Petsmart 2014 Annual Report Download - page 102

Table of Contents
PetSmart, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements — (Continued)
The following assumptions were used to value stock option grants:
Year Ended
February 2, 2014 February 3, 2013 January 29, 2012
Dividend yield 1.00% 1.20% 1.40%
Expected volatility 30.2% 28.8% 31.6%
Risk-free interest rate 1.33% 1.70% 1.24%
Forfeiture rate 13.4% 13.8% 14.3%
Expected lives 5.1 years 5.6 years 5.1 years
Vesting periods 4.0 years 4.0 years 4.0 years
Term 7.0 years 7.0 years 7.0 years
Weighted average fair value $ 15.62 $ 14.54 $ 10.76
Restricted stock expense reflects the fair market value on the date of the grant, net of forfeitures, and is amortized on a
straight-line basis by a charge to income over the requisite service period.
PSU expense, net of forfeitures, is recognized on a straight-line basis over the requisite service period based upon the fair
market value on the date of grant, adjusted for the anticipated or actual achievement against the established performance goal.
Compensation expense, net of forfeitures, for MEUs is recognized on a straight-line basis over the requisite service period
and is evaluated quarterly based upon the current market value of our common stock.
Note 10 — Employee Benefit Plans
We have a defined contribution plan, or the “Plan,” pursuant to Section 401(k) of the Internal Revenue Code. The Plan
covers all employees that meet certain service requirements. We match employee contributions, up to specified percentages of
those contributions, as approved by the Board of Directors. In addition, certain employees can elect to defer receipt of certain
salary and cash bonus payments pursuant to our Non-Qualified Deferred Compensation Plan. We match employee
contributions up to certain amounts as defined in the Non-Qualified Deferred Compensation Plan documents. During 2013,
2012, and 2011, we recognized expense related to matching contributions under these Plans of $7.6 million, $8.5 million, and
$7.1 million, respectively.
Note 11 — Financing Arrangements and Lease Obligations
Credit Facilities
We have a $100.0 million revolving credit facility agreement, or “Revolving Credit Facility,” which expires on March 23,
2017. Borrowings under this Revolving Credit Facility are subject to a borrowing base and bear interest, at our option, at
LIBOR plus 1.25% or Base Rate plus 0.25%. The Base Rate is defined as the highest of the following rates: the Federal Funds
Rate plus 0.5%, the Adjusted LIBOR plus 1.0%, or the Prime Rate.
We are subject to fees payable each month at an annual rate of 0.20% of the unused amount of the Revolving Credit
Facility. The Revolving Credit Facility also gives us the ability to issue letters of credit, which reduce the amount available
under the Revolving Credit Facility. Letter of credit issuances under the Revolving Credit Facility are subject to interest
payable and bear interest of 0.625% for standby letters of credit and commercial letters of credit.
We had no borrowings under our Revolving Credit Facility at February 2, 2014, and February 3, 2013. We had $14.3
million and $17.9 million in stand-by letter of credit issuances under our Revolving Credit Facility as of February 2, 2014, and
February 3, 2013, respectively.
We also have a $100.0 million stand-alone letter of credit facility agreement, or “Stand-alone Letter of Credit Facility,”
which expires on March 23, 2017. We are subject to fees payable each month at an annual rate of 0.175% of the average daily
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