Abercrombie & Fitch 1998 Annual Report Download - page 12

18
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.
ADOPTION OF ACCOUNTING STANDARDS In March 1998,
the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of
Position (“SOP”) 98-1, “Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use”. The SOP
requires that certain external costs, internal payroll and payroll
related costs be capitalized during the application development
stage of a software development project and amortized over the
software’s useful life. The Company will adopt the SOP in the
first quarter of 1999. The Company does not anticipate the
adoption of this SOP will have a material adverse effect on the
Company’s consolidated financial position, results of opera-
tions or cash flows. Previously, the Company has expensed all
software costs.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECUR-
ITIES LITIGATION REFORM ACT OF 1995 The Company
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 the
Company involve risks and uncertainties and are subject to
change based on various important factors. The foregoing state-
ments as to costs and dates relating to the Year 2000 effort are
forward-looking and are based on the Company’s best estimates
that may be updated as additional information becomes available.
The Company’s forward-looking statements are also based on
assumptions about many important factors, including the tech-
nical skills of employees and independent contractors, the
representations and preparedness of third parties, the failure of
vendors to deliver merchandise or perform services required by
the Company and the collateral effects of the Year 2000 issues on
the Company’s business partners and customers. While the
Company believes its assumptions are reasonable, it cautions that
it is impossible to predict the impact of certain factors that could
cause actual costs or timetables to differ materially from the
expected results. In addition to Year 2000 issues, 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 1999 and beyond
to differ materially from those expressed or implied in any such
forward-looking statements: changes in consumer spending
patterns, consumer preferences and overall economic condi-
tions, 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, avail-
ability of suitable store locations at appropriate terms, ability to
develop new merchandise and ability to hire and train associates.
Abercrombie &Fitch Co.