Petsmart 2006 Annual Report Download - page 75

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operating loss carryforwards are subject to certain limitations on their utilization pursuant to Section 382 of the
Internal Revenue Code of 1986, as amended.
The Company operates in multiple tax jurisdictions and could be subject to audit in these jurisdictions. These
audits can involve complex issues that may require an extended period of time to resolve and may cover multiple
years.
Note 7 — Earnings Per Share
A reconciliation of the basic and diluted per share calculations for fiscal 2006, 2005 and 2004 is as follows (in
thousands, except per share data):
January 28,
2007
January 29,
2006
January 30,
2005
Fiscal Year Ended
Net income ..................................... $185,069 $182,490 $157,453
Weighted average shares outstanding — Basic ............ 135,836 140,791 143,888
Effect of dilutive securities:
Options and restricted stock . . . .................... 3,701 4,786 5,764
Weighted average shares outstanding — Diluted .......... 139,537 145,577 149,652
Earnings per common share:
Basic ........................................ $ 1.36 $ 1.30 $ 1.09
Diluted ....................................... $ 1.33 $ 1.25 $ 1.05
Certain stock-based compensation awards representing 1,831,000, 1,068,000 and 191,000 shares of common
stock in fiscal 2006, 2005 and 2004, respectively, were outstanding but not included in the calculation of diluted
earnings per share because the inclusion of the awards would have been antidilutive for the periods presented.
Note 8 — Equity
Share Purchase Programs
In April 2000, the Board of Directors approved a plan to purchase the Company’s common stock. 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 increased the authorized amount of annual purchases to $35,000,000. In
September 2004, the Board of Directors approved a program, which replaced the March 2003 program, authorizing
the purchase of up to $150,000,000 of the Company’s common stock through fiscal 2005. During the first quarter of
fiscal 2005, the Company purchased approximately 3,618,000 shares of its common stock for $105,001,000, which
completed the authorized purchase of $150,000,000 of the Company’s common stock under the September 2004
program.
In June 2005, the Board of Directors approved a program authorizing the purchase of up to $270,000,000 of the
Company’s common stock through fiscal 2006. In August 2006, the Board of Directors increased the amount
remaining under the June 2005 share purchase program by $141,700,000 to bring the share purchase capacity under
the June 2005 share purchase program to $250,000,000 and extended the term of the June 2005 share purchase
program to August 9, 2007. During fiscal 2006, the Company purchased approximately 6,266,000 shares of its
common stock for $161,864,000. At January 28, 2007, the amount remaining under the June 2005 share purchase
program was $89,870,000.
F-19
PetSmart, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)