Abercrombie & Fitch 1998 Annual Report Download - page 18

Abercrombie &Fitch Co.
24
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 have been reclassified
to conform with current year presentation.
3. PROPERTY AND EQUIPMENT Property and equipment, at
cost, consisted of (thousands):
1998 1997
Furniture, fixtures and equipment $126,091 $104,671
Beneficial leaseholds 7,349 7,349
Leasehold improvements 16,450 11,615
Construction in progress 2,728 365
Total $152,618 $124,000
Less: accumulated depreciation and amortization 63,060 53,483
Property and equipment, net $89,558 $070,517
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
for 1998, 1997 and 1996 included charges from The Limited and
its subsidiaries for space under formal agreements that approxi-
mate market rates.
A summary of rent expense follows (thousands):
1998 1997 1996
Store rent:
Fixed minimum $42,774 $34,402 $24,599
Contingent 6,382 2,138 1,620
Total store rent $49,156 $36,540 $26,219
Buildings, equipment and other 1,814 1,400 1,229
Total rent expense $50,970 $37,940 $27,448
At January 30, 1999, 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
a term of three years from the date of the Exchange Offer. A
summary of minimum rent commitments under noncance-
lable leases follows (thousands):
1999 $48,924 2002 $49,488
2000 $50,243 2003 $48,284
2001 $49,824 Thereafter 181,661
5. ACCRUED EXPENSES Accrued expenses consisted of the
following (thousands):
1998 1997
Rent and landlord charges $13,368 $08,105
Compensation and benefits 9,800 8,357
Catalogue and advertising costs 8,701 4,012
Interest – 986
Taxes, other than income 3,634 1,827
Other 28,379 11,856
Total $63,882 $35,143
6. INCOME TAXES The provision for income taxes consisted of
(thousands):
1998 1997 1996
Currently payable:
Federal $65,270 $29,040 $16,001
State 14,682 6,450 3,646
$79,952 $35,490 $19,647
Deferred:
Federal (9,530) (2,620) (2,601)
State (2,382) (650) (646)
$(11,912) $(3,270) $(3,247)
Total provision $68,040 $32,220 $16,400