Petsmart 2002 Annual Report Download - page 18

Download and view the complete annual report

Please find page 18 of the 2002 Petsmart annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 85

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85

We believe that the principal competitive factors inÖuencing our business are product selection and
quality, convenience of store locations, customer service, price, and availability of pet services. Many of the
products we oÅer are not currently available in grocery stores, warehouse clubs or other mass merchandisers
due to manufacturers' restrictions. We believe that we compete eÅectively within our various markets;
however, some of our competitors are larger in terms of overall sales volume and have access to greater capital
and management resources than we do.
We are currently the only major specialty pet retailer that markets to customers through stores, catalogs,
and the Internet, and we believe this gives us a competitive advantage. In addition, we believe our pet services
business, which grocery stores and mass merchandisers are not likely to duplicate, is a competitive advantage.
Government Regulation
We are subject to laws governing our relationship with employees, including minimum wage require-
ments, overtime, working conditions, and citizenship requirements. There are statutes and regulations in
certain states and Canadian provinces that aÅect the ownership of veterinary practices, or the operation of
veterinary hospitals in retail stores, that may impact our or MMI's ability, to operate veterinary hospitals in
certain facilities.
The transportation, handling, and sale of small pets is governed by various state and local regulations.
These laws vary from state to state and are enforced by the courts and by regulatory authorities with broad
discretion. While we seek to structure our operations to comply with the laws and regulations of each state in
which we operate, there can be no assurance that, given varying and uncertain interpretations of these laws, we
would be found to be in compliance in all states.
Our facilities and operations are also subject to environmental regulations imposed by federal, state,
provincial and local authorities with respect to generation, handling, storage, transportation, and disposal of
waste and biohazardous materials, and the sale and distribution of products. We may in the future incur
liability under environmental statutes and regulations with respect to contamination detected at some sites
owned or operated by us, including contamination caused by prior owners or operators of these sites or other
persons. We also could be subject to costs, including Ñnes or sanctions, and third party claims as a result of
violations of, or liabilities under environmental, health, or safety laws.
Insurance
We maintain standard property and casualty insurance on all of our stores, product liability insurance
covering products and the sale of live pets, and worker compensation insurance. Property insurance covers
approximately $1.2 billion in buildings and contents, including furniture and Ñxtures, leasehold improvements
and inventory. Under our casualty and workers compensation insurance policies, we retain the initial risk of
loss of $250,000 for each policy per occurrence.
Intellectual Property
We have several service marks and trademarks registered with the United States Patent and Trademark
OÇce, or USPTO, including ""PETsMART»,'' ""PETsMART.com»,'' ""Where Pets Are Family»,'' and ""All
You Need for the Life of Your Pet»,'' as well as many others. We also have several applications pending with
the USPTO for trademarks, including ""PETsMART PETsHOTEL
TM
,'' and anticipate Ñling additional
applications in the future. We also have several registered service marks and trademarks and have applications
pending in other countries, including Canada. We also own several trade names, domain names and copyrights
for use in our business. We regard our intellectual property as having signiÑcant value and as important
components in our merchandising and marketing strategies.
Employees
As of February 2, 2003, we employed approximately 23,500 associates, approximately 12,000 of whom
were employed full time. We are not subject to any collective bargaining agreements and have not experienced
6