-----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, VJZpHx7i3CdlJ3iyKeLofiB5L24+1EFdXcEhmzyN6RKTQWywivQCE7dtqjy25ndy WSgnFiaGnXMnaNGnGE/KDg== /in/edgar/work/20000628/0000888455-00-000014/0000888455-00-000014.txt : 20000920 0000888455-00-000014.hdr.sgml : 20000920 ACCESSION NUMBER: 0000888455-00-000014 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PETCO ANIMAL SUPPLIES INC CENTRAL INDEX KEY: 0000888455 STANDARD INDUSTRIAL CLASSIFICATION: [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: 663289 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 0001.txt ANNUAL REPORT OF 401(K) PLAN 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, 1999 [ ] 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, 1999 and 1998 (With Independent Auditors' Report Thereon) PETCO ANIMAL SUPPLIES 401(k) PLAN Table of Contents Page Independent Auditors' Report 1 Statements of Net Assets Available for Benefits as of December 31, 1999 and 1998 2 Statements of Changes in Net Assets Available for Benefits for the years ended December 31, 1999 and 1998 3 Notes to Financial Statements 4 Schedule 1 Schedule of Assets Held for Investment Purposes at End of Year as of December 31, 1999 10 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 (the Plan) as of December 31, 1999 and 1998, 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, 1999. 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, 1999 and 1998, and the changes in net assets available for benefits for each of the years in the two-year period ended December 31, 1999, 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 schedule of assets held for investment purposes at end of year is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is 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. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. KPMG LLP San Diego, California June 20, 2000 PETCO ANIMAL SUPPLIES 401(k) PLAN Statements of Net Assets Available for Benefits December 31, 1999 and 1998
Assets 1999 1998 ------------------ ------------------ Investments (Note 3) $ 9,118,155 5,208,739 ------------------ ------------------ Receivables: Employer contribution 11,558 -- Participant contributions 24,093 -- ------------------ ------------------ Total receivables 35,651 -- ------------------ ------------------ Total assets 9,153,806 5,208,739 Liabilities Excess contributions due to participants (Note 6) 115,861 149,551 ------------------ ------------------ Net assets available for benefits $ 9,037,945 5,059,188 ================== ==================
See accompanying notes to financial statements. 2 PETCO ANIMAL SUPPLIES 401(k) PLAN Statements of Changes in Net Assets Available for Benefits Years ended December 31, 1999 and 1998
1999 1998 ------------------ ------------------ Additions to net assets attributed to: Investment income: Net appreciation (depreciation) in fair value of investments $ 1,194,963 (30,790) Interest 7,837 3,199 Dividends 643,317 352,669 Investment expenses (2,807) (1,047) ------------------ ------------------ 1,843,310 324,031 ------------------ ------------------ Contributions: Participant 2,206,063 1,784,393 Employer 854,401 518,584 ------------------ ------------------ 3,060,464 2,302,977 ------------------ ------------------ Total additions 4,903,774 2,627,008 Deductions from net assets attributed to benefits paid to participants 925,017 356,236 ------------------ ------------------ Net increase 3,978,757 2,270,772 Net assets available for benefits: Beginning of year 5,059,188 2,788,416 ------------------ ------------------ End of year $ 9,037,945 5,059,188 ================== ==================
See accompanying notes to financial statements. 3 PETCO ANIMAL SUPPLIES 401(k) PLAN Notes to Financial Statements December 31, 1999 and 1998 (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. (a) General The Plan was established on January 1, 1992, was amended and restated on January 1, 1994, October 1, 1996 and September 1, 1998, and is a defined contribution plan available to all eligible employees of Petco Animal Supplies, Inc. (the Company). Prudential 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). (b) Contributions Each Plan year, participants may elect to make a pretax contribution to the Plan ranging from 1% to 15% of their gross salary subject to Internal Revenue Service limits of $10,000 in 1999 and 1998. 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 65, retirement due to disability, death or termination of the Plan. For the Plan years ended December 31, 1999 and 1998, the Company made discretionary matching contributions of $854,401 and $518,584, respectively. (c) Participant Accounts Each participant's account is credited with the participant's contributions and an allocation of (a) the Company's discretionary matching contributions, (b) fund earnings and (c) forfeitures incurred prior to September 1, 1998 (Note 1(i)). 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. 4 (Continued) PETCO ANIMAL SUPPLIES 401(k) PLAN Notes to Financial Statements December 31, 1999 and 1998 (d) 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 Trust Money Invests in a diversified portfolio of short-term money Market Fund 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 Balanced Fund Invests in equities, debt and cash. Prudential Government Income Fund Invests at least 65% of the total fund assets in U.S. government securities. Prudential Natural Resources Fund Invests in securities of foreign and domestic companies that own, explore, mine, process or provide goods and services with respect to natural resources and securities. Fidelity Advisor Equity Growth Fund Invests in growth stocks of small, 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. Petco Common Stock Company common stock quoted on the NASDAQ national market. The Plan also holds nonparticipant-directed accounts which are invested in the following investment funds: Prudential Special Money Market Fund B Invests in a diversified portfolio of U.S. dollar-denominated money market instruments from domestic and foreign issuers. Prudential Government Money Market Fund Invests in a diversified portfolio of U.S. dollar-denominated money market instruments from the U.S. government.
5 (Continued) PETCO ANIMAL SUPPLIES 401(k) PLAN Notes to Financial Statements December 31, 1999 and 1998 (e) 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. (f) 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. (g) 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 65, retirement due to disability, death or termination of the Plan. (h) 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%. Participant loans outstanding at December 31, 1999 and 1998 were $117,702 and $29,433, respectively. The prime rate at December 31, 1999 and 1998 was 8.50% and 7.75%, respectively. Loan terms range from one to five years or up to ten years for the purchase of a primary residence. Principal and interest, calculated using the effective-interest method, are paid monthly or semimonthly through payroll deductions. (i) Forfeitures Forfeitures are used to reduce future employer contributions. During the year ended December 31, 1999, forfeitures totaled $58,924 and investment income on unallocated forfeitures was $2,601. At December 31, 1999 and 1998, forfeited nonvested accounts totaled $86,239 and $24,714, respectively and are invested in the Prudential Governmental Securities Trust Money Market Fund. (j) Administrative Costs Certain costs and expenses related to the administration of the Plan are paid by the Company. 6 (Continued) PETCO ANIMAL SUPPLIES 401(k) PLAN Notes to Financial Statements December 31, 1999 and 1998 (2) Significant Accounting Policies (a) 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. (b) Investment Valuation The Plan's investments in mutual funds, money market funds and common stock 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 and participant loans are valued at cost, which approximates fair value. (c) 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. (d) Accounting Standard Adopted In September 1999, the American Institute of Certified Public Accountants issued Statement of Position 99-3, Accounting for and Reporting of Certain Defined Contribution Plan Investments and Other Disclosure Matters (SOP 99-3). SOP 99-3 simplifies the disclosure for certain investments and is effective for plan years ending after December 15, 1999 with earlier application encouraged. The Plan adopted SOP 99-3 during the Plan year ended December 31, 1999. Accordingly, information previously required to be disclosed about participant-directed fund investment programs is not presented in the Plan's 1999 financial statements. The Plan's 1998 financial statements have been reclassified to conform with the current year's presentation. 7 (Continued) PETCO ANIMAL SUPPLIES 401(k) PLAN Notes to Financial Statements December 31, 1999 and 1998 (3) Investments The following presents investments that represent 5% or more of the Plan's net assets.
December 31, ---------------------------------------- 1999 1998 -------------------- ------------------ Prudential Governmental Securities Trust Money Market Fund, 490,567 and 294,774 shares, respectively $ 490,567 294,774 Prudential Utility Fund, 66,519 and 56,225 shares, respectively 735,035 677,440 Prudential Equity Fund, 105,995 and 81,972 shares, respectively 2,044,493 1,619,534 Prudential Balanced Fund, 56,628 and 39,352 shares, respectively 702,096 479,298 Fidelity Advisor Equity Growth Fund, 28,588 and 16,682 shares, respectively 2,047,221 952,026 Putnam OTC Emerging Growth Fund, 43,423 and 27,642 shares, respectively 1,607,082 476,833 Petco Common Stock, 62,507 and 36,164 shares, respectively 871,092 363,905
During 1999 and 1998, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in value, as follows:
1999 1998 ------------------- ------------------- Mutual funds $ 1,011,461 77,332 Money market funds (18) (5) Common stock 183,520 (108,117) ------------------- ------------------- $ 1,194,963 (30,790) =================== ===================
(4) 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, 1999 and 1998. 8 (Continued) PETCO ANIMAL SUPPLIES 401(k) PLAN Notes to Financial Statements December 31, 1999 and 1998 (5) 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. (6) Excess Contributions Due to Participants The Plan initially failed to meet certain nondiscrimination tests for the years ended December 31, 1999 and 1998, and $115,861 and $147,240, respectively was returned to certain participants in order to meet the nondiscrimination tests. In addition, for the year ended December 31, 1998, certain participants contributed amounts in excess of $10,000, the maximum deferral amount as determined by the Internal Revenue Service, and excess deferrals of $2,311 were returned to Plan participants in 1999. These amounts have been recorded in the accompanying financial statements as liabilities of the Plan as of December 31, 1999 and 1998. 9
Schedule 1 PETCO ANIMAL SUPPLIES 401(k) PLAN Schedule of Assets Held for Investment Purposes at End of Year December 31, 1999 (b) Identity of issue, (e) borrower, lessor (c) (d) Current (a) or similar party Description of investment Cost value - ------ ------------------------ ------------------------------------- -------------------- -------------------- Money market funds: * Prudential Governmental Securities Trust Money Market Fund $ 490,595 490,567 * Prudential Special Money Market Fund B 166 166 * Prudential Government Money Market Fund 11,870 11,870 -------------------- -------------------- 502,631 502,603 -------------------- -------------------- Mutual funds: * Prudential Utility Fund 752,564 735,035 * Prudential Equity Fund 2,040,222 2,044,493 * Prudential Balanced Fund 722,966 702,096 * Prudential Government Income Fund 306,791 290,558 * Prudential Natural Resources Fund 180,059 200,273 Fidelity Advisor Equity Growth Fund 1,686,935 2,047,221 Putnam OTC Emerging Growth Fund 826,951 1,607,082 -------------------- -------------------- 6,516,488 7,626,758 -------------------- -------------------- * Petco Petco Common Stock 778,090 871,092 * Participant Loans Interest rates ranging from 8.75% to 9.5% -- 117,702 -------------------- --------------------- Total investments $ 7,797,209 9,118,155 ==================== =====================
* Party in interest. See accompanying independent auditors' report 10 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 28, 2000 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/ Janet D. Mitchell -------------------------------------------------------- Janet D. Mitchell /s/ James M. Myers -------------------------------------------------------- James M. Myers /s/ William M. Woodard -------------------------------------------------------- William M. Woodard Consent of Independent Accountants 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 20, 2000, relating to the statements of net assets available for benefits of the Petco Animal Supplies 401(k) Plan as of December 31, 1999 and 1998, 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, 1999, and the related schedule, which report appears in the December 31, 1999 annual report on Form 11-K of Petco Animal Supplies 401(k) Plan. KPMG LLP San Diego, California June 28, 2000 -----END PRIVACY-ENHANCED MESSAGE-----