Costco 1998 Annual Report Download - page 2

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MERRILL CORPORATION NETWORK COMPOSITION SYSTEM CPICARD // 3-DEC-98 18:47 DISK004:[98SEA7.98SEA2097]BG2097A.;6
IMAGES:[PAGER.PSTYLES]MRLL.BST;4 pag$fmt:mrll.fmt Free: 410DM/ 0D Foot: 0D/ 0D VJ R Seq: 1 Clr: 0
COSTCO COMPANIES A/R (Y/E 8-31-98) Proj: P1826SEA98 Job: 98SEA2097 File: BG2097A.;6
Merrill/Seattle (206) 623-5606 Page Dim: 8.250N X 10.750NCopy Dim: 38. X 54.3
THE COMPANY
Costco Companies, Inc. (‘‘Costco’’ or the ‘‘Company’’) began operations in 1976 in San Diego,
California as The Price Company, pioneering the membership warehouse concept. Costco Wholesale
Corporation began operations in 1983 in Seattle, Washington with a similar membership warehouse
concept. Costco Companies, Inc. (formerly Price/Costco, Inc. prior to a name change in January 1997), is a
Delaware corporation, publicly traded under the NASDAQ ticker symbol ‘‘COST’’, and was formed in
October 1993 as a result of a merger of Costco Wholesale Corporation and The Price Company. Costco
Companies, Inc. is the parent company of Costco Wholesale Corporation and The Price Company which
operate membership warehouses primarily under the Costco Wholesale name.
Costco operates a chain of cash and carry membership warehouses that sell high quality, nationally
branded and selected private label merchandise at low prices to businesses purchasing for commercial use,
personal use, or resale, and also to individuals who are members of selected employee groups. The
Company’s business is based upon achieving high sales volumes and rapid inventory turnover by offering a
limited assortment of merchandise in a wide variety of product categories at very competitive prices. As of
December 1998, the Company operated a chain of 285 warehouses in 26 states (217 locations), nine
Canadian provinces (57 locations), the United Kingdom (seven locations, through a 60%-owned subsidi-
ary), Korea (three locations) and one warehouse in Taiwan. The Company also operates 16 warehouses in
Mexico through a joint venture partner.
CONTENTS
Financial Highlights .......................................................... 1
Letter to Shareholders ........................................................ 2
Map of Warehouse Locations ................................................... 4
Number of Warehouses/Ancillary Businesses ........................................ 6
Quarterly Results of Operations ................................................. 7
Ten Year Operating and Financial Highlights ....................................... 8
Management’s Discussion and Analysis of Financial Condition and Results of Operation ........ 10
Report of Management ....................................................... 16
Report of Independent Public Accountants ......................................... 16
Consolidated Financial Statements ............................................... 17
Notes to Consolidated Financial Statements ........................................ 21
Market for Costco Common Stock ............................................... 34
Dividend Policy ............................................................. 34
Directors and Officers ........................................................ 35
Additional Information ....................................................... 37
9 C Cs: 60762