The Gap 2009 Annual Report Download - page 44

Contractual Cash Obligations
We are party to many contractual obligations involving commitments to make payments to third parties. The
following table provides summary information concerning our future contractual obligations as of January 30,
2010. These obligations impact our short-term and long-term liquidity and capital resource needs. Certain of
these contractual obligations are reflected in the Consolidated Balance Sheet, while others are disclosed as
future obligations.
Payments Due by Period
($ in millions) Less than 1 Year 1-3 Years 3-5 Years More Than 5 Years Total
Amounts reflected in Consolidated Balance Sheet:
Liabilities for unrecognized tax benefits (a) .............. $ 1 $— $— $— $ 1
Other cash obligations not reflected in Consolidated
Balance Sheet:
Operating leases (b) ................................... 986 1,400 848 938 4,172
Purchase obligations and commitments (c) ............. 2,156 299 198 103 2,756
Total contractual cash obligations .......................... $3,143 $1,699 $1,046 $1,041 $6,929
(a) The table above excludes $131 million of long-term liabilities related to uncertain tax positions, as we are not able to reasonably estimate
when cash payments will occur. The amount is recorded in lease incentives and other long-term liabilities in the Consolidated Balance
Sheet as of January 30, 2010.
(b) Maintenance, insurance, taxes, and contingent rent obligations are excluded. See Note 11 of Notes to Consolidated Financial Statements
for discussion of our operating leases.
(c) Represents estimated open purchase orders to purchase inventory as well as commitments for products and services used in the normal
course of business.
Commercial Commitments
We have commercial commitments, not reflected in the table above, that were incurred in the normal course of
business to support our operations, including standby letters of credit of $58 million (of which $56 million was
issued under the revolving credit facility lines), surety bonds of $40 million, and bank guarantees of $7 million
outstanding at January 30, 2010.
Amounts Reflected in the Consolidated Balance Sheet
We have other long-term liabilities reflected in the Consolidated Balance Sheet, including deferred income taxes.
The payment obligations associated with these liabilities are not reflected in the table above due to the absence of
scheduled maturities. Therefore, the timing of these payments cannot be determined, except for amounts
estimated to be paid in fiscal 2010 that are recorded in current liabilities.
Other Cash Obligations Not Reflected in the Consolidated Balance Sheet (Off-Balance Sheet Arrangements)
The majority of our contractual obligations are made up of operating leases for our stores. Commitments for
operating leases represent future minimum lease payments under non-cancelable leases. In accordance with
accounting principles generally accepted in the United States of America, our operating leases are not recorded in
the Consolidated Balance Sheet; however, the minimum lease payments related to these leases are disclosed in
Note 11 of Notes to Consolidated Financial Statements.
Purchase obligations include our non-exclusive services agreement with IBM to operate certain aspects of our
information technology structure. The agreement was amended March 2, 2009. The services agreement expires in
March 2016, and we have the right to renew it for up to three additional years. We have various options to
terminate the agreement, and we pay IBM under a combination of fixed and variable charges, with the variable
charges fluctuating based on our actual consumption of services. IBM also has certain termination rights in the
event of our material breach of the agreement and failure to cure. Based on the current projection of service needs,
we expect to pay approximately $623 million to IBM over the remaining term of the contract.
28 Gap Inc. Form 10-K