What changed in this filing

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Item 1. Financial Statements

2024-06-06 compared with 2024-03-13 · 99 added, 85 removed, 415 unchanged (31% of the section changed)

4 unchanged sentences

12 Weeks Ended 36 Weeks Ended

2024 February 12,

2023 February 18,

2024 February 12,

Net sales $ 57,392 $ 52,604 $ 171,440 $ 160,280

22 unchanged sentences

12 Weeks Ended 36 Weeks Ended

2024 February 12,

2023 February 18,

2024 February 12,

$ 1,681 $ 1,302 $ 5,013 $ 4,132

49 unchanged sentences

(amounts in millions) (unaudited)

12 Weeks Ended February 18, 2024

12 Weeks Ended May 12, 2024

Common Stock Additional

6 unchanged sentences

Shares (000s) Amount

BALANCE AT NOVEMBER 26, 2023 443,787 $ 2 $ 7,489 $ ( 1,843 ) $ 20,499 $ 26,147 $ — $ 26,147

BALANCE AT FEBRUARY 18, 2024 443,549 $ 2 $ 7,620 $ ( 1,842 ) $ 14,980 $ 20,760 $ — $ 20,760

Net income — — — — 1,681 1,681 — 1,681

4 unchanged sentences

Cash dividend declared and other — — — — ( 514 ) ( 514 ) — ( 514 )

BALANCE AT FEBRUARY 18, 2024 443,549 $ 2 $ 7,620 $ ( 1,842 ) $ 14,980 $ 20,760 $ — $ 20,760

12 Weeks Ended February 12, 2023

BALANCE AT MAY 12, 2024 443,374 $ 2 $ 7,702 $ ( 1,922 ) $ 15,989 $ 21,771 $ — $ 21,771

12 Weeks Ended May 7, 2023

Common Stock Additional

6 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

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

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

2 unchanged sentences

(amounts in millions) (unaudited)

24 Weeks Ended February 18, 2024

36 Weeks Ended May 12, 2024

Common Stock Additional

10 unchanged sentences

Stock-based compensation — — 689 — — 689 — 689

Release of vested restricted stock units (RSUs), including tax effects 1,284 — ( 292 ) — — ( 292 ) — ( 292 )

Release of vested RSUs, including tax effects 1,330 — ( 313 ) — — ( 313 ) — ( 313 )

Repurchases of common stock ( 749 ) — ( 14 ) — ( 470 ) ( 484 ) — ( 484 )

Cash dividends declared and other — — — — ( 8,075 ) ( 8,075 ) — ( 8,075 )

BALANCE AT FEBRUARY 18, 2024 443,549 $ 2 $ 7,620 $ ( 1,842 ) $ 14,980 $ 20,760 $ — $ 20,760

24 Weeks Ended February 12, 2023

BALANCE AT MAY 12, 2024 443,374 $ 2 $ 7,702 $ ( 1,922 ) $ 15,989 $ 21,771 $ — $ 21,771

36 Weeks Ended May 7, 2023

Common Stock Additional

13 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

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

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

3 unchanged sentences

36 Weeks Ended

2024 February 12,

CASH FLOWS FROM OPERATING ACTIVITIES

19 unchanged sentences

Proceeds from short-term borrowings 628 667

Repayments of long-term debt — ( 75 )

Proceeds from issuance of long-term debt 498 —

6 unchanged sentences

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

Net increase in cash and cash equivalents ( 4,605 ) 2,767

Net change in cash and cash equivalents ( 3,296 ) 2,290

CASH AND CASH EQUIVALENTS BEGINNING OF YEAR 13,700 10,203

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 $ 1,449 $ 1,443

11 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 18, 2024, Costco operated 874 warehouses worldwide:

At May 12, 2024, Costco operated 876 warehouses worldwide:

604 in the United States (U.S.) located in 47 states, Washington, D.C., and Puerto Rico, 108 in Canada, 40 in Mexico, 33 in Japan, 29 in the United Kingdom (U.K.), 18 in Korea, 15 in Australia, 14 in Taiwan, six in China, four in Spain, two in France, and one each in Iceland, New Zealand, and Sweden.

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

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

Basis of Presentation

9 unchanged sentences

Fiscal 2024 is a 52-week year ending on September 1, 2024.

References to the second quarter of 2024 and 2023 relate to the 12-week fiscal quarters ended February 18, 2024, and February 12, 2023.

References to the first half of 2024 and 2023 relate to the 24 weeks ended February 18, 2024 and February 12, 2023.

References to the third quarter of 2024 and 2023 relate to the 12-week fiscal quarters ended May 12, 2024, and May 7, 2023.

References to the first thirty-six weeks of 2024 and 2023 relate to the 36 weeks ended May 12, 2024, and May 7, 2023.

Use of Estimates

4 unchanged sentences

Reclassification

Reclassifications were made to the condensed consolidated statement of cash flows for the first half of fiscal 2023 to conform with current year presentation.

Reclassifications were made to the condensed consolidated statement of cash flows for the first thirty-six weeks of fiscal 2023 to conform with current year presentation.

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, which is intended to improve reportable segment disclosure requirements, primarily through additional disclosures about significant segment expenses.

The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

The Company is evaluating the new standard.

In December 2023, the FASB issued ASU 2023-09, which focuses on income tax disclosures by requiring public business entities, on an annual basis, to disclose specific categories in the rate reconciliation, provide information for reconciling items that meet a quantitative threshold, and certain information about income taxes paid.

2 unchanged sentences

Retrospective application is permitted.

The Company is evaluating the new standard.

The Company is evaluating both standards.

Note 2—Investments

The Company's investments were as follows:

February 18, 2024:

May 12, 2024:

Basis Unrealized

13 unchanged sentences

Total short-term investments $ 1,551 $ ( 17 ) $ 1,534

Gross unrecognized holding gains and losses on available-for-sale securities were not material for the periods ended February 18, 2024, or September 3, 2023 .

Gross unrealized holding gains and losses on available-for-sale securities were not material for the periods ended May 12, 2024, or September 3, 2023 .

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 2024 or 2023.

The maturities of available-for-sale and held-to-maturity securities at February 18, 2024, are as follows:

There were no sales of available-for-sale securities during the first thirty-six weeks of 2024 or 2023.

The maturities of available-for-sale and held-to-maturity securities at May 12, 2024, are as follows:

Available-For-Sale Held-To-Maturity

13 unchanged sentences

_______________

(1) At February 18, 2024, $ 4 cash and cash equivalents and $ 665 short-term investments are included in the accompanying condensed consolidated balance sheets.

(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 18, 2024, and September 3, 2023, 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 2024 or 2023.

At May 12, 2024, and September 3, 2023, 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 2024 or 2023.

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 material fair value adjustments to these items during the first half of 2024.

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

There were no material fair value adjustments to these items during the first thirty-six weeks of 2024.

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

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

18 unchanged sentences

Interest is payable semi-annually, and maturity dates range from November 7, 2033, to November 7, 2043.

The fair value of the Company's long-term debt, including the current portion, was approximately $ 6,306 and $ 5,738 at February 18, 2024, and September 3, 2023.

The fair value of the Company's long-term debt, including the current portion, was approximately $ 6,252 and $ 5,738 at May 12, 2024, and September 3, 2023.

Subsequent to the end of the quarter on May 18, 2024, the Company paid the outstanding principal balance and interest on the 2.750 % Senior Notes using cash and cash equivalents and short-term investments.

Note 5—Equity

A quarterly cash dividend of $ 1.02 per share was declared on January 18, 2024, and paid on February 16, 2024.

The dividend was $ 0.90 per share in the second quarter of 2023.

On January 12, 2024, an aggregate payment of approximately $ 6,655 was made in connection with a special cash dividend of $ 15.00 per share, declared on December 13, 2023.

A quarterly cash dividend of $ 1.16 per share was declared on April 10, 2024, and paid on May 10, 2024.

The dividend was $ 1.02 per share in the third quarter of 2023.

On January 12, 2024, an aggregate payment of approximately $ 6,655 was made in connection with a special dividend of $ 15.00 per share, declared on December 13, 2023.

Stock Repurchase Programs

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

At February 18, 2024, the remaining amount available under the program was $ 3,241 .

At May 12, 2024, the remaining amount available under the program was $ 3,079 .

The following table summarizes the repurchase activity:

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

Second quarter of 2024 240 $ 664.02 $ 160

First half of 2024 528 $ 609.51 $ 322

Second quarter of 2023 294 $ 488.30 $ 144

First half of 2023 579 $ 492.06 $ 285

Third quarter of 2024 221 $ 733.23 $ 162

First thirty-six weeks of 2024 749 $ 646.07 $ 484

Third quarter of 2023 329 $ 492.71 $ 162

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

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

Shares for vested RSUs are generally delivered to participants annually, net of shares withheld for taxes.

As required by the 2019 Incentive Plan, in conjunction with the 2024 special cash dividend, the number of shares subject to outstanding RSUs was increased on the dividend record date to preserve their value.

As required by the 2019 Incentive Plan, in conjunction with the 2024 special dividend, the number of shares subject to outstanding RSUs was increased on the dividend record date to preserve their value.

They were adjusted by multiplying the number of outstanding shares by a factor of 1.018 , representing the ratio of the Nasdaq closing price of $ 674.62 on December 26, 2023, which was the last trading day immediately prior to the ex-dividend date, to the Nasdaq opening price of $ 662.70 on the ex-dividend date, December 27, 2023.

The outstanding RSUs increased by approximately 52,000 .

The adjustment did not result in additional stock-based compensation expense, as the fair value of the awards did not change.

The adjustment did not result in additional stock-based compensation expense, as the fair value of the awards did not

As further required by the 2019 Incentive Plan, the maximum number of shares issuable under the plan was proportionally adjusted, which resulted in an additional 128,000 RSU shares available to be granted.

Summary of Restricted Stock Unit Activity

At February 18, 2024, 7,249,000 shares were available to be granted as RSUs, and the following awards, adjusted for the effects of the special dividend, were outstanding:

At May 12, 2024, 7,255,000 shares were available to be granted as RSUs, and the following awards, adjusted for the effects of the special dividend, were outstanding:

• 2,665,000 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 2024, as it is currently deemed probable that the targets will be achieved.

The following table summarizes RSU transactions during the first half of 2024:

The Company recognized compensation expense for these awards in the third quarter of 2024, 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 2024:

Units (in 000s) Weighted-Average

4 unchanged sentences

Forfeited ( 57 ) 456.30

Special cash dividend 52 N/A

Outstanding at February 18, 2024 2,910 $ 462.35

The remaining unrecognized compensation cost related to RSUs unvested at February 18, 2024, was $ 1,098 , and the weighted-average period over which this cost will be recognized is 1.8 years.

Special dividend 52 N/A

Outstanding at May 12, 2024 2,830 $ 463.09

The remaining unrecognized compensation cost related to RSUs unvested at May 12, 2024, was $ 990 , 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

2024 February 12,

2023 February 18,

2024 February 12,

Stock-based compensation expense

5 unchanged sentences

12 Weeks Ended 36 Weeks Ended

2024 February 12,

2023 February 18,

2024 February 12,

$ 1,681 $ 1,302 $ 5,013 $ 4,132

4 unchanged sentences

444,828 444,360 444,662 444,455

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.

Basic earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period.

15 unchanged sentences

Martin Reyes v.

Costco Wholesale Corporation , Sacramento County Superior Court.

An amended complaint has been filed, as to which the Company has yet to respond.

Costco Wholesale Corporation, Sacramento County Superior Court (Case No.

23cv011351), removed to federal court, Case No.

2:24-cv-00300 (E.D.

An amended complaint was filed, which the Company has moved to dismiss.

In January 2024, the same plaintiff filed a related Private Attorneys General Act (PAGA) representative action, seeking civil penalties and asserting the same alleged underlying Labor Code violations and an additional suitable seating claim.

In May 2024, the plaintiff filed an amended PAGA complaint, as to which the Company has not responded.

In October 2023, current and former employees filed suit against the Company asserting collective and class claims on behalf of all “Junior Managers” under the Fair Labor Standards Act and New York Labor Law, for failure to pay overtime compensation and for inaccurate wage statements under New York law.

1 unchanged sentence

2:23-cv-07904;

On February 1, 2024, the Company served a motion to dismiss the inaccurate wage-statement claim.

On February 1, 2024, the

Company served a motion to dismiss the inaccurate wage-statement claim.

On April 5, 2024, plaintiffs filed a motion for conditional certification under the Act, which the Company has opposed.

In October 2023, a current employee filed suit against the Company asserting collective and class claims on behalf of all “supervisors” employed in New Jersey, under the Fair Labor Standards Act and New Jersey Wage and Hour Law for failure to pay all hours worked.

14 unchanged sentences

On October 31, 2023, a settlement was reached for an immaterial amount.

A hearing on preliminary approval of the settlement is scheduled for April 23, 2024.

A hearing on preliminary approval of the settlement is scheduled for June 2024.

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.

11 unchanged sentences

The plaintiffs subsequently made a demand that the Board of Directors take various actions, including among other things, pursuing claims against directors and officers of the type asserted in the litigation.

A demand review committee of the Board has been appointed to make a recommendation to the Board as to the demand.

A demand review committee of the Board was appointed to make a recommendation to the Board as to the demand.

On April 10, 2024, the committee recommended to the Board that the demand be refused.

The Board accepted the recommendation and unanimously determined to refuse the demand.

In October 2021 the Company received a notice that the Quebec Health Insurance Board had commenced an inquiry to determine whether the Company had given or received improper payments for drugs that are covered by the province's prescription drug program from drug wholesalers, generic drug manufacturers or the independent pharmacist who owns and operates the pharmacies located in the Company's Quebec locations.

The inquiry covers a period beginning January 1, 2017.

The Company is a named defendant in four bodily injury actions relating to its sale of Real Water, an alkalized water previously sold at the Company and other retailers.

Costco Wholesale Corp.

et al., Case No.

A23-864391-B, District Court, Clark County, NV Wei, et al.

Costco Wholesale Corp.

A-22-856147-B, District Court, Clark County, NV Henry et al.

Costco Wholesale Corp.

et al., Case No.

A21844176-B, District Court, Clark County, NV Lampman et al.

Costco Wholesale Corp.

A-23-868638-C, District Court, Clark County, NV.

The plaintiffs allegedly sustained liver or other bodily damage as a result of consuming the product, and seek compensatory and punitive damages from all defendants, which include the manufacturer, distributors, testing equipment makers and retailers.

The case is set for trial March 17, 2025.

Wei and Henry have been consolidated with Brown et al.

AffinityLifestyles.com, Inc., et al., Case No.

A-21-831776-B, District Court, Clark County, NV.

The Company is not a named defendant in Brown.

Wei/Henry/Brown is set for trial starting October 7, 2024.

Lampman does not have a trial date.

In February 2023, Go Green Norcal, LLC filed an arbitration demand against the Company.

1 unchanged sentence

In March 2023, the Company filed its answer, denying any breach by the Company, along with counterclaims against Go Green and an affiliate for breach of contract, negligent misrepresentation, and an accounting.

In August 2023 the plaintiff asserted that its damages exceed $ 70 million.

An award to the plaintiffs of an immaterial amount was paid in February 2024.

Between September 25, 2023, and October 31, 2023, five class action suits were filed against the Company alleging various privacy law violations stemming from pixel trackers on Costco.com:

Costco Wholesale Corp.

Costco Wholesale Corp., Case No.

T23-1405, Contra Costa County Superior Court;

Costco Wholesale Corp.

Costco Wholesale Corp., Case No.

2:23-cv-08808 (C.D.

Cal.), now consolidated with R.S.

Costco Wholesale Corp.

Costco Wholesale Corp., Case No.

2:23-cv-01628 (W.D.

Groves, et ano.

Costco Wholesale Corp.

Costco Wholesale Corp., Case No.

2:23-cv-01662 (W.D.

Wash.), and Castillo v.

Costco Wholesale Corp.

, under Case No.

Costco Wholesale Corp., under Case No.

2:34-cv-01548 (W.D.

1 unchanged sentence

The consolidated complaint also alleges breach of implied contract, invasion of privacy, conversion, and unjust enrichment.

The Company filed a motion to dismiss and demurrer in Birdwell and has not responded to the Castillo consolidated complaint.

The Company filed a motion to dismiss the Castillo complaint on March 11, 2024.

In Birdwell, the Company filed a motion to dismiss and demurrer on January 22, 2024.

On May 5, 2024, the Birdwell Court granted the demurrer with leave to amend and requested additional briefing on whether the case should be stayed in favor of Castillo.

On May 16, 2024, the parties stipulated to stay Birdwell pending resolution of Castillo.

On January 2, 2024, the Company received a related civil investigative demand from the Washington Attorney General's Office.

On January 3, 2024, the Company received a related pre-litigation letter from the Los Angeles Office of the County Counsel.

The inquiry covers a period beginning January 1, 2017.

The Company is in the process of responding to both.

In January 2023 the Company received a Civil Investigative Demand from the U.S.

1 unchanged sentence

The government is conducting a False Claims Act investigation concerning whether the Company presented or caused to be presented to the federal government for payment false claims relating to prescription medications.

In May 2024 the Company received a Notice of Intent to File Administrative Complaint for Violations of the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) from the U.S.

Environmental Protection Agency.

The EPA is seeking administrative fines for importation, sale and distribution of misbranded devices and unregistered products the government asserts are pesticides under FIFRA.

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;

8 unchanged sentences

International Total

12 Weeks Ended February 18, 2024

12 Weeks Ended May 12, 2024

Total revenue $ 42,449 $ 8,014 $ 8,052 $ 58,515

Operating income 1,476 394 327 2,197

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

24 Weeks Ended February 18, 2024

36 Weeks Ended May 12, 2024

Total revenue $ 126,234 $ 23,789 $ 24,733 $ 174,756

Operating income 4,128 1,109 1,006 6,243

24 Weeks Ended February 12, 2023

36 Weeks Ended May 7, 2023

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

5 unchanged sentences

The following table summarizes net sales by merchandise category;

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

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

12 Weeks Ended 36 Weeks Ended

2024 February 12,

2023 February 18,

2024 February 12,

Foods and Sundries $ 23,065 $ 21,298 $ 69,764 $ 64,672

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