Welcome to the conference. I would now like to introduce Mr. Richard Galanti, Chief Financial Officer of Costco Wholesale Corporation. Please go ahead, sir.
Thanks, Amy, and good afternoon to everyone. This should be a brief call. We just wanted to reiterate what we announced today in 2 different press releases. This morning, we had a press release that announced not only our November sales results, but also the special dividend that the Board of Directors declared. It's a $7 cash dividend payable on December 18 to shareholders of record at the close of business on December 10.
In total based on shares outstanding, it will be right at $3,000,000,000 This of course is in addition to our normal quarterly dividend, which will be paid on November 30 to shareholders of record November 16 that was $0.275 for the quarter. As I mentioned and commented in the press release, this of course is being done before calendar year end and continued effort to both return capital while maintaining what we think is a continued strong financial position to allow us to continue to grow our company, which we will continue to do. As many of you know, we have ramped up our expansion this year and we'll continue to grow our company. The press release this afternoon, which just was released about 10, 15 minutes ago, announced the completion of a debt offering today as well, a total of $3,500,000,000 3 tranches 3, 5 7 years. The first tranche is $1,200,000,000 with a 0.650 percent coupon, 65 basis points due in December of 2015.
A $1,100,000,000 tranche of 5 year, which is at 1.8%, 1.125% senior notes due in December of 2017. And the last tranche is 7 year tranche of $1,200,000,000 at 1.70 percent senior notes due in December 2019. Again, that's a total of $3,500,000,000 That is about $450,000,000 to $500,000,000 more than the cost of the dividend and that will be used for general corporate purposes. That really concludes my remarks, but wanted to just make sure that everybody had a chance to get that and answer any brief questions. As you know, by the way, we'll be reporting our fiscal Q1 earnings for the fiscal 12 week period that ended this past Sunday on Wednesday morning at 7 am Pacific Time December 12.
With that, Amy, I'll turn it over for any questions.
Your first question comes from the line of Charles Grom.
Hey, Richard. Just a quick question here on buybacks. Just wondering if today's announcement changes your appetite at all for share repurchases?
Nothing changes as it relates to our current operations including things like dividends and buybacks.
Okay. And then my follow-up would be, looks like year end the pro form a adjusted debt to EBITDA would be about 1.6x, 1.7x. Is that a rate you feel comfortable with going forward? And if it is, would you look to add on debt in the years out as you continue to grow operating income?
Well, as you know, we've always run a relatively conservative balance sheet shop here. We view this as opportunistic certainly well within our strong financial condition. As you know also we've announced this year that we've ramped up CapEx. And so even with all the things we've got going on, we feel we're able to do this. And one of the decisions to look at 3, 5 7 year tranches, while the whole debt market is certainly very attractive, we chose to go to those levels based on our anticipated free cash flow even with everything we've got going on.
So we don't expect at this point things could change, but we don't expect to be adding any debt.
Okay. All right. Thanks a lot.
Your next question comes from the line of John Heinbockel.
So Richard, I know you addressed the issue of buyback. What about further step up in CapEx beyond this year and possible land banking? Because you still have an awful lot of cash on the balance sheet. Is that are those possible uses of that cash? Well, in terms of land banking, we're not very good at land banking.
Once we get it, we want to build on it. Certainly, the pipeline as I've shared with all of you over the last several fiscal quarters is we're finally actually seeing some the pipeline is actually coming increased pipeline of real estate activity is coming to fruition in the form of more locations opened. Just in the first three or just in the 1st 4 months of this fiscal year September through mid December next month, we'll have opened I think 14 units compared to 16 all of last fiscal year and 20 the prior year. So again our best guess ever for this current fiscal year through next August end is somewhere in the certainly above 25 and maybe as many as 30, but probably in the middle of that range is the best guess. And that would bode similar in future years.
I think we've talked about the fact that we feel certainly comfortable getting up towards that 30 number a year in the next few years. And my guess is we have the ability to do that given the fact that we've increased our real estate activities over the last few years. And again, we're seeing that come to fruition. And then you continue to be generally uninterested in acquisitions, right, particularly when you think about outside the U. S.
Things that might exist, it's not been your way and I take it that's still the case. I can only tell you that historically our MO is we never have. And certainly we have plenty of organic growth to do as evidenced by the ramp up and expansion. So I don't see that in the near future. No.
Okay. Thanks.
Your next question comes from the line of Priya O'Reh Gupta. Thank you for taking the call. Just one question around the tenures which you issued today. You chose to focus on the shorter dated maturity of 3, 5, and 7. Can you speak to the strategy around that and why you didn't think about extending out further along the curve?
Well, again, all maturities are certainly attractive these days in the market. We really look at our anticipated cash flows of earnings and depreciation and current the current regular dividend that we've shown that has increased historically each year, occasional buybacks you name it and ramped up CapEx. And even with that, the math shows us that we have the likelihood of generating excess cash over the years over the upcoming years. And so we basically put this out based on how long we think we're going to need it out. There's not a whole lot more to that that I can say.
Okay. That's helpful. Thank you. Your next question comes from the line of Kieran Tally.
Thank you. Can you tell me how much cash you have on your balance sheet and why you used cash why you used debt instead of cash for this specialty dividend?
Well, at fiscal year end, I think the total of cash equivalents and short term investments was about $4,800,000,000 Recognize that as I've discussed in the past on quarterly calls sometimes, we close our fiscal periods on a Sunday night. And so all essentially from when the banks close on Friday afternoon to Monday, all the weekend debit and credit card receivables would be in that number. Although as I've said around here that's not money you can take and go to the movies on Saturday night. So that's generally in the $1,000,000,000 range. There's other cash pools that are essentially in some cases whether it's captive insurance balances, voluntary employee benefit trusts and the like, there's anywhere from $600,000,000 to $700,000,000 of that right now and I'm talking purposely wide numbers because they can vary.
But so and then also just the net of cash and checks that we receive from customers over the weekend and then deposit over the weekend for Monday use if you will, offset by any float we have when we write checks ourselves to merchandise vendors and expense vendors. And there's always some free float there. And then those 2 tend to be a little bit of working capital. So all in, if you'd look at the $4,800,000,000 certainly there's 2 plus that is working it's cash and equivalents, but it's really working capital related. The rest of it is both in the U.
S. And other countries. And again, with our expansion, we'd like to feel comfortable that we've got plenty to do what we want to do and have always aired on the fiscally conservative side and fiscally strong side of the balance sheet. As an example, we're raising 3.5% when about just under 3.05%, I believe based on the shares outstanding is what we'll send to
What is the free cash? What figure can I use the free cash flow free cash on your balance sheet?
Well, I think again very simply put, if you look at the 4.8 and then again it will fluctuate day to day and weekend to weekend. But certainly the roughly $2,000,000,000 or slightly more than $2,000,000,000 I talked about between weekend debit and credit card receivables, money and checks in transit, offset by a little bit of plus other things like balances and captive insurance accounts or what have you. All in that's a little more than $2,000,000,000 of that $4,800,000 So the rest of it, some would consider the rest of it free cash, some would consider a little bit of buffer, but a lot of it free.
And why using debt instead of cash to fund most fund the dividend?
Well, I think that's the question that even before we did this for the last several years, why do we have a balance sheet that shows a lot of net of extra cash? We like being in a financially strong position. Certainly rates at these levels are very attractive and we can extend that out and give us perhaps more flexibility than some would like to see, but we like it.
Thank you.
Your next question comes from Patrick
Hi. Thank you for taking the question. I just had a quick question with regard to how the dividend will be treated. Will it be a return of capital? Or is it ordinary income for tax purposes?
I believe it's a qualified dividend. And I'm sure if somebody was your knowledgeable, they'd say check with your own accountant. But it is I believe a qualified dividend.
Excellent. Thank you very much for taking the question.
And your next question comes from the line of Karen Short.
Hi. Just on CapEx and unit growth in years beyond fiscal 2013, is it fair to say that your unit growth guidance for this year is probably about your maximum kind of in outer years and therefore your CapEx assuming no acquisitions or no other extraordinary will probably end up being kind of in the same range as it will be this year?
I think as we've talked Kerry in the past about the past fiscal year ended September 2, we had CapEx of $1,480,000,000 If you look at the 4, 5 years prior to that, it probably averaged somewhere north of $1,300,000,000 and maybe $1,400,000,000 average. And this year it's closer to it is $2,000,000,000 And that's probably a decent single point estimate for the next several years. There may be the $2,000,000,000 this year includes some expansion of our depot operations both in 1st depot operations in certain new countries certain existing countries that we're getting up to the critical mass to have a depot like some of the Asian countries as well as expanding depots for refrigerated and frozen of those which we hadn't. Also what we call remodel activities which is everything from adding 8 additional gas pumps across the street. So it's 20 not 12 and putting in hearing aid centers, expanding refrigerated and frozen in retail facilities.
So there's other things in there as well, but certainly probably a best guess and this is an estimate that $2,000,000,000 number looking over the next few years is a decent number.
Okay. Thanks.
Okay. Well, thank you very much everyone and we'll talk to you on the morning early on the morning of for us 7 a. M. Pacific Time on the morning of December 12. Thank you.