Costco Companies, Inc. Reports Third Quarter and Year-To-Date Operating Results for Fiscal 1999.

ISSAQUAH, Wash.--(BUSINESS WIRE)--May 27, 1999--

Costco Companies, Inc. (Nasdaq:COST) announced today its operating results for the third quarter (12 weeks) and first thirty-six weeks of fiscal 1999, ended May 9, 1999.

Net sales for the third quarter of fiscal 1999 increased 13% to $5.94 billion from $5.24 billion during the third quarter of fiscal 1998. On a comparable warehouse basis, that is warehouses open at least a year, net sales increased by 9%.

Net income for the third quarter of fiscal 1999 increased 24% to $105.9 million from $85.2 million during the third quarter of fiscal 1998. On a per share basis, earnings increased 21% to $.46 per share (diluted) for the third quarter of fiscal 1999, from $.38 per share during the third quarter of 1998.

Net sales for the first thirty-six weeks of fiscal 1999 increased 13% to $18.32 billion from $16.26 billion during the first thirty-six weeks of fiscal 1998. Comparable warehouse sales during the first thirty-six weeks of fiscal 1999 increased 9% over the prior year's levels.

Net operating results for the first thirty-six weeks of fiscal 1999 were impacted by a first quarter $118.0 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. This resulted in reported earnings for the first thirty-six weeks of $244.1 million, or $1.07 per share, compared to reported net earnings of $309.1 million, or $1.37 per share, for the first thirty-six weeks of the prior fiscal year. Before the impact of this non-cash charge, net earnings for the first thirty-six weeks of fiscal 1999 were $362.1 million, or $1.57 per share. Assuming the newly adopted accounting treatment for deferring membership fees had been in effect in fiscal 1998, membership fees and other income for the first thirty-six weeks of the prior fiscal year would have been reduced by $21.4 million to $281.1 million; net earnings in the first thirty-six weeks of fiscal 1998 would have been $296.3 million, or $1.31 per share; and the year-over-year earnings increase for the first thirty-six weeks would have been 22%.

Costco currently operates 288 warehouses, including 218 in the United States, 58 in Canada, seven in the United Kingdom, three in Korea, one in Taiwan, and a recently opened warehouse in Hisayama, Japan; as well as 16 additional warehouses in Mexico with a joint venture partner. The Company also operates Costco Online, an electronic commerce web site, at www.costco.com. Expansion plans for the remainder of its 1999 fiscal year, ending August 29, 1999, include opening ten additional new warehouses (including the relocation of three existing warehouses to larger and better-located facilities). -0-

                        COSTCO COMPANIES, INC.
                   CONSOLIDATED STATEMENTS OF INCOME
             (dollars in thousands, except per share data)
                              (unaudited)

                            12 Weeks Ended      36 Weeks Ended
                           ----------------    ----------------
                            May 9,    May 10,   May 9,     May 10,
                            1999      1998       1999      1998
                           ------    --------   ------   ---------

REVENUE
Net sales              $ 5,941,049 $ 5,241,926 $18,319,732 $16,260,280
Membership fees
  and other                112,771      96,160     324,524     302,575
                         ----------  ----------  ----------- ---------
     Total revenue       6,053,820   5,338,086  18,644,256  16,562,855

OPERATING EXPENSES
Merchandise costs        5,341,716   4,715,755  16,418,154  14,594,043
Selling, general &
  administrative           528,158     466,987   1,590,713   1,416,430
Preopening expenses          6,120       8,884      20,778      20,298
Provision for impaired
  assets and warehouse
  closing costs              1,500       1,500       6,500       3,500
                         ----------  ----------- ----------- ---------
     Operating income      176,326     144,960     608,111     528,584

OTHER INCOME (EXPENSE)
Interest expense           (10,524)    (10,477)    (32,431)   (32,365)
Interest income and other   10,659       7,562      27,890      19,025
                         ----------  ----------- ----------  ---------

INCOME BEFORE INCOME
 TAXES AND CUMULATIVE
 EFFECT OF ACCOUNTING
  CHANGE                   176,461     142,045     603,570     515,244
Provision for income taxes  70,584      56,818     241,427     206,098
                         ----------  ----------- ----------  ---------
INCOME BEFORE CUMULATIVE
  EFFECT OF ACCOUNTING
  CHANGE                   105,877      85,227     362,143     309,146
Cumulative effect of
  accounting change,
  net of tax                 --           --       118,023        --
                         ----------  ----------- ----------- ---------

NET INCOME              $  105,877  $   85,227   $ 244,120  $  309,146
                         ==========  =========== =========== =========

NET INCOME PER COMMON SHARE:
Basic earnings per share:
Income before cumulative
  effect of accounting
  change                $     0.48  $     0.39   $   1.65   $     1.44
Cumulative effect of
  accounting change,
  net of tax                  --           --       (0.54)         --
                         ----------  ----------- ----------- ---------
Net income              $     0.48  $     0.39   $   1.11   $     1.44
                         ==========  =========== =========== =========
Diluted earnings
  per share:
Income before cumulative
  effect of accounting
  change                $     0.46  $     0.38   $   1.57   $     1.37
Cumulative effect of
  accounting change,
  net of tax                   --          --       (0.50)        --
                         ----------- -----------  ---------- ---------
Net income              $      0.46 $     0.38   $   1.07   $     1.37
                         =========== ===========  ========== =========

Shares used in
  calculation (000's):
Basic                       220,219    215,913    218,984      214,779
Diluted                     236,785    232,378    235,181      230,808
                         =========== ===========  ========== =========

Pro forma amounts assuming
  accounting change had
  been in effect in
  fiscal 1998:
Net income              $   105,877 $   84,730   $ 362,142  $  296,283
                         =========== ===========  ========== =========
Earnings per common
  share - basic         $      0.48 $     0.39   $    1.65  $     1.38
                         =========== ===========  ========== =========
Earnings per common
  share - diluted       $      0.46 $     0.37   $    1.57  $     1.31
                         =========== ===========  ========== =========