-----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, WNRJtsgvWfDnZ3Q5LWpYjd+bFM38woJBNvxPCckqWIoy+TMdRk7wgebnwuvl7bzx P/HHExI7qad+Yir0AISzSA== 0000888455-98-000034.txt : 19980701 0000888455-98-000034.hdr.sgml : 19980701 ACCESSION NUMBER: 0000888455-98-000034 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980630 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PETCO ANIMAL SUPPLIES INC CENTRAL INDEX KEY: 0000888455 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-RETAIL STORES, NEC [5990] IRS NUMBER: 330479906 STATE OF INCORPORATION: DE FISCAL YEAR END: 0128 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 000-23574 FILM NUMBER: 98658111 BUSINESS ADDRESS: STREET 1: 9125 REHCO RD CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 6194537845 MAIL ADDRESS: STREET 1: 9125 REHCO RD CITY: SAN DIEGO STATE: CA ZIP: 92121 11-K 1 THIS DOCUMENT IS A COPY OF THE FORM 11-K FILED ON JUNE 30, 1998 PURSUANT TO THE RULE 201 TEMPORARY HARDSHIP EXEMPTION. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K (Mark One) [ 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 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________________ to _______________________ Commission file number: 0-23574 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: PETCO ANIMAL SUPPLIES 401(K) PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Petco Animal Supplies, Inc. 9125 Rehco Road San Diego, CA 92121 PETCO ANIMAL SUPPLIES 401(k) PLAN Financial Statements December 31, 1997 and 1996 (With Independent Auditors' Report Thereon) PETCO ANIMAL SUPPLIES 401(K) PLAN Table of Contents Page Independent Auditors' Report 1 Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1997 2 Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1996 3 Statement of Changes in Net Assets Available for Benefits with Fund Information for the year ended December 31, 1997 4 Statement of Changes in Net Assets Available for Benefits with Fund Information for the year ended December 31, 1996 5 Notes to Financial Statements 6 Schedules 1 Schedule of Assets Held for Investment Purposes 11 2 Schedule of Reportable Transactions 12 1 INDEPENDENT AUDITORS' REPORT The Administrative Committee Petco Animal Supplies 401(k) Plan: We have audited the accompanying statements of net assets available for benefits of Petco Animal Supplies 401(k) Plan ("Plan")as of December 31, 1997 and 1996, and the related statements of changes in net assets available for benefits for each of the years in the two-year period ended December 31, 1997. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements 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 net assets available for benefits for each of the years in the two-year period then ended, 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 1 and 2 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. These supplemental schedules are the responsibility of the Plan's management. The fund information in the statements of net assets available for benefits and the statements of changes in net assets available for 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. KPMG Peat Marwick LLP San Diego, California June 19, 1998 2 PETCO ANIMAL SUPPLIES 401(k) PLAN Statement of Net Assets Available for Benefits with Fund Information December 31, 1997 Participant Directed --------------------------------------------------------------------------------------------------------- Prudential Governmental Fidelity Securities Prudential Advisor Putnam Trust Prudential Prudential Global Equity OTC Money Prudential Prudential Allocation Government Natural Petco Portfolio Emerging Market Utility Equity Balanced Income Resources Common Growth Growth Asset Fund Fund Fund Fund Fund Fund Stock Fund Fund - ----------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- Investments, at fair value: Mutual funds $ - 503,707 1,001,092 350,463 119,975 94,418 - 237,476 174,779 Common stock - - - - - - 157,565 - - Money market funds 181,562 - - - - - - - - Participant loans - - - - - - - - - ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total assets 181,562 503,707 1,001,092 350,463 119,975 94,418 157,565 237,476 174,779 Liabilities - ----------------------- Excess contributions due to participants (note 5) 6,002 16,299 37,975 2,798 73 1,442 174 6,272 3,991 --------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net assets available for benefits $ 175,560 487,408 963,117 347,665 119,902 92,976 157,391 231,204 170,788 ========== ========== ========== ========== ========== ========== ========== ========== ========== See accompanying notes to financial statements.
PETCO ANIMAL SUPPLIES 401(k) PLAN Statement of Net Assets Available for Benefits with Fund Information (continued) December 31, 1997 Nonparticipant Directed ----------------------- ------------- -------------- Prudential Prudential Special Government Money Money Market Market Loans to Asset Fund B Fund Participants Total ----------------------- ---------- ---------- -------------- -------------- Investments, at fair value: Mutual funds $ - - - 2,481,910 Common stock - - - 157,565 Money market funds 151 10,857 - 192,570 Participant loans - - 31,397 31,397 ---------- ---------- -------------- --------------- Total assets 151 10,857 31,397 2,863,442 Liabilities - ----------------------- Excess contributions due to participants (note 5) - - - 75,026 ---------- ---------- -------------- --------------- Net assets available for benefits $ 151 10,857 31,397 2,788,416 ========== ========== ============= ================ See accompanying notes to financial statements.
3 PETCO ANIMAL SUPPLIES 401(k) PLAN Statement of Net Assets Available for Benefits with Fund Information December 31, 1996 Participant Directed -------------------------------------------------------------------------------------------------------- Prudential Governmental Fidelity Securities Prudential Advisor Putnam Trust Prudential Global Equity OTC Money Prudential Prudential Prudential Government Natural Petco Portfolio Emerging Market Utility Equity Allocation Income Resources Common Growth Growth Assets Fund Fund Fund Fund Fund Fund Stock Fund Fund - ------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------- Investments, at fair value: Mutual funds $ - 351,144 616,892 274,668 61,001 52,650 - 23,391 30,312 Common stock - - - - - - 41,725 - - Money market funds 73,475 - - - - - - - - Participant loans - - - - - - - - - ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- 73,475 351,144 616,892 274,668 61,001 52,650 41,725 23,391 30,312 Contributions receivable: Employee - - - - - - - - - Employer 1,097 3,585 6,417 1,646 549 549 1,829 1,647 1,466 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total assets 74,572 354,729 623,309 276,314 61,550 53,199 43,554 25,038 31,778 Liabilities - ----------------------- Excess contributions due to participants (note 5) 173 1,670 5,808 1,573 2 609 130 427 591 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net assets available for benefits$ 74,399 353,059 617,501 274,741 61,548 52,590 43,424 24,611 31,187 ========== ========== ========== ========== ========== ========== ========== ========== ========== See accompanying notes to financial statemnts.
PETCO ANIMAL SUPPLIES 401(k) PLAN Statement of Net Assets Available for Benefits with Fund Information (continued) December 31, 1996 Nonparticipant Directed ----------------------- ------------- -------------- Prudential Prudential Special Government Money Money Market Market Loans to Assets Fund B Fund Participants Total - ----------------------- ---------- ---------- -------------- -------------- Investments, at fair value: Mutual funds $ - - - 1,410,058 Common stock - - - 41,725 Money market funds 9 10 - 73,494 Participant loans - - 17,200 17,200 ---------- ---------- -------------- --------------- 9 10 17,200 1,542,477 Contributions receivable: Employee - - - - Employer - - - 18,785 ---------- ---------- ------------- --------------- Total assets 9 10 17,200 1,561,262 Liabilities - ----------------------- Excess contributions due to participants (note 5) - - - 10,983 ---------- ---------- ------------- ---------------- Net assets available for benefits $ 9 10 17,200 1,550,279 ========== ========== ============= ================ See accompanying notes to financial statements.
4 PETCO ANIMAL SUPPLIES 401(k) PLAN Statement of Net Assets Available for Benefits with Fund Information December 31, 1997 Participant Directed -------------------------------------------------------------------------------------------------------------------- Prudential Governmental Fidelity Securities Prudential Advisor Putnam Trust Prudential Prudential Global Equity OTC Money Prudential Prudential Prudential Allocation Government Natural Petco Portfolio Emerging Market Utility Equity Allocation Balanced Income Resources Common Growth Growth Assets Fund Fund Fund Fund Fund Fund Fund Stock Fund Fund - ------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- -------- Additions to net assets attributed to: Investment Income Net Appreciation (depreciation) in fair value of investments $ (1) 56,720 101,738 (1,402) (37,652) 2,693 (22,809) (2,077) (3,708) 16,147 Interest 5,225 - - - - - - - - - Dividends - 49,455 64,368 39,614 43,829 5,197 12,349 - 23,594 - Less investment Expenses - - (15) - - - - - - - ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- 5,224 106,175 166,091 38,212 6,177 7,890 (10,460) (2,077) 19,886 16,147 Contributions: Employee 69,834 112,461 224,784 50,351 37,458 40,555 54,321 94,150 155,118 101,676 Employer 19,581 22,031 46,096 6,454 10,130 5,876 10,361 20,989 23,823 17,929 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- 89,415 134,492 270,880 56,805 47,588 46,431 64,682 115,139 178,941 119,605 Transfer of assets from Pet Food Warehouse, Inc. 401(k) Plan (note 6) 21,345 6,641 21,015 - 7,178 3,519 9,341 14,572 14,932 20,219 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total additions 115,984 247,308 457,986 95,017 60,943 57,840 63,563 127,634 213,759 155,971 Deductions from net assets attributed to benefits paid to participants 14,678 102,155 133,474 10,481 39,044 1,587 12,015 11,145 10,014 10,804 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) prior to interfund transfers 101,306 145,153 324,512 84,536 21,899 56,253 51,548 116,489 203,745 145,167 Interfund transfers (145) (10,804) 21,104 (359,277) 325,766 2,101 (11,162) (2,522) 2,848 (5,566) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) 101,161 134,349 345,616 (274,741) 347,665 58,354 40,386 113,967 206,593 139,601 Net assets available for benefits: Beginning of year 74,399 353,059 617,501 274,741 - 61,548 52,590 43,424 24,611 31,187 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- End of year $ 175,560 487,408 963,117 - 347,665 119,902 92,976 157,391 231,204 170,788 ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== See accompanying notes to financial statements.
PETCO ANIMAL SUPPLIES 401(k) PLAN Statement of Net Assets Available for Benefits with Fund Information (continued) December 31, 1997 Nonparticipant Directed ----------------------- ------------- -------------- Prudential Prudential Special Government Money Money Market Market Loans to Assets Fund B Fund Participants Total - ----------------------- ---------- ---------- -------------- -------------- Additions to net assets attributed to: Investment Income Net Appreciation (depreciation) in fair value of investments $ - - - 109,649 Interest 5 330 2,632 8,192 Dividends - - - 238,406 Less investment Expenses - - - (15) ---------- ---------- -------------- --------------- 5 330 2,632 356,232 Contributions: Employee 105 10 - 940,823 Employer 32 3 - 183,305 ---------- ---------- -------------- --------------- 137 13 - 1,124,128 Transfer of assets from Pet Food Warehouse, Inc. 401(k) Plan (note 6) - - - 118,762 ---------- ---------- -------------- --------------- Total additions 142 343 2,632 1,599,122 Deductions from net assets attributed to benefits paid to participants - - 15,588 360,985 ---------- ---------- -------------- --------------- Net increase (decrease) prior to interfund transfers 142 343 (12,956) 1,238,137 Interfund transfers - 10,504 27,153 - ---------- ---------- -------------- --------------- Net increase (decrease) 142 10,847 14,197 1,238,137 Net assets available for benefits: Beginning of year 9 10 17,200 1,550,279 ---------- ---------- -------------- --------------- End of year $ 151 10,857 31,397 2,788,416 ========== ========== ============== =============== See accompanying notes to financial statements.
5 PETCO ANIMAL SUPPLIES 401(k) PLAN Statement of Net Assets Available for Benefits with Fund Information December 31, 1996 Participant Directed ---------------------------------------------------------------------------------------------------------- Prudential Governmental Fidelity Securities Prudential Advisor Putnam Trust Prudential Global Equity OTC Money Prudential Prudential Prudential Government Natural Petco Portfolio Emerging Market Utility Equity Allocation Income Resources Common Growth Growth Fund Fund Fund Fund Fund Fund Stock Fund Fund ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Additions to net assets attributed to: Investment income: Net appreciation (depreciation) in fair value of investments $ (11) 28,011 19,970 (794) (1,724) 1,222 (8,611) 121 (2,810) Interest 2,842 - - - - - - - - Dividends - 30,411 62,592 26,537 2,979 5,345 - 536 1,766 Less investment expenses - - (29) - - - - - - ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- 2,831 58,422 82,533 25,743 1,255 6,567 (8,611) 657 (1,044) Contributions: Employee 40,371 75,021 173,061 72,698 22,208 24,278 41,470 18,286 21,782 Employer 5,604 13,773 27,605 9,602 2,477 1,819 6,543 3,806 3,435 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total Additions 48,806 147,216 283,199 108,043 25,940 32,664 39,402 22,749 24,173 Deductions from net assets attributed to benefits paid to participants (3,193) (18,810) (38,538) (16,128) (2,239) (3,149) (1,642) (110) (67) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net increase prior to interfund transfers 45,613 128,406 244,661 91,915 23,701 29,515 37,760 22,639 24,106 Interfund transfers (18,612) 8,839 4,180 (5,488) - 8,375 - 1,972 7,081 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net increase (decrease) 27,001 137,245 248,841 86,427 23,701 37,890 37,760 24,611 31,187 Net assets available for benefits: Beginning of year 47,398 215,814 368,660 188,314 37,847 14,700 5,664 - - ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- End of year $ 74,399 353,059 617,501 274,741 61,548 52,590 43,424 24,611 31,187 See accompanying notes to financial statements.
PETCO ANIMAL SUPPLIES 401(k) PLAN Statement of Net Assets Available for Benefits with Fund Information (continued) December 31, 1996 Nonparticipant Directed ----------------------- ------------- -------------- Prudential Prudential Special Government Money Money Market Market Loans to Fund B Fund Participants Total ---------- ---------- -------------- -------------- Additions to net assets attributed to: Investment income: Net appreciation (depreciation) in fair value of investments $ - - - 374 Interest 111 - - 2,953 Dividends - - - 130,166 Less investment expenses - - - (29) ---------- ---------- ------------- ---------------- 111 - - 168,464 Contributions: Employee 9 10 - 489,194 Employer - - - 74,664 ---------- ---------- ------------- ---------------- Total Additions 120 10 - 732,322 Deductions from net assets attributed to benefits paid to participants - - - (83,876) ---------- ---------- ------------- ---------------- Net increase prior to interfund transfers 120 10 - 648,446 Interfund transfers (23,547) - 17,200 - ---------- ---------- ------------- ---------------- Net increase (decrease) (23,427) 10 17,200 648,446 Net assets available for benefits: Beginning of year 23,436 - - 901,833 ---------- ---------- ------------- ---------------- End of year $ 9 10 17,200 1,550,279 See accompanying notes to financial statements.
6 PETCO ANIMAL SUPPLIES 401(K) PLAN Notes to Financial Statements December 31, 1997 and 1996 (1) Description of Plan The following description of the Petco Animal Supplies 401(k) Plan (the "Plan") is provided for general information purposes only. Participants should refer to the Plan Document for a more complete description of the Plan's provisions. General The Plan was established on January 1, 1992, was amended and restated on January 1, 1994 and October 1, 1996, and is a defined contribution plan available to all eligible employees of Petco Animal Supplies, Inc. (the "Company"). Prudential Bank and Trust Company is the Plan trustee and custodian of the Plan's assets. Certain administrative functions are performed by officers or employees of the Company. No such officer or employee receives compensation from the Plan. Certain investment and administrative expenses of the Plan are paid directly by the Company. All employees who are at least 21 years of age and have completed one year of service with a minimum of 1,000 hours worked are eligible to participate in the Plan. The Plan entry dates are on the first day of a calendar quarter coinciding with or following the date employees satisfy the eligibility requirements. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). Contributions Each Plan year participants may elect to make a pre-tax contribution to the Plan ranging from 1% to 15% of their gross salary. The Company, as plan sponsor, may make discretionary matching contributions on the participants' behalf to the Plan and additional discretionary contributions. Additional discretionary contributions are allocated to participants in proportion to their compensation as a percentage of the compensation of all participants. Contributions are subject to certain limitations. All employer contributions vest at the rate of 20% for each year of service by the participant or upon attainment of age sixty-five, retirement due to disability, death or termination of the Plan. For the Plan years ended December 31, 1997 and 1996, the Company made discretionary matching contributions of $183,305 and $74,664, respectively. Participant Accounts Each participant's account is credited with the participant's contributions and an allocation of (a) the Company's discretionary contributions, (b) fund earnings and (c) forfeitures. Allocations are based upon the participant's pro rata share of the beginning of the month's investment account balance. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. 6 PETCO ANIMAL SUPPLIES 401(K) PLAN Notes to Financial Statements, Continued Investment Options The Plan provides for participant-directed accounts which allow participants to allocate their account balance among the following investment funds: Name of Mutual Fund Type of Investment - ------------------------------------ ------------------------------ Prudential Governmental Securities Invests in a diversified portfolio of Trust Money Market Fund short-term money market instruments issued by the U.S. government or its agencies. Prudential Utility Fund Invests in equity and debt securities of utility companies. Prudential Equity Fund Invests in a portfolio of common stocks of major, well-established corporations. Prudential Allocation Balanced Invests in equities, debt and cash. Fund Prudential Government Income Fund Invests at least 65% of the total fund assets in U.S. government securities. Prudential Global Natural Invests in securities of foreign and Resources Fund domestic companies that own, explore, mine, process or provide goods and services with respect to natural resources and securities. Petco Common Stock Company common stock quoted on the NASDAQ national market. Fidelity Advisor Equity Portfolio Invests in growth stocks of small, Growth Fund medium, and large companies that demonstrate the potential for above average earnings or sales growth. Putnam OTC Emerging Growth Fund Invests in securities of companies with market capitalizations between $50 million and $2 billion that have a rapid growth rate and a dominant industry position. The Prudential Allocation Fund was replaced with the Prudential Allocation Balanced Fund as an investment option in the current year. 7 PETCO ANIMAL SUPPLIES 401(K) PLAN Notes to Financial Statements, Continued The Plan also holds non-participant directed accounts which are invested in the following investment funds: Prudential Special Money Market Invests in a diversified portfolio of Fund B U.S. dollar-denominated money market instruments from domestic and foreign issuers. Prudential Government Money Market Invests in a diversified portfolio of Fund U.S. dollar-denominated money market instruments from the U.S. government. Payment of Benefits On termination of service due to death, disability or retirement, a participant's vested account balance is paid in a lump sum distribution or as an annuity. The Plan also provides for hardship withdrawals subject to U.S. Department of Labor regulations. In-Service Withdrawals While the Plan is designed to be a retirement income supplement, it provides flexibility for participants greater than 59-1/2 years of age in cases where funds are needed prior to retirement. Accordingly, employees may withdraw funds before retirement up to the maximum vested account balance adjusted for amounts attributable to before tax contributions, as outlined in the Plan. Vesting Participants are immediately vested in their contributions plus actual earnings thereon. Company contributions vest at the rate of 20% for each year of service by the participant or upon attainment of age sixty-five, retirement due to disability, death or termination of the Plan. Participant Loans Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their account balance. Loan transactions are treated as a transfer to (from) the investment fund from (to) the Participant Loan fund, using the same allocation method as contributions. The loans are secured by the balance in the participant's account and bear interest equal to the prime rate established by the Plan's administrator plus 1%. The prime rate at December 31, 1997 was 8.5%. Loan terms range from 1 to 5 years or up to 15 years for the purchase of a primary residence. Principal and interest, calculated using the effective interest method, are paid monthly or semi-monthly through payroll deductions. Forfeitures Forfeitures are allocated to participant accounts in the Plan year in which a participant terminates service. The allocation of forfeitures is based on the ratio between a participant's salary and total salaries of all participants as defined in the Plan document. Such allocation is made only to participants in the Plan as of the last day of the fiscal year. 8 PETCO ANIMAL SUPPLIES 401(K) PLAN Notes to Financial Statements, continued Administrative Costs Certain costs and expenses related to the administration of the Plan are paid by the Company. 9 PETCO ANIMAL SUPPLIES 401(K) PLAN Notes to Financial Statements, Continued Reclassifications Certain reclassifications have been made to the 1996 financial statements to conform with the 1997 presentation. (2) Significant Accounting Policies Basis of Accounting The accompanying financial statements of the Plan are presented using the accrual method of accounting and have been prepared in accordance with generally accepted accounting principles. Investment Valuation The Plan's investments in common stocks, mutual funds, and money market funds are stated at fair value, which is determined by quoted market prices. Investment purchases and sales are recorded on a trade date basis. All receivables and liabilities are valued at cost, which approximates fair value. Use of Estimates The Company has made a number of estimates and assumptions relating to the reporting of net assets available for benefits and changes in net assets available for benefits to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. (3) Tax Status The adopted Plan document is a standardized profit sharing plan developed by the trustee. The Company has received a favorable determination letter dated July 31, 1995 regarding tax exempt status under the provisions of the Internal Revenue Code. The Plan has been amended since the determination letter has been received. However, the Company and the Company's tax counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, the Company believes that the Plan is qualified and the related trust was tax- exempt as of December 31, 1997 and 1996. (4) 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 anytime 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. (5) Excess Contributions Returned to Participants The Plan initially failed to meet certain nondiscrimination tests for the year ended December 31, 1997 and $46,990 was returned to certain participants in order to meet the nondiscrimination tests. In addition, certain participants contributed amounts in excess of $9,500, the maximum deferral amount as determined by the Internal Revenue Service, and excess deferrals of $28,036 were returned to plan participants. These amounts have been recorded in the accompanying financial statements as liabilities of the Plan as of December 31, 1997 as they were returned to participants subsequent to December 31, 1997. 10 PETCO ANIMAL SUPPLIES 401(K) PLAN Notes to Financial Statements, Continued (6) Transfer of Assets from Pet Food Warehouse, Inc. 401(k) Plan In connection with the Company's December 31, 1996 acquisition of Pet Food Warehouse, Inc., the Pet Food Warehouse, Inc. 401(k) Plan was merged with the Plan on December 1, 1997. This resulted in a transfer of $118,762 of net assets into the Plan. 11 Schedule 1 PETCO ANIMAL SUPPLIES 401(K) PLAN Line 27a - Schedule of Assets Held for Investment Purposes December 31, 1997 Current Issuer Description of investment Cost value - -------------- ------------------------------ --------- ------------ Prudential * Governmental Securities Trust Money Market Fund $ 181,562 181,562 Prudential * Utility Fund 426,097 503,707 Prudential * Equity Fund 858,191 1,001,092 Prudential * Allocation Balance Fund 388,304 350,463 Prudential * Government Income Fund 117,732 119,975 Prudential * Global Natural Resources Fund 116,838 94,418 Petco * Petco Common Stock 168,766 157,565 Fidelity Advisor Equity Portfolio Growth Fund 242,362 237,476 Putnam OTC Emerging Growth Fund 160,192 174,779 Prudential * Special Money Market Fund B 151 151 Prudential * Government Money Market Fund 10,857 10,857 Loans to Participants *Interest rate, 9.25% - 10.50% 31,397 31,397 --------- --------- Total investments $2,702,449 2,863,442 ========= ========= * Party in interest
12 Schedule 2 PETCO ANIMAL SUPPLIES 401(K) PLAN Line 27d - Schedule of Reportable Transactions For the year ended December 31, 1997 Current value of Identity Cost of asset on of party Description Purchase Selling asset transaction Net involved of asset price price sold date gain(loss) - ---------- ----------- ---------- ---------- ---------- ----------- ---------- Prudential Utility Fund $ - 84,660 69,617 84,660 15,043 232,260(1) - - 232,260 - - 151,627(1) 127,565 151,627 24,062 Prudential Equity Fund 476,650(1) - - 476,650 - - 215,207(1) 168,147 215,207 47,060 Prudential Allocation Fund 84,427(1) - - 84,427 - - 373,942(1) 371,757 373,942 2,185 - 203,435 205,047 203,435 (1,611) - 141,477 138,607 141,477 2,870 Prudential Allocation Balanced Fund 203,435 - - 203,435 - 141,477 - - 141,477 - 476,278(1) - - 476,278 - - 88,163(1) 89,337 88,163 (1,174) Prudential Natural Resource Fund 89,177(1) - - 89,177 - Prudential Government Money Market Fund 119,807(1) - - 119,807 - Petco Common Stock 132,377(1) - - 132,377 - Fidelity Advisor Equity Portfolio Growth Fund 231,502(1) - - 231,502 - Putnam OTC Emerging Growth Fund 148,967(1) - - 148,967 - (1) Represents a series of transactions
13 SIGNATURES The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf of the undersigned hereunto duly authorized. June 29, 1998 PETCO Animal Supplies 401(k) Plan BY: Plan Administrative Committee /s/ Brian K. Devine - ---------------------------------- Brian K. Devine /s/ Bruce C. Hall - ---------------------------------- Bruce C. Hall /s/ Richard C. St. Peter - ---------------------------------- Richard C. St. Peter /s/ Larry D. Asselin - ---------------------------------- Larry D. Asselin /s/ Janet D. Mitchell - ---------------------------------- Janet D. Mitchell /s/ James M. Myers - ---------------------------------- James M. Myers /s/ William M. Woodard - ---------------------------------- William M. Woodard 14 The Board of Directors Petco Animal Supplies, Inc.: We consent to incorporation by reference in the registration statement (No. 33-95352) on Form S-8 of Petco Animal Supplies, Inc. of our report dated June 19, 1998, relating to the statements of net assets available for benefits of the Petco Animal Supplies 401(k) Plan as of December 31, 1997 and 1996, and the related statements of changes in net assets available for benefits for each of the years in the two-year period ended December 31, 1997, and all related schedules, which report appears in the December 31, 1997 annual report on Form 11-K of Petco Animal Supplies 401(k) Plan. KPMG Peat Marwick LLP San Diego, California June 29, 1998 -----END PRIVACY-ENHANCED MESSAGE-----