Petsmart 2005 Annual Report Download - page 74

As of January 30, 2005
As Previously
Reported Adjustments
As Currently
Reported
Consolidated Balance Sheet
Deferred income taxes ........................... $ 13,839 6,042 $ 19,881
Total current assets ........................... 822,808 6,042 828,850
Deferred income taxes ........................... 64,952 16,911 81,863
Total assets ................................. 1,655,454 22,953 1,678,407
Additional paid-in capital......................... 792,400 111,930 904,330
Deferred compensation .......................... (14,444) 14,444 —
Retained earnings .............................. 286,380 (103,421) 182,959
Total stockholder’s equity . . . .................... 950,994 22,953 973,947
Total liabilities and stockholders’ equity ............ 1,655,454 22,953 1,678,407
The adoption of SFAS No. 123(R) resulted in an adjustment to stockholders’ equity that increased additional
paid-in capital by $94,433,000 and reduced retained earnings by $79,195,000 at February 2, 2003.
Prior to the adoption of SFAS No. 123(R), the Company presented all tax benefits resulting from the exercise
of stock options as operating cash flows in the Consolidated Statements of Cash Flows. SFAS No. 123(R) requires
cash flows resulting from excess tax benefits to be classified as financing cash flows. Excess tax benefits result from
tax deductions in excess of the compensation cost recognized for those options. Accordingly, the Consolidated
Statements of Cash Flows for fiscal 2004 and 2003 have been revised to reflect a decrease in cash flow from
operating activities of $28,667,000 and $13,829,000, respectively, with a corresponding increase in cash flow from
financing activities related to excess tax benefits.
Note 3 — Investments
The Company has an investment in MMI Holdings, Inc., or MMIH, a provider of veterinary and other pet-
related services. MMIH, through a wholly owned subsidiary, Medical Management International, Inc., or MMI,
operated full-service veterinary hospitals inside 513 of the Company’s stores as of January 29, 2006, under the
registered tradename of Banfield. The Company’s investment consists of common and convertible preferred stock.
The Company accounts for its investment using the cost method, as it lacks the ability to exercise significant
influence over MMIH’s operating and financial policies. MMIH has both voting and non-voting common stock and
also has voting and non-voting series of convertible preferred stock. During the second quarter of fiscal 2004, the
Company purchased an additional $773,000 of MMIH capital stock from certain MMIH shareholders. The
Company’s ownership interest in the stock of MMIH is as follows:
Cost Shares
Ownership
Percentage Cost Shares
Ownership
Percentage
January 29, 2006 January 30, 2005
(Dollars and shares in thousands)
Voting common and convertible
preferred .................. $ 6,151 2,721 17.1% $ 6,151 2,721 16.5%
Nonvoting common and
convertible preferred ......... 26,995 5,235 97.8% 26,995 5,235 94.8%
Other ...................... 521 — — 380 — —
Total investment .............. $33,667 7,956 37.0% $33,526 7,956 36.1%
Of the 2,721,000 shares of voting capital stock of MMIH held by the Company: (a) 1,071,000 are shares of
voting convertible preferred stock that may be converted into voting common stock at any time at the option of the
Company; and (b) 1,650,000 are shares of voting common stock. Of the 5,235,000 shares of non-voting stock held
F-15
PetSmart, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)