Costco Likes Tax Break
October 10, 2005-- Home Textiles Today,
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.
|Oper. income (EBIT)||484,591||479,565||1.0|
|Per share (diluted)||0.73||0.62||17.7|
|Average gross margin||10.4%||10.8%||–|
|Oper. income (EBIT)||1,543,926||1,417,099||8.9|
|Per share (diluted)||2.18||1.85||17.8|
|Average gross margin||10.6%||10.7%||–|