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March 2, 2000 at 12:00 AM EST

Costco Wholesale Corporation Reports Second Quarter And Year-To-Date Operating Results For Fiscal 2000 And February Sales Results

ISSAQUAH, Wash.--(BUSINESS WIRE)--March 2, 2000--Costco Wholesale Corporation (Nasdaq:COST) announced today its operating results for the second quarter (12 weeks) and first half (24 weeks) of fiscal 2000, ended February 13, 2000.

Net sales for the second quarter of fiscal 2000 increased 17% to $7.61 billion from $6.48 billion during the second quarter of fiscal 1999. On a comparable warehouse basis, that is warehouses open at least a year, net sales increased by 14%.

Net income for the second quarter of fiscal 2000 increased 19% to $181.6 million, or $.39 per share (diluted), from $152.0 million, or $.33 per share (diluted), during the second quarter of fiscal 1999.

Net sales for the first half of fiscal 2000 increased 17% to $14.44 billion from $12.38 billion during the first half of fiscal 1999. Comparable warehouse sales during the first half of fiscal 2000 increased 13% over the prior year's levels.

Net income for the first half of fiscal 2000 was $310.9 million, or $.66 per diluted share. Excluding the impact of a one-time accounting charge taken in last year's first quarter, net income for the first half of fiscal 1999 was $256.3 million, or $.55 per diluted share, resulting in year-over-year earnings and earnings per share increases of 21% and 20%, respectively. In last year's first half, the Company recorded a $118 million non-cash, after-tax charge, reflecting the cumulative effect of the Company's change in accounting for membership fees from a cash to a deferred method, whereby membership fee income is recognized ratably over the one-year life of the membership. Including this one-time charge, the Company last year reported net income of $138.2 million or $.30 per diluted share for the first half of fiscal 1999.

In addition to reporting second quarter fiscal year 2000 operating results, the Company today reported net sales of $2.20 billion for the four weeks ended February 27, 2000, an increase of 17% from $1.88 billion in the same four-week period of the prior fiscal year. On a comparable warehouse basis, that is warehouses open at least a year, sales increased 13%.

For the first twenty-six weeks of its 2000 fiscal year ended February 27, 2000, the Company reported net sales of $15.53 billion, an increase of 17% from $13.32 billion during the first twenty-six weeks of the prior fiscal year. Comparable sales for this year-to-date period increased 13% over the prior year's level.

As previously announced, the Company's Board of Directors approved a 2-for-1 stock split of Costco common stock, whereby shareholders received one additional share of common stock for every share held on the record date of December 24, 1999. The common stock began trading at a post-split price on January 14, 2000, and all per share data noted above reflect this 2-for-1 stock split.

Costco currently operates 304 warehouses, including 231 in the United States, 59 in Canada, seven in the United Kingdom, three in Korea, three in Taiwan and one warehouse in Japan. The Company also operates 17 warehouses in Mexico with a joint venture partner. The Company plans to open an additional 15 to 17 new warehouses (including two to four relocations of existing warehouses to larger and better-located facilities) prior to the end of its 2000 fiscal year on September 3, 2000.

                     COSTCO WHOLESALE CORPORATION
                   CONSOLIDATED STATEMENTS OF INCOME
             (dollars in thousands, except per share data)
                              (unaudited)


                       12 Weeks Ended             24 Weeks Ended
                  ------------------------- -------------------------
                  February 13, February 14, February 13, February 14,
                     2000         1999         2000          1999
                  ------------ ------------ ------------ ------------
REVENUE
Net Sales         $ 7,613,601  $ 6,484,445  $14,437,798  $12,378,683
Membership fees
 and other            123,386      107,913      242,701      211,753
                  -----------  -----------  -----------  -----------
   Total Revenue    7,736,987    6,592,358   14,680,499   12,590,436

OPERATING EXPENSES
Merchandise costs   6,792,367    5,788,653   12,912,568   11,076,438
Selling, general
 and administrative   636,739      543,565    1,233,456    1,062,555
Preopening expenses     8,108        3,951       18,442       14,658
Provision for impaired
 assets and warehouse
  closing costs         1,500        3,000        2,500        5,000
                  -----------  -----------  -----------  -----------
   Operating Income   298,273      253,189      513,533      431,785

OTHER INCOME (EXPENSE)
Interest expense      (10,576)     (10,995)     (20,973)     (21,907)
Interest income
 and other             14,983       11,192       25,650       17,231
                  -----------  -----------  -----------  -----------

INCOME BEFORE INCOME TAXES AND
     CUMULATIVE EFFECT OF ACCOUNTING
     CHANGE           302,680      253,386      518,210      427,109
Provision for
 income taxes         121,072      101,354      207,284      170,843
                  -----------  -----------  -----------  -----------

INCOME BEFORE CUMULATIVE EFFECT OF
 ACCOUNTING CHANGE    181,608      152,032      310,926      256,266
Cumulative effect of
 accounting change,
  net of tax               --           --           --     (118,023)
                  -----------  -----------  -----------  -----------

NET INCOME        $   181,608  $   152,032  $   310,926  $   138,243
                  ===========  =========== ============  ===========

NET INCOME PER COMMON SHARE:
Basic earnings per share:
 Income before cumulative
  effect of accounting
   change..       $      0.41  $      0.35  $      0.70  $      0.59
 Cumulative effect of
  accounting change,
   net of tax              --           --           --        (0.27)
                  -----------  -----------  -----------  -----------
 Net income       $      0.41  $      0.35  $      0.70  $      0.32
                  ===========  ===========  ===========  ===========
Diluted earnings per share:
 Income before cumulative
  effect of accounting
   change         $      0.39  $      0.33  $      0.66  $      0.55
 Cumulative effect of
  accounting change,
   net of tax              --           --           --        (0.25)
                  -----------  -----------  -----------  -----------
 Net Income       $      0.39   $     0.33   $     0.66   $     0.30
                  ===========  ===========  ===========  ===========

Shares used in calculation (000's):
Basic                 445,255      437,782      444,277      436,730
Diluted               476,642      470,453      475,120      468,787
                  ===========  ===========  ===========  ===========



   CONTACT: Costco Wholesale Corporation
            Richard Galanti, 425/313-8203
            Bob Nelson, 425/313-8255