Petsmart 2003 Annual Report Download - page 70

PETsMART, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
In March 2003, the Board of Directors extended the term of the purchase of the Company's common
stock for an additional three years through March 2006, and the authorized amount of annual purchases to
$35,000,000. The Company's policy on the purchase of its common stock is to make market purchases when
the price is advantageous and as cash Öow allows, to maintain appropriate liquidity. During Ñscal 2003, the
Company purchased approximately 1,406,000 shares of its common stock for $34,977,000, or an average price
of $24.87 per share.
Note 9 Ì Employee BeneÑt Plans
The Company has a deÑned contribution plan pursuant to Section 401(k) of the Internal Revenue Code
(the ""401(k) Plan''). The 401(k) Plan covers substantially all employees that meet certain service
requirements. The Company matches employee contributions, up to speciÑed percentages of those contribu-
tions, as approved by the Board of Directors. Certain employees can elect to defer receipt of certain salary and
cash bonus payments pursuant to the Company's Non-QualiÑed Deferred Compensation Plan. The Company
matches employee contributions up to certain amounts as deÑned in the Deferred Compensation Plan
documents. During Ñscal 2003, 2002 and 2001, the Company recognized expense related to matching
contributions under these Plans of $3,687,000, $2,378,000, and $2,139,000, respectively.
Note 10 Ì Subordinated Convertible Notes
In November 1997, the Company sold $200,000,000 aggregate principal amount of its Notes due 2004.
The outstanding Notes were convertible into the Company's common stock at any time prior to maturity at a
conversion price of $8.75 per share, subject to adjustment under certain conditions.
During Ñscal 2000, the Company repurchased and retired Notes with a face value of $18,750,000 at a
discounted price of $13,630,000. In connection with the repurchase of the Notes, the related portion of the
unamortized deferred Ñnancing costs of $432,000 was written oÅ and included in the determination of the gain
on extinguishment of debt. The Company recognized a gain of approximately $4,688,000, as a reduction to
general and administrative expenses. The Company also reclassiÑed the related income taxes of approximately
$1,876,000 to income tax expense (see Note 1).
During Ñscal 2001, the Company repurchased and retired Notes with a face value of $7,750,000 at a
discounted price of $6,382,000. In connection with the repurchase of the Notes, the related portion of the
unamortized deferred Ñnancing costs of $178,000 was written oÅ and included in the determination of the gain
on extinguishment of debt. The Company recognized a gain of approximately $1,190,000, as a reduction to
general and administrative expenses. The Company also reclassiÑed the related income tax expense for Ñscal
2001 of approximately $476,000 to income tax expense (see Note 1). The remaining principle outstanding as
of February 3, 2002, was $173,500,000.
In February and March, 2002, the remaining balance of $173,500,000 of the Notes were called for
redemption, resulting in the repurchase of the Notes for approximately $275,000 in cash and the conversion of
the remainder into approximately 19,800,000 shares of the Company's common stock at a conversion price of
$8.75 per share. As a result of the redemption, unamortized debt issuance costs of $2,357,000 and accrued
interest of $3,864,000 were reclassiÑed to stockholders' equity, resulting in a net increase of $1,507,000.
Note 11 Ì Common Stock
In July 2002, the Company Ñled a registration statement on Form S-3 for a public oÅering of
14,500,000 shares of its common stock, plus an over-allotment option of 2,175,000 shares. Of these shares,
13,182,584 were oÅered by entities aÇliated with Carrefour SA, and 1,317,416 shares, plus the shares in the
over-allotment option, were oÅered by the Company.
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