##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, 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
    February 1, 2009oro

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

94-3024325(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-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   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


182.


Properties


193.


Legal Proceedings


204.


Submission of Matters to a Vote of Security
    Holders


21PART II5.


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


216.


Selected Financial Data


247.


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


257A.


Quantitative and Qualitative Disclosures About
    Market Risk


368.


Financial Statements and Supplementary Data


369.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


369A.


Controls and Procedures


369B.


Other Information


39PART III10.


Directors, Executive Officers and Corporate
    Governance


3911.


Executive  Compensation


3912.


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


3913.


Certain Relationships and Related Transactions,
    and Director Independence


3914.


Principal Accounting Fees and Services


39PART IV15.


Exhibits, Financial Statement Schedules


39EX-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 2008
    fiscal year ended on February 1, 2009, and was a 52-week
    year. The 2007 fiscal year was a 53-week year, while the 2006
    fiscal year was a 52-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
    Add stores in existing multi-store, new multi-store and new
    single-store markets.
  Provide the right store format to meet the needs of our
    customers.
 2




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Expand our pet services business. 24-hour sm
  Offer superior customer service.
  Create meaningful differentiation that drives brand
    preference. ®
  Drive efficiency and create a consistent customer experience
    by focusing on operating excellence.
   3




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Our
    Stores
    2008


2007


2006Store count at beginning of year


1,008



908



826New, relocated and acquired stores opened


112



115



92Stores closed


(8
)


(15
)


(10
)Store count at end of year


1,112



1,008



908   Distribution
    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
    pet stores. Consumables merchandise sales comprised 57%, 54% and
    53% of our net sales in 2008, 2007 and 2006, 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 40%, 43% and 44% of our
    net sales in 2008, 2007 and 2006, respectively.
    Pets.  Our stores feature fresh-water tropical
    fish, birds, reptiles and small pets. Pets comprised 3% of our
    net sales in 2008, 2007 and 2006. We do not sell dogs or cats,
    but provide space in most stores for adoption and animal welfare
    organizations to use.  Pet
    Services
     4




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24-hour
  Veterinary
    Services
    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
  ® ® ® ® ®
 5




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Employees
    Financial
    Information by Business Segment and Geographic Data
  Disclosures about
    Segments of an Enterprise and Related Information,
    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


62


Chairman and Chief Executive OfficerRobert F. Moran


58


President and Chief Operating OfficerLawrence P. Molloy


47


Senior Vice President, Chief Financial OfficerScott A. Crozier


58


Senior Vice President, General Counsel, Secretary and Chief
    Compliance OfficerDonald E. Beaver


50


Senior Vice President, Chief Information OfficerKenneth T. Hall


40


Senior Vice PresidentDavid K. Lenhardt


39


Senior Vice President, Store Operations and Human ResourcesMary L. Miller


48


Senior Vice President, Chief Marketing OfficerJoseph D. OLeary


50


Senior Vice President, Merchandising and Supply ChainJaye D. Perricone


50


Senior Vice President, Real Estate and DevelopmentFrancesca M. Spinelli


55


Senior Vice President, PeopleNeil H. Stacey


55


Senior Vice President, Human Resources   Philip L. Francis
 6




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##### Table of Contents



Robert F. Moran
  Lawrence P. Molloy
  Scott A. Crozier
  Donald E. Beaver
  Kenneth T. Hall
  David K. Lenhardt e-commerce
  Mary L. Miller
 7




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##### Table of Contents



Joseph D. OLeary
  Jaye D. Perricone
  Francesca M. Spinelli
  Neil H. Stacey
  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.
   8




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e-commerce
  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
   9




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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
  Failure
    to successfully manage and execute our marketing initiatives
    could have a negative impact on our business.
  e-commerce
  Our
    operating margins at new stores may be lower than those of
    existing stores.
    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.
   10




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If our
    information systems fail to perform as designed or are
    interrupted for a significant period of time, our business could
    be harmed.
      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, or 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.
     11




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Our
    expanded offering of proprietary branded products may not
    improve our financial performance and may expose us to product
    liability claims.
    Food
    safety, quality and health concerns could affect our
    business.
    Our
    failure to successfully anticipate merchandise returns could
    have a negative impact on 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.
   12




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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.  Our
    business may be harmed if the operation of veterinary hospitals
    at our stores is limited or fails to continue.
    The Equity Method of
    Accounting for Investments in Common Stock.
 13




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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.
    Changes
    to estimates related to our property and equipment, or operating
    results, that are lower than our current estimates at certain
    store locations, may cause us to incur impairment
    charges.
    Our
    inability or failure to protect our intellectual property could
    have a negative impact on our operating results.
   14




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A
    determination that we are in violation of any contractual
    obligations or government regulations could result in a
    disruption to our operations and could harm our
    business.
      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.
   15




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Our
    business exposes us to claims, litigation and risk of loss that
    could result in adverse publicity, harm to our brand and impact
    our financial results.
        Our
    inability to obtain commercial insurance at acceptable prices or
    our failure to adequately reserve for self-insured exposures may
    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.
   16




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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.    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.
   17




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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   18




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##### Table of Contents



Item 2.
    Properties     Number ofUnited States:

StoresAlabama


13Arizona


47Arkansas


5California


122Colorado


33Connecticut


7Delaware


3Florida


67Georgia


36Idaho


4Illinois


49Indiana


21Iowa


8Kansas


7Kentucky


8Louisiana


14Maine


2Maryland


29Massachusetts


14Michigan


32Minnesota


15Mississippi


5Missouri


17Montana


3Nebraska


6Nevada


15New Hampshire


5New Jersey


37New Mexico


6New York


37North Carolina


37North Dakota


2Ohio


39Oklahoma


13Oregon


14Pennsylvania


44Rhode Island


2South Carolina


15South Dakota


2Tennessee


20Texas


107Utah


11Vermont


1Virginia


43Washington


22West Virginia


1Wisconsin


11Total U.S. stores


1,051Canada


61Total stores


1,112  19




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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


2012Phoenix, Arizona


620



November 1999


Forward distribution center


2021Columbus, Ohio


613



September 2000


Combination distribution center


2010Gahanna, Ohio


276



October 2000


Forward distribution center


2010Hagerstown, Maryland


252



October 2000


Forward distribution center


2010Ottawa, 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     e-commerce
  Item 3.
    Legal
    Proceedings  Sorenson v. PetSmart, Enabnit v.
    PetSmart,
  Langton v.
    PetSmart
 20




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##### Table of Contents



and/or
               No. 07-2867).
          Item 4.
    Submission
    of Matters to a Vote of Security Holders   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
 21




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##### Table of Contents



mark-ups,
  High


LowYear 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


$
13.27Year Ended February 3, 2008First Quarter ended April 29, 2007

$
34.69


$
28.50Second Quarter ended July 29, 2007

$
35.48


$
31.15Third Quarter ended October 28, 2007

$
35.01


$
27.57Fourth Quarter ended February 3, 2008

$
29.98


$
21.12   Common Stock Dividends.
    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     DividendAmount per


Stockholders ofDate Declared

Share


Record Date


Date PaidMarch 27, 2007

$
0.03



April 27, 2007



May 11, 2007June 20, 2007

$
0.03



July 27, 2007



August 10, 2007September 19, 2007

$
0.03



October 26, 2007



November 9, 2007December 13, 2007

$
0.03



February 1, 2008



February 15, 2008     Holders.
  Equity Compensation Plan
    Information. Form 10-K.
  Stock Purchase Program.
 22




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##### Table of Contents



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
  
  2/1/04


1/30/05


1/29/06


1/28/07


2/3/08


2/1/09PetSmart, Inc.


100.00



128.87



107.76



130.48



103.43



81.43S & P 500


100.00



106.23



117.26



134.28



131.17



80.50S & P Specialty Stores


100.00



109.03



135.63



154.04



117.56



64.74  23




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


February 3,


January 28,


January 29,


January 30,2009


2008


2007


2006


2005(In thousands, except per share amounts and operating
    data)Statement of Operations Data:Net sales

$
5,065,293


$
4,672,656


$
4,233,857


$
3,760,499


$
3,363,452Gross profit


1,495,433



1,436,821



1,307,770



1,173,001



1,038,587Operating, general and administrative expenses


1,125,579



1,085,308



985,936



861,621



781,248Operating income


369,854



351,513



321,834



311,380



257,339Gain on sale of equity investment






95,363











Interest income


579



6,813



10,551



9,037



4,791Interest expense


(59,336
)


(51,496
)


(42,268
)


(31,208
)


(21,326
)Income before income tax expense and equity in income from
    investee


311,097



402,193



290,117



289,209



240,804Income tax expense


(121,019
)


(145,180
)


(105,048
)


(106,719
)


(83,351
)Equity in income from investee


2,592



1,671











Net income

$
192,670


$
258,684


$
185,069


$
182,490


$
157,453Earnings Per Common Share Data:Basic

$
1.55


$
1.99


$
1.36


$
1.30


$
1.09Diluted

$
1.52


$
1.95


$
1.33


$
1.25


$
1.05Dividends declared per common share

$
0.12


$
0.12


$
0.12


$
0.12


$
0.12Weighted average shares outstanding:Basic


124,342



129,851



135,836



140,791



143,888Diluted


126,751



132,954



139,537



145,577



149,652Selected Operating Data:Stores open at end of period


1,112



1,008



908



826



726Square footage at end of period


25,102,528



22,825,783



20,787,903



19,029,359



16,967,480Net sales per square foot(2)

$
202


$
210


$
208


$
206


$
205Net sales growth


8.4
%


10.4
%


12.6
%


11.8
%


12.4
%Increase in comparable store sales(3)


3.8
%


2.4
%


5.0
%


4.2
%


6.3
%Selected Balance Sheet Data:Merchandise inventories

$
584,011


$
501,212


$
487,400


$
399,413


$
337,281Working capital

$
396,677


$
214,404


$
324,887


$
377,766


$
477,929Total assets

$
2,357,653


$
2,167,257


$
2,053,477


$
1,863,691


$
1,678,407Total debt(4)

$
585,993


$
563,747


$
449,001


$
364,123


$
250,735Total stockholders equity

$
1,144,136


$
986,597


$
1,000,894


$
940,750


$
973,947Current ratio


1.83



1.31



1.63



1.82



2.36Long-term debt-to-equity


48
%


52
%


43
%


37
%


25
%Total debt-to-capital


34
%


36
%


31
%


28
%


20
%     (1)
    
    2007 consisted of 53 weeks while all other periods
    presented consisted of 52 weeks. As a result, all
    comparisons other than comparable store sales which was
    calculated on an equivalent 52 week basis, also reflect the
    impact of one additional week in 2007. The estimated impact of
    the additional week in 2007 resulted in the following 24




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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 2007, includes sales through
    week 52.(4)
    
    Represents borrowings under credit facility and capital lease
    obligations.  Item 7.Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations
  Except for historical information, 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
    Executive
    Summary
  
    Diluted earnings per common share for 2008 were $1.52 on net
    income of $192.7 million compared to diluted earnings per
    common share of $1.95 on net income of $258.7 million in
    2007. The 2007 diluted earnings per share included benefits of
    $0.48 per common share for the sale of a portion of our
    non-voting shares in MMI Holdings, Inc., and $0.07 for the
    53rd week in 2007, which was partially offset by the $0.07
    charge for the sale of the State Line Tack business.
    Net sales increased 8.4% to $5.1 billion in 2008 compared
    to $4.7 billion in 2007 due to new store openings and an
    increase in comparable store sales. The 53rd week in 2007
    increased sales by approximately $89.7 million.
    We added 104 net new stores during 2008 and operated 1,112
    stores at the end of the year.
    Comparable store sales, or sales in stores open at least one
    year, increased 3.8% during 2008 compared to a 2.4% increase
    during 2007.
    Services sales increased 15.8% to $526.7 million, or 10.4%
    of net sales, for 2008 compared to $454.9 million, or 9.7%
    of net sales, during 2007. The 53rd week in 2007 increased
    services sales by $8.4 million. 25




---



##### Table of Contents




    We purchased 2.3 million and 9.8 million shares of our
    common stock for $50.0 million and $315.0 million
    during 2008 and 2007, respectively.  Critical
    Accounting Policies and Estimates
    Inventory
    Valuation Reserves
        Asset
    Impairments
  Accounting for the
    Impairment or Disposal of Long-Lived Assets.
  Reserve
    for Closed Stores
  Accounting for Costs
    Associated with Exit or Disposal Activities.
 26




---



##### Table of Contents



Insurance
    Liabilities and Reserves
    Income
    Taxes
    Accounting for
    Uncertainty in Income Taxes  an Interpretation of
    FASB Statement No. 109,
   27




---



##### Table of Contents



Results
    of Operations
    Year EndedFebruary 1,


February 3,


January 28,2009


2008


2007(52 weeks)


(53 weeks)


(52 weeks)Statement of Operations Data:Net sales


100.0
%


100.0
%


100.0
%Cost of sales


70.5



69.3



69.1Gross profit


29.5



30.7



30.9Operating, general and administrative expenses


22.2



23.2



23.3Operating income


7.3



7.5



7.6Gain on sale of investment






2.0



Interest income


0.0



0.1



0.2Interest expense


(1.2
)


(1.1
)


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


6.1



8.6



6.9Income tax expense


(2.4
)


(3.1
)


(2.5
)Equity in income from investee


0.1



0.0



Net income


3.8
%


5.5
%


4.4
%   2008
    (52 weeks) compared to 2007 (53 weeks)
  Net
    Sales
      Gross
    Profit
       28




---



##### Table of Contents



Operating,
    General and Administrative Expenses
      Interest
    Income
    Interest
    Expense
    Income
    Tax Expense
    Equity
    in Income from Investee
    2007
    (53 weeks) compared to 2006 (52 weeks)
  Net
    Sales
   29




---



##### Table of Contents



Gross
    Profit
          15-year
  Operating,
    General and Administrative Expenses
        e-commerce
   30




---



##### Table of Contents



Gain
    on Sale of Equity Investment and Equity in Income from
    Investee
      Interest
    Income
    Interest
    Expense
    Income
    Tax Expense
      Liquidity
    and Capital Resources
  Cash
    Flow
     31




---



##### Table of Contents



Common
    Stock Purchase Program
        Common
    Stock Dividends
    Operating
    Capital and Capital Expenditure Requirements
   32




---



##### Table of Contents



Year EndedFebruary 1,


February 3,


January 28,2009


2008


2007(52 weeks)


(53 weeks)


(52 weeks)Capital Expenditures:New stores

$
83,124


$
114,398


$
78,389Store-related projects(1)


51,908



68,612



51,482PetsHotel(2)


43,098



44,039



29,999Information technology


27,464



34,187



61,522Supply chain


20,480



30,316



18,420Other(3)


12,114



2,885



1,294Total capital expenditures

$
238,188


$
294,437


$
241,106     (1)
    
    Includes store remodels, grooming salon expansion, equipment
    replacement, 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.  Lease
    and Other Commitments
  Operating
    and Capital Lease Commitments and Other Obligations
    2010 &


2012 &


2014 andContractual Obligation

2009


2011


2013


Beyond


Other


TotalOperating lease obligations

$
257,829


$
549,452


$
526,092


$
970,522


$



$
2,303,895Capital lease obligations(1)


88,990



195,234



198,034



481,065







963,323Purchase obligations(2)


20,448



















20,448Uncertain tax positions(3)


















8,127



8,127Insurance obligations(4)


21,369















63,199



84,568Total

$
388,636


$
744,686


$
724,126


$
1,451,587


$
71,326


$
3,380,361Less: Sublease income


3,488



6,610



4,730



4,688







19,516Net Total

$
385,148


$
738,076


$
719,396


$
1,446,899


$
71,326


$
3,360,845     (1)
    
    Includes $377.3 million in interest.(2)
    
    Represents purchase obligations for advertising commitments.(3)
    
    Approximately $8.1 million of unrecognized tax benefits, as
    shown in Other, have been recorded as liabilities in
    accordance with FIN No. 48, and we are uncertain as to
    if or when such amounts may be settled. 33




---



##### Table of Contents



(4)
    
    Approximately $63.2 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 2009.  Letters
    of Credit
    Related
    Party Transactions
          15-year
      Credit
    Facility
   34




---



##### Table of Contents



Seasonality
    and Inflation
      Recent
    Accounting Pronouncements
  Business Combinations.
  Noncontrolling Interests in Consolidated Financial
    Statements an Amendment of ARB No. 51.
 35




---



##### Table of Contents



No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities No. EITF 03-6-1 No. EITF 03-6-1 No. EITF 03-6-1 No. EITF 03-6-1
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk    Energy
    Costs
    Foreign
    Currency Risk
      Interest
    Rate 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   36




---



##### Table of Contents



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)
      Changes
    in Internal Control Over Financial Reporting
  Rule 13a-15(f)
 37




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      Internal Control  Integrated Framework
        Internal Control  Integrated Framework
        38




---



##### 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.
 39




---



##### Table of Contents



SIGNATURES
      By:
    /s/  PHILIP
    L. FRANCIS   Chairman of the Board of Directors,
 and Chief Executive Officer
  POWER OF
    ATTORNEY
  Form 10-K
    Signature

Title

Date/s/  PHILIP
    L. FRANCISPhilip
    L. Francis

Chairman of the Board of Directors, and Chief Executive Officer
    (Principal Executive Officer)

March 26, 2009/s/  LAWRENCE
    P. MOLLOYLawrence
    P. Molloy

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

March 26, 2009/s/  LAWRENCE
    A. DEL SANTOLawrence
    A. Del Santo

Director

March 26, 2009/s/  RITA
    V. FOLEYRita
    V. Foley

Director

March 26, 2009/s/  RAKESH
    GANGWALRakesh
    Gangwal

Director

March 26, 2009/s/  JOSEPH
    S. HARDIN, JR.Joseph
    S. Hardin, Jr.

Director

March 26, 2009/s/  GREGORY
    P. JOSEFOWICZGregory
    P. Josefowicz

Director

March 26, 2009 40




---



##### Table of Contents



Signature

Title

Date/s/  AMIN
    I. KHALIFAAmin
    I. Khalifa

Director

March 26, 2009/s/  RICHARD
    K. LOCHRIDGERichard
    K. Lochridge

Director

March 26, 2009/s/  BARBARA
    A. MUNDERBarbara
    A. Munder

Director

March 26, 2009/s/  THOMAS
    G. STEMBERGThomas
    G. Stemberg

Director

March 26, 2009  41




---



##### 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
    February 1, 2009, and February 3, 2008


F-3Consolidated Statements of Operations and
    Comprehensive Income for the years ended February 1, 2009,
    February 3, 2008, and January 28, 2007


F-4Consolidated Statements of Stockholders
    Equity for the years ended February 1, 2009,
    February 3, 2008, and January 28, 2007


F-5Consolidated Statements of Cash Flows for the
    years ended February 1, 2009, February 3, 2008, and
    January 28, 2007


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) February 1,


February 3,2009


2008ASSETSCash and cash equivalents

$
126,314


$
58,322Receivables, net


48,609



49,341Merchandise inventories


584,011



501,212Deferred income taxes


28,223



28,644Prepaid expenses and other current assets


87,677



73,231Total current assets


874,834



710,750Property and equipment, net


1,302,245



1,230,770Equity investment in affiliate


25,938



23,346Deferred income taxes


93,128



126,665Goodwill


38,645



44,333Other noncurrent assets


22,863



31,393Total assets

$
2,357,653


$
2,167,257LIABILITIES AND STOCKHOLDERS EQUITYAccounts payable and bank overdraft.

$
194,630


$
172,352Accrued payroll, bonus and employee benefits


88,337



84,727Accrued occupancy expenses and deferred rents


55,642



46,955Short-term debt






30,000Current maturities of capital lease obligations


32,233



24,982Other current liabilities


107,315



137,330Total current liabilities


478,157



496,346Capital lease obligations


553,760



508,765Deferred rents


92,155



88,954Other noncurrent liabilities


89,445



86,595Total liabilities


1,213,517



1,180,660Commitments 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, 159,770 and 158,104 shares issued


16



16Additional paid-in capital


1,117,557



1,079,190Retained earnings


936,100



758,674Accumulated other comprehensive (loss) income


(2,714
)


5,585Less: treasury stock, at cost, 32,408 and 30,066 shares


(906,823
)


(856,868
)Total stockholders equity


1,144,136



986,597Total liabilities and stockholders equity

$
2,357,653


$
2,167,257    F-3




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
 Consolidated
    Statements of Operations and Comprehensive Income  Year EndedFebruary 1,


February 3,


January 28,2009


2008


2007(52 weeks)


(53 weeks)


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

$
4,538,563


$
4,217,716


$
3,860,176Services sales


526,730



454,940



373,681Net sales


5,065,293



4,672,656



4,233,857Cost of merchandise sales


3,184,819



2,901,415



2,654,171Cost of services sales


385,041



334,420



271,916Total cost of sales


3,569,860



3,235,835



2,926,087Gross profit


1,495,433



1,436,821



1,307,770Operating, general and administrative expenses


1,125,579



1,085,308



985,936Operating income


369,854



351,513



321,834Gain on sale of equity investment






95,363



Interest income


579



6,813



10,551Interest expense


(59,336
)


(51,496
)


(42,268
)Income before income tax expense and equity in income from
    investee


311,097



402,193



290,117Income tax expense


(121,019
)


(145,180
)


(105,048
)Equity in income from investee


2,592



1,671



Net income


192,670



258,684



185,069Other comprehensive income, net of income tax:Foreign currency translation adjustments


(8,299
)


4,457



(478
)Comprehensive income

$
184,371


$
263,141


$
184,591Earnings per common share:Basic

$
1.55


$
1.99


$
1.36Diluted

$
1.52


$
1.95


$
1.33Weighted average shares outstanding:Basic


124,342



129,851



135,836Diluted


126,751



132,954



139,537    F-4




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
 Consolidated
    Statements of Stockholders Equity  AccumulatedOtherShares





Additional





ComprehensiveCommon


Treasury


Common


Paid-In


Retained


(Loss)


TreasuryStock


Stock


Stock


Capital


Earnings


Income


Stock


Total(In thousands, except per share data)BALANCE AT JANUARY 29, 2006


153,024



(14,027
)

$
15


$
970,664


$
348,442


$
1,606


$
(379,977
)

$
940,750Stock options and employee stock purchase plan compensation cost














9,936















9,936Net tax benefits from tax deductions in excess of the
    compensation cost recognized














5,989















5,989Issuance of common stock under stock incentive plans


2,172







1



28,625















28,626Issuance of restricted stock and compensation cost, net of award
    reacquisitions and adjustments


586











9,416















9,416Dividends declared ($0.12 per share)


















(16,550
)










(16,550
)Other comprehensive income, net of income tax:Foreign currency translation adjustments






















(478
)






(478
)Purchase of treasury stock, at cost






(6,286
)


















(161,864
)


(161,864
)Net income


















185,069











185,069BALANCE 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
)

$
1,144,136    F-5




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
 Consolidated
    Statements of Cash Flows
    (In thousands)  Year EndedFebruary 1,


February 3,


January 28,2009


2008


2007(52 weeks)


(53 weeks)


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

$
192,670


$
258,684


$
185,069Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


225,054



195,980



156,941Gain on sale of equity investment






(95,363
)


Loss on disposal of property and equipment


5,589



6,914



8,727Stock-based compensation expense


24,301



18,333



19,320Deferred income taxes


33,957



(15,251
)


(18,882
)Equity in income from investee


(2,592
)


(1,671
)


Tax benefits from tax deductions in excess of the compensation
    cost recognized


(3,215
)


(10,715
)


(8,222
)Non-cash interest expense


4,576



2,589



5,647Changes in assets and liabilities, excluding the effect of the
    acquisition of store locations in Canada:Receivables, net


1,694



(11,793
)


1,832Merchandise inventories


(86,151
)


(9,005
)


(87,867
)Prepaid expenses and other current assets


(13,758
)


(22,549
)


(3,276
)Other noncurrent assets


8,057



(4,238
)


(2,555
)Accounts payable


25,201



(1,515
)


9,732Accrued payroll, bonus and employee benefits


4,280



(1,851
)


9,129Accrued occupancy expenses and current deferred rents


9,632



1,722



1,222Other current liabilities


(17,559
)


12,865



19,030Deferred rents


4,208



3,883



359Other noncurrent liabilities


4,756



5,697



(6,915
)Net cash provided by operating activities


420,700



332,716



289,291CASH FLOWS FROM INVESTING ACTIVITIES:Cash paid for short-term available-for-sale investments






(285,205
)


(2,114,035
)Proceeds from sales of short-term available-for-sale investments






304,405



2,314,735Decrease (increase) in restricted cash and short-term investments






60,700



(60,700
)Cash paid for property and equipment


(238,188
)


(294,437
)


(241,106
)Cash paid for acquisition of store locations in Canada






(36,963
)


Proceeds from sales of property and equipment


2,951



539



1,579Cash paid for equity investment










(4,398
)Proceeds from sale of equity investment






111,752



Net cash used in investing activities


(235,237
)


(139,209
)


(103,925
)CASH FLOWS FROM FINANCING ACTIVITIES:Net proceeds from common stock traded under stock incentive plans


12,082



31,576



28,626Cash paid for treasury stock


(49,955
)


(315,027
)


(161,864
)Payments of capital lease obligations


(33,853
)


(26,483
)


(19,046
)Proceeds from short-term debt


576,000



185,000



Payments on short-term debt


(606,000
)


(155,000
)


Increase (decrease) in bank overdraft.


15



(8,461
)


15,707Tax benefits from tax deductions in excess of the compensation
    cost recognized


3,215



10,715



8,222Cash dividends paid to stockholders


(15,265
)


(16,034
)


(16,654
)Net cash used in financing activities


(113,761
)


(293,714
)


(145,009
)EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS


(3,710
)


9,730



(1,973
)INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


67,992



(90,477
)


38,384CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR


58,322



148,799



110,415CASH AND CASH EQUIVALENTS AT END OF YEAR

$
126,314


$
58,322


$
148,799    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
    The Equity Method of Accounting for
    Investments in Common Stock.
  Fiscal
    Year
    Reclassifications
    Use of
    Estimates
   F-7




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Segment
    Reporting
  Disclosures about
    Segments of an Enterprise and Related Information,
  Financial
    Instruments
    Cash
    and Cash Equivalents
      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
  Goodwill and Other Intangible
    Assets.
  Insurance
    Liabilities and Reserves
   F-9




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Reserve
    for Closed Stores
  Accounting for Costs Associated
    with Exit or Disposal Activities.
    Income
    Taxes
    Accounting for
    Uncertainty in Income Taxes  an Interpretation of
    FASB Statement No. 109,
   F-10




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Other
    Current Liabilities
    February 1,


February 3,2009


2008Accrued income and sales tax

$
19,313


$
24,812Accounts payable  operating expenses


17,183



21,584Accrued capital purchases


14,255



21,419Accrued general liability insurance reserve


5,137



4,557Gift card liability


8,472



9,325Deferred revenue


6,692



7,686Other


36,263



47,947$
107,315


$
137,330   Revenue
    Recognition
  Revenue Recognition in Financial Statements, 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
  Share-Based
    Payment. Accounting for Stock-Based
    Compensation,
  Foreign
    Currency Translation and Transactions
    Other
    Comprehensive Income
   F-12




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Earnings
    Per Common Share
    Recently
    Issued Accounting Pronouncements
  Business Combinations.
  Noncontrolling Interests in Consolidated Financial
    Statements an Amendment of ARB No. 51.
  No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities No. EITF 03-6-1 No. EITF 03-6-1 No. EITF 03-6-1 No. EITF 03-6-1
  Note 2 
    Fair
    Value Measurements  Fair Value Meansurements, No. 157-2, Effective Date of Statement 157
    Level 1:
 F-13




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Level 2:
  Level 3:
      Fair Value Measurements at February 1, 2009, using:Significant


SignificantTotal Carrying


Quoted Prices in


Observable


UnobservableValue at February 1,


Active Markets


Other Inputs


Other Inputs2009


(Level 1)


(Level 2)


(Level 3)Money market funds

$
72,227


$
72,227







   Note 3 
    Investments    The
    Equity Method of Accounting for Investments in Common
    Stock.
    February 1, 2009


February 3, 2008Shares


Amount


Shares


AmountVoting common stock and convertible preferred stock


4,693


$
21,675



4,693


$
21,675Equity in income from investee






4,263







1,671Total equity investment in affiliate


4,693


$
25,938



4,693


$
23,346    F-14




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
          December 27,


February 3,2008


2008Current assets

$
187,066


$
163,083Noncurrent assets


121,932



120,204Current liabilities


196,070



183,540Noncurrent liabilities


14,070



13,631   Year EndedDecember 27,


February 3,


January 29,2008


2008


2007(52 weeks)


(52 weeks)


(53 weeks)Net sales

$
448,528


$
407,634


$
336,464Gross profit


65,917



52,104



55,962Net income before minority interest

$
13,626


$
7,898


$
9,763     15-year
     F-15




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Note 4 
    Property
    and Equipment    February 1,


February 3,2009


2008Land

$
691


$
2,991Buildings


15,773



6,204Furniture, fixtures and equipment


889,478



767,103Leasehold improvements


539,213



467,731Computer software


109,704



104,764Buildings, equipment and computer software under capital leases


673,330



624,0112,228,189



1,972,804Less: accumulated depreciation and amortization


975,668



828,5241,252,521



1,144,280Construction in progress


49,724



86,490Property and equipment, net

$
1,302,245


$
1,230,770   Capitalization of Interest
    Cost.
  Note 5 
    Reserve
    for Closed Stores    February 1,


February 3,2009


2008Total remaining gross occupancy costs

$
34,107


$
34,376Less:Expected sublease income


(26,604
)


(27,167
)Interest costs


(1,121
)


(1,052
)Reserve for closed stores

$
6,382


$
6,157       Year EndedFebruary 1,


February 3,


January 28,2009


2008


2007(52 weeks)


(53 weeks)


(52 weeks)Opening balance

$
6,157


$
7,689


$
9,604Charges, net


4,562



4,993



4,276Payments, net


(4,337
)


(6,525
)


(6,191
)Ending balance

$
6,382


$
6,157


$
7,689  F-16




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Note 6 
    Impairment
    of Long-Lived Assets and Asset Write-Downs    Note 7 
    Income
    Taxes    Year EndedFebruary 1,


February 3,


January 28,2009


2008


2007(52 weeks)


(53 weeks)


(52 weeks)United States

$
309,311


$
401,079


$
283,545Foreign


1,786



1,114



6,572$
311,097


$
402,193


$
290,117     Year EndedFebruary 1,


February 3,


January 28,2009


2008


2007(52 weeks)


(53 weeks)


(52 weeks)Current provision:Federal

$
73,017


$
144,961


$
108,940State/Foreign


9,056



18,325



14,69382,073



163,286



123,633Deferred:Federal


34,372



(15,139
)


(19,180
)State/Foreign


4,574



(2,967
)


59538,946



(18,106
)


(18,585
)Income tax expense

$
121,019


$
145,180


$
105,048  F-17




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year EndedFebruary 1,


February 3,


January 28,2009


2008


2007(52 weeks)


(53 weeks)


(52 weeks)Dollars


%


Dollars


%


Dollars


%Provision at federal statutory tax rate

$
108,882



35.0
%

$
140,768



35.0
%

$
101,541



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


8,860



2.8



12,788



3.2



8,327



2.9Adjustments to tax reserves


(486
)


(0.2
)


(2,446
)


(0.6
)


(826
)


(0.3
)Adjustments to deferred tax assets


















1,494



0.5Tax exempt interest income










(1,676
)


(0.4
)


(2,834
)


(1.0
)Adjustment to valuation allowance


158



0.1



(701
)


(0.2
)


337



0.1Utilization of capital loss










(4,974
)


(1.2
)


(3,033
)


(1.0
)Tax on equity income from investee


907



0.3



652



0.1







Other


2,698



0.9



769



0.2



42



0.0$
121,019



38.9
%

$
145,180



36.1
%

$
105,048



36.2
%     February 1,


February 3,2009


2008Deferred income tax assets:Capital lease obligations

$
180,775


$
149,002Employee benefit expense


70,945



68,331Deferred rents


39,888



37,576Net operating loss carryforwards


19,742



20,859Reserve for closed stores


2,600



2,017Miscellaneous reserves and accruals


8,211



2,180Tenant incentives


13,706



10,075Other


9,379



4,115Total deferred income tax assets


345,246



294,155Valuation allowance


(8,036
)


(7,878
)Deferred income tax assets, net of valuation allowance


337,210



286,277Deferred income tax liabilities:Property and equipment


(191,610
)


(113,392
)Inventory


(11,399
)


(13,726
)Prepaid expenses


(6,337
)


Other


(6,513
)


(3,850
)Total deferred income tax liabilities


(215,859
)


(130,968
)Net deferred income tax assets

$
121,351


$
155,309  F-18




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      February 1,


February 3,2009


2008Unrecognized tax benefits at February 3, 2008

$
8,824


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


1,314



1,115Gross increases  tax positions in prior periods


290



Gross decreases  tax positions in prior periods


(674
)


(4,200
)Gross settlements


(663
)


Lapse of statute of limitations


(558
)


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


(406
)


316Balance at February 1, 2009

$
8,127


$
8,824          F-19




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Note 8 
    Earnings
    Per Common Share    Year EndedFebruary 1,


February 3,


January 28,2009


2008


2007(52 weeks)


(53 weeks)


(52 weeks)Basic


124,342



129,851



135,836Effect of dilutive securities:Stock options, restricted stock and ESPP


2,409



3,103



3,701Diluted


126,751



132,954



139,537     Note 9 
    Stockholders
    Equity  Share
    Purchase Programs
       F-20




---



##### Table of Contents



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


Stockholders ofDate Declared

Share


Record Date


Date Paid2008: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, 20092007:March 27

$
0.03



April 27, 2007



May 11, 2007June 20

$
0.03



July 27, 2007



August 10, 2007September 19

$
0.03



October 26, 2007



November 9, 2007December 13

$
0.03



February 1, 2008



February 15, 2008   Note 10 
    Employee
    Benefit Plans    Note 11 
    Financing
    Arrangements and Lease Obligations  Short-term
    Debt and Letters of Credit
    Restatement and Revisions
    of Accounting Research Bulletins,
   F-21




---



##### Table of Contents



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


CapitalLeases


Leases2009

$
257,829


$
88,9902010


277,837



96,9712011


271,615



98,2632012


268,928



99,3162013


257,164



98,718Thereafter


970,522



481,065Total minimum rental commitments

$
2,303,895



963,323Less: amounts representing interest






(377,330
)Present value of minimum lease payments






585,993Less: current portion






(32,233
)Long-term obligations





$
553,760    F-22




---



##### Table of Contents



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

$
3,4882010


3,3042011


3,3062012


2,6022013


2,128Thereafter


4,688$
19,516   Note 12 
    Litigation
    and Settlements    Langton v.
    PetSmart
  and/or
              F-23




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
   No. 07-2867).
          Note 13 
    Commitments
    and Contingencies  Letters
    of Credit
    Advertising
    Purchase Commitments
    Product
    Purchase Commitments
    Note 14 
    Stock
    Incentive Plans    Stock
    Options
   F-24




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2006 (52 weeks)Weighted-AverageWeighted-Average


Remaining


AggregateShares


Exercise Price


Contractual Term


Intrinsic ValueOutstanding at beginning of year


8,784


$
15.27Granted


1,014


$
24.33Exercised


(1,919
)

$
12.36






$
31,061Forfeited/cancelled


(552
)

$
25.19Outstanding at end of year


7,327


$
16.54



5.45


$
101,603Vested and expected to vest at end of year


7,024


$
16.15



5.39


$
100,180Exercisable at end of year


5,354


$
13.21



4.93


$
92,051   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   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






$
28,316Forfeited/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   Restricted
    Stock
   F-25




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      2008 (52 weeks)


2007 (53 weeks)


2006 (52 weeks)Weighted-Average





Weighted-Average





Weighted- AverageGrant Date





Grant Date





Grant DateShares


Fair Value


Shares


Fair Value


Shares


Fair ValueNonvested at beginning of year


2,391


$
27.92



2,380


$
24.33



1,800


$
24.41Granted


978


$
19.33



886


$
31.39



1,000


$
24.47Vested


(367
)

$
24.85



(448
)

$
16.15



(7
)

$
25.66Forfeited


(317
)

$
25.48



(427
)

$
27.44



(413
)

$
25.01Nonvested at end of year


2,685


$
25.50



2,391


$
27.92



2,380


$
24.33     Employee
    Stock Purchase Plan
    2008


2007


2006(52 weeks)


(53 weeks)


(52 weeks)Shares purchased


338



246



216Aggregate proceeds

$
5,918


$
5,368


$
4,334   2009
    Stock-based Incentive Programs
    share-based compensation
 F-26




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Note 15 
    Stock-Based
    Compensation    2008


2007


2006(52 weeks)


(53 weeks)


(52 weeks)Stock options expense

$
7,959


$
3,408


$
8,625Restricted stock expense


14,227



13,196



9,384Employee stock purchase plan expense


2,115



1,729



1,311Total stock-based compensation cost

$
24,301


$
18,333


$
19,320Tax benefit

$
8,304


$
6,168


$
6,330      F-27




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2008


2007


2006(52 weeks)


(53 weeks)


(52 weeks)Dividend yield


0.42
%


0.42
%


0.48
%Expected volatility


36.2
%


32.0
%


34.6
%Risk-free interest rate


1.96
%


4.83
%


4.64
%Forfeiture rate


15.4
%


16.0
%


14.7
%Expected lives


5.2 years



5.2 years



4.6 yearsVesting periods


4.0 years



4.0 years



4.0 yearsTerm


7.0 years



7.0 years



7.0 yearsWeighted average fair value

$
6.44


$
10.86


$
8.63       2008


2007


2006(52 weeks)


(53 weeks)


(52 weeks)Dividend yield


0.52
%


0.37
%


0.48
%Expected volatility


43.4
%


22.2
%


29.3
%Risk-free interest rate


1.97
%


5.06
%


5.15
%Expected lives


0.5 years



0.5 years



0.5 years   Note 16 
    Supplemental
    Schedule of Cash Flows    2008


2007


2006(52 weeks)


(53 weeks)


(52 weeks)Interest paid

$
55,937


$
50,812


$
37,913Income taxes paid, net of refunds

$
92,786


$
171,303


$
125,468Assets acquired using capital lease obligations

$
86,083


$
100,506


$
98,628Accruals and accounts payable for capital expenditures

$
19,770


$
27,560


$
32,903Dividends declared but unpaid

$
3,816


$
3,837


$
4,064   Note 17 
    Acquisition
    of Store Locations in Canada  Business Combinations,
 F-28




---



##### Table of Contents



PetSmart,
    Inc. and Subsidiaries
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Note 18 
    Discontinuation
    of Equine Product Line      Accounting for the Impairment or Disposal of Long-Lived
    Assets,
  Accounting for Costs Associated
    with Exit or Disposal Activities.
  Note 19 
    Selected
    Quarterly Financial Data (Unaudited)    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)Net 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



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


Second


Third


FourthYear Ended February 3, 2008 (53 weeks)

Quarter(1, 2)


Quarter(1, 2)


Quarter(1, 2)


Quarter(1, 2, 3)(13 weeks)


(13 weeks)


(13 weeks)


(14 weeks)(In thousands, except per share data)Net sales

$
1,111,625


$
1,116,681


$
1,115,916


$
1,328,434Gross profit

$
338,479


$
346,323


$
331,529


$
420,490Operating income

$
76,585


$
84,736


$
59,609


$
130,583Income before income tax expense and equity in income from
    investee

$
163,123


$
76,004


$
46,863


$
116,203Net income

$
106,707


$
47,125


$
29,452


$
75,400Earnings per common share:Basic

$
0.80


$
0.36


$
0.23


$
0.60Diluted

$
0.78


$
0.35


$
0.23


$
0.59Weighted average shares outstanding:Basic


133,316



132,262



127,431



126,134Diluted


136,672



135,514



130,528



128,867     (1)
    
    The first quarter of 2007 included a pre-tax gain of
    $95.4 million, which is reflected in income before income
    tax expense and equity in income from investee and an after-tax
    gain of $64.3 million, which is reflected in net income for
    the sale of non-voting shares in MMIH. During the second quarter
    of 2007, a new agreement with MMIH was finalized which impacted
    license fees and utility reimbursements reflected in gross
    profit.(2)
    
    Our decision to exit our equine product line during the first
    quarter of 2007 impacted operating income for the full year as
    follows: $6.3 million in the first quarter,
    $3.6 million in the second quarter, $4.7 million in
    the third quarter, and $1.4 million in the fourth quarter.(3)
    
    The estimated impact of the additional week in the fourth
    quarter of 2007 was: net sales, $89.7 million; gross
    profit, $34.4 million; operating income,
    $16.0 million; income before income tax expense and equity
    in income from investee, $16.0 million; and net income,
    $9.8 million. F-30




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM      Form 10-K.
   
    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 market2006

$
8,534


$
1,716


$
(1,107
)

$
9,1432007

$
9,143


$
1,117


$
(4,392
)

$
5,8682008

$
5,868


$
4,736


$
(2,827
)

$
7,777Shrink2006

$
5,731


$
25,881


$
(24,017
)

$
7,5952007

$
7,595


$
30,188


$
(30,359
)

$
7,4242008

$
7,424


$
26,430


$
(27,032
)

$
6,822  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
.4

Bylaws of PetSmart, as amended

10-K

0-21888

3.4

3/28/20074
.1

Reference is made to Exhibit 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 A

5/7/200710
.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

8-K

0-21888

10.1

2/19/200910
.11

Form of Offer Letter between PetSmart and executive officers

10-K

0-21888

10.15

4/18/2003 E-1




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##### Table of Contents



Incorporated By ReferenceExhibit











FiledNumber

Exhibit Description

Form

File No.

Exhibit

Filing Date

Herewith10
.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

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