| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| Delaware | 31-1469076 | |
|
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 6301 Fitch Path, New Albany, Ohio | 43054 | |
| (Address of principal executive offices) | (Zip Code) | |
| Large accelerated filer þ | Accelerated filer o |
Non-accelerated filer
o
(Do not check if a smaller reporting company) |
Smaller reporting company o |
| Class A Common Stock | Outstanding at September 4, 2008 | |
| $.01 Par Value | 87,038,193 Shares |
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2
3
4
5
6
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10
11
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19
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22
23
24
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36
37
38
39
40
Thirteen Weeks Ended
Twenty-Six Weeks Ended
August 2,
August 4,
August 2,
August 4,
2008
2007
2008
2007
$
845,799
$
804,538
$
1,645,977
$
1,546,948
252,830
251,100
518,842
506,241
592,969
553,438
1,127,135
1,040,707
360,719
334,417
702,507
642,655
109,024
98,440
213,722
188,615
(754
)
(3,551
)
(3,695
)
(7,405
)
123,980
124,132
214,601
216,842
(1,757
)
(4,143
)
(9,403
)
(7,854
)
125,737
128,275
224,004
224,696
47,905
47,000
84,056
83,340
$
77,832
$
81,275
$
139,948
$
141,356
$
0.90
$
0.92
$
1.62
$
1.61
$
0.87
$
0.88
$
1.55
$
1.53
86,842
88,090
86,588
87,987
89,963
92,294
90,051
92,369
$
0.175
$
0.175
$
0.35
$
0.35
$
(770
)
$
2,730
$
(914
)
$
4,417
921
(74
)
(18,102
)
(92
)
$
151
$
2,656
$
(19,016
)
$
4,325
$
77,983
$
83,931
$
120,932
$
145,681
Twenty-Six Weeks Ended
August 2, 2008
August 4, 2007
$
139,948
$
141,356
108,417
87,732
(21,327
)
(18,405
)
21,895
13,361
17,308
14,938
(6,342
)
(11,996
)
640
(16,233
)
800
3,650
28,778
18,332
529
—
(137,644
)
(7,353
)
13,001
(1,102
)
(75,096
)
(74,190
)
(19,099
)
3,998
71,808
154,088
(200,208
)
(202,499
)
(49,411
)
(472,912
)
290,563
627,455
40,944
(47,956
)
55,127
24,498
100,000
—
6,342
11,996
(50,000
)
(79,040
)
(11,706
)
2,395
(30,021
)
(30,776
)
69,742
(70,927
)
504
—
182,998
35,205
118,044
81,959
$
301,042
$
117,164
$
(13,635
)
$
12,593
1.
BASIS OF PRESENTATION
Abercrombie & Fitch Co. (“A&F”), through its wholly-owned subsidiaries (collectively, A&F and
its wholly-owned subsidiaries are referred to as the “Company”), is a specialty retailer of
high-quality, casual apparel for men, women, boys and girls with an active, youthful
lifestyle.
The accompanying condensed consolidated financial statements include the historical financial
statements of, and transactions applicable to, the Company and reflect its assets,
liabilities, results of operations and cash flows.
The Company’s fiscal year ends on the Saturday closest to January 31. Fiscal years are
designated in the condensed consolidated financial statements and notes by the calendar year
in which the fiscal year commences. All references herein to “Fiscal 2008” represent the
52-week fiscal year that will end on January 31, 2009, and to “Fiscal 2007” represent the
52-week fiscal year that ended February 2, 2008.
In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 131,
“Disclosures
about Segments of an Enterprise and Related Information,”
(“SFAS No. 131”), the Company
determines its operating segments on the same basis that it uses to evaluate performance
internally. The operating segments identified by the Company include Abercrombie & Fitch,
abercrombie, Hollister, RUEHL and Gilly Hicks. The operating segments have been aggregated
and are reported as one reportable financial segment. RUEHL and Gilly Hicks were determined
to be immaterial for segment reporting purposes, and are therefore included in the one
reportable segment as they have similar economic characteristics and meet the majority of the
aggregation criteria in paragraph 17 of SFAS No. 131. The Company aggregates its operating
segments because they have similar economic characteristics and meet the aggregation criteria
set forth in paragraph 17 of SFAS No. 131. The Company believes its operating segments may
be aggregated for financial reporting purposes because they are similar in each of the
following areas: class of consumer, economic characteristics, nature of products, nature of
production processes and distribution methods. Revenues relating to the Company’s
international operations for the thirteen and twenty-six weeks ended August 2, 2008 and
August 4, 2007 and long-lived assets relating to the Company’s international operations as of
August 2, 2008 and February 2, 2008 were not material and were not reported separately from
domestic revenues and long-lived assets.
The condensed consolidated financial statements as of August 2, 2008 and for the thirteen and
twenty-six week periods ended August 2, 2008 and August 4, 2007 are unaudited and are
presented pursuant to the rules and regulations of the Securities and Exchange Commission
(“SEC”). 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 Fiscal 2007 filed on March 28, 2008. The year-end condensed
consolidated balance sheet data were derived from audited consolidated financial statements,
but do not include all disclosures required by accounting principles generally accepted in
the United States of America.
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 to be anticipated for Fiscal
2008.
Thirteen Weeks Ended
Twenty-Six Weeks Ended
August 2,
August 4,
August 2,
August 4,
2008
2007
2008
2007
$
774
$
454
$
1,542
$
527
10,438
7,686
20,353
12,834
$
11,212
$
8,140
$
21,895
$
13,361
The Company also recognized $4.3 million and $8.2 million in tax benefits related to
share-based compensation for the thirteen and twenty-six week periods ended August 2, 2008,
respectively, and $3.1 million and $5.1 million in tax benefits related to share-based
compensation for the thirteen and twenty-six week periods ended August 4, 2007, respectively,
The Company adjusts share-based compensation expense on a quarterly basis for actual
forfeitures and for changes to the estimate of expected award forfeitures based on actual
forfeiture experience. The effect of adjustments for forfeitures during the thirteen and
twenty-six week periods ended August 2, 2008 and August 4, 2007 was immaterial.
A&F issues shares of Class A Common Stock (“Common Stock”) for stock option exercises and
restricted stock unit vestings from treasury stock. As of August 2, 2008, A&F had enough
treasury
stock available to cover stock options and restricted stock units outstanding without having
to repurchase additional shares.
Fair Value Estimates
The Company estimates the fair value of stock options granted using the Black-Scholes
option-pricing model, which requires the Company to estimate the expected term of the stock
option grants and expected future stock price volatility over the expected term. Estimates
of the expected term, which represents the expected period of time the Company believes the
stock options will be outstanding, are based on historical experience. Estimates of
expected future stock price volatility are based on the volatility of A&F’s Common Stock
price for the most recent historical period equal to the expected term of the stock option.
The Company calculates the volatility as the annualized standard deviation of the differences
in the natural logarithms of the weekly stock closing price, adjusted for stock splits and
dividends.
The weighted-average estimated fair value of stock options granted during the twenty-six
weeks ended August 2, 2008 and August 4, 2007, as well as the assumptions used in calculating
such values on the date of grant, were as follows:
Twenty-Six Weeks Ended
Twenty-Six Weeks Ended
August 2, 2008
August 4, 2007
$
78.48
$
73.92
$
19.72
$
22.68
30
%
34
%
4
4
2.5
%
4.5
%
0.9
%
1.0
%
Weighted-Average
Number of
Weighted-Average
Aggregate
Remaining
Stock Options
Shares
Exercise Price
Intrinsic Value
Contractual Life
7,738,112
$
41.03
379,200
78.48
(1,299,622
)
42.53
(11,300
)
62.72
6,806,390
$
42.80
$
194,390,482
2.9
713,195
$
71.60
$
2,446,818
7.5
5,962,477
$
38.67
$
191,702,476
2.2
The total intrinsic value of stock options exercised during the twenty-six weeks ended August
2, 2008 and August 4, 2007 was $36.7 million and $40.6 million, respectively.
The fair value of stock options vested during the twenty-six weeks ended August 2, 2008 and
August 4, 2007 was $4.4 million and $4.1 million, respectively.
Weighted-Average Grant
Restricted Stock Units / Restricted Shares
Number of Shares
Date Fair Value
2,354,871
$
48.02
638,565
$
76.11
(328,469
)
$
55.13
(47,260
)
$
67.88
2,617,707
$
53.63
Thirteen Weeks Ended
Twenty-Six Weeks Ended
August 2, 2008
August 4, 2007
August 2, 2008
August 4, 2007
103,300
103,300
103,300
103,300
(16,458
)
(15,210
)
(16,712
)
(15,313
)
86,842
88,090
86,588
87,987
3,121
4,204
3,463
4,382
89,963
92,294
90,051
92,369
Stock options to purchase approximately 1.4 million and 18,000 shares of Common Stock during
the thirteen week periods ended August 2, 2008 and August 4, 2007, respectively, and
approximately 1.3 million shares of Common Stock during the twenty-six week period ended
August 2, 2008, were outstanding, but were not included in the computation of net income per
diluted share because the impact of such stock options would be anti-dilutive. For the
twenty-six week period ended August 4, 2007, all stock options outstanding were included in
the computation of net income per diluted share.
4.
CASH AND EQUIVALENTS AND INVESTMENTS
Cash and equivalents and investments consisted of (in thousands):
August 2, 2008
February 2, 2008
$
80,342
$
74,753
220,700
43,291
301,042
118,044
219,859
258,355
51,558
272,131
271,417
530,486
1,989
1,350
18,012
18,599
30,453
31,306
50,454
51,255
$
622,913
$
699,785
(1)
Rabbi trust assets are included in other assets on the Condensed Consolidated Balance Sheets.
Investments with original maturities greater than 90 days are accounted for in accordance
with SFAS No. 115, “
Accounting for Certain Investments in Debt and Equity Securities,
” and
are classified accordingly by the Company at the time of purchase. At August 2, 2008 and
February 2, 2008, the
Company’s marketable securities consisted of investment grade auction rate securities (“ARS”)
invested in insured student loan backed securities and insured municipal authority
bonds, with maturities ranging from 11 to 34 years, all classified as available-for-sale.
Despite the underlying long-term maturity of ARS, such securities had historically been
priced and subsequently traded as short-term investments because of an interest-rate reset
feature, which reset through a Dutch auction process at predetermined periods ranging from
seven to 35 days. Due to the frequent nature of the reset feature, ARS were classified as
current assets and reported at par, which approximated fair value, as of February 2, 2008.
On February 13, 2008, the Company began to experience failed auctions. Based on the failure
rate of these auctions and the overall lack of liquidity in the ARS market, the Company
determined that the ARS should be classified as non-current assets on the Condensed
Consolidated Balance Sheet and that the estimated fair value of the ARS no longer
approximated par value. The Company used a discounted cash flow model to determine the
estimated fair value of these investments as of August 2, 2008. See Note 5, “
Fair Value
” for
further discussion on the valuation of the ARS.
For the thirteen and twenty-six week periods ended August 2, 2008, the Company recorded an
unrealized gain of $0.9 million and an unrealized loss of $17.9 million, respectively, all
related to ARS and was included as a component of accumulated other comprehensive loss on the
Condensed Consolidated Balance Sheet. The Company deemed the unrealized loss to be temporary
because the Company does not plan to sell any of the ARS prior to maturity at an amount below
the original purchase value and, at this time, does not deem it probable that it will receive
less than 100% of the
principal and accrued interest from the issuers. The securities will
continue to accrue interest and be auctioned until one of the following: the auction
succeeds; the issuer calls the securities; or the securities mature. There were no
unrealized gains or losses on ARS for the thirteen and twenty-six week periods ended August
4, 2007.
As of August 2, 2008, approximately 62% of the Company’s ARS were “AAA” rated and
approximately 36% of the Company’s ARS were “AA” with the remaining ARS having an “A-”
rating, as rated by one or more of the major credit rating agencies.
The irrevocable rabbi trust (the “Rabbi Trust”) is a source of funds intended to be used to
match respective funding obligations to participants in the Abercrombie & Fitch Nonqualified
Savings and Supplemental Retirement Plan and the Chief Executive Officer Supplemental
Executive Retirement Plan. The Rabbi Trust assets are consolidated in accordance with
Emerging Issues Task Force Issue No. 97-14, “
Accounting for Deferred Compensation Agreements
Where Amounts Earned Are Held in a Rabbi Trust and Invested
” (“EITF 97-14”) and recorded at
fair value, with the exception of the trust-owned life insurance which is recorded at cash
surrender value, in other assets on the Condensed Consolidated Balance Sheets. Net
unrealized gains and losses related to the Rabbi Trust were immaterial for the thirteen and
twenty-six week periods ended August 2, 2008 and August 4, 2007, respectively.
5.
FAIR VALUE
Effective February 3, 2008, the Company adopted SFAS No. 157, “
Fair Value Measurements
”
(“SFAS No. 157”), for financial assets and liabilities and any other assets or liabilities
measured at fair value on a recurring basis. SFAS No. 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about instruments measured at fair
value. SFAS No. 157 defines fair value as the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. SFAS No. 157 also establishes a three-level
hierarchy for fair value measurements, which prioritizes valuation inputs as follows:
•
Level 1 — inputs are unadjusted quoted prices for identical assets or liabilities
that are available in active markets.
•
Level 2 — inputs are other than quoted market prices included within Level 1 that
are observable for assets or liabilities, directly or indirectly.
•
Level 3 — inputs to the valuation methodology are unobservable.
The lowest level of significant input determines the placement of the entire fair value
measurement in the hierarchy. The three levels of the hierarchy and the distribution of the
Company’s financial assets within it are as follows:
Assets at Fair Value as of August 2, 2008
(in thousands)
Level 1
Level 2
Level 3
Total
$
222,689
$
—
$
—
$
222,689
—
—
271,417
271,417
18,012
—
—
18,012
$
240,701
$
—
$
271,417
$
512,118
(1)
Includes $220.7 million in money market funds included in cash and equivalents and $2.0 million of money market
funds held in the Rabbi Trust, which are included in other assets on the Condensed Consolidated Balance Sheet.
The level 3 assets are investments in federally insured student loan backed securities and
insured municipal authority bonds ARS and were transferred from Level 2 in the first quarter
of Fiscal 2008 as a result of a change in market conditions. As a result of the market
failure and lack of liquidity in the current ARS market, ARS were valued using a discounted
cash flow model to determine the estimated fair value of these securities as of August 2,
2008. Some of the inputs into the model are unobservable in the market and are significant.
The assumptions used in preparing the model include, but are not limited to, periodic coupon
rates, market required rate of return and expected term. The coupon rate is estimated using
the results of a regression analysis factoring in historical data on the par swap rate and
the maximum coupon rate paid in the event of failure. In making the assumption of the
required rate of return, the Company considers risk-free interest rate and credit spread.
The expected term is identified as the time the principal becomes available to the investor.
The principal can become available under three different scenarios: (1) the assumed coupon
rate is above the required rate of return and the ARS is assumed to be called, (2) the market
has returned to normal and auctions have recommenced; and (3) the principal has reached
maturity. The Company also includes a marketability discount which takes into account the
lack of liquidity in the current ARS market.
The table below includes a roll forward of the Company’s investments in ARS from February 2,
2008 to August 2, 2008, and the reclassification of these investments from Level 2 to Level 3
in the hierarchy. When a determination is made to classify a financial instrument within
Level 3, the determination is based upon the lack of significance of the observable
parameters to the overall fair value measurement. However, the fair value determination for
Level 3 financial instruments may include observable components.
Significant Other
Significant
Auction Rate Securities:
Observable Inputs
Unobservable Inputs
(in thousands):
(Level 2)
(Level 3)
$
530,486
$
—
49,411
—
(242,955
)
(47,608
)
(336,942
)
336,942
—
(17,917
)
$
—
$
271,417
Also effective February 3, 2008, the Company adopted SFAS No. 159, “
The Fair Value Option for
Financial Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115
”
(“SFAS No. 159”). SFAS No. 159 permits companies to measure many financial instruments and
certain other assets and liabilities at fair value on an instrument by instrument basis. The
Company has elected not to apply the fair value option to its existing financial assets and
liabilities, and accordingly, there was no financial statement impact from the adoption of
SFAS No. 159.
6.
INVENTORIES
Inventories are principally valued at the lower of average cost or market utilizing the
retail method. The Company determines market value as the anticipated future selling price
of the merchandise less a normal margin. Therefore, an initial markup is applied to
inventory at cost in order to establish a cost-to-retail ratio. Permanent markdowns, when
taken, reduce both the retail and cost components of inventory on hand so as to maintain the
already established cost-to-retail relationship. The inventory balance was $470.7 million,
$333.2 million and $431.4 million at August 2, 2008, February 2, 2008 and August 4, 2007,
respectively.
August 2, 2008
February 2, 2008
$
2,227,013
$
2,054,275
(828,921
)
(735,984
)
$
1,398,092
$
1,318,291
8.
DEFERRED LEASE CREDITS
Deferred lease credits are derived from payments received from landlords to partially offset
store construction costs and are classified between current and long-term liabilities. The
amounts, which are amortized over the life of the related leases, consisted of the following
(in thousands):
August 2, 2008
February 2, 2008
$
508,322
$
471,498
(238,813
)
(219,834
)
$
269,509
$
251,664
9.
INCOME TAXES
The provision for income taxes is based on the current estimate of the annual effective tax
rate adjusted to reflect the impact of items discrete to the thirteen weeks ended August 2,
2008. The effective tax rate for the thirteen weeks ended August 2, 2008 was 38.1% as
compared to 36.6% for the Fiscal 2007 comparable period. The effective tax rate in the
twenty-six weeks ended August 2, 2008 was 37.5% as compared to 37.1% for the Fiscal 2007
comparable period.
Cash payments of income taxes made during the thirteen weeks ended August 2, 2008 and August
4, 2007 were approximately $49.0 million and $40.7 million, respectively. Cash payments of
income taxes made during the twenty-six weeks ended August 2, 2008 and August 4, 2007 were
approximately $138.6 million and $130.3 million, respectively.
The Company has recorded a valuation allowance against the deferred tax assets arising from
the net operating loss of a foreign subsidiary and on the temporary impairment of ARS
included in other comprehensive loss. As of August 2, 2008 and February 2, 2008, the
valuation allowance totaled $7.5 million and $0.9 million, respectively. No other valuation
allowances have been provided for deferred tax assets because management believes that it is
more likely than not that the full amount of the net deferred tax assets will be realized in
the future.
10.
LONG-TERM DEBT
On April 15, 2008, the Company entered into a syndicated unsecured credit agreement (the “New
Credit Agreement”) under which up to $450 million will initially be available. The New
Credit Agreement replaces the Credit Agreement, dated as of November 14, 2002, as amended and
restated as of December 15, 2004 (the “Original Credit Agreement”), which had been due to
expire on December 15, 2009. The primary purposes of the New Credit Agreement are for trade
and stand-by letters of credit in the ordinary course of business as well as working capital,
capital expenditures, acquisitions and investments, and other general corporate purposes.
During the life of the New Credit Agreement, the Company is permitted to make multiple
requests for additional credit commitments in an aggregate
amount not to exceed $150 million.
The New Credit Agreement has several borrowing options, including interest rates that are
based on (i) a Base Rate, payable quarterly, or (ii) an Adjusted Eurodollar Rate (as defined
in the New Credit Agreement) plus a margin based on a Leverage Ratio, payable at the end of
the applicable interest period for the borrowing. The Base Rate represents a rate per annum
equal to the higher of (a) National City Bank’s then publicly announced prime rate or (b) the
Federal Funds Effective Rate (as defined in the New Credit Agreement) as then in effect plus
1
/
2
of 1%. The facility fees payable under the New Credit Agreement are based on the Company’s
Leverage Ratio (i.e., the ratio on a consolidated basis, of (a) the sum of total debt
(excluding trade letters of credit) plus 600% of forward minimum rent commitments to (b)
consolidated earnings before interest, taxes, depreciation, amortization and rent for the
trailing four-consecutive-fiscal-quarter periods. The facility fees are projected to accrue
at a rate of 0.125% per annum. In addition, a utilization fee is payable under the New
Credit Agreement when the aggregate credit facility exposure, excluding trade letters of
credit, exceeds 50% of the total lender commitments then in effect, at a rate per annum equal
to 0.100% of the aggregate credit facility exposure for each day it is at such a level.
The New Credit Agreement contains limitations, subject to negotiated carve-outs, on
indebtedness, liens, significant corporate changes including mergers and acquisition
transactions with third parties, investments, loans, advances and guarantees in or for the
benefit of third parties, hedge agreements, restricted payments (including dividends and
stock repurchases) and transactions with affiliates. The New Credit Agreement will mature on
April 12, 2013. Trade letters of credit totaling approximately $60.3 million and $61.6
million were outstanding on August 2, 2008 and February 2, 2008, respectively. Standby
letters of credit totaling approximately $16.2 million and $14.5 million were outstanding on
August 2, 2008 and February 2, 2008, respectively. The standby letters of credit are set to
expire primarily during the fourth quarter of Fiscal 2008. To date, no beneficiary has drawn
upon the standby letters of credit.
As of August 2, 2008, the Company had $100.0 million outstanding under the New Credit
Agreement, classified as a current liability on the Company’s Condensed Consolidated Balance
Sheet. The average interest rate for the second quarter of Fiscal 2008 was 2.9%. No
borrowings were outstanding as of February 2, 2008 under the Original Credit Agreement.
11.
CONTINGENCIES
A&F is a defendant in lawsuits arising in the ordinary course of business.
On June 23, 2006, Lisa Hashimoto, et al. v. Abercrombie & Fitch Co. and Abercrombie & Fitch
Stores, Inc., was filed in the Superior Court of the State of California for the County of
Los Angeles. In that action, plaintiffs alleged, on behalf of a putative class of California
store managers employed in Hollister and abercrombie stores, that they were entitled to
receive overtime pay as “non-exempt” employees under California wage and hour laws. The
complaint seeks injunctive relief, equitable relief, unpaid overtime compensation, unpaid
benefits, penalties, interest and attorneys’ fees and costs. The defendants answered the
complaint on August 21, 2006, denying liability. On December 10, 2007, the defendants
reached an agreement in principle with plaintiffs’ counsel. The agreement resulted in a
written Stipulation and Settlement Agreement, effective as of February 7, 2008, settling all
claims of Hollister and abercrombie store managers who served in stores from June 23, 2002
until April 30, 2004. On June 23, 2008, the Superior Court approved that proposed partial
settlement. The partial settlement does not affect claims which are alleged to have arisen
in the period commencing on April 30, 2004. The parties are continuing to litigate these
claims.
On September 2, 2005, a purported class action, styled Robert Ross v. Abercrombie & Fitch
Company, et al., was filed against A&F and certain of its officers in the United States
District Court for the Southern District of Ohio on behalf of a purported class of all
persons who purchased or acquired shares of A&F’s Common Stock between June 2, 2005 and
August 16, 2005. In September and October of 2005, five other purported class actions were
subsequently filed against A&F and other defendants in the same Court. All six securities
cases allege claims under the federal securities laws, and seek unspecified monetary damages,
as a result of a decline in the price of A&F’s Common Stock during the summer of 2005. On
November 1, 2005, a motion to consolidate all of these purported class actions into the
first-filed case was filed by some of the plaintiffs. A&F joined in that motion. On March
22, 2006, the motions to consolidate were granted, and these actions (together with the
federal court derivative cases described in the following paragraph) were consolidated for
purposes of motion practice, discovery and pretrial proceedings. A consolidated amended
securities class action complaint (the “Complaint”) was filed on August 14, 2006. On October
13, 2006, all defendants moved to dismiss that Complaint. On August 9, 2007, the Court
denied the motions to dismiss. On September 14, 2007, defendants filed answers denying the
material allegations of the Complaint and asserting affirmative defenses. On October 26,
2007, plaintiffs moved to certify their purported class. The motion has not been fully
briefed or submitted.
On September 16, 2005, a derivative action, styled The Booth Family Trust v. Michael S.
Jeffries, et al., was filed in the United States District Court for the Southern District of
Ohio, naming A&F as a nominal defendant and seeking to assert claims for unspecified damages
against nine of A&F’s present and former directors, alleging various breaches of the
directors’ fiduciary duty and seeking equitable and monetary relief. In the following three
months (October, November and December of 2005), four similar derivative actions were filed
(three in the United States District Court for the Southern District of Ohio and one in the
Court of Common Pleas for Franklin County, Ohio) against present and former directors of A&F
alleging various breaches of the directors’ fiduciary duty and seeking equitable and monetary
relief. A&F is also a nominal defendant in each of the four later derivative actions. On
November 4, 2005, a motion to consolidate all of the federal court derivative actions with
the purported securities law class actions described in the preceding paragraph was filed.
On March 22, 2006, the motion to consolidate was granted, and the federal court derivative
actions have been consolidated with the aforesaid purported securities law class actions for
purposes of motion practice, discovery and pretrial proceedings. A consolidated amended
derivative complaint was filed in the federal proceeding on July 10, 2006. A&F filed a
motion to stay the consolidated federal derivative case and that motion
was granted. The
state court action was also stayed. On February 16, 2007, A&F announced its Board of
Directors received a report of the Special Litigation Committee established by the Board to
investigate and act with respect to claims asserted in certain previously disclosed
derivative lawsuits brought against current and former directors and management, including
Chairman and Chief Executive Officer Michael S. Jeffries. The Special Litigation Committee
has concluded that there is no evidence to support the asserted claims and directed the
Company to seek dismissal of the derivative actions. On September 10, 2007, the Company
moved to dismiss the federal derivative cases on the authority of the Special Litigation
Committee report and on October 18, 2007, the state court stayed further proceedings until
resolution of the consolidated federal derivative cases. The Company’s motion has not been
fully briefed or submitted.
Management intends to defend the aforesaid matters vigorously, as appropriate. Management is
unable to quantify the potential exposure of the aforesaid matters. However, management’s
assessment of the Company’s current exposure could change in the event of the discovery of
additional facts with respect to legal matters pending against the Company or determinations
by judges, juries or other finders of fact that are not in accordance with management’s
evaluation of the claims.
12.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In February 2008, the FASB issued FASB Staff Position (“FSP”) 157-2 (“FSP 157-2”) that
partially defers the effective date of SFAS No. 157 for one year for non-financial assets and
liabilities that are recognized or disclosed at fair value in the financial statements on a
non-recurring basis. Consequently, SFAS No. 157 will be effective for the Company on
February 1, 2009 for non-financial assets and liabilities that are recognized or disclosed at
fair value on a non-recurring basis. The Company is currently evaluating the potential
impact of adopting FSP 157-2 on the Company’s consolidated results of operations and
consolidated financial condition.
In March 2008, the FASB issued SFAS No. 161, “
Disclosures about Derivative Instruments and
Hedging Activities—an amendment of FASB Statement No. 133
” (“SFAS No. 161”) which changes the
disclosure requirements for derivative instruments and hedging activities. SFAS No. 161
requires enhanced disclosures about (a) how and why an entity uses derivative instruments,
(b) how derivative instruments and related hedged items are accounted for under SFAS No. 133,
“
Accounting for Derivative Instruments and Hedging Activities”
and its related
interpretations, and (c) how derivative instruments and related hedged items affect an
entity’s financial position, financial performance, and cash flows. SFAS No. 161 will be
effective for the Company on February 1, 2009. The Company is currently evaluating the
potential impact of adopting SFAS No. 161 on the disclosures in the Company’s consolidated
financial statements.
In May 2008, the FASB issued SFAS No. 162, “
The Hierarchy of Generally Accepted Accounting
Principles”
(“SFAS No. 162”). SFAS No. 162 identifies the sources of accounting principles
and the framework for selecting the principles to be used in the preparation of financial
statements of nongovernmental entities that are presented in conformity with generally
accepted accounting principles in the United States of America. SFAS No. 162 is effective
sixty days following the SEC’s approval of PCAOB amendments to AU Section 411, “
The Meaning
of ‘Present fairly in conformity with generally accepted accounting principles’
”. The
Company is currently evaluating the potential impact, if any, of the adoption of SFAS No. 162
on its consolidated financial statements.
Shareholders of Abercrombie & Fitch Co.:
Columbus, Ohio
September 8, 2008
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Thirteen Weeks Ended
Twenty-Six Weeks Ended
August 2, 2008
August 4, 2007
August 2, 2008
August 4, 2007
100.0
%
100.0
%
100.0
%
100.0
%
29.9
%
31.2
%
31.5
%
32.7
%
70.1
%
68.8
%
68.5
%
67.3
%
42.6
%
41.6
%
42.7
%
41.5
%
12.9
%
12.2
%
13.0
%
12.2
%
(0.1
)%
(0.4
)%
(0.2
)%
(0.5
)%
14.7
%
15.4
%
13.0
%
14.0
%
(0.2
)%
(0.5
)%
(0.6
)%
(0.5
)%
14.9
%
15.9
%
13.6
%
14.5
%
5.7
%
5.8
%
5.1
%
5.4
%
9.2
%
10.1
%
8.5
%
9.1
%
Thirteen Weeks Ended
Twenty-Six Weeks Ended
August 2, 2008
August 4, 2007
% Change
August 2, 2008
August 4, 2007
% Change
$
845,799
$
804,538
5
%
$
1,645,977
$
1,546,948
6
%
$
383,587
$
363,885
5
%
$
741,311
$
697,228
6
%
$
94,753
$
94,478
0
%
$
190,932
$
183,627
4
%
$
350,773
$
334,430
5
%
$
680,940
$
644,098
6
%
$
12,501
$
11,745
6
%
$
25,540
$
21,995
16
%
$
4,185
n/a
n/a
$
7,254
n/a
n/a
(4
)%
(2
)%
(4
)%
(3
)%
3
%
(2
)%
3
%
(3
)%
(11
)%
2
%
(9
)%
0
%
(9
)%
(3
)%
(9
)%
(4
)%
(22
)%
2
%
(20
)%
(1
)%
9
%
24
%
10
%
21
%
$
740
$
777
(5
)%
$
1,443
$
1,507
(4
)%
$
990
$
925
7
%
$
1,888
$
1,769
7
%
$
420
$
475
(12
)%
$
849
$
932
(9
)%
$
707
$
786
(10
)%
$
1,386
$
1,535
(10
)%
$
493
$
694
(29
)%
$
1,000
$
1,368
(27
)%
$
104
$
109
(5
)%
$
203
$
212
(4
)%
$
112
$
105
7
%
$
213
$
200
7
%
$
92
$
106
(13
)%
$
186
$
209
(11
)%
$
106
$
118
(10
)%
$
207
$
231
(10
)%
$
52
$
74
(30
)%
$
107
$
147
(27
)%
11,558
12,991
(11
)%
22,622
24,519
(8
)%
11,850
12,420
(5
)%
22,600
23,175
(2
)%
6,586
7,819
(16
)%
13,198
15,023
(12
)%
13,847
15,958
(13
)%
27,348
30,255
(10
)%
5,949
9,479
(37
)%
12,067
17,926
(33
)%
$
64.04
$
59.84
7
%
$
63.79
$
61.45
4
%
$
83.52
$
74.46
12
%
$
83.56
$
76.34
9
%
$
63.79
$
60.71
5
%
$
64.33
$
62.07
4
%
$
51.04
$
49.26
4
%
$
50.67
$
50.73
0
%
$
82.83
$
73.20
13
%
$
82.89
$
76.34
9
%
2.45
2.48
(1
)%
2.45
2.44
0
%
2.43
2.43
0
%
2.43
2.40
1
%
2.84
2.94
(3
)%
2.82
2.87
(2
)%
2.38
2.42
(2
)%
2.37
2.37
0
%
2.33
2.59
(10
)%
2.38
2.59
(8
)%
$
26.14
$
24.13
8
%
$
26.04
$
25.18
3
%
$
34.37
$
30.64
12
%
$
34.39
$
31.81
8
%
$
22.46
$
20.65
9
%
$
22.81
$
21.63
5
%
$
21.45
$
20.36
5
%
$
21.38
$
21.41
0
%
$
35.55
$
28.26
26
%
$
34.83
$
29.47
18
%
**
A store is included in comparable store sales when it has been open as the same brand 12 months or more and its square footage has not been expanded or
reduced by more than 20% within the past year.
**
Net sales for Gilly Hicks for the thirteen and twenty-six week periods ended August 2, 2008 reflect the activity of eight stores, respectively. There
were no Gilly Hicks stores open as of August 4, 2007. Operational data was deemed immaterial for inclusion in the table above.
August 2, 2008
February 2, 2008
$
397,995
$
597,142
$
1,745,645
$
1,618,313
Abercrombie & Fitch
abercrombie
Hollister
RUEHL
Gilly Hicks
Total
Store Activity
357
202
460
23
5
1,047
—
6
23
2
3
34
2
1
—
—
—
3
(2
)
—
(1
)
—
—
(3
)
357
209
482
25
8
1,081
3,162
923
3,077
218
57
7,437
—
29
152
20
31
232
23
6
—
—
—
29
(18
)
—
(6
)
—
—
(24
)
3,167
958
3,223
238
88
7,674
8,871
4,584
6,687
9,520
11,000
7,099
Abercrombie & Fitch
abercrombie
Hollister
RUEHL
Gilly Hicks
Total
Store Activity
359
180
399
16
—
954
3
5
20
1
—
29
1
1
—
—
—
2
(1
)
—
—
—
—
(1
)
362
186
419
17
—
984
3,173
801
2,651
149
—
6,774
22
27
148
10
—
207
12
11
—
—
—
23
(10
)
—
—
—
—
(10
)
3,197
839
2,799
159
—
6,994
8,831
4,511
6,680
9,353
—
7,108
Abercrombie & Fitch
abercrombie
Hollister
RUEHL
Gilly Hicks
Total
359
201
450
22
3
1,035
1
8
33
3
5
50
2
1
—
—
—
3
(5
)
(1
)
(1
)
—
—
(7
)
357
209
482
25
8
1,081
3,167
917
3,015
204
34
7,337
18
38
214
34
54
358
23
5
—
—
—
28
(41
)
(2
)
(6
)
—
—
(49
)
3,167
958
3,223
238
88
7,674
8,871
4,584
6,687
9,520
11,000
7,099
Abercrombie & Fitch
abercrombie
Hollister
RUEHL
Gilly Hicks
Total
360
177
393
14
—
944
4
9
26
2
—
41
—
—
—
1
(1)
—
1
(2
)
—
—
—
—
(2
)
362
186
419
17
—
984
3,171
788
2,604
130
—
6,693
47
44
195
20
—
306
(4
)
7
—
9
(1)
—
12
(17
)
—
—
—
—
(17
)
3,197
839
2,799
159
—
6,994
8,831
4,511
6,680
9,353
—
7,108
(1)
Includes one RUEHL store reopened after being closed temporarily due to fire.
–
loss of services of skilled senior executive officers;
–
ability to hire, train and retain qualified associates;
–
changes in consumer spending patterns and consumer preferences;
–
ability to develop innovative, high-quality new merchandise
in response to changing fashion trends;
–
effects on consumer purchases due to a general economic downturn;
–
impact of competition and pricing pressures;
–
availability and market prices of key raw materials;
–
ability of manufacturers to comply with applicable laws,
regulations and ethical business practices;
–
availability of suitable store locations on appropriate
terms;
–
currency and exchange risks and changes in existing or
potential duties, tariffs or quotas;
–
effects of political and economic events and conditions
domestically and in foreign jurisdictions in which the Company operates,
including, but not limited to, acts of terrorism or war;
–
unseasonable weather conditions affecting consumer preferences;
–
disruptive weather conditions affecting consumers’ ability to shop; and
–
effects of capital market conditions.
41
42
43
44
45
46
47
48
Total Number of
Total
Shares Purchased
Maximum Number of
Number of
Average
as Part of Publicly
Shares that May Yet be
Shares
Price Paid
Announced Plans
Purchased under the
Period (Fiscal Month)
Purchased
(1)
per Share
(2)
or Programs
(3)
Plans or Programs
(4)
2,232
$
72.83
—
11,346,900
1,321
$
70.94
—
11,346,900
1,714
$
63.21
—
11,346,900
5,267
$
69.22
—
11,346,900
(1)
Included in the total number of shares of A&F’s Common Stock purchased during the quarterly period
(thirteen-week period) ended August 2, 2008 were an aggregate of 5,267 shares which were withheld for
tax payments due upon the vesting of employee restricted stock units and restricted stock awards.
(2)
The average price paid per share includes broker commissions, as applicable.
(3)
There were no shares purchased pursuant to A&F’s publicly announced stock repurchase authorizations
during the quarterly period (thirteen-week period) ended August 2, 2008. On August 16, 2005, A&F
announced the August 15, 2005 authorization by A&F’s Board of Directors to repurchase 6.0 million shares
of A&F’s Common Stock. On November 21, 2007, A&F announced the November 20, 2007 authorization by
A&F’s Board of Directors to repurchase 10.0 million shares of A&F’s Common Stock, in addition to the
approximately 2.0 million shares of A&F’s Common Stock which remained available under the August 2005
authorization as of November 20, 2007.
(4)
The number shown represents, as of the end of each period, the maximum number of shares of Common
Stock that may yet be purchased under A&F’s publicly announced stock repurchase authorizations
described in footnote 3 above. The shares may be purchased, from time to time, depending on market
conditions.
Broker
Votes For
Votes Withheld
Abstentions
Non-Votes
71,106,157
2,563,461
—
—
70,465,513
3,204,105
—
—
71,117,586
2,552,032
—
—
On June 11, 2008, upon the recommendation of A&F’s Nominating and Board Governance Committee, Robert Rosholt was elected to A&F’s Board of Directors to fill the vacancy
resulting from the retirement of Mr. Golden and to serve in the class of directors whose terms expire at the 2010 Annual Meeting of Stockholders.
Broker
Votes For
Votes Against
Abstentions
Non-Votes
72,404,068
349,804
864,592
—
49,073
755
1,326
—
3.1
Amended and Restated Certificate of Incorporation of A&F as filed with the Delaware Secretary
of State on August 27, 1996, incorporated herein by reference to Exhibit 3.1 to A&F’s
Quarterly Report on Form 10-Q for the quarterly period ended November 2, 1996 (File No.
001-12107).
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 herein by reference
to Exhibit 3.2 to A&F’s Annual Report on Form 10-K for the fiscal year ended January 30, 1999
(File No. 001-12107).
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 herein by reference to Exhibit 3.3
to A&F’s Quarterly Report on Form 10-Q for the quarterly period ended July 31, 1999 (File No.
001-12107).
3.4
Amended and Restated Bylaws of A&F (reflecting amendments through May 20, 2004), incorporated
herein by reference to Exhibit 3.7 to A&F’s Quarterly Report on Form 10-Q for the quarterly
period ended May 1, 2004 (File No. 001-12107).
4.1
Rights Agreement, dated as of July 16, 1998, between A&F and First Chicago Trust Company of
New York, incorporated herein by reference to Exhibit 1 to A&F’s Registration Statement on
Form 8-A dated and filed July 21, 1998 (File No. 001-12107).
4.2
Amendment No. 1, dated as of April 21, 1999, to the Rights Agreement, dated as of July 16,
1998, between A&F and First Chicago Trust Company of New York, incorporated herein by
reference to Exhibit 2 to A&F’s Amendment No. 1 to Form 8-A dated April 23, 1999 and filed
April 26, 1999 (File No. 001-12107).
4.3
Certificate of adjustment of number of Rights associated with each share of Class A Common
Stock, dated May 27, 1999, incorporated herein by reference to Exhibit 4.6 to A&F’s Quarterly
Report on Form 10-Q for the quarterly period ended July 31, 1999 (File No. 001-12107).
4.4
Appointment and Acceptance of Successor Rights Agent, effective as of the opening of business
on October 8, 2001, between A&F and National City Bank, incorporated herein by reference to
Exhibit 4.6 to A&F’s Quarterly Report on Form 10-Q for the quarterly period ended August 4,
2001 (File No. 001-12107).
4.5
Amendment No. 2, dated as of June 11, 2008, to the Rights Agreement, dated as of July 16,
1998, between A&F and National City Bank (as successor to First Chicago Trust Company of New
York), as Rights Agent, incorporated herein by reference to Exhibit 4.1 to A&F’s Current
Report on Form 8-K dated and filed June 12, 2008 (File No. 001-12107).
4.6
Credit Agreement, dated as of April 15, 2008, among Abercrombie & Fitch Management Co.; the
Foreign Subsidiary Borrowers (as defined in the Credit Agreement) from time to time party to
the Credit Agreement; A&F; the Lenders (as defined in the Credit Agreement) from time to time
party to the Credit Agreement; National City Bank, as a co-lead arranger, a co-bookrunner and
Global Administrative Agent, as the Swing Line Lender and an LC Issuer; J.P. Morgan
Securities, Inc., as a co-leader arranger, a co-bookrunner and as syndication agent; and each
of Fifth Third Bank and Huntington National Bank, as a documentation agent, incorporated
herein by reference to Exhibit 4.1 to A&F’s Current Report on Form 8-K dated and filed April
18, 2008 (File No. 001-12107).
4.7
Guaranty of Payment (Domestic Credit Parties), dated as of April 15, 2008, among A&F; each
direct and indirect Domestic Subsidiary (as defined in the Guaranty of Payment) of A&F other
than Abercrombie & Fitch Management Co.; and National City Bank, as Global Administrative
Agent, incorporated herein by reference to Exhibit 4.2 to A&F’s Current Report on Form 8-K
dated and filed April 18, 2008 (File No. 001-12107).
4.8
Joinder Agreement, dated as of May 14, 2008, between AFH Canada Stores Co., as an Additional
Borrower, and National City Bank, as Global Administrative Agent, incorporated herein by
reference to Exhibit 4.11 to A&F’s Quarterly Report on Form 10-Q for the quarterly period
ended May 3, 2008 (File No. 001-12107).
4.9
Joinder Agreement, dated as of May 14, 2008, between Abercrombie & Fitch (UK) Limited, as an
Additional Borrower, and National City Bank, as Global Administrative Agent, incorporated
herein by reference to Exhibit 4.12 to A&F’s Quarterly Report on Form 10-Q for the quarterly
period ended May 3, 2008 (File No. 001-12107).
4.10
Joinder Agreement, dated as of May 14, 2008, between Abercrombie & Fitch Europe S.A., as an
Additional Borrower, and National City Bank, as Global Administrative Agent, incorporated
herein by reference to Exhibit 4.13 to A&F’s Quarterly Report on Form 10-Q for the quarterly
period ended May 3, 2008 (File No. 001-12107).
10.1
Abercrombie & Fitch Co. 2005 Long-Term Incentive Plan, incorporated herein by reference to
Exhibit 10.1 to A&F’s Current Report on Form 8-K dated and filed June 17, 2005 (File No.
001-12107).
10.2
Form of Stock Option Agreement (Nonstatutory Stock Option) for Associates under the
Abercrombie & Fitch Co. 2005 Long-Term Incentive Plan used and to be used to evidence grants
of nonstatutory stock options to associates (employees) of A&F and its subsidiaries on or
after March 6, 2006, incorporated herein by reference to Exhibit 10.33 to A&F’s Annual Report
on Form 10-K for the fiscal year ended January 28, 2006 (File 001-12107).
10.3
Form of Restricted Stock Unit Award Agreement for Associates under the Abercrombie & Fitch
Co. 2005 Long-Term Incentive Plan used and to be used to evidence grants of restricted stock
units to associates (employees) of A&F and its subsidiaries on or after March 6, 2006,
incorporated herein by reference to Exhibit 10.34 to A&F’s Annual Report on Form 10-K for the
fiscal year ended January 28, 2006 (File No. 001-12107).
10.4
Form of Restricted Stock Unit Award Agreement used and to be used to evidence the grant of
restricted stock units to Executive Vice Presidents of A&F and its subsidiaries under the
Abercrombie & Fitch Co. 2005 Long-Term Incentive Plan on and after March 4, 2008, incorporated
herein by reference to Exhibit 10.1 to A&F’s Current Report on Form 8-K dated and filed March
6, 2008 (File No. 001-12107).
10.5
Trust Agreement, dated as of October 16, 2006, between A&F and Wilmington Trust Company,
incorporated herein by reference to Exhibit 10.1 to A&F’s Current Report on Form 8-K dated and
filed October 17, 2006 (File No. 001-12107).
10.6
Abercrombie & Fitch Co. 2007 Long-Term Incentive Plan, incorporated herein by reference to
Exhibit 10.2 to A&F’s Current Report on Form 8-K dated and filed June 18, 2007 (File No.
001-12107).
10.7
Form of Stock Option Agreement used and to be used to evidence the grant of nonstatutory
stock options to associates (employees) of A&F and its subsidiaries under the Abercrombie &
Fitch Co. 2007 Long-Term Incentive Plan after August 21, 2007, incorporated herein by
reference to Exhibit 10.1 to A&F’s Current Report on Form 8-K dated and filed August 27, 2007
(File No. 001-12107).
10.8
Form of Restricted Stock Unit Award Agreement used and to be used to evidence the grant of
restricted stock units to associates (employees) of A&F and its subsidiaries under the
Abercrombie & Fitch Co. 2007 Long-Term Incentive Plan after August 21, 2007, incorporated
herein by reference to Exhibit 10.2 to A&F’s Current Report on Form 8-K dated and filed August
27, 2007 (File No. 001-12107).
10.9
Abercrombie & Fitch Co. Incentive Compensation Performance Plan, incorporated herein by
reference to Exhibit 10.1 to A&F’s Current Report on Form 8-K dated and filed June 18, 2007
(File No. 001-12107).
10.10
Agreement between Abercrombie & Fitch Management Co. and Michael W. Kramer, executed by each
on July 22, 2008, incorporated herein by reference to Exhibit 10.1 to A&F’s Current Report on
Form 8-K dated and filed July 24, 2008 (File No. 001-12107).
10.11
Abercrombie & Fitch Nonqualified Savings and Supplemental Retirement Plan (January 1, 2001
Restatement) — as authorized by the Compensation Committee of the A&F Board of Directors on
August 14, 2008, to become one of two sub-plans following the division of said Abercrombie &
Fitch Nonqualified Savings and Supplemental Retirement Plan (January 1, 2001 Restatement) into
two sub-plans effective immediately before January 1, 2009 and to be named the Abercrombie &
Fitch Co. Nonqualified Savings and Supplemental Retirement Plan I [terms to govern amounts
“deferred” (within the meaning of Section 409A of the Internal Revenue Code of 1986, as
amended) before January 1, 2005, and any earnings thereon], incorporated herein by reference
to Exhibit 10.9 to A&F’s Annual Report on Form 10-K for the fiscal year ended February 1, 2003
(File No. 001-12107).
10.12
First Amendment to the Abercrombie & Fitch Co. Nonqualified Savings and Supplemental
Retirement Plan I (Plan I)(January 1, 2001 Restatement), as authorized by the Compensation
Committee of the A&F Board of Directors on August 14, 2008 and executed on behalf of A&F on
September 3, 2008.*
10.13
Abercrombie & Fitch Co. Nonqualified Savings and Supplemental Retirement Plan (II) — as
authorized by the Compensation Committee of the A&F Board of Directors on August 14, 2008, to
become one of two sub-plans following the division of the Abercrombie & Fitch Nonqualified
Savings and Supplemental Retirement Plan (January 1, 2001 Restatement) into two sub-plans
effective immediately before January 1, 2009 and to be named the Abercrombie & Fitch Co.
Nonqualified Savings and Supplemental Retirement Plan II [terms to govern amounts “deferred”
(within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended) in
taxable years beginning on or after January 1, 2005, and any earnings thereon].*
10.14
Summary of Terms of the Annual Restricted Stock Unit Grants to Non-associate Directors of
Abercrombie & Fitch Co., to summarize the terms of the grants to the Board of Directors of A&F
under the 2005 Long-Term Incentive Plan.*
15
Letter re: Unaudited Interim Financial Information to Securities and Exchange Commission re:
Inclusion of Report of Independent Registered Public Accounting Firm — PricewaterhouseCoopers
LLP.*
31.1
Certification by Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under
the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.*
31.2
Certification by Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under
the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.*
32
Certification by Principal Executive Officer and Principal Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
*
Filed herewith.
49
ABERCROMBIE & FITCH CO.
Date: September 8, 2008
By
/s/ MICHAEL NUZZO
Michael Nuzzo
Senior Vice President, Finance
(Principal Financial Officer and Authorized Officer)
50
Exhibit No.
Document
First Amendment to the Abercrombie & Fitch Co. Nonqualified Savings and Supplemental
Retirement Plan I (Plan I)(January 1, 2001 Restatement), as authorized by the Compensation
Committee of the A&F Board of Directors on August 14, 2008 and executed on behalf of A&F on
September 3, 2008.*
Abercrombie & Fitch Co. Nonqualified Savings and Supplemental Retirement Plan (II) — as
authorized by the Compensation Committee of the A&F Board of Directors on August 14, 2008, to
become one of two sub-plans following the division of the Abercrombie & Fitch Nonqualified
Savings and Supplemental Retirement Plan (January 1, 2001 Restatement) into two sub-plans
effective immediately before January 1, 2009 and to be named the Abercrombie & Fitch Co.
Nonqualified Savings and Supplemental Retirement Plan II [terms to govern amounts “deferred”
(within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended) in
taxable years beginning on or after January 1, 2005, and any earnings thereon].*
Summary of Terms of the Annual Restricted Stock Unit Grants to Non-associate Directors of
Abercrombie & Fitch Co., to summarize the terms of the grants to the Board of Directors of A&F
under the 2005 Long-Term Incentive Plan.*
Letter re: Unaudited Interim Financial Information to Securities and Exchange
Commission re: Inclusion of Report of Independent Registered Public Accounting Firm -
PricewaterhouseCoopers LLP.
Certification by Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a)
of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
Certification by Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a)
of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
Certification of Principal Executive Officer and Principal Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
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|
ABERCROMBIE & FITCH CO.
|
||||
| By: | /s/ Kevin Flatley | |||
| Kevin Flatley, Vice President of Compensation & Benefits | ||||
25
1
|
ABERCROMBIE & FITCH CO.
|
||||
| By: | /s/ Kevin Flatley | |||
| Kevin Flatley, | ||||
| Vice President of Compensation & Benefits | ||||
2
| • | Restricted stock units are to be granted annually on the date of the annual meeting of stockholders pursuant to the Abercrombie & Fitch Co. 2005 Long-Term Incentive Plan. | ||
| • | The maximum value on the date of grant will be $300,000 (i.e., should the stock price on the grant date exceed $100 per share, the number of restricted stock units granted will be automatically scaled back to provide a maximum grant date value of $300,000). | ||
| • | The minimum value on the date of grant will be $120,000 (i.e., should the stock price on the grant date be lower than $40 per share, the number of restricted stock units granted will be automatically increased to provide a minimum grant date value of $120,000). | ||
| • | Restricted stock units will vest on the later of (i) the first anniversary of the grant date or (ii) the first “open window” trading date following the first anniversary of the grant date, subject to earlier vesting in the event of the director’s death or total disability or upon a change of control of Abercrombie & Fitch Co. |
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Abercrombie & Fitch Co. for the quarterly period ended August 2, 2008; | ||
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | ||
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: September 8, 2008 | By: | /s/ MICHAEL S. JEFFRIES | ||
| Michael S. Jeffries | ||||
|
Chairman and Chief Executive Officer
(Principal Executive Officer) |
||||
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Abercrombie & Fitch Co. for the quarterly period ended August 2, 2008; | ||
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | ||
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: September 8, 2008 | By: | /s/ MICHAEL NUZZO | ||
| Michael Nuzzo | ||||
|
Senior Vice President, Finance
(Principal Financial Officer) |
||||
| (1) | The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and | ||
| (2) | The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Corporation and its subsidiaries. |
|
/s/ MICHAEL S. JEFFRIES
|
/s/ MICHAEL NUZZO | |||
|
|
|
|||
|
Chairman and Chief Executive Officer
|
Senior Vice President, Finance | |||
|
|
||||
|
Dated: September 8, 2008
|
Dated: September 8, 2008 |
| * | This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Corporation specifically incorporates this certification by reference in such filing. |