COSTCO WHOLESALE CORP NEW
For the period ended Sep 1, 2024. Filed Oct 9, 2024.
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FY2024 · Filed Oct 9, 2024
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Notes
Note 4—Debt
Short-Term Borrowings
The Company maintains various short-term bank credit facilities, with a borrowing capacity of $1,198 and $1,234, in 2024 and 2023. Short-term borrowings outstanding were immaterial at the end of 2024 and 2023.
Long-Term Debt
The Company's long-term debt consists primarily of Senior Notes, described below. The Company at its option may redeem the Senior Notes 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 or the sum of the present value of the remaining scheduled payments of principal and interest to maturity. Additionally, upon certain events, a holder has the right to require a repurchase at a price of 101% of the principal amount plus accrued and unpaid interest. Interest on all outstanding long-term debt is payable semi-annually. The estimated fair value of Senior Notes is valued using Level 2 inputs.
Other long-term debt consists of Guaranteed Senior Notes issued by the Company's Japanese subsidiary, valued using Level 3 inputs. In November 2023, the Company’s Japan subsidiary issued four Guaranteed Senior Notes, totaling approximately $500, at fixed interest rates ranging from 1.400% to 2.120%. Interest is payable semi-annually, and maturity dates range from November 7, 2033, to November 7, 2043. In July 2024, the Japanese subsidiary repaid $77 of its Guaranteed Senior Notes.
On May 18, 2024, the Company paid the $1,000 outstanding principal balance and interest on the 2.750% Senior Notes using cash and cash equivalents and short-term investments.
At the end of 2024 and 2023, the fair value of the Company's long-term debt, including the current portion, was approximately $5,412 and $5,738. The carrying value of long-term debt consisted of the following:
| 2024 | 2023 | |
|---|---|---|
| 2.750% Senior Notes due May 2024 | $— | $1,000 |
| 3.000% Senior Notes due May 2027 | 1,000 | 1,000 |
| 1.375% Senior Notes due June 2027 | 1,250 | 1,250 |
| 1.600% Senior Notes due April 2030 | 1,750 | 1,750 |
| 1.750% Senior Notes due April 2032 | 1,000 | 1,000 |
| Other long-term debt | 919 | 484 |
| Total long-term debt | 5,919 | 6,484 |
| Less unamortized debt discounts and issuance costs | 22 | 26 |
| Less current portion(1) | 103 | 1,081 |
| Long-term debt, excluding current portion | $5,794 | $5,377 |
(1)Net of unamortized debt discounts and issuance costs.
Maturities of long-term debt during the next five fiscal years and thereafter are as follows:
| 2025 | $103 |
| 2026 | 76 |
| 2027 | 2,250 |
| 2028 | — |
| 2029 | 150 |
| Thereafter | 3,340 |
| Total | $5,919 |
Note 5—Leases
The tables below present information regarding the Company's lease assets and liabilities.
| 2024 | 2023 | |
|---|---|---|
| Assets | ||
| Operating lease right-of-use assets | $2,617 | $2,713 |
| Finance lease assets(1) | 1,433 | 1,325 |
| Total lease assets | $4,050 | $4,038 |
| Liabilities | ||
| Current | ||
| Operating lease liabilities(2) | $179 | $220 |
| Finance lease liabilities(2) | 147 | 129 |
| Long-term | ||
| Operating lease liabilities | 2,375 | 2,426 |
| Finance lease liabilities(3) | 1,351 | 1,303 |
| Total lease liabilities | $4,052 | $4,078 |
(1)Included in other long-term assets in the consolidated balance sheets.
(2)Included in other current liabilities in the consolidated balance sheets.
(3)Included in other long-term liabilities in the consolidated balance sheets.
| 2024 | 2023 | |
|---|---|---|
| Weighted-average remaining lease term (years) | ||
| Operating leases | 19 | 20 |
| Finance leases | 23 | 24 |
| Weighted-average discount rate | ||
| Operating leases | 2.67% | 2.47% |
| Finance leases | 4.59% | 4.47% |
The components of lease expense, excluding short-term lease costs and sublease income (which were immaterial), were as follows:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Operating lease costs(1) | $284 | $309 | $297 |
| Finance lease costs: | |||
| Amortization of lease assets(1) | 97 | 169 | 128 |
| Interest on lease liabilities(2) | 58 | 54 | 45 |
| Variable lease costs(1) | 163 | 160 | 157 |
| Total lease costs | $602 | $692 | $627 |
(1)Included in selling, general and administrative expenses and merchandise costs in the consolidated statements of income.
(2)Included in interest expense and merchandise costs in the consolidated statements of income.
Supplemental cash flow information related to leases was as follows:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Cash paid for amounts included in the measurement of lease liabilities: | |||
| Operating cash flows — operating leases | $274 | $287 | $277 |
| Operating cash flows — finance leases | 58 | 54 | 45 |
| Financing cash flows — finance leases | 136 | 291 | 176 |
| Operating lease assets obtained in exchange for new or modified leases | 125 | 202 | 231 |
| Finance lease assets obtained in exchange for new or modified leases | 200 | 100 | 794 |
As of September 1, 2024, future minimum payments during the next five fiscal years and thereafter are as follows:
| Operating Leases(1) · Finance Leases | ||
|---|---|---|
| 2025 | $242 | $204 |
| 2026 | 247 | 128 |
| 2027 | 226 | 120 |
| 2028 | 209 | 122 |
| 2029 | 183 | 109 |
| Thereafter | 2,205 | 1,664 |
| Total(2) | 3,312 | 2,347 |
| Less amount representing interest | 758 | 849 |
| Present value of lease liabilities | $2,554 | $1,498 |
(1)Operating lease payments have not been reduced by expected future sublease income of $98.
(2)Excludes $1,080 of lease payments for leases that have been signed but not commenced.
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