Costco 2014 Annual Report Download - page 60

Download and view the complete annual report

Please find page 60 of the 2014 Costco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 76

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76

Notes are being amortized to interest expense over the terms of the notes. The December 2012 Notes
are classified as a Level 2 measurement in the fair value hierarchy.
In February 2007, the Company issued $1,100 of 5.5% Senior Notes due March 15, 2017 at a discount of
$6 (the 2007 Senior Note). Interest is payable semi-annually. The discount and issuance costs associated
with the Senior Note are being amortized to interest expense over the term of the note. The Company, at
its option, may redeem the 2007 Senior Note at any time, in whole or in part, at a redemption price plus
accrued interest. The redemption price is equal to the greater of 100% of the principal amount of the 2007
Senior Note to be redeemed or the sum of the present value of the remaining scheduled payments of
principal and interest to maturity. Additionally, the Company will be required to make an offer to purchase
the 2007 Senior Note 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 Note. This note is
classified as a Level 2 measurement in the fair value hierarchy.
Other long-term debt consisted primarily of promissory notes and term loans issued by the Company's
Japanese subsidiary. These notes and term loans are classified primarily as a Level 3 measurement in
the fair value hierarchy. In July 2014, the Company's Japanese subsidiary also issued approximately $117
of 0.92% Yen-denominated guaranteed Senior Notes through a private placement. Interest on these
Senior Notes is payable semi-annually and principal is due July 8, 2024. This debt is classified as a Level
3 measurement in the fair value hierarchy.
The estimated fair value of the Company's debt was based primarily on reported market values, recently
completed market transactions, and estimates based upon interest rates, maturities, and credit. The
carrying value and estimated fair value at the end of 2014 and 2013 consisted of the following:
2014 2013
Carrying
Value
Fair
Value Carrying
Value
Fair
Value
0.65% Senior Notes due December 2015 .............................................
$
1,199
$
1,203
$
1,199
$
1,200
5.5% Senior Notes due March 2017 ....................................................... 1,099 1,223
1,098 1,248
1.125% Senior Notes due December 2017 ........................................... 1,100 1,095
1,100 1,065
1.7% Senior Notes due December 2019 ................................................ 1,198 1,186
1,198 1,157
Other long-term debt ................................................................................. 497 510
403 412
Lon
g
-term debt, excludin
g
current
p
ortion .............................................$5,093 $5,217
$ 4,998 $5,082
Maturities of long-term debt during the next five fiscal years and thereafter are as follows:
2015 ........................................................................................................................................................
$
0
2016 ........................................................................................................................................................ 1,296
2017 ........................................................................................................................................................ 1,099
2018 ........................................................................................................................................................ 1,191
2019 ........................................................................................................................................................ 96
Thereafter ............................................................................................................................................... 1,411
Total ................................................................................................................................................. $ 5,093
Note 5—Leases
Operating Leases
The aggregate rental expense for 2014, 2013, and 2012 was $230, $225, and $220, respectively. Sub-
lease income, included in interest income and other, net, and contingent rents were not material.
58