Abercrombie & Fitch 2009 Annual Report Download - page 85

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, 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. In March of 2006, the federal court derivative actions were consolidated with the Ross 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. 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 the derivative lawsuit, which concluded that there was no
evidence to support the asserted claims and directed the Company to seek dismissal of the derivative cases. On
September 10, 2007, the Company moved to dismiss the federal derivative cases on the authority of the
Special Litigation Committee report. On March 12, 2009, the Company’s motion was granted and, on
April 10, 2009, plaintiffs filed an appeal from the order of dismissal. The state court has stayed further
proceedings in the state-court derivative action until resolution of the consolidated federal derivative cases.
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, administrative agencies 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
stockholders 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
share of Common Stock outstanding as of the close of business on May 25, 1999, or issued or delivered after
May 25, 1999 and prior to the “Distribution Date” (as defined below), was proportionately adjusted from one
Right to 0.50 Right. Each share of Common Stock issued after May 25, 1999 and prior to the Distribution Date
has been, and will be issued, with 0.50 Right attached so that all shares of Common Stock outstanding prior to
the Distribution Date will have 0.50 Right attached.
The Rights are initially attached to the shares of Common Stock. The Rights will separate from the
Common Stock after a Distribution Date occurs. The “Distribution Date” generally means the earlier of (i) the
close of business on the 10th day after the date (the “Share Acquisition Date”) of the first public
announcement that a person or group (other than A&F or any of A&F’s subsidiaries or any employee
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ABERCROMBIE & FITCH CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)