Petsmart 2005 Annual Report Download - page 47

Our primary long-term capital requirements consist of opening new stores, reformatting existing stores,
expenditures associated with equipment and computer software in support of our system initiatives, PetsHotel
construction costs and other expenditures to support our growth plans and initiatives. For fiscal 2005, we used
$165.7 million in cash for capital expenditures, compared with $143.6 million for fiscal 2004. The fiscal 2005
expenditures were primarily related to new stores, remodel projects, information systems projects and fixtures and
equipment for a new distribution center.
Net cash used in financing activities for 2005 was $251.7 million, which is comprised primarily of
$265.0 million for the purchase of treasury stock, $17.2 million for dividends and $10.3 million for payments
on capital lease obligations, offset by $33.1 million in proceeds from the exercises of stock options and from our
employee stock purchase plan. Net cash used in financing activities for 2004 was $41.8 million.
Common Stock Purchase Program
In April 2000, the Board of Directors approved a plan to purchase our common stock. In March 2003, the
Board of Directors extended the term of the purchase of our common stock for an additional three years through
March 2006 and increased the authorized amount of annual purchases to $35.0 million. In September 2004, the
Board of Directors approved a program, which replaced the March 2003 program, authorizing the purchase of up to
$150.0 million of our common stock through fiscal 2005. During the first quarter of fiscal 2005, we purchased
approximately 3,618,000 shares of our common stock for approximately $105.0 million which completed the
authorized purchase of $150.0 million of our common stock under the September 2004 program.
In June 2005, the Board of Directors approved a program authorizing the purchase of up to $270.0 million of
our common stock through fiscal 2006. During fiscal 2005, we purchased approximately 6,322,000 shares of our
common stock for approximately $160.0 million under the June 2005 program.
Common Stock Dividends
We believe our ability to generate cash allows us to invest in the growth of the business and, at the same time,
distribute a quarterly dividend. Our credit facility permits us to pay dividends, so long as we are not in default and
the payment of dividends would not result in default. In fiscal 2005, the following dividends were declared by the
Board of Directors:
Date Declared
Dividend Amount
per Share
Stockholders of
Record Date Date Paid
March 22, 2005 .................. $0.03 April 29, 2005 May 20, 2005
June 23, 2005 ................... $0.03 July 29, 2005 August 19, 2005
September 21, 2005............... $0.03 October 31, 2005 November 18, 2005
December 15, 2005 ............... $0.03 January 27, 2006 February 10, 2006
On March 28, 2006, the Board of Directors declared a quarterly cash dividend of $0.03 per share, payable on
May 12, 2006 to stockholders of record on April 28, 2006.
Operating Capital and Capital Expenditure Requirements
Substantially all our stores are leased facilities. We opened 100 net new stores in fiscal 2005. Generally, each
new store requires capital expenditures of approximately $0.9 million for fixtures, equipment and leasehold
improvements, approximately $0.2 million for inventory and approximately $0.1 million for preopening costs. We
expect capital spending to be approximately $200 million to $230 million for fiscal 2006, based on our current plan
to open approximately 90 net new stores and 30 new PetsHotels, to fixture and equip a new distribution center in
Newnan, Georgia, which is expected to open in fiscal 2007, to continue our investment in the development of our
information systems, to add to our services capacity with the expansion of certain grooming salons, to remodel or
replace certain store assets and to roll out our store refresh program.
We believe our existing cash and cash equivalents, together with cash flows from operations, borrowing
capacity under our bank credit facility and available lease financing, will provide adequate funds for our foreseeable
working capital needs, planned capital expenditures and debt service obligations. Our ability to fund our operations,
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