks Ended
|
|
24 Weeks Ended
|
||||||||||||
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February 14,
2016 |
|
February 15,
2015 |
|
February 14,
2016 |
|
February 15,
2015 |
||||||||
REVENUE
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
27,567
|
|
|
$
|
26,872
|
|
|
$
|
54,194
|
|
|
$
|
53,156
|
|
Membership fees
|
603
|
|
|
582
|
|
|
1,196
|
|
|
1,164
|
|
||||
Total revenue
|
28,170
|
|
|
27,454
|
|
|
55,390
|
|
|
54,320
|
|
||||
OPERATING EXPENSES
|
|
|
|
|
|
|
|
||||||||
Merchandise costs
|
24,469
|
|
|
23,897
|
|
|
48,090
|
|
|
47,282
|
|
||||
Selling, general and administrative
|
2,835
|
|
|
2,671
|
|
|
5,641
|
|
|
5,367
|
|
||||
Preopening expenses
|
10
|
|
|
9
|
|
|
36
|
|
|
24
|
|
||||
Operating income
|
856
|
|
|
877
|
|
|
1,623
|
|
|
1,647
|
|
||||
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(31
|
)
|
|
(27
|
)
|
|
(64
|
)
|
|
(53
|
)
|
||||
Interest income and other, net
|
16
|
|
|
20
|
|
|
44
|
|
|
55
|
|
||||
INCOME BEFORE INCOME TAXES
|
841
|
|
|
870
|
|
|
1,603
|
|
|
1,649
|
|
||||
Provision for income taxes
|
286
|
|
|
263
|
|
|
561
|
|
|
537
|
|
||||
Net income including noncontrolling interests
|
555
|
|
|
607
|
|
|
1,042
|
|
|
1,112
|
|
||||
Net income attributable to noncontrolling interests
|
(9
|
)
|
|
(9
|
)
|
|
(16
|
)
|
|
(18
|
)
|
||||
NET INCOME ATTRIBUTABLE TO COSTCO
|
$
|
546
|
|
|
$
|
598
|
|
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$
|
1,026
|
|
|
$
|
1,094
|
|
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.24
|
|
|
$
|
1.36
|
|
|
$
|
2.34
|
|
|
$
|
2.49
|
|
Diluted
|
$
|
1.24
|
|
|
$
|
1.35
|
|
|
$
|
2.32
|
|
|
$
|
2.47
|
|
Shares used in calculation (000’s):
|
|
|
|
|
|
|
|
||||||||
Basic
|
439,648
|
|
|
440,384
|
|
|
438,990
|
|
|
439,567
|
|
||||
Diluted
|
441,559
|
|
|
442,896
|
|
|
441,457
|
|
|
442,522
|
|
||||
CASH DIVIDENDS DECLARED PER COMMON SHARE
|
$
|
0.40
|
|
|
$
|
5.355
|
|
|
$
|
0.80
|
|
|
$
|
5.710
|
|
|
12 Weeks Ended
|
|
24 Weeks Ended
|
||||||||||||
|
February 14,
2016 |
|
February 15,
2015 |
|
February 14,
2016 |
|
February 15,
2015 |
||||||||
NET INCOME INCLUDING NONCONTROLLING INTERESTS
|
$
|
555
|
|
|
$
|
607
|
|
|
$
|
1,042
|
|
|
$
|
1,112
|
|
Foreign-currency translation adjustment and other, net
|
(244
|
)
|
|
(410
|
)
|
|
(229
|
)
|
|
(732
|
)
|
||||
Comprehensive income
|
311
|
|
|
197
|
|
|
813
|
|
|
380
|
|
||||
Less: Comprehensive income attributable to noncontrolling interests
|
4
|
|
|
8
|
|
|
10
|
|
|
7
|
|
||||
COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO
|
$
|
307
|
|
|
$
|
189
|
|
|
$
|
803
|
|
|
$
|
373
|
|
|
24 Weeks Ended
|
||||||
|
February 14,
2016 |
|
February 15,
2015 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
||||
Net income including noncontrolling interests
|
$
|
1,042
|
|
|
$
|
1,112
|
|
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
556
|
|
|
514
|
|
||
Stock-based compensation
|
287
|
|
|
236
|
|
||
Excess tax benefits on stock-based awards
|
(74
|
)
|
|
(72
|
)
|
||
Other non-cash operating activities, net
|
(10
|
)
|
|
(17
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Increase in merchandise inventories
|
(98
|
)
|
|
(395
|
)
|
||
(Decrease) increase in accounts payable
|
(482
|
)
|
|
237
|
|
||
Other operating assets and liabilities, net
|
381
|
|
|
413
|
|
||
Net cash provided by operating activities
|
1,602
|
|
|
2,028
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Purchases of short-term investments
|
(499
|
)
|
|
(657
|
)
|
||
Maturities and sales of short-term investments
|
886
|
|
|
637
|
|
||
Additions to property and equipment
|
(1,339
|
)
|
|
(1,167
|
)
|
||
Other investing activities, net
|
0
|
|
|
7
|
|
||
Net cash used in investing activities
|
(952
|
)
|
|
(1,180
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Change in bank checks outstanding
|
(146
|
)
|
|
(115
|
)
|
||
Proceeds from short-term borrowings
|
99
|
|
|
53
|
|
||
Repayments of long-term debt
|
(1,200
|
)
|
|
(8
|
)
|
||
Minimum tax withholdings on stock-based awards
|
(219
|
)
|
|
(177
|
)
|
||
Excess tax benefits on stock-based awards
|
74
|
|
|
72
|
|
||
Repurchases of common stock
|
(213
|
)
|
|
(102
|
)
|
||
Cash dividend payments
|
(176
|
)
|
|
(156
|
)
|
||
Other financing activities, net
|
(6
|
)
|
|
60
|
|
||
Net cash used in financing activities
|
(1,787
|
)
|
|
(373
|
)
|
||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
(31
|
)
|
|
(347
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
(1,168
|
)
|
|
128
|
|
||
CASH AND CASH EQUIVALENTS BEGINNING OF YEAR
|
4,801
|
|
|
5,738
|
|
||
CASH AND CASH EQUIVALENTS END OF PERIOD
|
$
|
3,633
|
|
|
$
|
5,866
|
|
|
|
|
|
||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
||||
Cash paid during the first half of year for:
|
|
|
|
||||
Interest (reduced by $8 and $5 interest capitalized in 2016 and 2015, respectively)
|
$
|
52
|
|
|
$
|
56
|
|
Income taxes, net
|
$
|
447
|
|
|
$
|
432
|
|
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
|
|
|
|
||||
Cash dividend declared, but not yet paid
|
$
|
176
|
|
|
$
|
2,358
|
|
February 14, 2016:
|
Cost
Basis
|
|
Unrealized
Gains, Net
|
|
Recorded
Basis
|
||||||
Available-for-sale:
|
|
|
|
|
|
||||||
Government and agency securities
|
$
|
928
|
|
|
$
|
8
|
|
|
$
|
936
|
|
Asset and mortgage-backed securities
|
4
|
|
|
0
|
|
|
4
|
|
|||
Total available-for-sale
|
932
|
|
|
8
|
|
|
940
|
|
|||
Held-to-maturity:
|
|
|
|
|
|
||||||
Certificates of deposit
|
272
|
|
|
|
|
272
|
|
||||
Bankers' acceptances
|
10
|
|
|
|
|
10
|
|
||||
Total held-to-maturity
|
282
|
|
|
|
|
282
|
|
||||
Total short-term investments
|
$
|
1,214
|
|
|
$
|
8
|
|
|
$
|
1,222
|
|
August 30, 2015:
|
Cost
Basis
|
|
Unrealized
Gains, Net
|
|
Recorded
Basis
|
||||||
Available-for-sale:
|
|
|
|
|
|
||||||
Government and agency securities
|
$
|
1,394
|
|
|
$
|
4
|
|
|
$
|
1,398
|
|
Asset and mortgage-backed securities
|
5
|
|
|
0
|
|
|
5
|
|
|||
Total available-for-sale
|
1,399
|
|
|
4
|
|
|
1,403
|
|
|||
Held-to-maturity:
|
|
|
|
|
|
||||||
Certificates of deposit
|
215
|
|
|
|
|
215
|
|
||||
Total short-term investments
|
$
|
1,614
|
|
|
$
|
4
|
|
|
$
|
1,618
|
|
|
Available-For-Sale
|
|
Held-To-Maturity
|
||||||||
|
Cost Basis
|
|
Fair Value
|
|
|||||||
Due in one year or less
|
$
|
230
|
|
|
$
|
230
|
|
|
$
|
282
|
|
Due after one year through five years
|
644
|
|
|
650
|
|
|
0
|
|
|||
Due after five years
|
58
|
|
|
60
|
|
|
0
|
|
|||
|
$
|
932
|
|
|
$
|
940
|
|
|
$
|
282
|
|
February 14, 2016:
|
Level 1
|
|
Level 2
|
||||
Money market mutual funds
(1)
|
$
|
181
|
|
|
$
|
0
|
|
Investment in government and agency securities
|
0
|
|
|
936
|
|
||
Investment in asset and mortgage-backed securities
|
0
|
|
|
4
|
|
||
Forward foreign-exchange contracts, in asset position
(2)
|
0
|
|
|
11
|
|
||
Forward foreign-exchange contracts, in (liability) position
(2)
|
0
|
|
|
(8
|
)
|
||
Total
|
$
|
181
|
|
|
$
|
943
|
|
August 30, 2015:
|
Level 1
|
|
Level 2
|
||||
Money market mutual funds
(1)
|
$
|
306
|
|
|
$
|
0
|
|
Investment in government and agency securities
|
0
|
|
|
1,398
|
|
||
Investment in asset and mortgage-backed securities
|
0
|
|
|
5
|
|
||
Forward foreign-exchange contracts, in asset position
(2)
|
0
|
|
|
16
|
|
||
Forward foreign-exchange contracts, in (liability) position
(2)
|
0
|
|
|
(4
|
)
|
||
Total
|
$
|
306
|
|
|
$
|
1,415
|
|
(1)
|
Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets.
|
(2)
|
The asset and the liability values are included in other current assets and other current liabilities, respectively, in the accompanying condensed consolidated balance sheets. See Note 1 for additional information on derivative instruments.
|
|
February 14, 2016
|
|
August 30, 2015
|
||||||||||||
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||
0.65% Senior Notes due December 2015
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,200
|
|
|
$
|
1,201
|
|
5.5% Senior Notes due March 2017
|
1,099
|
|
|
1,155
|
|
|
1,099
|
|
|
1,171
|
|
||||
1.125% Senior Notes due December 2017
|
1,098
|
|
|
1,104
|
|
|
1,098
|
|
|
1,097
|
|
||||
1.7% Senior Notes due December 2019
|
1,196
|
|
|
1,212
|
|
|
1,195
|
|
|
1,186
|
|
||||
1.75% Senior Notes due February 2020
|
497
|
|
|
502
|
|
|
497
|
|
|
494
|
|
||||
2.25% Senior Notes due February 2022
|
496
|
|
|
507
|
|
|
496
|
|
|
484
|
|
||||
Other long-term debt
|
589
|
|
|
613
|
|
|
550
|
|
|
555
|
|
||||
Total long-term debt
|
4,975
|
|
|
5,093
|
|
|
6,135
|
|
|
6,188
|
|
||||
Less current portion
|
89
|
|
|
89
|
|
|
1,283
|
|
|
1,284
|
|
||||
Long-term debt, excluding current portion
|
$
|
4,886
|
|
|
$
|
5,004
|
|
|
$
|
4,852
|
|
|
$
|
4,904
|
|
|
Shares Repurchased (000's)
|
|
Average Price per Share
|
|
Total Cost
|
|||||
Second quarter of 2016
|
531
|
|
|
$
|
150.02
|
|
|
$
|
80
|
|
First half of 2016
|
1,429
|
|
|
$
|
146.79
|
|
|
$
|
210
|
|
|
|
|
|
|
|
|||||
Second quarter of 2015
|
642
|
|
|
$
|
143.21
|
|
|
$
|
92
|
|
First half of 2015
|
781
|
|
|
$
|
140.23
|
|
|
$
|
110
|
|
|
Attributable to Costco
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
||||||
Equity at August 30, 2015
|
$
|
10,617
|
|
|
$
|
226
|
|
|
$
|
10,843
|
|
Comprehensive income:
|
|
|
|
|
|
||||||
Net income
|
1,026
|
|
|
16
|
|
|
1,042
|
|
|||
Foreign-currency translation adjustment and other, net
|
(223
|
)
|
|
(6
|
)
|
|
(229
|
)
|
|||
Comprehensive income
|
803
|
|
|
10
|
|
|
813
|
|
|||
Stock-based compensation
|
287
|
|
|
0
|
|
|
287
|
|
|||
Release of vested restricted stock units (RSUs), including tax effects
|
(145
|
)
|
|
0
|
|
|
(145
|
)
|
|||
Repurchases of common stock
|
(210
|
)
|
|
0
|
|
|
(210
|
)
|
|||
Cash dividends declared
|
(352
|
)
|
|
0
|
|
|
(352
|
)
|
|||
Distribution to noncontrolling interest
|
0
|
|
|
(2
|
)
|
|
(2
|
)
|
|||
Equity at February 14, 2016
|
$
|
11,000
|
|
|
$
|
234
|
|
|
$
|
11,234
|
|
|
Attributable to Costco
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
||||||
Equity at August 31, 2014
|
$
|
12,303
|
|
|
$
|
212
|
|
|
$
|
12,515
|
|
Comprehensive income:
|
|
|
|
|
|
||||||
Net income
|
1,094
|
|
|
18
|
|
|
1,112
|
|
|||
Foreign-currency translation adjustment and other, net
|
(721
|
)
|
|
(11
|
)
|
|
(732
|
)
|
|||
Comprehensive income
|
373
|
|
|
7
|
|
|
380
|
|
|||
Stock-based compensation
|
236
|
|
|
0
|
|
|
236
|
|
|||
Stock options exercised, including tax effects
|
39
|
|
|
0
|
|
|
39
|
|
|||
Release of vested RSUs, including tax effects
|
(121
|
)
|
|
0
|
|
|
(121
|
)
|
|||
Repurchases of common stock
|
(110
|
)
|
|
0
|
|
|
(110
|
)
|
|||
Cash dividends declared
|
(2,514
|
)
|
|
0
|
|
|
(2,514
|
)
|
|||
Equity at February 15, 2015
|
$
|
10,206
|
|
|
$
|
219
|
|
|
$
|
10,425
|
|
•
|
8,030,000
time-based RSUs, which vest upon continued employment over specified periods of time;
|
•
|
212,000
performance-based RSUs, granted to certain executive officers of the Company, for which the performance targets have been met. The awards vest upon continued employment over specified periods of time; and
|
•
|
236,000
performance-based RSUs, granted to executive officers of the Company, subject to achievement of performance targets for fiscal
2016
, as determined by the Compensation Committee of the Board of Directors after the end of the fiscal year. These awards are included in the table below and the Company recognized compensation expense for these awards as it is currently deemed probable that the targets will be achieved.
|
|
Number of
Units
(in 000’s)
|
|
Weighted-Average
Grant Date Fair
Value
|
|||
Outstanding at August 30, 2015
|
9,233
|
|
|
$
|
99.72
|
|
Granted
|
3,521
|
|
|
153.46
|
|
|
Vested and delivered
|
(4,120
|
)
|
|
102.40
|
|
|
Forfeited
|
(156
|
)
|
|
112.18
|
|
|
Outstanding at February 14, 2016
|
8,478
|
|
|
$
|
120.51
|
|
|
12 Weeks Ended
|
|
24 Weeks Ended
|
||||||||||||
|
February 14,
2016 |
|
February 15,
2015 |
|
February 14,
2016 |
|
February 15,
2015 |
||||||||
Stock-based compensation expense before income taxes
|
$
|
101
|
|
|
$
|
86
|
|
|
$
|
287
|
|
|
$
|
236
|
|
Less recognized income tax benefit
|
(34
|
)
|
|
(29
|
)
|
|
(97
|
)
|
|
(80
|
)
|
||||
Stock-based compensation expense, net of income taxes
|
$
|
67
|
|
|
$
|
57
|
|
|
$
|
190
|
|
|
$
|
156
|
|
|
12 Weeks Ended
|
|
24 Weeks Ended
|
||||||||||||
|
February 14,
2016 |
|
February 15,
2015 |
|
February 14,
2016 |
|
February 15,
2015 |
||||||||
Net income available to common stockholders after assumed conversions of dilutive securities
|
$
|
546
|
|
|
$
|
598
|
|
|
$
|
1,026
|
|
|
$
|
1,094
|
|
Weighted average number of common shares used in basic net income per common share
|
439,648
|
|
|
440,384
|
|
|
438,990
|
|
|
439,567
|
|
||||
RSUs
|
1,900
|
|
|
2,500
|
|
|
2,456
|
|
|
2,943
|
|
||||
Conversion of convertible notes
|
11
|
|
|
12
|
|
|
11
|
|
|
12
|
|
||||
Weighted average number of common shares and dilutive potential of common stock used in diluted net income per share
|
441,559
|
|
|
442,896
|
|
|
441,457
|
|
|
442,522
|
|
|
United States
Operations
|
|
Canadian
Operations
|
|
Other
International
Operations
|
|
Total
|
||||||||
Twelve Weeks Ended February 14, 2016
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
20,642
|
|
|
$
|
3,791
|
|
|
$
|
3,737
|
|
|
$
|
28,170
|
|
Operating income
|
552
|
|
|
156
|
|
|
148
|
|
|
856
|
|
||||
Depreciation and amortization
|
212
|
|
|
24
|
|
|
49
|
|
|
285
|
|
||||
Additions to property and equipment
|
460
|
|
|
30
|
|
|
134
|
|
|
624
|
|
||||
Twelve Weeks Ended February 15, 2015
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
19,879
|
|
|
$
|
4,001
|
|
|
$
|
3,574
|
|
|
$
|
27,454
|
|
Operating income
|
556
|
|
|
178
|
|
|
143
|
|
|
877
|
|
||||
Depreciation and amortization
|
193
|
|
|
30
|
|
|
37
|
|
|
260
|
|
||||
Additions to property and equipment
|
327
|
|
|
32
|
|
|
253
|
|
|
612
|
|
||||
Twenty-four Weeks Ended February 14, 2016
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
40,488
|
|
|
$
|
7,673
|
|
|
$
|
7,229
|
|
|
$
|
55,390
|
|
Operating income
|
1,003
|
|
|
339
|
|
|
281
|
|
|
1,623
|
|
||||
Depreciation and amortization
|
416
|
|
|
49
|
|
|
91
|
|
|
556
|
|
||||
Additions to property and equipment
|
917
|
|
|
71
|
|
|
351
|
|
|
1,339
|
|
||||
Net property and equipment
|
11,327
|
|
|
1,325
|
|
|
3,413
|
|
|
16,065
|
|
||||
Total assets
|
22,733
|
|
|
3,076
|
|
|
6,579
|
|
|
32,388
|
|
||||
Twenty-four Weeks Ended February 15, 2015
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
39,060
|
|
|
$
|
8,232
|
|
|
$
|
7,028
|
|
|
$
|
54,320
|
|
Operating income
|
989
|
|
|
374
|
|
|
284
|
|
|
1,647
|
|
||||
Depreciation and amortization
|
381
|
|
|
58
|
|
|
75
|
|
|
514
|
|
||||
Additions to property and equipment
|
763
|
|
|
78
|
|
|
326
|
|
|
1,167
|
|
||||
Net property and equipment
|
10,403
|
|
|
1,457
|
|
|
3,012
|
|
|
14,872
|
|
||||
Total assets
|
23,232
|
|
|
3,856
|
|
|
6,129
|
|
|
33,217
|
|
||||
Year Ended August 30, 2015
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
84,351
|
|
|
$
|
17,341
|
|
|
$
|
14,507
|
|
|
$
|
116,199
|
|
Operating income
|
2,308
|
|
|
771
|
|
|
545
|
|
|
3,624
|
|
||||
Depreciation and amortization
|
848
|
|
|
119
|
|
|
160
|
|
|
1,127
|
|
||||
Additions to property and equipment
|
1,574
|
|
|
148
|
|
|
671
|
|
|
2,393
|
|
||||
Net property and equipment
|
10,815
|
|
|
1,381
|
|
|
3,205
|
|
|
15,401
|
|
||||
Total assets
|
22,988
|
|
|
3,608
|
|
|
6,421
|
|
|
33,017
|
|
•
|
Net sales increased 3% to $27,567, driven by sales at new warehouses opened since the end of the second quarter of fiscal 2015 and a 1% increase in comparable sales. Net and comparable sales results were negatively impacted by changes in all foreign currencies relative to the U.S. dollar and decreases in the price of gasoline;
|
•
|
Membership fee revenue increased 4% to $603, primarily due to sign-ups at existing and new warehouses and executive membership upgrades, partially offset by the negative impact of changes in all foreign currencies relative to the U.S. dollar;
|
•
|
Gross margin as a percentage of net sales increased 17 basis points, primarily from the impact of gasoline price deflation on net sales and gross margin increases in our warehouse ancillary and other businesses;
|
•
|
Selling, general and administrative (SG&A) expenses as a percentage of net sales increased 34 basis points;
|
•
|
Net income decreased 9% to $546, or $1.24 per diluted share, compared to $598, or $1.35 per diluted share in
2015
. The prior year results were positively impacted by discrete net tax benefits of $43, or $0.10 per diluted share, primarily related to the special cash dividend paid to the Company's 401(k) Plan participants;
|
•
|
Changes in foreign currencies relative to the U.S. dollar adversely impacted diluted earnings per share by $0.07, primarily due to changes in the Canadian dollar;
|
•
|
On December 7, 2015, we paid the outstanding principal balance and interest on the 0.65% Senior Notes of approximately $1,204, from our cash and cash equivalents and short-term investments; and
|
•
|
On January 29, 2016, our Board of Directors declared a quarterly cash dividend in the amount of $0.40 per share, which was paid subsequent to the end of the
second
quarter of 2016.
|
|
12 Weeks Ended
|
|
24 Weeks Ended
|
||||||||||||
|
February 14,
2016 |
|
February 15,
2015 |
|
February 14,
2016 |
|
February 15,
2015 |
||||||||
Net Sales
|
$
|
27,567
|
|
|
$
|
26,872
|
|
|
$
|
54,194
|
|
|
$
|
53,156
|
|
Changes in net sales:
|
|
|
|
|
|
|
|
||||||||
U.S.
|
4
|
%
|
|
5
|
%
|
|
4
|
%
|
|
7
|
%
|
||||
Canada
|
(5
|
)%
|
|
(1
|
)%
|
|
(7
|
)%
|
|
1
|
%
|
||||
Other International
|
5
|
%
|
|
6
|
%
|
|
3
|
%
|
|
7
|
%
|
||||
Total Company
|
3
|
%
|
|
4
|
%
|
|
2
|
%
|
|
6
|
%
|
||||
Changes in comparable warehouse sales:
|
|
|
|
|
|
|
|
||||||||
U.S.
|
3
|
%
|
|
4
|
%
|
|
3
|
%
|
|
5
|
%
|
||||
Canada
|
(7
|
)%
|
|
(2
|
)%
|
|
(8
|
)%
|
|
(1
|
)%
|
||||
Other International
|
(3
|
)%
|
|
(1
|
)%
|
|
(4
|
)%
|
|
0
|
%
|
||||
Total Company
|
1
|
%
|
|
2
|
%
|
|
0
|
%
|
|
3
|
%
|
||||
Increases in comparable warehouse sales excluding the impact of changes in foreign exchange rates and gasoline prices:
|
|
|
|
|
|
|
|
||||||||
U.S.
|
4
|
%
|
|
8
|
%
|
|
5
|
%
|
|
8
|
%
|
||||
Canada
|
10
|
%
|
|
9
|
%
|
|
10
|
%
|
|
9
|
%
|
||||
Other International
|
6
|
%
|
|
7
|
%
|
|
6
|
%
|
|
6
|
%
|
||||
Total Company
|
5
|
%
|
|
8
|
%
|
|
6
|
%
|
|
7
|
%
|
|
12 Weeks Ended
|
|
24 Weeks Ended
|
||||||||||||
|
February 14,
2016 |
|
February 15,
2015 |
|
February 14,
2016 |
|
February 15,
2015 |
||||||||
Membership fees
|
$
|
603
|
|
|
$
|
582
|
|
|
$
|
1,196
|
|
|
$
|
1,164
|
|
Membership fees as a percentage of net sales
|
2.19
|
%
|
|
2.17
|
%
|
|
2.21
|
%
|
|
2.19
|
%
|
||||
Total paid members (000's)
|
46,100
|
|
|
43,200
|
|
|
46,100
|
|
|
43,200
|
|
||||
Total cardholders (000's)
|
84,000
|
|
|
78,700
|
|
|
84,000
|
|
|
78,700
|
|
|
12 Weeks Ended
|
|
24 Weeks Ended
|
||||||||||||
|
February 14,
2016 |
|
February 15,
2015 |
|
February 14,
2016 |
|
February 15,
2015 |
||||||||
Net sales
|
$
|
27,567
|
|
|
$
|
26,872
|
|
|
$
|
54,194
|
|
|
$
|
53,156
|
|
Less merchandise costs
|
24,469
|
|
|
23,897
|
|
|
48,090
|
|
|
47,282
|
|
||||
Gross margin
|
$
|
3,098
|
|
|
$
|
2,975
|
|
|
$
|
6,104
|
|
|
$
|
5,874
|
|
Gross margin as a percentage of net sales
|
11.24
|
%
|
|
11.07
|
%
|
|
11.26
|
%
|
|
11.05
|
%
|
|
12 Weeks Ended
|
|
24 Weeks Ended
|
||||||||||||
|
February 14,
2016 |
|
February 15,
2015 |
|
February 14,
2016 |
|
February 15,
2015 |
||||||||
SG&A expenses
|
$
|
2,835
|
|
|
$
|
2,671
|
|
|
$
|
5,641
|
|
|
$
|
5,367
|
|
SG&A expenses as a percentage of net sales
|
10.28
|
%
|
|
9.94
|
%
|
|
10.41
|
%
|
|
10.10
|
%
|
|
12 Weeks Ended
|
|
24 Weeks Ended
|
||||||||||||
|
February 14,
2016 |
|
February 15,
2015 |
|
February 14,
2016 |
|
February 15,
2015 |
||||||||
Preopening expenses
|
$
|
10
|
|
|
$
|
9
|
|
|
$
|
36
|
|
|
$
|
24
|
|
Warehouse openings, including relocations
|
|
|
|
|
|
|
|
||||||||
United States
(1)
|
1
|
|
|
0
|
|
|
10
|
|
|
7
|
|
||||
Canada
|
0
|
|
|
0
|
|
|
1
|
|
|
0
|
|
||||
Other International
|
0
|
|
|
0
|
|
|
3
|
|
|
2
|
|
||||
Total warehouse openings, including relocations
|
1
|
|
|
0
|
|
|
14
|
|
|
9
|
|
(1)
|
Includes two relocations in the first quarter of 2016 and one relocation in the first quarter of 2015.
|
|
12 Weeks Ended
|
|
24 Weeks Ended
|
||||||||||||
|
February 14,
2016 |
|
February 15,
2015 |
|
February 14,
2016 |
|
February 15,
2015 |
||||||||
Interest expense
|
$
|
31
|
|
|
$
|
27
|
|
|
$
|
64
|
|
|
$
|
53
|
|
|
12 Weeks Ended
|
|
24 Weeks Ended
|
||||||||||||
|
February 14,
2016 |
|
February 15,
2015 |
|
February 14,
2016 |
|
February 15,
2015 |
||||||||
Interest income
|
$
|
7
|
|
|
$
|
15
|
|
|
$
|
16
|
|
|
$
|
28
|
|
Foreign-currency transaction gains, net
|
6
|
|
|
2
|
|
|
24
|
|
|
23
|
|
||||
Other, net
|
3
|
|
|
3
|
|
|
4
|
|
|
4
|
|
||||
Interest income and other, net
|
$
|
16
|
|
|
$
|
20
|
|
|
$
|
44
|
|
|
$
|
55
|
|
|
12 Weeks Ended
|
|
24 Weeks Ended
|
||||||||||||
|
February 14,
2016 |
|
February 15,
2015 |
|
February 14,
2016 |
|
February 15,
2015 |
||||||||
Provision for income taxes
|
$
|
286
|
|
|
$
|
263
|
|
|
$
|
561
|
|
|
$
|
537
|
|
Effective tax rate
|
34.0
|
%
|
|
30.2
|
%
|
|
35.0
|
%
|
|
32.6
|
%
|
|
24 Weeks Ended
|
||||||
|
February 14,
2016 |
|
February 15,
2015 |
||||
Net cash provided by operating activities
|
$
|
1,602
|
|
|
$
|
2,028
|
|
Net cash used in investing activities
|
(952
|
)
|
|
(1,180
|
)
|
||
Net cash used in financing activities
|
(1,787
|
)
|
|
(373
|
)
|
Period
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Programs
(1)
|
|
Maximum Dollar Value of Shares that May Yet be Purchased Under the Programs
(1)
|
||||||
November 23, 2015 - December 20, 2015
|
11,000
|
|
|
$
|
159.20
|
|
|
11,000
|
|
|
$
|
3,567
|
|
December 21, 2015 - January 17, 2016
|
138,000
|
|
|
154.55
|
|
|
138,000
|
|
|
3,546
|
|
||
January 18, 2016 - February 14, 2016
|
382,000
|
|
|
148.13
|
|
|
382,000
|
|
|
3,489
|
|
||
Total second quarter
|
531,000
|
|
|
$
|
150.02
|
|
|
531,000
|
|
|
|
(1)
|
Our stock repurchase program is conducted under a $4,000 authorization approved by of our Board of Directors in April 2015, which expires in April 2019.
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
Herewith
|
|
Form
|
|
Period Ending
|
|
Filing Date
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
Articles of Incorporation as amended of the registrant
|
|
|
|
10-Q
|
|
2/15/2015
|
|
3/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
Bylaws of the registrant
|
|
|
|
8-K
|
|
|
|
8/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
10.1*
|
|
Second Amendment to Citi, N.A. Co-Branded Credit Card Agreement
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Rule 13(a) – 14(a) Certifications
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
Section 1350 Certifications
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
x
|
|
|
|
|
|
|
|
C
OSTCO
W
HOLESALE
C
ORPORATION
(Registrant)
|
||
|
|
|
|
March 9, 2016
|
By
|
|
/s/ W. C
RAIG
J
ELINEK
|
Date
|
|
|
W. Craig Jelinek
President, Chief Executive Officer and Director
|
|
|
|
|
March 9, 2016
|
By
|
|
/s/ R
ICHARD
A. G
ALANTI
|
Date
|
|
|
Richard A. Galanti
Executive Vice President, Chief Financial Officer and Director
|
a.
|
Section 4.06(a):
Section4.06(a) is deleted in its entirety and replaced with the following:
|
b.
|
Section 4.06(b):
The following is added after the words “except with respect to the Executive Membership program” in the next-to-last sentence: “and except as set forth in Schedule 9.01, paragraph 4”.
|
c.
|
Section 4.06(c):
|
i.
|
The following is added after the phrase “As more particularly set out in Section 9.07(a)(iv),” in the first sentence: “[*]”.
|
ii.
|
The following is added after the words “except with respect to the costs incurred by Costco to provide benefits associated with Executive Membership” in the third sentence: “and as set forth in Schedule 9.01, paragraph 4”.
|
d.
|
Section 9.07(a)(iv):
The following is added at the beginning: “[*]”.
|
e.
|
Schedule 4.06(a):
|
i.
|
In the last sentence of the first paragraph, “3%” is replaced with “[*]%”, “$4,000” with “$[*]” and “2%” both places it appears with “[*]%”; “[*]” is inserted immediately preceding “and 1%”; and “[*]” is deleted. A new sentence is added at the end as follows: “[*]”
|
ii.
|
In the last sentence of the fourth paragraph “2%” is replaced both places it appears with “[*]%”; “[*]” is inserted immediately preceding “and 1%”; and “[*]” is deleted. A new sentence is added at the end as follows: “[*]”
|
iii.
|
“August 31
st
” is changed to “December 31
st
in both instances.
|
f.
|
Schedule 9.01, paragraph 4 is deleted and replaced with the following:
|
(a)
|
Bank will accrue an amount equal to (i) Net Purchase Charges (other than Accelerator Spending) multiplied by [*]%, plus (ii) Net Purchase Charges attributable to Accelerator
|
(b)
|
Bank will first fund Rewards based on Net Purchase Charges at Costco Locations pursuant to the then current Loyalty Program and will then fund Rewards based on Outside Spend, but (notwithstanding anything in Section 4.06(a)) [*] Except with respect to costs incurred by Costco to provide benefits associated with Executive Membership, Bank will pay to Costco as a Loyalty Program Expense [*] of all such redeemed Rewards coupons or other form or method of reward redemptions as soon as practicable after receipt of a report in respect thereof by Bank, and in no event more than [*] after receipt thereof by Bank; provided that Bank shall have no obligation to make a payment to Costco with respect to Rewards paid by way of a statement credit. If Bank disputes an amount set forth in the report regarding such redeemed Rewards in good faith, Bank may hold-back such disputed amount until such dispute is resolved pursuant to Section 16.02. All other payments shall be made pursuant to the terms set forth on the Program Economics Schedule.
|
(c)
|
Any Costco funding for amounts [*] is a Loyalty Program Payment and will be considered revenue to the contractual P&L as described in Schedule 9.08 “Costco Investments”. [*]
|
(d)
|
Within [*] after the end of each Costco fiscal period, Bank will calculate and report to Costco the projected net costs of the Loyalty Program and [*] for the applicable period and calendar year to date. Within 15 days of the mailing of the annual rewards coupons, Costco will make a payment for [*]. At the end of each calendar year, a true up payment will be made [*].
|
g.
|
Schedule 9.08:
the schedule is deleted and replaced with new Schedule 9.08 attached hereto as
Attachment 4
.
|
a.
|
Section 9.01(b) is deleted and replaced with the following:
|
b.
|
Schedule 9.01, paragraph 1:
|
i.
|
Paragraph 1 is deleted and replaced with the following:
|
(a)
|
Outside Spend Percentage Calculation
. At the end of each Program Year, Bank will calculate the Outside Spend Percentage for the Program Year.
|
(b)
|
Payment for Program Years
. Bank will make the External Royalty Payment for the first Program Year using an External Royalty Percentage of [*] basis points. Bank will make the External Royalty Payment for each other Program Year using the adjusted External Royalty Percentage calculated at the end of the prior Program Year pursuant to subsection (a) of this paragraph (1).
|
(c)
|
Annual External Royalty Payment Adjustment
. With respect to adjustments to the External Royalty Percentage made pursuant to this paragraph (1) of Schedule 9.01:
|
(i)
|
If the External Royalty Payment made during an Program Year is less than the External Royalty Payment would have been if the External Royalty Percentage as adjusted pursuant to subsection (a) of this paragraph 1 at the end of such Program Year had been multiplied by Outside Spend for such Program Year, Bank will pay the difference to Costco along with its first monthly External Royalty Payment for following Program Year.
|
(ii)
|
If the External Royalty Payment made during an Program Year is more than the External Royalty Payment would have been if the External Royalty Percentage as adjusted pursuant to subsection (a) of this paragraph 1 at the end of such Program Year had been multiplied by Outside Spend for such Program Year, Bank will reduce its first monthly External Royalty Payment of following Program Year by the difference (and if the difference is greater than the External Royalty Payment for such month, Bank will reduce the next monthly External Royalty Payment accordingly).
|
a.
|
Sections 7.02(b), 7.02(c), and 7.02(d
)
:
The following is added at the end of the first sentence of Section 7.02(b), the second sentence of Section 7.02(c), and the first and second sentences of Section 7.02(d), respectively: “, other than as set forth on Schedule 7.02”.
|
b.
|
Section 7.04(b):
The first word of the first sentence is deleted and replaced with the following: “Other than as set forth on Schedule 7.02, customer”.
|
c.
|
Schedule 7.02:
The following is added at the end:
|
Subcontractor
|
Function
|
Location
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
[*]
|
a.
|
Section 4.05(b):
The following is added after the word “PIN” in the first sentence: “or signature”.
|
b.
|
Schedule 4.05(a)(i):
the schedule is deleted and replaced with new Schedule 4.05(a)(i) attached hereto as
Attachment 2
.
|
c.
|
Schedule 4.05(a)(ii):
the schedule is deleted and replaced with new Schedule 4.05(a)(ii) attached hereto as
Attachment 3
.
|
a.
|
In Section 12.04(d) “[*]” is deleted and replaced with “[*]”
|
b.
|
In Section 12.05(e) subpart (i) is deleted and replaced with: “(i) Bank and American Express do not enter into the Amex Purchase Agreement on or prior to [*] for any reason”
|
COSTCO WHOLESALE CORPORATION
By:
/s/ Paul Latham
Name:
Paul Latham
Title:
SVP - Membership, Marketing, Services
|
CITIBANK, N.A.
By:
/s/ Donna VanBockern
Name:
Donna VanBockern
Title:
Senior Vice President
|
Co-Brand Credit Card Disclosures
|
|
Annual Percentage Rate (APR) for Purchases
|
[*]
introductory APR for [*] from date of account opening.
After that, your APR will be
[*]%.
This APR will vary with the market based on the Prime Rate.
|
APR for Balance Transfers
|
[*]%
for transfers completed within [*] months from date of account opening.
This APR will vary with the market based on the Prime Rate.
|
APR for Cash Advances
|
[*]%
This APR will vary with the market based on the Prime Rate.
|
Penalty APR and When it Applies
|
Up to
[*]%,
based on your creditworthiness. This APR will vary with the market based on the Prime Rate.
This APR may be applied to your account if you:
(1) Make a late payment or
(2) Make a payment that is returned.
How Long Will the Penalty APR Apply?
[*]
|
How to Avoid Paying Interest on Purchases
|
Your due date is at least [*] days after the close of each billing cycle. We will not charge you any interest on purchases if you pay your entire balance by the due date each month.
|
For Credit Card Tips from the Consumer Financial Protection Bureau
|
To learn more about factors to consider when applying for or using a credit card, visit the website of the Consumer Financial Protection Bureau at
http://www.consumerfinance.gov/learnmore.
|
Minimum Interest Charge
|
If you are charged interest, the charge will be no less than 50 cents.
|
Annual Fee
|
No annual fee for this credit card with your paid Costco membership
|
Transaction Fees
•
Balance Transfer
•
Cash Advance
•
Foreign Purchase Transaction
|
Either
[*] or [*]%
of the amount of each transfer, whichever is greater.
Either
[*] or [*]%
of the amount of each cash advance, whichever is greater.
[*]%
of each purchase transaction in US dollars.
|
Co-Brand Credit Card Disclosures
|
|
Penalty Fees
•
Late Payment
•
Returned Payment
|
Up to
[*].
Up to
[*].
|
Co-Brand Credit Card Disclosures
|
|
Annual Percentage Rate (APR) for Purchases
|
[*]%
introductory APR for 6 months from date of account opening.
After that, your APR will be
[*]%.
This APR will vary with the market based on the Prime Rate.
|
APR for Cash Advances
|
[*]%
This APR will vary with the market based on the Prime Rate.
|
Penalty APR and When it Applies
|
Up to
[*]%,
based on your creditworthiness. This APR will vary with the market based on the Prime Rate.
This APR may be applied to your account if you:
(1) Make a late payment or
(2) Make a payment that is returned.
How Long Will the Penalty APR Apply?
[*]
|
How to Avoid Paying Interest on Purchases
|
Your due date is at least [*] days after the close of each billing cycle. We will not charge you any interest on purchases if you pay your entire balance by the due date each month.
|
Minimum Interest Charge
|
If you are charged interest, the charge will be no less than 50 cents.
|
Annual Fee
|
No annual fee for this credit card with your paid Costco membership
|
Transaction Fees
•
Cash Advance
•
Foreign Purchase Transaction
|
Either
[*] or [*]%
of the amount of each cash advance, whichever is greater.
[*]%
of each purchase transaction in US dollars.
|
Penalty Fees
•
Late Payment
•
Returned Payment
|
Up to
[*].
Up to
[*].
|
|
[*]
|
[*]
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
[*]
|
|
|
1)
|
I have reviewed this Quarterly Report on Form 10-Q of Costco Wholesale Corporation (“the registrant”);
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5)
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ W. C
RAIG
J
ELINEK
|
|
W. Craig Jelinek
|
|
President, Chief Executive Officer and Director
|
|
1)
|
I have reviewed this Quarterly Report on Form 10-Q of Costco Wholesale Corporation (“the registrant”);
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5)
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ R
ICHARD
A. G
ALANTI
|
|
Richard A. Galanti
|
|
Executive Vice President, Chief Financial Officer and Director
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ W. C
RAIG
J
ELINEK
|
|
Date: March 9, 2016
|
W. Craig Jelinek
|
|
|
President, Chief Executive Officer and Director
|
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ R
ICHARD
A. G
ALANTI
|
|
Date: March 9, 2016
|
Richard A. Galanti
|
|
|
Executive Vice President, Chief Financial Officer and Director
|
|
|