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Press release from Business Wire

PetSmart Reports Results for the First Quarter 2010

<p class=' bwtextaligncenter'> <b>Q1 Earnings up 24% to $0.46 Per Share; Comp Sales Growth of 2.8 Percent; Total Sales Growth of 5.1 Percent; Services Sales Growth of 7.3 Percent</b> </p>

Wednesday, May 19, 2010

PetSmart Reports Results for the First Quarter 201016:02 EDT Wednesday, May 19, 2010 PHOENIX (Business Wire) -- PetSmart, Inc. (NASDAQ: PETM) today reported earnings of $0.46 per share, up 24% compared to $0.37 per share in the first quarter of 2009. Net income totaled $55.6 million in the first quarter of 2010, compared to $46.3 million in the first quarter of 2009. Total sales for the first quarter of 2010 increased 5.1% to $1.4 billion. The increase in net sales was partially impacted by $12 million in favorable foreign currency fluctuations. Comparable store sales, or sales in stores open at least a year, grew 2.8% in the first quarter. Services sales, which are included in total sales, grew 7.3% to $153 million. During the first quarter, the company generated $86 million in operating cash flow, spent $31 million in capital expenditures, distributed $12 million in dividends, and repurchased $107 million of PetSmart stock. The Company ended the quarter with $288 million in cash, cash equivalents and restricted cash and zero borrowings on its credit facility. “I am proud of the results that we have been able to achieve as a result of our focus on our key strategic priorities,” said Bob Moran, Chief Executive Officer and President. “Our results for the first quarter have exceeded our goals and reflect the underlying strength of our business model and our strategies to deliver solid earnings growth.” “We are encouraged by the results of the first quarter and optimistic about the remainder of 2010,” said Chip Molloy, Senior Vice President and Chief Financial Officer. “For the full year, we are raising our comp sales expectations to low- to mid-single digits and raising our earnings per share guidance to $1.82 to $1.92. For the second quarter, we anticipate comparable store sales in the low- to mid-single digits and earnings per share of $0.33 to $0.37.” Conference call information PetSmart management has scheduled a teleconference for 4:30 p.m. EDT today to discuss results for the first quarter 2010. This teleconference will be webcast live for all investors at www.petm.com or www.streetevents.com. The webcast will be available until the company announces results for the second quarter of 2010. In addition, you can listen to the call live by dialing (866) 835-8905 (within the United States and Canada) or (703) 639-1412 (for international callers), code 1455276. A phone replay will be available through June 19, 2010, 11:59 p.m. EDT, at 888-266-2081 in the United States and Canada, or at 703-925-2533 for international callers, code 1455276. About PetSmart PetSmart, Inc. is the largest specialty pet retailer of services and solutions for the lifetime needs of pets. The company employs approximately 45,000 associates and operates more than 1,160 pet stores in the United States and Canada, 165 in-store PetSmart PetsHotel® cat and dog boarding facilities, and is a leading online provider of pet supplies and pet care information (www.petsmart.com). PetSmart provides a broad range of competitively priced pet food and pet products; and offers complete pet training, pet grooming, pet boarding, PetSmart® Doggie Day Camp(SM) pet day care services and pet adoption services. Since 1994, PetSmart Charities, Inc., an independent 501(c)(3) non-profit animal welfare organization and the largest funder of animal welfare efforts in North America, has provided more than $109 million in grants and programs benefiting animal welfare organizations. Through its in-store pet adoption partnership with PetSmart Charities®, PetSmart has helped save the lives of more than 4 million pets. Forward-looking statements This news release contains forward-looking statements concerning our expectations for future performance, including the statements comprising our 2010 guidance. These "forward-looking statements" are based on currently available information, operating plans and projections about future events and trends. They inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements. Such risks and uncertainties include, but are not limited to: changes in general economic conditions; conditions affecting customer transactions and average ticket including, but not limited to, weather conditions or other seasonal events; our ability to compete effectively; disruption of our supply chain; our ability to effectively manage our growth and operations; changes in our cost structure; and changes in the legal or regulatory environment. Undue reliance should not be placed on such forward-looking statements as they speak only as of the date hereof, and we undertake no obligation to update these statements to reflect subsequent events or circumstances except as may be required by law. For additional information on these and other factors that arise when investing in PetSmart, please see our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Follow PetSmart on Twitter www.twitter.com/PetSmartTLC Find PetSmart on Facebook www.facebook.com/PetSmart   PetSmart, Inc. and SubsidiariesCondensed Consolidated Statements of Operations (in thousands, except per share and store data) (Unaudited)             Thirteen Weeks Ended Thirteen Weeks Ended May 2, 2010   % of Sales May 3, 2009   % of Sales   Merchandise sales $ 1,233,595 88.4 % $ 1,184,755 89.2 % Services sales 153,287 11.0 % 142,819 10.8 % Other revenue   8,271     0.6 %   -     0.0 %   Net sales   1,395,153     100.0 %   1,327,574     100.0 %   Cost of merchandise sales 869,842 62.3 % 847,874 63.9 % Cost of services sales 112,748 8.1 % 102,448 7.7 % Cost of other revenue   8,271     0.6 %   -     0.0 %   Total cost of sales   990,861     71.0 %     950,322     71.6 %   Gross profit 404,292 29.0 % 377,252 28.4 %   Operating, general and administrative expenses   301,031     21.6 %   287,383     21.6 %   Operating income 103,261 7.4 % 89,869 6.8 %   Interest expense, net   (15,343 )   -1.1 %   (14,974 )   -1.1 %   Income before income tax expense and equity in income from investee 87,918 6.3 % 74,895 5.6 %   Income tax expense (33,764 ) -2.4 % (29,749 ) -2.2 %   Equity in income from investee   1,438     0.1 %   1,116     0.1 %   Net income $ 55,592     4.0 % $ 46,262     3.5 %   Earnings per common share: Basic $ 0.47   $ 0.37   Diluted $ 0.46   $ 0.37     Weighted average shares outstanding: Basic 117,976 124,355 Diluted 120,382 126,524                       Stores open at beginning of each period 1,149 1,112 Stores opened during each period 14 26 Stores closed during each period (3 ) (1 ) Stores open at end of each period       1,160             1,137             PetSmart, Inc. and SubsidiariesCondensed Consolidated Balance Sheets (In thousands, except par value) Unaudited     May 2,January 31,May 3,201020102009   Assets Cash and cash equivalents $ 241,964 $ 308,360 $ 209,913 Restricted cash 46,515 48,172 - Receivables, net 47,460 52,232 56,208 Merchandise inventories 596,660 563,389 556,312 Deferred income taxes 36,805 36,805 29,334 Prepaid expenses and other current assets   61,007     57,652     89,348     Total current assets 1,030,411 1,066,610 941,115   Property and equipment, net 1,176,144 1,201,857 1,280,590 Equity investment in affiliate 33,924 32,486 27,054 Deferred income taxes 87,148 94,901 88,105 Goodwill 43,667 42,200 39,470 Other noncurrent assets   27,155     23,932     23,662     Total assets $ 2,398,449   $ 2,461,986   $ 2,399,996     Liabilities and Stockholders' Equity Accounts payable and bank overdraft $ 198,280 $ 212,121 $ 176,973 Accrued payroll, bonus and employee benefits 98,615 105,162 90,109 Accrued occupancy expenses and deferred rents 59,293 63,142 55,423 Current maturities of capital lease obligations 39,462 37,839 34,222 Other current liabilities   142,136     146,965     136,251     Total current liabilities 537,786 565,229 492,978   Capital lease obligations 533,893 533,635 554,862 Deferred rents 89,625 91,030 92,777 Other noncurrent liabilities   103,621     99,377     94,346     Total liabilities   1,264,925     1,289,271     1,234,963     Stockholders' Equity: Preferred stock; $.0001 par value - - - Common stock; $.0001 par value 16 16 16 Additional paid-in capital 1,169,930 1,148,228 1,119,735 Retained earnings 1,137,466 1,093,708 978,579 Accumulated other comprehensive income 4,786 2,369 (1,510 ) Treasury stock   (1,178,674 )   (1,071,606 )   (931,787 )   Total stockholders' equity   1,133,524     1,172,715     1,165,033     Total liabilities and stockholders' equity $ 2,398,449   $ 2,461,986   $ 2,399,996