Costco 2014 Annual Report Download - page 66

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64
Included in the balance at the end of 2014, are $38 of tax positions for which the ultimate deductibility is
highly certain but for which there is uncertainty about the timing of such deductibility. Because of the
impact of deferred tax accounting, other than interest and penalties, the disallowance of these tax
positions would not affect the annual effective tax rate but would accelerate the payment of cash to the
taxing authority to an earlier period.
The total amount of such unrecognized tax benefits that, if recognized, would favorably affect the effective
income tax rate in future periods is $47 and $46 at the end of 2014 and 2013, respectively.
Accrued interest and penalties related to income tax matters are classified as a component of income tax
expense. Interest and penalties recognized by the Company were not material in 2014 and 2013. Accrued
interest and penalties were not material at the end of 2014 and 2013.
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 practical 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 2010 to present and in California for fiscal years 2007 to
present. No other examinations are believed to be material.
Note 9—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 net
income and the weighted average number of shares of potentially dilutive common shares outstanding
(shares in 000’s):
2014 2013 2012
Net income available to common stockholders after assumed
conversions of dilutive securities .............................................................. $ 2,058
$ 2,039 $ 1,710
Weighted average number of common shares used in basic net income
per common share .................................................................................... 438,693
435,741 433,620
RSUs and stock options ....................................................................................... 3,771
4,552 4,906
Conversion of convertible notes ......................................................................... 21
219 847
Weighted average number of common shares and dilutive potential of
common stock used in diluted net income
p
er share................................... 442,485
440,512 439,373