Petsmart 2010 Annual Report Download - page 67

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The components of the net deferred income tax assets (liabilities) included in the Consolidated Balance Sheets
are as follows (in thousands):
January 30,
2011
January 31,
2010
Deferred income tax assets:
Capital lease obligations .................................... $192,825 $ 200,108
Employee benefit expense ................................... 82,228 74,613
Deferred rents ............................................ 37,596 39,283
Net operating loss carryforwards .............................. 17,717 18,690
Reserve for closed stores .................................... 3,932 3,132
Miscellaneous reserves and accruals............................ 9,589 10,501
Tenant incentives ......................................... 11,238 11,328
Other .................................................. 7,698 4,292
Total deferred income tax assets............................. 362,823 361,947
Valuation allowance...................................... (7,700) (7,693)
Deferred income tax assets, net of valuation allowance ............ 355,123 354,254
Deferred income tax liabilities:
Property and equipment..................................... (188,654) (200,150)
Inventory ............................................... (6,113) (6,913)
Prepaid expenses .......................................... (7,593) (7,452)
Other .................................................. (11,549) (8,033)
Total deferred income tax liabilities .......................... (213,909) (222,548)
Net deferred income tax assets .............................. $141,214 $ 131,706
We are subject to United States of America federal income tax, as well as the income tax of multiple state and
foreign jurisdictions. We have substantially settled all federal income tax matters through 2006, state and local
jurisdictions through 1999 and foreign jurisdictions through 2003. We could be subject to audits in these
jurisdictions. These audits can involve complex issues that may require an extended period of time to resolve
and may cover multiple years. During 2010, 2009 and 2008, we recorded a net benefit of approximately
$0.2 million, $1.0 million and $1.2 million, respectively, from the settlement of uncertain tax positions with
various state tax jurisdictions and the lapse of the statute of limitations for certain tax positions. The net benefits are
reflected in income tax expense in the Consolidated Statements of Income and Comprehensive Income. We cannot
make an estimate of the range of possible changes that may result from other audits.
F-17
PetSmart, Inc. and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)