Petsmart 2011 Annual Report Download - page 77

PetSmart, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements — (Continued)
employees can elect to defer receipt of certain salary and cash bonus payments pursuant to our Non-Qualified
Deferred Compensation Plan. We match employee contributions up to certain amounts as defined in the
Non-Qualified Deferred Compensation Plan documents. During 2011, 2010 and 2009, we recognized expense
related to matching contributions under these Plans of $7.1 million, $6.3 million, and $5.6 million, respectively.
Note 12 — Financing Arrangements and Lease Obligations
Credit Facilities
Effective April 22, 2011, we elected to reduce the aggregate commitment amount under our $350.0 million
revolving credit facility, or “Revolving Credit Facility,” to $100.0 million, which allows us to avoid stand-by
costs related to the excess commitment amount. This Revolving Credit Facility expires on August 15, 2012.
Borrowings under the Revolving Credit Facility are subject to a borrowing base and bear interest, at our option,
at a bank’s prime rate plus 0% to 0.25% or LIBOR plus 0.875% to 1.25%. We are subject to fees payable to
lenders each quarter at an annual rate of 0.20% of the unused amount of the Revolving Credit Facility. The
Revolving Credit Facility also gives us the ability to issue letters of credit, which reduce the amount available
under the Revolving Credit Facility. Letter of credit issuances under the Revolving Credit Facility are subject to
interest payable to the lenders and bear interest of 0.875% to 1.25% for standby letters of credit or 0.438% to
0.625% for commercial letters of credit.
As of January 29, 2012, we had no borrowings and $24.4 million in stand-by letter of credit issuances under
our Revolving Credit Facility. As of January 30, 2011, we had no borrowings and $31.6 million in stand-by letter
of credit issuances under our Revolving Credit Facility.
We also have a $100.0 million stand-alone letter of credit facility, or “Stand-alone Letter of Credit Facility,”
that expires on August 15, 2012. We are subject to fees payable to the lender each quarter at an annual rate of
0.45% of the average daily face amount of the letters of credit outstanding during the preceding calendar quarter.
In addition, we are required to maintain a cash deposit with the lender equal to the amount of outstanding letters
of credit or we may use other approved investments as collateral. If we use other approved investments as collat-
eral, we must have an amount on deposit which, when multiplied by the advance rate of 85%, is equal to the
amount of the outstanding letters of credit under the Stand-alone Letter of Credit Facility.
As of January 29, 2012, we had $70.2 million in outstanding letters of credit under the Stand-alone Letter of
Credit Facility and $70.2 million in restricted cash on deposit with the lender. As of January 30, 2011, we had
$61.4 million in outstanding letters of credit under the Stand-alone Letter of Credit Facility and $61.4 million in
restricted cash on deposit with the lender.
We issue letters of credit for guarantees provided for insurance programs.
Our Revolving Credit Facility and Stand-alone Letter of Credit Facility permit the payment of dividends if
we are not in default and the payment of dividends would not result in default of the Revolving Credit Facility
and Stand-alone Letter of Credit Facility. As of January 29, 2012, we were in compliance with the terms and
covenants of our Revolving Credit Facility and Stand-alone Letter of Credit Facility. The Revolving Credit
Facility and Stand-alone Letter of Credit Facility are secured by substantially all our personal property assets, our
wholly owned subsidiaries and certain real property.
We intend to refinance our Revolving Credit Facility and the Stand-alone Letter of Credit Facility with sim-
ilar facilities and terms before they expire on August 15, 2012.
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 15 years and typically allow us to renew for 2 to 4 addi-
tional 5-year terms. Store leases, excluding renewal options, expire at various dates through 2027. Generally, the
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