Costco 2012 Annual Report Download - page 10

BUSINESS OVERVIEW
Forward-Looking Statements
Certain statements contained in this Report constitute forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and
Section 21E of the Securities Exchange Act of 1934. They include statements that address activities,
events, conditions or developments that we expect or anticipate may occur in the future and may relate
to such matters as sales growth, increases in comparable store sales, cannibalization of existing
locations by new openings, price or fee changes, earnings performance, earnings per share, stock-
based compensation expense, warehouse openings and closures, the effect of adopting certain
accounting standards, future financial reporting, financing, margins, return on invested capital, strategic
direction, expense controls, membership renewal rates, shopping frequency, litigation impact and the
demand for our products and services. Forward-looking statements may also be identified by the words
“believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,”
“may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions.
Forward-looking statements are based on current expectations and assumptions and are subject to
risks and uncertainties that may cause actual results to differ materially from the forward-looking
statements. Such forward-looking statements involve risks and uncertainties that may cause actual
events, results, or performance to differ materially from those indicated by such statements, including,
without limitation, the factors set forth in Risk Factors on page 14, and other factors noted in
Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the
consolidated financial statements and related notes of this Report. Forward-looking statements speak
only as of the date they are made, and we do not undertake to update these forward-looking
statements, except as required by law.
General
Costco Wholesale Corporation and its subsidiaries (Costco or the Company) are principally engaged in
the operation of membership warehouses in the United States, Canada, Mexico, the United Kingdom,
Japan, Australia, and through majority-owned subsidiaries in Taiwan and Korea. Historically, our
operations in Mexico were through a 50% owned joint venture (Mexico). On July 10, 2012 we acquired
the remaining 50% interest in Mexico from our joint venture partner. At the beginning of fiscal 2011, we
began consolidating our Mexico joint venture due to the adoption of a new accounting standard.
Mexico’s results previously were accounted for under the equity method and our 50% share was
included in “interest income and other, net” in the consolidated statements of income. In fiscal 2011
and 2012, Mexico’s operations are fully consolidated and the joint venture partner’s 50% share,
through the acquisition date, is included in “net income attributable to noncontrolling interest” in the
consolidated statements of income. After the acquisition date, 100% of Mexico’s operations are
included in “net income attributable to Costco.” See discussion in Note 1 to the consolidated financial
statements included in this Report.
We report on a 52/53-week fiscal year, consisting of thirteen four-week periods and ending on the
Sunday nearest the end of August. The first three quarters consist of three periods each, and the
fourth quarter consists of four periods (five weeks in the thirteenth period in a 53-week year). The
material seasonal impact in our operations is an increased level of net sales and earnings during the
winter holiday season. References to 2012 relate to the 53-week fiscal year ended September 2, 2012.
References to 2011 and 2010 relate to the 52-week fiscal years ended August 28, 2011 and
August 29, 2010, respectively.
We operate membership warehouses based on the concept that offering our members low prices on a
limited selection of nationally branded and select private-label products in a wide range of merchandise
categories will produce high sales volumes and rapid inventory turnover. This turnover, when
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