Petsmart 2012 Annual Report Download - page 37

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a decrease in purchases of investments of $34.7 million, and an increase in maturities of investments of $13.0 million, offset by
an increase in cash paid for property and equipment of $17.8 million. The primary difference between 2011 and 2010 was purchases
of investments.
Net cash used in financing activities was $545.9 million for 2012, $369.4 million for 2011 and $328.1 million for 2010. Cash
used in 2012 consisted primarily of cash paid for treasury stock, payments of cash dividends, payments on capital lease obligations,
and a decrease in our bank overdraft, offset by net proceeds from common stock issued under equity incentive plans and excess
tax benefits from stock-based compensation. The primary difference between 2012 and 2011 was an increase in cash paid for
treasury stock of $98.5 million and a decrease in bank overdraft of $59.0 million. The primary differences between 2011 and 2010
were an increase in cash paid for treasury stock of $73.5 million and an increase in our bank overdraft of $31.2 million.
Free Cash Flow
Free cash flow is considered a non-GAAP financial measure under the SEC's rules. Management believes that free cash flow
is an important financial measure for use in evaluating our financial performance and our ability 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 used by other companies. 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
February 3,
2013 January 29,
2012 January 30, 2011
(53 weeks) (52 weeks) (52 weeks)
Net cash provided by operating activities............................................................ $ 653,007 $ 575,420 $ 457,645
Cash paid for property and equipment................................................................. (138,467)(120,720)(125,074)
Payments of capital lease obligations .................................................................. (64,462)(54,437)(51,668)
Free cash flow, a non-GAAP measure................................................................. $ 450,078 $ 400,263 $ 280,903
For 2012, our free cash flow increased primarily due to an increase in net income and an increase in trade accounts payable
resulting from the extension of vendor payment terms. This was partially offset by incremental increases in merchant receivables,
deferred income tax assets and capital spending as compared to 2011. 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 payment terms, a reduction
in growth of merchandise inventory, receipt of a dividend from Banfield, and a decrease in capital spending during 2011.