Abercrombie & Fitch 2005 Annual Report Download - page 37

Abercrombie &Fitch
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Amounts paid directly to taxing authorities were $122.0 million, $114.0
million and $113.0 million in Fiscal 2005, Fiscal 2004, and Fiscal 2003,
respectively.
The effect of temporary differences which give rise to deferred
income tax assets (liabilities) was as follows (thousands):
2005 2004
Deferred tax assets:
Deferred compensation $ 24,046 $ 16,205
Rent 88,399 98,793
Accrued expenses 11,340 7,194
Inventory 3,982 3,268
Legal expense 2,977 15,288
Total deferred tax assets $ 130,744 $ 140,748
Deferred tax liabilities:
Store supplies $ (10,851) $ (10,542)
Property and equipment (128,735) (141,147)
Total deferred tax liabilities $ (139,586) $ (151,689)
Net deferred income tax liabilities $ (8,842) $ (10,941)
No valuation allowance has been provided for deferred tax assets
because management believes the full amount of the net deferred tax
assets will be realized in the future.
9. LONG-TERM DEBT On December 15, 2004, the Company
entered into an amended and restated $250 million syndicated unse-
cured credit agreement (the “Amended Credit Agreement”). The
primary purposes of the Amended Credit Agreement are for trade,
stand-by letters of credit and working capital. The Credit Agreement
has several borrowing options, including an option where interest rates
are based on the agent bank’s “Alternate Base Rate,” and another using
the LIBO rate. The facility fees payable under the Amended Credit
Agreement are based on the Company’s leverage ratio of the sum of
total debt plus 600% of forward minimum rent commitments to con-
solidated EBITDAR for the trailing four-fiscal-quarter period. The
facility fees are projected to accrue between 0.15% and 0.175% on the
committed amounts per annum. The Amended Credit Agreement
contains limitations on indebtedness, liens, sale-leaseback transactions,
significant corporate changes including mergers and acquisitions with
third parties, investments, restricted payments (including dividends
and stock repurchases), hedging transactions and transactions with
affiliates. The Amended Credit Agreement will mature on December
15, 2009. Letters of credit totaling approximately $45.1 million and
$49.6 million were outstanding under the Amended Credit Agreement
at January 28, 2006 and January 29, 2005, respectively. No borrowings
were outstanding under the Amended Credit Agreement at January 28,
2006 and January 29, 2005.
10. RELATED PARTY TRANSACTIONS Shahid & Company,
Inc. has provided advertising and design services for the Company
since 1995. Sam N. Shahid, Jr., who served on A&F’s Board of
Directors until June 15, 2005, has been President and Creative Director
of Shahid & Company, Inc. since 1993. Fees paid to Shahid &
Company, Inc. for services provided during his tenure as a Director in
Fiscal 2005, Fiscal 2004 and Fiscal 2003 were approximately $863,000,
$2.1 million and $2.0 million, respectively. These amounts do not
include reimbursements to Shahid & Company, Inc. for expenses
incurred while performing these services.
11. STOCK OPTIONS AND RESTRICTED STOCK UNITS
Under the Company’s stock plans, associates and non-associate direc-
tors may be granted up to a total of 25.9 million restricted shares and
options to purchase A&F’s common stock at the market price on the
date of grant. In Fiscal 2005, associates of the Company were granted
options covering approximately 479,900 shares, with a vesting period of
four years. Options covering a total of 20,000 shares were granted to
non-associate directors in Fiscal 2005. Options granted to the non-
associate directors vest on the first anniversary of the grant date. All
options have a maximum term of ten years.
Options Outstanding Options Exercisable
at January 28, 2006 at January 28, 2006
Weighted–
Average Weighted– Weighted–
Range of Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life Price Exercisable Price
$ 8-$23 320,143 3.0 $15.06 233,393 $17.29
$23-$38 3,627,288 5.6 $27.43 2,612,387 $27.52
$38-$53 4,651,400 3.7 $44.04 3,435,750 $43.96
$53-$71 383,000 7.8 $57.80 2,500 $59.98
$71-$75 79,000 9.5 $71.10 ––
$ 8-$75 9,060,831 4.6 $37.18 6,284,030 $36.14