Petsmart 2010 Annual Report Download - page 65

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We record capitalized interest primarily for interest expense incurred during the construction period for new
stores. Capitalized interest was approximately $0.8 million, $0.2 million and $1.6 million in 2010, 2009 and 2008,
respectively. Capitalized interest is included in property and equipment, net in the Consolidated Balance Sheets.
Note 5 — Reserve for Closed Stores
The components of the reserve for closed stores were as follows (in thousands):
January 30,
2011
January 31,
2010
Total remaining gross occupancy costs ........................... $34,313 $ 33,577
Less:
Expected sublease income ................................... (22,964) (24,018)
Interest costs ............................................. (1,585) (1,343)
Reserve for closed stores...................................... $ 9,764 $ 8,216
Current portion, included in other current liabilities .................. 3,056 2,395
Noncurrent portion, included in other noncurrent liabilities ............ 6,708 5,821
Reserve for closed stores...................................... $ 9,764 $ 8,216
The activity related to the reserve for closed stores was as follows (in thousands):
January 30,
2011
January 31,
2010
February 1,
2009
Year Ended
Opening balance.................................. $8,216 $ 6,382 $ 6,157
Reserve for new store closures . .................... 4,921 1,526 3,132
Changes in sublease assumptions.................... 1,072 4,173 1,734
Lease terminations .............................. (562) (565) (821)
Other ........................................ 995 769 517
Charges, net ..................................... 6,426 5,903 4,562
Payments ....................................... (4,878) (4,069) (4,337)
Ending balance................................... $9,764 $ 8,216 $ 6,382
We record charges for new closures and adjustments related to changes in subtenant assumptions and other
occupancy payments in operating, general and administrative expenses in the Consolidated Statements of Income
and Comprehensive Income. We can make no assurances that additional charges related to closed stores will not be
required based on the changing real estate environment.
Note 6 — Income Taxes
Income before income tax expense and equity in income from Banfield was as follows (in thousands):
January 30,
2011
January 31,
2010
February 1,
2009
Year Ended
United States .................................... $361,106 $301,644 $309,311
Foreign ........................................ 8,785 7,687 1,786
$369,891 $309,331 $311,097
F-15
PetSmart, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)