1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------------- FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 5, 2001 ----------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ Commission file number 1-12107 ABERCROMBIE & FITCH CO. ------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 31-1469076 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 6301 Fitch Path, New Albany, OH 43054 --------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (614) 283-6500 ----------------------- Not Applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class A Common Stock Outstanding at June 11, 2001 - ------------------------- ------------------------------------- $.01 Par Value 99,261,208 Shares
2 ABERCROMBIE & FITCH CO. TABLE OF CONTENTS <TABLE> <CAPTION> Page No. -------- <S> <C> Part I. Financial Information Item 1. Financial Statements Condensed Consolidated Statements of Income Thirteen Weeks Ended May 5, 2001 and April 29, 2000.............................................................3 Condensed Consolidated Balance Sheets May 5, 2001 and February 3, 2001...........................................................4 Condensed Consolidated Statements of Cash Flows Thirteen Weeks Ended May 5, 2001 and April 29, 2000.............................................................5 Notes to Condensed Consolidated Financial Statements................................................6 Report of Independent Accountants..................................................................10 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition.............................................11 Part II. Other Information Item 1. Legal Proceedings.............................................................................15 Item 4. Submission of Matters to a Vote of Security Holders...........................................16 Item 6. Exhibits and Reports on Form 8-K..............................................................17 </TABLE> 2
3 PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS ABERCROMBIE & FITCH CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Thousands except per share amounts) (Unaudited) Thirteen Weeks Ended -------------------- May 5, April 29, 2001 2000 --------- --------- NET SALES $ 263,680 $ 205,006 Cost of Goods Sold, Occupancy and Buying Costs 165,840 129,603 --------- --------- GROSS INCOME 97,840 75,403 General, Administrative and Store Operating Expenses 65,777 50,927 --------- --------- OPERATING INCOME 32,063 24,476 Interest Income, Net (1,720) (2,467) --------- --------- INCOME BEFORE INCOME TAXES 33,783 26,943 Provision for Income Taxes 13,180 10,780 --------- --------- NET INCOME $ 20,603 $ 16,163 ========= ========= NET INCOME PER SHARE: Basic $ 0.21 $ 0.16 ========= ========= Diluted $ 0.20 $ 0.16 ========= ========= WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 99,011 102,055 ========= ========= Diluted 102,885 103,872 ========= ========= The accompanying notes are an integral part of these condensed consolidated financial statements. 3
4 ABERCROMBIE & FITCH CONDENSED CONSOLIDATED BALANCE SHEETS (Thousands) <TABLE> <CAPTION> May 5, February 3, 2001 2001 --------- --------- (Unaudited) <S> <C> <C> ASSETS ------ CURRENT ASSETS: Cash and Equivalents $ 123,259 $ 137,581 Receivables 12,126 15,829 Inventories 109,296 120,997 Store Supplies 18,414 17,817 Other 12,169 11,338 --------- --------- TOTAL CURRENT ASSETS 275,264 303,562 PROPERTY AND EQUIPMENT, NET 313,217 278,785 DEFERRED INCOME TAXES 4,788 4,788 OTHER ASSETS 343 381 --------- --------- TOTAL ASSETS $ 593,612 $ 587,516 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts Payable $ 23,904 $ 33,942 Accrued Expenses 108,371 101,302 Income Taxes Payable 5,398 19,318 --------- --------- TOTAL CURRENT LIABILITIES 137,673 154,562 OTHER LONG-TERM LIABILITIES 9,646 10,254 SHAREHOLDERS' EQUITY: Common Stock 1,033 1,033 Paid-In Capital 137,671 136,490 Retained Earnings 371,471 350,868 --------- --------- 510,175 488,391 Less: Treasury Stock, at Average Cost (63,882) (65,691) --------- --------- TOTAL SHAREHOLDERS' EQUITY 446,293 422,700 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 593,612 $ 587,516 ========= ========= </TABLE> The accompanying notes are an integral part of these condensed consolidated financial statements. 4
5 ABERCROMBIE & FITCH CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Thousands) (Unaudited) <TABLE> <CAPTION> Thirteen Weeks Ended -------------------- May 5, April 29, 2001 2000 --------- --------- <S> <C> <C> OPERATING ACTIVITIES: Net Income $ 20,603 $ 16,163 Impact of Other Operating Activities on Cash Flows: Depreciation and Amortization 8,777 7,153 Noncash Charge for Deferred Compensation 1,229 1,015 Changes in Assets and Liabilities: Inventories 11,701 (11,371) Accounts Payable and Accrued Expenses (11,439) (14,364) Income Taxes (13,920) (29,318) Other Assets and Liabilities 1,705 3,134 --------- --------- NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES 18,656 (27,588) --------- --------- INVESTING ACTIVITIES: Capital Expenditures (34,739) (35,047) Proceeds from Maturities of Marketable Securities -- 45,601 Notes Receivable -- (1,500) --------- --------- NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES (34,739) 9,054 --------- --------- FINANCING ACTIVITIES: Other Changes in Shareholders' Equity 1,761 (7,511) Purchase of Treasury Stock -- (4,506) --------- --------- NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 1,761 (12,017) --------- --------- NET DECREASE IN CASH AND EQUIVALENTS (14,322) (30,551) Cash and Equivalents, Beginning of Period 137,581 147,908 --------- --------- CASH AND EQUIVALENTS, END OF PERIOD $ 123,259 $ 117,357 ========= ========= SIGNIFICANT NONCASH INVESTING ACTIVITIES: Accrual for Construction in Progress $ 8,470 $ 17,264 ========= ========= </TABLE> The accompanying notes are an integral part of these condensed consolidated financial statements. 5
6 ABERCROMBIE & FITCH NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION Abercrombie & Fitch Co. ("A&F"), through its subsidiaries (collectively, A&F and its subsidiaries are referred to as "Abercrombie & Fitch" or the "Company"), is a specialty retailer of high quality, casual apparel for men, women and kids with an active, youthful lifestyle. The condensed consolidated financial statements include the accounts of A&F and all significant subsidiaries that are more than 50 percent owned and controlled. All significant intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements as of May 5, 2001 and for the thirteen week periods ended May 5, 2001 and April 29, 2000 are unaudited and are presented pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in A&F's Annual Report on Form 10-K for the fiscal year ended February 3, 2001 (the "2000 fiscal year"). In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments (which are of a normal recurring nature) necessary to present fairly the financial position and results of operations and cash flows for the interim periods, but are not necessarily indicative of the results of operations for a full fiscal year. The condensed consolidated financial statements as of May 5, 2001 and for the thirteen week periods ended May 5, 2001 and April 29, 2000 included herein have been reviewed by the independent accounting firm of PricewaterhouseCoopers LLP and the report of such firm follows the notes to condensed consolidated financial statements. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933 (the "Act") for its report on the condensed consolidated financial statements because that report is not a "report" within the meaning of Sections 7 and 11 of the Act. 2. ADOPTION OF ACCOUNTING STANDARDS Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," subsequently amended and clarified by SFAS No. 138, is effective for the Company's 2001 fiscal year. It requires that derivative instruments be recorded at fair value and that changes in their fair value be recognized in current earnings unless specific hedging criteria are met. The adoption of this standard had no impact on the Company's financial position or results of operations. 6
7 3. EARNINGS PER SHARE Weighted Average Shares Outstanding (in thousands): <TABLE> <CAPTION> Thirteen Weeks Ended -------------------- May 5, April 29, 2001 2000 -------- -------- <S> <C> <C> Shares of Class A Common Stock issued 103,300 103,300 Treasury shares (4,289) (1,245) -------- -------- Basic shares 99,011 102,055 Dilutive effect of options and restricted shares 3,874 1,817 -------- -------- Diluted shares 102,885 103,872 ======== ======== </TABLE> Options to purchase 5,582,000 and 9,329,000 shares of Class A Common Stock were outstanding at May 5, 2001 and April 29, 2000, respectively, but were not included in the computation of net income per diluted share because the options' exercise prices were greater than the average market price of the underlying shares. 4. INVENTORIES The fiscal year of A&F and its subsidiaries is comprised of two principal selling seasons: Spring (the first and second quarters) and Fall (the third and fourth quarters). Valuation of finished goods inventories is based principally upon the lower of average cost or market determined on a first-in, first-out basis utilizing the retail method. Inventory valuation at the end of the first and third quarters reflects adjustments for inventory markdowns and shrinkage estimates for the total selling season. 5. PROPERTY AND EQUIPMENT, NET Property and equipment, net, consisted of (in thousands): May 5, February 3, 2001 2001 --------- --------- Property and equipment, at cost $ 427,405 $ 384,196 Accumulated depreciation and amortization (114,188) (105,411) --------- --------- Property and equipment, net $ 313,217 $ 278,785 ========= ========= 6. INCOME TAXES The provision for income taxes is based on the current estimate of the annual effective tax rate. Income taxes paid during the thirteen weeks ended May 5, 2001 and April 29, 2000 approximated $26.5 million and $40.2 million, respectively. 7
8 7. LONG-TERM DEBT The Company entered into a $150 million syndicated unsecured credit agreement (the "Agreement"), on April 30, 1998. Borrowings outstanding under the Agreement are due April 30, 2003. The Agreement has several borrowing options, including interest rates that are based on the bank agent's "Alternate Base Rate," a LIBO Rate or a rate submitted under a bidding process. Facility fees payable under the Agreement are based on the Company's ratio (the "leverage ratio") of the sum of total debt plus 800% of forward minimum rent commitments to trailing four-quarters EBITDAR and currently accrues at .225% of the committed amount per annum. The Agreement contains limitations on debt, liens, restricted payments (including dividends), mergers and acquisitions, sale-leaseback transactions, investments, acquisitions, hedging transactions, and transactions with affiliates. It also contains financial covenants requiring a minimum ratio of EBITDAR to interest expense and minimum rent and a maximum leverage ratio. No amounts were outstanding under the Agreement at May 5, 2001 or February 3, 2001. 8. RELATED PARTY TRANSACTIONS Shahid & Company, Inc. has provided advertising and design services for the Company since 1995. Sam N. Shahid, Jr., who serves on A&F's Board of Directors, has been President and Creative Director of Shahid & Company, Inc. since 1993. Fees paid to Shahid & Company, Inc. for services provided during the thirteen weeks ended May 5, 2001 and April 29, 2000 were approximately $.4 and $.3 million, respectively. On May 18, 2001, A&F loaned the amount of $4,817,146 to its Chairman of the Board, a major shareholder of A&F, pursuant to the terms of a replacement promissory note. This note constitutes a replacement of, and substitute for, the replacement promissory note dated as of August 28, 2000 in the amount of $4.5 million, which has been cancelled. See NOTE 10 for additional information regarding the replacement promissory note. 9. 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. 8
9 10. SUBSEQUENT EVENT On May 18, 2001, A&F loaned the amount of $4,817,146 to its Chairman of the Board, a major shareholder of A&F, pursuant to the terms of a replacement promissory note, which provides that such amount is due and payable on December 31, 2001. If A&F records net sales of at least $652,468,000 during the period from May 6, 2001 through November 3, 2001, the outstanding principal under the note will not bear interest. If A&F does not record net sales exceeding that threshold, the outstanding principal under the note will bear interest from May 18, 2001 at the rate of 4.5% per annum. This note constitutes a replacement of, and substitute for, the replacement promissory note dated as of August 28, 2000 in the amount of $4.5 million, which has been cancelled. 9
10 REPORT OF INDEPENDENT ACCOUNTANTS --------------------------------- To the Board of Directors and Shareholders of Abercrombie & Fitch We have reviewed the accompanying condensed consolidated balance sheet of Abercrombie & Fitch (the "Company") and its subsidiaries as of May 5, 2001 and the related condensed consolidated statements of income for each of the thirteen-week periods ended May 5, 2001 and April 29, 2000 and the condensed consolidated statements of cash flows for the thirteen-week periods ended May 5, 2001 and April 29, 2000. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. We previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet as of February 3, 2001 and the related consolidated statements of income, shareholders' equity, and of cash flows for the year then ended (not presented herein) and in our report dated February 20, 2001 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of February 3, 2001 is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. PricewaterhouseCoopers LLP Columbus, Ohio May 11, 2001 10
11 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS During the first quarter of the 2001 fiscal year, net sales increased 29% to $263.7 million from $205.0 million a year ago. Operating income improved to $32.1 million in the first quarter of 2001 from $24.5 million in the first quarter of 2000. Earnings per diluted share were $.20 in the first quarter of 2001 compared to $.16 a year ago. Financial Summary - ----------------- The following summarized financial and statistical data compares the thirteen week period ended May 5, 2001 to the comparable fiscal 2000 period: <TABLE> <CAPTION> 2001 2000 % CHANGE ---------------- --------------- ------------------- <S> <C> <C> <C> Increase (decrease) in comparable store sales 2% (8)% Retail sales increase attributable to new and remodeled stores, magazine, catalogue and Web site 27% 18% Retail sales per average gross square foot $88 $90 (2)% Retail sales per average store (thousands) $707 $778 (9)% Average store size at end of quarter (gross square feet) 8,045 8,636 (7)% Gross square feet at end of quarter (thousands) 2,856 2,229 28% Number of stores: Beginning of year 354 250 Opened 2 8 Closed 1 - ---------------- --------------- End of period 355 258 ================ =============== </TABLE> Net Sales - --------- Net sales for the first quarter of 2001 increased 29% to $263.7 million from $205.0 million in 2000. The increase was due to the addition of new stores and a 2% increase in comparable store sales as compared with last year's comparable thirteen-week period ended May 6, 2001. The increase in comparable store sales was driven by the women's business with strong performances across most tops and bottoms categories. Comparable store sales were negative in the men's business for the quarter; however, the polo and denim categories performed well throughout the quarter. The Company's catalogue, A&F Quarterly (a catalogue/magazine), and the Company's Web sites accounted for 4.9% of net sales in the first quarter of 2001 as compared to 3.6% last year. 11
12 Gross Income - ------------ Gross income, expressed as a percentage of net sales, increased to 37.1% during the first quarter of 2001 from 36.8% for the same period in 2000. The increase was primarily attributable to higher merchandise margins (representing gross income before the deduction of buying and occupancy costs) due to higher initial markup (IMU). The increase in IMU was a result of improvement in the sourcing of merchandise, which allowed for an increased gross margin rate despite the offering of lower price points in key product classifications. The increased IMU was partially offset by a slightly higher markdown rate as compared to last year. General, Administrative and Store Operating Expenses - ---------------------------------------------------- General, administrative and store operating expenses, expressed as a percentage of net sales, were 24.9% and 24.8% in the first quarter of 2001 and 2000, respectively. The Company continues to tightly control expenses in both the stores and the home office, including limiting headcount additions and reducing home office travel and store payroll hours. The savings from these cost controls were offset by planned expenses related to the Company's move to a new home office and distribution center. Also offsetting the cost savings were higher costs related to management bonuses due to improved earnings performance. Operating Income - ---------------- First quarter operating income, expressed as a percentage of net sales, was 12.2% in 2001, up from 11.9% for the comparable period in 2000. The increase in operating income as a percentage of net sales is the result of higher gross income, as a percentage of net sales. Interest Income/Expense - ----------------------- First quarter 2001 net interest income was $1.7 million as compared with net interest income of $2.5 million for the first quarter last year. Net interest income in 2001 and 2000 was primarily from short-term investments. FINANCIAL CONDITION Liquidity and Capital Resources - ------------------------------- Cash provided by operating activities provides the resources to support operations, including projected growth, seasonal requirements and capital expenditures. A summary of the Company's working capital position and capitalization follows (thousands): <TABLE> <CAPTION> May 5, February 3, 2001 2001 ----------------- ------------------ <S> <C> <C> Working capital $137,591 $149,000 ================= ================== Capitalization: Shareholders' equity $446,293 $422,700 ================= ================== </TABLE> 12
13 Net cash provided by operating activities totaled $18.7 million for the thirteen weeks ended May 5, 2001 versus net cash used for operating activities of $27.6 million in the comparable period of 2000. Cash was provided primarily by current year net income adjusted for depreciation and amortization. Additionally, cash requirements for inventory decreased from February 3, 2001 in total and on a per store basis. The strengthening sales trend allowed for better flow through of inventory, resulting in a cleaner inventory position. Cash was reduced by tax payments on fourth quarter earnings and a decrease in the level of accounts payable. Abercrombie & Fitch's operations are seasonal in nature and typically peak during the back-to-school and Christmas selling periods. Accordingly, cash requirements for inventory expenditures are highest during these periods. Cash outflows for investing activities were for capital expenditures related to new and remodeled stores (net of construction allowances) and the construction costs of the new home office and distribution center. In 2000, capital expenditures were offset by maturities of marketable securities. Financing activities during the first quarter of 2000 consisted primarily of the repurchase of 300,000 shares of A&F's Class A Common Stock pursuant to previously authorized stock repurchase programs. No shares were repurchased during the first quarter of 2001. As of May 5, 2001, A&F was authorized to repurchase up to an additional 2,450,000 shares under the current repurchase program. Capital Expenditures - -------------------- Capital expenditures, primarily for new and remodeled stores and the construction of the new home office and distribution center, totaled $34.7 million and $35.0 million for the thirteen weeks ended May 5, 2001 and April 29, 2000, respectively. Additionally, the noncash accrual for construction in progress increased $8.5 million in 2001 and $17.3 million in 2000. The Company anticipates spending $110 to $120 million in 2001 for capital expenditures, of which $90 to $100 million will be for new stores, remodeling and/or expansion of existing stores and related improvements. The balance of capital expenditures will chiefly be related to the new home office and distribution center, which were completed in April 2001 and February 2001, respectively. The Company intends to add approximately 815,000 gross square feet in 2001, which will represent a 29% increase over year-end 2000. It is anticipated the increase will result from the addition of approximately 45 new "Abercrombie & Fitch" stores, 60 "abercrombie" stores and 25 "Hollister Co." stores. The Company estimates that the average cost for leasehold improvements and furniture and fixtures for Abercrombie & Fitch stores to be opened in 2001 will approximate $600,000 per store, after giving effect to landlord allowances. In addition, inventory purchases are expected to average approximately $300,000 per store. The Company estimates that the average cost for leasehold improvements and furniture and 13
14 fixtures for abercrombie stores to be opened in 2001 will approximate $500,000 per store, after giving effect to landlord allowances. In addition, inventory purchases are expected to average approximately $150,000 per store. The Company is in the early stages of developing Hollister Co. As a result, current average costs for leasehold improvements, furniture and fixtures and inventory purchases are not representative of future costs. The Company expects that substantially all future capital expenditures will be funded with cash from operations. In addition, the Company has available a $150 million credit agreement to support operations. Relationship with The Limited - ----------------------------- Effective May 19, 1998, The Limited, Inc. ("The Limited") completed a tax-free exchange offer to establish A&F as an independent company. Subsequent to the exchange offer, A&F and The Limited entered into various service agreements for terms ranging from one to three years. A&F hired associates with the appropriate expertise or contracted with outside parties to replace those services which expired in May 1999. Service agreements were also entered into for the continued use by the Company of its distribution and home office space and transportation and logistic services. The distribution space agreement terminated in April 2001. The home office space and transportation and logistic services agreements expired in May 2001. The cost of these services generally was equal to The Limited's cost in providing the relevant services plus 5% of such costs. Costs incurred to replace the services formerly provided by The Limited did not have a material adverse impact nor are they expected to have a material adverse impact on the Company's financial condition. Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 - -------------------------------------------------------------------------------- A&F cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this Report or made by management of A&F involve risks and uncertainties and are subject to change based on various important factors. The following factors, among others, in some cases have affected and in the future could affect the Company's financial performance and actual results and could cause actual results for 2001 and beyond to differ materially from those expressed or implied in any of the forward-looking statements included in this Form 10-Q or otherwise made by management: changes in consumer spending patterns, consumer preferences and overall economic conditions, the impact of competition and pricing, changes in weather patterns, political stability, currency and exchange risks and changes in existing or potential duties, tariffs or quotas, availability of suitable store locations at appropriate terms, ability to develop new merchandise and ability to hire and train associates. 14
15 PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS The Company is a defendant in lawsuits arising in the ordinary course of business. On January 13, 1999, a complaint was filed against many national retailers in the United States District Court for the Central District of California. The complaint (1) purported to be filed on behalf of a class of unnamed garment workers, (2) related to labor practices allegedly employed on the island of Saipan, Commonwealth of the Northern Mariana Islands, by apparel manufacturers unrelated to the Company, some of which have sold goods to the Company, and (3) sought injunctive, unspecified monetary and other relief. On September 29, 1999, the action was transferred to the United States District Court for the District of Hawaii. Thereafter, the plaintiffs moved for leave to amend their complaint to add A&F and others as additional defendants. That motion was granted and, on April 28, 2000, an amended complaint was filed which adds A&F and others as defendants, but does not otherwise significantly alter either the claims alleged or the relief sought by the plaintiffs. A&F has moved to dismiss the amended complaint. Certain of the other defendants also moved to transfer the action to Saipan. On June 23, 2000, the District Court of Hawaii ordered the case to be transferred to the United States District Court for the District of the Northern Mariana Islands. Plaintiffs filed a Petition for Writ of Mandamus challenging the transfer and on March 22, 2001, the Ninth Circuit Court of Appeals issued an order denying the Petition for Writ of Mandamus, thus allowing the case to be transferred to the United States District Court for the Northern Mariana Islands. The motion to dismiss is still pending. On June 2, 1998, A&F filed suit against American Eagle Outfitters, Inc. alleging an intentional and systematic copying of the "Abercrombie & Fitch" brand, its images and business practices, including the design and look of the Company's merchandise, marketing and catalogue/magazine. The lawsuit, filed in Federal District Court in Columbus, Ohio, sought to enjoin American Eagle's practices, recover lost profits and obtain punitive damages. In July 1999, the District Court granted a summary judgment dismissing the lawsuit against American Eagle. A&F filed a motion for reconsideration of the District Court judgment which was subsequently denied by court order dated September 10, 1999. In October 1999, A&F filed an appeal in the United States Court of Appeals for the Sixth Circuit (the "Sixth Circuit") regarding the decisions of the District Court on the motions for summary judgment and reconsideration. The appeal has been fully briefed and oral arguments were held before the Sixth Circuit on December 7, 2000. A&F is awaiting a written decision. A&F is aware of 20 actions that have been filed against A&F and certain of its officers and directors on behalf of a purported, but as yet uncertified, class of shareholders who purchased A&F's Class A Common Stock between October 8, 1999 and October 13, 1999. These 20 actions have been filed in the United States District Courts for the Southern District of New York and the Southern District of Ohio, Eastern Division alleging violations of the federal securities laws and seeking unspecified damages. On April 12, 2000, the Judicial Panel on Multidistrict Litigation issued a Transfer Order transferring the 20 pending actions to the Southern District of New York for consolidated pretrial proceedings under the caption In re Abercrombie & Fitch Securities Litigation. 15
16 On November 16, 2000, the Court signed an Order appointing the Hicks Group, a group of seven unrelated investors in A&F's securities, as lead plaintiff, and appointing lead counsel in the consolidated action. On December 14, 2000, plaintiffs filed a Consolidated Amended Class Action Complaint (the "Amended Complaint") in which they did not name as defendants Lazard Freres & Co. and Todd Slater, who had formerly been named as defendants in certain of the 20 complaints. A&F and other defendants filed motions to dismiss the Amended Complaint on February 14, 2001. A&F believes that the actions against it are without merit and intends to defend vigorously against them. However, A&F does not believe it is feasible to predict the outcome of these proceedings. The timing of the final resolution of these proceedings is also uncertain. In addition, the United States Securities and Exchange Commission initiated a formal investigation regarding trading in the securities of A&F and the disclosure of sales forecasts in October 1999, and the Ohio Division of Securities requested information from A&F regarding these same matters. A&F has cooperated in the investigations. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On May 30, 2001, A&F held its annual meeting of shareholders at the Hyatt Capital Square at Columbus City Center, Columbus, Ohio. At such meeting, Messrs. John A. Golden and Seth R. Johnson and Kathryn D. Sullivan, Ph.D., were reelected to A&F's Board of Directors, each to serve for a three-year term expiring in 2004. The vote on the election of directors was as follows: <TABLE> <CAPTION> For Withheld Broker Non-Votes --- -------- ---------------- <S> <C> <C> <C> John A. Golden 89,587,428 614,747 0 Seth R. Johnson 89,183,236 1,018,939 0 Kathryn D. Sullivan, Ph.D. 89,532,028 670,147 0 </TABLE> The following individuals also continue to serve on the Board of Directors: Messrs. Russell M. Gertmenian, Archie M. Griffin, Michael S. Jeffries, John W. Kessler and Sam N. Shahid, Jr. 16
17 Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 3. Certificate of Incorporation and Bylaws. 3.1 Amended and Restated Certificate of Incorporation of A&F as filed with the Delaware Secretary of State on August 27, 1996, incorporated by reference to Exhibit 3.1 to A&F's Quarterly Report on Form 10-Q for the quarter ended November 2, 1996. (File No. 1-12107) 3.2 Certificate of Designation of Series A Participating Cumulative Preferred Stock of A&F as filed with the Delaware Secretary of State on July 21, 1998, incorporated by reference to Exhibit 3.2 to A&F's Annual Report on Form 10-K for the year ended January 30, 1999. (File No. 1-12107) 3.3 Certificate of Decrease of Shares Designated as Class B Common Stock as filed with the Delaware Secretary of State on July 30, 1999, incorporated by reference to Exhibit 3.3 to A&F's Quarterly Report on Form 10-Q for the quarter ended July 31, 1999. (File No. 1-12107) 3.4 Amended and Restated Bylaws of A&F, incorporated by reference to Exhibit 3.2 to A&F's Quarterly Report on Form 10-Q for the quarter ended November 2, 1996. (File No. 1-12107) 3.5 Certificate regarding adoption of amendment to Subsection 1.10(c) of Amended and Restated Bylaws of A&F by Board of Directors on April 4, 2000, incorporated by reference to Exhibit 3.5 to A&F's Annual Report on Form 10-K for the year ended January 29, 2000. (File No. 1-12107) 3.6 Amended and Restated Bylaws of A&F (reflecting amendments through April 4, 2000) (for SEC reporting compliance purposes only), incorporated by reference to Exhibit 3.6 to A&F's Annual Report on Form 10-K for the year ended January 29, 2000. (File No. 1-12107) 4. Instruments Defining the Rights of Security Holders. 4.1 Credit Agreement, dated as of April 30, 1998, among Abercrombie & Fitch Stores, Inc., as Borrower, A&F, as Guarantor, the Lenders party thereto, The Chase Manhattan Bank, as Administrative Agent, and Chase Securities, Inc., as Arranger, incorporated by reference to Exhibit 4.1 to A&F's Current Report on Form 8-K dated May 7, 1998. (File No. 1-12107) 4.2 First Amendment and Waiver, dated as of July 30, 1999, to the Credit Agreement, dated as of April 30, 1998, among Abercrombie & Fitch Stores, Inc., A&F, the lenders party thereto and The Chase Manhattan Bank, as Administrative Agent, incorporated by reference to Exhibit 4.3 to A&F's Quarterly Report on Form 10-Q for the quarter ended July 31, 1999. (File No. 1-12107) 4.3 Rights Agreement, dated as of July 16, 1998, between A&F and First Chicago Trust Company of New York, as Rights Agent, incorporated by reference to Exhibit 1 to A&F's Registration Statement on Form 8-A dated July 21, 1998. (File No. 1-12107) 4.4 Amendment No. 1 to Rights Agreement, dated as of April 21, 1999, between A&F and First Chicago Trust Company of New York, as Rights 17
18 Agent, incorporated by reference to Exhibit 2 to A&F's Amendment No. 1 to Form 8-A dated April 23, 1999. (File No. 1-12107) 4.5 Certificate of adjustment of number of Rights associated with each share of Class A Common Stock, dated May 27, 1999, incorporated by reference to Exhibit 4.6 to A&F's Quarterly Report on Form 10-Q for the quarter ended July 31, 1999. (File No. 1-12107) 10. Material Contracts. 10.1 Abercrombie & Fitch Co. Incentive Compensation Performance Plan, incorporated by reference to Exhibit A to A&F's Proxy Statement dated April 14, 1997. (File No. 1-12107) 10.2 1998 Restatement of the Abercrombie & Fitch Co. 1996 Stock Option and Performance Incentive Plan (reflects amendments through December 7, 1999 and the two-for-one stock split distributed June 15, 1999 to stockholders of record on May 25, 1999), incorporated by reference to Exhibit 10.2 to A&F's Annual Report on Form 10-K for the year ended January 29, 2000. (File No. 1-12107) 10.3 1998 Restatement of the Abercrombie & Fitch Co. 1996 Stock Plan for Non-Associate Directors (reflects amendments through October 26, 2000 and the two-for-one stock split distributed June 15, 1999 to stockholders of record on May 25, 1999), incorporated by reference to Exhibit 10.3 to A&F's Quarterly Report on Form 10-Q for the quarter ended October 28, 2000. (File No. 1-12107) 10.4 Employment Agreement by and between A&F and Michael S. Jeffries dated as of May 13, 1997 with exhibits and amendment, incorporated by reference to Exhibit 10.4 to A&F's Quarterly Report on Form 10-Q for the quarter ended November 1, 1997. (File No. 1-12107) 10.5 Employment Agreement by and between A&F and Seth R. Johnson dated as of December 5, 1997, incorporated by reference to Exhibit 10.10 to A&F's Amendment No. 4 to Form S-4 Registration Statement filed on April 14, 1998 (Registration No. 333-46423). 10.6 Tax Disaffiliation Agreement dated as of May 19, 1998 between The Limited, Inc. and A&F, incorporated by reference to Exhibit 10.7 to A&F's Quarterly Report on Form 10-Q for the quarter ended May 2, 1998. (File No. 1-12107) 10.7 Amended and Restated Services Agreement dated as of May 19, 1998 between The Limited, Inc. and A&F, incorporated by reference to Exhibit 10.8 to A&F's Quarterly Report on Form 10-Q for the quarter ended May 2, 1998. (File No. 1-12107) 10.8 Sublease Agreement by and between Victoria's Secret Stores, Inc. and A&F, dated as of June 1, 1995 (the "Sublease Agreement"), incorporated by reference to Exhibit 10.3 to A&F's Registration Statement on Form S-1 filed on July 17, 1996 (Registration No. 333-08231). 10.9 Amendment to Sublease Agreement dated as of May 19, 1998, incorporated by reference to Exhibit 10.11 to A&F's Quarterly Report on Form 10-Q for the quarter ended May 2, 1998. (File No. 1-12107) 18
19 10.10 Abercrombie & Fitch, Inc. Directors' Deferred Compensation Plan, incorporated by reference to Exhibit 10.14 to A&F's Annual Report on Form 10-K for the year ended January 30, 1999. (File No. 1-12107) 10.11 Replacement Promissory Note, dated May 18, 2001, issued by Michael S. Jeffries to A&F. 15. Letter re: Unaudited Interim Financial Information to Securities and Exchange Commission re: Inclusion of Report of Independent Accountants. (b) Reports on Form 8-K. -------------------- No reports on Form 8-K were filed during the fiscal quarter ended May 5, 2001. 19
20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ABERCROMBIE & FITCH CO. (Registrant) By /S/ Seth R. Johnson ---------------------------------- Seth R. Johnson, Executive Vice President and Chief Operating Officer* Date: June 19, 2001 - -------------------------- * Mr. Johnson has been duly authorized to sign on behalf of the Registrant as its principal financial officer. 20
21 EXHIBIT INDEX Exhibit No. Document ----------- ------------------------ 10.11 Replacement Promissory Note, dated May 18, 2001, issued by Michael S. Jeffries to A&F. 15 Letter re: Unaudited Interim Financial Information to Securities and Exchange Commission re: Inclusion of Report of Independent Accountants.