Expert answer:Completing the workbook by using the 2014 10k repo
Answer & Explanation:Since one of the major topics in the
course is performance measurement, you are required to complete a financial
statement analysis for GAP, by completing THE WORKBOOK. YOU ARE TO USE THE 2014 10K REPORT OF THE GAP IN COMPLETING THE
WORKBOOK. FOR MORE INSTRUCTION READ THE
MANUAL.GPS 2014 Annual Report.pdf THE WORKBOOK.docx Manual.pdf
gps_2014_annual_report.pdf
the_workbook.docx
manual.pdf
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2014 ANNUAL REPORT
Dear Shareholders,
It’s an honor to write this letter as the CEO of Gap Inc., and a privilege to be chosen to lead this great company.
I want to express my gratitude to the Board, the Fisher Family, and Glenn Murphy, who has been a role model to me as we’ve
worked side by side over the past seven years. Glenn’s tireless efforts have made a tremendous impact on the company and
I want to thank him for everything he did to ensure a smooth leadership transition.
Together, with our team of more than 140,000 employees around the world, we’re focused on four key priorities for 2015 and
beyond: Global Growth, Product, Experience, and Talent.
Let me start with growth. Around the world, we continued to make progress with our long-term global growth strategy in
2014, adding almost 40 new stores in greater China, including seven Old Navy stores and Gap’s 100th store in this region.
In the U.S., Athleta grew its footprint to just over 100 stores, with plans to open 20 more this coming year. It’s my intent to
pursue growth, where appropriate, through all of our brands, but most importantly, through Old Navy’s ongoing expansion.
When it comes to product, as our performance in 2014 indicated, we have work to do. Our focus is to put on-trend, on-brand,
quality product in our stores, season after season, in every one of our brands.
Old Navy is our proof positive that we know how to get product right. The brand delivered positive comparable sales results
during each quarter in 2014, including an 11 percent increase during the fourth quarter. This performance is the direct result
of the team coming together with a clear focus and mission: to get better and more consistent at product with each season,
while aggressively leveraging our supply chain initiatives.
With new leadership at both Gap and Banana Republic, I am confident that we can move quickly to learn from the results
of Old Navy, and make rapid progress to improve the acceptance and consistency of our product. Athleta remains very well
positioned to serve the continued growth in the women’s active space and become part of our customers’ everyday wardrobe, and there’s considerable opportunity ahead for Intermix to build upon its customer loyalty.
Smart phones are rapidly changing the way we live our lives and customer behaviors are evolving faster than at any time in
the history of apparel retail. To bridge the digital and physical shopping experiences for customers, we’ve continued to break
through with new capabilities across a wide range of areas, including mobile, personalization, omni-channel, loyalty and
customer relationship management. A number of programs—such as Order in Store and Reserve in Store—provide flexible
options for how customers can get exactly what they want from our brands. We’re pleased with the customer response and
are working to roll out these leading capabilities across our brands in North America.
Our success is created by the strength and determination of our people, and I am committed to attracting, retaining and inspiring the best talent in the industry. We were proud to lead the way in February 2014 by increasing the U.S. minimum hourly
rate for our associates to $9 an hour, with a further increase to $10 an hour in June 2015. We believe this will yield a talent
advantage that will show up in front of our customers and in our results. Last September, we shared that we pay women
and men equally for equal work. This wasn’t a change we made—it is how we have always operated.
It’s tremendously exciting to be leading this company—with the great brands we have and talent that is second-to-none—at
a time of significant change in the industry. I am confident that our best days are ahead of us, and look forward to sharing
more with you in the future.
Art Peck
Chief Executive Officer
Gap Inc.
It’s not often you get the chance to talk with
an icon. In January 2015, Gap Inc. co-founder
Glenn: Doris, you’ve watched Gap grow from a single store in 1969
to a number of amazing brands, with thousands of stores around
the world. Can you talk about what makes this company unique?
Doris Fisher sat down with former Chairman
and CEO Glenn Murphy for a special conversation about our company’s values and legacy.
Doris: There’s a real feeling of family. That was very important
when Don and I started the business, and even today when I talk
to employees, they are so passionate about our company’s values,
especially our commitment to the community.
Glenn: That’s something that you and Don started with your belief
that anybody can just sell clothes, but that we want to do more.
The Boys & Girls Club recently opened the Don Fisher Clubhouse, in
recognition of his many years of service. And last year, employees
at this company volunteered more than 500,000 hours. That must
make you feel proud.
Doris: It does make me incredibly proud that our employees care so
much about giving back and want to support the communities they
live in. An employee at Old Navy recently told me about the first
time her team went to the Don Fisher Clubhouse to volunteer. When
they saw Don’s “Do What You Love” memorial wall they felt such an
enormous sense of pride that they all became emotional. It really
brought to life for them what it means to work for our company.
Glenn: That’s a really special story and I’ve heard many others like
that about the pride people feel working here. After seven years
at Gap Inc., I know I’m leaving here a different person than when I
came, with such a huge appreciation of what it takes to do more.
I feel good that, as a management team, we moved the business
forward in doing the right thing.
Doris: I agree wholeheartedly. Last year, under your leadership, the
company announced that we would raise the minimum wage for our
associates. And we also shared publicly that we pay women and
men equally for equal work. I’m surprised so few companies have
done the same. Glenn, your leadership has accomplished so much
to further our company’s values, and “doing more” is definitely a
part of your legacy as well.
Glenn: Thank you, Doris. It has been my honor to be part of this company, and this incredible family you and Don created. With Art Peck
as the new CEO, I’m confident the company is going to continue to
accomplish extraordinary things for many years to come.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended January 31, 2015
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from
to
Commission File Number 1-7562
THE GAP, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State of Incorporation)
94-1697231
(I.R.S. Employer Identification No.)
Two Folsom Street, San Francisco, California
(Address of principal executive offices)
94105
(Zip code)
Registrant’s telephone number, including area code: (415) 427-0100
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.05 par value
(Title of class)
The New York Stock Exchange
(Name of exchange where registered)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
No
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of
August 1, 2014 was approximately $11.5 billion based upon the last price reported for such date in the NYSE-Composite
transactions.
The number of shares of the registrant’s common stock outstanding as of March 17, 2015 was 418,771,239.
Documents Incorporated by Reference
Portions of the registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 19, 2015
(hereinafter referred to as the “2015 Proxy Statement”) are incorporated into Part III.
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Special Note on Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements within the “safe harbor” provisions of the
Private Securities Litigation Reform Act of 1995. All statements other than those that are purely historical are
forward-looking statements. Words such as “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” “project,”
and similar expressions also identify forward-looking statements. Forward-looking statements include, but are not
limited to, statements regarding the following:
• international expansion, including new Gap and Old Navy stores in Asia, additional international outlet stores,
increased international online sales, and franchise expansion;
• opening additional Athleta stores;
• Intermix opportunities;
• Piperlime closure;
• product acceptance and consistency improvements, in particular at Gap brand;
• investment in digital capabilities and further enhancement of our shopping capabilities;
• attracting, retaining, and training talent;
• impact of foreign exchange rate fluctuations on financial results;
• impact of West Coast port work slowdowns and stoppages on financial results;
• our ability to supplement near-term liquidity, if necessary, with our revolving credit facility;
• target cash balance and ability to provide for our working capital needs and for unexpected business downturns;
• the outcome of proceedings, lawsuits, disputes, and claims;
• returning excess cash to shareholders;
• the number of new store openings and store closings in fiscal 2015;
• net square footage change in fiscal 2015;
• the number of new franchise stores in fiscal 2015;
• current cash balances and cash flows being sufficient to support our business operations, including growth
initiatives and planned capital expenditures;
• cash spending for purchases of property and equipment in fiscal 2015;
• our intent to increase our dividend in fiscal 2015;
• the impact of accounting pronouncements;
• the estimates and assumptions we use in our accounting policies;
• the assumptions used to estimate the grant date fair value of stock options;
• our intention to utilize undistributed earnings of our foreign subsidiaries;
• total gross unrecognized tax benefits;
• expected payments to International Business Machines Corporation (“IBM”); and
• the impact of losses due to indemnification obligations.
Because these forward-looking statements involve risks and uncertainties, there are important factors that could
cause our actual results to differ materially from those in the forward-looking statements. These factors include,
without limitation, the following:
• the risk that the adoption of new accounting pronouncements will impact future results;
• the risk that we or our franchisees will be unsuccessful in gauging apparel trends and changing consumer
preferences;
• the risk that changes in global economic conditions or consumer spending patterns could adversely impact our
results of operations;
• the highly competitive nature of our business in the United States and internationally;
• the risk that if we are unable to manage our inventory effectively, our gross margins will be adversely affected;
• the risks to our efforts to expand internationally, including our ability to operate under a global brand structure,
foreign exchange fluctuations, and operating in regions where we have less experience;
• the risks to our business, including our costs and supply chain, associated with global sourcing and
manufacturing;
• the risks to our reputation or operations associated with importing merchandise from foreign countries, including
failure of our vendors to adhere to our Code of Vendor Conduct;
• the risk that trade matters could increase the cost or reduce the supply of apparel available to us and adversely
affect our business, financial condition, and results of operations;
• the risk that our franchisees’ operation of franchise stores is not directly within our control and could impair the
value of our brands;
• the risk that we or our franchisees will be unsuccessful in identifying, negotiating, and securing new store
locations and renewing, modifying, or terminating leases for existing store locations effectively;
• the risk that we are subject to data or other security breaches that may result in increased costs, violations of
law, significant legal and financial exposure, and a loss of confidence in our security measures, which could
have an adverse effect on our results of operations and our reputation;
• the risk that the failure to attract and retain key personnel, or effectively manage succession, could have an
adverse impact on our results of operations;
• the risk that our investments in omni-channel shopping initiatives may not deliver the results we anticipate;
• the risk that comparable sales and margins will experience fluctuations;
• the risk that changes in our credit profile or deterioration in market conditions may limit our access to the capital
markets and adversely impact our financial results or our business initiatives;
• the risk that updates or changes to our information technology (“IT”) systems may disrupt our operations;
• the risk that natural disasters, public health crises, political crises, or other catastrophic events could adversely
affect our operations and financial results, or those of our franchisees or vendors;
• the risk that changes in the regulatory or administrative landscape could adversely affect our financial condition,
strategies, and results of operations;
• the risk that we do not repurchase some or all of the shares we anticipate purchasing pursuant to our
repurchase program; and
• the risk that we will not be successful in defending various proceedings, lawsuits, disputes, claims, and audits.
Additional information regarding factors that could cause results to differ can be found in this Annual Report on
Form 10-K and our other filings with the U.S. Securities and Exchange Commission (“SEC”).
Future economic and industry trends that could potentially impact net sales and profitability are difficult to predict.
These forward-looking statements are based on information as of March 23, 2015, and we assume no obligation
to publicly update or revise our forward-looking statements even if experience or future changes make it clear that
any projected results expressed or implied therein will not be realized.
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THE GAP, INC.
2014 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
Page
PART I
Item 1.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
Item 2.
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
Item 3.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
Item 4.
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
Item 6.
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . .
18
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31
Item 8.
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. . . . . .
68
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68
PART III
Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68
Security Ownership of Certain Beneficial Owners and Management
Item 12. and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69
Item 13. Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . .
69
Item 14. Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69
PART IV
Item 15. Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
70
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Part I
Item 1. Business.
General
The Gap, Inc. (Gap Inc., the “Company,” “we,” and “our”) was incorporated in the State of California in July 1969
and was reincorporated under the laws of the State of Delaware in May 1988.
Gap Inc. is a leading global apparel retail company. We offer apparel, accessories, and personal care products for
men, women, and children under the Gap, Banana Republic, Old Na …
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