Costco 2009 Annual Report Download - page 21

Our international operations subject us to risks associated with the legislative, judicial,
accounting, regulatory, political and economic factors specific to the countries or regions in
which we operate, which could adversely affect our financial performance.
Our international operations could form a larger portion of our business in future years. Future
operating results internationally could be negatively affected by a variety of factors, many beyond our
control. These factors include political conditions, economic conditions, regulatory constraints, currency
regulations and exchange rates, and other matters in any of the countries or regions in which we
operate, now or in the future. Other factors that may impact international operations include foreign
trade, monetary and fiscal policies both of the United States and of other countries, laws and
regulations of foreign governments and the United States (such as the Foreign Corrupt Practices Act),
agencies and similar organizations, and risks associated with having major facilities located in
countries which have been historically less stable than the United States. Risks inherent in
international operations also include, among others, the costs and difficulties of managing international
operations, adverse tax consequences and greater difficulty in enforcing intellectual property rights.
Additionally, foreign currency exchange rates and fluctuations may have an impact on our future costs
or on future cash flows from our international operations.
Market expectations for our financial performance is high.
We believe that the price of our stock generally reflects high market expectations for our future
operating results. Any failure to meet or delay in meeting these expectations, including our comparable
warehouse sales growth rates, earnings and earnings per share or new warehouse openings, could
cause the market price of our stock to decline, as could changes in our dividend or share repurchase
policies.
We rely extensively on computer systems to process transactions, summarize results and
manage our business. Disruptions in both our primary and back-up systems could harm our
business.
Although we have independent, redundant, and primary and secondary computer systems, given the
number of individual transactions we have each year, it is important that we maintain uninterrupted
operation of our business-critical computer systems. Our computer systems, including our back-up
systems, are subject to damage or interruption from power outages, computer and telecommunications
failures, computer viruses, internal or external security breaches, catastrophic events such as fires,
earthquakes, tornadoes and hurricanes, and errors by our employees. If our computer systems and our
back-up systems are damaged or cease to function properly, we may have to make significant
investment to fix or replace them, and we may suffer interruptions in our operations in the interim. Any
material interruption in our computer systems may have a material adverse effect on our business or
results of operations. The costs, potential problems, and interruptions associated with implementing
technology initiatives could disrupt or reduce the efficiency of our operations in the short term. These
initiatives might not provide the anticipated benefits or provide them in a delayed or more costly
manner.
Natural disasters or other catastrophic events could unfavorably affect our financial performance.
Natural disasters, such as hurricanes or earthquakes, particularly in California or in Washington state,
where our centralized operating systems and administrative personnel are located, could unfavorably
affect our operations and financial performance. Such events could result in physical damage to one or
more of our properties, the temporary closure of one or more warehouses or depots, the temporary
lack of an adequate work force in a market, the temporary or long-term disruption in the supply of
products from some local and overseas suppliers, the temporary disruption in the transport of goods
from overseas, delays in the delivery of goods to our depots or warehouses within a country in which
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