Petsmart 2000 Annual Report Download - page 20

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cash dividends in the foreseeable future. In addition, the Company’ s revolving credit agreement restricts the
payment of dividends.
On April 5, 2000, there were 7,168 shareholders of record of the Company’ s Common Stock.
17
Item 6. Selected Financial Data
The information required by this Item is attached at Appendix A.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Except for the historical information contained herein, the following discussion contains forward-
looking statements that involve risks and uncertainties. The Company’s actual results could materially
differ from those discussed here. Factors that could cause or contribute to such differences include, but
are not limited to, those discussed in this section, as well as in the sections entitled PETsMART
Superstores, Distribution, Information Systems, Competition, Government Regulation and Business Risks
included in this Form 10-K for the year ended January 30, 2000.
Overview
Fiscal year 1999 was a year of significant events for PETsMART. The Company opened 58 new
superstores, including nine replacement stores, and closed six stores in North America, repurchased $25 million
in common stock, sold its subsidiary in the United Kingdom (“UK ”) and invested approximately $29 million in
PETsMART.com, an e-commerce pet business. Additionally, the Company transferred operational control of
the United States veterinary clinics owned by PETsMART Veterinary Services, Inc. to a third-party operator,
Medical Management International, Inc. (“MMI”) in exchange for an equity interest in MMI and a license
agreement to rent space in the existing PETsMART stores.
The C ompany expects that future increases in net sales and net income, if any, will be dependent on the
opening of additional superstores and the improved performance of existing superstores. In view of the increasing
maturity of its superstore base (4.2 years as of year end 1999), as well as the planned opening of 50 additional
superstores, net of relocations, in existing markets and single-store markets, the Company anticipates that
comparable store sales increases may be lower in future periods. As a result of its expansion plans, the Company
anticipates the timing of new superstore openings, and related preopening expenses, and the amount of revenue
contributed by new and existing superstores may cause the Company’ s quarterly results of operations to
fluctuate. The Company has achieved less favorable operating results in certain North American geographic
regions it recently entered than it has achieved historically in other regions. In addition, because new superstores
have higher payroll, advertising and other store operating expenses as a percentage of sales than mature
superstores, the impact of new superstore openings will also contribute to lower store operating margins until
they become established. Commencing with the first quarter of fiscal 1999, the Company charges preopening
costs associated with each new superstore to earnings as the costs are incurred. Therefore, the Company
expects that the opening of large numbers of new superstores in a given quarter will adversely impact its quarterly
results of operations for that period.
9/16/2010 www.sec.gov/Archives/edgar/data/86…
sec.gov/…/0000950153-00-000575-d1.… 20/70