Petsmart 2011 Annual Report Download - page 41

ity to generate future cash from our business operations. Free cash flow should be considered in addition to,
rather than as a substitute for, net income as a measure of our performance and net cash provided by operating
activities as a measure of our liquidity.
Although other companies report free cash flow, numerous methods exist for calculating free cash flow. As
a result, the method used by our management to calculate free cash flow may differ from the methods other
companies use to calculate free cash flow. We urge you to understand the methods used by another company to
calculate free cash flow before comparing our free cash flow to that of another company. We define free cash
flow as net cash provided by operating activities minus cash paid for property and equipment, and payments of
capital lease obligations.
The following table reconciles net cash provided by operating activities, a GAAP measure, to free cash
flow, a non-GAAP measure (in thousands).
Year Ended
January 29,
2012
January 30,
2011
January 31,
2010
Net cash provided by operating activities ................ $575,420 $ 457,645 $ 566,943
Cash paid for property and equipment ................... (120,720) (125,074) (112,920)
Payments of capital lease obligations ................... (54,437) (51,668) (38,439)
Free cash flow, a non-GAAP measure ................... $400,263 $ 280,903 $ 415,584
For 2011, our free cash flow increased primarily due to an increase in net income, an increase in non-trade
accounts payable resulting from the extension of vendor terms, a reduction in growth of merchandise inventory,
receipt of a dividend from Banfield, and a decrease in capital spending during 2011. For 2010, our free cash flow
decreased primarily due to increases in merchandise inventory balances, income tax payments, capital spending
and capital lease payments during 2010.
Share Purchase Program
In June 2009, the Board of Directors approved a share purchase program authorizing the purchase of up to
$350.0 million of our common stock through January 29, 2012. During 2009, we purchased 5.9 million shares of
our common stock for $140.0 million under the $350.0 million share purchase program. During the thirteen
weeks ended May 2, 2010, we purchased 3.4 million shares of our common stock for $107.1 million under this
$350.0 million program.
In June 2010, the Board of Directors approved a share purchase program authorizing the purchase of up to
$400.0 million of our common stock through January 29, 2012, replacing the $350.0 million program. During
2010, we purchased 4.2 million shares of our common stock for $156.2 million under the $400.0 million pro-
gram. During the twenty-six weeks ended July 31, 2011, we purchased 3.9 million shares of our common stock
for $165.4 million under this $400.0 million program.
In June 2011, the Board of Directors approved a share purchase program authorizing the purchase of up to
$450.0 million of our common stock through January 31, 2013, replacing the $400.0 million program, effective
August 1, 2011. During the twenty-six weeks ended January 29, 2012, we purchased 3.7 million shares of our
common stock for $171.4 million under the $450.0 million program. As of January 29, 2012, $278.6 million
remained available under the $450.0 million 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 revolving credit facility and letter of credit facility permit us to pay
dividends, as long as we are not in default and the payment of dividends would not result in default. During 2011,
2010, and 2009, we paid aggregate dividends of $0.53 per share, $0.45 per share, and $0.26 per share,
respectively.
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