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Costco Wholesale Corporation Reports Fourth Quarter and Fiscal Year 2014 Operating Results and September Sales Results

ISSAQUAH, WA -- (Marketwired) -- 10/08/14 -- Costco Wholesale Corporation ("Costco" or the "Company") (NASDAQ: COST) today announced its operating results for the 16-week fourth quarter and the 52-week fiscal year ended August 31, 2014, and its September sales results for the five weeks ended October 5, 2014.

Net sales for the fourth quarter were $34.75 billion, an increase of nine percent from $31.77 billion in fiscal 2013. Net sales for the fiscal year were $110.21 billion, an increase of seven percent from $102.87 billion last year.

Comparable sales were as follows:

16 Weeks 52 Weeks
U.S.
6%

5%
International 6% 3%
Total Company 6% 4%

Comparable sales for these periods, excluding negative impacts from gasoline price deflation and foreign exchange, were as follows:

16 Weeks 52 Weeks
U.S.
6%

5%
International 8% 7%
Total Company 7% 6%

Net income for the fourth quarter was $697 million, or $1.58 per diluted share, compared to $617 million, or $1.40 per diluted share, last year. Net income for the fiscal year was $2.06 billion, or $4.65 per diluted share, compared to $2.04 billion, or $4.63 per diluted share, in fiscal year 2013. Net income last year was positively impacted by a $62 million ($.14 per diluted share) tax benefit in connection with the portion of the special cash dividend paid in December 2012 to the Company 401(k) plan participants.

For the five-week reporting month of September, ended October 5, 2014, the Company reported net sales of $10.57 billion, an increase of seven percent from $9.86 billion during the similar five-week period last year.

Comparable sales for the five-week period ended October 5, 2014, were as follows:

5 Weeks
U.S.
5%
International 2%
Total Company 4%

Comparable sales for the five-week period, excluding negative impacts from gasoline price deflation and foreign exchange, were as follows:

5 Weeks
U.S.
6%
International 6%
Total Company 6%

Costco currently operates 664 warehouses, including 469 in the United States and Puerto Rico, 88 in Canada, 33 in Mexico, 26 in the United Kingdom, 20 in Japan, 11 in Korea, 10 in Taiwan, six in Australia and one in Spain. The Company plans to open up to an additional eight new warehouses (including one relocation) before the end of calendar year 2014. Costco also operates electronic commerce web sites in the U.S., Canada, the United Kingdom and Mexico.

A conference call to discuss these fiscal 2014 fourth quarter and year-end operating results and September sales is scheduled for 8:00 a.m. (PT) today, October 8, 2014, and is available via a webcast on www.costco.com (click on Investor Relations and "Play Webcast").

Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For these purposes, forward-looking statements are statements that address activities, events, conditions or developments that the Company expects or anticipates may occur in the future. Such forward-looking statements involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated by such statements. These risks and uncertainties include, but are not limited to, domestic and international economic conditions, including exchange rates, the effects of competition and regulation, uncertainties in the financial markets, consumer and small business spending patterns and debt levels, breaches of security or privacy of member or business information, conditions affecting the acquisition, development, ownership or use of real estate, amounts expected to be spent on expansion plans, actions of vendors, rising costs associated with employees (including health care costs), energy, and certain commodities, geopolitical conditions and other risks identified from time to time in the Company's public statements and reports filed with the Securities and Exchange Commission.

COSTCO WHOLESALE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share data)
(unaudited)
16 Weeks Ended 16 Weeks Ended 52 Weeks Ended 52 Weeks Ended
August 31, 2014 September 1, 2013 August 31, 2014 September 1, 2013
REVENUE
Net sales $ 34,755 $ 31,771 $ 110,212 $ 102,870
Membership fees 768 716 2,428 2,286
Total revenue 35,523 32,487 112,640 105,156
OPERATING EXPENSES
Merchandise costs 31,037 28,418 98,458 91,948
Selling, general and administrative 3,380 3,098 10,899 10,104
Preopening expenses 15 17 63 51
Operating income 1,091 954 3,220 3,053
OTHER INCOME (EXPENSE)
Interest expense (35 ) (36 ) (113 ) (99 )
Interest income and other, net 30 36 90 97
INCOME BEFORE INCOME TAXES 1,086 954 3,197 3,051
Provision for income taxes 381 332 1,109 990
Net income including noncontrolling interests 705 622 2,088 2,061
Net income attributable to noncontrolling interests (8 ) (5 ) (30 ) (22 )
NET INCOME ATTRIBUTABLE TO COSTCO $ 697 $ 617 $ 2,058 $ 2,039
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
Basic $ 1.59 $ 1.41 $ 4.69 $ 4.68
Diluted $ 1.58 $ 1.40 $ 4.65 $ 4.63
Shares used in calculation (000's)
Basic 437,875 436,752 438,693 435,741
Diluted 441,887 441,907 442,485 440,512
Cash dividends declared per common share $ 0.355 $ 0.31 $ 1.33 $ 8.17
COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
(unaudited)
Subject to Reclassifications
August 31, 2014 September 1, 2013
ASSETS
Cash and cash equivalents $ 5,738 $ 4,644
Short-term investments 1,577 1,480
Receivables, net 1,148 1,201
Merchandise inventories 8,456 7,894
Deferred income taxes and other current assets 669 621
Total current assets 17,588 15,840
Property and equipment, net 14,830 13,881
Other assets 606 562
TOTAL ASSETS $ 33,024 $ 30,283
LIABILITIES AND EQUITY
Accounts payable $ 8,491 $ 7,872
Accrued salaries and benefits 2,231 2,037
Deferred membership fees 1,254 1,167
Other current liabilities 2,436 2,181
Total current liabilities 14,412 13,257
Long-term debt, excluding current portion 5,093 4,998
Deferred income taxes and other liabilities 1,004 1,016
Total liabilities 20,509 19,271
Total Costco stockholders' equity 12,303 10,833
Noncontrolling interests 212 179
Total equity 12,515 11,012
TOTAL LIABILITIES AND EQUITY $ 33,024 $ 30,283

CONTACTS:
Costco Wholesale Corporation
Richard Galanti
425/313-8203

Bob Nelson
425/313-8255

Jeff Elliott
425/313-8264

Source: Costco