Costco Likes Tax Break
By Don Hogsett -- Home Textiles Today, 10/10/2005 12:00:00 AM
Issaquah, Wash. — —
Issaquah, Wash. — Getting a big lift from a lower tax rate and a smaller tax bill, fourth quarter profits at Costco Wholesale Corp. climbed 19.5 percent, to $354.7 million from $296.8 million last year.
But roughly half of the lift to the bottom line came from the break in taxes, which slashed the retailer's bill 17.3 percent, or $144.2 million, yielding a cash savings of $30.1 million. Excluding the tax relief, earnings rose at a more moderate pace of 9.4 percent, to $324.6 million.
Operating profits at the warehouse giant inched up just 1 percent, to $484.6 million from $479.6 million. Providing a big lift to the bottom line, in addition to lower taxes, were two other non-operating items, a big cut in interest costs, and a jump in interest income and miscellaneous income. Interest expense was whittled 32.7 percent, to $7.3 million from $10.9 million last year, a cash savings of $3.6 million.
Costco Wholesale Corp.
| Qtr. 8/28 (x000) | 2005 | 2004 | % change |
| a. Net sales during the fourth quarter, excluding $339.8 million in membership fees, compared with $306.4 million last year. For the 12 months, membership fees totaled $1.1 billion vs. $961,280 the prior year. b. Fourth quarter results include $10.4 million in pre-opening expenses, compared with $11.6 million last year; a $5.5 million provision for impaired assets and closing costs, compared with $2.5 million during the same period a year ago; miscellaneous income of $38.6 million $16.5 million a year ago; and an income tax provision of $144.2 million, down 17.3 percent from $174.3 million. c. 12-month results include $53.2 million in pre-opening costs vs. $30.5 million last year; a $16.4 million provision for impaired assets and closing costs, compared with $1.0 million last year; miscellaneous income of $109.1 million, compared with $51.6 million a year ago; and an income tax provision of $485.9 million, down 6.2 percent from $518.2 million the prior year. |
|||
| Sales | $16,362,437a | $14,832,939a | 10.3 |
| Oper. income (EBIT) | 484,591 | 479,565 | 1.0 |
| Net income | 354,699b | 296,768b | 19.5 |
| Per share (diluted) | 0.73 | 0.62 | 17.7 |
| Average gross margin | 10.4% | 10.8% | – |
| SG&A expenses | 9.6% | 9.6% | – |
| 12 months | |||
| Sales | 51,862,072a | 47,145,712a | 10.0 |
| Oper. income (EBIT) | 1,543,926 | 1,417,099 | 8.9 |
| Net income | 1,063,092b | 882,393c | 20.5 |
| Per share (diluted) | 2.18 | 1.85 | 17.8 |
| Average gross margin | 10.6% | 10.7% | – |
| SG&A expenses | 9.7% | 9.8% | – |
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