Costco Wholesale Corporation Releases Fourth Quarter and Fiscal Year 2005 Results of Operations and September Sales Results, and Announces over $400 Million in Recent Stock Repurchases and Plan to Repurchase up to an Additional $1 Billion.ISSAQUAH, Wash. -- Costco Costco Wholesale Corporation (NASDAQ: COST) is the largest membership warehouse club chain in the world based on sales volume, headquartered in Issaquah, Washington, United States,[1] with its flagship warehouse in nearby Seattle. Wholesale Corporation (Nasdaq: COST) announced today its results of operations for the 16 weeks (fourth quarter) and the 52 weeks (fiscal year) ended August 28, 2005. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the 16-week fourth quarter ended August 28, 2005, increased 10% to $16.36 billion from $14.83 billion during the 16-week fourth quarter ended August 29, 2004. Comparable warehouse sales during the 16-week fourth quarter of fiscal 2005 increased 7% over the comparable 16-week period in the prior fiscal year. Net sales for fiscal 2005, the 52 weeks ended August 28, 2005, were $51.86 billion, an increase of 10% from $47.15 billion during the prior 52-week fiscal year ended August 29, 2004. Comparable warehouse sales increased 7% over the comparable 52-week period of fiscal 2004. Net income for the 16-week fourth quarter increased to $354.7 million, or $0.73 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, from $296.8 million, or $.62 per diluted share, during the 16-week fourth quarter of fiscal 2004, representing an 18% increase in earnings per share. Net income during the quarter was positively impacted by lower income tax expense, reflecting a tax benefit recorded with respect to unremitted earnings (of approximately $0.04 per diluted share), and lower state tax expense (of approximately $.03 per diluted share), resulting in a tax rate of 28.90% for the quarter compared to 37.00% in the fourth quarter of the prior fiscal year. Excluding these items, the Company estimates its "normalized" fourth quarter tax rate would have been 35.8%, and its net income would have been $320.2 million, or $0.66 per diluted share. Net income for fiscal 2005 increased to $1,063.1 million, or $2.18 per diluted share, from $882.4 million, or $1.85 per diluted share during fiscal year 2004, representing an 18% increase in earnings per share. Net income during fiscal 2005 was impacted by two non-recurring items previously reported concerning the second quarter: a $52.1 million income tax benefit (covering the years 1996-2003) resulting primarily from the settlement of a transfer pricing Transfer pricing refers to the pricing of goods and services within a multi-divisional organization, particularly in regard to cross-border transactions. For example, goods from the production division may be sold to the marketing division, or goods from a parent company may be dispute between the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Canada; and a cumulative pre-tax, non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. to preopening expenses of $16.0 million related to an adjustment of the Company's method of accounting for leases (entered into over the past twenty years TWENTY YEARS. The lapse of twenty years raises a presumption of certain facts, and after such a time, the party against whom the presumption has been raised, will be required to prove a negative to establish his rights. 2. ). Exclusive of these items and the tax benefit with respect to unremitted earnings recorded in the fourth quarter, net income for fiscal 2005 would have been $998.3 million or $2.04 per diluted share, a 10% increase in earnings per share over the prior fiscal year. The Company today also reported net sales of $5.14 billion for the month of September, five weeks ended October 2, 2005, an increase of 13% from $4.53 billion in the same five-week period last year. Comparable sales increased 11% during this five-week period (10% domestically and 13% internationally). The U.S. figure includes the benefit from significant recent gasoline gasoline or petrol, light, volatile mixture of hydrocarbons for use in the internal-combustion engine and as an organic solvent, obtained primarily by fractional distillation and "cracking" of petroleum, but also obtained from natural gas, by price inflation, with the average sales price per gallon gallon: see English units of measurement. of gasoline up 47% year-over-year in the month of September. Excluding gasoline price inflation, U.S. comparable sales in September would have been 8%. The Company also announced today that its Board of Directors authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: an additional stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program of up to $1 billion of Costco Common Stock. This is in addition to the previously approved $500 million stock repurchase program, under which approximately $413 million has been expended ex·pend tr.v. ex·pend·ed, ex·pend·ing, ex·pends 1. To lay out; spend: expending tax revenues on government operations. See Synonyms at spend. 2. to date, repurchasing 9.2 million shares of stock at an average cost of $44.87 per share. Under these programs the Company may repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. shares at any time in the open market or in private transactions as market conditions warrant. The Company expects to fund stock purchases from cash and cash equivalents and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments on hand. A conference call to discuss these fiscal 2005 fourth quarter and year-end results, as well as the September sales results, is scheduled for 8:00 a.m. (PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT ) today, October 6, 2005, and is available via a webcast on www.costco.com (go to Customer Service, About Costco, webcasts and click on the "Play Webcast" icon). Costco currently operates 461 warehouses, including 339 in the United States and Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. , 65 in Canada, 16 in the United Kingdom, five in Korea, four in Taiwan, five in Japan and 27 in Mexico. The Company also operates Costco Online, an electronic commerce web site, at www.costco.com and at www.costco.ca in Canada. The Company plans to open eleven additional new warehouses (including the relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. of one existing warehouse to a larger and better-located facility) prior to the end of the 2005 calendar year, and a total of approximately 28-30 new warehouses during the entire 2006 fiscal year. Certain statements contained in this release constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. For these purposes, forward-looking statements are statements that address activities, events, conditions or developments that the Company expects, or anticipates may occur in the future. Such forward-looking statements involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated by such statements. These risks and uncertainties include, but are not limited to, domestic and international economic conditions including exchange rates, the effects of competition and regulation, consumer and small business spending patterns and debt levels, rising costs associated with employees (including health care and workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. costs), conditions affecting the acquisition, development, ownership or use of real estate, actions of vendors, and other risks identified from time to time in the Company's public statements and reports filed with the SEC.
COSTCO WHOLESALE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(unaudited)
16 Weeks 16 Weeks 52 Weeks 52 Weeks
Ended Ended Ended Ended
August 28, August 29, August 28, August 29,
2005 2004 2005 2004
------------ ------------ ------------ ------------
REVENUE
Net sales.........$16,362,437 $14,832,939 $51,862,072 $47,145,712
Membership fees... 339,811 306,362 1,073,156 961,280
------------ ------------ ------------ ------------
Total revenue.... 16,702,248 15,139,301 52,935,228 48,106,992
OPERATING EXPENSES
Merchandise costs. 14,654,749 13,229,605 46,346,961 42,092,016
Selling, general
and administrative 1,562,908 1,430,131 5,044,341 4,597,877
Preopening
expenses......... 10,374 11,558 53,230 30,451
Provision for
impaired assets
and closing
costs, net....... 6,593 2,500 16,393 1,000
------------ ------------ ------------ ------------
Operating income. 467,624 465,507 1,474,303 1,385,648
OTHER INCOME
(EXPENSE)
Interest expense.. (7,339) (10,911) (34,437) (36,651)
Interest income
and other........ 38,568 16,464 109,096 51,627
------------ ------------ ------------ ------------
INCOME BEFORE
INCOME TAXES...... 498,853 471,060 1,548,962 1,400,624
Provision for
income taxes..... 144,154 174,292 485,870 518,231
------------ ------------ ------------ ------------
NET INCOME.........$ 354,699 $ 296,768 $ 1,063,092 $ 882,393
============ ============ ============ ============
NET INCOME PER
COMMON SHARE:
Basic.............$ 0.74 $ 0.64 $ 2.24 $ 1.92
============ ============ ============ ============
Diluted...........$ 0.73 $ 0.62 $ 2.18 $ 1.85
============ ============ ============ ============
Shares used in
calculation (000's)
Basic............. 476,636 461,268 473,945 459,223
Diluted........... 491,392 485,073 492,035 482,459
Dividends per
share.............$ 0.115 $ 0.10 $ 0.43 $ 0.20
|
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion