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<br /> <br />". <br /> <br />Donaldson, Lufkin a JenreUe <br /> <br />Oonai<tIon.luftun' ..-Nen. Secuntoec CotporatoOll " 140 Dtoadway. N_ yen. N,Y. 10005 " (212) roc.3000 <br /> <br />Research Bulletin <br /> <br />St"a" M. Robbins <br />Vice President <br />(112) &04-4208 <br /> <br />June S. '986 <br />DJIA: '178.'" <br />SI"II: 275.20 <br /> <br />Tho~.. J.R. leckmann. C.f.A. <br />(212) 504-4211 <br /> <br />- <br />.' <br /> <br />COSTCO WHOLESALE CORPORATION (COST-17)~+ <br /> <br />Momentum Building--Long-Term Prospects Excellent <br /> <br />52-WeelF. Aange <br /> <br />Earnings ,., Share <br />1985 19SGE 19S7E <br /> <br />PIE "atio <br />.!!!!! .!!!l!. <br /> <br />Dividend <br /> <br />17 5i8- 1 1 3/8 <br /> <br />$10511 <br /> <br />SO 30 <br /> <br />SO 65 <br /> <br />56.7 <br /> <br />262 <br /> <br />Nil <br /> <br />Sh.res out5unding: 215 million <br /> <br />Ma,k.t upillliutlon. 5365.5 million <br /> <br />DU OVERALL RANKINC;S <br /> <br />-Rew.rd/R,sk An.lvsls. <br />.Ret.il S,atisllca, Compendium. <br />-Naltonal M.Hket Sh.re Survey. <br />.Reglonal and DeMograph,c Survev- <br /> <br />76 of 80 companies <br />NA <br />Goed <br />Good <br /> <br />Summary <br /> <br />Costco has rapidly become one of the leading wholesale membership warehouses, enjoying <br />what appear to be .exploding sales and earnings. Membership warehouses. specializing in <br />name-brand goods that are sold at extremely low prices primarily to small commercial <br />customer::, represent one of the fastest-growing distribution segments, and In Just two <br />Yf'.~r~, Costco has' become one of the largest Itnd most succe!;sful ni the warehous'h <br />entrant:;. <br /> <br />Recent results show COST's overall and same-store sales gains bUfgeon;ng. In part as 8 <br />result of the company's rapid expansion program. The sharp sales increases, coupled <br />with tight inventory and operating expense totals. allowed COST to turn the corner to <br />profitability in its first fiscal 1986 half (ending February), well ahead of <br />expectations. We believe that continued sharp operating leverage will allow strong <br />profits in the current fiscal year and at least 50% annual EPS gains in the ensuing two <br />te three years. <br /> <br />7 <br /> <br />"DONALDSON LU'''''' .. .IfNIIE':'TE SECUII'TIES COII~IIATICN MA"U A M..I\..eT '" THIS S[CU...TY 10010 HAS ~"'OOIC "OS'TlO"S ." <br />THIS S[CUII,n '" CO..N[CTION w,TH T"'S AC1"vln <br /> <br />.W'THIN THf "AST T"IIf[ YEAII.$ DO.....LDSO... LU'''''' a. .I[..IIETT[ SECUIIITI[S COII"OIU.T'O" HAS lEE" A "A"ACI"'C Oil CC-........C;,..C; <br />U"OEII""'UTfll 0' TH[ "OST IIEC[NT OF'EIIING 0' TH[ co........y.S SECUIIITI[S <br /> <br />{ DoF\8ldaon. Lufkin & Jenrttll. s.c...rltiH CotporahO<l. 1eu <br /> <br />Md...."., .",."".,.." .. ....I.bl. WpOft '.ou." <br /> <br />THIS IIE~IIT "AS IH" ""E"AII[D '"0M O",G'N"L SOUIICtS ....0 O"T" W[ IHIEV[ TO IE IIH'''ILE IUT WE ......[ NO IIE""ES[..T..TIO"S <br />AS TO ITS "CCUII"CY Oil CO....L[T[..US OO"ALOSO", LU'''''' . .I[..IIETTE S[CUIIITIES COllI'OIIAT'O", ITS A"'L,..T(S ""0 <br />SUISIOI..II,fS ....0.011 T"['" O"'C[IIS ....0 E....LOY[[S M..y '"0M T'M['TO T,..[ "COu,"e HOLD Oil ShL .. "OS'TIO" ,.. THE <br />I[CVIIIT.fS ME"ToO..fD "fll[l.. U"O" "[OuEST W[ w'LL IE I'\.EA$[O TO 'UII",S" S"[C"'C ''''Oll-..ATIO'' ,.. THIS II[CAIIO " <br />OO....LOSO.. LU"ON . .IENlltTTE UCUII'TIES COII~II..TtO" IS UStD ." CO....[C1ION W'TH TH[ ..UIICHASf O. SALE 0' A"Y IfCUII'T'Y <br />DISCUSSED ," THIS IIf~.T 00.....050.. LU''''''. .It""fTTE IECUIIIT'U COII~""T'O" M... ACT AS .. "'UNCI..AL 'Oil ITS 0..... <br />"CCOUNT Oil AS ..CE..T '0" 10TH TH[ IU.fll AND TH[ IfLLfll <br /> <br />J <br />