CASE: A-186B DATE: 06/19/03 COSTCO WHOLESALE CORPORATION FINANCIAL STATEMENT ANALYSIS (B Review Torres forecast in Exhibit 5.

How does the rate of expansion (i.e. new store openings) affect the balance sheet and free cash flow? Do you agree with her terminal value assumptions?

Costco Wholesale Corp.: Financial Statement Analysis (B) A-1868 p. 11 2008 2009 2010 lo 0 0 Olo 0 0 0 0 0 Exhibit 5 Margarita Torres: Forecast Abbreviated Balance Sheet Costco (2001 - 2010) Balance Sheet (millions) 2001 2002 2003 2004 2005 2006 2007 Net working capital required per store 0 0 0 0 0 0 0 Net operating working capital (230) 0 Net PP&A required per store 18 18 18 18 18 18 Other long-term assets required per store 1 1 1 1 1 1 Non-interest bearing long-term liabilities (0.35) (0.35) (0.35) (0.35) (0.35) (0.35) Net operating long-term assets per store 18.65 18.65 18.65 18.65 18.65 18.65 Net operating long-term assets 6,089 7,012 7,647 8,281 8,915 9,586 10,369 Net long-term debt 860 860 860 860 860 860 860 Minority interest 115 115 115 115 115 115 115 18 1 (0.35) 18.65 11,153 18 1 (0.35) 18.65 11,936 18 1 (0.35) 18.65 12,719 860 860 860 115 115 115 Shareholder's equity 4,884 6,037 6,672 7,306 7,940 8,611 9,394 10,178 10,961 11,744 Free Cash Flow Net income (-) Increase in working capital - Increase in long-term assets (+) Increase in long-term debt Free cash flow to equity holders 716 230 923 0 (437) 826 0 634 0 192 953 0 634 0 319 1,069 0 634 0 435 1,196 0 671 0 524 1,347 0 783 0 564 1,467 0 783 0 684 1,590 0 783 0 807 1,715 0 783 0 932 1% 480,585 1% 485,391 1% 490,245 475,827 1% 495,147 1% 500,099 1% 505,100 1% 510,151 1% 515,252 1% 520,405 1.29 1.94 1.49 (0.91) 1.70 0.40 2.16 0.88 2.39 1.05 2.67 1.12 2.88 1.34 3.09 1.57 3.30 1.79 0.65 Annual increase in shares outstanding Shares outstanding, diluted basis Earnings per share Free cash flow per share Terminal Value Information Growth in free cash flow, perpetuity Discount rate Annual free cash flow, 2011 5% 8% 978 Exhibit 5 Financial Statements for Costco Wholesale Corp. (1997 - 2001) Warehouses in Operation 2001 2000 1999 1998 Beginning of year (including Mexico) 331 308 292 274 Openings 41 27 23 19 Closings (7) (7) (1) End of year 365 331 308 292 Members at Year End (thousands) Business (primary cardholders) 4,358 4,170 3,887 3,676 Gold Star 12,737 10,521 9,555 8,654 1997 265 17 (8) 274 3,537 7,845 2001 2000 1999 1998 1997 34,137 660 34,797 31,621 543 32,164 26,976 480 27,456 23,830 440 24,270 21,484 390 21,874 30,598 3,129 60 18 33,805 992 28,322 2,756 42 7 31,127 1,037 24,170 2,338 31 57 26,596 860 21,380 2,070 27 6 23,483 787 19,314 1,877 27 75 21,293 581 Income Statement (millions) Revenue Net sales Membership fees and other Total revenues Operating expenses Merchandise costs SG&A Preopening expenses Provision for impaired assets / closings Total operating expenses Operating income Other income (expenses) Interest expense Interest income and other Provision for merger and restructuring Income continuing ops before taxes Provision for income taxes Income before cumulative effect of accting Cumulative effect of accting, nct of tax Income from continuing operations Discontinued operations Income (loss), net of tax Loss on disposal Net Income (loss) (32) 43 0 1,003 401 602 0 602 (39) 54 0 1,052 421 631 0 631 (45) 44 0 859 344 515 (118) 397 (48) 27 0 766 306 460 0 460 (76) 15 0 520 208 312 0 312 0 0 0 602 0 0 631 0 0 0 0 460 0 397 312 Net income per common share: Basic, before accounting change Cumulative effect of accounting changes Basic Diluted 1.34 0.00 1.34 1.29 1.41 0.00 1.41 1.07 0.00 1.17 (0.27) 0.90 0.76 0.00 0.76 0.73 1.07 1.01 1.35 0.86 Number of common shares for calculation Basic Diluted 439,253 449,631 475,827 446,255 475,737 431,012 463,371 414,758 449,336 471,120 Costco Wholesale Corp.: Financial Statement Analysis (B) A-1868 p. 11 2008 2009 2010 lo 0 0 Olo 0 0 0 0 0 Exhibit 5 Margarita Torres: Forecast Abbreviated Balance Sheet Costco (2001 - 2010) Balance Sheet (millions) 2001 2002 2003 2004 2005 2006 2007 Net working capital required per store 0 0 0 0 0 0 0 Net operating working capital (230) 0 Net PP&A required per store 18 18 18 18 18 18 Other long-term assets required per store 1 1 1 1 1 1 Non-interest bearing long-term liabilities (0.35) (0.35) (0.35) (0.35) (0.35) (0.35) Net operating long-term assets per store 18.65 18.65 18.65 18.65 18.65 18.65 Net operating long-term assets 6,089 7,012 7,647 8,281 8,915 9,586 10,369 Net long-term debt 860 860 860 860 860 860 860 Minority interest 115 115 115 115 115 115 115 18 1 (0.35) 18.65 11,153 18 1 (0.35) 18.65 11,936 18 1 (0.35) 18.65 12,719 860 860 860 115 115 115 Shareholder's equity 4,884 6,037 6,672 7,306 7,940 8,611 9,394 10,178 10,961 11,744 Free Cash Flow Net income (-) Increase in working capital - Increase in long-term assets (+) Increase in long-term debt Free cash flow to equity holders 716 230 923 0 (437) 826 0 634 0 192 953 0 634 0 319 1,069 0 634 0 435 1,196 0 671 0 524 1,347 0 783 0 564 1,467 0 783 0 684 1,590 0 783 0 807 1,715 0 783 0 932 1% 480,585 1% 485,391 1% 490,245 475,827 1% 495,147 1% 500,099 1% 505,100 1% 510,151 1% 515,252 1% 520,405 1.29 1.94 1.49 (0.91) 1.70 0.40 2.16 0.88 2.39 1.05 2.67 1.12 2.88 1.34 3.09 1.57 3.30 1.79 0.65 Annual increase in shares outstanding Shares outstanding, diluted basis Earnings per share Free cash flow per share Terminal Value Information Growth in free cash flow, perpetuity Discount rate Annual free cash flow, 2011 5% 8% 978 Exhibit 5 Financial Statements for Costco Wholesale Corp. (1997 - 2001) Warehouses in Operation 2001 2000 1999 1998 Beginning of year (including Mexico) 331 308 292 274 Openings 41 27 23 19 Closings (7) (7) (1) End of year 365 331 308 292 Members at Year End (thousands) Business (primary cardholders) 4,358 4,170 3,887 3,676 Gold Star 12,737 10,521 9,555 8,654 1997 265 17 (8) 274 3,537 7,845 2001 2000 1999 1998 1997 34,137 660 34,797 31,621 543 32,164 26,976 480 27,456 23,830 440 24,270 21,484 390 21,874 30,598 3,129 60 18 33,805 992 28,322 2,756 42 7 31,127 1,037 24,170 2,338 31 57 26,596 860 21,380 2,070 27 6 23,483 787 19,314 1,877 27 75 21,293 581 Income Statement (millions) Revenue Net sales Membership fees and other Total revenues Operating expenses Merchandise costs SG&A Preopening expenses Provision for impaired assets / closings Total operating expenses Operating income Other income (expenses) Interest expense Interest income and other Provision for merger and restructuring Income continuing ops before taxes Provision for income taxes Income before cumulative effect of accting Cumulative effect of accting, nct of tax Income from continuing operations Discontinued operations Income (loss), net of tax Loss on disposal Net Income (loss) (32) 43 0 1,003 401 602 0 602 (39) 54 0 1,052 421 631 0 631 (45) 44 0 859 344 515 (118) 397 (48) 27 0 766 306 460 0 460 (76) 15 0 520 208 312 0 312 0 0 0 602 0 0 631 0 0 0 0 460 0 397 312 Net income per common share: Basic, before accounting change Cumulative effect of accounting changes Basic Diluted 1.34 0.00 1.34 1.29 1.41 0.00 1.41 1.07 0.00 1.17 (0.27) 0.90 0.76 0.00 0.76 0.73 1.07 1.01 1.35 0.86 Number of common shares for calculation Basic Diluted 439,253 449,631 475,827 446,255 475,737 431,012 463,371 414,758 449,336 471,120