UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 2, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-23760
American Eagle Outfitters, Inc.
(Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation or organization) 150 Thorn Hill Drive, Warrendale, PA |
No. 13-2721761 (I.R.S. Employer Identification No.) 15086-7528 |
Registrant's telephone number, including area code: (724) 776-4857
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 the filing requirements for at least the past 90 days. YES [X] NO [ ]
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). 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: 71,125,992 Common Shares were outstanding at September 2, 2003.
AMERICAN EAGLE OUTFITTERS, INC.
TABLE OF CONTENTS
Page | |
PART I - FINANCIAL INFORMATION | |
Item 1. Financial Statements | 3 |
Consolidated Balance Sheets | |
August 2, 2003, February 1, 2003 and August 3, 2002 | 3 |
Consolidated Statements of Operations | |
Three and six months ended August 2, 2003 and August 3, 2002 | 4 |
Consolidated Statements of Cash Flows | |
Six months ended August 2, 2003 and August 3, 2002 | 5 |
Notes to Consolidated Financial Statements | 6 |
Report of Independent Accountants | 13 |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 14 |
Item 3. Quantitative and Qualitative Disclosures about Market Risk | 20 |
Item 4. Controls and Procedures | 20 |
PART II - OTHER INFORMATION | |
Item 1. Legal Proceedings | N/A |
Item 2. Changes in Securities and Use of Proceeds | N/A |
Item 3. Defaults Upon Senior Securities |
N/A |
Item 4. Submission of Matters to a Vote of Security Holders | 21 |
Item 5. Other Information | N/A |
22 | |
|
PART I
ITEM 1. FINANCIAL STATEMENTS.
AMERICAN EAGLE OUTFITTERS, INC. |
|||||
(In thousands) |
August 2, |
February 1, |
August 3, | ||
Current assets: |
|||||
Cash and cash equivalents |
$119,328 |
$194,526 |
$109,246 | ||
Short-term investments |
89,638 |
47,047 |
67,756 | ||
Merchandise inventory |
159,036 |
124,708 |
148,781 | ||
Accounts and note receivable, including related party |
25,230 |
13,598 |
17,971 | ||
Prepaid expenses and other |
35,117 |
32,153 |
28,998 | ||
Deferred income taxes |
13,468 |
15,846 |
16,343 | ||
Total current assets |
441,817 |
427,878 |
389,095 | ||
Property and equipment, at cost, net of accumulated depreciation and amortization |
277,619 |
267,479 |
263,989 | ||
Goodwill, net of accumulated amortization |
23,614 |
23,614 |
23,966 | ||
Other assets, net of accumulated amortization |
30,934 |
22,368 |
24,690 | ||
Total assets |
$773,984 |
$741,339 |
$701,740 | ||
Liabilities and Stockholders' Equity |
|||||
Current liabilities: |
|||||
Accounts payable |
$64,525 |
$50,608 |
$80,063 | ||
Current portion of note payable |
4,593 |
4,225 |
8,780 | ||
Accrued compensation and payroll taxes |
17,762 |
13,001 |
16,452 | ||
Accrued rent |
27,874 |
28,476 |
26,387 | ||
Accrued income and other taxes |
14,852 |
12,655 |
1,557 | ||
Unredeemed stored value cards and gift certificates |
13,593 |
22,837 |
10,238 | ||
Other liabilities and accrued expenses |
10,103 |
9,784 |
9,821 | ||
Total current liabilities |
153,302 |
141,586 |
153,298 | ||
Non-current liabilities: |
|||||
Note payable |
15,100 |
16,356 |
17,400 | ||
Other non-current liabilities |
9,752 |
5,915 |
7,021 | ||
Total non-current liabilities |
24,852 |
22,271 |
24,421 | ||
Commitments and contingencies |
- |
- |
- | ||
Stockholders' equity: |
|||||
Preferred stock |
- |
- |
- | ||
Common stock |
734 |
|
733 |
|
721 |
Contributed capital |
156,319 |
154,840 |
161,156 | ||
Accumulated other comprehensive gain (loss) |
2,417 |
|
(31) |
|
(1,844) |
Retained earnings |
483,029 |
468,522 |
402,585 | ||
Deferred compensation |
(1,698) |
|
(2,253) |
|
(6,501) |
Treasury stock |
(44,971) |
(44,329) |
(32,096) | ||
Total stockholders' equity |
595,830 | 577,482 | 524,021 | ||
Total liabilities and stockholders' equity |
$773,984 |
$741,339 |
$701,740 | ||
See Notes to Consolidated Financial Statements |
3
AMERICAN EAGLE OUTFITTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts) |
Three Months Ended |
Six Months Ended | ||||||
|
August 2, |
August 3, |
|
August 2, |
August 3, | |||
Net sales |
$337,055 |
$319,223 |
|
$628,913 |
|
$597,116 | ||
Cost of sales, including certain buying, occupancy and warehousing expenses |
|
|
|
|
|
| ||
Gross profit |
111,189 |
109,754 |
|
217,177 |
|
219,773 | ||
Selling, general and administrative expenses |
84,826 |
81,154 |
|
167,682 |
|
159,293 | ||
Depreciation and amortization expense |
13,763 |
12,487 |
|
27,179 |
|
24,445 | ||
Operating income |
12,600 |
16,113 |
|
22,316 |
|
36,035 | ||
Other income, net |
514 |
196 |
|
1,155 |
|
857 | ||
Income before income taxes |
13,114 |
16,309 |
|
23,471 |
|
36,892 | ||
Provision for income taxes |
5,010 |
6,229 |
|
8,964 |
|
14,094 | ||
Net income |
|
$8,104 |
|
$10,080 |
|
$14,507 |
|
$22,798 |
Basic income per common share |
|
$0.11 |
|
$0.14 |
|
$0.20 |
|
$0.32 |
Diluted income per common share |
|
$0.11 |
|
$0.14 |
|
$0.20 |
|
$0.31 |
Weighted average common shares outstanding - basic |
71,085 |
72,119 |
|
71,071 |
|
72,075 | ||
Weighted average common shares outstanding - diluted |
72,380 |
73,265 |
|
72,175 |
|
73,427 | ||
Retained earnings, beginning |
|
$474,925 |
|
$392,505 |
|
$468,522 |
|
$379,787 |
Net income |
8,104 |
10,080 |
|
14,507 |
|
22,798 | ||
Retained earnings, ending |
|
$483,029 |
|
$402,585 |
|
$483,029 |
|
$402,585 |
See Notes to Consolidated Financial Statements
4
AMERICAN EAGLE OUTFITTERS, INC. | ||
(Unaudited) |
||
|
Six Months Ended | |
(In thousands) |
August 2, |
August 3, |
Operating activities: |
||
Net income |
$14,507 | $22,798 |
Adjustments to reconcile net income to net cash provided by (used for) operating activities: |
||
Depreciation and amortization |
27,179 | 24,445 |
Stock compensation |
555 | 2,868 |
Deferred income taxes |
(1,183) | (110) |
Other adjustments |
1,089 | 1,279 |
Changes in assets and liabilities: |
||
Merchandise inventory |
(33,015) | (57,733) |
Accounts and note receivable, including related party |
(12,683) | (412) |
Prepaid expenses and other |
(2,454) | (5,507) |
Accounts payable |
12,976 | 42,680 |
Unredeemed stored value cards and gift certificates |
(9,345) | (7,346) |
Accrued liabilities |
6,997 | (34,142) |
Total adjustments |
(9,884) | (33,978) |
Net cash provided by (used for) operating activities |
4,623 | (11,180) |
Investing activities: |
||
Capital expenditures |
(34,158) | (32,125) |
Purchase of short-term investments |
(82,544) | (35,480) |
Sale of short-term investments |
39,953 | 12,761 |
Other investing activities |
(730) | (1,940) |
Net cash used for investing activities |
(77,479) | (56,784) |
Financing activities: |
||
Payments on note payable |
(2,814) | (2,670) |
Proceeds from borrowings from line of credit | - | 4,784 |
Repurchase of common stock |
(642) | (7,242) |
Net proceeds from stock options exercised |
527 | 1,746 |
Net cash used for financing activities |
(2,929) | (3,382) |
Effect of exchange rates on cash |
587 | 194 |
Net decrease in cash and cash equivalents |
(75,198) | (71,152) |
Cash and cash equivalents - beginning of period |
194,526 | 180,398 |
Cash and cash equivalents - end of period |
$119,328 | $109,246 |
See Notes to Consolidated Financial Statements
5
AMERICAN EAGLE OUTFITTERS, INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
1. Interim Financial Statements
The accompanying Consolidated Financial Statements of American Eagle Outfitters, Inc. (the "Company") at August 2, 2003 and August 3, 2002 and for the three and six month periods ended August 2, 2003 (the "current period") and August 3, 2002 (the "prior period") have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. Certain notes and other information have been condensed or omitted from the interim Consolidated Financial Statements presented in this Quarterly Report on Form 10-Q. Therefore, these Consolidated Financial Statements should be read in conjunction with the Company's Fiscal 2002 Annual Report. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The Consolidated Balance Sheet at February 1, 2003 was derived from the audited financial statements.
The Company's business is affected by the pattern of seasonality common to most retail apparel businesses. The results for the current and prior periods are not necessarily indicative of future financial results.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Fiscal Year
The Company's financial year is a 52/53 week year that ends on the Saturday nearest to January 31. As used herein, "Fiscal 2003" and "Fiscal 2002" refer to the fifty-two week period ending January 31, 2004 and the fifty-two week period ended February 1, 2003, respectively.
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates based on currently available information. Changes in facts and circumstances may result in revised estimates.
Recent Accounting Standards
FIN No. 46, Consolidation of Variable Interest Entities
In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"), Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51, Consolidated Financial Instruments. FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional financial support from other parties. FIN 46 is effective for all new variable interest entities created or interest acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the interpretation must be applied in the first interim period beginning after June 15, 2003. Management is currently performing an evaluation of the effect, if any, that the adoption of FIN 46 may have on the Company's earnings and financial condition.
6
Foreign Currency Translation
The Canadian dollar is the functional currency for the Canadian businesses. In accordance with SFAS No. 52, Foreign Currency Translation, assets and liabilities denominated in foreign currencies were translated into U.S. dollars at the exchange rate prevailing at the balance sheet date. Revenues and expenses denominated in foreign currencies were translated into U.S. dollars (the reporting currency) at the monthly average exchange rate for the period. Gains or losses resulting from foreign currency transactions are included in the results of operations, whereas, related translation adjustments are reported as an element of other comprehensive income, net of income taxes, in accordance with SFAS No. 130, Reporting Comprehensive Income (see Note 7 of the Consolidated Financial Statements).
Revenue Recognition
The Company principally records revenue upon the purchase of merchandise by customers. Revenue is not recorded on the purchase of stored value cards and gift certificates by customers. A current liability is recorded upon purchase and revenue is recognized when the card is redeemed for merchandise. Revenue is recorded net of sales returns. A sales returns reserve is provided on gross sales for projected merchandise returns based on historical average return percentages.
Cash and Cash Equivalents
Cash includes cash equivalents. The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.
Short-term Investments
Cash in excess of operating requirements is invested in marketable equity or government debt obligations. As of August 2, 2003, short-term investments included investments with an original maturity of greater than three months (averaging approximately ten months) and consisted primarily of tax-exempt municipal bonds and taxable agency bonds classified as available for sale.
Capital Structure
The Company has 250 million common shares authorized at $.01 par value, 74 million issued at August 2, 2003, February 1, 2003 and August 3, 2002 and 71 million outstanding at August 2, 2003 and February 1, 2003 and 72 million outstanding at August 3, 2002. The Company has 5 million preferred shares authorized at $.01 par value, with none issued or outstanding at August 2, 2003, February 1, 2003 or August 3, 2002.
On February 24, 2000, the Company's Board of Directors authorized the repurchase of up to 3,750,000 shares of its stock. As part of this stock repurchase program, the company purchased 40,000 shares of common stock for approximately $0.5 million on the open market during the six months ended August 2, 2003. The company purchased 337,100 shares of common stock for approximately $5.6 million on the open market during the six months ended August 3, 2002. As of August 2, 2003, approximately 700,000 shares remain authorized for repurchase. Additionally, during the six months ended August 2, 2003 and August 3, 2002, the Company purchased 5,400 shares and 56,000 shares, respectively, from certain employees at market prices totaling $0.1 million and $1.6 million, respectively, for the payment of taxes in connection with the vesting of restricted stock as permitted under the 1999 Stock Incentive Plan. These repurchases have been recorded as treasury stock.
7
Earnings Per Share
The following table shows the amounts used in computing earnings per share and the effect on income and the weighted average number of shares of potential dilutive common stock (stock options and restricted stock).
Three Months Ended |
Six Months Ended | |||
(In thousands) |
August 2, |
August 3, |
August 2, |
August 3, |
Net income |
$8,104 |
$10,080 |
$14,507 | $22,798 |
Weighted average common shares outstanding: |
||||
Basic shares |
71,085 |
72,119 |
71,071 |
72,075 |
Dilutive effect of stock options and non-vested restricted stock |
1,295 |
1,146 |
1,104 |
1,352 |
Diluted shares |
72,380 |
73,265 |
72,175 |
73,427 |
Options to purchase 5,420,000 and 5,467,000 shares of common stock during the three and six months ended August 2, 2003, respectively, and 5,914,000 and 3,900,000 shares during the three and six months ended August 3, 2002, respectively, were outstanding, but were not included in the computation of net income per diluted share because the options' exercise prices were greater than the average market price of the underlying shares.
Stock Option Plan
The Company accounts for its stock-based compensation plans under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. The pro forma information below is based on provisions of SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure ("SFAS No. 148"), issued in December 2002. SFAS No. 148 requires that the pro forma information regarding net income and earnings per share be determined as if the Company had accounted for its employee stock options granted beginning in the fiscal year subsequent to December 31, 1994 under the fair value method of that Statement. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model.
Three Months Ended |
Six Months Ended | |||
(In thousands) |
August 2, |
August 3, |
August 2, |
August 3, |
Net income, as reported |
$8,104 |
$10,080 |
$14,507 | $22,798 |
Add: stock-based compensation expense included in |
412 |
103 |
597 | 229 |
Less: total stock-based compensation expense determined under fair value method, net of tax |
(3,867) |
(2,005) |
(7,758) |
(4,117) |
Pro forma net income | $4,649 | $8,178 |
$7,346 |
$18,910 |
Basic income per common share: | ||||
As reported | $0.11 | $0.14 |
$0.20 |
$0.32 |
Pro forma | $0.07 | $0.11 |
$0.10 |
$0.26 |
Diluted income per common share: | ||||
As reported | $0.11 | $0.14 |
$0.20 |
$0.31 |
Pro forma | $0.06 | $0.11 |
$0.10 |
$0.26 |
8
Reclassification
Certain reclassifications have been made to the Consolidated Financial Statements for prior periods in order to conform to the August 2, 2003 presentation.
3. Accounts and Note Receivable
Accounts and note receivable is comprised of the following:
(In thousands) |
August 2, |
February 1, |
August 3, |
Accounts receivable - construction allowances |
$5,722 |
$5,247 |
$4,875 |
Accounts receivable - sell-offs to non-related parties |
4,468 |
1,670 |
3,149 |
Related party accounts receivable |
3,759 |
1,266 |
1,578 |
Fabric receivable | 3,189 | - | - |
Accounts receivable - other |
8,092 | 5,415 | 8,369 |
Total |
$25,230 |
$13,598 |
$17,971 |
4. Property and Equipment
Property and equipment consists of the following:
(In thousands) |
August 2, |
February 1, |
August 3, |
Land |
$2,355 |
$2,355 |
$2,355 |
Buildings |
20,629 |
20,144 |
19,783 |
Leasehold improvements |
240,265 |
217,102 |
207,248 |
Fixtures and equipment |
176,434 |
164,175 |
146,803 |
439,683 |
403,776 |
376,189 | |
Less: Accumulated depreciation and amortization |
(162,064) |
(136,297) |
(112,200) |
Net property and equipment |
$277,619 |
$267,479 |
$263,989 |
9
5. Related Party Transactions
The Company has various transactions with related parties. The Company believes that the terms of these transactions are as favorable to the Company as those that could be obtained from third parties.
The Company has an operating lease for its corporate headquarters and distribution center with Linmar Realty Company, an affiliate of Schottenstein Stores Corporation ("SSC"). The lease, which expires on December 31, 2020, provides for annual rental payments of approximately $2.4 million through 2005, $2.6 million through 2015, and $2.7 million through the end of the lease. Rent expense was $0.6 million for the three months ended August 2, 2003 and August 3, 2002, and $1.2 million for the six months ended August 2, 2003 and August 3, 2002 under the lease.
In addition, the Company and its subsidiaries sell end-of-season, overstock and irregular merchandise to various parties, including Value City Department Stores, Inc. ("VCDS"), a publicly-traded subsidiary of SSC. These sell-offs are typically sold below cost and the proceeds are reflected in cost of sales. For the three months ended August 2, 2003 and August 3, 2002, proceeds from sell-offs to VCDS were $0.7 million and $0.2 million, respectively. For the six months ended August 2, 2003 and August 3, 2002, proceeds from sell-offs to VCDS were $8.4 million and $3.9 million, respectively.
The Company had approximately $3.8 million, $1.3 million and $1.6 million included in accounts receivable at August 2, 2003, February 1, 2003 and August 3, 2002, respectively, that pertained to related party merchandise sell-offs.
SSC and its affiliates charge the Company for various professional services provided to the Company, including certain legal, real estate and insurance services. For the three months ended August 2, 2003 and August 3, 2002, the Company paid approximately $0.4 million and $0.1 million, respectively, for these services. For the six months ended August 2, 2003 and August 3, 2002, the Company paid approximately $0.8 million and $0.2 million, respectively, for these services.
During Fiscal 2002 and Fiscal 2001, the Company made deposits with SSC totaling approximately $2.5 million in a cost sharing arrangement for the acquisition of an interest in several corporate aircraft. These deposits are included in other assets, net of accumulated amortization. As of August 2, 2003, the net balance of the deposits was approximately $2.2 million. Additionally, the Company paid $0.4 million and $0.5 million for the three months ended August 2, 2003 and August 3, 2002, respectively, and $0.7 million for the six months ended August 2, 2003 and August 3, 2002 to cover its share of operating costs based on usage of the corporate aircraft.
6. Accounting for Derivative Instruments and Hedging Activities
On November 30, 2000, the Company entered into an interest rate swap agreement totaling $29.2 million in connection with the term facility. The swap amount decreases on a monthly basis beginning January 1, 2001 until the termination of the agreement in December 2007. The Company utilizes the interest rate swap to manage interest rate risk. The Company pays a fixed rate of 5.97% and receives a variable rate based on the one-month Bankers' Acceptance Rate. This agreement effectively changes the interest rate on the borrowings under the term facility from a variable rate to a fixed rate of 5.97% plus 140 basis points.
In accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, the Company recognizes its derivative on the balance sheet at fair value at the end of each period. Changes in the fair value of the derivative that is designated and meets all the required criteria for a cash flow hedge are recorded in accumulated other comprehensive income (loss). Unrealized net gains (losses) on derivative instruments of approximately $(39,000) and $62,000 for the three months ended August 2, 2003 and August 3, 2002, respectively, and $(4,000) and $216,000 for the six months ended August 2, 2003 and August 3, 2002, respectively, net of related tax effects, were recorded in other comprehensive income (loss).
The Company does not believe there is any significant exposure to credit risk due to the creditworthiness of the bank. In the event of non-performance by the bank, the Company's loss would be limited to any unfavorable interest rate differential.
10
7. Other Comprehensive Income (Loss)
Other comprehensive income (loss) is comprised of the following:
(In thousands) |
|
Three Months Ended |
Six Months Ended |
||||
|
|
August 2, |
August 3, |
August 2, |
August 3, |
||
Net Income |
$8,104 |
$10,080 |
$14,507 |
$22,798 |
|||
Unrealized gain (loss) on investments, net of tax |
(7) | (147) | (66) |
262 |
|||
Foreign currency translation adjustment, net of tax |
456 | (473) | 2,518 |
(427) |
|||
Unrealized derivative gains (losses) on cash flow hedge, net of tax |
(39) | 62 | (4) |
216 |
|||
Other comprehensive income (loss), net of tax |
410 | (558) | 2,448 |
51 |
|||
Total comprehensive income |
$8,514 | $9,522 | $16,955 |
$22,849 |
8. Segment Information
The Company has segmented its operations in a manner that reflects how its chief operating decision-makers review the results of the operating segments that make up the consolidated entity.
The Company has two reportable segments, its American Eagle segment and its Bluenotes segment. The American Eagle segment includes the Company's 776 U.S. and Canadian retail stores and the Company's e-commerce business, ae.com. The Bluenotes segment includes the Company's 111 Bluenotes/Thriftys retail stores in Canada. Both segments derive their revenues from the sale of women's and men's apparel. However, each segment is identified by a distinct brand name and target customer.
Segment information as of and for the three and six months ended August 2, 2003 and August 3, 2002 follows:
(In thousands) | |||
2003 |
American Eagle* |
Bluenotes |
Total |
Three months: | |||
Net sales |
$317,766 |
$19,289 |
$337,055 |
Operating income (loss) |
17,032 |
(4,432) |
12,600 |
Six months: |
|||
Net sales |
$593,835 |
$35,078 |
$628,913 |
Operating income (loss) |
32,434 |
(10,118) |
22,316 |
Total assets |
712,050 |
61,934 |
773,984 |
2002 | |||
Three months: | |||
Net sales |
$300,411 |
$18,812 |
$319,223 |
Operating income (loss) |
19,064 |
(2,951) |
16,113 |
Six months: | |||
Net sales |
$560,842 |
$36,274 |
$597,116 |
Operating income (loss) |
42,411 |
(6,376) |
36,035 |
Total assets | 639,600 | 62,140 | 701,740 |
* Includes certain other businesses that support American Eagle.
11
9. Contingency
During Fiscal 2000, a senior executive assumed a new position within the Company. As a result of this change, the Company accelerated the vesting on grants covering 780,000 shares of stock for this individual. This acceleration does not result in additional compensation expense unless this executive ceases employment with the Company prior to the original vesting dates. As of August 2, 2003, under the original terms of this executive's option agreements, 211,200 shares would have remained unvested which could result in compensation expense and a reduction to net income by $0.6 million based on the August 2, 2003 stock value if the executive ceases employment with the Company.
10. Income Taxes
For the three and six months ended August 2, 2003 and August 3, 2002, the effective tax rate used for the provision of income tax approximated 38%.
11. Legal Proceedings
The Company is a party to ordinary routine litigation incidental to its business. Management does not expect the results of the litigation to be material to the financial statements individually or in the aggregate.
12
Review by Independent Accountants
Ernst & Young LLP, our independent accountants, have performed a limited review of the Consolidated Financial Statements for the three and six month periods ended August 2, 2003 and August 3, 2002, as indicated in their report on the limited review included below. Since they did not perform an audit, they express no opinion on the Consolidated Financial Statements referred to above. Management has given effect to any significant adjustments and disclosures proposed in the course of the limited review.
Independent Accountants' Review Report
The Board of Directors and Stockholders
American Eagle Outfitters,
Inc.
We have reviewed the accompanying condensed consolidated balance sheets of American Eagle Outfitters, Inc. as of August 2, 2003 and August 3, 2002, and the related condensed consolidated statements of operations for the three-month and six-month periods ended August 2, 2003 and August 3, 2002, and the condensed consolidated statements of cash flows for the six-month periods ended August 2, 2003 and August 3, 2002. These financial statements are the responsibility of the Company's management.
We conducted our reviews 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 auditing standards generally accepted in the United States, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States.
We have previously audited, in accordance with auditing standards generally accepted in the United States, the consolidated balance sheet of American Eagle Outfitters, Inc. as of February 1, 2003, and the related consolidated statements of operations, comprehensive income, stockholders' equity and cash flows for the year then ended (not presented herein) and in our report dated February 24, 2003 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 February 1, 2003, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
/s/ Ernst & Young LLP
Pittsburgh, Pennsylvania
August 13, 2003
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis of financial condition and results of operations are based upon the Company's Consolidated Financial Statements and should be read in conjunction with these statements and notes thereto.
Results of Operations
Consolidated store data for the six months ended August 2, 2003 and August 3, 2002
Six Months Ended | ||||
|
August 2, |
August 3, | ||
Number of stores: |
||||
Beginning of period |
864 |
|
790 | |
Opened |
24 |
|
33 | |
Closed |
(1) |
|
(1) | |
End of period |
887 |
822 |
Store count and gross square feet by brand as of August 2, 2003 and August 3, 2002
August 2, |
August 3, | ||||||
Number of |
Gross square |
Number of |
Gross square | ||||
American Eagle Outfitters stores |
776 |
4,009,727 |
711 |
3,552,195 | |||
Bluenotes/Thriftys stores |
111 |
354,206 |
111 |
352,210 | |||
Total stores and gross square feet at end of period |
887 |
4,363,933 |
822 |
3,904,405 |
Comparison of three months ended August 2, 2003 to the three months ended August 3, 2002
Net Sales
Consolidated net sales increased 5.6% to $337.1 million from $319.2 million. The sales
increase was due primarily to a 12% increase in gross square feet, consisting
primarily of a net addition of 65 stores,
offset by a consolidated comparable store sales decrease of 5.5%.
American Eagle net sales increased 5.8% to $317.8 million from $300.4 million. The sales increase was due primarily to the net addition of 65 stores offset by a comparable store sales decrease of 5.3%. The comparable store sales decrease was driven primarily by a lower average unit retail price as well as a decline in the number of transactions per average store. Units sold per average store and units sold per transaction both increased compared to the same period last year. Comparable store sales in the men's business declined in the high single-digits for the period while the women's comparable store sales decreased in the mid single-digits.
Bluenotes net sales increased 2.5% to $19.3 million from $18.8 million. The increase in net sales was due to a stronger Canadian dollar during the period compared to the same period last year. Comparable store sales, which exclude the impact of foreign currency fluctuations, decreased 8.3% due to a decline in the number of transactions per average store as well as a lower average unit retail price. Units sold per transaction and units sold per store increased compared to the same period last year.
A store is included in comparable store sales in the thirteenth month of operation. However, stores that have a gross square footage increase of 25% or greater due to an expansion and/or relocation are removed from the comparable store sales base, but are included in total sales. These stores are returned to the comparable store sales base in the thirteenth month following the expansion and/or relocation.
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Gross Profit
Gross profit as a percent to sales declined to 33.0% from 34.4%. The percentage decrease was attributed to the deleveraging of buying, occupancy and warehousing costs, primarily rent expense, at the American Eagle stores. Merchandise margins were flat for the period as an improvement in markon was offset by higher markdowns.
Selling, General and Administrative Expenses
Selling, general and administrative expenses as a percent to sales decreased to 25.2% from 25.4% due primarily to the Company's cost control initiatives. Advertising, services purchased, travel, chargecard fees, supplies, and communications all leveraged during the period. These improvements were partially offset by the deleveraging of direct salaries in the American Eagle stores. For the period, selling, general and administrative expense per gross square foot declined 6.5% and decreased 3.1% per average store.
Depreciation and Amortization Expense
Depreciation and amortization expense as a percent to sales increased to 4.1% from 3.9% due primarily to our U.S. expansion, including new and remodeled stores.
Other Income, Net
Other income increased to $0.5 million from $0.2 million due primarily to lower interest expense and the strengthening of the Canadian dollar.
Comparison of six months ended August 2, 2003 to the six months ended August 3, 2002
Net Sales
Consolidated net sales increased 5.3% to $628.9 million from $597.1
million. The sales increase was due primarily to a 12% increase in gross square feet, consisting primarily of a net addition of
65 stores,
offset by a consolidated comparable store sales decrease of 6.0%.
American Eagle net sales increased 5.9% to $593.8 million from $560.8 million. The sales increase was due primarily to the net addition of 65 stores offset by a comparable store sales decrease of 5.6%. The comparable store sales decrease was driven by a lower average unit retail price as well as a slight decline in the number of transactions per average store. Units sold per average store and units sold per transaction both increased compared to the same period last year.
Bluenotes net sales decreased 3.3% to $35.1 million from $36.3 million. The sales decline was due primarily to a comparable store sales decrease of 11.6% partially offset by a stronger Canadian dollar this year compared to the same period last year. The comparable store sales decrease, which excludes the impact of foreign currency fluctuations, was driven primarily by a lower average unit retail as well as a slight decline in the number of transactions per average store. Units sold per transaction and units sold per average store both increased compared to the same period last year.
Gross Profit
Gross profit as a percent to sales declined to 34.5% from 36.8%. The percentage decrease was primarily attributed to the deleveraging of buying, occupancy, and warehousing costs and a lower merchandise margin at the American Eagle stores. Buying, occupancy and warehousing costs deleveraged due primarily to rent expense. A lower merchandise margin resulted from an increase in markdowns as a percent to sales, partially offset by an improved markon.
Selling, General and Administrative Expenses
Selling, general and administrative expenses as a percent to sales remained constant at 26.7%. Direct salaries deleveraged, offset primarily by the leveraging of advertising, services purchased, travel, chargecard fees, supplies, and communications. For the six month period, selling, general and administrative expenses per square foot declined 5.8% and decreased 2.5% per average store versus the same period last year.
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Depreciation and Amortization Expense
Depreciation and amortization expense as a percent to sales increased to 4.3% from 4.1% due primarily to our U.S. expansion, including new and remodeled stores.
Other Income, Net
Other income increased to $1.2 million from $0.9 million due primarily to lower interest expense and the strengthening of the Canadian dollar, offset by lower investment income resulting from lower average investment rates.
Liquidity and Capital Resources
The following sets forth certain measures of the Company's liquidity:
August 2, 2003 |
February 1, |
August 3, | |
Working capital (in 000's) | $288,515 | $286,292 | $235,797 |
Current ratio | 2.88 | 3.02 | 2.54 |
Net cash provided by operating activities was $4.6 million for the six months ended August 2, 2003 compared to $11.2 million used for operating activities during the same period last year. The primary differences in cash used for operating activities between the six months ended August 2, 2003 and the six months ended August 3, 2002 were due primarily to the timing of income tax payments offset by lower net income adjusted for depreciation and amortization and stock compensation compared to the same period last year.
Net cash used for investing activities of $77.5 million was primarily for the $42.6 million net purchase of short-term investments as well as capital expenditures of $34.2 million.
The Company has an unsecured demand lending arrangement (the "facility") with a bank to provide a $118.6 million line of credit at either the lender's prime lending rate (4.0% at August 2, 2003) or a negotiated rate such as LIBOR. The facility has a limit of $40.0 million that can be used for direct borrowing. No borrowings were required against the line for the current or prior period. At August 2, 2003, letters of credit in the amount of $52.1 million were outstanding leaving a remaining available balance on the facility of $66.5 million. The Company also has an uncommitted letter of credit facility for $50.0 million with a separate financial institution. At August 2, 2003, letters of credit in the amount of $30.5 million were outstanding, leaving a remaining available balance on the uncommitted letter of credit facility of $19.5 million.
The Company has a $29.1 million non-revolving term facility (the "term facility") and a $11.2 million revolving operating facility (the "operating facility") in connection with its Canadian acquisition. The term facility matures in December 2007 and bears interest at the one-month Bankers' Acceptance Rate (3.0% at August 2, 2003) plus 140 basis points. At August 2, 2003, the remaining balance on the term facility was $19.7 million. The operating facility is due in November 2003, has four additional one-year extensions, and bears interest at either the lender's prime lending rate (4.8% at August 2, 2003) or the Bankers' Acceptance Rate (3.0% at August 2, 2003) plus 120 basis points. There were no borrowings under the operating facility for the period ended August 2, 2003.
Capital expenditures, net of construction allowances, totaled $34.2 million for the six months ended August 2, 2003. This amount consisted primarily of $27.3 million related to 24 new and 35 remodeled American Eagle stores in the United States and Canada.
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We expect capital expenditures during Fiscal 2003 to be approximately $80 to $90 million, which will relate primarily to approximately 60 new American Eagle stores in the United States and Canada, and the remodeling of approximately 65 to 70 American Eagle stores in the United States. Remaining capital expenditures will relate primarily to information technology upgrades. This forward-looking statement will be influenced by factors including our financial position, consumer spending, and the number of acceptable store locations that may become available. We believe that our existing cash and investment balances, our cash flow from operations, and our bank lines of credit will be sufficient to meet our anticipated cash requirements through Fiscal 2003.
Our growth strategy includes the possibility of acquisitions and/or internally developing new brands. We periodically consider and evaluate these options to support future growth. In the event we do pursue such options, we could require additional equity or debt financing. There can be no assurance that we would be successful in closing any potential transaction, or that any endeavor we undertake would increase our profitability.
Critical Accounting Policies
The accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States. When more than one accounting principle, or method of its application, is generally accepted, management selects the principle or method that is appropriate in the Company's specific circumstances. Application of these accounting principles requires management to make estimates about the future resolution of existing uncertainties. Accordingly, results could differ from these estimates. In preparing these financial statements, management has made its best estimates and judgments of the amounts and disclosures included in the financial statements giving due regard to materiality. We believe the following policies, in addition to those described in our annual report on Form 10-K for the year ended February 1, 2003, to be critical:
Goodwill. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, management evaluates goodwill for impairment by comparing the fair value of the Company's reporting units to the book value. As of August 2, 2003, approximately $13.5 million in goodwill was assigned to the Bluenotes reporting unit. Additionally, a deferred tax asset of approximately $6.2 million relates to the Bluenotes' goodwill. The fair value of the Company's reporting units is estimated using discounted cash flow methodologies and market comparable information. Based on the analysis, if the implied fair value of each reporting unit exceeds the book value of the goodwill, no impairment loss is recognized. The Company continues to monitor for impairment of goodwill based on certain risk factors (see discussion of Risk Factors beginning on page 18). As of August 2, 2003, the Company has determined that no impairment of goodwill exists.
The Company's prospective determination will depend on the ongoing operations and performance of its defined reportable units. Bluenotes' future earnings growth depends, in part, upon the Company's ability to successfully reposition the brand. The Company has made management changes in the Bluenotes division and has implemented new merchandising and operating strategies. However, there can be no assurance that the merchandising and operating strategies implemented by the Company's new management team will result in improved results of operations. Additionally, management's assumptions about discount rates, inflation rates and other internal and external economic conditions, such as the expected growth rate and terminal value of its reportable units, requires significant judgment based on fluctuating rates, anticipated future revenues, and the prospective financial markets.
Asset Impairment. The Company is required to test for asset impairment whenever events or changes in circumstances indicate that the carrying value of an asset might not be recoverable. The Company applies SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, in order to determine whether or not an asset is impaired. Management evaluates the ongoing value of assets associated with retail stores that have been open longer than one year, which includes a review of lease acquisition costs, net of accumulated depreciation, of approximately $3.2 million related to Bluenotes. When undiscounted cash flows estimated to be generated by those assets are less than the carrying value of those assets, impairment losses are recorded. When events such as these occur, the impaired assets are adjusted to estimated fair value and an impairment loss is recorded in selling, general and administrative expenses. Should actual results or market conditions differ from those anticipated, particularly regarding the Bluenotes brand, additional losses may be recorded.
Income Taxes. The Company calculates income taxes in
accordance with SFAS No. 109, Accounting for Income Taxes, which requires
the use of the asset and liability method. Under this method, deferred tax
assets and liabilities are recognized based on the difference between the
consolidated financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using the tax rates in effect in the years when those temporary
differences are expected to reverse. No valuation allowance has been provided
for the deferred tax assets. A portion of the Company's deferred tax asset
totaling $10.8 million is attributed to a foreign tax loss carryforward and
relates to Bluenotes. However, the Company has identified tax planning
strategies and believes that future taxable income will be
sufficient to recover the full amount of the respective deferred tax asset.
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Impact of Inflation/Deflation
We do not believe that inflation has had a significant effect on our net sales or our profitability. Substantial increases in cost, however, could have a significant impact on our business and the industry in the future. Additionally, while deflation could positively impact our merchandise costs, it could have an adverse effect on our average unit retail price, resulting in lower sales and profitability.
Income Taxes
The actual effective tax rate for Fiscal 2003 will ultimately depend on several variables, including the mix of earnings between U.S. and foreign operations and the overall level of earnings. The rate is also influenced by proposed and enacted state and federal income tax legislation. We anticipate an increase in the effective tax rate to approximately 39% beginning in the three months ending November 1, 2003.
Safe Harbor Statement, Seasonality and Risk Factors
This report contains various "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent our expectations or beliefs concerning future events, including the following:
We caution that these statements are further qualified by factors that could cause our actual results to differ materially from those in the forward-looking statements, including without limitation, the following:
Our ability to identify and respond to changing consumer preferences and fashion trends in a timely manner
The Company's future success depends, in part, upon its ability to identify and respond to fashion trends in a timely manner. The specialty retail apparel business fluctuates according to changes in the economy and customer preferences, dictated by fashion and season. These fluctuations especially affect the inventory owned by apparel retailers, since merchandise typically must be ordered well in advance of the selling season. While we endeavor to test many merchandise items before ordering large quantities, we are still susceptible to changing fashion trends and fluctuations in customer demands.
In addition, the cyclical nature of the retail business requires that we carry a significant amount of inventory, especially prior to peak selling seasons, when we build up our inventory levels. We enter into agreements for the manufacture and purchase of our private label apparel well in advance of the applicable selling season. As a result, we are vulnerable to changes in consumer demand, pricing shifts, and the timing and selection of merchandise purchases. Changes in fashion trends, if unsuccessfully identified, forecasted or responded to by the Company, could, among other things, lead to lower sales, excess inventories and higher markdowns, which in turn could have a material adverse effect on the Company's results of operations and financial condition.
The effect of competitive pressures from other retailers and other business factors
The specialty retail industry is highly competitive. The Company competes primarily on the basis of quality, fashion, service, selection and price. There can be no assurance that the Company will be able to successfully compete in the future.
The success of the Company's operations also depends to a
significant extent upon a number of factors relating to discretionary consumer
spending, including economic conditions affecting disposable consumer income
such as employment, consumer debt, interest rates, and consumer confidence.
There can be no assurance that consumer spending will not be negatively affected
by general or local economic conditions, thereby adversely impacting the
Company's continued growth and results of operations.
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Our ability to expand through new store growth
The Company's continued growth and success will depend in part on its ability to open and operate new stores on a timely and profitable basis. During the remainder of Fiscal 2003, the Company plans to open roughly 36 new American Eagle stores in the United States and Canada. Accomplishing the Company's new store expansion goals will depend upon a number of factors, including the ability to obtain suitable sites for new stores at acceptable costs, the hiring and training of qualified personnel, particularly at the store management level, the integration of new stores into existing operations, the expansion of the Company's buying and inventory capabilities and the availability of capital. There can be no assurance that the Company will be able to achieve its store expansion goals, manage its growth effectively, successfully integrate the planned new stores into the Company's operations or operate its new stores profitably.
Our ability to successfully reposition the Bluenotes brand
The Company's future earnings depend, in part, upon its ability to successfully reposition the Bluenotes brand. The Bluenotes business incurred operating losses during the prior year due to a combination of factors, including (i) an abrupt change to the target customer and merchandising strategy, (ii) adjusting the merchandise fit to a smaller size, (iii) a merchandise product assortment that was skewed too high in price points and not consistent with the brand strategy, (iv) a marketing approach that was too narrow in scope, (v) a lack of sourcing efficiencies and (vi) increased competitive pressure. In addition, adverse economic conditions in general during the year had a negative impact on the operations of many Canadian retailers, including those of Bluenotes. The Company has made management changes in the Bluenotes division and has implemented new merchandising and operating strategies. However, there can be no assurance that the merchandising and operating strategies implemented by the Company's new management team will result in improved results of operations. For the six months ended August 2, 2003, the Bluenotes brand incurred an operating loss of approximately $10.1 million (see Note 8 of the Consolidated Financial Statements).
If the Company is not successful in repositioning the Bluenotes brand, the carrying value of certain assets assigned to the reporting unit may exceed the fair value of those assets and result in an impairment loss. As of August 2, 2003, goodwill and lease acquisition costs attributed to the Bluenotes brand, including the related deferred tax asset, had a carrying value of approximately $23.0 million. Additionally, a portion of the Company's deferred tax asset totaling $10.8 million is attributed to a foreign tax loss carryforward and relates to Bluenotes. However, the Company has identified tax planning strategies and believes that future taxable income will be sufficient to recover the full amount of the respective deferred tax asset. Management continues to monitor the Bluenotes brand for impairment based on the risk factors discussed above. There were no impairment losses related to Bluenotes recognized for the three months ended August 2, 2003. However, it is possible than an impairment loss may be required during the remainder of Fiscal 2003.
The interruption of the flow of merchandise from key vendors
The Company purchases merchandise from domestic and foreign suppliers. During the prior year, a majority of the Company's merchandise was purchased from foreign suppliers. Since we rely on a small number of overseas sources for a significant portion of our purchases, any event causing the disruption of imports including the insolvency of a significant supplier, the imposition of additional import restrictions, such as increased duties, tariffs or quotas, or political or economic disruptions could have an adverse effect on our operations. We do not maintain any long-term or exclusive commitments or arrangements to purchase from any single supplier.
Other risk factors
Additionally, other factors could adversely affect our financial performance, including factors such as: our ability to successfully acquire and integrate other businesses; any interruption of our key business systems; any disaster or casualty resulting in the interruption of service from our distribution centers or in a large number of our stores; changes in weather patterns; the effects of changes in currency exchange rates and interest rates; and international and domestic acts of terror.
The impact of the aforementioned factors, some of which are
beyond our control, may cause our actual results to differ materially from
expected results in these statements and other forward-looking statements we may
make from time-to-time.
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Seasonality
Historically, our operations have been seasonal, with a
significant amount of net sales and net income occurring in the fourth fiscal
quarter, reflecting increased demand during the year-end holiday selling season
and, to a lesser extent, the third quarter, reflecting increased demand during
the back-to-school selling season. During Fiscal 2002, these periods accounted
for approximately 59.2% of our sales. As a result of this seasonality, any
factors negatively affecting us during the third and fourth fiscal quarters of
any year, including adverse weather or unfavorable economic conditions, could
have a material adverse effect on our financial condition and results of
operations for the entire year. Our quarterly results of operations also may
fluctuate based upon such factors as the timing of certain holiday seasons, the
number and timing of new store openings, the amount of net sales contributed by
new and existing stores, the timing and level of markdowns, store closings,
refurbishments and relocations, competitive factors, weather and general
economic conditions.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES.
The Co-Chief Executive Officers and the Chief Financial Officer of the Company
conducted an evaluation of the effectiveness of the design and operation of the
Company's disclosure controls and procedures as defined in Exchange Act Rule
13a-15(e) as of the end of the period covered by this report. Based on
that evaluation, the Co-Chief Executive Officers and the Chief Financial Officer
concluded that the Company's disclosure controls and procedures were effective
as of the end of the period covered by this report. There were no
significant changes in internal controls over financial reporting that occurred
during the three months ended August 2, 2003 that have materially affected, or are reasonably
likely to materially affect, the Company's internal controls over financial
reporting.
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PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company held its 2003 Annual Meeting of Stockholders on May 27, 2003. Holders of 65,003,408 shares of the Company's common stock were present in person or by proxy representing approximately 91.5% of the Company's 71,053,177 shares outstanding on the record date.
(b) and (c) The following persons continued to serve as Class I directors: Ari
Deshe, Michael G. Jesselson, George Kolber, Roger S. Markfield and Jay L.
Schottenstein; and the following persons continue to serve as Class III
directors: Jon P. Diamond, Martin P. Doolan, Gilbert W. Harrison and James V.
O'Donnell. The following persons were elected as Class II members of the
Board of Directors to serve a three year term until the annual meeting in
2006 or until their successors are duly elected and qualified. Each person
received the number of votes for or the number of votes with authority withheld
indicated below.
Name |
Shares For |
Shares Abstain |
|||||
John L. Marakas |
63,556,695 | 1,446,713 | |||||
Robert R. McMaster | 64,089,230 | 914,178 | |||||
Gerald E. Wedren |
54,757,169 | 10,246,239 | |||||
Larry M. Wolf |
54,707,395 | 10,296,013 |
The stockholder proposal regarding the adoption of a management incentive plan did pass. It received 62,953,595 shares for, 2,023,999 shares against and 25,814 shares abstain. The stockholder proposal regarding the adoption of human rights standards did not pass. It received 6,751,031 shares for, 45,271,874 shares against and 3,072,472 shares abstain. The Company has an existing comprehensive vendor compliance program that contractually requires all suppliers to meet our global workplace standards, including human rights standards.
(d) Not applicable
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) | Exhibit 10.13
Employment Agreement between the Registrant and Michael Leedy dated July 30, 2003.
Exhibit 15 Acknowledgement of Ernst & Young LLP Exhibit 31.1 Certification by Roger S. Markfield pursuant to Rule 13a-14(a) or Rule 15d-14(a) Exhibit 31.2 Certification by James V. O'Donnell pursuant to Rule 13a-14(a) or Rule 15d-14(a) Exhibit 31.3
Certification by Laura A. Weil pursuant to Rule 13a-14(a) or Rule 15d-14(a) Exhibit 32.2 Certification of
Co-Chief Executive Officer Pursuant to 18 U.S.C.
Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 |
(b) | We filed the following reports
on Form 8-K during the three months ended August 2, 2003: 1. On May 7, 2003, we issued a press release announcing our April 2003 sales, filed on Form 8-K with the SEC on May 9, 2003. 2. On May 15, 2003, we issued a press release announcing our financial results for the first quarter ended May 3, 2003, filed on Form 8-K with the SEC on May 15, 2003. 3. On June 4, 2003, we issued a press release announcing our May 2003 sales, filed on Form 8-K with the SEC on June 6, 2003. 4. On July 9, 2003, we issued a press release announcing our June 2003 sales, filed on Form 8-K with the SEC on July 11, 2003. |
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SIGNATURES
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.
Dated September 9, 2003
American Eagle Outfitters, Inc.
(Registrant)/s/ Laura A. Weil
Laura A. Weil
Executive Vice President and Chief Financial Officer/s/ Dale E. Clifton
Dale E. Clifton
Vice President, Controller and Chief Accounting Officer
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