As filed with the Securities and Exchange Commission on January 22, 1999
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
THE GAP, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-1697231
(State of Incorporation) (I.R.S. Employer Identification No.)
One Harrison Street, San Francisco, California 94105, (415) 427-2000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------
LAURI SHANAHAN, ESQ.
Senior Vice President and General Counsel
The Gap, Inc.
One Harrison Street, San Francisco, California 94105
(415) 427-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
JOHN F. SEEGAL, ESQ. JOHN L. SAVVA, ESQ.
MARIE B. RIEHLE, ESQ. Sullivan & Cromwell
Orrick, Herrington & Sutcliffe LLP 1888 Century Park East
Old Federal Reserve Building Suite 2100
400 Sansome Street Los Angeles, California 90067
San Francisco, California 94111 (310) 712-6600
(415) 392-1122
---------------
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE
======================================================================================================
Proposed Proposed
Maximum Maximum
Title of Each Class of Amount to be Offering Price Aggregate Amount of
Securities to be Registered Registered* per Unit** Offering Price** Registration Fee
- ------------------------------------------------------------------------------------------------------
Debt Securities................. $500,000,000 100% $500,000,000 $139,000
======================================================================================================
* Or, if any Debt Securities are issued (i) with a principal amount
denominated in one or more foreign currencies or currency units, such
principal amount as shall result in an aggregate initial offering price
equivalent to $500,000,000 at the time of initial offering, or (ii) at an
original issue discount, such greater principal amount as shall result in
proceeds to the registrant of $500,000,000.
** Estimated solely for the purpose of calculating the registration fee.
Exclusive of accrued interest, if any.
---------------
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the SEC, acting pursuant to said Section 8(a), may
determine.
================================================================================
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to completion, dated January 22, 1999
$500,000,000
[LOGO OF GAP INC.]
Debt Securities
-------------
The Gap, Inc. may from time to time issue up to $500,000,000 aggregate
principal amount of Debt Securities. The accompanying Prospectus Supplement
will specify the terms of the securities.
The Gap, Inc. may sell these securities to or through underwriters, and also
to other purchasers or through agents. The names of any underwriters or agents
involved in the sale of the securities will be set forth in the accompanying
Prospectus Supplement.
-------------
Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
-------------
Prospectus dated , 1999.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). You may
read and copy any document we file at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. Our
SEC filings are also available to the public at the SEC's web site at
http://www.sec.gov. Reports, proxy material and other information about us can
also be inspected at the offices of the New York and Pacific Stock Exchanges.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below as well as all future
filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), until we sell
all the Debt Securities:
(a) Our Annual Report on Form 10-K for the fiscal year ended January 31,
1998; and
(b) Our Quarterly Reports on Form 10-Q for the fiscal quarters ended May
2, 1998, August 1, 1998 and October 31, 1998.
This Prospectus is part of a Registration Statement on Form S-3 (the
"Registration Statement") we filed with the SEC under the Securities Act of
1933, as amended (the "Securities Act"). This Prospectus does not contain all
of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the SEC. You
should look at the Registration Statement and its exhibits for further
information about us and about the Debt Securities.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
The Gap, Inc.
One Harrison Street
San Francisco, CA 94105
Attention: Investor Relations
Telephone: 1-800-GAP-NEWS.
In addition, documents incorporated by reference in this Prospectus are made
available by the SEC to any person through (i) the public reference facilities
maintained by the SEC by calling the SEC at 1-800-SEC-0330 and (ii) the SEC's
Internet site at http://www.sec.gov.
2
THE COMPANY
General
The Gap, Inc. (together with its subsidiaries, the "Company") is an
international specialty retailer which operates stores selling casual apparel,
personal care and other accessories for men, women and children under the Gap,
GapKids, babyGap, Banana Republic and Old Navy brands. As of January 2, 1999,
the Company operated 2,430 stores in the United States, Canada, the United
Kingdom, France, Germany and Japan.
The Company designs virtually all of its products for sale under its brands
in Company-operated stores. These brands and their corresponding store formats
collectively are positioned to address a broad consumer base. The Company
operates the following store formats:
Gap, GapKids and babyGap. Founded in 1969, Gap stores offer extensive
selections of classically-styled, high quality, casual apparel at moderate
price points. Products range from wardrobe basics, such as denim, khakis
and T-shirts, to accessories and personal care products for men and women
aged teen to adult. At January 2, 1999, the Company operated 1,108 Gap
stores, including 161 in international locations. One hundred of the
domestic stores are Gap Outlet stores. The Company entered the children's
apparel market with the introduction of GapKids in 1986 and babyGap in
1989. These stores offer casual basics, outerwear, shoes and other
accessories in the tradition of Gap style and quality for children aged
newborn through teen. At January 2, 1999, the Company operated a total of
634 GapKids and babyGap stores, including 128 in international locations.
Banana Republic. Acquired in 1983 with two stores, Banana Republic now
offers sophisticated, fashionable collections of dress-casual and tailored
clothing and accessories for men and women at higher price points. At
January 2, 1999, the Company operated 290 Banana Republic stores, including
9 in Canada.
Old Navy. The Company launched Old Navy in 1994 to address the market
for value-priced family apparel. Old Navy offers broad selections of
apparel, shoes and accessories for adults, children and infants in an
innovative, exciting shopping environment. At January 2, 1999, the Company
operated 398 Old Navy stores.
Direct. The Company established "Gap Online" in 1997, a web-based store
located at www.gap.com. Products from Gap, GapKids and babyGap stores can
be purchased on-line. In 1998, Banana Republic reintroduced its catalog
format, which offers clothing and accessories comparable to those carried
in its collections, and is aimed at developing a closer relationship with
its customer base.
The Company's executive offices are located at One Harrison Street, San
Francisco, California 94105, and its telephone number is (415) 427-2000.
Recent Developments
The Company has been named as a defendant in two lawsuits relating to
sourcing of products from Saipan (Commonwealth of the Northern Mariana
Islands). A complaint was filed on January 13, 1999 in California Superior
Court in San Francisco by the Union of Needletrades Industrial and Textile
Employees, AFL-CIO; Global Exchange; Sweatshop Watch; and Asian Law Caucus
against the Company and 17 other parties. The plaintiffs allege violations of
California's unlawful, fraudulent and unfair business practices and untrue and
misleading advertising statutes in connection with labeling of product and
labor practices regarding workers of factories that make product for the
Company in Saipan. The plaintiffs seek injunctive relief, restitution,
disgorgement of profits and other damages. A second complaint was filed on
January 13, 1999 in Federal District Court, Central
3
District of California, by various unidentified worker plantiffs against the
Company and 25 other parties. Those unidentified worker plaintiffs seek class-
action status and allege, among other things, that the Company violated the
Racketeer Influenced and Corrupt Organizations Act in connection with the labor
practices and treatment of workers of factories in Saipan that make product for
the Company. The plaintiffs seek injunctive relief as well as actual and
punitive damages.
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities offered hereby will be
used by the Company as set forth in a Prospectus Supplement relating to such
Debt Securities. Except as otherwise specified in the Prospectus Supplement
relating to a particular series of Debt Securities, the net proceeds from any
offering will be used for general corporate purposes, including expansion of
stores, distribution centers and headquarters facilities, brand investment,
development of additional distribution channels and repurchase of the Company's
common stock pursuant to the Company's ongoing share repurchase program.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for the periods indicated:
Fiscal Year Ended Nine Months Ended
--------------------------------------------------------------- ----------------------
January 29, January 28, February 3, February 1, January 31, November 1, October 31,
1994 1995 1996 1997 1998 1997 1998
----------- ----------- ----------- ----------- ----------- ----------- -----------
3.81 4.07 3.92 4.18 4.01 2.96 3.52
For purposes of computing the ratios of earnings to fixed charges, earnings
consist of income before taxes plus fixed charges (less capitalized interest),
and fixed charges consist of interest expense, capitalized interest and the
portion of rental expense under operating leases representative of an interest
factor.
DESCRIPTION OF THE DEBT SECURITIES
The Debt Securities are to be issued under an Indenture (as amended or
supplemented from time to time, the "Indenture") between the Company and Harris
Trust Company of California, as Trustee (the "Trustee"), a copy of which is
incorporated by reference as an exhibit to the Registration Statement. The
statements herein relating to the Debt Securities and the following summaries
of certain provisions of the Indenture do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all the
provisions of the Indenture, including the definitions therein of certain
terms, and the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). Wherever particular sections or defined terms of the Indenture are
referred to in this Prospectus or in a Prospectus Supplement, such sections or
defined terms are incorporated herein or therein by reference.
The following sets forth certain general terms and provisions of the Debt
Securities offered hereby. The particular terms of the Debt Securities offered
by any Prospectus Supplement (the "Offered Debt Securities") and the extent, if
any, to which such general terms and provisions may not apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating
to such Offered Debt Securities (the "Applicable Prospectus Supplement").
General
The Indenture does not limit the amount of Debt Securities that may be
issued thereunder and Debt Securities may be issued thereunder from time to
time in one or more series. The Debt
4
Securities will be unsecured and unsubordinated obligations of the Company and
will rank equally and ratably with other unsecured and unsubordinated
obligations of the Company.
Unless otherwise indicated in the Applicable Prospectus Supplement,
principal of, premium, if any, and interest on the Debt Securities will be
payable, and the transfer of Debt Securities will be registrable, at the office
or agency to be maintained by the Company in The City of New York and at any
other office or agency maintained by the Company for this purpose. (Sections
301, 305 and 1002) The Debt Securities will be issued only in fully registered
form without coupons and, unless otherwise indicated in the Applicable
Prospectus Supplement, in denominations of $1,000 or integral multiples of
$1,000. (Section 302) No service charge will be made for any registration of
transfer or exchange of the Debt Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
imposed in connection therewith. (Section 305)
The Applicable Prospectus Supplement will describe the terms of the Offered
Debt Securities, including:
(1) the title of the Offered Debt Securities;
(2) any limit on the aggregate principal amount of the Offered Debt
Securities;
(3) the person or entity to whom any interest on the Offered Debt
Securities shall be payable, if other than the person or entity in
whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for
such interest;
(4) the date or dates on which the principal of and premium, if any, on
the Offered Debt Securities is payable or the method of determination
thereof;
(5) the rate or rates at which the Offered Debt Securities shall bear
interest, if any, or the method of calculating the rate or rates of
interest, the date or dates from which any interest shall accrue or
the method by which the date or dates shall be determined, the
Interest Payment Dates on which any interest shall be payable and the
Regular Record Date for interest payable on any Interest Payment Date;
(6) the place or places where the principal of, premium, if any, and
interest on the Offered Debt Securities shall be payable;
(7) the period or periods within which, the price or prices at which, the
currency or currencies (including currency units) in which and the
other terms and conditions upon which the Offered Debt Securities may
be redeemed, in whole or in part, at the option of the Company;
(8) the obligation, if any, of the Company to redeem or purchase the
Offered Debt Securities pursuant to any sinking fund or analogous
provisions or at the option of a holder and the period or periods
within which, the price or prices at which and the other terms and
conditions upon which the Offered Debt Securities shall be redeemed or
purchased, in whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral multiple of
$1,000, the denominations in which the Offered Debt Securities shall
be issuable;
(10) the currency, currencies or currency units in which payment of the
principal of and any premium and interest on any Offered Debt
Securities shall be payable if other than the currency of the United
States of America and the manner of determining the equivalent thereof
in the currency of the United States of America;
(11) if the amount of payments of principal of or any premium or interest
on any Offered Debt Securities may be determined with reference to an
index, formula or other method, the index, formula or other method by
which these amounts shall be determined;
5
(12) if the principal of or any premium or interest on any Offered Debt
Securities is to be payable, at the election of the Company or a
holder, in one or more currencies or currency units other than that or
those in which the Debt Securities are stated to be payable, the
currency, currencies or currency units in which payment of the
principal of and any premium and interest on the Offered Debt
Securities as to which such election is made shall be payable, and the
periods within which and the other terms and conditions upon which
such election is to be made;
(13) if other than the principal amount, the portion of the principal
amount of the Offered Debt Securities which shall be payable upon
declaration of acceleration of maturity or the method by which the
portion may be determined;
(14) the applicability of the provisions described under "Defeasance of
Offered Debt Securities or Certain Covenants in Certain
Circumstances";
(15) if the Offered Debt Securities will be issuable only in the form of
one or more Global Debt Securities as described under "Global Debt
Securities", the Depositary or its nominee with respect to the Offered
Debt Securities and the circumstances under which the Global Debt
Security may be registered for transfer or exchange or authenticated
and delivered in the name of a person or entity other than the
Depositary or its nominee; and
(16) any other terms of the Offered Debt Securities.
(Section 301)
Debt Securities may be issued under the Indenture as Original Issue Discount
Debt Securities to be offered and sold at a substantial discount below their
stated principal amount. Special Federal income tax, accounting and other
considerations applicable thereto will be described in the Prospectus
Supplement relating thereto. "Original Issue Discount Debt Security" means any
Debt Security which provides for an amount less than the principal amount to be
due and payable upon a declaration of acceleration of maturity upon the
occurrence and continuance of an Event of Default. (Section 101)
If the purchase price of any of the Debt Securities is payable in one or
more foreign currencies or currency units, if any Debt Securities are
denominated in one or more foreign currencies or currency units or if the
principal of, premium, if any, or interest, if any, on any Debt Securities is
payable in one or more foreign currencies or currency units, the restrictions,
elections, material U.S. federal income tax considerations and other
information with respect to such issue of Debt Securities and such foreign
currency or currency units will be set forth in the Applicable Prospectus
Supplement.
If any index is used to determine the amount of payments of principal of,
premium, if any, or interest, if any, on any series of Debt Securities,
material U.S. federal income tax, accounting and other considerations
applicable thereto will be described in the Applicable Prospectus Supplement.
Global Debt Securities
The following description of Global Debt Securities will apply to any series
of Debt Securities except as otherwise provided in the Applicable Prospectus
Supplement.
The Debt Securities of a series may be issued in the form of one or more
Global Debt Securities that will be deposited with or on behalf of a
Depositary, which will be a clearing agent registered under the Exchange Act.
Global Debt Securities will be registered in the name of the Depositary or a
nominee of the Depositary, will be deposited with the Depositary or nominee or
a custodian therefor and will bear a legend regarding the restrictions on
exchanges and registration of transfer and any other matters as may be provided
for pursuant to the Indenture. Unless and until it is exchanged in whole or in
part for Debt Securities in definitive certificated form, a Global Debt
Security may not be transferred or exchanged except as a whole by the
Depositary for such Global Debt Security to a
6
nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any nominee to a
successor Depositary for such series or a nominee of a successor Depositary, or
except in the circumstances described in the Applicable Prospectus Supplement.
(Section 305)
Upon the issuance of any Global Debt Security, and the deposit of the Global
Debt Security with or on behalf of the Depositary for the Global Debt Security,
the Depositary will credit on its book-entry registration and transfer system
the respective principal amounts of the Debt Securities represented by the
Global Debt Security to the accounts of institutions ("Participants") that have
accounts with the Depositary. The accounts to be credited will be designated by
the underwriters or agents engaging in the distribution of the Debt Securities
or by the Company, if the Debt Securities are offered and sold directly by the
Company. Ownership of beneficial interests in a Global Debt Security will be
limited to Participants or persons that may hold interests through
Participants. Ownership of beneficial interests in a Global Debt Security will
be shown on, and the transfer of that ownership will be effected only through,
records maintained by the Depositary for the Global Debt Security or by its
nominee. Ownership of beneficial interests in the Global Debt Security by
persons who hold through Participants will be shown on, and the transfer of
beneficial interests within such Participants will be effected only through,
records maintained by those Participants. The laws of some jurisdictions
require that certain purchasers of securities take physical delivery of
securities in definitive form. These laws may impair the ability to transfer
beneficial interests in a Global Debt Security.
So long as the Depositary for a Global Debt Security, or its nominee, is the
owner of that Global Debt Security, the Depositary or its nominee, as the case
may be, will be considered the sole owner or holder of the Debt Security
represented by that Global Debt Security for all purposes under the Indenture.
Accordingly, each person owning a beneficial interest in the Global Debt
Security must rely on the procedures of the Depositary and, if the person is
not a Participant, on the procedures of the Participant through which that
person owns its interest, to exercise any rights of a holder under the
Indenture. The Company understands that under existing industry practices, if
it requests any action of holders or if an owner of a beneficial interest in a
Global Debt Security desires to give or take any instruction or action which a
holder is entitled to give or take under the Indenture, the Depositary would
authorize the Participants holding the relevant beneficial interests to give or
take that instruction or action, and the Participants would authorize
beneficial owners owning through those Participants to give or take that
instruction or action or would otherwise act upon the instructions of
beneficial owners holding through them.
Unless otherwise specified in the Applicable Prospectus Supplement, payments
with respect to principal, premium, if any, and interest, if any, on the Debt
Securities represented by a Global Debt Security registered in the name of the
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner of that Global Debt Security. The Company
expects that the Depositary for any Debt Securities represented by a Global
Debt Security, upon receipt of any payment of principal or interest in respect
of the Global Debt Security, will credit immediately Participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in the Global Debt Security as shown on the records of the Depositary. The
Company also expects that payments by Participants to owners of beneficial
interests in the Global Debt Security held through those Participants will be
governed by standing instructions and customary practices, as is now the case
with securities in bearer form held for the accounts of customers or registered
in "street name", and will be the responsibility of those Participants. None of
the Company, the Trustee or any agent of the Company or the Trustee shall have
any responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial interests in any Global Debt Security,
or for maintaining, supervising or reviewing any records relating to those
beneficial interests.
7
A Global Debt Security shall be exchangeable for Debt Securities in
certificated registered form, of like tenor and of an equal aggregate principal
amount, only if:
(a) the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for that Global Debt Security or if at any time
the Depositary ceases to be a clearing agency registered under the
Exchange Act;
(b) the Company in its sole discretion determines that such Global Debt
Security shall be exchangeable for Debt Securities in certificated
registered form; or
(c) there shall have occurred and be continuing an Event of Default with
respect to the Debt Securities.
Any Global Debt Security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for Debt Securities registered in the name or
names of such person or persons as the Depositary shall instruct the Trustee.
It is expected that these instructions may be based upon directions received by
the Depositary from its Participants with respect to ownership of beneficial
interests in the Global Debt Security.
Events of Default
Any one of the following events will constitute an Event of Default under
the Indenture with respect to Debt Securities of any series:
(a) failure to pay any interest on any Debt Security of that series when
due, continued for 30 days;
(b) failure to pay principal of or any premium on any Debt Security of that
series when due;
(c) failure to deposit any sinking fund payment, when due, in respect of
any Debt Security of that series;
(d) failure to perform, or breach of, any covenant or warranty of the
Company in the Indenture with respect to Debt Securities of that series
continued for 60 days after written notice as provided in the
Indenture;
(e) a default under any indebtedness for money borrowed by the Company or
any Subsidiary if (A) the default either (1) results from the failure
to pay the principal of any such indebtedness at its stated maturity or
(2) relates to an obligation other than the obligation to pay the
principal of such indebtedness at its stated maturity and results in
such indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable, (B) the
principal amount of such indebtedness, together with the principal
amount of any other such indebtedness in default for failure to pay
principal at stated maturity or the maturity of which has been so
accelerated, aggregates $25,000,000 or more at any one time outstanding
and (C) such indebtedness is not discharged, or such acceleration is
not rescinded or annulled, within 10 business days after written notice
as provided in the Indenture;
(f) certain events of bankruptcy, insolvency or reorganization of the
Company; or
(g) any other Event of Default provided with respect to Debt Securities of
that series.
(Section 501)
If an Event of Default (other than an Event of Default described in clause
(f) of the preceding paragraph) with respect to the Debt Securities of any
series at the time Outstanding shall occur and be continuing, either the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Outstanding Debt Securities of that series may accelerate the maturity of all
Debt Securities of that series; provided, however, that after such
acceleration, but before a judgment or decree based on acceleration, the
holders of a majority in aggregate principal amount of the Outstanding Debt
Securities
8
of that series may, under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than the non-payment of
accelerated principal, have been cured or waived as provided in the Indenture.
If an Event of Default described in clause (f) of the immediately preceding
paragraph occurs, the Outstanding Debt Securities will ipso facto become
immediately due and payable without any declaration or other act on the part of
the Trustee or any holder. (Section 502)
Reference is made to the Applicable Prospectus Supplement relating to any
series of Offered Debt Securities that are Original Issue Discount Debt
Securities for the particular provisions relating to acceleration of the Stated
Maturity of a portion of the principal amount of such series of Original Issue
Discount Debt Securities upon the occurrence of an Event of Default and the
continuation thereof.
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the holders of Debt Securities, unless such
holders shall have offered to the Trustee reasonable indemnity. (Section 603)
Subject to such provisions for the indemnification of the Trustee and to
certain other conditions, the holders of a majority in aggregate principal
amount of the Outstanding Debt Securities of any series will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Debt Securities of that series. (Section 512)
No holder of Debt Securities of any series will have any right to institute
any proceeding with respect to the Indenture or for any remedy thereunder,
unless that holder shall have previously given to the Trustee written notice of
a continuing Event of Default and unless the holders of at least 25% in
principal amount of the Outstanding Debt Securities of that series shall have
made written request, and offered reasonable indemnity, to the Trustee to
institute such proceeding as trustee, and the Trustee shall not have received
from the holders of a majority in aggregate principal amount of the Outstanding
Debt Securities of that series a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days. (Section 507)
However, these limitations do not apply to a suit instituted by a holder of
Debt Securities for enforcement of payment of the principal of and premium, if
any, or interest on such Debt Securities on or after the respective due dates
expressed in such Debt Securities. (Section 508)
The Company is required to furnish to the Trustee annually a statement as to
the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. (Section 1004)
Modification and Waiver
Modifications and amendments of the Indenture may be made by the Company and
the Trustee without the consent of the holders of any of the Debt Securities in
order
(1) to evidence the succession of another entity to the Company and the
assumption of the covenants and obligations of the Company under the
Debt Securities and the Indenture by such successor to the Company;
(2) to add to the covenants of the Company for the benefit of the holders
of all or any series of Debt Securities or to surrender any right or
power conferred on the Company by the Indenture;
(3) to add additional Events of Default with respect to any series of Debt
Securities;
(4) to add to or change any provisions to such extent as may be necessary
to permit or facilitate the issuance of Debt Securities in bearer form
or to facilitate the issuance of Global Debt Securities;
(5) to add to, change or eliminate any provision affecting only Debt
Securities not yet issued;
9
(6) to secure the Debt Securities;
(7) to establish the form or terms of Debt Securities of any series;
(8) to evidence and provide for successor Trustees or to add or change any
provisions to such extent as may be necessary to provide for or
facilitate the appointment of a separate Trustee or Trustees for
specific series of Debt Securities;
(9) to permit payment in respect of Debt Securities in bearer form in the
United States to the extent allowed by law; or
(10) to cure any ambiguity, to correct or supplement any mistaken or
inconsistent provisions or to make any other provisions with respect
to matters or questions arising under the Indenture, provided that any
such action (other than in respect of a mistaken provision) does not
adversely affect in any material respect the interests of any holder
of Debt Securities of any series then outstanding.
(Section 901)
Modifications and amendments of the Indenture also may be made by the
Company and the Trustee with the consent of the holders of not less than a
majority in aggregate principal amount of the Outstanding Debt Securities of
each series issued under the Indenture and affected by the modification or
amendments; provided, however, that no modification or amendment may, without
the consent of the holders of all Debt Securities affected thereby,
(1) change the Stated Maturity of the principal amount of, or any
installment of principal of or interest on, any Debt Security;
(2) reduce the principal amount of, or the premium, if any, or (except as
otherwise provided in the Applicable Prospectus Supplement) interest
on any Debt Security (including in the case of an Original Issue
Discount Debt Security the amount payable upon acceleration of
maturity);
(3) change the place or currency of payment of principal of, premium, if
any, or interest on any Debt Security;
(4) impair the right to institute suit for the enforcement of any payment
on any Debt Security on or after its Stated Maturity (or in the case
of redemption, on or after the Redemption Date); or
(5) reduce the percentage in principal amount of Outstanding Debt
Securities of any series, the consent of whose holders is required for
modification or amendment of the Indenture or for waiver of compliance
with certain provisions of the Indenture or for waiver of certain
defaults.
(Section 902)
The holders of at least a majority in aggregate principal amount of the
Outstanding Debt Securities of any series may, on behalf of all holders of Debt
Securities of that series, waive compliance by the Company with certain
restrictive provisions of the Indenture. (Section 1008) The holders of not less
than a majority in aggregate principal amount of the Outstanding Debt
Securities of any series may, on behalf of all holders of Debt Securities of
that series, waive any past default under the Indenture, except a default in
the payment of principal, premium or interest or in respect of a covenant or
provision of the Indenture that cannot be modified or amended without the
consent of the holder of each Outstanding Debt Security of such series affected
thereby. (Section 513)
No Protection In the Event of a Change of Control
Unless otherwise set forth in the Applicable Prospectus Supplement, the Debt
Securities will not contain any provisions which may afford holders of the Debt
Securities protection in the event of a change in control of the Company or in
the event of a highly leveraged transaction (whether or not the transaction
results in a change in control of the Company).
10
Covenants
Unless otherwise set forth in the Applicable Prospectus Supplement, and
except as set forth below, the Debt Securities will not contain any restrictive
covenants, including covenants restricting the Company or any of its
Subsidiaries from incurring, issuing, assuming or guaranteeing any indebtedness
or encumbering any property of the Company or any subsidiary, or restricting
the Company or any Subsidiary from transferring assets or entering into any
sale and leaseback transaction.
Consolidation, Merger and Sale of Assets
The Company may not consolidate with or merge with or into any other entity
or transfer or lease its assets substantially as an entirety to any entity,
unless
(1) either the Company is the continuing corporation, or any successor or
purchaser is a corporation, partnership or trust organized under the
laws of the United States of America, any State or the District of
Columbia, and the successor or purchaser expressly assumes the
Company's obligations on the Debt Securities under a supplemental
indenture,
(2) immediately after giving effect to the transaction, no Event of
Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have occurred and be
continuing, and
(3) if a supplemental indenture is to be executed in connection with such
consolidation, merger, transfer or lease, the Company has delivered to
the Trustee an officers' certificate and an opinion of counsel stating
compliance with these provisions.
(Section 801)
Defeasance of Offered Debt Securities or Certain Covenants in Certain
Circumstances
Defeasance and Discharge
The Indenture provides that the terms of any series of Debt Securities may
provide the Company with the option to be discharged from any and all
obligations in respect of the Debt Securities of such series (except for
certain transfer and administrative duties) upon the deposit with the Trustee,
in trust, of money and/or U.S. Government Obligations which, through the
payment of interest and principal in accordance with their terms, will provide
money in an amount sufficient to pay any installment of principal (and premium,
if any) and interest on, and any mandatory sinking fund payments in respect of,
the Debt Securities of such series on the Stated Maturity of such payments in
accordance with the terms of the Indenture and such Debt Securities. Discharge
may only occur if, among other things, the Company has delivered to the Trustee
an opinion of counsel to the effect that the Company has received from, or
there has been published by, the United States Internal Revenue Service a
ruling, or there has been a change in tax law, in either case to the effect
that such discharge will not be deemed, or result in, a taxable event with
respect to holders of the Debt Securities of such series. (Sections 1302 and
1304)
Defeasance of Certain Covenants
The Indenture provides that the terms of any series of Debt Securities may
provide the Company with the option to omit to comply with the restrictive
covenant described in this Prospectus under "Consolidation, Merger and Sale of
Assets" and any other covenants made applicable to any series of Debt
Securities as described in the Applicable Prospectus Supplement. The Company,
in order to exercise this option, will be required to deposit with the Trustee
money and/or U.S. Government Obligations which, through the payment of interest
and principal in accordance with their terms, will provide money in an amount
sufficient to pay principal (and premium, if any) and interest on, and any
mandatory sinking fund payments in respect of, the Debt Securities of such
series on the Stated Maturity of such payments in accordance with the terms of
the Indenture and such Debt Securities. The
11
Company will also be required to deliver to the Trustee an opinion of counsel
to the effect that the deposit and related covenant defeasance will not cause
the holders of the Debt Securities of such series to recognize income, gain or
loss for federal income tax purposes. (Sections 1303 and 1304)
In the event the Company exercises this option and the Debt Securities of
such series are declared due and payable because of the occurrence of any Event
of Default, the amount of money and U.S. Government Obligations on deposit with
the Trustee will be sufficient to pay amounts due on the Debt Securities of
such series at the time of their Stated Maturity but may not be sufficient to
pay amounts due on the Debt Securities of such series at the time of the
acceleration resulting from such Event of Default. However, the Company shall
remain liable for such payments.
The Applicable Prospectus Supplement will state if any defeasance provisions
will apply to the Offered Debt Securities.
Concerning the Trustee
Harris Trust Company of California, a California trust company, is the
Trustee under the Indenture. The Trustee may resign at any time or may be
removed by the holders of at least a majority in aggregate principal amount of
the Outstanding Debt Securities. If the Trustee resigns, is removed or becomes
incapable of acting as Trustee or if a vacancy occurs in the office of the
Trustee for any cause, a successor Trustee shall be appointed in accordance
with the provisions of the Indenture.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities to or through one or more underwriters
or dealers and also may sell Debt Securities to other investors directly or
through agents.
The distribution of the Debt Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, or
at market prices prevailing at the time of sale, at prices related to those
prevailing market prices or at negotiated prices.
In connection with the sale of Debt Securities, underwriters may receive
compensation from the Company or from purchasers of Debt Securities for whom
they may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell Debt Securities to or through dealers, and those dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agents. Underwriters, dealers and agents that participate in the
distribution of Debt Securities may be deemed to be underwriters, and any
discounts or commissions received by them from the Company and any profit on
the resale of Debt Securities by them may be deemed to be underwriting
discounts and commissions, under the Securities Act. Any underwriter or agent
will be identified, and any compensation received from the Company will be
described, in the applicable Prospectus Supplement.
Under agreements which may be entered into by the Company, underwriters and
agents who participate in the distribution of Debt Securities may be entitled
to indemnification by the Company against certain liabilities, including
liabilities under the Securities Act.
VALIDITY OF THE DEBT SECURITIES
The validity of the Debt Securities will be passed upon by Orrick,
Herrington & Sutcliffe LLP, San Francisco, California, and, unless otherwise
indicated in a Prospectus Supplement relating to Offered Debt Securities, by
Sullivan & Cromwell, Los Angeles, California, counsel for the underwriters or
agents.
12
EXPERTS
The consolidated financial statements of the Company as of January 31, 1998
and February 1, 1997 and for each of the three fiscal years in the period ended
January 31, 1998, incorporated in this Prospectus by reference from the
Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
With respect to the unaudited interim financial information for the periods
ended May 2, 1998 and May 3, 1997, and for the periods ended August 1, 1998 and
August 2, 1997, and for the periods ended October 31, 1998 and November 1, 1997
which is incorporated herein by reference, Deloitte & Touche LLP have applied
limited procedures in accordance with professional standards for a review of
such information. However, as stated in their reports included in the Company's
Quarterly Reports on Form 10-Q for the quarters ended May 2, 1998, August 1,
1998 and October 31, 1998 and incorporated by reference herein, they did not
audit and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche LLP are not subject to the liability provisions of Section 11
of the Securities Act for their reports on the unaudited interim financial
information because those reports are not "reports" or a "part" of the
registration statement prepared or certified by an accountant within the
meaning of Sections 7 and 11 of the Securities Act.
13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is an itemized statement of expenses of the Company in
connection with the issue of the Debt Securities.
Registration fee................................................ $ 139,000
Rating Agencies fees............................................ 250,000
Fees and expenses of Trustee.................................... 7,000
Printing expenses............................................... 30,000
Blue Sky and legal investment fees and expense.................. 10,000
Accountants' fees and expenses.................................. 75,000
Counsel fees and expenses....................................... 30,000
Miscellaneous................................................... 4,000
---------
Total......................................................... $ 545,000
=========
All except the first of the foregoing amounts are estimates.
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware Corporation Law authorizes a court to award or a
corporation's board of directors to grant indemnity to officers and directors
in terms sufficiently broad to permit such indemnification under certain
circumstances for liabilities (including reimbursement for expenses incurred)
arising under the Securities Act. The Registrant's By-laws provide for
indemnification of the Registrant's directors and officers to the maximum
extent permitted by the Delaware law.
Item 16. Exhibits.
Exhibit
Number Exhibit
------- -------
1.1 Form of Underwriting Agreement.
4.1 Indenture, dated as of September 1, 1997, between the Company and
Harris Trust Company of California, as Trustee (incorporated by
reference to Exhibit 4 to the Company's Quarterly Report on Form 10-
Q for the quarter ended November 1, 1997, SEC's File No. 1-7562).
4.2 Form of Debt Security (included in Exhibit 4.1 hereto).
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP as to the validity of
the Debt Securities.
12.1 Statement Setting Forth Computation of Ratio of Earnings to Fixed
Charges.
15.1 Letter re unaudited interim financial information.
23.1 Consent of Deloitte & Touche LLP.
23.2 The consent of Orrick, Herrington & Sutcliffe LLP is contained in
the opinion filed as Exhibit 5.1 to this Registration Statement.
24.1 Powers of Attorney of Directors and Officers of the Company (set
forth on the signature pages to this Registration Statement).
25.1 Form T-1 Statement of Eligibility and Qualification of Harris Trust
Company of California, as Trustee.
II-1
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the SEC pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no
more than a 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement, or any
material change to such information in the registration statement;
provided, however, that paragraphs (i) and (ii) shall not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act that is incorporated by reference
in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted against the registrant by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this registration
statement or amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Francisco, State of California, on the 22nd
day of January, 1999.
The Gap, Inc.
(Registrant)
By:/s/ Millard S. Drexler
___________________________________
Name:Millard S. Drexler
Title:Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints Millard S. Drexler,
Warren R. Hashagen and Anne B. Gust, and each of them, as his or her true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this Registration Statement or any subsequent registration
statements pursuant to Rule 462 (including any amendments thereto), and to file
the same, with all exhibits thereto, and all documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about
the foregoing, as fully to all intents and purposes as he or she might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them or their substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ Millard S. Drexler Chief Executive Officer and January 22, 1999
____________________________________ Director (Principal
Millard S. Drexler Executive Officer)
/s/ Warren R. Hashagen Senior Vice President and January 22, 1999
____________________________________ Chief Financial Officer
Warren R. Hashagen (Principal Financial and
Accounting Officer)
/s/ Donald G. Fisher Chairman and Director January 22, 1999
____________________________________
Donald G. Fisher
II-3
/s/ Adrian D. P. Bellamy Director January 22, 1999
____________________________________
Adrian D. P. Bellamy
/s/ Doris F. Fisher Director January 22, 1999
____________________________________
Doris F. Fisher
/s/ Robert J. Fisher Director January 22, 1999
____________________________________
Robert J. Fisher
/s/ John M. Lillie Director January 22, 1999
____________________________________
John M. Lillie
/s/ Charles R. Schwab Director January 22, 1999
____________________________________
Charles R. Schwab
/s/ Brooks Walker, Jr. Director January 22, 1999
____________________________________
Brooks Walker, Jr.
/s/ Sergio S. Zyman Director January 22, 1999
____________________________________
Sergio S. Zyman
II-4