Gap (GPS)

Note 13. Employee Benefit Plans

We have a qualified defined contribution retirement plan, called GapShare, which is available to employees who meet certain age and service requirements. This plan permits employees to make contributions up to the maximum limits allowable under the Internal Revenue Code. Under the plan, we match, in cash, all or a portion of employees’ contributions under a predetermined formula. Our contributions vest immediately. Our contributions to GapShare were $34 million, $36 million, and $35 million in fiscal 2008, 2007, and 2006, respectively.

We also have a deferred compensation plan which allows eligible employees and non-employee members of the Board of Directors to defer compensation up to a maximum amount. Plan investments are recorded at market value and are designated for the deferred compensation plan. The Company’s deferred compensation plan assets are determined based on quoted market prices. As of January 31, 2009 and February 2, 2008, the assets relating to the deferred compensation plan were $18 million and $24 million, respectively, and were included in other long-term assets in the Consolidated Balance Sheets. As of January 31, 2009 and February 2, 2008, the corresponding liabilities relating to the deferred compensation plan were $18 million and $25 million, respectively, and were included in lease incentives and other long-term liabilities in the Consolidated Balance Sheets. We match all or a portion of employees’ contributions under a predetermined formula. Plan investments are elected by the participants, and investment returns are not guaranteed by the Company. Our contributions to the deferred compensation plan in fiscal 2008, 2007, and 2006 were not material. We do not match non-employee members of the Board of Directors contributions under the deferred compensation plan.

NOTE 12. EMPLOYEE BENEFIT PLANS

We have a qualified defined contribution retirement plan, called GapShare, which is available to employees who meet certain age and service requirements. This plan permits employees to make contributions up to the maximum limits allowable under the Internal Revenue Code. Under the plan, we match, in cash, all or a portion of employees’ contributions under a predetermined formula. Our contributions vest immediately. Our contributions to GapShare were $36 million, $35 million, and $33 million in fiscal 2007, 2006, and 2005, respectively.

A nonqualified Supplemental Deferred Compensation Plan (the “SDCP”) was established on January 1, 2006, which allows eligible employees and non-employee members of the Board of Directors to defer compensation up to a maximum amount. As of February 2, 2008 and February 3, 2007, the assets relating to the SDCP were $5 million and $3 million respectively, and were included in other long-term assets in the Consolidated Balance Sheets. Plan investments are recorded at market value and are designated for the SDCP. As of February 2, 2008 and February 3, 2007, the liabilities relating to the SDCP were $6 million and $4 million, respectively, and were included in lease incentives and other long-term liabilities in the Consolidated Balance Sheets. We match, in cash, all or a portion of employees’ contributions under a predetermined formula. Plan investments are elected by the participants, and investment returns are not guaranteed by the Company. Our contributions to the SDCP in fiscal 2007, 2006, and 2005 were not material. We do not match non-employee members of the Board of Directors contributions under the SDCP.

62  Gap Inc. Form 10-K

Table of Contents

As of February 2, 2008 and February 3, 2007, the assets relating to a nonqualified Executive Deferred Compensation Plan (the “EDCP”) were $19 million and $22 million, respectively, and were included in other long- term assets in the Consolidated Balance Sheets. As of February 2, 2008 and February 3, 2007, the liabilities relating to the EDCP were $19 million and $22 million, respectively, and were recorded in lease incentives and other long-term liabilities in the Consolidated Balance Sheets. The EDCP was replaced by the SDCP and frozen for additional contributions effective December 31, 2005. We did not match any employees’ contributions under this plan.

NOTE 9. EMPLOYEE BENEFIT PLANS

We have a qualified defined contribution retirement plan, called GapShare, which is available to employees who meet certain age and service requirements. This plan permits employees to make contributions up to the maximum limits allowable under the Internal Revenue Code. Under the plan, we match in cash all or a portion of employees’ contributions under a predetermined formula. Our contributions vest immediately. Our contributions to GapShare in fiscal 2006, 2005, and 2004 were approximately $35 million, $33 million, and $31 million, respectively.

A nonqualified Executive Deferred Compensation Plan (the “Plan”) was established on January 1, 1999, and allows eligible employees to defer compensation up to a maximum amount. We do not match any employees’ contributions under this Plan. As of February 3, 2007 and January 28, 2006, the asset and liability relating to the Plan was approximately $22 million and $22 million, and $24 million and $30 million, respectively. The asset is classified in other assets and the liability is classified in lease incentives and other liabilities in the Consolidated Balance Sheets. This Plan was frozen for additional contributions effective December 31, 2005.

A nonqualified Supplemental Deferred Compensation Plan established on January 1, 2006, replaced the Plan and allows eligible employees and non-employee members of the Board of Directors to defer compensation up to a maximum amount. As of February 3, 2007 and January 28, 2006, the asset and liability relating to this Plan was not material. We match in cash all or a portion of employees’ contributions under a predetermined formula. Our contributions to this Plan in fiscal 2006 were $0.3 million. We do not match non-employee members of the Board of Directors contributions under the plan.

58

Table of Contents

NOTE H: EMPLOYEE BENEFIT PLANS

We have a qualified defined contribution retirement plan, called GapShare, which is available to employees who meet certain age and service requirements. This plan permits employees to make contributions up to the maximum limits allowable under the Internal Revenue Code. Under the plan, we match in cash all or a portion of employees’ contributions under a predetermined formula. Our contributions vest immediately. Our contributions to the retirement plan in fiscal 2005, 2004 and 2003 were approximately $33 million, $31 million and $28 million, respectively.

A nonqualified Executive Deferred Compensation Plan (the “Plan”) established on January 1, 1999, allows eligible employees to defer compensation up to a maximum amount. We do not match any employees’ contributions under this plan. As of January 28, 2006, the asset and liability relating to the Plan was approximately $24 million and $30 million, respectively. The asset is classified in other assets and the liability is classified in lease incentives and other liabilities in the Consolidated Balance Sheets. This plan was frozen for additional contributions effective December 31, 2005.

A nonqualified Supplemental Deferred Compensation Plan established on January 1, 2006, replaced the Plan and allows eligible employees and non-employee members of the Board of Directors to defer compensation up to a maximum amount. We match in cash all or a portion of employees’ contributions under a predetermined formula. We do not match non-employee members of the Board of Directors contributions under the current plan.

F-23