SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549-0001
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: DECEMBER 1, 2000
AMERICAN EAGLE OUTFITTERS, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
	DELAWARE	0-23760	13-2721761
	(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)	(COMMISSION FILE NO.)	(IRS EMPLOYER IDENTIFICATION NUMBER)
150 Thorn Hill Drive Warrendale, PA 15086-7528 (724)776-4857 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER INCLUDING AREA CODE OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
Not Applicable (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)

ITEM 7.	FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
	(a)	Financial Statements of the Businesses Acquired:
	The following financial statements for the acquired businesses are filed herein:
	Report of Independent Auditors on Combined Financial Statements for the Divisions of Dylex Limited acquired by American Eagle Outfitters, Inc. for the year ended January 29, 2000
	Combined Balance Sheets for the Divisions of Dylex Limited acquired by American Eagle Outfitters, Inc. as of October 28, 2000 (Unaudited) and January 29, 2000
	Combined Statements of Operations, Combined Statements of Cash Flows, and Combined Statements of Net Divisional Equity for the Divisions of Dylex Limited acquired by American Eagle Outfitters, Inc. for the year ended January 29, 2000, for the nine months ended October 28, 2000 (Unaudited), and for the nine months ended October 30, 1999 (Unaudited)
	Notes to the Combined Financial Statements
	(b)	Unaudited Pro Forma Financial Statements:
	The following unaudited pro forma combined financial statements are filed herein:
	Unaudited Pro Forma Combined Balance Sheet as of October 28, 2000
	Unaudited Pro Forma Combined Statement of Operations for the nine months ended October 28, 2000
	Unaudited Pro Forma Combined Statement of Operations for the year ended January 29, 2000
	Notes to the Unaudited Pro Forma Combined Financial Statements

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors of Dylex Limited

               We have audited the accompanying combined balance sheet of the Acquired Businesses as of January 29, 2000, and the related combined statements of operations, net divisional equity, and cash flows for the year then ended. The combined financial statements include the accounts of Braemar, Thrifty's and National Logistics Services (the "Acquired Businesses" ). The Acquired Businesses are divisions of Dylex Limited ("Dylex") and thus are under common ownership and common management. These financial statements are the responsibility of the management of Dylex Limited. Our responsibility is to express an opinion on these financial statements based on our audit.

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

               In our opinion, such combined financial statements present fairly, in all material respects, the financial position of the Acquired Businesses at January 29, 2000 and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP
Toronto, Canada

January 19, 2001

Combined Balance Sheet

Divisions of Dylex Limited Acquired by
American Eagle Outfitters, Inc.

	January 29, 2000
(U.S. dollars in thousands)
Assets
Current assets:
Cash	$	17,998
Merchandise inventory		11,394
Accounts receivable		945
Prepaid expenses		381
Total current assets		30,718
Fixed assets:
Land		2,124
Buildings and renovations		5,781
Leasehold improvements and equipment		22,699
		30,604
Less accumulated depreciation		7,986
		22,618
Systems development costs, net		1,109
Total assets	$	54,445
Liabilities and net divisional equity
Current liabilities:
Accounts payable	$	11,466
Accrued liabilities		1,537
Accrued compensation		1,734
Accrued rent		2,750
Unredeemed payable gift certificates		582
Accrued income and other taxes payable		4,677
Total current liabilities		22,746
Noncurrent liabilities		103
Net divisional equity		31,596
Total liabilities and net divisional equity	$	54,445

See accompanying notes to the combined financial statements.

Combined Statement of Operations

Divisions of Dylex Limited Acquired by
American Eagle Outfitters, Inc.

	Year ended January 29, 2000
(U.S. dollars in thousands)
Net sales	$	169,959
Cost of sales, including certain buying, occupancy, and warehousing costs		112,609
Gross profit		57,350
Selling, general, and administrative expenses		43,852
Depreciation and amortization expense		4,450
Operating income		9,048
Other expenses, net		(235	)
Income before income taxes		8,813
Provision for income taxes		3,878
Net income	$	4,935

See accompanying notes to the combined financial statements.

Combined Statement of Net Divisional Equity

Divisions of Dylex Limited Acquired by
American Eagle Outfitters, Inc.

For the year ended January 29, 2000

(U.S. dollars in thousands)	Net Investment		Other Comprehensive Income			Total Net Divisional Equity
Balance at January 31, 1999	$	24,321		$	—		$	24,321
Net transfers from Dylex		1,986			—			1,986
Comprehensive income:
Net income		4,935			—			4,935
Foreign currency translation adjustments, net of tax		—			354			354
Total comprehensive income								5,289
Balance at January 29, 2000	$	31,242		$	354		$	31,596

See accompanying notes to the combined financial statements.

Combined Statement of Cash Flows
Divisions of Dylex Limited Acquired by
American Eagle Outfitters, Inc.

	Year ended January 29, 2000
(U.S. dollars in thousands)
Operating activities:
Net income	$	4,935
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		4,450
Changes in assets and liabilities:
Merchandise inventory		1,518
Accounts receivable		122
Prepaid expenses		(1,109	)
Accounts payable		(1,214	)
Accrued liabilities		(4,598	)
Accrued compensation		(563	)
Accrued rent		(5	)
Unredeemed gift certificates		23
Accrued income and other taxes payable		(1,605	)
Total adjustments		(2,981	)
Net cash provided by operating activities		1,954
Investing activities:
Capital expenditures		(7,556	)
Net cash used for investing activities		(7,556	)
Financing activities
Net transfers from Dylex		6,165
Net cash provided by financing activities		6,165
Net increase in cash		563
Cash—beginning of period		17,435
Cash—end of period	$	17,998

See accompanying notes to the combined financial statements.

Notes to Combined Financial Statements

Divisions of Dylex Limited Acquired by
American Eagle Outfitters, Inc.

1. Business Operations

Braemar, Thrifty's, and National Logistic Services ("NLS") (the "Acquired Businesses") are divisions of Dylex Limited ("Dylex"), which is a company incorporated under the laws of Canada. During 1995, Dylex was reorganized (the "reorganization") under the provisions of the Companies' Creditors Arrangement Act ("CCAA") in Canada.

The Acquired Businesses are specialty retailers of apparel and accessories for women, teens, and young adults. The Acquired Businesses operate 172 retail stores located in Canada. The following table sets forth the approximate percentage of net sales attributable to each merchandise group for the Acquired Businesses:

	Year ended January 29, 2000
Men's apparel	28%
Women's apparel	69
Accessories	3
Total	100%

On December 1, 2000, American Eagle Outfitters, Inc. completed the purchase of the Acquired Businesses. These financial statements do not reflect any adjustments as a result of this acquisition. The combined financial statements reflect historical carve-out combined financial statements for the Acquired Businesses at and for the year ended January 29, 2000.

In connection with this acquisition, American Eagle Outfitters, Inc. announced its intention to convert the Braemar retail stores to American Eagle Outfitters retail stores. These combined financial statements do not reflect any adjustments to the assets and liabilities which might arise as a result of this subsequent event.

2. Principles of Combination

The accompanying combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. All significant transactions and balances between and with the Acquired Businesses have been eliminated in combination. The combined financial statements reflect an allocation of Dylex overhead expenses. These expenses were allocated, where practicable, based on net sales of the businesses acquired, or allocated to the Acquired Businesses on a pro rata basis. Management believes the methods of allocation to be reasonable.

3. Summary of Significant Accounting Policies

Merchandise Inventory

Merchandise inventory is valued at the lower of cost or market using the retail inventory method. The Acquired Businesses review their inventory levels in order to identify slow-moving merchandise and generally use markdowns to clear merchandise. Markdowns may occur when inventory exceeds customer demand for reasons of style, seasonal adaptation, changes in customer preference, lack of consumer acceptance of fashion items, competition, or if it is determined that the inventory in stock will not sell at its currently ticketed price. Such markdowns may have an adverse impact on earnings, depending on the extent and amount of inventory affected.

Fixed Assets

Fixed assets acquired after January 28, 1995, are recorded at cost. As part of the reorganization, fixed assets were revalued at the lower of net book value or fair market value.

Fixed assets are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings	40 years
Building renovations	5 years
Leasehold improvements and equipment	4 to 10 years

Depreciation expense for the year ended January 29, 2000 was $3.7 million.

In accordance with FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, management evaluates, at least annually, the ongoing value of long-lived assets associated with retail stores which have been open longer than one year. Impairment losses are recorded on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. When events such as these occur, the impaired assets are adjusted to estimated fair market value. There were no impairment losses recorded for the year ended January 29, 2000.

Capital Leases

Certain long-term lease transactions relating to the financing of store fixtures and other equipment are accounted for as capital leases. Assets recorded under capital leases are amortized on a straight-line basis using rates that are consistent with similar fixed assets. Obligations recorded under capital leases are reduced by rental payments net of imputed interest.

Start up Costs

Costs related to the development of new business concepts are expensed as incurred.

Systems Development Costs

Costs, primarily the external direct costs of purchasing software and direct payroll relating to the implementation of computer systems, are capitalized and amortized over a maximum of four years, commencing when the system is fully operational. Amortization expense for the year ended January 29, 2000 related to these assets was $0.9 million. Details of systems development costs follow:

(U.S. dollars in thousands)	January 29, 2000
Systems development costs	$	1,963
Less: accumulated amortization		(854)
Systems development costs, net	$	1,109

Store Opening Costs

All costs associated with the opening of new stores are expensed as incurred.

Foreign Currency Translation

As the Acquired Businesses operate solely in Canada, the Canadian dollar is the functional currency. These combined financial statements have been prepared as if the Acquired Businesses adopted the U.S. dollar as the reporting currency as of January 31, 1999. In accordance with FASB Statement No. 52, Foreign Currency Translation, assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate prevailing at the fiscal year-end. Revenues and expenses denominated in foreign currencies are translated into U.S. dollars at the average exchange rate for the year. Gains or losses resulting from foreign currency transactions are included in the results of operations, whereas related translation adjustments are reported as other comprehensive income in accordance with FASB Statement No. 130, Reporting Comprehensive Income. Components of comprehensive income include net income and the effects of translating the financial statements from the functional currency, Canadian dollars, to the reporting currency, U.S. dollars.

As part of the Statement of Net Divisional Equity, the current year effects of such translation gains and losses are reported, net of tax, as components of other comprehensive loss, as follows:

(U.S. dollars in thousands)	Cumulative Translation Gain- Pre-Tax	Tax Expense	Other Comprehensive Income, Net of Tax
January 29, 2000	$632	($278)	$354

Pension Costs

Dylex maintains two pension plans providing benefits on a defined benefit basis up to the end of 1992, and from 1993, on a defined contribution basis. In connection with the purchase of the Acquired Businesses, Dylex has retained the plan assets and benefit obligations of both plans. Therefore, neither the assets or liabilities related to the defined benefit plans have been included in these combined financial statements.

In the case of the defined benefit provisions, pensions are based on length of service and career average earnings. The cost of pension benefits earned by employees is determined using the projected benefit method pro-rated on service and is charged to expense as services are rendered. This cost reflects Management's best estimates of the pension plans' expected investment yields, salary escalation, mortality of members, termination, and the ages at which members will retire. Adjustments arising from plan amendments, experience gains and losses and changes in assumptions are amortized over the estimated average remaining service lives of the employees. These costs were considered as part of the allocation of Dylex overhead expenses discussed in Note 2.

In the case of the defined contribution plan, the cost of pension benefits is the Dylex required contribution to the plan.

Employee Stock Option Plan

Dylex has a stock option plan, which is described more fully in Note 10 of these combined financial statements. In October 1995, the FASB issued Statement No. 123, Accounting for Stock-Based Compensation, (SFAS 123) which establishes financial accounting and reporting standards for stock-based employee compensation plans. Dylex accounts for its stock-based employee compensation plan using the intrinsic value method under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, (APB 25). Under APB 25, because the exercise price of Dylex's employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized.

Use of Estimates

The preparation of the combined financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions based on currently available information. Such estimates and assumptions may affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as at the reporting date and the reported amounts of revenue and expenses during the period. Actual results could differ from the estimates and assumptions used.

Revenue Recognition

Revenue is recorded upon purchase of merchandise by customers. In connection with gift certificates, a deferred revenue amount is established upon purchase of the certificate by the customer and revenue is recognized upon redemption and purchase of the merchandise.

Advertising Costs

Advertising consists primarily of radio and outdoor advertising, preferred customer mailings, and in-store signage. Costs are expensed as incurred. Advertising expense was $3.5 million for the year ended January 29, 2000.

Landlord Allowances

Landlord allowances reduce leasehold improvements and equipment on the combined balance sheet.

Recent Financial Accounting Developments

In 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS 137 and 138 (collectively SFAS 133), which established standards for the recognition and measurement of derivative and hedging activities. This standard is effective for 2001. As discussed in Note 13, Dylex enters into these types of contracts, however, based on the fact that the Acquired Businesses do not engage in this type of activity, these pronouncements are not anticipated to have any significant impact on the combined financial statements.

4. Supplemental Disclosures of Cash Flow Information

(U.S. dollars in thousands)	Year ended January 29, 2000
Cash paid during the period for:
Income taxes	$	76
Interest	$	395

Income taxes paid represent the allocation from Dylex to the Acquired Businesses of the Canadian Large Corporation Tax.

5. Related Party Transactions

Dylex provides management services relating to technology, real estate, legal, lease administration, market research, payroll and accounts payable services to the Acquired Businesses. During the year ended January 29, 2000 management fees paid to Dylex approximated $2.7 million. These fees are included in selling, general, and administrative expenses.

6. Letters of Credit

Under Dylex, the Acquired Businesses have a borrowing arrangement with a bank to provide $17.4 million of letters of credit. At January 29, 2000, letters of credit of $1.8 million were outstanding related to the Acquired Businesses.

7. Net Divisional Equity

Net divisional equity represents the net assets of the Acquired Businesses. Included in net divisional equity are all interdivisional balances with Dylex, net income of the Acquired Businesses and foreign currency translation adjustments.

8. Lease Commitments

Store operations are conducted primarily from leased premises. These leases generally provide for base rentals and the payment of a percentage of sales as additional rent when sales exceed specified levels. These leases generally include renewal options and provide for rent escalations during the term of the lease. Minimum rentals relating to these leases are recorded on a straight-line basis. In addition, the leases typically include common area maintenance charges, real estate taxes, and certain other expenses. These leases are classified as operating leases.

Rent expense charged to operations was as follows:

(U.S. dollars in thousands)		Year ended January 29, 2000
Minimum rentals	$	12,700
Contingent rentals		583
	$	13,283

The Acquired Businesses' future minimum lease payments as of January 29, 2000 are as follows:

(U.S. dollars in thousands)		Capital Leases		Operating Leases
2001	$	98	$	10,899
2002		68		10,449
2003		29		10,169
2004		—		9,829
2005		—		8,671
Thereafter		—		23,009
Total minimum lease payments	$	195	$	73,026
Less amount representing imputed interest at varying rates		12
Present value of obligations under capital leases		183
Due within one year		80
Long-term obligations under capital leases	$	103

9. Income Taxes

As of January 29, 2000, the Acquired Businesses did not file separate tax returns, instead the reported operations were included in the Canadian tax return of Dylex Limited, which had significant net operating loss and capital loss carryforwards. Due to these loss carryforwards, no actual current income tax liabilities exist. These combined financial statements show the estimated total tax expense (current and deferred) of the Acquired Businesses, as if they were a standalone Canadian taxpayer, with no tax loss attributable to the reported operations. The current and deferred tax liabilities are grouped together on the combined balance sheet, due to a lack of available data necessary to classify the taxes separately and because such amounts would not be applicable following the purchase of the Acquired Businesses by American Eagle Outfitters, Inc.

The income tax expense is higher than the expected U.S. statutory rate of 35% due to higher statutory rates in Canada.

Significant components of the provision for income taxes are as follows:

		Year ended January 29, 2000
(U.S. dollars in thousands)
U.S federal	$	—
Canadian		3,878
Provision for income taxes	$	3,878

A reconciliation between the U.S. statutory federal income tax and the effective tax rate follows:

	Year ended January 29, 2000
U.S. federal income tax rate	35%
Effect of foreign operations subject
to higher Canadian tax rates	9
	44%

10. Employee Stock Option Plan

At the 1995, 1996, and 1997 Annual Meetings of Shareholders of Dylex, the Shareholders approved an employee stock option plan (ESOP) and authorized Dylex to reserve a total of 5,568,873 common shares for issuance in accordance with the terms of the ESOP. Options granted are exercisable over a period from seven to ten years and the purchase price is payable in full at the time the options are exercised. Options are granted at an exercise price equal to the market price of the underlying common shares at the time of the grant and, subject to accelerated vesting provisions, vest at 20% per year commencing on the first anniversary of the grant.

Pro forma information regarding net income is required by FASB 123, however, due to the fact that the fair value method results in net income that is not materially different from amounts reported, no pro forma information is disclosed.

A summary of Dylex's stock option activity applicable to the Acquired Businesses follows:

	Year ended January 29, 2000
		Options		Weighted Average Exercise Price
Outstanding—beginning of period		716,880			$	2.81
Granted (exercise price equal to fair value)		200,000			$	1.74
Exercised		(9,132	)		$	0.77
Cancelled		(162,400	)		$	3.12
Outstanding—end of period		745,348			$	2.60
Exercisable—end of period		203,880			$	2.60

The following summarizes information about stock options applicable to the Acquired Businesses which are outstanding at January 29, 2000:

		Options Outstanding				Options Exercisable
Exercise Prices	Outstanding at January 29, 2000		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price			Exercisable At January 29, 2000	Weighted Average Exercise Price
$0.77	215,348		6.0 years	$	0.77		100,080	$	0.77
$1.31	150,000		9.9 years	$	1.31		—		—
$1.92	20,000		6.3 years	$	1.92		9,800	$	1.92
$3.04	50,000		9.3 years	$	3.04		—		—
$4.01	150,000		8.4 years	$	4.01		30,000	$	4.01
$4.92	160,000		7.4 years	$	4.92		64,000	$	4.92
$0.77 to $4.92	745,348		7.8 years	$	2.60		203,880	$	2.60

These stock options were cancelled pursuant to the purchase of the Acquired Businesses by American Eagle Outfitters, Inc.

11. Pension Plan

The projected net assets available for plan benefits and the actuarially determined present value of accumulated pension benefits for the Acquired Businesses' share of Dylex's two defined benefit plans are as follows:

(U.S. dollars in thousands)	January 29, 2000
Pension fund assets	$	954
Pension obligations	$	807

The Acquired Businesses' share of pension fund assets and pension obligations disclosed above were determined based on the number of participants from the Acquired Businesses in relation to total plan participants.

In determining the actuarial present value of accumulated plan benefits and pension costs, Dylex used a discount rate and expected rate of return on plan assets of 6.5%. Discount rates reflected current interest rates. Dylex amortized unrecognized gains and losses associated with the plans over the estimated average remaining service life of the employee group covered by the plans, which is estimated to be 15.4 years and 11.0 years for the two plans, respectively. As such, plan assets represent fair market values and liabilities represent the present value of all future benefit obligations.

Commencing January 1, 1993, Dylex introduced a new Retirement Savings Program, the Dylex Employees' Pension Plan, replacing the defined benefit provisions with a defined contribution formula. All benefits earned by employees from this date onward have been reflected in the defined contribution arrangement. For the year ended January 29, 2000, the Acquired Businesses recognized $0.3 million in connection with this plan.

Effective August 31, 2000, Dylex commenced a wind-up of both plans. Dylex management anticipates that it will take one year to complete the wind-up process.

12. Contingencies

In the normal course of business, the Acquired Businesses have been the subject of legal claims. These legal claims are the responsibility of Dylex. No material amounts related to these claims have been incurred during the year relating to the Acquired Businesses.

13. Financial Instruments

Foreign Exchange Risk

From time to time, Dylex enters into forward exchange contracts to reduce the foreign exchange risk with respect to U.S. dollar denominated goods purchased for resale. The fair market value of the outstanding contract as at January 29, 2000 was $1.0 million. Gains and losses on foreign exchange contracts are included in the allocation of the Dylex's overhead expenses as discussed in Note 2.

Credit Risk

The Acquired Businesses' exposure to concentration of credit risk is limited. Accounts receivable are primarily from suppliers and customers of a large and diverse group.

Fair Value of Financial Instruments

The carrying value of the Acquired Businesses' financial assets and financial liabilities as of January 29, 2000 approximate their fair value.

14. Segment Information

The Acquired Businesses consist of three reportable segments: Braemar, Thrifty's, and National Logistics Services ("NLS"). Braemar sells sportswear and classically styled fashion coordinates for women. Thrifty's sells denim and other casual wear and accessories. NLS is a warehouse and distribution operation. Sales for NLS result from distribution services to Dylex. The accounting policies of all segments are the same as described in Note 3. Management of Dylex evaluates the performance of the business segments based on sales and operating earnings before interest, taxes, depreciation and amortization ("EBITDA").

Financial information regarding the reportable segments follow:

As at and for the year ended January 29, 2000

(U.S. dollars in thousands)		Thrifty's		Braemar			National Logistics Services		Total
Sales	$	99,629	$	54,177		$	16,153	$	169,959
EBITDA		13,082		(893	)		1,309		13,498
Depreciation and amortization		2,636		1,103			711		4,450
Provision (benefit) for income taxes		4,609		(970	)		239		3,878
Segment Assets		34,030		9,901			10,514		54,445
Purchase of fixed and leased assets		4,476		1,207			1,873		7,556

Combined Balance Sheet

Divisions of Dylex Limited Acquired by
American Eagle Outfitters, Inc.

	October 28, 2000
(U.S. dollars in thousands)		(Unaudited)
Assets
Current assets:
Cash	$	14,597
Merchandise inventory		18,186
Accounts receivable		2,199
Prepaid expenses		362
Total current assets		35,344
Fixed assets:
Land		2,007
Buildings and renovations		5,464
Leasehold improvements and equipment		24,628
		32,099
Less accumulated depreciation		10,123
		21,976
Systems development costs, net		824
Total assets	$	58,144
Liabilities and net divisional equity
Current liabilities:
Accounts payable	$	14,192
Accrued liabilities		3,049
Accrued compensation		1,515
Accrued rent		3,019
Unredeemed gift certificates		255
Accrued income and other taxes payable		5,099
Total current liabilities		27,129
Noncurrent liabilities		46
Net divisional equity		30,969
Total liabilities and net divisional equity	$	58,144

See accompanying notes to the combined financial statements.

Combined Statement of Operations

Divisions of Dylex Limited Acquired by
American Eagle Outfitters, Inc.

	Nine months ended October 28, 2000			Nine months ended October 30, 1999
(U.S. dollars in thousands)	(Unaudited)				(Unaudited)
Net sales	$	116,401			$	119,167
Cost of sales, including certain buying, occupancy, and     warehousing costs		77,977				81,485
Gross profit		38,424				37,682
Selling, general, and administrative expenses		32,935				32,192
Depreciation and amortization expense		3,661				3,166
Operating income		1,828				2,324
Other expenses, net		(647	)			(231	)
Income before income taxes		1,181				2,093
Provision for income taxes		520				921
Net income	$	661			$	1,172

See accompanying notes to the combined financial statements.

Combined Statement of Net Divisional Equity

Divisions of Dylex Limited Acquired by
American Eagle Outfitters, Inc.

For the nine months ended October 30, 1999 (Unaudited) and the nine months ended October 28, 2000 (Unaudited)

(U.S. dollars in thousands)	Net Investment			Other Comprehensive Income (Loss)				Total Net Divisional Equity
Balance at January 31, 1999	$	24,321			$	—			$	24,321
Net transfers to Dylex		(12,108	)			—				(12,108	)
Comprehensive income:
Net income		1,172				—				1,172
Foreign currency translation adjustments, net of tax		—				835				835
Total comprehensive income										2,007
Balance at October 30, 1999	$	13,385			$	835			$	14,220
Balance at January 29, 2000		31,242				354				31,596
Net transfers from Dylex		277				—				277
Comprehensive income:
Net income		661				—				661
Foreign currency translation adjustments, net of tax		—				(1,011	)			(1,011	)
Total comprehensive loss										(350	)
Balance at October 28, 2000	$	31,626			$	(657	)		$	30,969

See accompanying notes to the combined financial statements.

Combined Statement of Cash Flows
Divisions of Dylex Limited Acquired by
American Eagle Outfitters, Inc.

	Nine months ended October 28, 2000			Nine months ended October30, 1999
(U.S. dollars in thousands)		(Unaudited)			(Unaudited)
Operating activities:
Net income	$	661		$	1,172
Adjustments to reconcile net income to net cash provided       by operating activities:
Depreciation and amortization		3,661			3,166
Changes in assets and liabilities:
Merchandise inventory		(6,792	)		(7,424	)
Accounts receivable		(1,254	)		(156	)
Prepaid expenses		(450	)		(676	)
Accounts payable		2,723			11,235
Accrued liabilities		1,603			(2,275
Accrued compensation		(219	)		(1,069	)
Accrued rent		269			10
Unredeemed gift certificates		(327	)		(255	)
Accrued income and other taxes payable		425			2,256
Total adjustments		(361	)		4,812
Net cash provided by operating activities		300			5,984
Investing activities:
Capital expenditures		(3,447	)		(6,413	)
Net cash used for investing activities		(3,447	)		(6,413	)
Financing activities:
Net transfers to Dylex		(254	)		(7,906	)
Net cash used for financing activities		(254	)		(7,906	)
Net decrease in cash		(3,401	)		(8,335	)
Cash—beginning of period		17,998			17,435
Cash—end of period	$	14,597		$	9,100

See accompanying notes to the combined financial statements.

Notes to Combined Financial Statements

Divisions of Dylex Limited Acquired by
American Eagle Outfitters, Inc.

1. Business Operations

Braemar, Thrifty's, and National Logistic Services ("NLS") (the "Acquired Businesses") are divisions of Dylex Limited ("Dylex"), which is a company incorporated under the laws of Canada. During 1995, Dylex was reorganized (the "reorganization") under the provisions of the Companies' Creditors Arrangement Act ("CCAA") in Canada.

The Acquired Businesses are specialty retailers of apparel and accessories for women, teens, and young adults. The Acquired Businesses operate 172 retail stores located in Canada. The following table sets forth the approximate percentage of net sales attributable to each merchandise group for the Acquired Businesses:

	Nine months ended October 28, 2000	Nine months ended October 30, 1999
	(Unaudited)		(Unaudited)
Men's apparel	27%		26%
Women's apparel	70		71
Accessories	3		3
Total	100%		100%

On December 1, 2000, American Eagle Outfitters, Inc. completed the purchase of the Acquired Businesses. These financial statements do not reflect any adjustments as a result of this acquisition. The combined financial statements reflect historical carve-out combined financial statements for the Acquired Businesses at and for the nine months ended October 28, 2000 and the nine months ended October 30, 1999.

In connection with this acquisition, American Eagle Outfitters, Inc. announced its intention to convert the Braemar retail stores to American Eagle Outfitters retail stores. These combined financial statements do not reflect any adjustments to the assets and liabilities which might arise as a result of this subsequent event.

The financials statements for the nine months ended October 28, 2000 and the nine months ended October 30, 1999 have not been audited or reviewed by an independent accountant. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included and are consistent with the audited financial statements for the year ended January 29, 2000.

2. Principles of Combination

The accompanying combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. All significant transactions and balances between and with the Acquired Businesses have been eliminated in combination. The combined financial statements reflect an allocation of Dylex overhead expenses. These expenses were allocated, where practicable, based on net sales of the businesses acquired, or allocated to the Acquired Businesses on a pro rata basis. Management believes the methods of allocation to be reasonable.

3. Summary of Significant Accounting Policies

Merchandise Inventory

Merchandise inventory is valued at the lower of cost or market using the retail inventory method. The Acquired Businesses review their inventory levels in order to identify slow-moving merchandise and generally use markdowns to clear merchandise. Markdowns may occur when inventory exceeds customer demand for reasons of style, seasonal adaptation, changes in customer preference, lack of consumer acceptance of fashion items, competition, or if it is determined that the inventory in stock will not sell at its currently ticketed price. Such markdowns may have an adverse impact on earnings, depending on the extent and amount of inventory affected.

Fixed Assets

Fixed assets acquired after January 28, 1995, are recorded at cost. As part of the reorganization, fixed assets were revalued at the lower of net book value or fair market value.

Fixed assets are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings	40 years
Building renovations	5 years
Leasehold improvements and equipment	4 to 10 years

Depreciation for the nine months ended October 28, 2000 and October 30, 1999 was $2.9 million and $2.7 million, respectively.

In accordance with FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, management evaluates, at least annually, the ongoing value of long-lived assets associated with retail stores which have been open longer than one year. Impairment losses are recorded on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. When events such as these occur, the impaired assets are adjusted to estimated fair market value. There were no impairment losses recorded for the nine months ended October 29, 2000 or the nine months ended October 30, 1999.

Capital Leases

Certain long-term lease transactions relating to the financing of store fixtures and other equipment are accounted for as capital leases. Assets recorded under capital leases are amortized on a straight-line basis using rates that are consistent with similar fixed assets. Obligations recorded under capital leases are reduced by rental payments net of imputed interest.

Start up Costs

Costs related to the development of new business concepts are expensed as incurred.

Systems Development Costs

Costs, primarily the external direct costs of purchasing software and direct payroll relating to the implementation of computer systems, are capitalized and amortized over a maximum of four years, commencing when the system is fully operational. Amortization expense was $0.8 million and $0.6 million for the nine months ended October 28, 2000 and October 30, 1999, respectively. Details of systems development costs follow:

(U.S. dollars in thousands)	October 28, 2000
	(Unaudited)
Systems development costs	$	1,553
Less: accumulated amortization		(729	)
Systems development costs, net	$	824

Store Opening Costs

All costs associated with the opening of new stores are expensed as incurred.

Foreign Currency Translation

As the Acquired Businesses operate solely in Canada, the Canadian dollar is the functional currency. These combined financial statements have been prepared as if the Acquired Businesses adopted the U.S. dollar as the reporting currency as of January 31, 1999. In accordance with FASB Statement No. 52, Foreign Currency Translation, assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate prevailing at the period-end date. Revenues and expenses denominated in foreign currencies are translated into U.S. dollars at the 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 other comprehensive income in accordance with FASB Statement No. 130, Reporting Comprehensive Income. Components of comprehensive income include net income and the effects of translating the financial statements from the functional currency, Canadian dollars, to the reporting currency, U.S. dollars.

As part of the Statement of Net Divisional Equity, the accumulated effects of such translation gains and losses are reported, net of tax, as components of other comprehensive loss, as follows:

(U.S. dollars in thousands)	Cumulative Translation Loss-Pre-Tax	Tax Benefit		Other Comprehensive Loss, Net of Tax
October 28, 2000 (Unaudited)	($1,173)		516		($657)

Pension Costs

Dylex maintains two pension plans providing benefits on a defined benefit basis up to the end of 1992, and from 1993, on a defined contribution basis. In connection with the purchase of the Acquired Businesses, Dylex has retained the plan assets and benefit obligations of both plans. Therefore, neither the assets or liabilities related to the defined benefit plans have been included in these combined financial statements.

In the case of the defined benefit provisions, pensions are based on length of service and career average earnings. The cost of pension benefits earned by employees is determined using the projected benefit method pro-rated on service and is charged to expense as services are rendered. This cost reflects Management's best estimates of the pension plans' expected investment yields, salary escalation, mortality of members, termination, and the ages at which members will retire. Adjustments arising from plan amendments, experience gains and losses and changes in assumptions are amortized over the estimated average remaining service lives of the employees. These costs were considered as part of the allocation of Dylex overhead expenses discussed in Note 2.

In the case of the defined contribution plan, the cost of pension benefits is the Dylex required contribution to the plan.

Employee Stock Option Plan

Dylex has a stock option plan, which is described more fully in Note 10 of these combined financial statements. In October 1995, the FASB issued Statement No. 123, Accounting for Stock-Based Compensation, (SFAS 123) which establishes financial accounting and reporting standards for stock-based employee compensation plans. Dylex accounts for its stock-based employee compensation plan using the intrinsic value method under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, (APB 25). Under APB 25, because the exercise price of Dylex's employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized.

Use of Estimates

The preparation of the combined financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions based on currently available information. Such estimates and assumptions may affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as at the reporting date and the reported amounts of revenue and expenses during the period. Actual results could differ from the estimates and assumptions used.

Revenue Recognition

Revenue is recorded upon purchase of merchandise by customers. In connection with gift certificates, a deferred revenue amount is established upon purchase of the certificate by the customer and revenue is recognized upon redemption and purchase of the merchandise.

Advertising Costs

Advertising consists primarily of radio and outdoor advertising, preferred customer mailings, and in-store signage. Costs are expenses as incurred. Advertising expense is summarized as follows:

(U.S. dollars in thousands)	Nine months ended October 28, 2000	Nine months ended October 30, 1999
	(Unaudited)		(Unaudited)
Advertising expense	$3,271		$2,680

Landlord Allowances

Landlord allowances reduce leasehold improvements and equipment on the combined balance sheet.

Recent Financial Accounting Developments

In 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS 137 and 138 (collectively SFAS 133), which established standards for the recognition and measurement of derivative and hedging activities. This standard is effective for 2001. As discussed in Note 13, Dylex enters into these types of contracts, however, based on the fact that the Acquired Businesses do not engage in this type of activity, these pronouncements are not anticipated to have any significant impact on the combined financial statements.

4. Supplemental Disclosures of Cash Flow Information

(U.S. dollars in thousands)	Nine months ended October 28, 2000		Nine months ended October 30, 1999
		(Unaudited)			(Unaudited)
Cash paid during the periods for:
Income taxes	$	48		$	48
Interest	$	581		$	311

Income taxes paid represent the allocation from Dylex to the Acquired Businesses of the Canadian Large Corporation Tax.

5. Related Party Transactions

Dylex provides management services relating to technology, real estate, legal, lease administration, market research, payroll and accounts payable services to the Acquired Businesses. For the nine months ended October 28, 2000 and October 30, 1999, management fees paid were $1.8 million and $2.0 million, respectively. These fees are included in selling, general, and administrative expenses.

6. Letters of Credit

Under Dylex, the Acquired Businesses have a borrowing arrangement with a bank to provide $17.4 million of letters of credit. At October 28, 2000, letters of credit of $0.7 million were outstanding related to the Acquired Businesses.

7. Net Divisional Equity

Net divisional equity represents the net assets of the Acquired Businesses. Included in net divisional equity are all interdivisional balances with Dylex, net income of the Acquired Businesses and foreign currency translation adjustments.

8. Lease Commitments

Store operations are conducted primarily from leased premises. These leases generally provide for base rentals and the payment of a percentage of sales as additional rent when sales exceed specified levels. These leases generally include renewal options and provide for rent escalations during the term of the lease. Minimum rentals relating to these leases are recorded on a straight-line basis. In addition, the leases typically include common area maintenance charges, real estate taxes, and certain other expenses. These leases are classified as operating leases.

Rent expense charged to operations was as follows:

(U.S. dollars in thousands)	Nine months ended October 28, 2000		Nine months ended October 30, 1999
		(Unaudited)			(Unaudited)
Minimum rentals	$	9,839		$	9,369
Contingent rentals		327			278
	$	10,166		$	9,647

The Acquired Businesses' future minimum lease payments as of October 28, 2000 are as follows:

(U.S. dollars in thousands)	Capital Leases		Operating Leases
2001	$	78		$	11,996
2002		17			11,552
2003		—			12,275
2004		—			10,938
2005		—			8,779
Thereafter		—			21,123
Total minimum lease payments	$	95		$	75,663
Less amount representing imputed interest at varying rates		7
Present value of obligations under capital leases		88
Due within one year		42
Long-term obligations under capital leases	$	46

9. Income Taxes

As of October 28, 2000 and October 30, 1999, the Acquired Businesses did not file separate tax returns, instead the reported operations were included in the Canadian tax return of Dylex Limited, which had significant net operating loss and capital loss carryforwards. Due to these loss carryforwards, no actual current income tax liabilities exist. These combined financial statements show the estimated total tax expense (current and deferred) of the Acquired Businesses, as if they were a standalone Canadian taxpayer, with no tax loss attributable to the reported operations. The current and deferred tax liabilities are grouped together on the combined balance sheet, due to a lack of available data necessary to classify the taxes separately and because such amounts would not be applicable following the purchase of the Acquired Businesses by American Eagle Outfitters, Inc.

The income tax expense is higher than the expected U.S. statutory rate of 35% due to higher statutory rates in Canada.

Significant components of the provision for income taxes are as follows:

	Nine months ended October 28, 2000		Nine months ended October 30, 1999
	(Unaudited)			(Unaudited)
(U.S. dollars in thousands)
U.S federal	$	—		$	—
Canadian		520			921
Provision for income taxes	$	520		$	921

A reconciliation between the U.S. statutory federal income tax and the effective tax rate follows:

	Nine months ended October 28, 2000	Nine months ended October 30, 1999
	(Unaudited)		(Unaudited)
U.S. federal income tax rate	35	%	35	%
Effect of foreign operations subject
to higher Canadian tax rates	9		9
	44	%	44	%

10. Employee Stock Option Plan

At the 1995, 1996, and 1997 Annual Meetings of Shareholders of Dylex, the Shareholders approved an employee stock option plan (ESOP) and authorized Dylex to reserve a total of 5,568,873 common shares for issuance in accordance with the terms of the ESOP. Options granted are exercisable over a period from seven to ten years and the purchase price is payable in full at the time the options are exercised. Options are granted at an exercise price equal to the market price of the underlying common shares at the time of the grant and, subject to accelerated vesting provisions, vest at 20% per year commencing on the first anniversary of the grant.

Pro forma information regarding net income is required by FASB 123, however, due to the fact that the fair value method results in net income that is not materially different from amounts reported, no pro forma information is disclosed.

A summary of Dylex's stock option activity applicable to the Acquired Businesses follows:

	Nine months ended October 28, 2000 (Unaudited)
	Options		Weighted Average Exercise Price
Outstanding—beginning of period	745,348			$2.60
Granted (exercise price equal to fair value)	195,000			$0.53
Exercised	—			—
Cancelled	(274,668	)		$2.47
Outstanding—end of period	665,680			$1.88
Exercisable—end of period	417,680			$1.76

The following summarizes information about stock options applicable to the Acquired Businesses which are outstanding at October 28, 2000:

	Options Outstanding			Options Exercisable
Exercise Prices	Outstanding at October 28, 2000	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price	Exercisable At October 28, 2000	Weighted Average Exercise Price
$0.53	195,000	9.9 years	$0.53	100,000	$0.53
$0.77	140,680	5.3 years	$0.77	96,680	$0.77
$1.31	100,000	9.2 years	$1.31	100,000	$1.31
$1.92	20,000	5.6 years	$1.92	14,000	$1.92
$4.01	110,000	7.7 years	$4.01	38,000	$4.01
$4.92	100,000	6.7 years	$4.92	69,000	$4.92
$0.53 to $4.92	665,680	7.8 years	$1.99	417,680	$1.86

These stock options were cancelled pursuant to the purchase of the Acquired Businesses by American Eagle Outfitters, Inc.

11. Pension Plan

The projected net assets available for plan benefits and the actuarially determined present value of accumulated pension benefits for the Acquired Businesses' share of Dylex's two defined benefit plans are as follows:

(U.S. dollars in thousands)	January 29, 2000
Pension fund assets	$954
Pension obligations	$807

The Acquired Businesses' share of pension fund assets and pension obligations disclosed above were determined based on the number of participants from the Acquired Businesses in relation to total plan participants.

In determining the actuarial present value of accumulated plan benefits and pension costs, Dylex used a discount rate and expected rate of return on plan assets of 6.5%. Discount rates reflected current interest rates. Dylex amortized unrecognized gains and losses associated with the plans over the estimated average remaining service life of the employee group covered by the plans, which is estimated to be 15.4 years and 11.0 years for the two plans, respectively. As such, plan assets represent fair market values and liabilities represent the present value of all future benefit obligations.

Commencing January 1, 1993, Dylex introduced a new Retirement Savings Program, the Dylex Employees' Pension Plan, replacing the defined benefit provisions with a defined contribution formula. All benefits earned by employees from this date onward have been reflected in the defined contribution arrangement. For the nine months ended October 28, 2000 and October 30, 1999, the Acquired Businesses recognized $0.1 million and $0.3 million in expense, respectively.

Effective August 31, 2000, Dylex commenced a wind-up of both plans. Dylex management anticipates that it will take one year to complete the wind-up process.

12. Contingencies

In the normal course of business, the Acquired Businesses have been the subject of legal claims. These legal claims are the responsibility of Dylex. No material amounts related to these claims have been incurred during the periods presented relating to the Acquired Businesses.

13. Financial Instruments

Foreign Exchange Risk

From time to time, Dylex enters into forward exchange contracts to reduce the foreign exchange risk with respect to U.S. dollar denominated goods purchased for resale. The fair market value of the outstanding contract as at January 29, 2000 was $1.0 million. Gains and losses on foreign exchange contracts are included in the allocation of Dylex's overhead expenses as discussed in Note 2.

Credit Risk

The Acquired Businesses' exposure to concentration of credit risk is limited. Accounts receivable are primarily from suppliers and customers of a large and diverse group.

Fair Value of Financial Instruments

The carrying value of the Acquired Businesses' financial assets and financial liabilities as of January 29, 2000 approximate their fair value.

14. Segment Information

The Acquired Businesses consist of three reportable segments: Braemar, Thrifty's, and National Logistics Services ("NLS"). Braemar sells sportswear and classically styled fashion coordinates for women. Thrifty's sells denim and other casual wear and accessories. NLS is a warehouse and distribution operation. Sales for NLS result from distribution services to Dylex. The accounting policies of all segments are the same as described in Note 3. Management of Dylex evaluates the performance of the business segments based on sales and operating earnings before interest, taxes, depreciation and amortization ("EBITDA").

Financial information regarding the reportable segments follow:

As at and for the nine months ended October 28, 2000

(Unaudited) (U.S. Dollars in thousands)	Thrifty's		Braemar		National Logistics Services		Total
Sales		$75,801		$33,283		$7,317		$116,401
EBITDA		8,012		(4,063	)	1,540		5,489
Depreciation and amortization		2,389		922		350		3,661
Provision (benefit) for income taxes		2,333		(2,335	)	522		520
Segment Assets		37,471		12,553		8,120		58,144
Purchase of fixed and leased assets		2,172		1,055		220		3,447

As at and for the nine months ended October 30, 1999

(Unaudited) (U.S. Dollars in thousands)	Thrifty's		Braemar		National Logistics Services		Total
Sales		$68,022		$37,516		$13,629		$119,167
EBITDA		7,221		(2,389	)	658		5,490
Depreciation and amortization		1,794		777		595		3,166
Provision (benefit) for income taxes		2,385		(1,459	)	(5	)	921
Purchase of fixed and leased assets		3,465		1,082		1,866		6,413

Unaudited Pro Forma Combined Financial Statements

The accompanying Unaudited Pro Forma Financial Statements have been prepared to give effect to the acquisition of certain of the net assets of Braemar, Thrifty's and National Logistics Services-Divisions of Dylex Limited (collectively the "Acquired Businesses") by American Eagle Outfitters, Inc (the "Company" or "AEO"). The Unaudited Pro Forma Combined Statements of Operations gives effect to the acquisition of the Acquired Businesses for the year ended January 29, 2000 and the nine months ended October 28, 2000 as if the acquisition had occurred on January 31, 1999. The Unaudited Pro Forma Combined Statements of Operations presented for the year ended January 29, 2000 and the nine months ended October 28, 2000 includes the historical financial results of the Company and the Acquired Businesses adjusted for the impact of the Acquired Businesses acquisition cost.

The Unaudited Pro Forma Combined Statement of Financial Position as of October 28, 2000 gives effect to the acquisition as if the acquisition had occurred on that date. The Unaudited Pro Forma Combined Statement of Financial Position includes the balance sheet of the Company and the Acquired Businesses as of October 28, 2000 adjusted for the acquisition amounts paid and net asset amounts that were not acquired by AEO.

The Unaudited Pro Forma Combined Financial Statements includes the adjustments that have a continuing impact to the combined company to reflect the transaction using purchase accounting. The pro forma adjustments are described in the notes to the Unaudited Pro Forma Combined Financial Statements. The adjustments are based upon preliminary information and certain management judgments.

The Unaudited Pro Forma Combined Financial Statements and accompanying notes are presented for illustrative purposes only and do not purport to be indicative of and should not be relied upon as indicative of the financial position or operating results which may occur in the future, or that would have occurred if the acquisition had been consummated on the dates indicated above. Synergies and expected cost savings from the integration of the Acquired Businesses with the Company's previously existing businesses or any additional profitability resulting from the application of the Company's anticipated revenue enhancement measures have not been included in the Unaudited Pro Forma Combined Statements of Operations. The Company intends to convert approximately 47 Braemar locations to American Eagle Outfitters stores. No pro forma adjustments are reflected related to these anticipated conversions as those future actions are revenue enhancing and cost reducing activities. The Unaudited Pro Forma Combined Financial Statements should be read in conjunction with the Acquired Businesses' historical combined financial statements and notes thereto for the year ended January 29, 2000 and the nine months ended October 28, 2000 included in this report and the Company's consolidated financial statements and notes thereto and management's discussion and analysis for the year ended January 29, 2000 and the nine months ended October 28, 2000.

Unaudited Pro Forma Combined Balance Sheet

October 28, 2000

	Historical
(U.S. dollars, in thousands)	AEO October 28, 2000		Acquired Businesses October 28, 2000			Pro Forma Adjustments (1)			Pro Forma Combined
Assets
Current assets:
Cash and cash equivalents	$	70,959	$	14,597		$	(14,532	) (a)	$	22,098
							(48,926	) (c)
Short-term investments		28,230		—						28,230
Merchandise inventory		111,386		18,186			(844	) (b)		128,728
Accounts and note receivable		24,508		2,199						26,707
Prepaid expenses and other		14,893		362						15,255
Deferred income taxes		15,724		—						15,724
Total current assets		265,700		35,344			(64,302	)		236,742
Fixed assets:
Land		450		2,007			(634	) (b)		1,823
Building		—		5,464			1,312	(b)		6,776
Fixture and equipment		81,206		—						81,206
Leasehold improvements		107,661		24,628			2,135	(b)		134,424
		189,317		32,099			2,813			224,229
Less: accumulated depreciation		48,996		10,123			(10,123	) (b)		48,996
		140,321		21,976			12,936			175,233
Other assets, less accumulated depreciation		14,801		824			30,233	(b)		45,034
							(824	) (a)
Total assets	$	420,822	$	58,144		$	(21,957	)	$	457,009
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	56,588	$	14,192		$	(14,192	) (a)	$	56,588
Accrued compensation and payroll taxes		18,934		1,515			(1,515	) (a)		18,934
Accrued rent		20,193		3,019			(3,019	) (a)		20,193
Accrued income and other taxes payable		18,738		5,099			(5,099	) (a)		18,738
Unredeemed stored value cards and gift certificates		4,509		255			(255	) (a)		4,509
Other liabilities and accrued expenses		5,364		3,049			(3,049	) (a)		12,329
							490	(b)
							6,475	(b)
Total current liabilities		124,326		27,129			(20,164	)		131,291
Commitments and contingencies		—		—			—			—
Long-term debt							29,222	(c)		29,222
Other noncurrent liabilities		1,452		46			(46	) (a)		1,452
Total noncurrent liabilities		1,452		46			29,176			30,674
Stockholders' equity
Preferred stock		—		—						—
Common stock		473		—						473
Contributed capital		95,806		—						95,806
Net investment in acquired businesses		—		19,057			(19,057	) (a)		—
Retained earnings		225,145		12,569			(12,569	) (d)		225,145
		321,424		31,626			(31,626	)		321,424
Less: Deferred compensation		4,097		—						4,097
Accumulated other comprehensive income (loss)		56		(657	)		657	(d)		56
Treasury stock		22,339		—						22,339
Total stockholders' equity		295,044		30,969			(30,969	)		295,044
Total liabilities and stockholders' equity	$	420,822	$	58,144		$	(21,957	)	$	457,009

(1)     All letter references refer to Note 2 of the Notes to the Unaudited Pro Forma Combined Financial Statements.

Unaudited Pro Forma Combined Statement of Operations

Nine Months ended October 28, 2000

(U.S. dollars, in thousands)	AEO Nine Month Period ended October 28, 2000		Acquired Businesses Nine Month Period ended October 28, 2000		Pro Forma Adjustments (2)			Pro Forma Combined Company
Net sales	$	669,743	$	116,401		$	—		$	786,144
Cost of sales, including certain buying,      occupancy and warehousing expenses
		416,018		77,977			—			493,995
Gross profit		253,725		38,424			—			292,149
Selling, general and administrative      expenses
		169,367		32,935			—			202,302
Depreciation and amortization expense		14,952		3,661			1,475	(a)		21,485
							1,397	(c)
Operating income		69,406		1,828			(2,872	)		68,362
Other income (expense), net		3,847		(647	)		(1,323	) (b)		1,877
Income before income taxes		73,253		1,181			(4,195	)		70,239
Provision for income taxes		28,642		520			(1,067	) (d)		28,095
Net Income	$	44,611	$	661		$	(3,128	)	$	42,144
Basic earnings per common share	$	0.64							$	0.61
Diluted earnings per common share	$	0.62							$	0.59
Weighted average common shares
Outstanding—basic		69,633								69,633
Weighted average common shares
Outstanding—diluted		72,021								72,021

(2)     All letter references refer to Note 3 of the Notes to Unaudited Pro Forma Combined Financial Statements.

Unaudited Pro Forma Combined Statement of Operations

Year ended January 29, 2000

(U.S. dollars, in thousands)	AEO			Acquired Businesses				Pro Forma Adjustments (2)				Pro Forma Combined Company
Net sales	$	832,104			$	169,959			$	—			$	1,002,063
Cost of sales, including certain buying,
occupancy and warehousing expenses		475,596				112,609				—				588,205
Gross profit		356,508				57,350				—				413,858
Selling, general and administrative
expenses		194,795				43,852				—				238,647
Depreciation and amortization expense		12,199				4,450				1,967	(a)			20,479
										1,863	(c)
Operating income		149,514				9,048				(3,830	)			154,732
Other income (expense), net		(160	)			(235	)			(1,764	) (b)			(2,159	)
Income before income taxes		149,354				8,813				(5,594	)			152,573
Provision for income taxes		58,694				3,878				(1,543	) (d)			61,029
Net Income	$	90,660			$	4,935			$	(4,051	)		$	91,544
Basic earnings per common share	$	1.30											$	1.32
Diluted earnings per common share	$	1.24											$	1.25
Weighted average common shares
outstanding — basic		69,555												69,555
Weighted average common shares
outstanding — diluted		73,113												73,113

(2)     All letters references refer to Note 3 of the Notes to Unaudited Pro Forma Combined Financial Statements.

Notes to Unaudited Pro Forma Combined Financial Statements

1. Summary of Significant Accounting Policies

Foreign Currency Translation

The Canadian dollar is determined to be the functional currency for the Acquired Businesses. In accordance with FASB Statement No. 52, "Foreign Currency Translation," the assets and liabilities which are denominated in foreign currencies are translated into U.S. Dollars at the exchange rate prevailing at October 28, 2000. Revenues and expenses denominated in foreign currencies are translated into U.S. dollars at the average exchange rate for the nine months ended October 29, 2000 and the year ended January 29, 2000. Gains or losses resulting from foreign currency transactions are included in the results of operations, whereas, related translation adjustments are reported as other comprehensive income, in accordance with FASB Statement No. 130, "Reporting Comprehensive Income." Components of comprehensive income include net income and the effects of translating the financial statements from the functional currency, Canadian dollars, to the reporting currency, U.S. dollars. The exchange rate used to convert the Unaudited Pro Forma Combined Balance Sheet from Canadian dollars to U.S dollars as of October 28, 2000 was .6540. The Unaudited Pro Forma Combined Statements of Operations for the nine months ended October 28, 2000 and the year ended January 29, 2000 assume that the acquisition occurred on January 31, 1999 when the exchange rate from Canadian dollars to U.S. dollars was .6572. The difference in translation rates at the assumed transaction dates result in insignificant differences in the assumed purchase price allocation as presented in the Unaudited Pro Forma Combined Balance Sheet and the Unaudited Pro Forma Combined Statements of Operations.

Stock Split

On January 22, 2001, American Eagle Outfitters' Board of Directors announced a three-for-two stock split to be distributed on February 23, 2001 to shareholders of record on February 2, 2001. Accordingly, all share amounts and per share reflected in the unaudited pro forma combined financial statements have been restated to reflect the stock split.

2. Pro forma Adjustments to the Unaudited Pro Forma Combined Balance Sheet as of October 28, 2000

The pro forma adjustments to the Unaudited Pro Forma Combined Balance Sheet reflect the purchase of the acquired businesses and the allocation of the pro forma purchase price to the acquired assets based on the preliminary estimate of their fair value at the date of the acquisition.

(a) The following amounts included in the Acquired Businesses balance sheet were not purchased or assumed by AEO in the transaction:

Cash and cash equivalents	$	14,532
Other assets, less accumulated depreciation		824
Accounts payable		14,192
Accrued compensation and payroll taxes		1,515
Accrued rent		3,019
Accrued income and other taxes		5,099
Other liabilities and accrued expenses		3,049
Unredeemed stored value cards and gift certificates		255
Net investment in acquired businesses		19,057
Other noncurrent liabilities		46

(b) The estimated net purchase price and preliminary adjustments to historical book value of Acquired Businesses as a result of the acquisition together with the financing are as follows:

Purchase price:
	Estimated cash consideration	$	75,406
	Transaction costs		2,742
	Book value of net assets acquired		42,788
		$	35,360

The purchase price is subject to adjustment based upon the results of an audit and subsequent resolution of differences, if any, between the parties. This process is not completed, however, management does not believe material changes to the estimated amounts will occur.

Preliminary allocation of purchase price in excess of (less than) net assets acquired:

Merchandise inventory	$	(844	)
Land		(634	)
Building		1,312
Leasehold improvements		2,135
Accumulated depreciation		10,123
Accrued liabilities		(490	)
Accrued liabilities, recognized in accordance with EITF 95-3		(6,475	)
Estimated adjustment for costs in excess of net assets of
Acquired Businesses		30,233
	$	35,360

The unaudited pro forma combined balance sheet includes an estimated accrued liability of $6,475 for severance costs and estimated operating losses for the elimination of an Acquired Business concept. The Company has announced its intention to convert these locations to American Eagle Outfitters retail stores. The conversion plans will be finalized, approved, and communicated as soon as practical.

(c)	Represents debt incurred ($29,222) and cash paid ($48,926) to finance the acquisition.
(d)	Represents elimination of historic equity amounts of Acquired Businesses.
3.	Pro forma Adjustments to the Unaudited Pro Forma Combined Statements of Operations for the Year ended January 29, 2000 and the Nine Months ended October 28, 2000.

The pro forma adjustments to the unaudited pro forma combined statements of operations reflect the purchase of the acquired businesses.

(a) The following represents increased amortization expense related to goodwill created in the acquisition:

		Amount	Useful Life		Year ended January 29, 2000 Amortization Expense Adjustment		Nine months ended October 28, 2000 Amortization Expense Adjustment
Goodwill	$	29,507	15 years	$	1,967	$	1,475

(b) Reflects adjustments for additional interest expense assuming the acquisition occurred on January 31, 1999.

	Rate		Principal		Year ended January 29, 2000 Interest Expense Adjustment		Nine months ended October 28, 2000 Interest Expense Adjustment
Term loan	5.97%	$	29,544	$	1,764	$	1,323

(c) The following represents increased depreciation expense related to the adjustment of recording Acquired Businesses fixed assets at fair value:

		Write-up of Fixed Assets	Weighted Average Remaining Useful Life		Year ended January 29, 2000 Depreciation Expense Adjustment		Nine months ended October 28, 2000 Depreciation Expense Adjustment
Building	$	1,386	20 years	$	69	$	52
Leasehold improvements		12,554	7 years		1,794		1,345
				$	1,863	$	1,397

(d) Adjustment to reflect income taxes as the amount which would have been recognized on a combined basis.

		Year ended January 29, 2000		Nine month ended October 28, 2000
Pro forma income before income taxes	$	152,573	$	70,239
Estimated statutory rate		40%		40%
Pro forma tax expense	$	61,029	$	28,095

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 hereunto duly authorized.
	AMERICAN EAGLE OUTFITTERS, INC.
Date: February 13, 2001	By: /s/ Dale E. Clifton
	Dale E. Clifton Vice President, Controller, and Chief Accounting Officer