Costco 2005 Annual Report Download - page 24

$0.115 per share were paid May 27, 2005 and August 26, 2005 to shareholders of record at the close of business
on May 6, 2005 and August 5, 2005, respectively. In fiscal 2004 the Company paid dividends of $0.10 per share
in the third and fourth quarters.
Contractual Obligations
The Company’s commitment to make future payments under contractual obligations was as follows, as of
August 28, 2005.
Payments Due by Period
Contractual obligations Total
Less than
1year
1to3
years
4to5
years
After
5 years
Long-term debt(1)(2) .................... $ 879,520 $ 18,064 $379,466 $ 65,437 $ 416,553
Capital lease obligations .................. 6,591 3,225 1,305 927 1,134
Operating leases(3) ...................... 1,562,267 114,682 219,402 189,188 1,038,995
Purchase obligations (merchandise)(4) ...... 3,049,398 3,048,785 613 — —
Purchase obligations (building, equipment,
services and other)(5) .................. 242,361 230,086 12,275 — —
Other(6) .............................. 8,591 1,354 1,692 1,362 4,183
Total ............................. $5,748,728 $3,416,196 $614,753 $256,914 $1,460,865
(1) Amounts include contractual interest payments.
(2) The amount includes interest accreted to maturity for the Company’s Zero Coupon 3
1
⁄ 2 % Convertible Sub-
ordinated Notes due August 2017, totaling $415,246. The consolidated balance sheet as of August 28, 2005
reflects a balance outstanding of $274,071.
(3) Operating lease obligations have been reduced by $168,742 to reflect sub-lease income.
(4) Includes open merchandise purchase orders at fiscal year end.
(5) The amounts exclude minor outsourced services negotiated at the individual warehouse level that are not
significant and generally contain clauses allowing for cancellation without significant penalty.
(6) Consists of asset retirement and deferred compensation obligations.
Expansion Plans
Costco’s primary requirement for capital is the financing of the land, building and equipment costs for new
warehouses plus the costs of initial warehouse operations and working capital requirements, as well as additional
capital for international expansion.
While there can be no assurance that current expectations will be realized, and plans are subject to change
upon further review, it is management’s current intention to spend approximately $1,100,000 to $1,250,000 dur-
ing fiscal 2006 in the United States and Canada for real estate, construction, remodeling and equipment for
warehouse clubs and related operations; and approximately $100,000 to $150,000 for international expansion,
including the United Kingdom, Asia, Mexico and other potential ventures. These expenditures are expected to be
financed with a combination of cash provided from operations and the use of cash and cash equivalents and
short-term investments.
Expansion plans for the United States and Canada during fiscal 2006 are to open approximately 28-30 new
warehouse clubs on a net basis, inclusive of two to three relocations to larger and better-located warehouses. The
Company expects to continue its review of expansion plans in its international operations, including the United
Kingdom and Asia, along with other international markets. At present, the Company is planning to open three
additional warehouses in the U.K during fiscal 2006. Costco Mexico plans to open two to three new warehouse
clubs during fiscal 2006.
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