The Gap 2008 Annual Report Download - page 62

Sales Return Allowance
A summary of activity in the sales return allowance account is as follows:
($ in millions) January 31, 2009 February 2, 2008 February 3, 2007
Balanceatbeginningoffiscalyear........................................... $22 $21 $18
Additions ................................................................. 700 698 672
Returns ................................................................... (701) (697) (669)
Balanceatendoffiscalyear ................................................ $21 $22 $21
Note 3. Acquisition
On September 28, 2008, we acquired all of the outstanding capital stock of Athleta, a women’s sports and active
apparel company based in Petaluma, California, for an aggregate purchase price of $148 million in cash, including
transaction costs. The acquisition will allow us to enhance our presence in the growing women’s active apparel
sector in the United States. The results of operations for Athleta are included in the Consolidated Statements of
Earnings beginning September 29, 2008. The impact of the acquisition on the Company’s results of operations, as
if the acquisition had been completed as of the beginning of the periods presented, is not significant.
The purchase price was allocated as follows as of September 28, 2008:
($ in millions)
Goodwill .......................................................................................... $99
Tradename ....................................................................................... 54
Intangible assets subject to amortization ............................................................. 15
Net liabilities assumed ............................................................................. (20)
Totalpurchaseprice................................................................................ $148
All of the assets above have been allocated to the Direct reportable segment.
None of the goodwill acquired is deductible for tax purposes. During fiscal 2008, there were no material changes in
the carrying amount of goodwill or trade name. Intangible assets subject to amortization, consisting primarily of
customer relationships, are being amortized over a weighted-average amortization period of four years and are
as follows:
($ in millions) January 31, 2009
Gross carrying amount .......................................................................... $15
Less: Accumulated amortization ................................................................. (2)
Intangible assets subject to amortization, net of accumulated amortization .......................... $13
Amortization expense for intangible assets subject to amortization for fiscal 2008 was $2 million and is classified
as operating expenses in the Consolidated Statement of Earnings.
As of January 31, 2009, future amortization expense associated with intangible assets subject to amortization for
each of the five succeeding fiscal years is as follows:
($ in millions)
Fiscal Year
2009.............................................................................................. $6
2010 .............................................................................................. $4
2011............................................................................................... $2
2012 .............................................................................................. $1
2013 .............................................................................................. $—
50 Gap Inc. Form 10-K