The Gap 2007 Annual Report Download - page 15

Failure of our vendors to adhere to our code of vendor conduct could harm our business.
We purchase nearly all merchandise from third-party vendors outside of the United States and require those
vendors to adhere to a code of vendor conduct and other environmental, health, and safety standards for the
benefit of workers. From time to time, contractors may not be in compliance with these standards or applicable
local laws. Significant or continuing noncompliance with such standards and laws by one or more contractors
could have a negative impact on our reputation and a material adverse effect on our results of operations.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
We operate stores in the United States, Canada, the United Kingdom, France, Ireland, and Japan. The stores
operated as of February 2, 2008 aggregated approximately 39.6 million square feet. Almost all our stores are
leased with one or more renewal options after our initial term, or slightly longer terms with negotiated sales
termination clauses at predetermined sales thresholds. Economic terms vary by type of location.
We own approximately 1.2 million square feet of headquarters office space located in San Francisco, San Bruno
and Rocklin, California, of which approximately 184,000 square feet is leased to another company. We lease
approximately 1.2 million square feet of headquarters office space located in San Francisco, San Bruno and
Rocklin, California; New York, New York; Albuquerque, New Mexico; and Toronto, Ontario, Canada. Of the
1.2 million square feet of leased office space, approximately 189,000 square feet is under sublease to others and
approximately 6,300 square feet is being marketed for sublease to others. We also lease 24 regional offices in
North America and 36 international offices. We own approximately 8.6 million square feet of distribution space
located in Fresno, California; Fishkill, New York; Groveport, Ohio; Gallatin, Tennessee; Brampton, Ontario,
Canada; and Rugby, England. We lease approximately 1.8 million square feet of distribution space located in
Grove City, Ohio and in Northern Kentucky. A third-party logistics company provides logistics services to us
through a 390,000 square foot distribution warehouse in Chiba, Japan.
Item 3. Legal Proceedings
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,
employment, and securities related claims, including class action lawsuits in which plaintiffs allege that we
violated federal and state wage and hour and other 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, cash flows or financial position taken as a whole.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
12฀฀฀Form฀10-K
PART II
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
The principal market on which our stock is traded is the New York Stock Exchange. The number of holders of
record of our stock as of March 21, 2008 was 9,534. The table below sets forth the market prices and dividends
declared and paid for each of the fiscal quarters in fiscal 2007 and 2006.
Market Prices Dividends Declared and Paid
2007 2006 2007 2006
Fiscal High Low High Low
1st Quarter ................................ $20.26 $17.11 $19.42 $17.26 $0.08 $0.08
2nd Quarter ............................... $19.66 $16.44 $18.88 $15.91 0.08 0.08
3rd Quarter ................................ $19.73 $15.20 $20.84 $16.05 0.08 0.08
4th Quarter ................................ $22.02 $16.36 $21.39 $18.40 0.08 0.08
Year ..................................... $0.32 $0.32
Stock Performance Graph
The graph below compares the percentage changes in our cumulative total stockholder return on our common
stock for the five-year period ended February 2, 2008, with (i) the cumulative total return of the Dow Jones (“DJ”)
U.S. Retail, Apparel Index and (ii) the S&P 500 Index. The total stockholder return for our common stock assumes
quarterly reinvestment of dividends.
0
50
100
150
200
250
Dollars
2/1/2003 1/31/2004 1/29/2005 1/28/2006 2/3/2007 2/2/2008
฀฀ Form฀10-K฀฀฀13
TOTAL RETURN TO STOCKHOLDERS
(Assumes $100 investment on 2/1/2003)
The Gap, Inc. DJ US Retail, Apparel Index S&P 500 Index