Abercrombie &Fitch tabular presentation of the following information for all periods presented: 1. Net income and EPS (basic and diluted), as reported; 2. Compensation expense (if any), net of tax, included in reported net income; 3. Compensation expense that would have been included in net income had the company adopted the accounting pro visions of FASB No. 123 for all awards granted, modified or settled since December 15, 1994; 4. Pro forma net income and earnings per share. The transition and annual disclosure provisions of FASB No. 148 are effective for the 2002 financial statements. The new interim disclosure provisions are effective in the first quarter of 2003. Emerging Issues Task Force (“EITF”) Issue 02-16, “Accounting by a Customer (Including a Reseller) For Cash Consideration Received from a Vendor,” addresses the account- ing treatment for cash vendor allowances received. The adoption of EITF Issue 02-16 in 2003 did not have an impact on the Company’s financial position or results of operations. IMPACT OF INFLATION The Company’s results of operations and financial condition are presented based upon historical cost. While it is difficult to accurately measure the impact of infla- tion due to the imprecise nature of the estimates required, the Company believes that the effects of inflation, if any, on its results of operations and financial condition have been minor. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 A&F cau- tions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this Form 10-K 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 oth- ers, 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 2003 and beyond to differ materially from those expressed or implied in any of the forward-looking statements included in this Form 10-K or otherwise made by management: changes in consumer spending patterns and consumer preferences; the 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; the impact of competition and pricing; changes in weather patterns; market price of key raw materials; ability to source product from it global supplier base; 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, train and retain associates. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company maintains its cash and equiva- lents in financial instruments with original maturities of 90 days or less. The Company also holds marketable securities with original maturities of three to five months. These financial instruments bear interest at fixed rates and are subject to interest rate risk through lost income should interest rates increase. The Company does not enter into financial instruments for trading purposes. As of February 1, 2003, the Company had no long-term debt outstanding. Future borrowings would bear interest at negotiated rates and would be subject to interest rate risk. The Company does not believe that a hypothetical adverse change of 10% in interest rates would have a material affect on the Company’s financial condition. 13