Petsmart 2014 Annual Report Download - page 53

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Table of Contents
by incremental increases in merchant receivables of $20.2 million and deferred income tax assets of $17.3 million in 2012 as
compared to 2011.
Net cash used in investing activities consisted primarily of expenditures associated with opening new stores, reformatting
existing stores, expenditures associated with equipment and computer software in support of our system initiatives, and other
expenditures to support our growth plans and initiatives. Net cash used in investing activities was $138.2 million for 2013,
$114.6 million in 2012, and $155.4 million in 2011. The primary differences between 2013 and 2012 included a $10.4 million
increase in purchases of investments, a $10.4 million decrease in maturities of investments, and an $8.4 million increase in
cash paid for property and equipment. The primary differences between 2012 and 2011 were a decrease in purchases of
investments of $34.7 million, 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.
Net cash used in financing activities was $520.2 million for 2013, $545.9 million for 2012, and $369.4 million for 2011.
Cash used in 2013 consisted primarily of cash paid for treasury stock, payments on capital lease obligations, and cash
dividends paid to stockholders, offset by net proceeds from common stock issued under equity incentive plans. The primary
differences contributing to the decrease between 2013 and 2012 were a $61.6 million change in bank overdraft and other
financing activities, and a $29.3 million decrease in cash dividends paid to stockholders, as the dividend from the fourth
quarter of 2012 was paid in December of 2012, rather than February of 2013. This was offset by a $50.1 million increase in
cash paid for treasury stock. The primary differences between 2012 and 2011 were an increase in cash paid for treasury stock
of $98.5 million and a decrease in bank overdraft of $59.0 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.
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 2,
2014
February 3,
2013
January 29,
2012
(52 weeks) (53 weeks) (52 weeks)
Net cash provided by operating activities $ 615,180 $ 653,007 $ 575,420
Cash paid for property and equipment (146,822) (138,467) (120,720)
Free cash flow, a non-GAAP measure $ 468,358 $ 514,540 $ 454,700
For 2013, our free cash flow decreased primarily due to a change in accrued bonus, deferred compensation withholding,
and accrued payroll. 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.
Share Purchase Programs
In September 2013, the Board of Directors approved a share purchase program authorizing the purchase of up to $535.0
million through January 31, 2015. The $535.0 million program commenced on October 1, 2013, and was in addition to any
unused amount remaining under the previous $525.0 million program. We completed the $525.0 million program during the
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