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PROSPECTUS
2,000,000 SHARES
PETSMART, INC.
COMMON STOCK
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This Prospectus covers 2,000,000 shares (the "Shares") of the Common Stock,
$.0001 par value ("Common Stock"), of PETsMART, Inc., a Delaware corporation
("PETsMART" or the "Company") that may be offered and issued by the Company from
time to time in connection with the acquisition directly or indirectly by the
Company of other businesses or properties or interests therein, and which may be
reserved for issuance pursuant to, or offered and issued upon exercise or
conversion of, warrants, options, convertible notes, or other similar
instruments issued by the Company from time to time in connection with any such
acquisitions.
It is expected that the specific terms of any acquisition involving the
issuance of securities covered by this Prospectus will be determined by direct
negotiations with the owners or controlling persons of the businesses or
properties or interests therein to be acquired by the Company, and that the
shares of Common Stock issued will be valued at prices reasonably related to
market prices current either at the time the terms of the acquisition are agreed
upon or at or about the time of delivery of shares or at such other time or for
such period as may be agreed upon. No underwriting discounts or commissions will
be paid, although finder's fees may be paid from time to time with respect to
specific acquisitions. Any person receiving any such fees may be deemed to be an
underwriter within the meaning of the Securities Act of 1933, as amended (the
"Securities Act").
With the consent of the Company, this Prospectus may also be used by
persons who have received or will receive shares of Common Stock covered by this
Prospectus and who may wish to sell such shares under circumstances requiring or
making desirable its use. See "Resale of Securities Covered by this Prospectus"
for information relating to resales pursuant to this Prospectus of shares of
Common Stock issued under this Registration Statement. The Company will not
receive any proceeds from any such resale of shares. Expenses of this offering
will be paid by the Company.
The Common Stock of the Company is quoted on the Nasdaq National Market
under the symbol "PETM." Application will be made to list these shares on the
Nasdaq National Market. The last reported sales price of the Company's Common
Stock on the Nasdaq National Market on May 30, 1996 was $44.50 per share.
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THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" ON PAGE 4
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
May 31, 1996
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AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files annual and quarterly reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information may be inspected and copied
at the Commission's Public Reference Section, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, as well as at the Commission's Regional Offices at 7
World Trade Center, 13th Floor, New York, New York 10048; and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can
be obtained at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Common Stock
of the Company is quoted on the Nasdaq National Market. Reports and other
information concerning the Company may be inspected at the National Association
of Securities Dealers, Inc. at 1735 K Street, N.W. Washington, D.C. 20006.
ADDITIONAL INFORMATION
A registration statement on Form S-4 with respect to the Common Stock
offered hereby (the "Registration Statement") has been filed with the Commission
under the Act. This Prospectus does not contain all of the information
contained in such Registration Statement and the exhibits and schedules thereto,
certain portions of which have been omitted pursuant to the rules and
regulations of the Commission. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to the
Registration Statement and the exhibits and schedules thereto. Statements
contained in this Prospectus regarding the contents of any contract or any other
documents are not necessarily complete and, in each instance, reference is
hereby made to the copy of such contract or document filed as an exhibit to the
Registration Statement. The Registration Statement, including exhibits thereto,
may be inspected without charge at the Commission's principal office in
Washington, D.C., and copies of all or any part thereof may be obtained from the
Public Reference Section, Securities and Exchange Commission, Washington, D.C.,
20549, upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed with the Commission under the Exchange Act
(File No. 0-21888, are hereby incorporated by reference into this Prospectus:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
January 28, 1996, filed on or about April 15, 1996, as amended by a Form 10-K/A
filed on or about April 22, 1996, including all material incorporated by
reference therein;
(b) The Company's Current Report on Form 8-K dated January 30, 1996 and
filed on or about February 13, 1996 as amended by a Form 8-K/A dated January 30,
1996 and filed on or about April 15, 1996; and
(c) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing of such documents. Any
statement contained in this Prospectus or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently-filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the documents that have been
incorporated by reference herein (not including exhibits to such documents
unless such exhibits are specifically incorporated by reference herein or into
such documents). Such request may be directed to: Investor Relations, PETsMART,
Inc., 10000 N. 31st Avenue, Suite C-100, Phoenix, AZ 85051.
The discussions in this Prospectus and the documents incorporated by
reference herein contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein and in such incorporated documents. Factors that could cause
or contribute to such
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differences include, but are not limited to, those discussed under the heading
"Risk Factors" herein, as well as those discussed in the documents incorporated
herein by reference.
THE COMPANY
PETsMART is the leading operator of superstores specializing in pet food,
pet supplies, and pet services in the United States. As of March 29, 1996,
PETsMART operated 283 superstores in 33 states. PETsMART expects to open at
least 50 superstores in fiscal 1996. PETsMART endeavors to offer the pet owner
the most complete assortment of pet products and services available, at prices
that are typically 10% to 30% below those offered by supermarkets and other
traditional pet food and pet supply outlets.
PETsMART carries an extensive selection of pet foods and treats, including
premium labels such as Science Diet and Iams, as well as other national brand-
name products such as Ralston Purina and Alpo and its own corporate brand
products. PETsMART's broad assortment of pet supplies includes collars, leashes,
health aids, shampoos, medications, toys, animal carriers, dog houses, cat
furniture, and equestrian supplies. Other products include fresh water tropical
fish and, in most superstores, domestically bred birds. To attract new customers
and to engender customer loyalty, PETsMART is a leader in the introduction of
innovative marketing programs, merchandising techniques and services for the pet
owner. For example, PETsMART offers on-site professional grooming services in
most superstores, conducts periodic vaccination clinics and obedience classes,
sponsors Luv-A-Pet adoption program and, in selected superstores, leases space
to independently owned and operated veterinary clinics.
PETsMART's prototype 26,000 square foot superstore carries approximately
12,000 pet-related items as compared to an average of approximately 800 such
items in a typical supermarket, 20 such items in a typical warehouse club, 500
such items in a typical mass merchandiser and 1,000 items in a traditional pet
store. PETsMART's superstores utilize a hybrid retail-warehouse format that
reinforces the image of warehouse shopping at discount prices, enhances
merchandise presentation and provides a fun shopping experience for customers
and their pets. PETsMART superstores are generally located in sites co-anchored
by strong consumables-oriented retailers or other destination superstores, or
near major regional malls.
PETsMART is also the leading direct marketer of pet and equine supplies
through direct mail (catalog) operations which are managed by its Sporting Dog
and State Line Tack subsidiaries.
PETsMART was incorporated in Delaware in August 1986. The Company's
principal executive offices are located at 10000 N. 31st Avenue, Suite C-100,
Phoenix, Arizona 85051 and its telephone number is (602) 944-7070.
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RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN THE COMMON
STOCK.
INTEGRATION OF OPERATIONS AS THE RESULT OF ACQUISITIONS
If PETsMART is to realize the anticipated benefits of its recent
acquisitions of Petstuff, Inc., a Delaware corporation ("Petstuff"), Sporting
Dog Specialties, Inc., a New York corporation ("Sporting Dog"), The Pet Food
Giant, Inc., a New Jersey corporation ("Pet Food Giant"), and State Line Tack,
Inc., a New Hampshire corporation ("State Line Tack") the operations of all of
these companies must be integrated and combined efficiently. The process of
rationalizing stores, supply and distribution channels, computer and accounting
systems and other aspects of operations, while managing a larger and
geographically expanded entity with new equine and catalog businesses, will
present a significant challenge to PETsMART's management. There can be no
assurance that the integration process will be successful or that the
anticipated benefits of these acquisitions will be fully realized. The
dedication of management resources to such integration may detract attention
from the day-to-day business of the Company. The difficulties of integration may
be increased by the necessity of coordinating geographically separated
organizations, integrating personnel with disparate business backgrounds and
combining different corporate cultures. There can be no assurance that the
Company will be able to achieve any expense reductions with the acquired
companies, that there will not be substantial costs associated with any such
reductions or that such reductions will not result in a decrease in revenues or
that there will not be other material adverse effects of these integration
efforts. Such effects could materially reduce the short-term earnings of the
Company. Subsequent to the Petstuff acquisition, PETsMART incurred a charge in
its second quarter ended July 30, 1995 of $38.9 million to reflect its
acquisition of Petstuff, including transaction costs and costs attributable to
lease cancellations, store conversion expenses, severance and employee
relocation costs, the elimination of duplicate management information systems
and facilities, the write-off of assets, the cancellation of certain contractual
obligations and other integration costs. In addition, PETsMART incurred a charge
in its second quarter ended July 30, 1995 of $1.8 million to reflect its
acquisition of Sporting Dog, including transaction costs, costs associated with
the closure of inadequate facilities and other integration costs. PETsMART
incurred a charge in its third fiscal quarter ended October 29, 1995 of
approximately $6.4 million, to reflect its acquisition of Pet Food Giant,
including transaction costs and costs attributable to lease cancellations, store
conversion expenses, employee severance payments, the elimination of duplicate
management information systems and facilities, the write-off of assets, the
cancellation of certain contractual obligations and other integration costs.
PETsMART incurred a charge in its first fiscal quarter ending April 28, 1996, of
$8.1 million, to reflect the acquisition of State Line Tack, including
transaction costs, severance payments, and other integration costs. There can be
no assurance that PETsMART will not incur additional charges in subsequent
quarters to reflect costs associated with its acquisitions of Petstuff, Sporting
Dog, Pet Food Giant and State Line Tack. The Company may make other
acquisitions in the future. Acquisitions require significant financial and
management resources both at the time of the transaction and during the process
of integrating the newly acquired business into the Company's operations. The
Company's operating results could be adversely affected if it is unable to
successfully integrate such new companies into its operations. Future
acquisitions by the Company could also result in potentially dilutive issuances
of securities, the incurrence of additional debt and contingent liabilities, and
amortization expenses related to goodwill and other intangible assets, which
could materially adversely affect the Company's profitability.
EXPANSION PLANS
PETsMART has expanded from two superstores at the beginning of fiscal 1988
to 283 superstores as of March 29, 1996. PETsMART expects to open at least 50
superstores in fiscal 1996. The Company's ability to continue to open
superstores on a timely basis will depend upon a number of factors, including
the identification of suitable sites, the negotiation of leases for those sites
on acceptable terms, the construction or refurbishment of sites, the hiring,
training and retention of skilled managers and personnel and other factors, some
of which may be beyond the Company's control. As a result, there can be no
assurance that the Company will be able to achieve its targets for opening new
superstores. In addition, PETsMART is restricted under its bank credit facility
from incurring capital expenditures (excluding capital leases) in excess of $40
million in any fiscal year. While PETsMART expects to continue its current
practice of leasing its stores and equipment and does not anticipate needing a
waiver of this restriction, there can be no assurance that this will be the
case, or that if a waiver is needed it can be obtained. In addition, PETsMART's
bank credit facility requires PETsMART to meet certain financial covenants,
including a minimum net worth, debt ratio, fixed charge coverage ratio and debt
to equity ratio, and includes restrictions related to payment of cash dividends,
capital expenditures, and PETsMART's ability to incur additional debt (excluding
capital leases). To manage its expansion, PETsMART is continuously evaluating
the
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adequacy of its existing systems and procedures, including financial controls
and management information systems, product distribution facilities and field
and superstore management. There can be no assurance that PETsMART will
anticipate all of the changing demands which its expanding operations and the
acquisitions of Petstuff, Sporting Dog, Pet Food Giant and State Line Tack will
impose on such systems. PETsMART's failure to expand its distribution
capabilities or other internal systems or procedures as required could adversely
affect its future operating results.
PERFORMANCE OF NEW SUPERSTORES; FUTURE OPERATING RESULTS
A majority of PETsMART's superstores have been open for less than three
years. There can be no assurance that PETsMART's existing superstores will
maintain their profitability or that new superstores will generate sales levels
necessary to achieve store-level profitability, much less profitability
comparable to that of existing superstores. PETsMART has recently opened
superstores in new markets and plans to open additional superstores in other new
markets. There can be no assurance that these stores will be profitable in the
near term or that profitability, if achieved, will be sustained. Moreover, the
Petstuff and Pet Food Giant superstores need to be fully integrated into the
PETsMART organization and, in some cases, represent new geographic markets for
PETsMART. Petstuff and Pet Food Giant have incurred losses in their two most
recent fiscal years, primarily due to the limited operating history of many of
their stores and expenses associated with opening new stores and with developing
an infrastructure to support future growth. There can be no assurance that
PETsMART will be able to operate the former Petstuff or Pet Food Giant stores
profitably in the future. Further, PETsMART intends to open additional
superstores in existing markets, which may have the effect of reducing sales at
existing PETsMART superstores. PETsMART's comparable store sales were 19.8%,
19.1%, and 12.5% for fiscal 1993, fiscal 1994, and fiscal 1995, respectively.
PETsMART anticipates that its rate of comparable store sales growth may be lower
in future periods than the growth rates previously experienced due to the
maturing of the existing store base and the effects of opening additional stores
in existing markets. As a result of PETsMART's rapid expansion, PETsMART expects
its average store contribution and operating margins to be lower in the near
term due to the level of preopening expenses and the lower anticipated sales
volumes of its immature stores. In addition, certain costs, such as those
related to occupancy, are expected to be higher in some of the new geographic
markets PETsMART has recently entered. Finally, due in part to these
acquisitions, period-to-period comparisons of financial results may not be
meaningful and the results of operations for historical periods may not be
indicative of future results.
ENTRY INTO NEW BUSINESSES
PETsMART entered the mail order catalog business with its acquisition of
Sporting Dog and substantially increased its equine direct marketing business
with the acquisition of State Line Tack. Although the existing senior
management of both businesses have been retained, there can be no assurance that
these individuals will remain with the Company or that the operation of such
businesses as PETsMART subsidiaries will be successful or that the Company's
strategy of combining retail store and direct mail purchasing, marketing and
product line offerings will be successful.
CANADIAN OPERATIONS
The Company has announced plans to enter the Canadian market by opening
five superstores in Ontario in the third fiscal quarter of 1996. The Company's
management has never operated stores outside of the United States. There can be
no assurance that PETsMART will be able to successfully operate in Canada or
that the international expansion will be implemented successfully.
International expansion will require significant management resources and, if
unsuccessful, may materially and adversely affect the Company.
RELIANCE ON VENDORS AND PRODUCT LINES
Premium pet foods for dogs and cats, such as Science Diet, Iams and
Nature's Recipe, make up a significant portion of PETsMART's revenues.
Currently, premium pet foods are not sold in supermarkets, warehouse clubs or by
other mass merchandisers. The Company may be materially adversely affected if
any of the manufacturers of these premium pet foods were to make their products
available in supermarkets or through other mass merchandisers, or if the brands
currently available to such retailers were to gain market share at the expense
of the premium brands sold only through specialty pet food and supply outlets.
In addition, PETsMART's principal vendors currently provide it with certain
incentives, such as volume purchasing, trade discounts, cooperative advertising
and market development funds. A reduction or discontinuance of these incentives
could also have a material adverse effect on the Company. PETsMART has no supply
contracts with any of its premium food or other
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vendors. While the Company believes its vendor relationships are satisfactory, a
vendor could discontinue selling to the Company at any time.
COMPETITION
The pet food and supply retailing industry is highly competitive. PETsMART
competes with a wide variety of supermarkets, warehouse clubs and mass
merchandisers, many of which are larger and have significantly greater resources
than PETsMART. PETsMART also competes with a number of other pet supply
warehouse or specialty stores, smaller pet store chains, and independent pet
stores. The industry has become increasingly competitive due to the entrance of
other specialty retailers into the pet food and supply market, some of which
have developed formats similar to that used by PETsMART. If any of the Company's
major competitors, such as supermarkets, warehouse clubs, mass merchandisers, or
specialty pet stores, seek to gain or retain market share by reducing prices,
the Company may be required to reduce its prices in order to remain competitive,
which may have the effect of reducing profits. There can be no assurance that
the Company will not face greater competition from other national or regional
retailers in the future.
QUARTERLY AND SEASONAL FLUCTUATIONS
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's business
is also subject to some seasonal fluctuation and it expects to realize a higher
portion of its net sales during the month of December than during the other
months of the year and a lower portion of its net sales in the summer months. In
addition, PETsMART superstores typically draw from a large retail area, and can
also therefore be impacted by adverse weather and travel conditions.
CHANGES IN GOVERNMENT REGULATION
The Company is subject to laws governing its relationship with associates,
including minimum wage requirements, overtime, working conditions and
citizenship requirements. An increase in the minimum wage rate, employee benefit
costs or other costs associated with employees could adversely affect the
Company as well as the retail industry in general. In certain locations,
PETsMART leases space to independently-owned-and-operated veterinary clinics,
and the Company intends to lease space within its other superstores to such
clinics where appropriate. Recently, certain states have introduced legislation
designed to restrict the establishment of veterinary clinics in retail stores.
If legislation such as this is enacted, it could limit the Company's ability to
lease space to veterinarians within certain of its superstores.
DEPENDENCE UPON KEY PERSONNEL
PETsMART is dependent to a large degree on the services of Samuel J.
Parker, Chairman; Mark S. Hansen, President and Chief Executive Officer; and C.
Donald Dorsey, Executive Vice President and Chief Financial Officer. The loss of
the services of Messrs. Parker, Hansen or Dorsey could have a material adverse
effect on PETsMART. In addition, there can be no assurance that PETsMART will be
able to attract and retain additional key personnel with the skills and
expertise necessary to manage its planned growth and expansion. PETsMART has
entered into employment letter agreements with each of Messrs. Parker, Hansen
and Dorsey providing for a severance allowance, equal to one year's base salary,
a pro-rata bonus and a one year contribution of health care benefits, in the
event he is terminated by PETsMART for reasons other than cause. The agreement
with Mr. Parker terminates as of PETsMART's 1997 Annual Stockholders' Meeting,
and the agreements with Messrs. Hansen and Dorsey terminate on February 1, 1998.
ANTI-TAKEOVER MEASURES
The PETsMART Certificate and the PETsMART By-laws include provisions that
may be deemed to have anti-takeover effects and may delay, defer or prevent a
change in management or control that stockholders might consider to be in their
best interests. These provisions include (i) a classified Board of Directors
consisting of three classes, (ii) Board of Directors authorization to issue up
to 10,000,000 shares of preferred stock in one or more series with such rights,
obligations, and preferences as the Board of Directors may provide, (iii)
elimination of the right of stockholders to call special meetings of
stockholders, (iv) the elimination of the right of stockholders to act by
written consent, and (v) certain advance notice procedures for nominating
candidates for election to the Board of Directors. In addition, the PETsMART
Certificate requires a 66 2/3% vote of stockholders to (i) alter or amend the
PETsMART By-laws; (ii) remove a director without cause; or (iii) alter, amend or
repeal certain sections of
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the Certificate. In addition, PETsMART is subject to the provisions of Section
203 of the Delaware Law, which may have the effect of restricting changes in
control.
POSSIBLE VOLATILITY OF STOCK PRICE
Since the initial public offering of the Company's Common Stock in July
1993, the market value of the Company's Common Stock has been subject to
significant fluctuation. The market price of the Common Stock may continue to
be subject to significant fluctuations in response to operating results and
other factors. In addition, the stock market in recent years has experienced
price and volume fluctuations that often have been unrelated or disproportionate
to the operating performance of companies. These fluctuations, as well as
general economic and market conditions, may adversely affect the market price of
the Common Stock.
USE OF PROCEEDS
This Prospectus relates to shares of Common Stock of the Company that may
be offered and issued by the Company from time to time in connection with the
acquisition of other businesses and properties and interests therein, and upon
exercise or conversion of, warrants, options, convertible debentures, or other
similar instruments issued by the Company from time to time in connection with
any such acquisition. Other than the businesses or properties acquired, there
will be no proceeds to the Company from these offerings. When this Prospectus is
used by a Selling Stockholder in a public reoffering or resale of Common Stock
acquired pursuant to this Prospectus, the Company will not receive any proceeds
from such sale by the Selling Stockholder.
DIVIDEND POLICY
PETsMART has never paid any cash dividends on its Common Stock. The
Company presently intends to retain earnings for use in its business and
therefore does not anticipate paying cash dividends in the foreseeable future.
In addition, the Company is prohibited from paying any cash dividends without
prior bank approval under the terms of its bank credit facility.
RESALE OF SECURITIES COVERED BY THIS PROSPECTUS
This Prospectus, as appropriately amended or supplemented, may, with the
consent of the Company, be used from time to time by persons who have received
shares covered by the Registration Statement in acquisitions of business or
properties or interests therein by the Company, or by their transferees (such
persons being referred to herein as "Selling Shareholders") who wish to offer
and sell the Shares in transactions in which they and any broker-dealer through
whom any of the Shares are sold may be deemed to be underwriters within the
meaning of the Securities Act. The Company will receive none of the proceeds
from any such sales. There presently are no arrangements or understandings,
formal or informal, pertaining to the distribution of the Shares.
Agreements with Selling Stockholders permitting use of this Prospectus may
provide that any such offering be effected in an orderly manner through
securities dealers, acting as broker or dealer, selected by the Company; that
Selling Stockholders enter into custody agreements with one or more banks with
respect to such shares; and that sales be made only by one or more of the
methods described in this Prospectus, as appropriately supplemented or amended
when required.
The Company anticipates that resales of the Shares by a Selling Stockholder
may be effected from time to time on the open market in ordinary brokerage
transactions on the Nasdaq National Market, or such other security exchange on
which the Common Stock may be listed, or in private transactions (which may
involve crosses and block transactions). The Shares will be offered for sale at
market prices prevailing at the time of sale or at negotiated prices and on
terms to be determined when the agreement to sell is made or at the time of
sale, as the case may be. The Shares may be offered directly, through agents
designated from time to time, or through brokers or dealers. A member firm of
the National Association of Security Dealers, Inc. may be engaged to act as the
Selling Stockholder's agent in the sale of the Shares by the Selling Stockholder
and/or may acquire Shares as principal. Broker-dealers participating in such
transactions as agent may receive commissions from the Selling Stockholder (and,
if they act as agent for the purchaser of such Shares, from such purchaser).
Participating broker-dealers may agree with the Selling Stockholder to sell
a specified number of shares at a stipulated price per share and, to the extent
such broker-dealer is unable to do so acting as agent for the Selling
Stockholder to purchase as principal any unsold shares at the price required to
fulfill the broker-dealer's commitment to the Selling Stockholder. In addition
or alternatively, shares may be sold by the Selling Stockholder, and/or by
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or through other broker-dealers in special offerings, exchange distributions, or
secondary distributions. Broker-dealers who acquire shares as principal may
thereafter resell such Shares from time to time in transactions (which may
involve cross and block transactions and which may involve sales to and through
other broker-dealers, including transactions of the nature described in the
preceding two sentences) on the Nasdaq National Market or such other security
exchange on which the Common Stock may be listed, in negotiated transactions, or
otherwise, at market prices prevailing at the time of sale or at negotiated
prices, and in connection with such resales may pay to or receive commission's
from the purchasers of such shares.
Upon the Company's being notified by the Selling Stockholder that a
particular offer to sell the Shares is made, a material arrangement has been
entered into with a broker-dealer for the sale of shares through a block trade,
special offering, exchange distribution, or secondary distribution, or any block
trade has taken place, to the extent required, a supplement to this Prospectus
will be delivered together with this Prospectus and filed pursuant to Rule
424(b) under the Securities Act setting forth with respect to such offer or
trade the terms of the offer or trade; including (i) the name of each Selling
Stockholder, (ii) the number of Shares involved, (iii) the price at which the
Shares were sold, (iv) any participating brokers, dealers, agents or member firm
involved, (v) any discounts, commissions and other items paid as compensation
from, and the resulting net proceeds to, the Selling Stockholder, (vi) that such
broker-dealers did not conduct any investigation to verify the information set
out in this Prospectus, and (vii) other facts material to the transaction.
Shares may be sold directly by the Selling Stockholder or through agents
designated by the Selling Stockholder from time to time. Unless otherwise
indicated in a supplement to this Prospectus, any such agent will be acting on a
best efforts basis for the period of its appointment.
The Selling Stockholder and any brokers, dealers, agents, member firm or
others that participate with the Selling Stockholder in the distribution of the
Shares may be deemed to be "underwriters" within the meaning of the Securities
Act, and any commissions or fees received by such persons and any profit on the
resale of the Shares purchased by such person may be deemed to be underwriting
commissions or discounts under the Securities Act.
The Company may agree to indemnify the Selling Stockholder as an
underwriter under the Securities Act against certain liabilities, including
liabilities arising under the Securities Act. Agents may be entitled under
agreements entered into with the Selling Stockholder to indemnification against
certain civil liabilities, including liabilities under the Securities Act.
The Selling Stockholder will be subject to the applicable provisions of the
Exchange Act, and the rules and regulations thereunder, including without
limitation Rules 10b-2, 10b-6, and 10b-7, which provisions may limit the timing
of purchases and sales of any of the Common Stock by the Selling Stockholder.
All of the foregoing may affect the marketability of the Common Stock.
The Company will pay substantially all the expenses incident to this
offering of the Common Stock by the Selling Stockholder to the public other than
brokerage fees, commissions and discounts of underwriters, dealers or agents.
In order to comply with certain states' securities laws, if applicable, the
Common Stock will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In addition, in certain states the Common Stock may
not be sold unless the Common Stock has been registered or qualified for sale in
such state or an exemption from registration or qualification is available and
is complied with.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Cooley Godward Castro Huddleson & Tatum, Palo
Alto, California.
8.
<PAGE>
EXPERTS
The consolidated financial statements of PETsMART, Inc. as of January 28,
1996 and January 29, 1995 and for each of the three years in the period ended
January 28, 1996, incorporated by reference in this Prospectus, except as they
relate to The Weisheimer Companies, Inc. d/b/a PETZAZZ ("PETZAZZ"), Petstuff,
Inc. ("Petstuff"), Sporting Dog Specialties, Inc. and affiliates ("Sporting
Dog"), and The Pet Food Giant, Inc. ("Pet Food Giant"), have been audited by
Price Waterhouse LLP, independent accountants, and insofar as they relate to the
financial statements of PETZAZZ for the ten months ended January 31, 1994, not
included separately herein, by Coopers and Lybrand L.L.P., to Petstuff as of
January 29, 1995 and for each of the two years in the period ended January 29,
1995, not included separately herein, by Deloitte & Touche LLP, to Sporting Dog
as of January 31, 1995 and for each of the two years in the period ended January
31, 1995, not included separately herein, by Davie, Kaplan & Braverman, P.C.,
and to Pet Food Giant as of December 31, 1994 and for each of the two years in
the period ended December 31, 1994, not included separately herein, by Coopers &
Lybrand L.L.P., whose reports are incorporated by reference. Such financial
statements have been so incorporated in reliance on the reports of such
independent accountants given on the authority of said firms as experts in
auditing and accounting.
The consolidated balance sheet of Petstuff, Inc. and subsidiaries as of
January 29, 1995, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the two years in the period
ended January 29, 1995 incorporated by reference in this Prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report incorporated by reference herein (which report expresses an unqualified
opinion and includes an explanatory paragraph regarding a certain complaint) and
has been so incorporated in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
The combined financial statements of Sporting Dog Specialties, Inc. and
affiliates as of January 31, 1995 and the related combined statements of income
and cash flows for each of the two years in the period ended January 31, 1995
incorporated by reference in this Prospectus, have been audited by Davie, Kaplan
& Braverman, P.C., independent auditors, as stated in their report incorporated
by reference herein and are so incorporated in reliance upon the report of such
firm given on their authority as experts in accounting and auditing.
The consolidated financial statements of The Pet Food Giant, Inc. as of
December 31, 1994 and for the two years in the period ended December 31, 1994
incorporated by reference in this Prospectus, have been audited by Coopers &
Lybrand L.L.P., independent auditors, as stated in their report incorporated by
reference herein and is so incorporated in reliance upon the report of such firm
given on their authority as experts in accounting and auditing.
The consolidated financial statements of State Line Tack, Inc. as of
December 31, 1995 and for each of the three years in the period ended December
31, 1995, incorporated by reference in this Prospectus, have been audited by
Arthur Andersen LLP, independent auditors, as stated in their report
incorporated by reference herein and is so incorporated in reliance upon the
report of such firm given on their authority as experts in accounting and
auditing.
The supplemental consolidated financial statements of PETsMART as of
January 28, 1996 and January 29, 1995 and for each of the three years in the
period ended January 28, 1996, incorporated by reference in this Prospectus,
except as they relate to PETZAZZ, Petstuff, Sporting Dog, Pet Food Giant and
State Line Tack, Inc. ("State Line"), have been audited by Price Waterhouse LLP,
independent accountants, and insofar as they relate to the financial statements
of Pet Food Giant as of December 31, 1994 and for each of the two years in the
period ended December 31, 1994, not included separately herein, by Coopers &
Lybrand L.L.P., and insofar as they relate to the financial statements of State
Line, as of December 31, 1995 and for each of the three years in the period
ended December 31, 1995, not included separately herein, by Arthur Andersen LLP,
and insofar as they relate to the financial statements of Petstuff as of
January 29, 1995 and for each of the two years in the period ended January 29,
1995, not included separately herein, by Deloitte & Touche LLP, and insofar as
they relate to the financial statements of Sporting Dog as of January 31, 1995
and for each of the two years in the period ended January 31, 1995, not included
separately herein, by Davie, Kaplan and Braverman, P.C., and insofar as they
relate to the financial statements of PETZAZZ for the ten months ended January
31, 1994 not included separately herein, by Coopers & Lybrand L.L.P., whose
reports thereon are incorporated by reference. Such financial statements have
been so incorporated in reliance on the reports of such independent accountants
given on the authority of such firms as experts in auditing and accounting.
9.
<PAGE>
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No dealer, salesman or 2,000,000 SHARES
other person has been authorized
to give any information or to
make any representations other
than those contained in this
Prospectus and, if given or made,
such other information and
representations must not be
relied upon as having been PETSMART, INC.
authorized by the Company. This
Prospectus does not constitute an
offer or solicitation by anyone
in any state in which such offer
or solicitation is not
authorized, or in which the
person making such offer or
solicitation is not qualified to
do so, or to any person to whom COMMON STOCK
it is unlawful to make such offer
or solicitation. The delivery of
this Prospectus at any time does
not imply that the information
herein is correct as of any time
subsequent to the date hereof.
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PROSPECTUS
TABLE OF CONTENTS ----------
Page
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Available Information . . . 2
Additional Information . . . 2
Incorporation of Certain
Documents by Reference . . . 2
The Company . . . . . . . . . 3
Risk Factors . . . . . . . . 4
Use of Proceeds . . . . . . . 7
Dividend Policy . . . . . . . 7 May 31, 1996
Resale of Securities Covered
by this Prospectus . . . . . 7
Legal Matters . . . . . . . . 8
Experts . . . . . . . . . . 9
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