Costco 2006 Annual Report Download - page 19

Download and view the complete annual report

Please find page 19 of the 2006 Costco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 76

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76

We are involved in a number of legal proceedings, and while we cannot predict the outcomes of
such proceedings and other contingencies with certainty, some of these outcomes may
adversely affect our operations or increase our costs.
We are involved in a number of legal proceedings, including consumer, employment, tort and other
litigation. We cannot predict with certainty the outcomes of these legal proceedings and other
contingencies, including environmental remediation and other proceedings commenced by government
authorities. The outcome of some of these legal proceedings and other contingencies could require us
to take, or refrain from taking, actions which could adversely affect our operations or could require us
to pay substantial amounts of money. Additionally, defending against these lawsuits and proceedings
may involve significant expense and diversion of management’s attention and resources. Our business
requires compliance with a great variety of laws and regulations. Failure to achieve compliance could
subject us to lawsuits and other proceedings, and lead to damage awards, fines and penalties.
Failure of our internal control over financial reporting could harm our business and financial
results.
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting. Internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting for external purposes in accordance with U.S.
generally accepted accounting principles. Internal control over financial reporting includes: maintaining
records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable
assurance that transactions are recorded as necessary for preparation of the financial statements;
providing reasonable assurance that our receipts and expenditures of our assets are made in
accordance with management authorization; and providing reasonable assurance that unauthorized
acquisition, use or disposition of our assets that could have a material effect on the financial
statements would be prevented or detected on a timely basis. Because of its inherent limitations,
internal control over financial reporting is not intended to provide absolute assurance that a
misstatement of our financial statements would be prevented or detected. Any failure to maintain an
effective system of internal control over financial reporting could limit our ability to report our financial
results accurately and timely or to detect and prevent fraud.
The foregoing list of important factors is not exclusive and we do not undertake to revise any forward-
looking statement to reflect events or circumstances that occur after the date the statement is made.
17