ABERCROMBIE & FITCH CO /DE/, S-4/A, 1998-04-09

ABERCROMBIE & FITCH CO /DE/
S-4/A, 1998-04-09
FAMILY CLOTHING STORES

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==============================================================================

As filed with the Securities and Exchange Commission on April 9, 1998
Registration No. 333-46423

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_______________________

Amendment No. 3 to
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 of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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. [ ]

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.

==============================================================================

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.

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON April 9, 1998 --
SUBJECT TO COMPLETION.

[LTD LOGO]
EXCHANGE OFFER - IMPORTANT

Dear Limited Stockholders:

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
43,600,000 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 43,600,000
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 43,600,000 but more than 39,240,000 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 (39,240,000 out of a total of 43,600,000 shares) can be exchanged
for Limited shares. 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.

/s/ Leslie Wexner
-----------------
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

[PICTURES]

TABLE OF CONTENTS

QUESTIONS AND ANSWERS ABOUT THE
EXCHANGE OFFER..........................................................1

SUMMARY......................................................................6
The Companies................................................................6
Background and The Limited's Reasons for the
Exchange Offer..........................................................6
The Exchange Offer Generally.................................................7
The Exchange Offer...........................................................7
The Exchange Agent...........................................................9
The Information Agent........................................................9
The Dealer Managers..........................................................9
The Spin-Off.................................................................9
Comparative Per Share Market Price
Information.............................................................9
Comparative Per Share Data..................................................10
Summary Historical Consolidated Financial Data
of The Limited.........................................................11
Summary Unaudited Pro Forma Condensed
Consolidated Financial Data of The Limited.............................13
Summary Historical Consolidated Financial Data
of A&F.................................................................15
Summary Unaudited Pro Forma Condensed
Consolidated Financial Data of A&F.....................................16

RISK FACTORS................................................................17
Risk Factors Regarding A&F..................................................17
Risk Factor Regarding the Anticipated Premium...............................19
Risk Factor Regarding The Limited...........................................19

THE TRANSACTIONS............................................................20
Background and Purpose......................................................20
Effects.....................................................................22
No Appraisal Rights.........................................................22
Regulatory Approvals........................................................22
Accounting Treatment........................................................22
Forward-Looking Statements May Prove
Inaccurate.............................................................23

THE EXCHANGE OFFER..........................................................24
Terms of the Exchange Offer.................................................24
Exchange of Shares of Limited Common Stock..................................26
Determining to Participate in the Exchange Offer............................27
Procedures for Tendering Shares of Limited
Common Stock...........................................................29
Guaranteed Delivery Procedure...............................................31
Special Procedures for Participants in the
Savings and Retirement Plan and the Stock
Purchase Plan..........................................................32
Withdrawal Rights...........................................................33
Extension of Tender Period; Termination;
Amendment..............................................................34
Conditions to Consummation of the Exchange
Offer..................................................................35
Fees and Expenses...........................................................36

THE SPIN-OFF................................................................38

MARKET PRICES, TRADING AND DIVIDEND
INFORMATION............................................................39
Limited Common Stock........................................................39
A&F Common Stock............................................................39

CAPITALIZATION..............................................................41

UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS...................................................42
The Limited.................................................................43
Abercrombie & Fitch.........................................................48

MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF THE
LIMITED................................................................51
Financial Summary...........................................................53
Net Sales...................................................................54
Gross Income................................................................55
General, Administrative and Store Operating
Expenses...............................................................56
Special and Nonrecurring Items..............................................56
Operating Income............................................................57
Interest Expense............................................................57
Other Income................................................................57
Gains in Connection with IPO................................................58
Other Data..................................................................58
Acquisition.................................................................58
Financial Condition.........................................................58
Information Systems and "Year 2000"
Compliance.............................................................61
Impact of Inflation.........................................................62
Adoption of New Accounting Standards........................................62

MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF A&F.......................................63
Financial Summary...........................................................63
Net Sales...................................................................64
Gross Income................................................................64
General, Administrative and Store Operating
Expenses...............................................................65
Operating Income............................................................65
Interest Expense............................................................65
Financial Condition.........................................................66
Information Systems and "Year 2000"
Compliance.............................................................67
Impact of Inflation.........................................................67
Adoption of New Accounting Standards........................................68

BUSINESS OF A&F.............................................................69
Business Strengths..........................................................69
Growth Strategy.............................................................70
A&F Stores..................................................................71
Merchandising...............................................................72
Marketing and Promotion.....................................................73
Associates..................................................................74
Sourcing....................................................................74
Central Store Planning......................................................75
Central Real Estate Management..............................................75
Merchandise Distribution....................................................75
Management Information Systems..............................................76
Trademarks and Servicemarks.................................................76
Competition.................................................................77
Properties..................................................................77

BUSINESS OF THE LIMITED.....................................................79

MANAGEMENT OF A&F...........................................................81
Board of Directors..........................................................81

EXECUTIVE COMPENSATION FOR A&F..............................................82

MANAGEMENT OF THE LIMITED...................................................87

EXECUTIVE COMPENSATION FOR THE
LIMITED................................................................91

SHARES ELIGIBLE FOR FUTURE SALE.............................................95

COMPARISON OF RIGHTS OF HOLDERS OF
LIMITED COMMON STOCK AND A&F
COMMON STOCK...........................................................96
Number of Directors.........................................................96
Business Combinations.......................................................96
Authorized Shares of Stock..................................................97
Transactions with Interested Parties........................................97

RELATIONSHIP BETWEEN THE LIMITED AND
A&F....................................................................98
Services Agreements.........................................................98
Sublease Agreements.........................................................98
Shared Facilities Agreements................................................98
Tax-Separation Agreement....................................................99

CERTAIN FEDERAL INCOME TAX
CONSEQUENCES..........................................................100

LEGAL MATTERS..............................................................101

EXPERTS....................................................................101

WHERE YOU CAN FIND MORE
INFORMATION...........................................................102

LIST OF DEFINED TERMS......................................................104

INDEX TO THE CONSOLIDATED FINANCIAL
STATEMENTS OF THE LIMITED..........................................F(L)-1

INDEX TO THE CONSOLIDATED FINANCIAL
STATEMENTS OF A&F..................................................F(A)-1

SCHEDULE A -- TRANSACTIONS CONCERNING
LIMITED COMMON STOCK

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
re
flected 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 and is expected to have the
effect of increasing The Limited's earnings per share. Furthermore, the
Board's decision to invest in The Limited by using A&F shares to repurchase
Limited shares demonstrates our confidence in The Limited's future prospects.
In deciding to pursue the Exchange Offer, we considered, among other things,
the advice of our financial advisors, Goldman, Sachs & Co. and NationsBanc
Montgomery Securities.

Q3: What other alternatives did The Limited consider before choosing the
Exchange Offer?

A3: We considered two principal alternatives for the separation of A&F from
The Limited: the Exchange Offer and a pro rata spin-off. We decided, however,
that the spin-off was not the preferred alternative because it would not
achieve the objectives described in Answer 2 above other than permitting the
separation of A&F from The Limited on a tax-free basis.

Q4: What is a modified "Dutch auction"?

A4: 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.

Q5: What is the "exchange ratio"?

A5: The exchange ratio represents the number of A&F shares which Limited
stockholders will receive for each Limited share tendered in the Exchange
Offer.

Q6: How will The Limited decide on the final exchange ratio?

A6: The Limited will select as the final exchange ratio the lowest exchange
ratio within the exchange ratio range 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.

Q7: How do I decide whether to participate in the Exchange Offer?

A7: 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 17. 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.

Q8: What is the Anticipated Premium?

A8: Based on the closing trading prices for Limited (NYSE/LSE: LTD) and A&F
shares (NYSE: ANF) on ______, 1998, any of the designated exchange ratios
wo
uld result in a Limited stockholder receiving A&F shares with a market value
greater than the market value of 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 ___%.

Q9: Can I participate with only a portion of my Limited shares in the Exchange
Offer?

A9: Yes, you may tender some or all of your Limited shares.

Q10: Do I do anything if I want to retain my Limited shares?

A10: No. If you want to retain your Limited shares, you do not need to take
any action.

Q11: If I decide to participate in the Exchange Offer, how do I select an
appropriate exchange ratio?

A11: 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 29.

Q12: What happens if I select an exchange ratio higher than the final exchange
ratio?

A12: You will not participate in the Exchange Offer and the Limited shares you
tendered will be returned to you.

Q13: What happens if I select either the exchange ratio selected by the Dutch
Auction procedure or a specific exchange ratio which is equal to or lower than
the final exchange ratio?

A13: 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.

Q14: How can I make sure that I will participate in the Exchange Offer?

A14: To ensure participation in the Exchange Offer, you should check the box
marked "Shares Tendered at Exchange Ratio Determined by Dutch Auction" in Box
#2 on the Letter of Transmittal 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.

Q15: Can I select more than one exchange ratio?

A15: The same shares may not be tendered at more than one exchange ratio. You
may, however, tender different portions of your Limited shares at different
exchange ratios, but you must complete separate Letters of Transmittal for
each exchange ratio selected.

Q16: What is proration?

A16: Proration will occur if the Exchange Offer is oversubscribed; that is, if
the number of Limited shares tendered multiplied by the final exchange ratio
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.

Q17: Will Leslie Wexner be tendering his Limited shares in the Exchange Offer?

A17: No. Consistent with the goal of completely separating A&F from The
Limited, Mr. Wexner has decided not to tender his Limited shares (including
shares held by trusts created by Mr. Wexner). Trusts created by Mr. Wexner
have disposed of approximately 5.5 million Limited shares since the
announcement of the Exchange Offer on February 17, 1998. The decision to
dispose of such shares was made by the trustees of the trusts in order to
diversify their investments.

Q18: How do I participate in the Exchange Offer?

A18: 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 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).

Q19: Will participants in The Limited's Dividend Reinvestment Plan be able to
participate in the Exchange Offer?

A19: Yes. Each participant in the Dividend Reinvestment Plan may tender some
or all of the Limited shares attributable to his or her plan account.

Q20: Will participants in The Limited's Savings and Retirement Plan be able to
participate in the Exchange Offer?

A20: 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.

Q21: Will participants in The Limited's Stock Purchase Plan be able to
participate in the Exchange Offer?

A21: Yes. Each participant in the Stock Purchase Plan may instruct the agent
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.

Q22: My shares are held by my broker. What should I do if I want to
participate in the Exchange Offer?

A22: 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.

Q23: Can I change my mind after I tender my Limited shares?

A23: 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.

Q24: Are there any conditions to the Limited's obligation to complete the
Exchange Offer?

A24: Yes, The Limited's obligation to complete the Exchange Offer is subject
to the conditions outlined on page 35. In particular, we will not close the
Exchange Offer unless enough Limited shares are tendered so that at least
39,240,000 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". The Limited may waive any or all of the
conditions to the Exchange Offer in its reasonable discretion.

Q25: What happens if the number of Limited shares tendered is such that more
than 39,240,000 A&F shares, but fewer than 43,600,000 A&F shares, would be
exchanged?

A25: 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". For more details, see "The Spin-Off" on
page 38.

Q26: What happens if the number of Limited shares tendered is such that more
than 43,600,000 shares of A&F would be exchanged, i.e., the Exchange Offer is
oversubscribed?

A26: 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.

Q27: When does the Exchange Offer expire?

A27: The Exchange Offer, proration period and withdrawal rights will expire
at 12:00 midnight, New York City time, on__________, 1998, unless extended.
Your instructions and other required documents must be received before then in
order to participate in the Exchange Offer.

Q28: When will tendering stockholders know the outcome of the Exchange Offer?

A28: 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.

Q29: Will I be taxed on the shares of A&F that I receive in the Exchange Offer?

A29: The Limited has received 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.

Q30: What will be the tax basis and holding period of A&F shares I receive in
exchange for my Limited shares?

A30: 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 of the A&F shares you receive
in the Exchange Offer divided by (ii) the market value of the A&F shares
received in the Exchange Offer plus the market value of the Limited shares
held immediately after the Exchange Offer.

Stated as a formula, the basis in your A&F shares received in the Exchange
Offer may be determined as follows:

Market value of A&F
Basis in A&F Basis in received in the Exchange Offer
received in The Limited ------------------------------------------
the Exchange = prior to the x Market value Market value of
Offer Exchange of A&F + The Limited held
Offer received in the immediately
Exchange after the
Offer Exchange Offer.

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.

Q31: What will be the tax basis in Limited shares that are not exchanged
pursuant to the Exchange Offer?

A31: 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.

Q32: Doesn't A&F have two classes of stock? How will they be affected by the
Transactions?

A32: 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.

Q33: What happens to my Limited dividend in light of the Exchange Offer?

A33: If you tender your Limited shares, after the Exchange Offer, 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 your Limited shares that are not
exchanged in the Exchange Offer. A&F does not currently pay a dividend on its
shares.

Q34: Have other companies pursued such an exchange offer?

A34: Yes. Examples of similar exchange offers include recent transactions
involving Lockheed Martin Corporation, Eli Lilly and Company and Viacom
International Inc.

Q35: Who should I call if I have questions or want copies of additional
documents?

A35: 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 102. 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 various market segments that 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 79.

Abercrombie & Fitch Co.
Four Limited Parkway East
P.O. Box 182168
Reynoldsburg, Ohio 43068
(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 various market segments that
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
69.

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 and is expected to have the effect of
increasing The Limited's earnings per share. Furthermore, the Board's
decision to invest in The Limited by using A&F shares to repurchase Limited
shares demonstrates our confidence in The Limited's future prospects. In
deciding to pursue the Exchange Offer, we considered, among other things, the
advice of our financial advisors, Goldman, Sachs & Co. and NationsBanc
Montgomery Securities

To review the reasons for the Exchange Offer in greater detail,
see page 20.

The Exchange Offer Generally

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 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 New York Stock Exchange 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 100)

The Limited has received 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 A&F share 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 24)

The Limited is offering to exchange up to 43,600,000 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" in Box #2 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 as the final exchange ratio the lowest exchange ratio within the
exchange ratio range which would permit the maximum number of the shares of
A&F owned by The Limited to be exchanged in the Exchange Offer.

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 Limited shares not
accepted for exchange will be returned to stockholders promptly following the
expiration of the Exchange Offer.

Expiration Date; Extension; Termination (See page 34)

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 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 33)

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 35)

The Exchange Offer is subject to certain conditions, including
that enough Limited shares are tendered so that at least 90%, or 39,240,000
shares, of A&F owned by The Limited can be exchanged.

Procedures for Tendering (See pages 29 and 32)

Complete and sign the Letter of Transmittal designating the
number of Limited 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 & Co.),
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
43,600,000 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 the Exchange Offer. D.F. King's telephone number is (800)
594-6864.

The Dealer Managers

Goldman, Sachs & Co. is serving as the Dealer Managers for the
Exchange Offer. Goldman Sachs' telephone number is (800) 323-5678.

The Spin-Off (See page 38)

If the number of Limited shares tendered is such that fewer
than 43,600,000 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 39)

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 $31 1/2, and the closing sale price per A&F share on the NYSE
was $37 1/8. 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.

Comparative Per Share Data

The following table summarizes the per share information for
The Limited and A&F on an historical, pro forma and dividends-paid basis.

The Limited unaudited pro forma per share information gives
effect to the following transactions and events: (1) the split-off of A&F from
The Limited's consolidated financial statements -- the consolidated financial
statements of A&F will no longer be included in The Limited's consolidated
financial statements and The Limited's outstanding common stock will be
reduced by the number of shares of Limited Common Stock exchanged in the
Exchange Offer; (2) the elimination of A&F minority interest in The Limited's
consolidated financial statements and (3) the repayment of a $50 million
obligation due to The Limited by A&F through issuance of 600,000 shares of A&F
Common Stock to The Limited with the remainder being paid in cash. The pro
forma per share information assumes that these transactions occurred on
February 2, 1997.

The A&F unaudited pro forma per share information gives effect
to the following transactions and events: (1) the repayment of a $50 million
obligation due to The Limited by A&F through issuance of 600,000 shares of A&F
Common Stock to The Limited with the remainder being paid in cash and (2) the
elimination of interest expense from the A&F statement of income due to the
repayment of its $50 million obligation to The Limited. The pro forma per
share information assumes that these transactions occurred on February 2, 1997.

This data has been derived from and should be read in
conjunction with the audited consolidated financial statements (and the
related notes) of each of The Limited and A&F for the three years ended
January 31, 1998 included herein and other information that The Limited and
A&F have filed with the Securities and Exchange Commission (the "SEC"). See
"Where You Can Find More Information" on page 102 and the "Unaudited Pro Forma
Consolidated Financial Statements" on page 42.

<TABLE>
<CAPTION>
Fiscal year ended
-------------------------------------------------------------------------------
January 29, January 28, February 3, February 1, January 31,
1994 1995 1996 (1) 1997 1998
----------- ----------- ----------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Per share information - The Limited:

Net income per basic share $1.09 $1.25 $2.69 $1.55 $0.80
Net income per diluted share $1.08 $1.25 $2.68 $1.54 $0.79
Pro forma net income per basic share *
Pro forma net income per diluted share (2) *
Dividends per share $0.36 $0.36 $0.40 $0.40 $0.48

Per share information - A&F
Net income per basic share $(0.06) $0.19 $0.33 $0.54 $0.95
Net income per diluted share $(0.06) $0.19 $0.33 $0.54 $0.94
Pro forma net income per basic share $0.97
Pro forma net income per diluted share $0.96
Dividends per share (3)
</TABLE>

- ---------------
(1) Fifty-three week year.

(2) The pro forma net income per share is based upon the pro forma weighted
average number of common and potentially issuable common shares
outstanding of The Limited after the Exchange Offer.

(3) No dividends have been paid to shareholders of A&F Common Stock.

* Indicates calculations to be completed upon determination of the
Exchange Ratio Range.

Summary Historical Consolidated Financial Data of The Limited

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 January 31, 1998
included herein and other information that The Limited has filed with the SEC.
See "Where You Can Find More Information" on page 102.

The Limited, Inc.
(in thousands, except per share and ratio data)

<TABLE>
<CAPTION>
Fiscal year ended
-------------------------------------------------------------------------
January 29, January 28, February 3, February 1, January 31,
1994(1) 1995 1996(1)(2)(3) 1997 1998
----------- ----------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Summary of Operations:

Net sales ....................................... $ 7,245,088 $ 7,320,792 $ 7,881,437 $ 8,644,791 $ 9,188,804
Operating income ................................ $ 701,556(4) $ 798,989 $ 613,349(5) $ 636,067(6) $ 480,099(8)
Gain in connection with initial public offerings -- -- $ 649,467 $ 118,178 $ 8,606
Net income ...................................... $ 390,999 $ 448,343 $ 961,511 $ 434,208 $ 217,390
Net income, excluding gains in connection
with initial public offerings(7) ............... $ 390,999 $ 448,343 $ 312,044 $ 316,030 $ 211,784
Pro forma net income ............................ -- -- $ 174,558
Net income per basic share ..................... $ 1.09 $ 1.25 $ 2.69 $ 1.55 $ 0.80
Net income per diluted share .................... $ 1.08 $ 1.25 $ 2.68 $ 1.54 $ 0.79
Net income per diluted share, excluding
gains in connection with initial public
offerings ...................................... $ 1.08 $ 1.25 $ 0.87 $ 1.12 $ 0.77
Pro forma net income per basic share ........... *
Pro forma net income per diluted share .......... *
Dividends per share ............................. $ 0.36 $ 0.36 $ 0.40 $ 0.40 $ 0.48
Basic weighted average shares outstanding ....... 360,225 357,703 357,592 280,699 271,898
Diluted weighted average shares
outstanding .................................... 363,234 358,601 358,371 282,053 274,483
Pro forma basic weighted average shares
outstanding .................................... *
Pro forma diluted weighted average shares
outstanding .................................... *
Ratio of earnings to fixed charges .............. 3.53x 3.76x 5.01x 3.30x 2.44x

Condensed Consolidated Balance Sheets:

Assets:
Total current assets ........................... $ 2,220,625 $ 2,547,666 $ 2,834,311 $ 1,545,097 $ 2,031,151
Total assets ................................... $ 4,135,105 $ 4,570,077 $ 5,266,563 $ 4,120,002 $ 4,300,761
Total assets less intangible assets ............ $ 4,005,171 $ 4,445,720 $ 5,116,865 $ 3,991,836 $ 4,172,381
Liabilities and shareholders' equity:
Total current liabilities ...................... $ 707,444 $ 797,555 $ 815,351 $ 906,893 $ 1,093,412
Long-term debt ................................. $ 650,000 $ 650,000 $ 650,000 $ 650,000 $ 650,000
Total liabilities .............................. $ 1,693,812 $ 1,809,121 $ 2,065,522 $ 2,197,420 $ 2,255,804
Shareholders' equity ........................... $ 2,441,293 $ 2,760,956 $ 3,201,041 $ 1,922,582 $ 2,044,957
Book value per share outstanding at end
of period .................................... $ 6.82 $ 7.72 $ 9.01 $ 7.09 $ 7.50
Shares outstanding at end of period ............ 357,801 357,604 355,366 271,071 272,800
</TABLE>
- ---------------
(1) Includes the results of companies disposed of up to the disposition date.
Effective August 31, 1993 The Limited sold 60% of its interest in its
Brylane mail order business and effective January 31, 1996 The Limited
sold 60% of its interest in World Financial Network National Bank.

(2) Includes the results of Galyan's subsequent to the July 2, 1995
acquisition date.

(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 pretax 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.

(7) In 1995, The Limited recognized a $649.5 million gain resulting from the
initial public offering (IPO) of 16.9% of the stock of Intimate Brands,
Inc. In 1996, The Limited recognized a $118.2 million gain from the
initial public offering of a 15.8% interest in Abercrombie & Fitch. In
1997, The Limited recognized a $8.6 million gain on the initial public
offering of Brylane, Inc.

(8) Includes $213 million in special and nonrecurring charges comprised of the
following:

o $68 million in charges for the closing of the 118-store Cacique
business effective January 31, 1998.

o $82 million in charges related to streamlining the Henri Bendel
business.

o $86 million of impaired asset charges, related principally to the
women's apparel businesses.

o A $28 million provision for closing and downsizing approximately 80
oversized stores and a $12 million write-down to net realizable
value of a real estate investment previously acquired in connection
with closing and downsizing certain stores.

o These charges were partially offset by a third quarter net gain of
$62.8 million related principally to The Limited's sale of
approximately one-half of its investment in Brylane, Inc.

In addition, The Limited recognized a $13 million cost of sales charge in
the fourth quarter for inventory liquidation at Henri Bendel.

* Indicates calculations to be completed upon determination of the Exchange
Ratio Range.

Summary Unaudited Pro Forma Condensed Consolidated Financial Data of
The Limited

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 consolidated financial
statements of The Limited for the fiscal year ended January 31, 1998 included
herein. This information is only a summary and you should read it in
conjunction with the historical consolidated financial statements of The
Limited that are included herein, other information that The Limited has 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
102 and "Unaudited Pro Forma Consolidated Financial Statements" on page 42.

The Limited Unaudited Pro Forma Consolidated Financial
Statements give effect to the following transactions and events: (1) the
split-off of A&F from The Limited's consolidated financial statements -- the
consolidated financial statements of A&F will no longer be included in The
Limited's consolidated financial statements and The Limited's outstanding
common stock will be reduced by the number of shares of Limited Common Stock
exchanged in the Exchange Offer, (2) the elimination of A&F minority interest
in The Limited's consolidated financial statements and (3) the repayment of a
$50 million obligation due to The Limited by A&F through issuance of 600,000
shares of A&F Common Stock to The Limited and a cash payment. The Pro Forma
Consolidated Statement of Income Data assumes that these transactions occurred
on February 2, 1997 and the Pro Forma Consolidated Balance Sheet Data assumes
that these transactions and certain dated actions occurred on January 31, 1998.

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.

The Limited
(in thousands, except per share data)

<TABLE>
<CAPTION>
Fiscal year ended
January 31, 1998
-----------------
<S> <C>
Pro Forma Consolidated Statement of Income Data:
Net sales................................................. $ 8,667,187
Gross income.............................................. 2,616,897
Operating income(1)....................................... 395,974
Income before income taxes................................ 323,908
Net income................................................ 174,558
Basic net income per share............................... *
Diluted net income per share(2)........................... *
Diluted net income per share, excluding gains
in connection with initial public offerings(2)......
*
Pro Forma Consolidated Balance Sheet Data:
Current assets............................................ $ 1,947,189
Total assets.............................................. 4,142,523
Current liabilities....................................... 1,026,450
Long-term debt............................................ 650,000
Shareholders' equity...................................... 1,969,876
</TABLE>
- ---------------
(1) Includes $213 million in special and nonrecurring charges related to: (i)
the closure of the Cacique business, (ii) the streamlining of Henri
Bendel, (iii) closing and downsizing of certain store locations and
write-down to net realizable value of a real estate investment
previously acquired in connection with closing and downsizing certain
stores and (iv) impairment of assets, principally related to stores,
all of which were offset in part by a $62.8 million pretax 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 investment).

In addition, The Limited recognized a $13 million cost of sales charge in
the fourth quarter for inventory liquidation at Henri Bendel.

(2) The pro forma net income per share is based upon the pro forma weighted
average number of common and potentially issuable shares outstanding of The
Limited after the Exchange Offer.

* Indicates calculations to be completed upon determination of the Exchange
Ratio Range.

Summary Historical Consolidated Financial Data of A&F

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 consolidated financial
statements (and the related notes) of A&F for the three years ended January
31, 1998 included herein, other information that A&F has 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 102 and
"Unaudited Pro Forma Consolidated Financial Statements" on page 42.

Abercrombie & Fitch Co.
(in thousands, except per share data)

<TABLE>
<CAPTION>
Fiscal year ended
--------------------------------------------------------------------------
January 29, January 28, February 3, February 1, January 31,
1994 1995 1996(1) 1997 1998
----------- ----------- ----------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Summary of Operations:

Net sales................................... $ 110,952 $ 165,463 $ 235,659 $ 335,372 $ 521,617
Operating income (loss)..................... $ (4,064) $ 13,751 $ 23,798 $ 45,993 $ 84,125
Net income (loss)........................... $ (2,464) $ 8,251 $ 14,298 $ 24,674 $ 48,322
Pro forma net income........................ $ 49,837
Basic net income (loss) per share........... $ (0.06) $ 0.19 $ 0.33 $ 0.54 $ 0.95
Diluted net income (loss) per share......... $ (0.06) $ 0.19 $ 0.33 $ 0.54 $ 0.94
Pro forma basic net income per share........ $ 0.97
Pro forma diluted net income per share...... $ 0.96
Dividends per share(2)
Basic weighted average shares outstanding... 43,000 43,000 43,000 45,749 51,011
Diluted weighted average shares outstanding. 43,000 43,000 43,000 45,760 51,478
Pro forma basic weighted average shares
outstanding................................ 51,611
Pro forma diluted weighted average shares
outstanding................................ 52,078

Condensed Consolidated Balance Sheets:

Assets:
Total current assets....................... $ 15,602 $ 23,106 $ 38,856 $ 44,878 $ 108,962
Total assets............................... $ 48,882 $ 58,018 $ 87,693 $ 105,761 $ 183,238
Total assets less intangible assets........ $ 48,794 $ 57,950 $ 87,645 $ 105,733 $ 183,230
Liabilities and shareholders' equity
Total current liabilities.................. $ 10,673 $ 18,224 $ 109,796 $ 43,590 $ 66,962
Long-term debt............................. -- -- -- $ 50,000 $ 50,000
Total liabilities.......................... $ 94,223 $ 95,088 $ 110,315 $ 94,523 $ 124,463
Shareholders' equity (deficit)............. $ (45,341) $ (37,070) $ (22,622) $ 11,238 $ 58,775
Book value per share outstanding at end of
period................................... $ (1.05) $ (0.86) $ (0.53) $ 0.22 $ 1.15
Shares outstanding at end of period........ 43,000 43,000 43,000 51,050 51,009
</TABLE>
- ---------------
(1) Fifty-three week year.

(2) No dividends have been paid to shareholders of A&F Common Stock

Summary Unaudited Pro Forma Condensed Consolidated Financial Data of A&F

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 consolidated financial
statements of A&F for the fiscal year ended January 31, 1998 included herein.
This information is only a summary and you should read it in conjunction with
the historical consolidated financial statements of A&F contained herein and
the more detailed pro forma financial information included elsewhere in this
document. See "Where You Can Find More Information" on page 102 and "Unaudited
Pro Forma Consolidated Financial Statements" on page 42.

The A&F Unaudited Pro Forma Consolidated Financial Statements
give effect to the following transactions and events: (1) the repayment of a
$50 million obligation due to The Limited by A&F through issuance of 600,000
shares of A&F Common Stock to The Limited and the remainder paid in cash and
(2) the elimination of interest expense from the A&F statement of income due
to the repayment of its debt obligation to The Limited. The Pro Forma
Consolidated Statement of Income Data assumes that these transactions occurred
on February 2, 1997, and the Pro Forma Consolidated Balance Sheet Data assumes
that these transactions occurred on January 31, 1998.

This information is presented to show you what A&F 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
A&F will experience after the Transactions.

Abercrombie & Fitch Co.
(in thousands, except per share data)

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. In addition, for a
discussion of certain additional uncertainties associated with (i) the
businesses of The Limited and A&F, as well as (ii) forward-looking statements
in this Offering Circular-Prospectus, please see "Forward-Looking Statements
May Prove Inaccurate" on page 23.

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 a 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. 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 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 although a
diverse domestic and international market exists for the kinds of merchandise
sourced by A&F, 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. The Limited
and A&F believe that alternative sources of supply should be available in the
event of a supply disruption in one or more regions of the world. However,
neither The Limited nor A&F believes that, under current circumstances,
entering into committed alternative supply arrangements is warranted, and
there can be no assurance that alternative sources would in fact be available
at any particular time.

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 96.

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 The Limited

A&F is one of The Limited's fastest growing retail businesses,
and the separation of A&F from The Limited may adversely affect The Limited's
overall future growth rate. However, for the reasons set forth in "The
Transactions--Background and Purpose" on page 20, the Board of Directors of
The Limited believes that the Transactions are in the best interests of The
Limited, A&F and their respective stockholders.

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 Intimate
Brands IPO resulted in proceeds of approximately $649 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 (the "Limited Self Tender").

(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. ("Brylane"), the catalogue operations of
The Limited's Lerner and Lane Bryant retail businesses, and the 1998 sale of
The Limited's remaining interest in Brylane for approximately $131 million.
These actions follow the 1993 sale by The Limited of 60% of its interest in
Brylane to an affiliate of Freeman, Spogli, L.P.

(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 million.

(viii) The 1997 sale of Intimate Brands' Penhaligon's business and
the January 1998 closure of Intimate Brands' Cacique business.

(ix) The January 1998 decision 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 advisors, Goldman, Sachs & Co. ("Goldman
Sachs") and NationsBanc Montgomery Securities ("NMSI"), and its 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 Transactions are
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 advisors, Goldman Sachs and NMSI, and its
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. In reaching this determination, 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 and an investment in
The Limited's future prospects, 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. These were the
material factors considered by the Board of Directors of The Limited. A sale
of A&F through a negotiated transaction and through a public offering were
also proposed as alternative transactions. However, the Board of Directors of
The Limited elected not to pursue either alternative, principally because the
tax consequences of either transfer would have been adverse to The Limited's
stockholders. In view of the range of factors considered in connection with
its evaluation of the Transactions and the complexity of these matters, the
Board of Directors of The Limited did not attempt to quantify, rank or
otherwise assign relative weights to these factors. In considering the
factors described above, individual members of the Board may have given
different weight to different factors.

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 (including shares held by trusts created by Mr.
Wexner) in the Exchange Offer. Mr. Wexner has informed the Board that he made
this decision 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. Trusts created by Mr. Wexner have disposed of approximately
5.5 million shares of Limited Common Stock since the announcement of the
Exchange Offer on February 17, 1998. The decision to dispose of such shares
was made by the trustees of the trusts in order to diversify their investments.

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", "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 management
and 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 this
Exchange Offer, The Limited is offering hereby to exchange up to 43,600,000
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 33, 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 Limited
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 34. 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
43,600,000 shares of A&F Common Stock. If more than such maximum number of
shares of Limited Common Stock are tendered at an Exchange Ratio at or
below the Final Exchange Ratio, 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 each holder of Limited Common Stock will be able to specify
the fraction of a share of A&F Common Stock (in increments of ________) that
such holder is 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 his or her tendered shares accepted for exchange in the Exchange Offer
will depend on how the Exchange Ratio specified by such stockholder 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 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"). The Final
Exchange Ratio will be announced by press release 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 39,240,000 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 35 are satisfied.
The number of shares of Limited Common Stock that must be tendered to result
in at least 39,240,000 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 43,600,000 shares of A&F Common Stock would need 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 such tendered shares of
Limited Common Stock on a pro rata basis (with appropriate adjustments to
avoid acceptance for exchange of fractional shares of Limited Common Stock).
All shares which are tendered but not exchanged pursuant to the Exchange
Offer, including shares tendered at Exchange Ratios greater than the Final
Exchange Ratio and shares not exchanged because of proration, will be returned
to tendering stockholders promptly following the Expiration Date. Shares
accepted for exchange will be held by The Limited as treasury shares. If the
result of the Exchange Offer is such that fewer than 43,600,000 shares but
more than 39,240,000 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 38.

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 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 31) 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
pursuant to the Exchange Offer. The Exchange Agent, acting as agent for
stockholders of The Limited otherwise entitled to receive fractional shares of
A&F Common Stock, 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,
through such Book-Entry Transfer Facility. 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.

If the Trigger Amount is reached and the conditions set forth
in "--Conditions to Consummation of the Exchange Offer" on page 35 are met,
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
33, 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 the
Expiration Date until satisfaction or waiver of all such conditions to the
Exchange Offer. The Limited's right to delay acceptance for exchange or to
delay exchange of shares of Limited Common Stock tendered 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 34.

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 or deemed
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 to 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 to delay exchange of any
shares of Limited Common Stock, see "--Extension of Tender Period; Termination;
Amendment" on page 34.

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 29 and
"Special Procedures for Participants in the Savings and Retirement Plan and
the Stock Purchase Plan on page 32. 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 17.

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 the New York Stock Exchange ("NYSE") 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:

<TABLE>
<S> <C> <C> <C> <C>
Exchange Ratio x Price of one share of A&F Common Stock
The Anticipated Premium = ------------------------------------------------------- - 1
Price of one share of Limited Common Stock
</TABLE>

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
the NYSE 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
Exchange Ratio Range, the Anticipated Premium would be approximately ____%.
At the Minimum Exchange Ratio (_____ of a share of A&F Common Stock for each
share of Limited Common Stock tendered), the Anticipated Premium would be
approximately___%. At the Maximum Exchange Ratio (___ of a share of A&F
Common Stock for each share of Limited Common Stock 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 Exchange
Ratio Range), ___ (the Minimum Exchange Ratio) and _____ (the Maximum Exchange
Ratio).

<TABLE>
<S> <C> <C> <C> <C> <C>
Anticipated Premium at the Exchange Ratio of ___ (the midpoint of the Exchange Ratio Range)
-------------------------------------------------------------------------------------------
Limited Common Stock Price
---------------------------------------------------------
$___ $___ $___ $___
---------------------------------------------------------
A&F Common $___ ___% ___% ___% ___%
Stock Price
$___ ___% ___% ___% ___%
$___ ___% ___% ___% ___%
$___ ___% ___% ___% ___%

Anticipated Premium at the Minimum Exchange Ratio of ___
-------------------------------------------------------------------------------------------
Limited Common Stock Price
---------------------------------------------------------
$___ $___ $___ $___
---------------------------------------------------------
A&F Common $___ ___% ___% ___% ___%
Stock Price
$___ ___% ___% ___% ___%
$___ ___% ___% ___% ___%
$___ ___% ___% ___% ___%

Anticipated Premium at the Maximum Exchange Ratio of ___
-------------------------------------------------------------------------------------------
Limited Common Stock Price
---------------------------------------------------------
$___ $___ $___ $___
---------------------------------------------------------
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" IN BOX #2 ON THE LETTER OF TRANSMITTAL INDICATING
THAT SUCH STOCKHOLDER WILL ACCEPT WHATEVER THE FINAL EXCHANGE RATIO IS
DETERMINED TO BE BY THE DUTCH AUCTION. SOLELY FOR PURPOSES OF DETERMINING THE
FINAL EXCHANGE RATIO, THE LIMITED WILL DEEM SHARES OF LIMITED COMMON STOCK
TENDERED USING THIS OPTION TO HAVE BEEN TENDERED AT THE MINIMUM EXCHANGE RATIO.

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 his or
her 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 $___ per share 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 and the Stock Purchase Plan 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 Savings and Retirement Plan
and the Stock Purchase Plan" on page 32 to tender their Limited Common Stock.
Stockholders who are participants in the Dividend Reinvestment Plan of The
Limited (the "DRP") who wish to tender some or all of the shares of Limited
Common Stock attributable to their plan accounts may do so by so indicating on
the Letter of Transmittal and by following the procedures outlined in this
section, "Procedures for Tendering Shares of Limited Common Stock". Such
participants in the DRP should also see Instruction 6 of the Letter of
Transmittal. 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 3 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 Box #2 on
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
Box #2 on 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 IN THE
SECTION OF BOX #2 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 EXCHANGE RATIO DETERMINED BY STOCKHOLDER" ON THE
LETTER OF TRANSMITTAL IN BOX #2.

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 #2 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 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 if the certificates for such shares
of Limited Common Stock are not immediately available, the procedure for
delivery by book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach the Exchange Agent 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 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, A&F, the Exchange Agent, the Dealer Managers, the
Soliciting Dealers, the Information Agent and 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 and the
Stock Purchase 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 from the Savings and Retirement Plan Administrative Committee
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 of The Limited 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 29. 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.

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 29, subject
to the requirements of such other plans. To the extent required under any
such plan, participants will receive separate instructions from the
administrators of such other plans to be followed in connection with any
tender.

Withdrawal Rights

Tenders of shares of Limited Common Stock may be withdrawn at
any time 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 29 or "Special Procedures for
Participants in the Savings and Retirement Plan and the Stock Purchase Plan on
page 32, 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, A&F, 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 35, 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 soliciting dealer's 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 reasonable
discretion, in the event any of the conditions specified in "--Conditions to
Consummation of the Exchange Offer" on page 35 below shall not have been
satisfied and so long as shares of Limited Common Stock have not theretofore
been accepted for exchange, to delay the Expiration Date or to terminate the
Exchange Offer and not accept for exchange 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
exchanging any shares of Limited Common Stock or (iii) is unable to accept for
exchange or to exchange 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 33. The reservation by The Limited of the right to
delay acceptance for exchange or to delay 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 34, if prior to the Expiration
Date, 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) 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;

(v) 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

(vi) (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 15, 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 reasonable 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 is acting as the Dealer Managers in connection
with the Exchange Offer. Goldman Sachs and NMSI are acting as co-financial
advisors to The Limited for the Transactions. As Dealer Managers, 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. Goldman Sachs and NMSI may from
time to time hold shares of Limited Common Stock in their respective
proprietary accounts, and to the extent they own such shares in such accounts
at the time of the Exchange Offer, Goldman Sachs and NMSI may tender such
shares into the Exchange Offer by checking the box marked "Shares Tendered at
Exchange Ratio Determined by Dutch Auction" on the Letter of Transmittal.

The Limited will pay to a Soliciting Dealer a solicitation fee
of $1.00 per share, up to a maximum of 1,000 shares per stockholder, 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 in the United States or of the
National Association of Securities Dealers, Inc. or (ii) any bank or trust
company located in the United States. 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 properly completed and
duly executed Letter of Transmittal (including a completed box entitled
"Notice of Solicited Tenders" (Box #9)).

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
43,600,000 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 35. If
43,600,000 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 NYSE Composite Tape. Limited Common Stock is listed
and traded on the NYSE and the London Stock Exchange under the symbol "LTD".

<TABLE>
<CAPTION>
NYSE 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).... $.13
</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 $31 1/2. 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>
NYSE 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 $37 1/8. 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 $.13 per share of
Limited Common Stock on a quarterly basis. After the consummation of the
Exchange Offer, stockholders whose shares of Limited Common Stock are
exchanged 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 exchanged 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 January 31, 1998 based
on (i) the tender of approximately _______________ shares of Limited Common
Stock in exchange for approximately 43,600,000 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>
At January 31, 1998
-----------------------------------
Pro forma after
Historical(1) Transactions
------------- ---------------
<S> <C> <C>
Short-term borrowings:
Commercial paper..................................................................

Long-term debt..................................................................... $ 650,000 $ $650,000
Shareholders' equity(1):
Preferred stock, par value $1.00 per share, 10,000,000 shares authorized, no
shares issued and outstanding................................................... -- --
Common stock, par value $.50 per share, 500,000,000 shares authorized,
272,800,000 issued and outstanding prior to the Transactions and
___________ post Transactions, net of treasury shares........................... 180,352 180,352
Paid-in capital................................................................... 148,018 148,018
Retained earnings(2).............................................................. 3,613,174 *
----------- ----------
3,941,544
Less treasury stock, at average cost(3)........................................... (1,896,587) *
----------- ----------
Total shareholders' equity......................................................... $ 2,044,957 $1,969,826*
</TABLE>
- ---------------
(1) Represents amounts derived from the historical consolidated financial
statements (and the related notes) of The Limited included 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.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

The following Unaudited Pro Forma Consolidated Financial
Statements of The Limited and A&F give effect to the transactions and events
described below and in the notes to the Pro Forma Consolidated Financial
Statements as if the transactions and events were consummated at the beginning
of fiscal year 1997 (February 2, 1997) in the case of the Unaudited Pro Forma
Consolidated Statements of Income and as of January 31, 1998 in the case of
the Unaudited Pro Forma Consolidated Balance Sheets.

The Limited Unaudited Pro Forma Consolidated Financial
Statements give effect to the following transactions and events: (1) the
split-off of A&F from The Limited's consolidated financial statements -- the
consolidated financial statements of A&F will no longer be included in The
Limited's consolidated financial statements and The Limited's outstanding
common stock will be reduced by the number of shares of Limited Common Stock
exchanged in the Exchange Offer; (2) the elimination of A&F minority interest
in The Limited's consolidated financial statements and (3) the repayment of a
$50 million obligation due to The Limited by A&F through issuance of 600,000
shares of A&F Common Stock to The Limited with the remainder paid in cash.

The Limited and A&F believe the assumptions used provide a
reasonable basis on which to present the Unaudited Pro Forma Consolidated
Financial Statements. The Unaudited Pro Forma Consolidated Financial
Statements should be read in conjunction with the historical consolidated
financial statements (and the related notes) of each of The Limited and A&F
included herein and other information filed by the companies with the SEC.
See "Where You Can find More Information" on page 102. The Unaudited Pro
Forma Consolidated Financial Statements are presented for illustrative
purposes only and should not be construed to be indicative of the financial
position or results of operations of future periods or the results that
actually would have been realized had the transactions and events occurred on
the dates assumed.

The accompanying notes are an integral part of these Unaudited Pro Forma
Consolidated Financial Statements.

The Limited, Inc.
Pro Forma Consolidated Statement of Income
(Unaudited)
(in thousands, except per share data)

<TABLE>
<CAPTION>
Fiscal year ended
January 31, 1998
--------------------------------------------------------
Historical Adjustments(1) Pro forma
----------- -------------- -----------
<S> <C> <C> <C>
Net sales................................................ $ 9,188,804 $ 521,617 $ 8,667,187
Cost of goods sold, occupancy & buying costs............ (6,370,827) (320,537) (6,050,290)
----------- --------- -----------
Gross income............................................. 2,817,977 201,080 2,616,897
General, administrative & store operating expenses...... (2,124,663) (116,955) (2,007,708)
Special & nonrecurring items, net....................... (213,215) -- (213,215)
----------- --------- -----------
Operating income(4)...................................... 480,099 84,125 395,974
Interest expense........................................ (68,728) (68,728)
Other income, net....................................... 36,886 -- 36,886
Minority interest....................................... (56,473) (7,643)(2) (48,830)
Gain in connection with an initial public offering...... 8,606 -- 8,606
----------- --------- -----------
Income before income taxes............................... 400,390 76,482 323,908
Provision for income taxes............................. (183,000) (33,650)(5) (149,350)
----------- --------- -----------
Net income(4)............................................ $ 217,390 $ 42,832 $ 174,558
=========== ========= ===========
Net income per share:
Basic(3)................................................ $ 0.80 *
=========== ===========
Diluted(3).............................................. $ 0.79 *
=========== ===========
Basic weighted average shares outstanding................ 271,898 *
-----------
Diluted weighted average diluted shares outstanding...... 274,483 *
-----------
</TABLE>
- ---------------
* Indicates calculations to be completed upon determination of the Exchange
Ratio Range.

The accompanying notes are an integral part of these Unaudited Pro Forma
Consolidated Financial Statements.

The Limited, Inc.
Pro Forma Consolidated Balance Sheet
(Unaudited)
(in thousands, except per share data)

<TABLE>
<CAPTION>
At January 31, 1998
----------------------------------------------------------------------------------------------------------
Pro forma Pro forma
before after
Historical Adjustments Transactions Adjustments(3) Transactions
---------- ---------------------------------------- ----------- -------------- ------------
A&F(1) Elimination Other
---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and
equivalents.......... $ 746,395 $ (42,667) $25,000 (4) $704,943 $704,943
(23,785)(5)
Accounts receivable.. 83,370 (1,695) 81,675 81,675
Inventories.......... 1,002,710 (33,927) 968,783 968,783
Store supplies....... 99,167 (5,592) 93,575 93,575
Intercompany
receivable....... (23,785) 23,785 (5) -- --
Other................ 99,509 (1,296) 98,213 98,213
Total current
assets........... 2,031,151 (108,962) 1,947,189 1,947,189
Property &
equipment, net... 1,519,908 (70,517) 1,449,391 1,449,391
Restricted cash...... 351,600 -- 351,600 351,600
Deferred income
taxes................ 56,586 (3,759) 52,827 52,827
Investment in A&F.... 25,000 (4) 25,000 (25,000)(6) --
Other assets......... 341,516 -- $50,000 (2) (50,000)(4) 341,516 341,516
---------- --------- ------- ------ ---------- ----------
Total assets..... $4,300,761 $(183,238) $50,000 -- $4,167,523 $4,142,523
========== ========= ======= ======= ========== =========-

Liabilities & shareholders'
equity
Current liabilities:
Accounts payable..... $300,703 $ (15,968) $ 284,735 $284,735
Accrued expense...... 676,715 (35,143) 641,572 641,572
Income taxes......... 115,994 (15,851) 100,143 100,143
---------- --------- ---------- ----------
Total current
liabilities.... 1,093,412 (66,962) 1,026,450 1,026,450
Long-term debt....... 650,000 (50,000) 50,000 (2) 650,000 650,000
Other long-term
liabilities...... 58,720 (7,501) 51,219 51,219
Minority interest.... 102,072 (8,694)(3) 93,378 93,378
Contingent stock
redemption
agreement........ 351,600 351,600 351,600
Shareholders'
equity:
Common stock......... 180,352 180,352 180,352
Paid-in capital...... 148,018 148,018 148,018

Retained earnings.... 3,613,174 (58,775) 8,694 (3) 3,563,093 (25,000)*(6) *
---------- --------- ------- ---------- ----------
3,941,544 (58,775) 3,891,463
Less treasury
stock, @
cost........... (1,896,587) (1,896,587) *(6)

Total
shareholders'
equity......... 2,044,957 (58,775) 8,694 1,994,876 1,969,876
---------- ---------- ------- ---------- ----------
Total liabilities
& shareholders'
equity......... $4,300,761 $ (183,238) $50,000 $4,167,523 $ 4,142,523
========== =========== ======= ========== ===========
</TABLE>
- ---------------
* Indicates calculations to be completed upon determination of the Exchange
Ratio Range.

The accompanying notes are an integral part of these Unaudited Pro Forma
Consolidated Financial Statements.

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 included in this
Offering Circular-Prospectus which are adjusted for the following:

2. Pro Forma Consolidated Statement of Income

(1) Represents A&F's amounts which will not be consolidated in
The Limited's financial statements subsequent to the Transactions. The
split-off of A&F from The Limited will be treated as a disposal of part of a
line of business.

(2) Represents minority interest in earnings of A&F for the
periods presented.

(3) The pro forma net income per share is based upon the pro
forma weighted average number of common shares outstanding of The Limited at
the Exchange Ratio of ______ of a share of A&F Common Stock for each share of
Limited Common Stock.

(4) The Limited will recognize a gain of approximately
$__________, net of expenses as a special and nonrecurring gain which will be
included as a component of operating income. The gain will be calculated
based on the difference between carrying value of A&F by The Limited and fair
market value of A&F Common Stock. Fair market value will be determined based
on the trading price of A&F Common Stock on the Expiration Date of the
Exchange Offer.

(5) The assumed effective tax rate of the adjustments,
excluding the minority interest adjustment, is 40%. The minority interest
adjustment is net of tax, consistent with the presentation of minority
interest in the historical consolidated financial statements.

3. Pro Forma Consolidated Balance Sheet

(1) Amounts represent A&F balance sheet which will not be
included in The Limited's consolidated financial statements subsequent to the
Transactions.

(2) The $50 million obligation due to The Limited by A&F is
reflected in other assets on The Limited's consolidated balance sheet after
the deconsolidation of A&F. The $50 million adjustment to long-term debt
restores The Limited's long-term debt to $650 million.

(3) Represents minority interest in the accumulated earnings of
A&F.

(4) The $50 million obligation is assumed to be repaid by A&F
to The Limited. The obligation is paid through issuance of 600,000 shares of
A&F Common Stock to The Limited at an assumed fair market value of $41.67 per
share. The remainder of the obligation is assumed to be paid in cash.

(5) Represents settlement of the intercompany account between
A&F and The Limited.

(6) Represents the effect of approximately ______ shares of
Limited Common Stock tendered (at an assumed Exchange Ratio of ______) in
exchange for the market value of 43,600,000 shares of A&F Common Stock
previously owned by The Limited which is anticipated to result in a net gain of
approximately $________________ billion to The Limited.

Abercrombie & Fitch Co.
Pro Forma Consolidated Statement of Income
(Unaudited)
(in thousands, except per share data)

<TABLE>
<CAPTION>
Fiscal year ended
January 31, 1998
--------------------------------------------
Pro forma
after
Historical Adjustments Transactions
---------- ----------- ------------
<S> <C> <C> <C>
Net sales............................................... $ 521,617 $ 521,617
Cost of goods sold, occupancy & buying costs...... (320,537) (320,537)
---------- ---------
Gross income............................................ 201,080 201,080
General, administrative & store operating expenses (116,955) (116,955)
---------- ---------
Operating income........................................ 84,125 84,125
Interest expense, net............................. (3,583) 2,525 (1) (1,058)
---------- ---------
Income before income taxes.............................. 80,542 83,067
Provision for income taxes........................ (32,220) (1,010)(2) (33,230)
---------- ---------

Net income.............................................. $ 48,322 $ 49,837
========== =========
Net income per share:
Basic............................................. $ 0.95 $ 0.97
Diluted........................................... $ 0.94 $ 0.96
Basic weighted average shares outstanding............... 51,011 51,611
---------- ---------
Diluted weighted average shares outstanding............. 51,478 52,078
---------- ---------
</TABLE>

The accompanying notes are an integral part of these Unaudited Pro Forma
Consolidated Financial Statements.

Abercrombie & Fitch Co.
Pro Forma Consolidated Balance Sheet
(Unaudited)
(in thousands, except per share data)

<TABLE>
<CAPTION>
At January 31, 1998
Pro forma
after
Historical Adjustments Transactions
---------- ----------- ------------
<S> <C> <C> <C>
Assets
Current assets:
Cash and equivalents.......................... $ 42,667 $(25,000)(1) $ 41,452
23,785 (2)
Accounts receivable........................... 1,695 1,695
Inventories................................... 33,927 33,927
Store supplies................................ 5,592 5,592
Intercompany receivable (payable)............. 23,785 (23,785)(2) --
Other......................................... 1,296 1,296
-------- --------
Total current assets.................... 108,962 83,962

Property & equipment, net..................... 70,517 70,517
Deferred income taxes......................... 3,759 3,759
-------- --------
Total assets............................ $183,238 $158,238
======== ========
Liabilities & shareholders' equity
Current liabilities:
Accounts payable.............................. $ 15,968 $15,968
Accrued expenses.............................. 35,143 35,143
Income taxes.................................. 15,851 15,851
-------- --------
Total current liabilities............... 66,962 66,962

Long-term debt................................ 50,000 (50,000)(1) --
Other long-term liabilities................... 7,501 7,501
Shareholders' equity:
Common stock.................................. 511 6 517
Paid-in capital............................... 117,972 24,994 142,966
Retained earnings (deficit)................... (58,931) (58,931)
-------- --------
59,552 25,000 (1) 84,552
Less treasury stock at cost................... (777) (777)
-------- ------- --------
Total shareholders' equity................... 58,775 83,775
-------- --------
Total liabilities & shareholders' equity...... $183,238 $158,238
======== ========
</TABLE>

The accompanying notes are an integral part of these Unaudited Pro Forma
Consolidated Financial Statements.

Abercrombie & Fitch Co.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)

1. Basis of Presentation

Historical amounts for A&F were derived from the historical
consolidated financial statements of A&F included in this Offering
Circular-Prospectus which are adjusted for the following:

2. Pro Forma Consolidated Statement of Income

(1) Reflects elimination of interest expense on $50 million
obligation bearing interest at 7.8%, netted against interest expense incurred
on $25 million of borrowings at an assumed commercial paper rate of 5.5%.

(2) The effective rate of adjustment (1) above is assumed to be
40%.

(3) The pro forma net income per share information is based
upon historical weighted average shares plus 600,000 shares of A&F Common
Stock issued as partial payment on the $50 million obligation.

3. Pro Forma Consolidated Balance Sheet

(1) Repayment of $50 million obligation to The Limited. The
obligation is assumed to be paid through issuance of 600,000 shares of A&F
Common Stock to The Limited at an assumed fair market value of $41.67 per
share. The remainder of the obligation of $25 million is assumed to be paid
in cash.

(2) Settlement of the intercompany account between A&F and The
Limited.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF THE LIMITED

Net sales for the fourth quarter of 1997 grew 10% to $3.268
billion from $2.966 billion for the same period a year ago. Net income was
$85.3 million, and earnings per diluted share were $.31 versus $.78 in the
fourth quarter of 1996. Net income excluding special and nonrecurring items
and inventory liquidation charges associated with the closing of five Henri
Bendel stores was $252.5 million and earnings per diluted share were $.91
compared to last year's $.81.

As a result of an ongoing review of The Limited's retail
businesses and investments as well as implementation of initiatives intended
to promote and strengthen The Limited's various retail brands (including
closing businesses, identification and disposal of non-core assets and
identification of store locations not consistent with the image of a
particular brand) during the fourth quarter of 1997, The Limited recognized
total charges of $289 million (approximately $30 million after-tax cash
impact) or $.60 per diluted share, consisting of $276 million in special and
nonrecurring charges and a $13 million cost of sales charge for inventory
liquidation at Henri Bendel. These charges included:

o A $68 million charge for closing the 118 store Cacique
lingerie business effective January 31, 1998. The amount includes
$38 million in cash charges relating to cancellations of merchandise
on order and other exit costs such as severance, service contract
termination fees and lease termination costs;

o $95 million in charges related to Henri Bendel, which
include an $82 million special and nonrecurring charge related to
streamlining Henri Bendel from six stores to a one-store operation
by September 1, 1998. The amount includes $56 million in cash
charges that are recorded in other current liabilities. In addition,
The Limited incurred a $13 million cost of sales charge for inventory
liquidation. The charge to cost of sales is in accordance with
Emerging Issues Task Force ("EITF") Issue No. 96-9, "Classification
of Inventory Markdowns and Other Costs Associated with a
Restructuring;"

o $86 million of impaired asset charges related principally to
the women's apparel businesses, in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of." This charge has no cash impact but is an SFAS No. 121
required accounting adjustment to measure the fair value of store
assets, and will provide a noncash benefit in future periods from
reduced depreciation and amortization;

o A $28 million provision for closing or downsizing
approximately 80 oversized stores, primarily within The Limited, Lane
Bryant, Lerner New York and Express women's businesses, and for a $12
million write-down to net realizable value of a real estate
investment previously acquired in connection with closing and
downsizing certain stores.

Net sales for the fiscal year ended January 31, 1998 increased
6% to $9.189 billion from sales of $8.645 billion for the same period ended
February 1, 1997. Net income was $217.4 million, or $.79 per diluted share,
compared to $1.54 per diluted share last year.

Excluding the impact of special and nonrecurring items, gains
in connection with initial public offerings ("IPO") and Henri Bendel inventory
liquidation charges, The Limited would have earned $1.24 per diluted share
compared to last year's $1.14. These special and nonrecurring charges
consisted of: 1) a net $213.2 million related to the previously described
fourth quarter charges that were partially offset by a third quarter net gain
of $62.8 million related principally to the sale of approximately one-half of
The Limited's investment in Brylane; 2) $12 million of special and
nonrecurring charges in 1996 related to the April 1997 sale of Penhaligon's;
3) in 1997, a pretax gain of $8.6 million in connection with the IPO of
Brylane, a 26% owned (post-IPO) catalogue retailer; and 4) in 1996, a gain of
$118.2 million resulting from the A&F IPO.

Business highlights for 1997 include the following:

o Intimate Brands, led by strong performances at Bath & Body
Works and Victoria's Secret Stores, recorded earnings per diluted
share of $1.14, compared to $1.02 in 1996, including special and
nonrecurring charges of $.16 in 1997 and $.03 in 1996.

o A&F delivered 1997 earnings per diluted share of $.94, a 74%
increase over 1996 as comparable store sales increased 21% on top of
13% for 1996.

However, much of the gains from Intimate Brands and A&F were
offset by a decline in operating income for each of the women's businesses,
which finished the year with a pretax operating loss aggregating $268 million,
including special and nonrecurring charges of $187 million and the $13 million
inventory liquidation charge related to the closing of five Henri Bendel
stores.

Limited Too led the emerging businesses with a significant
improvement in operating income and 20% comparable store sales gains.

During the year, The Limited also completed the sales of its
interests in the Newport Office Tower in Jersey City, New Jersey and The Mall
at Tuttle Crossing in Columbus, Ohio and approximately one-half of its
interest in Brylane for cash proceeds of $343.2 million.

On February 17, 1998, a registration statement was filed with
the SEC in connection with a plan to establish A&F as a fully independent
company via a tax-free exchange offer pursuant to which The Limited
shareholders will be given an opportunity to tender some or all of their
shares of The Limited in return for shares of A&F. The transaction is subject
to certain customary conditions.

On April 3, 1998, The Limited sold its remaining 2.6 million
shares in Brylane to Pinault Printemps-Radoute for $51 per share,
generating cash proceeds of approximately $131 million.

The Limited does not believe that the consummation of the
transactions and the taking of the other actions outlined above will have a
material effect on The Limited's liquidity (i.e., its ability to provide the
resources to support operations, projected growth, seasonal requirements and
capital expenditures). Furthermore, although The Limited believes that such
transactions and other actions should have a favorable impact on The Limited's
results of operations, there can be no assurance with respect to the effect of
these actions.

Financial Summary

The following summarized financial data compares 1997 to the
comparable periods for 1996 and 1995:

<TABLE>
<CAPTION>
% Change
----------------------
1997 1996 1995 1997-96 1996-95
------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
Net Sales (millions):
Express............................. $1,189 $1,386 $1,445 (14%) (4%)
Lerner New York..................... 946 1,045 1,005 (9%) 4%
Lane Bryant......................... 907 905 903 - -
The Limited......................... 776 855 850 (9%) 1%
Henri Bendel........................ 83 91 91 (9%) -
------ ------ ------ --- ---
Total Women's Brands................ $3,901 $4,282 $4,294 (9%) -
------ ------ ------ --- ---

Structure........................... 660 660 576 - 15%
Limited Too......................... 322 259 214 24% 21%
Galyan's Trading Co. (since 7/2/95). 160 108 45 48% n/m
Other............................... 6 4 - n/m n/m
------ ------ ------ --- ---
Total Emerging Brands............... $1,148 $1,031 $ 835 11% 23%
------ ------ ------ --- ---

Victoria's Secret Stores............ 1,702 1,450 1,286 17% 13%
Victoria's Secret Catalogue......... 734 684 661 7% 3%
Bath & Body Works................... 1,057 753 475 40% 59%
Cacique............................. 95 88 80 8% 10%
Other............................... 30 22 15 n/m n/m
------ ------ ------ ---- ---
Total Intimate Brands............... $3,618 $2,997 $2,517 21% 19%
------ ------ ------ ---- ---

A&F................................. $ 522 $ 335 $ 235 56% 43%
------ ------ ------ ---- ---
Total net sales..................... $9,189 $8,645 $7,881 6% 10%
====== ====== ====== === ===

Operating Income (millions):
Women's Brands...................... $(268)(a) $64 $54(e) n/m 19%
Emerging Brands and Other........... 159 (b) 68 149(f) 134% (54%)
Intimate Brands..................... 505 (c) 458(d) 386 10% 19%
A&F................................. 84 46 24 83% 92%
------ ------ ------ --- ---
Total operating income.............. $480 $ 636 $ 613 (25%) 4%
------ ====== ====== === ===
</TABLE>
- ---------------
(a) 1997 includes special and nonrecurring charges of approximately $187
million relating to the closure of five out of six Henri Bendel stores and
charges associated with asset valuation impairment and the closure and
downsizing of certain stores, plus $13 million in inventory liquidation
charges associated with the Henri Bendel closings.

(b) 1997 includes $42 million of special and nonrecurring income relating to
the gain from the sale of approximately one-half of The Limited's interest
in Brylane, offset by a valuation adjustment on an investment.

(d) 1996 includes a special and nonrecurring charge of $12 million for
revaluation of certain assets in connection with the sale of Penhaligon's
in April 1997.

(e) 1995 includes a special and nonrecurring charge of approximately $48
million, primarily for store closings and downsizings.

(f) 1995 includes 100% of WFN's operating income of $114 million before
interest expense versus $4 million, representing 40% of net income of $11
million in 1996; 1995 also includes an approximate $73 million gain from
the sale of a 60% interest in WFN, partially offset by $23 million of
special and nonrecurring charges representing write-downs to net
realizable value of certain assets.

n/m not meaningful

The following summarized financial data compares 1997 to the
comparable periods for 1996 and 1995:

<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Comparable Store Sales:
Express............................. (15%) (6%) (2%)
Lerner New York..................... (5%) 8% (1%)
Lane Bryant......................... 1% 0% (8%)
The Limited......................... (7%) 3% (4%)
Henri Bendel........................ (13%) (5%) 6%
--- -- --
Total Women's Brands............... (8%) 0% (3%)
--- -- --

Structure........................... (3%) 7% (9%)
Limited Too......................... 20% 8% (4%)
Galyan's Trading Co. (since 7/2/96). 0% 12% -
--- -- --
Total Emerging Brands.............. 3% 7% (8%)
--- -- --

Victoria's Secret Stores............ 11% 5% (1%)
Bath & Body Works................... 11% 11% 21%
Cacique............................. 10% 8% (20%)
--- -- --
Total Intimate Brands.............. 11% 7% 1%
--- -- --

A&F................................. 21% 13% 5%
--- -- --
Total comparable store sales
increase (decrease)............... 0% 3% (2%)
=== == ==
</TABLE>

<TABLE>
<CAPTION>
% Change
----------------------
1997-96 1996-95
------- -------
<S> <C> <C> <C> <C> <C>
Store Data:
Retail sales increase attributable to new
and remodeled stores....................... 6% 8% 9%
Retail sales per average selling square
foot....................................... $ 295 $ 285 $ 272 4% 5%
Retail sales per average store
(thousands)................................ $1,478 $1,453 $1,419 2% 2%
Average store size at end of year
(selling square feet)...................... 5,035 5,043 5,172 - (2%)
Retail selling square feet at end of year
(thousands)................................ 28,400 28,405 27,403 - 4%

Number of Stores:
Beginning of year........................... 5,633 5,298 4,867
Opened..................................... 315 470 504
Acquired (sold)............................ (4) -- 6
Closed..................................... (304) (135) (79)
------ ------ ------
End of year................................. 5,640 5,633 5,298
====== ====== ======
</TABLE>

Net Sales

Fourth quarter 1997 sales as compared to sales for the fourth
quarter 1996 increased 10% to $3.268 billion due to 5% comparable store sales
gains with the balance of the increase attributable to new and remodeled
stores and increased catalogue sales. Thirteen-week fourth quarter 1996 sales
as compared to sales for the fourteen-week fourth quarter 1995 increased 7% to
$2.966 billion due to a 9% increase in sales attributable to new and remodeled
stores and a 3% increase in comparable store sales, offset by a 5% decrease
due to the fifty-third week in 1995.

The 1997 retail sales increase of 6% was attributable to The
Limited adding 315 new stores, remodeling 206 stores and closing 186 stores
(excluding closing 118 Cacique stores in January 1998 and the sale of four
Penhaligon's stores in the first quarter of 1997). This net addition of 129
stores represents over 365,000 square feet of new retail selling space. For
the year, average sales productivity increased 4% to $295 per square foot.

In 1997, Intimate Brands accounted for 114% of The Limited's
total net sales increase and 39% of total Limited sales. Intimate Brands
posted a $620 million sales gain over the prior year due to the net addition
of 223 stores (before the impact of the Cacique store closings and the
Penhaligon's sale) representing over 650,000 new retail selling square feet,
an 11% increase in comparable store sales and an 18% increase in catalogues
mailed by Victoria's Secret Catalogue. Additionally, A&F reported a $186
million sales increase over the prior year, bolstered by a 21% increase in
comparable store sales, while Limited Too experienced a $63 million sales
increase over the prior year on a 20% increase in comparable store sales.
However, sales at the women's businesses in 1997 declined $382 million from
1996, primarily due to an 8% decrease in comparable store sales, as well as a
net decrease of 131 stores representing over 705,000 retail selling square
feet, due principally to closures of underperforming locations.

The 1996 retail sales increase of 10% was attributable to an 8%
increase in sales due to The Limited adding 470 new stores, remodeling 252
stores and closing 135 stores and a 3% increase in comparable store sales,
offset by a 1% decrease due to the fifty-third week in 1995. This net
addition of 335 stores represents approximately 1 million square feet of new
retail selling space. For the year, average sales productivity increased 5% to
$285 per square foot.

In 1996, Intimate Brands accounted for 63% of the annual sales
increase, and nearly 35% of total Limited sales, posting a $480 million sales
increase over the prior year due to the net addition of 316 stores
representing over 817,000 selling square feet, a 7% increase in comparable
store sales and an 11% increase in catalogues mailed by Victoria's Secret
Catalogue. Sales at the women's businesses in 1996 were flat to 1995,
primarily due to flat comparable store sales. Disappointing results at Express,
which experienced a 6% decline in comparable store sales, were offset by
improved results at the Lerner New York and Limited businesses, which had 8%
and 3% increases in comparable store sales. In addition, the overall sales
increase for The Limited included sales increases at Structure, A&F and Limited
Too, which experienced 7%, 13% and 8% increases in comparable store sales.

Gross Income

Gross income increased to 35.4% as a percentage of sales for
the fourth quarter 1997 from 33.0% for the fourth quarter 1996. The
merchandise margin rate (representing gross income before deduction of buying
and occupancy costs), increased 2.3%, expressed as a percentage of sales, due
principally to improved initial markup ("IMU"), which was partially offset by
a slightly higher markdown rate and the $13 million Henri Bendel inventory
liquidation charge (.4% of sales). Buying and occupancy costs, expressed as a
percentage of sales, were flat for the fourth quarter as compared to last year.

Gross income, expressed as a percentage of sales, was 33.0% for
the fourth quarter 1996 compared to 29.2% for the fourth quarter 1995. The
merchandise margin rate increased 3.4%, expressed as a percentage of sales,
due principally to improved IMU and lower markdown rates, as The Limited was
less price-promotional than the year before. Buying and occupancy costs
decreased .4%, expressed as a percentage of sales, primarily due to sales
productivity associated with the 3% increase in comparable store sales.

The Limited's 1997 gross income rate increased 1.8% to 30.7% as
compared to 1996. The merchandise margin rate increased 1.7% due principally
to improved IMU while buying and occupancy costs, expressed as a percentage of
sales, were flat to last year.

The 1996 gross income rate of 28.9% increased 2.4% as compared
to 1995. Merchandise margins, expressed as a percentage of sales, increased
1.7%, due principally to improved IMU. Buying and occupancy costs decreased
.7% as a percentage of sales, primarily due to sales productivity associated
with the 3% increase in comparable store sales.

General, Administrative and Store Operating Expenses

General, administrative and store operating expenses increased
to 20.8%, expressed as a percentage of sales, in the fourth quarter of 1997
compared to 18.7% in the fourth quarter of 1996. This increase was
attributable to: 1) a 2.5% rate increase at Intimate Brands businesses
(discussed below) combined with an increase of Intimate Brands sales in the
total Limited mix to 42.7% from 39.1%; 2) the inability to leverage these
expenses at the women's businesses due to disappointing sales performance;
and 3) additional compensation charges for restricted stock plans.

Intimate Brands's increase is primarily the result of
advertising costs at Victoria's Secret Stores, the growth of Bath & Body Works
in the overall mix of Intimate Brands net sales from 25.1% in fiscal year 1996
to 29.2% in fiscal year 1997 and an increase in restricted stock plan
compensation expense. Due to an emphasis on point-of-sale marketing and sales
floor coverage for personal care products, Bath & Body Works has higher store
operating expenses as a percentage of net sales, which has been more than
offset by higher gross margins.

The Limited anticipates that these expenses, expressed as a
percentage of sales, will increase slightly in 1998, since Intimate Brands
businesses, in particular Bath & Body Works, will represent a greater portion
of total Limited sales.

General, administrative and store operating expenses, expressed
as a percentage of sales, increased to 18.7% in the fourth quarter of 1996
compared to 17.7% in the fourth quarter of 1995. This increase as a percentage
of sales was attributable to a 2.2% rate increase at Intimate Brands businesses
and the inability to leverage expenses due to disappointing sales performance
at the women's businesses, particularly Express.

General, administrative and store operating expenses increased,
expressed as a percentage of sales, to 23.1% in 1997, compared to 21.4% in
1996. This increase was primarily attributable to the reasons discussed above
for the 1997 fourth quarter. These costs increased, expressed as a percentage
of sales, to 21.4% in 1996 compared to 20.0% in 1995, also primarily due to
reasons discussed above for fourth quarter 1996.

Special and Nonrecurring Items

As described in Note 2 to the Consolidated Financial
Statements, The Limited recognized special and nonrecurring charges of $276
million during the fourth quarter of 1997 comprised of: 1) a $68 million
charge for the closing of the Cacique lingerie business effective January 31,
1998; 2) an $82 million charge related to streamlining the Henri Bendel
business from six stores to one store; 3) an $86 million impaired-asset charge
in accordance with SFAS No. 121, related principally to the women's apparel
businesses, covering certain store locations where the carrying values are
permanently impaired; and 4) a $28 million provision for closing and
downsizing approximately 80 oversized stores primarily within the Limited,
Lerner New York, Lane Bryant and Express women's businesses and for a $12
million write-down to net realizable value of a real estate investment
previously acquired in connection with closing and downsizing certain
stores. Additionally, The Limited recognized a $13 million charge to cost
of sales in the fourth quarter of 1997 for inventory liquidation in
accordance with EITF Issue No. 96-9. The Limited, in accordance with EITF
Issue No. 94-3, anticipates charges for severance and other associate
termination costs for Henri Bendel in the first quarter of 1998 (the period
the associates are notified). Additionally, The Limited recognized a net
$62.8 million pretax gain during the third quarter of 1997 relating to the
sale of approximately one-half of its investment in Brylane, partially
offset by valuation adjustments on certain assets where the carrying values
were permanently impaired.

In 1996 The Limited recorded a $12 million pretax, special and
nonrecurring charge in connection with the 1997 sale of Penhaligon's, a
U.K.-based subsidiary of Intimate Brands. In the fourth quarter of 1995, The
Limited recognized a $73.2 million pretax gain in connection with the sale of
a 60% interest in The Limited's wholly-owned credit card bank, WFN. In
addition, The Limited recognized a special and nonrecurring charge during the
fourth quarter of 1995 of approximately $71.9 million. Of this amount, $25.8
million was provided for the closing of 26 stores and $19.8 million was
provided for the downsizing of 33 stores, primarily at Limited Stores and
Lerner New York. The remaining charge of approximately $26.3 million
represented the write-down to market or net realizable value of certain assets
arising from nonoperating activities. The net pretax gain from these special
and nonrecurring items was $1.3 million.

Operating Income

Fourth quarter operating income, expressed as a percentage of
sales, was 6.1% in 1997, compared to 13.9% in 1996, and for the year was 5.2%
in 1997, compared to 7.4% in 1996. Excluding charges for special and
nonrecurring items in both years and the Henri Bendel inventory liquidation
charge in 1997, fourth quarter operating income, expressed as a percentage of
sales, would have been 15.0% in 1997, compared to 14.3% in 1996, and for the
year would have been 7.7% in 1997, compared to 7.5% in 1996. These increases
were due to increases in the gross income rate, which more than offset the
general, administrative and store operating expense rate increase.

The fourth quarter operating income rate increased 2.4% in
1996, from 11.5% on an adjusted basis in 1995, and for the year increased .9%
in 1996 from 6.5% on an adjusted basis in 1995. The 1995 rates were adjusted
to reflect the 1995 sale of a 60% interest in WFN as if the sale was
consummated at the beginning of the year. These increases were also due to
increases in gross income, which more than offset the general, administrative
and store operating expense rate increase.

Interest Expense

<TABLE>
<CAPTION>
Fourth Quarter Year
--------------------- ----------------------------------
1997 1996 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Average Daily Borrowings (millions)........ $ 891.4 $1,039.5 $ 835.9 $ 964.3 $ 887.7
Average Effective Interest Rate............ 8.07% 7.49% 8.22% 7.82% 8.73%
</TABLE>

Interest expense decreased by $1.5 million in the fourth
quarter of 1997 and decreased by $6.6 million for the year. For the quarter,
lower average borrowing levels reduced interest expense by $2.8 million,
offset by a $1.3 million increase resulting from higher rates. For the year,
lower average borrowing levels reduced interest expense by $10.0 million,
offset by $3.4 million of increased expense due to higher interest rates.

Other Income

The $5.1 million decrease in other income for 1997 compared to
1996 was primarily attributable to approximately $10.5 million of interest
income earned in the first quarter of 1996 which arose from $1.615 billion of
temporarily invested funds that were used to consummate the Limited Self
Tender in March 1996. Excluding this $10.5 million in 1996, interest earnings
increased $5.4 million from higher temporary investments in 1997, $3.5 million
of which was realized in the fourth quarter.

Gains in Connection with IPO

As discussed in Note 1 to the Consolidated Financial
Statements, The Limited recognized a pretax gain of $8.6 million during the
first quarter of 1997, in connection with the IPO of Brylane, Inc., a 26%
owned (post-IPO) catalogue retailer. In 1996, The Limited recognized a $118.2
million gain in connection with the A&F IPO. In 1995, The Limited recognized
a $649.5 million gain in connection with the IPO of 16.9% (42.7 million
shares) of the stock of Intimate Brands. The gains recorded by The Limited in
1996 and 1995 were not subject to tax.

Other Data

There were a number of significant events in fiscal years 1997
and 1996 that impacted the comparability of The Limited's net income per
diluted share data. Although the following information is not intended to be
presented in accordance with SEC guidelines for pro forma financial
information, it is being presented to assist in investors' understanding of
The Limited's results of operations.

o In 1997 and 1996, The Limited recognized $213.2 million and
$12 million in special and nonrecurring charges along with the $13
million Henri Bendel inventory liquidation charge in 1997 as more
fully described in Note 2 to the consolidated financial statements of
The Limited. The impact of these charges also reduced earnings
attributable to minority interest by $6.8 million and $1.0 million in
1997 and 1996, respectively.

o The Limited recognized pretax gains in connection with IPOs
of $8.6 million and $118.2 million in 1997 and 1996, respectively.
See Note 1 to the consolidated financial statements of The Limited.

o The Limited repurchased 85 million shares of Limited Common
Stock via the Limited Self Tender and, as a result of investing funds
used to facilitate the Limited Self Tender, recognized approximately
$10.5 million of interest income in 1996 up to the effective date.

Adjusted for the income tax effect (an $87 million expense in
1997 and a $1.0 million expense in 1996), earnings per diluted share would
have increased $.45 per share in 1997 to $1.24 and would have decreased $.38
per share to $1.16 in 1996.

Acquisition

Effective July 2, 1995, The Limited acquired all of the
outstanding common stock of Galyan's for $18 million in cash and stock. The
Limited's consolidated financial statements include the results of operations
of Galyan's since the acquisition date.

Financial Condition

The Limited's balance sheet at January 31, 1998, provides
continuing evidence of financial strength and flexibility. The Limited's
long-term debt-to-equity ratio declined to 32% at the end of 1997 from 34% in
1996, and working capital increased 47% over 1996 to $938 million. A more
detailed discussion of liquidity, capital resources and capital requirements
follows.

Liquidity and Capital Resources

Cash provided by operating activities, commercial paper backed
by funds available under committed long-term credit agreements, and The
Limited's capital structure continues to provide the resources to support
operations, projected growth, seasonal requirements and capital expenditures.

A summary of The Limited's working capital position and
capitalization follows (thousands):

<TABLE>
<CAPTION>
Adjusted
1997 1996 1995* 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash provided by operating activities.......... $ 589,981 $ 712,069 $ 340,732 $ 340,732
Working capital................................ $ 937,739 $ 638,204 $ 403,960 $2,018,960
Capitalization:
Long-term debt................................ $ 650,000 $ 650,000 $ 650,000 $ 650,000
Shareholders' equity.......................... 2,044,957 1,922,582 1,586,041 3,201,041
---------- ---------- ---------- ----------
Total capitalization........................... $2,694,957 $2,572,582 $2,236,041 $3,851,041
---------- ---------- ---------- ----------
Additional amounts available under long-term
credit agreements........................... $1,000,000 $1,000,000 $1,000,000 $1,000,000
========== ========== ========== ==========
</TABLE>
- ---------------
* Adjusted 1995 reflects the impact of the $1.615 billion repurchase of 85
million shares of common stock.

Net cash provided by operating activities totaled $590.0
million, $712.1 million and $340.7 million for 1997, 1996 and 1995 and
continued to serve as The Limited's primary source of liquidity.

The Limited considers the following to be several measures of
liquidity and capital resources:

<TABLE>
<CAPTION>
Adjusted
1997 1996 1995* 1995
------ ------ -------- ------
<S> <C> <C> <C> <C>
Debt-to-Equity Ratio 32% 34% 41% 20%
(Long-term debt divided by shareholders' equity)....................
Debt-to-Capitalization Ratio
(Long-term debt divided by total capitalization).................... 24% 25% 29% 17%
Interest Coverage Ratio
(Income, excluding gain in connection with IPOs, before
interest expense, depreciation, amortization and income
taxes divided by interest expense)................................. 11x 12x 12x 12x
Cash Flow to Capital Investment
(Net cash provided by operating activities divided by capital
expenditures)...................................................... 146% 174% 91% 91%
</TABLE>
- ---------------

* Adjusted 1995 reflects the impact of the $1.615 billion repurchase of 85
million shares of common stock.

Net cash provided from operating activities in 1997 decreased
$122.1 million from the prior year principally due to an increase in income
tax payments that was partially offset by slightly higher income from
operations adjusted for special and nonrecurring items and gains from IPOs.

Investing activities included capital expenditures of $405
million, about half of which was for new and remodeled stores. Investing
activities also included $235 million in net proceeds from the sales of the
Newport Tower, an office building in Jersey City, New Jersey and The Limited's
interest in The Mall at Tuttle Crossing in Columbus, Ohio and $108.3 million
of net proceeds from the third quarter sale of slightly less than one-half of
The Limited's investment in Brylane. In 1996, $41.3 million was invested in
the Alliance Data Systems (formerly WFN) credit card venture. 1995 reflects
the acquisition of Galyan's, the proceeds from the securitization of WFN's
credit card receivables of $1.2 billion (see Note 3 of The Limited
Consolidated Financial Statements) and the transfer of $351.6 million to a
restricted cash account (see Note 6 of The Limited's Consolidated Financial
Statements).

Cash used for financing activities for 1997 reflects an
increase in the quarterly dividend to $.12 per share from $.10 per share in
1996. Financing activities in 1996 include proceeds from and repayment of
$150 million in short-term debt borrowed by A&F and net proceeds of $118.2
million from the A&F IPO. Financing activities also included $1.615 billion
used to repurchase 85 million shares of The Limited's common stock via the
Limited Self Tender consummated in March 1996. Cash dividends paid in 1996 and
1995 were $.40 per share.

At January 31, 1998, The Limited had available $1 billion under
its long-term credit agreement. The Limited also has the ability to offer up
to $250 million of additional debt securities under its shelf registration
statement.

Stores and Selling Square Feet

A summary of actual stores and selling square feet by business
for 1997 and 1996 and the 1998 goals by business (including the impact of the
estimated 280 stores that will be closed/downsized during the year) follows:

<TABLE>
<CAPTION>
End of Year Change From
--------------------------------------------- ------------------------
Goal - 1998 1997 1996 1998-97 1997-96
----------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
Express
Stores........................ 712 753 753 (41) -
Selling Square Ft............. 4,481,000 4,739,000 4,726,000 (258,000) 13,000

Lerner New York
Stores........................ 668 746 784 (78) (38)
Selling Square Ft............. 5,041,000 5,698,000 5,984,000 (657,000) (286,000)

Lane Bryant
Stores........................ 760 773 832 (13) (59)
Selling Square Ft............. 3,666,000 3,735,000 3,980,000 (69,000) (245,000)

The Limited
Stores........................ 570 629 663 (59) (34)
Selling Square Ft............. 3,398,000 3,790,000 3,977,000 (392,000) (187,000)

Henri Bendel
Stores........................ 1 6 6 (5) -
Selling Square Ft............. 35,000 113,000 113,000 (78,000) -

Structure
Stores........................ 545 544 542 1 2
Selling Square Ft............. 2,161,000 2,143,000 2,117,000 18,000 26,000

Limited Too
Stores........................ 317 312 308 5 4
Selling Square Ft............. 1,002,000 979,000 967,000 23,000 12,000

Galyan's Trading Co.
Stores........................ 15 11 9 4 2
Selling Square Ft............. 1,026,000 641,000 488,000 385,000 153,000

Victoria's Secret Stores
Stores........................ 874 789 736 85 53
Selling Square Ft............. 3,795,000 3,555,000 3,326,000 240,000 229,000

Bath & Body Works
Stores........................ 1,101 921 750 180 171
Selling Square Ft............. 2,183,000 1,773,000 1,354,000 410,000 419,000

Cacique
Stores........................ - - 119 - (119)
Selling Square Ft............. - - 365,000 - (365,000)

Penhaligon's
Stores........................ - - 4 - (4)
Selling Square Ft............. - - 2,000 - (2,000)

A&F
Stores........................ 186 156 127 30 29
Selling Square Ft............. 1,453,000 1,234,000 1,006,000 219,000 228,000

Abercrombie & Fitch (Kids)
Stores........................ 13 - - 13 -
Selling Square Ft............. 42,000 - - 42,000 -

Total Retail Businesses
Stores........................ 5,762 5,640 5,633 122 7
Selling Square Ft............. 28,283,000 28,400,000 28,405,000 (117,000) (5,000)
</TABLE>

Capital Expenditures

Capital expenditures amounted to $404.6 million, $409.3 million
and $374.4 million for 1997, 1996 and 1995, of which $194.4 million, $235.7
million and $274.5 million was for new stores and remodeling and expanding
existing stores. In 1997 and 1996 The Limited expended $55.3 million and $53.1
million on land acquisition and development costs. Also, in 1997 and 1996 The
Limited expended $30.2 million and $42.1 million in connection with the Bath &
Body Works distribution center.

The Limited anticipates spending $480 to $500 million for
capital expenditures in 1998, of which $270 to $295 million will be for new
stores, the remodeling of existing stores and related improvements for the
retail businesses, $50 to $60 million will be for information technology
related to year 2000 expenditures and $30 to $40 million will be for land
acquisition and development costs, principally the Easton development project
in Columbus, Ohio. The Limited expects that substantially all 1998 capital
expenditures will be funded by net cash provided by operating activities.

The Limited intends to reduce selling square footage by
approximately 117,000 selling square feet in 1998, which represents a .4%
decrease from year-end 1997. It is anticipated that the decrease will result
from the closing of 250 stores offset by the addition of approximately 370
stores (over half of which are Bath & Body Works stores averaging 2,300 square
feet), the remodeling of approximately 125 stores.

Information Systems and "Year 2000" Compliance

The Limited recently completed a comprehensive review of its
information systems and is involved in an enterprise-wide program to update
computer systems and applications in preparation for the year 2000. The
Limited will incur internal staff costs as well as outside consulting and
other expenditures related to this initiative. Total expenditures related to
remediation, testing, conversion, replacement and upgrading system
applications are expected to range from $85 to $100 million from 1997 through
2000. Of the total, approximately $50 to $60 million will be capital
expenditures related to acquisition and implementation of new package systems.
The balance, approximately $35 to $40 million, will be expenses associated
with remediation and testing of existing systems. 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 Limited's financial condition during
any year during the conversion process from 1997 through 2000. However,
incremental expenses could total approximately $30 to $35 million in 1998, of
which the majority will impact the first three fiscal quarters of 1998, at a
rate of $9 to $10 million per quarter.

The Limited 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
Limited'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
Limited's systems. Furthermore, no assurance can be given that any or all of
The Limited'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 Limited's financial condition.

Impact of Inflation

The Limited's results of operations and financial condition are
presented based upon historical cost. While it is difficult to accurately
measure the impact of inflation due to the imprecise nature of the estimates
required, The Limited believes that the effects of inflation, if any, on the
results of operations and financial condition have been minor.

Adoption of New Accounting Standards

During the fourth quarter of 1997, The Limited adopted SFAS No.
128, "Earnings Per Share," which requires The Limited to disclose basic and
diluted earnings per share for all periods presented.

In June 1997, the Financial Accounting Standards Board issued
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information." While the standard has no impact in determining earnings and
earnings per share, The Limited will adopt the disclosure standards in 1998.

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF A&F

Net sales for the fourth quarter of 1997 were $212.1 million,
an increase of 52% from $139.2 million for the fourth quarter a year ago.
Operating income was $59.1 million, up 67% compared to $35.3 million last
year. Diluted earnings per share were $.68, up 70%, from $.40 last year.

Net sales for the fiscal year ended January 31, 1998, increased
56% to $521.6 million from $335.4 million last year. Operating income for the
year increased 83% to $84.1 million from $46.0 million in 1996. Diluted
earnings per share were $.94 compared to $.48 on an adjusted basis a year ago,
an increase of 96%.

The results of operations shown below are adjusted for both the
historical number of shares outstanding to reflect post-A&F IPO shares
outstanding and interest expense to reflect A&F's ongoing capital structure
and seasonal borrowings. The following assumptions were used to derive the
adjusted amounts: 1) 51.05 million post-A&F IPO shares outstanding for the
periods presented; prior to the A&F IPO, there were 43 million shares
outstanding; 2) interest expense on A&F's seasonal borrowings which were
funded from The Limited's intercompany cash management system; prior to July
11, 1996, the intercompany cash management account was noninterest bearing;
and 3) interest expense on A&F's ongoing capital structure which included
interest expense on a $50 million mirror note distributed to The Limited prior
to the A&F IPO but excluded interest expense on A&F's $150 million credit
agreement, entered into on July 2, 1996, and repaid in the fourth quarter of
1996.

<TABLE>
<CAPTION>
Year Ended
----------------------------------------
Actual Adjusted Actual
January 31, February 1, February 1,
1998 1997 1997
----------- ----------- -----------
<S> <C> <C> <C>
Operating income.................... $ 84,125 $ 45,993 $ 45,993
Interest expense, net............... 3,583 5,016 4,919
---------- ---------- ----------
Income before income taxes.......... 80,542 40,977 41,074
Provision for income taxes.......... 32,220 16,400 16,400
---------- ---------- ----------
Net income.......................... $ 48,322 $ 24,577 $ 24,674
========== ========== ==========
Net income per share
Basic.......................... $ .95 $ .48 $ .54
========== ========== ==========
Diluted........................ $ .94 $ .48 $ .54
========== ========== ==========
Weighted average shares outstanding:
Basic.......................... 51,011 51,050 45,749
========== ========== ==========
Diluted........................ 51,478 51,050 45,760
========== ========== ==========
</TABLE>

Financial Summary

The following summarized financial data compares 1997 to the
comparable periods for 1996 and 1995:

<TABLE>
<CAPTION>
% Change
------------------------
1997 1996 1995 1997-1996 1996-1995
---- ---- ---- --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales (millions)......................... $ 521.6 $ 335.4 $ 235.7 56% 42%
Increase in comparable store sales........... 21% 13% 5%
Retail sales increase attributable to new
and remodeled stores........................ 34% 29% 37%
Retail sales per average selling square
foot........................................ $ 462 $ 373 $ 354 24% 5%

Retail sales per average store
(thousands) ............................ $ 3,653 $2,955 $2,823 24% 5%
Average store size at year-end
(selling square feet)................... 7,910 7,921 7,920 0% 0%
Selling square feet at year-end
(thousands) ............................ 1,234 1,006 792 23% 27%

Number of Stores:
Beginning of year ...................... 127 100 67
Opened.................................. 30 29 33
Closed.................................. (1) (2) --
--------- --------- ---------
End of year............................. 156 127 100
========= ========= =========
</TABLE>

Net Sales

Fourth quarter 1997 net sales as compared to net sales for the
fourth quarter 1996 increased 52% to $212.1 million, due to a 23% increase in
comparable store sales and sales attributable to new and remodeled stores.
Comparable store sales increases were strong in both the men's and women's
businesses as both were driven by a very strong knit business. Additionally,
fourth quarter 1997 net sales included results from the first Holiday issue of
the A&F Quarterly, a catalog/magazine, which accounted for 1.7% of total net
sales.

Thirteen-week fourth quarter 1996 net sales as compared to net
sales for the fourteen-week fourth quarter 1995 increased 31% to $139.2
million, due to an 8% increase in comparable store sales and sales
attributable to new and remodeled stores. Comparable store sales increases
were strong in both the men's and women's businesses. Sweaters were the best
performing category in each business.

Net sales for 1997 increased 56% to $521.6 million over the
same period in 1996. The sales increase was attributable to the net addition
of 29 stores and a 21% comparable store sales increase. Comparable store
sales increases were equally strong in both men's and women's businesses and
their performance strength was broadly based across all major merchandise
categories. Net sales per selling square foot for A&F increased 24%, driven
principally by an increase in the number of transactions per store.

Net sales for 1996 increased 42% to $335.4 million over the
fifty-three week 1995 fiscal year. The sales increase was attributable to the
net addition of 27 stores and a 13% comparable store sales increase.
Consistent with A&F's strategy, the women's business continued to increase as
a proportion of the total business, with sweaters and pants the strongest
performing categories. The men's business also achieved significant growth
with its strongest categories being sweaters, pants and denim. Net sales per
selling square foot for A&F increased 5%.

Gross Income

Gross income increased, expressed as a percentage of net sales,
to 45.4% for the fourth quarter of 1997 from 43.0% for the same period in
1996. The increase was attributable to improved merchandise margins
(representing gross income before the deduction of buying and occupancy costs)
resulting from higher IMUs and a lower markdown rate. As a result of improved
inventory turnover, fewer markdowns, expressed as a percentage of net sales,
were needed in the fourth quarter of 1997 to clear season-end merchandise as
compared to the same period in 1996.

Gross income increased, expressed as a percentage of net sales,
to 43.0% for the fourth quarter of 1996 from 37.4% for the same period in
1995. The increase was due to a significant increase in merchandise margins
and a reduction in buying and occupancy costs, expressed as a percentage of net
sales. The increase in merchandise margins was the result of higher IMU. The
decrease in buying and occupancy costs was primarily attributable to higher
sales productivity associated with the 8% increase in comparable store sales.

For the year, the gross income rate increased to 38.5% in 1997
from 36.9% in 1996. The improvement was the result of higher merchandise
margins, expressed as a percentage of net sales. Improved IMU in both the
men's and women's businesses drove the increase in merchandise margins.
Buying and occupancy costs, expressed as a percentage of net sales, declined
slightly due to leverage achieved from comparable store sales increases.

In 1996, the gross income rate increased to 36.9% from 33.9% in
1995. Merchandise margins, expressed as a percentage of net sales, improved
due to a higher IMU in both the men's and women's businesses. Buying and
occupancy costs, expressed as a percentage of net sales, declined due to a 13%
increase in comparable store sales, including a 5% increase in net sales per
selling square foot.

General, Administrative and Store Operating Expenses

General, administrative and store operating expenses, expressed
as a percentage of net sales, were 17.5% in the fourth quarter of 1997 and
17.6% in the comparable period in 1996. The improvement resulted primarily
from favorable leveraging of expenses due to higher sales volume. Included in
these expenses for the fourth quarter of 1997 was approximately $2.6 million
of compensation expense associated with restricted stock grants awarded to key
executives of A&F.

For the year, general, administrative and store operating
expenses, expressed as a percentage of net sales, were 22.4%, 23.2% and 23.8%
for 1997, 1996 and 1995, respectively. The improvement during the three-year
period resulted from management's continued emphasis on expense control and
favorable leveraging of expenses, primarily stores expenses, due to higher
sales volume.

Operating Income

Operating income, expressed as a percentage of net sales, was
27.9%, 25.4% and 19.8% for the fourth quarter of 1997, 1996 and 1995 and
16.1%, 13.7% and 10.1% for fiscal years 1997, 1996 and 1995. The improvement
was the result of higher merchandise margins coupled with lower general,
administrative and store operating expenses, expressed as a percentage of net
sales. Sales volume and gross income have increased at a faster rate than
general, administrative and store operating expenses as A&F continues to
emphasize cost controls.

Interest Expense

Fourth quarter 1997 net interest expense of $305,000 improved
$820,000 from 1996 fourth quarter net interest expense of $1.1 million.
Interest expense in the fourth quarter of 1997 and 1996 included $975,000
associated with $50 million of long-term debt. The balance represented net
interest income from temporary investments in the fourth quarter of 1997,
while net interest expense in the fourth quarter of 1996 was primarily due to
higher borrowing levels.

A&F's year-to-date interest expense was $3.6 million, down $1.3
million from $4.9 million in 1996 due primarily to lower average borrowing
levels.

Financial Condition

A&F's continuing growth in operating income provides evidence
of financial strength and flexibility. A more detailed discussion of
liquidity, capital resources and capital requirements follows.

Liquidity and Capital Resources

Cash provided by operating activities and cash funding from The
Limited's centralized cash management system provided the resources to support
operations, including seasonal requirements and capital expenditures. A
summary of A&F's working capital position and capitalization follows
(thousands):

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash provided by operating activities. $100,195 $46,836 $ 12,714
Working capital....................... $ 42,000 $ 1,288 $(70,940)
Capitalization
Long-term debt................... $ 50,000 $50,000 --
Shareholders' equity (deficit)... 58,775 11,238 (22,622)
-------- ------- --------
Total capitalization.................. $108,775 $61,238 $(22,622)
======== ======= ========

</TABLE>

A&F considers the following to be measures of liquidity and
capital resources:

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Debt-to-capitalization ratio (long-term debt divided
by total capitalization)............................. 46% 82% n/m
Cash flow to capital investment (net cash provided
by operating activities divided by capital expenditures) 340% 193% 52%
</TABLE>

- ----------
n/m = not meaningful

Net cash provided by operating activities totaled $100.2
million, $46.8 million and $12.7 million for 1997, 1996 and 1995.

In 1997, the $100.2 million net cash provided by operating
activities increased from the comparable period last year due primarily to the
increase in net income before depreciation and amortization. Accounts payable
and accrued expenses increased in 1997 as a result of the increases of $7.8
million in merchandise payables due to the timing of receipts for Spring goods
and $2.3 million of accrued rent. Cash requirements for inventory decreased
in 1997 consistent with A&F's strategy to improve inventory turnover.

Investing activities were for capital expenditures, which were
primarily for new stores.

Financing activities in 1997 consisted primarily of activity
through The Limited's centralized cash management system. Financing
activities in 1996 include $150 million in proceeds from borrowings under a
bank credit agreement, which, along with the $8.6 million working capital
note, were later repaid with funds made available from the A&F IPO and cash
flow from operations. Proceeds of the $150 million bank credit agreement were
used to repay $91 million of intercompany debt and $32 million of trademark
obligations and fund a $27 million dividend to The Limited. Other financing
activities were due to intercompany and cash management account activity (see
Note 8 to the A&F Consolidated Financial Statements).

In connection with the plan to establish A&F as a fully
independent company via the Transactions (see Note 1 the A&F Consolidated
Financial Statements), A&F is in the process of negotiating credit facilities
that will be separate and independent of The Limited.

Capital Expenditures

Capital expenditures, primarily for new and remodeled stores,
amounted to $29.5 million, $24.3 million and $24.5 million for 1997, 1996 and
1995.

A&F anticipates spending $40 to $50 million in 1998 for capital
expenditures, of which $35 to $42 million will be for new stores, remodeling
and/or expansion of existing stores and related improvements. A&F intends to
add approximately 235,000 selling square feet in 1998, which will represent a
19% increase over year end 1997. It is anticipated the increase will result
from the addition of 30 new stores and the remodeling and/or expansion of four
stores. A&F estimates that the average cost for leasehold improvements,
furniture and fixtures for stores opened in 1998 will approximate $750,000 per
store, after giving effect to landlord allowances. In addition, inventory
purchases are expected to average approximately $275,000 per store.

Additionally, A&F plans to open 10 to 15 children's stores in
1998. The planned store size is approximately 3,200 selling square feet and
the average cost for leasehold improvements, furniture and fixtures will be
approximately $470,000.

A&F expects that substantially all future capital expenditures
will be funded by net cash provided by operating activities.

Information Systems and "Year 2000" Compliance

A&F recently 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. A&F will incur internal
staff costs as well as outside consulting and other expenditures related to
this initiative. Total expenditures related to remediation, testing,
conversion, replacement and upgrading system applications are expected to
range from $3.0 to $4.0 million from 1997 through 2000. 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 A&F's financial
condition in any year during the conversion process from 1997 through 2000.

A&F is attempting to contact vendors and others on whom it
relies to ensure that their systems will be converted in a timely fashion.
However, there can be no assurance that the systems of other companies on
which A&F's systems rely will also be converted in a timely fashion or that
any such failure to convert by another company would not have an adverse
effect on A&F's systems. Furthermore, no assurance can be given that any or
all of A&F'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 A&F's financial condition.

Impact of Inflation

A&F's results of operations and financial condition are
presented based upon historical cost. While it is difficult to accurately
measure the impact of inflation due to the imprecise nature of the estimates
required, A&F believes that the effects of inflation, if any, on its results
of operations and financial condition have been minor.

Adoption of New Accounting Standards

During the fourth quarter of 1997, A&F adopted SFAS No. 128,
"Earnings Per Share" which requires A&F to disclose basic and diluted earnings
per share for all 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.

A&F estimates that the men's and women's apparel market
generated approximately $140 billion in retail purchases in 1997 and 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 10-15 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 77 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 10-15 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. As Mast generally has operated
as if it were an unrelated party, A&F does not expect that its sourcing
arrangements with Mast will be affected in any material respect by the
Transactions.

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 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 disproportional 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 17.

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 98.

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 98.

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 17. 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 98. 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 center
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 provides
such services to A&F on a basis consistent with past practices. The Limited's
obligation to provide these services will terminate three 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 98.

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 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 98.

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 17. 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 98.

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 98. 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
Birmingham
Hoover

Arizona-2
Mesa
Scottsdale

Arkansas-1
Little Rock

California-10
Costa Mesa
Glendale
Los Angeles
Redondo Beach
Sacramento
San Diego (2)
San Francisco (2)
San Mateo

Colorado-6
Boulder
Colorado Springs
Denver (4)

Connecticut-4
Danbury
Farmington
Milford
Stamford

District of Columbia-1

Florida-6
Altamonte Springs
Brandon
Miami (2)
Orlando
W. Palm Beach

Georgia-7
Alpharetta
Atlanta (3)
Duluth
Kennesaw
Savannah

Illinois-8
Aurora
Chicago
Northbrook
Oakbrook
Orland Park
Schaumburg
Skokie
Vernon Hills

Indiana-3
Evansville
Indianapolis (2)

Kansas-3
Lawrence
Leawood
Overland Park

Kentucky-2
Lexington
Louisville

Louisiana-2
Baton Rouge
New Orleans

Maryland-3
Bethesda
Owings Mills
Towson

Massachusetts-9
Boston
Braintree
Burlington
Cambridge
Chestnut Hill
Holyoke
Marlborough
Natick
Peabody

Michigan-7
Ann Arbor
Grand Rapids
Novi
Okemos
Portage
Sterling Heights
Troy

Minnesota-3
Bloomington
Minnetonka
Roseville

Mississippi-1
Ridgeland

Missouri-3
Chesterfield
Kansas City
St. Louis

Nebraska-1
Omaha

Nevada-2
Las Vegas

New Hampshire-2
Nashua
Salem

New Jersey-6
Cherry Hill
Edison
Freehold
Paramus
Short Hills
Wayne

New Mexico-1
Albuquerque

New York-10
Albany (2)
Buffalo
Garden City
Manhasset
New York City
Rochester
Staten Island
Victor
White Plains

North Carolina-5
Charlotte
Durham
Greensboro
Raleigh
Winston Salem

Ohio-9
Beachwood
Beaver Creek
Cincinnati (2)
Cleveland
Columbus (2)
Strongsville
Toledo

Oklahoma-2
Oklahoma City
Tulsa

Oregon-1
Tigard

Pennsylvania-7
King of Prussia
Langhorn
Monroeville
Pittsburgh (2)
Whitehall
Willow Grove

South Carolina-2
Charleston
Greenville

Tennessee-4
Chattanooga
Knoxville
Memphis
Nashville

Texas-9
Austin
Cedar Park
Dallas (2)
Fort Worth
Houston
San Antonio
Sugar Land
The Woodlands

Virginia-5
Arlington
Fairfax
McLean
Richmond
Virginia Beach

Washington-4
Bellevue
Lynnwood
Redmond
Seattle

Wisconsin-3
Appleton
Madison
Wauwatosa

BUSINESS OF THE LIMITED

The Limited is one of the nation's leading mall-based specialty
retailers. As of __________, 1998, The Limited, through Express, Lerner New
York, Lane Bryant, Limited Stores, Structure, Limited Too, Galyan's and Henri
Bendel 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 approximately $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 a 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 773 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, Galyan's 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 Henri 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 the following
new directors not affiliated with The Limited.

<TABLE>
<CAPTION>
Name Age Business Experience
- ---- --- -------------------
<S> <C> <C>
George Foos 77 Mr. Foos has been a management consultant focusing on retail chains
and apparel manufacturers since 1989. Prior thereto, he has served as
Chairman of the Board of Emporium Capwell Department Stores and
President and Chief Executive Officer of May Department Stores,
Southern California.

John A. Golden 53 Mr. Golden has been a limited partner of Goldman Sachs Group L.P.
since 1994 and a general partner prior thereto. Mr. Golden is also a
member of the Board of Trustees of Colgate University.

Seth R. Johnson 44 Mr. Johnson has been Vice President and Chief Financial Officer of A&F
since 1992. Mr. Johnson was Director of Financial Analysis of The
Limited from 1989 until 1992 and was Director of Financial Reporting of
the Limited Stores, Inc., from 1986 until 1989.

John W. Kessler 62 Mr. Kessler has been the Chairman of New Albany Co. since 1988,
Chairman of Marsh & McLennan Real Estate Advisors, Inc. (a real
estate consulting firm) since 1980 and Chairman of the John W.
Kessler Company (a real estate development company) since 1975.
Mr. Kessler has also been a director of Banc One since 1995.

Sam N. Shahid, Jr. 57 Mr. Shahid has been President and Creative Director of Shahid &
Company, Inc., an advertising and design agency, since 1993. Prior
thereto, he has served as Vice President and Creative Director of
Banana Republic Advertising (an in-house agency for Banana Republic)
and Vice President and Creative Director of CRK Advertising (an in-
house agency for Calvin Klein).

Douglas L. Williams 44 Mr. Williams has been a partner in the Columbus office of Vorys, Sater,
Seymour and Pease LLP since 1993. Mr. Williams is also a member of
the Board of the United Way and the Children's Defense Fund for the
State of Ohio. Prior to joining Vorys, Sater, Mr. Williams was a partner
at the firm of Schwartz, Kelm, Warren & Rubenstein.
</TABLE>

Executive Officers

In addition to Mr. Johnson, Mr. Jeffries and Michele Donnan-Martin also
serve as executive officers of A&F. Michael S. Jeffries, age 53, a director
of A&F, has been President and Chief Executive Officer of A&F since February,
1992. Ms. Donnan-Martin, age 34, has been Vice President - General
Merchandising Manager - Women's of A&F since February, 1996 and for three and
one-half years prior thereto held the position of Vice-President Woman's
Merchandising of A&F.

EXECUTIVE COMPENSATION FOR A&F

Summary Compensation Table

The following table provides information concerning
compensation paid by A&F (except, as noted below, for executive officers
Wexner and Gilman, whose compensation was paid by The Limited in the years
noted) to each of the named executive officers of A&F for its last two fiscal
years and by The Limited for fiscal year 1995 and that portion of the 1996
fiscal year prior to the consummation of the A&F IPO.

<TABLE>
<CAPTION>
Summary Compensation Table
Long-term
Annual Compensation Compensation Awards
Securities
Restricted Underlying All Other
Stock Options Compen-
Fiscal Salary Bonus (2) Awards (3) Awarded sation (4)
Year ($) ($) ($) (#) ($)
---- ---------- ---------- ----------- --------------- -----------
Name and Principal Position (1)
<S> <C> <C> <C> <C> <C> <C>
Leslie H. Wexner 1997 $1,000,000 $1,861,560 -- 16,000,000 (5) $135,296
Chairman of the Board 1996 1,011,538 915,000 -- 200,000 (5) 151,629
100,000 (6)
1995 1,150,000 768,315 -- 100,000 (5) 148,436
Kenneth B. Gilman 1997 900,000 1,228,630 6,220,313 (5) 500,000 (5) 195,094
Vice Chairman 1996 903,846 603,900 -- 50,000 (5) 187,192
50,000 (6)
1995 941,935 449,820 -- 25,000 (5) 190,772
Michael S. Jeffries 1997 596,154 1,200,000 8,000,000 (7) 1,000,000 (7) 190,184
President and Chief Executive 1996 546,154 990,275 1,060,478 (7) 130,000 (7) 140,380
Officer 93,366 (5)
1995 491,700 426,300 159,393 (5) 12,000 (5) 104,772
Michele S. Donnan-Martin 1997 320,000 390,000 311,250 (7) 225,000 (7) 66,453
Vice President-General 1996 256,923 234,065 203,203 (7) 28,000 (7) 46,657
Merchandising Manager- 15,561 (5)
Women's 1995 217,510 107,184 26,566 (5) 5,000 (5) 36,051
Seth R. Johnson 1997 261,923 265,000 186,750 (7) 175,000 (7) 55,010
Vice President-Chief Financial 1996 223,077 202,556 43,203 (7) 6,500 (7) 45,873
Officer 1995 198,340 97,440 26,566 (5) 5,000 (5) 39,854
</TABLE>

- ----------

(1) Executive officers Wexner and Gilman are also employed by The Limited and
received no direct compensation from A&F. The annual base salary and
annual bonus opportunity for executive officers Wexner and Gilman in
respect of their service with The Limited and its affiliates was determined
by The Limited's Compensation Committee and was paid by The Limited.

(2) Represents for each fiscal year, the aggregate of the performance-based
incentive compensation for the Spring and Fall selling seasons.

(3) Represents for each executive officer, the restricted stock awards for the
specified fiscal year under A&F's 1996 Stock Option and Performance
Incentive Plan for awards of A&F Common Stock and under The Limited, Inc.
1993 Stock Option and Performance Incentive Plan for awards of Limited
Common Stock. Information set forth above is based on the closing price of
the stated common stock on the date on which the awards were made.

On February 1, 1998, 10,000 and 6,000 restricted shares of A&F Common Stock
were granted to executive officers Donnan-Martin and Johnson, respectively,
based on business performance for the fiscal 1997 year. The per share
value of A&F Common Stock on the then most recent prior date on which there
were sales (January 30, 1998) was $31.125. This award vests 10% on the
grant date, and 20%, 30% and 40% on the first through third anniversaries
of the grant date, in each case, subject to the holder's continued
employment with A&F.

On May 20, 1997, 300,000 restricted shares of Limited Common Stock were
granted to Mr. Gilman. The per share value of Limited Common Stock on such
date was $19.50. This award is earned subject to established financial
performance measures and once earned, vests 10%, 10%, 10%, 15%, 20% and 35%
on the first through sixth anniversaries of the grant date, respectively,
subject to continued employment with The Limited.

On May 13, 1997, 500,000 restricted shares of A&F Common Stock were granted
to Mr. Jeffries. The per share value of A&F Common Stock on such date was
$16.00. This award is earned subject to established financial performance
measures and once earned, vests over six years, subject to continued
employment with A&F.

On March 25, 1997, 19,750 restricted shares of Limited Common Stock were
granted to Mr. Gilman. The per share value of Limited Common Stock on
such date was $18.75. This award vests 100% one year from the grant date,
subject to continued employment with The Limited.

On February 1, 1997, 24,762, 3,142 and 3,142 restricted stock performance
awards of A&F Common Stock were granted to executive officers Jeffries,
Donnan-Martin and Johnson, respectively. The per share value of A&F Common
Stock on Friday, January 31, 1997 was $13.75. On August 1, 1996, 4,788,
798 and 798 restricted stock performance awards of Limited Common Stock
were granted to executive officers Jeffries, Donnan-Martin and Johnson,
respectively. The per share value of Limited Common Stock on such date was
$19.50. These awards, which are in respect of 1996 performance, generally
vest 10% on the grant date and 20%, 30% and 40% on the first through third
anniversaries of the grant date, in each case, subject to the holder's
continued employment with A&F.

On September 25, 1996, 45,000 and 4,500 restricted shares of A&F Common
Stock were awarded to executive officers Jeffries and Donnan-Martin,
respectively, in consideration of the cancellation of Mr. Jeffries' March
1, 1994 and Ms. Donnan-Martin's February 2, 1996 grant of restricted shares
of Limited Common Stock. These awards to Mr. Jeffries and Ms.
Donnan-Martin vest 100% on March 1, 1999 and February 2, 2001,
respectively, subject to continued employment. Also, on September 25,
1996, 5,500 restricted shares of A&F Common Stock were awarded to Ms.
Donnan-Martin. Such shares vest 100% five years from the grant date,
subject to continued employment with A&F. The per share value of A&F
Common Stock on such date was the A&F IPO price of $16.00 per share.

On February 1, 1996, 9,516, 1,586 and 1,586 restricted stock performance
awards of Limited Common Stock were granted to executive officers Jeffries,
Donnan-Martin and Johnson, respectively, in respect of 1995 performance.
The per share value of Limited Common Stock on such date was $16.75. These
awards generally vest 10% on the grant date and 20%, 30% and 40% on the
first through third anniversaries of the grant date, in each case, subject
to the holder's continued employment with A&F.

As of January 31, 1998, the aggregate holdings of restricted shares of A&F
Common Stock and the market value of such holdings for such named executive
officers were: Mr. Jeffries, 567,286 shares, $17,656,777; Ms.
Donnan-Martin, 22,828 shares, $710,522; and Mr. Johnson, 8,828, $274,772
455 (based on the $31.125 fair market value of A&F Common Stock as of
Friday, January 30, 1998). The holdings of executive officers
Donnan-Martin and Johnson include 10,000 and 6,000 restricted shares,
respectively, as noted in the second paragraph of this footnote.

As of January 31, 1998, the aggregate holdings of restricted shares of
Limited Common Stock and the market value of such holdings for each of the
named executive officers were: Mr. Wexner, 13,000 shares, $344,500; Mr.
Gilman, 326,250 shares, $8,645,625; Mr. Jeffries, 14,814 shares, $392,571;
Ms. Donnan-Martin, 2,470 shares, $65,455; and Mr. Johnson, 2,470 shares
$65,455 (based on the $26.50 fair market value of a share of Limited
Common Stock as of Friday, January 30, 1998).

Dividends will not be paid or accrue with respect to shares of restricted
stock until such shares vest.

(4) Represents for each executive officer, the amount of employer matching and
supplemental contributions allocated to his or her account under certain of
The Limited's qualified and non-qualified defined contribution plans during
1997.

(5) Denominated in shares of Limited Common Stock.

(6) Denominated in shares of the Intimate Brands' Class A Common Stock.

(7) Denominated in shares of A&F Common Stock.

Long-Term Incentive Plan Awards

No Awards were granted in respect of the 1997 fiscal year to
the named executive officers other than the restricted stock performance
awards as disclosed in the Summary Compensation Table.

Stock Options

The following table sets forth certain information regarding
stock options granted to the executive officers named in the Summary
Compensation Table during A&F's 1997 fiscal year.

<TABLE>
<CAPTION>
Option Grants in Fiscal Year 1997

Individual Grants(1)
--------------------
Percent of Potential Realizable
Total Value at Assumed
Options Annual Rates of Stock
Securities Granted to Price Appreciation for
Underlying Associates Exercise Option Term(4)($)
Options in Fiscal Price Expiration -------------------------
Name Granted (#)(1) Year Per Share ($) Date 5% 10%
- ----------------------- -------------- ---- --------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Leslie H. Wexner 1,600,000 (2) 22.01% $22.1375(5) 07/02/07 $22,275,448 $56,450,358
Kenneth B. Gilman 500,000 (2) 6.88% 19.5000 05/21/07 6,131,723 15,538,989
Michael S. Jeffries 1,000,000 (3) 60.13% 16.0000 05/14/07 10,062,314 25,499,879
Michele S. Donnan-Martin 150,000 (3) 9.02% 16.0000 02/21/07 1,509,347 3,824,982
75,000 (3) 4.51% 30.0001 12/06/07 1,444,492 36,609,627
Seth R. Johnson 100,000 (3) 6.01% 16.0000 02/21/07 1,006,231 2,549,988
75,000 (3) 4.51% 30.6250 12/06/07 1,444,492 3,660,627
</TABLE>

- ----------

(1) On July 1, 1997, options were granted to Mr. Wexner and on May 20, 1997,
options were granted to Mr. Gilman pursuant to The Limited's 1993 Stock
Option and Performance Incentive Plan (1997 Restatement). On February 20,
1997 and December 5, 1997, options were granted to executive officers
Donnan-Martin and Johnson pursuant to A&F's 1996 Stock Option and
Performance Incentive Plan (1997 Restatement). Such options vest 10%, 10%,
10%, 15%, 20% and 35% on the first through sixth anniversaries of the grant
date, respectively, in each case, subject to the holder's continued
employment with the executive's employer.

On May 13, 1997, options were granted to Mr. Jeffries pursuant to A&F's 1996
Stock Option and Performance Incentive Plan (1997 Restatement). Such options
vest over nine years, subject to earnings per share performance targets and
continued employment with A&F.

(2) Denominated in shares of Limited Common Stock.

(3) Denominated in shares of A&F Common Stock.

(4) The assumed rates of growth were selected by the Commission for illustrative
purposes only and are not intended to predict or forecast future stock
prices.

(5) The per share exercise price of all such options to Mr. Wexner is set at
110% of the fair market value of the stock on the date of grant.

The following table sets forth certain information relating to
stock options exercised and the number and value of shares of Limited Common
Stock and A&F Common Stock subject to the stock options held by the executive
officers named in the Summary Compensation Table during A&F's 1997 fiscal year
and the year-end value of unexercised options held by such executive officers.

<TABLE>
<CAPTION>
Aggregated Option Exercises in 1997 Fiscal Year
and Fiscal Year-End Option Values

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at Fiscal Year End (#) at Fiscal Year-End ($)
Acquired on Value ------------------------------ ------------------------------------
Name Exercise (#)(1) Realized ($)(2) Exercisable Unexercisable Exercisable Unexercisable
- --------------------- --------------- -------------- ----------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Leslie H. Wexner -- -- 25,000 (3) 75,000 (3) $93,125 (3) $279,375 (3)
137,500 (4) 1,812,500 (4) 1,113,750 (4) 8,471,250 (4)
Kenneth B. Gilman 31,250 $384,766 4,167 (3) 45,833 (3) 46,618 (3) 512,757 (3)
222,917 (4) 564,583 (4) 1,629,430 (4) 4,124,476 (4)
Michael S. Jeffries -- -- 10,833 (5) 1,119,167 (5) 163,849 (5) 16,927,401 (5)
52,000 (4) 9,000 (4) 302,625 (4) 82,500 (4)
Michele S. Donnan-Martin 19,500 72,125 7,000 (5) 246,000 (5) 105,875 (5) 2,623,875 (5)
-- (4) 3,500 (4) -- (4) 32,000 (4)
Seth R. Johnson -- -- 1,625 (5) 179,875 (5) 24,578 (5) 1,623,734 (5)
31,250 (4) 3,750 (4) 233,250 (4) 34,375 (4)
</TABLE>

- ----------
(1) All such shares acquired on exercise represent shares of Limited Common
Stock.

(2) Calculated on the basis of the number of shares exercised, multiplied by the
excess of the fair market value of a share of Limited Common Stock on the
date of exercise over the exercise price of such option.

(3) Denominated in shares of Intimate Brands' Class A Common Stock. Value is
calculated on the basis of the number of shares subject to such option,
multiplied by the excess of the fair market value of a share of Intimate
Brands' Class A Common Stock on the last trading day prior to fiscal
year-end ($25.3125) over the exercise price of such option.

(4) Denominated in shares of Limited Common Stock. Value is calculated on the
basis of the number of shares subject to each such option, multiplied by the
excess of the fair market value of a share of Limited Common Stock on the
last trading day prior to fiscal year-end ($26.50) over the exercise price
of such option.

(5) Denominated in shares of A&F Common Stock. Value is calculated on the basis
of the number of shares subject to such option, multiplied by the excess of
the fair market value of a share of A&F Common Stock on the last trading day
prior to fiscal year-end ($31.125) over the exercise price of such option.

Compensation of Directors

Directors who are not associates of A&F receive an annual
retainer of $10,000 per year (increased by $1,500 for each committee chair
held), plus a fee of $800 for each Board meeting attended ($400 for a
telephonic meeting) and, as committee members, receive $600 per committee
meeting attended ($200 for a telephonic meeting). Each action in writing taken
by the Board or any committee entitles each such director to be paid $200.
Associates and officers who are directors receive no additional compensation
for services rendered as directors. Under A&F's 1996 Stock Plan for
Non-Associate Directors, each director who is not an associate of A&F receives
(i) annual grants of options to purchase 2,000 shares of A&F Common Stock at a
price equal to the fair market value of such shares at the date of grant and
(ii) 50% of the annual retainer in shares of A&F Common Stock.

Employment Agreements with Certain Executive Officers

In 1997 A&F entered into individual employment agreements with
Executive Officers Jeffries, Donnan-Martin and Johnson. Pursuant to these
agreements, Mr. Jeffries serves as A&F's President and Chief Executive
Officer, Ms. Donnan-Martin serves as A&F's Vice President-General Merchandising
Manager, Womens and Mr. Johnson serves as A&F's Vice President and Chief
Financial Officer. The initial term of each agreement is six years, with
automatic one-year extensions thereafter unless either party gives written
notice to the contrary. Mr. Jeffries' agreement provides for an initial base
salary of $600,000, Ms. Donnan-Martin's agreement provides for an initial base
salary of $325,000 and Mr. Johnson's agreement provides for an initial base
salary of $265,000. Mr. Jeffries' agreement also provides for life insurance
coverage of $10 million. Each agreement also provides for incentive plan
participation as determined by the Board. Under each agreement, upon the
failure of A&F to extend the agreement or the termination of the executive's
employment either by A&F for cause or by the executive for good reason, the
executive will continue to receive the executive's base salary for one year
after the termination date. Under the agreements, each executive agrees not
to compete with A&F or solicit its employees or customers during the
employment term and for one year thereafter. Each executive's agreement
provides for disability benefits in addition to the benefits available under
A&F's disability plans. In the event any "parachute" excise tax is imposed on
any of Executive Officers Jeffries, Donnan-Martin or Johnson, the executive
will be entitled to tax reimbursement payments.

MANAGEMENT OF THE LIMITED

Board of Directors

Name Age Business Experience
- ---- --- -------------------

Eugene M. Freedman 66 Mr. Freedman has been Managing Director
of Monitor Clipper Partners, a private equity
merchant bank, since 1997 and Senior Advisor
to and a director of Monitor Company, Inc.,
an international business strategy and
consulting firm, since January 1995. Until
October 1994 and for more than five years
prior thereto, Mr. Freedman was a partner of
Coopers & Lybrand, where he served as
Chairman and Chief Executive Officer of
Coopers & Lybrand LLP, U.S. ("C & L, U.S.")
since October 1991 and as Chairman of Coopers
& Lybrand, International since 1992. During
the Company's 1997 fiscal year, C & L, U.S.
served as the Company's independent public
accountants. The amount of compensation paid
by the Company to C & L, U.S. for such
services was less than 1% of the Company's
and C & L, U.S.'s consolidated gross revenues
for their 1997 fiscal years. Mr. Freedman is
also a director of Bernard Technologies, Inc.

E. Gordon Gee 54 Dr. Gee has been President of Brown
University since January 1998. Dr. Gee was
President of The Ohio State University from
1990 to 1997. Dr. Gee is also a director of
A&F, ASARCO, Inc., Glimcher Realty Trust and
Intimate Brands.

Kenneth B. Gilman 51 Mr. Gilman has been Vice Chairman and Chief
Administrative Officer of The Limited since
June 1997. He was also Vice Chairman and
Chief Financial Officer of The Limited from
June 1993 to June 1997. For more than five
years prior thereto, Mr. Gilman was Executive
Vice President and Chief Financial Officer of
The Limited. Mr. Gilman has also been the
Vice Chairman of the Board of Intimate Brands
since 1995 and Vice Chairman of the Board of
A&F since 1996.

David T. Kollat 59 Dr. Kollat has been Chairman of 22, Inc., a
management consulting firm, for more than
five years. He is also a director of Audio
Environments, Inc., Cheryl & Co., Inc.,
Christy Partners, Consolidated Stores
Corporation, Cooker Restaurant Corporation,
Pipeliner Systems, Inc., Resource Marketing,
Inc., SBC Advertising, Select Comfort, Inc.,
Starpower Inc. and Wolverine World Wide, Inc.

Claudine B. Malone 61 Ms. Malone has been President and Chief
Executive Officer of Financial & Management
Consulting, Inc. since 1982. She is also
Chairman of the Federal Reserve Bank of
Richmond and a director of Dell Computer
Corporation, Hannaford Brothers, Inc.,
Hasbro, Inc., Houghton Mifflin Co., Lafarge
Corporation, Lowe's Companies, Mallinckrodt
Group, Inc., Science Applications
International Corporation and Union Pacific
Resources Corp.

Leonard A. Schlesinger 45 Dr. Schlesinger has been a member of
the faculty of Harvard Business School
("Harvard") since 1988 and currently is the
George F. Baker Jr. Professor of Business
Administration. He also served as the Senior
Associate Dean and Director of External
Relations at Harvard from July 1994 until
October 1995. Dr. Schlesinger currently is a
director of Borders Group, Inc., GC
Companies, Inc. and Pegasystems, Inc.

Donald B. Shackelford 65 Mr. Shackelford has been Chairman of
the Board and Chief Executive Officer of
State Savings Bank, a banking business, for
more than five years and has been the Chief
Executive Officer of State Savings Co. since
1995. Mr. Shackelford is also a director of
A&F, Intimate Brands, Progressive Corporation
and Worthington Foods, Inc.

Allan R. Tessler 61 Mr. Tessler has been Chairman of the Board and
Chief Executive Officer of International
Financial Group, Inc., a merchant banking
concern, for more than five years and Co-
Chairman and Chief Executive Officer of Data
Broadcasting Corporation, a data broadcasting
network, since 1992. Mr. Tessler was Chairman
of the Board and Chief Executive Officer of
Ameriscribe Corporation, a provider of
reprographic and related facilities management
services, from 1988 through 1993. Mr. Tessler
is also the Chairman of the Boards of Directors
of Enhance Financial Services Group, Inc. and
Jackpot Enterprises, Inc. Mr. Tessler is a
director of Allis-Chalmers Corporation.

Martin Trust 63 Mr. Trust has been President and Chief
Executive Officer of Mast Industries, Inc., a
wholly-owned subsidiary of The Limited, for
more than five years. He is also a director of
Staples, Inc.

Abigail S. Wexner 36 Mrs. Wexner was an attorney with the law
firm of Davis Polk & Wardwell from 1987 until
1992, where she specialized in mergers and
acquisitions. She is a director of the
Children's Defense Fund and is a member of
the Board of Trustees of the Wexner Center
Foundation, the Governing Committee of The
Columbus Foundation and the Board of Trustees
of the Children's Hospital, Inc. in Columbus,
Ohio and was appointed by the President of
the United States as a member of the United
States Holocaust Memorial Council. Mrs.
Wexner is the wife of Leslie H. Wexner.

Leslie H. Wexner 60 Mr. Wexner has been President and Chief
Executive Officer of The Limited since he
founded The Limited in 1963, and Chairman of
the Board for more than five years. Mr. Wexner
has also been the Chairman of the Board and
Chief Executive Officer of Intimate Brands,
Inc. ("Intimate Brands") since 1995, and
Chairman of the Board of A&F since 1996.
Intimate Brands and A&F are subsidiaries of
The Limited. Mr. Wexner is also a director of
Hollinger International and Hollinger
International Publishing, Inc. Mr. Wexner is
the husband of Abigail S. Wexner.

Raymond Zimmerman 64 Mr. Zimmerman was Chairman of the Board of
Service Merchandise, a retail merchandising
business, from 1981 to 1998. He was also
Chief Executive Officer of Service
Merchandise from 1984 until April 1997. Mr.
Zimmerman currently is a director of Service
Merchandise.

Executive Officers

In addition to Executive Officers Wexner, Gilman and Trust,
Arnold F. Kanarick and V. Ann Hailey also serve as Executive Officers of The
Limited. Mr. Kanarick, age 57, has served as Executive Vice President and
Chief Human Resources Officer of The Limited since November, 1992. Ms.
Harley, age 47, has served as Executive Vice President and Chief Financial
Officer of The Limited since August, 1997. From 1994 to August, 1997, Ms.
Hailey was Senior Vice President and Chief Financial Officer of The Pillsbury
Company, a division of GrandMet plc. From 1992 to 1994 Ms. Hailey was Vice
President, Finance and Planning, for the Specialty Products Division of RJR
Nabisco Foods, Inc.

Certain Relationships and Related Transactions

On January 26, 1996, The Limited, Leslie H. Wexner, The
Limited's Chairman, Chief Executive Officer and President, and The Wexner
Children's Trust (the "Trust") entered into a Contingent Stock Redemption
Agreement, which Agreement was amended as of July 19, 1996 (as so amended, the
"Agreement"). The following summary of the material terms of the Agreement
does not purport to be complete and is qualified in its entirety by reference
to the Agreement, a copy of which has been filed with the Securities and
Exchange Commission (the "Commission") as an exhibit to The Limited's Annual
Report on Form 10-K for the fiscal year ended February 1, 1997. Such exhibits
are available for inspection at the Commission.

A new, wholly-owned subsidiary (the "Subsidiary") of The
Limited has guaranteed The Limited's obligations under the Agreement, has been
capitalized by The Limited with $351.6 million (representing the amount
required to pay the Redemption Price in the event of an exercise in full of
the Redemption Right (each, as defined below)) and will not engage in any
actions or undertake any operations other than as contemplated by the
Agreement. Pursuant to the terms of the Agreement, the Trust deposited
18,750,000 shares of Limited Common Stock (the "Subject Shares") in a custody
account established with Morgan Guaranty Trust Company of New York. For the
purposes of the Agreement, a "Subject Share" will include, in the event of any
spinoff or other distribution by The Limited to its stockholders of any
business controlled by the Company, in addition to a share of Limited Common
Stock, such security (or portion thereof) as the Trust may receive in the
spinoff or other distribution in respect of each share of Limited Common
Stock.

Pursuant to the terms of the Agreement, the Trust will have the
opportunity (the "Redemption Right"), commencing on January 31, 1998 and
ending on January 30, 2006 (the "Exercise Period"), to require The Limited to
redeem the Subject Shares, from time to time, in whole or in part (subject to
specified minimum amounts), at a price per share equal to $18.75, subject to
certain adjustments (the "Redemption Price"). The Trust will have the right to
transfer the Redemption Right, from time to time, in whole or in part, to (i)
Mr. Wexner, (ii) any member of Mr. Wexner's immediate family, (iii) any
corporation, partnership, trust or other entity, of which all of the owners or
beneficiaries are Mr. Wexner or any member of Mr. Wexner's immediate family or
any charitable trust, (iv) any estate or personal representative of Mr. Wexner
or any member of Mr. Wexner's immediate family and (v) subject to certain
conditions, third parties, in each case, provided that such transferee agrees
to be bound by the terms of the Agreement. The Trust will have the right to
pledge the Redemption Right to a financial institution reasonably satisfactory
to The Limited to secure the Trust's obligations in respect of borrowed money
under any credit or similar agreement. The Trust will be permitted to withdraw
Subject Shares from the custody account provided such withdrawn shares are
replaced by an amount in cash equal to 120% of the market value of the
withdrawn shares. The Trust will be permitted to sell all the withdrawn
shares.

The Limited will have the opportunity (the "Company Redemption
Right"), beginning on July 31, 2006 and ending on January 30, 2007, to redeem
the Subject Shares, from time to time, in whole or in part (subject to
specified minimum amounts), at a price per share equal to $25.07, subject to
certain adjustments (also referred to as the "Redemption Price"). The Limited
will have the right to transfer the Company Redemption Right, from time to
time, in whole or in part, to any affiliate. The Limited Redemption Right will
be reduced on a share-for-share basis for any Subject Shares redeemed by The
Limited pursuant to the Redemption Right.

Subject to the terms of the Agreement, certain adjustments will
be made to the number of shares of Limited Common Stock subject to the
Redemption Right and the Company Redemption Right or to the Redemption Price,
as the case may be, upon the following events: (i) the payment of a dividend
in shares, or any subdivision, split or reclassification of shares of Limited
Common Stock; (ii) the issuance of shares of Limited Common Stock (or rights,
warrants or other securities convertible into or exchangeable or exercisable
for shares of Limited Common Stock) to all holders of shares of Limited Common
Stock at a price less than its market price; (iii) the repurchase of shares of
Limited Common Stock at a price in excess of its market price; or (iv) any
change, reclassification, conversion or other similar transaction involving
shares of Limited Common Stock.

During fiscal year 1997, Leonard A. Schlesinger, a member of
The Limited's Board of Directors, provided consulting services to The Limited
and Mast Industries, Inc., a wholly-owned subsidiary of The Limited. The fees
for such services were approximately $81,250 and $12,500, respectively.

EXECUTIVE COMPENSATION FOR THE LIMITED

Summary Compensation Table

The following table provides information concerning
compensation paid by The Limited to each of the named executive officers of
The Limited for each of The Limited's last three fiscal years.

Summary Compensation Table

<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
Securities
Other Restricted Underlying
Annual Stock Options All Other
Fiscal Salary Bonus(1) Compensation(2) Awards(3) Awarded Compensation
Name and Principal Position Year $ $ ($) $ # $
- --------------------------- ------ ---------- ----------- --------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Leslie H. Wexner 1997 $1,000,000 $1,861,560 -- ___ 1,600,000(4) $135,296(5)
Chairman of the
Board, Chief 1996 1,011,538 915,000 -- -- 200,000(4) 151,629(5)
Executive Officer and 100,000(6)
President 1995 1,150,000 768,315 -- -- 100,000(4) 148,436(5)
Kenneth B. Gilman(7) 1997 900,000 1,228,630 -- $6,220,313 500,000(4) 195,094(5)
Vice Chairman and 1996 903,846 603,900 -- -- 50,000(4) 187,192(5)
Chief Administra- 50,000(6)
tive Officer 1995 941,935 449,820 -- -- 25,000(4) 190,772(5)
Martin Trust 1997 700,000 868,980 -- 3,900,000 300,000(4) 216,212(5)
President and Chief 1996 703,846 1,155,700 -- 518,809 60,000(4) 203,807(5)
Executive Officer of 1995 741,650 679,455 -- 197,985 20,000(4) 154,278(5)
Mast Industries, Inc.
Arnold F. Kanarick 1997 546,154 477,800 $19,538 2,925,000 250,000(4) 99,089(5)(8)
Executive Vice 30,000(4)
President and 1996 497,308 255,500 -- 120,218 20,000(6) 79,833(5)
Chief Human
Resources Officer 1995 462,692 121,249 -- -- 15,000 (4) 75,305(5)
V. Ann Hailey(9) 1997 204,327 258,825 32,984 990,625 25,000(4) 276,099(8)(10)
Executive Vice
President and Chief
Financial Officer
</TABLE>

(1) Represents for each fiscal year the aggregate of the performance-based
incentive compensation for the Spring and Fall selling seasons.

(2) Represents amounts reimbursed for tax on relocation expenses.

(3) Represents for each executive officer the restricted stock awards for the
specified fiscal year under The Limited's 1993 Stock Option and Performance
Incentive Plan. Information set forth above is based on the closing price of
Limited Common Stock on the date on which the awards were made.

On February 1, 1998, 7,500 restricted shares of Limited Common Stock were
granted to Ms. Hailey based on business performance for the fiscal 1997
year. The per share value of the Limited Common Stock on the then most
recent prior date on which there were sales (January 30, 1998) was $26.50.
This award vests 10% on the grant date and 20%, 30%, and 40% on the first
through third anniversaries of the grant date, respectively, subject to
continued employment with The Limited.

On August 11, 1997, 35,000 restricted shares of Limited Common Stock were
granted to Ms. Hailey. The per share value of Limited Common Stock on such
date was $22.625. This award is earned subject to established financial
performance measures and, once earned, vests 100% on the fifth anniversary
of the grant date, subject to continued employment with The Limited.

On May 20, 1997, 300,000, 200,000 and 150,000 restricted shares of Limited
Common Stock were granted to executive officers Gilman, Trust and Kanarick,
respectively. The per share value of Limited Common Stock on such date was
$19.50. These awards are earned subject to established financial performance
measures and once earned, vest 10%, 10%, 10%, 15%, 20% and 35% on the first
through sixth anniversaries of the grant date, respectively, in each case
subject to the holder's continued employment with The Limited.

On March 25, 1997, 19,750 restricted shares of Limited Common Stock were
granted to Mr. Gilman. The per share value of Limited Common Stock on such
date was $18.75. This award vests 100% one year from the grant date, subject
to continued employment with The Limited.

On February 1, 1997, 21,712 and 7,020 restricted shares of Limited Common
Stock were awarded for business performance to executive officers Trust and
Kanarick, respectively. The per share value of Limited Common Stock on such
date was $17.125. On August 1, 1996 and on February 1, 1996, 7,538 and
11,820 , respectively, restricted shares of Limited Common Stock were
awarded for business performance to Mr. Trust. The per share value of
Limited Common Stock on such dates were $19.50 and $16.75, respectively. The
February 1, 1997 and August 1, 1996 awards are for fiscal 1996 business
performance and the February 1, 1996 award is for fiscal 1995 business
performance. These awards vest 10% on the grant date, and 20%, 30%, and 40%
on the first through third anniversaries of the grant date, in each case
subject to the holder's continued employment with The Limited.

Dividends will not be paid or accrue with respect to shares of restricted
stock until such shares vest.

As of January 31, 1998, the aggregate restricted Limited Common Stock
holdings and the value of such holdings for each of the named executive
officers were: Mr. Wexner, 13,000 shares, $344,500; Mr. Gilman, 326,250
shares, $8,645,625; Mr. Trust, 233,092 shares, $6,176,938; Mr. Kanarick,
185,218 shares, $4,908,277; and Ms. Hailey, 42,500 shares, $1,126,250
(includes the 7,500 restricted shares noted in the second paragraph of this
footnote) (based on the $26.50 fair market value of a share of Limited
Common Stock as of Friday, January 30, 1998).

(4) Denominated in shares of Limited Common Stock.

(5) Represents for each executive officer, the amount of employer matching and
supplemental contributions allocated to his or her account under certain of
The Limited's qualified and non-qualified defined contribution plans during
1997.

(6) Denominated in shares of Intimate Brands' Class A Common Stock.

(7) Mr. Gilman became Vice Chairman and Chief Administrative Officer on June 25,
1997. Previously, he was Vice Chairman and Chief Financial Officer.

(8) Includes reimbursement of relocation expenses above The Limited's normal
relocation policy of $7,500 for Mr. Kanarick and $26,099 for Ms. Hailey.

(9) Ms. Hailey joined The Limited on August 11, 1997 as Executive Vice President
and Chief Financial Officer; therefore, reporting numbers are for partial
year.

(10) Includes $250,000 incentive bonus paid in connection with Ms. Hailey's
commencement of employment with The Limited.

Long-Term Incentive Plan Awards.

No awards were granted in respect of the 1997 fiscal year to
the named executive officers other than the restricted stock performance
awards as disclosed in the Summary Compensation Table.

Stock Options

The following table sets forth certain information regarding
stock options granted to the executive officers named in the Summary
Compensation Table during The Limited's 1997 fiscal year.

Option Grants in Fiscal Year 1997

<TABLE>
<CAPTION>
Individual Potential Realizable
Grants (1) Value at Assumed
----------------- Annual Rates of Stock
Percent of Total Price Appreciation for
Securities Options Exercise Option Term (2)($)
Underlying Granted to Price ---------------------------
Options Associates Per Expiration
Name Granted (#)(1) in Fiscal Year Share ($) Date 5% 10%
- ---------------- -------------- ----------------- ------------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Leslie H. Wexner 1,600,000 22.01% $22.1375 (3) 07/02/07 $22,275,448 $56,450,358
Kenneth B. Gilman 500,000 6.88% 19.5000 05/21/07 6,131,723 15,538,989
Martin Trust 300,000 4.13% 19.5000 05/21/07 3,679,034 9,323,393
Arnold F. Kanarick 250,000 3.44% 19.5000 05/21/07 3,065,861 7,769,494
V. Ann Hailey 25,000 0.34% 22.6250 08/12/07 355,719 901,461

</TABLE>

- ----------

(1) On July 1, 1997, options were granted to Mr. Wexner, and, on May 20, 1997,
options were granted to executive officers Gilman, Trust and Kanarick
pursuant to The Limited's 1993 Stock Option and Performance Incentive Plan
(1997 Restatement). Such options vest 10%, 10%, 10%, 15%, 20% and 35% on the
first through sixth anniversaries of the grant date, respectively, in each
case subject to the holder's continued employment with The Limited.

On August 11, 1997, options were granted to Ms. Hailey pursuant to The
Limited's 1993 Stock Option and Performance Incentive Plan (1997
Restatement). Such options become exercisable in four equal annual
installments commencing on the first anniversary of the grant date, subject
to continued employment with The Limited.

(2) The assumed rates of growth were selected by the Commission for illustrative
purposes only and are not intended to predict or forecast future stock
prices.

(3) The per share exercise price of all such options to Mr. Wexner is set at
110% of the fair market value of the stock on the date of grant.

The following table sets forth certain information regarding
stock options exercised by the executive officers named in the Summary
Compensation Table during The Limited's 1997 fiscal year and the year-
end values of unexercised options held by such executive officers.

Aggregated Option Exercises in 1997 Fiscal Year
and Fiscal Year-End Option Values

<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired Value Options at Fiscal Year-End (#) Fiscal Year-End ($)
on Exercise Realized ---------------------------------- -------------------------------
Name (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ------------------ ------------- ------------- -------------- ----------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Leslie H. Wexner -- -- 137,500 (2) 1,812,500 (2) $1,113,750 (2) $8,471,250 (2)
25,000 (3) 75,000 (3) 93,125 (3) 279,375 (3)
Kenneth B. Gilman 31,250(4) $384,766 222,917 (2) 564,583 (2) 1,629,430 (2) 4,124,476 (2)
4,167 (3) 45,833 (3) 46,618 (3) 512,757 (3)
Martin Trust -- -- 91,750 (2) 371,250 (2) 482,500 (2) 2,792,500 (2)
Arnold F. Kanarick -- -- 76,250 (2) 288,750 (2) 389,063 (2) 2,124,688 (2)
1,667 (3) 18,333 (3) 18,650 (3) 205,100 (3)
V. Ann Hailey -- -- -- (2) 25,000 (2) -- (2) 96,875 (2)

</TABLE>

(1) Calculated on the basis of the number of shares exercised, multiplied by the
excess of the fair market value of a share of Limited Common Stock on the
date of exercise over the exercise price of such option.

(2) Denominated in shares of Limited Common Stock. Value is calculated on the
basis of the number of shares subject to each such option, multiplied by the
excess of the fair market value of a share of Limited Common Stock on the
last trading day prior to fiscal year- end ($26.50) over the exercise price
of such option.

(3) Denominated in shares of Intimate Brands' Class A Common Stock. Value is
calculated on the basis of the number of shares subject to each such option,
multiplied by the excess of the fair market value of a share of Intimate
Brands Class A Common Stock on the last trading day prior to fiscal year-end
($25.3125) over the exercise price of such option.

(4) Denominated in shares of Limited Common Stock.

Compensation of Directors.

Directors who are not associates of The Limited receive an
annual retainer of $20,000 per year (increased by $4,000 for each committee
chair held), plus a fee of $3,500 for each Board meeting attended ($1,000 for
a telephonic meeting) and, as committee members, receive $1,500 per committee
meeting attended ($500 for a telephonic meeting). Each action in writing taken
by the Board or any committee entitles each such director to be paid $500.
Associates and officers who are directors receive no additional compensation
for services rendered as directors. Under The Limited's 1996 Stock Plan for
Non-Associate Directors, each director who is not an associate of The Limited
receives (i) annual grants of options to purchase 1,000 shares of Limited
Common Stock at a price equal to the fair market value of such shares at the
date of grant and (ii) 50% of the annual retainer in shares of Limited Common
Stock.

Employment Agreements with Certain Executive Officers.

In 1997 The Limited entered into individual employment
agreements with Messrs. Gilman, Trust and Kanarick. Pursuant to these
agreements, Mr. Gilman serves as The Limited's Vice Chairman and Chief
Administrative Officer, Mr. Trust serves as President and Chief Executive
Officer of Mast Industries, Inc. and Mr. Kanarick serves as The Limited's
Executive Vice President and Chief Human Resources Officer. The initial term of
each agreement is six years, with automatic one-year extensions thereafter
unless either party gives written notice to the contrary. Mr. Gilman's agreement
provides for an initial base salary of $900,000, Mr. Trust's agreement provides
for an initial base salary of $700,000 and Mr. Kanarick's agreement provides for
an initial base salary of $550,000. Option grants and the value of performance-
based stock awards made in 1997 pursuant to the agreements are disclosed in the
Summary Compensation Table. Each agreement also provides for incentive plan
participation as determined by the Board and life insurance coverage of $5
million. Under each agreement, upon the failure of the Company to extend the
agreement or the termination of the executive's employment either by The Limited
without cause or by the executive for good reason, the executive will continue
to receive his base salary for one year after the termination date. Under the
agreements, each executive agrees not to compete with The Limited or solicit its
employees or customers during the employment term and for one year thereafter.
Each executive's agreement provides for disability benefits in addition to the
benefits available under The Limited's disability plans. In the event any
"parachute" excise tax is imposed on an executive, he will be entitled to tax
reimbursement payments.

Certain Transactions

Neither The Limited, nor any subsidiary of The Limited, nor, to
The Limited's knowledge, any of The Limited's executive officers or directors
or associates of any of the foregoing, has engaged in any transaction
involving shares of the Limited Common Stock during the period of forty
business days prior to the date hereof except for the transactions effected by
trusts created by Mr. Wexner referred to on page 22 and described in more
detail in Schedule A hereto.

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 of 1933, as
amended (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 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 102.

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" with respect to a class of stock 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. 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 directors of
The Limited and its subsidiaries (other than the directors of 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
consolidated 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 amended upon the consummation of the Exchange Offer (as
amended, the "New Services Agreement").

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, information technology services, human resources and
compensation, tax, 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 aggregate 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. In addition to the
foregoing, the New Services Agreement will include provisions binding on both
The Limited and A&F imposing confidentiality obligations with respect to
confidential information of the other and prohibiting the hiring of certain of
the other's employees.

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 three-year term,
although The Limited will cease to provide a substantial majority of the
services thereunder upon the first anniversary of the consummation of the
Exchange Offer. The New Services Agreement will also provide for early
termination of the agreement and of individual services by A&F.

Sublease Agreements

On June 11, 1995, 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. The Sublease Agreement will be amended upon the
consummation of the Exchange Offer to provide for a total term of six years
expiring June 11, 2001, so that A&F may continue to occupy such space for
approximately three 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 consolidated 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. The Shared Facilities
Agreements will not be effected by the Transactions and shall continue in
their current form.

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. Currently, 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 private letter ruling (the
"Ruling Letter") received from the Internal Revenue Service (the "IRS") with
respect to the Transactions and on the law in effect as of the date of this
Offering Circular-Prospectus. A copy of the Ruling Letter has been filed with
the SEC as an exhibit to the Registration Statement of which this Offering
Circular-Prospectus is a part. The following summary is qualified in its
entirety by reference to the Ruling Letter. Stockholders of The Limited are
urged to consult their tax advisors as to the particular tax consequences to
them of the Transactions.

The Ruling Letter provides 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 provides, in all material respects, 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 does 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 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 99.

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) audited consolidated financial statements of The
Limited for the year ended January 31, 1998 included in this Offering
Circular-Prospectus and (ii) audited consolidated financial statements of A&F
for the year ended January 31, 1998 included in this Offering
Circular-Prospectus have been included 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.

The Limited SEC Filings (File No. 1-8344) Period
- -------------------------------------------- -----------------------------
Annual Report on Form 10-K Year ended February 1, 1997
Current Report on Form 8-K Filed February 18, 1998
Proxy Statement Filed April 14, 1997

A&F SEC Filings (File No. 1-12107) Period
- -------------------------------------------- -----------------------------
Annual Report on Form 10-K Year ended February 1, 1997
Current Report on Form 8-K Filed February 18, 1998
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:

<TABLE>
<S> <C>
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 43608
Attention: Investor Relations Attention: Investor Relations
(614) 479-7000 (614) 577-6500
</TABLE>

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".......................................................20
"A&F IPO"................................................................20
"Agent's Message"........................................................31
"Anticipated Premium"....................................................27
"Book-Entry Transfer Facility"...........................................30
"Business Combination"...................................................96
"business day"...........................................................34
"Code"..................................................................100
"Continuing Director"....................................................96
"Dealer Manager"..........................................................9
"DGCL"...................................................................22
"DRP"....................................................................29
"Dutch auction"..........................................................24
"EITF"...................................................................51
"Eligible Institution"...................................................31
"Exchange Act"...........................................................26
"Exchange Agent".........................................................37
"Exchange Date"..........................................................26
"Exchange Ratio Range"...................................................24
"Exchange Ratio".........................................................24
"Exchange Time"..........................................................26
"Expiration Date"........................................................24
"Fair Price".............................................................97
"Final Exchange Ratio"...................................................24
"GATT"...................................................................74
"Goldman Sachs"..........................................................21
"HSR Act"................................................................22
"IMU"....................................................................55
"Information Agent"......................................................37
"Interested Person"......................................................96
"Intimate Brands IPO"....................................................20
"Intimate Brands"........................................................20
"IRS"...................................................................100
"LDS"....................................................................75
"Limited Common Stock"...................................................24
"Limited Self Tender"....................................................20
"Limited Store Planning".................................................75
"Mast"...................................................................74
"Maximum Exchange Ratio".................................................24
"Merchandise Marks"......................................................76
"Minimum Exchange Ratio".................................................24
"Name Mark"..............................................................76
"New Services Agreement".................................................98
"NMSI"...................................................................21
"NYSE"...................................................................27
"Old Services Agreement".................................................98
"POS"....................................................................76
"Receivables Securitization".............................................20
"Registration Statement"................................................102
"Ruling Letter".........................................................100
"Schedule 13E-4"........................................................102
"Securities Act".........................................................95
"SEC"....................................................................10
"Shared Facilities Agreements"...........................................98
"Soliciting Dealer"......................................................37
"Special Delivery Instructions"..........................................31
"Special Issuance Instructions"..........................................31
"Spin-Off"...............................................................38
"Sublease Agreement".....................................................98
"Substantial Part".......................................................96
"Tax Disaffiliation Agreement"...........................................99
"Tax-Sharing Agreement"..................................................99
"Transactions"...........................................................17
"Trigger Amount".........................................................25
"WCAS"...................................................................20
"WFN Sale"...............................................................20
"WFN"....................................................................20

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS OF THE LIMITED

Report of Independent Accountants.......................................F(L)-2
Consolidated Statements of Income.......................................F(L)-3
Consolidated Balance Sheets.............................................F(L)-4
Consolidated Statements of Shareholders' Equity.........................F(L)-5
Consolidated Statements of Cash Flows...................................F(L)-6
Notes to Consolidated Financial Statements..............................F(L)-7

[Letterhead of Coopers & Lybrand L.L.P.]

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of The Limited, Inc.

We have audited the accompanying consolidated balance sheets of The Limited,
Inc. and subsidiaries as of January 31, 1998 and February 1, 1997, and the
related consolidated statements of income, shareholders' equity, and cash
flows for each of the three fiscal years in the period ended January 31, 1998.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of The Limited,
Inc. and subsidiaries as of January 31, 1998 and February 1, 1997 and the
consolidated results of their operations and their cash flows for each of the
three fiscal years in the period ended January 31, 1998, in conformity with
generally accepted accounting principles.

/s/ Coopers & Lybrand L.L.P.

Coopers & Lybrand L.L.P.
Columbus, Ohio
February 20, 1998

THE LIMITED, INC.

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
1997 1996 1995
------------- ------------ --------------
(in thousands except per share amounts)

NET SALES.................................................. $ 9,188,804 $ 8,644,791 $ 7,881,437

Costs of Goods Sold, Occupancy and Buying Costs........... (6,370,827) (6,148,212) (5,793,905)
------------ ------------- -------------

GROSS INCOME............................................... 2,817,977 2,496,579 2,087,532

General, Administrative and Store Operating Expenses...... (2,124,663) (1,848,512) (1,475,497)

Special and Nonrecurring Items, Net....................... (213,215) (12,000) 1,314
------------ ------------- -------------

OPERATING INCOME........................................... 480,099 636,067 613,349

Interest Expense.......................................... (68,728) (75,363) (77,537)

Other Income, Net......................................... 36,886 41,972 21,606

Minority Interest......................................... (56,473) (45,646) (22,374)

Gain in Connection with Initial Public Offerings.......... 8,606 118,178 649,467
------------ ------------- -------------

INCOME BEFORE INCOME TAXES................................. 400,390 675,208 1,184,511
------------ ------------- -------------

Provision for Income Taxes................................ 183,000 241,000 223,000
------------ ------------- -------------

NET INCOME................................................. $217,390 $434,208 $961,511
============ ============= =============

NET INCOME PER SHARE:

BASIC..................................................... $ .80 $ 1.55 $ 2.69
============ ============= =============

DILUTED................................................... $ .79 $ 1.54 $ 2.68
============ ============= =============
</TABLE>

THE LIMITED, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
January 31, February 1,
1998 1997
----------- -------------
(in thousands)
<S> <C> <C>
ASSETS

CURRENT ASSETS:
Cash and Equivalents....................... $746,395 $312,796
Accounts Receivable........................ 83,370 69,337
Inventories................................ 1,002,710 1,007,303
Store Supplies............................. 99,167 90,400
Other...................................... 99,509 65,261
---------- ----------
TOTAL CURRENT ASSETS........................ 2,031,151 1,545,097

PROPERTY AND EQUIPMENT, NET................. 1,519,908 1,828,869
RESTRICTED CASH............................. 351,600 351,600
DEFERRED INCOME TAXES....................... 56,586 --
OTHER ASSETS................................ 341,516 394,436
---------- ----------

TOTAL ASSETS................................ $4,300,761 $4,120,002
========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts Payable........................... $300,703 $307,841
Accrued Expenses........................... 676,715 481,744
Income Taxes............................... 115,994 117,308
---------- ----------
TOTAL CURRENT LIABILITIES................... 1,093,412 906,893

LONG-TERM DEBT.............................. 650,000 650,000
DEFERRED INCOME TAXES....................... -- 169,932
OTHER LONG-TERM LIABILITIES................. 58,720 51,659
MINORITY INTEREST........................... 102,072 67,336
CONTINGENT STOCK REDEMPTION AGREEMENT....... 351,600 351,600

Shareholders' Equity:
Common Stock............................... 180,352 180,352
Paid-In Capital............................ 148,018 142,860
Retained Earnings.......................... 3,613,174 3,526,256
---------- ----------
3,941,544 3,849,468

Less: Treasury Stock, at Cost.............. (1,896,587) (1,926,886)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY.................. 2,044,957 1,922,582
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.. $4,300,761 $4,120,002
========== ==========
</TABLE>

THE LIMITED, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
Common Stock
------------------------- Total
Shares Par Paid-In Retained Treasury Stock, Shareholders'
Outstanding Value Capital Earnings at Cost Equity
----------- ------- --------- ----------- --------------- --------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>

Balance, January 28, 1995............ 357,604 $189,727 $132,938 $2,716,516 $(278,225) $2,760,956
Net Income........................... -- -- -- 961,511 -- 961,511
Cash Dividends....................... -- -- -- (143,091) -- (143,091)
Purchase of Treasury Stock........... (3,361) -- -- -- (55,239) (55,239)
Common Shares Subject to
Contingent Stock Redemption
Agreement........................... -- (9,375) (7,639) (334,586) -- (351,600)
Stock Issued for Acquisition......... 730 -- 7,769 -- 8,231 16,000
Exercise of Stock Options and Other.. 393 -- 4,066 -- 8,438 12,504
------- -------- -------- ---------- ----------- ----------
Balance, February 3, 1996............ 355,366 $180,352 $137,134 $3,200,350 $(316,795) $3,201,041
Net Income........................... -- -- -- 434,208 -- 434,208
Cash Dividends....................... -- -- -- (108,302) -- (108,302)
Purchase of Treasury Stock........... (85,000) -- -- -- (1,615,000) (1,615,000)
Exercise of Stock Options and Other.. 705 -- 5,726 -- 4,909 10,635
------- -------- -------- ---------- ----------- ----------
Balance, February 1, 1997............ 271,071 $180,352 $142,860 $3,526,256 $(1,926,886) $1,922,582
Net Income........................... -- -- -- 217,390 -- 217,390
Cash Dividends....................... -- -- -- (130,472) -- (130,472)
Exercise of Stock Options and Other.. 1,729 -- 5,158 -- 30,299 35,457
------- -------- -------- ---------- ----------- ----------
Balance, January 31, 1998............ 272,800 $180,352 $148,018 $3,613,174 $(1,896,587) $2,044,957
======= ======== ======== ========== =========== ==========
</TABLE>

The accompanying notes are an integral part of these
Consolidated Financial Statements.

THE LIMITED, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
1997 1996 1995
--------- ---------- -----------
(in thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income.................................................... $217,390 $434,208 $961,511
Impact of Other Operating Activities on Cash Flows:
Depreciation and Amortization............................... 313,292 289,643 285,889
Special and Nonrecurring Items, Net......................... 128,215 7,200 (1,314)
Minority Interest, Net of Dividends Paid.................... 34,736 21,637 17,250
Gain in Connection with Initial Public Offerings, Net....... (5,606) (118,178) (649,467)
Change in Assets and Liabilities:
Accounts Receivable....................................... (14,033) 8,179 (104,121)
Inventories............................................... (5,407) (48,350) (70,813)
Accounts Payable and Accrued Expenses..................... 81,833 116,599 50,883
Income Taxes.............................................. (145,832) (5,915) (132,560)
Other Assets and Liabilities.............................. (14,607) 7,046 (16,526)
-------- -------- ----------

NET CASH PROVIDED BY OPERATING ACTIVITIES...................... 589,981 712,069 340,732
-------- -------- ----------
INVESTING ACTIVITIES:
Capital Expenditures.......................................... (404,602) (409,260) (374,374)
Proceeds from Sale of Property and Related Interests.......... 234,976 -- --
Net Proceeds from Partial Sale of Interest in Investee........ 108,259 -- --
Businesses Acquired........................................... -- (41,255) (2,000)
Increase in Restricted Cash................................... -- -- (351,600)
Proceeds from Credit Card Securitization...................... -- -- 1,212,630
-------- -------- ----------
NET CASH PROVIDED BY (USED FOR) INVESTING
ACTIVITIES.................................................... (61,367) (450,515) 484,656
-------- -------- ----------
FINANCING ACTIVITIES:
Net Repayments of Commercial Paper Borrowings and
Certificates of Deposit..................................... -- -- (25,200)
Proceeds from Short-Term Borrowings........................... -- 150,000 250,000
Repayment of Short-Term Borrowings............................ -- (150,000) (250,000)
Net Proceeds from Issuance and Sale of Subsidiary
Stock....................................................... -- 118,178 788,589
Dividends Paid................................................ (130,472) (108,302) (143,091)
Purchase of Treasury Stock.................................... -- (1,615,000) (55,239)
Stock Options and Other....................................... 35,457 10,635 12,504
-------- -------- ----------
NET CASH PROVIDED BY (USED FOR) FINANCING
ACTIVITIES..................................................... (95,015) (1,594,489) 577,563
-------- -------- ----------
NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS................................................... 433,599 (1,332,935) 1,402,951
Cash and Equivalents, Beginning of Year........................ 312,796 1,645,731 242,780
-------- -------- ----------
CASH AND EQUIVALENTS, END OF YEAR.............................. $746,395 $312,796 $1,645,731
======== ======== ==========
</TABLE>

Noncash investing activities included $2.2 million in 1997 and $16 million in
1995 for stock issued in connection with the acquisition of Galyan's

The accompanying notes are an integral part of these
Consolidated Financial Statements.

THE LIMITED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of The Limited,
Inc. (the "Company") and all significant subsidiaries that are more than
50% owned and controlled. All significant intercompany balances and
transactions have been eliminated in consolidation.

Investments in other entities (including joint ventures) where the Company
has the ability to significantly influence operating and financial policies
are accounted for on the equity method.

Fiscal Year

The Company's fiscal year ends on the Saturday closest to January 31.
Fiscal years are designated in the financial statements and notes by the
calendar year in which the fiscal year commences. The results for fiscal
years 1997 and 1996 represent the 52-week periods ended January 31, 1998 and
February 1, 1997. The results for fiscal year 1995 represent the 53-week
period ended February 3, 1996.

Cash and Equivalents

Cash and equivalents include amounts on deposit with financial institutions
and money-market investments with maturities of less than 90 days.

Inventories

Inventories are principally valued at the lower of average cost or market,
on a first-in first-out basis, utilizing the retail method.

Store Supplies

The initial inventory of supplies for new stores including, but not limited
to, hangers, signage, security tags and point-of-sale supplies are
capitalized at the store opening date. Subsequent shipments are expensed,
except for new merchandise presentation programs, which are capitalized.

Property and Equipment

Depreciation and amortization of property and equipment are computed for
financial reporting purposes on a straight-line basis, using service lives
ranging principally from 10-30 years for buildings and improvements and
3-10 years for other property and equipment. The cost of assets sold or
retired and the related accumulated depreciation or amortization are
removed from the accounts with any resulting gain or loss included in net
income. Maintenance and repairs are charged to expense as incurred. Major
renewals and betterments that extend service lives are capitalized.
Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that full recoverability is questionable. Factors
used in the valuation include, but are not limited to, management's plans
for future operations, brand initiatives, recent operating results and
projected cash flows.

Goodwill Amortization

Goodwill represents the excess of the purchase price over the fair value of
the net assets of acquired companies and is amortized on a straight-line
basis, principally over 30 years.

Catalogue Costs and Advertising

Catalogue costs, primarily consisting of catalogue production and mailing
costs, are amortized over the expected future revenue stream, which is
principally from three to six months from the date catalogues are mailed.
All other advertising costs are expensed at the time the promotion first
appears in media or in the store. Catalogue and advertising costs amounted
to $275 million, $242 million and $237 million in 1997, 1996 and 1995.

Interest Rate Swap Agreements

The difference between the amount of interest to be paid and the amount of
interest to be received under interest rate swap agreements due to changing
interest rates is charged or credited to interest expense over the life of
the swap agreement. Gains and losses from the disposition of swap
agreements are deferred and amortized over the term of the related
agreements.

Income Taxes

The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes," which requires the use of the liability method. Under this method,
deferred tax assets and liabilities are recognized based on the difference
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates in effect in the years in
which those temporary differences are expected to reverse. Under SFAS No.
109, the effect on deferred taxes of a change in tax rates is recognized in
income in the period that includes the enactment date.

Shareholders' Equity

Five hundred million shares of $.50 par value common stock are authorized,
of which 272.8 million shares and 271.1 million shares were outstanding,
net of 106.7 million shares and 108.4 million shares held in treasury at
January 31, 1998 and February 1, 1997. Ten million shares of $1.00 par
value preferred stock are authorized, none of which have been issued.

On March 17, 1996, the Company completed the repurchase of 85 million
shares of its common stock under a self-tender offer at $19.00 per share.
Approximately $1.615 billion was paid in exchange for the outstanding
shares which was funded with funds made available from a series of
transactions that included: 1) the initial public offering of a 16.9%
interest in Intimate Brands, Inc. ("IBI"); 2) the securitization of World
Financial Network National Bank ("WFNNB") credit card receivables; and 3)
the sale of a 60% interest in WFNNB.

Revenue Recognition

Sales are recorded upon purchase by customers. A reserve is provided equal
to the gross profit on projected catalogue merchandise returns, based on
prior experience.

Earnings per Share

Net income per share is computed in accordance with SFAS No. 128, "Earnings
Per Share," which the Company adopted in the fourth quarter of 1997.
Earnings per basic share are computed based on the weighted average number
of outstanding common shares. Earnings per diluted share include the
weighted average effect of dilutive options and restricted stock.

Weighted Average Common Shares Outstanding:

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(in thousands)
<S> <C> <C> <C>
Common Shares Issued................... 379,454 379,454 379,454
Treasury Shares........................ (107,556) (98,755) (21,862)
-------- ------- -------
Basic Shares........................... 271,898 280,699 357,592

Dilutive Effect of Options and
Restricted Shares.................... 2,585 1,354 779
-------- ------- -------
Diluted Shares......................... 274,483 282,053 358,371
======= ======= =======
</TABLE>

Options to purchase .7 million, 5.9 million and 7.9 million shares of
common stock were outstanding at year-end 1997, 1996 and 1995, but were not
included in the computation of earnings per diluted share because the
options' exercise price was greater than the average market price of the
common shares. Exercise of the 18.75 million shares subject to the
Contingent Stock Redemption Agreement (see Notes 6 and 10) was determined
not to dilute earnings per share.

Subsequent to January 31, 1998, the Company announced an exchange offer for
Abercrombie & Fitch Co. ("A&F") shares that, if consummated, would result
in a substantial decrease in total common shares outstanding (see Note 14).

Gains in Connection with Initial Public Offerings

Gains in connection with initial public offerings are recognized in the
current year's income. During the first quarter of 1997, the Company
recognized a pretax gain of $8.6 million in connection with the initial
public offering ("IPO") of Brylane, Inc., a 26% owned (post-IPO) catalogue
retailer. In 1996, the Company recognized a $118.2 million gain in
connection with the IPO of a 15.8% interest (8.05 million shares) of A&F.
In 1995, the Company recognized a $649.5 million gain in connection with
the IPO of a 16.9% interest (42.7 million shares) of IBI. IBI consists of
the Victoria's Secret Stores, Victoria's Secret Catalogue, Bath & Body
Works and Gryphon businesses. The IPO gains recorded by the Company in
1996 and 1995 were not subject to income tax.

Minority interest of $102.1 million at January 31, 1998 represents a 16.9%
interest in the net equity of IBI and a 15.8% interest in the net equity of
A&F.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Since actual results may differ
from those estimates, the Company revises its estimates and assumptions as
new information becomes available.

Reclassifications

Certain amounts on previously reported financial statement captions have
been reclassified to conform with current year presentation.

2. Special and Nonrecurring Items

As a result of an ongoing review of the Company's retail businesses and
investments as well as implementation of initiatives intended to promote
and strengthen The Limited's various retail brands (including closing
businesses, identification and disposal of non-core assets and
identification of store locations not consistent with the image of a
particular brand), the Company recognized special and nonrecurring charges
of $276 million during the fourth quarter of 1997 comprised of: 1) a $68
million charge for the closing of the 118 store Cacique lingerie business
effective January 31, 1998. The amount includes noncash charges
approximating $30 million comprised principally of write-offs and
liquidations of store assets. Charges approximating $38 million related to
cancellations of merchandise on order and other exit costs such as
severance, service contract termination fees and lease termination costs
have been accrued. Other than contractual obligations of approximately $5
million, the accrued costs are expected to be paid in fiscal year 1998; 2)
an $82 million charge related to streamlining the Henri Bendel business
from six stores to one store by September 1, 1998. The amount includes
approximately $26 million of noncash charges related primarily to
write-offs of store assets. Charges of $56 million related primarily to
contract cancellations and lease termination costs have been accrued. Other
than contractual obligations of approximately $18 million, the accrued
costs are expected to be paid in 1998. Termination costs related to Henri
Bendel closings will be recognized in first quarter 1998 when the employees
are notified; 3) $86 million of impaired asset charges, related principally
to the women's apparel businesses, covering certain store locations where
the carrying values are permanently impaired; and 4) a $28 million
provision for closing and downsizing approximately 80 oversized stores,
primarily within the Limited, Lerner New York, Lane Bryant and Express
women's businesses and a $12 million write-down to net realizable value of a
real estate investment previously acquired in connection with closing and
downsizing certain stores. The $28 million charge includes approximately
$13 million of noncash charges related to write-offs of store assets.
Approximately $15 million related to lease termination costs have been
accrued. Other than contractual obligations of approximately $7 million,
the accrued costs are expected to be paid within 18 months.

Additionally, the Company recognized a $13 million cost of sales charge in
the fourth quarter for inventory liquidation at Henri Bendel. The after-tax
cash impact of these charges is estimated to be approximately $30 million.
The Company anticipates recognizing charges for severance and other associate
termination costs for Henri Bendel in the first quarter of 1998 at the time
the associates are notified. Additionally, the Company recognized a $75.3
million pretax gain during the third quarter of 1997 in connection with the
sale of 2.4 million shares of Brylane, which is carried on the equity method,
for approximately $46 per share generating cash proceeds of $108 million.
This sale represented approximately one-half of its investment in Brylane.
This gain was partially offset by valuation adjustments of $12.5 million on
certain assets where the carrying values were permanently impaired. On
February 20, 1998, The Limited entered into an agreement with Pinault
Printemps- Radoute to sell its remaining 2.6 million shares of Brylane for
$51 per share, estimated to generate cash proceeds of $131 million. The
transaction is expected to close April 1998.

The $86 million impaired asset charge was in accordance with SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of." As a result of the Company's strategic review
process including the implementation of brand initiatives within individual
businesses, updated analyses were prepared to determine if there was
impairment of any long-lived assets. The revised carrying values of these
assets were calculated on the basis of discounted cash flows. The impaired
asset charge had no impact on the Company's 1997 or future cash flows. As a
result of this charge, depreciation and amortization expense related to
these assets will decrease in future periods.

In 1996, the Company recorded a $12 million pretax, special and
nonrecurring charge in connection with the April 1997 sale of Penhaligon's,
a U.K.-based subsidiary of IBI.

In the fourth quarter of 1995, the Company recognized a $73.2 million
pretax gain in connection with the sale of a 60% interest in the Company's
wholly-owned credit card bank, WFNNB. In addition, the Company recognized
a special and nonrecurring charge during the fourth quarter of 1995 of
approximately $71.9 million. Of this amount, $25.8 million was provided
for the closing of 26 stores and $19.8 million was provided for the
downsizing of 33 stores, primarily at Limited and Lerner New York. The
remaining charge of approximately $26.3 million represented the write-down
to market or net realizable value of certain assets arising from
nonoperating activities. The net pretax gain from these special and
nonrecurring items was $1.3 million.

3. Accounts Receivable

As discussed in Note 2, the sale of a 60% interest in WFNNB was completed
in the fourth quarter of 1995 and WFNNB's outstanding debt to the Company
of approximately $1.2 billion was repaid. Finance charge revenue on the
deferred payment accounts amounted to $235.6 million in 1995 and the
provision for uncollectible accounts amounted to $91.4 million in 1995.
These amounts are classified as components of the cost to administer the
deferred payment program and are included in the Company's general,
administrative and store operating expenses for that year.

4. Property and Equipment

Property and equipment, at cost, consisted of:

<TABLE>
<CAPTION>
1997 1996
---- ----
(thousands)
<S> <C> <C>
Land, Buildings and Improvements................. $394,885 $530,259
Furniture, Fixtures and Equipment................ 1,951,172 1,929,951
Leaseholds and Improvements...................... 539,047 641,200
Construction in Progress......................... 219,508 188,834
--------- ---------
Total............................................ 3,104,612 3,290,244
Less: Accumulated Depreciation and Amortization. 1,584,704 1,461,375
--------- ---------
Property and Equipment, Net...................... $1,519,908 $1,828,869
========== ==========
</TABLE>

5. Leased Facilities and Commitments

A summary of rent expense for 1997, 1996 and 1995 follows:

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(thousands)
<S> <C> <C> <C>
Fixed Minimum............ $721,283 $689,319 $643,200
Contingent............... 26,630 23,117 18,812
------- ------- -------
Total Store Rent......... 747,913 712,436 662,012
Equipment and Other...... 23,492 25,163 26,101
------- ------- -------
Total Rent Expense....... $771,405 $737,599 $688,113
======== ======== ========
</TABLE>

At January 31, 1998, the Company was committed to noncancelable leases with
remaining terms generally from one to twenty years. A substantial portion
of these commitments are store leases with initial terms ranging from ten
to twenty years, with options to renew at varying terms.

A summary of minimum rent commitments under noncancelable
leases follows (thousands):

1998.................................. $731,233
1999.................................. 712,804
2000.................................. 688,317
2001.................................. 645,229
2002.................................. 595,377
Thereafter............................ 2,062,453

6. Restricted Cash

At January 31, 1998, Special Funding, Inc., a wholly-owned subsidiary of
the Company, had $351.6 million of restricted cash invested in short-term,
highly liquid securities. This amount is classified as a noncurrent asset,
since it has been reserved for use in the event that The Wexner Children's
Trust, established by Leslie H. Wexner, the Company's principal
shareholder, exercises its opportunity to require the Company to redeem, or
the Company exercises its opportunity to redeem from the Trust, shares of
The Limited, Inc. common stock in accordance with the terms of the
Contingent Stock Redemption Agreement (see Note 10). Interest earnings of
$18.6 million and $17.9 million in 1997 and 1996 on the segregated cash
accrued to the Company.

7. Accrued Expenses

Accrued expenses consisted of:

<TABLE>
<CAPTION>
1997 1996
---- ----
(thousands)
<S> <C> <C>
Compensation, Payroll Taxes and Benefits..... $135,701 $100,526
Rent......................................... 152,850 123,421
Taxes, Other than Income..................... 42,321 47,297
Interest..................................... 21,129 21,510
Store Closings............................... 86,803 3,509
Other........................................ 237,911 185,481
------- -------
Total........................................ $676,715 $481,744
======== ========
</TABLE>

8. Long-Term Debt

Unsecured long-term debt consisted of:

<TABLE>
<CAPTION>
1997 1996
---- ----
(thousands)
<S> <C> <C>

7 1/2% Debentures due March 2023........ $250,000 $250,000
7 4/5% Notes due May 2002............... 150,000 150,000
9 1/8% Notes due February 2001.......... 150,000 150,000
8 7/8% Notes due August 1999............ 100,000 100,000
- - - - ----- ------- -------
Total................................... $650,000 $650,000
======== ========
</TABLE>

The Company maintains a $1 billion unsecured credit agreement (the
"Agreement"), established on September 29, 1997 (the "Effective Date").
Borrowings outstanding under the Agreement are due September 28, 2002.
However, the revolving term of the Agreement may be extended an additional
two years upon notification by the Company on the second and fourth
anniversaries of the Effective Date, subject to the approval of the lending
banks. The Agreement has several borrowing options, including interest rates
which are based on either the lender's "Base Rate," as defined, LIBOR, CD-
based options or at a rate submitted under a bidding process. Facilities fees
payable under the Agreement are based on the Company's long-term credit
ratings, and currently approximate .1% of the committed amount per annum. The
Agreement contains covenants relating to the Company's working capital, debt
and net worth. No amounts were outstanding under the Agreement at January 31,
1998.

The Agreement supports the Company's commercial paper program which is used
from time to time to fund working capital and other general corporate
requirements. No commercial paper was outstanding at January 31, 1998.

Up to $250 million of debt securities and warrants to purchase debt
securities may be issued under the Company's shelf registration statement.

The Company periodically enters into interest rate swap agreements with the
intent to manage interest rate exposure. At January 31, 1998, the Company
had an interest rate swap position of $100 million notional principal
amount outstanding. This contract effectively changed the Company's
interest rate exposure on $100 million of variable rate debt to a fixed
rate of 8.09% through July 2000.

Long-term debt maturities within the next five years consist of $100
million which matures August 15, 1999, $150 million which matures February
1, 2001 and $150 million which matures May 15, 2002. Interest paid
approximated $69.1 million, $65.5 million and $88.4 million in 1997, 1996
and 1995.

9. Income Taxes

The provisions for income taxes consisted of:

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(thousands)
<S> <C> <C> <C>
Currently Payable
Federal............ $304,300 $210,400 $190,900
State.............. 33,800 34,000 24,700
Foreign............ 3,700 2,400 4,500
------- ------- -------
Total................. 341,800 246,800 220,100
------- ------- -------

Deferred
Federal............ (156,600) (13,800) (9,400)
State.............. (2,200) 8,000 12,300
------- ------- -------
Total................. (158,800) (5,800) 2,900
------- ------- -------

Total Provision....... $183,000 $241,000 $223,000
======== ======== ========
</TABLE>

The foreign component of pretax income, arising principally from overseas
sourcing operations, was $62.3 million, $45.9 million and $60.8 million in
1997, 1996 and 1995.

A reconciliation between the statutory Federal income tax rate and the
effective income tax rate on pretax earnings excluding the nontaxable gains
from sales of subsidiary stock in 1996 and 1995 and minority interest
follows:

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Federal Income Tax Rate.............. 35.0% 35.0% 35.0%
State Income Tax, Net of Federal
Income Tax Effect.................. 4.5% 4.5% 4.5%
Other Items, Net..................... .6% .5% .7%
---- ---- ----
Total................................ 40.1% 40.0% 40.2%
==== ==== ====
</TABLE>

Income taxes payable included net current deferred tax assets of $63.1
million and $.3 million at January 31, 1998 and February 1, 1997.

<TABLE>
<CAPTION>
1997 1996
---------------------------------------- ------------------------------------------
Assets Liabilities Total Assets Liabilities Total
------ ----------- ----- ------ ----------- -----
(thousands)
<S> <C> <C> <C> <C> <C> <C>
Excess of Tax Over Book
Depreciation................. -- $(1,400) $(1,400) -- $(20,000) $(20,000)

Undistributed Earnings of
Foreign Affiliates........... -- (102,400) (102,400) -- (116,600) (116,600)

Special and Nonrecurring
Items........................ $99,200 -- 99,200 $24,100 -- 24,100

Rent.......................... 62,100 -- 62,100 -- (17,500) (17,500)

Inventory..................... 43,700 -- 43,700 40,000 -- 40,000

Investments in Affiliates..... -- (24,900) (24,900) -- (54,000) (54,000)

State Income Taxes............ 24,900 -- 24,900 9,600 -- 9,600

Other......................... 18,500 -- 18,500 -- (35,300) (35,300)
-------- --------- -------- ------- --------- ---------
Total Deferred Income Taxes... $248,400 $(128,700) $119,700 $73,700 $(243,400) $(169,700)
======== ========= ======== ======= ========= =========
</TABLE>

Income tax payments approximated $410.8 million, $233.8 million and $306.1
million for 1997, 1996 and 1995.

The Internal Revenue Service has assessed the Company for additional taxes
and interest for the years 1992-1994 relating to the treatment of
transactions involving the Company's foreign operations for which the
Company has provided deferred taxes on the undistributed earnings of
foreign affiliates. The Company strongly disagrees with the assessment and
is vigorously contesting the matter. Management believes resolution of this
matter will not have a material adverse effect on the Company's results of
operations or financial condition.

10. Contingent Stock Redemption Agreement

In connection with the reconfiguration of its business, the Company
purchased from shareholders via a self-tender offer, 85 million shares of
The Limited, Inc. common stock for approximately $1.615 billion on March
17, 1996. Leslie H. Wexner, Chairman and CEO of the Company, as well as the
Company's founder and principal shareholder, did not participate in the
self-tender. However, the Company entered into an agreement, as amended in
1996, which provides The Wexner Children's Trust the opportunity,
commencing on February 1, 1998, and for a period of eight years thereafter
(the exercise period), to require the Company to redeem up to 18.75 million
shares for a price per share equal to $18.75 (a price equal to the price
per share paid in the self-tender less $.25 per share). Under certain
circumstances, lenders to the Trust, if any, may exercise this opportunity,
beginning February 1, 1997. The Company received the opportunity to redeem
an equivalent number of shares from the Trust at $25.07 per share for a
period beginning on July 31, 2006, and for six months thereafter. As a
result of these events, the Company has transferred $351.6 million to
temporary equity identified as Contingent Stock Redemption Agreement in the
Consolidated Balance Sheets. In addition, approximately $351.6 million has
been designated as restricted cash to consummate either of the above rights
(see Note 6). The terms of this agreement were approved by the Company's
Board of Directors.

11. Stock Options and Restricted Stock

Under the Company's stock plans, associates may be granted up to a total of
17.3 million restricted shares and options to purchase the Company's common
stock at the market price on the date of grant. In 1997, the Company
granted approximately 5.6 million options with a graduated vesting schedule
over six years. The remaining options generally vest 25% per year over the
first four years of the grant. Virtually all options have a maximum term
of ten years.

Under separate stock plans, up to 17.5 million IBI shares and 3.5 million
A&F shares are available to grant restricted shares and options to IBI and
A&F associates. As of January 31, 1998, options to purchase 4.3 million
IBI shares and 1.9 million A&F shares were outstanding, of which 418,000 IBI
options and 35,000 A&F options were exercisable. Under these plans,
options generally vest over periods from four to six years.

The Company adopted the disclosure requirements of SFAS No. 123,
"Accounting for Stock-Based Compensation," effective with the 1996
financial statements, but elected to continue to measure compensation
expense in accordance with APB Opinion No. 25, "Accounting for Stock Issued
to Employees." Accordingly, no compensation expense for stock options has
been recognized. If compensation expense had been determined based on the
estimated fair value of options granted since 1995, consistent with the
methodology in SFAS No. 123, the pro forma effect on net income and
earnings per diluted share, including the impact of options issued by IBI
and A&F, would have been a reduction of approximately $11.4 million or $.04
per share in 1997 and $4.0 million or $.01 per share in 1996. The
weighted-average per share fair value of options granted ($5.79, $4.72 and
$5.48 during 1997, 1996 and 1995) was estimated using the Black-Scholes
option-pricing model with the following weighted-average assumptions for
1997, 1996 and 1995: dividend yields of 2.8%; volatility of 27%, 31% and
31%; risk-free interest rates of 6%, 5.25% and 7%; assumed forfeiture rates
of 15%, 20% and 20%; and expected lives of 6.5 years, 5 years and 5 years.
The pro forma effect on net income for 1997 and 1996 is not representative
of the pro forma effect on net income in future years because it does not
take into consideration pro forma compensation expense related to grants
made prior to 1995.

Approximately 2,120,000, 468,000 and 569,000 restricted Limited shares were
granted in 1997, 1996 and 1995, with market values at date of grant of
$43.9 million, $8.3 million and $10.0 million. Included in the 1997 grants
were 1.7 million restricted shares, of which 685,000 had performance
requirements, with a graduated vesting schedule over six years. The
remaining restricted shares generally vest either on a graduated scale over
four years or 100% at the end of a fixed vesting period, principally five
years. Additionally, IBI granted 1,442,000, 169,000 and 357,000 restricted
shares in 1997, 1996 and 1995 and A&F granted 540,000 and 50,000 restricted
shares in 1997 and 1996. Vesting terms for the IBI and A&F restricted
shares are similar to those of The Limited. The market value of restricted
shares, subject to adjustment at measurement date for the performance
awards, is being amortized as compensation expense over the vesting period,
generally four to six years. Compensation expense related to restricted
stock awards, including expense related to awards granted at IBI and A&F,
amounted to $29.0 million in 1997 and $9.1 million in both 1996 and 1995.

The following table summarizes information about stock options
outstanding at January 31, 1998:

<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- ------------------------------------------------------------------------------------- ------------------------------------------
Number Weighted Average Number
Range of Exercise Outstanding at Remaining Weighted Average Exercisable at Weighted Average
Prices 1/31/98 Contractual Life Exercise Price 1/31/98 Exercisable Price
- -------------------- ---------------- ---------------- ---------------- --------------- -------------------
<S> <C> <C> <C> <C> <C>
$15 - $16 1,350,000 6.1 $16 618,000 $16
$17 - $18 2,827,000 7.3 $17 1,227,000 $17
$19 - $21 5,658,000 7.9 $20 1,651,000 $21
$22 - $27 2,646,000 7.9 $23 773,000 $24
$9 - $31 1,589,000 7.5 $20 638,000 $20
--- --- ---------- --- --- --------- ---
$9 - $31 14,070,000 7.5 $20 4,907,000 $20
=== === ========== === === ========= ===
</TABLE>

A summary of option activity for 1995, 1996 and 1997 follows:

<TABLE>
<CAPTION>
Weighted
Number of Average Option
Shares Price Per Share
---------- ---------------
<S> <C> <C>
1995
Outstanding at Beginning of Year... 8,414,000 $19.56
Granted............................ 2,196,000 17.81
Exercised.......................... (280,000) 12.43
Canceled........................... (1,188,000) 19.90
---------- -----
Outstanding at End of Year......... 9,142,000 $19.32
========= ======
Options Exercisable at Year-End.... 4,800,000 $19.62
========= ======

1996
Outstanding at Beginning of Year... 9,142,000 $19.32
Granted............................ 1,899,000 17.30
Exercised.......................... (531,000) 14.89
Canceled........................... (1,311,000) 19.45
---------- -----
Outstanding at End of Year......... 9,199,000 $19.14
========= ======
Options Exercisable at Year-End.... 5,249,000 $20.24
========= ======

1997
Outstanding at Beginning of Year... 9,199,000 $19.14
Granted............................ 7,331,000 20.02
Exercised.......................... (1,377,000) 17.70
Canceled........................... (1,083,000) 19.64
---------- -----
Outstanding at End of Year......... 14,070,000 $19.70
========== ======
Options Exercisable at Year-End.... 4,907,000 $19.89
========== ======
</TABLE>

12. Retirement Benefits

The Company sponsors a qualified defined contribution retirement plan and a
nonqualified supplemental retirement plan. Participation in the qualified
plan is available to all associates who have completed 1,000 or more hours
of service with the Company during certain 12-month periods and attained
the age of 21. Participation in the nonqualified plan is subject to service
and compensation requirements. Company contributions to these plans are
based on a percentage of associates' eligible annual compensation. The cost
of these plans was $36.4 million in 1997, $36.2 million in 1996 and $33.3
million in 1995.

13. Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to
estimate that value.

Current Assets, Current Liabilities and Restricted Cash

The carrying value of cash equivalents, restricted cash, accounts payable
and accrued expenses approximates fair value because of their short
maturity.

Long-Term Debt

Interest Rate Swap Agreement

The fair value of the interest rate swap is the estimated amount that the
Company would receive or pay to terminate the swap agreement at the
reporting date, taking into account current interest rates and the current
creditworthiness of the swap counterparty.

The estimated fair values of the Company's financial instruments are as
follows:

<TABLE>
<CAPTION>
1997 1996
------------------------------------ ------------------------------
Fair Fair
Carrying Amount Value Carrying Amount Value
------------------- ------------- ---------------- --------
(thousands)
<S> <C> <C> <C> <C>

Long-Term Debt.............. $(650,000) $(667,391) $(650,000) $(638,798)

Interest Rate Swaps......... $(328) $(5,345) $(351) $(5,267)
</TABLE>

14. Subsequent Event--Registration Statement for A&F Exchange Offer

On February 17, 1998, a registration statement was filed with the
Securities and Exchange Commission in connection with a plan to establish
A&F as a fully independent company via a tax-free exchange offer pursuant
to which The Limited shareholders will be given an opportunity to tender
some or all of their shares of The Limited in return for shares of A&F.
The transaction is subject to certain customary conditions.

15. Quarterly Financial Data (Unaudited)

Summarized quarterly financial results for 1997 and 1996 follow:

<TABLE>
<CAPTION>
First Second Third Fourth
----- ------ ----- ------
(thousands except per share amounts)
<S> <C> <C> <C> <C>
1997 Quarter
Net Sales............................ $1,829,780 $2,020,084 $2,070,559 $3,268,381
Gross Income......................... 501,471 538,907 620,982 1,156,617
Net Income........................... 24,873 27,574 79,682 85,261
Net Income Per Basic Share........... .09 .10 .29 .31
Net Income Per Diluted Share......... *.09 .10 *.29 *.31

1996 Quarter
Net Sales............................ $1,787,943 $1,895,601 $1,994,986 $2,966,261
Gross Income......................... 469,541 491,909 555,374 979,755
Net Income........................... 28,152 33,150 159,513 213,393
Net Income Per Basic Share........... .09 .12 .59 .79
Net Income Per Diluted Share......... .09 .12 *.59 *.78
</TABLE>

* Gains in connection with initial public offerings included an $8.6 million
($.02 per diluted share) pretax gain in the first quarter of 1997 in
connection with the Company's ownership portion of Brylane, Inc., a 26%
owned (post-IPO) catalogue retailer and a $118.2 million ($.44 per diluted
share) gain in the third quarter of 1996 in connection with the IPO of a
15.8% interest of A&F (see Note 1). Special charges included $276 million
($.57 per diluted share) in special and nonrecurring items and an
additional $13 million ($.03 per diluted share) in inventory liquidation
charges during the fourth quarter of 1997, a net $62.8 million ($.14 per
diluted share) pretax gain during the third quarter of 1997 relating to the
sale of approximately one-half of its investment in Brylane, Inc. and $12
million ($.03 per diluted share) in special and nonrecurring charges during
the fourth quarter of 1996 in connection with the sale of the Penhaligon's
business (see Note 2).

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS OF A&F

Report of Independent Accountants.......................................F(A)-2
Consolidated Statements of Income.......................................F(A)-3
Consolidated Balance Sheets.............................................F(A)-4
Consolidated Statements of Shareholders' Equity.........................F(A)-5
Consolidated Statements of Cash Flows...................................F(A)-6
Notes to Consolidated Financial Statements..............................F(A)-7

[Letterhead of Coopers & Lybrand L.L.P.]

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of Abercrombie & Fitch Co.

We have audited the accompanying consolidated balance sheets of Abercrombie &
Fitch Co. and subsidiaries as of January 31, 1998 and February 1, 1997, and
the related consolidated statements of income, shareholders' equity (deficit)
and cash flows for each of the three fiscal years in the period ended January
31, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Abercrombie &
Fitch Co. and subsidiaries as of January 31, 1998 and February 1, 1997 and the
consolidated results of their operations and their cash flows for each of the
three fiscal years in the period ended January 31, 1998, in conformity with
generally accepted accounting principles.

/s/ Coopers & Lybrand L.L.P.

Coopers & Lybrand L.L.P.
Columbus, Ohio
February 20, 1998

ABERCROMBIE & FITCH CO.

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
1997 1996 1995
------------- ------------- --------------
(Thousands except per share amounts)
<S> <C> <C> <C>

NET SALES............................ $521,617 $335,372 $235,659
Costs of Goods Sold, Occupancy
and Buying Costs................... 320,537 211,606 155,865
-------- -------- --------

GROSS INCOME......................... 201,080 123,766 79,794
General, Administrative and
Store Operating Expenses........... 116,955 77,773 55,996
-------- -------- --------

OPERATING INCOME..................... 84,125 45,993 23,798
Interest Expense, Net............... 3,583 4,919 --
-------- -------- --------

INCOME BEFORE INCOME TAXES.......... 80,542 41,074 23,798
Provision for Income Taxes.......... 32,220 16,400 9,500
-------- -------- --------

NET INCOME........................... $48,322 $24,674 $14,298
======== ======== ========

NET INCOME PER SHARE:
Basic............................... $ .95 $ .54 $ .33
======== ======== ========
Diluted............................. $ .94 $ .54 $ .33
======== ======== ========
</TABLE>

ABERCROMBIE & FITCH CO.
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
January 31, February 1,
1998 1997
----------- -----------
(Thousands)
<S> <C> <C>
ASSETS

CURRENT ASSETS:
Cash and Equivalents....................... $42,667 $1,945
Accounts Receivable........................ 1,695 2,102
Inventories................................ 33,927 34,943
Store Supplies............................. 5,592 5,300
Intercompany Receivable.................... 23,785 --
Other...................................... 1,296 588
-------- --------
TOTAL CURRENT ASSETS........................ 108,962 44,878

PROPERTY AND EQUIPMENT, NET................. 70,517 58,992

DEFERRED INCOME TAXES....................... 3,759 1,885

OTHER ASSETS................................ -- 6
-------- --------

TOTAL ASSETS................................ $183,238 $105,761

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts Payable........................... $15,968 $6,414
Accrued Expenses........................... 35,143 22,388
Income Taxes Payable....................... 15,851 9,371
Intercompany Payable....................... -- 5,417
-------- --------
TOTAL CURRENT LIABILITIES................... 66,962 43,590

LONG-TERM DEBT.............................. 50,000 50,000

OTHER LONG-TERM LIABILITIES................. 7,501 933

SHAREHOLDERS' EQUITY:
Common Stock............................... 511 511
Paid-In Capital............................ 117,972 117,980
Retained Earnings (Deficit)................ (58,931) (107,253)
-------- --------
59,552 11,238
Less: Treasury Stock, at Cost............. (777) --
-------- --------

TOTAL SHAREHOLDERS' EQUITY ................. 58,775 11,238
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY . $183,238 $105,761
======== ========

</TABLE>

ABERCROMBIE & FITCH CO.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
Common Stock
---------------------- Retained Treasury Total
Shares Par Paid-In Earnings Stock, Shareholders'
Outstanding Value Capital (Deficit) at Cost Equity (Deficit)
----------- ----- ------- --------- ------- ----------------
(Thousands)
<S> <C> <C> <C> <C> <C> <C>

Balance, January 28, 1995................ 43,000 -- $155 $(37,225) -- $(37,070)
Net Income .............................. -- -- -- 14,298 -- 14,298
Other.................................... -- -- 150 -- -- 150
------ ---- -------- -------- ----- -------

Balance, February 3, 1996................ 43,000 -- $305 $(22,927) -- $(22,622)
Transfer of Equity to Debt ($50,000
Long-Term Debt and $32,000
Short-Term Borrowings)................ -- -- -- (82,000) -- (82,000)

Cash Dividend to Parent Prior to Initial
Public Offering....................... -- -- -- (27,000) -- (27,000)
Sale of Common Stock in Initial
Public Offering....................... 8,050 $511 $117,667 -- -- 118,178
Net Income............................... -- -- -- 24,674 -- 24,674
Other.................................... -- -- 8 -- -- 8
------ ---- -------- -------- ----- -------

Balance, February 1, 1997................ 51,050 $511 $117,980 $(107,253) -- $11,238
Purchase of Treasury Stock............... (50) -- -- -- $(929) (929)
Net Income............................... -- -- -- 48,322 -- 48,322
Exercise of Stock Options and Other...... 9 -- (8) -- 152 144
------ ---- -------- -------- ----- -------
Balance, January 31, 1998................ 51,009 $511 $117,972 $(58,931) $(777) $58,775
====== ==== ======== ======== ===== =======
</TABLE>

The accompanying notes are an integral part of these
Consolidated Financial Statements.

ABERCROMBIE & FITCH CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
(Thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ................................................. $48,322 $24,674 $14,298

Impact of Other Operating Activities on Cash Flows
Depreciation and Amortization............................. 16,342 11,759 9,104
Noncash Charge for Deferred Compensation.................. 6,219 -- --
Change in Assets and Liabilities:
Inventories............................................. 1,016 (4,555) (13,837)
Accounts Payable and Accrued Expenses................... 22,309 9,943 4,069
Income Taxes............................................ 4,606 4,218 (2,525)
Other Assets and Liabilities............................ 1,381 797 1,605
------- ------- -------

NET CASH PROVIDED BY OPERATING ACTIVITIES.................... 100,195 46,836 12,714
------- ------- -------

CASH USED FOR INVESTING ACTIVITIES
Capital Expenditures........................................ (29,486) (24,323) (24,526)
------- ------- -------

FINANCING ACTIVITIES
Increase (Decrease) in Intercompany Balance................. (29,202) 18,988 11,944
Dividend Paid to Parent..................................... -- (27,000) --
Net Proceeds from Issuance of Common Stock.................. -- 118,178 --
Proceeds from Credit Agreement.............................. -- 150,000 --
Repayment of Credit Agreement............................... -- (150,000) --
Repayment of Trademark Obligations.......................... -- (32,000) --
Repayment of Intercompany Debt.............................. -- (91,000) --
Repayment of Working Capital Note........................... -- (8,616) --
Purchase of Treasury Stock.................................. (929) -- --
Other Changes in Shareholders' Equity ...................... 144 8 150
------- ------- -------

NET CASH PROVIDED BY (USED FOR) FINANCING
ACTIVITIES.................................................. (29,987) (21,442) 12,094
------- ------- -------

NET INCREASE IN CASH AND EQUIVALENTS......................... 40,722 1,071 282
Cash and Equivalents, Beginning of Year...................... 1,945 874 592
------- ------- -------

CASH AND EQUIVALENTS, END OF YEAR $42,667 $1,945 $874
======= ====== ====
</TABLE>

In 1996, noncash financing activities included the distribution
of a note representing preexisting obligations of the Company's operating
subsidiary in respect of certain trademarks in the amount of $32 million by the
Company's trademark subsidiary to The Limited, Inc., distribution of the $50
million in long-term debt and the conversion of $8.6 million of intercompany
debt into a working capital note.

ABERCROMBIE & FITCH CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

Abercrombie & Fitch Co. (the "Company") was incorporated on June 26, 1996,
and on July 15, 1996 acquired the stock of Abercrombie & Fitch Holdings,
the parent company of the Abercrombie & Fitch business, and A&F Trademark,
Inc., in exchange for 43 million shares of Class B common stock issued to
The Limited, Inc. ("The Limited"). The Company is a specialty retailer of
high quality, casual apparel for men and women with an active, youthful
lifestyle. The business was established in 1892 and subsequently acquired
by The Limited in 1988.

An initial public offering (the "Offering") of 8.05 million shares of the
Company's Class A common stock, including the sale of 1.05 million shares
pursuant to the exercise by the underwriters of their options to purchase
additional shares, was consummated on October 1, 1996. As a result of the
Offering, 84.2% of the outstanding common stock of the Company is owned by
The Limited.

The net proceeds received by the Company from the Offering, approximating
$118.2 million, and cash from operations were used to repay the borrowings
under a $150 million credit agreement.

The accompanying consolidated financial statements include the historical
financial statements of, and transactions applicable to the Company and its
subsidiaries and reflect the assets, liabilities, results of operations and
cash flows on a historical cost basis.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and all significant subsidiaries that are more than 50% owned and
controlled. All significant intercompany balances and transactions have
been eliminated in consolidation.

Fiscal Year

The Company's fiscal year ends on the Saturday closest to January 31.
Fiscal years are designated in the financial statements and notes by the
calendar year in which the fiscal year commences. The results for fiscal
years 1997 and 1996 represent the fifty-two week periods ended January 31,
1998 and February 1, 1997. The results for fiscal year 1995 represent the
fifty-three week period ended February 3, 1996.

Cash and Equivalents

Cash and equivalents include amounts on deposit with financial institutions
and investments with maturities of less than 90 days.

Inventories

Inventories are principally valued at the lower of average cost or market,
on a first-in first-out basis, utilizing the retail method.

Store Supplies

The initial inventory of supplies for new stores including, but not limited
to, hangers, signage, security tags and point-of-sale supplies are
capitalized at the store opening date. Subsequent shipments are expensed
except for new merchandise presentation programs which are capitalized.

Property and Equipment

Depreciation and amortization of property and equipment are computed for
financial reporting purposes on a straight-line basis, using service lives
ranging principally from 10-15 years for building improvements and 3-10
years for other property and equipment. Beneficial leaseholds represent the
present value of the excess of fair market rent over contractual rent of
existing stores at the 1988 purchase of the Company by The Limited and are
being amortized over the lives of the related leases. The cost of assets
sold or retired and the related accumulated depreciation or amortization
are removed from the accounts with any resulting gain or loss included in
net income. Maintenance and repairs are charged to expense as incurred.
Major renewals and betterments that extend service lives are capitalized.
Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that full recoverability is questionable. Factors
used in the valuation include, but are not limited to, management's plans
for future operations, recent operating results and projected cash flows.

Income Taxes

Income taxes are calculated in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes," which
requires the use of the liability method. Deferred tax assets and
liabilities are recognized based on the difference between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates in
effect in the years in which those temporary differences are expected to
reverse. Under SFAS No. 109, the effect on deferred taxes of a change in
tax rates is recognized in income in the period that includes the enactment
date.

The Company is included in The Limited's consolidated federal and certain
state income tax groups for income tax reporting purposes and is
responsible for its proportionate share of income taxes calculated upon its
federal taxable income at a current estimate of the annual effective tax
rate.

Shareholders' Equity

At January 31, 1998, there were 150 million of $.01 par value Class A
shares authorized, of which 8.01 million and 8.05 million shares were
outstanding at January 31, 1998 and February 1, 1997 and 150 million of
$.01 par value Class B shares authorized, of which 43 million shares were
issued and outstanding. In addition there were 15 million of $.01 par value
preferred shares authorized, none of which have been issued.

Holders of Class A common stock generally have identical rights to holders
of Class B common stock, except that holders of Class A common stock are
entitled to one vote per share while holders of Class B common stock are
entitled to three votes per share on all matters submitted to a vote of
shareholders. Each share of Class B common stock is convertible while held
by The Limited or any of its subsidiaries into one share of Class A common
stock (see Note 11).

Revenue Recognition

Sales are recorded upon purchase by customers.

Catalogue and Advertising Costs

Costs related to the A&F Quarterly, which premiered in 1997, primarily
consist of catalogue production and mailing costs and are expensed as
incurred. Advertising costs consist of in-store photographs and
advertising in selected national publications and are expensed when the
photographs or publications first appear. Catalogue and advertising costs
amounted to $13.7 million in 1997, $4.1 million in 1996 and $3.1 million in
1995.

Store Preopening Expenses

Preopening expenses related to new store openings are charged to operations
as incurred.

Fair Value of Financial Instruments

The recorded values of current assets and current liabilities, including
accounts receivable and accounts payable, approximate fair value due to the
short maturity and because the average interest rate approximates current
market origination rates.

The fair value of the Company's long-term debt is estimated based on the
quoted market prices for the same or similar issues or on the current rates
offered to the Company for debt of the same remaining maturity. The
estimated fair value of the Company's long-term debt was $52.2 million at
January 31, 1998 and $50.6 million at February 1, 1997.

Earnings per Share

Net income per share is computed in accordance with SFAS No. 128, "Earnings
Per Share," which the Company adopted in the fourth quarter of 1997. Basic
earnings per share are computed based on the weighted average number of
outstanding common shares. Diluted earnings per share include the weighted
average effect of dilutive stock options and restricted stock. The common
stock issued to The Limited (43 million Class B shares) in connection with
the incorporation of the Company is assumed to have been outstanding for
all periods.

Weighted Average Common Shares Outstanding (thousands):

<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Common shares issued............................. 51,050 45,749 43,000
Treasury shares.................................. (39) -- --
------ ------ ------
Basic shares..................................... 51,011 45,749 43,000

Dilutive effect of options and restricted shares. 467 11 --
------ ------ ------
Diluted shares................................... 51,478 45,760 43,000
====== ====== ======
</TABLE>

Options to purchase 228,000 and 240,000 shares of common stock were
outstanding at year-end 1997 and 1996 but were not included in the
computation of diluted earnings per share because the options' exercise
price was greater than the average market price of the common shares.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities as
of the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Since actual results may
differ from those estimates, the Company revises its estimates and
assumptions as new information becomes available.

Reclassifications

Certain amounts in previously reported financial statement captions have
been reclassified to conform with current year presentation.

3. Property and Equipment

Property and equipment, at cost, consisted of (thousands):

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Furniture, fixtures and equipment.................. $104,671 $88,248
Beneficial leaseholds.............................. 7,349 7,925
Leasehold improvements............................. 11,615 5,565
Construction in progress........................... 365 181
-------- --------
Total.............................................. $124,000 $101,919

Less: accumulated depreciation and amortization... 53,483 42,927
-------- --------

Property and equipment, net........................ $70,517 $58,992
======== ========
</TABLE>

4. Leased Facilities and Commitments

Annual store rent is comprised of a fixed minimum amount, plus contingent
rent based on a percentage of sales exceeding a stipulated amount. Store
lease terms generally require additional payments covering taxes, common
area costs and certain other expenses. Rent expense also includes charges
from The Limited and its subsidiaries for space under formal agreements
which approximate market rates (see Note 8).

A summary of rent expense for 1997, 1996 and 1995 follows (thousands):

<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Store rent:
Fixed minimum.................. $34,402 $24,599 $17,465
Contingent..................... 2,138 1,620 1,322
------- ------- -------
Total store rent.................. $36,540 $26,219 $18,787

Buildings, equipment and other.... 1,400 1,229 1,058
------- ------- -------

Total rent expense................ $37,940 $27,448 $19,845
======= ======= =======
</TABLE>

At January 31, 1998, the Company was committed to noncancelable leases with
remaining terms of one to fifteen years. These commitments include store
leases with initial terms ranging primarily from ten to fifteen years and
offices and a distribution center leased from an affiliate of The Limited
with an initial term of fifteen years. A majority of the Company's store
leases are guaranteed by The Limited. A summary of minimum rent
commitments under noncancelable leases follows (thousands):

1998 $40,775
1999 41,747
2000 41,866
2001 42,170
2002 42,254
Thereafter 181,769

5. Accrued Expenses

Accrued expenses consisted of the following (thousands):

<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Rent and landlord charges............... $8,105 $5,624
Compensation and benefits............... 8,357 4,638
Catalogue and advertising costs......... 4,012 1,449
Interest................................ 986 2,162
Taxes, other than income................ 1,827 1,761
Other................................... 11,856 6,754
------- -------
Total............................. $35,143 $22,388
======= =======
</TABLE>

6. Income Taxes

The provision for income taxes consisted of (thousands):

<TABLE>
<CAPTION>
1997 1996 1995
------- ------- ------
<S> <C> <C> <C>
Currently Payable:
Federal............. $29,620 $13,800 $6,900
State................ 3,470 1,300 1,700
------- ------- ------
$33,090 $15,100 $8,600
------- ------- ------
Deferred:
Federal.............. (3,200) (400) 700
State................ 2,330 1,700 200
------- ------- ------
$(870) $1,300 $900
------- ------- ------
Total provision......... $32,220 $16,400 $9,500
======= ======= ======
</TABLE>

A reconciliation between the statutory Federal income tax rate
and the effective income tax rate follows:

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Federal income tax rate........... 35.0% 35.0% 35.0%
State income tax, net of
federal income tax effect....... 4.7% 4.7% 5.2%
Other items, net.................. 0.3% 0.2% (0.3)%
---- ---- ----

Total............................. 40.0% 39.9% 39.9%
==== ==== ====
</TABLE>

Income taxes payable included net current deferred tax assets of $2.3
million and $1.2 million at January 31, 1998 and February 1, 1997.

Current income tax obligations are treated as having been settled through
the intercompany accounts as if the Company were filing its income tax
returns on a separate company basis. Such amounts were $27.6 million, $10.6
million and $7.5 million in 1997, 1996 and 1995.

The effect of temporary differences which give rise to net deferred income
tax assets was as follows (thousands):

<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Depreciation and amortization......... $1,540 $1,480
Rent.................................. 1,510 (413)
Accrued expenses...................... 3,450 1,343
Other, net............................ (450) 683
------ ------
Total deferred income taxes........... $6,050 $3,093
====== ======
</TABLE>

No valuation allowance has been provided for deferred tax assets because
management believes that it is more likely than not that the full amount of
the net deferred tax assets will be realized in the future.

7. Long-term Debt

Long-term debt consists of a 7.80% unsecured note in the amount of $50
million that matures May 15, 2002, and represents the Company's
proportionate share of certain long-term debt of The Limited. The interest
rate and maturity of the note parallels that of corresponding debt of The
Limited. The note is to be automatically prepaid concurrently with any
prepayment of the corresponding debt of The Limited.

8. Related Party Transactions

Transactions between the Company, The Limited, and its subsidiaries and
affiliates commonly occur in the normal course of business and principally
consist of the following:

Merchandise purchases
Real estate management and leasing
Capital expenditures
Inbound and outbound transportation
Corporate services

Information with regard to these transactions is as follows:

Significant purchases are made from Mast, a wholly-owned subsidiary of The
Limited. Purchases are also made from Gryphon, an indirect subsidiary of
The Limited. Mast is a contract manufacturer and apparel importer, while
Gryphon is a developer of fragrance and personal care products and also a
contract manufacturer. Prices are negotiated on a competitive basis by
merchants of the Company with Mast, Gryphon and the manufacturers.

The Company's real estate operations, including all aspects of lease
negotiations and ongoing dealings with landlords and developers, are
handled centrally by the Real Estate Division of The Limited ("Real Estate
Division"). Real Estate Division expenses are allocated to the Company based
on a combination of new and remodeled store construction projects and open
selling square feet.

The Company's store design and construction operations are coordinated
centrally by the Store Planning Division of The Limited ("Store Planning
Division"). The Store Planning Division facilitates the design and
construction of the stores and upon completion transfers the stores to the
Company at actual cost. Store Planning Division expenses are charged to the
Company based on a combination of new and remodeled store construction
projects and open selling square feet.

The Company's inbound and outbound transportation expenses are managed
centrally by Limited Distribution Services ("LDS"), a wholly-owned
subsidiary of The Limited. Inbound freight is charged to the Company based
on actual receipts, while outbound freight is charged on a percentage of
cartons shipped basis.

The Limited provides certain services to the Company including, among other
things, aircraft, tax, treasury, legal, corporate secretary, accounting,
auditing, corporate development, risk management, associate benefit plan
administration, human resource and compensation, government affairs and
public relation services. Identifiable costs are charged directly to the
Company. All other services- related costs not specifically attributable to
the business have been allocated to the Company based upon a percentage of
sales.

The Company participates in The Limited's centralized cash management system
whereby cash received from operations is transferred to The Limited's
centralized cash accounts and cash disbursements are funded from the
centralized cash accounts on a daily basis. Prior to the initial
capitalization of the Company, the intercompany cash management account was
noninterest bearing. After the initial capitalization of the Company on July
11, 1996, the intercompany cash management account became an interest earning
asset or interest bearing liability of the Company depending upon the level
of cash receipts and disbursements. Interest on the intercompany cash
management account is calculated based on 30-day commercial paper rates for
"AA" rated companies as reported in the Federal Reserve's H.15 statistical
release. The average outstanding balance of the noninterest bearing
intercompany payable to The Limited in the twenty-six weeks ended August 3,
1996 and fifty- three weeks ended February 3, 1996 approximated $64.5 million
and $89.8 million. A summary of the intercompany payment activity during the
noninterest bearing periods follows:

<TABLE>
<CAPTION>
Fifty-three
Twenty-six weeks ended
weeks ended February 3,
August 3, 1996 1996
-------------- ------------
<S> <C> <C>
Balance at beginning of period............ $86,045 $74,101
Mast and Gryphon purchases................ 23,178 35,167
Other transactions with related parties... 9,667 33,546
Centralized cash management............... (16,417) (64,269)
Settlement of current period income taxes. 5,700 7,500
Payment to The Limited.................... (91,000) --
Conversion to Working Capital Note........ (8,616) --
------- -------
Balance at end of period.................. $8,557 $86,045
======= ========
</TABLE>

The Company is charged rent expense, common area maintenance charges and
utilities for stores shared with other consolidated subsidiaries of The
Limited. The charges are based on square footage and represent the
proportionate share of the underlying leases with third parties.

The Company is also charged rent expense and utilities for the distribution
and home office space occupied (which approximates fair market value).

The Company and The Limited have entered into intercompany agreements that
establish the provision of services in accordance with the terms described
above. The prices charged to the Company for services provided under these
agreements may be higher or lower than prices that may be charged by third
parties. It is not practicable, therefore, to estimate what these costs
would be if The Limited were not providing these services and the Company
was required to purchase these services from outsiders or develop internal
expertise. Management believes the charges and allocations described above
are fair and reasonable.

The following table summarizes the related party transactions between the
Company and The Limited and its subsidiaries, for the years indicated
(thousands):

<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Mast and Gryphon purchases................................... $89,892 $61,776 $35,167
Capital expenditures......................................... 27,012 20,839 20,280
Inbound and outbound transportation.......................... 5,524 3,326 2,869
Corporate charges............................................ 6,857 3,989 4,019
Store leases and other occupancy, net........................ 1,184 1,509 1,397
Distribution center, MIS and home office expenses............ 3,102 2,696 2,564
Centrally managed benefits................................... 3,596 3,136 2,417
Interest charges............................................. 3,583 2,190 --
-------- ------- -------
$140,750 $99,461 $68,713
======== ======= =======
</TABLE>

The Company and The Limited are parties to a corporate agreement under
which the Company granted to The Limited a continuing option to purchase,
under certain circumstances, additional shares of Class B Common Stock or
shares of nonvoting capital stock of the Company.

The Company has no arrangements with The Limited which result in the
Company's guarantee, pledge of assets or stock to provide security for The
Limited's debt obligations.

The Company's proprietary credit card processing is performed by Alliance
Data Systems which is approximately 40% owned by The Limited.

9. Stock Options and Restricted Stock

Under the Company's stock plan, associates may be granted up to a total of
3.5 million restricted shares and options to purchase the Company's common
stock at the market price on the date of grant. In 1997, associates of the
Company were granted approximately 1.7 million options, most of which are
expected to vest on a graduated basis over six years, subject to certain
performance goals. The remaining options generally vest 25% per year over
the first four years of the grant. A total of 12,000 shares have been
issued to nonassociate directors, all of which vest over four years. All
options have a maximum term of ten years.

The Company adopted the disclosure requirements of SFAS No. 123, "Accounting
for Stock--Based Compensation," effective with the 1996 financial statements,
but elected to continue to measure compensation expense in accordance with
APB Opinion No. 25, "Accounting for Stock Issued to Employees." Accordingly,
no compensation expense for stock options has been recognized. If
compensation expense had been determined based on the estimated fair value of
options granted in 1997 and 1996, consistent with the methodology in SFAS No.
123, the pro forma effect on net income and diluted earnings per share would
have been a reduction of approximately $1.7 million, or $.03 per share in
1997. In 1996, the pro forma effect would have had no impact on net income
and diluted earnings per share. The weighted-average fair value of options
granted during fiscal 1997 and 1996 was $8.50 and $6.67. The fair value of
each option was estimated using the Black-Scholes option-pricing model with
the following weighted-average assumptions for 1997 and 1996: no expected
dividends, price volatility of 35%, risk-free interest rates of 6.0% and
6.25%, assumed forfeiture rates of 10% and expected lives of 6.5 and 5 years.

The pro forma effect on net income for 1997 and 1996 is not representative
of the pro forma effect on net income in future years because it takes into
consideration pro forma compensation expense related only to those grants
made subsequent to the Company's initial public offering.

A summary of option activity for 1997 and 1996 follows:

<TABLE>
<CAPTION>
1997 1996
------------------------------- -------------------------------
Weighted Weighted
Average Average
Shares Option Price Shares Option Price
------ ------------ ------ ------------
<S> <C> <C> <C> <C>
Outstanding at beginning of year....... 240,000 $16.00 -- --
Granted................................ 1,669,000 $18.03 240,000 $16.00
Exercised.............................. (4,000) $16.00 -- --
Canceled............................... (21,000) $16.00 -- --
--------- ------ ------- ------
Outstanding at end of year............. 1,884,000 $17.81 240,000 $16.00
========= ====== ======= ======
Options exercisable at year-end........ 35,000 $16.00 -- --
========= ====== ======= ======
</TABLE>

Approximately 88% of the options outstanding at year-end are at $16 per
share. Most of the remaining options outstanding are at $31 per share.

A total of 547,000 restricted shares were granted in 1997, with a total
market value at grant date of $8.7 million. Of this total, 500,000 shares
were subject to performance requirements and a defined vesting schedule
over six years. The remaining restricted stock grants generally vest
either on a graduated scale over four years or 100% at the end of a fixed
vesting period, principally five years. The market value of restricted
stock, subject to adjustment at the measurement date for shares with
performance requirements, is being amortized as compensation expense over
the vesting period, generally four to six years. Compensation expenses
related to restricted stock awards amounted to $6.2 million, $.5 million
and $.4 million in 1997, 1996 and 1995.

10. Retirement Benefits

The Company participates in a qualified defined contribution retirement
plan and a nonqualified supplemental retirement plan sponsored by The
Limited. Participation in the qualified plan is available to all associates
who have completed 1,000 or more hours of service with the Company during
certain 12-month periods and attained the age of 21. Participation in the
nonqualified plan is subject to service and compensation requirements. The
Company's contributions to these plans are based on a percentage of
associates' eligible annual compensation. The cost of these plans was $1.6
million in 1997, $753 thousand in 1996 and $564 thousand in 1995.

11. Registration Statement for Exchange Offer

On February 17, 1998, a registration statement was filed with the
Securities and Exchange Commission in connection with a plan to establish
the Company as a fully independent company via a tax-free exchange offer
pursuant to which The Limited shareholders will be given an opportunity to
exchange shares of The Limited for shares of the Company. At year end, The
Limited owned 43 million of the Company's shares.

12. Quarterly Financial Data (Unaudited)

Summarized quarterly financial results for 1997 and 1996 follow (thousands
except per share amounts):

<TABLE>
<CAPTION>
Quarter First Second Third Fourth
- ------- ----- ------ ----- ------
<S> <C> <C> <C> <C>

1997
Net sales................................... $ 74,316 $ 86,640 $ 148,516 $ 212,145
Gross income................................ 23,941 27,786 52,990 96,363
Net income.................................. 565 2,053 10,403 35,301
Net income per basic share.................. $ .01 $ .04 $ .20 $ .69
Net income per diluted share................ $ .01 $ .04 $ .20 $ .68

1996
Net sales................................... $ 51,020 $ 57,431 $ 87,688 $ 139,233
Gross income................................ 14,894 18,052 30,957 59,863
Net income (loss)........................... (199) 374 3,982 20,517
Net income (loss) per basic share........... $ .00 $ .01 $ .09 $ .40
Net income (loss) per diluted share......... $ .00 $ .01 $ .09 $ .40
</TABLE>

SCHEDULE A

TRANSACTIONS CONCERNING
LIMITED COMMON STOCK INC.

The following transactions were effected during the 40
business-day period preceding April ___, 1998. All of these transactions were
effected as open-market purchases.

<TABLE>
<S> <C> <C> <C> <C>
Person Effecting Date of Number of Price Aggregate
Transaction Transaction Shares Transferred per Share Purchase Price

The Wexner Children's 3/2/98 2,000,000 shares $29.125 $58,250,000
Trust II
The Wexner Children's 3/5/98 500,000 shares $29.00 $14,500,000
Trust II
Harry and Hannah 3/5/98 1,500,000 shares $29.00 $43,500,000
Wexner Trust
Harry, Hannah and 3/5/98 500,000 shares $29.00 $14,500,000
David Wexner Trust
Harry, Hannah and 3/17/98 800,000 shares $29.875 $23,900,000
David Wexner Trust
Harry and Hannah 3/17/98 144,600 $29.875 $4,319,925
Wexner Trust
</TABLE>

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:

<TABLE>
<S> <C> <C>
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 Depository 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>

If by facsimile transmission:
(For Eligible Institutions only)
(201) 222-4720
or
(201) 222-4721
Facsimile confirmation number:
(201) 222-4707

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
Call Collect (212) 269-5550
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.

5.1 Form Of Opinion of Davis Polk & Wardwell regarding the legality
of the securities being registered.

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 Amended and Restated 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 (Registration No. 333-8231)*

10.6 Amendment No. 1 to the Sublease Agreement*

10.7 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 with respect to The Limited,
Inc.*

23.2 Consent of independent accountants with respect to Abercrombie &
Fitch Co.*

24.1 Powers of Attorney*

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 (included in the Letter of Transmittal filed
as Exhibit 99.01 hereto)*

99.06 Letter from the Savings and Retirement Plan Administrative
Committee of The Limited, Inc.*

99.07 Notice to Participants in the Savings and Retirement Plan of The
Limited, Inc.*

99.08 Questions and Answers on Savings and Retirement Plan Tender
Rights and Procedures*

99.09 Notice to Participants in the Stock Purchase Plan of The Limited,
Inc.*

99.10 Consent of Mr. George Foos to be named as a future director of
Abercrombie & Fitch Co. in this Form S-4*

99.11 Consent of Mr. John A. Golden to be named as a future director of
Abercrombie & Fitch Co. in this Form S-4*

99.12 Consent of Mr. Seth R. Johnson to be named as a future director
of Abercrombie & Fitch Co. in this Form S-4*

99.13 Consent of Mr. John W. Kessler to be named as a future director
of Abercrombie & Fitch Co. in this Form S-4*

99.14 Consent of Mr. Sam N. Shahid, Jr. to be named as a future
director of Abercrombie & Fitch Co. in this Form S-4*

99.15 Consent of Mr. Douglas L. Williams to be named as a future
director of Abercrombie & Fitch Co. in this Form S-4*

99.16 Private Letter Ruling from the Internal Revenue Service

- ----------
* Previously filed.

Item 22. Undertakings.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Securities Act"), may be permitted to
directors, officers, or 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.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement;

(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide thereof.

The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report, to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Exchange
Act; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver,
or cause to be delivered to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, 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 APRIL 9, 1998.

ABERCROMBIE & FITCH CO.

By: /s/ Kenneth B. Gilman
-------------------------------------------
Name: Kenneth B. Gilman
Title: Vice Chairman of the Board of Directors

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON APRIL 9, 1998.

Signature Title

* Chairman of the Board of Directors
- -----------------------------
Leslie H. Wexner

/s/ Kenneth B. Gilman Vice Chairman of the Board of Directors
- -----------------------------
Kenneth B. Gilman

* Chief Executive Officer, President and
- ----------------------------- Director (Principal Executive Officer)
Michael S. Jeffries

* Vice President and Chief Financial Officer
- ----------------------------- (Principal Financial and Accounting
Seth R. Johnson Officer)

* Director
- -----------------------------
Roger D. Blackwell

* Director
- -----------------------------
E. Gordon Gee

* Director
- -----------------------------
Donald B. Shackelford

*By: /s/ Kenneth B. Gilman
-------------------------
Kenneth B. Gilman
as Attorney-in-Fact

EXHIBIT INDEX

Exhibit Page
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