##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Fiscal
    Year Ended January 31, 2010oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    fromto   Commission file
    number 0-21888
     PetSmart, Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

94-3024325(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer 
    Identification No.)   
  19601 N. 27th Avenue
    Phoenix, Arizona(Address of principal
    executive offices)

85027(Zip Code)   Registrants telephone number, including area code:
 (623) 580-6100
 Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $.0001 par value

The NASDAQ Stock Market LLC
    (NASDAQ Global Select Market)   Securities registered pursuant to Section 12(g) of the
    Act:
    None
  þ o
  o þ
  Note
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
 Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller reporting
    company o (Do not check if a smaller
    reporting company)
  Rule 12b-2 o þ
      DOCUMENTS INCORPORATED BY
    REFERENCE
  Form 10-K.




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##### 





TABLE OF
    CONTENTS
   
 Item



PagePART I1.


Business


11A.


Risk Factors


81B.


Unresolved Staff Comments


162.


Properties


173.


Legal Proceedings


18PART II5.


Market for the Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


196.


Selected Financial Data


227.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


237A.


Quantitative and Qualitative Disclosures About
    Market Risk


348.


Financial Statements and Supplementary Data


349.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


349A.


Controls and Procedures


349B.


Other Information


37PART III10.


Directors, Executive Officers and Corporate
    Governance


3711.


Executive  Compensation


3712.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


3713.


Certain Relationships and Related Transactions,
    and Director Independence


3714.


Principal Accounting Fees and Services


37PART IV15.


Exhibits, Financial Statement Schedules


37EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2




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PART I  This Annual Report on
    Form 10-K
    contains forward-looking statements within the meaning of
    Section 27A of the Securities Act of 1933 and
    Section 21E of the Securities Exchange Act of 1934. These
    statements are based on managements current expectations
    and beliefs about future events or future financial performance.
    We have attempted to identify forward-looking statements by
    words such as: anticipate, believe,
    can, continue, could,
    estimate, expect, intend,
    may, plan, potential,
    predict, should, will, or
    other comparable terminology. These statements are not
    guarantees of future performance or results and involve known
    and unknown risks, uncertainties and other factors, including
    the risks outlined under Item 1A. Risk Factors
    contained in Part I of this Annual Report, that may cause
    our actual results, levels of activity, performance or
    achievements to be materially different from any future results,
    levels of activity, performance or achievements expressed or
    implied by these forward-looking statements.
  Although we believe the expectations and beliefs reflected in
    the forward-looking statements are reasonable, such statements
    speak only as of the date this Annual Report on
    Form 10-K
    is filed, and we disclaim any intent or obligation to update any
    of the forward-looking statements after such date, whether as a
    result of new information, actual results, future events or
    otherwise, unless required by law.
  Our fiscal year consists of the 52 or 53 weeks ending on
    the Sunday nearest January 31 of the following year. The 2009
    fiscal year ended on January 31, 2010, and was a 52-week
    year. The 2008 fiscal year was also a 52-week year, while the
    2007 fiscal year was a 53-week year. Unless otherwise specified,
    all references in this Annual Report on
    Form 10-K
    to years are to fiscal years.
  Item 1.
    Business  General
  sm
    ®
  ® ® e-commerce
  The Pet
    Industry
   1




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Competition
    
    Warehouse clubs and other mass merchandisers;
    Supermarkets (grocery stores);
    Specialty pet supply stores;
    Independent pet stores;
    Veterinarians;
    General retail merchandisers;
    Catalog retailers; and
    E-commerce
    retailers.    Our
    Strategy
    Create meaningful differentiation that drives brand
    preference. sm ®
 2




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Offer superior customer service.
  Focus on operating excellence.
  Expand our pet services offerings.
  Add stores and provide the right store format to meet the
    needs of our customers.
    Our
    Stores
    2009


2008


2007Store count at beginning of year


1,112



1,008



908New, relocated and acquired stores opened


45



112



115Stores closed


(8
)


(8
)


(15
)Store count at end of year


1,149



1,112



1,008   Distribution
   3




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##### Table of Contents



Merchandise
    
    Consumables.  Consumables merchandise sales
    includes pet food, treats, and litter. We emphasize premium dog
    and cat foods, many of which are not available in supermarkets,
    warehouse clubs or other mass and general retail merchandisers,
    as well as our private label foods. We also offer quality
    national brands traditionally found in supermarkets and
    warehouse clubs or other mass merchandisers, and pet stores.
    Consumables merchandise sales comprised 53%, 52% and 50% of our
    net sales in 2009, 2008 and 2007, respectively.
    Hardgoods.  Hardgoods merchandise sales
    includes pet supplies and other goods. Our broad assortment of
    pet supplies, including private label products, includes
    collars, leashes, health care supplies, grooming and beauty
    aids, toys and apparel, as well as pet beds and carriers. We
    also offer a complete line of supplies for fish, birds, reptiles
    and small pets. These products include aquariums and habitats,
    as well as accessories, décor and filters. Hardgoods
    merchandise sales comprised 34%, 36% and 38% of our net sales in
    2009, 2008 and 2007, respectively.
    Pets.  Our stores feature fresh-water tropical
    fish, birds, reptiles and small pets. Pets comprised 2% of our
    net sales in 2009, 2008 and 2007. We do not sell dogs or cats,
    but provide space in most stores for adoption and animal welfare
    organizations to use.  Pet
    Services
      24-hour
  Veterinary
    Services
   4




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##### Table of Contents



PetSmart
    Charities and Adoptions
    
    Raising awareness of companion animal welfare issues;
    Funding programs to further individual animal welfare
    organizations missions; and
    Facilitating adoptions through in-store programs and pet
    transport programs.    Government
    Regulation
      Intellectual
    Property
  ® ® ® ® ®
  Employees
    Financial
    Information by Business Segment and Geographic Data
   5




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Available
    Information
  Form 10-K, Form 10-Q, Form 8-K
  1-800-SEC-0330. (http://www.sec.gov
  Management
    Name

Age

PositionPhilip L. Francis


63


Executive ChairmanRobert F. Moran


59


President and Chief Executive OfficerLawrence P. Molloy


48


Senior Vice President, Chief Financial OfficerDonald E. Beaver


51


Senior Vice President, Chief Information OfficerEmily D. Dickinson


50


Senior Vice President, General Counsel and    SecretaryKenneth T. Hall


41


Senior Vice President, Strategic Planning and Business
    DevelopmentDavid K. Lenhardt


40


Senior Vice President, Store OperationsJoseph D. OLeary


51


Senior Vice President, MerchandisingMary L. Miller


49


Senior Vice President, Chief Marketing OfficerJaye D. Perricone


51


Senior Vice President, Real Estate and DevelopmentNeil H. Stacey


56


Senior Vice President, Human ResourcesBruce K. Thorn


42


Senior Vice President, Supply Chain   Philip L. Francis
  Robert F. Moran
  Lawrence P. Molloy
 6




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##### Table of Contents



Donald E. Beaver
  Emily D. Dickinson
  Kenneth T. Hall
  David K. Lenhardt e-commerce
  Joseph D. OLeary
  Mary L. Miller
  Jaye D. Perricone
 7




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##### Table of Contents



Neil H. Stacey
  Bruce K. Thorn
  Item 1A.
    Risk
    Factors  In the normal course of business, our operations, financial
    condition and results of operations are routinely subjected to a
    variety of risks. Our actual financial results could differ
    materially from projected results due to some or all of the
    factors discussed below. You should carefully consider the risks
    and uncertainties described below, as well as those discussed in
    the Competition, Our Stores,
    Distribution and Government Regulation
    sections of this Annual Report on
    Form 10-K.
    In addition, the current global economic conditions amplify many
    of these risks.
  A
    decline in consumer spending or a change in consumer preferences
    could reduce our sales or profitability and harm our
    business.
    The
    pet products and services retail industry is very competitive
    and continued competitive forces may adversely impact our
    business and financial results.
  e-commerce
 8




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Comparable
    store sales growth may decrease as stores grow older. If we are
    unable to increase sales at our existing stores, our results of
    operations could be harmed.
    We may
    be unable to continue to open new stores and enter new markets
    successfully. If we are unable to successfully reformat existing
    stores and open new stores, our results of operations could be
    harmed. Also, store development may place increasing demands on
    management and operating systems and may erode sales at existing
    stores.
    
    Identifying store sites that offer attractive returns on our
    investment including the impact of cannibalization of our
    existing stores;
    Competition for those sites;
    Successfully negotiating with landlords and obtaining any
    necessary governmental, regulatory or private approvals;
    Timely construction of stores; and
    Our ability to attract and retain qualified store personnel.    and/or
    Our
    quarterly operating results may fluctuate due to seasonal
    changes associated with the pet products and services retail
    industry and the timing of expenses, new store openings and
    store closures.
  quarter-to-quarter
 9




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Failure
    to successfully manage and execute our marketing initiatives
    could have a negative impact on our business.
  e-commerce
  A
    disruption, malfunction or increased costs in the operation,
    expansion or replenishment of our distribution centers or our
    supply chain would impact our ability to deliver to our stores
    or increase our expenses, which could harm our sales and results
    of operations.
  out-of-stock
  Failure
    to successfully manage our inventory could harm our
    business.
    If our
    information systems fail to perform as designed or are
    interrupted for a significant period of time, our business could
    be harmed.
     10




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If we
    fail to protect the integrity and security of customer and
    associate information, we could be exposed to litigation and our
    business could be adversely impacted.
    The
    disruption of the relationship with or the loss of any of our
    key vendors, a decision by our vendors to make their products
    available in supermarkets or through warehouse clubs and other
    mass and retail merchandisers, the inability of our vendors to
    provide quality products in a timely or cost-effective manner,
    or risks associated with the suppliers from whom products are
    sourced, could harm our business.
        Our
    expanded offering of proprietary branded products may not
    improve our financial performance and may expose us to product
    liability claims.
   11




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##### Table of Contents



Food
    safety, quality and health concerns could affect our
    business.
    We
    depend on key executives, store managers and other personnel and
    may not be able to retain or replace these employees or recruit
    additional qualified personnel, which could harm our
    business.
    Our
    international operations may result in additional market risks,
    which may harm our business.
    
    Fluctuations in currency exchange rates;
    Changes in international staffing and employment issues;
    Tariff and other trade barriers;
    Greater difficulty in utilizing and enforcing our intellectual
    property rights;
    Failure to understand the local culture and market;
    The burden of complying with foreign laws, including tax laws
    and financial accounting standards; and
    Political and economic instability and developments. 12




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Our
    business may be harmed if the operation of veterinary hospitals
    at our stores is limited or fails to continue.
    We
    face various risks as an
    e-commerce
    retailer.
  e-commerce e-commerce e-commerce e-commerce;
  Our
    business could be harmed if we were unable to effectively manage
    our cash flow and raise any needed additional capital on
    acceptable terms.
    Failure
    to successfully integrate any business we acquire could have an
    adverse impact on our financial results.
   13




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Failure
    to protect our intellectual property could have a negative
    impact on our operating results.
    A
    determination that we are in violation of any contractual
    obligations or government regulations could result in a
    disruption to our operations and could impact our financial
    results.
      Failure
    of our internal controls over financial reporting could harm our
    business and financial results.
    Changes
    in laws, accounting standards and subjective assumptions,
    estimates, and judgments by management related to complex
    accounting matters could significantly affect our financial
    results.
    An
    unfavorable determination by tax regulators may cause our
    provision for income and other taxes to be inadequate and may
    result in a material impact to our financial
    results.
   14




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Failure
    to obtain commercial insurance at acceptable prices or failure
    to adequately reserve for self-insured exposures might have a
    negative impact on our business.
    Pending
    legislation, weather, catastrophic events, disease, or other
    factors, could disrupt our operations, supply chain and the
    supply of small pets and products we sell, which could harm our
    reputation and decrease sales.
    Fluctuations
    in the stock market, as well as general economic and market
    conditions, may impact our operations, sales, financial results
    and market price of our common stock.
    
    General economic changes;
    Actions taken by our competitors, including new product
    introductions and pricing changes;
    Changes in the strategy and capability of our competitors;
    Our ability to successfully integrate acquisitions;
    The prospects of our industry;
    Natural disasters, hostilities and acts of terrorism; and
    National or regional catastrophes or circumstances, such as a
    pandemic or other public health or welfare scare.   15




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Continued
    volatility and disruption to the global capital and credit
    markets may adversely affect our ability to access credit and
    the financial soundness of our suppliers.
  and/or
  Our
    operating and financial performance in any given period may
    differ from the guidance we have provided to the
    public.
    We
    have implemented some anti-takeover provisions that may prevent
    or delay an acquisition of us that may not be beneficial to our
    stockholders.
    
    A classified board of directors consisting of three classes;
    The ability of our board of directors to issue, without
    stockholder approval, up to 10,000,000 shares of preferred
    stock in one or more series with rights, obligations and
    preferences determined by the board of directors;
    No right of stockholders to call special meetings of
    stockholders;
    No right of stockholders to act by written consent;
    Certain advance notice procedures for nominating candidates for
    election to the board of directors; and
    No right to cumulative voting.  2 3
  
    alter or amend our bylaws;
    remove a director without cause; or
    alter, amend or repeal certain provisions of our restated
    certificate of incorporation.    Item 1B.
    Unresolved
    Staff Comments   16




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##### Table of Contents



Item 2.
    Properties    Number ofUnited States:

StoresAlabama


13Arizona


46Arkansas


5California


123Colorado


32Connecticut


8Delaware


3Florida


68Georgia


39Idaho


4Illinois


51Indiana


22Iowa


9Kansas


7Kentucky


8Louisiana


15Maine


2Maryland


29Massachusetts


15Michigan


32Minnesota


15Mississippi


6Missouri


19Montana


3Nebraska


7Nevada


16New Hampshire


5New Jersey


39New Mexico


6New York


37North Carolina


38North Dakota


2Ohio


39Oklahoma


15Oregon


14Pennsylvania


46Rhode Island


2South Carolina


15South Dakota


2Tennessee


20Texas


112Utah


11Vermont


1Virginia


44Washington


25West Virginia


2Wisconsin


14Total U.S. stores


1,086Canada


63Total stores


1,149  17




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##### Table of Contents



SquareLocation

Footage


Date Opened


Distribution Type

Lease Expiration(In thousands)Ennis, Texas


230



May 1996


Combination distribution center


2013Phoenix, Arizona


620



November 1999


Forward distribution center


2021Columbus, Ohio


613



September 2000


Combination distribution center


2015Gahanna, Ohio


276



October 2000


Forward distribution center


2015Hagerstown, Maryland


252



October 2000


Forward distribution center


2015Ottawa, Illinois


1,000



August 2005


Combination distribution center


2015Newnan, Georgia


878



July 2007


Combination distribution center


2022Reno, Nevada


873



April 2008


Combination distribution center


2023Total


4,742   Item 3.
    Legal
    Proceedings  and/or
  3/23/07)
 4/9/07)
 4/23/07)
 4/10/07)
 4/23/07)
 4/11/07)
 7/11/07)
 8/8/07)
 9/5/07)
 3/23/07)
 3/30/07)
 3/28/07)
  Bruski, Rozman, Ford,
    Wahl, Demith Thompkins In re: Pet Food Product
    Liability Litigation No. 07-2867).
  In re: Pet Food Product Liability Litigation
 18




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PART II  Item 5.
    Market
    for the Registrants Common Equity, Related Stockholder
    Matters and Issuer Purchases of Equity Securities  Price Range of Common Stock. intra-day mark-ups,
  High

LowYear Ended January 31, 2010First Quarter ended May 3, 2009

$
24.08


$
16.17Second Quarter ended August 2, 2009

$
23.70


$
19.61Third Quarter ended November 1, 2009

$
26.85


$
19.50Fourth Quarter ended January 31, 2010

$
27.50


$
23.07Year Ended February 1, 2009First Quarter ended May 4, 2008

$
24.81


$
18.75Second Quarter ended August 3, 2008

$
24.94


$
18.78Third Quarter ended November 2, 2008

$
28.86


$
16.73Fourth Quarter ended February 1, 2009

$
19.89


$
13.27   Common Stock Dividends.
    DividendAmount per

Stockholders ofDate Declared

Share

Record Date

Date PaidMarch 24, 2009

$
0.03



May 1, 2009



May 15, 2009June 22, 2009

$
0.10



July 31, 2009



August 14, 2009September 30, 2009

$
0.10



October 30, 2009



November 13, 2009December 10, 2009

$
0.10



January 29, 2010



February 12, 2010     DividendAmount per

Stockholders ofDate Declared

Share

Record Date

Date PaidMarch 25, 2008

$
0.03



May 2, 2008



May 16, 2008June 18, 2008

$
0.03



August 1, 2008



August 15, 2008September 24, 2008

$
0.03



October 31, 2008



November 14, 2008December 17, 2008

$
0.03



January 30, 2009



February 13, 2009  19




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Holders.
  Equity Compensation Plan
    Information. Form 10-K.
  Stock Purchase Program.
   20




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Stock Performance Graph.  The following performance
    graph and related information shall not be deemed
    filed with the Securities and Exchange Commission,
    nor shall such information be incorporated by reference into any
    future filing under the Securities Act of 1933 or Securities
    Exchange Act of 1934, each as amended, except to the extent that
    we specifically incorporate it by reference into such filing.
    COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN* Among
    PetSmart, Inc., The S&P 500 Index
    And The S&P Specialty Stores Index
  
  *
    $100 invested on 1/30/05 in stock or 1/31/05 in index, including
    reinvestment of dividends. Indexes calculated on month-end basis.  ©
  1/30/05

1/29/06

1/28/07

2/3/08

2/1/09

1/31/10PetSmart, Inc.


100.0



83.62



101.25



80.26



63.18



87.87S & P 500


100.0



110.38



126.40



123.48



75.78



100.89S & P Specialty Stores


100.0



124.40



141.29



107.82



59.38



96.84  21




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##### Table of Contents



Item 6.
    Selected
    Financial Data    As of and for the Year Ended(1)January 31,


February 1,


February 3,


January 28,


January 29,2010


2009


2008


2007


2006(In thousands, except per share amounts and operating
    data)Statement of Operations Data:Net sales

$
5,336,392


$
5,065,293


$
4,672,656


$
4,233,857


$
3,760,499Gross profit


1,519,217



1,495,433



1,436,821



1,307,770



1,173,001Operating, general and administrative expenses


1,150,138



1,125,579



1,085,308



985,936



861,621Operating income


369,079



369,854



351,513



321,834



311,380Gain on sale of equity investment










95,363







Interest expense, net


(59,748
)


(58,757
)


(44,683
)


(31,717
)


(22,171
)Income before income tax expense and equity in income from
    investee


309,331



311,097



402,193



290,117



289,209Income tax expense


(117,554
)


(121,019
)


(145,180
)


(105,048
)


(106,719
)Equity in income from investee


6,548



2,592



1,671







Net income

$
198,325


$
192,670


$
258,684


$
185,069


$
182,490Earnings Per Common Share Data:Basic

$
1.62


$
1.55


$
1.99


$
1.36


$
1.30Diluted

$
1.59


$
1.52


$
1.95


$
1.33


$
1.25Dividends declared per common share

$
0.33


$
0.12


$
0.12


$
0.12


$
0.12Weighted average shares outstanding:Basic


122,363



124,342



129,851



135,836



140,791Diluted


124,701



126,751



132,954



139,537



145,577Selected Operating Data:Stores open at end of period


1,149



1,112



1,008



908



826Square footage at end of period


25,876,510



25,102,528



22,825,783



20,787,903



19,029,359Net sales per square foot(2)

$
205


$
208


$
210


$
208


$
206Net sales growth


5.4
%


8.4
%


10.4
%


12.6
%


11.8
%Increase in comparable store sales(3)


1.6
%


3.8
%


2.4
%


5.0
%


4.2
%Selected Balance Sheet Data:Merchandise inventories

$
563,389


$
584,011


$
501,212


$
487,400


$
399,413Average inventory per store(4)

$
490


$
525


$
497


$
537


$
484Working capital

$
501,381


$
396,677


$
214,404


$
324,887


$
377,766Total assets

$
2,461,986


$
2,357,653


$
2,167,257


$
2,053,477


$
1,863,691Total debt(5)

$
571,474


$
585,993


$
563,747


$
449,001


$
364,123Total stockholders equity

$
1,172,715


$
1,144,136


$
986,597


$
1,000,894


$
940,750Current ratio


1.89



1.83



1.31



1.63



1.82Long-term
    debt-to-equity


46
%


48
%


52
%


43
%


37
%Total
    debt-to-capital


33
%


34
%


36
%


31
%


28
%      (1)
    
    The year ended February 3, 2008 consisted of 53 weeks
    while all other periods presented consisted of 52 weeks. As
    a result, all comparisons for the year ended February 3,
    2008, other than comparable store sales, which was calculated on
    an equivalent 52 week basis, also reflect the impact of one
    additional week. The estimated impact 22




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of this additional week resulted in the following increases: net
    sales, $89.7 million; gross profit, $34.4 million;
    operating, general and administrative expenses,
    $18.3 million; income before income tax expense and equity
    in income from investee, $16.0 million; net income,
    $9.8 million; and diluted earnings per common share, $0.07.(2)
    
    Net sales per square foot were calculated by dividing net sales,
    excluding catalog and
    e-commerce
    sales, by average square footage.(3)
    
    Retail stores only, excludes catalog and
    e-commerce
    sales in all periods. For the year ended February 3, 2008,
    includes sales through week 52.(4)
    
    Represents merchandise inventories divided by stores open at end
    of period.(5)
    
    Represents borrowings under credit facility and capital lease
    obligations.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following discussion contains forward-looking statements
    that involve risks and uncertainties. Our actual results could
    materially differ from those discussed here. Factors that could
    cause or contribute to such differences include, but are not
    limited to, those discussed in this section, as well as in the
    sections entitled Competition,
    Distribution and Government Regulation
    included in Item 1 Part I and Risk Factors included in
    Item 1 Part 1A of this Annual Report on
    Form 10-K.
  Overview
    24-hour
    sm
  Executive
    Summary
  
    Diluted earnings per common share for 2009 increased 4.6% to
    $1.59 on net income of $198.3 million compared to diluted
    earnings per common share of $1.52 on net income of
    $192.7 million in 2008.
    Net sales increased 5.4% to $5.3 billion in 2009 compared
    to $5.1 billion in 2008 due to new store openings and an
    increase in comparable store sales, or sales in stores open at
    least one year.
    Cash, cash equivalents, and restricted cash increased
    $230.2 million, or 182.3%, to $356.5 million in 2009. 23




---



##### Table of Contents




    We had no short-term debt as of January 31, 2010 or
    February 1, 2009, and did not borrow against the Revolving
    Credit Facility during 2009.
    We added 37 net new stores during 2009 and operated 1,149
    stores at the end of the year.
    Comparable store sales increased 1.6% during 2009 compared to a
    3.8% increase during 2008. The increase in sales was partially
    impacted by $8.3 million in unfavorable foreign currency
    fluctuations in 2009, compared to $6.3 million in
    unfavorable foreign currency fluctuations in 2008.
    Services sales increased 9.2% to $575.4 million, or 10.8%
    of net sales, for 2009 compared to $526.7 million, or 10.4%
    of net sales, during 2008.
    We purchased 7.1 million and 2.3 million shares of our
    common stock for $165.0 million and $50.0 million
    during 2009 and 2008, respectively.  Critical
    Accounting Policies and Estimates
    Inventory
    Valuation Reserves
          Asset
    Impairments
   24




---



##### Table of Contents



Reserve
    for Closed Stores
      Insurance
    Liabilities and Reserves
      Income
    Taxes
     25




---



##### Table of Contents



Results
    of Operations
    Year EndedJanuary 31,


February 1,


February 3,2010


2009


2008(52 weeks)


(52 weeks)


(53 weeks)Statement of Operations Data:Net sales


100.0
%


100.0
%


100.0
%Cost of sales


71.5



70.5



69.3Gross profit


28.5



29.5



30.7Operating, general and administrative expenses


21.6



22.2



23.2Operating income


6.9



7.3



7.5Gain on sale of investment










2.0Interest expense, net


(1.1
)


(1.2
)


(1.0
)Income before income tax expense and equity in income from
    investee


5.8



6.1



8.6Income tax expense


(2.2
)


(2.4
)


(3.1
)Equity in income from investee


0.1



0.1



0.0Net income


3.7
%


3.8
%


5.5
%   2009
    (52 weeks) compared to 2008 (52 weeks)
  Net
    Sales
      Gross
    Profit
   26




---



##### Table of Contents



Operating,
    General and Administrative Expenses
      Interest
    Expense, net
    Income
    Tax Expense
    Equity
    in Income from Investee
   27




---



##### Table of Contents



2008
    (52 weeks) compared to 2007 (53 weeks)
  Net
    Sales
  rd
    Gross
    Profit
            Operating,
    General and Administrative Expenses
     28




---



##### Table of Contents



Interest
    Expense, net
    Income
    Tax Expense
    Equity
    in Income from Investee
    Liquidity
    and Capital Resources
  Cash
    Flow
       29




---



##### Table of Contents



Free
    Cash Flow
          Year EndedJanuary 31,


February 1,


February 3,2010


2009


2008(52 weeks)


(52 weeks)


(53 weeks)Net cash provided by operating activities

$
566,943


$
420,700


$
332,716Cash paid for property and equipment


(112,920
)


(238,188
)


(294,437
)Payments of capital lease obligations


(38,439
)


(33,853
)


(26,483
)Free cash flow

$
415,584


$
148,659


$
11,796   Common
    Stock Purchase Program
     30




---



##### Table of Contents



Common
    Stock Dividends
    Operating
    Capital and Capital Expenditure Requirements
        Year EndedJanuary 31,


February 1,


February 3,2010


2009


2008(52 weeks)


(52 weeks)


(53 weeks)Capital Expenditures:New stores

$
28,470


$
83,124


$
114,398Store-related projects(1)


48,051



51,908



68,612PetsHotel(2)


6,510



43,098



44,039Information technology


20,297



27,464



34,187Supply chain


8,851



20,480



30,316Other(3)


741



12,114



2,885Total capital expenditures

$
112,920


$
238,188


$
294,437      (1)
    
    Includes store remodels, grooming salon expansions, equipment
    replacements, relocations, and various merchandising projects.(2)
    
    For new and existing stores.(3)
    
    Includes corporate office related expenses, including costs
    related to the expansion and renovation of our corporate offices
    during 2008. 31




---



##### Table of Contents



Lease
    and Other Commitments
  Operating
    and Capital Lease Commitments and Other Obligations
    2011 &


2013 &


2015 andContractual Obligation

2010


2012


2014


Beyond


Other


TotalOperating lease obligations

$
281,834


$
580,688


$
496,590


$
751,208


$



$
2,110,320Capital lease obligations(1)


93,432



206,207



201,186



397,693







898,518Purchase obligations(2)


27,876



















27,876Uncertain tax positions(3)


















7,652



7,652Insurance obligations(4)


20,730















66,511



87,241Total

$
423,872


$
786,895


$
697,776


$
1,148,901


$
74,163


$
3,131,607Less: Sublease income


4,115



7,043



5,041



4,953







21,152Net Total

$
419,757


$
779,852


$
692,735


$
1,143,948


$
74,163


$
3,110,455      (1)
    
    Includes $326.1 million in interest.(2)
    
    Represents purchase obligations for advertising commitments.(3)
    
    Approximately $7.7 million of unrecognized tax benefits, as
    shown in Other, have been recorded as liabilities,
    and we are uncertain as to if or when such amounts may be
    settled.(4)
    
    Approximately $66.5 million of insurance obligations, as
    shown in Other have been classified as noncurrent
    liabilities. We are unable to estimate the specific year to
    which the obligations will relate beyond 2010.  Letters
    of Credit
    Related
    Party Transactions
         32




---



##### Table of Contents



Credit
    Facility
          Seasonality
    and Inflation
  quarter-to-quarter quarter-to-quarter
 33




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk    Foreign
    Currency Risk
      Item 8.
    Financial
    Statements and Supplementary Data    Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures    Rule 13a-15(b) Rule 13a-15(e)
  Managements
    Report on Internal Control Over Financial Reporting
  Form 10-K. Form 10-K
  Rules 13a-15(f)
 34




---



##### Table of Contents



Changes
    in Internal Control Over Financial Reporting
  Rule 13a-15(f)
 35




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
   Internal Control  Integrated Framework
        Internal Control  Integrated Framework
        36




---



##### Table of Contents



Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Form 10-K.
      Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accounting Fees and Services   PART IV  Item 15.
    Exhibits,
    Financial Statement Schedule  The following documents are filed as part of this
    Annual Report on
    Form 10-K.
  Consolidated Financial Statements: page F-1.
  Consolidated Financial Statement
    Schedule: page F-1.
  Exhibits: page E-1.
 37




---



##### Table of Contents



SIGNATURES
      By:
    /s/  ROBERT
    F. MORAN   President and Chief Executive Officer
  POWER OF
    ATTORNEY
  Form 10-K
    Signature

Title

Date/s/  PHILIP
    L. FRANCISPhilip
    L. Francis

Executive Chairman

March 25, 2010/s/  ROBERT
    F. MORANRobert
    F. Moran

President and Chief Executive Officer (Principal Executive
    Officer)

March 25, 2010/s/  LAWRENCE
    P. MOLLOYLawrence
    P. Molloy

Senior Vice President, Chief Financial Officer (Principal
    Financial Officer and Principal Accounting Officer)

March 25, 2010/s/  LAWRENCE
    A. DEL SANTOLawrence
    A. Del Santo

Director

March 25, 2010/s/  RITA
    V. FOLEYRita
    V. Foley

Director

March 25, 2010/s/  RAKESH
    GANGWALRakesh
    Gangwal

Director

March 25, 2010/s/  JOSEPH
    S. HARDIN, JR.Joseph
    S. Hardin, Jr.

Director

March 25, 2010 38




---



##### Table of Contents



Signature

Title

Date/s/  GREGORY
    P. JOSEFOWICZGregory
    P. Josefowicz

Director

March 25, 2010/s/  AMIN
    I. KHALIFAAmin
    I. Khalifa

Director

March 25, 2010/s/  RICHARD
    K. LOCHRIDGERichard
    K. Lochridge

Director

March 25, 2010/s/  BARBARA
    A. MUNDERBarbara
    A. Munder

Director

March 25, 2010/s/  THOMAS
    G. STEMBERGThomas
    G. Stemberg

Director

March 25, 2010  39




---



##### Table of Contents



APPENDIX F
  PetSmart,
    Inc. and Subsidiaries
  Index to Consolidated Financial Statements and
 Financial Statement Schedule
  PageReport of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets as of
    January 31, 2010, and February 1, 2009


F-3Consolidated Statements of Operations and
    Comprehensive Income for the years ended January 31, 2010,
    February 1, 2009, and February 3, 2008


F-4Consolidated Statements of Stockholders
    Equity for the years ended January 31, 2010,
    February 1, 2009, and February 3, 2008


F-5Consolidated Statements of Cash Flows for the
    years ended January 31, 2010, February 1, 2009, and
    February 3, 2008


F-6Notes to Consolidated Financial Statements


F-7Report of Independent Registered Public
    Accounting Firm on Supplemental Schedule


A-1Schedule II  Valuation and
    Qualifying Accounts


A-2  F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM            Internal Control  Integrated Framework
  DELOITTE &
    TOUCHE LLP
    F-2




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
 Consolidated
    Balance Sheets(In thousands, except par
    value)  January 31,


February 1,2010


2009ASSETSCash and cash equivalents

$
308,360


$
126,314Restricted cash


48,172



Receivables, net


52,232



48,609Merchandise inventories


563,389



584,011Deferred income taxes


36,805



28,223Prepaid expenses and other current assets


57,652



87,677Total current assets


1,066,610



874,834Property and equipment, net


1,201,857



1,302,245Equity investment in affiliate


32,486



25,938Deferred income taxes


94,901



93,128Goodwill


42,200



38,645Other noncurrent assets


23,932



22,863Total assets

$
2,461,986


$
2,357,653LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable and bank overdraft

$
212,121


$
194,630Accrued payroll, bonus and employee benefits


105,162



88,337Accrued occupancy expenses and deferred rents


63,142



55,642Current maturities of capital lease obligations


37,839



32,233Other current liabilities


146,965



107,315Total current liabilities


565,229



478,157Capital lease obligations


533,635



553,760Deferred rents


91,030



92,155Other noncurrent liabilities


99,377



89,445Total liabilities


1,289,271



1,213,517Commitments and contingenciesStockholders equity:Preferred stock; $.0001 par value; 10,000 shares
    authorized, none issued and outstanding






Common stock; $.0001 par value; 625,000 shares
    authorized, 160,311 and 159,770 shares issued


16



16Additional paid-in capital


1,148,228



1,117,557Retained earnings


1,093,708



936,100Accumulated other comprehensive income (loss)


2,369



(2,714
)Less: treasury stock, at cost, 39,517 and 32,408 shares


(1,071,606
)


(906,823
)Total stockholders equity


1,172,715



1,144,136Total liabilities and stockholders equity

$
2,461,986


$
2,357,653    F-3




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
 Consolidated
    Statements of Operations and Comprehensive Income(In thousands, except per share
    data)  Year EndedJanuary 31,


February 1,


February 3,2010


2009


2008(52 Weeks)


(52 Weeks)


(53 Weeks)Merchandise sales

$
4,761,039


$
4,538,563


$
4,217,716Services sales


575,353



526,730



454,940Net sales


5,336,392



5,065,293



4,672,656Cost of merchandise sales


3,402,021



3,184,819



2,901,415Cost of services sales


415,154



385,041



334,420Total cost of sales


3,817,175



3,569,860



3,235,835Gross profit


1,519,217



1,495,433



1,436,821Operating, general and administrative expenses


1,150,138



1,125,579



1,085,308Operating income


369,079



369,854



351,513Gain on sale of equity investment










95,363Interest expense, net


(59,748
)


(58,757
)


(44,683
)Income before income tax expense and equity in income from
    investee


309,331



311,097



402,193Income tax expense


(117,554
)


(121,019
)


(145,180
)Equity in income from investee


6,548



2,592



1,671Net income


198,325



192,670



258,684Other comprehensive income (loss), net of income tax:Foreign currency translation adjustments


5,083



(8,299
)


4,457Comprehensive income

$
203,408


$
184,371


$
263,141Earnings per common share:Basic

$
1.62


$
1.55


$
1.99Diluted

$
1.59


$
1.52


$
1.95Weighted average shares outstanding:Basic


122,363



124,342



129,851Diluted


124,701



126,751



132,954    F-4




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
 Consolidated
    Statements of Stockholders Equity(In thousands, except per share
    data)  AccumulatedOtherShares





Additional





ComprehensiveCommon


Treasury


Common


Paid-In


Retained


(Loss)


TreasuryStock


Stock


Stock


Capital


Earnings


Income


Stock


TotalBALANCE AT JANUARY 28, 2007


155,782



(20,313
)


16



1,024,630



516,961



1,128



(541,841
)


1,000,894Cumulative effect of FIN No. 48 adoption


















(1,164
)










(1,164
)Stock options and employee stock purchase plan compensation cost














5,137















5,137Net tax benefits from tax deductions in excess of the
    compensation cost recognized














9,921















9,921Issuance of common stock under stock incentive plans


2,031











31,576















31,576Issuance of restricted stock and compensation cost, net of award
    reacquisitions and adjustments


291











7,926















7,926Dividends declared ($0.12 per share)


















(15,807
)










(15,807
)Other comprehensive income, net of income tax:Foreign currency translation adjustments






















4,457







4,457Purchase of treasury stock, at cost






(9,753
)


















(315,027
)


(315,027
)Net income


















258,684











258,684BALANCE AT FEBRUARY 3, 2008


158,104



(30,066
)


16



1,079,190



758,674



5,585



(856,868
)


986,597Stock options and employee stock purchase plan compensation cost














10,074















10,074Net tax benefits from tax deductions in excess of the
    compensation cost recognized














1,980















1,980Issuance of common stock under stock incentive plans


1,109







1



14,108















14,109Issuance of restricted stock and compensation cost, net of award
    reacquisitions and adjustments


557







(1
)


12,205















12,204Dividends declared ($0.12 per share)


















(15,244
)










(15,244
)Other comprehensive income, net of income tax:Foreign currency translation adjustments






















(8,299
)






(8,299
)Purchase of treasury stock, at cost






(2,342
)


















(49,955
)


(49,955
)Net income


















192,670











192,670BALANCE AT FEBRUARY 1, 2009


159,770



(32,408
)

$
16


$
1,117,557


$
936,100


$
(2,714
)

$
(906,823
)

$
1,144,136Stock options and employee stock purchase plan compensation cost














8,263















8,263Net tax benefits from tax deductions in excess of the
    compensation cost recognized














(1,062
)














(1,062
)Issuance of common stock under stock incentive plans


914







1



11,848















11,849Issuance of restricted stock and compensation cost, net of award
    reacquisitions and adjustments


(373
)






(1
)


8,253















8,252Issuance of performance shares, net of forfeitures














3,369















3,369Dividends declared ($0.33 per share)


















(40,717
)










(40,717
)Other comprehensive income, net of income tax:Foreign currency translation adjustments






















5,083







5,083Purchase of treasury stock, at cost






(7,109
)


















(164,783
)


(164,783
)Net income


















198,325











198,325BALANCE AT JANUARY 31, 2010


160,311



(39,517
)


16



1,148,228



1,093,708



2,369



(1,071,606
)


1,172,715    F-5




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
 Consolidated
    Statements of Cash Flows(In thousands)  Year EndedJanuary 31,


February 1,


February 3,2010


2009


2008(52 weeks)


(52 weeks)


(53 weeks)CASH FLOWS FROM OPERATING ACTIVITIES:Net income

$
198,325


$
192,670


$
258,684Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


236,538



225,054



195,980Gain on sale of equity investment










(95,363
)Loss on disposal of property and equipment


7,013



5,589



6,914Stock-based compensation expense


24,792



24,301



18,333Deferred income taxes


(13,572
)


33,957



(15,251
)Equity in income from investee


(6,548
)


(2,592
)


(1,671
)Tax benefits from tax deductions in excess of the compensation
    cost recognized


(2,901
)


(3,215
)


(10,715
)Non-cash interest expense


1,006



4,576



2,589Changes in assets and liabilities, excluding the effect of the
    acquisition of store locations in Canada:Receivables, net


(3,551
)


1,694



(11,793
)Merchandise inventories


23,403



(86,151
)


(9,005
)Prepaid expenses and other current assets


26,382



(13,758
)


(22,549
)Other noncurrent assets


(1,357
)


8,057



(4,238
)Accounts payable


21,842



25,201



(1,515
)Accrued payroll, bonus and employee benefits


16,638



4,280



(1,851
)Accrued occupancy expenses and current deferred rents


7,518



9,632



1,722Other current liabilities


23,355



(17,559
)


12,865Deferred rents


(1,412
)


4,208



3,883Other noncurrent liabilities


9,472



4,756



5,697Net cash provided by operating activities


566,943



420,700



332,716CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for short-term
    available-for-sale
    investments










(285,205
)Proceeds from sales of short-term
    available-for-sale
    investments










304,405(Increase) decrease in restricted cash and short-term investments


(48,172
)






60,700Cash paid for property and equipment


(112,920
)


(238,188
)


(294,437
)Cash paid for acquisition of store locations in Canada










(36,963
)Proceeds from sales of property and equipment


3,894



2,951



539Proceeds from sale of equity investment










111,752Net cash used in investing activities


(157,198
)


(235,237
)


(139,209
)CASH FLOWS FROM FINANCING ACTIVITIES:Net proceeds from common stock traded under stock incentive plans


11,848



14,108



31,576Minimum statutory withholding requirements


(3,405
)


(2,026
)


Cash paid for treasury stock


(164,783
)


(49,955
)


(315,027
)Payments of capital lease obligations


(38,439
)


(33,853
)


(26,483
)Proceeds from short-term debt






576,000



185,000Payments on short-term debt






(606,000
)


(155,000
)(Decrease) increase in bank overdraft.


(5,082
)


15



(8,461
)Tax benefits from tax deductions in excess of the compensation
    cost recognized


2,901



3,215



10,715Cash dividends paid to stockholders


(32,459
)


(15,265
)


(16,034
)Net cash used in financing activities


(229,419
)


(113,761
)


(293,714
)EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS


1,720



(3,710
)


9,730INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


182,046



67,992



(90,477
)CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR


126,314



58,322



148,799CASH AND CASH EQUIVALENTS AT END OF YEAR

$
308,360


$
126,314


$
58,322    F-6




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes
    to Consolidated Financial Statements
  Note 1 
    The
    Company and its Significant Accounting Policies  Business
  e-commerce
  Principles
    of Consolidation
      Fiscal
    Year
    Reclassifications
    Use of
    Estimates
    Segment
    Reporting
   F-7




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Financial
    Instruments
    Cash
    and Cash Equivalents
      Restricted
    Cash
    Vendor
    Rebates and Cooperative Advertising Incentives
    Merchandise
    Inventories and Valuation Reserves
     F-8




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Property
    and Equipment
        Buildings

39 years or term of leaseFurniture, fixtures and equipment

2 - 12 yearsLeasehold improvements

1 - 20 yearsComputer software

3 - 7 years   Goodwill
    Insurance
    Liabilities and Reserves
   F-9




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Reserve
    for Closed Stores
      Income
    Taxes
         F-10




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Other
    Current Liabilities
    January 31,


February 1,2010


2009Accrued income and sales tax

$
43,428


$
19,313Accounts payable  operating expenses


19,458



17,183Accrued capital purchases


17,303



14,255Accrued general liability insurance reserve (current portion)


5,195



5,137Gift card liability


8,991



8,472Deferred revenue


7,120



6,692Other


45,470



36,263$
146,965


$
107,315   Revenue
    Recognition
  E-commerce
        Cost
    of Merchandise Sales
    
    Purchase price of inventory sold;
    Transportation costs associated with moving inventory;
    Inventory shrinkage costs and valuation adjustments; F-11




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
   
    Costs associated with operating our distribution network,
    including payroll and benefit costs, occupancy costs, utilities
    costs and depreciation;
    Procurement costs, including merchandising and other costs
    directly associated with the procurement, storage and handling
    of inventory;
    Store occupancy costs, including rent, common area maintenance,
    real estate taxes, utilities and depreciation of leasehold
    improvements and capitalized lease assets; and
    Reductions for vendor rebates, promotions and discounts.  Cost
    of Services Sales
    Vendor
    Concentration Risk
    Advertising
    Stock-based
    Compensation
    Foreign
    Currency
   F-12




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Earnings
    Per Common Share
    Note 2 
    Fair
    Value Measurements    Level 1:
  Level 2:
  Level 3:
    Fair Value Measurements at January 31, 2010, using:Significant

SignificantTotal Carrying

Quoted Prices in

Observable

UnobservableValue at January 31,

Active Markets

Other Inputs

Other Inputs2010

(Level 1)

(Level 2)

(Level 3)Money market funds

$
287,293


$
287,293







   Note 3 
    Investments        January 31, 2010


February 1, 2009Shares


Amount


Shares


AmountVoting common stock and preferred stock


4,693


$
21,675



4,693


$
21,675Equity in income from investee






10,811







4,263Total equity investment in affiliate


4,693


$
32,486



4,693


$
25,938  F-13




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
            January 31,

February 1,2010

2009Current assets

$
269,381


$
187,066Noncurrent assets


122,934



121,932Current liabilities


247,138



196,070Noncurrent liabilities


16,216



14,070   Year EndedJanuary 31,

February 1,

February 3,2010

2009

2008(52 weeks)

(52 weeks)

(53 weeks)Net sales

$
617,508


$
448,528


$
407,634Gross profit


146,292



98,649



83,806Net income

$
29,723


$
13,626


$
7,898        F-14




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
   Note 4 
    Property
    and Equipment    January 31,


February 1,2010


2009Land

$
691


$
691Buildings


15,089



15,773Furniture, fixtures and equipment


926,763



889,478Leasehold improvements


581,684



539,213Computer software


97,319



109,704Buildings, equipment and computer software under capital leases


683,712



673,3302,305,258



2,228,189Less: accumulated depreciation and amortization


1,141,122



975,6681,164,136



1,252,521Construction in progress


37,721



49,724Property and equipment, net

$
1,201,857


$
1,302,245     Note 5 
    Reserve
    for Closed Stores    January 31,


February 1,2010


2009Total remaining gross occupancy costs

$
33,577


$
34,107Less:Expected sublease income


(24,018
)


(26,604
)Interest costs


(1,343
)


(1,121
)Reserve for closed stores

$
8,216


$
6,382Current portion, included in other current liabilities


2,395



2,271Noncurrent portion, included in other noncurrent liabilities


5,821



4,111Reserve for closed stores

$
8,216


$
6,382  F-15




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year EndedJanuary 31,


February 1,


February 3,2010


2009


2008(52 weeks)


(52 weeks)


(53 weeks)Opening balance

$
6,382


$
6,157


$
7,689Reserve for new store closures


1,526



3,132



2,546Changes in sublease assumptions


4,173



1,734



1,379Lease terminations


(565
)


(821
)


529Other


769



517



539Charges, net


5,903



4,562



4,993Payments


(4,069
)


(4,337
)


(6,525
)Ending balance

$
8,216


$
6,382


$
6,157     Note 6 
    Income
    Taxes    Year EndedJanuary 31,


February 1,


February 3,2010


2009


2008(52 weeks)


(52 weeks)


(53 weeks)United States

$
301,644


$
309,311


$
401,079Foreign


7,687



1,786



1,114$
309,331


$
311,097


$
402,193     Year EndedJanuary 31,


February 1,


February 3,2010


2009


2008(52 weeks)


(52 weeks)


(53 weeks)Current provision:Federal

$
111,911


$
73,017


$
144,961State/Foreign


19,215



9,056



18,325131,126



82,073



163,286Deferred:Federal


(4,439
)


34,372



(15,139
)State/Foreign


(9,133
)


4,574



(2,967
)(13,572
)


38,946



(18,106
)Income tax expense

$
117,554


$
121,019


$
145,180  F-16




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year EndedJanuary 31,


February 1,


February 3,2010


2009


2008(52 weeks)


(52 weeks)


(53 weeks)Provision at federal statutory tax rate

$
108,266



35.0
%

$
108,882



35.0
%

$
140,768



35.0
%State income taxes, net of federal income tax benefit


8,725



2.8



8,860



2.8



12,788



3.2Adjustments to tax reserves


(295
)


(0.1
)


(486
)


(0.2
)


(2,446
)


(0.6
)Tax exempt interest income


(90
)


(0.0
)










(1,676
)


(0.4
)Adjustment to valuation allowance


(343
)


(0.1
)


158



0.1



(701
)


(0.2
)Utilization of capital loss


















(4,974
)


(1.2
)Tax on equity income from investee


2,292



0.7



907



0.3



652



0.1Other


(1,001
)


(0.3
)


2,698



0.9



769



0.2$
117,554



38.0
%

$
121,019



38.9
%

$
145,180



36.1
%     January 31,


February 1,2010


2009Deferred income tax assets:Capital lease obligations

$
200,108


$
180,775Employee benefit expense


74,613



70,945Deferred rents


39,283



39,888Net operating loss carryforwards


18,690



19,742Reserve for closed stores


3,132



2,600Miscellaneous reserves and accruals


10,501



8,211Tenant incentives


11,328



13,706Other


4,292



9,379Total deferred income tax assets


361,947



345,246Valuation allowance


(7,693
)


(8,036
)Deferred income tax assets, net of valuation allowance


354,254



337,210Deferred income tax liabilities:Property and equipment


(200,150
)


(191,610
)Inventory


(6,913
)


(11,399
)Prepaid expenses


(7,452
)


(6,337
)Other


(8,033
)


(6,513
)Total deferred income tax liabilities


(222,548
)


(215,859
)Net deferred income tax assets

$
131,706


$
121,351    F-17




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Year EndedJanuary 31,


February 1,


February 3,2010


2009


2008(52 weeks)


(52 weeks)


(53 weeks)Unrecognized tax benefits, beginning balance

$
8,127


$
8,824


$
12,334Gross increases  tax positions related to the current
    year


1,299



1,314



1,115Gross increases  tax positions in prior periods


716



290



Gross decreases  tax positions in prior periods


(153
)


(674
)


(4,200
)Gross settlements


(394
)


(663
)


Lapse of statute of limitations


(2,215
)


(558
)


(741
)Gross (decreases) increases  foreign currency
    translation


272



(406
)


316Unrecognized tax benefits, ending balance

$
7,652


$
8,127


$
8,824          F-18




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
   Note 7 
    Earnings
    Per Common Share    Year EndedJanuary 31,


February 1,


February 3,2010


2009


2008(52 weeks)


(52 weeks)


(53 weeks)Basic


122,363



124,342



129,851Effect of dilutive securities:Stock options, restricted stock and performance share units


2,338



2,409



3,103Diluted


124,701



126,751



132,954     Note 8 
    Stockholders
    Equity  Share
    Purchase Programs
       F-19




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Dividends
    DividendAmount per

Stockholders ofDate Declared

Share

Record Date

Date Paid2009:March 24

$
0.03



May 1, 2009



May 15, 2009June 22

$
0.10



July 31, 2009



August 14, 2009September 30

$
0.10



October 30, 2009



November 13, 2009December 10

$
0.10



January 29, 2010



February 12, 20102008:March 25

$
0.03



May 2, 2008



May 16, 2008June 18

$
0.03



August 1, 2008



August 15, 2008September 24

$
0.03



October 31, 2008



November 14, 2008December 17

$
0.03



January 30, 2009



February 13, 2009   Note 9 
    Stock-Based
    Compensation    Stock
    Options
      Year Ended 2009 (52 weeks)Weighted-AverageWeighted-Average


Remaining


AggregateShares


Exercise Price


Contractual Term


Intrinsic ValueOutstanding at beginning of year


7,080


$
19.77Granted


1,696


$
16.97Exercised


(733
)

$
10.52






$
9,810Forfeited/cancelled


(734
)

$
23.69Outstanding at end of year


7,309


$
19.65



4.29


$
51,205Vested and expected to vest at end of year


7,026


$
19.72



4.23


$
48,978Exercisable at end of year


4,028


$
19.64



3.38


$
29,128   F-20




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Year Ended 2008 (52 weeks)Weighted-AverageWeighted-Average


Remaining


AggregateShares


Exercise Price


Contractual Term


Intrinsic ValueOutstanding at beginning of year


6,322


$
19.10Granted


1,816


$
19.10Exercised


(755
)

$
10.42






$
11,684Forfeited/cancelled


(303
)

$
25.12Outstanding at end of year


7,080


$
19.77



4.56


$
19,736Vested and expected to vest at end of year


6,367


$
19.35



4.45


$
19,732Exercisable at end of year


4,238


$
17.60



3.84


$
19,719   Year Ended 2007 (53 weeks)Weighted-AverageWeighted-Average


Remaining


AggregateShares


Exercise Price


Contractual Term


Intrinsic ValueOutstanding at beginning of year


7,327


$
16.54Granted


993


$
31.38Exercised


(1,665
)

$
14.23






$
30,623Forfeited/cancelled


(333
)

$
23.91Outstanding at end of year


6,322


$
19.10



4.80


$
42,282Vested and expected to vest at end of year


5,674


$
18.02



4.68


$
42,268Exercisable at end of year


4,613


$
15.53



4.41


$
42,250   Restricted
    Stock
   F-21




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year Ended 2009 (52 weeks)


Year Ended 2008 (52 weeks)


Year Ended 2007 (53 weeks)Weighted-Average





Weighted-Average





Weighted-AverageGrant Date





Grant Date





Grant DateShares


Fair Value


Shares


Fair Value


Shares


Fair ValueNonvested at beginning of year


2,685


$
25.50



2,391


$
27.92



2,380


$
24.33Granted


82


$
18.05



978


$
19.33



886


$
31.39Vested


(599
)

$
28.58



(367
)

$
24.85



(448
)

$
16.15Forfeited


(270
)

$
24.29



(317
)

$
25.48



(427
)

$
27.44Nonvested at end of year


1,898


$
24.38



2,685


$
25.50



2,391


$
27.92     Performance
    Share Units
  end-of-year end-of-year
    Year Ended 2009 (52 weeks)Weighted-AverageGrant DateShares


Fair ValueNonvested at beginning of year






Granted


592



16.96Vested






Forfeited


(22
)


16.69Nonvested at end of year


570



16.97   Management
    Equity Units
   F-22




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year Ended 2009 (52 weeks)Weighted-AverageShares


Fair ValueNonvested at beginning of year






Granted


285



25.75Vested






Forfeited


(30
)


25.75Nonvested at end of year


255



25.75   Employee
    Stock Purchase Plan
    Year EndedJanuary 31,


February 1,


February 3,2010


2009


2008(52 weeks)


(52 weeks)


(53 weeks)Shares purchased


167



338



246Aggregate proceeds

$
3,784


$
5,918


$
5,368   Stock-Based
    Compensation Expense
    Year EndedJanuary 31,


February 1,


February 3,2010


2009


2008(52 weeks)


(52 weeks)


(53 weeks)Stock options expense

$
8,263


$
7,959


$
3,408Restricted stock expense


11,626



14,227



13,196PSU expense


3,369







MEU expense


1,534







Employee stock purchase plan expense






2,115



1,729Total stock-based compensation cost

$
24,792


$
24,301


$
18,333Tax benefit

$
8,824


$
8,304


$
6,168    F-23




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year EndedJanuary 31,

February 1,

February 3,2010

2009

2008(52 weeks)

(52 weeks)

(53 weeks)Dividend yield


0.62
%


0.42
%


0.42
%Expected volatility


46.0
%


36.2
%


32.0
%Risk-free interest rate


1.17
%


1.96
%


4.83
%Forfeiture rate


15.1
%


15.4
%


16.0
%Expected lives


5.3 years



5.2 years



5.2 yearsVesting periods


4.0 years



4.0 years



4.0 yearsTerm


7.0 years



7.0 years



7.0 yearsWeighted average fair value

$
6.68


$
6.44


$
10.86         Note 10 
    Employee
    Benefit Plans    Note 11 
    Financing
    Arrangements and Lease Obligations  Short-term
    Debt and Letters of Credit
   F-24




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
          Operating
    and Capital Leases
   F-25




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Operating


CapitalLeases


Leases2010

$
281,834


$
93,4322011


297,992



102,6232012


282,696



103,5842013


261,588



102,6652014


235,002



98,521Thereafter


751,208



397,693Total minimum rental commitments

$
2,110,320



898,518Less: amounts representing interest






(327,044
)Present value of minimum lease payments






571,474Less: current portion






(37,839
)Long-term obligations





$
533,635       2010

$
4,1152011


4,0892012


2,9542013


2,6912014


2,350Thereafter


4,953$
21,152  F-26




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
   Note 12 
    Litigation
    and Settlements  and/or
  3/23/07)
             Bruski, Rozman, Ford,
    Wahl, Demith Thompkins In re: Pet Food Product
    Liability Litigation No. 07-2867).
  In re: Pet Food Product Liability Litigation
        Note 13 
    Commitments
    and Contingencies  Letters
    of Credit
    Advertising
    Purchase Commitments
   F-27




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
   Note 14 
    Supplemental
    Schedule of Cash Flows    2009

2008

2007(52 weeks)

(52 weeks)

(53 weeks)Interest paid

$
59,153


$
55,937


$
50,812Income taxes paid, net of refunds

$
81,511


$
92,786


$
171,303Assets acquired using capital lease obligations

$
18,849


$
86,083


$
100,506Accruals and accounts payable for capital expenditures

$
25,827


$
19,770


$
27,560Dividends declared but unpaid

$
12,073


$
3,816


$
3,837   Note 15 
    Acquisition
    of Store Locations in Canada    Note 16 
    Discontinuation
    of Equine Product Line         F-28




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
   Note 17 
    Selected
    Quarterly Financial Data (Unaudited)    First

Second

Third

FourthYear Ended January 31, 2010 (52 weeks)

Quarter

Quarter

Quarter

Quarter(13 weeks)

(13 weeks)

(13 weeks)

(13 weeks)(In thousands, except per share data)Merchandise sales

$
1,184,755


$
1,154,593


$
1,157,647


$
1,264,044Services sales


142,819



154,192



136,703



141,639Net sales


1,327,574



1,308,785



1,294,350



1,405,683Gross profit


377,252



369,412



356,176



416,377Operating income


89,869



73,789



71,280



134,141Income before income tax expense and equity in income from
    investee


74,895



58,819



56,249



119,368Net income


46,262



38,964



38,070



75,029Earnings per common share:Basic

$
0.37


$
0.32


$
0.31


$
0.63Diluted


0.37



0.31



0.31



0.61Weighted average shares outstanding:Basic


124,355



123,474



121,661



119,962Diluted


126,524



125,504



123,781



122,658   First

Second

Third

FourthYear Ended February 1, 2009 (52 weeks)

Quarter

Quarter

Quarter

Quarter(13 weeks)

(13 weeks)

(13 weeks)

(13 weeks)(In thousands, except per share data)Merchandise sales

$
1,083,450


$
1,101,984


$
1,124,587


$
1,228,542Services sales


129,481



139,964



126,557



130,728Net sales


1,212,931



1,241,948



1,251,144



1,359,270Gross profit


356,368



366,406



357,696



414,963Operating income


80,269



75,399



72,125



142,061Income before income tax expense and equity in income from
    investee


66,527



60,188



57,356



127,026Net income


41,211



37,248



35,823



78,388Earnings per common share:Basic

$
0.33


$
0.30


$
0.29


$
0.63Diluted


0.32



0.30



0.28



0.62Weighted average shares outstanding:Basic


125,050



123,751



124,122



124,444Diluted


127,419



126,210



126,795



126,783  F-29




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
   Form 10-K.
   DELOITTE &
    TOUCHE LLP
    A-1




---



##### Table of Contents



SCHEDULE II



PetSmart,
    Inc. and Subsidiaries



Valuation
    and Qualifying Accounts Balance at








Balance atBeginning


Charged to





End ofDescription

of Period


Expense


Deductions


Period(In thousands)Valuation reserves deducted in the Consolidated Balance Sheets
    from the asset to which it applies:Merchandise inventories:Lower of cost or market2007

$
9,143


$
1,117


$
(4,392
)

$
5,8682008

$
5,868


$
4,736


$
(2,827
)

$
7,7772009

$
7,777


$
9,652


$
(4,865
)

$
12,564Shrink2007

$
7,595


$
30,188


$
(30,359
)

$
7,4242008

$
7,424


$
26,430


$
(27,032
)

$
6,8222009

$
6,822


$
24,250


$
(27,205
)

$
3,867  A-2




---



##### Table of Contents



APPENDIX E
  PetSmart,
    INC.
  ANNUAL
    REPORT ON
    FORM 10-K
  EXHIBIT INDEX
  Incorporated By ReferenceExhibit











FiledNumber

Exhibit Description

Form

File No.

Exhibit

Filing Date

Herewith3
.1

Restated Certificate of Incorporation of PetSmart

S-1

33-63912

3.3(i)

6/4/19933
.2

Certificate of Amendment of Restated Certificate of
    Incorporation of PetSmart

10-Q

0-21888

3.5

9/7/20053
.3

Form of Certificate of Designation of Series A Junior
    Participating Preferred Stock of PetSmart

8-K

0-21888

99.3

8/21/19973
.35

Certificate of Amendment of Restated Certificate of
    Incorporation of PetSmart

8-K

0-21888

3.4

6/23/20093
.4

Bylaws of PetSmart, as amended

8-K

0-21888

3.5

6/23/20094
.1

Reference is made to Exhibits 3.1 through 3.44
.2

Form of Stock Certificate

S-1

33-63912

4.4

6/4/199310
.1

Form of Indemnity Agreement between PetSmart and its Directors
    and Officers

S-1

33-63912

10.1

6/4/199310
.2

2003 Equity Incentive Plan

Proxy
    Statement

0-21888

Appendix B

5/12/200310
.3

1996 Non-Employee Directors Equity Plan, as amended

S-8

333-58605

10.5

7/7/199810
.4

1997 Equity Incentive Plan, as amended

10-K

0-21888

10.4

4/18/200310
.5

2002 Employee Stock Purchase Plan, as amended

10-K10
.6

Non-Qualified 2005 Deferred Compensation Plan, as amended

10-Q

0-21888

10.10

11/30/200710
.7

Executive Short-Term Incentive Plan, as amended

Proxy
    Statement

0-21888

Appendix B

5/4/200910
.8

Amended and Restated Employment Agreement, between PetSmart and
    Philip L. Francis, Chairman of the Board of Directors and Chief
    Executive Officer

10-Q

0-21888

10.12

11/26/200810
.9

Amended and Restated Employment Agreement, between PetSmart and
    Robert F. Moran, President and Chief Operating Officer

10-Q

0-21888

10.13

11/26/200810
.10

Form of Performance Share Unit Grant Notice and Performance
    Share Unit Agreement

10-Q

0-21888

10.22

5/29/2009 E-1




---



##### Table of Contents



Incorporated By ReferenceExhibit











FiledNumber

Exhibit Description

Form

File No.

Exhibit

Filing Date

Herewith10
.11

Form of Offer Letter between PetSmart and executive officers

10-K

0-21888

10.15

4/18/200310
.12

Amended and Restated Executive Change in Control and Severance
    Benefit Plan

10-Q

0-21888

10.16

11/26/200810
.13

Forms of Stock Award Grant Agreements for the 2003 Equity
    Incentive Plan and 1997 Equity Incentive Plan

10-Q

0-21888

10.17

9/8/200410
.14

Forms of Revised Stock Option Grant Agreements for the 2003
    Equity Incentive Plan and 1997 Equity Incentive Plan

8-K

0-21888

10.20

2/3/200610
.15

Forms of Revised Restricted Stock Grant Agreements for the 2003
    Equity Incentive Plan and 1997 Equity Incentive Plan

8-K

0-21888

10.19

2/7/200510
.16

2006 Equity Incentive Plan

10-K

0-21888

10.21

3/28/200710
.17

Form of Nonstatutory Stock Agreement for 2006 Equity Incentive
    Plan

8-K

0-21888

10.2

6/28/200610
.18

Form of Restricted Stock Agreement for 2006 Equity Incentive Plan

8-K

0-21888

10.3

6/28/200610
.19

Offer letter to Lawrence Chip Molloy dated
    August 23, 2007

8-K

0-21888

10.27

9/7/200710
.20

Letter of Credit Agreement, dated June 30, 2006, between
    PetSmart, Inc. and Bank of America, N.A.

8-K

0-21888

10.21

7/3/200610
.21

Second Amendment to Letter of Credit Agreement, dated as of
    May 13, 2009

10-Q

0-21888

10.20

8/28/200910
.22

Credit Agreement dated as of August 15, 2007 among
    PetSmart, Inc., PetSmart Store Support Group, Inc., the Lenders
    Party thereto, Bank of America, N.A., as issuing bank,
    administrative agent and collateral agent, and Banc of America
    Securities LLC, as sole arranger and sole bookrunner.

8-K

0-21888

10.2

8/17/200723
.1

Consent of Deloitte & Touche LLP, Independent
    Registered Public Accounting Firm









X31
.1

Certification of Chief Executive Officer as required by
    Rule 13a-14(a)
    of the Securities Exchange Act of 1934, as amended









X31
.2

Certification of Chief Financial Officer as required by
    Rule 13a-14(a)
    of the Securities Exchange Act of 1934, as amended









X E-2




---



##### Table of Contents



Incorporated By ReferenceExhibit











FiledNumber

Exhibit Description

Form

File No.

Exhibit

Filing Date

Herewith32
.1*

Certification of Chief Executive Officer as required by
    Rule 13a-14(b)
    of the Securities Exchange Act of 1934, as amended









X32
.2*

Certification of Chief Financial Officer as required by
    Rule 13a-14(b)
    of the Securities Exchange Act of 1934, as amended









X     
    
    Compensation plans or arrangements in which directors or
    executive officers are eligible to participate.*
    
    The certifications attached as Exhibit 32.1 and
    Exhibit 32.2 accompany this Annual Report on
    Form 10-K,
    are not deemed filed with the Securities and Exchange Commission
    and are not to be incorporated by reference into any filing of
    PetSmart, Inc., under the Securities Act of 1933, as amended, or
    the Securities Exchange Act of 1934, as amended, whether made
    before or after the date of this Annual Report on
    Form 10-K,
    irrespective of any general incorporation language contained in
    such filing. E-3