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þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
94-1697231
|
(State or other jurisdiction
of incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
Two Folsom Street, San Francisco, California
|
|
94105
|
(Address of principal executive offices)
|
|
(Zip code)
|
|
|
Page
|
|
|
|
|
|
|
Item 1.
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 6.
|
Item 1.
|
Financial Statements.
|
($ and shares in millions except par value)
|
October 27,
2012 |
|
January 28,
2012 |
|
October 29,
2011 |
||||||
ASSETS
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
1,720
|
|
|
$
|
1,885
|
|
|
$
|
1,392
|
|
Short-term investments
|
50
|
|
|
—
|
|
|
25
|
|
|||
Merchandise inventory
|
2,269
|
|
|
1,615
|
|
|
2,322
|
|
|||
Other current assets
|
794
|
|
|
809
|
|
|
815
|
|
|||
Total current assets
|
4,833
|
|
|
4,309
|
|
|
4,554
|
|
|||
Property and equipment, net of accumulated depreciation of $5,355, $5,260, and $5,202
|
2,559
|
|
|
2,523
|
|
|
2,550
|
|
|||
Other long-term assets
|
615
|
|
|
590
|
|
|
553
|
|
|||
Total assets
|
$
|
8,007
|
|
|
$
|
7,422
|
|
|
$
|
7,657
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Current maturities of debt
|
$
|
2
|
|
|
$
|
59
|
|
|
$
|
52
|
|
Accounts payable
|
1,584
|
|
|
1,066
|
|
|
1,472
|
|
|||
Accrued expenses and other current liabilities
|
1,041
|
|
|
998
|
|
|
957
|
|
|||
Income taxes payable
|
1
|
|
|
5
|
|
|
1
|
|
|||
Total current liabilities
|
2,628
|
|
|
2,128
|
|
|
2,482
|
|
|||
Long-term liabilities:
|
|
|
|
|
|
||||||
Long-term debt
|
1,246
|
|
|
1,606
|
|
|
1,606
|
|
|||
Lease incentives and other long-term liabilities
|
972
|
|
|
933
|
|
|
910
|
|
|||
Total long-term liabilities
|
2,218
|
|
|
2,539
|
|
|
2,516
|
|
|||
Commitments and contingencies (see Note 11)
|
|
|
|
|
|
||||||
Stockholders’ equity:
|
|
|
|
|
|
||||||
Common stock $0.05 par value
|
|
|
|
|
|
||||||
Authorized 2,300 shares and Issued 1,106 shares for all periods presented; Outstanding 480, 485, and 489 shares
|
55
|
|
|
55
|
|
|
55
|
|
|||
Additional paid-in capital
|
2,844
|
|
|
2,867
|
|
|
2,873
|
|
|||
Retained earnings
|
12,966
|
|
|
12,364
|
|
|
12,201
|
|
|||
Accumulated other comprehensive income
|
219
|
|
|
229
|
|
|
226
|
|
|||
Treasury stock at cost (626, 621, and 617 shares)
|
(12,923
|
)
|
|
(12,760
|
)
|
|
(12,696
|
)
|
|||
Total stockholders’ equity
|
3,161
|
|
|
2,755
|
|
|
2,659
|
|
|||
Total liabilities and stockholders’ equity
|
$
|
8,007
|
|
|
$
|
7,422
|
|
|
$
|
7,657
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
($ and shares in millions except per share amounts)
|
October 27,
2012 |
|
October 29,
2011 |
|
October 27,
2012 |
|
October 29,
2011 |
||||||||
Net sales
|
$
|
3,864
|
|
|
$
|
3,585
|
|
|
$
|
10,926
|
|
|
$
|
10,266
|
|
Cost of goods sold and occupancy expenses
|
2,271
|
|
|
2,271
|
|
|
6,531
|
|
|
6,397
|
|
||||
Gross profit
|
1,593
|
|
|
1,314
|
|
|
4,395
|
|
|
3,869
|
|
||||
Operating expenses
|
1,073
|
|
|
968
|
|
|
3,055
|
|
|
2,803
|
|
||||
Operating income
|
520
|
|
|
346
|
|
|
1,340
|
|
|
1,066
|
|
||||
Interest expense
|
22
|
|
|
22
|
|
|
67
|
|
|
50
|
|
||||
Interest income
|
(1
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|
(3
|
)
|
||||
Income before income taxes
|
499
|
|
|
325
|
|
|
1,277
|
|
|
1,019
|
|
||||
Income taxes
|
191
|
|
|
132
|
|
|
493
|
|
|
404
|
|
||||
Net income
|
$
|
308
|
|
|
$
|
193
|
|
|
$
|
784
|
|
|
$
|
615
|
|
Weighted-average number of shares - basic
|
481
|
|
|
503
|
|
|
485
|
|
|
542
|
|
||||
Weighted-average number of shares - diluted
|
488
|
|
|
505
|
|
|
491
|
|
|
547
|
|
||||
Earnings per share - basic
|
$
|
0.64
|
|
|
$
|
0.38
|
|
|
$
|
1.62
|
|
|
$
|
1.13
|
|
Earnings per share - diluted
|
$
|
0.63
|
|
|
$
|
0.38
|
|
|
$
|
1.60
|
|
|
$
|
1.12
|
|
Cash dividends declared and paid per share
|
$
|
0.125
|
|
|
$
|
0.1125
|
|
|
$
|
0.375
|
|
|
$
|
0.3375
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
($ in millions)
|
October 27,
2012 |
|
October 29,
2011 |
|
October 27,
2012 |
|
October 29,
2011 |
||||||||
Net income
|
$
|
308
|
|
|
$
|
193
|
|
|
$
|
784
|
|
|
$
|
615
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation
|
(1
|
)
|
|
(8
|
)
|
|
(10
|
)
|
|
39
|
|
||||
Change in fair value of derivative financial instruments, net of tax (tax benefit) of $(2), $6, $1, and $(15)
|
(3
|
)
|
|
10
|
|
|
2
|
|
|
(22
|
)
|
||||
Reclassification adjustment for realized (gains) losses on derivative financial instruments, net of tax benefit (tax) of $(1), $7, $(1), and $17
|
(1
|
)
|
|
10
|
|
|
(2
|
)
|
|
24
|
|
||||
Other comprehensive income (loss), net of tax
|
(5
|
)
|
|
12
|
|
|
(10
|
)
|
|
41
|
|
||||
Comprehensive income
|
$
|
303
|
|
|
$
|
205
|
|
|
$
|
774
|
|
|
$
|
656
|
|
|
39 Weeks Ended
|
||||||
($ in millions)
|
October 27,
2012 |
|
October 29,
2011 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
784
|
|
|
$
|
615
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
421
|
|
|
444
|
|
||
Amortization of lease incentives
|
(58
|
)
|
|
(62
|
)
|
||
Share-based compensation
|
87
|
|
|
50
|
|
||
Tax benefit from exercise of stock options and vesting of stock units
|
32
|
|
|
10
|
|
||
Excess tax benefit from exercise of stock options and vesting of stock units
|
(32
|
)
|
|
(11
|
)
|
||
Non-cash and other items
|
4
|
|
|
51
|
|
||
Deferred income taxes
|
(15
|
)
|
|
82
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Merchandise inventory
|
(655
|
)
|
|
(694
|
)
|
||
Other current assets and other long-term assets
|
(14
|
)
|
|
(78
|
)
|
||
Accounts payable
|
517
|
|
|
422
|
|
||
Accrued expenses and other current liabilities
|
31
|
|
|
(87
|
)
|
||
Income taxes payable, net of prepaid and other tax-related items
|
31
|
|
|
(185
|
)
|
||
Lease incentives and other long-term liabilities
|
92
|
|
|
81
|
|
||
Net cash provided by operating activities
|
1,225
|
|
|
638
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(449
|
)
|
|
(416
|
)
|
||
Purchases of short-term investments
|
(175
|
)
|
|
(50
|
)
|
||
Maturities of short-term investments
|
125
|
|
|
125
|
|
||
Changes in other assets
|
(12
|
)
|
|
(4
|
)
|
||
Net cash used for investing activities
|
(511
|
)
|
|
(345
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of short-term debt
|
—
|
|
|
9
|
|
||
Payments of short-term debt
|
(17
|
)
|
|
—
|
|
||
Proceeds from issuance of long-term debt
|
—
|
|
|
1,646
|
|
||
Payments of long-term debt issuance costs
|
—
|
|
|
(11
|
)
|
||
Payments of long-term debt
|
(400
|
)
|
|
—
|
|
||
Proceeds from issuances under share-based compensation plans, net of withholding tax payments
|
159
|
|
|
55
|
|
||
Repurchases of common stock
|
(467
|
)
|
|
(2,013
|
)
|
||
Excess tax benefit from exercise of stock options and vesting of stock units
|
32
|
|
|
11
|
|
||
Cash dividends paid
|
(182
|
)
|
|
(181
|
)
|
||
Net cash used for financing activities
|
(875
|
)
|
|
(484
|
)
|
||
Effect of foreign exchange rate fluctuations on cash and cash equivalents
|
(4
|
)
|
|
22
|
|
||
Net decrease in cash and cash equivalents
|
(165
|
)
|
|
(169
|
)
|
||
Cash and cash equivalents at beginning of period
|
1,885
|
|
|
1,561
|
|
||
Cash and cash equivalents at end of period
|
$
|
1,720
|
|
|
$
|
1,392
|
|
Non-cash investing activities:
|
|
|
|
||||
Purchases of property and equipment not yet paid at end of period
|
$
|
68
|
|
|
$
|
50
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest during the period
|
$
|
81
|
|
|
$
|
42
|
|
Cash paid for income taxes during the period
|
$
|
445
|
|
|
$
|
494
|
|
($ in millions)
|
October 27,
2012 |
|
January 28,
2012 |
|
October 29,
2011 |
||||||
Goodwill
|
$
|
99
|
|
|
$
|
99
|
|
|
$
|
99
|
|
Trade name
|
$
|
54
|
|
|
$
|
54
|
|
|
$
|
54
|
|
Other indefinite-lived intangible assets
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Intangible assets subject to amortization
|
$
|
15
|
|
|
$
|
15
|
|
|
$
|
15
|
|
Less: Accumulated amortization
|
(15
|
)
|
|
(14
|
)
|
|
(14
|
)
|
|||
Intangible assets subject to amortization, net
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
($ in millions)
|
October 27,
2012 |
|
January 28,
2012 |
|
October 29,
2011 |
||||||
Notes
|
$
|
1,246
|
|
|
$
|
1,246
|
|
|
$
|
1,246
|
|
Term loan
|
—
|
|
|
400
|
|
|
400
|
|
|||
Total long-term debt
|
1,246
|
|
|
1,646
|
|
|
1,646
|
|
|||
Less: Current portion
|
—
|
|
|
(40
|
)
|
|
(40
|
)
|
|||
Total long-term debt, less current portion
|
$
|
1,246
|
|
|
$
|
1,606
|
|
|
$
|
1,606
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
($ in millions)
|
October 27, 2012
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
840
|
|
|
$
|
184
|
|
|
$
|
656
|
|
|
$
|
—
|
|
Short-term investments
|
50
|
|
|
—
|
|
|
50
|
|
|
—
|
|
||||
Derivative financial instruments
|
12
|
|
|
—
|
|
|
12
|
|
|
—
|
|
||||
Deferred compensation plan assets
|
27
|
|
|
27
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
929
|
|
|
$
|
211
|
|
|
$
|
718
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative financial instruments
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
($ in millions)
|
January 28, 2012
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
1,009
|
|
|
$
|
224
|
|
|
$
|
785
|
|
|
$
|
—
|
|
Short-term investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Derivative financial instruments
|
13
|
|
|
—
|
|
|
13
|
|
|
—
|
|
||||
Deferred compensation plan assets
|
22
|
|
|
22
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
1,044
|
|
|
$
|
246
|
|
|
$
|
798
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative financial instruments
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
($ in millions)
|
October 29, 2011
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
610
|
|
|
$
|
133
|
|
|
$
|
477
|
|
|
$
|
—
|
|
Short-term investments
|
25
|
|
|
—
|
|
|
25
|
|
|
—
|
|
||||
Derivative financial instruments
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
||||
Deferred compensation plan assets
|
23
|
|
|
23
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
665
|
|
|
$
|
156
|
|
|
$
|
509
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative financial instruments
|
$
|
37
|
|
|
$
|
—
|
|
|
$
|
37
|
|
|
$
|
—
|
|
(notional amounts in millions)
|
October 27,
2012 |
|
January 28,
2012 |
|
October 29,
2011 |
||||||
U.S. dollars (1)
|
$
|
1,091
|
|
|
$
|
873
|
|
|
$
|
1,042
|
|
British pounds
|
£
|
9
|
|
|
£
|
31
|
|
|
£
|
41
|
|
Japanese yen
|
¥
|
945
|
|
|
¥
|
2,564
|
|
|
¥
|
6,238
|
|
Euro
|
€
|
26
|
|
|
€
|
16
|
|
|
€
|
—
|
|
(1)
|
The principal currencies hedged against changes in the U.S. dollar were the Euro, British pound, Japanese yen, and Canadian dollar.
|
($ in millions)
|
October 27,
2012 |
|
January 28,
2012 |
|
October 29,
2011 |
||||||
Derivatives designated as cash flow hedges:
|
|
|
|
|
|
||||||
Other current assets
|
$
|
9
|
|
|
$
|
9
|
|
|
$
|
3
|
|
Other long-term assets
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Accrued expenses and other current liabilities
|
$
|
8
|
|
|
$
|
10
|
|
|
$
|
24
|
|
Lease incentives and other long-term liabilities
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
|
|
|
|
|
||||||
Derivatives designated as net investment hedges:
|
|
|
|
|
|
||||||
Other current assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Other long-term assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accrued expenses and other current liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Lease incentives and other long-term liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Derivatives not designated as hedging
instruments:
|
|
|
|
|
|
||||||
Other current assets
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
2
|
|
Other long-term assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accrued expenses and other current liabilities
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
7
|
|
Lease incentives and other long-term liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Total derivatives in an asset position
|
$
|
12
|
|
|
$
|
13
|
|
|
$
|
7
|
|
Total derivatives in a liability position
|
$
|
14
|
|
|
$
|
14
|
|
|
$
|
37
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
($ in millions)
|
October 27,
2012 |
|
October 29,
2011 |
|
October 27,
2012 |
|
October 29,
2011 |
||||||||
Derivatives in cash flow hedging relationships:
|
|
|
|
|
|
|
|
||||||||
Gain (loss) recognized in other comprehensive income
|
$
|
(5
|
)
|
|
$
|
16
|
|
|
$
|
3
|
|
|
$
|
(38
|
)
|
Gain (loss) reclassified into cost of goods sold and
occupancy expenses
|
$
|
2
|
|
|
$
|
(16
|
)
|
|
$
|
3
|
|
|
$
|
(37
|
)
|
Gain (loss) reclassified into operating expenses
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
|
|
|
|
|
|
|
||||||||
Derivatives in net investment hedging relationships:
|
|
|
|
|
|
|
|
||||||||
Gain (loss) recognized in other comprehensive income
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
2
|
|
|
$
|
(3
|
)
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
($ in millions)
|
October 27,
2012 |
|
October 29,
2011 |
|
October 27,
2012 |
|
October 29,
2011 |
||||||||
Gain (loss) recognized in operating expenses
|
$
|
(3
|
)
|
|
$
|
6
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
($ and shares in millions except average per share cost)
|
October 27,
2012 |
|
October 29,
2011 |
|
October 27,
2012 |
|
October 29,
2011 |
||||||||
Number of shares repurchased
|
2.7
|
|
|
39.2
|
|
|
16.5
|
|
|
106.5
|
|
||||
Total cost
|
$
|
96
|
|
|
$
|
645
|
|
|
$
|
463
|
|
|
$
|
2,013
|
|
Average per share cost including commissions
|
$
|
35.73
|
|
|
$
|
16.46
|
|
|
$
|
28.01
|
|
|
$
|
18.90
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
($ in millions)
|
October 27,
2012 |
|
October 29,
2011 |
|
October 27,
2012 |
|
October 29,
2011 |
||||||||
Stock units
|
$
|
28
|
|
|
$
|
11
|
|
|
$
|
71
|
|
|
$
|
35
|
|
Stock options
|
5
|
|
|
4
|
|
|
13
|
|
|
12
|
|
||||
Employee stock purchase plan
|
1
|
|
|
1
|
|
|
3
|
|
|
3
|
|
||||
Share-based compensation expense
|
34
|
|
|
16
|
|
|
87
|
|
|
50
|
|
||||
Less: Income tax benefit
|
(13
|
)
|
|
(7
|
)
|
|
(33
|
)
|
|
(20
|
)
|
||||
Share-based compensation expense, net of tax
|
$
|
21
|
|
|
$
|
9
|
|
|
$
|
54
|
|
|
$
|
30
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||
(shares in millions)
|
October 27,
2012 |
|
October 29,
2011 |
|
October 27,
2012 |
|
October 29,
2011 |
||||
Weighted-average number of shares - basic
|
481
|
|
|
503
|
|
|
485
|
|
|
542
|
|
Common stock equivalents
|
7
|
|
|
2
|
|
|
6
|
|
|
5
|
|
Weighted-average number of shares - diluted
|
488
|
|
|
505
|
|
|
491
|
|
|
547
|
|
•
|
Stores – The Stores reportable segment includes the results of the retail stores for Gap, Old Navy, and Banana Republic. We have aggregated the results of all Stores operating segments into one reportable segment because the operating segments have similar economic characteristics.
|
•
|
Direct – The Direct reportable segment includes the results for our online brands, including Piperlime and Athleta.
|
($ in millions)
|
|
Gap
|
|
Old Navy
|
|
Banana
Republic
|
|
Franchise (3)
|
|
Piperlime
and Athleta
|
|
Total (4)
|
|
Percentage
of Net Sales
|
|||||||||||||
13 Weeks Ended October 27, 2012
|
|
|
|
|
|
|
|||||||||||||||||||||
U.S. (1)
|
|
$
|
838
|
|
|
$
|
1,194
|
|
|
$
|
515
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,547
|
|
|
66
|
%
|
Canada
|
|
93
|
|
|
107
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
255
|
|
|
7
|
|
||||||
Europe
|
|
165
|
|
|
—
|
|
|
15
|
|
|
15
|
|
|
—
|
|
|
195
|
|
|
5
|
|
||||||
Asia
|
|
245
|
|
|
3
|
|
|
35
|
|
|
23
|
|
|
—
|
|
|
306
|
|
|
8
|
|
||||||
Other regions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52
|
|
|
—
|
|
|
52
|
|
|
1
|
|
||||||
Total Stores reportable segment
|
|
1,341
|
|
|
1,304
|
|
|
620
|
|
|
90
|
|
|
—
|
|
|
3,355
|
|
|
87
|
|
||||||
Direct reportable segment (2)
|
|
146
|
|
|
210
|
|
|
64
|
|
|
—
|
|
|
89
|
|
|
509
|
|
|
13
|
|
||||||
Total
|
|
$
|
1,487
|
|
|
$
|
1,514
|
|
|
$
|
684
|
|
|
$
|
90
|
|
|
$
|
89
|
|
|
$
|
3,864
|
|
|
100
|
%
|
Sales growth
|
|
5
|
%
|
|
9
|
%
|
|
8
|
%
|
|
11
|
%
|
|
31
|
%
|
|
8
|
%
|
|
|
|||||||
($ in millions)
|
|
Gap
|
|
Old Navy
|
|
Banana
Republic
|
|
Franchise (3)
|
|
Piperlime
and Athleta
|
|
Total (4)
|
|
Percentage
of Net Sales
|
|||||||||||||
13 Weeks Ended October 29, 2011
|
|
|
|
|
|
|
|||||||||||||||||||||
U.S. (1)
|
|
$
|
819
|
|
|
$
|
1,105
|
|
|
$
|
495
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,419
|
|
|
67
|
%
|
Canada
|
|
89
|
|
|
100
|
|
|
48
|
|
|
—
|
|
|
—
|
|
|
237
|
|
|
7
|
|
||||||
Europe
|
|
171
|
|
|
—
|
|
|
13
|
|
|
22
|
|
|
—
|
|
|
206
|
|
|
6
|
|
||||||
Asia
|
|
219
|
|
|
—
|
|
|
31
|
|
|
21
|
|
|
—
|
|
|
271
|
|
|
7
|
|
||||||
Other regions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
—
|
|
|
38
|
|
|
1
|
|
||||||
Total Stores reportable segment
|
|
1,298
|
|
|
1,205
|
|
|
587
|
|
|
81
|
|
|
—
|
|
|
3,171
|
|
|
88
|
|
||||||
Direct reportable segment (2)
|
|
121
|
|
|
178
|
|
|
47
|
|
|
—
|
|
|
68
|
|
|
414
|
|
|
12
|
|
||||||
Total
|
|
$
|
1,419
|
|
|
$
|
1,383
|
|
|
$
|
634
|
|
|
$
|
81
|
|
|
$
|
68
|
|
|
$
|
3,585
|
|
|
100
|
%
|
Sales growth (decline)
|
|
(3
|
)%
|
|
(5
|
)%
|
|
2
|
%
|
|
47
|
%
|
|
21
|
%
|
|
(2
|
)%
|
|
|
|||||||
($ in millions)
|
|
Gap
|
|
Old Navy
|
|
Banana
Republic
|
|
Franchise (3)
|
|
Piperlime
and Athleta
|
|
Total (4)
|
|
Percentage
of Net Sales
|
|||||||||||||
39 Weeks Ended October 27, 2012
|
|
|
|
|
|
|
|||||||||||||||||||||
U.S. (1)
|
|
$
|
2,351
|
|
|
$
|
3,486
|
|
|
$
|
1,516
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,353
|
|
|
68
|
%
|
Canada
|
|
244
|
|
|
285
|
|
|
147
|
|
|
—
|
|
|
—
|
|
|
676
|
|
|
6
|
|
||||||
Europe
|
|
474
|
|
|
—
|
|
|
47
|
|
|
48
|
|
|
—
|
|
|
569
|
|
|
5
|
|
||||||
Asia
|
|
716
|
|
|
5
|
|
|
104
|
|
|
63
|
|
|
—
|
|
|
888
|
|
|
8
|
|
||||||
Other regions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
137
|
|
|
—
|
|
|
137
|
|
|
1
|
|
||||||
Total Stores reportable segment
|
|
3,785
|
|
|
3,776
|
|
|
1,814
|
|
|
248
|
|
|
—
|
|
|
9,623
|
|
|
88
|
|
||||||
Direct reportable segment (2)
|
|
352
|
|
|
511
|
|
|
162
|
|
|
—
|
|
|
278
|
|
|
1,303
|
|
|
12
|
|
||||||
Total
|
|
$
|
4,137
|
|
|
$
|
4,287
|
|
|
$
|
1,976
|
|
|
$
|
248
|
|
|
$
|
278
|
|
|
$
|
10,926
|
|
|
100
|
%
|
Sales growth
|
|
4
|
%
|
|
6
|
%
|
|
8
|
%
|
|
21
|
%
|
|
31
|
%
|
|
6
|
%
|
|
|
|||||||
($ in millions)
|
|
Gap
|
|
Old Navy
|
|
Banana
Republic
|
|
Franchise (3)
|
|
Piperlime
and Athleta
|
|
Total (4)
|
|
Percentage
of Net Sales
|
|||||||||||||
39 Weeks Ended October 29, 2011
|
|
|
|
|
|
|
|||||||||||||||||||||
U.S. (1)
|
|
$
|
2,296
|
|
|
$
|
3,335
|
|
|
$
|
1,444
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,075
|
|
|
69
|
%
|
Canada
|
|
235
|
|
|
283
|
|
|
134
|
|
|
—
|
|
|
—
|
|
|
652
|
|
|
6
|
|
||||||
Europe
|
|
501
|
|
|
—
|
|
|
37
|
|
|
53
|
|
|
—
|
|
|
591
|
|
|
6
|
|
||||||
Asia
|
|
635
|
|
|
—
|
|
|
90
|
|
|
56
|
|
|
—
|
|
|
781
|
|
|
8
|
|
||||||
Other regions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
96
|
|
|
—
|
|
|
96
|
|
|
1
|
|
||||||
Total Stores reportable segment
|
|
3,667
|
|
|
3,618
|
|
|
1,705
|
|
|
205
|
|
|
—
|
|
|
9,195
|
|
|
90
|
|
||||||
Direct reportable segment (2)
|
|
294
|
|
|
440
|
|
|
125
|
|
|
—
|
|
|
212
|
|
|
1,071
|
|
|
10
|
|
||||||
Total
|
|
$
|
3,961
|
|
|
$
|
4,058
|
|
|
$
|
1,830
|
|
|
$
|
205
|
|
|
$
|
212
|
|
|
$
|
10,266
|
|
|
100
|
%
|
Sales growth (decline)
|
|
(1
|
)%
|
|
(3
|
)%
|
|
1
|
%
|
|
47
|
%
|
|
20
|
%
|
|
—
|
%
|
|
|
(1)
|
U.S. includes the United States and Puerto Rico.
|
(2)
|
Online sales shipped from distribution centers located outside the U.S. were
$44 million
(
$33 million
for Canada and
$11 million
for Europe) and
$34 million
(
$24 million
for Canada and
$10 million
for Europe) for the
thirteen weeks ended
October 27, 2012
and
October 29, 2011
, respectively. Online sales shipped from distribution centers located outside the U.S. were
$108 million
(
$76 million
for Canada and
$32 million
for Europe) and
$84 million
(
$58 million
for Canada and
$26 million
for Europe) for the
thirty-nine weeks ended
October 27, 2012
and
October 29, 2011
, respectively.
|
(3)
|
Franchise sales were
$90 million
(
$78 million
for Gap and
$12 million
for Banana Republic) and
$81 million
(
$71 million
for Gap and
$10 million
for Banana Republic) for the
thirteen weeks ended
October 27, 2012
and
October 29, 2011
, respectively. Franchise sales were
$248 million
(
$217 million
for Gap and
$31 million
for Banana Republic) and
$205 million
(
$179 million
for Gap and
$26 million
for Banana Republic) for the
thirty-nine weeks ended
October 27, 2012
and
October 29, 2011
, respectively.
|
(4)
|
Net sales outside of the U.S. and Canada (including Direct and franchise) were
$564 million
and
$525 million
for the
thirteen weeks ended
October 27, 2012
and
October 29, 2011
, respectively. Net sales outside of the U.S. and Canada (including Direct and franchise) were
$1.6 billion
and
$1.5 billion
for the
thirty-nine weeks ended
October 27, 2012
and
October 29, 2011
, respectively.
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
($ in millions)
|
October 27,
2012 |
|
October 29,
2011 |
|
October 27,
2012 |
|
October 29,
2011 |
||||||||
Operating income:
|
|
|
|
|
|
|
|
||||||||
Stores
|
$
|
403
|
|
|
$
|
255
|
|
|
$
|
1,043
|
|
|
$
|
836
|
|
Direct
|
117
|
|
|
91
|
|
|
297
|
|
|
230
|
|
||||
Operating income
|
$
|
520
|
|
|
$
|
346
|
|
|
$
|
1,340
|
|
|
$
|
1,066
|
|
($ in millions)
|
October 27,
2012 |
|
January 28,
2012 |
|
October 29,
2011 |
||||||
Segment Assets:
|
|
|
|
|
|
||||||
Stores
|
$
|
3,903
|
|
|
$
|
3,315
|
|
|
$
|
4,002
|
|
Direct
|
734
|
|
|
591
|
|
|
639
|
|
|||
Unallocated
|
3,370
|
|
|
3,516
|
|
|
3,016
|
|
|||
Total assets
|
$
|
8,007
|
|
|
$
|
7,422
|
|
|
$
|
7,657
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
($ in millions)
|
October 27,
2012 |
|
October 29,
2011 |
|
October 27,
2012 |
|
October 29,
2011 |
||||||||
U.S. (1)
|
$
|
3,012
|
|
|
$
|
2,799
|
|
|
$
|
8,548
|
|
|
$
|
8,062
|
|
Canada
|
288
|
|
|
261
|
|
|
752
|
|
|
710
|
|
||||
Total North America
|
3,300
|
|
|
3,060
|
|
|
9,300
|
|
|
8,772
|
|
||||
Other foreign
|
564
|
|
|
525
|
|
|
1,626
|
|
|
1,494
|
|
||||
Total net sales
|
$
|
3,864
|
|
|
$
|
3,585
|
|
|
$
|
10,926
|
|
|
$
|
10,266
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
the impact of the adoption of the new accounting standards update on our consolidated financial statements;
|
•
|
changes in total gross unrecognized tax benefits within the next 12 months;
|
•
|
the outcome of proceedings, lawsuits, disputes, and claims;
|
•
|
the impact of losses due to indemnification obligations;
|
•
|
earnings per share for fiscal 2012;
|
•
|
improving sales with healthy merchandise margins;
|
•
|
investing in our business while maintaining discipline;
|
•
|
delivering earnings per share growth;
|
•
|
returning excess cash to shareholders;
|
•
|
improving comparable store sales;
|
•
|
growing revenues;
|
•
|
opening additional stores, including outlets, in Asia and Canada;
|
•
|
continuing to open franchise stores worldwide;
|
•
|
opening additional Athleta stores;
|
•
|
the net openings of Company-operated store locations in fiscal 2012;
|
•
|
square footage change in fiscal 2012;
|
•
|
the number of new franchise stores, net of closures, in fiscal 2012;
|
•
|
operating margin and deleveraging operating expenses in fiscal 2012;
|
•
|
the effective tax rate in fiscal 2012;
|
•
|
current cash balances and cash flows being sufficient to support our business operations, including growth initiatives and planned capital expenditures;
|
•
|
ability to supplement near-term liquidity, if necessary, with our $500 million revolving credit facility;
|
•
|
the impact of the seasonality of our operations on certain asset and liability accounts;
|
•
|
depreciation and amortization expense in fiscal 2012;
|
•
|
capital expenditures in fiscal 2012; and
|
•
|
dividend payments in fiscal 2012.
|
•
|
the risk that adoption of new accounting pronouncements will impact future results;
|
•
|
the risk that changes in general 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 we or our franchisees will be unsuccessful in gauging apparel trends and changing consumer preferences;
|
•
|
the risk to our business associated with global sourcing and manufacturing, including sourcing costs, events causing disruptions in product shipment, or an inability to secure sufficient manufacturing capacity;
|
•
|
the risk that our efforts to expand internationally may not be successful;
|
•
|
the risk that our franchisees will be unable to successfully open, operate, and grow their franchised stores in a manner consistent with our requirements regarding our brand identities and customer experience standards;
|
•
|
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 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 and our ability to service our debt while maintaining other initiatives;
|
•
|
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 updates or changes to our information technology systems may disrupt our operations;
|
•
|
the risk that actual or anticipated cyber attacks, and other cybersecurity risks, may cause us to incur increasing costs;
|
•
|
the risk that natural disasters, public health crises, political crises, or other catastrophic events could adversely affect our operations and financial results;
|
•
|
the risk that acts or omissions by our third-party vendors, including a failure to comply with our code of vendor conduct, could have a negative impact on our reputation or operations;
|
•
|
the risk that we do not repurchase some or all of the shares we anticipate purchasing pursuant to our share repurchase program;
|
•
|
the risk that we will not be successful in defending various proceedings, lawsuits, disputes, claims, and audits; and
|
•
|
the risk that changes in the regulatory or administrative landscape could adversely affect our financial condition, strategies, and results of operations.
|
•
|
Net sales for the third quarter of fiscal 2012 increased
8 percent
to $3.9 billion compared with $3.6 billion for the third quarter of fiscal 2011. Comparable sales for the third quarter of fiscal 2012, which include the associated comparable online sales, increased 6 percent compared with a 5 percent decrease for the third quarter of fiscal 2011.
|
•
|
Direct net sales for the third quarter of fiscal 2012 increased 23 percent to $509 million compared with $414 million for the third quarter of fiscal 2011. Our Direct reportable segment includes sales for each of our online brands, including Piperlime and Athleta.
|
•
|
Net sales outside of the U.S. and Canada (including Direct and franchise) increased
7 percent
to
$564 million
for the third quarter of fiscal 2012 compared with $525 million for the third quarter of fiscal 2011.
|
•
|
Gross profit for the third quarter of fiscal 2012 was $1.6 billion compared with $1.3 billion for the third quarter of fiscal 2011. Gross margin for the third quarter of fiscal 2012 was
41.2 percent
compared with 36.7 percent for the third quarter of fiscal 2011.
|
•
|
Operating expenses for the third quarter of fiscal 2012 were $1.1 billion compared with $968 million for the third quarter of fiscal 2011 and increased
0.8 percent
as a percentage of net sales.
|
•
|
Net income for the third quarter of fiscal 2012 increased
60 percent
to $308 million compared with $193 million for the third quarter of fiscal 2011, and diluted earnings per share increased
66 percent
to $0.63 for the third quarter of fiscal 2012 compared with $0.38 for the third quarter of fiscal 2011. For fiscal 2012, we expect diluted earnings per share to be in the range of $2.20 to $2.25.
|
•
|
During the
first three quarters of fiscal 2012
, we generated free cash flow of
$776 million
compared with free cash flow of $222 million for the
first three quarters of fiscal 2011
. Free cash flow is defined as net cash provided by operating activities less purchases of property and equipment. For a reconciliation of free cash flow, a non-GAAP measure, from a GAAP financial measure, see the Liquidity and Capital Resources section.
|
•
|
improve sales with healthy merchandise margins;
|
•
|
invest in our business while maintaining discipline;
|
•
|
deliver earnings per share growth; and
|
•
|
return excess cash to shareholders.
|
•
|
opening additional stores, many of which will be outlets, in Asia and Canada;
|
•
|
continuing to open franchise stores worldwide; and
|
•
|
opening additional Athleta stores.
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||
|
October 27,
2012 |
|
October 29,
2011 |
|
October 27,
2012 |
|
October 29,
2011 |
||||
Gap North America
|
7
|
%
|
|
(6
|
)%
|
|
6
|
%
|
|
(4
|
)%
|
Old Navy North America
|
9
|
%
|
|
(4
|
)%
|
|
6
|
%
|
|
(2
|
)%
|
Banana Republic North America
|
6
|
%
|
|
(1
|
)%
|
|
6
|
%
|
|
(1
|
)%
|
International
|
(3
|
)%
|
|
(10
|
)%
|
|
(4
|
)%
|
|
(7
|
)%
|
The Gap, Inc.
|
6
|
%
|
|
(5
|
)%
|
|
5
|
%
|
|
(3
|
)%
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||
|
October 27,
2012 |
|
October 29,
2011 |
|
October 27,
2012 |
|
October 29,
2011 |
||||
Gap North America
|
4
|
%
|
|
(8
|
)%
|
|
5
|
%
|
|
(6
|
)%
|
Old Navy North America
|
8
|
%
|
|
(8
|
)%
|
|
4
|
%
|
|
(5
|
)%
|
Banana Republic North America
|
3
|
%
|
|
(3
|
)%
|
|
4
|
%
|
|
(3
|
)%
|
International
|
(3
|
)%
|
|
(11
|
)%
|
|
(5
|
)%
|
|
(8
|
)%
|
The Gap, Inc.
|
4
|
%
|
|
(7
|
)%
|
|
3
|
%
|
|
(5
|
)%
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
|
October 27,
2012 |
|
October 29,
2011 |
|
October 27,
2012 |
|
October 29,
2011 |
||||||||
Net sales per average square foot (1)
|
$
|
89
|
|
|
$
|
82
|
|
|
$
|
255
|
|
|
$
|
238
|
|
(1)
|
Excludes net sales associated with our online, catalog, and franchise businesses.
|
|
January 28, 2012
|
|
39 Weeks Ended October 27, 2012
|
|
October 27, 2012
|
|||||||||
|
Number of
Store Locations
|
|
Number of
Stores Opened
|
|
Number of
Stores Closed
|
|
Number of
Store Locations
|
|
Square Footage
(in millions)
|
|||||
Gap North America
|
1,043
|
|
|
15
|
|
|
42
|
|
|
1,016
|
|
|
10.5
|
|
Gap Europe
|
193
|
|
|
4
|
|
|
1
|
|
|
196
|
|
|
1.7
|
|
Gap Asia
|
152
|
|
|
26
|
|
|
3
|
|
|
175
|
|
|
1.7
|
|
Old Navy North America
|
1,016
|
|
|
17
|
|
|
20
|
|
|
1,013
|
|
|
17.7
|
|
Old Navy Asia
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Banana Republic North America
|
581
|
|
|
15
|
|
|
7
|
|
|
589
|
|
|
4.9
|
|
Banana Republic Asia
|
31
|
|
|
8
|
|
|
2
|
|
|
37
|
|
|
0.2
|
|
Banana Republic Europe
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
0.1
|
|
Athleta North America
|
10
|
|
|
20
|
|
|
—
|
|
|
30
|
|
|
0.1
|
|
Piperlime North America
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Company-operated stores total
|
3,036
|
|
|
107
|
|
|
75
|
|
|
3,068
|
|
|
36.9
|
|
Franchise
|
227
|
|
|
55
|
|
|
11
|
|
|
271
|
|
|
N/A
|
|
Total
|
3,263
|
|
|
162
|
|
|
86
|
|
|
3,339
|
|
|
36.9
|
|
Increase (decrease) over prior year
|
|
|
|
|
|
1.9
|
%
|
|
(1.9
|
)%
|
||||
|
|
|
|
|
|
|
|
|
|
|||||
|
January 29, 2011
|
|
39 Weeks Ended October 29, 2011
|
|
October 29, 2011
|
|||||||||
|
Number of
Store Locations
|
|
Number of
Stores Opened
|
|
Number of
Stores Closed
|
|
Number of
Store Locations
|
|
Square Footage
(in millions)
|
|||||
Gap North America
|
1,111
|
|
|
16
|
|
|
41
|
|
|
1,086
|
|
|
11.1
|
|
Gap Europe
|
184
|
|
|
12
|
|
|
5
|
|
|
191
|
|
|
1.7
|
|
Gap Asia
|
135
|
|
|
11
|
|
|
5
|
|
|
141
|
|
|
1.3
|
|
Old Navy North America
|
1,027
|
|
|
21
|
|
|
26
|
|
|
1,022
|
|
|
18.3
|
|
Banana Republic North America
|
576
|
|
|
11
|
|
|
4
|
|
|
583
|
|
|
4.9
|
|
Banana Republic Asia
|
29
|
|
|
1
|
|
|
1
|
|
|
29
|
|
|
0.2
|
|
Banana Republic Europe
|
5
|
|
|
4
|
|
|
—
|
|
|
9
|
|
|
0.1
|
|
Athleta North America
|
1
|
|
|
3
|
|
|
—
|
|
|
4
|
|
|
—
|
|
Company-operated stores total
|
3,068
|
|
|
79
|
|
|
82
|
|
|
3,065
|
|
|
37.6
|
|
Franchise
|
178
|
|
|
36
|
|
|
3
|
|
|
211
|
|
|
N/A
|
|
Total
|
3,246
|
|
|
115
|
|
|
85
|
|
|
3,276
|
|
|
37.6
|
|
Increase (decrease) over prior year
|
|
|
|
|
|
0.9
|
%
|
|
(2.1
|
)%
|
•
|
For the Stores reportable segment, our net sales for the third quarter of fiscal 2012 increased $184 million, or 6 percent, compared with the prior year comparable period. The increase was primarily due to an increase in Comp store sales, excluding the associated comparable online sales, for the U.S. and Canada and incremental sales for new international stores.
|
•
|
For the Direct reportable segment, our net sales for the third quarter of fiscal 2012 increased $95 million, or 23 percent, compared with the prior year comparable period. The increase was due to growth in our online business across all brands including the incremental sales related to new Athleta stores.
|
•
|
For the Stores reportable segment, our net sales for the
first three quarters of fiscal 2012
increased $428 million, or 5 percent, compared with the prior year comparable period. The increase was primarily due to an increase in Comp store sales, excluding the associated comparable online sales, for the U.S. and Canada, incremental sales for new international stores, and higher franchise net sales; partially offset by the unfavorable impact of foreign exchange of $29 million. The foreign exchange impact is the translation impact if net sales for the
first three quarters of fiscal 2011
were translated at exchange rates applicable during the
first three quarters of fiscal 2012
.
|
•
|
For the Direct reportable segment, our net sales for the
first three quarters of fiscal 2012
increased $232 million, or 22 percent, compared with the prior year comparable period. The increase was due to growth in our online business across all brands and the incremental sales related to new Athleta stores.
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
($ in millions)
|
October 27,
2012 |
|
October 29,
2011 |
|
October 27,
2012 |
|
October 29,
2011 |
||||||||
Cost of goods sold and occupancy expenses
|
$
|
2,271
|
|
|
$
|
2,271
|
|
|
$
|
6,531
|
|
|
$
|
6,397
|
|
Gross profit
|
$
|
1,593
|
|
|
$
|
1,314
|
|
|
$
|
4,395
|
|
|
$
|
3,869
|
|
Cost of goods sold and occupancy expenses as a percentage of net sales
|
58.8
|
%
|
|
63.3
|
%
|
|
59.8
|
%
|
|
62.3
|
%
|
||||
Gross margin
|
41.2
|
%
|
|
36.7
|
%
|
|
40.2
|
%
|
|
37.7
|
%
|
•
|
Cost of goods sold decreased 3.3 percent as a percentage of net sales in the third quarter of fiscal 2012 compared with the prior year comparable period. The decrease in cost of goods sold as a percentage of net sales was primarily driven by decreased cost of merchandise as a result of lower cotton prices.
|
•
|
Occupancy expenses decreased 1.2 percent as a percentage of net sales in the third quarter of fiscal 2012 compared with the prior year comparable period. The decrease in occupancy expenses as a percentage of net sales was primarily driven by higher net sales without a corresponding increase in occupancy expenses.
|
•
|
Cost of goods sold decreased 1.4 percent as a percentage of net sales during the
first three quarters of fiscal 2012
compared with the prior year comparable period. The decrease in cost of goods sold as a percentage of net sales was primarily driven by improved product acceptance resulting in improved average unit selling price.
|
•
|
Occupancy expenses decreased 1.1 percent as a percentage of net sales during the
first three quarters of fiscal 2012
compared with the prior year comparable period. The decrease in occupancy expenses as a percentage of net sales was primarily driven by higher net sales without a corresponding increase in occupancy expenses.
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
($ in millions)
|
October 27,
2012 |
|
October 29,
2011 |
|
October 27,
2012 |
|
October 29,
2011 |
||||||||
Operating expenses
|
$
|
1,073
|
|
|
$
|
968
|
|
|
$
|
3,055
|
|
|
$
|
2,803
|
|
Operating expenses as a percentage of net sales
|
27.8
|
%
|
|
27.0
|
%
|
|
28.0
|
%
|
|
27.3
|
%
|
||||
Operating margin
|
13.5
|
%
|
|
9.7
|
%
|
|
12.3
|
%
|
|
10.4
|
%
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
($ in millions)
|
October 27,
2012 |
|
October 29,
2011 |
|
October 27,
2012 |
|
October 29,
2011 |
||||||||
Interest expense
|
$
|
22
|
|
|
$
|
22
|
|
|
$
|
67
|
|
|
$
|
50
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
($ in millions)
|
October 27,
2012 |
|
October 29,
2011 |
|
October 27,
2012 |
|
October 29,
2011 |
||||||||
Income taxes
|
$
|
191
|
|
|
$
|
132
|
|
|
$
|
493
|
|
|
$
|
404
|
|
Effective tax rate
|
38.3
|
%
|
|
40.6
|
%
|
|
38.6
|
%
|
|
39.6
|
%
|
•
|
an increase in net income in the
first three quarters of fiscal 2012
compared with the
first three quarters of fiscal 2011
;
|
•
|
an increase related to income tax payables, net of prepaid income taxes and other tax-related items, for the
first three quarters of fiscal 2012
compared with the
first three quarters of fiscal 2011
primarily due to the timing of tax payments;
|
•
|
an increase related to accrued expenses and other current liabilities for the
first three quarters of fiscal 2012
compared with the
first three quarters of fiscal 2011
primarily due to a higher bonus accrual as of
October 27, 2012
compared with the bonus accrual as of
October 29, 2011
; and
|
•
|
an increase related to accounts payable for the
first three quarters of fiscal 2012
compared with the
first three quarters of fiscal 2011
primarily due to the volume and timing of payments.
|
•
|
$50 million of net purchases of short-term investments in the
first three quarters of fiscal 2012
compared with $75 million of net maturities in the
first three quarters of fiscal 2011
; and
|
•
|
$33 million more property and equipment purchases in the
first three quarters of fiscal 2012
compared with the
first three quarters of fiscal 2011
.
|
•
|
$1.6 billion of proceeds from our issuance of long-term debt in the
first three quarters of fiscal 2011
; and
|
•
|
$400 million of payments of long-term debt in the
first three quarters of fiscal 2012
; partially offset by
|
•
|
$1.5 billion less repurchases of common stock in the
first three quarters of fiscal 2012
compared with the
first three quarters of fiscal 2011
.
|
|
39 Weeks Ended
|
||||||
($ in millions)
|
October 27,
2012 |
|
October 29,
2011 |
||||
Net cash provided by operating activities
|
$
|
1,225
|
|
|
$
|
638
|
|
Less: Purchases of property and equipment
|
(449
|
)
|
|
(416
|
)
|
||
Free cash flow
|
$
|
776
|
|
|
$
|
222
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 4.
|
Controls and Procedures.
|
Item 1.
|
Legal Proceedings.
|
Item 1A.
|
Risk Factors.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
|
Total
Number of
Shares
Purchased
|
|
Average
Price Paid
Per Share
Including
Commissions
|
|
Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plans or
Programs
|
|
Maximum
Number (or
approximate
dollar amount) of
Shares that May
Yet be Purchased
Under the Plans
or Programs (1)
|
||||
Month #1 (July 29 - August 25)
|
340,700
|
|
|
$
|
35.20
|
|
|
340,700
|
|
|
$ 623 million
|
Month #2 (August 26 - September 29)
|
2,013,600
|
|
|
$
|
35.69
|
|
|
2,013,600
|
|
|
$ 551 million
|
Month #3 (September 30 - October 27)
|
330,400
|
|
|
$
|
36.54
|
|
|
330,400
|
|
|
$ 539 million
|
Total
|
2,684,700
|
|
|
$
|
35.73
|
|
|
2,684,700
|
|
|
|
(1)
|
On February 23, 2012, we announced that the Board of Directors approved a new $1 billion share repurchase authorization. This authorization has no expiration date.
|
Item 6.
|
Exhibits.
|
|
|
|
10.1*
|
|
Agreement with Stefan Larsson dated April 26, 2012, and confirmed on April 27, 2012.
|
10.2*
|
|
Amendment to Agreement with Stefan Larsson dated September 12, 2012, and confirmed on September 17, 2012.
|
10.3*
|
|
Amendment to Agreement with Stefan Larsson dated October 29, 2012, and confirmed on November 6, 2012.
|
10.4*
|
|
Letter Amendment No. 3 to the 3-Year Letter of Credit Agreement with HSBC Bank USA, National Association dated August 24, 2012.
|
31.1*
|
|
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002)
|
31.2*
|
|
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002)
|
32.1*
|
|
Certification of the Chief Executive Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2*
|
|
Certification of the Chief Financial Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101^
|
|
The following materials from The Gap, Inc.’s Quarterly Report on Form 10-Q for the quarter ended October 27, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.
|
*
|
Filed herewith.
|
^
|
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
|
|
|
THE GAP, INC.
|
|
|
|
|
|
Date:
|
December 3, 2012
|
By
|
/s/ Glenn K. Murphy
|
|
|
|
Glenn K. Murphy
|
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
Date:
|
December 3, 2012
|
By
|
/s/ Sabrina L. Simmons
|
|
|
|
Sabrina L. Simmons
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
10.1*
|
|
Agreement with Stefan Larsson dated April 26, 2012, and confirmed on April 27, 2012.
|
10.2*
|
|
Amendment to Agreement with Stefan Larsson dated September 12, 2012, and confirmed on September 17, 2012.
|
10.3*
|
|
Amendment to Agreement with Stefan Larsson dated October 29, 2012, and confirmed on November 6, 2012.
|
10.4*
|
|
Letter Amendment No. 3 to the 3-Year Letter of Credit Agreement with HSBC Bank USA, National Association dated August 24, 2012.
|
31.1*
|
|
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002)
|
31.2*
|
|
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer of The Gap, Inc. (Section 302 of the Sarbanes-Oxley Act of 2002)
|
32.1*
|
|
Certification of the Chief Executive Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2*
|
|
Certification of the Chief Financial Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101^
|
|
The following materials from The Gap, Inc.’s Quarterly Report on Form 10-Q for the quarter ended October 27, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.
|
*
|
Filed herewith.
|
^
|
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
---|
DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
---|
No information found
No Customers Found
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Avery Dennison Corporation | AVY |
Levi Strauss & Co. | LEVI |
Price
Yield
Owner | Position | Direct Shares | Indirect Shares |
---|