Petsmart 2007 Annual Report Download - page 68

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A reconciliation of the federal statutory income tax rate to our effective tax rate is as follows (dollars in
thousands):
Dollars % Dollars % Dollars %
(53 weeks) (52 weeks) (52 weeks)
February 3,
2008
January 28,
2007
January 29,
2006
Year Ended
Provision at federal statutory tax rate. . . $140,768 35.0% $101,541 35.0% $101,224 35.0%
State income taxes, net of federal
income tax benefit .............. 12,788 3.2 8,327 2.9 9,994 3.5
Adjustments to tax reserves.......... (2,446) (0.6) (826) (0.3) (4,631) (1.6)
Adjustments to deferred tax assets ..... — — 1,494 0.5 3,057 1.1
Tax exempt interest income .......... (1,676) (0.4) (2,834) (1.0) (2,625) (0.9)
Adjustment to valuation allowance . . . . (701) (0.2) 337 0.1 645 0.2
Utilization of capital loss ........... (4,974) (1.2) (3,033) (1.0) (650) (0.2)
Tax on equity income from investee . . . 652 0.1 — — — —
Other .......................... 769 0.2 42 0.0 (295) (0.1)
$145,180 36.1% $105,048 36.2% $106,719 36.9%
The components of the net deferred income tax assets (liabilities) included in the Consolidated Balance Sheets
are as follows (in thousands):
February 3,
2008
January 28,
2007
Deferred income tax assets:
Capital lease obligations .................................... $149,002 $ 133,628
Employee benefit expense ................................... 68,331 55,593
Deferred rents ............................................ 37,576 36,473
Net operating loss carryforwards .............................. 20,859 21,968
Capital loss carryforwards ................................... — 4,974
Reserves for closed stores ................................... 2,017 2,909
Miscellaneous reserves and accruals............................ 2,180 1,911
Other .................................................. 14,190 16,870
Total deferred income tax assets............................. 294,155 274,326
Valuation allowance...................................... (7,878) (13,553)
Deferred income tax assets, net of valuation allowance ............ 286,277 260,773
Deferred income tax liabilities:
Property and equipment..................................... (113,392) (109,864)
Inventory ............................................... (13,726) (9,874)
Other .................................................. (3,850) (3,807)
Total deferred income tax liabilities .......................... (130,968) (123,545)
Net deferred income tax assets .............................. $155,309 $ 137,228
We are subject to United States of America federal income tax, as well as the income tax of multiple state and
foreign jurisdictions. We have substantially settled all federal income tax matters through 2003, state and local
F-18
PetSmart, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)