<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended July 31, 1999
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number 1-12107
ABERCROMBIE & FITCH CO.
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(Exact name of registrant as specified in its charter)
Delaware 31-1469076
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Four Limited Parkway East, Reynoldsburg, OH 43068
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (614) 577-6500
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class A Common Stock Outstanding at September 1, 1999
-------------------- --------------------------------
$.01 Par Value 103,032,887 Shares
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ABERCROMBIE & FITCH CO.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Income
Thirteen and Twenty-six Weeks Ended July 31, 1999 and August 1, 1998...........................3
Consolidated Balance Sheets July 31, 1999 and January 30, 1999......................................4
Consolidated Statements of Cash Flows Twenty-six Weeks Ended July 31, 1999 and August 1, 1998.......5
Notes to Consolidated Financial Statements..........................................................6
Report of Independent Accountants..................................................................10
Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition.........11
Part II. Other Information
Item 1. Legal Proceedings.............................................................................17
Item 5. Other Information.............................................................................17
Item 6. Exhibits and Reports on Form 8-K..............................................................18
</TABLE>
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PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
ABERCROMBIE & FITCH CO.
CONSOLIDATED STATEMENTS OF INCOME
(Thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
--------------------------- ---------------------------
July 31, August 1, July 31, August 1,
1999 1998 1999 1998
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
NET SALES $198,895 $147,127 $387,189 $281,357
Cost of Goods Sold, Occupancy and Buying Costs 118,174 91,933 234,564 176,952
-------- -------- -------- --------
GROSS INCOME 80,721 55,194 152,625 104,405
General, Administrative and Store Operating Expenses 51,134 38,096 104,089 76,968
-------- -------- -------- --------
OPERATING INCOME 29,587 17,098 48,536 27,437
Interest Income, Net 1,171 570 3,058 739
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 30,758 17,668 51,594 28,176
Provision for Income Taxes 12,310 7,070 20,640 11,270
-------- -------- -------- --------
NET INCOME $ 18,448 $ 10,598 $ 30,954 $ 16,906
======== ======== ======== ========
NET INCOME PER SHARE:
Basic $ 0.18 $ 0.10 $ 0.30 $ 0.16
======== ======== ======== ========
Diluted $ 0.17 $ 0.10 $ 0.28 $ 0.16
======== ======== ======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 103,182 103,270 103,188 102,842
======== ======== ======== ========
Diluted 108,611 106,232 108,641 105,592
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
ABERCROMBIE & FITCH CO.
CONSOLIDATED BALANCE SHEETS
(Thousands)
<TABLE>
<CAPTION>
July 31, January 30,
1999 1999
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Equivalents $ 107,556 $ 163,564
Accounts Receivable 3,925 4,101
Inventories 97,629 43,992
Store Supplies 7,212 5,887
Other 1,221 691
--------- ---------
TOTAL CURRENT ASSETS 217,543 218,235
PROPERTY AND EQUIPMENT, NET 105,286 89,558
DEFERRED INCOME TAXES 19,767 19,767
OTHER ASSETS 561 631
--------- ---------
TOTAL ASSETS $ 343,157 $ 328,191
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable $ 40,918 $ 24,759
Accrued Expenses 79,273 63,882
Income Taxes Payable 5,107 42,617
--------- ---------
TOTAL CURRENT LIABILITIES 125,298 131,258
OTHER LONG-TERM LIABILITIES 13,235 10,828
SHAREHOLDERS' EQUITY:
Common Stock 1,033 517
Paid-In Capital 138,261 144,142
Retained Earnings 74,085 43,131
--------- ---------
213,379 187,790
Less: Treasury Stock, at Average Cost (8,755) (1,685)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 204,624 186,105
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 343,157 $ 328,191
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
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ABERCROMBIE & FITCH CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Twenty-six Weeks Ended
-----------------------------
July 31, August 1,
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 30,954 $ 16,906
Impact of Other Operating Activities on Cash Flows:
Depreciation and Amortization 14,073 9,952
Non Cash Charge for Deferred Compensation 3,544 6,573
Changes in Assets and Liabilities:
Inventories (53,637) (41,962)
Accounts Payable and Accrued Expenses 31,550 40,351
Income Taxes (37,510) (13,130)
Other Assets and Liabilities (1,543) (310)
--------- ---------
NET CASH (USED FOR)/PROVIDED BY OPERATING ACTIVITIES (12,569) 18,380
--------- ---------
CASH USED FOR INVESTING ACTIVITIES
Capital Expenditures (29,403) (15,354)
--------- ---------
FINANCING ACTIVITIES:
Issuance of Common Stock -- 25,875
Settlement of Intercompany Balance -- 23,785
Purchase of Treasury Stock (17,139) --
Stock Options and Other 3,103 502
Repayment of Long-Term Debt -- (50,000)
--------- ---------
NET CASH (USED FOR)/PROVIDED BY FINANCING ACTIVITIES (14,036) 162
--------- ---------
NET (DECREASE)/INCREASE IN CASH AND EQUIVALENTS (56,008) 3,188
Cash and Equivalents, Beginning of Year 163,564 42,667
--------- ---------
CASH AND EQUIVALENTS, END OF PERIOD $ 107,556 $ 45,855
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
ABERCROMBIE & FITCH CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
Abercrombie & Fitch Co. (the "Company") is a specialty retailer of
high-quality, casual apparel for men and women with an active, youthful
lifestyle.
The consolidated financial statements include the accounts of the
Company and all significant subsidiaries which are more than 50 percent
owned and controlled. All significant intercompany balances and
transactions have been eliminated in consolidation.
The consolidated financial statements as of July 31, 1999 and for the
thirteen and twenty-six week periods ended July 31, 1999 and August 1,
1998 are unaudited and are presented pursuant to the rules and
regulations of the Securities and Exchange Commission. Accordingly,
these consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto contained
in the Company's 1998 Annual Report on Form 10-K. In the opinion of
management, the accompanying consolidated financial statements reflect
all adjustments (which are of a normal recurring nature) necessary to
present fairly the financial position and results of operations and
cash flows for the interim periods, but are not necessarily indicative
of the results of operations for a full fiscal year.
The consolidated financial statements as of July 31, 1999, and for the
thirteen and twenty-six week periods ended July 31, 1999 and August 1,
1998 included herein have been reviewed by the independent accounting
firm of PricewaterhouseCoopers LLP and the report of such firm follows
the notes to consolidated financial statements.
Certain amounts have been reclassified to conform with current year
presentation.
2. TWO-FOR-ONE STOCK SPLIT
The Board of Directors declared a two-for-one stock split on the
Company's Class A Common Stock, payable June 15, 1999 to shareholders
of record at the close of business on May 25, 1999. All share and per
share amounts in the accompanying consolidated financial statements for
all periods have been restated to reflect the stock split.
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3. EARNINGS PER SHARE
Weighted Average Common Shares Outstanding (thousands):
<TABLE>
<CAPTION>
Thirteen Weeks Ended
---------------------------
July 31, August 1,
1999 1998
-------- ---------
<S> <C> <C>
Common shares issued 103,300 103,300
Treasury shares (118) (30)
------- -------
Basic shares 103,182 103,270
Dilutive effect of stock options and restricted shares 5,429 2,962
------- -------
Diluted shares 108,611 106,232
======= =======
</TABLE>
<TABLE>
<CAPTION>
Twenty-six Weeks Ended
---------------------------
July 31, August 1,
1999 1998
-------- ---------
<S> <C> <C>
Common shares issued 103,300 102,885
Treasury shares (112) (43)
------- -------
Basic shares 103,188 102,842
Dilutive effect of stock options and restricted shares 5,453 2,750
------- -------
Diluted shares 108,641 105,592
======= =======
</TABLE>
4. INVENTORIES
The fiscal year of the Company and its subsidiaries is comprised of two
principal selling seasons: Spring (the first and second quarters) and
Fall (the third and fourth quarters). Valuation of finished goods
inventories is based principally upon the lower of average cost or
market determined on a first-in, first-out basis utilizing the retail
method. Inventory valuation at the end of the first and third quarters
reflects adjustments for inventory markdowns and shrinkage estimates
for the total selling season.
5. PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consisted of (thousands):
<TABLE>
<CAPTION>
July 31, January 30,
1999 1999
-------- -----------
<S> <C> <C>
Property and equipment, at cost $177,335 $152,618
Accumulated depreciation and amortization (72,049) (63,060)
-------- --------
Property and equipment, net $105,286 $ 89,558
======== ========
</TABLE>
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6. INCOME TAXES
For the current period, the provision for income taxes is based on the
current estimate of the annual effective tax rate. During 1998, the
Company was included in the consolidated federal and certain state
income tax groups of The Limited, Inc. ("The Limited") for income tax
purposes. Under this arrangement, the Company was responsible for and
paid to The Limited its proportionate share of income taxes calculated
upon its federal taxable income at the estimated annual effective tax
rate. Subsequent to the exchange offer (see Footnote 8), the Company
began filing its tax returns on a separate basis and made tax payments
directly to taxing authorities. Income taxes paid during the twenty-six
weeks ended July 31, 1999 and August 1, 1998 approximated $57.9 million
and $24.4 million.
7. LONG-TERM DEBT
The Company entered into a $150 million syndicated unsecured credit
agreement (the "Agreement"), on April 30, 1998 (the "Effective Date").
Borrowings outstanding under the Agreement are due April 30, 2003. The
Agreement has several borrowing options, including interest rates that
are based on the bank agent's "Alternate Base Rate", a LIBO Rate or a
rate submitted under a bidding process. Facility fees payable under the
Agreement are based on the Company's ratio (the "leverage ratio") of
the sum of total debt plus 800% of forward minimum rent commitments to
trailing four-quarters EBITDAR and currently accrues at .275% of the
committed amount per annum. The Agreement contains limitations on debt,
liens, restricted payments (including dividends), mergers and
acquisitions, sale-leaseback transactions, investments, acquisitions,
hedging transactions, and transactions with affiliates. It also
contains financial covenants requiring a minimum ratio of EBITDAR to
interest expense and minimum rent and a maximum leverage ratio. No
amounts were outstanding under the Agreement at July 31, 1999 or August
1, 1998.
On April 15, 1998, the Company repaid $50 million of long-term debt to
The Limited. This occurred through the issuance of 600,000 shares of
Class A common stock to The Limited with the remaining balance paid
with cash from operations.
8. RELATED PARTY TRANSACTIONS
Effective May 19, 1998, The Limited completed a tax-free exchange offer
to establish the Company as an independent company. Subsequent to the
exchange offer, the Company and The Limited entered into various
service agreements for terms ranging from one to three years. The
Company has hired associates with the appropriate expertise or
contracted with outside parties to replace those services which expired
in May 1999. Service agreements were also entered into for the
continued use by the Company of its distribution and home office space
and transportation and logistic services. These agreements expire in
May 2001. The cost of these services generally is equal to The
Limited's cost in providing the relevant services plus 5% of such
costs.
Prior to the completion of the exchange offer, cash activity was
provided through The Limited's centralized cash management systems and
was reflected in the Company's intercompany account. On May 19, 1998,
all intercompany balances were settled.
8
<PAGE> 9
Shahid & Company, Inc. has provided advertising and design services for
the Company since 1995. Sam N. Shahid, Jr., who serves on the Company's
Board of Directors, has been President and Creative Director of Shahid
& Company, Inc. since 1993. Fees paid to Shahid & Company, Inc. for
services provided during the twenty-six weeks ended July 31, 1999 were
approximately $.7 million.
9
<PAGE> 10
REPORT OF INDEPENDENT ACCOUNTANTS
To the Audit Committee of
The Board of Directors of
Abercrombie & Fitch Co.
We have reviewed the condensed consolidated balance sheet of Abercrombie & Fitch
Co. (the "Company") at July 31, 1999, and the related condensed consolidated
statements of income for each of the thirteen and twenty-six week periods ended
July 31, 1999 and August 1, 1998 and the condensed consolidated statements of
cash flows for the twenty-six week periods ended July 31, 1999 and August 1,
1998. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of January 30, 1999, and the
related consolidated statements of income, shareholders' equity, and cash flows
for the year then ended (not presented herein); and in our report dated
February 16, 1999, we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of January 30, 1999, is
fairly stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Columbus, Ohio
August 10, 1999
10
<PAGE> 11
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
During the second quarter of 1999, net sales increased 35% to $198.9 million
from $147.1 million a year ago. Operating income improved to $29.6 million in
the second quarter of 1999 from $17.1 million in the second quarter of 1998.
Earnings per diluted share were $.17 in the second quarter of 1999 compared to
$.10 a year ago. Year-to-date earnings per diluted share were $.28 in 1999
compared to $.16 in 1998.
During the second quarter of 1999, the Board of Directors declared a two-for-one
stock split on the Company's Class A Common Stock, payable June 15, 1999 to
shareholders of record at the close of business on May 25, 1999.
Financial Summary
The following summarized financial and statistical data compare the thirteen and
twenty-six week periods ended July 31, 1999 to the comparable 1998 periods:
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
------------------------------------ ------------------------------------
JULY 31, AUGUST 1, JULY 31, AUGUST 1,
1999 1998 CHANGE 1999 1998 CHANGE
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Increase in comparable store sales 17% 45% 19% 46%
Retail sales increase attributable 18% 25% 19% 29%
to new and remodeled stores
Retail sales per average gross $105 $92 14% $206 $176 17%
square foot
Retail sales per average store $952 $878 8% $1,871 $1,688 11%
(thousands)
Average store size at end of 9,024 9,404 (4%)
quarter (gross square feet)
Gross square feet at end of 1,877 1,608 17%
quarter (thousands)
Number of stores:
Beginning of period 200 158 196 156
Opened 8 14 12 16
Closed -- (1) -- (1)
----- ----- ------ ------
End of period 208 171 208 171
===== ===== ====== ======
</TABLE>
11
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Net Sales
Net sales for the second quarter of 1999 increased 35% to $198.9 million from
$147.1 million in 1998. The increase was due to a comparable store sales
increase of 17%, driven primarily by significantly higher transactions per store
as compared to the second quarter of 1998, as well as the net addition of 37
stores. Comparable store sales increases were strong in both the men's and
women's businesses with strong performances in knits, tees and shorts. The
Company's catalogue and the A&F Quarterly, a catalogue/magazine, accounted for
2.4% of net sales in the second quarter of 1999 as compared to 1.8% last year.
Year-to-date net sales were $387.2 million, an increase of 38%, from $281.4
million for the same period in 1998. Sales growth resulted from a comparable
store sales increase of 19% and the net addition of 37 new stores. Net retail
sales per average gross square foot for the Company increased 17%, principally
from an increase in the number of transactions per store. The Company's
catalogue and the A&F Quarterly represented 2.4% of 1999 year-to-date net sales
as compared to 1.9% last year.
Gross Income
Gross income, expressed as a percentage of net sales, increased to 40.6% for the
second quarter of 1999 from 37.5% for the same period in 1998. The increase was
attributable to improved merchandise margins (representing gross income before
the deduction of buying and occupancy costs) due to fewer markdowns as the
Company executed its planned markdown strategy, taking more markdowns in the
first quarter this year which resulted in a lower markdown rate in the second
quarter. In addition, buying and occupancy costs, expressed as a percentage of
net sales, declined due to leverage achieved from comparable store sales
increases.
The 1999 year-to-date gross income, expressed as a percentage of net sales,
increased to 39.4% from 37.1% for the comparable period in 1998. The increase
was attributable to leverage in buying and occupancy costs, expressed as a
percentage of net sales, associated with increased comparable store sales.
General, Administrative and Store Operating Expenses
General, administrative and store operating expenses, expressed as a percentage
of net sales, were 25.7% in the second quarter of 1999 as compared to 25.9% for
the same period in 1998. The improvement resulted primarily from the favorable
leveraging of expenses due to higher sales volume. Included in the second
quarter 1999 general, administrative and store operating expenses were costs
associated with the completion of the Year 2000 initiative, the development of
the abercrombie.com web site and the filming of a television commercial.
General, administrative and store operating expenses, expressed as a percentage
of net sales, were 26.9% and 27.4% for the year-to-date periods in 1999 and
1998, respectively. The improvement resulted from management's continued
emphasis on expense control and the favorable leveraging of expenses over higher
sales volume.
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<PAGE> 13
Operating Income
Second quarter and year-to-date operating income, expressed as a percentage of
net sales, were 14.9% and 12.5%, in 1999, up from 11.6% and 9.8% for the
comparable periods in 1998. The improvement in operating income in these periods
is a result of higher gross income and lower general, administrative and store
operating expenses, expressed as a percentage of net sales.
Interest Income
Second quarter and year-to-date net interest income was $1.2 million and $3.1
million in 1999 and $570 thousand and $739 thousand in 1998. Net interest income
in 1999 was primarily from short-term investments. Net interest income in 1998
was primarily from short-term investments offset by interest expense on the $50
million long-term debt that was repaid during the first quarter of 1998.
FINANCIAL CONDITION
Liquidity and Capital Resources
Cash provided by operating activities and the Company's $150 million credit
agreement provide the resources to support operations, including seasonal
requirements and capital expenditures. A summary of the Company's working
capital position and capitalization follows (thousands):
<TABLE>
<CAPTION>
July 31, January 30,
1999 1999
-------- -----------
<S> <C> <C>
Working capital $ 92,245 $ 86,977
======== ========
Capitalization:
Shareholders' equity $204,624 $186,105
-------- --------
Total capitalization $204,624 $186,105
======== ========
</TABLE>
Net cash used for operating activities totaled $12.6 million for the twenty-six
weeks ended July 31, 1999 versus $18.4 million net cash provided by operating
activities in the comparable period in 1998. Cash was used for higher tax
payments and inventory purchases. Cash requirements for inventory increased over
the period supporting the sales growth and addition of stores. Accounts payable
and accrued expenses also increased supporting the growth in inventories and
sales. Cash was provided primarily from the increase in net income. Cash
requirements for income taxes increased due to tax payments made on higher
earnings.
The Company's operations are seasonal in nature and typically peak during the
back-to-school and Christmas selling seasons. Accordingly, cash requirements for
inventory expenditures are highest during these periods.
Investing activities were all for capital expenditures, which are primarily for
new and remodeled stores.
Financing activities in 1998 consisted primarily of the repayment of $50 million
in long-term debt to The Limited. This occurred through the issuance of 600,000
shares of Class A common
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stock to The Limited with the remaining balance paid with cash from operations.
Additionally, settlement of the intercompany balance between the Company and The
Limited occurred as of May 19, 1998.
Pursuant to the previously authorized stock repurchase program, the Company
repurchased 403,500 shares of the Company's Class A Common Stock during the
first half of 1999.
Capital Expenditures
Capital expenditures, primarily for new and remodeled stores, totaled $29.4
million for the twenty-six weeks ended July 31, 1999 compared to $15.4 million
for the comparable period of 1998.
The Company anticipates spending $85-$95 million in 1999 for capital
expenditures, of which $45-$50 million will be for new stores, remodeling and/or
expansion of existing stores and related improvements. The balance of capital
expenditures will chiefly be related to the construction of a new office and
distribution center which is expected to be completed by mid-2001. The Company
intends to add approximately 400,000 gross retail square feet in 1999, which
will represent a 22% increase over year-end 1998. It is anticipated the increase
will result from the addition of approximately 33 new Abercrombie & Fitch
stores, 21 new "abercrombie" stores and the remodeling and/or expansion of 10
stores. Subsequent to the end of the quarter, the Company purchased land for the
new office and distribution center for approximately $14.0 million.
The Company estimates that the average cost for leasehold improvements and
furniture and fixtures for Abercrombie & Fitch stores opened in 1999 will
approximate $700,000 per store, after giving effect to landlord allowances. In
addition, inventory purchases are expected to average approximately $300,000 per
store.
The Company estimates that the average cost for leasehold improvements and
furniture and fixtures for "abercrombie" stores opened in 1999 will approximate
$450,000 per store, after giving effect to landlord allowances. In addition,
inventory purchases are expected to average approximately $150,000 per store.
The Company expects that substantially all future capital expenditures will be
funded with cash from operations. In addition, the Company has available a $150
million credit agreement to support operations.
Information Systems and "Year 2000" Compliance: Year 2000 Readiness Disclosure
Potential Year 2000 issues will arise primarily from computer programs which
only have a two-digit date field, rather than four, to define the applicable
year of business transactions. Because such computer programs will be unable to
properly interpret dates beyond the year 1999, a systems failure or other
computer errors may ensue. The Company relies on computer-based technology and
utilizes a variety of proprietary and third party hardware and software. The
Company's critical information technology (IT) functions include point-of-sale
equipment, merchandise and non-merchandise procurement and business and
accounting management.
In order to address the Year 2000 issue, the Company has developed a Year 2000
plan that focuses on three areas: IT systems, facilities and distribution
equipment and vendor relations. The plan includes five stages, including (i)
awareness, (ii) assessment, (iii) renovation, (iv)
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<PAGE> 15
validation and (v) implementation. In addition to renovation of legacy systems,
new financial software packages have been implemented.
Year 2000 remediation of existing systems and implementation of new systems,
including validation and implementation, was completed during the second fiscal
quarter. The Company used both internal and external resources to complete the
Year 2000 initiatives.
The Company procures its merchandise and supplies from a vast network of vendors
located both within and outside the United States. The Company has identified
key vendors and suppliers and made inquiries to determine their Year 2000
compliance status. The Company is currently monitoring the responses from these
vendors and suppliers and is obtaining appropriate assurances from these vendors
regarding their Year 2000 compliance status.
The Company also utilizes various facilities, distribution equipment and
transportation and logistic services from The Limited. The Company is monitoring
The Limited's progress toward validation of the Year 2000 readiness of these
services and development of appropriate contingency plans.
The Company believes that the most likely worst case scenario is that there will
be some minor disruption of systems that will affect the supply and distribution
channels on a short-term basis rather than impacting the Company in the long
term. The Company is in the process of evaluating contingency plans, such as
accelerating merchandise deliveries, and developing the actions that would need
to be taken if critical systems or service providers were not Year 2000
compliant. Given the uncertainty as to the exact nature and extent of problems
that may arise, the Company's contingency planning focuses on minimizing any
significant disruptions by committing resources to respond to specific problems
that may arise. At the present time, the Company is not aware of any Year 2000
issues that it expects might materially affect its products, services,
competitive position or financial performance. However, despite the Company's
significant efforts to make its systems and facilities Year 2000 compliant, the
ability of third party service providers, vendors and certain other third
parties, including governmental entities and utility companies to be Year 2000
compliant is beyond the Company's control. Accordingly, the Company can give no
assurances that the failure of systems of other companies on which the Company's
systems rely or that the failure of key suppliers or other third parties to
comply with Year 2000 requirements will not have a material adverse effect on
the Company.
As of July 31, 1999, the Company had incurred substantially all expenses
relating to the Year 2000 issue, consisting of internal staff costs as well as
outside consulting and other expenditures. Total expenditures related to
remediation, testing, conversion, replacement and upgrading system applications
were approximately $4.0 million. Of the total, approximately $1.0 million were
expenses associated with remediation and testing of existing systems. In 1998, a
significant amount of total internal staff resources were directed towards Year
2000 projects. In 1999, internal resources and costs are not expected to change
significantly but will be redirected from Year 2000 projects to other Company
initiatives.
Relationship with The Limited
Effective May 19, 1998, The Limited completed a tax-free exchange offer to
establish the Company as an independent company. Subsequent to the exchange
offer, the Company and The Limited entered into various service agreements for
terms ranging from one to three years. The Company has hired associates with the
appropriate expertise or contracted with outside parties
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<PAGE> 16
to replace those services which expired in May 1999. Service agreements were
also entered into for the continued use by the Company of its distribution and
home office space and transportation and logistic services. These agreements
expire in May 2001. The cost of these services generally is equal to The
Limited's cost in providing the relevant services plus 5% of such costs.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
The Company cautions that any forward-looking statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995) contained in
this Report or made by management of the Company involve risks and uncertainties
and are subject to change based on various important factors. The foregoing
statements as to costs and dates relating to the Year 2000 effort are
forward-looking and are based on the Company's best estimates that may be
updated as additional information becomes available. The Company's
forward-looking statements are also based on assumptions about many important
factors, including the technical skills of employees and independent
contractors, the representations and preparedness of third parties, the failure
of vendors to deliver merchandise or perform services required by the Company
and the collateral effects of the Year 2000 issues on the Company's business
partners and customers. While the Company believes its assumptions are
reasonable, it cautions that it is impossible to predict the impact of a number
of factors that could cause actual costs or timetables to differ materially from
the expected results. In addition to Year 2000 issues, the following factors,
among others, in some cases have affected and in the future could affect the
Company's financial performance and actual results and could cause actual
results for 1999 and beyond to differ materially from those expressed or implied
in any of the forward-looking statements: changes in consumer spending patterns,
consumer preferences and overall economic conditions, the impact of competition
and pricing, changes in weather patterns, political stability, currency and
exchange risks and changes in existing or potential duties, tariffs or quotas,
availability of suitable store locations at appropriate terms, ability to
develop new merchandise and ability to hire and train associates.
16
<PAGE> 17
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is a defendant in lawsuits arising in the ordinary course
of business.
On November 13, 1997, the United States District Court for the Southern
District of Ohio, Eastern Division, dismissed with prejudice an amended
complaint that had been filed against the Company by the American
Textile Manufacturers Institute ("ATMI"), a textile industry trade
association. The amended complaint alleged that the defendants violated
the federal False Claims Act by submitting false country of origin
records to the U.S. Customs Service. On November 26, 1997, ATMI served
a motion to alter or amend judgment and a motion to disqualify the
presiding judge and to vacate the order of dismissal. The motion to
disqualify was denied on December 22, 1997, but as a matter of his
personal discretion, the presiding judge elected to recuse himself from
further proceedings and this matter was transferred to a judge of the
United States District Court for the Southern District of Ohio, Western
Division. On May 21, 1998, this judge denied all pending motions
seeking to alter, amend or vacate the judgment that had been entered in
favor of the Company. On June 5, 1998, ATMI appealed to the United
States Court of Appeals for the Sixth Circuit (the "Sixth Circuit"). On
August 12, 1999, the Sixth Circuit heard arguments from both sides, and
the matter remains pending.
On June 2, 1998, the Company filed suit against American Eagle
Outfitters alleging an intentional and systematic copying of the
Abercrombie & Fitch brand, its images and business practices, including
the design and look of the Company's merchandise, marketing and
catalogue/magazine. The lawsuit, filed in Federal District Court in
Columbus, Ohio, sought to enjoin American Eagle's practices, recover
lost profits and obtain punitive damages. In July 1999, the District
Court granted a summary judgment dismissing the lawsuit against
American Eagle. On July 27, 1999 the Company filed a motion for
reconsideration of the District Court judgment which was subsequently
denied by court order dated September 10, 1999.
Although it is not possible to predict with certainty the eventual
outcome of any litigation, in the opinion of management, the foregoing
proceedings are not expected to have a material adverse effect on the
Company's financial position or results of operations.
Item 5. OTHER INFORMATION
The Company and its subsidiary Abercrombie & Fitch Stores, Inc. ("A&F
Stores") entered into a First Amendment, dated as of July 30, 1999 (the
"Amendment"), to the Credit Agreement, dated as of April 30, 1998 (as
amended, the "Credit Agreement"), among the Company, A&F Stores, the
Lenders party to the Credit Agreement and The Chase Manhattan Bank, as
Administrative Agent. A copy of the Amendment is filed as an exhibit to
this Form 10-Q.
On July 30, 1999, the Company filed with the Delaware Secretary of
State a Certificate of Decrease of Shares Designated as Class B Common
Stock (the "Certificate of Decrease"). A copy of the Certificate of
Decrease is filed as an exhibit to this Form 10-Q.
17
<PAGE> 18
During the second quarter of 1999, the Board of Directors declared a
two-for-one stock split (the "Stock Split") on the Company's shares of
Class A Common Stock, payable on June 15, 1999 to the shareholders of
record at the close of business on May 25, 1999. In accordance with the
Rights Agreement, dated as of July 16, 1998 and amended as of April 21,
1999, between the Company and First Chicago Trust Company of New York
(the "Rights Agreement"), the number of Series A Participating
Cumulative Preferred Stock Purchase Rights associated with each share
of Class A Common Stock outstanding as of the close of business on May
25, 1999, or issued or delivered thereafter prior to the distribution
date for the Rights, was proportionately adjusted from one Right to
0.50 Right.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3. Articles of Incorporation and Bylaws
3.1 Amended and Restated Certificate of Incorporation of the
Company as filed with the Delaware Secretary of State on
August 27, 1996, incorporated by reference to Exhibit 3.1
to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 2, 1996.
3.2 Certificate of Designation of Series A Participating
Cumulative Preferred Stock of the Company as filed with the
Delaware Secretary of State on July 21, 1998, incorporated
by reference to Exhibit 3.2 to the Company's Annual Report
on Form 10-K for the year ended January 30, 1999.
3.3 Certificate of Decrease of Shares Designated as Class B
Common Stock as filed with the Delaware Secretary of State
on July 30, 1999.
3.4 Bylaws of the Company incorporated by reference to Exhibit
3.2 to the Company's Quarterly Report on Form 10-Q for the
quarter ended November 2, 1996.
4. Instruments Defining the Rights of Security Holders
4.1 Specimen Certificate of Class A Common Stock of the Company
incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-1 (File No. 333-8231) (the
"Form S-1").
4.2 Credit Agreement dated as of April 30, 1998 among
Abercrombie & Fitch Stores, Inc., as Borrower, the Company,
as Guarantor, the Lenders party thereto, The Chase
Manhattan Bank, as Administrative Agent, and Chase
Securities, Inc., as Arranger, incorporated by reference to
Exhibit 4.1 to the Company's Current Report on Form 8-K
dated April 30, 1998.
4.3 First Amendment, dated as of July 30, 1999, to the Credit
Agreement, dated as of April 30, 1998, among Abercrombie &
Fitch Stores, Inc., Abercrombie & Fitch Co., the Lenders
party thereto and The Chase Manhattan Bank, as
Administrative Agent.
4.4 Rights Agreement dated as of July 16, 1998 between
Abercrombie & Fitch Co. and First Chicago Trust Company of
New York, incorporated by reference to Exhibit 1 to the
Company's Current Report on Form 8-A dated July 21, 1998.
18
<PAGE> 19
4.5 Amendment No. 1 to the Rights Agreement dated as of April
21, 1999 between Abercrombie & Fitch Co. and First Chicago
Trust Company of New York, incorporated by reference to
Exhibit 2 to the Company's Amendment No. 1 to Form 8-A
dated April 23, 1999.
4.6 Certificate of adjustment of number of Rights associated
with each share of Class A Common Stock, dated May 27,
1999.
10. Material Contracts
10.1 Abercrombie & Fitch Co. Incentive Compensation Performance
Plan incorporated by reference to Exhibit A to the
Company's Proxy Statement dated April 14, 1997.
10.2 1998 Restatement of the Abercrombie & Fitch Co. 1996 Stock
Option and Performance Incentive Plan, as amended through
May 20, 1999, incorporated by reference to Exhibit A to the
Company's Proxy Statement dated April 22, 1999.
10.3 1998 Restatement of the Abercrombie & Fitch Co. 1996 Stock
Plan for Non-Associate Directors incorporated by reference
to Exhibit B to the Company's Proxy Statement dated May 29,
1998.
10.4 Employment Agreement by and between the Company and Michael
S. Jeffries dated as of May 13, 1997 with exhibits and
amendment incorporated by reference to Exhibit 10.4 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended November 1, 1997.
10.5 Employment Agreement by and between the Company and Michele
Donnan-Martin dated December 5, 1997 incorporated by
reference to Exhibit 10.9 to the Company's Registration
Statement on Form S-4 (File No. 333-46423) (the "Form
S-4").
10.6 Employment Agreement by and between the Company and Seth R.
Johnson dated December 5, 1997 incorporated by reference to
Exhibit 10.10 to the Form S-4.
10.7 Tax Disaffiliation Agreement dated as of May 19, 1998
between The Limited, Inc. and the Company incorporated by
reference to Exhibit 10.7 to the Company's Quarterly Report
on Form 10-Q for the quarter ended May 2, 1998.
10.8 Amended and Restated Services Agreement dated as of May 19,
1998 between The Limited, Inc. and the Company incorporated
by reference to Exhibit 10.8 to the Company's Quarterly
Report on Form 10-Q for the quarter ended May 2, 1998.
10.9 Shared Facilities Agreement dated September 27, 1996 by and
between the Company and The Limited, Inc. incorporated by
reference to Exhibit 10.3 to the Company's Quarterly Report
on Form 10-Q for the quarter ended November 2, 1996.
19
<PAGE> 20
10.10 Sublease Agreement by and between Victoria's Secret
Stores, Inc. and the Company, dated June 1, 1995, (the
"Sublease Agreement") incorporated by reference to Exhibit
10.3 to the Form S-1.
10.11 Amendment No. 1 to the Sublease Agreement dated as of May
19, 1998 incorporated by reference to Exhibit 10.11 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended May 2, 1998.
10.12 Employment Agreement by and between the Company and Charles
W. Martin dated December 5, 1997 incorporated by reference
to Exhibit 10.12 to the Company's Annual Report on Form
10-K for the year ended January 30, 1999.
10.13 Description of Arrangement between Diane Chang and the
Company incorporated by reference to Exhibit 10.13 to the
Company's Annual Report on Form 10-K for the year ended
January 30, 1999.
10.14 Abercrombie & Fitch, Inc. Directors' Deferred Compensation
Plan incorporated by reference to Exhibit 10.14 to the
Company's Annual Report on Form 10-K for the year ended
January 30, 1999.
15. Letter re: Unaudited Interim Financial Information to Securities
and Exchange Commission re: Incorporation of Report of Independent
Accountants
27. Financial Data Schedule
(b) Reports on Form 8-K.
None
20
<PAGE> 21
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ABERCROMBIE & FITCH CO.
(Registrant)
By /S/ Seth R. Johnson
------------------------
Seth R. Johnson,
Vice President and Chief
Financial Officer*
Date: September 13, 1999
- ------------------------
* Mr. Johnson is the principal financial officer and has been duly authorized to
sign on behalf of the Registrant.
21
<PAGE> 22
EXHIBIT INDEX
Exhibit No. Document
- ----------- --------
3.3 Certificate of Decrease of Shares Designated as Class B
Common Stock as filed with the Delaware Secretary of
State on July 30, 1999.
4.3 First Amendment, dated as of July 30, 1999, to the
Credit Agreement, dated as of April 30, 1998, among
Abercrombie & Fitch Stores, Inc., Abercrombie & Fitch
Co., the Lenders party thereto and The Chase Manhattan
Bank, as Administrative Agent.
4.6 Certificate of adjustment of number of Rights
associated with each share of Class A Common Stock,
dated May 27, 1999.
15 Letter re: Unaudited Interim Financial Information to
Securities and Exchange Commission re: Incorporation of
Report of Independent Accountants.
27 Financial Data Schedule.
22
<PAGE> 1
Exhibit 3.3
CERTIFICATE OF DECREASE
OF
SHARES DESIGNATED
AS
CLASS B COMMON STOCK
Abercrombie & Fitch Co., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY THAT:
1. The Amended and Restated Certificate of Incorporation of the
Corporation was filed in the office of the Secretary of State of Delaware on
August 27, 1996.
2. In accordance with the provisions of paragraph (d)(5)(E) of Section
2 of Article FOURTH of the Corporation's Amended and Restated Certificate of
Incorporation, upon the conversion of shares of Class B Common Stock, $0.01 par
value (the "Class B Common Stock"), into shares of Class A Common Stock, $0.01
par value (the "Class A Common Stock"), each share of Class B Common Stock that
is converted (i) shall be retired and cancelled and shall not be reissued and
(ii) shall proportionately decrease the number of shares of Class B Common Stock
designated by Section 2 of Article FOURTH.
3. Effective May 19, 1998, 40,484,545 shares of Class B Common Stock
were converted into a like number of shares of Class A Common Stock. Effective
June 1, 1998, 3,115,455 shares of Class B Common Stock were converted into a
like number of shares of Class A Common Stock. As a result, in accordance with
the provisions of paragraph (d)(5)(E) of Section 2 of Article FOURTH of the
Corporation's Amended and Restated Certificate of Incorporation an aggregate of
43,600,000 shares of Class B Common Stock shall be retired and cancelled and the
number of shares designed as shares of Class B Common Stock shall be decreased
to 106,400,000. In addition, the total number of shares of stock which the
Corporation shall have authority to issue shall be decreased to 271,400,000,
consisting of 256,400,000 shares of Common Stock, $0.01 par value, and
15,000,0000 shares of Preferred Stock, $0.01 par value.
<PAGE> 2
IN WITNESS WHEREOF, said Abercrombie & Fitch Co. has caused this
certificate to be signed by John K. Shubitowski, its Secretary, as of the 29th
day of July, 1999.
By /s/ John K. Shubitowski
-----------------------------
Typed Name: John K. Shubitowski
--------------------
Title: Secretary
-------------------------
<PAGE> 1
Exhibit 4.3
CONFORMED COPY
FIRST AMENDMENT AND WAIVER, dated as of July 30, 1999 (this "Amendment"), to the
Credit Agreement, dated as of April 30, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among ABERCROMBIE
& FITCH STORES, INC. a corporation organized under the laws of the State of
Delaware (the "Borrower"), ABERCROMBIE & FITCH CO., a corporation organized
under the laws of the State of Delaware (the "Parent"), the several banks and
other financial institutions and entities from time to time parties thereto (the
"Lenders"), and THE CHASE MANHATTAN BANK, as administrative agent (the
"Administrative Agent") for the Lenders.
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to
make certain loans to the Borrower; and
WHEREAS, the Borrower has requested that certain provisions of the
Credit Agreement be modified in the manner provided for in this Amendment, and
the Lenders are willing to agree to such modifications as provided for in this
Amendment.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used and not defined herein shall
have the meanings given to them in the Credit Agreement, as amended hereby.
2. Amendments to the Credit Agreement.
(a) Section 1.01 of the Credit Agreement is hereby amended by (i)
inserting in appropriate alphabetical order the following definition of
"Permitted Subordinated Debt":
"'Permitted Subordinated Debt' means Indebtedness of the
Parent (and any Guarantees of such Indebtedness by the Borrower or by
Subsidiaries of the Parent that are Guarantors of the obligations
hereunder), the payment of
<PAGE> 2
2
which is subordinated to the Parent's obligations under its Guarantee of the
obligations hereunder, provided that such Permitted Subordinated Debt (a)
accrues interest at a rate determined in good faith by the board of
directors of the Parent to be a market rate of interest for such Permitted
Subordinated Debt at the time of issuance thereof, (b) is created under
agreements or instruments that do not, as determined in good faith by the
board of directors of the Parent, (i) impose covenants on the Parent and the
Parent's Subsidiaries, (ii) contain a definition of change of control or
(iii) contain events of default and other provisions, in each case
materially more restrictive than the covenants imposed in, the change of
control definition used in and the events of default and other provisions
contained in this Agreement, (c) does not provide for scheduled principal
payments on such Permitted Subordinated Debt on any date on or prior to the
date which is six months subsequent to the Maturity Date, (d) is unsecured,
(e) is not guaranteed by the Borrower or any Subsidiary unless (i) each such
Subsidiary also has Guaranteed the obligations hereunder and (ii) such
Guarantee of such Permitted Subordinated Debt is subordinated, in the case
of a Subsidiary, to its Guarantee of the obligations hereunder and, in the
case of the Borrower, to its obligations hereunder, in each case on terms no
less favorable to the Lenders than the subordination provisions of the
Permitted Subordinated Debt, (f) does not by its terms require the
maintenance or achievement of any financial performance standards more
restrictive than those contained herein, as determined in good faith by the
board of directors of the Parent, other than as a condition to taking
specified action and (g) the terms of subordination of such Permitted
Subordinated Debt are customary and reasonably satisfactory to the
Administrative Agent."; and
(ii) inserting the following before the period at the end of the
definition of "Restricted Payment":
";provided, that cash payments in lieu of the
issuance of fractional shares upon the conversion of Permitted
Subordinated Debt shall not constitute a Restricted Payment."
<PAGE> 3
3
(b) Section 6.01 of the Credit Agreement is hereby amended by:
(i) deleting "and" at the end of clause (f) thereof and
substituting in lieu thereof the following:
";(g) Permitted Subordinated Debt in an aggregate
principal amount of up to $175,000,000; provided that the
proceeds of such Indebtedness are used to fund the
construction of a distribution center and corporate
headquarters of the Parent or the Borrower and, to the extent
not used therefor, up to $100,000,000 for working capital
purposes; and"; and
(ii) relettering clause (g) thereof as clause (h).
(c) Section 6.05 of the Credit Agreement is hereby amended by:
(i) deleting "and" at the end of clause (d) thereof and
substituting in lieu thereof the following:
"; (e) Guarantees constituting Permitted Subordinated
Debt permitted by Section 6.01(g);
(f) Guarantees by the Parent or any Subsidiary of the
Indebtedness hereunder; and "
(ii) relettering clause (e) thereof as clause (g).
(d) Section 6.07 of the Credit Agreement is hereby amended by:
(i) deleting "and" at the end of clause (c) thereof and
substituting in lieu thereof the following:
"(d) if no Default has occurred and is continuing,
the Borrower and the Subsidiaries may declare and pay
dividends to the Parent and other Subsidiaries in amounts
necessary to enable the Parent to make timely interest
payments on any Permitted Subordinated Debt permitted by
Section 6.01(g) and"; and
(ii) relettering clause (d) as clause (e).
<PAGE> 4
4
(e) Article VI of the Credit Agreement is hereby amended by inserting
the following after Section 6.12 thereof:
"SECTION 6.13 Prepayments of Permitted Subordinated Debt. The
Parent and the Borrower will not, and will not permit any Subsidiary
to, make, or agree to pay or make, directly or indirectly, any
mandatory or optional prepayment in respect of Permitted Subordinated
Debt as a result of a change of control (as defined in such Permitted
Subordinated Debt) or otherwise (other than payments made in capital
stock of the Parent, including cash payments in lieu of fractional
shares) unless and until all obligations under this Agreement have been
paid in full and all commitments hereunder have been terminated.
(f) Article VII of the Credit Agreement is hereby amended by inserting
the following before ";" at the end of clause (g) thereof: "or to prepayments of
Permitted Subordinated Debt made solely with capital stock of the Parent
(including cash payments in lieu of fractional shares) or the conversion of
Permitted Subordinated Debt into capital stock of the Parent (including cash
payments in lieu of fractional shares)".
3. Waiver. The Lenders hereby expressly waive any rights or remedies in
connection with any breach of or failure by the Parent or the Borrower to comply
with Section 5.09(a) or (b), Section 5.02(a) or any other provision of the
Credit Agreement prior to the date hereof as a result of the failure of the
Parent and the Borrower to (i) notify the Administrative Agent of the formation
or acquisition of the following subsidiaries (collectively, the "New
Subsidiaries"), each an Ohio corporation: Abercrombie & Fitch Fulfillment
Company, Abercrombie & Fitch Production Company and Abercrombie & Fitch
Distribution Company and (ii) cause each New Subsidiary to become a party to the
Guarantee Agreement.
4. No Other Amendments; Confirmation. Except as expressly amended,
waived, modified and supplemented hereby, the provisions of the Credit Agreement
are and shall remain in full force and effect.
<PAGE> 5
5
5. Representations and Warranties. Each of the Borrower and the Parent
hereby represents and warrants to the Administrative Agent and the Lenders as of
the date hereof:
(a) No Default or Event of Default has occurred and is continuing.
(b) The execution, delivery and performance by the Borrower and the
Parent of this Amendment have been duly authorized by all necessary
corporate and, if required, stockholder action and do not and will not
require any registration with, consent or approval of, notice to or action
by, any person (including any governmental agency) in order to be effective
and enforceable. The Credit Agreement as amended by this Amendment has been
duly executed and delivered by each of the Parent and the Borrower and
constitutes the legal, valid and binding obligation of each of the Borrower
and the Parent, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding at equity or at
law.
(c) All representations and warranties of the Borrower contained in the
Credit Agreement (other than representations or warranties expressly made
only on and as of the Effective Date) are true and correct as of the date
hereof.
6. Effectiveness. This Amendment shall become effective only upon the
satisfaction in full of the following conditions precedent:
(a) The Administrative Agent shall have received counterparts hereof,
duly executed and delivered by the Borrower, the Parent and the Required
Lenders;
(b) The Administrative Agent shall have received such opinions and
certificates from the Borrower, the Parent and their counsel as it may
reasonably request in form reasonably satisfactory to its counsel;
(c) The Borrower shall have paid to the Administrative Agent on behalf
of the Lenders that duly execute and
<PAGE> 6
6
deliver counterparts hereof on or prior to July 28, 1999 a fee equal to 0.05
percent of the aggregate amount of the outstanding Loans and Commitments
under the Credit Agreement; and
(d) The New Subsidiaries shall have become parties to the Guarantee
Agreement.
7. Expenses. The Borrower agrees to reimburse the Administrative Agent
for its out-of-pocket expenses in connection with this Amendment, including the
reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel
for the Administrative Agent.
8. Governing Law; Counterparts. (a) This Amendment and the rights and
obligations of the parties hereto shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.
(b) This Amendment may be executed by one or more of the parties to
this Amendment on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. This Amendment may be delivered by facsimile transmission of the
relevant signature pages hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
ABERCROMBIE & FITCH STORES,
INC.,
by
/s/ Seth R. Johnson
---------------------
Name: Seth R. Johnson
Title: VP/CFO
ABERCROMBIE & FITCH CO.,
by
/s/ Seth R. Johnson
---------------------
Name: Seth R. Johnson
Title: VP/CFO
<PAGE> 7
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent,
by
/s/ Barry K. Bergman
----------------------
Name: Barry K. Bergman
Title: Vice President
<PAGE> 8
BANK OF AMERICA, N.A.,
by
/s/ Bridget Garavalia
------------------------
Name: Bridget Garavalia
Title: Managing Director
<PAGE> 9
THE BANK OF NEW YORK,
by
/s/ Michael Flannery
----------------------
Name: Michael Flannery
Title: Vice President
<PAGE> 10
BANKBOSTON, N.A.,
by
/s/ Kathleen A. Dimock
-----------------------
Name: Kathleen A. Dimock
Title: Vice President
<PAGE> 11
BANK ONE, N.A.,
by
/s/ Debora K. Oberling
------------------------
Name: Debora K. Oberling
Title: Vice President
<PAGE> 12
THE FIFTH THIRD BANK OF
COLUMBUS,
by
---------------------------
Name:
Title:
<PAGE> 13
THE FIRST NATIONAL BANK OF
CHICAGO,
by
/s/ Debora K. Oberling
------------------------
Name: Debora K. Oberling
Title: Vice President
<PAGE> 14
FIRST UNION NATIONAL BANK,
by
/s/ Randall R. Meck
-------------------------------
Name: Randall R. Meck
Title: Assistant Vice President
<PAGE> 15
FIRSTAR, N.A.,
by
/s/ Timothy H. Kirtley
-------------------------------
Name: Timothy H. Kirtley
Title: Assistant Vice President
<PAGE> 16
FLEET NATIONAL BANK,
by
/s/ Robert T.P. Storer
------------------------
Name: Robert T.P. Storer
Title: S.V.P.
<PAGE> 17
THE HUNTINGTON NATIONAL BANK,
by
/s/ R. Bradley Smith
-----------------------
Name: R. Bradley Smith
Title: Vice President
<PAGE> 18
NATIONAL CITY BANK,
by
/s/ Joseph L. Kwasny
-----------------------
Name: Joseph L. Kwasny
Title: Vice President
<PAGE> 19
STANDARD CHARTERED BANK,
by
/s/ David D. Cutting
----------------------------
Name: David D. Cutting
Title: Senior Vice President
/s/ Kristina McDavid
----------------------------
Name: Kristina McDavid
Title: Vice President
<PAGE> 20
SUNTRUST BANK, CENTRAL FLORIDA,
N.A.,
by
/s/ Stephen L. Leister
------------------------
Name: Stephen L. Leister
Title: Vice President
<PAGE> 1
Exhibit 4.6
CERTIFICATE
I, Seth R. Johnson hereby certify that:
1. I am the duly elected, qualified and acting Vice President
- - Chief Financial Officer of Abercrombie & Fitch Co., a Delaware corporation
(the "Company").
2. In an Action Without a Meeting effective as of April 15,
1999, the Board of Directors of the Company declared a distribution in the form
of a stock split (the "Stock Split") of the shares of Class A Common Stock,
$0.01 par value (the "Common Stock"), of the Company whereby one (1) additional
share of Common Stock will be distributed on or about June 15, 1999, for each
share of Common Stock outstanding or held in treasury on May 25, 1999.
3. Pursuant to Section 11(p) of that certain Rights Agreement,
dated as of July 16, 1998, as amended by that certain Amendment No. 1 to Rights
Agreement, dated as of April 21, 1999 (the "Rights Agreement"), between the
Company and First Chicago Trust Company of New York, as Rights Agent ("First
Chicago"), the number of Rights (the "Rights") representing the right to
purchase one one-thousandth of a share of Series A Participating Cumulative
Preferred Stock, $1.00 par value (the "Preferred Stock"), of the Company
associated with each of the shares of Common Stock outstanding
<PAGE> 2
as of the close of business on May 25, 1999, or issued or delivered thereafter
prior to the "Distribution Date" (as defined in the Rights Agreement), is to be
proportionately adjusted.
4. Immediately prior to the Stock Split, 51,650,000 shares of
Common Stock were outstanding and immediately following the Stock Split
103,300,000 shares of Common Stock will be outstanding. As a result, the number
of Rights to be associated with each share of Common Stock following the Stock
Split will be .50.
5. This Certificate has been prepared in accordance with
Section 12 of the Rights Agreement and may be relied upon by First Chicago, as
the Rights Agent, and by each transfer agent of the Company's Preferred Stock
and Common Stock.
IN WITNESS WHEREOF, I have hereunto signed my name this 27th
day of May, 1999.
/s/ Seth R. Johnson
---------------------------------
Seth R. Johnson, Vice President -
Chief Financial Officer of
Abercrombie & Fitch Co.
2
<PAGE> 1
Exhibit 15
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549
Commissioners:
We are aware that our report dated August 10, 1999 on our review of the interim
consolidated financial information of Abercrombie & Fitch Co. (the "Company") as
of and for the thirteen and twenty-six week periods ended July 31, 1999 and
included in this Form 10-Q is incorporated by reference in the Company's
registration statements on Form S-8, Registration Nos. 333-15941, 333-15943,
333-15945, 333-60189, 333-60203 and 333-81373. Pursuant to Rule 436(c) under the
Securities Act of 1933, this report should not be considered a part of the
registration statement prepared or certified by us within the meaning of
Sections 7 and 11 of that Act.
Very truly yours,
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Columbus, Ohio
September 10, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements (unaudited) of Abercrombie & Fitch Co. for the
quarter ended July 31, 1999 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-29-2000
<PERIOD-START> MAY-02-1999
<PERIOD-END> JUL-31-1999
<CASH> 107,556
<SECURITIES> 0
<RECEIVABLES> 3,925
<ALLOWANCES> 0
<INVENTORY> 97,629
<CURRENT-ASSETS> 217,543
<PP&E> 177,335
<DEPRECIATION> 72,049
<TOTAL-ASSETS> 343,157
<CURRENT-LIABILITIES> 125,298
<BONDS> 0
0
0
<COMMON> 1,033
<OTHER-SE> 203,591
<TOTAL-LIABILITY-AND-EQUITY> 343,157
<SALES> 198,895
<TOTAL-REVENUES> 198,895
<CGS> 118,174
<TOTAL-COSTS> 118,174
<OTHER-EXPENSES> 51,134
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,171)
<INCOME-PRETAX> 30,758
<INCOME-TAX> 12,310
<INCOME-CONTINUING> 18,448
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,448
<EPS-BASIC> .18
<EPS-DILUTED> .17
</TABLE>
