The full report is available online at www.gapinc.com.

"We recognize our responsibility to be a catalyst for sustainable change, and believe an integrated approach that includes collaborative multi-stakeholder engagement can help drive lasting progress across our industry," said Gap Inc. CEO and President Paul Pressler. "Although we still face many challenges, we are encouraged by the progress we've made over the past year across several areas."

The report was prepared with input and guidance from the Public Reporting Working Group - a group of advisors from the socially responsible investment community that joined together in late 2002 to help the company increase transparency around its operations and ethical sourcing work. The group is comprised of Domini Social Investments, the Calvert Group, the As You Sow Foundation, the Center for Reflection, Education and Action, and the Interfaith Center on Corporate Responsibility.

As part of a statement included in the report, the working group said: "We believe that Gap Inc. has made substantial progress in focusing on the connections between its core business, systemic global concerns and workers' lives."

The report places particular emphasis on the continued evolution of Gap Inc.'s extensive factory monitoring program, which employs more than 90 people around the world, most of whom are Vendor Compliance Officers (VCOs) who visit factories, conduct inspections, document violations and work with garment manufacturers to improve conditions on a daily basis.

In 2004, Gap Inc. monitored 99.9% of garment factories approved for production for all of fiscal year 2004 - up from 94% in 2003. Gap Inc. also invited Social Accountability International (SAI) and Verité to conduct thorough assessments of its monitoring program and inspection protocols. Insights from the analyses are helping the company drive continued improvement in its monitoring techniques and strategies.

Gap Inc.'s 2004 report also outlines how the company is working to integrate labor standards into its business practices and supply chain operations by building closer relationships with garment manufacturers, reducing inefficiencies in its supply chain process and re-evaluating its purchasing practices. For example, in 2004, the company hosted its first-ever Vendor Summit, a forum designed to share business and sourcing strategies as well as set expectations with top garment manufacturers from around the world.

Underscoring the company's continued focus on stakeholder engagement, the report also cites expanded collaboration efforts through multi-stakeholder initiatives and with external stakeholders and training organizations. Gap Inc. has been actively involved in the Multi-Fiber Arrangement (MFA) Forum, a multi-stakeholder effort that has developed a broad set of recommendations to help stakeholders responsibly manage the transition to a post-quota environment. The company also continued to support the work of the International Labor Organization (ILO) to improve working conditions and boost productivity in Cambodian factories.

In addition to a focus on Gap Inc.'s ethical sourcing practices, the report describes activities in other areas of Social Responsibility:

"Over the past year, we've learned the power of collective engagement, and of open, honest discussion about the issues that we and many other companies face," Mr. Pressler said. "We know we still have a long way to go. That's why we're continuing to push the boundaries of what's possible, developing new programs and learning along the way."

Gap Inc. is a leading international specialty retailer offering clothing, accessories and personal care products for men, women, children and babies under the Gap, Banana Republic and Old Navy brand names. Fiscal 2004 sales were $16.3 billion. Gap Inc. operates about 3,000 stores in the United States, the United Kingdom, Canada, France and Japan. For more information, please visit gapinc.com.