Petsmart 2003 Annual Report Download - page 23

operating under the registered trade name of BanÑeld, The Pet Hospital. As of February 1, 2004, we owned
approximately 15% of the voting stock and 32% of the combined voting and non-voting stock of MMI
Holdings, Inc., the parent of MMI. We charge MMI licensing fees for the space used by the veterinary hospitals,
and we treat this income as a reduction of the retail stores' occupancy costs, which is recorded as a component of
cost of sales in our consolidated Ñnancial statements.
PETsMART Charities and Adoptions
Through PETsMART Charities, Inc., an independent 501(c)(3) organization, we support the activities of
local humane organizations. Our mission is to improve the quality of life for all companion animals. PETsMART
Charities creates and supports programs that save lives of homeless pets and promote healthy relationships between
people and pets. Moving toward our vision of a lifelong, loving home for every pet, we:
‚ Raise awareness of companion animal welfare issues;
‚ Fund programs to further individual animal welfare organizations' missions; and
‚ Facilitate adoptions through in-store programs.
Since 1994, PETsMART Charities has raised and donated more than $31.0 million to animal welfare programs
and, through our in-store adoption programs, has saved the lives of more than 1.7 million pets.
Government Regulation
We are subject to laws governing our relationship with employees, including minimum wage requirements,
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 ability, or MMI's ability, to operate veterinary hospitals in certain facilities.
The transportation, handling, and sale of small pets is governed by various federal, state, provincial, and local
regulations. These laws vary from jurisdiction to jurisdiction 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 jurisdiction 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 jurisdictions.
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 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, self-insured health plans, and worker compensation insurance. Property insurance
covers approximately $948.7 million in buildings and contents, including furniture and Ñxtures, leasehold improve-
ments, and inventory. Under our casualty and workers compensation insurance policies through January 31, 2004,
we retain the initial risk of loss of $0.25 million for each policy per occurrence. EÅective February 1, 2004, we
engaged a new insurance provider. Under our casualty and workers compensation insurance policies with the new
provider, we retain an initial risk of loss of $0.50 million for each policy per occurrence on or subsequent to
February 1, 2004.
Intellectual Property
We have several service marks and trademarks registered with the United States Patent and Trademark OÇce
(or USPTO), including PETsMART, PETsMART.com, PETsHOTEL, Total Lifetime Care, Where Pets Are
Family and All You Need For The Life Of Your Pet, as well as many others. We also own several service mark and
trademark applications that are pending with the USPTO, such as PetPerks, and anticipate Ñling additional
applications in the future. We also own numerous registered service marks, trademarks, and pending applications in
other countries, including Canada, as well as several trade names, domain names and copyrights for use in our
5