Petsmart 2008 Annual Report Download - page 63

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Of the 4.7 million shares of voting stock of MMIH, we held:
(a) 2.9 million shares of voting convertible preferred stock that may be converted into voting common
stock at any time at our option; and
(b) 1.8 million shares of voting common stock.
MMIH’s financial data is summarized as follows (in thousands):
December 27,
2008
February 3,
2008
Current assets............................................. $187,066 $163,083
Noncurrent assets .......................................... 121,932 120,204
Current liabilities .......................................... 196,070 183,540
Noncurrent liabilities ....................................... 14,070 13,631
December 27,
2008
February 3,
2008
January 29,
2007
(52 weeks) (52 weeks) (53 weeks)
Year Ended
Net sales ...................................... $448,528 $407,634 $336,464
Gross profit .................................... 65,917 52,104 55,962
Net income before minority interest .................. $ 13,626 $ 7,898 $ 9,763
During 2008, MMIH changed their fiscal year end to December 27, 2008. Therefore, MMIH’s financial data
presented for the year-ended December 27, 2008, represents the eleven month period from February 4, 2008, to
December 27, 2008. Our equity in income from investee for 2008 was calculated based on our ownership share of
MMIH’s net income for the twelve month period from December 31, 2007, to December 27, 2008, as we record our
equity income on a one-month lag.
In June 2007, we entered into a new master operating agreement with MMIH that has an initial 15-year term
and is retroactive to February 2007. We charge MMIH license fees for the space used by the veterinary hospitals and
for their portion of utilities costs. We treat these amounts as a reduction of the retail stores’ occupancy costs, which
are included as a component of cost of sales in the Consolidated Statements of Operations and Comprehensive
Income. We also charge MMIH for its portion of specific operating expenses and treat the reimbursement as a
reduction of the stores’ operating expense.
We recognized license fees, utilities and other cost reimbursements of $30.1 million, $32.9 million and
$21.4 million during 2008, 2007 and 2006, respectively. Receivables from MMIH totaled $3.3 million and
$4.5 million at February 1, 2009, and February 3, 2008, respectively, and were included in receivables in the
Consolidated Balance Sheets.
The master operating agreement also includes a provision for the sharing of profits on the sales of therapeutic
pet foods sold in all stores with a Banfield hospital.
F-15
PetSmart, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)