MERCHANDISE INVENTORIES. Merchandise inventories are valued at the lower of cost or market as determined by the retail inventory method, and are stated using the last-in, first-out (LIFO) method for U.S. merchandise inventories, and the first-in, first-out (FIFO) method for foreign merchandise inventories. If the FIFO method had been used merchandise inventory would have been $23,650 and $16,150 higher at May 12, 1996 and September 3, 1995, respectively. The Company provides for estimated inventory losses between physical inventory counts on the basis of a standard percentage of sales. This provision is adjusted to reflect the actual shrinkage results of the physical inventory counts which generally occur in the second and fourth fiscal quarters. NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE Net income per common and common equivalent share is based on the weighted average number of common and common equivalent shares outstanding. The calculation for the 12- and 36-week periods ended May 12, 1996 and May 7, 1995, reflects the reduction of approximately 23.2 million PriceCostco shares tendered in exchange for an equivalent number of Price Enterprises, Inc. shares as of December 20, 1994. The calculation also eliminates interest expense, net of income taxes, on the 5 1/2% convertible subordinated debentures (primary and fully diluted, and excluding the third quarter of fiscal 1995), and the 6 3/4% convertible subordinated debentures (fully diluted only and excluding the third quarter of fiscal 1995). PRICE/COSTCO, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) NOTE (2) -- DEBT BANK LINES OF CREDIT AND COMMERCIAL PAPER PROGRAMS The Company has a domestic multiple option loan facility with a group of 12 banks which provides for borrowings up to $500,000 or standby support for a $500,000 commercial paper program. Of this amount, $250,000 expires on January 27, 1997, and $250,000 expires on January 30, 2001. The interest rate on bank borrowings is based on LIBOR or rates bid at auction by the participating banks. At May 12, 1996, $11,000 was outstanding under the commercial paper program and no amount was outstanding under the loan facility. In addition, the Company's wholly-owned Eastern Canada subsidiary has a $102,000 commercial paper program supported by a bank credit facility with three Canadian banks, of which $61,000 will expire in March 1997 and $41,000 will expire in March 1999. The interest ra...
MERCHANDISE INVENTORIES. Merchandise inventories are valued at the lower of cost or market as determined primarily by the retail inventory method, and are stated using the last-in, first-out (LIFO) method for U.S. merchandise inventories, and first-in, first-out (FIFO) method for international merchandise inventories. If the FIFO method had been used merchandise inventories would have been $14,950 and $9,250 higher at May 8, 1994 and August 29, 1993, respectively. The Company provides for estimated inventory losses between physical inventory counts on the basis of a standard percentage of sales. This provision is adjusted to reflect the actual shrinkage results of the physical inventory counts which generally occur in the second and fourth quarters of the Company's fiscal year. NOTES RECEIVABLE Notes receivable included in other assets totaled $120,717 at May 8, 1994 and $75,419 at August 29, 1993 and consist primarily of a $41,000 loan to a hotel company (the Hotel loan) and amounts due from various municipalities and agencies. On October 15, 1993, the Company purchased and assumed all of the rights and obligations of the Hotel loan which it had previously guaranteed. The borrower, a hotel company, had been in violation of its debt covenants. The note is collateralized by certain hotel property. If the collateral were deemed worthless, the Company could incur an after-tax loss of up to $25,000. The Company believes that the likelihood of any material loss from this note receivable is remote. PRICECOSTCO, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) MAY 8, 1994 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE (1) -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) MINORITY INTERESTS The Company owns an approximately 60% interest in its United Kingdom subsidiary with minority interests owned by third-parties. During the third quarter of fiscal 1994 the Company received proceeds of approximate $36,514 representing the minority interests' investment in U.K. operations. The U.K. subsidiary is consolidated for financial reporting purposes. NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE Net income per common and common equivalent share is based on the weighted average number of common and common equivalent shares outstanding. For the 12 and 36 weeks ended May 8, 1994 and the 12 weeks ended May 9, 1993, the effect of convertible debentures was not dilutive for either primary or fully-diluted purposes. For the 36 weeks ended May 9, 1993 this calculation...
MERCHANDISE INVENTORIES. Merchandise inventories are valued at the lower of cost or market as determined primarily by the retail inventory method, and are stated using the last-in, first-out (LIFO) method for substantially all U.S. merchandise inventories. The Company believes the LIFO method more fairly presents the results of operations by more closely matching current costs with current revenues. If all merchandise inventories had been valued using the first-in, first-out (FIFO) method, inventories would have been higher by $16,150 at February 13, 2000 and $11,150 at August 29, 1999. The Company provides for estimated inventory losses between physical inventory counts on the basis of a standard percentage of sales. This provision is adjusted to reflect the actual shrinkage results of physical inventory counts, which generally occur in the second and fourth fiscal quarters. ACCOUNTS PAYABLE The Company's banking system provides for the daily replenishment of major bank accounts as checks are presented. Accordingly, included in Accounts Payable are $32,138 and $21,081 at February 13, 2000 and August 29, 1999, respectively, representing the excess of outstanding checks over cash on deposit at the banks on which the checks were drawn.
MERCHANDISE INVENTORIES. Merchandise inventories are stated at the lower of cost or market. Substantially all U.S. inventories represent finished goods which are valued using the LIFO retail inventory method. Merchandise inventory of Peoples Jewellers and Mappins Jewellers of Canada is valued using the first-in, first-out (‘‘FIFO’’) retail inventory method. Under the retail method, inventory is segregated into categories of merchandise with similar characteristics at its current average retail selling value. The determination of inventory at cost and the resulting gross margins are calculated by applying an average cost-to-retail ratio to the retail value of inventory. At the end of fiscal year 2010, approximately four percent and 14 percent of our total inventory represented raw materials and finished goods related to our manufacturing program and distribution center, respectively. This inventory is valued at the weighted average cost of the items. We are required to determine the LIFO cost on an interim basis by estimating annual inflation trends, annual purchases and ending inventory levels for the fiscal year. Actual annual inflation rates and inventory balances as of the end of any fiscal year may differ from interim estimates. We apply internally developed indices that we believe accurately and consistently measure inflation or deflation in the components of our merchandise (i.e., diamonds, gold and other metals and precious stones) and our overall merchandise mix. We believe our internally developed indices more accurately reflect inflation or deflation in our own prices than the U.S. Bureau of Labor Statistics (‘‘BLS’’) producer price indices or other published indices. We also reduce our inventory valuation for discontinued, slow-moving and damaged inventory. This write-down of inventory is equal to the difference between the cost of inventory and its estimated market value based upon assumptions of targeted inventory turn rates, future demand, management strategy and market conditions. If actual market conditions are less favorable than those projected by management, or if management strategy changes, additional inventory write-downs may be required and, in the case of a major change in strategy or downturn in market conditions, such write-downs could be significant. Shrinkage is estimated for the period from the last inventory date to the end of the fiscal year on a store-by-store basis. Such estimates are based on experience and the shrinkage results from the last phys...
MERCHANDISE INVENTORIES. Merchandise inventories are stated at the lower of cost or market. Substantially all U.S. inventories represent finished goods which are valued using the last-in, first-out (‘‘LIFO’’) retail inventory method. Merchandise inventory of Peoples Jewellers and Mappins Jewellers of Canada is valued using the first-in, first-out (‘‘FIFO’’) retail inventory method. Under the retail method, inventory is segregated into categories of merchandise with similar characteristics at its current average retail selling value. The determination of inventory at cost and the resulting gross margins are calculated by applying an average cost-to-retail ratio to the retail value of inventory. At the end of fiscal year 2010, approximately four percent and 14 percent of our total inventory represented raw materials and finished goods related to our manufacturing program and distribution center, respectively. These inventories are valued at the weighted average cost of those items. The LIFO charge was $5.7 million, $1.0 million and $2.4 million for the years ended July 31, 2010, 2009 and 2008, respectively. The cumulative LIFO provision reflected in the accompanying consolidated balance sheets was $18.9 million and $13.2 million at July 31, 2010 and 2009, respectively. Domestic inventories on a FIFO basis were $606.4 million and $652.9 million at July 31, 2010 and 2009, respectively. Our Canadian inventory accounted for on the FIFO retail method was approximately $115.6 million and $100.6 million at July 31, 2010 and 2009, respectively. Consignment inventory and the related contingent obligations are not reflected in our consolidated financial statements. Consignment inventory has historically consisted of test programs, merchandise at higher price points, or merchandise that otherwise does not warrant the risk of outright ownership. Consignment inventory can be returned to the vendor at any time. At the time consigned inventory is sold, we record the purchase liability in accounts payable and the related cost of merchandise in cost of sales. We had $81.1 million and $71.5 million of consignment inventory on hand at July 31, 2010 and 2009, respectively. We are required to determine the LIFO cost on an interim basis by estimating annual inflation trends, annual purchases and ending inventory levels for the fiscal year. Actual annual inflation rates and inventory balances as of the end of any fiscal year may differ from interim estimates. We apply internally developed indices that we ...
MERCHANDISE INVENTORIES. Merchandise inventories are valued at the lower of cost or market as determined primarily by the retail inventory method, and are stated using the last-in, first-out (LIFO) method for substantially all U.S. merchandise inventories. The Company believes the LIFO method more fairly presents the results of operations by more closely matching current costs with current revenues. If all merchandise inventories had been valued using the first-in, first-out (FIFO) method, inventories would have been higher by $22,150 at February 14, 1999 and $21,150 at February 15, 1998. The Company provides for estimated inventory losses between physical inventory counts on the basis of a standard percentage of sales. This provision is adjusted to reflect the actual shrinkage results of physical inventory counts which generally occur in the second and fourth fiscal quarters. ACCOUNTS PAYABLE The Company's banking system provides for the daily replenishment of major bank accounts as checks are presented. Accordingly, included in Accounts Payable are $81,661 and $10,376 at February 14, 1999 and August 30, 1998, respectively, representing the excess of outstanding checks over cash on deposit at the banks on which the checks were drawn. MEMBERSHIP FEES Membership fee revenue represents annual membership fees paid by substantially all of the Company's members. Effective with the first quarter of fiscal 1999, the Company changed its method of accounting for membership fee income from a "cash basis", which historically was consistent with generally accepted accounting principles and industry practice, to a "deferred basis" whereby membership fee income is recognized ratably over the one-year life of the membership. The change to the deferred method of accounting for membership fees resulted in a one-time, non-cash, pre-tax charge of approximately $196,705 ($118,023 after-tax, or $.50 per share) to reflect the cumulative effect of the accounting change as of the beginning of fiscal 1999.
MERCHANDISE INVENTORIES. Merchandise inventories are recorded at the lower of cost or market as determined by the retail inventory method, and are stated using the last-in, first-out (LIFO) method for U.S. merchandise inventories, and the first-in, first-out (FIFO) method for foreign merchandise inventories. If the FIFO method had been used, merchandise inventory would have been $18,650 higher at both November 23, 1997 and November 24, 1996. The Company provides for estimated inventory losses between physical inventory counts on the basis of a standard percentage of sales. This provision is adjusted to reflect the actual shrinkage results of physical inventory counts which generally occur in the second and fourth fiscal quarters. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) NOTE (1)--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE Net income per common and common equivalent share is based on the weighted average number of common and common equivalent shares outstanding. The calculation for the 12-week period ended November 23, 1997, eliminates interest expense, net of income taxes, on the 3 1/2% Zero Coupon Convertible Subordinated Debentures and includes the additional shares issuable upon conversion of these debentures. There was no dilutive effect from any of the three issues of convertible subordinated debentures outstanding for the 12-week period ended November 24, 1996. RECENT ACCOUNTING PRONOUNCEMENT In February 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings per Share" (SFAS No. 128). SFAS No. 128 establishes new standards for computing and presenting earnings per share (EPS) for entities with publicly-held common stock. The Company is required to adopt SFAS No. 128 in its second quarter ending February 15, 1998, following the December 15, 1997 effective date. If the provisions of SFAS No. 128 had been used to calculate EPS for the 12-week periods ended November 23, 1997 and November 24, 1996, proforma EPS would have been: 12 WEEKS ENDED ------------------------------------- NOVEMBER 23, 1997 ----------------- NOVEMBER 24, 1996 ----------------- Basic..................................... Diluted................................... $0.46 ----- ----- $0.44 ----- ----- $0.16 ----- ----- $0.16 ----- ----- Excluding the non-cash, pre-tax charge of $65,000 ($38,675 after-tax) for asset impairment, basic and dilut...
MERCHANDISE INVENTORIES. Merchandise inventories are recorded at the lower of cost or market as determined by the retail inventory method, and are stated using the last-in, first-out (LIFO) method for U.S. merchandise inventories, and the first-in, first-out (FIFO) method for foreign merchandise inventories. If the FIFO method had been used, merchandise inventory would have been $18,650 higher at both November 23, 1997 and November 24, 1996. The Company provides for estimated inventory losses between physical inventory counts on the basis of a standard percentage of sales. This provision is adjusted to reflect the actual shrinkage results of physical inventory counts which generally occur in the second and fourth fiscal quarters. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) NOTE (1)--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE Net income per common and common equivalent share is based on the weighted average number of common and common equivalent shares outstanding. The calculation for the 12-week period ended November 23, 1997, eliminates interest expense, net of income taxes, on the 3 1/2% Zero Coupon Convertible Subordinated Debentures and includes the additional shares issuable upon conversion of these debentures. There was no dilutive effect from any of the three issues of convertible subordinated debentures outstanding for the 12-week period ended November 24, 1996. RECENT ACCOUNTING PRONOUNCEMENT In February 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings per Share" (SFAS No. 128). SFAS No. 128 establishes new standards for computing and presenting earnings per share (EPS) for entities with publicly-held common stock. The Company is required to adopt SFAS No. 128 in its second quarter ending February 15, 1998, following the December 15, 1997 effective date. If the provisions of SFAS No. 128 had been used to calculate EPS for the 12-week periods ended November 23, 1997 and November 24, 1996, proforma EPS would have been: 12 WEEKS ENDED ------------------------------------- NOVEMBER 23, 1997 ----------------- NOVEMBER 24, 1996 ----------------- Basic..................................... Diluted................................... $0.46 ----- ----- $0.44 ----- ----- $0.16 ----- ----- $0.16 ----- ----- Excluding the non-cash, pre-tax charge of $65,000 ($38,675 after-tax) for asset impairment, basic and dilut...
