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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 Report (Date of earliest event reported): February 24, 1998
PETSMART, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-21888 94-3024325
(Commission File No.) (IRS Employer Identification No.)
19601 NORTH 27TH AVENUE
PHOENIX, AZ 85027
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (602) 580-6100
_______________________
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ITEM 2. OTHER EVENTS.
On February 24, 1998, PETsMART, Inc. (the "Company") announced its earnings
for the fiscal year ended February 1, 1998. The press release containing this
announcement is attached as Exhibit 99.1 hereto and incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Exhibits
Exhibit No. Description
99.1 Press Release of PETsMART, Inc. dated
February 24, 1998
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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: February 25, 1998 By: /s/ C. Donald Dorsey
----------------------------------
C. Donald Dorsey
Executive Vice President and Chief Financial
Officer
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EXHIBIT 99.1
PRESS RELEASE OF PETSMART, INC. DATED FEBRUARY 24, 1998
PETSMART INC. REPORTS QUARTERLY AND ANNUAL EARNINGS
PHOENIX--(BUSINESS WIRE)--Feb. 24, 1998--PETsMART Inc. (NASDAQ:PETM - news)
Tuesday announced its financial results for its fourth quarter and year ended
Feb. 1, 1998.
Net sales for the thirteen weeks ended Feb. 1, 1998 were $510.6 million, an
increase of 11.6% over the $457.4 million reported for the fourteen weeks
ended Feb. 2, 1997. North American comparable store sales for the quarter
increased 4.0%, and United Kingdom comparable store sales increased 5.6%.
The company opened seven stores, including one replacement store, and closed
four in North America during the quarter, and opened seven new superstores in
the United Kingdom. PETsMART operated 384 stores in North America and 84
stores in the United Kingdom at the end of the quarter.
For the year ended Feb. 1, 1998, the company reported net sales of $1.8
billion, an increase of 18.5% over the $1.5 billion reported for last year.
North American comparable store sales for the year increased 4.6% and United
Kingdom comparable store sales increased 5.0%.
Net income from operations for the fourth quarter, excluding merger and
integration charges related to its acquisition of Pet City Holdings plc and
the effects of a required change in accounting principle for business process
reengineering costs, was $6.1 million (or $0.05 per share) this year as
compared to $19.7 million (or $0.17 per share) last year.
The net income from operations for fourth quarter 1997 excludes $1.4 million,
before taxes, of merger and business integrations charges related to its
merger with Pet City Holdings, plc and $5.6 million, before taxes, related to
a change in accounting for business process reengineering costs.
Approximately $4.3 million of the change in accounting has been recorded as a
cumulative effect adjustment, net of tax, and $1.3 million has been recorded
as a component of general and administrative expenses.
Including the merger charge and the effects of the change in accounting
principle, the company reported net income of $1.9 million (or $0.02 per
share) for the thirteen weeks ended Feb. 1, 1998 as compared to net income of
$7.6 million (or $0.06 per share) for the fourteen weeks ended Feb. 2, 1997.
For fiscal 1997, net income from operations, excluding merger and integration
charges, restructuring charges and the effects of a required change in
accounting principle, was $15.5 million (or $0.13 per share) this year versus
$46.5 million (or $0.39 per share) last year.
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Net income from operations for the year excludes $73.5 million, before taxes,
of restructuring and business integration charges and $5.6 million, before
taxes, related to the change in accounting principle.
Including the merger charges and the change in accounting principle, the
company reported a net loss of $34.4 million (or $(0.30) per share) for the
year ended Feb. 1, 1998, as compared to net income of $20.6 million (or $0.17
per share) for the year ended Feb. 2, 1997.
Samuel J. Parker, chairman and chief executive officer of PETsMART Inc.,
stated, "While we were disappointed with our fourth quarter sales and
earnings performance, we are pleased to note several positive indicators
throughout our business. First, our comparable transaction counts continue to
increase indicating the consumer's favorable response to our everyday low
price strategy.
"Second, our inventory levels and in-stock conditions, along with our
working capital position, are strong. Finally, our increased emphasis on
customer service is having positive results in store morale and customer
responsiveness. We are confident that our continued focus on store
operations, which will continue under our new President and Chief Executive
Officer Phil Francis, will provide the opportunity for profitable growth in
1998."
PETsMART Inc. is a leading worldwide operator of superstores specializing in
pet food, supplies and services. At Feb. 1, 1998, PETsMART operated 384
superstores in North America and 84 superstores in the United Kingdom.
Through Feb. 23, 1998, the company has opened 18 stores, and closed 5 stores,
in North America and opened two stores in the United Kingdom.
The company's common stock trades on The Nasdaq Stock Market under the symbol
PETM.
This news release contains forward-looking statements that involve
substantial risks and uncertainties. Actual results and developments may
therefore differ materially from those described in this release. For more
information about PETsMART and risks arising when investing in PETsMART, you
are directed to the company's most recent Annual Report on Form 10-K filed
with the Securities and Exchange Commission.
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PETSMART INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Feb. 1, 1998 Feb. 2, 1997
------------ ------------
<S> <C> <C>
Cash and cash equivalents $125,082 $ 39,868
Merchandise inventories 317,547 300,892
Other current assets 73,081 68,524
Total current assets 515,710 409,284
Property held for sale and
leaseback 2,212 -
Property and equipment, net 242,384 219,263
Other assets 79,381 61,263
Total assets 839,687 689,810
Borrowings from bank - 25,000
Accounts payable 114,692 138,913
Other current liabilities 103,577 87,189
Total current liabilities 218,269 251,102
6 3/4% Convertible
Subordinated Notes 200,000 -
Capital lease obligations
and other liabilities 86,724 77,663
Total liabilities 504,993 328,765
Stockholders' equity 334,694 361,045
Total liabilities and
stockholders' equity $839,687 $689,810
</TABLE>
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PETSMART INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND OPERATING DATA)
<TABLE>
<CAPTION>
Thirteen Fourteen Fifty-Two Fifty-Three
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
Feb. 1, 1998 Feb. 2, 1997 Feb. 1, 1998 Feb. 2, 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $510,629 $457,364 $1,790,599 $1,501,017
Cost of sales 378,649 324,170 1,356,413 1,074,666
Gross profit 131,980 133,194 434,186 426,351
Store operating expenses 99,212 85,906 349,563 289,622
Store preopening expenses 1,297 3,119 9,222 10,907
General and
administrative expenses 18,520 9,979 53,865 42,463
Merger and business
integration charges 1,376 20,350 57,364 40,714
Operating income (loss) 11,575 13,840 (35,828) 42,645
Interest expense, net 4,282 2,457 13,708 8,393
Income (loss) before income taxes
and cumulative effect of a change
in accounting principle 7,293 11,383 (49,536) 34,252
Income tax (expense) benefit (2,812) (3,798) 17,735 (13,661)
Income (loss) before cumulative
effect of a change in
accounting principle 4,481 7,585 (31,801) 20,591
Cumulative effect of a change
in accounting principle (2,629) - (2,629) -
Net income (loss) $1,852 $7,585 $(34,430) $20,591
Basic earnings per share $0.02 $0.07 $(0.30) $0.18
Diluted earnings per share $0.02 $0.06 $(0.30) $0.17
Weighted average number of
shares outstanding - basic 115,401 113,220 114,920 112,520
</TABLE>
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<TABLE>
<CAPTION>
Thirteen Fourteen Fifty-Two Fifty-Three
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
Feb. 1, 1998 Feb. 2, 1997 Feb. 1, 1998 Feb. 2, 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Weighted average number of
shares outstanding - diluted 115,871 118,926 115,959 118,226
Stores opened during each period 14 17 105 82
Stores closed during each period 4 1 13 3
Stores open at end of each period 468 376 468 376
</TABLE>
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