Petsmart 2008 Annual Report Download - page 70

multiplied by the advance rate of 85%, is equal to the amount of outstanding letters of credit under this stand-alone
letter of credit facility. As of February 1, 2009, we had no outstanding letters of credit under this stand-alone letter of
credit facility, no restricted cash or short-term investments on deposit with the lenders, and no other investments
related to this credit facility.
As of February 1, 2009, we were in compliance with the terms and covenants of our credit facility and letter of
credit facility. The credit facility and letter of credit facility are secured by substantially all our personal property
assets, our subsidiaries and certain real property.
Operating and Capital Leases
We lease substantially all our stores, distribution centers and corporate offices under noncancelable leases. The
terms of the store leases generally range from 10 to 15 years and typically allow us to renew for 2 to 3 additional
five-year terms. Store leases, excluding renewal options, expire at various dates through 2025. Generally, the leases
require payment of property taxes, utilities, common area maintenance, insurance and, if annual sales at certain
stores exceed specified amounts, provide for additional rents. We also lease certain equipment under operating
leases. Total operating lease expense incurred, net of sublease income, during 2008, 2007 and 2006 was
$275.1 million, $245.9 million and $221.1 million, respectively. Additional rent included in those amounts was
not material.
At February 1, 2009, the future minimum annual rental commitments under all noncancelable leases were as
follows (in thousands):
Operating
Leases
Capital
Leases
2009 .................................................... $ 257,829 $ 88,990
2010 .................................................... 277,837 96,971
2011 .................................................... 271,615 98,263
2012 .................................................... 268,928 99,316
2013 .................................................... 257,164 98,718
Thereafter ................................................ 970,522 481,065
Total minimum rental commitments ............................. $2,303,895 963,323
Less: amounts representing interest ............................. (377,330)
Present value of minimum lease payments ........................ 585,993
Less: current portion ........................................ (32,233)
Long-term obligations ....................................... $553,760
The rental commitments schedule includes all locations for which we have the right to control the use of the
property and includes open stores, closed stores, stores to be opened in the future, distribution centers and corporate
offices. We have recorded accrued rent of $1.4 million and $1.6 million in the Consolidated Balance Sheets as of
February 1, 2009, and February 3, 2008, respectively. In addition to the commitments scheduled above, we have
executed lease agreements with total minimum lease payments of $154.8 million. The typical lease term for these
agreements is 10 to 15 years. We do not have the right to control the use of the property under these leases at
February 1, 2009.
F-22
PetSmart, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)