-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IAfJ5hVfJTp/zJR32Uc8U8Js3TZtg+XarOgh2vKCBKstUH9LUifenFwwdEmMzd91 nWLcdokVEk7at//olYAzfw== 0000950152-97-004518.txt : 19970617 0000950152-97-004518.hdr.sgml : 19970617 ACCESSION NUMBER: 0000950152-97-004518 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970503 FILED AS OF DATE: 19970616 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN EAGLE OUTFITTERS INC CENTRAL INDEX KEY: 0000919012 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FAMILY CLOTHING STORES [5651] IRS NUMBER: 251724320 STATE OF INCORPORATION: OH FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-23760 FILM NUMBER: 97624580 BUSINESS ADDRESS: STREET 1: 150 THORN HILL DR CITY: WARRENDALE STATE: PA ZIP: 15095 BUSINESS PHONE: 4127764857 MAIL ADDRESS: STREET 1: 150 THORN HILL DRIVE STREET 2: P O BOX 788 CITY: WARRENDALE STATE: PA ZIP: 15095 10-Q 1 AMERICAN EAGLE OUTFITTERS, INC. 10-Q 1 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 May 3, 1997 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________to______________ COMMISSION FILE NUMBER: 0-23760 AMERICAN EAGLE OUTFITTERS, INC. ------------------------------- (Exact name of registrant as specified in its charter) OHIO NO. 25-1724320 ---- -------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 150 THORN HILL DRIVE, WARRENDALE, PA 15086-7528 ------------------------------------ ---------- (Address of principal executive offices) (Zip code) (412) 776-4857 -------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. COMMON STOCK, NO PAR VALUE, 9,923,550 SHARES OUTSTANDING AS OF MAY 19, 1997 2 AMERICAN EAGLE OUTFITTERS, INC. TABLE OF CONTENTS PART I. FINANCIAL INFORMATION PAGE NO. --------------------- -------- Item 1. Financial Statements Consolidated Balance Sheets May 3, 1997 (unaudited) and February 1, 1997 3 Consolidated Statements of Operations (unaudited) Three months ended May 3, 1997 and May 4, 1996 4 Consolidated Statements of Cash Flows (unaudited) Three months ended May 3, 1997 and May 4, 1996 5 Notes to Consolidated Financial Statements 6-8 Review By Independent Accountants 9 Independent Accountants' Review Report 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10-12 PART II. OTHER INFORMATION Item 1. Legal Proceedings N/A Item 2. Changes in Securities N/A Item 3. Defaults Upon Senior Securities N/A Item 4. Submission of Matters to a Vote of Security Holders 13 Item 5. Other Information N/A Item 6. Exhibits and Reports on Form 8-K 13 Signatures 14 Exhibit 23 Acknowledgment of Independent Accountants 15
3 PART I. FINANCIAL INFORMATION Item 1. Financial Statements AMERICAN EAGLE OUTFITTERS, INC. CONSOLIDATED BALANCE SHEETS
(In thousands, except common stock share amounts) May 3, February 1, ASSETS 1997 1997 ----- ----- Current assets: (Unaudited) Cash and cash equivalents $14,261 $ 34,326 Merchandise inventory 35,486 27,117 Receivables 1,637 3,556 Prepaid expenses and other 4,805 4,381 Deferred income taxes 4,425 4,380 ------- -------- Total current assets 60,614 73,760 ------- -------- Fixed assets: Fixtures and equipment 24,116 23,118 Leasehold improvements 33,105 32,671 ------- -------- 57,221 55,789 Less: Accumulated depreciation and amortization 20,775 21,598 ------- -------- 36,446 34,191 ------- -------- Other assets 2,670 2,487 ------- -------- Total assets $99,730 $110,438 ======= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $19,107 $ 20,430 Accrued compensation and payroll taxes 3,941 4,926 Accrued rent 6,064 6,006 Accrued income and other taxes 526 5,478 Other liabilities and accrued expenses 2,267 2,542 ------- -------- Total current liabilities 31,905 39,382 ------- -------- Stockholders' equity: Common stock, 30,000,000 shares authorized, 10,053,350 shares issued (10,051,950 shares at February 1, 1997) 53,276 52,863 Contributed capital 5,539 5,535 Retained earnings 13,500 17,119 ------- -------- 72,315 75,517 Less: Deferred compensation 2,865 2,836 Treasury stock, 134,000 shares 1,625 1,625 ------- -------- Total stockholders' equity 67,825 71,056 ------- -------- Total liabilities and stockholders' equity $99,730 $110,438 ======= ========
See notes to Consolidated Financial Statements 3 4 AMERICAN EAGLE OUTFITTERS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts)
Three Months Ended -------------------- May 3, May 4, 1997 1996 ---- ---- Net sales $ 60,952 $ 54,396 Cost of sales, including certain buying, occupancy and warehousing expenses 46,699 40,786 -------- -------- Gross profit 14,253 13,610 Selling, general and administrative expenses 18,910 17,286 Depreciation and amortization 1,669 1,567 -------- -------- Operating loss (6,326) (5,243) Interest income, net 330 314 -------- -------- Loss before income taxes (5,996) (4,929) Benefit for income taxes (2,377) (1,938) -------- -------- Net loss $ (3,619) $ (2,991) ======== ========= Net loss per common share $ (0.36) $ (0.30) ======== ========= Weighted average number of shares outstanding 9,918 9,875 ======== ========= Retained earnings, beginning $ 17,119 $ 11,194 Net loss (3,619) (2,991) -------- -------- Retained earnings, ending $ 13,500 $ 8,203 ======== ========
See notes to Consolidated Financial Statements 4 5 AMERICAN EAGLE OUTFITTERS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH (In thousands) (Unaudited)
Three Months Ended ------------------ May 3, May 4, 1997 1996 ---- ---- Net loss $ (3,619) $ (2,991) ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES: Depreciation and amortization 1,669 1,567 Loss on disposal 401 237 Restricted stock compensation 262 206 Deferred income taxes (45) - CHANGES IN ASSETS AND LIABILITIES: Merchandise inventory (8,369) (1,075) Receivables 1,782 3,173 Prepaid and other (523) (649) Accounts payable (2,066) (1,660) Accrued liabilities (5,725) (3,038) -------- -------- Total adjustments (12,614) (1,239) -------- -------- Net cash used for operating activities (16,233) (4,230) -------- -------- INVESTING ACTIVITIES: Capital expenditures (3,845) (1,467) Collection on notes from sale of outlet stores - 3,568 -------- -------- Net cash used for investing activities (3,845) 2,101 -------- -------- FINANCING ACTIVITIES: Stock options exercised 13 - -- - Net cash provided by financing activities 13 - -- - Net decrease in cash (20,065) (2,129) Cash - beginning of period 34,326 19,986 -------- -------- Cash - end of period $ 14,261 $ 17,857 ======== ========
See notes to Consolidated Financial Statements 5 6 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 May 3, 1997 and for the three month periods ended May 3, 1997 (the "current period") and May 4, 1996 (the "prior period") have been prepared in accordance with generally accepted accounting principles 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 generally accepted accounting principles for complete financial statements. 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, 1997 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. 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 1996 Annual Report. 2. BASIS OF PRESENTATION ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities 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. EARNINGS PER SHARE Earnings per share are based upon the weighted average number of common shares outstanding during the periods presented. Common share equivalents, principally in the form of employee stock option awards, are not reflected in the common stock outstanding as they are anti-dilutive. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which is required to be adopted in the Company's 1997 annual report. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary (termed basic earnings per share) earnings per share, the dilutive effect of stock options will be excluded. The impact of Statement 128 on the calculation of primary and fully diluted earnings per share for the quarters ended May 3, 1997 and May 4, 1996 is not expected to be material. RECLASSIFICATION Certain reclassifications have been made to the Consolidated Financial Statements for the prior period in order to conform to the May 3, 1997 presentation. 3. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Because no borrowings were required under the terms of the Company's line of credit, there were no amounts paid for interest during the three months ended May 3, 1997 or May 4, 1996. Income tax payments were $2.4 million and $0.6 million during the three months ended May 3, 1997 and May 4, 1996, respectively. 4. RELATED PARTY TRANSACTIONS As described in the information that follows, the Company has various transactions with related parties. The nature of the relationship is 6 7 primarily through common ownership. The Company has an operating lease for its corporate headquarters and distribution center with an affiliate of the Company. The lease, which was entered into on January 1, 1996, and expires on December 31, 2010, provides for annual rental payments of approximately $1.2 million through 2001, $1.6 million through 2006, and $1.8 million through the end of the lease. In addition, the Company purchases merchandise from and sells merchandise to various related parties and uses the services of a related importing company. Transactions with these related parties and associated balance sheet amounts were as follows: (In thousands)
Three Months Ended ------------------ May 3, May 4, 1997 1996 ---- ----- Merchandise purchases plus import administrative charges $ 12,377 $ 7,076 Accounts payable $ 5,985 $ 4,499 Accounts receivable $ 138 $ 401 Rent expense $ 401 $ 395 Merchandise sales $ 305 $ 178
The Company has provided one-year loans, which are renewed annually, to certain officers and other individuals to pay the taxes on the restricted stock that vested in April 1995. As of May 3, 1997, the outstanding value of these loans, including interest at 6.8%, approximated $515,000 as compared with $350,000 at May 4, 1996. 5. ACCOUNTS RECEIVABLE Accounts Receivable is comprised of the following:
May 3, February 1, 1997 1997 ---- ---- Accounts Receivable - Landlord $ 898 $ 1,336 Related Party Accounts Receivable 138 1,334 Accounts Receivable - Other 601 886 ------- ------- Total $ 1,637 $ 3,556 ======= =======
6. INCOME TAXES The provisions of FASB No. 109, "Accounting for Income Taxes", have been reflected in the preparation of the accompanying Consolidated Financial Statements. For the three months ended May 3, 1997 and May 4, 1996, the effective tax rate used to provide income tax amounts approximated 39%. 7. LEASE COMMITMENTS The Company is contingently liable for the rental payments totaling approximately $7.0 million for the outlet stores which were sold in October 1995. 7 8 8. SUBSEQUENT EVENT Effective May 4, 1997, the Company acquired Prophecy Ltd. (Prophecy), a New York-based contract apparel manufacturer. The majority partner of Prophecy was the Schottenstein family. The goals of the acquisition are to leverage the talent and expense of the Company's New York design office and to use Prophecy's production expertise and manufacturing relationships to shorten the product delivery cycle and enable the Company to continually improve product quality and value. The terms of the acquisition included a cash payment of $0.9 million at closing, as well as the assumption of net liabilities of approximately $2.7 million. 8 9 REVIEW BY INDEPENDENT ACCOUNTANTS Ernst & Young LLP, our independent accountants, have performed a limited review of the Consolidated Financial Statements for the quarters ended May 3, 1997 and May 4, 1996, 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 Shareholders American Eagle Outfitters, Inc. We have reviewed the accompanying consolidated balance sheet of American Eagle Outfitters, Inc. as of May 3, 1997, and the related consolidated statements of operations for the three-month periods ended May 3, 1997 and May 4, 1996 and the consolidated statements of cash flows for the three-month periods ended May 3, 1997 and May 4, 1996. 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 generally accepted auditing standards, 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 generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of American Eagle Outfitters, Inc. as of February 1, 1997, and the related consolidated statements of operations and cash flows for the year then ended (not presented herein) and in our report dated March 7, 1997 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of February 1, 1997, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Pittsburgh, Pennsylvania May 27, 1997 9 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, the percentage relationship to net sales of the listed items included in the Company's Consolidated Statements of Operations.
Three months ended ------------------ May 3, May 4, 1997 1996 ---- ---- Net sales 100.0% 100.0% Cost of sales, including certain buying, occupancy and warehousing expenses 76.7 75.0 ----- ----- Gross profit 23.3 25.0 Selling, general and administrative expenses 31.0 31.8 Depreciation and amortization 2.7 2.9 ----- ----- Operating loss (10.4) (9.7) Interest income, net 0.5 0.6 ----- ----- Loss before income taxes (9.9) (9.1) Benefit for income taxes (3.9) (3.6) ----- ----- Net loss (6.0)% (5.5)% ===== =====
COMPARISON OF THREE MONTHS ENDED MAY 3, 1997 TO THREE MONTHS ENDED MAY 4, 1996 Net sales for the three months ended May 3, 1997 (the "current period") increased 12.0% to $60.9 million from $54.4 million for the three months ended May 4, 1996 (the "prior period"). The increase in net sales resulted primarily from increases of $5.2 million from non-comparable store sales and $1.7 million or 3.3% in comparable stores sales, offset by a decrease of $0.3 million from merchandise sales to Mycal Ltd. (formerly Nimius). The total increase in net sales resulted primarily from an increase in units sold rather than from an increase in prices. The Company operated 309 stores, excluding 3 temporary locations, at the end of the current period, compared to 274 stores, excluding 3 temporary locations, operated at the end of the prior period. Gross profit for the current period increased to $14.3 million from $13.6 million for the prior period. This increase was attributable to higher initial mark-ups, offset by higher markdowns and occupancy costs compared to the prior period. Gross profit as a percent of net sales for the current period decreased to 23.3% from 25.0% for the prior period. This decrease was attributable to the increased markdowns as a percent of net sales, only partially offset by an increase as a percent of net sales of higher initial mark-ups. Selling, general and administrative expenses for the current period increased to $18.9 million from $17.3 million for the prior period. As a percent of net sales, these expenses decreased to 31.0% from 31.8% for the prior period. The increase of $1.6 million resulted from an increase of $1.0 million in salaries primarily to support the new store growth, an increase of $0.4 million in promotional advertising, and an increase of $0.3 million in services purchased. Depreciation and amortization expense for the current period increased to $1.7 million from $1.6 million for the prior period and represented 2.7% of sales in the current period as compared to 2.9% of sales in the prior period. Interest income for the current and prior periods was $0.3 million. Interest income was generated on cash available for investment. No 10 11 borrowings were required under the terms of the Company's line of credit during the current period. The loss before income taxes for the current period increased to $6.0 million from a $4.9 million loss before income taxes for the prior period. As a percent of net sales, the loss before income taxes for the current period increased to 9.9% from 9.1% for the prior period. The increase in the loss before income taxes of $1.1 million was primarily a result of higher selling, general, and administrative expenses and depreciation, offset by increased gross profit dollars. LIQUIDITY AND CAPITAL RESOURCES The Company's primary uses of working capital in the current period were cash flow used by operating activities, primarily to support inventory increases for anticipated sales and new store growth and accounts payable decreases. Additionally, the Company used working capital to support capital expenditures. The Company had working capital of $28.7 and $34.4 million at May 3, 1997 and February 1, 1997, respectively. At May 3, 1997, the Company had an unsecured demand lending arrangement with a bank to provide a $60.0 million line of credit at either the lender's prime lending rate (8.25% at May 3, 1997) or a negotiated rate such as LIBOR. The facility has a limit of $40.0 million that can be used for direct borrowing. Cash generated from operations in prior periods was sufficient enough to finance operations so that no borrowings were required against the line during the current period. Letters of credit in the amount of $22.1 million were outstanding at May 3, 1997. The remaining available balance on the line was $37.9 million at May 4, 1997. Capital expenditures, net of construction allowances, totaled $3.8 million for the three months ended May 3, 1997. These expenditures included the addition of 10 new store locations (including 3 temporary locations), 12 store remodels, leasehold improvements in existing stores, and the purchase of CAD equipment and software. The Company expects to open an additional 15 stores during the remainder of the fiscal year. The Company has also selected an additional 8 of its better-performing older stores to upgrade to the newest store design during the remainder of Fiscal 1997. These locations were selected based upon criteria such as historical sales performance and lease terms. These forward-looking statements will be influenced by factors including the Company's financial position, consumer spending, and the number of advantageous mall store leases that may become available. The Company believes that the cash flow from operations and its bank line of credit will be sufficient to meet its presently anticipated cash requirements through Fiscal 1997. SEASONALITY Historically, the Company's operations have been seasonal, with highest 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. The Company has generally recognized net losses during its first and second fiscal quarters. IMPACT OF INFLATION The Company does not believe that the relatively modest levels of inflation which have been experienced in the United States in recent years have had a significant effect on its net sales or its profitability. Substantial increases in cost, however, could have a significant impact on the Company and the industry in the future. SAFE HARBOR STATEMENT AND BUSINESS RISKS 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 the Company's expectations or beliefs concerning future events, including the following: the planned opening of 15 stores during the remainder of Fiscal 1997; the selection of 8 stores for remodeling during the remainder of Fiscal 1997; and the sufficiency of cash flows and line of credit facilities to meet Fiscal 1997 cash requirements. The Company cautions that these statements are further qualified by factors that could cause actual results to differ materially from those in the forward-looking statements, including without limitation, the following: a decline in demand for the merchandise offered by the Company; any events causing the disruption of imports including the insolvency of a significant supplier; the ability of the Company to locate and obtain favorable store sites and negotiate acceptable lease terms; the ability of the Company to gauge the fashion tastes of its customers and provide merchandise that satisfies customer demand; the effect of the economic conditions; and the effect of competitive pressures from other retailers. 11 12 Results actually achieved thus may differ materially from expected results in any forward-looking statements. The Company's results of operations will also fluctuate from quarter to quarter in the future as a result of numerous other factors. These include factors the Company cannot control that impact mall-based retailers generally, such as factors affecting the amount of traffic in enclosed shopping malls and regional and national economic conditions affecting disposable consumer income. They also include factors over which the Company has some control, such as distinguishing itself from its competitors based on the quality and design of its private label brand names; identifying and responding to fashion trends in a timely manner; the ability to direct source merchandise closer to need and in appropriate quantities; the ability to retain qualified personnel; and the number and timing of the opening of new stores. Any one or a combination of these factors could have a material adverse affect on the Company's results of operations and financial condition. 12 13 PART II - OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The Company held its 1997 Annual Meeting of Shareholders on May 7, 1997. Holders of 7,978,306 Common Shares of the Company were present representing approximately 80% of the Company's 9,917,950 Common Shares issued and outstanding. (b) The following persons were elected as members of the Company's Board of and Directors to serve until the annual meeting following their election or (c) until their successors are duly elected and qualified. Each person received the number of votes for or the number of votes with authority withheld indicate below.
Name Votes For Votes Withheld - ---- --------- -------------- Martin P. Doolan 7,538,723 439,583 Thomas R. Ketteler 7,538,723 439,583 George Kolber 7,538,214 440,092 John L. Marakas 7,538,725 439,581 Jay L. Schottenstein 7,538,823 440,483 Saul Schottenstein 7,523,223 455,083 David W. Thompson 7,538,216 440,090
The proposal to approve the amendments to the Company's 1994 Stock Option Plan described in the Proxy Statement passed with 6,377,605 votes For, 641,304 votes Against and 11,923 votes withheld. (d) Not applicable. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit No. Description 10.10 Purchase Agreement re: Prophecy Limited Partnership. 23. Acknowledgment of Independent Accountants 27. Financial Data Schedule (b) Reports on Form 8-K - None 13 14 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 June 16, 1997 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 14 EX-10.10 2 EXHIBIT 10.10 1 Exhibit 10.10 PURCHASE AGREEMENT This Agreement is made effective as of the 4th day of May, 1997, by and among Prophecy Co., an Ohio corporation (the "G.P. Buyer"), Prophecy Ltd. Partner Co., an Ohio corporation (the "L.P. Buyer") (G.P. Buyer and L.P. Buyer sometimes referred to collectively as the "Buyers"), Glosser Brothers Acquisition, Inc., a Delaware corporation ("GB"), The Jay L. Schottenstein Descendants Trust ("JLS Trust"), The Ann S. Deshe Descendants Trust ("ASD Trust"), The Susan S. Diamond Descendants Trust ("SSD Trust"), The Schottenstein Family Limited Partnership, an Ohio limited partnership ("SFLP") (GB, JLS Trust, ASD Trust, SSD Trust, and SFLP collectively referred to herein as the "Sellers"), and Prophecy Limited Partnership, an Ohio limited partnership (the "Partnership"). WHEREAS, GB is the general partner of the Partnership and owns a 2% general partnership interest (the "GB Interest") in the Partnership under the Certificate and Agreement of Limited Partnership, dated as of November 22, 1994 (the "Partnership Agreement"); and WHEREAS, JLS Trust is a limited partner of the Partnership and owns a 35.92% limited partnership interest (the "JLS Trust Interest") in the Partnership under the Partnership Agreement; WHEREAS, ASD Trust is a limited partner of the Partnership and owns a 20.54% limited partnership interest (the "ASD Trust Interest") in the Partnership under the Partnership Agreement; WHEREAS, SSD Trust is a limited partner of the Partnership and owns a 20.54% limited partnership interest (the "SSD Trust Interest") in the Partnership under the Partnership Agreement; WHEREAS, SFLP is a limited partner of the Partnership and owns a 5% limited partnership interest (the "SFLP Interest") in the Partnership under the Partnership Agreement; WHEREAS, the G.P. Buyer desires to purchase the general partner interest in the Partnership through the purchase of the GB Interest, and the L.P. Buyer desires to purchase the limited partner interests in the Partnership through the purchase of the JLS Trust Interest, the ASD Trust Interest, the SSD Trust Interest, and the SFLP Interest (all of the interests, collectively, to be referred to as the "Purchased Interests") and the Sellers desire to sell and assign all of their Purchased Interests in the Partnership to the Buyers, pursuant to the terms of this Agreement; WHEREAS, upon giving effect to such sale and assignment of the Purchased Interests, the G.P. Buyer shall become the substituted general partner of the Partnership and the L.P. Buyer shall become the substituted limited partner of the Partnership, each holding a percentage interest in the Partnership according to an amended agreement of limited partnership to be agreed upon between the G.P. Buyer and the L.P. Buyer following the Closing (the "Amended Partnership Agreement"); and WHEREAS, all of the partners of the Partnership have consented to the sale and assignment of the Purchased Interests to the Buyers. 2 NOW, THEREFORE, in consideration of the promises and the mutual benefits to be derived from this Agreement and of the respective agreements and covenants set forth herein, the parties, intending to be legally bound, agree as follows: I. CLOSING 1.1 CLOSING. The closing with respect to the transactions provided for in this Agreement (the "Closing") shall take place upon the signing of this Agreement to be effective the close of business on May 4, 1997 (the "Effective Date"). II. SALE OF THE PURCHASED INTERESTS AND RELATED TRANSACTIONS 2.1 SALE OF PURCHASED INTERESTS. On the terms set forth in this Agreement, the Sellers hereby sell, convey, assign, transfer and deliver to the Buyers, and the Buyers hereby purchase and accept from the Sellers, effective as of the Effective Date, the entire right, title and interest in and to the Purchased Interests, free and clear of all liens, security interests, taxes, charges, encumbrances and claims of every kind, for an aggregate purchase price not to exceed One Million Six Hundred Thousand ($1,600,000) Dollars (the "Purchase Price"). The Purchase Price shall be allocated among the Sellers prorata in proportion to their percentage ownership interests in the Partnership and shall be paid by the Buyers in the following manner: (A) $900,000 cash payment at Closing; and (B) provided only if Buyers continue to own and operate the Partnership business, then contingent payments of $233,333 to be paid on each of the first two anniversaries of the Closing and $233,334 to be paid on the third anniversary of the Closing. The amount of these contingent payments is subject to adjustment as set forth in Section 2.2 below. 2.2 ADJUSTMENT TO PURCHASE PRICE. As soon as practicable after the Effective Date, the Sellers and Buyers shall jointly prepare a balance sheet based on the Partnership's books and records as of the close of business on March 31, 1997 (hereinafter referred to as the "Closing Balance Sheet"). If the Closing Balance Sheet shows an increase or decrease of more than $50,000 (a "Material Increase" or "Material Decrease") in the net book value of the Partnership as compared to the negative net book value of $1,730,000 shown on the preliminary balance sheet the Partnership as of December 31, 1996 (the "Preliminary Balance Sheet"), the contingent purchase price payments set forth in Section 2.1 shall be adjusted according to this Section 2.2. For purposes of making such an adjustment, if the Closing Balance Sheet shows a Material Increase, then the contingent payments shall be increased dollar for dollar for every dollar of such Material Increase. Or, in the alternative, if the Closing Balance Sheet shows a Material Decrease, then the contingent payments shall be reduced dollar for dollar for every dollar of such Material Decrease. Any such resulting adjustment to the Purchase Price shall be added or deducted from the contingent payments equally. If the Closing Balance Sheet shows neither a Material Increase nor a Material Decrease, there shall be no adjustment to the contingent payments. 2.3 CONTINUATION OF PARTNERSHIP AS A PARTNERSHIP. On and after the Closing, and effective as of the Effective Date, the G.P. Buyer shall be a substituted general partner, and the L.P. Buyer a 2 3 substituted limited partner in the Partnership, pursuant to the Amended Partnership Agreement. Notwithstanding the above, the Partnership shall be deemed to terminate with respect to the Sellers. 2.4 LIQUIDATION OPTION. If the Buyers, in their sole discretion, elect to terminate the operation of the business of the Partnership (not including the continuation of the business in a different legal entity) at any time during the three years after the Closing, the Buyers shall provide Sellers written notice of their intention to either sell or wind-up and liquidate the Partnership business. Upon receipt of the notice, Sellers shall have the right, exercisable for a period of 30 days by written notice to the Buyers, to acquire the Partnership business at a price to be agreed upon. 2.5 TAXES. The Sellers shall prepare, execute and file all tax returns relating to, and the Sellers shall be responsible for and pay when due, any and all sales, real estate, transfer or use or other tax due with regard to the purchase and sale of the Purchased Interests. III. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE SELLERS AND THE PARTNERSHIP Each of the Sellers, jointly and severally, hereby represents and warrants to the Buyers and agrees as follows: 3.l EXISTENCE AND GOOD STANDING. GB is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has the power and authority to own, operate and lease its properties, to carry on its business as now being conducted and to enter into this Agreement and perform its obligations hereunder. Each of JLS Trust, ASD Trust, and SSD Trust is a trust duly organized and validly existing under the laws of the State of Ohio, and has the power and authority to own, operate and lease its properties, to carry on its business as now being conducted and to enter into this Agreement and perform its obligations hereunder. SFLP is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Ohio, and has the power and authority to own, operate and lease its properties, to carry on its business as now being conducted and to enter into this Agreement and perform its obligations hereunder. 3.2 OWNERSHIP OF PURCHASED INTERESTS. Each of GB, JLS Trust, ASD Trust, SSD Trust and SFLP is the lawful owner of their respective Purchased Interests, free and clear of all security interests, liens, encumbrances and claims of every kind. Sellers have full legal right power and authority to enter into this Agreement and to sell, assign, transfer and convey the Purchased Interests pursuant to this Agreement. The delivery to the Buyer of the Purchased Interests pursuant to the provisions of this Agreement will transfer to the Buyer valid title thereto, free and clear of all security interests, liens, encumbrances and claims of every kind, except with respect to the GB Interest, which may be subject to such encumbrances arising solely as a result of its representing a general partner interest in the Partnership. 3.3 ORGANIZATION, POWER, AND GOOD STANDING OF PARTNERSHIP. The Partnership is a limited partnership, duly organized, validly existing and in good standing under the laws of the State of 3 4 Ohio. The Sellers have furnished to the Buyer a true, complete and correct copy of the Partnership Agreement, which remains in full force and effect without modification through the Closing. The Partnership has all requisite power and authority to own, operate and lease its properties, to carry on its business as now being conducted and to enter into this Agreement and perform its obligations hereunder. The Partnership is duly qualified to do business as a foreign partnership and is in good standing in each of the jurisdictions in which the property operated by the Partnership or the nature of its business makes such qualification necessary except where failure to so qualify would not have a material adverse effect on the financial condition of the Partnership and would not in any way affect the enforceability of this Agreement. 3.4 AUTHORITY RELATIVE TO AGREEMENT. The execution, delivery and performance of this Agreement and all documents and instruments to be delivered in connection herewith by each of the Sellers has been duly and effectively authorized by all necessary corporate, trustee or partnership action of the Partnership and the Sellers. This Agreement has been duly executed by each of the Sellers and is a valid, legally binding and enforceable obligation of each of the Sellers. 3.5 EFFECT OF AGREEMENT. The execution, delivery and performance of this Agreement and all documents and instruments to be delivered in connection herewith by each of the Sellers and the consummation by each of them of the transactions contemplated hereby and thereby does not (i) require the consent, approval or authorization of any person, corporation, partnership, joint venture or other business association or public authority; (ii) violate, with or without the giving of notice or the passage of time, or both, any provisions of law or statue or any rule, regulation, order, award, judgement or decree of any court or governmental authority applicable to any of the Sellers; or (iii) conflict with or result in a breach or termination of any provision of, or constitute a default under, or result of the creation of any lien, charge or encumbrance upon any of the assets of the Partnership or the Purchased Interests pursuant to any corporate charter, by law, partnership agreement, indenture, mortgage, deed of trust, lease, contract, agreement or other instrument, or any order, judgement, award, decree, statue, ordinance, regulation or any other restriction of any kind or character, to which any of the Sellers is a party, or by which any of the Sellers or any of the Purchased Interests may be bound. 3.6 FINANCIAL STATEMENTS. The Sellers and the Partnership have heretofore furnished the Buyers with the Preliminary Balance Sheet, which represents the preliminary balance sheet of the Partnership as of December 31, 1996. The Closing Balance Sheet fairly presents the financial condition of the Partnership at the date thereof. 3.7 TITLE TO PROPERTIES; ENCUMBRANCES. Except for properties and assets reflected in the Closing Balance Sheet which have been sold or otherwise disposed of in the ordinary course of business, the Partnership has good, valid and marketable title to all of its material properties and assets (real and personal, tangible and intangible), including, without limitation, all of the properties and assets reflected in the Closing Balance Sheet, except as indicated in any notes thereto. 4 5 3.8 PARTNERSHIP CONTRACTS. The Partnership neither has nor is bound by any agreement, contract, obligation, lease or commitment that would have a material adverse effect on the Partnership or this Agreement or that could not be cancelled without penalty upon 30 days notice. Each agreement, contract, obligation, lease and commitment of the Partnership is in full force and effect and there exists no default or event of default or event, occurrence, condition or act (including the sale of the Purchased Interests hereunder) which, with the giving of notice, the lapse of time or the happening of any other event or condition, would become a default or event of default thereunder. The Partnership has not violated any of the terms or conditions of any agreement, contract, obligation, lease or commitment in any material respect, and, to the best knowledge, information and belief of the Partnership and the Sellers, all of the covenants to be performed by any other party thereto have been performed in all material respects. 3.9 LITIGATION. There is no action, suit, proceeding at law or in equity, arbitration or administrative or other proceeding by or before or any investigation by any governmental or other instrumentality or agency, pending, or, to the best knowledge, information and belief of the Partnership and the Sellers, threatened, against or affecting the Partnership which, if adversely determined, would have a material adverse effect on the business of the Partnership; and the Sellers do not know of any valid basis for any such action, proceeding or investigation. The Partnership is not subject to any judgment, order or decree entered in any lawsuit or proceeding. 3.10 TAXES. The Partnership has filed or caused to be filed, within the times and within the manner prescribed by law, all federal, state, local and foreign tax returns and tax reports which are required to be filed by, or with respect to the Partnership. All federal, state, local and foreign income, profits, franchise, sales, use, occupancy, excise and other taxes and assessments (including interest and penalties) payable by, or due from, the Partnership prior to the Effective Date have been or will be fully paid by the Sellers. No examination of any tax return of the Partnership is currently in progress other than a New York state payroll tax inquiry for the quarter ended June 30, 1995. There are no outstanding agreements or waivers extending the statutory period of limitation applicable to any tax return of the Partnership. Where requested, the Partnership has provided the Buyers accurate and complete copies of all tax returns filed by the Partnership. The Sellers shall pay or immediately reimburse the Buyers on demand all tax liabilities of every nature whatsoever incurred by the Partnership on or prior to the Effective Date or as a result of the transactions contemplated by this Agreement. 3.11 LIABILITIES. The Partnership has no outstanding claims, liabilities or indebtedness, contingent or otherwise, of a type required to be accrued under generally accepted accounting principles, except as set forth in the Closing Balance Sheet or incurred in the ordinary course of its business after the date thereof. The Partnership is not in default in respect of the terms or conditions of any indebtedness. 3.12 COMPLIANCE WITH LAWS. The Partnership is in compliance in all material respects with all applicable laws, regulations, orders, judgments and decrees. 5 6 3.13 NO CHANGES SINCE THE CLOSING BALANCE SHEET DATE. Since the date of the Closing Balance Sheet, except as expressly contemplated hereby or except as incurred in the ordinary course of business, the Partnership has not (a) incurred any liability or obligation of any nature, whether accrued, absolute, contingent or otherwise, (b) permitted any of its assets to be subjected to any mortgage, pledge, lien, security interest, encumbrance, restriction or charge of any kind, (c) sold, transferred or otherwise disposed of any assets, (d) made any capital expenditure or commitment therefor, (e) made any bonus or profit sharing distribution or payment of any kind, (f) incurred indebtedness for borrowed money or made any loan, (g) written off as uncollectible any notes or accounts receivable, (h) cancelled or waived any claims or rights, (i) made any change in any method of accounting or auditing practice, (j) otherwise conducted its business or entered into any transaction, except in the usual and ordinary manner and in the ordinary course of business, or (k) agreed, whether or not in writing, to do any of the foregoing. 3.14 DISCLOSURE. None of this Agreement, the Closing Balance Sheet, or any document delivered in accordance with the terms hereof contains any untrue statement of a material fact, or omits any statement of a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact known to the Partnership or the Sellers which materially and adversely affects the business, prospects or financial condition of the Partnership or its properties or assets, which has not been set forth in this Agreement or any document delivered in accordance with the terms hereof. 3.15 INVENTORY; ACCOUNTS RECEIVABLE. The inventory, including, without limitation finished goods, inventory in-transit, work-in-progress, piece goods and trim, of the Partnership reflected on the Closing Balance Sheet is carried on the books of the Partnership at the lower of cost (first-in, first-out basis) or market, plus or minus any adjustments agreed to by the Buyer in connection with preparation of the Closing Balance Sheet. The accounts receivable reflected in the Closing Balance Sheet (the "Accounts Receivable") represent valid obligations arising from sales actually made or services actually performed in the ordinary course of business. The Accounts Receivable are currently collectable net of the respective reserves, if any, shown on the Closing Balance Sheet (which reserves are adequate and calculated consistent with past practice), and, to Sellers' knowledge, there is no contest, claim, or right of set-off with any obligor of an Accounts Receivable relating to the amount or validity of such Accounts Receivable in excess of the amount of the reserves. 3.16 BROKER'S OR FINDER'S FEES. No agent, broker, person or firm acting on behalf of the Sellers or the Partnership is, or will be, entitled to any commission or broker's or finder's fees from any of the parties hereto, or from any person or entity controlling, controlled by or under common control with any of the parties hereto, in connection with any of the transactions contemplated by this Agreement. 6 7 IV. REPRESENTATIONS AND WARRANTIES OF THE BUYERS. Buyers, jointly and severally, represent and warrant to the Sellers as follows: 4.1 ORGANIZATION; GOOD STANDING; POWER. Each of the Buyers is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio and has all requisite corporate power and authority to own, lease and operate its properties, to carry on its business and to enter into this Agreement and perform its obligations hereunder and thereunder. Each of the Buyers is duly qualified to do business as a foreign corporation and is in good standing in each of the jurisdictions in which the property owned, leased or operated by it or the nature of the business conducted by it after the consummation of the transaction contemplated hereunder makes such qualification necessary. 4.2 AUTHORITY RELATIVE TO AGREEMENT, ETC. The execution, delivery and performance of this Agreement and all documents and instruments to be delivered in connection herewith and the transactions contemplated hereby and thereby by the Buyers have been duly and effectively authorized by all necessary corporate action of the Buyers. This Agreement has been duly executed by the Buyer and is a valid, legally binding and enforceable obligation of the Buyers. 4.3 EFFECT OF AGREEMENT. The execution, delivery and performance of this Agreement and all documents and instruments to be delivered in connection herewith by the Buyers and the consummation of the transactions contemplated hereby will not (i) require the consent, approval or authorization of any person, corporation, partnership, joint venture or other business association or other public authority; (ii) violate, with or without the giving of notice or the passage of time, or both, any provisions of law applicable to the Buyers; or (iii) conflict with or result in a breach or termination of any provision of, or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any of the properties or assets of the Buyers pursuant to any indenture, corporate charter, bylaw, agreement, indenture, mortgage, deed of trust, lease, contract, agreement or other instrument or any order, judgment, award, decree, statute, ordinance, regulation or any other restriction of any kind or character, to which the Buyers are a party, or by which the Buyers or any of their assets or properties may be bound. V. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION 5.1 SURVIVAL OF REPRESENTATIONS, ETC. All representations, warranties and agreements made by the Sellers, on the one hand, or the Buyers on the other hand, in this Agreement or in any document or instrument delivered pursuant to the provisions hereof or in connection with the transactions contemplated hereby, and the remedies of the Sellers, on the one hand, or the Buyers on the other hand, with respect thereto, shall survive the Closing hereunder. 5.2 INDEMNIFICATION. (a) Each Seller, jointly and severally, shall indemnify, pay on behalf of, defend and hold harmless each Buyer, its parent, and their directors, officers, employees, agents 7 8 and successors and assigns (collectively, the "Buyer Parties"), from and against any and all demands, claims, actions or causes of action, losses, damages, liabilities, costs and expenses, including, without limitation, the costs of investigation and reasonable attorney's fees and expenses, asserted against, resulting to, imposed upon or incurred by the Buyer Parties arising out of or relating to any breach of this Agreement by any of the Sellers or the performance by any of the Sellers of any of their obligations under this Agreement; provided, however, each Sellers liability hereunder shall be limited to no more than the amount of the Purchase Price actually received by such Seller. (b) Each Buyer, jointly and severally, shall indemnify, pay on behalf of, defend and hold harmless each Seller, its affiliates, and their trustees, directors, officers, employees, agents and successors and assigns (collectively, the "Seller Parties"), from and against any and all demands, claims, actions or causes of action, losses, damages, liabilities, costs and expenses, including, without limitation, the costs of investigation and reasonable attorney's fees and expenses, asserted against, resulting to, imposed upon or incurred by the Seller Parties arising out of or relating to any breach of this Agreement by any of the Buyers or the performance by any of the Buyers of any of their obligations under this Agreement. (c) No claim shall be made for indemnification under this Article V by a party, unless and until the total value of all claims by the party exceed $50,000, in which event only claims exceeding such amount may be recovered. No claim shall be made for indemnification under this Article V by a party unless written notice of the claim has been sent to the other party on or before two (2) years from the Closing. VI. MISCELLANEOUS 6.1 FURTHER ASSURANCES; RECORDS, ETC. (a) From time to time after the Closing, upon the reasonable request of the other party hereto, each party will execute, deliver and acknowledge all such further instruments and documents as the other may reasonably require to further evidence the completion of the transactions contemplated under this Agreement. (b) On and after the Closing, Buyers will permit the Sellers and their representatives reasonable access to the books, records and accounts of the Partnership reasonably necessary to prepare, review or audit any of the financial statements or tax returns of any of them, and Buyers and the Sellers agree to cooperate with each other in preparing and filing tax returns to the extent deemed reasonably necessary by both parties. 6.2 AMENDMENT. This Agreement may be amended, modified or supplemented only by a written instrument executed by all the parties hereto. Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. 8 9 6.3 EXPENSES. Whether or not the transactions contemplated by this Agreement are consummated, the Buyers shall pay the fees and expenses of their counsel, accountants, other experts and all other expenses incurred by them incident to the negotiation, preparation and execution of this Agreement, and the Sellers shall pay any and all such fees and expenses incurred by them or the Partnership incident to the negotiation, preparation and execution of this Agreement and the performance by the Sellers or the Partnership of their obligations hereunder. 6.4 NOTICES. All notices, requests, demands and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid: If to the Sellers, to: c/o Irwin A. Bain, Esq. Glosser Brothers Acquisition, Inc. 1800 Moler Road Columbus, Ohio 43207 If to the Buyers, to: Prophecy Co. 150 Thorn Hill Drive Warrendale, PA 15086 Attn: George Kolber or to such other address as any party shall have specified by notice in writing to the other. 6.5 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof. 6.6 BINDING EFFECT; BENEFITS. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their successors and assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any other person other than the parties hereto and the Buyer Parties and the Seller Parties, or their successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 6.7 APPLICABLE LAW. This Agreement and the legal relations between the parties hereto shall be governed by and in accordance with the laws of the State of Ohio 6.8 COUNTERPARTS. This agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument. 9 10 IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed and delivered this Agreement as of the date first above written. SELLERS: GLOSSER BROTHERS ACQUISITION, INC. THE JAY L. SCHOTTENSTEIN DESCENDANTS TRUST /s/ Thomas R. Ketteler /s/ Jay L. Schottenstein - ------------------------------ ---------------------------- By: Thomas R. Ketteler By: Jay L. Schottenstein Its: Vice President Its: Trustee THE ANN S. DESHE DESCENDANTS TRUST THE SUSAN S. DIAMOND DESCENDANTS TRUST /s/ Ann S. Deshe /s/ Susan S. Diamond - ------------------------------ ---------------------------- By: Ann S. Deshe By: Susan S. Diamond Its: Trustee Its: Trustee THE SCHOTTENSTEIN FAMILY LIMITED PARTNERSHIP /s/ Jay L. Schottenstein - ------------------------------ By: Jay L. Schottenstein Its: General Partner G.P. BUYER: L.P. BUYER PROPHECY CO. PROPHECY LTD. PARTNER CO. /s/ George Kolber /s/ George Kolber - ------------------------------ ------------------------------ By: George Kolber By: George Kolber Its: Chief Operating Officer Its: Chief Operating Officer THE PARTNERSHIP: PROPHECY LIMITED PARTNERSHIP By: Glosser Brothers Acquisition, Inc., its General Partner /s/ Thomas R. Ketteler - ------------------------------ By: Thomas R. Ketteler Its: Vice President 10 EX-23 3 EXHIBIT 23 1 Exhibit 23 Acknowledgment of Ernst & Young LLP The Board of Directors and Stockholders American Eagle Outfitters, Inc. We are aware of the incorporation by reference in the Registration Statements (Forms S-8) of American Eagle Outfitters, Inc. pertaining to the American Eagle Outfitters, Inc. 1994 Stock Option Plan, the Stock Fund of the American Eagle Outfitters, Inc. Profit Sharing and 401(k) Plan, the American Eagle Outfitters, Inc. Employee Stock Purchase Plan, and the American Eagle Outfitters, Inc. 1994 Restricted Stock Plan of our report dated May 27, 1997 relating to the unaudited consolidated interim financial statements of American Eagle Outfitters, Inc. which are included in its Form 10-Q for the quarter ended May 3, 1997. Pursuant to Rule 436(c) of the Securities Act of 1933, our reports are not a part of the registration statement prepared or certified by accountants within the meaning of Section 7 or 11 of the Securities Act of 1933. Pittsburgh, Pennsylvania June 13, 1997 15 EX-27 4 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE QUARTER ENDED MAY 3, 1997 AND IS QUALIFIED IN IT'S ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000919012 AMERICAN EAGLE OUTFITTERS, INC. 3-MOS JAN-31-1998 FEB-02-1997 MAY-03-1997 14,261 0 1,637 0 35,486 60,614 57,221 20,775 99,730 31,905 0 0 0 53,276 14,549 99,730 60,952 60,952 46,699 46,699 20,579 0 (330) (5,996) (2,377) (3,619) 0 0 0 (3,619) (.36) (.36)
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