-----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, Gc845w2xwvpmJizS8AigB9gvh6Mcomkup9Q09w/ZoRHwRxLkhdz/TTZgv38zS3p7 9OPl60ldpxXnD92L2ixKAg== /in/edgar/work/20000626/0000898430-00-001905/0000898430-00-001905.txt : 20000920 0000898430-00-001905.hdr.sgml : 20000920 ACCESSION NUMBER: 0000898430-00-001905 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000626 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GAP INC CENTRAL INDEX KEY: 0000039911 STANDARD INDUSTRIAL CLASSIFICATION: [5651 ] IRS NUMBER: 941697231 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-07562 FILM NUMBER: 660824 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 11-K 1 0001.txt FORM 11-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K (Mark one) [X] Annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934 [No Fee Required, Effective October 7, 1996] For the fiscal year ended December 31, 1999 OR [ ] Transition report pursuant to Section 15(d) of the Securities Exchange Act of 1934 [No Fee Required] Commission file number 1-7562 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: GapShare B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: The Gap, Inc. One Harrison Street San Francisco, CA 94105 REQUIRED INFORMATION 1. Audited Statements of Net Assets Available for Plan Benefits as of December 31, 1999 and 1998 and Statements of Changes in Net Assets Available for Plan Benefits for the years ended December 1999 and 1998 and supplemental schedules are contained in Exhibit 1 to this Annual Report. 2. Consent of Deloitte & Touche LLP, Independent Auditors, is contained in Exhibit 2 to this Annual Report. The Exhibit Index is located on Page 3 hereof. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. GapShare /s/ Marka Hansen Date: June 23, 2000 _________________________ Marka Hansen Senior Vice President - Human Resources Exhibit Index
Sequentially Number Page 1. Audited Statements of Net Assets Available for Plan Benefits as of 4 December 31, 1999 and 1998 and Statements of Changes in Net Assets Available for Plan Benefits for the years ended December 1999 and 1998 and supplemental schedules 2. Consent of Deloitte & Touche LLP, Independent Auditors 13
EX-99.1 2 0002.txt AUDITED STATEMENTS OF NET ASSETS Exhibit 99.1 GAPSHARE TABLE OF CONTENTS - -------------------------------------------------------------------------------- Page INDEPENDENT AUDITORS' REPORT 1 FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999 AND 1998 AND FOR THE YEARS THEN ENDED: Statements of Net Assets Available for Benefits 2 Statements of Changes in Net Assets Available for Benefits 3 Notes to Financial Statements 4-7 SUPPLEMENTAL SCHEDULES AS OF DECEMBER 31, 1999 AND FOR THE YEAR THEN ENDED: Schedule of Assets Held for Investment Purposes as of December 31, 1999 8 Supplemental schedules not listed above have been omitted because of the absence of conditions under which they are required. Deloitte & Touche Deloitte & Touche LLP Telephone: (415) 247-4000 50 Fremont Street Facsimile: (415) 247-4320 San Francisco, California 94105-2230 INDEPENDENT AUDITORS' REPORT To the Administrative Committee and Participants of GapShare: We have audited the accompanying statements of net assets available for benefits of GapShare (the "Plan") as of December 31, 1999 and 1998, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1999 and 1998, and the changes in its net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule listed in the Table of Contents is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This schedule is the responsibility of the Plan's management. Such schedule has been subjected to the auditing procedures applied in our audit of the basic 1999 financial statements and, in our opinion, is fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. /s/ Deloitte & Touche LLP June 2, 2000 Deloitte Touche Tohmatsu GAPSHARE STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 1999 AND 1998 - ------------------------------------------------------------------------------- 1999 1998 ASSETS: Uninvested principal cash $ 27,531 $ 1,946 ------------ ------------ Investments, at fair value: Registered investment funds: IDS Cash Management Fund 19,951,493 14,318,324 IDS Bond Fund 12,107,098 11,224,680 IDS Growth Fund 107,905,820 77,205,076 AET Equity Index II Fund 15,576,652 3,182,089 Franklin Small Capital Growth Fund 31,086,772 14,113,547 Domini Social Equity Fund 19,021,515 11,764,243 Janus Worldwide Fund 17,168,289 4,353,973 AET Money Market I 5,320,066 2,331,410 ------------ ------------ Total Registered Investment Funds 228,137,705 138,493,342 Common stock: The Gap, Inc. common stock 314,764,752 279,774,844 Participant loans 17,306,436 13,835,808 ------------ ------------ Total investments at fair value 560,208,893 432,103,994 ------------ ------------ Accrued interest receivables 16,606 9,265 ------------ ------------ NET ASSETS AVAILABLE FOR BENEFITS $560,253,030 $432,115,205 ============ ============ The accompanying notes are an integral part of these financial statements. -2- GAPSHARE STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS YEARS ENDED DECEMBER 31, 1999 AND 1998 - -------------------------------------------------------------------------------
1999 1998 ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income: Net appreciation in fair value of registered investment funds $ 53,177,589 $ 13,000,335 Net appreciation in fair value of The Gap Inc.common stock 61,510,085 169,154,105 Dividends and interest 5,871,705 6,948,502 ------------ ------------ Total investment income 120,559,379 189,102,942 ------------ ------------ Contributions: Employer 15,343,972 12,800,420 Participants and others 30,110,900 22,493,559 ------------ ------------ Total contributions 45,454,872 35,293,979 ------------ ------------ Total additions 166,014,251 224,396,921 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO BENEFITS PAID TO PARTICIPANTS 37,876,426 33,150,974 ------------ ------------ NET INCREASE 128,137,825 191,245,947 NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 432,115,205 240,869,258 ------------ ------------ End of year $560,253,030 $432,115,205 ============ ============
The accompanying notes are an integral part of these financial statements. -3- GAPSHARE NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1999 AND 1998 - -------------------------------------------------------------------------------- 1. DESCRIPTION OF PLAN GapShare (the "Plan") is a defined contribution plan which was established to provide a source of retirement savings to participants and to enable participants to defer a portion of their compensation. The following brief description of the Plan is provided for general information purposes only. Participants should refer to the Summary Plan Description and official Plan documents for more complete information. The Plan qualifies under sections 401(a), 401(k) and 501(a) of the Internal Revenue Code of 1986. Full time and part time employees of The Gap, Inc. (the "Company") and its subsidiaries are eligible to participate in the Plan upon attaining the age of twenty-one and after one year of employment with the Company completing a minimum of 1,000 hours of service. The minimum level of participant contributions is 1% of total compensation on a pre-tax or after-tax basis. Total contributions may not exceed a maximum of 16% of total compensation on a pre-tax basis or 21% of total compensation on an after-tax basis. The maximum allowable contributions qualifying for deferral for individual income tax purposes was $10,000 for the years ended December 31, 1999 and 1998. Company contributions are made according to a matching formula established prior to the beginning of each Plan year. For 1999 and 1998, the formula provided for $1 of Company contributions for each $1 of participant basic contributions, up to a maximum of 4% of the participants total compensation on a pre-tax or after-tax basis. A participant's aggregate annual contribution may not exceed 25% of the participant's taxable compensation for the year or $30,000, whichever is less. Participants who earned greater than $80,000 in 1997 were not allowed to contribute greater than a 6% combined pre-tax and after-tax contribution during 1998. Effective January 1, 1999, the Plan adopted a Safe Harbor amendment allowing all participants to defer up to 16% of total compensation on a pre-tax basis or 21% of total compensation on an after- tax basis. The maximum compensation allowable for Plan allocation purposes was $160,000 for both years. Investments of participant and Company contributions are allocated to the funds as elected by the participant. Contribution allocations to the Gap Stock Fund may not exceed 50% of total contributions. Allocations of each fund's earnings are based on participant account balances in those funds. Participants may transfer accumulated account balances between funds at any time. -4- Investment Options - Effective January 1, 1998, American Express Trust Company was appointed Trustee. At December 31, 1998 and 1999, the Plan's assets were invested in the following funds: . IDS Cash Management Fund - A money market fund that seeks maximum current income consistent with liquidity and stability of principal by investing in high-quality money market securities. . IDS Bond Fund - A mutual fund that seeks to achieve current income and preservation of capital. The fund invests mainly in high-quality corporate bonds and U.S. government securities. . IDS Growth Fund - A mutual fund that seeks long-term capital growth by investing in a portfolio of common stocks of companies that have above-average potential for long-term growth as a result of new management, marketing opportunities or technological superiority. . American Express Trust Equity Index II - A collective fund with the objective to achieve a total rate of return as close as possible to that of the S&P 500 Index. . Franklin Small Cap Growth Fund - A mutual fund that seeks long-term capital growth by investing primarily in companies in emerging growth phases. . Domini Social Equity Fund - A mutual fund that seeks long-term total return corresponding with performance of the Domini Social index, which consists of approximately 400 companies that meet certain social criteria. The fund invests at least 80% of its assets in stocks in the index. To construct the index, the fund adviser selects companies in the S&P 500 Index based on social responsibility. The index also typically includes about 150 companies not included in the S&P 500. . Janus World Wide Fund - A diversified mutual fund that seeks long-term capital growth by investing primarily in common stocks of foreign and domestic companies. Janus World Wide Fund normally, but not always, invests in issuers from at least five different countries, including the United States. . Gap Stock Fund - The Gap Stock Fund is invested in common shares of The Gap, Inc., and a small amount of short-term investments. This fund may provide the greatest potential for either loss or gain since it is invested in the common stock of a single company. The Trustee buys shares of Gap Stock in the open market. Shares are also purchased from Plan participants who transfer their accounts out of the Gap Stock Fund or who take distributions or withdrawals from the Gap Stock Fund in the form of cash. At December 31, 1999 and 1998, the Gap Stock Fund held 6,482,712 shares and 4,973,775 shares, respectively, of The Gap, Inc. stock. Vesting - Effective January 1, 1999, the Board of Directors approved the immediate vesting of all active employees in all past and future employer contributions. Participant contributions and earnings thereon are fully vested. Prior to January 1, 1999, the first $600 of Company contributions each year and earnings thereon were fully vested. Beyond the first $600, Company contributions and earnings thereon were 20% vested after three years of employee service. The portion vested increased by 20% for each additional year of service. After seven years of service the Company contributions were fully vested. Participants terminating before -5- achieving seven years of service forfeited the nonvested portion. Amounts forfeited were applied as a reduction of future employer contributions. Participant Loans - Participants may apply to receive a loan up to the lesser of 50% of their vested account or $50,000, minus the highest balance of any other loan outstanding in the preceding 12 months. The minimum participants may borrow is $1,000. Such loans are repaid through payroll deductions for up to a period of five years, unless the loan is for the purchase or construction of a principal residence, in which case terms range from five to fifteen years. If an unpaid loan balance exists at the time a participant leaves the Company and withdraws from the Plan, it must be repaid by the participant or deducted from the participant's total distribution. The fixed interest rate charged is 1% over the current prime rate as stated in The Wall Street Journal, in effect at the time the loan is made. Administrative fees charged to participants upon setup are $30 for loans to be repaid within five years and $50 for loans with longer repayment periods. As of December 31, 1999 there were 4,202 such loans, with interest rates ranging from 7% to 11% maturing from 2000 to 2015. Payment of Benefits - Upon termination of employment, a participant may elect to have vested portions distributed either in a lump sum payment or, if greater than $5,000, deferred until the participant is the age of sixty- two. Deferred account balances may be invested in any of the funds, subject to normal restrictions. Administrative Expenses - The Plan's administrative expenses are paid by the Company and are not included in the Plan's financial statements. 2. SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting - The financial statements of the Plan are prepared under the accrual method of accounting. Investment Valuation and Income Recognition - The current fair value of common stock is determined by the closing market quotation at the end of the year. Pooled investment funds are valued by the trustee at fair market value at the end of each plan year. Participant loans are carried at amortized cost, which approximates fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on an accrual basis. Dividends are recorded on the ex-dividend date. Payment of Benefits - Distributions to participants are recorded when paid. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of net assets available for benefits and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of additions to and deductions from net assets available for benefits during the reporting period. Actual results could differ from those estimates. -6- New Accounting Pronouncement - In 1999, the Plan adopted Statement of Position 99-3, Accounting for and Reporting of Certain Defined Contribution Plan Investments and Other Disclosure Matters issued by the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants. Accordingly, previously required "by-fund" disclosures have been eliminated. 3. TAX EXEMPT STATUS The Plan qualifies as a profit sharing plan under Section 401(a) of the Internal Revenue Code of 1986 (the "Code"), with a qualified cash or deferred arrangement under Section 401(k) of the Code, and, accordingly, the Plan's net investment income is exempt from income taxes. The Plan has obtained a favorable tax determination letter from the Internal Revenue Service dated September 15, 1998. The Plan sponsor believes that the Plan continues to qualify for tax exempt status. 4. PLAN TERMINATION The Plan is intended to be permanent; however, in the event of the earlier of the termination of the Plan or the complete and permanent discontinuance of contributions by the Company, the accounts of all participants shall become fully vested and nonforfeitable. In the event of partial termination of the Plan, the full value of the accounts of the participants involved in the partial termination shall become fully vested and nonforfeitable. Upon the occurrence of such an event, the assets of the Plan allocable to each participant shall be segregated, liquidated and distributed to the participants in proportion to their respective account balances. ***** -7- GAPSHARE SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 1999 - ------------------------------------------------------------------------------- Identity of Issuer Description of Fair or Borrower Investment Cost Value IDS Cash Management Fund Money Market Fund $ 19,951,489 $ 19,951,493 IDS Bond Fund Mutual Fund, 2,543,508 shares 12,999,398 12,107,098 IDS Growth Fund Mutual Fund, 2,103,837 shares 72,085,086 107,905,820 American Express Trust Mutual Fund, Equity Index II 390,206 shares 13,301,679 15,576,652 Franklin Small Capital Mutual Fund, Growth Fund 704,436 shares 17,097,525 31,086,772 Domini Social Equity Fund Mutual Fund, 454,082 shares 13,871,562 19,021,515 Janus World Wide Fund Mutual Fund, 224,628 shares 11,627,996 17,168,289 The Gap, Inc. common stock 6,842,712 shares 29,457,508 314,764,752 AET Money Market I Money Market Fund 5,320,066 5,320,066 Participant loans 4,202 loans with interest rates from 7% - 11% maturing from 2000 to 17,306,436 17,306,436 2015 ------------ ------------ TOTAL $213,018,745 $560,208,893 ============ ============ -8- EX-99.2 3 0003.txt CONSENT OF DELOITTE & TOUCHE LLP EXHIBIT 99.2 Deloitte & Touche Deloitte & Touche LLP Telephone: (415) 247-4000 50 Fremont Street Facsimile: (415) 247-4320 San Francisco, California 94105-2230 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement No. 333- 00417 of The Gap, Inc. on From S-8 of our report dated June 2, 2000, appearing in this Annual Report on From 11-K of GapShare for the year ended December 31, 1999. /s/ Deloitte & Touche LLP June 22, 2000 Deloitte Touche Tohmatsu -----END PRIVACY-ENHANCED MESSAGE-----