10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 2, 2002

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from                        to                       

Commission File Number 1-7562

THE GAP, INC.

(Exact name of registrant as specified in its charter)

Delaware	94-1697231
(State of Incorporation)	(I.R.S. Employer Identification No.)

Two Folsom Street

San Francisco, California 94105

(Address of principal executive offices)

Registrant’s telephone number, including area code:  (650) 952-4400

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $0.05 par value	New York Stock Exchange, Inc. Pacific Exchange, Inc.
(Title of class)	(Name of each exchange where registered)

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes  x  No  ¨

Indicate by check mark whether Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes  x  No  ¨

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.

Common Stock, $0.05 par value, 883,899,858 shares as of November 22, 2002

THE GAP, INC.

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION	PAGE NUMBER
Item 1	Financial Statements
	Condensed Consolidated Balance Sheets November 2, 2002, February 2, 2002 and November 3, 2001, As Restated	3
	Condensed Consolidated Statements of Operations Thirteen and Thirty-nine weeks ended November 2, 2002 and November 3, 2001	4
	Condensed Consolidated Statements of Cash Flows Thirty-nine weeks ended November 2, 2002 and November 3, 2001, As Restated	5
	Notes to Condensed Consolidated Financial Statements	6
	Independent Accountants’ Report	10
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3	Quantitative and Qualitative Disclosures about Market Risk	17
Item 4	Controls and Procedures	18
PART II	OTHER INFORMATION	18
Item 1	Legal Proceedings	18
Item 5	Other Information	19
Item 6	Exhibits and Reports on Form 8-K	20

2

THE GAP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

($000 except share and par value)	November 2, 2002			February 2, 2002			November 3, 2001 (As Restated, See Note 8)
ASSETS
Current Assets:
Cash and equivalents	$	2,501,118		$	1,035,749		$	799,510
Merchandise inventory		2,821,441			1,768,613			2,837,534
Other current assets		330,914			331,685			355,478
Total Current Assets		5,653,473			3,136,047			3,992,522
Property and equipment, net		3,870,053			4,161,290			4,241,924
Lease rights and other assets		385,393			385,486			355,975
Total Assets	$	9,908,919		$	7,682,823		$	8,590,421
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Notes payable	$	—		$	41,889		$	1,029,250
Current maturities of long-term debt		499,959			—			250,000
Accounts payable		1,443,870			1,196,614			1,404,606
Accrued expenses and other current liabilities		960,447			827,119			894,879
Income taxes payable		200,271			82,108			113,196
Total Current Liabilities		3,104,547			2,147,730			3,691,931
Long-Term Liabilities:
Long-term debt		2,875,683			1,961,397			1,273,025
Deferred lease credits and other liabilities		540,147			564,115			571,838
Total Long-Term Liabilities		3,415,830			2,525,512			1,844,863
Shareholders’ Equity:
Common stock $.05 par value
Authorized 2,300,000,000 shares; Issued 967,195,332, 948,597,949 and 947,326,739 shares; Outstanding 885,564,305, 865,726,890 and 863,096,998 shares		48,360			47,430			47,366
Additional paid-in capital		620,906			461,408			453,543
Retained earnings		5,060,483			4,890,375			4,943,789
Accumulated other comprehensive losses		(34,969	)		(61,824	)		(41,074	)
Deferred compensation		(4,369	)		(7,245	)		(9,262	)
Treasury stock, at cost		(2,301,869	)		(2,320,563	)		(2,340,735	)
Total Shareholders’ Equity		3,388,542			3,009,581			3,053,627
Total Liabilities and Shareholders’ Equity	$	9,908,919		$	7,682,823		$	8,590,421

See accompanying notes to condensed consolidated financial statements.

3

THE GAP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Thirteen Weeks Ended						Thirty-nine Weeks Ended
	November 2, 2002			November 3, 2001			November 2, 2002			November 3, 2001
($000 except share and per share amounts)
Net sales	$	3,644,956		$	3,333,373		$	$9,804,105		$	9,758,248
Costs and expenses
Cost of goods sold and occupancy expenses		2,329,347			2,382,734			6,518,883			6,641,353
Operating expenses		1,009,393			946,882			2,697,890			2,740,066
Interest expense		67,475			23,748			182,556			76,649
Interest income		(9,570	)		(5,408	)		(26,786	)		(8,436	)
Earnings / (losses) before income taxes		248,311			(14,583	)		431,562			308,616
Income taxes		113,041			164,254			202,834			282,222
Net earnings / (losses)	$	135,270		$	(178,837	)	$	228,728		$	26,394
Weighted average number of shares – basic		879,275,933			862,420,054			871,826,795			858,808,170
Weighted average number of shares – diluted		968,163,722			862,420,054			877,828,469			876,068,384
Earnings / (losses) per share – basic	$	0.15		$	(0.21	)	$	0.26		$	0.03
Earnings / (losses) per share – diluted	$	0.15		$	(0.21	)	$	0.26		$	0.03
Dividends declared per share(a)	$	0.04		$	0.04		$	0.07		$	0.07

See accompanying notes to condensed consolidated financial statements.

^(a) Dividends per share represent dividends declared during the period.

4

THE GAP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Thirty-nine Weeks Ended
	November 2, 2002			November 3, 2001 (As Restated, See Note 8)
($000)
Cash Flows from Operating Activities:
Net earnings	$	228,728		$	26,394
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		581,591			589,626
Loss on disposal of property and equipment		13,195			16,048
Tax benefit from exercise of stock options and vesting of restricted stock		42,146			54,481
Changes in operating assets and liabilities:
Merchandise inventory		(1,040,125	)		(941,474	)
Other current assets		10,223			(32,842	)
Accounts payable		241,497			343,813
Accrued expenses		105,966			211,357
Income taxes payable		115,694			95,789
Deferred lease credits and other liabilities		(15,198	)		45,726
Net cash provided by operating activities		283,717			408,918
Cash Flows from Investing Activities:
Purchase of property and equipment		(216,762	)		(812,306	)
Proceeds from sale of property & equipment		8,513			—
Acquisition of lease rights and other assets		(6,660	)		(6,505	)
Net cash used for investing activities		(214,909	)		(818,811	)
Cash Flows from Financing Activities:
Net (decrease) increase in notes payable		(41,942	)		252,136
Issuance of long-term debt		1,345,500			495,886
Issuance of common stock		135,346			114,245
Cash dividends paid		(58,620	)		(57,176	)
Net cash provided by financing activities		1,380,284			805,091
Effect of exchange rate fluctuations on cash		16,277			(4,482	)
Net increase in cash and equivalents		1,465,369			390,716
Cash and equivalents at beginning of period		1,035,749			408,794
Cash and equivalents at end of period	$	2,501,118		$	799,510

See accompanying notes to condensed consolidated financial statements.

5

THE GAP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

The condensed consolidated balance sheets as of November 2, 2002 and November 3, 2001 and the interim condensed consolidated statements of operations for the thirteen and thirty-nine weeks ended November 2, 2002 and November 3, 2001 and cash flows for the thirty-nine weeks ended November 2, 2002 and November 3, 2001 have been prepared by The Gap, Inc. (the “Company,” “we,” and “our”), without audit. In the opinion of management, such statements include all adjustments (which include only normal recurring adjustments) considered necessary to present fairly our financial position, results of operations and cash flows at November 2, 2002 and November 3, 2001 and for all periods presented.

Certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted from these interim financial statements. We suggest that you read these condensed consolidated financial statements in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K/A for the year ended February 2, 2002.

Certain amounts from the prior periods have been reclassified to conform to the current period presentation. These reclassifications had no effect on net income as previously reported.

The condensed consolidated balance sheet as of February 2, 2002 was derived from our February 2, 2002 balance sheet included in our 2001 Annual Report on Form 10-K/A.

The results of operations for the thirty-nine weeks ended November 2, 2002 are not necessarily indicative of the operating results that may be expected for the year ending February 1, 2003.

2. COMPREHENSIVE EARNINGS / (LOSSES)

Comprehensive earnings / (losses) include net earnings / (losses) and other comprehensive earnings / (losses). Other comprehensive earnings / (losses) include foreign currency translation adjustments and fluctuations in the fair market value of certain derivative financial instruments. Comprehensive earnings / (losses) for the thirteen and thirty-nine weeks ended November 2, 2002 and November 3, 2001 were as follows:

	Thirteen Weeks Ended					Thirty-nine Weeks Ended
($000)	November 2, 2002		November 3, 2001			November 2, 2002		November 3, 2001
Net earnings / (losses)	$	135,270	$	(178,837	)	$	228,728	$	26,394
Other comprehensive earnings / (losses)		1,421		(1,254	)		26,855		(20,901	)
Comprehensive earnings / (losses)	$	136,691	$	(180,091	)	$	255,583	$	5,493

3. DEBT AND OTHER CREDIT ARRANGEMENTS

In March 2002, we issued $1.38 billion aggregate principal amount of 5.75 percent senior convertible notes due March 15, 2009, and received net proceeds of $1.35 billion in cash. Interest is payable semi-annually on March 15 and September 15 of each year. The first payment was made on September 15, 2002. We have an option to call the notes on or after March 20, 2005. The notes are convertible, unless previously redeemed or repurchased, at the option of the holder at any time prior to maturity, into shares of our common stock at a conversion price of $16.12 per share, subject to adjustment upon certain events, for an initial total of 85,607,940 shares. If converted, these additional shares would reduce our future earnings per share. Prior to conversion, the convertible notes are potentially dilutive at certain earnings levels. The effects of these dilutive securities are computed using the if-converted method.

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In March 2002, we entered into a $1.4 billion secured two-year credit facility (the “Facility”). The Facility is being used for general corporate purposes, primarily as back up for our trade letters of credit issuance. The Facility contains financial and other covenants, including, but not limited to, limitations on capital expenditures, liens and cash dividends and maintenance of certain financial ratios, including a fixed charge coverage ratio and an asset coverage ratio. Violation of these covenants could result in a default under the Facility, which would permit the participating banks to restrict our ability to further access the Facility for letters of credit or advances and require the immediate repayment of any outstanding advances under the Facility. In addition, such a default could, under certain circumstances, permit the holders of our outstanding unsecured debt to accelerate the payment of such obligations.

As of November 2, 2002, we had $1.0 billion in trade letters of credit issued under the Facility.

4. EARNINGS / (LOSSES) PER SHARE

Basic earnings / (losses) per share are computed using the weighted average number of shares of common stock outstanding during the period. Diluted earnings / (losses) per share includes the dilutive effect of our potentially dilutive securities, which include certain stock options and unvested shares of restricted stock, calculated using the treasury stock method, and convertible notes which are potentially dilutive at certain earnings levels, and are computed using the if-converted method. The following summarizes the incremental shares from the potentially dilutive securities:

	Thirteen Weeks Ended					Thirty-nine Weeks Ended
($000 except share and par value)	November 2, 2002		November 3, 2001			November 2, 2002		November 3, 2001
Net earnings / (losses) – basic	$	135,270	$	(178,837	)	$	228,728	$	26,394
Dilutive effect from:
Senior convertible notes interest		10,514		—			—		—
Diluted earnings / (losses)	$	145,784	$	(178,837	)	$	228,728	$	26,394
Weighted average number of shares – basic		879,275,933		862,420,054			871,826,795		858,808,170
Incremental shares resulting from:
Stock options		3,279,849		—			6,001,674		17,256,826
Restricted stock		—		—			—		3,388
Senior convertible notes		85,607,940		—			—		—
Weighted average number of shares – diluted		968,163,722		862,420,054			877,828,469		876,068,384
Basic earnings / (losses) per share	$	0.15	$	(0.21	)	$	0.26	$	0.03
Diluted earnings / (losses) per share	$	0.15	$	(0.21	)	$	0.26	$	0.03

The calculation above excludes stock options to purchase 75,343,121 and 76,390,818 shares of common stock during the thirteen and thirty-nine weeks ended November 2, 2002, respectively, and 67,689,614 and 27,764,622 shares of common stock during the thirteen and thirty-nine weeks ended November 3, 2001, respectively. The calculation above also excludes 85,701 and 97,618 shares of unvested restricted stock during the thirteen and thirty-nine weeks ended November 2, 2002, respectively, and 122,555 and 119,020 shares of unvested restricted stock during the thirteen and thirty-nine weeks ended November 3, 2001, respectively. The calculation above also excludes senior convertible notes which are convertible to 85,607,940 shares of common stock during the thirty-nine weeks ended November 2, 2002 because their inclusion would have an anti-dilutive effect on earnings per share.

7

5. EXCESS FACILITIES, SEVERANCE AND SUBLEASE LOSS RESERVE

In 2001, we announced plans to close four distribution facilities: Ventura, California; Basildon, England; Erlanger, Kentucky; and Roosendaal, Holland. The closures of the Ventura and Basildon facilities were completed by the first quarter of fiscal 2002, the Roosendaal facilities were closed during the second quarter of fiscal 2002 and the Erlanger facility was closed during the third quarter of fiscal 2002.

The facility in Roosendaal, Holland, is classified as held for sale in accordance with Statement of Financial Accounting Standards No. 144 (“SFAS 144”), “Accounting for the Impairment or Disposal of Long-Lived Assets”. The total carrying value of the land and building as of November 2, 2002 was $8.3 million. The facility in Ventura, California was sold in October 2002.

Facilities-related charges associated with distribution center closures include costs associated with lease terminations, facilities restoration and equipment removal. Remaining reserves of $5.3 million associated with facilities as of November 2, 2002 are expected to be paid by the third quarter of fiscal 2003. Employee separation expenses are comprised of severance pay, outplacement services, medical and other related benefits. Remaining reserves of $0.3 million associated with employee separations are expected to be paid by the fourth quarter of fiscal 2002.

During 2001, we consolidated and downsized headquarters facilities in our San Francisco and San Bruno campuses as part of our cost containment efforts. We recorded charges during fiscal 2001, which primarily related to the difference between our contract rent obligations and the rate at which we expect to be able to sublease the properties. As a result of deteriorating sublease market conditions, we revised sublease income and sublease commencement projections during the third quarter of fiscal 2002. This resulted in an additional sublease loss of $15.8 million in the third quarter of fiscal 2002 for these properties. The additional sublease loss charge was recorded in operating expenses.

The remaining reserve balance related to the distribution center exit costs and sublease loss as of November 2, 2002 was as follows:

($000)	Severance and Outplacement			Facilities Charges			Sublease Loss Reserve			Total
Balance at February 2, 2002	$	5,435		$	7,040		$	44,220		$	56,695
Payments		(5,157	)		(1,724	)		(5,185	)		(12,066	)
Provisions		—			—			15,755			15,755
Balance at November 2, 2002	$	278		$	5,316		$	54,790		$	60,384

6. INCOME TAXES

During the first half of fiscal 2001, we provided for taxes at a 36.5 percent effective tax rate. During the third quarter of fiscal 2001, we recorded $40 million in higher tax expense to bring the tax rate for the first half in line with our 49 percent effective tax rate for fiscal 2001. The increase in tax rate was a result of earnings performance and near-term earnings outlook for the remainder of fiscal 2001, which were below earlier expectations. Also, during the third quarter of fiscal 2001, we recorded a tax charge of $131 million. The charge included our estimate of probable settlements of foreign and domestic tax audits as well as adjustments relating to prior-year tax provisions that were based on earlier estimates.

As a result of our improved operating performance in the third quarter of fiscal 2002, we reduced our effective tax rate from 49 percent to 47 percent for the full year. The adjusted tax rate is based on our current assessment of full year earnings and the mix of earnings. The impact of the reduction on third quarter results is $0.01 per share. This includes $5.0 million for the two-percentage point rate change on third quarter earnings and $3.7 million tax expense reduction to bring the first-half tax rate from 49 percent to 47 percent.

8

7. NEW ACCOUNTING PRONOUNCEMENTS

We adopted Statement of Financial Accounting Standards No. 142 (“SFAS 142”) “Goodwill and Other Intangible Assets” for the fiscal year beginning February 3, 2002. The adoption of SFAS 142 did not have a significant impact on the financial statements.

In June 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 146 (“SFAS 146”), “Accounting for Costs Associated with Exit or Disposal Activities,” which addresses accounting for restructuring and similar costs. SFAS 146 supercedes previous accounting guidance, principally Emerging Issues Task Force Issue No. 94-3 (“Issue 94-3”), “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring).” We will adopt the provisions of SFAS 146 for restructuring activities, if any, initiated after December 31, 2002. SFAS 146 requires that the liability for costs associated with an exit or disposal activity be recognized when the liability is incurred. Under Issue 94-3, a liability for an exit cost was recognized at the date of our commitment to an exit plan. SFAS 146 also establishes that the liability should initially be measured and recorded at fair value. Accordingly, SFAS 146 may affect the timing of recognizing future restructuring costs, if any, as well as the amounts recognized.

8. RESTATEMENT FOR MERCHANDISE INVENTORY AND ACCOUNTS PAYABLE

During the third quarter of 2002, we made changes in an accounting report used to record in-transit merchandise inventory. These changes corrected an understatement of the Company’s in-transit inventory balances and the corresponding accounts payable balances.

While the in-transit inventory tracking system was accurately capturing data, a software upgrade in April 2002 inadvertently caused the system to begin generating accounting reports that understated in-transit inventory levels for financial reporting purposes. While addressing this issue, we also determined that the methodology for recording in-transit inventory required modifications to accurately report in-transit balances for financial reporting purposes for the quarters ended May 5, 2001 through August 3, 2002. These issues were identified in October 2002.

We have amended our quarterly filings for the first and second quarters of 2002 and our 2001 Annual Report on Form 10-K/A to reflect the adjustments. These adjustments will not impact previously reported net sales, net earnings, net cash flow, net working capital or financial covenant compliance. Additionally, there was no impact on the amount of inventory actually ordered from vendors or sold to customers in any affected reporting period.

The accompanying condensed consolidated balance sheet as of November 3, 2001 and the condensed consolidated statement of cash flows for the thirty-nine weeks ended November 3, 2001 have been restated from the amounts previously reported to reflect the adjustments discussed above. The following table summarizes the significant effects of the restatement:

	November 3, 2001
($000)	As Previously Reported		As Restated
Merchandise inventory	$	2,589,230	$	2,837,534
Total Current Assets	$	3,744,218	$	3,992,522
Total Assets	$	8,342,117	$	8,590,421
Accounts payable	$	1,156,302	$	1,404,606
Total Current Liabilities	$	3,443,627	$	3,691,931
Total Liabilities and Shareholders’ Equity	$	8,342,117	$	8,590,421

9

Deloitte & Touche LLP

50 Fremont Street

San Francisco, California 94105-2230

Tel: (415) 783-4000

Fax: (415) 783-4329

www.deloitte.com

Deloitte

& Touche

INDEPENDENT ACCOUNTANTS’ REPORT

To the Board of Directors and Shareholders of

  The Gap, Inc.:

We have reviewed the accompanying condensed consolidated balance sheets of The Gap, Inc. and subsidiaries as of November 2, 2002 and November 3, 2001, and the related condensed consolidated statements of operations for the thirteen and thirty-nine week periods ended November 2, 2002 and November 3, 2001, and of cash flows for the thirty-nine week periods ended November 2, 2002 and November 3, 2001. These financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of The Gap, Inc. and subsidiaries as of February 2, 2002, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated March 12, 2002, November 18, 2002 as to Note L, we expressed an unqualified opinion and included an explanatory paragraph relating to the restatement described in Note L, on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of February 2, 2002 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

As discussed in Note 8, the condensed consolidated balance sheet as of November 3, 2001, and the condensed consolidated statement of cash flows for the thirty-nine week period ended November 3, 2001, have been restated.

/s/ Deloitte & Touche LLP

San Francisco, California

November 18, 2002

10

THE GAP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information in this quarterly report on Form 10-Q contains certain forward-looking statements which reflect the current view of The Gap, Inc. (the “Company,” “we,” and “our”) with respect to future events and financial performance. Wherever used, the words “expect,” “plan,” “anticipate,” “believe,” “may” and similar expressions identify forward-looking statements.

Any such forward-looking statements are subject to risks and uncertainties and our future results of operations could differ materially from historical results or current expectations. Some of these risks include, without limitation, ongoing competitive pressures in the apparel industry, risks associated with challenging domestic and international retail environments, changes in the level of consumer spending or preferences in apparel, trade restrictions and political or financial instability in countries where our goods are manufactured, impact of legal proceedings, and/or other factors that may be described in our Annual Report on Form 10-K/A and/or other filings with the Securities and Exchange Commission. Future economic and industry trends that could potentially impact revenues and profitability are difficult to predict.

We suggest that this document is read in conjunction with the Management’s Discussion and Analysis included in our Annual Report on Form 10-K/A for the fiscal year ended February 2, 2002.

We assume no obligation to publicly update or revise our forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

The Management’s Discussion and Analysis of Financial Condition and Results of Operations presented below reflects the effects of the restatement of our condensed consolidated balance sheet as of November 3, 2001 and our condensed consolidated statement of cash flows for the thirty-nine weeks ended November 3, 2001. See Note 8 to the condensed consolidated financial statements for further discussion of this matter.

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RESULTS OF OPERATIONS

Net Sales

	Thirteen Weeks Ended					Thirty-nine Weeks Ended
	November 2, 2002		November 3, 2001			November 2, 2002			November 3, 2001
Net sales ($000)	$	3,644,956	$	3,333,373		$	9,804,105		$	9,758,248
Total net sales increase (decrease) percentage		9		(2	)		0			7
Comparable store sales increase (decrease) percentage		2		(17	)		(7	)		(11	)
Net sales per average square foot	$	95	$	93		$	258		$	283
Square footage of gross store space – at end of period (000)							37,645			36,033
Number of Store Concepts:
Beginning of Year							4,171			3,676
New store concepts							175			535
Expanded store concepts(1)							22			142
Closed store concepts							52			64
End of Period							4,294			4,147
Number of Store Locations:
Beginning of Year							3,097			2,848
New store locations							105			276
Expanded store locations (1)							30			138
Closed store store locations							44			23
End of Period							3,158			3,101

⁽¹⁾ Expanded stores do not change store count.

Store count and square footage at quarter end for fiscal 2002 and 2001 were as follows:

	November 2, 2002			November 3, 2001
	Number of Store Concepts	Number of Store Locations	Sq. Ft. (millions)	Number of Store Concepts	Number of Store Locations	Sq. Ft. (millions)
Gap Domestic	2,339	1,487	13.3	2,279	1,499	13.0
Gap International(1)	659	375	3.6	630	364	3.5
Banana Republic(2)	446	446	3.7	442	442	3.5
Old Navy(3)	850	850	17.0	796	796	16.0
Total	4,294	3,158	37.6	4,147	3,101	36.0

Gap Brand stores are reported based on concepts. Any Gap Adult, GapKids, babyGap or GapBody concept that meets a certain square footage threshold has been counted as a store, even when residing within a single physical location that may have other concepts. In the table above, we present the number of store concepts and the number of locations.

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⁽¹⁾ Includes store concepts and locations in the following countries:

United Kingdom: 240 and 223 store concepts and 149 and 140 store locations in 2002 and 2001, respectively.

Canada: 192 and 191 store concepts and 110 and 110 store locations in 2002 and 2001, respectively.

Japan: 153 and 140 store concepts and 71 and 69 store locations in 2002 and 2001, respectively.

France: 54 and 56 store concepts and 35 and 35 store locations in 2002 and 2001, respectively.

Germany: 20 store concepts and 10 store locations in 2002 and 2001.

⁽²⁾ Includes 16 stores in Canada in 2002 and 2001.

⁽³⁾ Includes 28 and 17 stores in Canada for 2002 and 2001 respectively.

Net sales for the third quarter of fiscal 2002 increased $312 million compared to the same period last year. Comparable store sales increased $63 million and non-comparable store sales increased by $249 million. The non-comparable store sales increase was primarily due to the increase in retail selling space, both through the opening of new stores (net of stores closed) and the expansion of existing stores. Increased regular price selling and higher markdown margins drove the increase in comparable store sales for the third quarter.

Net sales for year-to-date fiscal 2002 increased $46 million compared to the same period last year. Comparable store sales declined $669 million, offset by a $715 million increase in non-comparable store sales. The non-comparable store sales increase was primarily due to the increase in retail selling space, both through the opening of new stores (net of stores closed) and the expansion of existing stores. The effects of increased markdown selling and lower markdown margins during the first quarter and negative traffic during the second quarter drove the decrease in year-to-date comparable store sales.

The increase in net sales per average square foot for the third quarter was attributable to positive comparable store sales.

Comparable store sales by division for the third quarter were as follows:

• Gap Domestic reported a negative 2% versus a negative 17% last year

• Gap International reported a positive 2% versus a negative 13% last year

• Banana Republic reported a positive 1% versus a negative 13% last year

• Old Navy reported a positive 6% versus a negative 18% last year

Total sales by division for the third quarter were as follows:

• Gap Domestic reported $1.3 billion versus $1.3 billion last year

• Gap International reported $420 million versus $387 million last year

• Banana Republic reported $456 million versus $429 million last year

• Old Navy reported $1.5 billion versus $1.3 billion last year

Comparable store sales by division for year-to-date were as follows:

• Gap Domestic reported a negative 11% versus a negative 11% last year

• Gap International reported a negative 9% versus a negative 9% last year

• Banana Republic reported a negative 4% versus a negative 8% last year

• Old Navy reported a negative 4% versus a negative 14% last year

Total sales by division for year-to-date were as follows:

• Gap Domestic reported $3.4 billion versus $3.7 billion last year

• Gap International reported $1.1 billion versus $1.2 billion last year

• Banana Republic reported $1.3 billion versus $1.3 billion last year

• Old Navy reported $3.9 billion versus $3.6 billion last year

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Cost of Goods Sold and Occupancy Expenses

Cost of goods sold and occupancy expenses as a percentage of net sales decreased 7.6 percentage points from 71.5% to 63.9% in the third quarter of fiscal 2002 and decreased 1.6 percentage points from 68.1% to 66.5% for the year-to-date fiscal 2002 compared to the same periods in fiscal 2001. The decrease in the third quarter of fiscal 2002 was driven by higher merchandise margins of 6.1 percentage points and by lower occupancy expenses of 1.5 percentage points. The decrease year-to-date fiscal 2002 was primarily driven by higher merchandise margins of 2.0 percentage points offset by higher occupancy expenses of 0.4 percentage points.

Merchandise margins increased 6.1 percentage points in the third quarter primarily as a result of less markdown selling and higher markdown margins. Also, in the third quarter of fiscal 2001, we cancelled certain product orders which resulted in $52 million in cancelled fabric charges, which accounted for 1.6 percentage points of merchandise margin improvement over prior year. The increase in merchandise margins of 2.0 percentage points year-to-date was also primarily driven by a decrease in markdown selling and higher markdown margins. The cancelled fabric charges during fiscal 2001 accounted for a 0.5 percentage point in merchandise margin improvement year-to-date fiscal 2002 compared to prior year.

The decrease in occupancy expenses as a percentage of net sales for the third quarter of fiscal 2002 compared to the fiscal 2001 period was primarily driven by lower depreciation expense. Depreciation expense in the fiscal 2001 period included higher accelerated depreciation for store closures and remodels. The increase in occupancy expenses as a percentage of net sales year-to-date fiscal 2002 compared to the same period in fiscal 2001 was due to a loss of sales leverage, which accounted for a 1.2 percentage point increase as a percentage of net sales. This increase was partially offset by lower depreciation expense year-to-date compared to the same period of the prior year which included higher accelerated depreciation for store closures and remodels.

Operating Expenses

Operating expenses as a percentage of net sales decreased 0.7 percentage points from 28.4% to 27.7% for the third quarter of fiscal 2002 and decreased 0.6 percentage points from 28.1% to 27.5% for the year-to-date fiscal 2002 compared to the same periods in fiscal 2001. The decrease in operating expenses as a percentage of net sales for the third quarter of fiscal 2002 was due to sales leverage, which accounted for a 1.3 percentage point decrease as a percent of net sales. This decrease was partially offset by the additional sublease loss charge taken during the third quarter of fiscal 2002 and an increase in operating expenses for the third quarter of fiscal 2002 attributable to incremental advertising, which included TV campaigns and circulars. The incremental increase in advertising accounted for a 0.8 percentage point increase in operating expenses as a percent of net sales.

As a result of deteriorating sublease market conditions, we revised sublease income and sublease commencement projections during the third quarter of fiscal 2002. This resulted in an additional sublease loss of $15.8 million in the third quarter of fiscal 2002 for these properties.

Of the 0.6 percentage point decrease year-to-date in operating expenses as a percentage of net sales, 1.8 percentage points was attributable to cost reductions as well as expense savings due to the July 2001 workforce reduction and the impact of the second quarter 2001 charge related to those actions. These decreases were partially offset by higher store payroll and benefits, which accounted for a 0.5 percentage point increase, and loss of sales leverage, which resulted in a 0.7 percentage point increase in operating expenses as a percentage of net sales.

For fiscal 2002, we expect total operating expenses to increase about 1% to 3%, in dollar terms, for the full year compared to fiscal 2001.

Interest Expense

The increase in interest expense in the third quarter and year-to-date fiscal 2002 compared to the same periods in fiscal 2001 was primarily due to an increase in long-term borrowings and higher interest rates on new debt issuances.

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Interest Income

The increase in interest income in the third quarter and year-to-date fiscal 2002 compared to the same periods in fiscal 2001 was primarily due to increases in average cash available for investment as a result of new debt issuances. Available cash increased due to the debt issuance in March 2002 and reduced capital expenditures compared to the prior year.

Income Taxes

During the first half of fiscal 2001, we provided for taxes at a 36.5 percent effective tax rate. During the third quarter of fiscal 2001, we recorded $40 million in higher tax expense to bring the tax rate for the first half in line with our 49 percent effective tax rate for fiscal 2001. The increase in tax rate was a result of earnings performance and near-term earnings outlook for the remainder of fiscal 2001, which were below earlier expectations. Also, during the third quarter of fiscal 2001, we recorded a tax charge of $131 million. The charge included our estimate of probable settlements of foreign and domestic tax audits as well as adjustments relating to prior-year tax provisions that were based on earlier estimates.

As a result of our improved operating performance in the third quarter of fiscal 2002, we reduced our effective tax rate from 49 percent to 47 percent for the full year. The adjusted tax rate is based on our current assessment of full year earnings and the mix of earnings. The impact of the reduction on third quarter results is $0.01 per share. This includes $5.0 million for the two-percentage point rate change on third quarter earnings and $3.7 million tax expense reduction to bring first-half results from 49 percent to 47 percent.

LIQUIDITY AND CAPITAL RESOURCES

The following sets forth certain measures of our liquidity:

	Thirty-nine Weeks Ended
	November 2, 2002		November 3, 2001
Cash provided by operating activities ($000)	$	283,717	$	408,918
Working capital ($000)	$	2,548,926	$	300,591
Current ratio		1.82:1		1.08:1

For the thirty-nine weeks ended November 2, 2002, the decrease in cash flows provided by operating activities, compared to the same period in the prior year, was primarily attributable to an increase in merchandise inventory, a decrease in the relative growth in accounts payable and accrued expenses and a decrease in tenant allowance received due to slower store growth compared to the same period in the prior year. The decrease in cash flows provided by operating activities was partially offset by an increase in net earnings. An increase in cash due to the issuance of $1.38 billion senior convertible notes in March 2002 and $700 million notes in November 2001 and a decrease in short-term borrowings primarily drove the increase in working capital and the current ratio.

In March 2002, we entered into a $1.4 billion secured two-year credit facility (the “Facility”). The Facility is being used for general corporate purposes, primarily as back up for our trade letters of credit issuance. The fees related to the Facility fluctuate based on our senior unsecured credit ratings.

The Facility contains financial and other covenants, including, but not limited to, limitations on capital expenditures, liens and cash dividends, and maintenance of certain financial ratios, including a fixed-charge coverage ratio and an asset coverage ratio. Violation of these covenants could result in a default under the Facility, which would permit the participating banks to restrict our ability to further access the Facility for letters of credit or advances and to require the immediate repayment of any outstanding advances under the Facility. In addition, such default could, under certain circumstances, permit the holders of our outstanding unsecured debt to accelerate the payment of such obligations.

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As of November 2, 2002, we had $1.0 billion in trade letters of credit issued under the Facility.

We also have standby letters of credit, surety bonds and guarantees outstanding at November 2, 2002, amounting to $30 million, $33 million and $6 million, respectively.

On February 14, 2002, Moody’s reduced our long and short-term senior unsecured credit ratings from Baa3 to Ba2 and from Prime-3 to Not Prime, respectively, with a negative outlook on our long-term ratings, and Standard & Poor’s reduced our long and short-term credit ratings from BBB+ to BB+ and from A-2 to B, respectively, with a stable outlook on our long-term ratings. On February 27, 2002, Moody’s reduced our long-term senior unsecured credit ratings from Ba2 to Ba3 and stated that its outlook on our long-term ratings was stable. In April 2002, Standard & Poor’s assigned a BBB- rating to our new Facility. On May 9, 2002 and May 24, 2002, the outlook on our credit ratings was changed from stable to negative by Standard & Poor’s and Moody’s, respectively.

As a result of the downgrades in our long-term credit ratings, effective June 15, 2002, the interest rates payable by us on $700 million of our outstanding notes increased by 175 basis points to 9.90 percent per annum on $200 million of our outstanding notes due in 2005, and to 10.55 percent per annum on $500 million of our outstanding notes due in 2008. Any further downgrades of our long-term credit ratings by these rating agencies would result in further increases in the interest rates payable by us on the notes. The interest rates payable on these notes is subject to decrease upon upgrades of our long-term credit rating by these rating agencies. As a result of the downgrades in our short-term credit ratings, we no longer have meaningful access to the commercial paper market. In addition, we expect both the recent, and any future, lowering of the ratings on our debt to result in reduced access to the capital markets and higher interest costs on future financings.

In March 2002, we issued $1.38 billion aggregate principal amount of 5.75 percent senior convertible notes due March 15, 2009, and received net proceeds of $1.35 billion in cash. Interest is payable semi-annually on March 15 and September 15 of each year. The first payment was made on September 15, 2002. We have an option to call the notes on or after March 20, 2005. The notes are convertible, unless previously redeemed or repurchased, at the option of the holder at any time prior to maturity, into shares of our common stock at a conversion price of $16.12 per share, subject to adjustment in certain events, for a total of 85,607,940 shares. If converted, these additional shares would reduce our future earnings per share. Prior to conversion, the convertible notes are potentially dilutive at certain earnings levels. The effects of these dilutive securities are computed using the if-converted method. These securities were dilutive for the third quarter earnings per share calculation but not for the year-to-date earnings per calculation.

For the thirty-nine weeks ended November 2, 2002, capital expenditures, net of tenant allowance for construction and lease incentives, totaled approximately $189 million. The majority of these expenditures were used for expansion of the store base and information technology. Year-to-date fiscal 2002, we increased retail square footage by 3.6 percent and ended the quarter with 4,294 store concepts or 3,158 store locations.

Rent expense for all operating leases was $727 million and $699 million, for the thirty-nine weeks ended November 2, 2002 and November 3, 2001, respectively.

Our current outlook for capital expenditures for fiscal 2002 is in the low $300 million dollar range, down from a previous guidance of $360 million, primarily as a result of timing of certain information technology spending. Also, we anticipate full year depreciation and amortization expense to be in the high $700 million dollar range.

For fiscal 2002, we continue to expect net square footage growth to be around 3%. While we anticipate concept closures to be similar to last year’s levels, store location closures will likely be higher.

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Our store growth plans for fiscal 2002 are as follows:

	Fiscal 2002
	Number of Store Concepts	Number of Store Locations	Net Sq. Ft. Range*
Gap Domestic	70-75	20-25	1-3	%
Gap International	30-35	10-15	1-3	%
Banana Republic	15-20	15-20	3-5	%
Old Navy	55-60	55-60	4-6	%
Total	170-190	100-120	About 3	%

*Net of store closures.

Gap Brand stores are reported based on concepts. Any Gap Adult, GapKids, babyGap or GapBody concept that meets a certain square footage threshold has been counted as a store, even when residing within a single physical location that may have other concepts. In the table above, we present the number of store concepts and the number of locations.

For fiscal 2003, we expect to open stores at 30-40 new locations, which translates to 40-60 concepts. Approximately 60 percent of the resulting square footage growth is from Old Navy, with the balance spread equally among the other brands. At this point, we anticipate that store closures will likely be higher than 2002 levels, with net square footage expected to decline about 2 percent for the full 2003 fiscal year.

NEW ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 142 (“SFAS 142”), “Goodwill and Other Intangible Assets”, which is effective for all fiscal years beginning after December 15, 2001. SFAS 142 requires, among other things, the discontinuance of goodwill amortization. In addition, the standard includes provisions for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill and the identification of reporting units for purposes of assessing potential future impairments of goodwill. We adopted SFAS 142 for the fiscal year beginning February 3, 2002. The adoption of SFAS 142 did not have a significant impact on the financial statements.

In June 2002, the FASB issued Statement of Financial Accounting Standards No. 146 (“SFAS 146”), “Accounting for Costs Associated with Exit or Disposal Activities,” which addresses accounting for restructuring and similar costs. SFAS 146 supercedes previous accounting guidance, principally Emerging Issues Task Force Issue No. 94-3 (“Issue 94-3”), “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring).” We will adopt the provisions of SFAS 146 for restructuring activities, if any, initiated after December 31, 2002. SFAS 146 requires that the liability for costs associated with an exit or disposal activity is recognized when the liability is incurred. Under Issue 94-3, a liability for an exit cost was recognized at the date of our commitment to an exit plan. SFAS 146 also establishes that the liability should initially be measured and recorded at fair value. Accordingly, SFAS 146 may affect the timing of recognizing future restructuring costs, if any, as well as the amounts recognized.

Item 3.     Quantitative and Qualitative Disclosures about Market Risk

We operate in foreign countries which exposes us to market risk associated with foreign currency exchange rate fluctuations. Our risk management policy is to hedge substantially all merchandise purchases for foreign operations using forward contracts. At November 2, 2002, we had forward contracts maturing at various dates through August 2003 to buy and sell the equivalent of approximately $453 million in foreign currencies at contracted rates. We also use forward contracts to hedge our market risk exposure associated with foreign currency exchange rate fluctuations for certain loans denominated in currencies other than the functional currency of the entity holding or issuing the loan.

The outstanding mark-to-market net liability for all derivatives reflected in the condensed consolidated balance sheet as of November 2, 2002, was $27 million.

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We have limited exposure to interest rate fluctuations on our borrowings. The interest on our long-term debt is set at a fixed coupon, with the exception of the interest rates payable by us on $700 million of our outstanding notes, which are subject to change based on our long-term credit ratings. The interest rates earned on our cash and equivalents could fluctuate in line with short-term interest rates.

In March 2002, we issued $1.38 billion aggregate principal amount of 5.75 percent senior convertible notes due March 15, 2009, and received the net proceeds in cash. Interest is payable semi-annually on March 15 and September 15 of each year. The first payment was made on September 15, 2002. These debt securities are recorded in the balance sheet at their issuance amount net of unamortized discount.

The market risk profile of the Company on February 2, 2002 is disclosed on the Company’s 2001 Annual Report on Form 10-K/A.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934, as amended, within 90 days of the filing of this Quarterly Report on Form 10-Q. Based on such evaluation, they have concluded that as of such date, our disclosure controls and procedures are effective.

Changes in Internal Controls

There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

During the quarter, the Company and all other remaining parties (excluding one retailer) agreed to settle the claims in two previously-disclosed lawsuits relating to sourcing of products from Saipan (Commonwealth of the North Mariana Islands). The settlement requires court approval and does not involve an admission of wrongdoing by the defendants. See our Current Report on Form 8-K filed on September 26, 2002 for more details.

As a multinational company, we are subject to various proceedings, lawsuits, disputes and claims (“Actions”) arising in the ordinary course of our business. Many of these Actions raise complex factual and legal issues and are subject to uncertainties. Actions filed against us include commercial, intellectual property, customer, and labor and employment related claims, including class action lawsuits in which plaintiffs allege that we violated federal and state wage and hour laws. The plaintiffs in some Actions seek unspecified damages or injunctive relief, or both. Actions are in various procedural stages, and some are covered in part by insurance.

We cannot predict with assurance the outcome of Actions brought against us. Accordingly, adverse settlements or resolutions may occur and negatively impact earnings in the quarter of settlement or resolution. However, we do not believe that the outcome of any current Action would have a material adverse effect on our results from operations, liquidity or financial position taken as a whole.

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Item 5. Other Information

The Board of Directors has approved Amended and Restated Bylaws (the “New Bylaws” ), a copy of which is filed herewith as Exhibit 3.1. The New Bylaws include the following four new provisions:

• A requirement that any stockholder who desires to bring any business before, or nominate any person as director at, an annual meeting of stockholders provide the Company with advance notice of the stockholder’s intentions (the “Advance Notice Provision”).

• The Advance Notice Provision affords the Board of Directors the opportunity and time to (a) consider any stockholder initiated business and the qualifications of any director nominations proposed by stockholders well in advance of the annual meeting, (b) provide information to stockholders about these matters, (c) consider and undertake alternatives to the stockholder proposals or nominees, and (d) take other action that the Board of Directors deems to be necessary or desirable.

• The Advance Notice Provision helps ensure that stockholders are aware of all proposals to be voted on at an annual meeting and have the opportunity to consider each proposal in advance of the meeting.

• The Advance Notice Provision also allows annual meetings to be conducted in an orderly and efficient manner without disruption due to last minute or unexpected proposals.

• A requirement that any stockholder seeking to take action by written consent first advise the Company of this effort and request the Board of Directors to fix a record date for such purpose (the “Record Date Provision”).

• The Record Date Provision affords the Board of Directors the opportunity and time, especially if confronted by an unexpected proposal from a third party which has acquired a block of the Company’s stock, to (a) consider any proposed written consent solicitation, (b) consider and undertake alternatives thereto, (c) provide information to stockholders about the solicitation, and (d) take other action that the Board of Directors deems to be necessary or desirable.

• The Record Date Provision also helps ensure that stockholders are notified of the request to set a record date and thus allowed to continue to hold their shares through the anticipated record date for the action by written consent.

• An exclusive power on the part of the Board of Directors to fill all vacancies in the Board of Directors and express elimination of the power of stockholders to take such action.

• This provision will prevent stockholders who either enlarge the size of the Board or remove directors from filling the resulting vacancies. In effect, this provision forces stockholders who wish to replace the entire or a portion of the Board of Directors to do so only at an annual meeting of stockholders.

• A specification that the stockholder vote required for stockholders to amend, repeal, alter, amend or rescind the New Bylaws (including any of the provisions listed above) or adopt or make new bylaws is the affirmative vote of the holders of at least a majority of the outstanding voting stock.

• This provision ensures that the New Bylaws are amended only by action of the holders of a majority of the outstanding shares rather than a lesser amount, such as a majority of the quorum at a meeting of stockholders. This provision does not affect the power of the Board of Directors to amend the New Bylaws or adopt new bylaws.

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The Advance Notice Provision requires that any stockholder who desires to bring any business before an annual meeting of stockholders (including the nomination of persons to serve as directors) furnish the Company with advance notification of the nature of such business (or the identity and background of such persons) no later than the close of business on the 45th day and no earlier than the close of business on the 75th day prior to the first anniversary of the date on which the Company first mailed its proxy materials for the preceding year’s annual meeting of stockholders. Proposals of stockholders of the Company which are intended to be presented at the Company’s 2003 Annual Meeting of Stockholders must be received by the Secretary of the Company no earlier than January 17, 2003 and no later than February 18, 2003. A stockholder who fails to comply with the new procedures would be precluded from bringing his or her proposed business before the annual meeting and would be barred from nominating candidates for director at such meeting.

The Record Date Provision requires that any stockholder seeking to take action by written consent first advise the Company of this effort and request that the Board of Directors fix a record date for such purpose. The Board of Directors would have to take such action within 10 days of the Company’s receipt of such request, and, the Board of Directors would be authorized to set a date which is not more than 10 days later than the date upon which it meets or acts to set such record date.

The foregoing New Bylaw provisions might (a) deter a possible takeover attempt which a majority of the holders of the Company’s common stock may deem to be in their best interests or (b) delay stockholders from replacing a majority of the Board of Directors. However, the Board of Directors believes that these New Bylaw provisions are in the best interests of the Company and its stockholders for the reasons described above. Also, the Board of Directors has no knowledge of any present effort to gain control of the Company or to organize a proxy contest and has not approved these new provisions in response to any such effort.

The foregoing summary of portions of the New Bylaws is qualified in its entirety by reference to the complete text of the New Bylaws as set forth in Exhibit 3.1 hereto.

Item 6. Exhibits and Reports on Form 8-K

a)  Exhibits

(3.1)	Amended and Restated Bylaws of The Gap, Inc. (effective October 29, 2002)
(10.1)	Employment Agreement dated September 25, 2002 by and between the Company and Paul S. Pressler, filed as Exhibit 10.1 to the Company’s Form 8-K, dated September 26, 2002, Commission File No. 1-7562
(15)	Letter re: Unaudited Interim Financial Information
(99.1)	Certifications of the Chief Executive Officer and Chief Financial Officer of The Gap, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 regarding facts and circumstances relating to the Exchange Act filings.

b)  Reports on Form 8-K

We filed or furnished the following reports on Form 8-K during the three months ended November 2, 2002:

1.	Form 8-K, dated August 8, 2002, regarding the announcement of our July 2002 sales, filed with the SEC on August 8, 2002;
2.	Form 8-K, dated August 8, 2002, regarding the announcement of Gary Muto named president of Gap U.S. and Maureen Chiquet named president of Banana Republic, filed with the SEC on August 8, 2002;

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3. Form 8-K, dated August 12, 2002, regarding the Statements Under Oath of our Principal Executive Officer and our Principal Financial Officer regarding facts and circumstances relating to the Exchange Act filings, pursuant to the SEC’s Order no. 4-460, signed by Millard S. Drexler, President and Chief Executive Officer, and Heidi Kunz, Executive Vice President and Chief Financial Officer, furnished under Item 9 to the SEC on August 13, 2002;

4. Form 8-K, dated August 15, 2002, regarding the announcement of our earnings for the second quarter of fiscal 2002, filed with the SEC on August 16, 2002;

5. Form 8-K, dated September 5, 2002, regarding the announcement of our August 2002 sales, filed with the SEC on September 5, 2002;

6. Form 8-K, dated September 9, 2002, regarding the announcement that Millard S. Drexler exercised options, filed with the SEC on September 10, 2002;

7. Form 8-K, dated September 10, 2002, regarding the announcement that the Board of Directors elected Bob L. Martin to serve as a director of the Company, filed with the SEC on September 11, 2002;

8. Form 8-K, dated September 12, 2002, regarding the announcement of our response to an unsolicited “mini-tender offer,” filed  with the SEC on September 13, 2002;

9. Form 8-K, dated September 25, 2002, regarding the announcement of the naming of Paul Pressler as President and Chief Executive Officer of the Company, filed with the SEC on September 26, 2002, and attaching thereto as Exhibit 10.1 the  Employment Agreement, dated September 25, 2002, by and between the Company and Paul Pressler;

10. Form 8-K, dated September 26, 2002, regarding the announcement of the settlement agreement relating to the Saipan lawsuits, filed with the SEC on September 26, 2002;

11. Form 8-K, dated October 3, 2002, regarding the announcement of the appointment of Penny Hughes to the Board of  Directors of the Company and the resignation of Steven P. Jobs from the Board, filed with the SEC on October 4, 2002;

12. Form 8-K, dated October 10, 2002, regarding the announcement of our September 2002 sales, filed with the SEC on  October 10, 2002;

13. From 8-K, dated October 11, 2002, regarding the announcement of the resignation of Millard S. Drexler from the Board of  Directors, filed with the SEC on October 11, 2002; and

14. From 8-K, dated October 28, 2002, regarding the announcement that the Board of Directors elected Paul Pressler, President  and Chief Executive Officer, to serve as a director of the Company, filed with SEC on October 29, 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

THE GAP, INC.

Date: December 9, 2002	By:	/s/ PAUL S. PRESSLER
		Paul S. Pressler
		President and Chief Executive Office

Date: December 9, 2002	By:	/s/ HEIDI KUNZ
		Heidi Kunz
		Executive Vice President and
		Chief Financial Officer

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CERTIFICATIONS

I, Paul S. Pressler, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Gap, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a  material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for th periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

(c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors  and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

(a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: December 9, 2002

/s/    PAUL S. PRESSLER        

Paul S. Pressler

President and Chief Executive Officer

(Principal Executive Officer)

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I, Heidi Kunz, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Gap, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

(b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

(c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

(a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: December 9, 2002

/s/ HEIDI KUNZ        

Heidi Kunz

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

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		EXHIBIT INDEX
(3.1)		Amended and Restated Bylaws of The Gap, Inc. (effective October 29, 2002)
(10.1	)	Employment Agreement dated September 25, 2002 by and between the Company and Paul S. Pressler, filed as Exhibit 10.1 to the Company’s Form 8-K, dated September 26, 2002, Commission File No. 1-7562
(15)		Letter re: Unaudited Interim Financial Information
(99.1	)	Certifications of the Chief Executive Officer and Chief Financial Officer of The Gap, Inc. pursuant to 18 U.S.C.Section 1350,  as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 regarding facts and circumstances relating to the Exchange Act filings.

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EX-3.1

Exhibit 3.1

AMENDED AND RESTATED BYLAWS

OF

THE GAP, INC.

(Effective October 29, 2002)

ARTICLE I

OFFICES

Section 1.    Registered Office.

The registered office of the Corporation in the State of Delaware shall be in the City of Wilmington, County of New Castle, State of Delaware.

Section 2.    Other Offices.

The Corporation also may have offices at such other places both within and outside the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE II

STOCKHOLDERS

Section 1.    Stockholders’ Meetings.

(a)  Time and Place of Meetings.  Meetings of the stockholders shall be held at such times and places, either within or outside the State of Delaware, as may from time to time be fixed by the Board of Directors and stated in the notices or waivers of notice of such meetings.

(b)  Annual Meeting.  The annual meeting of the stockholders shall be held on such date and at such time as may be designated by the Board of Directors, for the election of directors and the transaction of such other business properly brought before such annual meeting of the stockholders in accordance with these Bylaws (as they may be amended from time to time, these “Bylaws”) and within the powers of the stockholders.

(c)  Special Meetings.  Special meetings of the stockholders of the Corporation for any purpose or purposes may be called only (i) by the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors constituting the whole Board of Directors or (ii) at the request in writing of stockholders owning not less than 10% of the voting power of the Corporation. Such resolution or request in writing shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting of the stockholders shall be limited to the purposes stated in the notice of such meeting.

(d)  Notice of Meetings.  Except as otherwise provided by law, the Certificate of Incorporation of the Corporation (as it may be amended from time to time, the “Certificate of Incorporation”) or these Bylaws, written notice of each meeting of the stockholders shall be

given not less than ten (10) days nor more than sixty (60) days before the date of such meeting to each stockholder entitled to vote thereat, directed to such stockholder’s address as it appears upon the books of the Corporation, such notice to specify the place, date, hour and purpose or purposes of such meeting. When a meeting of the stockholders is adjourned to another time and/or place, notice need not be given of such adjourned meeting if the time and place thereof are announced at the meeting of the stockholders at which the adjournment is taken, unless the adjournment is for more than thirty (30) days or unless after the adjournment a new record date is fixed for such adjourned meeting, in which event a notice of such adjourned meeting shall be given to each stockholder of record entitled to vote thereat. Notice of the time, place and purpose of any meeting of the stockholders may be waived in writing either before or after such meeting and will be waived by any stockholder by such stockholder’s attendance thereat in person or by proxy. Any stockholder so waiving notice of such a meeting shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given.

(e)    Quorum.  Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, the holders of not less than a majority of the shares entitled to vote at any meeting of the stockholders, present in person or by proxy, shall constitute a quorum. If a quorum is present at any meeting, the affirmative vote of the holders of a majority of the shares entitled to vote at such meeting and present thereat in person or by proxy shall be deemed the act of the stockholders. If a quorum shall fail to attend any meeting of the stockholders, the presiding officer of such meeting may adjourn such meeting from time to time to another place, date or time, without notice other than announcement at such meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting of the stockholders as originally noticed. The foregoing notwithstanding, if a notice of any adjourned special meeting of the stockholders is sent to all stockholders entitled to vote thereat which states that such adjourned special meeting will be held with those present in person or by proxy constituting a quorum, then, except as otherwise required by law, those present at such adjourned special meeting of the stockholders shall constitute a quorum and all matters shall be determined by a majority of the votes cast at such special meeting.

Section 2.    Determination of Stockholders Entitled to Notice and to Vote.

To determine the stockholders entitled to notice of any meeting of the stockholders or to vote thereat, the Board of Directors may fix in advance a record date as provided in Article VII, Section 1 of these Bylaws, or if no record date is fixed by the Board of Directors, a record date shall be determined as provided by law.

Section 3.    Voting.

(a)  Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, each stockholder present in person or by proxy at a meeting of the stockholders shall be entitled to one vote for each full share of stock registered in the name of such stockholder at the time fixed by the Board of Directors or by law as the record date for the determination of stockholders entitled to vote at such meeting.

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(b)    Every stockholder entitled to vote at a meeting of the stockholders may do so either in person or by one or more agents authorized by a written proxy executed by the person or such stockholder’s duly authorized agent whether by manual signature, typewriting, telegraphic transmission, facsimile signature or otherwise.

(c)    Voting may be by voice or by ballot as the presiding officer of the meeting of the stockholders shall determine. On a vote by ballot, each ballot shall be signed by the stockholder voting, or by such stockholder’s proxy, and shall state the number of shares voted.

(d)    In advance of any meeting of the stockholders, the Board of Directors shall appoint one or more persons as inspectors of election (“Inspectors”) to act at such meeting and make a written report thereof. If Inspectors are not so appointed, or if an appointed Inspector fails to appear or fails or refuses to act at a meeting of the stockholders, the presiding officer of any such meeting may, and on the request of any stockholder or such stockholder’s proxy shall, appoint Inspectors at such meeting. Each Inspector, before entering upon the discharge of the duties of Inspector, shall take and sign an oath faithfully to execute the duties of Inspector with strict impartiality and according to the best of such Inspector’s ability. Such Inspectors shall take charge of the ballots at such meeting. Also, such Inspectors shall (A) ascertain the number of shares outstanding and the voting power of each; (B) determine the shares represented at such meeting and the validity of proxies and ballots; (C) count all votes and ballots; (D) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the Inspectors; and (E) certify their determination of the number of shares represented at such meeting, and their count of all votes and ballots. The Inspectors may appoint or retain other persons or entities to assist the Inspectors in the performance of the duties of the Inspectors. An Inspector need not be a stockholder of the Corporation and any officer, employee, or agent of the Corporation may be an Inspector on any question other than a vote for or against such person’s election to any position with the Corporation or on any other questions in which such officer, employee, or agent may be directly interested. If there are three Inspectors, the determination, report or certificate of two such Inspectors shall be effective as if unanimously made by all Inspectors.

(e)    The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting of stockholders shall be announced at the meeting. No ballot, proxies or votes, nor any revocation thereof or changes thereto, shall be accepted by the Inspectors after the closing of the polls unless the Delaware Court of Chancery upon application by a stockholder shall determine otherwise.

Section 4.      List of Stockholders.

The officer who has charge of the stock ledger of the Corporation shall prepare and make available, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote thereat, arranged in alphabetical order, showing the address of and the number of shares registered in the name of each such stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to such meeting, during ordinary business hours, for a period of at least ten (10) days prior to such meeting, at the principal place of business of the corporation. The list also shall be produced and kept throughout the time and

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at the place of the meeting of the stockholders and may be inspected by any stockholder who is present.

Section 5.     Action by Consent of Stockholders.

(a)    Except as otherwise restricted by law or the Certificate of Incorporation, upon the setting of a record date in accordance with Section 5(b), any action required or permitted to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice to the stockholders and without a vote, if a consent in writing setting forth the action so taken shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of any corporate action taken without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

(b)    In order for the Corporation to determine the stockholders entitled to consent to any corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten (10) days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or any officer or agent of the Corporation having custody of the book in which proceedings of stockholders meetings are recorded, to the attention of the Secretary of the Corporation. Delivery shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action.

Section 6.      Advance Notice of Stockholder Nominees and Stockholder Business.

(a)    At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be: (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (iii) otherwise properly brought before the meeting by a stockholder. In addition to any other applicable requirements (including, without

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limitation, that any business brought before a meeting must be a proper matter for stockholder action), for business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation, the stockholder must have been a holder of record of the Corporation at the time such notice is delivered, and the stockholder, or his or her representative who is qualified under law to present the business on his or her behalf, must attend the meeting to present the business. To be timely, a stockholder’s notice must be delivered to or mailed and received by the Secretary at the principal executive offices of the Corporation no later than the close of business on the forty-fifth (45th) day and no earlier than the close of business on the seventy-fifth (75th) day prior to the first anniversary of the date on which the Corporation first mailed its proxy materials for the preceding year’s annual meeting of stockholders; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty (30) days from the date contemplated at the time of the previous year’s proxy statement, notice by the stockholder to be timely must be so received no earlier than the close of business on the one hundred fifth (105th) day prior to the date of the annual meeting and no later than the close of business on the later of (A) the seventy-fifth (75th) day prior to such annual meeting date or, (B) in the event public announcement of the date of such annual meeting is first made by the Corporation fewer than eighty-five (85) days prior to the date of such annual meeting, the close of business on the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Corporation. A stockholder’s notice shall be made to the Secretary and shall set forth as to each matter the stockholder proposes to bring before the annual meeting: (1) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (2) the name and address, as they appear on the Corporation’s books, of the stockholder proposing such business, (3) the class and number of shares of the Corporation which are beneficially owned by the stockholder, (4) any material interest of the stockholder in such business, and (5) any other information that is required to be provided by the stockholder pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “1934 Act”), in his or her capacity as a proponent of a stockholder proposal. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this paragraph (a). The presiding officer of the annual meeting shall, if the facts warrant, determine and declare at the meeting that business was not properly brought before the meeting in accordance with the provisions of this paragraph (a), and, if he or she should so determine, such presiding officer shall so declare at the meeting that any such business not properly brought before the meeting shall not be transacted.

(b)    In addition to any other applicable requirements, only persons who are nominated in accordance with the procedures set forth in this paragraph (b) shall be eligible for election as directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders by or at the direction of the Board of Directors or by any stockholder of the Corporation entitled to vote in the election of directors at the meeting who complies with the notice procedures set forth in this paragraph (b). Such nominations, other than those made by or at the direction of the Board of Directors, shall be made only after timely notice (as set forth in paragraph (a) of this Section 6) in writing to the Secretary of the Corporation in accordance with the provisions of paragraph (b) of this Section 6. Such stockholder’s notice shall set forth: (i) as to each person, if any, whom the stockholder intends to nominate for election or re-

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election as a director: (A) the name, age, business address and residence address of such person, (B) the principal occupation or employment of such person, (C) the class and number of shares of the Corporation which are beneficially owned by such person, (D) a description of all relationships, arrangements, and understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the stockholder, and (E) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the 1934 Act (including without limitation such person’s written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected); and (ii) as to such stockholder giving notice, the information required to be provided pursuant to paragraph (a) of this Section 6 of this Article II. Notwithstanding the foregoing, the Board of Directors shall not be required to solicit proxies for the election of any person the stockholder intends to nominate at the meeting. At the request of the Board of Directors, any person nominated by a stockholder for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in the stockholder’s notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this paragraph (b). The presiding officer of the meeting shall, if the facts warrant, determine and declare at the meeting that a nomination was not made in accordance with the procedures provided by this paragraph (b), and if he or she should so determine, such presiding officer shall so declare at the meeting, and the defective nomination shall be disregarded.

(c)  For purposes of this Section 6 of this Article II, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the 1934 Act.

ARTICLE III

BOARD OF DIRECTORS

Section 1.  General Powers.

The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, except as may be otherwise provided by law or the Certificate of Incorporation.

Section 2.  Election of Directors.

(a)  Number of Directors and Term of Office.    Except as otherwise provided in the Certificate of Incorporation, the authorized number of directors which shall constitute the whole Board of Directors of the Corporation shall be fixed from time to time by the Board of Directors, but shall not be less than three (3). The exact number of directors shall be determined from time to time, either by a resolution or Bylaw provision duly adopted by the Board of Directors. Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, each of the directors of the Corporation shall be elected at the annual meeting of the stockholders and each director so elected shall hold office until such director’s successor shall be elected and shall

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qualify (subject, however, to such director’s prior death, resignation, retirement, disqualification or removal from office).

(b)  Vacancies.    Except as otherwise required by these Bylaws, any vacancy in the Board of Directors that results from an increase in the authorized number of directors shall be filled only by vote of a majority of the authorized number of directors constituting the whole Board of Directors, provided that a quorum is present, and any other vacancy occurring in the Board of Directors shall be filled by a majority of the directors then in office, even if less than a quorum, or by a sole remaining director. Stockholders shall have no right to fill, or take any action to fill, any vacancy in the Board of Directors. Any director elected in accordance with this Section 2(b) shall hold office until such director’s successor shall be elected and shall qualify (subject, however, to such director’s prior death, resignation, retirement, disqualification or removal from office).

(c)  Resignation.    Any director may resign from the Board of Directors at any time by giving written notice thereof to the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time when such resignation shall become effective shall not be so specified, then such resignation shall take effect immediately upon its receipt by the Secretary; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

(d)  Removal.    Except as provided in the Certificate of Incorporation, any director of the Corporation may be removed from office with or without cause, but only by the affirmative vote of the holders of not less than a majority of the outstanding capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.

Section 3.  Meetings of the Board of Directors.

(a)  Regular Meetings.    Regular meetings of the Board of Directors and committees thereof shall be held without call or notice at such times and places as the Board of Directors shall from time to time determine.

(b)  Special Meetings.    Special meetings of the Board of Directors and committees thereof may be called by the Chairman of the Board of Directors, by the Chief Executive Officer, by the President, or by the Board of Directors, or in the case of committees, by the Chair thereof. Notice of the time and place of special meetings of the Board of Directors and committees thereof shall be given by the Secretary or an Assistant Secretary of the Corporation, or by any other officer authorized by the Board of Directors. Such notice shall be given to each director personally or by mail, messenger, telephone, facsimile transmission, overnight courier, or telegraph at such director’s business or residence address. Notice by mail shall be deposited in the United States mail, postage prepaid, not later than the third day prior to the date fixed for such special meeting. Notice by telephone, facsimile transmission or telegraph shall be sent, and notice given personally, by messenger or by overnight courier shall be delivered, at least twenty-four (24) hours prior to the time set for such special meeting. Notice of a special meeting of the Board of Directors or committee thereof need not contain a statement of the purpose of such special meeting.

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(c)  Adjourned Meetings.    A majority of directors present at any regular or special meeting of the Board of Directors or any committee thereof, whether or not constituting a quorum, may adjourn any meeting from time to time until a quorum is present or otherwise. Notice of the time and place of holding any adjourned meeting shall not be required if the time and place are fixed at the meeting adjourned.

(d)  Place of Meetings.    Meetings of the Board of Directors and committees thereof, both regular and special, may be held at any place within or outside the state of Delaware which has been designated in the notice of the meeting or, if not stated in the notice or if there is no notice, designated by the Board of Directors. In the absence of any such designation, meetings of the Board of Directors and committees thereof shall be held at the Corporation’s principal executive offices.

(e)  Participation by Telephone or Videoconference.    Members of the Board of Directors or any committee thereof may participate in any meeting of the Board of Directors or committee through the use of conference telephone, videoconference or similar communications equipment, so long as all members participating in such meeting can hear one another, and such participation shall constitute presence in person at such meeting.

(f)  Quorum.    At all meetings of the Board of Directors or any committee thereof, a majority of the authorized number of directors constituting the whole Board of Directors or serving on such committee, as applicable, shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any such meeting at which there is a quorum shall be the act of the Board of Directors or such committee, except as may be otherwise specifically provided by law, the Certificate of Incorporation or these Bylaws. A meeting of the Board of Directors or any committee thereof at which a quorum initially is present may continue to transact business notwithstanding the withdrawal of directors so long as any action is approved by at least a majority of the required quorum for such meeting.

(g)  Waiver of Notice.    The transactions of any meeting of the Board of Directors or any committee thereof, however called and noticed or wherever held, shall be as valid as if taken at a meeting duly held after regular call and notice, if a quorum be present and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, or a consent to hold such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting.

Section 4.  Action without Meeting.

Any action required or permitted to be taken by the Board of Directors at any meeting thereof or at any meeting of a committee thereof may be taken without a meeting if all members of the Board of Directors or such committee thereof consent thereto in writing and the writing or writings are filed with the minutes of the proceedings of the Board of Directors or such committee thereof.

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Section 5.  Compensation of Directors.

Unless otherwise restricted by law, the Certificate of Incorporation or these Bylaws, the Board of Directors shall have the authority to fix the compensation of directors. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

Section 6.  Committees of the Board.

(a)  Committees.    The Board of Directors may, by resolution adopted by the Board of Directors, designate one or more committees of the Board of Directors, each committee to consist of one or more directors. Each such committee, to the extent permitted by law, the Certificate of Incorporation and these Bylaws, shall have and may exercise such powers of the Board of Directors in the management and affairs of the Corporation as may be prescribed by the resolutions creating such committee. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. The Board of Directors shall have the power, at any time for any such reason, to change the members of any such committee, to fill vacancies, and to discontinue any such committee.

(b)  Minutes of Meetings.    Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required.

(c)  Limits on Authority of Committees.    No committee shall have the power or authority in reference to amending the Certificate of Incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in Section 151(a) of the General Corporation Law of the State of Delaware, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation, or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending any provision of these Bylaws; nor, unless the resolutions establishing such committee or the Certificate of Incorporation expressly so provide, shall any committee have the power or authority to declare a dividend, authorize the issuance of stock, adopt a certificate of ownership and merger, or fill vacancies in the Board of Directors.

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ARTICLE IV

OFFICERS

Section 1.  Officers.

(a)  Number.    The officers of the Corporation shall be a Chairman of the Board, a Chief Executive Officer, a President, a Secretary and a Chief Financial Officer. The Corporation may also have, at the discretion of the Board of Directors, one or more Vice Presidents, a Treasurer, one or more Assistant Secretaries, one or more Assistant Treasurers and such other officers as the Board of Directors may deem appropriate. The same person may hold any two or more offices, except those of President and Secretary.

(b)  Election and Term of Office.    The officers shall be elected annually by the Board of Directors at its next regular meeting following the annual meeting of the stockholders and each officer shall hold office until the next annual election of officers and until such officer’s successor is elected or until such officer’s death, resignation or removal. Any officer may be removed at any time, with or without cause, by the Board of Directors. Any vacancy occurring in any office may be filled by the Board of Directors.

(c)  Delegation of Authority.    The Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof.

(d)  Salaries.    The salaries of all officers of the Corporation shall be fixed by the Board of Directors or a committee thereof from time to time.

Section 2.  Chairman of the Board.

The Chairman of the Board or his designee as provided in this Article IV shall preside at all meetings of the stockholders and of the Board of Directors. The Chairman of the Board shall exercise and perform such other powers and duties as may from time to time be assigned to the Chairman by the Board of Directors.

Section 3.  Chief Executive Officer.

The Chief Executive Officer shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the Corporation. In addition, the Chief Executive Officer shall, in the absence of the Chairman of the Board or at his or her request, preside at all meetings of the stockholders and of the Board of Directors and shall exercise and perform such other powers and duties as may from time to time be assigned to the Chief Executive Officer by the Board of Directors.

Section 4.  President.

The President shall, in the absence of the Chairman of the Board and the Chief Executive Officer or at their request, preside at all meetings of the stockholders and of the Board of

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Directors, and shall exercise and perform such other powers and duties as may from time to time be assigned to the President by the Board of Directors.

Section 5.  Chief Financial Officer.

The Chief Financial Officer, who may, but need not, be the Treasurer, shall keep and maintain adequate and correct books and records of accounts of the Corporation, and shall see that all moneys and other valuables of the Corporation are deposited in the name and to the credit of the Corporation with such depositories as may be designated by the Board of Directors. The Chief Financial Officer shall disburse the funds of the Corporation as directed by the Board of Directors, shall render to the Chairman of the Board and the directors, whenever they request it, an account of all transactions in such officer’s official capacity and of the financial condition of the Corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors.

Section 6.  Vice Presidents.

The Vice Presidents shall have such powers and perform such duties as from time to time may be prescribed for them, respectively, by the Board of Directors, Chief Executive Officer or President.

Section 7.  Secretary and Assistant Secretaries.

The Secretary shall record or cause to be recorded, in books provided for the purpose, minutes of the meetings of the stockholders, the Board of Directors and all committees of the Board of Directors; see that all notices are duly given in accordance with the provisions of these Bylaws as required by law; in the absence of the Chairman of the Board, the Chief Executive Officer and President or at their request, preside at all meetings of the stockholders; be custodian of all corporate records (other than financial) and of the seal of the Corporation, and have authority to affix the seal to all documents requiring it and attest to the same; give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors; and, in general, shall perform all duties incident to the office of Secretary and such other duties as may, from time to time, be assigned to the Secretary by the Board of Directors, Chief Executive Officer or President. At the request of the Secretary, or in the Secretary’s absence or disability, any Assistant Secretary shall perform any of the duties of the Secretary and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Secretary.

Section 8.  Treasurer and Assistant Treasurers.

The Treasurer shall perform all other duties commonly incident to the Treasurer’s office and shall perform such other duties and have such other powers as the Board of Directors or the Chief Financial Officer shall designate from time to time. At the request of the Treasurer, or in the Treasurer’s absence or disability, any Assistant Treasurer may perform any of the duties of the Treasurer and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Treasurer. Except where by law the signature of the Treasurer is required, each of the

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Assistant Treasurers shall possess the same power as the Treasurer to sign all certificates, contracts, obligations and other instruments of the Corporation.

ARTICLE V

INDEMNIFICATION AND INSURANCE

Section 1.  Indemnification.

(a)  Actions, Suits or Proceedings Other Than By or in the Right of the Corporation.    The Corporation shall to the fullest extent permitted by the laws of the State of Delaware indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was or has agreed to become a director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another affiliated corporation, partnership, joint venture, trust or other enterprise (including, without limitation, service with respect to employee benefit plans) against all costs, charges, expenses (including attorneys’ fees), liabilities and losses, judgments, fines, amounts paid in settlement and excise taxes or penalties assessed with respect to any employee benefit or welfare plan reasonably incurred or suffered by him or her or on his or her behalf in connection with such action, suit or proceeding and any appeal therefrom, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, that the person had reasonable cause to believe that his or her conduct was unlawful.

(b)  Actions or Suits by or in the Right of the Corporation.    The Corporation shall indemnify to the fullest extent permitted by the laws of the State of Delaware any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was or has agreed to become a director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another affiliated corporation, partnership, joint venture, trust or other enterprise (including, without limitation, service with respect to employee benefit plans), against all costs, charges, expenses (including attorneys’ fees), judgments, amounts paid in settlement and excise taxes or penalties assessed with respect to any employee benefit or welfare plan reasonably incurred or suffered by him or her or on his or her behalf in connection with such action or suit and any appeal therefrom, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made under this Section 1(b) in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation, unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was

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brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper.

(c)  Indemnification for Costs, Charges and Expenses of Successful Party.    Notwithstanding any other provision of this Article V, to the extent that a director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1(a) or 1(b) of this Article V or in defense of any claim, issue or matter therein, he or she shall be indemnified against all costs, charges and expenses (including attorneys’ fees) actually and reasonably incurred by him or her or on his or her behalf in connection therewith.

(d)  Determination of Right to Indemnification.    Any indemnification under Sections 1(a) or 1(b) of this Article V (unless ordered by a court) shall be paid by the Corporation only as authorized in the specific case upon a determination that indemnification is proper in the circumstances because the indemnified person has met the applicable standard of conduct set forth in Sections 1(a) and 1(b) of this Article V. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel (who may be the regular counsel of the Corporation) in a written opinion, or (3) by the stockholders.

(e)  Advancement of Costs, Charges and Expenses.    Expenses (including attorneys’ fees) incurred by a director or officer referred to in Sections 1(a) or 1(b) of this Article V in defending a civil or criminal action, administrative or investigative action, suit or proceeding shall be paid by the Corporation, in advance of a determination of right to indemnification pursuant to Section 1(d) of this Article V or the final disposition of such action, suit or proceeding, upon the written request of such director or officer; provided, however, that the payment of such expenses in advance of the determination of right to indemnification or the final disposition of such action, suit or proceeding shall be made only upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such director or officer is not entitled to be indemnified by the Corporation as authorized in this Section 1 of Article V; and provided further that the payment of such expenses shall not be made if a court of competent jurisdiction enters a final nonappealable judgement that such payment would violate Section 402 of the Sarbanes-Oxley Act of 2002. The Board of Directors may, in such case, authorize the Corporation’s counsel to represent such person, in any action, suit or proceeding, whether or not the Corporation is a party to such action, suit or proceeding. Such costs, charges and expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate.

(f)   Procedure for Indemnification.    Any indemnification under Sections 1(a), 1(b) or 1(c) of this Article V or advance of expenses under Section 1(e) of this Article V shall be made promptly, and in any event within sixty (60) days, upon the written request of the indemnified person. The right to indemnification or advances as granted by this Section 1 of this Article V shall be enforceable by the indemnified person in any court of competent jurisdiction, if the

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Corporation denies such request, in whole or in part, or if no disposition thereof is made within such sixty (60) day period. Such person’s costs and expenses actually and reasonably incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses under Section 1 of this Article V where the required undertaking, if any, has been received by the Corporation) that the claimant has not met the standard of conduct set forth in Section 1(a) or 1(b) of this Article V, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Sections 1(a) or 1(b) of this Article V nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

(g)  Other Rights; Continuation of Right to Indemnification.    The indemnification and advancement of costs, charges and expenses provided by, or granted pursuant to, this Section 1 of this Article V shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of costs, charges and expenses may be entitled under any law (common or statutory), agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office as set forth in Sections 1(a) and 1(b) of this Article V or otherwise, and, unless otherwise provided when authorized or ratified, shall continue as to a person who has ceased to hold such office and shall inure to the benefit of the estate, heirs, executors and administrators of such person. All rights to indemnification under this Section 1 of this Article V shall be deemed to be a contract between the Corporation and each director and officer of the Corporation who serves or served in such capacity at any time while this Section 1 of this Article V is in effect. Any repeal or modification of this Section 1 of this Article V or any repeal or modification of Section 145 of the Delaware General Corporation Law or any other law affecting the rights of directors and officers of the Corporation to indemnification shall not adversely affect any rights of any such director or officer to indemnification or the obligations of the Corporation pursuant to this Section 1, Article V, with respect to any act or omission occurring prior to the time of such repeal or modification.

(h)  Indemnification of Employees and Other Agents.    The Board of Directors in its discretion shall have power on behalf of the Corporation, subject to applicable law, to indemnify any person made a party to any action, suit or proceeding by reason of the fact that such person, or his or her testator or intestate, is or was an employee or other agent of the Corporation and to advance costs, charges and expenses (including attorneys’ fees) incurred by such person in defending any such action, suit or proceeding.

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Section 2.  Insurance, Trust Fund, Etc.

The Corporation may purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against such person and incurred by such person, or arising out of such person’s capacity as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of law, the Certificate of Incorporation or these Bylaws. The Corporation may create a trust fund, grant a security interest and/or use other means (including, without limitation, letters of credit, surety bonds and/or other similar arrangements), as well as enter into contracts providing indemnification to the fullest extent authorized or permitted by law, the Certificate of Incorporation or these Bylaws and including as a part thereof provisions with respect to any or all of the foregoing to ensure the payment of such amounts as may become necessary to effect indemnification as provided in these Bylaws or elsewhere.

Section 3.  Limitations.

Notwithstanding anything contained in this Article V to the contrary, except for proceedings to enforce rights to indemnification provided by these Bylaws, the Corporation shall not be obligated to indemnify any person or advance any expenses in connection with a proceeding (or part thereof) initiated by such person or service by such person as a witness adverse to the Corporation, unless such proceeding (or part thereof) or such service was authorized by resolution of the Board of Directors.

Section 4.  Savings Clause.

If this Article V or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director and officer of the Corporation as to costs, charges and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the full extent permitted by any applicable portion of this Article V that shall not have been invalidated and to the full extent permitted by applicable law.

ARTICLE VI

CERTIFICATES FOR SHARES AND THEIR TRANSFER

Section 1.  Certificates for Shares.

Unless otherwise provided by a resolution of the Board of Directors, the shares of the Corporation shall be represented by a certificate. The certificates of stock of the Corporation shall be numbered and shall be entered in the books of the Corporation as they are issued. They shall exhibit the holder’s name and number of shares and shall be signed by or in the name of the Corporation by (a) the Chairman of the Board of Directors, the Chief Executive Officer, the President or any Vice President and (b) the Treasurer, any Assistant Treasurer, the Secretary or

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any Assistant Secretary. Any or all of the signatures on a certificate may be by facsimile. In case any officer of the Corporation, transfer agent or registrar who has signed, or whose facsimile signature has been placed upon such certificate, shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may nevertheless be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issuance.

Section 2.  Transfer.

Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

Section 3.  Record Owner.

The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof, and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of the State of Delaware or federal laws.

Section 4.  Lost Certificates.

The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as the Board of Directors shall require and to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

ARTICLE VII

MISCELLANEOUS

Section 1.  Record Date.

(a)  In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days prior to the date of such meeting nor more than

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sixty (60) days prior to any other action. If not fixed by the Board of Directors, the record date shall be determined as provided by the laws of the State of Delaware.

(b)  A determination of stockholders of record entitled to notice of or to vote at a meeting of the stockholders shall apply to any adjournments of the meeting, unless the Board of Directors fixes a new record date for the adjourned meeting.

(c)  Holders of stock on the record date are entitled to notice and to vote or to receive the dividend, distribution or allotment of rights or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the Corporation after the record date, except as otherwise provided by agreement or by law, the Certificate of Incorporation or these Bylaws.

Section 2.  Execution of Instruments.

The Board of Directors may, in its discretion, determine the method and designate the signatory officer or officers, or other persons, to execute any corporate instrument or document or to sign the corporate name without limitation, except where otherwise provided by law, the Certificate of Incorporation or these Bylaws. Such designation may be general or confined to specific instances.

Section 3.  Voting of Securities Owned by the Corporation.

All stock and other securities of other corporations held by the Corporation shall be voted, and all proxies with respect thereto shall be executed, by the person so authorized by resolution of the Board of Directors, or, in the absence of such authorization, by the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, or the Secretary.

Section 4.  Amendments.

In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, make, repeal, alter, amend and rescind from time to time any or all of the Bylaws of the Corporation, including, without limitation, Bylaw amendments increasing or reducing the authorized number of directors constituting the whole Board of Directors. The affirmative vote of the holders of at least a majority of the outstanding capital stock of the Corporation having general voting power, voting together as a single class, shall be required for the Corporation’s stockholders to adopt, make, repeal, alter, amend or rescind the Bylaws of the Corporation (notwithstanding any other provision of the Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition and subject to any vote of the holders of any class or series of stock of the Corporation required by law or by the Certificate of Incorporation).

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EX-15

EXHIBIT 15

Deloitte & Touche LLP

50 Fremont Street

San Francisco, California 94105-2230

Tel: (415) 783-4000

Fax: (415) 783-4329

www.deloitte.com

Deloitte

& Touche

December 5, 2002

The Gap, Inc.

Two Folsom Street

San Francisco, California 94105

We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of The Gap, Inc. and subsidiaries for the periods ended November 2, 2002 and November 3, 2001, as indicated in our report dated November 18, 2002; because we did not perform an audit, we expressed no opinion on that information.

We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended November 2, 2002, is incorporated by reference in the following Registration Statements on Form S-8: No. 2-72586, No. 2-60029, No. 33-39089, No. 33-40505, No. 33-54686, No. 33-54688, No. 33-54690, No. 33-56021, No. 333-00417, No. 333-12337, No. 333-36265, No. 333-68285, No. 333-72921, No. 333-76523, No. 333-47508, No. 333-59292, No. 333-88470, and No. 333-90414 and Registration Statement No. 333-87442 on Form S-3.

We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.

/s/ Deloitte & Touche LLP

San Francisco, California

EX-99.1

Exhibit 99.1

Certification of the Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of The Gap, Inc. (the “Company”) on Form 10-Q for the period ended November 2, 2002 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Paul S. Pressler, the President and Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ PAUL S. PRESSLER

Paul S. Pressler

President and Chief Executive Officer

December 9, 2002

Certification of the Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of The Gap, Inc. (the “Company”) on Form 10-Q for the period ended November 2, 2002 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Heidi Kunz, the Executive Vice President and Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ HEIDI KUNZ

Heidi Kunz

Executive Vice President and

Chief Financial Officer

December 9, 2002