Banana Republic 2005 Annual Report Download - page 28

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26 gap inc. 2005 annual report
For fiscal 2005, cash flows used for financing activities increased $244 million compared with fiscal 2004 and increased $1.2 billion in fiscal 2004
compared to fiscal 2003. In fiscal 2005, we repurchased $2.0 billion of common stock and reissued $27 million of treasury stock for Employee Stock
Purchase Plans. We also received $110 million from the issuance of common and treasury stock. In addition, we completed the redemption of our
Senior Convertible notes as of March 31, 2005 and approximately $0.5 million was paid in cash redemption. See Note B to the accompanying
Consolidated Financial Statements.
In fiscal 2004, we repurchased $1.0 billion of common stock and reissued $23.5 million of treasury stock for Employee Stock Purchase Plans. We
received $130 million from the issuance of common and treasury stock. In addition, we repurchased $596 million of domestic notes in the open
market, including the early retirement of our 2005 notes and we paid off the remaining outstanding balance of our €227 million 5-year euro bond
($275 million), which was due on September 30, 2004.
Dividend Policy
In determining whether to, and at what level to, declare a dividend, we considered a number of financial factors, including sustainability and financial
flexibility, as well as other factors including operating performance and capital resources. While we intend to increase dividends over time at a rate
greater than our growth in net income, we will balance future increases with the corresponding cash requirements of growing our businesses.
For fiscal 2005, net cash provided by investing activities increased $103 million compared with fiscal 2004, as we released $959 million of cash re-
quired as collateral to our letter of credit agreements. Maturities of short-term investments reinvested were less than purchases of new investments
in fiscal 2005, compared to the prior year. For fiscal 2004, net cash used for investing activities decreased $2.5 billion compared with fiscal 2003.
Maturities of short-term investments reinvested were greater than purchases of new investments in fiscal 2004 compared to the prior year, and we
released $337 million of restricted cash required as collateral to our letter of credit agreements.
In fiscal 2005 and 2004, capital expenditures totaled approximately $600 million and $419 million, respectively. The majority of these expenditures in
both fiscal years were used for new store locations, store remodels and information technology.
For fiscal 2006, we expect capital expenditures to be about $675 million, primarily for new stores, remodels and information technology infrastructure
and projects. We expect to open about 175 new store locations and to close about 135 store locations. New store locations will be weighted toward
Old Navy, while Gap stores will account for the majority of locations closed. As a result, we expect net square footage to increase 1 to 2 percent for
fiscal 2006. We expect to fund these capital expenditures with cash flows from operations and available cash. The breakdown of our fiscal 2006
capital expenditures estimate is outlined in the table below:
Cash Flows from Financing Activities
52 Weeks Ended
($ in millions) January 28, 2006 January 29, 2005 January 31, 2004
Payments of long-term debt $ - $ (871) $ (668)
Issuance of common stock 110 130 85
Purchase of treasury stock, net of reissuances (1,971) (976) 26
Cash dividends paid (179) (79) (79)
Net cash used for financing activities $ (2,040) $ (1,796) $ (636)
Projected
Fifty-Three Weeks Ending
($ in millions) February 3, 2007
New stores $ 270
Existing stores 200
Information technology 130
Headquarters and distribution centers 75
Total capital investments $ 675