Costco Wholesale Corporation (“Costco” or the “Company”) (Nasdaq: COST) today announced its operating results for the third quarter (twelve weeks) and the first thirty-six weeks of fiscal 2019, ended May 12, 2019.

Net sales for the quarter increased 7.4 percent, to $33.96 billion, from $31.62 billion last year. Net sales for the first thirty-six weeks increased 8.3 percent, to $102.90 billion, from $95.02 billion last year.

Comparable sales for the third quarter and year-to-date periods ended May 12, 2019, were as follows:

               
  12 Weeks   12 Weeks   36 Weeks   36 Weeks
      Adjusted*       Adjusted*
U.S. 7.0%   5.5%   8.5%   6.9%
Canada 1.3%   5.1%   1.1%   5.5%
Other International 1.7%   6.9%   2.1%   5.8%
               
Total Company 5.5%   5.6%   6.6%   6.5%
               
E-commerce 22.0%   19.5%   24.7%   23.9%
               

*Excluding the impacts from changes in gasoline prices, foreign exchange, and a previously disclosed accounting change concerning revenue recognition (ASC 606).

Net income for the quarter was $906 million, or $2.05 per diluted share, compared to $750 million, or $1.70 per diluted share, last year. Net income for the thirty-six weeks was $2.56 billion, or $5.79 per diluted share, compared to $2.09 billion, or $4.74 per diluted share, last year.  This year’s third quarter benefitted from a non-recurring tax item of $73 million, or 16 cents per diluted share.

Costco currently operates 773 warehouses, including 536 in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 28 in the United Kingdom, 26 in Japan, 16 in Korea, 13 in Taiwan, 11 in Australia, two in Spain, and one each in Iceland and France. Costco also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea, and Taiwan.

A conference call to discuss these results is scheduled for 2:00 p.m. (PT) today, May 30, 2019, and is available via a webcast on www.costco.com (click on Investor Relations and “Play Webcast”).

Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For these purposes, forward-looking statements are statements that address activities, events, conditions or developments that the Company expects or anticipates may occur in the future. In some cases forward-looking statements can be identified because they contain words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “likely,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or similar expressions and the negatives of those terms. Such forward-looking statements involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated by such statements. These risks and uncertainties include, but are not limited to, domestic and international economic conditions, including exchange rates, the effects of competition and regulation, uncertainties in the financial markets, consumer and small business spending patterns and debt levels, breaches of security or privacy of member or business information, conditions affecting the acquisition, development, ownership or use of real estate, capital spending, actions of vendors, rising costs associated with employees (generally including health care costs), energy and certain commodities, geopolitical conditions (including tariffs), the ability to remediate material weaknesses in internal control, and other risks identified from time to time in the Company’s public statements and reports filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the date that they are made, and the Company does not undertake to update them, except as required by law.

CONTACTS: Costco Wholesale Corporation Richard Galanti, 425/313-8203 Bob Nelson, 425/313-8255 David Sherwood, 425/313-8239 Josh Dahmen, 425/313-8254

COSTCO WHOLESALE CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF INCOME (dollars in millions, except per share data)(unaudited)

       
  12 Weeks Ended   36 Weeks Ended
  May 12, 2019   May 13, 2018   May 12, 2019   May 13, 2018
REVENUE              
Net Sales $ 33,964     $ 31,624     $ 102,903     $ 95,020  
Membership fees 776     737     2,302     2,145  
Total revenue 34,740     32,361     105,205     97,165  
OPERATING EXPENSES              
Merchandise costs 30,233     28,131     91,576     84,481  
Selling, general and administrative 3,371     3,155     10,310     9,613  
Preopening expenses 14     8     45     37  
Operating income 1,122     1,067     3,274     3,034  
OTHER INCOME (EXPENSE)              
Interest expense (35 )   (37 )   (105 )   (111 )
Interest income and other, net 36     41     104     70  
INCOME BEFORE INCOME TAXES 1,123     1,071     3,273     2,993  
Provision for income taxes 207     309     679     867  
Net income including noncontrolling interests 916     762     2,594     2,126  
Net income attributable to noncontrolling interests (10 )   (12 )   (32 )   (35 )
NET INCOME ATTRIBUTABLE TO COSTCO $ 906     $ 750     $ 2,562     $ 2,091  
               
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:              
Basic $ 2.06     $ 1.71     $ 5.83     $ 4.77  
Diluted $ 2.05     $ 1.70     $ 5.79     $ 4.74  
               
Shares used in calculation (000’s):              
Basic 439,859     438,740     439,767     438,576  
Diluted 442,642     441,715     442,565     441,383  
               

COSTCO WHOLESALE CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS (amounts in millions, except par value and share data)(unaudited)

   Subject to Reclassifications

           
      May 12, 2019   September 2, 2018
ASSETS      
CURRENT ASSETS      
Cash and cash equivalents $ 7,013     $ 6,055  
Short-term investments 1,154     1,204  
Receivables, net 1,704     1,669  
Merchandise inventories 11,304     11,040  
Other current assets 1,110     321  
Total current assets 22,285     20,289  
PROPERTY AND EQUIPMENT      
Land 6,310     6,193  
Buildings and improvements 16,644     16,107  
Equipment and fixtures 7,858     7,274  
Construction in progress 1,412     1,140  
  32,224     30,714  
Less accumulated depreciation and amortization (11,749 )   (11,033 )
Net property and equipment 20,475     19,681  
OTHER ASSETS 992     860  
TOTAL ASSETS $ 43,752     $ 40,830  
LIABILITIES AND EQUITY      
CURRENT LIABILITIES      
Accounts payable $ 11,331     $ 11,237  
Accrued salaries and benefits 2,888     2,994  
Accrued member rewards 1,160     1,057  
Deferred membership fees 1,761     1,624  
Current portion of long-term debt 1,699     90  
Other current liabilities 3,993     2,924  
Total current liabilities 22,832     19,926  
LONG-TERM DEBT, excluding current portion 4,799     6,487  
OTHER LIABILITIES 1,301     1,314  
Total liabilities 28,932     27,727  
COMMITMENTS AND CONTINGENCIES      
EQUITY      
Preferred stock $0.01 par value; 100,000,000 shares authorized; no shares   issued and outstanding      
Common stock $0.01 par value; 900,000,000 shares authorized;   439,811,000 and 438,189,000 shares issued and outstanding 4     4  
Additional paid-in capital 6,307     6,107  
Accumulated other comprehensive loss (1,321 )   (1,199 )
Retained earnings 9,496     7,887  
Total Costco stockholders’ equity 14,486     12,799  
Noncontrolling interests 334     304  
Total equity 14,820     13,103  
TOTAL LIABILITIES AND EQUITY $ 43,752     $ 40,830  
               
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