-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Per3PoKT98x1icdkdPE5FfqVsNmHjLg1hp5q54ezbnA5R5Bn8f310GeXMkndDObS FisJ+FttITq7DO3WUSjYEQ== 0000039911-96-000013.txt : 19960619 0000039911-96-000013.hdr.sgml : 19960619 ACCESSION NUMBER: 0000039911-96-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19960504 FILED AS OF DATE: 19960618 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GAP INC CENTRAL INDEX KEY: 0000039911 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FAMILY CLOTHING STORES [5651] IRS NUMBER: 941697231 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07562 FILM NUMBER: 96582460 BUSINESS ADDRESS: STREET 1: ONE HARRISON CITY: SAN FRANCISCO STATE: CA ZIP: 94105 BUSINESS PHONE: 4159524400 MAIL ADDRESS: STREET 1: ONE HARRISON STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94105 FORMER COMPANY: FORMER CONFORMED NAME: GAP STORES INC DATE OF NAME CHANGE: 19850617 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ X ] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended May 4, 1996 or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ______________ to ______________ Commission File Number 1-7562 THE GAP, INC. (Exact name of registrant as specified in its charter) Delaware 94-1697231 (State of Incorporation) (I.R.S. Employer Identification No.) One Harrison San Francisco, California 94105 (Address of principal executive offices) Registrant's telephone number, including area code: (415) 952-4400 _______________________ Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.05 par value New York Stock Exchange, Inc. (Title of class) Pacific Stock Exchange, Inc. (Name of each exchange where registered) Securities registered pursuant to Section 12(g) of the Act: None _______________________ Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date. Common Stock, $0.05 par value, 286,822,510 shares as of June 14, 1996
PART 1 THE GAP, INC. AND SUBSIDIARIES ITEM 1 CONSOLIDATED BALANCE SHEETS ($000) May 4, February 3, April 29, 1996 1996 1995 (Unaudited) (See Note 1) (Unaudited) ASSETS Current Assets: Cash and equivalents $ 552,729 $ 579,566 $ 298,218 Short-term investments 79,819 89,506 157,498 Merchandise inventory 489,719 482,575 408,952 Prepaid expenses and other 146,791 128,398 113,894 Total Current Assets 1,269,058 1,280,045 978,562 Property and equipment (net) 981,011 957,752 852,824 Long-term investments 41,573 30,370 16,949 Lease rights and other assets 81,672 74,901 86,393 Total Assets $ 2,373,314 $ 2,343,068 $ 1,934,728 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Notes payable 46,836 21,815 - Accounts payable 204,951 262,505 233,194 Accrued expenses 214,131 194,426 153,142 Income taxes payable 13,901 66,094 30,786 Deferred lease credits and other current 7,034 6,904 5,707 liabilities Total Current Liabilities 486,853 551,744 422,829 Long-term Liabilities: Deferred lease credits and other liabilities 156,864 150,851 127,753 156,864 150,851 127,753 Stockholders' Equity: Common stock $.05 par value Authorized 500,000,000 shares Issued 316,892,180, 315,971,306 and 314,786,422 shares Outstanding 287,248,358, 287,747,984 and 287,833,766 shares 15,845 15,799 15,739 Additional paid-in capital 399,619 335,193 312,788 Retained earnings 1,629,666 1,569,347 1,315,707 Foreign currency translation adjustment (9,830) (9,071) (6,612) Restricted stock plan deferred compensation (43,757) (48,735) (60,753) Treasury stock, at cost (261,946) (222,060) (192,723) 1,729,597 1,640,473 1,384,146 Total Liabilities and Stockholders' Equity $ 2,373,314 $ 2,343,068 $ 1,934,728 See accompanying notes to consolidated financial statements.
THE GAP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS Unaudited ($000 except per share amounts) Thirteen Weeks Ended May 4, 1996 April 29, 1995 Net Sales $ 1,113,154 $ 848,688 Costs and expenses Cost of goods sold and occupancy expenses 699,314 568,131 Operating expenses 282,627 202,575 Net interest income (3,618) (4,849) Earnings before income taxes 134,831 82,831 Income taxes 53,258 32,718 Net earnings $ 81,573 $ 50,113 Weighted average number of shares 288,010,684 287,744,200 Earnings per share $ .28 $ .17 Cash dividends per share $ .08 $ .06 See accompanying notes to consolidated financial statements. THE GAP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited ($000) Thirteen Weeks Ended May 4, 1996 April 29, 1995 Cash Flows from Operating Activities: Net earnings $ 81,573 $ 50,113 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization (a) 52,616 45,429 Tax benefit from exercise of stock options by employees and from vesting of restricted stock 41,276 6,765 Change in operating assets and liabilities: Merchandise inventory (7,212) (37,370) Prepaid expenses and other (18,750) (17,132) Accounts payable (57,289) (31,204) Accrued expenses 19,787 (32,400) Income taxes payable (52,201) (10,606) Deferred lease credits and other long-term liabilities 6,117 (3,339) Net cash provided by (used for) operating activities 65,917 (29,744) Cash Flows from Investing Activities: Net maturity of short-term investments 9,687 31,193 Purchase of long-term investments (11,203) - Purchase of property and equipment (69,186) (60,693) (Acquisition) Disposition of lease rights and other assets (7,799) 1,012 Net cash used for investing activities (78,501) (28,488) Cash Flows from Financing Activities: Net increase (decrease) in notes payable 24,897 (3,517) Issuance of common stock 22,121 3,452 Purchase of treasury stock (39,886) (41,977) Cash dividends paid (21,254) (16,707) Net cash used for financing activities (14,122) (58,749) Effect of exchange rate changes on cash (131) 712 Net increase (decrease) in cash and equivalents (26,837) (116,269) Cash and equivalents at beginning of year 579,566 414,487 Cash and equivalents at end of quarter $ 552,729 $ 298,218 See accompanying notes to consolidated financial statements. (a) Includes amortization of restricted stock. THE GAP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION The consolidated balance sheets as of May 4, 1996 and April 29, 1995, and the interim consolidated statements of earnings and the interim consolidated statements of cash flows for the thirteen weeks ended May 4, 1996 and April 29, 1995 have been prepared by the Company, without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) considered necessary to present fairly the financial position, results of operations and cash flows of the Company at May 4, 1996 and April 29, 1995, and for all periods presented, have been made. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with generally accepted accounting principles have been omitted from these interim financial statements. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended February 3, 1996. The results of operations for the thirteen weeks ended May 4, 1996 are not necessarily indicative of the operating results that may be expected for the year ending February 1, 1997. 2. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Year-to-date 1996 and 1995 gross interest payments were $0.8 million and $0.5 million respectively; income tax payments were $64.1 million and $36.4 million respectively. 3. TWO-FOR-ONE STOCK SPLIT On February 27, 1996, the Company's Board of Directors authorized a two-for-one split of its common stock effective April 10, 1996, in the form of a stock dividend for stockholders of record on March 18, 1996. Per share amounts in the accompanying consolidated financial statements give effect to the stock split. Deloitte & 2101 Webster Street Telephone (510)287-2700 Touche Oakland, California 94612-3027 Facsimile (510)835-4888 INDEPENDENT ACCOUNTANTS' REPORT To the Board of Directors and Stockholders of The Gap, Inc.: We have reviewed the accompanying consolidated balance sheets of The Gap, Inc. and subsidiaries as of May 4, 1996 and April 29, 1995 and the related consolidated statements of earnings and cash flows for the thirteen week periods ended May 4, 1996 and April 29, 1995. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to such consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of The Gap, Inc. and subsidiaries as of February 3, 1996, and the related consolidated statements of earnings, stockholders' equity and cash flows for the year then ended (not presented herein); and in our report dated February 29, 1996 (except for the effects of the stock split, as to which the date is April 10, 1996), we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of February 3, 1996 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it was derived. /S/ Deloitte & Touche LLP May 16, 1996 THE GAP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS Net Sales Thirteen weeks ended May 4, 1996 April 29, 1995 Net sales ($000) $1,113,154 $848,688 Total net sales growth percentage 31 13 Comparable store sales growth percentage (Based on a comparable 13 - week period) 9 <2> Net sales per average square foot 98 90 Average square footage of gross store space (000) 11,334 9,392 Fifty-three Fifty-two weeks ended weeks ended May 4, 1996 April 29, 1995 Number of New stores 225 176 Expanded stores 50 77 Closed stores 44 39 The increase in first quarter fiscal 1996 net sales over the same period last year was attributable to the opening of new stores (net of stores closed), an increase in comparable store sales, and the expansion of existing stores. The increase in net sales per average square foot compared with the same period last year was primarily attributable to an increase in comparable stores sales partially offset by the growing impact of the Old Navy division where lower priced merchandise and significantly larger stores result in lower net sales per average square foot when compared to other divisions . Cost of Goods Sold and Occupancy Expenses Cost of goods sold and occupancy expenses as a percentage of net sales decreased to 62.8 percent for the first quarter of fiscal 1996 from 66.9 percent for the same period in fiscal 1995. The resulting 4.1 percentage point increase in gross margin net of occupancy expenses was attributable to a 2.4 percentage point increase in merchandise margins as a percentage of net sales and a 1.7 percentage point decrease in occupancy expenses as a percentage of net sales. The increase in merchandise margins as a percentage of net sales was primarily attributable to higher initial merchandise margins. The decrease in occupancy expense as a percentage of net sales was primarily attributable to sales leverage resulting from positive comparable store sales growth. The growth of the Old Navy division with lower occupancy expenses as a percentage of net sales per average square foot when compared to other divisions also contributed to the decrease when compared to the same period last year. The Company reviews its inventory levels in order to identify slow- moving merchandise and broken assortments (items no longer in stock in a sufficient range of sizes) and uses markdowns to clear merchandise. Such markdowns may have an adverse impact on earnings depending upon the extent of the markdowns and amount of inventory affected. Operating Expenses Operating expenses as a percentage of net sales increased to 25.4 percent for first quarter of fiscal 1996 compared to 23.9 percent for the same period last year. The 1.5 percentage point increase in operating expenses was primarily attributable to a 1.1 percentage point increase in incentive bonus expense as a percentage of net sales. No incentive bonus expense was recognized in the first quarter of fiscal 1995 . Insurance recoveries received in the first quarter last year for business interruption losses resulted in a .4 percentage point unfavorable comparison this year as a percentage of net sales. Net Interest Income/Expense Net interest income was approximately $3.6 million for the first quarter of fiscal 1996 compared to $4.8 million for the same period last year. Income Taxes The effective tax rate was 39.5 percent for the thirteen weeks ended May 4, 1996 and April 29, 1995 . LIQUIDITY AND CAPITAL RESOURCES The following sets forth certain measures of the Company's liquidity: Thirteen weeks ended May 4, 1996 April 29, 1995 Cash provided by (used for) operating activities ($000) $ 65,917 $(29,744) Working capital ($000) $782,205 $555,733 Current ratio 2.61:1 2.31:1 For the thirteen weeks ended May 4, 1996, the increase in cash provided by operating activities was primarily attributable to an increase in net earnings exclusive of depreciation expense. The Company funds inventory expenditures during normal and peak periods through a combination of cash flows provided by operations and normal trade credit arrangements. The Company's business follows a seasonal pattern, peaking over a total of about ten to twelve weeks during the late summer and holiday periods. For the thirteen weeks ended May 4, 1996, capital expenditures, net of construction allowances and dispositions, totaled approximately $66 million. These expenditures included the addition of 40 new stores, the expansion of 9 stores and the remodeling of certain stores resulting in a net increase in store space of approximately 336,000 square feet or 3 percent since February 3, 1996. For fiscal 1996, the Company expects capital expenditures to total approximately $300 to $350 million, net of construction allowances, representing the addition of approximately 175 to 200 new stores, the expansion of approximately 40 to 50 stores, and the remodeling of certain stores. Planned expenditures also include amounts for administrative facilities, distribution centers, and equipment. The Company expects to fund such capital expenditures with cash flow from operations. Square footage growth is expected to be approximately 15 percent before store closings. New stores are generally expected to be leased. During fiscal 1995, the Company commenced construction of a distribution center in Gallatin, Tennessee for an estimated cost at completion of $45 to $55 million. The facility is expected to be in operation in late fiscal 1996. Additionally in May 1996, the Company exercised an option to purchase land and a building in the Netherlands to relocate its European distribution center. The building was under construction at the time of purchase and is estimated to be operational by Summer 1996. Estimated cost at completion for the land and building is approximately $10 million. This move will result in a more centralized shipping location to the European continent and will support store growth in Europe. In February 1996, the Company exercised an option to purchase land for $9 million in San Bruno, California to expand its headquarters facilities. Construction commenced in April 1996 for an estimated cost at completion of $55 to $60 million. The facility is expected to be in operation in late fiscal 1997. On February 27, 1996, the Company's Board of Directors authorized a two- for-one split of its common stock effective April 10, 1996, in the form of a stock dividend for stockholders of record at the close of business on March 18, 1996. Per share amounts in the accompanying consolidated financial statements give effect to the stock split. The Company has a credit agreement which provides for a $250 million revolving credit facility through June 30, 1998. In addition, the credit agreement provides for the issuance of letters of credit up to $500 million at any one time. The Company had outstanding letters of credit of approximately $412 million at May 4, 1996. Under a program announced in October 1994 to repurchase up to 18 million shares of the Company's outstanding common stock, the Company acquired 1,420,500 shares during the first quarter of 1996 for approximately $40 million. To date under this program, 8,560,300 shares have been repurchased for approximately $161 million. PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a) Exhibits (10.1) Form of Non-Qualified Stock Option Agreement for employees under Registrant's 1996 Stock Option and Award Plan (10.2) Form of Non-Qualified Stock Option Agreement for non-employee directors under Registrant's 1996 Stock Option and Award Plan (10.3) Form of Restricted Stock Agreement under Registrant's 1996 Stock Option and Award Plan (11) Computation of Earnings per Share (15) Letter re: Unaudited Interim Financial Information (27) Financial Data Schedule b) The Company did not file any reports on Form 8-K during the three months ended May 4, 1996. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE GAP, INC. Date: June 14, 1996 By /s/ Warren R. Hashagen Warren R. Hashagen Chief Financial Officer (Principal financial officer of the registrant) Date: June 14, 1996 By /s/ Millard S. Drexler Millard S. Drexler President and Chief Executive Officer EXHIBIT INDEX (10.1) Form of Non-Qualified Stock Option Agreement for employees under Registrant's 1996 Stock Option and Award Plan (10.2) Form of Non-Qualified Stock Option Agreement for non-employee directors under Registrant's 1996 Stock Option and Award Plan (10.3) Form of Restricted Stock Agreement under Registrant's 1996 Stock Option and Award Plan (11) Computation of Earnings per Share (15) Letter re: Unaudited Interim Financial Information (27) Financial Data Schedule EX-10.1 2 THE GAP, INC. NON-QUALIFIED STOCK OPTION AGREEMENT The Gap, Inc. (the "Company") hereby grants to 2x 1x (the "Employee"), a stock option under The Gap, Inc. 1996 Stock Option and Award Plan (the "Plan"), to purchase shares of common stock of the Company, $0.05 par value ("Shares"). This option is subject to all of the terms and conditions contained in this Agreement, including the terms and conditions contained in the attached Appendix A. The date of this Agreement is 7x. Subject to the provisions of Appendix A and of the Plan, the principal features of this option are as follows: Number of Shares Purchasable with this Option: 9x Price per Share: 8x Date Option was Granted: 7x Date Option is Scheduled to become Exercisable: 10x Latest Date Option Expires: 11x As provided in the Plan and in this Agreement, this option may terminate before the date written above, including before the option becomes exercisable or is exercised. For example, if Employee's employment ends before the date this option becomes exercisable, this option will terminate at the same time as Employee's employment terminates. See paragraphs 5, 6 and 7 of Appendix A for further information concerning how changes in employment affect termination of this option. PLEASE BE SURE TO READ ALL OF APPENDIX A, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS OPTION. IN WITNESS WHEREOF, the Company and the Employee have executed this Agreement, in duplicate, to be effective as of the date first above written. THE GAP, INC. Dated: _____________________________ Donald G. Fisher Chairman of the Board My signature below indicates that I understand that this option is subject to all of the terms and conditions of this Agreement (including the attached Appendix A) and of the Plan. EMPLOYEE Dated: _______________ ____________________________ Address:____________________ ____________________________ ____________________________ Social Security No.: __________ STOCK OPTION AGREEMENT APPENDIX - EMPLOYEE VERSION APPENDIX A TERMS AND CONDITIONS OF NON-QUALIFIED STOCK OPTION 1. Grant of Option. The Company hereby grants to Employee under the Plan, as a separate incentive in connection with his or her employment and not in lieu of any salary or other compensation for his or her services, a non-qualified stock option to purchase, on the terms and conditions set forth in this Agreement and the Plan, all or any part of the number of Shares set forth on page 1 of this Agreement. The option granted hereby is not intended to be an Incentive Stock Option within the meaning of Section 422 of the Code. 2. Exercise Price. The purchase price per Share (the "Option Price") shall be equal to the price set forth on page 1 of this Agreement, which is the fair market value per Share on the date of this Agreement. The Option Price shall be payable in the legal tender of the United States. 3. Number of Shares. The number and class of Shares specified in paragraph 1 above, and/or the Option Price, are subject to appropriate adjustment in the event of changes in the capital stock of the Company by reason of stock dividends, split-ups or combinations of shares, reclassifications, mergers, consolidations, reorganizations or liquidations. Subject to any required action of the stockholders of the Company, if the Company shall be the surviving corporation in any merger or consolidation, the option granted hereunder (to the extent that it is still outstanding) shall pertain to and apply to the securities to which a holder of the same number of Shares that are then subject to the option would have been entitled. To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the Compensation and Stock Option Committee of the Company's Board of Directors (the "Committee"), whose determination in that respect shall be final, binding and conclusive. 4. Commencement of Exercisability. Except as otherwise provided in this Agreement, the right to exercise the option awarded by this Agreement shall accrue as to 100% of the Shares subject to such option on the third anniversary date of the date of this Agreement, assuming that Employee is still employed with the Company or an Affiliate on such date. If Employee is not employed on such date, the option shall terminate, as set out in paragraph 7. 5. Postponement of Exercisability. Notwithstanding paragraph 4 or any other provision of this Agreement, prior to the third anniversary of the date of this Agreement, the Committee, in its sole discretion, may determine that the right to exercise the option awarded by this Agreement shall accrue on a date later than the third anniversary of this Agreement. The Committee shall exercise its power to postpone the commencement of exercisability only if the Committee, in its sole discretion, determines that Employee has taken a personal leave of absence (as defined from time to time by the Committee) since the date of this Agreement. The duration of the period of postponement shall equal the duration of the personal leave of absence. If Employee does not return from the personal leave of absence, the option shall terminate as set out in paragraph 7. 6. Elimination of Exercisability. Notwithstanding paragraph 4 or any other provision of this Agreement, prior to the third anniversary of the date of this Agreement, the Committee, in its sole discretion, may determine that the right to exercise the option awarded by this Agreement shall never accrue as to all or part of the Shares specified in paragraph 1 (and as adjusted pursuant to paragraph 3, if appropriate). The Committee shall exercise such power only if the Committee, in its sole discretion, determines that (a) Employee's employment with the Company or an Affiliate has been reduced to less than a full-time basis, and/or (b) Employee has transferred to a position which, under the Committee's then existing policy, normally would not qualify Employee to be granted options under the Plan. 7. Termination of Option. In the event that Employee's employment with the Company or an Affiliate terminates for any reason other than Retirement (as defined in the Plan) or death, this option shall immediately thereupon terminate. In the event of Employee's Retirement, Employee may, within one (1) year after the date of such Retirement, or within ten (10) years from the date of this Agreement, whichever shall first occur, exercise any unexercised portion of the option. In the event that Employee shall die while in the employ of the Company or an Affiliate, any unexercised portion of the option may be exercised by Employee's beneficiary or transferee, as hereinafter provided, for a period of one (1) year after the date of Employee's death or within ten (10) years from the date of this Agreement, whichever shall first occur. Notwithstanding the preceding two sentences, in the event that within one year of the date of this Agreement, Employee dies or terminates employment due to Retirement, this option shall immediately thereupon terminate. 8. Persons Eligible to Exercise. The option shall be exercisable during Employee's lifetime only by Employee. The option shall be non-transferable by Employee other than by a beneficiary designation made in a form and manner acceptable to the Committee, or by will or the applicable laws of descent and distribution. 9. Death of Employee. To the extent exercisable after Employee's death, the option shall be exercised only by Employee's designated beneficiary or beneficiaries, or if no beneficiary survives Employee, by the person or persons entitled to the option under Employee's will, or if Employee shall fail to make testamentary disposition of the option, his or her legal representative. Any transferee exercising the option must furnish the Company (a) written notice of his or her status as transferee, (b) evidence satisfactory to the Company to establish the validity of the transfer of the option and compliance with any laws or regulations pertaining to said transfer, and (c) written acceptance of the terms and conditions of the option as prescribed in this Agreement. 10. Exercise of Option. The option may be exercised by the person then entitled to do so as to any Shares which may then be purchased (a) by giving written notice of exercise to the Company, specifying the number of full Shares to be purchased and accompanied by full payment of the purchase price thereof (and the amount of any income tax the Company determines is required to be withheld by reason of such exercise), and (b) by giving satisfactory assurances in writing if requested by the Company, signed by the person exercising the option, that the Shares to be purchased upon such exercise are being purchased for investment and not with a view to the distribution thereof. 11. No Rights of Stockholder. Neither Employee nor any person claiming under or through said Employee shall be or have any of the rights or privileges of a stockholder of the Company in respect of any of the Shares issuable upon the exercise of the option, unless and until certificates representing such Shares shall have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to Employee. 12. No Right to Continued Employment. Employee understands and agrees that this agreement does not impact in any way the right of the Company, or the Affiliate employing Employee, as the case may be, to terminate or change the terms of the employment of Employee at any time for any reason whatsoever, with or without good cause. Employee understands and agrees that his or her employment is "at-will" and that either the Company or Employee may terminate Employee's employment at any time and for any reason. Employee also understands and agrees that his or her "at-will" status can only be changed by an express written contract signed by an authorized officer of the Company and Employee. 13. Addresses for Notices. Any notice to be given to the Company under the terms of this Agreement shall be addressed to the Company, in care of its Law Department, at The Gap, Inc., One Harrison, San Francisco, California 94105, or at such other address as the Company may hereafter designate in writing. Any notice to be given to Employee shall be addressed to Employee at the address set forth beneath Employee's signature hereto, or at such other address as Employee may hereafter designate in writing. Any such notice shall be deemed to have been duly given if and when enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified and deposited, postage and registry fee prepaid, in a United States post office. 14. Non-Transferability of Option. Except as otherwise herein provided, the option herein granted and the rights and privileges conferred hereby shall not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of said option, or of any right or privilege conferred hereby, contrary to the provisions hereof, or upon any attempted sale under any execution, attachment or similar process upon the rights and privileges conferred hereby, said option and the rights and privileges conferred hereby shall immediately become null and void. 15. Maximum Term of Option. Notwithstanding any other provision of this Agreement, this option is not exercisable after the expiration of ten (10) years from the date of this Agreement. 16. Binding Agreement. Subject to the limitation on the transferability of the option contained herein, this Agreement shall be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto. 17. Plan Governs. This Agreement is subject to all terms and provisions of the Plan. In the event of a conflict between one or more provisions of this Agreement and one or more provisions of the Plan, the provisions of the Plan shall govern. Terms used and not defined in this Agreement shall have the meaning set forth in the Plan. 18. Committee Authority. The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon Employee, the Company and all other interested persons. No member of the Committee shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Agreement. 19. Captions. Captions provided herein are for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. 20. Agreement Severable. In the event that any provision in this Agreement shall be held invalid or unenforceable, such provision shall be severable from, and such invalidity or unenforceability shall not be construed to have any effect on, the remaining provisions of this Agreement. EX-10.2 3 THE GAP, INC. NON-QUALIFIED STOCK OPTION AGREEMENT The Gap, Inc. (the "Company") hereby grants to 2x 1x (the "Director"), a stock option under The Gap, Inc. 1996 Stock Option and Award Plan (the "Plan"), to purchase shares of common stock of the Company, $0.05 par value ("Shares"). This option is subject to all of the terms and conditions contained in this Agreement, including the terms and conditions contained in the attached Appendix A. The date of this Agreement is 7x. Subject to the provisions of Appendix A and of the Plan, the principal features of this option are as follows: Number of Shares Purchasable with this Option: 9x Price per Share: 8x Date Option was Granted: 7x Date Option is Scheduled to become Exercisable: 10x Latest Date Option Expires: 11x As provided in the Plan and in this Agreement, this option may terminate before the date written above, including before the option becomes exercisable or is exercised. For example, if Director's term ends before the date this option becomes exercisable, this option will terminate at the same time as Director's term terminates. PLEASE BE SURE TO READ ALL OF APPENDIX A, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS OPTION. IN WITNESS WHEREOF, the Company and the Director have executed this Agreement, in duplicate, to be effective as of the day and year first above written. THE GAP, INC. Dated: 7x _____________________________________ Donald G. Fisher Chairman of the Board My signature below indicates that I understand that this option is subject to all of the terms and conditions of this Agreement (including the attached Appendix A) and of the Plan. DIRECTOR Dated: _________________ _____________________________ Address: ____________________ _____________________________ _____________________________ Social Security No.: _________________ STOCK OPTION AGREEMENT APPENDIX - DIRECTOR'S VERSION APPENDIX A TERMS AND CONDITIONS OF NON-QUALIFIED STOCK OPTION 1. Grant of Option. The Company hereby grants to the Director under the Plan, as a separate incentive in connection with his or her service and not in lieu of any salary or other compensation for his or her services, a non-qualified stock option to purchase, on the terms and conditions set forth in this Agreement and the Plan, all or any part of the number of shares set forth on page 1 of this Agreement. The option granted hereby is not intended to be an Incentive Stock Option within the meaning of Section 422 of the Code. 2. Exercise Price. The purchase price per Share (the "Option Price") shall be equal to the price set forth on page 1 of this Agreement, which is the fair market value per Share on the date of this Agreement. The Option Price shall be payable in the legal tender of the United States. 3. Number of Shares. The number and class of Shares specified in paragraph 1 above, and/or the Option Price, are subject to appropriate adjustment in the event of changes in the capital stock of the Company by reason of stock dividends, split-ups or combinations of Shares, reclassifications, mergers, consolidations, reorganizations or liquidations. Subject to any required action of the stockholders of the Company, if the Company shall be the surviving corporation in any merger or consolidation, the option granted hereunder (to the extent that it is still outstanding) shall pertain to and apply to the securities to which a holder of the same number of Shares of Common Stock that are then subject to the option would have been entitled. To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the Compensation and Stock Option Committee of the Company's Board of Directors (the "Committee"), whose determination in that respect shall be final, binding and conclusive. 4. Commencement of Exercisability. Except as otherwise provided in this Agreement, the right to exercise the option awarded by this Agreement shall accrue as to 100% of the Shares subject to such option on the third anniversary date of the date of this Agreement. 5. Reduction or Elimination of Exercisability. Notwithstanding paragraph 4 or any other provision of this Agreement, prior to the third anniversary of the date of this Agreement, the Committee, in its sole discretion, may determine that the right to exercise the option awarded by this Agreement shall not accrue as to all or part of the Shares specified in paragraph 1 (and as adjusted pursuant to paragraph 3, if appropriate). 6. Termination of Option. In the event that Director's service with the Company or an Affiliate terminates for any reason other than Retirement, Total Disability or death, this option shall immediately thereupon terminate. In the event of the Director's Retirement or Termination of Employment by reason of his or her Total Disability, the Director may, within one (1) year after the date of such Termination of Employment, or within ten (10) years from the date of this Agreement, whichever shall first occur, exercise any unexercised portion of the option. In the event that the Director shall die while in the employ of the Company or an Affiliate, any unexercised portion of the option may be exercised by the Director's beneficiary or transferee, as hereinafter provided, for a period of one (1) year after the date of the Director's death or within eight ten (10) years from the date of this Agreement, whichever shall first occur. Notwithstanding the preceding two sentences, in the event that within one year of the date of this Agreement, Director's service with the Company or an Affiliate is terminated on account of his or her Retirement, Total Disability or death, this option shall immediately thereupon terminate. 7. Persons Eligible to Exercise. The option shall be exercisable during the Director's lifetime only by the Director. The option shall be non-transferable by the Director other than by a beneficiary designation made in a form and manner acceptable to the Committee, or by will or the applicable laws of descent and distribution. 8. Death of Director. To the extent exercisable after the Director's death, the option shall be exercised only by the Director's designated beneficiary or beneficiaries, or if no beneficiary survives the Director, by the person or persons entitled to the option under the Director's will, or if the Director shall fail to make testamentary disposition of the option, his or her legal representative. Any transferee exercising the option must furnish the Company (a) written notice of his or her status as transferee, (b) evidence satisfactory to the Company to establish the validity of the transfer of the option and compliance with any laws or regulations pertaining to said transfer, and (c) written acceptance of the terms and conditions of the option as prescribed in this Agreement. 9. Exercise of Option. The option may be exercised by the person then entitled to do so as to any Shares which may then be purchased (a) by giving written notice of exercise to the Company, specifying the number of full Shares to be purchased and accompanied by full payment of the purchase price thereof (and the amount of any income tax the Company is required by law to withhold by reason of such exercise), and (b) by giving satisfactory assurances in writing if requested by the Company, signed by the person exercising the option, that the Shares to be purchased upon such exercise are being purchased for investment and not with a view to the distribution thereof. 10. No Rights of Stockholder. Neither the Director nor any person claiming under or through said Director shall be or have any of the rights or privileges of a stockholder of the Company in respect of any of the Shares issuable upon the exercise of the option, unless and until certificates representing such Shares shall have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to Director. 11. No Effect on Service. Nothing in this Agreement shall confer upon the Director the right to continue in service on the Board. 12. Addresses for Notices. Any notice to be given to the Company under the terms of this Agreement shall be addressed to the Company, in care of its Law Department, at The Gap, Inc., One Harrison Street, San Francisco, California 94105, or at such other address as the Company may hereafter designate in writing. Any notice to be given to the Director shall be addressed to the Director at the address set forth beneath the Director's signature hereto, or at such other address as the Director may hereafter designate in writing. Any such notice shall be deemed to have been duly given if and when enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified and deposited, postage and registry fee prepaid, in a United States post office. 13. Non-Transferability of Option. Except as otherwise herein provided, the option herein granted and the rights and privileges conferred hereby shall not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of said option, or of any right or privilege conferred hereby, contrary to the provisions hereof, or upon any attempted sale under any execution, attachment or similar process upon the rights and privileges conferred hereby, said option and the rights and privileges conferred hereby shall immediately become null and void. 14. Maximum Term of Option. Notwithstanding any other provision of this Agreement, this option is not exercisable after the expiration of ten (10) years from the date of this Agreement. 15. Binding Agreement. Subject to the limitation on the transferability of the option contained herein, this Agreement shall be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto. 16. Plan Governs. This Agreement is subject to all terms and provisions of the Plan. In the event of a conflict between one or more provisions of this Agreement and one or more provisions of the Plan, the provisions of the Plan shall govern. Terms used and not defined in this Agreement shall have the meaning set forth in the Plan. 17. Committee Authority. The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon Director, the Company and all other interested persons. No member of the Committee shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Agreement. 18. Captions. Captions provided herein are for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. 19. Agreement Severable. In the event that any provision in this Agreement shall be held invalid or unenforceable, such provision shall be severable from, and such invalidity or unenforceability shall not be construed to have any effect on, the remaining provisions of this Agreement. EX-10.3 4 Grant No. 6x THE GAP, INC. RESTRICTED STOCK AWARD AGREEMENT The Gap, Inc. (the "Company") hereby grants to 2x 1x (the "Employee"), an award of Restricted Stock under The Gap, Inc. 1996 Stock Option and Award Plan (the "Plan"). This award is subject to all of the terms and conditions contained in this Agreement, including the terms and conditions contained in the attached Appendix A. The date of this Agreement is 7x. Subject to the provisions of Appendix A and of the Plan, the principal features of this award are as follows: Number of Shares: 8x Date of Grant: 7x Date(s) Restrictions on Shares Scheduled to Lapse: 10x shares on datex 12x shares on datex 14x shares on datex 16x shares on datex 18x shares on datex As provided in the Plan and in this Agreement, this award may terminate before the restrictions on all or part of the shares lapse. For example, if Employee's employment ends before the date the restrictions lapse, this award will terminate and the shares awarded shall revert to the Company. See paragraph 4 of Appendix A for further information concerning how termination of employment affects termination of this award. IN WITNESS WHEREOF, the Company and the Employee have executed this Agreement, in duplicate, to be effective as of the date first above written. THE GAP, INC. Dated: _________________________________________ Donald G. Fisher Chairman of the Board My signature below indicates that I understand that this award is subject to all of the terms and conditions of this Agreement (including the attached Appendix A) and of the Plan. EMPLOYEE Dated: _______________ ____________________________________________ Address: ___________________________________ ___________________________________ ___________________________________ Social Security No.: _______________________ APPENDIX A TERMS AND CONDITIONS OF RESTRICTED STOCK AWARD 1. Grant of Award. The Company hereby grants to Employee for past services and as a separate incentive in connection with his or her employment and not in lieu of any salary or other compensation for his or her services, an award of the number of restricted shares of common stock of the Company, $0.05 par value, set forth on page 1 of this Agreement, which shares of Restricted Stock shall be granted on the date hereof, subject to all the terms and conditions in this Agreement and the Plan. 2. Shares held in Escrow. Unless and until the restrictions on the shares of Restricted Stock shall have lapsed in the manner set forth in paragraph 3 below, such shares shall be issued in the name of Employee and held by the Secretary of the Company as escrow agent (the "Escrow Agent"), and shall not be sold, transferred or otherwise disposed of and shall not be pledged or otherwise hypothecated. The Company may instruct the transfer agent for its common stock to place a legend on the certificates representing the Restricted Stock or otherwise note its records as to the restrictions on transfer set forth in this Agreement and the Plan. The certificate or certificates representing such shares shall be delivered by the Escrow Agent to Employee only after the restrictions on such shares have lapsed and all other terms and conditions in this Agreement have been satisfied. 3. Lapse of Restrictions. Subject to the provisions of paragraph 3(b), the restrictions on the shares of Restricted Stock awarded by this Agreement shall lapse with respect to a number of shares on a date (the "Lapse Date") determined under paragraph 3(a). (a) The Lapse Date shall be as set forth on page 1 of this Agreement. (b) If compliance with a trading restriction imposed by the Company's policy prohibiting trading on undisclosed material information, as set forth in the Company's Corporate Compliance Manual (the "Insider Trading Policy") would prohibit Employee from selling any shares of the Company's common stock on a Lapse Date set forth in paragraph 3(a), then the Lapse Date with respect to that number of Shares which would otherwise become vested pursuant to paragraph 3(a) shall be the earlier of (i) the first subsequent day on which both (A) the Company's common stock is traded on a national securities exchange within the meaning of Section 6 of the Securities and Exchange Act of 1934, as amended (the "Exchange Act") (such as the New York Stock Exchange) or a national market system within the meaning of Section 11A of the Exchange Act and (B) on which Employee may sell shares of the Company's common stock without violating the Insider Trading Policy, or (ii) the date which is ninety (90) days after the Lapse Date. 4. Termination of Employment. The shares of Restricted Stock as to which restrictions have not lapsed at the time of Employee's Termination of Employment shall thereupon be forfeited and automatically transferred to and reacquired by the Company at no cost to the Company. Employee hereby appoints the Escrow Agent with full power of substitution, as Employee's true and lawful attorney-in-fact with irrevocable power and authority in the name and on behalf of Employee to take any action and execute all documents and instruments, including, without limitation, stock powers which may be necessary to transfer the certificate or certificates evidencing such unvested shares to the Company upon such Termination of Employment. 5. Continuous Employment Required. Restrictions on shares of Restricted Stock shall not lapse in accordance with any of the provisions of this Agreement unless Employee shall have been continuously employed by the Company or by one of its Affiliates from the date of the award until the date such restrictions are deemed to have lapsed. 6. Withholding Taxes. Notwithstanding anything in this Agreement to the contrary, no certificate representing Restricted Stock may be released from the escrow established pursuant to paragraph 2 of this Agreement unless and until Employee shall have delivered to the Company or its designated Affiliate, the full amount of any federal, state or local income and other taxes which the Company or such Affiliate may be required by law to withhold with respect to such shares. 7. Beneficiary Designation. Any distribution or delivery to be made to Employee under this Agreement shall, if the Employee is then deceased, be made to the Employee's designated beneficiary, or if no such beneficiary survives the Employee, the person or persons entitled to such distribution or delivery under the Employee's will or, if the Employee shall fail to make testamentary disposition of such property, the executor of his or her estate. In order to be effective, a beneficiary designation must be made by the Employee in a form and manner acceptable to the Committee. Any transferee must furnish the Company with (a) written notice of his or her status as transferee, and (b) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer. 8. Conditions to Issuance of Shares. The shares of stock deliverable to Employee may be either previously authorized but unissued shares or issued shares which have been reacquired by the Company. The Company shall not be required to issue any certificate or certificates for shares of stock hereunder prior to fulfillment of all of the following conditions: (a) The admission of such shares to listing on all stock exchanges on which such class of stock is then listed; (b) The completion of any registration or other qualification of such shares under any State or Federal law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, which the Committee shall, in its absolute discretion, deem necessary or advisable; (c) The obtaining of any approval or other clearance from any State or Federal governmental agency, which the Committee shall, in its absolute discretion, determine to be necessary or advisable; and (d) The lapse of such reasonable period of time following the date of grant of the Restricted Stock as the Committee may establish from time to time for reasons of administrative convenience. 9. Rights as Stockholder. Except as otherwise provided in this Agreement, after the date of this Agreement, Employee shall have all rights of a stockholder of the Company with respect to voting such shares and receipt of dividends and distributions on such shares. 10. Changes in Stock. In the event that as a result of a stock dividend, stock split, reclassification, recapitalization, combination of shares or the adjustment in capital stock of the Company or otherwise, or as a result of a merger, consolidation, spin-off or other reorganization, the Company's common stock shall be increased, reduced or otherwise changed, and by virtue of any such change a Employee shall in his or her capacity as owner of unvested shares of Restricted Stock which have been awarded to him or her (the "Prior Shares") be entitled to new or additional or different shares of stock or securities (other than rights or warrants to purchase securities); such new or additional or different shares or securities shall thereupon be considered to be unvested Restricted Stock and shall be subject to all of the conditions and restrictions which were applicable to the Prior Shares pursuant to the Plan. If an Employee receives rights or warrants with respect to any Prior Shares, such rights or warrants may be held or exercised by the Employee, provided that until such exercise any such rights or warrants and after such exercise any shares or other securities acquired by the exercise of such rights or warrants shall be considered to be unvested Restricted Stock and shall be subject to all of the conditions and restrictions which were applicable to the Prior Shares pursuant to the Plan. 11. Plan Governs. This Agreement is subject to all the terms and provisions of the Plan. In the event of a conflict between one or more provisions of this Agreement and one or more provisions of the Plan, the provisions of the Plan shall govern. Terms used in this Agreement that are not defined in this Agreement shall have the meaning set forth in the Plan. 12. Committee Authority. The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon Employee, the Company and all other interested persons. No member of the Committee shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Agreement. 13. No Right to Continued Employment. The Employee understands and agrees that this agreement does not impact in any way the right of the Company, or the Affiliate employing the Employee, as the case may be, to terminate or change the terms of the employment of the Employee at any time for any reason whatsoever, with or without good cause. The Employee understands and agrees that his or her employment is "at-will" and that either the Company or the Employee may terminate Employee's employment at any time and for any reason. Employee also understands and agrees that his or her "at-will" status can only be changed by an express written contract signed by an authorized officer of the Company and the Employee. 14. Non-Transferability of Award. Except as otherwise herein provided, the Restricted Stock herein granted and the rights and privileges conferred hereby shall not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of such award, or of any right or privilege conferred hereby, contrary to the provisions hereof, or upon any attempted sale under any execution, attachment or similar process upon the rights and privileges conferred hereby, such award and the rights and privileges conferred hereby shall immediately become null and void. 15. Binding Agreement. Subject to the limitation on the transferability of the Restricted Stock contained herein, this Agreement shall be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of Employee and the Company. 16. Addresses for Notices. Any notice to be given to the Company under the terms of this Agreement shall be addressed to the Company, in care of its Law Department, at The Gap, Inc., One Harrison, San Francisco, California 94105, or at such other address as the Company may hereafter designate in writing. Any notice to be given to the Employee shall be addressed to the Employee at the address set forth beneath the Employee's signature hereto, or at such other address as the Employee may hereafter designate in writing. Any such notice shall be deemed to have been duly given if and when enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified and deposited, postage and registry fee prepaid, in a United States post office. 17. Captions. Captions provided herein are for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. 18. Agreement Severable. In the event that any provision in this Agreement shall be held invalid or unenforceable, such provision shall be severable from, and such invalidity or unenforceability shall not be construed to have any effect on, the remaining provisions of this Agreement. EX-11 5 THE GAP, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE Thirteen Weeks Ended May 4, 1996 April 29, 1995 Net earnings ($000) $ 81,573 $50,113 Weighted average shares of common stock outstanding during the period 288,010,684 287,744,200 Add incremental shares from assumed exercise of stock options (primary) 3,314,299 334,224 291,324,983 288,078,424 Primary earnings per share $ 0.28 $ 0.17 Weighted average shares of common stock outstanding during the period 288,010,684 287,744,200 Add incremental shares from assumed exercise of stock options (fully-diluted) 3,808,505 334,158 291,819,189 288,078,358 Fully-diluted earnings per share $ 0.28 $ 0.17 NOTE: (1) The information provided above is presented in accordance with Regulation S-K, Item 601(b)(11), while net earnings per share on the Consolidated Statements of Earnings is presented in accordance with APB Opinion 15. The information in this exhibit is not required under APB Opinion 15, as the difference between primary and fully- diluted earnings per share and earnings per share calculated on a weighted average share bases is less than 3%. (2) All share and per share data have been restated to reflect the 2- for-1 split of common stock in the form of a stock dividend effective April 10, 1996. EX-15 6 Deloitte & 2101 Webster Street Telephone (510)287-2700 Touche Oakland, California 94612-3027 Facsimile (510)835-4888 To the Board of Directors and Stockholders of The Gap, Inc.: We have made reviews, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim consolidated financial statements of The Gap, Inc., and subsidiaries for the thirteen week periods ended May 4, 1996 and April 29, 1995, as indicated in our report dated May 16, 1996, because we did not perform an audit, we expressed no opinion on that information. We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended May 4, 1996, in incorporated by reference in Post Effective Amendment No. 1 to Registration Statement No. 2-72586, Registration Statement No. 2-60029, Registration Statement No. 33-39089, Registration Statement No. 33- 40505, Registration Statement No. 33-54686, Registration Statement No. 33-54688, Registration Statement No. 33-54690, Registration Statement No. 33-56021, and Registration No. 333-00417. We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. /S/ Deloitte & Touche LLP June 15, 1996 EX-27 7
5 3-MOS FEB-01-1997 MAY-04-1996 552,729 79,819 0 0 489,719 1,269,058 1,626,967 645,956 2,373,314 486,853 0 0 0 15,845 1,713,752 2,373,314 1,113,154 1,113,154 699,314 282,627 (3,618) 0 0 134,831 53,258 81,573 0 0 0 81,573 .28 .28
-----END PRIVACY-ENHANCED MESSAGE-----