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GPS » Topics » RECONCILIATION OF GAP INC.S EXPECTATION OF $800 to $900 MILLION IN FREE CASH FLOW FOR FISCAL 2005 TO GAAP FINANCIAL MEASURES

This excerpt taken from the GPS 8-K filed Nov 17, 2005.

RECONCILIATION OF GAP INC.’S EXPECTATION OF $800 to $900 MILLION IN FREE CASH FLOW FOR FISCAL 2005 TO GAAP FINANCIAL MEASURES

 

(Range in millions)

   

Fifty-Two Weeks
Ending

January 29, 2006

  

Minimum net cash provided by operating activities

    $ 1,425     $ 1,525  

Less: Estimated net purchase of property and equipment

      (625 )     (625 )
    
 

Free cash flow (a)

    $ 800     $ 900  
    
 

 

(a) Free cash flow is a non-GAAP measure. We believe free cash flow is an important metric, as it represents a measure of how profitable a company is on a cash basis after the deduction of capital expenses, as most companies require regular capital expenditures to build and maintain stores and purchase new equipment to keep the business growing. We use this metric internally, as we believe our sustained ability to increase free cash flow is an important driver of value creation.

 

(b) For discussion of the restatement relating to the accounting for operating leases with scheduled rent and tenant allowances, see note B of the Consolidated Financial Statements in the company’s Form 10-K for the year ended January 29, 2005.
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