Petsmart 2014 Annual Report Download - page 87

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Table of Contents
PetSmart, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements — (Continued)
reported in stockholders' equity in the Consolidated Balance Sheets. Transaction gains and losses are included in net income in
the Consolidated Statements of Income and Comprehensive Income.
Activities related to foreign currency adjustments were as follows (in thousands):
Year Ended
February 2, 2014 February 3, 2013 January 29, 2012
(52 weeks) (53 weeks) (52 weeks)
Deferred tax (benefit) expense on translation adjustments $ (4,529) $ 23 $ 50
Transaction loss 889 454 817
Earnings Per Common Share
Basic earnings per common share is calculated by dividing net income by the weighted average of shares outstanding
during each period. Diluted earnings per common share reflects the potential dilution of securities that could share in earnings,
such as potentially dilutive common shares that may be issuable under our stock incentive plans, and is calculated by dividing
net income by the weighted average shares, including dilutive securities, outstanding during the period.
Note 2 — Recently Issued Accounting Pronouncements
In July 2013, the Financial Accounting Standards Board, or “FASB,” issued an accounting standards update on the
presentation of unrecognized tax benefits. The update clarifies that unrecognized tax benefits related to a net operating loss
carryforward, or similar tax loss, or tax credit carryforward, should generally be presented in the financial statements as a
reduction to a deferred tax asset. The amendments in this update are effective for fiscal years, and interim periods within those
years, beginning after December 15, 2013. The update allows for early adoption. We have accordingly presented applicable
uncertain tax positions as reductions to deferred income tax assets in the Consolidated Balance Sheet as of February 2, 2014.
These amounts are presented in other current liabilities and other noncurrent liabilities in the Consolidated Balance Sheet as of
February 3, 2013. The adoption of the new guidance did not have a material impact on our consolidated financial statements.
Note 3 — Income Taxes
Income before income tax expense and equity income from Banfield was as follows (in thousands):
Year Ended
February 2, 2014 February 3, 2013 January 29, 2012
(52 weeks) (53 weeks) (52 weeks)
United States and Puerto Rico $ 626,634 $ 580,672 $ 433,633
Foreign 14,905 16,216 12,644
$ 641,539 $ 596,888 $ 446,277
Income tax expense consisted of the following (in thousands):
Year Ended
February 2, 2014 February 3, 2013 January 29, 2012
(52 weeks) (53 weeks) (52 weeks)
Current provision:
Federal $ 219,617 $ 218,469 $ 147,728
State 31,800 25,869 22,934
251,417 244,338 170,662
Deferred:
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