x
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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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Name of each exchange on
which registered
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Common Stock, $.005 Par Value
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The NASDAQ Global Select Market
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Large accelerated filer
ý
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller company)
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Smaller reporting company
o
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Page
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Item 1.
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4
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Item 1A.
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9
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Item 1B.
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14
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Item 2.
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15
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Item 3.
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15
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Item 4.
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15
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Item 5.
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16
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Item 6.
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17
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Item 7.
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18
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Item 7A.
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28
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Item 8.
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29
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Item 9.
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29
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Item 9A.
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29
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Item 9B.
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30
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Item 10.
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31
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Item 11.
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31
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Item 12.
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31
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Item 13.
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31
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Item 14.
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31
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Item 15.
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31
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2013
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2012
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2011
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|||
Sundries
(including candy, snack foods, tobacco, alcoholic and nonalcoholic beverages and cleaning and institutional supplies)
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22
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%
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22
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%
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22
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%
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Hardlines
(including major appliances, electronics, health and beauty aids, hardware, office supplies, cameras, garden and patio, sporting goods, toys, seasonal items and automotive supplies)
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16
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%
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16
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%
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17
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%
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Food
(including dry and institutionally packaged foods)
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21
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%
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21
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%
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21
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%
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Softlines
(including apparel, domestics, jewelry, housewares, media, home furnishings and small appliances)
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11
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%
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10
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%
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10
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%
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Fresh Food
(including meat, bakery, deli and produce)
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13
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%
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13
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%
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12
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%
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Ancillary and Other
(including gas stations, pharmacy, food court, optical, one-hour photo, hearing aid and travel)
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17
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%
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18
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%
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18
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%
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2013
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2012
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2011
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|||
Food Court
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628
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602
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586
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One-Hour Photo Centers
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622
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591
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581
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Optical Dispensing Centers
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614
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589
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|
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574
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Pharmacies
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565
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544
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|
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529
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Hearing-Aid Centers
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502
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469
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427
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Gas Stations
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414
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394
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368
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Number of warehouses
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634
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608
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592
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2013
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2012
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2011
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|||
Full-time employees
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103,000
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96,000
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92,000
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Part-time employees
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81,000
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78,000
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72,000
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Total employees
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184,000
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174,000
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164,000
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Name
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Position
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Executive
Officer
Since
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Age
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W. Craig Jelinek
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President and Chief Executive Officer. Mr. Jelinek has been President and Chief Executive Officer since January 2012 and has been 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.
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1995
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61
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Jeffrey H. Brotman
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Chairman of the Board. Mr. Brotman is a co-founder of Costco and has been a director since its inception.
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1983
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71
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Richard A. Galanti
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Executive Vice President and Chief Financial Officer. Mr. Galanti has been a director since January 1995.
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1993
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57
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Franz Lazarus
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Executive Vice President, Administration. Mr. Lazarus was Senior Vice President, Administration-Global Operations since 2006.
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2012
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66
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John McKay
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Executive Vice President, Chief Operating Officer, Northern Division. Mr. McKay was Senior Vice President, General Manager, Northwest Region from 2000 to March 2010.
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2010
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56
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Paul G. Moulton
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Executive Vice President, Chief Information Officer. Mr. Moulton was Executive Vice President, Real Estate Development until March 2010.
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2001
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62
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James P. Murphy
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Executive Vice President, International. Mr. Murphy was Senior Vice President, International, from September 2004 to October 2010.
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2011
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60
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Joseph P. Portera
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Executive Vice President, Chief Operating Officer, Eastern and Canadian Divisions. Chief Diversity Officer since 2010.
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1994
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61
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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.
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2013
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61
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Douglas W. Schutt
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Executive Vice President, Chief Operating Officer, Merchandising. Mr. Schutt was Executive Vice President, Chief Operating Officer, Northern Division and Midwest Region from 2004 to March 2010.
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2004
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54
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Thomas K. Walker
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Executive Vice President, Construction and Distribution. Mr. Walker retired as of September 2013.
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2004
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73
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Dennis R. Zook
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Executive Vice President, Chief Operating Officer, Southwest Division and Mexico.
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1993
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64
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Own Land
and Building
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Lease Land
and/or
Building
(1)
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Total
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|||
United States and Puerto Rico
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362
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89
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451
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Canada
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75
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10
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85
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Mexico
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32
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1
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33
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United Kingdom
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20
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5
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25
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Japan
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4
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|
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14
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|
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18
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Taiwan
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—
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10
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10
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Korea
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3
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6
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9
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Australia
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2
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1
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|
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3
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Total
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498
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136
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634
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(1)
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95
of the
136
leases are land-leases only, where Costco owns the building.
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Openings by Fiscal Year
(1)
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United States
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Canada
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Other
International
(2)
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Total
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Total Warehouses
in Operation
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|||||
2009 and prior
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406
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77
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44
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527
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527
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2010
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10
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|
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2
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|
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1
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|
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13
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540
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2011
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13
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|
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3
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|
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36
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|
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52
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|
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592
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2012
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10
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|
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—
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6
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|
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16
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|
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608
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2013
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12
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3
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|
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11
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26
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|
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634
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2014 (expected through 12/31/2013)
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10
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|
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2
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|
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3
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|
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15
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|
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649
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Total
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461
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|
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87
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|
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101
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649
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(1)
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Net of closings.
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(2)
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2011 includes 32 Mexico warehouses in operation at the beginning of the year, when we began consolidating Mexico. These 32 warehouses were opened in 2009 and prior.
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Price Range
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Cash
Dividends
Declared
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||||||||
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High
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Low
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||||||||
2013:
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||||||
Fourth Quarter
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$
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120.07
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$
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107.56
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$
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0.310
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Third Quarter
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109.99
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99.45
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0.310
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|||
Second Quarter
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105.95
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96.26
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7.275
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(1)
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|||
First Quarter
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102.75
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94.47
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0.275
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|
|||
2012:
|
|
|
|
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||||||
Fourth Quarter
|
98.59
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|
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82.62
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|
0.550
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(2)
|
|||
Third Quarter
|
91.84
|
|
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83.24
|
|
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—
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(3)
|
|||
Second Quarter
|
88.06
|
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|
79.01
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0.240
|
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|||
First Quarter
|
85.30
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77.79
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0.240
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(1)
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The amount shown includes a special cash dividend of $7.00 per share.
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(2)
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The amount shown includes the dividend declared on May 9, 2012, in addition to the fourth quarter dividend declared on July 23, 2012.
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(3)
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On May 9, 2012, subsequent to the end of the third quarter of fiscal
2012
, the Board of Directors declared a quarterly cash dividend of $0.275 per share.
|
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Sept. 1, 2013
|
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Sept. 2, 2012
|
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Aug. 28, 2011
|
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Aug. 29, 2010
|
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Aug. 30, 2009
|
||||||||||
As of and for the year ended
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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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(52 weeks)
|
||||||||||
RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
102,870
|
|
|
$
|
97,062
|
|
|
$
|
87,048
|
|
|
$
|
76,255
|
|
|
$
|
69,889
|
|
Merchandise costs
|
91,948
|
|
|
86,823
|
|
|
77,739
|
|
|
67,995
|
|
|
62,335
|
|
|||||
Gross margin
|
10,922
|
|
|
10,239
|
|
|
9,309
|
|
|
8,260
|
|
|
7,554
|
|
|||||
Membership fees
|
2,286
|
|
|
2,075
|
|
|
1,867
|
|
|
1,691
|
|
|
1,533
|
|
|||||
Operating income
|
3,053
|
|
|
2,759
|
|
|
2,439
|
|
|
2,077
|
|
|
1,777
|
|
|||||
Net income attributable to Costco
(1)
|
2,039
|
|
|
1,709
|
|
|
1,462
|
|
|
1,303
|
|
|
1,086
|
|
|||||
Net income per diluted common share attributable to Costco
|
4.63
|
|
|
3.89
|
|
|
3.30
|
|
|
2.92
|
|
|
2.47
|
|
|||||
Cash dividends declared per common share
|
$
|
8.17
|
|
|
$
|
1.03
|
|
|
$
|
0.89
|
|
|
$
|
0.77
|
|
|
$
|
0.68
|
|
Increase (decrease) in comparable warehouse sales
(2)
|
|
|
|
|
|
|
|
|
|
||||||||||
United States
|
6
|
%
|
|
7
|
%
|
|
7
|
%
|
|
4
|
%
|
|
(2
|
%)
|
|||||
International
|
6
|
%
|
|
6
|
%
|
|
16
|
%
|
|
19
|
%
|
|
(8
|
%)
|
|||||
Total
|
6
|
%
|
|
7
|
%
|
|
10
|
%
|
|
7
|
%
|
|
(4
|
%)
|
|||||
Increase in international comparable warehouse sales in local currency
|
6
|
%
|
|
8
|
%
|
|
10
|
%
|
|
8
|
%
|
|
7
|
%
|
|||||
BALANCE SHEET DATA
(3)
|
|
|
|
|
|
|
|
|
|
||||||||||
Net property and equipment
|
$
|
13,881
|
|
|
$
|
12,961
|
|
|
$
|
12,432
|
|
|
$
|
11,314
|
|
|
$
|
10,900
|
|
Total assets
|
30,283
|
|
|
27,140
|
|
|
26,761
|
|
|
23,815
|
|
|
21,979
|
|
|||||
Current portion of long-term debt
|
—
|
|
|
1
|
|
|
900
|
|
|
—
|
|
|
80
|
|
|||||
Long-term debt, excluding current portion
|
4,998
|
|
|
1,381
|
|
|
1,253
|
|
|
2,141
|
|
|
2,130
|
|
|||||
Costco stockholders’ equity
|
$
|
10,833
|
|
|
$
|
12,361
|
|
|
$
|
12,002
|
|
|
$
|
10,829
|
|
|
$
|
10,024
|
|
WAREHOUSE INFORMATION
|
|
|
|
|
|
|
|
|
|
||||||||||
Warehouses in Operation
(4)
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning of year
(4)
|
608
|
|
|
592
|
|
|
572
|
|
|
527
|
|
|
512
|
|
|||||
Opened
(5)
|
26
|
|
|
17
|
|
|
24
|
|
|
14
|
|
|
19
|
|
|||||
Closed
(5)
|
0
|
|
|
(1
|
)
|
|
(4
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|||||
End of year
|
634
|
|
|
608
|
|
|
592
|
|
|
540
|
|
|
527
|
|
(1)
|
Includes 50% of the results of Costco Mexico's operations in fiscal 2009, 2010, 2011, and in 2012 prior to the July acquisition of our former joint venture partner's 50% equity interest. The remainder of fiscal 2012 and all of fiscal 2013 includes 100% of Costco Mexico's results of operations.
|
(2)
|
Includes net sales at warehouses open more than one year, including relocations, remodels, and expansions, as well as online sales. For fiscal 2013 and 2012, the prior year includes the comparable 52 and 53 weeks, respectively.
|
(3)
|
Excludes the balance sheet data for Costco Mexico for fiscal 2010 and 2009.
|
(4)
|
Excludes in 2010 and 2009 warehouses operated in Mexico through a 50% owned joint venture. Mexico opened 32 of these warehouses in 2009 and prior. The 2011 beginning-of-year figure includes these warehouses consolidated at the beginning of the fiscal year.
|
(5)
|
Includes warehouse relocations and the closure in July 2009 of two Costco Home locations.
|
•
|
We opened 26 new warehouses in 2013, 12 in the U.S., three in Canada, and 11 in our Other International segment, compared to 16 net new warehouses in 2012.
|
•
|
Net sales increased 6% to $102,870, driven by a 6% increase in comparable sales and sales at warehouses opened in 2012 and 2013, partially offset by the impact of one additional week of sales in 2012. Net sales were negatively impacted by changes in certain foreign currencies relative to the U.S. dollar;
|
•
|
Membership fees increased 10% to $2,286, primarily due to the impact of raising our annual membership fees and membership sign-ups at both existing and new warehouses. These increases were partially offset by the impact of one additional week of fees in 2012;
|
•
|
Gross margin (net sales less merchandise costs) as a percentage of net sales increased seven basis points;
|
•
|
Selling, general and administrative (SG&A) expenses as a percentage of net sales increased one basis point;
|
•
|
Net income in 2013 increased 19% to $2,039, or $4.63 per diluted share compared to $1,709, or $3.89 per diluted share in 2012. These results were positively impacted by a $62 tax benefit, or $0.14 per diluted share, in connection with the special cash dividend paid to the Company's 401(k) Plan participants;
|
•
|
In December 2012, we paid a special cash dividend of $7.00 per share (approximately $3,049). Additionally, in December 2012, we issued $3,500 in aggregate principal amount of Senior Notes; and
|
•
|
The Board of Directors approved an increase in the quarterly cash dividend from $0.275 to $0.31 per share in April 2013.
|
|
2013
|
|
2012
|
|
2011
|
|
||||||
Net Sales
|
$
|
102,870
|
|
|
$
|
97,062
|
|
|
$
|
87,048
|
|
|
Increases in net sales:
|
|
|
|
|
|
|
||||||
U.S.
|
5
|
%
|
|
11
|
%
|
|
9
|
%
|
|
|||
International
|
8
|
%
|
|
14
|
%
|
|
31
|
%
|
(2)
|
|||
Total Company
|
6
|
%
|
|
12
|
%
|
|
14
|
%
|
(2)
|
|||
Increases in comparable warehouse sales
(1)
:
|
|
|
|
|
|
|
||||||
U.S.
|
6
|
%
|
|
7
|
%
|
|
7
|
%
|
|
|||
International
|
6
|
%
|
|
6
|
%
|
|
16
|
%
|
|
|||
Total Company
|
6
|
%
|
|
7
|
%
|
|
10
|
%
|
|
|||
Increases in comparable warehouse sales excluding the impact of gasoline price inflation and foreign currencies
(1)
:
|
|
|
|
|
|
|
||||||
U.S.
|
6
|
%
|
|
6
|
%
|
|
5
|
%
|
|
|||
International
|
6
|
%
|
|
8
|
%
|
|
10
|
%
|
|
|||
Total Company
|
6
|
%
|
|
6
|
%
|
|
6
|
%
|
|
(1)
|
For 2013 and 2012, the prior year includes the comparable 52 weeks and 53 weeks, respectively.
|
(2)
|
The percentage increase in net sales for 2011 was positively impacted by the initial consolidation of Mexico beginning in fiscal 2011. Excluding Mexico, the International and Total Company increases in net sales would have been 18% and 11%, respectively.
|
|
2013
|
|
2012
|
|
2011
|
||||||
Membership fees
|
$
|
2,286
|
|
|
$
|
2,075
|
|
|
$
|
1,867
|
|
Membership fees increase
|
10
|
%
|
|
11
|
%
|
|
10
|
%
|
|||
Membership fees as a percent of net sales
|
2.22
|
%
|
|
2.13
|
%
|
|
2.15
|
%
|
|
2013
|
|
2012
|
|
2011
|
||||||
Net sales
|
$
|
102,870
|
|
|
$
|
97,062
|
|
|
$
|
87,048
|
|
Less merchandise costs
|
91,948
|
|
|
86,823
|
|
|
77,739
|
|
|||
Gross margin
|
$
|
10,922
|
|
|
$
|
10,239
|
|
|
$
|
9,309
|
|
Gross margin as a percent of net sales
|
10.62
|
%
|
|
10.55
|
%
|
|
10.69
|
%
|
|
2013
|
|
2012
|
|
2011
|
||||||
SG&A expenses
|
$
|
10,104
|
|
|
$
|
9,518
|
|
|
$
|
8,691
|
|
SG&A expenses as a percent of net sales
|
9.82
|
%
|
|
9.81
|
%
|
|
9.98
|
%
|
|
2013
|
|
2012
|
|
2011
|
||||||
Preopening expenses
|
$
|
51
|
|
|
$
|
37
|
|
|
$
|
46
|
|
Warehouse openings, including relocations
|
|
|
|
|
|
||||||
United States
|
12
|
|
|
10
|
|
|
15
|
|
|||
Canada
|
3
|
|
|
1
|
|
|
3
|
|
|||
Other International
|
11
|
|
|
6
|
|
|
6
|
|
|||
Total warehouse openings, including relocations
|
26
|
|
|
17
|
|
|
24
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Interest expense
|
$
|
99
|
|
|
$
|
95
|
|
|
$
|
116
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Interest income
|
$
|
44
|
|
|
$
|
49
|
|
|
$
|
41
|
|
Foreign-currency transaction gains, net
|
39
|
|
|
40
|
|
|
9
|
|
|||
Other, net
|
14
|
|
|
14
|
|
|
10
|
|
|||
Interest income and other, net
|
$
|
97
|
|
|
$
|
103
|
|
|
$
|
60
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Provision for income taxes
|
$
|
990
|
|
|
$
|
1,000
|
|
|
$
|
841
|
|
Effective tax rate
|
32.4
|
%
|
|
36.1
|
%
|
|
35.3
|
%
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
|
(52 Weeks)
|
|
(53 Weeks)
|
|
(52 Weeks)
|
||||||
Net cash provided by operating activities
|
|
$
|
3,437
|
|
|
$
|
3,057
|
|
|
$
|
3,198
|
|
Net cash used in investing activities
|
|
(2,251
|
)
|
|
(1,236
|
)
|
|
(1,180
|
)
|
|||
Net cash provided by (used in) financing activities
|
|
44
|
|
|
(2,281
|
)
|
|
(1,277
|
)
|
|
Payments Due by Fiscal Year
|
||||||||||||||||||
Contractual obligations
|
2014
|
|
2015 to
2016 |
|
2017 to
2018 |
|
2019 and
thereafter |
|
Total
|
||||||||||
Purchase obligations (merchandise)
(1)
|
$
|
5,573
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,574
|
|
Long-term debt
(2)
|
106
|
|
|
1,510
|
|
|
2,426
|
|
|
1,440
|
|
|
5,482
|
|
|||||
Operating leases
(3)
|
189
|
|
|
342
|
|
|
313
|
|
|
1,753
|
|
|
2,597
|
|
|||||
Purchase obligations (property, equipment, services and other)
(4)
|
339
|
|
|
76
|
|
|
—
|
|
|
—
|
|
|
415
|
|
|||||
Construction commitments
|
465
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
465
|
|
|||||
Capital lease obligations
(2)
|
17
|
|
|
33
|
|
|
32
|
|
|
338
|
|
|
420
|
|
|||||
Other
(5)
|
14
|
|
|
21
|
|
|
24
|
|
|
50
|
|
|
109
|
|
|||||
Total
|
$
|
6,703
|
|
|
$
|
1,983
|
|
|
$
|
2,795
|
|
|
$
|
3,581
|
|
|
$
|
15,062
|
|
(1)
|
Includes only open merchandise purchase orders.
|
(2)
|
Includes contractual interest payments.
|
(3)
|
Operating lease obligations exclude amounts for common area maintenance, taxes, and insurance and have been reduced by
$150
to reflect sub-lease income.
|
(4)
|
The amounts exclude certain services negotiated at the individual warehouse or regional level that are not significant and generally contain clauses allowing for cancellation without significant penalty.
|
(5)
|
Consists of
$50
in asset retirement obligations, $55 in deferred compensation obligations, and $4 of current unrecognized tax benefits relating to uncertain tax positions. The total amount excludes $215 of deferred compensation, $53 of non-current unrecognized tax benefits, and $24 of other obligations due to uncertainty regarding the timing of future cash payments.
|
|
Page
|
Consolidated Statements of Comprehensive Income,
for the 52 weeks ended September 1, 2013, the 53 weeks ended September 2, 2012, and the 52 weeks ended August 28, 2011
|
|
Consolidated Statements of Equity,
for the 52 weeks ended September 1, 2013, the 53 weeks ended September 2, 2012, and the 52 weeks ended August 28, 2011
|
|
Consolidated Statements of Cash Flows,
for the 52 weeks ended September 1, 2013, the 53 weeks ended September 2, 2012, and the 52 weeks ended August 28, 2011
|
|
/s/ W. C
RAIG
J
ELINEK
|
|
W. Craig Jelinek
|
|
President and Chief Executive Officer
|
|
/s/ R
ICHARD
A. G
ALANTI
|
|
Richard A. Galanti
|
|
Executive Vice President and Chief Financial Officer
|
|
(a)
|
Documents filed as part of this report are as follows:
|
1.
|
Financial Statements:
|
(b)
|
Financial Statement Schedules—None.
|
|
C
OSTCO
W
HOLESALE
C
ORPORATION
(Registrant)
|
||
|
|
|
|
|
By
|
|
/s/ R
ICHARD
A. G
ALANTI
|
|
|
|
Richard A. Galanti
Executive Vice President
and Chief Financial Officer
|
By
|
|
/s/ W. C
RAIG
J
ELINEK
|
|
|
|
October 16, 2013
|
|
|
W. Craig Jelinek
President, Chief Executive Officer and Director
|
|
|
|
|
|
|
|
|
|||
By
|
|
/s/ J
EFFREY
H. B
ROTMAN
|
|
|
|
October 16, 2013
|
|
|
Jeffrey H. Brotman
Chairman of the Board
|
|
|
|
|
|
|
|
|
|||
By
|
|
/s/ R
ICHARD
A. G
ALANTI
|
|
|
|
October 16, 2013
|
|
|
Richard A. Galanti
Executive Vice President, Chief Financial Officer and Director
(
Principal Financial Officer
)
|
|
|
|
|
|
|
|
|
|||
By
|
|
/s/ D
AVID
S. P
ETTERSON
|
|
|
|
October 16, 2013
|
|
|
David S. Petterson
Senior Vice President and Controller
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
|
|||
By
|
|
/s/ B
ENJAMIN
S. C
ARSON
, S
R
., M.D.
|
|
|
|
October 16, 2013
|
|
|
Benjamin S. Carson, Sr., M.D.
Director
|
|
|
|
|
|
|
|
|
|||
By
|
|
/s/ S
USAN
L. D
ECKER
|
|
|
|
October 16, 2013
|
|
|
Susan L. Decker
Director
|
|
|
|
|
|
|
|
|
|||
By
|
|
/s/ D
ANIEL
J. E
VANS
|
|
|
|
October 16, 2013
|
|
|
Daniel J. Evans
Director
|
|
|
|
|
By
|
|
/
S
/ W
ILLIAM
H. G
ATES
|
|
|
|
October 16, 2013
|
|
|
William H. Gates
Director
|
|
|
|
|
|
|
|
|
|||
By
|
|
/
S
/ H
AMILTON
E. J
AMES
|
|
|
|
October 16, 2013
|
|
|
Hamilton E. James
Director
|
|
|
|
|
|
|
|
|
|||
By
|
|
/
S
/ R
ICHARD
M. L
IBENSON
|
|
|
|
October 16, 2013
|
|
|
Richard M. Libenson
Director
|
|
|
|
|
|
|
|
|
|||
By
|
|
/
S
/ J
OHN
W. M
EISENBACH
|
|
|
|
October 16, 2013
|
|
|
John W. Meisenbach
Director
|
|
|
|
|
|
|
|
|
|||
By
|
|
/
S
/ C
HARLES
T. M
UNGER
|
|
|
|
October 16, 2013
|
|
|
Charles T. Munger
Director
|
|
|
|
|
|
|
|
|
|||
By
|
|
/
S
/ J
EFFREY
S. R
AIKES
|
|
|
|
October 16, 2013
|
|
|
Jeffrey S. Raikes
Director
|
|
|
|
|
|
|
|
|
|||
By
|
|
/
S
/ J
ILL
S. R
UCKELSHAUS
|
|
|
|
October 16, 2013
|
|
|
Jill S. Ruckelshaus
Director
|
|
|
|
|
|
|
|
|
|||
By
|
|
/
S
/ J
AMES
D. S
INEGAL
|
|
|
|
October 16, 2013
|
|
|
James D. Sinegal
Director
|
|
|
|
|
|
September 1,
2013 |
|
September 2,
2012 |
||||
ASSETS
|
|
|
|
||||
CURRENT ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
4,644
|
|
|
$
|
3,528
|
|
Short-term investments
|
1,480
|
|
|
1,326
|
|
||
Receivables, net
|
1,201
|
|
|
1,026
|
|
||
Merchandise inventories
|
7,894
|
|
|
7,096
|
|
||
Deferred income taxes and other current assets
|
621
|
|
|
550
|
|
||
Total current assets
|
15,840
|
|
|
13,526
|
|
||
PROPERTY AND EQUIPMENT
|
|
|
|
||||
Land
|
4,409
|
|
|
4,032
|
|
||
Buildings and improvements
|
11,556
|
|
|
10,879
|
|
||
Equipment and fixtures
|
4,472
|
|
|
4,261
|
|
||
Construction in progress
|
585
|
|
|
374
|
|
||
|
21,022
|
|
|
19,546
|
|
||
Less accumulated depreciation and amortization
|
(7,141
|
)
|
|
(6,585
|
)
|
||
Net property and equipment
|
13,881
|
|
|
12,961
|
|
||
OTHER ASSETS
|
562
|
|
|
653
|
|
||
TOTAL ASSETS
|
$
|
30,283
|
|
|
$
|
27,140
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
CURRENT LIABILITIES
|
|
|
|
||||
Accounts payable
|
$
|
7,872
|
|
|
$
|
7,303
|
|
Accrued salaries and benefits
|
2,037
|
|
|
1,832
|
|
||
Accrued member rewards
|
710
|
|
|
661
|
|
||
Accrued sales and other taxes
|
382
|
|
|
397
|
|
||
Deferred membership fees
|
1,167
|
|
|
1,101
|
|
||
Other current liabilities
|
1,089
|
|
|
966
|
|
||
Total current liabilities
|
13,257
|
|
|
12,260
|
|
||
LONG-TERM DEBT, excluding current portion
|
4,998
|
|
|
1,381
|
|
||
DEFERRED INCOME TAXES AND OTHER LIABILITIES
|
1,016
|
|
|
981
|
|
||
Total liabilities
|
19,271
|
|
|
14,622
|
|
||
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
||
EQUITY
|
|
|
|
||||
Preferred stock $.005 par value; 100,000,000 shares authorized; no shares issued and outstanding
|
0
|
|
|
0
|
|
||
Common stock $.005 par value; 900,000,000 shares authorized; 436,839,000 and 432,350,000 shares issued and outstanding
|
2
|
|
|
2
|
|
||
Additional paid-in capital
|
4,670
|
|
|
4,369
|
|
||
Accumulated other comprehensive (loss) income
|
(122
|
)
|
|
156
|
|
||
Retained earnings
|
6,283
|
|
|
7,834
|
|
||
Total Costco stockholders’ equity
|
10,833
|
|
|
12,361
|
|
||
Noncontrolling interests
|
179
|
|
|
157
|
|
||
Total equity
|
11,012
|
|
|
12,518
|
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
30,283
|
|
|
$
|
27,140
|
|
|
52 Weeks Ended
|
|
53 Weeks Ended
|
|
52 Weeks Ended
|
||||||
|
September 1,
2013 |
|
September 2,
2012 |
|
August 28,
2011 |
||||||
REVENUE
|
|
|
|
|
|
||||||
Net sales
|
$
|
102,870
|
|
|
$
|
97,062
|
|
|
$
|
87,048
|
|
Membership fees
|
2,286
|
|
|
2,075
|
|
|
1,867
|
|
|||
Total revenue
|
105,156
|
|
|
99,137
|
|
|
88,915
|
|
|||
OPERATING EXPENSES
|
|
|
|
|
|
||||||
Merchandise costs
|
91,948
|
|
|
86,823
|
|
|
77,739
|
|
|||
Selling, general and administrative
|
10,104
|
|
|
9,518
|
|
|
8,691
|
|
|||
Preopening expenses
|
51
|
|
|
37
|
|
|
46
|
|
|||
Operating income
|
3,053
|
|
|
2,759
|
|
|
2,439
|
|
|||
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
||||||
Interest expense
|
(99
|
)
|
|
(95
|
)
|
|
(116
|
)
|
|||
Interest income and other, net
|
97
|
|
|
103
|
|
|
60
|
|
|||
INCOME BEFORE INCOME TAXES
|
3,051
|
|
|
2,767
|
|
|
2,383
|
|
|||
Provision for income taxes
|
990
|
|
|
1,000
|
|
|
841
|
|
|||
Net income including noncontrolling interests
|
2,061
|
|
|
1,767
|
|
|
1,542
|
|
|||
Net income attributable to noncontrolling interests
|
(22
|
)
|
|
(58
|
)
|
|
(80
|
)
|
|||
NET INCOME ATTRIBUTABLE TO COSTCO
|
$
|
2,039
|
|
|
$
|
1,709
|
|
|
$
|
1,462
|
|
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
|
|
|
|
|
|
||||||
Basic
|
$
|
4.68
|
|
|
$
|
3.94
|
|
|
$
|
3.35
|
|
Diluted
|
$
|
4.63
|
|
|
$
|
3.89
|
|
|
$
|
3.30
|
|
Shares used in calculation (000’s)
|
|
|
|
|
|
||||||
Basic
|
435,741
|
|
|
433,620
|
|
|
436,119
|
|
|||
Diluted
|
440,512
|
|
|
439,373
|
|
|
443,094
|
|
|||
CASH DIVIDENDS DECLARED PER COMMON SHARE
|
$
|
8.17
|
|
|
$
|
1.03
|
|
|
$
|
0.89
|
|
|
52 Weeks Ended
|
|
53 Weeks Ended
|
|
52 Weeks Ended
|
||||||
|
September 1,
2013 |
|
September 2,
2012 |
|
August 28,
2011 |
||||||
NET INCOME INCLUDING NONCONTROLLING INTERESTS
|
$
|
2,061
|
|
|
$
|
1,767
|
|
|
$
|
1,542
|
|
Foreign-currency translation adjustment and other, net
|
(278
|
)
|
|
(96
|
)
|
|
275
|
|
|||
Comprehensive income
|
1,783
|
|
|
1,671
|
|
|
1,817
|
|
|||
Less: Comprehensive income attributable to noncontrolling interests
|
22
|
|
|
24
|
|
|
104
|
|
|||
COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO
|
$
|
1,761
|
|
|
$
|
1,647
|
|
|
$
|
1,713
|
|
|
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 29, 2010
|
433,510
|
|
|
$
|
2
|
|
|
$
|
4,115
|
|
|
$
|
122
|
|
|
$
|
6,590
|
|
|
$
|
10,829
|
|
|
$
|
101
|
|
|
$
|
10,930
|
|
Initial consolidation of noncontrolling interest in Costco Mexico
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
357
|
|
|
357
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,462
|
|
|
1,462
|
|
|
80
|
|
|
1,542
|
|
|||||||
Foreign-currency translation adjustment and other, net
|
—
|
|
|
—
|
|
|
—
|
|
|
251
|
|
|
—
|
|
|
251
|
|
|
24
|
|
|
275
|
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
207
|
|
|
—
|
|
|
—
|
|
|
207
|
|
|
—
|
|
|
207
|
|
|||||||
Stock options exercised, including tax effects
|
7,245
|
|
|
—
|
|
|
332
|
|
|
—
|
|
|
—
|
|
|
332
|
|
|
—
|
|
|
332
|
|
|||||||
Release of vested restricted stock units (RSUs), including tax effects
|
2,385
|
|
|
—
|
|
|
(51
|
)
|
|
—
|
|
|
—
|
|
|
(51
|
)
|
|
—
|
|
|
(51
|
)
|
|||||||
Conversion of convertible notes
|
65
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||||
Repurchases of common stock
|
(8,939
|
)
|
|
—
|
|
|
(89
|
)
|
|
—
|
|
|
(552
|
)
|
|
(641
|
)
|
|
—
|
|
|
(641
|
)
|
|||||||
Cash dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(389
|
)
|
|
(389
|
)
|
|
—
|
|
|
(389
|
)
|
|||||||
Investment by noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
9
|
|
|||||||
BALANCE AT AUGUST 28, 2011
|
434,266
|
|
|
2
|
|
|
4,516
|
|
|
373
|
|
|
7,111
|
|
|
12,002
|
|
|
571
|
|
|
12,573
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,709
|
|
|
1,709
|
|
|
58
|
|
|
1,767
|
|
|||||||
Foreign-currency translation adjustment and other, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(62
|
)
|
|
—
|
|
|
(62
|
)
|
|
(34
|
)
|
|
(96
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
241
|
|
|
—
|
|
|
—
|
|
|
241
|
|
|
—
|
|
|
241
|
|
|||||||
Stock options exercised, including tax effects
|
2,756
|
|
|
—
|
|
|
142
|
|
|
—
|
|
|
—
|
|
|
142
|
|
|
—
|
|
|
142
|
|
|||||||
Release of vested RSUs, including tax effects
|
2,554
|
|
|
—
|
|
|
(76
|
)
|
|
—
|
|
|
—
|
|
|
(76
|
)
|
|
—
|
|
|
(76
|
)
|
|||||||
Conversion of convertible notes
|
46
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||||
Repurchases of common stock
|
(7,272
|
)
|
|
—
|
|
|
(77
|
)
|
|
—
|
|
|
(540
|
)
|
|
(617
|
)
|
|
—
|
|
|
(617
|
)
|
|||||||
Cash dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(446
|
)
|
|
(446
|
)
|
|
—
|
|
|
(446
|
)
|
|||||||
Distribution to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(183
|
)
|
|
(183
|
)
|
|||||||
Purchase of noncontrolling interest in Costco Mexico
|
—
|
|
|
—
|
|
|
(379
|
)
|
|
(155
|
)
|
|
—
|
|
|
(534
|
)
|
|
(255
|
)
|
|
(789
|
)
|
|||||||
BALANCE AT SEPTEMBER 2, 2012
|
432,350
|
|
|
2
|
|
|
4,369
|
|
|
156
|
|
|
7,834
|
|
|
12,361
|
|
|
157
|
|
|
12,518
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,039
|
|
|
2,039
|
|
|
22
|
|
|
2,061
|
|
|||||||
Foreign-currency translation adjustment and other, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(278
|
)
|
|
—
|
|
|
(278
|
)
|
|
—
|
|
|
(278
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
285
|
|
|
—
|
|
|
—
|
|
|
285
|
|
|
—
|
|
|
285
|
|
|||||||
Stock options exercised, including tax effects
|
1,435
|
|
|
—
|
|
|
75
|
|
|
—
|
|
|
—
|
|
|
75
|
|
|
—
|
|
|
75
|
|
|||||||
Release of vested RSUs, including tax effects
|
2,609
|
|
|
—
|
|
|
(85
|
)
|
|
—
|
|
|
—
|
|
|
(85
|
)
|
|
—
|
|
|
(85
|
)
|
|||||||
Conversion of convertible notes
|
802
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
30
|
|
|||||||
Repurchases of common stock
|
(357
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(30
|
)
|
|
(34
|
)
|
|
—
|
|
|
(34
|
)
|
|||||||
Cash dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,560
|
)
|
|
(3,560
|
)
|
|
—
|
|
|
(3,560
|
)
|
|||||||
BALANCE AT SEPTEMBER 1, 2013
|
436,839
|
|
|
$
|
2
|
|
|
$
|
4,670
|
|
|
$
|
(122
|
)
|
|
$
|
6,283
|
|
|
$
|
10,833
|
|
|
$
|
179
|
|
|
$
|
11,012
|
|
|
52 Weeks Ended
|
|
53 Weeks Ended
|
|
52 Weeks Ended
|
||||||
|
September 1,
2013 |
|
September 2,
2012 |
|
August 28,
2011 |
||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||||||
Net income including noncontrolling interests
|
$
|
2,061
|
|
|
$
|
1,767
|
|
|
$
|
1,542
|
|
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
946
|
|
|
908
|
|
|
855
|
|
|||
Stock-based compensation
|
285
|
|
|
241
|
|
|
207
|
|
|||
Excess tax benefits on stock-based awards
|
(61
|
)
|
|
(64
|
)
|
|
(45
|
)
|
|||
Other non-cash operating activities, net
|
(7
|
)
|
|
28
|
|
|
23
|
|
|||
Deferred income taxes
|
7
|
|
|
(3
|
)
|
|
84
|
|
|||
Changes in operating assets and liabilities, net of the initial consolidation of Costco Mexico at the beginning of fiscal 2011:
|
|
|
|
|
|
||||||
Increase in merchandise inventories
|
(898
|
)
|
|
(490
|
)
|
|
(642
|
)
|
|||
Increase in accounts payable
|
718
|
|
|
338
|
|
|
804
|
|
|||
Other operating assets and liabilities, net
|
386
|
|
|
332
|
|
|
370
|
|
|||
Net cash provided by operating activities
|
3,437
|
|
|
3,057
|
|
|
3,198
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
Purchases of short-term investments
|
(2,572
|
)
|
|
(2,048
|
)
|
|
(3,276
|
)
|
|||
Maturities of short-term investments
|
2,141
|
|
|
1,821
|
|
|
2,614
|
|
|||
Sales of investments
|
244
|
|
|
482
|
|
|
602
|
|
|||
Additions to property and equipment
|
(2,083
|
)
|
|
(1,480
|
)
|
|
(1,290
|
)
|
|||
Increase resulting from initial consolidation of Costco Mexico
|
0
|
|
|
0
|
|
|
165
|
|
|||
Other investing activities, net
|
19
|
|
|
(11
|
)
|
|
5
|
|
|||
Net cash used in investing activities
|
(2,251
|
)
|
|
(1,236
|
)
|
|
(1,180
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Change in bank checks outstanding
|
(70
|
)
|
|
457
|
|
|
(514
|
)
|
|||
Repayments of short-term borrowings
|
(287
|
)
|
|
(114
|
)
|
|
(105
|
)
|
|||
Proceeds from short-term borrowings
|
326
|
|
|
114
|
|
|
79
|
|
|||
Proceeds from issuance of long-term debt
|
3,717
|
|
|
130
|
|
|
0
|
|
|||
Repayments of long-term debt
|
0
|
|
|
(900
|
)
|
|
0
|
|
|||
(Distribution to) investment by noncontrolling interests
|
(22
|
)
|
|
(161
|
)
|
|
9
|
|
|||
Proceeds from exercise of stock options
|
52
|
|
|
109
|
|
|
285
|
|
|||
Minimum tax withholdings on stock-based awards
|
(121
|
)
|
|
(107
|
)
|
|
(61
|
)
|
|||
Excess tax benefits on stock-based awards
|
61
|
|
|
64
|
|
|
45
|
|
|||
Repurchases of common stock
|
(36
|
)
|
|
(632
|
)
|
|
(624
|
)
|
|||
Cash dividend payments
|
(3,560
|
)
|
|
(446
|
)
|
|
(389
|
)
|
|||
Purchase of noncontrolling interest in Costco Mexico
|
0
|
|
|
(789
|
)
|
|
0
|
|
|||
Other financing activities, net
|
(16
|
)
|
|
(6
|
)
|
|
(2
|
)
|
|||
Net cash provided by (used in) financing activities
|
44
|
|
|
(2,281
|
)
|
|
(1,277
|
)
|
|||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
(114
|
)
|
|
(21
|
)
|
|
54
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
1,116
|
|
|
(481
|
)
|
|
795
|
|
|||
CASH AND CASH EQUIVALENTS BEGINNING OF YEAR
|
3,528
|
|
|
4,009
|
|
|
3,214
|
|
|||
CASH AND CASH EQUIVALENTS END OF YEAR
|
$
|
4,644
|
|
|
$
|
3,528
|
|
|
$
|
4,009
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest (reduced by $12, $10 and $9, interest capitalized in 2013, 2012 and 2011, respectively)
|
$
|
86
|
|
|
$
|
112
|
|
|
$
|
111
|
|
Income taxes
|
$
|
1,001
|
|
|
$
|
956
|
|
|
$
|
742
|
|
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Increase in accrued property and equipment
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Property acquired under capital leases
|
$
|
11
|
|
|
$
|
18
|
|
|
$
|
0
|
|
Unsettled repurchases of common stock
|
$
|
0
|
|
|
$
|
2
|
|
|
$
|
17
|
|
Distribution declared but not paid to noncontrolling interest
|
$
|
0
|
|
|
$
|
22
|
|
|
$
|
0
|
|
Common stock issued upon conversion of 3.5% Zero Coupon Convertible Subordinated Notes
|
$
|
30
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
2013
|
|
2012
|
||||
Vendor receivables
|
$
|
581
|
|
|
$
|
545
|
|
Reinsurance receivables
|
238
|
|
|
226
|
|
||
Receivables from governmental entities
|
228
|
|
|
87
|
|
||
Third-party pharmacy receivables
|
102
|
|
|
104
|
|
||
Other receivables, net
|
52
|
|
|
64
|
|
||
Receivables, net
|
$
|
1,201
|
|
|
$
|
1,026
|
|
|
2013
|
|
2012
|
||||
United States (primarily LIFO)
|
$
|
5,560
|
|
|
$
|
4,967
|
|
Foreign (FIFO)
|
2,334
|
|
|
2,129
|
|
||
Merchandise inventories
|
$
|
7,894
|
|
|
$
|
7,096
|
|
|
2013
|
|
2012
|
||||
Prepaid rents, lease costs, and long-term deposits
|
$
|
236
|
|
|
$
|
230
|
|
Receivables from governmental entities
|
128
|
|
|
225
|
|
||
Cash surrender value of life insurance
|
74
|
|
|
76
|
|
||
Goodwill, net
|
63
|
|
|
66
|
|
||
Other
|
61
|
|
|
56
|
|
||
Other Assets
|
$
|
562
|
|
|
$
|
653
|
|
|
2013
|
|
2012
|
||||
Insurance-related liabilities
|
$
|
346
|
|
|
$
|
308
|
|
Deferred sales
|
204
|
|
|
159
|
|
||
Cash card liability
|
159
|
|
|
133
|
|
||
Other current liabilities
|
162
|
|
|
135
|
|
||
Sales return reserve
|
95
|
|
|
86
|
|
||
Tax-related liabilities
|
77
|
|
|
88
|
|
||
Vendor consideration liabilities
|
46
|
|
|
57
|
|
||
Other current liabilities
|
$
|
1,089
|
|
|
$
|
966
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Interest income
|
$
|
44
|
|
|
$
|
49
|
|
|
$
|
41
|
|
Foreign-currency transactions gains, net
|
39
|
|
|
40
|
|
|
9
|
|
|||
Other, net
|
14
|
|
|
14
|
|
|
10
|
|
|||
Interest income and other, net
|
$
|
97
|
|
|
$
|
103
|
|
|
$
|
60
|
|
2013:
|
Cost
Basis
|
|
Unrealized
Gains, Net
|
|
Recorded
Basis
|
||||||
Available-for-sale:
|
|
|
|
|
|
||||||
Government and agency securities
(1)
|
$
|
1,263
|
|
|
$
|
0
|
|
|
$
|
1,263
|
|
Corporate notes and bonds
|
9
|
|
|
0
|
|
|
9
|
|
|||
Asset and mortgage-backed securities
|
5
|
|
|
0
|
|
|
5
|
|
|||
Total available-for-sale
|
1,277
|
|
|
0
|
|
|
1,277
|
|
|||
Held-to-maturity:
|
|
|
|
|
|
||||||
Certificates of deposit
|
124
|
|
|
|
|
124
|
|
||||
Bankers' acceptances
|
79
|
|
|
|
|
79
|
|
||||
Total held-to-maturity
|
203
|
|
|
|
|
203
|
|
||||
Total Short-Term Investments
|
$
|
1,480
|
|
|
$
|
0
|
|
|
$
|
1,480
|
|
(1)
|
Includes U.S. and Canadian government and agency securities.
|
2012:
|
Cost
Basis
|
|
Unrealized
Gains, Net
|
|
Recorded
Basis
|
||||||
Available-for-sale:
|
|
|
|
|
|
||||||
U.S. government and agency securities
|
$
|
776
|
|
|
$
|
6
|
|
|
$
|
782
|
|
Corporate notes and bonds
|
54
|
|
|
0
|
|
|
54
|
|
|||
FDIC-insured corporate bonds
|
35
|
|
|
0
|
|
|
35
|
|
|||
Asset and mortgage-backed securities
|
8
|
|
|
0
|
|
|
8
|
|
|||
Total available-for-sale
|
873
|
|
|
6
|
|
|
879
|
|
|||
Held-to-maturity:
|
|
|
|
|
|
||||||
Certificates of deposit
|
447
|
|
|
|
|
447
|
|
||||
Total Short-Term Investments
|
$
|
1,320
|
|
|
$
|
6
|
|
|
$
|
1,326
|
|
|
Available-For-Sale
|
|
Held-To-Maturity
|
||||||||
|
Cost Basis
|
|
Fair Value
|
|
|||||||
Due in one year or less
|
$
|
628
|
|
|
$
|
628
|
|
|
$
|
203
|
|
Due after one year through five years
|
632
|
|
|
632
|
|
|
0
|
|
|||
Due after five years
|
17
|
|
|
17
|
|
|
0
|
|
|||
|
$
|
1,277
|
|
|
$
|
1,277
|
|
|
$
|
203
|
|
2013:
|
Level 1
|
|
Level 2
|
||||
Money market mutual funds
(1)
|
$
|
87
|
|
|
$
|
0
|
|
Investment in government and agency securities
(2)
|
0
|
|
|
1,263
|
|
||
Investment in corporate notes and bonds
|
0
|
|
|
9
|
|
||
Investment in asset and mortgage-backed securities
|
0
|
|
|
5
|
|
||
Forward foreign-exchange contracts, in asset position
(3)
|
0
|
|
|
3
|
|
||
Forward foreign-exchange contracts, in (liability) position
(3)
|
0
|
|
|
(3
|
)
|
||
Total
|
$
|
87
|
|
|
$
|
1,277
|
|
2012:
|
Level 1
|
|
Level 2
|
||||
Money market mutual funds
(1)
|
$
|
77
|
|
|
$
|
0
|
|
Investment in U.S. government and agency securities
(2)
|
0
|
|
|
794
|
|
||
Investment in corporate notes and bonds
|
0
|
|
|
54
|
|
||
Investment in FDIC-insured corporate bonds
|
0
|
|
|
35
|
|
||
Investment in asset and mortgage-backed securities
|
0
|
|
|
8
|
|
||
Forward foreign-exchange contracts, in asset position
(3)
|
0
|
|
|
1
|
|
||
Forward foreign-exchange contracts, in (liability) position
(3)
|
0
|
|
|
(3
|
)
|
||
Total
|
$
|
77
|
|
|
$
|
889
|
|
(1)
|
Included in cash and cash equivalents in the accompanying consolidated balance sheets.
|
(2)
|
There were
no securities
included in cash and cash equivalents and $
1,263
included in short-term investments in the accompanying consolidated balance sheets at the end of
2013
. $
12
and $
782
included in cash and cash equivalents and short-term investments, respectively, in the accompanying consolidated balance sheets at the end of
2012
.
|
(3)
|
The asset and the liability values are included in deferred income taxes and other current assets and other current liabilities, respectively, in the accompanying consolidated balance sheets. See Note 1 for additional information on derivative instruments.
|
Category of Aggregate
Short-term Borrowings
|
|
Maximum Amount
Outstanding
During the Fiscal Year
|
|
Average Amount
Outstanding
During the Fiscal Year
|
|
Weighted Average
Interest Rate
During the Fiscal Year
|
|||||
2013:
|
|
|
|
|
|
|
|||||
Bank borrowings:
|
|
|
|
|
|
|
|||||
Japan
|
|
$
|
157
|
|
|
$
|
56
|
|
|
0.56
|
%
|
Bank overdraft facility:
|
|
|
|
|
|
|
|||||
United Kingdom
|
|
14
|
|
|
4
|
|
|
1.50
|
|
||
2012:
|
|
|
|
|
|
|
|||||
Bank borrowings:
|
|
|
|
|
|
|
|||||
Japan
|
|
$
|
83
|
|
|
$
|
57
|
|
|
0.58
|
%
|
Bank overdraft facility:
|
|
|
|
|
|
|
|||||
United Kingdom
|
|
3
|
|
|
0
|
|
|
1.50
|
|
|
2013
|
|
2012
|
||||||||||||
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||
5.5% Senior Notes due March 2017
|
$
|
1,098
|
|
|
$
|
1,248
|
|
|
$
|
1,097
|
|
|
$
|
1,325
|
|
0.65% Senior Notes due December 2015
|
1,199
|
|
|
1,200
|
|
|
0
|
|
|
0
|
|
||||
1.125% Senior Notes due December 2017
|
1,100
|
|
|
1,065
|
|
|
0
|
|
|
0
|
|
||||
1.7% Senior Notes due December 2019
|
1,198
|
|
|
1,157
|
|
|
0
|
|
|
0
|
|
||||
Other long-term debt
|
403
|
|
|
412
|
|
|
285
|
|
|
338
|
|
||||
Total long-term debt
|
4,998
|
|
|
5,082
|
|
|
1,382
|
|
|
1,663
|
|
||||
Less current portion
|
0
|
|
|
0
|
|
|
1
|
|
|
1
|
|
||||
Long-term debt, excluding current portion
|
$
|
4,998
|
|
|
$
|
5,082
|
|
|
$
|
1,381
|
|
|
$
|
1,662
|
|
2014
|
$
|
0
|
|
2015
|
0
|
|
|
2016
|
1,301
|
|
|
2017
|
1,099
|
|
|
2018
|
1,196
|
|
|
Thereafter
|
1,402
|
|
|
Total
|
$
|
4,998
|
|
|
Operating
Leases
|
|
Capital
Leases
|
||||
2014
|
$
|
189
|
|
|
$
|
17
|
|
2015
|
175
|
|
|
17
|
|
||
2016
|
167
|
|
|
16
|
|
||
2017
|
160
|
|
|
16
|
|
||
2018
|
153
|
|
|
16
|
|
||
Thereafter
|
1,753
|
|
|
338
|
|
||
Total
|
$
|
2,597
|
|
|
420
|
|
|
Less amount representing interest
|
|
|
(224
|
)
|
|||
Net present value of minimum lease payments
|
|
|
196
|
|
|||
Less current installments
(1)
|
|
|
(4
|
)
|
|||
Long-term capital lease obligations less current installments
(2)
|
|
|
$
|
192
|
|
(1)
|
Included in other current liabilities.
|
(2)
|
Included in deferred income taxes and other liabilities.
|
|
Shares
Repurchased
(000’s)
|
|
Average
Price per
Share
|
|
Total Cost
|
|||||
2013
|
357
|
|
|
$
|
96.41
|
|
|
$
|
34
|
|
2012
|
7,272
|
|
|
84.75
|
|
|
617
|
|
||
2011
|
8,939
|
|
|
71.74
|
|
|
641
|
|
|
Number Of
Options
(in 000’s)
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term
(in years)
|
|
Aggregate
Intrinsic
Value
(1)
|
|||||
Outstanding at the end of 2012
|
3,161
|
|
|
$
|
40.90
|
|
|
|
|
|
||
Exercised
|
(1,435
|
)
|
|
36.22
|
|
|
|
|
|
|||
Special cash dividend
|
221
|
|
|
N/A
|
|
|
|
|
|
|||
Outstanding at the end of 2013
|
1,947
|
|
|
$
|
39.70
|
|
|
1.38
|
|
$
|
140
|
|
(1)
|
The difference between the exercise price and market value of common stock at the end of
2013
.
|
|
Options Outstanding and Exercisable
|
|||||||
Range of Prices
(1)
|
Number of
Options
(in 000’s)
|
|
Weighted-
Average
Remaining
Contractual
Life
|
|
Weighted-
Average
Exercise
Price
|
|||
$34.71–$40.69
|
1,775
|
|
|
1.36
|
|
$
|
39.39
|
|
$42.73–$43.17
|
172
|
|
|
1.59
|
|
42.93
|
|
|
|
1,947
|
|
|
1.38
|
|
$
|
39.70
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Actual tax benefit realized for stock options exercised
|
$
|
33
|
|
|
$
|
50
|
|
|
$
|
78
|
|
Intrinsic value of stock options exercised
(1)
|
$
|
94
|
|
|
$
|
137
|
|
|
$
|
227
|
|
•
|
9,355,000
time-based RSUs that vest upon continued employment over specified periods of time;
|
•
|
726,000
performance-based RSUs, of which
350,000
were granted to certain executive officers subject to the certification of the attainment of specified performance targets for
2013
, which occurred in September 2013. These RSUs 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 2012
|
9,260
|
|
|
$
|
66.14
|
|
Granted
|
4,192
|
|
|
90.99
|
|
|
Vested and delivered
|
(3,872
|
)
|
|
67.17
|
|
|
Forfeited
|
(231
|
)
|
|
71.19
|
|
|
Special cash dividend
|
732
|
|
|
N/A
|
|
|
Outstanding at the end of 2013
|
10,081
|
|
|
$
|
72.52
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Stock-based compensation expense before income taxes
|
$
|
285
|
|
|
$
|
241
|
|
|
$
|
207
|
|
Less recognized income tax benefit
|
(94
|
)
|
|
(79
|
)
|
|
(67
|
)
|
|||
Stock-based compensation expense, net of income taxes
|
$
|
191
|
|
|
$
|
162
|
|
|
$
|
140
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Domestic (including Puerto Rico)
|
$
|
2,070
|
|
|
$
|
1,809
|
|
|
$
|
1,526
|
|
Foreign
|
981
|
|
|
958
|
|
|
857
|
|
|||
Total
|
$
|
3,051
|
|
|
$
|
2,767
|
|
|
$
|
2,383
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Federal:
|
|
|
|
|
|
||||||
Current
|
$
|
572
|
|
|
$
|
591
|
|
|
$
|
409
|
|
Deferred
|
16
|
|
|
12
|
|
|
74
|
|
|||
Total federal
|
588
|
|
|
603
|
|
|
483
|
|
|||
State:
|
|
|
|
|
|
||||||
Current
|
109
|
|
|
100
|
|
|
78
|
|
|||
Deferred
|
4
|
|
|
2
|
|
|
14
|
|
|||
Total state
|
113
|
|
|
102
|
|
|
92
|
|
|||
Foreign:
|
|
|
|
|
|
||||||
Current
|
302
|
|
|
312
|
|
|
270
|
|
|||
Deferred
|
(13
|
)
|
|
(17
|
)
|
|
(4
|
)
|
|||
Total foreign
|
289
|
|
|
295
|
|
|
266
|
|
|||
Total provision for income taxes
|
$
|
990
|
|
|
$
|
1,000
|
|
|
$
|
841
|
|
|
2013
|
|
2012
|
|
2011
|
|||||||||||||||
Federal taxes at statutory rate
|
$
|
1,068
|
|
|
35.0
|
%
|
|
$
|
969
|
|
|
35.0
|
%
|
|
$
|
834
|
|
|
35.0
|
%
|
State taxes, net
|
66
|
|
|
2.1
|
|
|
59
|
|
|
2.1
|
|
|
55
|
|
|
2.4
|
|
|||
Foreign taxes, net
|
(87
|
)
|
|
(2.8
|
)
|
|
(61
|
)
|
|
(2.2
|
)
|
|
(66
|
)
|
|
(2.8
|
)
|
|||
Employee stock ownership plan (ESOP)
|
(65
|
)
|
|
(2.1
|
)
|
|
(7
|
)
|
|
(0.3
|
)
|
|
(6
|
)
|
|
(0.3
|
)
|
|||
Other
|
8
|
|
|
0.2
|
|
|
40
|
|
|
1.5
|
|
|
24
|
|
|
1.0
|
|
|||
Total
|
$
|
990
|
|
|
32.4
|
%
|
|
$
|
1,000
|
|
|
36.1
|
%
|
|
$
|
841
|
|
|
35.3
|
%
|
|
2013
|
|
2012
|
||||
Equity compensation
|
$
|
80
|
|
|
$
|
79
|
|
Deferred income/membership fees
|
130
|
|
|
148
|
|
||
Accrued liabilities and reserves
|
530
|
|
|
461
|
|
||
Other
|
42
|
|
|
55
|
|
||
Property and equipment
|
(558
|
)
|
|
(522
|
)
|
||
Merchandise inventories
|
(190
|
)
|
|
(182
|
)
|
||
Net deferred tax assets
|
$
|
34
|
|
|
$
|
39
|
|
|
2013
|
|
2012
|
||||
Gross unrecognized tax benefit at beginning of year
|
$
|
116
|
|
|
$
|
106
|
|
Gross increases—current year tax positions
|
10
|
|
|
15
|
|
||
Gross increases—tax positions in prior years
|
5
|
|
|
3
|
|
||
Gross decreases—tax positions in prior years
|
(13
|
)
|
|
(3
|
)
|
||
Settlements
|
(38
|
)
|
|
(3
|
)
|
||
Lapse of statute of limitations
|
0
|
|
|
(2
|
)
|
||
Gross unrecognized tax benefit at end of year
|
$
|
80
|
|
|
$
|
116
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Net income available to common stockholders after assumed conversions of dilutive securities
|
$
|
2,039
|
|
|
$
|
1,710
|
|
|
$
|
1,463
|
|
Weighted average number of common shares used in basic net income per common share
|
435,741
|
|
|
433,620
|
|
|
436,119
|
|
|||
RSUs and stock options
|
4,552
|
|
|
4,906
|
|
|
6,063
|
|
|||
Conversion of convertible notes
|
219
|
|
|
847
|
|
|
912
|
|
|||
Weighted average number of common shares and dilutive potential of common stock used in diluted net income per share
|
440,512
|
|
|
439,373
|
|
|
443,094
|
|
|
United States
Operations
|
|
Canadian
Operations
|
|
Other
International
Operations
|
|
Total
|
||||||||
2013
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
75,493
|
|
|
$
|
17,179
|
|
|
$
|
12,484
|
|
|
$
|
105,156
|
|
Operating income
|
1,810
|
|
|
756
|
|
|
487
|
|
|
3,053
|
|
||||
Depreciation and amortization
|
696
|
|
|
123
|
|
|
127
|
|
|
946
|
|
||||
Additions to property and equipment
|
1,090
|
|
|
186
|
|
|
807
|
|
|
2,083
|
|
||||
Net property and equipment
|
9,652
|
|
|
1,621
|
|
|
2,608
|
|
|
13,881
|
|
||||
Total assets
|
20,608
|
|
|
4,529
|
|
|
5,146
|
|
|
30,283
|
|
||||
2012
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
71,776
|
|
|
$
|
15,717
|
|
|
$
|
11,644
|
|
|
$
|
99,137
|
|
Operating income
|
1,632
|
|
|
668
|
|
|
459
|
|
|
2,759
|
|
||||
Depreciation and amortization
|
667
|
|
|
117
|
|
|
124
|
|
|
908
|
|
||||
Additions to property and equipment
|
1,012
|
|
|
170
|
|
|
298
|
|
|
1,480
|
|
||||
Net property and equipment
|
9,236
|
|
|
1,664
|
|
|
2,061
|
|
|
12,961
|
|
||||
Total assets
|
18,401
|
|
|
4,237
|
|
|
4,502
|
|
|
27,140
|
|
||||
2011
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
64,904
|
|
|
$
|
14,020
|
|
|
$
|
9,991
|
|
|
$
|
88,915
|
|
Operating income
|
1,395
|
|
|
621
|
|
|
423
|
|
|
2,439
|
|
||||
Depreciation and amortization
|
640
|
|
|
117
|
|
|
98
|
|
|
855
|
|
||||
Additions to property and equipment
|
876
|
|
|
144
|
|
|
270
|
|
|
1,290
|
|
||||
Net property and equipment
|
8,870
|
|
|
1,608
|
|
|
1,954
|
|
|
12,432
|
|
||||
Total assets
|
18,558
|
|
|
3,741
|
|
|
4,462
|
|
|
26,761
|
|
|
52 Weeks Ended September 1, 2013
|
||||||||||||||||||
|
First
Quarter
(12 Weeks)
|
|
Second
Quarter
(12 Weeks)
|
|
Third
Quarter
(12 Weeks)
|
|
Fourth
Quarter
(16 Weeks)
|
|
Total
(52 Weeks)
|
||||||||||
REVENUE
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
23,204
|
|
|
$
|
24,343
|
|
|
$
|
23,552
|
|
|
$
|
31,771
|
|
|
$
|
102,870
|
|
Membership fees
|
511
|
|
|
528
|
|
|
531
|
|
|
716
|
|
|
2,286
|
|
|||||
Total revenue
|
23,715
|
|
|
24,871
|
|
|
24,083
|
|
|
32,487
|
|
|
105,156
|
|
|||||
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
||||||||||
Merchandise costs
|
20,726
|
|
|
21,766
|
|
|
21,038
|
|
|
28,418
|
|
|
91,948
|
|
|||||
Selling, general and administrative
|
2,332
|
|
|
2,361
|
|
|
2,313
|
|
|
3,098
|
|
|
10,104
|
|
|||||
Preopening expenses
|
18
|
|
|
6
|
|
|
10
|
|
|
17
|
|
|
51
|
|
|||||
Operating income
|
639
|
|
|
738
|
|
|
722
|
|
|
954
|
|
|
3,053
|
|
|||||
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
(13
|
)
|
|
(25
|
)
|
|
(25
|
)
|
|
(36
|
)
|
|
(99
|
)
|
|||||
Interest income and other, net
|
20
|
|
|
26
|
|
|
15
|
|
|
36
|
|
|
97
|
|
|||||
INCOME BEFORE INCOME TAXES
|
646
|
|
|
739
|
|
|
712
|
|
|
954
|
|
|
3,051
|
|
|||||
Provision for income taxes
|
225
|
|
|
185
|
|
(1)
|
248
|
|
|
332
|
|
|
990
|
|
|||||
Net income including noncontrolling interests
|
421
|
|
|
554
|
|
|
464
|
|
|
622
|
|
|
2,061
|
|
|||||
Net income attributable to noncontrolling interests
|
(5
|
)
|
|
(7
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|
(22
|
)
|
|||||
NET INCOME ATTRIBUTABLE TO COSTCO
|
$
|
416
|
|
|
$
|
547
|
|
|
$
|
459
|
|
|
$
|
617
|
|
|
$
|
2,039
|
|
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.96
|
|
|
$
|
1.26
|
|
|
$
|
1.05
|
|
|
$
|
1.41
|
|
|
$
|
4.68
|
|
Diluted
|
$
|
0.95
|
|
|
$
|
1.24
|
|
|
$
|
1.04
|
|
|
$
|
1.40
|
|
|
$
|
4.63
|
|
Shares used in calculation (000’s)
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
433,423
|
|
|
435,975
|
|
|
436,488
|
|
|
436,752
|
|
|
435,741
|
|
|||||
Diluted
|
438,643
|
|
|
439,812
|
|
|
440,780
|
|
|
441,907
|
|
|
440,512
|
|
|||||
CASH DIVIDENDS DECLARED PER COMMON SHARE
|
$
|
0.275
|
|
|
$
|
7.275
|
|
(2)
|
$
|
0.31
|
|
|
$
|
0.31
|
|
|
$
|
8.17
|
|
(1)
|
Includes a
$62
tax benefit recorded in the second quarter in connection with the special cash dividend paid to employees through the Company's 401(k) Retirement Plan.
|
(2)
|
Includes the special cash dividend of
$7.00
per share paid in December 2012.
|
|
53 Weeks Ended September 2, 2012
|
|||||||||||||||||||
|
First
Quarter
(12 Weeks)
|
|
Second
Quarter
(12 Weeks)
|
|
Third
Quarter
(12 Weeks)
|
|
Fourth
Quarter
(17 Weeks)
|
|
Total
(53 Weeks) |
|||||||||||
REVENUE
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net sales
|
$
|
21,181
|
|
|
$
|
22,508
|
|
|
$
|
21,849
|
|
|
$
|
31,524
|
|
|
$
|
97,062
|
|
|
Membership fees
|
447
|
|
|
459
|
|
|
475
|
|
|
694
|
|
|
2,075
|
|
||||||
Total revenue
|
21,628
|
|
|
22,967
|
|
|
22,324
|
|
|
32,218
|
|
|
99,137
|
|
||||||
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|||||||||||
Merchandise costs
|
18,931
|
|
|
20,139
|
|
|
19,543
|
|
|
28,210
|
|
|
86,823
|
|
||||||
Selling, general and administrative
|
2,144
|
|
(1)
|
2,178
|
|
|
2,152
|
|
|
3,044
|
|
|
9,518
|
|
||||||
Preopening expenses
|
10
|
|
|
6
|
|
|
6
|
|
|
15
|
|
|
37
|
|
||||||
Operating income
|
543
|
|
|
644
|
|
|
623
|
|
|
949
|
|
|
2,759
|
|
||||||
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest expense
|
(27
|
)
|
|
(27
|
)
|
|
(19
|
)
|
|
(22
|
)
|
|
(95
|
)
|
||||||
Interest income and other, net
|
37
|
|
|
10
|
|
|
18
|
|
|
38
|
|
|
103
|
|
||||||
INCOME BEFORE INCOME TAXES
|
553
|
|
|
627
|
|
|
622
|
|
|
965
|
|
|
2,767
|
|
||||||
Provision for income taxes
|
225
|
|
(2)
|
215
|
|
|
217
|
|
|
343
|
|
|
1,000
|
|
||||||
Net income including noncontrolling interests
|
328
|
|
|
412
|
|
|
405
|
|
|
622
|
|
|
1,767
|
|
||||||
Net income attributable to noncontrolling interests
|
(8
|
)
|
|
(18
|
)
|
|
(19
|
)
|
|
(13
|
)
|
|
(58
|
)
|
||||||
NET INCOME ATTRIBUTABLE TO COSTCO
|
$
|
320
|
|
|
$
|
394
|
|
|
$
|
386
|
|
|
$
|
609
|
|
|
$
|
1,709
|
|
|
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic
|
$
|
0.74
|
|
|
$
|
0.91
|
|
|
$
|
0.89
|
|
|
$
|
1.41
|
|
|
$
|
3.94
|
|
|
Diluted
|
$
|
0.73
|
|
|
$
|
0.90
|
|
|
$
|
0.88
|
|
|
$
|
1.39
|
|
|
$
|
3.89
|
|
|
Shares used in calculation (000’s)
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic
|
434,222
|
|
|
434,535
|
|
|
433,791
|
|
|
432,437
|
|
|
433,620
|
|
||||||
Diluted
|
440,615
|
|
|
439,468
|
|
|
439,166
|
|
|
438,344
|
|
|
439,373
|
|
||||||
CASH DIVIDENDS DECLARED PER COMMON SHARE
|
$
|
0.24
|
|
|
$
|
0.24
|
|
|
$
|
0.00
|
|
(3)
|
$
|
0.55
|
|
(4
|
)
|
$
|
1.03
|
|
(1)
|
Includes a $
17
charge to selling, general and administrative for contributions to an initiative reforming alcohol beverage laws in Washington State.
|
(2)
|
Includes a $
24
charge relating to the settlement of an income tax audit in Mexico.
|
(3)
|
On
May 9, 2012
, subsequent to
the end of the third quarter of 2012
, the Board of Directors declared a quarterly cash dividend of $
0.275
per share.
|
(4)
|
The quarterly dividend rate was $
0.275
per share.
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
Herewith
|
|
Form
|
|
Period Ending
|
|
Filing Date
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
Articles of Incorporation of the registrant
|
|
|
|
8-K
|
|
|
|
8/30/1999
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
Bylaws of the registrant
|
|
|
|
8-K
|
|
|
|
8/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
Form of Senior Debt Securities Indenture between Costco Wholesale Corporation and U.S. Bank National Association, as Trustee, dated as of October 26, 2001.
|
|
|
|
S-3
|
|
|
|
10/23/2001
|
|
|
|
|
|
|
|
|
|
|
|
4.2
|
|
First Supplemental Indenture between Costco Wholesale Corporation and U.S. Bank National Association, as Trustee, dated as of March 20, 2002
|
|
|
|
8-K
|
|
|
|
3/25/2002
|
|
|
|
|
|
|
|
|
|
|
|
4.3
|
|
Form of 5.500% Senior Notes due March 15, 2017
|
|
|
|
8-K
|
|
|
|
2/20/2007
|
|
|
|
|
|
|
|
|
|
|
|
4.4
|
|
Form of 0.650% Senior Notes due December 7, 2015
|
|
|
|
8-K
|
|
|
|
12/3/2012
|
|
|
|
|
|
|
|
|
|
|
|
4.5
|
|
Form of 1.125% Senior Notes due December 15, 2017
|
|
|
|
8-K
|
|
|
|
12/3/2012
|
|
|
|
|
|
|
|
|
|
|
|
4.6
|
|
Form of 1.700% Senior Notes due December 15, 2019
|
|
|
|
8-K
|
|
|
|
12/3/2012
|
|
|
|
|
|
|
|
|
|
|
|
10.1*
|
|
Costco Wholesale Executive Health Plan
|
|
|
|
10-K
|
|
9/2/2012
|
|
10/19/2012
|
|
|
|
|
|
|
|
|
|
|
|
10.1.5*
|
|
Amendments to Stock Option Plan, 2002
|
|
|
|
S-8
|
|
|
|
2/14/2002
|
|
|
|
|
|
|
|
|
|
|
|
10.1.6*
|
|
Costco Wholesale Corporation 2002 Stock Incentive Plan
|
|
|
|
S-8
|
|
|
|
2/14/2002
|
|
|
|
|
|
|
|
|
|
|
|
10.1.7*
|
|
Amended and Restated 2002 Stock Incentive Plan of Costco Wholesale Corporation
|
|
|
|
S-8
|
|
|
|
10/21/2005
|
|
|
|
|
|
|
|
|
|
|
|
10.1.8*
|
|
Second Restated 2002 Stock Incentive Plan Restricted Stock Unit Award Agreement-Employee
|
|
|
|
10-Q
|
|
5/7/2006
|
|
6/16/2006
|
|
|
|
|
|
|
|
|
|
|
|
10.1.9*
|
|
Second Restated 2002 Stock Incentive Plan Restricted Stock Unit Award Agreement-Non-Executive Director
|
|
|
|
10-Q
|
|
5/7/2006
|
|
6/16/2006
|
|
|
|
|
|
|
|
|
|
|
|
10.1.10*
|
|
Amendment to Second Restated 2002 Stock Incentive Plan
|
|
|
|
10-Q
|
|
2/18/2007
|
|
3/30/2007
|
|
|
|
|
|
|
|
|
|
|
|
10.1.11*
|
|
Amendment to Second Restated 2002 Stock Incentive Plan
|
|
|
|
8-K
|
|
|
|
1/31/2008
|
|
|
|
|
|
|
|
|
|
|
|
10.1.12*
|
|
Fourth Restated 2002 Stock Incentive Plan
|
|
|
|
10-K
|
|
8/31/2008
|
|
10/16/2008
|
|
|
|
|
|
|
|
|
|
|
|
10.1.13*
|
|
Fifth Restated 2002 Stock Incentive Plan
|
|
|
|
10-Q
|
|
2/14/2010
|
|
3/17/2010
|
|
|
|
|
|
|
|
|
|
|
|
10.1.14*
|
|
Sixth Restated 2002 Stock Incentive Plan
|
|
|
|
8-K
|
|
|
|
1/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
10.2*
|
|
Form of Indemnification Agreement
|
|
|
|
14A
|
|
|
|
12/13/1999
|
|
|
|
|
|
|
|
|
|
|
|
10.4
|
|
Stock Purchase Agreement, dated June 13, 2012, among Costco Venture Mexico, Controladora Comercial Mexicana, S.A.B. de C.V. and other parties named therein
|
|
|
|
10-K
|
|
9/2/2012
|
|
10/19/2012
|
|
|
|
|
|
|
|
|
|
|
|
10.5*
|
|
Deferred Compensation Plan
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
||||
Exhibit
Number
|
|
Exhibit Description
|
|
Filed
Herewith
|
|
Form
|
|
Period Ending
|
|
Filing Date
|
10.6.2*
|
|
Fiscal 2013 Executive Bonus Plan
|
|
|
|
8-K
|
|
|
|
11/1/2012
|
|
|
|
|
|
|
|
|
|
|
|
10.6.3*
|
|
Executive Employment Agreement between Craig Jelinek and Costco Wholesale Corporation
|
|
|
|
10-Q
|
|
11/25/2012
|
|
12/21/2012
|
|
|
|
|
|
|
|
|
|
|
|
21.1
|
|
Subsidiaries of the Company
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.1
|
|
Consent of Independent Registered Public Accounting Firm
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Rule 13(a) – 14(a) Certifications
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
Section 1350 Certifications
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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x
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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x
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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x
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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2.1
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"
Account
" - The separate bookkeeping account established for each Participant on the books of the Company for purposes of recording amounts credited with respect to each Plan Year's deferral under the Plan and any associated Company matching credits, if applicable, under Article 5 and interest credits under Article 7. "Accounts" shall refer to the aggregate accounts of each Participant. Effective September 4, 2001, all bookkeeping accounts established under the
Costco Deferred Compensation Plan for Employees of The Price Company
shall be transferred to become Accounts in this Plan, each participant with an account in that plan shall become a Participant in this Plan, and that plan shall be terminated.
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2.2
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“
Affiliate
” - Any entity with which the Company would be considered a single employer under Section 414(b) or Section 414(c) of the Code, except that, for purposes of determining whether there is a controlled group or common control, the language “at least 50 percent” is used instead of “at least 80 percent.”
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2.3
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“
Board
” - The Board of Directors of Costco.
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2.4
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"
Bonus
" - A bonus awarded during the Plan Year under the Costco Executive Bonus Plan or such other bonus or variable compensation arrangement as the Company may from time to time adopt and/or designate as an eligible source of compensation that may be deferred under the Plan. Bonus shall be calculated before reduction for compensation voluntarily deferred or contributed by the Participant pursuant to all qualified or nonqualified plans of the Company and shall be calculated to include amounts not otherwise included in Participant’s gross income under Code Section 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by the Company; provided, however, that all such amounts will be included in compensation only to the extent that had there been no such plan, the amount would have been payable in cash to the Participant.
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2.5
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“
Change of Control
” - A change in the ownership of the Company, a change in the effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company, as defined for purposes of Code section 409A(a)(2)(A)(v).
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2.6
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"
Committee
" - The "Benefits Committee" appointed by Costco to administer the employee benefit programs offered to employees and Directors of Costco and its subsidiaries. If there is no acting committee, the Plan shall be administered by Costco acting through its Chief Financial Officer.
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2.7
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"
Code
” - The Internal Revenue Code of 1986, as amended.
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2.8
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"
Company
" - Costco Wholesale Corporation and any Affiliate thereof.
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2.9
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“
Director
” - A non-employee member of the Board.
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2.10
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“
Director Fees
” - The annual fees earned during the Plan Year by a Director from Costco, including retainer fees and meeting fees, as compensation for serving on the Board.
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2.11
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"
Participant
" - An eligible employee or Director who has elected to defer payment of any portion of, in the case of employees, Salary or Bonus, and in the case of Directors, Director Fees, under the Plan.
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2.12
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"
Plan
" - The
Costco Deferred Compensation Plan
reflected in this document.
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2.13
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“
Plan Year
” - A period commencing on January 1 of each calendar year and continuing through December 31 of such calendar year.
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2.14
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"
Prior Deferred Compensation
" - Amounts that were previously deferred but that are due to be paid out during the year in question.
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2.15
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"
Salary
" - The basic compensation of a Participant paid by the Company during the Plan Year in question before payroll deductions, but excluding bonuses, fringe benefits, and disability pay. Salary does not include amounts earned by a Participant after being permanently transferred to a foreign Affiliate and taken off the U.S. payroll. Salary shall be calculated before reduction for compensation voluntarily deferred or contributed by the Participant pursuant to all qualified or nonqualified plans of the Company and shall be calculated to include amounts not otherwise included in Participant’s gross income under Code Section 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by the Company; provided, however, that all such amounts will be included in compensation only to the extent that had there been no such plan, the amount would have been payable in cash to the Participant.
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2.16
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“
Separation from Service
” - A “separation from service,” as defined in Treas. Reg. section 1.409A-1(h), with the Company. However, with respect to a Participant who provides services to the Company as an employee, a Separation from Service will occur at the date reasonably anticipated by the Committee that the Participant’s level of service will permanently decrease to 21% or less of the average level of service provided by the Participant over the immediately preceding 36 month period (or, if providing services for less than 36 months, such lesser period). For a Participant who provides services to the Company as a Director, a Separation from Service will occur upon the expiration of the Director’s term, provided that the expiration of the term is determined by the Committee to constitute a good-faith and complete termination of the service relationship between the Participant and the Company. For a Participant who provides services to the Company as both an employee and a Director, to the extent permitted by Treas. Reg. section 1.409A-1(h)(5), the services provided by such Participant as a Director shall not be taken into account in determining whether the Participant has experienced a Separation from Service as an employee, and the services provided by such Participant as an employee shall not be taken into account in determining whether the Participant has experienced a Separation from Service as a Director.
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4.1
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Initial Deferral Election
. Prior to December 15 of the calendar year immediately preceding the applicable Plan Year, or such earlier date set by the Committee as necessary to comply with Code section 409A, a Participant may elect to defer a specified amount or stated whole percentage (such method of determining deferrable amount to be determined by the Committee) of the Participant's expected compensation in the Plan Year.
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4.2
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Source of Deferrals
. Subject to Section 4.4, a Participant may elect, under the terms and conditions of the Plan, to defer all or a portion of his or her, in the case of employees, Salary and/or Bonus, and in the case of Directors, Director Fees. Such election shall be made by written or electronic notice in the manner specified by the Company and shall be irrevocable on December 15 or such earlier date set by the Committee under Section 4.1 as the last day for making the election.
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4.3
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Crediting of Deferrals
. A Participant's Account shall be credited with the appropriate deferral at the time the Salary and/or Bonus or Director Fees, as applicable, would have been paid to the Participant if a deferral election had not been made, or in any other manner determined by the Company; provided that such deferrals during the applicable Plan Year, in the aggregate, shall reflect the Participant’s elections in accordance with Code
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4.4
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Deductions
. The Company shall deduct from any deferred amount any necessary payroll withholding and all other amounts it may be required to withhold from the deferral amount by law, to the extent allowed under Code section 409A, and the amount credited to a Participant’s Account shall be reduced by any such deductions. In addition, for Participants who are employees, the Company shall first deduct from a Participant's Salary or Bonus any other allowed voluntary deductions the Participant may have elected (excluding deferrals under the Company’s 401(k) retirement plan), such as deductions for health care or other benefits, and any other amounts required to be deducted by law, such as amounts that must be paid according to a legally established lien, levy, or court order. The maximum amount that can be elected to be deferred shall be the remaining amount of Salary or Bonus after all such deductions (excluding deferrals under the Company’s 401(k) retirement plan) from Salary or Bonus under this Section 4.4.
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5.1
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Matching Amount
. For each Participant who is an employee, the Company will match a portion of each Participant's annual deferral of Salary and Bonus by crediting to his or her Account an amount equal to 50% of the Salary and Bonus deferred by the Participant, up to a maximum credit by the Company of $5,000 per Plan Year. Such amounts will be credited on or about January 1 following the Plan Year of such annual deferral only to Participants who are still employed by the Company on January 1 following the year of deferral. No matching credit shall be given for re-deferrals of Prior Deferred Compensation.
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5.2
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Vesting
. The Company matching contributions credited under this Article shall vest on a "class year" basis, as follows:
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a.
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20% immediately on the January 1 that the Company match is credited to a Participant's Account; and
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b.
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An additional 20% each following January 1, subject to the employment requirement described below, until the matching credit is 100% vested.
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a.
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The Participant becomes totally disabled (as determined in accordance with Section 6.5) while employed by the Company;
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b.
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The Participant dies while employed by the Company;
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c.
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The Participant earns 65 "Vesting Points" while employed by the Company. A Participant shall be credited with one Vesting Point for each year of service as an employee with the Company and one Vesting Point for each year of age not to exceed 60 years of age. If a Participant experiences a Separation from Service after having reached 65 Vesting Points and is subsequently rehired, he will continue to be treated as having earned 65 Vesting Points on rehire. If a Participant experiences a Separation from Service without earning 65 Vesting Points, and is subsequently rehired, years of service with the Company will include only those years of service beginning after the Participant is rehired.
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5.3
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Forfeiture of Credits for Cause
. Notwithstanding the foregoing, the Company retains the right to void the Company matching credit posted under Section 5.1, together with interest posted on all of a Participant's Accounts, if a Participant is terminated for cause.
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6.1
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Option
. At the time of each deferral election, a Participant shall make an irrevocable election to receive payment of his or her Account (along with any vested portion of the Company's matching credit, if applicable, for that Account and the earnings credited to that Account) in one of the forms set forth in Section 6.1(a) and commencing on one of the times or events set forth in Sections 6.1(b):
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a.
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Form of Payment
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i.
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Payment of the Account in a single lump sum payment; or
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ii.
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Payment of the Account in a specified number of approximately equal annual installments (with a maximum of ten installments), with the first installment occurring at the time set forth in the election under Section 6.1(b) (or, where no election is made, pursuant to Section 6.1(d)).
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b.
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Time of Payment
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i.
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In the first calendar quarter of a specified calendar year five or more years after the Plan Year during which such compensation would have been paid, were it not deferred; or
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ii.
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The date of your Separation from Service, subject to any delay required under Section 6.4.
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c.
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In addition to the payment times or events set forth in Section 6.1(b), a Participant may elect to receive payment of his or her Account in a lump sum payment upon a Change of Control that occurs prior to one of the times or events set forth in Section 6.1(b). An election to receive distribution pursuant to this Section 6.1 (c) may not be changed pursuant to Section 6.2 or otherwise and an initial deferral election that did not include a distribution pursuant to this Section 6.1(c) may not be changed pursuant to Section 6.2 or otherwise to add a distribution pursuant to this Section 6.1(c).
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d.
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If a Participant fails to specify one of the payment options described above, such Participant shall be deemed to have specified the single lump sum payment option payable five years after the calendar year during which the compensation would have been paid, were it not deferred (and, for the avoidance of any doubt, the Account shall not be paid upon a Change of Control pursuant to Section 6.1(c) that occurs prior to the time contemplated under this Section 6.1(d)). If a Participant elects installment payments, the amount of any given installment shall be determined by dividing the then-current value of the Account by the remaining number of unpaid installments.
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6.2
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Change in Time or Form of Distribution
. A Participant may change the time or form of distribution of all or a portion of Prior Deferred Compensation except for Prior Deferred Compensation that was elected to be distributed upon Separation from Service pursuant to Section 6.1(b)(ii) or upon a Change of Control pursuant to Section 6.1(c) A Participant’s election to change the time or form of distribution of Prior Deferred Compensation pursuant to the foregoing sentence shall be made by such date set by the Committee and shall be irrevocable as of the last date set for making such election. Such election shall not take effect until at least 12 months after the date of the election, must be made no less than 12 months prior to the date of the otherwise scheduled first payment of the Prior Deferred Compensation, and must defer payment not less than 5 years from the date payment would otherwise be made or, in the case of installments, would begin to be made. For the avoidance of any doubt, in the event of an election that is subsequently changed pursuant to this Section 6.2 to provide for a distribution upon a Separation from Service, any distribution that is made pursuant to the new distribution election shall not be made prior to the fifth anniversary of the date that the payment would otherwise have been made pursuant to the distribution election that was previously in effect, notwithstanding the occurrence of a Separation from Service before the fifth anniversary.
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6.3
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Termination Before Age 65 Without 65 Vesting Points
. Except as provided in Section 6.4, upon a Participant’s Separation from Service prior to reaching age 65, in the case of deferrals made before 1997, or before earning 65 "Vesting Points" while employed by the Company, in the case of deferrals made on or after January 1, 1997, the Participant's Accounts, to the extent vested, shall be paid to him or her in a lump sum within 90 days after the Participant’s Separation from Service. If a Participant who has experienced a Separation from Service is rehired, the distribution of the Participant’s account balance on the Participant’s Separation from Service will be made notwithstanding the Participant’s being rehired. For purposes of distribution of account balances contributed after rehire, if a Participant is rehired after having reached age 65 ”Vesting Points” at the time of the original Separation from Service, he will continue to be treated as having earned 65 Vesting Points on rehire. If a Participant is rehired after a Separation from Service without earning 65 Vesting Points, years of service with the Company will include only those years of service beginning after the Participant is rehired. The Company retains the right to void the Company matching credit, as well as interest posted on all of a Participant’s Accounts, if the Participant is terminated for cause.
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6.4
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6-Month Delay Applicable to Specified Employees
. Notwithstanding anything in this Plan to the contrary, in the case of a Participant who is determined to be a specified employee under Code Section 409A(a)(2)(B)(i) at the time of the Participant’s Separation from Service, no payment that is scheduled to be made upon a Participant’s Separation from Service shall be made before the date that is six months after the Participant’s Separation from Service, or upon the Participant’s death, if earlier. A payment otherwise due during the six months after the Participant’ Separation from Service shall be paid on the first day following the earlier of (i) the expiration of the sixth month following the date of the Participant’s Separation from Service (ii) the Participant’s death.
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6.5
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Death
. Upon the death of a Participant, his or her Accounts, to the extent vested, shall be paid in a lump sum to his or her designated beneficiary within 90 days after the Participant’s death. If the Participant had designated a spouse as beneficiary but is divorced from that spouse at the time of death, then the designation of the former spouse shall be ineffective, unless the Participant re-designated the former spouse as beneficiary after the date of the divorce. Any designation of secondary or other beneficiaries shall not be affected by the disqualification of a former spouse, except that the former spouse shall be deemed to have died before the Participant. If a Participant has not made an effective beneficiary designation under this Plan, or if all designated beneficiaries predecease the Participant, the designated beneficiary shall be the beneficiary designated by the Participant to receive life insurance benefits under The Costco Wholesale Corporation Flexible Benefits Plan, unless that beneficiary is a former spouse designated as beneficiary before the date of the divorce, in which case the former spouse shall be treated as if he or she had died before the Participant. If no effective beneficiary has been designated by the Participant under the Costco Wholesale Corporation Flexible Benefits Plan, or if all designated beneficiaries predecease the Participant, the death benefit shall be paid to the Participant's estate. (If a Participant dies while employed by the Company, the Participant's matching credits, if applicable, shall become 100% vested.)
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6.6
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Disability
. Upon the total disability of a Participant while employed by the Company, the Participant’s matching credits, if applicable, shall become 100% vested and the vested portion of the Participant's Accounts shall be paid to him or her in a lump sum within 90 days after such total disability. A Participant is totally disabled under this Plan only when found to be totally disabled by the Social Security Administration, and if such Participant presents proof of eligibility for Social Security disability income benefits to the Committee or its designee.
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6.7
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Distribution of Small Account Balances
. If at any time after a Participant’s Separation from Service or a distribution event specified above, the amount of the Participant’s Account is less than the annual limit under Code section 402(g)(1)(B) as in effect at the time of the distribution (in 2013, this limit is $17,500) and as determined in accordance with Treas. Reg. section 1.409A-3(j)(4)(v), the Committee may, in its sole discretion, elect to distribute the Participant’s Account in a lump sum.
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6.8
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Deductions
. The Company may deduct from any distribution under this Plan any necessary payroll withholding, any other amounts required to be deducted by law, and any amounts owed by the Participant to the Company to the extent consistent with Code section 409A.
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7.1
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Interest on Accounts
. As of the end of each month, the Company shall credit to each Participant's Accounts interest on all deferral and matching amounts, if applicable, credited by such time based on the interest rate as determined by Section 7.2 or Section 7.3, whichever is appropriate.
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7.2
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Normal Interest Rate
. Interest shall be credited at the monthly equivalent of the annual rate published as the local Bank of America Prime Rate in effect at the date interest is posted.
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7.3
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Bonus Interest Rate
. For each Participant who is an Employee, if the Participant dies while employed by the Company, or if the Participant meets either of the service requirements described below, interest shall be credited thereafter at the monthly equivalent of the annual rate published as the local Bank of America Prime Rate plus one percent, and for all the Participant's Accounts then in the Plan, interest shall be recalculated retroactively to add one percent to the interest rate in effect at the time the interest was posted for all years of deferral. In all situations, the method of calculation shall be determined pursuant to rules of administration established by the Committee. For purposes of this section, a Participant who is an Employee qualifies for the bonus interest rate in the following events:
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a.
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The Participant dies while employed by the Company;
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b.
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With respect to deferrals made before 1997, the Participant reaches the age of at least 65 while the Participant is employed by the Company; or
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c.
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With respect to deferrals made on or after January 1, 1997, the Participant earns 65 "Vesting Points" while employed by the Company. A Participant shall be credited with one Vesting Point for each year of service with the Company and one Vesting Point for each year of age not to exceed 60 years of age. If a Participant is rehired after having earned 65 Vesting Points at the time of the original Separation from Service, he will continue to be treated as having earned 65 Vesting Points on rehire. If a Participant is rehired after a Separation from Service without earning 65 Vesting Points, years of service with the Company will include only those years of service beginning after the Participant is rehired.
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7.4
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Forfeiture of Interest for Cause
. Notwithstanding the foregoing, the Company retains the right to void all interest posted on all of a Participant's Accounts if a Participant is terminated for cause.
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8.1
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No Right to Employment
. Nothing contained in the Plan shall:
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a.
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Confer upon any Participant any right with respect to continuation of employment with the Company;
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b.
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Interfere in any way with the right of the Company to terminate a Participant's employment at any time;
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c.
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Confer upon any Participant or other person any claim or right to any distribution under the Plan, except in accordance with its terms; or
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d.
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Guarantee continued eligibility for participation in the Plan.
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8.2
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Unfunded Plan
. This Plan shall be unfunded, as that term is defined for tax purposes under the Internal Revenue Code and for purposes of Title 1 of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan constitutes a mere promise by the Company to make benefit payments in the future, and any compensation deferred under this Plan, the Company matching credits, if applicable, and the interest credited to a Participant's Accounts shall continue to be a part of the general assets of the Company. To the extent that a Participant, former Participant, or beneficiary acquires a right to receive payments from the Plan, such right may be no greater than the right of any unsecured general creditor of the Company.
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8.3
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Assignment Prohibited
. Except as expressly provided herein, no right or interest of any Participant or beneficiary in any Account in the Plan shall, prior to actual payment or distribution to such Participant or beneficiary, be assignable or transferable in whole or in part, either voluntarily or by operation of law or otherwise, including by domestic relations order, or be subject to payment of debts of any Participant or beneficiary by execution, levy,
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9.1
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Early Payment of Deferred Amounts
. Unless otherwise permitted in the Plan, or allowed by the Committee consistent with Treas. Reg. section 1.409A-3(j)(4), a Participant shall not be entitled to payment of any portion of his or her Accounts before payments are otherwise due under the normal terms of the Plan. However, in cases of extreme financial hardship, the Committee may authorize (on a nondiscriminatory basis and taking into account other resources of the Participant) a hardship payment of the portion of a Participant’s deferral Account (excluding any interest credited to date and any matching credits) in the minimum amount that is required to meet the need created by the extreme financial hardship (including amounts necessary to pay taxes reasonably anticipated to result from the hardship payment).
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a.
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Reimbursement or compensation by insurance or otherwise;
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b.
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Reasonable liquidation of the Participant’s assets (or the assets of the spouse or minor children of the Participant) to the extent such liquidation will not itself cause severe financial hardship;
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c.
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Suspending all of the Participant’s contributions to any employee benefit plan (and the spouse’s contributions to any plan), including this Plan, to the extent such contributions may or are required to be suspended; or
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d.
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Applying for distributions or loans from any other plans in which the Participant or the Participant’s spouse participate.
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9.2
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Suspension of Participation
. A Participant who receives a hardship payment from this Plan shall be suspended from further participation in this Plan for the remainder of the calendar year in which the payment was made. Moreover, a Participant who receives a hardship distribution from the Costco 401(k) Retirement Plan (or from any other qualified 401(k) plan maintained by the Company) shall be suspended from further participation in this Plan for a period of 12 consecutive months, which period shall be reduced to 6 months effective January 1, 2002. Deferrals already elected under this Plan shall not be made during any suspension period, and an election for deferrals for a subsequent year shall not be effective until the suspension period has expired.
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10.1
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Plan Amendment or Termination
. The Company or the Committee may, from time to time, amend or suspend any or all of the provisions of the Plan, prospectively or retroactively as it shall see fit. The Company or the Committee may also terminate the Plan at any time. If the Plan is terminated, the value of each Participant's Accounts as of the date of termination shall be fully vested and distributed to such Participant in a lump sum as soon as administratively feasible, as long as such a distribution shall not result in non-compliance with Code section 409A, including the required six-month delay in payments for specified employees, if applicable. The Plan shall not be amended retroactively in any way that would reduce the accrued vested balance of a Participant's Accounts as of the date of the amendment.
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10.2
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Plan Administration
. The administration of the Plan shall be vested in the Committee. The Committee shall, subject to the express provisions of the Plan, have power to construe the Plan, interpret the meaning of its terms, prescribe rules and regulations relating to the Plan, and make all determinations necessary or advisable for the administration and interpretation of the Plan. The Committee may correct any defect, supply any omission, or reconcile any inconsistency in the Plan document in the manner and to the extent deemed expedient to effect the intent of the Company and the purpose of the Plan. The Committee may delegate all or any part of its power under this Section 10.2 to a single member of the Committee.
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10.3
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Expenses
. All expenses and costs incurred in connection with the administration and operation of the Plan shall be borne by the Company.
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10.4
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Change of Control
. If the threat of a Change of Control is accompanied by the filing of Form 13-D with the Securities and Exchange Commission, the Committee shall meet and discuss what, if any, actions regarding this Plan should be taken. In that event, the Committee may elect to terminate the Plan within 30 days before or 12 months following the Change of Control; to secure benefits under the Plan by the establishment of a "Rabbi Trust" in the form set out in Revenue Procedure 92-64 (or any successor ruling or regulation that established an IRS model rabbi trust) or in such other form as may be acceptable to the Committee; to accelerate vesting credits under the Plan; to grant all Participants the higher rate of interest described in Section 7.3; or take any other actions that the Committee deems advisable in order to protect the interests of Participants in the Plan. For the avoidance of any doubt, any action contemplated under this Section 10.4 shall not affect a Participant’s election to receive distribution of his Account upon a Change of Control pursuant to Section 6.1(c). Furthermore, upon and after a Change of Control, the Plan may not be amended or terminated without the consent of the Committee, as the Committee was constituted before the Change of Control occurred.
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11.1
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Interpretation
. Any Participant (or the beneficiary of a deceased Participant) desiring a benefit under, interpretation of, ruling under, or information regarding this Plan shall submit a written request regarding the same to the Committee. The Committee shall respond in writing to any such request as soon as practicable. Any such ruling or interpretation by the Committee shall be final and binding on all parties, subject to the following appeal procedures.
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11.2
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Denial of Claim
. If a claim for benefits under this Plan is denied in whole or in part, the Committee shall notify the claimant in writing of such denial and of his or her right to a conference with an individual designated in the notice for the purpose of explaining the denial. The denial notice will be provided within 90 days after a claim is received by the Committee. If special circumstances require an extension of time for processing a claim beyond the initial 90-day period, written notice of the extension will be furnished before the end of the initial 90-day period. An extension of time will not exceed a period of 90 days from the end of the initial 90-day period. An extension notice will explain the reasons for the extension and the expected date of a decision.
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11.3
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Contents of Written Notice of Benefit Denial
. If a claim for benefits under this Plan is denied, the written notice will include the following:
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•
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the specific reason or reasons for the denial;
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•
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references to the specific Plan provisions on which the denial is based;
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•
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a description of any additional material or information necessary in order to perfect the claim, and an explanation of why such material or information is needed;
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•
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an explanation of the Plan’s review procedure for denied claims, including the applicable time limits for submitting a claim for review; and
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•
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a statement of the right to bring a civil action under Section 502(a) of ERISA, if a claim is denied on appeal.
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11.4
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Appeal Procedure
. If the claimant does not want a conference, or is dissatisfied with its outcome, the claimant may appeal a denial of a claim for benefits. The claimant (or a duly authorized representative) must file a written
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11.5
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Timing and Effect of Appeal Decision
. A decision on an appeal will be made by the Committee not later than 60 days after an appeal is received, unless special circumstances require an extension of time for processing, in which case a decision will be rendered not later than 120 days after an appeal is received. Written notice of any extension of time will be sent before the end of the initial 60-day period explaining the reason for the extension and the expected date of the appeal determination. If an extension is required because the claimant has not provided the information necessary to decide the claim, the time period for processing the claim will not run from the date of notice of an extension until the earlier of 1) the date the Plan receives a response to a request for additional information or 2) the date set by the Plan for the requested response (at least 45 days).
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11.6
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Contents of Appeal Decision
. The decision on review will be in writing and will include the following information:
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•
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the specific reason or reasons for the decision;
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•
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reference to the specific Plan provisions on which the decision is based;
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•
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a statement of the right to receive, upon request free of charge, reasonable access to and copies of Relevant Documents; and
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•
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a statement of the right to bring a civil action under Section 502(a) of ERISA.
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11.7
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Relevant Documents
. Relevant Document means any document, record or other information that:
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•
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was relied upon in making a decision to deny benefits;
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•
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was submitted, considered, or generated in the course of making the decision to deny benefits, whether or not it was relied upon in making the decision to deny benefits; or
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•
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demonstrates compliance with any administrative processes and safeguards designed to confirm that the benefit determination was in accord with the Plan and that Plan provisions, where appropriate, have been applied consistently regarding similarly situated individuals.
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13.1
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Governing Law
. This Plan shall be subject to and governed by the laws of the State of Washington, except to the extent preempted by federal law.
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13.2
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Execution
. This Plan may be adopted, amended, or terminated by an appropriate instrument signed by any four members of the Costco Benefits Committee, if such a committee has been appointed, and if not, by resolution of the Board.
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Dated: June 19, 2013
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Costco Benefits Committee
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By: /s/ Pat Callans
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By: /s/ Julie Cruz
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Pat Callans
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Julie Cruz
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By: /s/ John Eagan
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By: /s/ Richard Galanti
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John Eagan
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Richard Galanti
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By: /s/ Bob Hickok
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By: /s/ Franz Lazarus
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Bob Hickok
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Franz Lazarus
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By: /s/ John Matthews
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By: /s/ John McKay
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John Matthews
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John McKay
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By: /s/ Monica Smith
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By: /s/ Jay Tihinen
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Monica Smith
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Jay Tihinen
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Subsidiaries
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State or Other Jurisdiction of Incorporation or Organization
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Name under Which Subsidiary Does Business
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Costco Canada Holdings Inc.
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Canadian Federal
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Costco Canada Holdings Inc.
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Costco Wholesale Membership, Inc.
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California
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Costco Wholesale Membership, Inc.
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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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Costco Wholesale Canada Ltd.
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Canadian Federal
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Costco Wholesale Canada, Ltd., Costco Wholesale
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NW Re Ltd.
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Arizona
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NW Re Ltd.
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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 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 Japan, Ltd.
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Japan
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Costco Wholesale Japan, Ltd.
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Costco Insurance Agency, Inc.
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United States
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Costco Insurance Agency, Inc.
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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. C
RAIG
J
ELINEK
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W. Craig Jelinek
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President and Chief Executive Officer
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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/ R
ICHARD
A. G
ALANTI
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Richard A. Galanti
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Executive Vice President and Chief Financial Officer
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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. C
RAIG
J
ELINEK
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Date: October 16, 2013
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W. Craig Jelinek
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President and Chief Executive Officer
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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/ R
ICHARD
A. G
ALANTI
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Date: October 16, 2013
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Richard A. Galanti
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Executive Vice President and Chief Financial Officer
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