Costco 2001 Annual Report Download - page 15

ventures. These expenditures will be financed with a combination of cash provided from operations, the
use of cash and cash equivalents and short-term investments, short-term borrowings under revolving credit
facilities and other financing sources as required.
Expansion plans for the United States and Canada during fiscal 2002 are to open approximately 34 to
36 new warehouse clubs, including six to seven relocations to larger and better-located warehouses. The
Company expects to continue expansion of its international operations and plans to open two to three
additional units in the United Kingdom through its 80%-owned subsidiary, and one additional unit in
Korea through its 96%-owned subsidiary. Other international markets are being assessed.
Costco and its Mexico-based joint venture partner, Controladora Comercial Mexicana, each own a
50% interest in Costco Mexico. As of September 2, 2001, Costco Mexico operated 20 warehouses in
Mexico and plans to open one or two new warehouse clubs during fiscal 2002.
Reorganization of Canadian Administrative Operations
On January 17, 2001, the Company announced plans to reorganize and consolidate the administration
of its operations in Canada. Anticipated costs related to the reorganization are estimated to total $26,000
pre-tax ($15,600 after-tax, or $.03 per diluted share), expensed as incurred in fiscal 2001 and to be incurred
in the first quarter of fiscal 2002. During the current year the Company expensed $19,000 related to this
reorganization and consolidation process and has reported this charge as part of the provision for impaired
assets and closing costs.
Bank Credit Facilities and Commercial Paper Programs (all amounts stated in thousands of US dollars)
The Company has in place a $500,000 commercial paper program supported by a $500,000 bank credit
facility with a group of 10 banks, of which $250,000 expires on November 12, 2002 and $250,000 expires on
November 15, 2005. At September 2, 2001, $194,000 was outstanding under the commercial paper program
and no amounts were outstanding under the loan facility.
In addition, a wholly owned Canadian subsidiary has a $129,000 commercial paper program supported
by a $90,000 bank credit facility with three Canadian banks, which expires in March, 2002. At September 2,
2001, no amounts were outstanding under the bank credit facility or the Canadian commercial paper
program.
The Company has agreed to limit the combined amount outstanding under the U.S. and Canadian
commercial paper programs to the $590,000 combined amounts of the respective supporting bank credit
facilities.
The Company’s wholly-owned Japanese subsidiary has a short-term 3 billion Yen bank line of credit,
equal to approximately $25,000, expiring in November 2002. At September 2, 2001, no amounts were
outstanding under the line of credit.
Letters of Credit
The Company has separate letter of credit facilities (for commercial and standby letters of credit),
totaling approximately $556,000. The outstanding commitments under these facilities at September 2, 2001
totaled approximately $127,000, including approximately $29,000 in standby letters of credit.
Financing Activities
During April 2001, the Company retired its unsecured note payable to banks of $140,000 using cash
provided from operations, cash and cash equivalents and short-term borrowings under its commercial
paper program.
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