What changed in this filing

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Item 1. Financial Statements

2023-06-01 compared with 2023-03-09 · 56 added, 76 removed, 462 unchanged (22% of the section changed)

4 unchanged sentences

12 Weeks Ended 36 Weeks Ended

2023 February 13,

2022 February 12,

2023 February 13,

Net sales $ 52,604 $ 51,612 $ 160,280 $ 151,966

24 unchanged sentences

12 Weeks Ended 36 Weeks Ended

2023 February 13,

2022 February 12,

2023 February 13,

NET INCOME INCLUDING NONCONTROLLING INTERESTS

3 unchanged sentences

Comprehensive income 1,294 984 4,281 3,542

Comprehensive income attributable to noncontrolling interests

Comprehensive (loss) income attributable to noncontrolling interests

— ( 13 ) — 31

COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO

48 unchanged sentences

(amounts in millions) (unaudited)

12 Weeks Ended February 12, 2023

12 Weeks Ended May 7, 2023

Common Stock Additional

7 unchanged sentences

Shares (000s) Amount

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

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

Net income — — — — 1,302 1,302 — 1,302

4 unchanged sentences

Cash dividend declared — — — — ( 452 ) ( 452 ) — ( 452 )

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

BALANCE AT MAY 7, 2023 443,222 $ 2 $ 7,211 $ ( 1,680 ) $ 18,035 $ 23,568 $ 5 $ 23,573

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

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

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

2 unchanged sentences

(amounts in millions) (unaudited)

24 Weeks Ended February 12, 2023

36 Weeks Ended May 7, 2023

Common Stock Additional

14 unchanged sentences

Cash dividends declared — — — — ( 1,251 ) ( 1,251 ) — ( 1,251 )

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

BALANCE AT MAY 7, 2023 443,222 $ 2 $ 7,211 $ ( 1,680 ) $ 18,035 $ 23,568 $ 5 $ 23,573

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

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

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

3 unchanged sentences

36 Weeks Ended

2023 February 13,

CASH FLOWS FROM OPERATING ACTIVITIES

5 unchanged sentences

Other non-cash operating activities, net 72 ( 62 )

Impairment of assets 391 118

Deferred income taxes ( 22 ) ( 2 )

20 unchanged sentences

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

Net increase in cash and cash equivalents 2,767 561

Net increase (decrease) in cash and cash equivalents 2,290 ( 65 )

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 half of the year for:

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

Income taxes, net $ 1,443 $ 1,121

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.

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.

At May 7, 2023, Costco operated 852 warehouses worldwide:

586 in the United States (U.S.) located in 46 states, Washington, D.C., and Puerto Rico, 107 in Canada, 40 in Mexico, 32 in Japan, 29 in the United Kingdom (U.K.), 18 in Korea, 14 in Taiwan, 14 in Australia, four in Spain, three in China, two in France, and one each in Iceland, New Zealand, and Sweden.

The Company operates e-commerce websites in the U.S., Canada, U.K., Mexico, Korea, Taiwan, Japan, and Australia.

11 unchanged sentences

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

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.

References to the third quarter of 2023 and 2022 relate to the 12-week fiscal quarters ended May 7, 2023, and May 8, 2022.

References to the first thirty-six weeks of 2023 and 2022 relate to the 36 weeks ended May 7, 2023, and May 8, 2022.

Use of Estimates

4 unchanged sentences

Reclassification

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

Reclassifications were made to the condensed consolidated statement of cash flows for the first thirty-six weeks 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.

1 unchanged sentence

The Company also occasionally revisits and modifies the terms of its leasing arrangements.

During the first quarter of 2023, the Company recognized a charge of $ 93 , primarily related to the termination costs and impairment of certain leased assets associated with charter shipping activities.

During the first quarter and third quarter of 2023, the Company recognized charges of $ 93 and $ 298 , primarily related to the impairment of certain leased assets associated with charter shipping activities.

This charge is included in merchandise costs.

1 unchanged sentence

The Company's investments were as follows:

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 February 12, 2023, and August 28, 2022 .

Gross unrecognized holding gains and losses on available-for-sale securities were not material for the periods ended May 7, 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 half of 2023 or 2022.

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

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

The maturities of available-for-sale and held-to-maturity securities at May 7, 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 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.

At May 7, 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 thirty-six weeks 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 $ 5,895 and $ 6,033 at February 12, 2023, and August 28, 2022.

The fair value of the Company's long-term debt, including the current portion, was approximately $ 5,907 and $ 6,033 at May 7, 2023, and August 28, 2022.

Note 5—Equity

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.

A quarterly cash dividend of $ 1.02 per share was declared on April 19, 2023 and paid on May 19, 2023.

The Company's quarterly dividend was $ 0.90 per share in the third quarter of 2022 and dividends totaled $ 2.82 and $ 2.48 per share in the first thirty-six weeks of 2023 and 2022.

Share Repurchase Program

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 Company's share repurchase program is conducted under a $ 4,000 authorization by the Board of Directors, which expires in January 2027.

At May 7, 2023, the remaining amount available under the program was $ 3,793 .

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

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

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

Third quarter of 2023 329 $ 492.71 $ 162

First thirty-six weeks of 2023 908 $ 492.30 $ 447

Third quarter of 2022 254 $ 547.38 $ 139

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

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.

5 unchanged sentences

Summary of Restricted Stock Unit Activity

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

At May 7, 2023, 8,724,000 shares were available to be granted as RSUs, and the following awards were outstanding:

• 2,898,000 time-based RSUs, which vest upon continued employment over specified periods and accelerate upon achievement of a 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 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:

The Company recognized compensation expense for these awards in the third quarter of 2023, 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 2023:

Units (in 000s) Weighted-Average

4 unchanged sentences

Forfeited ( 93 ) 396.50

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.

Outstanding at May 7, 2023 3,074 $ 405.51

The remaining unrecognized compensation cost related to RSUs unvested at May 7, 2023, was $ 930 , 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

2023 February 13,

2022 February 12,

2023 February 13,

Stock-based compensation expense

5 unchanged sentences

12 Weeks Ended 36 Weeks Ended

2023 February 13,

2022 February 12,

2023 February 13,

Net income attributable to Costco

5 unchanged sentences

444,360 444,886 444,455 444,802

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.

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.

On April 26, 2023, the court entered a final judgment in favor of the Company.

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.

16 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.

21 unchanged sentences

Nassau County Supreme Court).

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

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

Following final approval of the settlement, the case was dismissed on April 14, 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.

6 unchanged sentences

In September 2022, an amended complaint was filed, asserting class claims on behalf of certain non-exempt employees under New York Labor Law for failure to pay on a weekly basis.

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

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

In April 2023 the case was settled on an individual basis for an immaterial amount.

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.

8 unchanged sentences

On September 27, 2022, the parties reached a settlement for an immaterial amount.

The settlement requires court approval.

A hearing for final court approval is set for September 11, 2023.

In July 2021, a former temporary staffing employee filed a class action against the Company and a staffing company alleging violations of the California Labor Code regarding payment of wages, meal and rest periods, wage statements, the timeliness of wages and final wages, and for unfair business practices.

3 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 resolution of the motion to compel in the related case.

On September 7, 2021, the same plaintiff 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 arbitration of the plaintiff’s individual claims.

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.

18 unchanged sentences

In re National Prescription Opiate Litigation (MDL No.

Included are cases that name the Company, including actions filed by counties and cities in Michigan, New Jersey, Oregon, Virginia and South Carolina, a third-party payor in Ohio, and a hospital in Texas, class actions filed on behalf of infants born with opioid-related medical conditions in 40 states, and class actions and individual actions filed on behalf of individuals seeking to recover alleged increased insurance costs associated with opioid abuse in 43 states and American Samoa.

Included are cases filed against the Company by counties and cities in Michigan, New Jersey, Oregon, Virginia and South Carolina, a third-party payor in Ohio, and a hospital in Texas, class actions filed on behalf of infants born with opioid-related medical conditions in 40 states, and class actions and individual actions filed on behalf of individuals seeking to recover alleged increased insurance costs associated with opioid abuse in 43 states and American Samoa.

Claims against the Company filed in federal court outside the MDL have been asserted by certain counties and cities in Florida and Georgia;

claims filed by certain cities and counties in New York are pending in state court.

Claims against the Company in state courts in New Jersey, Oklahoma, Utah, and Arizona have been dismissed.

4 unchanged sentences

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

A motion to dismiss the amended complaint has been filed.

On March 28, 2023, the court granted the defendants’ motion to dismiss the action.

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;

11 unchanged sentences

Operations Total

12 Weeks Ended February 12, 2023

12 Weeks Ended May 7, 2023

Total revenue $ 39,049 $ 7,268 $ 7,331 $ 53,648

Operating income 1,027 327 325 1,679

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

24 Weeks Ended February 12, 2023

36 Weeks Ended May 7, 2023

Total revenue $ 119,339 $ 21,923 $ 22,089 $ 163,351

Operating income 3,558 899 876 5,333

24 Weeks Ended February 13, 2022

36 Weeks Ended May 8, 2022

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

7 unchanged sentences

12 Weeks Ended 36 Weeks Ended

2023 February 13,

2022 February 12,

2023 February 13,

Foods and Sundries $ 21,298 $ 19,594 $ 64,672 $ 58,646

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