THIS DOCUMENT IS A COPY OF THE FORM 11-K FILED ON JUNE 30, 1998 PURSUANT TO THE
RULE 201 TEMPORARY HARDSHIP EXEMPTION.
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, 1997
[ ] 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
<PAGE>
PETCO ANIMAL SUPPLIES 401(k) PLAN
Financial Statements
December 31, 1997 and 1996
(With Independent Auditors' Report Thereon)
<PAGE>
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, 1997 2
Statement of Net Assets Available for Benefits with Fund
Information as of December 31, 1996 3
Statement of Changes in Net Assets Available for Benefits with
Fund Information for the year ended December 31, 1997 4
Statement of Changes in Net Assets Available for Benefits with
Fund Information for the year ended December 31, 1996 5
Notes to Financial Statements 6
Schedules
1 Schedule of Assets Held for Investment Purposes 11
2 Schedule of Reportable Transactions 12
<PAGE> 1
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,
1997 and 1996, 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, 1997. 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, 1997 and 1996, 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 Peat Marwick LLP
San Diego, California
June 19, 1998
<PAGE> 2
PETCO ANIMAL SUPPLIES 401(k) PLAN
Statement of Net Assets Available for Benefits with Fund Information
December 31, 1997
<TABLE>
Participant Directed
---------------------------------------------------------------------------------------------------------
Prudential
Governmental Fidelity
Securities Prudential Advisor Putnam
Trust Prudential Prudential Global Equity OTC
Money Prudential Prudential Allocation Government Natural Petco Portfolio Emerging
Market Utility Equity Balanced Income Resources Common Growth Growth
Asset Fund Fund Fund Fund Fund Fund Stock Fund Fund
- ----------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments,
at fair value:
Mutual funds $ - 503,707 1,001,092 350,463 119,975 94,418 - 237,476 174,779
Common stock - - - - - - 157,565 - -
Money market funds 181,562 - - - - - - - -
Participant loans - - - - - - - - -
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total assets 181,562 503,707 1,001,092 350,463 119,975 94,418 157,565 237,476 174,779
Liabilities
- -----------------------
Excess contributions
due to participants
(note 5) 6,002 16,299 37,975 2,798 73 1,442 174 6,272 3,991
--------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net assets
available for
benefits $ 175,560 487,408 963,117 347,665 119,902 92,976 157,391 231,204 170,788
========== ========== ========== ========== ========== ========== ========== ========== ==========
See accompanying notes to financial statements.
</TABLE>
PETCO ANIMAL SUPPLIES 401(k) PLAN
Statement of Net Assets Available for Benefits with Fund Information (continued)
December 31, 1997
<TABLE>
Nonparticipant Directed
----------------------- ------------- --------------
Prudential Prudential
Special Government
Money Money
Market Market Loans to
Asset Fund B Fund Participants Total
----------------------- ---------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
Investments,
at fair value:
Mutual funds $ - - - 2,481,910
Common stock - - - 157,565
Money market funds 151 10,857 - 192,570
Participant loans - - 31,397 31,397
---------- ---------- -------------- ---------------
Total assets 151 10,857 31,397 2,863,442
Liabilities
- -----------------------
Excess contributions
due to participants
(note 5) - - - 75,026
---------- ---------- -------------- ---------------
Net assets
available for
benefits $ 151 10,857 31,397 2,788,416
========== ========== ============= ================
See accompanying notes to financial statements.
</TABLE>
<PAGE> 3
PETCO ANIMAL SUPPLIES 401(k) PLAN
Statement of Net Assets Available for Benefits with Fund Information
December 31, 1996
<TABLE>
Participant Directed
--------------------------------------------------------------------------------------------------------
Prudential
Governmental Fidelity
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
- ------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
========== ========== ========== ========== ========== ========== ========== ========== ==========
See accompanying notes to financial statemnts.
</TABLE>
PETCO ANIMAL SUPPLIES 401(k) PLAN
Statement of Net Assets Available for Benefits with Fund Information (continued)
December 31, 1996
<TABLE>
Nonparticipant Directed
----------------------- ------------- --------------
Prudential Prudential
Special Government
Money Money
Market Market Loans to
Assets Fund B Fund Participants Total
- ----------------------- ---------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
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
========== ========== ============= ================
See accompanying notes to financial statements.
</TABLE>
<PAGE> 4
PETCO ANIMAL SUPPLIES 401(k) PLAN
Statement of Net Assets Available for Benefits with Fund Information
December 31, 1997
<TABLE>
Participant Directed
--------------------------------------------------------------------------------------------------------------------
Prudential
Governmental Fidelity
Securities Prudential Advisor Putnam
Trust Prudential Prudential Global Equity OTC
Money Prudential Prudential Prudential Allocation Government Natural Petco Portfolio Emerging
Market Utility Equity Allocation Balanced Income Resources Common Growth Growth
Assets Fund Fund Fund Fund Fund Fund Fund Stock Fund Fund
- ------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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) (2,077) (3,708) 16,147
Interest
5,225 - - - - - - - - -
Dividends
- 49,455 64,368 39,614 43,829 5,197 12,349 - 23,594 -
Less investment
Expenses
- - (15) - - - - - - -
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
5,224 106,175 166,091 38,212 6,177 7,890 (10,460) (2,077) 19,886 16,147
Contributions:
Employee
69,834 112,461 224,784 50,351 37,458 40,555 54,321 94,150 155,118 101,676
Employer
19,581 22,031 46,096 6,454 10,130 5,876 10,361 20,989 23,823 17,929
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
89,415 134,492 270,880 56,805 47,588 46,431 64,682 115,139 178,941 119,605
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 14,572 14,932 20,219
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total additions
115,984 247,308 457,986 95,017 60,943 57,840 63,563 127,634 213,759 155,971
Deductions from net
assets attributed to
benefits paid to
participants
14,678 102,155 133,474 10,481 39,044 1,587 12,015 11,145 10,014 10,804
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase
(decrease)
prior to
interfund
transfers
101,306 145,153 324,512 84,536 21,899 56,253 51,548 116,489 203,745 145,167
Interfund transfers
(145) (10,804) 21,104 (359,277) 325,766 2,101 (11,162) (2,522) 2,848 (5,566)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase
(decrease)
101,161 134,349 345,616 (274,741) 347,665 58,354 40,386 113,967 206,593 139,601
Net assets available
for benefits:
Beginning of year
74,399 353,059 617,501 274,741 - 61,548 52,590 43,424 24,611 31,187
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
End of year
$ 175,560 487,408 963,117 - 347,665 119,902 92,976 157,391 231,204 170,788
========== ========== ========== ========== ========== ========== ========== ========== ========== ==========
See accompanying notes to financial statements.
</TABLE>
PETCO ANIMAL SUPPLIES 401(k) PLAN
Statement of Net Assets Available for Benefits with Fund Information (continued)
December 31, 1997
<TABLE>
Nonparticipant Directed
----------------------- ------------- --------------
Prudential Prudential
Special Government
Money Money
Market Market Loans to
Assets Fund B Fund Participants Total
- ----------------------- ---------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment Income
Net Appreciation
(depreciation)
in fair value
of investments $ - - - 109,649
Interest 5 330 2,632 8,192
Dividends - - - 238,406
Less investment
Expenses - - - (15)
---------- ---------- -------------- ---------------
5 330 2,632 356,232
Contributions:
Employee 105 10 - 940,823
Employer 32 3 - 183,305
---------- ---------- -------------- ---------------
137 13 - 1,124,128
Transfer of assets
from Pet Food
Warehouse, Inc.
401(k) Plan (note 6) - - - 118,762
---------- ---------- -------------- ---------------
Total additions 142 343 2,632 1,599,122
Deductions from net
assets attributed to
benefits paid to
participants - - 15,588 360,985
---------- ---------- -------------- ---------------
Net increase
(decrease)
prior to
interfund
transfers 142 343 (12,956) 1,238,137
Interfund transfers - 10,504 27,153 -
---------- ---------- -------------- ---------------
Net increase
(decrease) 142 10,847 14,197 1,238,137
Net assets available
for benefits:
Beginning of year 9 10 17,200 1,550,279
---------- ---------- -------------- ---------------
End of year $ 151 10,857 31,397 2,788,416
========== ========== ============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE> 5
PETCO ANIMAL SUPPLIES 401(k) PLAN
Statement of Net Assets Available for Benefits with Fund Information
December 31, 1996
<TABLE>
Participant Directed
----------------------------------------------------------------------------------------------------------
Prudential
Governmental Fidelity
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
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase
prior to
interfund
transfers
45,613 128,406 244,661 91,915 23,701 29,515 37,760 22,639 24,106
Interfund transfers
(18,612) 8,839 4,180 (5,488) - 8,375 - 1,972 7,081
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase
(decrease)
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
See accompanying notes to financial statements.
</TABLE>
PETCO ANIMAL SUPPLIES 401(k) PLAN
Statement of Net Assets Available for Benefits with Fund Information (continued)
December 31, 1996
<TABLE>
Nonparticipant Directed
----------------------- ------------- --------------
Prudential Prudential
Special Government
Money Money
Market Market Loans to
Fund B Fund Participants Total
---------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income:
Net appreciation
(depreciation)
in fair value
of investments $ - - - 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)
---------- ---------- ------------- ----------------
Net increase
prior to
interfund
transfers 120 10 - 648,446
Interfund transfers (23,547) - 17,200 -
---------- ---------- ------------- ----------------
Net increase
(decrease) (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
See accompanying notes to financial statements.
</TABLE>
<PAGE> 6
PETCO ANIMAL SUPPLIES 401(K) PLAN
Notes to Financial Statements
December 31, 1997 and 1996
(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, was amended and restated
on January 1, 1994 and October 1, 1996, 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 years ended December 31, 1997 and 1996, the Company
made discretionary matching contributions of $183,305 and $74,664,
respectively.
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.
<PAGE> 6
PETCO ANIMAL SUPPLIES 401(K) PLAN
Notes to Financial Statements, Continued
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 Invests in a diversified portfolio of
Trust Money Market Fund short-term money 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 Invests in equities, debt and cash.
Fund
Prudential Government Income Fund Invests at least 65% of the total
fund assets in U.S. government
securities.
Prudential Global Natural Invests in securities of foreign and
Resources Fund 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 Invests in growth stocks of small,
Growth Fund 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 Prudential Allocation Fund was replaced with the Prudential
Allocation Balanced Fund as an investment option in the current year.
<PAGE> 7
PETCO ANIMAL SUPPLIES 401(K) PLAN
Notes to Financial Statements, Continued
The Plan also holds non-participant directed accounts which are
invested in the following investment funds:
Prudential Special Money Market Invests in a diversified portfolio of
Fund B U.S. dollar-denominated money market
instruments from domestic and
foreign issuers.
Prudential Government Money Market Invests in a diversified portfolio of
Fund 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, 1997 was 8.5%. 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.
<PAGE> 8
PETCO ANIMAL SUPPLIES 401(K) PLAN
Notes to Financial Statements, continued
Administrative Costs
Certain costs and expenses related to the administration of the Plan
are paid by the Company.
<PAGE> 9
PETCO ANIMAL SUPPLIES 401(K) PLAN
Notes to Financial Statements, Continued
Reclassifications
Certain reclassifications have been made to the 1996 financial
statements to conform with the 1997 presentation.
(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
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. All
receivables and liabilities are valued at cost, which approximates fair
value.
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, 1997 and 1996.
(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, 1997 and $46,990 was returned 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. These amounts have been recorded in the accompanying
financial statements as liabilities of the Plan as of December 31, 1997
as they were returned to participants subsequent to December 31, 1997.
<PAGE> 10
PETCO ANIMAL SUPPLIES 401(K) PLAN
Notes to Financial Statements, Continued
(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.
<PAGE> 11
Schedule 1
PETCO ANIMAL SUPPLIES 401(K) PLAN
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
<TABLE>
<S> <S> <C> <C>
Current
Issuer Description of investment Cost value
- -------------- ------------------------------ --------- ------------
Prudential * Governmental Securities Trust
Money Market Fund $ 181,562 181,562
Prudential * Utility Fund 426,097 503,707
Prudential * Equity Fund 858,191 1,001,092
Prudential * Allocation Balance Fund 388,304 350,463
Prudential * Government Income Fund 117,732 119,975
Prudential * Global Natural Resources Fund 116,838 94,418
Petco * Petco Common Stock 168,766 157,565
Fidelity Advisor Equity Portfolio Growth
Fund 242,362 237,476
Putnam OTC Emerging Growth Fund 160,192 174,779
Prudential * Special Money Market Fund B 151 151
Prudential * Government Money Market Fund 10,857 10,857
Loans to
Participants *Interest rate, 9.25% - 10.50% 31,397 31,397
--------- ---------
Total investments $2,702,449 2,863,442
========= =========
* Party in interest
</TABLE>
<PAGE> 12
Schedule 2
PETCO ANIMAL SUPPLIES 401(K) PLAN
Line 27d - Schedule of Reportable Transactions
For the year ended December 31, 1997
<TABLE>
<S> <S> <C> <C> <C> <C> <C>
Current
value of
Identity Cost of asset on
of party Description Purchase Selling asset transaction Net
involved of asset price price sold date gain(loss)
- ---------- ----------- ---------- ---------- ---------- ----------- ----------
Prudential Utility Fund $ - 84,660 69,617 84,660 15,043
232,260(1) - - 232,260 -
- 151,627(1) 127,565 151,627 24,062
Prudential Equity Fund 476,650(1) - - 476,650 -
- 215,207(1) 168,147 215,207 47,060
Prudential Allocation
Fund 84,427(1) - - 84,427 -
- 373,942(1) 371,757 373,942 2,185
- 203,435 205,047 203,435 (1,611)
- 141,477 138,607 141,477 2,870
Prudential Allocation
Balanced
Fund 203,435 - - 203,435 -
141,477 - - 141,477 -
476,278(1) - - 476,278 -
- 88,163(1) 89,337 88,163 (1,174)
Prudential Natural
Resource
Fund 89,177(1) - - 89,177 -
Prudential Government
Money
Market Fund 119,807(1) - - 119,807 -
Petco Common Stock 132,377(1) - - 132,377 -
Fidelity Advisor Equity
Portfolio
Growth Fund 231,502(1) - - 231,502 -
Putnam OTC Emerging
Growth Fund 148,967(1) - - 148,967 -
(1) Represents a series of transactions
</TABLE>
<PAGE> 13
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 29, 1998
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/ Richard C. St. Peter
- ----------------------------------
Richard C. St. Peter
/s/ Larry D. Asselin
- ----------------------------------
Larry D. Asselin
/s/ Janet D. Mitchell
- ----------------------------------
Janet D. Mitchell
/s/ James M. Myers
- ----------------------------------
James M. Myers
/s/ William M. Woodard
- ----------------------------------
William M. Woodard
<PAGE> 14
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 19, 1998, relating to the statements of net assets available for
benefits of the Petco Animal Supplies 401(k) Plan as of December 31, 1997
and 1996, 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,
1997, and all related schedules, which report appears in the December 31,
1997 annual report on Form 11-K of Petco Animal Supplies 401(k) Plan.
KPMG Peat Marwick LLP
San Diego, California
June 29, 1998
