Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Nov. 24, 2013 | Dec. 13, 2013 | |
Document and Entity Information [Abstract] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 24-Nov-13 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Trading Symbol | 'COST | ' |
Entity Registrant Name | 'COSTCO WHOLESALE CORP /NEW | ' |
Entity Central Index Key | '0000909832 | ' |
Current Fiscal Year End Date | '--08-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 439,722,405 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Nov. 24, 2013 | Sep. 01, 2013 |
In Millions, unless otherwise specified | ||
CURRENT ASSETS | ' | ' |
Cash and cash equivalents | $4,699 | $4,644 |
Short-term investments | 1,740 | 1,480 |
Receivables, net | 1,145 | 1,201 |
Merchandise inventories | 9,337 | 7,894 |
Deferred income taxes and other current assets | 552 | 621 |
Total current assets | 17,473 | 15,840 |
PROPERTY AND EQUIPMENT | ' | ' |
Land | 4,530 | 4,409 |
Buildings and improvements | 11,913 | 11,556 |
Equipment and fixtures | 4,600 | 4,472 |
Construction in progress | 544 | 585 |
Gross property and equipment | 21,587 | 21,022 |
Less accumulated depreciation and amortization | -7,333 | -7,141 |
Net property and equipment | 14,254 | 13,881 |
OTHER ASSETS | 592 | 562 |
TOTAL ASSETS | 32,319 | 30,283 |
CURRENT LIABILITIES | ' | ' |
Accounts payable | 9,199 | 7,872 |
Accrued salaries and benefits | 2,070 | 2,037 |
Accrued member rewards | 713 | 710 |
Accrued sales and other taxes | 395 | 382 |
Deferred membership fees | 1,240 | 1,167 |
Other current liabilities | 1,316 | 1,089 |
Total current liabilities | 14,933 | 13,257 |
LONG-TERM DEBT, excluding current portion | 4,987 | 4,998 |
DEFERRED INCOME TAXES AND OTHER LIABILITIES | 990 | 1,016 |
Total liabilities | 20,910 | 19,271 |
COMMITMENTS AND CONTINGENCIES | ' | ' |
EQUITY | ' | ' |
Preferred stock $.005 par value; 100,000,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Common stock $.005 par value; 900,000,000 shares authorized; 439,722,000 and 436,839,000 shares issued and outstanding | 2 | 2 |
Additional paid-in capital | 4,689 | 4,670 |
Accumulated other comprehensive loss | -41 | -122 |
Retained earnings | 6,571 | 6,283 |
Total Costco stockholders' equity | 11,221 | 10,833 |
Noncontrolling interests | 188 | 179 |
Total equity | 11,409 | 11,012 |
TOTAL LIABILITIES AND EQUITY | $32,319 | $30,283 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Nov. 24, 2013 | Sep. 01, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Preferred stock, par value (in dollars per share) | $0.01 | $0.01 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 900,000,000 | 900,000,000 |
Common stock, shares issued | 439,722,000 | 436,839,000 |
Common stock, shares outstanding | 439,722,000 | 436,839,000 |
Consolidated_Statements_Of_Inc
Consolidated Statements Of Income (USD $) | 3 Months Ended | |
In Millions, except Share data in Thousands, unless otherwise specified | Nov. 24, 2013 | Nov. 25, 2012 |
REVENUE | ' | ' |
Net sales | $24,468 | $23,204 |
Membership fees | 549 | 511 |
Total revenue | 25,017 | 23,715 |
OPERATING EXPENSES | ' | ' |
Merchandise costs | 21,824 | 20,726 |
Selling, general and administrative | 2,501 | 2,332 |
Preopening expenses | 24 | 18 |
Operating income | 668 | 639 |
OTHER INCOME (EXPENSE) | ' | ' |
Interest expense | -27 | -13 |
Interest income and other, net | 18 | 20 |
INCOME BEFORE INCOME TAXES | 659 | 646 |
Provision for income taxes | 228 | 225 |
Net income including noncontrolling interests | 431 | 421 |
Net income attributable to noncontrolling interests | -6 | -5 |
NET INCOME ATTRIBUTABLE TO COSTCO | $425 | $416 |
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO: | ' | ' |
Basic (in dollars per share) | $0.97 | $0.96 |
Diluted (in dollars per share) | $0.96 | $0.95 |
Shares used in calculation (000's) | ' | ' |
Basic (shares) | 437,970 | 433,423 |
Diluted (shares) | 442,420 | 438,643 |
CASH DIVIDENDS DECLARED PER COMMON SHARE | $0.31 | $0.28 |
Consolidated_Statements_Of_Com
Consolidated Statements Of Comprehensive Income (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Nov. 24, 2013 | Nov. 25, 2012 |
Statement of Comprehensive Income [Abstract] | ' | ' |
NET INCOME INCLUDING NONCONTROLLING INTERESTS | $431 | $421 |
Foreign-currency translation adjustment and other, net | 84 | 22 |
Comprehensive income | 515 | 443 |
Less: Comprehensive income attributable to noncontrolling interests | 9 | 10 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO | $506 | $433 |
Consolidated_Statements_Of_Cas
Consolidated Statements Of Cash Flows (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Nov. 24, 2013 | Nov. 25, 2012 |
CASH FLOWS FROM OPERATING ACTIVITIES | ' | ' |
Net income including noncontrolling interests | $431 | $421 |
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 231 | 213 |
Stock-based compensation | 112 | 93 |
Excess tax benefits on stock-based awards | -65 | -38 |
Other non-cash operating activities, net | 8 | 6 |
Deferred income taxes | 3 | -2 |
Changes in operating assets and liabilities: | ' | ' |
Increase in merchandise inventories | -1,420 | -1,055 |
Increase in accounts payable | 1,311 | 1,283 |
Other operating assets and liabilities, net | 328 | 181 |
Net cash provided by operating activities | 939 | 1,102 |
CASH FLOWS FROM INVESTING ACTIVITIES | ' | ' |
Purchases of short-term investments | -809 | -856 |
Maturities of short-term investments | 544 | 437 |
Additions to property and equipment | -574 | -488 |
Other investing activities, net | 13 | 52 |
Net cash used in investing activities | -826 | -855 |
CASH FLOWS FROM FINANCING ACTIVITIES | ' | ' |
Change in bank checks outstanding | 2 | 235 |
Repayments of short-term borrowings | 0 | -115 |
Proceeds from short-term borrowings | 20 | 127 |
Distribution to noncontrolling interests | 0 | -22 |
Proceeds from exercise of stock options | 5 | 10 |
Minimum tax withholdings on stock-based awards | -163 | -116 |
Excess tax benefits on stock-based awards | 65 | 38 |
Repurchases of common stock | 0 | -36 |
Net cash (used in) provided by financing activities | -71 | 121 |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 13 | 1 |
Net increase in cash and cash equivalents | 55 | 369 |
CASH AND CASH EQUIVALENTS BEGINNING OF YEAR | 4,644 | 3,528 |
CASH AND CASH EQUIVALENTS END OF PERIOD | 4,699 | 3,897 |
Cash paid during the first twelve weeks of year for: | ' | ' |
Interest (reduced by $2 and $5 interest capitalized in 2014 and 2013, respectively) | 32 | 31 |
Income taxes, net | 0 | 118 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ' | ' |
Cash dividend declared, but not yet paid | $137 | $120 |
Consolidated_Statements_Of_Cas1
Consolidated Statements Of Cash Flows (Parenthetical) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Nov. 24, 2013 | Nov. 25, 2012 |
Statement of Cash Flows [Abstract] | ' | ' |
Interest, interest capitalized | $2 | $5 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended |
Nov. 24, 2013 | |
Accounting Policies [Abstract] | ' |
Summary of Significant Policies | ' |
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 select private-label products in a wide range of merchandise categories will produce high sales volumes and rapid inventory turnover. At November 24, 2013, Costco operated 646 warehouses worldwide: 460 in the United States (U.S.) (in 43 states, Washington, D.C., and Puerto Rico), 86 in Canada, 33 in Mexico, 25 in the United Kingdom (U.K.), 18 in Japan, 10 in Taiwan, 9 in Korea, and 5 in Australia. The Company's online business operates websites in the U.S., Canada, U.K., and Mexico. | |
Basis of Presentation | |
The condensed consolidated financial statements include the accounts of Costco, its wholly-owned subsidiaries, subsidiaries in which it has a controlling interest, consolidated entities in which it has made equity investments, or has other interests through which it has majority-voting control or it exercises the right to direct the activities that most significantly impact the entity’s performance (Costco or the Company). The Company reports noncontrolling interests in consolidated entities as a component of equity separate from the Company’s equity. All material inter-company transactions between and among the Company and its consolidated subsidiaries and other consolidated entities have been eliminated in consolidation. The Company’s net income excludes income attributable to noncontrolling interests in Taiwan and Korea. Unless otherwise noted, references to net income relate to net income attributable to Costco. | |
These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q for interim financial reporting pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). While these statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (U.S. GAAP) for complete financial statements. Therefore, the interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's annual report filed on Form 10-K for the fiscal year ended September 1, 2013. | |
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. References to the first quarters of 2014 and 2013 relate to the 12-week fiscal quarters ended November 24, 2013 and November 25, 2012, respectively. | |
Use of Estimates | |
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. | |
Reclassifications | |
Certain reclassifications have been made to prior fiscal year amounts or balances to conform to the presentation in the current fiscal year. These reclassifications did not have a material impact on the Company’s previously reported condensed consolidated financial statements. | |
Fair Value of Financial Instruments | |
The Company accounts for certain assets and liabilities at fair value. The carrying value of the Company’s financial instruments, including cash and cash equivalents, receivables and accounts payable, approximate fair value due to their short-term nature or variable interest rates. See Notes 2, 3, and 4 for the carrying value and fair value of the Company’s investments, derivative instruments, and fixed-rate debt, respectively. | |
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying a fair value hierarchy, which requires maximizing the use of observable inputs when measuring fair value. The three levels of inputs are: | |
Level 1: Quoted market prices in active markets for identical assets or liabilities. | |
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market | |
data. | |
Level 3: Significant unobservable inputs that are not corroborated by market data. | |
The Company’s current financial liabilities have fair values that approximate their carrying values. The Company’s long-term financial liabilities consist of long-term debt, which is recorded on the balance sheet at issuance price and adjusted for any applicable unamortized discounts or premiums. There have been no material changes to the valuation techniques utilized in the fair value measurement of assets and liabilities as disclosed in the Company's Form 10-K for the fiscal year ended September 1, 2013. | |
Merchandise Inventories | |
Merchandise inventories are valued at the lower of cost or market, as determined primarily by the retail inventory method, and are stated using the last-in, first-out (LIFO) method for substantially all U.S. merchandise inventories. Merchandise inventories for all foreign operations are primarily valued by the retail inventory method and are stated using the first-in, first-out (FIFO) method. The Company believes the LIFO method more fairly presents the results of operations by more closely matching current costs with current revenues. The Company records an adjustment each quarter, if necessary, for the projected annual effect of inflation or deflation, and these estimates are adjusted to actual results determined at year-end, when actual inflation rates and inventory levels have been determined. At November 24, 2013, and September 1, 2013, the cumulative impact of the LIFO valuation on merchandise inventories was $82 and $81, respectively. | |
Derivatives | |
The Company is exposed to foreign-currency exchange-rate fluctuations in the normal course of business. It manages these fluctuations, in part, through the use of forward foreign-exchange contracts, seeking to economically hedge the impact of fluctuations of foreign exchange on known future expenditures denominated in a non-functional foreign-currency. The contracts relate primarily to U.S. dollar merchandise inventory expenditures made by the Company’s international subsidiaries, whose functional currency is not the U.S. dollar. Currently, these contracts do not qualify for derivative hedge accounting. The Company seeks to mitigate risk with the use of these contracts and does not intend to engage in speculative transactions. These contracts do not contain any credit-risk-related contingent features. The aggregate notional amounts of open, unsettled forward foreign-exchange contracts were $416 and $458 at November 24, 2013, and September 1, 2013, respectively. The Company seeks to manage counterparty risk associated with these contracts by limiting transactions to counterparties with which the Company has an established banking relationship. There can be no assurance, however, that this practice effectively mitigates counterparty risk. The contracts are limited to less than one year in duration. See Note 3 for information on the fair value of unsettled forward foreign-exchange contracts as of November 24, 2013, and September 1, 2013. | |
The unrealized gains or losses recognized in interest income and other, net in the accompanying condensed consolidated statements of income relating to the net changes in the fair value of unsettled forward foreign-exchange contracts were immaterial in the first quarter of 2014 and 2013, respectively. | |
The Company is exposed to fluctuations in prices for the energy it consumes, particularly electricity and natural gas, which it seeks to partially mitigate through the use of fixed-price contracts for certain of its warehouses and other facilities, primarily in the U.S. and Canada. The Company also enters into variable-priced contracts for some purchases of electricity and natural gas, in addition to fuel for its gas stations, on an index basis. These contracts meet the characteristics of derivative instruments, but generally qualify for the “normal purchases or normal sales” exception under authoritative guidance and thus require no mark-to-market adjustment. | |
Foreign Currency | |
The Company recognizes foreign-currency transaction gains and losses related to revaluing or settling all monetary assets and liabilities denominated in currencies other than the functional currency in interest income and other, net in the accompanying condensed consolidated statements of income. Generally, this includes the U.S. dollar cash and cash equivalents and the U.S. dollar payables of consolidated subsidiaries to their functional currency. Also included are realized foreign-currency gains or losses from settlements of forward foreign-exchange contracts. These items resulted in a net gain of $9 in the first quarters of 2014 and 2013. | |
Stock Repurchase Programs | |
Repurchased shares of common stock are retired, in accordance with the Washington Business Corporation Act. The par value of repurchased shares is deducted from common stock and the excess repurchase price over par value is deducted from additional paid-in capital and retained earnings. See Note 5 for additional information. | |
Recently Adopted Accounting Pronouncements | |
In February 2013, the Financial Accounting Standards Board (FASB) issued guidance related to reclassifications out of accumulated other comprehensive income. An entity will be required to disclose the net income line items impacted by significant reclassifications out of accumulated other comprehensive income if the item is reclassified in its entirety. For other amounts that are not required to be reclassified in their entirety to net income, cross-references to other disclosures required under U.S. GAAP are required to provide additional detail. The new guidance was effective for fiscal years, and interim periods within those years, beginning after December 15, 2012. The Company adopted this guidance at the beginning of its first quarter of 2014. Adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements or disclosures. |
Investments
Investments | 3 Months Ended | |||||||||||
Nov. 24, 2013 | ||||||||||||
Investments, Debt and Equity Securities [Abstract] | ' | |||||||||||
Investments | ' | |||||||||||
Note 2—Investments | ||||||||||||
The Company's major categories of investments have not materially changed from the annual reporting period ended September 1, 2013. The Company’s investments were as follows: | ||||||||||||
November 24, 2013: | Cost | Unrealized | Recorded | |||||||||
Basis | Gains, Net | Basis | ||||||||||
Available-for-sale: | ||||||||||||
Government and agency securities | $ | 1,322 | $ | 3 | $ | 1,325 | ||||||
Asset and mortgage-backed securities | 3 | 0 | 3 | |||||||||
Total available-for-sale | 1,325 | 3 | 1,328 | |||||||||
Held-to-maturity: | ||||||||||||
Certificates of deposit | 128 | 128 | ||||||||||
Bankers' acceptances | 284 | 284 | ||||||||||
Total held-to-maturity | 412 | 412 | ||||||||||
Total short-term investments | $ | 1,737 | $ | 3 | $ | 1,740 | ||||||
September 1, 2013: | Cost | Unrealized | Recorded | |||||||||
Basis | Gains, Net | Basis | ||||||||||
Available-for-sale: | ||||||||||||
Government and agency securities | $ | 1,263 | $ | 0 | $ | 1,263 | ||||||
Corporate notes and bonds | 9 | 0 | 9 | |||||||||
Asset and mortgage-backed securities | 5 | 0 | 5 | |||||||||
Total available-for-sale | 1,277 | 0 | 1,277 | |||||||||
Held-to-maturity: | ||||||||||||
Certificates of deposit | 124 | 124 | ||||||||||
Bankers' acceptances | 79 | 79 | ||||||||||
Total held-to-maturity | $ | 203 | $ | 203 | ||||||||
Total short-term investments | $ | 1,480 | $ | 0 | $ | 1,480 | ||||||
At November 24, 2013, and September 1, 2013, the Company had no available-for-sale securities that were in continuous unrealized-loss positions or gross unrealized gains and losses on cash equivalents. | ||||||||||||
The proceeds from sales of available-for-sale securities were $10 and $61 during the first quarter of 2014 and 2013, respectively. Gross realized gains or losses from sales of available-for-sale securities during the first quarter of 2014 and 2013 were not material. | ||||||||||||
The maturities of available-for-sale and held-to-maturity securities at November 24, 2013, were as follows: | ||||||||||||
Available-For-Sale | Held-To-Maturity | |||||||||||
Cost Basis | Fair Value | |||||||||||
Due in one year or less | $ | 549 | $ | 549 | $ | 412 | ||||||
Due after one year through five years | 765 | 768 | 0 | |||||||||
Due after five years | 11 | 11 | 0 | |||||||||
$ | 1,325 | $ | 1,328 | $ | 412 | |||||||
Fair_Value_Measurement
Fair Value Measurement | 3 Months Ended | |||||||
Nov. 24, 2013 | ||||||||
Fair Value Disclosures [Abstract] | ' | |||||||
Fair Value Measurement | ' | |||||||
Note 3—Fair Value Measurement | ||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | ||||||||
The tables below present information regarding the Company’s financial assets and financial liabilities that are measured at fair value on a recurring basis and indicate the level within the fair value hierarchy reflecting the valuation techniques utilized to determine fair value. | ||||||||
November 24, 2013: | Level 1 | Level 2 | ||||||
Money market mutual funds(1) | $ | 85 | $ | 0 | ||||
Investment in government and agency securities(2) | 0 | 1,325 | ||||||
Investment in asset and mortgage-backed securities | 0 | 3 | ||||||
Forward foreign-exchange contracts, in asset position(3) | 0 | 1 | ||||||
Forward foreign-exchange contracts, in (liability) position(3) | 0 | (7 | ) | |||||
Total | $ | 85 | $ | 1,322 | ||||
September 1, 2013: | Level 1 | Level 2 | ||||||
Money market mutual funds(1) | $ | 87 | $ | 0 | ||||
Investment in government and agency securities(2) | 0 | 1,263 | ||||||
Investment in corporate notes and bonds | 0 | 9 | ||||||
Investment in asset and mortgage-backed securities | 0 | 5 | ||||||
Forward foreign-exchange contracts, in asset position(3) | 0 | 3 | ||||||
Forward foreign-exchange contracts, in (liability) position(3) | 0 | (3 | ) | |||||
Total | $ | 87 | $ | 1,277 | ||||
_______________ | ||||||||
-1 | Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets. | |||||||
-2 | Included in short-term investments in the accompanying condensed consolidated balance sheets. | |||||||
-3 | The asset and the liability values are included in deferred income taxes and other current assets and other current liabilities, respectively, in the accompanying condensed consolidated balance sheets. See Note 1 for additional information on derivative instruments. | |||||||
The Company did not hold any Level 3 financial assets and liabilities that were measured at fair value on a recurring basis at November 24, 2013 or September 1, 2013. There were no financial assets and liabilities measured on a recurring basis using significant unobservable inputs (Level 3) and there were no transfers in or out of Level 1, 2, or 3 during the first quarter of 2014 or 2013. | ||||||||
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis | ||||||||
Financial assets measured at fair value on a nonrecurring basis include held-to-maturity investments that are carried at amortized cost and are not remeasured to fair value on a recurring basis. There were no fair value adjustments to these financial assets during the first quarter of 2014 or 2013. | ||||||||
Nonfinancial assets measured at fair value on a nonrecurring basis include items such as long-lived assets that are measured at fair value resulting from an impairment, if deemed necessary. There were no fair value adjustments to these nonfinancial assets and liabilities during the first quarter of 2014 or 2013. |
Debt
Debt | 3 Months Ended | |||||||||||||||
Nov. 24, 2013 | ||||||||||||||||
Debt Disclosure [Abstract] | ' | |||||||||||||||
Debt | ' | |||||||||||||||
Note 4—Debt | ||||||||||||||||
The carrying value and estimated fair value of the Company’s long-term debt consisted of the following: | ||||||||||||||||
November 24, 2013 | September 1, 2013 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Value | Value | Value | Value | |||||||||||||
5.5% Senior Notes due March 2017 | $ | 1,098 | $ | 1,254 | $ | 1,098 | $ | 1,248 | ||||||||
0.65% Senior Notes due December 2015 | 1,199 | 1,206 | 1,199 | 1,200 | ||||||||||||
1.125% Senior Notes due December 2017 | 1,100 | 1,090 | 1,100 | 1,065 | ||||||||||||
1.7% Senior Notes due December 2019 | 1,198 | 1,168 | 1,198 | 1,157 | ||||||||||||
Other long-term debt | 392 | 402 | 403 | 412 | ||||||||||||
Long-term debt, excluding current portion | $ | 4,987 | $ | 5,120 | $ | 4,998 | $ | 5,082 | ||||||||
The estimated fair value of the Company’s debt was based primarily on reported market values, recently completed market transactions, and estimates based upon interest rates, maturities, and credit risk. Substantially all of the Company's long-term debt is classified as Level 2. |
Equity_and_Comprehensive_Incom
Equity and Comprehensive Income Equity and Comprehensive Income | 3 Months Ended | |||||||||||
Nov. 24, 2013 | ||||||||||||
Equity [Abstract] | ' | |||||||||||
Equity and Comprehensive Income | ' | |||||||||||
Note 5—Equity and Comprehensive Income | ||||||||||||
Dividends | ||||||||||||
The Company’s current quarterly dividend rate is $0.31 per share, compared to $0.275 per share in the first quarter of 2013. On October 29, 2013, the Board of Directors declared a quarterly cash dividend in the amount of $0.31 per share, which was paid on November 29, 2013. | ||||||||||||
Stock Repurchase Programs | ||||||||||||
There was no stock repurchase activity in the first quarter of 2014. In the first quarter of 2013, we repurchased 357,000 shares, at an average price of $96.41, totaling $34. The remaining amount available for stock repurchases under our approved plan was $3,055 at November 24, 2013. These amounts differ from the stock repurchase balances in the condensed consolidated statements of cash flows due to changes in unsettled stock 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, and pursuant to plans under SEC Rule 10b5-1. Repurchased shares are retired, in accordance with the Washington Business Corporation Act. | ||||||||||||
Components of Equity and Comprehensive Income | ||||||||||||
The following tables show the changes in equity attributable to Costco and the noncontrolling interests of consolidated subsidiaries and other entities in which the Company has a controlling interest, but less than total ownership: | ||||||||||||
Attributable to Costco | Noncontrolling | Total | ||||||||||
Interests | Equity | |||||||||||
Equity at September 1, 2013 | $ | 10,833 | $ | 179 | $ | 11,012 | ||||||
Comprehensive income: | ||||||||||||
Net income | 425 | 6 | 431 | |||||||||
Foreign-currency translation adjustment and other, net | 81 | 3 | 84 | |||||||||
Comprehensive income | 506 | 9 | 515 | |||||||||
Stock-based compensation | 112 | 0 | 112 | |||||||||
Stock options exercised, including tax effects | 8 | 0 | 8 | |||||||||
Release of vested restricted stock units (RSUs), including tax effects | (101 | ) | 0 | (101 | ) | |||||||
Cash dividends declared | (137 | ) | 0 | (137 | ) | |||||||
Equity at November 24, 2013 | $ | 11,221 | $ | 188 | $ | 11,409 | ||||||
Attributable to Costco | Noncontrolling | Total | ||||||||||
Interests | Equity | |||||||||||
Equity at September 2, 2012 | $ | 12,361 | $ | 157 | $ | 12,518 | ||||||
Comprehensive income: | ||||||||||||
Net income | 416 | 5 | 421 | |||||||||
Foreign-currency translation adjustment and other, net | 17 | 5 | 22 | |||||||||
Comprehensive income | 433 | 10 | 443 | |||||||||
Stock-based compensation | 93 | 0 | 93 | |||||||||
Stock options exercised, including tax effects | 14 | 0 | 14 | |||||||||
Release of vested RSUs, including tax effects | (83 | ) | 0 | (83 | ) | |||||||
Conversion of convertible notes | 1 | 0 | 1 | |||||||||
Repurchases of common stock | (34 | ) | 0 | (34 | ) | |||||||
Cash dividends declared | (120 | ) | 0 | (120 | ) | |||||||
Equity at November 25, 2012 | $ | 12,665 | $ | 167 | $ | 12,832 | ||||||
StockBased_Compensation_Plans
Stock-Based Compensation Plans | 3 Months Ended | ||||||||||||
Nov. 24, 2013 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||
Stock-Based Compensation Plans | ' | ||||||||||||
Note 6—Stock-Based Compensation Plans | |||||||||||||
In the second quarter of fiscal 2012, the Fifth Restated 2002 Stock Incentive Plan was amended following shareholder approval and is now referred to as the Sixth Restated 2002 Stock Incentive Plan (Sixth Plan). The Sixth Plan initially authorized the issuance of 16,000,000 shares (9,143,000 RSUs) of common stock for future grants in addition to shares authorized under the previous plan. Each RSU is counted as 1.75 shares toward the limit of shares available. The Company issues new shares of common stock upon exercise of stock options and upon vesting of RSUs. Shares for vested RSUs are generally delivered to participants annually, net of shares equal to the minimum statutory withholding taxes. | |||||||||||||
Summary of Restricted Stock Unit Activity | |||||||||||||
At November 24, 2013, 7,775,000 shares were available to be granted as RSUs and the following awards were outstanding: | |||||||||||||
• | 8,733,000 time-based RSUs that vest upon continued employment over specified periods of time; | ||||||||||||
• | 343,000 performance-based RSUs granted to certain executive officers of the Company for which the performance targets have been met. Further restrictions lapse upon achievement of continued employment over specified periods of time; and | ||||||||||||
• | 269,000 performance-based RSUs to be granted to executive officers of the Company upon achievement of performance targets for fiscal 2014, 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. | ||||||||||||
The following table summarizes RSU transactions during the first quarter of 2014: | |||||||||||||
Number of | Weighted-Average | ||||||||||||
Units | Grant Date Fair | ||||||||||||
(in 000’s) | Value | ||||||||||||
Outstanding at September 1, 2013 | 10,081 | $ | 72.52 | ||||||||||
Granted | 3,187 | 113.12 | |||||||||||
Vested and delivered | (4,135 | ) | 71 | ||||||||||
Forfeited | (57 | ) | 74.19 | ||||||||||
Outstanding at November 24, 2013 | 9,076 | $ | 85.8 | ||||||||||
The remaining unrecognized compensation cost related to non-vested RSUs at November 24, 2013 was $748 and the weighted-average period of time over which this cost will be recognized is 1.9 years. | |||||||||||||
Summary of Stock Option Activity | |||||||||||||
All outstanding stock options were fully vested and exercisable at November 24, 2013 and September 1, 2013. The following table summarizes stock option transactions: | |||||||||||||
Number Of | Weighted- | Weighted- | Aggregate | ||||||||||
Options | Average | Average | Intrinsic | ||||||||||
(in 000’s) | Exercise | Remaining | Value(1) | ||||||||||
Price | Contractual | ||||||||||||
Term | |||||||||||||
(in years) | |||||||||||||
Outstanding at September 1, 2013 | 1,947 | $ | 39.7 | ||||||||||
Exercised | (131 | ) | 37.79 | ||||||||||
Outstanding at November 24, 2013 | 1,816 | $ | 39.84 | 1.18 | $ | 155 | |||||||
_______________ | |||||||||||||
-1 | The difference between the exercise price and market value of common stock at November 24, 2013. | ||||||||||||
The tax benefits realized, derived from the compensation deductions resulting from the option exercises, and intrinsic value related to total stock options exercised are provided in the following table: | |||||||||||||
12 Weeks Ended | |||||||||||||
November 24, | November 25, | ||||||||||||
2013 | 2012 | ||||||||||||
Actual tax benefit realized for stock options exercised | $ | 4 | $ | 6 | |||||||||
Intrinsic value of stock options exercised(1) | $ | 11 | $ | 15 | |||||||||
_______________ | |||||||||||||
(1) The difference between the exercise price and market value of common stock measured at each exercise date. | |||||||||||||
Summary of Stock-Based Compensation | |||||||||||||
The following table summarizes stock-based compensation expense and the related tax benefits under the Company’s plans: | |||||||||||||
12 Weeks Ended | |||||||||||||
November 24, | November 25, | ||||||||||||
2013 | 2012 | ||||||||||||
Stock-based compensation expense before income taxes | $ | 112 | $ | 93 | |||||||||
Less recognized income tax benefit | (38 | ) | (31 | ) | |||||||||
Stock-based compensation expense, net of income taxes | $ | 74 | $ | 62 | |||||||||
Net_Income_per_Common_and_Comm
Net Income per Common and Common Equivalent Share | 3 Months Ended | |||||||
Nov. 24, 2013 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
Net Income Per Common and Common Equivalent Share | ' | |||||||
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 effect on net income and the weighted average number of shares of potentially dilutive common shares outstanding (shares in 000’s): | ||||||||
12 Weeks Ended | ||||||||
November 24, | November 25, | |||||||
2013 | 2012 | |||||||
Net income available to common stockholders after assumed conversions of dilutive securities | $ | 425 | $ | 416 | ||||
Weighted average number of common shares used in basic net income per common share | 437,970 | 433,423 | ||||||
RSUs and stock options | 4,421 | 4,413 | ||||||
Conversion of convertible notes | 29 | 807 | ||||||
Weighted average number of common shares and dilutive potential of common stock used in diluted net income per share | 442,420 | 438,643 | ||||||
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Nov. 24, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies | ' |
Note 8—Commitments and Contingencies | |
Legal Proceedings | |
The Company is involved in a number of claims, proceedings and litigation arising from its business and property ownership. In accordance with applicable accounting guidance, the Company establishes an accrual for legal proceedings if and when those matters reach a stage where they present loss contingencies that are both probable and reasonably estimable. In such cases, there may be a possible exposure to loss in excess of any amounts accrued. The Company monitors those matters for developments that would affect the likelihood of a loss and the accrued amount, if any, thereof, and adjusts the amount as appropriate. If the loss contingency at issue is not both probable and reasonably estimable, the Company does not establish an accrual, but will continue to monitor the matter for developments that will make the loss contingency both probable and reasonably estimable. As of the date of this report, the Company has not recorded an accrual with respect to any matter described below. In each case, there is a reasonable possibility that a loss may be incurred. For matters where no accrual has been recorded, the possible loss or range of loss cannot in our view be reasonably estimated because, among other things, (i) the remedies or penalties sought are indeterminate or unspecified, (ii) the legal and/or factual theories are not well developed; and/or (iii) the matters involve complex or novel legal theories or a large number of parties. | |
The Company is a defendant in the following matters, among others: | |
A case brought as a class action on behalf of certain present and former female managers, in which plaintiffs allege denial of promotion based on gender in violation of Title VII of the Civil Rights Act of 1964 and California state law. Shirley “Rae” Ellis v. Costco Wholesale Corp., United States District Court (San Francisco), Case No. C-04-3341-EMC. Plaintiffs seek compensatory damages, punitive damages, injunctive relief, interest and attorneys’ fees. Class certification was granted by the district court on January 11, 2007. On September 16, 2011, the United States Court of Appeals for the Ninth Circuit reversed the order of class certification and remanded to the district court for further proceedings. On September 25, 2012, the district court certified a class of women in the United States denied promotion to warehouse general manager or assistant general manager since January 3, 2002. Currently the class is believed to be approximately 1,300 people. In October 2013 the parties reached an agreement in principle on a settlement, which is subject to court approval. A hearing is set for February 6, 2014. Any payments to class members would be contingent upon proof of liability in individual adjudications. Payments under the settlement would be immaterial to the Company’s operations or financial position. | |
Numerous putative class actions have been brought around the United States against motor fuel retailers, including the Company, alleging that they have been overcharging consumers by selling gasoline or diesel that is warmer than 60 degrees without adjusting the volume sold to compensate for heat-related expansion or disclosing the effect of such expansion on the energy equivalent received by the consumer. The Company is named in the following actions: Raphael Sagalyn, et al., v. Chevron USA, Inc., et al., Case No. 07-430 (D. Md.); Phyllis Lerner, et al., v. Costco Wholesale Corporation, et al., Case No. 07-1216 (C.D. Cal.); Linda A. Williams, et al., v. BP Corporation North America, Inc., et al., Case No. 07-179 (M.D. Ala.); James Graham, et al. v. Chevron USA, Inc., et al., Civil Action No. 07-193 (E.D. Va.); Betty A. Delgado, et al., v. Allsups, Convenience Stores, Inc., et al., Case No. 07-202 (D.N.M.); Gary Kohut, et al. v. Chevron USA, Inc., et al., Case No. 07-285 (D. Nev.); Mark Rushing, et al., v. Alon USA, Inc., et al., Case No. 06-7621 (N.D. Cal.); James Vanderbilt, et al., v. BP Corporation North America, Inc., et al., Case No. 06-1052 (W.D. Mo.); Zachary Wilson, et al., v. Ampride, Inc., et al., Case No. 06-2582 (D. Kan.); Diane Foster, et al., v. BP North America Petroleum, Inc., et al., Case No. 07-02059 (W.D. Tenn.); Mara Redstone, et al., v. Chevron USA, Inc., et al., Case No. 07-20751 (S.D. Fla.); Fred Aguirre, et al. v. BP West Coast Products LLC, et al., Case No. 07-1534 (N.D. Cal.); J.C. Wash, et al., v. Chevron USA, Inc., et al.; Case No. 4:07cv37 (E.D. Mo.); Jonathan Charles Conlin, et al., v. Chevron USA, Inc., et al.; Case No. 07 0317 (M.D. Tenn.); William Barker, et al. v. Chevron USA, Inc., et al.; Case No. 07-cv-00293 (D.N.M.); Melissa J. Couch, et al. v. BP Products North America, Inc., et al., Case No. 07cv291 (E.D. Tex.); S. Garrett Cook, Jr., et al., v. Hess Corporation, et al., Case No. 07cv750 (M.D. Ala.); Jeff Jenkins, et al. v. Amoco Oil Company, et al., Case No. 07-cv-00661 (D. Utah); and Mark Wyatt, et al., v. B. P. America Corp., et al., Case No. 07-1754 (S.D. Cal.). On June 18, 2007, the Judicial Panel on Multidistrict Litigation assigned the action, entitled In re Motor Fuel Temperature Sales Practices Litigation, MDL Docket No 1840, to Judge Kathryn Vratil in the United States District Court for the District of Kansas. On April 12, 2009, the Company agreed to settle the actions in which it is named as a defendant. Under the settlement, which is subject to final approval by the court, the Company agreed, to the extent allowed by law, to install over five years from the effective date of the settlement temperature-correcting dispensers in the States of Alabama, Arizona, California, Florida, Georgia, Kentucky, Nevada, New Mexico, North Carolina, South Carolina, Tennessee, Texas, Utah, and Virginia. Other than payments to class representatives, the settlement does not provide for cash payments to class members. On September 22, 2011, the court preliminarily approved a revised settlement, which did not materially alter the terms. On April 24, 2012, the court granted final approval of the revised settlement. A class member who objected has filed a notice of appeal from the order approving the settlement. Plaintiffs have moved for an award of $10 million in attorneys’ fees, as well as an award of costs and payments to class representatives. The Company has opposed the motion. | |
On October 4, 2006, the Company received a grand jury subpoena from the United States Attorney’s Office for the Central District of California, seeking records relating to the Company’s receipt and handling of hazardous merchandise returned by Costco members and other records. The Company has entered into a tolling agreement with the United States Attorney’s Office. | |
The Environmental Protection Agency issued an Information Request to the Company, dated November 1, 2007, regarding warehouses in the states of Arizona, California, Hawaii, and Nevada and relating to compliance with regulations concerning air-conditioning and refrigeration equipment. On March 4, 2009, the Company was advised by the Department of Justice that the Department was prepared to allege that the Company has committed at least nineteen violations of the leak-repair requirements of 40 C.F.R. § 82.156(i) and at least seventy-four violations of the recordkeeping requirements of 40 C.F.R. § 82.166(k), (m) at warehouses in these states. The Company has responded to these allegations, is engaged in communications with the Department about these and additional allegations, and has entered into tolling agreements. Substantial penalties may be levied for violations of the Clean Air Act. The Company is cooperating with this inquiry. | |
The Company has received notices from most states stating that they have appointed an agent to conduct an examination of the books and records of the Company to determine whether it has complied with state unclaimed property laws. In addition to seeking the turnover of unclaimed property subject to escheat laws, the states may seek interest, penalties, costs of examinations, and other relief. | |
The Company has received from the Drug Enforcement Administration subpoenas and administrative inspection warrants concerning the Company's fulfillment of prescriptions related to controlled substances and related practices. The Company is seeking to cooperate with these processes. | |
The Company does not believe that any pending claim, proceeding or litigation, either alone or in the aggregate, will have a material adverse effect on the Company’s financial position; however, it is possible that an unfavorable outcome of some or all of the matters, however unlikely, could result in a charge that might be material to the results of an individual fiscal quarter. |
Segment_Reporting
Segment Reporting | 3 Months Ended | |||||||||||||||
Nov. 24, 2013 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Segment Reporting | ' | |||||||||||||||
The Company and its subsidiaries are principally engaged in the operation of membership warehouses in the U.S., Canada, Mexico, the United Kingdom, Japan, and Australia and through majority-owned subsidiaries in Taiwan and Korea. 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 the same as described in the notes to the consolidated financial statements included in the Company's annual report filed on Form 10-K for the fiscal year ended September 1, 2013, and Note 1 above. All material inter-segment net sales and expenses have been eliminated in computing total revenue and operating income. Certain operating expenses, predominantly stock-based compensation, are incurred on behalf of the Company's Canadian and Other International Operations, but are included in the U.S. Operations because those costs are not allocated internally and generally come under the responsibility of the Company's U.S. management team. | ||||||||||||||||
United States | Canadian | Other | Total | |||||||||||||
Operations | Operations | International | ||||||||||||||
Operations | ||||||||||||||||
Twelve Weeks Ended November 24, 2013 | ||||||||||||||||
Total revenue | $ | 17,724 | $ | 4,124 | $ | 3,169 | $ | 25,017 | ||||||||
Operating income | 364 | 189 | 115 | 668 | ||||||||||||
Depreciation and amortization | 170 | 28 | 33 | 231 | ||||||||||||
Additions to property and equipment | 385 | 67 | 122 | 574 | ||||||||||||
Net property and equipment | 9,855 | 1,667 | 2,732 | 14,254 | ||||||||||||
Total assets | 21,825 | 4,772 | 5,722 | 32,319 | ||||||||||||
Twelve Weeks Ended November 25, 2012 | ||||||||||||||||
Total revenue | $ | 16,918 | $ | 3,889 | $ | 2,908 | $ | 23,715 | ||||||||
Operating income | 343 | 176 | 120 | 639 | ||||||||||||
Depreciation and amortization | 155 | 28 | 30 | 213 | ||||||||||||
Additions to property and equipment | 305 | 55 | 128 | 488 | ||||||||||||
Net property and equipment | 9,384 | 1,678 | 2,189 | 13,251 | ||||||||||||
Total assets | 19,884 | 4,551 | 4,888 | 29,323 | ||||||||||||
Year Ended September 1, 2013 | ||||||||||||||||
Total revenue | $ | 75,493 | $ | 17,179 | $ | 12,484 | $ | 105,156 | ||||||||
Operating income | 1,810 | 756 | 487 | 3,053 | ||||||||||||
Depreciation and amortization | 696 | 123 | 127 | 946 | ||||||||||||
Additions to property and equipment | 1,090 | 186 | 807 | 2,083 | ||||||||||||
Net property and equipment | 9,652 | 1,621 | 2,608 | 13,881 | ||||||||||||
Total assets | 20,608 | 4,529 | 5,146 | 30,283 | ||||||||||||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Nov. 24, 2013 | |
Accounting Policies [Abstract] | ' |
Basis of Presentation | ' |
Basis of Presentation | |
The condensed consolidated financial statements include the accounts of Costco, its wholly-owned subsidiaries, subsidiaries in which it has a controlling interest, consolidated entities in which it has made equity investments, or has other interests through which it has majority-voting control or it exercises the right to direct the activities that most significantly impact the entity’s performance (Costco or the Company). The Company reports noncontrolling interests in consolidated entities as a component of equity separate from the Company’s equity. All material inter-company transactions between and among the Company and its consolidated subsidiaries and other consolidated entities have been eliminated in consolidation. The Company’s net income excludes income attributable to noncontrolling interests in Taiwan and Korea. Unless otherwise noted, references to net income relate to net income attributable to Costco. | |
These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q for interim financial reporting pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). While these statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (U.S. GAAP) for complete financial statements. Therefore, the interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's annual report filed on Form 10-K for the fiscal year ended September 1, 2013. | |
Fiscal Year End | ' |
Fiscal Year End | |
The Company operates on a 52/53 week fiscal year basis with the fiscal year ending on the Sunday closest to August 31. References to the first quarters of 2014 and 2013 relate to the 12-week fiscal quarters ended November 24, 2013 and November 25, 2012, respectively. | |
Use of Estimates | ' |
Use of Estimates | |
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. | |
Reclassifications | ' |
Reclassifications | |
Certain reclassifications have been made to prior fiscal year amounts or balances to conform to the presentation in the current fiscal year. These reclassifications did not have a material impact on the Company’s previously reported condensed consolidated financial statements. | |
Fair Value of Financial Instruments | ' |
Fair Value of Financial Instruments | |
The Company accounts for certain assets and liabilities at fair value. The carrying value of the Company’s financial instruments, including cash and cash equivalents, receivables and accounts payable, approximate fair value due to their short-term nature or variable interest rates. See Notes 2, 3, and 4 for the carrying value and fair value of the Company’s investments, derivative instruments, and fixed-rate debt, respectively. | |
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying a fair value hierarchy, which requires maximizing the use of observable inputs when measuring fair value. The three levels of inputs are: | |
Level 1: Quoted market prices in active markets for identical assets or liabilities. | |
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market | |
data. | |
Level 3: Significant unobservable inputs that are not corroborated by market data. | |
The Company’s current financial liabilities have fair values that approximate their carrying values. The Company’s long-term financial liabilities consist of long-term debt, which is recorded on the balance sheet at issuance price and adjusted for any applicable unamortized discounts or premiums. There have been no material changes to the valuation techniques utilized in the fair value measurement of assets and liabilities as disclosed in the Company's Form 10-K for the fiscal year ended September 1, 2013. | |
Merchandise Inventories | ' |
Merchandise Inventories | |
Merchandise inventories are valued at the lower of cost or market, as determined primarily by the retail inventory method, and are stated using the last-in, first-out (LIFO) method for substantially all U.S. merchandise inventories. Merchandise inventories for all foreign operations are primarily valued by the retail inventory method and are stated using the first-in, first-out (FIFO) method. The Company believes the LIFO method more fairly presents the results of operations by more closely matching current costs with current revenues. The Company records an adjustment each quarter, if necessary, for the projected annual effect of inflation or deflation, and these estimates are adjusted to actual results determined at year-end, when actual inflation rates and inventory levels have been determined. At November 24, 2013, and September 1, 2013, the cumulative impact of the LIFO valuation on merchandise inventories was $82 and $81, respectively. | |
Derivatives | ' |
Derivatives | |
The Company is exposed to foreign-currency exchange-rate fluctuations in the normal course of business. It manages these fluctuations, in part, through the use of forward foreign-exchange contracts, seeking to economically hedge the impact of fluctuations of foreign exchange on known future expenditures denominated in a non-functional foreign-currency. The contracts relate primarily to U.S. dollar merchandise inventory expenditures made by the Company’s international subsidiaries, whose functional currency is not the U.S. dollar. Currently, these contracts do not qualify for derivative hedge accounting. The Company seeks to mitigate risk with the use of these contracts and does not intend to engage in speculative transactions. These contracts do not contain any credit-risk-related contingent features. The aggregate notional amounts of open, unsettled forward foreign-exchange contracts were $416 and $458 at November 24, 2013, and September 1, 2013, respectively. The Company seeks to manage counterparty risk associated with these contracts by limiting transactions to counterparties with which the Company has an established banking relationship. There can be no assurance, however, that this practice effectively mitigates counterparty risk. The contracts are limited to less than one year in duration. See Note 3 for information on the fair value of unsettled forward foreign-exchange contracts as of November 24, 2013, and September 1, 2013. | |
The unrealized gains or losses recognized in interest income and other, net in the accompanying condensed consolidated statements of income relating to the net changes in the fair value of unsettled forward foreign-exchange contracts were immaterial in the first quarter of 2014 and 2013, respectively. | |
The Company is exposed to fluctuations in prices for the energy it consumes, particularly electricity and natural gas, which it seeks to partially mitigate through the use of fixed-price contracts for certain of its warehouses and other facilities, primarily in the U.S. and Canada. The Company also enters into variable-priced contracts for some purchases of electricity and natural gas, in addition to fuel for its gas stations, on an index basis. These contracts meet the characteristics of derivative instruments, but generally qualify for the “normal purchases or normal sales” exception under authoritative guidance and thus require no mark-to-market adjustment. | |
Foreign Currency | ' |
Foreign Currency | |
The Company recognizes foreign-currency transaction gains and losses related to revaluing or settling all monetary assets and liabilities denominated in currencies other than the functional currency in interest income and other, net in the accompanying condensed consolidated statements of income. Generally, this includes the U.S. dollar cash and cash equivalents and the U.S. dollar payables of consolidated subsidiaries to their functional currency. Also included are realized foreign-currency gains or losses from settlements of forward foreign-exchange contracts. These items resulted in a net gain of $9 in the first quarters of 2014 and 2013. | |
Stock Repurchase Programs | ' |
Stock Repurchase Programs | |
Repurchased shares of common stock are retired, in accordance with the Washington Business Corporation Act. The par value of repurchased shares is deducted from common stock and the excess repurchase price over par value is deducted from additional paid-in capital and retained earnings. See Note 5 for additional information. | |
Recently Adopted Accounting Pronouncements | ' |
Recently Adopted Accounting Pronouncements | |
In February 2013, the Financial Accounting Standards Board (FASB) issued guidance related to reclassifications out of accumulated other comprehensive income. An entity will be required to disclose the net income line items impacted by significant reclassifications out of accumulated other comprehensive income if the item is reclassified in its entirety. For other amounts that are not required to be reclassified in their entirety to net income, cross-references to other disclosures required under U.S. GAAP are required to provide additional detail. The new guidance was effective for fiscal years, and interim periods within those years, beginning after December 15, 2012. The Company adopted this guidance at the beginning of its first quarter of 2014. Adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements or disclosures. |
Investments_Tables
Investments (Tables) | 3 Months Ended | |||||||||||
Nov. 24, 2013 | ||||||||||||
Investments, Debt and Equity Securities [Abstract] | ' | |||||||||||
Available for Sale and Held to Maturity Investments | ' | |||||||||||
The Company’s investments were as follows: | ||||||||||||
November 24, 2013: | Cost | Unrealized | Recorded | |||||||||
Basis | Gains, Net | Basis | ||||||||||
Available-for-sale: | ||||||||||||
Government and agency securities | $ | 1,322 | $ | 3 | $ | 1,325 | ||||||
Asset and mortgage-backed securities | 3 | 0 | 3 | |||||||||
Total available-for-sale | 1,325 | 3 | 1,328 | |||||||||
Held-to-maturity: | ||||||||||||
Certificates of deposit | 128 | 128 | ||||||||||
Bankers' acceptances | 284 | 284 | ||||||||||
Total held-to-maturity | 412 | 412 | ||||||||||
Total short-term investments | $ | 1,737 | $ | 3 | $ | 1,740 | ||||||
September 1, 2013: | Cost | Unrealized | Recorded | |||||||||
Basis | Gains, Net | Basis | ||||||||||
Available-for-sale: | ||||||||||||
Government and agency securities | $ | 1,263 | $ | 0 | $ | 1,263 | ||||||
Corporate notes and bonds | 9 | 0 | 9 | |||||||||
Asset and mortgage-backed securities | 5 | 0 | 5 | |||||||||
Total available-for-sale | 1,277 | 0 | 1,277 | |||||||||
Held-to-maturity: | ||||||||||||
Certificates of deposit | 124 | 124 | ||||||||||
Bankers' acceptances | 79 | 79 | ||||||||||
Total held-to-maturity | $ | 203 | $ | 203 | ||||||||
Total short-term investments | $ | 1,480 | $ | 0 | $ | 1,480 | ||||||
Maturities of Available for Sale and Held to Maturity Securities | ' | |||||||||||
The maturities of available-for-sale and held-to-maturity securities at November 24, 2013, were as follows: | ||||||||||||
Available-For-Sale | Held-To-Maturity | |||||||||||
Cost Basis | Fair Value | |||||||||||
Due in one year or less | $ | 549 | $ | 549 | $ | 412 | ||||||
Due after one year through five years | 765 | 768 | 0 | |||||||||
Due after five years | 11 | 11 | 0 | |||||||||
$ | 1,325 | $ | 1,328 | $ | 412 | |||||||
Fair_Value_Measurement_Tables
Fair Value Measurement (Tables) | 3 Months Ended | |||||||
Nov. 24, 2013 | ||||||||
Fair Value Disclosures [Abstract] | ' | |||||||
Fair Value of Financial Assets and Liabilities Measured on Recurring Basis | ' | |||||||
The tables below present information regarding the Company’s financial assets and financial liabilities that are measured at fair value on a recurring basis and indicate the level within the fair value hierarchy reflecting the valuation techniques utilized to determine fair value. | ||||||||
November 24, 2013: | Level 1 | Level 2 | ||||||
Money market mutual funds(1) | $ | 85 | $ | 0 | ||||
Investment in government and agency securities(2) | 0 | 1,325 | ||||||
Investment in asset and mortgage-backed securities | 0 | 3 | ||||||
Forward foreign-exchange contracts, in asset position(3) | 0 | 1 | ||||||
Forward foreign-exchange contracts, in (liability) position(3) | 0 | (7 | ) | |||||
Total | $ | 85 | $ | 1,322 | ||||
September 1, 2013: | Level 1 | Level 2 | ||||||
Money market mutual funds(1) | $ | 87 | $ | 0 | ||||
Investment in government and agency securities(2) | 0 | 1,263 | ||||||
Investment in corporate notes and bonds | 0 | 9 | ||||||
Investment in asset and mortgage-backed securities | 0 | 5 | ||||||
Forward foreign-exchange contracts, in asset position(3) | 0 | 3 | ||||||
Forward foreign-exchange contracts, in (liability) position(3) | 0 | (3 | ) | |||||
Total | $ | 87 | $ | 1,277 | ||||
_______________ | ||||||||
-1 | Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets. | |||||||
-2 | Included in short-term investments in the accompanying condensed consolidated balance sheets. | |||||||
-3 | The asset and the liability values are included in deferred income taxes and other current assets and other current liabilities, respectively, in the accompanying condensed consolidated balance sheets. See Note 1 for additional information on derivative instruments. |
Debt_Tables
Debt (Tables) | 3 Months Ended | |||||||||||||||
Nov. 24, 2013 | ||||||||||||||||
Debt Disclosure [Abstract] | ' | |||||||||||||||
Carrying Value and Estimated Fair Value of Company's Long-Term Debt | ' | |||||||||||||||
The carrying value and estimated fair value of the Company’s long-term debt consisted of the following: | ||||||||||||||||
November 24, 2013 | September 1, 2013 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Value | Value | Value | Value | |||||||||||||
5.5% Senior Notes due March 2017 | $ | 1,098 | $ | 1,254 | $ | 1,098 | $ | 1,248 | ||||||||
0.65% Senior Notes due December 2015 | 1,199 | 1,206 | 1,199 | 1,200 | ||||||||||||
1.125% Senior Notes due December 2017 | 1,100 | 1,090 | 1,100 | 1,065 | ||||||||||||
1.7% Senior Notes due December 2019 | 1,198 | 1,168 | 1,198 | 1,157 | ||||||||||||
Other long-term debt | 392 | 402 | 403 | 412 | ||||||||||||
Long-term debt, excluding current portion | $ | 4,987 | $ | 5,120 | $ | 4,998 | $ | 5,082 | ||||||||
Equity_and_Comprehensive_Incom1
Equity and Comprehensive Income (Tables) | 3 Months Ended | |||||||||||
Nov. 24, 2013 | ||||||||||||
Equity [Abstract] | ' | |||||||||||
Components Of Equity And Comprehensive Income | ' | |||||||||||
Components of Equity and Comprehensive Income | ||||||||||||
The following tables show the changes in equity attributable to Costco and the noncontrolling interests of consolidated subsidiaries and other entities in which the Company has a controlling interest, but less than total ownership: | ||||||||||||
Attributable to Costco | Noncontrolling | Total | ||||||||||
Interests | Equity | |||||||||||
Equity at September 1, 2013 | $ | 10,833 | $ | 179 | $ | 11,012 | ||||||
Comprehensive income: | ||||||||||||
Net income | 425 | 6 | 431 | |||||||||
Foreign-currency translation adjustment and other, net | 81 | 3 | 84 | |||||||||
Comprehensive income | 506 | 9 | 515 | |||||||||
Stock-based compensation | 112 | 0 | 112 | |||||||||
Stock options exercised, including tax effects | 8 | 0 | 8 | |||||||||
Release of vested restricted stock units (RSUs), including tax effects | (101 | ) | 0 | (101 | ) | |||||||
Cash dividends declared | (137 | ) | 0 | (137 | ) | |||||||
Equity at November 24, 2013 | $ | 11,221 | $ | 188 | $ | 11,409 | ||||||
Attributable to Costco | Noncontrolling | Total | ||||||||||
Interests | Equity | |||||||||||
Equity at September 2, 2012 | $ | 12,361 | $ | 157 | $ | 12,518 | ||||||
Comprehensive income: | ||||||||||||
Net income | 416 | 5 | 421 | |||||||||
Foreign-currency translation adjustment and other, net | 17 | 5 | 22 | |||||||||
Comprehensive income | 433 | 10 | 443 | |||||||||
Stock-based compensation | 93 | 0 | 93 | |||||||||
Stock options exercised, including tax effects | 14 | 0 | 14 | |||||||||
Release of vested RSUs, including tax effects | (83 | ) | 0 | (83 | ) | |||||||
Conversion of convertible notes | 1 | 0 | 1 | |||||||||
Repurchases of common stock | (34 | ) | 0 | (34 | ) | |||||||
Cash dividends declared | (120 | ) | 0 | (120 | ) | |||||||
Equity at November 25, 2012 | $ | 12,665 | $ | 167 | $ | 12,832 | ||||||
StockBased_Compensation_Plans_
Stock-Based Compensation Plans (Tables) | 3 Months Ended | ||||||||||||
Nov. 24, 2013 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||
Summary of RSU Transactions | ' | ||||||||||||
The following table summarizes RSU transactions during the first quarter of 2014: | |||||||||||||
Number of | Weighted-Average | ||||||||||||
Units | Grant Date Fair | ||||||||||||
(in 000’s) | Value | ||||||||||||
Outstanding at September 1, 2013 | 10,081 | $ | 72.52 | ||||||||||
Granted | 3,187 | 113.12 | |||||||||||
Vested and delivered | (4,135 | ) | 71 | ||||||||||
Forfeited | (57 | ) | 74.19 | ||||||||||
Outstanding at November 24, 2013 | 9,076 | $ | 85.8 | ||||||||||
Summary of Stock Option Activity | ' | ||||||||||||
The following table summarizes stock option transactions: | |||||||||||||
Number Of | Weighted- | Weighted- | Aggregate | ||||||||||
Options | Average | Average | Intrinsic | ||||||||||
(in 000’s) | Exercise | Remaining | Value(1) | ||||||||||
Price | Contractual | ||||||||||||
Term | |||||||||||||
(in years) | |||||||||||||
Outstanding at September 1, 2013 | 1,947 | $ | 39.7 | ||||||||||
Exercised | (131 | ) | 37.79 | ||||||||||
Outstanding at November 24, 2013 | 1,816 | $ | 39.84 | 1.18 | $ | 155 | |||||||
_______________ | |||||||||||||
-1 | The difference between the exercise price and market value of common stock at November 24, 2013. | ||||||||||||
Tax Benefits Realized and Intrinsic Value Related to Total Stock Options Exercised | ' | ||||||||||||
The tax benefits realized, derived from the compensation deductions resulting from the option exercises, and intrinsic value related to total stock options exercised are provided in the following table: | |||||||||||||
12 Weeks Ended | |||||||||||||
November 24, | November 25, | ||||||||||||
2013 | 2012 | ||||||||||||
Actual tax benefit realized for stock options exercised | $ | 4 | $ | 6 | |||||||||
Intrinsic value of stock options exercised(1) | $ | 11 | $ | 15 | |||||||||
_______________ | |||||||||||||
(1) The difference between the exercise price and market value of common stock measured at each exercise date | |||||||||||||
Summary of Stock-Based Compensation Expense and Related Tax Benefits | ' | ||||||||||||
The following table summarizes stock-based compensation expense and the related tax benefits under the Company’s plans: | |||||||||||||
12 Weeks Ended | |||||||||||||
November 24, | November 25, | ||||||||||||
2013 | 2012 | ||||||||||||
Stock-based compensation expense before income taxes | $ | 112 | $ | 93 | |||||||||
Less recognized income tax benefit | (38 | ) | (31 | ) | |||||||||
Stock-based compensation expense, net of income taxes | $ | 74 | $ | 62 | |||||||||
Net_Income_per_Common_and_Comm1
Net Income per Common and Common Equivalent Share (Tables) | 3 Months Ended | |||||||
Nov. 24, 2013 | ||||||||
Schedule of Earnings Per Share, Basic and Diluted [Abstract] | ' | |||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | ' | |||||||
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 effect on net income and the weighted average number of shares of potentially dilutive common shares outstanding (shares in 000’s): | ||||||||
12 Weeks Ended | ||||||||
November 24, | November 25, | |||||||
2013 | 2012 | |||||||
Net income available to common stockholders after assumed conversions of dilutive securities | $ | 425 | $ | 416 | ||||
Weighted average number of common shares used in basic net income per common share | 437,970 | 433,423 | ||||||
RSUs and stock options | 4,421 | 4,413 | ||||||
Conversion of convertible notes | 29 | 807 | ||||||
Weighted average number of common shares and dilutive potential of common stock used in diluted net income per share | 442,420 | 438,643 | ||||||
Segment_Reporting_Tables
Segment Reporting (Tables) | 3 Months Ended | |||||||||||||||
Nov. 24, 2013 | ||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||
Segment Reporting Information, by Segment | ' | |||||||||||||||
The Company and its subsidiaries are principally engaged in the operation of membership warehouses in the U.S., Canada, Mexico, the United Kingdom, Japan, and Australia and through majority-owned subsidiaries in Taiwan and Korea. 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 the same as described in the notes to the consolidated financial statements included in the Company's annual report filed on Form 10-K for the fiscal year ended September 1, 2013, and Note 1 above. All material inter-segment net sales and expenses have been eliminated in computing total revenue and operating income. Certain operating expenses, predominantly stock-based compensation, are incurred on behalf of the Company's Canadian and Other International Operations, but are included in the U.S. Operations because those costs are not allocated internally and generally come under the responsibility of the Company's U.S. management team. | ||||||||||||||||
United States | Canadian | Other | Total | |||||||||||||
Operations | Operations | International | ||||||||||||||
Operations | ||||||||||||||||
Twelve Weeks Ended November 24, 2013 | ||||||||||||||||
Total revenue | $ | 17,724 | $ | 4,124 | $ | 3,169 | $ | 25,017 | ||||||||
Operating income | 364 | 189 | 115 | 668 | ||||||||||||
Depreciation and amortization | 170 | 28 | 33 | 231 | ||||||||||||
Additions to property and equipment | 385 | 67 | 122 | 574 | ||||||||||||
Net property and equipment | 9,855 | 1,667 | 2,732 | 14,254 | ||||||||||||
Total assets | 21,825 | 4,772 | 5,722 | 32,319 | ||||||||||||
Twelve Weeks Ended November 25, 2012 | ||||||||||||||||
Total revenue | $ | 16,918 | $ | 3,889 | $ | 2,908 | $ | 23,715 | ||||||||
Operating income | 343 | 176 | 120 | 639 | ||||||||||||
Depreciation and amortization | 155 | 28 | 30 | 213 | ||||||||||||
Additions to property and equipment | 305 | 55 | 128 | 488 | ||||||||||||
Net property and equipment | 9,384 | 1,678 | 2,189 | 13,251 | ||||||||||||
Total assets | 19,884 | 4,551 | 4,888 | 29,323 | ||||||||||||
Year Ended September 1, 2013 | ||||||||||||||||
Total revenue | $ | 75,493 | $ | 17,179 | $ | 12,484 | $ | 105,156 | ||||||||
Operating income | 1,810 | 756 | 487 | 3,053 | ||||||||||||
Depreciation and amortization | 696 | 123 | 127 | 946 | ||||||||||||
Additions to property and equipment | 1,090 | 186 | 807 | 2,083 | ||||||||||||
Net property and equipment | 9,652 | 1,621 | 2,608 | 13,881 | ||||||||||||
Total assets | 20,608 | 4,529 | 5,146 | 30,283 | ||||||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Nov. 24, 2013 | Nov. 25, 2012 | Sep. 01, 2013 |
warehouse | |||
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' |
Foreign Currency Transaction Gain, before Tax | $9 | $9 | ' |
Number of warehouses operated | 646 | ' | ' |
Inventory LIFO reserve cumulative impact | 82 | ' | 81 |
Forward Foreign Exchange Contracts | ' | ' | ' |
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' |
Notional amount of forward foreign - exchange derivative | $416 | ' | $458 |
UNITED STATES | ' | ' | ' |
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' |
Number of warehouses operated | 460 | ' | ' |
Number of regions in country | 43 | ' | ' |
CANADA | ' | ' | ' |
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' |
Number of warehouses operated | 86 | ' | ' |
MEXICO | ' | ' | ' |
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' |
Number of warehouses operated | 33 | ' | ' |
UNITED KINGDOM | ' | ' | ' |
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' |
Number of warehouses operated | 25 | ' | ' |
JAPAN | ' | ' | ' |
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' |
Number of warehouses operated | 18 | ' | ' |
TAIWAN, PROVINCE OF CHINA | ' | ' | ' |
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' |
Number of warehouses operated | 10 | ' | ' |
KOREA, REPUBLIC OF | ' | ' | ' |
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' |
Number of warehouses operated | 9 | ' | ' |
AUSTRALIA | ' | ' | ' |
Summary Of Significant Accounting Policies [Line Items] | ' | ' | ' |
Number of warehouses operated | 5 | ' | ' |
Investments_Available_for_Sale
Investments - Available for Sale and Held to Maturity Investments (Detail) (USD $) | Nov. 24, 2013 | Sep. 01, 2013 |
In Millions, unless otherwise specified | ||
Available For Sale And Held To Maturity [Line Items] | ' | ' |
Available-For-Sale, Cost Basis | $1,325 | ' |
Available-for-sale, Recorded Basis, Total | 1,328 | ' |
Held-to-maturity, Cost Basis | 412 | ' |
Total investments, Recorded Basis | 1,740 | 1,480 |
Short-term Investments | ' | ' |
Available For Sale And Held To Maturity [Line Items] | ' | ' |
Unrealized gains | 3 | 0 |
Total investments, Cost Basis | 1,737 | 1,480 |
Total investments, Recorded Basis | 1,740 | 1,480 |
Short-term Investments | Available-for-sale Securities | ' | ' |
Available For Sale And Held To Maturity [Line Items] | ' | ' |
Available-For-Sale, Cost Basis | 1,325 | 1,277 |
Unrealized gains | 3 | 0 |
Available-for-sale, Recorded Basis, Total | 1,328 | 1,277 |
Short-term Investments | Available-for-sale Securities | Government and agency securities | ' | ' |
Available For Sale And Held To Maturity [Line Items] | ' | ' |
Available-For-Sale, Cost Basis | 1,322 | 1,263 |
Unrealized gains | 3 | 0 |
Available-for-sale, Recorded Basis, Total | 1,325 | 1,263 |
Short-term Investments | Available-for-sale Securities | Corporate notes and bonds | ' | ' |
Available For Sale And Held To Maturity [Line Items] | ' | ' |
Available-For-Sale, Cost Basis | ' | 9 |
Unrealized gains | ' | 0 |
Available-for-sale, Recorded Basis, Total | ' | 9 |
Short-term Investments | Available-for-sale Securities | Asset and mortgage backed securities | ' | ' |
Available For Sale And Held To Maturity [Line Items] | ' | ' |
Available-For-Sale, Cost Basis | 3 | 5 |
Unrealized gains | 0 | 0 |
Available-for-sale, Recorded Basis, Total | 3 | 5 |
Short-term Investments | Held-to-maturity Securities | ' | ' |
Available For Sale And Held To Maturity [Line Items] | ' | ' |
Held-to-maturity, Cost Basis | 412 | 203 |
Held-to-maturity, Recorded Basis, Total | 412 | 203 |
Short-term Investments | Held-to-maturity Securities | Banker's Acceptances | ' | ' |
Available For Sale And Held To Maturity [Line Items] | ' | ' |
Held-to-maturity, Cost Basis | 284 | 79 |
Held-to-maturity, Recorded Basis, Total | 284 | 79 |
Short-term Investments | Held-to-maturity Securities | Certificates of deposit | ' | ' |
Available For Sale And Held To Maturity [Line Items] | ' | ' |
Held-to-maturity, Cost Basis | 128 | 124 |
Held-to-maturity, Recorded Basis, Total | $128 | $124 |
Investments_Proceeds_from_Sale
Investments - Proceeds from Sales of Available for Sale Securities (Detail) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Nov. 24, 2013 | Nov. 25, 2012 |
Investments, Debt and Equity Securities [Abstract] | ' | ' |
Proceeds | $10 | $61 |
Investments_Maturities_of_Avai
Investments - Maturities of Available for Sale and Held to Maturity Securities (Details) (USD $) | Nov. 24, 2013 |
In Millions, unless otherwise specified | |
Available-For-Sale, Cost Basis | ' |
Due in one year or less | $549 |
Due after one year through five years | 765 |
Due after five years | 11 |
Available-For-Sale, Cost Basis, Total | 1,325 |
Available-For-Sale, Fair Value | ' |
Due in one year or less | 549 |
Due after one year through five years | 768 |
Due after five years | 11 |
Available-for-sale, Recorded Basis, Total | 1,328 |
Held-To-Maturity | ' |
Due in one year or less | 412 |
Due after one year through five years | 0 |
Due after five years | 0 |
Held-To-Maturity, Cost Basis, Total | $412 |
Fair_Value_Measurement_Fair_Va
Fair Value Measurement - Fair Value of Financial Assets and Financial Liabilities Measured on Recurring Basis (Details) (Fair Value, Measurements, Recurring [Member], USD $) | Nov. 24, 2013 | Sep. 01, 2013 | ||
In Millions, unless otherwise specified | ||||
Fair Value, Inputs, Level 2 [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' | ||
Fair value of assets measured on recurring basis | $1,322 | $1,277 | ||
Fair Value, Inputs, Level 1 [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' | ||
Fair value of assets measured on recurring basis | 85 | 87 | ||
Money Market Funds [Member] | Fair Value, Inputs, Level 2 [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' | ||
Fair value of assets measured on recurring basis | 0 | [1] | 0 | [1] |
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' | ||
Fair value of assets measured on recurring basis | 85 | [1] | 87 | [1] |
Government and agency securities | Fair Value, Inputs, Level 2 [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' | ||
Fair value of assets measured on recurring basis | 1,325 | [2] | 1,263 | [2] |
Government and agency securities | Fair Value, Inputs, Level 1 [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' | ||
Fair value of assets measured on recurring basis | 0 | [2] | 0 | [2] |
Corporate notes and bonds | Fair Value, Inputs, Level 2 [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' | ||
Fair value of assets measured on recurring basis | ' | 9 | ||
Corporate notes and bonds | Fair Value, Inputs, Level 1 [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' | ||
Fair value of assets measured on recurring basis | ' | 0 | ||
Asset-backed Securities [Member] | Fair Value, Inputs, Level 2 [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' | ||
Fair value of assets measured on recurring basis | 3 | 5 | ||
Asset-backed Securities [Member] | Fair Value, Inputs, Level 1 [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' | ||
Fair value of assets measured on recurring basis | 0 | 0 | ||
Foreign Exchange Forward [Member] | Fair Value, Inputs, Level 2 [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' | ||
Fair value of assets measured on recurring basis | 1 | [3] | 3 | [3] |
Fair value of liabilities measured on recurring basis | -7 | [3] | -3 | [3] |
Foreign Exchange Forward [Member] | Fair Value, Inputs, Level 1 [Member] | ' | ' | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ' | ' | ||
Fair value of assets measured on recurring basis | 0 | [3] | 0 | [3] |
Fair value of liabilities measured on recurring basis | $0 | [3] | $0 | [3] |
[1] | Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets. | |||
[2] | ncluded in short-term investments in the accompanying condensed consolidated balance sheets. | |||
[3] | The asset and the liability values are included in deferred income taxes and other current assets and other current liabilities, respectively, in the accompanying condensed consolidated balance sheets. See Note 1 for additional information on derivative instruments. |
Debt_Carrying_Value_and_Estima
Debt (Carrying Value and Estimated Fair Value of Company's Long Term Debt) (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Nov. 24, 2013 | Sep. 01, 2013 |
Debt Instrument [Line Items] | ' | ' |
Long-term debt, excluding current portion, carrying value | $4,987 | $4,998 |
Long-term debt, excluding current portion, fair value | 5,120 | 5,082 |
5.5% Senior Notes due March 2017 | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Debt instrument, principal due date | '2017-03 | ' |
Debt instrument, stated interest rate (percent) | 5.50% | ' |
Total long-term debt, carrying value | 1,098 | 1,098 |
Total long-term debt, fair value | 1,254 | 1,248 |
0.65% Senior Notes due December 2015 | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Debt instrument, principal due date | '2015-12 | ' |
Debt instrument, stated interest rate (percent) | 0.65% | ' |
Total long-term debt, carrying value | 1,199 | 1,199 |
Total long-term debt, fair value | 1,206 | 1,200 |
1.25% Senior Notes due December 2017 | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Debt instrument, principal due date | '2017-12 | ' |
Debt instrument, stated interest rate (percent) | 1.13% | ' |
Total long-term debt, carrying value | 1,100 | 1,100 |
Total long-term debt, fair value | 1,090 | 1,065 |
1.7% Senior Notes due December 2019 | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Debt instrument, principal due date | '2019-12 | ' |
Debt instrument, stated interest rate (percent) | 1.70% | ' |
Total long-term debt, carrying value | 1,198 | 1,198 |
Total long-term debt, fair value | 1,168 | 1,157 |
Other Long Term Debt | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Total long-term debt, carrying value | 392 | 403 |
Total long-term debt, fair value | $402 | $412 |
Equity_and_Comprehensive_Incom2
Equity and Comprehensive Income - Additional Information (Detail) (USD $) | 3 Months Ended | |
In Millions, except Share data, unless otherwise specified | Nov. 24, 2013 | Nov. 25, 2012 |
Equity [Abstract] | ' | ' |
Dividends declared and paid | $0.31 | $0.28 |
Shares repurchased | 0 | 357,000 |
Average Price per Share | ' | $96.41 |
Total Cost | ' | $34 |
Stock repurchase authorization amount remaining | $3,055 | ' |
Changes_in_Equity_Attributes_t
Changes in Equity Attributes to Costco and the Noncontrolling Interests of Consolidated Subsidiaries (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Nov. 24, 2013 | Nov. 25, 2012 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' |
Equity at beginning of period | $11,012 | $12,518 |
Comprehensive income: | ' | ' |
Net income | 431 | 421 |
Net Income (Loss) Attributable to Parent | 425 | 416 |
Net Income (Loss) Attributable to Noncontrolling Interest | 6 | 5 |
Foreign-currency translation adjustment and other, net | 84 | 22 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO | 506 | 433 |
Comprehensive income | 515 | 443 |
Comprehensive (Income) Loss, Net of Tax, Attributable to Noncontrolling Interest | 9 | 10 |
Stock-based compensation | 112 | 93 |
Stock options exercised, including tax effects | 8 | 14 |
Release of vested restricted stock units (RSUs), including tax effects | -101 | -83 |
Conversion of convertible notes | ' | 1 |
Repurchases of common stock | ' | -34 |
Cash dividends declared | -137 | -120 |
Equity at end of period | 11,409 | 12,832 |
Attributable to Costco | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' |
Equity at beginning of period | 10,833 | 12,361 |
Comprehensive income: | ' | ' |
Net income | ' | 416 |
Net Income (Loss) Attributable to Parent | 425 | ' |
Foreign-currency translation adjustment and other, net | 81 | 17 |
Stock-based compensation | 112 | 93 |
Stock options exercised, including tax effects | 8 | 14 |
Release of vested restricted stock units (RSUs), including tax effects | -101 | -83 |
Conversion of convertible notes | ' | 1 |
Repurchases of common stock | ' | -34 |
Cash dividends declared | -137 | -120 |
Equity at end of period | 11,221 | 12,665 |
Noncontrolling Interests | ' | ' |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ' | ' |
Equity at beginning of period | 179 | 157 |
Comprehensive income: | ' | ' |
Net Income (Loss) Attributable to Noncontrolling Interest | 6 | 5 |
Foreign-currency translation adjustment and other, net | 3 | 5 |
Equity at end of period | $188 | $167 |
StockBased_Compensation_Plans_1
Stock-Based Compensation Plans - Additional Information (Detail) (USD $) | 3 Months Ended | |
In Millions, except Share data, unless otherwise specified | Nov. 24, 2013 | Sep. 01, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Additional number of shares authorized | 16,000,000 | ' |
Number of stock options outstanding | 1,816,000 | 1,947,000 |
Number of RSUs outstanding | 9,076,000 | 10,081,000 |
Restricted Stock Units (RSUs) | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Additional number of shares authorized | 9,143,000 | ' |
Time-based RSUs awards outstanding | 8,733,000 | ' |
Number of shares available to be granted as RSUs | 7,775,000 | ' |
Performance-based RSUs awards outstanding | 343,000 | ' |
Outstanding performance-based RSUs awards to be granted | 269,000 | ' |
Unrecognized compensation cost | 748 | ' |
Weighted-average recognition period | '1 year 10 months 27 days | ' |
Fourth Restated 2002 Plan [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Portion of each share issued counted towards limit of shares available | 1.75 | ' |
StockBased_Compensation_Plans_2
Stock-Based Compensation Plans - Summary of Stock Option Transactions (Details) (USD $) | 3 Months Ended | |
In Millions, except Share data in Thousands, unless otherwise specified | Nov. 24, 2013 | |
Number of options | ' | |
Number of options outstanding at September 1, 2013 | 1,947 | |
Exercised | -131 | |
Number of options outstanding at November 24, 2013 | 1,816 | |
Weighted-average exercise price | ' | |
Weighted-average exercise price at September 1, 2013 | $39.70 | |
Exercised | $37.79 | |
Weighted-average exercise price at November 24, 2013 | $39.84 | |
Weighted Average Remaining Contractual Term [Abstract] | ' | |
Weighted-average remaining contractual term (in years) | '1 year 2 months 4 days | |
Aggregate intrinsic value | ' | |
Aggregate intrinsic value | $155 | [1] |
[1] | The difference between the exercise price and market value of common stock at NovemberB 24, 2013. |
StockBased_Compensation_Plans_3
Stock-Based Compensation Plans - Tax Benefits Realized and Intrinsic Value Related to Stock Options Exercised (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Nov. 24, 2013 | Nov. 25, 2012 | ||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ' | ||
Actual tax benefit realized for stock options exercised | $4 | $6 | ||
Intrinsic value of stock options exercised | $11 | [1] | $15 | [1] |
[1] | The difference between the exercise price and market value of common stock measured at each exercise date |
StockBased_Compensation_Plans_4
Stock-Based Compensation Plans - Summary of RSU Transactions (Details) (USD $) | 3 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Nov. 24, 2013 |
Number of units | ' |
Outstanding at September 1, 2013 | 10,081 |
Granted | 3,187 |
Vested and delivered | -4,135 |
Forfeited | -57 |
Outstanding at November 24, 2013 | 9,076 |
Weighted average grant date fair value | ' |
Outstanding at September 1, 2013 | $72.52 |
Granted | $113.12 |
Vested and delivered | $71 |
Forfeited | $74.19 |
Outstanding at November 24, 2013 | $85.80 |
StockBased_Compensation_Plans_5
Stock-Based Compensation Plans - Summary of Stock-Based Compensation Expense (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Nov. 24, 2013 | Nov. 25, 2012 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ' |
Total stock-based compensation expense before income taxes | $112 | $93 |
Less recognized income tax benefit | -38 | -31 |
Total stock-based compensation expense, net of income taxes | $74 | $62 |
Net_Income_per_Common_and_Comm2
Net Income per Common and Common Equivalent Share - Schedule of Earnings per Share Effect on Net Income and Weighted Averegae Number of Dilutive Potential Common Stock (Details) (USD $) | 3 Months Ended | |
In Millions, except Share data in Thousands, unless otherwise specified | Nov. 24, 2013 | Nov. 25, 2012 |
Earnings Per Share [Abstract] | ' | ' |
Net income available to common stockholders after assumed conversion of dilutive securities | $425 | $416 |
Weighted average number of common shares used in basic net income per common share | 437,970 | 433,423 |
RSUs and stock options | 4,421 | 4,413 |
Conversion of convertible notes | 29 | 807 |
Weighted average number of common shares and dilutive potential of common stock used in diluted net income per share | 442,420 | 438,643 |
Commitments_and_Contingencies_
Commitments and Contingencies - Additional Information (Detail) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Nov. 24, 2013 |
Commitments and Contingencies Disclosure [Abstract] | ' |
Damages sought | $10 |
Segment_Reporting_Information_
Segment Reporting Information by Segment (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |
In Millions, unless otherwise specified | Nov. 24, 2013 | Nov. 25, 2012 | Sep. 01, 2013 |
Segment Reporting Information [Line Items] | ' | ' | ' |
Total revenue | $25,017 | $23,715 | $105,156 |
Operating income | 668 | 639 | 3,053 |
Depreciation and amortization | 231 | 213 | 946 |
Additions to property and equipment | 574 | 488 | 2,083 |
Net property and equipment | 14,254 | 13,251 | 13,881 |
Total assets | 32,319 | 29,323 | 30,283 |
United States Operations | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' |
Total revenue | 17,724 | 16,918 | 75,493 |
Operating income | 364 | 343 | 1,810 |
Depreciation and amortization | 170 | 155 | 696 |
Additions to property and equipment | 385 | 305 | 1,090 |
Net property and equipment | 9,855 | 9,384 | 9,652 |
Total assets | 21,825 | 19,884 | 20,608 |
Canadian Operations | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' |
Total revenue | 4,124 | 3,889 | 17,179 |
Operating income | 189 | 176 | 756 |
Depreciation and amortization | 28 | 28 | 123 |
Additions to property and equipment | 67 | 55 | 186 |
Net property and equipment | 1,667 | 1,678 | 1,621 |
Total assets | 4,772 | 4,551 | 4,529 |
Other International Operations | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' |
Total revenue | 3,169 | 2,908 | 12,484 |
Operating income | 115 | 120 | 487 |
Depreciation and amortization | 33 | 30 | 127 |
Additions to property and equipment | 122 | 128 | 807 |
Net property and equipment | 2,732 | 2,189 | 2,608 |
Total assets | $5,722 | $4,888 | $5,146 |