ANNUAL REPORT

FISCAL YEAR ENDEDSEPTEMBER 3, 2023

ANNU AL REPORT

2023

December 7, 2023

Dear Costco Shareholders,

Forty years ago this past September, the first Costco warehouse opened in Seattle. We grew to nearly three

billion dollars in sales in less than six years. Our operating philosophy then and now remains simple: provide our

members quality merchandise and services at the lowest possible prices. We achieve this through our

commitment to carrying out our mission statement and adhering to our code of ethics.

The successes and challenges we faced in fiscal year 2023 reinforced the foundational business model of Costco,

focusing on the most productive items and bringing quality goods to market in volume. Although we experienced

inflationary pressures and general economic uncertainties, our buying and operations staff ensured that quality

and value remained priorities.

Net sales for the 53-week year totaled $237.7 billion, an increase of 7%, with a comparable sales increase of 3%.

Net income was $6.3 billion, or $14.16 per diluted share, an increase of 8%. Revenue from membership fees

increased 8% to $4.6 billion, and our membership base grew to nearly 128 million cardholders, with a 90%

renewal rate.

In fiscal year 2023, Costco’s expansion included opening 23 net new locations: 13 in the U.S., three in China, two

each in Japan and Australia and one in South Korea, in addition to our first warehouses in New Zealand

(Auckland) and Sweden (Stockholm).

This year we introduced new Kirkland Signature™ items, which illustrate our commitment to provide cost savings

and improve quality. Our new bakery items included a peanut-butter chocolate pie, a lemon blueberry loaf, and a

lemon meringue cheesecake; each was met with tremendous enthusiasm. Other new KS items included cat food,

garlic butter shrimp, barbecue grills and yellow golf balls, each showing significant savings over comparable brand

name products.

Our ecommerce business provides a broader selection of merchandise that complements our warehouses. This

includes appliances, home furnishings, consumer electronics, lawn and garden, health and beauty aids, apparel,

and 2-Day Grocery Delivery. Costco Next, a Costco marketplace that offers an additional selection of products,

has over 60 suppliers and continues to grow.

We are dedicated more than ever to operate in a sustainable manner. Our merchandise teams concentrated on

decreasing packaging and plastic use, utilizing post-consumer recycled content, and finding ways to increase sell

units on pallets, trucks and containers, which maximizes space and therefore reduces emissions and costs. We

also continue to focus on diversity through inclusion, employee development, community involvement and

supplier diversity. Embracing differences is important to the growth of our company, as it leads to opportunities,

innovation and employee satisfaction.

The coming months will see changes at the executive level. After nearly two years as Costco's President and

COO, Ron Vachris will transition to the role of CEO, with Craig Jelinek retiring from the CEO role after serving in

that capacity for more than twelve years. As has been the case since Ron became President and COO, we expect

a smooth and seamless transition, maintaining the culture and operational excellence that Costco has been

known for throughout many years.

As this letter was being finalized, we were saddened to learn that Charlie Munger had peacefully passed away,

just five weeks shy of his hundredth birthday. Charlie was a long-time fan of Costco, serving on our Board for

more than 26 years. No one loved Costco more than Charlie and our company benefited greatly from his wisdom,

his business acumen, his passion for our business, his strong moral ethos and his common sense. We will miss

Charlie dearly and will take with us the many fond memories that he bestowed on us, personally, and on our

company.

We extend our deepest gratitude and compliments to our more than 316,000 employees. Their exemplary service

to our members, dedication to maintaining our core values and culture, and support of one another is why our

employees are our greatest competitive advantage.

Finally, we would like to thank Costco members around the world. Thank you for your loyal support and trust in

Costco. May the year ahead bring you and your families good health, happiness, peace and prosperity.

Sincerely,

Craig Jelinek Ron Vachris

Chief Executive Officer President & COO

Canada

Puerto Rico

United States and

México

108

600

UNITED

STATES

COSTCO.COM

ALABAMA – 4

ALASKA – 4

ARIZ ONA – 20

ARKANSAS – 1

CALIFORNIA – 135

COLORADO – 16

CONNECTICUT – 8

DELA WARE – 1

FL ORIDA – 31

GEORGIA – 17

HA WAII – 7

ID AHO – 7

ILLINOIS – 23

INDIANA – 9

IOWA – 4

KANSAS – 3

KENTUCKY – 4

LOUISIANA – 3

MAINE – 1

MARYLAND – 11

MASSACHUSETTS – 6

MICHIGAN – 16

MINNESO TA – 13

MISSISSIPPI – 1

MISSOURI – 9

MONT ANA – 5

NEBRASKA – 3

NEV AD A – 8

NEW HAMPSHIRE – 1

NEW JERSEY – 21

NEW MEXICO – 3

NEW YORK – 19

NORTH CAROLINA – 10

NORTH DAKOTA – 2

OHIO – 13

OKLAHOMA – 4

OREGON – 13

PENNSYLVANIA – 11

SOUTH CAROLINA – 6

SOUTH DAKOTA – 1

TENNESSEE – 7

TEXAS – 38

UT AH – 14

VERMONT – 1

VIRGINIA – 17

WASHINGTON – 33

WISCONSIN – 11

WASHINGTON, D.C. – 1

PUERTO RICO – 4

871 loca tions as of December 31 , 2023

CANAD A

COSTCO.CA

ALBERTA – 19

BRITISH COLUMBIA – 14

MANIT OBA – 3

NEW BRUNSWICK – 3

NEWFOUNDLAND AND

LABRADOR – 1

NO VA SCOTIA – 2

ONTARIO – 40

QUÉBEC – 23

SASKATCHEW AN – 3

MÉXICO

COSTCO.COM.MX

AGUASCALIENTES – 1

BAJA CALIFORNIA – 4

BAJA CALIFORNIA SUR – 1

CHIHUAHU A – 2

CIUD AD DE MÉXICO – 5

COAHUILA – 1

GUANAJU ATO – 3

JALISCO – 3

MÉXICO – 5

MICHO ACÁN – 1

MOREL OS – 1

NUEV O LEÓN – 3

PUEBLA – 1

QUERÉT ARO – 1

QUINT ANA ROO – 1

SAN LUIS POTOSÍ – 1

SINAL OA – 1

SONORA – 1

TABASC O – 1

VERA CRUZ – 2

YUCA TÁN – 1

Australia

China

Spain

France

Iceland

United

Kingdom

Sweden

New

Zealand

Taiwan

Japan

Korea

COR000296 1623

AUSTRA LIA

COSTCO.COM.AU

AUSTRALIAN CAPIT AL

TERRIT ORY – 1

NEW SOUTH WALES – 4

QUEENSLAND – 3

SOUTH AUSTRALIA – 1

VICT ORIA – 4

WESTERN AUSTRALIA – 2

NEW ZEALAND

AUCKLAND – 1

SHANGHAI – 1

JAPAN

COSTCO.CO.JP

AICHI – 2

CHIBA – 3

FUKUOKA – 2

GIFU – 1

GUNMA – 2

HIROSHIMA – 1

HOKKAIDO – 2

HY OGO – 2

IBARAKI – 2

ISHIKAWA – 1

KANAGAWA – 3

KUMAMOTO – 1

KYOTO – 1

MIYAGI – 1

OSAKA – 2

SAIT AMA – 2

SHIZUOKA – 1

TOCHIGI - 1

TOKYO – 1

TOYAMA – 1

YAMA GA TA – 1

SWEDEN

STOCKHOLM – 1

KOREA

COSTCO.CO.KR

BUSAN – 1

CHEONAN – 1

DAEGU – 2

DAEJEON – 1

GIMHAE – 1

GYEONGGI-DO – 5

INCHEON – 1

SEJONG – 1

SEOUL – 4

ULSAN – 1

CHINA

SHANGHAI – 2

JIANGSU – 1

ZHEJIANG – 2

TAIW AN

COSTCO.COM. TW

CHIAYI CITY – 1

HSINCHU CITY – 1

KAOHSIUNG CITY – 2

NEW TAIPEI CITY – 3

TAICHUNG CITY – 2

TAINAN CITY – 1

TAIPEI CITY – 2

TAOYUAN CITY – 2

UNITED

KINGDOM

COSTCO.CO.UK

ENGLAND – 25

SCOTLAND – 3

WALES – 1

ICELAND

KAUPTÚN – 1

SPAIN

AND ALUCÍA – 1

BISCAY – 1

MADRID – 2

FRANCE

ÎLE-DE-FRANCE – 2

UNITEDSTATES

SECURITIES AND EXCHANGECOMMISSION

Washington, D.C. 20549

FORM 10-K

☒

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES

EXCHANGEACT OF 1934

For thefiscal year endedSeptember 3, 2023

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES

EXCHANGEACT OF 1934

Commission file number 0-20355

Costco WholesaleCorporation

(Exact nameofregistrant as specifiedinits charter)

Washington 91-1223280

(State or other jurisdiction of

incorporationororganization)

(I.R.S.EmployerIdentificationNo.)

999 Lake Drive, Issaquah, WA 98027

(Addressofprincipal executiveoffices)(ZipCode)

Registrant’s telephone number,including area code: (425) 313-8100

Securities registered pursuant to Section12(b) of theAct:

Titleofeach classTrading Symbol

Name of each exchange on

whichregistered

CommonStock,$.005 ParValue COST TheNASDAQ Global Select Market

Securities registered pursuanttoSection12(g) of theAct:None

Indicate by checkmarkifthe registrant is awell-knownseasoned issuer,asdefined in Rule 405 of the

Securities Act. Yes ☒ No ☐

Indicate by checkmarkifthe registrant is not requiredtofile reports pursuant to Section13or

Section15(d) of theAct.Yes ☐ No ☒

Indicate by checkmarkwhether theregistrant (1)has filedall reports requiredtobefiledbySection 13 or

15(d) of theSecuritiesExchange Actof1934 duringthe preceding 12 months (orfor such shorte rperiod

that theregistrant wasrequiredtofilesuchreports), and (2)has been subjecttosuchfilingrequirements

forthe past90days. Yes ☒ No ☐

Indicate by checkmarkwhether theregistrant has submittedelectronically everyInteractive Data File

requiredtobesubmitted pursuanttoRule405 of RegulationS-T (§ 232.405 of this chapter)duringthe

preceding 12 months (orfor such shorterperiodthat theregistrant wasrequiredtosubmit such files).Yes

☒ No ☐

Indicate by checkmarkwhether theregistrant is alarge acceleratedfiler, an acceleratedfiler, anon-

acceleratedfiler, asmaller reporting company,oranemerginggrowthcompany.See thedefinitions of

“large acceleratedfiler,”“acceleratedfiler,”“smallerreporting company,” and “emerginggrowthcompany”

in Rule 12b-2ofthe Exchange Act.

Large acceleratedfiler

☒

Acceleratedfiler ☐

Non-acceleratedfiler

☐

Smallerreporting company ☐

Emerging growth company ☐

If an emerging growth company,indicatebycheck mark if theregistrant has electednot to usethe

extended transitionperiodfor complyingwithany new or revisedfinancialaccountingstandards provided

pursuant to Section13(a) of theExchangeAct. ☐

Indicate by checkmarkwhether theregistrant has filedareportonand attestationtoits management’s

assessment of theeffectivenessofits internal controloverfinanc ialreporting under Section404(b) of the

Sarbanes-Oxley Act(15 U.S.C. 7262(b)) by theregistered public accountingfirmthatprepared or issued

itsauditreport. ☒

If securities areregistered pursuant to Section12(b) of theAct,indicate by checkmarkwhether the

financialstatementsofthe registrant included in thefilingreflect thecorrectionofanerror to previously

issued financials statements. ☐

Indicate by checkmarkwhether anyofthoseerror corrections arerestatementsthat requiredarecovery

analysisofincentive-based compensationreceivedbyany of theregistrant's executiveofficersduringthe

relevant recovery periodpursuant to §240.10D-1(b). ☐

Indicate by checkmarkwhether theregistrant is ashellcompany (asdefined in Rule 12b-2ofthe Act).

Yes ☐ No ☒

Theaggregatemarketvalue of thevotingstock heldbynon-affiliatesofthe registrant as of February12,

2023 was$221,351,787,419.

Thenumber of shares outstanding of theregistrant’scommonstock as of Octo ber 3, 2023, was

442,740,572.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of theCompany’s ProxyStatement forthe Annual MeetingofShareholderstobeheldon

January18, 2024, are incorporated by referenceintoPartIII of this Form 10-K.

COSTCO WHOLESALECORPORATION

ANNUAL REPORT ON FORM 10-KFOR THEFISCAL YEAR ENDEDSEPTEMBER 3, 2023

TABLEOFCONTENTS

Page

PART I

Item1.

Business ................................................................

Item1A.

RiskFactors .............................................................

Item1B.

Unresolved StaffComments ...............................................

Item2.

Properties ...............................................................

Item 3.

Legal Proceedings ........................................................

Item4.

Mine Safety Disclosures ...................................................

PART II

Item5.

Market forRegistrant’s CommonEquity,Related Stockholder Matters and Issuer

Purchases of Equity Securities ...........................................

Item6.

Reserved ................................................................

Item 7.

Management’s Discussion and AnalysisofFinancialCondition and Resultsof

Operations .............................................................

Item 7A.

Quantitativeand QualitativeDisclosures About Market Risk ....................

Item8.

FinancialStatementsand SupplementaryData ...............................

Item9.

Changesinand DisagreementswithAccountantsonAccountingand Financial

Disclosure .............................................................

Item9A.

Controls and Procedures ..................................................

Item9B.

Other Information .........................................................

Item9C.

DisclosureRegarding ForeignJurisdictions that Prevent Inspections ............

PART III

Item10.

Directors,Executive Officers and CorporateGovernance ......................

Item11.

ExecutiveCompensation ..................................................

Item 12.

Security Ownership of CertainBeneficialOwnersand Management and Related

Stockholder Matters .....................................................

Item13.

CertainRelationships and RelatedTransactions ,and DirectorIndependence .....

Item14.

Principal AccountingFees and Services .....................................

PART IV

Item15.

Exhibits,FinancialStatement Schedules .....................................

Item16.

Form 10-KSummary ......................................................

Signatures ...............................................................

INFORMATION RELATING TO FORWARD LOOKINGSTATEMENTS

Certainstatementscontained in this document constitute forward-lookingstatementswithinthe meaning

of thePrivate Securities LitigationReformAct of 1995. Forthesepurposes,forward-lookingstatements

arestatementsthat addressactivities, events, conditions or developmentsthatthe Company expects or

anticipates mayoccur in thefutureand mayrelatetosuchmatters as net salesgrowth, changes in

comparablesales,cannibalizationofexistinglocations by new openings,price or feechanges,earnings

performance, earnings per share, stock-based compensationexpense, warehouseopenings and

closures,capitalspending, theeffectofadoptingcertain accountingstandards,futurefinancialreporting,

financing, margins,returnoninvestedcapital,strategicdirection, expensecontrols,membership renewal

rates, shopping frequency, litigation, and thedemand forour products and services.Insomecases,

forward-lookingstatementscan be identifiedbecausethey containwords such as “anticipate,”“believe,”

“continue,”“could,”“estimate,” “expect,”“intend,”“likely,” “may,”“might,” “plan,”“potential,”“predict,”

“project,” “seek,” “should,”“target,” “will,”“would,”orsimilarexpressions and thenegatives of thoseterms.

Such forward-lookingstatementsinvolve risks and uncertainties that maycauseactual events, results, or

performancetodiffermateriallyfromthoseindicatedbysuchstatements, including, without limitation, the

factorsset forthinthe sectiontitled“Item1A-Risk Factors”,and other factorsnoted in thesection titled

“Item7-Management's Discussion and AnalysisofFinancialCondition and ResultsofOperations”and in

theconsolidated financialstatementsand relatednotes in Item8of this Report. Forward-looking

statements speakonlyasof thedatethey aremade, and we do not undertake to updatethese

statements, except asrequiredbylaw.

PART I

Item 1—Business

Costco WholesaleCorporation and itssubsidiaries(Costco or theCompany)began operations in 1983, in

Seattle, Washington. We areprincipally engaged in theoperationofmembership warehouses in the

United States (U.S.) and Puerto Rico, Canada, Mexico,Japan, theUnitedKingdom (U.K.),Korea,

Australia,Taiwan, China, Spain, France,Iceland, NewZealand, and Sweden. Costco operated 861, 838,

and 815 warehouses worldwideatSeptember 3, 2023, August28, 2022, and August29, 2021. The

Company operates e-commerce websites in theU.S., Canada, Mexico,the U.K.,Korea, Ta iwan, Japan,

and Australia.Our commonstock trades on theNASDAQGlobal Select Market,under thesymbol

“COST.”

We reportona52/53-week fiscalyear, consisting of thirteen four-week periods and ending on theSunday

nearestthe end ofAugust. Thefirst threequarters consistofthree periods each, and thefourthquarter

consists of four periods(five weeksinthe thirteenthperiodina53-week year). Thematerialseasonal

impactinour operations is increased net salesand earnings duringthe winterholiday season.

References to 2023 relate to the53-week fiscalyear ended September 3, 2023. References to 2022 and

2021 relate to the52-week fiscalyears ended August28, 2022, and August29, 2021.

General

We operatemembershipwarehousesand e-commercewebsites based on theconcept that offering our

memberslow prices on alimited selectionofnationally-branded and private-label products in awide

range of categorieswill producehighsales volumesand rapidinventoryturnover.When combined with

theoperatingefficienciesachievedbyvolumepurchasing, efficient distributionand reduced handlingof

merchandise in no-frills,self-servicewarehousefacilities, thesevolumes and turnover enableusto

operateprofitablyatsignificantly lowergross margins(net saleslessmerchandise costs) than most other

retailers.Weoften sell inventorybeforeweare requiredtopay forit, even while taking advantage of early

payment discounts.

We buymostofour merchandise directly from suppliers and routeittocross-docking consolidationpoints

(depots) or directly to our warehouses. Ourdepotsreceive largeshipmentsfromsuppliers and quickly

ship thesegoods to warehouses.Thisprocess creates freight volume and handlingefficiencies, lowering

costsassociatedwithtraditional multiple-stepdistributionchannels. Oure-commerceoperations ship

merchandise through our depotsand logisticsoperations,aswellasthrough drop-ship and other delivery

arrangementswithour suppliers.

Ouraverage warehousespace is approximately147,000 squarefeet,withnewer units being slightly

larger.Floor plansare designed foreconomyand efficiencyinthe useofsellingspace, thehandlingof

merchandise,and thecontrol of inventory. Becauseshoppersare attractedprincipally by thequalityof

merchandise andlow prices,our warehouses arenot elaborate.Bystrictlycontrollingthe entrances and

exitsand usingamembershipformat, we believe our inventorylosses(shrinkage) arewellbelow thoseof

typicalretailoperations.

Ourwarehousesonaverage operateonaseven-day,70-hour week.Gasolineoperations generally have

extended hours. Becausethe hoursofoperationare shorterthan many other retailers,and due to other

efficienciesinherent in awarehouse-type operation, labor costsare lowerrelativetothe volume of sales.

Merchandise is generally stored on racks abovethe salesfloor and displayedonpallets containing large

quantities, reducinglabor required.Ingeneral,withvariations by country,our warehouses accept certain

creditcards,including Costco co-branded cards, debitcards,cashand checks, Executivemember 2%

reward certificates,co-brand cardholder rebates,and our proprietary stored-valuecard(shop card).

Ourstrategy is to provideour memberswithabroad range of high-qualitymerchandise at prices we

believe areconsistently lowerthan elsewhere. We seek to limit most itemstofast-sellingmodels, sizes,

andcolors. We carrylessthan4,000 acti ve stockkeeping units (SKUs) per warehouseinour core

warehousebusiness, significantlylessthan other broadlineretailers.Weaverage anywherefrom9,000 to

11,000 SKUs online, some of whichare also availableinour warehouses.Many consumableproducts are

offeredfor sale in case,carton, or multiple-packquantitiesonly.

In keeping withour policy of member satisfaction, we generally accept returnsofmerchandise.Oncertain

electronicitems,wetypically have a90-day return policyand provide, free of charge, technicalsupport

services,aswellasanextended warranty. Additional third-party warrantycoverage is sold on certain

electronicitems.

We offermerchandise andservicesinthe followingcategories:

Core Merchandise Categories (orcorebusiness):

•Foods andSundries (including sundries, drygrocery,candy,cooler,freezer,deli, liquor,and

tobacco)

•Non-Foods (including majorappliances,electronics, health and beautyaids, hardware, garden

andpatio,sportinggoods,tires,toysand seasonal,officesupplies, automotivecare, postage,

tickets,apparel,small appliances,furniture,domestics, housewares,specialorder kiosk, and

jewelry)

•Fresh Foods (including meat,produce, servicedeli, and bakery)

Warehouse Ancillary (includes gasoline, pharmacy,optical,food court, hearingaids, and tire installation)

and OtherBusinesses (includes e-commerce

,businesscenters

,travel, and other)

Warehouseancillary businessesoperateprimarily withinornexttoour warehouses,encouraging

memberstoshop more frequently. Thenumber of warehouses withgas stations varies significantly by

country,and we have no gasolinebusinessinKorea, China, or Sweden. We operated 692 gas stations at

theend of 2023.Our gasoline business represented approximately13% of totalnet salesin2023.

E-commerceand businesscentersare allocatedtothe appropriate merchandise categoriesinthe NetSales portion of Item7.

Ourother businessessellproducts andservicesthat complement our warehouseoperations (coreand

warehouseancillary businesses).Our e-commerceoperations give membersconvenienceand abroader

selectionofgoods andservices. Netsales fore-commercerepresented approximately6%oftotal net

salesin2023. This figuredoes notinc lude other services we offeronlineincertain countries such as

businessdelivery, travel,same-day grocery, and various other services.Our businesscenterscarry items

tailoredspecifically forfood services,conveniencestoresand offices, and offerwalk-in shoppingand

deliveries. Business centersare included in our totalwarehousecount.CostcoTraveloffersvacation

packages,car rentals, cruises, hotels, and other travel products exclusivelyfor Costco members(offered

in theU.S., Canada, and theU.K.).

We havedirectbuyingrelationships withmanyproducersofbrand-namemerchandise.Wedonot obtain

asignificant portionofmerchandise from any one supplier. When sourcesofsupplybecomeunavailable,

we seek alternatives.Wealsopurchaseand manufacture private-label merchandise,aslong as quality

andmemberdemand arehighand thevalue to our membersissignificant.

Certainfinancialinformation forour segmentsand geographicareas is included in Note 11 to the

consolidated financialstatementsincludedinItem8of this Report.

Membership

Ourmembers mayutilizetheir membershipsatall of our warehouses and websites.GoldStar

membershipsare availabletoindividuals; Businessmemberships arelimited to businesses, including

individualswithabusinesslicense, retail saleslicense, or comparabledocument.Businessmembersmay

addadditional cardholders(affiliates),towhich thesameannual feeapplies. Affiliatesare not availablefor

Gold Star members. Ourannual feefor thesemembershipsis$60 in theU.S.and varies in other

countries.All paidmemberships include afreehouseholdcard.

Ourmember renewal rate was92.7% in theU.S.and Canada and 90.4% worldwideatthe end of 2023.

Themajorityofmembers renew withinsix months followingtheirrenewal date. Ourrenewal rate,which

excludes affiliatesofBusinessmembers,isatrailingcalculation that captures renewalsduringthe period

seventoeighteen months priortothe reporting date. Ourmembership countsinclude active memberships

as well as membershipsthathavenot renewed withinthe 12 months priortothe reporting date.

Ourmembership wasmadeupofthe following(in thousands):

2023 2022 2021

Gold Star ................................................

58,800 54,000 50,200

Business, includingaffiliates ................................

12,200 11,800 11,500

Totalpaidmembers .....................................

71,000 65,800 61,700

Householdcards .........................................

56,900 53,100 49,900

Totalcardholders .......................................

127,900 118,900 111,600

Paid cardholders (exceptaffiliates) areeligible to upgrade to an Executivemembership in theU.S., foran

additional annualfee of $60. Executivemembershipsare also availableinCanada, Mexico,the U.K.,

Japan, Korea, Taiwan,and Australia,for whichthe additional feevaries. Executivemembersearna2%

reward on qualifiedpurchases (generally up to amaximum reward of $1,000 per year), redeemableat

Costco warehouses.Thisprogram offers services that vary by stateand country and provideaccess to

additional savingsand benefitsonvarious businessand consumer services,suchasautoand home

insurance, theCostcoautopur chaseprogram,and checkprinting. Executivememberstotaled 32.3

millionand represented 45.4% of paidmembers.The salespenetration of Executivemembers

represented approximately72.8% of worldwidenet salesin2023.

HumanCapital

OurCodeofEthicsrequiresthatwe“Ta ke Care of OurEmployees,” whichisfundamental to the

obligationto“TakeCareofOur Members.”Wemustalsocarefully controlour selling, general and

administrative(SG&A) expenses,sothat we cansellhighqualitygoods and services at lowprices.

Compensationand benefits foremployees is our largestexpenseafterthe cost of merchandise and is

carefully monitored.

Employee Base

At theend of 2023, we employed 316,000 employees worldwide. Approximately95% areemployedinour

membership warehousesand distribution channels, and approximately5%are represented by unions.

We also utilizeseasonal employees.

Thetotal numberofemployees by segment was:

2023 2022 2021

United States ...............................

208,000 202,000 192,000

Canada ....................................

51,000 50,000 47,000

Other International ..........................

57,000 52,000 49,000

Totalemployees ............................

316,000 304,000 288,000

Growth andEngagement

We believe that ourwarehousesare among themostproductive in theretailindustry, owinglargelytothe

commitment and efficiencyofour employees.Weseek to providethem not merely withemployment but

careers. Many attributes of our business contributetothe objective.The more significant include:

competitivecompensationand benefitsfor thoseworking in our membership warehouses and

distributions channels;acommitment to promotingfromwithin; and atarget ratioofatleast50% of our

employee basebeing full-time employees.Theseattributes contributetowhat we consider,especially for

theindustry, ahighretention rate.In2023, in theU.S.that rate wasapproximately90% foremployees

whohavebeenwithusfor at leastone year.

Diversity,Equity andInclusion

Thecommitment to “TakeCareofOur Employees”isalsothe foundationofour approachtopromoting

diversity, equity andinclusion and creatinganinclusive and respectfulworkplace.Westriv efor an

environment whereall employees feel that they belong, areaccepted, included, respectedand supported

becauseofwho they are. We demonstrateleadership commitment to equity through consistent

communication, employee development and education, supportofdiversity and inclusioninitiatives within

theorganization, communityinvolvement,and supplierdiversity.Costcocontinues itsefforts to develop

future leaders,including throughthe supervisorintrainingprograms. In 2023, over 7,800 hourly

employees completedthe 6-week course.

Well Being

Costco strivestoprovide our employees withcompetitive wages and excellent benefits. In March2023,

we increased thetop of thewagescalesby85centsper hour in theU.S,Canada and Puerto Rico. In

September of2023, we increasedthe starting wage to at least$18.50 forall entry-level positions in the

U.S. We havealsoexpandedour benefits in theU.S.toinclude additional mental health support for

childrenand adults at littletono cost to our employees.Costcoisfirmlycommittedtoprotectingthe health

andsafetyofour membersand employees and to servingour communities.

Formoredetailedinformation regarding our programsand initiatives, see“Employees”withinour

SustainabilityCommitment (located on our website).The SustainabilityCommitment and other

information on our websiteare not incorporated by referenceintoand do not form any partofthisAnnual

Report.

Competition

Ourindustryishighlycompetitive,based on factorssuchasprice,mer chandise qualityand selection,

location, convenience, distribution strategy,and customer service. We competeonaworldwidebasis with

global,national,and regional wholesalersand retailers,including supermarkets, supercenters, online

retailers,gasolinestations, harddiscounters, department and specialtystores, and operatorssellinga

singlecategoryornarrowrange of merchandise.Walmart,Target,Kroger,and Amazon areamong our

significant general merchandise retail competitorsinthe U.S. We also competewithother warehouse

clubs,including Walmart’sSam’s Cluband BJ’s WholesaleClubinthe U.S. Many of themajor

metropolitan areas in theU.S.and certainofour Other International locations havemultiplecompeting

clubs.

IntellectualProperty

We believe that,tovarying degrees,our trademarks, tradenames,copyrights, proprietary processes,

trade secrets, tradedress,domainnames and similarintellectual property add significant valuetoour

businessand areimportant to our success. We haveinvestedsignificantly in thedevelopment and

protection of ourwell-recognizedbrands,including theCos tc oWholesaletrademarks and our private-

label brand, Kirkland Signature. We believe that Kirkland Signatureproducts arehighquality, offeredat

prices that aregenerally lowerthan national brands,and helplower costs, differentiate our merchandise

offerings,and generally earn higher margins. We expecttocontinue to increasethe salespenetration of

our private-label items.

We rely on trademarkand copyright laws,trade-secret pr otection, and confidentiality, licenseand other

agreementswithour suppliers,employees and otherstoprotect our intellectual property.The availability

and durationoftrademark registrations vary by country;however,trademarks aregenerally valid and may

be renewed indefinitelyaslong as they areinuse and registrations aremaintained.

AvailableInformation

OurU.S.websiteiswww.costco.com. We make availablethrough theInvestorRelations sectionofthat

site,freeofcharge, ourAnnualReports on Form 10-K, QuarterlyReports on Form 10-Q, Current Reports

on Form 8-K, ProxyStatementsand Forms 3, 4and 5, and any amendmentstothose reports,assoon as

reasonablypracticable afterfilingsuchmaterials withorfurnishingsuchdocumentstothe Securities and

Exchange Commission (SEC). Theinformation found on our websiteisnot partofthisorany other report

filedwithorfur nished to theSEC.The SEC maintainsasite that contains reports,proxy and information

statements, and other informationregarding issuers, such as theCompany,that file electronically withthe

SECatwww.sec.gov.

We haveacode of ethics forseniorfinancialofficers, pursuant to Section406 of theSarbanes-Oxley Act.

Copies of thecodeare availablefreeofcharge by writingtoSecretary,CostcoWholesaleCorporation,

999 LakeDrive,Issaquah, WA 98027.Ifthe Company makesany amendmentstothiscode (other than

technical, administrative, ornon-substantiveamendments) or grantsany waivers, including implicit

waivers, to theChief ExecutiveOfficer,Chief FinancialOfficer or principal accountingofficer and

controller, we will disclose(on our websiteorinaForm 8-Kreportfiledwiththe SEC)the natureofthe

amendment orwaiver, itseffective date, and to whom it applies.

Information about ourExecutive Officers

Theexecutive officers of Costco,their position, and ages arelistedbelow.All haveover25yearsof

servicewiththe Company,withthe exceptionofMr. Sullivan whohas 22 yearsofservice.

Name Position

Executive

Officer

SinceAge

W. CraigJelinek ............ ChiefExecutive Officer. Mr.Jelinek has been adirectorsince

February2010. Mr.Jelinek previously wasPresident and CEOfrom

January2012 to February2022. He wasPresident and Chief

OperatingOfficer from February2010 to December 2011. Priorto

that he wasExecutive Vice President,Chief OperatingOfficer,

Merchandising since2004.

1995 71

RonM.Vachris ............. President and ChiefOperating Officer. Mr.Vachris has been a

director sinceFebruary2022. Mr.Vachris previously served as

ExecutiveVicePresident of Merchandising from June 2016 to

January2022, as Senior Vice President,RealEstateDevelopment,

from August2015 to June 2016, and Senior Vice President,General

Manager,Northwest Region, from 2010 to July 2015.

2016 58

RichardA.Galanti .......... ExecutiveVicePresident and ChiefFinancialOfficer.Mr. Galanti

has been adirectorsince January1995.

1993 67

JimC.Klauer .............. ExecutiveVicePresident,Chief OperatingOfficer,Northern

Division. Mr.Klauer wasSenior Vice President,Non-Foods and E-

commerceMerchandise,from2013 to January2018.

2018 61

Russ D. Miller .............. Senior ExecutiveVicePresident,U.S.Operations.Mr. Millerwas

ExecutiveVicePresident,Chief OperatingOfficer,Southwest

Divisionand Mexico,fromJanuary2018 to May2022. Mr.Miller

wasSenior Vice President,Western Canada Region, from 2001 to

January2018.

2018 66

PatrickJ.Callans ........... ExecutiveVicePresident,Administration. Mr.Callans wasSenior

Vice President,Human Resourcesand RiskManagement,from

2013 to December 2018.

2019 61

YoramB.Rubanenko ....... ExecutiveVicePresident,Chief OperatingOfficer,Eastern Division.

Mr.Rubanenkowas Senior Vice President and General Manager,

SoutheastRegion, from 2013 to September 2021, and Vice

President,Regional Operations Manager forthe NortheastRegion,

from 1998 to 2013.

2021 59

John Sullivan .............. ExecutiveVicePresident,GeneralCounsel &CorporateSecretary.

Mr.Sullivan has been General Counsel since2016 and Corporate

Secretarysince 2010.

2021 63

Claudine E. Adamo ......... ExecutiveVicePresident,Merchandising. Ms.Adamowas Senior

Vice President,Non-Foods,from2018 to February2022, and Vice

President,Non-Foods,from2013 to 2018.

2022 53

CatonFrates ............... ExecutiveVicePresident,Chief OperatingOfficer,Southwest

Division. Mr.Frateswas Senior Vice President,Los Angeles

Region, from 2015 to May2022.

2022 55

Pierre Riel ................. ExecutiveVicePresident,Chief OperatingOfficer,International

Division. Mr.Rielwas Senior Vice President,Country Manager,

Canada, from 2019 to March2022, and Senior Vice President,

EasternCanada Region, from 2001 to 2019.

2022 60

Item 1A—RiskFactors

Therisks described below couldmaterially and adversely affect our business, financialcondition and

resultsofoperations.Wecouldalsobeaffectedbyadditional risks that applytoall companies operating

in theU.S.and globally,aswellasother risks that arenot presently knowntousorthat we currently

consider to be immaterial.These RiskFactors shouldbecarefully reviewed in conjunction with

Management'sDiscussion and AnalysisofFinancialCondition and ResultsofOperations in Item7and

our consolidated financialstatementsand relatednotes in Item8of this Report.

Business andOperating Risks

We arehighlydependent on thefinancial performanceofour U.S. andCanadianoperations.

Ourfinancialand operational performanceishighlydependent on our U.S. and Canadian operations,

whichcomprised 87% and 84% ofnet salesand operatingincomein2023. Within theU.S., we arehighly

dependent on our California operations,which comprised27% of U.S. net salesin2023. OurCalifornia

market,ingeneral,has alarger percentage of higher volume warehouses as compared to our other

domesticmarkets.Any substantialslowingorsustained declineintheseoperations couldmaterially

adversely affect our business and financialresults.Declines in financialperformanceofour U.S.

operations,particularlyinCalifornia, and our Canadian operations couldarise from,among other things:

slow growth or declines in comparablewarehousesales (comparablesales); negativetrends in operating

expenses,including increased labor, healthcare and energy costs; failingtomeet targetsfor warehouse

openings;cannibalizingexistinglocations withnew warehouses;shifts in salesmix toward lowergross

margin products;changes oruncertainties in economic conditions in our markets, including higher levels

of unemployment anddepressedhomevalues;and failingtoconsistently providehighqualityand

innovativenew products.

We maybeunsuccessful implementing ourgrowthstrategy, including expanding our business in

existing marketsand newmarkets,and integratingacquisitions,which couldhaveanadverse

impact on ourbusiness, financialcondition andresultsofoperations.

Ourgrowthisdependent, in part,onour abilitytoacquire property and build or leasenew warehouses

and depots. We competewithother retailers and businessesfor suitablelocations.Local land useand

other regulations restrictingthe construction and operationofour warehouses and depots, as well as local

community actionsopposed to thelocationofour warehouses or depotsatspecific sitesand theadoption

of locallawsrestricting our operations and environmental regulations,may impactour abilitytofind

suitablelocations and increasethe cost of sitesand of constructing, leasingand operatingwarehouses

and depots. We also mayhavedifficultynegotiating leases or purchaseagreementsonacceptableterms.

In addition, certainjurisdictions haveenactedorproposed laws and regulations that wouldprevent or

restrict theoperationorexpansionplans of certainlarge retailers and warehouseclubs,including us.

Failure to effectivelymanage theseand other similarfactors mayaffectour abilitytotimelybuild or lease

and operatenew warehousesand depots, whichcouldhaveamaterial adverse effect on our future

growth and profitability.

We seek to expand in existing marketstoattain agreater overallmarketshare. Anew warehousemay

draw membersawayfromour existing warehouses and adversely affect theircomparablesales

performance, member traffic, andprofitability.

We intend to continue to open warehouses in new markets. Associated risks include difficulties in

attracting membersdue to alackoffamiliarity withus, attracting membersofother wholesaleclub

operators, ourlesserfamiliarity withlocal member preferences, and seasonal differences in themarket.

Entryintonew marketsmay bringusintocompetition withnew competitorsorwithexistingcompetitors

withalarge, established market presence.Wecannot ensurethat new warehouses and new e-commerce

websites will be profitableand future profitabilitycouldbedelayed or otherwisematerially adversely

affected.

We have made and maycontinue to make investmentsand acquisitions to improvethe speed, accuracy

andefficiencyofour supplychainsand deliverychannels. Theeffectivenessoftheseinvestmentscan be

less predictablethanopeningnew locations and might not providethe anticipated benefitsordesired

ratesofreturn.

Ourfailure to maintain membership growth,loyalty andbrand recognition couldadverselyaffect

our resultsofoperations.

Membership loyaltyand growth areessentialtoour business. Theextent to whichweachieve growth in

our membership base,increasethe penetration of Executivemembership,and sustainhighrenewal rates

materially influences ourprofitability. Damage to our brands or reputationmay negativelyimpact

comparablesales,diminishmembertrust,and reducerenewal ratesand, accordingly, net salesand

membership feerevenue, negativelyimpacting our resultsofoperations.

We sell many products under ourKirkland Signaturebrand. Maintainingconsistent productquality,

competitivepricing,and availabilityoftheseproducts is essentialtodeveloping and maintainingmember

loyalty. Theseproducts also generallycarry higher marginsthan national brand products and represent a

growingportion of ouroverall sales. If theKirkland Signaturebrand experiences alossofmember

acceptanceorconfidence, our salesand grossmarginresults couldbeadversely affected.

Disruptions in merchandisedistributionorprocessing, packaging, manufacturing, andother

facilitiescould adverselyaffectsales andmembersatisfaction.

We depend on theorderly operationofthe merchandise receivingand distributionprocess,primarily

through our depots. We also rely upon processing, packaging, manufacturing and other facilitiesto

supportour business, whichincludesthe production of certainprivate-label items. Although we believe

that our operations are efficient, disruptions due to fires, tornadoes,hurricanes,earthquakes,pandemics

or other extremeweather conditions or catastrophicevents, labor issues or other shipping problemsmay

result in delaysinthe production and deliveryofmerchandise to our warehouses,which couldadversely

affect salesand thesatisfactionofour members. Oure-commerceoperations depend heavily on third-

partyand in-houselogistics providersand is negativelyaffectedwhen theseprovidersare unableto

provideservicesinatimely fashion.

We maynot timely identify or effectivelyrespondtoconsumer trends,which couldnegatively

affect our relationship withour members, thedemandfor our products andservices, andour

market share.

It is difficulttoconsistentlyand successfully predictthe products and services that our memberswill

desire.Our successdepends,inpart, on our abilitytoidentify and respond to trends in demographics and

consumer preferences. Failuretoidentify timely or effectivelyrespond to changing consumer tastes,

preferences(including thoserelatingtoenvironmental,socialand governancepractices)and spending

patternscouldnegativelyaffectour relationshipwithour members, thedemand forour products and

services,and our market share. If we arenot successful at predictingour salestrends and adjusting our

purchases accordingly, we mayhaveexcess inventory, whichcouldresultinadditional markdowns,orwe

mayexperienceout-of-stockpositions and deliverydelays, whichcould result in higher costs, bothof

whichwouldreduceour operatingperformance. This couldhaveanadverse effect on net sales, gross

margin and operatingincome.

Availabilityand performanceofour informationtechnology (IT) systemsare vitaltoour business.

Failure to successfully executeITprojectsand have IT systemsavailabletoour business would

adversely impact ouroperations.

IT systemsplayacrucialroleinconducting our business. Thesesystemsare utilized to processavery

high volume of transactions,conductpayment transactions,track and valueour inventoryand produce

reports critical formakingbusinessdecisions.Failure or disruptionofthesesystemscouldhavean

adverse impactonour abilitytobuy products and services from our suppliers,producegoods in our

manufacturing plants, move theproducts in an efficient manner to our warehouses and sell products to

our members. We areundertakinglarge technology and IT transformation projects.The failure of these

projects couldadversely impact our businessplans and potentially impairour day to day business

operations.Given thehighvolumeoftransactions we process, it is important that we build strong digital

resiliencytoprevent disruptionfromeventssuchaspower outages,computer and telecommunications

failures, viruses, internal orexternalsecuritybreaches,errors by employees,and catastrophicevents

such as fires, earthquakes,tornadoes and hurricanes.Any debilitatingfailure of our critical IT systems,

datacentersand backupsystemswould require significant investmentsinresourcestorestore IT

services and maycause serious impairment in our businessoperations including loss of business

services,increased cost of moving merchandise and failure to provideservice to our members. We are

currently making substantialinvestments in maintainingand enhancingour digitalresiliencyand failure or

delayinthese projects couldbecostly and harmful to our business. Failure to deliver IT transformation

effortsefficiently andeffectively couldresultinthe loss of our competitivepositionand adversely impact

ourfinancialcondition and resultsofoperations.Insufficient IT capacitycouldalsoimpactour capacityfor

timely,completeand accurate financialand non-financialreporting requiredbylaw.

We arerequiredtomaintainthe privacy andsecurity of personaland business information amidst

multiplyingthreatlandscapesand in compliance withprivacy anddataprotectionregulations

globally.Failure to do so coulddamageour business, including our reputationwithmembers,

suppliers andemployees, cause us to incursubstantialadditionalcosts,and become subject to

litigation andregulatoryaction.

Increased security threatsand more sophisticated cyber misconductposearisktoour systems,

networks, products andservices. We rely upon IT systemsand networks, some of whichare managed by

or belong to thirdparties,including suppliers,partners, vendors, and serviceproviders. Additionally,we

collect,store and processsensitive information relating to our business, members, employees,and other

thirdparties.Operatingthese IT systemsand networks, and processing and maintainingthisdata, in a

secure manner,iscriticaltoour businessoperations and strategy.Increased remote work has also

increased thepossibleattacksurfaces. Attempts to gainunauthorized access to systems, networks and

data,bothoursand thirdparties withwhom we work,are increasinginfrequencyand sophistication, and

in some cases, theseattemptsare successful.Cybersecurity attacks mayrange from random attempts to

coordinated and targeted attacks, including sophisticated computer crimes and advanced persistent

threats. Phishing attackshaveemerged as particularlyprominent,including as vectorsfor ransomware

attacks, whichhaveincreased in breadthand frequency. While we trainour employees as partofour

security efforts, that training cannot be completely effective. Thesethreatsposearisktothe security of

oursystemsand networksand theconfidentiality, integrity, and availabilityofour data. OurITsystems

and networks, or thosemanaged by thirdparties such as cloud providersorsuppliers that otherwisehost

or haveaccesstoconfidentialinformation, periodically havevulnerabilities, whichmay go unnoticed fora

period of time.Our loggingcapabilities, or thelogging capabilitiesofthird parties,are also not always

complete or sufficiently detailed,affecting our abilitytofully investigateand understand thescope of

security events. While ourcybersecurity and complianceefforts seek to mitigatesuchrisks, therecan be

no guarantee that theactions and controls we and our third-party serviceprovidershaveimplemented

and areimplementing, will be sufficient to protectour systems, information or other property.

Thepotentialimpacts of acybersecurity attack include reputational damage, litigation, government

enforcement actions, penalties, disruptiontosystemsand operations,unauthorized releaseofconfidential

or otherwiseprotected information, corruptionofdata, diminutioninthe valueofour investment in IT

systemsand increased cybersecurity protection and remediationcosts.Thiscouldadversely affect our

competitiveness, resultsofoperations and financialcondition and, critically in light of our businessmodel,

loss of member confidence. Further, theinsurancecoverage we maintain and indemnification

arrangementswiththird parties maybeinadequatetocover claims,costs,and liabilitiesrelatingto

cybersecurity incidents. In addition, datawecollect,store and processissubjecttoavariety of U.S. and

international laws and regulations,suchasthe European Union'sGeneral Data Protection Regulation,

CaliforniaConsumerPrivacy Act, He alth InsurancePortabilityand AccountabilityAct,and other privacy

and cybersecurity laws across thevarious states and around theglobe, whichmay carry significant

potentialpenalties fornoncompliance.

We aresubject to payment-related risks.

We accept paymentsusing avariety of methods,including select creditand debitcards,cashand checks,

co-brand cardholder rebates,Executive member 2% reward certificates,and our shop card.Asweoffer

new payment optionstoour members, we maybesubjecttoadditional rules, regulations,compliance

requirements, andhigher fraudlosses. Forcerta in payment methods,wepay interchange and other

relatedacceptancefees, along withadditional transaction processing fees.Werelyonthird parties to

providepayment transaction processing services forcreditand debitcards and our shop card.Itcould

disrupt our businessiftheseparties becomeunwillingorunabletoprovide theseservicestous. We are

also subjecttofee increases by theseservice providers.

We must comply withevolvingpayment card associationand network operatingrules,including data

security rules, certificationrequirementsand rulesgoverning electronicfunds transfers.For example, we

aresubjecttoPayment Card IndustryDataSecurityStandards,which containcomplianceguidelines and

standards withregardtoour security surrounding thephysicaland electronicstorage, processing and

transmission of individual cardholder data.Ifour internal systemsare breached or compromised, we may

be liablefor card re-issuancecosts,subjecttofines and higher transaction fees and lose our abilityto

accept card paymentsfromour members, and our businessand operatingresults couldbeadversely

affected. Ourfailure to offerpayment methods desired by our memberscouldcreateacompetitive

disadvantage.

We mightsellproducts that causeillness or injury to our members, harm to our reputation, and

exposeusto litigation.

If our merchandise,including food and prepared food products forhuman consumption, drugs,children's

products,pet products anddurablegoods,donot meet or areperceived not to meet applicablesafetyor

labelingstandards or our members' expectati ons ,wecouldexperiencelostsales,increased costs,

litigationorreputational harm. Thesaleoftheseitems involves theriskofillnessorinjurytoour members.

Such illnessesorinjuriescould result from tamperingbyunauthorized thirdparties,productcontamination

or spoilage, includingthe pr esenceofforeign objects,substances,chemicals, other agents, or residues

introducedduringthe growing, manufacturing, storage,handlingand transportation phases,orfaulty

design. Oursuppliers aregenerally contractually requiredtocomplywithproductsafetylaws, and we are

dependent on them to ensurethatthe products we buy comply withsafetyand other standards.While we

aresubjecttogovernmental inspection and regulations and work to comply in allmaterialrespects with

applicablelawsand regulations,wecannot be sure that consumptionoruse of our products will not cause

illnessorinjuryorthat we will not besubjecttoclaims, lawsuits,orgovernment investigations relating to

such matters,resulting in costly productrecalls and other liabilitiesthat couldadversely affect our

businessand resultsofoperations.Evenifaproduct liabilityclaim is unsuccessful or is not fully pursued,

negativepublicitycould adversely affect our reputationwithexistingand potentialmembersand our

corporateand brand image, and theseeffects couldbelong-term.

If we do not successfully develop andmaintainarelevantomnichannelexperiencefor our

members, ourresultsofoperations couldbeadverselyimpacted.

Omnichannel retailingisrapidlyevolving, and we must keep pacewithchanging member expectations

and new developmentsbyour competitors. Ourmembersare increasinglyusing mobile phones,tablets,

computers, andother devices to shop and to interact with us through social media. We aremaking

investmentsinour websites and mobile applications.Ifweare unabletomake, improve, or develop

relevant member-facingtechnology in atimelymanner,our abilitytocompeteand our resultsof

operations couldbeadversely affected.

Inabilitytoattract,train andretainhighlyqualifiedemployees couldadverselyimpact our

business, financialcondition andresultsofoperations.

Oursuccess depends onthe continued contributions of our employees,including membersofour senior

management andother keyoperations,IT, merchandising and administrativepersonnel.Failure to identify

and implement asuccessionplanfor senior management couldnegativelyimpactour business. We must

attract, trainand retain alarge and growingnumber of qualifiedemployees,while controllingrelated labor

costsand maintainingour core values.Our abilitytocontrollabor and benefit costsissubjectto

numerous internal andexternalfactors,including regulatorychanges,prevailingwage rates, union

relations andhealthcare and otherinsurancecosts.Wecompetewithother retail and non-retail

businessesfor theseemployees andinvestsignificant resourcesintrainingand motivating them.Thereis

no assurancethatwewill be abletoattract or retain highlyqualifiedemployees in thefuture, whichcould

haveamaterialadverse effect on ourbusiness, financialcondition and resultsofoperations.

We mayincur property,casualty or otherlosses notcovered by our insurance.

Claimsfor employee health care benefits, workers’ compensation, general liability, property damage,

directors’ and officers’liability, vehicleliability, inventoryloss, and other expos ures arefunded

predominantly through self-insurance. Insurancecoverageismaintained forcertain risks to limit

exposures arisingfromverylarge losses. Thetypes and amountsofinsurancemay vary from time to time

based on our decisionswithrespect to risk retentionand regulatoryrequirements. Significant claims or

events, regulatorychanges,asubstantialriseincosts of health care or coststomaintainour insuranceor

thefailure to maintain adequate insurancecoveragecouldhaveanadverse impactonour financial

condition and resultsofoperations.

Although we maintain specific coverages forcatastrophicproperty losses, we still bear asignificant

portion of theriskoflossesincurredasaresult of any physicaldamage to,orthe destruction of,any

warehouses,depots, manufacturing or homeofficefacilities, loss or spoilage of inventory, and business

interruption. Such lossescould materially impactour cash flowsand resultsofoperations.

Market andOther External Risks

We face strong competitionfromother retailersand warehousecluboperators,which could

adverselyaffect ourbusiness, financialcondition andresultsofoperations.

Theretailbusinessishighlycompetitive.Wecompete formembers, employees,sites,products and

services and in otherimportant respects withawiderange of local, regional and national wholesalersand

retailers,bothinthe United States and in foreigncountries,including other warehouse-club operators,

supermarkets, supercenters, online retailers,gasolinestations,harddiscounters, department and

specialtystoresand operatorssellingasinglecategoryornarrowrange of merchandise.Suchretailers

and warehousecluboperatorscompete vigorously and in avariety of ways, including pricing, selection

and availability, services,location, convenience, storehours, and theattractivenessand easeofuse of

websites and mobile applications.The evolutionofretailinginonlineand mobile channelshas improved

theabilityofcustomers to comparison shop, whichhas enhanced competition. Some competitorshave

greater financialresources and technology capabilities, betteraccess to merchandise,and greater market

penetration than we do.Our inabilitytorespond effectivelytocompetitivepressures,changes in theretail

marketsorcustomerexpectations couldresultinlostmarketshareand negativelyaffectour financial

results.

Generaleconomicfactors,domestically andinternationally,may adverselyaffect our business,

financialcondition, andresults of ope rations.

Higher energy andgasolinecosts,inflation, levels of unemployment,healthcare costs, consumer debt

levels,foreign-currencyexchange rates, unsettled financialmarkets,weaknessesinhousingand real

estate markets, reducedconsumerconfidence, changes and uncertainties relatedtogovernment fiscal,

monetaryand taxpoliciesincluding changes in interest rates, taxrates,duties, tariffs, or other restrictions,

sovereigndebt crises,pandemics and other health crises,and other economic factorscouldadversely

affect demand forour products andservices, require achange in productmix,orimpactthe cost of or

abilitytopurchaseinventory.Additionally,trade-relatedactions in various countries,particularlyChina and

theUnitedStates, haveaffectedthe costsofsomeofour merchandise.The degree of our exposureis

dependent on (among other things)the type of goods,rates imposed, and timing of thetariffs.The impact

to our net salesand grossmarginisinfluenced in partbyour merchandising and pricingstrategies in

responsetopotentialcostincreases.Higher tariffscouldadversely impactour results.

Prices of certaincommodities,including gasolineand consumablegoods used in manufacturing and our

warehouseretailoperations,are historically volatile and aresubjecttofluctuations arisingfromchanges in

domesticand international supplyand demand, inflationarypressures, labor costs, competition, market

speculation, gover nment regulations,taxes and periodicdelaysindelivery. Rapidand significant changes

in commodity prices and our abilityand desiretopassthem through to our membersmay affect our sales

andprofitmargins.These factorscould also increaseour merchandise costsand selling, general and

administrativeexpenses,and otherwiseadversely affect our operations and financialresults.General

economic conditions canalsobeaffectedbyeventslikethe outbreak of hostilities, including but not

limitedtothe Ukraineconflict, or acts of terrorism.

Inflationaryfactors such as increases in merchandise costsmay adversely affect our business, financial

condition and resultsofoperations.Wemay not be abletoadjustpricestosufficiently offset theeffectof

cost increases without negativelyimpacting consumer demand.

Suppliers maybeunabletotimelysupplyuswithqualitymerchandise at competitiveprices or

mayfailtoadhere to our high standards, resultinginadverse effectsonour business,

merchandise inventories, sales, and profit margins.

We depend heavily on ourabilitytopurchasequalitymerchandise in sufficient quantitiesatcompetitive

prices.Asthe quantitieswerequire continue to grow,wehavenoassurances of continued supply,

appropriate pricingoraccess to newproducts,and any supplierhas theabilitytochange theterms upon

whichthey sell to us or discontinue sellingtous. Member demands maylead to out-of-stockpositions

causingalossofsales andprofits.

We buy from numerous domestic and foreignsuppliers and importers.Our inabilitytoacquire suitable

merchandise on acceptableterms or thelossofkey suppliers couldnegativelyaffectus. We maynot be

abletodevelop relationships withnew suppliers,and products from alternativesources, if any,may be of

alesserqualityormoreexpensive. Becauseofour effortstoadheretohigh-qualitystandards forwhich

availablesupplymay be limited, particularly forcertain food items, thelarge volumeswedemand maynot

be consistently available. Ourefforts to secure supplycould lead to commitmentsthat provetobe

unsuccessful in theshort and long-term.

Oursuppliers (and thosethey depend upon formaterials and services)are subjecttorisks, including

labor disputes,union organizing activities,financialliquidity,natural disasters, extremeweather

conditions,public health emergencies, supplyconstraintsand general economic and political conditions

and other risks similartothosewefacethat couldlimit theirabilitytotimelyprovide us withacceptable

merchandise.One or more of oursuppliersmight not adheretoour qualitycontrol,packaging, legal,

regulatory, labor,environmental oranimalwelfare standards.Thesedeficienciesmay delay or preclude

deliveryofmerchandise to us and might not be identifiedbeforewesellsuchmerchandise to our

members. This failure couldleadtorecalls and litigationand otherwisedamage our reputationand our

brands,increasecosts,and otherwiseadversely impactour business.

Fluctuations in foreignexchange ratesmay adverselyaffect our resultsofoperations.

During 2023, ourinternational operations,including Canada, generated 27% and 34% of our net sales

and operatingincome. Ourinternational operations haveaccounted foranincreasingportion of our

warehouses,and we plan to continue international growth.Toprepareour consolidated financial

statements, we translate thefinancialstatementsofour international operations from localcurrenciesinto

U.S. dollars usingcurrent exchange rate s. Future fluctuations in exchange ratesthat areunfavorableto

us mayadversely affect thefinancialperformanceofour Canadian and Other International operations and

haveacorresponding adverse period-over-period effect on our resultsofoperations.Aswecontinue to

expand internationally,our exposuretofluctuations in foreignexchange ratesmay increase.

Aportion of theproducts we purchaseispaidfor in acurrencyother than thelocal currencyofthe country

in whichthe goods aresold. Currency fluctuations mayincreaseour merchandise costsand maynot be

passed on to membersand thus mayadversely affect our resultsofoperations.

Naturaldisasters, extremeweatherconditions,orother catastrophicevents couldnegatively

affect our business, financialcondition, andresultsofoperations.

Naturaldisaste rs and extremeweather conditions,including thoseimpactedbyclimatechange, such as

hurricanes,typhoons,floods,earthquakes,wildfires, droughts; acts of terrorism or violence, including

active shooter situations;and energy shortages;particularlyinCaliforniaorWashington state, whereour

centralized operatingsystemsand administrativepersonnel arelocated, couldnegativelyaffectour

operations and financialperformance. Such eventscouldresultinphysicaldamage to our properties,

limitations on storeoperatinghours, less frequent visits by memberstophysicallocations,the temporary

closureofwarehouses,depots, manufacturing or homeofficefacilities, thetemporary lack of an adequate

work force, disruptions to our IT systems, thetemporary or long-term disruptioninthe supplyofproducts

from some localoroverseas suppliers,the temporarydisruptioninthe transportofgoods to or from

overseas,delaysinthe deliveryofgoods to our warehouses or depots, and thetemporaryreduction in the

availabilityofproducts in our warehouses.Theseeventscouldalsoreducedemand forour products or

make it difficultorimpossibletoprocure products.Wemay be requiredtosuspend operations in some or

allofour locations, whichcould haveamaterialadverse effect on our business, financialcondition and

resultsofoperations.

Pandemics andother health crises, including COVID-19, couldaffect our business, financial

condition andresults of operations in many respects.

Theemergence, severity,magnitude and durationofglobal or regional health crises areuncertain and

difficulttopredict.Apandemic, such as COVID-19, couldaffectcertain businessoperations,demand for

our products andservices, in-stock positions,costs of doing business, availabilityoflabor,access to

inventory, supplychain operations,our abilitytopredict future performance, exposuretolitigation, and our

financialperformance, among other things.Other factorsand uncertainties include, but arenot limited to:

•The severity and durationofpandemics;

•Evolvingmacroeconomic factors, including general economic uncertainty,unemployment rates,

andrecessionarypressures;

•Changes in labor marketsaffecting us and our suppliers;

•Unknownconsequences on our businessperformanceand initiativesstemming from the

substantialinvestmentoftimeand other resourcestothe pandemic response;

•The paceofpost-pandemic recovery;

•The long-term impactofthe pandemic on our business, including consumer behaviors;and

•Disruptionand volatilitywithinthe financialand creditmarkets.

Factorsassociated wit hclimate change couldadverselyaffect our business.

We usenatural gas, diesel fuel,gasoline, and electricityinour distributionand warehouseoperations.

Government regulations limitingcarbon dioxideand other greenhousegas emissions and other

environmental restrictions mayincreasecomplianceand merchandise costs, and other regulation

affectingenergy inputscould materially affect our profitability. As theeconomytransitions to lowercarbon

intensitywecannot guaranteethatwewill make adequateinvestmentsorsuccessfully implement

strategies that will effectivelyachieve our climate-relatedgoals, whichcouldlead to negativeperceptions

among membersand other stakeholdersand result in reputational harm. Climatechange, extreme

weather conditions,wildfires, droughtsand rising sealevelscouldaffectour abilitytoprocure

commodities at costsand in quantitieswecurrently experience.

We also sell asubstantial amount of gasoline, thedemand forwhich couldbeimpactedbyconcerns

about climatechange and increased regulations.Morestringent fuel economystandards,changing public

policiesaim ed at increasing theadoptionofzero-emission and alternativefuel vehicles and other

regulations relatedtoclimatechange,and evolving consumer preferences will affect our future operations

and will adversely impact certainelementsofour profitabilityand require significant capitalexpenditures.

Failure to meet financialmarket expectations couldadverselyaffect themarket priceand volatility

of our stock.

We believe that theprice of our stockcurrently reflects high market expectations forour future operating

results. Anyfailure to meet ordelay in meetingtheseexpectations,including our warehouseand e-

commercecomparablesales growth rates, membership renewal rates, new member sign-ups,gross

margin,earnings,earnings per share, new warehouseopenings,ordividend or stockrepurchasepolicies

couldcausethe priceofour stocktodecline.

Legaland RegulatoryRisks

We aresubject to risks associated with thelegislative,judicial,accounting, regulatory, political

andeconomic factorsspecifictothe countries or regions in whichweoperate,which could

adverselyaffect ourbusiness, financialcondition andresultsofoperations.

At theend of 2023, we operated 270 warehouses outside of theU.S.(31% of allwarehouselocations),

and we plan to continue expandingour international operations.Futureoperatingresults internationally

couldbenegativelyaffectedbyavarietyoffactors,many similartothosewefaceinthe U.S.,certain of

whichare beyond our control. Thesefactors include political and economic conditions,regulatory

constraints, currencyregulations,policychanges,and other matters in any of thecountries or regions in

whichweoperate, noworinthe future.Other factorsthat mayimpactinternational operations include

foreigntrade (including tariffsand trade sanctions), monetaryand fiscalpoliciesand thelawsand

regulations of theU.S.and foreigngovernments, agenciesand similarorganizations,and risks associated

withhavingmajor facilitiesinlocations whichhavebeen historically less stablethan theU.S.Risks

inherent in internationaloperations also include, amongothers, thecosts and difficulties of managing

international operations,adverse taxconsequences,and difficulty in enforcing intellectual property rights.

Newreporting obligations globally areincreasingthe cost and complexity of doing business.

Changesinaccountingstandards andsubjectiveassumptions,estimates andjudgments by

management relatedtocomplex accountingmatters couldsignificantlyaffect our financial

condition andresults of operations .

Accountingprinciplesand relatedpronouncements, implementationguidelines,and interpretations we

applytoawiderange of mattersthatare relevant to our business, including self-insuranceliabilities, are

highlycomplex and involvesubjectiveassumptions,estimates and judgmentsbyour management.

Changesinrules or interpretation or changes in underlyingassumptions,estimates or judgmentsbyour

management couldsignificantly change our reportedorexpectedfinancialperformanceand havea

material impactonour consolidated financialstatements.

We areexposed to risks relating to evaluationsofcontrols requiredbySection404 of the

Sarbanes-OxleyAct andotherwise.

Section404 of theSarbanes-Oxley Actof2002 requiresmanagement assessmentsofthe effectiveness

of internal controloverfinancial reporting and disclosurecontrols and procedures.Ifweare unableto

maintain effectiveinternal controloverfinancialreporting or disclosurecontrols and procedures,our ability

to record,process and reportfinancialinformation accurately and to preparefinancialstatementswithin

requiredtimeperiods couldbeadversely affected, whichcouldsubjectustolitigationorinvestigations

requiring management resourcesand payment of legal and other ex penses,negativelyaffectinvestor

confidenceinour financialstatementsand adversely impactour stockprice.Uncertainties aroundour

developing systemsconcerningcontrolsfor non-financialreporting also createrisks.

Changesintax rates, newU.S.orforeign taxlegislation, andexposuretoadditionaltax liabilities

couldadverselyaffect ourfinancial condition andresultsofoperations.

We aresubjecttoavarietyoftaxes and taxcollectionand remittanceobligations in theU.S.and

numerous foreignjurisdictions.Additionally,atany point in time,wemay be under examinationfor value

added, sales-based, payroll, product, importorother non-income taxes. We mayrecognize additional tax

expense, be subjecttoadditional taxliabilities, or incurlossesand penalties,due to changes in laws,

regulations,administrativepractices,principles, assessmentsbyauthoritiesand interpretations relatedto

tax, including taxrules in variousjurisdictions.Wecomputeour income taxprovision based on enacted

taxrates in thecountries in whichweoperate. As taxrates vary among countries,achange in earnings

attributabletothe various jurisdictionsinwhich we operatecouldresultinanunfavorablechange in our

overalltax provision.Additionally,changes in theenactedtax ratesoradverse outcomesintax audits,

including transferpricing disputes,couldhaveamaterial adverse effect on our financialcondition and

resultsofoperations.

Changesinorfailure to comply withregulations relating to theuse, storage, dischargeand

disposal of hazardous materials, hazardousand non-hazardous wastes andother environmental

matters (suchasrecyclingand extendedproducer responsibilityrequirements) couldadversely

impact our business, financialcondition andresultsofoperations.

We aresubjecttoawideand increasinglybroad arrayoffederal,state,regional,local and international

laws and regulations relating to theuse,storage, discharge and disposal of hazardous materials,

hazardous and non-hazardous wastes and other environmental matters.Failure to comply withthese

laws couldresultinharmtoour members, employees or others, significant coststosatisfy environmental

compliance, remediationorcompensatoryrequirements, or theimpositionofseverepenalties or

restrictions on operations bygovernmental agenciesorcourts that couldadversely affect our business,

financialcondition and resultsofoperations.

Operations at our facilitiesrequire thetreatment and disposal of wastewater,stormwater and agricultural

and food processing wastes,the useand maintenanceofrefrigerationsystems, including ammonia-based

chillers, noise,odor and dustmanagement,the operationofmechanizedprocessing equipment,and

other operations that potentially couldaffectthe environment and public health and safety.Failure to

comply withcurrent and future environmental,health and safety standards couldresultinthe impositionof

fines and penalties,illnessorinjuryofour employees,and claims or lawsuits relatedtosuc hillnessesor

injuries,and temporaryclosuresorlimitsonthe operations of facilities.

We areinvolvedinanumber of legalproceedings andaudits andsomeofthese outcomescould

adverselyaffect ourbusiness, financialcondition andresultsofoperations.

Ourbusinessrequirescompliancewithmanylawsand regulations.Failure to achievecompliancecould

subjectustolawsuitsand other proceedings and lead to damage awards,fines,penalties,and

remediationcosts.Weare or maybecomeinvolvedinanumber of legal proceedings and audits,

including grand jury investigations,government and agencyinvestigations,and consumer,employment,

tort,unclaimed property laws,and other litigation. We cannot predict withcertainty theoutcomesofthese

proceedings and other contingencies, including environmental remediationand other proceedings

commenced by governmental authorities. Theoutcome of some of theseproceedings,audits,unclaimed

property laws,and other contingenciescould require us to take,orrefrain from taking, actions whichcould

negativelyaffectour operations or couldrequire us to pay substantialamountsofmoney,adversely

affectingour financialcondition andresults of operations.Additionally,defending againsttheselawsuits

and proceedings mayinvolve significant expenseand diversionofmanagement'sattentionand

resources.

Item 1B—Unresolved StaffComments

None.

Item 2—Properties

Warehouse Properties

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

Own Land andBuilding

Lease Land and/or Building

(1)

Total

United States andPuertoRico ...............

477 114 591

Canada ...................................

90 17 107

Other International .........................

110 53 163

Total ..................................

677 184 861

_______________

(1)132 of the184 leases areland-onlyleases,whereCostcoownsthe building.

At theend of 2023, ourwarehousescontained approximately126.3millionsquarefeet of operatingfloor

space: 87.6millioninthe U.S.;15.3millioninCanada; and 23.4millioninOther International.Total

squarefeet associated withdistributionand logisticsfacilitieswereapproximately33.1million.

Additionally,weoperatevarious processing, packaging, manufacturing and other facilitiestosupportour

business, whichincludes theproduction of certainprivate-label items.

Item 3—LegalProceedings

Seediscussion of Legal Proceedings in Note 10 to theconsolidated financialstatementsincluded in

Item8of this Report.

Item 4—Mine Safety Disclosures

Notapplicable.

PART II

Item 5—Market forRegistrant’sCommonEquity, RelatedStockholderMatters andIssuer

Purchases of Equity Securities

Market Information andDividendPolicy

Ourcommonstock is traded on theNASDAQGlobal Select Market under thesymbol “COST.”On

October 3, 2023, we had 10,331 stockholdersofrecord.

Payment of dividendsissubject to declaration by theBoardofDirectors.Factors considered in

determining dividends includeour profitabilityand expectedcapitalneeds.Subjecttothesequalifications,

we presently expect to continue to paydividends on aquarterlybasis.

Issuer Purchases of Equity Securities

Thefollowing tablesetsforth informationonour common stockrepurchaseactivityfor thefourth quarter

of 2023 (dollars in millions,exceptper sharedata):

Period

Total Number

of Shares

Purchased

AveragePri ce

Paid per

Total Number of

Shares Purchased as

Part of Publicly

Announced

Program

(1)

MaximumDollar

ValueofShares

that MayYet be

Purchased under

thePro gram

May8—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

Totalfourth quarter .......

433,000 $530.67 433,000

_______________

(1)The repurchaseprogram is conducted under a$4,000 authorizationapproved by our BoardofDirectors in January2023,

whichexpires in January2027. This authorizationrevoked previously authorized but unused amounts, totaling$2,568.

PerformanceGraph

Thefollowinggraph compares thecumulativetotal shareholder return assuming reinvestment of

dividends on an investment of$100 in Costco commonstock, S&P 500 Index,S&P Retail Select Index,

and thepreviouslyselectedS&P 500RetailIndex over thefiveyearsfromSeptember 2, 2018, through

September 3, 2023. TheS&P Retail Select Index will prospectively replaceinthe graph theS&P 500

Retail Index to show abroaderrepresentationofindustryperformanceand abroader index of peers.

Comparison of 5-Year Cumulative Total Returns

Costco S&P500 S&P 500 Retail S&P Retail Select

2018 2019 2020 2021 2022 2023

$100

$200

$300

Thefollowinggraph provides informationconcerning average salesper warehouseovera10-year period.

AverageSales PerWarehouse*

(Sales In Millions)

Year Opened #ofWhses

2023 23 $151

2022 23 $150 158

2021 20 $140 158 172

2020 13 $132 152 184 193

2019 20 $129 138 172 208 216

2018 21 $116 119 141 172 202 214

2017 26 $121 142 158 176 206 237 247

2016 29 $87 97 118 131 145 173 204 212

2015 23 $83 85 94 112 122 136 163 189199

2014 &Before663 $164 165 165 170 184 191 201 228259 268

Totals861 $164 $162 $159 $163 $176 $182 $192 $217 $245 $252

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

FiscalYear

*First year salesannualized.

2017 and 2023 were 53-week fiscalyearsbut havebeen normalized forpurposes of comparability

Item 6—Reserved

Item 7—Management's Discussion andAnalysisofFinancial Conditions andResultsof

Operations (amountsinmillions,except per share, share, membership fee, and warehousecount data)

ThefollowingManagement's Discussion and AnalysisofFinancialCondition and ResultsofOperations

(MD&A) is intended to promoteunderstanding of theresults of operations and financialcondition. MD&A

is provided as asupplement to,and shouldbereadinconjunction with, our consolidated financial

statementsand theaccompanyingNotes to FinancialStatements(Part II, Item8of this Form 10-K).This

sectiongenerally discussesthe resultsofoperations for2023 compared to 2022. Fordiscussion related

to theresults of operations and changes in financialcondition for2022 compared to 2021 refertoPartII,

Item7,Management's Discussion and AnalysisofFinancialCondition and ResultsofOperations in our

fiscalyear2022 Form 10-K, whichwas filedwiththe United States Securities and Exchange Commission

(SEC)onOctober 5, 2022.

Overview

We believe that themostimportant driver of our profitabilityisincreasingnet sales, particularly

comparable sales. Netsales includesour core merchandise categories(foods and sundries, non-foods,

and freshfoods), warehouse ancillary (gasoline, pharmacy,optical,food court, hearingaids, and tire

installation) andother businesses(e-commerce, businesscenters, travel and other). Comparablesales is

defined as net salesfromwarehouses open formorethan one year,including remodels, relocations and

expansions,and salesrelated to e-commercewebsites operatingfor more than one year.The measureis

intended as supplemental informationand is not asubstitute fornet salespresented in accordancewith

U.S. generally accepted accountingprinciples(U.S. GAAP).Comparablesales growth is achieved

through increasingshopping frequency from new and existing membersand theamount they spend on

each visit(averageticket).Sales comparisons canalsobeparticularlyinfluenced by certainfactors that

arebeyond our control: fluctuations in currencyexchange rates(withrespecttoour international

operations); inflationordeflation and changes in thecostofgasolineand associated competitive

conditions.The higher ourcomparablesales exclusiveofthese items, themorewecan leverage our

SG&A expenses,reducingthemasapercentage of salesand enhancingprofitability. Generating

comparablesales growth is foremost aquestion of making availabletoour membersthe right

merchandise at theright prices, askill that we believe we haverepeatedlydemonstrated over thelong-

term. Another substantialfactorinnet salesgrowthisthe health of theeconomiesinwhich we do

business, includingthe effectsofinflation or deflation, especially theUnitedStates. Netsales growth and

grossmargins arealsoimpactedbyour competition, whichisvigorous and widespread, across awide

range of global,national and regional wholesalersand retailers,including thosewithe-commerce

operations.While we cannot controlorreliablypredict general economic health or changes in

competition, we believe that we havebeen successful historically in adaptingour businesstothese

changes,suchasthrough adjustmentstoour pricingand merchandise mix, including increasingthe

penetration of ourprivate-labelitems,and through onlineofferings.

Ourphilosophy is to provideour memberswithqualitygoods and services at competitiveprices. We do

notfocus in theshort-termonmaximizingpricescharged, but instead seek to maintain what we believe is

aperceptionamong our membersofour “pricing authority” –consistently providingthe most competitive

values.Merchandise costsin2023 continued to be impactedbyinflation, however at alower rate than

what we experienced in 2022. Theimpacttoour net salesand grossmarginisinfluenced in partbyour

merchandising and pricingstrategiesinresponsetocostincreases.Thosestrategies caninclude, but are

not limited to,working withour suppliers to shareinabsorbing cost increases,earlier-than-usual

purchasingand in greatervolumes,aswellaspassing cost increases on to our members. Our

investmentsinmerchandise pricingmay include reducingpricesonmerchandise to drivesales or meet

competitionand holding prices steady despite cost increases instead of passing theincreases on to our

members, allnegatively impacting grossmarginand grossmarginasapercentage of net sales(gross

margin percentage).

We believe our gasoline businessenhances trafficinour warehouses,but it generally has alower gross

margin percentage and lowerSG&Aexpense, relative to our non-gasolinebusin esses. Ahigher

penetration of gasolinesales will generally lowerour grossmarginpercentage. Rapidlychanging gasoline

prices maysignificantly impactour near-termnet salesgrowth. Ge ner ally,risinggasolinepricesbenefit

net salesgrowthwhich,given thehigher salesbase, negativelyimpacts our grossmarginpercentage but

decreases our SG&A expenses asapercentage of net sales. Adeclineingasolinepriceshas theinverse

effect.

Government actionsinvarious countries relating to tariffs, particularlyChina and theUnitedStates, have

affected thecosts of some of our merchandise.The degree of our exposureisdependent on (among

other things)the type of goods,rates imposed, and timing of thetariffs.Higher tariffscouldadversely

impactour results.

We also achievenet salesgrowthbyopening new warehouses.Asour warehousebasegrows,available

and desirablesites becomemoredifficult to secure,and squarefootage growth becomes acomparatively

less substantialcomponent of growth.The negativeaspects of such growth,however,including lower

initialoperatingprofitabilityrelativetoexistingwarehouses and cannibalizationofsales at existing

warehouses when openings occurinexistingmarkets,are continuing to declineinsignificanceasthey

relate to theresults of our totaloperations.Our rate of squarefootage growth is generally higher in foreign

markets, due to thesmaller baseinthosemarkets,and we expectthattocontinue. Oure-commerce

business, domestically andinternationally,generally has alower grossmarginpercentage than our

warehouseoperations.

Themembershipformatisanintegralpartofour businessand has asignificant effect on our profitability.

This formatisdesignedtoreinforce member loyaltyand providecontinuing feerevenue. Theextent to

whichweachieve growth in ourmembershipbase, increasethe penetration of our Executivemembers,

and sustainhighrenewal ratesmaterially influences our profitability. Ourpaid-membership growth rate

maybeadversely impacted when warehouseopenings occurinexistingmarkets as compared to new

markets.

Ourfinancialperformancedepends heavily on controllingcosts.While we believe that we haveachieved

successesinthisarea, some significant costsare partially outside our control, particularlyhealth care and

utilityexpenses.Withrespecttothe compensationofour employees,our philosophy is not to seek to

minimize theirwages andbenefits. Rather,webelieve that achievingour longer-termobjectivesof

reducingemployeeturnoverand enhancingemployeesatisfactionrequiresmaintaining compensation

levels that arebetterthanthe industryaverage formuchofour workforce. This maycauseus, for

example, to absorbcosts that otheremployers might seek to passthrough to theirworkforces. Because

our businessoperates onverylow margins, modestchanges in various itemsinthe consolidated

statementsofincome, particularly merchandise costsand SG&A expenses,can havesubstantialimpacts

on net income.

Ouroperatingmodel is generallythe same across our U.S.,Canadian, and Other International operating

segments(seeNote11tothe consolidated financialstatementsincluded in Item8of this Report).Certain

operations in theOther International segment haverelativelyhigher ratesofsquarefootage growth,lower

wage and benefit costsasapercentage of sales, less or no direct membership warehousecompetition, or

lack e-commerce or business delivery.

In discussions of our consolidated operatingresults,werefer to theimpactofchanges in foreign

currenciesrelativetothe U.S. dollar,which aredifferences between theforeign-exchange ratesweuse to

convertthe financialresults of our international operations from localcurrenciesintoU.S.dollars. This

impactofforeign-exchange rate changes is calculated based on thedifferencebetween thecurrent and

priorperiod'scurrencyexchange rates. Theimpactofchanges in gasolinepricesonnet salesis

calculated based on thedifferencebetween thecurrent and priorperiod'saverage priceper gallonsold.

Resultsexpressedexcluding theimpacts of foreignexchange and gasolinepricesshouldbereviewedin

conjunction withresults reportedinaccordancewithU.S.GAAP.

Ourfiscalyear ends onthe Sunday closesttoAugust31. References to 2023 relate to the53-week fiscal

year ended September 3,2023.References to 2022 and 2021 relate to the52-week fiscalyears ended

August28, 2022, and August29, 2021. Certainpercentages presented arecalculatedusing actual results

priortorounding. Unless otherwisenoted, references to net income relate to net income attributableto

Costco.

Highlightsfor 2023 versus 2022 include:

•Weopened 26 new warehouses, including threerelocations:13net new in theU.S.and 10 new in

our Other International segment.Weopened thesamenumber of new warehouses,including

relocations,in2022;

•Net salesincreased 7% to $237,710, driven by a3%increaseincomparablesales,sales at new

warehousesopened in 2022 and 2023, and th ebenefit of one additional week of salesin2023;

•Membership feerevenue increased 8% to $4,580, driven by new member sign-ups,upgrades to

Executivemembership, and one additional week of membership fees in 2023;

•Gross margin percentage increased nine basis points, driven primarily by asmallerLIFOcharge in

2023 compared to 2022 and our core merchandise categories. This waspartially offset by charges of

$391, predominantly relatedtothe discontinuationofour chartershipping activities;

•SG&Aexpenses as apercentage of net salesincreased 20 basis points, due to increased costsin

warehouse operations and other businesses, primarilywage increases effectiveinMarch and July

2022, and March2023,aswellaslower salesgrowth;

•The effectivetax rate in 2023 was25.9%,comparedto24.6% in 2022;

•Net income increased 8% to $6,292, or $14.16 per dilutedsharecompared to $5,844, or $13.14 per

dilutedsharein2022;

•InJanuary2023, theBoard of Directors authorized anew sharerepurchaseprogram in theamount

of $4,000; and

•InApril 2023, theBoard of Directors approved a13% increaseinthe quarterlycashdividend.

RESULTS OF OPERATIONS

NetSales

2023 2022 2021

NetSales ................................................

$237,710 $222,730 $192,052

Changes in net sales:

U.S. .................................................

7% 17 %16%

Canada ..............................................

4% 16 %22%

Other International ....................................

9% 10 %23%

TotalCompany ........................................

7% 16 %18%

Changes in comparablesales:

U.S. .................................................

3% 16 %15%

Canada ..............................................

2% 15 %20%

Other International ....................................

3% 7% 19 %

TotalCompany ........................................

3% 14 %16%

E-commerce ..........................................

(6)% 10 %44%

Changes in comparablesales excluding theimpactof

changes in foreign-currencyand gasolineprices:

U.S. .................................................

4% 10 %14%

Canada ..............................................

8% 12 %12%

Other International ....................................

8% 10 %13%

TotalCompany ........................................

5% 11 %13%

E-commerce ..........................................

(5)% 10 %43%

NetSales

Netsales increased $14,980 or 7% during 2023. Theimprovement wasattributabletoanincreasein

comparablesales of 3%,sales at new warehouses opened in 2022 and 2023, and one additional week of

salesin2023. Salesincreased $12,761, or 7% in core merchandise categories, ledbyfoods and sundries

and freshfoods;while non-foods decreased. Salesincreased $2,219, or 5% in warehouseancillary and

other businesses,led by pharmacy,foodcourt, and travel.

During 2023,changes in foreigncurrenciesrelativetothe U.S. dollarnegativelyimpactednet salesby

approximately$3,484, 156basis points,compared to 2022, attributabletoour Canadian andOther

Internationaloperations.The volume of gasolinesoldincreased approximately7%, positivelyimpacting

net salesby$2,148, or 96 basis points.Lower gasolinepricesnegativelyimpactednet salesby$1,592, or

71 basis points, compared to 2022, witha6% decreaseinthe average priceper gallon.

ComparableSales

Comparablesales increased 3% during 2023 and were positivelyimpactedbyincreases in shopping

frequency, partially offset by adecreaseinaverage ticket.

Membership Fees

2023 2022 2021

Membership fees .........................................

$4,580 $4,224 $3,877

Membership fees increase .................................

8% 9% 9%

Membership feerevenue increased 8% in 2023, driven by new member sign-ups,upgrades to Executive

membership,and thebenefit of an additional week.Changes in foreigncurrenciesrelativetothe U.S.

dollarnegatively impactedmembership fees by $76 compared to 2022. At theend of 2023, our member

renewal rateswere92.7% in theU.S.and Canada and 90.4% worldwide. More membersautorenewing

and higher penetration of Executivemembersbenefit renewal rates. Ourrenewal rate,which excludes

affiliatesofBusines smembers,isatrailingcalculation that captures renewalsduringthe periodseven to

eighteen months priortothe reporting date.

We accountfor membership feerevenue on adeferredbasis,recognizedratablyoverthe one-year

membership period.

GrossMargin

2023 2022 2021

Netsales ................................................

$237,710 $222,730 $192,052

Less merchandisecosts ...................................

212,586 199,382 170,684

Grossmargin .............................................

$25,124 $23,348 $21,368

Grossmarginpercentage ..................................

10.57 %10.48 %11.13 %

Grossmarginpercentage increased nine basis pointscompared to 2022. Excluding theimpactof

gasolineprice deflation on net sales, grossmarginwas 10.50%,anincreaseoftwo basis points. This two

basis point increase waspositivelyimpactedby: 18 basis pointsdue to asmallerLIFOcharge in 2023

compared to 2022, andseven basis points due to core merchandise categories, predominantly foods and

sundries. Thesewereoffsetby: 16 basis pointsdue to thedownsizingand then discontinuationofour

chartershipping activities;fourbasis pointsdue to increased 2% rewards; and threebasis pointsdue to

warehouseancillary andother businesses,predominantly e-commerce, partially offset by gasolineand

businesscenters. Changes in foreigncurrenciesrelativetothe U.S. dollarnegativelyimpactedgross

margin by approximately$349, compared to 2022, attributabletoour Canadian and Other International

Operations.

Thegross margin in core merchandise categories, when expressedasapercentage of core merchandise

sales(rather than totalnet sales),increased twobasis points, driven by foods and sundriesand non-

foods,partially offset by freshfoods.Thismeasureeliminates theimpactofchanges in salespenetration

and grossmargins from ourwarehouse ancillary and other businesses.

Grossmarginonasegment basis, when expressedasapercentage of thesegment's ownsales and

excluding theimpactofchangesingasolinepricesonnet sales(segment grossmarginpercentage),

increased in ourU.S.segment,due to asmallerLIFOcharge and increases in core merchandise

categories, primarily foods andsundries, partially offset by thecharges relatedtothe discontinuationof

our chartershippingactivitiesdiscussedaboveand warehouseanc illary and other businesses. Gross

margin percentage increased in ourCanada segment,attributabletoincreases in core merchandise

categoriesand warehouseancillary and other businesses. OurOther International grossmargin

percentage decreased, largelydue to decreases in core merchandise categories, partially offset by

warehouseancillary andother businesses.All segmentswerenegativelyimpactedbyincreased 2%

rewards.

Selling, Generaland Administrative Expenses

2023 2022 2021

SG&A expenses ..........................................

$21,590 $19,779 $18,537

SG&A expenses as apercentage of netsales ................

9.08 %8.88% 9.65 %

SG&A expenses as apercentage of net salesincreased 20 basis pointscompared to 2022. SG&A

expenses as apercentage of netsales excluding theimpactofgasolineprice deflation was9.02%,an

increaseof14basis points.The comparison to last year wasnegativelyimpactedby16basis points in

warehouseoperations andother businesses, largelydrivenbywage increases effectiveinMarch and July

2022, and March2023, as well as lowersales growth.Centraloperatingcosts were also higherbysix

basis points. SG&A waspositivelyimpactedbyeight basis pointsdue to theprior year's write-offof

information technology assets andacharge relatedtograntingour employees additional vacation.

Changes in foreigncurrenciesrelativetothe U.S. dollardecreased SG&A expenses by approximately

$281 compared to 2022, attributabletoour Canadian and Other International Operations.

Interest Expense

2023 2022 2021

Interest expense ..........................................

$160 $158 $171

Interest expenseisprimarily relatedtoSenior Note sand financingleases.For more information on our

debt arrangements, refertothe consolidated financialstatementsincluded in Item8of this Report.

Interest Income andOther,Net

2023 2022 2021

Interest income ...........................................

$470 $61$ 41

Foreign-currencytransaction gains,net ......................

29 106 56

Other,net ................................................

34 38 46

Interest income and other,net ..........................

$533 $205 $143

Theincreaseininterestincomein2023 wasdue to higher global interest ratesand higher averagecash

and investment balances.Foreign-currencytransaction gains,net include revaluationorsettlement of

monetaryassets andliabilitiesbyour Canadian and Other International operations and mark-to-market

adjustmentsfor forwardforeign-exchange contracts. SeeDerivatives and ForeignCurrencysectionsin

Note 1tothe consolidated financialstatementsincluded in Item8of this Report.

Provisionfor Income Taxes

2023 2022 2021

Provisionfor income taxes .................................

$2,195 $1,925 $1,601

Effectivetax rate ..........................................

25.9% 24.6% 24.0%

Theeffective taxratefor 2023 wasimpactedbynet discretetax benefitsof$62, primarily due to excess

taxbenefitsrelated to stockcompensation. Excluding discrete net taxbenefits, thetax rate was26.6%.

Theeffective taxratefor 2022 wasimpactedbynet discretetax benefitsof$130, primarily due to excess

taxbenefitsrelated to stockcompensation. Excluding discrete net taxbenefits, thetax rate was26.2%.

LIQUIDITYAND CAPITAL RESOURCES

Thefollowingtablesummarizesour significant sourcesand uses of cash and cash equivalents:

2023 2022 2021

Netcashprovidedbyoperatingactivities .....................

$11,068 $7,392 $8,958

Netcashusedininvesting activities .........................

(4,972) (3,915) (3,535)

Netcashusedinfinancingactivities .........................

(2,614) (4,283) (6,488)

Ourprimarysources of liquidity arecashflows from operations,cashand cash equivalents, andshort-

term investments. Cash and cash equivalentsand short-term investmentswere$15,234 and $11,049 at

September 3, 2023, and August28, 2022. Of thesebalances, unsettled creditand debitcardreceivables

represented $2,282 and $2,010. Thesereceivables generally settlewithinfour days. Changes in foreign

exchange ratesimpactedcashand cash equivalentspositivelyby$15 and $46 in 2023 and 2021, and

negativelyby$249 in 2022.

Material contractual obligations arising in thenormalcourse of businessprimarily consistofpurchase

obligations,long-term debt andrelated interest payments, leases,and construction and land purchase

obligations.See Notes4and 5tothe consolidated financialstatementsincluded in Item8of this Report

foramountsoutstanding on September 3, 2023, relatedtodebt and leases.

Purchaseobligations consistofcontractsprimarily relatedtomerchandise,equipment,and third-party

services,the majority of whichare due in thenext12months.Construction and land-purchaseobligations

consistofcontractsprimarily relatedtothe development and opening of new and relocatedwarehouses,

themajorityofwhich (other than leases)are due in thenext12months.

Management believesthatour cash and investment positionand operatingcashflows,withcapacity

under existing andavailable creditagreements, will be sufficient to meet our liquidity and capital

requirementsfor theforeseeable future.Webelieve that our U.S. current and projectedassetpositionis

sufficient to meet our U.S. liquidity requirements.

Cash FlowsfromOperating Activities

Netcashprovided by operatingactivitiestotaled $11,068 in 2023, compared to $7,392 in 2022. Ourcash

flow provided by operations is primarily from net salesand membership fees.Cashflowusedin

operations generally consists of paymentstomerchandise suppliers,warehouseoperatingcosts,

including payroll and employee benefits, utilities, and creditand debitcardprocessing fees.Cashusedin

operations also includes paymentsfor income taxes. Changes in our net investment in merchandise

inventories(thedifferencebetween merchandise inventoriesand accountspayable) is impactedby

severalfactors,including inventorylevelsand turnover,the forwarddeployment of inventorytoaccelerate

deliverytimes,payment terms withsuppliers,and early paymentstoobtaindiscounts.

Cash FlowsfromInvestingActivities

Netcashusedininvesting activities totaled$4,972 in 2023, compared to $3,915 in 2022, and is primarily

relatedtocapitalexpenditures. Netcashflows from investingactivitiesalsoincludes purchases and

maturities of short-term investments.

CapitalExpenditures

Ourprimary requirementsfor capitalare acquiring land, buildings,and equipment fornew and remodeled

warehouses.Capital is also requiredfor information systems, manufacturing and distributionfacilities,

initialwarehouse operations,and workingcapital. In 2023, we spent $4,323 on capitalexpenditures, and

it is our current intentiontospend approximately$4,400 to $4,600 during fiscal2024. Theseexpenditures

areexpecte dtobefinanced withcashfromoperations,existingcashand cash equivalents, and short-

term investments. We opened 26 new warehouses,including threerelocations,in2023, and plan to open

up to 28 additional new warehouses,including one relocation, in 2024. Therecan be no assurancethat

current expectations will be realized, and plans aresubjecttochange upon further review of ourcapital

expenditure needs andthe economic environment.

Cash FlowsfromFinancing Activities

Netcashusedinfinancing activities totaled$2,614 in 2023, compared to $4,283 in 2022. Cash flows

used in financingactivitiesprimarily relatedtothe payment of dividends,repurchases of commonstock,

and withholding taxesonstock-based awards.In2022, cash flow used in financingactivitiesincluded

paymentstoour former joint-venturepartner foradividend and thepurchaseoftheir equity interest in

Taiwan, totaling$1,050 in theaggregate, and repaymentsofour 2.300% Senior Notes.

StockRepurchasePrograms

On January19, 2023, theBoard of Directors authorized anew sharerepurchaseprogram in theamount

of $4,000, whichexpires in January2027. During 2023 and 2022, we repurchased 1,341,000 and

863,000 shares of commonstock,ataverage prices of $504.68 and $511.46, totalingapproximately$677

and$442. Theseamountsmay differ from theaccompanyingconsolidated statementsofcashflows due

to changes in unsettled repurchases at theend of eachfiscalyear.Purchases aremade from time to

time,asconditions warrant, in theopen market or in blockpurchases,pursuant to plans under SEC Rule

10b5-1. Repurchased shares are retired, in accordancewiththe Washington BusinessCorporationAct.

Theremaining amount availabletobepurchased under our approved plan was$3,563 at theend of

2023.

Dividends

Cash dividendsdeclaredin2023totaled $3.84 per share, as compared to $3.38 per sharein2022. In

April2023, theBoard of Directors increased our quarterlycashdividend from $0.90 to $1.02 per share.

Bank Credit Facilitiesand CommercialPaper Programs

We maintain bank credit facilitiesfor workingcapitaland general corporatepurposes.AtSeptember 3,

2023, we had bor rowingcapacityunder thesefacilitiesof$1,234. Ourinternational operations maintain

$756 of this capacityunderbank credit facilities, of which$167 is guaranteed by theCompany.Short-term

borrowings outstanding underthe bank creditfacilities, whichare included in other current liabilitiesonthe

consolidated balancesheets, were immaterial at theend of 2023 and 2022.

TheCompany hasletterofcreditfacilities, forcommercialand standby letters of credit, totaling$217. The

outstanding commitmentsunder thesefacilitiesatthe end of 2023 totaled$182, most of whichwere

standby lettersofcreditthatdonot expireorhaveexpirationdates withinone year.The bank credit

facilitieshavevarious expiration dates,mostwithinone year,and we generally intend to renew these

facilities. Theamount of borrowings availableatany time under our bank creditfacilitiesisreduced by the

amount of standby andcommercialletters of credit outstanding.

Off-Balance Sheet Arrangements

In theopinion of management,wehavenooff-balancesheet arrangementsthat havehad or are

reasonablylikelytohaveamaterial currentorfutureeffectonour financialcondition or financial

statements.

Critical Accounting Estimates

Thepreparationofour consolidated financialstatementsinaccordancewithU.S.GAAP requiresthat we

make estimatesand assumptions that affect thereportedamountsofassets and liabilitiesand the

disclosureofcontingent assets andliabilitiesatthe dateofthe financialstatementsand thereported

amountsofrevenuesand expenses duringthe reporting period. We baseour estimatesonhistorical

experienceand on assumptions that we believe to be reasonable, and we continue to review and

evaluatetheseestimates.For further informationonsignificant accountingpolicies, seediscussion in

Note 1tothe consolidated financialstatementsincluded in Item8of this Report.

Insurance/Self-insuranceLiabilities

Claimsfor employee health-carebenefits, workers’ compensation, general liability, property damage,

directors’ and officers’liability, vehicleliability, inventoryloss, and other expos ures arefunded

predominantly through self-insurance. Insurancecoverageismaintained forcertain risks to seek to limit

exposures arisingfromverylarge losses. We usevarious risk management mechanisms, includinga

wholly-owned captiveins urance subsidiary,and participateinareinsuranceprogram.Liabilities

associated withthe risks that we retain arenot discountedand areestimated usinghistoricalclaims

experience, demogr aphicfactors,severityfactors,and other actuarialassumptions.The costsofclaims

arehighlyunpredictableand canfluctuateasaresult of inflationrates,regulatoryorlegal changes,and

unforeseen developmentsinclaims. While we believe our estimatesare reasonable, actual claims and

costscoulddiffersignificantly from recorded liabilities. Historically,adjustmentstoour estimateshavenot

been material.

RecentAccounting Pronouncements

We do not expect that any recently issued accountingpronouncementswill haveamaterialeffectonour

financialstatements.

Item 7A—Quantitativeand QualitativeDisclosures About Market Risk (amountsinmillions)

Ourexposuretofinancial market risk resultsfromfluctuations in interest ratesand foreigncurrency

exchange rates. We do not engageinspeculativeorleveraged transactions or holdorissuefinancial

instrumentsfor trading purposes.

Interest Rate Risk

Ourexposuretomarketriskfor changes in interest ratesrelates primarily to our investment holdings that

arediversified among various instrumentsconsidered to be cash equivalents, as defined in Note 1tothe

consolidated financialstatementsincluded in Item 8ofthisReport, as well as short-term investmentsin

government and agencysecuritieswitheffective maturities of generally threemonths to five yearsatthe

dateofpurchase. Theprimary objective of our investment activities is to preserve principaland

secondarily to generateyields. Themajorityofour short-term investmentsare in fixedinterest-rate

securities.Thesesecuritiesare subjecttochanges in fair valuedue to interest rate fluctuations.

Ourpolicylimitsinvestments in theU.S.todirectU.S.government and government agencyobligations,

repurchaseagreementscollateralized by U.S. government and government agencyobligations,U.S.

government andgovernment agencymoney market funds,and insuredbank balances.Our wholly-owned

captiveinsurancesubsidiaryinvests in U.S. government and government agencyobligations and U.S.

government andgovernment agencymoney market funds.Our Canadian and Other International

subsidiaries’investments areprimarily in money market funds,bankers’ acceptances,and bank

certificates of deposit,generally denominated in localcurrencies.

A100 basis pointchange in interest ratesasofthe end of 2023 wouldhavehad an immaterial

incremental change in fair market value. Forthoseinvestmentsthat areclassified as available-for-sale,

theunrealized gains or lossesrelated to fluctuations in market volatilityand interest ratesare reflected

withinstockholders’ equity in accumulatedother comprehensiveincomeinthe consolidated balance

sheets.

Thenatureand amount of our long-term debt mayvaryasaresult of businessrequirements, market

conditions,and other factors. As of theend of 2023, long-termdebt withfixed interest rateswas $6,484.

Fluctuations in interest ratesmay affect thefairvalue of thefixed-rate debt.See Note 4tothe

consolidated financialstatementsincluded in Item 8ofthisReportfor more information on our long-term

debt.

ForeignCurrencyRisk

Ourforeign subsidiaries conduct certaintransactions in non-functional currencies, whichexposes us to

fluctuations in exchange rates. We manage thesefluctuations,inpart, through theuse of forwardforeign-

exchange contracts, seekingtoeconomically hedge theimpactofthesefluctuations on knownfuture

expendituresdenominated in anon-functional foreign-currency. Thecontractsare intended primarily to

economically hedge exposuretoU.S.dollarmerchandise inventoryexpendituresmade by our

international subsidiaries.Weseek to mitigateriskwiththe useofthesecontractsand do not intend to

engage in speculativetransactions.For additional informationrelated to theCompany's forwardforeign-

exchange contracts, seeNotes 1and 3tothe consolidated financialstatementsincluded in Item8of this

Report. Ahypothetical 10% strengthening of thefunctional currencycompared to thenon-functional

currencyexchange ratesatSeptember 3, 2023, wouldhavedecreased thefairvalue of thecontractsby

$109 and resulted in an unrealized loss in theconsolidated statementsofincomefor thesameamount.

Commodity PriceRisk

We areexposed to fluctuations in prices forenergy,particularlyelectricity and natural gas,and other

commodities used in retail and manufacturing operations,which we seek to partially mitigatethrough

fixed-pricecontractsfor certainofour warehouses and other facilities, predominantly in theU.S.and

Canada. We also enterintovariable-priced contractsfor some purchases of electricityand natural gas,in

addition to some of thefuelfor ourgas stations,onanindex basis.Thesecontractsmeetthe

characteristicsofderivativeins tr um ents ,but generally qualifyfor the“normalpurchases and normal

sales” exceptionunderauthoritativeguidanceand require no mark-to-market adjustment.

Item 8—FinancialStatementsand Supplementary Data

COSTCO WHOLESALECORPORATION

INDEXTOCONSOLIDATED FINANCIAL STATEMENTS

Page

Reports of IndependentRegisteredPublic AccountingFirm ..................................

Consolidated StatementsofIncome .......................................................

Consolidated StatementsofComprehensiveIncome ........................................

Consolidated BalanceSheets ............................................................

Consolidated StatementsofEquity ........................................................

Consolidated StatementsofCashFlows ...................................................

NotestoConsolidated FinancialStatements ...............................................

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM

To theStockholdersand BoardofDirectors

Costco WholesaleCorporation:

OpinionontheConsolidatedFinancialStatements

We haveauditedthe accompanyingconsolidated balancesheetsofCostcoWholesaleCorporationand

subsidiaries (the Company)asofSeptember 3, 2023, and August28, 2022, therelated consolidated

statementsofincome, comprehensiveincome, equity,and cash flowsfor the53-week periodended

September 3, 2023, andthe 52-week periods ended August28, 2022, and August29, 2021, and the

relatednotes (collectively, theconsolidated financialstatements).Inour opinion, theconsolidated

financialstatementspresent fairly,inall material respects,the financialpositionofthe Company as of

September 3, 2023,and August28, 2022, and theresults of itsoperations and itscashflows foreachof

the53-week period endedSeptember 3,2023, and the52-week periods ended August28, 2022, and

August29, 2021, in conformity withU.S.generally accepted accountingprinciples.

We also have audited, in accordancewiththe standards of thePublic Company AccountingOversight

Board(United States)(PCAOB),the Company’s internal controloverfinancialreporting as of September

3, 2023, based on criteria established in Internal Control–Integrated Framework(2013) issued by the

CommitteeofSponsoringOrganizations of theTreadway Commission, and our reportdated Oc tober 10,

2023, expressedanunqualifiedopinion on theeffectivenessofthe Company’s internal controlover

financialreporting.

Basisfor Opinion

Theseconsolidated financialstatementsare theresponsibilityofthe Company’s management.Our

responsibilityistoexpress an opinion on theseconsolidated financialstatementsbased on our audits.We

areapublic accountingfirmregisteredwiththe PCAOBand arerequiredtobeindependent withrespect

to theCompany in accordancewiththe U.S. federal securities laws and theapplicablerules and

regulations of theSecuritiesand Exchange Commission and thePCAOB.

We conductedour audits in accordancewiththe standards of thePCAOB.Thosestandards require that

we plan and perform theaudittoobtainreasonableassurance about whether theconsolidated financial

statementsare free of material misstatement,whether due to errororfraud. Ouraudits included

performing procedures to assess therisks of material misstatement of theconsolidated financial

statements, whether due to errororfraud, and performing procedures that respond to thoserisks. Such

procedures included examining, on atestbasis,evidenceregarding theamountsand disclosures in the

consolidated fi nanc ialstatements. Ouraudits also included evaluatingthe accountingprinciplesusedand

significant estimatesmade by management,aswellasevaluatingthe overallpresentationofthe

consolidated financialstatements. We believe that our audits provideareasonablebasis forour opinion.

Critical AuditMatter

Thecriticalauditmattercommunicatedbelow is amatterarising from thecurrent periodauditofthe

consolidated financialstatementsthatwas communicated or requiredtobecommunicatedtothe audit

committeeand that:(1) relatestoaccountsordisclosures that arematerialtothe consolidated financial

statementsand (2)involvedour especially challenging, subjective,orcomplex judgments. The

communication of acriticalaudit matterdoes not alterinany wayour opinion on theconsolidated financial

statements, takenasawhole, andwearenot,bycommunicating thecriticalauditmatterbelow,providing

aseparateopinion on thecriticalauditmatteroronthe accountsordisclosures to whichitrelates.

Evaluationofworkers'compensationself-insuranceliabilities

As discussedinNote1totheconsolidatedfinancialstatements, theCompany estimatesits self-insurance

liabilitiesbyconsideringhistoricalclaimsexperience, demographicfactors,severityfactors,and other

actuarialassumptions.The estimatedself-insuranceliabilitiesasofSeptember 3, 2023, were $1,513

million, aportion of whichrelated to workers’ compensationself-insuranceliabilitiesfor theUnitedStates

operations.

We identifiedthe evaluationofthe Company’s workers’ compensationself-insuranceliabilitiesfor the

United States operations asacritical auditmatterbecauseofthe extent of specialized skill and

knowledge needed to evaluate theunderlyingassumptions and judgmentsmade by theCompany in the

actuarialmodels. Specifically,subjectiveaudito rjudgment wasrequiredtoevaluatethe Company's

selected loss ratesand initialexpectedlossesusedinthe actuarialmodels.

Thefollowingare theprimary procedures we performedtoaddressthiscriticalauditmatter. We evaluated

thedes ignand tested theoperatingeffectivenessofcertain internal controls over theCompany’s self-

insuranceworkers'compensationprocess. This included controls relatedtothe development and

selectionofthe assumptions listedaboveusedinthe actuarialcalculation and review of theactuarial

report. We involved actuarialprofessionalswithspecialized skills and knowledge whoassistedin:

•Assessing theactuarial modelsusedbythe Company forconsistencywithgenerally

accepted actuarialstandards

•Evaluatingthe Company’s abilitytoestimateself-insuranceworkers'compensation

liabilitiesbycomparingits historical estimateswithactual incurredlossesand paidlosses

•Evaluatingthe abovelistedassumptions underlyingthe Company’s actuarialestimates by

developing an independent expectation of theself-insuranceworkers'compensation

liabilitiesand comparingthem to theamountsrecordedbythe Company.

/s/KPMGLLP

We haveservedasthe Company’s auditorsince 2002.

Seattle, Washington

October 10,2023

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM

To theStockholdersand BoardofDirectors

Costco WholesaleCorporation:

OpiniononInternal ControlOverFinancialReporting

We haveaudited Costco WholesaleCorporationand subsidiaries’ (the Company)internalcontroloverfinancial

reporting as of September 3, 2023, based on criteria established in Internal Control–Integrated Framework

(2013) issued by theCommitteeofSponsoringOrganizations of theTreadway Commission. In our opinion, the

Company maintained, in allmaterialrespects,effective internal controloverfinancialreporting as of September

3, 2023, based on criteria established in Internal Control–Integrated Framework(2013) issued by the

CommitteeofSponsoringOrganizations of theTreadway Commission.

We also haveaudited, in accordancewiththe standards of thePublic Company AccountingOversight Board

(UnitedStates) (PCAOB), theconsolidated balancesheetsofthe Company as of September 3, 2023, and

August 28, 2022, therelated consolidated statementsofincome, comprehensiveincome, equity,and cash

flowsfor the53-week periodended September 3, 2023, and the52-week per iods ended August28, 2022,

and August29, 2021,and therelated notes (collectively, theconsolidated financialstatements),and our report

dated October 10, 2023, expressedanunqualifiedopinion on thoseconsolidated financial statements.

Basisfor Opinion

TheCompany’smanagement is responsible formaintaining effectiveinternal controloverfinancialreporting

and forits assessment of theeffectivenessofinternal controloverfinancialreporting, included in the

accompanyingManagement’s Annual ReportonInternalControlOverFinancialReporting. Ourresponsibilityis

to expressanopinion on theCompany’s internal controloverfinancialreporting based on our audit. We area

public accountingfirmregisteredwiththe PCAOBand arerequiredtobeindependent withrespecttothe

Company in accordancewiththe U.S. federal securities laws and theapplicablerules and regulations of the

Securities and Exchange Commission and thePCAOB.

We conductedour auditinaccordancewiththe standards of thePCAOB.Thosestandards require that we plan

andperform theaudittoobtainreasonableassuranceabout whether effectiveinternalcontroloverfinancial

reporting wasmaintainedinall material respects.Our auditofinternal controloverfinancialreporting included

obtaininganunderstanding of internal controloverfinancialreporting, assessing theriskthat amaterial

weaknessexists, and testingand evaluatingthe designand operatingeffectivenessofinternal controlbased on

theassessedrisk. Ourauditalsoincluded performing such other procedures as we considered necessary in

thecircumstances.Webelieve that our auditprovides areasonablebasis forour opinion.

Definition and Limitations of Internal ControlOverFinancialReporting

Acompany’s internal controloverfinancialreporting is aprocess designed to providereasonableassurance

regarding thereliabilityoffinancialreporting and thepreparationoffinancialstatementsfor external purposes in

accordancewithgenerally accepted accountingprinciples. Acompany’s internal controloverfinancialreporting

includes thosepoliciesand procedures that (1)pertain to themaintenanceofrecords that,inreasonabledetail,

accurately and fairly reflectthe transactions and dispositions of theassets of thecompany;(2) provide

reasonableassurancethat transactions arerecorded as necessary to permitpreparationoffinancialstatements

in accordancewithgenerally accepted accountingprinciples, and that receipts and expendituresofthe

company arebeing made onlyinaccordancewithauthorizations of management and directorsofthe company;

and (3)provide reasonableassuranceregardingpreventionortimelydetection of unauthorized acquisition, use,

or dispositionofthe company’s assets that couldhaveamaterialeffectonthe financialstatements.

Becauseofits inherent limitations,internalcontroloverfinancialreporting maynot prevent or detect

misstatements. Also,projections of any evaluationofeffectivenesstofutureperiods aresubjecttothe risk that

controls maybecomeinadequatebecauseofchanges in conditions,orthat thedegree of compliancewiththe

policies or procedures maydeteriorate.

/s/KPMGLLP

Seattle, Washington

October 10,2023

COSTCO WHOLESALECORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(amounts in millions,exceptper sharedata)

53 Weeks Ended52Weeks Ended52Weeks Ended

September3,

2023

August28,

2022

August29,

2021

REVENUE

Netsales .................................

$237,710 $222,730 $192,052

Membership fees ..........................

4,580 4,224 3,877

Totalrevenue .........................

242,290 226,954 195,929

OPERATINGEXPENSES

Merchandise costs .........................

212,586 199,382 170,684

Selling, general and administrative ...........

21,590 19,779 18,537

Operatingincome .....................

8,114 7,793 6,708

OTHERINCOME(EXPENSE)

Interest expense ..........................

(160) (158) (171)

Interest income and other,net ...............

533 205 143

INCOME BEFORE INCOME TAXES .............

8,487 7,840 6,680

Provisionfor income taxes ..................

2,195 1,925 1,601

Netincomeincluding noncontrollinginterests 6,292 5,915 5,079

Netincomeattributabletononcontrolling

interests ................................

—(71) (72)

NETINCOME ATTRIBUTABLETOCOSTCO ....

$6,292 $5,844 $5,007

NETINCOME PER COMMON SHARE

ATTRIBUTABLETOCOSTCO:

Basic ....................................

$14.18 $13.17 $11.30

Diluted ...................................

$14.16 $13.14 $11.27

Shares used in calculation(000’s)

Basic ................................

443,854 443,651 443,089

Diluted ...............................

444,452 444,757 444,346

Theaccompanyingnotes areanintegral partoftheseconsolidated financialstatements.

COSTCO WHOLESALECORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVEINCOME

(amounts in millions)

53 Weeks Ended52Weeks Ended52Weeks Ended

September3,

2023

August28,

2022

August29,

2021

NETINCOME INCLUDING NONCONTROLLING

INTERESTS .................................

$6,292 $5,915 $5,079

Foreign-currencytranslation adjustment and

other, net ................................

24 (721) 181

Comprehensiveincome ..........................

6,316 5,194 5,260

Less: Comprehensiveincomeattributableto

noncontrollinginteres ts ....................

—3693

COMPREHENSIVEINCOME ATTRIBUTABLE

TO COSTCO .................................

$6,316 $5,158 $5,167

Theaccompanyingnotes areanintegral partoftheseconsolidated financialstatements.

COSTCO WHOLESALECORPORATION

CONSOLIDATED BALANCE SHEETS

(amounts in millions,exceptpar value andshare data)

September3,

2023

August28,

2022

ASSETS

CURRENT ASSETS

Cash and cash equivalents ...................................

$13,700 $10,203

Short-term investments ......................................

1,534 846

Receivables,net ............................................

2,285 2,241

Merchandise inventories .....................................

16,651 17,907

Other current assets .........................................

1,709 1,499

Totalcurrent assets ......................................

35,879 32,696

OTHERASSETS

Property and equipment,net ..................................

26,684 24,646

Operatingleaseright-of-useassets ............................

2,713 2,774

Other long-term assets .......................................

3,718 4,050

TOTALASSETS ........................................

$68,994 $64,166

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Accountspayable ...........................................

$17,483 $17,848

Accrued salaries and benefits .................................

4,278 4,381

Accrued member rewards ....................................

2,150 1,911

Deferredmembership fees ...................................

2,337 2,174

Current portion of long-term debt ..............................

1,081 73

Other current liabilities .......................................

6,254 5,611

Totalcurrent liabilities ....................................

33,583 31,998

OTHERLIABILITIES

Long-term debt,excluding current portion ......................

5,377 6,484

Long-termoperat ingleaseliabilities ...........................

2,426 2,482

Other long-term liabilities .....................................

2,550 2,555

TOTALLIABILITIES ....................................

43,936 43,519

COMMITMENTS AND CONTINGENCIES

EQUITY

Preferredstock $0. 005 par value; 100,000,000 shares authorized;

no shares issued and outstanding .............................

——

Commonstock $0.005 par value; 900,000,000 shares authorized;

442,793,000 and 442,664,000 shares issued and outstanding .....

Additional paid-in capital .....................................

7,340 6,884

Accumulatedother comprehensiveloss ........................

(1,805) (1,829)

Retained earnings ...........................................

19,521 15,585

TotalCostcostockholders’ equity ..........................

25,058 20,642

Noncontrollingint erests ......................................

—5

TOTALEQUITY ........................................

25,058 20,647

TOTALLIABILITIES AND EQUI TY .......................

$68,994 $64,166

Theaccompanyingnotes areanintegral partoftheseconsolidated financialstatements.

COSTCO WHOLESALECORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(amounts in millions)

CommonStock

Additional

Paid-in

Capital

Accumulated

Other

Comprehensive

Income (Loss)

Retained

Earnings

Total Costco

Stockholders’

Equity

Noncontrolling

Interests

Total

Equity

(000’s)Amount

BALANCE AT

AUGUST 30, 2020 ............

441,255 $4$6,698 $(1,297) $12,879 $18,284 $421 $18,705

Netincome .................

—— ——5,007 5,007 72 5,079

Foreign-currencytranslation

adjustment and other,net ..

—— —160 —160 21 181

Stock-based compensation ...

—— 668 —— 668—668

Releaseofvestedrestricted

stockunits (RSUs),

including taxeffects .......

1,928 —(312) —— (312) —(312)

Repurchases of commonstock (1,358) —(23) —(472) (495) —(495)

Cash dividendsdeclared .....

—— ——(5,748)(5,748) —(5,748)

BALANCEAT

AUGUST 29, 2021 ............

441,825 47,031 (1,137) 11,666 17,564 514 18,078

Netincome .................

—— ——5,844 5,844 71 5,915

Foreign-currencytranslation

adjustment and other, net ..

—— —(686) —(686) (35) (721)

Stock-based compensation ...

—— 728 —— 728—728

ReleaseofvestedRSUs,

including taxeffects .......

1,702 —(363) —— (363) —(363)

Dividend to noncontrolling

interest ..................

—— ————(208) (208)

Acquisition of noncontrolling

interest ..................

——(499) (6)— (505) (337) (842)

Repurchases of commonstock (863) —(15) —(427) (442) —(442)

Cash dividends declaredand

other ....................

—(2) 2—(1,498)(1,498) —(1,498)

BALANCE AT

AUGUST 28, 2022 ............

442,664 26,884 (1,829) 15,585 20,642 520,647

Netincome .................

—— ——6,292 6,292 —6,292

Foreign-currencytranslation

adjustment and other, net ..

—— —24— 24 —24

Stock-based compensation ...

—— 778 —— 778—778

ReleaseofvestedRSUs,

including taxeffects .......

1,470 —(303) —— (303) —(303)

Repurchases of commonstock (1,341) —(24) —(653) (677) —(677)

Cash dividends declaredand

other ....................

—— 5—(1,703)(1,698) (5)(1,703)

BALANCE AT

SEPTEMBER3,2023 ..........

442,793 $2$7,340 $(1,805) $19,521 $25,058 $—$25,058

( )

Theaccompanyingnotes areanintegral partoftheseconsolidated financialstatements.

COSTCO WHOLESALECORPORATION

CONSOLIDATED STATEMENTS OF CASHFLOWS

(amounts in millions)

53 Weeks

Ended

52 Weeks

Ended

52 Weeks

Ended

September3,

2023

August 28,

2022

August29,

2021

CASHFLOWS FROM OPERATINGACTIVITIES

Netincomeincluding noncontrollinginterests .........................

$6,292 $5,915 $5,079

Adjustmentstoreconcile net income including noncontrollinginterests

to net cash provided by operatingactivities:

Depreciation and amortization .....................................

2,077 1,900 1,781

Non-cash leaseexpense ..........................................

412377 286

Stock-based compensation ........................................

774724 665

Impairment of assets andother non-cash operatingactivities, net .......

49539144

Changes in operatingassets and liabilities:

Merchandise inventories ........................................

1,228 (4,003) (1,892)

Accountspayable ..............................................

(382) 1,891 1,838

Other operatingassetsand liabilities, net ..........................

172549 1,057

Netcashprovided by operatingactivities ..........................

11,068 7,392 8,958

CASH FLOWS FROM INVESTINGACTIVITIES

Purchases of short-term investments ................................

(1,622) (1,121) (1,331)

Maturities andsales of short-term investments ........................

9371,145 1,446

Additions to property andequipment .................................

(4,323) (3,891) (3,588)

Other investingactivities, net .......................................

36 (48) (62)

Netcashusedininvesting activities ..............................

(4,972) (3,915) (3,535)

CASHFLOWS FROM FINANCING ACTIVITIES

Repaymentsofshort-termborrowings ................................

(935) (6)—

Proceeds from short-term borrowings ................................

9175341

Repaymentsoflong-termdebt ......................................

(75) (800) (94)

Taxwithholdings on stock-basedawards .............................

(303) (363) (312)

Repurchases of commonstock ......................................

(676) (439) (496)

Cash dividend payments ...........................................

(1,251) (1,498) (5,748)

Financingleasepayments ..........................................

(291) (176) (67)

Dividend to noncontrollinginterest ...................................

—(208) —

Acquisition of noncontrollinginterest .................................

—(842) —

Other financing activities,net .......................................

—(4) 188

Netcashusedinfinancing activities ..............................

(2,614) (4,283) (6,488)

EFFECT OF EXCHANGERATECHANGES ON CASHAND CASH

EQUIVALENTS ..................................................

15 (249) 46

Netchangeincashand cash equivalents .............................

3,497 (1,055) (1,019)

CASHAND CASHEQUIVALENTS BEGINNING OF YEAR ..............

10,203 11,258 12,277

CASHAND CASHEQUIVALENTS ENDOFYEAR .....................

$13,700 $10,203 $11,258

SUPPLEMENTALDISCLOSURE OF CASHFLOWINFORMATION:

Cash paidduringthe year for:

Interest .......................................................

$125 $145 $149

Income taxes, net ..............................................

$2,234 $1,940 $1,527

SUPPLEMENTALDISCLOSURE OF NON-CASHACTIVITIES:

Cash dividend declared, but not yetpaid .............................

$452 $—$—

Capitalexpendituresincludedinliabilities .............................

$170 $156 $184

Theaccompanyingnotes areanintegral partoftheseconsolidated financialstatements.

COSTCO WHOLESALECORPORATION

NOTESTOCONSOLIDATED FINANCIAL STATEMENTS

(amounts in millions,exceptshare,per share, andwarehousecount data)

Note 1—Summary of SignificantAccountingPolicies

Description of Business

Costco WholesaleCorporation (Costcoorthe Company), aWashington corporation, and itssubsidiaries

operatemembershipwarehouses basedonthe concept that offering memberslow prices on alimited

selectionofnationally-branded and private-label products in awiderange of merchandise categorieswill

producehighsales volumesand rapidinventoryturnover. At September 3, 2023, Costco operated 861

warehouses worldwide: 591 in theUnitedStates(U.S.)located in 46 states,Washington, D.C.,and

Puerto Rico,107 in Canada,40inMexico, 33 in Japan, 29 in theUnitedKingdom (U.K.),18inKorea, 15

in Australia,14inTaiwan, five in China, four in Spain, twoinFrance, and one eachinIceland, New

Zealand, and Sweden.The Companyoperates e-commerce websites in theU.S., Canada, theU.K.,

Mexico,Korea, Taiwan,Japan, and Australia.

BasisofPresentation

Theconsolidated financialstatementsinclude theaccountsofCostcoand itssubsidiaries.The Company

reports noncontrollinginterests in consolidated entitiesasacomponent of equity separatefromthe

Company’s equity.All material inter-company transactions between and among theCompany and its

consolidated subsidiaries havebeen eliminated in consolidation. Unless otherwisenoted, references to

netincomerelatetonet income attributabletoCostco.

FiscalYear End

TheCompany operates on a52/53-week fiscalyear basis withthe year ending on theSunday closestto

August31. References to 2023 relate to the53-week fiscalyear ended September 3, 2023. References to

2022 and 2021 relate to the52-week fiscalyearsended August28, 2022, and August29, 2021.

UseofEstimates

Thepreparationoffinancial statementsinconformity withU.S.GAAP requiresmanagement to make

estimatesand assumptions that affectthe reportedamountsofassets and liabilitiesand thedisclosureof

contingent assets andliabilitiesatthe dateofthe financialstatementsand thereportedamountsof

revenues and expenses during thereporting period. Theseestimates and assumptions take into account

historical and forward-lookingfactors that theCompany believesare reasonable. Actual resultscould

differ from thoseestimates and assumptions.

Reclassification

Reclassifications were made to the2022 and 2021 consolidated statementsofcashflows to conformwith

current year presentation.

Cash and Cash Equivalents

TheCompany considersascashand cash equivalentsall cash on deposit,highlyliquidinvestmentswith

amaturityofthree months orlessatthe dateofpurchase, and proceeds due from creditand debitcard

transactions withsettlementterms of up to four days. Creditand debitcardreceivables were $2,282 and

$2,010 at theend of 2023 and 2022.

Short-Term Investments

Short-term investmentsgenerally consistofdebt securities (U.S.Government and AgencyNotes), with

maturities at thedateofpurchaseofthree months to five years. Investmentswithmaturitiesbeyond five

yearsmay be classified, based on theCompany’s determination, as short-term based on theirhighly

liquidnatureand becausetheyrepresent theinvestmentofcashthat is availablefor current operations.

Short-term investmentsclassifiedasavailable-for-saleare recorded at fair valueusing thespecific

identificationmethodwiththe unrealized gains and lossesreflected in ac cumulatedother comprehensive

income (loss) untilrealized. Realized gains and lossesfromthe sale of available-for-salesecurities, if any,

aredetermined on aspecificidentificationbasis and arerecordedininterestincomeand other,net in the

consolidated statementsofincome. Theseavailable-for-saleinvestmentshavealow levelofinherent

creditriskgiven they are issued by theU.S.Government and Agencies. Changes in theirfairvalue are

primarily attributabletochangesininterestrates and market liquidity.Short-term investmentsclassified as

held-to-maturity arefinancial instrumentsthat theCompany has theintent and abilitytoholdtomaturity

and arereportednet ofany relatedamortizationand arenot remeasured to fair valueonarecurring

basis.

TheCompany periodically evaluatesunrealized lossesinits investment securities forcreditimpairment,

usingbothqualitativeand quantitativecriteria. In theevent asecurityisdeemed to be impairedasthe

result of acreditloss, theCompany recognizesthe loss in interest income and other,net in the

consolidated statementsofincome.

Fair ValueofFinancial Instruments

TheCompany accountsfor certainassetsand liabilitiesatfairvalue. Thecarryingvalue of theCompany’s

financialinstruments,including cash and cash equivalents, receivables and accountspayable,

approximatefairvalue due to theirshort-termnatureorvariableinterestrates.See Notes2,3,and 4for

thecarryingvalue and fair valueofthe Company’s investments, derivativeinstruments, and fixed-rate

debt.

Fair valueisdefined as theprice that wouldbereceivedtosellanassetorpaidtotransferaliabilityinan

orderly transactionbetween market participantsatthe measurement date. Fair valueisestimated by

applying afairvalue hierarchy, whichrequiresmaximizingthe useofobservableinputswhen measuring

fair value. Thethree levels of inputsare:

Level 1:Quoted market pricesinactivemarkets foridentical assets or liabilities.

Level2:Observablemarket-basedinputsorunobservableinputsthat arecorroborated by market

data.

Level 3: Significant unobservableinputsthat arenot corroborated by market data.

TheCompany’s valuationtechniques used to measurethe fair valueofmoney market mutual funds are

based on quoted market prices,suchasquoted net assetvalues published by thefund as supportedin

an active market.Valuationmethodologies used to measurethe fair valueofall other non-derivative

financialinstruments arebased on independent external valuationinformation. Thepricing processuses

datafromavarietyofindependent external valuationinformation providers, including trades,bid priceor

spread, two-sidedmarkets,quotes, benchmarkcurvesincluding but not limited to treasurybenchmarks,

SecuredOvernight FinancingRateand swap curves,discount rates, and market datafeeds.All are

observableinthe market or canbederived principally from or corroborated by observablemarketdata.

TheCompany reports transfersinand out of Levels1,2,and 3, as applicable, usingthe fair valueofthe

individual securities as of thebeginning of thereporting periodinwhich thetransfer(s)occurred.

Current financialliabilitieshavefairvalues that approximatetheircarryingvalues.Long-term financial

liabilitiesinclude theCompany's long-term debt,which arerecordedonthe balancesheet at issuance

priceand adjustedfor unamortizeddiscountsorpremiumsand debt issuancecosts.Discounts, premiums

and debt issuancecosts areamortized to interest expenseoverthe term of theloan. Theestimated fair

valueofthe Company's long-term debt is based primarily on reportedmarketvalues,recently completed

market transactions,and estimatesbased upon interest rates, maturities,and credit.

Receivables,Net

Receivables consistprimarily of vendor,reinsurance, credit card incentive, third-party pharmacy and other

receivables.Vendor receivablesinclude discountsand volume rebates.Balances aregenerally presented

on agross basis,separatefromany relatedpayabledue. In certaincircumstances,thesereceivables may

be settled againstthe relatedpayabletothat vendor,inwhich case thereceivables arepresented on a

net basis.Reinsurance receivables areheldbythe Company’s wholly-owned captiveinsurance

subsidiary and primarily representamountsceded through reinsurancearrangementsgross of the

amountsassumed under reinsurance, whichare presented withinother current liabilitiesinthe

consolidated balancesheets. Credit card incentivereceivables primarily represent amountsearned under

co-branded creditcardarrangements. Third-partypharmacy receivables generally relate to amountsdue

from members’ insurers.Other receivablesprimarily consistofamountsdue from governmental entities,

mostly tax-relateditems.

Thevaluationallowancerelated to receivables wasnot material to our consolidated financialstatements

at theend of 2023 and 2022.

Merchandise Inventories

Merchandise inventoriesconsist of thefollowing:

2023 2022

United States ............................................

$12,153 $13,160

Canada .................................................

1,579 1,966

Other International ........................................

2,919 2,781

Merchandise inventories ...............................

$16,651 $17,907

Merchandise inventoriesare stated at thelower of cost or market.U.S.merchandise inventoriesare

valued by thecostmethod of accounting, usingthe last-in, first-out (LIFO) basis.The Company believes

theLIFOmethod more fairly presentsthe resultsofoperations by more closelymatchingcurrent costs

withcurrent revenues. TheCompany recordsanadjustment eachquarter, if necessary,for theprojected

annual effect of inflationordeflation, and theseestimates areadjustedtoactual resultsdetermined at

year-end, afteractualinflation or deflation ratesand inventorylevelshavebeen determined. An

immaterial LIFO charge wasrecordedin2023. Duetoinflation in 2022, a$438 charge wasrecorded to

merchandise coststoincreasethe cumulative LIFO valuationonmerchandise inventoriesatAugust28,

2022. Canadian and Other International merchandise inventoriesare predominantly valued usingthe cost

andretailinventory methods, respectively,using thefirst-in, first-out (FIFO) basis.

TheCompany provides forestimated inventorylossesbetween physicalinventorycountsusing estimates

basedonexperience. Theprovision is adjustedperiodically to reflectphysicalinventorycounts, which

generally occurinthe second and fourth fiscalquarters.Inventorycost, whereappropriate,isreduced by

estimatesofvendor rebates when earnedorasthe Company progressestowards earning thoserebates,

provided that they areprobableand reasonablyestimable.

Property and Equipment,Net

Property andequipment arestatedatcost. Depreciation and amortization expenseiscomputed primarily

usingthe straight-linemethodoverestimated useful lives.Leaseholdimprovementsmade afterthe

beginning of theinitial leasetermare depreciated over theshorterofthe estimatedusefullifeofthe asset

or theremaining term of theinitial leaseplusany renewalsthat arereasonablycertain at thedatethe

leaseholdimprovementsare made.

TheCompanycapitalizes certaincomputer softwareand costsincurredindeveloping or obtaining

softwarefor internal use. During development,thesecosts areincluded in construction in progress. To the

extent that theassets become ready fortheirintended use, thesecosts areincluded in equipment and

fixtures and amortizedonastraight-linebasis over theirestimated useful lives.

Repairand maintenancecosts areexpensed when incurred. Expendituresfor remodels, refurbishments

and improvementsthatadd to or change assetfunction or useful lifeare capitalized. Assets removed

duringthe remodel,refurbishment or im provement areretired. Assets classified as held-for-saleatthe

end of 2023 and 2022 were immaterial.

Thefollowingtable summarizesthe Company's property and equipment balances at theend of 2023 and

2022:

EstimatedUseful

Lives 2023 2022

Land .................................

N/A$ 8,590 $7,955

Buildings andimprovements ............

5-50 years22,001 20,120

Equipmentand fixtures .................

3-20 years11,512 10,275

Construction in progress ................

N/A1,266 1,582

43,369 39,932

Accumulateddepreciation andamortization .................

(16,685) (15,286)

Property and equipment,net ...........................

$26,684 $24,646

TheCompanyevaluates long-lived assets forimpairment on an annual basis,when relocating or closing

afacility, or when eventsorchangesincircumstances mayindicate thecarryingamount of theasset

group, generallyanindividual warehouse, maynot be fully recoverable. Forassetgroups heldand used,

including warehouses to be relocated, thecarryingvalue of theassetgroup is considered recoverable

when theestimated future undiscounted cash flowsgenerated from theuse and eventual dispositionof

theasset groupexceedthe respective carrying value. In theevent that thecarryingvalue is not

considered recoverable, an impairment loss is recognizedfor theassetgroup to be heldand used equal

to theexcessofthe carrying valueabovethe estimatedfairvalue of theassetgroup. Forassetgroups

classified as held-for-sale(disposal group),the carryingvalue is compared to thedisposal group’s fair

valuelesscosts to sell.The Company estimatesfairvalue by obtaining market appraisals from th ir dparty

brokersorusing other valuationtechniques.Impairment charges recognizedin2023 were immaterial.In

2022 and 2021,the Companyrecognizedwrite-offsof$118and $84 forinformation technology assets

whichare reflectedinSG&A.

Leases

TheCompany leases land, buildings, and/or equipment at warehouses and certainother office and

distributionfacilities. Leases generally containone or more of thefollowingoptions,which theCompany

canexerciseatthe end of theinitial term: (a)renew thelease foradefined number of yearsatthe then-

fair market rental rate or rate stipulated in theleaseagreement;(b) purchasethe property at thethen-fair

market valueorpurchaseprice stated in theagreement;or(c) aright of firstrefusal in theevent of athird-

party offer.

Some leases includefree-rent periodsand step-rent provisions,which arerecognizedonastraight-line

basisoverthe original term of thelease and any extensionoptions that theCompany is reasonably

certaintoexercisefromthe datethe Company has controlofthe property.Certain leases providefor

periodicrent increasesbased on priceindicesorthe greater of minimumguaranteed amountsorsales

volume,which arerecognizedasvariableleasepayments. Ourleases do not containany material

residual valueguarantees or material restrictivecovenants.

TheCompany determines at inceptionwhether acontract is or contains alease. Non-leasecomponents

and thelease components to whichtheyrelateare accounted fortogether as asingleleasecomponent

forall assetclasses.The Company initially recordsright-of-use(ROU) assets and leaseobligations forits

financeand operatingleasesbased on th ediscounted future minimumleasepaymentsoverthe term.

Theleasetermisdefined as thenoncancelableperiodofthe leaseplusany options to extend when it is

reasonablycertain that theCompany will exercise theoption. As therateimplicit in theCompany's leases

is noteasily determinable, thepresent valueofthe sumofthe leasepaymentsiscalculatedusing the

Company's incrementalborrowingrate. Therateisdetermined usingaportfolio approachbased on the

rate of interest theCompany wouldpay to borrowanamount equal to theleasepaymentsona

collateralized basis over asimilarterm. TheCompany uses quoted interest ratesfromfinancialinstitutions

to derive theincremental borrowingrate. Impairment of ROUassets is evaluated in asimilarmanner as

described in Property andEquipment,Net above. During 2023, theCompany recognizedcharges totaling

$391, primarily relatedtotheimpairment of certainleased assets associated withchartershipping

activities.Thischarge is included in merchandise costs.

TheCompany's assetretirementobligations (ARO)primarily relate to leaseholdimprovementsthatmust

be removedatthe end of alease. Theseobligations aregenerally recorded as adiscounted liability, with

an offsetting assetatthe inceptionofthe leaseterm, based upon theestimated fair valueofthe coststo

remove theimprovements. Theseliabilitiesare accreted over time to theprojected future valueofthe

obligation. TheARO assets aredepreciatedusing thesamedepreciation method as theleasehold

improvement assets andare included withbuildings and improvements. EstimatedARO liabilities

associated withthese leases areincluded in other liabilitiesinthe accompanyingconsolidated balance

sheet.

Goodwill and AcquiredIntangibleAssets

Goodwill representsthe excess of acquisitioncostoverthe fair valueofthe net assets acquiredand is not

subjecttoamortization. TheCompany reviewsgoodwill annually in thefourth quarterfor impairment or

when circumstances indicate carrying valuemay exceed thefairvalue. This evaluationisperformedat

thereporting unitlevel.Ifaqualitativeassessment indicatesthat it is more likelythan not that thefair

valueislessthancarryingvalue,aquantitative analysisiscompleted usingeither theincomeormarket

approach, or acombination of both. Theincomeapproachestimates fair valuebased on expected

discounted future cash flows, whilethe market approachusescomparablepublic companies and

transactionstodevelop metricstobeappliedtohistoricaland expectedfutureoperatingresults.

Goodwill is included in otherlong-term assets in theconsolidated balancesheets. Thefollowingtable

summarizesgoodwill by reportablesegment:

United

States Canada

Other

InternationalTotal

BalanceatAugust29, 2021 ....................

$953 $28$ 15 $996

Changesincurrencytranslation .............

—(1) (2)(3)

BalanceatAugust28, 2022 ....................

$953 $27$ 13 $993

Changes in currencytranslation .............

—(1) 21

BalanceatSeptember 3, 2023 ..................

$953 $26$ 15 $994

Definite-lived intangibleassets,which arenot material,are included in other long-term assets on the

consolidated balancesheetsand areamortized on astraight-linebasis over theirestimated lives,which

approximates thepattern of expec tedeconomic benefit.

Insurance/Self-insuranceLiabilities

Claimsfor employee health-carebenefits, workers’ compensation, general liability, property damage,

directors’ and officers’liability, vehicleliability, inventoryloss, and other exposures arefunded

predominantly through self-insurance. Insurancecoverageismaintained forcertain risks to limit

exposures arisingfromverylarge losses. TheCompany uses various risk management mechanisms,

including awholly-owned captiveinsurancesubsidiary (the captive) and participates in areinsurance

program.Liabilitiesassociatedwiththe risks that areretained by theCompany arenot discounted and are

estimatedusing historical claims experience, demographicfactors,severityfactors,and other actuarial

assumptions.The estimatedaccrualsfor theseliabilitiescouldbesignificantly affected if future

occurrences,claims, or expenses differ fr om theseassumptions and historical trends.Atthe end of 2023

and 2022, theseinsurance liabilitieswere$1,513 and $1,364 in theaggregate, and were included in

accrued salaries and benefits and othercurrent liabilitiesinthe consolidated balancesheets, classified

based on theirnature.

Thecaptivereceivesdirectpremiums, whichare nettedagainstthe Company’s premiumcosts in SG&A

expenses in theconsolidatedstatementsofincome. Thecaptive participates in areinsuranceprogram

that includes third-partyparticipants. Theparticipant agreementsand practicesofthe reinsurance

program are designed to limit aparticipatingmembers’individual risk. Income statement adjustments

relatedtothe reinsuranceprogram and relatedimpacts to theconsolidated balancesheetsare

recognizedasinformation becomes known. In theevent theCompany leaves thereinsuranceprogram,

theCompany retainsits prim aryobligationtothe policyholdersfor prioractivity.

Derivatives

TheCompany is exposed to foreign-currencyexchange-rate fluctuations in thenormalcourseof

business. It managesthese fluctuations,inpart, through theuse of forwardforeign-exchange contracts,

seekingtoeconomically hedgethe impactoffluctuations of foreignexchange on knownfuture

expendituresdenominated in anon-functional foreign-currency. Th econtractsrelateprimarily to U.S.

dollarmerchandise inventoryexpendituresmadebythe Company’s international subsidiaries with

functional currenciesother than theU.S.dollar. Currently,thesecontractsdonot qualifyfor derivative

hedge accounting. TheCompany seekstomitigateriskwiththe useofthesecontractsand does not

intend to engageinspeculative transactions.Someofthesecontractscontaincredit-risk-related

contingent features th at requiresettlement of outstanding contractsupon certaintriggeringevents. The

aggregatefairvalue amountsofderivativeinstruments in anet liabilitypositionand theamount needed to

settlethe instrumentsimmediately if thecredit-risk-relatedcontingent features were triggered were

immaterial at theend of 2023 and 2022. Theaggregatenotional amountsofopen, unsettled forward

foreign-exchange contractswere$1,068and $1,242 at theend of 2023 and 2022. SeeNote3for

information on thefairvalue of unsettledforward foreign-exchange contractsatthe end of 2023 and 2022.

Theunrealized gains or lossesrecognizedininterestincomeand other,net in theaccompanying

consolidated statementsofincomerelatingtothe net changes in thefairvalue of unsettled forward

foreign-exchange contractswereimmaterial in 2023, 2022 and 2021.

TheCompany is ex posed to fluctuations in prices forenergy,particularlyelectricity and natural gas, and

other commodity products used in retail and manufacturing operations,which it seekstopartially mitigate

through theuse of fixed-pricecontracts forcertain of itswarehouses and other facilities, primarily in the

U.S. and Canada. TheCompany alsoentersintovariable-priced contractsfor some purchases of natural

gas,inadditiontofuel forits gasstations, on an index basis.Thes econtractsmeet thecharacteristicsof

derivativeinstruments,but generally qualifyfor the“normal purchases and normalsales”exceptionunder

authoritativeguidanceand require no mark-to-market adjustment.

ForeignCurrency

Thefunctional currencies of theCompany’s international subsidiaries aretheirlocal currencies. Assets

and liabilitiesrecordedinforeign currenciesare translatedatthe exchange rate on thebalancesheet

date. Translation adjustmentsare recorded in accumulatedother comprehensiveloss. Revenues and

expenses of theCompany’s consolidated foreignoperations aretranslatedataverage exchange rates

prevailingduringthe year.

TheCompany recognizesforeign-currencytransaction gains and lossesrelated to revaluingorsettling

monetaryassets andliabilitiesdenominated in currencies other than thefunctional currencyininterest

income and other,net in theconsolidatedstatementsofincome. Generally,these include theU.S.dollar

cash and cash equivalentsand theU.S.dollarpayables of consolidated subsidiaries revalued to their

functional currency. Also included arerealized foreign-currencygains or lossesfromsettlementsof

forwardforeign-exchange contracts. Theseitems were $46 and $84 in 2023 and 2022 and immaterial in

2021.

Revenue Recognition

TheCompany recognizessales forthe amount of considerationcollected from themember,which

includes grossshippingfees whereapplicable, and is net of salestaxes collected and remittedto

government agenciesand member returns. TheCompany reserves forestimated returnsbased on

historical trends in merchandise returnsand reduces salesand merchandise costsaccordingly. The

Company records, on agross basis,arefund liabilityand an assetfor recovery,which areincluded in

other current liabilitiesand other currentassets, respectively,inthe consolidated balancesheets.

TheCompanyoffersmerchandiseinthe followingcoremerchandise categories: foods and sundries, non-

foods,and freshfoods.The Companyalsoprovides expanded products and services through warehouse

ancillary andother businesses. Themajorityofrevenue from merchandise salesisrecognizedatthe point

of sale.Revenuegenerated through e-commerceorspecialordersisgenerally recognizedupon shipment

to themember.For merchandise shipped directly to themember,shipping and handlingcosts are

expensed as incurred as fulfillment costsand included in merchandise costsinthe consolidated

statementsofincome. In certainancillary businesses, revenue is deferreduntil themember picksup

merchandise at thewarehouse. Deferred salesare included in other current liabilitiesinthe consolidated

balancesheets.

TheCompany is theprincipal forthe majority of itstransactions and recognizesrevenue on agross basis.

TheCompany is theprincipal when it hascontrolofthe merchandise or servicebeforeitistransferredto

themember, whichgenerally is established when Costco is primarily responsible formerchandising

decisions,pricing discretion, andmaintains therelationshipwiththe member,including assuranceof

member serviceand satisfaction.

TheCompany accountsfor membership feerevenue, net of refunds,onadeferredbasis,ratablyoverthe

one-year membership period. Deferred membership fees at theend of 2023 and 2022 were $2,337 and

$2,174.

In most countries,the Company's Executivemembers qualifyfor a2%rewardonqualifiedpurchases,

subjecttoanannualmaximum value, whichdoes not expire and is redeemableatCostcowarehouses.

TheCompany accountsfor this reward as areduction in sales, net of theestimated impactofnon-

redemptions (breakage),withthe corresponding liabilityclassified as accrued member rewardsinthe

consolidated balancesheets. Estimatedbreakage is computed bas ed on redemptiondata. For2023,

2022, and 2021,the net reductioninsales was$2,576, $2,307, and $2,047.

TheCompanysells andotherwiseprovidesproprietary shop cardsthat do not expire and areredeemable

at thewarehouseoronlinefor merchandise or membership.Revenue from shop cardsisrecognized

upon redemption, and estimatedbreakage is recognizedbased on redemptiondata. TheCompany

accountsfor outstanding shop card balances as ashop card liability, net of es timatedbreakage. Shop

card liabilitiesare included in othercurrent liabilitiesinthe consolidated balancesheets.

Citibank,N.A.isthe exclusiveissuerofco-branded creditcards to U.S. members. TheCompany receives

various forms of considerationfromCitibank,including aroyalty on purchases made on thecardoutside

of Costco.Aportionofthe royaltyisusedtofund therebatethat cardholdersreceive,aftertakinginto

considerationbreakage, whichiscalculatedbased on rebateredemptiondata. Therebates areissued in

Februaryand expire on December 31. TheCompany also maintainsco-branded creditcard

arrangementsinCanadaand certainother International subsidiaries.

Merchandise Costs

Merchandise costsconsist of thepurchaseprice or manufacturing costsofinventorysold, inbound and

outbound shipping charges and allcosts relatedtothe Company’s depot,fulfillment and manufacturing

operations,and arereduced by vendor consideration. Merchandise costsalsoinclude salaries,benefits,

depreciation, andutilitiesinfresh foods departmentsand certainancillary businesses.

Vendor Consideration

TheCompany receives funds from vendorsfor discountsand avariety of other programs. These

programsare evidenced by agreementsthat arereflected in thecarryingvalue of theinventorywhen

earned or asthe Company progressestowards earning therebateordiscount,and as acomponent of

merchandise costsasthe merchandiseissold. Other vendor considerationisgenerally recorded as a

reduction of merchandisecosts upon completion of contractual milestones,terms of therelated

agreement,orbyanother systematic approach.

Selling, General andAdministrativeExpenses

Selling, general andadministrativeexpenses consistprimarily of salaries,benefitsand workers’

compensationcosts forwarehouseemployees (other than freshfoods departmentsand certainancillary

businesseswhich arereflected in merchandise costs) as well as allregional and homeofficeemployees,

including buyingpersonnel.Selling, general and administrativeexpenses also include substantially all

buildingand equipment depreciation,stock compensationexpense, creditand debitcardprocessing fees,

utilities, preopening, as well as other operatingcosts incurredtosupportwarehouseand e-commerce

websiteoperations.

Retirement Plans

TheCompany's 401(k)retirement plan is availabletoall U.S. employees over theage of 18 whohave

completed90daysofemployment.The plan allows participantstomakewage deferralcontributions,a

portion of which theCompany matches.Inaddition, theCompany provides eacheligible participant an

annual discretionarycontribution. TheCompany also has adefined contributionplanfor employees in

Canada and contributes apercentage of eachemployee'swages.Certain subsidiaries in theCompany's

Other International operations have defined benefit and defined contributionplans,which arenot material.

Amountsexpensed under allplans were $914, $824, and $748 for2023, 2022, and 2021, and are

predominantly included in SG&A expenses in theconsolidated statementsofincome.

Stock-BasedCompensation

TheCompany grants stock-based compensation, primarily to employees and non-employee directors.

Grantstoexecutive officers aregenerallyperformance-based. Through aseriesofshareholder approvals,

therehavebeen amended and restated plans and new provisions implemented by theCompany.

Restricted StockUnits (RSUs) grantedtoemployees and to non-employee directorsgenerally vest ov er

five yearsand threeyears and aresubject to quarterlyvesting in theevent of retirement or voluntary

termination. Employeeswho attain at least25yearsofservice withthe Company receiveshares under

acceleratedvesting provisions on theannual vestingdate. Forfeituresare recognizedasthey occur.

Compensationexpensefor awards is predominantly recognizedusing thestraight-linemethodoverthe

requisite serviceperiodfor theentireaward.The terms of theRSUs, including performance-based

awards,provide foraccelerated vestingfor employees and non-employee directorswho haveattained 25

or more and five or more yearsofservice withthe Company,respectively.Recipientsare not entitledto

vote or receivedividendsonunvestedand undelivered shares.Compensationexpensefor the

acceleratedsharesisrecognizedupon achievement of thelong-serviceterm. Thecumulativeamount of

compensationcostrecognizedatany point in time equalsatleastthe portion of thegrant-datefairvalue

of theaward that is vested at that date. Thefairvalue of RSUs is calculated as themarketvalue of the

commonstock on themeasurement date less thepresent valueofthe expecteddividends forgone during

thevesting period.

Stock-based compensationexpenseispredominantly included in SG&A expenses in theconsolidated

statementsofincome. Certainstock-based compensationcosts arecapitalized or included in thecostof

merchandise.See Note 7for additional information on theCompany’s stock-based compensationplans.

Income Taxes

TheCompany accountsfor income taxesusing theassetand liabilitymethod. Deferredtax assets and

liabilitiesare recognizedfor thefuturetax consequences attributed to differences between thefinancial

statement carryingamountsofexistingassets and liabilitiesand theirtax bases,credits and loss carry-

forwards.Deferredtax assets and liabilities aremeasured usingtax ratesexpectedtoapplytotaxable

income in theyears in whichthosetemporary differences and carry-forwardsare expectedtobe

recoveredorsettled. Theeffectondeferredtax assets and liabilitiesofachange in taxrates is recognized

in income in theperiodthat includes theenactment date. Avaluationallowanceisestablished when

necessary to reducedeferredtax assets to amountsthat aremorelikelythan not expectedtoberealized.

Thetimingand amountsofdeductibleand taxableitems and theprobabilityofsustaininguncertain tax

positions requiressignificant judgment.The benefitsofuncertain taxpositions arerecorded in the

Company’s consolidated financialstatementsonlyafter determining amore-likely-than-not probabilitythat

theuncerta in taxpositions will withstand challenge from taxauthorities. When factsand circumstances

change, theCompany reassessesthese probabilitiesand recordschanges as appropriate.

NetIncomeper Common ShareAttributabletoCostco

Thecomputation of basicnet income per shareusesthe weighted average number of shares that were

outstanding duringthe period. Thecomputationofdilutednet income per shareusesthe weighted

average number of shares in thebasic net income per sharecalculation plus thenumber of common

shares that wouldbeissued assuming vestingofall potentially dilutive commonshares outstanding using

thetreasurystock method forsharessubject to RSUs.

StockRepurchasePrograms

Repurchased shares of commonstock areretired, in accordancewiththe Washington Business

CorporationAct.The par valueofrepurchased shares is deductedfromcommonstock and theexcess

repurchaseprice over parvalue is deductedbyallocation to additional paid-in capitaland retained

earnings.The amount allocatedtoadditional paid-in capitalisthe current valueofadditional paid-in

capitalper shareoutstanding and is appliedtothe number of shares repurchased. Anyremaining amount

is allocatedtoretainedearnings. SeeNote6foradditional information.

Note 2—Investments

TheCompany’s investmentswereasfollows:

2023:

Cost

Basis

Unrealized

Losses, Net

Recorded

Basis

Available-for-sale:

Government and agency securities ..............

$650 $(17) $633

Held-to-maturity:

Certificates of deposit ..........................

901 —901

Totalshort-term investments ................

$1,551 $(17) $1,534

( )

2022:

Cost

Basis

Unrealized

Losses, Net

Recorded

Basis

Available-for-sale:

Government and agency securities ..............

$534 $(5) $529

Held-to-maturity:

Certificates of deposit ..........................

317 —317

Totalshort-term investments ................

$851 $(5) $846

( )

Grossunrecognizedholding gains andlossesonavailable-for-salesecuritieswerenot material forthe

yearsended September 3, 2023, and August28, 2022. At thosedates,therewerenoavailable-for-sale

securities in amaterialcontinuous unrealized-loss position. Therewerenosales of available-for-sale

securities during2023 or 2022.

Thematuritiesofavailable-for-saleand held-to-maturity securities at theend of 2023 areasfollows:

Available-For-Sale

Held-To-MaturityCost BasisFairValue

Dueinone year or less ............................

$111 $110 $901

Dueafterone year through five years ................

337 330 —

Dueafterfiveyears ...............................

202 193 —

Total .........................................

$650 $633 $901

Note 3—Fair ValueMeasurement

Assets andLiabilitiesMeasuredatFairValue on aRecurring Basis

Thetable below presents information regarding theCompany’s financialassets and financialliabilities

that aremeasured at fair valueonarecurring basis and indicate thelevel withinthe hierarchyreflecting

thevaluationtechniques utilized to determinesuchfairvalue.

Level 2

2023 2022

Investment in government and agency securities ..............

$633 $529

Forwardforeign-exchange contracts, in assetposition

(1)

.......

18 34

Forwardforeign-exchange contracts, in (liability) position

(1)

.....

(7)(2)

Total .................................................

$644 $561

____________

(1)The assetand theliabilityvaluesare included in other current assets and other current liabilities, respectively,inthe

consolidated balancesheets.

At September 3, 2023,and August 28, 2022, theCompany didnot holdany Level 1or3financialassets

or liabilitiesthat were measured at fair valueonarecurring basis.Therewerenotransfers between levels

during2023 or 2022.

Assets andLiabilitiesMeasuredatFairValue on aNonrecurring Basis

Assets and liabilitiesrecognizedand disclosed at fair valueonanonrecurring basis include itemssuchas

financialassets measured at amortizedcostand long-lived nonfinancialassets.Theseassets are

measured at fair valueifdetermined to be impaired. Pleasesee Note 1for additional information.

Note 4—Debt

Short-Term Borrowings

TheCompany maintainsvarious short-term bank credit facilities, withaborrowingcapacityof$1,234 and

$1,257, in 2023 and 2022.Short-termborrowings outstanding were immaterial at theend of 2023 and

2022.

Long-Term Debt

TheCompany's long-term debt consists primarilyofSenior Notes, described below.The Company at its

option mayredeemthe Senior Notesatany time,inwholeorinpart, at aredemptionprice plus accrued

interest.The redemptionprice is equal to thegreater of 100% of theprincipal amount or thesum of the

present valueofthe remainingscheduled paymentsofprincipal and interest to maturity.Additionally,upon

certainevents, aholder hasthe right to require arepurchaseatapriceof101% of theprincipal amount

plus accrued and unpaid interest.Interestonall outstanding long-term debt is payablesemi-annually.The

estimatedfairvalue of Senior Notesisvalued usingLevel 2inputs.

Otherlong-term debt consists of Guaranteed Senior Notesissued by theCompany's Japanese

subsidiary,valuedusing Level 3inputs. In May2023, theJapanesesubsidiary repaid$75 of its

GuaranteedSeniorNotes.

At theend of 2023 and 2022, thefairvalue of theCompany's long-term debt,including thecurrent portion,

wasapproximately$5,738 and $6,033. Thecarryingvalue of long-term debt consistedofthe following:

2023 2022

2.750% Senior Notesdue May2024 ........................

$1,000 $1,000

3.000% Senior Notesdue May2027 ........................

1,000 1,000

1.375% Senior Notesdue June 2027 ........................

1,250 1,250

1.600% Senior Notesdue April2030 ........................

1,750 1,750

1.750% Senior Notesdue April2032 ........................

1,000 1,000

Other long-term debt ......................................

484 590

Totallong-term debt ...................................

6,484 6,590

Lessunamortizeddebt discountsand issuancecosts ......

26 33

Lesscurrent porti on

(1)

..................................

1,081 73

Long-term debt,excluding current por tion ................

$5,377 $6,484

_______________

(1)Net of unamortized debt discountsand issuancecosts.

Maturities of long-term debt during thenextfivefiscalyearsand thereafterare as follows:

2024 ......................................................................

$1,081

2025 ......................................................................

103

2026 ......................................................................

2027 ......................................................................

2,250

2028 ......................................................................

—

Thereafter ..............................................................

2,974

Total ...............................................................

$6,484

Note 5—Leases

Thetablesbelow presentinformation regarding theCompany's leaseassets and liabilities.

2023 2022

Assets

Operatingleaseright-of-useassets .........................

$2,713 $2,774

Financeleaseassets

(1)

....................................

1,325 1,620

Totalleaseassets .................................

$4,038 $4,394

Liabilities

Current

Operatingleaseliabilities

(2)

.............................

$220 $239

Financeleaseliabilities

(2)

...............................

129 245

Long-term

Operatingleaseliabilities ...............................

2,426 2,482

Financeleaseliabilities

(3)

...............................

1,303 1,383

Totalleaseliabilities ...............................

$4,078 $4,349

_______________

(1)Includedinother long-termassets in theconsolidated balancesheets.

(2)Includedinother current liabilitiesinthe consolidated balancesheets.

(3)Included in other long-termliabilitiesinthe consolidated balancesheets.

2023 2022

Weighted-average remaininglease term (years)

Operatingleases ......................................

20 20

Financeleases .......................................

24 17

Weighted-average discount rate

Operatingleases ......................................

2.47 %2.26%

Financeleases .......................................

4.47 %3.97%

Thecomponentsofleaseexpense, excluding short-term leasecosts and subleaseincome(whichwere

not material), were as follows:

2023 2022 2021

Operatingleasecosts

(1)

.................

$309 $297 $296

Financeleasecosts:

Amortization of leaseassets

(1)

........

169 128 50

Interest on leaseliabilities

(2)

..........

54 45 37

Variableleasecosts

(1)

...................

160 157 151

Totalleasecosts ................

$692 $627 $534

_______________

(1)Includedinselling, general andadministrativeexpenses and merchandise costsinthe consolidated statementsofincome.

(2)Includedininterestexpense and merchandise costsinthe consolidated statementsofincome.

Supplemental cash flow informationrelated to leases wasasfollows:

2023 2022 2021

Cash paid foramountsincluded in themeasurement

of leaseliabilities:

Operatingcashflows —operatingleases ........

$287 $277 $282

Operatingcashflows —financeleases .........

54 45 37

Financingcashflows —financeleases ..........

291 176 67

Operatingleaseassets obtained in exchange fornew

or modified leases ...............................

202 231 350

Financingleaseassets obtained in exchange fornew

or modified leases ...............................

100 794 399

As of September3,2023,futureminimum paymentsduringthe nextfivefiscalyearsand thereafterare as

follows:

OperatingLeases

(1)

FinanceLeases

2024 ....................................................

$277 $180

2025 ....................................................

230 175

2026 ....................................................

226 100

2027 ....................................................

206 91

2028 ....................................................

19192

Thereafter ...............................................

2,271 1,579

Total

(2)

...............................................

3,401 2,217

Lessamountrepresentinginterest ..........................

755 785

Presentvalue of leaseliabilities .............................

$2,646 $1,432

_______________

(1)Operatingleasepaymentshavenot been reduced by future subleaseincomeof$83.

(2)Excludes$843 of leasepaymentsfor leases that havebeen signed but not commenced.

Note 6—Equity

Dividends

Cash dividends declared in 2023 totaled$3.84 per share, as compared to $3.38 in 2022. TheCompany's

current quarterlydividend rate is $1.02 per share.

StockRepurchasePrograms

TheCompany's stockrepurchaseprogram is conductedunder a$4,000 authorizationbythe Boardof

Directors,which expiresinJanuary2027. As of theend of 2023, theremaining amount availableunder

theauthorizationwas $3,563. Thefollowingtablesummarizesthe Company’s stockrepurchaseactivity:

Repurchased

(000’s)

Average

Priceper

ShareTotal Cost

2023 ............................................

1,341 $504.68 $677

2022 ............................................

863 511.46 442

2021 ............................................

1,358 364.39 495

Theseamountsmay differ from repurchases of commonstock in theconsolidated statementsofcash

flowsdue to changes in unsettled stockrepurchases at theend of eachfiscalyear.Purchases aremade

from time to time,asconditions warrant, in theopen market or in blockpurchases and pursuant to plans

under SECRule10b5-1.

Note 7—Stock-Based Compensation

The2019 IncentivePlanauthorized theissuanceof17,500,000 shares (10,000,000 RSUs)ofcommon

stockfor future grants,plusthe remainingshares that were availablefor grant and thefutureforfeited

shares from grantsunder theprevious plan, up to amaximum aggregateof27,800,000 shares

(15,885,000 RSUs). TheCompany issues new shares of commonstock upon vestingofRSUs. Shares

forvestedRSUsare generally deliveredtoparticipantsannually,net of shares withheldfor taxes.

Summary of Restricted StockUnitActivity

At theend of 2023, 8,747,000 shares were availabletobegranted as RSUs,and thefollowingawards

were outstanding:

•2,869,000time-basedRSUs, whichvestupon continued employment or serviceoverspecified

periods of time;and

•176,000 performance-based RSUs,ofwhich 135,000 were granted to executiveofficerssubjectto

thedeterminationofthe attainment of performancetargetsfor 2023. This determinationoccurred

in September 2023, at whichtimeatleast33% of theunits vested, as aresultofthe long service

of allexecutive officers,withthe exceptionofone executiveofficer whohas less than 25 yearsof

service. Theremaining awards vest upon continued employment over specifiedperiods of time.

Pleaserefer to Note 1for acceleratedvesting requirements.

Thefollowingtable summarizesRSU transactions during2023:

Number of

Units

(in000’s)

Weighted-Average

GrantDateFair

Value

Outstanding at theend of 2022 .............................

3,449 $338.41

Granted ..............................................

1,814 471.47

Vested and delivered ..................................

(2,102) 352.53

Forfeited .............................................

(116) 398.31

Outstandingatthe end of 2023 .............................

3,045 $405.63

Theweighted-average grant date fair valueofRSUsgranted was$471.47, $476.06, and $369.15 in 2023,

2022, and2021.The remainingunrecognizedcompensationcostrelated to non-vested RSUs at theend

of 2023 was$790 and theweighted-average periodoftimeoverwhich this cost will be recognizedis1.6

years. Included in theoutstanding balanceatthe end of 2023 were approximately1,050,000 RSUs

vested but not yetdelivered.

Summary of Stock-BasedCompensation

Thefollowingtable summarizesstock-based compensationexpenseand therelated taxbenefits:

2023 2022 2021

Stock-based compensationexpense ................

$774 $724 $665

Lessrecognized income taxbenefit .................

163 154 140

Stock-based compensationexpense,net .........

$611 $570 $525

Note 8— Taxes

Income Taxes

Income beforeincometaxes is comprisedofthe following:

2023 2022 2021

Domestic ........................................

$6,264 $5,759 $4,931

Foreign ..........................................

2,223 2,081 1,749

Total .........................................

$8,487 $7,840 $6,680

Theprovisionsfor income taxesare as follows:

2023 2022 2021

Federal:

Current .......................................

$1,056 $798 $718

Deferred ......................................

33 (35) 84

Totalfederal ...............................

1,089 763 802

State:

Current ......................................

374 333 265

Deferred .....................................

10 (5)11

Totalstate ................................

384 328 276

Foreign:

Current ......................................

732 851 557

Deferred .....................................

(10) (17) (34)

Totalforeign ...............................

722 834 523

Totalprovision forincometaxes .....................

$2,195 $1,925 $1,601

Thereconciliation between thestatutory taxrateand theeffective rate for2023, 2022, and 2021 is as

follows:

2023 2022 2021

Federal taxesatstatutory rate ...........

$1,782 21.0% $1,646 21.0% $1,403 21.0%

Statetaxes,net ........................

302 3.6267 3.4243 3.6

Foreigntaxes,net ......................

160 1.9231 3.0921.4

Employee stockownership plan (ESOP) ..

(25) (0.3)(23) (0.3)(91) (1.3)

Other .................................

(24) (0.3)(196) (2.5)(46) (0.7)

Total ..............................

$2,195 25.9% $1,925 24.6% $1,601 24.0%

TheCompany recognizedtotal net taxbenefitsof$62, $130 and $163 in 2023, 2022 and 2021. These

include benefits of $54, $94and $75, relatedtostock-based compensation. During 2021, therewas anet

taxbenefit of $70 relatedtothe portion of thespecialdividend paidthrough theCompany's 401(k) plan.

Thecomponentsofthe deferredtax assets (liabilities) areasfollows:

2023 2022

Deferredtax assets:

Equity compensation ..................................

$89$ 84

Deferredincome/membership fees ......................

309 302

Foreigntax creditcarry forward .........................

250 201

Operatingleaseliabilities ...............................

678 727

Accrued liabilitiesand reserves .........................

761 694

Other ................................................

20 5

Totaldeferredtax assets ...................................

2,107 2,013

Valuationallowance .......................................

(422) (313)

Totalnet deferred taxassets ...............................

1,685 1,700

Deferredtax liabilities:

Property and equipment ................................

(867) (962)

Merchandise inventories ...............................

(380) (231)

Operatingleaseright-of-useassets ......................

(655) (701)

Foreignbranchdeferreds ..............................

(87) (85)

Totaldeferredtax liabilities .................................

(1,989) (1,979)

Netdeferredtax liabilities ...........................

$(304) $(279)

( ) ( )

Thedeferredtax accountsatthe end of 2023 and 2022 include deferredincometax assets of $491 and

$445, included in otherlong-term assets;and deferredincometax liabilitiesof$795 and $724, included in

other long-term liabilities.

In 2023 and 2022,the Companyhad valuationallowances of $422 and $313, primarily relatedtoforeign

taxcredits that theCompany believes will not be realized due to carry forwardlimitations.The foreigntax

creditcarry forwards areset to ex pire beginning in fi scal2030.

TheCompany generally no longer considersfiscalyear earnings of non-U.S. consolidated subsidiaries

after2017 to be indefinitelyreinvested(other than Chinaand Taiwan) and has recorded theestimated

incremental foreignwithholding taxes(net of availableforeign taxcredits)and stateincometaxes payable

assuming ahypothetical repatriation to theU.S.The Company considersundistributed earnings of certain

non-U.S. consolidated subsidiaries,which totaled$3,225, to be indefinitelyreinvestedand has not

provided forwithholding or statetaxes.

Areconciliation of thebeginning and ending amount of grossunrecognizedtax benefitsfor 2023 and

2022 is as follows:

2023 2022

Grossunrecognizedtax benefit at beginning of year ...........

$16$ 33

Grossincreases—current year taxpositions ..............

Grossincreases—tax positions in prioryears .............

11 12

Grossdecreases—tax positions in prioryears .............

(11) (12)

Grossdecreases—settlements ..........................

—(12)

Lapseofstatute of lim itations ...........................

(1)(6)

Grossunrecognizedtax benefit at end of year ................

$16$ 16

Thegross unr ecognizedtax benefit includes taxpositions forwhich theultimatedeductibilityishighly

certainbut thereisuncertainty about thetimingofsuc hdeductibility. At theend of 2023 and 2022, these

amountswereimmaterial.Because of theimpactofdeferredtax accounting, other than interest and

penalties,the disallowance of thesetax positions wouldnot affect theannual effectivetax rate but would

accelerate thepayment of cash to thetaxingauthority. Thetotal amount of such unrecognizedtax

benefitsthat if recognizedwould favorablyaffectthe effectiveincometax rate in future periods is $14 and

$15 at theend of 2023 and 2022.

Accrued interest andpenalties relatedtoincometax mattersare classified as acomponent of income tax

expense. Accrued interest andpenaltiesrecognizedduring2023 and 2022, and accrued at theend of

each respective period were notmaterial.

TheCompanyiscurrently under auditbyseveral jurisdictions in theUnitedStatesand abroad. Some

audits mayconclude in thenext12months,and theunrecognizedtax benefitsrecorded in relation to the

audits maydifferfromactual settlement amounts. It is not practicaltoestimatethe effect,ifany,ofany

amount of such change duringthe next 12 months to previously recorded uncertain taxpositions in

connection withthe audits.The Company does not anticipatethat therewill be amaterialincreaseor

decreaseinthe totalamount of unrecognizedtax benefitsinthe next12months.

TheCompany filesincometax returnsinthe United States,various stateand localjurisdictions,in

Canada, and in severalother foreignjurisdictions.Withfew exceptions,the Company is no longer subject

to U.S. federal,state or localexaminationfor yearsbeforefiscal2018. TheCompany is currently subject

to examinationinCaliforniafor fiscalyears2013 to present.

Other Taxes

TheCompany is subjecttomultipleexaminations forvalue added, sales-based, payroll, product, importor

other non-income taxesinvarious jurisdictions.Incertain cases, theCompany has received assessments

from theauthorities. Possiblelossesorrange of possiblelossesassociated withthesematters areeither

immaterial or an estimate of thepossiblelossorrange of loss cannot be made at this time.Ifcertain

matters or agroup of matters were to be decided adversely to theCompany,itcouldres ultinacharge

that mightbematerialtothe resultsofanindividual fiscalquarteroryear.

Note 9—NetIncomeper Commonand Common EquivalentShare

Thefollowingtable showsthe amounts used in computingnet income per shareand theweighted

average number ofsharesofbasic and of potentially dilutive commonshares outstanding (shares in

000’s):

2023 2022 2021

NetincomeattributabletoCostco ...................

$6,292 $5,844 $5,007

Weighted average basic shares .....................

443,854 443,651 443,089

RSUs ...........................................

598 1,106 1,257

Weighted average dilutedshares ....................

444,452 444,757 444,346

Note 10—Commitments andContingencies

Legal Proceedings

TheCompany is involved in many claims,proceedings and litigations arisingfromits businessand

property ownership. In accordancewithapplicableaccountingguidance, theCompany establishes an

accrual forlegal proceedings if and when thosematters present loss contingenciesthat arebothprobable

and reasonably estimable. Theremay be lossesinexcess of amountsaccrued. TheCompany monitors

thosematters fordevelopments that wouldaffectthe likelihood of aloss(taking into account where

applicableindemnification arrangementsconcerning suppliers and insurers)and theaccrued amount,if

any, thereof,and adjusts theamount as appropriate.The Company has recorded immaterial accruals with

respecttocertain matters describedbelow,inaddition to other immaterial accrualsfor matters not

described below.Ifthe loss contingencyatissueisnot bothprobableand reasonablyestimable,the

Company does notestablishanaccrual,but monitors fordevelopmentsthat make thecontingencyboth

probableand reasonably estimable. In eachcase, thereisareasonablepossibilitythat alossmay be

incurred, includingalossinexcessofthe applicableaccrual.For matters wherenoaccrual has been

recorded, thepossiblelossorrange of loss (including any loss in excess of theaccrual)cannot,inthe

Company's view,bereasonablyestimated because, amongother things:the remedies or penalties

sought areindeterminateorunspecified; thelegal and/or factual theoriesare not well developed; and/or

thematters involvecomplex or novellegal theoriesoralargenumber of parties.

TheCompany is adefendantinanactioncommenced in July 2013 under theCaliforniaLabor Code

PrivateAttorneysGeneral Act(PAGA)alleging violationofCaliforniaWage Order 7-2001 forfailingto

provideseatingtoemployees whoworkatentranceand exit doorsinCaliforniawarehouses. Canelav.

Costco WholesaleCorp. (CaseNo. 2013-1-CV-248813; SantaClara SuperiorCourt). Thecomplaint

sought reliefunder theCaliforniaLabor Code, including civilpenalties and attorneys’ fees.OnApril 26,

2023, thecourtentered afinal judgment in favorofthe Company.The plaintiffappealed thejudgment in

June 2023.

In June 2022, abusinesscenteremployeeraisedsimilarclaims, alleging failure to provideseating to

employees whoworkatmembershiprefund desks in Californiawarehouses and businesscenters.

Rodriguez v. Costco WholesaleCorp. (CaseNo. 22CV012847; Alameda SuperiorCourt).The complaint

seeksreliefunder theCaliforniaLaborCode, including civilpenalties and attorneys' fees.The Company

filedananswerdenyingthe material allegations of thecomplaint.

In March2019,employees filedaclass action againstthe Company alleging claims under Californialaw

forfailure to pay overtime,toprovide meal and rest periods and itemized wage statements, to timely pay

wages due to terminatingemployees,topay minimumwages,and forunfairbusinesspractices.Relief

wassought under theCaliforniaLaborCode, including civilpenalties and attorneys' fees. Nevarezv.

Costco WholesaleCorp. (CaseNo. 2:19-cv-03454; C.D. Cal.). TheCompany filedananswerdenyingthe

material allegations ofthe complaint. In December 2019, thecourtissued an order denyingclass

certification. In January2020,the plaintiffs dismissedtheirLabor Code claims without prejudice,and the

courtremanded theactiontostatecourt. Settlement foranimmaterial amount wasagreed upon in

February2021. Finalcourtapproval ofthe settlement wasgranted on May3,2022. Aproposed intervenor

appealed thedenial of hermotiontointervene, and theappeal wasdismissedonFebruary15, 2023.

In May2019, an employee filedaclassactionagainstthe Company alleging claims under Californialaw

forfailure to pay overtime,toprovide itemized wage statements, to timely pay wages due to terminating

employees,topay minimumwages,and forunfairbusinesspractices. Rough v. Costco WholesaleCorp.

(CaseNo. 2:19-cv-01340; E.D. Cal.). Reliefissought under theCaliforniaLabor Code, including civil

penalties and attorneys' fees.InSeptember 2021, thecourtgranted theCompany's motion forpartial

summary judgment anddenied classcertification. In August2019, theplaintiff filedacompanion case in

statecourtseekingpenalties under PAGA. Rough v. Costco WholesaleCorp. (CaseNo. FCS053454;

SonomaCountySuperiorCourt). Reliefissought under theCaliforniaLabor Code, including civil

penalties andattorneys'fees.The statecourt action has been stayed pending resolution of thefederal

action. In September 2023 theparties reached an agreement in principleonasettlement foran

immaterial amount.

In December 2020, aformeremployeefiledsuitagainstthe Company assertingcollectiveand class

claims on behalfofnon-exempt employees under theFairLabor Standards Actand NewYorkLabor Law

forfailure to pay forall hoursworked, failuretopay certainnon-exempt employees on aweek ly basis,and

failure to provideproper wage statementsand notices.The plaintiffalsoasserted individual retaliation

claims. Cappadorav.CostcoWholesale Corp. (CaseNo. 1:20-cv-06067; E.D.N.Y.). Basedonan

agreement in principleconcerningsettlementofthe matter, involvingaproposed payment by the

Company of an immaterial amount, thefederal action has been dismissed. In April2022, Cappadoraand

asecond plaintifffiledanactionagainstthe Company in NewYorkstate court, assertingthe same class

claims asserted in thefederal action under theNew York Labor Law and seekingpreliminaryapproval of

theclass settlement. Cappadoraand Sancho v. Costco WholesaleCorp. (Index No.604757/2022;

NassauCountySupreme Court).Followingfinal approval of thesettlement,the case wasdismissedon

April14, 2023.

In August2021, aformeremployeefiledasimilarsuit, assertingclass claims on behalfofcertain non-

exempt employeesunder NewYorkLabor Law forfailure to pay on aweekly basis. Umadat v. Costco

WholesaleCorp. (CaseNo. 2:21-cv-4814; E.D.N.Y. ). TheCompany filedananswer, denyingthe material

allegations of thecomplaint.InAugust2023, theparties reached an agreement in principleona

settlement foranimmaterial amount.InApril 2022, aformeremployeefiledasimilar suit,assertingclass

claims on behalfofcertain non-exempt employees under NewYorkLabor Law,aswellasunder theFair

Labor Standards Act, forfailure to pay on aweekly bas is and failure to pay overtime. Burian v. Costco

WholesaleCorp. (CaseNo. 2:22-cv-02108; E.D.N.Y.). Thecasewas settledfor an immaterial amount and

wasdismissed withprejudice in May2023.

In February2021, aformeremployeefiledaclassactionagainstthe Company alleging violations of

California Labor Code regarding payment of wages,meal and rest periods,wagestatements,

reimbursement of expenses,payment of final wages to terminated employees,and forunfairbusiness

practices. Edwardsv.CostcoWholesale Corp. (CaseNo. 5:21-cv-00716: C.D. Cal.). On September 27,

2022, theparties reached asettlement foranimmaterial amount,which is subjecttocourtapproval.

In July 2021, aformertemporary staffing employee filedaclass action againstthe Company and a

staffing company alleging violations ofthe CaliforniaLabor Code regarding payment of wages,mealand

rest periods,wagestatements, thetimelinessofwages and final wages,and forunfairbusinesspractices.

Dimas v. Costco WholesaleCorp. (CaseNo. STK-CV-UOE-2021-0006024; SanJoaquinSuperiorCourt).

TheCompany hasmoved to compel arbitration of theplaintiff's individual claims and to dismissthe class

action complaint. On September 7,2021, thesameplaintiff filedaseparaterepresentativeactionunder

PAGA,asserting thesameLabor Code violations and seekingcivil penalties and attorneys' fees.The

case has been stayed pendingarbitration of theplaintiff's individual claims.

In September 2021, anemployeefiledaclassactionagainstthe Company alleging violations of the

CaliforniaLabor Code regarding failure to providesickpay,failure to timely pay wages due at separation

from employment,and forviolationsofCalifornia'sunfaircompetitionlaw. De Benning v. Costco

WholesaleCorp. (CaseNo. 34-2021-00309030-CU-OE-GDS;SacramentoSuperiorCourt).InApril 2022,

asettlement foranimmaterialamount wasagreed upon, subjecttocourt approval.Final approval of the

settlement wasgranted on Februar y10, 2023.

In March2022, an employee filedaclassactionagainstthe Company alleging violations of theCalifornia

Labor Code regarding thefailure to:pay wages,provide meal and rest periods,provide accurate wage

statements, timely pay finalwages,and reimburse businessexpenses. Diazv.CostcoWholesaleCorp.

(CaseNo. 22STCV09513; LosAngeles SuperiorCourt).InDecember 2022, thecasewas settled foran

immaterial amount,and thecasewas dismissed.

In May2022, an employee filedaPAGAactionagainstthe Company alleging claims under theCalifornia

Labor Code regarding thepayment ofwages,mealand rest periods,the timelinessofwages and final

wages,wage statements, accurate recordsand businessexpenses. Gonzalez v. Costco WholesaleCorp.

(CaseNo. 22AHCV00255; LosAngeles SuperiorCourt).The Company filedananswerdenyingthe

allegations.

Beginning in December 2017, theUnitedStatesJudicial Panel on MultidistrictLitigationconsolidated

numerous casesconcerning theimpacts of opioidabuses filedagainstvarious defendantsbycounties,

cities,hospitals,NativeAmericantribes, third-party payors, and others. In re National Prescription Opiate

Litigation (MDLNo. 2804) (N.D.Ohio).Included arecases filedagainstthe Company by countiesand

cities in Michigan, NewJersey, Oregon, Virginia and SouthCarolina, athird-party payor in Ohio,and a

hospital in Te xas, classactions filedonbehalfofinfantsbornwithopioid-relatedmedicalconditions in 40

states,and classactions and individual actions filedonbehalfofindividualsseeking to recoveralleged

increased insurancecosts associated withopioidabusein43statesand American Samoa. Claims

againstthe Company filedinfederal courtoutside theMDL havebeen asserted by certaincountiesand

cities in Floridaand Georgia; claims filedbycertain cities and countiesinNew York arepending in state

court. Claimsagainstthe Company in statecourts in NewJersey, Oklahoma, Utah, and Arizona have

been dismissed. TheCompany is defending allofthe pending matters.

Membersofthe BoardofDirectors,six corporateofficersand theCompany were defendantsina

shareholder derivativeactionfiledinJune 2022 relatedtochickenwelfare and alleged breaches of

fiduciary duties. Smith, et ano. v. Vachris, et al., SuperiorCourtofthe StateofWashington, Countyof

King, No,22-2-08937-7SEA. Thecomplaint sought from theindividual defendants' damages,injunctive

relief, costs, andattorneys' fees.OnMarch 28, 2023, thecourtgranted thedefendants' motion to dismiss

theaction. Theplaintiffssubsequentlymadeademand that theBoardofDirectors take various actions,

including among other things,pursuingclaimsagainstdirectors and officers of thetypeasserted in the

litigation. Ademand review committeeofthe Boardhas been appointed to make arecommendationtothe

Boardastothe demand.

In February2023, Go Green Norcal,LLC fi ledanarbitration demand againstthe Company.The demand

alleged abreachofasupplyagreement and sought unspecifieddamages and cancellation of aloanfrom

theCompany.InMarch 2023,the Company filedits answer, denyingany breachbythe Company,along

withcounterclaims againstGoGreen and an affiliate forbreachofcontract,negligent misrepresentation,

andanaccounting. In August2023 theplaintiff asserted that itsdamages exceed $70 million.

In January2023 theCompany received aCivil InvestigativeDemandfromthe U.S. Attorney's Office,

WesternDistrictofWashington, requesting documents. Thegovernment is conducting aFalse ClaimsAct

investigationconcerningwhether theCompany presented or caused to be presented to thefederal

government forpayment falseclaimsrelatingtoprescription medications.

TheCompany does not believe that any pending claim, proceeding or litigation, either alone or in the

aggregate, will haveamaterial adverse effect on theCompany’s financialposition, resultsofoperations or

cash flows; it is possiblethat an unfavorableoutcome of some or allofthe matters,however unlikely,

couldresultinacharge that mightbematerialtothe resultsofanindividual fiscalquarteroryear.

Note 11—SegmentReporting

TheCompanyisprincipally engagedinthe operationofmembership warehouses through wholly owned

subsidiaries in theU.S., Canada,Mexico, Japan, theU.K., Korea, Australia,Taiwan, China, Spain,

France, Iceland, NewZealand, andSweden. Reportablesegmentsare largelybased on management’s

organization of theoperatingsegmentsfor operational decisions and as sessmentsoffinancial

performance, whichconsidersgeographic locations.The material accountingpoliciesofthe segmentsare

as described in Note 1. Inter-segment net salesand expenses havebeen eliminated in computingtotal

revenue and operatingincome.

Thefollowingtable provides informationfor theCompany's reportablesegments:

United States Canada

Other

InternationalTotal

2023

Totalrevenue ..............................

$176,630 $33,056 $32,604 $242,290

Operatingincome ..........................

5,392 1,448 1,274 8,114

Depreciation and amortization ...............

1,599 183 295 2,077

Additions to property andequipment ..........

3,288 281 754 4,323

Property and equipment,net .................

18,760 2,443 5,481 26,684

Totalassets ...............................

49,189 6,420 13,385 68,994

2022

Totalrevenue ..............................

$165,294 $31,675 $29,985 $226,954

Operatingincome ..........................

5,268 1,346 1,179 7,793

Depreciation and amortization ...............

1,436 180 284 1,900

Additions to property andequipment ..........

2,795 388 708 3,891

Property and equipment,net .................

17,205 2,459 4,982 24,646

Totalassets ...............................

44,904 6,558 12,704 64,166

2021

Totalrevenue ..............................

$141,398 $27,298 $27,233 $195,929

Operatingincome ..........................

4,470 1,093 1,145 6,708

Depreciation and amortization ...............

1,339 177 265 1,781

Additions to property andequipment ..........

2,612 272 704 3,588

Property and equipment,net .................

15,993 2,317 5,182 23,492

Totalassets ...............................

39,589 5,962 13,717 59,268

Disaggregated Revenue

Thefollowing ta blesummarizesnet salesbymerchandise category; salesfrome-commercewebsites

and businesscenters havebeen allocatedtothe applicablemerchandise categories:

2023 2022 2021

Foods andSundries .........................

$96,175 $85,629 $77,277

Non-Foods .................................

60,865 61,100 55,966

FreshFoods ................................

31,977 29,527 27,183

WarehouseAncillary andOther Businesses .....

48,693 46,474 31,626

Totalnet sales ............................

$237,710 $222,730 $192,052

Item 9—Changesinand Disagreements with Accountants on Accountingand FinancialDisclosure

None.

Item 9A—Controls andProcedures

Evaluation of Disclosure Controls andProcedures

Ourdisclosurecontrolsand procedures (asdefined in Rules13a-15(e) or 15d-15(e) under theSecurities

Exchange Actof1934, asamended)are designed to ensurethatinformation requiredtobedisclosed in

thereports that we file or submit under theExchange Actisrecorded, processed, summarized, and

reportedwithinthe time periodsspecifiedinthe rulesand forms of theSEC and to ensurethat information

requiredtobedisclosed is accumulatedand communicatedtomanagement,including our principal

executiveand financialofficers, to allowtimelydecisions regarding disclosure. TheChief Executive

Officerand theChief FinancialOfficer,withassistancefromother membersofmanagement,have

reviewed theeffectivenessofour disclosurecontrols and procedures as of September 3, 2023, and,

based on theirevaluation, haveconcluded that thedisclosurecontrols and procedures were effectiveas

of such date.

Management's Annual ReportonInternalControl Over Fina ncialReporting

Ourmanagement is responsible forestablishing and maintainingadequateinternal controloverfinancial

reporting as defined in Rule 13a-15(f) under theExchange Act. Ourinternalcontrol over financ ial

reporting is designed to providereasonableassuranceregarding thereliabilityoffinancialreporting and

thepreparationoffinancial statementsfor external purposes in accordancewithU.S.GAAP and includes

thosepoliciesand procedures that:(1) pertain to themaintenanceofrecords that in reasonabledetail

accurately and fairly reflectour transactions and thedispositions of our assets;(2) providereasonable

assurancethat ourtransactions arerecorded as necessary to permitpreparationoffinancialstatements

in accordancewithgenerallyacceptedaccountingprinciplesand that our receipts and expendituresare

being made onlyinaccordancewithappropriate authorizations;and (3)provide reasonableassurance

regarding preventionortimelydetection of unauthorized acquisition, useordisposition of our assets that

couldhaveamaterial effect on our financialstatements.

Becauseofits inherent limitations,internalcontroloverfinancialreporting maynot prevent or detect

misstatements. Projectionsofany evaluationofeffectivenessfor future periods aresubject to theriskthat

controls maybecomeinadequate becauseofchanges in conditions,orthat thedegree of compliancewith

thepoliciesorprocedures maydeteriorate.

Under thesupervision of and withthe participationofour management,weassessedthe effectivenessof

our internal controloverfinancialreporting as of September 3, 2023, usingthe criteria setforth by the

CommitteeofSponsoringOrganizations of theTreadway Commission in Internal Control—Integrated

Framework(2013).

Basedonits assessment,management has concluded that our internal controloverfinancialreporting

waseffective as of September3,2023. Theattestation of KPMGLLP,our independent registered public

accountingfirm, on theeffectivenessofour internal controloverfinancialreporting is included withthe

consolidated financialstatementsinItem8of this Report.

ChangesinInternalControl Over FinancialReporting

Therehavebeen no changesinour internal controloverfinancialreporting (asdefined in Rules13a-15(f)

or 15d-15(f) of theExchange Act) that occurredduringthe fourth quarterof2023 that havematerially

affected, or arereasonablylikelytomaterially affect,the Company’s internal controloverfinancial

reporting.

Item 9B—Other Information (amountsinwholedollars)

Disclosurepursuant to Section219 of theIranThreatReduction and SyriaHuman RightsAct of 2012 and

Section13(r) of th eSecuritiesExchange Actof1934, as amended.

During 2023 we hadthree individual cardholdersunder abusinessmembership in thenameofthe

Embassy of theIslamic Republic of Iran at our subsidiary in Mexico.Gross revenue during2023

attributabletothe membership wasapproximately$1,276, and our estimatedprofitonthesetransactions

wasapproximately$100.The membership wascanceled duringthe second quarterof2023. The

Company does notintend to continue theseactivities.

During thefiscalquarterendedSeptember 3, 2023, no director or officerofthe Company adopted or

terminated aRule10b5-1trading arrangement or non-Rule 10b5-1trading arrangement,aseachtermis

defined in Item408(a)ofRegulationS-K.

Item 9C—DisclosureRegarding Foreign Jurisdictions that PreventInspections

NotApplicable.

PART III

Item 10—Directors, Executive Officersand CorporateGovernance

Information relating to theavailabilityofour code of ethics forsenior financialofficersand alistofour

executiveofficersappearinPartI,Item1of this Report. Theinformation requiredbythisItemconcerning

our directorsand nomineesfor director is incorporated hereinbyreferencetothe sections entitled

“Proposal 1: Election of Directors,”“Directors”and “Committees of theBoard” in Costco’s Proxy

Statementfor its2024annual meetingofshareholders, whic hwill be filedwiththe SEC within120 daysof

theend of our fiscalyear(“Proxy Statement”).

Item 11—Executive Compensation

Theinformation requiredbythisItemisincorporatedhereinbyreferencetothe sections entitled

“CompensationofDirectors,” “Executive Compensation,”and “CompensationDiscussion and Analysis” in

Costco’s ProxyStatement.

Item 12—Security Ownership of CertainBeneficialOwnersand Management andRelated

StockholderMatters

Theinformation requiredbythisItemisincorporatedhereinbyreferencetothe sectionentitled“Principal

Shareholders” and“Equity CompensationPlanInformation” in Costco’s ProxyStatement.

Item 13—CertainRelationships andRelated Transactions,and Director Independe nce

Theinformation requiredbythisItemisincorporated hereinbyreferencetothe sections entitled“Proposal

1: Election of Directors,” “Directors,” “Committees of theBoard,”“Shareholder Communications to the

Board,”“MeetingAttendance,”“Reportofthe CompensationCommitteeofthe BoardofDirectors,”

“Certain Relationshipsand Transactions”and “Reportofthe AuditCommittee” in Costco’s Proxy

Statement.

Item 14—PrincipalAccountingFeesand Services

Ourindependentregistered public accountingfirmisKPMGLLP,Seattle, WA,AuditorFirmID: 185.

Theinformation requiredbythisItemisincorporated hereinbyreferencetothe sections entitled

“Independent Public Accountants” in Costco’s ProxyStatement.

PART IV

Item 15—Exhibits, FinancialStatement Schedules

(a)Documentsfiledaspartofthisreportare as follows:

1. FinancialStatements:

Seethe listing of FinancialStatementsincluded as apartofthisForm10-KinItem8of

Part II.

2. FinancialStatement Schedules:

Allschedules have beenomitted becausethe requiredinformation is not present or is not

present in amountssufficient to require submission of theschedule, or becausethe

information requiredisincluded in theconsolidated financialstatements, including the

notesthereto.

(b)Exhibits: Therequiredexhibitsare filedaspartofthisAnnual ReportonForm10-Korare

incorporated herein by reference.

3.1

Articles of Incorporationas

amendedofCostcoWholesale

Corporation

10-K8/28/2022 10/5/2022

3.2

Bylaws as amendedofCostco

WholesaleCorporation

8-K8/10/2023

4.1

FirstSupplemental Indenture

between Costco Wholesale

Corporationand U.S. Bank

National Association, as Trustee,

dated as of March20, 2002

(incorporated by referenceto

Exhibits 4.1and 4.2tothe

Company's Current Reportonthe

Form 8-KfiledonMarch 25,2002)

8-K3/25/2002

4.2

Form of 1.375% Senior Notesdue

June 20, 2027

8-K4/17/2020

4.3

Form of 1.600% Senior Notesdue

April20, 2030

8-K4/17/2020

4.4

Form of 1.750% Senior Notesdue

April20, 2032

8-K4/17/2020

4.5

Form of 2.300% Senior Notesdue

May18, 2022

8-K5/16/2017

4.6

Form of 2.750% Senior Notesdue

May18, 2024

8-K5/16/2017

4.7

Form of 3.000% Senior Notesdue

May18, 2027

8-K5/16/2017

4.8

Description of CommonStock

10-K8/28/2022 10/5/2022

10.1*

Costco WholesaleExecutive

Health Plan

10-K9/2/2012 10/19/2012

10.2*

2019 IncentivePlan

DEF1412/17/2019

Incorporated by Reference

Exhibit

Number

ExhibitDescription

Filed

Herewith

FormPeriodEndedFilingDate

10.3*

SeventhRestated2002 Stock

IncentivePlan

DEF14A 12/19/2014

10.3.1*

2019 StockIncentive Plan

Restricted StockUnitAward

Agreement-Employee

10-Q11/24/2019 12/23/2019

10.3.2*

2019 StockIncentive Plan

Restricted StockUnitAward

Agreement -Non-U.S. Employee

10-Q11/24/2019 12/23/2019

10.3.3*

2019 StockIncentive Plan

Restricted StockUnitAward

Agreement-Non-Executive

Director

10-Q11/24/2019 12/23/2019

10.3.4*

2019 StockIncentive Plan Letter

Agreement for2020 Performance-

BasedRestrictedStock Units-

Executive

10-Q11/24/2019 12/23/2019

10.4*

Fiscal2023 ExecutiveBonus Plan

8-K11/9/2022

10.5*

ExecutiveEmployment

Agreement,effective January 1,

2017, between W. CraigJelinek

and Costco Wholesale

Corporation

10-Q11/20/2016 12/16/2016

10.5.1*

Extensionofthe Term of the

ExecutiveEmployment

Agreement,effective January 1,

2019, between W. CraigJelinek

and Costco Wholesale

Corporation

10-Q11/25/2018 12/20/2018

10.5.2*

Extensionofthe Term of the

ExecutiveEmployment

Agreement,effective January 1,

2020, between W. CraigJelinek

and Costco Wholesale

Corporation

10-Q11/24/2019 12/23/2019

10.5.3* Extensionofthe Term of the

ExecutiveEmployment

Agreement,effective January 1,

2021, between W. CraigJelinek

and Costco Wholesale

Corporation

10-Q11/22/2020 12/16/2020

10.5.4* Extensionofthe Term of the

ExecutiveEmployment

Agreement,effective January 1,

2022, between W. CraigJelinek

and Costco Wholesale

Corporation

10-Q11/21/2021 12/22/2021

10.5.5* Extensionofthe Term of the

ExecutiveEmployment

Agreement,effective January 1,

2023, between W. CraigJelinek

and Costco Wholesale

Corporation

10-Q11/20/2022 12/29/2022

Incorporated by Reference

Exhibit

Number

ExhibitDescription

Filed

Herewith

FormPeriodEndedFilingDate

10.6

Form of Indemnification

Agreement

14A 12/13/1999

10.7*

DeferredCompensationPlan

10-K9/1/2013 10/16/2013

10.8**

Citibank,N.A.Co-Branded Credit

Card Agreement

10-Q/A5/10/2015 8/31/2015

10.8.1**

FirstAmendment to Citi, N.A. Co-

Branded CreditCardAgreement

10-Q11/22/2015 12/17/2015

10.8.2**

Second Amendment to Citi, N.A.

Co-Branded CreditCard

Agreement

10-Q2/14/2016 3/9/2016

10.8.3**

ThirdAmendment to Citi, N.A. Co-

Branded CreditCardAgreement

10-K8/28/2016 10/12/2016

10.8.4**

Fourth Amendment to Citi, N.A.

Co-Branded CreditCard

Agreement

10-Q2/18/2018 3/15/2018

10.8.5**

Fifth Amendment to Citi, N.A. Co-

Branded CreditCardAgreement

10-Q2/17/2019 3/13/2019

10.8.6

SixthAmendment to Citi, N.A. Co-

BrandedCreditCardAgreement

10-K9/1/2019 10/11/2019

10.8.7SeventhAmendment to Citi, N.A.

Co-Branded CreditCard

Agreement

10-Q2/14/2021 3/10/2021

10.8.8

EighthAmendment to Citi, N.A.

Co-Branded CreditCard

Agreement

10-Q2/13/2022 3/10/2022

10.8.9

Ninth Amendment to Citi, N.A. Co-

Branded CreditCardAgreement

10-Q11/20/2022 12/29/2022

10.8.10

TenthAmendment to Citi, N.A. Co-

Branded CreditCardAgreement

10-Q11/20/2022 12/29/2022

10.8.11

EleventhAmendment to Citi, N.A.

Co-Branded CreditCard

Agreement

10-Q2/12/2023 3/9/2023

10.8.12

TwelfthAmendment to Citi, N.A.

Co-Branded CreditCard

Agreement

21.1

Subsidiaries of theCompany

23.1

Consent of Independent

Registered Public AccountingFirm

31.1

Rule 13a –14(a) Certifications

32.1

Section1350 Certifications

101.INS

InlineXBRLInstanceDocument

101.SCH

InlineXBRLTaxonomyExtension

SchemaDocument

Incorporated by Reference

Exhibit

Number

ExhibitDescription

Filed

Herewith

FormPeriodEndedFilingDate

101.CAL

InlineXBRLTaxonomyExtension

CalculationLinkbaseDocument

101.DEF

InlineXBRLTaxonomyExtension

Definition LinkbaseDocument

101.LAB

InlineXBRLTaxonomyExtension

Label LinkbaseDocument

101.PRE

InlineXBRLTaxonomyExtension

PresentationLinkbaseDocument

104

CoverPage InteractiveDataFile

(formattedasinlineXBRLand

contained in Exhibit101)

Incorporated by Reference

Exhibit

Number

ExhibitDescription

Filed

Herewith

FormPeriodEndedFilingDate

_____________________

* Management contract,compensatory plan or arrangement.

** Portions of this exhibithavebeen omittedunder aconfidentialtreatment order issued by theSecuritiesand Exchange

Commission.

#Certain information in this exhibithas been omittedbecauseitisboth(i) not material and (ii) customarily and actually treated by

theregistrant as privateorconfidential.

(c)FinancialStatement Schedules—None.

Item 16—Form10-KSummary

None.

SIGNATURES

Pursuant to therequirementsofSection 13 or 15(d) of theSecuritiesExchange Actof1934, theregistrant

has duly caused this reporttobesigned on itsbehalfbythe undersigned, thereuntodulyauthorized.

October 10, 2023

COSTCO WHOLESALE CORPORATION

(Registrant)

/s/RICHARD A. GALANTI

RichardA.Galanti

ExecutiveVicePresident,Chief FinancialOfficer

and Director

Pursuant to therequirementsofthe Securities Exchange Actof1934, this reporthas been signed below

by thefollowingpersons on behalfofthe registrant and in thecapacitiesand on thedates indicated.

October 10, 2023

/s/W.CRAIG JELINEK

/s/HAMILTON E. JAMES

W. CraigJelinek

ChiefExecutive Officerand Director

Hamilton E. James

Chairmanofthe Board

/s/RICHARD A. GALANTI

/s/DANIEL M. HINES

RichardA.Galanti

ExecutiveVicePresident,Chief Financial

Officerand Director

(Principal FinancialOfficer)

Daniel M. Hines

Senior Vice President and Corporate

Controller

(Principal AccountingOfficer)

/s/RON M. VACHRIS

/s/SUSAN L. DECKER

RonM.Vachris

President,Chief OperatingOfficer and

Director

SusanL.Decker

Director

/s/KENNETH D. DENMAN

/s/SALLY JEWELL

KennethD.Denman

Director

Sally Jewell

Director

/s/CHARLES T. MUNGER

/s/JEFFREY S. RAIKES

CharlesT.Munger

Director

JeffreyS.Raikes

Director

/s/JOHN W. STANTON

/s/MARY (MAGGIE) A. WILDEROTTER

John W. Stanton

Director

Mary (Maggie) A. Wilderotter

Director

Claudine Adamo**

Executive Vice President, COO - Merchandising

Marc-Andre Bally

Senior Vice President, General Manager - Eastern Canada Region

Patrick J. Callans**

Executive Vice President, Administration

Greg Carter II

Senior Vice President, General Manager - Los Angeles Region

Richard Chang

Senior Vice President, General Manager - Asia

Angelina Ch aparro

Senior Vice President, General Manager - Bay Area Region

Jeffrey Cole

Senior Vice President, Costco Wholesale Industries and

Business Development

Wendy Davis

Senior Vice President, General Manager - Southeast Region

Gino Dorico

Senior Vice President, Country Manager - Canada

Sheri Flies

Senior Vice President, Global Sustainability and Compliance

Caton Frates**

Executive Vice President, COO - Southwest Division

Richard A. Galanti**

Executive Vice President and Chief Financial Officer

Sarah George

Senior Vice President, Merchandising - Foods and Sundries

Darby Greek

Senior Vice President, General Manager - Texas Region

Peter Gruening

Senior Vice President, Membership, Marketing and Member

Service Centers

Daniel M. Hines

Senior Vice President, Corporate Controller

W. Craig Jelinek**

Chief Executive Officer

Teresa Jones

Senior Vice President, Depots and Traffic

Yoon Kim

Senior Vice President, Merchandising - Non-Foods

James Klauer**

Executive Vice President, COO - Northern Division

Bill Koza

Senior Vice President, General Manager - Midwest Region

David Messner

Senior Vice President, Real Estate Development

EXECUTIVE AND SENIOR OFFICERS

DIRECTORS AND OFFICERS

BOARD OF DIRECTORS

Ali Moayeri

Senior Vice President, Construction and Purchasing

Russ Miller**

Senior Executive Vice President, COO - Warehouse Operations,

U.S. and Mexico

Pietro Nenci

Senior Vice President, Merchandising - Corporate Foods,

Non-Foods and Ecommerce, Canada

Scott O'Brien

Senior Vice President, Merchandising - Fresh Foods

Mario Omoss

Senior Vice President, General Manager - Northwest Region

Rob Parker

Senior Vice President, Business Centers

Mike Parrott

Senior Vice President, Ecommerce

Pierre Riel**

Executive Vice President, COO - International Division

Yoram B. Rubanenko**

Executive Vice President, COO - Eastern Division

Adam Self

Senior Vice President, General Manager - Northeast Region

Walt Shafer

Senior Vice President, Lincoln Premium Poultry

Geoff Shavey

Senior Vice President, Merchandising - Non-Foods

Louie Silveira

Senior Vice President, General Manager - Europe

Richard Stephens

Senior Vice President, Pharmacy

John Sullivan**

Executive Vice President, General Counsel and Corporate Secretary

Sandy Torrey

Senior Vice President, Membership, Marketing, Member Service

Centers and Travel

Ron M. Vachris**

President and Chief Operating Of ficer

Azmina Virani

Senior Vice President, General Manager - Western Canada Region

Brenda Weber

Senior Vice President, Human Resources

W. Richard Wilcox

Senior Vice President, General Manager - San Diego Region

Terry Williams

Senior Vice President, CIO - Information Systems

** Executive Committee Member

Susan L. Decker(a)

Chief Executive Officer and Founder, Raftr;

Former President, Yahoo! Inc.

Kenneth D. Denman(a)*(c)

General Venture Partner, Sway Ventures; Former

President and Chief Executive Officer, Emotient, Inc.

Helena B. Foulkes

Executive Chair, Follett Higher Education Group;

Former President, CVS Pharmacy; Former Chief

Executive Officer, Hudson's Bay Company

Richard A. Galanti

Executive Vice President and

Chief Financial Officer, Costco Wholesale

Hamilton E. James

Chairman of the Board, Costco Wholesale;

Chairman, Jefferson River Capital;

Former Executive Vice Chairman, The Blackstone Group

W. Craig Jelinek

Chief Executive Officer, Costco Wholesale

Sally Jewell(a)(b)

Global Board Treasurer, The Nature Conservancy;

Former U.S. Secretary of the Interior; Former Chief Executive

Officer and Director, Recreational Equipment Inc.

Jeffrey S. Raikes(c)*

Co-Founder, The Raikes Foundation; Former Chief

Executive Officer, Bill and Melinda Gates Foundation

John W. Stanton(b)*

Chairman, First Avenue Entertainment LLLP; Trilogy

International Partners, Inc.; and Trilogy Equity Partners

Ron M. Vachris

President and Chief Operating Officer, Costco Wholesale

Maggie A. Wilderotter(b)(c)

Former Chief Executive Officer and Chairman, Grand Reserve Inn;

Former Chief Executive Officer and Executive Chairman, Frontier

Communications

Board Committees

(a) Audit Committee

(b) Compensation Committee

*2023 Committee Chair

ADDITIONAL INFORMATION

Shareholder Information

Copies of Costco's Annual Report on Form 10-Kand QuarterlyReports on Form 10-Qwillbeprovided to any

shareholder upon writtenrequesttoInvestorRelations,CostcoWholesaleCorporation, 999 LakeDrive,Issaquah,

Washington 98027. Internet users can access recent sales and earnings releases, the annual report and SEC filings,

as well as our Costco website, at www.costco.com.E-mail users can direct investor relations questions

to investor@costco.com. The SEC maintains a site that contains reports, proxy and information statements, and

other information regarding issuers, such as the Company, that file electronically with the SEC, at www.sec.gov.

Annual Meeting

Thursday, January 18, 2024 at 2:00 PM Pacific

www.virtualshareholdermeeting.com/COST2024

Independent Public Accountants

KPMG LLP

401 Union Street, Suite 2800

Seattle, WA 98101

Stock Exchange Listing

The Nasdaq Global Select Market

Stock Symbol: CO ST

Transfer Agent

Computershare

Costco Shareholder Relations

Correspondence should be mailed to:

P. O. Box 43006

Providence RI 02940

Overnight correspondence should be sent to:

150 Royall St., Suite 101

Canton, MA 02021

Telephone: (800) 249-8982

TDD for Hearing Impaired: (800) 490-1493

Outside U.S.: (201) 680-6578

Website: https://www.computershare.com/investor

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Acommitment to quality andvalueat

871locationsand on Costco.com