Petsmart 2007 Annual Report Download - page 26

We lease substantially all of our stores, retail distribution centers and corporate offices under non-cancelable
leases. The terms of the store leases generally range from 10 to 20 years and typically allow us to renew for three to
five additional five-year terms. Store leases, excluding renewal options, expire at various dates through fiscal 2024.
Certain leases require payment of property taxes, utilities, common area maintenance and insurance and, if annual
sales at certain stores exceed specified amounts, provide for additional rent. We have paid minimal additional rent
under these provisions during 2007, 2006 and 2005.
Our corporate offices currently contain approximately 250,000 square feet. In July 2006, we entered into
15 year lease agreements to expand our corporate offices and renovate the existing offices. The project is expected
to be completed in 2008 and add approximately 115,000 square feet.
Our distribution centers and respective lease expirations as of February 3, 2008 were as follows:
Location
Square
Footage Lease Expiration
(In thousands)
Ennis, Texas .......................................... 230 2012
Phoenix, Arizona ...................................... 620 2021
Columbus, Ohio ....................................... 613 2010
Gahanna, Ohio ........................................ 276 2010
Hagerstown, Maryland .................................. 252 2010
Reno, Nevada ......................................... 199 2008
Ottawa, Illinois ........................................ 1,000 2015
Newnan, Georgia ...................................... 878 2022
Total ............................................... 4,068
We opened our new 878,000 square foot combination distribution center in Newnan, Georgia in July 2007.
This facility replaced the 200,000 square foot forward distribution center we previously leased in Newnan, Georgia
that was closed in June 2007. In March 2007, we entered into an agreement to lease approximately 873,000 square
feet in Reno, Nevada to be used as a combination distribution center. The lease commences in 2008 and will expire
in 2023. The facility will open in 2008, and it will replace the 199,000 square foot forward distribution center we
currently lease in Reno, Nevada.
In February 2007, we decided to exit the State Line Tack equine product line and closed our e-commerce
fulfillment, equine catalog fulfillment and equine distribution center in Brockport, New York during 2007. See
Note 17 to the Notes to Consolidated Financial Statements for additional information.
Item 3. Legal Proceedings
In October 2006, two lawsuits were filed against us in California State Court on behalf of putative classes of
current and former California employees. The first suit, Sorenson v. PetSmart, was filed on October 3, 2006. The
plaintiff, a former dog groomer, alleges that she and other non-exempt employees failed to receive their meal and
rest breaks as required by law. The second suit, Enabnit v. PetSmart, was filed on October 12, 2006, and alleges meal
and rest period violations and that employee paychecks were not compliant with the California Labor Code. The
plaintiff seeks compensatory damages, penalties under the California Labor Code, restitution, attorney’s fees, costs
and prejudgment interest. In November 2006, we removed both actions to the United States District Court for the
Eastern District of California. The parties have reached an agreement in principle to settle both of these matters for
an amount that will not be material to our business and has been accrued for. The parties expect to seek approval of
the settlements from the court later this year.
We are also a party to several lawsuits arising from the pet food recalls announced by several manufacturers
beginning in March 2007. The named plaintiffs have sued the major pet food manufacturers and retailers claiming
that their pets suffered injury and/or death as a result of consuming allegedly contaminated pet food and pet snack
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