Petsmart 2004 Annual Report Download - page 48

intervals, generally every 28 to 49 days, there is a new auction process. We recorded investments in ARS as of
January 30, 2005 as short-term investments and reclassiÑed ARS as of February 1, 2004 that were previously
included in cash and cash equivalents to short-term investments.
Cash provided by operations increased $36.8 million to $282.6 million in 2004, compared with
$245.8 million in 2003. Cash provided by operating activities was generated primarily by net income of
$171.2 million and non-cash depreciation and amortization expenses of $112.6 million. Cash is used in
operating activities primarily to fund growth in inventory and other assets, net of accounts payable and other
accrued liabilities. Inventory increased to $337.3 million at January 30, 2005 compared to $309.1 million at
February 1, 2004 primarily due to the 83 net new stores in Ñscal 2004.
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 2004,
we incurred $143.0 million in capital expenditures, compared with $171.9 million for 2003. The 2004
expenditures were primarily related to new stores, remodel projects and information systems projects. In
addition, we purchased equipment during Ñscal 2004 that was previously leased.
Net cash used in Ñnancing activities for 2004 was $69.0 million, which is comprised primarily of
$80.0 million for the purchase of treasury stock and $15.9 million for dividends, oÅset by $40.0 million in
proceeds from the exercises of stock options and from our employee stock purchase plan. Net cash used in
Ñnancing activities for 2003 was $0.2 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 authorizing the purchase of up to $150.0 million of our
common stock through Ñscal year 2005. This program replaces the March 2003 program. During Ñscal 2004,
we purchased 2,680,778 shares of our common stock for approximately $80.0 million, or an average price of
$29.84 per share, under the March 2003 and September 2004 programs. At January 30, 2005, approximately
$105.0 million remained available for purchase under these programs.
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. During 2004, we were not in default of our
credit facility. In Ñscal 2004, the following dividends were declared by the Board of Directors:
Dividend Amount Stockholders of
Date Declared per Share Record Date Date Paid
March 23, 2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $0.03 April 30, 2004 May 21, 2004
June 23, 2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $0.03 July 30, 2004 August 20, 2004
September 29, 2004 ÏÏÏÏÏÏÏÏÏÏÏÏ $0.03 October 29, 2004 November 19, 2004
December 14, 2004 ÏÏÏÏÏÏÏÏÏÏÏÏ $0.03 January 28, 2005 February 18, 2005
On March 22, 2005, the Board of Directors declared a quarterly cash dividend of $0.03 per share, payable
on May 20, 2005 to stockholders of record on April 29, 2005.
Common Stock OÅering
In July 2002, we Ñled a registration statement on Form S-3 for a public oÅering of 14,500,000 shares of
our common stock, plus an over-allotment option of 2,175,000 shares. Of these shares, 13,182,584 were oÅered
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