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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended May 1, 2004

For the transition period from              to             

Commission file number 0-23574

PETCO ANIMAL SUPPLIES, INC.

(Exact name of registrant as specified in its charter)

(858) 453-7845

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  x    No  ¨

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

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PETCO ANIMAL SUPPLIES, INC.

FORM 10-Q

For the Quarter Ended May 1, 2004

INDEX

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Part I. Financial Information

Item 1. Unaudited Consolidated Financial Statements

PETCO ANIMAL SUPPLIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

See accompanying notes to consolidated financial statements.

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PETCO ANIMAL SUPPLIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share data)

See accompanying notes to consolidated financial statements.

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PETCO ANIMAL SUPPLIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

See accompanying notes to consolidated financial statements.

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PETCO ANIMAL SUPPLIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited, in thousands, except per share data)

Note 1—General

In the opinion of management of PETCO Animal Supplies, Inc. (the “Company” or “PETCO”), the unaudited consolidated financial statements presented herein contain all adjustments, consisting of normal recurring adjustments, necessary to fairly present the financial position, results of operations and cash flows of the Company as of May 1, 2004 and for the thirteen-week periods ended May 3, 2003 and May 1, 2004. Certain prior period amounts have been reclassified to conform to the current period presentation. Because of the seasonal nature of the Company’s business, the results of operations for the thirteen weeks ended May 3, 2003 and May 1, 2004 are not necessarily indicative of the results to be expected for the full year. The Company’s fiscal year ends on the Saturday closest to January 31, resulting in years of either 52 or 53 weeks. All references to a fiscal year refer to the fiscal year ending on the Saturday closest to January 31 of the following year. For example, references to fiscal 2004 refer to the fiscal year beginning on February 1, 2004 and ending on January 29, 2005. All of the Company’s stores are aggregated into one reportable segment given the similarities in economic characteristics among the operations represented by the stores and the common nature of the products, customers and methods of distribution. For further information, refer to the consolidated financial statements and related footnotes for fiscal 2003 included in the Company’s Annual Report on Form 10-K (File No. 000-23574) filed with the Securities and Exchange Commission on April 5, 2004.

Note 2—New Accounting Standards

The Company adopted Emerging Issues Task Force, or EITF, 02-16, Accounting by a Customer (including a Reseller) for Cash Consideration Received from a Vendor, during the first quarter of fiscal 2003. EITF 02-16 addresses how a customer should account for cash consideration received from a vendor and requires all amounts received from vendors to be accounted for as a reduction of the cost of the products purchased unless certain criteria are met to allow presentation as a reduction of selling, general and administrative expenses. The transition provisions applied prospectively to arrangements with vendors entered into or modified subsequent to December 31, 2002 and do not allow for prior period reclassification. Pursuant to the adoption of EITF 02-16, substantially all vendor support is initially deferred as a reduction of the cost of inventory purchased and then recognized as a reduction of cost of sales and occupancy costs as the related inventory is sold. Prior to the adoption of EITF 02-16, certain vendor support was recorded as a reduction of selling, general and administrative expenses when earned. For the thirteen-week period ended May 3, 2003, the adoption of EITF 02-16 resulted in the reclassification of $1.7 million of vendor consideration from an offset to selling, general and administrative expenses to an $0.8 million reduction of cost of sales and occupancy costs and a $0.9 million reduction of inventory. For the thirteen-week period ended May 1, 2004, $9.4 million of such vendor consideration was recognized as a reduction of cost of sales and occupancy costs.

The Company adopted EITF 03-10, Application of EITF Issue No. 02-16, “Accounting by a Customer (including a Reseller) for Cash Consideration Received from a Vendor,” by Resellers to Sales Incentives Offered to Consumers by Manufacturers, during the first quarter of fiscal 2004. EITF 03-10 addresses the accounting for consideration received by a reseller in the form of a reimbursement by the vendor for honoring the vendor’s sales incentives offered directly to consumers, and requires such consideration to be accounted for as a reduction of cost of sales unless certain criteria are met. Prior to the adoption of EITF 03-10, such vendors’ sales incentives were recognized as net sales. The transition provisions apply prospectively to arrangements with vendors entered into or modified in fiscal periods beginning in the Company’s first quarter of fiscal 2004. In accordance with EITF 03-10, the fiscal 2003 consolidated financial statements have been reclassified to conform to this accounting change. For the thirteen-week period ended May 3, 2003, the adoption of EITF 03-10 resulted in the reclassification of $10.1 million of vendors’ sales incentives as a reduction of both net sales and cost of sales and occupancy costs. For the thirteen-week period ended May 1, 2004, the corresponding amount of vendor sales’ incentives recorded in cost of sales and occupancy costs was $10.8 million.

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Note 3—Stock-Based Compensation

The Company accounts for its stock option plans using the intrinsic value method prescribed by Accounting Principles Board, or APB, Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, and recognizes compensation expense if the market price of the underlying stock exceeds the exercise price on the date of grant. Had compensation costs for the Company’s stock option plans been determined based on the fair value of the awards at the grant date, consistent with the methodology prescribed under Statement of Financial Accounting Standards, or SFAS, No. 123, Accounting for Stock-Based Compensation, the Company’s net earnings and net earnings per share would have been as reflected below:

The weighted-average fair value per share of the options granted during the thirteen-week periods ended May 3, 2003 and May 1, 2004 was an estimated $7.25 and $12.94, respectively, calculated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

Note 4—Net Earnings Per Share

Basic net earnings per common share are computed using the weighted average number of common shares outstanding during the period. Diluted net earnings per common share includes the incremental shares issuable upon the assumed exercise of potentially issuable common stock. Net earnings and the weighted average number of common shares used to compute net earnings per common share, basic and diluted, are presented below:

Options to purchase common shares that were outstanding at May 3, 2003 and May 1, 2004 but were not included in the computation of diluted net earnings per common share because of their anti-dilutive impact were 109 and 1,345, respectively.

Note 5—Long-Term Debt

The Company has a senior credit facility that consists of a $75.0 million revolving credit facility and a $141.5 million term loan for a total commitment of $216.5 million. The senior credit facilities expire between

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October 2, 2006 and October 2, 2008. Borrowings under the senior credit facility are secured by substantially all of the Company’s assets and bear interest (1) in the case of the revolving credit facility, at the Company’s option, at the agent bank’s base rate plus a margin of up to 2.25%, or LIBOR plus a margin of up to 3.25%, based on the Company’s leverage ratio at the time, and (2) in the case of the term loan, at the Company’s option, at the agent bank’s base rate plus a fixed margin of 1.5%, or LIBOR plus a fixed margin of 2.5%. Amounts can be withdrawn under the revolving credit facility for general business purposes. The Company incurs a fee of 2.0% on letters of credit issued under the revolving credit facility and a fee of 0.5% on the unused commitment under the revolving credit facility, which is reduced for any letters of credit. The credit agreement contains certain affirmative and negative covenants related to, among other things, indebtedness, interest and fixed charges coverage and consolidated net worth. At May 1, 2004, the Company was in full compliance with all of the covenants, and the outstanding balance of the Company’s term loan facility was $140.4 million, including a current portion of $1.4 million. There are no borrowings on the Company’s revolving credit facility, which had $55.5 million of available credit at May 1, 2004. The interest rate at May 1, 2004 on the borrowings under the term loan facility was 3.61%.

Note 6—Senior Subordinated Notes

The Company’s senior subordinated notes mature on November 1, 2011. Interest on the senior subordinated notes accrues at a rate of 10.75% per annum and is payable semi-annually. The Company may redeem the senior subordinated notes at its option at any time after November 1, 2006, in whole or in part, based upon an agreed upon schedule of redemption prices.

Note 7—Contingencies

In June 2002, allegations were made in a complaint filed in the San Francisco Superior Court by the San Francisco City Attorney’s office to the effect that certain associates have not properly cared for companion animals for sale in the Company’s two San Francisco stores. The complaint, which was transferred to the Santa Clara Superior Court, seeks penalties and an injunction against the sale of companion animals in the Company’s San Francisco stores. The complaint and related news reports have caused negative publicity. The Company takes seriously any allegations regarding the proper care of companion animals and has taken steps to reiterate to all its associates the importance of proper care for all companion animals in all of the Company’s stores. The Company has defended the matter vigorously while at the same time exploring whether the matter could be amicably resolved. Without admitting any of the allegations of the City of San Francisco’s complaint, the Company recently reached a settlement of the matter in which the City of San Francisco will agree to drop its claims in consideration of the Company paying $50,000 and agreeing to continue certain training and animal care practices currently implemented in the Company’s San Francisco stores. The settlement will not have a material impact on the Company’s results of operations or financial condition in this or any future period.

The District Attorneys of various California counties, through the San Diego and Los Angeles District Attorneys, have investigated certain alleged weights and measures violations. The investigation specifically concerned whether checkout price scanners used in the Company’s stores identified prices that in some instances did not match the posted prices for certain products, and whether the sale tags regarding those products were misleading. The investigation has also involved allegations regarding the proper care of companion animals. For some time the Company has been working cooperatively with the District Attorneys to reach a satisfactory resolution of this matter, and a final resolution has recently been reached. Without the Company admitting any wrongdoing in the matter, the Company and the subject California counties have entered into a stipulated settlement in which the Company will make a payment to the counties of approximately $650,000, agree to make an investment of approximately $200,000 in improved scanning equipment and conduct increased price scanning audits over the next five years to avoid inconsistencies between posted and scanner prices. This settlement will not have a material impact on the Company’s results of operations or financial condition in this or any future period.

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From time to time, the Company also receives inquiries or notices from other jurisdictions or regulatory authorities with respect to similar alleged weights and measures issues or violations, which the Company responds to in the ordinary course of business.

In April 2003, three alleged applicants for employment instituted an action against over 100 retailers, including the Company, in the Superior Court of California for the County of Los Angeles. The complaint in the action was filed individually and on behalf of a purported class. The complaint alleges that the individual plaintiffs and the purported class members sought employment with the other retailers, or the Company, and that the written employment application asked, in violation of the California Labor Code and Unfair Business Practices Act, about convictions for certain marijuana offenses and about convictions that resulted in the defendant being sent to a diversion program. In December 2003, the court granted the Company’s request to dismiss the action due to certain defects regarding parties named in the initial complaint. Shortly thereafter, the three plaintiffs filed lawsuits against each retailer separately, but to date the Company has not been formally served with a complaint. Following formal receipt of the complaint, the Company intends to vigorously defend the action, and does not believe that the outcome of the matter will have a material impact on the Company’s results of operations or financial condition in any future period.

In October 2003, the Company was served with a Civil Investigative Demand from the United States Federal Trade Commission, or FTC, seeking information and documents relating to the Company’s e-commerce website, petco.com, and more particularly the Company’s policies and practices regarding the protection of personal information furnished by customers to the website. The request stems from an incident in late June 2003 in which a self-proclaimed hacker purportedly obtained unauthorized access to a portion of the Company’s website. The Company has cooperated with the FTC’s inquiry by providing documents and information, and has taken and is taking additional steps to insure that its e-commerce customers’ privacy is maintained. At the present time, the Company is unable to determine whether the FTC will initiate any enforcement action against the Company or the financial impact any such action might entail.

The Company has recorded accruals for estimated losses related to certain of the above matters. The Company is also involved in other routine litigation arising in the ordinary course of its business. While the results of such other litigation cannot be predicted with certainty, the Company believes that the final outcome of such matters will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

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Note 8—Supplemental Guarantor Condensed Consolidating Financial Statements

The Company’s senior subordinated notes are guaranteed by certain of its subsidiaries (the guarantor subsidiaries) on a full and unconditional basis. The following tables present the condensed consolidating balance sheets of PETCO Animal Supplies, Inc., as a parent company, its guarantor subsidiaries and its non-guarantor subsidiaries as of January 31, 2004 and May 1, 2004 and the related condensed consolidating statements of operations and of cash flows for each of the thirteen-week periods ended May 3, 2003 and May 1, 2004.

CONDENSED CONSOLIDATING GUARANTOR, NON-GUARANTOR AND

PARENT COMPANY BALANCE SHEET

January 31, 2004

(in thousands)

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PETCO ANIMAL SUPPLIES, INC.

CONDENSED CONSOLIDATING GUARANTOR, NON-GUARANTOR AND

PARENT COMPANY BALANCE SHEET

May 1, 2004

(unaudited, in thousands)

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PETCO ANIMAL SUPPLIES, INC.

CONDENSED CONSOLIDATING GUARANTOR, NON-GUARANTOR AND

PARENT COMPANY STATEMENTS OF OPERATIONS

For the thirteen weeks ended May 3, 2003

(unaudited, in thousands)

For the thirteen weeks ended May 1, 2004

(unaudited, in thousands)

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PETCO ANIMAL SUPPLIES, INC.

CONDENSED CONSOLIDATING GUARANTOR, NON-GUARANTOR AND

PARENT COMPANY STATEMENT OF CASH FLOWS

For the thirteen weeks ended May 3, 2003

(unaudited, in thousands)