Costco 2011 Annual Report Download - page 76

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 12 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):
2011 2010 2009
Net income available to common stockholders used in basic
net income per common share ........................ $1,462 $1,303 $1,086
Interest on convertible notes, net of tax ................... 1 1 1
Net income available to common stockholders after assumed
conversions of dilutive securities ....................... $1,463 $1,304 $1,087
Weighted average number of common shares used in basic
net income per common share ........................ 436,119 438,611 433,988
Stock options and RSUs ............................... 6,063 6,409 5,072
Conversion of convertible notes ......................... 912 950 1,394
Weighted number of common shares and dilutive potential of
common stock used in diluted net income per share ....... 443,094 445,970 440,454
Anti-dilutive stock options and RSUs ..................... 0 1,141 8,045
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:
A class action was filed on May 15, 2009, on behalf of present and former hourly employees in
California, in which the plaintiff principally alleges that the Company’s routine closing procedures and
security checks cause employees to incur delays that qualify as uncompensated working time. Mary
Pytelewski v. Costco Wholesale Corp., Superior Court for the County of San Diego,
Case No. 37-2009-00089654. The case was removed to the United States District Court, Southern
District of California (San Diego), Case No. 09-CV-02473-AJB (BGS). On December 14, 2010, the
court certified two classes of hourly non-exempt employees subject to the Company’s closing lockdown
procedures: one under California law for California non-union employees who were subject to the
closing procedures between May 15, 2005, and October 1, 2009; and a nationwide class under federal
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