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May 31, 2006 at 3:02 AM EDT

Costco Wholesale Corporation Reports Third Quarter and Year-to-Date Operating Results for Fiscal 2006 and May Sales Results

ISSAQUAH, WA, May 31, 2006 (MARKET WIRE via COMTEX News Network) -- Costco Wholesale Corporation (NASDAQ: COST) announced today its operating results for the third quarter (twelve weeks) and first thirty-six weeks of fiscal 2006, ended May 7, 2006, and May sales results for the four weeks ended May 28th.

Net sales for the third quarter of fiscal 2006 increased 11% to $13.00 billion, from $11.75 billion during the third quarter of fiscal 2005. Net income for the third quarter of fiscal 2006 increased to $235.6 million, or $.49 per diluted share, from $209.8 million, or $.43 per diluted share, during the third quarter of fiscal 2005, representing a 14% increase in earnings per share.

Net sales for the first thirty-six weeks of fiscal 2006 increased 11% to $39.45 billion, from $35.50 billion during the first thirty-six weeks of fiscal 2005. Net income for the first thirty-six weeks of fiscal 2006 increased to $747.6 million, or $1.55 per diluted share, compared to net income for the first thirty-six weeks of fiscal 2005 of $708.4 million, or $1.45 per diluted share.

Net income for the first thirty-six weeks of fiscal 2005 was impacted by a one-time $52.1 million income tax benefit and a cumulative pre-tax, non-cash charge of $16.0 million ($10.0 million after-tax) concerning accounting for leases. Without these adjustments net income for the first thirty-six weeks of fiscal 2005 would have been $666.3 million or $1.36 per diluted share. Reported earnings per diluted share of $1.55 for the first thirty-six weeks of fiscal 2006 represents a 14% increase over this amount.

Comparable sales for the fiscal third quarter (twelve weeks) and first thirty-six weeks of fiscal 2006, both ended May 7, 2006, were as follows:

                              12 Weeks                36 Weeks
                       ----------------------- -----------------------
US                               7%                      7%
International                    8%                      9%

Total Company                    7%                      8%
                       ======================= =======================

May Sales Results

The Company today also reported net sales of $4.71 billion for the four-week retail reporting month of May, the four weeks ended May 28, 2006, an increase of 15% from $4.11 billion in the same four-week period of the prior fiscal year. For the first thirty-nine weeks of its 2006 fiscal year ended May 28, 2006, which include the first three weeks of its fiscal fourth quarter, the Company reported net sales of $43.01 billion, an increase of 12% from $38.54 billion during the comparable period of the prior fiscal year.

Comparable sales for the four-week retail-reporting month of May and the 39-week retail-reporting period of September through May are as follows:

                              4 Weeks                39 Weeks
                       ----------------------- -----------------------
US                               7%                      8%
International                    17%                     10%

Total Company                    10%                      8%
                       ======================= =======================


Costco currently operates 477 warehouses, including 350 in the United States and Puerto Rico, 68 in Canada, 17 in the United Kingdom, five in Korea, four in Taiwan, five in Japan and 28 in Mexico. The Company also operates Costco Online, an electronic commerce web site, at www.costco.com and at www.costco.ca in Canada. The Company plans to open an additional eleven to twelve new warehouses, including the relocation of one warehouse to a larger and better-located facility, prior to the end of its 53-week 2006 fiscal year, ending on September 3, 2006.

A conference call to discuss these third quarter results is scheduled for 8:00 a.m. (PT) today, May 31, 2006, and is available via a webcast on www.costco.com (click on Investor Relations and "Webcasts").

Certain statements contained in this document 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, consumer and small business spending patterns and debt levels, conditions affecting the acquisition, development, ownership or use of real estate, actions of vendors, rising costs associated with employees (including health care and workers' compensation costs), rising costs associated with the acquisition of merchandise (including the direct and indirect effects of the rising cost of petroleum-based products and fuel and energy costs), geopolitical conditions and other risks identified from time to time in the Company's public statements and reports filed with the Securities and Exchange Commission.

COSTCO WHOLESALE CORPORATION
              CONDENSED CONSOLIDATED STATEMENTS OF INCOME
             (dollars in thousands, except per share data)
                              (unaudited)
                          12 Weeks Ended              36 Weeks Ended
                    --------------------------  --------------------------
                     May 7, 2006   May 8, 2005   May 7, 2006   May 8, 2005
                    ------------  ------------  ------------  ------------
REVENUE
  Net sales         $ 12,996,942  $ 11,747,113  $ 39,446,551  $ 35,499,635
  Membership fees        276,233       249,787       808,553       733,345
                    ------------  ------------  ------------  ------------
    Total revenue     13,273,175    11,996,900    40,255,104    36,232,980
OPERATING EXPENSES
  Merchandise costs   11,635,052    10,503,661    35,269,073    31,692,212
  Selling,
   general and
   administrative      1,271,803     1,164,625     3,843,270     3,481,433
  Preopening
   expenses               10,431         9,475        27,422        42,856
  Provision for
   impaired assets
   and closing
   costs, net              1,182         3,000         3,821         9,800
                    ------------  ------------  ------------  ------------
    Operating income     354,707       316,139     1,111,518     1,006,679
OTHER INCOME
 (EXPENSE)
  Interest expense        (2,679)       (8,476)       (9,326)      (27,098)
  Interest income
   and other              33,751        30,159        94,516        70,528
                    ------------  ------------  ------------  ------------
INCOME BEFORE
 INCOME TAXES            385,779       337,822     1,196,708     1,050,109
  Provision for
   income taxes          150,184       128,034       449,092       341,716
                    ------------  ------------  ------------  ------------
NET INCOME          $    235,595  $    209,788  $    747,616  $    708,393
                    ============  ============  ============  ============
NET INCOME PER
 COMMON SHARE:
  Basic             $       0.50  $       0.44  $       1.58  $       1.50
                    ============  ============  ============  ============
  Diluted           $       0.49  $       0.43  $       1.55  $       1.45
                    ============  ============  ============  ============
Shares used in
 calculation (000's)
  Basic                  470,516       478,248       471,699       472,765
  Diluted                480,533       493,282       482,933       492,247
Dividends per share $       0.13  $      0.115  $       0.36  $      0.315


CONTACTS:
Costco Wholesale Corporation
Richard Galanti
425/313-8203
Bob Nelson
425/313-8255
Jeff Elliott
425/313-8264

SOURCE: Costco