A-4 APPENDIX A American Eagle Outfitters, Inc., 2017 Annual Report AMERICAN EAGLE OUTFITTERS, INC. Consolidated Balance Sheets February 3, 2018 January 28, 2017 $ $ (In thousands, except per share amounts) Assets Current assets: Cash and cash equivalents Merchandise inventory Accounts receivable, net Prepaid expenses and other Total current assets Property and equipment, net of accumulated depreciation Intangible assets, net of accumulated amortization Goodwill Deferred income taxes Other assets Total assets 413,613 398,213 78,304 78.400 968,530 724 239 46,666 15,070 9,344 52,464 1,816,313 378,613 358,446 86,634 77,536 901,229 707,797 49,373 14,887 49,250 60,124 1,782,660 $ $ $ 236,703 54,324 83,312 12,781 52,347 11,203 34,551 485, 221 246,204 54,184 78,619 12,220 52,966 12,780 36,810 493,783 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued compensation and payroll taxes Accrued rent Accrued income and other taxes Unredeemed gift cards and gift certificates Current portion of deferred lease credits Other liabilities and accrued expenses Total current liabilities Non-current liabilities: Deferred lease credits Non-current accrued income taxes Other non-current liabilities Total non-current liabilities Commitments and contingencies Stockholders' equity Preferred stock, 50.01 par value; 5,000 shares authorized; none issued and outstanding Common stock, $0.01 par value; 600,000 shares authorized; 249,566 shares issued; 177,316 and 181,886 shares outstanding, respectively Contributed capital Accumulated other comprehensive loss, net of tax Retained earnings Treasury stock, 72,250 and 67,680 shares, respectively, at cost Total stockholders' equity Total liabilities and stockholders' equity 47,977 7.269 29,055 84,301 45,114 4,537 34,657 84,308 2,496 593,770 (30,795) 1,883,592 (1,202,272) 1,246,791 1,816,313 2,496 603,890 (36,462) 1,775,775 (1,141,130) 1,204,569 1,782,660 $ $ Refer to Notes to Consolidated Financial Statements American Eagle Outfitter ual Report 4-5 AMERICAN EAGLE OUTFITTERS, INC. Consolidated Statements of Operations For the Years Ended January 28, 2017 $ 3,609,865 January 30 2016 3,521,848 $ $ 2.242.938 1,366,927 857,562 21,166 156,723 331,476 3,786 335 262 122.813 212,449 2.219,114 1,302,734 834,700 0 148,156 319,878 1,993 321,871 108,580 213,291 4,847 218,138 $ 212,449 $ February 3. (In thousands, except per share amounts) 2018 Total net revenue 3,795,549 Cost of sales, including certain buying, occupancy and warehousing expenses 2.425,044 Gross profit 1,370,505 Selling, general and administrative expenses 879,685 Impairment and restructuring charges 20,611 Depreciation and amortization expense 167,421 Operating income 302,788 Other (expense) income, net (15,615) Income before income taxes 287,173 Provision for income taxes 83,010 Income from continuing operations 204,163 Discontinued operations, net of tax Net income 204,163 Basic income per common share: Income from continuing operations 1.15 Discontinued operations Basic net income per common share 1.15 Diluted income per common share: Income from continuing operations 1.13 Discontinued operations Diluted net income per common share $ 1.13 Weighted average common shares outstanding - basic 177.938 Weighted average common shares outstanding - diluted 180,156 Refer to Notes to Consolidated Financial Statements $ 1.17 $ 1.10 0.02 1.12 $ 1.17 $ $ $ 1.16 $ 1.09 0.02 1.11 $ 1.16 $ 181,429 183,835 194,351 196,237 AMERICAN EAGLE OUTFITTERS, INC. Consolidated Statements of Comprehensive Income February 3. 2018 204,163 For the Years Ended January 28 2017 $ 212,449 January 30 2016 218,138 $ (In thousands) Net income Other comprehensive gain (loss): Foreign currency translation gain (loss) Other comprehensive gain (loss) Comprehensive income 5,667 5,667 209,830 (6.594 (6,594) 205,855 (19.924) (19,924 198,214 $ $ Refer to Notes to Consolidated Financial Statements AMERICAN EAGLE OUTFITTERS, INC. Consolidated Statements of Cash Flows February 3 2018 For the Years Ended January 28, 2017 January 30, 2016 $ 204,163 $ 212.449 $ 218,138 (4.847 213.291 $ 204,163 $ 212.449 $ 169.473 16.890 44.312 (5.616) 158,174 29.137 14,838 (835) 20,576 148,858 34.977 4.680 2.977 (9.422) (In thousands) Operating activities: Net income Gain from discontinued operations, net of tax Income from continuing operations Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization Share-based compensation Deferred income taxes Foreign currency transaction (gain) loss Loss on impairment of assets Gain on sale of assets Changes in assets and liabilities: Merchandise inventory Accounts receivable Prepaid expenses and other Other assets Accounts payable Unredeemed gift cards and gift certificates Deferred lease credits Accrued compensation and payroll taxes Accrued income and other taxes Accrued liabilities Total adjustments Net cash provided by operating activities from continuing operations Investing activities: Capital expenditures for property and equipment Acquisitions and purchase of long-lived assets in business combination Proceeds from sale of assets Acquisition of intangible assets Net cash used for investing activities from continuing operations Financing activities: Payments on capital leases and other Repurchase of common stock as part of publicly announced programs Repurchase of common stock from employees Net proceeds from stock options exercised Excess tax benefit from share-based payments Cash dividends paid Net cash used for financing activities from continuing operations Effect of exchange rates on cash Cash flows of discontinued operations Net cash used for operating activities Net cash used for investing activities Net cash used for financing activities Effect of exchange rates on cash Net cash used for discontinued operations Net increase (decrease) in cash and cash equivalents Cash and cash equivalents - beginning of period Cash and cash equivalents - end of period (35,912) 8.837 (399) 5.317 (16,663) (874) 984 1.289 565 2.060 190,263 394,426 (53,613) (7.705) (332) (6.705) 52.347 4,465 (5.229) (25,809) (10,695) (15.467 153.147 365,596 (22.259) (10,093) (7.027 (10,017) (3.189) 755 (4.099) 34 234 (17,615) (14.133 128,627 341,918 (169.469) (161,494) (153.256) (10.442) 12.579 (2.382) (153,501) (2.681) (172.150) (1.528 (163,022) (4,375) (3,384) (87.682) (12.513) 3.355 7.635) (227.071) (5.163) 7.283 657 (97 237 (329,166 3.076 (7,032) 16.260 763 (90.680) (85,064) 1.036 (88.548) (188,772) 1,496 (6.805) 35,000 378,613 413,613 $ (6,805 (150,630) 410 697 260.067 118,546 260.067 378,613 $ $ Refer to Notes to Consolidated Financial Statements February 3, 2018 January 28, 2017 ASSETS CURRENT ASSETS: Cash and cash equivalents Short-term investments (Notes Band) Receivables Inventory Prepaid expenses and other assets (Note F) Total current assets 165,086 50.833 8,588 118,007 18,070 360,584 196,536 49.994 8.210 125,694 6,023 386,457 PROPERTY AND EQUIPMENT (Note D) Less accumulated depreciation and amortization 459,043 (309,497) 149,546 459.359 (290,364) 168,995 LONG-TERM INVESTMENTS (Notes Band C) OTHER ASSETS (Notes F and G) 21,453 6,533 18,092 6,303 Total assets 538,116 579.847 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable Accrued employee compensation Accrued store operating expenses Gift certificates redeemable Income taxes payable Total current liabilities 29,387 22,307 15.646 18,202 12,364 97,906 25.079 26,906 14,695 21,199 10,737 98.616 DEFERRED COMPENSATION (Note I) DEFERRED RENT LIABILITY Total liabilities 15.154 33,808 146,868 13.092 37,600 149,308 COMMITMENTS (Notes E and H) 486 STOCKHOLDERS' EQUITY (Note )): Common stock, authorized 100,000,000 shares of 5.01 par value, 48,816,170 and 48,622,780 shares issued and outstanding at February 3, 2018 and January 28, 2017, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total stockholders' equity 488 144,279 246,570 (89) 391.248 139,398 290,737 (82) 430,539 Total liabilities and stockholders' equity $ 538,116 $ 579,847 THE BUCKLE, INC. CONSOLIDATED STATEMENTS OF INCOME (Amounts in Thousands Except Per Share Amounts) Fiscal Years Ended January 28, 2017 February 3, 2018 January 30, 2016 SALES, Net of returns and allowances of $87,389, 5101,375, and $113,325, respectively 913,380 $ 974,873 $ 1,119,616 COST OF SALES (Including buying, distribution, and occupancy costs) 533,357 577,705 638, 215 Gross profit 380,023 397,168 481,401 OPERATING EXPENSES Selling General and administrative 206,068 39,877 245,945 205,933 38,475 244,408 212,531 39,282 251,813 INCOME FROM OPERATIONS 134,078 152,760 229,588 OTHER INCOME, Net 5,407 3,511 5,236 INCOME BEFORE INCOME TAXES 139,485 156,271 234,824 PROVISION FOR INCOME TAXES (Note F) 49,778 58,310 87,541 NET INCOME $ 89,707 S 97,961 147,283 EARNINGS PER SHARE (Note K): Basic 1.86 S 2.04 3.06 Diluted $ 1.85 S 2.03 $ 3.06 See notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Amounts in Thousands) February 3, 2018 Fiscal Years Ended January 28, 2017 January 30, 2016 NET INCOME 89,707 97,961 $ 147,283 (7) 221 98 OTHER COMPREHENSIVE INCOME, NET OF TAX: Change in unrealized loss on investments, net of tax of S17, 5129, and S59, respectively Reclassification adjustment for losses included in net income, net of tax of $0, $17, and $0, respectively Other comprehensive income 28 249 98 COMPREHENSIVE INCOME 89,700 98,210 S 147,381 See notes to consolidated financial statements. Financial information for American Eagle is presented in Appendix A at the end of the book, and financial information for Buckle is presented in Appendix B at the end of the book. The stock prices as of February 3, 2018, for American Eagle and Buckle were $17.56 and $19.60, respectively. Required: 1-a. Calculate the return on equity for American Eagle and Buckle for the year ended February 3, 2018. (Round "Average stockholders' equity" answers to 1 decimal place and final answers to 2 decimal places.) Answer is not complete. Net income American Eagle (s in thousands) Return on Equity Average stockholders' equity $ 3,795,549.0 X Average stockholders' equity $ 41,089,350.0 % $ 204,163 Net income Buckle % $ 89,707 1-b. Which company has a higher return on equity? American Eagle Buckle 2-a. Calculate the dividend yield for American Eagle and Buckle for the year ended February 3, 2018. (Hint: Find dividends per share as total dividends divided by the number of shares outstanding shown in the balance sheet.) (Round your answers to 2 decimal places.) Answer is not complete. Dividend Yield Dividends per share Stock price American Eagle > % 0.50 $ 1.00 X Dividends per share Stock price Buckle % $ 2.75 $ 10.00 X 2-b. Which company has a higher dividend yield? American Eagle Buckle 3-a. Calculate the price-earnings ratio on February 3, 2018, for American Eagle and Buckle. Basic earnings per share are provided for each company near the bottom of the income statement. (Round your answers to 2 decimal places.) Price-Earnings Ratio American Eagle Buckle