What changed in this filing

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Item 1. Financial Statements

2022-06-02 compared with 2022-03-10 · 74 added, 74 removed, 430 unchanged (26% of the section changed)

4 unchanged sentences

12 Weeks Ended 36 Weeks Ended

2022 February 14,

2021 February 13,

2022 February 14,

Net sales $ 51,612 $ 44,376 $ 151,966 $ 130,611

24 unchanged sentences

12 Weeks Ended 36 Weeks Ended

2022 February 14,

2021 February 13,

2022 February 14,

NET INCOME INCLUDING NONCONTROLLING INTERESTS

3 unchanged sentences

Comprehensive income 984 1,287 3,542 3,796

Comprehensive income attributable to noncontrolling interests

Comprehensive income (loss) attributable to noncontrolling interests

( 13 ) 15 31 71

COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO

48 unchanged sentences

(amounts in millions) (unaudited)

12 Weeks Ended February 13, 2022

12 Weeks Ended May 8, 2022

Common Stock Additional

7 unchanged sentences

Shares (000s) Amount

BALANCE AT NOVEMBER 21, 2021 443,434 $ 4 $ 7,064 $ ( 1,211 ) $ 12,606 $ 18,463 $ 537 $ 19,000

BALANCE AT FEBRUARY 13, 2022 443,279 $ 4 $ 7,186 $ ( 1,246 ) $ 13,474 $ 19,418 $ 558 $ 19,976

Net income — — — — 1,353 1,353 19 1,372

4 unchanged sentences

Cash dividend declared — — — — ( 398 ) ( 398 ) — ( 398 )

BALANCE AT FEBRUARY 13, 2022 443,279 $ 4 $ 7,186 $ ( 1,246 ) $ 13,474 $ 19,418 $ 558 $ 19,976

12 Weeks Ended February 14, 2021

BALANCE AT MAY 8, 2022 443,029 $ 4 $ 7,272 $ ( 1,602 ) $ 14,294 $ 19,968 $ 545 $ 20,513

12 Weeks Ended May 9, 2021

Common Stock Additional

7 unchanged sentences

Shares (000s) Amount

BALANCE AT NOVEMBER 22, 2020 442,955 $ 4 $ 6,725 $ ( 1,101 ) $ 9,232 $ 14,860 $ 449 $ 15,309

BALANCE AT FEBRUARY 14, 2021 442,654 $ 4 $ 6,843 $ ( 961 ) $ 9,766 $ 15,652 $ 477 $ 16,129

Net income — — — — 1,220 1,220 13 1,233

4 unchanged sentences

Cash dividend declared — — — — ( 349 ) ( 349 ) — ( 349 )

BALANCE AT FEBRUARY 14, 2021 442,654 $ 4 $ 6,843 $ ( 961 ) $ 9,766 $ 15,652 $ 477 $ 16,129

BALANCE AT MAY 9, 2021 442,141 $ 4 $ 6,921 $ ( 909 ) $ 10,466 $ 16,482 $ 492 $ 16,974

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(amounts in millions) (unaudited)

24 Weeks Ended February 13, 2022

36 Weeks Ended May 8, 2022

Common Stock Additional

14 unchanged sentences

Cash dividends declared — — — — ( 1,099 ) ( 1,099 ) — ( 1,099 )

BALANCE AT FEBRUARY 13, 2022 443,279 $ 4 $ 7,186 $ ( 1,246 ) $ 13,474 $ 19,418 $ 558 $ 19,976

24 Weeks Ended February 14, 2021

BALANCE AT MAY 8, 2022 443,029 $ 4 $ 7,272 $ ( 1,602 ) $ 14,294 $ 19,968 $ 545 $ 20,513

36 Weeks Ended May 9, 2021

Common Stock Additional

14 unchanged sentences

Cash dividends declared — — — — ( 5,399 ) ( 5,399 ) — ( 5,399 )

BALANCE AT FEBRUARY 14, 2021 442,654 $ 4 $ 6,843 $ ( 961 ) $ 9,766 $ 15,652 $ 477 $ 16,129

BALANCE AT MAY 9, 2021 442,141 $ 4 $ 6,921 $ ( 909 ) $ 10,466 $ 16,482 $ 492 $ 16,974

The accompanying notes are an integral part of these condensed consolidated financial statements.

3 unchanged sentences

36 Weeks Ended

2022 February 14,

CASH FLOWS FROM OPERATING ACTIVITIES

30 unchanged sentences

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the first half of the year for:

Cash paid during the first thirty-six weeks of the year for:

Income taxes, net $ 1,121 $ 867

10 unchanged sentences

Costco Wholesale Corporation (Costco or the Company), a Washington corporation, and its subsidiaries operate membership warehouses based on the concept that offering members low prices on a limited selection of nationally-branded and private-label products in a wide range of merchandise categories will produce high sales volumes and rapid inventory turnover.

For the period ended February 13, 2022, Costco operated 828 warehouses worldwide:

For the period ended May 8, 2022, Costco operated 829 warehouses worldwide:

573 in the United States (U.S.) located in 46 states, Washington, D.C., and Puerto Rico, 105 in Canada, 40 in Mexico, 30 in Japan, 29 in the United Kingdom (U.K.), 16 in Korea, 14 in Taiwan, 13 in Australia, four in Spain, two each in France and China, and one in Iceland.

14 unchanged sentences

Fiscal 2022 is a 52-week year ending on August 28, 2022.

References to the second quarter of 2022 and 2021 relate to the 12-week fiscal quarters ended February 13, 2022 and February 14, 2021, respectively.

References to the first half of 2022 and 2021 relate to the 24 weeks ended February 13, 2022 and February 14, 2021, respectively.

References to the third quarter of 2022 and 2021 relate to the 12-week fiscal quarters ended May 8, 2022 and May 9, 2021, respectively.

References to the first thirty-six weeks of 2022 and 2021 relate to the 36 weeks ended May 8, 2022 and May 9, 2021, respectively.

Use of Estimates

4 unchanged sentences

Property and Equipment, Net

The Company capitalizes certain computer software and costs incurred in developing or obtaining software for internal use.

The Company recognized a $ 118 write-off of certain information technology assets, which was recorded in the first quarter of 2022, in selling, general and administrative expenses, in the condensed consolidated statements of income.

The Company capitalizes certain computer software and costs incurred in developing or obtaining software.

The Company recognized a $ 118 write-off of certain information technology assets, which was recorded in the first quarter of 2022, in selling, general and administrative expenses.

Reclassification

Reclassifications were made to our second quarter and first half 2021 condensed consolidated statements of income to conform with current period presentation.

Reclassifications were made to our third quarter and first thirty-six weeks of 2021 condensed consolidated statements of income to conform with current period presentation.

Note 2—Investments

The Company's investments were as follows:

February 13, 2022:

Basis Unrealized

Gains, Net Recorded

Losses, Net Recorded

Available-for-sale:

11 unchanged sentences

Total short-term investments $ 911 $ 6 $ 917

Gross unrecognized holding gains and losses on available-for-sale securities were not material for the periods ended February 13, 2022, and August 29, 2021 .

Gross unrecognized holding gains and losses on available-for-sale securities were not material for the periods ended May 8, 2022, and August 29, 2021 .

At those dates, there were no available-for-sale securities in a material continuous unrealized-loss position.

There were no sales of available-for-sale securities during the first half of 2022 or 2021.

The maturities of available-for-sale and held-to-maturity securities at February 13, 2022, are as follows:

There were no sales of available-for-sale securities during the first thirty-six weeks of 2022 or 2021.

The maturities of available-for-sale and held-to-maturity securities at May 8, 2022 are as follows:

Available-For-Sale Held-To-Maturity

12 unchanged sentences

_______________

(1) At February 13, 2022, $ 8 cash and cash equivalents and $ 365 short-term investments are included in the accompanying condensed consolidated balance sheets.

(1) At August 29, 2021, $ 12 cash and cash equivalents and $ 381 short-term investments are included in the accompanying condensed consolidated balance sheets.

(2) The asset and liability values are included in other current assets and other current liabilities, respectively, in the accompanying condensed consolidated balance sheets.

At February 13, 2022, and August 29, 2021, the Company did not hold any Level 1 or 3 financial assets or liabilities that were measured at fair value on a recurring basis.

There were no transfers between levels during the first half of 2022 or 2021.

At May 8, 2022, and August 29, 2021, the Company did not hold any Level 1 or 3 financial assets or liabilities that were measured at fair value on a recurring basis.

There were no transfers between levels during the first thirty-six weeks of 2022 or 2021.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

1 unchanged sentence

These assets are measured at fair value if determined to be impaired.

There were no fair value adjustments to these items during the first half of 2022 or 2021.

There were no fair value adjustments to these items during the first thirty-six weeks of 2022 or 2021.

The carrying value of the Company’s long-term debt consisted of the following:

16 unchanged sentences

Other long-term debt consists of Guaranteed Senior Notes issued by the Company's Japan subsidiary, valued using Level 3 inputs.

The fair value of the Company's long-term debt, including the current portion, was approximately $ 6,492 and $ 7,692 at February 13, 2022, and August 29, 2021.

The fair value of the Company's long-term debt, including the current portion, was approximately $ 6,000 and $ 7,692 at May 8, 2022, and August 29, 2021, respectively.

On December 1, 2021, the Company repaid, prior to maturity, the 2.300 % Senior Notes at a redemption price plus accrued interest as specified in the Notes' agreement.

Note 5—Equity

The Company’s current quarterly dividend is $ 0.79 per share, compared to $ 0.70 in the second quarter of 2021.

On January 20, 2022, the Board of Directors declared a quarterly cash dividend in the amount of $ 0.79 per share, which was paid on February 18, 2022.

The Company’s current quarterly dividend is $ 0.90 per share, compared to $ 0.79 in the third quarter of 2021.

On April 13, 2022, the Board of Directors declared a quarterly cash dividend in the amount of $ 0.90 per share, which was paid on May 13, 2022.

Share Repurchase Program

The Company's share repurchase program is conducted under a $ 4,000 authorization by the Board of Directors, which expires in April 2023.

The remaining amount available under the approved plan was $ 3,132 at February 13, 2022.

Share repurchase activity during the second quarter of 2022 and 2021 is summarized below:

The remaining amount available under the program was $ 2,993 at May 8, 2022.

Share repurchase activity is summarized below:

Shares Repurchased (000s) Average Price per Share Total Cost

Second quarter of 2022 159 $ 518.73 $ 83

First half of 2022 236 $ 498.00 $ 118

Second quarter of 2021 308 $ 362.95 $ 112

First half of 2021 521 $ 361.52 $ 189

Third quarter of 2022 254 $ 547.38 $ 139

First thirty-six weeks of 2022 490 $ 523.61 $ 257

Third quarter of 2021 519 $ 346.19 $ 179

First thirty-six weeks of 2021 1,040 $ 353.87 $ 368

These amounts may differ from the repurchase balances in the accompanying condensed consolidated statements of cash flows due to changes in unsettled repurchases at quarter end.

5 unchanged sentences

Summary of Restricted Stock Unit Activity

At February 13, 2022, 10,388,000 shares were available to be granted as RSUs, and the following awards were outstanding:

At May 8, 2022, 10,411,000 shares were available to be granted as RSUs, and the following awards were outstanding:

• 3,375,000 time-based RSUs, which vest upon continued employment over specified periods and accelerate upon achievement of the long-service term;

3 unchanged sentences

These awards are included in the table below.

The Company recognized compensation expense for these awards in the second quarter of 2022, as it is currently deemed probable that the targets will be achieved.

The following table summarizes RSU transactions during the first half of 2022:

The Company recognized compensation expense for these awards in the third quarter of 2022, as it is currently deemed probable that the targets will be achieved.

The following table summarizes RSU transactions during the first thirty-six weeks of 2022:

Units (in 000s) Weighted-Average

4 unchanged sentences

Forfeited ( 89 ) 324.80

Outstanding at February 13, 2022 3,524 $ 338.29

The remaining unrecognized compensation cost related to RSUs unvested at February 13, 2022, was $ 985 , and the weighted-average period over which this cost will be recognized is 1.8 years.

Outstanding at May 8, 2022 3,496 $ 338.37

The remaining unrecognized compensation cost related to RSUs unvested at May 8, 2022, was $ 890 , and the weighted-average period over which this cost will be recognized is 1.7 years.

Summary of Stock-Based Compensation

1 unchanged sentence

12 Weeks Ended 36 Weeks Ended

2022 February 14,

2021 February 13,

2022 February 14,

Stock-based compensation expense

5 unchanged sentences

12 Weeks Ended 36 Weeks Ended

2022 February 14,

2021 February 13,

2022 February 14,

Net income attributable to Costco

5 unchanged sentences

444,886 444,127 444,802 444,336

Anti-dilutive RSUs

Anti-dilutive shares are excluded from the calculation of diluted shares and earnings per diluted share because their impact would increase earnings per diluted share.

Note 8—Commitments and Contingencies

2 unchanged sentences

In accordance with applicable accounting guidance, the Company establishes an accrual for legal proceedings if and when those matters present loss contingencies that are both probable and reasonably estimable.

There may be exposure to loss in excess of any amounts accrued.

There may be exposure to loss in excess of amounts accrued.

The Company monitors those matters for developments that would affect the likelihood of a loss (taking into account where applicable indemnification arrangements concerning suppliers and insurers) and the accrued amount, if any, thereof, and adjusts the amount as appropriate.

17 unchanged sentences

The Company filed an answer denying the material allegations of the complaint.

In October 2019, the parties reached an agreement to settle for an immaterial amount the seating claims on a representative basis, which received court approval in February 2020.

The workplace temperature claims continue in litigation.

In October 2019, the parties settled for an immaterial amount the seating claims on a representative basis, which received court approval in February 2020.

The parties settled the temperature claims for an immaterial amount in April 2022, and court approval was received in May 2022.

In March 2019, employees filed a class action against the Company alleging claims under California law for failure to pay overtime, to provide meal and rest periods and itemized wage statements, to timely pay wages due to terminating employees, to pay minimum wages, and for unfair business practices.

Relief is sought under the California Labor Code, including civil penalties and attorneys' fees.

Wholesale Corp.

Costco Wholesale Corp.

2:19-cv-03454;

2 unchanged sentences

In January 2020, the plaintiffs dismissed their Labor Code claims without prejudice, and the court remanded the action to state court.

The remand was appealed;

the appeal is in abeyance due to a pending settlement for an immaterial amount that was agreed upon in February 2021.

The Court preliminarily approved the settlement in October 2021, and the Court's final review is scheduled for May 2022.

Settlement for an immaterial amount was agreed upon in February 2021.

Final court approval of the settlement was granted on May 3, 2022.

In May 2019, an employee filed a class action against the Company alleging claims under California law for failure to pay overtime, to provide itemized wage statements, to timely pay wages due to terminating employees, to pay minimum wages, and for unfair business practices.

12 unchanged sentences

The case was stayed due to the plaintiff's bankruptcy, and his individual claim was settled for an immaterial amount.

A request for dismissal of the class and representative action is pending.

The class and representative action claims were thereafter dismissed.

In December 2020, a former employee filed suit against the Company asserting collective and class claims on behalf of non-exempt employees under the Fair Labor Standards Act and New York Labor Law for failure to pay for all hours worked, failure to pay certain non-exempt employees on a weekly basis, and failure to provide proper wage statements and notices.

4 unchanged sentences

Based on an agreement in principle concerning settlement of the matter, involving a proposed payment by the Company of an immaterial amount, the federal action has been dismissed.

In April 2022, Cappadora and a second plaintiff filed an action against the Company in New York state court asserting the same class claims asserted in the federal action under the New York Labor Law and seeking preliminary approval of the class settlement.

Cappadora and Sancho v.

Costco Wholesale Corp.

Nassau County Supreme Court).

In August 2021, a former employee filed a similar suit, asserting class claims on behalf of certain non-exempt employees under New York Labor Law for failure to pay on a weekly basis.

2 unchanged sentences

The Company answered the complaint on October 21, 2021, denying the material allegations.

In April 2022, a former employee filed a similar suit, asserting class claims on behalf of certain non-exempt employees under New York Labor Law, as well as under the Fair Labor Standards Act, for failure to pay on a weekly basis and failure to pay overtime.

Costco Wholesale Corp.

2:22-cv-02108;

In February 2021, a former employee filed a class action against the Company alleging violations of California Labor Code regarding payment of wages, meal and rest periods, wage statements, reimbursement of expenses, payment of final wages to terminated employees, and for unfair business practices.

4 unchanged sentences

The court granted the motion in part in July 2021 with leave to amend.

In August 2021, the plaintiff filed a second amended complaint and filed a separate representative action under PAGA asserting the same Labor Code claims and seeking civil penalties and attorneys' fees.

In August 2021, the plaintiff filed a second amended complaint and filed a separate representative action under PAGA asserting the same Labor

Code claims and seeking civil penalties and attorneys' fees.

The Company filed an answer to the second amended class action complaint, denying the material allegations.

4 unchanged sentences

The Company has moved to compel arbitration of the plaintiff's individual claims and to dismiss the class action complaint.

On September 7, 2021, the same former employee filed a separate representative

action under PAGA asserting the same Labor Code violations and seeking civil penalties and attorneys' fees.

The complaint has not yet been served.

On September 7, 2021, the same former employee filed a separate representative action under PAGA asserting the same Labor Code violations and seeking civil penalties and attorneys' fees.

The case has been stayed pending the motion to compel in the related case.

In September 2021, an employee filed a class action against the Company alleging violations of the California Labor Code regarding the alleged failure to provide sick pay, failure to timely pay wages due at separation from employment, and for violations of California's unfair competition law.

4 unchanged sentences

The Company answered the complaint in January 2022, denying its material allegations.

In April 2022, a settlement for an immaterial amount was agreed upon, subject to court approval.

In March 2022, an employee filed a class action against the Company alleging violations of the California Labor Code regarding the failure to:

pay wages, provide meal and rest periods, provide accurate wage statements, timely pay final wages, and reimburse business expenses.

Costco Wholesale Corp.

Los Angeles Superior Court).

The Court stayed the case, including the Company's filing of a responsive pleading, pending the initial status conference.

In May 2022, an employee filed a PAGA-only representative action against the Company alleging claims under the California Labor Code regarding the payment of wages, meal and rest periods, the timeliness of wages and final wages, wage statements, accurate records and business expenses.

Costco Wholesale Corp.

Los Angeles Superior Court).

Beginning in December 2017, the United States Judicial Panel on Multidistrict Litigation consolidated numerous cases concerning the impacts of opioid abuses filed against various defendants by counties, cities, hospitals, Native American tribes, third-party payors, and others.

4 unchanged sentences

The Company does not believe that any pending claim, proceeding or litigation, either alone or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations or cash flows;

however, it is possible that an unfavorable outcome of some or all of the matters, however unlikely, could result in a charge that might be material to the results of an individual fiscal quarter or year.

it is possible that an unfavorable outcome of some or all of the matters, however unlikely, could result in a charge that might be material to the results of an individual fiscal quarter or year.

Note 9—Segment Reporting

12 unchanged sentences

Operations Total

12 Weeks Ended February 13, 2022

12 Weeks Ended May 8, 2022

Total revenue $ 38,534 $ 7,268 $ 6,794 $ 52,596

Operating income 1,205 324 262 1,791

12 Weeks Ended February 14, 2021

12 Weeks Ended May 9, 2021

Total revenue $ 32,759 $ 6,299 $ 6,219 $ 45,277

Operating income 1,135 260 268 1,663

24 Weeks Ended February 13, 2022

36 Weeks Ended May 8, 2022

Total revenue $ 112,418 $ 21,406 $ 21,039 $ 154,863

Operating income 3,502 918 876 5,296

24 Weeks Ended February 14, 2021

36 Weeks Ended May 9, 2021

Total revenue $ 96,178 $ 18,311 $ 18,765 $ 133,254

7 unchanged sentences

12 Weeks Ended 36 Weeks Ended

2022 February 14,

2021 February 13,

2022 February 14,

Foods and Sundries $ 19,594 $ 17,551 $ 58,646 $ 53,194

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements