Costco 2002 Annual Report Download - page 15

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Letters of Credit
The Company has separate letter of credit facilities (for commercial and standby letters of credit), totaling
approximately $373,000. The outstanding commitments under these facilities at September 1, 2002 totaled ap-
proximately $142,000, including approximately $32,000 in standby letters of credit.
Contractual Obligations
The Company’s commitment to make future payments under long-term contractual obligations was as fol-
lows, as of September 1, 2002.
Payments Due by Period
Contractual obligations Total
Less than
1year
1to3
years
4to5
years
After
5 years
Long-term debt(1) ..................... $1,659,030(2) $ 40,446 $369,906 $337,843 $ 910,835(2)
Capital lease obligations ................ 14,409 7,244 3,168 1,115 2,882
Operating leases ...................... 1,095,780 67,955 129,275 127,202 771,348
Total ............................. $2,769,219 $115,645 $502,349 $466,160 $1,685,065
(1) Amounts include contractual interest payments.
(2) The amount includes the amount of interest accreted to maturity for the Company’s Zero Coupon 3½%
Convertible Subordinated Notes due August 2017, totaling $851,860. The balance sheet as of September 1,
2002 reflects the current balance outstanding of $506,883.
Financing Activities
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.
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.
In March 2002, the Company issued $300,000 of 5
1
⁄
2
% Senior Notes due March 15, 2007. Interest is pay-
able semi-annually. Simultaneous with the issuance of the Senior Notes, the Company entered into interest rate
swap agreements converting the interest from fixed to floating.
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.
Derivatives
The Company has limited involvement with derivative financial instruments and uses them only to manage
well-defined interest rate and foreign exchange risks. Forward foreign exchange contracts are used to hedge the
impact of fluctuations of foreign exchange on inventory purchases and typically have very short terms. The ag-
gregate amount of foreign exchange contracts outstanding at September 1, 2002 was not material. The only
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