Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 20, 202226, 2023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-20355
Costco Wholesale Corporation
(Exact name of registrant as specified in its charter)
Washington 91-1223280
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer Identification No.)
999 Lake Drive, Issaquah, WA 98027
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code): (425) 313-8100

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, $.005 Par ValueCOSTThe Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    No 

The number of shares outstanding of the issuer's common stock as of December 22, 202213, 2023 was 443,729,036.443,728,416.
1

Table of Contents

COSTCO WHOLESALE CORPORATION
INDEX TO FORM 10-Q
  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.

2

Table of Contents

PART I—FINANCIAL INFORMATION
Item 1—Financial Statements
COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(amounts in millions, except per share data) (unaudited)
12 Weeks Ended12 Weeks Ended
November 20,
2022
November 21,
2021
November 26,
2023
November 20,
2022
REVENUEREVENUEREVENUE
Net salesNet sales$53,437 $49,417 Net sales$56,717 $53,437 
Membership feesMembership fees1,000 946 Membership fees1,082 1,000 
Total revenueTotal revenue54,437 50,363 Total revenue57,799 54,437 
OPERATING EXPENSESOPERATING EXPENSESOPERATING EXPENSES
Merchandise costsMerchandise costs47,769 43,952 Merchandise costs50,457 47,769 
Selling, general and administrativeSelling, general and administrative4,917 4,718 Selling, general and administrative5,358 4,917 
Operating incomeOperating income1,751 1,693 Operating income1,984 1,751 
OTHER INCOME (EXPENSE)OTHER INCOME (EXPENSE)OTHER INCOME (EXPENSE)
Interest expenseInterest expense(34)(39)Interest expense(38)(34)
Interest income and other, netInterest income and other, net53 42 Interest income and other, net160 53 
INCOME BEFORE INCOME TAXESINCOME BEFORE INCOME TAXES1,770 1,696 INCOME BEFORE INCOME TAXES2,106 1,770 
Provision for income taxesProvision for income taxes406 351 Provision for income taxes517 406 
Net income including noncontrolling interests1,364 1,345 
Net income attributable to noncontrolling interests— (21)
NET INCOME ATTRIBUTABLE TO COSTCO$1,364 $1,324 
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
NET INCOMENET INCOME$1,589 $1,364 
NET INCOME PER COMMON SHARE:NET INCOME PER COMMON SHARE:
BasicBasic$3.07 $2.99 Basic$3.58 $3.07 
DilutedDiluted$3.07 $2.98 Diluted$3.58 $3.07 
Shares used in calculation (000s):Shares used in calculation (000s):Shares used in calculation (000s):
BasicBasic443,837 443,377 Basic443,827 443,837 
DilutedDiluted444,531 444,604 Diluted444,403 444,531 

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


3

Table of Contents

COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(amounts in millions) (unaudited)
 12 Weeks Ended
 November 20,
2022
November 21,
2021
NET INCOME INCLUDING NONCONTROLLING INTERESTS$1,364 $1,345 
Foreign-currency translation adjustment and other, net(96)(72)
Comprehensive income1,268 1,273 
Less: Comprehensive income attributable to noncontrolling interests— 23 
COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO$1,268 $1,250 
 12 Weeks Ended
 November 26,
2023
November 20,
2022
NET INCOME$1,589 $1,364 
Foreign-currency translation adjustment and other, net(38)(96)
COMPREHENSIVE INCOME$1,551 $1,268 



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

4

Table of Contents

COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in millions, except par value and share data) (unaudited)


November 20,
2022
August 28,
2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents$10,856 $10,203 
Short-term investments817 846 
Receivables, net2,312 2,241 
Merchandise inventories18,571 17,907 
Other current assets1,594 1,499 
Total current assets34,150 32,696 
OTHER ASSETS
Property and equipment, net25,144 24,646 
Operating lease right-of-use assets2,787 2,774 
Other long-term assets3,946 4,050 
TOTAL ASSETS$66,027 $64,166 
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable$18,348 $17,848 
Accrued salaries and benefits4,317 4,381 
Accrued member rewards1,959 1,911 
Deferred membership fees2,322 2,174 
Current portion of long-term debt71 73 
Other current liabilities6,050 5,611 
Total current liabilities33,067 31,998 
OTHER LIABILITIES
Long-term debt, excluding current portion6,472 6,484 
Long-term operating lease liabilities2,503 2,482 
Other long-term liabilities2,509 2,555 
TOTAL LIABILITIES44,551 43,519 
COMMITMENTS AND CONTINGENCIES
EQUITY
Preferred stock $0.005 par value; 100,000,000 shares authorized; no shares issued and outstanding— — 
Common stock $0.005 par value; 900,000,000 shares authorized; 443,841,000 and 442,664,000 shares issued and outstanding
Additional paid-in capital6,982 6,884 
Accumulated other comprehensive loss(1,925)(1,829)
Retained earnings16,412 15,585 
Total Costco stockholders’ equity21,471 20,642 
Noncontrolling interests
TOTAL EQUITY21,476 20,647 
TOTAL LIABILITIES AND EQUITY$66,027 $64,166 


November 26,
2023
September 3,
2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents$17,011 $13,700 
Short-term investments853 1,534 
Receivables, net2,542 2,285 
Merchandise inventories18,001 16,651 
Other current assets1,673 1,709 
Total current assets40,080 35,879 
OTHER ASSETS
Property and equipment, net27,168 26,684 
Operating lease right-of-use assets2,672 2,713 
Other long-term assets3,803 3,718 
TOTAL ASSETS$73,723 $68,994 
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable$20,357 $17,483 
Accrued salaries and benefits4,474 4,278 
Accrued member rewards2,207 2,150 
Deferred membership fees2,462 2,337 
Current portion of long-term debt1,080 1,081 
Other current liabilities6,188 6,254 
Total current liabilities36,768 33,583 
OTHER LIABILITIES
Long-term debt, excluding current portion5,866 5,377 
Long-term operating lease liabilities2,401 2,426 
Other long-term liabilities2,541 2,550 
TOTAL LIABILITIES47,576 43,936 
COMMITMENTS AND CONTINGENCIES
EQUITY
Preferred stock $0.005 par value; 100,000,000 shares authorized; no shares issued and outstanding— — 
Common stock $0.005 par value; 900,000,000 shares authorized; 443,787,000 and 442,793,000 shares issued and outstanding
Additional paid-in capital7,489 7,340 
Accumulated other comprehensive loss(1,843)(1,805)
Retained earnings20,499 19,521 
TOTAL EQUITY26,147 25,058 
TOTAL LIABILITIES AND EQUITY$73,723 $68,994 

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

5

Table of Contents

COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(amounts in millions) (unaudited)
12 Weeks Ended November 20, 2022
 Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Total Costco
Stockholders’
Equity
Noncontrolling
Interests
Total
Equity
 Shares (000s)Amount
BALANCE AT AUGUST 28, 2022442,664 $$6,884 $(1,829)$15,585 $20,642 $$20,647 
Net income— — — — 1,364 1,364 — 1,364 
Foreign-currency translation adjustment and other, net— — — (96)— (96)— (96)
Stock-based compensation— — 403 — — 403 — 403 
Release of vested restricted stock units (RSUs), including tax effects1,462 — (301)— — (301)— (301)
Repurchases of common stock(285)— (4)— (137)(141)— (141)
Cash dividend declared— — — — (400)(400)— (400)
BALANCE AT NOVEMBER 20, 2022443,841 $$6,982 $(1,925)$16,412 $21,471 $$21,476 


12 Weeks Ended November 21, 2021
 Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Total Costco
Stockholders’
Equity
Noncontrolling
Interests
Total
Equity
 Shares (000s)Amount
BALANCE AT AUGUST 29, 2021441,825 $$7,031 $(1,137)$11,666 $17,564 $514 $18,078 
Net income— — — — 1,324 1,324 21 1,345 
Foreign-currency translation adjustment and other, net— — — (74)— (74)(72)
Stock-based compensation— — 389 — — 389 — 389 
Release of vested RSUs, including tax effects1,686 — (355)— — (355)— (355)
Repurchases of common stock(77)— (1)— (34)(35)— (35)
Cash dividend declared— — — — (350)(350)— (350)
BALANCE AT NOVEMBER 21, 2021443,434 $$7,064 $(1,211)$12,606 $18,463 $537 $19,000 

12 Weeks Ended November 26, 2023
 Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total Costco
Stockholders’
Equity
Noncontrolling
Interests
Total
Equity
 Shares (000s)Amount
BALANCE AT SEPTEMBER 3, 2023442,793 $$7,340 $(1,805)$19,521 $25,058 $— $25,058 
Net income— — — — 1,589 1,589 — 1,589 
Foreign-currency translation adjustment and other, net— — — (38)— (38)— (38)
Stock-based compensation— — 446 — — 446 — 446 
Release of vested restricted stock units (RSUs), including tax effects1,282 — (292)— — (292)— (292)
Repurchases of common stock(288)— (5)— (157)(162)— (162)
Cash dividend declared and other— — — — (454)(454)— (454)
BALANCE AT NOVEMBER 26, 2023443,787 $$7,489 $(1,843)$20,499 $26,147 $— $26,147 


12 Weeks Ended November 20, 2022
 Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total Costco
Stockholders’
Equity
Noncontrolling
Interests
Total
Equity
 Shares (000s)Amount
BALANCE AT
AUGUST 28, 2022
442,664 $$6,884 $(1,829)$15,585 $20,642 $$20,647 
Net income— — — — 1,364 1,364 — 1,364 
Foreign-currency translation adjustment and other, net— — — (96)— (96)— (96)
Stock-based compensation— — 403 — — 403 — 403 
Release of vested RSUs, including tax effects1,462 — (301)— — (301)— (301)
Repurchases of common stock(285)— (4)— (137)(141)— (141)
Cash dividend declared— — — — (400)(400)— (400)
BALANCE AT NOVEMBER 20, 2022443,841 $$6,982 $(1,925)$16,412 $21,471 $$21,476 


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

6

Table of Contents

COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in millions) (unaudited)
12 Weeks Ended
November 20,
2022
November 21,
2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income including noncontrolling interests$1,364 $1,345 
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities:
Depreciation and amortization447 432 
Non-cash lease expense111 72 
Stock-based compensation402 388 
Other non-cash operating activities, net123 111 
Deferred income taxes(2)(2)
Changes in operating assets and liabilities:
Merchandise inventories(737)(2,760)
Accounts payable487 3,389 
Other operating assets and liabilities, net415 283 
Net cash provided by operating activities2,610 3,258 
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of short-term investments(253)(258)
Maturities of short-term investments274 444 
Additions to property and equipment(1,057)(1,055)
Other investing activities, net(21)(43)
Net cash used in investing activities(1,057)(912)
CASH FLOWS FROM FINANCING ACTIVITIES
Tax withholdings on stock-based awards(301)(355)
Repurchases of common stock(141)(37)
Cash dividend payments(400)(350)
Other financing activities, net(21)(97)
Net cash used in financing activities(863)(839)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS(37)(14)
Net change in cash and cash equivalents653 1,493 
CASH AND CASH EQUIVALENTS BEGINNING OF YEAR10,203 11,258 
CASH AND CASH EQUIVALENTS END OF PERIOD$10,856 $12,751 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the first 12 weeks of the year for:
Interest$52 $64 
Income taxes, net$214 $206 
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Financing lease assets obtained in exchange for new or modified leases$49 $118 
Operating lease assets obtained in exchange for new or modified leases$68 $61 

12 Weeks Ended
November 26,
2023
November 20,
2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$1,589 $1,364 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization501 447 
Non-cash lease expense74 111 
Stock-based compensation444 402 
Impairment of assets and other non-cash operating activities, net43 121 
Changes in operating assets and liabilities:
Merchandise inventories(1,384)(737)
Accounts payable2,854 487 
Other operating assets and liabilities, net530 415 
Net cash provided by operating activities4,651 2,610 
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of short-term investments(200)(253)
Maturities of short-term investments878 274 
Additions to property and equipment(1,040)(1,057)
Other investing activities, net(4)(21)
Net cash used in investing activities(366)(1,057)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of short-term borrowings(173)(77)
Proceeds from short-term borrowings144 29 
Proceeds from issuance of long-term debt498 — 
Tax withholdings on stock-based awards(292)(301)
Repurchases of common stock(162)(141)
Cash dividend payments(905)(400)
Financing lease payments(82)(60)
Other financing activities, net(2)87 
Net cash used in financing activities(974)(863)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS— (37)
Net increase in cash and cash equivalents3,311 653 
CASH AND CASH EQUIVALENTS BEGINNING OF YEAR13,700 10,203 
CASH AND CASH EQUIVALENTS END OF PERIOD$17,011 $10,856 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the first 12 weeks of the year for:
Interest$52 $52 
Income taxes, net$210 $214 
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Financing lease assets obtained in exchange for new or modified leases$29 $49 
Operating lease assets obtained in exchange for new or modified leases$18 $68 
The accompanying notes are an integral part of these condensed consolidated financial statements.

7

Table of Contents

COSTCO WHOLESALE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts in millions, except share, per share, and warehouse count data)
(unaudited)
Note 1—Summary of Significant Accounting Policies
Description of Business
Costco Wholesale Corporation (Costco or the Company), a Washington corporation, and its subsidiaries operate membership warehouses based on the concept that offering members low prices on a limited selection of nationally-branded and private-label products in a wide range of merchandise categories will produce high sales volumes and rapid inventory turnover. At November 20, 2022,26, 2023, Costco operated 845870 warehouses worldwide: 582599 in the United States (U.S.) located in 4647 states, Washington, D.C., and Puerto Rico, 107108 in Canada, 40 in Mexico, 3133 in Japan, 29 in the United Kingdom (U.K.), 18 in Korea, 1415 in Australia,14 in Taiwan, 13five in Australia,China, four in Spain, two each in France, and China, 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.
Basis of Presentation
The condensed consolidated financial statements include the accounts of Costco and its wholly-owned subsidiaries, and a subsidiary in which it has a controlling interest.subsidiaries. All material inter-company transactions among the Company and its consolidated subsidiaries have been eliminated in consolidation. 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 on Form 10-K for the fiscal year ended August 28, 2022.September 3, 2023.
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 20232024 is a 53-week52-week year ending on September 3, 2023.1, 2024. References to the first quarter of 20232024 and 20222023 relate to the 12-week fiscal quarters ended November 20, 2022,26, 2023, and November 21, 2021.20, 2022.
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. These estimates and assumptions take into account historical and forward-looking factors that the Company believes are reasonable. Actual results could differ from those estimates and assumptions.

8

Table of Contents

Reclassification
Reclassifications were made to the condensed consolidated statement of cash flows for the first quartertwelve weeks of 2022fiscal 2023 to conform with current year presentation.
Leases
8

Table of Contents

Recent Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued 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 leases land, buildings, equipment, and other assets at warehouses, offices, or withinis evaluating the operations that support supply chain and distribution channels. The Company reviews lease right-of-use assets for impairment when events or changes in circumstances indicate that the carrying amount of the asset group may not be fully recoverable. The Company also occasionally revisits and modifies the terms of its leasing arrangements. During the first quarter of 2023, the Company recognized a charge of $93, primarilydisclosure requirements related to the termination costs and impairment of certain leased assets associated with charter shipping activities. This charge is included in merchandise costs.new standard.
Note 2—Investments
The Company's investments were as follows:
November 20, 2022:Cost
Basis
Unrealized
Losses, Net
Recorded
Basis
November 26, 2023:November 26, 2023:Cost
Basis
Unrealized
Losses, Net
Recorded
Basis
Available-for-sale:Available-for-sale:Available-for-sale:
Government and agency securitiesGovernment and agency securities$570 $(12)$558 Government and agency securities$665 $(20)$645 
Held-to-maturity:Held-to-maturity:Held-to-maturity:
Certificates of depositCertificates of deposit259 — 259 Certificates of deposit208 — 208 
Total short-term investmentsTotal short-term investments$829 $(12)$817 Total short-term investments$873 $(20)$853 
August 28, 2022:Cost
Basis
Unrealized
Losses, Net
Recorded
Basis
September 3, 2023:September 3, 2023:Cost
Basis
Unrealized
Losses, Net
Recorded
Basis
Available-for-sale:Available-for-sale:Available-for-sale:
Government and agency securitiesGovernment and agency securities$534 $(5)$529 Government and agency securities$650 $(17)$633 
Held-to-maturity:Held-to-maturity:Held-to-maturity:
Certificates of depositCertificates of deposit317 — 317 Certificates of deposit901 — 901 
Total short-term investmentsTotal short-term investments$851 $(5)$846 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 November 20, 2022,26, 2023, and August 28, 2022September 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 quarter of 20232024 or 2022.2023.
The maturities of available-for-sale and held-to-maturity securities at November 20, 202226, 2023, are as follows:
Available-For-SaleHeld-To-Maturity Available-For-SaleHeld-To-Maturity
Cost BasisFair Value Cost BasisFair Value
Due in one year or lessDue in one year or less$220 $217 $259 Due in one year or less$120 $118 $208 
Due after one year through five yearsDue after one year through five years264 259 — Due after one year through five years362 354 — 
Due after five yearsDue after five years86 82 — Due after five years183 173 — 
TotalTotal$570 $558 $259 Total$665 $645 $208 

9

Table of Contents

Note 3—Fair Value Measurement
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The table below presents information regarding the Company’s financial assets and financial liabilities that are measured at fair value on a recurring basis and indicatesindicate the level within the fair-value hierarchy reflecting the valuation techniques utilized.
Level 2
November 20,
2022
August 28,
2022
Investment in government and agency securities$558 $529 
Forward foreign-exchange contracts, in asset position(1)
19 34 
Forward foreign-exchange contracts, in (liability) position(1)
(25)(2)
Total$552 $561 
9

Table of Contents

Level 2
November 26,
2023
September 3,
2023
Investment in government and agency securities$645 $633 
Forward foreign-exchange contracts, in asset position(1)
18 
Forward foreign-exchange contracts, in (liability) position(1)
(16)(7)
Total$636 $644 
 _______________
(1)The asset and liability values are included in other current assets and other current liabilities, respectively, in the accompanying condensed consolidated balance sheets.
At November 20, 2022,26, 2023, and August 28, 2022,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 quarter of 20232024 or 2022.2023.
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 measured at amortized cost and long-lived nonfinancial assets. These assets are measured at fair value if determined to be impaired. Please see Note 1 for additional information.There were no material fair value adjustments to these items during the first quarter 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.
Note 4—Debt
The carrying value of the Company’s long-term debt consisted of the following:
November 20,
2022
August 28,
2022
November 26,
2023
September 3,
2023
2.750% Senior Notes due May 20242.750% Senior Notes due May 2024$1,000 $1,000 2.750% Senior Notes due May 2024$1,000 $1,000 
3.000% Senior Notes due May 20273.000% Senior Notes due May 20271,000 1,000 3.000% Senior Notes due May 20271,000 1,000 
1.375% Senior Notes due June 20271.375% Senior Notes due June 20271,250 1,250 1.375% Senior Notes due June 20271,250 1,250 
1.600% Senior Notes due April 20301.600% Senior Notes due April 20301,750 1,750 1.600% Senior Notes due April 20301,750 1,750 
1.750% Senior Notes due April 20321.750% Senior Notes due April 20321,000 1,000 1.750% Senior Notes due April 20321,000 1,000 
Other long-term debtOther long-term debt574 590 Other long-term debt972 484 
Total long-term debtTotal long-term debt6,574 6,590 Total long-term debt6,972 6,484 
Less unamortized debt discounts and issuance costsLess unamortized debt discounts and issuance costs31 33 Less unamortized debt discounts and issuance costs26 26 
Less current portion(1)
Less current portion(1)
71 73 
Less current portion(1)
1,080 1,081 
Long-term debt, excluding current portionLong-term debt, excluding current portion$6,472 $6,484 Long-term debt, excluding current portion$5,866 $5,377 
 _______________
(1)Net of unamortized debt discounts and issuance costs.
The fair value of the Senior Notes is estimated using Level 2 inputs. Other long-term debt consists of Guaranteed Senior Notes issued by the Company's Japan subsidiary, valued using Level 3 inputs. In November 2023, our Japan subsidiary issued four Guaranteed Senior Notes, totaling approximately $500, at fixed interest rates ranging from 1.400% to 2.120%. 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 $5,816$6,234 and $6,033$5,738 at November 20, 2022,26, 2023, and August 28, 2022.September 3, 2023.
10

Table of Contents


Note 5—Equity
Dividends
OnA quarterly cash dividend of $1.02 per share was declared on October 12, 2022,18, 2023, and paid on November 17, 2023. The dividend was $0.90 per share in the firstquarter of 2023.
Subsequent to the end of the quarter, on December 13, 2023, the Board of Directors declared a quarterlyspecial cash dividend inof $15.00 per share, payable January 12, 2024, to shareholders of record as of the close of business on December 28, 2023. The aggregate amount of $0.90 per share, which was paid on November 10, 2022.payments will be approximately $6.7 billion.
ShareStock Repurchase ProgramPrograms
The Company's sharestock repurchase program is conducted under a $4,000 authorization by the Board of Directors, which expires in April 2023.January 2027. At November 20, 2022,26, 2023, the remaining amount available under the planprogram was $2,667.$3,401. The following table summarizes the Company's stock repurchase activity:
Shares Repurchased (000s)Average Price per ShareTotal Cost
First quarter of 2024First quarter of 2024288 $564.06 $162 
Shares Repurchased (000s)Average Price per ShareTotal Cost
First quarter of 2023First quarter of 2023285 $495.94 $141 First quarter of 2023285 $495.94 $141 
First quarter of 202277 $455.08 $35 
These amounts may differ from repurchases of common stock in the accompanying condensed consolidated statements of cash flows due to changes in unsettled stock repurchases at the end of each quarter. 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.
Note 6—Stock-Based Compensation
The 2019 Incentive Plan authorized the issuance of 17,500,000 shares (10,000,000 RSUs) of common stock for future grants, plus the remaining shares that were available for grant and the future forfeited shares from grants under the previous plan, up to a maximum of 27,800,000 shares (15,885,000 RSUs).15,885,000 RSUs. 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 withheld for taxes.
Summary of Restricted Stock Unit Activity
At November 20, 2022, 8,652,00026, 2023, 7,097,000 shares were available to be granted as RSUs, and the following awards were outstanding:
2,976,0002,726,000 time-based RSUs, which vest upon continued employment over specified periods and accelerate upon achievement of thea long-service term;
41,00069,000 performance-based RSUs granted to executive officers of the Company, for which the performance targets have been met. The awards vest upon continued employment over specified periods of time and upon achievement of thea long-service term; and
135,00090,000 performance-based RSUs granted to executive officers of the Company, subject to achievement of performance targets for fiscal 2023,2024, as determined by the Compensation Committee of the Board of Directors after the end of the fiscal year. These awards are not included in the table below or in the amount of unrecognized compensation cost.
11

Table of Contents
The following table summarizes RSU transactions during the first quarter of 2023:2024:
Number of
Units (in 000s)
Weighted-Average
Grant Date Fair Value
Number of
Units (in 000s)
Weighted-Average
Grant Date Fair Value
Outstanding at August 28, 20223,449 $338.41 
Outstanding at September 3, 2023Outstanding at September 3, 20233,045 $405.63 
GrantedGranted1,678 470.47 Granted1,573 544.28 
Vested and deliveredVested and delivered(2,090)352.56 Vested and delivered(1,810)430.49 
ForfeitedForfeited(20)385.02 Forfeited(13)446.28 
Outstanding at November 20, 20223,017 $401.75 
Outstanding at November 26, 2023Outstanding at November 26, 20232,795 $467.39 
The remaining unrecognized compensation cost related to RSUs unvested at November 20, 2022,26, 2023, was $1,139,$1,193, and the weighted-average period over which this cost will be recognized is 1.8 years.
Summary of Stock-Based Compensation
The following table summarizes stock-based compensation expense and the related tax benefits:
12 Weeks Ended12 Weeks Ended
November 20,
2022
November 21,
2021
November 26,
2023
November 20,
2022
Stock-based compensation expenseStock-based compensation expense$402 $388 Stock-based compensation expense$444 $402 
Less recognized income tax benefitsLess recognized income tax benefits89 85 Less recognized income tax benefits95 89 
Stock-based compensation expense, netStock-based compensation expense, net$313 $303 Stock-based compensation expense, net$349 $313 
Note 7—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 basic and of potentially dilutive common shares outstanding (shares in 000s):
12 Weeks Ended12 Weeks Ended
November 20,
2022
November 21,
2021
November 26,
2023
November 20,
2022
Net income attributable to Costco$1,364 $1,324 
Net incomeNet income$1,589 $1,364 
Weighted average basic sharesWeighted average basic shares443,837 443,377 Weighted average basic shares443,827 443,837 
RSUsRSUs694 1,227 RSUs576 694 
Weighted average diluted sharesWeighted average diluted shares444,531 444,604 Weighted average diluted shares444,403 444,531 
12
Basic earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is calculated based on the dilutive effect of RSUs using the treasury stock method.

Table of Contents


Note 8—Commitments and Contingencies
LegalProceedings
The Company is involved in a number ofmany claims, proceedings and litigations 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 present loss contingencies that are both probable and reasonably estimable. There may be exposure to losslosses in excess of amounts accrued. The Company monitors those matters for developments that would affect the likelihood of a loss (taking into account where applicable indemnification arrangements concerning suppliers and insurers) and the accrued amount, if any, thereof, and adjusts the amount as appropriate. The Company has recorded immaterial accruals with
12

Table of Contents
respect to certain matters 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 monitor the mattermonitors for developments that will make the 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 isIn September 2023, a defendant in an action commenced in July 2013 under the California Labor Code Private Attorneys General Act (PAGA) alleging violation of California Wage Order 7-2001 for failing to provide seating to employees who work at entrance and exit doors in California warehouses. Canela v. Costco Wholesale Corp. (Case No. 2013-1-CV-248813; Santa Clara Superior Court).The complaint seeks relief under the California Labor Code, including civil penalties and attorneys’ fees. The Company filed an answer denying the material allegations of the complaint. A bench trial was held in June and July; no decision has been issued.
In June 2022, a business center employee raised similar claims alleging failure to provide seating to employees who work at membership refund desks in California warehouses and business centers. Rodriguez v. Costco Wholesale Corp. (Case No. 22CV012847; Alameda Superior Court). The complaint seeks relief under the California Labor Code, including civil penalties and attorneys' fees. The Company filed an answer denying the material allegations of the complaint.
In December 2018, a depot employee raised similar claims, alleging that depot employees in California did not receive suitable seating or reasonably comfortable workplace temperature conditions. Lane v. Costco Wholesale Corp. (Case No. CIVDS 1908816; San Bernardino Superior Court). The Company filed an answer denying the material allegations of the complaint. In October 2019, the parties settled for an immaterial amount the seating claims on a representative basis, which received court approval in February 2020. The parties settled the temperature claims for an immaterial amount in April 2022, and court approval was received in May 2022. A February 2023 hearing has been set for a final report on the settlement.
In March 2019, employees filed a class action against the Company alleging claims under California law for failure to pay overtime, to provide meal and rest periods and itemized wage statements, to timely pay wages due to terminating employees, to pay minimum wages, and for unfair business practices. Relief is sought under the California Labor Code, including civil penalties and attorneys' fees. Nevarez v. Costco Wholesale Corp. (Case No. 2:19-cv-03454; C.D. Cal.). The Company filed an answer denying the material allegations of the complaint. In December 2019, the court issued an order denying class certification. In January 2020, the plaintiffs dismissed their Labor Code claims without prejudice, and the court remanded the action to state court. Settlement for an immaterial amount was agreed upon in February 2021. Final court approval of the settlement was granted on May 3, 2022. A proposed intervenor has appealed the denial of her motion to intervene.
13

Table of Contents
In May 2019, anformer employee filed a class action against the Company alleging claims under California law for failure to pay minimum wage, to pay overtime, to provide itemizedmeal and rest periods, to provide accurate wage statements, to timely pay final wages, due to terminating employees, to pay minimum wages,reimburse employee expenses, and for unfair business practices. RoughJordan Clower v. Costco Wholesale CorpCorporation (Case No. 1:23-cv-01621). The Company has filed a motion to dismiss.
In November 2023, a former employee filed a class action against the Company alleging claims under California law for failure to pay minimum wage, failure to pay overtime, failure to provide meal and rest breaks, failure to provide accurate wage statements, failure to reimburse expenses, failure to pay wages when due, and failure to pay sick pay. Martin Reyes v. Costco Wholesale Corporation, Sacramento County Superior Court. (Case No. 2:19-cv-01340; E.D. Cal.)23cv011351). Relief is soughtThe Company has not yet responded to the complaint.
In August 2023, a former employee of a third-party staffing company filed a letter with the California Labor and Workforce Development Agency threatening claims under the California Private Attorneys General Act for alleged Labor Code including civil penaltiesviolations consisting of minimum wage and attorneys' fees. In September 2021, the court granted Costco’s motion for partial summary judgmentovertime violations, meal and denied class certification. In August 2019, the plaintiff filed a companion case in state court seeking penalties under PAGA. rest period violations, wage statement violations and failure to pay all wages at termination.Rough Yesenia Murillo v. Real Time Staffing Services, LLC and Costco Wholesale Corp. Corporation.(Case No. FCS053454; Sonoma County Superior Court). Relief The Company is sought under the California Labor Code, including civil penalties and attorneys' fees. The state court actionnamed as an alleged joint employer. A complaint has not yet been stayed pending resolution of the federal action.filed.
In December 2020, aOctober 2023, current and former employeeemployees filed suit against the Company asserting collective and class claims on behalf of non-exempt employeesall “Junior Managers” under the Fair Labor Standards Act and New York Labor Law for failure to pay overtime compensation and for all hours worked, failure to pay certain non-exempt employees on a weekly basis,inaccurate wage notices and failure to provide proper wage statements and notices. The plaintiff also asserted individual retaliation claims.under New York law. CappadoraLock et al. v. Costco Wholesale Corp. (Case No. 1:20-cv-06067;2:23-cv-07904; E.D.N.Y.). An amended complaint wasThe Company has not yet responded to the complaint.
In October 2023, a current employee filed and the Company denied the material allegations of the amended complaint. Based on an agreement in principle concerning settlement of the matter, involving a proposed payment by the Company of an immaterial amount, the federal action has been dismissed. In April 2022, Cappadora and a second plaintiff filed an actionsuit against the Company in New York state court, asserting the same class claims asserted in the federal action under the New York Labor Lawcollective and seeking preliminary approval of the class settlement. Cappadora and Sancho v. Costco Wholesale Corp. (Index No. 604757/2022; Nassau County Supreme Court). The state court granted preliminary approval of the settlement in October 2022.
In August 2021, a former employee filed a similar suit, asserting class claims on behalf of certain non-exempt employees underall “supervisors” employed in New York Labor Law for failure to pay on a weekly basis. Umadat v. Costco Wholesale Corp. (Case No. 2:21-cv-4814; E.D.N.Y.). The Company filed an answer, denying the material allegations of the complaint. In April 2022, a former employee filed a similar suit, asserting class claims on behalf of certain non-exempt employees under New York Labor Law, as well asJersey under the Fair Labor Standards Act for failure to pay on a weekly basis and failure to pay overtime. Burian v. Costco Wholesale Corp. (Case No. 2:22-cv-02108; E.D.N.Y.). In September 2022, an amended complaint was filed, asserting class claims on behalf of certain non-exempt employees under New York LaborJersey Wage and Hour Law for failure to pay on a weekly basis.all hours worked. Shah v. Costco Wholesale Corp. (Case No. 2:23-cv-21286; D.N.J.) The Company responded by requesting permission to file a motion to dismiss. The court has not responded.yet responded to the complaint.
In February 2021, a former employee filed a class action against the Company alleging violations of California Labor Code regarding payment of wages, meal and rest periods, wage statements, reimbursement of expenses, payment of final wages to terminated employees, and for unfair business practices. Edwards v. Costco Wholesale Corp. (Case No. 5:21-cv-00716: C.D. Cal.). In May 2021, the Company filed a motion to dismiss the complaint, which was granted with leave to amend. In June 2021, the plaintiff filed an amended complaint, which the Company moved to dismiss later that month. The court granted the motion in part in July 2021 with leave to amend. In August 2021, the plaintiff filed a second amended complaint and filed a separate representative action under PAGA asserting the same Labor Code claims and seeking civil penalties and attorneys' fees. The Company filed an answer to the second amended class action complaint, denying the material allegations. The Company also filed an answer to the PAGA representative action, denying the material allegations. On September 27, 2022, the parties reached a settlement for an immaterial amount. The settlement requireswas granted final court approval.approval on October 20, 2023.
In July 2021, a former temporary staffing employee filed a class action against the Company and a staffing company, alleging violations of the California Labor Code regarding payment of wages, meal and rest periods, wage statements, the timeliness of wages and final wages, and for unfair business practices. Dimas v. Costco Wholesale Corp. (Case No. STK-CV-UOE-2021-0006024; San Joaquin Superior Court). The Company has moved to compel arbitration of the plaintiff's individual claims and to dismiss the class action complaint. On September 7, 2021, the same former employeeplaintiff filed a separate representative action under the California Private Attorneys General Act, asserting the same Labor Code violations and seeking civil
1413

Table of Contents
action under PAGA, asserting the same Labor Code violations and seeking civil penalties and attorneys' fees. The case has been stayed pending arbitration of the motion to compel in the related case.plaintiff's individual claims.
In September 2021, an employee filed a class action against the Company alleging violations of the California Labor Code regarding the alleged failure to provide sick pay, failure to timely pay wages due at separation from employment, and for violations of California's unfair competition law. De Benning v. Costco Wholesale Corp. (Case No. 34-2021-00309030-CU-OE-GDS; Sacramento Superior Court). The Company answered the complaint in January 2022, denying its material allegations. In April 2022, a settlement for an immaterial amount was agreed upon, subject to court approval. The court granted preliminaryFinal approval of the settlement was granted on October 28, 2022.February 10, 2023. A final approvalcompliance hearing is setscheduled for February 10, 2023.
In March 2022, an employee filed a class action against the Company alleging violations of the California Labor Code regarding the failure to: pay wages, provide meal and rest periods, provide accurate wage statements, timely pay final wages, and reimburse business expenses. Diaz v. Costco Wholesale Corp. (Case No. 22STCV09513; Los Angeles Superior Court). The Company filed an answer denying the material allegations.9, 2024.
In May 2022, an employee filed a PAGA-only representativePAGA action against the Company, alleging claims under the California Labor Code regarding the payment of wages, meal and rest periods, the timeliness of wages and final wages, wage statements, accurate records and business expenses. Gonzalez v. Costco Wholesale Corp. (Case No. 22AHCV00255; Los Angeles Superior Court). The Company filed an answer denying the allegations. On October 31, 2023, a settlement was reached for an immaterial amount. The settlement requires court approval.
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. In re National Prescription Opiate Litigation (MDL No. 2804) (N.D. Ohio). Included are cases that namefiled against the Company including actions filed by counties and cities in Michigan, New Jersey, Oregon, Virginia and South Carolina, a third-party payor in Ohio, and a hospital in Texas, class actions filed on behalf of infants born with opioid-related medical conditions in 40 states, and class actions and individual actions filed on behalf of individuals seeking to recover alleged increased insurance costs associated with opioid abuse in 43 states and American Samoa. Claims against the Company filed in federal court outside the MDL have been asserted by certain counties and cities in Florida and Georgia; claims filed by certain cities and counties in New York are pending in state court. Claims against the Company in state courts in New Jersey, Oklahoma, Utah, and Arizona have been dismissed. The Company is defending all of the pending matters.
Members of the Board of Directors, six corporate officers and the Company arewere defendants in a shareholder derivative action filed in June 2022 related to chicken welfare and alleged breaches of fiduciary duties. Smith, et ano. v. Vachris, et al., Superior Court of the State of Washington, County of King, No, 22-2-08937-7SEA, (filed 6/14/22, as amended, 6/30/22);22-2-08937-7SEA. The complaint seekssought from the individual defendantsdefendants' damages, injunctive relief, costs, and attorneys' fees. AOn March 28, 2023, the court granted the defendants' motion to dismiss the amended complaintaction. 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 filed.appointed to make a recommendation to the Board as to the demand.
In February 2023, Go Green Norcal, LLC filed an arbitration demand against the Company. The demand alleged a breach of a supply agreement and sought unspecified damages and cancellation of a loan from the Company. 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.
Between September 25, 2023, and October 21, 2023, five class action suits were filed against the Company alleging various privacy law violations stemming from pixel trackers on Costco.com. Birdwell v. Costco, Case No. T23-1405, Contra Costa County Superior Court; Castillo v. Costco, Case No. 2:34-cv-01548 (W.D. Wash.); Groves et ano. v. Costco, Case No. 2:23-cv-01662 (W.D. Wash.); R.S. v, Costco, Case No. 2:23-cv-01628; Stock v. Costco, Case No. 2:23-cv-08808 (C.D. Cal.). The complaints seek damages, equitable relief and attorneys’ fees under various statutes, including the Washington Consumer Protection Act, Washington Privacy Act, Electronic Communications Privacy Act, California Invasion of Privacy Act, and California Confidentiality of Medical Information Act. They also allege breach of implied
14

Table of Contents
contract, breach of fiduciary duty of confidentiality, unjust enrichment, negligence, and invasion of privacy. The Company has not yet responded to the complaints.
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.
In January 2023 the Company received a Civil Investigative Demand from the U.S. Attorney's Office, Western District of Washington, requesting documents. 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.
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; it is possible that an unfavorable outcome of some or all of the matters, however unlikely, could result in a charge that might be material to the results of an individual fiscal quarter or year.
15

Table of Contents


Note 9—Segment Reporting
The Company is principally engaged in the operation of membership warehouses through wholly owned subsidiaries in the U.S., Canada, Mexico, Japan, the U.K., Korea, Australia, Taiwan, Australia,China, Spain, France, China, Iceland, New Zealand, and Sweden. Reportable segments are largely based on management’s organization of the operating segments for operational decisions and assessments of financial performance, which considers 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 August 28, 2022,September 3, 2023, and Note 1 above. Inter-segment net sales and expenses have been eliminated in computing total revenue and operating income.
The following table provides information for the Company's reportable segments:
United States
Operations
Canadian
Operations
Other
International
Operations
TotalUnited StatesCanadaOther
International
Total
12 Weeks Ended November 20, 2022
12 Weeks Ended November 26, 202312 Weeks Ended November 26, 2023
Total revenueTotal revenue$40,145 $7,356 $6,936 $54,437 Total revenue$41,833 $7,901 $8,065 $57,799 
Operating incomeOperating income1,236 288 227 1,751 Operating income1,358 325 301 1,984 
12 Weeks Ended November 21, 2021
12 Weeks Ended November 20, 202212 Weeks Ended November 20, 2022
Total revenueTotal revenue$36,317 $7,121 $6,925 $50,363 Total revenue$40,145 $7,356 $6,936 $54,437 
Operating incomeOperating income1,118 293 282 1,693 Operating income1,236 288 227 1,751 
52 Weeks Ended August 28, 2022
53 Weeks Ended September 3, 202353 Weeks Ended September 3, 2023
Total revenueTotal revenue$165,294 $31,675 $29,985 $226,954 Total revenue$176,630 $33,056 $32,604 $242,290 
Operating incomeOperating income5,268 1,346 1,179 7,793 Operating income5,392 1,448 1,274 8,114 
Disaggregated Revenue
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:
12 Weeks Ended12 Weeks Ended
November 20,
2022
November 21,
2021
November 26,
2023
November 20,
2022
Foods and SundriesFoods and Sundries$21,448 $19,563 Foods and Sundries$23,024 $21,448 
Non-FoodsNon-Foods14,032 14,162 Non-Foods14,766 14,032 
Fresh FoodsFresh Foods6,717 6,439 Fresh Foods7,328 6,717 
Warehouse Ancillary and Other BusinessesWarehouse Ancillary and Other Businesses11,240 9,253 Warehouse Ancillary and Other Businesses11,599 11,240 
Total net salesTotal net sales$53,437 $49,417 Total net sales$56,717 $53,437 


16

Table of Contents
Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations
(amounts in millions, except per share, share, percentages and warehouse count data)
FORWARD-LOOKING STATEMENTS
Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For these purposes, forward-looking statements are statements that address activities, events, conditions or developments that the Company expects or anticipates may occur in the future and may relate to such matters as net sales growth, changes in comparable sales, cannibalization of existing locations by new openings, price or fee changes, earnings performance, earnings per share, stock-based compensation expense, warehouse openings and closures, capital spending, the effect of adopting certain accounting standards, future financial reporting, financing, margins, return on invested capital, strategic direction, expense controls, membership renewal rates, shopping frequency, litigation, and the demand for our products and services. In some cases, forward-looking statements can be identified because they contain words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or similar expressions and the negatives of those terms. Such forward-looking statements involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated by such statements. These risks and uncertainties include, but are not limited to, domestic and international economic conditions, including exchange rates, inflation or deflation, the effects of competition and regulation, uncertainties in the financial markets, consumer and small-businesssmall business spending patterns and debt levels, breaches of security or privacy of member or business information, conditions affecting the acquisition, development, ownership or use of real estate, capital spending, actions of vendors, rising costs associated with employees (generally including health-care costs), energy and certain commodities, geopolitical conditions (including tariffs and the Ukraine conflict), the ability to maintain effective internal control over financial reporting, regulatory and other impacts related to climate change, COVID-19public-health related factors, and challenges, and other risks identified from time to time in the Company's public statements and reports filed with the Securities and Exchange Commission (SEC).Commission. Forward-looking statements speak only as of the date they are made, and the Company does not undertake to update these statements, except as required by law.
OVERVIEW
The following Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to promote understanding of the results of operations and financial condition. MD&A is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the accompanying Notes to Financial Statements (Part I, Item 1 of this Form 10-Q), as well as our consolidated financial statements, the accompanying Notes to Financial Statements, and the related Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal year 20222023 Form 10-K, filed with the United States Securities and Exchange Commission (SEC) on October 5, 2022.11, 2023.
We operate membership warehouses and e-commerce websites based on the concept that offering our members low prices on a limited selection of nationally-branded and private-label products in a wide range of categories will produce high sales volumes and rapid inventory turnover. When combined with the operating efficiencies achieved by volume purchasing, efficient distribution and reduced handling of merchandise in no-frills, self-service warehouse facilities, these volumes and turnover enable us to operate profitably at significantly lower gross margins (net sales less merchandise costs) than most other retailers. We often sell inventory before we are required to pay for it, even while taking advantage of early payment discounts.
We believe that the most important driver of our profitability is increasing net sales, particularly comparable sales. Net sales includes our core merchandise categories (foods and sundries, non-foods, and fresh foods), warehouse ancillary (gasoline, pharmacy, optical, food court, hearing aids, and tire installation) and other businesses (e-commerce, business centers, travel and other). We defineComparable sales is
17

Table of Contents


comparable salesdefined as net sales from warehouses open for more than one year, including remodels, relocations and expansions, and sales related to e-commerce websites operating for more than one year. The measure is intended as supplemental information and is not a substitute for net sales presented in accordance with U.S. generally accepted accounting principles (U.S. GAAP). Comparable sales growth is achieved through increasing shopping frequency from new and existing members and the amount they spend on each visit (average ticket). Sales comparisons can also be particularly influenced by certain factors that are beyond our control: fluctuations in currency exchange rates (with respect to our international operations); inflation or deflation and changes in the cost of gasoline and associated competitive conditions. The higher our comparable sales exclusive of these items, the more we can leverage our SG&A expenses, reducing them as a percentage of sales and enhancing profitability. Generating comparable sales growth is foremost a question of making available to our members the right merchandise at the right prices, a skill that we believe we have repeatedly demonstrated over the long-term. Another substantial factor in net sales growth is the health of the economies in which we do business, including the effects of inflation or deflation, especially the United States. Net sales growth and gross margins are also impacted by our competition, which is vigorous and widespread, across a wide range of global, national and regional wholesalers and retailers, including those with e-commerce operations. While we cannot control or reliably predict general economic health or changes in competition, we believe that we have been successful historically in adapting our business to these changes, such as through adjustments to our pricing and merchandise mix, including increasing the penetration of our private-label items, and through online offerings.
Our philosophy is to provide our members with quality goods and services at competitive prices. We do not focus in the short-term on maximizing prices charged, but instead seek to maintain what we believe is a perception among our members of our “pricing authority” – consistently providing the most competitive values. Merchandise costs in the first quarter of 2023 was impacted by inflation higher than what we have experienced in recent years. The impact to our net sales and gross margin is influenced in part by our merchandising and pricing strategies in response to cost increases. Those strategies can include, but are not limited to, working with our suppliers to share in absorbing cost increases, earlier-than-usual purchasing and in greater volumes, offering seasonal merchandise outside its season, as well as passing cost increases on to our members. Our investments in merchandise pricing may include reducing prices on merchandise to drive sales or meet competition and holding prices steady despite cost increases instead of passing the increases on to our members, all negatively impacting gross margin and gross margin as a percentage of net sales (gross margin percentage).
We believe our gasoline business enhances traffic in our warehouses, but it generally has a lower gross margin percentage relative to our non-gasoline businesses. It also hasand lower SG&A expenses as a percent of net sales comparedexpense, relative to our non-gasoline businesses. A higher penetration of gasoline sales will generally lower our gross margin percentage. Rapidly changing gasoline prices may significantly impact our near-term net sales growth. Generally, rising gasoline prices benefit net sales growth which, given the higher sales base, negatively impacts our gross margin percentage but decreases our SG&A expenses as a percentage of net sales. A decline in gasoline prices has the inverse effect. Additionally, government
Government actions in various countries relating to tariffs, particularly China and the United States, have affected the costs of some of our merchandise. The degree of our exposure is dependent on (among other things) the type of goods, rates imposed, and timing of the tariffs. Higher tariffs could adversely impact our results.
We also achieve net sales growth by opening new warehouses. As our warehouse base grows, available and desirable sites become more difficult to secure, and square footage growth becomes a comparatively less substantial component of growth. The negative aspects of such growth, however, including lower initial operating profitability relative to existing warehouses and cannibalization of sales at existing warehouses when openings occur in existing markets, are continuing to decline in significance as they relate to the results of our total operations. Our rate of square footage growth is generally higher in foreign markets, due to the smaller base in those markets, and we expect that to continue. Our e-commerce business, domestically and internationally, generally has a lower gross margin percentage than our warehouse operations.
The membership format is an integral part of our business and has a significant effect on our profitability. This format is designed to reinforce member loyalty and provide continuing fee revenue. The extent to which we achieve growth in our membership base, increase the penetration of our Executive members,
18

Table of Contents


which we achieve growth in our membership base, increase the penetration of our Executive members, and sustain high renewal rates materially influences our profitability. Our paid membershippaid-membership growth rate may be adversely impacted when warehouse openings occur in existing markets as compared to new markets.
Our financial performance depends heavily on controlling costs. While we believe that we have achieved successes in this area, some significant costs are partially outside our control, particularly health care and utility expenses. With respect to the compensation of our employees, our philosophy is not to seek to minimize their wages and benefits. Rather, we believe that achieving our longer-term objectives of reducing employee turnover and enhancing employee satisfaction requirerequires maintaining compensation levels that are better than the industry average for much of our workforce. This may cause us, for example, to absorb costs that other employers might seek to pass through to their workforces. Because our business operates on very low margins, modest changes in various items in the consolidated statements of income, particularly merchandise costs and SG&A expenses, can have substantial impacts on net income.
Our operating model is generally the same across our U.S., Canadian, and Other International operating segments (see Note 9 to the condensed consolidated financial statements included in Part I, Item 1, of this Report). Certain operations in the Other International segment have relatively higher rates of square footage growth, lower wage and benefit costs as a percentage of sales, less or no direct membership warehouse competition, or lack e-commerce or business delivery.
In discussions of our consolidated operating results, we refer to the impact of changes in foreign currencies relative to the U.S. dollar, which are differences between the foreign-exchange rates we use to convert the financial results of our international operations from local currencies into U.S. dollars. This impact of foreign-exchange rate changes is calculated based on the difference between the current and prior period's currency exchange rates. The impact of changes in gasoline prices on net sales is calculated based on the difference between the current and prior period's average price per gallon sold. Results expressed excluding the impacts of foreign exchange and gasoline prices are intended as supplemental information and are not a substitute for net sales presented in accordance with U.S. GAAP and should be reviewed in conjunction with results reported in accordance with U.S. GAAP.
Our fiscal year ends on the Sunday closest to August 31. References to the first quarter of 20232024 and 20222023 relate to the 12-week fiscal quarters ended November 20, 2022,26, 2023, and November 21, 2021.20, 2022. Certain percentages presented are calculated using actual results prior to rounding. Unless otherwise noted, references to net income relate to net income attributable to Costco.
Highlights for the first quarter of 20232024 versus 20222023 include:
Net sales increased 8%6% to $53,437,$56,717, driven by ana 4% increase in comparable sales of 7% and sales at 2225 net new warehouses opened since the end of the first quarter of 2022;2023;
Membership fee revenue increased 6%8% to $1,000,$1,082, driven by new member sign-ups, upgrades to Executive Membership, and an increase in oura higher renewal rate;
Gross margin percentage decreased 45increased 43 basis points, driven primarily by our core merchandise categorieswarehouse operations and other businesses and the absence of a charge of $93, $0.15 per diluted share, predominantly related to downsizingthe discontinuation of our charter shipping activities. Thisactivities, which was partially offset by increasesrecorded in warehouse ancillary and other businesses;the first quarter of 2023;
SG&A expenses as a percentage of net sales decreased 35increased 25 basis points, primarily due to a write-offincreased costs in warehouse operations and other businesses, including the impact of information technology assets of $118, $0.20 per diluted share, recordedwage increases in the first quarter of 2022,March and leveraging increased sales in the first quarter of 2023.September 2023;
The provision for income taxes in the first quarter of 20232024 was positively impacted by a benefit related to stock compensation of $53, $0.12$44, $0.10 per diluted share, compared to $91, $0.21$53, $0.12 per diluted share, in the first quarter of 2022.2023;
Net income was $1,589, $3.58 per diluted share, compared to $1,364, $3.07 per diluted share compared to $1,324, $2.98in 2023;
A quarterly cash dividend of $1.02 per diluted share in 2022;was declared on October 18, 2023, and paid on November 17, 2023; and
On October 12, 2022, ourSubsequent to the end of the quarter, on December 13, 2023, the Board of Directors declared a quarterlyspecial cash dividend of $0.90$15.00 per share, which was paid on November 10, 2022.payable January 12, 2024.
19

Table of Contents


RESULTS OF OPERATIONS
Net Sales
12 Weeks Ended12 Weeks Ended
November 20,
2022
November 21,
2021
November 26,
2023
November 20,
2022
Net SalesNet Sales$53,437 $49,417 Net Sales$56,717 $53,437 
Changes in net sales:Changes in net sales:Changes in net sales:
U.S11 %16 %
U.S.U.S.%11 %
CanadaCanada%19 %Canada%%
Other InternationalOther International— %17 %Other International16 %— %
Total CompanyTotal Company%17 %Total Company%%
Changes in comparable sales:Changes in comparable sales:Changes in comparable sales:
U.S%15 %
U.S.U.S.%%
CanadaCanada%17 %Canada%%
Other InternationalOther International(3)%13 %Other International11 %(3)%
Total CompanyTotal Company%15 %Total Company%%
E-commerceE-commerce(4)%14 %E-commerce%(4)%
Changes in comparable sales excluding the impact of changes in foreign-currency and gasoline prices:Changes in comparable sales excluding the impact of changes in foreign-currency and gasoline prices:Changes in comparable sales excluding the impact of changes in foreign-currency and gasoline prices:
U.S%10 %
U.S.U.S.%%
CanadaCanada%%Canada%%
Other InternationalOther International%11 %Other International%%
Total CompanyTotal Company%10 %Total Company%%
E-commerceE-commerce(2)%13%E-commerce%(2)%
Net Sales
Net sales increased $4,020$3,280 or 8%6%, during the first quarter of 2023. This2024. The improvement was attributable to an increase in comparable sales of 7%4%, and sales at the 2225 net new warehouses opened since the end of the first quarter of 2022.2023. Sales increased $2,033,$2,921, or 5.1%7% in core merchandise categories, led by fresh foods and sundriesfoods and fresh foods; while non-foods decreased slightly.sundries. Sales increased $1,987, or 21.5% in warehouse ancillary and other businesses increased $359, or 3%, led by gasoline, business centers and travel businesses.pharmacy.
During the first quarter of 2023, higher2024, lower gasoline prices positivelynegatively impacted net sales by $1,216, 246$341, 64 basis points, compared to 2022,2023, with a 17% increase4% decrease in the average price per gallon. The volume of gasoline sold increased approximately 10%, positively impacting net sales by $650, 131 basis points. ChangesChanges in foreign currencies relative to the U.S. dollar negativelypositively impacted net sales by approximately $1,534, 310$195, 36 basis points, compared to the first quarter of 2022,2023, attributable to our Canadian and Other International operations, partially offset by our Canadian operations.
Comparable Sales
Comparable sales increased 7%4% in the first quarter of 20232024 and were positively impacted by increases in shopping frequency, and thepartially offset by a slight decrease in average ticket, which includes the effects of inflation and changes in foreign currency.ticket.
20

Table of Contents


Membership Fees
12 Weeks Ended12 Weeks Ended
November 20,
2022
November 21,
2021
November 26,
2023
November 20,
2022
Membership feesMembership fees$1,000 $946 Membership fees$1,082 $1,000 
Membership fees increaseMembership fees increase%10 %Membership fees increase%%
Total paid members (000s)Total paid members (000s)66,900 62,500 Total paid members (000s)72,000 66,900 
Total cardholders (000s)Total cardholders (000s)120,900 113,100 Total cardholders (000s)129,500 120,900 
Membership fee revenue increased 6% in the first quarter of 2023,8%, driven by new member sign-ups, upgrades to Executive Membership, and an increase in oura higher renewal rate. Changes in foreign currencies relative to the U.S. dollar negatively impacted membership fees by $32, compared to the first quarter of 2022. At the end of the first quarter of 2023,2024, our member renewal rates were 93%92.8% in the U.S. and Canada and 90%90.5% worldwide. Renewal rates continue to benefitbenefited from more members auto renewing and increasedhigher penetration of Executive members, who on average renew at a higher rate.members. Our renewal rate, which excludes affiliates of Business members, is a trailing calculation that captures renewals during the period seven to eighteen months prior to the reporting date.
We account for membership fee revenue on a deferred basis, recognized ratably over the one-year membership period. Our membership counts include active memberships and memberships that have not renewed within the 12 months prior to the reporting date.
Gross Margin
12 Weeks Ended12 Weeks Ended
November 20,
2022
November 21,
2021
November 26,
2023
November 20,
2022
Net salesNet sales$53,437 $49,417 Net sales$56,717 $53,437 
Less merchandise costsLess merchandise costs47,769 43,952 Less merchandise costs50,457 47,769 
Gross marginGross margin$5,668 $5,465 Gross margin$6,260 $5,668 
Gross margin percentageGross margin percentage10.61 %11.06 %Gross margin percentage11.04 %10.61 %
Total grossGross margin percentage decreased 45increased 43 basis points compared to the first quarter of 2022.points. Excluding the impact of gasoline price inflationdeflation on net sales, gross margin percentage was 10.85%10.97%, a decreasean increase of 2136 basis points. ThisThe 36 basis-point increase was positively impacted by: 22 basis points related to our warehouse ancillary and other businesses, primarily gasoline and e-commerce; 17 basis points due to the absence of a charge related to the discontinuation of our charter shipping activities that was recorded in the first quarter of 2023; and three basis points due to a 31 basis-point decrease inLIFO benefit. These were partially offset by: three basis points due to core merchandise categories, predominantly in non-foodsfresh foods; and fresh foods, and an 18 basis-point charge, primarily related to downsizing our charter shipping activities. Gross margin was also negatively impacted by fivethree basis points due to increased 2% rewards. Warehouse ancillary and other businesses positively impacted gross margin by 30 basis points, predominantly gasoline, partially offset by e-commerce. A smaller LIFO charge in the first quarter of 2023 compared to the first quarter of 2022 positively contributed three basis points. Changes in foreign currencies relative to the U.S. dollar negatively impacted gross margin by approximately $153, compared to the first quarter of 2022, attributable to our Canadian and Other International operations.
The gross margin in core merchandise categories, when expressed as a percentage of core merchandise sales (rather than total net sales), decreased 31increased five basis points. The decreaseincrease was primarily due to fresh foods and non-foods, partially offset by fresh foods and foods and sundries. This measure eliminates the impact of changes in sales penetration and gross margins from our warehouse ancillary and other businesses.
21

Table of Contents


Gross margin on a segment basis, when expressed as a percentage of the segment's own sales and excluding the impact of changes in gasoline prices on net sales (segment gross margin percentage), decreasedincreased across all segments. Our U.S. segment performed similarly to the results above. The increases in our Canadian and Other International segments were primarily due to increases in warehouse ancillary and other businesses and core merchandise categories. All segments were negatively impacted by decreases in core merchandise categories as described above and increased 2% rewards, partially offset by increases in warehouse ancillary and other businesses. Gross margin in our U.S. segment was also negatively impacted by the charge primarily related to the downsizingrewards.
21

Table of our charter shipping activities, partially offset by a lower LIFO charge.Contents


Selling, General and Administrative Expenses
12 Weeks Ended12 Weeks Ended
November 20,
2022
November 21,
2021
November 26,
2023
November 20,
2022
SG&A expensesSG&A expenses$4,917 $4,718 SG&A expenses$5,358 $4,917 
SG&A expenses as a percentage of net salesSG&A expenses as a percentage of net sales9.20 %9.55 %SG&A expenses as a percentage of net sales9.45 %9.20 %
SG&A expenses as a percentage of net sales decreased 35increased 25 basis points. SG&A expenses as a percentage of net sales excluding the impact of gasoline price inflationdeflation was 9.42%9.39%, a decreasean increase of 1319 basis points. The comparison to last year was favorablynegatively impacted by 2414 basis points from a write-off of certain information technology assets in the prior year. Stock compensation was also lower by one basis point. Warehousewarehouse operations and other businesses which included the impact of wage increases in March and September 2023. Stock compensation and preopening costs were each higher by ninetwo basis points, largely attributable to the wage increases we instituted in 2022. Centraland central operating costs were higher by threeone basis points. Changes in foreign currencies relative to the U.S. dollar decreased SG&A expenses by approximately $121 compared to the first quarter of 2022.point.
Interest Expense
12 Weeks Ended
November 20,
2022
November 21,
2021
Interest expense$34 $39 
12 Weeks Ended
November 26,
2023
November 20,
2022
Interest expense$38 $34 
Interest expense is primarily related to Senior Notes and financing leases. Interest expense decreased in the first quarter of 2023 due to repayment of the 2.300% Senior Notes on December 1, 2021.
Interest Income and Other, Net
12 Weeks Ended12 Weeks Ended
November 20,
2022
November 21,
2021
November 26,
2023
November 20,
2022
Interest incomeInterest income$54 $Interest income$154 $54 
Foreign-currency transaction gains (losses), netForeign-currency transaction gains (losses), net(9)26 Foreign-currency transaction gains (losses), net(9)
Other, netOther, netOther, net
Interest income and other, netInterest income and other, net$53 $42 Interest income and other, net$160 $53 
The increase in interest income in the first quarter of 2023 was primarily due to higher global interest rates.rates and higher average cash and investment balances. Foreign-currency transaction gains (losses), net, include the mark-to-market adjustments for forward foreign-exchange contracts and the revaluation or settlement of monetary assets and liabilities by our Canadian and Other International operations.operations and mark-to-market adjustments for forward foreign-exchange contracts. See Derivatives and Foreign Currency sections in Item 8, Note 1 of our Annual Report on Form 10-K, for the fiscal year ended August 28, 2022.
22

Table of Contents


September 3, 2023.
Provision for Income Taxes
12 Weeks Ended 12 Weeks Ended
November 20,
2022
November 21,
2021
November 26,
2023
November 20,
2022
Provision for income taxesProvision for income taxes$406 $351 Provision for income taxes$517 $406 
Effective tax rateEffective tax rate23.0 %20.7 %Effective tax rate24.5 %23.0 %
The effective tax rate for the first quarter of 2024 was impacted by net discrete tax benefits of $40, primarily due to excess tax benefits related to stock compensation. Excluding discrete net tax benefits, the tax rate was 26.4% for the first quarter of 2024.
The effective tax rate for the first quarter of 2023 was impacted by net discrete tax benefits of $56, primarily attributabledue to $53 in excess tax benefits related to stock compensation. Excluding discrete net tax benefits, the tax rate was 26.1% for the first quarter of 2023.
The effective tax rate for the first quarter
22

Table of 2022 was impacted by net discrete tax benefits of $97, primarily attributable to $91 in excess tax benefits related to stock compensation. Excluding discrete net tax benefits, the tax rate was 26.4% for the first quarter of 2022.Contents


LIQUIDITY AND CAPITAL RESOURCES
The following table summarizes our significant sources and uses of cash and cash equivalents:
12 Weeks Ended12 Weeks Ended
November 20,
2022
November 21,
2021
November 26,
2023
November 20,
2022
Net cash provided by operating activitiesNet cash provided by operating activities$2,610 $3,258 Net cash provided by operating activities$4,651 $2,610 
Net cash used in investing activitiesNet cash used in investing activities(1,057)(912)Net cash used in investing activities(366)(1,057)
Net cash used in financing activitiesNet cash used in financing activities(863)(839)Net cash used in financing activities(974)(863)
Our primary sources of liquidity are cash flows from our operations, cash and cash equivalents, and short-term investments. Cash and cash equivalents and short-term investments were $11,673$17,864 and $11,049$15,234 at November 20, 2022,26, 2023, and August 28, 2022.September 3, 2023. Of these balances, unsettled credit and debit card receivables represented approximately $2,488$2,603 and $2,010$2,282 at November 20, 2022,26, 2023, and August 28, 2022.September 3, 2023. These receivables generally settle within four days.
Material contractual obligations arising in the normal course of business primarily consist of purchase obligations, long-term debt and related interest payments, leases, and construction and land purchase obligations.
Purchase obligations consist of contracts primarily related to merchandise, equipment, and third-party services, the majority of which are due in the next 12 months. Construction and land purchase obligations consist of contracts primarily related to the development and opening of new and relocated warehouses, the majority of which (other than leases) are due in the next 12 months.
Management believes that our cash and investment position and operating cash flows with capacity under existing and available credit agreements will be sufficient to meet our liquidity and capital requirements for the foreseeable future. We believe that our U.S. current and projected asset position is sufficient to meet our U.S. liquidity requirements.
Cash Flows from Operating Activities
Net cash provided by operating activities totaled $4,651 in the first quarter of 2024, compared to $2,610 in the first quarter of 2023, compared to $3,258 in the first quarter of 2022.2023. Our cash flow provided by operations is primarily from net sales and membership fees. Cash flow used in operations generally consists of payments to merchandise suppliers, warehouse operating costs, including payroll and employee benefits, utilities, and credit and debit card processing fees. Cash used in operations also includes payments for income taxes. Changes in our net investment in merchandise inventories (the difference between merchandise inventories and accounts payable) is
23

Table of Contents


impacted by several factors, including inventory levels and turnover, the forward deployment of inventory to accelerate delivery times, payment terms with suppliers, and early payments to obtain discounts.
Cash Flows from Investing Activities
Net cash used in investing activities totaled $366 in the first quarter of 2024, compared to $1,057 in the first quarter of 2023, compared to $912 in the first quarter of 2022, and is primarily related to capital expenditures. Net cash from investing activities also includes purchases and maturities of short-term investments.
Capital Expenditure Plans
Our primary requirements for capital are acquiring land, buildings, and equipment for new and remodeled warehouses. Capital is also required for information systems, manufacturing and distribution facilities, initial warehouse operations, and working capital. In the first quarter of 2023,2024, we spent $1,057$1,040 on capital expenditures, and it is our current intention to spend approximately $3,800$4,400 to $4,000$4,600 during fiscal 2023.2024. These expenditures are expected to be financed with cash from operations, existing cash and cash equivalents, and short-term investments. We opened eight10 new warehouses, including one relocation, in the
23

Table of Contents


first quarter of 20232024 and plan to open 1923 additional new warehouses, including two relocations,one relocation, in the remainder of fiscal 2023.2024. There can be no assurance that current expectations will be realized, and plans are subject to change upon further review of our capital expenditure needs and the economic environment.
Cash Flows from Financing Activities
Net cash used in financing activities totaled $974 in the first quarter of 2024, compared to $863 in the first quarter of 2023, compared to $839 in the first quarter of 2022.2023. Cash flow used in financing activities during the first quarter of 2024 was primarily related to the payment of dividends, withholding taxes on stock-based awards, and repurchases of common stock. In November 2023, our Japanese subsidiary issued four Guaranteed Senior Notes totaling approximately $500 at fixed interest rates ranging from 1.400% to 2.120%.
Dividends
On October 12, 2022, our Board declared aA quarterly cash dividend of $0.90$1.02 per share was declared on October 18, 2023, payable to shareholders of record on October 28, 2022,November 3, 2023, which was paid on November 10, 2022.17, 2023.
Subsequent to the end of the quarter, on December 13, 2023, the Board of Directors declared a special cash dividend of $15.00 per share, payable January 12, 2024, to shareholders of record as of the close of business on December 28, 2023. The aggregate amount of payments will be approximately $6.7 billion.
Share Repurchase Program
On January 19, 2023, the Board of Directors authorized a share repurchase program in the amount of $4,000, which expires in January 2027. During the first quarter of 20232024 and 2022,2023, we repurchased 285,000288,000 and 77,000285,000 shares of common stock, at an average price per share of $495.94$564.06 and $455.08,$495.94, totaling approximately $141$162 and $35.$141. These amounts may differ from the repurchase balances in the accompanying condensed consolidated statements of cash flows due to changes in unsettled repurchases at the end of a quarter. Purchases are made from time to time, as conditions warrant, in the open market or in block purchases, pursuant to plans under SEC Rule 10b5-1. Repurchased shares are retired, in accordance with the Washington Business Corporation Act. The remaining amount available to be purchased under our approved plan was $3,401 at the end of the first quarter.
Bank Credit Facilities and Commercial Paper Programs
We maintain bank credit facilities for working capital and general corporate purposes. At November 20, 2022,26, 2023, we had borrowing capacity under these facilities of $1,244.$1,245. Our international operations maintain $756$757 of this capacity under bank credit facilities, of which $171$163 is guaranteed by the Company. Short-term borrowings outstanding under the bank credit facilities, which are included in other current liabilities on the consolidated balance sheets, were $37 and $88immaterial at the end of the first quarter of 20232024 and at the end of fiscal 2022.2023.
The Company has letter of credit facilities, for commercial and standby letters of credit, totaling $226.$223. The outstanding commitments under these facilities at the end of the first quarter of 20232024 totaled $187,$188, most of which were standby letters of credit that do not expire or have expiration dates within one year. The bank credit facilities have various expiration dates, most within one year, and we generally intend to renew these facilities. The amount of borrowings available at any time under our bank credit facilities is reduced by the amount of standby and commercial letters of credit outstanding.
24

Table of Contents


Critical Accounting Estimates
The preparation of our consolidated financial statements in accordance with U.S. GAAP requires that we make estimates and judgments. We base these on historical experience and on assumptions that we believe to be reasonable. Our critical accounting policies are discussed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report
24

Table of Contents


on Form 10-K, for the fiscal year ended August 28, 2022.September 3, 2023. There have been no material changes to the critical accounting estimates previously disclosed in that Report.
Recent Accounting Pronouncements
There have been no material changesSee discussion of Recent Accounting Pronouncements in recently issued or adopted accounting standards from those disclosedNote 1 to the condensed consolidated financial statements included in our Annual Report on Form 10-K, for the fiscal year ended August 28, 2022.Part 1, Item 1 of this Report.
Item 3—Quantitative and Qualitative Disclosures about Market Risk
Our direct exposure to financial market risk results from fluctuations in foreign-currency exchange rates and interest rates. There have been no material changes to our market risks as disclosed in our Annual Report on Form 10-K, for the fiscal year ended August 28, 2022.September 3, 2023.
Item 4—Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure. The Chief Executive Officer and the Chief Financial Officer, with assistance from other members of management, have reviewed the effectiveness of our disclosure controls and procedures as of November 20, 202226, 2023, and, based on their evaluation, have concluded the disclosure controls and procedures were effective as of such date.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the first quarter of fiscal 20232024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1—Legal Proceedings
See discussion of Legal Proceedings in Note 8 to the condensed consolidated financial statements included in Part I, Item 1 of this Report.
Item 1A—Risk Factors
In addition to the other information set forth in the Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K, for the fiscal year ended August 28, 2022.September 3, 2023. There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K.
25

Table of Contents


Item 2—Unregistered Sales of Equity Securities, and Use of Proceeds, and Issuer Purchases of Equity Securities
The following table sets forth information on our common stock repurchase program activity for the first quarter of 20232024 (amounts in millions, except share and per share data):
PeriodTotal Number of Shares PurchasedAverage 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)
August 29, 2022 — September 25, 202289,000 $513.91 89,000 $2,762 
September 26, 2022 — October 23, 2022101,000 473.85 101,000 2,714 
October 24, 2022 — November 20, 202295,000 502.66 95,000 2,667 
Total first quarter285,000 $495.94 285,000 
PeriodTotal Number of Shares PurchasedAverage 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, 2023 — October 1, 202395,000 $558.12 95,000 $3,510 
October 2, 2023 — October 29, 2023100,000 561.76 100,000 3,454 
October 30, 2023 — November 26, 202393,000 572.60 93,000 3,401 
Total first quarter288,000 $564.06 288,000 
 _______________
(1)Our share repurchase program is conducted under a $4,000 authorization approved by our Board of Directors in April 2019,January 2023, which expires in April 2023.January 2027.
Item 3—Defaults Upon Senior Securities
None.
Item 4—Mine Safety Disclosures
Not applicable.
Item 5—Other Information (amounts
On December 16, 2023, Costco Wholesale Corporation entered into an executive employment agreement, effective January 1, 2024, with Ron Vachris. He will be employed as President and Chief Executive Officer for a one-year term beginning January 1, 2024; the Agreement may be renewed for one or more additional one-year terms upon the written agreement of both parties. The agreement provides for, among other things, an annual base salary of $1.15 million and upon involuntary termination of employment (other than for cause, death or disability) or resignation for good reason severance of 1.5 times annual base salary and target bonus, and accelerated vesting of certain equity awards. This description is qualified in whole dollars)
Disclosure pursuantits entirety by reference to Section 2019the full text of the Iran Threat Reduction and Syria Human Rights Act of 2012 and Section 13(r) of the Securities Exchange Act of 1934,agreement, which is filed as amended.
During the first quarter of 2023, we had as cardholders at our subsidiary in Mexico three individuals under a business membership in the name of the Embassy of the Islamic Republic of Iran. Gross revenue in the first quarter of 2023 attributableExhibit 10.2 to the membership was approximately $1,131, and our estimated profit on these transactions was less than $100. The membership was canceled during the second quarter of 2023. The Company does not intend to continue these activities.this Form 10-Q.
26

Table of Contents


Item 6—Exhibits
The following exhibits are filed as part of this Quarterly Report on Form 10-Q or are incorporated herein by reference.
  Incorporated by Reference
Exhibit
Number
Exhibit DescriptionFiled
Herewith
FormPeriod 
Ending
Filing Date
3.110-K8/28/202210/5/2022
3.210-Q8-K5/8/20226/2/20228/10/2023
10.1*8-K11/9/202224/2023
10.2*x
10.3x
10.4x
31.1x
32.1x
101.INSInline XBRL Instance Documentx
101.SCHInline XBRL Taxonomy Extension Schema Documentx
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Documentx
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Documentx
101.LABInline XBRL Taxonomy Extension Label Linkbase Documentx
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Documentx
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)x
_____________________
* Management contract, compensatory plan or arrangement.
27

Table of Contents


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
COSTCO WHOLESALE CORPORATION
(Registrant)
December 29, 202220, 2023By
/s/ W. CRAIG JELINEK
Date
W. Craig Jelinek
Chief Executive Officer and Director
December 29, 202220, 2023By
/s/ RICHARD A. GALANTI
Date
Richard A. Galanti
Executive Vice President, Chief Financial Officer and Director

28