Petsmart 2001 Annual Report Download - page 51

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PETsMART, Inc. and Subsidiaries
Notes to Consolidated Financial Statements Ì (Continued)
Note 12 Ì Interest Expense
Interest costs incurred and interest capitalized on construction in progress are as follows:
Fiscal Year Ended
January 28, January 30, January 31,
2001 2000 1999
(In thousands)
Interest costs incurred ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $23,443 $24,509 $25,182
Less: interest costs capitalized ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 58 1,753 1,073
Interest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $23,385 $22,756 $24,109
Note 13 Ì Leases
The Company leases substantially all of its stores, distribution centers, corporate oÇces and certain
equipment under noncancelable operating leases, expiring at various dates through 2020. The Company has
the option to extend the terms of the leases for periods ranging from 5 to 20 years. Certain leases require
payment of property taxes, utilities, common area maintenance and insurance and additional rents based on a
percentage of sales. No additional rent payments were required during Ñscal 2000, 1999, or 1998. In addition,
certain leases provide for variable rent payments based on prevailing interest rates. Total rent expense incurred
under operating leases during Ñscal 2000, 1999 and 1998 was $184,317,000, $174,165,000, and $161,565,000,
respectively.
The Company has entered into sale and leaseback transactions for several of its store locations which
included buildings and underlying land. Such assets are sold at cost and are leased back at terms similar to
those of other leased stores. The Company also leases certain Ñxtures and equipment, computer hardware and
software under capital leases.
At January 28, 2001, the future minimum annual rental commitments under all noncancelable leases
were as follows:
Operating Capital
leases leases
(In thousands)
2001 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 182,959 $17,455
2002 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 163,138 17,163
2003 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 152,491 9,726
2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 150,193 7,583
2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 141,154 6,934
Thereafter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,024,972 57,168
Total minimum rental commitments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,814,907 116,029
Less: amounts representing interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 43,343
Present value of obligations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 72,686
Less: current portionÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11,132
Long-term obligationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $61,554
The Company receives rental income from MMI for the space in the Company's retail stores occupied by
veterinary services, which is recorded as income from leased departments within cost of sales in the
accompanying consolidated statements of operations. Rentals are determined by Ñxed costs per square foot,
adjusted for the number of days the clinics are open and sales volumes achieved. Income of approximately
$6,853,000, $7,361,000 and $4,800,000 was recognized during Ñscal years 2000, 1999, and 1998, respectively.
F-22