Petsmart 2009 Annual Report Download - page 65

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A reconciliation of the federal statutory income tax rate to our effective tax rate is as follows (dollars in
thousands):
(52 weeks) (52 weeks) (53 weeks)
January 31,
2010
February 1,
2009
February 3,
2008
Year Ended
Provision at federal statutory tax rate .......... $108,266 35.0%$108,882 35.0%$140,768 35.0%
State income taxes, net of federal income tax
benefit............................... 8,725 2.8 8,860 2.8 12,788 3.2
Adjustments to tax reserves ................. (295) (0.1) (486) (0.2) (2,446) (0.6)
Tax exempt interest income ................. (90) (0.0) — — (1,676) (0.4)
Adjustment to valuation allowance ............ (343) (0.1) 158 0.1 (701) (0.2)
Utilization of capital loss ................... — — — — (4,974) (1.2)
Tax on equity income from investee ........... 2,292 0.7 907 0.3 652 0.1
Other . . ............................... (1,001) (0.3) 2,698 0.9 769 0.2
$117,554 38.0%$121,019 38.9%$145,180 36.1%
The components of the net deferred income tax assets (liabilities) included in the Consolidated Balance Sheets
are as follows (in thousands):
January 31,
2010
February 1,
2009
Deferred income tax assets:
Capital lease obligations .................................... $200,108 $ 180,775
Employee benefit expense ................................... 74,613 70,945
Deferred rents ............................................ 39,283 39,888
Net operating loss carryforwards .............................. 18,690 19,742
Reserve for closed stores .................................... 3,132 2,600
Miscellaneous reserves and accruals............................ 10,501 8,211
Tenant incentives ......................................... 11,328 13,706
Other .................................................. 4,292 9,379
Total deferred income tax assets............................. 361,947 345,246
Valuation allowance...................................... (7,693) (8,036)
Deferred income tax assets, net of valuation allowance ............ 354,254 337,210
Deferred income tax liabilities:
Property and equipment..................................... (200,150) (191,610)
Inventory ............................................... (6,913) (11,399)
Prepaid expenses .......................................... (7,452) (6,337)
Other .................................................. (8,033) (6,513)
Total deferred income tax liabilities .......................... (222,548) (215,859)
Net deferred income tax assets .............................. $131,706 $ 121,351
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 2005, state and local
jurisdictions through 1999 and foreign jurisdictions through 2003. We could be subject to audits in these
F-17
PetSmart, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)