☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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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Title of each class
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Trading Symbol
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Name of each exchange on
which registered
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Common Stock, $.01 Par Value
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COST
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The NASDAQ Global Select Market
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Large accelerated filer ☒
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☐
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Emerging growth company ☐
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Page
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Item 1.
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Item 1A.
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Item 1B.
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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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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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•
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Food and Sundries (including dry foods, packaged foods, groceries, snack foods, candy, alcoholic and nonalcoholic beverages, and cleaning supplies)
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•
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Hardlines (including major appliances, electronics, health and beauty aids, hardware, and garden and patio)
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•
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Fresh Foods (including meat, produce, deli, and bakery)
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•
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Softlines (including apparel and small appliances)
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•
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Ancillary (including gasoline and pharmacy businesses)
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Name
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Position
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Executive
Officer
Since
|
Age
|
W. Craig Jelinek
|
President and Chief Executive Officer. Mr. Jelinek has been President and Chief Executive Officer since January 2012 and a director since February 2010. He was President and Chief Operating Officer from February 2010 to December 2011. Prior to that he was Executive Vice President, Chief Operating Officer, Merchandising since 2004.
|
1995
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67
|
Richard A. Galanti
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Executive Vice President and Chief Financial Officer. Mr. Galanti has been a director since January 1995.
|
1993
|
63
|
Jim C. Klauer
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Executive Vice President, Chief Operating Officer, Northern Division. Mr. Klauer was Senior Vice President, Non Foods and E-commerce merchandise, from 2013 to January 2018.
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2018
|
57
|
Patrick J. Callans
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Executive Vice President, Administration. Mr. Callans was Senior Vice President, Human Resources and Risk Management, from 2013 to December 2018.
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2019
|
57
|
Russ D. Miller
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Executive Vice President, Chief Operating Officer, Southern Division and Mexico. Mr. Miller was Senior Vice President, Western Canada Region, from 2001 to January 2018.
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2018
|
62
|
Paul G. Moulton
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Executive Vice President, Chief Information Officer. Mr. Moulton was Executive Vice President, Real Estate Development, from 2001 until March 2010.
|
2001
|
68
|
James P. Murphy
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Executive Vice President, Chief Operating Officer, International. Mr. Murphy was Senior Vice President, International, from 2004 to October 2010.
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2011
|
66
|
Joseph P. Portera
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Executive Vice President, Chief Operating Officer, Eastern and Canadian Divisions. Mr. Portera has held these positions since 1994 and has been the Chief Diversity Officer since 2010.
|
1994
|
67
|
Timothy L. Rose
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Executive Vice President, Ancillary Businesses, Manufacturing, and Business Centers. Mr. Rose was Senior Vice President, Merchandising, Food and Sundries and Private Label, from 1995 to December 2012.
|
2013
|
67
|
Ron M. Vachris
|
Executive Vice President, Chief Operating Officer, Merchandising. Mr. Vachris was Senior Vice President, Real Estate Development, from August 2015 to June 2016, and Senior Vice President, General Manager, Northwest Region, from 2010 to July 2015.
|
2016
|
54
|
|
Own Land
and Building
|
|
Lease Land
and/or
Building(1)
|
|
Total
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|||
United States and Puerto Rico
|
437
|
|
|
106
|
|
|
543
|
|
Canada
|
86
|
|
|
14
|
|
|
100
|
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Mexico
|
38
|
|
|
1
|
|
|
39
|
|
United Kingdom
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23
|
|
|
6
|
|
|
29
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|
Japan
|
13
|
|
|
13
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|
|
26
|
|
Korea
|
12
|
|
|
4
|
|
|
16
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|
Taiwan
|
—
|
|
|
13
|
|
|
13
|
|
Australia
|
8
|
|
|
3
|
|
|
11
|
|
Spain
|
2
|
|
|
—
|
|
|
2
|
|
Iceland
|
—
|
|
|
1
|
|
|
1
|
|
France
|
1
|
|
|
—
|
|
|
1
|
|
China
|
—
|
|
|
1
|
|
|
1
|
|
Total
|
620
|
|
|
162
|
|
|
782
|
|
(1)
|
114 of the 162 leases are land-only leases, where Costco owns the building.
|
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United States
|
|
Canada
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Other
International
|
|
Total
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|
Total Warehouses
in Operation
|
|||||
2015 and prior
|
480
|
|
|
89
|
|
|
117
|
|
|
686
|
|
|
686
|
|
2016
|
21
|
|
|
2
|
|
|
6
|
|
|
29
|
|
|
715
|
|
2017
|
13
|
|
|
6
|
|
|
7
|
|
|
26
|
|
|
741
|
|
2018
|
13
|
|
|
3
|
|
|
5
|
|
|
21
|
|
|
762
|
|
2019
|
16
|
|
|
—
|
|
|
4
|
|
|
20
|
|
|
782
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|
2020 (expected through 12/31/2019)
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
785
|
|
Total
|
546
|
|
|
100
|
|
|
139
|
|
|
785
|
|
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Period
|
|
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Total Number of Shares Purchased
|
|
Average Price Paid per Share
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Total Number of Shares Purchased as Part of Publicly Announced Program(1)
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Maximum Dollar Value of Shares that May Yet be Purchased under the Program
|
||||||
May 13—June 9, 2019
|
|
39,000
|
|
|
$
|
246.12
|
|
|
39,000
|
|
|
$
|
3,985
|
|
|
June 10—July 7, 2019
|
|
36,000
|
|
|
263.30
|
|
|
36,000
|
|
|
3,976
|
|
|||
July 8—August 4, 2019
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|
54,000
|
|
|
278.15
|
|
|
54,000
|
|
|
3,961
|
|
|||
August 5—September 1, 2019
|
|
65,000
|
|
|
275.37
|
|
|
65,000
|
|
|
3,943
|
|
|||
Total fourth quarter
|
|
194,000
|
|
|
$
|
268.08
|
|
|
194,000
|
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(1)
|
The repurchase program is conducted under a $4,000 authorization approved by our Board of Directors in April 2019, which expires in April 2023. This authorization revoked previously authorized but unused amounts, totaling $2,237.
|
|
Sept. 1, 2019
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|
Sept. 2, 2018
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|
Sept. 3, 2017
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|
Aug. 28, 2016
|
|
Aug. 30, 2015
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||||||||||
As of and for the year ended
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(52 weeks)
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(52 weeks)
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(53 weeks)
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(52 weeks)
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(52 weeks)
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||||||||||
RESULTS OF OPERATIONS
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|
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|
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|
||||||||||
Net sales
|
$
|
149,351
|
|
|
$
|
138,434
|
|
|
$
|
126,172
|
|
|
$
|
116,073
|
|
|
$
|
113,666
|
|
Membership fees
|
3,352
|
|
|
3,142
|
|
|
2,853
|
|
|
2,646
|
|
|
2,533
|
|
|||||
Gross margin(1) as a percentage of net sales
|
11.02
|
%
|
|
11.04
|
%
|
|
11.33
|
%
|
|
11.35
|
%
|
|
11.09
|
%
|
|||||
Selling, general and administrative expenses as a percentage of net sales
|
10.04
|
%
|
|
10.02
|
%
|
|
10.26
|
%
|
|
10.40
|
%
|
|
10.07
|
%
|
|||||
Operating income
|
$
|
4,737
|
|
|
$
|
4,480
|
|
|
$
|
4,111
|
|
|
$
|
3,672
|
|
|
$
|
3,624
|
|
Net income attributable to Costco
|
3,659
|
|
|
3,134
|
|
|
2,679
|
|
|
2,350
|
|
|
2,377
|
|
|||||
Net income per diluted common share attributable to Costco
|
8.26
|
|
|
7.09
|
|
|
6.08
|
|
|
5.33
|
|
|
5.37
|
|
|||||
Cash dividends declared per common share
|
2.44
|
|
|
2.14
|
|
|
8.90
|
|
|
1.70
|
|
|
6.51
|
|
|||||
Changes in comparable sales(2)
|
|
|
|
|
|
|
|
|
|
||||||||||
United States
|
8
|
%
|
|
9
|
%
|
|
4
|
%
|
|
1
|
%
|
|
3
|
%
|
|||||
Canada
|
2
|
%
|
|
9
|
%
|
|
5
|
%
|
|
(3
|
)%
|
|
(5
|
)%
|
|||||
Other International
|
2
|
%
|
|
11
|
%
|
|
2
|
%
|
|
(3
|
)%
|
|
(3
|
)%
|
|||||
Total Company
|
6
|
%
|
|
9
|
%
|
|
4
|
%
|
|
0
|
%
|
|
1
|
%
|
|||||
Changes in Total Company comparable sales excluding the impact of changes in foreign currency and gasoline prices (3)
|
6
|
%
|
|
7
|
%
|
|
4
|
%
|
|
4
|
%
|
|
7
|
%
|
|||||
BALANCE SHEET DATA
|
|
|
|
|
|
|
|
|
|
||||||||||
Net property and equipment
|
$
|
20,890
|
|
|
$
|
19,681
|
|
|
$
|
18,161
|
|
|
$
|
17,043
|
|
|
$
|
15,401
|
|
Total assets
|
45,400
|
|
|
40,830
|
|
|
36,347
|
|
|
33,163
|
|
|
33,017
|
|
|||||
Long-term debt, excluding current portion
|
5,124
|
|
|
6,487
|
|
|
6,573
|
|
|
4,061
|
|
|
4,852
|
|
|||||
Costco stockholders’ equity
|
15,243
|
|
|
12,799
|
|
|
10,778
|
|
|
12,079
|
|
|
10,617
|
|
|||||
WAREHOUSE INFORMATION
|
|
|
|
|
|
|
|
|
|
||||||||||
Warehouses in Operation
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning of year
|
762
|
|
|
741
|
|
|
715
|
|
|
686
|
|
|
663
|
|
|||||
Opened
|
25
|
|
|
25
|
|
|
28
|
|
|
33
|
|
|
26
|
|
|||||
Closed due to relocation
|
(5
|
)
|
|
(4
|
)
|
|
(2
|
)
|
|
(4
|
)
|
|
(3
|
)
|
|||||
End of year
|
782
|
|
|
762
|
|
|
741
|
|
|
715
|
|
|
686
|
|
|||||
MEMBERSHIP INFORMATION
|
|
|
|
|
|
|
|
|
|
||||||||||
Total paid members (000's)
|
53,900
|
|
|
51,600
|
|
|
49,400
|
|
|
47,600
|
|
|
44,600
|
|
(1)
|
Net sales less merchandise costs.
|
(2)
|
Includes net sales from warehouses and websites operating for more than one year. For 2017, the prior year includes the comparable 53 weeks.
|
(3)
|
Excluding the impact of the revenue recognition standard for the year ended September 1, 2019. See Note 1 in Item 8.
|
•
|
We opened 25 new warehouses, including 5 relocations: 16 net new locations in the U.S. and 4 in our Other International segment, including our first warehouse in China, compared to 25 new warehouses, including 4 relocations in 2018;
|
•
|
Net sales increased 8% to $149,351 driven by a 6% increase in comparable sales and sales at new warehouses opened in 2018 and 2019;
|
•
|
Membership fee revenue increased 7% to $3,352, primarily due to membership sign-ups at existing and new warehouses and the annual fee increase in the U.S. and Canada in June 2017.
|
•
|
Gross margin percentage decreased two basis points. Excluding the impact of the new revenue recognition standard on net sales, gross margin as a percentage of adjusted net sales increased eight basis points;
|
•
|
Selling, general & administrative (SG&A) expenses as a percentage of net sales increased two basis points. Excluding the impact of the new revenue recognition standard on net sales, SG&A as a percentage of adjusted net sales increased 11 basis points, primarily related to a $123 charge for a product tax assessment;
|
•
|
Effective March 2019, starting and supervisor wages were increased and paid bonding leave was made available for hourly employees in the U.S. and Canada. The estimated annualized pre-tax cost of these increases is approximately $50-$60;
|
•
|
The effective tax rate in 2019 was 22.3% compared to 28.4% in 2018. Both years were favorably impacted by the Tax Cuts and Jobs Act (2017 Tax Act) and other net tax benefits;
|
•
|
Net income increased 17% to $3,659, or $8.26 per diluted share compared to $3,134, or $7.09 per diluted share in 2018; and
|
•
|
In April 2019, the Board of Directors approved an increase in the quarterly cash dividend from $0.57 to $0.65 per share and authorized a new share repurchase program in the amount of $4,000.
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net Sales
|
$
|
149,351
|
|
|
$
|
138,434
|
|
|
$
|
126,172
|
|
Changes in net sales:
|
|
|
|
|
|
||||||
U.S.
|
9
|
%
|
|
9
|
%
|
|
8
|
%
|
|||
Canada
|
3
|
%
|
|
10
|
%
|
|
10
|
%
|
|||
Other International
|
5
|
%
|
|
14
|
%
|
|
8
|
%
|
|||
Total Company
|
8
|
%
|
|
10
|
%
|
|
9
|
%
|
|||
Changes in comparable sales:
|
|
|
|
|
|
||||||
U.S.
|
8
|
%
|
|
9
|
%
|
|
4
|
%
|
|||
Canada
|
2
|
%
|
|
9
|
%
|
|
5
|
%
|
|||
Other International
|
2
|
%
|
|
11
|
%
|
|
2
|
%
|
|||
Total Company
|
6
|
%
|
|
9
|
%
|
|
4
|
%
|
|||
Increases in comparable sales excluding the impact of changes in foreign currency and gasoline prices(1):
|
|
|
|
|
|
||||||
U.S.
|
6
|
%
|
|
7
|
%
|
|
4
|
%
|
|||
Canada
|
5
|
%
|
|
4
|
%
|
|
4
|
%
|
|||
Other International
|
6
|
%
|
|
7
|
%
|
|
4
|
%
|
|||
Total Company
|
6
|
%
|
|
7
|
%
|
|
4
|
%
|
(1)
|
Excluding the impact of the revenue recognition standard for the year ended September 1, 2019. See Note 1 in Item 8.
|
|
2019
|
|
2018
|
|
2017
|
||||||
Membership fees
|
$
|
3,352
|
|
|
$
|
3,142
|
|
|
$
|
2,853
|
|
Membership fees increase
|
7
|
%
|
|
10
|
%
|
|
8
|
%
|
|||
Membership fees as a percentage of net sales
|
2.24
|
%
|
|
2.27
|
%
|
|
2.26
|
%
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
$
|
149,351
|
|
|
$
|
138,434
|
|
|
$
|
126,172
|
|
Less merchandise costs
|
132,886
|
|
|
123,152
|
|
|
111,882
|
|
|||
Gross margin
|
$
|
16,465
|
|
|
$
|
15,282
|
|
|
$
|
14,290
|
|
Gross margin percentage
|
11.02
|
%
|
|
11.04
|
%
|
|
11.33
|
%
|
|
2019
|
|
2018
|
|
2017
|
||||||
SG&A expenses
|
$
|
14,994
|
|
|
$
|
13,876
|
|
|
$
|
12,950
|
|
SG&A expenses as a percentage of net sales
|
10.04
|
%
|
|
10.02
|
%
|
|
10.26
|
%
|
|
2019
|
|
2018
|
|
2017
|
||||||
Preopening expenses
|
$
|
86
|
|
|
$
|
68
|
|
|
$
|
82
|
|
Warehouse openings, including relocations
|
|
|
|
|
|
||||||
United States
|
18
|
|
|
17
|
|
|
15
|
|
|||
Canada
|
3
|
|
|
3
|
|
|
6
|
|
|||
Other International
|
4
|
|
|
5
|
|
|
7
|
|
|||
Total warehouse openings, including relocations
|
25
|
|
|
25
|
|
|
28
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Interest expense
|
$
|
150
|
|
|
$
|
159
|
|
|
$
|
134
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Interest income
|
$
|
126
|
|
|
$
|
75
|
|
|
$
|
50
|
|
Foreign-currency transaction gains (losses), net
|
27
|
|
|
23
|
|
|
(5
|
)
|
|||
Other, net
|
25
|
|
|
23
|
|
|
17
|
|
|||
Interest income and other, net
|
$
|
178
|
|
|
$
|
121
|
|
|
$
|
62
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Provision for income taxes
|
$
|
1,061
|
|
|
$
|
1,263
|
|
|
$
|
1,325
|
|
Effective tax rate
|
22.3
|
%
|
|
28.4
|
%
|
|
32.8
|
%
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash provided by operating activities
|
$
|
6,356
|
|
|
$
|
5,774
|
|
|
$
|
6,726
|
|
Net cash used in investing activities
|
(2,865
|
)
|
|
(2,947
|
)
|
|
(2,366
|
)
|
|||
Net cash used in financing activities
|
(1,147
|
)
|
|
(1,281
|
)
|
|
(3,218
|
)
|
|
Payments Due by Fiscal Year
|
||||||||||||||||||
Contractual obligations
|
2020
|
|
2021 to 2022
|
|
2023 to 2024
|
|
2025 and thereafter
|
|
Total
|
||||||||||
Purchase obligations (merchandise)(1)
|
$
|
8,752
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,756
|
|
Long-term debt(2)
|
1,828
|
|
|
2,594
|
|
|
1,330
|
|
|
1,651
|
|
|
7,403
|
|
|||||
Operating leases (3)
|
239
|
|
|
431
|
|
|
374
|
|
|
2,206
|
|
|
3,250
|
|
|||||
Construction and land obligations
|
606
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
614
|
|
|||||
Capital lease obligations(4)
|
51
|
|
|
91
|
|
|
78
|
|
|
544
|
|
|
764
|
|
|||||
Purchase obligations (equipment, services and other)(5)
|
538
|
|
|
176
|
|
|
33
|
|
|
65
|
|
|
812
|
|
|||||
Other(6)
|
18
|
|
|
28
|
|
|
23
|
|
|
96
|
|
|
165
|
|
|||||
Total
|
$
|
12,032
|
|
|
$
|
3,332
|
|
|
$
|
1,838
|
|
|
$
|
4,562
|
|
|
$
|
21,764
|
|
(1)
|
Includes only open merchandise purchase orders.
|
(2)
|
Includes contractual interest payments and excludes deferred issuance costs.
|
(3)
|
Excludes common area maintenance, taxes, and insurance and have been reduced by $105 related to sub-lease income.
|
(4)
|
Includes build-to-suit lease obligations and contractual interest payments.
|
(5)
|
Excludes certain services negotiated at the individual warehouse or regional level that are not significant and generally contain clauses allowing for cancellation without significant penalty.
|
(6)
|
Includes asset retirement obligations and deferred compensation obligations. The amount excludes $27 of non-current unrecognized tax contingencies and $36 of other obligations due to uncertainty regarding the timing of future cash payments.
|
•
|
Assessing the actuarial models used by the Company for consistency with generally accepted actuarial standards;
|
•
|
Evaluating the Company’s ability to estimate self-insurance liabilities by comparing its historical estimates with actual loss payments;
|
•
|
Evaluating the key assumptions underlying the Company’s actuarial estimates by developing an independent expectation of the self-insurance liabilities and comparing them to the amounts recorded by the Company; and
|
•
|
Evaluating the qualifications of the Company’s actuaries by assessing their certifications, and determining whether they met the Qualification Standards of the American Academy of Actuaries to render the statements of actuarial opinion implicit in their analyses.
|
•
|
Testing the underlying records of selected transaction data obtained from the impacted IT systems to support the use of the information in the conduct of the audit; and
|
•
|
Involving forensic professionals with specialized skills and knowledge in data analysis to perform an evaluation of the journal entry data, including assessing that the entire population of automated and manual transactions has been identified. Forensic professionals also assisted with the identification of certain entries that required additional testing and for all such entries, we agreed the journal entry data to source documents.
|
|
September 1,
2019 |
|
September 2,
2018 |
||||
ASSETS
|
|
|
|
||||
CURRENT ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
8,384
|
|
|
$
|
6,055
|
|
Short-term investments
|
1,060
|
|
|
1,204
|
|
||
Receivables, net
|
1,535
|
|
|
1,669
|
|
||
Merchandise inventories
|
11,395
|
|
|
11,040
|
|
||
Other current assets
|
1,111
|
|
|
321
|
|
||
Total current assets
|
23,485
|
|
|
20,289
|
|
||
PROPERTY AND EQUIPMENT
|
|
|
|
||||
Land
|
6,417
|
|
|
6,193
|
|
||
Buildings and improvements
|
17,136
|
|
|
16,107
|
|
||
Equipment and fixtures
|
7,801
|
|
|
7,274
|
|
||
Construction in progress
|
1,272
|
|
|
1,140
|
|
||
|
32,626
|
|
|
30,714
|
|
||
Less accumulated depreciation and amortization
|
(11,736
|
)
|
|
(11,033
|
)
|
||
Net property and equipment
|
20,890
|
|
|
19,681
|
|
||
OTHER ASSETS
|
1,025
|
|
|
860
|
|
||
TOTAL ASSETS
|
$
|
45,400
|
|
|
$
|
40,830
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
CURRENT LIABILITIES
|
|
|
|
||||
Accounts payable
|
$
|
11,679
|
|
|
$
|
11,237
|
|
Accrued salaries and benefits
|
3,176
|
|
|
2,994
|
|
||
Accrued member rewards
|
1,180
|
|
|
1,057
|
|
||
Deferred membership fees
|
1,711
|
|
|
1,624
|
|
||
Current portion of long-term debt
|
1,699
|
|
|
90
|
|
||
Other current liabilities
|
3,792
|
|
|
2,924
|
|
||
Total current liabilities
|
23,237
|
|
|
19,926
|
|
||
LONG-TERM DEBT, excluding current portion
|
5,124
|
|
|
6,487
|
|
||
OTHER LIABILITIES
|
1,455
|
|
|
1,314
|
|
||
Total liabilities
|
29,816
|
|
|
27,727
|
|
||
COMMITMENTS AND CONTINGENCIES
|
|
|
|
||||
EQUITY
|
|
|
|
||||
Preferred stock $0.01 par value; 100,000,000 shares authorized; no shares issued and outstanding
|
0
|
|
|
0
|
|
||
Common stock $0.01 par value; 900,000,000 shares authorized; 439,625,000 and 438,189,000 shares issued and outstanding
|
4
|
|
|
4
|
|
||
Additional paid-in capital
|
6,417
|
|
|
6,107
|
|
||
Accumulated other comprehensive loss
|
(1,436
|
)
|
|
(1,199
|
)
|
||
Retained earnings
|
10,258
|
|
|
7,887
|
|
||
Total Costco stockholders’ equity
|
15,243
|
|
|
12,799
|
|
||
Noncontrolling interests
|
341
|
|
|
304
|
|
||
Total equity
|
15,584
|
|
|
13,103
|
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
45,400
|
|
|
$
|
40,830
|
|
|
52 Weeks Ended
|
|
52 Weeks Ended
|
|
53 Weeks Ended
|
||||||
|
September 1,
2019 |
|
September 2,
2018 |
|
September 3,
2017 |
||||||
REVENUE
|
|
|
|
|
|
||||||
Net sales
|
$
|
149,351
|
|
|
$
|
138,434
|
|
|
$
|
126,172
|
|
Membership fees
|
3,352
|
|
|
3,142
|
|
|
2,853
|
|
|||
Total revenue
|
152,703
|
|
|
141,576
|
|
|
129,025
|
|
|||
OPERATING EXPENSES
|
|
|
|
|
|
||||||
Merchandise costs
|
132,886
|
|
|
123,152
|
|
|
111,882
|
|
|||
Selling, general and administrative
|
14,994
|
|
|
13,876
|
|
|
12,950
|
|
|||
Preopening expenses
|
86
|
|
|
68
|
|
|
82
|
|
|||
Operating income
|
4,737
|
|
|
4,480
|
|
|
4,111
|
|
|||
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
||||||
Interest expense
|
(150
|
)
|
|
(159
|
)
|
|
(134
|
)
|
|||
Interest income and other, net
|
178
|
|
|
121
|
|
|
62
|
|
|||
INCOME BEFORE INCOME TAXES
|
4,765
|
|
|
4,442
|
|
|
4,039
|
|
|||
Provision for income taxes
|
1,061
|
|
|
1,263
|
|
|
1,325
|
|
|||
Net income including noncontrolling interests
|
3,704
|
|
|
3,179
|
|
|
2,714
|
|
|||
Net income attributable to noncontrolling interests
|
(45
|
)
|
|
(45
|
)
|
|
(35
|
)
|
|||
NET INCOME ATTRIBUTABLE TO COSTCO
|
$
|
3,659
|
|
|
$
|
3,134
|
|
|
$
|
2,679
|
|
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
|
|
|
|
|
|
||||||
Basic
|
$
|
8.32
|
|
|
$
|
7.15
|
|
|
$
|
6.11
|
|
Diluted
|
$
|
8.26
|
|
|
$
|
7.09
|
|
|
$
|
6.08
|
|
Shares used in calculation (000’s)
|
|
|
|
|
|
||||||
Basic
|
439,755
|
|
|
438,515
|
|
|
438,437
|
|
|||
Diluted
|
442,923
|
|
|
441,834
|
|
|
440,937
|
|
|
52 Weeks Ended
|
|
52 Weeks Ended
|
|
53 Weeks Ended
|
||||||
|
September 1,
2019 |
|
September 2,
2018 |
|
September 3,
2017 |
||||||
NET INCOME INCLUDING NONCONTROLLING INTERESTS
|
$
|
3,704
|
|
|
$
|
3,179
|
|
|
$
|
2,714
|
|
Foreign-currency translation adjustment and other, net
|
(245
|
)
|
|
(192
|
)
|
|
98
|
|
|||
Comprehensive income
|
3,459
|
|
|
2,987
|
|
|
2,812
|
|
|||
Less: Comprehensive income attributable to noncontrolling interests
|
37
|
|
|
38
|
|
|
48
|
|
|||
COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO
|
$
|
3,422
|
|
|
$
|
2,949
|
|
|
$
|
2,764
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Retained
Earnings
|
|
Total Costco
Stockholders’
Equity
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
|||||||||||||||||
|
Shares (000’s)
|
|
Amount
|
|
||||||||||||||||||||||||||
BALANCE AT AUGUST 28, 2016
|
437,524
|
|
|
$
|
2
|
|
|
$
|
5,490
|
|
|
$
|
(1,099
|
)
|
|
$
|
7,686
|
|
|
$
|
12,079
|
|
|
$
|
253
|
|
|
$
|
12,332
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,679
|
|
|
2,679
|
|
|
35
|
|
|
2,714
|
|
|||||||
Foreign-currency translation adjustment and other, net
|
—
|
|
|
—
|
|
|
—
|
|
|
85
|
|
|
—
|
|
|
85
|
|
|
13
|
|
|
98
|
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
518
|
|
|
—
|
|
|
—
|
|
|
518
|
|
|
—
|
|
|
518
|
|
|||||||
Release of vested restricted stock units (RSUs), including tax effects
|
2,673
|
|
|
—
|
|
|
(165
|
)
|
|
—
|
|
|
—
|
|
|
(165
|
)
|
|
—
|
|
|
(165
|
)
|
|||||||
Conversion of convertible notes
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Repurchases of common stock
|
(2,998
|
)
|
|
—
|
|
|
(41
|
)
|
|
—
|
|
|
(432
|
)
|
|
(473
|
)
|
|
—
|
|
|
(473
|
)
|
|||||||
Cash dividends declared and other
|
—
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
(3,945
|
)
|
|
(3,945
|
)
|
|
—
|
|
|
(3,945
|
)
|
|||||||
BALANCE AT SEPTEMBER 3, 2017
|
437,204
|
|
|
4
|
|
|
5,800
|
|
|
(1,014
|
)
|
|
5,988
|
|
|
10,778
|
|
|
301
|
|
|
11,079
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,134
|
|
|
3,134
|
|
|
45
|
|
|
3,179
|
|
|||||||
Foreign-currency translation adjustment and other, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(185
|
)
|
|
—
|
|
|
(185
|
)
|
|
(7
|
)
|
|
(192
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
547
|
|
|
—
|
|
|
—
|
|
|
547
|
|
|
—
|
|
|
547
|
|
|||||||
Release of vested RSUs, including tax effects
|
2,741
|
|
|
—
|
|
|
(217
|
)
|
|
—
|
|
|
—
|
|
|
(217
|
)
|
|
—
|
|
|
(217
|
)
|
|||||||
Repurchases of common stock
|
(1,756
|
)
|
|
—
|
|
|
(26
|
)
|
|
—
|
|
|
(296
|
)
|
|
(322
|
)
|
|
—
|
|
|
(322
|
)
|
|||||||
Cash dividends declared and other
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
(939
|
)
|
|
(936
|
)
|
|
(35
|
)
|
|
(971
|
)
|
|||||||
BALANCE AT SEPTEMBER 2, 2018
|
438,189
|
|
|
4
|
|
|
6,107
|
|
|
(1,199
|
)
|
|
7,887
|
|
|
12,799
|
|
|
304
|
|
|
13,103
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,659
|
|
|
3,659
|
|
|
45
|
|
|
3,704
|
|
|||||||
Foreign-currency translation adjustment and other, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(237
|
)
|
|
—
|
|
|
(237
|
)
|
|
(8
|
)
|
|
(245
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
598
|
|
|
—
|
|
|
—
|
|
|
598
|
|
|
—
|
|
|
598
|
|
|||||||
Release of vested RSUs, including tax effects
|
2,533
|
|
|
—
|
|
|
(272
|
)
|
|
—
|
|
|
—
|
|
|
(272
|
)
|
|
—
|
|
|
(272
|
)
|
|||||||
Repurchases of common stock
|
(1,097
|
)
|
|
—
|
|
|
(16
|
)
|
|
—
|
|
|
(231
|
)
|
|
(247
|
)
|
|
—
|
|
|
(247
|
)
|
|||||||
Cash dividends declared and other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,057
|
)
|
|
(1,057
|
)
|
|
—
|
|
|
(1,057
|
)
|
|||||||
BALANCE AT SEPTEMBER 1, 2019
|
439,625
|
|
|
$
|
4
|
|
|
$
|
6,417
|
|
|
$
|
(1,436
|
)
|
|
$
|
10,258
|
|
|
$
|
15,243
|
|
|
$
|
341
|
|
|
$
|
15,584
|
|
|
2019
|
|
2018
|
||||
United States
|
$
|
8,415
|
|
|
$
|
8,081
|
|
Canada
|
1,123
|
|
|
1,189
|
|
||
Other International
|
1,857
|
|
|
1,770
|
|
||
Merchandise inventories
|
$
|
11,395
|
|
|
$
|
11,040
|
|
|
As Reported
|
|
ASU 2014-09 Effect
|
|
Excluding ASU 2014-09 Effect
|
||||||
52 Weeks Ended September 1, 2019
|
|
|
|
|
|
||||||
Net Sales
|
$
|
149,351
|
|
|
$
|
1,332
|
|
|
$
|
148,019
|
|
Merchandise Costs
|
132,886
|
|
|
1,324
|
|
|
131,562
|
|
|||
Gross Margin (1)
|
16,465
|
|
|
8
|
|
|
16,457
|
|
(1)
|
Net sales less merchandise costs.
|
2019:
|
Cost
Basis
|
|
Unrealized
Gains, Net
|
|
Recorded
Basis
|
||||||
Available-for-sale:
|
|
|
|
|
|
||||||
Government and agency securities
|
$
|
716
|
|
|
$
|
6
|
|
|
$
|
722
|
|
Held-to-maturity:
|
|
|
|
|
|
||||||
Certificates of deposit
|
338
|
|
|
|
|
338
|
|
||||
Total short-term investments
|
$
|
1,054
|
|
|
$
|
6
|
|
|
$
|
1,060
|
|
2018:
|
Cost
Basis
|
|
Unrealized
Losses, Net
|
|
Recorded
Basis
|
||||||
Available-for-sale:
|
|
|
|
|
|
||||||
Government and agency securities
|
$
|
912
|
|
|
$
|
(14
|
)
|
|
$
|
898
|
|
Held-to-maturity:
|
|
|
|
|
|
||||||
Certificates of deposit
|
306
|
|
|
|
|
306
|
|
||||
Total short-term investments
|
$
|
1,218
|
|
|
$
|
(14
|
)
|
|
$
|
1,204
|
|
|
Available-For-Sale
|
|
Held-To-Maturity
|
||||||||
|
Cost Basis
|
|
Fair Value
|
|
|||||||
Due in one year or less
|
$
|
297
|
|
|
$
|
297
|
|
|
$
|
338
|
|
Due after one year through five years
|
402
|
|
|
407
|
|
|
0
|
|
|||
Due after five years
|
17
|
|
|
18
|
|
|
0
|
|
|||
Total
|
$
|
716
|
|
|
$
|
722
|
|
|
$
|
338
|
|
2019:
|
Level 1
|
|
Level 2
|
||||
Investment in government and agency securities(1)
|
$
|
0
|
|
|
$
|
766
|
|
Forward foreign-exchange contracts, in asset position(2)
|
0
|
|
|
15
|
|
||
Forward foreign-exchange contracts, in (liability) position(2)
|
0
|
|
|
(4
|
)
|
||
Total
|
$
|
0
|
|
|
$
|
777
|
|
2018:
|
Level 1
|
|
Level 2
|
||||
Money market mutual funds(3)
|
$
|
9
|
|
|
$
|
0
|
|
Investment in government and agency securities(1)
|
0
|
|
|
903
|
|
||
Forward foreign-exchange contracts, in asset position(2)
|
0
|
|
|
16
|
|
||
Forward foreign-exchange contracts, in (liability) position(2)
|
0
|
|
|
(2
|
)
|
||
Total
|
$
|
9
|
|
|
$
|
917
|
|
(1)
|
At September 1, 2019, $44 cash and cash equivalents and $722 short-term investments are included in the accompanying consolidated balance sheets. At September 2, 2018, immaterial cash and cash equivalents and $898 short-term investments are included in the accompanying consolidated balance sheets.
|
(2)
|
The asset and the liability values are included in other current assets and other current liabilities, respectively, in the accompanying consolidated balance sheets.
|
(3)
|
Included in cash and cash equivalents in the accompanying balance sheet.
|
|
2019
|
|
2018
|
||||
1.70% Senior Notes due December 2019
|
$
|
1,200
|
|
|
$
|
1,200
|
|
1.75% Senior Notes due February 2020
|
500
|
|
|
500
|
|
||
2.15% Senior Notes due May 2021
|
1,000
|
|
|
1,000
|
|
||
2.25% Senior Notes due February 2022
|
500
|
|
|
500
|
|
||
2.30% Senior Notes due May 2022
|
800
|
|
|
800
|
|
||
2.75% Senior Notes due May 2024
|
1,000
|
|
|
1,000
|
|
||
3.00% Senior Notes due May 2027
|
1,000
|
|
|
1,000
|
|
||
Other long-term debt
|
852
|
|
|
613
|
|
||
Total long-term debt
|
6,852
|
|
|
6,613
|
|
||
Less unamortized debt discounts and issuance costs
|
29
|
|
|
36
|
|
||
Less current portion(1)
|
1,699
|
|
|
90
|
|
||
Long-term debt, excluding current portion
|
$
|
5,124
|
|
|
$
|
6,487
|
|
2020
|
$
|
1,700
|
|
2021
|
1,094
|
|
|
2022
|
1,300
|
|
|
2023
|
94
|
|
|
2024
|
1,113
|
|
|
Thereafter
|
1,551
|
|
|
Total
|
$
|
6,852
|
|
|
Operating
Leases
|
|
Capital
Leases(1)
|
||||
2020
|
$
|
239
|
|
|
$
|
51
|
|
2021
|
229
|
|
|
53
|
|
||
2022
|
202
|
|
|
38
|
|
||
2023
|
193
|
|
|
39
|
|
||
2024
|
181
|
|
|
39
|
|
||
Thereafter
|
2,206
|
|
|
544
|
|
||
Total
|
$
|
3,250
|
|
|
764
|
|
|
Less amount representing interest
|
|
|
(343
|
)
|
|||
Net present value of minimum lease payments
|
|
|
421
|
|
|||
Less current installments(2)
|
|
|
(26
|
)
|
|||
Long-term capital lease obligations less current installments(3)
|
|
|
$
|
395
|
|
(1)
|
Includes build-to-suit lease obligations.
|
(2)
|
Included in other current liabilities in the accompanying consolidated balance sheets.
|
(3)
|
Included in other liabilities in the accompanying consolidated balance sheets.
|
|
Shares
Repurchased
(000’s)
|
|
Average
Price per
Share
|
|
Total Cost
|
|||||
2019
|
1,097
|
|
|
$
|
225.16
|
|
|
$
|
247
|
|
2018
|
1,756
|
|
|
183.13
|
|
|
322
|
|
||
2017
|
2,998
|
|
|
157.87
|
|
|
473
|
|
•
|
6,268,000 time-based RSUs that vest upon continued employment over specified periods of time;
|
•
|
228,000 performance-based RSUs, of which 150,000 were granted to executive officers subject to the certification of the attainment of specified performance targets for 2019. This certification occurred in September 2019, at which time a portion vested as a result of the long service of all executive officers. The remaining awards vest upon continued employment over specified periods of time.
|
|
Number of
Units
(in 000’s)
|
|
Weighted-Average
Grant Date Fair
Value
|
|||
Outstanding at the end of 2018
|
7,578
|
|
|
$
|
140.85
|
|
Granted
|
2,792
|
|
|
224.00
|
|
|
Vested and delivered
|
(3,719
|
)
|
|
155.65
|
|
|
Forfeited
|
(155
|
)
|
|
164.75
|
|
|
Outstanding at the end of 2019
|
6,496
|
|
|
$
|
167.55
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Stock-based compensation expense before income taxes
|
$
|
595
|
|
|
$
|
544
|
|
|
$
|
514
|
|
Less income tax benefit (1)
|
(128
|
)
|
|
(116
|
)
|
|
(167
|
)
|
|||
Stock-based compensation expense, net of income taxes
|
$
|
467
|
|
|
$
|
428
|
|
|
$
|
347
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Domestic
|
$
|
3,591
|
|
|
$
|
3,182
|
|
|
$
|
2,988
|
|
Foreign
|
1,174
|
|
|
1,260
|
|
|
1,051
|
|
|||
Total
|
$
|
4,765
|
|
|
$
|
4,442
|
|
|
$
|
4,039
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Federal:
|
|
|
|
|
|
||||||
Current
|
$
|
328
|
|
|
$
|
636
|
|
|
$
|
802
|
|
Deferred
|
222
|
|
|
(35
|
)
|
|
7
|
|
|||
Total federal
|
550
|
|
|
601
|
|
|
809
|
|
|||
State:
|
|
|
|
|
|
||||||
Current
|
178
|
|
|
190
|
|
|
161
|
|
|||
Deferred
|
26
|
|
|
22
|
|
|
8
|
|
|||
Total state
|
204
|
|
|
212
|
|
|
169
|
|
|||
Foreign:
|
|
|
|
|
|
||||||
Current
|
405
|
|
|
487
|
|
|
389
|
|
|||
Deferred
|
(98
|
)
|
|
(37
|
)
|
|
(42
|
)
|
|||
Total foreign
|
307
|
|
|
450
|
|
|
347
|
|
|||
Total provision for income taxes
|
$
|
1,061
|
|
|
$
|
1,263
|
|
|
$
|
1,325
|
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
Federal taxes at statutory rate
|
$
|
1,001
|
|
|
21.0
|
%
|
|
$
|
1,136
|
|
|
25.6
|
%
|
|
$
|
1,414
|
|
|
35.0
|
%
|
State taxes, net
|
171
|
|
|
3.6
|
|
|
154
|
|
|
3.4
|
|
|
116
|
|
|
2.9
|
|
|||
Foreign taxes, net
|
(1
|
)
|
|
0.0
|
|
|
32
|
|
|
0.7
|
|
|
(64
|
)
|
|
(1.6
|
)
|
|||
Employee stock ownership plan (ESOP)
|
(18
|
)
|
|
(0.4
|
)
|
|
(14
|
)
|
|
(0.3
|
)
|
|
(104
|
)
|
|
(2.6
|
)
|
|||
2017 Tax Act
|
(123
|
)
|
|
(2.6
|
)
|
|
19
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|||
Other
|
31
|
|
|
0.7
|
|
|
(64
|
)
|
|
(1.4
|
)
|
|
(37
|
)
|
|
(0.9
|
)
|
|||
Total
|
$
|
1,061
|
|
|
22.3
|
%
|
|
$
|
1,263
|
|
|
28.4
|
%
|
|
$
|
1,325
|
|
|
32.8
|
%
|
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Equity compensation
|
$
|
74
|
|
|
$
|
72
|
|
Deferred income/membership fees
|
180
|
|
|
136
|
|
||
Foreign tax credit carry forward
|
65
|
|
|
—
|
|
||
Accrued liabilities and reserves
|
566
|
|
|
484
|
|
||
Total deferred tax assets
|
885
|
|
|
692
|
|
||
Valuation allowance
|
(76
|
)
|
|
—
|
|
||
Total net deferred tax assets
|
809
|
|
|
692
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Property and equipment
|
(677
|
)
|
|
(478
|
)
|
||
Merchandise inventories
|
(187
|
)
|
|
(175
|
)
|
||
Foreign branch deferreds
|
(69
|
)
|
|
—
|
|
||
Other
|
(21
|
)
|
|
(40
|
)
|
||
Total deferred tax liabilities
|
$
|
(954
|
)
|
|
$
|
(693
|
)
|
Net deferred tax (liabilities)/assets
|
$
|
(145
|
)
|
|
$
|
(1
|
)
|
|
2019
|
|
2018
|
||||
Gross unrecognized tax benefit at beginning of year
|
$
|
36
|
|
|
$
|
52
|
|
Gross increases—current year tax positions
|
5
|
|
|
6
|
|
||
Gross increases—tax positions in prior years
|
2
|
|
|
6
|
|
||
Gross decreases—tax positions in prior years
|
0
|
|
|
(17
|
)
|
||
Settlements
|
(4
|
)
|
|
(1
|
)
|
||
Lapse of statute of limitations
|
(12
|
)
|
|
(10
|
)
|
||
Gross unrecognized tax benefit at end of year
|
$
|
27
|
|
|
$
|
36
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net income attributable to Costco
|
$
|
3,659
|
|
|
$
|
3,134
|
|
|
$
|
2,679
|
|
Weighted average basic shares
|
439,755
|
|
|
438,515
|
|
|
438,437
|
|
|||
RSUs and other
|
3,168
|
|
|
3,319
|
|
|
2,500
|
|
|||
Weighted average diluted shares
|
442,923
|
|
|
441,834
|
|
|
440,937
|
|
|
United States
Operations
|
|
Canadian
Operations
|
|
Other
International
Operations
|
|
Total
|
||||||||
2019
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
111,751
|
|
|
$
|
21,366
|
|
|
$
|
19,586
|
|
|
$
|
152,703
|
|
Operating income
|
3,063
|
|
|
924
|
|
|
750
|
|
|
4,737
|
|
||||
Depreciation and amortization
|
1,126
|
|
|
143
|
|
|
223
|
|
|
1,492
|
|
||||
Additions to property and equipment
|
2,186
|
|
|
303
|
|
|
509
|
|
|
2,998
|
|
||||
Net property and equipment
|
14,367
|
|
|
2,044
|
|
|
4,479
|
|
|
20,890
|
|
||||
Total assets
|
32,162
|
|
|
4,369
|
|
|
8,869
|
|
|
45,400
|
|
||||
2018
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
102,286
|
|
|
$
|
20,689
|
|
|
$
|
18,601
|
|
|
$
|
141,576
|
|
Operating income
|
2,787
|
|
|
939
|
|
|
754
|
|
|
4,480
|
|
||||
Depreciation and amortization
|
1,078
|
|
|
135
|
|
|
224
|
|
|
1,437
|
|
||||
Additions to property and equipment
|
2,046
|
|
|
268
|
|
|
655
|
|
|
2,969
|
|
||||
Net property and equipment
|
13,353
|
|
|
1,900
|
|
|
4,428
|
|
|
19,681
|
|
||||
Total assets
|
28,207
|
|
|
4,303
|
|
|
8,320
|
|
|
40,830
|
|
||||
2017
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
93,889
|
|
|
$
|
18,775
|
|
|
$
|
16,361
|
|
|
$
|
129,025
|
|
Operating income
|
2,644
|
|
|
841
|
|
|
626
|
|
|
4,111
|
|
||||
Depreciation and amortization
|
1,044
|
|
|
124
|
|
|
202
|
|
|
1,370
|
|
||||
Additions to property and equipment
|
1,714
|
|
|
277
|
|
|
511
|
|
|
2,502
|
|
||||
Net property and equipment
|
12,339
|
|
|
1,820
|
|
|
4,002
|
|
|
18,161
|
|
||||
Total assets
|
24,068
|
|
|
4,471
|
|
|
7,808
|
|
|
36,347
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Food and Sundries
|
$
|
59,672
|
|
|
$
|
56,073
|
|
|
$
|
52,362
|
|
Hardlines
|
24,570
|
|
|
22,620
|
|
|
20,583
|
|
|||
Fresh Foods
|
19,948
|
|
|
18,879
|
|
|
17,849
|
|
|||
Softlines
|
16,590
|
|
|
15,387
|
|
|
14,537
|
|
|||
Ancillary
|
28,571
|
|
|
25,475
|
|
|
20,841
|
|
|||
Total Net Sales
|
$
|
149,351
|
|
|
$
|
138,434
|
|
|
$
|
126,172
|
|
|
52 Weeks Ended September 1, 2019
|
|||||||||||||||||||
|
First
Quarter
(12 Weeks)
|
|
Second
Quarter
(12 Weeks)
|
|
Third
Quarter
(12 Weeks)
|
|
Fourth
Quarter
(16 Weeks)
|
|
Total
(52 Weeks)
|
|||||||||||
REVENUE
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net sales
|
$
|
34,311
|
|
|
$
|
34,628
|
|
|
$
|
33,964
|
|
|
$
|
46,448
|
|
|
$
|
149,351
|
|
|
Membership fees
|
758
|
|
|
768
|
|
|
776
|
|
|
1,050
|
|
|
3,352
|
|
||||||
Total revenue
|
35,069
|
|
|
35,396
|
|
|
34,740
|
|
|
47,498
|
|
|
152,703
|
|
||||||
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|||||||||||
Merchandise costs
|
30,623
|
|
|
30,720
|
|
|
30,233
|
|
|
41,310
|
|
|
132,886
|
|
||||||
Selling, general and administrative
|
3,475
|
|
|
3,464
|
|
|
3,371
|
|
|
4,684
|
|
(1
|
)
|
14,994
|
|
|||||
Preopening expenses
|
22
|
|
|
9
|
|
|
14
|
|
|
41
|
|
|
86
|
|
||||||
Operating income
|
949
|
|
|
1,203
|
|
|
1,122
|
|
|
1,463
|
|
|
4,737
|
|
||||||
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest expense
|
(36
|
)
|
|
(34
|
)
|
|
(35
|
)
|
|
(45
|
)
|
|
(150
|
)
|
||||||
Interest income and other, net
|
22
|
|
|
46
|
|
|
36
|
|
|
74
|
|
|
178
|
|
||||||
INCOME BEFORE INCOME TAXES
|
935
|
|
|
1,215
|
|
|
1,123
|
|
|
1,492
|
|
|
4,765
|
|
||||||
Provision for income taxes
|
158
|
|
|
314
|
|
|
207
|
|
|
382
|
|
|
1,061
|
|
||||||
Net income including noncontrolling interests
|
777
|
|
|
901
|
|
|
916
|
|
|
1,110
|
|
|
3,704
|
|
||||||
Net income attributable to noncontrolling interests
|
(10
|
)
|
|
(12
|
)
|
|
(10
|
)
|
|
(13
|
)
|
|
(45
|
)
|
||||||
NET INCOME ATTRIBUTABLE TO COSTCO
|
$
|
767
|
|
|
$
|
889
|
|
|
$
|
906
|
|
|
$
|
1,097
|
|
|
$
|
3,659
|
|
|
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic
|
$
|
1.75
|
|
|
$
|
2.02
|
|
|
$
|
2.06
|
|
|
$
|
2.49
|
|
|
$
|
8.32
|
|
|
Diluted
|
$
|
1.73
|
|
|
$
|
2.01
|
|
|
$
|
2.05
|
|
|
$
|
2.47
|
|
|
$
|
8.26
|
|
|
Shares used in calculation (000’s)
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic
|
439,157
|
|
|
440,284
|
|
|
439,859
|
|
|
439,727
|
|
|
439,755
|
|
||||||
Diluted
|
442,749
|
|
|
442,337
|
|
|
442,642
|
|
|
443,400
|
|
|
442,923
|
|
||||||
CASH DIVIDENDS DECLARED PER COMMON SHARE
|
$
|
0.57
|
|
|
$
|
0.57
|
|
|
$
|
0.65
|
|
|
$
|
0.65
|
|
|
$
|
2.44
|
|
|
52 Weeks Ended September 2, 2018
|
||||||||||||||||||
|
First
Quarter
(12 Weeks)
|
|
Second
Quarter
(12 Weeks)
|
|
Third
Quarter
(12 Weeks)
|
|
Fourth
Quarter
(16 Weeks)
|
|
Total (52 Weeks)
|
||||||||||
REVENUE
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
31,117
|
|
|
$
|
32,279
|
|
|
$
|
31,624
|
|
|
$
|
43,414
|
|
|
$
|
138,434
|
|
Membership fees
|
692
|
|
|
716
|
|
|
737
|
|
|
997
|
|
|
3,142
|
|
|||||
Total revenue
|
31,809
|
|
|
32,995
|
|
|
32,361
|
|
|
44,411
|
|
|
141,576
|
|
|||||
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
||||||||||
Merchandise costs
|
27,617
|
|
|
28,733
|
|
|
28,131
|
|
|
38,671
|
|
|
123,152
|
|
|||||
Selling, general and administrative
|
3,224
|
|
|
3,234
|
|
|
3,155
|
|
|
4,263
|
|
|
13,876
|
|
|||||
Preopening expenses
|
17
|
|
|
12
|
|
|
8
|
|
|
31
|
|
|
68
|
|
|||||
Operating income
|
951
|
|
|
1,016
|
|
|
1,067
|
|
|
1,446
|
|
|
4,480
|
|
|||||
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(37
|
)
|
|
(37
|
)
|
|
(37
|
)
|
|
(48
|
)
|
|
(159
|
)
|
|||||
Interest income and other, net
|
22
|
|
|
7
|
|
|
41
|
|
|
51
|
|
|
121
|
|
|||||
INCOME BEFORE INCOME TAXES
|
936
|
|
|
986
|
|
|
1,071
|
|
|
1,449
|
|
|
4,442
|
|
|||||
Provision for income taxes
|
285
|
|
|
273
|
|
|
309
|
|
|
396
|
|
|
1,263
|
|
|||||
Net income including noncontrolling interests
|
651
|
|
|
713
|
|
|
762
|
|
|
1,053
|
|
|
3,179
|
|
|||||
Net income attributable to noncontrolling interests
|
(11
|
)
|
|
(12
|
)
|
|
(12
|
)
|
|
(10
|
)
|
|
(45
|
)
|
|||||
NET INCOME ATTRIBUTABLE TO COSTCO
|
$
|
640
|
|
|
$
|
701
|
|
|
$
|
750
|
|
|
$
|
1,043
|
|
|
$
|
3,134
|
|
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
1.46
|
|
|
$
|
1.60
|
|
|
$
|
1.71
|
|
|
$
|
2.38
|
|
|
$
|
7.15
|
|
Diluted
|
$
|
1.45
|
|
|
$
|
1.59
|
|
|
$
|
1.70
|
|
|
$
|
2.36
|
|
|
$
|
7.09
|
|
Shares used in calculation (000’s)
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
437,965
|
|
|
439,022
|
|
|
438,740
|
|
|
438,379
|
|
|
438,515
|
|
|||||
Diluted
|
440,851
|
|
|
441,568
|
|
|
441,715
|
|
|
442,427
|
|
|
441,834
|
|
|||||
CASH DIVIDENDS DECLARED PER COMMON SHARE
|
$
|
0.50
|
|
|
$
|
0.50
|
|
|
$
|
0.57
|
|
|
$
|
0.57
|
|
|
$
|
2.14
|
|
/s/ W. CRAIG JELINEK
|
|
W. Craig Jelinek
|
|
President, Chief Executive Officer and Director
|
|
/s/ RICHARD A. GALANTI
|
|
Richard A. Galanti
|
|
Executive Vice President, Chief Financial Officer and Director
|
|
(a)
|
Documents filed as part of this report are as follows:
|
1.
|
Financial Statements:
|
(b)
|
Exhibits: The required exhibits are filed as part of this Annual Report on Form 10-K or are incorporated herein by reference.
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
Herewith
|
|
Form
|
|
Period Ended
|
|
Filing Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q
|
|
2/17/2019
|
|
3/13/2019
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
|
|
4/30/2019
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
|
|
5/16/2017
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
|
|
5/16/2017
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
|
|
5/16/2017
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
|
|
5/16/2017
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-K
|
|
9/2/2012
|
|
10/19/2012
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEF 14
|
|
|
|
12/17/2019
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
Herewith
|
|
Form
|
|
Period Ended
|
|
Filing Date
|
|
|
|
|
DEF 14A
|
|
|
|
12/19/2014
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q
|
|
11/22/2015
|
|
12/17/2015
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q
|
|
11/22/2015
|
|
12/17/2015
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q
|
|
11/22/2015
|
|
12/17/2015
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q
|
|
11/22/2015
|
|
12/17/2015
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
|
|
10/26/2018
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q
|
|
11/20/2016
|
|
12/16/2016
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q
|
|
11/25/2018
|
|
12/20/2018
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14A
|
|
|
|
12/13/1999
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-K
|
|
9/1/2013
|
|
10/16/2013
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q/A
|
|
5/10/2015
|
|
8/31/2015
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q
|
|
11/22/2015
|
|
12/17/2015
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q
|
|
2/14/2016
|
|
3/9/2016
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-K
|
|
8/28/2016
|
|
10/12/2016
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q
|
|
2/18/2018
|
|
3/15/2018
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
Herewith
|
|
Form
|
|
Period Ended
|
|
Filing Date
|
|
|
|
|
10-Q
|
|
2/17/2019
|
|
3/13/2019
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
x
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
x
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
x
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
x
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
Financial Statement Schedules—None.
|
|
COSTCO WHOLESALE CORPORATION
(Registrant)
|
||
|
|
|
|
|
By
|
|
/s/ RICHARD A. GALANTI
|
|
|
|
Richard A. Galanti
Executive Vice President, Chief Financial Officer and Director
|
By
|
|
/s/ W. CRAIG JELINEK
|
|
By
|
|
/s/ HAMILTON E. JAMES
|
|
|
W. Craig Jelinek
President, Chief Executive Officer and Director
|
|
|
|
Hamilton E. James
Chairman of the Board |
|
|
|
|
|||
By
|
|
/s/ RICHARD A. GALANTI
|
|
By
|
|
/s/ DANIEL M. HINES
|
|
|
Richard A. Galanti
Executive Vice President, Chief Financial Officer and Director (Principal Financial Officer) |
|
|
|
Daniel M. Hines
Senior Vice President and Corporate Controller (Principal Accounting Officer) |
|
|
|
|
|||
By
|
|
/s/ SUSAN L. DECKER
|
|
By
|
|
/s/ KENNETH D. DENMAN
|
|
|
Susan L. Decker
Director |
|
|
|
Kenneth D. Denman
Director |
|
|
|
|
|||
By
|
|
/s/ JOHN W. MEISENBACH
|
|
By
|
|
/s/ CHARLES T. MUNGER
|
|
|
John W. Meisenbach
Director |
|
|
|
Charles T. Munger
Director |
|
|
|
|
|||
By
|
|
/s/ JEFFREY S. RAIKES
|
|
By
|
|
/s/ JOHN W. STANTON
|
|
|
Jeffrey S. Raikes
Director |
|
|
|
John W. Stanton
Director |
|
|
|
|
|||
By
|
|
/s/ MARY (MAGGIE) A. WILDEROTTER
|
|
|
|
|
|
|
Mary (Maggie) A. Wilderotter
Director |
|
|
|
|
Certain confidential information contained in this document, indicated by the mark “[*]”, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed
|
COSTCO WHOLESALE CORPORATION
By: /s/ Paul Latham_____________________
Name: Paul Latham_____________________
Title: SVP ____________________________
|
CITIBANK, N.A.
By: /s/ Valerie Greer_____________________
Name: Valerie Greer_____________________
Title: MD______________________________
|
Subsidiaries
|
|
State or Other Jurisdiction of Incorporation or Organization
|
|
Name under Which Subsidiary Does Business
|
Costco Wholesale Membership, Inc.
|
|
California
|
|
Costco Wholesale Membership, Inc.
|
Costco Wholesale Canada Ltd.
|
|
Canadian Federal
|
|
Costco Wholesale Canada, Ltd.
|
NW Re Ltd.
|
|
Arizona
|
|
NW Re Ltd.
|
Costco Insurance Agency, Inc.
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Washington
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Costco Insurance Agency, Inc.
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PriceCostco International, Inc
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Nevada
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PriceCostco International, Inc.
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Costco Wholesale Korea, Ltd.
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Korea
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Costco Wholesale Korea, Ltd.
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Costco Wholesale Japan, Ltd.
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Japan
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Costco Wholesale Japan, Ltd.
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Costco De Mexico, S.A. de C.V.
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Mexico
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Costco De Mexico, S.A. de C.V.
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Costco Wholesale United Kingdom Ltd.
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United Kingdom
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Costco Wholesale United Kingdom Ltd.
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1)
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I have reviewed this Annual Report on Form 10-K of Costco Wholesale Corporation (“the registrant”);
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2)
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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;
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3)
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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;
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4)
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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:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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5)
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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):
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a)
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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
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b)
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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.
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/s/ W. CRAIG JELINEK
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W. Craig Jelinek
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President, Chief Executive Officer and Director
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1)
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I have reviewed this Annual Report on Form 10-K of Costco Wholesale Corporation (“the registrant”);
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2)
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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;
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3)
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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;
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4)
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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:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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5)
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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):
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a)
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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
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b)
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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.
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/s/ RICHARD A. GALANTI
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Richard A. Galanti
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Executive Vice President, Chief Financial Officer and Director
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ W. CRAIG JELINEK
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Date: October 10, 2019
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W. Craig Jelinek
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President, Chief Executive Officer and Director
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ RICHARD A. GALANTI
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Date: October 10, 2019
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Richard A. Galanti
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Executive Vice President, Chief Financial Officer and Director
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