News Release

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