Abercrombie & Fitch 2009 Annual Report Download - page 48

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Assuming no changes in the Company’s financial structure as it stood at January 30, 2010, if the average
market interest rates increased 100 basis points over the fifty-two week period for Fiscal 2010 compared to the
interest rates incurred during the fifty-two week period ended January 30, 2010, there would be an immaterial
change in interest expense. This amount was determined by calculating the effect of the average hypothetical
interest rate increase on the Company’s variable rate unsecured Amended Credit Agreement. This hypo-
thetical increase in interest rate for the fifty-two week period ended January 29, 2011 may be different from
the actual increase in interest expense due to varying interest rate reset dates under the Company’s unsecured
Amended Credit Agreement.
Foreign Exchange Rate Risk
The Company has exposure to changes in currency exchange rates associated with foreign currency
transactions, including inter-company transactions and foreign denominated assets and liabilities. Such
foreign currency transactions are denominated in Euros, Canadian Dollars, Japanese Yen, Danish Krones,
Swiss Francs, Hong Kong Dollars and British Pounds. The Company has established a program that primarily
utilizes foreign currency forward contracts to partially offset the risks associated with the effects of certain
foreign currency exposures. Under this program, increases or decreases in foreign currency exposures are
partially offset by gains or losses on forward contracts, to mitigate the impact of foreign currency gains or
losses. The Company does not use forward contracts to engage in currency speculation. All outstanding
foreign currency forward contracts are recorded at fair value at the end of each fiscal period.
47