12 Weeks 36 Weeks
-------- --------
US 6% 5%
International 16% 17%
Total Company 8% 7%
======== ========
The U.S. comparable sales figure includes, among other things, the effect
of recent gasoline price inflation, with the average sales price per gallon
of gasoline up 20% year-over-year for the quarter. Excluding this, U.S.
comparable sales in the third quarter would have been 4%. In addition,
significantly stronger foreign exchange rates, primarily in Canada,
positively impacted the third quarter's international comparable sales
results. On a local currency basis, international comparable sales
increased 6% in the third quarter.
Net income for the third quarter of fiscal 2008 was $295.1 million, or $.67
per diluted share, compared to $224.0 million, or $.49 per diluted share,
during the third quarter of fiscal 2007. Included in last year's third
quarter results was a $48.1 million pre-tax ($30.3 million after-tax)
charge primarily reflecting the reduced gross margin on estimated future
returns recorded in the adjustment to the sales returns reserve noted
above. Excluding this adjustment, last year's third quarter net income
would have been $254.3 million, or $.56 per diluted share.
Net income for the first thirty-six weeks of fiscal 2008 was $884.9
million, or $1.99 per diluted share, compared to net income for the first
thirty-six weeks of fiscal 2007 of $710.4 million, or $1.54 per diluted
share. Excluding the sales return reserve adjustments outlined above, as
well as two additional non-recurring items recorded in the second quarter
of fiscal 2007, which in total aggregated to $132.5 million pre-tax ($83.4
million after-tax), net income for the first thirty-six weeks of fiscal
2007 would have been $793.8 million or $1.72 per diluted share.
Costco currently operates 538 warehouses, including 394 in the United
States and Puerto Rico, 75 in Canada, 19 in the United Kingdom, six in
Korea, five in Taiwan, eight in Japan and 31 in Mexico. The Company also
operates Costco Online, an electronic commerce web site, at www.costco.com
and at www.costco.ca in Canada. The Company plans to open an additional
nine to ten new warehouses (including the relocation of four warehouses to
larger and better-located facilities) prior to the end of its 2008 fiscal
year on August 31, 2008.
A conference call to discuss these third quarter results is scheduled for
8:00 a.m. (PT) today, May 29, 2008, and is available via a webcast on
www.costco.com (click on Investor Relations and "Webcasts").
Certain statements contained in this document constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform
Act of 1995. For these purposes, forward-looking statements are statements
that address activities, events, conditions or developments that the
Company expects or anticipates may occur in the future. Such
forward-looking statements involve risks and uncertainties that may cause
actual events, results or performance to differ materially from those
indicated by such statements. These risks and uncertainties include, but
are not limited to, domestic and international economic conditions
including exchange rates, the effects of competition and regulation,
uncertainties in the financial markets, consumer and small business
spending patterns and debt levels, conditions affecting the acquisition,
development, ownership or use of real estate, actions of vendors, rising
costs associated with employees (including health care and workers'
compensation costs), rising costs associated with the acquisition of
merchandise (including the direct and indirect effects of the rising cost
of petroleum-based products and fuel and energy costs), geopolitical
conditions and other risks identified from time to time in the Company's
public statements and reports filed with the Securities and Exchange
Commission.
COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(unaudited)
12 Weeks Ended 36 Weeks Ended
-------------------------- --------------------------
May 11, 2008 May 13, 2007 May 11, 2008 May 13, 2007
------------ ------------ ------------ ------------
REVENUE
Net sales $ 16,262,793 $ 14,341,520 $ 48,351,255 $ 42,998,537
Membership fees 350,924 317,735 1,031,878 924,358
------------ ------------ ------------ ------------
Total revenue 16,613,717 14,659,255 49,383,133 43,922,895
OPERATING EXPENSES
Merchandise costs 14,548,022 12,877,587 43,204,722 38,518,297
Selling, general
and
administrative 1,582,488 1,432,650 4,767,613 4,303,108
Preopening
expenses 8,427 9,022 39,618 39,235
Provision for
impaired assets
and closing
costs, net 9,205 931 6,419 8,722
------------ ------------ ------------ ------------
Operating
income 465,575 339,065 1,364,761 1,053,533
OTHER INCOME
(EXPENSE)
Interest expense (24,140) (26,016) (70,579) (31,776)
Interest income
and other 23,888 42,838 97,769 106,475
------------ ------------ ------------ ------------
INCOME BEFORE
INCOME TAXES 465,323 355,887 1,391,951 1,128,232
Provision for
income taxes 170,257 131,901 507,054 417,882
------------ ------------ ------------ ------------
NET INCOME $ 295,066 $ 223,986 $ 884,897 $ 710,350
============ ============ ============ ============
NET INCOME PER
COMMON SHARE:
Basic $ 0.68 $ 0.50 $ 2.04 $ 1.57
============ ============ ============ ============
Diluted $ 0.67 $ 0.49 $ 1.99 $ 1.54
============ ============ ============ ============
Shares used in
calculation
(000’s)
Basic 433,678 445,471 434,515 451,744
Diluted 443,281 455,889 444,379 461,702
Dividends per share $ 0.16 $ 0.145 $ 0.45 $ 0.405
Contact Information: CONTACTS: Costco Wholesale Corporation Richard Galanti 425/313-8203 Bob Nelson 425/313-8255 Jeff Elliott 425/313-8264