Costco 2009 Annual Report Download - page 67

In 2008, 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 these
securities 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. During 2009 and 2008, the Company recognized $12
and $5, respectively, of other-than-temporary impairment losses related to these securities. The losses
are included in interest income and other in the accompanying consolidated statements of income. At
August 30, 2009 and August 31, 2008, the balance of the Columbia fund was $27 and $104,
respectively, on the consolidated balance sheets.
In 2008, two other enhanced money fund investments, BlackRock Cash Strategies, LLC (BlackRock)
and Merrill Lynch Capital Reserve Fund, LLC (Merrill Lynch), ceased accepting redemption requests
and commenced liquidation. As of August 31, 2008, the balance of the BlackRock and Merrill Lynch
funds was $82 and $43, respectively, on the consolidated balance sheets. During 2009, these funds
were liquidated and the Company received the remaining balances of its investment.
During 2008, the Company reclassified $371 of these three funds from cash and cash equivalents to
short-term investments and other assets. At August 30, 2009, $24 remained in short-term investments
and $3 remained in other assets on the consolidated balance sheets, reflecting the timing of the
expected distributions. At August 31, 2008, $161 was in short-term investments and $68 in other
assets on the consolidated balance sheets.
The markets relating to these investments remain uncertain, and there may be further declines in the
value of these investments that may cause additional losses in future periods.
The maturities of available-for-sale and held-to-maturity securities at August 30, 2009 are as follows:
Available-For-Sale Held-To-Maturity
Cost Basis Fair Value Cost Basis Fair Value
Due in one year or less .............................. $324 $325 $59 $59
Due after one year through five years ................... 178 181 — —
Due after five years ................................. 8 8 — —
$510 $514 $59 $59
Note 3—Fair Value Measurement
On September 1, 2008, the Company adopted SFAS 157, as amended by FSP 157-1, FSP 157-2, and
FSP 157-3 and effective May 11, 2009, the Company adopted FSP 157-4 (collectively referred to as
SFAS 157), for all financial assets and liabilities that are recognized or disclosed at fair value in the
consolidated financial statements on a recurring basis or on a nonrecurring basis during the reporting
period. While the Company adopted the provisions of SFAS 157 for nonfinancial assets and liabilities
that are recognized or disclosed at fair value in the financial statements on a recurring basis, no such
assets or liabilities existed at the balance sheet date. The Company, in accordance with FSP 157-2,
delayed implementation of SFAS 157 for all nonfinancial assets and liabilities recognized or disclosed
at fair value in the financial statements on a nonrecurring basis. Nonfinancial nonrecurring assets and
liabilities included on the Company’s consolidated balance sheets include items, such as goodwill and
long lived assets, that are measured at fair value to test for and measure an impairment charge, when
necessary.
65