As filed with the Securities and Exchange Commission on February 17, 1998
Registration No. 333-_____
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
ABERCROMBIE & FITCH CO.
(Exact name of Registrant as specified in its charter)
Delaware 5651 31-1469076
(State or jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation Classification Code Number) Identification No.)
or organization) Four Limited Parkway East
Reynoldsburg, OH 43068
(614) 577-6500
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
-------------------------
Seth R. Johnson
Four Limited Parkway East
Reynoldsburg, OH 43068
(614) 577-6500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-------------------------
COPIES TO:
David L. Caplan, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
(212) 450-4000
Approximate date of commencement of proposed sale to the public: As
promptly as practicable after this Registration Statement becomes effective
and the other conditions to the commencement of the Exchange Offer described
herein have been satisfied or waived.
If any of the securities being registered on this form are to be offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
-------------------------
<TABLE>
<S> <C> <C> <C> <C>
CALCULATION OF REGISTRATION FEE
============================================================================================================================
Proposed Maximum Proposed Maximum
Title Of Each Class Of Amount to be Offering Price Aggregate Offering Amount of
Securities to be Registered Registered(1) Per Unit(2) Price(2) Registration Fee
- ----------------------------------------------------------------------------------------------------------------------------
Class A Common Stock, par value $.01
per share 43,000,000 shares $29.125 $1,252,375,000.00 $369,451.00
============================================================================================================================
</TABLE>
- ---------------
(1) The maximum number of shares of Class A common stock ("A&F Common Stock")
of Abercrombie & Fitch Co. ("A&F") offered in exchange for shares of the
common stock ("Limited Common Stock") of The Limited, Inc. ("The Limited"),
as described in the Offering Circular-Prospectus filed as part of this
Registration Statement.
(2) Estimated solely for purposes of calculating the registration fee and
computed pursuant to Rule 457(f)(1) under the Securities Act of 1933, as
amended, based on $29.125, the average of the high and low per share
trading prices reported on the New York Stock Exchange Composite Tape on
February 9, 1998 for the Limited Common Stock to be purchased by The
Limited in exchange for shares of A&F Common Stock.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SAID SECTION 8(A), MAY DETERMINE.
==============================================================================
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 17, 1998 --
SUBJECT TO COMPLETION.
[LTD LOGO]
EXCHANGE OFFER -
IMPORTANT
The Limited has announced a plan to establish its Abercrombie & Fitch
subsidiary as a fully independent public company. In order to implement this
plan and distribute its A&F shares, The Limited is offering you, as a
stockholder, the opportunity to exchange (on a tax free basis) shares of The
Limited which you own for shares of A&F. The Limited currently owns
43,000,000 A&F shares.
This Exchange Offer will be conducted as a modified "Dutch auction". What
that means is that you will be able to select, from within a range, the
exchange ratio at which you are willing to exchange some or all of your
Limited shares for shares of A&F. This exchange ratio range is not more than
___ nor less than ___ of a share of A&F for each share of The Limited.
Based on the exchange ratios selected by fellow tendering stockholders, The
Limited will select as the final exchange ratio the lowest exchange ratio that
will permit the maximum number of shares of A&F owned by The Limited to be
exchanged. This final exchange ratio would apply to all Limited shares
accepted for exchange.
In order to facilitate a successful distribution of A&F shares, The Limited
anticipates that the final exchange ratio will provide tendering stockholders
with shares of A&F having a market value greater than the market value of the
Limited shares tendered. We will refer to this greater value in this document
as the "Anticipated Premium." Based on the trading prices for A&F and Limited
shares on _____, 1998, the Anticipated Premium would be approximately ___%
using the minimum exchange ratio and approximately ___% using the maximum
exchange ratio. We cannot, however, predict what the amount of any Anticipated
Premium will be.
If the collective response of stockholders is such that more than 43,000,000
shares of A&F would be exchanged at the final exchange ratio, then the number
of Limited shares to be accepted from each stockholder who tendered shares at
or below the final exchange ratio will be reduced on a pro rata basis. If
fewer than 43,000,000 shares of A&F would be exchanged, The Limited will
accept all shares tendered at or below the final exchange ratio, and will
distribute its remaining A&F shares to its stockholders at the time on a pro
rata basis through a "spin-off" transaction.
Whether you should participate in the Exchange Offer depends on many factors.
You should consider, among other things, (i) your view of the relative values
of a single Limited share and a single A&F share, (ii) the opportunity to
receive the Anticipated Premium and (iii) your investment strategy with regard
to the two stocks. Neither The Limited nor A&F nor any of their respective
directors makes any recommendation as to whether you should tender shares. You
must make your own decision after reading this document and consulting with
your advisors based on your own financial position and requirements. We urge
you to read this Offering Circular-Prospectus very carefully.
The Exchange Offer is subject to certain conditions, including that enough
Limited shares are tendered so that at least 90% of the A&F shares owned by
The Limited (38,700,00 out of a total of 43,000,000 shares) can be exchanged
for Limited shares and that we receive a private letter ruling from the
Internal Revenue Service to the effect that the Exchange Offer (and Spin-Off,
if any) will generally be tax-free for The Limited and its stockholders. The
Exchange Offer, proration period and withdrawal rights will expire at 12:00
midnight, New York City time, on _____________, 1998, unless extended.
The Limited has retained the services of D.F. King & Co., as Information
Agent, and Goldman, Sachs & Co., as Dealer Managers, to assist you in
connection with the Exchange Offer. You may call either the Information Agent
(1-800-549-6864, toll-free) or the Dealer Managers (1-800-323-5678, toll-free)
directly to request additional documents and to ask any questions.
LESLIE H. WEXNER
Chairman, CEO and President
The Limited, Inc.
Neither the Securities and Exchange Commission nor any state securities
regulators have approved the Abercrombie & Fitch Common Stock to be issued
in the Exchange Offer or determined if this Offering Circular-Prospectus is
accurate or adequate. Any representation to the contrary is a criminal
offense.
The Dealer Managers for this Exchange Offer are:
Goldman, Sachs & Co.
Offering Circular-Prospectus, dated __________, 1998
Information contained in this Offering Circular-Prospectus is subject to
completion or amendment. A registration statement relating to the A&F
Common Stock has been filed with the Securities and Exchange Commission.
The A&F Common Stock may not be sold nor may offers to buy be accepted
prior to the time the registration statement becomes effective. This
prospectus shall not constitute an offer to buy nor shall there be any sale
of A&F Common Stock in any state in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such state.
TABLE OF CONTENTS
Page
----
QUESTIONS AND ANSWERS ABOUT THE EXCHANGE OFFER...............................1
SUMMARY......................................................................6
The Companies................................................................6
Backgroung and The Limited's Reasons for the Exchange Offer..................6
The Exchange Offer Generally.................................................7
The Exchange Offer...........................................................7
The Limited, Inc. Summary Historical Consolidated Financial Data............10
The Limited, Inc. Summary Unaudited Pro Forma Condensed Consolidated
Financial Data............................................................12
A&F Summary Historical Consolidated Financial Data..........................13
RISK FACTORS................................................................14
Risk Factors Regarding A&F..................................................14
Risk Factor Regarding the Anticipated Premium...............................15
Risk Factor Regarding Forward-Looking Information...........................16
THE TRANSACTIONS............................................................17
Background and Purpose......................................................17
Effects.....................................................................19
No Appraisal Rights.........................................................19
Regulatory Approvals........................................................19
Accounting Treatment........................................................19
Forward Looking Statements May Prove Inaccurate.............................20
THE EXCHANGE OFFER..........................................................21
Terms of the Exchange Offer.................................................21
Exchange of Shares of Limited Common Stock..................................23
Determining to Participate in the Exchange Offer............................24
Procedures for Tendering Shares of Limited Common Stock.....................26
Guaranteed Delivery Procedure...............................................28
Special Procedures for Participants in the Savings and Retirement Plan,
the Stock Purchase Plan and the Dividend Reinvestment Plan................29
Withdrawal Rights...........................................................30
Extension of Tender Period; Termination; Amendment..........................30
Conditions to Consummation of the Exchange Offer............................32
Fees and Expenses...........................................................33
THE SPIN-OFF................................................................34
MARKET PRICES, TRADING AND DIVIDEND INFORMATION.............................35
Limited Common Stock........................................................35
A&F Common Stock............................................................36
CAPITALIZATION..............................................................37
THE LIMITED, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS................................................................38
BUSINESS OF A&F.............................................................43
Business Strengths..........................................................43
Growth Strategy.............................................................44
A&F Stores..................................................................45
Merchandising...............................................................46
Marketing and Promotion.....................................................47
Associates..................................................................48
Sourcing....................................................................48
Central Store Planning......................................................48
Central Real Estate Management..............................................49
Merchandise Distribution....................................................49
Management Information Systems..............................................49
Trademarks and Servicemarks.................................................50
Competition.................................................................50
Properties..................................................................51
BUSINESS OF THE LIMITED.....................................................53
MANAGEMENT OF A&F...........................................................54
Board of Directors..........................................................54
SHARES ELIGIBLE FOR FUTURE USE..............................................54
COMPARISON OF RIGHTS OF HOLDERS OF LIMITED COMMON STOCK AND A&F COMMON
STOCK.....................................................................54
Actions by the Stockholders.................................................55
Number of Directors.........................................................55
Business Combinations.......................................................55
Authorized Shares of Stock..................................................56
Transactions with Interested Parties........................................56
RELATIONSHIP BETWEEN THE LIMITED AND A&F....................................57
Services Agreements.........................................................57
Sublease Agreements.........................................................57
Shared Facilities Agreements................................................57
Tax-Separation Agreement....................................................58
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.....................................59
LEGAL MATTERS...............................................................60
EXPERTS.....................................................................60
WHERE YOU CAN FIND MORE INFORMATION.........................................61
LIST OF DEFINED TERMS.......................................................63
QUESTIONS AND ANSWERS ABOUT THE EXCHANGE OFFER
Q1: Why has The Limited decided to separate A&F from the rest of the company?
A1: For the past several years, we have been reviewing The Limited's
organizational structure to better address the management requirements of a
large, multi-division, specialty retail company. We have taken a number of
significant steps to address these organizational and management issues and to
better position The Limited's retail businesses to realize their full
potential. At the same time, we have also taken actions intended to maximize
stockholder value because we believe that the price of Limited shares has not
reflected the inherent value of The Limited's various businesses. To further
these objectives, we determined after much consideration that the complete
separation of A&F from The Limited would be in the best interests of A&F, The
Limited and their respective stockholders. This transaction is intended to
allow A&F, which has demonstrated that it has an established brand and a
proven and profitable growth strategy, to grow as an independent company. At
the same time, the separation of A&F allows The Limited to focus its resources
on brands where we can add more value.
Q2: Why did The Limited choose the Exchange Offer as the way to separate A&F?
A2: We chose the Exchange Offer because we believe it is a tax efficient way
to distribute value to you, gives you a choice to adjust your investment
between The Limited and A&F on a tax-free basis, provides you with the
opportunity to receive the Anticipated Premium, demonstrates our confidence in
The Limited and is expected to have the effect of increasing The Limited's
earnings per share.
Q3: What is a "modified-Dutch auction?"
A3: A modified "Dutch auction" means that you pick the exchange ratio at
which you are willing to exchange some or all of your Limited shares for
shares of A&F from within the specified range of not more than ___ nor less
than ___ of a share of A&F for each share of The Limited.
Q4: What is the "exchange ratio?"
A4: The exchange ratio represents the number of A&F shares which Limited
stockholders will receive for each Limited share tendered in the Exchange
Offer.
Q5: How will The Limited decide on the final exchange ratio?
A5: The Limited will select as the final exchange ratio the lowest exchange
ratio that would permit the maximum number of the shares of A&F owned by The
Limited to be exchanged in the Exchange Offer. The final exchange ratio will
apply to all tendering stockholders whose Limited shares are accepted for
exchange.
Q6: How do I decide whether to participate in the Exchange Offer?
A6: Whether you should participate in the Exchange Offer depends on many
factors. You should consider, among other things, (i) your view of the
relative values of a single Limited share and a single A&F share, (ii) the
opportunity to receive the Anticipated Premium and (iii) your investment
strategy with regard to the two stocks. In addition, you should consider all
of the factors described under "Risk Factors" starting at page 14. Neither
The Limited nor A&F nor any of their respective directors makes any
recommendation as to whether you should tender your Limited shares. You must
make your own decision after reading this document and consulting with your
advisors based on your own financial position and requirements.
Q7: What is the Anticipated Premium?
A7: Based on the closing trading prices for Limited (NYSE: LTD) and A&F
shares (NYSE: ANF) on ______, 1998, any of the designated exchange ratios
would result in a Limited stockholder receiving A&F shares with a market value
greater than the Limited shares tendered for exchange. We cannot, however,
predict what the amount of the Anticipated Premium, if any, will be or the
prices at which A&F or Limited shares will trade over time.
You can calculate the Anticipated Premium using the following formula:
Exchange Ratio x Price of one A&F share
--------------------------------------------- -1
Price of one Limited share
For example: Assume a price of $____ for a Limited share and a price of $____
for an A&F share (the closing trading prices of Limited and A&F shares on
__________, 1998). At an exchange ratio of ____ of a share of A&F for each
Limited share (the midpoint of the range of exchange ratios), the Anticipated
Premium would be approximately ___%. At the minimum exchange ratio of ___,
the Anticipated Premium would be approximately ___%. At the maximum exchange
ratio of ___, the Anticipated Premium would be approximately ___%.
Q8: Can I participate with only a portion of my Limited shares in the Exchange
Offer?
A8: Yes, you may tender some or all of your Limited shares.
Q9: Do I do anything if I want to retain my Limited shares?
A9: No. If you want to retain your Limited shares, you do not need to take
any action.
Q10: If I decide to participate in the Exchange Offer, how do I select an
appropriate exchange ratio?
A10: In selecting an exchange ratio, you should consider your view of the
value of one share of Limited compared to that of one share of A&F, as well as
the level of certainty that you desire that your tender will be accepted in
the Exchange Offer. The higher your exchange ratio, the lower the likelihood
that your shares will be accepted for exchange. In other words, a tender at
an exchange ratio greater than the final exchange ratio will not be accepted.
Conversely, the lower your exchange ratio, the higher the likelihood that your
shares will be accepted for exchange. See "The Exchange Offer--Determining to
Participate in the Exchange Offer--Selecting an Exchange Ratio", page 25.
Q11: What happens if I select an exchange ratio higher than the final exchange
ratio?
A11: You will not participate in the Exchange Offer and the Limited shares you
tendered will be returned to you.
Q12: What happens if I select either the exchange ratio selected by the
modified Dutch Auction or a specific exchange ratio which is equal to or lower
than the final exchange ratio?
A12: You will participate in the Exchange Offer at the final exchange ratio,
but the actual number of your Limited shares accepted for exchange will depend
on whether the Exchange Offer is oversubscribed.
Q13: How can I make sure that I will participate in the Exchange Offer?
A13: To ensure participation in the Exchange Offer, you should check the box
marked "Shares Tendered at Exchange Ratio Determined by Dutch Auction"
indicating that you will accept whatever the final exchange ratio is
determined to be. In this case you will participate in the Exchange Offer,
but the actual number of your Limited shares accepted for exchange will depend
on whether the Exchange Offer is oversubscribed. If the Exchange Offer is
oversubscribed, you will participate on a pro rata basis.
Q14: Can I select more than one exchange ratio?
A14: The same shares may not be tendered at more than one exchange ratio. You
may, however, tender different shares at different exchange ratios, but you
must complete separate Letters of Transmittal for each exchange ratio selected.
Q15: What is proration?
A15: Proration will occur if the Exchange Offer is oversubscribed. That is,
if the number of Limited shares tendered exceeds the number of A&F shares
available for exchange at the final exchange ratio. In this case, all Limited
shares that are tendered at or below the final exchange ratio will be accepted
for exchange on a pro rata basis at the final exchange ratio.
Q16: Will Leslie Wexner be tendering his Limited shares in the Exchange Offer?
A16: No. Consistent with the goal of completely separating A&F from The
Limited, Mr. Wexner has decided not to tender his Limited shares.
Q17: How do I participate in the Exchange Offer?
A17: Complete and sign the Letter of Transmittal designating the number of
Limited shares you wish to tender and either your willingness to accept the
final exchange ratio determined by the modified Dutch auction or the specific
exchange ratio at which you are tendering. Send it, together with your share
certificates and any other documents required by the Letter of Transmittal, by
registered mail, return receipt requested, so that it is received by the
Exchange Agent at one of the addresses set forth on the back cover of this
Offering Circular-Prospectus before the expiration of the Exchange Offer. Do
not send your certificates to The Limited, A&F, the Dealer Managers (Goldman,
Sachs & Co.), any soliciting dealer or the Information Agent (D.F. King).
Q18: Will participants in The Limited's Dividend Reinvestment Plan be able to
participate in the Exchange Offer?
A18: Yes. Each participant in the Dividend Reinvestment Plan may tender some
or all of the Limited shares attributable to his or her plan account.
Q19: Will participants in The Limited's Savings and Retirement Plan be able
to participate in the Exchange Offer?
A19: Yes. Each participant in the Savings and Retirement Plan may instruct
the trustee of the plan to tender some or all of the Limited shares
attributable to his or her plan account. Separate forms will be sent to each
plan participant for use in directing the trustee.
Q20: Will participants in The Limited's Stock Purchase Plan be able to
participate in the Exchange Offer?
A20: Yes. Each participant in the Stock Purchase Plan may instruct the
agents for such plan to tender some or all of the Limited shares attributable
to his or her plan account. Separate forms will be sent to each plan
participant for use in directing the agent.
Q21: My shares are held by my broker. What should I do if I want to
participate in the Exchange Offer?
A21: If your shares are held by your broker and are not certificated in your
name (i.e., your shares are in "street name"), you should receive instructions
from your broker on how to participate. In this situation, you do not need to
complete the Letter of Transmittal. If you have not yet received instructions
from your broker, please contact your broker directly.
Q22: Can I change my mind after I tender my Limited shares?
A22: Yes. You may withdraw tenders of your shares any time before the
expiration of the Exchange Offer. If you change your mind again, you can
retender your Limited shares by following the tender procedures again prior to
the expiration of the Exchange Offer.
Q23: Are there any conditions to the Limited's obligation to complete the
Exchange Offer?
A23: Yes, The Limited's obligation to complete the Exchange Offer is subject
to the conditions outlined on page 32. In particular, we will not close the
Exchange Offer unless enough Limited shares are tendered so that at least
38,700,000 shares of A&F stock can be distributed to Limited stockholders. We
refer to the number of Limited shares that must be tendered to produce this
result as the "Trigger Amount". In addition, The Limited will not complete
the Exchange Offer unless it receives a private letter ruling from the Internal
Revenue Service to the effect that the Exchange Offer and Spin-Off, if any,
generally will be tax-free to The Limited and its stockholders.
Q24: What happens if the number of Limited shares tendered is such that more
than 38,700,000 A&F shares, but fewer than 43,000,000 A&F shares, would be
exchanged?
A24: A&F shares held by The Limited after completion of the Exchange Offer
will be distributed to its stockholders on a pro rata basis. We refer to this
distribution as the "Spin-Off".
Q25: What happens if the number of Limited shares tendered is such that more
than 43,000,000 shares of A&F would be exchanged, i.e., the Exchange Offer is
oversubscribed?
A25: All Limited shares which are tendered at or below the final exchange
ratio will be accepted for exchange on a pro rata basis at the final exchange
ratio. Any shares not accepted for exchange will be returned to tendering
stockholders.
Q26: When does the Exchange Offer expire?
A26: The Exchange Offer, proration period and withdrawal rights will expire
at 12:00 midnight, New York City time, on__________, 1998, unless extended.
Your instructions must be received before then in order to participate in the
Exchange Offer.
Q27: When will tendering stockholders know the outcome of the Exchange Offer?
A27: Preliminary results of the Exchange Offer, including any preliminary
proration factor, will be announced by press release promptly after the
expiration of the Exchange Offer. Announcement of any final proration factor
should occur approximately seven business days after the expiration of the
Exchange Offer.
Q28: Will I be taxed on the shares of A&F that I receive in the Exchange Offer?
A28: The Limited has requested a private letter ruling from the Internal
Revenue Service to the effect that the Exchange Offer (and the subsequent
Spin-Off, if any) will generally be tax-free to The Limited and its
stockholders. The receipt of cash for a fractional A&F share will be taxable
as a capital gain or loss if your Limited shares were held as a capital asset.
Each stockholder should consult his or her tax advisor as to the particular
consequences of the Exchange Offer and Spin-Off to such stockholder.
Q29: What will be the tax basis and holding period of A&F shares I receive in
exchange for my Limited shares?
A29: If you tender all of your Limited shares and they are all accepted for
exchange, the tax basis in the A&F shares you receive will equal your tax
basis in your Limited shares before the exchange.
If you tender fewer than all of your Limited shares or fewer than all of your
Limited shares are accepted for exchange, the total tax basis in the Limited
and A&F shares that you hold immediately after the exchange will equal your
tax basis in your Limited shares before the exchange; however, the basis of
the A&F shares you receive will not necessarily equal the basis of the Limited
shares that are accepted for exchange. The portion of your total tax basis
allocated to the A&F shares you receive in the Exchange Offer will equal your
old tax basis in the Limited shares multiplied by a fraction. The fraction
will be equal to (i) the aggregate market value ("FMV") of the A&F shares you
receive in the Exchange Offer divided by (ii) the market value of the A&F
shares plus the market value of the Limited shares on the date of exchange.
Stated as a formula, the basis in your A&F shares received in the Exchange
Offer may be determined as follows:
<TABLE>
<S> <C> <C>
Basis in A&F received in the Basis in The Limited prior to FMV of A&F received in the
Exchange Offer = the Exchange Offer Exchange Offer
x -----------------------------
FMV of A&F FMV of The
received in + Limited held
Exchange Offer immediately after
the Exchange Offer.
</TABLE>
If additional shares of A&F are received in the Spin-Off, the same calculation
must be repeated using the basis in the Limited shares, as determined
following the Exchange Offer as the starting point in the calculation.
Your holding period in the A&F shares you receive in the Transactions
generally will include your holding period for Limited shares.
Q30: What will be the tax basis in Limited shares that are not exchanged
pursuant to the Exchange Offer?
A30: If you tender fewer than all of your Limited shares, or fewer than all
of your Limited shares are accepted for exchange, the total tax basis in your
remaining Limited shares will equal your total tax basis in Limited shares
before the exchange, less the basis allocated to A&F shares as determined
under the calculation described in the answer to the preceding question.
Q31: Doesn't A&F have two classes of stock? How will they be affected by the
Transactions?
A31: A&F currently has two classes of common stock, Class A, which is
publicly held, and Class B, which is all held by The Limited. All Class B
shares will be converted into Class A shares prior to the completion of the
Exchange Offer. As a result, there will be no Class B shares after the
consummation of the Exchange Offer. Accordingly, we have referred to the
Class A shares as the A&F shares or the A&F Common Stock in this document.
Q32: What happens to my Limited dividend in light of the Exchange Offer?
A32: If you were a Limited stockholder on March 6, 1998, you would still be
entitled to your quarterly dividend of $0.13 payable on March 17, 1998 even if
you tender shares in the Exchange Offer. In the future, however, you will not
receive a Limited dividend for any Limited shares exchanged in the Exchange
Offer because you will no longer own such shares. You would continue to
receive the regular Limited dividend for any Limited shares that are not
exchanged in the Exchange Offer. A&F does not currently pay a dividend on its
shares.
Q33: Have other companies pursued such an exchange offer?
A33: Yes. Examples of similar exchange offers include recent transactions
involving Lockheed Martin Corporation, Eli Lilly and Company and Viacom
International Inc.
Q34: Who should I call if I have questions or want copies of additional
documents?
A34: You may call either the Information Agent (1-800-549-6864, toll-free) or
the Dealer Managers (1-800-323-5678, toll-free) directly to request additional
documents and to ask any questions.
SUMMARY
This summary highlights selected information from this Offering
Circular-Prospectus and may not contain all the information that is important
to you. To understand the Exchange Offer fully and for a more complete
description of the legal terms of the Exchange Offer, you should read
carefully this entire document and the documents to which we have referred
you. See "Where You Can Find More Information" on page 61. We have included
page references in parentheses to direct you to a more complete description of
the topics presented in this summary.
The Companies
The Limited, Inc.
Three Limited Parkway
P.O. Box 16000
Columbus, Ohio 43230
(614) 479-7000
The Limited is engaged in the purchase, distribution and sale of women's
apparel, lingerie, men's apparel, personal care products, children's apparel
and a wide variety of sporting goods. The Limited operates an integrated
distribution system which supports its retail activities. These activities
are conducted under various trade names through the retail stores and
catalogue businesses of The Limited. Merchandise is targeted to appeal to
customers in specialty markets who have distinctive consumer characteristics.
The Limited's women's apparel businesses offer regular and special-sized
fashion apparel at various price levels, including shirts, blouses, sweaters,
pants, skirts, coats and dresses. In addition, The Limited offers lingerie
and accessories, men's apparel, fragrances, bath, personal care products,
specialty gift items, children's apparel and a wide variety of sporting goods.
The Limited conducts its principal operations through wholly-owned
subsidiaries, its 83% owned-subsidiary, Intimate Brands, Inc., and A&F. For
more detail on the business of The Limited, see page 53.
Abercrombie & Fitch Co.
Four Limited Parkway East
P.O. Box 182168
Reynoldsburg, Ohio 43218
(614) 577-6500
Abercrombie & Fitch is engaged in the purchase, distribution and sale of men's
and women's casual apparel. A&F's retail activities are conducted through
retail stores bearing the Abercrombie & Fitch name. Merchandise is targeted
to appeal to customers in specialty markets who have distinctive consumer
characteristics. An initial public offering of 8,050,000 shares of A&F's
Class A Common Stock was completed on October 1, 1996 and, as a result,
approximately 84% of the outstanding common stock of A&F is owned by The
Limited. For more detail on the business of A&F, see page 43.
Background and The Limited's Reasons for the Exchange Offer
For the past several years, we have been reviewing The Limited's
organizational structure to better address the management requirements of a
large, multi-division, specialty retail company. We have taken a number of
significant steps to address these organizational and management issues and to
better position The Limited's retail businesses to realize their full
potential. At the same time, we have also attempted to take actions intended
to maximize stockholder value because we believe that the price of Limited
shares has not reflected the inherent value of The Limited's various
businesses. To further these objectives, we determined after much
consideration that the complete separation of A&F from The Limited would be in
the best interests of A&F, The Limited and their respective stockholders. The
Exchange Offer is intended to allow A&F, which has demonstrated that it has an
established brand and a proven and profitable growth strategy, to grow as an
independent company. At the same time, the separation of A&F allows The
Limited to focus its resources on brands where it can add more value. We chose
the Exchange Offer because we believe it is a tax efficient way to distribute
value to you, gives you a choice to adjust your investment between The Limited
and A&F on a tax-free basis, provides you with the opportunity to receive the
Anticipated Premium, demonstrates our confidence in The Limited and is
expected to have the effect of increasing The Limited's earnings per share.
To review the reasons for the Exchange Offer in greater detail, see page 17.
The Exchange Offer Generally (See page 17)
Effects of the Exchange Offer
Limited stockholders will be affected by the Exchange Offer regardless of
whether they tender their Limited shares in the Exchange Offer. Stockholders
who tender all their Limited shares will, if all such shares are accepted for
exchange, no longer have an ownership interest in The Limited and will no
longer participate in any change in the value of The Limited. Stockholders
who exchange some, but not all of their Limited shares in the Exchange Offer
will have a diminished ownership interest in The Limited and an increased
ownership interest in A&F. Stockholders who do not tender any of their Limited
shares will receive shares of A&F only as a result of the Spin-Off, and will
continue to have an ownership interest in The Limited, which ownership
interest will have increased on a percentage basis as a result of the Exchange
Offer.
The Position of The Limited and A&F on the Exchange Offer
Neither The Limited nor A&F nor any of their respective directors makes any
recommendation as to whether you should tender any of your Limited shares.
Among the factors which you should consider when deciding whether to tender
your Limited shares are (i) your view of the relative value of a single share
of The Limited and A&F, (ii) the opportunity to receive the Anticipated
Premium and (iii) your investment strategy with regard to the two stocks.
Based on the closing trading prices of A&F and Limited shares on _________,
1998, the Anticipated Premium would be approximately ___% using the minimum
exchange ratio and approximately ___% using the maximum exchange ratio. We
cannot, however, predict what the amount of the Anticipated Premium will be or
whether in fact there will be a premium at the expiration of the Exchange Offer
or the prices at which A&F or Limited shares will trade over time. You must
make your own decision as to whether to tender, and, if so, how many shares
and at what exchange ratio to tender after reading this Offering
Circular-Prospectus and consulting with your advisors based on your own
financial position and requirements. We urge you to read this document very
carefully.
No Appraisal Rights
No appraisal rights are available to stockholders of The Limited in connection
with the Exchange Offer or the Spin-Off.
Certain Federal Income Taxes (See page 59)
The Limited has requested a private letter ruling from the Internal Revenue
Service to the effect that the Exchange Offer (and the subsequent Spin-Off,
if any) generally will be tax-free to The Limited and its stockholders. The
receipt of cash for a fractional share of A&F Common Stock will be taxable as
a capital gain or loss if the Limited shares tendered were held as a capital
asset. Each stockholder should consult his or her tax advisor as to the
particular consequences of the Exchange Offer and Spin-Off to such stockholder.
The Exchange Offer
Terms of the Exchange Offer (See page 21)
The Limited is offering to exchange up to 43,000,000 A&F shares for Limited
shares at an exchange ratio not greater than ___ nor less than ___ of a share
of A&F for each share of The Limited. The Exchange Offer will be conducted as
a modified "Dutch auction" which means that you pick the exchange ratio at
which you are willing to exchange some or all of your Limited shares for
shares of A&F from within the specified range. Whether, and to what extent,
your Limited shares will be accepted for exchange will depend on how your
exchange ratio compares to the exchange ratios selected by other tendering
stockholders. So, a "Dutch auction" is basically a competitive bid between you
and other Limited stockholders. Your exchange ratio must be within the range
set by The Limited. If you wish to maximize the chance that your Limited
shares will be exchanged for A&F shares, you may check the box marked "Shares
Tendered at Exchange Ratio Determined by Dutch Auction" on the Letter of
Transmittal indicating that you will accept whatever the final exchange ratio
is determined to be. Limited shares tendered at exchange ratios above the
final exchange ratio will not be accepted for exchange.
After the expiration of the Exchange Offer, The Limited will select the lowest
exchange ratio which would permit the maximum number of the shares of A&F
owned by The Limited to be exchanged in the Exchange Offer at the final
exchange ratio.
All Limited shares properly tendered and not withdrawn, at exchange ratios at
or below the final exchange ratio will be exchanged at the final exchange
ratio, on the terms and subject to the conditions of the Exchange Offer,
including the proration provisions. Any shares not accepted for exchange
will be returned to stockholders promptly following the expiration of the
Exchange Offer.
Expiration Date; Extension; Termination (See page 30)
The Exchange Offer, proration period and withdrawal rights will expire at
12:00 midnight, New York City time, on ________, 1998, unless extended. You
must tender your Limited shares on or prior to such expiration date if you
wish to participate in the offer. The Exchange Offer may also terminate or be
terminable in certain circumstances.
Withdrawal Rights (See page 30)
You may withdraw tenders of Limited shares any time before the expiration of
the Exchange Offer. If you change your mind again, you may retender your
Limited shares by following the tender procedures again prior to the
expiration of the Exchange Offer.
Conditions of the Exchange Offer (See page 32)
The Exchange Offer is subject to certain conditions, including that enough
Limited shares are tendered so that at least 90%, or 38,700,000 shares, of A&F
owned by The Limited can be exchanged, and the receipt of a private letter
ruling from the Internal Revenue Service to the effect that the Exchange Offer
(and the subsequent Spin-Off, if any) will generally be tax-free to The Limited
and its stockholders.
Procedures for Tendering (See pages 26 and 29)
Complete and sign the Letter of Transmittal designating the number of shares
you wish to tender and either your willingness to accept the exchange ratio
selected by the Dutch auction, or the specific exchange ratio at which you are
tendering. Send it, together with your share certificates and any other
documents required by the Letter of Transmittal, by registered mail, return
receipt requested, so that it is received by the Exchange Agent at one of the
addresses set forth on the back cover of this Offering Circular-Prospectus
before the expiration of the Exchange Offer. You may also comply with the
procedures for guaranteed delivery. Do not send your certificates to The
Limited, A&F, the Dealer Managers (Goldman Sachs), any Soliciting Dealer or
the Information Agent (D.F. King). If your shares are held by your broker and
are not certificated in your name (i.e., your shares are in "street name"),
you should receive instructions from your broker on how to participate. In
this situation, you do not need to complete the Letter of Transmittal. If you
have not yet received instructions from your broker, please contact your
broker directly. Certain financial institutions may also effect tenders by
book-entry transfer through the book-entry transfer facility.
If you are a participant in The Limited's Savings and Retirement Plan or Stock
Purchase Plan you will receive separate forms to be used to tender Limited
shares held in your accounts under the relevant plan. You may not use the
Letter of Transmittal to tender shares held under either plan.
Proration
If the number of Limited shares tendered is such that more than 43,000,000
shares of A&F would be exchanged for those Limited shares, The Limited will
accept all Limited shares that are validly tendered at or below the final
exchange ratio on a pro rata basis. The preliminary proration factor will be
announced by press release promptly after the expiration of the Exchange
Offer. Announcement of any final proration factor should occur approximately
seven business days after the expiration date.
No Fractional Shares
No fractional shares of A&F will be distributed. The Exchange Agent, acting as
your agent, will aggregate any fractional shares and sell them for your
accounts. Any proceeds realized by the Exchange Agent on the sale of
fractional shares will be distributed on a pro rata basis, net of commissions.
The Exchange Agent
First Chicago Trust Company of New York is serving as the Exchange Agent in
connection with the Exchange Offer.
The Information Agent
D.F. King & Co., Inc. is serving as the information Agent in connection with
Exchange Offer. Its phone number is (800) 594-6864.
The Dealer Managers
Goldman, Sachs & Co. is serving as the Dealer Manager for the Exchange Offer.
Goldman Sachs' telephone number is (800) 323-5678.
The Spin-Off (See page 34)
If the number of Limited shares tendered is such that fewer than 43,000,000
A&F shares would be exchanged for Limited shares, The Limited will accept all
shares tendered at or below the final exchange ratio, and promptly after the
completion of the Exchange Offer, will distribute its remaining A&F shares to
its then remaining stockholders on a pro rata basis.
Comparative Per Share Market Price Information (See page 35)
Limited shares and A&F shares are listed and traded on the New York Stock
Exchange. On February 17, 1998, the last trading day before announcement of
the Exchange Offer, the closing sale price per Limited share on the NYSE was
$_____, and the closing sale price per A&F share on the NYSE was $____. On
_______, 1998, the last trading day before the start of the Exchange Offer,
the closing sale price per Limited share and the closing sale price per A&F
share on the NYSE was $_____ and $____, respectively.
THE LIMITED, INC. SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table contains certain summary historical
consolidated financial data of The Limited. This data has been derived from
and should be read in conjunction with the audited consolidated financial
statements (and the related notes) of The Limited for the three years ended
February 1, 1997 appearing in The Limited's Annual Report on Form 10-K for the
year ended February 1, 1997 and from the unaudited consolidated financial
statements included in The Limited's Quarterly Report on Form 10-Q for the
thirty-nine weeks ended November 1, 1997 and other information and data
contained in such reports and other information that The Limited has filed with
the Securities and Exchange Commission (the "SEC"). See "Where You Can Find
More Information" on page 61.
The Limited, Inc.
(in thousands, except per share numbers)
<TABLE>
<CAPTION>
Fiscal year ended Thirty-nine weeks ended
--------------------------------------------------------------------- -------------------------
1/30/93 1/29/94(1) 1/28/95 2/3/96(1)(2)(3) 2/1/97 11/2/96 11/1/97
---------- ---------- ---------- --------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations:
Net sales.................. $6,944,296 $7,245,088 $7,320,792 $7,881,437 $8,644,791 $5,678,530 $5,920,423
Operating income........... $ 788,698 $ 701,556(4) $ 798,989 $ 613,349(5) $ 636,067(6) $ 223,728 $ 280,301
Gain in connection with
initial public offerings.. $ 9,117 -- -- $ 649,467 $ 118,178 $ 118,567 $ 8,606
Net income................. $ 455,497 $ 390,999 $ 448,343 $ 961,511 $ 434,208 $ 220,815 $ 132,129
Net income, excluding
gains in connection
with initial public
offerings................. $ 446,380 $ 390,999 $ 448,343 $ 312,044 $ 316,030 $ 102,248 $ 123,523
Pro forma net income.......
Net income per share....... $ 1.25 $ 1.08 $ 1.25 $ 2.68 $ 1.54 $ 0.78 $ 0.48
Net income per share,
excluding gains in
connection with
initial public
offerings................. $ 1.23 $ 1.08 $ 1.25 $ 0.87 $ 1.12 $ 0.36 $ 0.45
Pro forma net income per
share.....................
Weighted average shares
outstanding............... 363,738 363,234 358,601 358,371 282,053 284,765 273,737
Pro forma weighted
average shares
outstanding...............
Ratio of earnings to fixed
charges................... 4.21x 3.53x 3.76x 5.01x 3.30x 2.33x 2.10x
Condensed Consolidated
Balance Sheets:
Assets:
Total current assets...... $1,784,130 $2,220,625 $2,547,666 $2,834,311 $1,545,097 $1,672,631 $1,790,078
Total assets.............. $3,846,450 $4,135,105 $4,570,077 $5,266,563 $4,120,002 $4,277,439 $4,237,434
Total assets less
intangible assets........ $3,685,076 $4,005,171 $4,445,720 $5,116,865 $3,991,836 $4,131,341 $4,105,951
Liabilities and
Shareholders' Equity
Total current liabilities. $ 720,778 $ 707,444 $ 797,555 $ 815,351 $ 906,893 $1,274,535 $1,029,892
Long-term debt............ $ 541,639 $ 650,000 $ 650,000 $ 650,000 $ 650,000 $ 650,000 $ 650,000
Total liabilities......... $1,578,833 $1,693,812 $1,809,121 $2,065,522 $2,197,420 $2,541,800 $2,252,521
Shareholders' equity...... $2,267,617 $2,441,293 $2,760,956 $3,201,041 $1,922,582 $1,735,639 $1,984,913
Book value per
share outstanding at
end of period........... $ 6.25 $ 6.82 $ 7.72 $ 9.01 $ 7.09 $6.40 $ 7.29
Shares outstanding at
end of period............ 362,648 357,801 357,604 355,366 271,071 270,992 272,120
</TABLE>
- ---------------
(1) Includes the results of companies disposed of up to the disposition date.
(2) Includes the results of companies acquired subsequent to the date of
acquisition.
(3) Fifty-three week year.
(4) Includes a pretax gain of $203 million for the sale of a 60% interest in
The Limited's Brylane mail order business offset by a $200 million charge
for the remodeling, downsizing and closing of retail stores, as well as a
write-down in the carrying value of certain fixed and intangible assets.
(5) Includes gain of $73 million for the sale of a 60% interest in World
Financial Network National Bank, a credit card bank formerly wholly-owned
by The Limited, partially offset by $72 million of special and
nonrecurring charges representing write-downs to net realizable value
of certain assets and accelerated closing and downsizing of retail
stores.
(6) Includes a $12 million special and nonrecurring charge in connection with
the sale of The Limited's Penhaligon's business.
THE LIMITED, INC. SUMMARY UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma information is provided to you
to aid in your analysis of the financial aspects of the Transactions. This
information was derived from the audited and unaudited financial statements of
The Limited for the fiscal year ended February 1, 1997 and the thirty-nine week
periods ended November 2, 1996 and November 1, 1997. This information is only
a summary and you should read it in conjunction with the historical financial
statements of The Limited that have been filed with the SEC and the more
detailed pro forma financial information included elsewhere in this document.
See "Where You Can Find More Information" on page 61 and "The Limited, Inc.
Unaudited Pro Forma Consolidated Financial Statements" on page 38.
The Pro Forma Consolidated Statement of Income Data assumes
that the Transactions occurred at the beginning of the periods presented, and
the Pro Forma Consolidated Balance Sheet Data assumes that the Transactions
occurred on February 1, 1997.
This information is presented to show you what The Limited
might have looked like if the Transactions had occurred at the times outlined
above. You should not rely on the pro forma information as being indicative
of the historical results that would have been achieved or the future results
that The Limited will experience after the Transactions.
<TABLE>
Fiscal year
ended Thirty-nine weeks ended
-------------- -------------------------------
February 1, November 2, November 1,
1997 1996 1997
-------------- -------------- --------------
<S> <C> <C> <C>
Pro Forma Consolidated Statement
of Income Data:
Net Sales........................... $8,309,419 $5,482,391 $5,610,951
Gross Income........................ $2,372,813 $1,452,921 $1,556,643
Operating Income.................... $ 590,074(2) $ 213,077(3) $ 255,322(4)
Income before Income Taxes.......... $ 636,143 $ 292,958 $ 216,511
Net Income.......................... $ 411,543 $ 216,658 $ 121,191
Net income per share..............
---------- ---------- ----------
Net income per share excluding
gain in connection with initial
public offering(1)...............
---------- ---------- ----------
Pro Forma Consolidated Balance
Sheet Data:
Current assets...................... $1,500,219
Total assets........................ $4,064,241
Current liabilities................. $ 863,303
Long-term debt...................... $ 650,000
Shareholders' equity................
----------
</TABLE>
- ---------------
(1) The pro forma consolidated net income per share, presented on a diluted
basis, is based upon the pro forma weighted average number of common and
common equivalent shares outstanding of A&F and The Limited for each
period at the Exchange Ratio of _______ of a share of A&F Common Stock
for each share of Limited Common Stock.
(2) Includes a $12 million special and nonrecurring charge related to the
closing of The Limited's Penhaligon's business.
(3) Includes a tax free gain of $118.6 million in connection with initial
public offering of a subsidiary.
(4) Includes a $62.8 million pre-tax gain from special and nonrecurring items
in the third quarter of 1997, principally due to the net gain from the
sale of Brylane, Inc. stock (an equity interest), and a $8.6 million
gain from the initial public offering of Brylane, Inc. in the first
quarter of 1997.
A&F SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table contains certain summary historical
consolidated financial data of A&F. This data has been derived from and
should be read in conjunction with the audited financial statements (and the
related notes) of A&F for the three years ended February 1, 1997, appearing in
A&F's Annual Report on Form 10-K for the year ended February 1, 1997 and from
the unaudited consolidated financial statements included in A&F's Quarterly
Report on Form 10-Q for the thirty-nine weeks ended November 1, 1997 and other
information and data contained in such reports and other information that A&F
has filed with the SEC. See "Where You Can Find More Information" on page 61.
Abercrombie and Fitch Co.
(in thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal year ended Thirty-nine weeks ended
-------------------------------------------------------------- ------------------------
1/30/93 1/29/94 1/28/95 2/3/96(1) 2/1/97 11/2/96 11/1/97
--------- ---------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations:
Net Sales............................. $ 85,301 $110,952 $165,463 $235,659 $335,372 $196,139 $309,472
Operating income (loss)............... $(10,190) $ (4,064) $ 13,751 $ 23,798 $ 45,993 $ 10,651 $ 24,979
Net income (loss)..................... $ (6,090) $ (2,464) $ 8,251 $ 14,298 $ 24,674 $ 4,157 $ 13,021
Net income (loss) per share........... $ (0.14) $ (0.06) $ 0.19 $ 0.33 $ 0.54 $ 0.09 $ 0.25
Weighted average number of shares
outstanding.......................... 43,000 43,000 43,000 43,000 45,760 43,982 51,328
Condensed Consolidated Balance Sheets:
Assets:
Total current assets................. $ 18,032 $ 13,122 $ 23,106 $ 38,856 $ 44,878 $ 61,468 $ 67,104
Total assets......................... $ 61,626 $ 48,882 $ 58,018 $ 87,693 $105,761 $113,948 $137,997
Total assets less intangible assets.. $ 61,626 $ 48,794 $ 57,950 $ 87,645 $105,733 $113,915 $137,986
Liabilities and Shareholders' Equity
Total current liabilities............ $ 614 $ 8,193 $ 18,224 $109,796 $ 43,590 $ 70,389 $ 63,274
Long-term debt....................... -- -- -- -- $ 50,000 $ 50,000 $ 50,000
Total liabilities.................... $104,503 $ 94,223 $ 95,088 $110,315 $ 94,523 $122,845 $114,540
Shareholders' equity (deficit)....... $(42,877) $(43,341) $(37,070) $(22,622) $ 11,238 $ (8,897) $ 23,457
Book value per share outstanding .... $ (1.00) $ (1.01) $ (0.86) $ (0.53) $ 0.22 $ (0.19) $ 0.46
Shares outstanding at end of period.. 43,000 43,000 43,000 43,000 51,050 45,919 51,007
</TABLE>
_______________
(1) Fifty-three week year.
RISK FACTORS
In considering whether or not to tender shares of Limited
Common Stock pursuant to the Exchange Offer, you should consider carefully
all of the information set forth or incorporated in this Offering Circular-
Prospectus and, in particular, the following:
Risk Factors Regarding A&F
Termination of Subsidiary Relationship With The Limited
As a subsidiary of The Limited, A&F has been able to benefit
from The Limited's financial strength, extensive network of business
relationships with companies and government contacts around the world. A&F
has drawn on this resource in developing its own contacts and relationships.
After completion of the Exchange Offer and the Spin-Off, if any (collectively,
the "Transactions"), A&F will be a stand-alone company and thus will no longer
be able to benefit from The Limited's relationships to the same extent that it
could as majority-owned subsidiary of The Limited. Although The Limited and
A&F will enter into certain intercompany agreements in connection with the
Transactions pursuant to which The Limited will continue to provide certain
services to A&F, such agreements will be of short duration (generally one
year) and will require A&F to begin promptly to replace services currently
being provided by The Limited. There can be no assurance that A&F will be
able to replace such services on terms at least as favorable as those
negotiated with The Limited or that the termination of The Limited's
relationship with A&F will not adversely affect A&F.
Competition With The Limited
The Limited is one of the largest specialty retailers in the
United States. The Limited is not restricted in any manner from competing
with A&F and currently markets merchandise similar to that sold by A&F through
certain of its other subsidiaries. Although The Limited was permitted to--and
did--compete with A&F prior to the consummation of the Transactions, this
competition may increase once The Limited no longer holds an equity interest
in A&F. There can be no assurance that The Limited will not expand, through
development of new lines of products or businesses, acquisition or otherwise,
its operations that compete with A&F.
Dependence on Key Personnel
A&F believes that it has benefitted substantially from the
leadership of Leslie H. Wexner, Chairman, President and Chief Executive
Officer of The Limited and Chairman of the Board of A&F, and Michael S.
Jeffries, President and Chief Executive Officer of A&F. Mr. Wexner's service
with A&F will terminate after the consummation of the Exchange Offer. In
addition, the loss of any of the services of Mr. Jeffries could have a
material adverse effect on A&F's business and prospects.
Market Uncertainties With Respect to A&F Common Stock
The Transactions will increase the number of publicly held
shares of A&F Common Stock and the number of A&F stockholders. If significant
numbers of holders of Limited Common Stock who receive shares of A&F Common
Stock pursuant to the Transactions sell A&F Common Stock shortly after the
Transactions, the market price for A&F Common Stock could be adversely
affected.
No Assurance That Growth May Be Sustained
A&F has grown rapidly over the past several years. A&F's future
growth prospects are dependent upon a number of factors, including, among
other things, the availability of suitable store locations, the ability to
develop new merchandise and the ability to hire and train qualified
associates. There is no assurance that A&F will be able to continue to grow
profitably or at rates consistent with the recent past.
Seasonality
A&F experiences seasonal fluctuations in its net sales and net
income, with a disproportional amount of A&F's net sales and a majority of its
net income typically realized during the fourth quarter. Net sales and net
income are generally weakest during the first quarter. A&F's quarterly
results of operations may also fluctuate significantly as a result of a
variety of other factors, including the timing of new store openings and the
net sales contributed by new stores, merchandise mix and the timing and level
of markdowns. The Limited also experiences similar seasonal fluctuations and
is therefore subject to similar risks.
Company Results of Operations Subject to Variable Influences;
Intense Competition
A&F's business is sensitive to changes in consumer spending
patterns, consumer preferences and overall economic conditions. A&F is also
subject to fashion trends affecting the desirability of its merchandise. In
addition, A&F competes with a broad range of other retailers, including The
Limited and its other subsidiaries, some of which have greater financial
resources than A&F. A&F's future performance will be subject to such factors,
which are beyond its control, and there can be no assurance that such factors
would not have a material adverse effect on A&F's results of operations. The
Limited's business is also subject to the these influences.
Reliance on Foreign Sources of Production
In 1997, approximately 39% of A&F's merchandise was sourced
from independent foreign factories located primarily in the Far East. A&F has
no long-term merchandise supply contracts and many of its imports are subject
to existing or potential duties, tariffs or quotas that may limit the quantity
of certain types of goods which may be imported into the United States from
countries in that region. A&F competes with other companies, including The
Limited and its other subsidiaries, for production facilities and import quota
capacity. A&F's business is also subject to a variety of other risks generally
associated with doing business abroad, such as political instability, currency
and exchange risks and local political issues. A&F's future performance will
be subject to such factors, which are beyond its control, and there can be no
assurance that such factors would not have a material adverse effect on A&F's
results of operations. The Limited faces similar risks with respect to its
foreign sources of production.
Anti-Takeover Provisions
A&F's Certificate of Incorporation and Bylaws contain a number
of provisions that could impede a merger, consolidation, takeover or other
business combination involving A&F or discourage a potential acquiror from
making a tender offer or otherwise attempting to obtain control of A&F. Those
provisions include (i) a requirement that a vote of the holders of at least
75% of the common stock of A&F held by stockholders other than any person or
entity owning 5% or more of the common stock of A&F is required to effect a
merger or consolidation with such person or entity, a sale of all or
substantially all of the assets of A&F to such person or entity and certain
other control transactions (unless such transaction shall have been approved
by a majority of Continuing Directors (as defined in A&F's Certificate of
Incorporation)); (ii) a classified board; and (iii) a requirement that certain
provisions of A&F's Certificate of Incorporation and Bylaws may be amended,
and directors may be removed, only with the approval of the holders of at
least 75% of the outstanding common stock of A&F. See "Comparison of the
Rights of Holders of Limited Common Stock and A&F Common Stock" on page 54.
Risk Factor Regarding the Anticipated Premium
The amount of the Anticipated Premium to be received by Limited
stockholders participating in the Exchange Offer will depend on the prices for
shares of Limited Common Stock and A&F Common Stock and the Final Exchange
Ratio. While The Limited anticipates that its stockholders will receive A&F
Common Stock having a market value greater than the recent market value of the
Limited Common Stock being tendered, The Limited cannot predict what the
amount of the Anticipated Premium will be or whether in fact there will be a
premium at the end of the Exchange Offer or the prices at which shares of A&F
Common Stock or Limited Common Stock will trade over time. Accordingly, there
can be no assurance as to the amount, if any, of the Anticipated Premium.
Risk Factor Regarding Forward-Looking Information
This Offering Circular-Prospectus contains certain
forward-looking statements and information relating to The Limited and A&F
that are based on the beliefs of management of The Limited or A&F as well as
assumptions made by and information currently available to management of The
Limited or A&F. When used in this document, the words "anticipate," "believe,"
"estimate" and "expect" and similar expressions, as they relate to The Limited,
A&F or management of The Limited or A&F, are intended to identify
forward-looking statements. Such statements reflect the current views of The
Limited or A&F with respect to future events and are subject to certain risks,
uncertainties and assumptions, including the risk factors described in this
Offering Circular-Prospectus. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated or expected. Neither The Limited nor A&F intends to update
these forward-looking statements. See page 20 for a discussion of certain of
the uncertainties related to forward-looking statements.
THE TRANSACTIONS
Background and Purpose
For the past several years, The Limited's Board of Directors
and senior management have been engaged in a comprehensive review of The
Limited's organizational structure in order to better address the management
requirements of a large, multi-division, specialty retail company. In their
review, the Board and management sought to address various issues which have
arisen as a result of the substantial growth experienced by The Limited. In
particular, the Board and management concluded that (i) certain of The
Limited's businesses would benefit from separate management and ownership
structures, thereby providing greater incentives to divisional management and
greater accountability to public investors, and (ii) divesting or closing
certain operations would create a more focused and stronger specialty retail
enterprise. In addition, the Board and management believe that the price of
Limited Common Stock has not reflected the inherent value of The Limited's
various businesses because of the differing characteristics of the businesses
in which The Limited is engaged and, at the same time, has evaluated numerous
alternatives intended to maximize stockholder value.
To further these objectives, The Limited has taken a number of
significant actions during the last three years:
(i) The 1995 initial public offering of common stock of
Intimate Brands, Inc. ("Intimate Brands"), which consisted of The Limited's
Victoria's Secret Stores, Victoria's Secret Catalogue, Bath & Body Works,
Cacique, Penhaligon's and Gryphon businesses (the "Intimate Brands IPO").
The offering resulted in proceeds of approximately $677 million (net of
underwriting fees, commissions and discounts and all other expenses related
to the offering). Pursuant to the Intimate Brands IPO, The Limited
retained approximately 83% of the economic interests in, and approximately
94% of the total voting power of, Intimate Brands.
(ii) The 1995 sale of a 60% interest in World Financial
Network National Bank ("WFN"), The Limited's credit card bank to an
affiliate of Welsh, Carson, Anderson and Stowe VII, L.P. ("WCAS") for
approximately $165 million in cash (the "WFN Sale").
(iii) The securitization (the "Receivables Securitization")
of approximately $1.3 billion of credit card accounts receivable owned by
WFN. The Receivables Securitization was consummated in January 1996 and
resulted in net proceeds of approximately $1.2 billion.
(iv) A distribution of cash made available as a result of
the foregoing transactions in The Limited's March 1996 $1.6 billion issuer
tender offer.
(v) The 1996 initial public offering (the "A&F IPO") of
8,050,000 shares of the Class A Common Stock, par value $.01 per share, of
A&F (the "A&F Common Stock"). The A&F IPO resulted in proceeds of
approximately $118 million (net of underwriting fees, commissions and
discounts and all other expenses related to the offering). Pursuant to the
A&F IPO, The Limited retained approximately 84% of the economic interests
in, and approximately 94% of the total voting power of, A&F.
(vi) The 1997 public offering of a significant portion of
The Limited's interest in Brylane, Inc., the catalogue operations of The
Limited's Lerner and Lane Bryant retail businesses. This offering follows
the 1993 sale by The Limited of 60% of its interest in Brylane, Inc. to an
affiliate of Freeman, Spogli, L.P. The Limited has announced that it
intends to divest its remaining interest in Brylane.
(vii) The 1997 sales of The Limited's interests in (x) the
Newport Office Tower in Jersey City, New Jersey to TrizecHahn Office
Properties for approximately $159 million and (y) The Mall at Tuttle
Crossing in Columbus, Ohio to a unit of Taubman Centers Inc. for
approximately $76.3 million.
(viii) The 1997 sale if Intimate Brands' Penhaligon's
business and the January 1998 closure of Intimate Brands' Cacique business.
(ix) The February 1998 announcement that The Limited's Henri
Bendel business would become a single store concept, with the closure of all
Henri Bendel locations other than its New York City store.
Beginning in the second half of 1997, the Board of Directors,
with the assistance of its financial and legal advisors, began an analysis of
various alternatives with respect to The Limited's remaining interest in A&F.
This analysis resulted from both The Limited's ongoing consideration of
strategic alternatives as well as a desire on the part of A&F to adopt
compensation practices different from those of The Limited. In January 1998,
The Limited's Board approved the separation of A&F from The Limited. This
decision was based on several factors. First, the Board of Directors
concluded that A&F's continued success required that A&F adopt compensation
practices different from those of The Limited and that, absent a separation,
A&F's practices would materially interfere with The Limited's management of
its other businesses. Second, The Limited determined that its continued
ownership of A&F, including The Limited's need to evaluate strategic decisions
on an overall basis, might inhibit A&F's ability to maximize its potential.
Finally, The Limited determined that the distribution of A&F would further the
various objectives outlined above and that the complete separation of A&F from
The Limited would be in the best interests of A&F, The Limited and their
respective stockholders. The transaction is intended to allow A&F, which has
demonstrated that it has an established brand and a proven and profitable
growth strategy, to grow as an independent company. At the same time, the
separation of A&F allows The Limited to focus its resources on brands where it
can add more value
As part of its analysis of a separation of A&F, the Board, in
consultation with its financial and legal advisors, considered two alternative
methods of disposing of The Limited's holdings in A&F: a spin-off and the
Transactions. The Board determined to pursue the Transactions because, in its
view, the Transactions were superior to the other alternative. Among other
things, the Board (i) believed that the Transactions address the business
goals discussed above, (ii) considered the Transactions to be a tax efficient
way to distribute value to The Limited's stockholders, (iii) recognized that
the Exchange Offer (as opposed to a spin-off of A&F Common Stock) would give
Limited stockholders a choice to adjust their investment between The Limited
and A&F based on individual financial considerations on a tax-free basis, (iv)
believed that the Transactions would provide the stockholders of The Limited
with the opportunity to receive the Anticipated Premium, (v) believed that the
Exchange Offer, which is effectively a repurchase of Limited Common Stock
using A&F Common Stock as the currency for the repurchase, demonstrates the
confidence of the Board of Directors in The Limited and (vi) recognized that
the Exchange Offer is expected to have the effect of increasing earnings per
share of Limited Common Stock outstanding after consummation of the Exchange
Offer.
Mr. Leslie H. Wexner, Chairman, Chief Executive Officer and
President of The Limited, has informed the Board that he will not tender
shares of Limited Common Stock in the Exchange Offer. Mr. Wexner has informed
the Board that he reached this determination to ensure that A&F is fully
independent of The Limited after the consummation of the Transactions.
Although Mr. Wexner will not participate in the Exchange Offer, he would
receive shares of A&F Common Stock in the Spin-Off, if any.
Effects
Holders of shares of Limited Common Stock will be affected by
the Transactions regardless of whether such holders tender their shares of
Limited Common Stock for exchange pursuant to the Exchange Offer. Holders of
shares of Limited Common Stock who tender all of their shares for exchange
pursuant to the Exchange Offer will, if all such shares are accepted for
exchange, no longer have an ownership interest in The Limited and will no
longer participate in any change in the value of The Limited. Holders of
shares of Limited Common Stock who exchange some, but not all of their Limited
Common Stock in the Exchange Offer will have a diminished ownership interest
in The Limited and an increased ownership interest in A&F. Holders of shares
of Limited Common Stock who do not tender any of their shares for exchange
pursuant to the Exchange Offer will receive shares of A&F Common Stock only as
a result of the Spin-Off, if any, and will continue to have an ownership
interest in The Limited, which ownership interest will have increased on a
percentage basis as a result of the Exchange Offer.
No Appraisal Rights
Because neither an exchange offer nor a spin-off is a merger or
consolidation giving rise to appraisal rights under Section 262 of the
Delaware General Corporation Law (the "DGCL"), no appraisal rights are
available to stockholders of The Limited in connection with the Transactions.
Regulatory Approvals
No filings under the Hart Scott Rodino Antitrust Improvements
Act of 1976 (the "HSR Act") are required in connection with the Exchange Offer
generally. To the extent that certain stockholders of The Limited decide to
participate in the Exchange Offer and thereby acquire a number of shares of
A&F Common Stock that exceeds any threshold stated in the regulations under
the HSR Act, and if an exemption under those regulations does not apply, such
stockholders and The Limited would be required to make filings under the HSR
Act, and the waiting period under the HSR Act would have to expire or be
terminated before any exchanges of shares with those particular stockholders
could be effected.
The Limited and A&F do not believe that any other material
federal or state regulatory approvals will be necessary to consummate the
Transactions.
Accounting Treatment
The shares of Limited Common Stock received by The Limited
pursuant to the Exchange Offer will be recorded as a decrease in stockholders'
equity, reflecting the decrease in common stock outstanding at the market
value of the shares of A&F Common Stock distributed on the Expiration Date.
The Exchange Offer will result in a net gain to The Limited, after direct
expenses of the disposition, and will be reported as a gain on the disposal
of the business. The gain from the Exchange Offer will result from the
difference between the market value and the carrying value of the shares of
A&F Common Stock distributed.
Neither the exchange of shares of Limited Common Stock for A&F
Common Stock pursuant to the Exchange Offer nor the distribution of shares of
A&F Common Stock in the Spin-Off will affect the financial position or results
of operations of A&F.
Any remaining shares of A&F Common Stock that are distributed
through the Spin-Off will be accounted for as a dividend through a direct
charge to retained earnings. The amount of the dividend will be equal to The
Limited's carrying value of the shares of A&F Common Stock distributed.
Forward Looking Statements May Prove Inaccurate
This document (including documents that are incorporated herein
by reference) contains forward-looking statements about The Limited, A&F and
the effects of the Transactions which are subject to certain risks and
uncertainties. Forward-looking statements are those statements preceded by,
followed by, or that otherwise include the words "believes", "expects",
"anticipates", "intends", "estimates" or similar expressions, including,
without limitation, such statements in "Questions and Answers About the
Exchange Offer", "Offering Circular-Prospectus Summary", "--Background and
Purpose", "Business of A&F" and "Business of The Limited". A&F and The
Limited caution that any forward-looking statements contained in this Offering
Circular-Prospectus or made by management of The Limited or A&F involve risks
and uncertainties, and are subject to change based on various important
factors. The following factors, among others, in some cases have affected,
and in the future could affect, The Limited's or A&F's financial performance
and actual results and could cause actual results for 1998 and beyond to
differ materially from those expressed or implied in any such forward-looking
statements: changes in consumer spending patterns, consumer preferences and
overall economic conditions, the impact of competition and pricing, changes in
weather patterns, political stability, currency and exchange risks and changes
in existing or potential duties, tariffs or quotas, availability of suitable
store locations at appropriate terms, ability to develop new merchandise and
ability to hire and train associates. Additional factors that may affect The
Limited's or A&F's performance or the Transactions are set forth in "Risk
Factors."
THE EXCHANGE OFFER
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in the
Exchange Offer, The Limited is offering hereby to exchange up to 43,000,000
shares of A&F Common Stock for shares of the common stock, par value $.50 per
share, of The Limited (the "Limited Common Stock") that are validly tendered
by the Expiration Date and not deemed withdrawn, as set forth below under
"--Withdrawal Rights" on page 30, at an Exchange Ratio (determined in the
manner set forth below) not greater than ____ (the "Maximum Exchange Ratio")
nor less than _____ (the "Minimum Exchange Ratio") of a share of A&F Common
Stock for each share of Limited Common Stock tendered. The range of exchange
ratios between the Minimum Exchange Ratio and the Maximum Exchange Ratio is
referred to throughout this Offering Circular-Prospectus as the "Exchange
Ratio Range". That portion of a share of A&F Common Stock which a stockholder
is willing to accept in exchange for each share of Limited Common Stock
tendered is referred to throughout this Offering Circular-Prospectus as the
"Exchange Ratio". The term "Expiration Date" shall mean 12:00 Midnight, New
York City time, on __________, 1998, unless extended in accordance with
applicable law and the terms of the Exchange Offer itself, in which event the
term "Expiration Date" shall mean the latest time and date at which the
Exchange Offer, as so extended, shall expire. See "--Extension of Tender
Period; Termination; Amendment" on page 30. The maximum number of shares of
Limited Common Stock which will be accepted for exchange will be that number
of shares which, when multiplied by the final exchange ratio (determined in
the manner set forth below), equals 43,000,000 shares of A&F Common Stock. If
more than such maximum number of shares of Limited Common Stock are tendered,
the Exchange Offer will be oversubscribed, and shares of Limited Common Stock
tendered at or below the Final Exchange Ratio will be subject to proration.
The proration period will also expire on the Expiration Date.
The Exchange Offer will be conducted as a modified "Dutch
auction" in which holders of Limited Common Stock will be able to specify the
fraction of a share of A&F Common Stock that such holders are willing to
receive in exchange for a share of Limited Common Stock. Whether and to what
extent a tendering stockholder of The Limited will have its tendered shares
accepted for exchange in the Exchange Offer will depend on how the Exchange
Ratio specified by it compares to Exchange Ratios specified by other tendering
stockholders of The Limited. In other words, a "Dutch auction" is a
competitive bid among stockholders of The Limited. The Exchange Ratio
specified by each tendering stockholder of The Limited must be within the
Exchange Ratio Range. The Minimum Exchange Ratio and Maximum Exchange Ratio
were established by The Limited based on discussions with the Dealer Managers.
The Limited will, upon the terms and subject to the conditions of the Exchange
Offer, determine the final exchange ratio, taking into account the number of
shares of Limited Common Stock tendered and the fraction of a share of A&F
Common Stock specified by tendering stockholders. The Limited will select as
the final exchange ratio (the "Final Exchange Ratio") the lowest Exchange
Ratio from within the Exchange Ratio Range which would permit the maximum
number of the shares of A&F Common Stock owned by The Limited to be exchanged
in the Exchange Offer. The Final Exchange Ratio will be announced by The
Limited promptly after the Expiration Date.
At the expiration of the Exchange Offer, The Limited will
calculate the number of shares of Limited Common Stock validly tendered at
Exchange Ratios within the Exchange Ratio Range, beginning with shares
tendered at the Minimum Exchange Ratio and ending, if necessary, at the
Maximum Exchange Ratio. When the aggregate number of shares of A&F Common
Stock to be exchanged for shares of Limited Common Stock tendered in ascending
order of Exchange Ratios is equal to or greater than 38,700,000 shares, The
Limited will become obligated to accept, on a pro rata basis, the shares of
Limited Common Stock of all stockholders who tendered at or below the lowest
Exchange Ratio; provided that the highest of such Exchange Ratios is less than
the Maximum Exchange Ratio and that the other conditions set forth in
"Conditions to Consummation of the Exchange Offer" on page 32 are satisfied.
The number of shares of Limited Common Stock that must be tendered to result
in at least 38,700,000 shares of A&F Common Stock being exchanged pursuant to
the Exchange Offer is referred to herein as the "Trigger Amount".
All shares of Limited Common Stock properly tendered and not
withdrawn or deemed withdrawn at Exchange Ratios at or below the Final
Exchange Ratio will be exchanged at the Final Exchange Ratio, on the terms and
subject to the conditions of the Exchange Offer, including the proration
provisions described herein. If the result of the Exchange Offer is such that
more than 43,000,000 shares of A&F Common Stock would be needed to be
exchanged for shares of Limited Common Stock which have been validly tendered
for exchange at or below the Final Exchange Ratio and are not properly
withdrawn prior to the Expiration Date (if all such validly tendered shares
were accepted), The Limited will exchange shares of A&F Common Stock for
shares of Limited Common Stock on a pro rata basis (with appropriate
adjustments to avoid purchases of fractional shares of Limited Common Stock).
All shares which are tendered but not acquired pursuant to the Exchange Offer,
including shares tendered at Exchange Ratios greater than the Final Exchange
Ratio and shares not acquired because of proration, will be returned to
tendering stockholders promptly following the Expiration Date. Shares accepted
for exchange will be retired by The Limited. If the result of the Exchange
Offer is such that fewer than 43,000,000 shares of A&F Common Stock are
exchanged pursuant to the Exchange Offer, promptly after the consummation of
the Exchange Offer, The Limited will distribute its remaining shares of A&F
Common Stock to the remaining holders of Limited Common Stock pro rata based
on their then respective holdings of Limited Common Stock. See "The Spin-Off"
on page 34.
The Exchange Offer, proration period and withdrawal rights will
expire on the Expiration Date, as may be extended.
If proration of tendered shares of Limited Common Stock is
required, The Limited does not expect that it would be able to announce the
final proration factor or to commence delivery of any shares of A&F Common
Stock exchanged pursuant to the Exchange Offer until approximately seven
business days after the Expiration Date. This delay results from the
difficulty in determining the number of shares of Limited Common Stock validly
tendered for exchange (including shares of Limited Common Stock tendered for
exchange pursuant to the guaranteed delivery procedure described in
"--Guaranteed Delivery Procedure" on page 28) and not properly withdrawn prior
to the Expiration Date. Preliminary results of proration will be announced by
press release as promptly as practicable after the Expiration Date. Holders of
shares of Limited Common Stock may obtain such preliminary information from
the Information Agent and Dealer Managers and may also be able to obtain such
information from their brokers.
No fractional shares of A&F Common Stock will be distributed.
The Exchange Agent, acting as agent for stockholders of The Limited otherwise
entitled to receive fractional shares, will aggregate all fractional shares and
sell them for the accounts of such stockholders. Such proceeds as may be
realized by the Exchange Agent upon the sale of such fractional shares will be
distributed, net of commissions, to such stockholders on a pro rata basis. Any
such cash payments will be made through the Exchange Agent if the related
shares of Limited Common Stock are tendered to the Exchange Agent or, if such
shares of Limited Common Stock are tendered through the Book-Entry Transfer
Facility (as defined herein), through such Book-Entry Transfer Facility. NONE
OF THE EXCHANGE AGENT, THE LIMITED, A&F, THE SOLICITING DEALERS OR THE DEALER
MANAGER WILL GUARANTEE ANY MINIMUM PROCEEDS FROM THE SALE OF SHARES OF A&F
COMMON STOCK AND NO INTEREST WILL BE PAID ON ANY SUCH PROCEEDS.
If the Trigger Amount is reached, and subject to certain
conditions set forth in "--Conditions to Consummation of the Exchange Offer"
on page 32, The Limited will become obligated to consummate the Exchange
Offer. If any such conditions are not satisfied, The Limited may (a) terminate
the Exchange Offer and as promptly as practicable return all tendered shares
of Limited Common Stock to tendering stockholders, (b) extend the Exchange
Offer and, subject to the withdrawal rights described in "--Withdrawal Rights"
on page 30, retain all such shares of Limited Common Stock until the
expiration of the Exchange Offer as so extended, (c) waive any such condition
and, subject to any requirement to extend the period of time during which the
Exchange Offer is open, exchange all shares of Limited Common Stock validly
tendered for exchange by the Expiration Date and not properly withdrawn or (d)
delay acceptance for exchange of any shares of Limited Common Stock until
satisfaction or waiver of all such conditions to the Exchange Offer. The
Limited's right to delay acceptance for exchange, or exchange, of shares of
Limited Common Stock tendered for exchange pursuant to the Exchange Offer is
subject to the provisions of applicable law, including, to the extent
applicable, Rule 13e-4(f)(5) promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), which requires that The Limited pay the
consideration offered or return the shares of Limited Common Stock deposited
by or on behalf of stockholders of The Limited promptly after the termination
or withdrawal of the Exchange Offer. For a description of The Limited's right
to extend the period of time during which the Exchange Offer is open and to
amend, delay or terminate the Exchange Offer, see "--Extension of Tender
Period; Termination; Amendment" on page 30.
This Offering Circular-Prospectus and the Letter of Transmittal
are being sent to persons who were holders of record of Limited Common Stock
at the close of business on________, 1998. As of such date, there were _____
shares of Limited Common Stock outstanding. This Offering Circular-Prospectus
and related Letter of Transmittal will also be furnished to brokers, banks and
similar persons whose names or the names of whose nominees appear on the
stockholder list of The Limited or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of shares of Limited Common Stock.
Exchange of Shares of Limited Common Stock
Upon the terms and subject to the satisfaction or waiver of the
conditions of the Exchange Offer, The Limited will accept for exchange, and
shares of A&F Common Stock will be exchanged for, shares of Limited Common
Stock that have been validly tendered and not properly withdrawn prior to the
Expiration Date. In addition, The Limited reserves the right, in its sole
discretion (subject to Rule 13e-4(f)(5) under the Exchange Act), to delay the
acceptance for exchange or delay exchange of any shares of Limited Common
Stock in order to comply in whole or in part with any applicable law. For a
description of The Limited's right to terminate the Exchange Offer and not
accept for exchange or exchange any shares of Limited Common Stock or to delay
acceptance for exchange or exchange of any shares of Limited Common Stock, see
"--Extension of Tender Period; Termination; Amendment" on page 30.
For purposes of the Exchange Offer, The Limited shall be
deemed, subject to the proration provisions of the Exchange Offer, to have
accepted for exchange and exchanged shares of Limited Common Stock validly
tendered for exchange when, as and if The Limited gives oral or written notice
to the Exchange Agent of its acceptance of the tenders of such shares of
Limited Common Stock for exchange. Exchange of shares of Limited Common Stock
accepted for exchange pursuant to the Exchange Offer will be made on the first
business day following announcement by The Limited of the final proration
factor (which first business day in no event shall be more than ten business
days after the Expiration Date and which first business day shall be
hereinafter referred to as the "Exchange Time") by deposit of tendered shares
of Limited Common Stock with the Exchange Agent, which will act as agent for
the tendering stockholders for the purpose of receiving shares of A&F Common
Stock and transmitting such shares to tendering stockholders. The date on
which the Exchange Time occurs is referred to as the "Exchange Date". In all
cases, tendered shares of Limited Common Stock accepted for exchange pursuant
to the Exchange Offer will be exchanged only after timely receipt by the
Exchange Agent of (i) certificates for such shares of Limited Common Stock (or
of a confirmation of a book-entry transfer of such shares of Limited Common
Stock into the Exchange Agent's account at the Book-Entry Transfer Facility),
and (ii) a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) or an Agent's Message in connection with a
book-entry transfer of shares, together with any other documents required by
the Letter of Transmittal. For a description of the procedures for tendering
shares of Limited Common Stock pursuant to the Exchange Offer, see
"--Procedures for Tendering Shares of Limited Common Stock" on page 26 and
"Special Procedures for Participants in the Savings and Retirement Plan, the
Stock Purchase Plan and the Dividend Reinvestment Plan" on page 29. Under no
circumstances will interest be paid by The Limited pursuant to the Exchange
Offer, regardless of any delay in making such exchange.
If any tendered shares of Limited Common Stock are not
exchanged pursuant to the Exchange Offer for any reason, or if certificates
are submitted for more shares of Limited Common Stock than are (i) tendered for
exchange or (ii) accepted for exchange due to the proration provisions,
certificates for such unexchanged or untendered shares of Limited Common Stock
will be returned (or, in the case of shares of Limited Common Stock tendered
by book-entry transfer, such shares of Limited Common Stock will be credited
to an account maintained at the Book-Entry Transfer Facility), without expense
to the tendering stockholder, as promptly as practicable following the
expiration or termination of the Exchange Offer.
The Limited will pay all stock transfer taxes, if any, payable
on the transfer to it of shares of Limited Common Stock and the transfer to
tendering stockholders of shares of A&F Common Stock pursuant to the Exchange
Offer. If, however, the exchange of shares is to be made to, or (in the
circumstances permitted by the Exchange Offer) if shares of Limited Common
Stock that are not tendered or not accepted for exchange are to be registered
in the name of or delivered to any person other than the registered owner, or
if tendered certificates are registered in the name of any person other than
the person signing the Letter of Transmittal, the amount of all stock transfer
taxes, if any (whether imposed on the registered owner or such other person),
payable on account of the transfer to such person must be paid by the
tendering stockholder unless evidence satisfactory to The Limited of the
payment of such taxes or exemption therefrom is submitted.
Determining to Participate in the Exchange Offer
Whether to Participate in the Exchange Offer
Whether you should participate in the Exchange Offer depends on
many factors. Stockholders of The Limited should consider, among other
things, (i) their view of the relative values of a single share of Limited
Common Stock and a single share of A&F Common Stock, (ii) the opportunity to
receive the Anticipated Premium and (iii) their individual investment strategy
with regard to the two stocks. In addition, a stockholder of The Limited
should consider all of the factors described under "Risk Factors" on page 14.
The Limited anticipates that the Final Exchange Ratio will
provide stockholders with the opportunity to receive A&F Common Stock having a
market value greater than the recent market value of Limited Common Stock being
tendered. Based on the closing trading prices for Limited Common Stock and
A&F Common Stock on ___________, 1998, any of the Exchange Ratios in the
Exchange Ratio Range would result in a Limited stockholder receiving A&F
Common Stock with a market value greater than Limited Common Stock tendered for
exchange. This greater market value is referred to in this Offering
Circular-Prospectus as the "Anticipated Premium". Based on such closing
trading prices, the Anticipated Premium would be approximately ____%, assuming
the Minimum Exchange Ratio, and ___%, assuming the Maximum Exchange Ratio.
The Limited cannot, however, predict what the amount of the Anticipated
Premium will be or whether in fact there will be a premium at the end of the
Exchange Offer or the prices at which shares of A&F Common Stock or Limited
Common Stock will trade over time.
Stockholders can calculate the Anticipated Premium using the
following formula:
The Anticipated Exchange Ratio x Price of one share of A&F Common Stock
Premium = ------------------------------------------------------- - 1
Price of one share of Limited Common Stock
For example: Assume that the price of one share of Limited
Common Stock is $____ and the price for one share of A&F Common Stock is $____
(the closing trading prices of Limited Common Stock and A&F Common Stock on
__________, 1998). At an exchange ratio of____ of a share of A&F Common Stock
for each share of Limited Common Stock, the midpoint of the range of exchange
ratios, the Anticipated Premium would be approximately ____%. At the Minimum
Exchange Ratio (_____ of an A&F share for each Limited share tendered), the
Anticipated Premium would be approximately___%. At the Maximum Exchange Ratio
(___ of an A&F share for each Limited share tendered), the Anticipated Premium
would be approximately ___%.
The Anticipated Premium depends on the prevailing stock prices
for Limited Common Stock and A&F Common Stock. The tables below show the
Anticipated Premium at exchange ratios of ___ (the midpoint of the range of
exchange ratios), ___ (the Minimum Exchange Ratio) and _____ (the Maximum
Exchange Ratio).
<TABLE>
Anticipated Premium at Exchange Ratio of ___
the midpoint of the Exchange Ratio Range)
- --------------------------------------------------------------------------
Limited Common Stock Price
-------------------------------------------
$___ $___ $___ $___
-------------------------------------------
<S> <C> <C> <C> <C> <C>
A&F $___ ___% ___% ___% ___%
Common $___ ___% ___% ___% ___%
Stock $___ ___% ___% ___% ___%
Price $___ ___% ___% ___% ___%
</TABLE>
<TABLE>
Anticipated Premium at the Minimum Exchange Ratio of ___
- -------------------------------------------------------------------------
Limited Common Stock Price
-------------------------------------------
$___ $___ $___ $___
-------------------------------------------
<S> <C> <C> <C> <C> <C>
A&F $___ ___% ___% ___% ___%
Common $___ ___% ___% ___% ___%
Stock $___ ___% ___% ___% ___%
Price $___ ___% ___% ___% ___%
</TABLE>
<TABLE>
Anticipated Premium at the Maximum Exchange Ratio of ___
- -------------------------------------------------------------------------
Limited Common Stock Price
-------------------------------------------
$___ $___ $___ $___
-------------------------------------------
<S> <C> <C> <C> <C> <C>
A&F $___ ___% ___% ___% ___%
Common $___ ___% ___% ___% ___%
Stock $___ ___% ___% ___% ___%
Price $___ ___% ___% ___% ___%
</TABLE>
NONE OF THE LIMITED, A&F, THE DEALER MANAGERS, THE
SOLICITING DEALERS, THE BOARD OF DIRECTORS OF THE LIMITED OR THE BOARD OF
DIRECTORS OF A&F MAKES ANY RECOMMENDATION TO ANY STOCKHOLDER OF THE LIMITED
AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES OF LIMITED COMMON
STOCK PURSUANT TO THE EXCHANGE OFFER. EACH STOCKHOLDER OF THE LIMITED MUST
MAKE HIS OR HER OWN DECISION WHETHER TO TENDER SHARES OF LIMITED COMMON
STOCK PURSUANT TO THE EXCHANGE OFFER AND, IF SO, HOW MANY SHARES TO TENDER
AND AT WHAT EXCHANGE RATIO TO TENDER SUCH SHARES AFTER READING THIS
OFFERING CIRCULAR-PROSPECTUS AND CONSULTING WITH HIS OR HER ADVISORS BASED
ON HIS OR HER OWN FINANCIAL POSITION AND REQUIREMENTS.
Selecting an Exchange Ratio
In the event a stockholder of The Limited determines to
participate in the Exchange Offer, in deciding at which Exchange Ratio to
tender, such stockholder should consider not only his or her view of the value
of a single share of Limited Common Stock and a single share of A&F Common
Stock but also the level of certainty that he or she desires that his or her
tender will be accepted in the Exchange Offer. STOCKHOLDERS WISHING TO
MAXIMIZE THE CHANCE THAT THEIR SHARES WILL BE ACCEPTED FOR EXCHANGE IN THE
EXCHANGE OFFER MAY CHECK THE BOX MARKED "SHARES TENDERED AT EXCHANGE RATIO
DETERMINED BY DUTCH AUCTION" ON THE LETTER OF TRANSMITTAL INDICATING THAT SUCH
STOCKHOLDER WILL ACCEPT WHATEVER THE FINAL EXCHANGE RATIO IS DETERMINED TO BE
BY THE MODIFIED DUTCH AUCTION.
In selecting an Exchange Ratio at which to tender a share of
Limited Common Stock, a stockholder of The Limited should also remember that
the market value of a share of A&F Common Stock may be different from its view
of the value of such a share. If the market value of a share of A&F Common
Stock is lower than the value assumed by a stockholder of The Limited in
selecting the Exchange Ratio at which to tender (and assuming all other things
remain the same), each share of A&F Common Stock received will have less value
than such stockholder of The Limited thought it would have at the Exchange
Ratio selected. For example, if a Limited stockholder selected an Exchange
Ratio of ___ based on a market price of a $___ per share value of the A&F
Common Stock and the market price becomes $___, such stockholder would have
only received A&F Common Stock having a market price of $___ rather than $___
for each share of Limited Common Stock which was accepted for exchange.
Procedures for Tendering Shares of Limited Common Stock
To tender shares of Limited Common Stock pursuant to the
Exchange Offer, either (i) a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) with any required signature
guarantees, or an Agent's Message in the case of a book-entry transfer of
shares, and any other documents required by the Letter of Transmittal must be
received by the Exchange Agent at one of its addresses set forth on the back
cover of this Offering Circular-Prospectus prior to the Expiration Date, and
either (a) certificates for the shares of Limited Common Stock to be tendered
must be transmitted to and received by the Exchange Agent at one of such
addresses prior to such time or (b) such shares of Limited Common Stock must
be delivered pursuant to the procedures for book-entry transfer described
below (and a confirmation of such delivery received by the Exchange Agent), in
each case by the Expiration Date, or (ii) the guaranteed delivery procedure
described below must be complied with. Participants in the Savings and
Retirement Plan, the Stock Purchase Plan and the Dividend Reinvestment Plan
(the "DRP") of The Limited may also participate in this Exchange Offer and
should follow the procedures set forth in the "Special Procedures for
Participants in The Limited's Savings and Retirement Plan, the Stock Purchase
Plan and the Dividend Reinvestment Plan" on page 29 to tender their Limited
Common Stock. Stockholders who are participants in employee benefit plans not
affiliated with The Limited but who hold shares of Limited Common Stock and
would like to participate in the Exchange Offer may follow the general
instructions described in this section, subject to the requirements of such
other employee benefit plans.
As specified in Instruction ___ of the Letter of Transmittal,
each stockholder desiring to tender shares of Limited Common Stock pursuant to
the Exchange Offer must either (a) check the box in the section of the Letter
of Transmittal captioned "Shares Tendered at Exchange Ratio Determined by
Dutch Auction" or (b) check one of the boxes in the section of the Letter of
Transmittal captioned "Shares Tendered at Exchange Ratio Determined by
Stockholder". A STOCKHOLDER WHO WISHES TO MAXIMIZE THE CHANCE THAT HIS OR HER
SHARES WILL BE EXCHANGED SHOULD CHECK THE BOX ON THE LETTER OF TRANSMITTAL
MARKED, "SHARES TENDERED AT EXCHANGE RATIO DETERMINED BY DUTCH AUCTION". NOTE
THAT THIS ELECTION COULD RESULT IN SUCH STOCKHOLDER'S SHARES BEING EXCHANGED AT
THE MINIMUM EXCHANGE RATIO OF___ OF A SHARE OF A&F COMMON STOCK PER SHARE OF
LIMITED COMMON STOCK. A STOCKHOLDER WHO WISHES TO INDICATE A SPECIFIC EXCHANGE
RATIO AT WHICH SUCH STOCKHOLDER'S SHARES ARE BEING TENDERED MUST CHECK A BOX
UNDER THE SECTION CAPTIONED "SHARES TENDERED AT PRICE DETERMINED BY
STOCKHOLDER" ON THE LETTER OF TRANSMITTAL IN THE TABLE LABELED "SHARES OF A&F
COMMON STOCK AT WHICH SHARES OF LIMITED COMMON STOCK ARE BEING TENDERED FOR
EXCHANGE".
A TENDER OF SHARES WILL BE PROPER IF, AND ONLY IF, ON THE
APPROPRIATE LETTER OF TRANSMITTAL EITHER THE BOX IN THE SECTION CAPTIONED
"SHARES TENDERED AT EXCHANGE RATIO DETERMINED BY DUTCH AUCTION" OR ONE OF THE
BOXES IN THE SECTION CAPTIONED "SHARES TENDERED AT EXCHANGE RATIO DETERMINED
BY STOCKHOLDER" IS CHECKED.
STOCKHOLDERS DESIRING TO TENDER SHARES AT MORE THAN ONE
EXCHANGE RATIO MUST COMPLETE SEPARATE LETTERS OF TRANSMITTAL FOR EACH EXCHANGE
RATIO AT WHICH SUCH STOCKHOLDER IS TENDERING SHARES, EXCEPT THAT THE SAME
SHARES CANNOT BE TENDERED (UNLESS PROPERLY WITHDRAWN PREVIOUSLY IN ACCORDANCE
WITH THE TERMS OF THE EXCHANGE OFFER) AT MORE THAN ONE EXCHANGE RATIO. IN
ORDER TO TENDER SHARES PROPERLY, ONE AND ONLY ONE EXCHANGE RATIO MUST BE
INDICATED IN BOX ___ OF EACH LETTER OF TRANSMITTAL.
LETTERS OF TRANSMITTAL AND CERTIFICATES FOR SHARES OF LIMITED
COMMON STOCK SHOULD NOT BE SENT TO THE LIMITED, A&F, THE DEALER MANAGERS, ANY
SOLICITING DEALER OR THE INFORMATION AGENT. DELIVERY OF ANY OF THE
AFOREMENTIONED REQUIRED DOCUMENTS TO ANY ADDRESS OTHER THAN AS SET FORTH
HEREIN WILL NOT CONSTITUTE VALID DELIVERY THEREOF.
It is a violation of Rule 14e-4 promulgated under the Exchange
Act for a person to tender shares of Limited Common Stock for such person's
own account unless the person so tendering (i) owns such shares of Limited
Common Stock or (ii) owns other securities convertible into or exchangeable
for such shares of Limited Common Stock or owns an option, warrant or right to
purchase such shares of Limited Common Stock and intends to acquire shares of
Limited Common Stock for tender by conversion or exchange of such securities
or by exercise of such option, warrant or right. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person.
A tender of shares of Limited Common Stock made pursuant to any
method of delivery set forth herein and the acceptance by The Limited for
exchange of such shares pursuant to the procedures described herein and in the
Letter of Transmittal will constitute a binding agreement between the
tendering stockholder and The Limited upon the terms and subject to the
conditions of the Exchange Offer, including the tendering stockholder's
representation that (i) such stockholder owns the shares of Limited Common
Stock being tendered within the meaning of Rule 14e-4 promulgated under the
Exchange Act and (ii) the tender of such shares of Limited Common Stock
complies with Rule 14e-4.
The Exchange Agent will establish an account with respect to
shares of Limited Common Stock at The Depository Trust Company (the
"Book-Entry Transfer Facility") for purposes of the Exchange Offer within two
business days after the date of this Offering Circular-Prospectus, and any
financial institution that is a participant in the system of the Book-Entry
Transfer Facility may make delivery of shares of Limited Common Stock by
causing such Book-Entry Transfer Facility to transfer such shares of Limited
Common Stock into the Exchange Agent's account in accordance with the
procedures of such Book-Entry Transfer Facility. Although delivery of shares
of Limited Common Stock may be effected through book-entry transfer to the
Exchange Agent's account at the Book-Entry Transfer Facility, a properly
completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) and any other required documents, or an Agent's Message
must, in any case, be transmitted to and received or confirmed by the Exchange
Agent at one of its addresses set forth on the back cover of this Offering
Circular-Prospectus on or prior to the Expiration Date, or the guaranteed
delivery procedure described below must be complied with. "Agent's Message"
means a message transmitted through electronic means by the Book-Entry
Transfer Facility to and received by the Exchange Agent and forming a part of a
book-entry confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the shares that such participant has received and
agrees to be bound by the Letter of Transmittal. DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH ITS PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT AS REQUIRED HEREBY.
Signatures on a Letter of Transmittal must be guaranteed by an
Eligible Institution unless the shares of Limited Common Stock tendered
pursuant to the Letter of Transmittal are tendered (i) by the registered
holder of the shares of Limited Common Stock tendered therewith and such
holder has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. An "Eligible Institution" means a
participant in the Security Transfer Agents Medallion Program or the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program. A verification by a notary public alone is not acceptable.
If a certificate representing shares of Limited Common Stock is registered in
the name of a person other than the signer of a Letter of Transmittal, or if
delivery of shares of A&F Common Stock is to be made or shares of Limited
Common Stock not tendered or not accepted for exchange are to be returned to a
person other than the registered owner, the certificate must be endorsed or
accompanied by an appropriate stock power, and the signature on such
certificate or stock power must appear exactly as the name of the registered
owner appears on the certificate with the signature on the certificate or stock
power guaranteed by an Eligible Institution.
If the Letter of Transmittal or Notice of Guaranteed Delivery
or any certificates or stock powers are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should
so indicate when signing, and, unless waived by The Limited, proper evidence
satisfactory to The Limited of their authority so to act must be submitted.
If any certificate representing shares of Limited Common Stock
has been mutilated, destroyed, lost or stolen, the stockholder must (i)
furnish to the Exchange Agent evidence, satisfactory to it in its discretion,
of the ownership of and the destruction, loss or theft of such certificate,
(ii) furnish to the Exchange Agent indemnity, satisfactory to it in its
discretion and (iii) comply with such other reasonable regulations as the
Exchange Agent may prescribe.
Guaranteed Delivery Procedure
If a stockholder desires to tender shares of Limited Common
Stock pursuant to the Exchange Offer and cannot deliver such shares of Limited
Common Stock and all other required documents to the Exchange Agent, or cannot
complete the procedure for delivery by book-entry transfer, prior to the
Expiration Date, such shares of Limited Common Stock may nevertheless be
tendered if all of the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by The Limited
setting forth the name and address of the holder and the number of shares
of Limited Common Stock tendered, stating that the tender is being made
thereby and guaranteeing that, within three business days after the date of
the Notice of Guaranteed Delivery, the certificate(s) representing the
shares of Limited Common Stock accompanied by all other documents required
by the Letter of Transmittal will be deposited by the Eligible Institution
with the Exchange Agent, is received by the Exchange Agent (as provided
below) prior to the Expiration Date; and
(iii) the certificate(s) for such shares of Limited Common
Stock (or a confirmation of a book-entry transfer of such shares of Limited
Common Stock into the Exchange Agent's account at the Book-Entry Transfer
Facilities), together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) and any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer, and any other documents required by the Letter of Transmittal,
are received by the Exchange Agent within three business days after the
date of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand,
telegram, facsimile transmission or mail to the Exchange Agent and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice.
THE METHOD OF DELIVERY OF SHARES OF LIMITED COMMON STOCK AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING
STOCKHOLDER. IF CERTIFICATES REPRESENTING SHARES OF LIMITED COMMON STOCK ARE
SENT BY MAIL, IT IS RECOMMENDED THAT TENDERING STOCKHOLDERS USE PROPERLY
INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND ALLOW SUFFICIENT
TIME TO ENSURE TIMELY RECEIPT.
All questions as to the form of documents (including notices of
withdrawal) and the validity, form, eligibility (including time of receipt)
and acceptance for exchange of any tender of shares of Limited Common Stock
will be determined by The Limited in its sole discretion, which determination
will be final and binding on all tendering stockholders. The Limited reserves
the absolute right to reject any or all tenders of shares of Limited Common
Stock determined by it not to be in proper form or the acceptance for exchange
of shares of Limited Common Stock which may, in the opinion of the counsel of
The Limited, be unlawful. The Limited also reserves the absolute right to
waive any defect or irregularity in any tender of shares of Limited Common
Stock. None of The Limited, the Exchange Agent, the Dealer Managers, the
Soliciting Dealers, the Information Agent or any other person will be under
any duty to give notification of any defect or irregularity in tenders or
notices of withdrawal or incur any liability for failure to give any such
notification.
Special Procedures for Participants in the Savings and Retirement Plan, the
Stock Purchase Plan and the Dividend Reinvestment Plan
Participants in the Savings and Retirement Plan who wish to
participate in the Exchange Offer may instruct the trustee of such plan to
tender shares of Limited Common Stock attributable to their plan accounts by
completing, executing and returning to such trustee the election form included
in the Letter to Participants in the Savings and Retirement Plan sent to such
participants. Participants in the Stock Purchase Plan who wish to participate
in the Exchange Offer may instruct the agent for such plan (Merrill, Lynch,
Pierce, Fenner & Smith) to tender shares of Limited Common Stock attributable
to their plan accounts by notifying such agent of the election as provided in
the Notice to Participants in the Stock Purchase Plan sent to such
participants. Holders of vested but unexercised options to purchase Limited
Common Stock may exercise such options for cash in accordance with the terms
of the Stock Option Plans and tender the shares of Limited Common Stock
received upon such exercise pursuant to the general instructions for tendering
shares discussed in "Procedures for Tendering Shares of Limited Common Stock"
on page 26. PARTICIPANTS IN THE STOCK PURCHASE PLAN OR THE SAVINGS AND
RETIREMENT PLAN MAY NOT USE THE LETTER OF TRANSMITTAL TO DIRECT THE TENDER OF
SHARES OF LIMITED COMMON STOCK, BUT MUST USE THE SEPARATE ELECTION FORM SENT TO
THEM. STOCK PURCHASE PLAN AND SAVINGS AND RETIREMENT PLAN PARTICIPANTS ARE
URGED TO READ THE SEPARATE ELECTION FORM AND RELATED MATERIALS CAREFULLY. SEE
INSTRUCTION _______ OF THE LETTER OF TRANSMITTAL.
Stockholders who are participants in the DRP who wish to tender
some or all of the shares of The Limited attributable to their plan accounts
may do so by so indicating on the Letter of Transmittal and by following the
procedures outlined above under "Procedures for Tendering Shares of Limited
Common Stock" on page 26.
Stockholders who are participants in employee benefit plans not
affiliated with The Limited which hold shares of The Limited may tender some
or all of such shares pursuant to the instructions described above under
"Procedures for Tendering Shares of Limited Common Stock" on page 26, subject
to the requirements of such other plans. To the extent required under any
such plan, participants will receive separate instructions to be followed in
connection with any tender.
Withdrawal Rights
Tenders of shares of Limited Common Stock may be withdrawn at
any time on or prior to the Expiration Date and, unless theretofore accepted
for exchange as provided in this Offering Circular-
Prospectus, may also be withdrawn after the expiration of 40 business days
from the commencement of the Exchange Offer. If The Limited (i) extends the
period of time during which the Exchange Offer is open, (ii) is delayed in its
acceptance of shares of Limited Common Stock for exchange or (iii) is unable
to accept shares of Limited Common Stock for exchange pursuant to the Exchange
Offer for any reason, then, without prejudice to The Limited's rights under
the Exchange Offer, the Exchange Agent may, on behalf of The Limited, retain
all shares of Limited Common Stock tendered, and such shares of Limited Common
Stock may not be withdrawn except as otherwise provided herein, subject to
Rule 13e-4(f)(5) under the Exchange Act, which provides that the person making
an issuer exchange offer shall either pay the consideration offered or return
tendered securities promptly after the termination or withdrawal of the
Exchange Offer.
To be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Exchange
Agent at one of its addresses set forth on the back cover of this Offering
Circular-Prospectus and must specify the name of the person who tendered the
shares of Limited Common Stock to be withdrawn and the number of shares of
Limited Common Stock to be withdrawn precisely as they appear in the Letter of
Transmittal. If the shares of Limited Common Stock to be withdrawn have been
delivered to the Exchange Agent, a signed notice of withdrawal with signatures
guaranteed by an Eligible Institution must be submitted prior to the release
of such shares of Limited Common Stock (except that such signature guarantee
requirement is not applicable in the case of shares of Limited Common Stock
tendered by an Eligible Institution). In addition, such notice must specify,
in the case of shares of Limited Common Stock tendered by delivery of
certificates, the name of the registered holder (if different from that of the
tendering stockholder) and the serial numbers shown on the particular
certificates evidencing the shares of Limited Common Stock to be withdrawn or,
in the case of shares of Limited Common Stock tendered by book-entry transfer,
the name and number of the account at the Book-Entry Transfer Facility.
Withdrawals may not be rescinded, and shares of Limited Common Stock withdrawn
will thereafter be deemed not validly tendered for purposes of the Exchange
Offer. However, withdrawn shares of Limited Common Stock may be retendered by
again following one of the procedures described in "--Procedures for Tendering
Shares of Limited Common Stock" on page 26 or "Special Procedures for
Tendering Shares of Limited Common Stock for Participants in the Savings and
Retirement Plan, the Stock Purchase Plan and the Dividend Reinvestment Plan"
on page 29, at any time prior to the Expiration Date.
All questions as to the form and validity (including time of
receipt) of any notice of withdrawal will be determined by The Limited, in its
sole discretion, which determination shall be final and binding. None of The
Limited, the Exchange Agent, the Dealer Managers, the Soliciting Dealers, the
Information Agent or any other person will be under any duty to give
notification of any defect or irregularity in any notice of withdrawal or incur
any liability for failure to give any such notification.
Except as otherwise provided above, any tender of shares of
Limited Common Stock made pursuant to the Exchange Offer is irrevocable.
Extension of Tender Period; Termination; Amendment
The Limited expressly reserves the right, at any time or from
time to time, in its sole discretion and regardless of whether any of the
conditions specified in "--Conditions to Consummation of the Exchange Offer"
beginning on page 32, shall have been satisfied, (i) to extend the period of
time during which the Exchange Offer is open by giving oral or written notice
of such extension to the Exchange Agent and by making a public announcement
of such extension or (ii) to amend the Exchange Offer in any respect by making
a public announcement of such amendment.
If The Limited materially changes the terms of the Exchange
Offer or the information concerning the Exchange Offer, The Limited will
extend the Exchange Offer to the extent required by the Exchange Act. Certain
rules promulgated under the Exchange Act provide that the minimum period
during which an offer must remain open following material changes in the terms
of the offer or information concerning the offer (other than a change in
price, change in the dealer's soliciting fee or a change in percentage of
securities sought) will depend on the facts and circumstances, including the
relative materiality of such terms or information. The SEC has stated that,
as a general rule, it is of the view that an offer should remain open for a
minimum of five business days from the date that notice of such material
change is first published, sent or given, and that if material changes are
made with respect to information that approaches the significance of price and
share levels, a minimum of ten business days may be required to allow adequate
dissemination and investor response. Subject to the foregoing paragraph, if (i)
The Limited increases or decreases (a) the number of shares of A&F Common
Stock offered in exchange for shares of Limited Common Stock pursuant to the
Exchange Offer, (b) the number of shares of Limited Common Stock eligible for
exchange or (c) the Trigger Amount, and (ii) the Exchange Offer is scheduled
to expire at any time earlier than the expiration of a period ending on the
tenth business day from and including the date that notice of such increase or
decrease is first published, sent or given, the Exchange Offer will be
extended until the expiration of such period of ten business days. The term
"business day" shall mean any day other than Saturday, Sunday or a federal
holiday and shall consist of the time period from 12:01 a.m. through 12:00
Midnight, New York City time.
The Limited also reserves the right, in its sole discretion, in
the event any of the conditions specified in "--Conditions to Consummation of
the Exchange Offer" on page 32, below shall not have been satisfied and so
long as shares of Limited Common Stock have not theretofore been accepted for
exchange, to delay (except as otherwise required by applicable law) acceptance
for exchange, or exchange, of any shares of Limited Common Stock or to
terminate the Exchange Offer and not accept for exchange of or exchange for
any shares of Limited Common Stock.
If The Limited (i) extends the period of time during which the
Exchange Offer is open, (ii) is delayed in accepting for exchange, or
exchange, of any shares of Limited Common Stock or (iii) is unable to accept
for exchange, or exchange, of any shares of Limited Common Stock pursuant to
the Exchange Offer for any reason, then, without prejudice to rights of The
Limited under the Exchange Offer, the Exchange Agent may, on behalf of The
Limited, retain all shares of Limited Common Stock tendered and such shares of
Limited Common Stock may not be withdrawn except as otherwise provided in
"Withdrawal Rights" on page 30. The reservation by The Limited of the right to
delay acceptance for exchange, or exchange, of any shares of Limited Common
Stock is subject to applicable law, which requires that The Limited pay the
consideration offered or return the shares of Limited Common Stock deposited
by or on behalf of stockholders promptly after the termination or withdrawal
of the Exchange Offer.
Any extension, termination or amendment of the Exchange Offer
will be followed as promptly as practicable by a public announcement thereof.
Without limiting the manner in which The Limited may choose to make any public
announcement, The Limited will have no obligation (except as otherwise
required by applicable law) to publish, advertise or otherwise communicate any
such public announcement other than by making a release to the Dow Jones News
Service. In the case of an extension of the Exchange Offer, SEC regulations
require a public announcement of such extension no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date.
Conditions to Consummation of the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer and
without prejudice to The Limited's other rights under the Exchange Offer, The
Limited shall not be required to accept for exchange or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act relating to The Limited's obligation to exchange or return
tendered shares of Limited Common Stock promptly after termination or
withdrawal of the Exchange Offer, exchange, any shares of Limited Common
Stock, and may terminate the Exchange Offer as provided in "--Extension of
Tender Period; Termination; Amendment" on page 30, if prior to the acceptance
for exchange of any shares of Limited Common Stock, any of the following
conditions exist:
(i) the Trigger Amount shall not have been reached;
(ii) (a) any action, proceeding or litigation seeking to
enjoin, make illegal or materially delay consummation of the Exchange Offer
or otherwise relating in any manner to the Exchange Offer shall have been
instituted before any court or other regulatory or administrative
authority; or (b) any order, stay, judgment or decree shall have been
issued by any court, government, governmental authority or other regulatory
or administrative authority and be in effect, or any statute, rule,
regulation, governmental order or injunction shall have been proposed,
enacted, enforced or deemed applicable to the Exchange Offer, any of which
would or might restrain, prohibit or delay consummation of the Exchange
Offer or materially impair the contemplated benefits of the Exchange Offer
to The Limited or A&F;
(iii) there shall have occurred (and the adverse effect of
such occurrence shall, in the reasonable judgment of The Limited, be
continuing) (a) any general suspension of trading in, or limitation on
prices for, securities on any national securities exchange or in the over-
the-counter market in the United States, (b) any extraordinary or material
adverse change in U.S. financial markets generally, including, without
limitation, a decline of at least 20% in either the Dow Jones average of
industrial stocks or the Standard & Poor's 500 Index from __________, 1998,
(c) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (d) any limitation (whether or not
mandatory) by any governmental entity, on, or any other event that would
reasonably be expected to materially adversely affect, the extension of
credit by banks or other lending institutions, (e) a commencement of a war
or armed hostilities or other national or international calamity directly
or indirectly involving the United States, which would reasonably be
expected to affect materially and adversely (or to delay materially) the
consummation of the Exchange Offer or (f) in the case of any of the
foregoing existing at the time of commencement of the Exchange Offer, a
material acceleration or worsening thereof;
(iv) The Limited fails to receive a private letter ruling
from the Internal Revenue Service in form and substance reasonably
satisfactory to The Limited to the effect that, for federal income tax
purposes, the Transactions will generally be tax-free to The Limited and
its stockholders (See "Certain Federal Income Tax Consequences" on page 59
for further detail);
(v) any tender or exchange offer with respect to some or all
of the outstanding Limited Common Stock (other than the Exchange Offer), or
a merger, acquisition or other business combination proposal for The
Limited, shall have been proposed, announced or made by any person or
entity;
(vi) there shall have occurred any event or events that have
resulted, or may, in the sole judgment of The Limited, result, in an actual
or threatened change in the business, condition (financial or other),
income, operations, stock ownership or prospects of The Limited and its
subsidiaries, taken as a whole, or of A&F and its subsidiaries, taken as a
whole; or
(vii) (A) any person, entity or "group" (as that term is
used in Section 13(d)(3) of the Exchange Act) shall have acquired, or
proposed to acquire, beneficial ownership of more than 5% of the
outstanding shares of Limited Common Stock (other than a person, entity or
group which had publicly disclosed such ownership in a Schedule 13D or 13G
(or an amendment thereto) on file with the SEC prior to February ___,
1998), (B) any such person, entity or group which had publicly disclosed
such ownership prior to such date shall have acquired, or proposed to
acquire, beneficial ownership of additional shares of Limited Common Stock
constituting more than 2% of the outstanding shares of Limited Common Stock
(options for and other rights to acquire Limited Common Stock which are so
acquired, or proposed to be acquired, being deemed for this purpose to be
immediately exercisable) or (C) any new group shall have been formed which
beneficially owns more than 5% of the outstanding shares of Limited Common
Stock;
which in the reasonable judgment of The Limited in any such case, and
regardless of the circumstances, makes it inadvisable to proceed with the
Exchange Offer or with such acceptance for exchange of shares.
The foregoing conditions are for the sole benefit of The
Limited and may be asserted by it with respect to all or any portion of the
Exchange Offer regardless of the circumstances giving rise to such conditions
or may be waived by The Limited in whole or in part at any time and from time
to time in its sole discretion. Any determination by The Limited concerning
the conditions described above will be final and binding upon all parties.
The failure by The Limited at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.
In addition, The Limited will not accept any shares of Limited
Common Stock tendered, and no shares of A&F Common Stock will be exchanged for
any shares of Limited Common Stock, at any time at which there shall be a stop
order issued by the SEC which shall remain in effect with respect to the
Registration Statement.
Fees and Expenses
Goldman, Sachs & Co. ("Goldman Sachs") is acting as the Dealer
Manager in connection with the Exchange Offer. Goldman Sachs and NationsBanc
Montgomery Securities ("NMSI") are acting as co-financial advisors to The
Limited for these transactions. As Dealer Manager, Goldman Sachs will receive
a fee of $_____ for its services. Goldman Sachs and NMSI will receive
additional advisory fees in addition to being reimbursed by The Limited for
their out of pocket expenses, including attorneys' fees, in connection with
the Exchange Offer. Goldman Sachs has from time to time provided investment
banking services to The Limited, including acting as co-lead manager of the
Intimate Brands IPO and the lead manager of the A&F IPO, for which Goldman
Sachs has received customary compensation. NMSI acted as co-manager of the
A&F IPO for which NMSI has received customary compensation. The Limited has
agreed to indemnify Goldman Sachs and NMSI against certain liabilities,
including civil liabilities under the federal securities laws, and to
contribute to payments which Goldman Sachs and NMSI may be required to make in
respect thereof.
The Limited will pay to a Soliciting Dealer a solicitation fee
of $1.00 per share, up to a maximum of 1,000 shares, for each share of Limited
Common Stock tendered and accepted for exchange pursuant to the Exchange Offer
if such Soliciting Dealer has affirmatively solicited and obtained such
tender, except that no solicitation fee shall be payable (i) in connection
with a tender of Limited Common Stock by a stockholder (A) tendering more than
10,000 shares of Limited Common Stock or (B) tendering from a country outside
of the United States; or (ii) to the Dealer Managers. "Soliciting Dealer"
includes (i) any broker or dealer in securities which is a member of any
national securities exchange or of the National Association of Securities
Dealers, Inc. or (ii) any bank or trust company. In order for a Soliciting
Dealer to receive a solicitation fee with respect to the tender of shares of
Limited Common Stock, the Exchange Agent must have received a Letter of
Transmittal with Section ___ thereof entitled "Notice of Solicited Tenders"
properly completed and duly executed.
No solicitation fee shall be payable to a Soliciting Dealer if
such Soliciting Dealer is required for any reason to transfer the amount of
such fee to a tendering holder (other than itself). Soliciting Dealers are not
entitled to a solicitation fee with respect to shares of Limited Common Stock
beneficially owned by such Soliciting Dealer or with respect to any shares
that are registered in the name of a Soliciting Dealer unless the shares are
held by such Soliciting Dealer as nominee and are tendered for the benefit of
beneficial holders identified in the Letter of Transmittal. No broker, dealer,
bank, trust company or fiduciary shall be deemed to be the agent of The
Limited, A&F, the Exchange Agent, the Dealer Managers or the Information Agent
for purposes of the Exchange Offer.
The Limited has retained D.F. King & Co., Inc. (the
"Information Agent") to act as the Information Agent and First Chicago Trust
Company of New York (the "Exchange Agent") to act as the Exchange Agent in
connection with the Exchange Offer. The Information Agent may contact holders
of shares of Limited Common Stock by mail, telephone, facsimile transmission
and personal interviews and may request brokers, dealers and other nominee
stockholders to forward materials relating to the Exchange Offer to beneficial
owners. The Information Agent and the Exchange Agent each will receive
reasonable and customary compensation for their respective services, will be
reimbursed for certain reasonable out-of-pocket expenses and will be
indemnified against certain liabilities in connection with their services,
including certain liabilities under the federal securities laws. Neither the
Information Agent nor the Exchange Agent has been retained to make
solicitations or recommendations in their respective roles as Information
Agent and Exchange Agent, and the fees to be paid to them will not be based on
the number of shares of Limited Common Stock tendered pursuant to the Exchange
Offer; however, the Exchange Agent will be compensated in part on the basis of
the number of Letters of Transmittal received and the number of stock
certificates distributed pursuant to the Exchange Offer.
The Limited will not pay any fees or commissions to any broker
or dealer or any other person (other than the Dealer Managers, the Soliciting
Dealers, the Information Agent and the Exchange Agent) for soliciting tenders
of shares of Limited Common Stock pursuant to the Exchange Offer. Brokers,
dealers, commercial banks and trust companies will, upon request, be
reimbursed by The Limited for reasonable and necessary costs and expenses
incurred by them in forwarding materials to their customers.
THE SPIN-OFF
If the result of the Exchange Offer is such that fewer than
43,000,000 shares of A&F Common Stock are exchanged pursuant to the Exchange
Offer, and the Exchange Offer is consummated, The Limited will distribute all
remaining shares of A&F Common Stock owned by it pro rata to remaining holders
of record of shares of Limited Common Stock at the close of business on a
record date promptly after consummation of the Exchange Offer (the
"Spin-Off"). Such record date and the date of such distribution (which will be
as soon as practicable after such record date) will be publicly announced by
The Limited when they have been determined. If the Trigger Amount is not
reached, The Limited may, in its sole discretion, (i) decide not to consummate
the Exchange Offer, (ii) waive the Trigger Amount and consummate the
Transactions, (iii) spin-off all shares of A&F Common Stock owned by it or
(iv) review and implement other alternatives. See "The Exchange
Offer--Conditions to Consummation of the Exchange Offer" on page 32. If
43,000,000 shares of A&F Common Stock are exchanged pursuant to the Exchange
Offer, the Spin-Off will not be effected.
No fractional shares of A&F Common Stock will be distributed
pursuant to the Spin-Off. The Exchange Agent, acting as agent for stockholders
of The Limited otherwise entitled to receive fractional shares, will aggregate
all fractional shares and sell them for the accounts of such stockholders.
Such proceeds as may be realized by the Exchange Agent upon the sale of such
fractional shares will be distributed, net of commissions, to such
stockholders on a pro rata basis. Any such cash payments will be paid by the
Exchange Agent. NONE OF THE EXCHANGE AGENT, THE LIMITED, A&F, THE SOLICITING
DEALERS OR THE DEALER MANAGERS WILL GUARANTEE ANY MINIMUM PROCEEDS FROM THE
SALE OF SHARES OF A&F COMMON STOCK AND NO INTEREST WILL BE PAID ON ANY SUCH
PROCEEDS.
MARKET PRICES, TRADING AND DIVIDEND INFORMATION
Limited Common Stock
Price Range and Dividends
The following table sets forth, for the calendar periods
indicated, the per share range of high and low sales prices for Limited Common
Stock, as reported on the New York Stock Exchange (the "NYSE") Composite Tape.
Limited Common Stock is listed and traded on the NYSE under the symbol "LTD".
<TABLE>
<CAPTION>
Market Price Cash
----------------------- Dividend
High Low Per Share
------- ------- ---------
<S> <C> <C> <C>
Fiscal Year 1995
1st Quarter................... $23 1/4 $16 5/8 $.10
2nd Quarter................... 22 7/8 20 .10
3rd Quarter................... 21 1/2 17 7/8 .10
4th Quarter................... 19 1/2 15 1/4 .10
Fiscal Year 1996
1st Quarter................... $20 3/4 $16 5/8 $.10
2nd Quarter................... 22 18 1/4 .10
3rd Quarter................... 20 1/4 17 3/4 .10
4th Quarter................... 20 1/8 16 5/8 .10
Fiscal Year 1997
1st Quarter................... $20 1/8 $17 $.12
2nd Quarter................... 22 5/16 18 5/8 .12
3rd Quarter................... 25 1/2 21 3/8 .12
4th Quarter................... 27 1/4 23 9/16 .12
Fiscal Year 1998
1st Quarter (through ________,
1998)............
</TABLE>
The number of holders of record of Limited Common Stock as
of __________, 1998 was _______.
On February 17, 1998 (the last trading day prior to
announcement of the Exchange Offer), the closing sales price per share of
Limited Common Stock as reported on the NYSE Composite Tape was $_____. On
____________, 1998, the last reported sale price per share of Limited Common
Stock as reported on the NYSE Composite Tape was ______. STOCKHOLDERS ARE
URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR SHARES OF LIMITED COMMON STOCK.
NO ASSURANCE CAN BE GIVEN CONCERNING THE MARKET PRICE OF LIMITED COMMON STOCK
BEFORE OR AFTER THE DATE ON WHICH THE EXCHANGE OFFER IS CONSUMMATED.
A&F Common Stock
Price Range and Dividends
The following table sets forth, for the calendar periods
indicated, the per share range of high and low sales prices for A&F Common
Stock, as reported on the NYSE Composite Tape. A&F Common Stock is listed and
traded on the NYSE under the symbol "ANF".
<TABLE>
<CAPTION>
Market Price
-----------------------
High Low
------- -------
<S> <C> <C>
Fiscal Year 1996
3rd Quarter..................... $26 1/4 $21 3/4
4th Quarter..................... 23 3/4 12 5/8
Fiscal Year 1997
1st Quarter..................... $17 5/8 $12 7/8
2nd Quarter..................... 20 1/2 15 3/4
3rd Quarter..................... 27 1/4 19 1/4
4th Quarter..................... $34 11/16 $25 11/16
Fiscal Year 1998
1st Quarter (through __________,
1998).........................
</TABLE>
On February 17, 1998 (the last trading day prior to
announcement of the Exchange Offer), the closing sales price per share of
A&F Common Stock as reported on the NYSE Composite Tape was $____. On
__________, 1998, the last reported sale price per share of A&F Common
Stock as reported on the NYSE Composite Tape was ________. STOCKHOLDERS
ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR SHARES OF A&F COMMON
STOCK. NO ASSURANCE CAN BE GIVEN CONCERNING THE MARKET PRICE OF A&F COMMON
STOCK BEFORE OR AFTER THE DATE ON WHICH THE EXCHANGE OFFER IS CONSUMMATED.
Dividend Policies
The Limited currently pays a dividend of $0.13 per share of
Limited Common Stock on a quarterly basis. Limited stockholders who were
holders of record on March 6, 1998 will receive the regular quarterly dividend
of $0.13 per share payable March 17, 1998. Thereafter, stockholders whose
shares of Limited Common Stock are purchased pursuant to this Exchange Offer
will not be entitled to any dividend on such shares. Limited stockholders
will continue to receive the regular quarterly dividend with respect to shares
of Limited Common Stock which are not purchased pursuant to the Exchange
Offer. A&F does not currently pay a dividend on shares of A&F Common Stock.
The payment of dividends by The Limited and A&F in the future
will depend upon business conditions, their respective financial conditions
and earnings and other factors. There can be no assurance as to the payment of
dividends in the future, and the actual amount of dividends paid, if any, may
be more or less than the amount discussed above.
CAPITALIZATION
The following table sets forth the pro forma
(post-Transactions) capitalization of The Limited as of November 1, 1997 based
on (i) the tender of approximately _______________ shares of Limited Common
Stock in exchange for approximately 43,000,000 shares of A&F Common Stock
(which were previously owned by The Limited) and (ii) an Exchange Ratio of ___
of a share of A&F Common Stock for each share of Limited Common Stock. The
Transactions are accounted for as a $______________ tax free gain by The
Limited with a corresponding $________________ increase in treasury shares
owned by The Limited.
<TABLE>
<CAPTION>
November 1, 1997
----------------------------------
Pro forma after
Historical(1) Transactions
-------------- ---------------
<S> <C> <C>
Short-term borrowings:
Commercial Paper.............................................................. $ 101,269 $ 101,269
----------- ----------
101,269 101,269
Long-Term Debt 650,000 650,000
Shareholders' equity(1):
Preferred Stock, 10,000,000 shares authorized, no shares issued and
outstanding................................................................. -- --
Common Stock, par value $.50 per share, 500,000,000 shares authorized,
271,100,000 million prior to the transaction and ___________ post
transaction net of treasury shares.......................................... 180,352 180,352
Paid-in Capital............................................................... 148,790 148,790
Retained Earnings(2).......................................................... 3,560,602 *
----------- ----------
3,889,744
Less Treasury Stock, at Average Cost(3)....................................... (1,904,831) *
----------- ----------
Total Shareholders' Equity..................................................... $1,984,913 *
========== ==========
</TABLE>
- ---------------
(1) Represents amounts derived from the Consolidated Financial Statements of
The Limited included elsewhere in this Offering Circular-Prospectus.
(2) Represents the before and after Transactions balances in retained earnings
which on a post Transactions basis reflects an increase of $___________
billion as a result of a gain on the Transactions offset by the
elimination of A&F earnings, net of minority interest, for the 1997
fiscal year-to-date period.
(3) Represents the basis in treasury shares acquired as a result of
____________ shares of Limited Common Stock tendered in exchange for the
value of A&F Common Stock previously owned by The Limited.
* Indicates calculations to be completed upon the determination of the
Exchange Ratio range.
THE LIMITED, INC. UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma financial statements are
presented for illustrative purposes only and are not necessarily indicative of
the financial position or results of operations of future periods or the
results that actually would have been realized had the Transactions occurred
at the specified time. The unaudited pro forma financial statements,
including the notes thereto, are qualified in their entirety by reference to,
and should be read in conjunction with, the historical financial statements of
The Limited, including the notes thereto, incorporated herein by reference.
See "Where You Can Find More Information" on page 61.
The Limited, Inc. Pro Forma Consolidated
Statement of Income (Unaudited) (in thousands)
Year Ended February 1, 1997
<TABLE>
<CAPTION>
Historical Adjustments(1) Pro forma
----------- -------------- -----------
<S> <C> <C> <C>
Net Sales............................................... $ 8,644,791 $ 335,372 $ 8,309,419
Cost of Goods Sold, Occupancy & Buying Costs........... (6,148,212) (211,606) (5,936,606)
----------- --------- -----------
Gross Income............................................ 2,496,579 123,766 2,372,813
General, Administrative & Store Operating Expenses..... (1,848,512) (77,773) (1,770,739)
Special & Nonrecurring Items, Net...................... (12,000) 0 (12,000)
----------- --------- -----------
Operating Income........................................ 636,067 45,993 590,074
Interest Expense....................................... (75,363) (4,919) (70,444)
Other Income, Net...................................... 41,972 0 41,972
Minority Interest...................................... (45,646) (2,009) (43,637)
Gain in connection with an initial public offering..... 118,178 0 118,178
----------- --------- -----------
Income before Income Taxes.............................. 675,208 39,065 636,143
Provision for Income Taxes............................ 241,000 16,400 224,600
----------- --------- -----------
Net Income.............................................. $ 434,208 $ 22,665 $ 411,543
=========== ========= ===========
Net Income Per Share................................... $ 1.54 $ * $ *
=========== ========= ===========
Net Income Per Share, Excluding Gain in Connection
with Initial Public Offering.......................... $ 1.12 $ *
=========== ========= ===========
</TABLE>
* Indicates calculations to be completed upon determination of the Exchange
Ratio range.
The Limited, Inc.
Pro Forma Consolidated Balance Sheet
(Unaudited)
(in thousands)
As of February 1, 1997
<TABLE>
<CAPTION> Pro forma Pro forma
before after
Historical Adjustments Transactions Adjustments(3) Transactions
---------- ------------------------ ------------ -------------- ------------
A&f(1) Other(2)
----------- --------
<S> <C> <C> <C> <C> <C>
Assets
Current Assets:
Cash & Equivalents.......... $ 312,796 $ 1,945 $ 310,851 $ 310,851
Accounts Receivable......... 69,337 2,102 67,235 67,235
Inventories................. 1,007,303 34,943 972,360 972,360
Store Supplies.............. 90,400 5,300 85,100 85,100
Other....................... 65,261 588 64,673 64,673
---------- ---------- ---------- ----------
Total Current Assets....... 1,545,097 44,878 1,500,219 1,500,219
Property & Equipment, Net... 1,828,869 58,992 1,769,877 1,769,877
Restricted Cash............. 351,600 0 351,600 351,600
Other Assets................ 394,436 1,891 $50,000 442,545 442,545
---------- ---------- ------- ---------- ----------
Total Assets............... $4,120,002 $ 105,761 $50,000 $4,064,241 $4,064,241
========== ========== ======= ========== ==========
Liabilities &
Shareholders' Equity
Current Liabilities:
Accounts Payable............ $ 307,841 $ 11,831 $ 296,010 $ 296,010
Accrued Expense............. 481,744 22,388 459,356 459,356
Income Taxes................ 117,308 9,371 107,937 107,937
---------- ---------- ---------- ----------
Total Current Liabilities.. 906,893 43,590 863,303 863,303
Long-term debt.............. 650,000 50,000 50,000 650,000 650,000
Deferred Income Taxes....... 169,932 0 169,932 169,932
Other Long-Term Liabilities. 51,659 933 50,726 50,726
Minority Interest........... 67,336 2,009 (3) 65,327 65,327
Contingent Stock
Redemption Agreement....... 351,600 0 351,600 351,600
Shareholders' Equity:
Common Stock................ 180,352 180,352 180,352
Paid-In Capital............. 142,860 142,860 142,860
11,238
Retained Earnings........... 3,526,256 (2,009)(3) 3,517,027 *(4) *
---------- ---------- ------- ---------- ---------- ----------
3,849,468 11,238 3,840,239
Less: Treasury Stock, @
cost..................... (1,926,886) (1,926,886) *(4)
---------- ---------- ---------- ---------- ----------
Total Shareholders' Equity. 1,922,582 * 1,913,353 *
---------- ---------- ------- ---------- ----------
Total Liabilities &
Shareholders' Equity..... $4,120,002 $ 105,761 $50,000 $4,064,241 $ *
========== ========== ======= ========== ==========
</TABLE>
* Indicates calculations to be completed upon determination of the Exchange
Ratio range.
The Limited, Inc.
Pro Forma Consolidated Statement of Income
(Unaudited)
<TABLE>
<CAPTION>
For the Thirty-nine
Weeks Ended November 2, 1996
--------------------------------------------------
Historical Adjustments(1) Pro forma
---------- -------------- -----------
(in thousands, except for per share amounts)
<S> <C> <C> <C>
Net Sales................................................. $5,678,530 $196,139 $5,482,391
Cost of Goods Sold, Occupancy and Buying Costs........... 4,161,706 132,236 4,029,470
---------- -------- ----------
Gross Income.............................................. 1,516,824 63,903 1,452,921
General, Administrative and Store Operating Expenses..... (1,293,096) (53,252) (1,239,844)
---------- -------- ----------
Operating Income.......................................... 223,728 10,651 213,077
Interest Expense......................................... (55,902) (3,794) (52,108)
Other Income............................................. 30,445 30,445
Minority Interest........................................ (17,023) (17,023)
Gain in Connection with Initial Public Offering.......... 118,567 -- 118,567
---------- -------- ----------
Income Before Income Taxes............................... 299,815 6,857 292,958
Provision for Income Taxes............................. 79,000 2,700 76,300
---------- -------- ----------
Net Income................................................ $ 220,815 $ 4,157 $ 216,658
========== ======== ==========
Net Income Per Share...................................... $ 0.78 $ * *
========== ======== ==========
</TABLE>
* Indicates calculations to be completed upon the determination of the
Exchange Ratio range.
The Limited, Inc.
Pro Forma Consolidated Statement of Income
(Unaudited)
<TABLE>
<CAPTION>
For the Thirty-nine
Weeks Ended November 1, 1997
--------------------------------------------------
Historical Adjustments(1) Pro forma
---------- -------------- ----------
(in thousands, except for per share amounts)
<S> <C> <C> <C>
Net Sales................................................. $5,920,423 $309,472 $5,610,951
Cost of Goods Sold, Occupancy and Buying Costs........... 4,259,063 204,755 4,054,308
---------- -------- ----------
Gross Income.............................................. 1,661,360 104,717 1,556,643
General, Administrative and Store Operating Expenses..... (1,443,844) (79,738) (1,364,106)
Special and Nonrecurring Items, net...................... 62,785 62,785
---------- -------- ----------
Operating Income.......................................... 280,301 24,979 255,322
Interest Expense......................................... (50,744) (3,278) (47,466)
Other Income............................................. 21,876 21,876
Minority Interest........................................ (23,910) (2,083)(2) (21,827)
Gain in Connection with Initial Public Offering.......... 8,606 -- 8,606
---------- -------- ----------
Income Before Income Taxes............................... 236,129 19,618 216,511
Provision for Income Taxes............................... 104,000 8,680 95,320
---------- -------- ----------
Net Income................................................ $132,129 $ 10,938 $ 121,191
========== ======== ==========
Net Income Per Share...................................... $ 0.48 $ * *
========== ======== ==========
</TABLE>
* Indicates calculations to be completed upon the determination of the
Exchange Ratio Range.
The Limited, Inc.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The following summary of pro forma adjustments are based on
available information and certain estimates and assumptions. Therefore, it is
likely that the actual adjustments will differ from the pro forma adjustments.
A&F and The Limited believe that such assumptions provide a reasonable basis
for presenting all of the significant effects of the following transactions
and events and that the pro forma adjustments give appropriate effect to those
assumptions and are properly applied in the unaudited pro forma consolidated
financial statements.
Historical amounts for The Limited were derived from the
historical Consolidated Financial Statements of The Limited incorporated by
reference in this Offering Circular-Prospectus which are adjusted for the
following:
2. Adjustments to Pro Forma Consolidated Balance Sheet
(1) Amounts represent A&F balance sheet which will not be
included in The Limited financial statements subsequent to the Transactions.
(2) Represents elimination entries on the balance sheet of The
Limited.
(3) Represents minority interest in the accumulated earnings of
A&F.
(4) Represents the impact of ________________ shares of Limited
Common Stock tendered in exchange for the market value of 43,000,000 shares
of A&F Common Stock previously owned by The Limited which resulted in a gain
of $________________ million to The Limited.
3. Adjustments to Pro Forma Consolidated Statements of Income
Amounts of The Limited's statements of income were derived from
the historical consolidated financial statements incorporated by reference in
this Offering Circular-Prospectus and are adjusted for the following:
(1) Amounts represent A&F's results of operations which will
not be consolidated in The Limited's financial statements subsequent to the
exchange offer.
(2) Represents minority interest in earnings of A&F for the
periods presented.
BUSINESS OF A&F
Abercrombie & Fitch is a rapidly growing specialty retailer of
high-quality, casual apparel for men and women approximately 15 to 50 years of
age. A&F's net sales have increased from $85.3 million in 1992 to $521.6
million in 1997, representing a compound annual growth rate of 44%. During
this time, operating income has improved from an operating loss of $10.2
million in 1992 to operating income of $84.1 million in 1997, while the number
of A&F stores in operation more than tripled, increasing from 40 at the end of
1992 to 156 at the end of 1997. A&F plans to continue this new store expansion
program by opening 30 new stores in 1998 and by increasing the number of
stores in operation by approximately 20% annually for the next several years
thereafter.
The A&F brand was established in 1892 and became well known as
a supplier of rugged, high-quality outdoor gear. Famous for outfitting the
safaris of Teddy Roosevelt and Ernest Hemingway and the expeditions of Admiral
Byrd to the North and South Poles, A&F goods were renowned for their
durability and dependability--and A&F placed a premium on complete customer
satisfaction with each item sold. In 1992, a new management team began
repositioning A&F as a more fashion-oriented casual apparel business directed
at men and women with a youthful lifestyle. In reestablishing the A&F brand,
A&F combined its historical image for quality with a new emphasis on casual
American style and youthfulness. A&F believes that this strategic decision has
contributed to the strong growth and improved profitability it has experienced
since 1992.
Industry sources estimate that the men's and women's apparel
market generated approximately $140.2 billion in retail purchases in 1997.
These sources estimate that men's and women's apparel total sales volume grew
at a compound annual rate of approximately 4.4% between 1992 and 1997. A&F's
compound annual growth of 44% during this period has outpaced that of the
industry. A&F believes that the size of A&F's market, coupled with its
business strengths and growth strategies, should provide significant
opportunities for growth and increased market share in the future.
Business Strengths
A&F believes that certain business strengths have contributed
to its success in the past and will enable it to continue growing profitably.
o Established and Differentiated Lifestyle Brand. A&F has
created a focused and differentiated brand image based on quality,
youthfulness and classic American style. This image is consistently
communicated through all aspects of A&F's business, including merchandise
assortments, in-store marketing, print advertising and the recently introduced
A&F Quarterly, a catalog/magazine. A&F believes that the strength of the A&F
brand provides opportunities for increased penetration of current merchandise
categories and entry into new product categories.
o Broad and Growing Appeal. A&F's merchandise assortment
appeals to a broad range of customers with varying ages and income levels. A&F
believes that both men and women interested in casual, classic American
fashion are attracted to the A&F lifestyle image. A&F also believes that the
brand's broad appeal has been augmented by, and should continue to benefit
from, the current trend in fashion toward casual apparel.
o Proven Management Team. Since the current management team
assumed responsibility in 1992, A&F has increased the level of brand awareness
and consistently reported improved financial results. In addition, A&F's
senior management has significant experience, with an aggregate of over one
hundred years in the retail business. A&F believes that management's
substantial experience and demonstrated track record of highly profitable
growth strongly positions A&F for the future.
o Consistent Store Level Execution. A&F believes that a major
element of its success is the consistent store level execution of its brand
strategy. Store presentation is tightly controlled by A&F and is based on a
detailed and comprehensive store plan regarding visual merchandising,
marketing and fixtures to assure that all stores provide a consistent
portrayal of the brand. Store associates are trained as "brand
representatives" who convey and reinforce the brand image through their
attitude and enthusiasm.
o Quality. Since its founding over 100 years ago, A&F has
maintained a strong reputation for quality. This reputation has been enhanced
in recent years as management has made quality a defining element of the brand.
A&F sources high quality natural fabrics from around the world and uses
distinctive trim details and specialized washes to achieve a unique style and
comfort in its products. As part of this focus on quality, A&F establishes
on-going relationships with key factories to ensure reliability and
consistency of production.
o Internal Design and Merchandising Capabilities. The
cornerstone of A&F's business is its ability to design products which embody
the A&F image. A&F develops substantially all of its merchandise line through
its own design group, which allows it to develop exclusive merchandise and
offer a consistent assortment within a season and from year to year. In
addition, because A&F's merchandise is sold exclusively in its own stores, A&F
is able to control the presentation and pricing of its merchandise, provide a
higher level of customer service and closely monitor retail sell-through,
which provides competitive advantages over other brand manufacturers that
market their goods through department stores.
Growth Strategy
A&F has implemented a growth strategy designed to permit A&F to
capitalize on its business strengths. The principal elements of A&F's growth
strategy are summarized below:
o New Store Growth. Beginning in 1993, A&F began its store
expansion program. Since then, A&F has opened 121 stores and plans to
continue this store expansion program by opening 30 new stores in 1998 and
increasing the number of stores in operation by approximately 20% annually for
the next several years thereafter. While most stores to be opened in 1998 will
be in regional shopping malls, A&F believes that selected street locations in
university and high-traffic urban settings also provide attractive expansion
opportunities. Given the strength of the A&F brand and its customer
demographics, management believes that, in the current format, there will be
approximately 250 additional mall and street location sites available for new
stores.
o Further Penetration of Existing Merchandise Categories.
Management believes that A&F's ability to design and market new merchandise
quickly and effectively has been a key element of its success. In recent years
A&F has significantly broadened its assortment in existing categories in order
to increase volume and productivity. Key classifications such as sweaters,
knits, pants and outerwear have been expanded, and new categories such as
men's and women's underwear/loungewear have been added. As a result of A&F
broadening its product mix, it has been able to flow fresh merchandise to the
stores on a more frequent basis. In 1998 and beyond, A&F will continue to
focus on building its core classifications to drive the volume growth of the
business.
o Introduction of New Business Concepts. A&F believes that it
can successfully extend the A&F brand into new merchandise categories to
further increase sales and profit growth. In 1997 A&F introduced A&F
Quarterly, a catalog/magazine to enhance and reinforce the A&F brand image.
In 1998 A&F will also begin testing a kids' business. The initial test will
include 10-20 stores in major regional malls. Future openings will be
determined based on the results of the initial test.
A&F Stores
Store Environment
A&F stores and point-of-sale marketing are designed to convey
the principal elements and personality of the brand--quality, casual American
fashion, and a youthful lifestyle. The store design, furniture, fixtures and
music are all carefully planned and coordinated to create a shopping
experience that is consistent with the A&F lifestyle. A&F's in-store
photographs are also principal components in creating and enhancing the
casual, energized environment of the stores. These photographs, which are
enlarged and displayed prominently throughout the stores, contain distinctive
black and white images of men and women engaged in activities identified with
an active, fun lifestyle. A&F believes that its customers experience the A&F
stores as entertaining destinations, in which they feel welcomed and
comfortable.
A&F's sales associates, or brand representatives, are a central
element in creating the entertaining, yet comfortable, atmosphere of the
stores. In addition to providing a high level of customer service, the brand
representatives reflect the casual, energetic attitude of the A&F brand and
culture. In conjunction with other components of the store environment, A&F
believes its brand representatives significantly contribute to a store
atmosphere that is consistent with a gathering among friends.
A&F maintains a uniform appearance throughout its store base,
in terms of merchandise display and location on the selling floor. Store
managers receive detailed store plans that dictate fixture and merchandise
placement to ensure uniform execution of the merchandising strategy at the
store level. Standardization of store design and merchandise presentation also
creates cost savings in store furnishings, maximizes usage and productivity of
selling space and allows A&F to efficiently open new stores. In Fall 1996,
A&F introduced a new, more sophisticated store prototype that seeks to further
stress the casual, youthful nature of the A&F brand accomplished in part
through the use of lighter colors throughout the store and wood floors.
Store Expansion Program
A&F stores are located principally in regional shopping malls.
At February 10, 1998, A&F operated 156 stores nationwide, averaging 7,910
selling square feet. See "--Properties" on page 51 for a listing of store
locations by state. The table below highlights the store expansion strategy
pursued by A&F:
<TABLE>
<CAPTION>
Average Store
Stores Open Stores Opened Stores Closed Stores Open Selling Space
at beginning of during during at end of Total at end of
Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Selling Space Fiscal Year
- ----------- --------------- -------------- ------------- ----------- ------------- -------------
(000's sq. ft.) (sq. ft.)
<S> <C> <C> <C> <C> <C> <C>
1993........ 40 9 -- 49 405 8,265
1994........ 49 20 2 67 541 8,075
1995........ 67 33 -- 100 792 7,920
1996........ 100 29 2 127 1,006 7,921
1997........ 127 30 1 156 1,234 7,910
</TABLE>
A&F plans to open 30 stores in 1998 (none of which have been
opened to date) and increase the number of stores in operation by
approximately 20% annually for the next several years thereafter. While
most of the stores to be opened in 1998 will be in regional shopping malls,
A&F believes that selected street locations in university and high-traffic
urban settings also provide attractive expansion opportunities. In
evaluating real estate locations A&F considers a variety of criteria.
Regional malls are measured based on strength of anchor stores, the fashion
and quality mix of other specialty tenants and population and income
characteristics of the surrounding area. Non-mall locations are assessed
in terms of strength of other nearby specialty stores, and whether the
shopping area attracts a customer mix consistent with the lifestyle
characteristics targeted by the brand. Additionally, A&F will be testing a
kids' business in 10-20 stores in 1998.
A key element of A&F's new store strategy is to open new stores
with trained managers in place. A&F targets that all managers of new stores
have prior experience in other A&F stores in either the manager or assistant
manager position.
New Store Economics
The new A&F stores that were opened in 1996 averaged $3.6
million in net sales in 1997 and produced net sales per selling square foot of
approximately $445. The average cost for leasehold improvements, furniture and
fixtures for these stores was approximately $750,000 per store, after giving
effect to landlord allowances. Inventory purchases for such stores averaged
$265,000 per store. These stores generated an average after-tax return on
investment (after-tax four wall contribution divided by capital investment and
average inventory) of approximately 65% in 1997.
A&F estimates that the average cost for leasehold improvements,
furniture and fixtures for stores to be opened in 1998 will be approximately
$750,000 per store, after giving effect to landlord allowances. Average
pre-opening costs per store, which will be expensed as incurred, are expected
to be less than $30,000. In addition, inventory purchases are expected to
average approximately $275,000 per store.
A&F's stores have typically exceeded management's store
operating profitability and return on asset targets during the first year of
operation.
Merchandising
Product Mix
A&F designs and sells all of its merchandise under its
proprietary A&F brand. The merchandise assortment covers a broad range of
classifications in men's and women's casual apparel. In addition, A&F offers a
broad range of accessories that includes belts, socks, caps, boxers, underwear
and personal care products.
The following table sets forth A&F's merchandise mix by major
category as a percentage of net sales for the years 1995-1997.
<TABLE>
<CAPTION>
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
Men's................ 60.2% 56.0% 54.4%
Women's.............. 39.8 44.0 45.6
Total Company........ 100.0% 100.0% 100.0%
</TABLE>
Over the past several years, A&F has increased the square
footage and the size of the merchandise offering devoted to women's
sportswear, which has resulted in an increase in the women's business as a
percentage of total net sales.
A&F believes that there are major opportunities to increase
volume through both increased penetration of the existing classifications and
adding new merchandise classifications. Management believes that A&F's ability
to design and market new merchandise quickly and effectively has been a key
element of its success. In recent years A&F has significantly broadened its
assortment in existing categories in order to increase volume and productivity.
A&F believes it can extend the A&F brand into new merchandise
categories and further increase sales productivity and growth. A&F believes
that its internal design capability will continue to develop new merchandise
categories to reflect the A&F image.
A&F's point-of-sale information system allows management to
track the performance of merchandise items on a stock-keeping unit, or SKU,
basis. Reorder "triggers" are used to replenish inventory of strong selling
items. In addition, performance by store at a SKU level is tracked to allow
inventory to be replenished based on differences in selling trends by store.
Product Design
The cornerstone of A&F's business is its ability to design
products which embody the A&F image of a casual, youthful lifestyle. Since the
new management team joined A&F in 1992, a major strategy has been to build an
internal design group. The product development process begins with senior
management in the merchandising and design areas, who develop seasonal
merchandise themes and concepts. These concepts are used to create line lists
of items that are then developed by the designers. Designs cover not only
fabric content, specifications and colors, but also labels, hangtags, and
other descriptive marketing. In developing concepts and designs, A&F's
executives identify trends through domestic and foreign travel, retail
shopping, and awareness of activities favored by the young, active segment of
the population.
Product Quality
Throughout its over 100 year history, quality has been a major
element of the A&F brand. A&F strives to offer distinct, high quality
merchandise in order to enhance customer satisfaction and increase brand
loyalty. A&F emphasizes natural fibers and uses a number of different washes
to achieve the desired comfort and hand-feel in its products. A&F's designers
also place significant importance on developing distinctive trim details. Many
of the products have unique buttons, pocket detailing, labels, graphic designs
and hangtags. As part of this focus on quality, A&F establishes on-going
relationships with key factories to ensure reliability and consistency of
production. All factories used for A&F's production are approved for quality
and dependability by senior management before orders are placed.
Marketing and Promotion
A&F's marketing and promotional strategies are consistent with
its established and differentiated lifestyle brand. The significant brand
equity in the A&F name enables A&F to maintain a non-promotional price strategy
in most of its merchandise classifications throughout the year. A&F conducts
four promotional events each year. These events are intended to clear seasonal
goods in advance of introducing new full-priced assortments and returning the
stores to their generally non-promotional status. A&F's pricing strategy is
designed to deliver the quality consistent with designer brands at price
points below those typically associated with such designers.
A&F focuses its advertising efforts on in-store displays and
print media. In-store advertising includes a series of distinctive black and
white photographs that are enlarged and prominently displayed throughout the
stores. These photographs portray men and women engaged in activities
identified with an active and spirited lifestyle and connote the timeless
quality associated with the A&F brand. Print media advertising is focused on
selected national publications and, as with the in-store photographs,
communicates and reinforces the A&F brand image.
In addition, A&F introduced the A&F Quarterly, a
catalog/magazine, to further enhance and build the brand image. The A&F
Quarterly features numerous lifestyle photographs (consistent with the
in-store photographs) in addition to editorial features on seasonal topics.
Merchandise presented in the A&F Quarterly is also found in the stores.
The A&F website was introduced in 1996 and has evolved into a
lifestyle piece targeted at the A&F customer. The site uses images from the
A&F stores and the A&F Quarterly and is interactive.
Associates
Customer service is a defining feature of the A&F corporate
culture. A&F believes that knowledgeable and enthusiastic sales associates
have a direct impact on a customer's perception of the brand. Accordingly, A&F
focuses significant resources on the selection and training of sales
associates. A&F stresses the role of these sales associates as "brand
representatives" and they are expected to reflect the lifestyle image of the
brand. Brand representatives are required to be familiar with the full range
of A&F merchandise and to have the ability to assist customers with
merchandise selection. A&F minimizes brand representatives' time spent on
administrative functions by centrally determining merchandise display and
replenishment, markdowns and labor scheduling. By emphasizing friendliness,
product knowledge and personal attention, management believes that A&F has
established a reputation for excellent customer service.
The typical management of an A&F store consists of one store
manager and three to five assistant managers. A&F compensates its district and
store managers with a base salary plus a performance bonus based primarily on
store sales. A&F's store, district and regional managers spend a majority of
their work week on A&F selling floors, providing leadership through coaching
the staff and assisting customers.
At January 31, 1998, A&F had approximately 6,700 associates, of
whom approximately 500 were full-time salaried associates and approximately
700 were full-time hourly associates. A significant number of associates are
hired on a seasonal basis to meet demand during holiday gift-buying seasons.
The balance were part-time hourly associates. None of A&F's associates is
represented by a labor union. A&F believes that its relationship with its
associates is good.
Sourcing
A&F utilizes a variety of sourcing arrangements. Mast
Industries, Inc. ("Mast"), a wholly owned subsidiary of The Limited, supplied
approximately 41% of the apparel purchased by A&F in 1997. A&F believes all
transactions entered into with Mast are on an arm's-length basis, and A&F is
not obligated to source product through Mast.
In 1997, approximately 39% of A&F's merchandise was sourced
from independent foreign factories located primarily in the Far East. A&F has
no long-term merchandise supply contracts and many of its imports are subject
to existing or potential duties, tariffs or quotas that may limit the quantity
of certain types of goods which may be imported into the United States from
countries in those regions. A&F competes with other companies for production
facilities and import quota capacity. In addition, although the General
Agreement on Tariffs and Trade ("GATT") adopted on December 8, 1994 requires
the elimination of duties, tariffs and quotas on apparel and textile products
by January 1, 2005, the GATT treaty is not expected to have any meaningful
effect on the import of merchandise used in A&F's business for several years.
A&F attempts to monitor manufacturing to ensure that no one company or country
is responsible for a disproportionate amount of A&F's merchandise. A&F
typically transacts business on an order-by-order basis and does not maintain
any long-term or exclusive commitments or arrangements to purchase from any
vendor. A&F believes that it has good relationships with its vendors and that,
as the number of its stores increases, there will be adequate sources to
produce a sufficient supply of quality goods in a timely manner and on
satisfactory economic terms. See "Risk Factors--Risk Factors Regarding A&F" on
page 14.
Central Store Planning
A&F's store design and construction operations are handled
centrally by the Store Planning division of The Limited ("Limited Store
Planning"). Limited Store Planning is organized into teams comprised of
designers, construction managers, architects, purchasing agents and financial
personnel who are responsible for all phases of store design and construction.
Teams are assigned to work with the senior management of a specific retail
business (including A&F) to develop and implement store designs that are
consistent with and promote the image of a given retail business. A&F and The
Limited are parties to an agreement pursuant to which The Limited provides such
services to A&F. The Limited's obligation to provide these services will
terminate one year after the consummation of the Exchange Offer. For
additional information with respect to the arrangements between A&F and The
Limited, see "Relationship between The Limited and A&F--Services Agreement" on
page 57.
Central Real Estate Management
A&F's real estate operations, including all aspects of lease
negotiations, are handled by the real estate division of The Limited. A&F and
The Limited are parties to an agreement pursuant to which The Limited provides
such services to A&F. The Limited's obligation to provide these services will
terminate one year after the consummation of the Exchange Offer. For
additional information with respect to the arrangements between A&F and The
Limited, see "Relationship between The Limited and A&F--Services Agreement" on
page 57.
Potential new stores, locations, expansions and relocations are
identified by A&F and by The Limited's real estate division. In choosing new
sites for retail stores, The Limited's real estate division provides financial
details regarding the proposed lease arrangement to A&F, which then evaluates
the net required investment and potential rates of return relative to A&F's
established hurdle rates before the store is approved for construction. The
actual construction of the store is managed by Limited Store Planning.
Although the real estate division retains control over the allocation of space
within a given mall among the various retail businesses of The Limited,
including A&F, each individual business is entitled to reject any transaction
negotiated by the real estate division of The Limited. See "Risk Factors--Risk
Factors Regarding A&F" on page 14. Real estate decisions are based on a number
of factors, including consistency with a given business image, sales and
profit potential, the overall economic condition and demographic
characteristics of the market, the identity of the other tenants in close
proximity and the availability of acceptable lease terms.
Merchandise Distribution
A&F's distribution operations are managed in a distribution
center owned by The Limited and subleased to A&F. See "Relationship between
The Limited and A&F--Sublease Agreement" on page 57. The distribution center
is located in Reynoldsburg, Ohio. Once received at the distribution center,
merchandise is inspected, packed for delivery to the stores and forwarded to a
central shipping facility operated by Limited Distribution Services ("LDS"), a
subsidiary of The Limited, which also provides certain engineering services to
the distribution center.
LDS also maintains a worldwide logistics network of agents and
space availability arrangements to support the in-bound movement of
merchandise into the distribution center. The out-bound shipping system
consists of common carrier line haul routes connecting the distribution
complex to a network of delivery agents. This system allows each store
operated by A&F to receive several deliveries each week and daily during the
peak holiday shopping season, which A&F believes is more frequent than A&F's
smaller competitors. LDS does not own or operate trucks or trucking
facilities. A&F and The Limited are parties to an agreement pursuant to which
LDS to provides such services to A&F on a basis consistent with past
practices. The Limited's obligation to provide these services will terminate
___ years after the consummation of the Exchange Offer. For additional
information with respect to the arrangements between A&F and The Limited, see
"Relationship between The Limited and A&F--Services Agreement" on page 57.
Management Information Systems
A&F's management information systems and electronic data
processing systems consist of a full range of retail, financial, and
merchandising systems, including credit, inventory distribution and control,
sales reporting, accounts payable, merchandise reporting and distribution. A&F
has an information system that is uniquely structured to the needs of its
particular business. Certain of the equipment used in the management
information systems is owned by The Limited. A&F and The Limited are parties
to an agreement pursuant to which A&F uses such equipment. The Limited's
obligation to provide these services will terminate one year after the
consummation of the Exchange offers. For additional information with respect
to the arrangements between A&F and The Limited, see "Relationship between The
Limited and A&F--Services Agreement" on page 56.
Sales are updated daily in the merchandise reporting systems by
polling sales information from each store's point-of-sale ("POS") terminals.
A&F's POS system consists of registers providing price look-up, scanning of
bar-coded tickets and credit authorization. Through automated nightly two-way
electronic communication with each store, sales information, payroll hours and
store initiated transfers are uploaded to the host system, and price changes
are downloaded through the POS devices. The nightly communication with the
stores also enables A&F to receive store transfer and physical inventory
details and send electronic mail. A&F evaluates information obtained through
daily reporting to implement merchandising decisions regarding markdowns and
allocation of merchandise.
Trademarks and Servicemarks
A subsidiary of A&F is the owner in the United States of the
Abercrombie & Fitch trademark (the "Name Mark"). The Name Mark of A&F is
registered in the United States Patent and Trademark Office. The term of this
registration is ten years, and it is renewable for additional ten-year periods
indefinitely, so long as the mark is still in use at the time of renewal.
A&F's rights in its Name Mark are a significant part of A&F's business. A&F,
therefore, intends to maintain its Name Mark and its registration. A&F is not
aware of any claims of infringement or other challenges to A&F's right to
register or use its Name Mark in the United States.
Another subsidiary is the owner in the United States of
trademarks and service marks used to identify A&F's merchandise and services,
other than its Name Mark (the "Merchandise Marks"). Many of the Merchandise
Marks of A&F are registered in the United States Patent and Trademark Office.
The Merchandise Marks are important to A&F, and, therefore, A&F intends to,
directly or indirectly, maintain these marks and their registrations. However,
A&F may choose not to renew a registration of one or more of its Merchandise
Marks if it determines that the mark is no longer important to its business.
A&F does not believe any material claims of infringement or other challenges
to A&F's right to register or use its Merchandise Marks in the United States
in a manner consistent with its current practices are pending.
A&F also conducts business in foreign countries principally as
a result of the fact that a substantial portion of its merchandise is
manufactured outside the United States. A&F believes its subsidiaries own
registrations of its Name Mark and Merchandise Marks in numerous foreign
countries to the degree necessary to protect such marks, although there may be
restrictions on the use of certain of A&F's marks in a limited number of
foreign jurisdictions.
A&F has not licensed any of its trademarks or service marks to
any other entity, although, for so long as A&F remains a subsidiary of The
Limited, The Limited will be entitled to use A&F's trademarks and service
marks at no cost to The Limited in The Limited's annual report to stockholders
and publicity materials and for other similar purposes.
Competition
All aspects of A&F's businesses are highly competitive. A&F
competes primarily with department stores, mass merchandisers and other
specialty retailers, including The Limited. See "Risk Factors--Risk Factors
Regarding A&F--Competition with The Limited" on page 14. A&F believes that the
principal bases upon which it competes are quality, fashion, service,
selection and price.
A&F believes that it has significant competitive advantages
because of high consumer recognition and acceptance of its brand name and its
strong presence in the major shopping malls in the United States, and the
experience of its management team. Certain of A&F's competitors in selected
product lines are larger and have greater financial, marketing and other
resources than A&F, however, and there can be no assurance that A&F will be
able to compete successfully with them in the future.
Properties
The main offices of A&F are located in Reynoldsburg, Ohio.
These headquarters are owned by The Limited and subleased to A&F. A&F also has
a distribution center located in Reynoldsburg, Ohio which is owned by The
Limited and subleased to A&F. A&F believes that its facilities are well
maintained, in good operating condition and adequate for its current needs.
See "Relationship between The Limited and A&F--Sublease Agreement" on page 56.
As of February 10, 1998, A&F operated 156 stores, which are
located primarily in shopping malls throughout the United States. Of these
stores, 154 were leased directly from third parties (principally shopping mall
developers) and two were leased from retail stores operated by other
businesses of The Limited. See "Relationship between The Limited and
A&F--Shared Facilities Agreements" on page 57. A&F believes that, as of
February 10, 1998, approximately 97.0% of its stores are located in shopping
malls, and that there are growth opportunities for expansion to free-standing
locations.
Leases with third parties are typically between 10 and 15 years
in duration. In most cases, the business unit pays an annual base rent plus a
contingent rent based on the store's annual sales in excess of a specified
threshold. Leases with other businesses of The Limited are on terms that
represent the proportionate share of the base rent payable in accordance with
the underlying lease plus the portion of any contingent rent payable in
accordance with the underlying lease attributable to the performance of A&F.
Many of the leases entered into by A&F are guaranteed by The Limited. A&F
management believes that its size and financial strength should allow it to
enter into leases on attractive terms without guarantees from The Limited, and
it is the intent of both The Limited and A&F that future A&F leases will not
be guaranteed by The Limited.
The list below sets forth the number of stores by state
operated by A&F in the United States and the cities in which A&F stores are
located as of February 10, 1998:
Alabama-2 Maryland-3 North Carolina-5
Birmingham Bethesda Charlotte
Hoover Owings Mills Durham
Towson Greensboro
Arizona-2 Raleigh
Mesa Massachusetts-9 Winston Salem
Scottsdale Boston
Braintree Ohio-9
Arkansas-1 Burlington Beachwood
Little Rock Cambridge Beaver Creek
Chestnut Hill Cincinnati (2)
California-10 Holyoke Cleveland
Costa Mesa Marlborough Columbus (2)
Glendale Natick Strongsville
Los Angeles Peabody Toledo
Redondo Beach
Sacramento Michigan-7 Oklahoma-2
San Diego (2) Ann Arbor Oklahoma City
San Francisco (2) Grand Rapids Tulsa
San Mateo Novi
Okemos Oregon-1
Colorado-6 Portage Tigard
Boulder Sterling Heights
Colorado Springs Troy Pennsylvania-7
Denver (4) King of Prussia
Minnesota-3 Langhorn
Connecticut-4 Bloomington Monroeville
Danbury Minnetonka Pittsburgh (2)
Farmington Roseville Whitehall
Milford Willow Grove
Stamford Mississippi-1
Ridgeland South Carolina-2
District of Columbia-1 Charleston
Missouri-3 Greenville
Florida-6 Chesterfield Tennessee-4
Altamonte Springs Kansas City Chattanooga
Brandon St. Louis Knoxville
Miami (2) Memphis
Orlando Nebraska-1 Nashville
W. Palm Beach Omaha
Texas-9
Georgia-7 Nevada-2 Austin
Alpharetta Las Vegas Cedar Park
Atlanta (3) Dallas (2)
Duluth New Hampshire-2 Fort Worth
Kennesaw Nashua Houston
Savannah Salem San Antonio
Sugarland
Illinois-8 New Jersey-6 The Woodlands
Aurora Cherry Hill
Chicago Edison Virginia-5
Northbrook Freehold Arlington
Oakbrook Paramus Fairfax
Orland Park Short Hills McLean
Schaumburg Wayne Richmond
Skokie Virginia Beach
Vernon Hills New Mexico-1
Albuquerque Washington-4
Indiana-3 Bellevue
Evansville New York-10 Lynnwood
Indianapolis Albany (2) Redmond
Buffalo Seattle
Kansas-3 Garden City
Lawrence Manhasset Wisconsin-3
Leawood New York City Appleton
Overland Park Rochester Madison
Staten Island Wauwatosa
Kentucky-2 Victor
Lexington White Plains
Louisville
Louisiana-2
Baton Rouge
New Orleans
BUSINESS OF THE LIMITED
The Limited is one of the nation's leading mall-based
specialty retailers. The Limited, through Express, Lerner New York, Lane
Bryant, Limited Stores, Limited Too, Galyan's and Henri Bendel presently
operates 3,774 specialty stores. The Limited also owns approximately 83%
of Intimate Brands, Inc. which, through Victoria's Secret and Bath & Body
Works stores, operates 1,710 specialty stores as of February 10, 1998, and
distributes apparel internationally through the Victoria's Secret
Catalogue. The Limited currently owns approximately 84% of A&F, which
operates 156 stores as of February 10, 1998, but will no longer own any of
A&F upon the consummation of the Transactions.
Intimate Brands is a leading specialty retailer of intimate
apparel and personal care products, operating primarily under its Victoria's
Secret and Bath & Body Works brand names. Under the Victoria's Secret name,
The Limited is the leading mall-based specialty retailer of women's intimate
apparel and related products, and a leading catalogue retailer of intimate and
other women's apparel. Victoria's Secret operates over 780 stores nationwide
and in 1997 mailed approximately 425 million catalogues. Under the Bath &
Body Works name, The Limited is the leading mall-based specialty retailer of
personal care products. Launched in 1990, Bath & Body Works operates over 920
stores nationwide. Intimate brands had net sales of $3.6 billion in 1997.
Express is a leading specialty retailer of women's
sportswear and accessories. Express' strategy is to offer, under the
Express brand, an exciting collection of quality sportswear designed to
appeal to a broad range of young-minded, spirited women looking for the
latest in current fashion. Launched in 1980, Express had net sales of
approximately $1.2 billion in 1997 and operated 753 stores in 48 states.
Lerner New York is a leading mall-based specialty store
retailer of value priced women's apparel. The division's repositioned
merchandising strategy is to be the leading fashion-at-a-value women's
specialty retailer offering its customer a fashion-coordinated flexible
wardrobe at opening price points. Originally founded in 1918, Lerner New York
was purchased by The Limited in 1985. Lerner New York had net sales of
approximately $946 million in 1997 and operated 746 stores in 45 states.
Lane Bryant is the leading specialty store retailer of
large-size women's apparel. The division targets fashion-conscious women who
are seeking moderately-priced clothing in sizes 14-28. Originally founded in
1900, Lane Bryant was acquired by the Limited in 1982. The division had net
sales of approximately $907 million in 1997 and operated 713 stores in 46
states.
Limited Stores is one of the oldest and largest mall-based
specialty store retailers. In early 1995, the division repositioned its
merchandising strategy to focus its historically strong brand name on an
"American Lifestyle" point of view, targeting fashion-oriented women who
prefer a classic and comfortable wardrobe and seek consistency in style,
taste, quality and fit. Founded in 1963, Limited Stores had net sales of
approximately $776 million in 1997 and operated 629 stores in 46 states.
Structure is a leading mall-based specialty retailer of men's
clothing. Structure targets men with an active, outdoor-oriented lifestyle.
In 1996, Structure repositioned its strategy by returning to classic American
casual fashion. Structure operates 544 stores in 43 states and had net sales
of $660 million in 1997.
Limited Too, established in 1987, sells casual clothes for
girls up to fourteen years of age through 312 stores. Limited Too had net
sales of $322 million in 1997.
Galyan's is a leading rapidly-growing operator of full-line
sporting goods and apparel superstores in the midwestern United States. At
November 1, 1997, The Limited operated eleven stores in four markets. Galyan's
targets upscale sports enthusiasts and the high-end of the consumer market.
Galyan's, which was acquired by The Limited in July 1995, was founded by
Albert W. Galyan in 1946 and had net sales of $160 million in 1997.
Henri Bendel operates specialty stores which feature better,
bridge and designer women's fashions in an exclusive, eclectic shopping
environment. The business was purchased by The Limited in 1988 and had net
sales of approximately $83 million in 1997. The Limited has announced that it
will close all Bendel locations other than its New York City store.
MANAGEMENT OF A&F
Board of Directors
A&F's Board of Directors currently consists of Messrs. Leslie
H. Wexner, Chairman of A&F and Chairman, President and Chief Executive Officer
of The Limited; Kenneth B. Gilman, Vice Chairman of A&F and Chief
Administrative Officer of The Limited; Michael S. Jeffries, President and
Chief Executive Officer of A&F; Roger D. Blackwell, Professor of Marketing at
The Ohio State University and President and Chief Executive Officer of Roger
D. Blackwell Associates, Inc.; E. Gordon Gee, President of Brown University;
and Donald B. Shackelford, Chairman and Chief Executive Officer of State
Savings Bank.
Effective upon the consummation of the Exchange Offer, all
directors other than Mr. Jeffries will resign and be replaced by new directors
not affiliated with The Limited.
SHARES ELIGIBLE FOR FUTURE SALE
Shares of A&F Common Stock distributed to stockholders of The
Limited will be freely transferable, except for shares received by persons who
may be deemed to be "affiliates" of A&F under the Securities Act. Persons who
may be deemed to be affiliates of A&F after the expiration of the Exchange
Offer generally include individuals or entities that control, are controlled
by, or are under common control with, A&F, and will include the directors and
principal executive officers of A&F and also could include certain significant
stockholders of A&F. Persons who are affiliates of A&F will be permitted to
sell their shares of A&F Common Stock only pursuant to an effective
registration statement under the Securities Act or an exemption from the
registration requirements of the Securities Act, such as the exemption
afforded by Rule 144 under the Securities Act.
COMPARISON OF RIGHTS OF HOLDERS OF LIMITED COMMON STOCK
AND A&F COMMON STOCK
The following is a summary of material differences between
the rights of holders of Limited Common Stock and the rights of holders of
A&F Common Stock. Because each of The Limited and A&F is organized under
the laws of Delaware, such differences arise principally from provisions of
the Certificate of Incorporation and Bylaws of each of The Limited and A&F.
The following summary does not purport to be a complete
statement of the rights of stockholders of The Limited under the Restated
Certificate of Incorporation and Restated Bylaws of The Limited as compared
with the rights of A&F stockholders under the Amended and Restated Certificate
of Incorporation and the Bylaws of A&F or a complete description of the
specific provisions referred to herein. The identification of specific
differences is not meant to indicate that other equal or more significant
differences do not exist. The summary is qualified in its entirety by
reference to the DGCL and governing corporate instruments of The Limited and
A&F, to which stockholders are referred. Copies of the governing corporate
instruments of The Limited and A&F have been filed with the SEC. See "Where
You Can Find More Information" on page 61.
Actions by the Stockholders
Under A&F's Certificate of Incorporation, no stockholder action
may be taken except at an annual or special meeting of stockholders. The
Certificate of Incorporation of The Limited does not contain such a provision.
Number of Directors
A&F's Bylaws provide that the number of directors on the Board
of Directors (exclusive of directors to be elected by the holders of any one
or more series of Preferred Stock voting separately as a class or classes)
shall not be less than four nor more than nine, the exact number to be set by
the Board from time to time.
The Bylaws of The Limited provide that the number of directors
on the Board of Directors (exclusive of directors to be elected by the holders
of any one or more series of Preferred Stock voting separately as a class or
classes) shall not be less than nine nor more than 13, the exact number to be
set by the Board from time to time.
Business Combinations
A&F's Certificate of Incorporation states that the affirmative
vote of not less than 75 percent of the outstanding shares entitled to vote
thereon held by stockholders other than the Interested Person seeking to effect
a Business Combination shall be required for the approval or any Business
Combination with any Interested Person, unless such transaction has been
approved by a majority of the Continuing Directors. A "Business Combination"
means: (a) any merger or consolidation of A&F or a subsidiary of A&F with or
into an Interested Person, (b) any sale, lease, exchange, transfer or other
disposition, including without limitation, a mortgage or any other security
device, of all or any Substantial Part of the assets of A&F or a subsidiary of
A&F to an Interested Person, (c) any merger or consolidation of an Interested
Person with or into A&F or a subsidiary of A&F, (d) any sale, lease, exchange,
transfer or other disposition, including without limitation, a mortgage or
other security device, of all or any Substantial Part of the assets of an
Interested Person to A&F or a subsidiary of A&F, (e) the issuance or transfer
by A&F or any subsidiary of A&F of any securities of A&F or a subsidiary of
A&F to an Interested Person, (f) any reclassification of securities,
recapitalization or other comparable transaction involving A&F that would have
the effect of increasing the voting power of any Interested Person with
respect to the voting stock of A&F, and (g) any agreement, contract or other
arrangement providing for any of the foregoing transactions. "Interested
Person" means any individual, corporation, partnership or other person or
entity which, together with its affiliates and associate beneficially owns in
the aggregate five percent or more of the outstanding voting stock of A&F, and
any affiliate or associates, of any such person or entity. "Substantial Part"
means more than 20 percent of the fair market value as determined by
two-thirds of the Continuing Directors of the total consolidated assets of A&F
and its subsidiaries as of the end of its most recent fiscal year ended prior
to the time the determination is being made. "Continuing Director" means a
director who was a member of the Board of Directors of A&F immediately prior
to the time that the Interested Person involved in a Business Combination
became an Interested Person, or a director who was elected or appointed to
fill a vacancy after the date the Interested Person became an Interested
Person by a majority of the then-current Continuing Directors.
The Certificate of Incorporation of The Limited contains a
substantially similar business combination provision with respect to The
Limited and its subsidiaries, except that (i) the definition of an "Interested
Person" requires the beneficial ownership of 20 percent of the voting stock of
The Limited, instead of five percent in the case of A&F, and (ii) the 75
percent voting requirement does not apply to any Business Combination if (a)
the Continuing Directors have, by at least a two-thirds vote, (1) expressly
approved in advance the acquisition of the shares of voting stock that caused
such person or entity to become an Interested Person or (2) expressly approved
such Business Combination, or (b) the cash or fair market value of the
consideration to be received per share by the stockholders of The Limited in
the Business Combination is not less than the Fair Price paid by the Interested
Person in acquiring its holdings of voting stock of The Limited. "Fair Price"
means, subject to certain adjustments set forth in the Certificate of
Incorporation of The Limited, the highest price that can be determined by a
majority of the Continuing Directors to have been paid at any time by the
Interested Person for any share or shares of that class of capital stock.
Authorized Shares of Stock
A&F's Certificate of Incorporation provides that the total
number of shares of stock which A&F shall have authority to issue is
315,000,000, consisting of 300,000,000 shares of common stock, par value $.01
per share, and 15,000,000 shares of preferred stock, par value $.01 per share.
The common stock of A&F is divided into two classes, Class A Common Stock and
Class B Common Stock, par value $.01 per share, of A&F. The Class A Common
Stock and Class B Common Stock are identical, except that Class A Common Stock
has one vote per share while Class B Common Stock has three votes per share.
All outstanding shares of the A&F Class B Common Stock will be converted into
A&F Class A Common Stock immediately prior to the consummation of the Exchange
Offer.
The Certificate of Incorporation of The Limited provides that
the total number of shares of stock which The Limited has authority to issue
is 510,000,000, consisting of 500,000,000 shares of common stock, par value
$.50 per share, and 10,000,000 shares of preferred stock, par value $1.00 per
share. The common stock of The Limited is currently not divided into any
classes.
Transactions with Interested Parties
A&F's Certificate of Incorporation currently includes certain
provisions addressing (i) potential conflicts of interest between A&F and The
Limited, (ii) corporate opportunities and the treatment of those opportunities
by the directors of A&F and (iii) limitation of liability of The Limited and
its subsidiaries (other than A&F) for certain breaches of their fiduciary
duties in connection with the intercompany agreements. By the terms of A&F's
Certificate of Incorporation, such provisions will no longer be in effect upon
the consummation of the Transactions.
RELATIONSHIP BETWEEN THE LIMITED AND A&F
Services Agreements
On September 27, 1996, A&F and The Limited entered into an
intercompany services and operating agreement (the "Old Services Agreement")
with respect to services to be provided by The Limited to A&F. Pursuant to the
Old Services Agreement, The Limited provided services in exchange for fees
which (based on current costs for such services) management believes did not
exceed fees that would be paid if such services were provided by an
independent third party and which were consistent in all material respects
with the allocation of the costs of such services set forth in the historical
financial statements of A&F. The services provided to A&F by The Limited
pursuant to the Old Services Agreement included, among other things, certain
accounting, associate benefit plan administration, audit, cash management,
corporate development, corporate secretary, governmental affairs, human
resources and compensation, investor and public relations, legal, risk
management, transportation, tax and treasury, store design/planning, real
estate and import and shipping services. The net charge for services that
were paid by A&F in 1997 was approximately $8.3 million. The Old Services
Agreement will be terminated upon the consummation of the Exchange Offer, and
The Limited and A&F will enter into a new intercompany services and operating
agreement (the "New Services Agreement") effective thereafter.
The services to be provided by The Limited to A&F under the New
Services Agreement include, among other things, certain associate benefit plan
administration, governmental affairs, human resources and compensation,
investor and public relations, tax and store design/planning, transportation,
real estate and import and shipping services. The cost of such services to be
charged to A&F generally will equal The Limited's costs in providing the
relevant services plus 5% of such costs. The amounts to be charged to A&F
under the New Services Agreement are not expected to be materially different
than the amounts charged to A&F under the Old Services Agreement.
Pursuant to the New Services Agreement, each party will
indemnify the other, except in certain limited circumstances, against
liabilities that the other may incur that are caused by or arise in connection
with such party's failure to fulfill its material obligations under the New
Services Agreement.
The New Services Agreement will have a one-year term. The New
Services Agreement will provide for early termination by A&F.
Sublease Agreements
On September 27, 1996, A&F entered into a sublease agreement
with an affiliate of The Limited (the "Sublease Agreement") pursuant to which
such affiliate subleases to A&F the distribution center and headquarters
office space currently used by A&F. The Sublease Agreement provides that the
lessee will lease space at an average annual rental rate equal to $11.00 per
square foot in the case of office space and $2.85 per square foot in the case
of the distribution center, subject to adjustment based on the Consumer Price
Index every ___ year. The Sublease Agreement will be amended upon the
consummation of the Exchange Offer to provide for a term of ___ years after
the consummation of the Exchange Offer, instead of the original fifteen year
term.
Shared Facilities Agreements
On September 27, 1996, A&F and the relevant businesses operated
by The Limited entered into shared facilities agreements (collectively, the
"Shared Facilities Agreements") pursuant to which A&F subleases such
facilities from the relevant subsidiary of The Limited. Under the Shared
Facilities Agreements, A&F is responsible for its pro rata share (based on
square feet occupied) of all costs and expenses (principally fixed rent) under
the relevant lease plus the portion of any performance based rent attributable
to A&F. This method of allocating such costs and expenses is consistent in all
material respects with the allocation of such costs and expenses set forth in
the historical financial statements of A&F. The store lease and other
occupancy costs charge paid by A&F in 1997 is approximately $1.3 million. At
February 10, 1998, two of A&F's stores were located in space leased by other
businesses controlled by The Limited.
Tax-Separation Agreement
A&F is currently included in The Limited's federal consolidated
income tax group and A&F's tax liability will be included in the consolidated
federal income tax liability of The Limited for 1997 and part of 1998. In
certain circumstances, certain A&F subsidiaries may be included with certain
subsidiaries of The Limited in combined, consolidated or unitary income tax
groups for state and local tax purposes. A&F and The Limited are parties to a
tax-sharing agreement (the "Tax-Sharing Agreement") entered into on September
27, 1996. Pursuant to the Tax-Sharing Agreement, A&F and The Limited make
payments between them such that, with respect to any period, the amount of
taxes to be paid by A&F, subject to certain adjustments, will be determined as
though A&F were to file separate federal, state and local income tax returns
(including, except as provided below, any amounts determined to be due as a
result of a redetermination of the tax liability of The Limited arising from
an audit or otherwise) as the common parent of an affiliated group of
corporations filing combined, consolidated or unitary (as applicable) federal,
state and local returns rather than a consolidated subsidiary of The Limited
with respect to federal, state and local income taxes. A&F is reimbursed,
however, for tax attributes that it generates, such as net operating losses,
if and when they are used on a consolidated basis.
After the Transactions, A&F will no longer be included in The
Limited's consolidated group for federal income tax purposes. Accordingly, The
Limited and A&F will amend their existing Tax Sharing Agreement (the "Tax
Disaffiliation Agreement") to reflect the separation of A&F from The Limited
pursuant to the Transactions with respect to tax matters. The Tax
Disaffiliation Agreement will reflect each party's rights and obligations with
respect to payments and refunds of taxes that are attributable to periods
beginning prior to and including the date of the Transactions and taxes
resulting from transactions effected in connection with the Transactions. The
Tax Disaffiliation Agreement will also express each party's intention with
respect to certain tax attributes of A&F after the Transactions. The Tax
Disaffiliation Agreement will provide for payments between the two companies
for certain tax adjustments made after the Transactions that cover
pre-Transactions tax liabilities. Other provisions will cover the handling of
audits, settlements, elections, accounting methods and return filing in cases
where both companies have an interest in the results of these activities.
Under the Tax Disaffiliation Agreement, both The Limited and
A&F will agree to refrain from engaging in certain transactions for two years
following the date of the Transactions without first (i) obtaining a ruling
from the IRS to the effect that such actions will not result in the
Transactions being taxable to The Limited or its stockholders, or (ii)
obtaining an opinion of counsel recognized as an expert in federal income tax
matters and acceptable to the other party to the same effect as in (i).
Transactions that may be subject to this restriction include, among other
things, liquidation, merger or consolidation with another company, certain
issuances and redemptions of A&F Common Stock, the granting of stock options,
the sale, distribution or other disposition of assets in a manner that would
adversely affect the tax consequences of the Transactions or any transactions
effected in connection with the Transactions and the discontinuation of
certain businesses.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material U.S. federal income
tax consequences relating to the Transactions. The discussion contained in
this Offering Circular-Prospectus is based on the law in effect as of the date
of this Offering Circular-Prospectus. Stockholders of The Limited are urged to
consult their tax advisors as to the particular tax consequences to them of
the Transactions.
The Limited has requested a private letter ruling (the "Ruling
Letter") from the Internal Revenue Service (the "IRS") to the effect that, for
federal income tax purposes, the Transactions will qualify as a tax-free
distribution to The Limited's stockholders under Section 355 of the Internal
Revenue Code of 1986, as amended (the "Code"), (except with respect to cash
received in lieu of fractional shares) and, in general, will be tax-free to
The Limited. Although private letter rulings are generally binding on the
IRS, The Limited will not be able to rely on the Ruling Letter if any factual
representations or assumptions made in connection with the ruling request are
incorrect or untrue in any material respect. The Limited is not aware of any
facts or circumstances that would cause any such representations or
assumptions to be incorrect or untrue in any material respect. Nevertheless,
if the Transactions are subsequently held to be taxable, both The Limited and
its stockholders who receive A&F shares in the Exchange Offer or the Spin-Off,
if any, would be subject to tax.
The Ruling Letter is expected to provide generally that (i) no
gain or loss will be recognized by (and no amount will be included in the
income of) Limited stockholders upon their receipt of A&F Common Stock in the
Transactions, (ii) Limited stockholders that surrender all of their Limited
Common Stock in the Exchange Offer will have an aggregate basis in the shares
of A&F Common Stock received in the Exchange Offer equal to such stockholders'
aggregate basis in Limited Common Stock surrendered, (iii) Limited
stockholders that receive A&F Common Stock in the Transactions and continue to
hold some Limited Common Stock will have a basis in the A&F Common Stock
received in the Transactions determined by allocating such stockholder's
aggregate tax basis in Limited Common Stock held before the Transactions
between the A&F Common Stock received in the Transactions and the Limited
Common Stock retained in proportion to their relative fair market values, (iv)
the holding period of A&F Common Stock received by a Limited stockholder in
the Transactions will include the period during which the stockholder held its
shares of Limited Common Stock, whether or not such Limited Common Stock was
surrendered in the Exchange Offer, provided that such shares of Limited Common
Stock are held as a capital asset on the date of the Transactions, and (v)
cash received in lieu of fractional share interests in A&F will give rise to
gain or loss equal to the difference between the amount of cash received and
the tax basis allocable to such fractional share interests. Such gain or loss
will be capital gain or loss if the shares of Limited Common Stock are held as
a capital asset on the date of the Transactions.
The Ruling Letter will not specifically address tax basis
issues with respect to holders of Limited Common Stock who have blocks of
stock with different per share tax bases. Such holders are encouraged to
consult their tax advisors regarding the possible tax basis consequences of
the Transactions.
U.S. Treasury regulations require each Limited stockholder that
receives shares of A&F Common Stock in the Transactions to attach to the
holder's U.S. federal income tax return for the year in which such stock is
received a detailed statement setting forth such data as may be appropriate in
order to show the applicability of Section 355 of the Code to the
Transactions. Within a reasonable time after the Transactions, The Limited
will provide Limited stockholders who participate in the Exchange Offer and
Limited stockholders who will receive A&F Common Stock in the Spin-Off, if
any, with the information necessary to comply with that requirement, and will
provide information regarding the allocation of basis described in clause
(iii) above.
THIS SUMMARY IS FOR GENERAL INFORMATION ONLY AND DOES NOT
DISCUSS ALL TAX CONSIDERATIONS THAT MAY BE RELEVANT TO STOCKHOLDERS OF THE
LIMITED IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, NOR DOES IT ADDRESS THE
CONSEQUENCES TO CERTAIN STOCKHOLDERS OF THE LIMITED SUBJECT TO SPECIAL
TREATMENT UNDER THE U.S. FEDERAL INCOME TAX LAWS (SUCH AS TAX-EXEMPT ENTITIES,
NON-RESIDENT ALIEN INDIVIDUALS AND FOREIGN CORPORATIONS). IN ADDITION, THIS
SUMMARY DOES NOT ADDRESS THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO
STOCKHOLDERS OF THE LIMITED WHO DO NOT HOLD THEIR LIMITED COMMON STOCK AS A
CAPITAL ASSET. THIS SUMMARY DOES NOT ADDRESS ANY STATE, LOCAL OR FOREIGN TAX
CONSEQUENCES. STOCKHOLDERS OF THE LIMITED ARE URGED TO CONSULT THEIR TAX
ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE TRANSACTION AND
THE OWNERSHIP AND DISPOSITION OF A&F COMMON STOCK, INCLUDING THE APPLICATION
OF STATE, LOCAL AND FOREIGN TAX LAWS AND ANY CHANGES IN FEDERAL TAX LAWS THAT
OCCUR AFTER THE DATE OF THIS OFFERING CIRCULAR-PROSPECTUS.
For a description of an agreement pursuant to which The Limited
and A&F have provided for certain tax sharing and other tax-related matters,
see "Relationship between The Limited and A&F--Tax-Separation Agreement" on
page 58.
LEGAL MATTERS
Certain legal matters with respect to the Transactions will be
passed upon by Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York
10017.
EXPERTS
The (i) consolidated financial statements of The Limited
incorporated in this Offering Circular-Prospectus by reference to the Annual
Report on Form 10-K for the year ended February 1, 1997 and (ii) consolidated
financial statements of A&F incorporated in this Offering Circular-Prospectus
by reference to the Annual Report on Form 10-K for the year ended February 1,
1997 have been so incorporated in reliance on the reports of Coopers & Lybrand
LLP, independent accountants of The Limited and A&F, given on the authority of
said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
The Limited and A&F file annual, quarterly and special reports,
proxy statements and other information with the SEC. You may read and copy
any reports, statements or other information filed by either company at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. The companies' SEC filings are
also available to the public from commercial document retrieval services and
at the web site maintained by the SEC at "http://www.sec.gov."
A&F filed a Registration Statement (together with any
amendments thereto, the "Registration Statement") on Form S-4 to register with
the SEC the A&F Common Stock to be issued to Limited stockholders who tender
their shares in the Exchange Offer and whose shares of Limited Common Stock
are accepted for exchange. The Limited has filed a Schedule 13E-4 Issuer
Tender Offer Statement with the SEC with respect to the Exchange Offer
(together with any amendments thereto, the "Schedule 13E-4"). This
Offering-Circular Prospectus is a part of that Registration Statement and
constitutes a Offering Circular of The Limited in addition to being a
Prospectus of A&F. As allowed by SEC rules, this Offering Circular-Prospectus
does not contain all the information you can find in the Registration
Statement, the Schedule 13E-4 or the exhibits to the Registration Statement
and the Schedule 13E-4.
The SEC allows The Limited and A&F to "incorporate by
reference" information into this Offering Circular-Prospectus, which means
important information may be disclosed to you by referring you to another
document filed separately with the SEC. The information incorporated by
reference is deemed to be part of this Offering Circular-Prospectus, except
for any information superseded by information in (or incorporated by reference
in) this Offering Circular-Prospectus. The Offering Circular-Prospectus
incorporates by reference the documents set forth below that have been
previously filed with the SEC. These documents contain important information
about our companies and their finances.
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The Limited SEC Filings (File No. 1-12107) Period
- ------------------------------------------------------------- ------------------------------------------------
Annual Report on Form 10-K Year ended February 1, 1997
Quarterly Reports on Form 10-Q Quarters ended May 3, 1997, August 2, 1997 and
November 1, 1997
Proxy Statement Filed April 14, 1997
</TABLE>
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A&F SEC Filings (File No. 1-13814) Period
- ------------------------------------------------------------ ------------------------------------------------
Annual Report on Form 10-K Year ended February 1, 1997
Quarterly Reports on Form 10-Q Quarters ended May 3, 1997, August 2, 1997 and
November 1, 1997
Proxy Statement Filed April 14, 1997
</TABLE>
The Limited and A&F are also incorporating by reference
additional documents that either company may file with the SEC between the
date of this Offering Circular-Prospectus and the Expiration Date.
A&F has agreed to indemnify The Limited against certain
liabilities, including civil liabilities under the federal securities act, and
to contribute to payments which The Limited may be required to make in respect
thereof, but solely with respect to information relating to A&F in this
Offering Circular-Prospectus. The Limited has agreed to indemnify A&F against
certain liabilities, including civil liabilities under the federal securities,
and to contribute to payments which A&F may be required to make in respect
thereof, but solely with respect to information relating to The Limited in
this Offering Circular-Prospectus.
The Limited may have already sent you some of the documents
incorporated by reference, but you can obtain any of them through the SEC or
through The Limited or A&F, the Dealer Managers or the Information Agent,
without charge, excluding all exhibits unless we have specifically
incorporated by reference an exhibit in this Offering Circular-Prospectus.
Stockholders may obtain documents incorporated by reference in this Offering
Circular-Prospectus by requesting in writing or by telephone from the
Information Agent or the Dealer Managers at their respective addresses, the
appropriate party at the following address:
The Limited, Inc. Abercrombie & Fitch Co.
Three Limited Parkway Four Limited Parkway East
P.O. Box 16000 P.O. Box 182168
Columbus, Ohio 43230 Reynoldsburg, Ohio 43218
Attention: Investor Relations Attention: Investor Relations
(614) 479-7000 (614) 577-6500
If you would like to request documents from either company,
please do so five business days before the Expiration Date to receive them
in time.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE IN THIS OFFERING CIRCULAR-PROSPECTUS IN CONNECTION
WITH THE EXCHANGE OFFER OR IN THE LETTER OF TRANSMITTAL. NEITHER THE LIMITED
NOR A&F HAS AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS
DIFFERENT FROM WHAT IS CONTAINED IN THIS OFFERING CIRCULAR-PROSPECTUS. THIS
OFFERING CIRCULAR-PROSPECTUS IS DATED ___________, 1998. YOU SHOULD NOT
ASSUME THAT THE INFORMATION CONTAINED IN THIS OFFERING CIRCULAR-PROSPECTUS IS
ACCURATE AS OF ANY DATE OTHER THAN SUCH DATE, AND NEITHER THE MAILING OF THIS
OFFERING CIRCULAR-PROSPECTUS TO STOCKHOLDERS NOR THE ISSUANCE OF A&F COMMON
STOCK SHALL CREATE ANY IMPLICATION TO THE CONTRARY.
THIS OFFERING CIRCULAR-PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE A&F COMMON STOCK IN
ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. THE LIMITED IS NOT AWARE OF ANY
JURISDICTION WHERE THE MAKING OF THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF
WOULD NOT BE IN COMPLIANCE WITH APPLICABLE LAW. IF THE LIMITED BECOMES AWARE
OF ANY JURISDICTION WHERE THE MAKING OF THE EXCHANGE OFFER OR ACCEPTANCE
THEREOF WOULD NOT BE IN COMPLIANCE WITH ANY VALID APPLICABLE LAW, THE LIMITED
WILL MAKE A GOOD FAITH EFFORT TO COMPLY WITH SUCH LAW. IF, AFTER SUCH GOOD
FAITH EFFORT, THE LIMITED CANNOT COMPLY WITH SUCH LAW, THE EXCHANGE OFFER WILL
NOT BE MADE TO, NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF, HOLDERS OF
SHARES OF LIMITED COMMON STOCK IN ANY SUCH JURISDICTION.
LIST OF DEFINED TERMS
Defined Term Page
- ------------ ----
"A&F Common Stock"......................................................17
"A&F IPO"...............................................................17
"Agent's Message".......................................................27
"Anticipated Premium"...................................................24
"Book-Entry Transfer Facility"..........................................27
"Business Combination"..................................................55
"business day"..........................................................31
"Code"..................................................................59
"Continuing Director"...................................................55
"Dealer Managers"........................................................9
"DGCL"..................................................................19
"Dutch auction".........................................................21
"DRP"...................................................................26
"Eligible Institution"..................................................28
"Exchange Act"..........................................................23
"Exchange Agent"........................................................34
"Exchange Date".........................................................23
"Exchange Ratio"........................................................21
"Exchange Ratio Range"..................................................21
"Exchange Time".........................................................23
"Fair Price"............................................................56
"Final Exchange Ratio"..................................................21
"GATT"..................................................................48
"HSR Act"...............................................................19
"Information Agent".....................................................34
"Interested Person".....................................................55
"Intimate Brands".......................................................17
"Intimate Brands IPO"...................................................17
"IRS"...................................................................59
"LDS"...................................................................49
"Limited Common Stock"..................................................21
"Limited Store Planning"................................................48
"Mast"..................................................................48
"Maximum Exchange Ratio"................................................21
"Merchandise Marks".....................................................50
"Minimum Exchange Ratio"................................................21
"Name Mark".............................................................50
"New Services Agreement"................................................57
"NYSE"..................................................................35
"Old Services Agreement"................................................57
"POS"...................................................................50
"Receivables Securitization"............................................17
"Registration Statement"................................................61
"Ruling Letter".........................................................59
"Schedule 13E-4"........................................................61
"SEC"...................................................................10
"Soliciting Dealer".....................................................33
"Special Delivery Instructions".........................................28
"Special Issuance Instructions".........................................28
"Spin-Off"..............................................................34
"Sublease Agreement"....................................................57
"Substantial Part"......................................................55
"Tax Disaffiliation Agreement...........................................58
"Tax-Sharing Agreement".................................................58
"Trigger Amount"........................................................21
"WFN Sale"..............................................................17
"WFN"...................................................................17
Manually signed facsimile copies of the Letter of
Transmittal will be accepted. The Letter of Transmittal, certificates for
shares of Limited Common Stock and any other required documents should be
sent or delivered by each stockholder of The Limited or his or her broker,
dealer, commercial bank, trust company or other nominee to the Exchange
Agent at one of the addresses set forth below:
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First Chicago Trust Company of New York
If by mail: If by hand: If by overnight delivery:
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges
Suite 4660 c/o The Depositary Trust Company Suite 4680
P.O. Box 2569 55 Water Street, DTC TAD 14 Wall Street, 8th Floor
Jersey City, New Jersey Vietnam Veterans Memorial Plaza New York, New York
07303-2569 New York, New York 10005
10041
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions only)
(201) 222-4720
or
(201) 222-4721
Facsimile confirmation number:
Questions and requests for assistance may be directed to the
Information Agent or the Dealer Managers at their respective addresses and
telephone numbers set forth below. Additional copies of this Offering
Circular-Prospectus, the Letter of Transmittal and other Exchange Offer
material may be obtained from the Information Agent or the Dealer Managers
as set forth below. You may also contact your broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Exchange
Offer.
The Information Agent for the Exchange Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005
(212) 269-5550 (Call Collect)
or
Call Toll-Free (800) 549-6864
The Dealer Managers for the Exchange Offer are:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Call Toll-Free (800) 323-5678
PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of
Delaware (the "DGCL") empowers a Delaware corporation to indemnify any persons
who are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
such corporation), by reason of the fact that such person was an officer or
director of such corporation, or is or was serving at the request of such
corporation as a director, officer, employee or agent of another corporation
or enterprise. The indemnity may include expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding,
provided that such officer or director acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best
interests, and, for criminal proceedings, had no reasonable cause to believe
his conduct was illegal. A Delaware corporation may indemnify officers and
directors against expenses (including attorneys' fees) in connection with the
defense or settlement of an action by or in the right of the corporation under
the same conditions, except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses which such officer or director actually and
reasonably incurred.
In accordance with the DGCL, A&F's Certificate of Incorporation
contains a provision to limit the personal liability of the directors of A&F
for violations of their fiduciary duty. This provision eliminates each
director's liability to A&F or its stockholders for monetary damages except
(i) for any breach of the director's duty of loyalty to A&F or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the DGCL providing for liability of directors for unlawful payment of
dividends or unlawful stock purchases or redemptions, or (iv) for any
transaction from which a director derived an improper personal benefit. The
effect of this provision is to eliminate the personal liability of directors
for monetary damages for actions involving a breach of their fiduciary duty of
care, including any such actions involving gross negligence.
Article V of A&F's Bylaws provides for indemnification of the
officers and directors of A&F to the full extent permitted by applicable law.
Item 21. Exhibits and Financial Statement Schedules.
<TABLE>
<S> <C>
5.1 Opinion of Davis Polk & Wardwell regarding the legality of the securities being registered.+
8.1 Opinion of Davis Polk & Wardwell regarding certain tax matters.+
10.1 Form of Tax Disaffiliation Agreement between The Limited, Inc. and Abercrombie & Fitch
Co.+
10.2 Services Agreement by and between Abercrombie & Fitch Co. and The Limited, Inc. dated
September 27, 1996, incorporated by reference to Exhibit 10.2 to the A&F's Quarterly Report
on Form 10-Q for the quarter ended November 2, 1996++
10.3 Form of Amendment No. 1 to the Services Agreement+
10.4 Shared Facilities Agreement, dated September 27, 1996, by and between Abercrombie & Fitch
Co. and The Limited, Inc., incorporated by reference to Exhibit 10.3 to A&F's Quarterly
Report on Form 10-Q for the quarter ended November 2, 1996++
10.5 Sublease Agreement by and between Victoria's Secret Stores, Inc. and Abercrombie & Fitch
Co., Inc., dated June 1, 1995, incorporated by reference to Exhibit 10.3 to A&F's
Registration Statement on Form S-1++
10.6 Corporate Agreement by and between Abercrombie & Fitch Co. and The Limited, Inc., dated
October 1, 1996, incorporated by reference to Exhibit 10.5 to A&F's Quarterly Report on
Form 10-Q for the quarter ended November 2, 1996++
23.1 Consent of independent accountants to the incorporation by reference of the 1996 Annual Report
on Form 10-K of The Limited, Inc. into this Form S-4.
23.2 Consent of independent accountants to the incorporation by reference of the 1996 Annual Report
on Form 10-K of Abercrombie & Fitch Co. into this Form S-4.
23.3 Consent of independent accountants to the incorporation by reference of the 1997 third fiscal
quarter Quarterly Report on Form 10-Q of The Limited, Inc. into this Form S-4.
23.4 Consent of independent accountants to the incorporation by reference of the 1997 third fiscal
quarter Quarterly Report on Form 10-Q of Abercrombie & Fitch Co. into this Form S-4.
24.1 Power of Attorney (included on the signature pages of this Form S-4).
99.01 Letter of Transmittal+
99.02 Notice of Guaranteed Delivery+
99.03 Letter from the Dealer Managers to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees+
99.04 Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and other
Nominees+
99.05 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9+
99.06 Letter to Participants in the Savings and Retirement Plan of The Limited, Inc.+
99.07 Notice to Participants in the Stock Purchase Plan of The Limited, Inc.+
</TABLE>
- ---------------
+ To be filed by amendment.
++ Previously filed.
Item 22. Undertakings.
In so far as indemnification for liabilities arising under the
Securities Act, as amended, may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request. The undersigned Registrant
hereby further undertakes to supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired involved
therein, that was not the subject of or included in the registration statement
when it became effective.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED PERSON, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
REYNOLDSBURG, STATE OF OHIO, ON FEBRUARY 17, 1998.
ABERCROMBIE & FITCH CO.
By: /s/ Michael S. Jeffries
--------------------------------
Name: Michael S. Jeffries
Title: Chief Executive Officer,
President and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Leslie H. Wexner, Kenneth B.
Gilman and Michael S. Jeffries and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacities, to sign, execute and file this registration statement under the
Securities Act of 1933 and any and all amendments (including, without
limitation, post-effective amendments and any amendment or amendments or
additional registration statements filed pursuant to Rule 462 under the
Securities Act of 1933 increasing the amount of securities for which
registration is being sought) to this registration statement, and to file the
same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission, to sign any and all
applications, registration statements, notices or other documents necessary or
advisable to comply with the applicable state security laws, and to file the
same, together with other documents in connection therewith, with the
appropriate state securities authorities, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents and purposes
as he or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON FEBRUARY 17, 1998.
<TABLE>
<S> <C>
Signature Title
/s/ Leslie H. Wexner Chairman of the Board of Directors
- -------------------------------------
Leslie H. Wexner
/s/ Kenneth B. Gilman Vice Chairman of the Board of Directors
- -------------------------------------
Kenneth B. Gilman
/s/ Michael S. Jeffries Chief Executive Officer, President and Director
- -------------------------------------
Michael S. Jeffries (Principal Executive Officer)
/s/ Seth R. Johnson Vice President and Chief Financial Officer
- -------------------------------------
Seth R. Johnson (Principal Financial and Accounting Officer)
/s/ Roger D. Blackwell Director
- -------------------------------------
Roger D. Blackwell
/s/ E. Gordon Gee Director
- -------------------------------------
E. Gordon Gee
/s/ Donald B. Shackelford Director
- -------------------------------------
Donald B. Shackelford
</TABLE>
EXHIBIT INDEX
<TABLE>
Exhibit
Number Description Page
- ------ ----------- ----
<S> <C> <C>
5.1 Opinion of Davis Polk & Wardwell regarding the legality of the securities being registered.+
8.1 Opinion of Davis Polk & Wardwell regarding certain tax matters.+
10.1 Form of Tax Disaffiliation Agreement between The Limited, Inc. and Abercrombie & Fitch
Co.+
10.2 Services Agreement by and between Abercrombie & Fitch Co. and The Limited, Inc. dated
September 27, 1996, incorporated by reference to Exhibit 10.2 to the A&F's Quarterly Report
on Form 10-Q for the quarter ended November 2, 1996++
10.3 Form of Amendment No. 1 to the Services Agreement+
10.4 Shared Facilities Agreement, dated September 27, 1996, by and between Abercrombie & Fitch
Co. and The Limited, Inc., incorporated by reference to Exhibit 10.3 to A&F's Quarterly
Report on Form 10-Q for the quarter ended November 2, 1996++
10.5 Sublease Agreement by and between Victoria's Secret Stores, Inc. and Abercrombie & Fitch
Co., Inc., dated June 1, 1995, incorporated by reference to Exhibit 10.3 to A&F's
Registration Statement on Form S-1++
10.6 Corporate Agreement by and between Abercrombie & Fitch Co. and The Limited, Inc., dated
October 1, 1996, incorporated by reference to Exhibit 10.5 to A&F's Quarterly Report on
Form 10-Q for the quarter ended November 2, 1996++
23.1 Consent of independent accountants to the incorporation by reference of the 1996 Annual Report
on Form 10-K of The Limited, Inc. into this Form S-4.
23.2 Consent of independent accountants to the incorporation by reference of the 1996 Annual Report
on Form 10-K of Abercrombie & Fitch Co. into this Form S-4.
23.3 Consent of independent accountants to the incorporation by reference of the 1997 third fiscal
quarter Quarterly Report on Form 10-Q of The Limited, Inc. into this Form S-4.
23.4 Consent of independent accountants to the incorporation by reference of the 1997 third fiscal
quarter Quarterly Report on Form 10-Q of Abercrombie & Fitch Co. into this Form S-4.
24.1 Power of Attorney (included on the signature pages of this Form S-4).
99.01 Letter of Transmittal+
99.02 Notice of Guaranteed Delivery+
99.03 Letter from the Dealer Managers to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees+
99.04 Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and other
Nominees+
99.05 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9+
99.06 Letter to Participants in the Savings and Retirement Plan of The Limited, Inc.+
99.07 Notice to Participants in the Stock Purchase Plan of The Limited, Inc.+
- ---------------
+ To be filed by amendment.
++ Previously filed.
</TABLE>
Exhibit 23.1
[LETTERHEAD OF COOPERS & LYBRAND L.L.P.]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
on Form S-4 of our report dated February 24, 1997, on our audits of the
consolidated financial statements and financial statement schedules of The
Limited, Inc. as of February 1, 1997 and February 3, 1996, and for the
years ended February 1, 1997, February 3, 1996 and January 28, 1995, which
report was included in the The Limited, Inc. Annual Report on Form 10-K
for the year ended February 1, 1997. We also consent to the reference to
our Firm under the caption "Experts".
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Columbus, Ohio
February 16, 1998
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
on Form S-4 of our report dated February 24, 1997, on our audits of the
consolidated financial statements and financial statement schedules of
Abercrombie & Fitch Co. as of February 1, 1997 and February 3, 1996, and
for the years ended February 1, 1997, February 3, 1996 and January 28,
1995, which report was included in the Abercrombie & Fitch Co. Annual
Report on Form 10-K for the year ended February 1, 1997. We also consent
to the reference to our Firm under the caption "Experts".
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Columbus, Ohio
February 16, 1998
Exhibit 23.3
[LETTERHEAD OF COOPERS & LYBRAND L.L.P.]
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
We are aware that our report dated November 17, 1997 on our review of
interim consolidated financial information of The Limited, Inc. for the
thirteen and thirty-nine week periods ended November 1, 1997 and November
2, 1996 and included in the Company's quarterly report on Form 10-Q for the
periods then ended is incorporated by reference in this Registration
Statement on Form S-4. Pursuant to Rule 436(c) under the Securities Act of
1933, this report should not be considered a part of the registration
statement prepared or certified by us within the meaning of Sections 7 and
11 of that Act.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Columbus, Ohio
February 16, 1998
Exhibit 23.4
[LETTERHEAD OF COOPERS & LYBRAND L.L.P.]
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
We are aware that our report dated November 17, 1997 on our review of
interim consolidated financial information of Abercrombie & Fitch Co. for
the thirteen and thirty-nine week periods ended November 1, 1997 and
November 2, 1996 and included in the Company's quarterly report on Form 10-
Q for the periods then ended is incorporated by reference in this
Registration Statement on Form S-4. Pursuant to Rule 436(c) under the
Securities Act of 1933, this report should not be considered a part of the
registration statement prepared or certified by us within the meaning of
Sections 7 and 11 of that Act.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Columbus, Ohio
February 16, 1998
