-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AahbsQcyr63PPuOSz86RR+AYCSPdgWjrhRA/anlECuxTchDWq/mHebIUdnegVhQI 2k0Qtpw+CdNoG0kUMRgk/w== 0000950152-99-007554.txt : 19990915 0000950152-99-007554.hdr.sgml : 19990915 ACCESSION NUMBER: 0000950152-99-007554 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19990731 FILED AS OF DATE: 19990914 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ABERCROMBIE & FITCH CO /DE/ CENTRAL INDEX KEY: 0001018840 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FAMILY CLOTHING STORES [5651] IRS NUMBER: 311469076 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12107 FILM NUMBER: 99711301 BUSINESS ADDRESS: STREET 1: FOUR LIMITED PARKWAY EAST CITY: REYNOLDSBURG STATE: OH ZIP: 43068 BUSINESS PHONE: 6145776500 MAIL ADDRESS: STREET 1: FOUR LIMITED PARKWAY EAST CITY: COLUMBUS STATE: OH ZIP: 43068 10-Q 1 ABERCROMBIE & FITCH CO. FORM 10-Q 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. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 31-1469076 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) Four Limited Parkway East, Reynoldsburg, OH 43068 --------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (614) 577-6500 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class A Common Stock Outstanding at September 1, 1999 -------------------- -------------------------------- $.01 Par Value 103,032,887 Shares 2 ABERCROMBIE & FITCH CO. TABLE OF CONTENTS
Page No. -------- 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
2 3 PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS ABERCROMBIE & FITCH CO. CONSOLIDATED STATEMENTS OF INCOME (Thousands except per share amounts) (Unaudited)
Thirteen Weeks Ended Twenty-six Weeks Ended --------------------------- --------------------------- July 31, August 1, July 31, August 1, 1999 1998 1999 1998 -------- --------- -------- --------- 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 ======== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial statements. 3 4 ABERCROMBIE & FITCH CO. CONSOLIDATED BALANCE SHEETS (Thousands)
July 31, January 30, 1999 1999 ----------- ----------- (Unaudited) 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 ========= =========
The accompanying notes are an integral part of these consolidated financial statements. 4 5 ABERCROMBIE & FITCH CO. CONSOLIDATED STATEMENTS OF CASH FLOWS (Thousands) (Unaudited)
Twenty-six Weeks Ended ----------------------------- July 31, August 1, 1999 1998 --------- --------- 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 ========= =========
The accompanying notes are an integral part of these consolidated financial statements. 5 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. 6 7 3. EARNINGS PER SHARE Weighted Average Common Shares Outstanding (thousands):
Thirteen Weeks Ended --------------------------- July 31, August 1, 1999 1998 -------- --------- 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 ======= =======
Twenty-six Weeks Ended --------------------------- July 31, August 1, 1999 1998 -------- --------- 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 ======= =======
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):
July 31, January 30, 1999 1999 -------- ----------- 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 ======== ========
7 8 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 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 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 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:
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED ------------------------------------ ------------------------------------ JULY 31, AUGUST 1, JULY 31, AUGUST 1, 1999 1998 CHANGE 1999 1998 CHANGE ------ ------ ------ ------ ------ ------ 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 ===== ===== ====== ======
11 12 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. 12 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):
July 31, January 30, 1999 1999 -------- ----------- Working capital $ 92,245 $ 86,977 ======== ======== Capitalization: Shareholders' equity $204,624 $186,105 -------- -------- Total capitalization $204,624 $186,105 ======== ========
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 13 14 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) 14 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 15 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 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 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 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 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 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 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 EX-3.3 2 EXHIBIT 3.3 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. 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 ------------------------- EX-4.3 3 EXHIBIT 4.3 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 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." 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). 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. 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 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 7 THE CHASE MANHATTAN BANK, individually and as Administrative Agent, by /s/ Barry K. Bergman ---------------------- Name: Barry K. Bergman Title: Vice President 8 BANK OF AMERICA, N.A., by /s/ Bridget Garavalia ------------------------ Name: Bridget Garavalia Title: Managing Director 9 THE BANK OF NEW YORK, by /s/ Michael Flannery ---------------------- Name: Michael Flannery Title: Vice President 10 BANKBOSTON, N.A., by /s/ Kathleen A. Dimock ----------------------- Name: Kathleen A. Dimock Title: Vice President 11 BANK ONE, N.A., by /s/ Debora K. Oberling ------------------------ Name: Debora K. Oberling Title: Vice President 12 THE FIFTH THIRD BANK OF COLUMBUS, by --------------------------- Name: Title: 13 THE FIRST NATIONAL BANK OF CHICAGO, by /s/ Debora K. Oberling ------------------------ Name: Debora K. Oberling Title: Vice President 14 FIRST UNION NATIONAL BANK, by /s/ Randall R. Meck ------------------------------- Name: Randall R. Meck Title: Assistant Vice President 15 FIRSTAR, N.A., by /s/ Timothy H. Kirtley ------------------------------- Name: Timothy H. Kirtley Title: Assistant Vice President 16 FLEET NATIONAL BANK, by /s/ Robert T.P. Storer ------------------------ Name: Robert T.P. Storer Title: S.V.P. 17 THE HUNTINGTON NATIONAL BANK, by /s/ R. Bradley Smith ----------------------- Name: R. Bradley Smith Title: Vice President 18 NATIONAL CITY BANK, by /s/ Joseph L. Kwasny ----------------------- Name: Joseph L. Kwasny Title: Vice President 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 20 SUNTRUST BANK, CENTRAL FLORIDA, N.A., by /s/ Stephen L. Leister ------------------------ Name: Stephen L. Leister Title: Vice President EX-4.6 4 EXHIBIT 4.6 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 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 EX-15 5 EXHIBIT 15 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 EX-27 6 EXHIBIT 27
5 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. 1,000 3-MOS JAN-29-2000 MAY-02-1999 JUL-31-1999 107,556 0 3,925 0 97,629 217,543 177,335 72,049 343,157 125,298 0 0 0 1,033 203,591 343,157 198,895 198,895 118,174 118,174 51,134 0 (1,171) 30,758 12,310 18,448 0 0 0 18,448 .18 .17
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