Banana Republic 2010 Annual Report Download - page 32

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related to the repatriation of earnings from our Canadian subsidiaries. The increase was primarily offset by the
release of unrecognized tax benefits for closed years.
The increase in the effective tax rate for fiscal 2009 compared with fiscal 2008 was primarily driven by providing
U.S. taxes on certain foreign earnings, the impact of changes in state tax laws, and a change in the mix of income
between domestic and international operations.
We currently expect the fiscal 2011 effective tax rate to be about 39 percent. The actual rate will ultimately depend
on several variables, including the mix of income between domestic and international operations, the overall level
of income, the potential resolution of outstanding tax contingencies, and changes in tax laws and rates.
Liquidity and Capital Resources
Our largest source of cash flows is cash collections from the sale of our merchandise. Our primary uses of cash
include merchandise inventory purchases, occupancy costs, personnel-related expenses, purchases of property and
equipment, payment of taxes, and share repurchases. In addition to share repurchases, we also continue to return
cash to our shareholders in the form of dividends.
We consider the following to be measures of our liquidity and capital resources:
($ in millions) January 29,
2011 January 30,
2010 January 31,
2009
Cash,cashequivalents,andshort-terminvestments .......................... $ 1,661 $ 2,573 $ 1,715
Debt ..................................................................... $3$—$50
Workingcapital ........................................................... $ 1,831 $ 2,533 $ 1,847
Current ratio .............................................................. 1.87:1 2.19:1 1.86:1
Our working capital and current ratio as of January 29, 2011 decreased compared with January 30, 2010, primarily
due to decreases in cash and cash equivalents and short-term investments. See Cash Flows discussed below.
As of January 29, 2011, cash and cash equivalents and short-term investments were $1.7 billion. Our operating cash
flow generation and cash position remain strong. We believe that current cash balances and cash flows from our
operations will be sufficient to support our business operations, including growth initiatives and planned capital
expenditures, for the next 12 months and beyond. We are also able to supplement near-term liquidity, if necessary,
with our existing $500 million revolving credit facility.
Cash Flows from Operating Activities
Net cash provided by operating activities during fiscal 2010 decreased $184 million compared with fiscal 2009,
primarily due to the following:
• an increase in inventory purchases in fiscal 2010 compared with fiscal 2009;
• a higher fiscal 2009 bonus payout in the first quarter of fiscal 2010 compared with the fiscal 2008 bonus payout
in the first quarter of fiscal 2009; partially offset by
• an increase in net income in fiscal 2010 compared with fiscal 2009.
Net cash provided by operating activities during fiscal 2009 increased $516 million compared with fiscal 2008,
primarily due to the following:
• an increase in net income in fiscal 2009 compared with fiscal 2008; and
• a lower fiscal 2008 bonus payout in the first quarter of fiscal 2009 compared with the fiscal 2007 bonus payout
in the first quarter of fiscal 2008;
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