Petsmart 2011 Annual Report Download - page 67

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PetSmart, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements — (Continued)
A reconciliation of the federal statutory income tax rate to our effective tax rate is as follows (dollars in
thousands):
Year Ended
January 29,
2012
January 30,
2011
January 31,
2010
Provision at federal statutory tax rate ...... $156,197 35.0% $129,462 35.0% $108,266 35.0%
State income taxes, net of federal income
tax benefit ......................... 10,423 2.3 5,591 1.5 8,725 2.8
Tax on equity income from Banfield ...... (645) (0.2) 3,630 1.0 2,292 0.7
Other ............................... 985 0.3 1,713 0.5 (1,729) (0.5)
$166,960 37.4% $140,396 38.0% $117,554 38.0%
The components of the net deferred income tax assets (liabilities) included in the Consolidated Balance
Sheets are as follows (in thousands):
January 29,
2012
January 30,
2011
Deferred income tax assets:
Capital lease obligations ....................................... $189,650 $ 192,825
Employee benefit expense ..................................... 100,536 82,228
Deferred rents ............................................... 36,225 37,596
Net operating loss carryforwards ................................ 16,586 17,717
Other ...................................................... 39,067 32,457
Total deferred income tax assets .............................. 382,064 362,823
Valuation allowance ........................................ (7,700) (7,700)
Deferred income tax assets, net of valuation allowance ............. 374,364 355,123
Deferred income tax liabilities:
Property and equipment ....................................... (198,192) (188,654)
Inventory ................................................... (12,074) (6,113)
Other ...................................................... (19,232) (19,142)
Total deferred income tax liabilities ............................ (229,498) (213,909)
Net deferred income tax assets ................................ $144,866 $ 141,214
We are subject to United States of America federal income tax, as well as the income tax of multiple state,
territorial and foreign jurisdictions. We have substantially settled all federal income tax matters through 2007,
state and local jurisdictions through 1999 and foreign jurisdictions through 2003. We could be subject to audits in
these jurisdictions. These audits can involve complex issues that may require an extended period of time to
resolve and may cover multiple years. During 2011, 2010 and 2009, we recorded a net benefit of approximately
$0.2 million, $0.2 million and $1.0 million, respectively, from the settlement of uncertain tax positions with
various state tax jurisdictions and the lapse of the statute of limitations for certain tax positions. The net benefits
are reflected in income tax expense in the Consolidated Statements of Income and Comprehensive Income. We
cannot make an estimate of the range of possible changes that may result from other audits.
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