QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||||||||
☒ | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company |
Page | ||||||||
PART I | ||||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
PART II | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
12 Weeks Ended | 36 Weeks Ended | ||||||||||||||||||||||
May 9, 2021 | May 10, 2020 | May 9, 2021 | May 10, 2020 | ||||||||||||||||||||
REVENUE | |||||||||||||||||||||||
Net sales | $ | $ | $ | $ | |||||||||||||||||||
Membership fees | |||||||||||||||||||||||
Total revenue | |||||||||||||||||||||||
OPERATING EXPENSES | |||||||||||||||||||||||
Merchandise costs | |||||||||||||||||||||||
Selling, general and administrative | |||||||||||||||||||||||
Preopening expenses | |||||||||||||||||||||||
Operating income | |||||||||||||||||||||||
OTHER INCOME (EXPENSE) | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Interest income and other, net | |||||||||||||||||||||||
INCOME BEFORE INCOME TAXES | |||||||||||||||||||||||
Provision for income taxes | |||||||||||||||||||||||
Net income including noncontrolling interests | |||||||||||||||||||||||
Net income attributable to noncontrolling interests | ( | ( | ( | ( | |||||||||||||||||||
NET INCOME ATTRIBUTABLE TO COSTCO | $ | $ | $ | $ | |||||||||||||||||||
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||||||||||
Shares used in calculation (000s): | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted |
12 Weeks Ended | 36 Weeks Ended | ||||||||||||||||||||||
May 9, 2021 | May 10, 2020 | May 9, 2021 | May 10, 2020 | ||||||||||||||||||||
NET INCOME INCLUDING NONCONTROLLING INTERESTS | $ | $ | $ | $ | |||||||||||||||||||
Foreign-currency translation adjustment and other, net | ( | ( | |||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||
Less: Comprehensive income attributable to noncontrolling interests | |||||||||||||||||||||||
COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO | $ | $ | $ | $ |
May 9, 2021 | August 30, 2020 | ||||||||||
ASSETS | |||||||||||
CURRENT ASSETS | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Short-term investments | |||||||||||
Receivables, net | |||||||||||
Merchandise inventories | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
OTHER ASSETS | |||||||||||
Property and equipment, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Other long-term assets | |||||||||||
TOTAL ASSETS | $ | $ | |||||||||
LIABILITIES AND EQUITY | |||||||||||
CURRENT LIABILITIES | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued salaries and benefits | |||||||||||
Accrued member rewards | |||||||||||
Deferred membership fees | |||||||||||
Current portion of long-term debt | |||||||||||
Other current liabilities | |||||||||||
Total current liabilities | |||||||||||
OTHER LIABILITIES | |||||||||||
Long-term debt, excluding current portion | |||||||||||
Long-term operating lease liabilities | |||||||||||
Other long-term liabilities | |||||||||||
TOTAL LIABILITIES | |||||||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||
EQUITY | |||||||||||
Preferred stock $ | |||||||||||
Common stock $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Retained earnings | |||||||||||
Total Costco stockholders’ equity | |||||||||||
Noncontrolling interests | |||||||||||
TOTAL EQUITY | |||||||||||
TOTAL LIABILITIES AND EQUITY | $ | $ |
12 Weeks Ended May 9, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Costco Stockholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||
Shares (000s) | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
BALANCE AT FEBRUARY 14, 2021 | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Foreign-currency translation adjustment and other, net | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Release of vested restricted stock units (RSUs), including tax effects | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||
Repurchases of common stock | ( | — | ( | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Cash dividend declared | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
BALANCE AT MAY 9, 2021 | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
12 Weeks Ended May 10, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Costco Stockholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||
Shares (000s) | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
BALANCE AT FEBRUARY 16, 2020 | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Foreign-currency translation adjustment and other, net | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Release of vested RSUs, including tax effects | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||
Repurchases of common stock | ( | — | ( | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Cash dividend declared | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
BALANCE AT MAY 10, 2020 | $ | $ | $ | ( | $ | $ | $ | $ |
36 Weeks Ended May 9, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Costco Stockholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||
Shares (000s) | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
BALANCE AT AUGUST 30, 2020 | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Foreign-currency translation adjustment and other, net | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Release of vested restricted stock units (RSUs), including tax effects | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||
Repurchases of common stock | ( | — | ( | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Cash dividends declared | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
BALANCE AT MAY 9, 2021 | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
36 Weeks Ended May 10, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Costco Stockholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||
Shares (000s) | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
BALANCE AT SEPTEMBER 1, 2019 | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Foreign-currency translation adjustment and other, net | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Release of vested RSUs, including tax effects | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||
Repurchases of common stock | ( | — | ( | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Cash dividends declared | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
BALANCE AT MAY 10, 2020 | $ | $ | $ | ( | $ | $ | $ | $ |
36 Weeks Ended | |||||||||||
May 9, 2021 | May 10, 2020 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
Net income including noncontrolling interests | $ | $ | |||||||||
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Non-cash lease expense | |||||||||||
Stock-based compensation | |||||||||||
Other non-cash operating activities, net | ( | ||||||||||
Deferred income taxes | ( | ( | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Merchandise inventories | ( | ||||||||||
Accounts payable | ( | ||||||||||
Other operating assets and liabilities, net | |||||||||||
Net cash provided by operating activities | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
Purchases of short-term investments | ( | ( | |||||||||
Maturities of short-term investments | |||||||||||
Additions to property and equipment | ( | ( | |||||||||
Acquisitions | ( | ||||||||||
Other investing activities, net | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
Change in bank payments outstanding | ( | ||||||||||
Proceeds from issuance of long-term debt | |||||||||||
Repayments of long-term debt | ( | ||||||||||
Tax withholdings on stock-based awards | ( | ( | |||||||||
Repurchases of common stock | ( | ( | |||||||||
Cash dividend payments | ( | ( | |||||||||
Other financing activities, net | ( | ( | |||||||||
Net cash (used in) provided by financing activities | ( | ||||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | |||||||||||
Net change in cash and cash equivalents | ( | ||||||||||
CASH AND CASH EQUIVALENTS BEGINNING OF YEAR | |||||||||||
CASH AND CASH EQUIVALENTS END OF PERIOD | $ | $ | |||||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||||||
Cash paid during the first thirty-six weeks of the year for: | |||||||||||
Interest | $ | $ | |||||||||
Income taxes, net | $ | $ | |||||||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES: | |||||||||||
Cash dividend declared, but not yet paid | $ | $ |
May 9, 2021: | Cost Basis | Unrealized Gains, Net | Recorded Basis | ||||||||||||||
Available-for-sale: | |||||||||||||||||
Government and agency securities | $ | $ | $ | ||||||||||||||
Held-to-maturity: | |||||||||||||||||
Certificates of deposit | — | ||||||||||||||||
Total short-term investments | $ | $ | $ |
August 30, 2020: | Cost Basis | Unrealized Gains, Net | Recorded Basis | ||||||||||||||
Available-for-sale: | |||||||||||||||||
Government and agency securities | $ | $ | $ | ||||||||||||||
Held-to-maturity: | |||||||||||||||||
Certificates of deposit | — | ||||||||||||||||
Total short-term investments | $ | $ | $ |
Available-For-Sale | Held-To-Maturity | ||||||||||||||||
Cost Basis | Fair Value | ||||||||||||||||
Due in one year or less | $ | $ | $ | ||||||||||||||
Due after one year through five years | |||||||||||||||||
Total | $ | $ | $ |
Level 2 | |||||||||||
May 9, 2021 | August 30, 2020 | ||||||||||
Investment in government and agency securities(1) | $ | $ | |||||||||
Forward foreign-exchange contracts, in asset position(2) | |||||||||||
Forward foreign-exchange contracts, in (liability) position(2) | ( | ( | |||||||||
Total | $ | $ |
May 9, 2021 | August 30, 2020 | ||||||||||
2.300% Senior Notes due May 2022 | $ | $ | |||||||||
2.750% Senior Notes due May 2024 | |||||||||||
3.000% Senior Notes due May 2027 | |||||||||||
1.375% Senior Notes due June 2027 | |||||||||||
1.600% Senior Notes due April 2030 | |||||||||||
1.750% Senior Notes due April 2032 | |||||||||||
Other long-term debt | |||||||||||
Total long-term debt | |||||||||||
Less unamortized debt discounts and issuance costs | |||||||||||
Less current portion(1) | |||||||||||
Long-term debt, excluding current portion | $ | $ |
Shares Repurchased (000s) | Average Price per Share | Total Cost | |||||||||||||||
Third quarter of 2021 | $ | $ | |||||||||||||||
First thirty-six weeks of 2021 | $ | $ | |||||||||||||||
Third quarter of 2020 | $ | $ | |||||||||||||||
First thirty-six weeks of 2020 | $ | $ |
Number of Units (in 000s) | Weighted-Average Grant Date Fair Value | ||||||||||
Outstanding at August 30, 2020 | $ | ||||||||||
Granted | |||||||||||
Vested and delivered | ( | ||||||||||
Forfeited | ( | ||||||||||
Special cash dividend | N/A | ||||||||||
Outstanding at May 9, 2021 | $ |
12 Weeks Ended | 36 Weeks Ended | ||||||||||||||||||||||
May 9, 2021 | May 10, 2020 | May 9, 2021 | May 10, 2020 | ||||||||||||||||||||
Stock-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
Less recognized income tax benefit | |||||||||||||||||||||||
Stock-based compensation expense, net | $ | $ | $ | $ |
12 Weeks Ended | 36 Weeks Ended | ||||||||||||||||||||||
May 9, 2021 | May 10, 2020 | May 9, 2021 | May 10, 2020 | ||||||||||||||||||||
Net income attributable to Costco | $ | $ | $ | $ | |||||||||||||||||||
Weighted average basic shares | |||||||||||||||||||||||
RSUs | |||||||||||||||||||||||
Weighted average diluted shares | |||||||||||||||||||||||
Anti-dilutive RSUs |
United States Operations | Canadian Operations | Other International Operations | Total | ||||||||||||||||||||
12 Weeks Ended May 9, 2021 | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | |||||||||||||||||||
Operating income | |||||||||||||||||||||||
12 Weeks Ended May 10, 2020 | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | |||||||||||||||||||
Operating income | |||||||||||||||||||||||
36 Weeks Ended May 9, 2021 | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | |||||||||||||||||||
Operating income | |||||||||||||||||||||||
36 Weeks Ended May 10, 2020 | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | |||||||||||||||||||
Operating income | |||||||||||||||||||||||
52 Weeks Ended August 30, 2020 | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | |||||||||||||||||||
Operating income | |||||||||||||||||||||||
12 Weeks Ended | 36 Weeks Ended | ||||||||||||||||||||||
May 9, 2021 | May 10, 2020 | May 9, 2021 | May 10, 2020 | ||||||||||||||||||||
Foods and sundries | $ | $ | $ | $ | |||||||||||||||||||
Hardlines | |||||||||||||||||||||||
Fresh foods | |||||||||||||||||||||||
Softlines | |||||||||||||||||||||||
Ancillary and other | |||||||||||||||||||||||
Total net sales | $ | $ | $ | $ |
12 Weeks Ended | 36 Weeks Ended | ||||||||||||||||||||||
May 9, 2021 | May 10, 2020 | May 9, 2021 | May 10, 2020 | ||||||||||||||||||||
Net Sales | $ | 44,376 | $ | 36,451 | $ | 130,611 | $ | 110,943 | |||||||||||||||
Changes in net sales: | |||||||||||||||||||||||
U.S | 19 | % | 8 | % | 16 | % | 8 | % | |||||||||||||||
Canada | 34 | % | (1) | % | 22 | % | 4 | % | |||||||||||||||
Other International | 27 | % | 11 | % | 25 | % | 10 | % | |||||||||||||||
Total Company | 22 | % | 7 | % | 18 | % | 8 | % | |||||||||||||||
Changes in comparable sales: | |||||||||||||||||||||||
U.S | 18 | % | 6 | % | 15 | % | 7 | % | |||||||||||||||
Canada | 32 | % | (3) | % | 20 | % | 3 | % | |||||||||||||||
Other International | 23 | % | 6 | % | 21 | % | 6 | % | |||||||||||||||
Total Company | 21 | % | 5 | % | 16 | % | 6 | % | |||||||||||||||
Changes in comparable sales excluding the impact of changes in foreign-currency and gasoline prices: | |||||||||||||||||||||||
U.S | 15 | % | 8 | % | 15 | % | 7 | % | |||||||||||||||
Canada | 17 | % | 3 | % | 15 | % | 5 | % | |||||||||||||||
Other International | 13 | % | 12 | % | 16 | % | 8 | % | |||||||||||||||
Total Company | 15 | % | 8 | % | 15 | % | 7 | % |
12 Weeks Ended | 36 Weeks Ended | ||||||||||||||||||||||
May 9, 2021 | May 10, 2020 | May 9, 2021 | May 10, 2020 | ||||||||||||||||||||
Membership fees | $ | 901 | $ | 815 | $ | 2,643 | $ | 2,435 | |||||||||||||||
Membership fees as a percentage of net sales | 2.03 | % | 2.24 | % | 2.02 | % | 2.20 | % | |||||||||||||||
Total paid members (000s) | 60,600 | 55,800 | — | — | |||||||||||||||||||
Total cardholders (000s) | 109,800 | 101,800 | — | — |
12 Weeks Ended | 36 Weeks Ended | ||||||||||||||||||||||
May 9, 2021 | May 10, 2020 | May 9, 2021 | May 10, 2020 | ||||||||||||||||||||
Net sales | $ | 44,376 | $ | 36,451 | $ | 130,611 | $ | 110,943 | |||||||||||||||
Less merchandise costs | 39,415 | 32,249 | 115,951 | 98,538 | |||||||||||||||||||
Gross margin | $ | 4,961 | $ | 4,202 | $ | 14,660 | $ | 12,405 | |||||||||||||||
Gross margin percentage | 11.18 | % | 11.53 | % | 11.22 | % | 11.18 | % |
12 Weeks Ended | 36 Weeks Ended | ||||||||||||||||||||||
May 9, 2021 | May 10, 2020 | May 9, 2021 | May 10, 2020 | ||||||||||||||||||||
SG&A expenses | $ | 4,189 | $ | 3,830 | $ | 12,829 | $ | 11,305 | |||||||||||||||
SG&A expenses as a percentage of net sales | 9.44 | % | 10.51 | % | 9.82 | % | 10.19 | % |
12 Weeks Ended | 36 Weeks Ended | ||||||||||||||||||||||
May 9, 2021 | May 10, 2020 | May 9, 2021 | May 10, 2020 | ||||||||||||||||||||
Preopening expenses | $ | 10 | $ | 8 | $ | 41 | $ | 29 | |||||||||||||||
Warehouse openings, including relocations | |||||||||||||||||||||||
United States | 1 | 1 | 8 | 4 | |||||||||||||||||||
Canada | 3 | — | 5 | 1 | |||||||||||||||||||
Other International | 2 | 1 | 3 | 1 | |||||||||||||||||||
Total warehouse openings, including relocations | 6 | 2 | 16 | 6 |
12 Weeks Ended | 36 Weeks Ended | ||||||||||||||||||||||
May 9, 2021 | May 10, 2020 | May 9, 2021 | May 10, 2020 | ||||||||||||||||||||
Interest expense | $ | 40 | $ | 37 | $ | 119 | $ | 109 |
12 Weeks Ended | 36 Weeks Ended | ||||||||||||||||||||||
May 9, 2021 | May 10, 2020 | May 9, 2021 | May 10, 2020 | ||||||||||||||||||||
Interest income | $ | 8 | $ | 10 | $ | 29 | $ | 72 | |||||||||||||||
Foreign-currency transaction gains, net | 6 | 5 | 13 | 9 | |||||||||||||||||||
Other, net | 13 | 6 | 33 | 20 | |||||||||||||||||||
Interest income and other, net | $ | 27 | $ | 21 | $ | 75 | $ | 101 |
12 Weeks Ended | 36 Weeks Ended | ||||||||||||||||||||||
May 9, 2021 | May 10, 2020 | May 9, 2021 | May 10, 2020 | ||||||||||||||||||||
Provision for income taxes | $ | 417 | $ | 311 | $ | 1,004 | $ | 843 | |||||||||||||||
Effective tax rate | 25.2 | % | 26.7 | % | 22.9 | % | 24.1 | % |
36 Weeks Ended | |||||||||||
May 9, 2021 | May 10, 2020 | ||||||||||
Net cash provided by operating activities | $ | 6,018 | $ | 4,619 | |||||||
Net cash used in investing activities | (2,380) | (2,950) | |||||||||
Net cash (used in) provided by financing activities | (5,769) | 771 | |||||||||
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs(1) | Maximum Dollar Value of Shares that May Yet be Purchased Under the Programs(1) | |||||||||||||||||||
February 15, 2021 — March 14, 2021 | 204,000 | $ | 333.07 | 204,000 | $ | 3,488 | |||||||||||||||||
March 15, 2021 — April 11, 2021 | 183,000 | 342.44 | 183,000 | 3,426 | |||||||||||||||||||
April 12, 2021 — May 9, 2021 | 132,000 | 371.74 | 132,000 | 3,377 | |||||||||||||||||||
Total third quarter | 519,000 | $ | 346.19 | 519,000 |
Incorporated by Reference | ||||||||||||||||||||||||||||||||
Exhibit Number | Exhibit Description | Filed Herewith | Form | Period Ending | Filing Date | |||||||||||||||||||||||||||
3.1 | 10-Q | 2/16/2020 | 3/12/2020 | |||||||||||||||||||||||||||||
3.2 | 8-K | 1/29/2020 | ||||||||||||||||||||||||||||||
3.2.1 | 8-K | 9/16/2020 | ||||||||||||||||||||||||||||||
31.1 | x | |||||||||||||||||||||||||||||||
32.1 | x | |||||||||||||||||||||||||||||||
101.INS | Inline XBRL Instance Document | x | ||||||||||||||||||||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | x | ||||||||||||||||||||||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | x | ||||||||||||||||||||||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | x | ||||||||||||||||||||||||||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | x | ||||||||||||||||||||||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | x | ||||||||||||||||||||||||||||||
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | x |
COSTCO WHOLESALE CORPORATION (Registrant) | |||||||||||
June 2, 2021 | By | /s/ W. CRAIG JELINEK | |||||||||
Date | W. Craig Jelinek President, Chief Executive Officer and Director | ||||||||||
June 2, 2021 | By | /s/ RICHARD A. GALANTI | |||||||||
Date | Richard A. Galanti Executive Vice President, Chief Financial Officer and Director |
/s/ W. CRAIG JELINEK | |||||
W. Craig Jelinek | |||||
President, Chief Executive Officer and Director |
/s/ RICHARD A. GALANTI | |||||
Richard A. Galanti | |||||
Executive Vice President, Chief Financial Officer and Director |
/s/ W. CRAIG JELINEK | Date: June 2, 2021 | |||||||
W. Craig Jelinek | ||||||||
President, Chief Executive Officer and Director |
/s/ RICHARD A. GALANTI | Date: June 2, 2021 | |||||||
Richard A. Galanti | ||||||||
Executive Vice President, Chief Financial Officer and Director |
Condensed Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Millions |
3 Months Ended | 8 Months Ended | ||
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May 09, 2021 |
May 10, 2020 |
May 09, 2021 |
May 10, 2020 |
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REVENUE | ||||
Total Revenue | $ 45,277 | $ 37,266 | $ 133,254 | $ 113,378 |
OPERATING EXPENSES | ||||
Merchandise costs | 39,415 | 32,249 | 115,951 | 98,538 |
Selling, general and administrative | 4,189 | 3,830 | 12,829 | 11,305 |
Preopening expenses | 10 | 8 | 41 | 29 |
Operating income | 1,663 | 1,179 | 4,433 | 3,506 |
OTHER INCOME (EXPENSE) | ||||
Interest expense | (40) | (37) | (119) | (109) |
Interest income and other, net | 27 | 21 | 75 | 101 |
INCOME BEFORE INCOME TAXES | 1,650 | 1,163 | 4,389 | 3,498 |
Provision for income taxes | 417 | 311 | 1,004 | 843 |
Net income including noncontrolling interests | 1,233 | 852 | 3,385 | 2,655 |
Net income attributable to noncontrolling interests | (13) | (14) | (48) | (42) |
NET INCOME ATTRIBUTABLE TO COSTCO | $ 1,220 | $ 838 | $ 3,337 | $ 2,613 |
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO: | ||||
Basic (in dollars per share) | $ 2.75 | $ 1.90 | $ 7.53 | $ 5.91 |
Diluted (in dollars per share) | $ 2.75 | $ 1.89 | $ 7.51 | $ 5.89 |
Shares used in calculation (000's) | ||||
Basic (shares) | 443,043 | 442,322 | 443,043 | 442,054 |
Diluted (shares) | 444,127 | 443,855 | 444,336 | 443,754 |
Net Sales | ||||
REVENUE | ||||
Total Revenue | $ 44,376 | $ 36,451 | $ 130,611 | $ 110,943 |
Membership fees | ||||
REVENUE | ||||
Total Revenue | $ 901 | $ 815 | $ 2,643 | $ 2,435 |
Condensed Consolidated Statements Of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | 8 Months Ended | ||
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May 09, 2021 |
May 10, 2020 |
May 09, 2021 |
May 10, 2020 |
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Statement of Comprehensive Income [Abstract] | ||||
NET INCOME INCLUDING NONCONTROLLING INTERESTS | $ 1,233 | $ 852 | $ 3,385 | $ 2,655 |
Foreign-currency translation adjustment and other, net | 54 | (396) | 411 | (224) |
Comprehensive income | 1,287 | 456 | 3,796 | 2,431 |
Less: Comprehensive income attributable to noncontrolling interests | 15 | 16 | 71 | 60 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO | $ 1,272 | $ 440 | $ 3,725 | $ 2,371 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
May 09, 2021 |
Aug. 30, 2020 |
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Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 900,000,000 | 900,000,000 |
Common Stock, Shares, Issued | 442,141,000 | 441,255,000 |
Common Stock, Shares, Outstanding | 442,141,000 | 441,255,000 |
Summary of Significant Accounting Policies |
8 Months Ended |
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May 09, 2021 | |
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 private-label products in a wide range of merchandise categories will produce high sales volumes and rapid inventory turnover. For the period ended May 9, 2021, Costco operated 809 warehouses worldwide: 559 in the United States (U.S.) located in 45 states, Washington, D.C., and Puerto Rico, 105 in Canada, 39 in Mexico, 29 in the United Kingdom (U.K.), 29 in Japan, 16 in Korea, 14 in Taiwan, 12 in Australia, three in Spain, and one each in Iceland, France and China. The Company operates e-commerce websites in the U.S., Canada, Mexico, U.K., Korea, Taiwan, Japan, and Australia. Basis of Presentation The condensed consolidated financial statements include the accounts of Costco, its wholly owned subsidiaries, and subsidiaries in which it has a controlling interest. The Company reports noncontrolling interests in consolidated entities as a component of equity separate from the Company’s equity. All material inter-company transactions between and among the Company and its consolidated subsidiaries have been eliminated in consolidation. The Company’s net income excludes income attributable to the noncontrolling interest in Taiwan. 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 August 30, 2020. Fiscal Year End The Company operates on a 52/53 week fiscal year basis, with the fiscal year ending on the Sunday closest to August 31. Fiscal 2021 is a 52-week year ending on August 29, 2021. References to the third quarter of 2021 and 2020 relate to the 12-week fiscal quarters ended May 9, 2021, and May 10, 2020. References to the first thirty-six weeks of 2021 and 2020 relate to the 36 weeks ended May 9, 2021, and May 10, 2020. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions take into account historical and forward-looking factors that the Company believes are reasonable, including but not limited to the potential impacts arising from the novel coronavirus (COVID-19) and related public and private sector policies and initiatives. Actual results could differ from those estimates and assumptions.
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Business Combinations |
8 Months Ended |
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May 09, 2021 | |
Business Combinations [Abstract] | |
Business Combination Disclosure | Note 2—Acquisition of Innovel On March 17, 2020, the Company acquired Innovel Solutions for $999, using existing cash and cash equivalents. Innovel (now known as Costco Wholesale Logistics or CWL) provides final-mile delivery, installation and white-glove capabilities for big and bulky products across the United States and Puerto Rico. Its financial results have been included in the Company's consolidated financial statements from the date of acquisition. As of May 9, 2021, the provisional period of the acquisition has ended, and the Company has completed the accounting for the acquisition. The net purchase price of $999 has been allocated to the tangible and intangible assets of $294 and liabilities assumed of $235, based on fair values on the acquisition date. The remaining unallocated net purchase price of $940 was recorded as goodwill. Goodwill represents the acquisition's benefits to the Company, which include the ability to serve more members and improve delivery times, enabling growth in certain segments of our U.S. e-commerce operations. The Company assigned this goodwill, which is deductible for tax purposes, to reporting units within the U.S. segment. Changes to the purchase price allocation originally recorded in the third quarter of 2020 were not material.
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Investments |
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Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Note 3—Investments The Company's investments were as follows:
Gross unrecognized holding gains and losses on available-for-sale securities were not material for the periods ended May 9, 2021, and August 30, 2020. At those dates, there were no available-for-sale securities in a continuous unrealized-loss position. There were no sales of available-for-sale securities during the first thirty-six weeks of 2021 or 2020. The maturities of available-for-sale and held-to-maturity securities at May 9, 2021, are as follows:
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Fair Value Measurement |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurement | Note 4—Fair Value Measurement Assets and Liabilities Measured at Fair Value on a Recurring Basis The table below presents information regarding financial assets and liabilities that are measured at fair value on a recurring basis and indicates the level within the fair value hierarchy reflecting the valuation techniques utilized.
_______________ (1)At August 30, 2020, $60 cash and cash equivalents and $448 short-term investments are included in the accompanying condensed consolidated balance sheets. (2)The asset and liability values are included in other current assets and other current liabilities, respectively, in the accompanying condensed consolidated balance sheets. At May 9, 2021, and August 30, 2020, the Company did not hold any Level 1 or 3 financial assets or liabilities that were measured at fair value on a recurring basis. There were no transfers between levels during the first thirty-six weeks of 2021 or 2020. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Assets and liabilities recognized and disclosed at fair value on a nonrecurring basis include items such as financial assets measured at amortized cost and long-lived nonfinancial assets. These assets are measured at fair value if determined to be impaired. There were no fair value adjustments to these items during the first thirty-six weeks of 2021 or 2020.
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Note 5—Debt The carrying value of the Company’s long-term debt consisted of the following:
_______________ (1)Net of unamortized debt discounts and issuance costs. The fair value of Senior Notes is estimated using Level 2 inputs. Other long-term debt consists of Guaranteed Senior Notes issued by the Company's Japan subsidiary, valued using Level 3 inputs. The fair value of the Company's long-term debt, including the current portion, was approximately $7,750 and $7,987 at May 9, 2021, and August 30, 2020.
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Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' equity | Note 6—Equity Dividends The Company’s current quarterly dividend is $0.79 per share, compared to $0.70 in the third quarter of 2020. On April 14, 2021, the Board of Directors declared a quarterly cash dividend in the amount of $0.79 per share, which was paid on May 14, 2021. Stock Repurchase Programs Stock repurchase activity during the third quarter and first thirty-six weeks of 2021 and 2020 is summarized below:
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Stock-Based Compensation Plans |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Plans | Note 7—Stock-Based Compensation The 2019 Incentive Plan authorized the issuance of 17,500,000 shares (10,000,000 RSUs) of common stock for future grants, plus the remaining shares that were available for grant and the future forfeited shares from grants under the previous plan, up to a maximum of 27,800,000 shares (15,885,000 RSUs). The Company issues new shares of common stock upon vesting of RSUs. Shares for vested RSUs are generally delivered to participants annually, net of shares withheld for taxes. As required by the Company's Seventh Restated 2002 Incentive Plan and 2019 Incentive Plan, in conjunction with a special cash dividend paid in the second quarter of 2021, the number of shares subject to outstanding RSUs was increased on the dividend record date to preserve their value. They were adjusted by multiplying the number of outstanding shares by a factor of 1.019 (rounded up to a whole share), representing the ratio of the Nasdaq closing price of $391.77 on November 30, 2020, which was the last trading day immediately prior to the ex-dividend date, to the Nasdaq opening price of $384.50 on the ex-dividend date, December 1, 2020. The outstanding RSUs increased by approximately 94,000. The adjustment did not result in additional stock-based compensation expense, as the fair value of the awards did not change. As further required by the plans, the maximum number of shares issuable was proportionally adjusted, which resulted in an additional 222,000 RSU shares available to be granted. Summary of Restricted Stock Unit Activity At May 9, 2021, 11,981,000 shares were available to be granted as RSUs, and the following awards were outstanding: •4,242,000 time-based RSUs, which vest upon continued employment over specified periods; •29,000 performance-based RSUs, granted to executive officers of the Company, for which the performance targets have been met. The awards vest upon continued employment over specified periods of time; and •102,000 performance-based RSUs, granted to executive officers of the Company, subject to achievement of performance targets for fiscal 2021, as determined by the Compensation Committee of the Board of Directors after the end of the fiscal year. These awards are included in the table below. The Company recognized compensation expense for these awards in the third quarter of 2021, as it is currently deemed probable that the targets will be achieved. The following table summarizes RSU transactions during the first thirty-six weeks of 2021:
The remaining unrecognized compensation cost related to unvested RSUs at May 9, 2021, was $852, and the weighted-average period over which this cost will be recognized is 1.7 years. Summary of Stock-Based Compensation The following table summarizes stock-based compensation expense and the related tax benefits:
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Income Taxes Income Taxes |
8 Months Ended |
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May 09, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 8—Taxes The Company's reported effective income tax rate for the first thirty-six weeks of 2021 was 26.4%, excluding the impact of discrete net tax benefits. The provision for income taxes was favorably impacted by discrete tax items, including $75 related to the excess tax benefit on stock compensation, $70 related to the portion of the special cash dividend payable through our 401(k) plan and $19 primarily related to a reduction in the valuation allowance against certain deferred tax assets. Other Taxes The Company is subject to multiple examinations for value added, sales-based, payroll, product, import or other non-income taxes in various jurisdictions. In certain cases, the Company has received assessments from the authorities. The possible losses or range of possible losses associated with these matters are either immaterial or an estimate of the possible loss or range of loss cannot be made at this time. If certain matters or a group of matters were to be decided adversely to the Company, it could result in a charge that might be material to the results of an individual fiscal quarter or year.
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Net Income per Common and Common Equivalent Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Common and Common Equivalent Share | Note 9—Net Income per Common and Common Equivalent Share The following table shows the amounts used in computing net income per share and the weighted average number of shares of basic and potentially dilutive common shares outstanding (shares in 000s):
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Commitments and Contingencies |
8 Months Ended |
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May 09, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10—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 present loss contingencies that are both probable and reasonably estimable. There may be exposure to loss in excess of any amounts accrued. The Company monitors those matters for developments that would affect the likelihood of a loss (taking into account where applicable indemnification arrangements concerning suppliers and insurers) and the accrued amount, if any, thereof, and adjusts the amount as appropriate. As of the date of this Report, the Company has recorded immaterial accruals with respect to certain matters described below, in addition to other immaterial accruals for matters not described below. If the loss contingency at issue is not both probable and reasonably estimable, the Company does not establish an accrual, but will continue to monitor the matter for developments that will make the loss contingency both probable and reasonably estimable. In each case, there is a reasonable possibility that a loss may be incurred, including a loss in excess of the applicable accrual. For matters where no accrual has been recorded, the possible loss or range of loss (including any loss in excess of the accrual) cannot, in the Company's view, be reasonably estimated because, among other things: (i) the remedies or penalties sought are indeterminate or unspecified; (ii) the legal and/or factual theories are not well developed; and/or (iii) the matters involve complex or novel legal theories or a large number of parties. The Company is a defendant in an action commenced in August 2013 under the California Labor Code Private Attorneys General Act (PAGA) alleging violation of California Wage Order 7-2001 for failing to provide seating to member service assistants who work at entrance and exit doors in the Company’s California warehouses. Canela v. Costco Wholesale Corp., et al. (Case No. 2013-1-CV-248813; Santa Clara Superior Court). The complaint seeks relief under the California Labor Code, including civil penalties and attorneys’ fees. The Company filed an answer denying the material allegations of the complaint. In January 2019, an employee brought similar claims for relief concerning Costco employees engaged at member services counters in California. Rodriguez v. Costco Wholesale Corp. (Case No. RG19001310; Alameda Superior Court). The Company filed an answer denying the material allegations of the complaint. On February 4, 2021, the court finally approved a settlement, under which payment of an immaterial amount has been made. In December 2018, a depot employee raised similar claims, alleging that depot employees in California did not receive suitable seating or appropriate workplace temperature conditions. Lane v. Costco Wholesale Corp. (Case No. CIVDS 1908816; San Bernardino Superior Court). The Company filed an answer denying the material allegations of the complaint. In October 2019, the parties reached an agreement to settle for an immaterial amount the seating claims on a representative basis, which received court approval in February 2020. The workplace temperature claims continue in litigation. In January 2019, a former seasonal employee filed a class action, alleging failure to provide California seasonal employees meal and rest breaks, proper wage statements, and appropriate wages. Jadan v. Costco Wholesale Corp. (Case No. 19-CV-340438; Santa Clara Superior Court). The complaint seeks relief under the California Labor Code, including civil penalties and attorneys’ fees. In October 2019, the parties reached an agreement on a class settlement for an immaterial amount, which received court approval in January 2021. In March 2019, employees filed a class action against the Company alleging claims under California law for failure to pay overtime, to provide meal and rest periods and itemized wage statements, to timely pay wages due to terminating employees, to pay minimum wages, and for unfair business practices. Relief is sought under the California Labor Code, including civil penalties and attorneys' fees. Nevarez v. Costco Wholesale Corp. (Case No. 2:19-cv-03454; C.D. Cal.). The Company filed an answer denying the material allegations of the complaint. In December 2019, the court issued an order denying class certification. In January 2020, the plaintiffs dismissed their Labor Code claims without prejudice, and the court remanded the action to state court. The remand is being appealed. In May 2019, an employee filed a class action against the Company alleging claims under California law for failure to pay overtime, to provide itemized wage statements, to timely pay wages due to terminating employees, to pay minimum wages, and for unfair business practices. Rough v. Costco Wholesale Corp. (Case No. 2:19-cv-01340; E.D. Cal.). Relief is sought under the California Labor Code, including civil penalties and attorneys' fees. The Company has moved for partial summary judgment, and the parties have filed competing motions regarding class certification. In August 2019, Rough filed a companion case in state court seeking penalties under PAGA. Rough v. Costco Wholesale Corp. (Case No. FCS053454; Sonoma County Superior Court). Relief is sought under the California Labor Code, including civil penalties and attorneys' fees. The state court action has been stayed pending resolution of the federal action. In June 2019, an employee filed a class action against the Company alleging claims under California law for failure to pay overtime, to provide meal and rest periods, itemized wage statements, to timely pay wages due to terminating employees, to pay minimum wages, and for unfair business practices. Martinez v. Costco Wholesale Corp. (Case No. 3:19-cv-05624; N.D. Cal.). The Company filed an answer denying the material allegations of the complaint. In April 2020, an employee, alleging underpayment of sick pay, filed a class and representative action against the Company, alleging claims under California law for failure to pay all wages at termination and for Labor Code penalties under PAGA. Kristy v. Costco Wholesale Corp. (Case No. 5:20-cv-04119; N.D. Cal.). The Company filed a motion to dismiss as to the plaintiff's amended complaint, and the case has been stayed, due to the plaintiff's bankruptcy. In July 2020, an employee filed an action under PAGA on behalf of all California non-exempt employees alleging violations of California Labor Code provisions regarding meal and rest periods, minimum wage, overtime, wage statements, reimbursement of expenses, and payment of wages at termination. Schwab v. Costco Wholesale Corp. (Case No. 37-2020-00023551-CU-OE-CTL; San Diego County Superior Court). In August 2020, the Company filed a motion to strike portions of the complaint, which was denied, and an answer has been filed denying the material allegations of the complaint. In December 2020, a former employee filed suit against the Company asserting collective and class claims on behalf of non-exempt employees under the Fair Labor Standards Act and New York Labor Law for failure to pay for all hours worked on a weekly basis and failure to provide proper wage statements and notices. The plaintiff also asserts individual retaliation claims. Cappadora v. Costco Wholesale Corp. (Case No. 1:20-cv-06067; E.D.N.Y.). An amended complaint has been filed, and the Company has denied the material allegations of the amended complaint. In February 2021, a former employee filed a class action against the Company alleging violations of California Labor Code regarding payment of wages, meal and rest periods, wage statements, reimbursement of expenses, payment of final wages to terminated employees, and for unfair business practices. Edwards v. Costco Wholesale Corp. (Case No. 5:21-cv-00716: C.D. Cal.) In May 2021, the Company filed a motion to dismiss the complaint. In December 2017, the United States Judicial Panel on Multidistrict Litigation consolidated numerous cases concerning the impacts of opioid abuses filed against various defendants by counties, cities, hospitals, Native American tribes, third-party payors, and others. In re National Prescription Opiate Litigation (MDL No. 2804) (N.D. Ohio). Included are federal cases that name the Company, including actions filed by counties and cities in Michigan, New Jersey, Oregon, Virginia and South Carolina and a third-party payor in Ohio, class actions filed on behalf of infants born with opioid-related medical conditions in 40 states, and class actions and individual actions filed on behalf of individuals seeking to recover alleged increased insurance costs associated with opioid abuse in 42 states and American Samoa. Similar actions were commenced against the Company in state courts in Utah (2019) and Texas (2021). Claims against the Company in state courts in New Jersey, Oklahoma, and Arizona have been dismissed. The Company is defending all of these matters. The Company and its CEO and CFO are defendants in putative class actions brought on behalf of shareholders who acquired Company stock between June 6 and October 25, 2018. Johnson v. Costco Wholesale Corp., et al. (W.D. Wash.; filed Nov. 5, 2018); Chen v. Costco Wholesale Corp., et al. (W.D. Wash.; filed Dec. 11, 2018). The complaints allege violations of the federal securities laws stemming from the Company’s disclosures concerning internal control over financial reporting. They seek unspecified damages, equitable relief, interest, and costs and attorneys’ fees. On January 30, 2019, an order was entered consolidating the actions, and a consolidated amended complaint was filed on April 16, 2019. On November 26, 2019, the court entered an order dismissing the consolidated amended complaint and granting the plaintiffs leave to file a further amended complaint. A further amended complaint was filed on March 9, which the court dismissed with prejudice on August 19, 2020. An appeal in the Ninth Circuit is pending. Members of the Board of Directors, one other individual, and the Company are defendants in a shareholder derivative action related to the internal controls and related disclosures identified in the putative class actions, alleging that the individual defendants breached their fiduciary duties. Wedekind v. Hamilton James, Susan Decker, Kenneth Denman, Richard Galanti, Craig Jelinek, Richard Libenson, John Meisenbach, Charles Munger, Jeffrey Raikes, John Stanton, Mary Agnes Wilderotter, and Costco Wholesale Corp. (W.D. Wash.; filed Dec. 11, 2018). The complaint seeks unspecified damages, disgorgement of compensation, corporate governance changes, and costs and attorneys' fees. Because the complaint is derivative in nature, it does not seek monetary damages from the Company, which is a nominal defendant. By agreement among the parties the action has been stayed pending further proceedings in the class action. Similar actions were filed in King County Superior Court on February 20, 2019, Elliott v. Hamilton James, Susan Decker, Kenneth Denman, Richard Galanti, Craig Jelinek, Richard Libenson, John Meisenbach, Charles Munger, Jeffrey Raikes, John Stanton, Mary Agnes Wilderotter, and Costco Wholesale Corp. (Case No. 19-2-04824-7), April 16, 2019, Brad Shuman, et ano. v. Hamilton James, Susan Decker, Kenneth Denman, Richard Galanti, Craig Jelinek, John Meisenbach, Charles Munger, Jeffrey Raikes, John Stanton, Mary Agnes Wilderotter, and Costco Wholesale Corp. (Case No. 19-2-10460-1), and June 12, 2019, Rahul Modi v. Hamilton James, Susan Decker, Kenneth Denman, Richard Galanti, Craig Jelinek, John Meisenbach, Charles Munger, Jeffrey Raikes, John Stanton, Mary Agnes Wilderotter, and Costco Wholesale Corp. (Case No. 19-2-15514-1). These actions have also been stayed. On June 23, 2020, a putative class action was filed against the Company, the “Board of Directors,” the “Costco Benefits Committee” and others under the Employee Retirement Income Security Act, in the United States District Court for the Eastern District of Wisconsin. Dustin S. Soulek v. Costco Wholesale, et al., Case No. 20-cv-937. The class is alleged to be beneficiaries of the Costco 401(k) plan from June 23, 2014, and the claims are that the defendants breached their fiduciary duties in the operation and oversight of the plan. The complaint seeks injunctive relief, damages, interest, costs, and attorneys' fees. On September 11, 2020, the defendants filed a motion to dismiss the complaint, and on September 21 the plaintiffs filed an amended complaint, which the defendants have also moved to dismiss. The Company does not believe that any pending claim, proceeding or litigation, either alone or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations or cash flows; 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 or year.
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Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Note 11—Segment Reporting The Company and its subsidiaries are principally engaged in the operation of membership warehouses in the U.S., Canada, Mexico, U.K., Japan, Korea, Australia, Spain, Iceland, France and China and through a majority-owned subsidiary in Taiwan. Reportable segments are largely based on management’s organization of the operating segments for operational decisions and assessments of financial performance, which consider geographic locations. The material accounting policies of the segments are as described in the notes to the consolidated financial statements included in the Company's Annual Report filed on Form 10-K for the fiscal year ended August 30, 2020, and Note 1 above. Inter-segment net sales and expenses have been eliminated in computing total revenue and operating income. Certain operating expenses, predominantly stock-based compensation, are incurred on behalf of the Company's Canadian and Other International operations, but are included in the U.S. operations because those costs generally come under the responsibility of the Company's U.S. management team. The following table provides information for the Company's reportable segments:
Disaggregated Revenue The following table summarizes net sales by merchandise category; sales from e-commerce are allocated to the relevant categories:
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Summary of Significant Accounting Policies (Policies) |
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May 09, 2021 | |
Accounting Policies [Abstract] | |
Basis of Accounting, Policy | Basis of Presentation The condensed consolidated financial statements include the accounts of Costco, its wholly owned subsidiaries, and subsidiaries in which it has a controlling interest. The Company reports noncontrolling interests in consolidated entities as a component of equity separate from the Company’s equity. All material inter-company transactions between and among the Company and its consolidated subsidiaries have been eliminated in consolidation. The Company’s net income excludes income attributable to the noncontrolling interest in Taiwan. 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 August 30, 2020.
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Fiscal Period, Policy | Fiscal Year End The Company operates on a 52/53 week fiscal year basis, with the fiscal year ending on the Sunday closest to August 31. Fiscal 2021 is a 52-week year ending on August 29, 2021. References to the third quarter of 2021 and 2020 relate to the 12-week fiscal quarters ended May 9, 2021, and May 10, 2020. References to the first thirty-six weeks of 2021 and 2020 relate to the 36 weeks ended May 9, 2021, and May 10, 2020.
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Use of Estimates, Policy | Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions take into account historical and forward-looking factors that the Company believes are reasonable, including but not limited to the potential impacts arising from the novel coronavirus (COVID-19) and related public and private sector policies and initiatives. Actual results could differ from those estimates and assumptions.
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Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Available-for-sale and Held-to-maturity Investments | The Company's investments were as follows:
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Maturities of Available-for-sale and Held-to-maturity Securities | The maturities of available-for-sale and held-to-maturity securities at May 9, 2021, are as follows:
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Fair Value Measurement (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Assets and Liabilities Measured on Recurring Basis | The table below presents information regarding financial assets and liabilities that are measured at fair value on a recurring basis and indicates the level within the fair value hierarchy reflecting the valuation techniques utilized.
_______________ (1)At August 30, 2020, $60 cash and cash equivalents and $448 short-term investments are included in the accompanying condensed consolidated balance sheets. (2)The asset and liability values are included in other current assets and other current liabilities, respectively, in the accompanying condensed consolidated balance sheets.
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Debt (Tables) |
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Carrying Value and Estimated Fair Value of Company's Long-term Debt | The carrying value of the Company’s long-term debt consisted of the following:
_______________ (1)Net of unamortized debt discounts and issuance costs.
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Equity (Tables) |
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Stock Repurchased During Period | Stock repurchase activity during the third quarter and first thirty-six weeks of 2021 and 2020 is summarized below:
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Stock-Based Compensation Plans (Tables) |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of RSU Transactions | The following table summarizes RSU transactions during the first thirty-six weeks of 2021:
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Summary of Stock-Based Compensation Expense and Related Tax Benefits | The following table summarizes stock-based compensation expense and the related tax benefits:
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Net Income per Common and Common Equivalent Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table shows the amounts used in computing net income per share and the weighted average number of shares of basic and potentially dilutive common shares outstanding (shares in 000s):
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Segment Reporting (Tables) |
8 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Information, by Segment | The following table provides information for the Company's reportable segments:
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Disaggregation of Revenue [Table Text Block] | Disaggregated Revenue The following table summarizes net sales by merchandise category; sales from e-commerce are allocated to the relevant categories:
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Business Combinations (Details) - USD ($) $ in Millions |
Mar. 17, 2020 |
May 09, 2021 |
---|---|---|
Business Combinations [Abstract] | ||
Payments to Acquire Businesses, Gross | $ 999 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets | $ 294 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities | 235 | |
Business Acquisition, Goodwill, Expected Tax Deductible Amount | $ 940 |
Investments - Maturities of Available-for-sale and Held-to-maturity Securities (Details) $ in Millions |
May 09, 2021
USD ($)
|
---|---|
Available-for-sale, Cost Basis | |
Due in one year or less | $ 219 |
Due after one year through five years | 208 |
Available-for-sale, cost basis | 427 |
Available-for-sale, Fair Value | |
Due in one year or less | 220 |
Due after one year through five years | 215 |
Available-for-sale, recorded basis, total | 435 |
Held-to-maturity | |
Due in one year or less | 465 |
Due after one year through five years | 0 |
Held-to-maturity, cost basis, total | $ 465 |
Equity - Additional Information - Dividends (Detail) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 8 Months Ended | ||
---|---|---|---|---|
May 09, 2021 |
May 10, 2020 |
May 09, 2021 |
May 10, 2020 |
|
Dividends Payable [Line Items] | ||||
Dividends declared | $ 0.79 | $ 0.70 | ||
Payments of Dividends | $ 5,050 | $ 860 | ||
Dividend Rate | ||||
Dividends Payable [Line Items] | ||||
Dividends declared | $ 0.79 |
Equity (Stock Repurchased During Period) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
3 Months Ended | 8 Months Ended | ||
---|---|---|---|---|
May 09, 2021 |
May 10, 2020 |
May 09, 2021 |
May 10, 2020 |
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Equity [Abstract] | ||||
Stock Repurchased and Retired During Period, Shares | 519 | 106 | 1,040 | 368 |
Average price per share | $ 346.19 | $ 296.38 | $ 353.87 | $ 298.53 |
Total Cost | $ (179) | $ (31) | $ (368) | $ (110) |
Equity - Additional Information - Stock Repurchase Programs (Details) $ in Millions |
May 09, 2021
USD ($)
|
---|---|
Equity [Abstract] | |
Stock repurchase program, remaining authorized repurchase amount | $ 3,377 |
Stock-Based Compensation Plans - Summary of RSU Transactions (Details) shares in Thousands |
8 Months Ended |
---|---|
May 09, 2021
$ / shares
shares
| |
Number of units | |
Outstanding at August 30, 2020 | 5,174 |
Granted | 1,982 |
Vested and delivered | (2,760) |
Forfeited | (117) |
Special cash dividend | 94 |
Outstanding at May 9, 2021 | 4,373 |
Weighted average grant date fair value | |
Outstanding at August 30, 2020 | $ / shares | $ 207.55 |
Granted | $ / shares | 369.15 |
Vested and delivered | $ / shares | 235.67 |
Forfeited | $ / shares | 251.89 |
Outstanding at May 9, 2021 | $ / shares | $ 257.87 |
Stock-Based Compensation Plans - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 8 Months Ended | ||
---|---|---|---|---|
May 09, 2021 |
May 10, 2020 |
May 09, 2021 |
May 10, 2020 |
|
Stock-based compensation expense before income taxes | $ 87 | $ 88 | $ 550 | $ 508 |
Less recognized income tax benefit | (18) | (18) | (115) | (105) |
Stock-based compensation expense, net of income taxes | $ 69 | $ 70 | $ 435 | $ 403 |
Income Taxes Income Taxes (Details) $ in Millions |
8 Months Ended |
---|---|
May 09, 2021
USD ($)
| |
Effective Income Tax Rate Reconciliation, Percent | 26.40% |
DiscreteIncomeTaxBenefit | $ 75 |
Effective Income Tax Rate Reconciliation, Deduction, Dividends, Amount | 70 |
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | $ 19 |
Net Income per Common and Common Equivalent Share - Schedule of Earnings per Share Effect on Net Income and Weighted Average Number of Dilutive Potential Common Stock (Details) - USD ($) shares in Thousands, $ in Millions |
3 Months Ended | 8 Months Ended | ||
---|---|---|---|---|
May 09, 2021 |
May 10, 2020 |
May 09, 2021 |
May 10, 2020 |
|
Earnings Per Share [Abstract] | ||||
Net Income (Loss) Attributable to Parent | $ 1,220 | $ 838 | $ 3,337 | $ 2,613 |
Weighted average number of common shares used in basic net income per common share | 443,043 | 442,322 | 443,043 | 442,054 |
RSUs | 1,084 | 1,533 | 1,293 | 1,700 |
Weighted average number of common shares and dilutive potential of common stock used in diluted net income per share | 444,127 | 443,855 | 444,336 | 443,754 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,046 | 0 | 0 | 0 |
Segment Reporting Information by Segment (Detail) - USD ($) $ in Millions |
3 Months Ended | 8 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
May 09, 2021 |
May 10, 2020 |
May 09, 2021 |
May 10, 2020 |
Aug. 30, 2020 |
|
Segment Reporting Information [Line Items] | |||||
Total Revenue | $ 45,277 | $ 37,266 | $ 133,254 | $ 113,378 | $ 166,761 |
Operating Income | 1,663 | 1,179 | 4,433 | 3,506 | 5,435 |
Operating Segments [Member] | United States Operations | |||||
Segment Reporting Information [Line Items] | |||||
Total Revenue | 32,759 | 27,626 | 96,178 | 83,214 | 122,142 |
Operating Income | 1,099 | 853 | 2,737 | 2,309 | 3,633 |
Operating Segments [Member] | Canada Operations | |||||
Segment Reporting Information [Line Items] | |||||
Total Revenue | 6,299 | 4,722 | 18,311 | 15,080 | 22,434 |
Operating Income | 271 | 129 | 800 | 559 | 860 |
Operating Segments [Member] | Other International Operations | |||||
Segment Reporting Information [Line Items] | |||||
Total Revenue | 6,219 | 4,918 | 18,765 | 15,084 | 22,185 |
Operating Income | $ 293 | $ 197 | $ 896 | $ 638 | $ 942 |
Segment Reporting Segment Reporting Information by Item Category (Details) - USD ($) $ in Millions |
3 Months Ended | 8 Months Ended | ||
---|---|---|---|---|
May 09, 2021 |
May 10, 2020 |
May 09, 2021 |
May 10, 2020 |
|
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 45,277 | $ 37,266 | $ 133,254 | $ 113,378 |
Foods and Sundries [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 17,551 | 16,897 | 53,194 | 46,413 |
Hardlines [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 8,206 | 5,891 | 23,842 | 18,508 |
Fresh Foods [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 6,296 | 5,587 | 18,413 | 15,242 |
Softlines [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 4,693 | 2,806 | 15,164 | 11,607 |
Ancillary | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 7,630 | 5,270 | 19,998 | 19,173 |
Net Sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 44,376 | $ 36,451 | $ 130,611 | $ 110,943 |
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