For The Quarterly Period Ended July 31, 2004

-----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, VXsZwrhlivNGFxu72UaCD6E1+B6U0wkmKKk+rvhBFDEj9RWgEz65Zssj/iUoKbNO OXlU48XOieiZGZ6Z6q+5ZQ== 0001193125-04-152253.txt : 20040903 0001193125-04-152253.hdr.sgml : 20040903 20040903165419 ACCESSION NUMBER: 0001193125-04-152253 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20040731 FILED AS OF DATE: 20040903 DATE AS OF CHANGE: 20040903 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: 041017327 BUSINESS ADDRESS: STREET 1: TWO FOLSOM STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94105 BUSINESS PHONE: 4159524400 MAIL ADDRESS: STREET 1: TWO FOLSOM STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94105 FORMER COMPANY: FORMER CONFORMED NAME: GAP STORES INC DATE OF NAME CHANGE: 19850617 10-Q 1 d10q.htm FOR THE QUARTERLY PERIOD ENDED JULY 31, 2004 For The Quarterly Period Ended July 31, 2004

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 July 31, 2004 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.)

Two Folsom Street

San Francisco, California 94105

(Address of principal executive offices)

Registrant’s telephone number, including area code: (650) 952-4400

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 by check mark whether Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). 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, 903,758,820 shares as of August 31, 2004

THE GAP, INC.

TABLE OF CONTENTS


		PAGE NUMBER
PART I	FINANCIAL INFORMATION

Item 1	Financial Statements

	Condensed Consolidated Balance Sheets July 31, 2004, January 31, 2004 and August 2, 2003	3

	Condensed Consolidated Statements of Operations Thirteen and Twenty-six weeks ended July 31, 2004 and August 2, 2003	4

	Condensed Consolidated Statements of Cash Flows Twenty-six weeks ended July 31, 2004 and August 2, 2003	5

	Notes to Condensed Consolidated Financial Statements	6

	Report of Independent Registered Public Accounting Firm	11

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3	Quantitative and Qualitative Disclosures about Market Risk	19

Item 4	Controls and Procedures	19

PART II	OTHER INFORMATION

Item 1	Legal Proceedings	20

Item 4	Submission of Matters to a Vote of Security Holders	20

Item 6	Exhibits and Reports on Form 8-K	21

THE GAP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions except share and par value)	July 31, 2004			January 31, 2004			August 2, 2003
ASSETS
Current Assets:
Cash and equivalents	$	2,498		$	2,261		$	1,803
Short-term investments		484			1,073			30
Restricted cash		1,362			1,351			1,311

Cash and equivalents, short-term investments and restricted cash		4,344			4,685			3,144
Merchandise inventory		2,087			1,704			2,274
Prepaid income taxes		146			20			—
Other current assets		321			300			315

Total current assets		6,898			6,709			5,733

Property and equipment, net of accumulated depreciation of $3,799, $3,611, and $3,357		3,188			3,368			3,510
Other assets		269			286			428

Total assets	$	10,355		$	10,363		$	9,671

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:

Current maturities of long-term debt	$	272		$	283		$	—
Accounts payable		1,240			1,178			1,174
Accrued expenses and other current liabilities		824			872			823
Income taxes payable		31			179			77

Total current liabilities		2,367			2,512			2,074

Long-Term Liabilities:
Long-term debt		635			1,107			1,528
Senior convertible notes		1,380			1,380			1,380
Lease incentives and other liabilities		613			581			582

Total long-term liabilities		2,628			3,068			3,490

Shareholders’ Equity:
Common stock $.05 par value
Authorized 2,300,000,000 shares; Issued 981,783,953, 976,154,229 and 972,649,720 shares; Outstanding 903,627,095, 897,202,485 and 892,796,992 shares		49			49			49
Additional paid-in capital		835			732			692
Retained earnings		6,706			6,241			5,661
Accumulated other comprehensive earnings (loss)		30			31			(9	)
Deferred compensation		(11	)		(9	)		(11	)
Treasury stock, at cost		(2,249	)		(2,261	)		(2,275	)

Total shareholders’ equity		5,360			4,783			4,107

Total liabilities and shareholders’ equity	$	10,355		$	10,363		$	9,671

See accompanying notes to condensed consolidated financial statements.

THE GAP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Thirteen Weeks Ended						Twenty-six Weeks Ended
(In millions except share and per share amounts)	July 31, 2004			August 2, 2003			July 31, 2004			August 2, 2003
Net Sales	$	3,721		$	3,685		$	7,388		$	7,038
Costs and expenses
Cost of goods sold and occupancy expenses		2,290			2,359			4,379			4,435
Operating expenses		1,016			930			2,014			1,819
Loss on early retirement of debt		65			—			95			—
Interest expense		44			62			96			128
Interest income		(12	)		(9	)		(25	)		(19	)

Earnings before income taxes		318			343			829			675
Income Taxes		124			134			323			263

Net earnings	$	194		$	209		$	506		$	412


Weighted average number of shares - basic		901,982,212			891,701,717			900,031,893			890,257,859
Weighted average number of shares - diluted		1,002,743,050			987,514,041			999,678,960			983,614,652
Earnings per share - basic	$	0.22		$	0.23		$	0.56		$	0.46
Earnings per share – diluted	$	0.21		$	0.22		$	0.53		$	0.44
Cash dividends paid per share	$	0.02	^(a)	$	0.02	^(d)	$	0.04	^{(a) (b)}	$	0.04	^{(c) (d)}

See accompanying notes to condensed consolidated financial statements.

(a)	Includes a dividend of $0.02 per share declared in first quarter of fiscal 2004 but paid in second quarter of fiscal 2004.

(b)	Includes a dividend of $0.02 per share declared in fourth quarter of fiscal 2003 but paid in first quarter of fiscal 2004.

(c)	Includes a dividend of $0.02 per share declared in fourth quarter of fiscal 2002 but paid in first quarter of fiscal 2003.

(d)	Includes a dividend of $0.02 per share declared in first quarter of fiscal 2003 but paid in second quarter of fiscal 2003.

THE GAP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Twenty-six Weeks Ended
(In millions)	July 31, 2004			August 2, 2003
Cash Flows from Operating Activities:
Net earnings	$	506		$	412
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		302			344
Loss on disposal of property and equipment and other non-cash items affecting net earnings		10			13
Tax benefit from exercise of stock options and vesting of restricted stock		18			11
Deferred income taxes		(14	)		(29	)
Changes in operating assets and liabilities:
Merchandise inventory		(387	)		(219	)
Other assets		(17	)		(40	)
Accounts payable		57			14
Accrued expenses and other current liabilities		(27	)		(47	)
Income taxes payable		(271	)		(116	)
Lease incentives and other liabilities		78			3

Net cash provided by operating activities		255			346

Cash Flows from Investing Activities:
Purchase of property and equipment		(156	)		(110	)
Proceeds from sale of property & equipment		—			1
Purchase of short term investments		(736	)		(50	)
Maturities of short term investments		1,324			333
Net change in lease rights and other assets		(9	)		3

Net cash provided by investing activities		423			177

Cash Flows from Financing Activities:
Payments of long-term debt		(473	)		(500	)
Restricted cash		(10	)		(1,263	)
Issuance of common stock		93			54
Cash dividends paid		(40	)		(40	)

Net cash used for financing activities		(430	)		(1,749	)

Effect of exchange rate fluctuations on cash		(11	)		2

Net increase (decrease) in cash and equivalents		237			(1,224	)

Cash and equivalents at beginning of period		2,261			3,027

Cash and equivalents at end of period	$	2,498		$	1,803

See accompanying notes to condensed consolidated financial statements.

THE GAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

The condensed consolidated balance sheets as of July 31, 2004 and August 2, 2003, the interim condensed consolidated statements of operations for each of the thirteen and twenty-six week periods ended July 31, 2004 and August 2, 2003, and the condensed consolidated statements of cash flows for the twenty-six week periods ended July 31, 2004 and August 2, 2003 have been prepared by The Gap, Inc. (the “company,” “we,” and “our”), without audit. In the opinion of management, such statements include all adjustments (which include only normal recurring adjustments) considered necessary to present fairly our financial position, results of operations and cash flows at July 31, 2004 and August 2, 2003 and for all periods presented.

Certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted from these interim financial statements. We suggest that you read these condensed consolidated financial statements in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended January 31, 2004.

Certain amounts from the prior periods have been reclassified to conform to the current period presentation. These reclassifications had no effect on net earnings as previously reported.

The results of operations for the thirteen and twenty-six weeks ended July 31, 2004 are not necessarily indicative of the operating results that may be expected for the year ending January 29, 2005.

2. NEW ACCOUNTING PRONOUNCEMENT

In December 2003, the Financial Accounting Standards Board published a revision to Financial Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities” (hereafter referred to as “FIN 46R”) to clarify some of the provisions of FIN 46, and to exempt certain entities from its requirements. Under the new guidance, there are new effective dates for companies that have interests in structures that are commonly referred to as special-purpose entities. The rules are effective in financial statements for periods ending after March 15, 2004. FIN 46R did not have any impact on our operating results or financial position as we do not have any variable interest entities.

3. STOCK-BASED AWARDS

We account for stock-based awards to employees and directors using the intrinsic value method of accounting in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”. Under the intrinsic value method, when the exercise price of employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized in the consolidated statements of operations. Restricted stock and discounted stock option awards, which are granted at less than fair market value, result in the recognition of deferred compensation. Deferred compensation is shown as a reduction of shareholders’ equity and is amortized to operating expenses over the vesting period of the stock award. We amortize deferred compensation for each vesting layer of a stock award using the straight-line method.

Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure of Amendment of FASB Statement No. 123” and Statement of Financial Accounting Standards No. 123 (“SFAS 123”) requires the disclosure of proforma net earnings per share as if we had adopted the fair value method. Under SFAS 123, the fair value of stock based compensation is calculated through the use of option pricing models. These models require subjective assumptions, including future stock price volatility and expected time to exercise, which affect the calculated values. The following table illustrates the effect on net earnings and earnings per share had we applied the fair value recognition provisions of SFAS 123.


	Thirteen Weeks Ended						Twenty-six Weeks Ended
(In millions)	July 31, 2004			August 2, 2003			July 31, 2004			August 2, 2003
Net earnings
As reported	$	194		$	209		$	506		$	412
Add: Stock-based employee compensation expense included in reported net earnings, net of tax related effects		1			—			2			—
Deduct: Total stock-based employee compensation expense determined under fair-value-based method for all awards, net of related tax effects		(22	)		(12	)		(39	)		(22	)

Pro forma net earnings	$	173		$	197		$	469		$	390

Earnings per share:
As reported-basic	$	0.22		$	0.23		$	0.56		$	0.46
Pro forma-basic		0.19			0.22			0.52			0.44
As reported-diluted		0.21			0.22			0.53			0.44
Pro forma-diluted		0.18			0.21			0.49			0.42

4. COMPREHENSIVE EARNINGS

Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive Income” (SFAS 130), establishes standards for reporting comprehensive earnings. Comprehensive earnings include net earnings as currently reported under generally accepted accounting principles, and other comprehensive earnings. Other comprehensive earnings consider the effect of additional economic events that are not required to be recorded in determining net earnings but rather are reported as a separate component of shareholders’ equity. Other comprehensive earnings include foreign currency translation adjustments and fluctuations in the fair market value of certain derivative financial instruments. Comprehensive earnings for the thirteen and twenty-six weeks ended July 31, 2004 and August 2, 2003 were as follows:


	Thirteen Weeks Ended					Twenty-six Weeks Ended
(In millions)	July 31, 2004			August 2, 2003		July 31, 2004			August 2, 2003
Net earnings	$	194		$	209	$	506		$	412
Adjustments for foreign currency translation		9			1		(12	)		3
Adjustments for fluctuations in fair market value of financial instruments, net of tax related effects		(10	)		2		1			(3	)

Comprehensive earnings	$	193		$	212	$	495		$	412

5. DEBT AND OTHER CREDIT ARRANGEMENTS

As of July 31, 2004, we had $907 million in trade letters of credit issued under letter of credit agreements. There were no drawings under our $750 million secured revolving credit facility.

In line with our objective of reducing long-term debt, during the first half of fiscal 2004, we repurchased an aggregate of $58 million in principal amount of our bonds due 2005, $91 million in principal amount of our bonds due 2007 and $324 million in principal amount of our bonds due 2008. Therefore, for the twenty-six weeks ended July 31, 2004, we reduced total debt by $473 million. Although the bond repurchases are net present value positive, we incurred $95 million in losses on early retirement of debt due to premiums paid.

On August 30, 2004, we replaced our existing $750 million three-year secured revolving credit facility scheduled to expire in June 2006 with a new $750 million five-year unsecured revolving credit facility. See Note 9 for further discussion.

6. EARNINGS PER SHARE

Basic earnings per share are computed using the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share includes the additional dilutive effect of our potentially dilutive securities, which include certain stock options and unvested shares of restricted stock, calculated using the treasury stock method, and convertible notes which are potentially dilutive at certain earnings levels calculated using the if-converted method. The following summarizes the incremental shares from the potentially dilutive securities:


	Thirteen Weeks Ended				Twenty-six Weeks Ended
	July 31, 2004		August 2, 2003		July 31, 2004		August 2, 2003
Net earnings-basic (in millions)	$	194	$	209	$	506	$	412
Net earnings-diluted (in millions)	$	206	$	217	$	530	$	433

Weighted-average number of shares-basic (in thousands)		901,982		891,702		900,032		890,258

Incremental shares resulting from:
Stock options		15,153		10,204		14,039		7,749
Senior convertible notes		85,608		85,608		85,608		85,608

Weighted-average number of shares-diluted (in thousands)		1,002,743		987,514		999,679		983,615

Earnings per share-basic	$	0.22	$	0.23	$	0.56	$	0.46
Earnings per share-diluted	$	0.21	$	0.22	$	0.53	$	0.44

Excluded from the above computations of weighted-average shares for diluted earnings per share were options to purchase 13,306,065 and 20,011,302 anti-dilutive shares of common stock and 0 shares of unvested restricted stock during the thirteen and twenty-six weeks ended July 31, 2004, respectively. Excluded from the above computations of weighted-average shares for diluted earnings per share were options to purchase 30,952,453 and 33,763,782 anti-dilutive shares of common stock and 659 and 2,205 anti-dilutive shares of unvested restricted stock during the thirteen and twenty-six weeks ended August 2, 2003, respectively.

7. OTHER OPERATING CHARGES

The following table provides the liability balances for actions previously taken associated with our cost containment efforts and downsizing of our headquarter facilities primarily in our San Francisco and San Bruno campuses.


(In millions)	Sublease Loss Reserve				Sublease Loss Reserve
Balance at January 31, 2004	$	105		Balance at February 1, 2002	$	115
Cash payments		(12	)	Cash payments		(11	)

Balance at July 31, 2004	$	93		Balance at August 2, 2003	$	104

Our sublease loss charges primarily relate to the net present value of the difference between the contract rent obligations and the rate at which we expect to be able to sublease the properties. These estimates and assumptions are monitored on at least a quarterly basis for changes in circumstances.

Remaining cash expenditures associated with the sublease loss reserve are expected to be paid over the remaining various lease terms through 2017. Based on our current assumptions as of July 31, 2004, we expect the sublease of our excess facilities to result in a total cash outlay of approximately $225 million for future rent expense. Our accrued liability related to the sublease loss charges of $93 million at July 31, 2004, was net of approximately $111 million of estimated sublease income to be generated from sublease contracts, which have not yet been identified. Our ability to generate this amount of sublease income is highly dependent upon economic conditions and commercial real estate market conditions in the San Francisco Bay Area market at the time we negotiate sublease arrangements with third parties. While the amount we have accrued represents our best estimate of the remaining obligations we expect to incur in connection with these facilities, estimates are subject to change and may require additional adjustments as conditions and facts change. If adverse macroeconomic conditions continue, particularly as they pertain to the commercial real estate market, we may be required to further reduce our estimated future sublease income and, accordingly, incur a charge to increase our estimated accrued liability.

8. COMMITMENTS AND CONTINGENCIES

We have applied the measurement and disclosure provisions of FASB Interpretation No. 45 (“FIN45”), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of the Indebtedness of Others,” to our agreements that contain guarantee and indemnification clauses. FIN 45 requires that upon issuance of a guarantee, the guarantor must disclose and recognize a liability for the fair value of the obligation it assumes under the guarantee. The initial recognition and measurement provisions of FIN 45 are effective for guarantees issued or modified after December 31, 2002. As of July 31, 2004, we did not have any material guarantees that were issued or modified subsequent to December 31, 2002.

However, we are a party to a variety of contractual agreements under which we may be obligated to indemnify the other party for certain matters. These contracts primarily relate to our commercial contracts, operating leases, trademarks, intellectual property, financial agreements and various other agreements. Under these contracts we may provide certain routine indemnifications relating to representations and warranties (e.g., ownership of assets, environmental or tax indemnifications) or personal injury matters. The terms of these indemnifications range in duration and may not be explicitly defined.

Generally, the maximum obligation under such indemnifications is not explicitly stated and as a result, the overall amount of these obligations cannot be reasonably estimated. Historically we have not made significant payments for these indemnifications. We believe that if we were to incur a loss in any of these matters, the loss would not have a material effect on our financial condition or results of operations.

As a multinational company, we are subject to various proceedings, lawsuits, disputes and claims (“Actions”) arising in the ordinary course of our business. Many of these Actions raise complex factual and legal issues and are subject to uncertainties. Actions filed against us include commercial, intellectual property, customer, and labor and employment related claims, including class action lawsuits in which plaintiffs allege that we violated federal and state wage and hour laws. The plaintiffs in some Actions seek unspecified damages or injunctive relief, or both. Actions are in various procedural stages, and some are covered in part by insurance.

We cannot predict with assurance the outcome of Actions brought against us. Accordingly, adverse developments, settlements or resolutions may occur and negatively impact earnings in the quarter of such development, settlement or resolution. However, we do not believe that the outcome of any current Action would have a material adverse effect on our results of operations, liquidity or financial position taken as a whole.

9. SUBSEQUENT EVENTS

On August 30, 2004, we repaid all amounts outstanding and terminated all commitments under our $750 million three-year secured revolving credit facility scheduled to expire in June 2006 (the “old Facility”) and replaced the old Facility with a new $750 million five-year unsecured revolving credit facility scheduled to expire in August 2009 (the “new Facility”). The new Facility is available for general corporate purposes, including commercial paper backstop, working capital, trade letters of credit and standby letters of credit. The drawn cost and fees related to the new Facility fluctuate based on our long-term senior unsecured credit ratings and our leverage ratio. In addition, on August 30, 2004, we executed amendments to our four letter of credit agreements, which provide an aggregate $1.2 billion in letter of credit issuing capacity. The letter of credit agreements are scheduled to expire in June 2006 and are secured, in the aggregate, by approximately $1.24 billion in cash, which is included in restricted cash on our Consolidated Balance Sheets.

Unlike the old Facility, the new Facility does not contain any restrictions on share repurchases, dividend increases, and debt repurchases. The new Facility contains financial and other covenants, including, but not limited to, limitations on liens and subsidiary debt as well as the maintenance of two financial ratios - a fixed charge coverage ratio and a leverage ratio. The letter of credit agreements contain a fixed charge coverage ratio, which is more lenient than the ratio in the new Facility.

Deloitte.

Deloitte & Touche LLP

50 Fremont Street
San Francisco, CA 94105-2230
USA

Tel: +1 415 783 4000
Fax: +1 415 783 4329
www. deloitte.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

The Gap, Inc.

We have reviewed the accompanying condensed consolidated balance sheets of The Gap, Inc. and subsidiaries as of July 31, 2004 and August 2, 2003, and the related condensed consolidated statements of operations for each of the thirteen and twenty-six week periods ended July 31, 2004 and August 2, 2003, and the condensed consolidated statements of cash flows for the twenty-six week periods ended July 31, 2004 and August 2, 2003. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures 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 the standards of the Public Company Accounting Oversight Board, 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 condensed consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board, the consolidated balance sheet of The Gap, Inc. and subsidiaries as of January 31, 2004, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated March 30, 2004, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of January 31, 2004 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Deloitte & Touche LLP

San Francisco, California

September 2, 2004

Member of

Deloitte Touche Tohmatsu

THE GAP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information made available below and elsewhere in this quarterly report on Form 10-Q contains certain forward-looking statements that reflect the current view of The Gap, Inc. (the “company”, “we” and “our”) with respect to future events and financial performance. Wherever used, the words “estimate,” “expect,” “plan,” “anticipate,” “believe,” “may” and similar expressions identify forward-looking statements.

Any such forward-looking statements are subject to risks and uncertainties and our future results of operations could differ materially from historical results or current expectations. Some of these risks include, without limitation, ongoing competitive pressures in the apparel industry, risks associated with challenging domestic and international retail environments, changes in the level of consumer spending or preferences in apparel, trade restrictions and political or financial instability in countries where our goods are manufactured, impact of legal proceedings, and/or other factors that may be described in our Annual Report on Form 10-K and/or other filings with the Securities and Exchange Commission. Future economic and industry trends that could potentially impact revenues and profitability are difficult to predict.

We assume no obligation to publicly update or revise our forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

We suggest that this document is read in conjunction with the Management’s Discussion and Analysis included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2004.

Overview

We continue to execute against our strategic priorities of driving earnings by improving margins year over year, improving our inventory turns, flowing our earnings through to cash flow and increasing our returns on capital by optimizing the productivity of our store fleet through selective closures and repositioning.

Following a strong start in May, business in June and July was challenging, with traffic trends softening and monthly results disappointing. Our strategic decision to reduce overall promotional and markdown activity partially contributed to the deterioration of traffic during the quarter. Although comparable store sales were flat for the quarter, we continue to improve regular price selling and markdown margins through disciplined inventory management. The improvement in merchandise margins, coupled with disciplined inventory management, and leverage in rent, occupancy, and depreciation expense has supported higher gross margins.

Consistent with our goal to reduce our long-term debt and return our credit ratings to investment grade, we continued to strengthen our balance sheet through early debt repurchase. During the second quarter of fiscal 2004 we repurchased $303 million in debt prior to maturity, which reduced our total outstanding debt to $2.3 billion. As a reflection of our improved operating performance and financial position, on May 18, 2004, Moody’s Investors Service upgraded our senior unsecured debt ratings one level to Ba2 and our senior implied rating to Ba1 with a positive outlook, and Standard and Poor’s raised their outlook on our debt rating from stable to positive on July 1, 2004. As a result of the recent upgrade by Moody’s, the interest rate payable by us on the 2005 notes decreased by 25 basis points to 9.65 percent per annum, and the interest rate payable by us on the 2008 notes decreased by 25 basis points to 10.30 percent per annum as of June 15, 2004.

In summary, although comparable store sales were flat for the quarter, our operational focus sustained healthy bottom-line performance for second quarter, and we continued to strengthen our balance sheet through early debt repurchase. We remain confident in our long-term strategies. Our second quarter results are evidence of the progress we continue to make. We will continue to pursue near term opportunities and build the teams and infrastructure that we expect will drive the future growth of our company.

RESULTS OF OPERATIONS

Net Sales


	Thirteen Weeks Ended						Twenty-six Weeks Ended
	July 31, 2004			August 2, 2003			July 31, 2004			August 2, 2003
Net sales (In millions)	$	3,721		$	3,685		$	7,388		$	7,038

Total net sales increase percentage		1	%		13	%		5	%		14	%

Comparable store sales increase percentage		0	%		10	%		3	%		11	%

Net sales per average square foot	$	99		$	97		$	196		$	184

Square footage of store space – at end of period (In millions)								36			37

Number of Store Locations⁽¹⁾:
Beginning of Period		3,016			3,105			3,022			3,117
New store locations		27			10			41			17
Closed store locations		(44	)		(20	)		(64	)		(39	)
End of Period		2,999			3,095			2,999			3,095

⁽¹⁾	Expanded stores do not change store count

A store is included in comparable store sales (“Comp”) when it has been open at least one year and has not been expanded or remodeled by more than 15 percent or permanently relocated within that year. Therefore, a store is included in Comp on the first day it has comparable prior year sales. Stores in which square footage has been expanded or remodeled by 15 percent or more are excluded from Comp until the first day they have comparable prior year sales.

A store is considered non-comparable (“Non-comp”) when, in general, the store had no comparable prior year sales. For example, a new store, or a store that has been expanded by more than 15 percent or permanently relocated within the last year. Non-store sales such as from online operations are also considered Non-comp.

Net sales for the second quarter of fiscal 2004 increased $36 million compared to the same period last year. This increase is due to a decrease in our comparable store sales of $10 million and an increase in our non-comparable store sales of $46 million.

Net sales for year-to-date fiscal 2004 increased $350 million compared with the same period last year. Comparable store sales increased $221 million and non-comparable store sales increased $129 million.

Because we translate foreign currencies into U.S. dollars for reporting purposes, currency fluctuations can have an impact on our results. The impact of changes in foreign currency exchange rates during 2004 positively affected the translation of foreign currency sales into U.S. dollars. For year-to-date 2004, currency fluctuations accounted for $92 million of the increase in net sales.

Comparable store sales by division for the second quarter were as follows:

Old Navy reported flat versus a positive 11 percent last year

Gap U.S. reported a positive 2 percent versus a positive 9 percent last year

Gap International reported a negative 10 percent versus a positive 13 percent last year

Banana Republic reported a positive 4 percent versus a positive 5 percent last year

Total sales by division for the second quarter were as follows:

Old Navy reported $1.6 billion versus $1.5 billion last year

Gap U.S. reported $1.2 billion versus $1.2 billion last year

Gap International reported $445 million versus $468 million last year

Banana Republic reported $528 million versus $497 million last year

Comparable store sales by division for year-to-date were as follows:

Old Navy reported a positive 4 percent versus a positive 13 percent last year

Gap U.S. reported a positive 3 percent versus a positive 11 percent last year

Gap International reported a negative 7 percent versus a positive 13 percent last year

Banana Republic reported a positive 12 percent versus a positive 3 percent last year

Total sales by division for year-to-date were as follows:

Old Navy reported $3.1 billion versus $2.9 billion last year

Gap U.S. reported $2.4 billion versus $2.4 billion last year

Gap International reported $882 million versus $879 million last year

Banana Republic reported $1.0 billion versus $907 million last year

The increase in second quarter sales was driven by strong performance in May, offset by challenges in June and July as a result of our strategic decision to reduce overall promotional and markdown activity, which partially contributed to a weakness in traffic.

The increase in our year-to-date sales was primarily due to an increase in regular price selling and higher markdown margins compared with the same period last year. The increase during the first half of fiscal year 2004 in our comparable store sales was driven by improvement in our traffic comps at Banana Republic and Old Navy and increased units per transaction for the total company. Strong product acceptance during the first quarter of fiscal 2004 and disciplined inventory management during the first half of fiscal 2004 drove higher average unit retail sales, primarily at Banana Republic and Gap U.S.

With regard to weak International division performance, we will continue to study local market preferences and are working to better balance product assortments to be more market appropriate throughout the year. In addition, we continue to add design talent for the International division and will be placing some merchants local in country. As we are still in the building phase with these teams, it will take time before any positive financial impact will be visible.

The increase in net sales per average square foot for the first half of fiscal 2004 was attributable to positive comparable store sales.

Store count and square footage for the twenty-six weeks ended July 31, 2004 was as follows:


	January 31, 2004 Total Store Count	Opened	Closed		July 31, 2004 Total Store Count	July 31, 2004 Total Square Footage
Gap U.S.
Gap Brand	1,249	1	(38	)	1,212	11,084,566
Gap Outlet	140	2	(2	)	140	1,373,960

	1,389	3	(40	)	1,352	12,458,526

Gap (International)
United Kingdom	133	—	(4	)	129	1,205,712
United Kingdom Outlet	7	—	(1	)	6	57,090
Canada	102	—	(1	)	101	964,295
Canada Outlet	2	—	—		2	24,806
France	35	—	—		35	288,668
Japan	67	5	—		72	771,849
Japan Outlet	2	—	—		2	35,474
Germany	10	—	(10	)	—	—

	358	5	(16	)	347	3,347,894

Banana Republic
Banana Republic U.S.	376	3	(1	)	378	3,216,446
Banana Republic Canada	16	—	—		16	119,943
Banana Republic Outlet	43	11	(1	)	53	431,232

	435	14	(2	)	447	3,767,621

Old Navy
Old Navy U.S.	765	17	(6	)	776	15,518,111
Old Navy Canada	33	2	—		35	683,968
Old Navy Outlet	42	—	—		42	599,433

	840	19	(6	)	853	16,801,512

Total	3,022	41	(64	)	2,999	36,375,553

Cost of Goods Sold and Occupancy Expenses

Cost of goods and occupancy expenses include the cost of merchandise, rent, occupancy and depreciation for our distribution centers and stores.

Cost of goods sold and occupancy expenses as a percentage of net sales decreased 2.5 percentage points from 64.0 percent to 61.5 percent in the second quarter of fiscal 2004 and decreased 3.7 percentage points from 63.0 percent to 59.3 percent in the first half of fiscal 2004, compared to the same periods in fiscal 2003. Cost of goods sold and occupancy expenses decreased $69 million in the second quarter of fiscal 2004 from $2.4 billion to $2.3 billion during the same period in fiscal 2003 and decreased $56 million in the first half of fiscal 2004 from $4.4 billion to $4.4 billion during the same period in fiscal 2003. The decrease in cost of goods sold and occupancy expenses as a percentage of net sales in the second quarter of fiscal 2004 was driven by higher merchandise margins of 1.9 percentage points and by lower occupancy expenses of 0.6 percentage points.

Merchandise margins increased 1.9 percentage points for the second quarter and 2.6 percentage points for the first half of fiscal 2004 compared to the same periods in fiscal 2003 as a result of disciplined inventory management. During the second quarter, we realized better year-over-year margins on regular price and markdown sales. We also sold more at regular price versus last year.

The decrease in occupancy expenses as a percentage of net sales for the second quarter and first half of fiscal 2004 compared to the same periods in fiscal 2003 came from leveraging of rent, occupancy, and depreciation expenses due to less depreciation from asset depletion and decreases in store locations in addition to improved sales performance.

Operating Expenses

Operating expenses as a percentage of net sales increased 2.1 percentage points from 25.2 percent to 27.3 percent in the second quarter of fiscal 2004 and increased 1.5 percentage points from 25.8 percent to 27.3 percent for the first half of fiscal 2004, compared to the same periods in fiscal 2003. Operating expenses increased $86 million in the second quarter of fiscal 2004 to $1.0 billion compared to $930 million in the second quarter of fiscal 2003. Operating expenses increased $195 million for the first half of fiscal 2004 to $2.0 billion compared to $1.8 billion for the same period in fiscal 2003. The increase in total operating expense dollars for the second quarter and first half of fiscal 2004 was primarily driven by increased planned costs related to our growth initiatives, variable expenses due to sales growth, and advertising expenses as Gap U.S had additional TV media advertising during the first half of fiscal 2004, compared to the same period in fiscal 2003.

For the full year fiscal 2004, we expect total operating expense dollars, together with losses on early retirement of debt, to increase by about 11 percent compared to fiscal 2003.

Loss on Early Retirement of Debt

In support of our ongoing goal to return to an investment grade credit rating, we reduced our outstanding debt by $473 million by repurchasing domestic debt during the first half of fiscal 2004. Although the bond repurchases are net present value positive, we incurred $95 million in losses on early retirement of debt due to premiums paid in the first half of fiscal 2004.

Interest Expense

Interest expense decreased $18 million in the second quarter of fiscal 2004 to $44 million, compared to $62 million in the second quarter of fiscal 2003. Interest expense decreased $32 million in the first half of fiscal 2004 to $96 million compared to $128 million in the same period of fiscal 2003. The decrease in interest expense during 2004 was primarily due to our debt repurchases as well as interest savings as a result of refinancing our $1.4 billion secured credit facility in June 2003 with a $750 million secured revolving credit facility and $1.2 billion in letter of credit agreements.

For full year fiscal 2004, we expect interest expense to be about $180 million, which includes about $43 million for the third quarter and about $41 million for the fourth quarter.

Interest Income

Interest income increased $3 million in the second quarter of fiscal 2004 to $12 million compared to $9 million in the second quarter of fiscal 2003. The increase in interest income in the second quarter of fiscal 2004 was primarily due to increases in average cash available for investment as a result of higher cash balances.

Interest income increased $6 million in the first half of fiscal 2004 to $25 million, compared to $19 million in the first half of fiscal 2003. The increase in interest income in the first half of fiscal 2004 was primarily due to increases in average cash available for investment as a result of higher cash balances.

Income Taxes

The effective tax rate was 39.0 percent for the second quarter of fiscal 2004 and 2003 as well as for the first half of fiscal 2004 and 2003. We currently expect the fiscal 2004 effective tax rate to be within a range of 38.5 percent to 39.5 percent. The actual rate will ultimately depend on several variables, including the mix of earnings between domestic and international operations and the overall level of earnings.

FINANCIAL CONDITION

The following sets forth certain measures of our liquidity:


	Twenty-six Weeks Ended				Fifty-two Weeks Ended January 31, 2004
($ In millions)	July 31, 2004		August 2, 2003		Fifty-two Weeks Ended January 31, 2004
Working capital	$	4,531	$	3,659	$	4,197
Current ratio		2.91:1		2.76:1		2.67:1

We ended the second quarter of fiscal 2004 with $4.3 billion in cash and equivalents, short-term investments and restricted cash, of which $1.4 billion was restricted and $484 million was held in short-term investments. Our total outstanding debt was $2.3 billion. We believe the combination of cash on hand and cash from operations will provide adequate liquidity for business operations, capital expenditures, debt reduction, dividend payments and growth opportunities. At July 31, 2004, our working capital and current ratio calculation included the $1.4 billion of restricted cash.

Cash Flows from Operating Activities

Net cash provided by operating activities for the twenty-six weeks ended July 31, 2004 decreased $91 million, compared with the same period in the prior year. Net earnings improvement of $94 million, offset by an increase in working capital used in the first half of fiscal 2004, contributed to the decreased cash flow compared with the same period in the prior year. Specifically, there was a larger use of cash this year related to merchandise inventory and

income taxes payable. In 2003, we reduced our excess inventory and began 2004 with lower inventory levels. The lower inventory levels required increased purchases during the first half of fiscal 2004 to support sales. In addition, higher estimated tax payments due to our stronger earnings performance in the first quarter required more cash during the first half of fiscal 2004.

Our inventory balance at July 31, 2004, was $2.1 billion, a decrease of $187 million from the same period in the prior year of $2.3 billion. Inventory per square foot was $57, or $4 per square foot lower than the same period in the prior year. Inventory management remains an area of focus as we continue to execute against our strategies to optimize inventory productivity and more effectively manage slower turning inventory while maintaining appropriate in-store merchandise levels to support sales growth.

We fund inventory expenditures during normal and peak periods through a combination of cash flow from operations and cash on our balance sheet. Our business follows a seasonal pattern, peaking over a total of about 13 weeks during the back-to-school and holiday periods. The seasonality of our operations may lead to significant fluctuations in certain asset and liability accounts between fiscal year-end and subsequent interim periods.

Cash Flows from Investing Activities

Net cash provided by investing activities for the twenty-six weeks ended July 31, 2004, increased $246 million compared with the same period in the prior year. The net change in the purchase and maturities of short-term investments of $305 million contributed to this increase compared with the same period in the prior year.

For the second quarter of fiscal 2004 our net square footage was flat compared to year-end fiscal 2003. In the second quarter of fiscal 2004, capital expenditures totaled approximately $156 million. The majority of these expenditures were used for 41 new store locations, store remodels and information technology.

For full year fiscal 2004, we expect capital expenditures to be about $500 million. We expect to fund these capital expenditures with cash flows from operations. Also, we anticipate full year fiscal 2004 depreciation and amortization expense to be $600 million to $625 million. We continue to expect net square footage to remain flat for the full year fiscal 2004.

Cash Flows from Financing Activities

Net cash used for financing activities for the twenty-six weeks ended July 31, 2004, decreased $1.3 billion compared with the same period in the prior year due to our execution of letter of credit agreements in June 2003, secured by approximately $1.24 billion in cash, which is included in restricted cash on our Consolidated Balance Sheets. In the first half of fiscal 2004 we repurchased $473 million of domestic notes. In the first quarter of fiscal 2003, we repaid a maturing $500 million two-year bond.

Credit Facility

As of July 31, 2004, we had $907 million in trade letters of credit issued under letter of credit agreements. There were no drawings under our $750 million secured revolving credit facility.

lenient than the ratio in the new Facility. As with the old Facility, a violation of these covenants could result in a default under the new Facility and letter of credit agreements, which would permit the participating banks to restrict our ability to further access the new Facility for letters of credit and advances, terminate our ability to request letters of credit pursuant to the letter of credit agreements and require the immediate repayment of any outstanding advances under the new Facility. In addition, such a default could, under certain circumstances, permit the holders of our outstanding unsecured debt to accelerate payment of such obligations.

Other Debt Information

On May 18, 2004, Moody’s Investors Service (“Moody’s”) upgraded our senior unsecured credit rating to Ba2 from Ba3 and the senior implied rating to Ba1 from Ba2 with a positive outlook. As a result of the current upgrade by Moody’s, the interest rate payable by us on the 2005 notes decreased by 25 basis points to 9.65 percent per annum and the interest rate payable by us on the 2008 notes decreased by 25 basis points to 10.30 percent per annum as of June 15, 2004. On July 1, 2004, Standard and Poor’s raised their outlook on our debt rating from stable to positive.

Summary Disclosures about Contractual Cash Obligations and Commercial Commitments

We also have standby letters of credit, surety bonds and bank guarantees outstanding at July 31, 2004, amounting to $83 million (of which $34 million is issued under the revolving credit facility), $26 million and $6 million, respectively.

Rent expense for all operating leases was $245 million and $246 million, for the thirteen weeks ended July 31, 2004 and August 2, 2003, respectively and $494 million and $493 million for the twenty-six weeks ended July 31, 2004 and August 2, 2003, respectively.

As party to a reinsurance pool for workers’ compensation, general liability and automobile liability, we have guarantees with a maximum exposure of $90 million, of which $27 million has already been cash collateralized. Our maximum exposure and cash collateralized balance are expected to decrease in the future as our participation in the reinsurance pool diminishes.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to adopt accounting policies and make significant judgments and estimates to develop amounts reflected and disclosed in the financial statements. In many cases, there are alternative policies or estimation techniques that could be used. We maintain a thorough process to review the application of our accounting policies and to evaluate the appropriateness of the many estimates that are required to prepare the financial statements of a large, global corporation. However, even under optimal circumstances, estimates routinely require adjustment based on changing circumstances and the receipt of new or better information. There have been no changes to the policies as discussed in our Annual Report on Form 10-K for the year ended January 31, 2004.

NEW ACCOUNTING PRONOUNCEMENT

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We operate in foreign countries, which exposes us to market risk associated with foreign currency exchange rate fluctuations. Our risk management policy is to hedge substantially all forecasted merchandise purchases for foreign operations using foreign exchange forward contracts. We also use forward contracts to hedge our market risk exposure associated with foreign currency exchange rate fluctuations for certain inter-company loans, balances and subsidiary investments denominated in currencies other than the functional currency of the entity holding or issuing the inter-company loan, balance and investment. These contracts are entered into with large, reputable financial institutions, thereby minimizing the credit exposure from our counter-parties. At July 31, 2004, we had forward contracts pertaining to merchandise hedges maturing at various dates through July 2005 to buy and sell the equivalent of approximately $692 million in foreign currencies at contracted rates.

In addition, we used a cross-currency interest rate swap to swap the interest and principal payable of $50 million debt securities of our Japanese subsidiary, Gap (Japan) KK, from a fixed interest rate of 6.25 percent, payable in U.S. dollars, to 6.1 billion Japanese yen with a fixed interest rate of 2.43 percent.

The outstanding fair market value net liability for all derivatives reflected in the Condensed Consolidated Balance Sheets as of July 31, 2004, was $47 million.

We have limited exposure to interest rate fluctuations on our borrowings. The interest on our long-term debt is set at a fixed coupon, with the exception of the interest rates payable by us on our outstanding notes due December 2005 and December 2008, which are subject to change based on our long-term senior secured credit ratings. The interest rates earned on our cash and equivalents will fluctuate in line with short-term interest rates.

Our market risk profile as of July 31, 2004 has not significantly changed since January 31, 2004. Our market risk profile on January 31, 2004 is disclosed in our 2003 Annual Report on Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, as of July 31, 2004. Based on such evaluation, they have concluded that as of such date, our disclosure controls and procedures are effective.

Changes in Internal Controls

During our last fiscal quarter, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

Item 4. Submission of Matters to a Vote of Security Holders

a)	On May 12, 2004, the Annual Meeting of the Stockholders of the Company was held in San Francisco, California. There were 898,095,233 shares of common stock outstanding on the record date and entitled to vote at the Annual Meeting.

b)	The following directors were elected:


	Vote For	Vote Withheld
Howard Behar	816,701,024	25,998,603
Adrian D.P. Bellamy	816,396,008	26,303,619
Donald G. Fisher	810,310,178	32,389,449
Doris F. Fisher	815,774,683	26,924,944
Robert J. Fisher	816,429,413	26,270,214
Glenda A. Hatchett	816,130,823	26,568,804
Penelope L. Hughes	816,430,350	26,269,277
Bob L. Martin	815,890,211	26,809,416
Jorge P. Montoya	816,633,359	26,066,268
Paul S. Pressler	816,553,878	26,145,749
James M. Schneider	816,473,501	26,226,126
Mayo A. Shattuck III	816,369,353	26,330,274
Margaret C. Whitman	816,567,677	26,131,950

There were no abstentions and no broker non-votes.

c)	The selection of Deloitte & Touche, LLP as independent auditors for the fiscal year ending January 29, 2005, was ratified with 835,172,809 votes in favor and 3,499,141 votes against.

There were 4,027,677 abstentions and no broker non-votes.

d)	The proposal to amend and restate the company’s Executive Management Incentive Cash Award Plan was ratified with 716,390,371 votes in favor and 46,109,961 votes against.

There were 4,693,490 abstentions and 75,505,805 broker non-votes.

e)	The shareholder proposal regarding executive compensation was rejected with 21,703,127 votes in favor and 724,948,775 votes against.

There were 20,541,920 abstentions and 75,505,805 broker non-votes.

Item 6. Exhibits and Reports on Form 8-K

Exhibits



(3)		Amended and Restated Bylaws of the company effective as of July 27, 2004.

(15)		Letter re: Unaudited Interim Financial Information.

(31.1)		Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002).

(31.2)		Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002).

(32.1)		Certification of the Chief Executive Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(32.2)		Certification of the Chief Financial Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Reports on 8-K

We filed the following reports on Form 8-K during the quarter ended July 31, 2004:



1.		Form 8-K, dated May 6, 2004, regarding the announcement of our sales for the month and quarter ended May 1, 2004, filed with the SEC on May 6, 2004;

2.		Form 8-K, dated May 20, 2004, regarding the announcement of our earnings for the quarter ended May 1, 2004, filed with the SEC on May 20, 2004;

3.		Form 8-K, dated May 25, 2004, regarding the announcement that the Board of Directors elected Domenico De Sole to serve as a director of the company, filed with the SEC on May 26, 2004;

4.		Form 8-K, dated June 3, 2004, regarding the announcement of our sales for the month ended May 29, 2004, filed with the SEC on June 3, 2004; and

5.		Form 8-K, dated July 8, 2004, regarding the announcement of our sales for the month ended July 3, 2004, filed with the SEC on July 8, 2004.

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: September 3, 2004	By	/s/ PAUL S. PRESSLER
		Paul S. Pressler
		President and Chief Executive Officer

Date: September 3, 2004	By	/s/ BYRON POLLITT
		Byron Pollitt
		Executive Vice President and
		Chief Financial Officer

EXHIBIT INDEX



(3.1)		Amended and Restated Bylaws of the company effective as of July 27, 2004.

(15)		Letter re: Unaudited Interim Financial Information.

(31.1)		Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002).

(31.2)		Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002).

(32.1)		Certification of the Chief Executive Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(32.2)		Certification of the Chief Financial Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

EX-3.1 2 dex31.htm AMENDED AND RESTATED BYLAWS OF THE COMPANY Amended and Restated Bylaws of the company

Exhibit 3.1

AMENDED AND RESTATED BYLAWS

THE GAP, INC.

(Effective -July 27, 2004)

ARTICLE I

OFFICES

Section 1. Registered Office.

The registered office of the Corporation in the State of Delaware shall be in the City of Wilmington, County of New Castle, State of Delaware.

Section 2. Other Offices.

The Corporation also may have offices at such other places both within and outside the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE II

STOCKHOLDERS

Section 1. Stockholders’ Meetings.

(a) Time and Place of Meetings. Meetings of the stockholders shall be held at such times and places, either within or outside the State of Delaware, as may from time to time be fixed by the Board of Directors and stated in the notices or waivers of notice of such meetings.

(b) Annual Meeting. The annual meeting of the stockholders shall be held on such date and at such time as may be designated by the Board of Directors, for the election of directors and the transaction of such other business properly brought before such annual meeting of the stockholders in accordance with these Bylaws (as they may be amended from time to time, these “Bylaws”) and within the powers of the stockholders.

(c) Special Meetings. Special meetings of the stockholders of the Corporation for any purpose or purposes may be called only (i) by the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors constituting the whole Board of Directors or (ii) at the request in writing of stockholders owning not less than 10% of the voting power of the Corporation. Such resolution or request in writing shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting of the stockholders shall be limited to the purposes stated in the notice of such meeting.

(d) Notice of Meetings. Except as otherwise provided by law, the Certificate of Incorporation of the Corporation (as it may be amended from time to time, the “Certificate of Incorporation”) or these Bylaws, written notice of each meeting of the stockholders shall be given not less than ten (10) days nor more than sixty (60) days before the date of such meeting to each stockholder entitled to vote thereat, directed to such stockholder’s address as it appears upon the books of the Corporation, such notice to specify the place, date, hour and purpose or purposes of such meeting. When a meeting of the stockholders is adjourned to another time and/or place, notice need not be given of such adjourned meeting if the time and place thereof are announced at the meeting of the stockholders at which the adjournment is taken, unless the adjournment is for more than thirty (30) days or unless after the adjournment a new record date is fixed for such adjourned meeting, in which event a notice of such adjourned meeting shall be given to each stockholder of record entitled to vote thereat. Notice of the time, place and purpose of any meeting of the stockholders may be waived in writing either before or after such meeting and will be waived by any stockholder by such stockholder’s attendance thereat in person or by proxy. Any stockholder so waiving notice of such a meeting shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given.

(e) Quorum. Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, the holders of not less than a majority of the shares entitled to vote at any meeting of the stockholders, present in person or by proxy, shall constitute a quorum. If a quorum is present at any meeting, the affirmative vote of the holders of a majority of the shares entitled to vote at such meeting on the subject matter and present thereat in person or by proxy shall be deemed the act of the stockholders. If a quorum shall fail to attend any meeting of the stockholders, the presiding officer of such meeting may adjourn such meeting from time to time to another place, date or time, without notice other than announcement at such meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting of the stockholders as originally noticed. The foregoing notwithstanding, if a notice of any adjourned special meeting of the stockholders is sent to all stockholders entitled to vote thereat which states that such adjourned special meeting will be held with those present in person or by proxy constituting a quorum, then, except as otherwise required by law, those present at such adjourned special meeting of the stockholders shall constitute a quorum and all matters shall be determined by a majority of the votes cast at such special meeting.

Section 2. Determination of Stockholders Entitled to Notice and to Vote.

To determine the stockholders entitled to notice of any meeting of the stockholders or to vote thereat, the Board of Directors may fix in advance a record date as provided in Article VII, Section 1 of these Bylaws, or if no record date is fixed by the Board of Directors, a record date shall be determined as provided by law.

Section 3. Voting.

(a) Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, each stockholder present in person or by proxy at a meeting of the stockholders shall be entitled to one vote for each full share of stock registered in the name of such stockholder at the time fixed by the Board of Directors or by law as the record date for the determination of stockholders entitled to vote at such meeting.

(b) Every stockholder entitled to vote at a meeting of the stockholders may do so either in person or by one or more agents authorized by a written proxy executed by the person or such stockholder’s duly authorized agent whether by manual signature, typewriting, telegraphic transmission, facsimile signature or otherwise.

(c) Voting may be by voice or by ballot as the presiding officer of the meeting of the stockholders shall determine. On a vote by ballot, each ballot shall be signed by the stockholder voting, or by such stockholder’s proxy, and shall state the number of shares voted.

(d) In advance of any meeting of the stockholders, the Board of Directors shall appoint one or more persons as inspectors of election (“Inspectors”) to act at such meeting and make a written report thereof. If Inspectors are not so appointed, or if an appointed Inspector fails to appear or fails or refuses to act at a meeting of the stockholders, the presiding officer of any such meeting may, and on the request of any stockholder or such stockholder’s proxy shall, appoint Inspectors at such meeting. Each Inspector, before entering upon the discharge of the duties of Inspector, shall take and sign an oath faithfully to execute the duties of Inspector with strict impartiality and according to the best of such Inspector’s ability. Such Inspectors shall take charge of the ballots at such meeting. Also, such Inspectors shall (A) ascertain the number of shares outstanding and the voting power of each; (B) determine the shares represented at such meeting and the validity of proxies and ballots; (C) count all votes and ballots; (D) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the Inspectors; and (E) certify their determination of the number of shares represented at such meeting, and their count of all votes and ballots. The Inspectors may appoint or retain other persons or entities to assist the Inspectors in the performance of the duties of the Inspectors. An Inspector need not be a stockholder of the Corporation and any officer, employee, or agent of the Corporation may be an Inspector on any question other than a vote for or against such person’s election to any position with the Corporation or on any other questions in which such officer, employee, or agent may be directly interested. If there are three Inspectors, the determination, report or certificate of two such Inspectors shall be effective as if unanimously made by all Inspectors.

(e) The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting of stockholders shall be announced at the meeting. No ballot, proxies or votes, nor any revocation thereof or changes thereto, shall be accepted by the Inspectors after the closing of the polls unless the Delaware Court of Chancery upon application by a stockholder shall determine otherwise.

Section 4. List of Stockholders.

The officer who has charge of the stock ledger of the Corporation shall prepare and make available, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote thereat, arranged in alphabetical order, showing the address of and the number of shares registered in the name of each such stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to such meeting, during ordinary business hours, for a period of at least ten (10) days prior to such meeting, at the principal place of business of the corporation. The list also shall be produced and kept throughout the time and at the place of the meeting of the stockholders and may be inspected by any stockholder who is present.

Section 5. Action by Consent of Stockholders.

(a) Except as otherwise restricted by law or the Certificate of Incorporation, upon the setting of a record date in accordance with Section 5(b), any action required or permitted to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice to the stockholders and without a vote, if a consent in writing setting forth the action so taken shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of any corporate action taken without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

(b) In order for the Corporation to determine the stockholders entitled to consent to any corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten (10) days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or any officer or agent of the Corporation having custody of the book in which proceedings of stockholders meetings are recorded, to the attention of the Secretary of the Corporation. Delivery shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action.

Section 6. Advance Notice of Stockholder Nominees and Stockholder Business.

(a) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be: (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (iii) otherwise properly brought before the meeting by a stockholder. In addition to any other applicable requirements (including, without

limitation, that any business brought before a meeting must be a proper matter for stockholder action), for business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation, the stockholder must have been a holder of record of the Corporation at the time such notice is delivered, and the stockholder, or his or her representative who is qualified under law to present the business on his or her behalf, must attend the meeting to present the business. To be timely, a stockholder’s notice must be delivered to or mailed and received by the Secretary at the principal executive offices of the Corporation no later than the close of business on the forty-fifth (45th) day and no earlier than the close of business on the seventy-fifth (75th) day prior to the first anniversary of the date on which the Corporation first mailed its proxy materials for the preceding year’s annual meeting of stockholders; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty (30) days from the date contemplated at the time of the previous year’s proxy statement, notice by the stockholder to be timely must be so received no earlier than the close of business on the one hundred fifth (105th) day prior to the date of the annual meeting and no later than the close of business on the later of (A) the seventy-fifth (75th) day prior to such annual meeting date or, (B) in the event public announcement of the date of such annual meeting is first made by the Corporation fewer than eighty-five (85) days prior to the date of such annual meeting, the close of business on the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Corporation. A stockholder’s notice shall be made to the Secretary and shall set forth as to each matter the stockholder proposes to bring before the annual meeting: (1) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (2) the name and address, as they appear on the Corporation’s books, of the stockholder proposing such business, (3) the class and number of shares of the Corporation which are beneficially owned by the stockholder, (4) any material interest of the stockholder in such business, and (5) any other information that is required to be provided by the stockholder pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “1934 Act”), in his or her capacity as a proponent of a stockholder proposal. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this paragraph (a). The presiding officer of the annual meeting shall, if the facts warrant, determine and declare at the meeting that business was not properly brought before the meeting in accordance with the provisions of this paragraph (a), and, if he or she should so determine, such presiding officer shall so declare at the meeting that any such business not properly brought before the meeting shall not be transacted.

(b) In addition to any other applicable requirements, only persons who are nominated in accordance with the procedures set forth in this paragraph (b) shall be eligible for election as directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders by or at the direction of the Board of Directors or by any stockholder of the Corporation entitled to vote in the election of directors at the meeting who complies with the notice procedures set forth in this paragraph (b). Such nominations, other than those made by or at the direction of the Board of Directors, shall be made only after timely notice (as set forth in paragraph (a) of this Section 6) in writing to the Secretary of the Corporation in accordance with the provisions of paragraph (b) of this Section 6. Such stockholder’s notice shall set forth: (i) as to each person, if any, whom the stockholder intends to nominate for election or

re-election as a director: (A) the name, age, business address and residence address of such person, (B) the principal occupation or employment of such person, (C) the class and number of shares of the Corporation which are beneficially owned by such person, (D) a description of all relationships, arrangements, and understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the stockholder, and (E) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the 1934 Act (including without limitation such person’s written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected); and (ii) as to such stockholder giving notice, the information required to be provided pursuant to paragraph (a) of this Section 6 of this Article II. Notwithstanding the foregoing, the Board of Directors shall not be required to solicit proxies for the election of any person the stockholder intends to nominate at the meeting. At the request of the Board of Directors, any person nominated by a stockholder for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in the stockholder’s notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this paragraph (b). The presiding officer of the meeting shall, if the facts warrant, determine and declare at the meeting that a nomination was not made in accordance with the procedures provided by this paragraph (b), and if he or she should so determine, such presiding officer shall so declare at the meeting, and the defective nomination shall be disregarded.

(c) For purposes of this Section 6 of this Article II, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the 1934 Act.

ARTICLE III

BOARD OF DIRECTORS

Section 1. General Powers.

The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, except as may be otherwise provided by law or the Certificate of Incorporation.

Section 2. Election of Directors.

(a) Number of Directors and Term of Office. Except as otherwise provided in the Certificate of Incorporation, the authorized number of directors which shall constitute the whole Board of Directors of the Corporation shall be fixed from time to time by the Board of Directors, but shall not be less than three (3). The exact number of directors shall be determined from time to time, either by a resolution or Bylaw provision duly adopted by the Board of Directors. Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, each of the directors of the Corporation shall be elected at the annual meeting of the stockholders and each director so elected shall hold office until such director’s successor shall be elected and shall qualify (subject, however, to such director’s prior death, resignation, retirement, disqualification or removal from office).

(b) Vacancies. Except as otherwise required by these Bylaws, any vacancy in the Board of Directors that results from an increase in the authorized number of directors shall be filled only by vote of a majority of the authorized number of directors constituting the whole Board of Directors, provided that a quorum is present, and any other vacancy occurring in the Board of Directors shall be filled by a majority of the directors then in office, even if less than a quorum, or by a sole remaining director. Stockholders shall have no right to fill, or take any action to fill, any vacancy in the Board of Directors. Any director elected in accordance with this Section 2(b) shall hold office until such director’s successor shall be elected and shall qualify (subject, however, to such director’s prior death, resignation, retirement, disqualification or removal from office).

(c) Resignation. Any director may resign from the Board of Directors at any time by giving written notice thereof to the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time when such resignation shall become effective shall not be so specified, then such resignation shall take effect immediately upon its receipt by the Secretary; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

(d) Removal. Except as provided in the Certificate of Incorporation, any director of the Corporation may be removed from office with or without cause, but only by the affirmative vote of the holders of not less than a majority of the outstanding capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.

Section 3. Meetings of the Board of Directors.

(a) Regular Meetings. Regular meetings of the Board of Directors and committees thereof shall be held without call or notice at such times and places as the Board of Directors shall from time to time determine.

(b) Special Meetings. Special meetings of the Board of Directors and committees thereof may be called by the Chairman of the Board of Directors, by the Chief Executive Officer, by the President, or by the Board of Directors, or in the case of committees, by the Chair thereof. Notice of the time and place of special meetings of the Board of Directors and committees thereof shall be given by the Secretary or an Assistant Secretary of the Corporation, or by any other officer authorized by the Board of Directors. Such notice shall be given to each director personally or by mail, messenger, telephone, facsimile transmission, overnight courier, or telegraph at such director’s business or residence address. Notice by mail shall be deposited in the United States mail, postage prepaid, not later than the third day prior to the date fixed for such special meeting. Notice by telephone, facsimile transmission or telegraph shall be sent, and notice given personally, by messenger or by overnight courier shall be delivered, at least twenty-four (24) hours prior to the time set for such special meeting. Notice of a special meeting of the Board of Directors or committee thereof need not contain a statement of the purpose of such special meeting.

(c) Adjourned Meetings. A majority of directors present at any regular or special meeting of the Board of Directors or any committee thereof, whether or not constituting a quorum, may adjourn any meeting from time to time until a quorum is present or otherwise. Notice of the time and place of holding any adjourned meeting shall not be required if the time and place are fixed at the meeting adjourned.

(d) Place of Meetings. Meetings of the Board of Directors and committees thereof, both regular and special, may be held at any place within or outside the state of Delaware which has been designated in the notice of the meeting or, if not stated in the notice or if there is no notice, designated by the Board of Directors. In the absence of any such designation, meetings of the Board of Directors and committees thereof shall be held at the Corporation’s principal executive offices.

(e) Participation by Telephone or Videoconference. Members of the Board of Directors or any committee thereof may participate in any meeting of the Board of Directors or committee through the use of conference telephone, videoconference or similar communications equipment, so long as all members participating in such meeting can hear one another, and such participation shall constitute presence in person at such meeting.

(f) Quorum. At all meetings of the Board of Directors or any committee thereof, a majority of the authorized number of directors constituting the whole Board of Directors or serving on such committee, as applicable, shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any such meeting at which there is a quorum shall be the act of the Board of Directors or such committee, except as may be otherwise specifically provided by law, the Certificate of Incorporation or these Bylaws. A meeting of the Board of Directors or any committee thereof at which a quorum initially is present may continue to transact business notwithstanding the withdrawal of directors so long as any action is approved by at least a majority of the required quorum for such meeting.

(g) Waiver of Notice. The transactions of any meeting of the Board of Directors or any committee thereof, however called and noticed or wherever held, shall be as valid as if taken at a meeting duly held after regular call and notice, if a quorum be present and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, or a consent to hold such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting.

Section 4. Action without Meeting.

Any action required or permitted to be taken by the Board of Directors at any meeting thereof or at any meeting of a committee thereof may be taken without a meeting if all members of the Board of Directors or such committee thereof consent thereto in writing and the writing or writings are filed with the minutes of the proceedings of the Board of Directors or such committee thereof.

Section 5. Compensation of Directors.

Unless otherwise restricted by law, the Certificate of Incorporation or these Bylaws, the Board of Directors shall have the authority to fix the compensation of directors. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

Section 6. Committees of the Board.

(a) Committees. The Board of Directors may, by resolution adopted by the Board of Directors, designate one or more committees of the Board of Directors, each committee to consist of one or more directors. Each such committee, to the extent permitted by law, the Certificate of Incorporation and these Bylaws, shall have and may exercise such powers of the Board of Directors in the management and affairs of the Corporation as may be prescribed by the resolutions creating such committee. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. The Board of Directors shall have the power, at any time for any such reason, to change the members of any such committee, to fill vacancies, and to discontinue any such committee.

(b) Minutes of Meetings. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required.

(c) Limits on Authority of Committees. No committee shall have the power or authority in reference to amending the Certificate of Incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in Section 151(a) of the General Corporation Law of the State of Delaware, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation, or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending any provision of these Bylaws; nor, unless the resolutions establishing such committee or the Certificate of Incorporation expressly so provide, shall any committee have the power or authority to declare a dividend, authorize the issuance of stock, adopt a certificate of ownership and merger, or fill vacancies in the Board of Directors.

Section 7. Chairman of the Board.

The Chairman of the Board, who shall be a member of the Board of Directors, but not an officer or employee of the Corporation, shall preside at all meetings of the Board of Directors and, subject to Article IV, shall preside at all meetings of the stockholders. The Chairman of the Board shall exercise and perform such other powers and duties as may from time to time be assigned to the Chairman by the Board of Directors. The Chairman of the Board shall be elected annually by the Board of Directors at its next regular meeting following the annual meeting of the stockholders and shall serve in such capacity until the next annual election of the Chairman of the Board and until his or her successor is elected or until his or her death, resignation or removal. The Chairman of the Board may be removed from this position (but not as a director) at any time, with or without cause, by the Board of Directors. If a director has not been elected as Chairman of the Board, or if the Chairman of the Board is not present at a meeting of the Board of Directors, the Board of Directors shall elect a member of the Board of Directors who is not an officer or employee of the Corporation to serve as Chairman of the Board of Directors for such meeting.

ARTICLE IV

OFFICERS

Section 1. Officers.

(a) Number. The officers of the Corporation shall be a Chief Executive Officer, a President, a Secretary and a Chief Financial Officer. The Corporation may also have, at the discretion of the Board of Directors, one or more Vice Presidents, a Treasurer, one or more Assistant Secretaries, one or more Assistant Treasurers and such other officers as the Board of Directors may deem appropriate. The same person may hold any two or more offices, except those of President and Secretary.

(b) Election and Term of Office. The officers shall be elected annually by the Board of Directors at its next regular meeting following the annual meeting of the stockholders and each officer shall hold office until the next annual election of officers and until such officer’s successor is elected or until such officer’s death, resignation or removal. Any officer may be removed at any time, with or without cause, by the Board of Directors. Any vacancy occurring in any office may be filled by the Board of Directors.

(c) Delegation of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof.

(d) Salaries. The salary, bonus, and long-term incentive compensation of all executive officers of the Corporation (as defined in Rule 3b-7 of the Securities Exchange Act of 1934, as amended) shall be fixed by the Board of Directors or a committee thereof from time to time.

Section 2. Chief Executive Officer.

The Chief Executive Officer shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the Corporation. In addition, the Chief Executive Officer shall, in the absence of the Chairman of the Board or at his or her request, preside at all meetings of the stockholders and shall exercise and perform such other powers and duties as may from time to time be assigned to the Chief Executive Officer by the Board of Directors.

Section 3. President.

The President shall, in the absence of the Chairman of the Board and the Chief Executive Officer or at their request, preside at all meetings of the stockholders, and shall exercise and perform such other powers and duties as may from time to time be assigned to the President by the Board of Directors.

Section 4. Chief Financial Officer.

The Chief Financial Officer, who may, but need not, be the Treasurer, shall keep and maintain adequate and correct books and records of accounts of the Corporation, and shall see that all moneys and other valuables of the Corporation are deposited in the name and to the credit of the Corporation with such depositories as may be designated by the Board of Directors. The Chief Financial Officer shall disburse the funds of the Corporation as directed by the Board of Directors, shall render to the Chairman of the Board and the directors, whenever they request it, an account of all transactions in such officer’s official capacity and of the financial condition of the Corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors.

Section 5. Vice Presidents.

The Vice Presidents shall have such powers and perform such duties as from time to time may be prescribed for them, respectively, by the Board of Directors, Chief Executive Officer or President.

Section 6. Secretary and Assistant Secretaries.

The Secretary shall record or cause to be recorded, in books provided for the purpose, minutes of the meetings of the stockholders, the Board of Directors and all committees of the Board of Directors; see that all notices are duly given in accordance with the provisions of these Bylaws as required by law; in the absence of the Chairman of the Board, the Chief Executive Officer and President or at their request, preside at all meetings of the stockholders; be custodian of all corporate records (other than financial) and of the seal of the Corporation, and have authority to affix the seal to all documents requiring it and attest to the same; give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors; and, in general, shall perform all duties incident to the office of Secretary and such other duties as may, from time to time, be assigned to the Secretary by the Board of Directors, Chief Executive Officer or President. At the request of the Secretary, or in the Secretary’s absence or disability, any Assistant Secretary shall perform any of the duties of the Secretary and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Secretary.

Section 7. Treasurer and Assistant Treasurers.

The Treasurer shall perform all other duties commonly incident to the Treasurer’s office and shall perform such other duties and have such other powers as the Board of Directors or the Chief Financial Officer shall designate from time to time. At the request of the Treasurer, or in the Treasurer’s absence or disability, any Assistant Treasurer may perform any of the duties of the Treasurer and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Treasurer. Except where by law the signature of the Treasurer is required, each of the Assistant Treasurers shall possess the same power as the Treasurer to sign all certificates, contracts, obligations and other instruments of the Corporation.

ARTICLE V

INDEMNIFICATION AND INSURANCE

Section 1. Indemnification.

(a) Actions, Suits or Proceedings Other Than By or in the Right of the Corporation. The Corporation shall to the fullest extent permitted by the laws of the State of Delaware indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was or has agreed to become a director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another affiliated corporation, partnership, joint venture, trust or other enterprise (including, without limitation, service with respect to employee benefit plans) against all costs, charges, expenses (including attorneys’ fees), liabilities and losses, judgments, fines, amounts paid in settlement and excise taxes or penalties assessed with respect to any employee benefit or welfare plan reasonably incurred or suffered by him or her or on his or her behalf in connection with such action, suit or proceeding and any appeal therefrom, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, that the person had reasonable cause to believe that his or her conduct was unlawful.

(b) Actions or Suits by or in the Right of the Corporation. The Corporation shall indemnify to the fullest extent permitted by the laws of the State of Delaware any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was or has agreed to become a director or officer of the Corporation,

or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another affiliated corporation, partnership, joint venture, trust or other enterprise (including, without limitation, service with respect to employee benefit plans), against all costs, charges, expenses (including attorneys’ fees), judgments, amounts paid in settlement and excise taxes or penalties assessed with respect to any employee benefit or welfare plan reasonably incurred or suffered by him or her or on his or her behalf in connection with such action or suit and any appeal therefrom, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made under this Section 1(b) in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation, unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper.

(c) Indemnification for Costs, Charges and Expenses of Successful Party. Notwithstanding any other provision of this Article V, to the extent that a director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1(a) or 1(b) of this Article V or in defense of any claim, issue or matter therein, he or she shall be indemnified against all costs, charges and expenses (including attorneys’ fees) actually and reasonably incurred by him or her or on his or her behalf in connection therewith.

(d) Determination of Right to Indemnification. Any indemnification under Sections 1(a) or 1(b) of this Article V (unless ordered by a court) shall be paid by the Corporation only as authorized in the specific case upon a determination that indemnification is proper in the circumstances because the indemnified person has met the applicable standard of conduct set forth in Sections 1(a) and 1(b) of this Article V. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel (who may be the regular counsel of the Corporation) in a written opinion, or (3) by the stockholders.

(e) Advancement of Costs, Charges and Expenses. Expenses (including attorneys’ fees) incurred by a director or officer referred to in Sections 1(a) or 1(b) of this Article V in defending a civil or criminal action, administrative or investigative action, suit or proceeding shall be paid by the Corporation, in advance of a determination of right to indemnification pursuant to Section 1(d) of this Article V or the final disposition of such action, suit or proceeding, upon the written request of such director or officer; provided, however, that the payment of such expenses in advance of the determination of right to indemnification or the final disposition of such action, suit or proceeding shall be made only upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such director or officer is not entitled to be indemnified by the Corporation as authorized in this Section 1 of Article V; and provided further that the payment of such expenses shall not be made if a court of competent jurisdiction enters a final nonappealable judgement that such payment would violate

Section 402 of the Sarbanes-Oxley Act of 2002. The Board of Directors may, in such case, authorize the Corporation’s counsel to represent such person, in any action, suit or proceeding, whether or not the Corporation is a party to such action, suit or proceeding. Such costs, charges and expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate.

(f) Procedure for Indemnification. Any indemnification under Sections 1(a), 1(b) or 1(c) of this Article V or advance of expenses under Section 1(e) of this Article V shall be made promptly, and in any event within sixty (60) days, upon the written request of the indemnified person. The right to indemnification or advances as granted by this Section 1 of this Article V shall be enforceable by the indemnified person in any court of competent jurisdiction, if the Corporation denies such request, in whole or in part, or if no disposition thereof is made within such sixty (60) day period. Such person’s costs and expenses actually and reasonably incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses under Section 1 of this Article V where the required undertaking, if any, has been received by the Corporation) that the claimant has not met the standard of conduct set forth in Section 1(a) or 1(b) of this Article V, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Sections 1(a) or 1(b) of this Article V nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

(g) Other Rights; Continuation of Right to Indemnification. The indemnification and advancement of costs, charges and expenses provided by, or granted pursuant to, this Section 1 of this Article V shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of costs, charges and expenses may be entitled under any law (common or statutory), agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office as set forth in Sections 1(a) and 1(b) of this Article V or otherwise, and, unless otherwise provided when authorized or ratified, shall continue as to a person who has ceased to hold such office and shall inure to the benefit of the estate, heirs, executors and administrators of such person. All rights to indemnification under this Section 1 of this Article V shall be deemed to be a contract between the Corporation and each director and officer of the Corporation who serves or served in such capacity at any time while this Section 1 of this Article V is in effect. Any repeal or modification of this Section 1 of this Article V or any repeal or modification of Section 145 of the Delaware General Corporation Law or any other law affecting the rights of directors and officers of the Corporation to indemnification shall not adversely affect any rights of any such director or officer to indemnification or the obligations of the Corporation pursuant to this Section 1, Article V, with respect to any act or omission occurring prior to the time of such repeal or modification.

(h) Indemnification of Employees and Other Agents. The Board of Directors in its discretion shall have power on behalf of the Corporation, subject to applicable law, to indemnify any person made a party to any action, suit or proceeding by reason of the fact that such person, or his or her testator or intestate, is or was an employee or other agent of the Corporation and to advance costs, charges and expenses (including attorneys’ fees) incurred by such person in defending any such action, suit or proceeding.

Section 2. Insurance, Trust Fund, Etc.

The Corporation may purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against such person and incurred by such person, or arising out of such person’s capacity as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of law, the Certificate of Incorporation or these Bylaws. The Corporation may create a trust fund, grant a security interest and/or use other means (including, without limitation, letters of credit, surety bonds and/or other similar arrangements), as well as enter into contracts providing indemnification to the fullest extent authorized or permitted by law, the Certificate of Incorporation or these Bylaws and including as a part thereof provisions with respect to any or all of the foregoing to ensure the payment of such amounts as may become necessary to effect indemnification as provided in these Bylaws or elsewhere.

Section 3. Limitations.

Notwithstanding anything contained in this Article V to the contrary, except for proceedings to enforce rights to indemnification provided by these Bylaws, the Corporation shall not be obligated to indemnify any person or advance any expenses in connection with a proceeding (or part thereof) initiated by such person or service by such person as a witness adverse to the Corporation, unless such proceeding (or part thereof) or such service was authorized by resolution of the Board of Directors.

Section 4. Savings Clause.

If this Article V or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director and officer of the Corporation as to costs, charges and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the full extent permitted by any applicable portion of this Article V that shall not have been invalidated and to the full extent permitted by applicable law.

ARTICLE VI

CERTIFICATES FOR SHARES AND THEIR TRANSFER

Section 1. Certificates for Shares.

Unless otherwise provided by a resolution of the Board of Directors, the shares of the Corporation shall be represented by a certificate. The certificates of stock of the Corporation shall be numbered and shall be entered in the books of the Corporation as they are issued. They shall exhibit the holder’s name and number of shares and shall be signed by or in the name of the Corporation by (a) the Chairman of the Board of Directors, the Chief Executive Officer, the President or any Vice President and (b) the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary. Any or all of the signatures on a certificate may be by facsimile. In case any officer of the Corporation, transfer agent or registrar who has signed, or whose facsimile signature has been placed upon such certificate, shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may nevertheless be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issuance.

Section 2. Transfer.

Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

Section 3. Record Owner.

The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof, and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of the State of Delaware or federal laws.

Section 4. Lost Certificates.

The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as the Board of Directors shall require and to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

ARTICLE VII

MISCELLANEOUS

Section 1. Record Date.

(a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days prior to the date of such meeting nor more than sixty (60) days prior to any other action. If not fixed by the Board of Directors, the record date shall be determined as provided by the laws of the State of Delaware.

(b) A determination of stockholders of record entitled to notice of or to vote at a meeting of the stockholders shall apply to any adjournments of the meeting, unless the Board of Directors fixes a new record date for the adjourned meeting.

(c) Holders of stock on the record date are entitled to notice and to vote or to receive the dividend, distribution or allotment of rights or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the Corporation after the record date, except as otherwise provided by agreement or by law, the Certificate of Incorporation or these Bylaws.

Section 2. Execution of Instruments.

The Board of Directors may, in its discretion, determine the method and designate the signatory officer or officers, or other persons, to execute any corporate instrument or document or to sign the corporate name without limitation, except where otherwise provided by law, the Certificate of Incorporation or these Bylaws. Such designation may be general or confined to specific instances.

Section 3. Voting of Securities Owned by the Corporation.

All stock and other securities of other corporations held by the Corporation shall be voted, and all proxies with respect thereto shall be executed, by the person so authorized by resolution of the Board of Directors, or, in the absence of such authorization, by the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, or the Secretary.

Section 4. Amendments.

In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, make, repeal, alter, amend and rescind from time to time any or all of the Bylaws of the Corporation, including, without limitation, Bylaw amendments increasing or reducing the authorized number of directors constituting the whole Board of Directors. The affirmative vote of the holders of at least a majority of the outstanding capital stock of the Corporation having general voting power, voting together as a single class, shall be required for the Corporation’s stockholders to adopt, make, repeal, alter, amend or rescind the Bylaws of the Corporation (notwithstanding any other provision of the Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition and subject to any vote of the holders of any class or series of stock of the Corporation required by law or by the Certificate of Incorporation).

EX-15 3 dex15.htm LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATION Letter re: Unaudited Interim Financial Information

Exhibit 15

Deloitte.

Deloitte & Touche LLP

50 Fremont Street

San Francisco, CA 94105-2230

USA

Tel: +1 415 783 4000

Fax: +1 415 783 4329

www. deloitte.com

September 2, 2004

The Gap, Inc.

Two Folsom Street

San Francisco, California 94105

We have made a review, in accordance with the standards of the Public Company Accounting Oversight Board (United States) of the unaudited interim financial information of The Gap, Inc. and subsidiaries for the periods ended July 31, 2004 and August 2, 2003, as indicated in our report dated September 2, 2004; 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 July 31, 2004, is incorporated by reference on Form S-8 in Registration Statements No. 2-72586, No. 2-60029, No. 33-39089, No. 33-40505, No. 33-54686, No. 33-54688, No. 33-54690, No. 33-56021, No. 333-00417, No. 333-12337, No. 333-36265, No. 333-68285, No. 333-72921, No. 333-76523, No. 333-47508, No. 333-59292, No. 333-88470, No. 333-90414, No. 333-103128, and No. 333-105934.

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

San Francisco, California

Member of

Deloitte Touche Tohmatsu

EX-31.1 4 dex311.htm SECTION 302 CEO CERTIFICATION Section 302 CEO Certification

Exhibit 31.1

CERTIFICATIONS

I, Paul S. Pressler, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of The Gap, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 3, 2004

/s/ PAUL S. PRESSLER

Paul S. Pressler

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2 5 dex312.htm SECTION 302 CFO CERTIFICATION Section 302 CFO Certification

Exhibit 31.2

CERTIFICATIONS

I, Byron Pollitt, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of The Gap, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)

(b)

(c)

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 3, 2004

/s/ BYRON POLLITT

Byron Pollitt

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

EX-32.1 6 dex321.htm SECTION 906 CEO CERTIFICATION Section 906 CEO Certification

Exhibit 32.1

Certification of the Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of The Gap, Inc. (the “Company”) on Form 10-Q for the period ended July 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Paul S. Pressler, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ PAUL S. PRESSLER

Paul S. Pressler

President and Chief Executive Officer

September 3, 2004

EX-32.2 7 dex322.htm SECTION 906 CFO CERTIFICATION Section 906 CFO Certification

Exhibit 32.2

Certification of the Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of The Gap, Inc. (the “Company”) on Form 10-Q for the period ended July 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Byron Pollitt, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ BYRON POLLITT

Byron Pollitt

Executive Vice President and

Chief Financial Officer

September 3, 2004

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