Costco 2014 Annual Report Download - page 48

COSTCO WHOLESALE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in millions, except share, per share, and warehouse count data)
Note 1—Summary of Significant Accounting Policies
Description of Business
Costco Wholesale Corporation (Costco or the Company), a Washington corporation, and its subsidiaries
operate membership warehouses based on the concept that offering 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. At August 31, 2014, Costco
operated 663 warehouses worldwide: 468 United States (U.S.) locations (in 43 U.S. states, Washington,
D.C., and Puerto Rico), 88 Canadian locations, 33 Mexico locations, 26 United Kingdom (U.K.) locations,
20 Japan locations, 11 Korea locations, 10 Taiwan locations, 6 Australia locations, and 1 Spain location.
The Company's online business operates websites in the U.S., Canada, U.K., and Mexico.
Basis of Presentation
The consolidated financial statements include the accounts of Costco Wholesale Corporation, its wholly-
owned subsidiaries, subsidiaries in which it has a controlling interest, consolidated entities in which it has
made equity investments, or has other interests through which it has majority-voting control or it exercises
the right to direct the activities that most significantly impact the entity’s performance. The Company
reports noncontrolling interests in consolidated entities as a component of equity separate from the
Company’s equity. All material inter-company transactions between and among the Company and its
consolidated subsidiaries and other consolidated entities have been eliminated in consolidation. In July
2012, Costco purchased its former joint venture partner’s 50% equity interest in Costco Mexico. The
Company’s net income excludes income attributable to noncontrolling interests in its operations in Mexico
prior to the July 2012 acquisition of the 50% noncontrolling interest, Taiwan, and Korea. Subsequent to
the acquisition date, 100% of Mexico’s operations are included in “net income attributable to Costco.”
Unless otherwise noted, references to net income relate to net income attributable to Costco.
In 2011 and prior to the July 2012 acquisition of the 50% noncontrolling interest in Mexico, the financial
position and results of Mexico’s operations were fully consolidated, and the joint venture partner’s share
was included in “net income attributable to noncontrolling interests.”
Fiscal Year End
The Company operates on a 52/53 week fiscal year basis with the fiscal year ending on the Sunday
closest to August 31. References to 2014 relate to the 52-week fiscal year ended August 31, 2014.
References to 2013 and 2012 relate to the 52-week and 53-week fiscal years ended September 1, 2013
and September 2, 2012, respectively.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles
(U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates and assumptions.
Reclassifications
Certain reclassifications have been made to prior fiscal year amounts or balances to conform to the
presentation in the current fiscal year. These reclassifications did not have a material impact on the
Company’s previously reported consolidated financial statements.
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