Petsmart 2007 Annual Report Download - page 20

uncertainties with respect to e-commerce, and collection of sales or other taxes by one or more states or foreign
jurisdictions. If any of these risks materialize, it could have an adverse effect on our business.
Our business could be harmed if we were unable to effectively manage our cash flow and raise any needed
additional capital on acceptable terms.
We expect to fund our currently planned operations with existing capital resources, including the borrowing
capacity under our credit facility and cash flows from operations. If, however, we are unable to effectively manage
our cash flows or generate and maintain positive operating cash flows and operating income in the future, we may
need additional funding. We may also choose to raise additional capital due to market conditions or strategic
considerations even if we believe that we have sufficient funds for our current or future operating plans. Our credit
facility and letter of credit facility are secured by substantially all our personal property assets, our subsidiaries and
certain real property. This could limit our ability to obtain, or obtain on favorable terms, additional financing and
may make additional debt financing outside our credit facility and letter of credit facility more costly. If additional
capital were needed, an inability to raise capital on favorable terms could harm our business and financial condition.
In addition, to the extent that we raise additional capital through the sale of equity or debt securities convertible into
equity, the issuance of these securities could result in dilution or accretion to our stockholders.
Failure to successfully integrate any business we acquire could have an adverse impact on our financial
results.
We may, from time to time, acquire businesses we believe to be complementary to our business. Acquisitions
may result in difficulties in assimilating acquired companies and may result in the diversion of our capital and our
management’s attention from other business issues and opportunities. We may not be able to successfully integrate
operations that we acquire, including their personnel, financial systems, distribution, operations and general
operating procedures. If we fail to successfully integrate acquisitions, we could experience increased costs
associated with operating inefficiencies which could have an adverse effect on our financial results. Also, while
we employ several different methodologies to assess potential business opportunities, the new businesses may not
positively affect our financial performance.
Changes to estimates related to our property and equipment, or operating results that are lower than our
current estimates at certain store locations, may cause us to incur impairment charges.
We make estimates and projections in connection with impairment analyses for our store locations in
accordance with accounting principles generally accepted in the United States of America or “GAAP”. We review
all stores for potential impairment. An impairment charge is required when the carrying value of the asset exceeds
the undiscounted future cash flows over the life of the asset. These calculations require us to make a number of
estimates and projections of future results. If these estimates or projections change or prove incorrect, we may be,
and have been, required to record impairment charges on certain of these store locations. If these impairment
charges are significant, our results of operations would be adversely affected.
Our inability or failure to protect our intellectual property could have a negative impact on our operating
results.
Our trademarks, servicemarks, copyrights, patents, trade secrets, domain names and other intellectual property
are valuable assets that are critical to our success. The unauthorized reproduction or other misappropriation of our
intellectual property could diminish the value of our brands or goodwill and cause a decline in our revenue or
operating results. Protecting our intellectual property outside the United States could be time-consuming and costly,
and the local laws and regulations outside the United States may not fully protect our rights in such intellectual
property. Any infringement or other intellectual property claim made against us, whether or not it has merit, could
be time-consuming, result in costly litigation, cause product delays or require us to enter into royalty or licensing
agreements. As a result, any such claim could have an adverse effect on our operating results.
14