Costco 1999 Annual Report Download - page 33

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COSTCO COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share data)
Note 4—Stock Options (Continued)
At August 30, 1998 and August 31, 1997, there were 5,926 and 7,118 options exercisable at weighted
average exercise prices of $19.65 and $18.85, respectively.
Note 5—Retirement Plans
The Company has a 401(k) Retirement Plan that is available to all U.S. employees who have one year
or more of service, except California union employees. The plan allows pre-tax deferral against which the
Company matches 50% of the first one thousand dollars of employee contributions. In addition, the
Company will provide each eligible participant a contribution based on salary and years of service. The
Company has a defined contribution plan for Canadian and United Kingdom employees and contributes a
percentage of each employee’s salary.
California union employees participate in a defined benefit plan sponsored by their union. The
Company makes contributions based upon its union agreement. In June 1995, the Company also estab-
lished a 401(k) plan for the California union employees. The plan currently allows pre-tax deferral against
which the Company matches 50% of the first four hundred dollars of employee contributions.
Amounts expensed under these plans were $85,974, $73,764, and $59,960 for fiscal 1999, 1998, and
1997, respectively. The Company has defined contribution 401(k) and retirement plans only, and thus has
no liability for post-retirement benefit obligations under the SFAS No. 106 ‘‘Employer’s Accounting for
Post-retirement Benefits Other than Pensions.’’
Note 6—Income Taxes
The provisions for income taxes for fiscal 1999, 1998, and 1997 are as follows:
1999 1998 1997
Federal:
Current ............................. $259,104 $214,788 $151,433
Deferred ............................ (70,248) (3,415) (13,249)
Total federal .......................... 188,856 211,373 138,184
State:
Current ............................. 54,701 49,881 34,666
Deferred ............................ (13,418) (2,231) (3,178)
Total state ............................ 41,283 47,650 31,488
Foreign:
Current ............................. 52,416 47,096 40,192
Deferred ............................ (17,692) 442 (1,732)
Total foreign .......................... 34,724 47,538 38,460
Total provision for income taxes ............. $264,863(a) $306,561 $208,132
(a) Total provision for income taxes includes a provision on income before the cumulative effect of
accounting change of $343,545 and a tax benefit of $78,682 resulting from the cumulative effect of
accounting change.
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