Costco 2010 Annual Report Download - page 32

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Preopening expenses include costs incurred for startup operations related to new warehouses and the
expansion of operations at existing warehouses. Preopening expenses can vary due to the timing of
the warehouse opening relative to our year-end, whether the warehouse is owned or leased, and
whether the opening is in an existing, new, or international market. The 2009 preopening expense
included costs related to several international warehouses that opened in the fourth quarter of fiscal
2009.
Provision for Impaired Assets and Closing Costs, Net
2010 2009 2008
Warehouse closing expenses ............................. $ 6 $ 9 $ 9
Impairment of long-lived assets ............................ 2 8 10
Net gains on the sale of real property ....................... — — (19)
Provision for impaired assets & closing costs, net ............. $ 8 $17 $—
This provision primarily includes costs related to: impairment of long-lived assets; future lease
obligations of warehouses that have been closed or relocated to new facilities; accelerated
depreciation, based on the shortened useful life through the expected closing date on buildings to be
demolished or sold and that are not otherwise impaired; and gains and losses resulting from the sale of
real property, largely comprised of former warehouse locations.
2010 vs. 2009
The net provision for impaired assets and closing costs was $8 in 2010, compared to $17 in 2009. The
provision in 2010 included charges of $6 for warehouse closing expenses and impairment charges of
$2.
2009 vs. 2008
The net provision for impaired assets and closing costs was $17 in 2009, compared to a nominal
amount in 2008. The provision in 2009 included charges of $9 for warehouse closing expenses, and
impairment charges of $8, primarily related to the closing of our two Costco Home locations in July
2009. The impairment charge in 2008 primarily related to a warehouse in Michigan that was
demolished and rebuilt.
At the end of both 2010 and 2009, the reserve for warehouse closing costs was $5, and primarily
related to future lease obligations.
Interest Expense
2010 2009 2008
Interest expense ..................................... $111 $108 $103
Interest expense primarily relates to our $900 of 5.3% and $1,100 of 5.5% Senior Notes (2007 Senior
Notes) issued in 2007.
Interest Income and Other, Net
2010 2009 2008
Earnings of affiliates and other, net ........................ $65 $31 $ 49
Interest income ........................................ 23 27 96
Interest Income and other, net ........................ $88 $58 $145
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