On March 7, 2003, Standard&Poor's Ratings Services affirmed its 'B+' corporate credit rating on PetsMart Inc. and revised its outlook on the company to positive from stable. The outlook revision reflects improving credit measures and solid operating performance over the past two years. PetsMart's better results have significantly improved cash flow generation, with lease-adjusted EBITDA increasing to about $386 million in 2002 from $244 million in 2001. As a result, cash flow protection measures strengthened in 2002, with EBITDA interest coverage at about 2.7x in 2002, up from 1.9x in 2001. The company's debt leverage also improved with total debt to EBITDA at about 3.6x, down from 5.4x in 2001. In addition, the conversion of its $172.5 million
