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May 24, 2000 at 9:17 AM EDT

Costco Wholesale Corporation Reports Third Quarter and Year-to-date Operating Results for Fiscal 2000 and Comments On Future Earnings Outlook

ISSAQUAH, Wash.--(BUSINESS WIRE)--May 24, 2000--Costco Wholesale Corporation (Nasdaq:COST) announced today its operating results for the third quarter (12 weeks) and first thirty-six weeks of fiscal 2000, ended May 7, 2000.

Net sales for the third quarter of fiscal 2000 increased 14% to $6.77 billion from $5.94 billion during the third quarter of fiscal 1999. On a comparable warehouse basis, that is warehouses open at least a year, net sales increased by 10%.

Net income for the third quarter of fiscal 2000 increased 14% to $120.3 million, or $.26 per diluted share, from $105.9 million, or $.23 per diluted share, during the third quarter of fiscal 1999.

Net sales for the first thirty-six weeks of fiscal 2000 increased 16% to $21.21 billion from $18.32 billion during the first thirty-six weeks of fiscal 1999. Comparable warehouse sales during the first thirty-six weeks of fiscal 2000 increased 12% over the prior year's levels.

Net income for the first thirty-six weeks of fiscal 2000 was $431.3 million, or $.92 per diluted share. Excluding the impact of a one-time accounting charge taken in last year's first quarter, net income for the first thirty-six weeks of fiscal 1999 was $362.1 million, or $.78 per diluted share, resulting in year-over-year earnings and earnings per share increases of 19% and 18%, respectively. In last year's first quarter, 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 $244.1 million or $.53 per diluted share for the first thirty-six weeks of fiscal 1999.

In terms of the earnings outlook for the fourth quarter of fiscal 2000, which ends September 3rd, the company expects to be $.01 to $.02 per share below the current average published consensus estimate of $.45 per share. For fiscal year 2001, the company expects earnings per share growth to be in the 11% to 13% range.

Costco currently operates 305 warehouses, including 231 in the United States, 59 in Canada, eight in the United Kingdom, three in Korea, three in Taiwan, and a warehouse in Japan; as well as 18 additional warehouses in Mexico with a joint venture partner. The Company also operates Costco Online, an electronic commerce web site, at www.costco.com. The Company plans to open an additional 10 to 12 new warehouses (including two to three relocations of existing warehouses to larger and better-located facilities) prior to the end of its fiscal year 2000 on September 3, 2000.

Certain statements contained in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For these purposes, forward-looking statements are statements that address activities, events, conditions or developments that the company expects, or anticipates may occur in the future. Such forward-looking statements involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated by such statements. These risks and uncertainties include, but are not limited to, domestic and international economic conditions including exchange rates, the effects of competition and regulation, conditions affecting the acquisition, development, ownership or use of real estate, actions of vendors, Year 2000 issues, and other risks identified from time to time in the Company's public statements and reports filed with the SEC. -0-

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


                        12 Weeks Ended            36 Weeks Ended
                  ------------------------   ------------------------
                  May 7, 2000  May 9, 1999   May 7, 2000  May 9, 1999
                  -----------  -----------   -----------  -----------
REVENUE
Net Sales          $6,768,608   $5,941,049   $21,206,406  $18,319,732
Membership fees
 and other            126,000      112,771       368,701      324,524
                   ----------   ----------   -----------  -----------
     Total Revenue  6,894,608    6,053,820    21,575,107   18,644,256

OPERATING EXPENSES
Merchandise costs   6,084,246    5,341,716    18,996,814   16,418,154
Selling, general
 and administrative   604,924      528,158     1,838,380    1,590,713
Preopening expenses     6,728        6,120        25,170       20,778
Provision for impaired
 assets and warehouse
  closing costs         1,500        1,500         4,000        6,500
                   ----------   ----------   -----------  -----------
Operating Income      197,210      176,326       710,743      608,111

OTHER INCOME (EXPENSE)
Interest expense       (9,604)     (10,524)      (30,577)     (32,431)
Interest income
 and other             12,943       10,659        38,593       27,890
                   ----------   ----------   -----------  -----------

INCOME BEFORE INCOME TAXES
AND CUMULATIVE EFFECT
OF ACCOUNTING CHANGE  200,549      176,461       718,759      603,570
Provision for
 income taxes          80,220       70,584       287,504      241,427
                   ----------   ----------   -----------  -----------

INCOME BEFORE CUMULATIVE
EFFECT OF
ACCOUNTING CHANGE     120,329      105,877       431,255      362,143
Cumulative effect of
 accounting change,
  net of tax              ---          ---           ---     (118,023)
                   ----------   ----------   -----------  -----------

NET INCOME           $120,329     $105,877      $431,255     $244,120
                   ==========   ==========   ===========  ===========

NET INCOME PER COMMON SHARE:
Basic earnings per share:
 Income before cumulative
  effect of accounting
   change               $0.27        $0.24         $0.97        $0.83
Cumulative effect of
 accounting change,
  net of tax              ---          ---           ---        (0.27)
                   ----------   ----------   -----------  -----------
Net income              $0.27        $0.24         $0.97        $0.56
                   ==========   ==========   ===========  ===========

Diluted earnings per share:
Income before cumulative
 effect of
  accounting change     $0.26        $0.23         $0.92        $0.78
Cumulative effect of
 accounting change,
  net of tax              ---          ---           ---        (0.25)
                   ----------   ----------   -----------  -----------
Net Income              $0.26        $0.23         $0.92        $0.53
                   ==========   ==========   ===========  ===========


Shares used in calculation (000's):
Basic                 448,113      440,438       445,557      437,968
Diluted               478,750      473,570       476,409      470,362
                   ==========   ==========   ===========  ===========
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    CONTACT:  Costco Wholesale Corporation
              Richard Galanti, 425/313-8203
              Bob Nelson, 425/313-8255