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COSTCO WHOLESALE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share data)
Note 1—Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of Costco Wholesale Corporation, a
Washington corporation, and its subsidiaries (“Costco” or the “Company”). All material inter-company
transactions between the Company and its subsidiaries have been eliminated in consolidation.
Costco operates membership warehouses that offer low prices on a limited selection of nationally
branded and selected private label products in a wide range of merchandise categories in no-frills, self-
service warehouse facilities. At August 31, 2008, Costco operated 512 warehouses: 394 in the United
States and 4 in Puerto Rico; 75 in Canada; 20 in the United Kingdom; 8 in Japan; 6 in Korea; and 5 in
Taiwan. The Company’s 50%-owned joint venture in Mexico operates an additional 31 warehouses.
In connection with the adoption of Financial Accounting Standards Board (FASB) Interpretation No. 48,
“Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109” (FIN 48),
the Company adjusted its beginning retained earnings balance for fiscal 2008 in the accompanying
consolidated financial statements. See Note 8 for additional information on FIN 48.
The Company, in accordance with Staff Accounting Bulletin No. 108, “Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (SAB
108), adjusted its beginning retained earnings for fiscal 2006 in the accompanying consolidated
financial statements. See Note 11 for additional information on the adoption of SAB 108.
Fiscal Year End
Our fiscal year ends on the Sunday closest to August 31. References to 2008 and 2007 relate to the
52-week fiscal years ended August 31, 2008 and September 2, 2007, respectively. References to 2006
relate to the 53-week fiscal year ended September 3, 2006.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to prior fiscal year amounts or balances to conform to the
presentation adopted in the current fiscal year.
Cash and Cash Equivalents
The Company considers as cash and cash equivalents all highly liquid investments with a maturity of
three months or less at the date of purchase and proceeds due from credit and debit card transactions
with settlement terms of less than one week. Of the total cash and cash equivalents of $2,619,429 at
August 31, 2008 and $2,779,733 at September 2, 2007, credit and debit card receivables were
$787,511 and $655,205, respectively.
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