<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20459
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
(FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE TRANSITION PERIOD FROM ______ TO ______
COMMISSION FILE NUMBER 1-5858
PRICE/COSTCO, INC.
401(k) RETIREMENT PLAN
------------------------------
PRICE/COSTCO, INC.
999 LAKE DRIVE
ISSAQUAH, WASHINGTON 98027
-------------------------------
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated June 24, 1996, on the financial statements of the
Price/Costco 401(k) Retirement plan included in the annual report on Form 11-K
for the year ended December 31, 1995, into the Company's previously filed
Registration Statement File Number 33-50799 on Form S-8.
Arthur Andersen LLP
Seattle, Washington
June 27, 1996
<PAGE>
PRICE/COSTCO, INC.
401(K) RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
-----------------------------------------------------------------------------------
Cash Stable Equity Spectrum Spectrum PriceCostco
and Cash Value Income Income Growth Common
Equivalents Fund Fund Fund Fund Stock Total
----------- ----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments at fair value-
Cash and cash equivalents $61,343 $ - $ - $ - $ - $ - $ 61,343
Registered investment
company funds - 28,521,752 28,041,414 70,144,239 27,867,707 - 154,575,112
PriceCostco common stock-
1,748,012 shares held - - - - - 26,657,187 26,657,187
------- ----------- ----------- ----------- ----------- ----------- ------------
Total investments 61,343 28,521,752 28,041,414 70,144,239 27,867,707 26,657,187 181,293,642
------- ----------- ----------- ----------- ----------- ----------- ------------
CONTRIBUTIONS RECEIVABLE:
Employer - 11,986,840 5,152,781 1,213,126 4,903,496 5,001,593 28,257,836
Employee - 220,781 221,796 63,279 213,188 193,592 912,636
------- ----------- ----------- ----------- ----------- ----------- ------------
Total receivables - 12,207,621 5,374,577 1,276,405 5,116,684 5,195,185 29,170,472
------- ----------- ----------- ----------- ----------- ----------- ------------
LIABILITIES:
Excess contributions
payable to participants - (18,458) (20,056) (3,266) (22,626) (23,521) (87,927)
------- ----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $61,343 $40,710,915 $33,395,935 $71,417,378 $32,961,765 $31,828,851 $210,376,187
======= =========== =========== =========== =========== =========== ============
</TABLE>
The accompanying notes and schedules are an integral part of this statement.
<PAGE>
PRICE/COSTCO INC.
401(K) RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
----------------------------------------------------------------------
Stable Ginnie Equity Capital Spectrum
Value Mae Income Appreciation Growth
Fund Fund Fund Fund Fund Total
----------- ---------- ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments at fair value-
Registered investment company funds $ 2,313,450 $3,214,961 $5,008,665 $4,015,387 $3,130,675 $17,683,138
Contributions receivable-
Employee 28,435 - 108,000 - 83,990 220,425
Employer 14,006 - 54,882 - 41,368 110,256
---------- ---------- ---------- ---------- ---------- -----------
Total receivables 42,441 - 162,882 - 125,358 330,681
---------- ---------- ---------- ---------- ---------- -----------
Net assets available for plan benefits $2,355,891 $3,214,961 $5,171,547 $4,015,387 $3,256,033 $18,013,819
========== ========== ========== ========== ========== ===========
</TABLE>
The accompanying notes and schedules are an integral part of this statement.
<PAGE>
PRICE/COSTCO, INC.
401(K) RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDING DECEMBER 31, 1995
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
-------------------------------------------------------------------------------------------
Cash
and Capital
Cash Stable Equity Spectrum Spectrum PriceCostco Ginnie Apprecia-
Equiva- Value Income Income Growth Common Mae tion
lents Fund Fund Fund Fund Stock Fund Fund Total
------- ----------- ----------- ----------- ----------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET INVESTMENT RESULTS:
Net appreciation
(depreciation) in
fair value of assets $ - $ - $ 4,248,798 $ 7,717,503 $ 3,527,570 $ 3,321,258 $ (10,862) $ 9,956 $ 18,814,223
Interest - 1,510,345 - - - - 669 - 1,511,014
Dividends - - 1,410,134 5,085,118 1,882,549 721 - - 8,378,522
------- ----------- ----------- ----------- ----------- ----------- ---------- ---------- ------------
Total net investment
results - 1,510,345 5,658,932 12,802,621 5,410,119 3,321,979 (10,193) 9,956 28,703,759
------- ----------- ----------- ----------- ----------- ----------- ---------- ---------- ------------
CONTRIBUTIONS TO THE PLAN:
Employee - 5,938,704 5,555,505 1,475,066 4,972,707 5,356,987 - - 23,298,969
Employer - 13,530,325 6,328,814 1,332,393 5,944,595 6,128,888 - - 33,265,015
Rollovers - 62,465 32,865 30,896 66,370 16,788 - - 209,384
------- ----------- ----------- ----------- ----------- ----------- ---------- ---------- ------------
Total contributions - 19,531,494 11,917,184 2,838,355 10,983,672 11,502,663 - - 56,773,368
------- ----------- ----------- ----------- ----------- ----------- ---------- ---------- ------------
DISTRIBUTIONS TO
PARTICIPANTS:
Hardship withdrawals - (1,136,757) (447,734) (154,273) (539,941) (923,313) - - (3,202,018)
Terminations - (982,822) (868,973) (4,610,409) (590,547) (372,155) - - (7,424,906)
Excess contributions - (18,458) (20,056) (3,266) (22,626) (23,521) - - (87,927)
------- ----------- ----------- ----------- ----------- ----------- ---------- ---------- ------------
Total distributions - (2,138,037) (1,336,763) (4,767,948) (1,153,114) (1,318,989) - - (10,714,851)
------- ----------- ----------- ----------- ----------- ----------- ---------- ---------- ------------
INTERFUND TRANSFERS 61,343 523,773 8,156,117 (5,925,886) 3,585,351 375,968 (3,047,615) (3,729,051) -
TRANSFERS FROM
PRIOR PLANS - 19,050,678 4,257,624 66,608,652 11,103,672 17,947,230 - - 118,967,856
TRANSFERS TO
PRICE ENTERPRISE,
INC. PLAN - (123,229) (428,706) (138,416) (223,968) - (157,153) (296,292) (1,367,764)
NET INCREASE
(DECREASE) IN NET
ASSETS AVAILABLE FOR
PLAN BENEFITS 61,343 38,355,024 28,224,388 71,417,378 29,705,732 31,828,851 (3,214,961) (4,015,387) 192,362,368
NET ASSETS AVAILABLE FOR
PLAN BENEFITS, beginning
of year - 2,355,891 5,171,547 - 3,256,033 - 3,214,961 4,015,387 18,013,819
------- ----------- ----------- ----------- ----------- ----------- ---------- ---------- ------------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS,
end of year $61,343 $40,710,915 $33,395,935 $71,417,378 $32,961,765 $31,828,851 $ - $ - $210,376,187
======= =========== =========== =========== =========== =========== ========== ========== ============
</TABLE>
The accompanying notes and schedules are an integral part of this statement.
<PAGE>
PRICE/COSTCO, INC.
401(K) RETIREMENT PLAN
EIN: 33-0572969
PIN 002
ITEM 27D "SCHEDULE OF REPORTABLE TRANSACTIONS"
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Category (i) - Single transactions in excess of 5 percent of plan assets at January 1, 1995
- -------------------------------------------------------------------------------------------
Number of Shares/Units or Total Purchase or
Description of Assets Principal Amount Sale Price Cost of Asset Gain or (loss)
- ------------------------ ------------------------- ----------------- ------------- --------------
<S> <C> <C> <C> <C>
Stable Value Fund
Purchase 21,419,968 $21,419,968 $21,419,968 $ -
Sale 2,313,450 2,313,450 2,313,450 -
Equity Income Fund - Purchase 481,859 7,723,617 7,723,617 -
Spectrum Income Fund - Purchase 6,988,609 70,553,682 70,533,682 -
Spectrum Growth Fund - Purchase 989,975 10,952,437 10,952,437 -
PriceCostco Common Stock Purchase 1,391,645 26,731,890 26,731,890 -
Ginnie Mae Fund - Sale 362,045 3,204,099 3,449,014 (244,915)
Capital Appreciation Fund Sale 331,850 4,025,343 4,081,722 (56,379)
</TABLE>
The accompanying notes are an integral part of this schedule.
<PAGE>
PRICE/COSTCO, INC.
401(K) RETIREMENT PLAN
EIN: 33-0572969
PIN 002
ITEM 27D "SCHEDULE OF REPORTABLE TRANSACTIONS"
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Category (iii) - Series of transactions in excess of 5% of plan assets at January 1, 1995
- -----------------------------------------------------------------------------------------
Description of Assets Number of Purchases Number of Sales Purchase Price Selling Price Gain or (loss)
- ------------------------- ------------------- --------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Stable Value Fund 94 111 $31,398,556 $ 5,293,538 $ -
Equity Income Fund 160 48 19,690,178 904,994 124,208
Spectrum Income Fund 45 156 75,466,607 13,039,872 916,256
Spectrum Growth Fund 157 50 21,968,759 763,541 102,392
PriceCostco Common Stock 97 93 34,035,160 1,915,292 (337,213)
</TABLE>
The accompanying notes are an integral part of this schedule.
<PAGE>
PRICE
COSTCO
401(K) RETIREMENT PLAN
EIN 33-0572969
PIN 002
FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1995 AND 1994
TOGETHER WITH AUDITORS' REPORT
<PAGE>
PRICE/COSTCO, INC.
401(K) RETIREMENT PLAN
FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1995 AND 1994
INDEX
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS
Statements of Net Assets Available for Plan Benefits
Statement of Changes in Net Assets Available for Plan Benefits
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
SUPPLEMENTAL INFORMATION
Schedule I, Item 27a - Schedule of Assets Held for Investment Purposes
as of December 31, 1995
Schedule II, Item 27d - Schedule of Reportable Transactions for the Year
Ended December 31, 1995
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Benefit Committee of
the Price/Costco, Inc. 401(K) Retirement Plan:
We have audited the accompanying statements of net assets available for plan
benefits of PriceCostco 401(K) Retirement Plan as of December 31, 1995 and 1994,
and the related statement of changes in net assets available for plan benefits
for the year ended December 31, 1995. 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, 1995 and 1994, and the changes in its net assets available for
benefits for the year ended December 31, 1995, 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 of assets
held for investment purposes and reportable transactions are presented for
purposes of complying with the Department of Labor's 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. The fund
information in the statements of net assets available for plan benefits and the
statement of changes in net assets available for plan benefits are presented for
the purpose 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.
Arthur Andersen LLP
Seattle, Washington,
June 24, 1996
<PAGE>
PRICE/COSTCO INC.
401(K) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1995
1. PLAN DESCRIPTION:
The following description of the Price/Costco Inc. (the Company or PriceCostco)
401(k) Retirement Plan (the Plan) provides only general information, reflecting
amendments effective as of January 1, 1995. Participants should refer to the
Plan agreement for a more complete description of the Plan's provisions. The
Price Company and Costco Wholesale Corporation are wholly owned subsidiaries of
the Company.
GENERAL
The Plan is a defined contribution plan subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA). Prior to January 1,
1995, the Plan was named the Price Company 401(k) Plan, and eligible
participants included certain employees of the Price Company.
Effective January 1, 1995, the Plan was amended and renamed the PriceCostco
401(k) Retirement Plan, and participation was expanded to include all
participants formerly covered by The Costco Wholesale Corporation Employees'
401(k) Retirement Plan and The Price Company Profit Sharing Plan (the Combining
Plans). Effective March 15, 1995 assets totaling $118,967,856 were transferred
to the Plan from the Combining Plans. Effective January 3, 1995, assets
totaling $1,367,764 were transferred from the Plan into the Price Enterprises,
Inc. 401(K) Plan. Price Enterprises, Inc. was a wholly owned subsidiary of the
Company that was spun off from the Company as of December 21, 1994.
ELIGIBILITY
The Plan covers certain employees of Costco Wholesale Corporation and The Price
Company, who have completed at least 1,000 hours of service within one year,
based on their date of hire and are age 18 or older. Price Club employees
covered by a collective bargaining agreement in the State of California are not
eligible for participation.
<PAGE>
CONTRIBUTIONS
Each year, participants may contribute from 1% to 15% of their compensation
before income taxes, subject to certain limitations set by the Internal Revenue
Service (IRS). Excess contributions returned to participants represented
contributions made in excess of IRS limitations. Participants may also
contribute amounts representing distributions from other qualified benefit or
contribution plans (known as "rollover" contributions).
The Company contributes 50% of the first $1,000 of compensation that a
participant contributes to the Plan. The Company may, at its discretion, make a
qualified nonelective contribution. In addition, for each plan year, the
Company may contribute a discretionary amount to the account of each participant
who is employed by the Company on the last day of the plan year. The
discretionary contribution may range from 3% to 10% of compensation based on
years of service. All contributions are made to the Plan in cash.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the salary deferral amount, employer
matching and discretionary contributions, and any qualified non-elective
contributions. All contributions to the participant's account are reflected in
units of each investment fund selected or shares of Company stock. The net
investment results and any expenses charged to the Plan determine the value of
the units of each investment fund and the value of the shares of Company stock.
VESTING
Participants are immediately vested in their contributions and any qualified
nonelective contributions, plus actual earnings thereon. Vesting in the
employer matching and discretionary contributions is based on years of
continuous service, according to the following schedule:
Years of Service Percentage Vested
---------------- -----------------
Less than 2 0%
2-3 10%
3-4 25%
4-5 50%
5 or more 100%
Benefits earned by participants under the Combining Plans remained vested under
this Plan, at least to the extent that the interest of the participant was
vested under the Combining Plans.
FORFEITURES
During 1995, forfeitures of approximately $1,035,000 were used to reduce the
employer contributions to the Plan. Forfeitures can be restored to a
participant's account if the participant is reemployed by the Company prior to
the expiration of five consecutive years of break in service and repays the full
dollar amount distributed on account of the termination within five years of the
reemployment date. As of December 31, 1995, forfeitures of
<PAGE>
approximately $185,000 had not been used to reduce employer contributions.
These forfeitures will be used to offset future employer contributions.
INVESTMENT OPTIONS
Upon enrollment in the Plan, a participant may direct contributions in any of
the five investment options listed below. T. Rowe Price trustees all assets and
provides recordkeeping of all participant accounts.
T. Rowe Price Stable Value Fund - Funds are invested primarily in high-
quality insurance company and bank-issued investment contracts.
Spectrum Income Fund - Funds are invested in a managed mix of funds
including four domestic bond funds, an international bond fund, a money
market fund and an income-oriented stock fund.
Equity Income Fund - Funds are invested in common stocks of established
companies that pay above-average dividends and have prospects of future
dividend increases.
Spectrum Growth Fund - Funds are invested in a managed mix of funds,
including five U.S. stock funds, an international stock fund and a
money market fund.
PriceCostco Stock Fund - Funds are invested in common stock of
PriceCostco.
Participants may change their investment options daily.
Effective January 3, 1995, participants' account balances in the Ginnie Mae Fund
and the Capital Appreciation Fund were transferred to the Spectrum Income Fund
and Equity Income Fund, respectively.
PAYMENT OF BENEFITS
Upon termination of employment, death or total disability, the vested interest
in a participant's account is distributed in a lump sum. Participants may apply
for a distribution of all or a portion of the vested interest at any time after
attainment of age 59 1/2. Participants are also eligible to make hardship
withdrawals from their salary deferral contributions in the event of certain
financial hardships. Following a hardship withdrawal, participants are not
allowed to contribute to the Plan for a one-year period.
PLAN ADMINISTRATOR
The Plan is administered by the Benefits Committee (the Committee), which is
appointed by the Board of Directors of the Company.
ADMINISTRATIVE EXPENSES
All administrative and custodial fees of the Plan are paid by the Company. All
investment management and transaction fees directly related to the plan
investments are shown as a reduction of net investment results.
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual method of
accounting.
USE OF ESTIMATES
The preparation of financial statements requires the use of estimates. Actual
results could differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
Investments are stated at fair value. Registered investment company funds and
PriceCostco common stock are valued using the closing price of the investments
on the last day of business of the plan year.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the ex-
dividend date. Net appreciation (depreciation) in fair value of assets
represents the change in the fair value of assets and is computed using the
moving average method.
PAYMENT OF BENEFITS
Benefits are recorded when paid. Excess contributions represent contributions,
to be returned to participants, exceeding certain IRS limitations.
3. RELATED PARTY TRANSACTIONS:
Certain plan investments are shares of mutual funds managed by T. Rowe Price.
T. Rowe Price is also the trustee/custodian, as defined by the Plan.
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 any time 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. TAX STATUS:
The Internal Revenue Service has informed the Company, by a letter dated
January 12, 1996, that an application for determination concerning the
qualification of the Plan has been received. The Plan Administrator and the
Plan's counsel believe that the Plan is currently designed and is being operated
in compliance with the applicable requirements of the Internal Revenue Service.
Therefore, they believe that the Plan was qualified and the related trust was
tax-exempt through the year ended December 31, 1995.
<PAGE>
PRICE/COSTCO INC.
401(K) RETIREMENT PLAN
EIN: 33-0572969
PIN: 002
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1995
Identity of Party Involved/ Number of
Description of Investments Shares Cost Current Value
- -------------------------- --------- ------------ -------------
Cash and cash equivalents - $ 61,343 $ 61,343
T. Rowe Price:
Stable Value Fund 28,521,750 28,521,752 28,521,752
Equity Income Fund 1,401,370 24,065,478 28,041,414
Spectrum Income Fund 6,240,591 63,407,089 70,144,239
Spectrum Growth Fund 2,065,805 24,610,027 27,867,707
PriceCostco Common Stock 1,748,012 31,736,914 26,657,187
------------ ------------
$172,402,603 $181,293,642
============ ============
The accompanying notes are an integral part of this schedule.
