The Gap 2009 Annual Report Download - page 43

base rate (typically the London Interbank Offered Rate) plus a margin based on our long-term senior unsecured
credit ratings and our leverage ratio on the unpaid principal amount. To maintain availability of funds under the
Facility, we pay a facility fee on the full facility amount, regardless of usage. As of January 30, 2010, there were no
borrowings under the Facility. The net availability of the Facility, reflecting $56 million of outstanding standby
letters of credit, was $444 million as of January 30, 2010.
The Facility and letter of credit agreements contain 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. Violation of these covenants could result in a default under the Facility and
letter of credit agreements, which would permit the participating banks to terminate our ability to access the
Facility for letters of credit and advances, terminate our ability to request letters of credit under the letter of credit
agreements, require the immediate repayment of any outstanding advances under the Facility, and require
the immediate posting of cash collateral in support of any outstanding letters of credit under the letter of
credit agreements.
Dividend Policy
In determining whether and at what level to declare a dividend, we consider a number of factors including
sustainability, operating performance, liquidity, and market conditions.
We increased our annual dividend, which had been $0.32 per share for fiscal 2007, to $0.34 per share for fiscal 2008
and 2009. We intend to increase our annual dividend to $0.40 per share for fiscal 2010.
Share Repurchase Program
Since the beginning of fiscal 2004, the Company has repurchased approximately 364 million shares for $7.0 billion.
In fiscal 2006 and 2007, the Board of Directors authorized share repurchases of $1.3 billion and $1.5 billion,
respectively, which were both fully utilized by the end of fiscal 2007. In February 2008, the Board of Directors
authorized $1 billion for additional share repurchases, which was fully utilized by the end of fiscal 2009. In
November 2009, the Board of Directors authorized an additional $500 million share repurchase program, of which
$255 million was utilized through January 30, 2010. This authorization was fully utilized in March 2010. In
connection with the fiscal 2007, 2008, and 2009 authorizations, we entered into purchase agreements with
individual members of the Fisher family (related party transactions). The Fisher family shares were purchased at
the same weighted-average market price that we paid for share repurchases in the open market. The purchase
agreements were terminable upon 15 business days notice by the Company or individual Fisher family members.
During fiscal 2009, we repurchased approximately 24 million shares for $510 million, including commissions, at an
average price per share of $21.30. Approximately 2 million of these shares were repurchased for $40 million from
the Fisher family. All of the share repurchases were paid for as of January 30, 2010 except $3 million that was
payable to Fisher family members. During fiscal 2008, we repurchased approximately 46 million shares for $745
million, including commissions, at an average price per share of $16.36, and approximately 7 million of these shares
were repurchased for $117 million from the Fisher family. In fiscal 2007, we repurchased approximately 89 million
shares for $1.7 billion, including commissions, at an average price per share of $19.05, and approximately 13 million
of these shares were repurchased for $249 million from the Fisher family.
In February 2010, we announced that our Board of Directors authorized $1 billion for additional share repurchases.
We have not entered into purchase agreements with members of the Fisher family in connection with
this authorization.
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