BALANCE SHEET; WINNERS AND LOSERS ON THE FISCAL BATTLEFIELD.

Daily News Record, October, 2003 by KARR, ARNOLD J.

GAP INC.'s earnings and sales have been stronger than its competitors' for months, and its stock has returned to levels not seen since early in the decade. So why do all three credit rating agencies -- Standard & Poor's, Moody's Investors Service and Fitch Ratings -- still rate its debt as noninvestment, or "junk," grade? Moody's and Fitch recently revised their corporate outlooks on the San Francisco-based retail giant to "stable" from "negative." Sabrina Simmons, Gap's senior vice-president and treasurer, pointed out that although S&P, the lone holdout, has maintained its negative evaluation since May 2002, its rating on Gap debt is just one tick below the junk/investment border, but Moody's and Fitch are three notches below. Gap is further saddled, according to...

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