8-K
COSTCO WHOLESALE CORP /NEW (COST)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): September 24, 2020
COSTCO WHOLESALE CORPORATION
(Exact name of registrant as specified in its charter)
| Washington | 0-20355 | 91-1223280 |
|---|---|---|
| (State or other jurisdiction<br> <br>of incorporation) | (Commission<br> <br>File No.) | (I.R.S. Employer<br> <br>Identification No.) |
999 Lake Drive
Issaquah, WA 98027
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: 425-313-8100
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Common Stock, par value $.01 per share | COST | NASDAQ |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
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. ☐
| Item 2.02. | Results of Operations and Financial Condition |
|---|
On September 24, 2020, the Company issued a press release containing its operating results for the 16-week fourth quarter and the 52-week fiscal year, ended August 30, 2020. A copy of the press release is included in Item 9.01.
| Item 9.01. | Financial Statements and Exhibits |
|---|
(d) Exhibits. The following exhibit is included in this report:
| 99.1. | Press release dated September 24, 2020. |
|---|---|
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
2
SIGNATURE
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, hereunto duly authorized, on September 24, 2020.
| COSTCO WHOLESALE CORPORATION | |
|---|---|
| By: | /s/ Richard A. Galanti |
| Richard A. Galanti | |
| Executive Vice President and Chief Financial Officer |
3
EX-99.1
Exhibit 99.1
| Press Release |
|---|
COSTCO WHOLESALE CORPORATION REPORTS FOURTH QUARTER AND FISCAL
YEAR 2020 OPERATING RESULTS
ISSAQUAH, Wash., September 24, 2020 - Costco Wholesale Corporation (“Costco” or the “Company”) (Nasdaq: COST) today announced its operating results for the 16-week fourth quarter and the 52-week fiscal year, ended August 30, 2020.
Net sales for the quarter increased 12.5 percent, to $52.28 billion from $46.45 billion last year. Net sales for the fiscal year increased 9.3 percent, to $163.22 billion from $149.35 billion last year.
Comparable sales for the fourth quarter and the fiscal year were as follows:
| 16 Weeks | 16 Weeks | 52 Weeks | 52 Weeks | |
|---|---|---|---|---|
| Adjusted* | Adjusted* | |||
| U.S. | 11.0% | 13.6% | 8.1% | 9.2% |
| Canada | 9.1% | 12.6% | 5.0% | 7.4% |
| Other International | 16.1% | 18.8% | 8.9% | 11.2% |
| Total Company | 11.4% | 14.1% | 7.7% | 9.2% |
| E-commerce | 90.6% | 91.3% | 49.5% | 50.1% |
*Excluding the impacts from changes in gasoline prices and foreign exchange.
Net income for the fourth quarter was $1.389 billion, or $3.13 per diluted share, compared to $1.097 billion, or $2.47 per diluted share last year. This year’s fourth quarter was negatively impacted by incremental expense related to COVID-19 premium wages and sanitation costs of $281 million pretax ($0.47 per diluted share) and a $36 million pretax charge ($0.06 per diluted share) related to the prepayment of $1.5 billion of debt. These items were partially offset by an $84 million pretax benefit ($0.15 per diluted share) for the partial reversal of a reserve of $123 million pretax ($0.22 cents per diluted share), related to a product tax assessment taken in the fourth quarter of last year.
Net income for the fiscal year was $4.00 billion, or $9.02 per diluted share, compared to $3.66 billion, or $8.26 per diluted share in the prior year.
Costco currently operates 795 warehouses, including 552 in the United States and Puerto Rico, 101 in Canada, 39 in Mexico, 29 in the United Kingdom, 27 in Japan, 16 in Korea, 13 in Taiwan, 12 in Australia, three in Spain, and one each in Iceland, France, and China. Costco also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan, and Australia.
A conference call to discuss these results is scheduled for 2:00 p.m. (PT) today, September 24, 2020, and is available via a webcast on www.costco.com (click on Investor Relations and “Play Webcast”).
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. 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
| Press Release |
|---|
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, the effects of competition and regulation, uncertainties in the financial markets, consumer and small 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), the ability to maintain effective internal control over financial reporting, COVID-19 related factors and challenges, including among others, the duration of the pandemic, the unknown long-term economic impacts, reduced customer shopping due to illness, travel restrictions or financial hardship, shifts in demand away from discretionary or higher-priced products, reduced workforce due to illness, quarantine, or government mandates, temporary store closures due to reduced workforces or government mandates, or supply-chain disruptions, and other risks identified from time to time in the Company’s public statements and reports filed with the Securities and Exchange 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.
| CONTACTS: | Costco Wholesale Corporation |
|---|---|
| Richard Galanti, 425/313-8203 | |
| Bob Nelson, 425/313-8255 | |
| David Sherwood, 425/313-8239 | |
| Josh Dahmen, 425/313-8254 | |
| Press Release | |
| --- |
COSTCO WHOLESALE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share data)
(unaudited)
| 16 Weeks Ended | 52 Weeks Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| August 30, 2020 | September 1, 2019 | August 30, 2020 | September 1, 2019 | |||||||||
| REVENUE | ||||||||||||
| Net sales | $ | 52,277 | $ | 46,448 | $ | 163,220 | $ | 149,351 | ||||
| Membership fees | 1,106 | 1,050 | 3,541 | 3,352 | ||||||||
| Total revenue | 53,383 | 47,498 | 166,761 | 152,703 | ||||||||
| OPERATING EXPENSES | ||||||||||||
| Merchandise costs | 46,401 | 41,310 | 144,939 | 132,886 | ||||||||
| Selling, general and administrative | 5,027 | 4,684 | 16,332 | 14,994 | ||||||||
| Preopening expenses | 26 | 41 | 55 | 86 | ||||||||
| Operating income | 1,929 | 1,463 | 5,435 | 4,737 | ||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||
| Interest expense | (51 | ) | (45 | ) | (160 | ) | (150 | ) | ||||
| Interest income and other, net | (9 | ) | 74 | 92 | 178 | |||||||
| INCOME BEFORE INCOME TAXES | 1,869 | 1,492 | 5,367 | 4,765 | ||||||||
| Provision for income taxes | 465 | 382 | 1,308 | 1,061 | ||||||||
| Net income including noncontrolling interests | 1,404 | 1,110 | 4,059 | 3,704 | ||||||||
| Net income attributable to noncontrolling interests | (15 | ) | (13 | ) | (57 | ) | (45 | ) | ||||
| NET INCOME ATTRIBUTABLE TO COSTCO | $ | 1,389 | $ | 1,097 | $ | 4,002 | $ | 3,659 | ||||
| NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO: | ||||||||||||
| Basic | $ | 3.14 | $ | 2.49 | $ | 9.05 | $ | 8.32 | ||||
| Diluted | $ | 3.13 | $ | 2.47 | $ | 9.02 | $ | 8.26 | ||||
| Shares used in calculation (000’s): | ||||||||||||
| Basic | 442,843 | 439,727 | 442,297 | 439,755 | ||||||||
| Diluted | 444,231 | 443,400 | 443,901 | 442,923 | ||||||||
| Press Release | ||||||||||||
| --- |
COSTCO WHOLESALE CORPORATION
CONSOLIDATED BALANCE SHEETS
(amounts in millions, except par value and share data)
(unaudited)
Subject toReclassification
| September 1,<br>2019 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| CURRENT ASSETS | |||||
| Cash and cash equivalents | 12,277 | $ | 8,384 | ||
| Short-term investments | 1,028 | 1,060 | |||
| Receivables, net | 1,550 | 1,535 | |||
| Merchandise inventories | 12,242 | 11,395 | |||
| Other current assets | 1,023 | 1,111 | |||
| Total current assets | 28,120 | 23,485 | |||
| OTHER ASSETS | |||||
| Property and equipment, net | 21,807 | 20,890 | |||
| Operating lease<br>right-of-use assets | 2,788 | — | |||
| Other long-term assets | 2,841 | 1,025 | |||
| TOTAL ASSETS | 55,556 | $ | 45,400 | ||
| LIABILITIES AND EQUITY | |||||
| CURRENT LIABILITIES | |||||
| Accounts payable | 14,172 | $ | 11,679 | ||
| Accrued salaries and benefits | 3,605 | 3,176 | |||
| Accrued member rewards | 1,393 | 1,180 | |||
| Deferred membership fees | 1,851 | 1,711 | |||
| Current portion of long-term debt | 95 | 1,699 | |||
| Other current liabilities | 3,728 | 3,792 | |||
| Total current liabilities | 24,844 | 23,237 | |||
| OTHER LIABILITIES | |||||
| Long-term debt, excluding current portion | 7,514 | 5,124 | |||
| Long-term operating lease liabilities | 2,558 | — | |||
| Other long-term liabilities | 1,935 | 1,455 | |||
| TOTAL LIABILITIES | 36,851 | 29,816 | |||
| COMMITMENTS AND CONTINGENCIES EQUITY | |||||
| Preferred stock 0.01 par value; 100,000,000 shares authorized; no shares issued and<br>outstanding | — | — | |||
| Common stock 0.01 par value; 900,000,000 shares authorized; 441,255,000 and 439,625,000 shares<br>issued and outstanding | 4 | 4 | |||
| Additional paid-in capital | 6,698 | 6,417 | |||
| Accumulated other comprehensive loss | (1,297 | ) | (1,436 | ) | |
| Retained earnings | 12,879 | 10,258 | |||
| Total Costco stockholders’ equity | 18,284 | 15,243 | |||
| Noncontrolling interests | 421 | 341 | |||
| Total equity | 18,705 | 15,584 | |||
| TOTAL LIABILITIES AND EQUITY | 55,556 | $ | 45,400 |
All values are in US Dollars.