Petsmart 2003 Annual Report Download - page 64

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PETsMART, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 4 Ì Property and Equipment
Property and equipment consists of the following (in thousands):
February 1, February 2,
2004 2003
LandÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 3,251 $ 691
Buildings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8,776 8,776
Furniture, Ñxtures and equipmentÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 300,608 234,265
Leasehold improvements ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 293,872 230,978
Computer software ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 51,270 32,885
Buildings, equipment, and computer software under capital leasesÏÏÏÏÏÏÏ 223,799 218,012
881,576 725,607
Less: accumulated depreciation and amortizationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 332,848 261,667
548,728 463,940
Construction in progressÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 28,454 26,007
$577,182 $489,947
Accumulated amortization of equipment, computer software, and buildings under capital leases approxi-
mated $69,191,000 and $57,056,000 as of February 1, 2004, and February 2, 2003, respectively. During Ñscal
2003, the Company entered into capital lease agreements for six buildings, resulting in an addition to capital
leases of approximately $10,701,000 (See Note 12).
Depreciation and amortization expense for stores is recorded in Operating Expense, and corporate
depreciation and amortization expense is recorded in General and Administrative Expense, based on actual
amounts.
The Company evaluates capitalized interest under SFAS No. 34, ""Capitalization of Interest Cost'', and
due to the short-term nature of projects in process, the Company had no capitalized interest for Ñscal years
2003, 2002, and 2001.
Note 5 Ì Notes Receivable from OÇcers
During Ñscal 2000, the Company provided loans to certain oÇcers to be used only for the purpose of
purchasing shares of the Company's common stock on the open market. As of February 2, 2003, the notes had
been repaid in full, and the Company will not make any new loans to its oÇcers under this program in the
future.
Note 6 Ì Special Charges
Reorganization of PETsMART Direct and PETsMART.com
During the fourth quarter of Ñscal 2001, the Company approved a plan to move administrative functions,
during Ñscal 2002, of PETsMART Direct, Inc. (""PETsMART Direct'') and PETsMART.com, Inc.
(""PETsMART.com'') to the Company's administrative oÇce located in Phoenix, Arizona. PETsMART
Direct has, among other functions, the merchandising, human resource, and Ñnance operations provided by
the personnel in Arizona under a shared services arrangement. As a result of the reorganization of these
functions, the Company eliminated 44 positions during Ñscal 2002, and recorded severance charges of
approximately $431,000 in Ñscal 2001. The PETsMART Direct facility, located in Brockport, New York,
continues to handle warehousing and fulÑllment for the pet and equine catalogs, e-commerce sites, and in-
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