SEC Comment Letter for COSTCO WHOLESALE (COST) — Mar 10, 2014
COSTCO WHOLESALE CORP /NEW (COST) (CIK 0000909832)
Date: March 10, 2014 · CIK: 0000909832 · Accession: 0000000000-14-011937
AI Filing Summary & Sentiment
Reasoning
Referenced dates: February 18, 2014
Letter
March 10, 2014 Via E -mail Richard A. Galanti Costco Wholesale Corporation 999 Lake Drive Issaquah, WA 98027
Re: Costco Wholesale Corporation Form 10-K for the Fiscal Year Ended September 1, 2013 Filed October 16, 2013 Response dated March 3 , 2014 File No. 0 -20355
Dear Mr. Galanti :
We have reviewed your response dated March 3, 2014 and have the following additional comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.
Please respond to this letter within ten business days by amending your filing, by providing the requested information, or by advising us when you will provide the requested response. If you do not believe our comments apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your response.
After reviewing any amendment to your filing and the information you provide in response to these comme nts, we may have additional comments.
Form 10 -K for the Fiscal Year Ended September 1, 2013
Results of Operations, page 19
Membership Fees, page 20
1. We have read your response to comment 1 of our letter dated February 18, 2014, and your dis closure on page 21 where you state, “Executive Membership 2% reward program negatively impacted gross margin by two basis points, due to increased spending by Executive Members.” Please show us how you calculated the two basis point margin effect related to the increased spending by the Executive Members. In this regard, we note on page 46 that the incremental net reduction in sales for fiscal 2013 was $70 million. Please show us how such amount is utilized in the calculation of the basis effect on gross margin.
Richard A. Galanti Costco Wholesale Corporation March 10, 2014 Page 2
Selling, General and Administrative Expenses, page 22
2. We have read your response to comment 3 of our letter dated February 18, 2014. Tell us and disclose the amounts recognized in the consolidated statements of income for the Co - Branded Agree ment with Amex. Refer to ASC 605 -50-50-1. If not material, please quantify. For our understanding, please also explain the nature and calculation of the rebates and other pay -for performance incentives you receive from Amex. As previously requested, ple ase explain to us in detail your arrangement with American Express as it relates to the merchant discount fee structure.
You may contact Robert Babula, Staff Accountant, at (202) 551 -3339 or me at (202) 551 - 3849 if you have questions regarding our comments or any other questions.
Sincerely,
/s/ James Allegretto
Show Raw Text
March 10, 2014 Via E -mail Richard A. Galanti Costco Wholesale Corporation 999 Lake Drive Issaquah, WA 98027 Re: Costco Wholesale Corporation Form 10-K for the Fiscal Year Ended September 1, 2013 Filed October 16, 2013 Response dated March 3 , 2014 File No. 0 -20355 Dear Mr. Galanti : We have reviewed your response dated March 3, 2014 and have the following additional comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to this letter within ten business days by amending your filing, by providing the requested information, or by advising us when you will provide the requested response. If you do not believe our comments apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your response. After reviewing any amendment to your filing and the information you provide in response to these comme nts, we may have additional comments. Form 10 -K for the Fiscal Year Ended September 1, 2013 Results of Operations, page 19 Membership Fees, page 20 1. We have read your response to comment 1 of our letter dated February 18, 2014, and your dis closure on page 21 where you state, “Executive Membership 2% reward program negatively impacted gross margin by two basis points, due to increased spending by Executive Members.” Please show us how you calculated the two basis point margin effect related to the increased spending by the Executive Members. In this regard, we note on page 46 that the incremental net reduction in sales for fiscal 2013 was $70 million. Please show us how such amount is utilized in the calculation of the basis effect on gross margin. Richard A. Galanti Costco Wholesale Corporation March 10, 2014 Page 2 Selling, General and Administrative Expenses, page 22 2. We have read your response to comment 3 of our letter dated February 18, 2014. Tell us and disclose the amounts recognized in the consolidated statements of income for the Co - Branded Agree ment with Amex. Refer to ASC 605 -50-50-1. If not material, please quantify. For our understanding, please also explain the nature and calculation of the rebates and other pay -for performance incentives you receive from Amex. As previously requested, ple ase explain to us in detail your arrangement with American Express as it relates to the merchant discount fee structure. You may contact Robert Babula, Staff Accountant, at (202) 551 -3339 or me at (202) 551 - 3849 if you have questions regarding our comments or any other questions. Sincerely, /s/ James Allegretto James Allegretto Senior Assistant Chief Accountant