Costco 2010 Annual Report Download - page 76

in Note 1. The Company recognized $7 of income related to interest and penalties in 2010. Accrued
interest and penalties are $9 and $20 at the end of 2010 and 2009, respectively.
The Company is currently under audit by several taxing jurisdictions in the United States and in several
foreign countries. Some audits may conclude in the next 12 months and the unrecognized tax benefits
we have recorded in relation to the audits may differ from actual settlement amounts. It is not possible
to estimate the effect, if any, of any amount of such change during the next 12 months to previously
recorded uncertain tax positions in connection with the audits. The Company does not anticipate that
there will be a material increase or decrease in the total amount of unrecognized tax benefits in the
next twelve months.
The Company files income tax returns in the United States, various state and local jurisdictions, in
Canada and in several other foreign jurisdictions. With few exceptions, the Company is no longer
subject to U.S. federal, state or local examination for years before fiscal 2007. The Company is
currently subject to examination in Canada for fiscal years 2006 to present and in California for fiscal
years 2004 to present. No other examinations are believed to be material.
Note 10—Net Income Per Common and Common Equivalent Share
The following table shows the amounts used in computing net income per share and the effect on
income and the weighted average number of shares of dilutive potential common stock (shares in
000’s):
2010 2009 2008
Net income available to common stockholders used in basic
net income per common share ........................ $1,303 $1,086 $1,283
Interest on convertible notes, net of tax ................... 1 1 1
Net income available to common stockholders after assumed
conversions of dilutive securities ....................... $1,304 $1,087 $1,284
Weighted average number of common shares used in basic
net income per common share ........................ 438,611 433,988 434,442
Stock options and RSUs ............................... 6,409 5,072 8,268
Conversion of convertible notes ......................... 950 1,394 1,530
Weighted number of common shares and dilutive potential of
common stock used in diluted net income per share ....... 445,970 440,454 444,240
Anti-dilutive stock options and RSUs ..................... 1,141 8,045 11
Note 11—Commitments and Contingencies
Legal Proceedings
The Company is involved from time to time in claims, proceedings and litigation arising from its
business and property ownership. The Company is a defendant in the following matters, among others:
Cases purportedly brought as class actions on behalf of certain present and former Costco managers
in California, in which plaintiffs principally allege that they have not been properly compensated for
overtime work. Scott M. Williams v. Costco Wholesale Corp., United States District Court (San Diego),
Case No. 02-CV-2003 NAJ (JFS); Greg Randall v. Costco Wholesale Corp., Superior Court for the
County of Los Angeles, Case No. BC-296369. The parties in Randall agreed on a partial settlement of
the action (resolving all claims except for the claim that the Company miscalculated pay), requiring a
payment of up to $16 by the Company, which was substantially paid in the first quarter of fiscal 2010.
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