Petsmart 2007 Annual Report Download - page 67

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The current portion of the closed store reserve is recorded in other current liabilities, and the noncurrent
portion of the reserve is recorded in other noncurrent liabilities in the Consolidated Balance Sheets. We record a
charge for new closures and adjustments related to changes in subtenant assumptions and other occupancy
payments in operating, general and administrative expenses in the Consolidated Statements of Operations and
Comprehensive Income.
We made payments of approximately $3.2 million and $1.8 million in 2007 and 2006, respectively, for the
buyout of previously reserved lease obligations.
Note 5 — Impairment of Long-Lived Assets and Asset Write-Downs
During 2007, we recorded expense of $7.5 million for accelerated depreciation of assets related to the exit of
our equine product line. During 2006, we recorded expense of $2.8 million related to the replacement of
telecommunications equipment. During 2005, we recorded expense of $2.1 million for accelerated depreciation
due to the replacement of exterior signage.
Note 6 — Income Taxes
Income before income tax expense and equity in income from investee was as follows (in thousands):
February 3,
2008
January 28,
2007
January 29,
2006
Year Ended
(53 weeks) (52 weeks) (52 weeks)
United States .................................... $401,079 $283,545 $285,228
Foreign ........................................ 1,114 6,572 3,981
$402,193 $290,117 $289,209
Income tax expense consisted of the following (in thousands):
February 3,
2008
January 28,
2007
January 29,
2006
Year Ended
(53 weeks) (52 weeks) (52 weeks)
Current provision:
Federal ....................................... $144,961 $108,940 $102,823
State/Foreign .................................. 18,325 14,693 20,596
163,286 123,633 123,419
Deferred:
Federal ....................................... (15,139) (19,180) (12,339)
State/Foreign .................................. (2,967) 595 (4,361)
(18,106) (18,585) (16,700)
Income tax expense ............................... $145,180 $105,048 $106,719
F-17
PetSmart, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)