Costco 2004 Annual Report Download - page 40

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data) (Continued)
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 (EPS) and the effect on income
and the weighted average number of shares of dilutive potential common stock.
52 Weeks Ended
August 29, 2004
52 Weeks Ended
August 31, 2003
52 Weeks Ended
September 1, 2002
Net income available to common stockholders used in basic
EPS ............................................ $882,393 $721,000 $699,983
Interest on convertible bonds, net of tax ................. 11,607 11,109 10,602
Net income available to common stockholders after assumed
conversions of dilutive securities ..................... $894,000 $732,109 $710,585
Weighted average number of common shares used in basic
EPS(000’s)...................................... 459,223 456,335 453,650
Stockoptions(000’s) ................................ 3,892 3,646 6,267
Conversion of convertible bonds (000’s) ................. 19,344 19,345 19,345
Weighted number of common shares and dilutive potential
commonstockusedindilutedEPS(000’s) ............. 482,459 479,326 479,262
The diluted share base calculation for fiscal years ended August 29, 2004, August 31, 2003 and Sep-
tember 1, 2002, excludes 24,747,815, 33,362,000 and 6,908,000 stock options outstanding, respectively. These
options are excluded due to their anti-dilutive effect.
Dividends
Costco’s Board of Directors declared two quarterly cash dividends of $0.10 per share in fiscal 2004. The
first quarterly cash dividend of $0.10 per share, in the amount of $45,939, was paid May 31, 2004 to shareholders
of record at the close of business on May 10, 2004. The second quarterly cash dividend of $0.10 per share, in the
amount of $46,198, was paid August 27, 2004, to shareholders of record at the close of business on July 23,
2004. The Company presently expects to pay a cash dividend on a quarterly basis going forward.
Stock Repurchase Program
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 could repurchase shares at any time in the open market or in private transactions as market con-
ditions warrant. The repurchased shares would constitute authorized, but non-issued shares and would be used for
general corporate purposes, including stock option grants under stock option programs. On October 25, 2004, the
Board of Directors renewed the program for another three years. To date, no shares have been repurchased under
either program.
Recent Accounting Pronouncements
In March 2004, the Financial Accounting Standards Board’s (FASB) Emerging Issues Task Force (EITF)
reached a consensus on EITF Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments,” (EITF 03-1). The guidance prescribes a three-step model for determining
whether an investment is other-than-temporarily impaired and requires disclosures about unrealized losses on
investments. The accounting guidance is effective for reporting periods beginning after June 15, 2004, while the
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