Petsmart 2005 Annual Report Download - page 33

sometimes occur while they are within our care. As a result, we may be subject to claims that we do not properly
care for these small pets. We may also be subject to claims resulting from the transfer of diseases from pets in our
stores to other animals, associates and customers. From time to time, we have been subject to product liability
claims for some of the products we sell. Any negative publicity or claims relating to any of the foregoing could harm
our reputation and business, as well as expose us to litigation expenses and damages.
Pending legislation, weather, disease or other factors could disrupt the supply of the small pets and products
we sell, which could harm our reputation and decrease sales.
There is generally a significant amount of legislation pending at the federal, state, provincial and local levels
regarding the handling of pets. This legislation may impair our ability to transport the small pets we sell in our
stores. The small pets we sell in our stores are susceptible to diseases that can quickly decrease or destroy the supply
of these pets. In addition, our supply of products may be negatively impacted by weather, disease, contamination or
trade barriers. Any disruption in the supply of products to our stores, due to legislation, weather, disease or any other
factor, could harm our reputation and decrease our sales.
Fluctuations in the stock market, as well as general economic and market conditions, including but not lim-
ited to fuel costs, may harm the market price of our common stock.
Over the last several years, the market price of our common stock has been subject to significant fluctuations.
The market price of our common stock may continue to be subject to significant fluctuations in response to
operating results and other factors including, but not limited to:
• Announcements by analysts regarding their assessment of PetSmart and our prospects;
• Announcements of our financial results, particularly if they differ from investors’ expectations;
• General economic changes, including increased fuel costs;
• Actions taken by our competitors, including new product introductions and pricing changes;
• Changes in the strategy and capability of our competitors;
• Our ability to successfully integrate acquisitions and consolidations;
• The prospects of our industry; and
• Natural disasters, hostilities and acts of terrorism.
In addition, the stock market in recent years has experienced price and volume fluctuations that often have
been unrelated or disproportionate to the operating performance of companies. These fluctuations, as well as
general economic and market conditions, including but not limited to fuel costs, may harm the market price of our
common stock.
We have implemented some anti-takeover provisions, including a stockholder rights plan that may prevent
or delay an acquisition of us that may not be beneficial to our stockholders.
Our restated certificate of incorporation and bylaws include provisions that may delay, defer or prevent a
change in management or control that our stockholders may not believe is in their best interests. These provisions
include:
• A classified board of directors consisting of three classes;
• The ability of our board of directors to issue, without stockholder approval, up to 10,000,000 shares of
preferred stock in one or more series with rights, obligations and preferences determined by the board of
directors;
• No right of stockholders to call special meetings of stockholders;
• No right of stockholders to act by written consent;
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