Costco Wholesale (COST) 10-K risk factor changes: FY2021 vs FY2020

These Risk Factors should be carefully reviewed in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations in [Item [removed: 7](#id2c7a27cc45a4341a7bdf88b9739d38b_46)] [added: 7](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_46)] and our consolidated financial statements and related notes in [removed: [Item 8](#id2c7a27cc45a4341a7bdf88b9739d38b_73)] [added: Item 8] of this Report.

Our financial and operational performance is highly dependent on our U.S. and Canadian operations, which comprised [removed: 87%] [added: 86%] and [removed: 83%] [added: 81%] of net sales and operating income in [removed: 2020,] [added: 2021,] respectively.

Within the U.S., we are highly dependent on our California operations, which comprised [removed: 29%] [added: 28%] of U.S. net sales in [removed: 2020.][added: 2021.]

We cannot ensure that new warehouses and new e-commerce websites will be profitable [removed: and, as a result,] [added: and] future profitability could be delayed or otherwise materially adversely affected.

We have made and may continue to make investments and acquisitions to improve the speed, accuracy and efficiency of our supply [removed: chains.][added: chains and delivery channels.]

The extent to which we achieve growth in our membership base, increase the penetration of Executive [removed: members,] [added: membership,] and sustain high renewal rates materially influences our profitability.

Our e-commerce business depends heavily on third-party [added: and in-house] logistics providers and that business is negatively affected when these providers are unable to provide services in a timely fashion.

Failure to identify timely or effectively respond to changing consumer tastes, preferences (including those relating to [removed: sustainability of product sources] [added: environmental, social] and [removed: animal welfare)] [added: governance practices)] and spending patterns could negatively affect our relationship with our members, the demand for our products and services, and our market share.

Availability and performance of our information technology (IT) systems are vital [removed: for our business] to [removed: operate efficiently.][added: our business.]

Failure to [added: successfully] execute [removed: complex] IT [removed: projects,] [added: projects] and have [removed: these] IT systems available to our business [removed: will] [added: would] adversely impact our operations.

IT systems play a crucial role in conducting our [removed: business on a daily basis.][added: business.]

These systems are utilized to process a very high volume of transactions, conduct payment transactions, track and value our inventory and produce reports [removed: which are] critical for making business [removed: decisions on a daily, weekly and periodic basis.][added: decisions.]

Failure or disruption of these [removed: IT] systems could have an adverse impact on our ability to buy products [added: and services] from our suppliers, produce goods in our manufacturing plants, move the products in an efficient manner to our warehouses and sell products to our members.

[removed: The failure of these] projects could adversely impact our business plans and [added: potentially impair our day to day business operations.]

Given the high volume of transactions we process, it is important that we build strong digital resiliency [removed: for our business-critical systems] to prevent disruption from events such as power outages, computer and telecommunications failures, [removed: computer] viruses, internal or external security breaches, errors by employees, and catastrophic events such as fires, [removed: earthquakes] [added: earthquakes,] tornadoes and hurricanes.

We are currently making [removed: significant] [added: substantial] investments in [added: maintaining and] enhancing our digital resiliency and failure or delay in [removed: execution of] these projects could [removed: delay our ability to] be [removed: resilient] [added: costly and harmful] to [removed: disruptive events.][added: our business.]

Failure to deliver [removed: our] IT transformation efforts efficiently and effectively could result in the loss of our competitive position and adversely impact our financial condition and results of operations.

We are required to maintain the privacy and security of personal and business information amidst [removed: evolving] [added: multiplying] threat landscapes and in compliance with [removed: emerging] privacy and data protection regulations globally.

Failure to [removed: meet the requirements] [added: do so] could damage our [added: business, including our] reputation with members, suppliers and employees, cause us to incur substantial additional costs, and become subject to [removed: litigation.][added: litigation and regulatory action.]

Increased [removed: IT] security threats and more sophisticated [removed: computer crime] [added: cyber misconduct] pose a risk to our systems, networks, products and services.

We rely upon IT systems and networks, some of which are managed by third parties, in connection with [removed: a variety] [added: virtually all] of [added: our] business activities.

[removed: The increased use of] [added: Increased] remote work [removed: infrastructure] due to the COVID-19 pandemic has also increased the possible attack surfaces.

[removed: Security threats] [added: Threats] designed to gain unauthorized access to [removed: our] systems, networks and data, [added: both ours and third parties with whom we work,] are increasing in frequency and sophistication.

It is possible that our IT systems and networks, or those managed by third parties such as cloud [removed: providers,] [added: providers or suppliers that otherwise host confidential information,] could have vulnerabilities, which could go unnoticed for a period of time.

While our cybersecurity and compliance [removed: posture seeks] [added: efforts seek] to mitigate such risks, there can be no guarantee that the actions and controls we and our third-party service providers have implemented and are implementing, will be sufficient to protect our systems, information or other property.

The potential impacts of a [removed: future] material cybersecurity attack [removed: includes] [added: include] reputational damage, litigation, government enforcement actions, penalties, disruption to systems, unauthorized release of confidential or otherwise protected information, corruption of data, diminution in the value of our investment in IT systems and increased cybersecurity protection and remediation costs.

This could adversely affect our competitiveness, results of operations and financial condition [removed: and] [added: and, critically in light of our business model,] loss of member confidence.

Further, the [removed: amount of] insurance coverage we maintain [added: and indemnification arrangements with third-parties] may be inadequate to cover [removed: claims or] [added: claims, costs, and] liabilities relating to [removed: a] cybersecurity [removed: attack.][added: incidents.]

In addition, data we collect, store and process is subject to a variety of U.S. and international laws and regulations, such as the European Union's General Data Protection Regulation, California Consumer Privacy Act, Health Insurance Portability and Accountability Act, [removed: China cybersecurity law] and other emerging privacy and cybersecurity laws across the various states and around the globe, which may carry significant potential penalties for noncompliance.

[added: We rely on third parties to] provide payment transaction processing services for credit and debit cards and our shop card.

If our merchandise, including food and prepared food products for human consumption, drugs, children's products, pet products and durable goods, do not meet or are perceived not to meet applicable safety [added: or labeling] standards or our members' [removed: expectations regarding safety,] [added: expectations,] we could experience lost sales, increased costs, litigation or reputational harm.

Our ability to control labor and benefit costs is subject to numerous internal and external factors, including [added: the continuing impacts of the pandemic,] regulatory changes, prevailing wage rates, and healthcare and other insurance costs.

Insurance coverage is maintained [removed: in] [added: for] certain [removed: instances] [added: risks] to limit exposures arising from very large losses.

Some competitors [removed: may] have greater financial resources and technology capabilities, better access to merchandise, and greater market penetration than we do.

Our inability to respond effectively to competitive pressures, changes in the retail markets [removed: and] [added: or] customer expectations could result in lost market share and negatively affect our financial results.

[removed: Higher energy] and [removed: gasoline costs, inflation, levels of unemployment, healthcare costs, consumer debt levels, foreign-currency exchange rates, unsettled financial markets, weaknesses in housing and real estate markets, reduced consumer confidence, changes and uncertainties related to government fiscal and] tax policies including changes in tax rates, duties, tariffs, or other restrictions, sovereign debt crises, pandemics and other health crises, and other economic factors could adversely affect demand for our products and services, require a change in product mix, or impact the cost of or ability to purchase inventory.

Additionally, actions in various countries, particularly [removed: China] [added: China, the United States] and the United [removed: States,] [added: Kingdom,] have raised the cost of many items and created uncertainty with respect to tariff impacts on the costs of some of our merchandise.

The impact to our [removed: business, including] net sales and gross [removed: margin, will be] [added: margin is] influenced in part by [added: our] merchandising and pricing strategies in response to potential cost [removed: increases by us and our competitors.][added: increases.]

While these potential impacts are uncertain, they could have an adverse impact on our [removed: financial] results.

Prices of certain commodities, including gasoline and consumable goods used in manufacturing and our warehouse retail operations, are historically volatile and are subject to fluctuations arising from changes in domestic and international supply and demand, [added: inflationary pressures,] labor costs, competition, market speculation, government regulations, taxes and periodic delays in delivery.

The failure of these

Phishing attacks have emerged as particularly prominent, including as vectors for ransomware attacks, which have increased in breadth and frequency.

While we train our employees as part of our security efforts, that training cannot be completely effective.

Higher energy and gasoline costs, inflation, levels of unemployment, healthcare costs, consumer debt levels, foreign-currency exchange rates, unsettled financial markets, weaknesses in housing and real estate markets, reduced consumer confidence, changes and uncertainties related to government fiscal

Inflationary factors such as increases in merchandise costs may adversely affect our business, financial condition and results of operations.

If inflation on merchandise increases beyond our ability to control we may not be able to adjust prices to sufficiently offset the effect of the various cost increases without negatively impacting consumer demand.

Certain merchandise categories were impacted by inflation higher than what we have experienced in recent years due to, among other things, the continuing impacts of the pandemic and uncertain economic environment.

Member demand for certain products has and may continue to fluctuate as the pandemic progresses and member

- Changes in labor markets affecting us and our suppliers;

- Disruption and volatility within the financial and credit markets.

Changes in tax rates, new U.S. or foreign tax legislation, and exposure to additional tax liabilities could adversely affect our financial condition and results of operations.

potentially impair our day to day business operations.

We rely on third parties to

Rapid and significant changes in commodity prices and

depots, manufacturing or home office facilities, the temporary lack of an adequate work force, disruptions to our IT systems, the temporary or long-term disruption in the supply of products from some local or overseas suppliers, the temporary disruption in the transport of goods to or from overseas, delays in the delivery of goods to our warehouses or depots, and the temporary reduction in the availability of products in our warehouses.

We are taking precautionary measures intended to help minimize the risk of the virus to our employees, including temporarily requiring some employees to work remotely.

To reward our employees for exemplary service in difficult times we temporarily increased compensation levels and otherwise incurred increased spending for wages and benefits, including overtime pay.

The pandemic has significantly impacted the global supply chain, with restrictions and limitations on business activities causing disruption and delay.

These factors have resulted in higher out-of-stock positions in certain products, as well as delays in delivering those products.

Even if we are able to find alternate sources for certain products, they may cost more or require us to incur higher transportation costs, adversely impacting our profitability and financial condition.

In an effort to strengthen our liquidity position, during the year we issued $4,000 million Senior Notes, a portion of which was used to repay, prior to maturity, $1,500 million of our 2.150% and 2.250% Senior Notes.

Financial and credit markets have experienced and may continue to experience significant volatility and turmoil.

Our continued access to external sources of liquidity depends on multiple factors, including the condition of debt capital markets, our operating performance, and maintaining strong credit ratings.

If the impacts of the pandemic continue to disrupt the financial markets, or if rating agencies lower our credit ratings, it could adversely affect our ability to access the debt markets, our cost of funds, and other terms for new debt or other sources of external liquidity, if needed.

We could be subject to additional tax liabilities.

Our exposure to market risk for changes in interest rates relates primarily to our investment holdings that are diversified among various instruments considered to be cash equivalents, as defined in [Note [removed: 1](#id2c7a27cc45a4341a7bdf88b9739d38b_106)] [added: 1](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_106)] to the consolidated financial statements included in Item 8 of this Report, as well as short-term investments in government and agency securities with effective maturities of generally three months to five years at the date of purchase.

A 100 basis point change in interest rates as of the end of [removed: 2020] [added: 2021] would have had an immaterial incremental change in fair market value.

As of the end of [removed: 2020,] [added: 2021,] long-term debt with fixed interest rates was [removed: $7,657.][added: $7,531.]

See [Note [removed: 5](#id2c7a27cc45a4341a7bdf88b9739d38b_121)] [added: 5](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_124)] to the consolidated financial statements included in Item 8 of this Report for more information on our long-term debt.

For additional information related to the Company's forward foreign-exchange contracts, see [Notes [removed: 1](#id2c7a27cc45a4341a7bdf88b9739d38b_106)] [added: 1](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_106)] and [removed: [4](#id2c7a27cc45a4341a7bdf88b9739d38b_118)] [added: [4](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_121)] to the consolidated financial statements included in Item 8 of this Report.

A hypothetical 10% strengthening of the functional currency compared to the non-functional currency exchange rates at August [removed: 30, 2020,] [added: 29, 2021,] would have decreased the fair value of the contracts by [removed: $111] [added: $149] and resulted in an unrealized loss in the consolidated statements of income for the same amount.

Costco operated [added: 815,] 795, [removed: 782,] and [removed: 762] [added: 782] warehouses worldwide at August [added: 29, 2021, August] 30, 2020, [added: and] September 1, 2019, [removed: and September 2, 2018,] respectively.

References to [added: 2021,] 2020, [removed: 2019,] and [removed: 2018] [added: 2019] relate to the 52-week fiscal years ended August [added: 29, 2021, August] 30, 2020, [added: and] September 1, 2019, [removed: and September 2, 2018,] respectively.

We operate membership warehouses [added: and e-commerce websites] based on the concept that offering our members low prices on a limited selection of nationally-branded and private-label products in a wide range of categories will produce high sales volumes and rapid inventory turnover.

We carry [removed: an average of approximately 3,700] [added: less than 4,000] active stock keeping units (SKUs) per warehouse in our core warehouse business, significantly less than other broadline retailers.

We average anywhere from [removed: 8,000] [added: 9,000] to [removed: 10,000] [added: 11,000] SKUs online, some of which are also available in our warehouses.

We offer merchandise [added: and services] in the following categories:

- Fresh Foods (including meat, produce, [added: service] deli, and bakery)

[removed: Ancillary] [added: Warehouse ancillary] businesses [added: operate primarily] within or next to our [removed: warehouses provide expanded products and services,] [added: warehouses,] encouraging members to shop more frequently.

The number of warehouses with gas stations varies significantly by country, and we [removed: do not currently operate our] [added: have no] gasoline business in Korea or China.

We operated [removed: 615] [added: 636] gas stations at the end of [removed: 2020.][added: 2021.]

Net sales for our gasoline business represented approximately 9% of total net sales in [removed: 2020.][added: 2021.]

Net sales for e-commerce represented approximately [removed: 6%] [added: 7%] of total net sales in [removed: 2020.][added: 2021.]

We have direct buying relationships with many producers of [removed: national] brand-name merchandise.

The COVID-19 pandemic created unprecedented supply [removed: constraints] [added: constraints,] including disruptions and delays that have impacted and could continue to impact the flow and availability of certain products.

Certain financial information for our segments and geographic areas is included in [Note [removed: 12](#id2c7a27cc45a4341a7bdf88b9739d38b_151)] [added: 12](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_154)] to the consolidated financial statements included in Item 8 of this Report.

Our members may utilize their memberships at [added: all of] our warehouses [removed: worldwide.][added: and websites.]

Our member renewal rate was 91% in the U.S. and Canada and [removed: 88% on a] [added: 89%] worldwide [removed: basis] at the end of [removed: 2020.][added: 2021.]

The change did not impact [removed: 2019 or 2018.][added: 2019.]

| | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | |

| Gold Star | | | [removed: 46,800] [added: 50,200] | | | | | | [removed: 42,900] [added: 46,800] | | | | | | [removed: 40,700] [added: 42,900] | | |

| Business, including affiliates | | | [removed: 11,300] [added: 11,500] | | | | | | [removed: 11,000] [added: 11,300] | | | | | | [removed: 10,900] [added: 11,000] | | |

| Total paid members | | | [removed: 58,100] [added: 61,700] | | | | | | [removed: 53,900] [added: 58,100] | | | | | | [removed: 51,600] [added: 53,900] | | |

| Household cards | | | [removed: 47,400] [added: 49,900] | | | | | | [removed: 44,600] [added: 47,400] | | | | | | [removed: 42,700] [added: 44,600] | | |

| Total cardholders | | | [removed: 105,500] [added: 111,600] | | | | | | [removed: 98,500] [added: 105,500] | | | | | | [removed: 94,300] [added: 98,500] | | |

This program also offers (except in [removed: Mexico, Japan,] [added: Mexico] and Korea), access to additional savings and benefits on various business and consumer services, such as auto and home insurance, the Costco auto purchase program, and check printing.

[removed: Executive members, who totaled 22.6 million and represented 39% of paid members at the end of 2020,] [added: They] generally shop more frequently and spend more than other members.

| Total employees | | | [removed: 273,000] [added: 288,000] | | | | | | [removed: 254,000] [added: 273,000] | | | | | | [removed: 245,000] [added: 254,000] | | |

[added: Walmart, Target, Kroger, and Amazon are among our significant general merchandise retail competitors in the U.S.] We also compete with other warehouse clubs [removed: (primarily] [added: including] Walmart’s Sam’s Club and BJ’s Wholesale [removed: Club),] [added: Club,] and many of the major metropolitan areas in the U.S. and certain of our Other International locations have multiple clubs.

We have invested significantly in the development and protection of our well-recognized brands, including the Costco [removed: Wholesale®] [added: Wholesale] trademarks and our private-label brand, Kirkland [removed: Signature®.][added: Signature.]

We have adopted a code of ethics for senior financial [removed: officers] [added: officers,] pursuant to Section 406 of the Sarbanes-Oxley Act.

All [removed: executive officers] have over 25 years of service with the Company.

| W. Craig Jelinek | | | | | | President and Chief Executive Officer. Mr. Jelinek has been President and Chief Executive Officer since January 2012 and a director since February 2010. He was President and Chief Operating Officer from February 2010 to December 2011. Prior to that he was Executive Vice President, Chief Operating Officer, Merchandising since 2004. | | | | | | 1995 | | | | | | [removed: 68] [added: 69] | | |

| Richard A. Galanti | | | | | | Executive Vice President and Chief Financial Officer. Mr. Galanti has been a director since January 1995. | | | | | | 1993 | | | | | | [removed: 64] [added: 65] | | |

| Jim C. Klauer | | | | | | Executive Vice President, Chief Operating Officer, Northern Division. Mr. Klauer was Senior Vice President, [removed: Non Foods] [added: Non-Foods] and E-commerce Merchandise, from 2013 to January 2018. | | | | | | 2018 | | | | | | [removed: 58] [added: 59] | | |

| Patrick J. Callans | | | | | | Executive Vice President, Administration. Mr. Callans was Senior Vice President, Human Resources and Risk Management, from 2013 to December 2018. | | | | | | 2019 | | | | | | [removed: 58] [added: 59] | | |

| Russ D. Miller | | | | | | Executive Vice President, Chief Operating Officer, Southern Division and Mexico. Mr. Miller was Senior Vice President, Western Canada Region, from 2001 to January 2018. | | | | | | 2018 | | | | | | [removed: 63] [added: 64] | | |

| James P. Murphy | | | | | | Executive Vice President, Chief Operating Officer, International. Mr. Murphy was Senior Vice President, International, from 2004 to October 2010. | | | | | | 2011 | | | | | | [removed: 67] [added: 68] | | |

| Joseph P. Portera | | | | | | Executive Vice President, Chief Operating Officer, Eastern and Canadian Divisions. Mr. Portera has held these positions since 1994 and has been the Chief Diversity Officer since 2010. | | | | | | 1994 | | | | | | [removed: 68] [added: 69] | | |

| Timothy L. Rose | | | | | | Executive Vice President, Ancillary Businesses, Manufacturing, and Business Centers. Mr. Rose was Senior Vice President, Merchandising, [removed: Food] [added: Foods] and Sundries and Private Label, from 1995 to December 2012. | | | | | | 2013 | | | | | | [removed: 68] [added: 69] | | |

| Ron M. Vachris | | | | | | Executive Vice President, Chief Operating Officer, Merchandising. Mr. Vachris was Senior Vice President, Real Estate Development, from August 2015 to June 2016, and Senior Vice President, General Manager, Northwest Region, from 2010 to July 2015. | | | | | | 2016 | | | | | | [removed: 55] [added: 56] | | |

For our e-

commerce operations we ship merchandise through our depots, our logistics operations for big and bulky items, as well as through drop-ship and other delivery arrangements with our suppliers.

Core Merchandise Categories (or core business):

- Foods and Sundries (including sundries, dry grocery, candy, cooler, freezer, deli, liquor, and tobacco)

- Non-Foods (previously Hardlines and Softlines; including major appliances, electronics, health and beauty aids, hardware, garden and patio, sporting goods, tires, toys and seasonal, office supplies, automotive care, postage, tickets, apparel, small appliances, furniture, domestics, housewares, special order kiosk, and jewelry)

Warehouse Ancillary (includes gasoline, pharmacy, optical, food court, hearing aids, and tire installation) and Other Businesses (includes e-commerce, business centers, travel, and other)

Our other businesses sell products and services that complement our warehouse operations (core and warehouse ancillary businesses).

Our e-commerce operations give members convenience and a broader selection of goods and services.

Our business centers carry items tailored specifically for food services, convenience stores and offices, and offer walk-in shopping and deliveries.

Business centers are included in our total warehouse count.

Costco Travel offers vacation

packages, hotels, cruises, and other travel products exclusively for Costco members (offered in the U.S., Canada, and the U.K.).

Executive members totaled 25.6 million and represented 55% of paid members (excluding affiliates) in the U.S. and Canada and 17% of paid members (excluding affiliates) in our Other International operations at the end of 2021.

Human Capital

Our Code of Ethics requires that we “Take Care of Our Employees,” which is fundamental to the obligation to “Take Care of Our Members.” We must also carefully control our selling, general and administrative (SG&A) expenses, so that we can sell high quality goods and services at low prices.

Compensation and benefits for employees is our largest expense after the cost of merchandise and is carefully monitored.

At the end of 2021, we employed 288,000 employees worldwide.

The large majority (approximately 95%) is employed in our membership warehouses and distribution channels and approximately 17,000 employees are represented by unions.

We also utilize seasonal employees during peak periods.

The total number of employees by segment is:

| | | | Number of Employees | | | | | | | | | | | | | | |

| | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

| United States | | | 192,000 | | | | | | 181,000 | | | | | | 167,000 | | |

| Canada | | | 47,000 | | | | | | 46,000 | | | | | | 42,000 | | |

| Other International | | | 49,000 | | | | | | 46,000 | | | | | | 45,000 | | |

We believe that our warehouses are among the most productive in the retail industry, owing in substantial part to the commitment and efficiency of our employees.

We seek to provide them not merely with employment but careers.

Many attributes of our business contribute to the objective; the more significant include: competitive compensation and benefits for those working in our membership warehouses and distributions channels; a commitment to promoting from within; and maintaining a ratio of at least 50% of our employee base being full-time employees.

These attributes contribute to what we consider, especially for the industry, a high retention rate.

In 2021, in the U.S. that rate was above 90% for employees who have been with us for at least one year.

The commitment to “Take Care of Our Employees” is also the foundation of our approach to diversity, equity and inclusion and creating an inclusive and respectful workplace.

In 2021, we added training and communication for managers on topics of race, bias and equity, and greater visibility of our employee demographics.

Embracing differences is important to the growth of our Company.

It leads to more opportunities, innovation, and employee satisfaction and connects us to the communities where we do business.

Costco is firmly committed to helping protect the health and safety of our members and employees and to serving our communities.

In response to the COVID-19 pandemic and its associated challenges, we began providing premium pay to the majority of our hourly employees in March 2020 and continued for a full year through February 2021, at which time a portion of the premium was built permanently into our hourly wage scales in the U.S. In fall 2020, we also began offering employees additional paid time off to attend to child care and schooling needs through the 2021 school year.

As the global effect of coronavirus (COVID-19) continues to evolve, we are closely monitoring the changing situation and complying with public health guidance.

For more detailed information regarding our programs and initiatives, see “Employees” within our Sustainability Commitment (located on our website).

This report and other information on our website are not incorporated by reference into and do not form any part of this Annual Report.

| Yoram Rubanenko | | | | | | Executive Vice President, Northeast and Southeast Regions. Mr. Rubanenko was Senior Vice President and General Manager, Southeast Region, from 2013 to September 2021, and Vice President, Regional Operations Manager for the Northeast Region, from 1998 to 2013. | | | | | | 2021 | | | | | | 57 | | |

- Food and Sundries (including dry foods, packaged foods, groceries, snack foods, candy, alcoholic and nonalcoholic beverages, and cleaning supplies)

- Hardlines (including major appliances, electronics, health and beauty aids, hardware, and garden and patio)

- Softlines (including apparel and small appliances)

- Ancillary (including gasoline and pharmacy businesses)

These businesses include gas stations, pharmacies, optical dispensing centers, food courts, and hearing-aid centers.

Our e-commerce operations allow us to connect with our members online and provide additional products and services, many not found in our warehouses.

Labor

Our employee count was as follows:

| Full-time employees | | | 156,000 | | | | | | 149,000 | | | | | | 143,000 | | |

| Part-time employees | | | 117,000 | | | | | | 105,000 | | | | | | 102,000 | | |

Approximately 17,100 employees are union employees.

We consider our employee relations to be very good.

Walmart, Target, Kroger, and Amazon are among our significant general merchandise retail competitors.

| Paul G. Moulton | | | | | | Executive Vice President, Chief Information Officer. Mr. Moulton was Executive Vice President, Real Estate Development, from 2001 until March 2010. | | | | | | 2001 | | | | | | 69 | | |

See discussion of Legal Proceedings in [Note [removed: 11](#id2c7a27cc45a4341a7bdf88b9739d38b_148)] [added: 11](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_151)] to the consolidated financial statements included in Item 8 of this Report.

For the fiscal year ended August [removed: 30, 2020][added: 29, 2021]

The aggregate market value of the voting stock held by non-affiliates of the registrant as of February [removed: 16, 2020] [added: 14, 2021] was [removed: $140,245,657,604.][added: $155,810,963,274.]

The number of shares outstanding of the registrant’s common stock as of September [removed: 29, 2020] [added: 28, 2021,] was [removed: 441,228,027.][added: 441,823,811.]

Portions of the Company’s Proxy Statement for the Annual Meeting of Shareholders to be held on January [removed: 21, 2021,] [added: 20, 2022,] are incorporated by reference into [Part [removed: III](#id2c7a27cc45a4341a7bdf88b9739d38b_166)] [added: III](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_169)] of this Form 10-K.

ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED AUGUST [removed: 30, 2020][added: 29, 2021]

| Item 1. | | | [removed: [Business](#id2c7a27cc45a4341a7bdf88b9739d38b_16)] [added: [Business](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_16)] | | | [removed: [3](#id2c7a27cc45a4341a7bdf88b9739d38b_16)] [added: [3](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_16)] | | |

| Item 1A. | | | [Risk [removed: Factors](#id2c7a27cc45a4341a7bdf88b9739d38b_19)] [added: Factors](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_19)] | | | [removed: [8](#id2c7a27cc45a4341a7bdf88b9739d38b_19)] [added: [9](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_19)] | | |

| Item 1B. | | | [Unresolved Staff [removed: Comments](#id2c7a27cc45a4341a7bdf88b9739d38b_22)] [added: Comments](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_22)] | | | [removed: [17](#id2c7a27cc45a4341a7bdf88b9739d38b_22)] [added: [19](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_22)] | | |

| Item 2. | | | [removed: [Properties](#id2c7a27cc45a4341a7bdf88b9739d38b_25)] [added: [Properties](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_25)] | | | [removed: [17](#id2c7a27cc45a4341a7bdf88b9739d38b_25)] [added: [19](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_25)] | | |

| Item 3. | | | [Legal [removed: Proceedings](#id2c7a27cc45a4341a7bdf88b9739d38b_28)] [added: Proceedings](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_28)] | | | [removed: [18](#id2c7a27cc45a4341a7bdf88b9739d38b_28)] [added: [19](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_28)] | | |

| Item 4. | | | [Mine Safety [removed: Disclosures](#id2c7a27cc45a4341a7bdf88b9739d38b_31)] [added: Disclosures](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_31)] | | | [removed: [18](#id2c7a27cc45a4341a7bdf88b9739d38b_31)] [added: [19](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_31)] | | |

| Item 5. | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#id2c7a27cc45a4341a7bdf88b9739d38b_37)] [added: Securities](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_37)] | | | [removed: [18](#id2c7a27cc45a4341a7bdf88b9739d38b_37)] [added: [20](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_37)] | | |

| Item 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#id2c7a27cc45a4341a7bdf88b9739d38b_46)] [added: Operations](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_46)] | | | [removed: [21](#id2c7a27cc45a4341a7bdf88b9739d38b_46)] [added: [22](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_46)] | | |

| Item 7A. | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#id2c7a27cc45a4341a7bdf88b9739d38b_70)] [added: Risk](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_73)] | | | [removed: [30](#id2c7a27cc45a4341a7bdf88b9739d38b_70)] [added: [31](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_73)] | | |

| Item 8. | | | [Financial Statements and Supplementary [removed: Data](#id2c7a27cc45a4341a7bdf88b9739d38b_73)] [added: Data](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_76)] | | | [removed: [32](#id2c7a27cc45a4341a7bdf88b9739d38b_73)] [added: [33](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_76)] | | |

| Item 9. | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#id2c7a27cc45a4341a7bdf88b9739d38b_157)] [added: Disclosure](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_160)] | | | [removed: [66](#id2c7a27cc45a4341a7bdf88b9739d38b_157)] [added: [65](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_160)] | | |

| Item 9A. | | | [Controls and [removed: Procedures](#id2c7a27cc45a4341a7bdf88b9739d38b_160)] [added: Procedures](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_163)] | | | [removed: [66](#id2c7a27cc45a4341a7bdf88b9739d38b_160)] [added: [65](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_163)] | | |

| Item 9B. | | | [Other [removed: Information](#id2c7a27cc45a4341a7bdf88b9739d38b_163)] [added: Information](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_166)] | | | [removed: [67](#id2c7a27cc45a4341a7bdf88b9739d38b_163)] [added: [66](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_166)] | | |

| Item 10. | | | [Directors, Executive Officers and Corporate [removed: Governance](#id2c7a27cc45a4341a7bdf88b9739d38b_169)] [added: Governance](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_172)] | | | [removed: [67](#id2c7a27cc45a4341a7bdf88b9739d38b_169)] [added: [66](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_172)] | | |

| Item 11. | | | [Executive [removed: Compensation](#id2c7a27cc45a4341a7bdf88b9739d38b_172)] [added: Compensation](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_175)] | | | [removed: [67](#id2c7a27cc45a4341a7bdf88b9739d38b_172)] [added: [66](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_175)] | | |

| Item 12. | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#id2c7a27cc45a4341a7bdf88b9739d38b_175)] [added: Matters](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_178)] | | | [removed: [67](#id2c7a27cc45a4341a7bdf88b9739d38b_175)] [added: [66](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_178)] | | |

| Item 13. | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#id2c7a27cc45a4341a7bdf88b9739d38b_178)] [added: Independence](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_181)] | | | [removed: [67](#id2c7a27cc45a4341a7bdf88b9739d38b_178)] [added: [66](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_181)] | | |

| Item 14. | | | [Principal Accounting Fees and [removed: Services](#id2c7a27cc45a4341a7bdf88b9739d38b_181)] [added: Services](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_184)] | | | [removed: [67](#id2c7a27cc45a4341a7bdf88b9739d38b_181)] [added: [66](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_184)] | | |

| Item 15. | | | [Exhibits, Financial Statement [removed: Schedules](#id2c7a27cc45a4341a7bdf88b9739d38b_187)] [added: Schedules](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_190)] | | | [removed: [68](#id2c7a27cc45a4341a7bdf88b9739d38b_187)] [added: [66](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_190)] | | |

| Item 16. | | | [Form 10-K [removed: Summary](#id2c7a27cc45a4341a7bdf88b9739d38b_190)] [added: Summary](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_193)] | | | [removed: [70](#id2c7a27cc45a4341a7bdf88b9739d38b_190)] [added: [69](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_193)] | | |

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, including, without limitation, the factors set forth in the section titled “[Item 1A-Risk [removed: Factors](#id2c7a27cc45a4341a7bdf88b9739d38b_19)”,] [added: Factors](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_19)”,] and other factors noted in the section titled “[Item 7-Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#id2c7a27cc45a4341a7bdf88b9739d38b_46)”] [added: Operations](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_46)”] and in the consolidated financial statements and related notes in [removed: [Item 8](#id2c7a27cc45a4341a7bdf88b9739d38b_73)] [added: Item 8] of this Report.

| [PART I](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_13) | | | | | | | | |

| [PART II](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_34) | | | | | | | | |

| Item 6. | | | [Reserved](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_43) | | | [21](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_43) | | |

| [PART III](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_169) | | | | | | | | |

| [PART IV](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_187) | | | | | | | | |

| | | | [Signatures](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_196) | | | [70](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_196) | | |

| [PART I](#id2c7a27cc45a4341a7bdf88b9739d38b_13) | | | | | | | | |

| [PART II](#id2c7a27cc45a4341a7bdf88b9739d38b_34) | | | | | | | | |

| Item 6. | | | [Selected Financial Data](#id2c7a27cc45a4341a7bdf88b9739d38b_43) | | | [19](#id2c7a27cc45a4341a7bdf88b9739d38b_43) | | |

| [PART III](#id2c7a27cc45a4341a7bdf88b9739d38b_166) | | | | | | | | |

| [PART IV](#id2c7a27cc45a4341a7bdf88b9739d38b_184) | | | | | | | | |

| | | | [Signatures](#id2c7a27cc45a4341a7bdf88b9739d38b_193) | | | [71](#id2c7a27cc45a4341a7bdf88b9739d38b_193) | | |

At August [removed: 30, 2020,] [added: 29, 2021,] we operated [removed: 795] [added: 815] membership warehouses:

| | | | Own Land and Building | | | | | | Lease Land and/or [removed: Building(1)] [added: Building(1)] | | | | | | Total | | |

| United States and Puerto Rico | | | [removed: 443] [added: 454] | | | | | | [removed: 109] [added: 110] | | | | | | [removed: 552] [added: 564] | | |

| Other International | | | [removed: 99] [added: 101] | | | | | | [removed: 43] [added: 45] | | | | | | [removed: 142] [added: 146] | | |

[removed: (1)119] [added: (1)121] of the [removed: 166] [added: 171] leases are land-only leases, where Costco owns the building.

At the end of [removed: 2020,] [added: 2021,] our warehouses contained approximately [removed: 116.1] [added: 118.9] million square feet of operating floor space: [removed: 81.4] [added: 83.2] million in the U.S.; [removed: 14.3] [added: 14.9] million in Canada; and [removed: 20.4] [added: 20.8] million in Other International.

Total square feet associated with distribution and logistics facilities were approximately [removed: 28.0] [added: 31.4] million.

| Canada | | | 89 | | | | | | 16 | | | | | | 105 | | |

| Total | | | 644 | | | | | | 171 | | | | | | 815 | | |

| Canada | | | 87 | | | | | | 14 | | | | | | 101 | | |

| Total | | | 629 | | | | | | 166 | | | | | | 795 | | |

Our common stock is traded on the NASDAQ Global Select Market under the symbol “COST.” On September [removed: 29, 2020,] [added: 28, 2021,] we had [removed: 9,690] [added: 9,958] stockholders of record.

The following table sets forth information on our common stock repurchase activity for the fourth quarter of [removed: 2020] [added: 2021] (dollars in millions, except per share data):

| Period | | | | | | | | | Total Number of Shares Purchased | | | | | | Average Price Paid per Share | | | | | | Total Number of Shares Purchased as Part of Publicly Announced [removed: Program(1)] [added: Program(1)] | | | | | | Maximum Dollar Value of Shares that May Yet be Purchased under the Program | | | [removed: | | |]

| Total fourth quarter | | | | | | | | | [removed: | | | 275,000] [added: 318,000] | | | | | | $ | [removed: 321.73] [added: 398.76] | | | | | [removed: 275,000] [added: 318,000] | | | | | | | | |

The following graph compares the cumulative total shareholder return (stock price appreciation and the reinvestment of dividends) on an investment of $100 in Costco common stock, S&P 500 Index, and the S&P 500 Retail Index over the five years from August [removed: 30, 2015,] [added: 28, 2016,] through August [removed: 30, 2020.][added: 29, 2021.]

[removed: ][added: ]

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| May 10—June 6, 2021 | | | | | | | | | 102,000 | | | | | | $ | 381.50 | | | | | 102,000 | | | | | | $ | 3,338 | |

| June 7—July 4, 2021 | | | | | | | | | 108,000 | | | | | | 387.32 | | | | | | 108,000 | | | | | | 3,296 | | |

| July 5—August 1, 2021 | | | | | | | | | 63,000 | | | | | | 412.73 | | | | | | 63,000 | | | | | | 3,270 | | |

| August 2—August 29, 2021 | | | | | | | | | 45,000 | | | | | | 446.15 | | | | | | 45,000 | | | | | | 3,250 | | |

The following graph provides information concerning average sales per warehouse over a 10 year period.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | Average Sales Per Warehouse* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | (Sales In Millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Year Opened | | | # of Whses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| 2021 | | | 20 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 140 | |

| 2020 | | | 13 | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 132 | | 152 | | |

| 2019 | | | 20 | | | | | | | | | | | | | | | | | | | | | | | | $ | 129 | | 138 | | | 172 | | |

| 2018 | | | 21 | | | | | | | | | | | | | | | | | | | | | $ | 116 | | 119 | | | 141 | | | 172 | | |

| 2017 | | | 26 | | | | | | | | | | | | | | | | | | $ | 121 | | 142 | | | 158 | | | 176 | | | 206 | | |

| 2016 | | | 29 | | | | | | | | | | | | | | | $ | 87 | | 97 | | | 118 | | | 131 | | | 145 | | | 173 | | |

| 2015 | | | 23 | | | | | | | | | | | | $ | 83 | | 85 | | | 94 | | | 112 | | | 122 | | | 136 | | | 163 | | |

| 2014 | | | 30 | | | | | | | | | $ | 108 | | 109 | | | 115 | | | 125 | | | 140 | | | 144 | | | 155 | | | 182 | | |

| 2013 | | | 26 | | | | | | $ | 99 | | 109 | | | 113 | | | 116 | | | 124 | | | 137 | | | 144 | | | 158 | | | 186 | | |

| 2012 & Before | | | 607 | | | $ | 155 | | 163 | | | 169 | | | 170 | | | 169 | | | 175 | | | 188 | | | 195 | | | 205 | | | 232 | | |

| Totals | | | 815 | | | 155 | | | 160 | | | 164 | | | 162 | | | 159 | | | 163 | | | 176 | | | 182 | | | 192 | | | 217 | | |

| | | | | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | 2021 | | |

| | | | | | | Fiscal Year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| *First year sales annualized. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| 2017 was a 53-week fiscal year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| May 11—June 7, 2020 | | | | | | | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | 3,833 | |

| June 8—July 5, 2020 | | | | | | | | | | | | 94,000 | | | | | | 301.79 | | | | | | 94,000 | | | | | | 3,805 | | |

| July 6—August 2, 2020 | | | | | | | | | | | | 93,000 | | | | | | 324.51 | | | | | | 93,000 | | | | | | 3,775 | | |

| August 3—August 30, 2020 | | | | | | | | | | | | 88,000 | | | | | | 340.17 | | | | | | 88,000 | | | | | | 3,745 | | |

[removed: This information] [added: MD&A is provided as a supplement to, and] should be read in conjunction [removed: with Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in [Item 7](#id2c7a27cc45a4341a7bdf88b9739d38b_46) of this Report, and] [added: with,] our consolidated financial statements and [removed: notes thereto, included in [Item 8](#id2c7a27cc45a4341a7bdf88b9739d38b_73)] [added: the accompanying Notes to Financial Statements (Part II, Item 8] of this [removed: Report.][added: Form 10-K).]

| Net [removed: sales | | | $ | 163,220 | | | | | $ | 149,351 | |] [added: Sales] | | | $ | [removed: 138,434] [added: 192,052] | | | | | $ | [removed: 126,172] [added: 163,220] | | | | | $ | [removed: 116,073] [added: 149,351] | |

| Membership fees | | | [removed: 3,541 | | | | | | 3,352 | | | | | | 3,142] [added: $] | [added: 3,877] | | | | | [removed: 2,853] [added: $] | [added: 3,541] | | | | | [removed: 2,646] [added: $] | [added: 3,352] | |

| Gross [removed: margin(1) as a] [added: margin] percentage [removed: of net sales] | | | [removed: 11.20 | | % | | | | 11.02 | | % | | | | 11.04] [added: 11.13] | | % | | | | [removed: 11.33] [added: 11.20] | | % | | | | [removed: 11.35] [added: 11.02] | | % |

| [removed: Selling, general and administrative] [added: SG&A] expenses as a percentage of net sales | | | [removed: 10.01 | | % | | | | 10.04 | | % | | | | 10.02] [added: 9.61] | | % | | | | [removed: 10.26] [added: 10.01] | | % | | | | [removed: 10.40] [added: 10.04] | | % |

| [removed: Changes] [added: Increases] in comparable [removed: sales(2) | | | | | | | | | | | |] [added: sales:] | | | | | | | | | | | | | | | | | |

| United States | | | [removed: 8 | | % | | | | 8] [added: 13] | | [removed: %] | | | | 9 | | [removed: %] | | | | [removed: 4 | | % | | | | 1] [added: 18] | | [removed: %] |

| Canada | | | [removed: 5 | | % | | | | 2 | | % | | | | 9] [added: 22] | | % | | | | 5 | | % | | | | [removed: (3)] [added: 3] | | % |

| Other International | | | [removed: 9 | | % | | | | 2 | | % | | | | 11] [added: 23] | | % | | | | [removed: 2] [added: 13] | | % | | | | [removed: (3)] [added: 5] | | % |

| Total Company | | | [removed: 8 | | % | | | | 6] [added: 18] | | % | | | | 9 | | % | | | | [removed: 4 | | % | | | | 0] [added: 8] | | % |

[removed: (2)Includes] [added: We define comparable sales as] net sales from warehouses [added: open for more than one year, including remodels, relocations] and [added: expansions, and sales-related to e-commerce] websites operating for more than one year.

Net sales includes our core merchandise categories [removed: (food] [added: (foods] and sundries, [removed: hardlines, softlines,] [added: non-foods,] and fresh foods), warehouse ancillary [added: (includes gasoline, pharmacy, optical, food court, hearing aids,] and [added: tire installation) and] other [removed: businesses.][added: businesses (includes e-commerce, business centers, travel and other).]

Sales comparisons can also be particularly influenced by certain factors that are beyond our control: fluctuations in currency exchange rates (with respect to the consolidation of the results of our international operations); and changes in the cost of gasoline and associated competitive [removed: conditions (primarily impacting our U.S. and Canadian operations).][added: conditions.]

[removed: Additionally, actions in various countries, particularly China and the United States, have created] uncertainty with respect to how tariffs will affect the costs of some of our merchandise.

The impact to our net sales and gross margin [removed: will be] [added: is] influenced in part by our merchandising and pricing strategies in response to cost increases.

Our rate of operating floor space square footage growth is generally higher in foreign markets, due to the smaller base in those markets, and we expect that to [added: continue.]

Our e-commerce business growth, domestically and internationally, has also increased our sales but it generally has a lower gross margin percentage relative to our warehouse [removed: business.][added: operations.]

Our operating model is generally the same across our U.S., [removed: Canada,] [added: Canadian,] and Other International operating segments (see [Note [removed: 12](#id2c7a27cc45a4341a7bdf88b9739d38b_151)] [added: 12](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_154)] to the consolidated financial statements included in Item 8 of this Report).

Certain [removed: countries] [added: operations] in the Other International segment have relatively higher rates of square footage growth, lower wage and benefit costs as a percentage of [removed: country] sales, less or no direct membership warehouse competition, [removed: and may] [added: or] lack an e-commerce business.

References to [added: 2021,] 2020, [removed: 2019,] and [removed: 2018] [added: 2019] relate to the 52-week fiscal years ended August [added: 29, 2021, August] 30, 2020, [added: and] September 1, 2019, [removed: and September 2, 2018,] respectively.

For discussion related to the results of operations and changes in financial condition for [removed: 2019] [added: 2020] compared to [removed: 2018] [added: 2019] refer to Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal year [removed: 2019] [added: 2020] Form 10-K, which was filed with the United States Securities and Exchange Commission [added: (SEC)] on October [removed: 11, 2019.][added: 7, 2020.]

Highlights for [removed: 2020] [added: 2021] included:

- We opened [removed: 16] [added: 22] new warehouses, including [removed: 3] [added: 2] relocations: [removed: 9] [added: 12 net] new in the U.S., [removed: 3] [added: 4 net] new in our [removed: Other International] [added: Canadian] segment, and [removed: 1 net] [added: 4] new [removed: location] in our [removed: Canadian] [added: Other International] segment, compared to [removed: 25] [added: 16] new warehouses, including [removed: 5] [added: 3] relocations in [removed: 2019;][added: 2020;]

- Net sales increased [removed: 9%] [added: 18%] to [removed: $163,220] [added: $192,052] driven by a [removed: 8%] [added: 16%] increase in comparable sales and sales at new warehouses opened in [removed: 2019] [added: 2020] and [removed: 2020;][added: 2021;]

- Membership fee revenue increased [removed: 6% to $3,541, primarily due] [added: 9%] to [removed: membership] [added: $3,877, driven by] sign-ups [removed: at existing] and [removed: new warehouses;][added: upgrades to Executive membership;]

- Gross margin percentage [removed: increased 18] [added: decreased seven] basis points, driven primarily by [removed: certain] [added: a shift in sales penetration from our] core merchandise [removed: categories, partially offset by certain] [added: categories to our warehouse] ancillary and other [removed: businesses, which were negatively impacted by COVID-19 related closures or restrictions;][added: businesses;]

- SG&A expenses as a percentage of net sales decreased [removed: three] [added: 40] basis [removed: points] [added: points,] primarily due to leveraging increased sales and [removed: partial reversal of a previous year tax assessment.][added: decreased incremental wages related to COVID-19;]

- The effective tax rate in [removed: 2020] [added: 2021] was [removed: 24.4%] [added: 24.0%] compared to [removed: 22.3%] [added: 24.4%] in [removed: 2019;][added: 2020;]

- Net income increased [removed: 9%] [added: 25%] to [removed: $4,002,] [added: $5,007,] or [removed: $9.02] [added: $11.27] per diluted share compared to [removed: $3,659,] [added: $4,002,] or [removed: $8.26] [added: $9.02] per diluted share in [removed: 2019;][added: 2020;]

[removed: -] In [removed: April] 2020, we issued $4,000 in aggregate principal amount of Senior [removed: Notes, some proceeds of which were used to repay $1,500] [added: Notes and repaid $3,200] of Senior [removed: Notes; and][added: Notes.]

[removed: -] In April [removed: 2020,] [added: 2021,] the Board of Directors [removed: approved an increase in the] [added: increased our] quarterly cash dividend from [removed: $0.65 to] $0.70 [added: to $0.79] per share.

| | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | |

| Net [removed: Sales] [added: sales] | | | $ | [removed: 163,220] [added: 192,052] | | | | | $ | [removed: 149,351] [added: 163,220] | | | | | $ | [removed: 138,434] [added: 149,351] | |

| [removed: Changes] [added: Increases] in net sales: | | | | | | | | | | | | | | | | | |

| U.S. | | | [removed: 9] [added: 16] | | % | | | | 9 | | % | | | | 9 | | % |

| Canada | | | [removed: 5] [added: 20] | | % | | | | [removed: 3] [added: 5] | | % | | | | [removed: 10] [added: 2] | | % |

| Other International | | | [removed: 13] [added: 19] | | % | | | | [removed: 5] [added: 9] | | % | | | | [removed: 14] [added: 2] | | % |

| Total Company | | | [removed: 9] [added: 16] | | % | | | | 8 | | % | | | | [removed: 10] [added: 6] | | % |

| U.S. | | | [removed: 8] [added: 15] | | % | | | | 8 | | % | | | | [removed: 9] [added: 8] | | % |

| Canada | | | [removed: 5] [added: 12] | | % | | | | [removed: 2] [added: 7] | | % | | | | [removed: 9] [added: 5] | | % |

The following Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to promote understanding of the results of operations and financial condition.

This section generally discusses the results of operations for 2021 compared to 2020.

In 2021, we combined the hardlines and softlines merchandise categories into non-foods.

This change did not have a material impact on the discussion of our results of operations.

Additionally, actions in various countries, particularly China, the United States and the United Kingdom, have created

Certain merchandise categories were impacted by inflation higher than what we have experienced in recent years.

During 2021, our sales mix began returning to pre-pandemic levels.

This included sales increases in non-foods and in many of our warehouse ancillary and other businesses, certain of which experienced closures or restrictions in 2020.

COVID-related supply and logistics constraints have adversely affected some merchandise categories and are expected to do so for the foreseeable future.

We paid $515 in incremental wages during 2021 related to COVID-19.

The incremental wage and benefit costs associated with COVID-19, which began on March 1, 2020 and ended on February 28, 2021, totaled approximately $825.

Effective March 1, 2021, we permanently increased wages for hourly and most salaried warehouse employees.

The estimated annualized pre-tax cost is approximately $400.

Additionally, in certain areas in the United States governments have mandated or are considering mandating extra pay for classes of employees that include our employees, which has and will result in higher costs.

Net sales increased $28,832 or 18% during 2021.

The improvement was attributable to an increase in comparable sales of 16%, and sales at new warehouses opened in 2020 and 2021.

While sales in all core merchandise categories increased, sales were particularly strong in non-foods.

Sales increases were also strong in our warehouse ancillary and other businesses, predominantly e-commerce and gasoline.

Certain merchandise categories were impacted by inflation higher than what we have experienced in recent years.

| | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

Membership fees increased 9% in 2021, driven by sign-ups and upgrades to Executive membership.

Excluding the positive impact of changes in foreign currencies relative to the U.S. dollar, membership fees increased 8%.

| | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

The increase was across all categories, most significantly in non-foods.

The comparison was also positively impacted by a three basis point reserve on inventory recorded in 2020 with no such reserve this year.

Gross margin percentage was negatively impacted three basis points due to increased 2% rewards and two basis points due to a LIFO charge for higher merchandise costs.

Gross margin on a segment basis, when expressed as a percentage of the segment's own sales and excluding the impact of changes in gasoline prices on net sales (segment gross margin percentage), decreased in our U.S. segment, due to our warehouse ancillary and other businesses, our core merchandise categories, and the LIFO charge, partially offset by the reserve for certain inventory in 2020.

| | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

Incremental wages as a result of COVID-19, which ended on February 28, 2021, were lower by eight basis points.

Central operating costs were lower by five basis points.

These decreases were offset by an increase of five basis points related to a partial reversal of a product tax assessment in 2020, as well as an increase of four basis points related to a write-off of certain information technology assets in the fourth quarter of 2021 that are no longer expected to be utilized as part of the modernization of our information systems.

| | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

| | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

| | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

| | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

The effective tax rate for 2021 included discrete net tax benefits of $163, including a benefit of $75 due to excess benefits from stock compensation, $70 related to the special dividend payable through our 401(k) plan, and $19 related to a reduction in the valuation allowance against certain deferred tax assets.

| | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

Material contractual obligations arising in the normal course of business primarily consist of purchase obligations, long-term debt and related interest payments, leases, and construction and land purchase obligations.

See [Notes 5](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_124) and [6](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_130) to the consolidated financial statements included in Item 8 of this Report for amounts outstanding on August 29, 2021, related to debt and leases.

Purchase obligations consist of contracts primarily related to merchandise, equipment, and third-party services, the majority of which are due in the next 12 months.

The following graph provides information concerning average sales per warehouse over a 10 year period.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | Average Sales Per Warehouse* | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | (Sales In Millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Year Opened | | | # of Whses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| 2020 | | | 13 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 132 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| 2019 | | | 20 | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 129 | | $ | 138 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| 2018 | | | 21 | | | | | | | | | | | | | | | | | | | | | | | | $ | 116 | | $ | 119 | | $ | 141 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| 2017 | | | 26 | | | | | | | | | | | | | | | | | | | | | $ | 121 | | $ | 142 | | $ | 158 | | $ | 176 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| 2016 | | | 29 | | | | | | | | | | | | | | | | | | $ | 87 | | $ | 97 | | $ | 118 | | $ | 131 | | $ | 145 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| 2015 | | | 23 | | | | | | | | | | | | | | | $ | 83 | | $ | 85 | | $ | 94 | | $ | 112 | | $ | 122 | | $ | 136 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| 2014 | | | 30 | | | | | | | | | | | | $ | 108 | | $ | 109 | | $ | 115 | | $ | 125 | | $ | 140 | | $ | 144 | | $ | 155 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| 2013 | | | 26 | | | | | | | | | $ | 99 | | $ | 109 | | $ | 113 | | $ | 116 | | $ | 124 | | $ | 137 | | $ | 144 | | $ | 158 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| 2012 | | | 15 | | | | | | $ | 105 | | $ | 115 | | $ | 124 | | $ | 128 | | $ | 130 | | $ | 139 | | $ | 152 | | $ | 158 | | $ | 173 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| 2011 & Before | | | 592 | | | $ | 146 | | $ | 156 | | $ | 164 | | $ | 171 | | $ | 171 | | $ | 170 | | $ | 176 | | $ | 189 | | $ | 196 | | $ | 206 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Totals | | | 795 | | | $ | 146 | | $ | 155 | | $ | 160 | | $ | 164 | | $ | 162 | | $ | 159 | | $ | 163 | | $ | 176 | | $ | 182 | | $ | 192 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | 2011 | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | Fiscal Year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| *First year sales annualized. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| 2012 and 2017 were 53-week fiscal years | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

The following table sets forth information concerning our consolidated financial condition, operating results, and key operating metrics.

SELECTED FINANCIAL DATA

(dollars in millions, except per share data)

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | Aug. 30, 2020 | | | | | | Sept. 1, 2019 | | | | | | Sept. 2, 2018 | | | | | | Sept. 3, 2017 | | | | | | Aug. 28, 2016 | | |

| As of and for the year ended | | | (52 weeks) | | | | | | (52 weeks) | | | | | | (52 weeks) | | | | | | (53 weeks) | | | | | | (52 weeks) | | |

| RESULTS OF OPERATIONS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Operating income | | | $ | 5,435 | | | | | $ | 4,737 | | | | | $ | 4,480 | | | | | $ | 4,111 | | | | | $ | 3,672 | |

| Net income attributable to Costco | | | 4,002 | | | | | | 3,659 | | | | | | 3,134 | | | | | | 2,679 | | | | | | 2,350 | | |

| Net income per diluted common share attributable to Costco | | | 9.02 | | | | | | 8.26 | | | | | | 7.09 | | | | | | 6.08 | | | | | | 5.33 | | |

| Cash dividends declared per common share | | | 2.70 | | | | | | 2.44 | | | | | | 2.14 | | | | | | 8.90 | | | | | | 1.70 | | |

| Changes in Total Company comparable sales excluding the impact of changes in foreign currency and gasoline prices (3) | | | 9 | | % | | | | 6 | | % | | | | 7 | | % | | | | 4 | | % | | | | 4 | | % |

| BALANCE SHEET DATA | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Net property and equipment | | | $ | 21,807 | | | | | $ | 20,890 | | | | | $ | 19,681 | | | | | $ | 18,161 | | | | | $ | 17,043 | |

| Total assets | | | 55,556 | | | | | | 45,400 | | | | | | 40,830 | | | | | | 36,347 | | | | | | 33,163 | | |

| Long-term debt, excluding current portion | | | 7,514 | | | | | | 5,124 | | | | | | 6,487 | | | | | | 6,573 | | | | | | 4,061 | | |

| Costco stockholders’ equity | | | 18,284 | | | | | | 15,243 | | | | | | 12,799 | | | | | | 10,778 | | | | | | 12,079 | | |

| WAREHOUSE INFORMATION | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

We have audited the accompanying consolidated balance sheets of Costco Wholesale Corporation and subsidiaries (the Company) as of August [removed: 30, 2020] [added: 29, 2021] and [removed: September 1, 2019,] [added: August 30, 2020,] the related consolidated statements of income, comprehensive income, equity, and cash flows for the 52-week periods ended August [added: 29, 2021, August] 30, [removed: 2020, September 1, 2019] [added: 2020] and September [removed: 2, 2018,] [added: 1, 2019,] and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of August [removed: 30, 2020] [added: 29, 2021] and [removed: September 1, 2019,] [added: August 30, 2020,] and the results of its operations and its cash flows for the 52-week periods ended August [added: 29, 2021, August] 30, [removed: 2020, September 1, 2019] [added: 2020] and September [removed: 2, 2018,] [added: 1, 2019,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of August [removed: 30, 2020,] [added: 29, 2021,] based on criteria established in *Internal Control – Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated October [removed: 6, 2020] [added: 5, 2021] expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

[removed: As discussed in [Note 1](#id2c7a27cc45a4341a7bdf88b9739d38b_106) to the consolidated financial statements, the] [added: The] Company [removed: has] changed its method of accounting for leases as of September 2, [removed: 2019] [added: 2019,] due to the adoption of Accounting Standards Update 2016-02 – Leases (ASC 842).

*Evaluation of [added: workers' compensation] self-insurance liabilities*

As discussed in [Note [removed: 1](#id2c7a27cc45a4341a7bdf88b9739d38b_106)] [added: 1](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_106)] to the consolidated financial statements, the Company estimates its self-insurance liabilities by considering historical claims experience, demographic factors, severity factors, and other actuarial assumptions.

The estimated [removed: insurance/self-insurance] [added: self-insurance] liabilities as of August [removed: 30, 2020] [added: 29, 2021] were [removed: $1,188] [added: $1,257] million, a portion of which related to workers’ compensation [removed: and general liability] self-insurance liabilities for the United States [removed: and Canadian] operations.

We identified the evaluation of the Company’s workers’ compensation [removed: and general liability] self-insurance liabilities for the United States [removed: and Canadian] operations as a critical audit matter because of the extent of specialized skill and knowledge needed to evaluate the [removed: Company’s actuarial models and the judgments required to assess the] underlying assumptions [added: and judgments] made by the [removed: Company.][added: Company in the actuarial models.]

Specifically, subjective auditor judgment was required to evaluate [removed: certain assumptions underlying] the [removed: Company’s actuarial estimates, including reporting and payment patterns used in the projections of the ultimate loss; loss and exposure trends; the] [added: Company's] selected loss rates and initial expected losses used in the [removed: Paid and Incurred Bornhuetter-Ferguson methods; and the selection of the ultimate loss derived from the various methods.][added: actuarial models.]

We evaluated the design and tested [added: the] operating effectiveness of certain internal controls over the Company’s self-insurance [added: workers' compensation] process.

- Assessing the actuarial models used by the Company for consistency with generally [added: accepted actuarial standards]

- Evaluating the Company’s ability to estimate self-insurance [added: workers' compensation] liabilities by comparing its [added: historical estimates with actual incurred losses and paid losses]

- Evaluating the above listed assumptions underlying the Company’s actuarial estimates by [added: developing an independent expectation of the self-insurance workers' compensation liabilities and comparing them to the amounts recorded by the Company]

We have audited Costco Wholesale Corporation and subsidiaries*’* (the Company) internal control over financial reporting as of August [removed: 30, 2020,] [added: 29, 2021,] based on criteria established in *Internal Control – Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August [removed: 30, 2020,] [added: 29, 2021,] based on criteria established in *Internal Control – Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of August [removed: 30, 2020] [added: 29, 2021] and [removed: September 1, 2019,] [added: August 30, 2020,] the related consolidated statements of income, comprehensive income, equity, and cash flows for the 52-week periods ended August [added: 29, 2021, August] 30, [removed: 2020, September 1, 2019] [added: 2020] and September [removed: 2, 2018,] [added: 1, 2019,] and the related notes (collectively, the consolidated financial statements), and our report dated October [removed: 6, 2020] [added: 5, 2021] expressed an unqualified opinion on those consolidated financial statements.

| | | | August [removed: 30, 2020] [added: 29, 2021] | | | | | | [removed: September 1, 2019] [added: August 30, 2020] | | | | | | September [removed: 2, 2018] [added: 1, 2019] | | |

| Net sales | | | $ | [removed: 163,220] [added: 192,052] | | | | | $ | [removed: 149,351] [added: 163,220] | | | | | $ | [removed: 138,434] [added: 149,351] | |

| Membership fees | | | [removed: 3,541] [added: 3,877] | | | | | | [removed: 3,352] [added: 3,541] | | | | | | [removed: 3,142] [added: 3,352] | | |

| Total revenue | | | [removed: 166,761] [added: 195,929] | | | | | | [removed: 152,703] [added: 166,761] | | | | | | [removed: 141,576] [added: 152,703] | | |

| Merchandise costs | | | [removed: 144,939] [added: 170,684] | | | | | | [removed: 132,886] [added: 144,939] | | | | | | [removed: 123,152] [added: 132,886] | | |

| Selling, general and administrative | | | [removed: 16,332] [added: 18,461] | | | | | | [removed: 14,994] [added: 16,332] | | | | | | [removed: 13,876] [added: 14,994] | | |

| Preopening expenses | | | [removed: 55] [added: 76] | | | | | | [removed: 86] [added: 55] | | | | | | [removed: 68] [added: 86] | | |

| Operating income | | | [removed: 5,435] [added: 6,708] | | | | | | [removed: 4,737] [added: 5,435] | | | | | | [removed: 4,480] [added: 4,737] | | |

| Interest expense | | | [removed: (160)] [added: (171)] | | | | | | [removed: (150)] [added: (160)] | | | | | | [removed: (159)] [added: (150)] | | |

| Interest income and other, net | | | [removed: 92] [added: 143] | | | | | | [removed: 178] [added: 92] | | | | | | [removed: 121] [added: 178] | | |

| INCOME BEFORE INCOME TAXES | | | [removed: 5,367] [added: 6,680] | | | | | | [removed: 4,765] [added: 5,367] | | | | | | [removed: 4,442] [added: 4,765] | | |

| Provision for income taxes | | | [removed: 1,308] [added: 1,601] | | | | | | [removed: 1,061] [added: 1,308] | | | | | | [removed: 1,263] [added: 1,061] | | |

| Net income including noncontrolling interests | | | [removed: 4,059] [added: 5,079] | | | | | | [removed: 3,704] [added: 4,059] | | | | | | [removed: 3,179] [added: 3,704] | | |

| Net income attributable to noncontrolling interests | | | [removed: (57)] [added: (72)] | | | | | | [removed: (45)] [added: (57)] | | | | | | (45) | | |

| NET INCOME ATTRIBUTABLE TO COSTCO | | | $ | [removed: 4,002] [added: 5,007] | | | | | $ | [removed: 3,659] [added: 4,002] | | | | | $ | [removed: 3,134] [added: 3,659] | |

| Basic | | | $ | [removed: 9.05] [added: 11.30] | | | | | $ | [removed: 8.32] [added: 9.05] | | | | | $ | [removed: 7.15] [added: 8.32] | |

| Diluted | | | $ | [removed: 9.02] [added: 11.27] | | | | | $ | [removed: 8.26] [added: 9.02] | | | | | $ | [removed: 7.09] [added: 8.26] | |

| Basic | | | [removed: 442,297] [added: 443,089] | | | | | | [removed: 439,755] [added: 442,297] | | | | | | [removed: 438,515] [added: 439,755] | | |

| Diluted | | | [removed: 443,901] [added: 444,346] | | | | | | [removed: 442,923] [added: 443,901] | | | | | | [removed: 441,834] [added: 442,923] | | |

| NET INCOME INCLUDING NONCONTROLLING INTERESTS | | | $ | [removed: 4,059] [added: 5,079] | | | | | $ | [removed: 3,704] [added: 4,059] | | | | | $ | [removed: 3,179] [added: 3,704] | |

| Foreign-currency translation adjustment and other, net | | | [removed: 162] [added: 181] | | | | | | [removed: (245)] [added: 162] | | | | | | [removed: (192)] [added: (245)] | | |

| Comprehensive income | | | [removed: 4,221] [added: 5,260] | | | | | | [removed: 3,459] [added: 4,221] | | | | | | [removed: 2,987] [added: 3,459] | | |

| Less: Comprehensive income attributable to noncontrolling interests | | | [removed: 80] [added: 93] | | | | | | [removed: 37] [added: 80] | | | | | | [removed: 38] [added: 37] | | |

| COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO | | | $ | [removed: 4,141] [added: 5,167] | | | | | $ | [removed: 3,422] [added: 4,141] | | | | | $ | [removed: 2,949] [added: 3,422] | |

October 5, 2021

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Net income | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,007 | | | | | | 5,007 | | | | | | 72 | | | | | | 5,079 | | |

| Repurchases of common stock | | | (1,358) | | | | | | — | | | | | | (23) | | | | | | — | | | | | | (472) | | | | | | (495) | | | | | | — | | | | | | (495) | | |

| BALANCE AT AUGUST 29, 2021 | | | 441,825 | | | | | | $ | 4 | | | | | $ | 7,031 | | | | | $ | (1,137) | | | | | $ | 11,666 | | | | | $ | 17,564 | | | | | $ | 514 | | | | | $ | 18,078 | |

| | | | August 29, 2021 | | | | | | August 30, 2020 | | | | | | September 1, 2019 | | |

| Proceeds from short-term borrowings | | | 41 | | | | | | — | | | | | | — | | |

These available-for-sale investments have a low level of inherent credit risk given they are issued by the U.S. Government and Agencies.

Changes in their fair value are primarily attributable to changes in interest rates and market liquidity.

value of the individual securities as of the beginning of the reporting period in which the transfer(s) occurred.

Receivables are recorded net of an allowance for credit losses which considers creditworthiness of vendors and third parties, historical experience and current economic trends.

An immaterial charge was recorded to merchandise costs to increase the cumulative LIFO valuation on merchandise inventories at August 29, 2021.

In the fourth quarter of 2021, the Company recognized an $84 write-off of certain information technology assets, which was recorded in selling, general and administrative expenses, in the consolidated statements of income.

| | | | | | | | | | 37,658 | | | | | | 34,703 | | |

Impairment charges recognized in 2021 were immaterial.

| Changes in currency translation and other (1) | | | 6 | | | | | | 1 | | | | | | 1 | | | | | | 8 | | |

| Balance at August 29, 2021 | | | $ | 953 | | | | | $ | 28 | | | | | $ | 15 | | | | | $ | 996 | |

(1)Other consists of changes to the purchase price allocation.

See [Note](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_112) [2](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_112).

These contracts meet the characteristics of

Shop card liabilities are included in other current liabilities in the consolidated balance sheets.

| Total | | | $ | 375 | | | | | $ | 381 | | | | | $ | 536 | |

| | | | | | | | | | | | |

____________

Short-term borrowings outstanding were $41 at the end of 2021.

There were no outstanding balances at the end of 2020.

In June 2021, the Japanese subsidiary repaid approximately $94 of its Guaranteed Senior Notes.

| | | | | | | | | | | | |

| | | | 2021 | | | | | | 2020 | | |

| 2024 | | | 1,109 | | |

| 2025 | | | 136 | | |

| 2026 | | | 100 | | |

| Thereafter | | | 5,295 | | |

| Total | | | $ | 7,531 | |

| | | | | | | | | | | | |

| | | | 2021 | | | | | | 2020 | | |

accepted actuarial standards

historical estimate with actual incurred losses and paid losses

developing an independent expectation of the self-insurance liabilities and comparing them to the amounts recorded by the Company

October 6, 2020

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| BALANCE AT SEPTEMBER 3, 2017 | | | 437,204 | | | | | | $ | 4 | | | | | $ | 5,800 | | | | | $ | (1,014) | | | | | $ | 5,988 | | | | | $ | 10,778 | | | | | $ | 301 | | | | | $ | 11,079 | | | | | | | |

| Net income | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,134 | | | | | | 3,134 | | | | | | 45 | | | | | | 3,179 | | | | | | | | |

| Repurchases of common stock | | | (1,756) | | | | | | — | | | | | | (26) | | | | | | — | | | | | | (296) | | | | | | (322) | | | | | | — | | | | | | (322) | | | | | | | | |

In February 2020, the Company acquired a 35% interest in Navitus Health Solutions, a pharmacy benefit manager.

This investment is included in other long-term assets and is accounted for using the equity-method with earnings/losses recorded in other income in the consolidated statement of income.

Receivables are recorded net of an allowance for doubtful accounts.

The allowance is based on historical experience and application of the specific identification method.

| | | | | | | | | | 34,703 | | | | | | 32,626 | | |

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

*Recent Accounting Pronouncements Adopted*

In February 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-02 - Leases (ASC 842), which required recognition on the balance sheet for the rights and obligations created by leases with terms greater than 12 months.

The Company adopted ASC 842, using the modified retrospective transition method and used September 2, 2019, as the date of initial application.

Consequently, the comparative periods presented continue to be in accordance with ASC 840, Leases, previously in effect.

The Company elected the package of practical expedients permitted under the transition guidance, allowing the Company to carry forward conclusions related to: (a) whether expired or existing contracts contain leases; (b) lease classification; and (c) initial direct costs for existing leases.

The Company has elected not to record operating lease right-of-use assets or lease liabilities associated with leases with durations of 12 months or less.

The Company elected the practical expedient allowing aggregation of non-lease components with related lease components when evaluating the accounting treatment for all classes of underlying assets.

Adoption of the new standard resulted in an initial increase to assets and liabilities of $2,632, related to recognition of operating lease right-of-use assets and operating lease obligations as of September 2, 2019.

Other impacts in the Company's consolidated balance sheet were not material.

The standard did not materially impact the consolidated statements of income and cash flows.

For more information on the Company's lease arrangements refer to [Note 6](#id2c7a27cc45a4341a7bdf88b9739d38b_127).

Cash paid excludes the final settlement of certain holdbacks and provisional amounts, discussed below.

As part of the acquisition, in the fourth quarter of 2020, a payment of $25 was made relating to certain holdbacks.

Innovel's results of operations were not material to the Company's consolidated results during 2020.

Pro forma results are thus not considered meaningful.

As of August 30, 2020, the initial accounting for the acquisition was incomplete, pending determination of the final purchase price, working capital adjustments, the fair value of operating lease right-of-use assets, operating lease liabilities, and other assumed obligations.

As additional information becomes available, the provisional fair value estimates will be refined.

At the end of 2019, available-for-sale securities that were in a continuous unrealized-loss position were not material.

| Total | | | $ | 436 | | | | | $ | 448 | | | | | $ | 580 | | | | | | | |

The remaining funds are intended for general corporate purposes.

In December 2019, the Company paid the outstanding $1,200 principal balance and interest on the 1.700% Senior Notes, with existing sources of cash and cash equivalents and short-term investments.

In February 2020, the Company paid the outstanding $500 principal balance and interest on the 1.750% Senior Notes, with existing sources of cash and cash equivalents and short-term investments.

In August 2019, the Company's Japanese subsidiary issued approximately $200 and $100 of Guaranteed Senior Notes at fixed interest rates of 0.28% and 0.42%, respectively.

The Chief Executive Officer and the Chief Financial Officer, with assistance from other members of management, have reviewed the effectiveness of our disclosure controls and procedures as of August [removed: 30, 2020] [added: 29, 2021] and, based on their evaluation, have concluded that the disclosure controls and procedures were effective as of such date.

Under the supervision of and with the participation of our management, we assessed the effectiveness of our internal control over financial reporting as of August [removed: 30, 2020,] [added: 29, 2021,] using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013).

Based on its assessment, management has concluded that our internal control over financial reporting was effective as of August [removed: 30, 2020.][added: 29, 2021.]

There 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) that occurred during the fourth quarter of [removed: 2020] [added: 2021] that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| /s/ W. CRAIG JELINEK | | | | | |

| W. Craig Jelinek | | | | | |

| *President, Chief Executive Officer and Director* | | | | | |

| /s/ RICHARD A. GALANTI | | | | | |

| Richard A. Galanti | | | | | |

| *Executive Vice President, Chief Financial Officer and Director* | | | | | |

Information relating to the availability of our code of ethics for senior financial officers and a list of our executive officers appear in Part I, [Item [removed: 1](#id2c7a27cc45a4341a7bdf88b9739d38b_16)] [added: 1](#ie58daa2d8b3247c6bfd8c5ea0ae4a34e_16)] of this Report.

The information required by this Item concerning our directors and nominees for director is incorporated herein by reference to the sections entitled “Proposal 1: Election of Directors,” “Directors” and “Committees of the Board” in Costco’s Proxy Statement for its [removed: 2021] [added: 2022] annual meeting of shareholders, which will be filed with the SEC within 120 days of the end of our fiscal year (“Proxy Statement”).

| | | | | | | | | | | | | | | | | | | Incorporated by Reference | | | | | | | | | | | | | | | [removed: | | | | | | | | | | | |]

| Exhibit Number | | | | | | Exhibit Description | | | | | | Filed Herewith | | | | | | Form | | | | | | Period Ended | | | | | | Filing Date | | | [removed: | | | | | | | | | | | |]

| 3.1 | | | | | | [Articles of Incorporation as amended of Costco Wholesale Corporation](https://www.sec.gov/Archives/edgar/data/909832/000090983220000004/costex3110q21620.htm) | | | | | | | | | | | | 10-Q | | | | | | 2/16/2020 | | | | | | 3/12/2020 | | | [removed: | | | | | | | | | | | |]

| 3.2 | | | | | | [removed: [Bylaws](https://www.sec.gov/Archives/edgar/data/909832/000119312520018115/d880773dex32.htm) [as amended](https://www.sec.gov/Archives/edgar/data/909832/000119312520018115/d880773dex32.htm) [of] [added: [Bylaws as amended of] Costco Wholesale Corporation](https://www.sec.gov/Archives/edgar/data/909832/000119312520018115/d880773dex32.htm) | | | | | | | | | | | | 8-K | | | | | | | | | | | | 1/29/2020 | | | [removed: | | | | | | | | | | | |]

| 3.2.1 | | | | | | [Amendments to Sections 3.3, 3.4, and 3.6 of the Bylaws of Costco Wholesale Corporation (to be effective and first apply with respect to the Company's 2022 Annual Meeting of Shareholders)](https://www.sec.gov/Archives/edgar/data/909832/000119312520247153/d87006dex32.htm) | | | | | | | | | | | | 8-K | | | | | | | | | | | | 9/16/2020 | | | [removed: | | | | | | | | | | | |]

| 4.1 | | | | | | First Supplemental Indenture between Costco Wholesale Corporation and U.S. Bank National Association, as Trustee, dated as of March 20, 2002 (incorporated by reference to [removed: [Exhibits](https://www.sec.gov/Archives/edgar/data/909832/000090730302000061/exh41to8k.txt) [4.1](https://www.sec.gov/Archives/edgar/data/909832/000090730302000061/exh41to8k.txt)] [added: [Exhibits 4.1](https://www.sec.gov/Archives/edgar/data/909832/000090730302000061/exh41to8k.txt)] and [4.2](https://www.sec.gov/Archives/edgar/data/909832/000090730302000061/exh42to8k.txt) to the Company's Current Report on the Form 8-K filed on March 25, 2002) | | | | | | | | | | | | 8-K | | | | | | | | | | | | 3/25/2002 | | | [removed: | | | | | | | | | | | |]

| 4.2 | | | | | | [Form of 1.375% Senior Notes due June 20, 2027](https://www.sec.gov/Archives/edgar/data/909832/000119312520110803/d903866dex41.htm) | | | | | | | | | | | | 8-K | | | | | | | | | | | | 4/17/2020 | | | [removed: | | | | | | | | | | | |]

| 4.3 | | | | | | [Form of 1.600% Senior Notes due April 20, 2030](https://www.sec.gov/Archives/edgar/data/909832/000119312520110803/d903866dex42.htm) | | | | | | | | | | | | 8-K | | | | | | | | | | | | 4/17/2020 | | | [removed: | | | | | | | | | | | |]

| 4.4 | | | | | | [Form of 1.750% Senior Notes due April 20, 2032](https://www.sec.gov/Archives/edgar/data/909832/000119312520110803/d903866dex43.htm) | | | | | | | | | | | | 8-K | | | | | | | | | | | | 4/17/2020 | | | [removed: | | | | | | | | | | | |]

| 4.5 | | | | | | [Form of 2.300% Senior Notes due May 18, 2022](https://www.sec.gov/Archives/edgar/data/909832/000119312517172294/d398248dex42.htm) | | | | | | | | | | | | 8-K | | | | | | | | | | | | 5/16/2017 | | | [removed: | | | | | | | | | | | |]

| 4.6 | | | | | | [Form of 2.750% Senior Notes due May 18, 2024](https://www.sec.gov/Archives/edgar/data/909832/000119312517172294/d398248dex43.htm) | | | | | | | | | | | | 8-K | | | | | | | | | | | | 5/16/2017 | | | [removed: | | | | | | | | | | | |]

| 4.7 | | | | | | [Form of 3.000% Senior Notes due May 18, 2027](https://www.sec.gov/Archives/edgar/data/909832/000119312517172294/d398248dex44.htm) | | | | | | | | | | | | 8-K | | | | | | | | | | | | 5/16/2017 | | | [removed: | | | | | | | | | | | |]

| 4.8 | | | | | | [Description of Common [removed: Stock](https://www.sec.gov/Archives/edgar/data/909832/000090983220000017/costex4810k083020.htm) | | | | | | x | | | | | |] [added: Stock](http://www.sec.gov/Archives/edgar/data/909832/000090983220000017/costex4810k083020.htm)] | | | | | | | | | | | | [added: 10-K] | | | | | | [added: 8/30/2020] | | | | | | [added: 10/7/2020] | | |

| 10.1* | | | | | | [Costco Wholesale Executive Health Plan](http://www.sec.gov/Archives/edgar/data/909832/000119312512428890/d388097dex101.htm) | | | | | | | | | | | | 10-K | | | | | | 9/2/2012 | | | | | | 10/19/2012 | | | [removed: | | | | | | | | | | | |]

| 10.2* | | | | | | [2019 Incentive Plan](http://www.sec.gov/Archives/edgar/data/909832/000090983218000018/costproxy2018.htm#sD1A6C6E2B97792177C11C8F81F35ABA5) | | | | | | | | | | | | DEF 14 | | | | | | | | | | | | 12/17/2019 | | | [removed: | | | | | | | | | | | |]

| 10.3* | | | | | | [Seventh Restated 2002 Stock Incentive Plan](http://www.sec.gov/Archives/edgar/data/909832/000090983214000028/costdefproxy2014.htm#sADEFC67A06AE143EB0AD50BB166A9871) | | | | | | | | | | | | DEF 14A | | | | | | | | | | | | 12/19/2014 | | | [removed: | | | | | | | | | | | |]

| 10.3.1* | | | | | | [2019 Stock Incentive Plan Restricted Stock Unit Award Agreement-Employee](https://www.sec.gov/Archives/edgar/data/909832/000090983219000033/costex1021112419.htm) | | | | | | | | | | | | 10-Q | | | | | | 11/24/2019 | | | | | | 12/23/2019 | | | [removed: | | | | | | | | | | | |]

| 10.3.2* | | | | | | [2019 Stock Incentive Plan Restricted Stock Unit Award Agreement - Non-U.S. Employee](https://www.sec.gov/Archives/edgar/data/909832/000090983219000033/costex1022112419.htm) | | | | | | | | | | | | 10-Q | | | | | | 11/24/2019 | | | | | | 12/23/2019 | | | [removed: | | | | | | | | | | | |]

| 10.3.3* | | | | | | [2019 Stock Incentive Plan Restricted Stock Unit Award Agreement-Non-Executive Director](https://www.sec.gov/Archives/edgar/data/909832/000090983219000033/costex1023112419.htm) | | | | | | | | | | | | 10-Q | | | | | | 11/24/2019 | | | | | | 12/23/2019 | | | [removed: | | | | | | | | | | | |]

| 10.3.4* | | | | | | [2019 Stock Incentive Plan Letter Agreement for 2020 Performance-Based Restricted Stock Units-Executive](https://www.sec.gov/Archives/edgar/data/909832/000090983219000033/costex1024112419.htm) | | | | | | | | | | | | 10-Q | | | | | | 11/24/2019 | | | | | | 12/23/2019 | | | [removed: | | | | | | | | | | | |]

| 10.4* | | | | | | [Fiscal [removed: 2020 Executive] [added: 202](https://www.sec.gov/Archives/edgar/data/909832/000119312520270247/d41700dex101.htm)[1](https://www.sec.gov/Archives/edgar/data/909832/000119312520270247/d41700dex101.htm) [Executive] Bonus [removed: Plan](https://www.sec.gov/Archives/edgar/data/909832/000119312519270742/d816585dex101.htm)] [added: Plan](https://www.sec.gov/Archives/edgar/data/909832/000119312520270247/d41700dex101.htm)] | | | | | | | | | | | | 8-K | | | | | | | | | | | | [removed: 10/21/2019 | | | | | | | | | | | |] [added: 10/15/2020] | | |

| 10.5* | | | | | | [Executive Employment Agreement, effective January 1, 2017, between W. Craig Jelinek and Costco Wholesale Corporation](http://www.sec.gov/Archives/edgar/data/909832/000090983216000040/costex10110q112016.htm) | | | | | | | | | | | | 10-Q | | | | | | 11/20/2016 | | | | | | 12/16/2016 | | | [removed: | | | | | | | | | | | |]

| 10.5.1* | | | | | | [Extension of the Term of the Executive Employment Agreement, effective January 1, 2019, between W. Craig Jelinek and Costco Wholesale Corporation](http://www.sec.gov/Archives/edgar/data/909832/000090983218000022/costex10210q112518.htm) | | | | | | | | | | | | 10-Q | | | | | | 11/25/2018 | | | | | | 12/20/2018 | | | [removed: | | | | | | | | | | | |]

| 10.5.2* | | | | | | [Extension of the Term of the Executive Employment Agreement, effective January 1, 2020, between W. Craig Jelinek and Costco Wholesale Corporation](https://www.sec.gov/Archives/edgar/data/909832/000090983219000033/costex103112419.htm) | | | | | | | | | | | | 10-Q | | | | | | 11/24/2019 | | | | | | 12/23/2019 | | | [removed: | | | | | | | | | | | |]

| 10.6 | | | | | | [Form of Indemnification Agreement](http://www.sec.gov/Archives/edgar/data/909832/000103221099001718/0001032210-99-001718.txt) | | | | | | | | | | | | 14A | | | | | | | | | | | | 12/13/1999 | | | [removed: | | | | | | | | | | | |]

| 10.7* | | | | | | [Deferred Compensation Plan](http://www.sec.gov/Archives/edgar/data/909832/000144530513002422/costex10510k2013.htm) | | | | | | | | | | | | 10-K | | | | | | 9/1/2013 | | | | | | 10/16/2013 | | | [removed: | | | | | | | | | | | |]

| 10.8 | | | | | | [Citibank, N.A. Co-Branded Credit Card Agreement](http://www.sec.gov/Archives/edgar/data/909832/000090983215000012/costex10110qa51015.htm) | | | | | | | | | | | | 10-Q/A | | | | | | 5/10/2015 | | | | | | 8/31/2015 | | | [removed: | | | | | | | | | | | |]

| 10.8.1 | | | | | | [First Amendment to Citi, N.A. Co-Branded Credit Card Agreement](http://www.sec.gov/Archives/edgar/data/909832/000090983215000017/costex10210q112215.htm) | | | | | | | | | | | | 10-Q | | | | | | 11/22/2015 | | | | | | 12/17/2015 | | | [removed: | | | | | | | | | | | |]

| 10.8.2 | | | | | | [Second Amendment to Citi, N.A. Co-Branded Credit Card Agreement](http://www.sec.gov/Archives/edgar/data/909832/000090983216000023/costex10110q21416.htm) | | | | | | | | | | | | 10-Q | | | | | | 2/14/2016 | | | | | | 3/9/2016 | | | [removed: | | | | | | | | | | | |]

| 10.8.3 | | | | | | [Third Amendment to Citi, N.A. Co-Branded Credit Card Agreement](http://www.sec.gov/Archives/edgar/data/909832/000090983216000032/costex105310k82816.htm) | | | | | | | | | | | | 10-K | | | | | | 8/28/2016 | | | | | | 10/12/2016 | | | [removed: | | | | | | | | | | | |]

| 10.8.4 | | | | | | [Fourth Amendment to Citi, N.A. Co-Branded Credit Card Agreement](http://www.sec.gov/Archives/edgar/data/909832/000090983218000002/costex10110q21818.htm) | | | | | | | | | | | | 10-Q | | | | | | 2/18/2018 | | | | | | 3/15/2018 | | | [removed: | | | | | | | | | | | |]

| 10.8.5 | | | | | | [Fifth Amendment to Citi, N.A. Co-Branded Credit Card Agreement](http://www.sec.gov/Archives/edgar/data/909832/000090983219000003/costex10210q21719.htm) | | | | | | | | | | | | 10-Q | | | | | | 2/17/2019 | | | | | | 3/13/2019 | | | [removed: | | | | | | | | | | | |]

| 10.8.6 | | | | | | [Sixth Amendment to Citi, N.A. Co-Branded Credit Card Agreement](https://www.sec.gov/Archives/edgar/data/909832/000090983219000019/costex108710k9119.htm) | | | | | | | | | | | | 10-K | | | | | | 9/1/2019 | | | | | | 10/11/2019 | | | [removed: | | | | | | | | | | | |]

| 21.1 | | | | | | [Subsidiaries of the [removed: Company](https://www.sec.gov/Archives/edgar/data/909832/000090983220000017/costex21110k08302020.htm)] [added: Company](https://www.sec.gov/Archives/edgar/data/909832/000090983221000014/costex21110k082921.htm)] | | | | | | x | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | | | | | |]

| 23.1 | | | | | | [Consent of Independent Registered Public Accounting [removed: Firm](https://www.sec.gov/Archives/edgar/data/909832/000090983220000017/costex23110k083020.htm)] [added: Firm](https://www.sec.gov/Archives/edgar/data/909832/000090983221000014/costex23110k082921.htm)] | | | | | | x | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | | | | | |]

| 31.1 | | | | | | [Rule 13a – 14(a) [removed: Certifications](https://www.sec.gov/Archives/edgar/data/909832/000090983220000017/costex31110k083020.htm)] [added: Certifications](https://www.sec.gov/Archives/edgar/data/909832/000090983221000014/costex31110k082921.htm)] | | | | | | x | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | | | | | |]

| 32.1 | | | | | | [Section 1350 [removed: Certifications](https://www.sec.gov/Archives/edgar/data/909832/000090983220000017/costex32110k083020.htm)] [added: Certifications](https://www.sec.gov/Archives/edgar/data/909832/000090983221000014/costex32110k082921.htm)] | | | | | | x | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | | | | | |]

| 101.INS | | | | | | Inline XBRL Instance Document | | | | | | x | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | | | | | |]

| 101.SCH | | | | | | Inline XBRL Taxonomy Extension Schema Document | | | | | | x | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | | | | | |]

| 101.CAL | | | | | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | | | | | x | | | | | | | | | | | | | | | | | | | | | [removed: | | | | | | | | | | | |]

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | COSTCO WHOLESALE CORPORATION (Registrant) | | | | | | | | | [removed: | | | | | |]

| | | | By | | | | | | /s/ RICHARD A. GALANTI | | | [removed: | | | | | |]

| | | | | | | | | | Richard A. Galanti *Executive Vice President, Chief Financial Officer and Director* | | | [removed: | | | | | |]

| By | | | | | | /s/ W. CRAIG JELINEK | | | | | | By | | | | | | /s/ HAMILTON E. JAMES | | | [removed: | | | | | | | | |]

| | | | | | | W. Craig Jelinek *President, Chief Executive Officer and Director* | | | | | | | | | | | | Hamilton E. James *Chairman of the Board* | | | [removed: | | | | | | | | |]

| By | | | | | | /s/ RICHARD A. GALANTI | | | | | | By | | | | | | /s/ DANIEL M. HINES | | | [removed: | | | | | | | | |]

| | | | | | | Richard A. Galanti *Executive Vice President, Chief Financial Officer and Director (Principal Financial Officer)* | | | | | | | | | | | | Daniel M. Hines *Senior Vice President and Corporate Controller (Principal Accounting Officer)* | | | [removed: | | | | | | | | |]

| By | | | | | | /s/ SUSAN L. DECKER | | | | | | By | | | | | | /s/ KENNETH D. DENMAN | | | [removed: | | | | | | | | |]

| | | | | | | Susan L. Decker *Director* | | | | | | | | | | | | Kenneth D. Denman *Director* | | | [removed: | | | | | | | | |]

| By | | | | | | /s/ SALLY JEWELL | | | | | | By | | | | | | /s/ CHARLES T. MUNGER | | | [removed: | | | | | | | | |]

| | | | | | | Sally Jewell *Director* | | | | | | | | | | | | Charles T. Munger *Director* | | | [removed: | | | | | | | | |]

| By | | | | | | /s/ JEFFREY S. RAIKES | | | | | | By | | | | | | /s/ JOHN W. STANTON | | | [removed: | | | | | | | | |]

| | | | | | | Jeffrey S. Raikes *Director* | | | | | | | | | | | | John W. Stanton *Director* | | | [removed: | | | | | | | | |]

| By | | | | | | /s/ MARY (MAGGIE) A. WILDEROTTER | | | | | | | | | | | | | | | [removed: | | | | | | | | |]

| | | | | | | Mary (Maggie) A. Wilderotter *Director* | | | | | | | | | | | | | | | [removed: | | | | | | | | |]

October 5, 2021

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | |

October 5, 2021

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

October 6, 2020

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |