Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Nov. 25, 2018 | Dec. 12, 2018 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Nov. 25, 2018 | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | COST | |
Entity Registrant Name | COSTCO WHOLESALE CORP /NEW | |
Entity Central Index Key | 909,832 | |
Current Fiscal Year End Date | --09-01 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 440,490,478 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Nov. 25, 2018 | Sep. 02, 2018 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 6,778,000,000 | $ 6,055,000,000 |
Short-term investments | 1,175,000,000 | 1,204,000,000 |
Receivables, net | 1,795,000,000 | 1,669,000,000 |
Merchandise inventories | 12,205,000,000 | 11,040,000,000 |
Other current assets | 1,001,000,000 | 321,000,000 |
Total current assets | 22,954,000,000 | 20,289,000,000 |
PROPERTY AND EQUIPMENT | ||
Land | 6,211,000,000 | 6,193,000,000 |
Buildings and improvements | 16,355,000,000 | 16,107,000,000 |
Equipment and fixtures | 7,448,000,000 | 7,274,000,000 |
Construction in progress | 1,130,000,000 | 1,140,000,000 |
Gross property and equipment | 31,144,000,000 | 30,714,000,000 |
Less accumulated depreciation and amortization | (11,265,000,000) | (11,033,000,000) |
Net property and equipment | 19,879,000,000 | 19,681,000,000 |
OTHER ASSETS | 981,000,000 | 860,000,000 |
TOTAL ASSETS | 43,814,000,000 | 40,830,000,000 |
CURRENT LIABILITIES | ||
Accounts payable | 13,133,000,000 | 11,237,000,000 |
Accrued salaries and benefits | 2,982,000,000 | 2,994,000,000 |
Accrued member rewards | 1,077,000,000 | 1,057,000,000 |
Deferred membership fees | 1,695,000,000 | 1,624,000,000 |
Other current liabilities | 3,586,000,000 | 3,014,000,000 |
Total current liabilities | 22,473,000,000 | 19,926,000,000 |
LONG-TERM DEBT, excluding current portion | 6,480,000,000 | 6,487,000,000 |
OTHER LIABILITIES | 1,382,000,000 | 1,314,000,000 |
Total liabilities | 30,335,000,000 | 27,727,000,000 |
EQUITY | ||
Preferred stock $.01 par value; 100,000,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Common stock $0.01 par value; 900,000,000 shares authorized; 440,546,000 and 438,189,000 shares issued and outstanding | 4,000,000 | 4,000,000 |
Additional paid-in capital | 6,107,000,000 | 6,107,000,000 |
Accumulated other comprehensive loss | (1,331,000,000) | (1,199,000,000) |
Retained earnings | 8,387,000,000 | 7,887,000,000 |
Total Costco stockholders' equity | 13,167,000,000 | 12,799,000,000 |
Noncontrolling interests | 312,000,000 | 304,000,000 |
Total equity | 13,479,000,000 | 13,103,000,000 |
TOTAL LIABILITIES AND EQUITY | $ 43,814,000,000 | $ 40,830,000,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Nov. 25, 2018 | Sep. 02, 2018 |
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 |
Common stock, shares, issued | 440,546,000 | 438,189,000 |
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 |
Condensed Consolidated Statemen
Condensed Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | |
Nov. 25, 2018 | Nov. 26, 2017 | |
REVENUE | ||
Total Revenue | $ 35,069 | $ 31,809 |
OPERATING EXPENSES | ||
Merchandise costs | 30,623 | 27,617 |
Selling, general and administrative | 3,475 | 3,224 |
Preopening expenses | 22 | 17 |
Operating income | 949 | 951 |
OTHER INCOME (EXPENSE) | ||
Interest expense | (36) | (37) |
Interest income and other, net | 22 | 22 |
INCOME BEFORE INCOME TAXES | 935 | 936 |
Provision for income taxes | 158 | 285 |
Net income including noncontrolling interests | 777 | 651 |
Net income attributable to noncontrolling interests | (10) | (11) |
NET INCOME ATTRIBUTABLE TO COSTCO | $ 767 | $ 640 |
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO: | ||
Basic (in dollars per share) | $ 1.75 | $ 1.46 |
Diluted (in dollars per share) | $ 1.73 | $ 1.45 |
Shares used in calculation (000's) | ||
Basic (shares) | 439,157 | 437,965 |
Diluted (shares) | 442,749 | 440,851 |
Net sales | ||
REVENUE | ||
Total Revenue | $ 34,311 | $ 31,117 |
Membership fees | ||
REVENUE | ||
Total Revenue | $ 758 | $ 692 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements Of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Nov. 25, 2018 | Nov. 26, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
NET INCOME INCLUDING NONCONTROLLING INTERESTS | $ 777 | $ 651 |
Foreign-currency translation adjustment and other, net | (134) | (23) |
Comprehensive income | 643 | 628 |
Less: Comprehensive income attributable to noncontrolling interests | 8 | 11 |
COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO | $ 635 | $ 617 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity Statement - USD ($) shares in Thousands, $ in Millions | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | AOCI Attributable to Parent [Member] | Retained Earnings [Member] | Parent [Member] | Noncontrolling Interest [Member] |
Common Stock at beginning of period (shares) at Sep. 03, 2017 | 437,204 | ||||||
Equity at beginning of period at Sep. 03, 2017 | $ 11,079 | $ 4 | $ 5,800 | $ (1,014) | $ 5,988 | $ 10,778 | $ 301 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 651 | 640 | 640 | 11 | |||
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | (23) | (23) | (23) | ||||
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition | 235 | 235 | 235 | ||||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | 2,715 | ||||||
Stock Issued During Period, Value, Stock Options Exercised | (216) | (216) | (216) | ||||
Stock Repurchased and Retired During Period, Shares | (734) | ||||||
Stock Repurchased and Retired During Period, Value | (119) | 10 | 109 | 119 | |||
Dividends, Cash and other | (251) | 2 | (219) | (217) | (34) | ||
Common Stock at end of period (shares) at Nov. 26, 2017 | 439,185 | ||||||
Equity at end of period at Nov. 26, 2017 | 11,356 | $ 4 | 5,811 | (1,037) | 6,300 | 11,078 | 278 |
Common Stock at beginning of period (shares) at Sep. 02, 2018 | 438,189 | ||||||
Equity at beginning of period at Sep. 02, 2018 | 13,103 | $ 4 | 6,107 | (1,199) | 7,887 | 12,799 | 304 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 777 | 767 | 767 | 10 | |||
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | (134) | (132) | (132) | (2) | |||
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition | 272 | 272 | 272 | ||||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | 2,507 | ||||||
Stock Issued During Period, Value, Stock Options Exercised | (270) | (270) | (270) | ||||
Stock Repurchased and Retired During Period, Shares | (150) | ||||||
Stock Repurchased and Retired During Period, Value | (34) | 2 | 32 | 34 | |||
Dividends, Cash and other | (235) | 0 | (235) | (235) | 0 | ||
Common Stock at end of period (shares) at Nov. 25, 2018 | 440,546 | ||||||
Equity at end of period at Nov. 25, 2018 | $ 13,479 | $ 4 | $ 6,107 | $ (1,331) | $ 8,387 | $ 13,167 | $ 312 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Nov. 25, 2018 | Nov. 26, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income including noncontrolling interests | $ 777 | $ 651 |
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities: | ||
Depreciation and amortization | 331 | 335 |
Stock-based compensation | 270 | 234 |
Other non-cash operating activities, net | (4) | (5) |
Deferred income taxes | (31) | (2) |
Changes in operating assets and liabilities: | ||
Merchandise inventories | (1,324) | (1,415) |
Accounts payable | 1,822 | 2,058 |
Other operating assets and liabilities, net | 336 | 150 |
Net cash provided by operating activities | 2,177 | 2,006 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of short-term investments | (316) | (272) |
Maturities and sales of short-term investments | 340 | 311 |
Additions to property and equipment | (730) | (820) |
Other investing activities, net | (31) | (4) |
Net cash used in investing activities | (737) | (785) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Change in bank checks outstanding | 193 | 377 |
Repayments of long-term debt | (89) | (58) |
Tax withholdings on stock-based awards | (270) | (216) |
Repurchases of common stock | (32) | (124) |
Cash dividend payments | (501) | 0 |
Other financing activities, net | (1) | (37) |
Net cash used in financing activities | (700) | (58) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (17) | (20) |
Net change in cash and cash equivalents | 723 | 1,143 |
CASH AND CASH EQUIVALENTS BEGINNING OF YEAR | 6,055 | 4,546 |
CASH AND CASH EQUIVALENTS END OF PERIOD | 6,778 | 5,689 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Interest (reduced by $5 and $4, interest capitalized in 2019 and 2018, respectively) | 49 | 54 |
Income taxes, net | 133 | 314 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES: | ||
Cash dividend declared, but not yet paid | $ 0 | $ 220 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements Of Cash Flows (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Nov. 25, 2018 | Nov. 26, 2017 | |
Statement of Cash Flows [Abstract] | ||
Interest capitalized | $ 5 | $ 4 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Nov. 25, 2018 | |
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. At November 25, 2018 , Costco operated 768 warehouses worldwide: 533 United States (U.S.) locations (in 44 U.S. states, Washington, D.C., and Puerto Rico), 100 Canada locations, 39 Mexico locations, 28 United Kingdom (U.K.) locations, 26 Japan locations, 15 Korea locations, 13 Taiwan locations, 10 Australia locations, two Spain locations, one Iceland location, and one France location. The Company operates e-commerce websites in the U.S., Canada, Mexico, U.K., Korea, and Taiwan. 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. During the first quarter of 2018 , the Company purchased its former joint venture partner's remaining equity interest in its Korean operations. Unless otherwise noted, references to net income relate to net income attributable to Costco. These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q for interim financial reporting pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). While these statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (U.S. GAAP) for complete financial statements. Therefore, the interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report filed on Form 10-K for the fiscal year ended September 2, 2018 . 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 2019 is a 52-week year ending on September 1, 2019 . References to the first quarter of 2019 and 2018 relate to the 12-week fiscal quarters ended November 25, 2018 , and November 26, 2017 , respectively. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. Revenue Recognition The Company recognizes sales for the amount of consideration collected from the member, which includes gross shipping fees where applicable, and is net of sales taxes and merchandise returns. The Company reserves for estimated sales returns based on historical trends in merchandise returns, and reduces sales and merchandise costs accordingly. The Company records, on a gross basis, a refund liability and an asset for recovery, which are included in other current liabilities and other current assets, respectively, in the condensed consolidated balance sheets. Merchandise Sales - The Company offers merchandise in the following core merchandise categories: food and sundries, hardlines, softlines, and fresh foods. The Company also provides expanded products and services through warehouse ancillary and other businesses. The majority of revenue from merchandise sales is recognized at the point of sale. Revenue generated through e-commerce or special orders is recognized upon shipment to the member to the extent there is no installation provided as a part of the contract. For merchandise shipped directly to the member, shipping and handling costs are expensed as incurred as fulfillment costs. In certain ancillary businesses, revenue is deferred until the member picks up merchandise at the warehouse. Deferred sales are included in other current liabilities in the condensed consolidated balance sheets. Principal Versus Agent - The Company is the principal for the majority of its transactions and recognizes revenue on a gross basis. The Company is the principal when it has control of the merchandise or service before it is transferred to the member, which generally is established when Costco is primarily responsible for merchandising decisions, maintains the relationship with the member, including assurance of member service and satisfaction, and has pricing discretion. Membership Fees - The Company accounts for membership fee revenue, net of refunds, on a deferred basis, ratably over the one-year membership period. The Company recognized $758 of membership fees during the first quarter of 2019 , of which $662 was included in the deferred membership fees balance of $1,624 at the end of 2018 . Deferred membership fees were $1,695 at the end of the first quarter of 2019 . In certain countries, the Company's Executive members qualify for a 2% reward on qualified purchases (up to a maximum reward of approximately $1,000 per year), which does not expire and can be redeemed only at Costco warehouses. The Company accounts for this reward as a reduction in sales, net of the estimated impact of non-redemptions (breakage), with the corresponding liability classified as accrued member rewards in the condensed consolidated balance sheets. Estimated breakage is computed based on redemption data. The net reduction in sales was $350 and $317 in the first quarter of 2019 and 2018 , respectively. Cash Cards - The Company sells and otherwise provides proprietary cash cards that do not expire and are redeemable at the warehouse or online for merchandise or membership. Revenue from cash cards is recognized upon redemption, and estimated breakage is recognized based on redemption data. The Company accounts for outstanding cash card balances as a cash card liability, net of estimated breakage and as of the end of the first quarter of 2019 and 2018 , the cash card liability was not material. Co-Brand Credit Card Program - Under the terms of the Company's co-branded credit card program, Citibank, N.A. (“Citi”) became the exclusive issuer of co-branded credit cards to U.S. members in June 2016. The Company receives various forms of consideration, including a royalty on purchases made on the card outside of Costco, a portion of which is used to fund the rebate that cardholders receive after giving rise to estimated breakage. The rebates are issued in February and expire on December 31 of each year. Breakage is estimated based on redemption data. Recent Accounting Pronouncements Adopted In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, providing for changes in the recognition of revenue from contracts with customers. The guidance requires disclosures sufficient to describe the nature, amount, timing, and uncertainty of revenue and cash flows. The Company adopted the new standard in the first quarter of 2019, using the modified retrospective approach and recorded a cumulative effect adjustment of $16 as an increase to retained earnings, which is included in cash dividend declared and other in the condensed consolidated statements of equity. The new standard impacted the presentation and timing of certain revenue transactions. Specifically, the changes included gross presentation of the Company’s estimate of merchandise returns reserve and related recoverable assets, recognizing cash card breakage over the period of redemption, and accelerating the recognition of certain e-commerce and special order sales. Additionally, the Company’s evaluation under the new standard of its status as a principal in certain vendor arrangements resulted in the recognition of additional sales on a gross basis. The effect of the standard on the Company's condensed consolidated balance sheet was an increase to other current liabilities and other current assets of $649 and $692 at adoption and at the end of the first quarter of 2019, respectively, related to the estimate of merchandise returns reserve and the related recoverable assets. The effect of the adoption of this standard on the Company's condensed consolidated statement of income for the first quarter of 2019 is as follows: As Reported ASU 2014-09 Effect Excluding ASU 2014-09 Effect Net Sales $ 34,311 $ 340 $ 33,971 Merchandise Costs 30,623 331 30,292 Gross Margin (1) 3,688 9 3,679 _______________ (1) Net sales less merchandise costs. For related disaggregated revenue disclosures, see Note 10 . Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, which will require recognition on the balance sheet of rights and obligations created by leases with terms greater than twelve months. The standard is effective for fiscal years and interim periods within those years beginning after December 15, 2018, with early adoption permitted. The Company plans to adopt this guidance at the beginning of its first quarter of fiscal 2020 and plans to utilize the transition option, which does not require application of the guidance to comparative periods in the year of adoption. The primary effect of adoption will be recording right-of-use assets and corresponding lease obligations for current operating leases. The adoption is expected to have a material impact on the Company's consolidated balance sheets, but not on the consolidated statements of income or cash flows. Additionally, the Company is in the process of reviewing current accounting policies and related disclosures, changes to business processes, systems and controls to support adoption of the new standard, which includes implementing a new lease accounting system. |
Investments
Investments | 3 Months Ended |
Nov. 25, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Note 2—Investments The Company's investments were as follows: November 25, 2018: Cost Unrealized Recorded Available-for-sale: Government and agency securities $ 901 $ (14 ) $ 887 Held-to-maturity: Certificates of deposit 288 288 Total short-term investments $ 1,189 $ (14 ) $ 1,175 September 2, 2018: Cost Unrealized Recorded Available-for-sale: Government and agency securities $ 912 $ (14 ) $ 898 Held-to-maturity: Certificates of deposit 306 306 Total short-term investments $ 1,218 $ (14 ) $ 1,204 Gross unrealized gains and losses on available-for-sale securities were not material for the first quarter of 2019 or 2018. At November 25, 2018 , and September 2, 2018 , available-for-sale securities that were in a continuous unrealized-loss position were not material. There were no sales of available-for-sale securities during the first quarter of 2019 . Proceeds from sales of available-for-sale securities were $35 during the first quarter of 2018 and gross realized gains and losses for these sales were immaterial . The maturities of available-for-sale and held-to-maturity securities at November 25, 2018 , were as follows: Available-For-Sale Held-To-Maturity Cost Basis Fair Value Due in one year or less $ 377 $ 375 $ 288 Due after one year through five years 505 494 0 Due after five years 19 18 0 Total $ 901 $ 887 $ 288 |
Fair Value Measurement
Fair Value Measurement | 3 Months Ended |
Nov. 25, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Note 3—Fair Value Measurement Assets and Liabilities Measured at Fair Value on a Recurring Basis The tables below present information regarding financial assets and financial liabilities that are measured at fair value on a recurring basis and indicate the level within the hierarchy reflecting the valuation techniques utilized to determine fair value. November 25, 2018: Level 1 Level 2 Money market mutual funds (1) $ 4 $ 0 Investment in government and agency securities (2) 0 896 Forward foreign-exchange contracts, in asset position (3) 0 12 Forward foreign-exchange contracts, in (liability) position (3) 0 (1 ) Total $ 4 $ 907 September 2, 2018: Level 1 Level 2 Money market mutual funds (1) $ 9 $ 0 Investment in government and agency securities (2) 0 903 Forward foreign-exchange contracts, in asset position (3) 0 16 Forward foreign-exchange contracts, in (liability) position (3) 0 (2 ) Total $ 9 $ 917 _______________ (1) Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets. (2) At November 25, 2018 , immaterial cash and cash equivalents and $887 short-term investments are included in the accompanying condensed consolidated balance sheets. At September 2, 2018 , immaterial cash and cash equivalents and $898 short-term investments are included in the accompanying condensed consolidated balance sheets. (3) The asset and the liability values are included in other current assets and other current liabilities, respectively, in the accompanying condensed consolidated balance sheets. During and at the periods ended November 25, 2018 , and September 2, 2018 , the Company did not hold any Level 3 financial assets or liabilities that were measured at fair value on a recurring basis. There were no transfers in or out of Level 1 or 2 during the first quarter of 2019 or 2018 . 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 recorded 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 quarter of 2019 or 2018 . |
Debt
Debt | 3 Months Ended |
Nov. 25, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Note 4—Debt The carrying value of the Company’s long-term debt consisted of the following: November 25, 2018 September 2, 2018 1.70% Senior Notes due December 2019 $ 1,200 $ 1,200 1.75% Senior Notes due February 2020 500 500 2.15% Senior Notes due May 2021 1,000 1,000 2.25% Senior Notes due February 2022 500 500 2.30% Senior Notes due May 2022 800 800 2.75% Senior Notes due May 2024 1,000 1,000 3.00% Senior Notes due May 2027 1,000 1,000 Other long-term debt 514 613 Total long-term debt 6,514 6,613 Less unamortized debt discounts and issuance costs 34 36 Less current portion (1) — 90 Long-term debt, excluding current portion $ 6,480 $ 6,487 _______________ (1) Included in other current liabilities in the condensed consolidated balance sheet. The estimated fair value of Senior Notes is valued using Level 2 inputs. Other long-term debt consists of Guaranteed Senior Notes issued by the Company's Japan subsidiary and are valued using Level 3 inputs. The fair value of the Company's long-term debt, including the current portion, was approximately $6,360 and $6,492 at November 25, 2018 , and September 2, 2018 , respectively. |
Equity
Equity | 3 Months Ended |
Nov. 25, 2018 | |
Equity [Abstract] | |
Equity and Comprehensive Income | Note 5—Equity Dividends The Company’s current quarterly dividend rate is $0.57 per share, compared to $0.50 per share in the first quarter of 2018 . On October 24, 2018 , the Board of Directors declared a quarterly dividend in the amount of $0.57 per share, which was paid on November 23, 2018 . Stock Repurchase Programs Stock repurchase activity during the first quarter of 2019 and 2018 is summarized below: Shares Repurchased (000's) Average Price per Share Total Cost First quarter of 2019 150 $ 229.35 $ 34 First quarter of 2018 734 $ 162.51 $ 119 These amounts may differ from the stock repurchase balances in the accompanying condensed consolidated statements of cash flows due to changes in unsettled stock repurchases at the end of a quarter. The remaining amount available for stock repurchases under our approved plan, which expires in April 2019, was $2,393 at November 25, 2018 . Purchases are made from time-to-time, as conditions warrant, in the open market or in block purchases and pursuant to plans under SEC Rule 10b5-1. |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 3 Months Ended |
Nov. 25, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation Plans | Note 6—Stock-Based Compensation The Seventh Restated 2002 Stock Incentive Plan authorized the issuance of 23,500,000 shares ( 13,429,000 RSUs) of common stock for future grants in addition to the shares authorized under the previous plan. The Company issues new shares of common stock upon vesting of RSUs. Shares for vested RSUs are generally delivered to participants annually, net of shares withheld for taxes. Summary of Restricted Stock Unit Activity At November 25, 2018 , 5,553,000 shares were available to be granted as RSUs and the following awards were outstanding: • 6,415,000 time-based RSUs that vest upon continued employment over specified periods of time; • 91,000 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 • 150,000 performance-based RSUs, granted to executive officers of the Company, subject to achievement of performance targets for fiscal 2019 , as determined by the Compensation Committee of the Board of Directors after the end of the fiscal year. These awards are not included in the table below. The following table summarizes RSU transactions during the first quarter of 2019 : Number of Units (in 000’s) Weighted-Average Grant Date Fair Value Outstanding at September 2, 2018 7,578 $ 140.85 Granted 2,642 223.34 Vested and delivered (3,682 ) 155.66 Forfeited (32 ) 158.81 Outstanding at November 25, 2018 6,506 $ 165.89 The remaining unrecognized compensation cost related to non-vested RSUs at November 25, 2018 , was $ 1,011 , and the weighted-average period over which this cost will be recognized is 1.8 years. Summary of Stock-Based Compensation The following table summarizes stock-based compensation expense and the related tax benefits under the Company’s plans: 12 Weeks Ended November 25, November 26, Stock-based compensation expense before income taxes $ 270 $ 234 Less recognized income tax benefit (1) (61 ) (77 ) Stock-based compensation expense, net of income taxes $ 209 $ 157 _______________ (1) For the first quarter of 2019, the tax benefit reflects the reduction in the U.S. federal statutory income tax rate from 35% to 21% . |
Income Taxes Income Taxes
Income Taxes Income Taxes | 3 Months Ended |
Nov. 25, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 7—Income Taxes In December 2017, the Tax Cuts and Jobs Act (the “2017 Tax Act”) was signed into law. The Company is a fiscal-year taxpayer, so most provisions became effective for fiscal 2019, including limitations on the Company’s ability to claim foreign tax credits, repeal of the domestic manufacturing deduction, and limitations on certain business deductions. Implementation of the 2017 Tax Act involves provisional determinations based on the Company's current interpretation and estimates that it believes are reasonable. The Company continues to evaluate the impact of the 2017 Tax Act, and adjustments may be made through the second quarter of 2019, in accordance with Staff Accounting Bulletin 118. |
Net Income per Common and Commo
Net Income per Common and Common Equivalent Share | 3 Months Ended |
Nov. 25, 2018 | |
Earnings Per Share [Abstract] | |
Net Income Per Common and Common Equivalent Share | Note 8—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 potentially dilutive common shares outstanding (shares in 000’s): 12 Weeks Ended November 25, November 26, Net income attributable to Costco $ 767 $ 640 Weighted average number of common shares used in basic net income per common share 439,157 437,965 RSUs 3,592 2,886 Weighted average number of common shares and dilutive potential of common stock used in diluted net income per share 442,749 440,851 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Nov. 25, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 9—Commitments and Contingencies Legal Proceedings The Company is involved in a number of claims, proceedings and litigation arising from its business and property ownership. In accordance with applicable accounting guidance, the Company establishes an accrual for legal proceedings if and when those matters reach a stage where they present loss contingencies that are both probable and reasonably estimable. 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 an immaterial accrual with respect to one matter 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 a class action alleging violation of California Wage Order 7-2001 for failing to provide seating to member service assistants who act as greeters and exit attendants in the Company’s California warehouses. Canela v. Costco Wholesale Corp., et al. (Case No. 5:13-cv-03598, N.D. Cal. filed July 1, 2013). 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. The plaintiff has since indicated that exit attendants are no longer a subject of the litigation. The action in the district court has been stayed pending review by the Ninth Circuit of the order certifying a class. On September 6, 2018, counsel claiming to represent an employee notified the California Labor and Workforce Development agency of an intention to bring similar claims concerning Costco employees engaged at member services counters. On November 23, 2016, the Company’s Canadian subsidiary received from the Ontario Ministry of Health and Long Term Care a request for an inspection and information concerning compliance with the anti-rebate provisions in the Ontario Drug Benefit Act and the Drug Interchangeability and Dispensing Fee Act. The Ministry has indicated that it has reason to believe the Company received payments in violation of these laws and is seeking disgorgement of these sums, and the Company is engaged in discussions concerning a settlement payment. In December 2017, the United States Judicial Panel on Multidistrict Litigation consolidated numerous cases filed against various defendants by counties, cities, hospitals, Native American tribes and third-party payors concerning the impacts of opioid abuse. In re National Prescription Opiate Litigation (MDL No. 2804) (N.D. Ohio). Included are federal court cases that name the Company, including actions filed by a number of counties and cities in Michigan, New Jersey and Ohio, and a third-party payor in Ohio. Similar cases that name the Company are pending in state court in Oklahoma. 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. The Company expects these actions to be vigorously defended. 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. In November 2016 and September 2017, the Company received notices of violation from the Connecticut Department of Energy and Environmental Protection regarding hazardous waste practices at its Connecticut warehouses, primarily concerning unsalable pharmaceuticals. The Company is seeking to cooperate concerning the resolution of these notices. 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. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Nov. 25, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting | Note 10—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 and France 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 September 2, 2018 , 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. United States Canadian Other Total Twelve Weeks Ended November 25, 2018 Total revenue $ 25,550 $ 4,977 $ 4,542 $ 35,069 Operating income 560 214 175 949 Depreciation and amortization 248 31 52 331 Additions to property and equipment 524 94 112 730 Net property and equipment 13,580 1,914 4,385 19,879 Total assets 30,499 4,673 8,642 43,814 Twelve Weeks Ended November 26, 2017 Total revenue $ 22,813 $ 4,771 $ 4,225 $ 31,809 Operating income 533 236 182 951 Depreciation and amortization 252 32 51 335 Additions to property and equipment 480 75 265 820 Net property and equipment 12,573 1,836 4,273 18,682 Total assets 27,005 4,138 8,235 39,378 Year Ended September 2, 2018 Total revenue $ 102,286 $ 20,689 $ 18,601 $ 141,576 Operating income 2,787 939 754 4,480 Depreciation and amortization 1,078 135 224 1,437 Additions to property and equipment 2,046 268 655 2,969 Net property and equipment 13,353 1,900 4,428 19,681 Total assets 28,207 4,303 8,320 40,830 Disaggregated Revenue The following table summarizes net sales by merchandise category: 12 Weeks Ended November 25, 2018 Foods & Sundries $ 13,641 Hardlines 5,840 Fresh Foods 4,293 Softlines 4,123 Ancillary 6,414 Total Net Sales $ 34,311 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Nov. 25, 2018 | |
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. During the first quarter of 2018 , the Company purchased its former joint venture partner's remaining equity interest in its Korean operations. Unless otherwise noted, references to net income relate to net income attributable to Costco. These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q for interim financial reporting pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). While these statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (U.S. GAAP) for complete financial statements. Therefore, the interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report filed on Form 10-K for the fiscal year ended September 2, 2018 . |
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 2019 is a 52-week year ending on September 1, 2019 . References to the first quarter of 2019 and 2018 relate to the 12-week fiscal quarters ended November 25, 2018 , and November 26, 2017 , respectively. |
Use of Estimates, Policy | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions. |
Revenue Recognition | Revenue Recognition The Company recognizes sales for the amount of consideration collected from the member, which includes gross shipping fees where applicable, and is net of sales taxes and merchandise returns. The Company reserves for estimated sales returns based on historical trends in merchandise returns, and reduces sales and merchandise costs accordingly. The Company records, on a gross basis, a refund liability and an asset for recovery, which are included in other current liabilities and other current assets, respectively, in the condensed consolidated balance sheets. Merchandise Sales - The Company offers merchandise in the following core merchandise categories: food and sundries, hardlines, softlines, and fresh foods. The Company also provides expanded products and services through warehouse ancillary and other businesses. The majority of revenue from merchandise sales is recognized at the point of sale. Revenue generated through e-commerce or special orders is recognized upon shipment to the member to the extent there is no installation provided as a part of the contract. For merchandise shipped directly to the member, shipping and handling costs are expensed as incurred as fulfillment costs. In certain ancillary businesses, revenue is deferred until the member picks up merchandise at the warehouse. Deferred sales are included in other current liabilities in the condensed consolidated balance sheets. Principal Versus Agent - The Company is the principal for the majority of its transactions and recognizes revenue on a gross basis. The Company is the principal when it has control of the merchandise or service before it is transferred to the member, which generally is established when Costco is primarily responsible for merchandising decisions, maintains the relationship with the member, including assurance of member service and satisfaction, and has pricing discretion. Membership Fees - The Company accounts for membership fee revenue, net of refunds, on a deferred basis, ratably over the one-year membership period. The Company recognized $758 of membership fees during the first quarter of 2019 , of which $662 was included in the deferred membership fees balance of $1,624 at the end of 2018 . Deferred membership fees were $1,695 at the end of the first quarter of 2019 . In certain countries, the Company's Executive members qualify for a 2% reward on qualified purchases (up to a maximum reward of approximately $1,000 per year), which does not expire and can be redeemed only at Costco warehouses. The Company accounts for this reward as a reduction in sales, net of the estimated impact of non-redemptions (breakage), with the corresponding liability classified as accrued member rewards in the condensed consolidated balance sheets. Estimated breakage is computed based on redemption data. The net reduction in sales was $350 and $317 in the first quarter of 2019 and 2018 , respectively. Cash Cards - The Company sells and otherwise provides proprietary cash cards that do not expire and are redeemable at the warehouse or online for merchandise or membership. Revenue from cash cards is recognized upon redemption, and estimated breakage is recognized based on redemption data. The Company accounts for outstanding cash card balances as a cash card liability, net of estimated breakage and as of the end of the first quarter of 2019 and 2018 , the cash card liability was not material. Co-Brand Credit Card Program - Under the terms of the Company's co-branded credit card program, Citibank, N.A. (“Citi”) became the exclusive issuer of co-branded credit cards to U.S. members in June 2016. The Company receives various forms of consideration, including a royalty on purchases made on the card outside of Costco, a portion of which is used to fund the rebate that cardholders receive after giving rise to estimated breakage. The rebates are issued in February and expire on December 31 of each year. Breakage is estimated based on redemption data. |
Recent Accounting Pronouncements Adopted | Recent Accounting Pronouncements Adopted In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, providing for changes in the recognition of revenue from contracts with customers. The guidance requires disclosures sufficient to describe the nature, amount, timing, and uncertainty of revenue and cash flows. The Company adopted the new standard in the first quarter of 2019, using the modified retrospective approach and recorded a cumulative effect adjustment of $16 as an increase to retained earnings, which is included in cash dividend declared and other in the condensed consolidated statements of equity. The new standard impacted the presentation and timing of certain revenue transactions. Specifically, the changes included gross presentation of the Company’s estimate of merchandise returns reserve and related recoverable assets, recognizing cash card breakage over the period of redemption, and accelerating the recognition of certain e-commerce and special order sales. Additionally, the Company’s evaluation under the new standard of its status as a principal in certain vendor arrangements resulted in the recognition of additional sales on a gross basis. The effect of the standard on the Company's condensed consolidated balance sheet was an increase to other current liabilities and other current assets of $649 and $692 at adoption and at the end of the first quarter of 2019, respectively, related to the estimate of merchandise returns reserve and the related recoverable assets. The effect of the adoption of this standard on the Company's condensed consolidated statement of income for the first quarter of 2019 is as follows: As Reported ASU 2014-09 Effect Excluding ASU 2014-09 Effect Net Sales $ 34,311 $ 340 $ 33,971 Merchandise Costs 30,623 331 30,292 Gross Margin (1) 3,688 9 3,679 _______________ (1) Net sales less merchandise costs. For related disaggregated revenue disclosures, see Note 10 . |
Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, which will require recognition on the balance sheet of rights and obligations created by leases with terms greater than twelve months. The standard is effective for fiscal years and interim periods within those years beginning after December 15, 2018, with early adoption permitted. The Company plans to adopt this guidance at the beginning of its first quarter of fiscal 2020 and plans to utilize the transition option, which does not require application of the guidance to comparative periods in the year of adoption. The primary effect of adoption will be recording right-of-use assets and corresponding lease obligations for current operating leases. The adoption is expected to have a material impact on the Company's consolidated balance sheets, but not on the consolidated statements of income or cash flows. Additionally, the Company is in the process of reviewing current accounting policies and related disclosures, changes to business processes, systems and controls to support adoption of the new standard, which includes implementing a new lease accounting system. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Nov. 25, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] | The effect of the adoption of this standard on the Company's condensed consolidated statement of income for the first quarter of 2019 is as follows: As Reported ASU 2014-09 Effect Excluding ASU 2014-09 Effect Net Sales $ 34,311 $ 340 $ 33,971 Merchandise Costs 30,623 331 30,292 Gross Margin (1) 3,688 9 3,679 _______________ (1) Net sales less merchandise costs. |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Nov. 25, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Available-for-sale and Held-to-maturity Investments | The Company's investments were as follows: November 25, 2018: Cost Unrealized Recorded Available-for-sale: Government and agency securities $ 901 $ (14 ) $ 887 Held-to-maturity: Certificates of deposit 288 288 Total short-term investments $ 1,189 $ (14 ) $ 1,175 September 2, 2018: Cost Unrealized Recorded Available-for-sale: Government and agency securities $ 912 $ (14 ) $ 898 Held-to-maturity: Certificates of deposit 306 306 Total short-term investments $ 1,218 $ (14 ) $ 1,204 |
Maturities of Available-for-sale and Held-to-maturity Securities | The maturities of available-for-sale and held-to-maturity securities at November 25, 2018 , were as follows: Available-For-Sale Held-To-Maturity Cost Basis Fair Value Due in one year or less $ 377 $ 375 $ 288 Due after one year through five years 505 494 0 Due after five years 19 18 0 Total $ 901 $ 887 $ 288 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 3 Months Ended |
Nov. 25, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Assets and Liabilities Measured on Recurring Basis | The tables below present information regarding financial assets and financial liabilities that are measured at fair value on a recurring basis and indicate the level within the hierarchy reflecting the valuation techniques utilized to determine fair value. November 25, 2018: Level 1 Level 2 Money market mutual funds (1) $ 4 $ 0 Investment in government and agency securities (2) 0 896 Forward foreign-exchange contracts, in asset position (3) 0 12 Forward foreign-exchange contracts, in (liability) position (3) 0 (1 ) Total $ 4 $ 907 September 2, 2018: Level 1 Level 2 Money market mutual funds (1) $ 9 $ 0 Investment in government and agency securities (2) 0 903 Forward foreign-exchange contracts, in asset position (3) 0 16 Forward foreign-exchange contracts, in (liability) position (3) 0 (2 ) Total $ 9 $ 917 _______________ (1) Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets. (2) At November 25, 2018 , immaterial cash and cash equivalents and $887 short-term investments are included in the accompanying condensed consolidated balance sheets. At September 2, 2018 , immaterial cash and cash equivalents and $898 short-term investments are included in the accompanying condensed consolidated balance sheets. (3) The asset and the liability values are included in other current assets and other current liabilities, respectively, in the accompanying condensed consolidated balance sheets. |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Nov. 25, 2018 | |
Debt Disclosure [Abstract] | |
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: November 25, 2018 September 2, 2018 1.70% Senior Notes due December 2019 $ 1,200 $ 1,200 1.75% Senior Notes due February 2020 500 500 2.15% Senior Notes due May 2021 1,000 1,000 2.25% Senior Notes due February 2022 500 500 2.30% Senior Notes due May 2022 800 800 2.75% Senior Notes due May 2024 1,000 1,000 3.00% Senior Notes due May 2027 1,000 1,000 Other long-term debt 514 613 Total long-term debt 6,514 6,613 Less unamortized debt discounts and issuance costs 34 36 Less current portion (1) — 90 Long-term debt, excluding current portion $ 6,480 $ 6,487 _______________ (1) Included in other current liabilities in the condensed consolidated balance sheet. |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Nov. 25, 2018 | |
Equity [Abstract] | |
Stock Repurchased During Period | Stock repurchase activity during the first quarter of 2019 and 2018 is summarized below: Shares Repurchased (000's) Average Price per Share Total Cost First quarter of 2019 150 $ 229.35 $ 34 First quarter of 2018 734 $ 162.51 $ 119 |
Stock-Based Compensation Plans
Stock-Based Compensation Plans (Tables) | 3 Months Ended |
Nov. 25, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of RSU Transactions | The following table summarizes RSU transactions during the first quarter of 2019 : Number of Units (in 000’s) Weighted-Average Grant Date Fair Value Outstanding at September 2, 2018 7,578 $ 140.85 Granted 2,642 223.34 Vested and delivered (3,682 ) 155.66 Forfeited (32 ) 158.81 Outstanding at November 25, 2018 6,506 $ 165.89 |
Summary of Stock-Based Compensation Expense and Related Tax Benefits | The following table summarizes stock-based compensation expense and the related tax benefits under the Company’s plans: 12 Weeks Ended November 25, November 26, Stock-based compensation expense before income taxes $ 270 $ 234 Less recognized income tax benefit (1) (61 ) (77 ) Stock-based compensation expense, net of income taxes $ 209 $ 157 _______________ (1) For the first quarter of 2019, the tax benefit reflects the reduction in the U.S. federal statutory income tax rate from 35% to 21% . |
Net Income per Common and Com_2
Net Income per Common and Common Equivalent Share (Tables) | 3 Months Ended |
Nov. 25, 2018 | |
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 potentially dilutive common shares outstanding (shares in 000’s): 12 Weeks Ended November 25, November 26, Net income attributable to Costco $ 767 $ 640 Weighted average number of common shares used in basic net income per common share 439,157 437,965 RSUs 3,592 2,886 Weighted average number of common shares and dilutive potential of common stock used in diluted net income per share 442,749 440,851 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Nov. 25, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting Information, by Segment | 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. United States Canadian Other Total Twelve Weeks Ended November 25, 2018 Total revenue $ 25,550 $ 4,977 $ 4,542 $ 35,069 Operating income 560 214 175 949 Depreciation and amortization 248 31 52 331 Additions to property and equipment 524 94 112 730 Net property and equipment 13,580 1,914 4,385 19,879 Total assets 30,499 4,673 8,642 43,814 Twelve Weeks Ended November 26, 2017 Total revenue $ 22,813 $ 4,771 $ 4,225 $ 31,809 Operating income 533 236 182 951 Depreciation and amortization 252 32 51 335 Additions to property and equipment 480 75 265 820 Net property and equipment 12,573 1,836 4,273 18,682 Total assets 27,005 4,138 8,235 39,378 Year Ended September 2, 2018 Total revenue $ 102,286 $ 20,689 $ 18,601 $ 141,576 Operating income 2,787 939 754 4,480 Depreciation and amortization 1,078 135 224 1,437 Additions to property and equipment 2,046 268 655 2,969 Net property and equipment 13,353 1,900 4,428 19,681 Total assets 28,207 4,303 8,320 40,830 |
Disaggregation of Revenue [Table Text Block] | Disaggregated Revenue The following table summarizes net sales by merchandise category: 12 Weeks Ended November 25, 2018 Foods & Sundries $ 13,641 Hardlines 5,840 Fresh Foods 4,293 Softlines 4,123 Ancillary 6,414 Total Net Sales $ 34,311 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Detail) $ in Millions | 3 Months Ended | ||
Nov. 25, 2018USD ($)warehouse | Nov. 26, 2017USD ($) | Sep. 02, 2018USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | |||
Number of warehouses operated | warehouse | 768 | ||
Total Revenue | $ 35,069 | $ 31,809 | |
Deferred Revenue, Revenue Recognized | 662 | ||
Deferred Revenue, Current | 1,695 | $ 1,624 | |
Reduction In Sales | 350 | 317 | |
Revenue Recognition, Sales Returns, Reserve for Sales Returns | 692 | $ 649 | |
Merchandise costs | 30,623 | 27,617 | |
Gross Margin (1) | 3,688 | ||
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets | 16 | ||
Membership fees | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Total Revenue | 758 | 692 | |
Net sales | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Total Revenue | 34,311 | $ 31,117 | |
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Merchandise costs | 331 | ||
Gross Margin (1) | 9 | ||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Net sales | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Total Revenue | 340 | ||
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Merchandise costs | 30,292 | ||
Gross Margin (1) | 3,679 | ||
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | Net sales | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Total Revenue | $ 33,971 | ||
UNITED STATES | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of warehouses operated | warehouse | 533 | ||
CANADA | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of warehouses operated | warehouse | 100 | ||
MEXICO | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of warehouses operated | warehouse | 39 | ||
UNITED KINGDOM | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of warehouses operated | warehouse | 28 | ||
JAPAN | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of warehouses operated | warehouse | 26 | ||
KOREA | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of warehouses operated | warehouse | 15 | ||
TAIWAN | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of warehouses operated | warehouse | 13 | ||
AUSTRALIA | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of warehouses operated | warehouse | 10 | ||
SPAIN | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of warehouses operated | warehouse | 2 | ||
ICELAND | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of warehouses operated | warehouse | 1 | ||
FRANCE | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Number of warehouses operated | warehouse | 1 |
Investments - Available-for-sal
Investments - Available-for-sale and Held-to-maturity Investments (Detail) - USD ($) $ in Millions | 3 Months Ended | ||
Nov. 25, 2018 | Nov. 26, 2017 | Sep. 02, 2018 | |
Available-for-sale and Held-to-maturity [Line Items] | |||
Available-for-sale, recorded basis | $ 887 | ||
Available-for-sale, cost basis, total | 901 | ||
Held-to-maturity, cost basis | 288 | ||
Total investments, recorded basis | 1,175 | $ 1,204 | |
Proceeds from Sale of Available-for-sale Securities | 0 | $ 35 | |
Short-term Investments | |||
Available-for-sale and Held-to-maturity [Line Items] | |||
Unrealized gains/(loss), net | (14) | (14) | |
Total investments, recorded basis | 1,175 | 1,204 | |
Total investments, cost basis, total | 1,189 | 1,218 | |
Short-term Investments | Government and Agency Securities | |||
Available-for-sale and Held-to-maturity [Line Items] | |||
Available-for-sale, recorded basis | 887 | 898 | |
Available-for-sale Securities [Member] | Short-term Investments | Government and Agency Securities | |||
Available-for-sale and Held-to-maturity [Line Items] | |||
Available-for-sale, recorded basis | 887 | 898 | |
Unrealized gains/(loss), net | (14) | (14) | |
Available-for-sale, cost basis, total | 901 | 912 | |
Held-to-maturity Securities [Member] | Short-term Investments | Certificates of deposit | |||
Available-for-sale and Held-to-maturity [Line Items] | |||
Held-to-maturity, recorded basis | 288 | 306 | |
Held-to-maturity, cost basis | $ 288 | $ 306 |
Investments - Maturities of Ava
Investments - Maturities of Available-for-sale and Held-to-maturity Securities (Details) $ in Millions | Nov. 25, 2018USD ($) |
Available-for-sale, Cost Basis | |
Due in one year or less | $ 377 |
Due after one year through five years | 505 |
Due after five years | 19 |
Available-for-sale, cost basis, total | 901 |
Available-for-sale, Fair Value | |
Due in one year or less | 375 |
Due after one year through five years | 494 |
Due after five years | 18 |
Available-for-sale, recorded basis, total | 887 |
Held-to-maturity | |
Due in one year or less | 288 |
Due after one year through five years | 0 |
Due after five years | 0 |
Held-to-maturity, cost basis, total | $ 288 |
Fair Value Measurement - Fair V
Fair Value Measurement - Fair Value of Financial Assets and Financial Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Millions | Nov. 25, 2018 | Sep. 02, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term Investments | $ 887 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets measured on recurring basis | 4 | $ 9 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets measured on recurring basis | 907 | 917 |
Money Market Funds | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets measured on recurring basis | 4 | 9 |
Money Market Funds | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets measured on recurring basis | 0 | 0 |
Government and Agency Securities | Short-term Investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Short-term Investments | 887 | 898 |
Government and Agency Securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets measured on recurring basis | 0 | 0 |
Government and Agency Securities | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets measured on recurring basis | 896 | 903 |
Forward Foreign-exchange Contracts | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets measured on recurring basis | 0 | 0 |
Fair value of liabilities measured on recurring basis | 0 | 0 |
Forward Foreign-exchange Contracts | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets measured on recurring basis | 12 | 16 |
Fair value of liabilities measured on recurring basis | $ (1) | $ (2) |
Debt (Carrying Value and Estima
Debt (Carrying Value and Estimated Fair Value of Company's Long-term Debt) (Details) - USD ($) $ in Millions | Nov. 25, 2018 | Sep. 02, 2018 | |
Debt Instrument [Line Items] | |||
Total long-term debt, Face value | $ 6,514 | $ 6,613 | |
Less unamortized debt discounts and issuance costs, Net | 34 | 36 | |
Less current portion, Face value | [1] | 0 | 90 |
Long-term debt, excluding current portion | 6,480 | 6,487 | |
Total long-term debt, fair value | $ 6,360 | 6,492 | |
1.7% Senior Notes Due December 2019 | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate, stated percentage | 1.70% | ||
Total long-term debt, Face value | $ 1,200 | 1,200 | |
1.75% Senior Notes Due February 2020 | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate, stated percentage | 1.75% | ||
Total long-term debt, Face value | $ 500 | 500 | |
2.15% Senior Notes Due May 2021 | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate, stated percentage | 2.15% | ||
Total long-term debt, Face value | $ 1,000 | 1,000 | |
2.25% Senior Notes Due February 2022 | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate, stated percentage | 2.25% | ||
Total long-term debt, Face value | $ 500 | 500 | |
2.30% Senior Notes Due May 2022 | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate, stated percentage | 2.30% | ||
Total long-term debt, Face value | $ 800 | 800 | |
2.75% Senior Notes Due May 2024 | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate, stated percentage | 2.75% | ||
Total long-term debt, Face value | $ 1,000 | 1,000 | |
3.00% Senior Notes Due May 2027 | |||
Debt Instrument [Line Items] | |||
Debt instrument, interest rate, stated percentage | 3.00% | ||
Total long-term debt, Face value | $ 1,000 | 1,000 | |
Other Long-term Debt | |||
Debt Instrument [Line Items] | |||
Total long-term debt, Face value | $ 514 | $ 613 | |
[1] | Included in other current liabilities in the condensed consolidated balance sheet. |
Equity - Additional Information
Equity - Additional Information - Dividends (Detail) - $ / shares | 3 Months Ended | |
Nov. 25, 2018 | Nov. 26, 2017 | |
Dividend Rate | ||
Dividends Payable [Line Items] | ||
Dividends declared | $ 0.57 | $ 0.50 |
Equity (Stock Repurchased Durin
Equity (Stock Repurchased During Period) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | |
Nov. 25, 2018 | Nov. 26, 2017 | |
Equity [Abstract] | ||
Shares repurchased (000's) | 150 | 734 |
Average price per share | $ 229.35 | $ 162.51 |
Total Cost | $ 34 | $ 119 |
Stock-Based Compensation Plan_2
Stock-Based Compensation Plans - Additional Information (Detail) $ in Millions | 3 Months Ended |
Nov. 25, 2018USD ($)shares | |
Seventh Restated 2002 Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Additional number of shares authorized | 23,500,000 |
Restricted Stock Units (RSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Additional number of shares authorized | 13,429,000 |
Number of shares available to be granted as RSUs | 5,553,000 |
Time-based RSUs awards outstanding | 6,415,000 |
Performance-based RSUs awards outstanding | 91,000 |
Outstanding performance-based RSUs awards granted, subject to achievement of performance targets | 150,000 |
Unrecognized compensation cost | $ | $ 1,011 |
Weighted-average recognition period | 1 year 9 months 18 days |
Stock-Based Compensation Plan_3
Stock-Based Compensation Plans - Summary of RSU Transactions (Details) shares in Thousands | 3 Months Ended |
Nov. 25, 2018$ / sharesshares | |
Number of units | |
Outstanding at September 2, 2018 | shares | 7,578 |
Granted | shares | 2,642 |
Vested and delivered | shares | (3,682) |
Forfeited | shares | (32) |
Outstanding at November 25, 2018 | shares | 6,506 |
Weighted average grant date fair value | |
Outstanding at September 2, 2018 | $ / shares | $ 140.85 |
Granted | $ / shares | 223.34 |
Vested and delivered | $ / shares | 155.66 |
Forfeited | $ / shares | 158.81 |
Outstanding at November 25, 2018 | $ / shares | $ 165.89 |
Stock-Based Compensation Plan_4
Stock-Based Compensation Plans - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 11 Months Ended | |
Nov. 25, 2018 | Nov. 26, 2017 | Nov. 25, 2018 | |
Stock-based compensation expense before income taxes | $ 270 | $ 234 | |
Less recognized income tax benefit | (61) | (77) | |
Stock-based compensation expense, net of income taxes | $ 209 | $ 157 | |
Scenario, Plan [Member] | |||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 35.00% | 21.00% | |
Restricted Stock Units (RSUs) [Member] | |||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 1 year 9 months 18 days |
Net Income per Common and Com_3
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 | |
Nov. 25, 2018 | Nov. 26, 2017 | |
Earnings Per Share [Abstract] | ||
Net income available to common stockholders used in basic and diluted net income per common share | $ 767 | $ 640 |
Weighted average number of common shares used in basic net income per common share | 439,157 | 437,965 |
RSUs | 3,592 | 2,886 |
Weighted average number of common shares and dilutive potential of common stock used in diluted net income per share | 442,749 | 440,851 |
Segment Reporting Information b
Segment Reporting Information by Segment (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Nov. 25, 2018 | Nov. 26, 2017 | Sep. 02, 2018 | |
Segment Reporting Information [Line Items] | |||
Total revenues | $ 35,069 | $ 31,809 | $ 141,576 |
Operating Income | 949 | 951 | 4,480 |
Depreciation and amortization | 331 | 335 | 1,437 |
Additions to property and equipment | 730 | 820 | 2,969 |
Net property and equipment | 19,879 | 18,682 | 19,681 |
Total Assets | 43,814 | 39,378 | 40,830 |
Operating Segments [Member] | United States Operations | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 25,550 | 22,813 | 102,286 |
Operating Income | 560 | 533 | 2,787 |
Depreciation and amortization | 248 | 252 | 1,078 |
Additions to property and equipment | 524 | 480 | 2,046 |
Net property and equipment | 13,580 | 12,573 | 13,353 |
Total Assets | 30,499 | 27,005 | 28,207 |
Operating Segments [Member] | Canada Operations | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 4,977 | 4,771 | 20,689 |
Operating Income | 214 | 236 | 939 |
Depreciation and amortization | 31 | 32 | 135 |
Additions to property and equipment | 94 | 75 | 268 |
Net property and equipment | 1,914 | 1,836 | 1,900 |
Total Assets | 4,673 | 4,138 | 4,303 |
Operating Segments [Member] | Other International Operations | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 4,542 | 4,225 | 18,601 |
Operating Income | 175 | 182 | 754 |
Depreciation and amortization | 52 | 51 | 224 |
Additions to property and equipment | 112 | 265 | 655 |
Net property and equipment | 4,385 | 4,273 | 4,428 |
Total Assets | $ 8,642 | $ 8,235 | $ 8,320 |
Segment Reporting Segment Repor
Segment Reporting Segment Reporting Information by Item Category (Details) - USD ($) $ in Millions | 3 Months Ended | |
Nov. 25, 2018 | Nov. 26, 2017 | |
Disaggregation of Revenue [Line Items] | ||
Total Revenue | $ 35,069 | $ 31,809 |
Food and Sundries [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 13,641 | |
Hardlines [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 5,840 | |
Fresh Food [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 4,293 | |
Softlines [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 4,123 | |
Ancillary | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | 6,414 | |
Net sales | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenue | $ 34,311 | $ 31,117 |