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Costco Wholesale Corporation Reports Third Quarter and Year-to-Date Operating Results for Fiscal 2014

ISSAQUAH, WA -- (Marketwired) -- 05/29/14 -- Costco Wholesale Corporation ("Costco" or the "Company") (NASDAQ: COST) announced today its operating results for the third quarter (twelve weeks) and the first thirty-six-weeks of fiscal 2014, ended May 11, 2014. Net sales for the quarter increased seven percent, to $25.23 billion, from $23.55 billion last year. Net sales for the first thirty-six weeks increased six percent, to $75.46 billion, from $71.10 billion last year.

Comparable sales were as follows:

12 Weeks 36 Weeks
U.S. 5% 4%
International 3% 1%
Total 4% 3%

Comparable sales for these periods, excluding negative impacts from gasoline price deflation and foreign exchange, were as follows:

12 Weeks 36 Weeks
U.S. 6% 5%
International 8% 7%
Total 6% 5%

Net income for the quarter was $473 million, or $1.07 per diluted share, compared to $459 million, or $1.04 per diluted share, last year. Net income for the first thirty-six weeks was $1.36 billion, or $3.07 per diluted share, compared to $1.42 billion, or $3.23 per diluted share, last year. Net income for the thirty-six week period last year was positively impacted by a second quarter $62 million ($.14 per diluted share) tax benefit in connection with the portion of the special cash dividend paid in December 2012 to the Company 401(k) plan participants.

Costco currently operates 655 warehouses, including 464 in the United States and Puerto Rico, 87 in Canada, 33 in Mexico, 25 in the United Kingdom, 19 in Japan, 10 in Taiwan, 10 in Korea, six in Australia, and one in Spain. The Company plans to open up to an additional eight new warehouses prior to the end of its fiscal year on August 31, 2014. Costco also operates electronic commerce web sites in the U.S., Canada, the United Kingdom and Mexico.

A conference call to discuss these third quarter operating results is scheduled for 8:00 a.m. (PT) today, May 29, 2014, and is available via a webcast on www.costco.com (click on Investor Relations and "Play Webcast").

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, uncertainties in the financial markets, consumer and small business spending patterns and debt levels, breaches of security or privacy of member or business information, conditions affecting the acquisition, development, ownership or use of real estate, amounts expected to be spent on expansion plans, actions of vendors, rising costs associated with employees (including health care costs), energy, and certain commodities, 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 millions, except per share data)
(unaudited)
12 Weeks Ended 36 Weeks Ended
May 11,
2014
May 12,
2013
May 11,
2014
May 12,
2013
REVENUE
Net sales $ 25,233 $ 23,552 $ 75,457 $ 71,099
Membership fees 561 531 1,660 1,570
Total revenue 25,794 24,083 77,117 72,669
OPERATING EXPENSES
Merchandise costs 22,554 21,038 67,421 63,530
Selling, general and administrative 2,487 2,313 7,519 7,006
Preopening expenses 16 10 48 34
Operating income 737 722 2,129 2,099
OTHER INCOME (EXPENSE)
Interest expense (25 ) (25 ) (78 ) (63 )
Interest income and other, net 12 15 60 61
INCOME BEFORE INCOME TAXES 724 712 2,111 2,097
Provision for income taxes 245 248 728 658
Net income including noncontrolling interests 479 464 1,383 1,439
Net income attributable to noncontrolling interests (6 ) (5 ) (22 ) (17 )
NET INCOME ATTRIBUTABLE TO COSTCO $ 473 $ 459 $ 1,361 $ 1,422
NET INCOME PER COMMON SHARE ATTRIBUTABLE TO COSTCO:
Basic $ 1.08 $ 1.05 $ 3.10 $ 3.27
Diluted $ 1.07 $ 1.04 $ 3.07 $ 3.23
Shares used in calculation (000's)
Basic 439,446 436,488 439,058 435,293
Diluted 442,720 440,780 442,651 439,738
Cash dividends declared per common share $ 0.355 $ 0.31 $ 0.975 $ 7.86
COSTCO WHOLESALE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
(unaudited)
Subject to Reclassifications
May 11,
2014
September 1,
2013
ASSETS
Cash and cash equivalents $ 5,736 $ 4,644
Short-term investments 1,539 1,480
Receivables, net 1,115 1,201
Merchandise inventories 8,483 7,894
Deferred income taxes and other current assets 660 621
Total current assets 17,533 15,840
Property and equipment, net 14,583 13,881
Other assets 585 562
TOTAL ASSETS $ 32,701 $ 30,283
LIABILITIES AND EQUITY
Accounts payable $ 8,361 $ 7,872
Accrued salaries and benefits 2,056 2,037
Other current liabilities 2,973 2,181
Deferred membership fees 1,297 1,167
Total current liabilities 14,687 13,257
Long-term debt, excluding current portion 4,985 4,998
Deferred income taxes and other liabilities 1,008 1,016
Total liabilities 20,680 19,271
Total Costco stockholders' equity 11,819 10,833
Noncontrolling interests 202 179
Total equity 12,021 11,012
TOTAL LIABILITIES AND EQUITY $ 32,701 $ 30,283

CONTACTS:
Costco Wholesale Corporation
Richard Galanti
425/313-8203

Bob Nelson
425/313-8255

Jeff Elliott
425/313-8264

Source: Costco