Petsmart 2007 Annual Report Download - page 66

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Note 3 — Property and Equipment
Property and equipment consists of the following (in thousands):
February 3,
2008
January 28,
2007
Land ................................................... $ 2,991 $ 2,991
Buildings................................................ 6,204 8,776
Furniture, fixtures and equipment .............................. 767,103 533,923
Leasehold improvements .................................... 467,731 476,636
Computer software......................................... 104,764 94,944
Buildings, equipment and computer software under capital leases ...... 624,011 520,196
1,972,804 1,637,466
Less: accumulated depreciation and amortization .................. 828,524 683,032
1,144,280 954,434
Construction in progress..................................... 86,490 77,987
Property and equipment, net .................................. $1,230,770 $1,032,421
Accumulated amortization of buildings, equipment and computer software under capital leases was approx-
imately $175.3 million and $136.6 million as of February 3, 2008 and January 28, 2007, respectively.
We recognize capitalized interest in accordance with SFAS No. 34, “Capitalization of Interest Cost.”
Capitalized interest primarily consists of interest expense incurred during the construction period for new stores.
Capitalized interest was approximately $2.4 million, $1.8 million and $1.3 million in 2007, 2006 and 2005,
respectively. Capitalized interest is included in property and equipment in the Consolidated Balance Sheets.
Note 4 — Reserves for Closed Stores
The closed store reserves were as follows (in thousands):
February 3,
2008
January 28,
2007
Total remaining gross occupancy costs ........................... $34,376 $ 44,234
Less:
Expected sublease income ................................... (27,167) (35,284)
Interest costs ............................................. (1,052) (1,261)
Closed store reserve ......................................... $ 6,157 $ 7,689
The activity related to the closed store reserve was as follows (in thousands):
February 3,
2008
January 28,
2007
January 29,
2006
Year Ended
(53 weeks) (52 weeks) (52 weeks)
Opening balance.................................. $7,689 $ 9,604 $ 9,141
Charges, net ..................................... 4,993 4,276 4,309
Payments, net .................................... (6,525) (6,191) (3,846)
Ending balance................................... $6,157 $ 7,689 $ 9,604
F-16
PetSmart, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)