Petsmart 2006 Annual Report Download - page 44

Our primary long-term capital requirements consist of opening or acquiring new stores, reformatting existing
stores, expenditures associated with equipment and computer software in support of our system initiatives,
PetsHotel construction costs, costs to expand our distribution network and other expenditures to support our
growth plans and initiatives. For fiscal 2006, we used $241.1 million in cash for capital expenditures, compared with
$165.7 million for fiscal 2005. The fiscal 2006 expenditures were primarily related to new stores, remodel projects,
information systems projects and fixtures and equipment for a new distribution center.
Net cash used in financing activities for fiscal 2006 was $145.0 million, which is comprised primarily of
$161.9 million for the purchase of treasury stock, $19.0 million for payments on capital lease obligations and
$16.7 million for dividends, offset by $36.8 million in proceeds and tax benefits from stock issued under our equity
incentive plans and a $15.7 million increase in our bank overdraft. The primary difference between fiscal 2006 and
2005 was a change in the amount of treasury stock purchased.
Common Stock Purchase Program
In April 2000, the Board of Directors approved a program 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, which replaced the March 2003 program, authorizing the purchase of up to
$150.0 million of our common stock through fiscal 2005. During the first quarter of fiscal 2005, we purchased
approximately 3.6 million shares of our common stock for $105.0 million, which completed the authorized
purchase of $150.0 million of our common stock under the September 2004 program.
In June 2005, the Board of Directors approved a program authorizing the purchase of up to $270.0 million of
our common stock through fiscal 2006. In August 2006, the Board of Directors increased the amount remaining
under the June 2005 share purchase program by $141.7 million, to bring the share purchase capacity under the
program to $250.0 million and extended the term of the program to August 9, 2007.
During fiscal 2006, we purchased approximately 6.3 million shares of our common stock for approximately
$161.9 million under the June 2005 share purchase program. At January 28, 2007, the amount remaining under the
June 2005 share purchase program was $89.9 million.
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 and letter of credit facility permit us to pay dividends, so long as
we are not in default and the payment of dividends would not result in default. In fiscal 2006, the Board of Directors
declared the following dividends:
Date Declared
Dividend Amount
per Share
Stockholders of
Record Date Date Paid
March 28, 2006 .................. $0.03 April 28, 2006 May 12, 2006
June 22, 2006 ................... $0.03 July 28, 2006 August 11, 2006
September 20, 2006............... $0.03 October 27, 2006 November 10, 2006
December 12, 2006 ............... $0.03 January 26, 2007 February 9, 2007
On March 27, 2007, the Board of Directors declared a quarterly cash dividend of $0.03 per share, payable on
May 11, 2007 to stockholders of record on April 27, 2007.
Operating Capital and Capital Expenditure Requirements
Substantially all our stores are leased facilities. We opened 82 net new stores in fiscal 2006. Generally, each
new store requires capital expenditures of approximately $0.9 million for fixtures, equipment and leasehold
improvements, approximately $0.3 million for inventory and approximately $0.1 million for preopening costs. We
expect capital spending to be approximately $250.0 million to $260.0 million for fiscal 2007, to open new stores and
new PetsHotels, to fixture and equip a new distribution center in Newnan, Georgia, which is expected to open in
fiscal 2007, and a new distribution center in Reno, Nevada which is expected to open in fiscal 2008, to continue our
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