The Gap 2009 Annual Report Download - page 41

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Cash Flows from Operating Activities
In fiscal 2009, net cash provided by operating activities increased $516 million compared with fiscal 2008, primarily
due to the following:
• an increase in net income in fiscal 2009 compared with fiscal 2008; and
• a lower fiscal 2008 bonus payout in the first quarter of fiscal 2009 compared with the fiscal 2007 bonus payout
in the first quarter of fiscal 2008;
For fiscal 2008, net cash provided by operating activities decreased $669 million compared with fiscal 2007,
primarily due to the following:
• an increased balance in accounts payable in fiscal 2007 due to the change in vendor payment terms;
• a higher payout during the first quarter of fiscal 2008 related to the fiscal 2007 bonus compared with the prior
year comparable period;
• a decrease in the gift card, gift certificate, and credit voucher liability due to more redemptions than issuances in
fiscal 2008, compared with more issuances than redemptions in fiscal 2007;
• decreases in accrued liabilities and other current liabilities related to information technology projects and
advertising expenses; offset by
• higher net income in fiscal 2008 compared with fiscal 2007.
Inventory management remains an area of focus. Inventory per square foot at January 30, 2010 was relatively flat
compared with inventory per square foot at January 31, 2009.
We fund inventory expenditures during normal and peak periods through cash flows from operating activities and
available cash. Our business follows a seasonal pattern, with sales peaking over a total of about eight weeks during
the holiday period. The seasonality of our operations may lead to significant fluctuations in certain asset and
liability accounts between fiscal year-end and subsequent interim periods.
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 2009 increased $139 million compared with fiscal 2008, primarily
due to the following:
• $401 million due to net purchases of short-term investments in fiscal 2009 compared with net maturities in
fiscal 2008; offset by
• $142 million, net of cash acquired, used for the acquisition of Athleta in September 2008; and
• $97 million less purchases of property and equipment in fiscal 2009 compared with fiscal 2008.
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, net of cash acquired, used for the acquisition of Athleta in September 2008; offset by
• $251 million less purchases of property and equipment in fiscal 2008 compared with fiscal 2007.
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