Costco 2003 Annual Report Download - page 41

Note 3—Debt (Continued)
In October 2000, the Company’s wholly-owned Japanese subsidiary issued 2.070% promissory notes in the
aggregate amount of approximately $30,079, through a private placement. Interest is payable annually and
principal is due on October 23, 2007.
In July 2001, the Company’s wholly-owned Japanese subsidiary issued 1.187% promissory notes in the ag-
gregate amount of approximately $25,782, through a private placement. Interest is payable semi-annually and
principal is due on July 9, 2008.
In November 2002, the Company’s wholly-owned Japanese subsidiary issued promissory notes bearing
interest at 0.88% in the aggregate amount of approximately $25,782, through a private placement. Interest is
payable semi-annually and principal is due on November 7, 2009.
In April 2003, the Company’s wholly-owned Japanese subsidiary issued promissory notes bearing interest at
0.92% in the aggregate amount of approximately $34,376, through a private placement. Interest is payable semi-
annually and principal is due on April 26, 2010.
During April 2001, the Company retired its unsecured note payable to banks of $140,000 using cash pro-
vided from operations, cash and cash equivalents, and short-term borrowings under its commercial paper pro-
gram.
On August 19, 1997, the Company completed the sale of $900,000 principal amount at maturity Zero Cou-
pon Subordinated Notes (the “Notes”) due August 19, 2017. The Notes were priced with a yield to maturity of
3
1
⁄ 2 %, resulting in gross proceeds to the Company of $449,640. The Notes are convertible into a maximum of
19,344,969 shares of Costco Common Stock shares 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, 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 August 31,
2003, $48,140 in principal amount of the Zero Coupon Notes had been converted by note holders to shares of
Costco Common Stock.
In February 1996, the Company filed with the Securities and Exchange Commission a shelf registration
statement for $500,000 of senior debt securities. On October 23, 2001, an additional $100,000 in debt securities
were registered, bringing the total amount of debt registered under the shelf registration to $600,000. The
$300,000 of 5.5% Senior Notes issued in March 2002, reduced the amount of registered securities available for
future issuance to $300,000.
At August 31, 2003, the fair value of the 7
1
⁄ 8 % Senior Notes, and the 5
1
⁄ 2 % Senior Notes, based on market
quotes, was approximately $321,780 and $320,760, respectively. The Senior Notes are not redeemable prior to
maturity. The fair value of the 3
1
⁄ 2 % Zero Coupon Subordinated Notes at August 31, 2003, based on market
quotes, was approximately $634,951. The fair value of other long-term debt approximates carrying value.
Maturities of long-term debt during the next five fiscal years and thereafter are as follows:
2004 ............................................................ $ 7,051
2005 ............................................................ 311,536
2006 ............................................................ 1,870
2007 ............................................................ 327,563
2008 ............................................................ 58,095
Thereafter ....................................................... 590,585
Total ....................................................... $1,296,700
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