Costco 2000 Annual Report Download - page 29

COSTCO WHOLESALE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share data)
Note 2ÌDebt (Continued)
In April 1996, the Company borrowed $140,000 from a group of banks under a Ñve-year unsecured term
loan. Interest only is payable quarterly at rates based on LIBOR.
On August 19, 1997, the Company completed the sale of $900,000 principal amount at maturity of Zero
Coupon Subordinated Notes (the ""Notes'') due August 19, 2017. The Notes were priced with a yield to
maturity of 3¥%, resulting in gross proceeds to the Company of $449,640. The Notes are convertible into a
maximum of 20,438,180 shares of Costco Common Stock at an initial conversion price of $22.00. Holders of
the Notes may require the Company to purchase the Notes (at the discounted issue price plus accrued interest
to date of purchase) on August 19, 2002, 2007, or 2012. The Company, at its option, may redeem the Notes
(at the discounted issue price plus accrued interest to date of redemption) any time on or after August 19,
2002. As of September 3, 2000, $48,123 in principal amount of the Zero Coupon Notes were converted by
note holders to shares of Costco Common Stock.
In February, 1996, the Company Ñled with the Securities and Exchange Commission a shelf registration
statement for $500,000 of senior debt securities. Although the registration statement was declared eÅective, no
securities have been issued under this Ñling.
At September 3, 2000, the fair value of the 7±% Senior Notes, based on market quotes, was
approximately $300,120. The Senior Notes are not redeemable prior to maturity. The fair value of the 3¥%
Zero Coupon Subordinated Notes at September 3, 2000, based on market quotes, was approximately
$727,418. The fair value of other long-term debt approximates carrying value.
Maturities of long-term debt during the next Ñve Ñscal years and thereafter are as follows:
2001 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $148,749
2002 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,829
2003 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,586
2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,264
2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 301,396
Thereafter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 481,978
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $938,802
Note 3ÌLeases
The Company leases land and/or warehouse buildings at 68 of the 313 warehouses open at September 3,
2000, and certain other oÇce and distribution facilities under operating leases with remaining terms ranging
from 1 to 30 years. These leases generally contain one or more of the following options which the Company
can exercise at the end of the initial lease term: (a) renewal of the lease for a deÑned number of years at the
then fair market rental rate; (b) purchase of the property at the then fair market value; or (c) right of Ñrst
refusal in the event of a third party purchase oÅer. Certain leases provide for periodic rental increases based on
the price indices and some of the leases provide for rents based on the greater of minimum guaranteed
amounts or sales volume. Contingent rents have not been material.
Additionally, the Company leases certain equipment and Ñxtures under short-term operating leases that
permit the Company to either renew for a series of one-year terms or to purchase the equipment at the then
fair market value.
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