Petsmart 2012 Annual Report Download - page 53

F-7
Note 1 — The Company and its Significant Accounting Policies
Business
PetSmart, Inc., including its wholly owned subsidiaries (the “Company,” “PetSmart,” "we" or “us”), is the leading specialty
provider of products, services and solutions for the lifetime needs of pets in North America. We offer a broad selection of products
for all the life stages of pets, as well as various pet services including professional grooming, training, day camp for dogs and
boarding. We also offer pet products through our website, PetSmart.com. As of February 3, 2013, we operated 1,278 retail stores
and had full-service veterinary hospitals in 816 of our stores. MMI Holdings, Inc., through a wholly owned subsidiary, Medical
Management International, Inc., collectively referred to as “Banfield,” operated 809 of the veterinary hospitals under the registered
trade name of “Banfield, The Pet Hospital.” The remaining 7 hospitals are operated by other third parties in Canada.
Principles of Consolidation
Our consolidated financial statements include the accounts of PetSmart and our wholly owned subsidiaries. We have eliminated
all intercompany accounts and transactions.
Fiscal Year
Our fiscal year consists of 52 or 53 weeks and ends on the Sunday nearest January 31. The 2012 fiscal year ended on February 3,
2013, and was a 53-week year. The 2011 and 2010 fiscal years were 52-week years. Unless otherwise specified, all references to
years in these consolidated financial statements are to fiscal years.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America, or “GAAP,” requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Management bases its estimates on historical experience and on various other assumptions
it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Under different assumptions or conditions, actual
results could differ from these estimates.
Segment Reporting
We have identified two operating segments, Merchandise and Services. These operating segments have similar long-term
economic characteristics, include sales to the same types of customers, have the same distribution method, and include sales similar
in nature, therefore, they have been aggregated into one reportable segment.
Net sales in the United States and Puerto Rico were $6.4 billion, $5.8 billion and $5.4 billion for 2012, 2011 and 2010,
respectively. Net sales in Canada, denominated in United States dollars, were $0.4 billion, $0.3 billion and $0.3 billion for 2012,
2011 and 2010, respectively. Substantially all our long-lived assets are located in the United States.
Financial Instruments
Our financial instruments consist primarily of cash and cash equivalents, restricted cash, receivables and accounts payable.
These balances, as presented in the consolidated financial statements at February 3, 2013, and January 29, 2012, approximate fair
value because of the short-term nature. We have short-term investments in municipal bonds, which are recorded at fair value using
quoted prices in active markets for identical assets or liabilities as detailed in Note 4. We also have investments in negotiable
certificates of deposit, which are carried at their amortized cost basis as detailed in Note 4. From time to time, we have entered
into foreign exchange currency contracts, which are not designated as hedges and are recorded at fair value using quoted prices
for similar assets or liabilities in active markets. The recorded gains and losses were immaterial for 2011 and 2010. We did not
enter into foreign exchange currency contracts during 2012.
Cash and Cash Equivalents
We consider any liquid investments with a maturity of three months or less at purchase to be cash equivalents. Included in
cash and cash equivalents are credit and debit card receivables from banks, which typically settle within five business days, of
$58.9 million and $52.3 million as of February 3, 2013, and January 29, 2012, respectively.
PetSmart, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements