Costco 2007 Annual Report Download - page 37

million at September 3, 2006), renewable on a yearly basis in May 2008, and a $40.3 million
uncommitted money market line entered into in February 2007 and renewable on a yearly basis
beginning in May 2008. At September 2, 2007, $20.1 million was outstanding under the revolving credit
facility with an applicable interest rate of 6.23%, $15.6 million was outstanding under the uncommitted
line with an applicable interest rate of 6.47% and no amounts were outstanding under the bank
overdraft facility with an applicable interest rate of 6.75%. At September 3, 2006, $38.0 million was
outstanding under the revolving credit facility, with an applicable interest rate of 5.32%, and no
amounts were outstanding under the bank overdraft facility.
Letters of Credit
We have letter of credit facilities (for commercial and standby letters of credit) totaling $475.0 million.
The outstanding commitments under these facilities at September 2, 2007 and September 3, 2006
totaled $119.1 million and $84.9 million, respectively, including $71.7 million and $54.9 million,
respectively, in standby letters of credit.
Financing Activities
On February 20, 2007, we issued $900 million of 5.3% Senior Notes due March 15, 2012 at a discount
of $2.5 million and $1.1 billion of 5.5% Senior Notes due March 15, 2017 at a discount of $5.9 million
(together, the 2007 Senior Notes). Interest on the 2007 Senior Notes is payable semi-annually on
March 15 and September 15 of each year, with the first payment due on September 15, 2007. The net
proceeds were used, in part, to repay the 2002 Senior Notes in March 2007, and the balance has been
and will be used for general corporate purposes, including repurchases of our common stock. The $8.4
million discount and $2.0 million issuance costs associated with the 2007 Senior Notes are being
amortized to interest expense over the terms of those notes.
At our option, we may redeem the 2007 Senior Notes at any time, in whole or in part, at a redemption
price plus accrued interest up to the redemption date. The redemption price is equal to the greater of
100% of the principal amount of the 2007 Senior Notes to be redeemed, or the sum of the present
values of the remaining scheduled payments of principal and interest to maturity. Additionally, we will
be required to make an offer to purchase the 2007 Senior Notes at a price of 101% of the principal
amount plus accrued and unpaid interest to the date of repurchase, upon certain events as defined by
the terms of the 2007 Senior Notes.
In April 2003, our wholly-owned Japanese subsidiary issued promissory notes bearing interest at
0.92% in the aggregate amount of $34.4 million, through a private placement. Interest is payable semi-
annually and principal is due in April 2010. In November 2002, our wholly-owned Japanese subsidiary
issued promissory notes bearing interest at 0.88% in the aggregate amount of $25.8 million, through a
private placement. Interest is payable semi-annually and principal is due in November 2009. In July
2001, our wholly-owned Japanese subsidiary issued 1.187% promissory notes in the aggregate
amount of $25.8 million, through a private placement. Interest is payable semi-annually and principal is
due in July 2008. In October 2000, our wholly-owned Japanese subsidiary issued 2.070% promissory
notes in the aggregate amount of $30.1 million, through a private placement. Interest is payable
annually and principal is due in October 2007 and will be refinanced. As of September 2, 2007, the
1.187% and the 2.070% promissory notes are reported in the current portion of long-term debt on our
consolidated balance sheets.
In August 1997, we completed the sale of $900.0 million principal amount at maturity Zero Coupon
Notes due in August 2017. The Zero Coupon Notes were priced with a yield to maturity of 3.5%,
resulting in gross proceeds to us of $449.6 million. The current Notes outstanding are convertible into a
maximum of 1.5 million shares of Costco Common Stock shares at an initial conversion price of
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