Abercrombie & Fitch 2002 Annual Report Download - page 27

2001
Outstanding at beginning of year 12,994,000 $28.01
Granted 648,000 29.38
Exercised (521,000) 15.00
Canceled (160,000) 24.09
Outstanding at end of year 12,961,000 $28.65
Options exercisable at year-end 3,065,000 $18.49
2000
Outstanding at beginning of year 12,809,000 $28.03
Granted 1,414,000 17.25
Exercised (193,000) 14.57
Canceled (1,036,000) 16.06
Outstanding at end of year 12,994,000 $28.01
Options exercisable at year-end 2,164,000 $16.13
A total of 1,046,000, 19,000 and 102,000 restricted shares were
granted in 2002, 2001 and 2000, respectively, with a total market
value at grant date of $28.0 million, $.6 million and $2.3 million,
respectively. Of the restricted shares granted in 2002, 1,000,000
shares were awarded to the Company’s Chairman, which become
vested on December 31, 2008 provided the Chairman remains
continuously employed by the Company through such date. The
remaining restricted share grants generally vest either on a gradu-
ated 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 vest-
ing period, generally four to five years. Compensation expenses
related to restricted share awards amounted to $2.3 million, $3.9
million and $4.3 million in 2002, 2001 and 2000, respectively.
11. RETIREMENT BENEFITS The Company participates in a
qualified defined contribution retirement plan and a nonqual-
ified supplemental retirement plan. Participation in the
qualified plan is available to all associates who have complet-
ed 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 $5.6 mil-
lion in 2002, $3.9 million in 2001 and $3.0 million in 2000.
Effective February 2, 2003, the Company established a
Supplemental Executive Retirement Plan to provide additional
retirement income to its Chairman. Subject to service require-
ments, the Chairman will receive a monthly prorated share of
his final average compensation (as defined in the Plan) for life.
Abercrombie &Fitch
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.
The Company has standby letters of credit in the amount of
$4.7 million that expire in 1 year. The beneficiary, a merchan-
dise supplier, has the right to draw upon the standby letters of
credit if the Company has authorized or filed a voluntary peti-
tion in bankruptcy. To date, the beneficiary has not drawn
upon the standby letters of credit
The Company enters into agreements with professional
services firms, in the ordinary course of business and, in
most agreements, indemnifies these firms from any harm.
There is no financial impact on the Company related to these
indemnifications.
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 a
Right attached. 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
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