The Gap 2008 Annual Report Download - page 39

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Cash Flows from Investing Activities
Our cash outflows from investing activities are primarily for capital expenditures and purchases of short-term
investments, while cash inflows are primarily the result of proceeds from maturities of short-term investments.
Net cash used for investing activities for fiscal 2008 increased $124 million compared with fiscal 2007 primarily due
to the following:
• $217 million less net maturities of short-term investments in fiscal 2008 compared with fiscal 2007;
• $142 million, which is net of cash acquired, used for the acquisition of Athleta in fiscal 2008; offset by
• $251 million less purchases of property and equipment in fiscal 2008 compared with fiscal 2007.
Net cash used for investing activities for fiscal 2007 increased $124 million compared with fiscal 2006 primarily due
to $110 million more purchases of property and equipment in fiscal 2007 compared with fiscal 2006.
For fiscal 2009, we expect capital expenditures to be about $350 million. We expect to open about 50 new store
locations and to close about 100 store locations. As a result, we expect net square footage to decrease about
2 percent for fiscal 2009.
Cash Flows from Financing Activities
Our cash outflows from financing activities consist primarily of the repurchases of our common stock, dividend
payments, and the repayment of debt, while cash inflows typically consist of proceeds from share-based
compensation. Net cash used for financing activities for fiscal 2008 decreased $1.1 billion compared with fiscal
2007 primarily due to the following:
• $995 million less repurchases of common stock in fiscal 2008 compared with fiscal 2007;
• $188 million less repayments of long-term debt in fiscal 2008 compared with fiscal 2007; offset by
• $50 million less cash inflows from share-based compensation in fiscal 2008 compared with fiscal 2007.
Net cash used for financing activities for fiscal 2007 increased $1.0 billion compared with fiscal 2006 primarily due
to the following:
• $650 million more repurchases of common stock in fiscal 2007 compared with fiscal 2006; and
• $326 million more repayments of long-term debt in fiscal 2007 compared with fiscal 2006.
Free Cash Flow
Free cash flow is a non-GAAP measure. We believe free cash flow is an important metric because it represents a
measure of how much cash a company has available after the deduction of capital expenditures, as we require
regular capital expenditures to build and maintain stores and purchase new equipment to improve our business.
We use this metric internally, as we believe our sustained ability to generate free cash flow is an important
driver of value creation. However, this non-GAAP financial measure is not intended to supersede or replace
our GAAP results.
The following table reconciles free cash flow, a non-GAAP financial measure, from a GAAP financial measure.
Fiscal Year
($ in millions) 2008 2007 2006
Net cash provided by operating activities .......................................... $1,412 $2,081 $1,250
Less: Purchases of property and equipment ........................................ (431) (682) (572)
Freecashflow.............................................................. $ 981 $1,399 $ 678
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