On July 1, 2004, Standard & Poor's Rating Services revised its outlook on specialty apparel store operator The Gap Inc. to positive from stable. The outlook change reflects the substantial improvement in operating performance that the company has made over the past two and a half years and its cash-rich balance sheet. Ratings on the company, including the 'BB+' corporate credit rating, were affirmed. The ratings on San Francisco, Calif.-based The Gap reflect the company's strong business position in casual apparel, geographic diversity, and strong cash flow. This is offset, in part, by management's challenge to continue to improve the business position of its three brands in an industry that is intensely competition. Management's initiatives to improve product quality and
