Petsmart 2011 Annual Report Download - page 66

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PetSmart, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements — (Continued)
Note 3 — Derivative Financial Instruments
From time to time, we have entered into foreign currency exchange forward contracts, or “Foreign
Exchange Contracts,” in Canada to manage the impact of foreign currency exchange rate fluctuations related to
certain balance sheet accounts. We do not designate these Foreign Exchange Contracts as hedges and, accord-
ingly, they are recorded at fair value using quoted prices for similar assets or liabilities in active markets. The
changes in the fair value are recognized in operating, general and administrative expenses in the Consolidated
Statements of Income and Comprehensive Income.
At January 29, 2012, we had no Foreign Exchange Contracts outstanding. The fair value of the receivable
included in prepaid expenses and other current assets was immaterial at January 30, 2011.
We recorded the following (gains) losses on Foreign Exchange Contracts (in thousands):
Year Ended
January 29,
2012
January 30,
2011
(Gain) loss .................................................... $(77) $412
We did not enter into Foreign Exchange Contracts during 2009.
Note 4 — Income Taxes
Income before income tax expense and equity in income from Banfield was as follows (in thousands):
Year Ended
January 29,
2012
January 30,
2011
January 31,
2010
United States and Puerto Rico ......................... $433,633 $361,106 $301,644
Foreign ........................................... 12,644 8,785 7,687
$446,277 $369,891 $309,331
Income tax expense consisted of the following (in thousands):
Year Ended
January 29,
2012
January 30,
2011
January 31,
2010
Current provision:
Federal ......................................... $147,728 $133,753 $111,911
State ........................................... 22,934 17,968 19,215
170,662 151,721 131,126
Deferred:
Federal ......................................... 574 (7,906) (4,439)
State ........................................... (4,276) (3,419) (9,133)
(3,702) (11,325) (13,572)
Income tax expense .................................. $166,960 $140,396 $117,554
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