Petsmart 2007 Annual Report Download - page 72

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no outstanding letters of credit under this stand-alone letter of credit facility and had no restricted cash and short-
term investments on deposit with the lenders in connection with this facility.
As of February 3, 2008, we were in compliance with the terms and covenants of our credit facility and letter of
credit facility. The credit facility and letter of credit facility are secured by substantially all our personal property
assets, our subsidiaries and certain real property.
Operating and Capital Leases
We lease substantially all our stores, distribution centers and corporate offices under noncancelable leases. The
terms of the store leases generally range from 10 to 20 years and typically allow us to renew for three to five
additional five-year terms. Store leases, excluding renewal options, expire at various dates through 2024. Generally,
the leases require payment of property taxes, utilities, common area maintenance, insurance and, if annual sales at
certain stores exceed specified amounts, provide for additional rents. We also lease certain equipment under
operating leases. Total operating lease expense incurred, net of sublease income, during 2007, 2006 and 2005 was
$245.9 million, $221.1 million and $199.6 million, respectively. Additional rent included in those amounts was not
material.
At February 3, 2008, the future minimum annual rental commitments under all noncancelable leases were as
follows (in thousands):
Operating
Leases
Capital
Leases
2008 .................................................... $ 241,455 $ 77,006
2009 .................................................... 254,891 83,957
2010 .................................................... 244,999 84,864
2011 .................................................... 237,316 86,150
2012 .................................................... 221,969 87,167
Thereafter. . ............................................... 892,321 487,060
Total minimum rental commitments ............................. $2,092,951 906,204
Less: amounts representing interest .............................. 372,457
Present value of minimum lease payments ......................... 533,747
Less: current portion. . . ...................................... 24,982
Long-term obligations. . ...................................... $508,765
The rental commitments schedule includes all locations for which we have the right to control the use of the
property and includes open stores, closed stores, stores to be opened in the future, distribution centers and corporate
offices. We have recorded accrued rent of $1.6 million and $1.8 million in accrued occupancy in the Consolidated
Balance Sheets as of February 3, 2008 and January 28, 2007 respectively. In addition to the commitments scheduled
above, we have executed lease agreements with total minimum lease payments of $559.3 million. The typical lease
term for these agreements is 10 to 15 years. We do not have the right to control the use of the property under these
leases at February 3, 2008.
F-22
PetSmart, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)