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1、Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 FORM 10-QQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF1934For the quarterly period ended February 18,2024orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHA

2、NGE ACT OF1934Commission file number 0-20355Costco Wholesale Corporation(Exact name of registrant as specified in its charter)Washington 91-1223280(State or other jurisdiction ofincorporation or organization)(I.R.S.Employer Identification No.)999 Lake Drive,Issaquah,WA 98027(Address of principal exe

3、cutive offices)(Zip Code)(Registrants telephone number,including area code):(425)313-8100Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading symbol(s)Name of each exchange on which registeredCommon Stock,$.005 Par ValueCOSTThe Nasdaq Global Select MarketIndicate by c

4、heck mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject tosuch filing requirements

5、 for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was

6、 required tosubmit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reportingcompany,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reportin

7、g company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition

8、period for complying withany new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No The number of shares outstanding of the issuers commo

9、n stock as of March 6,2024 was 443,504,036.1Table of ContentsCOSTCO WHOLESALE CORPORATIONINDEX TO FORM 10-Q PagePART IFINANCIAL INFORMATIONItem 1.Financial Statements3Condensed Consolidated Statements of Income3Condensed Consolidated Statements of Comprehensive Income4Condensed Consolidated Balance

10、Sheets5Condensed Consolidated Statements of Equity6Condensed Consolidated Statements of Cash Flows8Notes to Condensed Consolidated Financial Statements9Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations18Item 3.Quantitative and Qualitative Disclosures About M

11、arket Risk26Item 4.Controls and Procedures27PART IIOTHER INFORMATIONItem 1.Legal Proceedings27Item 1A.Risk Factors27Item 2.Unregistered Sales of Equity Securities,Use of Proceeds,and Issuer Purchases of Equity Securities27Item 3.Defaults Upon Senior Securities28Item 4.Mine Safety Disclosures28Item 5

12、.Other Information28Item 6.Exhibits28Signatures292Table of ContentsPART IFINANCIAL INFORMATIONItem 1Financial StatementsCOSTCO WHOLESALE CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF INCOME(amounts in millions,except per share data)(unaudited)12 Weeks Ended24 Weeks EndedFebruary 18,2024February 12

13、,2023February 18,2024February 12,2023REVENUENet sales$57,331$54,239$114,048$107,676 Membership fees1,111 1,027 2,193 2,027 Total revenue58,442 55,266 116,241 109,703 OPERATING EXPENSESMerchandise costs51,140 48,423 101,597 96,192 Selling,general and administrative5,240 4,940 10,598 9,857 Operating i

14、ncome2,062 1,903 4,046 3,654 OTHER INCOME(EXPENSE)Interest expense(41)(34)(79)(68)Interest income and other,net216 114 376 167 INCOME BEFORE INCOME TAXES2,237 1,983 4,343 3,753 Provision for income taxes494 517 1,011 923 NET INCOME$1,743$1,466$3,332$2,830 NET INCOME PER COMMON SHARE:Basic$3.93$3.30$

15、7.51$6.37 Diluted$3.92$3.30$7.49$6.37 Shares used in calculation(000s):Basic443,892 443,877 443,859 443,857 Diluted444,754 444,475 444,579 444,503 The accompanying notes are an integral part of these condensed consolidated financial statements.3Table of ContentsCOSTCO WHOLESALE CORPORATIONCONDENSED

16、CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(amounts in millions)(unaudited)12 Weeks Ended24 Weeks Ended February 18,2024February 12,2023February 18,2024February 12,2023NET INCOME$1,743$1,466$3,332$2,830 Foreign-currency translation adjustment and other,net1 253(37)157 COMPREHENSIVE INCOME$1,744$

17、1,719$3,295$2,987 The accompanying notes are an integral part of these condensed consolidated financial statements.4Table of ContentsCOSTCO WHOLESALE CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(amounts in millions,except par value and share data)(unaudited)February 18,2024September 3,2023ASSETS

18、CURRENT ASSETSCash and cash equivalents$9,095$13,700 Short-term investments1,226 1,534 Receivables,net2,779 2,285 Merchandise inventories17,075 16,651 Other current assets1,971 1,709 Total current assets32,146 35,879 OTHER ASSETSProperty and equipment,net27,601 26,684 Operating lease right-of-use as

19、sets2,740 2,713 Other long-term assets3,836 3,718 TOTAL ASSETS$66,323$68,994 LIABILITIES AND EQUITYCURRENT LIABILITIESAccounts payable$17,494$17,483 Accrued salaries and benefits4,801 4,278 Accrued member rewards2,268 2,150 Deferred membership fees2,541 2,337 Current portion of long-term debt1,080 1

20、,081 Other current liabilities6,504 6,254 Total current liabilities34,688 33,583 OTHER LIABILITIESLong-term debt,excluding current portion5,865 5,377 Long-term operating lease liabilities2,488 2,426 Other long-term liabilities2,522 2,550 TOTAL LIABILITIES45,563 43,936 COMMITMENTS AND CONTINGENCIESEQ

21、UITYPreferred stock$0.005 par value;100,000,000 shares authorized;no shares issued andoutstanding Common stock$0.005 par value;900,000,000 shares authorized;443,549,000 and442,793,000 shares issued and outstanding2 2 Additional paid-in capital7,620 7,340 Accumulated other comprehensive loss(1,842)(1

22、,805)Retained earnings14,980 19,521 TOTAL EQUITY20,760 25,058 TOTAL LIABILITIES AND EQUITY$66,323$68,994 The accompanying notes are an integral part of these condensed consolidated financial statements.5Table of ContentsCOSTCO WHOLESALE CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF EQUITY(amounts

23、in millions)(unaudited)12 Weeks Ended February 18,2024 Common StockAdditionalPaid-inCapitalAccumulatedOtherComprehensiveIncome(Loss)RetainedEarningsTotal CostcoStockholdersEquityNoncontrollingInterestsTotalEquity Shares(000s)AmountBALANCE ATNOVEMBER 26,2023443,787$2$7,489$(1,843)$20,499$26,147$26,14

24、7 Net income 1,743 1,743 1,743 Foreign-currencytranslation adjustmentand other,net 1 1 1 Stock-basedcompensation 136 136 136 Release of vestedrestricted stock units(RSUs),including taxeffects2 Repurchases ofcommon stock(240)(5)(155)(160)(160)Cash dividend declaredand other (7,107)(7,107)(7,107)BALAN

25、CE ATFEBRUARY 18,2024443,549$2$7,620$(1,842)$14,980$20,760$20,760 12 Weeks Ended February 12,2023 Common StockAdditionalPaid-inCapitalAccumulatedOtherComprehensiveIncome(Loss)RetainedEarningsTotal CostcoStockholdersEquityNoncontrollingInterestsTotalEquity Shares(000s)AmountBALANCE ATNOVEMBER 20,2022

26、443,841$2$6,982$(1,925)$16,412$21,471$5$21,476 Net income 1,466 1,466 1,466 Foreign-currencytranslation adjustmentand other,net 253 253 253 Stock-basedcompensation 148 148 148 Release of vestedRSUs,including taxeffects3 (1)(1)(1)Repurchases ofcommon stock(294)(6)(138)(144)(144)Cash dividend declared

27、 (399)(399)(399)BALANCE ATFEBRUARY 12,2023443,550$2$7,123$(1,672)$17,341$22,794$5$22,799 The accompanying notes are an integral part of these condensed consolidated financial statements.6Table of ContentsCOSTCO WHOLESALE CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF EQUITY(amounts in millions)(una

28、udited)24 Weeks Ended February 18,2024 Common StockAdditionalPaid-inCapitalAccumulatedOtherComprehensiveIncome(Loss)RetainedEarningsTotal CostcoStockholdersEquityNoncontrollingInterestsTotalEquity Shares(000s)AmountBALANCE ATSEPTEMBER 3,2023442,793$2$7,340$(1,805)$19,521$25,058$25,058 Net income 3,3

29、32 3,332 3,332 Foreign-currencytranslation adjustmentand other,net (37)(37)(37)Stock-basedcompensation 582 582 582 Release of vestedrestricted stock units(RSUs),including taxeffects1,284 (292)(292)(292)Repurchases ofcommon stock(528)(10)(312)(322)(322)Cash dividendsdeclared and other (7,561)(7,561)(

30、7,561)BALANCE ATFEBRUARY 18,2024443,549$2$7,620$(1,842)$14,980$20,760$20,760 24 Weeks Ended February 12,2023 Common StockAdditionalPaid-inCapitalAccumulatedOtherComprehensiveIncome(Loss)RetainedEarningsTotal CostcoStockholdersEquityNoncontrollingInterestsTotalEquity Shares(000s)AmountBALANCE AT AUGU

31、ST28,2022442,664$2$6,884$(1,829)$15,585$20,642$5$20,647 Net income 2,830 2,830 2,830 Foreign-currencytranslation adjustmentand other,net 157 157 157 Stock-basedcompensation 551 551 551 Release of vestedRSUs,including taxeffects1,465 (302)(302)(302)Repurchases ofcommon stock(579)(10)(275)(285)(285)Ca

32、sh dividendsdeclared (799)(799)(799)BALANCE ATFEBRUARY 12,2023443,550$2$7,123$(1,672)$17,341$22,794$5$22,799 The accompanying notes are an integral part of these condensed consolidated financial statements.7Table of ContentsCOSTCO WHOLESALE CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(

33、amounts in millions)(unaudited)24 Weeks EndedFebruary 18,2024February 12,2023CASH FLOWS FROM OPERATING ACTIVITIESNet income$3,332$2,830 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization1,015 917 Non-cash lease expense148 216 Stock-based co

34、mpensation580 549 Impairment of assets and other non-cash operating activities,net(7)145 Changes in operating assets and liabilities:Merchandise inventories(425)1,849 Accounts payable4(1,417)Other operating assets and liabilities,net735 713 Net cash provided by operating activities5,382 5,802 CASH F

35、LOWS FROM INVESTING ACTIVITIESPurchases of short-term investments(719)(396)Maturities of short-term investments1,029 512 Additions to property and equipment(2,071)(1,947)Other investing activities,net9(34)Net cash used in investing activities(1,752)(1,865)CASH FLOWS FROM FINANCING ACTIVITIESRepaymen

36、ts of short-term borrowings(409)(520)Proceeds from short-term borrowings383 479 Proceeds from issuance of long-term debt498 Tax withholdings on stock-based awards(292)(302)Repurchases of common stock(322)(284)Cash dividend payments(8,012)(400)Financing lease payments(94)(158)Other financing activiti

37、es,net(2)(30)Net cash used in financing activities(8,250)(1,215)EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS15 45 Net increase in cash and cash equivalents(4,605)2,767 CASH AND CASH EQUIVALENTS BEGINNING OF YEAR13,700 10,203 CASH AND CASH EQUIVALENTS END OF PERIOD$9,095$12,970 SUPPLE

38、MENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the first half of the year for:Interest$62$62 Income taxes,net$1,197$636 SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:Cash dividend declared,but not yet paid$399 Financing lease assets obtained in exchange for new or modified leases$97$47

39、 Operating lease assets obtained in exchange for new or modified leases$145$131 Capital expenditures included in liabilities$144$11 The accompanying notes are an integral part of these condensed consolidated financial statements.8Table of ContentsCOSTCO WHOLESALE CORPORATIONNOTES TO CONDENSED CONSOL

40、IDATED FINANCIAL STATEMENTS(amounts in millions,except share,per share,and warehouse count data)(unaudited)Note 1Summary of Significant Accounting PoliciesDescription of BusinessCostco Wholesale Corporation(Costco or the Company),a Washington corporation,and its subsidiaries operate membership wareh

41、ousesbased on the concept that offering members low prices on a limited selection of nationally-branded and private-label products in a wide range ofmerchandise categories will produce high sales volumes and rapid inventory turnover.At February 18,2024,Costco operated 874 warehousesworldwide:602 in

42、the United States(U.S.)located in 47 states,Washington,D.C.,and Puerto Rico,108 in Canada,40 in Mexico,33 inJapan,29 in the United Kingdom(U.K.),18 in Korea,15 in Australia,14 in Taiwan,six in China,four in Spain,two in France,and one eachin Iceland,New Zealand,and Sweden.The Company operates e-comm

43、erce websites in the U.S.,Canada,the U.K.,Mexico,Korea,Taiwan,Japan,and Australia.Basis of PresentationThe condensed consolidated financial statements include the accounts of Costco and its wholly-owned subsidiaries.All material inter-companytransactions among the Company and its consolidated subsid

44、iaries have been eliminated in consolidation.These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q for interimfinancial reporting pursuant to the rules and regulations of the Securities and Exchange Commission(SEC).While these

45、 statements reflect allnormal recurring adjustments that are,in the opinion of management,necessary for fair presentation of the results of the interim period,they donot include all of the information and footnotes required by U.S.generally accepted accounting principles(U.S.GAAP)for complete financ

46、ialstatements.Therefore,the interim condensed consolidated financial statements should be read in conjunction with the consolidated financialstatements and notes included in the Companys Annual Report on Form 10-K for the fiscal year ended September 3,2023.Fiscal Year EndThe Company operates on a 52

47、/53 week fiscal year basis,with the fiscal year ending on the Sunday closest to August 31.Fiscal 2024 is a 52-week year ending on September 1,2024.References to the second quarter of 2024 and 2023 relate to the 12-week fiscal quartersended February 18,2024,and February 12,2023.References to the firs

48、t half of 2024 and 2023 relate to the 24 weeks ended February 18,2024and February 12,2023.Use of EstimatesThe preparation of financial statements in conformity with U.S.GAAP requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and the disclo

49、sure of contingent assets and liabilities at the date of the financial statements and thereported amounts of revenues and expenses during the reporting period.These estimates and assumptions take into account historical andforward-looking factors that the Company believes are reasonable.Actual resul

50、ts could differ from those estimates and assumptions.ReclassificationReclassifications were made to the condensed consolidated statement of cash flows for the first half of fiscal 2023 to conform with current yearpresentation.9Table of ContentsRecent Accounting Pronouncements Not Yet AdoptedIn Novem

51、ber 2023,the Financial Accounting Standards Board(FASB)issued Accounting Standards Update(ASU)2023-07,which is intended toimprove reportable segment disclosure requirements,primarily through additional disclosures about significant segment expenses.The standardis effective for fiscal years beginning

52、 after December 15,2023,and interim periods within fiscal years beginning after December 15,2024,withearly adoption permitted.The amendments should be applied retrospectively to all prior periods presented in the financial statements.TheCompany is evaluating the new standard.In December 2023,the FAS

53、B issued ASU 2023-09,which focuses on income tax disclosures by requiring public business entities,on an annualbasis,to disclose specific categories in the rate reconciliation,provide information for reconciling items that meet a quantitative threshold,andcertain information about income taxes paid.

54、The standard is effective for annual periods beginning after December 15,2024,with early adoptionpermitted.The amendments should be applied on a prospective basis.Retrospective application is permitted.The Company is evaluating thenew standard.Note 2InvestmentsThe Companys investments were as follow

55、s:February 18,2024:CostBasisUnrealizedLosses,NetRecordedBasisAvailable-for-sale:Government and agency securities$678$(13)$665 Held-to-maturity:Certificates of deposit561 561 Total short-term investments$1,239$(13)$1,226 September 3,2023:CostBasisUnrealizedLosses,NetRecordedBasisAvailable-for-sale:Go

56、vernment and agency securities$650$(17)$633 Held-to-maturity:Certificates of deposit901 901 Total short-term investments$1,551$(17)$1,534 Gross unrecognized holding gains and losses on available-for-sale securities were not material for the periods ended February 18,2024,orSeptember 3,2023.At those

57、dates,there were no available-for-sale securities in a material continuous unrealized-loss position.There were nosales of available-for-sale securities during the first half of 2024 or 2023.The maturities of available-for-sale and held-to-maturity securities at February 18,2024,are as follows:Availa

58、ble-For-SaleHeld-To-Maturity Cost BasisFair ValueDue in one year or less$136$135$561 Due after one year through five years370 365 Due after five years172 165 Total$678$665$561 10Table of ContentsNote 3Fair Value MeasurementAssets and Liabilities Measured at Fair Value on a Recurring BasisThe table b

59、elow presents information regarding the Companys financial assets and financial liabilities that are measured at fair value on arecurring basis and indicates the level within the hierarchy reflecting the valuation techniques utilized.Level 2February 18,2024September 3,2023Investment in government an

60、d agency securities$669$633 Forward foreign-exchange contracts,in asset position12 18 Forward foreign-exchange contracts,in(liability)position(4)(7)Total$677$644 _(1)At February 18,2024,$4 cash and cash equivalents and$665 short-term investments are included in the accompanying condensed consolidate

61、d 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 February 18,2024,and September 3,2023,the Company did not hold any Level 1 or 3 financial assets or liabilit

62、ies that were measured at fairvalue on a recurring basis.There were no transfers between levels during the first half of 2024 or 2023.Assets and Liabilities Measured at Fair Value on a Nonrecurring BasisAssets and liabilities recognized and disclosed at fair value on a nonrecurring basis include ite

63、ms such as financial assets measured atamortized cost and long-lived nonfinancial assets.These assets are measured at fair value if determined to be impaired.There were no materialfair value adjustments to these items during the first half of 2024.During the first quarter of 2023,the Company recogni

64、zed in merchandise costsa charge of$93,primarily related to the impairment of certain leased assets associated with charter shipping activities,now discontinued.Note 4DebtThe carrying value of the Companys long-term debt consisted of the following:February 18,2024September 3,20232.750%Senior Notes d

65、ue May 2024$1,000$1,000 3.000%Senior Notes due May 20271,000 1,000 1.375%Senior Notes due June 20271,250 1,250 1.600%Senior Notes due April 20301,750 1,750 1.750%Senior Notes due April 20321,000 1,000 Other long-term debt969 484 Total long-term debt6,969 6,484 Less unamortized debt discounts and iss

66、uance costs24 26 Less current portion1,080 1,081 Long-term debt,excluding current portion$5,865$5,377 _(1)Net of unamortized debt discounts and issuance costs.(1)(2)(2)(1)11Table of ContentsThe fair value of the Senior Notes is estimated using Level 2 inputs.Other long-term debt consists of Guarante

67、ed Senior Notes issued by theCompanys Japan subsidiary,valued using Level 3 inputs.In November 2023,the Companys Japan subsidiary issued four Guaranteed SeniorNotes,totaling approximately$500,at fixed interest rates ranging from 1.400%to 2.120%.Interest is payable semi-annually,and maturity datesran

68、ge from November 7,2033,to November 7,2043.The fair value of the Companys long-term debt,including the current portion,wasapproximately$6,306 and$5,738 at February 18,2024,and September 3,2023.Note 5EquityDividendsA quarterly cash dividend of$1.02 per share was declared on January 18,2024,and paid o

69、n February 16,2024.The dividend was$0.90 pershare in the second quarter of 2023.On January 12,2024,an aggregate payment of approximately$6,655 was made in connection with aspecial cash dividend of$15.00 per share,declared on December 13,2023.Stock Repurchase ProgramsThe Companys stock repurchase pro

70、gram is conducted under a$4,000 authorization by the Board of Directors,which expires in January 2027.At February 18,2024,the remaining amount available under the program was$3,241.The following table summarizes the repurchase activity:Shares Repurchased(000s)Average Price per ShareTotal CostSecond

71、quarter of 2024240$664.02$160 First half of 2024528$609.51$322 Second quarter of 2023294$488.30$144 First half of 2023579$492.06$285 These amounts may differ from the accompanying condensed consolidated statements of cash flows due to changes in unsettled stockrepurchases at the end of each quarter.

72、Purchases are made from time to time,as conditions warrant,in the open market or in block purchasesand pursuant to plans under SEC Rule 10b5-1.Note 6Stock-Based CompensationThe 2019 Incentive Plan authorized the issuance of up to a maximum of 15,885,000 RSUs.To preserve the value of outstanding awar

73、ds,thenumber of RSUs that may be granted under this Plan is subject to adjustments from changes in capital structure.The Company issues newshares of common stock upon vesting of RSUs.Shares for vested RSUs are generally delivered to participants annually,net of shares withheldfor taxes.As required b

74、y the 2019 Incentive Plan,in conjunction with the 2024 special cash dividend,the number of shares subject to outstanding RSUswas increased on the dividend record date to preserve their value.They were adjusted by multiplying the number of outstanding shares by afactor of 1.018,representing the ratio

75、 of the Nasdaq closing price of$674.62 on December 26,2023,which was the last trading day immediatelyprior to the ex-dividend date,to the Nasdaq opening price of$662.70 on the ex-dividend date,December 27,2023.The outstanding RSUsincreased by approximately 52,000.The adjustment did not result in add

76、itional stock-based compensation expense,as the fair value of theawards did not change.As further required by the 2019 Incentive Plan,the maximum number of shares issuable under the plan wasproportionally adjusted,which resulted in an additional 128,000 RSU shares available to be granted.12Table of

77、ContentsSummary of Restricted Stock Unit ActivityAt February 18,2024,7,249,000 shares were available to be granted as RSUs,and the following awards,adjusted for the effects of the specialdividend,were outstanding:2,749,000 time-based RSUs,which vest upon continued employment over specified periods a

78、nd accelerate upon achievement of a long-service term;70,000 performance-based RSUs granted to executive officers of the Company,for which the performance targets have been met.Theawards vest upon continued employment over specified periods of time and upon achievement of a long-service term;and91,0

79、00 performance-based RSUs granted to executive officers of the Company,subject to achievement of performance targets for 2024,as determined by the Compensation Committee of the Board of Directors after the end of the fiscal year.These awards are included inthe table below.The Company recognized comp

80、ensation expense for these awards in the second quarter of 2024,as it is currentlydeemed probable that the targets will be achieved.The following table summarizes RSU transactions during the first half of 2024:Number ofUnits(in 000s)Weighted-AverageGrant Date Fair ValueOutstanding at September 3,202

81、33,045$405.63 Granted1,663 545.98 Vested and delivered(1,813)430.54 Forfeited(37)454.02 Special cash dividend52 N/AOutstanding at February 18,20242,910$462.35 The remaining unrecognized compensation cost related to RSUs unvested at February 18,2024,was$1,098,and the weighted-average periodover which

82、 this cost will be recognized is 1.8 years.Summary of Stock-Based CompensationThe following table summarizes stock-based compensation expense and the related tax benefits:12 Weeks Ended24 Weeks EndedFebruary 18,2024February 12,2023February 18,2024February 12,2023Stock-based compensation expense$136$

83、147$580$549 Less recognized income tax benefits25 24 120 113 Stock-based compensation expense,net$111$123$460$436 13Table of ContentsNote 7Net Income per Common and Common Equivalent ShareThe following table shows the amounts used in computing net income per share and the weighted average number of

84、shares of basic and ofpotentially dilutive common shares outstanding(shares in 000s):12 Weeks Ended24 Weeks EndedFebruary 18,2024February 12,2023February 18,2024February 12,2023Net income$1,743$1,466$3,332$2,830 Weighted average basic shares443,892 443,877 443,859 443,857 RSUs862 598 720 646 Weighte

85、d average diluted shares444,754 444,475 444,579 444,503 Anti-dilutive RSUs 6 Anti-dilutive shares are excluded from the calculation of diluted shares and earnings per diluted share because their impact would increaseearnings per diluted shares.Basic earnings per share is calculated by dividing net i

86、ncome by the weighted average number of shares of common stock outstanding duringthe period.Diluted earnings per share is calculated based on the dilutive effect of RSUs using the treasury stock method.Note 8Commitments and ContingenciesLegal ProceedingsThe Company is involved in many claims,proceed

87、ings and litigations arising from its business and property ownership.In accordance withapplicable accounting guidance,the Company establishes an accrual for legal proceedings if and when those matters present loss contingenciesthat are both probable and reasonably estimable.There may be losses in e

88、xcess of amounts accrued.The Company monitors those matters fordevelopments that would affect the likelihood of a loss(taking into account where applicable indemnification arrangements concerning suppliersand insurers)and the accrued amount,if any,thereof,and adjusts the amount as appropriate.The Co

89、mpany has recorded immaterial accrualswith respect to certain matters described below,in addition to other immaterial accruals for matters not described below.If the loss contingencyat issue is not both probable and reasonably estimable,the Company does not establish an accrual,but monitors for deve

90、lopments that makethe contingency both probable and reasonably estimable.In each case,there is a reasonable possibility that a loss may be incurred,including aloss in excess of the applicable accrual.For matters where no accrual has been recorded,the possible loss or range of loss(including any loss

91、in excess of the accrual)cannot,in the Companys view,be reasonably estimated because,among other things:the remedies or penaltiessought are indeterminate or unspecified;the legal and/or factual theories are not well developed;and/or the matters involve complex or novellegal theories or a large numbe

92、r of parties.In November 2023,a former employee filed a class action against the Company alleging claims under California law for failure to pay minimumwage,failure to pay overtime,failure to provide meal and rest breaks,failure to provide accurate wage statements,failure to reimburseexpenses,failur

93、e to pay wages when due,and failure to pay sick pay.Martin Reyes v.Costco Wholesale Corporation,Sacramento CountySuperior Court.(Case No.23cv011351).An amended complaint has been filed,as to which the Company has yet to respond.In October 2023,current and former employees filed suit against the Comp

94、any asserting collective and class claims on behalf of all“JuniorManagers”under the Fair Labor Standards Act and New York Labor Law,for failure to pay overtime compensation and for inaccurate wagestatements under New York law.14Table of ContentsLock et al.v.Costco Wholesale Corp.(Case No.2:23-cv-079

95、04;E.D.N.Y.).On February 1,2024,the Company served a motion to dismiss theinaccurate wage-statement claim.In October 2023,a current employee filed suit against the Company asserting collective and class claims on behalf of all“supervisors”employedin New Jersey,under the Fair Labor Standards Act and

96、New Jersey Wage and Hour Law for failure to pay all hours worked.Shah v.CostcoWholesale Corp.(Case No.2:23-cv-21286;D.N.J.).On December 26,2023,the Company filed its answer,denying all claims.In July 2021,a former temporary staffing employee filed a class action against the Company and a staffing co

97、mpany,alleging violations of theCalifornia Labor Code regarding payment of wages,meal and rest periods,wage statements,the timeliness of wages and final wages,and forunfair business practices.Dimas v.Costco Wholesale Corp.(Case No.STK-CV-UOE-;San Joaquin Superior Court).TheCompany has mo

98、ved to compel arbitration of the plaintiffs individual claims and to dismiss the class action complaint.On September 7,2021,the same plaintiff filed a separate representative action under the California Private Attorneys General Act,asserting the same Labor Codeviolations and seeking civil penalties

99、 and attorneys fees.The case has been stayed pending arbitration of the plaintiffs individual claims.In May 2022,an employee filed an action under the California Private Attorneys General Act against the Company,alleging claims under theCalifornia Labor Code regarding the payment of wages,meal and r

100、est periods,the timeliness of wages and final wages,wage statements,accurate records and business expenses.Gonzalez v.Costco Wholesale Corp.(Case No.22AHCV00255;Los Angeles Superior Court).TheCompany filed an answer denying the allegations.On October 31,2023,a settlement was reached for an immateria

101、l amount.A hearing onpreliminary approval of the settlement is scheduled for April 23,2024.Beginning in December 2017,the United States Judicial Panel on Multidistrict Litigation consolidated numerous cases concerning the impacts ofopioid abuses filed against various defendants by counties,cities,ho

102、spitals,Native American tribes,third-party payors,and others.In re NationalPrescription Opiate Litigation(MDL No.2804)(N.D.Ohio).Included are cases filed against the Company by counties and cities in Michigan,New Jersey,Oregon,Virginia and South Carolina,a third-party payor in Ohio,and a hospital in

103、 Texas,class actions filed on behalf of infants bornwith opioid-related medical conditions in 40 states,and class actions and individual actions filed on behalf of individuals seeking to recoveralleged increased insurance costs associated with opioid abuse in 43 states and American Samoa.Claims agai

104、nst the Company filed in federalcourt outside the MDL have been asserted by certain counties and cities in Florida and Georgia;claims filed by certain cities and counties inNew York are pending in state court.Claims against the Company in state courts in New Jersey,Oklahoma,Utah,and Arizona have bee

105、ndismissed.The Company is defending all of the pending matters.Members of the Board of Directors,six corporate officers and the Company were defendants in a shareholder derivative action filed in June 2022related to chicken welfare and alleged breaches of fiduciary duties.Smith,et ano.v.Vachris,et a

106、l.,Superior Court of the State of Washington,County of King,No,22-2-08937-7SEA.The complaint sought from the individual defendants damages,injunctive relief,costs,and attorneysfees.On March 28,2023,the court granted the defendants motion to dismiss the action.The plaintiffs subsequently made a deman

107、d that theBoard of Directors take various actions,including among other things,pursuing claims against directors and officers of the type asserted in thelitigation.A demand review committee of the Board has been appointed to make a recommendation to the Board as to the demand.In February 2023,Go Gre

108、en Norcal,LLC filed an arbitration demand against the Company.The demand alleged a breach of a supply agreementand sought unspecified damages and cancellation of a loan from the Company.In March 2023,the Company filed its answer,denying anybreach by the Company,along with counterclaims against Go Gr

109、een and an affiliate for breach of contract,negligent misrepresentation,and anaccounting.In August 2023 the plaintiff asserted that its damages exceed$70 million.An award to the plaintiffs of an immaterial amount waspaid in February 2024.15Table of ContentsBetween September 25,2023,and October 31,20

110、23,five class action suits were filed against the Company alleging various privacy lawviolations stemming from pixel trackers on C.Birdwell v.Costco Wholesale Corp.,Case No.T23-1405,Contra Costa County SuperiorCourt;and Scott v.Costco Wholesale Corp.,Case No.2:23-cv-08808(C.D.Cal.),now consolidated

111、with R.S.v.Costco Wholesale Corp.,CaseNo.2:23-cv-01628(W.D.Wash.);Groves,et ano.v.Costco Wholesale Corp.,Case No.2:23-cv-01662(W.D.Wash.)and Castillo v.CostcoWholesale Corp.,under Case No.2:34-cv-01548(W.D.Wash.).The Castillo plaintiffs filed a consolidated complaint on January 26,2024,whichseeks da

112、mages,equitable relief and attorneys fees under various statutes,including the Washington Consumer Protection Act,WashingtonPrivacy Act,Washington Uniform Health Care Information Act,Electronic Communications Privacy Act,California Invasion of Privacy Act,andCalifornia Confidentiality of Medical Inf

113、ormation Act.The consolidated complaint also alleges breach of implied contract,invasion of privacy,conversion and unjust enrichment.The Company filed a motion to dismiss and demurrer in Birdwell and has not responded to the Castilloconsolidated complaint.On January 2,2024,the Company received a rel

114、ated civil investigative demand from the Washington Attorney Generalsoffice.On January 3,2024,the Company received a related pre-litigation letter from the Los Angeles Office of the County Counsel.In October 2021 the Company received a notice that the Quebec Health Insurance Board had commenced an i

115、nquiry to determine whether theCompany had given or received improper payments for drugs that are covered by the provinces prescription drug program from drugwholesalers,generic drug manufacturers or the independent pharmacist who owns and operates the pharmacies located in the CompanysQuebec locati

116、ons.The inquiry covers a period beginning January 1,2017.In January 2023 the Company received a Civil Investigative Demand from the U.S.Attorneys Office,Western District of Washington,requestingdocuments.The government is conducting a False Claims Act investigation concerning whether the Company pre

117、sented or caused to bepresented to the federal government for payment false claims relating to prescription medications.The Company does not believe that any pending claim,proceeding or litigation,either alone or in the aggregate,will have a material adverseeffect on the Companys financial position,

118、results of operations or cash flows;it is possible that an unfavorable outcome of some or all of thematters,however unlikely,could result in a charge that might be material to the results of an individual fiscal quarter or year.16Table of ContentsNote 9Segment ReportingThe Company is principally eng

119、aged in the operation of membership warehouses through wholly owned subsidiaries in the U.S.,Canada,Mexico,Japan,the U.K.,Korea,Australia,Taiwan,China,Spain,France,Iceland,New Zealand,and Sweden.Reportable segments are largelybased on managements organization of the operating segments for operationa

120、l decisions and assessments of financial performance,whichconsider geographic locations.The material accounting policies of the segments are as described in the notes to the consolidated financialstatements included in the Companys Annual Report filed on Form 10-K for the fiscal year ended September

121、 3,2023,and Note 1 above.Inter-segment net sales and expenses have been eliminated in calculating total revenue and operating income.The following table provides information for the Companys reportable segments:United StatesCanadaOtherInternationalTotal12 Weeks Ended February 18,2024Total revenue$41

122、,952$7,874$8,616$58,442 Operating income1,294 390 378 2,062 12 Weeks Ended February 12,2023Total revenue$40,145$7,299$7,822$55,266 Operating income1,295 284 324 1,903 24 Weeks Ended February 18,2024Total revenue$83,785$15,775$16,681$116,241 Operating income2,652 715 679 4,046 24 Weeks Ended February

123、 12,2023Total revenue$80,290$14,655$14,758$109,703 Operating income2,531 572 551 3,654 53 Weeks Ended September 3,2023Total revenue$176,630$33,056$32,604$242,290 Operating income5,392 1,448 1,274 8,114 Disaggregated RevenueThe following table summarizes net sales by merchandise category;sales from e

124、-commerce websites and business centers have been allocatedto the applicable merchandise categories:12 Weeks Ended24 Weeks EndedFebruary 18,2024February 12,2023February 18,2024February 12,2023Foods and Sundries$23,675$21,926$46,699$43,374 Non-Foods15,017 14,741 29,783 28,773 Fresh Foods7,996 7,376 1

125、5,324 14,093 Warehouse Ancillary and Other Businesses10,643 10,196 22,242 21,436 Total net sales$57,331$54,239$114,048$107,676 17Table of ContentsItem 2Managements Discussion and Analysis of Financial Condition and Results of Operations(amounts in millions,except per share,share,percentages and ware

126、house count data)FORWARD-LOOKING STATEMENTSCertain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities LitigationReform Act of 1995.For these purposes,forward-looking statements are statements that address activities,events,conditi

127、ons or developmentsthat the Company expects or anticipates may occur in the future and may relate to such matters as net sales growth,changes in comparablesales,cannibalization of existing locations by new openings,price or fee changes,earnings performance,earnings per share,stock-basedcompensation

128、expense,warehouse openings and closures,capital spending,the effect of adopting certain accounting standards,future financialreporting,financing,margins,return on invested capital,strategic direction,expense controls,membership renewal rates,shopping frequency,litigation,and the demand for our produ

129、cts and services.In some cases,forward-looking statements can be identified because they containwords such as“anticipate,”“believe,”“continue,”“could,”“estimate,”“expect,”“intend,”“likely,”“may,”“might,”“plan,”“potential,”“predict,”“project,”“seek,”“should,”“target,”“will,”“would,”or similar express

130、ions and the negatives of those terms.Such forward-looking statementsinvolve 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 internationa

131、l economic conditions,including exchange rates,inflationor deflation,the effects of competition and regulation,uncertainties in the financial markets,consumer and small business spending patterns anddebt levels,breaches of security or privacy of member or business information,conditions affecting th

132、e acquisition,development,ownership oruse of real estate,capital spending,actions of vendors,rising costs associated with employees(generally including health-care costs),energyand certain commodities,geopolitical conditions(including tariffs and the Ukraine conflict),the ability to maintain effecti

133、ve internal control overfinancial reporting,regulatory and other impacts related to climate change,public-health related factors,and other risks identified from time totime in the Companys public statements and reports filed with the Securities and Exchange Commission.Forward-looking statements spea

134、konly as of the date they are made,and the Company does not undertake to update these statements,except as required by law.OVERVIEWManagements Discussion and Analysis of Financial Condition and Results of Operations(MD&A)is intended to promote understanding of theresults of operations and financial

135、condition.MD&A is provided as a supplement to,and should be read in conjunction with,our condensedconsolidated financial statements and the accompanying Notes to Financial Statements(Part I,Item 1 of this Form 10-Q),as well as ourconsolidated financial statements,the accompanying Notes to Financial

136、Statements,and the related Managements Discussion and Analysis ofFinancial Condition and Results of Operations in our fiscal year 2023 Form 10-K,filed with the United States Securities and ExchangeCommission on October 11,2023.We operate membership warehouses and e-commerce websites based on the con

137、cept that offering members low prices on a limited selection ofnationally-branded and private-label products in a wide range of categories will produce high sales volumes and rapid inventory turnover.Whencombined with the operating efficiencies achieved by volume purchasing,efficient distribution an

138、d reduced handling of merchandise in no-frills,self-service warehouse facilities,these volumes and turnover enable us to operate profitably at significantly lower gross margins(net sales lessmerchandise costs)than most other retailers.We often sell inventory before we are required to pay for it,even

139、 while taking advantage of earlypayment discounts.We believe that the most important driver of our profitability is increasing net sales,particularly comparable sales.Net sales includes our coremerchandise categories(foods and sundries,non-foods,and fresh foods),warehouse ancillary(gasoline,pharmacy

140、,optical,food court,hearingaids,and tire installation)and other businesses(e-commerce,business centers,travel,and other).Comparable sales is18Table of Contentsdefined as net sales from warehouses open for more than one year,including remodels,relocations and expansions,and sales related to e-commerc

141、e websites operating for more than one year.The measure is intended as supplemental information and is not a substitute for net salespresented in accordance with U.S.GAAP.Comparable sales growth is achieved through increasing shopping frequency from new and existingmembers and the amount they spend

142、on each visit(average ticket).Sales comparisons can also be particularly influenced by certain factors thatare beyond our control:fluctuations in currency exchange rates(with respect to our international operations);and inflation or deflation andchanges in the cost of gasoline and associated competi

143、tive conditions.The higher our comparable sales exclusive of these items,the more wecan leverage our selling general and administrative(SG&A)expenses,reducing them as a percentage of sales and enhancing profitability.Generating comparable sales growth is foremost a question of making available the r

144、ight merchandise at the right prices,a skill that we believewe have repeatedly demonstrated over the long-term.Another substantial factor in net sales growth is the health of the economies in which wedo business,including the effects of inflation or deflation,especially the United States.Net sales g

145、rowth and gross margins are also impacted byour competition,which is vigorous and widespread,across a wide range of global,national and regional wholesalers and retailers,includingthose with e-commerce operations.While we cannot control or reliably predict general economic health or changes in compe

146、tition,we believethat we have been successful historically in adapting our business to these changes,such as through adjustments to our pricing andmerchandise mix,including increasing the penetration of our private-label items,and through online offerings.Our philosophy is to provide our members wit

147、h quality goods and services at competitive prices.We do not focus in the short-term onmaximizing prices charged,but instead seek to maintain what we believe is a perception among our members of our“pricing authority”consistently providing the most competitive values.Our investments in merchandise p

148、ricing may include reducing prices on merchandise to drivesales or meet competition and holding prices steady despite cost increases instead of passing the increases on to our members,all negativelyimpacting gross margin and gross margin as a percentage of net sales(gross margin percentage).We belie

149、ve our gasoline business enhances traffic in our warehouses;it generally has a lower gross margin percentage and lower SG&Aexpense relative to our non-gasoline businesses.A higher penetration of gasoline sales will generally lower our gross margin percentage.Generally,rising gasoline prices benefit

150、net sales growth which,given the higher sales base,negatively impacts our gross margin percentagebut decreases our SG&A expenses as a percentage of net sales.A decline in gasoline prices has the inverse effect.Government actions in various countries relating to tariffs,particularly China and the Uni

151、ted States,have affected the costs of some of ourmerchandise.The degree of our exposure is dependent on(among other things)the type of goods,rates imposed,and timing of the tariffs.Higher tariffs could adversely impact our results.We also achieve net sales growth by opening new warehouses.As our war

152、ehouse base grows,available and desirable sites become moredifficult to secure,and square footage growth becomes a comparatively less substantial component of growth.Negative aspects of such growthinclude lower initial operating profitability relative to existing warehouses and cannibalization of sa

153、les at existing warehouses when openingsoccur in existing markets.Our rate of square footage growth is generally higher in foreign markets,due to the smaller base in those markets,andwe expect that to continue.Our e-commerce business,domestically and internationally,generally has a lower gross-margi

154、n percentage than ourwarehouse operations.The membership format is an integral part of our business and has a significant effect on our profitability.This format is designed to reinforcemember loyalty and provide continuing fee revenue.The extent to which we achieve growth in our membership base,inc

155、rease the penetration ofExecutive memberships,and sustain high renewal rates materially influences our profitability.Our paid-membership growth rate may beadversely impacted when warehouse openings occur in existing markets as compared to new markets.19Table of ContentsOur financial performance depe

156、nds heavily on controlling costs.While we believe that we have achieved successes in this area,some significantcosts are partially outside our control,particularly health care and utility expenses.With respect to the compensation of our employees,ourphilosophy is not to seek to minimize their wages

157、and benefits.Rather,we believe that achieving our longer-term objectives of reducingemployee turnover and enhancing employee satisfaction requires maintaining compensation levels that are better than the industry average formuch of our workforce.This may cause us,for example,to absorb costs that oth

158、er employers might seek to pass through to their workforces.Because our business operates on very low margins,modest changes in various items in the consolidated statements of income,particularlymerchandise costs and SG&A expenses,can have substantial impacts on net income.Our operating model is gen

159、erally the same across our U.S.,Canadian,and Other International operating segments(see Note 9 to theconsolidated financial statements included in Part I,Item 1,of this Report).Certain operations in the Other International segment have relativelyhigher rates of square footage growth,lower wage and b

160、enefit costs as a percentage of sales,less or no direct membership warehousecompetition,or lack e-commerce or business delivery.In discussions of our consolidated operating results,we refer to the impact of changes in foreign currencies relative to the U.S.dollar,which aredifferences between the for

161、eign-exchange rates we use to convert the financial results of our international operations from local currencies intoU.S.dollars.This impact of foreign-exchange rate changes is calculated based on the difference between the current and prior periodsexchange rates.The impact of changes in gasoline p

162、rices on net sales is calculated based on the difference between the current and priorperiods average price per gallon sold.Results expressed excluding the impacts of foreign exchange and gasoline prices are intended assupplemental information and are not a substitute for net sales presented in acco

163、rdance with U.S.GAAP and should be reviewed in conjunctionwith results reported in accordance with U.S.GAAP.Our fiscal year ends on the Sunday closest to August 31.References to the second quarter of 2024 and 2023 relate to the 12-week fiscalquarters ended February 18,2024,and February 12,2023.Refer

164、ences to the first half of 2024 and 2023 relate to the 24 weeks endedFebruary 18,2024,and February 12,2023.Certain percentages presented are calculated using actual results prior to rounding.Highlights for the second quarter of 2024 versus 2023 include:Net sales increased 6%to$57,331,driven by an in

165、crease in comparable sales and sales at 26 net new warehouses opened since theend of the second quarter of 2023;Membership fee revenue increased 8%to$1,111,driven by new member sign-ups,upgrades to Executive Membership,and a higherrenewal rate;Gross margin percentage increased eight basis points,dri

166、ven primarily by our warehouse ancillary and other businesses and coremerchandise categories,partially offset by an increase in 2%rewards;SG&A expenses as a percentage of net sales increased three basis points,primarily due to increased costs in warehouse operations andother businesses,including the

167、 impact of wage increases in March and September 2023,partially offset by central operating costs;A quarterly cash dividend of$1.02 per share was declared on January 18,2024,and paid on February 16,2024.On January 12,2024,an aggregate payment of approximately$6,655 was made in connection with a spec

168、ial cash dividend of$15.00 per share,declared onDecember 13,2023;Our effective tax rate was 22.1%and was positively impacted by a$94 benefit,or$0.21 per diluted share,related to the special cashdividend;andNet income was$1,743,$3.92 per diluted share,compared to$1,466,$3.30 per diluted share in 2023

169、.20Table of ContentsRESULTS OF OPERATIONSNet Sales12 Weeks Ended24 Weeks EndedFebruary 18,2024February 12,2023February 18,2024February 12,2023Net Sales$57,331$54,239$114,048$107,676 Changes in net sales:U.S.4%7%4%9%Canada8%4%8%4%Other International10%7%13%4%Total Company6%6%6%7%Changes in comparable

170、 sales:U.S.4%6%3%8%Canada9%4%8%3%Other International9%4%10%Total Company6%5%5%6%E-commerce18%(10)%12%(7)%Changes in comparable sales excluding the impact of changesin foreign-currency and gasoline prices:U.S.5%6%4%6%Canada9%10%9%9%Other International8%10%8%9%Total Company6%7%5%7%E-commerce18%(9)%12%

171、(6)%_(1)Comparable sales for the second quarter and first half of 2024 were calculated using comparable retail weeks.Net SalesNet sales increased$3,092 or 6%,and$6,372 or 6%during the second quarter and first half of 2024.The improvement was attributable to anincrease in comparable sales of 6%and 5%

172、in the second quarter and first half of 2024,and sales at the 26 net new warehouses opened sincethe end of the second quarter of 2023.Sales increased$2,645,or 6%and$5,566,or 6%in core merchandise categories during the secondquarter and first half of 2024,due to increases in all categories.Sales in w

173、arehouse ancillary and other businesses increased$447 or 4%,and$806,or 4%during the second quarter and first half of 2024,led by pharmacy.During the second quarter of 2024,lower gasoline prices negatively impacted net sales by$231,43 basis points,compared to 2023,with a 3%decrease in the average pri

174、ce per gallon.Changes in foreign currencies relative to the U.S.dollar positively impacted net sales by approximately$94,17 basis points,compared to the second quarter of 2023,attributable to our Canadian and Other International operations.During the first half of 2024,lower gasoline prices negative

175、ly impacted net sales by$572,53 basis points,compared to 2023,with a 4%decrease in the average price per gallon.Changes in foreign currencies relative to the U.S.dollar positively impacted net sales by approximately$289,27 basis points,compared to the second quarter of 2023,attributable to our Other

176、 International operations,partially offset by our Canadianoperations.(1)(1)21Table of ContentsComparable SalesComparable sales increased 6%and 5%in the second quarter and first half of 2024 and were positively impacted by increased shoppingfrequency and a slightly higher average ticket.Membership Fe

177、es12 Weeks Ended24 Weeks EndedFebruary 18,2024February 12,2023February 18,2024February 12,2023Membership fees$1,111$1,027$2,193$2,027 Membership fees increase8%6%8%6%Total paid members(000s)73,400 68,100 Total cardholders(000s)132,000 123,000 Membership fee revenue increased 8%in both the second qua

178、rter and first half of 2024,driven by new member sign-ups,upgrades to ExecutiveMembership,and a higher renewal rate.At the end of the second quarter of 2024,our renewal rates were 92.9%in the U.S.and Canada and90.5%worldwide.Renewal rates benefited from higher penetration of Executive members.Our re

179、newal rate,which excludes affiliates ofBusiness members,is a trailing calculation that captures renewals during the period seven to eighteen months prior to the reporting date.We account for membership fee revenue on a deferred basis,recognized ratably over the one-year membership period.Gross Margi

180、n12 Weeks Ended24 Weeks EndedFebruary 18,2024February 12,2023February 18,2024February 12,2023Net sales$57,331$54,239$114,048$107,676 Less merchandise costs51,140 48,423 101,597 96,192 Gross margin$6,191$5,816$12,451$11,484 Gross margin percentage10.80%10.72%10.92%10.67%Quarterly ResultsGross margin

181、percentage increased eight basis points.Excluding the impact of gasoline price deflation on net sales,gross margin percentagewas 10.76%,an increase of four basis points.The four basis-point increase was positively impacted by:six basis points due to warehouseancillary and other businesses,primarily

182、e-commerce;three basis points due to a LIFO benefit;and two basis points due to core merchandisecategories.This increase was partially offset by seven basis points due to increased 2%rewards.The gross margin in core merchandise categories,when expressed as a percentage of core merchandise sales(rath

183、er than total net sales),increased 25 basis points.The increase was primarily due to non-foods and foods and sundries,partially offset by fresh foods.This measureeliminates the impact of changes in sales penetration and gross margin from our warehouse ancillary and other businesses.Gross margin perc

184、entage on a segment basis,when expressed as a percentage of the segments own sales and excluding the impact ofchanges in gasoline prices on net sales(segment gross margin percentage),decreased in our U.S.segment due to core merchandisecategories and increased 2%rewards,partially offset by warehouse

185、ancillary and other businesses and a LIFO benefit.Gross margin increasedin our Canadian segment,largely due to core merchandise categories.Gross margin decreased in our Other International segment,primarilydue to increased 2%rewards and warehouse ancillary and other businesses,partially offset by in

186、creases in core merchandise categories.22Table of ContentsYear-to-date ResultsGross margin percentage increased 25 basis points.Excluding the impact of gasoline price deflation on net sales,gross margin percentage was10.86%,an increase of 19 basis points.The 19 basis-point increase was positively im

187、pacted by:15 basis points due to warehouse ancillary andother business,primarily e-commerce;nine basis points due to the absence of a charge related to the discontinuation of our charter shippingactivities that was recorded in the first quarter of 2023;and two basis points due to a LIFO benefit.This

188、 increase was partially offset by five basispoints due to increased 2%rewards and two basis points due to core merchandise categories.The gross margin in core merchandise categories,when expressed as a percentage of core merchandise sales(rather than total net sales),increased 14 basis points.The in

189、crease was primarily due to non-foods,partially offset by fresh foods.Segment gross margin percentage increased in our U.S.and Canadian segments.Our U.S.segment performed similarly to the consolidatedresults above.Our Canadian segment gross margin increased at a greater rate compared to our consolid

190、ated results,primarily due to increasesin core merchandise categories,partially offset by increased 2%rewards.Gross margin percentage was flat in our Other International segment,positively impacted by core merchandise categories,offset by increased 2%rewards.Selling,General and Administrative Expens

191、es12 Weeks Ended24 Weeks EndedFebruary 18,2024February 12,2023February 18,2024February 12,2023SG&A expenses$5,240$4,940$10,598$9,857 SG&A expenses as a percentage of net sales9.14%9.11%9.29%9.15%Quarterly ResultsSG&A expenses as a percentage of net sales increased three basis points.SG&A expenses as

192、 a percentage of net sales excluding the impactof gasoline price deflation was 9.10%,a decrease of one basis point.The comparison to last year was favorably impacted by five basis pointsdue to central operating costs and four basis points due to lower stock compensation expense.Warehouse operations

193、and other businesseswere higher by eight basis points,driven by our U.S.operations,which included the impact of wage increases in March and September 2023.SG&A expenses as a percentage of net sales were lower in our Canadian and Other International operations.Year-to-date ResultsSG&A expenses as a p

194、ercentage of net sales increased 14 basis points.SG&A expenses as a percentage of net sales excluding the impact ofgasoline price deflation was 9.25%,an increase of 10 basis points.The comparison to last year was negatively impacted by 11 basis points inwarehouse operations and other businesses,driv

195、en by our U.S.operations,which included the impact of wage increases in March andSeptember 2023.Preopening costs were also higher by one basis point.SG&A was positively impacted by two basis points due to centraloperating costs.SG&A expenses as a percentage of net sales were lower in our Canadian an

196、d Other International operations.Interest Expense12 Weeks Ended24 Weeks EndedFebruary 18,2024February 12,2023February 18,2024February 12,2023Interest expense$41$34$79$68 Interest expense is primarily related to Senior Notes and financing leases.23Table of ContentsInterest Income and Other,Net12 Week

197、s Ended24 Weeks EndedFebruary 18,2024February 12,2023February 18,2024February 12,2023Interest income$147$105$301$159 Foreign-currency transaction gains(losses),net31 3 34(6)Other,net38 6 41 14 Interest income and other,net$216$114$376$167 The increase in interest income in the second quarter and fir

198、st half of 2024 was due to higher global interest rates and higher average cash andinvestment balances,prior to the payment of the special cash dividend.Foreign-currency transaction gains(losses),net,include revaluation orsettlement of monetary assets and liabilities by our Canadian and Other Intern

199、ational operations and mark-to-market adjustments for forwardforeign-exchange contracts.See Derivatives and Foreign Currency sections in Item 8,Note 1 of our Annual Report on Form 10-K,for the fiscalyear ended September 3,2023.Provision for Income Taxes 12 Weeks Ended24 Weeks Ended February 18,2024F

200、ebruary 12,2023February 18,2024February 12,2023Provision for income taxes$494$517$1,011$923 Effective tax rate22.1%26.1%23.3%24.6%The effective tax rate for the first half of 2024 was favorably impacted by net discrete tax benefits of$139.This included$94 related to theportion of the special cash di

201、vidend payable through our 401(k)plan in the second quarter and$44 of excess tax benefits related to stockcompensation in the first quarter.Excluding discrete net tax benefits,the tax rate was 26.5%.The effective tax rate for the first half of 2023 was impacted by net discrete tax benefits of$57,pri

202、marily due to excess tax benefits related tostock compensation in the first quarter.Excluding discrete net tax benefits,the tax rate was 26.1%.LIQUIDITY AND CAPITAL RESOURCESThe following table summarizes our significant sources and uses of cash and cash equivalents:24 Weeks EndedFebruary 18,2024Feb

203、ruary 12,2023Net cash provided by operating activities$5,382$5,802 Net cash used in investing activities(1,752)(1,865)Net cash used in financing activities(8,250)(1,215)Our primary sources of liquidity are cash flows from operations,cash and cash equivalents,and short-term investments.Cash and cashe

204、quivalents and short-term investments were$10,321 and$15,234 at February 18,2024,and September 3,2023.Of these balances,unsettledcredit and debit card receivables represented approximately$2,069 and$2,282 at February 18,2024,and September 3,2023.Thesereceivables generally settle within four days.Mat

205、erial contractual obligations arising in the normal course of business primarily consist of purchase obligations,long-term debt and relatedinterest payments,leases,and construction and land purchase obligations.24Table of ContentsPurchase obligations consist of contracts primarily related to merchan

206、dise,equipment,and third-party services,the majority of which are due inthe next 12 months.Construction and land purchase obligations consist of contracts primarily related to the development and opening of newand relocated warehouses,the majority of which(other than leases)are due in the next 12 mo

207、nths.Management believes that our cash and investment position and operating cash flows with capacity under existing and available creditagreements will be sufficient to meet our liquidity and capital requirements for the foreseeable future.We believe that our U.S.current andprojected asset position

208、 is sufficient to meet our U.S.liquidity requirements.Cash Flows from Operating ActivitiesNet cash provided by operating activities totaled$5,382 in the first half of 2024,compared to$5,802 in the first half of 2023.Our cash flowprovided by operations is primarily from net sales and membership fees.

209、Cash flow used in operations generally consists of payments tomerchandise suppliers,warehouse operating costs,including payroll and employee benefits,utilities,and credit and debit card processing fees.Cash used in operations also includes payments for income taxes.Changes in our net investment in m

210、erchandise inventories(the differencebetween merchandise inventories and accounts payable)is impacted by several factors,including inventory levels and turnover,the forwarddeployment of inventory to accelerate delivery times,payment terms with suppliers,and early payments to obtain discounts.Cash Fl

211、ows from Investing ActivitiesNet cash used in investing activities totaled$1,752 in the first half of 2024,compared to$1,865 in the first half of 2023,and is primarily related tocapital expenditures.Net cash from investing activities also includes purchases and maturities of short-term investments.C

212、apital Expenditure PlansOur primary requirements for capital are acquiring land,buildings,and equipment for new and remodeled warehouses.Capital is also requiredfor information systems,manufacturing and distribution facilities,initial warehouse operations,and working capital.In the first half of 202

213、4,wespent$2,071 on capital expenditures,and it is our current intention to spend a total of approximately$4,400 to$4,600 during fiscal 2024.Theseexpenditures are expected to be financed with cash from operations,existing cash and cash equivalents,and short-term investments.Weopened 14 new warehouses

214、,including one relocation,in the first half of 2024 and plan to open 16 additional new warehouses,including onerelocation,in the remainder of fiscal 2024.There can be no assurance that current expectations will be realized,and plans are subject to changeupon further review of our capital expenditure

215、 needs and the economic environment.Cash Flows from Financing ActivitiesNet cash used in financing activities totaled$8,250 in the first half of 2024,compared to$1,215 in the first half of 2023.Cash flow used infinancing activities during the first half of 2024 was primarily related to the payment o

216、f dividends,repayments of short-term borrowings,andrepurchases of common stock.In November 2023,the Companys Japan subsidiary issued four Guaranteed Senior Notes totaling approximately$500 at fixed interest rates ranging from 1.400%to 2.120%.DividendsA quarterly cash dividend of$1.02 per share was d

217、eclared on January 18,2024,payable to shareholders of record on February 2,2024,whichwas paid on February 16,2024.On January 12,2024,an aggregate payment of approximately$6,655 was made in connection with a specialcash dividend of$15.00 per share,declared on December 13,2023.25Table of ContentsShare

218、 Repurchase ProgramOn January 19,2023,the Board of Directors authorized a share repurchase program in the amount of$4,000,which expires in January 2027.During the first half of 2024 and 2023,we repurchased 528,000 and 579,000 shares of common stock,at an average price per share of$609.51and$492.06,t

219、otaling approximately$322 and$285.These amounts may differ from the accompanying condensed consolidated statements ofcash flows due to changes in unsettled repurchases at the end of a quarter.Purchases are made from time to time,as conditions warrant,in theopen market or in block purchases,pursuant

220、to plans under SEC Rule 10b5-1.Repurchased shares are retired,in accordance with theWashington Business Corporation Act.The remaining amount available to be purchased under our approved plan was$3,241 at the end of thesecond quarter.Bank Credit Facilities and Commercial Paper ProgramsWe maintain ban

221、k credit facilities for working capital and general corporate purposes.At February 18,2024,we had borrowing capacity underthese facilities of$1,237.Our international operations maintain$748 of this capacity under bank credit facilities,of which$164 is guaranteed bythe Company.Short-term borrowings o

222、utstanding under the bank credit facilities,which are included in other current liabilities on theconsolidated balance sheets,were immaterial at the end of the second quarter of 2024 and at the end of fiscal 2023.The Company has letter of credit facilities,for commercial and standby letters of credi

223、t,totaling$210.The outstanding commitments under thesefacilities at the end of the second quarter of 2024 totaled$184,most of which were standby letters of credit that do not expire or have expirationdates within one year.The bank credit facilities have various expiration dates,most within one year,

224、and we generally intend to renew thesefacilities.The amount of borrowings available at any time under our bank credit facilities is reduced by the amount of standby and commercialletters of credit outstanding.Critical Accounting EstimatesThe preparation of our consolidated financial statements in ac

225、cordance with U.S.GAAP requires that we make estimates and judgments.Webase these on historical experience and on assumptions that we believe to be reasonable.Our critical accounting policies are discussed in PartII,Item 7,“Managements Discussion and Analysis of Financial Condition and Results of Op

226、erations”section of our Annual Report on Form 10-K,for the fiscal year ended September 3,2023.There have been no material changes to the critical accounting estimates previously disclosed inthat Report.Recent Accounting PronouncementsSee discussion of Recent Accounting Pronouncements in Note 1 to th

227、e condensed consolidated financial statements included in Part I,Item 1 ofthis Report.Item 3Quantitative and Qualitative Disclosures about Market RiskOur direct exposure to financial market risk results from fluctuations in foreign-currency exchange rates and interest rates.There have been nomateria

228、l changes to our market risks as disclosed in our Annual Report on Form 10-K,for the fiscal year ended September 3,2023.26Table of ContentsItem 4Controls and ProceduresEvaluation of Disclosure Controls and ProceduresOur disclosure controls and procedures(as defined in Rules 13a-15(e)or 15d-15(e)unde

229、r the Securities Exchange Act of 1934,as amended)are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded,processed,summarized,and reported within the time periods specified in the rules and forms of the Securities and

230、Exchange Commission andto ensure that information required to be disclosed is accumulated and communicated to management,including our principal executive andfinancial officers,to allow timely decisions regarding disclosure.The Chief Executive Officer and the Chief Financial Officer,with assistance

231、fromother members of management,have reviewed the effectiveness of our disclosure controls and procedures as of February 18,2024,and,basedon their evaluation,have concluded the disclosure controls and procedures were effective as of such date.Changes in Internal Control over Financial ReportingThere

232、 have been no changes in our internal control over financial reporting(as defined in Rules 13a-15(f)or 15d-15(f)of the Exchange Act)thatoccurred during the second quarter of fiscal 2024 that have materially affected,or are reasonably likely to materially affect,the Companysinternal control over fina

233、ncial reporting.PART IIOTHER INFORMATIONItem 1Legal ProceedingsSee discussion of Legal Proceedings in Note 8 to the condensed consolidated financial statements included in Part I,Item 1 of this Report.Item 1ARisk FactorsIn addition to the other information set forth in the Quarterly Report on Form 1

234、0-Q,you should carefully consider the factors discussed in Part I,Item 1A,“Risk Factors”in our Annual Report on Form 10-K,for the fiscal year ended September 3,2023.There have been no material changesin our risk factors from those disclosed in our Annual Report on Form 10-K.Item 2Unregistered Sales

235、of Equity Securities,Use of Proceeds,and Issuer Purchases of Equity SecuritiesThe following table sets forth information on our common stock repurchase program activity for the second quarter of 2024(amounts in millions,except share and per share data):PeriodTotal Number ofSharesPurchasedAverage Pri

236、cePaid Per ShareTotal Number of SharesPurchased as Part ofPublicly AnnouncedProgramsMaximum Dollar Value ofShares that May Yet bePurchased Under theProgramsNovember 27,2023 December 24,202389,000$624.76 89,000$3,345 December 25,2023 January 21,202471,000 667.23 71,000 3,297 January 22,2024 February

237、18,202480,000 705.31 80,000 3,241 Total second quarter240,000$664.02 240,000 _(1)Our share repurchase program is conducted under a$4,000 authorization approved by our Board of Directors in January 2023,which expires in January 2027.(1)(1)27Table of ContentsItem 3Defaults Upon Senior SecuritiesNone.I

238、tem 4Mine Safety DisclosuresNot applicable.Item 5Other InformationNone.Item 6ExhibitsThe following exhibits are filed as part of this Quarterly Report on Form 10-Q or are incorporated herein by reference.Incorporated by ReferenceExhibitNumberExhibit DescriptionFiledHerewithFormPeriod EndingFiling Da

239、te3.1Articles of Incorporation as amended of CostcoWholesale Corporation10-K8/28/202210/5/20223.2Bylaws as amended of Costco Wholesale Corporation8-K8/10/202310.1Executive Employment Agreement effective January 1,2024,between Ron Vachris and Costco WholesaleCorporation10-Q11/26/202312/20/202331.1Rul

240、e 13(a)14(a)Certificationsx32.1Section 1350 Certificationsx101.INSInline XBRL Instance Documentx101.SCHInline XBRL Taxonomy Extension Schema Documentx101.CALInline XBRL Taxonomy Extension Calculation LinkbaseDocumentx101.DEFInline XBRL Taxonomy Extension Definition LinkbaseDocumentx101.LABInline XBR

241、L Taxonomy Extension Label LinkbaseDocumentx101.PREInline XBRL Taxonomy Extension Presentation LinkbaseDocumentx104Cover Page Interactive Data File(formatted as inlineXBRL and contained in Exhibit 101)x28Table of ContentsSIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934,t

242、he registrant has duly caused this Report to be signed on its behalf by theundersigned,thereunto duly authorized.COSTCO WHOLESALE CORPORATION(Registrant)March 13,2024By/s/RON M.VACHRISDateRon M.VachrisChief Executive Officer,President and DirectorMarch 13,2024By/s/RICHARD A.GALANTIDateRichard A.Gala

243、ntiExecutive Vice President,Chief Financial Officer and Director29Exhibit 31.1CERTIFICATIONSI,Ron M.Vachris,certify that:1)I have reviewed this Quarterly Report on Form 10-Q of Costco Wholesale Corporation(“the registrant”);2)Based on my knowledge,this report does not contain any untrue statement of

244、 a material fact or omit to state a material fact necessary tomake the statements made,in light of the circumstances under which such statements were made,not misleading with respect to theperiod covered by this report;3)Based on my knowledge,the financial statements,and other financial information

245、included in this report,fairly present in all materialrespects the financial condition,results of operations and cash flows of the registrant as of,and for,the periods presented in this report;4)The registrants other certifying officer(s)and I are responsible for establishing and maintaining disclos

246、ure controls and procedures(asdefined in Exchange Act Rules 13a-15(e)and 15d-15(e)and internal control over financial reporting(as defined in Exchange Act Rules13a-15(f)and 15d-15(f)for the registrant and have:a)Designed such disclosure controls and procedures,or caused such disclosure controls and

247、procedures to be designed underour supervision,to ensure that material information relating to the registrant,including its consolidated subsidiaries,is madeknown to us by others within those entities,particularly during the period in which this report is being prepared;b)Designed such internal cont

248、rol over financial reporting,or caused such internal control over financial reporting to be designedunder our supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally acc

249、epted accounting principles;c)Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures,as of the end of the period covered by this report based onsuch evaluation;and

250、d)Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrantsmost recent fiscal quarter(the registrants fourth fiscal quarter in the case of an annual report)that has materially affected,or isreasonably likely to materially af

251、fect,the registrants internal control over financial reporting;and5)The registrants other certifying officer(s)and I have disclosed,based on our most recent evaluation of internal control over financialreporting,to the registrants auditors and the audit committee of the registrants board of director

252、s(or persons performing the equivalentfunctions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting whichare reasonably likely to adversely affect the registrants ability to record,process,summarize and report financial info

253、rmation;andb)Any fraud,whether or not material,that involves management or other employees who have a significant role in the registrantsinternal control over financial reporting.March 13,2024/s/RON M.VACHRISRon M.VachrisChief Executive Officer,President and DirectorCERTIFICATIONSI,Richard A.Galanti

254、,certify that:1)I have reviewed this Quarterly Report on Form 10-Q of Costco Wholesale Corporation(“the registrant”);2)Based on my knowledge,this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made,in light of the circ

255、umstances under which such statements were made,not misleading with respect to theperiod covered by this report;3)Based on my knowledge,the financial statements,and other financial information included in this report,fairly present in all materialrespects the financial condition,results of operation

256、s and cash flows of the registrant as of,and for,the periods presented in this report;4)The registrants other certifying officer(s)and I are responsible for establishing and maintaining disclosure controls and procedures(asdefined in Exchange Act Rules 13a-15(e)and 15d-15(e)and internal control over

257、 financial reporting(as defined in Exchange Act Rules13a-15(f)and 15d-15(f)for the registrant and have:a)Designed such disclosure controls and procedures,or caused such disclosure controls and procedures to be designed underour supervision,to ensure that material information relating to the registra

258、nt,including its consolidated subsidiaries,is madeknown to us by others within those entities,particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting,or caused such internal control over financial reporting to be designedunder o

259、ur supervision,to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrants disclosure controls and proced

260、ures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures,as of the end of the period covered by this report based onsuch evaluation;andd)Disclosed in this report any change in the registrants internal control over financial reporting that occ

261、urred during the registrantsmost recent fiscal quarter(the registrants fourth fiscal quarter in the case of an annual report)that has materially affected,or isreasonably likely to materially affect,the registrants internal control over financial reporting;and5)The registrants other certifying office

262、r(s)and I have disclosed,based on our most recent evaluation of internal control over financialreporting,to the registrants auditors and the audit committee of the registrants board of directors(or persons performing the equivalentfunctions):a)All significant deficiencies and material weaknesses in

263、the design or operation of internal control over financial reporting whichare reasonably likely to adversely affect the registrants ability to record,process,summarize and report financial information;andb)Any fraud,whether or not material,that involves management or other employees who have a signi

264、ficant role in the registrantsinternal control over financial reporting.March 13,2024/s/RICHARD A.GALANTIRichard A.GalantiExecutive Vice President,Chief Financial Officer and DirectorExhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C.SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY AC

265、T OF 2002In connection with the Quarterly Report of Costco Wholesale Corporation(the Company)on Form 10-Q for the quarter ended February 18,2024,as filed with the Securities and Exchange Commission(the Report),I,Ron M.Vachris,Chief Executive Officer,President and Director ofthe Company,certify,pursu

266、ant to 18 U.S.C.Section 1350,as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,that:(1)The Report fully complies with the requirements of Section 13(a)or 15(d)of the Securities Exchange Act of 1934;and(2)The information contained in the Report fairly presents,in all material respe

267、cts,the financial condition and results of operations of theCompany./s/RON M.VACHRIS Date:March 13,2024Ron M.Vachris Chief Executive Officer,President and Director A signed original of this written statement has been provided to and will be retained by Costco Wholesale Corporation and furnished to t

268、heSecurities and Exchange Commission or its staff upon request.CERTIFICATION PURSUANT TO18 U.S.C.SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Quarterly Report of Costco Wholesale Corporation(the Company)on Form 10-Q for the quarter ended Febr

269、uary 18,2024,as filed with the Securities and Exchange Commission(the Report),I,Richard A.Galanti,Executive Vice President,Chief Financial Officerand Director of the Company,certify,pursuant to 18 U.S.C.Section 1350,as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002,that:(1)The Repo

270、rt fully complies with the requirements of Section 13(a)or 15(d)of the Securities Exchange Act of 1934;and(2)The information contained in the Report fairly presents,in all material respects,the financial condition and results of operations of theCompany./s/RICHARD A.GALANTI Date:March 13,2024Richard A.Galanti Executive Vice President,Chief Financial Officer and Director A signed original of this written statement has been provided to and will be retained by Costco Wholesale Corporation and furnished to theSecurities and Exchange Commission or its staff upon request.