☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Washington
|
|
91-1223280
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
Title of each class
|
|
Trading symbol(s)
|
|
Name of each exchange on which registered
|
Common Stock, $.01 Par Value
|
|
COST
|
|
The NASDAQ Global Select Market
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
Emerging growth company
|
☐
|
|
|
Page
|
PART I
|
|
|
Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
PART II
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
|
|
12 Weeks Ended
|
||||||
|
November 24,
2019 |
|
November 25,
2018 |
||||
REVENUE
|
|
|
|
||||
Net sales
|
$
|
36,236
|
|
|
$
|
34,311
|
|
Membership fees
|
804
|
|
|
758
|
|
||
Total revenue
|
37,040
|
|
|
35,069
|
|
||
OPERATING EXPENSES
|
|
|
|
||||
Merchandise costs
|
32,233
|
|
|
30,623
|
|
||
Selling, general and administrative
|
3,732
|
|
|
3,475
|
|
||
Preopening expenses
|
14
|
|
|
22
|
|
||
Operating income
|
1,061
|
|
|
949
|
|
||
OTHER INCOME (EXPENSE)
|
|
|
|
||||
Interest expense
|
(38
|
)
|
|
(36
|
)
|
||
Interest income and other, net
|
35
|
|
|
22
|
|
||
INCOME BEFORE INCOME TAXES
|
1,058
|
|
|
935
|
|
||
Provision for income taxes
|
202
|
|
|
158
|
|
||
Net income including noncontrolling interests
|
856
|
|
|
777
|
|
||
Net income attributable to noncontrolling interests
|
(12
|
)
|
|
(10
|
)
|
||
NET INCOME ATTRIBUTABLE TO COSTCO
|
$
|
844
|
|
|
$
|
767
|
|
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
|
|
|
|
||||
Basic
|
$
|
1.91
|
|
|
$
|
1.75
|
|
Diluted
|
$
|
1.90
|
|
|
$
|
1.73
|
|
Shares used in calculation (000s):
|
|
|
|
||||
Basic
|
441,818
|
|
|
439,157
|
|
||
Diluted
|
443,680
|
|
|
442,749
|
|
|
12 Weeks Ended
|
||||||
|
November 24,
2019 |
|
November 25,
2018 |
||||
NET INCOME INCLUDING NONCONTROLLING INTERESTS
|
$
|
856
|
|
|
$
|
777
|
|
Foreign-currency translation adjustment and other, net
|
125
|
|
|
(134
|
)
|
||
Comprehensive income
|
981
|
|
|
643
|
|
||
Less: Comprehensive income attributable to noncontrolling interests
|
22
|
|
|
8
|
|
||
COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO
|
$
|
959
|
|
|
$
|
635
|
|
|
November 24,
2019 |
|
September 1,
2019 |
||||
ASSETS
|
|
|
|
||||
CURRENT ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
9,027
|
|
|
$
|
8,384
|
|
Short-term investments
|
993
|
|
|
1,060
|
|
||
Receivables, net
|
1,711
|
|
|
1,535
|
|
||
Merchandise inventories
|
13,818
|
|
|
11,395
|
|
||
Other current assets
|
1,094
|
|
|
1,111
|
|
||
Total current assets
|
26,643
|
|
|
23,485
|
|
||
PROPERTY AND EQUIPMENT
|
|
|
|
||||
Land
|
6,533
|
|
|
6,417
|
|
||
Buildings and improvements
|
17,732
|
|
|
17,136
|
|
||
Equipment and fixtures
|
8,243
|
|
|
7,801
|
|
||
Construction in progress
|
803
|
|
|
1,272
|
|
||
Accumulated depreciation and amortization
|
(12,074
|
)
|
|
(11,736
|
)
|
||
Net property and equipment
|
21,237
|
|
|
20,890
|
|
||
OTHER ASSETS
|
|
|
|
||||
Operating lease right-of-use assets
|
2,597
|
|
|
0
|
|
||
Other long-term assets
|
954
|
|
|
1,025
|
|
||
TOTAL ASSETS
|
$
|
51,431
|
|
|
$
|
45,400
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
CURRENT LIABILITIES
|
|
|
|
||||
Accounts payable
|
$
|
14,440
|
|
|
$
|
11,679
|
|
Accrued salaries and benefits
|
3,159
|
|
|
3,176
|
|
||
Accrued member rewards
|
1,193
|
|
|
1,180
|
|
||
Deferred membership fees
|
1,817
|
|
|
1,711
|
|
||
Current portion of long-term debt
|
1,700
|
|
|
1,699
|
|
||
Other current liabilities
|
3,956
|
|
|
3,792
|
|
||
Total current liabilities
|
26,265
|
|
|
23,237
|
|
||
OTHER LIABILITIES
|
|
|
|
||||
Long-term debt, excluding current portion
|
5,107
|
|
|
5,124
|
|
||
Long-term operating lease liabilities
|
2,442
|
|
|
0
|
|
||
Other long-term liabilities
|
1,393
|
|
|
1,455
|
|
||
TOTAL LIABILITIES
|
35,207
|
|
|
29,816
|
|
||
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; 441,778,000 and 439,625,000 shares issued and outstanding
|
4
|
|
|
4
|
|
||
Additional paid-in capital
|
6,391
|
|
|
6,417
|
|
||
Accumulated other comprehensive loss
|
(1,321
|
)
|
|
(1,436
|
)
|
||
Retained earnings
|
10,787
|
|
|
10,258
|
|
||
Total Costco stockholders’ equity
|
15,861
|
|
|
15,243
|
|
||
Noncontrolling interests
|
363
|
|
|
341
|
|
||
TOTAL EQUITY
|
16,224
|
|
|
15,584
|
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
51,431
|
|
|
$
|
45,400
|
|
|
12 Weeks Ended November 24, 2019
|
|||||||||||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Retained
Earnings
|
|
Total Costco
Stockholders’
Equity
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
|||||||||||||||||
|
Shares (000s)
|
|
Amount
|
|
||||||||||||||||||||||||||
BALANCE AT SEPTEMBER 1, 2019
|
439,625
|
|
|
$
|
4
|
|
|
$
|
6,417
|
|
|
$
|
(1,436
|
)
|
|
$
|
10,258
|
|
|
$
|
15,243
|
|
|
$
|
341
|
|
|
$
|
15,584
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
844
|
|
|
844
|
|
|
12
|
|
|
856
|
|
|||||||
Foreign-currency translation adjustment and other, net
|
—
|
|
|
—
|
|
|
—
|
|
|
115
|
|
|
—
|
|
|
115
|
|
|
10
|
|
|
125
|
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
302
|
|
|
—
|
|
|
—
|
|
|
302
|
|
|
—
|
|
|
302
|
|
|||||||
Release of vested restricted stock units (RSUs), including tax effects
|
2,253
|
|
|
—
|
|
|
(326
|
)
|
|
—
|
|
|
—
|
|
|
(326
|
)
|
|
—
|
|
|
(326
|
)
|
|||||||
Repurchases of common stock
|
(100
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(28
|
)
|
|
(30
|
)
|
|
—
|
|
|
(30
|
)
|
|||||||
Cash dividend declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(287
|
)
|
|
(287
|
)
|
|
—
|
|
|
(287
|
)
|
|||||||
BALANCE AT NOVEMBER 24, 2019
|
441,778
|
|
|
$
|
4
|
|
|
$
|
6,391
|
|
|
$
|
(1,321
|
)
|
|
$
|
10,787
|
|
|
$
|
15,861
|
|
|
$
|
363
|
|
|
$
|
16,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
12 Weeks Ended November 25, 2018
|
|||||||||||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-in Capital |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Retained
Earnings |
|
Total Costco
Stockholders’ Equity |
|
Noncontrolling
Interests |
|
Total
Equity |
|||||||||||||||||
|
Shares (000s)
|
|
Amount
|
|
||||||||||||||||||||||||||
BALANCE AT SEPTEMBER 2, 2018
|
438,189
|
|
|
$
|
4
|
|
|
$
|
6,107
|
|
|
$
|
(1,199
|
)
|
|
$
|
7,887
|
|
|
$
|
12,799
|
|
|
$
|
304
|
|
|
$
|
13,103
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
767
|
|
|
767
|
|
|
10
|
|
|
777
|
|
|||||||
Foreign-currency translation adjustment and other, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(132
|
)
|
|
—
|
|
|
(132
|
)
|
|
(2
|
)
|
|
(134
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
272
|
|
|
—
|
|
|
—
|
|
|
272
|
|
|
—
|
|
|
272
|
|
|||||||
Release of vested RSUs, including tax effects
|
2,507
|
|
|
—
|
|
|
(270
|
)
|
|
—
|
|
|
—
|
|
|
(270
|
)
|
|
—
|
|
|
(270
|
)
|
|||||||
Repurchases of common stock
|
(150
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(32
|
)
|
|
(34
|
)
|
|
—
|
|
|
(34
|
)
|
|||||||
Cash dividend declared and other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(235
|
)
|
|
(235
|
)
|
|
—
|
|
|
(235
|
)
|
|||||||
BALANCE AT NOVEMBER 25, 2018
|
440,546
|
|
|
$
|
4
|
|
|
$
|
6,107
|
|
|
$
|
(1,331
|
)
|
|
$
|
8,387
|
|
|
$
|
13,167
|
|
|
$
|
312
|
|
|
$
|
13,479
|
|
November 24, 2019:
|
Cost
Basis |
|
Unrealized
Gains, Net |
|
Recorded
Basis |
||||||
Available-for-sale:
|
|
|
|
|
|
||||||
Government and agency securities
|
$
|
596
|
|
|
$
|
4
|
|
|
$
|
600
|
|
Held-to-maturity:
|
|
|
|
|
|
||||||
Certificates of deposit
|
393
|
|
|
|
|
393
|
|
||||
Total short-term investments
|
$
|
989
|
|
|
$
|
4
|
|
|
$
|
993
|
|
September 1, 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
|
|
|
Available-For-Sale
|
|
Held-To-Maturity
|
||||||||
|
Cost Basis
|
|
Fair Value
|
|
|||||||
Due in one year or less
|
$
|
213
|
|
|
$
|
212
|
|
|
$
|
393
|
|
Due after one year through five years
|
375
|
|
|
379
|
|
|
0
|
|
|||
Due after five years
|
8
|
|
|
9
|
|
|
0
|
|
|||
Total
|
$
|
596
|
|
|
$
|
600
|
|
|
$
|
393
|
|
|
Level 2
|
||||||
|
November 24,
2019 |
|
September 1,
2019 |
||||
Investment in government and agency securities(1)
|
$
|
699
|
|
|
$
|
766
|
|
Forward foreign-exchange contracts, in asset position(2)
|
6
|
|
|
15
|
|
||
Forward foreign-exchange contracts, in (liability) position(2)
|
(7
|
)
|
|
(4
|
)
|
||
Total
|
$
|
698
|
|
|
$
|
777
|
|
(1)
|
At November 24, 2019, $99 cash and cash equivalents and $600 short-term investments are included in the accompanying condensed consolidated balance sheets. At September 1, 2019, $44 cash and cash equivalents and $722 short-term investments are included in the accompanying condensed consolidated balance sheets.
|
(2)
|
The asset and liability values are included in other current assets and other current liabilities, respectively, in the accompanying condensed consolidated balance sheets.
|
|
November 24,
2019 |
|
September 1,
2019 |
||||
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
|
833
|
|
|
852
|
|
||
Total long-term debt
|
6,833
|
|
|
6,852
|
|
||
Less unamortized debt discounts and issuance costs
|
26
|
|
|
29
|
|
||
Less current portion(1)
|
1,700
|
|
|
1,699
|
|
||
Long-term debt, excluding current portion
|
$
|
5,107
|
|
|
$
|
5,124
|
|
(1)
|
Net of unamortized debt discounts and issuance costs.
|
|
|
November 24,
2019 |
||
Assets
|
|
|
||
Operating lease right-of-use assets
|
|
$
|
2,597
|
|
Finance lease assets(1)
|
|
355
|
|
|
Total lease assets
|
|
$
|
2,952
|
|
Liabilities
|
|
|
||
Current
|
|
|
||
Operating(2)
|
|
$
|
169
|
|
Finance(2)
|
|
12
|
|
|
Long-term
|
|
|
||
Operating
|
|
2,442
|
|
|
Finance(3)
|
|
388
|
|
|
Total lease liabilities
|
|
$
|
3,011
|
|
(1)
|
Included in net property and equipment in the accompanying condensed consolidated balance sheets.
|
(2)
|
Included in other current liabilities in the accompanying condensed consolidated balance sheets.
|
(3)
|
Included in other long-term liabilities in the accompanying condensed consolidated balance sheets.
|
|
|
November 24,
2019 |
|
Weighted-average remaining lease term (years)
|
|
|
|
Operating leases
|
|
21
|
|
Finance leases
|
|
15
|
|
Weighted-average discount rate
|
|
|
|
Operating leases
|
|
2.25
|
%
|
Finance leases
|
|
8.54
|
%
|
|
|
12 Weeks Ended
|
||
|
|
November 24,
2019 |
||
Operating lease cost(1)
|
|
$
|
51
|
|
Finance lease cost
|
|
|
||
Amortization of lease assets(1)
|
|
4
|
|
|
Interest on lease liabilities(2)
|
|
7
|
|
|
Total lease cost
|
|
$
|
62
|
|
(1)
|
Generally included in selling, general and administrative expenses in the accompanying condensed consolidated statements of income.
|
(2)
|
Included in interest expense in the accompanying condensed consolidated statements of income.
|
|
|
12 Weeks Ended
|
||
|
|
November 24,
2019 |
||
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
||
Operating cash flows — operating leases
|
|
$
|
40
|
|
Operating cash flows — finance leases
|
|
7
|
|
|
Financing cash flows — finance leases
|
|
31
|
|
|
Leased assets obtained in exchange for finance lease liabilities
|
|
4
|
|
|
Leased assets obtained in exchange for operating lease liabilities
|
|
10
|
|
|
Operating Leases(1)
|
|
Finance Leases
|
||||
2020
|
$
|
173
|
|
|
$
|
29
|
|
2021
|
216
|
|
|
40
|
|
||
2022
|
206
|
|
|
39
|
|
||
2023
|
212
|
|
|
42
|
|
||
2024
|
188
|
|
|
40
|
|
||
Thereafter
|
2,400
|
|
|
557
|
|
||
Total(2)
|
3,395
|
|
|
747
|
|
||
Less amount representing interest
|
784
|
|
|
347
|
|
||
Present value of lease liabilities
|
$
|
2,611
|
|
|
$
|
400
|
|
(1)
|
Operating lease payments have not been reduced by future sublease income of $103.
|
(2)
|
Excludes $250 of lease payments for leases that have been signed but not yet commenced.
|
|
Operating Leases
|
|
Capital Leases
|
||||
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
|
|
|
Shares Repurchased (000s)
|
|
Average Price per Share
|
|
Total Cost
|
|||||
First quarter of 2020
|
100
|
|
|
$
|
295.97
|
|
|
$
|
30
|
|
|
|
|
|
|
|
|||||
First quarter of 2019
|
150
|
|
|
$
|
229.35
|
|
|
$
|
34
|
|
•
|
5,227,000 time-based RSUs that vest upon continued employment over specified periods of time;
|
•
|
30,000 performance-based RSUs, granted to 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
|
•
|
123,000 performance-based RSUs, granted to executive officers of the Company, subject to achievement of performance targets for fiscal 2020, as determined by the Compensation Committee of the Board of Directors after the end of the fiscal year. These awards are not included in the table below.
|
|
Number of
Units
(in 000s)
|
|
Weighted-Average
Grant Date Fair
Value
|
|||
Outstanding at September 1, 2019
|
6,496
|
|
|
$
|
167.55
|
|
Granted
|
2,128
|
|
|
293.62
|
|
|
Vested and delivered
|
(3,341
|
)
|
|
188.91
|
|
|
Forfeited
|
(26
|
)
|
|
182.38
|
|
|
Outstanding at November 24, 2019
|
5,257
|
|
|
$
|
204.94
|
|
|
12 Weeks Ended
|
||||||
|
November 24,
2019 |
|
November 25,
2018 |
||||
Stock-based compensation expense before income taxes
|
$
|
301
|
|
|
$
|
270
|
|
Less recognized income tax benefit
|
(66
|
)
|
|
(61
|
)
|
||
Stock-based compensation expense, net of income taxes
|
$
|
235
|
|
|
$
|
209
|
|
|
12 Weeks Ended
|
||||||
|
November 24,
2019 |
|
November 25,
2018 |
||||
Net income attributable to Costco
|
$
|
844
|
|
|
$
|
767
|
|
Weighted average basic shares
|
441,818
|
|
|
439,157
|
|
||
RSUs
|
1,862
|
|
|
3,592
|
|
||
Weighted average diluted shares
|
443,680
|
|
|
442,749
|
|
|
United States
Operations |
|
Canadian
Operations |
|
Other
International Operations |
|
Total
|
||||||||
12 Weeks Ended November 24, 2019
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
27,065
|
|
|
$
|
5,127
|
|
|
$
|
4,848
|
|
|
$
|
37,040
|
|
Operating income
|
635
|
|
|
228
|
|
|
198
|
|
|
1,061
|
|
||||
Total assets
|
35,784
|
|
|
4,857
|
|
|
10,790
|
|
|
51,431
|
|
||||
12 Weeks Ended November 25, 2018
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
25,550
|
|
|
$
|
4,977
|
|
|
$
|
4,542
|
|
|
$
|
35,069
|
|
Operating income
|
560
|
|
|
214
|
|
|
175
|
|
|
949
|
|
||||
Total assets
|
30,499
|
|
|
4,673
|
|
|
8,642
|
|
|
43,814
|
|
||||
52 Weeks Ended September 1, 2019
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
111,751
|
|
|
$
|
21,366
|
|
|
$
|
19,586
|
|
|
$
|
152,703
|
|
Operating income
|
3,063
|
|
|
924
|
|
|
750
|
|
|
4,737
|
|
||||
Total assets
|
32,162
|
|
|
4,369
|
|
|
8,869
|
|
|
45,400
|
|
|
12 Weeks Ended
|
||||||
|
November 24,
2019 |
|
November 25,
2018 |
||||
Foods and Sundries
|
$
|
14,532
|
|
|
$
|
13,641
|
|
Hardlines
|
5,843
|
|
|
5,840
|
|
||
Fresh Foods
|
4,576
|
|
|
4,293
|
|
||
Softlines
|
4,297
|
|
|
4,123
|
|
||
Ancillary
|
6,988
|
|
|
6,414
|
|
||
Total Net Sales
|
$
|
36,236
|
|
|
$
|
34,311
|
|
•
|
Net sales increased 6% to $36,236, driven by an increase in comparable sales of 4% and sales at 17 net new warehouses opened since the end of the first quarter of 2019;
|
•
|
Membership fee revenue increased 6% to $804, primarily due to sign-ups at existing and new warehouses;
|
•
|
Gross margin percentage increased 30 basis points, primarily due to our warehouse ancillary and other businesses and an adjustment in the first quarter of 2019 to our estimate of breakage on rewards earned under our co-branded credit card program;
|
•
|
SG&A expenses as a percentage of net sales increased 17 basis points, primarily due to operating costs related to warehouse, ancillary and other businesses and stock compensation;
|
•
|
The provision for income taxes in the first quarter of 2020 was positively impacted by a benefit related to stock compensation of $77, or $0.17 per diluted share compared to $59, or $0.13 in the first quarter of 2019. The first quarter of 2019 was also positively impacted by a benefit of $27, or $0.06 per diluted share, related to the Tax Cuts and Jobs Act (2017 Tax Act);
|
•
|
Net income increased 10% to $844, or $1.90 per diluted share, compared to $767, or $1.73 per diluted share in 2019; and
|
•
|
On October 18, 2019, our Board of Directors declared a quarterly cash dividend of $0.65 per share, which was paid on November 15, 2019.
|
|
12 Weeks Ended
|
||||||
|
November 24,
2019 |
|
November 25,
2018 |
||||
Net Sales
|
$
|
36,236
|
|
|
$
|
34,311
|
|
Changes in net sales
|
|
|
|
||||
U.S
|
6
|
%
|
|
12
|
%
|
||
Canada
|
3
|
%
|
|
4
|
%
|
||
Other International
|
7
|
%
|
|
8
|
%
|
||
Total Company
|
6
|
%
|
|
10
|
%
|
||
Changes in comparable sales:
|
|
|
|
||||
U.S
|
5
|
%
|
|
11
|
%
|
||
Canada
|
3
|
%
|
|
2
|
%
|
||
Other International
|
3
|
%
|
|
4
|
%
|
||
Total Company
|
4
|
%
|
|
9
|
%
|
||
Changes in comparable sales excluding the impact of changes in foreign currency and gasoline prices (1):
|
|
|
|
||||
U.S
|
5
|
%
|
|
8
|
%
|
||
Canada
|
5
|
%
|
|
5
|
%
|
||
Other International
|
4
|
%
|
|
6
|
%
|
||
Total Company
|
5
|
%
|
|
7
|
%
|
(1)
|
Excludes the impact of the revenue recognition standard for the period ended November 25, 2018.
|
|
12 Weeks Ended
|
||||||
|
November 24,
2019 |
|
November 25,
2018 |
||||
Membership fees
|
$
|
804
|
|
|
$
|
758
|
|
Membership fees as a percentage of net sales
|
2.22
|
%
|
|
2.21
|
%
|
||
Total paid members as of quarter end (000s)
|
54,700
|
|
|
52,200
|
|
||
Total cardholders as of quarter end (000s)
|
99,900
|
|
|
95,400
|
|
|
12 Weeks Ended
|
||||||
|
November 24,
2019 |
|
November 25,
2018 |
||||
Net sales
|
$
|
36,236
|
|
|
$
|
34,311
|
|
Less merchandise costs
|
32,233
|
|
|
30,623
|
|
||
Gross margin
|
$
|
4,003
|
|
|
$
|
3,688
|
|
Gross margin percentage
|
11.05
|
%
|
|
10.75
|
%
|
|
12 Weeks Ended
|
||||||
|
November 24,
2019 |
|
November 25,
2018 |
||||
SG&A expenses
|
$
|
3,732
|
|
|
$
|
3,475
|
|
SG&A expenses as a percentage of net sales
|
10.30
|
%
|
|
10.13
|
%
|
|
12 Weeks Ended
|
||||||
|
November 24,
2019 |
|
November 25,
2018 |
||||
Preopening expenses
|
$
|
14
|
|
|
$
|
22
|
|
Warehouse openings, including relocations
|
|
|
|
||||
United States
|
3
|
|
|
6
|
|
||
Canada
|
1
|
|
|
2
|
|
||
Other International
|
0
|
|
|
0
|
|
||
Total warehouse openings, including relocations
|
4
|
|
|
8
|
|
|
12 Weeks Ended
|
||||||
|
November 24,
2019 |
|
November 25,
2018 |
||||
Interest expense
|
$
|
38
|
|
|
$
|
36
|
|
|
12 Weeks Ended
|
||||||
|
November 24,
2019 |
|
November 25,
2018 |
||||
Interest income
|
$
|
32
|
|
|
$
|
21
|
|
Foreign-currency transaction gains, net
|
(4
|
)
|
|
(5
|
)
|
||
Other, net
|
7
|
|
|
6
|
|
||
Interest income and other, net
|
$
|
35
|
|
|
$
|
22
|
|
|
12 Weeks Ended
|
||||||
|
November 24,
2019 |
|
November 25,
2018 |
||||
Provision for income taxes
|
$
|
202
|
|
|
$
|
158
|
|
Effective tax rate
|
19.1
|
%
|
|
16.9
|
%
|
|
12 Weeks Ended
|
||||||
|
November 24,
2019 |
|
November 25,
2018 |
||||
Net cash provided by operating activities
|
$
|
2,102
|
|
|
$
|
2,177
|
|
Net cash used in investing activities
|
(630
|
)
|
|
(737
|
)
|
||
Net cash used in financing activities
|
(836
|
)
|
|
(700
|
)
|
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)
|
||||||
September 2 — September 29, 2019
|
33,000
|
|
|
$
|
291.99
|
|
|
33,000
|
|
|
$
|
3,933
|
|
September 30 — October 27, 2019
|
34,000
|
|
|
295.38
|
|
|
34,000
|
|
|
3,923
|
|
||
October 28 — November 24, 2019
|
33,000
|
|
|
300.47
|
|
|
33,000
|
|
|
3,913
|
|
||
Total first quarter
|
100,000
|
|
|
$
|
295.97
|
|
|
100,000
|
|
|
|
(1)
|
Our stock repurchase program is conducted under a $4,000 authorization approved by our Board of Directors in April 2019, which expires in April 2023.
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
Herewith
|
|
Form
|
|
Period
Ending
|
|
Filing Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10-Q
|
|
2/17/2019
|
|
3/13/2019
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
|
|
4/30/2019
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
x
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8-K
|
|
|
|
10/21/2019
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
x
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
x
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
x
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
x
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
x
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
x
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
x
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
Inline XBRL Instance Document
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
Inline XBRL Taxonomy Extension Schema Document
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104
|
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
|
x
|
|
|
|
|
|
|
|
COSTCO WHOLESALE CORPORATION
(Registrant)
|
||
|
|
|
|
December 18, 2019
|
By
|
|
/s/ W. CRAIG JELINEK
|
Date
|
|
|
W. Craig Jelinek
President, Chief Executive Officer and Director
|
|
|
|
|
December 18, 2019
|
By
|
|
/s/ RICHARD A. GALANTI
|
Date
|
|
|
Richard A. Galanti
Executive Vice President, Chief Financial Officer and Director
|
•
|
a merger or share exchange with, disposition of assets to, or issuance or redemption of stock to or from, the acquiring person;
|
•
|
a termination of 5% or more of the employees of the target corporation employed in the State of Washington as a result of the acquiring person’s acquisition of 10% or more of the shares, whether at one time or over the five-year period following the share acquisition;
|
•
|
a transaction in which the acquiring person is allowed to receive a disproportionate benefit as a shareholder; or
|
•
|
liquidating or dissolving the target corporation.
|
•
|
our Board of Directors may issue up to 100,000,000 shares of preferred stock, with any rights or preferences as it may designate;
|
•
|
our Articles and Bylaws provide that (1) until the declassification of our Board of Directors implemented by amendments to our Articles and Bylaws that became effective in January 2019 is fully phased in beginning with our 2022 annual meeting of shareholders, the current three-year terms of certain of our directors will remain in effect until their current terms expire, (2) a director may only be removed from the Board of Directors for cause, and (3) only our Board of Directors may change the size of our Board of Directors, which provisions together generally make it more difficult for shareholders to replace a majority of our Board of Directors;
|
•
|
Washington law, our Articles and Bylaws limit the ability of shareholders from acting by written consent by requiring unanimous written consent for shareholder action to be effective;
|
•
|
our Articles and Bylaws limit who may call a special meeting of shareholders to only our Board of Directors, Chairman, President, any Executive Vice President or the Secretary or shareholders owning an aggregate at least 10% of all votes entitled to be cast;
|
•
|
our Bylaws provide that shareholders seeking to present proposals before a meeting of shareholders or to nominate candidates for election as directors at a meeting of shareholders must provide timely advance written notice to us in writing, and specify requirements as to the form and content of a shareholder’s notice, which may preclude shareholders from bringing matters before a meeting of shareholders or from making nominations for directors at a meeting of shareholders; and
|
•
|
our Articles do not provide for cumulative voting for our directors, which may make it more difficult for shareholders owning less than a majority of our capital stock to elect any members to our Board of Directors.
|
COSTCO WHOLESALE CORPORATION
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/s/ ROBERT E. NELSON, III
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Robert E. Nelson, III
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Senior Vice President - Finance
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/s/ W. CRAIG JELINEK
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W. Craig Jelinek
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President and CEO
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Costco Wholesale Corporation
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By: /s/ HAMILTON JAMES
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Hamilton E. James
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Chairman of the Board
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1)
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I have reviewed this Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q 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: December 18, 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: December 18, 2019
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Richard A. Galanti
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Executive Vice President, Chief Financial Officer and Director
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