COSTCO WHOLESALE CORP /NEW

Note 4—Debt

Short-Term Borrowings

The Company maintains various short-term bank credit facilities, with a borrowing capacity of $2,118 and $1,220, in 2026 and 2025. This increase was primarily driven by the renewal and expansion of the Company's U.S. revolving credit facility in August 2026, which increased total borrowing capacity from $400 to $1,000 and extended the maturity date to August 2027, as well as credit facility expansions in the Japan and Mexico subsidiaries. There were no short-term borrowings outstanding at the end of 2026, and short-term borrowings were immaterial at the end of 2025.

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 2026, the Company’s Japan subsidiary issued three series of Guaranteed Senior Notes, totaling approximately $500, at fixed interest rates ranging from 2.620% to 3.680%. Interest is payable semi-annually, and maturity dates range from June 2031 to June 2041. In 2026, 2025, and 2024 the Japanese subsidiary repaid $69, $103, and $77 of its Guaranteed Senior Notes.

In 2024, the Company repaid the $1,000 outstanding principal balance on its 2.750% Senior Notes.

At the end of 2026 and 2025, the fair value of the Company's long-term debt, including the current portion, was $5,689 and $5,370. The carrying value of long-term debt consisted of the following:

(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:

Note 5—Leases

Information regarding the Company's lease assets and liabilities were as follows:

(1)Included inother long-term assets in the consolidated balance sheets.

(2)Included inother current liabilities in the consolidated balance sheets.

(3)Included inother long-term liabilities in the consolidated balance sheets.

The components of lease expense, excluding short-term lease costs and sublease income (which were immaterial), were as follows:

(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 were as follows:

As of August 30, 2026, future minimum payments during the next five fiscal years and thereafter are as follows:

(1)Operating lease payments have not been reduced by expected future sublease income of $90.

(2)Excludes $1,667 of lease payments for leases that have been signed but not commenced.