The Gap 2014 Annual Report Download - page 37

Download and view the complete annual report

Please find page 37 of the 2014 The Gap annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 96

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96

25
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 during the end-of-year 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
Net cash used for investing activities during fiscal 2014 decreased $28 million compared with fiscal 2013,
primarily due to the following:
• $121 million of proceeds from the sale of a building owned but no longer occupied by the Company in fiscal
2014; partially offset by
• $50 million less maturities of short-term investments in fiscal 2014; and
• $44 million more property and equipment purchases in fiscal 2014.
Net cash used for investing activities during fiscal 2013 decreased $220 million compared with fiscal 2012,
primarily due to the following:
• $129 million used for the acquisition of Intermix in fiscal 2012; and
• $50 million of maturities of short-term investments in fiscal 2013 compared with $50 million of net purchases in
fiscal 2012.
In fiscal 2014, cash used for purchases of property and equipment was $714 million. In fiscal 2015, we expect
cash spending for purchases of property and equipment to be about $800 million.
Cash Flows from Financing Activities
Net cash used for financing activities during fiscal 2014 increased $503 million compared with fiscal 2013,
primarily due to the following:
• $200 million more repurchases of common stock in fiscal 2014;
• $144 million proceeds from issuance of long-term debt in fiscal 2013;
• $62 million more cash dividends paid in fiscal 2014; and
• $59 million less net proceeds from issuances under share-based compensation plans in fiscal 2014.
Net cash used for financing activities during fiscal 2013 decreased $477 million compared with fiscal 2012,
primarily due to the following:
• $419 million of payments of debt in fiscal 2012;
• $144 million of proceeds from issuance of long-term debt in fiscal 2013; and
• $51 million less repurchases of common stock in fiscal 2013 compared with fiscal 2012, partially offset by
• $81 million more dividends paid in fiscal 2013 compared with fiscal 2012; and
• $77 million less net proceeds from issuances under share-based compensation plans in fiscal 2013 compared
with fiscal 2012.
Free Cash Flow
Free cash flow is a non-GAAP financial measure. We believe free cash flow is an important metric because it
represents a measure of how much cash a company has available for discretionary and non-discretionary items
after the deduction of capital expenditures, as we require regular capital expenditures to build and maintain stores
and purchase new equipment to improve our business. We use this metric internally, as we believe our sustained
ability to generate free cash flow is an important driver of value creation. However, this non-GAAP financial
measure is not intended to supersede or replace our GAAP result.