Abercrombie & Fitch 1997 Annual Report Download - page 21

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Abercrombie &Fitch Co.
10. RETIREMENT BENEFITS The Company participates in a
qualified defined contribution retirement plan and a non-
qualified supplemental retirement plan sponsored by The Limited.
Participation in the qualified plan is available to all associates who
have completed 1,000 or more hours of service with the Company
during certain 12-month periods and attained the age of 21.
Participation in the nonqualified plan is subject to service and
compensation requirements. The Company’s contributions to
these plans are based on a percentage of associates’ eligible annual
compensation. The cost of these plans was $1.6 million in 1997,
$753 thousand in 1996 and $564 thousand in 1995.
11. REGISTRATION STATEMENT FOR EXCHANGE OFFER
On February 17, 1998, a registration statement was filed with the
Securities and Exchange Commission in connection with a plan
to establish the Company as a fully independent company via a
tax-free exchange offer pursuant to which The Limited share-
holders will be given an opportunity to exchange shares of The
Limited for shares of the Company. At year end, The Limited
owned 43 million of the Company’s shares.
12. SUBSEQUENT EVENTS (UNAUDITED) On April 15, 1998,
the Company repaid the $50 million unsecured note plus accrued
interest through issuance of 600,000 shares of Class B common
stock to The Limited at $43.125 per share with the remaining bal-
ance of $25 million paid in cash.
On April 30, 1998, the Company entered into a $150 million
unsecured revolving credit agreement (the “Agreement”).
Borrowings under the Agreement are due April 30, 2003. The
Agreement had several borrowing options, including interest rates
which are based on either the lender’s “Alternate Base Rate,” as
defined, a LIBO based rate or at a rate submitted under a bidding
process. Facilities fees payable under the Agreement are based on
the Company’s “Leverage Ratio,” as defined. The Agreement
contains provisions which (i) limit the incurrence of additional
indebtedness and certain other transactions and (ii) limit the pay-
ment of dividends to shareholders. The Agreement also contains
covenants relating to the Company’s interest coverage and debt.
In connection with the registration statement discussed in
Note 11, the exchange offer was completed in May, 1998.
13. QUARTERLY FINANCIAL DATA (UNAUDITED) Summ-
arized quarterly financial results for 1997 and 1996 follow
(thousands except per share amounts):
1997 Quarter First Second Third Fourth
Net sales $74,316 $86,640 $148,516 $212,145
Gross income 23,941 27,786 52,990 96,363
Net income 565 2,053 10,403 35,301
Net income per basic share $.01 $.04 $.20 $.69
Net income per diluted share $.01 $.04 $.20 $.68
1996 Quarter
Net sales $51,020 $57,431 $87,688 $139,233
Gross income 14,894 18,052 30,957 59,863
Net income (loss) (199) 374 3,982 20,517
Net income (loss) per basic share $.00 $.01 $.09 $.40
Net income (loss) per diluted share $.00 $.01 $.09 $.40
MARKET PRICE INFORMATION The following is a summary
of market price since the Company was originally listed on the
New York Stock Exchange (“ANF”) on September 26, 1996:
Market Price
High Low
Fiscal Year End 1997
4th Quarter $3411⁄16 $2511⁄16
3rd Quarter $271⁄4$191⁄4
2nd Quarter $201⁄2$153⁄4
1st Quarter $175⁄8$127⁄8
Fiscal Year End 1996
4th Quarter $233⁄4$125⁄8
3rd Quarter $261⁄4$213⁄4
On January 31, 1998, there were approximately 180 share-
holders of record. However, when including active associates who
participate in the Company’s stock purchase plan, associates who
own shares through Company sponsored retirement plans and
others holding shares in broker accounts under street name, the
Company estimates the shareholder base at approximately 3,300.