Costco Fiscal Q3 Net Income up 18% on 11% Sales Gain

Costco Wholesale Corporation announced net sales for the third quarter of fiscal 2003 increased 11% to $9.34 billion from $8.44 billion during the third quarter of fiscal 2002. On a comparable warehouse basis, that is warehouses open at least a year, net sales increased 6%.

Net income for the third quarter of fiscal 2003 increased 18% to $153.8 million, or $.33 per share (diluted), from $130.4 million, or $.28 per share (diluted), during the third quarter of fiscal 2002.

Net sales for the first thirty-six weeks of fiscal 2003 increased 9% to $28.28 billion from $25.94 billion during the first thirty-six weeks of fiscal 2002. Comparable warehouse sales during the first thirty-six weeks of fiscal 2003 increased 5% over the prior year’s level.

Net income for the first thirty-six weeks of fiscal 2003 increased 6% to $481.6 million, or $1.02 per diluted share, compared to net income for the first thirty-six weeks of fiscal 2002 of $452.6 million, or $.96 per diluted share. Excluding the pre-tax charge of $26 million ($16 million or $.03 per diluted share after tax) reflecting an increase in workers compensation loss reserves, which was booked in the second quarter of fiscal 2003, net income for the first thirty-six weeks of fiscal 2003 would have been $497.6 million, or $1.05 per diluted share, reflecting a 10% increase in net income over the prior year’s thirty-six week period.

                     COSTCO WHOLESALE CORPORATION

              CONDENSED CONSOLIDATED STATEMENTS OF INCOME
             (dollars in thousands, except per share data)
                              (unaudited)

                         12 Weeks Ended           36 Weeks Ended
                     ----------------------- -------------------------
                       May 11,     May 12,      May 11,      May 12,
                        2003        2002         2003         2002
                     ----------- ----------- ------------ ------------

REVENUE
 Net sales           $9,344,959  $8,436,807  $28,275,854  $25,942,296
 Membership fees and
  other                 198,112     179,940      579,969      523,856
                     ----------- ----------- ------------ ------------
  Total revenue       9,543,071   8,616,747   28,855,823   26,466,152
OPERATING EXPENSES
 Merchandise costs    8,358,323   7,583,251   25,247,631   23,229,678
 Selling, general
  and administrative    923,309     806,617    2,779,139    2,432,740
 Preopening expenses      5,853       6,077       31,115       36,827
 Provision for
  impaired assets
  and closing costs       6,000       4,500       15,500       16,050
                     ----------- ----------- ------------ ------------
  Operating income      249,586     216,302      782,438      750,857
OTHER INCOME
 (EXPENSE)
 Interest expense        (8,715)     (8,643)     (25,186)     (21,080)
 Interest income and
  other                   9,179       9,624       25,796       24,527
                     ----------- ----------- ------------ ------------
INCOME BEFORE INCOME
 TAXES                  250,050     217,283      783,048      754,304
 Provision for
  income taxes           96,270      86,913      301,474      301,722
                     ----------- ----------- ------------ ------------
NET INCOME           $  153,780  $  130,370  $   481,574  $   452,582