UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 28, 2017April 29, 2023
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-7562
THE GAP, INC.
(Exact name of registrant as specified in its charter)
Delaware94-1697231
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
Two Folsom Street, San Francisco, California94105
(Address of principal executive offices)(Zip code)
Two Folsom Street
San Francisco, California 94105
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (415) 427-0100

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.05 par valueGPSThe New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☑No  ☐
Yes  ☑ No  ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☑    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☑Accelerated filer☐ Non-accelerated filer☐ Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☑
Yes  ☐    No  ☑
The number of shares of the registrant’s common stock outstanding as of November 15, 2017May 19, 2023 was 388,857,073.

368,056,655.



FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements other than those that are purely historical are forward-looking statements. Words such as “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” “project,” and similar expressions also identify forward-looking statements. Forward-looking statements include, but are not limited to, statements regarding the following:
•the potential impact of global economic conditions on the assumptions and estimates used when preparing the Condensed Consolidated Financial Statements;
•the impact of recent accounting pronouncements;
•the adoptiontiming of revenue recognition of upfront payments related to our new accounting standards;credit card program agreements with Barclays and Mastercard;
•costs expected to be incurred in connection with our restructuring plan and the timing of actions associated with the reduction of our workforce;
•the timing of recognition in income of unrealized gains and losses from designated cash flow hedges into income;hedges;
the impact of the potential settlement of outstanding tax matters;
•the impact of losses due to indemnification obligations;obligations on the Condensed Consolidated Financial Statements;
•the outcome of proceedings, lawsuits, disputes, and claims;
claims, including the impact of continuing depreciationsuch actions on the Condensed Consolidated Financial Statements and our financial results;
•our arrangements with third parties to operate stores and websites selling apparel and related products under our brand names;
•our plans to rationalize the Gap and Banana Republic store fleet by reducing the number of certain foreign currencies on gross margins for our foreign subsidiaries;Gap and Banana Republic stores in North America;
current cash balances and cash flows being sufficient•managing inventory to support a healthy merchandise margin;
•reducing and optimizing our fixed cost structure to improve profitability and manage through current macroeconomic challenges;
•driving sales through assortment improvements and a balanced and relevant category mix;
•driving creative excellence and delivering product that offers value to customers through a combination of fit, quality, brand, and price;
•prioritizing asset-light growth through licensing, online, and franchise partnerships globally;
•optimizing investments in our four purpose-led lifestyle brands to drive relevance and gain market share;
•attracting and retaining strong talent in our businesses and functions;
•continuing to integrate social and environmental sustainability into business operations, including growth initiatives and planned capital expenditures;practices to support long-term growth;
•our ability to supplement near-term liquidity, if necessary, with our $500 million revolving credit facilitythe ABL Facility or other available market instruments;
•the impact of seasonality and global economic conditions on certain asset and liability accounts as well as cash inflows and outflows;
•the seasonalityability of our operations;cash flows from our operations, current balances of cash and cash equivalents, the Senior Notes and the ABL Facility, and other available market instruments to support our business operations and liquidity requirements;
•the importance of our sustained ability to generate free cash flow, which is a non-GAAP financial measure and is defined and discussed in more detail in Item 2 of Part 1 of this Form 10-Q below;
•our dividend payments in fiscal 2017;policy, including the potential timing and amounts of future dividends; and
•the impact of changes in internal control over financial reporting, and assessing the impact of our restructuring plan on our internal control over financial reporting.
Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, without limitation, the following:
•the overall global economic and geopolitical environment and the impact on consumer spending patterns;
•the risk that inflationary pressures continue to negatively impact gross margins or that we are unable to pass along price increases;
•the risk that restructuring our business may not generate the intended benefits and projected cost savings to the extent or on the timeline as expected;
•the risk that we or our franchisees willmay be unsuccessful in gauging apparel trends and changing consumer preferences including channel preferences;or responding with sufficient lead time;


•the risk that we may be unable to manage or protect our inventory effectively and the resulting impact on our gross margins, sales and results of operations;
•the risk that we fail to manage key executive succession and retention and to continue to attract and retain qualified personnel;
•the risk that we fail to maintain, enhance, and protect our brand image and reputation;
•the highly competitive nature of our business in the United States and internationally;
the risk•engaging in or seeking to engage in strategic transactions that failureare subject to maintain, enhance,various risks and protect our brand image could have an adverse effect on our results of operations;uncertainties;
the risk that the failure to attract and retain key personnel, or effectively manage succession, could have an adverse impact on our results of operations;
the risk that trade matters could increase the cost or reduce the supply of apparel available to us and adversely affect our business, financial condition, and results of operations;
the risk that changes in the regulatory or administrative landscape could adversely affect our financial condition, strategies, and results of operations;
•the risk that our investments in customer, digital, and customeromni-channel shopping initiatives may not deliver the results we anticipate;
the risk that if we are unable to manage our inventory effectively, our gross margins will be adversely affected;
the risk that we are subject to data or other security breaches that may result in increased costs, violations of law, significant legal and financial exposure, and a loss of confidence in our security measures, which could have an adverse effect on our results of operations and our reputation;
the risk that foreign currency exchange rate fluctuations could adversely impact our financial results;
•the risks to our business, including our costs and supply chain, associated with global sourcing and manufacturing;
the risk that changes in global economic conditions or consumer spending patterns could adversely impact our results of operations;
the risks to our efforts to expand internationally, including our ability to operate under a global brand structure and operating in regions where we have less experience;
•the risks to our reputation or operations associated with importing merchandise from foreign countries, including failure of our vendors to adhere to our Code of Vendor Conduct;
•the risk of data or other security breaches or vulnerabilities that may result in increased costs, violations of law, significant legal and financial exposure, and a loss of confidence in our security measures;
•the risk that failures of, or updates or changes to, our IT systems may disrupt our operations;
•natural disasters, public health crises, political crises, negative global climate patterns, or other catastrophic events;
•the ongoing conflict between Russia and Ukraine and the impact on global market stability;
•the risk that our franchisees’ operation of franchise stores isefforts to expand internationally may not directly withinbe successful;
•the risk that our controlfranchisees and licensees could impair the value of our brands;brands or fail to make payments for which we are liable;
•the risk that trade matters could increase the cost or reduce the supply of apparel available to us;
•the risk of foreign currency exchange rate fluctuations;
•the risk that our comparable sales and margins may experience fluctuations, that the seasonality of our business may experience changes, or that we may fail to meet financial market expectations;
•the risk that we or our franchisees willmay be unsuccessful in identifying, negotiating, and securing new store locations and renewing, modifying, or terminating leases for existing store locations effectively;

•the adverse effects of climate change on our operations and those of our franchisees, vendors and other business partners;


•the risk that comparable saleswe will not be successful in defending various proceedings, lawsuits, disputes, and margins will experience fluctuations;claims;
•our failure to comply with applicable laws and regulations and changes in the regulatory or administrative landscape;
•our failure to satisfy regulations and market expectations related to our ESG initiatives;
•reductions in income and cash flow from our credit card arrangement related to our private label and co-branded credit cards;
•the risk that worsening global economic and geopolitical conditions could result in changes to the assumptions and estimates used when preparing the Condensed Consolidated Financial Statements;
•the risk that changes in our business structure, our performance or our industry could result in reductions in our pre-tax income or utilization of existing tax carryforwards in future periods, and require additional deferred tax valuation allowances;
•the risk that changes in the geographic mix and level of income or losses, the expected or actual outcome of audits, changes in deferred tax valuation allowances, and new legislation could impact our effective tax rate;
•the risk that our level of indebtedness may impact our ability to operate and expand our business;
•the risk that we and our subsidiaries may be unable to meet our obligations under our indebtedness agreements;
•the risk that changes in our credit profile or deterioration in market conditions may limit our access to the capital marketsmarkets; and adversely impact our financial position or our business initiatives;
•the risk that updates or changes to our information technology (“IT”) systems may disrupt our operations;
the risk that natural disasters, public health crises, political crises, or other catastrophic events could adversely affect our operations and financial results, or those of our franchisees or vendors;
the risk that reductions in income and cash flow from our marketing and servicing arrangement related to our private label and co-branded credit cards could adversely affect our operating results and cash flows;
the risk that adoption of new accounting pronouncements will impact future results;
the risk that we do not repurchase some or all of the shares we anticipate purchasing pursuant to our repurchase program; and
the risk that we will not be successful in defending various proceedings, lawsuits, disputes, claims, and audits.results.
Additional information regarding factors that could cause results to differ can be found in our Annual Report on Form 10-K for the fiscal year ended January 28, 20172023 and our other filings with the U.S. Securities and Exchange Commission.


Future economic and industry trends that could potentially impact net sales and profitability are difficult to predict. These forward-looking statements are based on information as of November 22, 2017, and weMay 26, 2023. We assume no obligation to publicly update or revise our forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.
We suggest that this document be read in conjunction with Management’s Discussion and Analysis included in our Annual Report on Form 10-K for the fiscal year ended January 28, 2017.2023.





THE GAP, INC.
TABLE OF CONTENTS
 
Page
PART I - FINANCIAL INFORMATION
Page
Item 1.
Item 1.
Financial Statements
1
Condensed Consolidated Balance Sheets as of October 28, 2017,April 29, 2023, January 28, 2017,28, 2023, and October 29, 2016April 30, 2022
1
Condensed Consolidated Statements of IncomeOperations for the Thirteen13 Weeks Ended April 29, 2023 and Thirty-Nine Weeks Ended October 28, 2017 and October 29, 2016April 30, 2022
2
Condensed Consolidated Statements of Comprehensive IncomeLoss for the Thirteen13 Weeks Ended April 29, 2023 and Thirty-Nine Weeks Ended October 28, 2017 and October 29, 2016April 30, 2022
3
Condensed Consolidated Statements of Stockholders' Equity for the 13 Weeks Ended April 29, 2023 and April 30, 2022
4
Condensed Consolidated Statements of Cash Flows for the Thirty-Nine13 Weeks Ended October 28, 2017April 29, 2023 and October 29, 2016 April 30, 2022
45
56
Item 2.
1615
Item 3.
22
Item 4.
2223
PART II - OTHER INFORMATION
Item 1.
2324
Item 1A.
2324
Item 2.
2325
Item 6.
2426




PART I – FINANCIAL INFORMATION
Item 1.Financial Statements.

Item 1.     Financial Statements.
THE GAP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
($ and shares in millions except par value)October 28,
2017		 January 28,
2017		 October 29,
2016		($ and shares in millions except par value)April 29,
2023		January 28,
2023		April 30,
2022
ASSETS     ASSETS
Current assets:     Current assets:
Cash and cash equivalents$1,353
 $1,783
 $1,522
Cash and cash equivalents$1,170 $1,215 $845 
Merchandise inventory2,476
 1,830
 2,398
Merchandise inventory2,299 2,389 3,169 
Other current assets654
 702
 751
Other current assets814 1,013 991 
Total current assets4,483
 4,315
 4,671
Total current assets4,283 4,617 5,005 
Property and equipment, net of accumulated depreciation of $6,041, $5,813, and $5,9002,686
 2,616
 2,662
Property and equipment, net of accumulated depreciation of $4,878, $4,837 and $4,967Property and equipment, net of accumulated depreciation of $4,878, $4,837 and $4,9672,646 2,688 2,791 
Operating lease assetsOperating lease assets3,123 3,173 3,587 
Other long-term assets726
 679
 674
Other long-term assets880 908 874 
Total assets$7,895
 $7,610
 $8,007
Total assets$10,932 $11,386 $12,257 
LIABILITIES AND STOCKHOLDERS’ EQUITY     LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:     Current liabilities:
Current maturities of debt$—
 $65
 $424
Accounts payable1,330
 1,243
 1,413
Accounts payable$1,199 $1,320 $1,599 
Accrued expenses and other current liabilities1,132
 1,113
 1,059
Accrued expenses and other current liabilities1,051 1,219 1,127 
Current portion of operating lease liabilitiesCurrent portion of operating lease liabilities658 667 717 
Income taxes payable134
 32
 19
Income taxes payable10 50 29 
Total current liabilities2,596
 2,453
 2,915
Total current liabilities2,918 3,256 3,472 
Long-term liabilities:     Long-term liabilities:
Revolving credit facilityRevolving credit facility350 350 350 
Long-term debt1,248
 1,248
 1,320
Long-term debt1,487 1,486 1,485 
Lease incentives and other long-term liabilities1,027
 1,005
 1,046
Long-term operating lease liabilitiesLong-term operating lease liabilities3,453 3,517 3,921 
Other long-term liabilitiesOther long-term liabilities539 544 575 
Total long-term liabilities2,275
 2,253
 2,366
Total long-term liabilities5,829 5,897 6,331 
Commitments and contingencies (see Note 11)
 
 
Commitments and contingencies (see Note 10)Commitments and contingencies (see Note 10)
Stockholders’ equity:     Stockholders’ equity:
Common stock $0.05 par value     Common stock $0.05 par value
Authorized 2,300 shares for all periods presented; Issued and Outstanding 389, 399, and 399 shares19
 20
 20
Authorized 2,300 shares for all periods presented; Issued and Outstanding 368, 366, and 369 sharesAuthorized 2,300 shares for all periods presented; Issued and Outstanding 368, 366, and 369 shares18 18 19 
Additional paid-in capital—
 81
 57
Additional paid-in capital47 27 — 
Retained earnings2,965
 2,749
 2,621
Retained earnings2,067 2,140 2,389 
Accumulated other comprehensive income40
 54
 28
Accumulated other comprehensive income53 48 46 
Total stockholders’ equity3,024
 2,904
 2,726
Total stockholders’ equity2,185 2,233 2,454 
Total liabilities and stockholders’ equity$7,895
 $7,610
 $8,007
Total liabilities and stockholders’ equity$10,932 $11,386 $12,257 
See Accompanying Notes to Condensed Consolidated Financial Statements

1


THE GAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOMEOPERATIONS
(Unaudited)
 
13 Weeks Ended 39 Weeks Ended 13 Weeks Ended
($ and shares in millions except per share amounts)October 28,
2017		 October 29,
2016		 October 28,
2017		 October 29,
2016		($ and shares in millions except per share amounts)April 29,
2023		April 30,
2022
Net sales$3,838
 $3,798
 $11,077
 $11,087
Net sales$3,276 $3,477 
Cost of goods sold and occupancy expenses2,313
 2,305
 6,770
 6,948
Cost of goods sold and occupancy expenses2,062 2,381 
Gross profit1,525
 1,493
 4,307
 4,139
Gross profit1,214 1,096 
Operating expenses1,147
 1,104
 3,224
 3,249
Operating expenses1,224 1,293 
Operating income378
 389
 1,083
 890
Operating lossOperating loss(10)(197)
Interest expense18
 20
 53
 57
Interest expense23 20 
Interest income(4) (3) (11) (6)Interest income(13)(1)
Income before income taxes364
 372
 1,041
 839
Income taxes135
 168
 398
 383
Net income$229
 $204
 $643
 $456
Loss before income taxesLoss before income taxes(20)(216)
Income tax benefitIncome tax benefit(2)(54)
Net lossNet loss$(18)$(162)
Weighted-average number of shares - basic391
 399
 395
 398
Weighted-average number of shares - basic367 370 
Weighted-average number of shares - diluted393
 400
 397
 400
Weighted-average number of shares - diluted367 370 
Earnings per share - basic$0.59
 $0.51
 $1.63
 $1.15
Earnings per share - diluted$0.58
 $0.51
 $1.62
 $1.14
Cash dividends declared and paid per share$0.23
 $0.23
 $0.69
 $0.69
Net loss per share - basicNet loss per share - basic$(0.05)$(0.44)
Net loss per share - dilutedNet loss per share - diluted$(0.05)$(0.44)
See Accompanying Notes to Condensed Consolidated Financial Statements

2


THE GAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMELOSS
(Unaudited)
 
 13 Weeks Ended 39 Weeks Ended
($ in millions)October 28,
2017		 October 29,
2016		 October 28,
2017		 October 29,
2016
Net income$229
 $204
 $643
 $456
Other comprehensive income (loss)       
Foreign currency translation(5) (10) 12
 (1)
Change in fair value of derivative financial instruments, net of tax (tax benefit) of $2, $4, $(6), and $(5)23
 39
 (20) (57)
Reclassification adjustment for (gains) losses on derivative financial instruments, net of (tax) tax benefit of $6, $-, $4, and $(6)(1) —
 (6) 1
Other comprehensive income (loss), net of tax17
 29
 (14) (57)
Comprehensive income$246
 $233
 $629
 $399
 13 Weeks Ended
($ in millions)April 29,
2023		April 30,
2022
Net loss$(18)$(162)
Other comprehensive income (loss), net of tax
Foreign currency translation(1)3 
Change in fair value of derivative financial instruments, net of tax expense of $2 and $28 7 
Reclassification adjustment for gains on derivative financial instruments, net of tax expense of $— and $(1)(2)(2)
Other comprehensive income, net of tax5 8 
Comprehensive loss$(13)$(154)
See Accompanying Notes to Condensed Consolidated Financial Statements

3


THE GAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
 Common StockAdditional
Paid-in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income		 
($ and shares in millions except per share amounts)SharesAmountTotal
Balance as of January 28, 2023366 $18 $27 $2,140 $48 $2,233 
Net loss for the 13 weeks ended April 29, 2023(18)(18)
Other comprehensive income (loss), net of tax
Foreign currency translation(1)(1)
Change in fair value of derivative financial instruments8 8 
Amounts reclassified from accumulated other comprehensive income(2)(2)
Issuance of common stock related to stock options and employee stock purchase plans— — 7 7 
Issuance of common stock and withholding tax payments related to vesting of stock units2 — (10)(10)
Share-based compensation, net of forfeitures23 23 
Common stock dividends declared and paid ($0.15 per share)(55)(55)
Balance as of April 29, 2023368 $18 $47 $2,067 $53 $2,185 
Balance as of January 29, 2022371 $19 $43 $2,622 $38 $2,722 
Net loss for the 13 weeks ended April 30, 2022(162)(162)
Other comprehensive income (loss), net of tax
Foreign currency translation3 3 
Change in fair value of derivative financial instruments7 7 
Amounts reclassified from accumulated other comprehensive income(2)(2)
Repurchases and retirement of common stock(4)— (39)(15)(54)
Issuance of common stock related to stock options and employee stock purchase plans1 — 7 7 
Issuance of common stock and withholding tax payments related to vesting of stock units1 — (14)(14)
Share-based compensation, net of forfeitures3 3 
Common stock dividends declared and paid ($0.15 per share)(56)(56)
Balance as of April 30, 2022369 $19 $— $2,389 $46 $2,454 
See Accompanying Notes to Condensed Consolidated Financial Statements

4

THE GAP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
39 Weeks Ended 13 Weeks Ended
($ in millions)October 28,
2017		 October 29,
2016		($ in millions)April 29,
2023		April 30,
2022
Cash flows from operating activities:   Cash flows from operating activities:
Net income$643
 $456
Adjustments to reconcile net income to net cash provided by operating activities:   
Net lossNet loss$(18)$(162)
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:Adjustments to reconcile net loss to net cash provided by (used for) operating activities:
Depreciation and amortization418
 449
Depreciation and amortization137 130 
Amortization of lease incentives(46) (47)
Share-based compensation60
 55
Share-based compensation23 1 
Tax benefit from exercise of stock options and vesting of stock units—
 (4)
Excess tax benefit from exercise of stock options and vesting of stock units—
 (1)
Store asset impairment charges17
 89
Impairment of store assetsImpairment of store assets1 3 
Amortization of debt issuance costsAmortization of debt issuance costs1 2 
Non-cash and other items9
 12
Non-cash and other items26 (3)
Gain on sale of buildingGain on sale of building(47)— 
Deferred income taxes(50) (10)Deferred income taxes5 (1)
Changes in operating assets and liabilities:   Changes in operating assets and liabilities:
Merchandise inventory(636) (513)Merchandise inventory83 (166)
Other current assets and other long-term assets(60) (52)Other current assets and other long-term assets9 57 
Accounts payable55
 294
Accounts payable(102)(336)
Accrued expenses and other current liabilities(46) 10
Accrued expenses and other current liabilities(22)(236)
Income taxes payable, net of prepaid and other tax-related items188
 80
Lease incentives and other long-term liabilities48
 (18)
Net cash provided by operating activities600
 800
Income taxes payable, net of receivables and other tax-related itemsIncome taxes payable, net of receivables and other tax-related items(49)369 
Other long-term liabilitiesOther long-term liabilities(11)20 
Operating lease assets and liabilities, netOperating lease assets and liabilities, net(21)(40)
Net cash provided by (used for) operating activitiesNet cash provided by (used for) operating activities15 (362)
Cash flows from investing activities:   Cash flows from investing activities:
Purchases of property and equipment(463) (383)Purchases of property and equipment(117)(228)
Insurance proceeds related to loss on property and equipment60
 —
Other(3) (1)
Net cash used for investing activities(406) (384)
Net proceeds from sale of buildingNet proceeds from sale of building76 333 
Net proceeds from divestiture activityNet proceeds from divestiture activity11 — 
Net cash provided by (used for) investing activitiesNet cash provided by (used for) investing activities(30)105 
Cash flows from financing activities:   Cash flows from financing activities:
Payments of current maturities of debt(67) —
Proceeds from revolving credit facilityProceeds from revolving credit facility— 350 
Proceeds from issuances under share-based compensation plans23
 25
Proceeds from issuances under share-based compensation plans7 7 
Withholding tax payments related to vesting of stock units(15) (18)Withholding tax payments related to vesting of stock units(10)(14)
Repurchases of common stock(300) —
Repurchases of common stock— (54)
Excess tax benefit from exercise of stock options and vesting of stock units—
 1
Cash dividends paid(272) (275)Cash dividends paid(55)(56)
Net cash used for financing activities(631) (267)
Effect of foreign exchange rate fluctuations on cash and cash equivalents7
 3
Net increase (decrease) in cash and cash equivalents(430) 152
Cash and cash equivalents at beginning of period1,783
 1,370
Cash and cash equivalents at end of period$1,353
 $1,522
Net cash provided by (used for) financing activitiesNet cash provided by (used for) financing activities(58)233 
Effect of foreign exchange rate fluctuations on cash, cash equivalents, and restricted cashEffect of foreign exchange rate fluctuations on cash, cash equivalents, and restricted cash(2)(7)
Net decrease in cash, cash equivalents, and restricted cashNet decrease in cash, cash equivalents, and restricted cash(75)(31)
Cash, cash equivalents, and restricted cash at beginning of periodCash, cash equivalents, and restricted cash at beginning of period1,273 902 
Cash, cash equivalents, and restricted cash at end of periodCash, cash equivalents, and restricted cash at end of period$1,198 $871 
   
Supplemental disclosure of cash flow information:   Supplemental disclosure of cash flow information:
Cash paid for interest during the period$76
 $80
Cash paid for interest during the period$35 $32 
Cash paid for income taxes during the period, net of refunds$260
 $318
Cash paid for income taxes during the period, net of refunds$46 $(420)
See Accompanying Notes to Condensed Consolidated Financial Statements

5


THE GAP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Accounting Policies
Basis of Presentation
The Condensed Consolidated Balance Sheets asIn the opinion ofOctober 28, 2017 and October 29, 2016, and the Condensed Consolidated Statements of Income and the Condensed Consolidated Statements of Comprehensive Income for the thirteen and thirty-nine weeks ended October 28, 2017 and October 29, 2016, and the Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks endedOctober 28, 2017 and October 29, 2016 have been prepared by The Gap, Inc. (the “Company,” “we,” and “our”). In management, the opinion of management, such statements includeaccompanying unaudited Condensed Consolidated Financial Statements contain all normal and recurring adjustments (which include normal recurring adjustments)(except as otherwise disclosed) considered necessary to present fairly our financial position, results of operations, comprehensive loss, stockholders' equity, and cash flows as of October 28, 2017April 29, 2023 and October 29, 2016April 30, 2022 and for all periods presented. The Condensed Consolidated Balance Sheet as of January 28, 20172023 has been derived from our audited financial statements.
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted from these interim financial statements, although the Company believes that the disclosures made are adequate to make the information not misleading. We suggest that you read these Condensed Consolidated Financial Statements in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 28, 2017.2023.
The results of operations for the thirteen and thirty-nine13 weeks endedOctober 28, 2017 April 29, 2023 are not necessarily indicative of the operating results that may be expected for the 53-week period ending February 3, 2018.2024.

Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. Additionally, these estimates and assumptions may change as a result of the impact of global economic conditions such as the uncertainty regarding global inflationary pressures, the Russia-Ukraine crisis, and distress in global credit and banking markets. We will continue to consider the impact of the global economic conditions on the assumptions and estimates used when preparing these Condensed Consolidated Financial Statements including inventory valuation, income taxes and valuation allowances, sales return and bad debt allowances, and the impairment of long-lived assets. If the global economic conditions worsen beyond what is currently estimated by management, such future changes may have an adverse impact on the Company's results of operations and financial position.
Note 2. Recent Restricted Cash
As of April 29, 2023, restricted cash primarily included consideration that serves as collateral for certain obligations occurring in the normal course of business and our insurance obligations. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within our Condensed Consolidated Balance Sheets to the total shown on our Condensed Consolidated Statements of Cash Flows:
($ in millions)April 29,
2023		January 28,
2023		April 30,
2022
Cash and cash equivalents, per Condensed Consolidated Balance Sheets$1,170 $1,215 $845 
Restricted cash included in other current assets— 32 — 
Restricted cash included in other long-term assets28 26 26 
Total cash, cash equivalents, and restricted cash, per Condensed Consolidated Statements of Cash Flows$1,198 $1,273 $871 
Accounting Pronouncements
Except as noted below, the Company has considered all recent accounting pronouncements and has concluded that there are no recent accounting pronouncements that may have a material impact on itsour Condensed Consolidated Financial Statements and disclosures, based on current information.
Recent Accounting Pronouncements Related to Revenue RecognitionASU No. 2022-04, Disclosure of Supplier Finance Program Obligations
In May 2014,September 2022, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update (“ASU”("ASU") No. 2014-09, Revenue from Contracts with Customers,2022-04, Disclosure of Supplier Finance Program Obligations. The ASU is intended to clarifyenhance the principlestransparency of recognizing revenuethe use of supplier finance programs by requiring that the buyers in those programs provide additional disclosures about the program’s nature and create common revenue recognition guidance between U.S. GAAPpotential magnitude, including a rollforward of the obligations and International Financial Reporting Standards.activity during the period. The ASU No. 2014-09, as amended, is effective retrospectively for fiscal years and interim periods within those years beginning after December 15, 2017.
While we do not expect2022, except for the adoption of ASU No. 2014-09 and related ASUs to have a material impact on our Consolidated Financial Statements, we expect the adoption to result in change in the timing of recognizing revenue for breakage income for gift cards, gift certificates, and credit vouchers, credit card reward points and certificate liability, as well as sales where we ship the merchandise to the customer from a distribution center or store. Additionally, under the new guidance, we expect to recognize allowances for estimated sales returns on a gross basis rather than net basis on the Consolidated Balance Sheets.
We are currently evaluating the classification of income earned in connection with our private label and co-branded credit cards. We are also evaluating expanded disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.
We will adopt these ASUs on a modified retrospective basis beginning in the first quarter of fiscal 2018.


Other Recent Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases (with the exception of short-term leases) at the commencement date. The ASUrollforward information, which is effective prospectively for fiscal years and interim periods within those years beginning after December 15, 2018.2023. We are still assessing the impact of this ASU on our Consolidated Financial Statements, but it will result in a substantial increase in our long-term assets and liabilities. We will adopt the ASU beginning in the first quarter of fiscal 2019.
In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The amendments are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Wehave adopted the provisions of this ASU induring the first quarter13 weeks ended April 29, 2023. The ASU does not affect the recognition, measurement, or financial statement presentation of fiscal 2017. Beginning insupplier finance program obligations. See Note 13 of Notes to Condensed Consolidated Financial Statements for information regarding our supply chain finance program.
Note 2. Revenue
Disaggregation of Net Sales
We disaggregate our net sales by channel and also by brand and region. Net sales by region are allocated based on the first quarter of fiscal 2017, we have made the policy election to account for forfeitures when they occur, rather than estimating expected forfeitures, when recognizing share-based compensation cost. We adopted this provisionlocation of the ASU using a modified retrospective transition method,store where the customer paid for and received the merchandise or the distribution center or store from which resultedthe products were shipped.
Net sales disaggregated by channel are as follows:
13 Weeks Ended
($ in millions)April 29, 2023April 30, 2022
Store and franchise sales$2,053 $2,137 
Online sales (1)1,223 1,340 
Total net sales$3,276 $3,477 
__________
(1)Online sales primarily include sales originating from our online channel including those that are picked up or shipped from stores and net sales from revenue-generating strategic initiatives.

6

Net sales disaggregated by brand and region are as follows:
($ in millions)Old Navy GlobalGap GlobalBanana Republic GlobalAthleta GlobalOther (2)Total
13 Weeks Ended April 29, 2023
U.S. (1)$1,659 $496 $374 $309 $3 $2,841 
Canada145 61 36 10 — 252 
Europe— 29 1 1 — 31 
Asia1 77 14 — — 92 
Other regions23 29 7 1 — 60 
Total$1,828 $692 $432 $321 $3 $3,276 
($ in millions)Old Navy GlobalGap GlobalBanana Republic GlobalAthleta GlobalOther (2)Total
13 Weeks Ended April 30, 2022
U.S. (1)$1,673 $497 $416 $344 $3 $2,933 
Canada147 64 43 9 — 263 
Europe1 54 1 2 — 58 
Asia— 141 16 — — 157 
Other regions20 35 6 5 — 66 
Total$1,841 $791 $482 $360 $3 $3,477 
__________
(1)U.S. includes the United States and Puerto Rico.
(2)Primarily consists of net sales from revenue-generating strategic initiatives.
Deferred Revenue
We defer revenue when cash payments are received in advance of performance for unsatisfied obligations related to our gift cards, licensing agreements, outstanding loyalty points, and reimbursements of loyalty program discounts associated with our credit card agreement. For the cumulative-effect adjustment13 weeks ended April 29, 2023, the opening balance of a $3deferred revenue for these obligations was $354 million, increase to retained earningsof which $131 million was recognized as revenue during the period. The closing balance of deferred revenue for these obligations was $334 million as of April 29, 2023.
For the beginning13 weeks ended April 30, 2022, the opening balance of deferred revenue for these obligations was $345 million, of which $127 million was recognized as revenue during the period. The closing balance of deferred revenue for these obligations was $323 million as of April 30, 2022.
In April 2021, the Company entered into agreements with Barclays and Mastercard relating to a new long-term credit card program. In May 2022, the Company launched the new credit card program with Barclays and Mastercard and accordingly, our prior credit card program with Synchrony Financial was discontinued. The Company received an upfront payment of $60 million related to the new agreements prior to the program launch, which is being recognized as revenue over the term of the agreements.
Note 3. Restructuring
On April 25, 2023, the Company's management committed to a restructuring plan (the "Plan") as part of the Company's previously announced efforts to simplify and optimize its operating model and structure. The Plan includes a reduction in workforce of approximately 1,800 employees, primarily in headquarters locations.
In connection with the Plan, the Company incurred $75 million in restructuring costs during the 13 weeks ended April 29, 2023 on a pre-tax basis. The costs incurred in connection with the Plan are as follows:
13 Weeks Ended
April 29, 2023
($ in millions)Cost of Goods Sold and Occupancy ExpensesOperating ExpensesTotal Costs
Employee-related costs$4 $58 $62 
Consulting and other associated costs— 13 13 
Total restructuring costs$4 $71 $75 
7

Including the costs incurred during the 13 weeks ended April 29, 2023, the Company estimates that it will incur approximately $100 million to $120 million in aggregate pre-tax cash expenditures in connection with the Plan, which consists of approximately $75 million to $85 million in employee-related costs and $25 million to $35 million in consulting and other associated costs. The actions associated with the reduction of the Company's workforce under the Plan are expected to be substantially completed by the end of the first quarterhalf of fiscal 2017. Also, all excess2023.
The following table summarizes restructuring costs that will be settled with cash payments and the related liability balances as of April 29, 2023, which are primarily included in accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheet:
($ in millions)Employee-Related CostsConsulting and Other Associated CostsTotal
Balance at January 28, 2023$— $— $— 
Provision62 13 75 
Cash payments— (10)(10)
Balance at April 29, 2023$62 $3 $65 
Note 4. Income Taxes
The effective income tax benefits and tax deficiencies related to share-based payment awards are now reflectedrate was 10.0 percent for the 13 weeks ended April 29, 2023, compared with 25.0 percent for the 13 weeks ended April 30, 2022. The decrease in the Consolidated Statement of Income as a component of the provision for income taxes on a prospective basis, whereas they were recognized in equity under the previous guidance. Additionally, excesseffective tax benefits related to share-based payment awards are now reflected in operating activities, along with other income tax related cash flows, in our Consolidated Statement of Cash Flows on a prospective basis.
In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment. The amendments simplify the subsequent measurement of goodwill and eliminate the two-step goodwill impairment test. The ASU is effective prospectively for fiscal years and interim periods within those years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We early adopted this ASUrate for the interim goodwill impairment test13 weeks ended April 29, 2023 compared with the 13 weeks ended April 30, 2022 is primarily due to changes in the first quarteramount and jurisdictional mix of fiscal 2017. The adoption of this ASU did not have any impact on the Consolidated Financial Statements.pre-tax operations.
In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities. The amendments are intended to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2018. We are currently assessing the potential impact of this ASU on our Consolidated Financial Statements.

Note 3.5. Debt and Credit Facilities
Long-term debt recorded on the Condensed Consolidated Balance Sheets consists of the following:
($ in millions)April 29,
2023		January 28,
2023		April 30,
2022
2029 Notes750 750 750 
2031 Notes750 750 750 
Less: Unamortized debt issuance costs(13)(14)(15)
Total long-term debt$1,487 $1,486 $1,485 
($ in millions)October 28,
2017		 January 28,
2017		 October 29,
2016
Notes$1,248
 $1,248
 $1,248
Japan Term Loan—
 65
 96
Total debt1,248
 1,313
 1,344
Less: Current portion of Japan Term Loan—
 (65) (24)
Total long-term debt$1,248
 $1,248
 $1,320
The scheduled maturity of the Senior Notes is as follows:
Scheduled Maturity ($ in millions)PrincipalInterest RateInterest Payments
October 1, 2029 (1)$750 3.625 %Semi-Annual
October 1, 2031 (2)750 3.875 %Semi-Annual
Total issuance$1,500 
__________
(1)Includes an option to redeem the 2029 Notes, in whole or in part at any time, subject to a make-whole premium, prior to October 1, 2024. On or after October 1, 2024, includes an option to redeem the 2029 Notes, in whole or in part at any time, at stated redemption prices.
(2)Includes an option to redeem the 2031 Notes, in whole or in part at any time, subject to a make-whole premium, prior to October 1, 2026. On or after October 1, 2026, includes an option to redeem the 2031 Notes, in whole or in part at any time, at stated redemption prices.
On September 27, 2021, we completed the issuance of $1.5 billion aggregate principal amount of 3.625 percent senior notes due 2029 (“2029 Notes”) and 3.875 percent senior notes due 2031 (“2031 Notes”) (the 2029 Notes and the 2031 Notes, collectively, the “Senior Notes”). As of October 28, 2017, January 28, 2017, and OctoberApril 29, 2016,2023, the aggregate estimated fair value of our $1.25the Senior Notes was $1.05 billion aggregate principal amount of 5.95 percent notes (the “Notes”) due April 2021 was $1.35 billion, $1.32 billion, and $1.34 billion, respectively, and was based on the quoted market priceprices for each of the Senior Notes (level 1 inputs) as of the last business day of the respective fiscal quarter. The aggregate principal amount of the Senior Notes is recorded in long-term debt inon the Condensed Consolidated Balance Sheets, net of the unamortized discount.debt issuance costs.
As of January 28, 2017 and October 29, 2016, the carrying amount of our 15 billion Japanese yen, four-year, unsecured term loan (“Japan Term Loan”) approximated its fair value, as the interest rate varied depending on quoted market rates (level 1 inputs). Repayments of 2.5 billion Japanese yen were paid on January 15 of each year, and a final repayment of 7.5 billion Japanese yen which was due on January 15, 2018 was paid in full in June 2017. Interest was payable at least quarterly based on an interest rate equal to the Tokyo Interbank Offered Rate plus a fixed margin.
8

In October 2015,On May 7, 2020, we entered into a $400 million unsecured term loansenior secured asset-based revolving credit agreement (the “Term Loan”"ABL Facility"), which was includedpreviously scheduled to expire in current maturitiesMay 2023. On July 13, 2022, we entered into an amendment and restatement of debtthe ABL Facility. Among other changes, the amendment and restatement extended the maturity of the ABL Facility to July 2027, increased the borrowing capacity from $1.8675 billion to $2.2 billion, modified the reference rate from the London Interbank Offered Rate ("LIBOR") to the Secured Overnight Financing Rate ("SOFR"), and reduced the applicable interest rate margin. Following the amendment and restatement, the ABL Facility generally bears interest at a per annum rate based on SOFR (subject to a zero floor) plus a margin, depending on borrowing base availability. The ABL Facility is available for working capital, capital expenditures, and other general corporate purposes.
As of April 29, 2023, the Company's outstanding borrowing under the ABL Facility was $350 million. The variable interest rate on the drawn amount is adjusted SOFR (calculated to include a 0.10% credit adjustment spread) plus a margin of 1.25%. The borrowing was recorded in long-term liabilities on the Condensed Consolidated Balance Sheet as of OctoberApril 29, 2016. The Term Loan was2023.
On May 15, 2023, the Company repaid in full in January 2017. Interest was payable at least quarterly based on an interest rate equal$100 million of the outstanding borrowing under the ABL Facility, which reduced the outstanding borrowing to $250 million.
We also have the London Interbank Offered Rate plus a fixed margin.
We have a $500 million, five-year, unsecured revolving credit facility (the “Facility”), which is scheduledability to expire in May 2020. There were no borrowings and no material outstanding standbyissue letters of credit under the Facility as of October 28, 2017.


We maintain multiple agreements with third parties that make unsecured revolving credit facilities available foron our operations in foreign locations (the “Foreign Facilities”). These Foreign Facilities are uncommitted and are generally available for borrowings, overdraft borrowings, and the issuance of bank guarantees. The total capacity of the Foreign Facilities was $47 million as of October 28, 2017.ABL Facility. As of October 28, 2017, there were no borrowings under the Foreign Facilities. There were $14 million in bank guarantees issued and outstanding primarily related to store leases under the Foreign Facilities as of October 28, 2017.
We have bilateral unsecured standby letter of credit agreements that are uncommitted and do not have expiration dates. As of October 28, 2017,April 29, 2023, we had $15$49 million in standby letters of credit issued under these agreements.the ABL Facility.

Following the closing of the Gap China transaction with Baozun Inc. ("Baozun") on January 31, 2023, the respective Gap China credit facilities were terminated. See Note 12 of Notes to Condensed Consolidated Financial Statements for related disclosures.
Note 4.6. Fair Value Measurements
The Company measures certain financial assets and liabilities at fair value on a recurring basis. The Company categorizes financial assets and liabilities recorded at fair value based upon a three-level hierarchy that considers the related valuation techniques.
There were no material purchases, sales, issuances, or settlements related to recurring level 3 measurements duringfor the thirteen and thirty-nine13 weeks endedOctober 28, 2017 April 29, 2023 or October 29, 2016. There were no transfers of financial assets or liabilities into or out of level 1 and level 2 during the thirteen and thirty-nine weeks endedOctober 28, 2017 or October 29, 2016.April 30, 2022.

9
Financial Assets and Liabilities

Financial assets and liabilities measured at fair value on a recurring basis and cash equivalents held at amortized cost are as follows:
  Fair Value Measurements at Reporting Date Using  Fair Value Measurements at Reporting Date Using
($ in millions)October 28, 2017 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
($ in millions)April 29, 2023Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Assets:       Assets:
Cash equivalents$389
 $28
 $361
 $—
Cash equivalents$2 $— $2 $— 
Derivative financial instruments31
 —
 31
 —
Derivative financial instruments19 — 19 — 
Deferred compensation plan assets46
 46
 —
 —
Deferred compensation plan assets33 33 — — 
Other assetsOther assets4 — — 4 
Total$466
 $74
 $392
 $—
Total$58 $33 $21 $4 
Liabilities:       Liabilities:
Derivative financial instruments$20
 $—
 $20
 $—
Derivative financial instruments$4 $— $4 $— 
  Fair Value Measurements at Reporting Date Using  Fair Value Measurements at Reporting Date Using
($ in millions)January 28, 2017 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
($ in millions)January 28, 2023Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Assets:       Assets:
Cash equivalents$697
 $256
 $441
 $—
Cash equivalents$15 $— $15 $— 
Derivative financial instruments58
 —
 58
 —
Derivative financial instruments11 — 11 — 
Deferred compensation plan assets40
 40
 —
 —
Deferred compensation plan assets34 34 — — 
Other assetsOther assets4 — — 4 
Total$795
 $296
 $499
 $—
Total$64 $34 $26 $4 
Liabilities:       Liabilities:
Derivative financial instruments$21
 $—
 $21
 $—
Derivative financial instruments$20 $— $20 $— 
  Fair Value Measurements at Reporting Date Using  Fair Value Measurements at Reporting Date Using
($ in millions)October 29, 2016 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant  Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
($ in millions)April 30, 2022Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Assets:       Assets:
Cash equivalents$596
 $106
 $490
 $—
Cash equivalents$16 $— $16 $— 
Derivative financial instruments62
 —
 62
 —
Derivative financial instruments44 — 44 — 
Deferred compensation plan assets41
 41
 —
 —
Deferred compensation plan assets40 40 — — 
Other assetsOther assets4 — — 4 
Total$699
 $147
 $552
 $—
Total$104 $40 $60 $4 
Liabilities:       Liabilities:
Derivative financial instruments$49
 $—
 $49
 $—
Derivative financial instruments$1 $— $1 $— 
We have highly liquid fixed and variable income investments classified as cash equivalents, which are placed primarily in time deposits and money market funds.equivalents. We value these investments at their original purchase prices plus interest that has accrued at the stated rate.


Our cash equivalents are placed primarily in time deposits.
Derivative financial instruments primarily include foreign exchange forward contracts. TheSee Note 7 of Notes to Condensed Consolidated Financial Statements for information regarding currencies hedged against changes in the U.S. dollar are Canadian dollars, Japanese yen, British pounds, Euro, Mexican pesos, Chinese yuan, and Taiwan dollars. The fair value of the Company’s derivative financial instruments is determined using pricing models based on current market rates. Derivative financial instruments in an asset position are recorded in other current assets or other long-term assets in the Condensed Consolidated Balance Sheets. Derivative financial instruments in a liability position are recorded in accrued expenses and other current liabilities or lease incentives and other long-term liabilities in the Condensed Consolidated Balance Sheets.dollar.
We maintain the Gap, Inc. Deferred Compensation Plan (“DCP”), which allows eligible employees to defer base compensation and bonus up to a maximum percentage, and non-employee directors to defer compensation up toreceipt of a maximum amount.portion of their Board fees. Plan investments are directed by participants and are recorded at market value and designated for the DCP. The fair value of the Company’s DCP assets is determined based on quoted market prices, and the assets are recorded in other long-term assets inon the Condensed Consolidated Balance Sheets.

10

Nonfinancial Assets
We review the carrying amount of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The fair value of the long-lived assets is determined using level 3 inputs and based on discounted future cash flows of the asset or asset group using a discount rate commensurate with the risk. The asset group is defined as the lowest level for which identifiable cash flows are available and largely independent of the cash flows of other groups of assets, which for our retail stores is primarily at the store level.
During the thirteen weeks ended October 28, 2017, weThere were no material impairment charges recorded a charge for the impairment of long-lived assets of $4 million, which reduced the then carrying amount of the applicable long-lived assets of $5 million to their fair value of $1 million. The impairment charge was recorded in operating expenses in the Condensed Consolidated Statement of Income.
During the thirty-nine weeks ended October 28, 2017, we recorded a charge for the impairment of long-lived assets of $17 million, which reduced the then carrying amount of the applicable long-lived assets of $18 million to their fair value of $1 million. The impairment charge was recorded in operating expenses in the Condensed Consolidated Statement of Income.
In May 2016, the Company announced measures to close its fleet of 53 Old Navy stores in Japan and select Banana Republic stores, primarily internationally. During the thirteen weeks ended October 29, 2016, we recorded charges for impairment of long-lived assets of $2 million related to the announced store closures, and an additional $31 million for long-lived assets that were unrelated toduring the announced measures. The impairment charges were recorded in operating expenses in the Condensed Consolidated Statement of Income and reduced the then carrying amount of the applicable long-lived assets of $34 million to their fair value of $1 million.
During the thirty-nine13 weeks ended OctoberApril 29, 2016, we recorded charges for impairment of long-lived assets of $54 million related to the announced store closures, primarily related to Old Navy Japan, and an additional $35 million for long-lived assets that were unrelated to the announced measures. The impairment charges were recorded in operating expenses in the Condensed Consolidated Statement of Income and reduced the then carrying amount of the applicable long-lived assets of $102 million to their fair value of $13 million.2023 or April 30, 2022.
We review the carrying amount of goodwill and other indefinite-lived intangible assets for impairment annually and whenever events or changes in circumstances indicate that it is more likely than not that the carrying amount may not be recoverable.
There were no impairment charges recorded for goodwill or other indefinite-lived intangible assets for the thirteen and thirty-nine13 weeks ended October 28, 2017April 29, 2023 or October 29, 2016.April 30, 2022.

Note 5.7. Derivative Financial Instruments
We operate in foreign countries, which exposes us to market risk associated with foreign currency exchange rate fluctuations. We use derivative financial instruments to manage our exposure to foreign currency exchange rate risk and do not enter into derivative financial contracts for trading purposes. Consistent with our risk management guidelines, we hedge a portion of our transactions related to merchandise purchases for foreign operations and certain intercompany transactions using foreign exchange forward contracts. These contracts are entered into with large, reputable financial institutions that are monitored for counterparty risk. The currencies hedged against changes in the U.S. dollar are the Canadian dollars,dollar, Japanese yen, British pounds, Euro,pound, New Taiwan dollar, Mexican pesos, Chinese yuan,peso, and Taiwan dollars.Euro. Cash flows from derivative financial instruments are classified as cash flows from operating activities inon the Condensed Consolidated Statements of Cash Flows.



Derivative financial instruments are recorded at fair value on the Condensed Consolidated Balance Sheets as other current assets, other long-term assets, accrued expenses and other current liabilities, or other long-term liabilities.
Cash Flow Hedges
We designate the following foreign exchange forward contracts as cash flow hedges: (1) forward contracts used to hedge forecasted merchandise purchases and related costs denominated in U.S. dollars made by our international subsidiaries whose functional currencies are their local currencies; (2) forward contracts used to hedge forecasted intercompany royalty payments denominated in foreign currencies received by entities whose functional currencies are U.S. dollars; and (3) forward contracts used to hedge forecasted intercompany revenue transactions related to merchandise sold from our regional purchasing entity, whose functional currency is the U.S. dollar, to certain international subsidiaries in their local currencies.as cash flow hedges. The foreign exchange forward contracts entered into to hedge forecasted merchandise purchases and related costs intercompany royalty payments, and intercompany revenue transactions generally have terms of up to 24 months. The effective portion of the gain or loss on the derivative financial instruments is reported as a component of other comprehensive income (loss) and is recognized ininto net income in(loss) during the period in which the underlying transaction impacts the income statement.

Net Investment Hedges
We also use foreign exchange forward contracts to hedge the net assetsCondensed Consolidated Statements of international subsidiaries to offset the foreign currency translation and economic exposures related to our investment in the subsidiaries.

Operations.
Other Derivatives Not Designated as Hedging Instruments
We enter intouse foreign exchange forward contracts to hedge our market risk exposure associated with foreign currency exchange rate fluctuations for certain intercompany balances denominated in currencies other than the functional currency of the entity with the intercompany balance. The gain or loss on the derivative financial instruments that represent economic hedges, as well as the remeasurement impact of the underlying intercompany balances, is recorded in operating expenses inon the Condensed Consolidated Statements of IncomeOperations in the same period and generally offset.offset each other.

11



Outstanding Notional Amounts
We had foreign exchange forward contracts outstanding in the following notional amounts:
($ in millions)October 28,
2017		 January 28,
2017		 October 29,
2016		($ in millions)April 29,
2023		January 28,
2023		April 30,
2022
Derivatives designated as cash flow hedges$873
 $1,101
 $1,201
Derivatives designated as cash flow hedges$330 $441 $373 
Derivatives designated as net investment hedges30
 31
 31
Derivatives not designated as hedging instruments581
 618
 664
Derivatives not designated as hedging instruments599 645 758 
Total$1,484
 $1,750
 $1,896
Total$929 $1,086 $1,131 
Quantitative Disclosures about Derivative Financial Instruments
The fair values of foreign exchange forward contracts are as follows:
($ in millions)October 28,
2017		 January 28,
2017		 October 29,
2016		($ in millions)April 29,
2023		January 28,
2023		April 30,
2022
Derivatives designated as cash flow hedges:     Derivatives designated as cash flow hedges:
Other current assets$16
 $28
 $35
Other current assets$13 $9 $16 
Other long-term assets$4
 $16
 $13
Accrued expenses and other current liabilities$11
 $10
 $26
Accrued expenses and other current liabilities1 5 — 
Lease incentives and other long-term liabilities$2
 $1
 $8
     
Derivatives designated as net investment hedges:     
Other current assets$—
 $—
 $1
Other long-term assets$—
 $—
 $—
Accrued expenses and other current liabilities$2
 $—
 $—
Lease incentives and other long-term liabilities$—
 $—
 $—
     
Derivatives not designated as hedging instruments:     Derivatives not designated as hedging instruments:
Other current assets$11
 $13
 $13
Other current assets6 2 28 
Other long-term assets$—
 $1
 $—
Accrued expenses and other current liabilities$5
 $10
 $14
Accrued expenses and other current liabilities3 15 1 
Lease incentives and other long-term liabilities$—
 $—
 $1
     
Total derivatives in an asset position$31
 $58
 $62
Total derivatives in an asset position$19 $11 $44 
Total derivatives in a liability position$20
 $21
 $49
Total derivatives in a liability position$4 $20 $1 
The majoritySubstantially all of the unrealized gains and losses from designated cash flow hedges as of October 28, 2017April 29, 2023 will be recognized in income (loss) within the next 12 months at the then-current values, which may differ from the fair values as of October 28, 2017April 29, 2023 shown above.
Our foreign exchange forward contracts are subject to master netting arrangements with each of our counterparties and such arrangements are enforceable in the event of default or early termination of the contract. We do not elect to offset the fair values of our derivative financial instruments inon the Condensed Consolidated Balance Sheets, and as such, the fair values shown above represent gross amounts. The amounts subject to enforceable master netting arrangements are $8 million, $18 million, and $9 million as of October 28, 2017, January 28, 2017, and October 29, 2016, respectively. If we did elect to offset, the net amounts of our derivative financial instruments in an asset position would be $23 million, $40 million, and $53 million and the net amounts of the derivative financial instruments in a liability position would be $12 million, $3 million, and $40 million as of October 28, 2017, January 28, 2017 and October 29, 2016, respectively.were not material for all periods presented.
See Note 46 of Notes to Condensed Consolidated Financial Statements for disclosures on the fair value measurements of our derivative financial instruments.


The effective portion of gains and losses on foreign exchange forward contractspre-tax amounts recognized in cash flow hedging and net investment hedging relationships recorded in other comprehensive income and the Condensed Consolidated Statements of Income, on a pre-tax basis,loss related to derivative instruments are as follows:
Location and Amount of Gain
Recognized in Net Loss
13 Weeks Ended
April 29, 2023		13 Weeks Ended
April 30, 2022
($ in millions)Cost of goods sold and occupancy expensesOperating expensesCost of goods sold and occupancy expensesOperating expenses
Total amount of expense line items presented in the Condensed Consolidated Statements of Operations in which the effects of derivatives are recorded$2,062 $1,224 $2,381 $1,293 
Gain recognized in net loss
Derivatives designated as cash flow hedges(2)— (3)— 
Derivatives not designated as hedging instruments— (8)— (22)
Total gain recognized in net loss$(2)$(8)$(3)$(22)
12

13 Weeks Ended
39 Weeks Ended
($ in millions)October 28,
2017
October 29,
2016
October 28,
2017
October 29,
2016
Derivatives in cash flow hedging relationships:       
Gain (loss) recognized in other comprehensive income$25
 $43
 $(26) $(62)
Gain (loss) reclassified into cost of goods sold and occupancy expenses$(5) $2
 $2
 $15
Loss reclassified into operating expenses$—
 $(2) $—
 $(10)
        
Derivatives in net investment hedging relationships:       
Gain (loss) recognized in other comprehensive income$1
 $1
 $(1) $(1)
For the thirteen and thirty-nine weeks endedOctober 28, 2017 and October 29, 2016, there were no amounts of gains or losses reclassified from accumulated other comprehensive income into net income for derivative financial instruments in net investment hedging relationships, as we did not sell or liquidate (or substantially liquidate) any of our hedged subsidiaries during the periods.
Gains and losses on foreign exchange forward contracts not designated as hedging instruments recorded in the Condensed Consolidated Statements of Income, on a pre-tax basis, are as follows:

 13 Weeks Ended 39 Weeks Ended
($ in millions)October 28,
2017		 October 29,
2016		 October 28,
2017		 October 29,
2016
Gain (loss) recognized in operating expenses$10
 $12
 $(13) $(5)

Note 6.8. Share Repurchases
Share repurchase activity is as follows:
 13 Weeks Ended 39 Weeks Ended
($ and shares in millions except average per share cost)October 28,
2017		 October 29,
2016		 October 28,
2017		 October 29,
2016
Number of shares repurchased (1)3.8
 —
 12.5
 —
Total cost$100
 $—
 $300
 $—
Average per share cost including commissions$26.64
 $—
 $24.21
 $—
__________
(1)Excludes13 Weeks Ended
($ and shares withheld to settle employee statutory tax withholding related to the vestingin millions except average per share cost)April 29,
2023		April 30,
2022
Number of stock units.shares repurchased (1)— 3.7 
Total cost$— $54 
Average per share cost including commissions$— $14.47 
_________
(1)Excludes shares withheld to settle employee statutory tax withholding related to the vesting of stock units.
In February 2016, we announced that2019, the Company's Board of Directors (the "Board") approved a $1.0 billion share repurchase authorization of which $700(the "February 2019 repurchase program"). The February 2019 repurchase program had $476 million was remaining as of October 28, 2017.
All of the share repurchases were paid for as of October 28, 2017.April 29, 2023. All common stock repurchased is immediately retired.



Note 7. Accumulated Other Comprehensive Income
Changes in accumulated other comprehensive income by component, net of tax, are as follows:
($ in millions)Foreign Currency Translation Cash Flow Hedges Total
Balance at January 28, 2017$29
 $25
 $54
13 Weeks Ended April 29, 2017:     
Foreign currency translation(4) —
 (4)
Change in fair value of derivative financial instruments—
 —
 —
Amounts reclassified from accumulated other comprehensive income—
 (4) (4)
Other comprehensive loss, net of tax(4) (4) (8)
Balance at April 29, 201725
 21
 46
13 Weeks Ended July 29, 2017:     
Foreign currency translation21
 —
 21
Change in fair value of derivative financial instruments—
 (43) (43)
Amounts reclassified from accumulated other comprehensive income—
 (1) (1)
Other comprehensive income (loss), net of tax21
 (44) (23)
Balance at July 29, 201746
 (23) 23
13 Weeks Ended October 28, 2017:     
Foreign currency translation(5) —
 (5)
Change in fair value of derivative financial instruments—
 23
 23
Amounts reclassified from accumulated other comprehensive income—
 (1) (1)
Other comprehensive income (loss), net of tax(5) 22
 17
Balance at October 28, 2017$41
 $(1) $40
      
($ in millions)Foreign Currency Translation Cash Flow Hedges Total
Balance at January 30, 2016$22
 $63
 $85
13 Weeks Ended April 30, 2016:     
Foreign currency translation31
 —
 31
Change in fair value of derivative financial instruments—
 (89) (89)
Amounts reclassified from accumulated other comprehensive income—
 (7) (7)
Other comprehensive income (loss), net of tax31
 (96) (65)
Balance at April 30, 201653
 (33) 20
13 Weeks Ended July 30, 2016:     
Foreign currency translation(22) —
 (22)
Change in fair value of derivative financial instruments—
 (7) (7)
Amounts reclassified from accumulated other comprehensive income—
 8
 8
Other comprehensive income (loss), net of tax(22) 1
 (21)
Balance at July 30, 201631
 (32) (1)
13 Weeks Ended October 29, 2016:     
Foreign currency translation(10) —
 (10)
Change in fair value of derivative financial instruments—
 39
 39
Amounts reclassified from accumulated other comprehensive income—
 —
 —
Other comprehensive income (loss), net of tax(10) 39
 29
Balance at October 29, 2016$21
 $7
 $28
See Note 5 of Notes to Condensed Consolidated Financial Statements for additional disclosures about reclassifications out of accumulated other comprehensive income and their corresponding effects on the respective line items in the Condensed Consolidated Statements of Income.



Note 8. Share-Based Compensation
Share-based compensation expense recognized in the Condensed Consolidated Statements of Income, primarily in operating expenses, is as follows:
 13 Weeks Ended 39 Weeks Ended
($ in millions)October 28,
2017		 October 29,
2016		 October 28,
2017		 October 29,
2016
Stock units$14
 $14
 $47
 $43
Stock options3
 4
 10
 9
Employee stock purchase plan1
 1
 3
 3
Share-based compensation expense18
 19
 60
 55
Less: Income tax benefit(7) (8) (23) (25)
Share-based compensation expense, net of tax$11
 $11
 $37
 $30

Note 9. Income Taxes
The Company conducts business globally, and as a result, files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as the United States, Canada, France, the United Kingdom, China, Hong Kong, Japan, and India. We are no longer subject to U.S. federal income tax examinations for fiscal years before 2009, and with few exceptions, we are also no longer subject to U.S. state, local, or non-U.S. income tax examinations for fiscal years before 2008.
The Company is in continual discussions with taxing authorities regarding tax matters in the various U.S. and foreign jurisdictions in the normal course of business. As of October 28, 2017, it is reasonably possible that we will recognize a decrease in gross unrecognized tax benefits within the next 12 months of up to $6 million, primarily due to the closing of audits. If we do recognize such a decrease, the net impact on the Condensed Consolidated Statement of Income would not be material.

Note 10. EarningsNet Loss Per Share
Weighted-average number of shares used for earningsnet loss per share is as follows:
 13 Weeks Ended
(shares in millions)April 29,
2023		April 30,
2022
Weighted-average number of shares - basic367 370 
Common stock equivalents (1)— — 
Weighted-average number of shares - diluted367 370 
_________
 13 Weeks Ended 39 Weeks Ended
(shares in millions)October 28,
2017		 October 29,
2016		 October 28,
2017		 October 29,
2016
Weighted-average number of shares - basic391
 399
 395
 398
Common stock equivalents2
 1
 2
 2
Weighted-average number of shares - diluted393
 400
 397
 400
(1)For the 13 weeks ended April 29, 2023 and April 30, 2022, the dilutive impact of outstanding options and awards was excluded from dilutive shares as a result of the Company's net loss for the periods.
The above computations of weighted-average number of shares – diluted exclude 9 million and 8 millionanti-dilutive shares related to stock options and other stock awards excluded from the computation of weighted-average number of shares – diluted were 7 million and 12 million for the thirteen13 weeks ended October 28, 2017 April 29, 2023 and October 29, 2016, respectively, and 9 million and 7 million shares related to stock options and other stock awards for the thirty-nine weeks ended October 28, 2017 and October 29, 2016,April 30, 2022, respectively, as their inclusion would have an anti-dilutive effect on earningsnet loss per share.

Note 11.10. Commitments and Contingencies
We are a party to a variety of contractual agreements under which we may be obligated to indemnify the other party for certain matters. These contracts primarily relate to our commercial contracts, operating leases, trademarks, intellectual property, financial agreements, and various other agreements. Under these contracts, we may provide certain routine indemnifications relating to representations and warranties (e.g., ownership of assets, environmental or tax indemnifications), or personal injury matters. The terms of these indemnifications range in duration and may not be explicitly defined. Generally, the maximum obligation under such indemnifications is not explicitly stated, and as a result, the overall amount of these obligations cannot be reasonably estimated. Historically, we have not made significant payments for these indemnifications. We believe that if we were to incur a loss in any of these matters, the loss would not have a material effect on our Condensed Consolidated Financial Statements taken as a whole.


As a multinational company, we are subject to various proceedings, lawsuits, disputes, and claims (“Actions”("Actions") arising in the ordinary course of our business. Many of these Actions raise complex factual and legal issues and are subject to uncertainties. As of October 28, 2017,April 29, 2023, Actions filed against us included commercial, intellectual property, customer, employment, securities, and data privacy claims, including class action lawsuits. The plaintiffs in some Actions seek unspecified damages or injunctive relief, or both. Actions are in various procedural stages and some are covered in part by insurance. As of October 28, 2017, April 29, 2023, January 28, 2017,2023, and October 29, 2016,April 30, 2022, we recorded a liability for an estimated loss if the outcome of an Action is expected to result in a loss that is considered probable and reasonably estimable. The liability recorded as of October 28, 2017, January 28, 2017, and October 29, 2016was not material for any individual Action or in total.total for all periods presented. Subsequent to October 28, 2017April 29, 2023, and through the filing date of this Quarterly Report on Form 10-Q, no information has become available that indicates a change is required that would be material to our Condensed Consolidated Financial Statements taken as a whole.
We cannot predict with assurance the outcome of Actions brought against us. Accordingly, developments, settlements, or resolutions may occur and impact income in the quarter of such development, settlement, or resolution. However, we do not believe that the outcome of any current Action would have a material effect on our Condensed Consolidated Financial Statements taken as a whole.
Fire at the Fishkill Distribution Center
13
On August 29, 2016, a fire occurred in one of the buildings at a Company-owned distribution center campus in Fishkill, New York. The impacted building primarily held Gap and Banana Republic products for distribution to stores and fulfilled online orders for Gap and Old Navy in the Northeast region of the United States.
The Company maintains property and business interruption insurance coverage. Based on the provisions of the Company’s insurance policies, the Company recorded insurance recoveries based on the determination that recovery of certain fire-related costs is probable. During fiscal 2016, the Company incurred a total of $133 million in certain fire-related costs. In January of fiscal 2016, the Company agreed upon a partial settlement of $159 million related to the loss on inventory and recorded a gain of $73 million, representing the excess over the loss on inventory, which was recorded in operating expenses in the Consolidated Statement of Income. During fiscal 2016, the Company received $174 million of insurance proceeds. As a result, the insurance receivable balance was $32 million as of January 28, 2017 and was recorded in other current assets in the Consolidated Balance Sheet.


During the thirteen and thirty-nine weeks ended October 28, 2017, the Company incurred immaterial costs and $15 million, respectively, in certain fire-related costs for which the Company recorded insurance recoveries based on the determination that recovery of these fire-related costs is probable. In June 2017, the Company also agreed upon a partial settlement and recorded a gain of $64 million, primarily related to property and equipment, representing the excess over the loss on fire-related recoverable costs, which was recorded in operating expenses in the Condensed Consolidated Statement of Income.

The Company received $29 million and $131 million of insurance proceeds during the thirteen and thirty-nine weeks ended October 28, 2017, respectively. Included in the $29 million was $20 million in insurance proceeds related to business interruption, which were recorded as a reduction to cost of goods sold and occupancy expenses in the Condensed Consolidated Statement of Income. The remaining $9 million and $111 million of insurance proceeds received during the thirteen and thirty-nine weeks ended October 28, 2017, respectively, were recorded as a reduction to the insurance receivable balance. As a result, the insurance proceeds received in excess of expected recoveries was less than $1 million as of October 28, 2017.

We will continue to incur additional logistics costs related to the disruption to our North American supply chain network. As settlements are reached, any recoveries related to business interruption insurance will be recognized as a reduction to cost of goods sold and occupancy expenses in the Condensed Consolidated Statements of Income.
During the thirty-nine weeks ended October 28, 2017, we allocated $60 million of insurance proceeds to the loss on property and equipment based on the partial settlement of claims reported as insurance proceeds related to loss on property and equipment, a component of cash flows from investing activities, in the Condensed Consolidated Statement of Cash Flows.

Note 12.11. Segment Information
The Gap, Inc. is a global retailer that sells apparel, accessories, and personal care products under the Gap, Old Navy, Banana Republic, Athleta, Intermix, and Weddington Way brands. We identify our operating segments according to how our business activities are managed and evaluated. As of October 28, 2017,April 29, 2023, our operating segments included Gap Global,included: Old Navy Global, Gap Global, Banana Republic Global, and Athleta Global. Each operating segment has a brand president who is responsible for various geographies and Intermix.channels. Each of our brands serves customer demand through stores and online channels, leveraging our omni-channel capabilities that allow customers to shop seamlessly across all of our brands. We have determined that each of our operating segments share similar economic and other qualitative characteristics, and therefore the results of our operating segments are aggregated into one reportable segment as of October 28, 2017.April 29, 2023. We continually monitor and review our segment reporting structure in accordance with authoritative guidance to determine whether any changes have occurred that would impact our reportable segments.


Net salesSee Note 2 of Notes to Condensed Consolidated Financial Statements for disaggregation of revenue by channel and by brand and regionregion.
Note 12. Divestitures
On November 7, 2022, we signed agreements to transition our Gap China and Gap Taiwan ("Gap Greater China") operations to a third party, Baozun, to operate Gap Greater China stores and the in-market website as a franchise partner, subject to regulatory approvals and closing conditions. On January 31, 2023, the Gap China transaction closed with Baozun. The impact to the Condensed Consolidated Financial Statements upon divestiture was not material for the 13 weeks ended April 29, 2023. The Gap Taiwan operations will continue to operate as usual until regulatory approvals and closing conditions are met.
On February 1, 2022, we completed the transition of our Gap Italy operations to a third party, OVS S.p.A. ("OVS"), to operate Gap Italy stores as follows:
($ in millions) Gap Global Old Navy Global 
Banana
Republic Global
 Other (2) Total Percentage of Net Sales
13 Weeks Ended October 28, 2017      
U.S. (1) $750
 $1,587
 $467
 $200
 $3,004
 79%
Canada 109
 143
 57
 1
 310
 8
Europe 154
 —
 4
 —
 158
 4
Asia 278
 13
 21
 —
 312
 8
Other regions 31
 15
 8
 —
 54
 1
Total $1,322
 $1,758
 $557
 $201
 $3,838
 100%
             
($ in millions) Gap Global Old Navy Global 
Banana
Republic Global
 Other (3) Total Percentage of Net Sales
13 Weeks Ended October 29, 2016      
U.S. (1) $756
 $1,507
 $479
 $172
 $2,914
 77%
Canada 102
 131
 55
 1
 289
 8
Europe 150
 —
 14
 —
 164
 4
Asia 296
 55
 25
 —
 376
 10
Other regions 36
 12
 7
 —
 55
 1
Total $1,340
 $1,705
 $580
 $173
 $3,798
 100%
             
($ in millions) Gap Global Old Navy Global 
Banana
Republic Global
 Other (2) Total Percentage of Net Sales
39 Weeks Ended October 28, 2017      
U.S. (1) $2,137
 $4,609
 $1,396
 $633
 $8,775
 79%
Canada 277
 387
 156
 2
 822
 8
Europe 435
 —
 11
 —
 446
 4
Asia 780
 34
 69
 —
 883
 8
Other regions 83
 47
 21
 —
 151
 1
Total $3,712
 $5,077
 $1,653
 $635
 $11,077
 100%
             
($ in millions) Gap Global Old Navy Global 
Banana
Republic Global
 Other (3) Total Percentage of Net Sales
39 Weeks Ended October 29, 2016      
U.S. (1) $2,203
 $4,335
 $1,456
 $550
 $8,544
 77%
Canada 264
 358
 159
 2
 783
 7
Europe 453
 —
 45
 —
 498
 5
Asia 856
 171
 80
 —
 1,107
 10
Other regions 100
 32
 23
 —
 155
 1
Total $3,876
 $4,896
 $1,763
 $552
 $11,087
 100%
__________
(1)U.S. includes the United States, Puerto Rico, and Guam.
(2)Includes Athleta, Intermix, and Weddington Way.
(3)Includes Athleta and Intermix.
Net sales by region are allocated baseda franchise partner. The impact to the Condensed Consolidated Financial Statements upon divestiture was not material for the 13 weeks ended April 30, 2022. As of April 30, 2022, the Company also reclassified certain assets as held for sale assets that were expected to be sold in the next 12 months related to our distribution center in Rugby, England. The aggregate carrying amount of the assets held for sale, primarily consisting of fixed assets, was $45 million and was recorded within other current assets on the locationCondensed Consolidated Balance Sheet as of April 30, 2022.
Note 13. Supply Chain Finance Program
Our voluntary supply chain finance ("SCF") program provides certain suppliers with the opportunity to sell their receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. We are not a party to the agreements between our suppliers and the financial institutions and our payment terms are not impacted by whether a supplier participates in the SCF program.
We may agree to side letters with participating financial institutions related to the SCF program that require us to transfer a certain amount of cash to be used as collateral for our payment obligations in a specified period. These collateral amounts, if applicable, are classified as restricted cash on our Condensed Consolidated Balance Sheets. There were no collateral amounts under the SCF program as of April 29, 2023 and April 30, 2022. The collateral amount under the SCF program was $30 million as of January 28, 2023. Additionally, our lenders under the ABL Facility who also participate in the SCF program have their related financings secured pursuant to the terms of the store whereABL Facility.
The Company's outstanding obligations under the customer paid forSCF program were $322 million, $316 million, and received$238 million as of April 29, 2023, January 28, 2023, and April 30, 2022, respectively, and were included in accounts payable on the merchandise or the distribution center or store from which the products were shipped.

Condensed Consolidated Balance Sheets.

14
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations.

Item 2.     Management's Discussion and Analysis of Financial Condition and Results of Operations.
OUR BUSINESS
We are a global retailercollection of purpose-led, lifestyle brands offering apparel, accessories, and personal care products for men, women, and children under the Gap, Old Navy, Gap, Banana Republic, Athleta, Intermix, and Weddington WayAthleta brands. We have Company-operated stores in the United States, Canada, the United Kingdom, France, Ireland, Japan, Italy, China, Hong Kong, Taiwan, and Mexico.Taiwan. Our products are available to customers online through Company-owned websites and through third party arrangements. We also have franchise agreements with unaffiliated franchisees to operate Old Navy, Gap, Banana Republic, and Old Navy storesAthleta throughout Asia, Australia, Europe, Latin America, the Middle East, and Africa. Under these agreements, third parties operate, or will operate, stores and websites that sell apparel and related products under our brand names. Our products are also available to customers online through Company-owned websites and through the use of third parties that provide logistics and fulfillment services. In addition to operating in the specialty, outlet, online, and franchise channels, we also use our omni-channel capabilities to bridge the digital world and physical stores to further enhance our shopping experience for our customers. Our omni-channel services, including curbside pick-up, buy online pick-up in store, order-in-store, reserve-in-store, find-in-store, and ship-from-store, as well as enhanced mobilemobile-enabled experiences, are tailored uniquely across our portfoliocollection of brands. Most of the products sold under our brand names are designed by us and manufactured by independent sources. We also sell products that are designed and manufactured by branded third parties, primarily at our Intermix brand.
OVERVIEW
ResultsFinancial results for the first three quarters of fiscal 2017 include a gain from insurance proceeds of $64 million related to the fire that occurred in one of the buildings at a Company-owned distribution center campus in Fishkill, New York on August 29, 2016 (“the Fishkill fire”), which was recorded in operating expenses in the Condensed Consolidated Statement of Income. During the third quarter of fiscal 2017, we also received $202023 are as follows:
•Net sales for the first quarter of fiscal 2023 decreased 6 percent compared with the first quarter of fiscal 2022.
•Online sales for the first quarter of fiscal 2023 decreased 9 percent compared with the first quarter of fiscal 2022 and store and franchise sales for the first quarter of fiscal 2023 decreased 4 percent compared with the first quarter of fiscal 2022.
•Gross profit for the first quarter of fiscal 2023 was $1.21 billion compared with $1.10 billion for the first quarter of fiscal 2022. Gross margin for the first quarter of fiscal 2023 was 37.1 percent compared with 31.5 percent for the first quarter of fiscal 2022.
•Operating loss for the first quarter of fiscal 2023 was $(10) million in insurance proceeds relatedcompared with $(197) million for the first quarter of fiscal 2022.
•The effective income tax rate for the first quarter of fiscal 2023 was 10.0 percent compared with 25.0 percent for the first quarter of fiscal 2022.
•Net loss for the first quarter of fiscal 2023 was $(18) million compared with $(162) million for the first quarter of fiscal 2022.
•Diluted loss per share was $(0.05) for the first quarter of fiscal 2023 compared with $(0.44) for the first quarter of fiscal 2022.
•Merchandise inventory as of the first quarter of fiscal 2023 decreased 27 percent compared with the first quarter of fiscal 2022.
On April 25, 2023, the Company's management committed to business interruption, which were recordedthe Plan as part of the Company's previously announced efforts to simplify and optimize its operating model and structure. The Plan includes a reduction to costin workforce of goods sold and occupancy expensesapproximately 1,800 employees, primarily in the Condensed Consolidated Statement of Income. Fiscal 2016 results were impacted by the previously announced measures to better align talent and financial resources against our most important priorities to position the Company for improved business performance and long-term success. headquarters locations.
In connection with these measures,the Plan, the Company incurred $29 million and $179$75 million in restructuring costs during the thirteen and thirty-nine13 weeks ended OctoberApril 29, 2016, respectively,2023 on a pre-tax basis.basis, which includes employee-related costs of $62 million and consulting and other associated costs of $13 million. Including the costs incurred during the 13 weeks ended April 29, 2023, the Company estimates that it will incur approximately $100 million to $120 million in aggregate pre-tax cash expenditures in connection with the Plan, which consists of approximately $75 million to $85 million in employee-related costs and $25 million to $35 million in consulting and other associated costs. The actions associated with the reduction of the Company's workforce under the Plan are expected to be substantially completed by the end of the first half of fiscal 2023.
The Company is also continuing to reduce the number of Gap and Banana Republic stores in North America by approximately 350 stores from the beginning of fiscal 2020 to the end of fiscal 2023. As of April 29, 2023, we have closed, net of openings, 315 Gap and Banana Republic stores in North America since the beginning of fiscal 2020.
On November 7, 2022, we signed agreements to transition our Gap Greater China operations to a third party, Baozun, to operate Gap Greater China stores and the in-market website as a franchise partner, subject to regulatory approvals and closing conditions. On January 31, 2023, the Gap China transaction closed with Baozun. The impact to the Condensed Consolidated Financial resultsStatements upon divestiture was not material for the third quarter of fiscal 201713 weeks ended April 29, 2023. The Gap Taiwan operations will continue to operate as usual until regulatory approvals and closing conditions are as follows:
Net sales for the third quarter of fiscal 2017 increased 1 percent compared with the third quarter of fiscal 2016.
Comparable sales for the third quarter of fiscal 2017 increased 3 percent compared with a 3 percent decrease for the third quarter of fiscal 2016, which included an estimated negative impact from the Fishkill fire of approximately 2 percentage points.
Gross profit for the third quarter of fiscal 2017 and fiscal 2016 were $1.5 billion. Gross margin for the third quarter of fiscal 2017 was 39.7 percent compared with 39.3 percent for the third quarter of fiscal 2016.
Operating margin for the third quarter of fiscal 2017 was 9.8 percent compared with 10.2 percent for the third quarter of fiscal 2016.
Net income for the third quarter of fiscal 2017 was $229 million compared with $204 million for the third quarter of fiscal 2016.
Diluted earnings per share was $0.58 for the third quarter of fiscal 2017 compared with $0.51 for the third quarter of fiscal 2016. Diluted earnings per share for the third quarter of fiscal 2016 included about a $0.09 impact of restructuring costs incurred in the third quarter of fiscal 2016.
met.
During the first three quarters13 weeks ended April 29, 2023, the Company sold a building for $76 million and recorded a pre-tax gain on sale of fiscal 2017, we distributed $572$47 million within operating expenses on the Condensed Consolidated Statement of Operations.
15


We remain focused on the following strategic priorities in the near term:
•managing inventory to shareholderssupport a healthy merchandise margin;
•reducing and optimizing our fixed cost structure to improve profitability and manage through share repurchasescurrent macroeconomic challenges;
•driving sales through assortment improvements and dividends.a balanced and relevant category mix;
Our business priorities for fiscal 2017 remain as follows:
offering•driving creative excellence and delivering product that is consistently brand-appropriateoffers value to our customers through a combination of fit, quality, brand, and on-trend with high customer acceptance, with a focus on expandingprice;
•rationalizing the Gap and Banana Republic store fleet;
•prioritizing asset-light growth through licensing, online, and franchise partnerships globally;
•optimizing investments in our advantage in loyalty categories;four purpose-led lifestyle brands to drive relevance and market share;
investing in digital and customer capabilities to support growth;
creating a unique and differentiated customer experience that builds loyalty, with focus on both the physical and digital expressions of our brands;
•attracting and retaining greatstrong talent in our businesses and functions; and
leveraging our scale•continuing to improve the effectivenessintegrate social and efficiency of our processes.environmental sustainability into business practices to support long-term growth.



In fiscal 2017, we are focused on investing strategically in the business while also maintaining operating expense discipline. One of our primary objectives is to continue transforming our product to market process, with the development of a more efficient operating model, allowing us to more fully leverage our scale. To enable this, we have several product, supply chain, and IT initiatives underway. Further, we expect to continue our investment in customer experience, both in stores and online, to drive higher customer engagement and loyalty, resulting in market share gains. Finally, we will continue to invest in strengthening brand awareness, customer acquisition, and digital capabilities.
In fiscal 2017, we expect that gross margins for our foreign subsidiaries, net of the impact from our merchandise hedge program, will continue to be negatively impacted by the depreciation of certain foreign currencies as our merchandise purchases are primarily in U.S. dollars.
16


RESULTS OF OPERATIONS
Net Sales
See Note 122 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 inof this Form 10-Q, for net sales by brand and region.

disaggregation.
Comparable Sales (“("Comp Sales”Sales")
The percentage change in Comp Sales by global brand and for The Gap, Inc., as compared with the preceding year, is as follows:
 13 Weeks Ended 39 Weeks Ended
 October 28,
2017		 October 29,
2016		 October 28,
2017		 October 29,
2016
Gap Global1 % (8)% (1)% (5)%
Old Navy Global4 % 3 % 5 % (1)%
Banana Republic Global(1)% (8)% (4)% (9)%
The Gap, Inc.3 % (3)% 2 % (3)%
Comp Sales for the third quarter of fiscal 2016 include an estimated negative impact from the Fishkill fire of approximately 4 percentage points for Gap Global, approximately 1 percentage point for Old Navy Global, and approximately 2 percentage points for Banana Republic Global.
Comp Sales include the results of Company-operated stores and sales through our online channels in those countries where we have existing comparable store sales.channel. The calculation of The Gap, Inc. Comp Sales includes the results of Athleta and Intermix but excludes the results of our franchise business. Comp Sales also included the results of certain foreign operations until their respective transitions to third party franchise partners. See Note 12 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, for related disclosures.
A store is included in the Comp Sales calculations when it has been open and operated by the Company for at least one year and the selling square footage has not changed by 15 percent or more within the past year. A store is included in the Comp Sales calculations on the first day it has comparable prior year sales. Stores in which the selling square footage has changed by 15 percent or more as a result of a remodel, expansion, or reduction are excluded from the Comp Sales calculations until the first day they have comparable prior year sales.
A store is considered non-comparable (“Non-comp”("Non-comp") when it has been open and operated by the Company for less than one year or has changed its selling square footage by 15 percent or more within the past year.
A store is considered “Closed”"Closed" if it is temporarily closed for three or more full consecutive days or it is permanently closed. When a temporarily closed store reopens, the store will be placed in the Comp/Non-comp status it was in prior to its closure. If a store was in Closed status for three or more days in the prior year, the store will be in Non-comp status for the same days the following year.
Current year foreign exchange rates are applied to both current year and prior year Comp Sales to achieve a consistent basis for comparison.

Store CountThe percentage change in Comp Sales by global brand and Square Footage Information
Net sales per average square foot arefor The Gap, Inc., as compared with the preceding year, is as follows:
 13 Weeks Ended 39 Weeks Ended
 October 28,
2017		 October 29,
2016		 October 28,
2017		 October 29,
2016
Net sales per average square foot (1)$82
 $81
 242
 $240
__________
(1)Excludes net sales associated with our online and franchise businesses.

 13 Weeks Ended
 April 29,
2023		April 30,
2022
Old Navy Global(1)%(22)%
Gap Global1 %(11)%
Banana Republic Global(8)%27 %
Athleta Global(13)%(7)%
The Gap, Inc.(3)%(14)%




17

Store count, openings, closings, and square footage for our stores are as follows:
 January 28, 202313 Weeks Ended April 29, 2023April 29, 2023
 Number of
Store Locations		Number of
Stores Opened		Number of
Stores Closed		Number of
Store Locations		Square Footage
(in millions)
Old Navy North America1,238 15 1 1,252 20.0 
Gap North America493 — 5 488 5.1 
Gap Asia (1)232 1 1 143 1.2 
Banana Republic North America419 — 6 413 3.5 
Banana Republic Asia46 2 2 46 0.2 
Athleta North America257 3 1 259 1.1 
Company-operated stores total2,685 21 16 2,601 31.1 
Franchise (1)667 57 6 852  N/A
Total3,352 78 22 3,453 31.1 
Increase (decrease) over prior year1.1 %(6.3)%
 January 29, 202213 Weeks Ended April 30, 2022April 30, 2022
 Number of
Store Locations		Number of
Stores Opened		Number of
Stores Closed		Number of
Store Locations		Square Footage
(in millions)
Old Navy North America1,252 9 3 1,258 20.2 
Gap North America520 1 9 512 5.4 
Gap Asia329 3 4 328 2.7 
Gap Europe (2)11 — — — — 
Banana Republic North America446 1 2 445 3.7 
Banana Republic Asia50 1 — 51 0.2 
Athleta North America227 6 2 231 1.0 
Company-operated stores total2,835 21 20 2,825 33.2 
Franchise (2)564 23 9 589 N/A
Total3,399 44 29 3,414 33.2 
Decrease over prior year(4.4)%(4.3)%
 January 28, 2017 39 Weeks Ended October 28, 2017 October 28, 2017
 
Number of
Store Locations
 
Number of
Stores Opened
 
Number of
Stores Closed
 
Number of
Store Locations
 
Square Footage
(in millions)
Gap North America844
 6
 15
 835
 8.6
Gap Asia311
 24
 26
 309
 3.0
Gap Europe164
 2
 9
 157
 1.3
Old Navy North America1,043
 20
 6
 1,057
 17.6
Old Navy Asia13
 —
 —
 13
 0.2
Banana Republic North America601
 4
 9
 596
 5.0
Banana Republic Asia48
 1
 1
 48
 0.2
Banana Republic Europe1
 —
 1
 —
 —
Athleta North America132
 8
 —
 140
 0.6
Intermix North America43
 —
 5
 38
 0.1
Company-operated stores total3,200
 65
 72
 3,193
 36.6
Franchise459
 31
 44
 446
  N/A
Total3,659
 96
 116
 3,639
 36.6
Decrease over prior year      (2.8)% (2.9)%
          
 January 30, 2016 39 Weeks Ended October 29, 2016 October 29, 2016
 
Number of
Store Locations
 
Number of
Stores Opened
 
Number of
Stores Closed
 
Number of
Store Locations
 
Square Footage
(in millions)
Gap North America866
 11
 19
 858
 9.0
Gap Asia305
 18
 8
 315
 3.0
Gap Europe175
 1
 10
 166
 1.4
Old Navy North America1,030
 19
 10
 1,039
 17.4
Old Navy Asia65
 5
 10
 60
 0.9
Banana Republic North America612
 7
 7
 612
 5.1
Banana Republic Asia51
 —
 2
 49
 0.2
Banana Republic Europe10
 —
 —
 10
 0.1
Athleta North America120
 10
 —
 130
 0.5
Intermix North America41
 2
 1
 42
 0.1
Company-operated stores total3,275
 73
 67
 3,281
 37.7
Franchise446
 52
 37
 461
 N/A
Total3,721
 125
 104
 3,742
 37.7
Decrease over prior year      (1.4)% (2.3)%
__________
(1)The 89 Gap China stores that were transitioned to Baozun during the period are not included as store closures or openings for Company-operated and Banana Republic outletFranchise store activity. The ending balance for Gap Asia excludes Gap China stores and the ending balance for Franchise includes Gap China locations transitioned during the period.
(2)The 11 Gap Italy stores that were transitioned to OVS during the period are not included as store closures or openings for Company-operated and Franchise store activity. The ending balance for Gap Europe excludes Gap Italy stores and the ending balance for Franchise includes Gap Italy stores.
Outlet and factory stores are reflected in each of the respective brands.

18

Net Sales
Our net sales for the third quarter of fiscal 2017 increased $40 million, or 1 percent, compared with the third quarter of fiscal 2016 primarily driven by an increase in net sales at Old Navy, partially offset by a decrease in net sales at Gap and Banana Republic. The increase in Comp Sales of 3 percent for the third quarter of fiscal 2017 was offset by the impact of lost sales primarily from international store closures in fiscal 2016.
Our net sales for the first three quartersquarter of fiscal 20172023 decreased $10$201 million, or 6 percent, compared with the first three quartersquarter of fiscal 20162022, driven primarily driven by a decrease in netonline sales, atthe transition of our Gap China business to a partnership model, and Banana Republic, as well asstrategic store closures. Additionally, there was an unfavorable impact of foreign exchange of $49 million, partially offset by an increase in net sales at Old Navy. The unfavorable impact of foreign exchange was primarily due to the weakening of the Japanese yen, British pound, and Chinese yuan against the U.S. dollar.$35 million. The foreign exchange impact is the translation impact if net sales for the first three quartersquarter of fiscal 20162022 were translated at exchange rates applicable during the first three quartersquarter of fiscal 2017. The increase in Comp Sales of 2 percent for the first three quarters of fiscal 2017 was offset by the impact of lost sales primarily from international store closures in fiscal 2016.2023.



Cost of Goods Sold and Occupancy Expenses
  
13 Weeks Ended
($ in millions)April 29,
2023		April 30,
2022
Cost of goods sold and occupancy expenses$2,062 $2,381 
Gross profit$1,214 $1,096 
Cost of goods sold and occupancy expenses as a percentage of net sales62.9 %68.5 %
Gross margin37.1 %31.5 %
  
13 Weeks Ended 39 Weeks Ended
($ in millions)October 28,
2017		 October 29,
2016		 October 28,
2017		 October 29,
2016
Cost of goods sold and occupancy expenses$2,313
 $2,305
 $6,770
 $6,948
Gross profit$1,525
 $1,493
 $4,307
 $4,139
Cost of goods sold and occupancy expenses as a percentage of net sales60.3% 60.7% 61.1% 62.7%
Gross margin39.7% 39.3% 38.9% 37.3%
Cost of goods sold and occupancy expenses decreased 0.4 percent5.6 percentage points as a percentage of net sales in the thirdfirst quarter of fiscal 20172023 compared with the thirdfirst quarter of fiscal 2016.2022.
•Cost of goods sold was flatdecreased 6.0 percentage points as a percentage of net sales in the thirdfirst quarter of fiscal 20172023 compared with the thirdfirst quarter of fiscal 2016,2022, primarily driven by a decrease in air freight expenses as well as improved average selling price per unit at Old Navy and Banana Republic,promotional activity. This was partially offset by higher average unit cost at all global brands.
commodity price increases.
•Occupancy expenses decreasedincreased 0.4 percentpercentage points as a percentage of net sales in the thirdfirst quarter of fiscal 20172023 compared with the thirdfirst quarter of fiscal 2016,2022, primarily driven by an increasea decrease in online sales without a corresponding increasedecrease in fixed occupancy expenses and the closure of international stores in fiscal 2016, partially offset by real estate expenses for new stores at the Times Square, New York location for Gap and Old Navy.
Cost of goods sold and occupancy expenses decreased1.6 percent as a percentage of net sales during the first three quarters of fiscal 2017 compared with the first three quarters of fiscal 2016.expenses.
Cost of goods sold decreased1.2 percent as a percentage of net sales during the first three quarters of fiscal 2017 compared with the first three quarters of fiscal 2016, primarily driven by higher margins achieved as a result of improved average selling price per unit at all global brands, partially offset by higher average unit cost at all global brands.
19
Occupancy expenses decreased0.4 percent as a percentage of net sales during the first three quarters of fiscal 2017 compared with the first three quarters of fiscal 2016, primarily driven by an increase in online sales without a corresponding increase in occupancy expenses and the closure of international stores in fiscal 2016, partially offset by real estate expenses incurred for new stores at the Times Square, New York location for Gap and Old Navy.

Operating Expenses
  
13 Weeks Ended
($ in millions)April 29,
2023		April 30,
2022
Operating expenses$1,224 $1,293 
Operating expenses as a percentage of net sales37.4 %37.2 %
Operating margin(0.3)%(5.7)%
  
13 Weeks Ended 39 Weeks Ended
($ in millions)October 28,
2017		 October 29,
2016		 October 28,
2017		 October 29,
2016
Operating expenses$1,147
 $1,104
 $3,224
 $3,249
Operating expenses as a percentage of net sales29.9% 29.1% 29.1% 29.3%
Operating margin9.8% 10.2% 9.8% 8.0%
Operating expenses decreased $69 million, but increased $43 million, or 0.8 percent0.2 percentage points as a percentage of net sales in the thirdfirst quarter of fiscal 2017 compared with the third quarter of fiscal 2016. The increase in operating expenses for the third quarter of fiscal 2017 compared with the third quarter of fiscal 2016 was primarily due to the following:
an increase in payroll-related expenses primarily driven by an increase in bonus expense; and
an increase in marketing and investments in digital and customer initiatives; partially offset by
$36 million of restructuring costs incurred in the third quarter of fiscal 2016; and
a decrease of $27 million of store asset impairment charges unrelated to restructuring activities.
Operating expenses decreased $25 million, or 0.2 percent as a percentage of net sales, during the first three quarters of fiscal 20172023 compared with the first three quartersquarter of fiscal 2016. The decrease in operating expenses for the first three quarters of fiscal 2017 compared with the first three quarters of fiscal 2016 was2022, primarily due to a decrease in net sales as well as the following:
$171•a decrease in advertising expenses;
•a gain on sale of building of $47 million; and
•a decrease in technology-related investments; partially offset by
•restructuring expenses of $71 million of restructuring costs incurred during the first three quarters of fiscal 2016;
a gain from insurance proceeds of $64 million related to the Fishkill fire recorded in the second quarter of fiscal 2017;2023 as a result of actions taken to further simplify and
a decrease of $18 million of store asset impairment charges unrelated to restructuring activities; partially offset by
an increase in payroll-related expenses primarily driven by an increase in bonus expense; and
an increase in marketing optimize our operating model and investments in digital and customer initiatives.structure.



Interest Expense
13 Weeks Ended 39 Weeks Ended
13 Weeks Ended
($ in millions)October 28,
2017		 October 29,
2016		 October 28,
2017		 October 29,
2016		($ in millions)April 29,
2023		April 30,
2022
Interest expense$18
 $20
 $53
 $57
Interest expense$23 $20 
Interest expense for the third quarter and the first three quarters of fiscal 2017 and fiscal 2016 primarily includes interest on overalloutstanding borrowings and obligations mainly related to our $1.25 billion 5.95 percentSenior Notes.

Income Taxes
13 Weeks Ended 39 Weeks Ended
13 Weeks Ended
($ in millions)October 28,
2017		 October 29,
2016		 October 28,
2017		 October 29,
2016		($ in millions)April 29,
2023		April 30,
2022
Income taxes$135
 $168
 $398
 $383
Income taxes$(2)$(54)
Effective tax rate37.1% 45.2% 38.2% 45.6%Effective tax rate10.0 %25.0 %
The decrease in the effective tax rate for the third quarter and first three quarters of fiscal 2017 compared with the third quarter and first three quarters of fiscal 2016 was primarily due to the impact of restructuring costs incurred for foreign subsidiaries during the third quarter of fiscal 2016 and resulting valuation allowances on certain foreign deferred tax assets. The decrease in the effective tax rate for the first three quarters of fiscal 20172023 compared with the first three quartersquarter of fiscal 20162022 is primarily due to changes in the amount and jurisdictional mix of pre-tax operations.
20

LIQUIDITY AND CAPITAL RESOURCES
In addition to our cash flows from operating activities, our primary sources of liquidity include cash and cash equivalents, our Senior Notes, and borrowings under our ABL Facility. As of April 29, 2023, we had cash and cash equivalents of approximately $1.2 billion. We hold our cash and cash equivalents across a diversified set of reputable financial institutions and monitor the credit standing of those financial institutions. In addition, we have issued $1.5 billion aggregate principal amount of our Senior Notes, and are also able to supplement near-term liquidity, if necessary, with our ABL Facility or other available market instruments. As of April 29, 2023, the Company's outstanding borrowing under the ABL Facility was partially offset by$350 million. On May 15, 2023, the impactCompany repaid $100 million of the adoption of ASU No. 2016-09, Compensation - Stock Compensation: Improvementsoutstanding borrowing under the ABL Facility, which reduced the outstanding borrowing to Employee Share-Based Payment Accounting in fiscal 2017.$250 million. See Note 25 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 inof this Form 10-Q, for additional disclosures on the adoption of the accounting standard.Senior Notes and ABL Facility.

LIQUIDITY AND CAPITAL RESOURCES
Our largest source of operating cash flows is cash collections from the sale of our merchandise. Our primary uses of cash include merchandise inventory purchases, lease and occupancy costs, personnel-related expenses, purchases of property and equipment, shipping costs, and payment of taxes. In addition, we may have dividend payments, debt repayments, and share repurchases. As of October 28, 2017, cash and cash equivalents were $1.4 billion, the majority of which was held in the United States and is generally accessible without any limitations.
We believe that current cash balances and cash flows from our operations will be sufficient to support our business operations, including growth initiatives and planned capital expenditures, for the next 12 months and beyond. We are also able to supplement near-term liquidity, if necessary,typically follows a seasonal pattern, with our $500 million revolving credit facility or other available market instruments.

Cash Flows from Operating Activities
Net cash provided by operating activitiessales peaking during the first three quarters of fiscal 2017 decreased $200 million compared with the first three quarters of fiscal 2016, primarily due to the following:
Net income
an increase of $187 million in net income.
Non-cash items
a decrease of $72 million related to store asset impairment charges during the first three quarters of fiscal 2017 compared with the first three quarters of fiscal 2016 primarily due to restructuring activities in fiscal 2016.
Changes in operating assets and liabilities
a decrease of $239 million related to accounts payable primarily due to the timing of lease payments and other non-merchandise payables;
a decrease of $123 million related to merchandise inventory primarily due to the volume and timing of receipts; and
a decrease of $56 million related to accrued expenses and other current liabilities in part due to the timing of severance payments as a result of fiscal 2016 restructuring activities; partially offset by
an increase of $108 million related to income taxes payable, net of prepaid and other tax-related items, primarily due to an increase in taxable income during the first three quarters of fiscal 2017 compared with the first three quarters of fiscal 2016 as well as the timing of tax payments.
Weend-of-year holiday period, 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, in addition to the impact of global economic conditions such as the uncertainty surrounding global inflationary pressures, the Russia-Ukraine crisis, and distress in global credit and banking markets, may lead to significant fluctuations in certain asset and liability accounts as well as cash inflows and outflows between fiscal year-end and subsequent interim periods.

Our voluntary SCF program provides certain suppliers with the opportunity to sell their receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. We are not a party to the agreements between our suppliers and the financial institutions and our payment terms are not impacted by whether a supplier participates in the SCF program. See Note 13 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, for disclosures on the Company's SCF program.

We believe our existing balances of cash and cash equivalents, along with our cash flows from operations, and instruments mentioned above, provide sufficient funds for our business operations as well as capital expenditures, dividends, and other liquidity requirements associated with our business operations over the next 12 months and beyond.

Cash Flows from Operating Activities
Net cash provided by operating activities was $15 million during the first quarter of fiscal 2023 compared with $362 million of net cash used for operating activities during the first quarter of fiscal 2022, primarily due to the following:
    Net Loss
•a net loss of $18 million during the first quarter of fiscal 2023 compared with a net loss of $162 million during the first quarter of fiscal 2022;
Changes in operating assets and liabilities
•an increase of $249 million related to merchandise inventory primarily due to lower inventory levels in the first quarter of fiscal 2023 compared with the first quarter of fiscal 2022;
•an increase of $234 million related to accounts payable primarily due to the timing of payments for inventory during the first quarter of fiscal 2023 compared with the first quarter of fiscal 2022; and
•an increase of $214 million related to accrued expenses and other current liabilities primarily due to lower bonus payment during the first quarter of fiscal 2023 compared with the first quarter of fiscal 2022; partially offset by
•a decrease of $418 million related to income taxes payable, net of receivables and other tax-related items, primarily due to receipt of tax refunds during the first quarter of fiscal 2022 related to fiscal 2020 net operating loss carryback claims.
Cash Flows from Investing Activities
Net cash used for investing activities was $30 million during the first three quartersquarter of fiscal 2017 increased $22 million2023 compared with $105 million of net cash provided by investing activities during the first three quartersquarter of fiscal 2016,2022, primarily due to the following:
•$80 million more in property and equipment purchases including purchases related to the rebuilding of the Company’s Fishkill, New York distribution center campus; offset by
$6076 million in insurancenet proceeds allocated to loss onfrom the sale of a building during the first quarter of fiscal 2023 compared with $333 million in net proceeds from the sale of a building during the first quarter of fiscal 2022; partially offset by
•$111 million less purchases of property and equipment during the first three quartersquarter of fiscal 2017 related to the Fishkill fire2023 compared with no insurance proceeds allocated during the first three quartersquarter of fiscal 2016.2022.

21

Cash Flows from Financing Activities
Net cash used for financing activities was $58 million during the first three quartersquarter of fiscal 2017 increased $364 million2023 compared with $233 million of net cash provided by financing activities during the first three quartersquarter of fiscal 2016,2022, primarily due to the following:
•$300350 million in proceeds received from borrowing under the ABL Facility during the first quarter of cash used forfiscal 2022; partially offset by
•$54 million in repurchases of common stock during the first three quartersquarter of fiscal 20172022 compared with no repurchases of common stock duringin the first three quartersquarter of fiscal 2016; and
$67 million related to the repayment of the Japan Term Loan in full in June 2017.

2023.
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 weexpenditures. We require regular capital expenditures to buildincluding technology improvements as well as building and maintainmaintaining our stores and purchase new equipment to improve our business.distribution centers. 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 results. Free cash flow for the first three quarters of fiscal 2017 is further adjusted for insurance proceeds allocated to loss on property and equipment, as our cash used for purchases of property and equipment for the first three quarters of fiscal 2017 includes certain capital expenditures related to the rebuilding of the Company-owned distribution center which was impacted by the Fishkill fire.
The following table reconciles free cash flow, a non-GAAP financial measure, from a GAAP financial measure.
 39 Weeks Ended
($ in millions)October 28,
2017		 October 29,
2016
Net cash provided by operating activities$600
 $800
Less: Purchases of property and equipment(463) (383)
Add: Insurance proceeds related to loss on property and equipment60
 —
Free cash flow$197
 $417

Debt and Credit Facilities
Certain financial information about the Company’s debt and credit facilities is set forth under the heading “Debt and Credit Facilities” in Note 3 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

 13 Weeks Ended
($ in millions)April 29,
2023		April 30,
2022
Net cash provided by (used for) operating activities$15 $(362)
Less: Purchases of property and equipment(117)(228)
Free cash flow$(102)$(590)
Dividend Policy
In determining whether and at what level to declare a dividend, we consider a number of factors including sustainability, operating performance, liquidity, and market conditions.
We paid a dividend of $0.23$0.15 per share during each of the first three quartersquarter of fiscal 2017 and fiscal 2016. Including2023. In May 2023, the dividend paid during the first three quarters of fiscal 2017 of $0.69 per share, we intend to pay an annualBoard authorized a dividend of $0.92$0.15 per share for the second quarter of fiscal 2017, consistent with the annual dividend for fiscal 2016.2023.

Share Repurchases
Certain financial information about the Company’s share repurchases is set forth under the heading “Share Repurchases” in Note 68 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.



Summary Disclosures about Contractual Cash Obligations and Commercial Commitments
There have been no material changes to our contractual obligations and commercial commitments as disclosed in our Annual Report on Form 10-K as of January 28, 2017,2023, other than those which occur in the normal course of business. See Note 1110 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, for disclosures on commitments and contingencies.

Critical Accounting Policies and Estimates
There have been no significant changes to our critical accounting policies and estimates as discussed in our Annual Report on Form 10-K for the fiscal year ended January 28, 2017.2023. See Note 1 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, for disclosures on accounting policies.

Item 3.     Quantitative and Qualitative Disclosures About Market Risk.
Item 3.Quantitative and Qualitative Disclosures About Market Risk.
Our market risk profile as of January 28, 20172023, is disclosed in our Annual Report on Form 10-K and has not significantly changed.changed other than as noted below. See Notes 3, 4,5, 6, and 57 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, for disclosures on our debt and credit facilities, investments, and derivative financial instruments.
On March 27, 2023, Moody's downgraded our corporate credit rating from Ba2 to Ba3 with a negative outlook and downgraded the rating of our Senior Notes from Ba3 to B1 with a negative outlook. These reductions and any future reduction in our credit ratings could result in an increase to our interest expense on future borrowings.
22
Item 4.Controls and Procedures.

Item 4.     Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of management, including the interim Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act Rule 13a-15(e))of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, the interim Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting
There was no change in the Company’s internal control over financial reporting that occurred during the Company’s thirdfirst quarter of fiscal 20172023 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company reviews its internal control over financial reporting following major organizational restructuring. The impact of the Plan on the Company's internal control over financial reporting will be assessed and monitored throughout the fiscal year. See Note 3 of Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, for disclosures on the Plan.

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PART II – OTHER INFORMATION
Item 1.Legal Proceedings.
Item 1.     Legal Proceedings.
As a multinational company, we are subject to various proceedings, lawsuits, disputes, and claims ("Actions") arising in the ordinary course of our business. Many of these Actions raise complex factual and legal issues and are subject to uncertainties. Actions filed against us from time to time include commercial, intellectual property, customer, employment, securities, and data privacy claims, including class action lawsuits. The plaintiffs in some Actions seek unspecified damages or injunctive relief, or both. Actions are in various procedural stages, and some are covered in part by insurance.
We cannot predict with assurance the outcome of Actions brought against us. Accordingly, developments, settlements, or resolutions may occur and impact incomeoperations in the quarter of such development, settlement, or resolution. However, we do not believe that the outcome of any current Action would have a material effect on our financial results.

Item 1A.     Risk Factors.
Item 1A.Risk Factors.
The following risk factors appearing in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 28, 2023 have been updated.
Risks Related to Strategic Transactions and Investments
We may engage in or seek to engage in strategic transactions, such as acquisitions, divestitures and other dispositions, or adjust or restructure our business, all of which are subject to various risks and uncertainties, which could disrupt or adversely affect our business.
We may engage in or seek to engage in strategic transactions, such as acquisitions, divestitures or other dispositions, which we may not be able to complete on anticipated terms or time frames or at all, or which may not generate some or all of the strategic, financial, operational or other benefits we expect to realize from such transactions on such anticipated time frames or at all. In addition, these transactions may be complex in nature, and unanticipated developments or changes, including changes in law, the macroeconomic environment, market conditions, the retail industry or political conditions may affect our ability to complete such transactions. In addition, the process of completing these transactions may be time-consuming and involve considerable costs and expenses, which may be significantly higher than what we anticipate and may not yield a benefit if the transactions are not completed successfully. Executing these transactions may require significant time and attention from our senior management and employees, which could disrupt our ongoing business and adversely affect our results of operations. We may also experience increased difficulties in attracting, retaining and motivating employees and/or attracting and retaining customers during the pendency or following the completion of any of these transactions, which could harm our business.
In 2021, we reached agreements to transfer our European business to a franchise model, and in 2022 we reached agreements to transition our Mexico and Greater China businesses to a franchise model. In 2021, we also divested our Janie and Jack and Intermix brands and acquired two technology companies. We incurred costs and expenses in connection with these transactions and may incur such costs and expenses in connection with future strategic reviews, which may require significant attention from our senior management and employees. Executing any transactions resulting from future strategic reviews will be time-consuming, will involve additional costs and expenses, which may be significant, and may result in difficulties attracting, retaining and motivating employees, which could harm our business and adversely affect our results of operations.
We have also adjusted and may further adjust our business strategies to meet changes in our business environment. For example, in 2022, we began taking steps to drive long-term improvements across our business, which include reducing open and existing corporate roles, renegotiating our advertising agency contracts, reducing technology operating costs, and rationalizing digital investments. In March 2023, we shared plans to further simplify and optimize our operating model and structure, including actions such as increasing spans of control and decreasing management layers to improve quality and speed of decision making, as well as creating a consistent organizational structure across all four brands. In connection with those actions, in April 2023, we announced a restructuring plan that includes a reduction of the Company's workforce primarily in headquarters locations. Our ability to achieve the intended benefits and projected cost savings from these actions are subject to many estimates and assumptions. For example, costs associated with these actions could be higher than anticipated, and savings associated with these actions could be lower than anticipated. In addition, these actions may impact our ability to attract and retain qualified personnel, may be distracting to our senior management and employees, and may negatively impact our business operations and reputation. These actions are also subject to execution risk and may not generate the intended benefits and projected cost savings to the extent or on the timeline as expected, and our new organizational structure and strategies could be less successful than our previous organizational structure and strategies.
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Risks Relating to Our Indebtedness and Credit Profile
Changes in our credit profile or deterioration in market conditions may limit our access to the capital markets and adversely impact our business and financial condition.
We currently have a corporate credit rating of BB with a negative outlook from Standard & Poor's. In March 2023, Moody's downgraded our corporate credit rating from Ba2 to Ba3 with a negative outlook and downgraded the rating of our Senior Notes from Ba3 to B1 with a negative outlook. These reductions and any future reduction in our credit ratings could result in reduced access to the credit and capital markets, more restrictive covenants in future financing documents and higher interest costs, and potentially increased lease or hedging costs. In addition, market conditions such as increased volatility or disruption in the credit markets could adversely affect our ability to obtain financing or refinance existing debt on terms that would be acceptable to us.
There have been no other material changes in our risk factors from those disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 28, 2017.2023.

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.
The following table presents information with respectIn February 2019, we announced that the Board approved a $1.0 billion share repurchase authorization (the "February 2019 repurchase program"), which has no expiration date. There were no shares repurchased, other than shares withheld to purchasessettle employee statutory tax withholding related to the vesting of common stock of the Company madeunits, during the thirteen13 weeks endedOctober 28, 2017 by April 29, 2023. The Gap, Inc.February 2019 repurchase program had $476 million remaining as of April 29, 2023.
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Item 6.     Exhibits.
Incorporated by Reference
Exhibit No.Exhibit DescriptionFormFile No.ExhibitFiling DateFiled/
Furnished
Herewith
3.1Amended and Restated Certificate of Incorporation (P)10-K1-75623.1April 26, 1993
3.2
Certificate of Amendment of Amended and Restated Certificate of Incorporation10-K1-75623.2April 4, 2000
3.3
Amended and Restated Bylaws (effective August 15, 2022)10-Q1-75623.3August 26, 2022
10.1†
Letter Agreement dated February 27, 2023 by and between Sally Gilligan and the RegistrantX
10.2†
Letter Agreement dated March 20, 2023 by and between Gurmeet Singh and the RegistrantX
10.3†
2023 Form of Non-Qualified Stock Option Agreement under the 2016 Long-Term Incentive Plan8-K1-756210.1March 10, 2023
10.4†
2023 Form of Restricted Stock Unit Award Agreement under the 2016 Long-Term Incentive Plan8-K1-756210.2March 10, 2023
10.5†
2023 Form of Performance Share Agreement under the 2016 Long-Term Incentive Plan8-K1-756210.3March 10, 2023
31.1
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002)X
31.2
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002)X
32.1
Certification of the Chief Executive Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002X
32.2
Certification of the Chief Financial Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002X
101The following materials from The Gap, Inc.’s Quarterly Report on Form 10-Q for the quarter ended April 29, 2023, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Loss, (iv) the Condensed Consolidated Statements of Stockholders' Equity; (v) the Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial StatementsX
104Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)X
_____________________________
(P)    This Exhibit was originally filed in paper format. Accordingly, a hyperlink has not been provided.
†Indicates management contract or any affiliated purchaser, as defined in Exchange Act Rule 10b-18(a)(3):compensatory plan or arrangement.





26
 
Total
Number of
Shares
Purchased (1)
 
Average
Price Paid
Per Share
Including
Commissions
 
Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plans or
Programs
 
Maximum
Number (or
approximate
dollar amount) of
Shares that May
Yet be Purchased
Under the Plans
or Programs (2)
Month #1 (July 30 - August 26)539,800
 $23.15
 539,800
 $788 million
Month #2 (August 27 - September 30)2,249,992
 $26.66
 2,249,992
 $728 million
Month #3 (October 1 - October 28)963,538
 $28.57
 963,538
 $700 million
Total3,753,330
 $26.64
 3,753,330
  
__________
(1)Excludes shares withheld to settle employee statutory tax withholding related to the vesting of stock units.
(2)On February 25, 2016, we announced that the Board of Directors approved a $1 billion share repurchase authorization, which has no expiration date.





Item 6.Exhibits.

10.1Agreement with Shawn Curran dated September 29, 2017 and confirmed on October 5, 2017. (1)
31.1Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002). (1)
31.2Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002). (1)
32.1Certification of the Chief Executive Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2)
32.2Certification of the Chief Financial Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2)
101The following materials from The Gap, Inc.’s Quarterly Report on Form 10-Q for the quarter ended October 28, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements. (1)
__________
(1)Filed herewith.
(2)Furnished herewith.





SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

THE GAP, INC.
Date:May 26, 2023THE GAP, INC.By/s/ Bob L. Martin
Bob L. Martin
Date:November 22, 2017By  /s/ Arthur Peck
Arthur Peck
Interim Chief Executive Officer
(Principal Executive Officer)
Date:November 22, 2017By  /s/ Teri List-Stoll
Date:May 26, 2023ByTeri List-Stoll/s/ Katrina O'Connell
Katrina O'Connell
Executive Vice President and Chief Financial Officer


Exhibit Index
10.1
Agreement with Shawn Curran dated September 29, 2017(Principal Financial and confirmed on October 5, 2017. (1)
31.1
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002). (1)
31.2
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002). (1)
32.1
Certification of the Chief Executive Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2)
32.2
Certification of the Chief Financial Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2)
101
The following materials from The Gap, Inc.’s Quarterly Report on Form 10-Q for the quarter ended October 28, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements. (1)
Accounting Officer)
_____________________________
(1)Filed herewith.
(2)Furnished herewith.


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