The Gap, Inc. (GAP) 10-K 26 Mar 10 2010 FY Annual report Financial data

Statement Of Financial Position

Statement Of Financial Position Classified (USD $)
In Millions	12 Months Ended Jan. 30, 2010	12 Months Ended Jan. 31, 2009
Current assets:
Cash and cash equivalents	$2,348	$1,715
Short-term investments	225	0
Restricted cash	18	41
Merchandise inventory	1,477	1,506
Other current assets	596	743
Total current assets	4,664	4,005
Property and equipment, net	2,628	2,933
Other long-term assets	693	626
Total assets	7,985	7,564
Current liabilities:
Current maturities of long-term debt	0	50
Accounts payable	1,027	975
Accrued expenses and other current liabilities	1,063	1,076
Income taxes payable	41	57
Total current liabilities	2,131	2,158
Lease incentives and other long-term liabilities	963	1,019
Commitments and contingencies (see Notes 11 and 15)
Stockholders' equity:
Common stock $0.05 par value Authorized 2,300 shares; Issued 1,106 and 1,105 shares; Outstanding 676 and 694 shares	55	55
Additional paid-in capital	2,935	2,895
Retained earnings	10,815	9,947
Accumulated other comprehensive income	155	123
Treasury stock, at cost (430 and 411 shares)	(9,069)	(8,633)
Total stockholders' equity	4,891	4,387
Total liabilities and stockholders' equity	$7,985	$7,564

1_Statement Of Financial Positi

Statement Of Financial Position Classified (Parenthetical) (USD $)
Share data in Millions, except Per Share data	Jan. 30, 2010	Jan. 31, 2009
Common stock, par value	0.05	0.05
Common stock, Authorized	2,300	2,300
Common stock, Issued	1,106	1,105
Common stock, Outstanding	676	694
Treasury stock, shares	430	411

Statement Of Income

Statement Of Income (USD $)
In Millions, except Per Share data	12 Months Ended Jan. 30, 2010	12 Months Ended Jan. 31, 2009	12 Months Ended Feb. 02, 2008
Net sales	$14,197	$14,526	$15,763
Cost of goods sold and occupancy expenses	8,473	9,079	10,071
Gross profit	5,724	5,447	5,692
Operating expenses	3,909	3,899	4,377
Operating income	1,815	1,548	1,315
Interest expense	6	1	26
Interest income	(7)	(37)	(117)
Income from continuing operations before income taxes	1,816	1,584	1,406
Income taxes	714	617	539
Income from continuing operations, net of income taxes	1,102	967	867
Loss from discontinued operation, net of income tax benefit	0	0	(34)
Net income	$1,102	$967	$833
Weighted-average number of shares-basic	694	716	791
Weighted-average number of shares-diluted	699	719	794
Earnings (loss) per share-basic
Income from continuing operations, net of income taxes	1.59	1.35	1.1
Loss from discontinued operation, net of income tax benefit	$0	$0	-0.05
Earnings per share	1.59	1.35	1.05
Earnings (loss) per share-diluted
Income from continuing operations, net of income taxes	1.58	1.34	1.09
Loss from discontinued operation, net of income tax benefit	$0	$0	-0.04
Earnings per share	1.58	1.34	1.05
Cash dividends declared and paid per share	0.34	0.34	0.32

Statement Of Shareholders Equit

Statement Of Shareholders Equity And Other Comprehensive Income (USD $)
In Millions	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income	Treasury Stock	Comprehensive Income	Total
Beginning Balance at Feb. 03, 2007	$55	$2,631	$8,646	$77	($6,235)		$5,174
Beginning Balance (in shares) at Feb. 03, 2007	1,093				(279)
Net income			833			833	833
Foreign currency translation				84		84	84
Change in fair value of derivative financial instruments, net of tax (benefit) expense of $(12) in 2009, $14 in 2008 and $(17) in 2007				(18)		(18)	(18)
Reclassification adjustment for realized (gains) losses on derivative financial instruments, net of tax expense (benefit) of $6 in 2009, $(13) in 2008 and $11 in 2007				(18)		(18)	(18)
Cumulative effect of adoption of uncertain tax position guidance (formerly FIN 48)			(4)				(4)
Issuance of common stock pursuant to stock option and other stock award plans, net of shares withheld for employee taxes (in shares)	7
Issuance of common stock pursuant to stock option and other stock award plans, net of shares withheld for employee taxes	0	93					93
Tax benefit from exercise of stock options and vesting of stock units		8					8
Share-based compensation, net of estimated forfeitures		49					49
Repurchases of common stock (in shares)					(89)
Repurchases of common stock					(1,700)		(1,700)
Reissuance of treasury stock (in shares)					2
Reissuance of treasury stock		2			23		25
Cash dividends			(252)				(252)
Total comprehensive income						881
Ending Balance (in shares) at Feb. 02, 2008	1,100				(366)
Ending Balance at Feb. 02, 2008	55	2,783	9,223	125	(7,912)		4,274
Net income			967			967	967
Foreign currency translation				(38)		(38)	(38)
Change in fair value of derivative financial instruments, net of tax (benefit) expense of $(12) in 2009, $14 in 2008 and $(17) in 2007				15		15	15
Reclassification adjustment for realized (gains) losses on derivative financial instruments, net of tax expense (benefit) of $6 in 2009, $(13) in 2008 and $11 in 2007				21		21	21
Issuance of common stock pursuant to stock option and other stock award plans, net of shares withheld for employee taxes (in shares)	5
Issuance of common stock pursuant to stock option and other stock award plans, net of shares withheld for employee taxes	0	52					52
Tax benefit from exercise of stock options and vesting of stock units		5					5
Share-based compensation, net of estimated forfeitures		56					56
Repurchases of common stock (in shares)					(46)
Repurchases of common stock					(745)		(745)
Reissuance of treasury stock (in shares)					1
Reissuance of treasury stock		(1)			24		23
Cash dividends			(243)				(243)
Total comprehensive income						965
Ending Balance (in shares) at Jan. 31, 2009	1,105				(411)
Ending Balance at Jan. 31, 2009	55	2,895	9,947	123	(8,633)		4,387
Net income			1,102			1,102	1,102
Foreign currency translation				59		59	59
Change in fair value of derivative financial instruments, net of tax (benefit) expense of $(12) in 2009, $14 in 2008 and $(17) in 2007				(18)		(18)	(18)
Reclassification adjustment for realized (gains) losses on derivative financial instruments, net of tax expense (benefit) of $6 in 2009, $(13) in 2008 and $11 in 2007				(9)		(9)	(9)
Issuance of common stock pursuant to stock option and other stock award plans, net of shares withheld for employee taxes (in shares)	1
Issuance of common stock pursuant to stock option and other stock award plans, net of shares withheld for employee taxes	0	(14)					(14)
Tax benefit from exercise of stock options and vesting of stock units		(2)					(2)
Share-based compensation, net of estimated forfeitures		60					60
Repurchases of common stock (in shares)					(24)
Repurchases of common stock					(510)		(510)
Reissuance of treasury stock (in shares)					5
Reissuance of treasury stock		(4)			74		70
Cash dividends			(234)				(234)
Total comprehensive income						1,134
Ending Balance (in shares) at Jan. 30, 2010	1,106				(430)
Ending Balance at Jan. 30, 2010	$55	$2,935	$10,815	$155	($9,069)		$4,891

2_Statement Of Shareholders Equ

Statement Of Shareholders Equity And Other Comprehensive Income (Parenthetical) (USD $)
In Millions	12 Months Ended Jan. 30, 2010	12 Months Ended Jan. 31, 2009	12 Months Ended Feb. 02, 2008
Change in fair value of derivative financial instruments, tax (benefit) expense	($12)	$14	($17)
Reclassification adjustment for realized (gains) losses on derivative financial instruments, tax expense (benefit)	$6	($13)	$11

Statement Of Cash Flows Indirec

Statement Of Cash Flows Indirect (USD $)
In Millions	12 Months Ended Jan. 30, 2010	12 Months Ended Jan. 31, 2009	12 Months Ended Feb. 02, 2008
Cash flows from operating activities:
Net income	$1,102	$967	$833
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	655	653	635
Amortization of lease incentives	(82)	(85)	(88)
Share-based compensation	64	55	52
Tax benefit from exercise of stock options and vesting of stock units	(2)	5	8
Excess tax benefit from exercise of stock options and vesting of stock units	(4)	(6)	(7)
Non-cash and other items	16	61	54
Deferred income taxes	(50)	10	(51)
Changes in operating assets and liabilities:
Merchandise inventory	43	51	252
Other current assets and other long-term assets	83	34	18
Accounts payable	40	(4)	199
Accrued expenses and other current liabilities	(23)	(284)	32
Income taxes payable, net of prepaid and other tax-related items	64	(94)	(4)
Lease incentives and other long-term liabilities	22	49	148
Net cash provided by operating activities	1,928	1,412	2,081
Cash flows from investing activities:
Purchases of property and equipment	(334)	(431)	(682)
Proceeds from sale of property and equipment	1	1	11
Purchases of short-term investments	(350)	(75)	(894)
Maturities of short-term investments	125	251	1,287
Acquisition of business, net of cash acquired	0	(142)	0
Change in restricted cash	21	(1)	7
Change in other long-term assets	0	(1)	(3)
Net cash used for investing activities	(537)	(398)	(274)
Cash flows from financing activities:
Payments of long-term debt	(50)	(138)	(326)
Proceeds from share-based compensation, net of withholding tax payments	56	75	125
Repurchases of common stock	(547)	(705)	(1,700)
Excess tax benefit from exercise of stock options and vesting of stock units	4	6	7
Cash dividends paid	(234)	(243)	(252)
Net cash used for financing activities	(771)	(1,005)	(2,146)
Effect of foreign exchange rate fluctuations on cash	13	(18)	33
Net increase (decrease) in cash and cash equivalents	633	(9)	(306)
Cash and cash equivalents at beginning of period	1,715	1,724	2,030
Cash and cash equivalents at end of period	2,348	1,715	1,724
Non-cash investing activities:
Purchases of property and equipment, not yet paid at end of period	37	35	55
Supplemental disclosure of cash flow information:
Cash paid for interest during the period	3	17	39
Cash paid for income taxes during the period	$702	$674	$535

Organization and Summary of Sig

Organization and Summary of Significant Accounting Policies
	12 Months Ended Jan. 30, 2010
Organization and Summary of Significant Accounting Policies	Note 1. Organization and Summary of Significant Accounting Policies Organization The Gap, Inc., a Delaware Corporation, is a global specialty retailer offering clothing, accessories, and personal care products for men, women, children, and babies under the Gap, Old Navy, Banana Republic, Piperlime, and Athleta brands. We operate stores in the United States, Canada, the United Kingdom, France, Ireland, and Japan, and we also have franchise agreements with unaffiliated franchisees to operate stores in Asia, Australia, Europe, LatinAmerica, and the Middle East under the Gap and Banana Republic brand names. Our U.S. customers can shop online at gap.com, oldnavy.com, bananarepublic.com, piperlime.com, and athleta.com. Principles of Consolidation The Consolidated Financial Statements include the accounts of The Gap, Inc. and its subsidiaries (the Company, we, and our). All intercompany transactions and balances have been eliminated. Fiscal Year Our fiscal year is a 52- or 53-week period ending on the Saturday closest to January31. Fiscal years ended January30, 2010 (fiscal 2009), January31, 2009 (fiscal 2008) and February2, 2008 (fiscal 2007) consisted of 52 weeks. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the UnitedStates of America 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 thoseestimates. Cash and Cash Equivalents, Short-Term Investments, and Restricted Cash Amounts in-transit from banks for customer credit card and debit card transactions that process in less than seven days are classified as cash and cash equivalents in the Consolidated Balance Sheets. The banks process the majority of these amounts within one to two business days. All highly liquid investments with maturities of 91 days or less at the date of purchase are classified as cash equivalents. Highly liquid investments with maturities of greater than 91 days and less than one year from the balance sheet date are classified as short-term investments. Our cash and cash equivalents and short-term investments are placed primarily in money market funds, domestic commercial paper, U.S. treasury bills, and bank deposits, and are classified as held-to-maturity based on our positive intent and ability to hold the securities to maturity. These investments are stated at amortized cost, which approximates market value due to their short maturities. Income related to these securities is recorded in interest income in the Consolidated Statements ofIncome. Any cash that is legally restricted from use is recorded in restricted cash in the Consolidated Balance Sheets. If the purpose of restricted cash relates to acquiring a long-term asset, liquidating a long-term liability or is otherwise unavailable for a period longer than one year from the balance sheet date, the restricted cash is classified as a long-term asset. Otherwise,

Additional Financial Statement

Additional Financial Statement Information
	12 Months Ended Jan. 30, 2010
Additional Financial Statement Information	Note 2. Additional Financial Statement Information Cash and Cash Equivalents and Short-Term Investments Cash and cash equivalents and short-term investments consist of the following: ($ in millions) January30, 2010 January31, 2009 Cash $ 1,279 $ 1,195 Domestic commercial paper 590 275 Bank certificates of deposit and time deposits 479 245 Cash equivalents (original maturities of 91 days or less) 1,069 520 Cash and cash equivalents $ 2,348 $ 1,715 U.S. treasury bills $ 50 $ Bank certificates of deposit and time deposits 175 Short-term investments (original maturities of greater than 91 days) $ 225 $ We did not record any impairment charges on our cash equivalents and short-term investments in fiscal 2009, 2008, or 2007. Restricted Cash Restricted cash consists primarily of cash that serves as collateral for our insurance obligations. Restricted cash of $41 million as of January31, 2009 also included collateral from our cross-currency interest rate swap, which was reclassified to cash and cash equivalents in connection with the settlement in fiscal 2009. Other Current Assets Other current assets consist of the following: ($ in millions) January30, 2010 January31, 2009 Current portion of deferred tax assets $ 193 $ 166 Prepaid minimum rent and occupancy expenses 140 136 Prepaid expenses 119 217 Prepaid catalog 1 3 Other 143 221 Other current assets $ 596 $ 743 No other individual items accounted for greater than five percent of total current assets as of January30, 2010 or January31, 2009. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and consist of the following: ($ in millions) January30, 2010 January31, 2009 Leasehold improvements $ 3,013 $ 2,949 Furniture and equipment 2,417 2,377 Land, buildings, and building improvements 1,086 1,065 Software 832 774 Construction-in-progress 79 80 Property and equipment, at cost 7,427 7,245 Less: Accumulated depreciation (4,799 ) (4,312 ) Property and equipment, net of accumulated depreciation $ 2,628 $ 2,933 Depreciation expense for property and equipment was $643 million, $643 million, and $625 million for fiscal 2009, 2008, and 2007, respectively. No interest related to assets under construction was capitalized in fiscal 2009. Interest of $8 million and $10 million related to assets under construction was capitalized in fiscal 2008 and 2007, respectively. We recorded a charge for the impairment of long-lived assets, primarily related to our Stores reportable segment, of $14 million, $5 million, and $13 million for fiscal 2009, 2008, and 2007, respectively, which is recorded in operating expenses in the Consolidated Statements of Income. See N

Discontinued Operation of Forth

Discontinued Operation of Forth & Towne
	12 Months Ended Jan. 30, 2010
Discontinued Operation of Forth & Towne	Note 3. Discontinued Operation of Forth Towne In February 2007, we announced our decision to close our Forth Towne store locations. The decision resulted from a thorough analysis of the concept, which revealed it was not demonstrating enough potential to deliver an acceptable long-term return on investment. All of the 19 Forth Towne stores were closed by the end of June2007, and we reduced our workforce by approximately 550 employees in fiscal 2007. The results of Forth Towne, net of income tax benefit, are presented as a discontinued operation in the Consolidated Statements of Income for all periods presented and are as follows: Fiscal Year ($ in millions) 2009 2008 2007 Net sales $ $ $ 16 Loss from discontinued operation, before income tax benefit $ $ $ (56 ) Add: Income tax benefit 22 Loss from discontinued operation, net of income tax benefit $ $ $ (34 ) For fiscal 2007, the loss from the discontinued operation of Forth Towne included the following charges on a pre-tax basis: $29 million related to the impairment of long-lived assets, $6 million of lease settlement charges, $5million of employee severance, $4 million of administrative and other costs, and $2 million of net lease losses. Future cash payments for Forth Towne primarily relate to obligations associated with certain leases, and these payments will be made over the various remaining lease terms through 2017. Based on our current assumptions as of January30, 2010, we expect our lease payments, net of sublease income, to be immaterial.

Acquisition, Goodwill, and Inta

Acquisition, Goodwill, and Intangible Assets
	12 Months Ended Jan. 30, 2010
Acquisition, Goodwill, and Intangible Assets	Note 4. Acquisition, Goodwill, and Intangible Assets On September28, 2008, we acquired all of the outstanding capital stock of Athleta Inc., a womens sports and active apparel company based in Petaluma, California, for an aggregate purchase price of $148 million in cash, including transaction costs. The acquisition allows us to enhance our presence in the growing womens active apparel sector in the United States. The results of operations for Athleta are included in the Consolidated Statements of Income beginning September29, 2008.The impact of the acquisition on the Companys results of operations, as if the acquisition had been completed as of the beginning of the periods presented, is not significant. The purchase price was allocated as follows as of September28, 2008: ($ in millions) Goodwill $ 99 Trade name 54 Intangible assets subject to amortization 15 Net liabilities assumed (20 ) Total purchase price $ 148 All of the assets above have been allocated to the Direct reportable segment. None of the goodwill acquired is deductible for tax purposes. During fiscal 2009 and 2008, there were no material changes in the carrying amount of goodwill or the trade name. Intangible assets subject to amortization, consisting primarily of customer relationships, are being amortized over a weighted-average amortization period of four years and are asfollows: ($ in millions) January30, 2010 January31, 2009 Gross carrying amount $ 15 $ 15 Less: Accumulated amortization (8 ) (2 ) Intangible assets subject to amortization, net of accumulated amortization $ 7 $ 13 Amortization expense for intangible assets subject to amortization for fiscal 2009 and 2008 was $6 million and $2million, respectively, and is recorded in operating expenses in the Consolidated Statements of Income. As of January30, 2010, future amortization expense associated with intangible assets subject to amortization for each of the five succeeding fiscal years is as follows: ($ in millions) Fiscal Year 2010 $ 4 2011 $ 2 2012 $ 1 2013 $ 2014 $ During the fourth quarter of fiscal 2009, we completed our annual impairment testing of our goodwill and the trade name and did not recognize any impairment charges.

Debt

Debt
	12 Months Ended Jan. 30, 2010
Debt	Note 5. Debt In September 2007, we paid $326 million related to the maturity of our 6.90 percent notes payable. In December 2008, we paid $138 million related to the maturity of our 8.80 percent notes payable. The remaining $50 million notes payable of our Japanese subsidiary, Gap (Japan) KK, with a fixed interest rate of 6.25 percent per annum, was repaid in March 2009. As of January30, 2010, the Company had no debt outstanding.

Credit Facilities

Credit Facilities
	12 Months Ended Jan. 30, 2010
Credit Facilities	Note 6. Credit Facilities Trade letters of credit represent a payment undertaking guaranteed by a bank on our behalf to pay a vendor a given amount of money upon presentation of specific documents demonstrating that merchandise has shipped. Vendor payables are recorded in the Consolidated Balance Sheets at the time of merchandise title transfer, although the letters of credit are generally issued prior to this. Most of our merchandise vendors are now on open account payment terms. As of January30, 2010, our letter of credit agreements consist of two separate $100million, three-year, unsecured committed letter of credit agreements with two separate banks, for a total aggregate availability of $200 million with an expiration date of May 2011. As of January30, 2010, we had $24million in trade letters of credit issued under these letter of credit agreements. As of January30, 2010, our credit facility consisted of a $500 million, five-year, unsecured revolving credit facility with an expiration date of August 2012 (the Facility). The Facility is available for general corporate purposes, including working capital, trade letters of credit, and standby letters of credit. The facility usage fees and fees related to the Facility fluctuate based on our long-term senior unsecured credit ratings and our leverage ratio. If we were to draw on the Facility, interest would be a base rate (typically the London Interbank Offered Rate) plus a margin based on our long-term senior unsecured credit ratings and our leverage ratio on the unpaid principal amount. To maintain availability of funds under the Facility, we pay a facility fee on the full facility amount, regardless of usage. As of January30, 2010, there were no borrowings under the Facility. The net availability of the Facility, reflecting $56million of outstanding standby letters of credit, was $444 million as of January30, 2010. The Facility and letter of credit agreements contain financial and other covenants, including but not limited to limitations on liens and subsidiary debt as well as the maintenance of two financial ratiosa fixed charge coverage ratio and a leverage ratio. Violation of these covenants could result in a default under the Facility and letter of credit agreements, which would permit the participating banks to terminate our ability to access the Facility for letters of credit and advances, terminate our ability to request letters of credit under the letter of credit agreements, require the immediate repayment of any outstanding advances under the Facility, and require the immediate posting of cash collateral in support of any outstanding letters of credit under the letter of creditagreements.

Fair Value Measurements

Fair Value Measurements
	12 Months Ended Jan. 30, 2010
Fair Value Measurements	Note 7. Fair Value Measurements Financial Assets and Liabilities Financial assets and liabilities measured at fair value on a recurring basis are asfollows: Fair Value Measurements at Reporting Date Using ($ in millions) January30,2010 QuotedPricesin ActiveMarketsfor Identical Assets (Level 1) SignificantOther ObservableInputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Derivative financial instruments $ 9 $ $ 9 $ Deferred compensation plan assets 21 21 Total $ 30 $ 21 $ 9 $ Liabilities: Derivative financial instruments $ 27 $ $ 27 $ Fair Value Measurements at Reporting Date Using ($ in millions) January31,2009 QuotedPricesin ActiveMarketsfor IdenticalAssets (Level 1) SignificantOther ObservableInputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Derivative financial instruments $ 87 $ $ 87 $ Deferred compensation plan assets 18 18 Total $ 105 $ 18 $ 87 $ Liabilities: Derivative financial instruments $ 52 $ $ 52 $ Derivative financial instruments primarily include foreign exchange forward contracts. The principal currencies hedged against changes in the U.S.Dollar are Euro, British pounds, Japanese yen, and Canadian dollars. The fair value of the Companys 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 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 Consolidated Balance Sheets. We maintain deferred compensation plans which allow eligible employees and non-employee members of the Board of Directors to defer compensation up to a maximum amount. Plan investments are recorded at market value and are designated for the deferred compensation plans. The fair value of the Companys deferred compensation plan assets is determined based on quoted market prices, and the assets are recorded in other long-term assets in the Consolidated Balance Sheets. In addition, as of January30, 2010 and January31, 2009, we had highly liquid investments classified as cash and cash equivalents and short-term investments measured using level 1 inputs. These investments are placed primarily in money market funds, domestic commercial paper, U.S. treasury bills, and bank deposits, and are classified as held-to-maturity based on our positive intent and ability to hold the securities to maturity. These investments are stated at amortized cost, which approximates market value due to their short maturities. Nonfinancial Assets Effective February1, 2009, we adopted e

Derivative Financial Instrument

Derivative Financial Instruments
	12 Months Ended Jan. 30, 2010
Derivative Financial Instruments	Note 8. Derivative Financial Instruments Effective February1, 2009, we adopted enhanced disclosure requirements for derivative financial instruments and hedging activities. We operate in foreign countries, which exposes us to market risk associated with foreign currency exchange rate fluctuations. Our risk management policy is to hedge a significant portion of forecasted merchandise purchases for foreign operations, forecasted intercompany royalty payments, and intercompany obligations that bear foreign exchange risk using foreign exchange forward contracts. The principal currencies hedged against changes in the U.S. dollar are Euro, British pounds, Japanese yen, and Canadian dollars. Until March 2009, we also used a cross-currency interest rate swap to swap the interest and principal payable of the $50million debt of our Japanese subsidiary, Gap (Japan) KK. In connection with the maturity of the debt, the swap was settled in March 2009. Wedo not enter into derivative financial contracts for trading purposes. Our derivative financial instruments are recorded in the Consolidated Balance Sheets at fair value determined using pricing models based on current market rates. Cash flows from derivative financial instruments are classified as cash flows from operating activities in the Consolidated Statements of Cash Flows. Cash Flow Hedges We designate the following foreign exchange forward contracts as cash flow hedges: forward contracts used to hedge forecasted merchandise purchases denominated primarily in U.S. dollars made by our international subsidiaries whose functional currencies are their local currencies and forward contracts used to hedge forecasted intercompany royalty payments denominated in Japanese yen and Canadian dollars received by entities whose functional currencies are U.S. dollars. There were no material amounts recorded in income for fiscal 2009, 2008, or 2007 as a result of hedge ineffectiveness, hedge components excluded from the assessment of effectiveness, or the discontinuance of cash flow hedges because the forecasted transactions were no longer probable. We make merchandise purchases on a monthly basis, and we enter into foreign exchange forward contracts to hedge forecasted merchandise purchases generally occurring in 12 to 18 months. We make intercompany royalty payments on a quarterly basis, and we enter into foreign exchange forward contracts to hedge intercompany royalty payments generally occurring in 12 to 15 months. At January30, 2010, we had foreign exchange forward contracts outstanding to buy the notional amount of $671million and 21million British pounds and to sell various currencies related to our forecasted merchandise purchases and forecasted intercompany royalty payments. Net Investment Hedges We also use foreign exchange forward contracts to hedge the net assets of international subsidiaries to offset the foreign currency translation and economic exposures related to our investment in the subsidiaries. There were no amounts recorded in income for fiscal 2009, 2008, or 2007 as a result of hedge ineffectiveness, hedge components excluded from the assessment of effectiveness, or the

Common Stock

Common Stock
	12 Months Ended Jan. 30, 2010
Common Stock	Note 9. Common Stock Common and Preferred Stock The Board of Directors is authorized to issue 60million shares of Class B common stock, which is convertible into shares of common stock on a share-for-share basis. Transfer of the shares is restricted. In addition, the holders of the Class B common stock have six votes per share on most matters and are entitled to a lower cash dividend. NoClass B shares have been issued as of January30, 2010. The Board of Directors is authorized to issue 30million shares of one or more series of preferred stock, which has a par value of $0.05 per share, and to establish at the time of issuance the issue price, dividend rate, redemption price, liquidation value, conversion features, and such other terms and conditions of each series (including voting rights) as the Board of Directors deems appropriate, without further action on the part of the stockholders. Nopreferred shares have been issued as of January30, 2010. Share Repurchases Share repurchases are as follows: Fiscal Year ($ and shares in millions except average per share cost) 2009 2008 2007 Number of shares repurchased 24 46 89 Total cost $ 510 $ 745 $ 1,700 Average per share cost including commissions $ 21.30 $ 16.36 $ 19.05 In fiscal 2006 and 2007, the Board of Directors authorized share repurchases of $1.3 billion and $1.5 billion, respectively, which were both fully utilized by the end of fiscal 2007. In February 2008, the Board of Directors authorized $1 billion for additional share repurchases, which was fully utilized by the end of fiscal 2009. In November 2009, the Board of Directors authorized an additional $500 million share repurchase program, of which $255 million was utilized through January30, 2010. This authorization was fully utilized in March 2010. In connection with the fiscal 2007, 2008, and 2009 authorizations, we entered into purchase agreements with individual members of the Fisher family (related party transactions). The Fisher family shares were purchased at the same weighted-average market price that we paid for share repurchases in the open market. The purchase agreements were terminable upon 15 business days notice by the Company or individual Fisher family members. During fiscal 2009, 2008, and 2007, approximately 2million, 7million, and 13million shares, respectively, were repurchased for $40 million, $117 million, and $249 million, respectively, from the Fisher family subject to these agreements. All of the share repurchases were paid for as of January30, 2010 except $3 million that was payable to Fisher family members. As of January31, 2009, all except $40 million of total share repurchases were paid for, of which $21million was payable to Fisher family members. In February 2010, we announced that our Board of Directors authorized $1 billion for additional share repurchases. We have not entered into purchase agreements with members of the Fisher family in connection with this authorization.

Share-Based Compensation

Share-Based Compensation
	12 Months Ended Jan. 30, 2010
Share-Based Compensation	Note 10. Share-Based Compensation Total share-based compensation expense recognized in the Consolidated Statements of Income, primarily in operating expenses, is as follows: Fiscal Year ($ in millions) 2009 2008 2007 Stock units $ 51 $ 39 $ 34 Stock options 9 12 14 Employee stock purchase plan 4 4 4 Share-based compensation expense 64 55 52 Less: Income tax benefit (25 ) (21 ) (20 ) Share-based compensation expense, net of tax $ 39 $ 34 $ 32 No material share-based compensation expense was capitalized in fiscal 2009, 2008, and 2007. Other than the stock option modification noted below, there were no other material modifications made to our outstanding stock options and other stock awards in fiscal 2009, 2008, and 2007. General Description of Stock Option and Other Stock Award Plans The 1996 Stock Option and Award Plan (the 1996 Plan) was established on March26, 1996 and amended and restated on January28, 2003. The 1996 Plan was further amended and restated on January24, 2006 and renamed the 2006 Long-Term Incentive Plan (the 2006 Plan). The 2006 Plan was further amended and restated on August20, 2008. Under the 2006 Plan, nonqualified stock options and other stock awards are granted to officers, directors, eligible employees, and consultants at exercise prices or with initial values equal to the fair market value of the Companys common stock at the date of grant or as determined by the Compensation and Management Development Committee of the Board of Directors (the Committee). The 2002 Stock Option Plan (the 2002 Plan) was established on January1, 1999. On May9, 2006, the 2002 Plan was discontinued, and only those awards then outstanding continue to be subject to the terms of the 2002 Plan under which they were granted. The 2002 Plan empowered the Committee to award nonqualified stock options to non-officer employees. As of January30, 2010, we had 115,567,431shares of our common stock available for future issuance for our stock option and other stock award plans. Stock options generally expire 10 years from the grant date, three months after employee termination, or one year after the date of an employees retirement or death, if earlier. In addition, stock options generally vest over a four year period, with shares becoming exercisable in equal annual installments of 25 percent. Other stock awards generally vest over a four year period in equal annual installments of 25 percent. Beginning in the second quarter of fiscal 2009, all shares related to stock options and other stock awards are issued from treasury stock. Stock Option and Other Stock Award Modification In February 2007, the Committee approved the modification of certain stock options and other stock awards held by designated employees such that at the time of an involuntary termination without cause, any outstanding, unvested time-based options or other stock awards scheduled to vest within a defined time frame would be accelerated. No materi

Leases

Leases
	12 Months Ended Jan. 30, 2010
Leases	Note 11. Leases We lease most of our store premises and some of our corporate facilities and distribution centers. These operating leases expire at various dates through 2033. Most store leases are for a five year base period and include options that allow us to extend the lease term beyond the initial base period, subject to terms agreed upon at lease inception. Some leases also include early termination options, which can be exercised under specific conditions. We also lease certain equipment under operating leases that expire at various dates through 2012. The aggregate minimum non-cancelable annual lease payments under leases in effect on January30, 2010, are asfollows: ($ in millions) Fiscal Year 2010 $ 986 2011 792 2012 608 2013 476 2014 372 Thereafter 938 Total minimum lease commitments $ 4,172 The total minimum lease commitment amount above does not include minimum sublease rent income of $17million receivable in the future under non-cancelable sublease agreements. Rent expense related to our store premises, corporate facilities, and distribution centers under operating leases is as follows: Fiscal Year ($ in millions) 2009 2008 2007 Minimum rent expense $ 973 $ 992 $ 970 Contingent rent expense 135 126 129 Less: Sublease income (2 ) (4 ) (4 ) Total $ 1,106 $ 1,114 $ 1,095 In addition to the amounts disclosed in the rent expense table above, we had rent expense related to equipment under operating leases of $4 million, $5 million, and $6 million for fiscal 2009, 2008, and 2007, respectively. We had lease loss reserves of $13 million and $10 million as of January30, 2010 and January31, 2009, respectively. Lease losses are recorded in operating expenses in the Consolidated Statements of Income and were $6 million, $8million, and $5 million for fiscal 2009, 2008, and 2007, respectively. Remaining cash expenditures associated with our lease loss reserve are expected to be paid over the various remaining lease terms through 2017. Based on our current assumptions as of January30, 2010, we expect a total net cash outlay of approximately $18 million for future rent.

Income Taxes

Income Taxes
	12 Months Ended Jan. 30, 2010
Income Taxes	Note 12. Income Taxes For financial reporting purposes, components of income from continuing operations before income taxes are as follows: Fiscal Year ($ in millions) 2009 2008 2007 United States $ 1,511 $ 1,209 $ 1,073 Foreign 305 375 333 Income from continuing operations before income taxes $ 1,816 $ 1,584 $ 1,406 The provision for income taxes consists of the following: Fiscal Year ($ in millions) 2009 2008 2007 Current: Federal $ 572 $ 440 $ 443 State 78 43 56 Foreign 114 124 91 Total current 764 607 590 Deferred: Federal (43 ) 5 (42 ) State (10 ) 5 (18 ) Foreign 3 9 Total deferred (50 ) 10 (51 ) Total provision $ 714 $ 617 $ 539 During fiscal 2009, we assessed the anticipated cash needs and overall financial position of our Canadian and Japanese subsidiaries. As a result, we determined that we no longer intend to utilize approximately $117 million and $83 million of the undistributed earnings of our Canadian and Japanese subsidiaries, respectively, in foreign operations indefinitely. Accordingly, we have established a deferred tax liability for U.S. income taxes with respect to such earnings as of January30, 2010 and have recorded related tax expense of $9 million. The foreign component of pre-tax income before elimination of intercompany transactions in fiscal 2009, 2008, and 2007 was $305 million, $375 million, and $333 million, respectively. Except as noted above and where required by U.S. tax law, no provision was made for U.S. income taxes on the undistributed earnings of the foreign subsidiaries, as we intend to utilize those earnings in the foreign operations for an indefinite period of time or repatriate such earnings only when tax-effective to do so. That portion of accumulated undistributed earnings of foreign subsidiaries as of January30, 2010 and January31, 2009 was approximately $1.1 billion for both years. If the undistributed earnings were repatriated, the unrecorded deferred tax liability as of January30, 2010 and January31,2009 would have been approximately $148 million and $147 million, respectively. The difference between the effective income tax rate and the U.S. federal income tax rate is as follows: Fiscal Year 2009 2008 2007 Federal tax rate 35.0 % 35.0 % 35.0 % State income taxes, less federal benefit 3.7 3.5 3.1 Tax impact of foreign operations 1.4 1.7 2.3 Other (0.8 ) (1.2 ) (2.1 ) Effective tax rate 39.3 % 39.0 % 38.3 % Deferred tax assets (liabilities) consist of the following: ($ in millions) January30, 2010 January31, 2009 Deferred tax assets: Deferred rent $ 113

Employee Benefit Plans

Employee Benefit Plans
	12 Months Ended Jan. 30, 2010
Employee Benefit Plans	Note 13. Employee Benefit Plans We have a qualified defined contribution retirement plan called GapShare, which is available to employees who meet certain age and service requirements. This plan permits employees to make contributions up to the maximum limits allowable under the Internal Revenue Code. Under the plan, we match, in cash, all or a portion of employees contributions under a predetermined formula. Our contributions vest immediately. Our contributions to GapShare were $35 million, $34 million, and $36 million in fiscal 2009, 2008, and 2007, respectively. We also have a deferred compensation plan that allows eligible employees and non-employee members of the Board of Directors to defer compensation up to a maximum amount. Plan investments are recorded at fair market value and are designated for the deferred compensation plan. The Companys deferred compensation plan assets are determined based on quoted market prices.As of January30, 2010 and January31, 2009, the assets related to the deferred compensation plan were $21 million and $18 million, respectively, and were recorded in other long-term assets in the Consolidated Balance Sheets. As of January30, 2010 and January31, 2009, the corresponding liabilities relating to the deferred compensation plan were $22 million and $18 million, respectively, and were recorded in lease incentives and other long-term liabilities in the Consolidated Balance Sheets. We match all or aportion of employees contributions under a predetermined formula. Plan investments are elected by the participants, and investment returns are not guaranteed by the Company. Our contributions to the deferred compensation plan in fiscal 2009, 2008, and 2007 were not material. We do not match non-employee members ofthe Board of Directors contributions under the deferred compensation plan.

Earnings per Share

Earnings per Share
	12 Months Ended Jan. 30, 2010
Earnings per Share	Note 14. Earnings per Share Weighted-average number of shares used for earnings per share is as follows: Fiscal Year (shares in millions) 2009 2008 2007 Weighted-average number of sharesbasic 694 716 791 Common stock equivalents 5 3 3 Weighted-average number of sharesdiluted 699 719 794 The above computations of weighted-average number of sharesdiluted exclude 25million, 31million, and 33million shares related to stock options and other stock awards for fiscal 2009, 2008, and 2007, respectively, as their inclusion would have an antidilutive effect on earnings per share.

Commitments and Contingencies

Commitments and Contingencies
	12 Months Ended Jan. 30, 2010
Commitments and Contingencies	Note 15. Commitments and Contingencies In January 2006, we entered into a non-exclusive services agreement with IBM to operate certain aspects of our information technology infrastructure. The agreement was amended effective March2, 2009. The services agreement expires in March 2016, and we have the right to renew it for up to three additional years. We have various options to terminate the agreement, and we pay IBM under a combination of fixed and variable charges, with the variable charges fluctuating based on our actual consumption of services. IBM also has certain termination rights in the event of our material breach of the agreement and failure to cure. We paid $120million, $134million, and $146 million to IBM for fixed charges during fiscal 2009, 2008, and 2007, respectively. Based on the current projection of service needs, we expect to pay approximately $623 million to IBM over the remaining term of the contract. We have assigned certain store and corporate facility leases to third parties as of January30, 2010.Under these arrangements, we are secondarily liable and have guaranteed the lease payments of the new lessees for the remaining portion of our original lease obligations through 2019.The maximum potential amount of future lease payments we could be required to make is approximately $31 million as of January30, 2010.We recognize a liability for such guarantees when events or changes in circumstances indicate that the loss is probable and the amount of such loss can be reasonably estimated. The carrying amount of the liability related to the guarantees was $2 million as of January30, 2010 and January31, 2009. 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 financial condition or results of operations. As party to a reinsurance pool for workers compensation, general liability, and automobile liability, we have guarantees with a maximum exposure of $14 million as of January30, 2010, of which $0.2 million has been cash collateralized. We are currently in the process of winding down our participation in the reinsurance pool. Our maximum exposure and cash collateralized balance are expected to decrease in the future as our participation in the reinsurance pool diminishes. As a multinational company, we are subjec

Segment Information

Segment Information
	12 Months Ended Jan. 30, 2010
Segment Information	Note 16. Segment Information We identify our operating segments according to how our business activities are managed and evaluated. All of our operating segments sell a group of similar products clothing, accessories, and personal care products. We have two reportable segments: Stores The Stores reportable segment includes the results of the retail stores for each of our brands: Gap, OldNavy, and Banana Republic. We have aggregated the results of all Stores operating segments into one reportable segment because we believe the operating segments have similar economic characteristics. Direct The Direct operating segment includes the results of the online business for each of our web-based brands: gap.com, oldnavy.com, bananarepublic.com, piperlime.com, and beginning in September 2008, athleta.com. The Direct operating segment also includes Athletas catalog business. Based on the different distribution method associated with the Direct operating segment, Direct is considered a reportable segment. The accounting policies for each of our operating segments are the same as those described in Note 1 of Notes to Consolidated Financial Statements. Net sales by brand, region, and reportable segment are as follows: ($ in millions) Fiscal Year 2009 Gap OldNavy Banana Republic Other(3) Total Percentage ofNetSales U.S.(1) $ 3,508 $ 4,949 $ 2,034 $ $ 10,491 74 % Canada 312 386 162 860 6 Europe 683 24 36 743 5 Asia 774 106 48 928 7 Other Regions 57 57 Total Stores reportable segment 5,277 5,335 2,326 141 13,079 92 Direct reportable segment (2) 324 473 134 187 1,118 8 Total $ 5,601 $ 5,808 $ 2,460 $ 328 $ 14,197 100 % Sales Growth (Decline) (6 )% 2 % (7 )% 46 % (2 )% Fiscal Year 2008 Gap OldNavy Banana Republic Other(3) Total Percentage ofNetSales U.S.(1) $ 3,840 $ 4,840 $ 2,221 $ $ 10,901 75 % Canada 329 392 146 867 6 Europe 724 23 33 780 6 Asia 732 101 47 880 6 Other Regions 68 68 Total Stores reportable segment 5,625 5,232 2,491 148 13,496 93 Direct reportable segment (2) 333 475 145 77 1,030 7 Total $ 5,958 $ 5,707 $ 2,636 $ 225 $ 14,526 100 % Sales Growth (Decline) (5 )% (14 )% (3 )% 84 % (8 )% Fiscal Year 2007 Gap Old Navy

Quarterly Information

Quarterly Information (Unaudited)
	12 Months Ended Jan. 30, 2010
Quarterly Information (Unaudited)	Note17. Quarterly Information (Unaudited) The following quarterly data are derived from our Consolidated Statements of Income: ($ in millions except per share amounts) 13Weeks Ended May2, 2009 13Weeks Ended August1, 2009 13 Weeks Ended October31, 2009 13 Weeks Ended January30, 2010 52 Weeks Ended January30, 2010 (fiscalyear2009) Net sales $ 3,127 $ 3,245 $ 3,589 $ 4,236 $ 14,197 Gross profit $ 1,239 $ 1,288 $ 1,524 $ 1,673 $ 5,724 Net income $ 215 $ 228 $ 307 $ 352 $ 1,102 Earnings per sharebasic (1): $ 0.31 $ 0.33 $ 0.44 $ 0.51 $ 1.59 Earnings per sharediluted (1): $ 0.31 $ 0.33 $ 0.44 $ 0.51 $ 1.58 ($ in millions except per share amounts) 13Weeks Ended May3, 2008 13Weeks Ended August2, 2008 13 Weeks Ended November1, 2008 13 Weeks Ended January31, 2009 52Weeks Ended January31, 2009 (fiscalyear2008) Net sales $ 3,384 $ 3,499 $ 3,561 $ 4,082 $ 14,526 Gross profit $ 1,342 $ 1,338 $ 1,378 $ 1,389 $ 5,447 Net income $ 249 $ 229 $ 246 $ 243 $ 967 Earnings per sharebasic (1): $ 0.34 $ 0.32 $ 0.35 $ 0.34 $ 1.35 Earnings per sharediluted (1): $ 0.34 $ 0.32 $ 0.35 $ 0.34 $ 1.34 (1) Earnings per share were computed individually for each of the periods presented; therefore, the sum of the earnings per share amounts for the quarters may not equal the total for the year.

Document Information

Document Information
	12 Months Ended Jan. 30, 2010
Document Type	10-K
Amendment Flag	false
Document Period End Date	2010-01-30

Entity Information

Entity Information (USD $)
	12 Months Ended Jan. 30, 2010	Mar. 22, 2010	Jul. 31, 2009
Trading Symbol	GPS
Entity Registrant Name	GAP INC
Entity Central Index Key	0000039911
Current Fiscal Year End Date	--01-30
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		667,420,104
Entity Public Float			$9,000,000,000