Costco 2006 Annual Report Download - page 59

Maturities of long-term debt during the next five fiscal years and thereafter are as follows:
2007 ...................................................... $308,523
2008 ...................................................... 58,867
2009 ...................................................... 898
2010 ...................................................... 60,553
2011 ...................................................... 969
Thereafter ................................................. 94,082
Total .................................................. $523,892
Note 4—Leases
The Company leases land and/or warehouse buildings at 99 of the 458 warehouses open at
September 3, 2006, and certain other office and distribution facilities under operating leases. The
remaining terms of these operating leases range from approximately one to 42 years, with the
exception of one lease in the U.S. that has a remaining life of 78 years and one lease in the
Company’s United Kingdom subsidiary, which has a remaining lease term of 145 years. These leases
generally contain one or more of the following options which the Company can exercise at the end of
the initial lease term: (a) renewal of the lease for a defined number of years at the then-fair market
rental rate; (b) purchase of the property at the then-fair market value; or (c) right of first refusal in the
event of a third party purchase offer. Certain leases provide for periodic rental increases based on the
price indices, and some of the leases provide for rents based on the greater of minimum guaranteed
amounts or sales volume. Contingent rents have not been material. The Company accounts for its
leases with step-rent provisions on a straight-line basis over the original term of the lease.
Aggregate rental expense for fiscal 2006, 2005 and 2004 was $134,406, $127,770 and $113,681,
respectively. The amount for 2005 excludes $15,999 in rent expense associated with the correction
made in the second quarter of fiscal 2005 to the Company’s method of accounting for ground leases
that did not require rental payments during the period of construction.
Future minimum payments, net of sub-lease income of $162,120 for all years combined, during the
next five fiscal years and thereafter under non-cancelable leases with terms of at least one year, at
September 3, 2006, were as follows:
2007 ............................................................ $ 130,259
2008 ............................................................ 122,829
2009 ............................................................ 114,544
2010 ............................................................ 102,807
2011 ............................................................ 97,245
Thereafter ....................................................... 1,079,999
Total minimum payments ....................................... $1,647,683
The Company has sub-leases related to certain of its operating lease agreements. During fiscal 2006,
2005 and 2004, the Company recognized sub-lease income of $12,687, $10,484 and $9,510,
respectively, included in interest income and other in the consolidated Statements of Income.
Note 5—Stockholders’ Equity
Dividends
In fiscal 2006, the Company paid quarterly cash dividends totaling $0.49 per share. In fiscal 2005, the
Company paid quarterly cash dividends totaling $0.43 per share. The Company’s current quarterly
dividend rate is $0.13 per share or $0.52 per share on an annualized basis.
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