<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 23, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PRICE/COSTCO, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 33-0572969
(State of incorporation) (I.R.S. Employer
Identification Number)
</TABLE>
999 LAKE DRIVE
ISSAQUAH, WASHINGTON 98027
(206) 313-8100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
RICHARD J. OLIN
VICE PRESIDENT
PRICE/COSTCO, INC.
999 LAKE DRIVE
ISSAQUAH, WASHINGTON 98027
(206) 313-6469
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
DAVID R. WILSON JEFFREY H. COHEN
Foster Pepper & Shefelman NICK P. SAGGESE
1111 Third Avenue, Suite 3400 Skadden, Arps, Slate, Meagher & Flom
Seattle, Washington 98101 300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ___________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ___________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT* OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.01 par value per share....... 21,191,301 shares $20.3125 $430,448,301 $148,431
</TABLE>
*Estimated solely for purposes of calculating the registration fee pursuant to
Rule 457(c) based on the average of the high and low prices of the Common Stock
as reported on the Nasdaq National Market on May 20, 1996.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Registration Statement is being filed with respect to the offering of
19,500,000 shares of common stock, $.01 par value (the "Common Stock"), of
Price/Costco, Inc., a Delaware corporation (the "Company"), owned by Fourcar
B.V. (the "Selling Stockholder") (and an additional 1,691,301 shares of Common
Stock owned by the Selling Stockholder upon exercise of the U.S. Underwriters'
over-allotment option) in an underwritten public offering.
The Registration Statement contains two separate prospectuses. The first
prospectus relates to a public offering in the U.S. and Canada of an aggregate
of 15,600,000 shares of Common Stock (the "U.S. Offering"). The second
prospectus relates to a concurrent offering outside the U.S. and Canada of an
aggregate of 3,900,000 shares of Common Stock (the "International Offering").
The prospectuses for the U.S. Offering and the International Offering will be
identical except for alternate front and back cover pages for the International
Offering, which alternate pages appear immediately after the prospectus for the
U.S. Offering.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 23, 1996
PROSPECTUS
JUNE , 1996
19,500,000 SHARES
PRICECOSTCO, INC.
COMMON STOCK
This Prospectus relates to 19,500,000 shares (the "Shares") of common stock,
$.01 par value (the "Common Stock") of Price/Costco, Inc., a Delaware
corporation (the "Company" or "PriceCostco"), owned by Fourcar B.V. (the
"Selling Stockholder"). The Company will not receive any of the proceeds from
sales of the Shares made hereunder. See "Use of Proceeds." Of the 19,500,000
Shares offered by the Selling Stockholder, 15,600,000 Shares are being offered
for sale in the United States and Canada by the U.S. Underwriters (the "U.S.
Offering") and 3,900,000 Shares are being offered for sale outside the U.S. and
Canada in a concurrent offering by the International Managers (the
"International Offering" and, together with the U.S. Offering, the "Offerings"),
subject to transfers between the U.S. Underwriters and the International
Managers. See "Underwriting."
The Common Stock is traded on the Nasdaq National Market under the symbol
"PCCW". On May 22, 1996, the last reported sale price of the Common Stock was
$20 7/8 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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PRICE UNDERWRITING PROCEEDS TO
TO DISCOUNTS AND SELLING
PUBLIC COMMISSIONS(1) STOCKHOLDER(2)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share..................................... $ $ $
Total(3)...................................... $ $ $
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) THE COMPANY AND THE SELLING STOCKHOLDER HAVE AGREED TO INDEMNIFY THE SEVERAL
U.S. UNDERWRITERS AND INTERNATIONAL MANAGERS (COLLECTIVELY, THE
"UNDERWRITERS") AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES UNDER THE
SECURITIES ACT OF 1933. SEE "UNDERWRITING."
(2) BEFORE DEDUCTING ESTIMATED EXPENSES PAYABLE BY THE SELLING STOCKHOLDER OF
$ .
(3) THE SELLING STOCKHOLDER HAS GRANTED THE U.S. UNDERWRITERS AN OPTION
EXERCISABLE WITHIN 30 DAYS AFTER THE DATE HEREOF TO PURCHASE UP TO 1,691,301
ADDITIONAL SHARES OF COMMON STOCK, ON THE SAME TERMS AND CONDITIONS AS SET
FORTH ABOVE, AT THE PRICE TO PUBLIC, LESS THE UNDERWRITING DISCOUNTS AND
COMMISSIONS, SOLELY TO COVER OVER-ALLOTMENTS, IF ANY. IF THE U.S.
UNDERWRITERS EXERCISE SUCH OPTION IN FULL, THE TOTAL PRICE TO PUBLIC,
UNDERWRITING DISCOUNTS AND COMMISSIONS AND PROCEEDS TO SELLING STOCKHOLDER
WILL BE $ , $ , AND $ , RESPECTIVELY. SEE "UNDERWRITING."
The Shares offered hereby are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by them and subject to various
prior conditions, including the right to reject any order in whole or in part.
It is expected that delivery of the Shares will be made in New York, New York on
or about June , 1996.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON BROTHERS INC
UBS SECURITIES
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SHARES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street N.W., Washington, D.C. 20549 and at the Commission's regional offices at
7 World Trade Center, 13th Floor, New York, New York 10048 and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material can also be obtained at prescribed rates
from the Public Reference Section of the Commission at its principal office at
Judiciary Plaza, 450 Fifth Street N.W., Washington, D.C. 20549. This Prospectus
does not contain all information set forth in the Registration Statement and the
exhibits thereto which the Company has filed with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"), and to which
reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended September
3, 1995, and the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended November 26, 1995 and February 18, 1996, and the description of
the Common Stock contained in the Company's Registration Statement on Form 8-A,
filed by the Company with the Commission, are hereby incorporated in this
Prospectus by reference.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to termination of the offering of the Shares offered hereby
shall be deemed to be incorporated by reference herein and to be a part hereof
from the date of the filing of such reports and documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a Prospectus is delivered, upon written or oral request of such person, a
copy of any document incorporated herein by reference, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
in such documents). Requests should be directed to Richard J. Olin, Vice
President, Price/ Costco, Inc., 999 Lake Drive, Issaquah, Washington 98027,
telephone number (206) 313-6469.
2
<PAGE>
THE COMPANY
The Company operates, principally through subsidiaries, a chain of cash and
carry membership warehouses under the names "Costco Wholesale" and "Price Club".
The Company's business is based on the concept that offering members very low
prices on a limited selection of nationally branded and selected private label
products in a wide range of merchandise categories will produce rapid inventory
turnover and high sales volumes. This rapid inventory turnover, when combined
with operating efficiencies achieved by volume purchasing, efficient
distribution and reduced handling of merchandise in no-frills, self-service
warehouse facilities, enables the Company to operate profitably at significantly
lower gross margins than traditional wholesalers, discount retailers and
supermarkets.
The Company buys virtually all of its merchandise directly from
manufacturers for shipment either directly to the Company's selling warehouses
or to a consolidation point where various shipments are combined so as to
minimize freight and handling costs. As a result, the Company eliminates many of
the costs associated with multiple step distribution channels, which include
purchasing from distributors as opposed to manufacturers, use of central
receiving, storing and distributing warehouses and storage of merchandise in
locations off the sales floor. By providing this more cost effective means of
distributing goods, the Company meets the needs of business customers who
otherwise would pay a premium for small purchases and for the distribution
services of traditional wholesalers, and who cannot otherwise obtain the full
range of their product requirements from any single source. In addition, these
business members will often combine personal shopping with their business
purchases. The Company's merchandise selection is designed to appeal to both the
business and consumer requirements of its members by offering a wide range of
nationally branded and selected private label products, often in case, carton or
multiple-pack quantities, at low prices.
As of May 22, 1996, the Company operated 249 membership warehouses in 21
states (189 locations), nine Canadian provinces (55 locations), and the United
Kingdom (five locations, through a 60% owned subsidiary). In addition, the
Company operates 13 membership warehouses in Mexico through a joint venture in
which the Company has a 50% interest.
The Company is incorporated in the State of Delaware. The Company's offices
are located at 999 Lake Drive, Issaquah, Washington 98027, telephone (206)
313-8100.
USE OF PROCEEDS
All of the Shares offered hereby are being offered by the Selling
Stockholder. The Company will not receive any proceeds from the sale of the
Shares. See "Selling Stockholder."
SELLING STOCKHOLDER
Fourcar B.V., an indirect subsidiary of Carrefour S.A., is the owner of
21,191,301 shares of Common Stock (10.8% of the outstanding shares of Common
Stock) and is offering 19,500,000 shares of Common Stock pursuant to this
Prospectus, and has granted the U.S. Underwriters an option to acquire any or
all of its remaining 1,691,301 shares of Common Stock solely to cover
over-allotments. See "Underwriting." In the event the over-allotment option is
not exercised in full, the Selling Stockholder intends to sell the remainder of
its shares of Common Stock following completion of the Offerings pursuant to
Rule 144 under the Securities Act.
Daniel Bernard, Chief Executive Officer of Carrefour S.A., has been a
director of the Company since June 1, 1994. Pursuant to an agreement with the
Company, Carrefour S.A. has the right to have a representative on the Company's
Board of Directors so long as Carrefour S.A. beneficially owns 10% or more of
the outstanding Common Stock. Mr. Bernard intends to resign from the Company's
Board of Directors upon completion of the Offerings.
The Selling Stockholder and the Company have agreed to pay 39.6% and 60.4%,
respectively, of the expenses of registration (other than underwriting discounts
and commissions, which will be paid by the Selling Stockholder) in connection
with the sale of the shares of Common Stock offered hereby.
3
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
The selected consolidated financial information of the Company presented in
the table below for each of the last five fiscal years and the balance sheet
data as of the end of each such year has been derived from audited consolidated
financial statements included in the documents incorporated by reference in this
Prospectus. The selected consolidated financial information of the Company
presented in the table below as of and for the 24 weeks ended February 12, 1995
and February 18, 1996 is unaudited; however, in the opinion of management, all
adjustments, consisting only of normal recurring adjustments necessary for a
fair presentation of the results for such periods, have been included. The
results of operations for the 24 weeks ended February 18, 1996 may not be
indicative of results of operations to be expected for the full year. The table
should be read in conjunction with the Consolidated Financial Statements and
notes thereto included in the Company's Annual Report on Form 10-K for the year
ended September 3, 1995 and the Quarterly Reports on Form 10-Q for the fiscal
quarters ended November 26, 1995 and February 18, 1996 incorporated by reference
herein. See "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
24 WEEKS ENDED
FISCAL YEARS(1) --------------------------
---------------------------------------------------------- FEBRUARY 12, FEBRUARY 18,
1991 1992 1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ---------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales...................... $11,813,509 $13,820,380 $15,154,685 $16,160,911 $17,905,926 $8,173,878 $8,901,932
Gross profit (2)............... 1,057,686 1,254,917 1,403,532 1,498,020 1,680,078 774,640 860,824
Membership fees and other...... 228,742 276,998 309,129 319,732 341,360 163,367 170,327
Operating expenses (3)......... 952,259 1,156,493 1,347,832 1,457,613 1,588,106 719,051 793,336
Operating income............... 334,169 375,422 364,829 360,139 433,332 218,956 237,815
Other income (expense) (4)..... 7,872 (6,567) (28,366) (36,584) (65,128) (26,242) (31,894)
Provision for merger and
restructuring expenses (5)... -- -- -- (120,000) -- -- --
Income from continuing
operations................... $ 207,293 $ 223,022 $ 202,843 $ 110,898 $ 217,241 $ 113,298 $ 120,979
Discontinued operations (6)
Income (loss), net of tax.... 11,566 19,385 20,404 (40,766) -- -- --
Loss on disposal............. -- -- -- (182,500) (83,363) (83,363) --
Net income (loss).............. $ 218,859 $ 242,407 $ 223,247 $ (112,368) $ 133,878 $ 29,935 $ 120,979
Income (loss) per common and
common equivalent share
(fully diluted)
Continuing operations........ $.93 $.98 $.92 $.51(5) $1.05 $.52 $.59
Discontinued operations (6)
Income (loss) net of tax... .05 .08 .08 (.19) -- -- --
Loss on disposal........... -- -- -- (.83) (.37) (.36 ) --
---------- ---------- ---------- ---------- ---------- ------------ ------------
Net income (loss)............ $.98 $1.06 $1.00 $(.51) $.68 $.16 $.59
---------- ---------- ---------- ---------- ---------- ------------ ------------
---------- ---------- ---------- ---------- ---------- ------------ ------------
OPERATING DATA
Warehouses open at end of
period....................... 140 170 200 221 240 231 250
Comparable warehouse sales
increase (decrease) (7)...... 10% 6% (3)% (3)% 2% 0 % 4 %
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 1, AUGUST 30, AUGUST 29, AUGUST 28, SEPTEMBER 3, FEBRUARY 12, FEBRUARY 18,
1991 1992 1993 1994 1995 1995 1996
------------ ----------- ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Working capital (deficit)..... $ 304,703 $ 281,592 $ 127,312 $(113,009) $ 9,381 $ (128,036) $ (50,319)
Total assets.................. 2,986,094 3,576,543 3,930,799 4,235,659 4,437,419 4,120,788 4,600,691
Long-term debt (8)............ 500,440 813,976 812,576 795,492 1,094,615 794,004 1,092,842
Stockholders' equity (9)...... 1,429,703 1,593,943 1,796,728 1,684,960 1,530,744 1,410,808 1,628,674
Shares outstanding at end of
period (6).................. 219,612 216,020 217,074 217,795 195,164 194,806 195,394
</TABLE>
- ------------------------------
(1) The Company reports its financial position and results of operations
utilizing a 52- or 53-week fiscal year which ends on the Sunday nearest
August 31. Fiscal 1995 was a 53-week year; all other fiscal years presented
were 52 weeks.
(2) Gross profit is comprised of net sales less merchandise costs.
4
<PAGE>
(3) Operating expenses include selling, general and administrative expenses,
preopening expenses and provision for estimated warehouse closing costs.
(4) Other income (expense) includes interest expense, interest income and other
income or expense.
(5) Includes provision for merger and restructuring expenses of $120,000 pre-tax
($80,000 or $.36 per share, after tax) related to the merger of The Price
Company and Costco Wholesale Corporation in October 1993. If such provision
for merger and restructuring expenses were excluded, income from continuing
operations for fiscal 1994 would have been $190,898 or $.87 per share.
(6) In the fourth quarter of fiscal 1994, the Company reported its non-club real
estate segment as a discontinued operation. All of the assets of the
non-club real estate segment, along with certain other assets, were included
in the spin-off of Price Enterprises. In connection with the decision to
discontinue the non-club real estate operations, the Company recorded
primarily non-cash charges of $80,500 pre-tax ($47,500 after tax or $.22 per
share) related to a change in calculating estimated losses for assets which
are considered to be economically impaired and of $182,500 ($15,250 of which
related to expenses of the transaction) for estimated loss on disposal of
Price Enterprises. In the second quarter of fiscal 1995, an additional
non-cash charge of $83,363 for the loss on disposal of Price Enterprises was
recorded to reflect the consummation of the spin-off transaction. The
additional charge on the spin-off of Price Enterprises reflected the
difference between the $15.25 per share estimated trading price of Price
Enterprises Common Stock (used to calculate the estimated loss in the fourth
quarter of fiscal 1994) and the average closing sales price of Price
Enterprises Common Stock during the 20 trading days commencing on the sixth
trading day following the closing of the spin-off on December 20, 1994
(which was approximately $12.16 per share) multiplied by the 27 million
shares which were exchanged or sold during the second quarter of fiscal
1995.
(7) Calculated based on sales from warehouses open at least one year.
(8) Long-term debt includes convertible subordinated debt and other long-term
debt, net of current portion.
(9) PriceCostco did not pay any dividends on its Common Stock during the periods
presented.
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS
The following is a general discussion of certain United States Federal tax
consequences of the acquisition, ownership, and disposition of Common Stock by a
holder that, for United States Federal income tax purposes, is not a "United
States person" (a "Non-United States Holder"). This discussion is based upon the
United States Federal tax law now in effect, which is subject to change,
possibly retroactively. For purposes of this discussion, a "United States
person" means a citizen or resident of the United States; a corporation,
partnership, or other entity created or organized in the United States or under
the laws of the United States or of any political subdivision thereof; or an
estate or trust whose income is includible in gross income for United States
Federal income tax purposes regardless of its source. This discussion does not
consider any specific facts or circumstances that may apply to a particular
Non-United States Holder. Prospective investors are urged to consult their tax
advisors regarding the United States Federal tax consequences of acquiring,
holding, and disposing of Common Stock, as well as any tax consequences that may
arise under the laws of any foreign, state, local, or other taxing jurisdiction.
DIVIDENDS
Dividends paid to a Non-United States Holder will generally be subject to
withholding of United States Federal income tax at the rate of 30% unless the
dividend is effectively connected with the conduct of a trade or business within
the United States by the Non-United States Holder, in which case the dividend
will be subject to the United States Federal income tax on net income that
applies to United States persons generally (and, with respect to corporate
holders and under certain circumstances, the branch profits tax). Non-United
States Holders should consult any applicable income tax treaties, which may
provide for a lower rate of withholding or other rules different from those
described above. A Non-United States Holder may be required to satisfy certain
certification requirements in order to claim treaty benefits or otherwise claim
a reduction of or exemption from withholding under the foregoing rules.
GAIN ON DISPOSITION
A Non-United States Holder will generally not be subject to United States
Federal income tax on gain recognized on a sale or other disposition of Common
Stock unless (i) the gain is effectively connected with the conduct of a trade
or business within the United States by the Non-United States Holder, (ii) in
the case of a Non-United States Holder who is a nonresident alien individual and
holds the Common Stock as a
5
<PAGE>
capital asset, such holder is present in the United States for 183 or more days
in the taxable year and certain other requirements are met, or (iii) the
Non-United States Holder is subject to tax under the United States real property
holding company rules discussed below. Gain that is effectively connected with
the conduct of a trade or business within the United States by the Non-United
States Holder will be subject to the United States Federal income tax on net
income that applies to United States persons generally (and, with respect to
corporate holders and under certain circumstances, the branch profits tax) but
will not be subject to withholding. Non-United States Holders should consult
applicable treaties, which may provide for different rules.
The Company may be, or may subsequently become, treated as a United States
real property holding corporation for United States Federal income tax purposes
because of its ownership of substantial real estate assets in the United States.
If the Company were to be treated as a United States real property holding
corporation, then a Non-United States Holder who holds, directly or indirectly,
more than 5% of the Common Stock of the Company will be subject to United States
Federal income taxation on any gain realized from the sale or exchange of such
stock, unless an exemption is provided under an applicable treaty.
FEDERAL ESTATE TAXES
Common Stock owned or treated as owned by an individual who is not a citizen
or resident (as specially defined for United States Federal estate tax purposes)
of the United States at the date of death will be included in such individual's
estate for United States Federal estate tax purposes, unless an applicable
estate tax treaty provides otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Under temporary United States Treasury regulations, United States
information reporting requirements and backup withholding tax will generally not
apply to dividends paid on the Common Stock to a Non-United States Holder at an
address outside the United States. Payments by a United States office of a
broker of the proceeds of a sale of the Common Stock is subject to both backup
withholding at a rate of 31% and information reporting unless the holder
certifies its Non-United States Holder status under penalties of perjury or
otherwise establishes an exemption. Information reporting requirements (but not
backup withholding) will also apply to payments of the proceeds of sales of the
Common Stock by foreign offices of United States brokers, or foreign brokers
with certain types of relationships to the United States, unless the broker has
documentary evidence in its records that the holder is a Non-United States
Holder and certain other conditions are met, or the holder otherwise establishes
an exemption.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the Non-United
States Holder's United States Federal income tax liability, provided that the
required information is furnished to the Internal Revenue Service.
These information reporting and backup withholding rules are under review by
the United States Treasury and their application to the Common Stock could be
changed by future regulations. The Internal Revenue Service recently issued
proposed Treasury Regulations concerning the withholding of tax and reporting
for certain amounts paid to non-resident individuals and foreign corporations.
The proposed Treasury Regulations, if adopted in their present form, would be
effective for payments made after December 31, 1997. Prospective investors
should consult their tax advisors concerning the potential adoption of such
proposed Treasury Regulations and the potential effect on their ownership of the
Common Stock.
6
<PAGE>
UNDERWRITING
Subject to the terms and conditions of an underwriting agreement (the
"Underwriting Agreement"), the U.S. Underwriters named below (the "U.S.
Underwriters"), for whom Donaldson, Lufkin & Jenrette Securities Corporation,
Salomon Brothers Inc and UBS Securities LLC are acting as representatives (the
"U.S. Representatives"), and the international managers named below (the
"International Managers" and, together with the U.S. Underwriters, the
"Underwriters"), for whom Donaldson, Lufkin & Jenrette Securities Corporation,
UBS Limited and Salomon Brothers International Limited are acting as
representatives (the "International Representatives" and, together with the U.S.
Representatives, the "Representatives"), have severally agreed to purchase from
the Selling Stockholder, and the Selling Stockholder has agreed to sell to the
Underwriters at the public offering price set forth on the cover page of this
Prospectus less the underwriting discounts and commissions, the Shares. The
respective number of Shares that each Underwriter has agreed to purchase is set
forth opposite its name below:
<TABLE>
<CAPTION>
U.S. UNDERWRITERS NUMBER OF SHARES
- ------------------------------------------------------------------------------------- -----------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation..................................
Salomon Brothers Inc.................................................................
UBS Securities LLC...................................................................
-----------------
U.S. Offering subtotal............................................................. 15,600,000
-----------------
<CAPTION>
INTERNATIONAL MANAGERS NUMBER OF SHARES
- ------------------------------------------------------------------------------------- -----------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation..................................
UBS Limited..........................................................................
Salomon Brothers International Limited...............................................
-----------------
International Offering subtotal.................................................... 3,900,000
-----------------
Total............................................................................ 19,500,000
-----------------
-----------------
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to the approval of certain legal matters by
their counsel and to certain other conditions precedent. The Underwriting
Agreement also provides that the Company and the Selling Stockholder will
indemnify the Underwriters and certain persons controlling the Underwriters
against certain liabilities and expenses, including under the Securities Act, or
will contribute to payments the Underwriters are required to make in respect
thereof. The nature of the Underwriters' obligations under the Underwriting
Agreement is such that they are committed to purchase all of the Shares if they
purchase any of the Shares. The offering price and underwriting discounts and
commissions per share for the U.S. Offering and the International Offering are
identical.
The Underwriters have advised the Selling Stockholder that they propose to
offer the Shares to the public initially at the public offering price set forth
on the cover page of this Prospectus, and to certain dealers at such price less
a concession not in excess of $ per Share. The Underwriters may allow, and
such dealers may reallow, a concession not in excess of $ per Share to
certain other dealers. After the public offering of the Shares, the public
offering price, concession and reallowance may be changed by the Underwriters.
The Selling Stockholder has granted to the U.S. Underwriters an option to
purchase up to an aggregate of 1,691,301 additional shares of the Company's
Common Stock at the public offering price net of underwriting discounts and
commissions, solely to cover over-allotments. Such option may be exercised at
any time until 30 days after the date of this Prospectus. To the extent that the
U.S. Representatives exercise such option, each of the U.S. Underwriters will be
committed, subject to certain conditions, to purchase a number of option shares
proportionate to such U.S. Underwriter's initial commitment as indicated in the
preceding table.
The Company has agreed with the Underwriters, subject to certain exceptions,
not to, directly or indirectly, offer, sell, contract to sell, grant any option
to purchase or otherwise dispose of, without the prior
7
<PAGE>
written consent of the Representatives, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for, or warrants,
options or rights to purchase or acquire, Common Stock or in any other manner
transfer all or a portion of the economic consequences associated with the
ownership of any Common Stock, or enter into any agreement to do any of the
foregoing, for a period of 90 days after the date of the Underwriting Agreement.
Pursuant to an Agreement Between U.S. Underwriters and International
Managers (the "Agreement Between U.S. Underwriters and International Managers"),
each U.S. Underwriter has represented and agreed that, with respect to the
Common Stock included in the U.S. Offering and with certain exceptions, (a) it
is not purchasing any Common Stock for the account of anyone other than a United
States or Canadian Person (as defined below) and (b) it has not offered or sold,
and will not offer or sell, directly or indirectly, any Common Stock or
distribute this Prospectus outside of the United States or Canada or to anyone
other than a United States or Canadian Person. Pursuant to the Agreement Between
U.S. Underwriters and International Managers, each International Manager has
represented and agreed that, with respect to the Common Stock included in the
International Offering and with certain exceptions, (a) it is not purchasing any
Common Stock for the account of any United States or Canadian Person and (b) it
has not offered or sold, and will not offer or sell, directly or indirectly, any
Common Stock or distribute this Prospectus within the United States or Canada or
to any United States or Canadian Person. The foregoing limitations do not apply
to stabilization transactions and to certain other transactions among the
International Managers and the U.S. Underwriters. As used herein, "United States
or Canadian Person" means any national or resident of the United States or
Canada or any corporation, pension, profit-sharing or other trust or other
entity organized under the laws of the United States or Canada or of any
political subdivision thereof (other than a branch located outside the United
States or Canada of any United States or Canadian Person) and includes any
United States or Canadian branch of a person who is not otherwise a United
States or Canadian person, and "United States" means the United States of
America, its territories, its possessions and all areas subject to its
jurisdiction.
Pursuant to the Agreement between U.S. Underwriters and International
Managers, sales may be made between U.S. Underwriters and the International
Managers of any number of shares of Common Stock to be purchased pursuant to the
Underwriting Agreement as may be mutually agreed. The per share price and
currency of settlement of any shares of Common Stock so sold shall be the public
offering price set forth on the cover page hereof, in United States dollars,
less an amount not greater than the per share amount of the concession to
dealers set forth above.
Pursuant to the Agreement Between U.S. Underwriters and International
Managers, each U.S. Underwriter has represented that it has not offered or sold,
and has agreed not to offer or sell, any Common Stock, directly or indirectly,
in Canada in contravention of the securities laws of Canada or any province or
territory thereof and has represented that any offer of Common Stock in Canada
will be made only pursuant to an exemption from the requirement to file a
prospectus in the province or territory of Canada in which such offer is made.
Each U.S. Underwriter has further agreed to send any dealer who purchases from
it any Common Stock a notice stating in substance that, by purchasing such
Common Stock, such dealer represents and agrees that it has not offered or sold,
and will not offer or sell, directly or indirectly, any of such Common Stock in
Canada in contravention of the securities laws of Canada or any province or
territory thereof and that any offer of Common Stock in Canada will be made only
pursuant to an exemption from the requirements to file a prospectus in the
province or territory of Canada in which such offer is made, and that such
dealer will deliver to any other dealer to whom it sells any of such Common
Stock a notice to the foregoing effect.
Pursuant to the Agreement Between U.S. Underwriters and International
Managers, each International Manager has represented and agreed that (i) it has
not offered or sold and during the period of six months from the date of this
Prospectus will not offer or sell any Common Stock to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which do not
constitute an offer to the public in the United Kingdom for the purposes of the
Public Offers of Securities Regulations 1995 (the "Regulations"); (ii) it has
complied and will comply with all
8
<PAGE>
applicable provisions of the Financial Services Act of 1986 of Great Britain and
the Regulations with respect to anything done by it in relation to the Common
Stock in, from or otherwise involving the United Kingdom; and (iii) it has only
issued or passed on and will only issue or pass on in the United Kingdom any
document received by it in connection with the issue of the Common Stock to a
person who is of a kind described in Article 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1995 of Great Britain or is
a person to whom the document may otherwise lawfully be issued or passed on.
No action has been taken in any jurisdiction by the Company, the Selling
Stockholder or the Underwriters that would permit a public offering of Common
Stock offered pursuant to the Offerings in any jurisdiction where action for
that purpose is required, other than the United States. The distribution of this
Prospectus and the offering or sale of the Common Stock offered hereby in
certain jurisdictions may be restricted by law. Accordingly, the Common Stock
offered hereby may not be offered or sold, directly or indirectly, and neither
this Prospectus nor any other offering material or advertisements in connection
with such Common Stock may be distributed or published, in or from any
jurisdiction, except under circumstances that will result in compliance with
applicable rules and regulations of any such jurisdiction. Such restrictions may
be set out in applicable Prospectus supplements. Persons into whose possession
this Prospectus comes are required by the Company, the Selling Stockholder and
the Underwriters to inform themselves about and to observe any applicable
restrictions. This Prospectus does not constitute an offer of, or an invitation
to subscribe for purchase of, any shares of Common Stock and may not be used for
the purpose of an offer to, or solicitation by, anyone in any jurisdiction or in
any circumstances in which such offer or solicitation is not authorized or is
unlawful.
Certain of the Underwriters have performed investment banking services for
the Company, for which they received customary compensation. Hamilton E. James,
a Managing Director of DLJ, is a director of the Company.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby has been
passed upon for the Company by Foster Pepper & Shefelman, Seattle, Washington.
Certain legal matters in connection with the Offerings will be passed upon for
the Underwriters by Skadden, Arps, Slate, Meagher & Flom, Los Angeles,
California. Members of Foster Pepper & Shefelman own 6,667 shares of the
Company's Common Stock. Skadden, Arps, Slate, Meagher & Flom has from time to
time represented the Company on unrelated matters.
EXPERTS
The consolidated financial statements and schedules of the Company for each
of the three fiscal years in the period ended September 3, 1995, incorporated
herein by reference, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto. In those
reports, that firm states that with respect to The Price Company for fiscal year
1993, its opinion is based on the report of other independent auditors, namely
Ernst & Young LLP. The consolidated financial statements referred to above have
been incorporated herein by reference in reliance upon the reports of said firms
and upon the authority of those firms as experts in accounting and auditing.
With respect to the unaudited financial information of the Company for the
12-week period ended November 26, 1995 and for the 12- and 24-week periods ended
February 18, 1996, incorporated herein by reference, Arthur Andersen LLP has
applied limited procedures in accordance with professional standards for a
review of such information. However, their separate reports thereon and
incorporated by reference herein state that they did not audit and they do not
express an opinion on that interim financial information. Accordingly, the
degree of reliance on their reports on that information should be restricted in
light of the limited nature of the review procedures applied. In addition,
Arthur Andersen LLP is not subject to the liability provisions of Section 11 of
the Securities Act for their reports on the unaudited interim financial
information because neither of those reports is a "report" or a "part" of this
Prospectus prepared or certified by Arthur Andersen LLP within the meaning of
Sections 7 or 11 of the Securities Act.
9
<PAGE>
- --------------------------------------------------
--------------------------------------------------
- --------------------------------------------------
--------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
-------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS
Available Information........................ 2
Incorporation of Certain Documents by
Reference................................... 2
The Company.................................. 3
Use of Proceeds.............................. 3
Selling Stockholder.......................... 3
Selected Financial and Operating Data........ 4
Certain United States Federal Tax
Consequences to Non-United States Holders... 5
Underwriting................................. 7
Legal Matters................................ 9
Experts...................................... 9
</TABLE>
19,500,000 SHARES
PRICECOSTCO, INC.
COMMON STOCK
-----------------
PROSPECTUS
-----------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON BROTHERS INC
UBS SECURITIES
- --------------------------------------------------
--------------------------------------------------
- --------------------------------------------------
--------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
SUBJECT TO COMPLETION, DATED MAY 23, 1996
PROSPECTUS
JUNE , 1996
19,500,000 SHARES
PRICECOSTCO, INC.
COMMON STOCK
This Prospectus relates to 19,500,000 shares (the "Shares") of common stock,
$.01 par value (the "Common Stock") of Price/Costco, Inc., a Delaware
corporation (the "Company" or "PriceCostco"), owned by Fourcar B.V. (the
"Selling Stockholder"). The Company will not receive any of the proceeds from
sales of the Shares made hereunder. See "Use of Proceeds." Of the 19,500,000
Shares offered by the Selling Stockholder, 3,900,000 Shares are being offered
for sale outside the United States and Canada in an offering by the
International Managers (the "International Offering") and 15,600,000 Shares are
being offered for sale in the U.S. and Canada in a concurrent offering by the
U.S. Underwriters (the "U.S. Offering" and, together with the International
Offering, the "Offerings"), subject to transfers between the U.S. Underwriters
and the International Managers. See "Underwriting."
The Common Stock is traded on the Nasdaq National Market under the symbol
"PCCW". On May 21, 1996, the last reported sale price of the Common Stock was
$20.375 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
PRICE UNDERWRITING PROCEEDS TO
TO DISCOUNTS AND SELLING
PUBLIC COMMISSIONS(1) STOCKHOLDER(2)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share..................................... $ . $ $
Total(3)...................................... $ $ $
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) THE COMPANY AND THE SELLING STOCKHOLDER HAVE AGREED TO INDEMNIFY THE SEVERAL
U.S. UNDERWRITERS AND INTERNATIONAL MANAGERS (COLLECTIVELY, THE
"UNDERWRITERS") AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES UNDER THE
SECURITIES ACT OF 1933. SEE "UNDERWRITING."
(2) BEFORE DEDUCTING ESTIMATED EXPENSES PAYABLE BY THE SELLING STOCKHOLDER OF
$ .
(3) THE SELLING STOCKHOLDER HAS GRANTED THE U.S. UNDERWRITERS AN OPTION
EXERCISABLE WITHIN 30 DAYS AFTER THE DATE HEREOF TO PURCHASE UP TO 1,691,301
ADDITIONAL SHARES OF COMMON STOCK, ON THE SAME TERMS AND CONDITIONS AS SET
FORTH ABOVE, AT THE PRICE TO PUBLIC, LESS THE UNDERWRITING DISCOUNTS AND
COMMISSIONS, SOLELY TO COVER OVER-ALLOTMENTS, IF ANY. IF THE U.S.
UNDERWRITERS EXERCISE SUCH OPTION IN FULL, THE TOTAL PRICE TO PUBLIC,
UNDERWRITING DISCOUNTS AND COMMISSIONS AND PROCEEDS TO SELLING STOCKHOLDER
WILL BE $ , $ , AND $ , RESPECTIVELY. SEE "UNDERWRITING."
The Shares offered hereby are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by them and subject to various
prior conditions, including the right to reject any order in whole or in part.
It is expected that delivery of the Shares will be made in New York, New York on
or about June , 1996.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
UBS LIMITED
SALOMON BROTHERS INTERNATIONAL LIMITED
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
- --------------------------------------------------
--------------------------------------------------
- --------------------------------------------------
--------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
-------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS
Available Information........................ 2
Incorporation of Certain Documents by
Reference................................... 2
The Company.................................. 3
Use of Proceeds.............................. 3
Selling Stockholder.......................... 3
Selected Financial and Operating Data........ 4
Certain United States Federal Tax
Consequences to Non-United States Holders... 5
Underwriting................................. 7
Legal Matters................................ 9
Experts...................................... 9
</TABLE>
19,500,000 SHARES
PRICECOSTCO, INC.
COMMON STOCK
-----------------
PROSPECTUS
-----------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
UBS LIMITED
SALOMON BROTHERS
INTERNATIONAL LIMITED
- --------------------------------------------------
--------------------------------------------------
- --------------------------------------------------
--------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses (not including underwriting commissions and fees) of issuance
and distribution of the securities, which will be paid 60.4% and 39.6% by the
Company and the Selling Stockholder, respectively, are estimated to be:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee....................... $ 148,431
Accounting Fees and Expenses.............................................. $ 20,000
Attorneys' Fees and Expenses.............................................. $ 20,000
Printing Expenses......................................................... $ *
Blue Sky Filing Fees and Expenses (including attorneys' fees)............. $ *
Miscellaneous Expenses.................................................... $ *
Total................................................................. $ *
---------
---------
</TABLE>
- ------------------------
* To be completed by amendment
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Restated Certificate of Incorporation of the Company (the "Certificate
of Incorporation") and the Amended and Restated Bylaws of the Company (the
"Bylaws") provide for indemnification of present and former directors and
officers of the Company, The Price Company ("Price") and Costco Wholesale
Corporation ("Costco") and persons serving as directors, officers, employees or
agents of another corporation or entity at the request of the Company, Price or
Costco (each, an "Indemnified Party"), each to the fullest extent permitted by
the Delaware General Corporation Law (the "DGCL"). Section 145 of the DGCL
allows indemnification of specified persons by Delaware corporations, and
describes requirements and limitations on such powers of indemnification. The
Company has included in the Certificate of Incorporation and the Bylaws
provisions which require the Company to indemnify an Indemnified Party if the
standard of conduct and other requirements set forth therein and by the DGCL are
met.
Indemnified Parties are specifically indemnified in the Certificate of
Incorporation and the Bylaws (the "Indemnification Provisions") from expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with an action, suit or proceeding (i) by reason of the fact that
he or she is or was a director or officer of the Company, Price or Costco or
served as a director, officer, employee or agent at the request of the Company,
Price or Costco or (ii) by or in right of the Company, Price or Costco, provided
that indemnification is permitted only with judicial approval if the Indemnified
Party is adjudged to be liable to the Company. Such Indemnified Party must have
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the subject corporation and, with respect
to any criminal action or proceeding, must have had no reasonable cause to
believe his or her conduct was unlawful. Any indemnification must be authorized
based on a determination that the indemnification is proper as the applicable
standard of conduct has been met by the Indemnified Party. Such determination
will be made by a majority vote of a quorum of the Board consisting of directors
not a party to the suit, action or proceeding, by a written opinion of
independent legal counsel or by the stockholders. In the event that a
determination is made that a director or officer is not entitled to
indemnification under the Indemnification Provisions, the Indemnification
Provisions provide that the Indemnified Party may seek a judicial determination
of his or her rights to indemnification. The Indemnification Provisions further
provide that the Indemnified Party is entitled to indemnification for and
advancement of all expenses (including attorneys' fees) incurred in any
proceeding seeking to collect from the Company an indemnity claim or advancement
of expenses under the Indemnification Provisions whether or not such Indemnified
Party is successful.
The Company will pay expenses incurred by a director or officer of the
Company, or a former director or officer of Price of Costco, in advance of the
final disposition of an action, suit or proceeding, if he or she undertakes to
repay amounts advanced if it is ultimately determined that he or she is not
entitled to be
II-1
<PAGE>
indemnified by the Company. The Indemnification Provisions are expressly not
exclusive of any other rights of indemnification or advancement of expenses
pursuant to the Bylaws or any agreement, vote of the stockholders or
disinterested directors or pursuant to judicial direction.
The Company is authorized to purchase insurance on behalf of an Indemnified
Party for liabilities incurred, whether or not the Company would have the power
or obligation to indemnify him or her pursuant to the Certificate of
Incorporation or the DGCL. The Company has obtained such insurance.
The Company has entered into indemnification agreements with all of its
directors providing for the foregoing.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement (to be filed by amendment).
5.1 Opinion of Foster Pepper & Shefelman.
15.1 Letter of Arthur Andersen LLP regarding unaudited interim financial information
(included in its consent filed as Exhibit 23.1).
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Foster Pepper & Shefelman (included in its opinion filed as Exhibit 5.1).
23.3 Consent of Ernst & Young LLP.
24.1 Power of Attorney (included on the signature page of this Registration Statement).
</TABLE>
ITEM 17. UNDERTAKINGS.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE offering
thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(i) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial BONA FIDE offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Issaquah, State of Washington, on the 22nd day of
May, 1996.
PRICE/COSTCO, INC.
By: /s/ JAMES D. SINEGAL
-----------------------------------
Its: President, Chief Executive
Officer and Director
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes
Jeffrey H. Brotman, James D. Sinegal, Richard A. Galanti and Richard J. Olin, or
any of them, as attorneys-in-fact with full power of substitution, to execute in
the name and on behalf of each person, individually and in each capacity stated
below, and to file, any and all amendments to this Registration Statement and
any Rule 462(b) registration statement, including any and all post-effective
amendments.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on May 22, 1996.
<TABLE>
<C> <S>
/s/ JEFFREY H. BROTMAN
- ------------------------------------ Chairman of the Board of Directors
Jeffrey H. Brotman
/s/ JAMES D. SINEGAL
- ------------------------------------ President, Chief Executive Officer and Director
James D. Sinegal
/s/ RICHARD A. GALANTI
- ------------------------------------ Executive Vice President, Chief Financial Officer and
Richard A. Galanti Director (Principal Financial Officer)
/s/ RICHARD D. DICERCHIO
- ------------------------------------ Executive Vice President, COO--Merchandising and
Richard D. DiCerchio Director
/s/ DAVID S. PETTERSON
- ------------------------------------ Senior Vice President and Corporate Controller
David S. Petterson (Principal Accounting Officer)
- ------------------------------------
Daniel Bernard Director
/s/ HAMILTON E. JAMES
- ------------------------------------ Director
Hamilton E. James
/s/ RICHARD M. LIBENSON
- ------------------------------------ Director
Richard M. Libenson
/s/ JOHN W. MEISENBACH
- ------------------------------------ Director
John W. Meisenbach
/s/ FREDRICK O. PAULSELL, JR.
- ------------------------------------ Director
Fredrick O. Paulsell, Jr.
/s/ JILL S. RUCKELSHAUS
- ------------------------------------ Director
Jill S. Ruckelshaus
</TABLE>
II-3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
- ----------- ------------------------------------------------------------------------------------------------ ---------
<C> <S> <C>
1.1 Form of Underwriting Agreement..................................................................
5.1 Opinion of Foster Pepper & Shefelman
15.1 Letter of Arthur Andersen LLP regarding unaudited interim financial information (included in its
consent filed as Exhibit 23.1).................................................................
23.1 Consent of Arthur Andersen LLP..................................................................
23.2 Consent of Foster Pepper & Shefelman (included in its opinion filed as Exhibit 5.1).............
23.3 Consent of Ernst & Young LLP....................................................................
24.1 Power of Attorney (included on the signature page of this Registration Statement)...............
</TABLE>
II-4
<PAGE>
EXHIBIT 5.1
May 22, 1996
Board of Directors
PriceCostco, Inc.
999 Lake Drive
Issaquah, WA 98027
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel for PriceCostco, Inc., a Delaware
corporation (the "Company") in connection with the preparation and
filing of a Registration Statement on Form S-3 ("Registration
Statement") under the Securities Act of 1933, as amended, for up to
21,191,301 shares of the Company's common stock (the "Shares").
The Shares are currently outstanding and are held of record by
Fourcar, B.V.
We have examined the Registration Statement and the actions of
the Board of Directors of the Company in authorizing the various
issuances of the Shares and such other documents and records as we
deem necessary for the purpose of this opinion.
Based on the foregoing, we are of the opinion that the Shares
are legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as as exhibit
to the Registration Statement and to the reference to our firm
under the heading "Legal Matters" in the Prospectus included in the
Registration Statement.
Very truly yours,
FOSTER PEPPER & SHEFELMAN
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EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-3, of our report dated
October 25, 1995, included in Price/Costco, Inc.'s Form 10-K for the 53-week
period ended September 3, 1995, and to all references to our firm included in
this Registration Statement.
We are aware that Price/Costco, Inc. has incorporated by reference in this
Registration Statement its Form 10-Q filings for the 12-week period ended
November 26, 1995 and for the 12- and 24-week periods ended February 18, 1996.
These filings include our reports dated December 18, 1995 and March 20, 1996,
covering the unaudited interim financial information contained therein. Pursuant
to Regulation C of the Securities Act of 1933, these reports are not considered
a part of the Registration Statement prepared or certified by our firm or
reports prepared or certified by our firm within the meaning of Sections 7 and
11 of the Act.
ARTHUR ANDERSEN LLP
Seattle, Washington
May 21, 1996
<PAGE>
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Price/Costco, Inc.
and to the incorporation by reference therein of our report dated November 19,
1993, with respect to the consolidated financial statements and schedules of The
Price Company (not presented separately) included in the Annual Report (Form
10-K) of Price/Costco, Inc. for the year ended September 3, 1995 filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
San Diego, California
May 21, 1996
