PETSMART INC
FORM
8-K
(Current report filing)
Filed 11/14/12 for the Period Ending 11/13/12
Address
Telephone
CIK
SIC Code
Industry
Sector
Fiscal Year
19601 N 27TH AVE
PHOENIX, AZ 85027
6235806100
0000863157
5990 - Retail Stores, Not Elsewhere Classified
Other Specialty Retailers
Consumer Cyclicals
02/02
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of earliest event reported: November 13, 2012
PetSmart, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware
0-21888
94-3024325
(State or Other Jurisdiction
of Incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
19601 North 27 th Avenue, Phoenix, Arizona 85027
(Address of Principal Executive Offices) (Zip Code)
(623) 580-6100
(Registrant’s telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On November 14, 2012, PetSmart, Inc. (the “Company”) issued a press release announcing its results for the third quarter ended October 28,
2012, entitled “PetSmart Reports Results for the Third Quarter 2012.” A copy of the press release is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
The information in Item 2.02 of this report on Form 8-K, including Exhibit 99.1 hereto, shall not be deemed to be “filed” for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)
(2) of the Securities Act of 1933, as amended. The information contained herein and in the accompanying Exhibit 99.1 shall not be
incorporated by reference into any filing with the Securities and Exchange Commission made by PetSmart, Inc., whether made before or after
the date hereof, regardless of any general incorporation language in such filing.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
On November 13, 2012, the Company entered into a letter agreement (the “Letter Agreement”) with Lawrence P. Molloy, the Company’s
Executive Vice President and Chief Financial Officer, pursuant to which Mr. Molloy will remain in his current position through June 30, 2013
(the “Transition Date”); Mr. Molloy has agreed to then remain employed by the Company as a special advisor to the Chief Executive Officer
through March 31, 2014 (the “Separation Date”). As special advisor, Mr. Molloy will, among other things, provide guidance and transition
assistance as requested by the Company, including when the Company names a new Chief Financial Officer. Mr. Molloy will voluntarily
resign as Executive Vice President and Chief Financial Officer as of the close of business on the Transition Date and as an employee of the
Company as of the close of business on the Separation Date.
The Letter Agreement provides for the following compensation and benefits to Mr. Molloy:
•
Salary continuation of $45,833 per month through the Transition Date and thereafter $40,833 per month through the Separation
Date;
•
$45,000 payable within 30 days after the Separation Date or his last day of employment with the Company, if earlier, as
consideration for signing a release of claims in connection with termination of employment on the Separation Date or his last day of
employment with the Company, if earlier;
•
Continued participation in the Executive Short-Term Incentive Plan with respect to the 2012 and 2013 fiscal years with the current
target award of 85% of salary; provided, that the award earned for fiscal 2013 will be based on the salary earned in fiscal 2013
through the Transition Date;
•
Treatment of outstanding stock options and performance share units as provided under the applicable agreements and related plan
documents; provided, that Mr. Molloy will be entitled to receive a prorated portion of the performance share units deemed earned
following the 2014 fiscal year-end under the award granted to him on March 14, 2012, based on the months worked through the
Separation Date;
•
Continued accrual of vacation through the Transition Date;
•
Continued health, life and disability insurance coverage through the Separation Date; and
•
Continued participation in the executive benefits programs and the executive physical program through the Transition Date.
Mr. Molloy has also agreed to a covenant not-to-compete for a period of eighteen months from the Separation Date, as well as other customary
covenants concerning non-solicitation and non-disclosure of confidential information of the Company, among others, and has executed a
release of claims in favor of the Company.
The description of the Letter Agreement contained herein is a summary of the material terms of the Letter Agreement, does not purport to be
complete, and is qualified in its entirety by reference to the Letter Agreement filed as Exhibit 10.1 hereto, which is incorporated herein by
reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
Exhibit No.
Description
10.1
Letter Agreement dated November 13, 2012 between Lawrence P. Molloy and PetSmart, Inc.
99.1
Press Release entitled “PetSmart Reports Results for the Third Quarter 2012,” dated November 14, 2012.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PetSmart, Inc.
Dated: November 14, 2012
By: /s/ J. Dale Brunk
J. Dale Brunk
Vice President, Deputy General Counsel, and Assistant
Secretary
Exhibit 10.1
November 13, 2012
Personal and Confidential
Lawrence P. Molloy
PetSmart, Inc.
19601 North 27th Avenue
Phoenix, Arizona 85027
Dear Chip:
This letter agreement (“Agreement”) sets forth the terms and conditions of the package we are offering you to retain and reward your
services until you leave PetSmart. This offer will expire twenty one (21) calendar days from the letter date above.
1.
RESIGNATION . You agree that your last day as an executive officer of PetSmart, Inc. and any of its affiliated entities (collectively the
“Company” or “PetSmart”) will be June 30, 2013 (the “Transition Date”). You also agree to voluntarily resign from any position you may
hold with the Company and its affiliates and subsidiaries effective as of the close of business on March 31, 2014 (the “Separation Date”).
You agree to sign a resignation letter substantially in the form attached hereto as Exhibit D and Exhibit E respectively, on each of the
Transition Date and the Separation Date.
2.
TRANSITION . In order to allow for an orderly transition of your duties, you agree to continue your employment with the Company as
Executive Vice President and Chief Financial Officer through the Transition Date. During this period you may choose to work from home
on Fridays. After the Transition Date and through the Separation Date (the “Transition Period”), you will continue your employment with
the Company as a special advisor to the Chief Executive Officer. Assigned activities will be directed by the Chief Executive Officer and
are expected to include, among other things, providing input on required filings with the United States Securities and Exchange
Commission (the “SEC”) that are anticipated up until the Separation Date. You will also provide guidance and transition assistance as
requested by the Company when the Company chooses to hire a new Chief Financial Officer, which may occur at any time prior to the
Separation Date. Routine contacts and schedules during the Transition Period will be mutually agreed upon between you and the Chief
Executive Officer.
3.
BENEFITS AND COMPENSATION . Except as otherwise provided in this Agreement, you will continue to participate in the
employee benefit plans maintained by the Company during the remainder of your employment in accordance with the applicable terms of
each plan. You will cease to participate in such plans effective with the Separation Date or such earlier date as provided in the applicable
employee benefit plan. In the event you terminate your employment before the Transition Date or Separation Date, as applicable, the
benefits, compensation and other rights described below will terminate as of such earlier termination date.
A.
Salary and Release Consideration. You will continue to receive a salary of $45,833 per month ($550,000 annual rate) through the
Transition Date and thereafter will receive $40,833 per month ($490,000 annual rate) through the Separation Date, less applicable
tax withholding. In addition, as consideration for signing the Second Release (as defined in Section 11) in connection with your
termination of employment with the Company on the Separation Date or your last day of employment with the Company, if earlier,
you will receive a payment of $45,000, less applicable tax withholding (the “Release Consideration”), within thirty (30) days after
the Separation Date or your last day of employment with the Company, if earlier; provided, however, that if the Second Release is
not signed by the Separation Date or is revoked thereafter in accordance with its terms, you will forfeit the Release Consideration.
Lawrence Molloy
November 13, 2012
Page 2
B.
2012 and 2013 Participation in ESTIP. You will continue participation in the Executive Short-Term Incentive Plan (“ESTIP”)
through the Transition Date. For the 2012 fiscal year, your current target award of 85% of your salary will remain unchanged. For
the 2013 fiscal year, your target award will be 85% of the salary you earn through the Transition Date. You will not be eligible to
participate in the ESTIP with respect to the 2014 fiscal year.
C.
Stock Options and Performance Share Units. Your rights under any current stock option and performance share unit agreements
are governed by the terms of the applicable agreements and related plan documents; provided, however, that you will be entitled to
receive a prorated portion of the performance share units deemed earned by the Company’s Compensation Committee following the
2014 fiscal year-end under the award granted to you on March 14, 2012, based on the number of months worked through the
Separation Date as a percentage of thirty-six (36) months.
You will not receive any new or additional long term equity-based awards for the 2013 and 2014 fiscal years.
D.
Vacation. You will continue to accrue vacation through the Transition Date and you will be paid for all earned but unused vacation
hours in accordance with PetSmart’s standard policy within 30 days after the Transition Date, less applicable tax withholding. No
vacation will accrue after the Transition Date.
E.
SmartChoices Benefits Plan. The Company will continue to provide you with health, life and disability insurance coverage
pursuant to the SmartChoices Benefits Plan through the Separation Date, subject to the terms and conditions of such
plan. Thereafter, you may continue or convert coverage to an individual policy to the extent provided under the SmartChoices
Benefits Plan and applicable insurance policies. You will be solely responsible for paying the cost of any such continued or
converted coverage.
Lawrence Molloy
November 13, 2012
Page 3
F.
Executive Benefit Programs. You will be able to continue to participate in the Company’s executive benefit programs through the
Transition Date. The Company will pay to you, within thirty (30) calendar days after the Transition Date, the dollar amount of any
financial planning and related services included as part of the Executive Choice Program based on participation for the full 2013
calendar year for which you were eligible to have been paid by the Company and for which you have not already been paid as of the
Transition Date. In addition, you will be eligible for the yearly medical examination under the Executive Physical Program through
the Transition Date and may schedule such examination at any date prior to the Transition Date.
G.
Other Compensation. Except as expressly provided in this Agreement, you will not receive from the Company and agree you are
not entitled to any additional compensation (including but not limited to salary, fees, vacation, bonuses, stock, stock options,
performance share units, or restricted stock), severance or benefits (including but not limited to any car allowance or long distance
telephone fees) after the Separation Date except those that are inalienable under applicable law (such as any vested account balance
under the SaveSmart 401(k) Plan and COBRA continuation coverage under applicable group health plans). In addition, any
amounts you contributed under the Employee Stock Purchase Plan and any vested account balance under the Deferred
Compensation Plan will be returned or distributed to you pursuant to the respective plan documents.
4.
COOPERATION WITH COMPANY . In exchange for the consideration afforded by this Agreement, you agree you will cooperate
with the Company on all business or legal matters as to which the Company may request assistance.
5.
INSIDER TRADING POLICY . You acknowledge and agree you continue to be bound by the PetSmart Insider Trading Policy and the
laws, rules and regulations of the SEC. If you currently, or at the Separation Date, are subject to limitations on your ability to buy or sell
Company stock or have otherwise been notified by the appropriate legal counsel of the Company that you are prohibited from buying or
selling Company stock, the Company strongly recommends you continue to abide by your obligations in these areas. Should you have
any questions with regard to your obligations please refer to the Insider Trading Policy available at www.petm.com.
6.
EXPENSE REIMBURSEMENTS . You agree to submit your final documented expense reimbursement statement reflecting all
business expenses you have incurred within ten (10) business days after the Separation Date or such earlier date on which your
employment with the Company ends.
7.
RETURN OF COMPANY PROPERTY . On or before the Separation Date, you shall return to the Company all Company documents
(all originals and all copies thereof,
Lawrence Molloy
November 13, 2012
Page 4
whether in paper, hard copy, computer files or other electronic form) and other Company property you have had in your possession at any
time including, but not limited to, Company files, emails, email attachments, notes, drawings, records, business plans and forecasts,
financial information, customer information, specifications, training materials, personnel information, sales and marketing information,
computer-recorded information, tangible property (including, but not limited to, credit cards, laptops, entry cards, identification badges
and keys) and any materials of any kind that contain or embody any proprietary or confidential information of the Company (and all
reproductions thereof). You may retain your Company issued cell phone and iPAD at no cost; however, you will be responsible for
obtaining a new service provider at your own expense within thirty (30) days of the Separation Date or such earlier date on which your
employment with the Company ends.
8.
PROPRIETARY INFORMATION AND NON-COMPETITION . You acknowledge your continuing obligations under and agree to
be bound by the Confidentiality Agreement attached hereto as Exhibit A. You also acknowledge your continuing obligations under the
Agreement not to Compete and Non-Solicitation Agreement that you executed in connection with your initial hire, and also agree to be
bound by the Non-Compete and Non-Solicitation Agreement attached hereto as Exhibit B. You further agree that in your position at
PetSmart you have been given confidential, proprietary, and trade secret information and that acceptance of a position with a competitor
of PetSmart will inevitably result in disclosure of PetSmart confidential and proprietary information.
You agree not to use or disclose any confidential or proprietary information of the Company without prior written authorization from a
duly authorized officer of the Company except as may be required by law or in any judicial process. You further agree until eighteen
(18) months from the Separation Date, you will not directly or indirectly, aid, assist, participate in, consult with, render services for,
accept a position with, become employed by, or otherwise enter into any relationship with any PetSmart Competitor.
“PetSmart Competitor” is defined to mean any entity engaged in whole or in part in the pet retail or pet services industry that: (i) if it is
primarily engaged in the pet retail or pet services industry, has annual gross revenue related to pets, pet retail or pet services (collectively,
“Pet-related Revenue”) of at least $100 million (including, but not limited to Petco, Pet Supplies Plus, Pet Supermarket, Pet Food
Express, Pet Valu (Canada), Super Pet (Canada) Petland (US and Canada)); or (ii) if it is not primarily engaged in the pet retail or pet
services industry, its annual Pet-related Revenue equals or exceeds 20% of its total annual revenue as measured by Generally Accepted
Accounting Principles. In addition, notwithstanding the foregoing, “PetSmart Competitor” shall also mean WalMart and Target.
9.
REFERENCE/NON-DISPARAGEMENT . You agree you will not disparage the Company or its officers, associates, or affiliates, any
projects or assignments you worked on or performed during your tenure with the Company, or matters that have come within your
knowledge as a result of your position with the Company. You and the Company mutually acknowledge that it would be difficult to
ascertain the exact amount of damages
Lawrence Molloy
November 13, 2012
Page 5
incurred by the Company in the event of any breach of the non-disparagement provision contained herein by you, and that, in addition to
all other remedies provided elsewhere in this Agreement or by law, the Company will be entitled to recover from you, as liquidated
damages, the sum of one hundred and fifty thousand dollars ($150,000) for each proven breach of the non-disparagement provision
contained herein. It is agreed that this sum represents a reasonable estimate of the damages that would accrue to the Company. Nothing in
this paragraph prohibits your cooperation in any investigation by any government agency.
10.
[RESERVED] .
11.
RELEASE . In exchange for the benefits herein and as a condition of receiving any benefits under this Agreement, you agree to execute,
(a) initially, in connection with and as of the time of your execution of this Agreement and (b) secondly, as a condition for receipt of the
Release Consideration and as of the Separation Date or your last day of employment with the Company, if earlier (the “Second Release”),
a release in substantially the form attached hereto as Exhibit C, which completely releases the Company to the fullest extent permitted by
law from all claims you may have against the Company as of the dates you execute the releases, except to the extent provided therein.
12.
CONFIDENTIALITY . The provisions of this Agreement shall be held in strict confidence by you and shall not be publicized or
disclosed in any manner whatsoever; provided however, that you may disclose this Agreement in confidence (a) to your immediate
family; (b) to your attorneys, accountants, auditors, tax preparation advisors, and financial advisors; and (c) as necessary to enforce this
Agreement’s terms and/or as otherwise required by law or as necessary to comply with the terms of this Agreement.
The Company agrees to hold the provisions of this Agreement in strict confidence and shall not publicize or disclose outside of the
Company, provided however, that it may disclose this Agreement (a) in confidence to its attorneys, accountants, and tax advisors; and
(b) as necessary to enforce this Agreement’s terms and/or as otherwise required by law or as necessary to comply with the terms of this
Agreement.
13.
BREACH OF AGREEMENTS . You acknowledge and agree that your right to any of the benefits or payments made or owing to you
under this Agreement shall, without the need for prior written notice from the Company, terminate immediately upon the occurrence of
any of the following:
(i)
you breach the Confidentiality Agreement identified in Section 8 or any similar confidentiality agreements entered into
between you and the Company, or you breach any time prior to the eighteen (18) month anniversary of the Separation Date,
the Non-Compete and Non-Solicitation Agreement identified in Section 8 or any similar non-competition, or non-solicitation
agreements entered into between you and the Company;
Lawrence Molloy
November 13, 2012
Page 6
14.
(ii)
you become employed by or provide any consulting or professional services (paid or unpaid) at any time prior to the
eighteen (18) month anniversary of the Separation Date to a “PetSmart Competitor” as defined in Section 8 or engage in
actions prohibited by this Agreement;
(iii)
you own, manage, operate, join, control, or participate in the ownership, management, operation, or control of, are employed
by, or connected in any manner with, any enterprise, or entity at any time prior to the eighteen (18) month anniversary of the
Separation Date which is a “PetSmart Competitor” as defined in Section 8; provided, however, that such restriction will not
apply to any passive investment representing an interest of less than two percent (2%) of an outstanding class of publiclytraded securities of any corporation or other entity or enterprise;
(iv)
you actively encourage or solicit at any time prior to the eighteen (18) month anniversary of the Separation Date any of the
Company’s then current employees, consultants or independent contractors to leave the Company’s employ for any reason
or intentionally interfere with employment or other service relationships, as applicable, at the time existing between the
Company and its then current employees, consultants or independent contractors; or
(v)
you induce at any time prior to the eighteen (18) month anniversary of the Separation Date any of the Company’s then
current clients, customers, suppliers, vendors, distributors, licensors, licensees, or other third parties to terminate their
existing business relationship with the Company or you intentionally interfere with any existing business relationship
between the Company and any then current client, customer, supplier, vendor, distributor, licensor, licensee, or other third
party.
ENTIRE AGREEMENT . This Agreement, including all exhibits, constitutes the complete, final and exclusive embodiment of the
entire agreement between you and the Company with regard to the subject matter hereof, and supersedes any and all agreements
previously entered into by and between you and the Company, except the Company and you agree that the Confidentiality Agreement and
Agreement Not to Compete and Non-Solicitation Agreements identified in Section 8 and any similar confidentiality, non-competition and
non-solicitation agreements entered into between you and the Company shall also remain in force and effect. To the extent the provisions
of such other agreements differ in substance from this Agreement, those provisions shall be enforceable to the extent they afford
additional or greater protection to the Company. This Agreement is entered into without reliance on any promise or representation,
written or oral, other than those expressly contained herein. It may not be modified except in a written agreement signed by you and a
duly authorized officer of the Company. Each party has carefully read this Agreement, has been afforded the opportunity to be advised of
its meaning and consequences by his or its respective attorneys, and signed the same of his or its own free will.
Lawrence Molloy
November 13, 2012
Page 7
15.
SUCCESSORS AND ASSIGNS . This Agreement will bind the heirs, personal representatives, successors, assigns, executors, and
administrators of each party, and will inure to the benefit of each party, its heirs, successors and assigns.
16.
WARRANTIES . You warrant and represent that there are no liens or claims of lien or assignments in law or equity or otherwise on or
against any potential claims or causes of action released herein. Both you and the Company warrant and represent that we are each,
respectively, fully entitled and duly authorized to enter into this Agreement and perform our respective obligations hereunder.
17.
INDEMNITY . Nothing contained herein will be deemed to terminate or alter any obligation of the Company to indemnify you or
provide you with a legal defense, to the extent provided under applicable law, the certificate of incorporation or the bylaws of the
Company or any other agreement, with respect to any claims which may be brought against you arising from or relating to your service as
an officer or director of the Company or any of its affiliates.
18.
APPLICABLE LAW . This Agreement will be deemed to have been entered into and will be construed and enforced in accordance with
the laws of the State of Arizona as applied to contracts made and to be performed entirely within Arizona. You also agree that the
Maricopa County Arizona State Superior Court will have exclusive jurisdiction and be the sole venue for resolving any dispute regarding
your employment or this Agreement or related agreements.
19.
NO GUARANTEE OF EMPLOYMENT . Nothing contained in this Agreement shall impair or interfere in any way with the right of
the Company to terminate your employment. Notwithstanding this right or any such termination, the Company will continue to provide
you with the benefits, compensation and other rights described in this Agreement. The only exceptions to the Company’s obligation to
continue to provide you with the benefits, compensation and other rights described in this Agreement in the event of a termination of
employment are limited to and specifically set forth below:
(i)
In the event of any alleged breach by you of any of the Company’s Code of Business Ethics and Policies or any of the
provisions of this Agreement set forth in Sections 8, 9 or 13. If the Company intends to cease the benefits, compensation and
other rights described in this Agreement pursuant to this Section 19(i), the Company will provide you with three (3) business
days’ written notice of such intent, including a description of the event or circumstances that forms the basis for such
cessation, and you will have three (3) business days from the date of such notice to cure such alleged breach; and
(ii)
In the event of any alleged breach of performance obligations as set forth in Sections 2 or 4 of this Agreement, said
termination will be considered without cause and the Company will continue to pay and provide you with the benefits,
compensation and other rights described in this Agreement
Lawrence Molloy
November 13, 2012
Page 8
unless termination is for one of the following reasons: (a) a refusal or failure by you to follow either the law or the
reasonable directions of the Board or individual to whom you report, which refusal or failure is not cured within ten
(10) days following delivery of written notice of such conduct to you; (b) a material failure by you to perform your duties in
a manner reasonably satisfactory to the Board that is not cured within ten (10) days following delivery of written notice of
such failure to you; or (c) participation in, a conviction of or a plea of guilty or nolo contendere to a felony or any crime
involving moral turpitude, fraud or dishonesty that is likely to have or has had a material adverse effect on the Company.
20.
SEVERABILITY . If a court or tribunal of competent jurisdiction determines any term or provision of this Agreement, the agreements
identified in Section 8, and/or any similar confidentiality, non-competition and non-solicitation agreements entered into between you and
the Company, is invalid or unenforceable, in whole or in part, then the remaining terms and provisions of this Agreement and such other
agreements shall remain enforceable. Notwithstanding any contrary provision in any such agreements, the court or tribunal will have the
authority to modify or replace the invalid or unenforceable term or provision with a valid and enforceable term or provision that most
accurately represents the parties’ intention with respect to the invalid or unenforceable term or provision.
21.
CODE SECTION 409A . This Agreement is intended to comply with the short-term deferral rule under Treasury Regulation
Section 1.409A-1(b)(4) and be exempt from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and shall be
construed and interpreted in accordance with such intent, provided that, if any severance provided at any time hereunder involves
nonqualified deferred compensation within the meaning of Code Section 409A, it is intended to comply with the applicable rules with
regard thereto and shall be interpreted accordingly. A termination of employment shall not be deemed to have occurred for purposes of
any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment
that are considered “nonqualified deferred compensation” under Code Section 409A unless such termination is also a “separation from
service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a
“termination,” “termination of employment” or like terms shall mean “separation from service.” If you are determined by the Company
on the date of termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then with
regard to any payment that is considered nonqualified deferred compensation under Code Section 409A payable on account of a
“separation from service,” such payment or benefit shall be made or provided at the date which is the earlier of the date that is
immediately following the expiration of the six (6)-month period measured from the date of such “separation from service” of you, and
the date of your death. With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits,
except as permitted by Code Section 409A, (a) the right to reimbursement or in-kind benefits shall not be subject to liquidation or
exchange for
Lawrence Molloy
November 13, 2012
Page 9
another benefit, (b) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not
affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, and (c) such payments shall
be made on or before the last day of your taxable year following the taxable year in which the expense occurred. For purposes of Code
Section 409A, your right to receive any installment payments pursuant to this letter agreement shall be treated as a right to receive a
series of separate and distinct payments. In no event may you, directly or indirectly, designate the calendar year of any payment to be
made under the letter agreement that is considered nonqualified deferred compensation. In the event the time period for considering any
release and it becoming effective as a condition of receiving severance payment shall overlap two calendar years, no amount of such
severance payment shall be paid in the earlier calendar year.
22.
PARAGRAPH HEADINGS . The paragraph headings contained in this Agreement are for reference purposes only and will not affect in
any way the meaning or interpretation of this Agreement.
23.
COUNTERPARTS . This Agreement may be executed in two counterparts, each of which will be deemed an original, all of which
together constitutes one and the same instrument.
24.
CONSTRUCTION . This Agreement will be deemed drafted by both parties, and will not be construed against either party as the drafter
of the document.
Please advise me of your acceptance of the Company’s offer by signing below. Return the originals to me and retain the enclosed copy
for your files. Please call me if you have any questions.
PETSMART, INC.
By: /s/ Robert F. Moran
Name: Robert F. Moran
Title: Chairman and Chief Executive Officer
UNDERSTOOD AND AGREED:
/s/ Lawrence P. Molloy
Lawrence P. Molloy
November 13, 2012
Date:
Exhibit A – Confidentiality Agreement
Exhibit B – Non-Compete and Non-Solicitation Agreement
Exhibit C – General Release and Waiver
Exhibit D – June 13, 2013 Resignation Letter
Exhibit E – March 31, 2014 Resignation Letter
EXHIBIT A
CONFIDENTIALITY AGREEMENT
I recognize that in consideration of my employment or continued employment by PetSmart, Inc., having its corporate headquarters at 19601 N.
27 th Avenue, Phoenix, Arizona 85027, or its affiliates (hereinafter referred to as “the Company”), and the compensation now and hereafter paid
to me, I hereby agree as follows:
1.
DISCLOSURE OR USE OF CONFIDENTIAL INFORMATION. At all times during and after the term of my employment, I will hold in
strictest confidence and will not disclose to any unauthorized person or use (except in connection with ‘my work for the Company) any of
the Company’s Confidential Information. “Confidential Information” means trade secrets and any information, process or idea considered
confidential and not publically disclosed by the Company.
2.
CONFIDENTIAL INFORMATION . Examples of Confidential Information include:
(a)
The Company’s customer and prospective customer lists (including, but not limited to, computer based/rolodex/address book
information);
(b)
The Company’s vendor and prospective vendor lists (including, but not limited to, computer based/rolodex/address book
information);
(c)
Confidential correspondence, notes, files, memoranda, notebooks, drawings, schematics, specifications, plans, programs, price lists,
inventory control lists, materials, data, information of any kind, videotapes, tangible property, equipment, entry cards, identification
badges and keys;
(d)
Confidential information regarding the Company’s operations, finances, methods, plans and results;
(e)
The Company’s confidential arrangements with suppliers and distributors;
(f)
The Company’s confidential plans and strategies for research, development, expansion, store design, staffing and management
systems, new products, purchasing, budgets, priorities, marketing and sales;
(g)
The Company’s confidential financial statements and data regarding sales, profits, productivity, purchasing arrangements, prices
and costs;
(h)
Confidential information regarding the Company’s computer systems and programs;
(i)
Third-party confidential information which the Company has a duty to maintain as confidential;
(j)
Confidential personnel information such as the identities, capabilities, activities, compensation, performance, and ratings of
employees;
(k)
Confidential information regarding employee hiring, incentive, evaluation and discipline practices and programs;
(l)
Confidential training programs, techniques, and materials;
(m) Confidential grooming methods and practices;
(n)
Confidential marketing and promotional plans, methods, budgets and targets; and
(o)
Confidential cost-control methods and practices.
I understand that this list is not all-inclusive and that other information may qualify as Confidential Information. In the event that I am not
sure whether certain information is Confidential Information, I shall treat it as Confidential Information unless the Company informs me
to the contrary.
3.
TERMINATION OF EMPLOYMENT: When I leave the employment of the Company, I will deliver to the Company the originals and
all copies of any and all notes, memoranda, records and documentation and any other material containing or disclosing any Confidential
Information of the Company that are in my possession or under my control. Prior to leaving, I will comply with the Company’s exit
interview procedures.
4.
CONFIDENTIAL INFORMATION OF OTHER EMPLOYERS: I will not during my employment at the Company improperly use or
disclose any confidential information or trade secrets, if any, of any former or concurrent employer.
5.
OWNERSHIP OF INTELLECTUAL PROPERTY: All work product including, but not limited to, deliverables, business continuity
planning programs, designs, installation drawings, drawings, reports, calculations, maps, photographs, computer programs, code,
software, development, systems design, specifications, notes, data, location lay-outs, services, and any other pertinent data, in whatever
form of media, specifically prepared, produced, created, and/or authored by me are works for hire (collectively referred to herein as
“Work”) and are the exclusive property of the Company. To the extent title to any Work may not, by operation of law, vest in the
Company or the Work may not be considered works for hire, I irrevocably assign all my rights, title, and interest in the Work to the
Company. The Company may obtain, and hold in its own name, copyrights, registrations, or such other protections as may be appropriate
to the subject matter of the Work. Upon the Company’s request, I agree while employed by the Company and any time thereafter to give
the Company, at its expense, and any person designated by the Company, reasonable assistance required to achieve or record these rights.
(This paragraph, however, shall not be interpreted to require the assignment of any Work which I can prove I developed entirely on my
own time, without the use of any equipment, supplies, facilities or Confidential Information of the Company, and which neither results
from the work I perform for the Company nor is related to the business of the Company). In the event that the Company is unable, after
reasonable effort, to secure my signature on any documents needed to apply for or prosecute a Work, I hereby irrevocably designate and
appoint the Company and its duly authorized officers and agents as my agent and attorney-in-fact, to act for and in my behalf to execute,
verify and file any such
applications and to do all other lawfully permitted acts to further the prosecution and issuance of patents, copyrights, and other
registrations available for protections with the same legal force and effect as if executed by me. I acknowledge that I am responsible for
understanding, complying with, and implementing the Company’s Intellectual Property Policy and Guidelines published by the Company
as they apply to my position and area of accountability at the Company.
6.
DURATIONS: The obligations imposed by paragraphs 1 and 5 of this Confidentiality Agreement shall remain in force indefinitely, even
if my employment with the Company terminates for any reason.
7.
INJUNCTIVE RELIEF: I acknowledge and agree that in the event of a breach or threatened breach of this Confidentiality Agreement, the
Company will suffer an irreparable injury, and remedies at law may be inadequate. Accordingly, I agree that in such event the Company
shall be entitled to apply for an injunction, without bond, restraining me from disclosing Confidential Information or from rendering any
services to any person, company, or other entity to whom such Confidential Information has been disclosed or is threatened to be
disclosed. (This clause, however, shall not be interpreted as prohibiting the Company from pursing any other available remedies,
including the recovery of damages).
8.
GENERAL:
(a)
ATTORNEY FEES - . If any legal action arises relating to this Confidentiality Agreement, the prevailing party shall be entitled to
recover all costs, expenses, and reasonable attorneys’ fees incurred because of the legal action.
(b)
SEVERABILITY - . In the event that any paragraph or provision of this Confidentiality Agreement shall be held to be illegal or
unenforceable, such paragraph or provision shall be severed from this Confidentiality Agreement and the balance of this
Confidentiality Agreement shall remain in full force and effect.
(c)
GOVERNING LAW - . This Confidentiality Agreement shall be governed by the laws of the State of Arizona. I also agree that the
Maricopa County Arizona State Superior Court will have exclusive jurisdiction and be the sole venue for resolving any dispute
regarding my employment or this Confidentiality Agreement or related agreements.
(d)
CONSULTING RELATIONSHIP - . As used in this Confidentiality Agreement, references to employment shall be deemed to
include and refer to consulting relationships as well.
(e)
CUMULATIVE REMEDIES; WAIVER - . All rights and remedies conferred under this Confidentiality Agreement or by any other
instrument or law shall be cumulative, and may be exercised singularly or concurrently. Failure by the Company to enforce and
provision shall not be deemed a waiver of future enforcement of that or any provision.
9.
EXECUTION: This Confidentiality Agreement is executed on the date indicated on the Signature Page and covers all Confidential
Information currently known to me as well as Confidential Information that shall become known to me during my tenure at the Company.
Print Name: Lawrence P. Molloy
Signature:
/s/ Lawrence P. Molloy
Date:
November 13, 2012
EXHIBIT B
NON-COMPETE AND NON-SOLICITATION AGREEMENT
Capitalized terms used and not defined in this Non-Compete and Non-Solicitation Agreement (this “Agreement”) shall have the meanings
given to such terms in the Letter Agreement between the Company and Lawrence P. Molloy, dated November 13, 2012.
1.
I agree for eighteen (18) months following my Separation Date, I will not, either directly or through others, solicit, attempt to solicit or
hire any employee, consultant, or independent contractor of the Company to terminate his or her relationship with the Company in order
to become an employee, consultant or independent contractor to or for any other person or entity.
2.
I further agree until eighteen (18) months from my Separation Date, I will not directly or indirectly, aid, assist, participate in, consult
with, render services for, accept a position with, become employed by, or otherwise enter into any relationship with any PetSmart
Competitor. “PetSmart Competitor” is defined to mean any entity engaged in whole or in part in the pet retail or pet services industry
that: (i) if it is primarily engaged in the pet retail or pet services industry, has annual gross revenue related to pets, pet retail or pet
services (collectively, “Pet-related Revenue”) of at least $100 million (including, but not limited to Petco, Pet Supplies Plus, Pet
Supermarket, Pet Food Express, Pet Valu (Canada), Super Pet (Canada) Petland (US and Canada)); or (ii) if it is not primarily engaged in
the pet retail or pet services industry, its annual Pet-related Revenue equals or exceeds 20% of its total annual revenue as measured by
Generally Accepted Accounting Principles. In addition, notwithstanding the foregoing, “PetSmart Competitor” shall also mean WalMart
and Target.
3.
I understand and I agree that this Agreement supplements, and does not supersede, other agreements with the Company that I have made,
such as the Confidentiality Agreement, which I have signed. My obligation to keep the Company’s trade secrets and other confidential
information in strictest confidence will continue to be binding following the termination of my employment and the expiration of the
eighteen (18) months non-competition period thereafter, or as allowed or required by applicable law. I also understand that while this
Agreement allows me to compete with the Company following the expiration of the eighteen (18) month period, it does not give me
license to engage in acts that would constitute unfair competition in violation of applicable law.
4.
I acknowledge and agree that in the event of a breach or threatened breach of this Agreement, the Company will suffer irreparable injuries
and remedies at law may be inadequate. Accordingly, I agree that in such event, the Company shall be entitled to apply for an injunction
restraining me from rendering any services to any person, company, or other entity in violation of this Agreement, without bond. This
clause, however, shall not be interpreted as prohibiting the Company from pursuing any other available remedies, including the recovery
of damages.
5.
If legal action arises relation to this Agreement, the prevailing party shall be entitled to recover all costs, expenses, and reasonable
attorney fees incurred because of legal action.
6.
All the provisions of this Agreement are severable and/or divisible. If any paragraph, provision, or part of a provision in this Agreement
shall be held to be illegal or unenforceable, such a paragraph or provision shall be modified to the extent necessary to make it
enforceable.
7.
This Agreement will be deemed to have been entered into and will be construed and enforced in accordance with the laws of the State of
Arizona as applied to contracts made and to be performed entirely within Arizona. I also agree that the Maricopa County Arizona State
Superior Court will have exclusive jurisdiction and be the sole venue for resolving any dispute regarding my employment or this
Agreement or related agreements.
8.
All rights and remedies conferred under this Agreement or by any other instrument of law shall be cumulative, and may be exercised
singularly or concurrently. Failure by the Company to enforce any provision shall not be deemed a waiver of future enforcement of that
or any other provision.
UNDERSTOOD AND AGREED:
Print Name: Lawrence P. Molloy
Signature:
/s/ Lawrence P. Molloy
Date:
November 13, 2012
EXHIBIT C
GENERAL RELEASE AND WAIVER
1.
RELEASE AND WAIVER OF CLAIMS. In consideration of the payments and other benefits described in the Letter Agreement dated
November 13, 2012 (the “Agreement”), between LAWRENCE P. MOLLOY (“EMPLOYEE” or “you”) and PETSMART, INC. (the
“Company”) and other good and valuable consideration received from the COMPANY, receipt of which is hereby acknowledged,
EMPLOYEE, in full satisfaction, hereby agrees to, and does, release, acquit and forever discharge the COMPANY, and its parent entities
and subsidiaries, and their officers, directors, agents, insurers, employees, attorneys, shareholders, successors, assigns and affiliates
(collectively, the “Released Parties”), of and from any and all matters, claims, demands, damages, causes of actions, debts, liabilities,
costs, expenses, attorneys’ fees, damages, indemnities, controversies, judgments, suits and obligations of every kind and nature, in law,
equity or otherwise, foreseen or unforeseen, known or unknown, suspected and unsuspected, disclosed and undisclosed, arising or in any
way related to agreements, events, acts or conduct between EMPLOYEE and Company at any time prior to and/or including the date of
your execution of this Agreement (collectively, “Claims and Demands”), including but not limited to: all Claims and Demands directly or
indirectly arising out of or in any way connected with (i) EMPLOYEE’S employment with any of the Released Parties or the termination
of that employment; (ii) Claims and Demands related to salary, bonuses, commissions, stock, stock options, restricted stock or any other
ownership interests in the Company, vacation pay, fringe benefits, expenses reimbursements, severance pay, or any other form of
compensation; (iii) Claims and Demands related to unjust, wrongful, retaliatory, or tortious discharge (including any claim of fraud,
negligence, whistleblowing, tortious interference with contracts or prospective economic advantage, negligent intentional infliction of
emotional distress, or intentional infliction of emotional distress); (iv) Claims and Demands related to defamation, slander, libel or other
common law action; (v) Claims and Demands involving or arising under any type of federal, state, local or other laws, statutes,
regulations, ordinances or any other source of legal obligations, including but not limited to: the federal Civil Rights Act of 1964; the
federal Civil Rights Act of 1991, the federal Americans with Disabilities Act of 1990 (ADA); the Rehabilitation Act of 1973, the federal
Age Discrimination in Employment Act of 1967 (ADEA); the Older Workers Benefit Protection Act (OWBPA), the Equal Pay Act, the
Fair Labor Standards Act of 1938 (FLSA), the Family and Medical Leave Act (FMLA); the Employee Retirement Income Security Act of
1974 (ERISA); the Arizona Civil Rights Act; as each is amended, tort law; contract law; wrongful discharge; discrimination; harassment;
fraud; defamation; emotional distress; human rights, civil rights and employment laws of the State of AZ and any other relevant federal,
state or local statutes or ordinances; (vi) Claims and Demands for pay, insurance, or welfare benefits or any other benefits of employment
with the Company arising from the events occurring prior to the date of this General Release and Wavier (“Release”) other than claims
for benefits to which EMPLOYEE is entitled under the Agreement and any applicable worker’s compensation or unemployment
compensation; and (vii) any Claims and Demands relation to a breach of the implied covenant of good faith and fair dealing; provided,
however, that nothing herein shall prevent EMPLOYEE from enforcing the terms of the Agreement or obtaining his vested right to a
benefit under the SaveSmart
401(k) Plan. This release does not waive rights or claims that by law cannot be released by private agreement, such as involvement in
agency proceedings, but it does waive EMPLOYEE’S individual right to compensation or monetary relief of any kind from the Released
Parties that might arise from any such proceedings. This Release applies only to claims that arise on or before the date EMPLOYEE signs
this Release and does not include claims that EMPLOYEE may have that arise after the date he signs this Release.
2.
AGREEMENT NOT TO SUE. EMPLOYEE hereby agrees not to sue or to pursue any claim against Released Parties with respect to any
claims released pursuant to this Release. EMPLOYEE hereby acknowledges that EMPLOYEE has been advised by the COMPANY to
consult an attorney prior to executing this Release and that EMPLOYEE has had a full opportunity to do so. EMPLOYEE agrees that if
any such claim referenced herein is filed, pursued or otherwise prosecuted, EMPLOYEE waives his right to relief from any such claim,
including the right to damages, attorneys’ fees, court costs and any and all other relief, whether legal or equitable, sought in connection
with such claim. EMPLOYEE further represents, declares, and agrees that EMPLOYEE agrees that if he, or any person or entity should
bring a charge, claim, complaint or action on his behalf, EMPLOYEE hereby waives and forfeits any right to recover any monetary
dames under said claim and shall be liable for the payment of all damages and costs, including attorneys’ fees incurred by the Released
Parties, or any of them, in connection with such a claim and COMPANY shall not be obligated to make any payment or benefit not
already made to EMPLOYEE. EMPLOYEE voluntarily accepts the benefits described in the Agreement for the purposes of making a full
and final compromise, adjustment, and settlement of all claims hereinabove described.
3.
NO CLAIMS PENDING. EMPLOYEE represents and warrants that as of the date he signs this Release, he has not initiated or caused to
be initiated or caused to be initiated against the Company an administrative claim, investigation, proceeding or suit of any kind.
4.
WAIVER IS KNOWING AND VOLUNTARY. EMPLOYEE acknowledges that, among other things, EMPLOYEE hereby knowingly
and voluntarily waives and releases any and all rights he may have under ADEA, as amended, arising to and including the date
EMPLOYEE signs this Release. EMPLOYEE also acknowledges that the severance pay and other benefits afforded under the Agreement
constitute consideration that is in addition to anything of value to which EMPLOYEE already is entitled. EMPLOYEE further
acknowledges that he has been advised in writing as stated in this Section 4: (a) that EMPLOYEE’S waiver and release does not apply to
any rights or claims that arise after the execution date of this Release; (b) to consult with an attorney prior to executing this Release;
(c) that EMPLOYEE has twenty-one (21) calendar days to consider the Agreement and Release (although you may knowingly choose to
voluntarily execute this Release earlier); and (d) that EMPLOYEE has seven (7) calendar days following the execution of this Release to
revoke this Release. The Company and EMPLOYEE agree that any notice of revocation must be in writing and delivered, or provided to
a third-party commercial carrier (for example, Federal Express or United Parcel Service) or the U.S. Postal Service, at any time on or
before the seventh (7th) calendar day following EMPLOYEE’S execution of this Release for delivery the next business day to:
Neil Stacey
PetSmart Inc.
19601 North 27 th Avenue
Phoenix Arizona 85027
The Company and EMPLOYEE agree that to the extent permitted under applicable law, any changes made to the Agreement or this
Release after you receive it, whether or not material, do not restart the running of the 21 calendar day review period. This Release shall
not be effective until the tenth calendar day after this Release is executed by EMPLOYEE, provided that EMPLOYEE has not revoked
the Release (as described in this Section 4).
5.
CIVIL CODE SECTION 1542 WAIVER. In giving this release, which includes claims that may be unknown to EMPLOYEE at present,
though arising on or before the date of this Release’s execution, EMPLOYEE acknowledges that EMPLOYEE understands he is waiving
the benefit of any provision of law in any jurisdiction, including but not limited to California Civil Code section 1542, which states: “A
general release does not extend to claims which the creditor does not know or suspect to exist in his/her favor at the time of executing the
release which if known by him/her must have materially affected his/her settlement with the debtor.” EMPLOYEE expressly waives and
relinquishes all rights and benefits under that section and any law or legal principle of similar effect in any jurisdiction with respect to the
release of unknown and unsuspected claims granted in this Release.
6.
GOVERNING LAW. This release will be deemed to have been entered into and will be construed and enforced in accordance with the
laws of the State of Arizona as applied to contracts made and to be performed entirely within Arizona. You also agree that the Maricopa
County Arizona State Superior Court will have exclusive jurisdiction and be the sole venue for resolving any dispute regarding your
employment or this Release or related agreements.
IN WITNESS WHEREOF, the EMPLOYEE has executed this General Release and Waiver.
I HAVE READ THIS GENERAL RELEASE AND WAVIER AND, UNDERSTANDING ALL OF ITS TERMS, SIGN IT OF MY FREE
WILL.
Date November 13, 2012
/s/ Lawrence P. Molloy
LAWRENCE P. MOLLOY
PETSMART, INC.
Date November 13, 2012
By
/s/ Robert F. Moran
Title Chairman and Chief Executive Officer
EXHIBIT D
RESIGNATION LETTER—TRANSITION DATE
Date: [June 30, 2013]
Board of Directors
PetSmart, Inc.
19601 N. 27 th Avenue
Phoenix, AZ 85027
I hereby tender my voluntary resignation as an officer of PetSmart, Inc. and any of its affiliated entities (collectively the “Company”),
including as Executive Vice President and Chief Financial Officer of the Company, and from all boards and committees of the Company,
effective as of the close of business on June 30, 2013.
EXHIBIT E
RESIGNATION LETTER—SEPARATION DATE
Date: [March 31, 2014]
Board of Directors
PetSmart, Inc.
19601 N. 27 th Avenue
Phoenix, AZ 85027
I hereby tender my voluntary resignation as an employee of, and from any and all positions I may hold with, PetSmart, Inc. and any of its
affiliated entities (collectively the “Company”), including as a special advisor to the Chief Executive Officer of the Company, effective as of
the close of business on March 31, 2014.
Exhibit 99.1
CONTACT:
PetSmart Investor Relations
(623) 587-2025
PetSmart Reports Results for the Third Quarter 2012
Q3 Earnings up 50% to $0.75 per Share; Comp Sales of 6.5%; Total Sales up 9%;
Comp Transactions up 2.3%; Chip Molloy, Executive Vice President and Chief Financial Officer, will be resigning in early 2014
PHOENIX, AZ—(November 14, 2012) - PetSmart, Inc. (NASDAQ: PETM) today reported earnings of $0.75 per share, up 50% compared to
$0.50 per share in the third quarter of 2011. Net income totaled $82 million in the third quarter of 2012, compared to $56 million in the third
quarter of 2011.
Total sales for the third quarter of 2012 increased 9% to $1.6 billion. The increase in net sales was partially impacted by $1 million in favorable
foreign currency fluctuations. Comparable store sales, or sales in stores open at least a year, grew 6.5%, benefitting from comparable
transactions growth of 2.3%. Services sales, which are included in total sales, grew 8% to $175 million.
During the third quarter, the company generated $133 million in operating cash flow, spent $40 million in capital expenditures, distributed $18
million in dividends, and repurchased $60 million of PetSmart stock. The company ended the quarter with $370 million in cash, cash
equivalents and restricted cash and zero borrowings on its credit facility.
“Our performance in the third quarter was due to strength across all three merchandising categories, as well as across services,” said Bob
Moran, Chairman and Chief Executive Officer. “We are executing well, and continue to define the pet specialty customer experience.”
“As a reminder, 2012 contains a 53 rd week. For all of 2012, we anticipate comparable store sales growth of 6% to 7%, and total sales growth in
the 10% to 11% range. We are raising our earnings per share guidance from a previous range of $3.30 to $3.40, to our current expectations of
$3.47 to $3.51. The impact of the extra week is estimated to be $120 million in sales and $0.16 in EPS,” said Chip Molloy, Executive Vice
President and Chief Financial Officer. “For the fourth quarter of 2012, we are expecting comparable store sales growth in the mid-single digit
range, and earnings per share between $1.16 and $1.20, including the impact of the extra week.”
The company also announced that Chip Molloy, Executive Vice President and Chief Financial Officer, will be resigning in early 2014, to allow
him to spend more time with his family, who now live in the southeast. Mr. Molloy will continue as Executive Vice President and Chief
Financial Officer until June 2013, and will remain with the company as a special advisor until March 2014. “Chip has been an invaluable
member of our management team over the past five years, and has been instrumental in designing a framework and creating a culture within the
company that consistently pushes us to always consider our shareholders,” said Mr. Moran. “It is this foundation of focus and discipline that
has contributed to our success over the past four years, and will remain a key pillar of our strategy well into the future.”
Conference call information
PetSmart management has scheduled a teleconference for 4:30 p.m. EST on November 14, 2012 to discuss results for the third quarter 2012.
This teleconference will be webcast live for all investors at www.petm.com. The webcast will be available until the company announces results
for the fourth quarter of 2012. In addition, you can listen to the call live by dialing 866-814-1933 (within the United States and Canada) or 703639-1365 (for international callers), code 1596112.
A phone replay will be available through December 14, 2012, 11:59 p.m. EST, at 888-266-2081 in the United States and Canada, or at 703925-2533 for international callers, code 1596112.
About PetSmart
PetSmart, Inc. (NASDAQ: PETM) is the largest specialty pet retailer of services and solutions for the lifetime needs of pets. The company
employs approximately 50,000 associates and operates more than 1,269 pet stores in the United States, Canada and Puerto Rico, over 195 instore PetSmart ® PetsHotel ® dog and cat boarding facilities and is a leading online provider of pet supplies and pet care information
(http://www.petsmart.com). PetSmart provides a broad range of competitively priced pet food and pet products; and offers dog training, pet
grooming, pet boarding, PetSmart Doggie Day Camp SM day care services and pet adoption services. Since 1994, PetSmart Charities, Inc., an
independent 501(c)(3) non-profit animal welfare organization and the largest funder of animal welfare efforts in North America, has provided
more than $165 million in grants and programs benefiting animal welfare organizations. Through its in-store pet adoption partnership with
PetSmart Charities ® , PetSmart has helped save the lives of more than 5 million pets.
Forward-looking statements
This news release contains forward-looking statements concerning our expectations for future performance, including the statements
comprising our 2012 guidance. These “forward-looking statements” are based on currently available information, operating plans and
projections about future events and trends. They inherently involve risks and uncertainties that could cause actual results to differ materially
from those predicted in such forward-looking statements. Such risks and uncertainties include, but are not limited to: changes in general
economic conditions; conditions affecting customer transactions and average ticket including, but not limited to, weather conditions or other
seasonal events; our ability to compete effectively; disruption of our supply chain; our ability to effectively manage our growth and operations;
changes in our cost structure; and changes in the legal or regulatory environment. Undue reliance should not be placed on such forward-looking
statements as they speak only as of the date hereof, and we undertake no obligation to update these statements to reflect subsequent events or
circumstances except as may be required by law. For additional information on these and other factors that arise when investing in PetSmart,
please see our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent
reports on Forms 10-Q and 8-K.
Follow PetSmart on Twitter www.twitter.com/PetSmartTLC
Find PetSmart on Facebook www.facebook.com/PetSmart
PetSmart, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share and store data)
(Unaudited)
Merchandise sales
Services sales
Other revenue
Net sales
Cost of merchandise
sales
Cost of services sales
Cost of other revenue
Total cost of sales
Gross profit
Operating, general
and administrative
expenses
Operating income
Interest expense, net
Income before income
tax expense and
equity income
from Banfield
Income tax expense
Equity income from
Banfield
Net income
Earnings per common
share:
Basic
Diluted
Weighted average
shares outstanding:
Basic
Diluted
Stores open at
beginning of each
period
Stores opened
during each
period
Stores closed during
each period
Stores open at end
of each period
Thirteen Weeks Ended
October 28, 2012
% of Sales
Thirteen Weeks Ended
October 30, 2011
% of Sales
Thirty-Nine Weeks Ended
October 28, 2012
% of Sales
Thirty-Nine Weeks Ended
October 30, 2011
% of Sales
$ 1,444,683
175,018
9,810
1,629,511
88.7%
10.7%
0.6%
100.0%
$ 1,326,819
161,339
9,399
1,497,557
88.6%
10.8%
0.6%
100.0%
$ 4,303,625
546,899
28,547
4,879,071
88.2%
11.2%
0.6%
100.0%
$ 3,941,641
506,380
27,455
4,475,476
88.1%
11.3%
0.6%
100.0%
1,008,278
128,911
9,810
1,146,999
482,512
61.9%
7.9%
0.6%
70.4%
29.6%
940,960
119,038
9,399
1,069,397
428,160
62.8%
8.0%
0.6%
71.4%
28.6%
2,989,671
392,152
28,547
3,410,370
1,468,701
61.3%
8.0%
0.6%
69.9%
30.1%
2,777,172
364,290
27,455
3,168,917
1,306,559
62.1%
8.1%
0.6%
70.8%
29.2%
342,958
139,554
(13,375)
21.0%
8.6%
-0.8%
326,964
101,196
(14,038)
21.8%
6.8%
-0.9%
1,038,736
429,965
(41,054)
21.3%
8.8%
-0.8%
973,404
333,155
(42,740)
21.7%
7.4%
-1.0%
126,179
7.8%
87,158
5.8%
388,911
8.0%
290,415
6.5%
(48,335)
-3.0%
(33,826)
-2.3%
(144,840)
-3.0%
(110,356)
-2.5%
$
4,472
82,316
0.3%
5.1%
$
2,826
56,158
0.2%
3.7%
$
11,448
255,519
0.2%
5.2%
$
8,184
188,243
0.2%
4.2%
$
$
0.76
0.75
$
$
0.50
0.50
$
$
2.36
2.32
$
$
1.67
1.65
107,719
109,333
111,330
113,081
108,303
110,117
112,425
114,399
1,249
1,197
1,232
1,187
24
15
49
28
(4)
(2)
(12)
(5)
1,269
1,210
1,269
1,210
PetSmart, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except par value)
(Unaudited)
October 28,
2012
Assets
Cash and cash equivalents
Short-term investments
Restricted cash
Receivables, net
Merchandise inventories
Deferred income taxes
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Equity investment in Banfield
Deferred income taxes
Goodwill
Other noncurrent assets
Total assets
Liabilities and Stockholders’ Equity
Accounts payable and bank overdraft
Accrued payroll, bonus and employee benefits
Accrued occupancy expenses and deferred rents
Current maturities of capital lease obligations
Other current liabilities
Total current liabilities
Capital lease obligations
Deferred rents
Other noncurrent liabilities
Total liabilities
Stockholders’ Equity:
Preferred stock; $.0001 par value
Common stock; $.0001 par value
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income
Less: Treasury stock
Total stockholders’ equity
Total liabilities and stockholders’ equity
$
298,090
13,862
71,916
49,811
765,831
51,381
111,164
1,362,055
January 29,
2012
$
342,892
20,311
70,189
53,899
644,864
51,381
80,352
1,263,888
October 30,
2011
$
271,252
19,555
61,439
65,709
707,997
44,999
88,908
1,259,859
997,361
35,412
85,308
44,248
44,623
$ 2,569,007
1,067,028
37,824
93,485
44,084
37,775
$ 2,544,084
1,064,993
35,082
95,426
44,266
34,336
$ 2,533,962
$
$
$
266,708
161,030
74,106
60,023
181,381
743,248
199,177
158,079
68,584
54,219
201,247
681,306
228,431
149,032
72,563
52,446
169,733
672,205
475,552
75,948
117,248
1,411,996
505,273
81,403
122,273
1,390,255
511,984
82,565
121,068
1,387,822
—
17
1,393,158
1,711,574
5,600
(1,953,338)
1,157,011
$ 2,569,007
—
16
1,312,996
1,507,054
5,490
(1,671,727)
1,153,829
$ 2,544,084
—
16
1,290,152
1,420,471
5,731
(1,570,230)
1,146,140
$ 2,533,962