8-K

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): March 2, 2017

COSTCO WHOLESALE CORPORATION

(Exact name of registrant as specified in its charter)

Washington	0-20355	91-1223280
(State or other jurisdiction of incorporation)	(Commission File No.)	(I.R.S. Employer 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))

Item 2.02. Results of Operations and Financial Condition

On March 2, 2017, the Company issued a press release containing its operating results for the second quarter (twelve weeks) and first half (24 weeks) of fiscal 2017, ended February 12, 2017.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits. The following exhibit is included in this report:

99.1. Press release dated March 2, 2017.

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 March 3, 2017.

COSTCO WHOLESALE CORPORATION
By:	/s/ Richard A. Galanti
	Richard A. Galanti
	Executive Vice President and Chief Financial Officer

2

EX-99.1

Exhibit 99.1

COSTCO WHOLESALE CORPORATION REPORTS SECOND QUARTER AND YEAR-TO-DATE

OPERATING RESULTS FOR FISCAL YEAR 2017, FEBRUARY SALES RESULTS, AND PLANS FOR MEMBERSHIP FEE INCREASE

ISSAQUAH, Wash., March 2, 2017 – Costco Wholesale Corporation (“Costco” or the “Company”) (Nasdaq: COST) today announced its operating results for the second quarter (twelve weeks) and first half (24 weeks) of fiscal 2017, ended February 12, 2017.

Net sales for the quarter increased six percent, to $29.13 billion from $27.57 billion last year. Net sales for the first half increased four percent, to $56.60 billion from $54.19 billion last year.

Comparable sales for the twelve-week and twenty-four-week periods were as follows:

	12 Weeks	24 Weeks
U.S.	3%	2%
Canada	8%	6%
Other International	-2%	-1%
Total Company	3%	2%

Comparable sales for these periods excluding the impacts from changes in gasoline prices and foreign exchange were as follows:

	12 Weeks	24 Weeks
U.S.	3%	2%
Canada	2%	3%
Other International	3%	3%
Total Company	3%	2%

Net income for the quarter was $515 million, or $1.17 per diluted share, compared to $546 million, or $1.24 per diluted share, last year. Net income for the first half was $1.060 billion, or $2.41 per diluted share, compared to $1.026 billion, or $2.32 per diluted share, last year.

For the four-week reporting month of February, ended February 26, 2017, the Company reported net sales of $8.92 billion, an increase of eight percent from $8.28 billion during the similar four-week period last year. For the twenty-six week period ended February 26, 2017, net sales were $61.18 billion, an increase of five percent from $58.25 billion during the similar period last year.

Comparable sales for the four-week and twenty-six-week periods ended February 26, 2017 were as follows:

	4 Weeks	26 Weeks
U.S.	5%	3%
Canada	10%	6%
Other International	-2%	-1%
Total Company	4%	3%

Comparable sales for these periods excluding the impacts from changes in gasoline prices and foreign exchange were as follows:

	4 Weeks	26 Weeks
U.S.	2%	2%
Canada	2%	3%
Other International	-1%	3%
Total Company	2%	2%

The Company also announced that, effective June 1, 2017, it will increase annual membership fees by $5 for U.S. and Canada Goldstar (individual), Business, and Business add-on members (“Primary” Members). With this increase, all U.S. and Canada Goldstar, Business and Business add-on members will pay an annual fee of $60. Also effective June 1, annual fees for Executive Memberships in the U.S. and Canada will increase from $110 to $120 (Primary membership of $60, plus the Executive upgrade of $60), and the maximum annual 2% reward associated with the Executive Membership will increase from $750 to $1,000. The fee increases will impact around 35 million members, roughly half of them Executive Members.

Costco currently operates 728 warehouses, including 508 in the United States and Puerto Rico, 94 in Canada, 37 in Mexico, 28 in the United Kingdom, 25 in Japan, 13 in Korea, 13 in Taiwan, eight in Australia and two in Spain. Costco also operates electronic commerce web sites in the U.S., Canada, the United Kingdom, Mexico, Korea and Taiwan.

A conference call to discuss these fiscal 2017 second quarter operating results and February sales results is scheduled for 2:00 p.m. (PT) on March 2, 2017, 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. 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 (including health care costs), energy and certain commodities, geopolitical conditions, 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 we do 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

COSTCO WHOLESALE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(dollars in millions, except per share data)

(unaudited)

	12 Weeks Ended						24 Weeks Ended
	February 12, 2017			February 14, 2016			February 12, 2017			February 14, 2016
REVENUE
Net sales	$	29,130		$	27,567		$	56,599		$	54,194
Membership fees		636			603			1,266			1,196
Total revenue		29,766			28,170			57,865			55,390
OPERATING EXPENSES
Merchandise costs		25,927			24,469			50,215			48,090
Selling, general and administrative		2,980			2,835			5,920			5,641
Preopening expenses		15			10			37			36
Operating income		844			856			1,693			1,623
OTHER INCOME (EXPENSE)
Interest expense		(31	)		(31	)		(60	)		(64	)
Interest income and other, net		(4	)		16			22			44
INCOME BEFORE INCOME TAXES		809			841			1,655			1,603
Provision for income taxes		288			286			579			561
Net income including noncontrolling interests		521			555			1,076			1,042
Net income attributable to noncontrolling interests		(6	)		(9	)		(16	)		(16	)
NET INCOME ATTRIBUTABLE TO COSTCO	$	515		$	546		$	1,060		$	1,026
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
Basic	$	1.17		$	1.24		$	2.42		$	2.34
Diluted	$	1.17		$	1.24		$	2.41		$	2.32
Shares used in calculation: (000’s)
Basic		439,127			439,648			438,567			438,990
Diluted		440,657			441,559			440,568			441,457
Cash dividends declared per common share	$	0.45		$	0.40		$	0.90		$	0.80

COSTCO WHOLESALE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in millions, except par value and share data)

(unaudited)

Subject to Reclassifications

	February 12, 2017			August 28, 2016
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	4,744		$	3,379
Short-term investments		1,221			1,350
Receivables, net		1,597			1,252
Merchandise inventories		9,530			8,969
Other current assets		368			268
Total current assets		17,460			15,218
PROPERTY AND EQUIPMENT
Land		5,436			5,395
Buildings and improvements		14,395			13,994
Equipment and fixtures		6,363			6,077
Construction in progress		697			701
		26,891			26,167
Less accumulated depreciation and amortization		(9,549	)		(9,124	)
Net property and equipment		17,342			17,043
OTHER ASSETS		828			902
TOTAL ASSETS	$	35,630		$	33,163
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	8,764		$	7,612
Current portion of long-term debt		2,257			1,100
Accrued salaries and benefits		2,780			2,629
Accrued member rewards		910			869
Deferred membership fees		1,458			1,362
Other current liabilities		2,691			2,003
Total current liabilities		18,860			15,575
LONG-TERM DEBT, excluding current portion		2,815			4,061
OTHER LIABILITIES		1,243			1,195
Total liabilities		22,918			20,831
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; 438,941,000 and 437,524,000 shares issued and outstanding		2			2
Additional paid-in capital		5,631			5,490
Accumulated other comprehensive loss		(1,333	)		(1,099	)
Retained earnings		8,140			7,686
Total Costco stockholders’ equity		12,440			12,079
Noncontrolling interests		272			253
Total equity		12,712			12,332
TOTAL LIABILITIES AND EQUITY	$	35,630		$	33,163