<PAGE>
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 [FEE REQUIRED]
For the fiscal year end December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____________ to ______________
Commission file number 33-12250
---------------------------------------
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Costco Wholesale Corporation
Employees' Savings/Retirement Plan [401(k)]
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Price/Costco, Inc.
10809 - 120th Avenue NE
Kirkland, WA 98033
<PAGE>
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees have duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
Costco Wholesale Corporation
Employees' Savings/Retirement
Plan [401(k)]
Date June 30, 1995 /s/ Richard Galanti
--------------------------- -----------------------------------
Richard Galanti
Executive Vice President
Chief Financial Officer
<PAGE>
COSTCO WHOLESALE CORPORATION
EMPLOYEES' SAVINGS/RETIREMENT PLAN [401(K)]
EIN: 91-1223280
PIN: 001
FINANCIAL STATEMENTS AND SCHEDULES
AS OF DECEMBER 31, 1994 AND 1993
TOGETHER WITH AUDITORS' REPORT
<PAGE>
COSTCO WHOLESALE CORPORATION
EMPLOYEES' SAVINGS/RETIREMENT PLAN [401(k)]
INDEX
DECEMBER 31, 1994 AND 1993
Page
Report of Independent Public Accountants 1
Statements of Net Assets Available for Plan Benefits
with Fund Information 3
Statement of Changes in Net Assets Available for Plan Benefits
with Fund Information 4
Notes to Financial Statements 5
Schedule I - Schedule of Assets Held for Investment Purposes 8
Schedule II - Schedule of Reportable Transactions 9
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee of the
Costco Wholesale Corporation
Employees' Savings/Retirement Plan [401(k)]:
We have audited the accompanying statements of net assets available for plan
benefits of the Costco Wholesale Corporation Employees' Savings/Retirement Plan
[401(k)] as of December 31, 1994 and 1993, and the related statements of changes
in net assets available for plan 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 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 the
Plan's 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 Costco
Wholesale Corporation Employees' Savings/Retirement Plan [401(k)] as of December
31, 1994 and 1993, and the changes in net assets available for benefits for the
years then ended in conformity with generally accepted accounting principles.
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<PAGE>
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
purposes 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 statement of net assets available for benefits and the statement 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.
Aurthur Anderson LLP
Seattle, Washington,
May 1, 1995
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<PAGE>
COSTCO WHOLESALE CORPORATION
EMPLOYEES' SAVINGS/RETIREMENT PLAN [401(k)]
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
WITH FUND INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
PriceCostco Common
Stock Fund Fixed Income Fund Growth Fund
---------------------------- ------------------------------ -------------
1994 1993 1994 1993 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET INVESTMENT RESULTS:
Unrealized appreciation (depreciation)
of investments, net $(7,709,511) $(3,432,577) $ - $ 83,114 $ -
Realized losses on sale of investments (50,391) (150,686) (246,171) - (103,967)
Interest 1,990 1,800 159,666 196,544 58,068
Dividends 2,438 1,659 711,234 482,696 130,751
Investment management fees - - (85,809) (64,156) (59,773)
----------- ----------- ----------- ----------- -----------
Total net investment results (7,755,474) (3,579,804) 538,920 698,198 25,079
----------- ----------- ----------- ----------- -----------
CONTRIBUTIONS TO THE PLAN:
Employees 6,453,731 6,551,823 4,821,061 4,124,687 3,057,462
Employer 1,157,966 1,068,519 828,813 655,100 524,975
----------- ----------- ----------- ----------- -----------
Total contributions 7,611,697 7,620,342 5,649,874 4,779,787 3,582,437
----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS TO PARTICIPANTS (1,492,191) (1,183,117) (1,356,799) (893,362) (763,017)
----------- ----------- ----------- ----------- -----------
INTERFUND TRANSFERS (535,916) (795,403) 465,626 (286,113) (166,664)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in
net assets available for
plan benefits (2,171,884) 2,062,018 5,297,621 4,298,510 2,677,835
Net assets, beginning
of year 20,135,723 18,073,705 13,911,735 9,613,225 8,477,095
----------- ----------- ----------- ----------- -----------
Net assets, end of year $17,963,839 $20,135,723 $19,209,356 $13,911,735 $11,154,930
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
Growth Fund Balanced Fund Total
---------- ---------------------------- ----------------------------
1993 1994 1993 1994 1993
---------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
NET INVESTMENT RESULTS:
Unrealized appreciation (depreciation)
of investments, net $ 372,687 $ - $ 29,036 $(7,709,511) $(2,947,740)
Realized losses on sale of investments (41,157) (240,238) - (640,767) (191,843)
Interest - - 58 219,724 198,402
Dividends 116,962 76,769 789 921,192 602,106
Investment management fees (44,625) 50 (50) (145,532) (108,831)
---------- ---------- --------- ----------- -----------
Total net investment results 403,867 (163,419) 29,833 (7,354,894) (2,447,906)
---------- ---------- --------- ----------- -----------
CONTRIBUTIONS TO THE PLAN:
Employees 2,445,434 2,182,029 426,834 16,514,283 13,548,778
Employer 409,972 335,935 60,721 2,847,689 2,194,312
---------- ---------- --------- ----------- -----------
Total contributions 2,855,406 2,517,964 487,555 19,361,972 15,743,090
---------- ---------- --------- ----------- -----------
DISTRIBUTIONS TO PARTICIPANTS (466,330) (228,445) (28,196) (3,840,452) (2,571,005)
---------- ---------- --------- ----------- -----------
INTERFUND TRANSFERS (398,261) 236,954 1,479,777 - -
---------- ---------- --------- ----------- -----------
Net increase (decrease) in
net assets available for
plan benefits 2,394,682 2,363,054 1,968,969 8,166,626 10,724,179
Net assets, beginning
of year 6,082,413 1,968,969 - 44,493,522 33,769,343
---------- ---------- ---------- ----------- -----------
Net assets, end of year $8,477,095 $4,332,023 $1,968,969 $52,660,148 $44,493,522
---------- ---------- ---------- ----------- -----------
---------- ---------- ---------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
COSTCO WHOLESALE CORPORATION
EMPLOYEES' SAVINGS/RETIREMENT PLAN [401(k)]
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
WITH FUND INFORMATION
AS OF DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
PriceCostco Common
Stock Fund Fixed Income Fund Growth Fund
---------------------------- ------------------------------ -------------
1994 1993 1994 1993 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CASH AND CASH EQUIVALENTS $ 217,302 $ 289,980 $ 4,989,895 $ 241,302 $11,154,545
INVESTMENTS:
Government securities - - - 3,134,687 -
Common stock - - - - -
PriceCostco common stock 17,746,334 19,857,761 - - -
Investment contracts - - 14,219,457 10,367,823 -
Mutual funds - - - - -
ACCRUED INTEREST - - - 48,538 -
CONTRIBUTIONS RECEIVABLE 203 862 4 573 385
INTERFUND TRANSFERS AND OTHER - (12,880) - 118,812 -
----------- ----------- ----------- ----------- -----------
Net assets available for
plan benefits $17,963,839 $20,135,723 $19,209,356 $13,911,735 $11,154,930
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
Growth Fund Balanced Fund Total
--------------- ---------------------------- -----------------------------
1993 1994 1993 1994 1993
---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CASH AND CASH EQUIVALENTS $1,340,011 $4,331,735 $ 251,393 $20,693,477 $ 2,122,686
INVESTMENTS:
Government securities - - - - 3,134,687
Common stock 7,037,164 - - - 7,037,164
PriceCostco common stock - - - 17,746,334 19,857,761
Investment contracts - - - 14,219,457 10,367,823
Mutual funds - - 1,922,754 - 1,922,754
ACCRUED INTEREST - - - - 48,538
CONTRIBUTIONS RECEIVABLE 486 288 188 880 2,109
INTERFUND TRANSFERS AND OTHER 99,434 - (205,366) - -
---------- ---------- ---------- ----------- -----------
Net assets available for
plan benefits $8,477,095 $4,332,023 $1,968,969 $52,660,148 $44,493,522
---------- ---------- ---------- ----------- -----------
---------- ---------- ---------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
COSTCO WHOLESALE CORPORATION
EMPLOYEES' SAVINGS/RETIREMENT PLAN [401(k)]
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
1. DESCRIPTION OF THE PLAN:
The Costco Wholesale Corporation (the Corporation) Employees' Savings/
Retirement Plan [401(k)] (the Plan), began on January 1, 1987. The following
description of the Plan is provided for general information purposes only. For
more complete information refer to the summary plan description. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
On January 1, 1995, the Plan assets were merged into the PriceCostco Employees'
Saving/Retirement Plan [401(k)] (the New Plan). Participants of the Plan were
automatically enrolled in the New Plan.
ELIGIBILITY
Employees of the Corporation are eligible to participate in the Plan if they
have been employed by the Corporation for a minimum of 12 months, and are at
least 18 years of age.
CONTRIBUTIONS
Under the Plan, participants are able to contribute annually a maximum of 18% of
their annual base compensation up to a specified amount, under the Internal
Revenue Code, which was $9,240 in calendar year 1994. The Corporation will
contribute out of its current or accumulated net profits an additional amount
equal to $.10 for every $1.00 the participant elects to defer. After the
participant reaches his or her five-year anniversary of service, the Corporation
will match $.25 for every $1.00 contributed. Maximum participant deferrals are
16% of base salary when the Corporation's 25% match is applicable.
Employee contributions shall be at all times 100% vested and will be paid upon
termination of employment, death or attainment of age 65. In addition, benefits
may be distributed to a participant in the event of financial hardship.
Employer contributions are fully vested after five years based on years of
continuous service, according to the following schedule.
Years of Service Percentage Vested
---------------- -----------------
Under 3 0%
3 25%
4 50%
5 100%
-5-
<PAGE>
All contributions to the Plan are invested at the direction of the participants
in any of the following funds: the PriceCostco Common Stock Fund, the Fixed
Income Fund, the Growth Fund and the Balanced Fund. The number of active
participants in each fund at December 31, 1994 was 6,932, 6,061, 4,641 and
2,541, respectively. The total number of participants in the Plan at December
31, 1994 was 7,338.
FUND DESCRIPTIONS
The PriceCostco stock fund invests solely in PriceCostco common stock. On
October 21, 1993, the shareholders of both The Price Company (Price) and Costco
Wholesale Corporation (Costco) approved an agreement that provided for the
mergers of Price and Costco into Price/Costco, Inc. (PriceCostco). Pursuant to
the Transaction, Price and Costco became subsidiaries of PriceCostco.
Shareholders of Costco received one share of PriceCostco stock for each share of
Costco.
The fixed fund is designed to provide a secure principal and stable current
income. The funds are invested in U.S. Government Treasury or agency bonds and
guaranteed investment contracts.
The growth fund is designed to provide capital appreciation, with a secondary
objective of providing current income. The funds are invested in U.S. common
stocks.
The balanced fund is designed to mix current income with capital appreciation.
The funds are invested in a diverse portfolio of stocks and fixed-income
securities.
FORFEITURES
In the event of employee termination other than by reason of retirement, death
or disability, nonvested employer contributions are forfeited and the employer
contribution is reduced by the amount forfeited.
PARTICIPANT ACCOUNTS
Individual accounts are maintained for each of the Plan's participants to
reflect the participant's share of the Plan's income, the employer's
contributions and the particpant's contributions. Allocations are based on
participant account balances as defined.
ADMINISTRATIVE FEES
All administrative and custodial fees of the Plan are paid by the Corporation.
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:
The financial statements are presented on the accrual basis of accounting.
Interest income is recorded as earned. Dividend income is recorded on the ex-
dividend date.
-6-
<PAGE>
Investments in marketable securities are valued using the closing price of the
investments on the last day of business of the plan year. Cash equivalents are
stated at cost which approximates market value.
3. UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS:
Unrealized appreciation (depreciation) and realized gain (losses) have been
determined by the market value of an investment at the beginning of the plan
year or its acquisition cost if acquired during the plan year, consistent with
ERISA requirements.
4. FEDERAL INCOME TAXES:
The Plan has received a favorable determination letter, dated December 1,
1988,from the Internal Revenue Service (IRS) under Section 401(a) and is exempt
from taxes under Section 501(a). The Plan has been amended since receiving the
determination letter. 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 Code. Therefore, they believe that the Plan was
qualified and the related trust was tax-exempt through the year ended December
31, 1994.
5. BENEFITS PAYABLE:
The Plan classifies all benefits owed to vested, terminated participants as a
component of net assets available for plan benefits rather than as a liability.
These amounts are recorded as a liability in the Plan's Form 5500 and were
$107,869 and $71,444 as of December 31, 1994 and 1993, respectively.
-7-
<PAGE>
SCHEDULE I
COSTCO WHOLESALE CORPORATION
EMPLOYEES' SAVINGS/RETIREMENT PLAN [401(k)]
EIN 91-1223280
PIN 001
ITEM 27a
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
Total
Number of ------------------------
Shares/Units or Current
Issuer/Description Principal Amount Cost Value
- ------------------ ---------------- ----------- -----------
<S> <C> <C> <C>
PRICECOSTCO COMMON STOCK FUND
- -----------------------------
PriceCostco Common Stock 1,378,356 $28,689,016 $17,746,334
FIXED INCOME FUND
- -----------------
INVESCO Retirement GIC Fund,
1994 annual yield 5.86% 14,219,457 $14,219,457 $14,219,457
</TABLE>
The accompanying notes to the financial statements are
an integral part of this schedule.
-8-
<PAGE>
SCHEDULE II
COSTCO WHOLESALE CORPORATION
EMPLOYEES' SAVINGS/RETIREMENT PLAN [401(k)]
EIN 91-1223280
PIN 001
Item 27d
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
-------------------------Purchases---------------------
Number of
Number Shares/Units or
Issuer/Description of Purchases Principal Amount Total
- ------------------ ------------ ---------------- -----------
Category (i) - Single transactions in excess of 5 percent of plan assets at January 1, 1994
- -------------------------------------------------------------------------------------------
Balanced Fund
- -------------
<S> <C> <C> <C>
Fidelity Advisor
Series II - Income and Growth
Fund - - $ -
Category (iii) - Series of transactions in excess of 5 percent of plan assets at January 1, 1994
- ------------------------------------------------------------------------------------------------
*PriceCostco Common Stock Fund
-----------------------------
PriceCostco
Common Stock 51 387,669 6,260,636
Fixed Income Fund
-----------------
Invesco Retirement GIC Fund 26 3,217,674 3,217,674
Balanced Fund
- -------------
Fidelity Advisor
Series II - Income and Growth
Fund 27 180,955 2,707,509
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------Sales----------------------------------------
Number of Total
Number Shares/Units or Total Sale Net
of Sales Principal Amount Cost Price Gain (Loss)
-------- ---------------- ---------- ---------- -----------
Category (i) - Single transactions in excess of 5 percent of plan assets at January 1, 1994
- -------------------------------------------------------------------------------------------
Balanced Fund
- --------------
<S> <C> <C> <C> <C> <C>
Fidelity Advisor
Series II - Income and Growth
Fund 1 $ 291,085 $4,383,209 $4,179,978 $ (203,231)
Category (iii) - Series of transactions in excess of 5 percent of plan assets at January 1, 1994
- ------------------------------------------------------------------------------------------------
*PriceCostco Common Stock Fund
- ------------------------------
PriceCostco
Common Stock 6 34,625 554,000 555,126 1,126
Fixed Income Fund
-----------------
Invesco Retirement GIC Fund 12 67,248 67,248 67,248 -
Balanced Fund
- -------------
Fidelity Advisor
Series II - Income and Growth
Fund 3 310,535 4,676,090 4,465,082 (211,008)
</TABLE>
There were no category (ii) or (iv) reportable transactions during 1994.
*Represents a party in interest for the year ended December 31, 1994
The accompanying notes to the financial statements are an integral part of this
schedule.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 11-K, into Price/Costco, Inc.'s previously filed
Registration Statement File No. 33-50799.
Aurthur Anderson LLP
Seattle, Washington,
June 28, 1995
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