Petsmart 2012 Annual Report Download - page 25

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We lease substantially all our stores, distribution centers and corporate offices under noncancelable leases. The terms of the
store leases generally range from 10 to 15 years and typically allow us to renew for 2 to 4 additional 5-year terms. Store leases,
excluding renewal options, expire at various dates through 2027. Generally, the leases require payment of property taxes, utilities,
common area maintenance, insurance and if annual sales at certain stores exceed specified amounts, provide for additional rents.
We lease approximately 365,000 square feet for our corporate offices. The lease expires in 2023.
Our distribution centers and respective lease expirations as of February 3, 2013, were as follows:
Location Square Footage Date Opened Distribution Type Lease Expiration
(In thousands)
Ennis, Texas........................ 230 May 1996 Forward distribution center 2017
Phoenix, Arizona................ 620 November 1999 Combination distribution center 2021
Columbus, Ohio ................. 613 September 2000 Combination distribution center 2015
Gahanna, Ohio.................... 276 October 2000 Forward distribution center 2015
Hagerstown, Maryland....... 252 October 2000 Forward distribution center 2015
Ottawa, Illinois................... 1,000 August 2005 Combination distribution center 2022
Newnan, Georgia................ 878 July 2007 Combination distribution center 2022
Reno, Nevada ..................... 873 April 2008 Combination distribution center 2023
Total.................................... 4,742
In July 2012, we entered into a build-to-suit lease for a new distribution center in Bethel, Pennsylvania. Once the construction
of the Bethel location is completed, we will vacate two smaller distribution centers located in Gahanna, Ohio and Hagerstown,
Maryland, both of which are nearing capacity. We expect to open this new distribution center in 2014.
Item 3. Legal Proceedings
We are involved in the legal proceedings described below and are subject to other claims and litigation arising in the normal
course of our business. We have made accruals with respect to certain of these matters, where appropriate, that are reflected in
our consolidated financial statements but are not, individually or in the aggregate, considered material. For other matters, we have
not made accruals because we have not yet determined that a loss is probable or because the amount of loss cannot be reasonably
estimated. While the ultimate outcome of the matters described below cannot be determined, we currently do not expect that these
proceedings and claims, individually or in the aggregate, will have a material adverse effect on our financial position, results of
operations, or cash flows. The outcome of any litigation is inherently uncertain, however, and if decided adversely to PetSmart,
or if PetSmart determines that settlement of particular litigation is appropriate, we may be subject to liability that could have a
material adverse effect on the Company's financial position, results of operations, or cash flows. Accordingly, we disclose matters
below for which a material loss is reasonably possible. In each case, however, we have either determined that the range of loss is
not reasonably estimable or that any reasonably estimable range of loss is not material to our consolidated financial statements.
In January 2011, we were served with a lawsuit captioned Pedroza, et al. v. PetSmart, Inc., a case originally filed in California
Superior Court for the County of San Bernardino. The case has been removed to the United States District Court for the Central
District of California. The complaint alleges, purportedly on behalf of current and former exempt store management in California,
that we improperly classified our store management as exempt pursuant to the California Labor Code, and as a result failed to: (i)
pay or provide to such managers proper wages, overtime compensation, or rest or meal periods, (ii) maintain and provide accurate
wage-related statements and records, and (iii) reimburse certain business expenses, in each case as is required by the California
Labor Code.The lawsuit seeks compensatory damages, statutory penalties and other relief, including liquidated damages, attorneys'
fees, costs and injunctive relief. The court has since dismissed the plaintiff's claim for statutory penalties for the alleged failures
to provide accurate wage statements and pay all wages upon termination. On January 28, 2013, the court issued a decision denying
class certification. The remaining claims were subsequently dismissed.
In May 2012, we were named as a defendant in Moore, et al. v. PetSmart, Inc., et. al., a lawsuit originally filed in California
Superior Court for the County of Alameda. PetSmart removed the case to the United States District Court for the Northern District
of California. The complaint brings both individual and class action claims, first alleging that PetSmart failed to engage in the
interactive process and failed to accommodate the disabilities of four current and former named associates. The complaint also
alleges on behalf of current and former hourly store associates that PetSmart failed to provide pay for all hours worked, failed to