-----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, Kl38ouQhVTuwx43FKdnJ1pdUMNNgqQHX9Zl2BmAvMEYPAtozyZzGff78Y8WTfh2u 2tM2YAdKdF6wGnkJA/e/aA== 0000912057-97-022248.txt : 19970630 0000912057-97-022248.hdr.sgml : 19970630 ACCESSION NUMBER: 0000912057-97-022248 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970627 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: COSTCO COMPANIES INC CENTRAL INDEX KEY: 0000909832 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-VARIETY STORES [5331] IRS NUMBER: 330572969 STATE OF INCORPORATION: CA FISCAL YEAR END: 0830 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-04355 FILM NUMBER: 97631821 BUSINESS ADDRESS: STREET 1: 999 LAKE DRIVE CITY: ISSAQUAH STATE: WA ZIP: 98027- BUSINESS PHONE: (206)-313-8100 MAIL ADDRESS: STREET 1: 999 LAKE DRIVE CITY: ISSAQUAD STATE: WA ZIP: 98027 FORMER COMPANY: FORMER CONFORMED NAME: PRICE/COSTCO INC DATE OF NAME CHANGE: 19930728 11-K 1 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, 1996 / / 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 PRICECOSTCO 401(k) RETIREMENT PLAN ------------ PRICE/COSTCO, INC. 999 LAKE DRIVE ISSAQUAH, WASHINGTON 98027 (425) 313-8100 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PRICECOSTCO 401(k) RETIREMENT PLAN EIN 33-0572969 PIN 002 FINANCIAL STATEMENTS AND SCHEDULES DECEMBER 31, 1996 AND 1995 TOGETHER WITH AUDITORS' REPORT PRICECOSTCO 401(k) RETIREMENT PLAN FINANCIAL STATEMENTS AND SCHEDULES DECEMBER 31, 1996 AND 1995 INDEX REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS FINANCIAL STATEMENTS Statements of Net Assets Available for Plan Benefits as of December 31, 1996 and 1995 Statement of Changes in Net Assets Available for Plan Benefits for the Year Ended December 31, 1996 NOTES TO FINANCIAL STATEMENTS AND SCHEDULES SUPPLEMENTAL INFORMATION Schedule I, Item 27a - Schedule of Assets Held for Investment Purposes as of December 31, 1996 Schedule II, Item 27d - Schedule of Reportable Transactions for the Year Ended December 31, 1996 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Benefits Committee of the Costco 401(k) Retirement Plan: We have audited the accompanying statements of net assets available for plan benefits of PriceCostco 401(k) Retirement Plan as of December 31, 1996 and 1995, and the related statement of changes in net assets available for plan benefits for the year ended December 31, 1996. 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 plan benefits of the Plan as of December 31, 1996 and 1995, and the changes in its net assets available for benefits for the year ended December 31, 1996, 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. /s/Arthur Andersen LLP Seattle, Washington, May 16, 1997 PRICECOSTCO 401(k) RETIREMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AS OF DECEMBER 31, 1996
PARTICIPANT DIRECTED -------------------------------------------------------------------- Cash Stable Equity Spectrum Spectrum and Cash Value Income Income Growth Equivalents Fund Fund Fund ----------- ----------- ----------- ----------- ----------- ASSETS: Investments at fair value- Registered investment company funds $42,748 $47,323,062 $53,829,752 $64,681,834 $54,688,418 Price/Costco common stock - 2,170,687 shares held - - - - - ------- ----------- ----------- ----------- ----------- Total investments 42,748 47,323,062 53,829,752 64,681,834 54,688,418 ------- ----------- ----------- ----------- ----------- Contributions receivable- Employer - 12,263,804 6,331,811 2,101,594 6,409,617 Employee - 232,480 298,912 94,382 321,820 ------- ----------- ----------- ----------- ----------- Total receivables - 12,496,284 6,630,723 2,195,976 6,731,437 ------- ----------- ----------- ----------- ----------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $42,748 $59,819,346 $60,460,475 $66,877,810 $61,419,855 ======= =========== =========== =========== =========== PARTICIPANT DIRECTED ------------------------------------- New Mid-Cap Price/Costco Horizons Growth Common Fund Fund Stock Total -------- -------- ------------ ------------ ASSETS: Investments at fair value- Registered investment company funds $ - $ - $ - $220,565,814 Price/Costco common stock - 2,170,687 shares held - - 54,538,510 54,538,510 -------- -------- ----------- ------------ Total investments - - 54,538,510 275,104,324 -------- -------- ----------- ------------ Contributions receivable- Employer 564,570 613,125 5,306,538 33,591,059 Employee 3,354 4,220 193,233 1,148,401 -------- -------- ----------- ------------ Total receivables 567,924 617,345 5,499,771 34,739,460 -------- -------- ----------- ------------ NET ASSETS AVAILABLE FOR PLAN $567,924 $617,345 $60,038,281 $309,843,784 BENEFITS ======== ======== =========== ============
The accompanying notes and schedules are an integral part of this statement. PRICECOSTCO 401(k) RETIREMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AS OF DECEMBER 31, 1995
PARTICIPANT DIRECTED ----------------------------------------------------------------------------------- Cash Stable Equity Spectrum Spectrum Price/Costco and Cash Value Income Income Growth Common Equivalents Fund Fund Fund Stock Total ----------- ----------- ----------- ----------- ----------- ------------ ------------ ASSETS: Investments at fair value- Cash and cash equivalents $61,343 $ - $ - $ - $ - $ - $ 61,343 Registered investment company funds - 28,521,752 28,041,414 70,144,239 27,867,707 - 154,575,112 Price/Costco common stock - 1,748,012 shares held - - - - - 26,657,187 26,657,187 ------- ----------- ----------- ----------- ----------- ----------- ------------ Total investments 61,343 28,521,752 28,041,414 70,144,239 27,867,707 26,657,187 181,293,642 ------- ----------- ----------- ----------- ----------- ----------- ------------ Contributions receivable- Employer - 11,986,840 5,152,781 1,213,126 4,903,496 5,001,593 28,257,836 Employee - 220,781 221,796 63,279 213,188 193,592 912,636 ------- ----------- ----------- ----------- ----------- ----------- ------------ Total receivables - 12,207,621 5,374,577 1,276,405 5,116,684 5,195,185 29,170,472 ------- ----------- ----------- ----------- ----------- ----------- ------------ LIABILITIES: Excess contributions payable to participants - (18,458) (20,056) (3,266) (22,626) (23,521) (87,927) ------- ----------- ----------- ----------- ----------- ----------- ------------ NET ASSETS AVAILABLE FOR PLAN BENEFITS $61,343 $40,710,915 $33,395,935 $71,417,378 $32,961,765 $31,828,851 $210,376,187 ======= =========== =========== =========== =========== =========== ============
The accompanying notes and schedules are an integral part of this statement. PRICECOSTCO 401(k) RETIREMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1996
PARTICIPANT DIRECTED -------------------------------------------------------------------- Cash Stable Equity Spectrum Spectrum and Cash Value Income Income Growth Equivalents Fund Fund Fund ----------- ----------- ----------- ----------- ----------- NET INVESTMENT RESULTS: Net appreciation in fair value of assets $ - $ - $ 4,868,889 $ (322,583) $ 4,317,312 Interest - 2,515,603 - 5,068,119 - Dividends - - 3,235,058 - 3,790,799 -------- ----------- ----------- ----------- ----------- Total net investment results - 2,515,603 8,103,947 4,745,536 8,108,111 -------- ----------- ----------- ----------- ----------- CONTRIBUTIONS TO THE PLAN: Employer - 14,218,515 7,846,314 2,559,540 7,999,593 Employee - 5,931,328 7,313,907 2,234,027 7,564,149 Rollovers - 77,046 43,061 69,291 97,917 -------- ----------- ----------- ----------- ----------- Total contributions - 20,226,889 15,203,282 4,862,858 15,661,659 -------- ----------- ----------- ----------- ----------- DISTRIBUTIONS TO PARTICIPANTS: Hardship withdrawals - (1,005,196) (616,594) (158,413) (664,195) Terminations - (1,606,851) (1,535,618) (4,344,751) (1,106,178) -------- ----------- ----------- ----------- ----------- Total distributions - (2,612,047) (2,152,212) (4,503,164) (1,770,373) -------- ----------- ----------- ----------- ----------- INTERFUND TRANSFERS (18,595) (1,022,014) 5,909,523 (9,644,798) 6,458,693 -------- ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS AVAILABLE FOR PLAN BENEFITS (18,595) 19,108,431 27,064,540 (4,539,568) 28,458,090 NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of year 61,343 40,710,915 33,395,935 71,417,378 32,961,765 -------- ----------- ----------- ----------- ----------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, end of year $ 42,748 $59,819,346 $60,460,475 $66,877,810 $61,419,855 ======== =========== =========== =========== =========== PARTICIPANT DIRECTED ------------------------------------- New Mid-Cap Price/Costco Horizons Growth Common Fund Fund Stock Total -------- -------- ------------ ------------ NET INVESTMENT RESULTS: Net appreciation in fair value of assets $ - $ - $ 20,210,456 $ 29,074,074 Interest - - - 7,583,722 Dividends - - - 7,025,857 -------- -------- ----------- ------------ Total net investment - - 20,210,456 43,683,653 results -------- -------- ----------- ------------ CONTRIBUTIONS TO THE PLAN: Employer 564,570 613,125 6,450,763 40,252,420 Employee 3,354 4,220 4,903,111 27,954,096 Rollovers - - 34,850 322,165 -------- -------- ----------- ------------ Total contributions 567,924 617,345 11,388,724 68,528,681 -------- -------- ----------- ------------ DISTRIBUTIONS TO PARTICIPANTS: Hardship withdrawals - - (776,217) (3,220,615) Terminations - - (930,724) (9,524,122) -------- -------- ----------- ------------ Total distributions - - (1,706,941) (12,744,737) -------- -------- ----------- ------------ INTERFUND TRANSFERS - - (1,682,809) - -------- -------- ----------- ------------ NET INCREASE (DECREASE) IN NET ASSETS AVAILABLE FOR PLAN BENEFITS 567,924 617,345 28,209,430 99,467,597 NET ASSETS AVAILABLE FOR PLAN - - 31,828,851 210,376,187 BENEFITS, beginning of year -------- -------- ----------- ------------ NET ASSETS AVAILABLE FOR PLAN $567,924 $617,345 $60,038,281 $309,843,784 BENEFITS, end of year ======== ======== =========== ============
The accompanying notes and schedules are an integral part of this statement. PRICECOSTCO 401(k) RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS AND SCHEDULES DECEMBER 31, 1996 1. PLAN DESCRIPTION: The following description of the PriceCostco 401(k) Retirement Plan (the Plan) provides only general information, reflecting amendments effective as of January 1, 1996. Participants should refer to the plan document 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). Costco Wholesale Corporation and The Price Company are wholly-owned subsidiaries of Price/Costco, Inc. (collectively, the Company). Effective January 29, 1997, Price/Costco, Inc. was renamed Costco Companies, Inc. Effective January 1, 1997, the Plan was renamed Costco 401(k) Retirement Plan. ELIGIBILITY The Plan covers certain employees of the Company, who have completed at least 1,000 hours of service within one year, based on their date of hire and who are age 18 or older. The Price Company employees covered by a collective bargaining agreement in the state of California are not eligible for participation. 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). Excess contributions returned to participants represented contributions made in excess of IRS limitations. Participants may also contribute amounts representing distributions from other qualified benefit or contribution plans (known as "rollover" contributions). The Company contributes 50 cents for every $1 contributed by participants, up to a maximum employer matching contribution of $500. The Company may, at its discretion, make a qualified nonelective contribution. In addition, for each plan year, the Company may contribute a discretionary amount to the account of each participant who is employed by the Company on the last day of the plan year. The discretionary contribution may range from 3% to 10% of compensation based on years of service. - 2 - PARTICIPANT ACCOUNTS Each participant's account is credited with his or her contribution, employer matching and discretionary 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 the participant's vested account. VESTING Participants are immediately vested in their contributions and any qualified nonelective contributions, plus actual earnings thereon. Vesting in the employer matching and discretionary 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 1996, forfeitures of approximately $1,230,000 were used to reduce the employer contributions to the Plan. Forfeitures can be restored to a participant's account if the participant is reemployed by the Company prior to the expiration of five consecutive years of break in service and repays the full dollar amount distributed because of the termination within five years of the reemployment date. As of December 31, 1996, forfeitures of approximately $630,000 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 in any of the five investment options listed below. T. Rowe Price acts as trustee for all investments, serves as investment manager for all funds and provides record keeping of all participant accounts. T. Rowe Price Stable Value Fund - Funds are invested primarily in high- quality insurance company and bank-issued investment contracts. 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. 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 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. - 3 - Price/Costco Common Stock Fund - Funds are invested in common stock of Price/Costco. Effective January 1, 1997, the New Horizons Fund and the Mid-Cap Growth Fund were added to the investment options listed above. Participants may change their investment options daily. 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 Company stock. As of December 31, 1996 and 1995, units held by the Plan were as follows: Units/Shares Held at Units/Shares held at Description of Asset December 31, 1996 December 31, 1995 - -------------------------- -------------------- -------------------- Price/Costco Common Stock 2,170,687 1,748,012 Stable Value Fund 47,323,062 28,521,750 Equity Income Fund 2,388,188 1,401,370 Spectrum Income Fund 5,775,164 6,240,591 Spectrum Growth Fund 3,614,568 2,065,805 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 Price/Costco 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, by a letter dated November 29, 1996, that the Plan is designed in accordance with applicable sections of the Internal Revenue Code. 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. SCHEDULE I PRICECOSTCO 401(k) RETIREMENT PLAN EIN: 33-0572969 PIN: 002 ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 1996 Identity of Party Involved/ Description of Investments Cost Current Value - ----------------------------- ------------ ------------- *T. Rowe Price: Cash and cash equivalents $ 42,748 $ 42,748 Stable Value Fund 47,323,062 47,323,062 Equity Income Fund 45,603,810 53,829,752 Spectrum Income Fund 59,503,308 64,681,834 Spectrum Growth Fund 47,635,687 54,688,418 *Price/Costco common stock 39,933,981 54,538,510 ------------ ------------ $240,042,596 $275,104,324 ------------ ------------ ------------ ------------ *Represents a party in interest. The accompanying notes are an integral part of this schedule. PRICECOSTCO 401(k) RETIREMENT PLAN EIN: 33-0572969 PIN 002 ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1996
Purchases Sales ------------------------------ ----------------------------------------------------------------- Number of Number of Description of Assets Transactions Purchase Price Transactions Sale Price Cost of Asset Gain - ------------------------------ ------------ -------------- ------------ ------------ ------------- ---------- Category (iii) - Series of transactions in excess of 5% of Plan assets at beginning of year. Price/Costco Common Stock 115 $ 7,936,762 131 $ 5,234,484 $ 4,828,055 $ 406,429 Stable Value Fund 93 13,796,922 160 5,106,974 5,106,974 - Equity Income Fund 178 22,721,642 72 1,781,848 1,481,973 299,875 Spectrum Income Fund 52 8,477,791 184 13,118,479 12,009,515 1,108,964 Spectrum Growth Fund 188 24,087,803 66 1,571,209 1,300,163 271,046
There were no Category (i), (ii) or (iv) transactions. The accompanying notes are an integral part of this schedule. EX-99.1 2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS 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 /s/Arthur Andersen LLP Seattle, Washington, June 25, 1997 -----END PRIVACY-ENHANCED MESSAGE-----