Gap (GPS)

Earnings and Effective Tax Rate

The company stated that it expects diluted earnings per share of $1.20 to $1.27 for fiscal year 2008. This guidance takes into account a range of outcomes dependent in part on product acceptance and the volatile macroeconomic environment.

The company’s fourth quarter tax rate was 38.8 percent. The effective tax rate for fiscal year 2007 was 38.3 percent. The company expects the effective tax rate to be about 39 percent for fiscal year 2008.

Earnings and Effective Tax Rate

The company expects diluted earnings per share excluding Forth & Towne’s net loss to be $0.80 to $0.90 in 2007. The company expects diluted earnings per share on a GAAP basis for 2007 to be $0.76 to $0.86, reflecting Forth & Towne’s expected net loss of $0.04 per diluted share through closure. Please see the reconciliation of expected diluted earnings per share excluding Forth & Towne’s net loss, a non-GAAP financial measure, to a GAAP financial measure in the table at the end of this release.

The effective tax rate for fiscal year 2006 was 38.4 percent. The company expects the effective tax rate to be about 39 percent for 2007.