Costco 2008 Annual Report Download - page 66

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In December 2007, one of the Company’s enhanced money fund investments, Columbia Strategic
Cash Portfolio Fund (Columbia), ceased accepting cash redemption requests and changed to a
floating net asset value. In light of the restricted liquidity, the Company elected to receive a pro-rata
allocation of the underlying securities in a separately managed account. The Company assessed the
fair value of the underlying securities in this account through market quotations and review of current
investment ratings, as available, coupled with an evaluation of the liquidation value of each investment
and its current performance in meeting scheduled payments of principal and interest. In 2008, the
Company recognized $5,033 of other-than-temporary losses related to these securities: $2,773, $1,431
and $829 in the second, third and fourth quarters, respectively. The losses are included in interest
income and other in the accompanying consolidated statements of income. At the end of 2008, the
balance of the Columbia fund was $103,641 on the consolidated balance sheet.
Additionally, in December 2007, two other enhanced money fund investments, BlackRock Cash
Strategies, LLC (BlackRock) and Merrill Lynch Capital Reserve Fund, LLC (Merrill Lynch), ceased
accepting redemption requests. These two funds are being liquidated with periodic distributions and
the expectation is that the funds will be substantially liquidated by 2010. To date, the funds have
maintained a $1.00 per unit net asset value. At the end of 2008, the combined balance of BlackRock
and Merrill Lynch funds was $125,089 on the consolidated balance sheet. The Company received cash
redemptions of $48,212 from the BlackRock and Merrill Lynch funds subsequent to the end of the year
and through October 14, 2008.
During 2008, the Company reclassified $371,062 related to these three funds from cash and cash
equivalents. This reclassification is shown in cash flows from investing activities in the consolidated
statements of cash flows. At the end of 2008, $228,730 remained, with $160,708 in short-term
investments and $68,022 in other assets on the consolidated balance sheet, reflecting the timing of the
expected distributions.
The maturities of available-for-sale and held-to-maturity debt securities at August 31, 2008 are as
follows:
Available-For-Sale Held-To-Maturity
Cost Basis Fair Value Cost Basis Fair Value
Due in one year or less .................... $385,888 $386,049 $125,549 $125,549
Due after one year through five years ........ 210,682 209,574 — —
Due after five years ....................... 2,547 2,434 — —
$599,117 $598,057 $125,549 $125,549
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