Abercrombie & Fitch 2008 Annual Report Download - page 84

Table of Contents
ABERCROMBIE & FITCH CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Amended and Restated Employment Agreement, dated as of December 19, 2008, between the Company
and its CEO. In Fiscal 2008, the Company recorded income of $2.5 million associated to the SERP. The
amount recognized in Fiscal 2008 was the result of a reduction in the average compensation. The expense
associated with the SERP was $1.4 million in Fiscal 2007 and $6.6 million in Fiscal 2006. The increase in
Fiscal 2006 was primarily related to a change in the discount rate.
The Company established the Rabbi Trust during the third quarter of Fiscal 2006, the purpose of
which is to be a source of funds to match respective funding obligations to participants in the
Abercrombie & Fitch Nonqualified Savings and Supplemental Retirement Plan and the SERP. Refer to
further discussion regarding the Rabbi Trust in Note 5, “Cash and Equivalents and Investments.”
16. CONTINGENCIES
A&F is a defendant in lawsuits arising in the ordinary course of business.
On June 23, 2006, Lisa Hashimoto, et al. v. Abercrombie & Fitch Co. and Abercrombie & Fitch
Stores, Inc., was filed in the Superior Court of the State of California for the County of Los Angeles. In
that action, plaintiffs alleged, on behalf of a putative class of California store managers employed in
Hollister and abercrombie stores, that they were entitled to receive overtime pay as “non-exempt”
employees under California wage and hour laws. The complaint seeks injunctive relief, equitable relief,
unpaid overtime compensation, unpaid benefits, penalties, interest and attorneys’ fees and costs. The
defendants answered the complaint on August 21, 2006, denying liability. On June 23, 2008, the
defendants settled all claims of Hollister and abercrombie store managers who served in stores from
June 23, 2002 through April 30, 2004, but continued to oppose the plaintiffs’ remaining claims. On
July 29, 2008, the Court certified a class consisting of all store managers who served at Hollister and
abercrombie stores in California from May 1, 2004 through the future date upon which the action
concludes. The parties are continuing to litigate the claims of that putative class.
On September 2, 2005, a purported class action, styled Robert Ross v. Abercrombie & Fitch
Company, et al., was filed against A&F and certain of its officers in the United States District Court for
the Southern District of Ohio on behalf of a purported class of all persons who purchased or acquired
shares of A&F’s Common Stock between June 2, 2005 and August 16, 2005. In September and October
of 2005, five other purported class actions were subsequently filed against A&F and other defendants in
the same Court. All six securities cases allege claims under the federal securities laws related to sales of
Common Stock by certain defendants and to a decline in the price of A&F’s Common Stock during the
summer of 2005, allegedly as a result of misstatements attributable to A&F. Plaintiffs seek unspecified
monetary damages. On November 1, 2005, a motion to consolidate all of these purported class actions
into the first-filed case was filed by some of the plaintiffs. A&F joined in that motion. On March 22,
2006, the motions to consolidate were granted, and these actions (together with the federal court
derivative cases described in the following paragraph) were consolidated for purposes of motion practice,
discovery and pretrial proceedings. A consolidated amended securities class action complaint (the
“Complaint”) was filed on August 14, 2006. On October 13, 2006, all defendants moved to dismiss that
Complaint. On August 9, 2007, the Court denied the motions to dismiss. On September 14, 2007,
defendants filed answers denying the material allegations of the Complaint and asserting
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Source: ABERCROMBIE & FITCH CO /DE/, 10-K, March 27, 2009 Powered by Morningstar® Document Research℠