Costco 2010 Annual Report Download - page 52

COSTCO WHOLESALE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except 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, its wholly-owned subsidiaries, and subsidiaries in which it has a controlling
interest (“Costco” or the “Company”). The Company reports its noncontrolling interests in consolidated
subsidiaries as a component of equity separate from the Company’s equity. All material inter-company
transactions among 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 select private label products in a wide range of merchandise categories in no-frills, self-
service facilities. At August 29, 2010, Costco operated 540 warehouses in 40 states and Puerto Rico
(416 locations), nine Canadian provinces (79 locations), the United Kingdom (22 locations), Japan
(nine locations), Korea (seven locations), Taiwan (six locations) and Australia (one location), as well as
32 locations in Mexico, through a 50%-owned joint venture.
Fiscal Year End
The Company’s fiscal year ends on the Sunday closest to August 31. References to 2010, 2009, and
2008 relate to the 52-week fiscal years ended August 29, 2010, August 30, 2009, and August 31,
2008, respectively.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles (GAAP) 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 and assumptions.
Reclassifications
Certain reclassifications have been made to prior fiscal year amounts or balances to conform to the
presentation in the current fiscal year. Additionally, as a result of the application of a new accounting
pronouncement for noncontrolling interests in consolidated entities, as discussed below in Recently
Adopted Accounting Pronouncements, the Company:
• Reclassified to noncontrolling interests, a component of total equity, $80 at August 31, 2009,
which was previously reported as minority interest on our consolidated balance sheet, after
the correction of an immaterial error of $6 relating to the noncontrolling interest component of
accumulated other comprehensive income. A new subtotal, total Costco stockholders’ equity,
refers to the equity attributable to stockholders of Costco;
• Reported as separate captions within our consolidated statements of income, net income
including noncontrolling interests, net income attributable to noncontrolling interests and net
income attributable to Costco;
• Utilized net income including noncontrolling interests, as the starting point on our consolidated
statements of cash flows in order to reconcile net income including noncontrolling interests to
cash flows from operating activities; and
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