Costco Wholesale Corporation Reports Second Quarter and Year-to-Date Operating Results for Fiscal Year 2016 and February Sales Results

ISSAQUAH, WA--(Marketwired - Mar 2, 2016) - Costco Wholesale Corporation ("Costco" or the "Company") (NASDAQ: COST) today announced its operating results for the second quarter (twelve weeks) and first half (24 weeks) of fiscal 2016, ended February 14, 2016.

Net sales for the quarter increased three percent, to $27.57 billion from $26.87 billion last year. Net sales for the first half increased two percent, to $54.19 billion from $53.16 billion last year.

Comparable sales for the twelve-week and twenty-four-week periods were as follows:

		12 Weeks		24 Weeks
U.S.		3%		3%
Canada		-7%		-8%
Other International		-3%		-4%
Total Company		1%		0%

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

		12 Weeks		24 Weeks
U.S.		4%		5%
Canada		10%		10%
Other International		6%		6%
Total Company		5%		6%

Net income for the quarter was $546 million, or $1.24 per diluted share, compared to $598 million, or $1.35 per diluted share, last year. Net income for the first half was $1,026 million, or $2.32 per diluted share, compared to $1,094 million, or $2.47 per diluted share, last year.

Net income for the quarter last year was positively impacted by a $57 million ($0.13 per diluted share) tax benefit in connection with a special cash dividend received by the Company 401(k) plan participants, and was negatively impacted by a $14 million ($0.03 per diluted share) tax charge relating to an ongoing income tax matter.

For the four-week reporting month of February, ended February 28, 2016, the Company reported net sales of $8.28 billion, an increase of one percent from $8.18 billion during the similar four-week period last year. For the twenty-six week period ended February 28, 2016, net sales were $58.25 billion, an increase of two percent from $57.19 billion during the similar period last year.

Comparable sales for the four-week and twenty-six-week periods ended February 28, 2016 were as follows:

		4 Weeks		26 Weeks
U.S.		2%		2%
Canada		-2%		-8%
Other International		-8%		-5%
Total Company		0%		0%

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

		4 Weeks		26 Weeks
U.S.		4%		5%
Canada		10%		10%
Other International		0%		6%
Total Company		4%		5%

Costco currently operates 698 warehouses, including 488 in the United States and Puerto Rico, 90 in Canada, 36 in Mexico, 27 in the United Kingdom, 24 in Japan, 12 in Korea, 11 in Taiwan, eight in Australia and two in Spain. Costco also operates electronic commerce web sites in the U.S., Canada, the United Kingdom, Mexico, Korea and Taiwan.

A conference call to discuss these fiscal 2016 second quarter operating results and February sales results is scheduled for 8:00 a.m. (PT) on March 3, 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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in millions, except per share data)
(unaudited)
				12 Weeks Ended								24 Weeks Ended
				February 14, 2016				February 15, 2015				February 14, 2016				February 15, 2015
REVENUE
	Net sales			$	27,567			$	26,872			$	54,194			$	53,156
	Membership fees				603				582				1,196				1,164
		Total revenue			28,170				27,454				55,390				54,320
OPERATING EXPENSES
	Merchandise costs				24,469				23,897				48,090				47,282
	Selling, general and administrative				2,835				2,671				5,641				5,367
	Preopening expenses				10				9				36				24
		Operating income			856				877				1,623				1,647
OTHER INCOME (EXPENSE)
	Interest expense				(31	)			(27	)			(64	)			(53	)
	Interest income and other, net				16				20				44				55
INCOME BEFORE INCOME TAXES					841				870				1,603				1,649
	Provision for income taxes				286				263				561				537
	Net income including noncontrolling interests				555				607				1,042				1,112
	Net income attributable to noncontrolling interests				(9	)			(9	)			(16	)			(18	)
NET INCOME ATTRIBUTABLE TO COSTCO				$	546			$	598			$	1,026			$	1,094
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
	Basic			$	1.24			$	1.36			$	2.34			$	2.49
	Diluted			$	1.24			$	1.35			$	2.32			$	2.47
	Shares used in calculation: (000's)
		Basic			439,648				440,384				438,990				439,567
		Diluted			441,559				442,896				441,457				442,522
Cash dividends declared per common share				$	0.40			$	5.355			$	0.80			$	5.710

COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in millions, except par value and share data)
(unaudited)
Subject to Reclassifications
				February 14, 2016				August 30,  2015
ASSETS
CURRENT ASSETS
	Cash and cash equivalents			$	3,633			$	4,801
	Short-term investments				1,222				1,618
	Receivables, net				1,453				1,224
	Merchandise inventories				8,908				8,908
	Other current assets				313				228
		Total current assets			15,529				16,779
PROPERTY AND EQUIPMENT
	Land				5,140				4,961
	Buildings and improvements				13,212				12,618
	Equipment and fixtures				5,623				5,274
	Construction in progress				727				811
					24,702				23,664
	Less accumulated depreciation and amortization				(8,637	)			(8,263	)
		Net property and equipment			16,065				15,401
OTHER ASSETS					794				837
		TOTAL ASSETS		$	32,388			$	33,017
LIABILITIES AND EQUITY
CURRENT LIABILITIES
	Accounts payable			$	8,222			$	9,011
	Current portion of long-term debt				89				1,283
	Accrued salaries and benefits				2,619				2,468
	Accrued member rewards				846				813
	Deferred membership fees				1,377				1,269
	Other current liabilities				2,280				1,695
		Total current liabilities			15,433				16,539
LONG-TERM DEBT, excluding current portion					4,886				4,852
OTHER LIABILITIES					835				783
		Total liabilities			21,154				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; 439,256,000 and 437,952,000 shares issued and outstanding				2				2
	Additional paid-in capital				5,341				5,218
	Accumulated other comprehensive loss				(1,344	)			(1,121	)
	Retained earnings				7,001				6,518
		Total Costco stockholders' equity			11,000				10,617
	Noncontrolling interests				234				226
		Total equity			11,234				10,843
		TOTAL LIABILITIES AND EQUITY		$	32,388			$	33,017