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Gap Inc. Reports Fourth Quarter Earnings Per Share Increase Of 66 Percent

These forward-looking statements are based on information as of February 28, 2013. The company assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

About Gap Inc.

Gap Inc. is a leading global specialty retailer offering clothing, accessories, and personal care products for men, women, children, and babies under the Gap, Banana Republic, Old Navy, Piperlime, Athleta, and Intermix brands. Fiscal year 2012 net sales were $15.7 billion. Gap Inc. products are available for purchase in more than 90 countries worldwide through about 3,000 company-operated stores, over 300 franchise stores, and e-commerce sites. For more information, please visit www.gapinc.com.

 
The Gap, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
   
($ in millions) February 2,

2013

  January 28,

2012

ASSETS
Current assets:
Cash, cash equivalents, and short-term investments $ 1,510 $ 1,885
Merchandise inventory 1,758 1,615
Other current assets   864   809
Total current assets 4,132 4,309
Property and equipment, net 2,619 2,523
Other long-term assets   719   590
Total assets $ 7,470 $ 7,422
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of debt $ - $ 59
Accounts payable 1,144 1,066
Accrued expenses and other current liabilities 1,092 998
Income taxes payable   108   5
Total current liabilities   2,344   2,128
Long-term liabilities:
Long-term debt 1,246 1,606
Lease incentives and other long-term liabilities   986   933
Total long-term liabilities   2,232   2,539
Total stockholders' equity   2,894   2,755
Total liabilities and stockholders' equity $ 7,470 $ 7,422
 
The Gap, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
       
14 Weeks Ended 13 Weeks Ended 53 Weeks Ended 52 Weeks Ended
($ and shares in millions except per share amounts) February 2,

2013

January 28,

2012

February 2,

2013

January 28,

2012

Net sales $ 4,725 $ 4,283 $ 15,651 $ 14,549
Cost of goods sold and occupancy expenses   2,949   2,878   9,480   9,275
Gross profit 1,776 1,405 6,171 5,274
Operating expenses   1,174   1,033   4,229   3,836
Operating income 602 372 1,942 1,438
Interest, net   18   22   81   69
Income before income taxes 584 350 1,861 1,369
Income taxes   233   132   726   536
Net income $ 351 $ 218 $ 1,135 $ 833
 
Weighted-average number of shares - basic 472 488 482 529
Weighted-average number of shares - diluted 479 492 488 533
 
Earnings per share - basic $ 0.74 $ 0.45 $ 2.35 $ 1.57
Earnings per share - diluted $ 0.73 $ 0.44 $ 2.33 $ 1.56
 
The Gap, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
   

53 Weeks Ended

52 Weeks Ended

($ in millions) February 2,

2013

January 28,

2012

Cash flows from operating activities:
Net income $ 1,135 $ 833
Depreciation and amortization (a) 483 506
Change in merchandise inventory (143 ) 4
Other, net   461     20  
Net cash provided by operating activities   1,936     1,363  
 
Cash flows from investing activities:
Purchases of property and equipment (659 ) (548 )
Purchases of short-term investments (200 ) (50 )
Maturities of short-term investments 150 150
Acquisition of business, net of cash acquired (129 ) -
Other   (6 )   (6 )
Net cash used for investing activities   (844 )   (454 )
 
Cash flows from financing activities:
Proceeds from issuance of short-term debt - 16
Payments of short-term debt (19 ) -
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 174 62
Repurchases of common stock (1,030 ) (2,092 )
Excess tax benefit from exercise of stock options and vesting of stock units 34 13
Cash dividends paid   (240 )   (236 )
Net cash used for financing activities   (1,481 )   (602 )
 
Effect of foreign exchange rate fluctuations on cash and cash equivalents   (36 )   17  
Net increase (decrease) in cash and cash equivalents (425 ) 324
Cash and cash equivalents at beginning of period   1,885     1,561  
Cash and cash equivalents at end of period $ 1,460   $ 1,885  
 
(a) Depreciation and amortization is net of amortization of lease incentives.
 
The Gap, Inc.
SEC REGULATION G
UNAUDITED
   
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
 
53 Weeks Ended 52 Weeks Ended
($ in millions) February 2,

2013

January 28,

2012

Net cash provided by operating activities $ 1,936 $ 1,363
Less: purchases of property and equipment   (659 )   (548 )
Free cash flow (a) $ 1,277   $ 815  
_________
(a) Free cash flow is a non-GAAP financial measure. We believe free cash flow is an important metric because it represents a measure of how much cash a company has available for discretionary and non-discretionary items after the deduction of capital expenditures, as we require regular capital expenditures to build and maintain stores and purchase new equipment to improve our business. We use this metric internally, as we believe our sustained ability to generate free cash flow is an important driver of value creation. However, this non-GAAP financial measure is not intended to supersede or replace our GAAP results.




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