The Gap 2009 Annual Report Download - page 28

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, labor, 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 an adverse effect on our results of operations.
Changes in the regulatory or administrative landscape could adversely affect our financial condition and
results of operations.
Laws and regulations at the state, federal, and international levels frequently change, and the ultimate cost of
compliance cannot be precisely estimated. In addition, we cannot predict the impact that may result from changes
in the regulatory or administrative landscape. Any changes in regulations, the imposition of additional regulations,
or the enactment of any new or more stringent legislation that impacts employment and labor, trade, product
safety, transportation and logistics, health care, tax, privacy, or environmental issues, among others, could have an
adverse impact on our financial condition and 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 in
operation as of January 30, 2010 aggregated approximately 38.8 million square feet. Almost all of our stores are
leased with one or more renewal options after our initial term, or have 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 corporate 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 corporate office space located in San Francisco, San Bruno, Rocklin, and
Petaluma, California; New York, New York; Albuquerque, New Mexico; and Toronto, Ontario, Canada. Of the
1.2 million square feet of leased office space, approximately 150,000 square feet is under sublease to others and
approximately 36,000 square feet is being marketed for sublease to others. We also lease 15 regional offices in
North America and 31 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 1.6 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 444,000
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 from time to time include commercial, intellectual property,
customer, employment, data privacy, 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.
12 Gap Inc. Form 10-K