Costco February Comps Increase 8%

Costco Wholesale Corporation saw net sales for the second quarter of fiscal 2006 increase 11% to $13.78 billion from $12.41 billion during the second quarter of fiscal 2005. Net income for the second quarter was $296.2 million, or 62 cents per diluted share, compared to $305.5 million, or 62 cents per diluted share, during the second quarter of fiscal 2005.

Net income during last year's fiscal 2005 second quarter was positively impacted by a one-time $52.1 million income tax benefit, resulting primarily from the settlement of a transfer pricing dispute between the United States and Canada (covering the years 1996-2003). Additionally, during last year's second quarter the company adjusted its method of accounting for leases (entered into over the past twenty years), primarily related to ground leases at certain owned warehouse locations that did not require rental payments during the period of construction, and recorded a cumulative pre-tax, non-cash charge of $16.0 million ($10.0 million after-tax) as a preopening expense. Without these charges net income for the second quarter of fiscal 2005 would have been $263.4 million or 54 cents per diluted share. The current quarter's reported earnings per share of 62 cents represents a 15% increase over the prior year's adjusted earnings per share of 54 cents.

Net sales for the first half of fiscal 2006 increased 11% to $26.45 billion from $23.75 billion during the first half of fiscal 2005. Net income for the first half of fiscal 2006 increased 3% to $512.0 million, or $1.06 per diluted share, compared to net income for the first half of fiscal 2005 of $498.6 million, or $1.02 per diluted share. Without the impact of the prior year's second quarter tax benefit and the cumulative charge to preopening expenses (above), net income for the first half of fiscal 2005 would have been $456.5 million, or 94 cents per diluted share. Reported earnings of $1.06 per diluted share for the first half of fiscal 2006 represents a 13% increase over the prior year's adjusted earnings per share of 94 cents.

Comparable sales for the fiscal second quarter (12 weeks) and fiscal first half (24 weeks) of fiscal 2006, both ended February 12, 2006, were as follows:

                              12 Weeks     24 Weeks
                             -----------  -----------
            US                    7%          8%
            International        10%         10%

            Total Company         7%          8%
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The company also reported net sales of $4.21 billion for the four-week retail reporting month of February, the four weeks ended February 26, 2006, an increase of 11% from $3.78 billion in the same four-week period of the prior fiscal year. For the six-month retail reporting period of September through February, the twenty-six weeks ended February 26, 2006, which includes the first two weeks of the company's fiscal third quarter, the company reported net sales of $28.55 billion, an increase of 11% from $25.62 billion during the comparable period of the prior fiscal year.

Comparable sales for the 4-week retail-reporting month of February and the 26-week retail-reporting period of September through February are as follows:

                                  4          26
                                Weeks       Weeks
                             -----------  ----------
            US                    7%          8%
            International        11%          9%

            Total Company         8%          8%
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