-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EuPN4C1V/PKqbnr/+Xbb5McqiS1aB7v/In2zd2moN+MIRa+QPM4+2Yo7Ul0uAqkI MFVvAPZ2G5yPr6alNn0+Ew== 0001047469-98-025278.txt : 19980626 0001047469-98-025278.hdr.sgml : 19980626 ACCESSION NUMBER: 0001047469-98-025278 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980625 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: COSTCO WHOLESALE CORP CENTRAL INDEX KEY: 0000734198 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-VARIETY STORES [5331] IRS NUMBER: 911223280 STATE OF INCORPORATION: WA FISCAL YEAR END: 0902 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 033-48878 FILM NUMBER: 98653870 BUSINESS ADDRESS: STREET 1: 10809 120TH AVE N E CITY: KIRKLAND STATE: WA ZIP: 98033 BUSINESS PHONE: 2068288100 11-K 1 FORM 11-K - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM 11-K -------------------- [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to __________ Commission file number 333-21093 COSTCO 401(k) PLAN FOR CALIFORNIA UNION EMPLOYEES -------------------- COSTCO COMPANIES, INC. 999 LAKE DRIVE ISSAQUAH, WASHINGTON 98027 (425) 313-8100 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- COSTCO WHOLESALE 401(k) PLAN FOR CALIFORNIA UNION EMPLOYEES EIN 33-0572969 PIN 004 FINANCIAL STATEMENTS AND SCHEDULES AS OF DECEMBER 31, 1997 AND 1996 TOGETHER WITH AUDITORS' REPORT COSTCO 401(k) PLAN FOR CALIFORNIA UNION EMPLOYEES FINANCIAL STATEMENTS AND SCHEDULES DECEMBER 31, 1997 AND 1996 INDEX REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS FINANCIAL STATEMENTS Statements of Net Assets Available for Plan Benefits as of December 31, 1997 and 1996 Statement of Changes in Net Assets Available for Plan Benefits for the Year Ended December 31, 1997 NOTES TO FINANCIAL STATEMENTS AND SCHEDULES SUPPLEMENTAL INFORMATION Schedule I, Item 27a -- Schedule of Assets Held for Investment Purposes as of December 31, 1997 Schedule II, Item 27d -- Schedule of Reportable Transactions for the Year Ended December 31, 1997 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Benefits Committee of the Costco 401(k) Plan for California Union Employees: We have audited the accompanying statements of net assets available for plan benefits of the Costco 401(k) Plan for California Union Employees as of December 31, 1997 and 1996, and the related statement of changes in net assets available for plan benefits for the year ended December 31, 1997. These financial statements and the schedules referred to below are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1997 and 1996, and the changes in its net assets available for plan benefits for the year ended December 31, 1997, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes and reportable transactions are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The Fund information in the statements of net assets available for plan benefits and the statement of changes in net assets available for plan benefits is presented for purposes of additional analysis rather than to present the net assets available for plan benefits and changes in net assets available for plan benefits of each fund. The supplemental schedules and Fund information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. Seattle, Washington, June 1, 1998 COSTCO 401(k) PLAN FOR CALIFORNIA UNION EMPLOYEES STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AS OF DECEMBER 31, 1997
Participant Directed ------------------------------------------------------------------------------ Costco Companies, Stable Equity Spectrum Spectrum New Mid-Cap Inc. Value Income Income Growth Horizons Growth Common Fund Fund Fund Fund Fund Fund Stock ---------- ---------- ---------- ---------- -------- -------- ---------- ASSETS: Investments at fair value-- Registered investment company funds $1,383,211 $2,526,618 $1,205,135 $3,298,950 $174,821 $194,142 $ -- Costco Companies, Inc. common stock --34,258 shares held -- -- -- -- -- -- 1,528,769 ---------- ---------- ---------- ---------- -------- -------- ---------- Total investments 1,383,211 2,526,618 1,205,135 3,298,950 174,821 194,142 1,528,769 ---------- ---------- ---------- ---------- -------- -------- ---------- Contributions receivable-- Employee 25,002 40,056 20,420 51,647 6,841 8,207 19,998 Employer 246 501 189 445 60 61 166 ---------- ---------- ---------- ---------- -------- -------- ---------- Total receivables 25,248 40,557 20,609 52,092 6,901 8,268 20,164 ---------- ---------- ---------- ---------- -------- -------- ---------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $1,408,459 $2,567,175 $1,225,744 $3,351,042 $181,722 $202,410 $1,548,933 ---------- ---------- ---------- ---------- -------- -------- ---------- ---------- ---------- ---------- ---------- -------- -------- ---------- Total ----------- ASSETS: Investments at fair value-- Registered investment company funds $ 8,782,877 Costco Companies, Inc. common stock --34,258 shares held 1,528,769 ----------- Total investments 10,311,646 ----------- Contributions receivable-- Employee 172,171 Employer 1,668 ----------- Total receivables 173,839 ----------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $10,485,485 ----------- -----------
The accompanying notes and schedules are an integral part of this statement. COSTCO 401(k) PLAN FOR CALIFORNIA UNION EMPLOYEES STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AS OF DECEMBER 31, 1996
Participant Directed ------------------------------------------------------------------------------ Costco Companies, Stable Equity Spectrum Spectrum New Mid-Cap Inc. Value Income Income Growth Horizons Growth Common Fund Fund Fund Fund Fund Fund Stock ---------- ---------- ---------- ---------- -------- -------- ---------- ASSETS: Investments at fair value-- Registered investment company funds $792,097 $1,200,730 $676,998 $1,812,599 $ -- $ -- $ -- Costco Companies, Inc. common stock --18,510 shares held -- -- -- -- -- -- 465,074 ---------- ---------- ---------- ---------- -------- -------- -------- Total investments 792,097 1,200,730 676,998 1,812,599 -- -- 465,074 ---------- ---------- ---------- ---------- -------- -------- -------- Contributions receivable-- Employee 21,367 30,204 17,208 44,122 430 433 10,866 Employer 98 194 118 205 44 27 153 ---------- ---------- ---------- ---------- -------- -------- -------- Total receivables 21,465 30,398 17,326 44,327 474 460 11,019 ---------- ---------- ---------- ---------- -------- -------- -------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $813,562 $1,231,128 $694,324 $1,856,926 $474 $460 $476,093 ---------- ---------- ---------- ---------- -------- -------- ---------- ---------- ---------- ---------- ---------- -------- -------- ---------- Total ----------- ASSETS: Investments at fair value-- Registered investment company funds $4,482,424 Costco Companies, Inc. common stock --18,510 shares held 465,074 ---------- Total investments 4,947,498 ---------- Contributions receivable-- Employee 124,630 Employer 839 ---------- Total receivables 125,469 ---------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $5,072,967 ---------- ----------
The accompanying notes and schedules are an integral part of this statement. COSTCO 401(k) PLAN FOR CALIFORNIA UNION EMPLOYEES STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1997
Participant Directed ------------------------------------------------------------------------------ Costco Companies, Stable Equity Spectrum Spectrum New Mid-Cap Inc. Value Income Income Growth Horizons Growth Common Fund Fund Fund Fund Fund Fund Stock ---------- ---------- ---------- ---------- -------- -------- ---------- NET INVESTMENT RESULTS: Net appreciation in fair value of investments $ -- $ 230,162 $ 38,244 $ 66,171 $ 5,911 $ 16,051 $ 536,400 Interest 65,645 -- 73,396 -- -- -- -- Dividends -- 233,990 -- 333,922 4,243 2,007 -- ---------- ---------- ---------- ---------- -------- -------- ---------- Total net investment results 65,645 464,152 111,640 400,093 10,154 18,058 536,400 ---------- ---------- ---------- ---------- -------- -------- ---------- CONTRIBUTIONS TO THE PLAN: Employee 575,950 899,849 482,690 1,213,745 113,045 122,400 395,051 Employer 58,635 76,607 41,715 107,881 9,198 10,132 35,095 ---------- ---------- ---------- ---------- -------- -------- ---------- Total contributions 634,585 976,456 524,405 1,321,626 122,243 132,532 430,146 ---------- ---------- ---------- ---------- -------- -------- ---------- DISTRIBUTIONS TO PARTICIPANTS: Hardship withdrawals (20,685) (24,124) (17,946) (42,758) (793) (717) (16,903) Terminations (37,212) (46,065) (20,222) (80,819) (1,700) (2,904) (22,769) ---------- ---------- ---------- ---------- -------- -------- ---------- Total distributions (57,897) (70,189) (38,168) (123,577) (2,493) (3,621) (39,672) ---------- ---------- ---------- ---------- -------- -------- ---------- INTERFUND TRANSFERS (47,436) (34,372) (66,457) (104,026) 51,344 54,981 145,966 ---------- ---------- ---------- ---------- -------- -------- ---------- NET INCREASE IN NET ASSETS AVAILABLE FOR PLAN BENEFITS 594,897 1,336,047 531,420 1,494,116 181,248 201,950 1,072,840 NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of year 813,562 1,231,128 694,324 1,856,926 474 460 476,093 ---------- ---------- ---------- ---------- -------- -------- ---------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, end of year $1,408,459 $2,567,175 $1,225,744 $3,351,042 $181,722 $202,410 $1,548,933 ---------- ---------- ---------- ---------- -------- -------- ---------- ---------- ---------- ---------- ---------- -------- -------- ---------- Total ----------- NET INVESTMENT RESULTS: Net appreciation in fair value of investments $ 892,939 Interest 139,041 Dividends 574,162 ---------- Total net investment results 1,606,142 ---------- CONTRIBUTIONS TO THE PLAN: Employee 3,802,730 Employer 339,263 ---------- Total contributions 4,141,993 ---------- DISTRIBUTIONS TO PARTICIPANTS: Hardship withdrawals (123,926) Terminations (211,691) ---------- Total distributions (335,617) ---------- INTERFUND TRANSFERS -- ---------- NET INCREASE IN NET ASSETS AVAILABLE FOR PLAN BENEFITS 5,412,518 NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of year 5,072,967 ---------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, end of year $10,485,485 ----------- -----------
The accompanying notes and schedules are an integral part of this statement. COSTCO 401(k) PLAN FOR CALIFORNIA UNION EMPLOYEES NOTES TO FINANCIAL STATEMENTS AND SCHEDULES DECEMBER 31, 1997 1. PLAN DESCRIPTION: The following description of the Costco 401(k) Plan for California Union Employees (the Plan) provides only general information. Participants should refer to the plan agreement for a more complete description of the Plan's provisions. The Plan is a defined contribution plan subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Price Company and Costco Wholesale Corporation are wholly-owned subsidiaries of Costco Companies, Inc. Prior to January 1, 1997, the Plan was named the PriceCostco 401(k) Plan for California Union Employees. ELIGIBILITY The Plan covers all employees covered by the collective bargaining agreement between The Price Company and The International Brotherhood of Teamsters in the State of California over the age of 18 who have completed one year of service containing a minimum of 1,000 hours worked. The employee enters the Plan on the entry date following the fulfillment of these requirements. CONTRIBUTIONS Each year, participants may contribute from 1% to 15% of their compensation before income taxes, subject to certain limitations set by the Internal Revenue Service (IRS). Participants may also contribute amounts representing distributions from other qualified benefit or contribution plans (known as "rollover" contributions). The Company matches 50% of the employee's contributions, up to the first $250 of participant contributions to the Plan. PARTICIPANT ACCOUNTS Each participant's account is credited with his or her contributions, employer matching contributions and an allocation of plan earnings. Allocations are based on participant account balances as defined. The benefit to which a participant is entitled is the benefit that can be provided from his or her vested account. 2 VESTING Participants are immediately vested in their contributions, plus actual earnings thereon. Vesting in the employer matching contributions is based on years of continuous service, according to the following schedule:
Years of Service Percentage Vested ---------------- ----------------- Less than 2 0% 2-3 10 3-4 25 4-5 50 5 or more 100
FORFEITURES During 1997, forfeitures of approximately $3,800 were used to reduce the employer contributions to the Plan. Forfeitures can be restored to a participant's account if the participant is re-employed by the Company prior to the expiration of five consecutive breaks in service and repays the full dollar amount distributed due to the termination within five years of the reemployment date. As of December 31, 1997, forfeitures of approximately $11,500 had not been used to reduce employer contributions. These forfeitures will be used to offset future employer contributions. INVESTMENT OPTIONS Upon enrollment in the Plan, a participant may direct contributions into any of the seven investment options listed below. T. Rowe Price is the trustee of all investments, serves as investment manager for all funds and provides record keeping of all participant accounts. Funds may be temporarily invested in a cash account. Stable Value Fund -- Funds are invested primarily in high-quality insurance company and bank-issued investment contracts. Equity Income Fund -- Funds are invested in common stocks of established companies that pay above-average dividends and have prospects of future dividend increases. Spectrum Income Fund -- Funds are invested in a managed mix of funds including four domestic bond funds, an international bond fund, a money market fund and an income-oriented stock fund. Spectrum Growth Fund -- Funds are invested in a managed mix of funds, including five U.S. stock funds, an international stock fund and a money market fund. New Horizons Fund -- Funds are invested in common stock of rapidly growing companies in a broad range of industries. Mid-Cap Growth Fund -- Funds are invested in stock of companies with medium-sized market capitalization that have attractive growth prospects and established operating histories. Costco Companies, Inc. Common Stock -- Funds are invested in common stock of the Company. Participants may change their investment options daily. 3 UNIT ACCOUNTING All contributions to a participant's account and the participant's account balance are reflected in units of each fund selected or shares of Costco Companies, Inc. common stock. As of December 31, 1997 and 1996, units held by the Plan were as follows:
Units/shares Units/shares held at held at Description of Asset December 31, 1997 December 31, 1996 --------------------- ----------------- ----------------- Stable Value Fund 1,383,211 792,097 Equity Income Fund 96,917 53,273 Spectrum Income Fund 103,356 60,446 Spectrum Growth Fund 207,090 119,802 New Horizons Fund 7,503 -- Mid-Cap Growth Fund 6,788 -- Costco Companies, Inc. Common Stock 34,258 18,510
DISTRIBUTIONS Upon termination of employment, death or total disability, the vested interest in a participant's account is distributed in a lump sum. Participants may apply for a distribution of all or a portion of the vested interest at any time after attainment of age 59-1/2. Participants are also eligible to make hardship withdrawals from their salary deferral contributions in the event of certain financial hardships. Following a hardship withdrawal, participants are not allowed to contribute to the Plan for a one-year period. PLAN ADMINISTRATOR The Plan is administered by the Benefits Committee ("the Committee"), which is appointed by the Board of Directors of the Company. ADMINISTRATIVE EXPENSES All administrative and custodial fees of the Plan are paid by the Company. All investment management and transaction fees directly related to the plan investments are shown as a reduction of net investment results. 2. SIGNIFICANT ACCOUNTING POLICIES: BASIS OF ACCOUNTING The financial statements of the Plan are prepared under the accrual method of accounting. USE OF ESTIMATES The preparation of financial statements requires the use of estimates. Actual results could differ from those estimates. 4 INVESTMENT VALUATION AND INCOME RECOGNITION Investments are stated at fair value. Registered investment company funds and Costco Companies, Inc. common stock are valued using the closing price of the investments on the last day of business of the plan year. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation (depreciation) in fair value of assets includes the change in the fair value of assets from one period to the next, and realized gains and losses, and is computed using the moving average method. PAYMENT OF BENEFITS Benefits are recorded when paid. 3. PLAN TERMINATION: Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of plan termination, participants will become 100% vested in their accounts. 4. TAX STATUS: The IRS has informed the Company, in a letter dated November 29, 1996, that the Plan is designed in accordance with applicable sections of the Internal Revenue Code. The Plan has been amended subsequent to receiving a determination letter. The Plan Administrator and the Plan's counsel believe that the Plan is currently designed and is being operated in compliance with the applicable requirements of the IRS. 5. SUBSEQUENT EVENTS: Effective February 1, 1998, the Company will contribute a match of 50% of the employee's contribution, up to the first $400 of participant contributions to the Plan. Effective December 31, 1998, active employees in the Plan shall receive a contribution based on all straight time hours worked from February 1, 1998 through December 31, 1998, up to a maximum of 173 hours per month. SCHEDULE I COSTCO 401(k) PLAN FOR CALIFORNIA UNION EMPLOYEES EIN: 33-0572969 PIN: 004 ITEM 27A -- SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 1997
Identity of Party Involved/ Description of Investments Cost Current Value - ---------------------------- ---------- ------------- *T. Rowe Price: Stable Value Fund $1,383,211 $ 1,383,211 Equity Income Fund 2,313,872 2,526,618 Spectrum Income Fund 1,168,971 1,205,135 Spectrum Growth Fund 3,253,999 3,298,950 New Horizons Fund 170,367 174,821 Mid-Cap Growth Fund 179,336 194,142 *Costco Companies, Inc. Common Stock 1,026,327 1,528,769 ---------- ----------- $9,496,083 $10,311,646 ---------- ----------- ---------- -----------
*Represents a party in interest. The accompanying notes are an integral part of this schedule. SCHEDULE II COSTCO 401(k) PLAN FOR CALIFORNIA UNION EMPLOYEES ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1997 CATEGORY (iii) -- SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS AT BEGINNING OF YEAR.
Costco Companies, Stable Equity Spectrum Spectrum Inc. Value Income Income Growth Common Description of Assets Fund Fund Fund Fund Stock - -------------------------------------- -------- ---------- -------- ---------- --------- PURCHASES: Number of transactions 61 71 46 62 116 Purchase price $777,591 $1,227,673 $582,845 $1,669,133 $636,846 SALES: Number of transactions 87 67 75 90 39 Sale price $190,964 $ 131,947 $ 92,359 $ 244,506 $109,552 Cost of asset 190,964 111,147 89,811 219,240 82,391 -------- ---------- -------- ---------- -------- Gain $ -- $ 20,800 $ 2,548 $ 25,266 $ 27,161 -------- ---------- -------- ---------- -------- -------- ---------- -------- ---------- --------
THERE WERE NO CATEGORY (i), (ii) OR (iv) TRANSACTIONS. The accompanying notes are an integral part of this schedule. EX-99.1 2 EXHIBIT 99.1 EXHIBIT 99.1 ARTHUR ANDERSON LLP CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our reports included in this Form 11-K, into the Company's previously filed Registration Statement File No. 333-21093 on Form S-8. /s/ Arthur Anderson LLP Seattle, Washington June 22, 1998 -----END PRIVACY-ENHANCED MESSAGE-----