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Costco Wholesale Corporation Reports Fourth Quarter and Fiscal Year 2016 Operating Results

ISSAQUAH, WA -- (Marketwired) -- 09/29/16 -- 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 28, 2016.

Net sales for the fourth quarter were $35.73 billion, an increase of two percent from $34.99 billion in fiscal 2015. Net sales for the fiscal year were $116.07 billion, an increase of two percent from $113.67 billion last year.

Comparable sales were as follows:

16 Weeks 52 Weeks
U.S.
-1
%
1
%
Canada 2 % -3 %
Other International -2 % -3 %
Total Company 0 % 0 %

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

16 Weeks 52 Weeks
U.S.
2
%
3
%
Canada 5 % 8 %
Other International 1 % 4 %
Total Company 3 % 4 %

Net income for the fourth quarter was $779 million, or $1.77 per diluted share, compared to $767 million, or $1.73 per diluted share, last year.

Net income for the fiscal year was $2.35 billion, or $5.33 per diluted share, compared to $2.38 billion, or $5.37 per diluted share, last year. Net income last year was positively impacted by a $57 million ($.13 per diluted share) tax benefit in connection with a second-quarter special cash dividend.

Costco ended its 2016 fiscal year and currently operates 715 warehouses, including 501 in the United States and Puerto Rico, 91 in Canada, 36 in Mexico, 28 in the United Kingdom, 25 in Japan, 12 in Korea, 12 in Taiwan, eight in Australia and two in Spain. The Company plans to open up to an additional nine new warehouses (including one relocation) before the end of calendar year 2016. Costco also operates e-commerce web sites in the U.S., Canada, the United Kingdom, Mexico, Korea and Taiwan.

A conference call to discuss these fiscal 2016 fourth quarter and year-end operating results is scheduled for 2:00 p.m. (PT) today, September 29, 2016, and is available via a webcast on www.costco.com (click on Investor Relations and "Play Webcast").

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

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 28, 2016 August 30, 2015 August 28, 2016 August 30, 2015
REVENUE
Net sales $ 35,728 $ 34,993 $ 116,073 $ 113,666
Membership fees 832 785 2,646 2,533
Total revenue 36,560 35,778 118,719 116,199
OPERATING EXPENSES
Merchandise costs 31,649 31,096 102,901 101,065
Selling, general and administrative 3,696 3,499 12,068 11,445
Preopening expenses 24 27 78 65
Operating income 1,191 1,156 3,672 3,624
OTHER INCOME (EXPENSE)
Interest expense (39 ) (40 ) (133 ) (124 )
Interest income and other, net 29 40 80 104
INCOME BEFORE INCOME TAXES 1,181 1,156 3,619 3,604
Provision for income taxes 396 378 1,243 1,195
Net income including noncontrolling interests 785 778 2,376 2,409
Net income attributable to noncontrolling interests (6 ) (11 ) (26 ) (32 )
NET INCOME ATTRIBUTABLE TO COSTCO $ 779 $ 767 $ 2,350 $ 2,377
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
Basic $ 1.78 $ 1.75 $ 5.36 $ 5.41
Diluted $ 1.77 $ 1.73 $ 5.33 $ 5.37
Shares used in calculation: (000's)
Basic 437,809 438,835 438,585 439,455
Diluted 440,868 442,404 441,263 442,716
Cash dividends declared per common share $ 0.45 $ 0.40 $ 1.70 $ 6.51
COSTCO WHOLESALE CORPORATION
CONSOLIDATED BALANCE SHEETS
(amounts in millions, except par value and share data)
(unaudited)
Subject to Reclassifications
August 28,
2016
August 30,
2015
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,379 $ 4,801
Short-term investments 1,350 1,618
Receivables, net 1,252 1,224
Merchandise inventories 8,969 8,908
Other current assets 268 228
Total current assets 15,218 16,779
PROPERTY AND EQUIPMENT
Land 5,395 4,961
Buildings and improvements 13,994 12,618
Equipment and fixtures 6,077 5,274
Construction in progress 701 811
26,167 23,664
Less accumulated depreciation and amortization (9,124 ) (8,263 )
Net property and equipment 17,043 15,401
OTHER ASSETS 902 837
TOTAL ASSETS $ 33,163 $ 33,017
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable $ 7,612 $ 9,011
Current portion of long-term debt 1,100 1,283
Accrued salaries and benefits 2,629 2,468
Accrued member rewards 869 813
Deferred membership fees 1,362 1,269
Other current liabilities 2,003 1,695
Total current liabilities 15,575 16,539
LONG-TERM DEBT, excluding current portion 4,061 4,852
OTHER LIABILITIES 1,195 783
Total liabilities 20,831 22,174
COMMITMENTS AND CONTINGENCIES
EQUITY
Preferred stock $.005 par value; 100,000,000 shares authorized; no shares issued and outstanding 0 0
Common stock $.005 par value; 900,000,000 shares authorized; 437,524,000 and 437,952,000 shares issued and outstanding 2 2
Additional paid-in capital 5,490 5,218
Accumulated other comprehensive loss (1,099 ) (1,121 )
Retained earnings 7,686 6,518
Total Costco stockholders' equity 12,079 10,617
Noncontrolling interests 253 226
Total equity 12,332 10,843
TOTAL LIABILITIES AND EQUITY $ 33,163 $ 33,017

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

Bob Nelson
425/313-8255

Jeff Elliott
425/313-8264

David Sherwood
425/313-8239

Source: Costco