Costco 2007 Annual Report Download - page 79

The accounting policies of the segments are the same as those described in Note 1. All inter-segment
net sales and expenses are immaterial and have been eliminated in computing total revenue and
operating income.
(a) Certain Home Office operating expenses are incurred on behalf of our Canadian operations, but
are included in the United States operations above as those costs are not allocated internally and
generally come under the responsibility of our United States management team.
Note 13—Quarterly Financial Data (Unaudited)
The two tables that follow reflect the unaudited quarterly results of operations for fiscal 2007 and 2006.
52 Weeks Ended September 2, 2007
First
Quarter
12 Weeks
Second
Quarter
12 Weeks
Third
Quarter
12 Weeks
Fourth
Quarter
16 Weeks
Total
52 Weeks
REVENUE
Net sales ................... $13,852,321 $14,804,696(a) $14,341,520(a) $20,089,064 $63,087,601
Membership fees ............ 299,303 307,320 317,735 388,196(d) 1,312,554
Total revenue ............. 14,151,624 15,112,016 14,659,255 20,477,260 64,400,155
OPERATING EXPENSES
Merchandise costs ........... 12,388,958 13,251,752(b) 12,877,587(b) 17,931,405 56,449,702
Selling, general and
administrative ............. 1,382,467 1,487,991(c) 1,432,650 1,969,988 6,273,096
Preopening expenses ........ 22,727 7,486 9,022 15,928 55,163
Provision for impaired assets
and closing costs, net ...... 4,332 3,459 931 4,886 13,608
Operating income .......... 353,140 361,328 339,065 555,053 1,608,586
OTHER INCOME (EXPENSE)
Interest expense ............ (2,140) (3,620) (26,016) (32,303) (64,079)
Interest income and other ..... 27,111 36,526 42,838 59,009 165,484
INCOME BEFORE INCOME
TAXES .................... 378,111 394,234 355,887 581,759 1,709,991
Provision for income taxes .... 141,225 144,756 131,901 209,337 627,219
NET INCOME ................. $ 236,886 $ 249,478 $ 223,986 $ 372,422 $ 1,082,772
NET INCOME PER COMMON
SHARE:
Basic ...................... $ 0.52 $ 0.55 $ 0.50 $ 0.85 $ 2.42
Diluted ..................... $ 0.51 $ 0.54 $ 0.49 $ 0.83 $ 2.37
Shares used in calculation (000’s)
Basic ...................... 458,873 450,901 445,471 438,449 447,659
Diluted ..................... 467,836 461,575 455,889 448,733 457,641
Dividends per share ............ $ 0.130 $ 0.130 $ 0.145 $ 0.145 $ 0.55
(a) Includes a $224,384 and $228,169 decrease to net sales in the second and third quarter of fiscal 2007, respectively,
to reflect a change in the reserve for estimated sales returns (See Note 1- Revenue Recognition).
(b) Includes a $176,313 and $181,977 decrease to merchandise costs in the second and third quarter of fiscal 2007,
respectively, to reflect a change in the reserve for estimated sales returns (See Note 1- Revenue Recognition).
(c) Includes a $46,215 charge related to protecting employees from adverse tax consequences resulting from the
Company’s internal review of its historical stock option grant practices in fiscal 2006 of certain stock options (See
Note 6).
(d) Includes a $56,183 decrease to membership fees to adjust for a change in method of applying an accounting
principle and for cumulative timing errors related to the calculation of deferred membership income (See Note 1-
Revenue Recognition).
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