Costco 1998 Annual Report Download - page 33

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MERRILL CORPORATION NETWORK COMPOSITION SYSTEM CPICARD // 3-DEC-98 18:50 DISK004:[98SEA7.98SEA2097]DW2097A.;6
IMAGES:[PAGER.PSTYLES]MRLL.BST;4 pag$fmt:mrll.fmt Free: 260D*/ 1615D Foot: 0D/ 0D VJ R Seq: 11 Clr: 0
COSTCO COMPANIES A/R (Y/E 8-31-98) Proj: P1826SEA98 Job: 98SEA2097 File: DW2097A.;6
Merrill/Seattle (206) 623-5606 Page Dim: 8.250N X 10.750NCopy Dim: 38. X 54.3
COSTCO COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share data)
Note 5—Retirement Plans (Continued)
Company has a defined contribution plan for Canadian and United Kingdom employees and contributes a
percentage of each employee’s salary.
California union employees participate in a defined benefit plan sponsored by its union. The
Company makes contributions based upon its union agreement. In June 1995, the Company also estab-
lished a 401(k) plan for the California union employees. The plan allows pre-tax deferral against which the
Company matches 50% of the first two hundred fifty dollars of employee contributions.
Amounts expensed under these plans were $73,764, $59,960, and $51,996 for fiscal 1998, 1997, and
1996, respectively. The Company has defined contribution 401(k) and retirement plans only and thus has
no liability for postretirement benefit obligations under the SFAS No. 106 ‘‘Employer’s Accounting for
Postretirement Benefits Other than Pensions.’’
Note 6—Income Taxes
The provisions for income taxes for fiscal 1998, 1997, and 1996 are as follows:
1998 1997 1996
Federal:
Current .............................. $214,788 $151,433 $131,978
Deferred ............................. (3,415) (13,249) (4,515)
Total federal ......................... 211,373 138,184 127,463
State:
Current .............................. 49,881 34,666 27,926
Deferred ............................. (2,231) (3,178) (976)
Total state ........................... 47,650 31,488 26,950
Foreign:
Current .............................. 47,096 40,192 20,882
Deferred ............................. 442 (1,732) (611)
Total foreign ......................... 47,538 38,460 20,271
Total provision for income taxes ........... $306,561 $208,132 $174,684
A reconciliation between the statutory tax rate and the effective rate for fiscal 1998, 1997, and 1996 is
as follows:
1998 1997 1996
Federal taxes at statutory rate ........... $268,241 35.00% $182,115 35.00% $148,217 35.00%
State taxes, net ..................... 33,722 4.40 22,374 4.30 17,786 4.20
Foreign taxes, net .................... 8,543 1.11 5,452 1.05 4,658 1.10
Other ............................ (3,945) (0.51) (1,809) (.35) 4,023 .95
Provision at effective tax rate .......... $306,561 40.00% $208,132 40.00% $174,684 41.25%
31
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