What changed in this filing

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Item 1. Financial Statements

2023-03-09 compared with 2022-12-29 · 135 added, 65 removed, 403 unchanged (33% of the section changed)

3 unchanged sentences

(amounts in millions, except per share data) (unaudited)

12 Weeks Ended

2022 November 21,

12 Weeks Ended 24 Weeks Ended

2023 February 13,

2022 February 12,

2023 February 13,

Net sales $ 54,239 $ 50,937 $ 107,676 $ 100,354

23 unchanged sentences

(amounts in millions) (unaudited)

12 Weeks Ended

2022 November 21,

12 Weeks Ended 24 Weeks Ended

2023 February 13,

2022 February 12,

2023 February 13,

NET INCOME INCLUDING NONCONTROLLING INTERESTS

54 unchanged sentences

(amounts in millions) (unaudited)

12 Weeks Ended November 20, 2022

12 Weeks Ended February 12, 2023

Common Stock Additional

7 unchanged sentences

Shares (000s) Amount

BALANCE AT AUGUST 28, 2022 442,664 $ 2 $ 6,884 $ ( 1,829 ) $ 15,585 $ 20,642 $ 5 $ 20,647

BALANCE AT NOVEMBER 20, 2022 443,841 $ 2 $ 6,982 $ ( 1,925 ) $ 16,412 $ 21,471 $ 5 $ 21,476

Net income — — — — 1,466 1,466 — 1,466

4 unchanged sentences

Cash dividend declared — — — — ( 399 ) ( 399 ) — ( 399 )

BALANCE AT FEBRUARY 12, 2023 443,550 $ 2 $ 7,123 $ ( 1,672 ) $ 17,341 $ 22,794 $ 5 $ 22,799

12 Weeks Ended February 13, 2022

Common Stock Additional

Capital Accumulated

Comprehensive

Income (Loss) Retained

Earnings Total Costco

Stockholders’

Equity Noncontrolling

Interests Total

Shares (000s) Amount

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

12 Weeks Ended November 21, 2021

Net income — — — — 1,299 1,299 21 1,320

Foreign-currency translation adjustment and other, net — — — ( 35 ) — ( 35 ) — ( 35 )

Stock-based compensation — — 129 — — 129 — 129

Release of vested RSUs, including tax effects 4 — ( 4 ) — — ( 4 ) — ( 4 )

Repurchases of common stock ( 159 ) — ( 3 ) — ( 80 ) ( 83 ) — ( 83 )

Cash dividend declared — — — — ( 351 ) ( 351 ) — ( 351 )

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

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

COSTCO WHOLESALE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(amounts in millions) (unaudited)

24 Weeks Ended February 12, 2023

Common Stock Additional

11 unchanged sentences

Stock-based compensation — — 551 — — 551 — 551

Release of vested restricted stock units (RSUs), including tax effects 1,465 — ( 302 ) — — ( 302 ) — ( 302 )

Repurchases of common stock ( 579 ) — ( 10 ) — ( 275 ) ( 285 ) — ( 285 )

Cash dividends declared — — — — ( 799 ) ( 799 ) — ( 799 )

BALANCE AT FEBRUARY 12, 2023 443,550 $ 2 $ 7,123 $ ( 1,672 ) $ 17,341 $ 22,794 $ 5 $ 22,799

24 Weeks Ended February 13, 2022

Common Stock Additional

Capital Accumulated

Comprehensive

Income (Loss) Retained

Earnings Total Costco

Stockholders’

Equity Noncontrolling

Interests Total

Shares (000s) Amount

BALANCE AT AUGUST 29, 2021 441,825 $ 4 $ 7,031 $ ( 1,137 ) $ 11,666 $ 17,564 $ 514 $ 18,078

Net income — — — — 2,623 2,623 42 2,665

Foreign-currency translation adjustment and other, net — — — ( 109 ) — ( 109 ) 2 ( 107 )

Stock-based compensation — — 518 — — 518 — 518

Release of vested RSUs, including tax effects 1,690 — ( 359 ) — — ( 359 ) — ( 359 )

Repurchases of common stock ( 236 ) — ( 4 ) — ( 114 ) ( 118 ) — ( 118 )

Cash dividend declared — — — — ( 350 ) ( 350 ) — ( 350 )

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

Cash dividends declared — — — — ( 701 ) ( 701 ) — ( 701 )

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

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

3 unchanged sentences

24 Weeks Ended

2022 November 21,

2023 February 13,

CASH FLOWS FROM OPERATING ACTIVITIES

18 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES

Repayments of short-term borrowings ( 520 ) ( 87 )

Proceeds from short-term borrowings 479 80

Repayments of long-term borrowings — ( 800 )

Tax withholdings on stock-based awards ( 302 ) ( 359 )

4 unchanged sentences

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

( 37 ) ( 14 )

Net change in cash and cash equivalents 653 1,493

Net increase in cash and cash equivalents 2,767 561

CASH AND CASH EQUIVALENTS BEGINNING OF YEAR 10,203 11,258

1 unchanged sentence

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the first 12 weeks of the year for:

Cash paid during the first half of the year for:

Income taxes, net $ 636 $ 469

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:

Cash dividend declared, but not yet paid

Financing lease assets obtained in exchange for new or modified leases $ 47 $ 172

7 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.

At November 20, 2022, Costco operated 845 warehouses worldwide:

At February 12, 2023, Costco operated 848 warehouses worldwide:

584 in the United States (U.S.) located in 46 states, Washington, D.C., and Puerto Rico, 107 in Canada, 40 in Mexico, 31 in Japan, 29 in the United Kingdom (U.K.), 18 in Korea, 14 in Taiwan, 14 in Australia, four in Spain, two each in France and China, and one each in Iceland, New Zealand, and Sweden.

12 unchanged sentences

Fiscal 2023 is a 53-week year ending on September 3, 2023.

References to the first quarter of 2023 and 2022 relate to the 12-week fiscal quarters ended November 20, 2022, and November 21, 2021.

References to the second quarter of 2023 and 2022 relate to the 12-week fiscal quarters ended February 12, 2023, and February 13, 2022.

References to the first half of 2023 and 2022 relate to the 24 weeks ended February 12, 2023 and February 13, 2022.

Use of Estimates

4 unchanged sentences

Reclassification

Reclassifications were made to the condensed consolidated statement of cash flows for the first quarter of 2022 to conform with current year presentation.

Reclassifications were made to the condensed consolidated statement of cash flows for the first half of 2022 to conform with current year presentation.

The Company leases land, buildings, equipment, and other assets at warehouses, offices, or within the operations that support supply chain and distribution channels.

5 unchanged sentences

The Company's investments were as follows:

November 20, 2022:

February 12, 2023:

Basis Unrealized

13 unchanged sentences

Total short-term investments $ 851 $ ( 5 ) $ 846

Gross unrecognized holding gains and losses on available-for-sale securities were not material for the periods ended November 20, 2022, and August 28, 2022 .

Gross unrecognized holding gains and losses on available-for-sale securities were not material for the periods ended February 12, 2023, and August 28, 2022 .

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 quarter of 2023 or 2022.

The maturities of available-for-sale and held-to-maturity securities at November 20, 2022 are as follows:

There were no sales of available-for-sale securities during the first half of 2023 or 2022.

The maturities of available-for-sale and held-to-maturity securities at February 12, 2023 are as follows:

Available-For-Sale Held-To-Maturity

14 unchanged sentences

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

At November 20, 2022, and August 28, 2022, 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 quarter of 2023 or 2022.

At February 12, 2023, and August 28, 2022, 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 2023 or 2022.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

20 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 $ 5,816 and $ 6,033 at November 20, 2022, and August 28, 2022.

The fair value of the Company's long-term debt, including the current portion, was approximately $ 5,895 and $ 6,033 at February 12, 2023, and August 28, 2022.

Note 5—Equity

On October 12, 2022, the Board of Directors declared a quarterly cash dividend in the amount of $ 0.90 per share, which was paid on November 10, 2022.

A quarterly cash dividend of $ 0.90 per share was declared on January 19, 2023 and paid on February 17, 2023.

The Company's quarterly dividend was $ 0.79 per share in the second quarter of 2022 and dividends totaled $ 1.80 and $ 1.58 per share in the first half of 2023 and 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.

At November 20, 2022, the remaining amount available under the plan was $ 2,667 .

On January 19, 2023, the Board of Directors authorized a new share repurchase program in the amount of $ 4,000 , which expires in January 2027.

This authorization revoked previously authorized but unused amounts, totaling $ 2,568 .

At February 12, 2023, the remaining amount available under the program was $ 3,955 .

The following table summarizes the Company's stock repurchase activity:

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

First quarter of 2023 285 $ 495.94 $ 141

First quarter of 2022 77 $ 455.08 $ 35

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

Second quarter of 2023 294 $ 488.30 $ 144

First half of 2023 579 $ 492.06 $ 285

Second quarter of 2022 159 $ 518.73 $ 83

First half of 2022 236 $ 498.00 $ 118

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

Purchases are made from time to time, as conditions warrant, in the open market or in block purchases and pursuant to plans under SEC Rule 10b5-1.

4 unchanged sentences

Summary of Restricted Stock Unit Activity

At November 20, 2022, 8,652,000 shares were available to be granted as RSUs, and the following awards were outstanding:

• 2,976,000 time-based RSUs, which vest upon continued employment over specified periods and accelerate upon achievement of the long-service term;

At February 12, 2023, 8,703,000 shares were available to be granted as RSUs, and the following awards were outstanding:

• 2,921,000 time-based RSUs, which vest upon continued employment over specified periods and accelerate upon achievement of a long-service term;

• 41,000 performance-based RSUs granted to executive officers of the Company, for which the performance targets have been met.

The awards vest upon continued employment over specified periods of time and upon achievement of the long-service term;

The awards vest upon continued employment over specified periods of time and upon achievement of a long-service term;

• 135,000 performance-based RSUs granted to executive officers of the Company, subject to achievement of performance targets for fiscal 2023, as determined by the Compensation Committee of the Board of Directors after the end of the fiscal year.

These awards are not included in the table below or in the amount of unrecognized compensation cost.

The following table summarizes RSU transactions during the first quarter of 2023:

These awards are included in the table below.

The Company recognized compensation expense for these awards in the second quarter of 2023, as it is currently deemed probable that the targets will be achieved.

The following table summarizes RSU transactions during the first half of 2023:

Units (in 000s) Weighted-Average

4 unchanged sentences

Forfeited ( 72 ) 394.40

Outstanding at November 20, 2022 3,017 $ 401.75

The remaining unrecognized compensation cost related to RSUs unvested at November 20, 2022, was $ 1,139 , and the weighted-average period over which this cost will be recognized is 1.8 years.

Outstanding at February 12, 2023 3,097 $ 405.46

The remaining unrecognized compensation cost related to RSUs unvested at February 12, 2023, was $ 1,031 , and the weighted-average period over which this cost will be recognized is 1.8 years.

Summary of Stock-Based Compensation

The following table summarizes stock-based compensation expense and the related tax benefits:

12 Weeks Ended

2022 November 21,

12 Weeks Ended 24 Weeks Ended

2023 February 13,

2022 February 12,

2023 February 13,

Stock-based compensation expense

$ 147 $ 128 $ 549 $ 516

Less recognized income tax benefits 24 23 113 108

2 unchanged sentences

The following table shows the amounts used in computing net income per share and the weighted average number of shares of basic and of potentially dilutive common shares outstanding (shares in 000s):

12 Weeks Ended

2022 November 21,

12 Weeks Ended 24 Weeks Ended

2023 February 13,

2022 February 12,

2023 February 13,

Net income attributable to Costco

5 unchanged sentences

444,475 444,916 444,503 444,760

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 shares.

Note 8—Commitments and Contingencies

17 unchanged sentences

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

A bench trial was held in June and July;

no decision has been issued.

In June 2022, a business center employee raised similar claims alleging failure to provide seating to employees who work at membership refund desks in California warehouses and business centers.

Costco Wholesale Corp.

Alameda Superior Court).

The complaint seeks relief under the California Labor Code, including civil penalties and attorneys' fees.

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

On January 19, 2023, the court issued a Proposed/Tentative Statement of Decision Following Court Trial finding in favor of Costco.

The plaintiff filed a request for further statement of decision and objections to the tentative decision.

The parties are awaiting the court's review of plaintiff's filings and Costco's response thereto, after which the court will decide if it requires a hearing before a final decision issues.

In December 2018, a depot employee raised similar claims, alleging that depot employees in California did not receive suitable seating or reasonably comfortable workplace temperature conditions.

2 unchanged sentences

San Bernardino Superior Court).

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

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.

A February 2023 hearing has been set for a final report on the settlement.

In June 2022, a business center employee raised similar claims, alleging failure to provide seating to employees who work at membership refund desks in California warehouses and business centers.

Costco Wholesale Corp.

Alameda Superior Court).

The complaint seeks relief under the California Labor Code, including civil penalties and attorneys' fees.

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

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.

5 unchanged sentences

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

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

Settlement for an immaterial amount was agreed upon in

February 2021.

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

A proposed intervenor has appealed the denial of her motion to intervene.

A proposed intervenor appealed the denial of her motion to intervene.

Her appeal was dismissed on February 15, 2023.

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.

19 unchanged sentences

The state court granted preliminary approval of the settlement in October 2022.

A final approval hearing is set for March 27, 2023.

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.

7 unchanged sentences

The Company responded by requesting permission to file a motion to dismiss.

The court has not responded.

The court stayed the action pending the class settlement in the Cappadora matter noted above.

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.

2 unchanged sentences

In May 2021, the Company filed a motion to dismiss the complaint, which was granted with leave to amend.

In June 2021, the plaintiff filed an amended complaint, which the Company moved to dismiss later that month.

In June 2021, the plaintiff filed an amended complaint, which the Company moved to dismiss.

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

9 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 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.

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 resolution of 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 failure to provide sick pay, failure to timely pay wages due at separation from employment, and for violations of California's unfair competition law.

De Benning v.

4 unchanged sentences

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

The court granted preliminary approval of the settlement on October 28, 2022.

A final approval hearing is set for February 10, 2023.

Final approval of the settlement was granted on February 10, 2023.

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

3 unchanged sentences

The Company filed an answer denying the material allegations.

In December 2022, the case was settled for an immaterial amount.

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.

1 unchanged sentence

Los Angeles Superior Court).

The Company filed an answer denying the allegations.

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.

3 unchanged sentences

The Company is defending all of the pending matters.

Members of the Board of Directors, six corporate officers and the Company are defendants in a shareholder derivative action related to chicken welfare and alleged breaches of fiduciary duties.

Members of the Board of Directors, six corporate officers and the Company are defendants in a shareholder derivative action filed in June 2022 related to chicken welfare and alleged breaches of fiduciary duties.

Smith, et ano.

Vachris, et al., Superior Court of the State of Washington, County of King, No, 22-2-08937-7SEA, (filed 6/14/22, as amended, 6/30/22);

Vachris , et al., Superior Court of the State of Washington, County of King, No, 22-2-08937-7SEA.

The complaint seeks from the individual defendants damages, injunctive relief, costs, and attorneys' fees.

13 unchanged sentences

Operations Total

12 Weeks Ended November 20, 2022

12 Weeks Ended February 12, 2023

Total revenue $ 40,145 $ 7,299 $ 7,822 $ 55,266

Operating income 1,295 284 324 1,903

12 Weeks Ended November 21, 2021

12 Weeks Ended February 13, 2022

Total revenue $ 37,567 $ 7,017 $ 7,320 $ 51,904

Operating income 1,179 301 332 1,812

24 Weeks Ended February 12, 2023

Total revenue $ 80,290 $ 14,655 $ 14,758 $ 109,703

Operating income 2,531 572 551 3,654

24 Weeks Ended February 13, 2022

Total revenue $ 73,884 $ 14,138 $ 14,245 $ 102,267

Operating income 2,297 594 614 3,505

52 Weeks Ended August 28, 2022

4 unchanged sentences

sales from e-commerce websites and business centers have been allocated to the applicable merchandise categories:

12 Weeks Ended

2022 November 21,

12 Weeks Ended 24 Weeks Ended

2023 February 13,

2022 February 12,

2023 February 13,

Foods and Sundries $ 21,926 $ 19,489 $ 43,374 $ 39,052

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