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, 1996
[ ] 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, 1996 and 1995
(With Independent Auditors' Report Thereon)
PETCO ANIMAL SUPPLIES 401(k) PLAN
Table of Contents
Page
Independent Auditors' Report 1
FINANCIAL STATEMENTS
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1996 2
Statement of Net Assets Available for Benefits
with Fund Information as of December 31, 1995 3
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the year ended December 31, 1996 4
Statement of Changes in Net Assets Available for Benefits
with Fund Information for the year ended December 31, 1995 5
Notes to Financial Statements 6
SUPPLEMENTAL SCHEDULES
Schedule I - Line 27a - Schedule of Assets Held
for Investment Purposes 11
Schedule II - Line 27d - Schedule of Reportable Transactions 12
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 as of December 31,
1996 and 1995, 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, 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
benefits of the Plan as of December 31, 1996 and 1995, 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 I and II 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 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.
San Diego, California
June 16, 1997
PETCO ANIMAL SUPPLIES 401(k) PLAN
Statement of Net Assets Available for Benefits
December 31, 1996
<TABLE>
<S> <C> <S> <C> <C> <C> <C> <C> <S> <C> <C>
Participant Directed
Prudential
Governmental Prudential
Securities Prudential Advisor Putnam
Trust Prudential Global Equity OTC
Money Prudential Prudential Prudential Government Natural Petco Portfolio Emerging
Market Utility Equity Allocation Income Resources Common Growth Growth
Assets Fund Fund Fund Fund Fund Fund Stock Fund Fund
Investments, at fair
value:
Mutual funds $ - 351,144 616,892 274,668 61,001 52,650 - 23,391 30,312
Common stock - - - - - - 41,725 - -
Money market funds 73,475 - - - - - - - -
Participant loans - - - - - - - - -
73,475 351,144 616,892 274,668 61,001 52,650 41,725 23,391 30,312
Contributions receivable:
Employee - - - - - - - - -
Employer 1,097 3,585 6,417 1,646 549 549 1,829 1,647 1,466
Total assets 74,572 354,729 623,309 276,314 61,550 53,199 43,554 25,038 31,778
Liabilities
Excess contributions
due to participants
(note 5) 173 1,670 5,808 1,573 2 609 130 427 591
Net assets available
for benefits $ 74,399 353,059 617,501 274,741 61,548 52,590 43,424 24,611 31,187
Nonparticipant
Directed
Prudential Prudential
Special Government
Money Money
Market Market Loans to
Fund B Fund Participants Total
Investments, at fair
value:
Mutual funds $ - - - 1,410,058
Common stock - - - 41,725
Money market funds 9 10 - 73,494
Participant loans - - 17,200 17,200
9 10 17,200 1,542,477
Contributions receivable:
Employee - - - -
Employer - - - 18,785
Total assets 9 10 17,200 1,561,262
Liabilities
Excess contributions
due to participants
(note 5) - - - 10,983
Net assets available
for benefits $ 9 10 17,200 1,550,279
</TABLE>
See accompanying notes to financial statements.
PETCO ANIMAL SUPPLIES 401(k) PLAN
Statement of Net Assets Available for Benefits
December 31, 1995
<TABLE>
<S> <C> <S> <C> <C> <C> <C> <C> <S> <C>
Participant Directed
Prudential
Governmental
Securities Prudential Prudential
Trust Prudential Global Special
Money Prudential Prudential Prudential Government Natural Petco Money
Market Utility Equity Allocation Income Resources Common Market
Assets Fund Fund Fund Fund Fund Fund Stock Fund B Total
Investments, at
fair value:
Mutual funds $ - 213,174 363,311 184,603 36,893 13,999 - - 811,980
Common stock - - - - - - 5,412 - 5,412
Money market funds 46,728 - - - - - - 23,436 70,164
46,728 213,174 363,311 184,603 36,893 13,999 5,412 23,436 887,556
Employee contributions
receivable 670 2,640 5,349 3,711 954 701 252 - 14,277
Net assets available
for benefits $ 47,398 215,814 368,660 188,314 37,847 14,700 5,664 23,436 901,833
</TABLE>
See accompanying notes to financial statements.
PETCO ANIMAL SUPPLIES 401(k) PLAN
Statement of Changes in Net Assets Available for Benefits
For the year ended December 31, 1996
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Participant Directed
Prudential
Governmental Prudential
Securities Prudential Advisor Putnam
Trust Prudential Global Equity OTC
Money Prudential Prudential Prudential Government Natural Petco Portfolio Emerging
Market Utility Equity Allocation Income Resources Common Growth Growth
Fund Fund Fund Fund Fund Fund Stock Fund Fund
Additions to net
assets attributed to:
Investment income:
Net appreciation
(depreciation) in
fair value of
investments $ (11) 28,011 19,970 (794) (1,724) 1,222 (8,611) 121 (2,810)
Interest 2,842 - - - - - - - -
Dividends - 30,411 62,592 26,537 2,979 5,345 - 536 1,766
Less investment
expenses - - (29) - - - - - -
2,831 58,422 82,533 25,743 1,255 6,567 (8,611) 657 (1,044)
Contributions:
Employee 40,371 75,021 173,061 72,698 22,208 24,278 41,470 18,286 21,782
Employer 5,604 13,773 27,605 9,602 2,477 1,819 6,543 3,806 3,435
Total additions 48,806 147,216 283,199 108,043 25,940 32,664 39,402 22,749 24,173
Deductions from net
assets attributed to:
Benefits paid to
participants (3,193) (18,810) (38,538) (16,128) (2,239) (3,149) (1,642) (110) (67)
Loans issued (11,600) - (5,600) - - - - - -
Net increase prior to
interfund transfers 34,013 128,406 239,061 91,915 23,701 29,515 37,760 22,639 24,106
Interfund transfers (7,012) 8,839 9,780 (5,488) - 8,375 - 1,972 7,081
Net increase 27,001 137,245 248,841 86,427 23,701 37,890 37,760 24,611 31,187
Net assets available
for benefits:
Beginning of year 47,398 215,814 368,660 188,314 37,847 14,700 5,664 - -
End of year $ 74,399 353,059 617,501 274,741 61,548 52,590 43,424 24,611 31,187
Nonparticpant
Directed
Prudential Prudential
Special Government
Money Money
Market Market Loans to
Fund B Fund Participants Total
Additions to net
assets attributed to:
Investment income:
Net appreciation
(depreciation) in
fair value of
investments $ - - - 35,374
Interest 111 - - 2,953
Dividends - - - 130,166
Less investment
expenses - - - (29)
111 - - 168,464
Contributions:
Employee 9 10 - 489,194
Employer - - - 74,664
Total additions 120 10 - 732,322
Deductions from net
assets attributed to:
Benefits paid to
participants - - - (83,876)
Loans issued - - 17,200 -
Net increase prior to
interfund transfers 120 10 17,200 648,446
Interfund transfers (23,547) - - -
Net increase (23,427) 10 17,200 648,446
Net assets available
for benefits:
Beginning of year 23,436 - - 901,833
End of year $ 9 10 17,200 1,550,279
</TABLE>
See accompanying notes to financial statements.
PETCO ANIMAL SUPPLIES 401(k) PLAN
Statement of Changes in Net Assets Available for Benefits
For the year ended December 31, 1995
<TABLE>
<S> <C> <S> <C> <C> <C> <C> <C> <C> <S><C>
Participant Directed
Prudential
Governmental
Securities Prudential Prudential
Trust Prudential Global Special
Money Prudential Prudential Prudential Government Natural Petco Money
Market Utility Equity Allocation Income Resources Common Market
Fund Fund Fund Fund Fund Fund Stock Fund B Total
Additions to net assets
attributed to:
Investment income:
Net appreciation in
fair value of
investments $ - 32,968 62,423 16,458 3,470 1,029 967 - 117,315
Interest 2,264 - - - - - - 1,220 3,484
Dividends - 8,470 17,328 14,021 1,873 738 - - 42,430
Less investment expenses - (208) (110) (172) (12) - - - (502)
2,264 41,230 79,641 30,307 5,331 1,767 967 1,220 162,727
Employee contributions 16,356 44,409 84,437 49,520 10,204 10,012 5,168 - 220,106
Total additions 18,620 85,639 164,078 79,827 15,535 11,779 6,135 1,220 382,833
Deductions from net assets
attributed to benefits
paid to participants (6,077) (24,138) (31,602) (29,817) (11,146) (1,090) - - (103,870)
Net increase prior to
interfund transfers 12,543 61,501 132,476 50,010 4,389 10,689 6,135 1,220 278,963
Interfund transfers 143 (949) 871 136 - 270 (471) - -
Net increase 12,686 60,552 133,347 50,146 4,389 10,959 5,664 1,220 278,963
Net assets available for
benefits:
Beginning of year 34,712 155,262 235,313 138,168 33,458 3,741 - 22,216 622,870
End of year $ 47,398 215,814 368,660 188,314 37,847 14,700 5,664 23,436 901,833
</TABLE>
See accompanying notes to financial statements.
PETCO ANIMAL SUPPLIES 401(k) PLAN
Notes to Financial Statements
December 31, 1996 and 1995
(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.
General
The Plan was established on January 1, 1992, and amended on
January 1, 1994, 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").
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 sixty-
five, retirement due to disability, death or termination of the
Plan. For the Plan year ended December 31, 1996, the Company made
a discretionary matching contribution of $74,664. The Company did
not make a contribution to the Plan for the Plan year ended
December 31, 1995.
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. 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.
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 Invests in a diversified
Securities Trust Money 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 Fund Invests in equities, bonds and
money market securities.
Prudential Government Invests at least 65% of the total
Income Fund fund assets in U.S. government
securities.
Prudential Global Natural Invests in securities of foreign
Resources Fund 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 Invests in growth stocks of
Portfolio Growth Fund small, medium, and large companies
that demonstrate the potential for
above average earnings or sales
growth.
Putnam OTC Emerging Invests in securities of
Growth Fund 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 non-participant directed accounts which are
invested in the following investment funds:
Prudential Special Money Invests in a diversified
Market Fund B portfolio of U.S. dollar-
denominated money market
instruments from domestic and
foreign issuers.
Prudential Government Invests in diversified portfolio
Money Market Fund of U.S. dollar-denominated money
market instruments from the U.S.
government.
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.
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.
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 sixty-five, retirement due to disability, death
or termination of the Plan.
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, 1996 was
8.25%. Loan terms range from 1 to 5 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.
Forfeitures
Forfeitures are allocated to participant accounts in the Plan year
in which a participant terminates service. The allocation of
forfeitures is based on the ratio between a participant's salary
and total salaries of all participants as defined in the Plan
document. Such allocation is made only to participants in the
Plan as of the last day of the fiscal year.
Administrative Costs
Certain costs and expenses related to the administration of the
Plan are paid by the Company.
(2) Significant Accounting Policies
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.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value. Fair value is
determined by the quoted market price of the investments at the
Plan's year-end. Investment purchases and sales are recorded on
the trade date. Net appreciation or depreciation in the fair
value of investments is based on the change in the fair value of
investments as of the beginning of the year and the fair value of
investments at the end of the year. Interest income is recorded
on the accrual basis.
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,
1996 and 1995.
(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, 1996 and $10,983 was returned to
certain participants in order to meet the nondiscrimination test.
These amounts have been recorded in the accompanying financial
statements as liabilities of the Plan as of December 31, 1996.
There were no excess contributions as of December 31, 1995.
Schedule I
PETCO ANIMAL SUPPLIES 401(k) PLAN
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1996
<TABLE>
<S> <C> <S>
Description Current
Issuer of investment Cost value
Prudential * Governmental Securities
Trust Money Market Fund $ 73,474 73,475
Prudential * Utility Fund 312,712 351,144
Prudential * Equity Fund 544,160 616,892
Prudential * Allocation Fund 271,290 274,668
Prudential * Government Income Fund 61,427 61,001
Prudential * Global Natural Resources Fund 51,063 52,650
Petco * Petco Common Stock 49,462 41,725
Fidelity Advisor Equity Portfolio
Growth Fund 23,263 23,391
Putnam OTC Emerging Growth Fund 33,110 30,312
Prudential * Special Money Market Fund B 9 9
Prudential * Government Money Market Fund 10 10
Loans to
Participants * Interest rate of 9.25% - 17,200
Total investments $ 1,419,980 1,542,477
</TABLE>
* Party-in-interest
Schedule II
PETCO ANIMAL SUPPLIES 401(k) PLAN
Line 27d - Schedule of Reportable Transactions
For the year ended December 31, 1996
<TABLE>
<S> <C> <S> <C> <S>
Current
value of
Cost of asset on
Identity Purchase Selling asset transaction Net
of party Description price price sold date gain
involved of asset (1) (1) (1) (1)
Prudential Utility Fund $ 172,173 - - 172,173 -
- 142,761 129,528 142,761 13,233
Prudential Equity Fund 502,097 - - 502,097 -
- 291,404 235,492 291,404 55,912
Prudential Allocation
Fund 148,709 - - 148,709 -
- 67,862 63,860 67,862 4,002
Prudential Government
Money Market
Fund 48,556 - - 48,556 -
Petco Common Stock 46,569 - - 46,569 -
</TABLE>
(1) Represents a series of transactions
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, 1997
PETCO Animal Supplies 401(k) Plan
BY: Plan Administrative Committee
/s/Brian K. Devine
Brian K. Devine
/s/Richard St. Peter
Richard St. Peter
/s/Larry Asselin
Larry Asselin
/s/William M. Woodard
William M. Woodard
/s/James M. Myers
James M. Myers
/s/Bruce Hall
Bruce Hall
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 16, 1997, relating to the statements of net assets
available for benefits of the Petco Animal Supplies 401(k) Plan as of
December 31, 1996 and 1995, 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, 1996, and all related schedules, which
report appears in the December 31, 1996 annual report on Form 11-K of
Petco Animal Supplies, Inc.
San Diego, California
June 29, 1997
