Abercrombie & Fitch 2000 Annual Report Download - page 13

A total of 102,000 restricted shares were granted in 2000,
with a total market value at grant date of $2.3 million. A total of
140,000 restricted shares were granted in both 1999 and 1998,
with a total market value at grant date of $5.4 million and $2.7
million, respectively. The restricted share grants generally vest
either on a graduated scale over four years or 100% at the end
of a fixed vesting period, principally five years. The market
value of restricted shares is being amortized as compensation
expense over the vesting period, generally four to five years.
Compensation expenses related to restricted share awards
amounted to $4.3 million, $5.2 million and $11.5 million in
2000, 1999 and 1998, respectively. Long-term liabilities at fiscal
year-end 1998 included $8.7 million of compensation expense
relating to restricted shares.
11. RETIREMENT BENEFITS The Company participates in
a qualified defined contribution retirement plan and a non-
qualified supplemental retirement plan. 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 require-
ments. The Company’s contributions to these plans are based
on a percentage of associates’ eligible annual compensation.
The cost of these plans was $3.0 million in 2000, $2.6 million
in 1999 and $2.0 million in 1998.
12. CONTINGENCIES The Company is involved in a number of
legal proceedings. Although it is not possible to predict with any
certainty the eventual outcome of any legal proceedings, it is the
opinion of management that the ultimate resolution of these
matters will not have a material impact on the Company’s results
of operations, cash flows or financial position.
13. PREFERRED STOCK PURCHASE RIGHTS On July 16, 1998,
A&F’s Board of Directors declared a dividend of .50 of a Series A
Participating Cumulative Preferred Stock Purchase Right (Right)
for each outstanding share of Class A Common Stock, par value
$.01 per share (Common Stock), of A&F. The dividend was paid
to shareholders of record on July 28, 1998. Shares of Common
Stock issued after July 28, 1998 and prior to the Distribution
Date described below will be issued with .50 Right attached.
29
Abercrombie &Fitch
28
Under certain conditions, each whole Right may be exercised to
purchase one one-thousandth of a share of Series A Participating
Cumulative Preferred Stock at an initial price of $250. The
Rights initially will be attached to the shares of Common Stock.
The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of 10 business days
after a public announcement that a person or group has acquired
beneficial ownership of 20% or more of A&F’s outstanding shares
of Common Stock and become an “Acquiring Person” (Share
Acquisition Date) or 10 business days (or such later date as the
Board shall determine before any person has become an
Acquiring Person) after commencement of a tender or exchange
offer which would result in a person or group beneficially
owning 20% or more of A&F’s outstanding Common Stock.
The Rights are not exercisable until the Distribution Date.
In the event that any person becomes an Acquiring Person,
each holder of a Right (other than the Acquiring Person and
certain affiliated persons) will be entitled to purchase, upon
exercise of the Right, shares of Common Stock having a market
value two times the exercise price of the Right. At any time
after any person becomes an Acquiring Person (but before any
person becomes the beneficial owner of 50% or more of the out-
standing shares), A&F’s Board of Directors may exchange all or
part of the Rights (other than Rights beneficially owned by an
Acquiring Person and certain affiliated persons) for shares of
Common Stock at an exchange ratio of one share of Common
Stock per Right. In the event that, at any time following the Share
Acquisition Date, A&F is acquired in a merger or other business
combination transaction in which A&F is not the surviving
corporation, the Common Stock is exchanged for other securi-
ties or assets or 50% or more of A&F’s assets or earning power is
sold or transferred, the holder of a Right will be entitled to buy,
for the exercise price of the Rights, the number of shares of
Common Stock of the acquiring company which at the time
of such transaction will have a market value of two times the
exercise price of the Right.
The Rights, which do not have any voting rights, expire on
July 16, 2008, and may be redeemed by A&F at a price of $.01
per whole Right at any time before a person becomes an
Acquiring Person.
Rights holders have no rights as a shareholder of A&F, includ-
ing the right to vote and to receive dividends.
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial results for 2000 and 1999
follow (thousands except per share amounts):
2000 Quarter First (1) Second (1) Third (1) Fourth
Net sales $205,006 $229,031 $364,122 $439,445
Gross income 75,403 87,765 143,283 202,924
Net income 16,163 21,163 43,592 77,215
Net income per basic share $.16 $.21 $.44 $.78
Net income per diluted share $.16 $.21 $.43 $.76
1999 Quarter First (1) Second (1) Third (1) Fourth (1)
Net sales $186,427 $196,227 $284,510 $363,694
Gross income 69,368 77,346 118,600 185,069
Net income 14,963 18,858 39,059 76,724
Net income per basic share $.14 $.18 $.38 $.75
Net income per diluted share $.14 $.17 $.36 $.73
MARKET PRICE INFORMATION The following is a summary
of A&F’s sales price as reported on the New York Stock
Exchange (“ANF”) for the 2000 and 1999 fiscal years:
Sales Price
High Low
2000 Fiscal Year
4th Quarter $31.31 $14.75
3rd Quarter $26.56 $15.31
2nd Quarter $16.69 $ 8.00
1st Quarter $24.50 $10.06
1999 Fiscal Year
4th Quarter $32.56 $19.56
3rd Quarter $43.25 $21.00
2nd Quarter $49.69 $36.50
1st Quarter $50.75 $35.25
Per share amounts have been restated to reflect the two-for-one
stock split on A&F’s Class A Common Stock, distributed on
June 15, 1999 to shareholders of record at the close of business
on May 25, 1999.
A&F has not paid dividends on its shares of Class A Common
Stock in the past and does not presently plan to pay dividends
on the shares. It is presently anticipated that earnings will be
retained and reinvested to support the growth of the Company’s
business. The payment of any future dividends on shares will
be determined by the A&F Board of Directors in light of condi-
tions then existing, including earnings, financial condition and
capital requirements, restrictions in financing agreements,
business conditions and other factors.
On February 3, 2001, there were approximately 7,000 share-
holders of record. However, when including active associates who
participate in A&F’s stock purchase plan, associates who own
shares through A&F sponsored retirement plans and others
holding shares in broker accounts under street name, A&F
estimates the shareholder base at approximately 65,000.
Abercrombie &Fitch
(1) Net sales and gross income for 1999 and the first three quarters of 2000 reflect the reclassi-
fication of shipping and handling revenues and costs and employee discounts (see Note 3).