SEC Comment Letter for GAP INC (GAP) (CIK 0000039911) (GAP) — Dec 22, 2005
GAP INC (GAP) (CIK 0000039911)
Date: Dec. 22, 2005 · CIK: 0000039911 · Accession: 0000000000-05-063545
AI Filing Summary & Sentiment
Referenced dates: November 8, 2005
Letter
Mail Stop 3561 December 22, 2005 Mr. Paul S. Pressler President and Chief Executive Officer The Gap, Inc. Two Folsom Street San Francisco, CA 94105
Re: The Gap, Inc. Form 10-K for Fiscal Year Ended January 29, 2005 Filed March 28, 2005 File No. 1-7562 Form 10-Q for Fiscal Quarter Ended July 30, 2005 Filed September 1, 2005 File No. 1-7562
Dear Mr. Pressler:
We have reviewed your response dated December 5, 2005 to our comment letter dated November 8, 2005 and have the following additional comments. Please understand that the purpose of our review is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing. We look forward to working with you in these respects. Feel free to call us at the telephone numbers listed at the end of this letter.
Notes to Consolidated Financial Statements, page 46 Note A: Summary of Significant Accounting Policies, page 46
1. We note your response to comment 5 in our letter dated November 8, 2005. These payments appear to represent initial direct costs that should be included in minimum lease payments to determine whether these leases are classified as either operating or capital. If a lease is classified as an operating lease, these costs should be deferred and amortized over the lease term as additional rent expense payments. If a lease is determined to be capital, these costs would be subject to the usual accounting requirements for a capital lease.
Mr. Paul S. Pressler The Gap, Inc. Decem ber 22, 2005 Page 2
Please tell us the nature and gross am ounts that m ake up the net carrying am ount of $54 m illion and $52 m illion at January 29, 2005 and January 31, 2004. Then, quantify and tell us the im pact, if any, the inclusion of these costs will have on your classification of these leases as either operating or capital. If the im pact is immaterial to your balance sheets, statem ents of incom e and cash flows please reclassify key m oney paym ents and revise your disclosures to reflect your revised accounting policy in your upcom ing annual report. Please show us what your revised disclosures will look like in your response. If the change in accounting is material to your consolidated financial statem ents, please revise your financial statem ents and related disclosures as required by paragraphs 36 and 37 of APB No. 20 or SFAS No. 154, if early adopted.
Note M: Segm ent Inform ation, page 63
2. We note your response to com ment 9 in our letter dated Novem ber 8, 2005. W e believe that aggregating all of your products as a total outfit for a single lifestyle image to be an overly broad view of what constitutes sim ilar products. W e agree that the com parability of store sales is an im portant key m easure within the retail industry. However, it does not satisfy the disclosure requirem ents that an enterprise report revenues from external custom ers for each group of sim ilar products for an enterprise as a whole so that an analysis of trends in revenues from products is available to assess past perform ance and assess future growth. We note that your website distinguishes between products for m en, wom en, maternity, kids and babies. See paragraph 103 of SFAS No. 131 and the Current Accounting and Disclosure Issues Outline at http://www.sec.gov/divisions/corpfin/acctdis120105.pdf . Please advise or provide us with an exam ple of your revised disclosure for sim ilar groups of products that contributed at least 10% of consolidated revenues for the last three fiscal years. See Item 101(c)(i) of Regul ation S-K. In your response, include an explanation that supports m anagem ent’s belief this presentation reasonably represents the sim ilar groups of products offered.
As appropriate, please am end your filing and respond to these com ments within 10 business days or tell us when you will provide a response. You m ay wish to provide us with m arked copies of the am endm ent to expedite our review. Please furnish a cover letter with your am endm ent that keys your responses to our com ments and provides any requested inform ation. Detailed cover letters greatly facilitate our review. Please understand that we m ay have additional com ments after reviewing your am endm ent and responses to our com ment.
Mr. Paul S. Pressler The Gap, Inc. Decem ber 22, 2005 Page 3
You m ay contact Brian McAllister, Staff Accountant at (202) 551-3341, Donna Di Silvio at (202) 551-3202, or m e at (202) 551-3841 if you have any questions regarding comments on the financial statem ents and related m atters.
S incerely,
M ichael Moran A ccounting Branch Chief
Show Raw Text
Mail Stop 3561
December 22, 2005
Mr. Paul S. Pressler
President and Chief Executive Officer
The Gap, Inc.
Two Folsom Street
San Francisco, CA 94105
Re: The Gap, Inc.
Form 10-K for Fiscal Year Ended January 29, 2005
Filed March 28, 2005
File No. 1-7562
Form 10-Q for Fiscal Quarter Ended July 30, 2005
Filed September 1, 2005
File No. 1-7562
Dear Mr. Pressler:
We have reviewed your response dated December 5, 2005 to our comment letter
dated November 8, 2005 and have the following additional comments. Please
understand that the purpose of our review is to assist you in your compliance with the
applicable disclosure requirements and to enhance the overall disclosure in your filing. We look forward to working with you in these respects. Feel free to call us at the
telephone numbers listed at the end of this letter.
Notes to Consolidated Financial Statements, page 46
Note A: Summary of Significant Accounting Policies, page 46
1. We note your response to comment 5 in our letter dated November 8, 2005.
These payments appear to represent initial direct costs that should be included in
minimum lease payments to determine whether these leases are classified as
either operating or capital. If a lease is classified as an operating lease, these costs should be deferred and amortized over the lease term as additional rent
expense payments. If a lease is determined to be capital, these costs would be
subject to the usual accounting requirements for a capital lease.
Mr. Paul S. Pressler
The Gap, Inc.
Decem ber 22, 2005
Page 2
Please tell us the nature and gross am ounts that m ake up the net carrying am ount
of $54 m illion and $52 m illion at January 29, 2005 and January 31, 2004. Then,
quantify and tell us the im pact, if any, the inclusion of these costs will have on
your classification of these leases as either operating or capital. If the im pact is
immaterial to your balance sheets, statem ents of incom e and cash flows please
reclassify key m oney paym ents and revise your disclosures to reflect your revised
accounting policy in your upcom ing annual report. Please show us what your
revised disclosures will look like in your response. If the change in accounting is
material to your consolidated financial statem ents, please revise your financial
statem ents and related disclosures as required by paragraphs 36 and 37 of APB
No. 20 or SFAS No. 154, if early adopted.
Note M: Segm ent Inform ation, page 63
2. We note your response to com ment 9 in our letter dated Novem ber 8, 2005. W e
believe that aggregating all of your products as a total outfit for a single lifestyle
image to be an overly broad view of what constitutes sim ilar products. W e agree
that the com parability of store sales is an im portant key m easure within the retail
industry. However, it does not satisfy the disclosure requirem ents that an
enterprise report revenues from external custom ers for each group of sim ilar
products for an enterprise as a whole so that an analysis of trends in revenues
from products is available to assess past perform ance and assess future growth.
We note that your website distinguishes between products for m en, wom en,
maternity, kids and babies. See paragraph 103 of SFAS No. 131 and the Current
Accounting and Disclosure Issues Outline at
http://www.sec.gov/divisions/corpfin/acctdis120105.pdf . Please advise or
provide us with an exam ple of your revised disclosure for sim ilar groups of
products that contributed at least 10% of consolidated revenues for the last three
fiscal years. See Item 101(c)(i) of Regul ation S-K. In your response, include an
explanation that supports m anagem ent’s belief this presentation reasonably
represents the sim ilar groups of products offered.
As appropriate, please am end your filing and respond to these com ments within
10 business days or tell us when you will provide a response. You m ay wish to provide
us with m arked copies of the am endm ent to expedite our review. Please furnish a cover
letter with your am endm ent that keys your responses to our com ments and provides any
requested inform ation. Detailed cover letters greatly facilitate our review. Please
understand that we m ay have additional com ments after reviewing your am endm ent and
responses to our com ment.
Mr. Paul S. Pressler
The Gap, Inc.
Decem ber 22, 2005
Page 3
You m ay contact Brian McAllister, Staff Accountant at (202) 551-3341, Donna
Di Silvio at (202) 551-3202, or m e at (202) 551-3841 if you have any questions regarding
comments on the financial statem ents and related m atters.
S incerely,
M ichael Moran
A ccounting Branch Chief