<PAGE>
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 ended December 31, 1993
-------------------------
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 0-20355
---------------------------------------------
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)]
10809 - 120th Avenue NE
Kirkland, WA 98033
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>
COSTCO WHOLESALE
EMPLOYEES' SAVINGS/RETIREMENT PLAN [401(k)]
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1993 AND 1992
TOGETHER WITH AUDITORS' REPORT
<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, 1993 and 1992, and the related statements of
changes in net assets available for plan benefits for the years then ended.
These financial statements and the schedules referred to below are the
responsibility of the Plan Administrator. Our responsibility is to express an
opinion on these financial statements and schedules 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 Administrator, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the
Costco Wholesale Corporation Employees' Savings/Retirement Plan [401(k)] as of
December 31, 1993 and 1992, and the changes in its net assets available for
plan benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were made 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
purposes of complying with the Department of Labor Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974 and are not a required part of the basic financial statements. Such
schedules have been subjected to the auditing procedures applied in the audit
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.
Seattle, Washington,
March 9, 1994
<PAGE>
COSTCO WHOLESALE CORPORATION
EMPLOYEES' SAVINGS/RETIREMENT PLAN [401(k)]
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
Price/Costco Common
Stock Fund Fixed Income Fund Growth Fund
------------------------ ------------------------ ----------------------
1993 1992 1993 1992 1993 1992
------------------------ ------------------------ ----------------------
<S> <C> <C> <C> <C> <C> <C>
CASH AND CASH EQUIVALENTS $ 289,980 $ 74,180 $ 241,302 $ 68,213 $1,340,011 $ 280,650
INVESTMENTS:
Government securities - - - - 3,134,687 3,026,397
Common stock - - - - 7,037,164 5,806,315
Price/Costco common stock 19,857,761 17,977,047
Investment contracts - - 10,367,823 6,480,310
Mutual funds - - - - - -
ACCRUED INTEREST - - 48,538 55,988 - -
CONTRIBUTIONS RECEIVABLE 862 - 573 - 486 243
INTERFUND TRANSFERS AND OTHER (12,880) 22,478 118,812 (17,683) 99,434 (4,795)
----------- ----------- ----------- ---------- ---------- ----------
Net assets available for
plan benefits $20,135,723 $18,073,705 $13,911,735 $9,613,225 $8,477,095 $6,082,413
----------- ----------- ----------- ---------- ---------- ----------
----------- ----------- ----------- ---------- ---------- ----------
Balanced Fund Total
--------------------------- -------------------------
1993 1992 1993 1992
--------------------------- -------------------------
<S> <C> <C> <C> <C>
CASH AND CASH EQUIVALENTS $ 251,393 - $ 2,122,686 $ 423,043
INVESTMENTS:
Government securities - - 3,134,687 3,026,397
Common stock - - 7,037,164 5,806,315
Price/Costco common stock - - 19,857,761 17,977,047
Investment contracts - - 10,367,823 6,480,310
Mutual funds 1,922,754 - 1,922,754 -
ACCRUED INTEREST - - 48,538 55,988
CONTRIBUTIONS RECEIVABLE 188 - 2,109 243
INTERFUND TRANSFERS AND OTHER (205,366) - - -
---------- ---------- ----------- -----------
Net assets available for $1,968,969 $ - $44,493,522 $33,769,343
plan benefits ---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
COSTCO WHOLESALE CORPORATION
EMPLOYEES' SAVINGS/RETIREMENT PLAN [401(k)]
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
Price/Costco Common
Stock Fund Fixed Income Fund Growth Fund
-------------------------- ------------------------- --------------------------
1993 1992 1993 1992 1993 1992
----------- ----------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT RESULTS:
Unrealized appreciation (depreciation)
of investments $(3,432,577) $(7,905,128) $ 83,114 $ (57,246) $ 372,687 $ 414,884
Realized losses on sale of investments (150,686) (129,775) - (1,408) (41,157) (84,686)
Interest 1,800 4,661 196,544 201,460 - -
Dividends 1,659 - 482,696 336,113 116,962 82,849
Investment management fees - - (64,156) (44,077) (44,625) (25,407)
----------- ----------- ----------- ---------- ---------- ----------
Total net investment results (3,579,804) (8,030,242) 698,198 434,842 403,867 387,640
----------- ----------- ----------- ---------- ---------- ----------
CONTRIBUTIONS TO THE PLAN (Note 1):
Employees 6,551,823 6,102,221 4,124,687 2,806,507 2,445,434 1,538,730
Employer 1,068,519 967,509 655,100 468,223 409,972 259,621
----------- ----------- ----------- ---------- ---------- ----------
Total contributions 7,620,342 7,069,730 4,779,787 3,274,730 2,855,406 1,798,351
----------- ----------- ----------- ---------- ---------- ----------
DISTRIBUTIONS TO PARTICIPANTS (1,183,117) (1,726,656) (893,362) (737,845) (466,330) (423,244)
----------- ----------- ----------- ---------- ---------- ----------
INTERFUND TRANSFERS (795,403) 2,002,766 (286,113) (1,529,588) (398,261) (473,178)
----------- ----------- ----------- ---------- ---------- ----------
Net increase (decrease) in
net assets available for
plan benefits 2,062,018 (684,402) 4,298,510 1,442,139 2,394,682 1,289,569
Net assets, beginning
of year 18,073,705 18,758,107 9,613,225 8,171,086 6,082,413 4,792,844
----------- ----------- ----------- ---------- ---------- ----------
Net assets, end of year $20,135,723 $18,073,705 $13,911,735 $9,613,225 $8,477,095 $6,082,413
----------- ----------- ----------- ---------- ---------- ----------
----------- ----------- ----------- ---------- ---------- ----------
Balanced Fund Total
------------------------- --------------------------
1993 1992 1993 1992
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
NET INVESTMENT RESULTS:
Unrealized appreciation (depreciation)
of investments $ 29,036 $ - $(2,947,740) $(7,547,490)
Realized losses on sale of investments - - (191,843) (215,869)
Interest 58 - 198,402 206,121
Dividends 789 - 602,106 418,962
Investment management fees (50) - (108,831) (69,484)
---------- --------- ----------- -----------
Total net investment results 29,833 - (2,447,906) (7,207,760)
---------- --------- ----------- -----------
CONTRIBUTIONS TO THE PLAN (Note 1):
Employees 426,834 - 13,548,778 10,447,458
Employer 60,721 - 2,194,312 1,695,353
---------- --------- ----------- -----------
Total contributions 487,555 - 15,743,090 12,142,811
---------- --------- ----------- -----------
DISTRIBUTIONS TO PARTICIPANTS (28,196) - (2,571,005) (2,887,745)
---------- --------- ----------- -----------
INTERFUND TRANSFERS 1,479,777 - - -
---------- --------- ----------- -----------
Net increase (decrease) in
net assets available for
plan benefits 1,968,969 - 10,724,179 2,047,306
Net assets, beginning
of year - - 33,769,343 31,722,037
---------- --------- ----------- -----------
Net assets, end of year $1,968,969 $ - $44,493,522 $33,769,343
---------- --------- ----------- -----------
---------- --------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
COSTCO WHOLESALE CORPORATION
EMPLOYEES' SAVINGS/RETIREMENT PLAN [401(k)]
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1993
1. DESCRIPTION OF THE PLAN:
The Costco Wholesale Corporation (the "Corporation") Employees' Savings/
Retirement Plan [401(k)] (the "Plan"), began on January 1, 1987. 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.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
Under the Plan, participants are able to contribute annually a maximum of 18%
of their annual base compensation up to a specified amount which was $8,994 in
calendar year 1993. 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 59-1/2. In addition,
benefits may be distributed to a participant in the event of financial
hardship. Employer contributions are fully vested after five years, according
to the following schedule.
<TABLE>
<CAPTION>
Years of Service Percentage Vested
---------------- -----------------
<S> <C>
Under 3 0%
3 25%
4 50%
5 100%
</TABLE>
All contributions to the Plan are invested at the direction of the
participants in any of the following funds: the Price/Costco 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, 1993 was 6,647,
5,499, 3,977 and 1,480, respectively. The total number of participants in the
Plan at December 31, 1993 was 7,313.
The Price/Costco stock fund invests solely in Price/Costco common stock. On
October 21, 1993, the shareholders of both The Price Company (Price) and
Costco Wholesale Corporation approved an agreement that provided for the
mergers of Price and Costco into Price/Costco, Inc. (Price/Costco). Pursuant to
the Transaction, Price and Costco became subsidiaries of Price/Costco.
Shareholders of Costco received one share of Price/Costco common 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 of U.S. Government Treasury or agency bonds
and guaranteed investment contracts.
<PAGE>
- 2 -
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.
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.
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.
Investments are valued using the closing price of the investments on the last
day of business of the plan year.
3. UNREALIZED APPRECIATION (DEPRECIATION) IN PLAN INVESTMENTS:
Unrealized appreciation (depreciation) and realized 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
Employee Retirement Income Security Act (ERISA) requirements.
4. FEDERAL INCOME TAXES:
The Plan has received a favorable determination letter from the IRS under
Section 401(a) and is exempt from taxes under Section 501(a).
5. PLAN TERMINATION:
Although it has not expressed any intent to do so, the Corporation has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan, subject to the provisions of ERISA. In the event of plan
termination or partial termination, participants will have a nonforfeitable
interest in the vested portion of their account balance.
6. 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 were $71,444 and $189,906 as of December 31, 1993
and 1992, respectively.
<PAGE>
COSTCO WHOLESALE CORPORATION
EMPLOYEES' SAVINGS/RETIREMENT PLAN [401(k)]
EIN 91-1223280
ITEM 27a
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Total
Number of ------------------------
Shares/Units or Current
Issuer/Description Principal Amount Cost Value
- ------------------ ---------------- --------------------------
<S> <C> <C> <C>
PRICE/COSTCO COMMON STOCK FUND
Price/Costco Common Stock 1,031,572 $22,983,506 $19,857,761
----------- -----------
Total Price/Costco Common
Stock Fund 22,983,506 19,857,761
----------- -----------
FIXED INCOME FUND
Federal Home Loan Bank
Due 01/25/94, 7.3% 50,000 50,537 50,141
Federal National Mortgage Assoc.
Debentures, due 01/10/97, 7.6% 150,000 147,661 161,720
U.S. Treasury Notes:
Due 09/30/94, 8.5% 25,000 25,742 25,899
Due 06/30/94, 8.5% 50,000 53,117 51,250
Due 04/30/96, 7.625% 250,000 251,890 267,735
Due 08/15/95, 8.5% 100,000 103,063 106,875
Due 10/15/98, 7.125% 300,000 318,185 324,564
Due 01/15/99, 6.375% 500,000 501,807 525,155
Due 12/31/96, 6.125% 175,000 174,903 182,929
Due 04/15/98, 7.875% 150,000 161,507 166,078
Due 05/31/97, 6.75% 215,000 276,549 228,371
Due 08/31/97, 5.625% 125,000 127,341 128,204
Due 08/31/94, 4.25% 125,000 126,624 125,586
Due 11/30/98, 6% 250,000 250,152 259,453
Due 02/28/98, 5.125% 100,000 100,438 100,438
Due 03/31/98, 5.125% 250,000 250,850 250,860
Due 05/15/95, 5.875% 175,000 179,429 179,429
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Total
Number of ------------------------
Shares/Units or Current
Principal Amount Cost Value
---------------- ----------- ------------
<S> <C> <C> <C>
FIXED INCOME FUND (Continued)
INVESCO Retirement GIC Fund,
1993 annual yield 5.83% 10,367,823 10,367,823 10,367,823
----------- -----------
Total Fixed Income Fund
Investments 13,467,618 13,502,510
----------- -----------
GROWTH FUND
Common Stock:
Adobe Systems 2,600 96,200 57,850
Aetna Life & Casualty 2,200 114,425 132,825
A H Belco Corp. 2,000 58,795 106,000
American Express Company 3,450 77,974 106,519
American Home Products Corp. 1,200 60,000 77,700
American International 900 55,641 78,975
American Power Conversion 2,400 39,694 57,000
Amgen 2,000 73,896 99,000
Arnolds Industries, Inc. 2,000 18,375 42,000
Autodesk 1,600 74,397 72,000
Banc One Corp Ohio 2,000 85,600 78,250
BankAmerica Corp 2,000 77,680 92,750
Bankers Trust NY Corp. 1,625 123,500 128,578
Boeing Co. 3,150 122,047 136,238
Brinker International 2,662 45,588 122,452
Brown-Forman Corp. Class B 1,000 70,875 87,250
Capital Cities/ABC, Inc. 120 54,442 74,340
Capital Holding 2,000 56,796 74,250
Charles Schwab Corp 3,450 56,300 111,694
Cisco Sys Inc. 1,400 71,975 90,475
Coastal Corp. 4,100 109,513 115,825
Digital Equipment Corp. 4,800 220,450 164,400
Dreyfus Corp. 2,675 103,844 120,375
Electronic Arts 2,500 85,150 75,000
Equifax Inc. 4,000 78,724 109,500
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Total
Number of --------------------------
Shares/Units or Current
Principal Amount Cost Value
---------------- ------------ -------------
<S> <C> <C> <C>
Federal Home Loan Mortgage 2,425 66,083 120,947
Federal National Mtg Assoc 1,100 58,238 86,350
First Financial Mgmt Corp 2,000 82,910 113,500
FMC Corp. 1,425 69,469 67,153
Ford Motor 1,150 30,170 74,175
Fruit of the Loom 2,800 110,011 67,550
Geico Corp. 1,300 37,495 66,788
General Electric 800 62,400 83,900
Genzyme Corp. 2,400 107,513 66,000
Great Lakes Chem 1,200 55,775 89,550
Guiness Plc 3,925 159,922 136,394
Hanson Plc 6,000 109,713 120,000
Hewlett Packard 900 54,312 71,100
Home Depot 1,900 36,017 75,050
Intel Corp. 1,400 41,675 86,800
Limited Inc. 3,300 74,752 56,100
Liz Claiborne 2,100 86,751 47,512
McClatchy Newspapers, Inc. 2,200 43,313 51,975
Merrill Lynch 2,200 49,788 92,400
Microsoft 1,150 64,700 92,719
Motorola Incorporated 1,000 45,958 92,250
National Service Ind. 3,200 81,325 82,000
Nestle S A Spnsd Adr 3,450 124,856 148,350
New York Times, Class A 6,100 144,959 160,125
Nike 1,700 85,838 78,625
Norwest Corp 3,300 87,450 80,437
Novell 3,000 52,243 62,250
Office Depot 3,750 54,488 126,094
Old Republic International Corp. 5,075 93,581 114,822
Paramount Communications 1,600 75,443 147,200
Philip Morris Companies 3,875 208,863 215,547
RJR Nabisco Holdings Corp. 39,100 270,906 249,263
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Total
Number of --------------------------
Shares/Units or Current
Principal Amount Cost Value
---------------- --------------------------
<S> <C> <C> <C>
Silicon Graphics 4,400 50,903 108,900
Staples Inc. 4,200 88,456 107,100
Stratus Computer 2,600 74,563 81,575
Stride Rite Corp 4,800 99,700 78,600
Student Loan Market Assn 1,700 91,550 76,287
Sun Microsystems 2,700 76,491 78,637
Sybase Inc. 2,200 74,454 92,400
Tecumseh Prods Co. Class A 1,800 68,175 83,250
Teledyne Inc. 3,750 73,125 97,500
Toys R Us Inc. 2,500 73,783 85,837
United Healthcare Corp 1,600 72,177 121,400
United Technologies Corp. 1,900 90,379 117,800
U S Healthcare Inc. 1,950 75,068 112,369
Waste Management 2,400 90,882 63,300
Walt Disney Company 2,300 84,911 98,037
----------- ----------
Total Growth Fund 5,943,415 7,037,164
----------- -----------
BALANCED FUND
- -------------
Fidelity Advisor
Series II - Income & Growth Fund 124,289 1,893,718 1,922,754
----------- -----------
Total Balanced Fund 1,893,718 1,922,754
----------- -----------
Total Investments $44,288,257 $42,320,189
------------ -----------
------------ -----------
</TABLE>
<PAGE>
COSTCO WHOLESALE CORPORATION
EMPLOYEES' SAVINGS/RETIREMENT PLAN [401(k)]
EIN 91-1223280
ITEM 27d
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
-------------------Purchases-------------------------------------------Sales---------------------------
Number of Number of Total
Number Shares/Units or Number Shares/Units or Total Sale Net
Issuer/Description of Purchases Principal Amount Total of Sales Principal Amount Cost Price Gain (Loss)
- ------------------ ------------- --------------- ----- -------- ---------------- ----- ----- ---------
CATEGORY (iii) - SERIES OF TRANSACTIONS IN EXCESS OF 5 PERCENT OF PLAN ASSETS AT JANUARY 1, 1993
PRICE/COSTCO COMMON STOCK FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Price/Costco Common Stock 52 365,272 6,795,427 4 61,466 $1,344,569 $1,214,906 $(129,663)
FIXED FUND
Invesco Retirement GIC Fund 31 4,169,800 4,169,800 13 659,206 659,206 659,206 -
BALANCED FUND
Fidelity Advisor
Series II - Income and Growth
Fund 13 124,289 1,893,718 - - - - -
</TABLE>
There were no category (i), (ii) or (iv) reportable transactions during 1993.
<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.
/s/ Arthur Andersen
Seattle, Washington,
March 30, 1994
