Costco 2003 Annual Report Download - page 37

Note 1—Summary of Significant Accounting Policies (Continued)
Net Income Per Common and Common Equivalent Share
The following data show the amounts used in computing earnings per share and the effect on income and
the weighted average number of shares of dilutive potential common stock.
52 Weeks Ended
August 31, 2003
52 Weeks Ended
September 1, 2002
52 Weeks Ended
September 2, 2001
Net income available to common stockholders used in basic
EPS ........................................... $721,000 $699,983 $602,089
Interest on convertible bonds, net of tax ................ 11,109 10,602 9,992
Net income available to common stockholders after
assumed conversions of dilutive securities ............ $732,109 $710,585 $612,081
Weighted average number of common shares used in basic
EPS (000’s) .................................... 456,335 453,650 449,631
Stock options (000’s) ............................... 3,646 6,267 6,851
Conversion of convertible bonds (000’s) ................ 19,345 19,345 19,345
Weighted number of common shares and dilutive potential
common stock used in diluted EPS (000’s) ............ 479,326 479,262 475,827
The diluted share base calculation for fiscal years ended August 31, 2003, September 1, 2002 and Sep-
tember 2, 2001, excludes 33,362,000, 6,908,000 and 7,108,000 stock options outstanding, respectively. These
options are excluded due to their anti-dilutive effect.
On November 30, 2001, the Company’s Board of Directors approved a stock repurchase program authoriz-
ing the repurchase of up to $500,000 of Costco Common Stock through November 30, 2004. Under the program,
the Company can repurchase shares at any time in the open market or in private transactions as market conditions
warrant. The repurchased shares would constitute authorized, but non-issued shares and would be used for gen-
eral corporate purposes, including stock option grants under stock option programs. To date, no shares have been
repurchased under this program.
Recent Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 143, “Accounting for
Asset Retirement Obligations,” which provides the accounting requirements for retirement obligations associated
with tangible long-lived assets. SFAS No. 143 requires entities to record the fair value of a liability for an asset
retirement obligation in the period in which it is incurred. SFAS No. 143 was effective for the Company’s 2003
fiscal year. The adoption of SFAS No. 143 did not have a material impact on the Company’s consolidated results
of operations, financial position or cash flows.
In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-
Lived Assets,” effective for the Company’s 2003 fiscal year. This Statement supersedes FASB Statement No.
121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and
other related accounting guidance. The adoption of SFAS No. 144 did not have a material impact on the Compa-
ny’s consolidated results of operations, financial position, or cash flows.
In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal
Activities.” This statement addresses financial accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, “Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring).” This statement requires that a liability for a cost associated with an exit or disposal activity
should be recognized at fair value when the liability is incurred. SFAS No. 146 was effective for the Company’s
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