☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Washington | 91-1223280 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer ☒ | Accelerated filer ☐ | |
Non-accelerated filer ☐ (Do not check if a smaller reporting company) | Smaller reporting company ☐ | |
Emerging growth company ☐ |
Page | ||
PART I | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
November 26, 2017 | September 3, 2017 | ||||||
ASSETS | |||||||
CURRENT ASSETS | |||||||
Cash and cash equivalents | $ | 5,689 | $ | 4,546 | |||
Short-term investments | 1,196 | 1,233 | |||||
Receivables, net | 1,559 | 1,432 | |||||
Merchandise inventories | 11,213 | 9,834 | |||||
Other current assets | 240 | 272 | |||||
Total current assets | 19,897 | 17,317 | |||||
PROPERTY AND EQUIPMENT | |||||||
Land | 5,915 | 5,690 | |||||
Buildings and improvements | 15,523 | 15,127 | |||||
Equipment and fixtures | 6,859 | 6,681 | |||||
Construction in progress | 812 | 843 | |||||
29,109 | 28,341 | ||||||
Less accumulated depreciation and amortization | (10,427 | ) | (10,180 | ) | |||
Net property and equipment | 18,682 | 18,161 | |||||
OTHER ASSETS | 799 | 869 | |||||
TOTAL ASSETS | $ | 39,378 | $ | 36,347 | |||
LIABILITIES AND EQUITY | |||||||
CURRENT LIABILITIES | |||||||
Accounts payable | $ | 11,992 | $ | 9,608 | |||
Accrued salaries and benefits | 2,791 | 2,703 | |||||
Accrued member rewards | 973 | 961 | |||||
Deferred membership fees | 1,590 | 1,498 | |||||
Other current liabilities | 3,014 | 2,725 | |||||
Total current liabilities | 20,360 | 17,495 | |||||
LONG-TERM DEBT, excluding current portion | 6,478 | 6,573 | |||||
OTHER LIABILITIES | 1,184 | 1,200 | |||||
Total liabilities | 28,022 | 25,268 | |||||
COMMITMENTS AND CONTINGENCIES | |||||||
EQUITY | |||||||
Preferred stock $.01 par value; 100,000,000 shares authorized; no shares issued and outstanding | 0 | 0 | |||||
Common stock $.01 par value; 900,000,000 shares authorized; 439,185,000 and 437,204,000 shares issued and outstanding | 4 | 4 | |||||
Additional paid-in capital | 5,811 | 5,800 | |||||
Accumulated other comprehensive loss | (1,037 | ) | (1,014 | ) | |||
Retained earnings | 6,300 | 5,988 | |||||
Total Costco stockholders’ equity | 11,078 | 10,778 | |||||
Noncontrolling interests | 278 | 301 | |||||
Total equity | 11,356 | 11,079 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 39,378 | $ | 36,347 |
12 Weeks Ended | |||||||
November 26, 2017 | November 20, 2016 | ||||||
REVENUE | |||||||
Net sales | $ | 31,117 | $ | 27,469 | |||
Membership fees | 692 | 630 | |||||
Total revenue | 31,809 | 28,099 | |||||
OPERATING EXPENSES | |||||||
Merchandise costs | 27,617 | 24,288 | |||||
Selling, general and administrative | 3,224 | 2,940 | |||||
Preopening expenses | 17 | 22 | |||||
Operating income | 951 | 849 | |||||
OTHER INCOME (EXPENSE) | |||||||
Interest expense | (37 | ) | (29 | ) | |||
Interest income and other, net | 22 | 26 | |||||
INCOME BEFORE INCOME TAXES | 936 | 846 | |||||
Provision for income taxes | 285 | 291 | |||||
Net income including noncontrolling interests | 651 | 555 | |||||
Net income attributable to noncontrolling interests | (11 | ) | (10 | ) | |||
NET INCOME ATTRIBUTABLE TO COSTCO | $ | 640 | $ | 545 | |||
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO: | |||||||
Basic | $ | 1.46 | $ | 1.24 | |||
Diluted | $ | 1.45 | $ | 1.24 | |||
Shares used in calculation (000’s): | |||||||
Basic | 437,965 | 438,007 | |||||
Diluted | 440,851 | 440,525 | |||||
CASH DIVIDENDS DECLARED PER COMMON SHARE | $ | 0.50 | $ | 0.45 |
12 Weeks Ended | |||||||
November 26, 2017 | November 20, 2016 | ||||||
NET INCOME INCLUDING NONCONTROLLING INTERESTS | $ | 651 | $ | 555 | |||
Foreign-currency translation adjustment and other, net | (23 | ) | (345 | ) | |||
Comprehensive income | 628 | 210 | |||||
Less: Comprehensive income attributable to noncontrolling interests | 11 | 5 | |||||
COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO | $ | 617 | $ | 205 |
12 Weeks Ended | |||||||
November 26, 2017 | November 20, 2016 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income including noncontrolling interests | $ | 651 | $ | 555 | |||
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities: | |||||||
Depreciation and amortization | 335 | 297 | |||||
Stock-based compensation | 234 | 211 | |||||
Other non-cash operating activities, net | (5 | ) | (90 | ) | |||
Deferred income taxes | (2 | ) | 49 | ||||
Changes in operating assets and liabilities: | |||||||
Merchandise inventories | (1,415 | ) | (1,983 | ) | |||
Accounts payable | 2,058 | 3,707 | |||||
Other operating assets and liabilities, net | 150 | 47 | |||||
Net cash provided by operating activities | 2,006 | 2,793 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Purchases of short-term investments | (272 | ) | (402 | ) | |||
Maturities and sales of short-term investments | 311 | 416 | |||||
Additions to property and equipment | (820 | ) | (667 | ) | |||
Other investing activities, net | (4 | ) | (2 | ) | |||
Net cash used in investing activities | (785 | ) | (655 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Change in bank checks outstanding | 377 | (178 | ) | ||||
Repayments of long-term debt | (58 | ) | 0 | ||||
Tax withholdings on stock-based awards | (216 | ) | (201 | ) | |||
Repurchases of common stock | (124 | ) | (122 | ) | |||
Cash dividend payments | 0 | (198 | ) | ||||
Other financing activities, net | (37 | ) | 39 | ||||
Net cash used in financing activities | (58 | ) | (660 | ) | |||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (20 | ) | (52 | ) | |||
Net change in cash and cash equivalents | 1,143 | 1,426 | |||||
CASH AND CASH EQUIVALENTS BEGINNING OF YEAR | 4,546 | 3,379 | |||||
CASH AND CASH EQUIVALENTS END OF PERIOD | $ | 5,689 | $ | 4,805 | |||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||
Cash paid during the first quarter for: | |||||||
Interest (reduced by $4 and $5 for interest capitalized in 2018 and 2017, respectively) | $ | 54 | $ | 34 | |||
Income taxes, net | $ | 314 | $ | 171 | |||
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES: | |||||||
Cash dividend declared, but not yet paid | $ | 220 | $ | — |
November 26, 2017: | Cost Basis | Unrealized Loss, Net | Recorded Basis | ||||||||
Available-for-sale: | |||||||||||
Government and agency securities | $ | 948 | $ | (7 | ) | $ | 941 | ||||
Mortgage-backed securities | 1 | 0 | 1 | ||||||||
Total available-for-sale | 949 | (7 | ) | 942 | |||||||
Held-to-maturity: | |||||||||||
Certificates of deposit | 254 | 254 | |||||||||
Total short-term investments | $ | 1,203 | $ | (7 | ) | $ | 1,196 |
September 3, 2017: | Cost Basis | Unrealized Gains, Net | Recorded Basis | ||||||||
Available-for-sale: | |||||||||||
Government and agency securities | $ | 947 | $ | 0 | $ | 947 | |||||
Mortgage-backed securities | 1 | 0 | 1 | ||||||||
Total available-for-sale | 948 | 0 | 948 | ||||||||
Held-to-maturity: | |||||||||||
Certificates of deposit | 285 | 285 | |||||||||
Total short-term investments | $ | 1,233 | $ | 0 | $ | 1,233 |
Available-For-Sale | Held-To-Maturity | ||||||||||
Cost Basis | Fair Value | ||||||||||
Due in one year or less | $ | 177 | $ | 176 | $ | 254 | |||||
Due after one year through five years | 729 | 723 | 0 | ||||||||
Due after five years | 43 | 43 | 0 | ||||||||
Total | $ | 949 | $ | 942 | $ | 254 |
November 26, 2017: | Level 1 | Level 2 | |||||
Money market mutual funds(1) | $ | 9 | $ | 0 | |||
Investment in government and agency securities | 0 | 941 | |||||
Investment in mortgage-backed securities | 0 | 1 | |||||
Forward foreign-exchange contracts, in asset position(2) | 0 | 2 | |||||
Forward foreign-exchange contracts, in (liability) position(2) | 0 | (13 | ) | ||||
Total | $ | 9 | $ | 931 |
September 3, 2017: | Level 1 | Level 2 | |||||
Money market mutual funds(1) | $ | 7 | $ | 0 | |||
Investment in government and agency securities | 0 | 947 | |||||
Investment in mortgage-backed securities | 0 | 1 | |||||
Forward foreign-exchange contracts, in asset position(2) | 0 | 2 | |||||
Forward foreign-exchange contracts, in (liability) position(2) | 0 | (8 | ) | ||||
Total | $ | 7 | $ | 942 |
(1) | Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets. |
(2) | The asset and the liability values are included in other current assets and other current liabilities, respectively, in the accompanying condensed consolidated balance sheets. See Note 1 for additional information on derivative instruments. |
November 26, 2017 | September 3, 2017 | ||||||
1.70% Senior Notes due December 2019 | $ | 1,198 | $ | 1,198 | |||
1.75% Senior Notes due February 2020 | 499 | 498 | |||||
2.15% Senior Notes due May 2021 | 994 | 994 | |||||
2.25% Senior Notes due February 2022 | 497 | 497 | |||||
2.30% Senior Notes due May 2022 | 793 | 793 | |||||
2.75% Senior Notes due May 2024 | 991 | 991 | |||||
3.00% Senior Notes due May 2027 | 986 | 986 | |||||
Other long-term debt | 636 | 702 | |||||
Total long-term debt | 6,594 | 6,659 | |||||
Less current portion | 116 | 86 | |||||
Long-term debt, excluding current portion | $ | 6,478 | $ | 6,573 |
Shares Repurchased (000's) | Average Price per Share | Total Cost | ||||||||
First quarter of 2018 | 734 | $ | 162.51 | $ | 119 | |||||
First quarter of 2017 | 809 | $ | 151.00 | $ | 122 |
Attributable to Costco | Noncontrolling Interests | Total Equity | |||||||||
Equity at September 3, 2017 | $ | 10,778 | $ | 301 | $ | 11,079 | |||||
Comprehensive income: | |||||||||||
Net income | 640 | 11 | 651 | ||||||||
Foreign-currency translation adjustment and other, net | (23 | ) | 0 | (23 | ) | ||||||
Comprehensive income | 617 | 11 | 628 | ||||||||
Stock-based compensation | 235 | 0 | 235 | ||||||||
Release of vested restricted stock units (RSUs), including tax effects | (216 | ) | 0 | (216 | ) | ||||||
Repurchases of common stock | (119 | ) | 0 | (119 | ) | ||||||
Cash dividends declared and other | (217 | ) | (34 | ) | (251 | ) | |||||
Equity at November 26, 2017 | $ | 11,078 | $ | 278 | $ | 11,356 |
Attributable to Costco | Noncontrolling Interests | Total Equity | |||||||||
Equity at August 28, 2016 | $ | 12,079 | $ | 253 | $ | 12,332 | |||||
Comprehensive income: | |||||||||||
Net income | 545 | 10 | 555 | ||||||||
Foreign-currency translation adjustment and other, net | (340 | ) | (5 | ) | (345 | ) | |||||
Comprehensive income | 205 | 5 | 210 | ||||||||
Stock-based compensation | 211 | 0 | 211 | ||||||||
Release of vested RSUs, including tax effects | (162 | ) | 0 | (162 | ) | ||||||
Repurchases of common stock | (122 | ) | 0 | (122 | ) | ||||||
Cash dividends declared and other | (238 | ) | 0 | (238 | ) | ||||||
Equity at November 20, 2016 | $ | 11,973 | $ | 258 | $ | 12,231 |
• | 7,484,000 time-based RSUs that vest upon continued employment over specified periods of time; |
• | 127,000 performance-based RSUs, granted to certain 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 |
• | 205,000 performance-based RSUs, granted to executive officers of the Company, subject to achievement of performance targets for fiscal 2018, 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. |
Number of Units (in 000’s) | Weighted-Average Grant Date Fair Value | |||||
Outstanding at September 3, 2017 | 8,199 | $ | 128.15 | |||
Granted | 3,517 | 155.44 | ||||
Vested and delivered | (4,054 | ) | 129.45 | |||
Forfeited | (51 | ) | 134.00 | |||
Outstanding at November 26, 2017 | 7,611 | $ | 140.03 |
12 Weeks Ended | |||||||
November 26, 2017 | November 20, 2016 | ||||||
Stock-based compensation expense before income taxes | $ | 234 | $ | 211 | |||
Less recognized income tax benefit | (77 | ) | (69 | ) | |||
Stock-based compensation expense, net of income taxes | $ | 157 | $ | 142 |
12 Weeks Ended | |||||||
November 26, 2017 | November 20, 2016 | ||||||
Net income available to common stockholders used in basic and diluted net income per common share | $ | 640 | $ | 545 | |||
Weighted average number of common shares used in basic net income per common share | 437,965 | 438,007 | |||||
RSUs and other | 2,886 | 2,518 | |||||
Weighted average number of common shares and dilutive potential of common stock used in diluted net income per share | 440,851 | 440,525 | |||||
Anti-dilutive RSUs | 0 | 1,877 |
United States Operations | Canadian Operations | Other International Operations | Total | ||||||||||||
Twelve Weeks Ended November 26, 2017 | |||||||||||||||
Total revenue | $ | 22,813 | $ | 4,771 | $ | 4,225 | $ | 31,809 | |||||||
Operating income | 533 | 236 | 182 | 951 | |||||||||||
Depreciation and amortization | 252 | 32 | 51 | 335 | |||||||||||
Additions to property and equipment | 480 | 75 | 265 | 820 | |||||||||||
Net property and equipment | 12,573 | 1,836 | 4,273 | 18,682 | |||||||||||
Total assets | 27,005 | 4,138 | 8,235 | 39,378 | |||||||||||
Twelve Weeks Ended November 20, 2016 | |||||||||||||||
Total revenue | $ | 20,377 | $ | 4,099 | $ | 3,623 | $ | 28,099 | |||||||
Operating income | 506 | 191 | 152 | 849 | |||||||||||
Depreciation and amortization | 226 | 26 | 45 | 297 | |||||||||||
Additions to property and equipment | 426 | 110 | 131 | 667 | |||||||||||
Net property and equipment | 11,945 | 1,673 | 3,538 | 17,156 | |||||||||||
Total assets | 25,364 | 4,103 | 7,065 | 36,532 | |||||||||||
Year Ended September 3, 2017 | |||||||||||||||
Total revenue | $ | 93,889 | $ | 18,775 | $ | 16,361 | $ | 129,025 | |||||||
Operating income | 2,644 | 841 | 626 | 4,111 | |||||||||||
Depreciation and amortization | 1,044 | 124 | 202 | 1,370 | |||||||||||
Additions to property and equipment | 1,714 | 277 | 511 | 2,502 | |||||||||||
Net property and equipment | 12,339 | 1,820 | 4,002 | 18,161 | |||||||||||
Total assets | 24,068 | 4,471 | 7,808 | 36,347 |
• | Net sales increased 13% to $31,117, driven by an increase in comparable sales of 10% and sales at new warehouses opened since the end of the first quarter of fiscal 2017; |
• | Membership fee revenue increased 10% to $692, primarily due to sign-ups at existing and new warehouses, and the fee increase; |
• | Gross margin percentage decreased 33 basis points, due in part to a non-recurring legal settlement received in the first quarter of fiscal 2017; |
• | SG&A expenses as a percentage of net sales decreased 34 basis points, primarily driven by leveraging increased sales; |
• | Net income increased 17% to $640, or $1.45 per diluted share, compared to $545, or $1.24 per diluted share in 2017. The first quarter of 2018 was positively impacted by a $41 tax benefit, or $0.09 per diluted share, in connection with the adoption of an accounting standard related to stock-based compensation while the first quarter of fiscal 2017 benefited from a non-recurring $51M legal settlement, or $0.07 per diluted share; and |
• | On October 30, 2017, our Board of Directors declared a quarterly cash dividend of $0.50, which was paid on December 1, 2017. |
12 Weeks Ended | |||||||
November 26, 2017 | November 20, 2016 | ||||||
Net Sales | $ | 31,117 | $ | 27,469 | |||
Changes in net sales: | |||||||
U.S. | 12 | % | 3 | % | |||
Canada | 16 | % | 6 | % | |||
Other International | 17 | % | 4 | % | |||
Total Company | 13 | % | 3 | % | |||
Changes in comparable sales: | |||||||
U.S. | 10 | % | 1 | % | |||
Canada | 11 | % | 4 | % | |||
Other International | 10 | % | 0 | % | |||
Total Company | 10 | % | 1 | % | |||
Changes in comparable sales excluding the impact of changes in foreign exchange rates and gasoline prices: | |||||||
U.S. | 9 | % | 1 | % | |||
Canada | 4 | % | 5 | % | |||
Other International | 8 | % | 3 | % | |||
Total Company | 8 | % | 2 | % |
12 Weeks Ended | |||||||
November 26, 2017 | November 20, 2016 | ||||||
Membership fees | $ | 692 | $ | 630 | |||
Membership fees as a percentage of net sales | 2.22 | % | 2.29 | % | |||
Total paid members as of quarter end (000's) | 49,900 | 47,900 | |||||
Total cardholders as of quarter end (000's) | 91,500 | 87,300 |
12 Weeks Ended | |||||||
November 26, 2017 | November 20, 2016 | ||||||
Net sales | $ | 31,117 | $ | 27,469 | |||
Less merchandise costs | 27,617 | 24,288 | |||||
Gross margin | $ | 3,500 | $ | 3,181 | |||
Gross margin percentage | 11.25 | % | 11.58 | % |
12 Weeks Ended | |||||||
November 26, 2017 | November 20, 2016 | ||||||
SG&A expenses | $ | 3,224 | $ | 2,940 | |||
SG&A expenses as a percentage of net sales | 10.36 | % | 10.70 | % |
12 Weeks Ended | |||||||
November 26, 2017 | November 20, 2016 | ||||||
Preopening expenses | $ | 17 | $ | 22 | |||
Warehouse openings, including relocations | |||||||
United States | 6 | 6 | |||||
Canada | 1 | 3 | |||||
Other International | 0 | 0 | |||||
Total warehouse openings, including relocations | 7 | 9 |
12 Weeks Ended | |||||||
November 26, 2017 | November 20, 2016 | ||||||
Interest expense | $ | 37 | $ | 29 |
12 Weeks Ended | |||||||
November 26, 2017 | November 20, 2016 | ||||||
Interest income | $ | 13 | $ | 8 | |||
Foreign-currency transaction gains, net | 4 | 13 | |||||
Other, net | 5 | 5 | |||||
Interest income and other, net | $ | 22 | $ | 26 |
12 Weeks Ended | |||||||
November 26, 2017 | November 20, 2016 | ||||||
Provision for income taxes | $ | 285 | $ | 291 | |||
Effective tax rate | 30.4 | % | 34.4 | % |
12 Weeks Ended | |||||||
November 26, 2017 | November 20, 2016 | ||||||
Net cash provided by operating activities | $ | 2,006 | $ | 2,793 | |||
Net cash used in investing activities | (785 | ) | (655 | ) | |||
Net cash used in financing activities | (58 | ) | (660 | ) |
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs(1) | Maximum Dollar Value of Shares that May Yet be Purchased Under the Programs(1) | |||||||||
September 4, 2017 - October 1, 2017 | 255,000 | $ | 161.04 | 255,000 | $ | 2,708 | |||||||
October 2, 2017 - October 29, 2017 | 280,000 | 160.13 | 280,000 | 2,663 | |||||||||
October 30, 2017 - November 26, 2017 | 199,000 | 167.72 | 199,000 | 2,630 | |||||||||
Total first quarter | 734,000 | $ | 162.51 | 734,000 |
(1) | Our stock repurchase program is conducted under a $4,000 authorization approved by of our Board of Directors in April 2015, which expires in April 2019. |
Incorporated by Reference | ||||||||||
Exhibit Number | Exhibit Description | Filed Herewith | Form | Period Ending | Filing Date | |||||
10-Q | 2/15/2015 | 3/11/2015 | ||||||||
8-K | 11/2/2017 | |||||||||
8-K | 10/31/2017 | |||||||||
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101.INS | XBRL Instance Document | x | ||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | x | ||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | x | ||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | x | ||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | x | ||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | x |
COSTCO WHOLESALE CORPORATION (Registrant) | |||
December 20, 2017 | By | /s/ W. CRAIG JELINEK | |
Date | W. Craig Jelinek President, Chief Executive Officer and Director | ||
December 20, 2017 | By | /s/ RICHARD A. GALANTI | |
Date | Richard A. Galanti Executive Vice President, Chief Financial Officer and Director |
/s/ W. CRAIG JELINEK |
W. Craig Jelinek |
President and CEO |
12/18/2017 |
Costco Wholesale Corp. |
/s/ HAMILTON JAMES |
Hamilton E. James |
Chairman of the Board |
12/18/2017 |
1) | I have reviewed this Quarterly Report on Form 10-Q of Costco Wholesale Corporation (“the registrant”); |
2) | 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; |
3) | 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; |
4) | 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: |
a) | 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; |
b) | 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; |
c) | 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 |
d) | 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 |
5) | 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): |
a) | 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 |
b) | 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. |
/s/ W. CRAIG JELINEK | |
W. Craig Jelinek | |
President, Chief Executive Officer and Director |
1) | I have reviewed this Quarterly Report on Form 10-Q of Costco Wholesale Corporation (“the registrant”); |
2) | 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; |
3) | 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; |
4) | 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: |
a) | 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; |
b) | 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; |
c) | 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 |
d) | 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 |
5) | 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): |
a) | 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 |
b) | 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. |
/s/ RICHARD A. GALANTI | |
Richard A. Galanti | |
Executive Vice President, Chief Financial Officer and Director |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ W. CRAIG JELINEK | Date: December 20, 2017 | |
W. Craig Jelinek | ||
President, Chief Executive Officer and Director |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ RICHARD A. GALANTI | Date: December 20, 2017 | |
Richard A. Galanti | ||
Executive Vice President, Chief Financial Officer and Director |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Nov. 26, 2017 |
Dec. 13, 2017 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Nov. 26, 2017 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | COST | |
Entity Registrant Name | COSTCO WHOLESALE CORP /NEW | |
Entity Central Index Key | 0000909832 | |
Current Fiscal Year End Date | --09-02 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 439,105,871 |
Condensed Consolidated Balance Sheets - USD ($) |
Nov. 26, 2017 |
Sep. 03, 2017 |
---|---|---|
CURRENT ASSETS | ||
Cash and cash equivalents | $ 5,689,000,000 | $ 4,546,000,000 |
Short-term investments | 1,196,000,000 | 1,233,000,000 |
Receivables, net | 1,559,000,000 | 1,432,000,000 |
Merchandise inventories | 11,213,000,000 | 9,834,000,000 |
Other current assets | 240,000,000 | 272,000,000 |
Total current assets | 19,897,000,000 | 17,317,000,000 |
PROPERTY AND EQUIPMENT | ||
Land | 5,915,000,000 | 5,690,000,000 |
Buildings and improvements | 15,523,000,000 | 15,127,000,000 |
Equipment and fixtures | 6,859,000,000 | 6,681,000,000 |
Construction in progress | 812,000,000 | 843,000,000 |
Gross property and equipment | 29,109,000,000 | 28,341,000,000 |
Less accumulated depreciation and amortization | (10,427,000,000) | (10,180,000,000) |
Net property and equipment | 18,682,000,000 | 18,161,000,000 |
OTHER ASSETS | 799,000,000 | 869,000,000 |
TOTAL ASSETS | 39,378,000,000 | 36,347,000,000 |
CURRENT LIABILITIES | ||
Accounts payable | 11,992,000,000 | 9,608,000,000 |
Accrued salaries and benefits | 2,791,000,000 | 2,703,000,000 |
Accrued member rewards | 973,000,000 | 961,000,000 |
Deferred membership fees | 1,590,000,000 | 1,498,000,000 |
Other current liabilities | 3,014,000,000 | 2,725,000,000 |
Total current liabilities | 20,360,000,000 | 17,495,000,000 |
LONG-TERM DEBT, excluding current portion | 6,478,000,000 | 6,573,000,000 |
OTHER LIABILITIES | 1,184,000,000 | 1,200,000,000 |
Total liabilities | 28,022,000,000 | 25,268,000,000 |
COMMITMENTS AND CONTINGENCIES | ||
EQUITY | ||
Preferred stock $.01 par value; 100,000,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Common stock $.01 par value; 900,000,000 shares authorized; 439,185,000 and 437,204,000 shares issued and outstanding | 4,000,000 | 4,000,000 |
Additional paid-in capital | 5,811,000,000 | 5,800,000,000 |
Accumulated other comprehensive loss | (1,037,000,000) | (1,014,000,000) |
Retained earnings | 6,300,000,000 | 5,988,000,000 |
Total Costco stockholders' equity | 11,078,000,000 | 10,778,000,000 |
Noncontrolling interests | 278,000,000 | 301,000,000 |
Total equity | 11,356,000,000 | 11,079,000,000 |
TOTAL LIABILITIES AND EQUITY | $ 39,378,000,000 | $ 36,347,000,000 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Nov. 26, 2017 |
Sep. 03, 2017 |
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Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 900,000,000 | 900,000,000 |
Common stock, shares issued | 439,185,000 | 437,204,000 |
Common stock, shares outstanding | 439,185,000 | 437,204,000 |
Condensed Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 26, 2017 |
Nov. 20, 2016 |
|
REVENUE | ||
Net sales | $ 31,117 | $ 27,469 |
Membership fees | 692 | 630 |
Total revenue | 31,809 | 28,099 |
OPERATING EXPENSES | ||
Merchandise costs | 27,617 | 24,288 |
Selling, general and administrative | 3,224 | 2,940 |
Preopening expenses | 17 | 22 |
Operating income | 951 | 849 |
OTHER INCOME (EXPENSE) | ||
Interest expense | (37) | (29) |
Interest income and other, net | 22 | 26 |
INCOME BEFORE INCOME TAXES | 936 | 846 |
Provision for income taxes | 285 | 291 |
Net income including noncontrolling interests | 651 | 555 |
Net income attributable to noncontrolling interests | (11) | (10) |
NET INCOME ATTRIBUTABLE TO COSTCO | $ 640 | $ 545 |
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO: | ||
Basic (in dollars per share) | $ 1.46 | $ 1.24 |
Diluted (in dollars per share) | $ 1.45 | $ 1.24 |
Shares used in calculation (000's) | ||
Basic (shares) | 437,965 | 438,007 |
Diluted (shares) | 440,851 | 440,525 |
CASH DIVIDENDS DECLARED PER COMMON SHARE | $ 0.5 | $ 0.45 |
Condensed Consolidated Statements Of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 26, 2017 |
Nov. 20, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||
NET INCOME INCLUDING NONCONTROLLING INTERESTS | $ 651 | $ 555 |
Foreign-currency translation adjustment and other, net | (23) | (345) |
Comprehensive income | 628 | 210 |
Less: Comprehensive income attributable to noncontrolling interests | 11 | 5 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO | $ 617 | $ 205 |
Condensed Consolidated Statements Of Cash Flows (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 26, 2017 |
Nov. 20, 2016 |
|
Statement of Cash Flows [Abstract] | ||
Interest capitalized | $ 4 | $ 5 |
Summary of Significant Accounting Policies |
3 Months Ended |
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Nov. 26, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Policies | Description of Business Costco Wholesale Corporation (Costco or the Company), a Washington corporation, and its subsidiaries operate membership warehouses and ecommerce websites 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 26, 2017, Costco operated 746 warehouses worldwide: 518 United States (U.S.) locations (in 44 states, Washington, D.C., and Puerto Rico), 98 Canada locations, 37 Mexico locations, 28 United Kingdom (U.K.) locations, 26 Japan locations, 13 Korea locations, 13 Taiwan locations, nine Australia locations, two Spain locations, one Iceland location, and one France location. The Company operates e-commerce websites in the U.S., Canada, Mexico, U.K., Korea, and Taiwan. Basis of Presentation The condensed consolidated financial statements include the accounts of Costco, its wholly-owned subsidiaries, and subsidiaries in which it has a controlling interest. The Company reports noncontrolling interests in consolidated entities as a component of equity separate from the Company’s equity. All material inter-company transactions between and among the Company and its consolidated subsidiaries have been eliminated in consolidation. The Company’s net income excludes income attributable to noncontrolling interests in its operations in Taiwan. During the first quarter of 2018, Costco purchased its former joint venture partner's remaining equity interest in its Korean operations. Unless otherwise noted, references to net income relate to net income attributable to Costco. These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q for interim financial reporting pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). While these statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (U.S. GAAP) for complete financial statements. Therefore, the interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report filed on Form 10-K for the fiscal year ended September 3, 2017. Fiscal Year End The Company operates on a 52/53 week fiscal year basis, with the fiscal year ending on the Sunday closest to August 31. Fiscal 2018 is a 52-week year ending on September 2, 2018. References to the first quarters of 2018 and 2017 relate to the 12-week fiscal quarters ended November 26, 2017, and November 20, 2016, respectively. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results and events could differ from those estimates and assumptions. Fair Value of Financial Instruments The Company accounts for certain assets and liabilities at fair value. The carrying value of the Company’s financial instruments, including cash and cash equivalents, receivables and accounts payable, approximate fair value due to their short-term nature or variable interest rates. See Notes 2, 3, and 4 for the carrying value and fair value of the Company’s investments, derivative instruments, and fixed-rate debt, respectively. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying a fair value hierarchy, which requires maximizing the use of observable inputs when measuring fair value. The three levels of inputs are: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Significant unobservable inputs that are not corroborated by market data. Current financial liabilities have fair values that approximate their carrying values. Long-term financial liabilities include the Company's long-term debt, which are recorded on the balance sheet at issuance price and adjusted for unamortized discounts or premiums and debt issuance costs, which are being amortized to interest expense over the term of the loan. There have been no material changes to the valuation techniques utilized in the fair value measurement of assets and liabilities as disclosed in the Company's 2017 Form 10-K. Merchandise Inventories Merchandise inventories are stated at the lower of cost or market. U.S. merchandise inventories are valued by the cost method of accounting, using the last-in, first-out (LIFO) basis. The Company believes the LIFO method more fairly presents the results of operations by more closely matching current costs with current revenues. The Company records adjustments quarterly, if necessary, for the projected annual effect of inflation or deflation, and these estimates are adjusted to actual results determined at year-end, after actual inflation rates and inventory levels have been determined. Canadian and Other International merchandise inventories are predominantly valued using the cost and retail inventory methods, respectively, using the first-in, first-out (FIFO) basis. As of November 26, 2017, U.S. merchandise inventories valued at LIFO approximated FIFO after considering the lower of cost or market principle. As of September 3, 2017, the cumulative impact of the LIFO valuation on merchandise inventories was zero. Derivatives The Company is exposed to foreign-currency exchange-rate fluctuations in the normal course of business. It manages these fluctuations, in part, through the use of forward foreign-exchange contracts, seeking to economically hedge the impact of fluctuations of foreign exchange on known future expenditures denominated in a non-functional foreign-currency. The contracts relate primarily to U.S. dollar merchandise inventory expenditures made by the Company’s international subsidiaries, whose functional currency is not the U.S. dollar. These contracts do not qualify for derivative hedge accounting. The Company seeks to mitigate risk with the use of these contracts and does not intend to engage in speculative transactions. Some of these contracts contain credit-risk-related contingent features that require settlement of outstanding contracts upon certain triggering events. At November 26, 2017 and September 3, 2017, both the aggregate fair value amounts of derivative instruments in a net liability position and the amount needed to settle the instruments immediately if the credit-risk-related contingent features were triggered were immaterial. The aggregate notional amounts of unsettled forward foreign-exchange contracts were $928 and $637 at November 26, 2017, and September 3, 2017, respectively. The Company seeks to manage counterparty risk associated with these contracts by limiting transactions to counterparties with which the Company has an established banking relationship. There can be no assurance that this practice is effective. The contracts are limited to less than one year in duration. See Note 3 for information on the fair value of unsettled forward foreign-exchange contracts as of November 26, 2017, and September 3, 2017. The unrealized gains or losses recognized in interest income and other, net in the accompanying condensed consolidated statements of income relating to the net changes in the fair value of unsettled forward foreign-exchange contracts were immaterial in the first quarter of 2018 and resulted in a net gain of $30 in the first quarter of 2017. The Company is exposed to fluctuations in prices for the energy it consumes, particularly electricity and natural gas, which it seeks to partially mitigate through the use of fixed-price contracts for certain of its warehouses and other facilities, primarily in the U.S. and Canada. The Company also enters into variable-priced contracts for some purchases of natural gas and fuel for its gas stations on an index basis. These contracts meet the characteristics of derivative instruments, but generally qualify for the “normal purchases or normal sales” exception under authoritative guidance and require no mark-to-market adjustment. Foreign Currency The Company recognizes foreign-currency transaction gains and losses related to revaluing or settling monetary assets and liabilities denominated in currencies other than the functional currency in interest income and other, net in the accompanying condensed consolidated statements of income. Generally, these include the U.S. dollar cash and cash equivalents and the U.S. dollar payables of consolidated subsidiaries revalued to their functional currency. Also included are realized foreign-currency gains or losses from settlements of forward foreign-exchange contracts. These items were immaterial in the first quarter of 2018 and 2017. Stock Repurchase Programs Repurchased shares of common stock are retired, in accordance with the Washington Business Corporation Act. The par value of repurchased shares is deducted from common stock and the excess repurchase price over par value is deducted by allocation to additional paid-in capital and retained earnings. The amount allocated to additional paid-in capital is the current value of additional paid-in capital per share outstanding and is applied to the number of shares repurchased. Any remaining amount is allocated to retained earnings. See Note 5 for additional information. Recent Accounting Pronouncements Adopted In March 2016, the Financial Accounting Standards Board (FASB) issued guidance intended to simplify accounting for share-based payment transactions. The guidance relates to the accounting for income taxes, forfeitures, and minimum statutory tax withholding requirements. The new standard was effective for fiscal years and interim periods within those years beginning after December 15, 2016, with early adoption permitted. The Company adopted this guidance at the beginning of its first quarter of fiscal year 2018 and recognized an excess tax benefit of $41 as part of its income tax provision in the accompanying condensed consolidated statements of income. Previously these amounts were reflected in equity. Additionally, these amounts are now reflected as cash flows from operations instead of cash flows from financing activities in the consolidated statements of cash flows on a prospective basis. Adoption of this guidance did not have a material impact on the consolidated balance sheets, consolidated statements of cash flows, or related disclosures. Recent Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued guidance on the recognition of revenue from contracts with customers. The guidance converges the requirements for reporting revenue and requires disclosures sufficient to describe the nature, amount, timing, and uncertainty of revenue and cash flows arising from these contracts. Transition is permitted either retrospectively or as a cumulative effect adjustment as of the date of adoption. The new standard is effective for fiscal years and interim periods within those years beginning after December 15, 2017. The Company plans to adopt this guidance at the beginning of its first quarter of fiscal year 2019. While its review is continuing, based on preliminary assessments, the Company believes the new guidance will change recognition timing of cash-card breakage income to reflect the historical pattern of gift card redemption rather than the current methodology of recognizing income when redemption is considered remote. The Company will also present estimated sales returns on a gross basis rather than net of the sales return reserve on the consolidated balance sheets. The Company continues to evaluate various areas such as gross versus net revenue presentation for certain contracts, identification and treatment of performance obligations associated with membership offers, and accounting for warranty arrangements on qualified purchases. The Company continues to evaluate potential impacts on the contracts associated with the co-branded credit card arrangement as well as its adoption methodology. In February 2016, the FASB issued guidance on leases, which will require recognition on the balance sheet for the rights and obligations created by all leases with terms greater than twelve months. The standard is effective for fiscal years and interim periods within those years beginning after December 15, 2018, with early adoption permitted. The Company plans to adopt this guidance at the beginning of its first quarter of fiscal year 2020. While the Company continues to evaluate this standard and the effect on related disclosures, the primary effect of adoption will be to require recording right-of-use assets and corresponding lease obligations for current operating leases. The adoption is expected to have a material impact on the Company's consolidated balance sheets, but not on the consolidated statements of income or consolidated statements of cash flows. |
Investments |
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Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | The Company's major categories of investments have not materially changed from the annual reporting period ended September 3, 2017. The Company’s investments were as follows:
At November 26, 2017, and September 3, 2017, available-for-sale securities that were in a continuous unrealized-loss position were immaterial. During the first quarter of 2018, there were no unrealized gains or losses on cash and cash equivalents. During the first quarter of 2017, unrealized gains or losses on cash and cash equivalents were immaterial. The proceeds from sales of available-for-sale securities were $35 and $32 during the first quarter of 2018 and 2017, respectively. Gross realized gains or losses from sales of available-for-sale securities during the first quarter of 2018 and 2017 were not material. The maturities of available-for-sale and held-to-maturity securities at November 26, 2017, were as follows:
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Fair Value Measurement |
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Fair Value Measurement | Assets and Liabilities Measured at Fair Value on a Recurring Basis The tables below present information regarding financial assets and financial liabilities that are measured at fair value on a recurring basis and indicate the level within the hierarchy reflecting the valuation techniques utilized to determine fair value.
_______________
During and at the periods ended November 26, 2017, and September 3, 2017, the Company did not hold any Level 3 financial assets or liabilities that were measured at fair value on a recurring basis. There were no transfers in or out of Level 1 or 2 during the first quarter of 2018 or 2017. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Assets and liabilities recognized and disclosed at fair value on a nonrecurring basis include items such as financial assets recorded at amortized cost and long-lived nonfinancial assets. These assets are measured at fair value if determined to be impaired. There were no fair value adjustments to these items during the first quarter of 2018 or 2017. |
Debt |
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Debt | The carrying value of the Company’s long-term debt consisted of the following:
The estimated fair value of Senior Notes is valued using Level 2 inputs. Other long-term debt consists primarily of promissory notes and term loans issued by the Company's Japan subsidiary and are valued primarily using Level 3 inputs. The fair value of the Company's long-term debt, including the current portion, was approximately $6,641 and $6,753 at November 26, 2017, and September 3, 2017, respectively. |
Equity and Comprehensive Income |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity and Comprehensive Income | Dividends The Company’s current quarterly dividend rate is $0.50 per share, compared to $0.45 per share in the first quarter of 2017. On October 30, 2017, the Board of Directors declared a quarterly cash dividend in the amount of $0.50 per share, which was paid on December 1, 2017. Stock Repurchase Programs Stock repurchase activity during the first quarter of 2018 and 2017 is summarized below:
These amounts may differ from the stock repurchase balances in the accompanying condensed consolidated statements of cash flows due to changes in unsettled stock repurchases at the end of a quarter. The remaining amount available for stock repurchases under our approved plan, which expires in April 2019, was $2,630 at November 26, 2017. 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. Components of Equity and Comprehensive Income The following tables show the changes in equity attributable to Costco and the noncontrolling interests of consolidated subsidiaries:
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Stock-Based Compensation Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Plans | The Seventh Restated 2002 Stock Incentive Plan authorized the issuance of 23,500,000 shares (13,429,000 RSUs) of common stock for future grants in addition to the shares authorized under the previous plan. The Company issues new shares of common stock upon vesting of RSUs. Shares for vested RSUs are generally delivered to participants annually, net of shares for statutory withholding taxes. Summary of Restricted Stock Unit Activity At November 26, 2017, 8,109,000 shares were available to be granted as RSUs and the following awards were outstanding:
The following table summarizes RSU transactions during the first quarter of 2018:
The remaining unrecognized compensation cost related to non-vested RSUs at November 26, 2017, was $999, 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 under the Company’s plans:
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Net Income per Common and Common Equivalent Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Common and Common Equivalent Share | The following table shows the amounts used in computing net income per share and the weighted average number of shares of potentially dilutive common shares outstanding (shares in 000’s):
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Legal Proceedings The Company is involved in a number of claims, proceedings and litigation arising from its business and property ownership. In accordance with applicable accounting guidance, the Company establishes an accrual for legal proceedings if and when those matters reach a stage where they present loss contingencies that are both probable and reasonably estimable. There may be exposure to loss in excess of any 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. As of the date of this Report, the Company has recorded an immaterial accrual with respect to one matter described below, in addition to other immaterial accruals for matters not described below. If the loss contingency at issue is not both probable and reasonably estimable, the Company does not establish an accrual, but will continue to monitor the matter for developments that will make the loss contingency both probable and reasonably estimable. In each case, there is a reasonable possibility that a loss may be incurred, including a loss in excess of the applicable accrual. For matters where no accrual has been recorded, the possible loss or range of loss (including any loss in excess of the accrual) cannot, in the Company's view, be reasonably estimated because, among other things: (i) the remedies or penalties sought are indeterminate or unspecified; (ii) the legal and/or factual theories are not well developed; and/or (iii) the matters involve complex or novel legal theories or a large number of parties. The Company is a defendant in a class action alleging violation of California Wage Order 7-2001 by failing to provide seating to member service assistants who act as greeters and exit attendants in the Company’s California warehouses. Canela v. Costco Wholesale Corp., et al. (Case No. 5:13-cv-03598, N.D. Cal. filed July 1, 2013). The complaint seeks relief under the California Labor Code, including civil penalties and attorneys’ fees. The Company has filed an answer denying the material allegations of the complaint. On November 23, 2016, the Company’s Canadian subsidiary received from the Ontario Ministry of Health and Long Term Care a request for an inspection and information concerning compliance with the anti-rebate provisions in the Ontario Drug Benefit Act and the Drug Interchangeability and Dispensing Fee Act. The Company is seeking to cooperate with the request. In November 2016 and September 2017, the Company received notices of violation from the Connecticut Department of Energy and Environmental Protection regarding hazardous waste practices at its Connecticut warehouses, primarily concerning unsalable pharmaceuticals. The Company is seeking to cooperate concerning the resolution of these notices. 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; 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. |
Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | The Company and its subsidiaries are principally engaged in the operation of membership warehouses in the U.S., Canada, Mexico, U.K., Japan, Korea, Australia, Spain, Iceland and France and through a majority-owned subsidiary in Taiwan. Reportable segments are largely based on management’s organization of the operating segments for operational decisions and assessments of financial performance, which consider geographic locations. The material accounting policies of the segments are as described in the notes to the consolidated financial statements included in the Company's Annual Report filed on Form 10-K for the fiscal year ended September 3, 2017, and Note 1 above. Inter-segment net sales and expenses have been eliminated in computing total revenue and operating income. Certain operating expenses, predominantly stock-based compensation, are incurred on behalf of the Company's Canadian and Other International Operations, but are included in the U.S. Operations because those costs are not allocated internally and generally come under the responsibility of the Company's U.S. management team.
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Summary of Significant Accounting Policies (Policies) |
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Nov. 26, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements include the accounts of Costco, its wholly-owned subsidiaries, and subsidiaries in which it has a controlling interest. The Company reports noncontrolling interests in consolidated entities as a component of equity separate from the Company’s equity. All material inter-company transactions between and among the Company and its consolidated subsidiaries have been eliminated in consolidation. The Company’s net income excludes income attributable to noncontrolling interests in its operations in Taiwan. During the first quarter of 2018, Costco purchased its former joint venture partner's remaining equity interest in its Korean operations. Unless otherwise noted, references to net income relate to net income attributable to Costco. These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q for interim financial reporting pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). While these statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (U.S. GAAP) for complete financial statements. Therefore, the interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report filed on Form 10-K for the fiscal year ended September 3, 2017. |
Fiscal Year End | Fiscal Year End The Company operates on a 52/53 week fiscal year basis, with the fiscal year ending on the Sunday closest to August 31. Fiscal 2018 is a 52-week year ending on September 2, 2018. References to the first quarters of 2018 and 2017 relate to the 12-week fiscal quarters ended November 26, 2017, and November 20, 2016, respectively. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results and events could differ from those estimates and assumptions. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company accounts for certain assets and liabilities at fair value. The carrying value of the Company’s financial instruments, including cash and cash equivalents, receivables and accounts payable, approximate fair value due to their short-term nature or variable interest rates. See Notes 2, 3, and 4 for the carrying value and fair value of the Company’s investments, derivative instruments, and fixed-rate debt, respectively. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying a fair value hierarchy, which requires maximizing the use of observable inputs when measuring fair value. The three levels of inputs are: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Significant unobservable inputs that are not corroborated by market data. Current financial liabilities have fair values that approximate their carrying values. Long-term financial liabilities include the Company's long-term debt, which are recorded on the balance sheet at issuance price and adjusted for unamortized discounts or premiums and debt issuance costs, which are being amortized to interest expense over the term of the loan. There have been no material changes to the valuation techniques utilized in the fair value measurement of assets and liabilities as disclosed in the Company's 2017 Form 10-K. |
Merchandise Inventories | Merchandise Inventories Merchandise inventories are stated at the lower of cost or market. U.S. merchandise inventories are valued by the cost method of accounting, using the last-in, first-out (LIFO) basis. The Company believes the LIFO method more fairly presents the results of operations by more closely matching current costs with current revenues. The Company records adjustments quarterly, if necessary, for the projected annual effect of inflation or deflation, and these estimates are adjusted to actual results determined at year-end, after actual inflation rates and inventory levels have been determined. Canadian and Other International merchandise inventories are predominantly valued using the cost and retail inventory methods, respectively, using the first-in, first-out (FIFO) basis. As of November 26, 2017, U.S. merchandise inventories valued at LIFO approximated FIFO after considering the lower of cost or market principle. As of September 3, 2017, the cumulative impact of the LIFO valuation on merchandise inventories was zero. |
Derivatives | Derivatives The Company is exposed to foreign-currency exchange-rate fluctuations in the normal course of business. It manages these fluctuations, in part, through the use of forward foreign-exchange contracts, seeking to economically hedge the impact of fluctuations of foreign exchange on known future expenditures denominated in a non-functional foreign-currency. The contracts relate primarily to U.S. dollar merchandise inventory expenditures made by the Company’s international subsidiaries, whose functional currency is not the U.S. dollar. These contracts do not qualify for derivative hedge accounting. The Company seeks to mitigate risk with the use of these contracts and does not intend to engage in speculative transactions. Some of these contracts contain credit-risk-related contingent features that require settlement of outstanding contracts upon certain triggering events. At November 26, 2017 and September 3, 2017, both the aggregate fair value amounts of derivative instruments in a net liability position and the amount needed to settle the instruments immediately if the credit-risk-related contingent features were triggered were immaterial. The aggregate notional amounts of unsettled forward foreign-exchange contracts were $928 and $637 at November 26, 2017, and September 3, 2017, respectively. The Company seeks to manage counterparty risk associated with these contracts by limiting transactions to counterparties with which the Company has an established banking relationship. There can be no assurance that this practice is effective. The contracts are limited to less than one year in duration. See Note 3 for information on the fair value of unsettled forward foreign-exchange contracts as of November 26, 2017, and September 3, 2017. The unrealized gains or losses recognized in interest income and other, net in the accompanying condensed consolidated statements of income relating to the net changes in the fair value of unsettled forward foreign-exchange contracts were immaterial in the first quarter of 2018 and resulted in a net gain of $30 in the first quarter of 2017. The Company is exposed to fluctuations in prices for the energy it consumes, particularly electricity and natural gas, which it seeks to partially mitigate through the use of fixed-price contracts for certain of its warehouses and other facilities, primarily in the U.S. and Canada. The Company also enters into variable-priced contracts for some purchases of natural gas and fuel for its gas stations on an index basis. These contracts meet the characteristics of derivative instruments, but generally qualify for the “normal purchases or normal sales” exception under authoritative guidance and require no mark-to-market adjustment. |
Foreign Currency | Foreign Currency The Company recognizes foreign-currency transaction gains and losses related to revaluing or settling monetary assets and liabilities denominated in currencies other than the functional currency in interest income and other, net in the accompanying condensed consolidated statements of income. Generally, these include the U.S. dollar cash and cash equivalents and the U.S. dollar payables of consolidated subsidiaries revalued to their functional currency. Also included are realized foreign-currency gains or losses from settlements of forward foreign-exchange contracts. These items were immaterial in the first quarter of 2018 and 2017. |
Stock Repurchase Programs | Stock Repurchase Programs Repurchased shares of common stock are retired, in accordance with the Washington Business Corporation Act. The par value of repurchased shares is deducted from common stock and the excess repurchase price over par value is deducted by allocation to additional paid-in capital and retained earnings. The amount allocated to additional paid-in capital is the current value of additional paid-in capital per share outstanding and is applied to the number of shares repurchased. Any remaining amount is allocated to retained earnings. See Note 5 for additional information. |
Recent Accounting Pronouncements Adopted | Recent Accounting Pronouncements Adopted In March 2016, the Financial Accounting Standards Board (FASB) issued guidance intended to simplify accounting for share-based payment transactions. The guidance relates to the accounting for income taxes, forfeitures, and minimum statutory tax withholding requirements. The new standard was effective for fiscal years and interim periods within those years beginning after December 15, 2016, with early adoption permitted. The Company adopted this guidance at the beginning of its first quarter of fiscal year 2018 and recognized an excess tax benefit of $41 as part of its income tax provision in the accompanying condensed consolidated statements of income. Previously these amounts were reflected in equity. Additionally, these amounts are now reflected as cash flows from operations instead of cash flows from financing activities in the consolidated statements of cash flows on a prospective basis. Adoption of this guidance did not have a material impact on the consolidated balance sheets, consolidated statements of cash flows, or related disclosures. |
Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued guidance on the recognition of revenue from contracts with customers. The guidance converges the requirements for reporting revenue and requires disclosures sufficient to describe the nature, amount, timing, and uncertainty of revenue and cash flows arising from these contracts. Transition is permitted either retrospectively or as a cumulative effect adjustment as of the date of adoption. The new standard is effective for fiscal years and interim periods within those years beginning after December 15, 2017. The Company plans to adopt this guidance at the beginning of its first quarter of fiscal year 2019. While its review is continuing, based on preliminary assessments, the Company believes the new guidance will change recognition timing of cash-card breakage income to reflect the historical pattern of gift card redemption rather than the current methodology of recognizing income when redemption is considered remote. The Company will also present estimated sales returns on a gross basis rather than net of the sales return reserve on the consolidated balance sheets. The Company continues to evaluate various areas such as gross versus net revenue presentation for certain contracts, identification and treatment of performance obligations associated with membership offers, and accounting for warranty arrangements on qualified purchases. The Company continues to evaluate potential impacts on the contracts associated with the co-branded credit card arrangement as well as its adoption methodology. In February 2016, the FASB issued guidance on leases, which will require recognition on the balance sheet for the rights and obligations created by all leases with terms greater than twelve months. The standard is effective for fiscal years and interim periods within those years beginning after December 15, 2018, with early adoption permitted. The Company plans to adopt this guidance at the beginning of its first quarter of fiscal year 2020. While the Company continues to evaluate this standard and the effect on related disclosures, the primary effect of adoption will be to require recording right-of-use assets and corresponding lease obligations for current operating leases. The adoption is expected to have a material impact on the Company's consolidated balance sheets, but not on the consolidated statements of income or consolidated statements of cash flows. |
Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Available-for-sale and Held-to-maturity Investments | The Company’s investments were as follows:
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Maturities of Available-for-sale and Held-to-maturity Securities | The maturities of available-for-sale and held-to-maturity securities at November 26, 2017, were as follows:
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Fair Value Measurement (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Assets and Liabilities Measured on Recurring Basis | The tables below present information regarding financial assets and financial liabilities that are measured at fair value on a recurring basis and indicate the level within the hierarchy reflecting the valuation techniques utilized to determine fair value.
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Debt (Tables) |
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Carrying Value and Estimated Fair Value of Company's Long-term Debt | The carrying value of the Company’s long-term debt consisted of the following:
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Equity and Comprehensive Income (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Repurchased During Period | Stock repurchase activity during the first quarter of 2018 and 2017 is summarized below:
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Components Of Equity And Comprehensive Income | The following tables show the changes in equity attributable to Costco and the noncontrolling interests of consolidated subsidiaries:
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Stock-Based Compensation Plans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 26, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of RSU Transactions | The following table summarizes RSU transactions during the first quarter of 2018:
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Summary of Stock-Based Compensation Expense and Related Tax Benefits | The following table summarizes stock-based compensation expense and the related tax benefits under the Company’s plans:
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Net Income per Common and Common Equivalent Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 26, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table shows the amounts used in computing net income per share and the weighted average number of shares of potentially dilutive common shares outstanding (shares in 000’s):
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Segment Reporting (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 26, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Information, by Segment | Certain operating expenses, predominantly stock-based compensation, are incurred on behalf of the Company's Canadian and Other International Operations, but are included in the U.S. Operations because those costs are not allocated internally and generally come under the responsibility of the Company's U.S. management team.
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Investments - Proceeds from Sales of Available-for-sale Securities (Detail) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 26, 2017 |
Nov. 20, 2016 |
|
Investments, Debt and Equity Securities [Abstract] | ||
Proceeds | $ 35 | $ 32 |
Investments - Maturities of Available-for-sale and Held-to-maturity Securities (Details) $ in Millions |
Nov. 26, 2017
USD ($)
|
---|---|
Available-for-sale, Cost Basis | |
Due in one year or less | $ 177 |
Due after one year through five years | 729 |
Due after five years | 43 |
Available-for-sale, cost basis, total | 949 |
Available-for-sale, Fair Value | |
Due in one year or less | 176 |
Due after one year through five years | 723 |
Due after five years | 43 |
Available-for-sale, recorded basis, total | 942 |
Held-to-maturity | |
Due in one year or less | 254 |
Due after one year through five years | 0 |
Due after five years | 0 |
Held-to-maturity, cost basis, total | $ 254 |
Debt (Carrying Value and Estimated Fair Value of Company's Long-term Debt) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 26, 2017 |
Sep. 03, 2017 |
|
Debt Instrument [Line Items] | ||
Total long-term debt, carrying value | $ 6,594 | $ 6,659 |
Less current portion, carrying value | 116 | 86 |
Long-term debt, excluding current portion | 6,478 | 6,573 |
Total long-term debt, fair value | $ 6,641 | 6,753 |
1.7% Senior Notes Due December 2019 | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate, stated percentage | 1.70% | |
Debt instrument, maturity date | Dec. 15, 2019 | |
Total long-term debt, carrying value | $ 1,198 | 1,198 |
1.75% Senior Notes Due February 2020 | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate, stated percentage | 1.75% | |
Debt instrument, maturity date | Feb. 15, 2020 | |
Total long-term debt, carrying value | $ 499 | 498 |
2.15% Senior Notes Due May 2021 | ||
Debt Instrument [Line Items] | ||
Total long-term debt, carrying value | $ 994 | 994 |
2.25% Senior Notes Due February 2022 | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate, stated percentage | 2.25% | |
Debt instrument, maturity date | Feb. 15, 2022 | |
Total long-term debt, carrying value | $ 497 | 497 |
2.30% Senior Notes Due May 2022 | ||
Debt Instrument [Line Items] | ||
Total long-term debt, carrying value | 793 | 793 |
2.75% Senior Notes Due May 2024 | ||
Debt Instrument [Line Items] | ||
Total long-term debt, carrying value | 991 | 991 |
3.00% Senior Notes Due May 2027 | ||
Debt Instrument [Line Items] | ||
Total long-term debt, carrying value | 986 | 986 |
Other Long-term Debt | ||
Debt Instrument [Line Items] | ||
Total long-term debt, carrying value | $ 636 | $ 702 |
2.30% Senior Notes Due May 2022 | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate, stated percentage | 2.30% | |
Debt instrument, maturity date | May 18, 2022 | |
3.00% Senior Notes Due May 2027 | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate, stated percentage | 3.00% | |
Debt instrument, maturity date | May 18, 2027 | |
2.75% Senior Notes Due May 2024 | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate, stated percentage | 2.75% | |
Debt instrument, maturity date | May 18, 2024 | |
2.15% Senior Notes Due May 2021 | ||
Debt Instrument [Line Items] | ||
Debt instrument, interest rate, stated percentage | 2.15% | |
Debt instrument, maturity date | May 18, 2021 |
Equity and Comprehensive Income - Additional Information - Dividends (Detail) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 26, 2017 |
Nov. 20, 2016 |
|
Dividends Payable [Line Items] | ||
Dividends declared | $ 0.5 | $ 0.45 |
Payments of Dividends | $ 0 | $ 198 |
Dividend Rate | ||
Dividends Payable [Line Items] | ||
Dividends declared | $ 0.50 | $ 0.45 |
Equity and Comprehensive Income (Stock Repurchased During Period) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 26, 2017 |
Nov. 20, 2016 |
|
Equity [Abstract] | ||
Shares repurchased (000's) | 734 | 809 |
Average price per share | $ 162.51 | $ 151.00 |
Total cost | $ 119 | $ 122 |
Equity and Comprehensive Income Equity and Comprehensive Income - Additional Information - Stock Repurchase Programs (Details) $ in Millions |
Nov. 26, 2017
USD ($)
|
---|---|
Equity [Abstract] | |
Stock repurchase program, remaining authorized repurchase amount | $ 2,630 |
Changes in Equity Attributes to Costco and the Noncontrolling Interests of Consolidated Subsidiaries (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 26, 2017 |
Nov. 20, 2016 |
|
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Equity at beginning of period | $ 11,079 | $ 12,332 |
Comprehensive income: | ||
Net income | 651 | 555 |
Foreign-currency translation adjustment and other, net | (23) | (345) |
COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO | 617 | 205 |
Comprehensive income (loss), net of tax, attributable to noncontrolling interest | 11 | 5 |
Comprehensive income | 628 | 210 |
Stock-based compensation | 235 | 211 |
Release of vested restricted stock units (RSUs), including tax effects | 216 | (162) |
Stock Repurchased and Retired During Period, Value | (119) | (122) |
Cash dividends declared and other | (251) | (238) |
Equity at end of period | 11,356 | 12,231 |
Attributable to Costco | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Equity at beginning of period | 10,778 | 12,079 |
Comprehensive income: | ||
Net income | 640 | 545 |
Foreign-currency translation adjustment and other, net | (23) | (340) |
COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO | 617 | 205 |
Stock-based compensation | 235 | 211 |
Release of vested restricted stock units (RSUs), including tax effects | 216 | (162) |
Stock Repurchased and Retired During Period, Value | (119) | (122) |
Cash dividends declared and other | (217) | (238) |
Equity at end of period | 11,078 | 11,973 |
Noncontrolling Interests | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Equity at beginning of period | 301 | 253 |
Comprehensive income: | ||
Net income | 11 | 10 |
Foreign-currency translation adjustment and other, net | 0 | (5) |
Comprehensive income (loss), net of tax, attributable to noncontrolling interest | 11 | 5 |
Cash dividends declared and other | (34) | 0 |
Equity at end of period | $ 278 | $ 258 |
Stock-Based Compensation Plans - Additional Information (Detail) $ in Millions |
3 Months Ended |
---|---|
Nov. 26, 2017
USD ($)
shares
| |
Restricted Stock Units (RSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Additional number of shares authorized | 13,429,000 |
Number of shares available to be granted as RSUs | 8,109,000 |
Time-based RSUs awards outstanding | 7,484,000 |
Performance-based RSUs awards outstanding | 127,000 |
Outstanding performance-based RSUs awards granted, subject to achievement of performance targets | 205,000 |
Unrecognized compensation cost | $ | $ 999 |
Weighted-average recognition period | 1 year 9 months 18 days |
Seventh Restated 2002 Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Additional number of shares authorized | 23,500,000 |
Stock-Based Compensation Plans - Summary of RSU Transactions (Details) shares in Thousands |
3 Months Ended |
---|---|
Nov. 26, 2017
$ / shares
shares
| |
Number of units | |
Outstanding at September 3, 2017 | shares | 8,199 |
Granted | shares | 3,517 |
Vested and delivered | shares | (4,054) |
Forfeited | shares | (51) |
Outstanding at November 26, 2017 | shares | 7,611 |
Weighted average grant date fair value | |
Outstanding at September 3, 2017 | $ / shares | $ 128.15 |
Granted | $ / shares | 155.44 |
Vested and delivered | $ / shares | 129.45 |
Forfeited | $ / shares | 134.00 |
Outstanding at November 26, 2017 | $ / shares | $ 140.03 |
Stock-Based Compensation Plans - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 26, 2017 |
Nov. 20, 2016 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Stock-based compensation expense before income taxes | $ 234 | $ 211 |
Less recognized income tax benefit | (77) | (69) |
Stock-based compensation expense, net of income taxes | $ 157 | $ 142 |
Net Income per Common and Common Equivalent Share - Schedule of Earnings per Share Effect on Net Income and Weighted Average Number of Dilutive Potential Common Stock (Details) - USD ($) shares in Thousands, $ in Millions |
3 Months Ended | |
---|---|---|
Nov. 26, 2017 |
Nov. 20, 2016 |
|
Earnings Per Share [Abstract] | ||
Net income available to common stockholders used in basic and diluted net income per common share | $ 640 | $ 545 |
Weighted average number of common shares used in basic net income per common share | 437,965 | 438,007 |
RSUs and other | 2,886 | 2,518 |
Weighted average number of common shares and dilutive potential of common stock used in diluted net income per share | 440,851 | 440,525 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 1,877 |
Segment Reporting Information by Segment (Detail) $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Nov. 26, 2017
USD ($)
warehouse
|
Nov. 20, 2016
USD ($)
|
Sep. 03, 2017
USD ($)
|
|
Segment Reporting Information [Line Items] | |||
Number of Stores | warehouse | 746 | ||
Total revenue | $ 31,809 | $ 28,099 | $ 129,025 |
Operating income | 951 | 849 | 4,111 |
Depreciation and amortization | 335 | 297 | 1,370 |
Additions to property and equipment | 820 | 667 | 2,502 |
Net property and equipment | 18,682 | 17,156 | 18,161 |
Total assets | $ 39,378 | 36,532 | 36,347 |
UNITED STATES | |||
Segment Reporting Information [Line Items] | |||
Number of Stores | warehouse | 518 | ||
CANADA | |||
Segment Reporting Information [Line Items] | |||
Number of Stores | warehouse | 98 | ||
Operating Segments [Member] | UNITED STATES | |||
Segment Reporting Information [Line Items] | |||
Total revenue | $ 22,813 | 20,377 | 93,889 |
Operating income | 533 | 506 | 2,644 |
Depreciation and amortization | 252 | 226 | 1,044 |
Additions to property and equipment | 480 | 426 | 1,714 |
Net property and equipment | 12,573 | 11,945 | 12,339 |
Total assets | 27,005 | 25,364 | 24,068 |
Operating Segments [Member] | CANADA | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 4,771 | 4,099 | 18,775 |
Operating income | 236 | 191 | 841 |
Depreciation and amortization | 32 | 26 | 124 |
Additions to property and equipment | 75 | 110 | 277 |
Net property and equipment | 1,836 | 1,673 | 1,820 |
Total assets | 4,138 | 4,103 | 4,471 |
Operating Segments [Member] | Other International Operations | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 4,225 | 3,623 | 16,361 |
Operating income | 182 | 152 | 626 |
Depreciation and amortization | 51 | 45 | 202 |
Additions to property and equipment | 265 | 131 | 511 |
Net property and equipment | 4,273 | 3,538 | 4,002 |
Total assets | $ 8,235 | $ 7,065 | $ 7,808 |
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