Abercrombie & Fitch 1997 Annual Report Download - page 17

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Abercrombie &Fitch Co.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL
STATEMENTS The preparation of financial statements in con-
formity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the finan-
cial statements and the reported amounts of revenues and expenses
during the reporting period. Since actual results may differ from
those estimates, the Company revises its estimates and assump-
tions as new information becomes available.
RECLASSIFICATIONS Certain amounts in previously reported
financial statement captions have been reclassified to conform
with current year presentaion.
3. PROPERTY AND EQUIPMENT Property and equipment, at
cost, consisted of (thousands):
1997 1996
Furniture, fixtures and equipment $104,671 $088,248
Beneficial leaseholds 7,349 7,925
Leasehold improvements 11,615 5,565
Construction in progress 365 181
Total $124,000 $101,919
Less: accumulated depreciation and amortization 53,483 42,927
Property and equipment, net $070,517 $058,992
4. LEASED FACILITIES AND COMMITMENTS Annual store
rent is comprised of a fixed minimum amount, plus contingent
rent based on a percentage of sales exceeding a stipulated amount.
Store lease terms generally require additional payments covering
taxes, common area costs and certain other expenses. Rent
expense also includes charges from The Limited and its sub-
sidiaries for space under formal agreements which approximate
market rates (see Note 8).
A summary of rent expense for 1997, 1996 and 1995 follows
(thousands):
1997 1996 1995
Store rent:
Fixed minimum $34,402 $24,599 $17,465
Contingent 2,138 1,620 1,322
Total store rent $36,540 $26,219 $18,787
Buildings, equipment and other 1,400 1,229 1,058
Total rent expense $37,940 $27,448 $19,845
At January 31, 1998, the Company was committed to non-
cancelable leases with remaining terms of one to fifteen years.
These commitments include store leases with initial terms
ranging primarily from ten to fifteen years and offices and a
distribution center leased from an affiliate of The Limited with
an initial term of fifteen years. A majority of the Company’s
store leases are guaranteed by The Limited. A summary of
minimum rent commitments under noncancelable leases
follows (thousands):
1998 $40,775 2001 $42,170
1999 $41,747 2002 $42,254
2000 $41,866 Thereafter 181,769
5. ACCRUED EXPENSES Accrued expenses consisted of the
following (thousands):
1997 1996
Rent and landlord charges $08,105 $05,624
Compensation and benefits $08,357 $04,638
Catalogue and advertising costs 4,012 1,449
Interest 986 2,162
Taxes, other than income 1,827 1,761
Other 11,856 6,754
Total $35,143 $22,388
6. INCOME TAXES The provision for income taxes consisted of
(thousands):
1997 1996 1995
Currently payable:
Federal $29,620 $13,800 $6,900
State 3,470 1,300 1,700
$33,090 $15,100 $8,600
Deferred:
Federal (3,200) (400) 700
State 2,330 1,700 200
$00(870) $01,300 $0,900
Total provision $32,220 $16,400 $9,500