<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 1, 1998
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------- --------------
Commission file number 1-12107
ABERCROMBIE & FITCH CO.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 31-1469076
- - ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Four Limited Parkway East, Reynoldsburg, OH 43068
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (614) 577-6500
------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class A Common Stock Outstanding at September 1, 1998
- - -------------------- --------------------------------
$.01 Par Value 51,644,187 Shares
<PAGE> 2
ABERCROMBIE & FITCH CO.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Income
Thirteen and Twenty-six Weeks Ended
August 1, 1998 and August 2, 1997..........................................................3
Consolidated Balance Sheets
August 1, 1998 and January 31, 1998........................................................4
Consolidated Statements of Cash Flows
Twenty-six Weeks Ended
August 1, 1998 and August 2, 1997..........................................................5
Notes to Consolidated Financial Statements..........................................................6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition.............................................11
Part II. Other Information
Item 1. Legal Proceedings.............................................................................17
Item 4. Submission of Matters to a Vote of Security Holders...........................................17
Item 6. Exhibits and Reports on Form 8-K..............................................................18
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
ABERCROMBIE & FITCH CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
------------------------- -------------------------
August 1, August 2, August 1, August 2,
1998 1997 1998 1997
-------- ------- --------- --------
<S> <C> <C> <C> <C>
NET SALES $147,127 $86,640 $281,357 $160,956
Cost of Goods Sold, Occupancy and Buying Costs 91,933 58,854 176,952 109,229
-------- ------- -------- --------
GROSS INCOME 55,194 27,786 104,405 51,727
General, Administrative and Store Operating
Expenses 38,096 23,196 76,968 45,157
-------- ------- -------- --------
OPERATING INCOME 17,098 4,590 27,437 6,570
Interest (Income)/Expense, Net (570) 1,167 (739) 2,202
-------- ------- -------- --------
INCOME BEFORE INCOME TAXES 17,668 3,423 28,176 4,368
Provision for Income Taxes 7,070 1,370 11,270 1,750
-------- ------- -------- --------
NET INCOME $ 10,598 $ 2,053 $ 16,906 $ 2,618
======== ======= ======== ========
NET INCOME PER SHARE:
Basic $.21 $.04 $.33 $.05
======== ======= ======== ========
Diluted $.20 $.04 $.32 $.05
======== ======= ======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 51,635 51,005 51,421 51,014
======== ======= ======== ========
Diluted 53,116 51,322 52,796 51,195
======== ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
ABERCROMBIE & FITCH CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands)
<TABLE>
<CAPTION>
August 1, January 31,
1998 1998
-------- --------
(Unaudited)
ASSETS
------
<S> <C> <C>
CURRENT ASSETS:
Cash & Equivalents $ 45,855 $ 42,667
Accounts Receivable 3,681 1,695
Inventories 75,889 33,927
Store Supplies 5,916 5,592
Intercompany Receivable - 23,785
Other 950 1,296
-------- --------
TOTAL CURRENT ASSETS 132,291 108,962
PROPERTY AND EQUIPMENT, NET 73,987 70,517
DEFERRED INCOME TAXES 4,239 3,759
OTHER ASSETS 706 -
-------- --------
TOTAL ASSETS $211,223 $183,238
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts Payable $ 36,085 $ 15,968
Accrued Expenses 55,377 35,143
Income Taxes Payable 3,201 15,851
-------- --------
TOTAL CURRENT LIABILITIES 94,663 66,962
LONG-TERM DEBT - 50,000
OTHER LONG-TERM LIABILITIES 14,502 7,501
SHAREHOLDERS' EQUITY:
Common Stock 517 511
Paid-In Capital 143,891 117,972
Retained Deficit (42,025) (58,931)
-------- --------
102,383 59,552
Less: Treasury Stock, at Average Cost (325) (777)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 102,058 58,775
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $211,223 $183,238
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
ABERCROMBIE & FITCH CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Twenty-six Weeks Ended
-----------------------------
August 1, August 2,
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 16,906 $ 2,618
Impact of Other Operating Activities on Cash Flows:
Depreciation and Amortization 9,952 7,080
Non-Cash Charge for Deferred Compensation 6,573 -
Changes in Assets and Liabilities:
Inventories (41,962) (25,743)
Accounts Payable and Accrued Expenses 40,351 13,566
Income Taxes (13,130) (9,452)
Other Assets and Liabilities (310) (2,462)
-------- --------
NET CASH PROVIDED BY/(USED FOR) OPERATING ACTIVITIES 18,380 (14,393)
-------- --------
CASH USED FOR INVESTING ACTIVITIES
Capital Expenditures (15,354) (12,790)
-------- --------
FINANCING ACTIVITIES:
Issuance of Common Stock 25,875 -
Settlement of Intercompany Balance 23,785 -
Increase in Intercompany Balance - 28,391
Purchase of Treasury Stock - (852)
Stock Options and Other 502 16
Repayment of Long-Term Debt (50,000) -
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 162 27,555
-------- --------
NET INCREASE IN CASH AND EQUIVALENTS 3,188 372
Cash and Equivalents, Beginning of Year 42,667 1,945
-------- --------
CASH AND EQUIVALENTS, END OF PERIOD $ 45,855 $ 2,317
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
ABERCROMBIE & FITCH CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
Abercrombie & Fitch Co. (the "Company") is a specialty retailer of high
quality, casual apparel for men and women with an active, youthful
lifestyle.
The consolidated financial statements include the accounts of the
Company and all significant subsidiaries which are more than 50 percent
owned and controlled. All significant intercompany balances and
transactions have been eliminated in consolidation.
The consolidated financial statements as of August 1, 1998 and for the
thirteen and twenty-six week periods ended August 1, 1998 and August 2,
1997 are unaudited and are presented pursuant to the rules and
regulations of the Securities and Exchange Commission. Accordingly,
these consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto contained
in the Company's 1997 Annual Report on Form 10-K. In the opinion of
management, the accompanying consolidated financial statements reflect
all adjustments (which are of a normal recurring nature) necessary to
present fairly the financial position and results of operations and
cash flows for the interim periods, but are not necessarily indicative
of the results of operations for a full fiscal year.
The consolidated financial statements as of August 1, 1998, and for the
thirteen and twenty-six week periods ended August 1, 1998 and August 2,
1997 included herein have been reviewed by the independent accounting
firm of PricewaterhouseCoopers LLP and the report of such firm follows
the notes to consolidated financial statements.
2. ADOPTION OF ACCOUNTING STANDARDS
In March 1998, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of
Position ("SOP") 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use". The SOP requires that certain
external costs, internal payroll and payroll related costs be
capitalized during the application development stage of a software
development project and amortized over the software's useful life. The
Company will adopt the SOP in the first quarter of 1999.
6
<PAGE> 7
3. CONSUMMATION OF EXCHANGE OFFER
On May 19, 1998, The Limited, Inc. ("The Limited") completed a tax-free
exchange offer to establish the Company as an independent company. The
Limited accepted 47,075,052 shares of its common stock that were
exchanged at a ratio of .86 of a share of Abercrombie & Fitch stock for
each Limited share accepted for exchange. In addition, on June 1, 1998,
The Limited effected a pro rata spin-off to its shareholders of its
remaining 3,115,455 Abercrombie & Fitch shares. Limited shareholders of
record at the close of trading on May 29, 1998 received .013673 of a
share of Abercrombie & Fitch stock for each Limited share owned at that
time.
4. EARNINGS PER SHARE
Weighted Average Common Shares Outstanding (thousands):
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------------
August 1, August 2,
1998 1997
------ ------
<S> <C> <C>
Common shares issued 51,650 51,050
Treasury shares (15) (45)
------ ------
Basic shares 51,635 51,005
Dilutive effect of options and restricted shares 1,481 317
------ ------
Diluted shares 53,116 51,322
====== ======
Twenty-six Weeks Ended
--------------------------
August 1, August 2,
1998 1997
------ ------
Common shares issued 51,442 51,050
Treasury shares (21) (36)
------ ------
Basic shares 51,421 51,014
Dilutive effect of options and restricted shares 1,375 181
------ ------
Diluted shares 52,796 51,195
====== ======
</TABLE>
5. INVENTORIES
The fiscal year of the Company and its subsidiaries is comprised of two
principal selling seasons: Spring (the first and second quarters) and
Fall (the third and fourth quarters). Valuation of finished goods
inventories is based principally upon the lower of average cost or
market determined on a first-in, first-out basis utilizing the retail
method. Inventory valuation at the end of the first and third quarters
reflects adjustments for inventory markdowns and shrinkage estimates
for the total selling season.
7
<PAGE> 8
6. PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consisted of (thousands):
<TABLE>
<CAPTION>
August 1, January 31,
1998 1998
-------- --------
<S> <C> <C>
Property and equipment, at cost $126,203 $124,000
Accumulated depreciation and amortization (52,216) (53,483)
-------- --------
Property and equipment, net $ 73,987 $ 70,517
======== ========
</TABLE>
7. INCOME TAXES
The Company is included in The Limited's consolidated federal and
certain state income tax groups for income tax reporting purposes
through the completion of the split-off. Under this arrangement, the
Company is responsible for its proportionate share of income taxes
calculated upon its federal taxable income at a current estimate of the
Company's annual effective tax rate. Income taxes paid during the
twenty-six weeks ended August 1, 1998 and August 2, 1997 approximated
$24.4 million and $12.2 million, respectively.
8. LONG-TERM DEBT
The Company entered into a $150 million syndicated unsecured credit
agreement (the "Agreement"), on April 30, 1998 (the "Effective Date").
Borrowings outstanding under the Agreement are due April 30, 2003. The
Agreement has several borrowing options, including interest rates that
are based on the bank agent's "Alternate Base Rate", a LIBO Rate or a
rate submitted under a bidding process. Facility fees payable under the
Agreement are based on the Company's ratio (the "leverage ratio") of
the sum of total debt plus 800% of forward minimum rent commitments to
trailing four-quarters EBITDAR and currently accrues at .275% of the
committed amount per annum. The Agreement contains limitations on debt,
liens, restricted payments (including dividends), mergers and
acquisitions, sale-leaseback transactions, investments, acquisitions,
hedging transactions, and transactions with affiliates and financial
covenants requiring a minimum ratio of EBITDAR to interest expense and
minimum rent and a maximum leverage ratio. No amounts were outstanding
under the Agreement at August 1, 1998.
Long-term debt at January 31, 1998 consisted of a 7.80% unsecured note
in the amount of $50 million that represented the Company's
proportionate share of certain long-term debt of The Limited. The
interest rate and maturity of the note paralleled that of corresponding
debt of The Limited.
During the first quarter of 1998, the Company repaid the $50 million
long-term note owed to The Limited, Inc. by issuing 600,000 shares of
Class A common stock at a price of $43.125 per share and paid
$24,125,000 in cash.
8
<PAGE> 9
9. RELATIONSHIP WITH THE LIMITED
Subsequent to the exchange offer, The Limited continues to provide
various services to the Company including, but not limited to,
information technology, tax, store planning/design, transportation and
import and shipping services. The cost of these services generally is
equal to The Limited's cost in providing the relevant services plus 5%
of such costs. The Limited will cease to provide a substantial majority
of these services on May 19, 1999 (the first anniversary of the closing
of the exchange offer establishing the Company as an independent
company).
Prior to the completion of the exchange offer, cash activity was
provided through The Limited's centralized cash management systems and
was reflected in the Company's intercompany account. On May 19, 1998,
all intercompany balances were settled.
9
<PAGE> 10
[PRICEWATERHOUSECOOPERS LOGO]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Audit Committee of
The Board of Directors of
Abercrombie & Fitch Co.
We have reviewed the condensed consolidated balance sheet of Abercrombie & Fitch
Co. and Subsidiaries (the Company) at August 1, 1998, and the related condensed
consolidated statements of income and cash flows for the thirteen-week and
twenty-six-week periods ended August 1, 1998 and August 2, 1997. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of January 31, 1998, and the
related consolidated statements of income, shareholders' equity, and cash flows
for the year then ended (not presented herein); and in our report dated February
20, 1998, we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of January 31, 1998, is fairly stated,
in all material respects, in relation to the consolidated balance sheet from
which it has been derived.
/s/ PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
Columbus, Ohio
August 11, 1998
10
<PAGE> 11
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
During the second quarter of 1998, net sales increased 70% to $147.1 million
from $86.6 million a year ago. Operating income improved to $17.1 million in the
second quarter of 1998 from $4.6 million in the second quarter of 1997. Earnings
per diluted share were $.20 in the second quarter of 1998 compared to $.04 a
year ago. Year-to-date earnings per diluted share were $.32 in 1998 compared to
$.05 in 1997.
Financial Summary
The following summarized financial and statistical data compares the thirteen
and twenty-six week periods ended August 1, 1998 to the comparable 1997 periods:
<TABLE>
<CAPTION>
SECOND QUARTER YEAR-TO-DATE
------------------------------------------ ------------------------------------------
1998 1997 CHANGE 1998 1997 CHANGE
---- ----- ----- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
Increase in comparable store 45% 15% 46% 14%
sales
Retail sales increase 25% 36% 29% 34%
attributable to new and
remodeled stores
Retail sales per average selling $114 $81 41% $218 $153 42%
square foot
Retail sales per average store $878 $639 37% $1,688 $1,210 40%
(thousands)
Average store size at end of 7,561 7,921 (5)%
quarter (selling square feet)
Selling square feet at end of 1,293 1,101 17%
quarter (thousands)
Number of stores:
Beginning of period 158 132 156 127
Opened 14 7 17 12
Closed (1) - (2) -
----- ----- ------ ------
End of period 171 139 171 139
===== ===== ====== ======
</TABLE>
11
<PAGE> 12
Net Sales
Net sales for the second quarter of 1998 increased 70% to $147.1 million from
$86.6 million in the year earlier period. The increase was due to a comparable
store sales increase of 45%, driven primarily by significantly higher
transactions per store as compared to the second quarter of 1997. Comparable
store sales increases were strong in both the men's and women's businesses. The
men's business was driven by a very strong performance in knits, caps and
activewear, with women's having significant increases in knits, shirts, pants
and denim. Additionally, the A&F Quarterly accounted for 1.8% of net sales in
the second quarter of 1998.
Year-to-date net sales were $281.4 million, an increase of 75%, from $161.0
million for the same period in 1997. Sales growth resulted from a comparable
store sales increase of 46% and the net addition of 32 new stores. Net retail
sales per average selling square foot for the Company increased 42%, principally
from an increase in the number of transactions per store. The A&F Quarterly
represented 1.9% of 1998 year-to-date net sales.
Gross Income
Gross income, expressed as a percentage of net sales, increased to 37.5% for the
second quarter of 1998 from 32.1% for the same period in 1997. The increase was
attributable to significant leverage in buying and occupancy costs, as a
percentage of net sales, associated with increased comparable store sales as
well as improved merchandise margins (representing gross income before the
deduction of buying and occupancy costs).
The 1998 year-to-date gross income, expressed as a percentage of net sales,
increased to 37.1% from 32.1% for the comparable period in 1997. Merchandise
margins increased as a percentage of net sales due to higher initial markups
(IMU) while buying and occupancy costs declined due to leverage achieved from
comparable store sales increases.
General, Administrative and Store Operating Expenses
General, administrative and store operating expenses, expressed as a percentage
of net sales, were 25.9% in the second quarter of 1998 as compared to 26.8% for
the same period in 1997. The improvement resulted primarily from the favorable
leveraging of store expenses due to higher sales volume. Included in the second
quarter 1998 general, administrative and store operating expenses were
approximately $1.5 million in costs associated with the year 2000 initiative.
General, administrative and store operating expenses, expressed as a percentage
of net sales, were 27.4% and 28.1% for the year-to-date periods in 1998 and
1997, respectively. The improvement resulted from management's continued
emphasis on expense control and the favorable leveraging of expenses, primarily
store expenses, over higher sales volume.
12
<PAGE> 13
Operating Income
Second quarter and year-to-date operating income, expressed as a percentage of
net sales, were 11.6% and 9.8%, in 1998, up from 5.3% and 4.1% for the
comparable periods in 1997. The improvement in operating income in these periods
is a result of higher gross income and lower general, administrative and store
operating expenses, expressed as a percentage of net sales.
Interest Expense
Second quarter and year-to-date 1998 net interest income was $570 thousand and
$739 thousand as compared with net interest expense of $1.2 million and $2.2
million for the comparable periods last year. Net interest income in 1998 was
primarily from short-term investments. Interest expense in 1997 consisted of
$975 thousand per quarter on the $50 million long-term debt that was repaid
during the first quarter of 1998 in addition to interest on short-term
borrowings.
FINANCIAL CONDITION
Liquidity and Capital Resources
Cash provided from operating activities and the Company's $150 million credit
agreement provide the resources to support operations, including projected
growth, seasonal requirements and capital expenditures. A summary of the
Company's working capital position and long-term ongoing capitalization follows
(thousands):
<TABLE>
<CAPTION>
August 1, January 31,
1998 1998
-------- --------
<S> <C> <C>
Working capital $ 37,628 $ 42,000
======== ========
Capitalization:
Long-term debt - $ 50,000
Shareholders' equity $102,058 58,775
-------- --------
Total capitalization $102,058 $108,775
======== ========
</TABLE>
Net cash provided by operating activities totaled $18.4 million for the
twenty-six weeks ended August 1, 1998 versus $14.4 million net cash used for
operating activities in the comparable period in 1997. The improvement in cash
provided by operating activities was largely due to increases in net income and
accounts payable and accrued expenses. Cash requirements for inventory increased
over the period, supporting the sales growth and addition of stores.
Correspondingly, accounts payable and accrued expenses also increased supporting
the growth in inventories and sales. Additionally, cash used for income taxes
increased due to tax payments made on higher earnings.
13
<PAGE> 14
Abercrombie & Fitch's operations are seasonal in nature and typically peak
during the back-to-school and Christmas selling periods. Accordingly, cash
requirements for inventory expenditures are highest during these periods.
Investing activities were all for capital expenditures, which are primarily for
new stores.
In 1998, financing activities consisted primarily of the repayment of $50
million long-term debt to The Limited. This occurred through the issuance of
600,000 shares of Class A common stock to The Limited with the remaining balance
paid with cash from operations. Additionally, settlement of the intercompany
balance between the Company and The Limited occurred as of the split-off date.
Capital Expenditures
Capital expenditures, primarily for new and remodeled stores, totaled $15.4
million for the twenty-six weeks ended August 1, 1998 compared to $12.8 million
for the comparable period of 1997.
During the second quarter, the Company opened five Abercrombie & Fitch stores
and nine "abercrombie" kids stores.
The Company anticipates spending $38-$43 million in 1998 for capital
expenditures, of which $31-$36 million will be for new stores, remodeling and/or
expansion of existing stores and related improvements. The Company intends to
add approximately 210,000 net selling square feet in 1998, which will represent
a 17% increase over year-end 1997. It is anticipated that the increase will
result from the addition of 30 new Abercrombie & Fitch stores and the remodeling
and/or expansion of four stores.
The Company estimates that the average cost for leasehold improvements and
furniture and fixtures for Abercrombie & Fitch stores opened in 1998 will
approximate $725,000 per store, after giving effect to landlord allowances. In
addition, inventory purchases are expected to average approximately $275,000 per
store.
Additionally, the Company plans to open 13 to 15 "abercrombie" stores in 1998.
The planned store size is approximately 3,200 selling square feet and the
average cost for leasehold improvements and furniture and fixtures will be
approximately $520,000.
The Company expects capital expenditures will be funded principally by net cash
provided by operating activities.
Information Systems and "Year 2000" Compliance
The Company has completed a comprehensive review of its information systems and
is involved in a program to update computer systems and applications in
preparation for the year 2000. Total expenditures related to remediation,
testing, conversion, replacement and upgrading system applications are expected
to range from $3.0 million to $4.0 million from 1997 through 2000. As of August
1, 1998, the Company has incurred approximately $2.8 million of expenses
consisting of internal staff costs as well as outside consulting and other
expenditures related to the initiative. The Company expects to be fully
14
<PAGE> 15
compliant with Year 2000 by the end of the current fiscal year. Total
incremental expenses, including depreciation and amortization of new package
systems, remediation to bring current systems into compliance and writing off
legacy systems are not expected to have a material impact on the Company's
financial condition in any year during the conversion process through 2000.
The Company is attempting to contact vendors and others on whom it relies to
assure that their systems will be timely converted. However, there can be no
assurance that the systems of other companies on which the Company's systems
rely also will be timely converted or that any such failure to convert by
another company would not have an adverse effect on the Company's systems.
Furthermore, no assurance can be given that any or all of the Company's systems
are or will be Year 2000 compliant, or that the ultimate costs required to
address the Year 2000 issue or the impact of any failure to achieve substantial
Year 2000 compliance will not have a material adverse effect on the Company's
financial condition.
Relationship with The Limited
Subsequent to the split-off, the Company and The Limited entered into service
agreements which include among other things, tax, information technology and
store design and construction. These agreements are generally for a term of one
year. Service agreements were also entered into for the continued use by the
Company of its distribution and home office space and transportation and
logistic services. These agreements are generally for a term of three years.
Costs for these services will generally be the costs and expenses incurred by
The Limited plus 5% of such amounts. Upon expiration of these agreements with
The Limited, the Company may bring certain services in-house, contract with
other outside parties or take other actions the Company deems appropriate at
that time.
The Company does not anticipate that costs associated with these service
agreements or costs to be incurred upon their expiration will have a material
adverse impact on its financial condition.
Adoption of Accounting Standards
In March 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position ("SOP")
98-1, "Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use". The SOP requires that certain external costs, internal payroll
and payroll related costs be capitalized during the application development
stage of a software development project and amortized over the software's useful
life. The Company will adopt the SOP in the first quarter of 1999. The Company
does not anticipate the adoption of this SOP will have a material adverse effect
on the Company's consolidated financial position, results of operations or cash
flows.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
All forward-looking statements made by the Company involve material risks and
uncertainties and are subject to change based on various important factors which
may be beyond the Company's control. Accordingly, the Company's future
performance and financial results may differ materially from those expressed or
implied in any such forward-looking statements. Such factors include, but are
not limited to, 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 on appropriate terms, ability to develop new merchandise,
ability to hire and train associates, and other factors that may be described in
the Company's filings with the Securities and Exchange Commission. The Company
does not undertake to publicly update or revise its forward-looking statements
even if experience or future changes make it clear that any projected results
expressed or implied therein will not be realized.
15
<PAGE> 16
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is a defendant in a variety of lawsuits arising in the
ordinary course of business. On November 13, 1997, the United States
District Court for the Southern District of Ohio, Eastern Division,
dismissed with prejudice an amended complaint previously transferred to
that court by the United States District Court, Central District of
California. The amended complaint, which had been filed against the
Company, The Limited and certain of The Limited's other subsidiaries by
the American Textile Manufacturers Institute ("ATMI"), a textile
industry trade association, alleged that the defendants violated the
federal False Claims Act by submitting false country of origin records
to the U.S. Customs Service. On November 26, 1997, ATMI served a motion
to alter or amend judgment and a motion to disqualify the presiding
judge and to vacate the order of dismissal. The motion to disqualify
was denied on December 22, 1997, but as a matter of his personal
discretion, the presiding judge elected to recuse himself from further
proceedings and this matter was transferred to another judge of the
United States District Court for the Southern District of Ohio, Western
Division. On May 21, 1998, this judge reaffirmed the earlier dismissal
and denied all pending motions seeking to alter, amend or vacate the
judgment that had been entered in favor of the Company. On June 5,
1998, ATMI filed a notice of appeal to the United States Court of
Appeals for the Sixth Circuit.
On June 2, 1998, Abercrombie & Fitch filed suit against American Eagle
Outfitters alleging an intentional and systematic copying of the
Abercrombie & Fitch Brand, its images and business practices, including
the design and look of the Company's merchandise, marketing and
catalogue/magazine. The lawsuit was filed in Federal District Court in
Columbus, Ohio and seeks to enjoin American Eagle's practices, recover
lost profits and obtain punitive damages.
Although it is not possible to predict with certainty the eventual
outcome of any litigation, in the opinion of management, the foregoing
proceedings are not expected to have a material adverse effect on the
Company's financial position or results of operations.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On July 16, 1998, the Company held its annual meeting of stockholders
at its corporate headquarters, Four Limited Parkway East, Reynoldsburg,
Ohio. At such meeting, (i) Messrs. John A. Golden and Seth R. Johnson
were elected to the Company's Board of Directors to serve for a three
year term expiring in 2001, (ii) the 1998 Restatement of the
Abercrombie & Fitch Co. 1996 Stock Option and Performance Incentive
Plan was approved and (iii) the 1998 Restatement of the Abercrombie &
Fitch Co. 1996 Stock Plan for Non-Associate Directors was approved. The
votes on the foregoing matters are as follows:
(i) Elections of Messrs. Golden and Johnson
<TABLE>
<CAPTION>
For Withheld
--- --------
<S> <C> <C>
John A. Golden 37,487,296 2,036,477
Seth R. Johnson 39,356,356 167,417
</TABLE>
16
<PAGE> 17
(ii) Approval of the 1998 Restatement of the Abercrombie
& Fitch Co. 1996 Stock Option and Performance
Incentive Plan
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
22,380,564 6,090,802 11,052,407
</TABLE>
(iii) Approval of the 1998 Restatement of the Abercrombie
& Fitch Co. 1996 Stock Plan for Non-Associate
Directors
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
27,643,919 909,060 10,970,794
</TABLE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3. Articles of Incorporation and Bylaws
3.1 Amended and Restated Certificate of Incorporation of the
Company incorporated by reference to Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended November 2, 1996.
3.2 Bylaws of the Company incorporated by reference to Exhibit
3.2 to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 2, 1996.
4. Instruments Defining the Rights of Security Holders
4.1 Specimen Certificate of Class A Common Stock of the
Company incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-1 (File No.
333-8231) (the "Form S-1").
4.2 Credit Agreement dated as of April 30, 1998 among
Abercrombie & Fitch Stores, Inc., as Borrower, the
Company, as Guarantor, the Lenders party thereto, The
Chase Manhattan Bank, as Administrative Agent, and Chase
Securities, Inc., as Arranger, incorporated by reference
to Exhibit 4.1 to the Company's Current Report on Form 8-K
dated April 30, 1998.
4.3 Rights Agreement dated as of July 16, 1998 between
Abercrombie & Fitch Co. and First Chicago Trust Company of
New York, incorporated by reference to Exhibit 1 to the
Company's Current Report on Form 8-A dated July 21, 1998.
10. Material Contracts
10.1 Abercrombie & Fitch Co. Incentive Compensation Performance
Plan incorporated by reference to Exhibit A to the
Company's Proxy Statement dated April 14, 1997.
10.2 1998 Restatement of the Abercrombie & Fitch Co. 1996 Stock
Option and Performance Incentive Plan, as amended.
17
<PAGE> 18
10.3 1998 Restatement of the Abercrombie & Fitch Co. 1996 Stock
Plan for Non-Associate Directors incorporated by
reference to Exhibit B to the Company's Proxy Statement
dated May 29, 1998.
10.4 Employment Agreement by and between the Company and
Michael S. Jeffries dated as of May 13, 1997 with exhibits
and amendment incorporated by reference to Exhibit 10.4 to
the Company's Quarterly Report on Form 10-Q for the
quarter ended November 1, 1997.
10.5 Employment Agreement by and between the Company and
Michele Donnan-Martin dated December 5, 1997 incorporated
by reference to Exhibit 10.9 to the Company's Registration
Statement on Form S-4 (File No. 333-46423) (the "Form
S-4").
10.6 Employment Agreement by and between the Company and Seth
R. Johnson dated December 5, 1997 incorporated by
reference to Exhibit 10.10 to the Form S-4.
10.7 Tax Disaffiliation Agreement dated as of May 19, 1998
between The Limited, Inc. and the Company incorporated by
reference to Exhibit 10.7 to the Company's Quarterly
Report on Form 10-Q for the quarter ended May 2, 1998.
10.8 Amended and Restated Services Agreement dated as of May
19, 1998 between The Limited, Inc. and the Company
incorporated by reference to Exhibit 10.8 to the Company's
Quarterly Report on Form 10-Q for the quarter ended May 2,
1998.
10.9 Shared Facilities Agreement dated September 27, 1996 by
and between the Company and The Limited, Inc.
incorporated by reference to Exhibit 10.3 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
November 2, 1996.
10.10 Sublease Agreement by and between Victoria's Secret
Stores, Inc. and the Company dated June 1, 1995 (the
"Sublease Agreement") incorporated by reference to Exhibit
10.3 to the Form S-1.
10.11 Amendment No. 1 to the Sublease Agreement dated as of May
19, 1998 incorporated by reference to Exhibit 10.11 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended May 2, 1998.
15. Letter re: Unaudited Interim Financial Information to Securities and
Exchange Commission re: Incorporation of Independent Accountants'
Report
27. Financial Data Schedule
(b) Reports on Form 8-K
A report on Form 8-K was filed on July 21, 1998. Such report related to
the announcement of the Company's adoption of a Stockholder Rights Plan
and a Share Buyback Plan.
18
<PAGE> 19
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ABERCROMBIE & FITCH CO.
(Registrant)
By /s/ Seth R. Johnson
-------------------
Seth R. Johnson,
Vice President and Chief
Financial Officer*
Date: September 10, 1998
- - ------------------------
* Mr. Johnson is the principal financial officer and has been duly authorized to
sign on behalf of the Registrant.
19
<PAGE> 20
EXHIBIT INDEX
Exhibit No. Document
----------- --------
10.2 1998 Restatement of the Abercrombie & Fitch Co. 1996
Stock Option and Performance Incentive Plan, as
amended.
15 Letter re: Unaudited Interim Financial Information to
Securities and Exchange Commission re: Incorporation of
Independent Accountants' Report.
27 Financial Data Schedule.
<PAGE> 1
EXHIBIT A EXHIBIT 10.2
ABERCROMBIE & FITCH CO.
1996 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
(1998 RESTATEMENT)
ARTICLE 1
ESTABLISHMENT AND PURPOSE
1.1 Establishment and Effective Date. Abercrombie & Fitch Co., a
Delaware corporation (the "Company"), hereby establishes a stock incentive plan
to be known as the Abercrombie & Fitch Co. 1996 Stock Option and Performance
Incentive Plan (1998 Restatement) (the "Plan"). The Plan shall become effective
on July 16, 1998, subject to the approval of the Company's stockholders at the
1998 Annual Meeting. Upon approval of the Plan by the Board of Directors of the
Company (the "Board"), awards may be made as provided herein, subject to
stockholder approval.
1.2 Purpose. The Company desires to attract and retain the best
available executive and key management associates for itself and its
subsidiaries and to encourage the highest level of performance by such
associates in order to serve the best interests of the Company and its
stockholders. The Plan is expected to contribute to the attainment of these
objectives by offering eligible associates the opportunity to acquire stock
ownership interests in the Company, and other rights with respect to stock of
the Company, and to thereby provide them with incentives to put forth maximum
efforts for the success of the Company and its subsidiaries.
ARTICLE 2
AWARDS
2.1 Form of Awards. Awards under the Plan may be granted in any one or
all of the following forms: (i) incentive stock options ("Incentive Stock
Options") meeting the requirements of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"); (ii) nonstatutory stock options ("Nonstatutory
Stock Options") (unless otherwise indicated, references in the Plan to "Options"
shall include both Incentive Stock Options and Nonstatutory Stock Options);
(iii) stock appreciation rights ("Stock Appreciation Rights"), as described in
Article 7, which may be
<PAGE> 2
awarded either in tandem with Options ("Tandem Stock Appreciation Rights") or on
a stand-alone basis ("Nontandem Stock Appreciation Rights"); (iv) shares of
Common Stock (as defined below) which are restricted as provided in Article 11
("Restricted Shares"); (v) units representing shares of Common Stock, as
described in Article 12 ("Performance Shares"); (vi) units which do not
represent shares of Common Stock but which may be paid in the form of Common
Stock, as described in Article 13 ("Performance Units"); (vii) shares of
unrestricted Common Stock ("Unrestricted Shares") and (viii) tax offset payments
("Tax Offset Payments"), as described in Article 15.
2.2 Maximum Shares Available. The maximum aggregate number of shares of
the Company's Class A Common Stock, par value $.01 per share (the "Common
Stock") available for award under the Plan, including shares of Common Stock
awarded as Tax Offset Payments, is 2,852,324 subject to adjustment pursuant to
Article 16. Shares of Common Stock issued pursuant to the Plan may be either
authorized but unissued shares or issued shares reacquired by the Company. In
the event that prior to the end of the period during which Options may be
granted under the Plan, any Option or any Nontandem Stock Appreciation Right
under the Plan expires unexercised or is terminated, surrendered or canceled
(other than in connection with the exercise of a Stock Appreciation Right)
without being exercised in whole or in part for any reason, or any Restricted
Shares, Performance Shares or Performance Units are forfeited, or if such awards
are settled in cash in lieu of shares of Common Stock, then such shares or units
may, at the discretion of the Committee to the extent permissible under Rule
16b-3 under the Securities Exchange Act of 1934 (the "Act"), be made available
for subsequent awards under the Plan, upon such terms as the Committee may
determine.
2.3 Return of Prior Awards. As a condition to any subsequent award, the
Committee shall have the right, at its discretion, to require associates to
return to the Company awards previously granted under this Plan. Subject to the
provisions of this Plan, such new award shall be upon such terms and conditions
as are specified by the Committee at the time the new award is granted to the
extent permitted by Rule 16b-3 under the Act.
ARTICLE 3
ADMINISTRATION
<PAGE> 3
3.1 Committee. The Plan shall be administered by a Committee (the
"Committee") appointed by the Board and consisting of not less than two (2)
members of the Board. Each member of the Committee shall be an "outside
director" (within the meaning of Section 162(m) of the Code) and a "non-employee
director" (within the meaning of Rule 16b-3(b)(3)(i) under the Act).
3.2 Powers of Committee. Subject to the express provisions of the Plan,
the Committee shall have the power and authority (i) to grant Options and to
determine the purchase price of the Common Stock covered by each Option, the
term of each Option, the number of shares of Common Stock to be covered by each
Option and any performance objectives or vesting standards applicable to each
Option, (ii) to designate Options as Incentive Stock Options or Nonstatutory
Stock Options and to determine which Options, if any, shall be accompanied by
Tandem Stock Appreciation Rights; (iii) to grant Tandem Stock Appreciation
Rights and Nontandem Stock Appreciation Rights and to determine the terms and
conditions of such rights; (iv) to grant Restricted Shares and to determine the
term of the restricted period and other conditions and restrictions applicable
to such shares; (v) to grant Performance Shares and Performance Units and to
determine the performance objectives, performance periods and other conditions
applicable to such shares or units; (vi) to grant Unrestricted Shares; (vii) to
determine the amount of, and to make, Tax Offset Payments; and (viii) to
determine the associates to whom, and the time or times at which, Options, Stock
Appreciation Rights, Restricted Shares, Performance Shares, Performance Units
and Unrestricted Shares shall be granted.
3.3 Delegation. The Committee may delegate to one or more of its
members or to any other person or persons such ministerial duties as it may deem
advisable; provided, however, that the Committee may not delegate any of its
responsibilities hereunder if such delegation will cause (i) transactions under
the Plan to fail to comply with Section 16 of the Act or (ii) the Committee to
fail to qualify as "outside directors" under Section 162(m) of the Code. The
Committee may also employ attorneys, consultants, accountants or other
professional advisors and shall be entitled to rely upon the advice, opinions or
valuations of any such advisors.
3.4 Interpretations. The Committee shall have sole discretionary
authority to interpret the terms of the Plan, to adopt and revise rules,
regulations and policies to administer the Plan and to make any other factual
determinations which it believes to be necessary or advisable for the
administration of the Plan. All actions taken and interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the
<PAGE> 4
Company, all associates who have received awards under the Plan and all other
interested persons.
3.5 Liability; Indemnification. No member of the Committee, nor any
associate to whom ministerial duties have been delegated, shall be personally
liable for any action, interpretation or determination made with respect to the
Plan or awards made thereunder, and each member of the Committee shall be fully
indemnified and protected by the Company with respect to any liability he or she
may incur with respect to any such action, interpretation or determination, to
the extent permitted by applicable law and to the extent provided in the
Company's Certificate of Incorporation and Bylaws, as amended from time to time.
ARTICLE 4
ELIGIBILITY
Awards shall be limited to executive and key management associates who
are regular, full-time associates of the Company, its present and future
subsidiaries. In determining the associates to whom awards shall be granted and
the number of shares to be covered by each award, the Committee shall take into
account the nature of the services rendered by such associates, their present
and potential contributions to the success of the Company and its subsidiaries
and such other factors as the Committee in its sole discretion shall deem
relevant. As used in this Plan, the term "subsidiary" shall mean any corporation
which at the time qualifies as a subsidiary of the Company under the definition
of "subsidiary corporation" set forth in Section 424(f) of the Code, or any
successor provision hereafter enacted. No associate may be granted in any
calendar year awards covering more than 1,500,000 shares of Common Stock.
ARTICLE 5
STOCK OPTIONS
5.1 Grant of Options. Options may be granted under this Plan for the
purchase of shares of Common Stock. Options shall be granted in such form and
upon such terms and conditions, including the satisfaction of corporate or
individual performance objectives and other vesting standards, as the Committee
shall from time to time determine.
5.2 Option Price. The option price of each Option to purchase Common
Stock shall be determined by the Committee at the time of grant, but shall not
be less than 100 percent of the fair market value of the Common Stock subject to
such Option on the
<PAGE> 5
date of grant. The option price so determined shall also be applicable in
connection with the exercise of any Tandem Stock Appreciation Right granted with
respect to such Option.
5.3 Term of Options. The term of each Option granted under the Plan
shall not exceed ten (10) years from the date of grant, subject to earlier
termination as provided in Articles 9 and 10, except as otherwise provided in
Section 6.1 with respect to ten (10) percent stockholders of the Company.
5.4 Exercise of Options. An Option may be exercised, in whole or in
part, at such time or times as the Committee shall determine. The Committee may,
in its discretion, accelerate the exercisability of any Option at any time.
Options may be exercised by an associate by giving written notice to the
Committee stating the number of shares of Common Stock with respect to which the
Option is being exercised and tendering payment therefor. Payment for the Common
Stock issuable upon exercise of the Option shall be made in full in cash, or by
certified check or, if the Committee, in its sole discretion, permits, in shares
of Common Stock (valued at fair market value on the date of exercise). As soon
as reasonably practicable following such exercise, a certificate representing
the shares of Common Stock purchased, registered in the name of the associate,
shall be delivered to the associate.
5.5 Cancellation of Stock Appreciation Rights. Upon exercise of all or
a portion of an Option, the related Tandem Stock Appreciation Rights shall be
canceled with respect to an equal number of shares of Common Stock.
ARTICLE 6
SPECIAL RULES APPLICABLE TO INCENTIVE STOCK OPTIONS
6.1 Ten Percent Stockholder. Notwithstanding any other provision of
this Plan to the contrary, no associate may receive an Incentive Stock Option
under the Plan if such associate, at the time the award is granted, owns (after
application of the rules contained in Section 424(d) of the Code) stock
possessing more than ten (10) percent of the total combined voting power of all
classes of stock of the Company or its subsidiaries, unless (i) the option price
for such Incentive Stock Option is at least 110 percent of the fair market value
of the Common Stock subject to such Incentive Stock Option on the date of grant
and (ii) such Option is not exercisable after the date five (5) years from the
date such Incentive Stock Option is granted.
6.2 Limitation on Grants. The aggregate fair market value (determined
with respect to each Incentive Stock Option at the time such Incentive Stock
Option is granted) of the shares of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an associate during any
<PAGE> 6
calendar year (under this Plan or any other plan of the Company or a subsidiary)
shall not exceed $100,000.
6.3 Limitations on Time of Grants. No grant of an Incentive Stock
Option shall be made under this Plan after the termination date set forth in
Section 19.10 hereof.
ARTICLE 7
STOCK APPRECIATION RIGHTS
7.1 Grants of Stock Appreciation Rights. Tandem Stock Appreciation
Rights may be awarded by the Committee in connection with any Option granted
under the Plan, either at the time the Option is granted or thereafter at any
time prior to the exercise, termination or expiration of the Option. Nontandem
Stock Appreciation Rights may also be granted by the Committee at any time. At
the time of grant of a Nontandem Stock Appreciation Right, the Committee shall
specify the number of shares of Common Stock covered by such right and the base
price of shares of Common Stock to be used in connection with the calculation
described in Section 7.4 below. The base price of a Nontandem Stock Appreciation
Right shall be not less than 100 percent of the fair market value of a share of
Common Stock on the date of grant. Stock Appreciation Rights shall be subject to
such terms and conditions not inconsistent with the other provisions of this
Plan as the Committee shall determine.
7.2 Limitations on Exercise. A Tandem Stock Appreciation Right shall be
exercisable only to the extent that the related Option is exercisable and shall
be exercisable only for such period as the Committee may determine (which period
may expire prior to the expiration date of the related Option). Upon the
exercise of all or a portion of Tandem Stock Appreciation Rights, the related
Option shall be canceled with respect to an equal number of shares of Common
Stock. Shares of Common Stock subject to Options or portions thereof,
surrendered upon exercise of a Tandem Stock Appreciation Right, shall not be
available for subsequent awards under the Plan. A Nontandem Stock Appreciation
Right shall be exercisable during such period as the Committee shall determine.
7.3 Surrender or Exchange of Tandem Stock Appreciation Rights. A Tandem
Stock Appreciation Right shall entitle the associate to surrender to the Company
unexercised the related Option, or any portion thereof, and to receive from the
Company in exchange therefor that number of shares of Common Stock having an
aggregate fair market value equal to (A) the excess of (i) the fair market value
of one (1) share of Common Stock as of the date the Tandem Stock Appreciation
Right is exercised over (ii) the option price per share specified in such
Option, multiplied by
<PAGE> 7
(B) the number of shares of Common Stock subject to the Option, or portion
thereof, which is surrendered. Cash shall be delivered in lieu of any fractional
shares.
7.4 Exercise of Nontandem Stock Appreciation Rights. The exercise of a
Nontandem Stock Appreciation Right shall entitle the associate to receive from
the Company that number of shares of Common Stock having an aggregate fair
market value equal to (A) the excess of (i) the fair market value of one (1)
share of Common Stock as of the date on which the Nontandem Stock Appreciation
Right is exercised over (ii) the base price of the shares covered by the
Nontandem Stock Appreciation Right, multiplied by (B) the number of shares of
Common Stock covered by the Nontandem Stock Appreciation Right, or the portion
thereof being exercised. Cash shall be delivered in lieu of any fractional
shares.
7.5 Settlement of Stock Appreciation Rights. As soon as is reasonably
practicable after the exercise of a Stock Appreciation Right, the Company shall
(i) issue, in the name of the associate, stock certificates representing the
total number of full shares of Common Stock to which the associate is entitled
pursuant to Section 7.3 or 7.4 hereof and cash in an amount equal to the fair
market value, as of the date of exercise, of any resulting fractional shares,
and (ii) if the Committee causes the Company to elect to settle all or part of
its obligations arising out of the exercise of the Stock Appreciation Right in
cash pursuant to Section 7.6, deliver to the associate an amount in cash equal
to the fair market value, as of the date of exercise, of the shares of Common
Stock it would otherwise be obligated to deliver.
7.6 Cash Settlement. The Committee, in its discretion, may cause the
Company to settle all or any part of its obligation arising out of the exercise
of a Stock Appreciation Right by the payment of cash in lieu of all or part of
the shares of Common Stock it would otherwise be obligated to deliver in an
amount equal to the fair market value of such shares on the date of exercise.
ARTICLE 8
NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS
No Option or Stock Appreciation Right may be transferred, assigned,
pledged or hypothecated (whether by operation of law or otherwise), except as
provided by will or the applicable laws of descent and distribution, and no
Option or Stock Appreciation Right shall be subject to execution, attachment or
similar process. Any attempted assignment, transfer, pledge, hypothecation or
other disposition of an Option or a Stock Appreciation Right not
<PAGE> 8
specifically permitted herein shall be null and void and without effect. An
Option or Stock Appreciation Right may be exercised by an associate only during
his or her lifetime, or following his or her death pursuant to Article 10.
ARTICLE 9
TERMINATION OF EMPLOYMENT
9.1 Exercise after Termination of Employment. Except as the Committee
may at any time provide, in the event that the employment of an associate to
whom an Option or Stock Appreciation Right has been granted under the Plan shall
be terminated (for reasons other than death or total disability), such Option or
Stock Appreciation Right may be exercised (to the extent that the associate was
entitled to do so on the date of the termination of his employment) at any time
within three (3) months after such termination of employment.
9.2 Total Disability. In the event that an associate to whom an Option
or Stock Appreciation Right has been granted under the Plan shall become totally
disabled, except as the Committee may at any time provide, such Option or Stock
Appreciation Right may be exercised at any time during the first nine (9) months
that the associate receives benefits under the VABCO Long-Term Disability Plan
(the "Disability Plan") to the extent otherwise exercisable during such
nine-month period. For purposes hereof, "total disability" shall have the
definition set forth in the Disability Plan, which definition is hereby
incorporated by reference.
ARTICLE 10
DEATH OF ASSOCIATE
If an associate to whom an Option or Stock Appreciation Right has been
granted under the Plan shall die while employed by the Company or one of its
subsidiaries or within three (3) months after the termination of such
employment, except as the Committee may at any time provide, such Option or
Stock Appreciation Right may be exercised to the extent that the associate was
entitled to do so at the time of his or her death, by the associate's estate or
by the person who acquires the right to exercise such Option or Stock
Appreciation Right upon his or her death by bequest or inheritance. Such
exercise may occur at any time within one (1) year after the date of the
associate's death or such other period as the Committee may at any time provide,
but in no case
<PAGE> 9
later than the date on which the Option or Stock Appreciation Right would
otherwise terminate.
ARTICLE 11
RESTRICTED SHARES
11.1 Grant of Restricted Shares. The Committee may from time to time
cause the Company to grant Restricted Shares under the Plan to associates,
subject to such restrictions, conditions and other terms as the Committee may
determine.
11.2 Restrictions. At the time a grant of Restricted Shares is made,
the Committee shall establish a period of time (the "Restricted Period")
applicable to such Restricted Shares. Each grant of Restricted Shares may be
subject to a different Restricted Period. The Committee may, in its sole
discretion, at the time a grant is made, prescribe restrictions in addition to
or other than the expiration of the Restricted Period, including the
satisfaction of corporate or individual performance objectives which may be
applicable to all or any portion of the Restricted Shares. Except with respect
to grants of Restricted Shares intended to qualify as performance-based
compensation for purposes of Section 162(m) of the Code, the Committee may also,
in its sole discretion, shorten or terminate the Restricted Period or waive any
other restrictions applicable to all or a portion of such Restricted Shares.
None of the Restricted Shares may be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of during the Restricted Period or prior to the
satisfaction of any other restrictions prescribed by the Committee with respect
to such Restricted Shares.
11.3 Restricted Stock Certificates. If the Committee deems it necessary
or appropriate, the Company may issue, in the name of each associate to whom
Restricted Shares have been granted, stock certificates representing the total
number of Restricted Shares granted to the associate, provided that such
certificates bear an appropriate legend or other restriction on transfer. The
Secretary of the Company shall hold such certificates, properly endorsed for
transfer, for the associate's benefit until such time as the Restricted Shares
are forfeited to the Company, or the restrictions lapse.
11.4 Rights of Holders of Restricted Shares. Except as determined by
the Committee either at the time Restricted Shares are awarded or at any time
thereafter prior to the lapse of the restrictions, holders of Restricted Shares
shall not have the
<PAGE> 10
right to vote such shares or the right to receive any dividends with respect to
such shares. All distributions, if any, received by an associate with respect to
Restricted Shares as a result of any stock split-up, stock distribution, a
combination of shares, or other similar transaction shall be subject to the
restrictions of this Article 11.
11.5 Forfeiture. Except as the Committee may at any time provide, any
Restricted Shares granted to an associate pursuant to the Plan shall be
forfeited if the associate terminates employment with the Company or its
subsidiaries prior to the expiration or termination of the Restricted Period and
the satisfaction of any other conditions applicable to such Restricted Shares.
Upon such forfeiture, the Secretary of the Company shall either cancel or retain
in its treasury the Restricted Shares that are forfeited to the Company.
11.6 Delivery of Restricted Shares. Upon the expiration or termination
of the Restricted Period and the satisfaction of any other conditions prescribed
by the Committee, the restrictions applicable to the Restricted Shares shall
lapse and a stock certificate for the number of Restricted Shares with respect
to which the restrictions have lapsed shall be delivered, free of all such
restrictions, to the associate or the associate's beneficiary or estate, as the
case may be.
11.7 Performance-Based Objectives. At the time of the grant of
Restricted Shares to an associate, and prior to the beginning of the performance
period to which performance objectives relate, the Committee may establish
performance objectives based on any one or more of the following: price of
Company Common Stock or the stock of any affiliate, shareholder return, return
on equity, return on investment, return on capital, sales productivity,
comparable store sales growth, economic profit, economic value added, net
income, operating income, gross margin, sales, free cash flow, earnings per
share, operating company contribution or market share. These factors shall have
a minimum performance standard below which, and a maximum performance standard
above which, no payments will be made. These performance goals may be based on
an analysis of historical performance and growth expectations for the business,
financial results of other comparable businesses, and progress towards achieving
the long-range strategic plan for the business. These performance goals and
determination of results shall be based entirely on financial measures. The
Committee may not use any discretion to modify award results except as permitted
under Section 162(m) of the Code.
ARTICLE 12
<PAGE> 11
PERFORMANCE SHARES
12.1 Award of Performance Shares. For each Performance Period (as
defined in Section 12.2), Performance Shares may be granted under the Plan to
such associates of the Company and its subsidiaries as the Committee shall
determine. Each Performance Share shall be deemed to be equivalent to one (1)
share of Common Stock. Performance Shares granted to an associate shall be
credited to an account (a "Performance Share Account") established and
maintained for such associate.
12.2 Performance Period. "Performance Period" shall mean such period of
time as shall be determined by the Committee in its sole discretion. Different
Performance Periods may be established for different associates receiving
Performance Shares. Performance Periods may run consecutively or concurrently.
12.3 Right to Payment of Performance Shares. With respect to each award
of Performance Shares under this Plan, the Committee shall specify performance
objectives (the "Performance Objectives") which must be satisfied in order for
the associate to vest in the Performance Shares which have been awarded to him
or her for the Performance Period. If the Performance Objectives established for
an associate for the Performance Period are partially but not fully met, the
Committee may, nonetheless, in its sole discretion, determine that all or a
portion of the Performance Shares have vested. If the Performance Objectives for
a Performance Period are exceeded, the Committee may, in its sole discretion,
grant additional, fully vested Performance Shares to the associate. The
Committee may also determine, in its sole discretion, that Performance Shares
awarded to an associate shall become partially or fully vested upon the
associate's death, total disability (as defined in Article 9) or retirement, or
upon the termination of the associate's employment prior to the end of the
Performance Period.
12.4 Payment for Performance Shares. As soon as practicable following
the end of a Performance Period, the Committee shall determine whether the
Performance Objectives for the Performance Period have been achieved (or
partially achieved to the extent necessary to permit partial vesting at the
discretion of the Committee pursuant to Section 12.3). If the Performance
Objectives for the Performance Period have been exceeded, the Committee shall
determine whether additional Performance Shares shall be granted to the
associate pursuant to Section 12.3. As soon as reasonably practicable after such
determinations, or at such later date as the Committee shall determine at the
time of grant, the Company shall pay to the associate an amount with respect to
<PAGE> 12
each vested Performance Share equal to the fair market value of a share of
Common Stock on such payment date or, if the Committee shall so specify at the
time of grant, an amount equal to (i) the fair market value of a share of Common
Stock on the payment date less (ii) the fair market value of a share of Common
Stock on the date of grant of the Performance Share. Payment shall be made
entirely in cash, entirely in Common Stock (including Restricted Shares) or in
such combination of cash and Common Stock as the Committee shall determine.
12.5 Voting and Dividend Rights. No associate shall be entitled to any
voting rights, to receive any dividends, or to have his or her Performance Share
Account credited or increased as a result of any dividends or other distribution
with respect to Common Stock. Notwithstanding the foregoing, within sixty (60)
days from the date of payment of a dividend by the Company on its shares of
Common Stock, the Committee, in its discretion, may credit an associate's
Performance Share Account with additional Performance Shares having an aggregate
fair market value equal to the dividend per share paid on the Common Stock
multiplied by the number of Performance Shares credited to his or her account at
the time the dividend was declared.
ARTICLE 13
PERFORMANCE UNITS
13.1 Award of Performance Units. For each Performance Period (as
defined in Section 12.2), Performance Units may be granted under the Plan to
such associates of the Company and its subsidiaries as the Committee shall
determine. The award agreement covering such Performance Units shall specify a
value for each Performance Unit or shall set forth a formula for determining the
value of each Performance Unit at the time of payment (the "Ending Value"). If
necessary to make the calculation of the amount to be paid to the associate
pursuant to Section 13.3, the Committee shall also state in the award agreement
the initial value of each Performance Unit (the "Initial Value"). Performance
Units granted to an associate shall be credited to an account (a "Performance
Unit Account") established and maintained for such associate.
13.2 Right to Payment of Performance Units. With respect to each award
of Performance Units under this Plan, the Committee shall specify Performance
Objectives which must be satisfied in order for the associate to vest in the
Performance Units which have been awarded to him or her for the Performance
Period. If the Performance Objectives established for an associate for the
Performance Period are partially but not fully met, the
<PAGE> 13
Committee may, nonetheless, in its sole discretion, determine that all or a
portion of the Performance Units have vested. If the Performance Objectives for
a Performance Period are exceeded, the Committee may, in its sole discretion,
grant additional, fully vested Performance Units to the associate. The Committee
may also determine, in its sole discretion, that Performance Units awarded to an
associate shall become partially or fully vested upon the associate's death,
total disability (as defined in Article 9) or retirement, or upon the
termination of employment of the associate by the Company.
13.3 Payment for Performance Units. As soon as practicable following
the end of a Performance Period, the Committee shall determine whether the
Performance Objectives for the Performance Period have been achieved (or
partially achieved to the extent necessary to permit partial vesting at the
discretion of the Committee pursuant to Section 13.2). If the Performance
Objectives for the Performance Period have been exceeded, the Committee shall
determine whether additional Performance Units shall be granted to the associate
pursuant to Section 13.2. As soon as reasonably practicable after such
determinations, or at such later date as the Committee shall determine, the
Company shall pay to the associate an amount with respect to each vested
Performance Unit equal to the Ending Value of the Performance Unit or, if the
Committee shall so specify at the time of grant, an amount equal to (i) the
Ending Value of the Performance Unit less (ii) the Initial Value of the
Performance Unit. Payment shall be made entirely in cash, entirely in Common
Stock (including Restricted Shares) or in such combination of cash and Common
Stock as the Committee shall determine.
ARTICLE 14
UNRESTRICTED SHARES
14.1 Award of Unrestricted Shares. The Committee may cause the Company
to grant Unrestricted Shares to associates at such time or times, in such
amounts and for such reasons as the Committee, in its sole discretion, shall
determine. Except as required by applicable law, no payment shall be required
for Unrestricted Shares.
14.2 Delivery of Unrestricted Shares. The Company shall issue, in the
name of each associate to whom Unrestricted Shares have been granted, stock
certificates representing the total number of Unrestricted Shares granted to the
associate, and shall deliver such certificates to the associate as soon as
reasonably practicable after the date of grant or on such later date as the
Committee
<PAGE> 14
shall determine at the time of grant.
ARTICLE 15
TAX OFFSET PAYMENTS
The Committee shall have the authority at the time of any award under
this Plan or anytime thereafter to make Tax Offset Payments to assist associates
in paying income taxes incurred as a result of their participation in this Plan.
The Tax Offset Payments, which, if awarded, may be in cash or shares of Common
Stock, shall be determined by multiplying a percentage established by the
Committee by all or a portion (as the Committee shall determine) of the taxable
income recognized by an associate upon (i) the exercise of a Nonstatutory Stock
Option or a Stock Appreciation Right, (ii) the disposition of shares received
upon exercise of an Incentive Stock Option, (iii) the lapse of restrictions on
Restricted Shares, (iv) the award of Unrestricted Shares or (v) payments for
Performance Shares or Performance Units. The percentage shall be established,
from time to time, by the Committee at that rate which the Committee, in its
sole discretion, determines to be appropriate and in the best interests of the
Company to assist associates in paying income taxes incurred as a result of the
events described in the preceding sentence. Tax Offset Payments shall be subject
to the restrictions on transferability applicable to Options and Stock
Appreciation Rights under Article 8.
ARTICLE 16
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
Notwithstanding any other provision of the Plan, the Committee may at
any time make or provide for such adjustments to the Plan, to the number and
class of shares available thereunder or to any outstanding Options, Stock
Appreciation Rights, Restricted Shares or Performance Shares as it shall deem
appropriate to prevent dilution or enlargement of rights, including adjustments
in the event of changes in the number of shares of outstanding Common Stock by
reason of stock dividends, extraordinary cash dividends, split-ups,
recapitalizations, mergers, consolidations, combinations or exchanges of shares,
separations, reorganizations, liquidations and the like.
ARTICLE 17
AMENDMENT AND TERMINATION
<PAGE> 15
The Board may suspend, terminate, modify or amend the Plan, provided
that any amendment that would materially increase the aggregate number of shares
which may be issued under the Plan shall be subject to the approval of the
Company's stockholders, except that any such increase or modification that may
result from adjustments authorized by Article 16 does not require such approval.
If the Plan is terminated, the terms of the Plan shall, notwithstanding such
termination, continue to apply to awards granted prior to such termination. No
suspension, termination, modification or amendment of the Plan may, without the
consent of the associate to whom an award shall theretofore have been granted,
adversely affect the rights of such associate under such award.
ARTICLE 18
WRITTEN AGREEMENT
Each award of Options, Stock Appreciation Rights, Restricted Shares,
Performance Shares, Performance Units, Unrestricted Shares and Tax Offset
Payments shall be evidenced by a written agreement, executed by the associate
and the Company, and containing such restrictions, terms and conditions, if any,
as the Committee may require. In the event of any conflict between a written
agreement and the Plan, the terms of the Plan shall govern.
ARTICLE 19
MISCELLANEOUS PROVISIONS
19.1 Fair Market Value. "Fair market value" for purposes of this Plan,
shall be the closing price of the Common Stock as reported on the principal
exchange on which the shares are listed for the date on which the grant,
exercise or other transaction occurs, or if there were no sales on such date,
the most recent prior date on which there were sales.
19.2 Tax Withholding. The Company shall have the right to require
associates or their beneficiaries or legal representatives to remit to the
Company an amount sufficient to satisfy federal, state and local withholding tax
requirements, or to deduct from all payments under this Plan, including Tax
Offset Payments, amounts sufficient to satisfy all withholding tax requirements.
Whenever payments under the Plan are to be made to an associate in cash, such
payments shall be net of any amounts sufficient to satisfy all federal, state
and local withholding tax requirements. The Committee may, in its discretion,
permit an associate to satisfy his or her tax withholding obligation either by
(i) surrendering shares owned by the associate or (ii) having the Company
withhold from shares
<PAGE> 16
otherwise deliverable to the associate. Shares surrendered or withheld shall be
valued at their fair market value as of the date on which income is required to
be recognized for income tax purposes. In the case of an award of Incentive
Stock Options, the foregoing right shall be deemed to be provided to the
associate at the time of such award.
19.3 Compliance With Section 16(b) and Section 162(m). In the case of
associates who are or may be subject to Section 16 of the Act, it is the intent
of the Company that any award granted hereunder satisfy and be interpreted in a
manner that satisfies the applicable requirements of Rule 16b-3, so that such
persons will be entitled to the benefits of Rule 16b-3 or other exemptive rules
under Section 16 of the Act and will not be subjected to liability thereunder.
If any provision of the Plan or any award would otherwise conflict with the
intent expressed herein, that provision, to the extent possible, shall be
interpreted and deemed amended so as to avoid such conflict. To the extent of
any remaining irreconcilable conflict with such intent, such provision shall be
deemed void as applicable to associates who are or may be subject to Section 16
of the Act. If any award hereunder is intended to qualify as performance-based
for purposes of Section 162(m) of the Code, the Committee shall not exercise any
discretion to increase the payment under such award except to the extent
permitted by Section 162(m) and the regulations thereunder.
19.4 Successors. The obligations of the Company under the Plan shall be
binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Company, or upon any
successor corporation or organization succeeding to substantially all of the
assets and businesses of the Company. In the event of any of the foregoing, the
Committee may, at its discretion prior to the consummation of the transaction,
cancel, offer to purchase, exchange, adjust or modify any outstanding awards, at
such time and in such manner as the Committee deems appropriate and in
accordance with applicable law.
19.5 General Creditor Status. Associates shall have no right, title, or
interest whatsoever in or to any investments which the Company may make to aid
it in meeting its obligations under the Plan. Nothing contained in the Plan, and
no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company and
any associate or beneficiary or legal representative of such associate. To the
extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of an unsecured
general creditor of the Company.
<PAGE> 17
All payments to be made hereunder shall be paid from the general funds of the
Company and no special or separate fund shall be established and no segregation
of assets shall be made to assure payment of such amounts except as expressly
set forth in the Plan.
19.6 No Right to Employment. Nothing in the Plan or in any written
agreement entered into pursuant to Article 18, nor the grant of any award, shall
confer upon any associate any right to continue in the employ of the Company or
a subsidiary or to be entitled to any remuneration or benefits not set forth in
the Plan or such written agreement or interfere with or limit the right of the
Company or a subsidiary to modify the terms of or terminate such associate's
employment at any time.
19.7 Notices. Notices required or permitted to be made under the Plan
shall be sufficiently made if sent by registered or certified mail addressed (a)
to the associate at the associate's address as set forth in the books and
records of the Company or its subsidiaries, or (b) to the Company or the
Committee at the principal office of the Company.
19.8 Severability. In the event that any provision of the Plan shall be
held illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
19.9 Governing Law. To the extent not preempted by federal law, the
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Delaware.
19.10 Term of Plan. Unless earlier terminated pursuant to Article 17
hereof, the Plan shall terminate on the earlier of the tenth (10th) anniversary
of the date of adoption of the Plan by the Board or July 15, 2008.
<PAGE> 18
BOARD RESOLUTIONS
Abercrombie & Fitch Co.
RESOLVED, that the amendments presented to this meeting with respect to the
1998 Restatement of the Abercrombie and Fitch Co. 1996 Stock Option and
Performance Incentive Plan (the "Plan") be, and hereby are, adopted effective as
set forth therein in substantially the form attached as Exhibit A hereto with
such changes thereto as the proper officers of the Company deem necessary or
desirable;
RESOLVED that the proper officers of the Company be, and each of them
hereby is, authorized to make such changes in the Plan as the officer executing
the same may deem necessary or desirable in order to meet any technical or legal
requirements, approval of any such changes to be conclusively evidenced by his
signature thereto.
<PAGE> 19
Amendment No. 1
to the
1998 RESTATEMENT OF THE
ABERCROMBIE & FITCH CO.
1996 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
Effective July 17, 1998, the 1998 Restatement of the Abercrombie and Fitch
Co. 1996 Stock Option and Performance Plan (the "PLAN") is amended as set forth
below:
1. Section 5.2 of the Plan is hereby amended to read as follows:
"5.2 Option Price. The option price of each Option to purchase
Common Stock shall be determined by the Committee at the time of grant, but
shall not be less than 100 percent of the fair market value of the Common
Stock subject to such Option on the date of grant. The option price so
determined shall also be applicable in connection with the exercise of any
Tandem Stock Appreciation Right granted with respect to such Option. The
exercise price of an Option previously granted under the Plan shall not
thereafter be reduced other than pursuant to the provisions of Article 16
or Article 17."
2. Section 11.2 of the Plan is hereby amended to read as follows:
"11.2 Restrictions. (a) At the time a grant of Restricted Shares is
made, the Committee shall establish a period of time (the "RESTRICTED
PERIOD") applicable to such Restricted Shares. Each grant of Restricted
Shares may be subject to a different Restricted Period but except as set
forth in subsection (b) hereof in no event shall Restricted Period be less
than the minimum Restricted Period hereinafter set forth. The Committee
may, in its sole discretion, at the time a grant is made, prescribe
restrictions in addition to or other than the expiration of the Restricted
Period, including the satisfaction of corporate or individual performance
objectives which may be applicable to all or any portion of the Restricted
Shares. Except as set forth in subsection (b) hereof, the minimum
Restricted Period shall be three (3) years except in respect of Restricted
Shares that are also subject to restrictions relating to the satisfaction
of corporate or individual performance objectives, as to which the minimum
Restricted Period shall be one (1) year.
<PAGE> 20
(b) With respect to grants of Restricted Shares intended to qualify
as performance-based compensation for purposes of Section 162(m) of the
Code, the Committee shall have no discretion, shorten or terminate the
Restricted Period or waive any other restrictions applicable to all or a
portion of such Restricted Shares. With respect to grants of Restricted
Shares not intended to so qualify as performance-based compensation, upon
the death, disability or retirement of the holder of Restricted Shares or
as permitted under Section 16 hereof, the Committee may, in its sole
discretion, shorten or terminate the Restricted Period or waive any other
restrictions applicable to all or a portion of such Restricted Shares. None
of the Restricted Shares may be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of during the Restricted Period or prior
to the satisfaction of any other restrictions prescribed by the Committee
with respect to such Restricted Shares."
3. Article 17 of the Plan is hereby amended to read as follows:
"ARTICLE 17
AMENDMENT AND TERMINATION
The Board may suspend, terminate, modify or amend the Plan, provided
that any amendment that would (i) materially increase the aggregate number
of shares which may be issued under the Plan, (ii) materially modify the
requirements as to eligibility for participation in the Plan or (iii)
reduce the exercise price of options previously granted under the Plan
shall be subject to the approval of the Company's stockholders, except that
any such increase, modification or reduction that may result from
adjustments authorized by Article 16 does not require such approval. If the
Plan is terminated, the terms of the Plan shall, notwithstanding such
termination, continue to apply to awards granted prior to such termination.
No suspension, termination, modification or amendment of the Plan may,
without the consent of the associate to whom an award shall theretofore
have been granted, adversely affect the rights of such associate under such
award."
Approved by:
/s/ Seth R. Johnson
Name: Seth R. Johnson
--------------------
Title: Vice President & CFO
-------------------
Date: July 16, 1998
--------------------
<PAGE> 1
Exhibit 15
[PRICEWATERHOUSECOOPERS LOGO]
Securities and Exchange Commission
450 5th Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
We are aware that our report dated August 11, 1998, on our review of the interim
consolidated financial information of Abercrombie & Fitch Co. and Subsidiaries
for the thirteen-week and twenty-six-week periods ended August 1, 1998 and
included in this Form 10-Q is incorporated by reference in the Company's
registration statements on Form S-8, Registration Nos. 333-15941, 333-15943,
333-15945, 333-60189 and 333-60203. 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/ PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
Columbus, Ohio
September 11, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements (unaudited) of Abercrombie & Fitch Co. and
Subsidiaries for the quarter ended August 1, 1998 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> AUG-01-1998
<CASH> 45,855
<SECURITIES> 0
<RECEIVABLES> 3,681
<ALLOWANCES> 0
<INVENTORY> 75,889
<CURRENT-ASSETS> 132,291
<PP&E> 126,203
<DEPRECIATION> (52,216)
<TOTAL-ASSETS> 211,223
<CURRENT-LIABILITIES> 94,663
<BONDS> 0
0
0
<COMMON> 517
<OTHER-SE> 101,541
<TOTAL-LIABILITY-AND-EQUITY> 211,223
<SALES> 147,127
<TOTAL-REVENUES> 147,127
<CGS> 91,933
<TOTAL-COSTS> 91,933
<OTHER-EXPENSES> 38,096
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (570)
<INCOME-PRETAX> 17,668
<INCOME-TAX> 7,070
<INCOME-CONTINUING> 10,598
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,598
<EPS-PRIMARY> .21
<EPS-DILUTED> .20
</TABLE>
