Abercrombie & Fitch 2008 Annual Report Download - page 85

Table of Contents
ABERCROMBIE & FITCH CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
affirmative defenses. On October 26, 2007, plaintiffs moved to certify their purported class. The motion
has not been fully briefed or submitted.
On September 16, 2005, a derivative action, styled The Booth Family Trust v. Michael S. Jeffries, et
al., was filed in the United States District Court for the Southern District of Ohio, naming A&F as a
nominal defendant and seeking to assert claims for unspecified damages against nine of A&F’s present
and former directors, alleging various breaches of the directors’ fiduciary duty and seeking equitable and
monetary relief. In the following three months (October, November and December of 2005), four similar
derivative actions were filed (three in the United States District Court for the Southern District of Ohio
and one in the Court of Common Pleas for Franklin County, Ohio) against present and former directors of
A&F alleging various breaches of the directors’ fiduciary duty allegedly arising out of the same matters
alleged in the Ross case and seeking equitable and monetary relief on behalf of A&F. A&F is also a
nominal defendant in each of the four later derivative actions. On November 4, 2005, a motion to
consolidate all of the federal court derivative actions with the purported securities law class actions
described in the preceding paragraph was filed. On March 22, 2006, the motion to consolidate was
granted, and the federal court derivative actions have been consolidated with the aforesaid purported
securities law class actions for purposes of motion practice, discovery and pretrial proceedings. A
consolidated amended derivative complaint was filed in the federal proceeding on July 10, 2006. A&F
filed a motion to stay the consolidated federal derivative case and that motion was granted. The state court
action was also stayed. On February 16, 2007, A&F announced that its Board of Directors had received a
report of the Special Litigation Committee established by the Board to investigate and act with respect to
claims asserted in certain previously disclosed derivative lawsuits brought against current and former
directors and management, including Chairman and Chief Executive Officer Michael S. Jeffries. The
Special Litigation Committee concluded that there is no evidence to support the asserted claims and
directed the Company to seek dismissal of the derivative actions. On September 10, 2007, the Company
moved to dismiss the federal derivative cases on the authority of the Special Litigation Committee report
and on October 18, 2007, the state court stayed further proceedings until resolution of the consolidated
federal derivative cases. The Company’s motion has been briefed and submitted and is pending decision
by the court.
Management intends to defend the aforesaid matters vigorously, as appropriate. Management is
unable to quantify the potential exposure of the aforesaid matters. However, management’s assessment of
the Company’s current exposure could change in the event of the discovery of additional facts with
respect to legal matters pending against the Company or determinations by judges, juries or other finders
of fact that are not in accordance with management’s evaluation of the claims.
17. PREFERRED STOCK PURCHASE RIGHTS
On July 16, 1998, A&F’s Board of Directors declared a dividend of one Series A Participating
Cumulative Preferred Stock Purchase Right (the “Rights”) for each outstanding share of Class A Common
Stock (the “Common Stock”), par value $.01 per share, of A&F. The dividend was paid on July 28, 1998
to shareholders of record on that date. Shares of Common Stock issued after July 28, 1998 and prior to
May 25, 1999 were issued with one Right attached. A&F’s Board of Directors declared a two-for-one
stock split (the “Stock Split”) on the Common Stock, payable on June 15, 1999 to the holders of record at
the close of business on May 25, 1999. In connection with the Stock Split, the number of Rights
associated with each
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Source: ABERCROMBIE & FITCH CO /DE/, 10-K, March 27, 2009 Powered by Morningstar® Document Research℠