Costco Wholesale (COST) 10-K risk factor changes: FY2023 vs FY2022

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](#i7f92822ddf844c24912627bf68509b56_46)] [added: 7](#i4bf6d0bde838478985b72eb4052bc976_46)] and our consolidated financial statements and related notes in [removed: Item 8] [added: [Item 8](#i4bf6d0bde838478985b72eb4052bc976_76)] of this Report.

Our financial and operational performance is highly dependent on our U.S. and Canadian operations, which comprised 87% and [removed: 85%] [added: 84%] of net sales and operating income in [removed: 2022, respectively.][added: 2023.]

Within the U.S., we are highly dependent on our California operations, which comprised [removed: 28%] [added: 27%] of U.S. net sales in [removed: 2022.][added: 2023.]

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

[removed: Any debilitating failure of our critical IT systems,] data centers and backup systems would require significant investments in resources to restore IT services and may cause serious impairment in our business operations including loss of business services, increased cost of moving merchandise and failure to provide service to our members.

We rely upon IT systems and networks, some of which are managed by [added: or belong to] third parties, [removed: in connection with virtually all of our business activities.][added: including suppliers, partners, vendors, and service providers.]

Additionally, we collect, store and process sensitive information relating to our business, members, [removed: suppliers] [added: employees,] and [removed: employees.][added: other third parties.]

[removed: Threats designed] [added: Attempts] to gain unauthorized access to systems, networks and data, both ours and third parties with whom we work, are increasing in frequency and [removed: sophistication.][added: sophistication, and in some cases, these attempts are successful.]

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

The potential impacts of a [removed: material] cybersecurity attack include reputational damage, litigation, government enforcement actions, penalties, disruption to [removed: systems,] [added: systems and operations,] 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.

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

[removed: As we offer] new payment options to our members, we may be subject to additional rules, regulations, compliance requirements, and higher fraud losses.

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

We compete for members, employees, sites, products and services and in other important respects with a wide range of local, regional and national wholesalers and retailers, both in the United States and in foreign countries, including other warehouse-club operators, supermarkets, supercenters, [removed: internet] [added: online] retailers, gasoline stations, hard discounters, department and specialty stores and operators selling a single category or narrow range of merchandise.

Such retailers and warehouse club operators compete [added: vigorously and] in a variety of ways, including pricing, selection and availability, services, location, convenience, store hours, and the attractiveness and ease of use of websites and mobile applications.

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 [removed: fiscal][added: fiscal, monetary and tax policies including changes in interest rates, 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, [added: trade-related] actions in various countries, particularly China and the United States, have affected the costs of some of our merchandise.

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

We buy from numerous domestic and foreign [removed: manufacturers] [added: suppliers] and importers.

Because of our efforts to adhere to [removed: high quality] [added: high-quality] standards for which available supply may be limited, particularly for certain food items, the large volumes we demand may not be consistently available.

Our suppliers (and those they depend upon for materials and services) are subject to risks, including labor disputes, union organizing activities, financial liquidity, natural disasters, extreme weather conditions, public health emergencies, supply constraints and general economic and political conditions [added: and other risks similar to those we face] that could limit their ability to timely provide us with acceptable merchandise.

During [removed: 2022,] [added: 2023,] our international operations, including Canada, generated 27% and [removed: 32%] [added: 34%] of our net sales and operating [removed: income, respectively.][added: income.]

Currency fluctuations may increase our merchandise costs and may not be passed on to [removed: members.][added: members and thus may adversely affect our results of operations.]

Natural disasters, extreme weather conditions, [removed: public health emergencies] or other catastrophic events could negatively affect our business, financial condition, and results of operations.

Natural disasters and extreme weather conditions, including those impacted by climate change, such as hurricanes, typhoons, floods, earthquakes, wildfires, droughts; acts of terrorism or violence, including active shooter situations; [added: and] energy shortages; [removed: public health issues, including pandemics and quarantines,] particularly in California or Washington state, where our centralized operating systems and administrative personnel are located, could negatively affect our operations and financial performance.

[removed: The COVID-19 pandemic continues to] [added: Pandemics and other health crises, including COVID-19, could] affect our business, financial condition and results of operations in many respects.

[removed: The continuing impacts of the COVID-19 pandemic are highly unpredictable and volatile and are affecting] [added: A pandemic, such as COVID-19, could affect] certain business operations, demand for our products and services, in-stock positions, costs of doing business, availability of labor, access to inventory, supply chain operations, our ability to predict future performance, exposure to litigation, and our financial performance, among other things.

- The pace of [removed: recovery when the pandemic subsides;][added: post-pandemic recovery;]

Government regulations limiting carbon dioxide and other greenhouse gas emissions [added: and other environmental restrictions] may increase compliance and merchandise costs, and other regulation affecting energy inputs could materially affect our profitability.

More stringent fuel economy [removed: standards and] [added: standards, changing] public policies aimed at increasing the adoption of zero-emission and alternative fuel vehicles and other regulations related to climate [removed: change] [added: change, and evolving consumer preferences] will affect our future operations and [removed: may] [added: will] adversely impact [added: certain elements of] our [removed: profitability,] [added: profitability] and require significant capital expenditures.

At the end of [removed: 2022,] [added: 2023,] we operated [removed: 260] [added: 270] warehouses outside of the [removed: U.S.,] [added: U.S. (31% of all warehouse locations),] and we plan to continue expanding our international operations.

These factors include political and economic conditions, regulatory constraints, currency regulations, [added: policy changes, and other matters in any of the countries or regions in which we operate, now or in the future.]

We are exposed to risks relating to evaluations of controls required by Section 404 of the Sarbanes-Oxley [removed: Act.][added: Act and otherwise.]

[removed: Additionally, at any point in time, we may be under examination for value] added, sales-based, payroll, product, import or other non-income taxes.

[removed: Significant changes] [added: Changes] in or failure to comply with regulations relating to the use, storage, discharge and disposal of hazardous materials, hazardous and non-hazardous wastes and other environmental matters [added: (such as recycling and extended producer responsibility requirements)] could adversely impact our business, financial condition and results of operations.

Failure to achieve compliance could subject us to lawsuits and other [removed: proceedings,] [added: proceedings] and lead to damage awards, fines, penalties, and remediation costs.

Any debilitating failure of our critical IT systems,

Insufficient IT capacity could also impact our capacity for timely, complete and accurate financial and non-financial reporting required by law.

Our logging capabilities, or the logging capabilities of third parties, are also not always complete or sufficiently detailed, affecting our ability to fully investigate and understand the scope of security events.

As we offer

Our failure to offer payment methods desired by our members could create a competitive disadvantage.

Our ability to control labor and benefit costs is subject to

Our efforts to secure supply could lead to commitments that prove to be unsuccessful in the short and long-term.

The emergence, severity, magnitude and duration of global or regional health crises are uncertain and difficult to predict.

- The severity and duration of pandemics;

New reporting obligations globally are increasing the cost and complexity of doing business.

Uncertainties around our developing systems concerning controls for non-financial reporting also create risks.

Additionally, at any point in time, we may be under examination for value

The failure of these

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.

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.

Consequently, fluctuations in currency exchange rates may adversely affect our results of operations.

Public health issues, whether occurring in the U.S. or abroad, could disrupt our operations, disrupt the operations of suppliers or members, or have an adverse impact on consumer spending and confidence levels.

- The severity and duration of the pandemic, including future mutations or related variants of the virus in areas in which we operate;

To the extent that COVID-19 continues to adversely affect the U.S. and global economy, our business, results of operations, cash flows, or financial condition, it may also heighten other risks described in this section, including but not limited to those related to consumer behavior and expectations, competition, brand reputation, implementation of strategic initiatives, cybersecurity threats, payment-related risks, technology systems disruption, supply chain disruptions, labor availability and cost, litigation, operational risk as a result of remote work arrangements and regulatory requirements.

policy changes such as the withdrawal of the U.K. from the European Union, and other matters in any of the countries or regions in which we operate, now or in the future.

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](#i7f92822ddf844c24912627bf68509b56_103)] [added: 1](#i4bf6d0bde838478985b72eb4052bc976_106)] to the consolidated financial statements included in [removed: Item 8] [added: [Item 8](#i4bf6d0bde838478985b72eb4052bc976_76)] 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: 2022] [added: 2023] would have had an immaterial incremental change in fair market value.

As of the end of [removed: 2022,] [added: 2023,] long-term debt with fixed interest rates was [removed: $6,590.][added: $6,484.]

See [Note [removed: 4](#i7f92822ddf844c24912627bf68509b56_121)] [added: 4](#i4bf6d0bde838478985b72eb4052bc976_118)] to the consolidated financial statements included in [removed: Item 8] [added: [Item 8](#i4bf6d0bde838478985b72eb4052bc976_76)] of this Report for more information on our long-term debt.

The contracts are intended primarily to economically hedge exposure to U.S. dollar merchandise inventory expenditures made by our [removed: international subsidiaries.]

For additional information related to the Company's forward foreign-exchange contracts, see [Notes [removed: 1](#i7f92822ddf844c24912627bf68509b56_103)] [added: 1](#i4bf6d0bde838478985b72eb4052bc976_106)] and [removed: [3](#i7f92822ddf844c24912627bf68509b56_118)] [added: [3](#i4bf6d0bde838478985b72eb4052bc976_115)] to the consolidated financial statements included in [removed: Item 8] [added: [Item 8](#i4bf6d0bde838478985b72eb4052bc976_76)] of this Report.

A hypothetical 10% strengthening of the functional currency compared to the non-functional currency exchange rates at [removed: August 28, 2022,] [added: September 3, 2023,] would have decreased the fair value of the contracts by [removed: $128] [added: $109] and resulted in an unrealized loss in the consolidated statements of income for the same amount.

international subsidiaries.

We are principally engaged in the operation of membership warehouses in the United States (U.S.) and Puerto Rico, Canada, Mexico, Japan, [added: the] United Kingdom (U.K.), Korea, [removed: Taiwan,] Australia, [added: Taiwan, China,] Spain, France, [removed: China,] [added: Iceland, New Zealand,] and [removed: Iceland.][added: Sweden.]

Costco operated [added: 861,] 838, [removed: 815,] and [removed: 795] [added: 815] warehouses worldwide at [added: September 3, 2023,] August 28, 2022, [removed: August 29, 2021,] and August [removed: 30, 2020, respectively.][added: 29, 2021.]

The Company operates e-commerce websites in the U.S., Canada, Mexico, [added: the] U.K., Korea, Taiwan, Japan, and Australia.

References to [removed: 2022, 2021,] [added: 2022] and [removed: 2020] [added: 2021] relate to the 52-week fiscal years ended August 28, 2022, [removed: August 29, 2021,] and August [removed: 30, 2020, respectively.][added: 29, 2021.]

We buy most of our merchandise directly from [removed: manufacturers] [added: suppliers] and route it to cross-docking consolidation points (depots) or directly to our warehouses.

Our depots receive large shipments from [removed: manufacturers] [added: suppliers] and quickly ship these goods to warehouses.

[removed: For our e-commerce operations we ship] merchandise through our [removed: depots, our logistics operations for big] [added: depots] and [removed: bulky items,] [added: logistics operations,] as well as through drop-ship and other delivery arrangements with our suppliers.

Our average warehouse space is approximately [removed: 146,000] [added: 147,000] square feet, with newer units being slightly larger.

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

Warehouse Ancillary (includes gasoline, pharmacy, optical, food court, hearing aids, and tire installation) and Other Businesses (includes [removed: e-commerce,] [added: e-commerce1,] business [removed: centers,] [added: centers1,] travel, and other)

The number of warehouses with gas stations varies significantly by country, and we have no gasoline business in [removed: Korea] [added: Korea, China,] or [removed: China.][added: Sweden.]

We operated [removed: 668] [added: 692] gas stations at the end of [removed: 2022.][added: 2023.]

[removed: Net sales for our] [added: Our] gasoline business [removed: increased to] [added: represented] approximately [removed: 14%] [added: 13%] of total net sales in [removed: 2022.][added: 2023.]

Net sales for e-commerce represented approximately [removed: 7%] [added: 6%] of total net sales in [removed: 2022.][added: 2023.]

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

Costco Travel offers vacation packages, [removed: hotels,] [added: car rentals,] cruises, [added: hotels,] and other travel products exclusively for Costco members (offered in the U.S., Canada, and the U.K.).

Certain financial information for our segments and geographic areas is included in [Note [removed: 11](#i7f92822ddf844c24912627bf68509b56_145)] [added: 11](#i4bf6d0bde838478985b72eb4052bc976_139)] to the consolidated financial statements included in [removed: Item 8] [added: [Item 8](#i4bf6d0bde838478985b72eb4052bc976_76)] of this Report.

Our member renewal rate was [removed: 93%] [added: 92.7%] in the U.S. and Canada and [removed: 90%] [added: 90.4%] worldwide at the end of [removed: 2022.][added: 2023.]

| | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| Gold Star | | | [removed: 54,000] [added: 58,800] | | | | | | [removed: 50,200] [added: 54,000] | | | | | | [removed: 46,800] [added: 50,200] | | |

| Business, including affiliates | | | [removed: 11,800] [added: 12,200] | | | | | | [removed: 11,500] [added: 11,800] | | | | | | [removed: 11,300] [added: 11,500] | | |

| Total paid members | | | [removed: 65,800] [added: 71,000] | | | | | | [removed: 61,700] [added: 65,800] | | | | | | [removed: 58,100] [added: 61,700] | | |

| Household cards | | | [removed: 53,100] [added: 56,900] | | | | | | [removed: 49,900] [added: 53,100] | | | | | | [removed: 47,400] [added: 49,900] | | |

| Total cardholders | | | [removed: 118,900] [added: 127,900] | | | | | | [removed: 111,600] [added: 118,900] | | | | | | [removed: 105,500] [added: 111,600] | | |

Executive memberships are also available in Canada, Mexico, the U.K., Japan, Korea, [removed: and] Taiwan, [added: and Australia,] for which the additional fee varies.

This program [removed: also] offers [removed: (except in Mexico] [added: services that vary by state] and [removed: Korea)] [added: country and provide] 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.

The sales penetration of Executive members represented approximately [removed: 71%] [added: 72.8%] of worldwide net sales in [removed: 2022.][added: 2023.]

At the end of [removed: 2022,] [added: 2023,] we employed [removed: 304,000] [added: 316,000] employees worldwide.

[removed: The large majority (approximately 95%) is] [added: Approximately 95% are] employed in our membership warehouses and distribution channels, and [removed: less than 10%] [added: approximately 5%] are represented by unions.

The total number of employees by segment [removed: is:][added: was:]

| United States | | | [removed: 202,000] [added: 208,000] | | | | | | [removed: 192,000] [added: 202,000] | | | | | | [removed: 181,000] [added: 192,000] | | |

| Canada | | | [removed: 50,000] [added: 51,000] | | | | | | [removed: 47,000] [added: 50,000] | | | | | | [removed: 46,000] [added: 47,000] | | |

| Other International | | | [removed: 52,000] [added: 57,000] | | | | | | [removed: 49,000] [added: 52,000] | | | | | | [removed: 46,000] [added: 49,000] | | |

| Total employees | | | [removed: 304,000] [added: 316,000] | | | | | | [removed: 288,000] [added: 304,000] | | | | | | [removed: 273,000] [added: 288,000] | | |

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

[removed: Many attributes of our business contribute to the objective; the] [added: 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 [removed: maintaining] a [added: target] ratio of at least 50% of our employee base being full-time employees.

In [removed: 2022,] [added: 2023,] in the U.S. that rate was approximately 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 [added: promoting] diversity, equity and inclusion and creating an inclusive and respectful workplace.

Costco is firmly committed to [removed: helping protect] [added: protecting] the health and safety of our members and employees and to serving our communities.

[removed: This report] [added: The Sustainability Commitment] and other information on our website are not incorporated by reference into and do not form any part of this Annual Report.

References to 2023 relate to the 53-week fiscal year ended September 3, 2023.

Our e-commerce operations ship

Our business centers carry items

1 E-commerce and business centers are allocated to the appropriate merchandise categories in the Net Sales portion of Item 7.

Executive members totaled 32.3 million and represented 45.4% of paid members.

We also utilize seasonal employees.

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

Many attributes of our business contribute to the objective.

We strive for an environment where all employees feel that they belong, are accepted, included, respected and supported because of who they are.

We demonstrate leadership commitment to equity through consistent communication, employee development and education, support of diversity and inclusion initiatives within the organization, community involvement, and supplier diversity.

Costco continues its efforts to develop future leaders, including through the supervisor in training programs.

In 2023, over 7,800 hourly employees completed the 6-week course.

Costco strives to provide our employees with competitive wages and excellent benefits.

In March 2023, we increased the top of the wage scales by 85 cents per hour in the U.S, Canada and Puerto Rico.

In September of 2023, we increased the starting wage to at least $18.50 for all entry-level positions in the U.S. We have also expanded our benefits in the U.S. to include additional mental health support for children and adults at little to no cost to our employees.

We compete on a worldwide basis with global, national, and regional wholesalers and retailers, including supermarkets, supercenters, online

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

At the end of 2020, we standardized our membership count methodology globally to be consistent with the U.S. and Canada, which resulted in the addition to the count of approximately 2.0 million total cardholders for 2020, of which 1.3 million were paid members.

Membership fee income and the renewal rate calculations were not affected.

These services are generally provided by third parties and vary by state and country.

Executive members totaled 29.1 million and represented 57% of paid members (excluding affiliates) in the U.S. and Canada, and 22% of paid members (excluding affiliates) in our Other International operations.

We also utilize seasonal employees during peak periods.

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

In 2022, we appointed a new Chief Diversity and Inclusion Officer.

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.

In October 2021, we provided an increase of a minimum of $0.50 per hour for U.S. and Canada wage scales.

In March 2022, we provided certain compensation increases, including a $0.75 per hour increase to the top of the U.S. wage scales, increased the starting wage to $17.50, and granted our employees one additional day of paid time off.

In July 2022, we provided an additional increase to the top of the U.S. wage scales of $0.50 per hour.

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

Many of the major metropolitan areas in the U.S. and certain of our Other International locations have multiple competing clubs.

| James P. Murphy | | | | | | Executive Vice President, Chief Operating Officer, International Division. Mr. Murphy was Senior Vice President, International, from 2004 to October 2010. Mr. Murphy is retiring from the Company at the end of calendar year 2022. | | | | | | 2011 | | | | | | 69 | | |

| Timothy L. Rose | | | | | | Executive Vice President, Ancillary Businesses, Manufacturing, and Business Centers. Mr. Rose was Senior Vice President, Merchandising, Foods and Sundries and Private Label, from 1995 to December 2012. Mr. Rose is retiring from the Company effective November, 2022. | | | | | | 2013 | | | | | | 70 | | |

See discussion of Legal Proceedings in [Note [removed: 10](#i7f92822ddf844c24912627bf68509b56_142)] [added: 10](#i4bf6d0bde838478985b72eb4052bc976_136)] to the consolidated financial statements included in [removed: Item 8] [added: [Item 8](#i4bf6d0bde838478985b72eb4052bc976_76)] of this Report.

For the fiscal year ended [removed: August 28, 2022][added: September 3, 2023]

See the definitions of “large accelerated filer,” “accelerated [removed: filer”,] [added: filer,”] “smaller reporting [removed: company”,] [added: company,”] and “emerging growth company” in Rule 12b-2 of the Exchange Act.

The aggregate market value of the voting stock held by non-affiliates of the registrant as of February [removed: 13, 2022] [added: 12, 2023] was [removed: $225,434,477,639.][added: $221,351,787,419.]

The number of shares outstanding of the registrant’s common stock as of [removed: September 27, 2022,] [added: October 3, 2023,] was [removed: 442,604,145.][added: 442,740,572.]

Portions of the Company’s Proxy Statement for the Annual Meeting of Shareholders to be held on January [removed: 19, 2023,] [added: 18, 2024,] are incorporated by reference into [Part [removed: III](#i7f92822ddf844c24912627bf68509b56_157)] [added: III](#i4bf6d0bde838478985b72eb4052bc976_154)] of this Form 10-K.

ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED [removed: AUGUST 28, 2022][added: SEPTEMBER 3, 2023]

| Item 1. | | | [removed: [Business](#i7f92822ddf844c24912627bf68509b56_16)] [added: [Business](#i4bf6d0bde838478985b72eb4052bc976_16)] | | | [removed: [3](#i7f92822ddf844c24912627bf68509b56_16)] [added: [3](#i4bf6d0bde838478985b72eb4052bc976_16)] | | |

| Item 1A. | | | [Risk [removed: Factors](#i7f92822ddf844c24912627bf68509b56_19)] [added: Factors](#i4bf6d0bde838478985b72eb4052bc976_19)] | | | [removed: [9](#i7f92822ddf844c24912627bf68509b56_19)] [added: [8](#i4bf6d0bde838478985b72eb4052bc976_19)] | | |

| Item 1B. | | | [Unresolved Staff [removed: Comments](#i7f92822ddf844c24912627bf68509b56_22)] [added: Comments](#i4bf6d0bde838478985b72eb4052bc976_22)] | | | [removed: [19](#i7f92822ddf844c24912627bf68509b56_22)] [added: [17](#i4bf6d0bde838478985b72eb4052bc976_22)] | | |

| Item 2. | | | [removed: [Properties](#i7f92822ddf844c24912627bf68509b56_25)] [added: [Properties](#i4bf6d0bde838478985b72eb4052bc976_25)] | | | [removed: [19](#i7f92822ddf844c24912627bf68509b56_25)] [added: [17](#i4bf6d0bde838478985b72eb4052bc976_25)] | | |

| Item 3. | | | [Legal [removed: Proceedings](#i7f92822ddf844c24912627bf68509b56_28)] [added: Proceedings](#i4bf6d0bde838478985b72eb4052bc976_28)] | | | [removed: [19](#i7f92822ddf844c24912627bf68509b56_28)] [added: [18](#i4bf6d0bde838478985b72eb4052bc976_28)] | | |

| Item 4. | | | [Mine Safety [removed: Disclosures](#i7f92822ddf844c24912627bf68509b56_31)] [added: Disclosures](#i4bf6d0bde838478985b72eb4052bc976_31)] | | | [removed: [19](#i7f92822ddf844c24912627bf68509b56_31)] [added: [18](#i4bf6d0bde838478985b72eb4052bc976_31)] | | |

| Item 5. | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#i7f92822ddf844c24912627bf68509b56_37)] [added: Securities](#i4bf6d0bde838478985b72eb4052bc976_37)] | | | [removed: [20](#i7f92822ddf844c24912627bf68509b56_37)] [added: [18](#i4bf6d0bde838478985b72eb4052bc976_37)] | | |

| Item 6. | | | [removed: [Reserved](#i7f92822ddf844c24912627bf68509b56_43)] [added: [Reserved](#i4bf6d0bde838478985b72eb4052bc976_43)] | | | [removed: [21](#i7f92822ddf844c24912627bf68509b56_43)] [added: [19](#i4bf6d0bde838478985b72eb4052bc976_43)] | | |

| Item 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i7f92822ddf844c24912627bf68509b56_46)] [added: Operations](#i4bf6d0bde838478985b72eb4052bc976_46)] | | | [removed: [22](#i7f92822ddf844c24912627bf68509b56_46)] [added: [20](#i4bf6d0bde838478985b72eb4052bc976_46)] | | |

| Item 7A. | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#i7f92822ddf844c24912627bf68509b56_73)] [added: Risk](#i4bf6d0bde838478985b72eb4052bc976_73)] | | | [removed: [30](#i7f92822ddf844c24912627bf68509b56_73)] [added: [28](#i4bf6d0bde838478985b72eb4052bc976_73)] | | |

| Item 8. | | | [Financial Statements and Supplementary [removed: Data](#i7f92822ddf844c24912627bf68509b56_76)] [added: Data](#i4bf6d0bde838478985b72eb4052bc976_76)] | | | [removed: [32](#i7f92822ddf844c24912627bf68509b56_76)] [added: [30](#i4bf6d0bde838478985b72eb4052bc976_76)] | | |

| Item 9. | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#i7f92822ddf844c24912627bf68509b56_148)] [added: Disclosure](#i4bf6d0bde838478985b72eb4052bc976_142)] | | | [removed: [64](#i7f92822ddf844c24912627bf68509b56_148)] [added: [60](#i4bf6d0bde838478985b72eb4052bc976_142)] | | |

| Item 9A. | | | [Controls and [removed: Procedures](#i7f92822ddf844c24912627bf68509b56_151)] [added: Procedures](#i4bf6d0bde838478985b72eb4052bc976_145)] | | | [removed: [64](#i7f92822ddf844c24912627bf68509b56_151)] [added: [60](#i4bf6d0bde838478985b72eb4052bc976_145)] | | |

| Item 9B. | | | [Other [removed: Information](#i7f92822ddf844c24912627bf68509b56_154)] [added: Information](#i4bf6d0bde838478985b72eb4052bc976_148)] | | | [removed: [65](#i7f92822ddf844c24912627bf68509b56_154)] [added: [61](#i4bf6d0bde838478985b72eb4052bc976_148)] | | |

| Item 9C. | | | [Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#i7f92822ddf844c24912627bf68509b56_1620)] [added: Inspections](#i4bf6d0bde838478985b72eb4052bc976_151)] | | | [removed: [65](#i7f92822ddf844c24912627bf68509b56_1620)] [added: [61](#i4bf6d0bde838478985b72eb4052bc976_151)] | | |

| Item 10. | | | [Directors, Executive Officers and Corporate [removed: Governance](#i7f92822ddf844c24912627bf68509b56_160)] [added: Governance](#i4bf6d0bde838478985b72eb4052bc976_157)] | | | [removed: [65](#i7f92822ddf844c24912627bf68509b56_160)] [added: [61](#i4bf6d0bde838478985b72eb4052bc976_157)] | | |

| Item 11. | | | [Executive [removed: Compensation](#i7f92822ddf844c24912627bf68509b56_163)] [added: Compensation](#i4bf6d0bde838478985b72eb4052bc976_160)] | | | [removed: [65](#i7f92822ddf844c24912627bf68509b56_163)] [added: [61](#i4bf6d0bde838478985b72eb4052bc976_160)] | | |

| Item 12. | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i7f92822ddf844c24912627bf68509b56_166)] [added: Matters](#i4bf6d0bde838478985b72eb4052bc976_163)] | | | [removed: [65](#i7f92822ddf844c24912627bf68509b56_166)] [added: [61](#i4bf6d0bde838478985b72eb4052bc976_163)] | | |

| Item 13. | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#i7f92822ddf844c24912627bf68509b56_169)] [added: Independence](#i4bf6d0bde838478985b72eb4052bc976_166)] | | | [removed: [65](#i7f92822ddf844c24912627bf68509b56_169)] [added: [61](#i4bf6d0bde838478985b72eb4052bc976_166)] | | |

| Item 14. | | | [Principal Accounting Fees and [removed: Services](#i7f92822ddf844c24912627bf68509b56_172)] [added: Services](#i4bf6d0bde838478985b72eb4052bc976_169)] | | | [removed: [65](#i7f92822ddf844c24912627bf68509b56_172)] [added: [61](#i4bf6d0bde838478985b72eb4052bc976_169)] | | |

| Item 15. | | | [Exhibits, Financial Statement [removed: Schedules](#i7f92822ddf844c24912627bf68509b56_178)] [added: Schedules](#i4bf6d0bde838478985b72eb4052bc976_175)] | | | [removed: [65](#i7f92822ddf844c24912627bf68509b56_178)] [added: [62](#i4bf6d0bde838478985b72eb4052bc976_175)] | | |

| Item 16. | | | [Form 10-K [removed: Summary](#i7f92822ddf844c24912627bf68509b56_181)] [added: Summary](#i4bf6d0bde838478985b72eb4052bc976_178)] | | | [removed: [68](#i7f92822ddf844c24912627bf68509b56_181)] [added: [65](#i4bf6d0bde838478985b72eb4052bc976_178)] | | |

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](#i7f92822ddf844c24912627bf68509b56_19)”,] [added: Factors](#i4bf6d0bde838478985b72eb4052bc976_19)”,] and other factors noted in the section titled “[Item 7-Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i7f92822ddf844c24912627bf68509b56_46)”] [added: Operations](#i4bf6d0bde838478985b72eb4052bc976_46)”] and in the consolidated financial statements and related notes in [removed: Item 8] [added: [Item 8](#i4bf6d0bde838478985b72eb4052bc976_76)] of this Report.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financials statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

| [PART I](#i4bf6d0bde838478985b72eb4052bc976_13) | | | | | | | | |

| [PART II](#i4bf6d0bde838478985b72eb4052bc976_34) | | | | | | | | |

| [PART III](#i4bf6d0bde838478985b72eb4052bc976_154) | | | | | | | | |

| [PART IV](#i4bf6d0bde838478985b72eb4052bc976_172) | | | | | | | | |

| | | | [Signatures](#i4bf6d0bde838478985b72eb4052bc976_181) | | | [66](#i4bf6d0bde838478985b72eb4052bc976_181) | | |

| [PART I](#i7f92822ddf844c24912627bf68509b56_13) | | | | | | | | |

| [PART II](#i7f92822ddf844c24912627bf68509b56_34) | | | | | | | | |

| [PART III](#i7f92822ddf844c24912627bf68509b56_157) | | | | | | | | |

| [PART IV](#i7f92822ddf844c24912627bf68509b56_175) | | | | | | | | |

| | | | [Signatures](#i7f92822ddf844c24912627bf68509b56_184) | | | [69](#i7f92822ddf844c24912627bf68509b56_184) | | |

| United States and Puerto Rico | | | [removed: 466] [added: 477] | | | | | | [removed: 112] [added: 114] | | | | | | [removed: 578] [added: 591] | | |

[removed: (1)126] [added: (1)132] of the [removed: 177] [added: 184] leases are land-only leases, where Costco owns the building.

At the end of [removed: 2022,] [added: 2023,] our warehouses contained approximately [removed: 122.5] [added: 126.3] million square feet of operating floor space: [removed: 85.4] [added: 87.6] million in the U.S.; [removed: 15.2] [added: 15.3] million in Canada; and [removed: 21.9] [added: 23.4] million in Other International.

Total square feet associated with distribution and logistics facilities were approximately [removed: 31.0] [added: 33.1] million.

At September 3, 2023, we operated 861 membership warehouses:

| Other International | | | 110 | | | | | | 53 | | | | | | 163 | | |

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

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

| Total | | | 677 | | | | | | 184 | | | | | | 861 | | |

At August 28, 2022, we operated 838 membership warehouses:

| Other International | | | 105 | | | | | | 48 | | | | | | 153 | | |

| Total | | | 661 | | | | | | 177 | | | | | | 838 | | |

Our common stock is traded on the NASDAQ Global Select Market under the symbol “COST.” On [removed: September 27, 2022,] [added: October 3, 2023,] we had [removed: 10,279] [added: 10,331] stockholders of record.

The following table sets forth information on our common stock repurchase activity for the fourth quarter of [removed: 2022] [added: 2023] (dollars in millions, except per share data):

| Total fourth quarter | | | | | | | | | [removed: 373,000] [added: 433,000] | | | | | | $ | [removed: 495.49] [added: 530.67] | | | | | [removed: 373,000] [added: 433,000] | | | | | | | | |

(1)The repurchase program is conducted under a $4,000 authorization approved by our Board of Directors in [removed: April 2019,] [added: January 2023,] which expires in [removed: April 2023.][added: January 2027.]

The following graph compares the cumulative total shareholder return assuming reinvestment of dividends on an investment of $100 in Costco common stock, S&P 500 Index, [added: S&P Retail Select Index,] and the [added: previously selected] S&P 500 Retail Index over the five years from September [removed: 3, 2017,] [added: 2, 2018,] through [removed: August 28, 2022.][added: September 3, 2023.]

[removed: ][added: ]

| [added: Average Sales Per Warehouse*] | | | | | | [removed: Average Sales Per Warehouse*] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| [added: (Sales In Millions)] | | | | | | [removed: (Sales In Millions)] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| 2022 | | | 23 | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: $] | [added: 150] | | [removed: $] [added: 158] | [removed: 150] | |

| 2021 | | | 20 | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | |] $ | 140 | | 158 | | | [added: 172 | | |]

| 2020 | | | 13 | | | | | | | | | | | | | | | | | | | | | [removed: | | |] $ | 132 | | 152 | | | 184 | | | [added: 193 | | |]

| 2019 | | | 20 | | | | | | | | | | | | | | | | | | [removed: | | |] $ | 129 | | 138 | | | 172 | | | 208 | | | [added: 216 | | |]

| 2018 | | | 21 | | | | | | | | | | | | | | | [removed: | | |] $ | 116 | | 119 | | | 141 | | | 172 | | | 202 | | | [added: 214 | | |]

| 2017 | | | 26 | | | | | | | | | | | | [removed: | | |] $ | 121 | | 142 | | | 158 | | | 176 | | | 206 | | | 237 | | | [added: 247 | | |]

| 2016 | | | 29 | | | | | | | | | [removed: | | |] $ | 87 | | 97 | | | 118 | | | 131 | | | 145 | | | 173 | | | 204 | | | [added: 212 | | |]

| 2015 | | | 23 | | | | | | [removed: | | |] $ | 83 | | 85 | | | 94 | | | 112 | | | 122 | | | 136 | | | 163 | | | 189 | | | [added: 199 | | |]

| Totals | | | [removed: 838 | |] [added: 861] | [removed: 160] | | [added: $] | 164 | | [added: $] | 162 | | [added: $] | 159 | | [added: $] | 163 | | [added: $] | 176 | | [added: $] | 182 | | [added: $] | 192 | | [added: $] | 217 | | [added: $] | 245 | | [added: $] | [added: 252 | |]

| | | | | | | [removed: 2013 | | |] 2014 | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | 2021 | | | 2022 | | | [added: 2023 | | |]

| 2017 [removed: was a] [added: and 2023 were] 53-week fiscal [removed: year] [added: years] but [removed: it has] [added: have] been normalized for purposes of comparability | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| May 8—June 4, 2023 | | | | | | | | | 107,000 | | | | | | $ | 498.28 | | | | | 107,000 | | | | | | $ | 3,740 | |

| June 5—July 2, 2023 | | | | | | | | | 102,000 | | | | | | 523.05 | | | | | | 102,000 | | | | | | 3,687 | | |

| July 3—July 30, 2023 | | | | | | | | | 97,000 | | | | | | 548.20 | | | | | | 97,000 | | | | | | 3,634 | | |

| July 31—September 3, 2023 | | | | | | | | | 127,000 | | | | | | 550.58 | | | | | | 127,000 | | | | | | 3,563 | | |

This authorization revoked previously authorized but unused amounts, totaling $2,568.

The S&P Retail Select Index will prospectively replace in the graph the S&P 500 Retail Index to show a broader representation of industry performance and a broader index of peers.

| 2023 | | | 23 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 151 | |

| 2014 & Before | | | 663 | | | $ | 164 | | 165 | | | 165 | | | 170 | | | 184 | | | 191 | | | 201 | | | 228 | | | 259 | | | 268 | | |

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

| May 9—June 5, 2022 | | | | | | | | | 98,000 | | | | | | $ | 463.77 | | | | | 98,000 | | | | | | $ | 2,947 | |

| June 6—July 3, 2022 | | | | | | | | | 98,000 | | | | | | 467.53 | | | | | | 98,000 | | | | | | 2,901 | | |

| July 4—July 31, 2022 | | | | | | | | | 89,000 | | | | | | 512.08 | | | | | | 89,000 | | | | | | 2,856 | | |

| August 1—August 28, 2022 | | | | | | | | | 88,000 | | | | | | 545.08 | | | | | | 88,000 | | | | | | 2,808 | | |

| 2014 | | | 30 | | | | | | $ | 108 | | 109 | | | 115 | | | 125 | | | 140 | | | 144 | | | 155 | | | 182 | | | 208 | | |

| 2013 & Before | | | 633 | | | $ | 160 | | 167 | | | 168 | | | 167 | | | 173 | | | 186 | | | 193 | | | 203 | | | 230 | | | 261 | | |

MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying Notes to Financial Statements (Part II, [removed: Item 8] [added: [Item 8](#i4bf6d0bde838478985b72eb4052bc976_76)] of this Form 10-K).

This section generally discusses the results of operations for [removed: 2022] [added: 2023] compared to [removed: 2021.][added: 2022.]

For discussion related to the results of operations and changes in financial condition for [removed: 2021] [added: 2022] compared to [removed: 2020] [added: 2021] refer to Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal year [removed: 2021] [added: 2022] Form 10-K, which was filed with the United States Securities and Exchange Commission (SEC) on October [removed: 6, 2021.][added: 5, 2022.]

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

Sales comparisons can also be particularly influenced by certain factors that are beyond our control: fluctuations in currency exchange rates (with respect to our international operations); inflation [added: or deflation] and changes in the cost of gasoline and associated competitive conditions.

Those strategies can include, but are not limited to, working with our suppliers to share in absorbing cost increases, earlier-than-usual purchasing and in greater volumes, [removed: offering seasonal merchandise outside its season,] as well as passing cost increases on to our members.

We believe our gasoline business enhances traffic in our warehouses, but it generally has a lower gross margin percentage [added: and lower SG&A expense,] relative to our non-gasoline [removed: business.][added: businesses.]

Rapidly changing gasoline prices may significantly impact our [removed: near-][added: near-term net sales growth.]

[removed: term] [added: | Changes in] net [removed: sales growth.][added: sales: | | | | | | | | | | | | | | | | | |]

[removed: Additionally,] [added: Government] actions in various [removed: countries,] [added: countries relating to tariffs,] particularly China and the United States, have affected the costs of some of our merchandise.

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

Our [removed: paid membership] [added: paid-membership] growth rate may be adversely impacted when warehouse openings occur in existing markets as compared to new markets.

Our operating model is generally the same across our U.S., Canadian, and Other International operating segments (see [Note [removed: 11](#i7f92822ddf844c24912627bf68509b56_145)] [added: 11](#i4bf6d0bde838478985b72eb4052bc976_139)] to the consolidated financial statements included in [removed: Item 8] [added: [Item 8](#i4bf6d0bde838478985b72eb4052bc976_76)] of this Report).

In discussions of our consolidated operating results, we refer to the impact of changes in foreign currencies relative to the U.S. dollar, which are [removed: the] differences between the foreign-exchange rates we use to convert the financial results of our international operations from local currencies into U.S. dollars.

This impact of foreign-exchange rate changes is calculated based on the difference between the current [added: and prior] period's currency exchange [removed: rates and that of the comparable prior period.][added: rates.]

The impact of changes in gasoline prices on net sales is calculated based on the difference between the current [added: and prior] period's average price per gallon [removed: sold and that of the comparable prior period.][added: sold.]

References to [removed: 2022, 2021,] [added: 2022] and [removed: 2020] [added: 2021] relate to the 52-week fiscal years ended August 28, 2022, [removed: August 29, 2021,] and August [removed: 30, 2020, respectively.][added: 29, 2021.]

Highlights for [removed: 2022] [added: 2023] versus [removed: 2021] [added: 2022] include:

- We opened 26 new warehouses, including [removed: 3] [added: three] relocations: [removed: 14] [added: 13] net new in the [removed: U.S., 2 net new in our Canadian segment,] [added: U.S.] and [removed: 7] [added: 10] new in our Other International [removed: segment, compared to 22 new warehouses, including 2 relocations in 2021;][added: segment.]

- Net sales increased [removed: 16%] [added: 7%] to [removed: $222,730] [added: $237,710,] driven by a [removed: 14%] [added: 3%] increase in comparable [removed: sales and] [added: sales,] sales at new warehouses opened in [removed: 2021] [added: 2022] and [removed: 2022;][added: 2023, and the benefit of one additional week of sales in 2023;]

[removed: -] Membership fee revenue increased [removed: 9% to $4,224,] [added: 8% in 2023,] driven by new member sign-ups, upgrades to Executive membership, and [added: the benefit of] an [removed: increase in our renewal rate;][added: additional week.]

- Gross margin percentage [removed: decreased 65] [added: increased nine] basis points, driven primarily by [removed: our core merchandise categories and] a [added: smaller] LIFO charge [removed: for higher] [added: in 2023 compared to 2022 and our core] merchandise [removed: costs;][added: categories.]

- The effective tax rate in [removed: 2022] [added: 2023] was [removed: 24.6%] [added: 25.9%,] compared to [removed: 24.0%] [added: 24.6%] in [removed: 2021;][added: 2022;]

- Net income increased [removed: 17%] [added: 8%] to [removed: $5,844,] [added: $6,292,] or [removed: $13.14] [added: $14.16] per diluted share compared to [removed: $5,007,] [added: $5,844,] or [removed: $11.27] [added: $13.14] per diluted share in [removed: 2021;][added: 2022;]

[removed: - In June 2022, the Company paid] [added: payments to our former joint-venture partner for] a [removed: cash] dividend [removed: of $208] and [removed: purchased] the [removed: remaining] [added: purchase of their] equity interest [removed: of its Taiwan operations from its former joint-venture partner for $842,] [added: in Taiwan,] totaling $1,050 in the [removed: aggregate;] [added: aggregate,] and [added: repayments of our 2.300% Senior Notes.]

[removed: -] In April [removed: 2022,] [added: 2023,] the Board of Directors [removed: approved an increase in the] [added: increased our] quarterly cash dividend from [removed: $0.79 to] $0.90 [added: to $1.02] per share.

| | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| Net Sales | | | $ | [removed: 222,730] [added: 237,710] | | | | | $ | [removed: 192,052] [added: 222,730] | | | | | $ | [removed: 163,220] [added: 192,052] | |

| U.S. | | | [removed: 17] [added: 7] | | % | | | | [removed: 16] [added: 17] | | % | | | | [removed: 9] [added: 16] | | % |

| Canada | | | [removed: 16] [added: 4] | | % | | | | [removed: 22] [added: 16] | | % | | | | [removed: 5] [added: 22] | | % |

| Other International | | | [removed: 10] [added: 9] | | % | | | | [removed: 23] [added: 10] | | % | | | | [removed: 13] [added: 23] | | % |

| Total Company | | | [removed: 16] [added: 7] | | % | | | | [removed: 18] [added: 16] | | % | | | | [removed: 9] [added: 18] | | % |

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

| U.S. | | | [removed: 16] [added: 3] | | % | | | | [removed: 15] [added: 16] | | % | | | | [removed: 8] [added: 15] | | % |

| Canada | | | [removed: 15] [added: 2] | | % | | | | [removed: 20] [added: 15] | | % | | | | [removed: 5] [added: 20] | | % |

| Other International | | | [removed: 7] [added: 3] | | % | | | | [removed: 19] [added: 7] | | % | | | | [removed: 9] [added: 19] | | % |

| Total Company | | | [removed: 14] [added: 3] | | % | | | | [removed: 16] [added: 14] | | % | | | | [removed: 8] [added: 16] | | % |

| [removed: Increases] [added: Changes] in comparable sales excluding the impact of changes in [removed: foreign currency] [added: foreign-currency] and gasoline prices: | | | | | | | | | | | | | | | | | |

| U.S. | | | [removed: 10] [added: 4] | | % | | | | [removed: 14] [added: 10] | | % | | | | [removed: 9] [added: 14] | | % |

| Canada | | | [removed: 12] [added: 8] | | % | | | | 12 | | % | | | | [removed: 7] [added: 12] | | % |

The measure is intended as supplemental information and is not a substitute for net sales presented in accordance with U.S. generally accepted accounting principles (U.S. GAAP).

Merchandise costs in 2023 continued to be impacted by inflation, however at a lower rate than what we experienced in 2022.

Results expressed excluding the impacts of foreign exchange and gasoline prices should be reviewed in conjunction with results reported in accordance with U.S. GAAP.

References to 2023 relate to the 53-week fiscal year ended September 3, 2023.

We opened the same number of new warehouses, including relocations, in 2022;

This was partially offset by charges of $391, predominantly related to the discontinuation of our charter shipping activities;

- SG&A expenses as a percentage of net sales increased 20 basis points, due to increased costs in warehouse operations and other businesses, primarily wage increases effective in March and July 2022, and March 2023, as well as lower sales growth;

- In January 2023, the Board of Directors authorized a new share repurchase program in the amount of $4,000; and

- In April 2023, the Board of Directors approved a 13% increase in the quarterly cash dividend.

| E-commerce | | | (6) | | % | | | | 10 | | % | | | | 44 | | % |

| E-commerce | | | (5) | | % | | | | 10 | | % | | | | 43 | | % |

Net sales increased $14,980 or 7% during 2023.

Sales increased $12,761, or 7% in core merchandise categories, led by foods and sundries and fresh foods; while non-foods decreased.

Sales increased $2,219, or 5% in warehouse ancillary and other businesses, led by pharmacy, food court, and travel.

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

| Net sales | | | $ | 237,710 | | | | | $ | 222,730 | | | | | $ | 192,052 | |

These were offset by: 16 basis points due to the downsizing and then discontinuation of our charter shipping activities; four basis points due to increased 2% rewards; and three basis points due to warehouse ancillary and other businesses, predominantly e-commerce, partially offset by gasoline and business centers.

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), increased in our U.S. segment, due to a smaller LIFO charge and increases in core merchandise categories, primarily foods and sundries, partially offset by the charges related to the discontinuation of our charter shipping activities discussed above and warehouse ancillary and other businesses.

All segments were negatively impacted by increased 2% rewards.

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

The comparison to last year was negatively impacted by 16 basis points in warehouse operations and other businesses, largely driven by wage increases effective in March and July 2022, and March 2023, as well as lower sales growth.

Central operating costs were also higher by six basis points.

SG&A was positively impacted by eight basis points due to the prior year's write-off of information technology assets and a charge related to granting our employees additional vacation.

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

In 2022, cash flow used in financing activities included

On January 19, 2023, the Board of Directors authorized a new share repurchase program in the amount of $4,000, which expires in January 2027.

We use various risk management mechanisms, including a

Merchandise costs in 2022 were impacted by inflation higher than what we have experienced in recent years.

It also has lower SG&A expenses as a percent of net sales compared to our non-gasoline business.

E-commerce sales growth slowed in 2022 compared to 2021 and 2020.

- SG&A expenses as a percentage of net sales decreased 77 basis points, primarily due to leveraging increased sales and ceasing of incremental wages related to COVID-19, despite additional wage and benefits increases;

- We incurred a one-time $77 pretax charge, primarily related to granting our employees one additional day of paid time off in March 2022;

COVID-19

The COVID-19 pandemic continued to impact our business during 2022, albeit to a lesser extent.

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

During 2021, we paid $515 in incremental wages related to COVID-19, which ceased in February 2021.

| Increases in net sales: | | | | | | | | | | | | | | | | | |

Net sales increased $30,678 or 16% during 2022.

The rate of increase was strongest in our gasoline, business centers, and travel businesses.

Sales continued to be impacted by inflation, higher than what we experienced in previous fiscal years.

E-commerce comparable sales increased 10% during 2022, including inflation.

Gross margin was also negatively impacted by one basis point due to increased 2% rewards.

Warehouse ancillary and other businesses positively impacted gross margin by 29 basis points, predominantly gasoline, partially offset by e-commerce.

Gross margin was positively impacted by five basis points due to the net impact of ceasing incremental wages related to COVID-19 and the negative impact of a one-time charge related to granting our employees one additional day of paid time off.

The decrease was across all categories, most significantly in fresh foods.

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 across all segments.

Gross margin in our U.S. segment was also negatively impacted by the LIFO charge.

Our Other International segment was negatively impacted by increased 2% rewards.

All segments benefited from the ceasing of incremental wages related to COVID-19.

Warehouse operations and other businesses were lower by 17 basis points, largely attributable to leveraging increased sales.

This includes the impact of the starting wage increase we instituted in October 2021, as well the increased wages and benefits that were effective on March 14, 2022, and July 4, 2022.

SG&A expenses was benefited by a net of 16 basis points due to the positive impact of ceasing incremental wages related to COVID-19, partially offset by higher write-offs of certain information technology assets, and expenses related to granting our employees one additional day of paid time off.

Central operating costs were lower by five basis points, and stock compensation expense was lower by one basis point.

Interest expense decreased in 2022 due to repayment of the 2.300% Senior Notes on December 1, 2021.

This included $94 of excess tax benefits related to stock compensation.

This included $75 of excess tax benefits related to stock compensation, $70 related to the special cash dividend paid through our 401(k) plan, and $19 related to a reduction in the valuation allowance against certain deferred tax assets.

several factors, including how fast inventory is sold, the forward deployment of inventory to accelerate delivery times, payment terms with our suppliers, and early payments to obtain discounts from suppliers.

Dividends in 2021 included a special dividend of $10.00 per share, aggregating approximately $4,430.

In April 2022, the Board of Directors increased our quarterly cash dividend from $0.79 to $0.90 per share.

facilities.

| [Reports of Independent Registered Public Accounting [removed: Firm](#i7f92822ddf844c24912627bf68509b56_79)] [added: Firm](#i4bf6d0bde838478985b72eb4052bc976_82)] | | | [removed: [33](#i7f92822ddf844c24912627bf68509b56_79)] [added: [31](#i4bf6d0bde838478985b72eb4052bc976_82)] | | |

| [Consolidated Statements of [removed: Income](#i7f92822ddf844c24912627bf68509b56_82)] [added: Income](#i4bf6d0bde838478985b72eb4052bc976_85)] | | | [removed: [36](#i7f92822ddf844c24912627bf68509b56_82)] [added: [34](#i4bf6d0bde838478985b72eb4052bc976_85)] | | |

| [Consolidated Statements of Comprehensive [removed: Income](#i7f92822ddf844c24912627bf68509b56_85)] [added: Income](#i4bf6d0bde838478985b72eb4052bc976_88)] | | | [removed: [37](#i7f92822ddf844c24912627bf68509b56_85)] [added: [35](#i4bf6d0bde838478985b72eb4052bc976_88)] | | |

| [Consolidated Balance [removed: Sheets](#i7f92822ddf844c24912627bf68509b56_88)] [added: Sheets](#i4bf6d0bde838478985b72eb4052bc976_91)] | | | [removed: [38](#i7f92822ddf844c24912627bf68509b56_88)] [added: [36](#i4bf6d0bde838478985b72eb4052bc976_91)] | | |

| [Consolidated Statements of [removed: Equity](#i7f92822ddf844c24912627bf68509b56_94)] [added: Equity](#i4bf6d0bde838478985b72eb4052bc976_97)] | | | [removed: [39](#i7f92822ddf844c24912627bf68509b56_94)] [added: [37](#i4bf6d0bde838478985b72eb4052bc976_97)] | | |

| [Consolidated Statements of Cash [removed: Flows](#i7f92822ddf844c24912627bf68509b56_97)] [added: Flows](#i4bf6d0bde838478985b72eb4052bc976_100)] | | | [removed: [40](#i7f92822ddf844c24912627bf68509b56_97)] [added: [38](#i4bf6d0bde838478985b72eb4052bc976_100)] | | |

| [Notes to Consolidated Financial [removed: Statements](#i7f92822ddf844c24912627bf68509b56_100)] [added: Statements](#i4bf6d0bde838478985b72eb4052bc976_103)] | | | [removed: [41](#i7f92822ddf844c24912627bf68509b56_100)] [added: [39](#i4bf6d0bde838478985b72eb4052bc976_103)] | | |

We have audited the accompanying consolidated balance sheets of Costco Wholesale Corporation and subsidiaries (the Company) as of [added: September 3, 2023, and] August 28, 2022, [removed: and August 29, 2021,] the related consolidated statements of income, comprehensive income, equity, and cash flows for [removed: each of] the [added: 53-week period ended September 3, 2023, and the] 52-week periods ended August 28, 2022, [added: and] August 29, 2021, and [removed: August 30, 2020, 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 [added: September 3, 2023, and] August 28, 2022, and [removed: August 29, 2021, and] the results of its operations and its cash flows for each of the [added: 53-week period ended September 3, 2023, and the] 52-week periods ended August 28, 2022, [added: and] August 29, 2021, [removed: and August 30, 2020,] 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 [removed: August 28, 2022,] [added: September 3, 2023,] 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: 4, 2022,] [added: 10, 2023,] expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

As discussed in [Note [removed: 1](#i7f92822ddf844c24912627bf68509b56_103)] [added: 1](#i4bf6d0bde838478985b72eb4052bc976_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 self-insurance liabilities as of [removed: August 28, 2022,] [added: September 3, 2023,] were [removed: $1,364] [added: $1,513] million, a portion of which related to workers’ compensation self-insurance liabilities for the United States operations.

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

We have audited Costco Wholesale Corporation and subsidiaries*’* (the Company) internal control over financial reporting as of [removed: August 28, 2022,] [added: September 3, 2023,] 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 [removed: August 28, 2022,] [added: September 3, 2023,] 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 [added: September 3, 2023, and] August 28, 2022, [removed: and August 29, 2021,] the related consolidated statements of income, comprehensive income, equity, and cash flows for [removed: each of] the [added: 53-week period ended September 3, 2023, and the] 52-week periods ended August 28, 2022, [added: and] August 29, 2021, and [removed: August 30, 2020, and] the related notes (collectively, the consolidated financial statements), and our report dated October [removed: 4, 2022,] [added: 10, 2023,] expressed an unqualified opinion on those consolidated financial statements.

| | | | [removed: 52] [added: 53] Weeks Ended | | | | | | [added: 52 Weeks Ended] | | | | | | [added: 52 Weeks Ended] | | |

| | | | [removed: August 28, 2022] [added: September 3, 2023] | | | | | | August [removed: 29, 2021] [added: 28, 2022] | | | | | | August [removed: 30, 2020] [added: 29, 2021] | | |

| Net sales | | | $ | [removed: 222,730] [added: 237,710] | | | | | $ | [removed: 192,052] [added: 222,730] | | | | | $ | [removed: 163,220] [added: 192,052] | |

| Membership fees | | | [removed: 4,224] [added: 4,580] | | | | | | [removed: 3,877] [added: 4,224] | | | | | | [removed: 3,541] [added: 3,877] | | |

| Total revenue | | | [removed: 226,954] [added: 242,290] | | | | | | [removed: 195,929] [added: 226,954] | | | | | | [removed: 166,761] [added: 195,929] | | |

| Merchandise costs | | | [removed: 199,382] [added: 212,586] | | | | | | [removed: 170,684] [added: 199,382] | | | | | | [removed: 144,939] [added: 170,684] | | |

| Selling, general and administrative | | | [removed: 19,779] [added: 21,590] | | | | | | [removed: 18,537] [added: 19,779] | | | | | | [removed: 16,387] [added: 18,537] | | |

| Operating income | | | [removed: 7,793] [added: 8,114] | | | | | | [removed: 6,708] [added: 7,793] | | | | | | [removed: 5,435] [added: 6,708] | | |

| Interest expense | | | [removed: (158)] [added: (160)] | | | | | | [removed: (171)] [added: (158)] | | | | | | [removed: (160)] [added: (171)] | | |

| Interest income and other, net | | | [removed: 205] [added: 533] | | | | | | [removed: 143] [added: 205] | | | | | | [removed: 92] [added: 143] | | |

| INCOME BEFORE INCOME TAXES | | | [removed: 7,840] [added: 8,487] | | | | | | [removed: 6,680] [added: 7,840] | | | | | | [removed: 5,367] [added: 6,680] | | |

| Provision for income taxes | | | [removed: 1,925] [added: 2,195] | | | | | | [removed: 1,601] [added: 1,925] | | | | | | [removed: 1,308] [added: 1,601] | | |

| Net income including noncontrolling interests | | | [removed: 5,915] [added: 6,292] | | | | | | [removed: 5,079] [added: 5,915] | | | | | | [removed: 4,059] [added: 5,079] | | |

| Net income attributable to noncontrolling interests | | | [removed: (71)] [added: —] | | | | | | [removed: (72)] [added: (71)] | | | | | | [removed: (57)] [added: (72)] | | |

| NET INCOME ATTRIBUTABLE TO COSTCO | | | $ | [removed: 5,844] [added: 6,292] | | | | | $ | [removed: 5,007] [added: 5,844] | | | | | $ | [removed: 4,002] [added: 5,007] | |

| Basic | | | $ | [removed: 13.17] [added: 14.18] | | | | | $ | [removed: 11.30] [added: 13.17] | | | | | $ | [removed: 9.05] [added: 11.30] | |

| Diluted | | | $ | [removed: 13.14] [added: 14.16] | | | | | $ | [removed: 11.27] [added: 13.14] | | | | | $ | [removed: 9.02] [added: 11.27] | |

| Basic | | | [removed: 443,651] [added: 443,854] | | | | | | [removed: 443,089] [added: 443,651] | | | | | | [removed: 442,297] [added: 443,089] | | |

| Diluted | | | [removed: 444,757] [added: 444,452] | | | | | | [removed: 444,346] [added: 444,757] | | | | | | [removed: 443,901] [added: 444,346] | | |

| NET INCOME INCLUDING NONCONTROLLING INTERESTS | | | $ | [removed: 5,915] [added: 6,292] | | | | | $ | [removed: 5,079] [added: 5,915] | | | | | $ | [removed: 4,059] [added: 5,079] | |

| Foreign-currency translation adjustment and other, net | | | [removed: (721)] [added: 24] | | | | | | [removed: 181] [added: (721)] | | | | | | [removed: 162] [added: 181] | | |

| Comprehensive income | | | [removed: 5,194] [added: 6,316] | | | | | | [removed: 5,260] [added: 5,194] | | | | | | [removed: 4,221] [added: 5,260] | | |

| Less: Comprehensive income attributable to noncontrolling interests | | | [removed: 36] [added: —] | | | | | | [removed: 93] [added: 36] | | | | | | [removed: 80] [added: 93] | | |

| COMPREHENSIVE INCOME ATTRIBUTABLE TO COSTCO | | | $ | [removed: 5,158] [added: 6,316] | | | | | $ | [removed: 5,167] [added: 5,158] | | | | | $ | [removed: 4,141] [added: 5,167] | |

October 10, 2023

| | | | 53 Weeks Ended | | | | | | 52 Weeks Ended | | | | | | 52 Weeks Ended | | |

| | | | September 3, 2023 | | | | | | August 28, 2022 | | |

| Repurchases of common stock | | | (1,341) | | | | | | — | | | | | | (24) | | | | | | — | | | | | | (653) | | | | | | (677) | | | | | | — | | | | | | (677) | | |

| BALANCE AT SEPTEMBER 3, 2023 | | | 442,793 | | | | | | $ | 2 | | | | | $ | 7,340 | | | | | $ | (1,805) | | | | | $ | 19,521 | | | | | $ | 25,058 | | | | | $ | — | | | | | $ | 25,058 | |

| | | | 53 Weeks Ended | | | | | | 52 Weeks Ended | | | | | | 52 Weeks Ended | | |

| | | | September 3, 2023 | | | | | | August 28, 2022 | | | | | | August 29, 2021 | | |

| Repayments of short-term borrowings | | | (935) | | | | | | (6) | | | | | | — | | |

| Proceeds from short-term borrowings | | | 917 | | | | | | 53 | | | | | | 41 | | |

| Financing lease payments | | | (291) | | | | | | (176) | | | | | | (67) | | |

| Cash dividend declared, but not yet paid | | | $ | 452 | | | | | $ | — | | | | | $ | — | |

References to 2023 relate to the 53-week fiscal year ended September 3, 2023.

Investments with maturities beyond five

Discounts, premiums and debt issuance costs are amortized to interest expense over the term of the loan.

The estimated fair

| | | | 2023 | | | | | | 2022 | | |

| | | | | | | | | | 43,369 | | | | | | 39,932 | | |

During 2023, the Company recognized charges totaling $391, primarily related to the impairment of certain leased assets associated with charter shipping activities.

This charge is included in merchandise costs.

| Balance at September 3, 2023 | | | $ | 953 | | | | | $ | 26 | | | | | $ | 15 | | | | | $ | 994 | |

predominantly through self-insurance.

The fair value of RSUs is calculated as the market value of the

| Total | | | $ | 650 | | | | | $ | 633 | | | | | $ | 901 | |

| | | | 2023 | | | | | | 2022 | | |

Please see [Note 1](#i4bf6d0bde838478985b72eb4052bc976_106) for additional information.

In May 2023, the Japanese subsidiary repaid $75 of its Guaranteed Senior Notes.

| | | | 2023 | | | | | | 2022 | | |

| 2024 | | | $ | 1,081 | |

| 2025 | | | 103 | | |

| 2028 | | | — | | |

| Thereafter | | | 2,974 | | |

| Total | | | $ | 6,484 | |

| | | | 2023 | | | | | | 2022 | | |

| | | | 2023 | | | | | | 2022 | | |

| 2024 | | | $ | 277 | | | | | $ | 180 | | | | | | | |

| 2025 | | | 230 | | | | | | 175 | | | | | | | | |

| 2026 | | | 226 | | | | | | 100 | | | | | | | | |

| 2027 | | | 206 | | | | | | 91 | | | | | | | | |

| 2028 | | | 191 | | | | | | 92 | | | | | | | | |

| Thereafter | | | 2,271 | | | | | | 1,579 | | | | | | | | |

October 4, 2022

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

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

| BALANCE AT SEPTEMBER 1, 2019 | | | 439,625 | | | | | | $ | 4 | | | | | $ | 6,417 | | | | | $ | (1,436) | | | | | $ | 10,258 | | | | | $ | 15,243 | | | | | $ | 341 | | | | | $ | 15,584 | |

| Repurchases of common stock | | | (643) | | | | | | — | | | | | | (10) | | | | | | — | | | | | | (188) | | | | | | (198) | | | | | | — | | | | | | (198) | | |

| Deferred income taxes | | | (37) | | | | | | 59 | | | | | | 104 | | |

| Acquisitions | | | — | | | | | | — | | | | | | (1,163) | | |

| Proceeds from issuance of long-term debt | | | — | | | | | | — | | | | | | 3,992 | | |

During 2022, the Company paid a cash dividend of $208 and purchased the equity interest of its Taiwan operations from its former joint-venture partner for $842, totaling $1,050 in the aggregate.

The remaining noncontrolling interest represents the portion of equity interests in a consolidated joint venture that is not 100% owned by the Company.

The Company provides for the daily replenishment of major bank accounts as payments are presented.

Included in accounts payable at the end of 2022 and 2021, are $995 and $999 representing the excess of outstanding payments over cash on deposit at the banks on which the payments were drawn.

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

| | | | | | | | | | 39,932 | | | | | | 37,658 | | |

Impairment charges recognized in 2021 were immaterial.

| Balance at August 30, 2020 | | | $ | 947 | | | | | $ | 27 | | | | | $ | 14 | | | | | $ | 988 | |

____________

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

The reinsurance agreement is one year in duration, and new agreements are entered into by each participant at their discretion at the commencement of the next calendar year.

There were no derivative instruments in a net liability position at the end of 2021.

These contracts meet the characteristics of

| Total | | | $ | 534 | | | | | $ | 529 | | | | | $ | 317 | |

(1)At August 29, 2021, $12 cash and cash equivalents and $381 short-term investments are included in the consolidated balance sheets.

There were no fair value adjustments to nonfinancial assets during 2022 and in 2021 they were immaterial.

Borrowings on these short-term facilities were immaterial during 2022 and 2021.

On December 1, 2021, the Company repaid, prior to maturity, the 2.300% Senior Notes at a redemption price plus accrued interest as specified in the Notes' agreement.

| 2.750% Senior Notes due May 2024 | | | 1,000 | | | | | | 1,000 | | |

| 2024 | | | 1,088 | | |

| 2025 | | | 110 | | |

| Thereafter | | | 2,988 | | |

| Total | | | $ | 6,590 | |

| 2023 | | | $ | 277 | | | | | $ | 288 | | | | | | | |

| 2024 | | | 256 | | | | | | 253 | | | | | | | | |

| 2025 | | | 210 | | | | | | 280 | | | | | | | | |

| 2026 | | | 207 | | | | | | 119 | | | | | | | | |

| 2027 | | | 186 | | | | | | 88 | | | | | | | | |

| Thereafter | | | 2,332 | | | | | | 1,191 | | | | | | | | |

| Total(2) | | | 3,468 | | | | | | 2,219 | | | | | | | | |

Dividends in 2021 included a special dividend of $10.00 per share, aggregating approximately $4,430.

| 2020 | | | 643 | | | | | | 308.45 | | | | | | 198 | | |

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 [removed: August 28, 2022,] [added: September 3, 2023,] 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 [removed: August 28, 2022,] [added: September 3, 2023,] 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 [removed: August 28, 2022.][added: September 3, 2023.]

The attestation of KPMG LLP, our independent registered public accounting firm, on the effectiveness of our internal control over financial reporting is included with the consolidated financial statements in [removed: Item 8] [added: [Item 8](#i4bf6d0bde838478985b72eb4052bc976_76)] of this Report.

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: 2022] [added: 2023] that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Disclosure pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 and Section 13(r) of the Securities Exchange Act of 1934, as amended.

During 2023 we had three individual cardholders under a business membership in the name of the Embassy of the Islamic Republic of Iran at our subsidiary in Mexico.

Gross revenue during 2023 attributable to the membership was approximately $1,276, and our estimated profit on these transactions was approximately $100.

The membership was canceled during the second quarter of 2023.

The Company does not intend to continue these activities.

During the fiscal quarter ended September 3, 2023, no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.

None.

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](#i7f92822ddf844c24912627bf68509b56_16)] [added: 1](#i4bf6d0bde838478985b72eb4052bc976_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: 2023] [added: 2024] annual meeting of shareholders, which will be filed with the SEC within 120 days of the end of our fiscal year (“Proxy Statement”).

See the listing of Financial Statements included as a part of this Form 10-K in [removed: Item 8] [added: [Item 8](#i4bf6d0bde838478985b72eb4052bc976_76)] of Part II.

| 3.1 | | | | | | [Articles of Incorporation as amended of Costco Wholesale Corporation](https://www.sec.gov/Archives/edgar/data/909832/000090983222000021/costex3110k082822.htm) | | | | | | [removed: x] | | | | | | [added: 10-K] | | | | | | [added: 8/28/2022] | | | | | | [added: 10/5/2022] | | |

| 3.2 | | | | | | [Bylaws as amended of Costco Wholesale [removed: Corporation](https://www.sec.gov/Archives/edgar/data/909832/000119312520018115/d880773dex32.htm)] [added: Corporation](https://www.sec.gov/Archives/edgar/data/909832/000090983223000034/costex328-k8923.htm)] | | | | | | | | | | | | [removed: 10-Q] [added: 8-K] | | | | | | [removed: 5/8/2022] | | | | | | [removed: 6/2/2022] [added: 8/10/2023] | | |

| 4.8 | | | | | | [Description of Common Stock](https://www.sec.gov/Archives/edgar/data/909832/000090983222000021/costex4810k082822.htm) | | | | | | [removed: x] | | | | | | [added: 10-K] | | | | | | [added: 8/28/2022] | | | | | | [added: 10/5/2022] | | |

| 10.4* | | | | | | [Fiscal [removed: 2022] [added: 2023] Executive Bonus [removed: Plan](https://www.sec.gov/Archives/edgar/data/0000909832/000119312521325451/d167405dex101.htm)] [added: Plan](https://www.sec.gov/Archives/edgar/data/909832/000119312522281298/d352180dex101.htm)] | | | | | | | | | | | | 8-K | | | | | | | | | | | | [removed: 11/10/2021] [added: 11/9/2022] | | |

| 10.5.4* | | | | | | [Extension of the Term of the Executive Employment Agreement, effective January 1, 2022, between W. Craig Jelinek and Costco Wholesale Corporation](https://www.sec.gov/Archives/edgar/data/0000909832/000090983221000021/costex10210q112121.htm) | | | | | | | | | | | | 10-Q | | | | | | [removed: 11/22/2021] [added: 11/21/2021] | | | | | | 12/22/2021 | | |

| [removed: 10.8.6] [added: 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: 10.8.7] [added: 10.8.7] | | | | | | [Seventh Amendment to Citi, N.A. Co-Branded Credit Card Agreement](https://www.sec.gov/Archives/edgar/data/0000909832/000090983221000003/costex10110q21421.htm) | | | | | | | | | | | | 10-Q | | | | | | 2/14/2021 | | | | | | 3/10/2021 | | |

| [removed: 10.8.8] [added: 10.8.8] | | | | | | [Eighth Amendment to Citi, N.A. Co-Branded Credit Card Agreement](https://www.sec.gov/Archives/edgar/data/0000909832/000090983222000005/costex10110q21322.htm) | | | | | | | | | | | | 10-Q | | | | | | 2/13/2022 | | | | | | 3/10/2022 | | |

| 21.1 | | | | | | [Subsidiaries of the [removed: Company](https://www.sec.gov/Archives/edgar/data/909832/000090983222000021/costex21110k082822.htm)] [added: Company](https://www.sec.gov/Archives/edgar/data/909832/000090983223000042/costex21110k9323.htm)] | | | | | | x | | | | | | | | | | | | | | | | | | | | |

| 23.1 | | | | | | [Consent of Independent Registered Public Accounting [removed: Firm](https://www.sec.gov/Archives/edgar/data/909832/000090983222000021/costex23110k082822.htm)] [added: Firm](https://www.sec.gov/Archives/edgar/data/909832/000090983223000042/costex23110k9323.htm)] | | | | | | x | | | | | | | | | | | | | | | | | | | | |

| 31.1 | | | | | | [Rule 13a – 14(a) [removed: Certifications](https://www.sec.gov/Archives/edgar/data/909832/000090983222000021/costex31110k082822.htm)] [added: Certifications](https://www.sec.gov/Archives/edgar/data/909832/000090983223000042/costex31110k9323.htm)] | | | | | | x | | | | | | | | | | | | | | | | | | | | |

| 32.1 | | | | | | [Section 1350 [removed: Certifications](https://www.sec.gov/Archives/edgar/data/909832/000090983222000021/costex32110k082822.htm)] [added: Certifications](https://www.sec.gov/Archives/edgar/data/909832/000090983223000042/costex32110k9323.htm)] | | | | | | x | | | | | | | | | | | | | | | | | | | | |

| 10.5.5* | | | | | | [Extension of the Term of the Executive Employment Agreement, effective January 1, 2023, between W. Craig Jelinek and Costco Wholesale Corporation](https://www.sec.gov/Archives/edgar/data/909832/000090983222000035/costex10210q112022.htm) | | | | | | | | | | | | 10-Q | | | | | | 11/20/2022 | | | | | | 12/29/2022 | | |

| 10.8.9 | | | | | | [Ninth Amendment to Citi, N.A. Co-Branded Credit Card Agreement](https://www.sec.gov/Archives/edgar/data/909832/000090983222000035/costex10310q112022.htm) | | | | | | | | | | | | 10-Q | | | | | | 11/20/2022 | | | | | | 12/29/2022 | | |

| 10.8.10 | | | | | | [Tenth Amendment to Citi, N.A. Co-Branded Credit Card Agreement](https://www.sec.gov/Archives/edgar/data/909832/000090983222000035/costex10410q112022.htm) | | | | | | | | | | | | 10-Q | | | | | | 11/20/2022 | | | | | | 12/29/2022 | | |

| 10.8.11 | | | | | | [Eleventh Amendment to Citi, N.A. Co-Branded Credit Card Agreement](https://www.sec.gov/Archives/edgar/data/909832/000090983223000014/costex10110q21223.htm) | | | | | | | | | | | | 10-Q | | | | | | 2/12/2023 | | | | | | 3/9/2023 | | |

| 10.8.12# | | | | | | [Twelfth Amendment to Citi, N.A. Co-Branded Credit Card Agreement](https://www.sec.gov/Archives/edgar/data/909832/000090983223000042/costex1081210k9323.htm) | | | | | | x | | | | | | | | | | | | | | | | | | | | |

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# Certain information in this exhibit has been omitted because it is both (i) not material and (ii) customarily and actually treated by the registrant as private or confidential.

October 10, 2023

October 10, 2023

October 4, 2022