Investments

6 Months Ended

Jul. 31, 2011

NOTE 4 — INVESTMENTS

We have an investment in Banfield which is accounted for using the equity method of accounting. Our ownership interest in the stock of Banfield was as follows (in thousands):


	July 31, 2011					January 30, 2011				August 1, 2010
	Shares		Amount			Shares		Amount		Shares		Amount
Voting common stock and preferred stock		4,693	$	21,675			4,693	$	21,675		4,693	$	21,675
Equity in income from Banfield		—		26,541			—		21,183		—		14,368
Dividend received from Banfield		—		(15,960	)		—		—		—		—

Total equity investment in Banfield		4,693	$	32,256			4,693	$	42,858		4,693	$	36,043

Our investment consisted of voting common stock, comprising 21.4% of all voting stock as of July 31, 2011, January 30, 2011, and August 1, 2010. Our ownership percentage as of July 31, 2011, January 30, 2011, and August 1, 2010, considering all classes of stock (voting and non-voting) was 21.0%.

Banfield’s financial data is summarized as follows (in thousands):


	July 31, 2011		January 30, 2011		August 1, 2010
Current assets	$	340,116	$	351,379	$	314,625
Noncurrent assets		128,942		119,175		122,987
Current liabilities		332,841		279,836		278,683
Noncurrent liabilities		11,257		12,367		15,932


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	July 31, 2011		August 1, 2010		July 31, 2011		August 1, 2010
Net sales	$	176,428	$	161,346	$	341,286	$	310,654
Income from operations		23,532		16,929		44,919		28,646
Net income		13,250		10,096		25,512		16,940

We recognized license fees and reimbursements for specific operating expenses from Banfield of $9.1 million and $8.6 million during the thirteen weeks ended July 31, 2011, and August 1, 2010, respectively, and $18.1 million and $16.8 million during the twenty-six weeks ended July 31, 2011, and August 1, 2010, respectively, in other revenue on the Condensed Consolidated Statements of Income and Comprehensive Income. The related costs are included in cost of other revenue in the Condensed Consolidated Statements of Income and Comprehensive Income. Receivables from Banfield totaled $3.1 million, $2.7 million and $3.0 million at July 31, 2011, January 30, 2011, and August 1, 2010, respectively, and were included in receivables, net in the Condensed Consolidated Balance Sheets.

The master operating agreement also includes a provision for the sharing of profits on the sale of therapeutic pet foods sold in all stores with an operating Banfield hospital. The net sales and gross profit on the sale of therapeutic pet food are not material to our condensed consolidated financial statements.

- Definition

The entire disclosure for equity investment, or group of investments, for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20 percent of the voting stock and the investment is accounted for using the equity method, and the reasons why it is.

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