Costco 2006 Annual Report Download - page 27

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Provision for Impaired Assets and Closing Costs, net
Fiscal 2006 Fiscal 2005 Fiscal 2004
Provision for Impaired Assets and Closing
Costs, net:
Warehouse closing expenses ......... $3,762 $11,619 $ 16,548
Impairment of long-lived assets ....... — 3,893 —
Net losses (gains) on the sale of real
property ......................... 1,691 881 (15,548)
Total .......................... $5,453 $16,393 $ 1,000
Provision for Impaired Assets and Closing
Costs, net as a percent of net sales ...... 0.01% 0.03% 0.00%
2006 vs. 2005
The net provision for impaired assets and closing costs was $5.5 million in fiscal 2006, compared to
$16.4 million in fiscal 2005. The provision includes costs related to impairment of long-lived assets,
future lease obligations of warehouses that have been relocated to new facilities, and losses or gains
resulting from the sale of real property. The provision for fiscal 2006 included charges of $3.8 million
for warehouse closing expenses and $1.7 million for net losses on the sale of real property. The
provision for fiscal 2005 included charges of $3.9 million for impairment of long-lived assets, $11.6
million for warehouse closing expenses and $0.9 million for net losses on the sale of real property.
2005 vs. 2004
The net provision for impaired assets and closing costs was $16.4 million in fiscal 2005, compared to
$1.0 million in fiscal 2004. The provision for fiscal 2005 included charges of $3.9 million for impairment
of long-lived assets, $11.6 million for warehouse closing expenses and $0.9 million for net losses on
the sale of real property. The provision for fiscal 2004 included charges of $16.5 million for warehouse
closing expenses that were offset by gains of $15.5 million on the sale of real property.
The reserve for warehouse closing costs at the end of fiscal 2006 and 2005 included:
September 3,
2006 August 28,
2005
Reserve for warehouse closing costs:
Future lease obligations ........................... $5,950 $9,118
Other .......................................... 1,091 438
Total ....................................... $7,041 $9,556
Interest Expense
Fiscal 2006 Fiscal 2005 Fiscal 2004
Interest expense ........................ $12,570 $34,437 $36,651
2006 vs. 2005
Interest expense totaled $12.6 million in fiscal 2006, compared to $34.4 million in fiscal 2005. Interest
expense in fiscal 2006 primarily included interest on the 5
1
⁄
2
% Senior Notes, the 3
1
⁄
2
% Zero Coupon
Notes, and balances outstanding under our bank credit facilities and promissory notes. In fiscal 2005,
interest expense also included interest on the 7
1
⁄
8
% Senior Notes. The decrease in interest expense in
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