Costco 2000 Annual Report Download

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YEAR ENDED SEPTEMBER 3, 2000
2000
costco.com

Table of contents

  • Page 1
    YEAR ENDED SEPTEMBER 3, 2000 2000 costco.com

  • Page 2
    ... non-warehouse assets to Price Enterprises, Inc., the Company changed its name to Costco Companies, Inc. In August 1999, the Company reincorporated from Delaware to Washington and changed its name to Costco Wholesale Corporation, which trades on the NASDAQ under the symbol ""COST''. Costco operates...

  • Page 3
    ...Accounting Change 26,976 2000 * Income from continuing operations ** Income from continuing operations excluding asset impairment/ warehouse closing costs and/or accounting change Comparable Sales Growth 11,500 12% 11% 10% 9% 10% 10,000 11,000 10,500 Membership Gold Star Members 4,400 Business...

  • Page 4
    ...Ã'scal year 2000, compared to seven warehouses replaced the prior year. New markets opened last year included Memphis, Tennessee; Cincinnati, Ohio; Ft. Meyers and Naples, Florida; Aberdeen, Scotland; Haydock, England; and Xalapa, Mexico. In Ã'scal 2001, our plans call for 36 to 40 new warehouses (18...

  • Page 5
    ... merchandising and operational initiatives. In summary, we believe Costco made strong progress in many areas in Ã'scal 2000 ÃŒ achieving record sales and earnings, strengthening our balance sheet and positioning our Company for long-term growth and proÃ'tability and increased shareholder value. We...

  • Page 6
    349 LOCATIONS AS OF DECEMBER 31, 2000 ALASKA NEWFOUNDLAND SOUTH KOREA JAPAN UNITED KINGDOM Canada (59) TAIWAN HAWAII U.S.A. (251) Alabama (1) Huntsville Alaska (3) Anchorage N. Anchorage Juneau Arizona (11) Gilbert Glendale Phoenix N. Phoenix Prescott Scottsdale Superstition Springs Tempe ...

  • Page 7
    ..., including the following as of December 31, 2000: ANCILLARY BUSINESSES United States Canada Other International Total Pharmacy Optical Dispensing Centers One-Hour Photo Food Court and Hot Dog Stands Hearing Aid Centers Copy Centers Print Shops Gas Stations 238 239 246 246 66 9 1 120...

  • Page 8
    ... 53 Weeks Total 52 Weeks REVENUE Net sales Membership fees and otherÏÏÏ Total revenue OPERATING EXPENSES Merchandise costs Selling, general and administrative Preopening expenses Provision for impaired assets and warehouse closing costs Operating income OTHER INCOME (EXPENSE) Interest...

  • Page 9
    ... (loss) Shares used in calculation (000's) Balance Sheet Data Working capital (deÃ'cit) Property and equipment, net Total assets Short-term debt Long-term debt and capital lease obligations Stockholders' equity SALES INCREASE (DECREASE) FROM PRIOR YEAR Total Comparable units MEMBERS AT YEAR END (000...

  • Page 10
    1996 240 20 (8) 252 1995 221 24 (5) 240 1994 200 29 (8) 221 1993 170 37 (7) 200 1992 140 31 (1) 170 1991 119 23 (2) 140 $19,214 352 19,566 17,345 1,691 29 10 19,075 491 (78) 11 Ì 424 175 249 Ì 249 Ì Ì 249 100.0% 1.8 101.8 90.3 8.8 0.1 Ì 99.2 2.6 (0.4) Ì Ì 2.2 0.9 1.3 Ì 1.3 Ì Ì 1.3%...

  • Page 11
    ... SEC. The Company's Board of Directors approved a 2-for-1 stock split of Costco Common Stock whereby shareholders of record received one additional share of common stock for every share held on the record date of December 24, 1999. The common stock began trading at a post-split price on January 14...

  • Page 12
    ... sales, during Ã'scal 1999. During Ã'scal 2000, the Company opened 25 new warehouses compared to 21 new warehouses during Ã'scal 1999. Pre-opening expenses also include costs related to remodels, expanded fresh foods and ancillary operations at existing warehouses, as well as expanded international...

  • Page 13
    ... (dollars in thousands) Expansion Plans Costco's primary requirement for capital is the Ã'nancing of the land, building and equipment costs for new warehouses plus the costs of initial warehouse operations and working capital requirements, as well as additional capital for international expansion...

  • Page 14
    ...The acquisition was funded with cash and cash equivalents on hand. Costco Wholesale UK Limited currently operates ten Costco warehouse locationsÃŒeight in England and two in Scotland. Bank Credit Facilities and Commercial Paper Programs (all amounts stated in thousands of US dollars) The Company has...

  • Page 15
    ... equipment and merchandise inventory related to the Company's expansion program oÃ...set by a decrease in cash and cash equivalents and short-term investments. Stock Repurchase Program (dollars in thousands except per share data) On November 5, 1998, the Company announced that its Board of Directors...

  • Page 16
    ...xed interest rate of the Notes. The Company's short-term investments as of September 3, 2000, include corporate notes and bonds and certiÃ'cates of deposit with maturities of less than sixty days. These investments are classiÃ'ed as available for sale. If interest rates were to increase or decrease...

  • Page 17
    ... REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Costco Wholesale Corporation: We have audited the accompanying consolidated balance sheets of Costco Wholesale Corporation (a Washington corporation) and subsidiaries (""Costco'') as of September 3, 2000 and August 29, 1999, and the related consolidated...

  • Page 18
    COSTCO WHOLESALE CORPORATION CONSOLIDATED BALANCE SHEETS (dollars in thousands except par value) ASSETS September 3, 2000 August 29, 1999 CURRENT ASSETS Cash and cash equivalents 524,505 $ 440,586 Short-term investments 48,026 256,688 Receivables, net 174,375 168,648 Merchandise inventories, net...

  • Page 19
    ... WHOLESALE CORPORATION CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except per share data) 53 Weeks Ended September 3, 2000 52 Weeks Ended August 29, 1999 52 Weeks Ended August 30, 1998 REVENUE Net sales Membership fees and other Total revenue OPERATING EXPENSES Merchandise costs...

  • Page 20
    COSTCO WHOLESALE CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the 53 weeks ended September 3, 2000, 52 weeks ended August 29, 1999 and August 30, 1998 (in thousands) Additional Paid-In Capital Other Accumulated Comprehensive Income/(Loss) Common Stock Shares Amount Retained ...

  • Page 21
    ...amortization Accretion of discount on zero coupon notes Net gain on sale of property and equipment and other Provision for impaired assets Change in deferred income taxes Tax beneÃ't from exercise of stock options Cumulative eÃ...ect of accounting change, net of tax Change in receivables, other...

  • Page 22
    ...in Japan. As of September 3, 2000, the Company also operated (through a 50%-owned joint venture) 18 warehouses in Mexico. The Company's investment in the Costco Mexico joint venture and in other unconsolidated joint ventures that are less than majority owned are accounted for under the equity method...

  • Page 23
    ... PLC its 20% equity interest in Costco Wholesale UK Limited, bringing the Company's ownership in Costco Wholesale UK Limited to 80%. The acquisition was funded with cash and cash equivalents on hand. Costco Wholesale UK Limited currently operates ten Costco warehouse locations Ì eight in England...

  • Page 24
    ..., except per share data) Note 1ÃŒSummary of SigniÃ'cant Accounting Policies (Continued) Accounts Payable The Company's banking system provides for the daily replenishment of major bank accounts as checks are presented. Accordingly, included in accounts payable at September 3, 2000 and August 29...

  • Page 25
    ... 11,890 19,977 471,120 $459,842 9,529 $469,371 431,013 11,920 20,438 463,371 All per share data reÃ-ects a 2-for-1 stock split which was approved by the Company's Board of Directors for shareholders of record on December 24,1999. The common stock began trading at a post-split price on January 14...

  • Page 26
    ... in private transactions as market conditions warrant. The Company expects to fund stock purchases from cash and short-term investments on hand, as well as from future operating cash Ã-ows. The repurchased shares would constitute authorized but unissued shares and would be used for general corporate...

  • Page 27
    COSTCO WHOLESALE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) Note 1ÃŒSummary of SigniÃ'cant Accounting Policies (Continued) In March 2000, the Financial Accounting Standards Board, or FASB, released FASB Interpretation No. 44, ""...

  • Page 28
    ... 2000 and 1999: Category of Aggregate Short-Term Borrowings Maximum Amount Outstanding During the Period Average Amount Outstanding During the Period Weighted Average Interest Rate During the Period Period ended September 3, 2000 Bank borrowings: U.S Canadian Other International Commercial Paper...

  • Page 29
    ...periodic rental increases based on the price indices and some of the leases provide for rents based on the greater of minimum guaranteed amounts or sales volume. Contingent rents have not been material. Additionally, the Company leases certain equipment and Ã'xtures under short-term operating leases...

  • Page 30
    ... shares of its common stock upon the exercise of stock options and up to 3,333,332 shares through stock grants. Prior to the merger of The Price Company and Costco Wholesale Corporation, various incentive and non-qualiÃ'ed stock option plans existed which allowed certain key employees and directors...

  • Page 31
    ....35, $15.50, and $9.86, respectively. The following table summarizes information regarding stock options outstanding at September 3, 2000: Options Outstanding Remaining Contractual Number Life(1) Price(1) Options Exercisable Number Price(1) Range of Prices $5.67 Ã" $13.44 12,758 $14.06 Ã" $36.91...

  • Page 32
    COSTCO WHOLESALE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) Note 5ÃŒRetirement Plans (Continued) California union employees participate in a deÃ'ned beneÃ't plan sponsored by their union. The Company makes contributions based upon...

  • Page 33
    ... or results of its operations. Note 8ÃŒSegment Reporting In Ã'scal 1999, the Company adopted SFAS No. 131, ""Disclosures about Segments of an Enterprise and Related Information,'' which established reporting and disclosure standards for an enterprise's operating segments. Operating segments are de...

  • Page 34
    COSTCO WHOLESALE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in thousands, except per share data) Note 8ÃŒSegment Reporting (Continued) The Company and its subsidiaries are principally engaged in the operation of membership warehouses in the United States, Canada, ...

  • Page 35
    ... Market's National Market under the symbol ""COST.'' The following table sets forth the closing high and low sales prices of Costco Common Stock for the period January 1, 1998 through December 8, 2000. The quotations are as reported in published Ã'nancial sources. The Company's Board of Directors...

  • Page 36
    ... the Board Don Burdick Senior Vice President, Information Systems Charles V. Burnett Senior Vice President, Pharmacy Roger A. Campbell Senior Vice President, General ManagerÌ Southeast Region Richard Chavez Senior Vice PresidentÌAsia Robert E. Craves Senior Vice President, Community Giving Hubert...

  • Page 37
    ... Photo, Optical & Hearing Aids Steve Pappas Country ManagerÃŒKorea Shawn Parks OperationsÃŒLos Angeles Region Roger E. Peterson OperationsÃŒSan Diego Region Robert L. Pugmire GMM-Softlines C.J. Ray GMM-FoodsÃŒBay Area Region Pierre Riel OperationsÃŒEastern Canada Region George R. Roe Operations...

  • Page 38
    ... INFORMATION A copy of Costco's annual report to the Securities and Exchange Commission on Form 10-K and quarterly reports on Form 10-Q will be provided to any shareholder upon written request directed to Investor Relations, Costco Wholesale Corporation, 999 Lake Drive, Issaquah, Washington...

  • Page 39
    Printed on recycled paper