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Press release from Business Wire

PetSmart Reports Results for the Fourth Quarter and Fiscal Year 2010

<p class='bwalignc'> <b>Q4 Earnings up 26% to $0.77 per Share; Comp Sales of 6.3%; Total Sales of 8.1%; Comp Transactions of 4.4%; FY10 Earnings up 26% to $2.01 per Share; Comp Sales of 4.8%; Total Sales of 6.7%; Comp Transactions of 2.1%</b> </p>

Tuesday, March 01, 2011

PetSmart Reports Results for the Fourth Quarter and Fiscal Year 201009:00 EST Tuesday, March 01, 2011 PHOENIX (Business Wire) -- PetSmart, Inc. (NASDAQ: PETM) today reported financial results for the fourth quarter and fiscal year 2010, and provided guidance for 2011. After market close on February 28, 2011, Thomson Reuters, our investor relations web site service provider, inadvertently published on that web site certain fourth quarter of fiscal 2010 results. The information was available only for a very brief period, and was originally scheduled to be released after the market closed on March 2, 2011. To assure full public dissemination of this information, we are reporting today our financial results for the fourth quarter and full year of fiscal 2010, which includes the financial results that were inadvertently disclosed. For the quarter, earnings per share were up 26% to $0.77. Comparable store sales, or sales in stores open at least a year, grew 6.3%, benefitting from comparable transactions growth of 4.4%. Total sales for the quarter were up 8.1% to $1.5 billion, partially impacted by $4 million in favorable foreign currency fluctuations. Services sales, which are included in total sales, grew 7.2% to $152 million. For the year, the company delivered earnings per share of $2.01, up 26% compared to $1.59 last year. Comparable store sales grew 4.8%, benefitting from comparable transactions growth of 2.1%. Total sales for the year were $5.7 billion, up 6.7%, including a favorable impact from foreign currency fluctuations of $25 million, and services sales grew 7.5% to $619 million. During the year, the company generated $458 million in operating cash flow and spent $125 million in capital expenditures. In addition, the company repurchased $263 million of PetSmart stock during 2010, with $100 million repurchased during the fourth quarter. The company also distributed $53 million in dividends during 2010, ending the year with $353 million in cash, cash equivalents and restricted cash and zero borrowings on its credit facility. “We are pleased to report that we exceeded our goals for 2010 and delivered record results,” said Bob Moran, Chief Executive Officer and President. “Our third consecutive quarter of accelerating comparable transactions growth as well as a strong holiday performance led to better-than-expected results for the quarter.” “For all of 2011, we anticipate comparable store sales growth in the three to four percent range, and total sales growth in the mid-single digits range. We expect earnings per share between $2.23 to $2.35, and spending for capital expenditures projects to be between $130 million to $140 million,” said Chip Molloy, Senior Vice President and Chief Financial Officer. "For the first quarter of 2011, we are expecting comparable store sales of low- to mid-single digits, and earnings per share between $0.52 to $0.56.” Conference call information PetSmart management has scheduled a teleconference for 4:30 p.m. EST on March 2, 2011, to discuss results for the fourth quarter and fiscal year 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 first quarter of 2011. In addition, you can listen to the call live by dialing 866-227-1607 (within the United States and Canada) or 703-639-1130 (for international callers), code 1513264. A phone replay will be available through April 2, 2011, 11:59 p.m. EST, at 888-266-2081 in the United States and Canada, or at 703-925-2533 for international callers, code 1513264. About PetSmart PetSmart, Inc. is the largest specialty pet retailer of services and solutions for the lifetime needs of pets. The company employs approximately 47,000 associates and operates more than 1,187 pet stores in the United States and Canada, 180 in-store PetSmart PetsHotel(R) cat and dog boarding facilities, and is a leading online provider of pet supplies and pet care information (http://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(R) 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 $110 million in grants and programs benefiting animal welfare organizations. Through its in-store pet adoption partnership with PetSmart Charities(R), PetSmart has helped save the lives of more than 4.4 million pets. Forward-looking statements This news release contains forward-looking statements concerning our expectations for future performance, including the statements comprising our 2011 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 Fifty-Two Weeks Ended Fifty-Two Weeks Ended January 30, 2011   % of Sales January 31, 2010   % of Sales January 30, 2011   % of Sales January 31, 2010   % of Sales   Merchandise sales $ 1,359,619 89.4 % $ 1,264,044 89.9 % $ 5,040,807 88.5 % $ 4,761,039 89.2 % Services sales 151,881 10.0 % 141,639 10.1 % 618,755 10.9 % 575,353 10.8 % Other revenue   8,534     0.6 %   -     0.0 %   34,235     0.6 %   -     0.0 %   Net sales   1,520,034     100.0 %   1,405,683     100.0 %   5,693,797     100.0 %   5,336,392     100.0 %   Cost of merchandise sales 934,763 61.5 % 885,643 63.0 % 3,554,387 62.4 % 3,402,021 63.8 % Cost of services sales 111,778 7.4 % 103,663 7.4 % 450,644 7.9 % 415,154 7.8 % Cost of other revenue   8,534     0.6 %   -     0.0 %   34,235     0.6 %   -     0.0 %   Total cost of sales   1,055,075     69.4 %     989,306     70.4 %   4,039,266     70.9 %   3,817,175     71.5 %   Gross profit 464,959 30.6 % 416,377 29.6 % 1,654,531 29.1 % 1,519,217 28.5 %   Operating, general and administrative expenses   315,139     20.7 %   282,236     20.1 %   1,225,803     21.5 %   1,150,138     21.6 %   Operating income 149,820 9.9 % 134,141 9.5 % 428,728 7.5 % 369,079 6.9 %   Interest expense, net   (14,615 )   -1.0 %   (14,773 )   -1.1 %   (58,837 )   -1.0 %   (59,748 )   -1.1 %   Income before income tax expense and equity in income from Banfield 135,205 8.9 % 119,368 8.5 % 369,891 6.5 % 309,331 5.8 %   Income tax expense (49,096 ) -3.2 % (45,960 ) -3.3 % (140,396 ) -2.5 % (117,554 ) -2.2 %   Equity in income from Banfield   4,167     0.3 %   1,621     0.1 %   10,372     0.2 %   6,548     0.1 %   Net income $ 90,276     5.9 % $ 75,029     5.3 % $ 239,867     4.2 % $ 198,325     3.7 %   Earnings per common share: Basic $ 0.78   $ 0.63   $ 2.05   $ 1.62   Diluted $ 0.77   $ 0.61   $ 2.01   $ 1.59     Weighted average shares outstanding: Basic 115,222 119,962 116,799 122,363 Diluted 117,712 122,658 119,405 124,701                                             Stores open at beginning of each period 1,172 1,149 1,149 1,112 Stores opened during each period 17 2 46 45 Stores closed during each period (2 ) (2 ) (8 ) (8 ) Stores open at end of each period         1,187             1,149             1,187             1,149         PetSmart, Inc. and SubsidiariesCondensed Consolidated Balance Sheets (In thousands, except par value) (Unaudited)               January 30,January 31,20112010   Assets Cash and cash equivalents $ 291,949 $ 308,360 Short-term investments 9,708 - Restricted cash 61,439 48,172 Receivables, net 53,971 52,232 Merchandise inventories 615,841 563,389 Deferred income taxes 44,999 36,805 Prepaid expenses and other current assets   46,022     57,652     Total current assets 1,123,929 1,066,610   Property and equipment, net 1,132,435 1,201,857 Equity investment in Banfield 42,858 32,486 Deferred income taxes 96,215 94,901 Goodwill 44,111 42,200 Other noncurrent assets   30,672     23,932     Total assets $ 2,470,220   $ 2,461,986     Liabilities and Stockholders' Equity Accounts payable and bank overdraft $ 168,776 $ 212,121 Accrued payroll, bonus and employee benefits 139,359 105,162 Accrued occupancy expenses and deferred rents 64,328 63,142 Current maturities of capital lease obligations 45,277 37,839 Other current liabilities   156,065     146,965     Total current liabilities 573,805 565,229   Capital lease obligations 521,552 533,635 Deferred rents 86,027 91,030 Other noncurrent liabilities   118,194     99,377     Total liabilities   1,299,578     1,289,271     Stockholders' Equity: Preferred stock; $.0001 par value - - Common stock; $.0001 par value 16 16 Additional paid-in capital 1,222,340 1,148,228 Retained earnings 1,277,803 1,093,708 Accumulated other comprehensive income 5,380 2,369 Less: Treasury stock   (1,334,897 )   (1,071,606 )   Total stockholders' equity   1,170,642     1,172,715     Total liabilities and stockholders' equity $ 2,470,220   $ 2,461,986   PetSmart, Inc.Investor Relations, 623-587-2025