Abercrombie & Fitch 2008 Annual Report Download - page 40

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Table of Contents
Company received a right to sell the UBS ARS back to UBS at par (“Put Option”), at the Company’s sole
discretion, commencing on June 30, 2010.
The Company considers the following to be measures of its liquidity and capital resources for the last
three fiscal years:
2008 2007 2006
Current ratio (current assets divided by current
liabilities) 2.41 2.10 2.14
Net cash provided by operating activities
(thousands) $ 490,836 $ 817,524 $ 582,171*
* Fiscal 2006 was a fifty-three week year.
Operating Activities
Net cash provided by operating activities, the Company’s primary source of liquidity, decreased to
$490.8 million for Fiscal 2008 from $817.5 million in Fiscal 2007. In Fiscal 2008, the decrease in cash
from operations compared to Fiscal 2007 was driven by a decrease in net income, as well as increased
inventory on-hand at the end of the year. In Fiscal 2007, the increase in cash from operations compared to
Fiscal 2006 was driven by increased net income and decreased inventory on-hand at the end of the year.
The Company’s operations are seasonal and typically peak during the Back-to-School and Holiday
selling periods. Accordingly, cash requirements for inventory expenditures are typically highest in the
second and third fiscal quarters as the Company builds inventory in anticipation of these selling periods.
Investing Activities
Cash outflows from investing activities in Fiscal 2008 were for capital expenditures related primarily
to new store construction, store remodels and refreshes, information technology and purchases of
marketable securities. Cash inflows from investing activities were generated by sales of marketable
securities.
Cash outflows for Fiscal 2007 were primarily for purchases of marketable securities and trust-owned
life insurance policies, and capital expenditures related primarily to new store construction; store remodels
and refreshes; the purchase of an airplane; and other various store, home office and DC projects, partially
offset by proceeds from the sale of marketable securities.
Cash outflows for Fiscal 2006 were primarily for purchases of marketable securities, the purchase of
trust-owned life insurance policies and capital expenditures. Cash inflows from investing activities were
generated by sales of marketable securities.
Financing Activities
Cash outflows related to financing activities consisted primarily of the repurchase of the Company’s
Common Stock and the payment of dividends in Fiscal 2008 and Fiscal 2007. In Fiscal 2006, cash
outflows for financing activities related primarily to the payment of dividends and a change in outstanding
checks. Cash inflows in Fiscal 2008 primarily related to proceeds from the borrowing under the
Company’s unsecured credit agreement and proceeds from share-based compensation and the related
excess tax benefits. Fiscal 2007 and Fiscal 2006 cash inflows consisted primarily of proceeds from
share-based compensation and the
37
Source: ABERCROMBIE & FITCH CO /DE/, 10-K, March 27, 2009 Powered by Morningstar® Document Research℠