Costco 2010 Annual Report Download - page 71

Download and view the complete annual report

Please find page 71 of the 2010 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 88

  • 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
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88

Amounts remaining under stock repurchase authorizations of the Board of Directors at the end of 2010
are detailed below:
Date Authorized
Amount
Authorized
Amount
Repurchased
Amount
Remaining
Prior to November 2007 ....................... $4,800 $4,800 $ 0
November 2007 (expires in November 2010) ...... 1,000 566 434
July 2008 (expires in July 2011) ................. 1,000 0 1,000
Total ................................... $6,800 $5,366 $1,434
Accumulated Other Comprehensive Income
The components of accumulated other comprehensive income, net of tax, were as follows:
2010 2009
Unrealized gains on short-term investments ................ $ 6 $ 3
Foreign currency translation adjustment and other ........... 116 107
Accumulated other comprehensive income ............. $122 $110
Note 7—Stock-Based Compensation Plans
Through the first quarter of fiscal 2006, the Company granted stock options under the Amended and
Restated 2002 Stock Incentive Plan (Second Restated 2002 Plan) and predecessor plans. Since the
fourth quarter of fiscal 2006, the Company has granted RSUs in lieu of stock options under the Second
Restated 2002 Plan. In July 2008 The Third Restated 2002 Plan was amended by the Board of Directors
(Fourth Restated 2002 Plan). Under the Fourth Restated 2002 Plan, prospective grants of RSUs are
subject, upon certain terminations of employment, to quarterly, as opposed to daily vesting. Previously
awarded RSU grants continue to involve daily vesting upon certain terminations of employment.
Additionally, employees who attain certain years of service with the Company will receive shares under
accelerated vesting provisions on the annual vesting date rather than upon qualified retirement. The first
grant impacted by these amendments occurred in the first quarter of 2009. In the second quarter of 2010,
the Fourth Restated 2002 Plan was amended following shareholder approval and is now referred to as
the Fifth Restated 2002 Stock Incentive Plan (Fifth Restated 2002 Plan). The Fifth Restated 2002 Plan
authorizes the issuance of an additional 18,000,000 shares (10,285,714 RSUs) of common stock for
future grants in addition to grants currently authorized. Each share issued in respect of stock bonuses or
stock units is counted as 1.75 shares toward the limit of shares available. The Company issues new
shares of common stock upon exercise of stock options and vesting of RSUs.
Summary of Stock Option Activity
The following table summarizes stock option transactions during 2010:
Number of
Options
(in 000’s)
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term
(in Years)
Aggregate
Intrinsic
Value(1)
Outstanding at the end of 2009 ........ 18,742 $40.17
Exercised ...................... (5,576) 41.74
Forfeited or expired .............. (4) 43.58
Outstanding at the end of 2010 ........ 13,162 $39.50 3.33 $220
Exercisable at the end of 2010 ......... 13,032 $39.43 3.31 $218
(1) The difference between the original exercise price and market value of common stock at
August 29, 2010.
69