Costco 2014 Annual Report Download - page 32

included in this Report for discussion of accelerated vesting. Warehouse operating costs were lower by
one basis point, primarily resulting from improvements in payroll in our Canadian operations as a result of
leveraging increased sales, partially offset by increases in employee benefit costs, primarily health care,
in our U.S. operations. Changes in foreign currencies relative to the U.S. dollar decreased our SG&A
expenses by $119 in 2014.
2013 vs. 2012
SG&A expenses as a percentage of net sales increased one basis point. This increase was driven by
higher stock compensation expense of three basis points, partially offset by contributions made to an
initiative reforming alcohol beverage laws in Washington State in the first quarter of 2012, with no
comparable charge in 2013, which resulted in a positive impact of two basis points. Central operating
costs as a percent of net sales were flat, primarily due to the benefit of lower non-equity incentive
compensation costs as a result of not meeting certain internal performance targets. This was offset by
higher central operating costs, predominately related to the continued investment in modernizing our
information systems, primarily incurred by our U.S. operations. Warehouse operating costs as a
percentage of net sales were flat, primarily due to leveraging payroll costs in our U.S. and Canadian
operations as a result of increased net sales which was offset by increases in other operating costs,
primarily employee benefits and workers' compensation.
Preopening Expenses
2014 2013 2012
Preopening expenses .......................................................................................
.
$63
$ 51 $37
Warehouse openings, including relocations
United States ..............................................................................................
.
17
12 10
Canada ........................................................................................................
.
3
3 1
Other International .....................................................................................
.
10
11 6
Total warehouse openings, including relocations .........................................
.
30
26 17
Preopening expenses include costs for startup operations related to new warehouses, development in
new international markets, and expansions at existing warehouses. Preopening expenses vary due to the
number of warehouse openings, the timing of the opening relative to our year-end, whether the
warehouse is owned or leased, and whether the opening is in an existing, new, or international market.
During the fourth quarter we opened our first warehouse in Spain.
Interest Expense
2014 2013 2012
Interest ex
p
ense .................................................................................. $113 $99
$ 95
Interest expense in 2014 primarily relates to our $1,100 of 5.5% Senior Notes issued in fiscal 2007 and
our $3,500 of Senior notes issued in December 2012 (described in further detail under the heading “Cash
Flows from Financing Activities” and in Note 4 to the consolidated financial statements included in this
Report).
Interest Income and Other, Net
2014 2013 2012
Interest income .......................................................................................
.
$52 $44 $ 49
Foreign-currency transaction gains, net .............................................
.
26 39
40
Other, net.................................................................................................
.
12 14
14
Interest income and other, net ......................................................
.
$ 90 $ 97 $ 103
30