The Gap 2012 Annual Report Download - page 69

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51
There were no amounts recorded in income for fiscal 2012, 2011, or 2010 as a result of hedge ineffectiveness, hedge
components excluded from the assessment of effectiveness, or the discontinuance of net investment hedges.
Other Derivatives Not Designated as Hedging Instruments
We use foreign exchange forward contracts to hedge our market risk exposure associated with foreign currency exchange
rate fluctuations for certain intercompany balances denominated in currencies other than the functional currency of the
entity with the intercompany balance. The gain or loss on the derivative financial instruments, as well as the
remeasurement of the underlying intercompany balances, is recorded in operating expenses in the Consolidated
Statements of Income in the same period and generally offset. We generally enter into foreign exchange forward contracts
as needed to hedge intercompany balances that bear foreign exchange risk.
Outstanding Notional Amounts
As of February 2, 2013 and January 28, 2012, we had foreign exchange forward contracts outstanding in the following
notional amounts:
(notional amounts in millions) February 2,
2013 January 28,
2012
U.S. dollars (1) $ 988 $ 873
British pounds £ 31 £ 31
Japanese yen ¥ — ¥ 2,564
Euro € 25 € 16
__________
(1) The principal currencies hedged against changes in the U.S. dollar were British pounds, Canadian dollars, Euro, and Japanese yen.
Contingent Features
We had no derivative financial instruments with credit-risk-related contingent features underlying the agreements as of
February 2, 2013 or January 28, 2012.
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