Costco 2008 Annual Report Download - page 88

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Subsequent to the end of 2008, Lehman Brothers Holdings Inc. (Lehman) filed a petition under
Chapter 11 of the U.S. Bankruptcy Code. At August 31, 2008, the Company held $2,321 of Lehman
securities, within the Columbia portfolio, purchased by the fund manager prior to receipt of the
Company’s pro-rata allocation of the fund’s investments in December 2007. As of October 14, 2008,
the Company does not have an estimate of the recovery value of these securities.
Additionally, on September 29, 2008, one of Sigma Finance Corporation’s (Sigma) lenders terminated
its repurchase agreements, followed by two additional lenders also terminating agreements. On
September 30, 2008, Sigma received a notice of default, which is expected to cause lenders to move
to seize Sigma’s assets. Sigma’s Board of Directors also announced they will cease trading. At
August 31, 2008, the Company held Sigma securities with a market value of $2,215 and a book value
of $1,896, within the Columbia portfolio purchased by the fund manager prior to receipt of the
Company’s pro-rata allocation of the fund’s investments in December 2007. These securities were
previously impaired during 2008 and $1,351 was recorded as an other-than-temporary impairment. As
of October 14, 2008, the Company does not have an estimate of the recovery value of these securities.
On October 9, 2008, the Company’s 50% joint venture partner in Costco Mexico, Controladora
Comercial Mexicana, initiated a reorganization proceeding in Mexico. That filing does not include the
Company’s joint venture Costco Mexico, and at present the Company does not expect this filing to
have a material impact on the venture’s financial condition or operations.
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