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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 11-K
Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1999
OR
[ ] TRANSACTIONS REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 000-12704
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
WILLIAMS-SONOMA, INC. ASSOCIATE
STOCK INCENTIVE PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
WILLIAMS-SONOMA, INC.
3250 Van Ness Avenue
San Francisco, CA 94109
(415) 421-7900
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WILLIAMS-SONOMA, INC.
ASSOCIATE STOCK
INCENTIVE PLAN
Financial Statements as of and for the
Years Ended December 31, 1999 and
1998, Supplemental Schedule as of the
Year Ended December 31, 1999 and
Independent Auditors' Report
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WILLIAMS-SONOMA, INC.
ASSOCIATE STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
TABLE OF CONTENTS
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PAGE
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INDEPENDENT AUDITORS' REPORT ................................................. 1
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998:
Statements of Net Assets Available for Benefits ........................... 2
Statements of Changes in Net Assets Available for Benefits ................ 3
Notes to Financial Statements ............................................. 4-6
SUPPLEMENTAL SCHEDULE AS OF THE YEAR ENDED DECEMBER 31, 1999:
Supplemental Schedule of Assets Held for Investment
Purposes as of December 31, 1999 ........................................ 7
</TABLE>
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INDEPENDENT AUDITORS' REPORT
Administrative Committee,
Williams-Sonoma, Inc.
Associate Stock Incentive Plan:
We have audited the accompanying statements of net assets available for benefits
of the Williams-Sonoma, Inc. Associate Stock Incentive Plan (formerly the
Williams-Sonoma, Inc. Employee Profit Sharing and Stock Incentive Plan) (the
"Plan") as of December 31, 1999 and 1998, and the related statements of changes
in net assets available for benefits for the years then ended. 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 auditing standards generally accepted
in the United States of America. 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, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31, 1999
and 1998, and the changes in its net assets available for benefits for the years
then ended in conformity with accounting principles generally accepted in the
United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
table of contents 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. Such schedule is the responsibility of the Plan's management. Such
schedule has been subjected to the auditing procedures applied in our audit of
the basic financial statements and, in our opinion, is fairly stated in all
material respects when considered in relation to the basic financial statements
taken as a whole.
June 9, 2000
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WILLIAMS-SONOMA, INC.
ASSOCIATE STOCK INCENTIVE PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 AND 1998
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<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS:
Investments, at fair value:
Common stock - Williams-Sonoma, Inc. ........ $44,714,116 $38,302,228
Cash equivalents ............................ 658,731 216,551
Mutual funds:
Dodge & Cox Balanced Fund ................... 1,672,019 1,225,783
Vanguard Federal Money Market Fund .......... 455,074 304,785
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Total investments .................... 47,499,940 40,049,347
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Dividend and interest income receivable ....... 5,153 2,167
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Total assets ......................... 47,505,093 40,051,514
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LIABILITIES -
Forfeitures refundable to Williams-Sonoma, Inc. -- 60,022
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NET ASSETS AVAILABLE FOR BENEFITS ............... $47,505,093 $39,991,492
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</TABLE>
See notes to financial statements.
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WILLIAMS-SONOMA, INC.
ASSOCIATE STOCK INCENTIVE PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1999 AND 1998
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<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Net appreciation in fair value of investments $ 6,359,327 $18,409,000
Interest and dividends ...................... 95,597 79,336
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Total investment income .............. 6,454,924 18,488,336
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Contributions:
Employee .................................... 4,253,664 2,845,884
Employer - matching ......................... 2,748,140 1,971,039
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Total contributions .................. 7,001,804 4,816,923
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INCREASE ATTRIBUTABLE TO INVESTMENT INCOME
AND CONTRIBUTIONS ............................. 13,456,728 23,305,259
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO -
Benefit payments to participants .............. 5,943,127 4,334,050
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NET INCREASE .................................... 7,513,601 18,971,209
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year ............................. 39,991,492 21,020,283
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End of year ................................... $47,505,093 $39,991,492
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</TABLE>
See notes to financial statements.
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WILLIAMS-SONOMA, INC.
ASSOCIATE STOCK INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
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1. DESCRIPTION OF PLAN
The following description of the Williams-Sonoma, Inc. Associate Stock
Incentive Plan (the "Plan") provides only general information.
Participants should refer to the Plan document for a more complete
description of the Plan provisions.
GENERAL - The Williams-Sonoma, Inc. Associate Stock Incentive Plan is a
defined contribution plan covering all eligible salaried and hourly
employees. The Plan was created to provide savings opportunities to the
employees of Williams-Sonoma, Inc. (the "Company"). The Plan became
effective as of February 1, 1989. The Plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974 ("ERISA") and contains
an arrangement under Section 401(k) of the Internal Revenue Code.
CONTRIBUTIONS - The Plan allows participants to defer a portion of their
income and have such deferred income paid into the Plan, thus reducing the
participants' taxable income. Under the terms of the Plan, employees who
are at least 21 years old may participate 30 days after their date of
hire, or in the case of certain "Limited Employees," 30 days after their
completion of 1,000 hours of service with the Company within a calendar
year. Prior to January 1, 1999, participants could defer up to 10% of
their annual compensation. Effective January 1, 1999, the Plan was amended
to increase the allowable contribution percentage to 15% and allow
participants to defer distributions from the Plan if the participants are
still employed with the Company when the participant reaches age 70 1/2.
The Company matches 100% of the first 6% of a participant's salary
deferral contributions which the participant elects to have invested in
the Company's common stock. During 1999 and 1998, Federal income tax rules
limited the maximum salary deferral contributions by an employee to
$10,000.
PARTICIPANT ACCOUNTS - The Plan maintains individual accounts for
participants and permits participants to direct their individual account
investments into available investment alternatives. The investment
alternatives available to participants during 1999 and 1998 were as
follows:
- Company Stock Fund - consists solely of Williams-Sonoma, Inc.
common stock
- Dodge & Cox Balanced Fund - a fixed income and equity securities
mutual fund
- Vanguard Federal Money Market Fund - a money market mutual fund
Each participant's account is credited with the participant's
contribution, the Company's matching contribution (if applicable), and
plan earnings.
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NONPARTICIPANT ACCOUNTS - The Plan maintains a short-term investment
account to invest funds prior to their transfer into one of the
participant investment funds, prior to distribution to a terminated
participant or prior to the execution of interfund transfers. Amounts
related to the short-term investment account are included as cash
equivalents in the statement of net assets available for benefits.
Significant changes in the fund balance of the short-term investments
consisted of interest income of $27,328 and $26,349 in 1999 and 1998,
respectively. Transfers (to) from participant-directed investments were
$417,066 and $(654,640) in 1999 and 1998, respectively.
VESTING - Participants are immediately 100% vested in their salary
deferral contributions and earnings attributable thereto. Vesting in the
Company contributions and earnings attributable thereto is based on years
of credited service. A participant is 100% vested in his or her Company
contributions and earnings attributable thereto after five years of
credited service. Upon termination of employment prior to full vesting,
unvested Company contributions and earnings attributable thereto are
forfeited and used to reduce the amount of future Company contributions.
In the event of plan termination, participants' amounts become fully
vested and net assets of the Plan are to be applied to the exclusive
benefit of the participants. The Company has no intention at this time to
terminate the Plan.
PAYMENT OF BENEFITS - Benefits are payable upon termination, withdrawal
from the Plan on account of hardship, death, disability, retirement or at
age 59 1/2. Distribution of a participant's benefits may be made in cash,
Company common stock, or both, and are recorded when paid.
PLAN ADMINISTRATIVE EXPENSES - Administrative expenses incurred by the
Plan are paid by the Company.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements of the Plan are prepared on
the accrual basis.
MANAGEMENT ESTIMATES - The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, and disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of additions to and deductions from
net assets available for benefits during the reporting period. Actual
results could differ from those estimates.
CASH EQUIVALENTS represent shares in First American Prime Obligations Fund
which are purchased each time a contribution is made. The Plan converts
these short-term investments into the Company's common stock, Money Market
and Balanced Funds after each bi-weekly payroll.
PURCHASES AND SALES of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis.
INVESTMENTS in common stock and mutual funds are stated at fair value
which is based on publicly quoted market values.
BENEFITS PAYABLE - As of December 31, 1999 and 1998, the following amounts
were due to participants who have withdrawn from participation in the
Plan:
<TABLE>
<CAPTION>
1999 1998
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Benefits payable ........ $ 58,186 $ 57,692
Deferred benefits payable 8,046,876 6,171,269
</TABLE>
Deferred benefits payable represent vested balances payable to terminated
plan participants who have elected to defer distribution of their account
balances.
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FORFEITURES REFUNDABLE TO WILLIAMS-SONOMA, INC. represent unvested Company
matching contributions that will be used to offset future Company
contributions.
RELATED PARTY TRANSACTIONS - Certain Plan investments are held in a
short-term investment account managed by U.S. Bank. U.S. Bank is the
trustee as defined by the Plan, and, therefore, these transactions qualify
as party-in-interest. Fees paid by the Company for the investment
management services amounted to $24,822 and $23,720 for the years ended
December 31, 1999 and 1998, respectively.
NEW ACCOUNTING PRONOUNCEMENT - In 1999, the Plan adopted statement of
position 99-3, "Accounting for and Reporting of Certain Defined
Contribution Plan Investments and Other Disclosure Matters" issued by the
Accounting Standards Executive Committee of the American Institute of
Certified Public Accountants. Accordingly, previously required "by fund"
disclosures have been eliminated.
3. INVESTMENTS
During the years ended December 31, 1999 and 1998, the Plan's investments,
including investments bought and sold as well as those held during the
year, appreciated in value as follows:
<TABLE>
<CAPTION>
1999 1998
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Common stock - Williams-Sonoma, Inc. $ 6,249,658 $18,373,524
Mutual funds ......................... 109,669 35,476
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Total ................................ $ 6,359,327 $18,409,000
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</TABLE>
At December 31, 1999 and 1998, investments included the following, which
are 5% or more of the total Plan assets:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Williams-Sonoma, Inc. common stock ... $44,714,116 $38,302,228
</TABLE>
4. INCOME TAX STATUS
On April 13, 1993, the Internal Revenue Service ("IRS") issued a
determination letter that stated the Plan as amended through March 10,
1992 is qualified and the trust established thereunder is tax-exempt. The
Administrative Committee believes that the Plan, as amended, continues to
operate in accordance with current law and was tax-exempt as of December
31, 1999. Therefore, no provision for income taxes has been included in
the Plan's financial statements.
******
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WILLIAMS-SONOMA, INC.
ASSOCIATE STOCK INCENTIVE PLAN
SUPPLEMENTAL SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1999
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<TABLE>
<CAPTION>
SHARES SECURITY DESCRIPTION COST FAIR VALUE
<S> <C> <C> <C>
First American Prime Obligation
658,731 Short-Term Investment Fund ....... $ 658,731 $ 658,731
972,046 Williams-Sonoma, Inc. Common Stock 10,318,799 44,714,116
25,445 Dodge & Cox Balanced Fund ........ 1,589,849 1,672,019
455,074 Vanguard Federal Money Market Fund 455,074 455,074
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Total ............................ $13,022,453 $47,499,940
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</TABLE>
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