The Gap 2011 Annual Report Download - page 43

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 28,
2012. 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
Long-termdebt(1) ................................... $ 40 $ 80 $ 280 $1,250 $ 1,650
Interest payable ..................................... 76 148 148 312 684
Liabilities for unrecognized tax benefits (2) ............. 1— — — 1
Operating leases (3) .................................. 1,025 1,718 1,207 1,609 5,559
Purchase obligations and commitments (4) ............ 2,712 229 126 8 3,075
Total contractual cash obligations ......................... $3,854 $2,175 $1,761 $3,179 $10,969
(1) Represents principal maturities, excluding interest. See Note 4 of Notes to Consolidated Financial Statements.
(2) Excludes $101 million of long-term liabilities related to uncertain tax positions, as we are not able to reasonably estimate when cash
payments will occur. Amount is recorded in lease incentives and other long-term liabilities in the Consolidated Balance Sheet as of
January 28, 2012.
(3) Excludes maintenance, insurance, taxes, and contingent rent obligations. See Note 10 of Notes to Consolidated Financial Statements for
discussion of our operating leases.
(4) 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 $45 million (of which $43 million was
issued under the revolving credit facility lines), surety bonds of $38 million, and bank guarantees of $6 million
outstanding as of January 28, 2012.
Other Cash Obligations Not Reflected in the Consolidated Balance Sheet (Off-Balance Sheet Arrangements)
The majority of our contractual obligations relate to operating leases for our stores. Future minimum lease
payments represent commitments under non-cancelable operating leases and are disclosed in Item 8, Financial
Statements and Supplementary Data, Note 10 of Notes to Consolidated Financial Statements.
Our other off-balance sheet arrangements are disclosed in Item 8, Financial Statements and Supplementary Data,
Note 14 of Notes to Consolidated Financial Statements.
Critical Accounting Policies and Estimates
The preparation of financial statements in accordance with GAAP requires management to adopt accounting
policies and make significant judgments and estimates to develop amounts reflected and disclosed in the financial
statements. In many cases, there are alternative policies or estimation techniques that could be used. We maintain
a thorough process to review the application of our accounting policies and to evaluate the appropriateness of the
many estimates that are required to prepare the financial statements of a large, global corporation. However, even
under optimal circumstances, estimates routinely require adjustment based on changing circumstances and the
receipt of new or better information.
Our significant accounting policies can be found in Item 8, Financial Statements and Supplementary Data, Note 1
of Notes to Consolidated Financial Statements. The policies and estimates discussed below include the financial
statement elements that are either judgmental or involve the selection or application of alternative accounting
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