Costco 2002 Annual Report Download - page 36

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Note 2—Debt (Continued)
In October 2000, the Company’s wholly-owned Japanese subsidiary issued 2.070% promissory notes in the
aggregate amount of 3.5 billion Yen, equal to $29,400, 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 3 billion Yen, equal to $25,200, through a private placement. Interest is payable semi-annually
and principal is due on July 9, 2008.
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.
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 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 pur-
chase) 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 September 1, 2002,
$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
1
⁄
2
% Senior Notes issued in March 2002, reduced the amount of registered securities available for
future issuance to $300,000.
At September 1, 2002, the fair value of the 7
1
⁄
8
% Senior Notes, and the 5
1
⁄
2
% Senior Notes, based on mar-
ket quotes, was approximately $329,160 and $315,990, respectively. The Senior Notes are not redeemable prior
to maturity. The fair value of the 3
1
⁄
2
% Zero Coupon Subordinated Notes at September 1, 2002, based on market
quotes, was approximately $662,006. 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:
2003 ............................................................ $ 7,584
2004 ............................................................ 3,239
2005 ............................................................ 309,125
2006 ............................................................ 1,302
2007 ............................................................ 329,485
Thereafter ....................................................... 567,487
Total ......................................................... $1,218,222
35