-----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, JT2eI3i+6w4spQVls9/26hu7b5oqaHmyaiFgkpPb8CTCnNDQoNYDZNn44o3hmYuV Gt5H138z0dLVEzNx5tYn6w== 0000888455-99-000012.txt : 19990701 0000888455-99-000012.hdr.sgml : 19990701 ACCESSION NUMBER: 0000888455-99-000012 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990630 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: 99656522 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 11-K 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, 1998 [ ] 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, 1998 and 1997 (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, 1998 2 Statement of Net Assets Available for Benefits with Fund Information as of December 31, 1997 3 Statement of Changes in Net Assets Available for Benefits with Fund Information for the year ended December 31, 1998 4 Statement of Changes in Net Assets Available for Benefits with Fund Information for the year ended December 31, 1997 6 Notes to Financial Statements 8 Schedules 1 Schedule of Assets Held for Investment Purposes as of December 31, 1998 12 2 Schedule of Reportable Transactions for the year ended December 31, 1998 13 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, 1998 and 1997, 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, 1998. 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, 1998 and 1997, 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 LLP San Diego, California June 21, 1999 PETCO ANIMAL SUPPLIES 401(k) PLAN Statement of Net Assets Available for Benefits with Fund Information December 31, 1998
Participant Directed -------------------------------------------------------------------------------------------------------- Prudential Governmental Securities Prudential Trust Prudential Prudential Global Money Prudential Prudential Allocation Government Natural Petco Market Utility Equity Balanced Income Resources Common Assets Fund Fund Fund Fund Fund Fund Stock ------------- ------------- ------------- ------------- ------------- ------------- ------------- Investments, at fair value: Mutual funds $ -- 677,440 1,619,534 479,298 195,354 108,741 -- Common stock -- -- -- -- -- -- 363,905 Money market funds 294,774 -- -- -- -- -- -- Participant loans -- -- -- -- -- -- -- ------------- ------------- ------------- ------------- ------------- ------------- ------------- Total assets 294,774 677,440 1,619,534 479,298 195,354 108,741 363,905 Liabilities Excess contributions due to participants (Note 5) 8,506 17,422 54,167 4,728 3,142 3,348 776 ------------- ------------- ------------- ------------- ------------- ------------- ------------- Net assets available for benefits $ 286,268 660,018 1,565,367 474,570 192,212 105,393 363,129 ============= ============= ============= ============= ============= ============= ============= Participant Directed Nonparticipant Directed ---------------------------- ---------------------------- Fidelity Advisor Putnam Prudential Prudential Equity OTC Special Government Portfolio Emerging Money Money Growth Growth Market Market Loans to Assets Fund Fund Fund B Fund Participants Total ------------- ------------- ------------- ------------- ------------- ------------- Investments, at fair value: Mutual funds $ 952,026 476,833 -- -- -- 4,509,226 Common stock -- -- -- -- -- 363,905 Money market funds -- -- 158 11,243 -- 306,175 Participant loans -- -- -- -- 29,433 29,433 ------------- ------------- ------------- ------------- ------------- ------------- Total assets 952,026 476,833 158 11,243 29,433 5,208,739 Liabilities Excess contributions due to participants (Note 5) 41,240 16,222 -- -- -- 149,551 ------------- ------------- ------------- ------------- ------------- ------------- Net assets available for benefits $ 910,786 460,611 158 11,243 29,433 5,059,188 ============= ============= ============= ============= ============= ============= See accompanying notes to financial statements.
PETCO ANIMAL SUPPLIES 401(k) PLAN Statement of Net Assets Available for Benefits with Fund Information December 31, 1997
Participant Directed -------------------------------------------------------------------------------------------------------- Prudential Governmental Securities Prudential Trust Prudential Prudential Global Money Prudential Prudential Allocation Government Natural Petco Market Utility Equity Balanced Income Resources Common Assets Fund Fund Fund Fund Fund Fund Stock ------------- ------------- ------------- ------------- ------------- ------------- ------------- Investments, at fair value: Mutual funds $ -- 503,707 1,001,092 350,463 119,975 94,418 -- Common stock -- -- -- -- -- -- 157,565 Money market funds 181,562 -- -- -- -- -- -- Participant loans -- -- -- -- -- -- -- ------------- ------------- ------------- ------------- ------------- ------------- ------------- Total assets 181,562 503,770 1,001,092 350,463 119,975 94,418 157,565 Liabilities Excess contributions due to participants (Note 5) 6,002 16,299 37,975 2,798 73 1,442 174 ------------- ------------- ------------- ------------- ------------- ------------- ------------- Net assets available for benefits $ 175,560 487,408 963,117 347,665 119,902 92,976 157,391 ============= ============= ============= ============= ============= ============= ============= Participant Directed Nonparticipant Directed ---------------------------- ---------------------------- Fidelity Advisor Putnam Prudential Prudential Equity OTC Special Government Portfolio Emerging Money Money Growth Growth Market Market Loans to Assets Fund Fund Fund B Fund Participants Total ------------- ------------- ------------- ------------- ------------- ------------- Investments, at fair value: Mutual funds $ 237,476 174,779 -- -- -- 2,481,910 Common stock -- -- -- -- -- 157,565 Money market funds -- -- 151 10,857 -- 192,570 Participant loans -- -- -- -- 31,397 31,397 ------------- ------------- ------------- ------------- ------------- ------------- Total assets 237,476 174,779 151 10,857 31,397 2,863,442 Liabilities Excess contributions due to participants (Note 5) 6,272 3,991 -- -- -- 75,026 ------------- ------------- ------------- ------------- ------------- ------------- Net assets available for benefits $ 231,204 170,788 151 10,857 31,397 2,788,416 ============= ============= ============= ============= ============= ============= See accompanying notes to financial statements.
PETCO ANIMAL SUPPLIES 401(k) PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information For the year ended December 31, 1998
Participant Directed -------------------------------------------------------------------------------------------------------- Prudential Governmental Securities Prudential Trust Prudential Prudential Global Money Prudential Prudential Prudential Allocation Government Natural Market Utility Equity Allocation Balanced Income Resources Fund Fund Fund Fund Fund Fund Fund ------------- ------------- ------------- ------------- ------------- ------------- ------------- Additions to net assets attributed to: Investment income: Net appreciation (depreciation) in fair value of investments $ -- (15,503) (23,149) -- (6,388) 3,549 (22,571) Interest -- -- -- -- -- -- -- Dividends 9,650 60,336 122,647 -- 40,938 8,949 5,284 Investment expenses (135) (117) (315) -- (139) (43) (60) ------------- ------------- ------------- ------------- ------------- ------------- ------------- 9,515 44,716 99,183 -- 34,411 12,455 (17,347) ------------- ------------- ------------- ------------- ------------- ------------- ------------- Contributions: Employee 94,191 122,583 449,184 -- 141,736 59,383 49,319 Employer 53,388 43,421 127,252 -- 35,052 17,319 13,056 ------------- ------------- ------------- ------------- ------------- ------------- ------------- 147,579 166,004 576,436 -- 176,788 76,702 62,375 ------------- ------------- ------------- ------------- ------------- ------------- ------------- Total additions 157,094 210,720 675,619 -- 211,199 89,157 45,028 Deductions from net assets attributed to - benefits paid to participants 20,648 42,632 82,512 -- 58,795 12,266 11,030 ------------- ------------- ------------- ------------- ------------- ------------- ------------- Net increase (decrease) prior to interfund transfers 136,446 168,088 593,107 -- 152,404 76,891 33,998 Interfund transfers (25,738) 4,522 9,143 -- (25,499) (4,581) (21,581) ------------- ------------- ------------- ------------- ------------- ------------- ------------- Net increase (decrease) 110,708 172,610 602,250 -- 126,905 72,310 12,417 Net assets available for benefits: Beginning of year 175,560 487,408 963,117 -- 347,665 119,902 92,976 ------------- ------------- ------------- ------------- ------------- ------------- ------------- End of year $ 286,268 660,018 1,565,367 -- 474,570 192,212 105,393 ============= ============= ============= ============= ============= ============= =============
PETCO ANIMAL SUPPLIES 401(k) PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information For the year ended December 31, 1998
Participant Directed Nonparticipant Directed ----------------------------------------- ---------------------------- Fidelity Advisor Putnam Prudential Prudential Equity OTC Special Government Petco Portfolio Emerging Money Money Common Growth Growth Market Market Loans to Stock Fund Fund Fund B Fund Participants Total ------------- ------------- ------------- ------------- ------------- ------------- ------------- Additions to net assets attributed to: Investment income: Net appreciation (depreciation) in fair value of investments $ (108,117) 101,587 39,807 -- (5) -- (30,790) Interest -- -- -- -- -- 3,199 3,199 Dividends -- 90,268 14,066 7 524 -- 352,669 Investment expenses -- (92) (146) -- -- -- (1,047) ------------- ------------- ------------- ------------- ------------- ------------- ------------- (108,117) 191,763 53,727 7 519 3,199 324,031 ------------- ------------- ------------- ------------- ------------- ------------- ------------- Contributions: Employee 262,608 394,070 211,319 -- -- -- 1,784,393 Employer 69,007 101,279 58,810 -- -- -- 518,584 ------------- ------------- ------------- ------------- ------------- ------------- ------------- 331,615 495,349 270,129 -- -- -- 2,302,977 ------------- ------------- ------------- ------------- ------------- ------------- ------------- Total additions 223,498 687,112 323,856 7 519 3,199 2,627,008 Deductions from net assets attributed to - benefits paid to participants 20,421 54,518 39,177 -- 22 14,215 356,236 ------------- ------------- ------------- ------------- ------------- ------------- ------------- Net increase (decrease) prior to interfund transfers 203,077 632,594 284,679 7 497 (11,016) 2,270,772 Interfund transfers 2,661 46,988 5,144 -- (111) 9,052 -- ------------- ------------- ------------- ------------- ------------- ------------- ------------- Net increase (decrease) 205,738 679,582 289,823 7 386 (1,964) 2,270,772 Net assets available for benefits: Beginning of year 157,391 231,204 170,788 151 10,857 31,397 2,788,416 ------------- ------------- ------------- ------------- ------------- ------------- ------------- End of year $ 363,129 910,786 460,611 158 11,243 29,433 5,059,188 ============= ============= ============= ============= ============= ============= ============= See accompanying notes to financial statements.
PETCO ANIMAL SUPPLIES 401(k) PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information For the year ended December 31, 1997
Participant Directed -------------------------------------------------------------------------------------------------------- Prudential Governmental Securities Prudential Trust Prudential Prudential Global Money Prudential Prudential Prudential Allocation Government Natural Market Utility Equity Allocation Balanced Income Resources Fund Fund Fund Fund Fund 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) Interest 5,225 -- -- -- -- -- -- Dividends -- 49,455 64,368 39,614 43,829 5,197 12,349 Investment expenses -- -- (15) -- -- -- -- ------------- ------------- ------------- ------------- ------------- ------------- ------------- 5,224 106,175 166,091 38,212 6,177 7,890 (10,460) ------------- ------------- ------------- ------------- ------------- ------------- ------------- Contributions: Employee 69,834 112,461 224,784 50,351 37,458 40,555 54,321 Employer 19,581 22,031 46,096 6,454 10,130 5,876 10,361 ------------- ------------- ------------- ------------- ------------- ------------- ------------- 89,415 134,492 270,880 56,805 47,588 46,431 64,682 ------------- ------------- ------------- ------------- ------------- ------------- ------------- 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 ------------- ------------- ------------- ------------- ------------- ------------- ------------- Total additions 115,984 247,308 457,986 95,017 60,943 57,840 63,563 Deductions from net assets attributed to - benefits paid to participants 14,678 102,155 133,474 10,481 39,044 1,587 12,015 ------------- ------------- ------------- ------------- ------------- ------------- ------------- Net increase (decrease) prior to interfund transfers 101,306 145,153 324,512 84,536 21,899 56,253 51,548 Interfund transfers (145) (10,804) 21,104 (359,277) 325,766 2,101 (11,162) ------------- ------------- ------------- ------------- ------------- ------------- ------------- Net increase (decrease) 101,161 134,349 345,616 (274,741) 347,665 58,354 40,386 Net assets available for benefits: Beginning of year 74,399 353,059 617,501 274,741 -- 61,548 52,590 ------------- ------------- ------------- ------------- ------------- ------------- ------------- End of year $ 175,560 487,408 963,117 -- 347,665 119,902 92,976 ============= ============= ============= ============= ============= ============= =============
PETCO ANIMAL SUPPLIES 401(k) PLAN Statement of Changes in Net Assets Available for Benefits with Fund Information For the year ended December 31, 1997
Participant Directed Nonparticipant Directed -------------------------------------------- ---------------------------- Fidelity Advisor Putnam Prudential Prudential Equity OTC Special Government Petco Portfolio Emerging Money Money Common Growth Growth Market Market Loans to Stock Fund Fund Fund B Fund Participants Total ------------- ------------- ------------- ------------- ------------- ------------- ------------- Additions to net assets attributed to: Investment income: Net appreciation (depreciation) in fair value of investments $ (2,077) (3,708) 16,147 -- -- -- 109,649 Interest -- -- -- 5 330 2,632 8,192 Dividends -- 23,594 -- -- -- -- 238,406 Investment expenses -- -- -- -- -- -- (15) ------------- ------------- ------------- ------------- ------------- ------------- ------------- (2,077) 19,886 16,147 5 330 2,632 356,232 ------------- ------------- ------------- ------------- ------------- ------------- ------------- Contributions: Employee 94,150 155,118 101,676 105 10 -- 940,823 Employer 20,989 23,823 17,929 32 3 -- 183,305 ------------- ------------- ------------- ------------- ------------- ------------- ------------- 115,139 178,941 119,605 137 13 -- 1,124,128 ------------- ------------- ------------- ------------- ------------- ------------- ------------- Transfer of assets from Pet Food Warehouse, Inc. 401(k) Plan (note 6) 14,572 14,932 20,219 -- -- -- 118,762 ------------- ------------- ------------- ------------- ------------- ------------- ------------- Total additions 127,634 213,759 155,971 142 343 2,632 1,599,122 Deductions from net assets attributed to - benefits paid to participants 11,145 10,014 10,804 -- -- 15,588 360,985 ------------- ------------- ------------- ------------- ------------- ------------- ------------- Net increase (decrease) prior to interfund transfers 116,489 203,745 145,167 142 343 (12,956) 1,238,137 Interfund transfers (2,522) 2,848 (5,566) -- 10,504 27,153 -- ------------- ------------- ------------- ------------- ------------- ------------- ------------- Net increase (decrease) 113,967 206,593 139,601 142 10,847 14,197 1,238,137 Net assets available for benefits: Beginning of year 43,424 24,611 31,187 9 10 17,200 1,550,279 ------------- ------------- ------------- ------------- ------------- ------------- ------------- End of year $ 157,391 231,204 170,788 151 10,857 31,397 2,788,416 ============= ============= ============= ============= ============= ============= ============= See accompanying notes to financial statements.
PETCO ANIMAL SUPPLIES 401(k) PLAN Notes to Financial Statements December 31, 1998 and 1997 (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 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). (b) 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 65, retirement due to disability, death or termination of the Plan. For the Plan years ended December 31, 1998 and 1997, the Company made discretionary matching contributions of $518,584 and $183,305, respectively. (c) 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 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. (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 Allocation 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 Global 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. Petco Common Stock Company common stock quoted on the NASDAQ national market. Fidelity Advisor Equity Portfolio 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. 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.
(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%. The prime rate at December 31, 1998 and 1997 was 7.75% and 8.50%, respectively. Loan terms range from one to five 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. (i) Forfeitures Forfeitures are used to reduce future employer contributions. Prior to September 1, 1998, forfeitures were to be allocated to participant accounts in the Plan year in which a participant terminates service. The allocation of forfeitures was based on the ratio between a participant's salary and total salaries of all participants as defined in the Plan document. Such allocation was made only to participants in the Plan as of the last day of the fiscal year. At December 31, 1998 and 1997, forfeited nonvested accounts totaled $24,714 and $4,838, respectively. (j) Administrative Costs Certain costs and expenses related to the administration of the Plan are paid by the Company. (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 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. (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. (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, 1998 and 1997. (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, 1998 and $147,240 was returned in 1999 to certain participants in order to meet the nondiscrimination tests. In addition, certain participants contributed amounts in excess of $10,000, the maximum deferral amount as directed 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, 1998. The Plan initially failed to meet certain nondiscrimination tests for the year ended December 31, 1997 and $46,990 was returned in 1998 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 in 1998. These amounts have been recorded in the accompanying financial statements as liabilities of the Plan as of December 31, 1997. (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, during the year ended December 31, 1997. Schedule 1 PETCO ANIMAL SUPPLIES 401(K) PLAN Line 27a - Schedule of Assets Held for Investment Purposes December 31, 1998
(e) Current (a) (b) Issuer (c) Description of investment (d) Cost value - ------- --------------------------- --------------------------------------- -------------------- -------------------- Money market funds: * Prudential Governmental Securities Trust Money Market Fund $ 294,774 294,774 * Prudential Special Money Market Fund B 158 158 * Prudential Government Money Market Fund 11,243 11,243 -------------------- -------------------- 306,175 306,175 -------------------- -------------------- Mutual funds: * Prudential Utility Fund 628,063 677,440 * Prudential Equity Fund 1,520,608 1,619,534 * Prudential Allocation Balanced Fund 518,011 479,298 * Prudential Government Income Fund 190,119 195,354 * Prudential Global Natural Resources Fund 145,317 108,741 Fidelity Advisor Equity Portfolio Growth Fund 860,470 952,026 Putnam OTC Emerging Growth Fund 430,041 476,833 -------------------- -------------------- 4,292,629 4,509,226 -------------------- -------------------- * Petco Petco common stock 470,312 363,905 * Loans to Participants Interest rate, 9.0% - 9.5% 29,433 29,433 -------------------- -------------------- Total investments $ 5,098,549 5,208,739 ==================== ==================== * Party in interest. See accompanying notes to financial statements.
Schedule 2 PETCO ANIMAL SUPPLIES 401(K) PLAN Line 27d - Schedule of Reportable Transactions Year ended December 31, 1998
(h) Current (a) Identity value of asset of party (b) Description (c) Purchase (d) Selling (f) Cost on transaction (i) Net involved of asset price price of asset date gain (loss) - --------------- ---------------- ---------------------------------- --------------- ---------------- ---------------- Prudential Utility Fund $ 292,757 -- -- 292,757 -- -- 64,687 55,847 64,687 8,840 Prudential Equity Fund 834,322 -- -- 834,322 -- -- 130,901 114,230 130,901 16,671 Petco Common Stock 337,442 -- -- 337,442 -- -- 22,985 35,897 22,985 (12,912) Fidelity Advisor Equity 686,893 -- -- 686,893 -- Portfolio -- 73,931 68,786 73,931 5,145 Growth Fund Putnam OTC Emerging 329,380 -- -- 329,380 -- Growth Fund -- 67,132 59,531 67,132 7,601 Prudential Government 148,922 -- -- 148,922 -- Money Market -- 55,585 55,585 55,585 -- Fund Prudential Allocation 250,858 -- -- 250,858 -- Balanced -- 71,896 75,928 71,896 (4,032) Fund See accompanying notes to financial statements.
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 30, 1999 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 21, 1999, relating to the statements of net assets available for benefits with fund information of the Petco Animal Supplies 401(k) Plan as of December 31, 1998 and 1997, and the related statements of changes in net assets available for benefits with fund information for each of the years in the two-year period ended December 31, 1998, and all related schedules, which report appears in the December 31, 1998 annual report on Form 11-K of Petco Animal Supplies 401(k) Plan. KPMG LLP San Diego, California June 30, 1999 -----END PRIVACY-ENHANCED MESSAGE-----