The ratings on The Gap Inc. reflect the company's strong business position in casual apparel, its geographic diversity, and Standard & Poor's belief that management will take steps to at least maintain the company's position in an industry that will continue to experience intense competition. In addition, the rating incorporates Standard & Poor's expectation that the company will follow a more prudent financial policy and significantly improve operating performance in 2002. The Gap has a leadership position as a marketer of private-label, moderately priced, good-quality sportswear and accessories. Historically, the company has had great success. However, the company's operating performance has been poor since late 1999 due to the confluence of increased competition, new entrants effectively copying The Gap's historically
